DICTAPHONE John H. Duerden Chairman & Chief Executive Officer January 24, 1996 Mr. Robert E. Trimper 104 Oakwood Court Abbotsbury Road London, W14 8J2 Dear Bob: This letter will set forth our agreement concerning your employment with Dictaphone...

DICTAPHONE



Xxxx X. Xxxxxxx
Chairman & Chief Executive Officer


                               January 24, 1996


Xx. Xxxxxx X. Xxxxxxx
000 Xxxxxxx Xxxxx
Xxxxxxxxxx Xxxx
Xxxxxx, X00 0X0

Dear Xxx:

            This letter will set forth our agreement  concerning your employment
with Dictaphone  Corporation  effective  3/1/96 and supersedes any and all prior
offer letters.

1.  THE JOB AND LOCATION

            I am pleased to extend you an offer of  employment  with  Dictaphone
Corporation as a Vice President,  International Operations reporting directly to
me. In this capacity, you will of course, be a full-time member of the Executive
Committee.  Your position will be based in London,  England  except for required
travel on company business. The company will not relocate you outside of London,
England  unless  you and I  agree  that  the  move is in the  best  interest  of
Dictaphone.

2.  COMPENSATION

            Your  annual base salary  will be  $220,000.  As is current  company
practice, your performance will be reviewed on an annual basis for consideration
of a merit increase based on the base structure and the  performance  management
grid in effect as of the date of your annual review.  Your base pay will be paid
in accordance  with the company's  payroll  procedure but, in any case, not less
frequently   than  monthly.   We  expect  that  should  there  be  dual  payroll
participation  that your  payment  will be on the basis of each of the  separate
country  payrolls  and that no special  payroll run will be required in order to
meet your personal tax needs.

            To assist you with your transition into Dictaphone, I have agreed to
pay a one time  sign-on  bonus of  $50,000.  This will be payable to you on your
start date with Dictaphone.

            In addition to your annual based salary, you are eligible to receive
a  performance  base  bonus  with a  target  of 35% of your  base  pay  equaling
approximately






$77,000.  As a performance  based  compensation  employee,  "PBC," your bonus is
determined on the basis of your  individual  performance  and the performance of
Dictaphone Corporation as assessed by the Board of Directors. This can pay up to
100% of your base salary. I've enclosed a copy of the proposed PBC Group II (35%
target grid)  Incentive Guide which has been forwarded to the Board of Directors
for  approval  for 1996.  In addition,  I've  attached  the proposed  grid for a
Dictaphone  "rating"  guideline  which has also been  forwarded to the Board for
approval.  You  will  note  that  the  vertical  rating  for the  Grid II  bonus
delineates the payout based on the Dictaphone  rating. The Dictaphone rating for
1996 will be based solely on corporate performance against the EBITDA target and
is self- explanatory. Your personal rating which is the horizontal access on the
grid will be based on 60% of the financial  performance  against  budget for the
International group as mutually agreed upon at the beginning of the fiscal year.
The other 40% of your personal  rating will be dependent  upon your  performance
against agreed upon objectives for the  International  Operation.  I will expect
you and I to come to a  conclusion  within  three weeks of your start date as to
what  those  targets  for the  remainder  of the  calendar  year  will be.  As a
demonstration  of my confidence in your ability to have a positive impact on the
International  organization  I have agreed that your bonus for 1996  (payable in
February,  1997) will be  guaranteed at the 50% of base salary for that prorated
period of 1996 for which you are actively employed.  In addition,  I have agreed
that for 1997  fiscal  year  bonus  payable in  February,  1998 you will also be
guaranteed  a bonus  payout of 50% of the base  salary in effect for 1997.  This
guarantee assumes,  of course,  that you are actively employed by Dictaphone for
the period  covered.  For 1998 and  thereafter,  you will be eligible  for a PBC
bonus based on the grid  approved by the Board of  Directors at the start of the
new year and comparable to other PBC Level II participants. It is my expectation
at this time that the on target bonus  opportunity would be at 35% of the annual
base  with a  maximum  bonus  opportunity  of not less than 100% for the grid II
bonus. All compensation plans,  however, are reviewed on an annual basis and may
be changed at the company's discretion.

3.  STOCK OPTION

            As a PBC level executive a recommendation  will be made to the Board
of Directors that you be offered stock options and an opportunity to participate
in the management  equity options.  The details of these plans will be discussed
in greater detail with you in the documents  specifically  designed to delineate
all of the terms and conditions of those plans. The  recommendation to the Board
will be that you be offered 10,000  management  equity options at $10 a share in
accordance with the Management  Private Placement  Memorandum.  In addition,  it
will be recommended  that you be offered  30,000 stock options,  15,000 of which
will vest over a five year period and 15,000 of which will be performance  based
on the total Dictaphone  organizations  performance  against specific targets in
accordance  with the  Management  Stock  Option  Plan.  The  relevant  documents
covering these plans will be forwarded to Mr. Album on your behalf over the next
few business  days. In case of any  discrepancy  in terms and/or  conditions the
formal plan  documents will be the final  authority.  If you are approved for an
equity position you will, of course,  be required to make a personal  investment
of  $100,000  to cover  the  management  equity  options.  Dictaphone  will make
available  to you a loan of up to $50,000  under the same  terms and  conditions
afforded other executives buying equity in the company as of August 11, 1995.





4.  BENEFITS

            The  company  has  agreed  to  offer  you the  appropriate  benefits
depending  upon  availability  and based on the plan  documents  or  policies in
effect for each plan.

            As a PBC level  employee you are entitled to paid  vacation  time in
accordance  with the  current  plans and  practices  of  Dictaphone  and will be
entitled to receive a minimum of four weeks paid vacation per calendar year.

5.  DISABILITY BENEFITS

            If, as a result of your incapacity due to physical or mental illness
you shall be unable to perform  all of your  duties  hereunder  by reason of the
illness you will be eligible  for  compensation  under the  company's  long term
disability  plan provided you are a participant  of the plan. Any incapacity due
to physical  or mental  illness  which is  expected,  based on bonafide  medical
documentation,  to  continue  for  more  than  six  consecutive  months  will be
considered  grounds for  termination  and will invoke the  "Executive  Severance
Arrangement" as described hereunder.

6.  EXPENSE REIMBURSEMENT

            As a PBC level executive within the Dictaphone Team reporting to me,
you are eligible for participation in the Company Car Program which provides for
an allowance of $1,000 per month.  Or, if you would  prefer,  the lease on a BMW
530 or  comparable  lease on a top-line  fully loaded  automobile as long as the
terms of the lease are  reasonably  acceptable to  Dictaphone.  You will also be
entitled to receive prompt  reimbursement for all reasonable business and travel
expenses upon the companies  receipt of accountings  and in accordance  with the
company policy on expense reimbursement. When you are required to be in the U.S.
for   Dictaphone   business,   the  company  will  pay  for   reasonable   hotel
accommodations, meals and transportation.

7.  TAX MATTERS

            As we  discussed,  the company has agreed that  dependent  upon your
wishes and as is legally  appropriate  for  Dictaphone,  we will  structure your
payment and benefit  plans in such a way that is most tax efficient for you. You
acknowledge  that you will  remain  responsible  for the payment of all fees and
expenses of your  external tax  consultant  and retain  personal  liability  for
ensuring that the  appropriate  level of taxes have been paid to whatever taxing
authority you are deemed to be accountable to.

8.  SEVERANCE TERMS

            Your employment may be terminated at any time by the company with or
without  cause.  I have agreed to extend an  "Executive  Severance  Arrangement"
including a severance pay period of up to two times your current annual base pay
in the event that your  employment is  terminated  by Dictaphone  for any reason
other than cause. This severance





will also be offered  to you  should  your job be  eliminated  or a  substantial
reduction in your responsibilities and/or compensation occur.

            A  termination  for  cause  will  be  defined  as  your  termination
resulting  from a severe  breach of business  ethics,  a material  violation  of
stated   company  policy  which  would   otherwise   result  in  your  immediate
termination,  your  continued  failure or refusal to perform any of the material
duties or responsibilities (other than failure due to a disability as defined in
Dictaphone's Disability Policy) reasonably required by Dictaphone hereunder with
written notice and an opportunity to cure within 45 days of that written notice,
acts of gross misconduct or a breach of your representations and warranties made
to Dictaphone herein. In the event of a termination for cause, you shall receive
your salary up through the date of  termination  and other accrued  benefits and
pension rights.

            In addition to your  severance  pay you will be eligible for payment
for any earned and unpaid  annual  bonus  amount with respect to any fiscal year
ending  prior to the date of  termination  and, for the fiscal year in which the
termination occurred, a prorata portion equal to the bonus which would have been
payable with respect to such  termination year multiplied by a fraction equal to
(a) the number of days of the termination year elapsed prior to termination over
(b) 365.  Any such bonus or prorata  bonus will be paid in  accordance  with the
standard PBC bonus payments, normally in February of the subsequent fiscal year.

            Under the terms of this "Executive  Severance  Arrangement" you will
be  offered  your  salary  at the time of  separation  for a period of up to two
years, payable on regular pay days. In the event that it is agreed upon that the
severance will not continue beyond the first twelve months  severance pay may be
paid in a lump sum.  The first year of  severance  pay will be payable to you in
full  regardless  of your  employment  status  with any  other  company.  At the
conclusion of the first 12 months, if you have not secured employment elsewhere,
the  company  will  extend  your  severance  pay on a month by month basis for a
maximum of 12 additional months.  This extension,  at the company's  discretion,
will be dependent upon reasonable efforts to secure employment as judged by your
documented job search activities.

            In addition,  you will be eligible for out  placement  services at a
nationally  recognized  out  placement  firm of the  company's  choosing  at the
service levels  normally  afforded  Executive  Vice  Presidents for the first 12
months of the severance  period.  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 12 months or until you have
secured employment elsewhere.

            In any event, the PBC severance package or the "Executive  Severance
Arrangement"  will require you to sign,  as a condition  or receiving  severance
hereunder,  a severance  agreement  including a release of the company  from all
liability for any acts or violations  relative to any  administrative  procedure
and/or federal, state or local law(s) covering the employment relationship.  The
release  will also  include  a  non-compete,  non-  solicitation  of  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.

9.  DIRECTORS AND OFFICERS LIABILITY INSURANCE

            As a Vice  President  of the  company  you  will be  covered  by the
company's Director's and Officer's Liability Insurance as in effect from time to
time.  The company will not,  however,  indemnify  and hold you harmless for any
claims  arising from your prior  employers  with respect to your conduct or your
employment responsibilities in any case.

10.  OTHER CONTINGENCIES

            Your  offer of  employment  remains  contingent  upon the  following
conditions:

            o     Completion of the patent and confidentiality agreement.  A
                  copy of this has been forwarded to you with my letter of
                  December 22, 1995.

            o     Compliance,  as an express  condition of employment,  with the
                  Dictaphone's  drug free  workplace and substance  abuse policy
                  statement  including  passing a pre-employment  drug screening
                  test.

11.  LAW APPLICABLE

            This  Agreement,  the rights and  obligations of the parties hereto,
and any claims or disputes relating thereto,  shall be governed by and construed
in accordance  with the laws of the State of New York  (applicable to agreements
to be entered into and performed wholly within such state).

12.  SUMMARY

            I trust this addresses all major issues  relative to your employment
offer  with  Dictaphone  Corporation.  I am  confident  that you will  find this
position to be challenging and rewarding and afford you an opportunity to make a
significant  contribution to the future of Dictaphone. I remain hopeful that you
will be able to begin this position no later than March 1, 1996.  Please confirm
to me as soon as is reasonable  what your  expected  start date will be and what
benefit  structure and payroll  structure is most  appropriate for your personal
circumstances.

            This letter  contains all of the terms of your  proposed  employment
with  Dictaphone;  no change or  modification  of such terms shall be  effective
unless set forth in writing,  signed by yourself  and  Dictaphone.  Further,  by
signing below you represent and





warrant that your  employment  with  Dictaphone  hereunder  will not violate the
terms of any agreements to which you are bound.

                                       Sincerely,


                                       /s/ Xxxx X. Xxxxxxx
                                       Xxxx X. Xxxxxxx
                                       Chairman and Chief Executive Officer


Agreed and Accepted:


/S/ XXXXXX X. XXXXXXX
Xxxxxx X. Xxxxxxx
Date:






================================================================================
                                                          Minimum EBITDA and
        Dictaphone                                    Qualify/PERCENTAGE OVER PY
          RATING                   DICTAPHONE
================================================================================
             1              Less than 85% of          Less than $64.5 Million
                            Budgeted EBITDA           --
--------------------------------------------------------------------------------
             2              85 - 89% of Budgeted      $64.5 Million
                            EBITDA                    --
--------------------------------------------------------------------------------
             3              90 - 93% of Budgeted      $68.4 Million
                            EBITDA                    6%
--------------------------------------------------------------------------------
             4              94 - 100% of Budgeted     $71.0 Million
                            EBITDA                    10%
--------------------------------------------------------------------------------
             5              Greater than 100% of      $75.9 Million
                            Budgeted EBITDA           18%
--------------------------------------------------------------------------------

                       1996 Budgeted EBITDA $75.8 Million

                      1995 Forecasted EBITDA $64.5 Million

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                         PBC GROUP II INCENTIVE GUIDE
                                35% TARGET GRID


                                INDIVIDUAL RATING



              ------------------------------------------------------------------
 DICTAPHONE        1              2              3              4            5
   RATING
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     1             0              0             20             31           36

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     2             0              0             28             34           40

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     3             0             10             35             41           48

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     4             0             12             40             46           53

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     5             0             14             44             52         60-100

--------------------------------------------------------------------------------