<PAGE>


            STOCK OPTION AGREEMENT dated as of August 1, 1997 between DICTAPHONE
CORPORATION, a Delaware corporation (the "COMPANY"), and PETER P.
TONG (the "PARTICIPANT").

            WHEREAS, the Participant is currently a non-employee director of the
Company or one of its  Subsidiaries  and,  pursuant to the Company's  Management
Stock Option Plan, as may be amended consistent therewith, (the "PLAN") and upon
the terms and  subject to the  conditions  hereinafter  set forth,  the  Company
desires to provide the Participant  with an incentive to remain as a Director of
the  Company or one of its  Subsidiaries  and to  increase  his  interest in the
success of the Company by granting to the Participant nonqualified stock options
(the  "OPTIONS")  to purchase  shares of Common Stock,  par value $0.01,  of the
Company (the "COMMON STOCK");

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

            1. DEFINITIONS;  INCORPORATION OF PLAN TERMS. Capitalized terms used
herein without  definition shall have the meanings assigned to them in the Plan,
a copy of which is attached hereto.  This Agreement,  the Options and the shares
of Common Stock issued pursuant to the exercise of Options (the "OPTION SHARES")
shall be subject to the Plan, the terms of which are hereby  incorporated herein
by reference, and in the event of any conflict or inconsistency between the Plan
and this Agreement, the Plan shall govern. The Date of Grant with respect to the
Options shall be the date specified at the foot of the signature page hereof.

            2. STOCKHOLDERS AGREEMENT; CERTAIN RESTRICTIONS.  In accordance with
Section 6(f) of the Plan, the  Participant  and the Company hereby confirm that,
effective  as of the date hereof,  the  Participant  shall,  for purposes of the
Stockholders  Agreement,  be deemed to be a  "Stockholder"  with  respect to the
Options and the Option Shares and the Participant  agrees to be bound by all the
terms of the Stockholders  Agreement  applicable to such a Stockholder.  None of
the Option  Shares may be sold,  transferred,  assigned,  pledged,  or otherwise
encumbered  or disposed  of to any third party other than the Company  except as
provided in the  Stockholders  Agreement or the Plan. None of the Options may be
sold,  transferred,  assigned,  pledged, or otherwise encumbered or disposed of,
except by will or the laws of descent and distribution. During the Participant's
lifetime, an Option shall be exercisable only by the Participant. Each Permitted
Transferee  (other than the Company) of any Option or Option  Share shall,  as a
condition to the  transfer  thereof,  execute an agreement  pursuant to which it
shall become a party to the Stockholders Agreement and this Agreement.

            3. GRANT OF OPTIONS.  Subject to the terms and conditions  contained
herein and in the Plan, the Company hereby grants to the Participant,  effective
as of the Date of Grant, 10,000 Service Options.  Each such Option shall entitle
the  Participant to purchase,  upon payment of the Option Price specified at the
foot of the signature page hereof,  one share of Common Stock. The Options shall
be exercisable as hereinafter provided.

            4.  TERMS  AND  CONDITIONS  OF  OPTIONS.   The  Options  evidenced
hereby are subject to the following terms and conditions:


<PAGE>


            (a)  DURATION  OF OPTIONS.  The period for which  these  Options are
      effective  shall  commence upon the Date of Grant and shall continue until
      these  Options  are  terminated  as  hereinafter   provided  (the  "OPTION
      PERIOD").  Except as otherwise  expressly provided in Section 4(a) hereof,
      the Options (whether or not exercisable) shall terminate  immediately upon
      an Employee's  ceasing to be an employee or, in the case of a Director,  a
      Director's ceasing to be a member of the Board of Directors of the Company
      or any of its  subsidiaries.  The  Option  Period of these  Options  shall
      terminate  upon the earliest to occur of (1) the tenth  anniversary of the
      date  hereof;  (2) the close of  business on the date on which the Company
      acquires any shares of any class of Common Stock owned by the  Participant
      or his Permitted  Transferees  (as defined in the  Stockholders  Agreement
      dated August 11, 1995, by and among the Company,  the Management Investors
      (as defined in the Stockholders  Agreement),  the Stonington  Investor (as
      defined in the Stockholders Agreement) and the Institutional Investors (as
      defined in the Stockholders Agreement)(as in effect from time to time, the
      "STOCKHOLDERS  AGREEMENT"))  or any Option held by him or his  estate,  in
      each case in connection  with a Put Event (as defined in the  Stockholders
      Agreement);  (3) the close of  business  on the date on which the  Company
      acquires  all  shares  of Common  Stock  owned by the  Participant  or his
      Permitted  Transferee and Options held by him or his estate,  in each case
      in  connection  with  a  Call  Event  (as  defined  in  the   Stockholders
      Agreement); and (4) the following dates:

                  (i)     the  six-month  anniversary  of the date upon  which
            the  Participant  holding such Option  ceases to be an employee or
            director of the Company or its subsidiaries by reason of death;

                  (ii) unless otherwise  specifically  provided in any agreement
            between the Participant and the Company or one of its  subsidiaries,
            the  thirty-day  anniversary  of  the  date  of  the  Retirement  or
            Disability (as such terms are defined in the Stockholders Agreement)
            of the Participant if the  Participant  retires or is disabled while
            an employee  or director of the Company or any of its  subsidiaries,
            or the thirty-day anniversary of the date of Involuntary Termination
            (as defined in the Stockholders Agreement) of the Participant; or

                  (iii) immediately upon a Participant's  Voluntary  Resignation
            (as  defined  in  the  Stockholders  Agreement)  or  termination  of
            employment  or   directorship   with  the  Company  or  any  of  its
            subsidiaries for Cause (as defined in the  Stockholders  Agreement);
            PROVIDED,  HOWEVER,  that  notwithstanding  anything to the contrary
            contained in clauses (i), (ii) or (iii) of this Section 4(a), in the
            event that prior to the time that any Option would  otherwise  cease
            to be exercisable  pursuant to such clauses (i), (ii), or (iii), the
            Participant  (A)  exercises a "Put Right" with  respect to such "Put
            Options"  (as  such  terms  are  described  in  Section  3.1  of the
            Stockholders  Agreement) and (B) withdraws all of his Put Options as
            provided in the last sentence of Section 3.1(b) of the  Stockholders
            Agreement  because a  Restriction  (as  defined in the  Stockholders
            Agreement)  prevents  payment  by the  Company in cash in respect of
            such Put  Options,  then such  Options  shall not expire,  and shall
            continue to be exercisable  until the earlier of

                                      -2-

<PAGE>

            (x) the  acquisition  by the  Company  for cash of such Put  Options
            pursuant to Section  3.1(e) or 3.2(d) (or by the Company's  designee
            pursuant to Section 3.1(f) or 3.2(c)) of the Stockholders Agreement;
            (y) the later of (1) the thirtieth  day after the  expiration of any
            applicable  "holdback" or similar  arrangement  that the Participant
            has entered into with one or more underwriters in connection with an
            IPO  (as  defined  in the  Stockholders  Agreement),  (2) if no such
            agreement is entered into, the thirtieth day after an IPO or (3) the
            thirtieth  day  following  the   effectiveness   of  a  registration
            statement on Form S-8 with respect to the Option Shares; and (z) the
            tenth anniversary of the date hereof. In addition, in the event that
            the  Participant  has  delivered  to the  Company a Put  Notice  (as
            defined in the Stockholders  Agreement) with respect to Put Options,
            and has not withdrawn such Put Notice  pursuant to Section 3.1(b) of
            the  Stockholders  Agreement,  the related  Option  shall not expire
            until it has been  acquired  by the  Company  (or a designee  of the
            Company)  pursuant  to  Section  3.1  or  3.2  of  the  Stockholders
            Agreement.

            (b) EXERCISABILITY AND VESTING OF OPTIONS. Options granted hereunder
      shall become  exercisable  pursuant to the following  terms and (except as
      otherwise expressly provided for hereunder or in any agreement between the
      Company  and the  Participant)  only if the  Employee  is  employed by the
      Company or any of its subsidiaries  (as determined  pursuant to Section 10
      of the Plan)  or, in the case of a  Director,  only if the  Director  is a
      member of the Board of Directors of the Company or any of its subsidiaries
      on the date on which  such  Option  becomes  exercisable.  An  Option  (or
      portion thereof) which becomes  exercisable  pursuant to the terms of this
      Section  4(b) is referred  to as a "VESTED  OPTION."  The Options  granted
      hereunder  shall  vest and become  exercisable  as of the  effective  date
      hereof upon the  execution and delivery of this  Agreement by  Participant
      and the Company.

            (c) PROCEDURE FOR EXERCISE AND PAYMENT FOR SHARES. Exercise of these
      Options shall be made by the  Participant's  giving  written notice to the
      Company.  Such written notice shall be deemed  sufficient for this purpose
      only if it (i) is delivered to the Company at its principal offices,  (ii)
      states the  number of Option  Shares  with  respect to which the Option is
      being  exercised,  and (iii)  states the date,  no earlier  than the fifth
      business day after,  and no later than the tenth  business day after,  the
      date of such notice,  upon which the Option  Shares shall be purchased and
      payment  therefor shall be made. The payments for Option Shares  purchased
      pursuant  to  exercise  of these  Options  shall be made at the  principal
      offices of the Company. Upon (x) the exercise of any Option, in compliance
      with the  provisions of this Section  4(c),  (y) receipt by the Company of
      the payment for the Option  Shares so purchased  together with cash in the
      amount of (or the making of arrangements  referred to in Section 13 of the
      Plan with respect to) any taxes  required to be collected or withheld as a
      result of the exercise of this  Option,  and (z) receipt by the Company of
      an executed copy of the Stockholders Agreement (unless such Participant is
      already a party thereto or the Company receives such other evidence as the
      Company may reasonably  require to ensure that the Option Shares  issuable
      upon  exercise  of  the  Option  will  be  subject  to  the   Stockholders
      Agreement),  the Company  shall  deliver

                                      -3-

<PAGE>

      or cause to be  delivered to the  Participant  so  exercising  an Option a
      certificate or  certificates  for the number of Option Shares with respect
      to which these  Options  are  exercised  and  payment is made.  The Option
      Shares  shall be  registered  in the name of the  exercising  Participant;
      PROVIDED  that in no event shall any Option  Shares be issued  pursuant to
      exercise of an Option until full payment  therefor shall have been made in
      one of the manners set forth below; and PROVIDED, FURTHER, that until such
      payment has been made, the exercising  Participant shall have no rights of
      a shareholder.  For purposes of this paragraph, the date of issuance shall
      be the date upon which payment in full has been received by the Company as
      provided herein.  Notwithstanding  the foregoing,  if a Put Right has been
      exercised  by the  Participant  or a Call Right has been  exercised by the
      Company  pursuant  to the  Stockholders  Agreement,  with  respect  to the
      Option,  such Option  shall be  cancelled,  effective  upon receipt by the
      Participant  of  the  consideration   provided  for  in  the  Stockholders
      Agreement.  The  exercise  price  shall be payable at the  election of the
      Participant,  in whole or in part, in any one or a combination  of cash or
      Mature  Common Stock valued at the Fair Value Price (as defined  below) as
      of the date the  notice of  exercise  is  given.  Mature  Common  Stock is
      defined as shares of Common Stock held by such  Participant  for more than
      six months.

            (d)   CASH-OUT OF CERTAIN OPTIONS.

                  (i)  Without  limiting  any  rights of the  Company  under the
            Stockholders Agreement,  the Committee or the Board of Directors may
            in its sole  discretion  cancel the vested  portion of any Option or
            Options  held by a person who is at such time no longer an  employee
            or  director of the Company or its  subsidiaries  in exchange  for a
            cash  payment  equal to the excess of (x) the Fair  Value  Price (as
            defined in the Plan) of the  Option  Shares  subject to such  Vested
            Option, over (y) the Option Price for such Option Shares, multiplied
            by the number of Option Shares  subject to such  cancelled  Options;
            PROVIDED,  HOWEVER,  that the exercise of the right of the Committee
            or Board of Directors  hereunder shall not be made in  contemplation
            of a Sale or an IPO.

                  (ii)  Without  limiting  any rights of the  Company  under the
            Stockholders Agreement,  the Committee or the Board of Directors may
            cancel any outstanding Options in exchange for a cash payment, or in
            the discretion of the Committee or the Board of Directors payment of
            other property,  to the  Participant  equal to the excess of (x) the
            fair  market  value  (as  determined  in good  faith by the Board of
            Directors  of  the  Company)  of  the  consideration   received  per
            Stonington Share by the Stonington  Investor in any sale (by merger,
            stock  purchase or  otherwise) to a Person which is not an Affiliate
            of the Company or any Stonington Investor of all the then issued and
            outstanding  Stonington  Shares  (as  defined  in  the  Stockholders
            Agreement) (a "TRANSFER EVENT"),  over (y) the Option Price for such
            Option Shares,  multiplied by the number of Option Shares subject to
            such cancelled Options, in each case effective upon the consummation
            of the Transfer Event.

                                      -4-

<PAGE>


            (e) STOCKHOLDER  RIGHTS.  The Participant  shall have no rights as a
      stockholder with respect to any Option Shares until such Participant shall
      have exercised the related Options and until a certificate or certificates
      evidencing such shares shall have been issued to the  Participant,  and no
      adjustment shall be made for dividends or distributions or other rights in
      respect of any share for which the  record  date is prior to the date upon
      which the Participant shall become the holder of record thereof.

            (f) DIVIDENDS AND DISTRIBUTIONS. Any shares of Common Stock or other
      securities  of the Company  received by the  Participant  as a result of a
      stock  distribution  to holders of Option  Shares,  as a stock dividend on
      Option Shares or pursuant to a similar transaction shall be subject to the
      same  restrictions  as such Option  Shares,  and all  references to Option
      Shares hereunder shall be deemed to include such shares of Common Stock or
      other securities.

            5. REQUIREMENTS OF LAW AND OF CERTAIN AGREEMENTS.  If any law or any
regulation of any commission or agency of competent  jurisdiction  shall require
the Company or the exercising Participant to take any action with respect to any
Option  Shares,  then the date upon which the Company shall issue or cause to be
issued the certificate or certificates for such Option Shares shall be postponed
until  full  compliance  has been  made  with all  such  requirements  of law or
regulation;  PROVIDED that the Company shall use reasonable  efforts to take all
necessary action to comply with such requirements of law or regulation. Further,
if  requested  by the  Company,  at or before the time of the  issuance  of such
Option Shares,  the Participant  shall deliver to the Company his or her written
statements  satisfactory  in form and  content  to the  Company,  that he or she
intends to hold the Option Shares so acquired by him or her for  investment  and
not with a view to  resale  or  other  distribution  thereof  to the  public  in
violation of the Securities Act or any applicable state securities or "blue sky"
law.  Moreover,  in the  event  that the  Company  shall  determine  in its sole
discretion  that, in compliance with the Securities Act or any applicable  state
securities  or "blue sky" law, it is  necessary  to  register  any of the Option
Shares,  or to qualify  any such  Option  Shares for  exemption  from any of the
requirements  of  the  Securities  Act  or  any  other  applicable   statute  or
regulation,  no Options  may be  exercised  until the  required  action has been
completed;  PROVIDED that the Company shall use  reasonable  efforts to take all
necessary  action to comply with such  requirements  of law or  regulation.  All
Option Shares shall bear the legends provided for in the Stockholders Agreement.

            6.  MISCELLANEOUS.

            (a) NO RIGHTS TO GRANTS OR  CONTINUED  EMPLOYMENT.  The  Participant
      shall not have any claim or right to receive  grants of Options  under the
      Plan.  Neither the Plan nor this Agreement nor any action taken or omitted
      to be taken hereunder or thereunder shall be deemed to create or confer on
      the  Participant  any right to be retained in the employ of the Company or
      any  Subsidiary or other  affiliate  thereof,  or to interfere  with or to
      limit  in any way the  right of the  Company  or any  Subsidiary  or other
      affiliate  thereof to terminate the  employment of the  Participant at any
      time.

            (b) TAX  WITHHOLDING.  No later  than the date as of which an amount
      first  becomes  includible  in the  gross  income of the  Participant  for
      Federal  income  tax  purposes  with  respect  to Option  Shares  acquired
      pursuant to the exercise of any Option  hereunder,  such Participant shall
      pay to the Company,  or make arrangements  reasonably  satisfactory to the
      Company  regarding  the payment of, any Federal,  state,  local or foreign
      taxes of any kind  required  by law to be  withheld  with  respect to such
      amount;  PROVIDED,  HOWEVER,  that such  arrangements need not involve the
      advancement  by the  Company  of any  funds  to,  for or on  behalf of any
      Participant  or the  incurrence  or payment by the Company of any

                                      -5-

<PAGE>

      costs or  expenses.  The  obligations  of the Company  hereunder  shall be
      conditional on such payment or arrangements, and the Company shall, to the
      extent  permitted by law, have the right to deduct any such taxes from any
      payment otherwise due to the Participant.

            (c) NO RESTRICTION ON RIGHT OF COMPANY TO EFFECT CORPORATE  CHANGES.
      Neither the Plan nor this  Agreement  shall affect in any way the right or
      power of the Company or its  stockholders  to make or authorize any or all
      adjustments,  recapitalizations,  reorganizations  or other changes in the
      capital   structure  or  business  of  the  Company,   or  any  merger  or
      consolidation  of the  Company,  or any  issue  of  stock  or of  options,
      warrants or rights to purchase stock or of bonds, debentures, preferred or
      prior preference  stocks whose rights are superior to or affect the Common
      Stock or the rights thereof or which are convertible  into or exchangeable
      for Common Stock, or the dissolution or liquidation of the Company, or any
      sale or  transfer  of all or any part of the  assets  or  business  of the
      Company,  or any other  corporate act or proceeding,  whether of a similar
      character or otherwise.

            (d) 1934 ACT. Notwithstanding anything contained in the Plan or this
      Agreement to the contrary,  if the  consummation of any transaction  under
      the Plan or this  Agreement  would  result in the possible  imposition  of
      liability to the  Participant  pursuant to Section  16(b) of the 1934 Act,
      the Board of Directors or the Committee  shall have the right, in its sole
      discretion,  but shall not be obligated,  to defer such transaction to the
      extent necessary to avoid such liability,  but in no event for a period in
      excess of 180 days.

            7.  SURVIVAL; ASSIGNMENT.

            (a) All agreements,  representations  and warranties made herein and
      in any certificates  delivered  pursuant hereto shall survive the issuance
      to  the   Participant   of  the  Options   and  the  Option   Shares  and,
      notwithstanding  any  investigation  heretofore  or hereafter  made by the
      Participant  or the  Company  or on  the  Participant's  or the  Company's
      behalf, shall continue in full force and effect. Without the prior written
      consent of the Company,  the  Participant may not assign any of his rights
      hereunder except by will or the laws of descent and distribution. Whenever
      in this Agreement any of the parties hereto is referred to, such reference
      shall be deemed to include the heirs and permitted  successors and assigns
      of such party;  and all agreements  herein by or on behalf of the Company,
      or by or on behalf of the Participant, shall bind and inure to the benefit
      of the heirs and permitted successors and assigns of such parties hereto.

            (b) The  Company  shall  have  the  right  to  assign  to any of its
      affiliates any of its rights,  or to delegate to any of its affiliates any
      of its obligations, under this Agreement.

            8.  CERTAIN  REMEDIES.  Without  intending  to  limit  the  remedies
available to the Company,  the Participant agrees that damages at law will be an
insufficient  remedy  in the event the  Participant  violates  the terms of this
Agreement.  The  Participant  agrees  that the  Company  may  apply for and have
injunctive or other equitable  relief in any court of competent  jurisdiction

                                      -6-

<PAGE>

to restrain the breach or  threatened  breach of, or otherwise  specifically  to
enforce, any of the provisions hereof.

            9. NOTICES. All notices and other communications provided for herein
shall be in  writing  and shall be  delivered  by hand or sent by  certified  or
registered mail, return receipt requested, postage prepaid, addressed, if to the
Participant,  to his  attention at the mailing  address set forth at the foot of
this Agreement (or to such other address as the Participant shall have specified
to the Company in writing)  and, if to the  Company,  c/o  Stonington  Partners,
Inc.,  767 Fifth Avenue,  New York,  New York 10153,  Attention:  Scott M. Shaw,
Principal.  All such  notices  shall be  conclusively  deemed to be received and
shall  be  effective,  if sent by hand  delivery,  upon  receipt,  or if sent by
registered  or  certified  mail,  on the fifth  day after the day on which  such
notice is mailed.

            10.  WAIVER.  The  waiver by  either  party of  compliance  with any
provision of this Agreement by the other party shall not operate or be construed
as a waiver of any  other  provision  of this  Agreement,  or of any  subsequent
breach by such party of a provision of this Agreement.

            11. ENTIRE  AGREEMENT;  GOVERNING  LAW. This Agreement and the other
related  agreements  expressly referred to herein set forth the entire agreement
and understanding  between the parties hereto and supersede all prior agreements
and understandings  relating to the subject matter hereof. This Agreement may be
executed  in one or more  counterparts,  each of which  shall be deemed to be an
original,  but all such counterparts shall together  constitute one and the same
agreement.  The headings of sections and subsections  herein are included solely
for  convenience  of  reference  and shall not affect the  meaning of any of the
provisions of this Agreement. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York.

            IN WITNESS  WHEREOF,  the Company has caused  this  Agreement  to be
executed by its duly  authorized  officer and the  Participant has executed this
Agreement, both as of the day and year first written above.

                                   DICTAPHONE CORPORATION


                                   By:   /s/ Daniel P. Hart
                                        ------------------------------
                                   Name:     Daniel P. Hart
                                   Title:    Vice President, Business
                                             Development and General Counsel

                                   PARTICIPANT

                                         /s/ Peter P. Tong
                                   ------------------------------------
                                   Name:     Peter P. Tong


Number of Service Options:    10,000

Option Price:                 $10.00

Effective Date of Grant:      August 1, 1997


                                      -7-