PEABODY, Mass., August 6, 2002 - ScanSoft, Inc. (Nasdaq: SSFT), a leading supplier of digital imaging, speech and language solutions, today announced that it has proposed to representatives of Lernout & Hauspie Holdings and Lernout & Hauspie, N.V. (collectively, L&H) the terms of a transaction that are intended to provide for the orderly disposition of approximately 7.4 million shares of ScanSoft's common stock, which were issued as part of the Company's December 2001 purchase of the speech and language business of L&H. The proposed terms include ScanSoft's offer to:

Repurchase shares of its common stock worth $6.8 million from L&H at the closing price yesterday, August 5, 2002, of $4.79,

Issue approximately 300,000 shares to holders of the remaining six million shares as consideration for holding ScanSoft shares for a period of one year, and

Effect the orderly disposition of the remaining shares after one year, through a public offering.

"Because we believe ScanSoft's shares are significantly undervalued, the combination of an immediate share buyback and 12-month holding period serves to maximize value to both our shareholders and the L&H creditors," said Paul Ricci, chairman and CEO of ScanSoft. "As the L&H assets continue to perform beyond our expectations, this proposal is designed to give the creditors additional opportunity to participate in the Company's growth."

ScanSoft made this proposal to L&H representatives today and has asked for a response by the close of business on Friday, August 9, 2002.

On December 12, 2001, ScanSoft announced that it had closed the acquisition of substantially all the operating and technology assets of L&H's Speech and Language Technologies business. Consideration for the transaction comprised $10 million in cash, a $3.5 million note and 7.4 million shares of ScanSoft stock. The U.S. Bankruptcy Court for the District of Delaware approved the transaction on December 11, 2001.

About ScanSoft, Inc.

ScanSoft, Inc. (Nasdaq: SSFT) is the leading supplier of imaging, speech and language solutions that are used to automate a wide range of manual processes - saving time, increasing worker productivity and improving customer service. For more information regarding ScanSoft products and technologies, please visit www.scansoft.com.

Trademark reference: ScanSoft and the ScanSoft logo are registered trademarks or trademarks of ScanSoft, Inc. in the United States and other countries. All other company or product names mentioned may be the trademarks of their respective owners.

Safe Harbor Statement

Except for the historical information contained herein, this press release includes forward-looking statements within the meaning of Section 21(e) of the Securities Exchange Act of 1934. These statements include those regarding the value of ScanSoft shares, the maximization of value to stockholders and L&H creditors should the proposal be accepted and the performance of the speech and language business. These statements are based on ScanSoft's current expectations; estimates as to prospective events and circumstances that may or may not be in ScanSoft's control and as to which there can be no firm assurances given. These forward-looking statements are subject to risks and uncertainties and there can be no assurance that any of these forward-looking statements may prove to be correct and actual results may differ materially. These risks and uncertainties include, but are not limited to, the possibility that L&H will not accept this proposal or any proposal at all, the ability to agree to reasonable terms with L&H, delays in reaching an agreement with L&H, potential volatility in ScanSoft's stock price, uncertainty in the market regarding L&H's disposition of ScanSoft common stock, and other risks detailed from time to time in ScanSoft's SEC reports. ScanSoft disclaims any intent or obligation to update these forward-looking statements.

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