LOAN AGREEMENT

LOAN AGREEMENT dated as of April 14, 1997 entered into by and between
Lernout & Hauspie Speech Products USA, Inc., a Delaware corporation having a
place of business at 20 Burlington Mall Road, Burlington, Massachusetts 01803
("Lender") and Kurzweil Applied Intelligence, Inc., a Delaware corporation
having a place of business in Waltham, Massachusetts ("Borrower").

W I T N E S S E T H:
--------------------

WHEREAS, Borrower has requested that Lender make available to Borrower
a line of credit in the amount of up to $1,500,000 to finance Borrower's license
payments and working capital needs;

WHEREAS, Lender is willing to do so, but only on the terms and subject
to the conditions set forth herein;

NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Borrower and
Lender agree as follows.

1. CERTAIN DEFINITIONS. As used herein the terms set forth on Schedule
I hereto shall have the meanings set forth thereon.

2. THE LOAN.

(a) At any time after the date hereof through June 30, 1997 (the
"Commitment Period"), Lender shall, at Borrower's request, make a loan to
Borrower (the "Loan"), subject to the terms and conditions contained in this
Agreement and in an aggregate amount not to exceed $1,500,000. Once repaid, the
Loan may not be reborrowed. The Loan shall be due and payable as set forth in
the Line of Credit Note.

(b) The Loan shall be evidenced by the Line of Credit Note in the form
of Exhibit A hereto. The Loan shall bear interest and be payable as set forth in
the Line of Credit Note.

(d) Borrower may request that Lender advance the Loan on not less than
seven (7) days' prior written notice to Lender, made after the satisfaction of
the conditions precedent set forth below. The Lender shall make only one advance
hereunder. Lender shall make the Loan available to Borrower by wire transfer or
otherwise as Borrower requests in its notice to advance

the Loan (provided that Borrower shall reimburse Lender for any administrative
expense (wire transfer fees and the like) incurred by Lender in connection with
such advance methods, except for an advance by bank or certified check).

3. REPRESENTATIONS AND WARRANTIES. The representations and warranties
made by Borrower to Lender with respect to its business, properties, financial
statements and related matters under Article II of that certain Agreement and
Plan of Merger by and among Borrower, Lernout & Hauspie Speech Products N.V. and
Trappist Acquisition Corp. dated as of April 14, 1997 (the "Merger Agreement")
are hereby incorporated by reference. By executing this Agreement, Borrower
shall be deemed to have made such representations and warranties as of the date
hereof. In addition, the Borrower represents as follows:

(a) Its exact legal name is as set forth in the preamble to this
Agreement and Borrower is not generally known by or using any fictitious or
other name or trade name or style.

(b) Its chief executive office and the office where it keeps its books
and records concerning its assets is that shown in the preamble to this
Agreement.

4. BORROWER'S AGREEMENTS. The agreements and covenants made by Borrower
to Lender under Article IV of the Merger Agreement are hereby incorporated by
reference. By executing this Agreement, Borrower shall be deemed to have made
such agreements and covenants as of the date hereof. In addition, the Borrower
agrees as follows:

(a) Borrower will notify Lender, at least thirty (30) days prior to any
such event, of any change in Borrower's exact legal name, any change in its
place of business or location as set forth in the preamble to this Agreement, or
its establishment of any new place of business or location, or any change in
Borrower's organizational structure.

(b) Borrower will not incur any indebtedness or other obligations after
the date of this Agreement from Prospect Leasing Division of Bankers Leasing
Association, Inc.

5. EVENTS OF DEFAULT; REMEDIES.

Upon the occurrence and during the continuance of an Event of Default
(as defined on Schedule I hereto), (a) the Borrower shall have no further right
to request the Loan hereunder, (b) the Loan shall bear interest at the Default
Rate of Interest, as defined in the Line of Credit Note, (c) the Lender may by
notice to Borrower accelerate the payment of the Loan and all other obligations
of Borrower hereunder and demand payment thereof; and (d) Lender may proceed to
enforce payment of any of the foregoing and shall have and may exercise any and
all rights under the Uniform Commercial Code or which are afforded to Lender
herein, in the Security Agreement and other collateral documents executed in
connection herewith, or otherwise. Notwithstanding the foregoing, Lender shall
forbear from the exercise of its rights to foreclose or otherwise realize upon
or take possession of or use Borrower's intellectual property (including without
limitation, patents, trademarks and copyrights) until the earlier of ninety(90)
days after the occurrence of an Event of Default or January 31, 1998, so long as
(i) there occurs and is

continuing no Event of Default of the type described in subsections (f) or (g)
of the definition of such term, and (ii) Borrower does not take any action to
contest the validity or priority of Lender's lien and security interest in such
intellectual property, or any other collateral.

6. EXPENSES. Borrower agrees to pay Lender on demand any and all
reasonable out-of-pocket costs and expenses of any nature (including without
limitation reasonable attorneys' fees and disbursements) which may be incurred
by Lender in connection with exercise of Lender's rights against the Borrower
after an Event of Default; any exercise of Lender's right of acceleration; any
enforcement, collection or other proceedings with respect to the Loan; or any
bankruptcy, insolvency or other similar proceedings of the Borrower.

7. CONDITIONS PRECEDENT.

Borrower acknowledges and agrees that Lender will not make the Loan
hereunder, nor will Lender entertain any request from Borrower for the Loan
hereunder, unless and until all of the following conditions have been satisfied
and remain satisfied as of the date of funding the Loan:

(a) Representations and Warranties. Borrower's representations and
warranties contained herein shall be correct and complete in all material
respects;

(b) Covenants. Borrower shall be in compliance in all material respects
with all covenants and agreements contained herein;

(c) No Events of Default. There shall exist no Event of Default or any
event which, with the passage of time or the giving of notice or both, would
constitute an Event of Default;

(d) Delivery of Documents. Borrower shall have delivered, or caused to
be delivered, to Lender the documents listed on Schedule II, duly executed bythe
Borrower, and in form and substance reasonably satisfactory to Lender;

(e) Merger Agreement. The Merger Agreement shall not have been
terminated by any party thereto, nor shall the Merger (as defined in the Merger
Agreement) have been abandoned (provided that the termination of the Merger
Agreement or abandonment of the Merger by Lernout & Hauspie Speech Products,
N.V. other than explicitly in accordance with the Merger Agreement shall not
constitute the failure of this condition).

8. MISCELLANEOUS PROVISIONS.

(a) Notices. Unless otherwise specified herein, all other notices
hereunder shall be in writing directed to the addresses shown at the end of this
Agreement. Written notices and communications shall be effective and shall be
deemed received on the day when delivered by hand or by facsimile transmission;
on the next business day, if by commercial overnight courier; and on the third
business day, if by registered or certified mail, postage prepaid.

(b) No Waiver. No failure to exercise and no delay in exercising, on
the part of Lender, any right or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right or remedy. Waiver by
Lender of any right or remedy on any one occasion shall not be construed as a
bar to or waiver thereof or of any other right or remedy on any future occasion.
Lender's rights and remedies hereunder, under any agreement or instrument
supplemental hereto or under any other agreement or instrument shall be
cumulative, may be exercised singly or concurrently and are not exclusive of any
rights or remedies provided by law.

(c) Assignment. This Agreement shall be binding upon and shall inure to
the benefit of Borrower and Lender and their respective successors and assigns;
PROVIDED THAT Borrower may not assign or transfer any rights or obligations
hereunder without Lender's prior written consent.

(d) Governing Law; Jurisdiction. This Agreement shall be governed by
the laws of the Commonwealth of Massachusetts (other than its laws relating to
conflicts of laws).

[SIGNATURE PAGE TO LOAN AGREEMENT]

Executed as an instrument under seal on the date set forth above.

KURZWEIL APPLIED INTELLIGENCE, INC.

By: /s/ Thomas E. Brew Jr.
--------------------------------
Name: Thomas E. Brew Jr.
Title: President & CEO

Address:
--------

411 Waverley Oaks Road
Waltham, MA 02154

LERNOUT & HAUSPIE SPEECH PRODUCTS
USA, INC.

By: /s/ Gaston Bastiaens
--------------------------------
Name: Gaston Bastiaens
Title: President

Address:
--------

20 Burlington Mall Road
Burlington, MA 01803

EXHIBIT A
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[LINE OF CREDIT NOTE]

LINE OF CREDIT NOTE

$1,500,000.00 Boston, Massachusetts
April 14, 1997

FOR VALUE RECEIVED, the undersigned KURZWEIL APPLIED INTELLIGENCE, INC. a
Delaware corporation ("Maker"), hereby promises to pay to the order of LERNOUT &
HAUSPIE SPEECH PRODUCTS USA, INC., a Delaware corporation, at its place of
business at 20 Burlington Mall Road, Burlington, Massachusetts 01803 ("Lender"),
the sum of ONE MILLION FIVE HUNDRED THOUSAND DOLLARS ($1,500,000.00), or so much
as may have been advanced to Maker as provided in that certain Loan Agreement
(the "Loan Agreement") dated as of the date hereof between Maker and Lender,
together with interest on the unpaid principal amount from time to time
outstanding prior to demand at a fixed rate per annum equal to the Prime Rate in
effect as of the date hereof.

Prior to the occurrence of an Event of Default, as defined in the Loan
Agreement, interest shall accrue but shall not be payable currently. All
outstanding principal and interest shall be due and payable in full on October
31, 1997.

After the occurrence and during the continuance of an Event of Default, (a)
principal outstanding hereunder shall bear interest at a fixed rate equal to the
sum of the Prime Rate in effect as of the date hereof plus three percent (3%)
per annum (the "Default Rate of Interest"), and (b) the Lender shall be entitled
to accelerate all outstanding principal and interest due hereunder and demand
immediate payment in full of the same.

Interest and fees shall be calculated on the basis of a 360-day year times the
actual number of days elapsed. "Prime Rate," as used herein, shall mean for any
day the highest "prime rate" published in The Wall Street Journal under the
heading "Money Rates" on such day (or on the next day on which The Wall Street
Journal is published). In no event shall interest payable hereunder exceed the
highest rate permitted by applicable law. To the extent any interest received by
Lender exceeds the maximum amount permitted, such payment shall be credited to
principal, and any excess remaining after full payment of principal shall be
refunded to Maker. This Note evidences borrowings under the Loan Agreement and
is secured by and entitled to the benefits of the provisions of the Loan
Agreement and any other instruments or documents executed in connection
therewith. The principal of this Note is subject to prepayment in full or in
part at any time without premium or penalty.

Maker and all guarantors and endorsers hereby waive presentment, demand, notice,
protest, and all other demands and notices in connection with the delivery,
acceptance, performance and enforcement of this Note, and assent to extensions
of the time of payment or forbearance or other indulgence without notice. No
delay or omission of Lender in exercising any right or remedy hereunder shall
constitute a waiver of any such right or remedy. Acceptance by Lender of any

payment after demand shall not be deemed a waiver of such demand. A waiver on
one occasion shall not operate as a bar to or waiver of any such right or remedy
on any future occasion.

Executed as an instrument under seal as of the date first above written.

WITNESS: KURZWEIL APPLIED INTELLIGENCE, INC.

/s/ By: /s/ Thomas E. Brew Jr.
- ----------------------------- --------------------------------
Name: Thomas E. Brew Jr.
Title: President & CEO

-2-

SCHEDULE I
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DEFINITIONS
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"Event of Default" means any one or more of the following events:

(a) failure by Borrower to pay any principal, interest or
other amount due hereunder or on account of the Loan, within five (5)
days of the date when due;

(b) failure by Borrower to perform or discharge, observe or
comply with any of its covenants or agreements set forth herein or in
the Line of Credit Note or Security Agreement, (or any of the other
security documents delivered in connection herewith), or under Article
IV of the Merger Agreement in accordance with the terms thereof
(provided that except for defaults under Sections 4.4(c), (e), (i) or
(j) of the Merger Agreement, such failure shall not constitute an Event
of Default unless the same has not been waived by Lender or cured
within 15 days after the occurrence of failure);

(c) any representation, warranty of Borrower to Lender set
forth herein is found to have been false or misleading in any material
respect as of the time when made;

(d) Borrower's liquidation, termination, dissolution or
ceasing to carry on any substantial part of its current business;

(e) The consummation of any Business Combination Transaction,
as defined in Section 6.5(e) of the Merger Agreement.

(f) commencement by Borrower of a voluntary proceeding seeking
relief with respect to itself or its debts under any bankruptcy,
insolvency or other similar law, or seeking appointment of a trustee,
receiver, liquidator or other similar official for it or any
substantial part of its assets; or its consent to any of the foregoing
in an involuntary proceeding against it; or Borrower shall generally
not be paying its debts as they become due or admit in writing its
inability to do so; or an assignment for the benefit of, or the
offering to or entering into by Borrower of any composition, extension,
reorganization or other agreement or arrangement with, its creditors;
or

(g) commencement of an involuntary proceeding against Borrower
seeking relief with respect to it or its debts under any bankruptcy,
insolvency or other similar law, or seeking appointment of a trustee,
receiver, liquidator or other similar official for it or any
substantial part of its assets, which proceeding is not dismissed or
stayed within sixty (60) days.

"Line of Credit Note" means the note executed and delivered by Borrower to
Lender in the form of Exhibit A hereof, made to evidence the Loan.

"Loan" has the meaning given in Section 2(a) hereof.

SCHEDULE II
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CLOSING AGENDA
--------------

$1,500,000 Loan
from Lernout & Hauspie Speech Products USA, Inc.
to Kurzweil Applied Intelligence, Inc.

Closing Date: April __, 1997

Responsible
Document Party
-------- -----

1. Loan Agreement BRF&G

2. Line of Credit Note BRF&G

3. Security Agreement BRF&G

4. Patent Collateral Assignment and Security Agreement BRF&G

5. Trademark Collateral Assignment and Security Agreement BRF&G

6. Copyright Security Agreement BRF&G

7. UCC financing statements BRF&G

8. Stock Warrant BRF&G

9. Casualty and Liability Insurance Certificates, showing Lender as Borrower
loss payee and additional insured