The two companies first entered into a multi-million marketing arrangement in Spring 1998. Dragon Systems' products, including Dragon Point & Speak, an entry-level continuous dictation product, are fully compatible with AOL, including e-mail, Internet chat rooms, and AOL Instant Messenger. The extremely positive customer response to the offerings led to the expanded relationship.

"Dragon Systems' products have enhanced our members' online experience," said Jan Brandt, AOL's President of Marketing. "We look forward to exploring other initiatives with Dragon to further enhance and deploy Dragon's speech technology on AOL."

"AOL's keen understanding of the Internet and of the online community will help us to develop products and services that are truly responsive to the needs of AOL members. Our expanded relationship will help us both to grow in the fast-paced on-line marketplace," said Dr. Janet Baker, Chairman and Chief Executive Officer of Dragon Systems.

Dragon Systems, Inc., is a worldwide leader in PC speech recognition. Dragon develops and markets high-performance, cost-effective speech and language technology that, in multiple world languages (including American English, British English, French, German, Italian, Spanish and Swedish), enable users to create text, issue commands, enter and access data simply by speaking. The company also licenses technology worldwide through developers, distributors, resellers, OEMs (Original Equipment Manufacturers) and ISVs (Integrated Software Vendors). Dragon Systems ports its technology across multiple operating systems and hardware platforms — from hand-held devices and PCs to workstations, and is pursuing leading-edge research and development projects for computer and telecommunications applications. Since introducing Dragon NaturallySpeaking, the first large vocabulary continuous speech recognition system able to create general purpose text, in 1997, the Company has received over 70 major industry awards worldwide. Founded in 1982, Dragon Systems is headquartered in Newton, Massachusetts; its Dragon Systems UK Ltd. subsidiary, which is focused on speech recognition for telephony and high-noise environments, is based in Cheltenham, England; Dragon Systems GmbH is located in Munich, Germany, Dragon Systems also has offices in France. Dragon Systems can be found on the world wide web at: www.dragonsys.com or www.naturalspeech.com.