EIGHTH LOAN MODIFICATION AGREEMENT

Exhibit 10.1

EIGHTH LOAN MODIFICATION AGREEMENT

     This Eighth Loan Modification Agreement (this “Loan Modification Agreement”) is entered into as of this 29^th day of December, 2005, by and between SILICON VALLEY BANK, a California-chartered bank, with its principal place of business at 0000 Xxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000 and with a loan production office located at One Newton Executive Park, Suite 200, 0000 Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 (“Bank”) and NUANCE COMMUNICATIONS INC, formerly known as SCANSOFT, INC., a Delaware corporation with offices at 0 Xxxxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000 (“Borrower”).

	1.		DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS. Among other indebtedness and obligations which may be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to a loan arrangement dated as of October 31, 2002, evidenced by, among other documents, (i) a certain Loan and Security Agreement dated as of October 31, 2002 between Borrower and Bank, as amended by a certain First Loan Modification Agreement dated May 7, 2003, effective as of March 31, 2003, as further amended by a certain Second Loan Modification Agreement dated as of June 18, 2003, as further amended by a certain Third Loan Modification Agreement dated as of August 11, 2003, as further amended by a certain Fourth Loan Modification Agreement dated as of September 30, 2003, as further amended by a certain Fifth Loan Modification Agreement dated as of March 31, 2004, as further amended by a certain Sixth Loan Modification Agreement dated as of March 29, 2005, and as further amended by a certain Seventh Loan Modification Agreement dated as of September 29, 2005 (as may be further amended from time to time, the “Loan Agreement”), and (ii) a certain Negative Pledge Agreement dated as of October 31, 2002 (the “Negative Pledge Agreement”). Capitalized terms used but not otherwise defined herein shall have the same meaning as in the Loan Agreement.
			Hereinafter, all indebtedness and obligations owing by Borrower to Bank shall be referred to as the “Obligations”.
	2.		DESCRIPTION OF COLLATERAL. Repayment of the Obligations is secured by the Collateral as described in the Loan Agreement and a certain Pledge Agreement dated October 31, 2002 (together with any other collateral security granted to Bank, the “Security Documents”).
			Hereinafter, the Security Documents, together with all other documents evidencing or securing the Obligations shall be referred to as the “Existing Loan Documents”.
	3.		DESCRIPTION OF CHANGE IN TERMS.

Modifications to Loan Agreement.

1. The Loan Agreement shall be amended by deleting Section 5 of the Schedule to the Loan Agreement, entitled “Financial Covenants”, in its entirety and inserting in lieu thereof the following:

“5. FINANCIAL COVENANTS. (Section 5.1)

(a) Minimum Unrestricted Cash. On the Closing Date and at all times thereafter, the Borrower shall maintain unrestricted cash in accounts with the Bank in an amount equal to or great than the aggregate amount of all Obligations (including, without limitation, contingent Obligations such as reimbursement obligations for any issued Letters of Credit) of the Borrower to Bank.”

2. Notwithstanding Section 6(i) and Section 6(iv) of the Schedule to the Loan Agreement, Borrower shall deliver its monthly consolidated balance sheet and income statements, together with a Compliance Certificate to the Bank on or before November 15, 2005.

	4.		FEES. Borrower shall pay to Bank a modification fee equal to Ten Thousand Dollars ($10,000.00) which fee shall be due on the date hereof and shall be deemed fully earned as of the date hereof. Borrower shall also reimburse Bank for all legal fees and expenses incurred in connection with this amendment to the Existing Loan Documents.
	5.		RATIFICATION OF NEGATIVE PLEDGE AGREEMENT. Borrower hereby ratifies, confirms and reaffirms, all and singular, the terms and conditions of the Negative Pledge Agreement and acknowledges, confirms and agrees that the Negative Pledge Agreement remains in full force and effect.
	6.		CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever necessary to reflect the changes described above.
	7.		RATIFICATION OF LOAN DOCUMENTS. Borrower hereby ratifies, confirms, and reaffirms all terms and conditions of all security or other collateral granted to the Bank, and confirms that the indebtedness secured thereby includes, without limitation, the Obligations.
	8.		NO DEFENSES OF BORROWER. Borrower hereby acknowledges and agrees that Borrower has no offsets, defenses, claims, or counterclaims against Bank with respect to the Obligations, or otherwise, and that if Borrower now has, or ever did have, any offsets, defenses, claims, or counterclaims against Bank, whether known or unknown, at law or in equity, all of them are hereby expressly WAIVED and Borrower hereby RELEASES Bank from any liability thereunder.
	9.		CONTINUING VALIDITY. Borrower understands and agrees that in modifying the existing Obligations, Bank is relying upon Borrower’s representations, warranties, and agreements, as set forth in the Existing Loan Documents. Except as expressly modified pursuant to this Loan Modification Agreement, the terms of the Existing Loan Documents remain unchanged and in full force and effect. Bank’s agreement to modifications to the existing Obligations pursuant to this Loan Modification Agreement in no way shall obligate Bank to make any future modifications to the Obligations. Nothing in this Loan Modification Agreement shall constitute a satisfaction of the Obligations. It is the intention of Bank and Borrower to retain as liable parties all makers of Existing Loan Documents, unless the party is expressly released by Bank in writing. No maker will be released by virtue of this Loan Modification Agreement.
	10.		JURISDICTION/VENUE. Borrower accepts for itself and in connection with its properties, unconditionally, the non-exclusive jurisdiction of any state or federal court of competent jurisdiction in the Commonwealth of Massachusetts in any action, suit, or proceeding of any kind against it which arises out of or by reason of this Loan Modification Agreement; provided, however, that if for any reason Bank cannot avail itself of the courts of the Commonwealth of Massachusetts, then venue shall lie in Santa Xxxxx County, California.
	11.		COUNTERSIGNATURE/EFFECTIVENESS. This Loan Modification Agreement shall become effective only when it shall have been executed by Borrower and Bank.

     This Loan Modification Agreement is executed as a sealed instrument under the laws of the Commonwealth of Massachusetts as of the date first written above.

		BORROWER:
		NUANCE COMMUNICATIONS INC. F/K/A SCANSOFT, INC.
		By:		/s/ Xxxxx X. Xxxxxx, Xx.
		Name:		Xxxxx X. Xxxxxx, Xx.
		Title:		Chief Financial Officer, Nuance
		BANK:
		SILICON VALLEY BANK
		By:		/s/ Xxxx Xxxxxxxxx
		Name:		Xxxx Xxxxxxxxx
		Title:		SVP

     The undersigned ratifies, confirms and reaffirms, all and singular, the terms and conditions of a certain Unconditional Guaranty dated October 31, 2002 (the “Guaranty”) and a certain Security Agreement dated October 31, 2002 (the “Security Agreement”) and acknowledges, confirms and agrees that the Guaranty and the Security Agreement shall remain in full force and effect and shall in no way be limited by the execution of this Loan Modification Agreement, or any other documents, instruments and/or agreements executed and/or delivered in connection herewith.

CAERE CORPORATION
By:		/s/ Xxxxx X. Xxxxxx, Xx.
Name:		Xxxxx X. Xxxxxx, Xx.
Title:		Chief Financial Officer, Nuance

     The undersigned each hereby ratifies, confirms and reaffirms, all and singular, the terms and conditions of certain Unconditional Guarantees each dated September 30, 2003 (collectively, the “Guaranty”) and acknowledges, confirms and agrees that the Guaranty shall remain in full force and effect and shall in no way be limited by the execution of this Loan Modification Agreement, or any other documents, instruments and/or agreements executed and/or delivered in connection herewith.

SPEECHWORKS SECURITIES CORP.
By:		/s/ Xxxxx X. Xxxxxx, Xx.
Name:		Xxxxx X. Xxxxxx, Xx.
Title:		Chief Financial Officer, Nuance
SPEECHWORKS INTERNATIONAL HOLDINGS, INC.
By:		/s/ Xxxxx X. Xxxxxx, Xx.
Name:		Xxxxx X. Xxxxxx, Xx.
Title:		Chief Financial Officer, Nuance
SPEECHWORKS ACQUISITION CORP.
By:		/s/ Xxxxx X. Xxxxxx, Xx.
Name:		Xxxxx X. Xxxxxx, Xx.
Title:		Chief Financial Officer, Nuance
SPEECHWORKS INTERNATIONAL, INC.
By:		/s/ Xxxxx X. Xxxxxx, Xx.
Name:		Xxxxx X. Xxxxxx, Xx.
Title:		Chief Financial Officer, Nuance