<PAGE>
                                                                    Exhibit 10.1

                                            CONFORMED TO ORIGINAL SIGNED 8/11/03


                                SCANSOFT, INC.

                             EMPLOYMENT AGREEMENT

      This Agreement is made by and between ScanSoft, Inc. (along with its
successors and assigns, the "Company") and Paul A. Ricci (the "Executive") as of
August 11, 2003 (the "Effective Date").

      1. Duties and Scope of Employment.

         (a) Positions and Duties. Executive will serve as Chairman of the Board
and Chief Executive Officer of the Company. Executive will render such business
and professional services in the performance of Executive's duties, consistent
with Executive's position within the Company, as shall reasonably be assigned to
him by the Company's Board of Directors (the "Board").

         (b) Board Membership. During the Employment Term (as defined below),
Executive will serve as the Chairman of the Board, subject to any required
stockholder approval.

         (c) Obligations. During the Employment Term, Executive will devote
Executive's full business efforts and time to the Company. For the duration of
the Employment Term, Executive agrees not to actively engage in any other
employment, occupation or consulting activity for any direct or indirect
remuneration without the prior approval of the Board of Directors of the
Company, which approval will not be unreasonably withheld; provided, however,
that Executive may, without the approval of the Board, serve in any capacity
with any civic, educational or charitable organization, or as a member of
corporate Boards of Directors (but in all cases subject to Executive's
compliance with the terms of the Confidential Information Agreement).

      2. Employment Term. Subject to earlier termination as provided for below,
the Company will employ Executive for an initial term of three (3) years
commencing on the Effective Date. The term of employment hereunder shall
automatically extend for successive additional terms of one (1) year each (each,
a "Successive One-Year Term") unless, at least forty-five (45) days prior to the
end of the initial three (3) year term or any Successive One-Year Term, the
Company or Executive gives written notice of intent to terminate this Agreement
(a "Notice of Non-Renewal"). The term of employment under this Agreement shall
include the initial three (3) year period and any extension thereof (the
"Employment Term"). If Executive terminates employment as a result of the
receipt of a Notice of Non-Renewal from the Company, Executive shall be entitled
to the payments and benefits under Section 4(a) of this Agreement.
Notwithstanding the foregoing, Executive and the Company acknowledge that this
employment relationship may be terminated at any time prior to the expiration of
the Employment Term, upon ninety (90) days written notice to the other party,
with or without
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                                            CONFORMED TO ORIGINAL SIGNED 8/11/03

good cause or for any or no cause, at the option either of the Board or
Executive and that in the event the Company or Executive terminate Executive's
employment with the Company prior to the end of the Employment Term, Executive
only will be entitled to those payments and benefits, if any, provided for in
Section 4 of this Agreement.

      3. Compensation.

         (a) Base Salary. The Company will pay Executive as compensation for
Executive's services a base salary at the annualized rate of $300,000 through
December 31, 2003 and $400,000 beginning on January 1, 2004 (respectively, the
"Base Salary"). On July 1, 2005 and each anniversary thereafter, the Base Salary
will increase by at least $25,000. The Base Salary will be paid through payroll
periods that are consistent with the Company's normal payroll practices and will
be subject to the usual, required withholding.

         (b) Performance Bonus. For the 2003 fiscal year of the Company,
Executive will be eligible to receive a target bonus of up to fifty percent
(50%) of Executive's Base Salary in 2003 based upon the achievement of
performance criteria established by the Compensation Committee of the Board,
after consultation with Executive. For each fiscal year of the Company following
its 2003 fiscal year, Executive will be eligible to receive a target bonus of up
to one-hundred percent (100%) of Executive's then Base Salary based upon the
achievement of performance criteria established within four (4) months of the
start of the applicable bonus period by the Compensation Committee of the Board,
after consultation with Executive. The performance standards will be based on
the Company's achievement of revenue and diluted earnings per share ("EPS"). The
actual percentage of Base Salary payable as a bonus for any year will depend
upon the extent to which the applicable performance criteria have been achieved.
Any bonus that actually is earned will be paid as soon as practicable (but no
later than 2-1/2 months) after the end of the fiscal year for which the bonus is
earned, but only if Executive was employed with the Company through the end of
such fiscal year.

         (c) Restricted Stock. At the next meeting of the Board following the
Effective Date, Executive will be issued three hundred thousand (300,000) shares
of common stock of the Company at a per share purchase price equal to the par
value of the Company's common stock (the "Restricted Stock"). The Restricted
Stock will vest as to 1/3 of the shares of Restricted Stock at the end of each
twelve-month period following the date of grant. Except as otherwise specified
herein, in the event that Executive's employment with the Company terminates,
any unvested shares of Restricted Stock shall be forfeited and revert to the
Company. The grant of the Restricted Stock shall be represented by, and subject
to, the terms of a restricted stock agreement to be prepared in accordance with
the terms herein.

         (d) Stock Options. For each fiscal year of the Company during the
Employment Term, Executive will be eligible to receive a stock option grant to
acquire shares of the Company's common stock. The number of shares subject to
each stock option grant, if any, for each fiscal year will be based on
Executive's performance as assessed by the Compensation Committee of the Board.
The terms and conditions of any stock options granted to Executive hereunder
(including vesting restrictions) will be established by the Compensation
Committee of the Board; provided, that

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                                            CONFORMED TO ORIGINAL SIGNED 8/11/03

Executive will have the right to exercise the vested shares subject to any stock
options that are granted after the Effective Date during the term of the
applicable stock option whether or not Executive remains employed with the
Company through such term.

         (e) Living Expenses. During the Employment Term, Executive will receive
semi-monthly living expense bonuses equal to $4,458, which will be subject to
the usual, required withholding and subject to Executive's continued employment
with the Company through the applicable semi-monthly payment date.

         (f) Professional Services. During the Employment Term, the Company will
reimburse Executive for reasonable professional services expenses incurred by
Executive for tax, financial and/or estate planning. The Company will reimburse
Executive only for expenses that do not exceed $20,000 per calendar year.

         (g) Employee Benefits. During the Employment Term, Executive will be
entitled to participate in the employee benefit plans currently and hereafter
maintained by the Company of general applicability to other senior executives of
the Company, including, without limitation, the Company's group medical, dental,
vision, disability, life insurance, and flexible-spending account plans. The
Company reserves the right to cancel or change the benefit plans and programs it
offers to its employees at any time.

      4. Severance. Upon termination of employment for any reason, Executive
shall receive payment of (a) his Base Salary, as then in effect, through the
date of termination of employment, and (b) all accrued vacation, expense
reimbursements and any other benefits (other than severance benefits, except as
provided below) due to Executive through the date of termination of employment
in accordance with established Company plans and policies or applicable law (the
"Accrued Obligations"). In addition, the following will apply:

         (a) Involuntary Termination other than for Cause, Death or Disability.
If Executive's employment with the Company is terminated for a reason other than
(i) Cause (as defined below), (ii) Executive becoming Disabled (as defined
below) or (iii) Executive's death, or if the Executive terminates his employment
with the Company for Good Reason, then, subject to Executive's compliance with
the provisions in Section 4(e), Executive will be entitled to: (i) continuing
payments of Executive's Base Salary, as then in effect but no less than a Base
Salary of $400,000, during the Severance Period, to be paid periodically in
accordance with the Company's normal payroll policies and subject to the usual,
required withholding; (ii) continued payment by the Company of the group
medical, dental and vision continuation coverage premiums for Executive and
Executive's eligible dependents under Title X of the Consolidated Budget
Reconciliation Act of 1985, as amended ("COBRA") during the Severance Period
under the Company's group health plans, as then in effect; (iii) immediately
fully vest on the termination date in Executive's stock options and unvested
Restricted Stock; and (iv) exercise Executive's outstanding stock options until
the end of the term of the applicable stock option.
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                                            CONFORMED TO ORIGINAL SIGNED 8/11/03

         (b) Termination due to Death or Disability. If the Executive's
employment with the Company is terminated due to his death or his becoming
Disabled, then Executive or Executive's estate (as the case may be) will (i)
receive the Base Salary through the date of termination of employment, (ii) be
entitled to immediate 100% of any Company stock options or Restricted Stock held
by the Executive that were unvested immediately prior to his termination of
employment, (iii) receive Company-paid coverage for a period of two (2) years
for Executive (if applicable) and Executive's eligible dependents under the
Company's health benefit plans (or, at the Company's option, coverage under a
separate plan), providing benefits that are no less favorable than those
provided under the Company's plans immediately prior to Executive's death, (iv)
receive all accrued vacation, expense reimbursements and any other benefits due
to Executive through the date of termination of employment in accordance with
Company-provided or paid plans and policies, and (v) not be entitled to any
other compensation or benefits from the Company except to the extent required by
law (for example, under Section 4980B of the Code).

         (c) Change of Control Benefits. If, within six (6) months following a
Change of Control, Executive's employment with the Company is terminated for a
reason other than (i) Cause, (ii) Executive becoming Disabled or (iii)
Executive's death, or if the Executive terminates his employment with the
Company for Good Reason, then, subject to Executive's compliance with the
provisions in Section 4(e), Executive will be entitled to the severance payments
and benefits set forth in Section 4(a).

         (d) Other Termination. If the Executive terminates employment with the
Company other than for Good Reason (as defined), or if Executive's employment
with the Company is terminated for Cause, then Executive will receive payment of
the Accrued Obligations but he shall not be entitled to any other compensation
or benefits (including, without limitation, accelerated vesting of stock options
and unvested Restricted Stock) from the Company, except to the extent provided
under the applicable stock option agreement(s), Company benefit plans or as may
be required by law (for example, under COBRA).

         (e) Conditions to Receive Severance Package. Except for the Accrued
Obligations, the applicable provisions of the Option Plan and Option Agreement,
and other payments to which Executive may be entitled by law, the severance
payments, continued benefits, continued vesting, vesting acceleration and the
ability to exercise stock options described in this Section 4 will be provided
to Executive if the following conditions are satisfied: (i) Executive complies
with all surviving provisions of the Confidential Information Agreement and any
confidentiality or proprietary rights agreement signed by Executive; and (ii)
Executive executes and delivers to the Company, and does not revoke, a full
general release, in a form acceptable to the Company, releasing all claims,
known or unknown, that Executive may have against the Company, and any
subsidiary or related entity, their officers, directors, employees and agents,
arising out of or any way related to Executive's employment or termination of
employment with the Company.

         (f) Cause. For purposes of this Agreement, "Cause" means Executive's
employment with the Company is terminated after a majority of the Board has
found any of the following to exist:

<PAGE>

(i) Executive's theft, dishonesty that materially harms the Company or
falsification of any Company records; (ii) disclosure of the Company's
confidential or proprietary information which violates the terms of the
Confidential Information Agreement; (iii) Executive's continued substantial
willful nonperformance (except by reason of Disability) of his employment duties
after Executive has received a written demand for performance by the Board and
has failed to cure such nonperformance within 15 business days of receiving such
notice; or (iv) Executive's conviction of, or plea of nolo contendere to, a
felony which such conviction or plea materially harms the business or reputation
of the Company.

         (g) Change of Control. For the purposes of this Agreement, a "Change of
Control" means: (i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing 50% or more of the total
voting power represented by the Company's then outstanding voting securities; or
(ii) a change in the composition of the Board occurring within a two-year
period, as a result of which fewer than a majority of the directors are
Incumbent Directors ("Incumbent Directors" will mean directors who either (A)
are members of the Board as of the Effective Date, or (B) are elected, or
nominated for election, to the Board with the affirmative votes of at least a
majority of the Board at the time of such election or nomination (but will not
include an individual whose election or nomination is in connection with an
actual or threatened proxy contest relating to the election of directors to the
Company)); or (iii) the date of the consummation of a merger or consolidation of
the Company with any other corporation that has been approved by the
stockholders of the Company, other than a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than fifty
percent (50%) of the total voting power represented by the voting securities of
the Company or such surviving entity outstanding immediately after such merger
or consolidation; or (iv) the date of the consummation of the sale or
disposition by the Company of all or substantially all the Company's assets.

         (h) Disabled. For purposes of this Agreement, "Disabled" means
Executive being unable to perform the principal functions of his duties due to a
physical or mental impairment, but only if such inability has lasted or is
reasonably expected to last for at least six months. Whether Executive is
Disabled will be determined by the Board based on evidence provided by one or
more physicians selected by the Board.

         (i) Good Reason. For purposes of this Agreement, "Good Reason" means
(i) without the Executive's consent, a significant reduction of the Executive's
duties, position, reporting status, or responsibilities relative to the
Executive's duties, position, reporting status, or responsibilities in effect
immediately prior to such reduction, or the removal of the Executive from such
position, duties and responsibilities or change in reporting status, unless the
Executive is provided with comparable duties, position and responsibilities or
reporting status; provided, however, that a reduction in duties, position,
reporting status or responsibilities solely by virtue of the Company being
acquired and made part of a larger entity will not constitute "Good Reason" to
the extent

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                                            CONFORMED TO ORIGINAL SIGNED 8/11/03

Executive remains in a comparable position with a division or subsidiary of the
acquiror, which division or subsidiary conducts substantially the same core
operations, business and activities as were conducted by the Company prior to
any such acquisition or similar corporate transaction; (ii) without the
Executive's consent, a substantial reduction, by the Board of the Executive's
Base Salary as in effect immediately prior to such reduction (unless such
reduction is part of an overall Company effort that effects similarly situated
senior executives of the Company); (iii) without the Executive's consent, the
requirement that Executive relocate his principal place of employment more than
fifty (50) miles from the current location of the Company's principal executive
offices; (iv) a material breach by the Company of this Agreement; and (iv)
failure of Executive to be nominated as a Board member.

         (j) Severance Period. For purposes of this Agreement, "Severance
Period" means the period beginning on the date of Executive's termination of
employment with the Company and ending on the date eighteen (18) months later.

      5. Confidential Information. Executive agrees to continue to comply with
any agreement Executive has entered into with the Company regarding confidential
information and/or invention assignment (the "Confidential Information
Agreement").

      6. Assignment. This Agreement will be binding upon and inure to the
benefit of (a) the heirs, executors and legal representatives of Executive upon
Executive's death and (b) any successor of the Company. Any such successor of
the Company will be deemed substituted for the Company under the terms of this
Agreement for all purposes. For this purpose, "successor" means any person,
firm, corporation or other business entity which at any time, whether by
purchase, merger or otherwise, directly or indirectly acquires all or
substantially all of the assets or business of the Company. None of the rights
of Executive to receive any form of compensation payable pursuant to this
Agreement may be assigned or transferred except by will or the laws of descent
and distribution. Any other attempted assignment, transfer, conveyance or other
disposition of Executive's right to compensation or other benefits will be null
and void.

      7. Notices. All notices, requests, demands and other communications called
for hereunder will be in writing and will be deemed given (i) on the date of
delivery if delivered personally, (ii) one (1) day after being sent by a well
established commercial overnight service, or (iii) four (4) days after being
mailed by registered or certified mail, return receipt requested, prepaid and
addressed to the parties or their successors at the following addresses, or at
such other addresses as the parties may later designate in writing:

      If to the Company:

      ScanSoft, Inc.
      9 Centennial Drive
      Peabody, MA 01960

      Attn: Chief Financial Officer
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                                            CONFORMED TO ORIGINAL SIGNED 8/11/03

      If to Executive:

      at the last residential address known by the Company.

      8. Severability. In the event that any provision hereof becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement will continue in full force and effect without said
provision.

      9. Original Agreement. Executive previously entered into an employment
agreement with the Company on August 21, 2000 (the "Original Agreement") and
Amendment No. 1 to the employment agreement dated July 26, 2001. Executive and
the Company agree that this Agreement will supersede and replace the Original
Agreement and Amendments to the Original Agreement in its entirety.

      10. Non-Competition, Non-Solicitation and Non-Disparagement. For a period
beginning on the Effective Date and ending one year after the Executive ceases
to be employed by the Company, Executive, directly or indirectly, whether as
employee, owner, sole proprietor, partner, director, member, consultant, agent,
founder, co-venturer or otherwise, will: (i) not engage, participate or invest
in any business activity anywhere in the United States that is directly
competitive with the principal markets, products and services of the Company at
the time of Executive's termination; provided, however, that it will not be a
violation of this Section 10 for Executive to own (as a passive investment): (A)
not more than two percent of any class of publicly traded securities of any
entity or (B) not more than five percent of any class of non-publicly traded
securities of any entity; (ii) not solicit, induce or influence any person to
leave employment with the Company; (iii) not directly or indirectly solicit
business from any of the Company's customers and users on behalf of any business
that directly competes with the principal business of the Company. In addition,
following the date Executive ceases to be employed by the Company, Executive
will not disparage in any way the Company, its officers, directors, employees,
investors, shareholders, administrators, affiliates, divisions, subsidiaries,
predecessor or successor corporations, or assigns, and will refrain from any
defamation, libel or slander of any of those parties, and any tortious
interference with the contracts, relationships and prospective economic
advantage of any of those parties.

      11. Entire Agreement. This Agreement, together with the Confidentiality
Agreement, represents the entire agreement and understanding between the Company
and Executive concerning the subject matter herein and Executive's employment
relationship with the Company, and supersedes and replaces any and all prior or
contemporaneous agreements and understandings whether written or oral between
the Executive and the Company.

      12. Arbitration and Equitable Relief.

         (a) Except as provided in Section 12(d) below, Executive and the
Company agree that to the extent permitted by law, any dispute or controversy
arising out of, relating to, or in connection with this Agreement, or the
interpretation, validity, construction, performance, breach, or termination
thereof will be settled by arbitration to be held at a location within 30 miles
of the Company's

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                                            CONFORMED TO ORIGINAL SIGNED 8/11/03

principal executive offices in Massachusetts, in accordance with the National
Rules for the Resolution of Employment Disputes then in effect of the American
Arbitration Association (the "Rules"). The arbitrator may grant injunctions or
other relief in such dispute or controversy. The decision of the arbitrator will
be final, conclusive and binding on the parties to the arbitration. Judgment may
be entered on the arbitrator's decision in any court having jurisdiction.

         (b) The arbitrator will apply Massachusetts law to the merits of any
dispute or claim, without reference to rules of conflict of law. Executive
hereby expressly consents to the personal jurisdiction of the state and federal
courts located in Massachusetts for any action or proceeding arising from or
relating to this Agreement and/or relating to any arbitration in which the
parties are participants.

         (c) The Company will pay the direct costs and expenses of the
arbitration. The Company and Executive each will separately pay its counsel fees
and expenses; provided, however, the Company shall reimburse Executive for his
reasonable costs (including without limitation attorneys' fees) incurred if
Executive succeeds on the merits with respect to a material breach of this
Agreement at any such arbitration, including enforcing any judgment entered on
an arbitrator's decision.

         (d) The Company may apply to any court of competent jurisdiction for a
temporary restraining order, preliminary injunction, or other interim or
conservatory relief, as necessary to enforce the provisions of the confidential
information and trade secrets agreement between Executive and the Company,
without breach of this arbitration agreement and without abridgement of the
powers of the arbitrator.

         (e) EMPLOYEE HAS READ AND UNDERSTANDS SECTION 12, WHICH DISCUSSES
ARBITRATION. EMPLOYEE UNDERSTANDS THAT BY SIGNING THIS AGREEMENT, EMPLOYEE
AGREES TO THE EXTENT PERMITTED BY LAW, TO SUBMIT ANY FUTURE CLAIMS ARISING OUT
OF, RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION,
VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH, OR TERMINATION THEREOF TO BINDING
ARBITRATION, AND THAT THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF EMPLOYEE'S
RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO
ALL ASPECTS OF THE EMPLOYER/EMPLOYEE RELATIONSHIP, INCLUDING BUT NOT LIMITED TO,
THE FOLLOWING CLAIMS:

            (i) ANY AND ALL CLAIMS FOR WRONGFUL DISCHARGE OF EMPLOYMENT; BREACH
OF CONTRACT, BOTH EXPRESS AND IMPLIED; BREACH OF THE COVENANT OF GOOD FAITH AND
FAIR DEALING, BOTH EXPRESS AND IMPLIED; NEGLIGENT OR INTENTIONAL INFLICTION OF
EMOTIONAL DISTRESS; NEGLIGENT OR INTENTIONAL MISREPRESENTATION; NEGLIGENT OR
INTENTIONAL INTERFERENCE WITH CONTRACT OR PROSPECTIVE ECONOMIC ADVANTAGE; AND
DEFAMATION;

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                                            CONFORMED TO ORIGINAL SIGNED 8/11/03

            (ii) ANY AND ALL CLAIMS FOR VIOLATION OF ANY FEDERAL STATE OR
MUNICIPAL STATUTE, INCLUDING, BUT NOT LIMITED TO, THE AMERICANS WITH
DISABILITIES ACT OF 1990, THE FAIR LABOR STANDARDS ACT, AND ANY LAW OF THE STATE
OF CALIFORNIA; AND

            (iii) ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER LAWS AND
REGULATIONS RELATING TO EMPLOYMENT OR EMPLOYMENT DISCRIMINATION.

      13. No Oral Modification, Cancellation or Discharge. This Agreement may be
changed or terminated only in writing (signed by Executive and the Company).

      14. Withholding. The Company is authorized to withhold, or cause to be
withheld, from any payment or benefit under this Agreement the full amount of
any applicable withholding taxes.

      15. Governing Law. This Agreement will be governed by the laws of the
Commonwealth of Massachusetts (with the exception of its conflict of laws
provisions).

      16. Acknowledgment. Executive acknowledges that he has had the opportunity
to discuss this matter with and obtain advice from his private attorney, has had
sufficient time to, and has carefully read and fully understands all the
provisions of this Agreement, and is knowingly and voluntarily entering into
this Agreement.

      17. Attorneys' Fees. Executive shall be reimbursed his reasonable
attorneys' fees incurred with respect to the negotiation of this Agreement.



                           {Signature Pages to Follow}


<PAGE>



                                          CONFORMED TO ORIGINAL SIGNED 8/11/03


      IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
respective dates set forth below:

      EXECUTIVE

      /s/ Paul A. Ricci                               Date:  As of 8/11/03
      -------------------------------------
      Paul A. Ricci
      Chairman and Chief Executive Officer

      COMPANY

      /s/ Robert G. Teresi                            Date:  As of 8/11/03
      ------------------------------------

      Member of the Board


                                      -10-