Document:

<PAGE>

                                                                   Exhibit 10.16

                                                     VAR Agreement Number_______
                                                  Nuance Agreement Number_______

                          Nortel--Nuance Confidential

                        VALUE-ADDED RESELLER AGREEMENT
                                    BETWEEN
                          NUANCE COMMUNICATIONS, INC.
                                      AND
                            NORTEL NETWORKS LIMITED

This Value-Added Reseller Agreement ("Agreement") is entered into as of this
31st day of August, 2000 (the "Effective Date") between Nuance Communications,
Inc., a Delaware corporation having a place of business at 1005 Hamilton Court,
Menlo Park, CA 94025 ("Nuance"), and Nortel Networks Limited, a Canadian
corporation, having a place of business at 8200 Dixie Road, Suite 1OO, Brampton,
Ontario, L6T 5P6, Canada ("NNL").

The parties understand and agree that any Subsidiary may become a part to this
agreement by signing a document agreeing to be bound by the terms hereof, a form
of which is attached hereto as Exhibit N, (the "Accession Agreement"), and
providing such Accession Agreement to Nuance in accordance with the notification
procedures of this Agreement.

This Agreement consists of this page ("Signature Page"), the attached terms and
conditions ("Terms and Conditions"), and the exhibits ("Exhibits") listed and
initialed by each party below. The parties may enter into Exhibits from time to
time, which Exhibits shall be so indicated on this Signature Page, shall be
signed by each party, and shall be attached hereto. All such Exhibits shall be
designated with sequential numerical suffixes, such as A-1, A-2 and A-3.

                                             DATE  NUANCE    VAR
EXHIBIT A - Application Description                /s/ BD   s/ DH
                                             ----  ------   -----
EXHIBIT B - Price List                             /s/ BD   s/ DH
                                             ----  ------   -----
EXHIBIT C - Limited Use License                             s/ DH
                                             ----  ------   -----
EXHIBIT C-1 - Limited Use License
              For Call Pilot                                s/ DH
                                             ----  ------   -----
EXHIBIT D - Professional Services                  /s/ BD   s/ DH
                                             ----  ------   -----
EXHIBIT E - Minimum Terms                          /s/ BD   s/ DH
                                             ----  ------   -----
EXHIBIT F - Technical Support Services             /s/ BD   s/ DH
                                             ----  ------   -----
EXHIBIT G - Nuance Trademarks                      /s/ BD   s/ DH
                                             ----  ------   -----
EXHIBIT H - Purchase Order Form                    /s/ BD   s/ DH
                                             ----  ------   -----
EXHIBIT I - Amendment                                       s/ DH
                                             ----  ------   -----
EXHIBIT J - Customer Specific                               s/ DH
                                             ----  ------   -----
EXHIBIT K - Escrow                                 /s/ BD   s/ DH
                                             ----  ------   -----
EXHIBIT L - Technical Support Services             /s/ BD   s/ DH
                                             ----  ------   -----
EXHIBIT M - Royalty Reporting                      /s/ BD   s/ DH
                                             ----  ------   -----
EXHIBIT N - Accession Agreement                    /s/ BD   s/ DH
                                             ----  ------   -----

AGREED TO:

NUANCE COMMUNICATIONS                 NORTEL NETWORKS LIMITED

By:    /s/ Brian Danella              By: /s/ David Hyslop
   -------------------------------        --------------------------------------
Title: /s/ VP and General Counsel     Title: /s/ Strategic illegible Procurement
      ----------------------------          ------------------------------------
Date:  20 Oct 00                      Date:  Oct 26, 2000
     -----------------------------          ------------------------------------

[*]= CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMMITED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       1
<PAGE>

                                                     VAR Agreement Number_______
                                                  Nuance Agreement Number_______

                          Nortel--Nuance Confidential

                             NUANCE COMMUNICATIONS
                        VALUE-ADDED RESELLER AGREEMENT
                             TERMS AND CONDITIONS

1.   DEFINITIONS. Capitalized terms used in this Agreement shall have the
     following meanings:

     "ACCEPTED ORDER" means a Purchase Order accepted by Nuance in accordance
     herewith.

     "APPLICATION" shall mean the software designated as such in an EXHIBIT D
     ("PROFESSIONAL SERVICES").

     "APPLICATION DOCUMENTATION" shall mean all information provided to VAR by
     Nuance which describes the form, features or operation of an Application
     and which is contained in a tangible medium, such as written format, tape,
     magnetic or other media. Application Documentation shall include any
     Updates of Application Documentation which Nuance may make available to VAR
     pursuant to this Agreement.

     "APPLICATION SPECIFICATION" shall mean the technical and performance
     specifications for an Application which are contained in and distributed
     with the Application Documentation.

     "APPLICATION WARRANTY" SHALL MEAN THE WARRANTY PROVIDED BY NUANCE FOR AN
     APPLICATION DEVELOPED IN ACCORDANCE WITH EXHIBIT D ("PROFESSIONAL
     SERVICES") AS FURTHER DEFINED IN EXHIBIT D ("PROFESSIONAL SERVICES").

     "AUTHORIZED APPLICATION" shall mean:

         a)  with respect to an Accepted Order in which VAR ordered licenses for
             "Tier 1 Applications" (as the same are described in Exhibit A), a
             software application that is a Tier 1 Application;

         b)  with respect to an Accepted Order in which VAR ordered licenses for
             "Tier 2 Applications" (as the same are described in Exhibit A), a
             software application that is a Tier 2 Application or Tier 1
             Application;

         c)  with respect to an Accepted Order in which VAR ordered licenses for
             "Tier 3 Applications" (as the same are described in Exhibit A), a
             software application that is a Tier 3 Application, Tier 2
             Application or Tier 1 Application; and

         d)  with respect to an Accepted Order in which VAR ordered licenses for
             "Tier 4 Applications" (as the same are described in Exhibit A), a
             software application that is a Tier 4 Application, Tier 3
             Application, Tier 2 Application or Tier 1 Application.

     "AUTHORIZED PORTS" shall mean, with respect to an Accepted Order, the
     number of recognition and/or verification Ports ordered by VAR thereunder
     for which Nuance has provided to VAR Keys in accordance herewith.

     "AUTHORIZED SUBLICENCEES" shall mean an End User or a third-party
     subdistributor, value-added reseller or subsidiary of VAR which has entered
     into a written agreement with VAR having terms and conditions substantially
     similar to those contained in this Agreement.

     "BASIC TECHNICAL SUPPORT SERVICES" shall have the meaning assigned to it in
     SECTION 13 ("TECHNICAL SUPPORT SERVICES").

     "CALL" shall mean a telephone call, voice-over-IP connection or other like
     connection between an individual and an Integrated System.

                                       2
<PAGE>

                                                     VAR Agreement Number_______
                                                  Nuance Agreement Number_______

                          Nortel--Nuance Confidential

  "CONFIDENTIAL INFORMATION" shall have the meaning assigned to it in SECTION
  6.1 ("DESIGNATION").

  "CONNECTED" shall mean, for any particular Call:

      a)  With respect to Nuance recognition software, that: (1) the Software
          (x) is preparing to recognize speech either by registering or
          recording identifying information or by gathering data from such Call
          to enable the Software to recognize speech, (y) is recognizing speech
          from such Call, or (z) has recognized speech from such Call; and (2)
          such Call has not been Disconnected; and

      b)  With respect to Nuance Verifier, that Nuance Verifier is in actual use
          and such Call has not been Disconnected.

  "DESIGNATED EMPLOYEES" shall mean an agreed number of regular employees of
  VAR, who shall be identified beforehand and in writing to Nuance by VAR,
  and who shall communicate with Nuance concerning the provision of Technical
  Support Services as provided in SECTION 13 ("TECHNICAL SUPPORT SERVICES AND
  IN SERVICE DATA").

  "DISCLOSING PARTY" shall have the meaning assigned to it in SECTION 6.1
  ("DESIGNATION").

  "DESIGNATED REPRESENTATIVE" shall mean a representative appointed by VAR to
  be the recipient of purchasing and pricing communications from Nuance,
  whose name, title and contact information are delivered in writing to
  Nuance by VAR; or any successor to the business duties of such person whose
  name, title and contact information are delivered in writing to Nuance by
  VAR; or in the absence of such a successor, the General Counsel of VAR; or
  in the absence of any of the foregoing, the President of VAR.

  "DISCONNECTED" shall mean, with respect to a particular Call, that (1) such
  Call has been terminated by the associated caller or (2) no further
  recognition or verification will be performed by the Software with regard
  to speech from such Call.

  "DOCUMENTATION" shall mean, all information provided to VAR by Nuance which
  describes the form, features or operation of the Software and which is
  contained in a tangible medium, such as written format, tape, magnetic or
  other media. Documentation shall include any Updates of Documentation which
  Nuance may make available to VAR pursuant to this Agreement.

  "EFFECTIVE DATE" shall have the meaning assigned to it in the first
  paragraph of this Agreement.

  "END USER" shall mean an entity which acquires an Integrated System,
  including the Software therein pursuant to an End User License Agreement,
  for its own use, and not for further distribution.

  "END USER LICENSE AGREEMENT" shall mean a written license agreement, in a
  commercially reasonable form, containing at least the Minimum Terms, and
  pursuant to which VAR shall grant sublicenses of the Software which is
  incorporated into an Integrated System.

  "ERROR" shall have the meaning assigned to it in SECTION 12.1 ("SOFTWARE
  WARRANTY").

  "EXHIBITS" shall have the meaning assigned to it in the second paragraph of
  this Agreement.

  "FEES" shall mean Software License Fees, Professional Services Fees,
  Technical Support Services Fees, some or all of the foregoing.

  "IN SERVICE DATA" shall mean the audio input to the Software resulting from
  End User telephone calls to the Integrated System whether in a pilot, trial
  or production use of the Integrated System.

                                       3
<PAGE>

                                                     VAR Agreement Number_______
                                                  Nuance Agreement Number_______

                          Nortel--Nuance Confidential

  "INTEGRATED SYSTEM" shall mean VAR's commercially available product, which
  may be hardware, software or a combination thereof, (1) into which the
  Software has been integrated in accordance with the license granted to VAR
  hereunder and (2) having substantial value in excess of that attributable
  to the Software.

  "KEY" shall mean a numerical or alpha-numerical code which is necessary to
  gain access to certain Software on certain media as delivered by Nuance
  hereunder.

  "MINIMUM TERMS" shall mean the End User License Agreement terms described
  in EXHIBIT E ("MINIMUM TERMS").

  "OBJECT CODE" shall mean computer software programs, not readily
  perceivable by humans, and suitable for machine execution without the
  intervening steps of interpretation or compilation.

  "PORT" shall mean one telecommunications connection which permits input for
  a single user into an Integrated System.

  "PORTS" shall mean the maximum number of Calls that may be simultaneously
  Connected to the Software pursuant to licenses granted by Nuance hereunder.

  "PREMIUM TECHNICAL SUPPORT SERVICES" shall have the meaning assigned to it
  in SECTION 13 ("TECHNICAL SUPPORT SERVICES AND IN SERVICE DATA").

  "PROFESSIONAL SERVICES FEES" shall mean the Fees for performance of
  Professional Services payable by VAR to Nuance as described in an EXHIBIT D
  ("PROFESSIONAL SERVICES").

  "PURCHASE ORDER" shall have the meaning assigned to it in SECTION 2
  ("PURCHASE ORDERS").

  "RECEIVING PARTY" shall have the meaning assigned to it in SECTION 6.1
  ("DESIGNATION").

  "RELEASE" shall mean a new, enhanced or revised iteration of Software,
  which may include corrections for Errors, and which is generally designated
  by Nuance with a change to one or more numbers to the right of the decimal
  point in the name of such Release, such as Release "1.x".

  "REPORT" shall have the meaning assigned to it in SECTION 10 ("REPORTS AND
  RIGHT TO AUDIT").

  "SALE", "SELL", "SELLING" or "SOLD" shall mean, with respect to the
  Integrated System, any sublicense of the Software as part of the Integrated
  System pursuant to the End User License Agreement, with or without
  consideration or other payment to VAR.

  "SIGNATURE PAGE" shall have the meaning assigned to it in the second
  paragraph of this Agreement.

  "SOFTWARE" shall mean the Nuance computer software programs set forth in
  Exhibit B, attached hereto, including Updates, if any, and accompanying
  Documentation, as licensed in accordance herewith.

  "SOFTWARE LICENSE" shall mean a license of the Software, in accordance with
  this Agreement.

  "SOFTWARE LICENSE FEES" shall mean those Fees for a Software License,
  payable by VAR to Nuance.

  "SOURCE CODE" shall mean computer software programs not in machine readable
  format and not suitable for machine execution without the intervening steps
  of interpretation or compilation.

                                       4
<PAGE>

                                                     VAR Agreement Number_______
                                                  Nuance Agreement Number_______

                          Nortel--Nuance Confidential

     "SPECIFICATIONS" shall mean the technical and performance specifications
     for the Software which are contained in and distributed with the
     Documentation.

     "SUBSIDIARY" shall mean any entity which is controlled by a party. A party
     shall be considered as in control of an entity if that party owns, or
     directly or indirectly controls, at least fifty percent (50%) of the voting
     stock or other ownership interest of such entity, or if it directly or
     indirectly possesses the power to direct or cause the direction of the
     management and policies of such entity by any means.

     "TECHNICAL SUPPORT SERVICES" shall mean Basic Technical Support Services,
     Premium Technical Support Services, either or both.

     "TECHNICAL SUPPORT SERVICES FEE" shall mean the annual Fee for Technical
     Support Services payable by VAR to Nuance described as such in an EXHIBIT F
     ("TECHNICAL SUPPORT SERVICES"), and as may be increased or decreased by
     Nuance, upon notice and at Nuance's discretion, subject to Section 9.1.7,
     upon each anniversary of the date of this Agreement.

     "TERM" shall have the meaning assigned to it IN SECTION 11 ("TERM AND
     TERMINATION").

     "TERMS AND CONDITIONS" shall have the meaning assigned to it in the second
     paragraph of this Agreement.

     "TEST AND INTEGRATION LICENSE" shall have the meaning described by Section
     3.3.

     "TOOLKIT" shall mean the Software known as "Nuance Developer's Toolkit."

     "TRADEMARKS" shall mean the trademarks, trade names, and service marks of
     Nuance which are described in EXHIBIT G ("NUANCE TRADEMARKS"), and as may
     be modified or supplemented upon notice from Nuance.

     "UPDATE" shall mean any modification of or addition to the Software or
     Documentation, including new Releases but not new Versions, for which
     Nuance does not charge an additional fee to licensees who are similarly
     situated to VAR.

     "VAR" shall mean NNL and any and all Subsidiaries that have executed and
     delivered an Accession Agreement in accordance herewith.

     "VERSION" shall mean a new, enhanced or revised iteration of Software,
     which may include corrections for Errors, and which is generally designated
     by Nuance with a change to one or more numbers to the left of the decimal
     point in the name of such Version, such as Version "X.1".

     "WARRANTY PERIOD" shall have the meaning assigned to it in SECTION 12
     ("WARRANTY AND DISCLAIMER").

2.   PURCHASE ORDERS.

     2.1  ISSUANCE OF PURCHASE ORDERS. VAR may, from time to time during the
          Term, issue to Nuance purchase orders which describe the Software
          Licenses, Professional Services, Technical Support Services or other
          goods or services which VAR wishes to obtain from Nuance ("Purchase
          Orders"). Purchase Orders shall be in a form substantially similar to
          the Purchase Order attached hereto as EXHIBIT H ("PURCHASE ORDER").
          Nuance agrees that VAR may, for purposes of administrative convenience
          use VAR's standard form of purchase order which may contain preprinted
          or other written terms and conditions. The parties understand and
          agree that such terms and conditions shall have no effect whatsoever.

     2.2  VAR agrees that any Purchase Order form must include the following
          information:

                                       5
<PAGE>

                                                     VAR Agreement Number_______
                                                  Nuance Agreement Number_______

                          Nortel--Nuance Confidential

         a)  The specific Nuance Software to be licensed including version
             number(s) and language(s);

         b)  The level of Technical Support ordered in connection with such
             Software;

         c)  The name and address of the Authorized Sublicensee to whom the
             Software License will issue.

         d)  Whether the physical location of the computer(s) on which the
             Sofware will run is within or outside the continental United States
             or Canada;

         e)  The number of Ports to be licensed per Application (as defined in
             Exhibit A); and

         f)  The Tier of each Application or Separate Application (as such terms
             are defined in Exhibit A) for which Ports have been ordered.

    2.3  ACCEPTANCE OR REJECTION OF PURCHASE ORDERS. Nuance shall have five (5)
         days from the date of receipt of each Purchase Order to accept or
         reject such Purchase Order and notify VAR of the acceptance or
         rejection of such Purchase Order. Any failure of Nuance to accept or
         reject a Purchase Order within the foregoing five (5) day period shall
         be deemed acceptance thereof. In the event Nuance accepts a Purchase
         Order, Nuance shall create and deliver to VAR the appropriate Key(s)
         within five (5) business days unless otherwise agreed through
         acceptance of the Purchase Order. The parties agree that neither party
         shall have any obligation with respect to a rejected Purchase Order.

3.   GRANT OF LICENSES.

     3.1  License Grant. Subject to all the terms and conditions hereof, Nuance
          -------------
          hereby grants to VAR a worldwide, non-exclusive, non-transferable
          license during the Term under all of Nuance's intellectual property
          rights in the Software:

          a)  to internally use and copy Software delivered to VAR in accordance
              herewith for the purpose of creating an Integrated System;

          b)  to reproduce the Integrated System in copies; and

          c)  with respect to each Accepted Order,

              i)   to distribute, either directly or through subdistributors who
                   are Authorized Sublicensees, one or more of such copies to
                   the End User specified therein; and

              ii)  to permit such End User to copy and use, pursuant to an End
                   User License Agreement the Software ordered in such Accepted
                   Order as incorporated into the Integrated System solely to
                   recognize or verify speech (1) using an Authorized
                   Application; (2) from Calls Connected to the Software through
                   not more than the Authorized Ports; and (3) using computers
                   physically located in the geographic location specified in
                   such Accepted Order

     3.2  COPIES. VAR may make a reasonable number of copies of the Software for
          VAR's internal back-up and archival purposes only, provided that all
          such copies shall bear the original and unmodified copyright, patent
          and other intellectual property markings as when originally delivered
          by Nuance.

    3.3  PROVISION OF [***]. Nuance shall provide to VAR a [***] which will
         contain the Software and a [***] for the purposes of generating copies
         of the Software for use in [***]. Reporting and payment for all copies
         of the Software shall be in accordance with the terms and conditions of
         this Agreement as defined herewith.

[*]= CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       6
<PAGE>

                                                     VAR Agreement Number_______
                                                  Nuance Agreement Number_______

                          Nortel--Nuance Confidential

  3.4  TEST AND INTEGRATION LICENSE. VAR is hereby granted a no-charge, royalty-
       free, non-exclusive, non-transferable license to use the Software for the
       purpose of internal testing, analysis, and technical integration with
       equipment manufactured by VAR, and/or sales demonstration of the
       Software, including the right to make a minimum number of copies of
       Software for the sole purpose of facilitating such internal activities by
       VAR ("Test and Integration License").

  3.5  ADDITIONAL RESTRICTIONS.

       3.5.1  NO IMPLIED LICENSES. The Software, including all copies thereof,
              are and shall remain at all times the exclusive property of
              Nuance. VAR acquires no rights or licenses therein except those
              expressly granted herein.

       3.5.2  NO TRANSFER. Except as expressly provided in this SECTION 3
              ("GRANT OF LICENSES"), VAR may not market, distribute or transfer
              copies of the Software to others or electronically transfer the
              Software from one computer to another over a network; except that,
              VAR may transfer copies of the Software to a similarly configured
              back-up system: for the contingency of primary system failure
              (redundancy) and routine installation, warranty and maintenance
              services. VAR may also transfer licensed copies of the Software in
              conjunction with Integrated Systems that are configured in a
              network environment.

       3.5.3  NO REVERSE ENGINEERING. VAR hereby acknowledges that the Software
              contains valuable trade secret and confidential information of
              Nuance. VAR agrees not to reverse compile, reverse engineer,
              reverse assemble, or otherwise attempt, directly or indirectly, to
              obtain or create Source Code for the Software.

       3.5.4  RE-CONNECTING. VAR shall not cause or permit Calls that have been
              Disconnected to thereafter be re-Connected for the purpose of
              reducing the number of Ports required to provide voice recognition
              to simultaneous callers to the Integrated System. VAR shall ensure
              that the number of Ports provisioned with respect to the Software
              in any Integrated System is sufficient to support the maximum
              number of simultaneous callers to such Software.

  3.6  [***] Nuance agrees to provide to VAR a [***] which shall enable VAR to
       [***] as are necessary for use in [***] and shall provide [***] as are
       necessary for use in [***] and shall provide [***] as are reasonably
       necessary to [***] for purposes of [***]. Notwithstanding anything to the
       contrary in this Agreement, VAR hereby acknowledges that VAR shall have
       no right or license to any Software shipped to VAR on media as provided
       above which Software is not properly licensed, that any such Software is
       included therein solely as a matter of administrative convenience, and
       VAR further agrees not to attempt to gain access to, or permit any third
       party to attempt to gain access to, such Software.

       Nuance and VAR agree to work in good faith to define and implement a
       process that will enable [***] [***]. Such process will include [***]
       that are required by Nuance to protect its intellectual property [***].
       Nuance and VAR agree to make best efforts to define and agree to such a
       process within [***] of the signing of this Agreement and to implement
       the process as quickly as practicable thereafter. Failure to define such
       process within [***] will not be deemed a material breach of this
       agreement.

  3.6  TRADEMARK LICENSE.

[*]= CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       7
<PAGE>

                                                     VAR Agreement Number_______
                                                  Nuance Agreement Number_______

                          Nortel--Nuance Confidential

          3.6.1  GRANT OF LICENSE. Nuance hereby grants to VAR, with the right
                 to sublicense to Authorized Sublicensees other than End Users,
                 a nonexclusive, nontransferable limited license to use the
                 Trademarks on copies of the Integrated System and in
                 advertising and printed materials therefor, provided that the
                 notices of trademark status as described in EXHIBIT G are
                 displayed adjacent to and with the first or most prominent use
                 of the Trademarks in each piece of advertising or printed
                 materials in which such Trademarks appear and includes the
                 respective legends adjacent to or as a footnote to the
                 Trademarks as described in EXHIBIT G. EXHIBIT G may be amended
                 from time to time to reflect the current trademark status of
                 existing marks and to add new trademarks. VAR agrees to
                 diligently comply with updated trademark requirements as
                 reflected in amendments to EXHIBIT G.

          3.6.2  USE OF TRADEMARKS; RESTRICTIONS. VAR agrees not to use any
                 other trademark or service mark in close proximity to the
                 Trademarks or combine such marks so as to effectively create a
                 unitary composite mark without the prior, written permission of
                 Nuance. VAR agrees to comply with all the foregoing terms in
                 its catalogs, advertising, packaging and promotional materials
                 relating to or including the Integrated System and ensure
                 compliance with these terms by its Authorized Sublicensees
                 (other than End Users).

          3.6.3  OWNERSHIP AND QUALITY. VAR acknowledges the ownership of the
                 Trademarks in Nuance, agrees that it will do nothing
                 inconsistent with such ownership, agrees to use reasonable
                 efforts to preserve Nuance's rights in the Trademarks, and
                 agrees that all uses of the Trademarks by VAR and Authorized
                 Sublicensees (other than End Users) shall inure to the sole
                 benefit of Nuance. VAR agrees to cooperate with Nuance and
                 ensure cooperation by Authorized Sublicensees (other than End
                 Users) in facilitating Nuance's monitoring and control of the
                 nature and quality of such Integrated System, and to supply
                 Nuance with specimens of use of the Trademarks upon request.
                 VAR shall comply, and ensure compliance by Authorized
                 Sublicensees (other than End Users), with all applicable laws,
                 rules, regulations, and customs with respect to the Trademarks,
                 and shall notify Nuance immediately and in writing of any
                 unauthorized use of the Trademarks by any third party. Nuance
                 shall have the sole right to bring any legal proceeding with
                 respect to any such unauthorized use.

4.   PROFESSIONAL SERVICES. In the event that VAR has entered into an EXHIBIT D
     ("PROFESSIONAL SERVICES") as indicated on the Signature Page, Nuance agrees
     to use its commercially reasonable efforts to develop and deliver to VAR
     the Professional Services described therein according to the milestone
     schedule also described therein. The content of Exhibit D shall, in all
     events, include the following mutually agreed terms: specifications of any
     deliverable item or work product, delivery schedule, acceptance criteria,
     documentation specifications and warranty period.

     4.1  OWNERSHIP. Unless otherwise provided in a statement of work, Nuance
          shall own all deliverables created pursuant to such professional
          services and, upon Nuance's receipt of payment for same, Nuance grants
          to VAR a perpetual, world-wide, nonexclusive, royalty-free, fully-paid
          license under Nuance's intellectual property rights to use such
          deliverables in conjunction with Nuance Software. In the event that an
          Application is developed by Nuance under the terms of an EXHIBIT D
          ("PROFESSIONAL SERVICES"), [***]

5.   DELIVERY AND ACCEPTANCE

     5.1  Nuance shall deliver all of the Software ordered by VAR on or before
          the date shown on the applicable Order Form. Delivery shall be FOB
          VAR's offices, freight prepaid by Nuance, unless otherwise indicated
          in the Order Form. Partial deliveries are not authorized.

[*]= CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       8
<PAGE>

                                                     VAR Agreement Number_______
                                                  Nuance Agreement Number_______

                          Nortel--Nuance Confidential

     5.2  Unless modified by an Exhibit J, Software licensed hereunder, shall
          have a test period of ten (10) days duration, provided, however, that
          should an acceptance test failure occur during such ten (10) day
          period, all subsequent re-testing shall occur pursuant to an
          additional ten (10) day period.

     5.3  In no event shall any Update delivered by Nuance cause any Software or
          Documentation previously accepted by VAR to perform less favorably in
          any material respect than as described in the Specifications in effect
          at the time of such acceptance.

     5.4  Nuance shall use commercially reasonable efforts to (a) minimize the
          frequency of new Releases, Updates and Versions by optimal engineering
          development, process, controls, and quality assurance procedures; (b)
          anticipate and accommodate, to the greatest degree possible, a typical
          lead-time for internal testing and evaluation by VAR of 60 days for
          new Releases, Updates or Versions.

     5.5  VAR shall have the right to order Software, Releases or Versions which
          were previously ordered by VAR during the preceding 15 month period or
          the prior three releases, whichever is later. Such Software, Releases
          or Versions, and their respective Documentation and Updates, shall be
          identical in form, function and all other respects, and be fully and
          effectively supported by Nuance during the Warranty Period set forth
          in Section 12.1 and any period of Technical Support Services described
          in Exhibit F.

     5.6  CUSTOMER SPECIFIC ACCEPTANCE REQUIREMENTS. Any customer specific
          acceptance requirements that have been negotiated and agreed upon by
          the parties in good faith shall be made solely pursuant to an Exhibit
          J ("Customer Specific Acceptance Requirements").

6.   CONFIDENTIAL INFORMATION.

     6.1  DESIGNATION. Each party (the "Disclosing Party") may from time to time
          during the Term of this Agreement disclose to the other party (the
          "Receiving Party") certain non-public information regarding the
          Disclosing Party's business, including technical, marketing,
          financial, personnel, planning, and other information ("Confidential
          Information"). The Disclosing Party shall mark all such Confidential
          Information in tangible form with the legend `confidential',
          `proprietary', or with similar legend. With respect to Confidential
          Information disclosed orally, the Disclosing Party shall describe such
          Confidential Information as such at the time of disclosure, and shall
          confirm such Confidential Information as such in writing within thirty
          (30) days after the date of oral disclosure. Regardless of whether so
          marked, however the Software itself (in Source Code and Object Code
          formats), shall be deemed to be the Confidential Information of
          Nuance.

     6.2  PROTECTION OF CONFIDENTIAL INFORMATION. Except as expressly permitted
          by this Agreement, the Receiving Party shall not disclose the
          Confidential Information of the Disclosing Party and shall use at
          least the same degree of care which the Receiving Party ordinarily
          uses with respect to its own proprietary information, but in no event
          with less than reasonable care. The Receiving Party shall not use the
          Confidential Information of the Disclosing Party for any purpose not
          expressly permitted by this Agreement, and shall limit the disclosure
          of the Confidential Information of the Disclosing Party to the
          employees or agents of the Receiving Party who have a need to know
          such Confidential Information for purposes of this Agreement, and who
          are, with respect to the Confidential Information of the Disclosing
          Party, bound in writing by confidentiality terms no less restrictive
          than those contained herein. The Receiving Party shall provide copies
          of such written agreements to the Disclosing Party upon request;
          provided, however, that such agreement copies shall themselves be
          deemed Confidential Information.

     6.3  EXCEPTIONS. Notwithstanding anything herein to the contrary,
          Confidential Information shall not be deemed to include any
          information which: (A) was already lawfully known to the Receiving
          Party at the time of disclosure by the Disclosing Party as reflected
          in the written records of the Receiving Party; (B) was or has been
          disclosed by the Disclosing Party to a third party without obligation
          of confidence; (C) was or becomes lawfully known to the general public

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                                                     VAR Agreement Number_______
                                                  Nuance Agreement Number_______

                          Nortel--Nuance Confidential

          without breach of this Agreement; (D) is independently developed by
          the Receiving Party; (E) is approved in writing by the Disclosing
          Party for disclosure by the Receiving Party; (F) is required to be
          disclosed in order for the Receiving Party to enforce its rights under
          this Agreement; or (G) is required to be disclosed by law or by the
          order or a court or similar judicial or administrative body; provided,
          however, that the Receiving Party shall notify the Disclosing Party of
          such requirement immediately and in writing, and shall cooperate
          reasonably with the Disclosing Party, at the Disclosing Party's
          expense, in the obtaining of a protective or similar order with
          respect thereto.

     6.4  RETURN OF CONFIDENTIAL INFORMATION. The Receiving Party shall return
          to the Disclosing Party, destroy or erase all Confidential Information
          of the Disclosing Party in tangible form: (A) upon the written request
          of the Disclosing Party (except for Software contained in such
          Confidential Information); or (B) upon the expiration or termination
          of this Agreement, whichever comes first, and in both cases, the
          Receiving Party shall certify promptly and in writing that it has done
          so. Except for the rights expressly described herein, VAR is not
          granted any rights to any Nuance patents, copyrights, trade secrets,
          trade names, trademarks (whether or not registered), or any other
          rights, franchises or licenses.

7.   PROPRIETARY NOTICES.

     7.1  REQUIRED NOTICES. VAR agrees that as a condition of its rights
          hereunder, each copy of the Software shall contain the same
          proprietary notices which appear on or in Software as provided by
          Nuance to VAR and as otherwise reasonably required by Nuance.

     7.2  UNAUTHORIZED DISTRIBUTION OR COPYING. VAR agrees that: (A)
          distributing, copying, duplicating or otherwise reproducing all or any
          part of the Software (except as expressly permitted by this
          Agreement); or (B) distributing copies of all or any portion of the
          Software other than in conjunction with the Integrated System and in
          strict accordance with this Agreement, will be considered a material
          breach of this Agreement. Regardless of any cure period under any
          other section of this Agreement, Nuance shall have the immediate right
          to seek injunctive relief for breach under this Section. In any event,
          and regardless of any other cure period under this agreement, the cure
          period for breach under this SECTION 7.2 shall be a maximum of ten
          (10) days.

8.   MARKETING.

     8.1  MARKETING OF INTEGRATED SYSTEM. VAR agrees to use its commercial best
          efforts to Sell the Integrated System to End Users pursuant to the End
          User License. VAR agrees to actively and diligently develop, promote,
          market, solicit orders for, maintain and support Integrated Systems in
          a manner which reflects favorably on the Nuance Products and the good
          will and reputation of the parties.

     8.2  COMPETITIVE PRODUCTS. Subject to all terms of this Agreement,
          including without limitation the provisions of SECTION 6
          ("CONFIDENTIAL INFORMATION"), and the intellectual property rights of
          each party, nothing in this Agreement shall prevent either party from
          developing or having developed any goods or services, regardless of
          their similarity to the goods and services of the other party, or
          shall prevent either party from entering into any agreement with any
          third party.

     8.3  COOPERATIVE SALES EFFORTS. Nuance and VAR agree to cooperative sales
          activities as follows:

          8.3.1 Nuance and VAR mutually agree that when joint commitments are
                made in writing to pursue a specific business opportunity,
                neither will make a joint proposal for that business opportunity
                with any third party except by prior mutual written agreement
                between VAR and Nuance.

                                       10
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                                                     VAR Agreement Number_______
                                                  Nuance Agreement Number_______

                          Nortel--Nuance Confidential

          8.3.2 Nuance may choose to call directly on any prospect as may VAR.
                Nuance will determine whether any resulting opportunities
                represent a joint opportunity with VAR and if so will seek to
                involve VAR. However, if Nuance has reseller relationships with
                more than one bidder in a competitive procurement, Nuance will
                provide equivalent reseller support to all resellers regardless
                of which is the installed supplier.

          8.3.3 Nuance agrees that it will not [***] by [***] End Users or
                Authorized Sublicensees [***]. If a [***] required to [***]
                Nuance and VAR agree to jointly review the sales situation to
                determine if [***] is appropriate.

          8.3.4 If Nuance's direct sales activity identifies a prospect's
                preference for a supplier of voice processing solutions other
                than VAR based upon installed base, prior relationships, etc.,
                Nuance will be free to work with the prospect's preferred
                supplier.

     8.4  COOPERATIVE MARKETING EFFORTS. Nuance and VAR agree to cooperative
          marketing activity as follows:

          8.4.1 Nuance and VAR agree to meet quarterly (in person or by
                conference call) to review market, sales and product
                requirements and to agree to needed actions to achieve the
                objectives of this Agreement.

          8.4.2 VAR agrees to provide Nuance a quarterly forecast of anticipated
                sales and expected revenue. Nuance agrees to provide appropriate
                support to VAR's sales efforts (i.e. provide marketing/sales
                documentation, accompany VAR on specific customer calls as
                agreed appropriate, etc.).

          8.4.3 In an effort to promote the relationship, Nuance and VAR agree
                to use commercially reasonable efforts to provide Nuance with
                monthly updates on forecasts of projected sales volumes of
                Nuance products. Especially in the event of pending significant
                transactions or series of transactions, Nuance and VAR shall
                work together in good faith to track the progress of said
                transactions. Failure to comply with this section 8.4.3 shall
                not constitute material breach of this agreement.

          8.4.4 When VAR is the prime contractor to an End User for a specific
                project, Nuance will respond to End User requests for
                information, data or documentation that are specific to such
                project [***], unless otherwise agreed in writing.
                VAR agrees to make reasonable efforts to include Nuance's
                project manager in project status reviews and meetings which
                relate to Nuance Software or Professional Services, as
                applicable, to assure Nuance's understanding of End User
                requirements to permit Nuance to develop an appropriate response
                in cooperation with VAR for communication to End User [***].

          8.4.5 VAR shall not describe the Software in a way that implies or
                states that it is owned or has been developed by VAR. When
                referring specifically to the Software or its underlying
                technology, VAR will use the Nuance name or trademarks. VAR may
                describe a marketing concept such as Large Vocabulary
                Recognition (LVR) that includes the Software and software from
                other companies without specific reference to Nuance's name or
                trademarks.

9.   INVOICES AND PAYMENTS.

     9.1  INVOICES. Nuance shall issue payment invoices from time to time for
          Fees and any other amounts due hereunder. VAR shall make payment to
          Nuance of all such payment invoices in the lawful money of the United
          States of America.

[*]= CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTION.

                                       11
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                                                     VAR Agreement Number_______
                                                  Nuance Agreement Number_______

                          Nortel--Nuance Confidential

    9.1.1 SELF-PROVISIONING OF LICENSES AND ROYALTY REPORTING. Nuance has
          provided to VAR a [***] Additional copies of a [***] may be provided
          by amendment to this Agreement. The royalty report (Exhibit M) will be
          generated on a [***] basis, with the report being due on the [***]
          after the [***] end. Payment is due [***] after the report due date.
          Initially, Nuance and VAR will have a [***]. During the [***] period,
          VAR will provide [***] shipped, but order licenses through the
          standard process. At the end of [***] if the reports conform to Nuance
          requirements and are received per the agreed deadlines, then the [***]
          will be considered effective. [***] in existence and in possession or
          control at the time of the signing of this Agreement.

    9.1.2 PAYMENT FOR SOFTWARE. Payment for Software for any licenses not
          purchased per 9.1.1 will be due within [***] after the [***] in which
          the Software was accepted under Section 5.2.

    9.1.3 PAYMENT FOR TECHNICAL SUPPORT SERVICES. Subject to the terms specified
          in EXHIBIT F, SCHEDULE 1 ("TECHNICAL SUPPORT SERVICES FEE SCHEDULE"),
          payment for Technical Support Services, shall be made as follows:

          i)  For new customers beginning on support,: At the end of each [***],
              VAR will provide a report showing which customers began support in
              that [***]. The report will be provided within [***] of the end
              of each quarter. Nuance will invoice, and VAR will pay a [***] for
              the portion of that quarter that the customer was on support in
              arrears, as well as [***], in accordance with the terms as further
              defined in Schedule 1 of Exhibit F. At the end of the first full
              quarter that a customer is on support, the billing of their
              support renewals will be done per the terms of existing customers
              renewing support. Support begins at the end of Warranty Period.

          ii) For existing customers renewing support: [***] for that quarter.
              Payment terms for existing customers renewing support will be
              [***].

    9.1.4 PAYMENT FOR PROFESSIONAL SERVICES OR MISCELLANEOUS FEES AND SERVICES.
          Payment for Professional Services shall be made as agreed within an
          EXHIBIT D ("PROFESSIONAL SERVICES"). Payment for miscellaneous fees or
          services will be due thirty (30) days following the issuance of an
          invoice from Nuance to VAR in conformance with the terms of an Exhibit
          D.

    9.1.5 UPDATES AND SUPPORT SERVICES FOR THE STOCKS & MUTUAL FUNDS. Grammars
          update services shall be due for the [***] upon commencement of
          delivery of services. Payment should be [***] per the terms of section
          9.1.2.

    9.1.6 STANDARD DISCOUNT TERMS. VAR will be eligible for the following
          discounts off Nuance's [***]. Discount for this agreement will be
          established based on the following levels:

                   -------------------            ---------------
                          [***]                        [***]

[*]= CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMMITED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMMITED PORTIONS.

                                       12

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                                                     VAR Agreement Number_______
                                                  Nuance Agreement Number_______

                          Nortel--Nuance Confidential

                                     [***]
                                     [***]

          9.1.7 OTHER DISCOUNTS VAR will receive a [***] the Stocks and
                Mutual Funds Grammar Update Service. Nuance will conduct [***]

          9.1.8 [***] [***]

     9.2  EFFECT OF LATE PAYMENT. All late payments of payment invoices by VAR,
          not subject to good faith dispute, shall bear interest at a rate of
          one and one- half percent (1.5%) per month or partial month during
          which any sums under such payment invoices were owed and unpaid, or
          the highest rate allowed by law, whichever is lower.

     9.3  EFFECT OF NON-PAYMENT. Any failure of VAR to make payment of any
          payment invoice in the manner described in this SECTION 9 ("INVOICES
          AND PAYMENTS") may, at Nuance's discretion, be considered a material
          breach of this Agreement by VAR for purposes of initiating the
          procedures set forth in paragraph 11.2 of SECTION 11 ("TERM AND
          TERMINATION").

     9.4  EFFECT OF REDUCED REVENUE TO NUANCE. In the event that revenue to
          Nuance drops below [***] after the initial term of this agreement,
          Nuance reserves the right to reset the discount schedule to Nuance's
          then standard VAR discounts.

10.  REPORTS AND RIGHT TO AUDIT.

     10.1 REPORTS. Upon Nuance's enabling VAR to [***] as described in SECTION
          [***], VAR shall prepare and deliver to Nuance within [***] Nuance
          may provide, from time to time, a form of Report which VAR agrees to
          follow with respect to carrying out the foregoing obligations.

          VAR shall also report the [***]

     10.2 RIGHT TO AUDIT. VAR shall maintain written records describing the use
          and location of all copies of the Software, including without
          limitation any such copies in the possession or control of VAR. Upon
          Nuance's written request, VAR shall provide Nuance with all
          information and assistance necessary to enable Nuance to determine (a)
          whether VAR has categorized any or all

[*]= CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
                                       13
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                                                     VAR Agreement Number_______
                                                  Nuance Agreement Number_______

                          Nortel--Nuance Confidential

          Applications in the appropriate Tier(s); and (b) whether any Calls are
          being Disconnected and Reconnected outside the scope of the licenses
          granted herein. In connection with the foregoing obligation, VAR may
          provide, without limitation, data generated by the call logging
          features of the Software (if such features are enabled), the access
          phone number(s) for any Application or Separate Application, a copy of
          any Application, Separate Application or other VAR software requested
          by Nuance, and other information similarly useful to enable Nuance to
          exercise its audit rights hereunder. Provision of such information by
          VAR shall not in any way restrict Nuance's right to request additional
          information hereunder. All information and software provided to Nuance
          or its agents pursuant to this Section 10.2 shall be treated as
          confidential by Nuance.

          VAR agrees that, upon written request by Nuance, VAR will assist
          Nuance to verify that Authorized Sublicensees are complying with the
          applicable licenses granted hereunder. Accordingly, VAR shall use
          reasonable efforts to include a provision in its agreements with all
          Authorized Sublicensees that such parties will provide to VAR, upon
          VAR's request, all assistance and information required to enable VAR
          to verify that Authorized Sublicensees are complying with the
          applicable licenses granted by VAR pursuant to this Agreement. All
          information provided by VAR to Nuance in connection with the foregoing
          obligation shall be treated by Nuance as VAR's Confidential
          Information.

          VAR shall also maintain a complete, clear, and accurate record of: (A)
          the location of each copy of the Software while in VAR's possession;
          (B) the number, type, Authorized Sublicensee identity and location for
          Software Sold or sublicense in an Integrated System or used internally
          by VAR during each calendar month; and (C) any other information which
          may be reasonably required by Nuance to determine whether VAR is
          complying with the terms of this Agreement. To ensure compliance with
          the terms of this Agreement, Nuance shall have the right, at its own
          expense and exercisable by outside auditors mutually agreed upon by
          the parties, to audit and to obtain copies of all such written records
          provided such audit does not interfere unreasonably with VAR's day to
          day business operations and that such auditors sign VAR's non-
          disclosure agreement. Such non-disclosure agreement shall be
          commercially reasonable and will not prohibit the auditors from
          disclosing their findings to Nuance. Nuance may exercise such right to
          audit upon reasonable advance notice to VAR, and no more frequently
          than one (1) time each calendar year. If any such audit should
          disclose any underpayment of Fees, VAR shall promptly pay Nuance such
          underpaid amount, together with interest thereon at a rate of one and
          one-half percent (1.5%) per month or partial month during which each
          such amount was owed and unpaid, or the highest rate allowed by law,
          whichever is lower. If the amount of such underpayment exceeds five
          percent (5%) of amounts otherwise payable, then VAR shall immediately
          reimburse Nuance for Nuance's reasonable and customary audit expenses.

11.  TERM AND TERMINATION.

     11.1 TERM. This Agreement shall remain in effect for an initial period
          [***]. At the expiration of the initial period, this Agreement shall
          automatically renew for subsequent [***] periods unless either party
          provides written notice of an intention not to renew for a given
          period. Any given period is subject to earlier termination by either
          party as hereinafter provided. Any End User License already entered
          into by VAR as of the date of the expiration or termination of this
          Agreement shall remain in effect provided that all associated End
          Users have at all times remained in strict compliance with the terms
          of the End User License. Nuance shall continue to provide Level 3
          Technical Support Services to VAR for applicable End User Support so
          long as VAR continues payment to Nuance of all applicable Technical
          Support Fees, but in no event shall VAR enter into any new Technical
          Support Services agreements with End Users subsequent to the
          expiration or termination of this Agreement.

     11.2 TERMINATION FOR MATERIAL BREACH. Either party may terminate this
          Agreement immediately upon written notice for the material breach of
          the other party, which material breach has remained uncured for period
          of thirty (30) days from the date of delivery of written notice
          thereof to the breaching party. The parties expressly understand and
          agree that any uncured failure

[*]=CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
                                       14
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                                                     VAR Agreement Number_______
                                                  Nuance Agreement Number_______

                          Nortel--Nuance Confidential

          of VAR to undertake the efforts described by SECTION 8.1 may be deemed
          a material breach of this Agreement.

     11.3 EFFECT. In the event of any termination of this Agreement as provided
          in SECTION 11.2 ("TERMINATION FOR MATERIAL BREACH"), and except as
          further described below, all licenses granted by Nuance hereunder
          shall immediately terminate, and VAR shall immediately return to
          Nuance all material belonging to Nuance or its licensors, including
          without limitation all copies of the Software and Nuance Confidential
          Information, and shall promptly certify to Nuance in writing that VAR
          has done so. Any End User License already entered into by VAR as of
          the date of the foregoing material breach by VAR shall remain in
          effect provided that all associated End Users have at all times
          remained in strict compliance with the terms of the End User License.
          Nuance shall continue to provide Level 3 Technical Support Services to
          VAR for applicable End User support so long as VAR continues payment
          to Nuance of all applicable Technical Support Services Fees, but in no
          event shall VAR enter into any new Technical Support Services
          agreements with End Users subsequent to such breach. Solely in the
          event of a termination of this Agreement for Nuance's material breach,
          and in addition to any other available remedies, VAR shall, for a
          period not to exceed ninety (90) days have the right to Sell, pursuant
          to the terms of this Agreement, any remaining Integrated Systems which
          were in VAR's inventory on the date of the foregoing material breach.

12.  WARRANTY AND DISCLAIMER.

     12.1 SOFTWARE WARRANTY. Nuance warrants that for a period of ninety (90)
          days from acceptance of Software pursuant to SECTION 5 ("DELIVERY AND
          ACCEPTANCE") (hereinafter the "Warranty Period"), the Software shall
          meet all of Nuance's material Specifications for the Software at the
          time of acceptance for use on an Integrated System. Each instance in
          which the Software fails to meet such material Specifications shall be
          considered an "Error." If VAR reports to Nuance any Errors in such
          Software during the applicable Warranty Period, and provides such
          detail as Nuance may reasonably require to permit Nuance to reproduce
          such Errors, then Nuance, at its expense, shall modify or replace the
          Software, or provide Updates to correct such Errors.

     12.2 [***]

     12.3 DISCLAIMER. THE WARRANTY SET FORTH SUBSECTION 12.1 ("SOFTWARE
          WARRANTY") STATES NUANCE'S SOLE AND EXCLUSIVE WARRANTY TO VAR AND ANY
          THIRD PARTY CONCERNING THE "SOFTWARE" AND THE EXCLUSIVE REMEDY FOR
          BREACH OF WARRANTY. EXCEPT AS EXPRESSLY SET FORTH IN SUBSECTION 12.1
          ("SOFTWARE WARRANTY"), THE "SOFTWARE" IS PROVIDED STRICTLY "AS IS,"
          AND NUANCE MAKES NO ADDITIONAL WARRANTIES, EXPRESS, IMPLIED, ARISING
          FROM COURSE OF DEALING OR USAGE OF TRADE, OR STATUTORY, AS TO THE
          "SOFTWARE" OR ANY MATTER WHATSOEVER. IN PARTICULAR, ANY AND ALL
          WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
          NON- INFRINGEMENT (EXCEPT IN ACCORDANCE WITH SECTION 12.2 ARE
          EXPRESSLY EXCLUDED. THIS IS A LIMITED WARRANTY AND IS THE ONLY
          WARRANTY MADE BY NUANCE. VAR SHALL NOT HAVE THE RIGHT TO MAKE OR PASS
          ON, AND SHALL TAKE ALL MEASURES NECESSARY TO ENSURE THAT NEITHER VAR
          NOR ANY OF ITS AGENTS OR EMPLOYEES SHALL MAKE OR PASS ON, ANY EXPRESS
          OR IMPLIED WARRANTY OR REPRESENTATION ON BEHALF OF NUANCE OR ITS
          LICENSORS TO ANY END USER OR THIRD PARTY.

13.  TECHNICAL SUPPORT SERVICES AND IN SERVICE DATA.

     13.1 PROVISION OF TECHNICAL SUPPORT SERVICES. In the event that VAR has
          elected to receive Technical Support Services as indicated on an
          EXHIBIT F ("TECHNICAL SUPPORT

[*]= CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       15
<PAGE>

                                                     VAR Agreement Number_______
                                                  Nuance Agreement Number_______

                          Nortel--Nuance Confidential

    SERVICES"), and has paid all associated Technical Support Services
    Fees as invoiced by Nuance, VAR shall be entitled to receive Technical
    Support Services as hereinafter described. For purposes of this
    Agreement, "Technical Support Services" shall consist of:

    13.1.1 The right of VAR's Designated Employees to contact Nuance by
           telephone or e-mail and to consult with Nuance regarding the
           installation, functions and operation of the Software or
           Application;

    13.1.2 The right of VAR's Designated Employees to contact Nuance by
           telephone or e-mail to consult with Nuance regarding Errors in
           the Software or Application which Errors have been brought to
           Nuance's attention by VAR's Designated Employees;

    13.1.3 The right to obtain from Nuance certain Updates for the
           Software or Application which Updates are reasonably necessary
           to correct reproducible Errors which Errors have been brought
           to Nuance's attention by VAR's Designated Employees; or which
           provide improved or additional functions which are supplied to
           other VARs or End Users under a Technical Support Services
           agreement.

    13.1.4 The right to have Nuance use its commercially reasonable effort
           to promptly, thoroughly and competently correct Errors other
           than those described above which have been brought to Nuance's
           attention by VAR's Designated Employees.

  13.2 HOURS AND FACILITIES.

    13.2.1 BASIC TECHNICAL SUPPORT SERVICES. If VAR, on behalf of an End
           User, has elected to receive Basic Technical Support Services
           as indicated on an EXHIBIT F ("TECHNICAL SUPPORT SERVICES"),
           then VAR shall be entitled to receive Technical Support
           Services on behalf of the subject End User as described in
           SECTION 13.1 ("PROVISION OF TECHNICAL SUPPORT SERVICES") only
           between the hours of 8:30 a.m. and 6:00 p.m., Eastern Time.

    13.2.2 PREMIUM TECHNICAL SUPPORT SERVICES. If VAR, on behalf of an End
           User, has elected to receive Premium Technical Support Services
           as indicated by VAR's signature on an EXHIBIT F ("TECHNICAL
           SUPPORT SERVICES"), then VAR shall be entitled to receive
           Technical Support Services on behalf of the subject End User as
           described in SECTION 13.1 ("PROVISION OF TECHNICAL SUPPORT
           SERVICES") twenty-four (24) hours per day, seven (7) days a
           week.

  13.3 LIMITATIONS. VAR, on behalf of End User, must elect to receive Technical
       Support Services on either all or none of the Software, and may not elect
       to receive Technical Support Services on some Software and not on other
       Software. Nuance shall have no obligation to provide Technical Support
       Services for any Application (except as so provided under an EXHIBIT D
       "(PROFESSIONAL SERVICES")) any non-Nuance computer programs, technology
       or hardware, or any Software which is not within three Releases of the
       most recent Version or Release, or which was first delivered to VAR more
       than three years earlier (whichever is later) or for which Nuance has
       provided Updates which have not been applied to the Software for a period
       of more than one (1) year from the date of delivery thereof to VAR.
       Should VAR or VAR's End User cancel Technical Support Services and
       subsequently desire to reinstate such Technical Support Services, VAR
       shall pay Nuance an amount equal to the unpaid Technical Support Services
       Fees that would have been due during the period in which Technical
       Support Services were canceled. Any failure of VAR to pay all Technical
       Support Service Fees as invoiced by Nuance, and not subject to good faith
       dispute, shall, at Nuance's sole option, immediately eliminate any
       obligation of Nuance to provide Technical Support Services hereunder.

 13.4  ADDITIONAL SERVICES. In the event that VAR desires to obtain from
       Nuance additional services with respect to the Software, or any
       services at all with respect to any Professional

                                       16
<PAGE>

                                                     VAR Agreement Number_______
                                                  Nuance Agreement Number_______

                          Nortel--Nuance Confidential

       Services, Nuance agrees to negotiate in good faith for the provision of
       such services at rates no higher than Nuance's normal commercial rates,
       and subject to terms as may be agreed to by the parties and to be
       contained in an Exhibit to this Agreement.

  13.5 IN SERVICE DATA. In the event that VAR determines that In Service Data is
       required for the tuning or support of an Intergrated System, and subject
       to agreement by VAR's End User, which (if granted) may require Nuance's
       execution of a non-disclosure agreement acceptable to VAR's End User,
       Nuance will be provided reasonable access to In-Service Data generated
       through the use of each Integrated System in which Software is installed.
       VAR shall use commercial best efforts to negotiate the right to obtain
       such In-Service Data, and/or clearly inform the End User in writing that
       denial of access to In-Service Data may result in the inability of Nuance
       to make essential improvements to the Software's functionality or
       recognition accuracy. In cases where the Specifications establish
       performance criteria which are predicated upon access to In-Service Data,
       VAR shall ensure that its own contract specifications with an End User
       clearly cite the requirement for In-Service Data as a condition of
       achieving such performance by the Software. Nuance may use this In-
       Service Data to train, refine, supplement or test its speech recognition
       and natural language understanding software, models and algorithms. The
       primary use of In-Service Data is to improve the performance of the
       Software for the End User. Additionally, resulting improvements to the
       Software may be used for the benefit of all users of the Software. Nuance
       may not use the content of any such data for any purpose other than that
       described in this section.

14.  VAR SUPPORT OF END USERS. VAR hereby acknowledges and agrees that Nuance
     shall have no responsibility for providing service or assistance to End
     Users except as provided under EXHIBIT D ("PROFESSIONAL SERVICES"). VAR
     agrees that VAR shall not direct any End Users to contact Nuance directly
     for Technical Support Services.

15.  INDEMNITIES AND LIMITATION OF LIABILITY.

  15.1 INTELLECTUAL PROPERTY INDEMNITY. Nuance shall defend or, at Nuance's
       option, settle, any claim, suit, action or proceeding (a "Claim") brought
       in a court of competent jurisdiction by a third party against VAR to the
       extent such Claim alleges that the Software infringes such third party's
       [***] and Nuance shall pay any damages finally awarded by such court in
       connection therewith, provided that VAR, gives Nuance prompt written
       notice of each such Claim, tenders to Nuance the sole control of the
       defense or settlement of each such Claim at Nuance's expense, and
       cooperates with Nuance in defending or settling each such claim. If
       Nuance receives notice of an alleged infringement, or if VAR's use of the
       Software shall be prevented by permanent injunction, Nuance may, at its
       sole option and expense, procure for VAR the right to continue using the
       Software as provided hereunder, modify the Software so that it is no
       longer infringing, or replace the Software with computer software of
       equal or superior functional capability or in the case of trademark
       infringement, instruct VAR to use an alternative trademark. THE RIGHTS
       GRANTED TO VAR UNDER THIS SECTION 15.1 ("INTELLECTUAL PROPERTY
       INDEMNITY") SHALL BE VAR's SOLE AND EXCLUSIVE REMEDY AND NUANCE'S SOLE
       OBLIGATION FOR ANY ALLEGED INFRINGEMENT OF ANY PATENT, COPYRIGHT,
       TRADEMARK, OR OTHER PROPRIETARY RIGHT. NUANCE SHALL HAVE NO LIABILITY TO
       VAR OR ANY THIRD PARTY IF ANY ALLEGED INFRINGEMENT OR CLAIM OF
       INFRINGEMENT IS BASED UPON: (A) ANY "APPLICATION" OR MODIFIED "SOFTWARE";
       (B) USE OF THE "SOFTWARE" IN CONNECTION OR IN COMBINATION WITH EQUIPMENT,
       DEVICES, OR SOFTWARE NOT PROVIDED BY NUANCE (IF SUCH INFRINGEMENT OR
       CLAIM COULD HAVE BEEN AVOIDED BY THE USE OF OTHER EQUIPMENT, DEVICES OR
       SOFTWARE), OTHER THAN FOR USE ON AN "INTEGRATED SYSTEM"; OR (C) THE USE
       OF "SOFTWARE" OTHER THAN AS PERMITTED UNDER THIS AGREEMENT OR NOT IN
       ACCORDANCE WITH THE SPECIFICATIONS OR USE OF OTHER THAN THE MOST CURRENT
       RELEASE OR VERSION OF THE "SOFTWARE" (IF SUCH CLAIM WOULD HAVE BEEN
       PREVENTED BY THE USE OF SUCH RELEASE OR VERSION).

[*]=CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       17
<PAGE>

                                                     VAR Agreement Number_______
                                                  Nuance Agreement Number_______

                          Nortel--Nuance Confidential

  15.2 VAR INDEMNITY Without limiting Nuance's obligations under Section
       15.1, VAR agrees to defend and hold harmless Nuance from and against any
       losses, costs, or damages (including reasonable attorneys' fees)
       resulting from or in connection with any claims by third parties
       resulting from or in connection with the use, manufacture, or
       distribution of Integrated Systems by VAR and VAR's direct and indirect
       customers [***] provided that Nuance gives VAR prompt written notice of
       any such claim, tenders to VAR the defense or settlement of any such
       claim at VAR's expense, and cooperates with VAR, at VAR's expense, in
       defending or settling such claim.

  15.3 LIMITATION OF LIABILITY.

       EXCEPT WITH REGARD FOR DAMAGES FOR PERSONAL INJURY, NEITHER PARTY WILL BE
       LIABLE TO THE OTHER PARTY OR ANY THIRD PARTY FOR ANY LOSS OF USE,
       INTERRUPTION OF BUSINESS OR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE
       OR CONSEQUENTIAL DAMAGES OF ANY KIND (INCLUDING LOST PROFITS) REGARDLESS
       OF THE FORM OF ACTION WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE),
       STRICT PRODUCT LIABILITY OR OTHERWISE, EVEN IF THAT PARTY HAS BEEN
       ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THE FOREGOING LIMITATION OF
       LIABILITY IS INDEPENDENT OF ANY EXCLUSIVE REMEDIES FOR BREACH OF WARRANTY
       SET FORTH IN THIS AGREEMENT.

16.  TAXES. In addition to any other payments due under this Agreement, VAR
     agrees to pay, and to indemnify and hold Nuance harmless from, any sales,
     use, excise, import or export, value added or similar tax or duty not based
     on Nuance's net income levied by the United States or a taxing authority
     therein, including any penalties and interest, as well as any costs
     associated with the collection or withholding thereof, and all governmental
     permit fees, license fees and customs and similar fees levied upon the
     delivery by Nuance of the Software, which Nuance may incur in respect of
     this Agreement.

17.  GOVERNMENT END USERS. When Selling an Integrated System to a U.S.
     Government End User, VAR shall identify the Software in an Integrated
     System as a "commercial item," as that term is defined at 48 C.F.R. 2.101
     (OCT 1995), and more specifically shall identify such item as "commercial
     computer software" and "commercial computer software documentation," as
     such terms are used in 48 C.F.R. 12.212 (SEPT 1995). Consistent with 48
     C.F.R. 12.212 and 48 C.F.R. 227.7202-1 through 227.7202-4 (JUNE 1995), VAR
     will provide the Software in any Integrated System (including related
     documentation) to U.S. Government End Users: (A) only as a commercial end
     item; and (B) only pursuant to the End User License Agreement.

18.  EXPORT CONTROL. The parties acknowledge that the manufacture and sale of
     the Software or Application is subject to the export control laws of the
     United States of America, including the U.S. Bureau of Export
     Administration regulations, as amended, and hereby agree to obey any and
     all such laws. The parties agree not to take any actions that would cause
     either party to violate the U.S. Foreign Corrupt Practices Act of 1997, as
     amended.

19.  [***] [***]. [***] [***].

[*]=CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                   18
<PAGE>

                                                     VAR Agreement Number_______
                                                  Nuance Agreement Number_______

                          Nortel--Nuance Confidential

20.  SURVIVAL AND ORDER OF PRECEDENCE. In the event of any expiration or
     termination of this Agreement, the provisions OF SECTION 1 ("DEFINITIONS"),
     SECTION 6 ("CONFIDENTIAL INFORMATION"), SECTION 9 ("INVOICES AND
     PAYMENTS"), SECTION 10 ("REPORTS AND RIGHT TO AUDIT"), SECTION 11.1
     ("TERM"), SECTION 11.3 ("EFFECT"), SECTION 12 ("WARRANTY AND DISCLAIMER"),
     SECTION 14 ("VAR SUPPORT OF END USERS"), SECTION 15 ("INDEMNITIES AND
     LIMITATION OF LIABILITY"), SECTION 16 ("TAXES"), SECTION 20 ("SURVIVAL AND
     ORDER OF PRECEDENCE") and SECTION 21 ("GENERAL"), except SECTION 21.10,
     shall survive and shall continue to bind the parties. In the event of any
     conflict between the terms of this Agreement and the terms of any Exhibit,
     the terms of the Exhibit shall control.

21.  GENERAL.

     21.1  VENUE. All litigation arising under or related to this agreement
           shall be brought in either the Superior Court of the State of
           California in Santa Clara County or the Federal District Court of San
           Francisco, California. VAR hereby consents to the personal
           jurisdiction of the above-referenced courts.

     21.2  GOVERNING LAW. This Agreement shall be governed in all respects by
           the laws of the United States of America and the State of New York
           without regard to conflicts of law principles. The parties agree that
           the United Nations Convention on Contracts for the International Sale
           of Goods is specifically excluded from application to this Agreement.

     21.3  ATTORNEYS' FEES. In the event any proceeding or lawsuit is brought by
           Nuance or VAR in connection with this Agreement, the prevailing party
           in such proceeding shall be entitled to receive its costs, expert
           witness fees and reasonable attorneys' fees, including costs and fees
           on appeal.

     21.4  INJUNCTIVE RELIEF. It is understood and agreed that, notwithstanding
           any other provisions of this Agreement, breach of the provisions of
           this Agreement by VAR will cause Nuance irreparable damage for which
           recovery of money damages would be inadequate, and that Nuance shall
           therefore be entitled to obtain timely injunctive relief to protect
           Nuance's rights under this Agreement in addition to any and all
           remedies otherwise available under this Agreement.

     21.5  NOTICES. All notices or reports permitted or required under this
           Agreement shall be in writing and shall be delivered by personal
           delivery or by certified or registered mail, return receipt
           requested, and shall be deemed given upon personal delivery or five
           (5) days after deposit in the mail. Notices shall be sent to the
           parties at the addresses described on the Signature Page or such
           other address as either party may designate for itself in writing.

     21.6  NO AGENCY. Nothing contained herein shall be construed as creating
           any agency, partnership, or other form of joint enterprise between
           the parties.

     21.7  FORCE MAJEURE. Neither party shall be liable hereunder by reason of
           any failure or delay in the performance of its obligations hereunder
           (except for the payment of money) on account of strikes, shortages,
           riots, insurrection, fires, flood, storm, explosions, acts of God,
           war, governmental action, labor conditions, earthquakes, material
           shortages or any other cause which is beyond the reasonable control
           of such party.

     21.8  WAIVER. The failure of either party to require performance by the
           other party of any provision hereof shall not affect the full right
           to require such performance at any time thereafter; nor shall the
           waiver by either party of a breach of any provision hereof be taken
           or held to be a waiver of the provision itself.

     21.9  SEVERABILITY. In the event that any provision of this Agreement shall
           be unenforceable or invalid under any applicable law or be so held by
           applicable court decision, such unenforceability or invalidity shall
           not render this Agreement unenforceable or invalid as a whole, and,
           in such event, such provision shall be changed and interpreted so as
           to best accomplish the objectives of such unenforceable or invalid
           provision within the limits of applicable law or applicable court
           decisions.

                                       19
<PAGE>

                                                     VAR Agreement Number_______
                                                  Nuance Agreement Number_______

                          Nortel--Nuance Confidential

          or invalidity shall not render this Agreement unenforceable or invalid
          as a whole, and, in such event, such provision shall be changed and
          interpreted so as to best accomplish the objectives of such
          unenforceable or invalid provision within the limits of applicable law
          or applicable court decisions.

    21.10 USE OF VAR'S NAME. VAR agrees that Nuance may use VAR's name and may
          disclose that VAR is a licensee of Nuance products in Nuance
          advertising, promotion and similar public disclosures with respect to
          the Software; provided, however, that such advertising, promotion or
          similar public disclosures shall not indicate that VAR in any way
          endorses any Nuance products. Nuance agrees that VAR may use Nuance's
          name and may disclose that Nuance is a licensor to VAR in VAR
          advertising, promotion and similar public disclosures with respect to
          the Software; provided, however, that such advertising, promotion or
          similar public disclosures shall not indicate that Nuance in any way
          endorses any VAR products. Notwithstanding the foregoing, neither
          party may issue press releases specifically concerning the other party
          without prior written consent.

    21.11 HEADINGS. The section headings appearing in this Agreement are
          inserted only as a matter of convenience and in no way define, limit,
          construe, or describe the scope or extent of such section or in any
          way affect this Agreement.

    21.12 ASSIGNMENT. Neither this Agreement nor any rights or obligations of a
          Party hereunder may be assigned by that Party in whole or in part
          without the prior written approval of the other Party.

    21.13 COUNTERPARTS. This Agreement may be executed simultaneously in two or
          more counterparts, each of which will be considered an original, but
          all of which together will constitute one and the same instrument.

    21.14 ENTIRE AGREEMENT. This Agreement together with the Exhibits hereto
          completely and exclusively states the agreement of the parties
          regarding its subject matter. It supersedes, and its terms govern, all
          prior proposals, agreements, or other communications between the
          parties, oral or written, regarding such subject matter, including
          that certain value added reseller agreement between Nuance and Nortel
          Networks Inc., formerly known as Northern Telecom Inc., dated on or
          about December of 1997. The terms of any shrink-wrap agreement
          accompanying any Software delivered by Nuance hereunder shall, to the
          extent inconsistent with the terms of this Agreement, have no effect
          whatsoever. This Agreement shall not be modified except by a
          subsequently dated written amendment or Exhibit signed on behalf of
          Nuance and VAR by their duly authorized representatives.

                                       20
<PAGE>

                                                     VAR Agreement Number_______
                                                  Nuance Agreement Number_______

                          Nortel--Nuance Confidential

                                   EXHIBIT A
                            APPLICATION DESCRIPTION

I. General. Prices for all Software licensed under this Agreement shall be
   calculated in accordance with the provisions of this Exhibit A at the
   prices set forth in Exhibit B. It is understood and agreed that Exhibit B
   may be updated and or modified by Nuance in its sole discretion from time to
   time. Any such update or modification shall take effect [***] following
   Nuance's provision of written notice thereof to the Designated
   Representative. [***].

   Definitions. For purposes of this Exhibit A, the following terms shall have
   -----------
   the following meanings:

    "Application" means those software components of the Integrated System
     -----------
    that provide the caller interface to recognize or verify speech in
    connection with the Software and other system software. "Application"
    shall not include operating system software or similar system-level
    software of VAR or third-parties. For the purpose of this Exhibit A,
    all software comprising an Application shall be deemed to constitute
    one (1) Application unless such software consists of two (2) or more
    Separate Applications.

    "Main Menu" means the set of introductory prompts played for a caller
    -----------
    upon first access to an Application at the commencement of a Call,
    which prompts guide such caller to select a particular Separate
    Application. Main Menu shall not include (i) any prompts played after
    a caller's initial access of a Separate Application; or (ii) any
    introductory prompts within any Separate Application.

    "Menu Shortcuts" means portions of a grammar in which two (2) Unique
     --------------
    Items are recognized in a single utterance; provided that (i) such
                                                --------
    Unique Items are menu choices recited by a prompt in the relevant
    application's call flow; and (ii) in a particular Call, no prompt
    indicates to the associated caller that a particular Menu Shortcut is
    available prior to the Application's having first recognized from such
    caller, as separate utterances, any two (2) Unique Items from menu
    choices in the Application that constitute such Menu Shortcut.

    "Separate Applications" means two or more Applications that either (i)
    -----------------------
    are accessed via separate telephone numbers, VOIP connections, or the
    like and cannot be accessed from one-another; or (ii) are accessed via
         ---
    a common Main Menu and, once accessed, do not permit access to any
    other Application during the same Call, whether by returning to the
    Main Menu or otherwise.

    "Unique Item" means a single piece of data obtained from recognizing
    -------------
    speech and having a discrete meaning in an Application. All synonyms
    in a grammar are considered one (1) Unique Item. As an example, the
    utterance, "Buy 33 shares of VAR" contains three (3) Unique Items,
    because the following three (3) prompts could be used to collect the
    data therein contained:

      Prompt:   "Would you like to buy or sell?"
      Response: "Buy."
      Prompt:   "Which stock?"
      Response: "VAR."
      Prompt:   "How many shares?"
      Response: "33."

II.  Recognition Software.  It is understood that the Nuance Express product
     is no longer available and Nuance shall have no further obligation to
     license or otherwise provide Nuance Express hereunder.  Nuance
     recognition software pricing shall be calculated as follows:

     Multi-Tiered, Per-Port Pricing. Nuance recognition software is licensed
     ------------------------------
     hereunder on a per-Port basis, with multi-tiered pricing as set forth in
     Exhibit B hereto. The price per Port is determined by the level of natural
     language understanding capability ("Tier") of the relevant Authorized
     Application. All Ports

[*]=CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
                                       21
<PAGE>

                                                     VAR Agreement Number_______
                                                  Nuance Agreement Number_______

                          Nortel--Nuance Confidential

     licensed in connection with a particular Authorized Application shall be
     licensed at the same per-Port price; provided that Separate Applications
                                          --------
     within an Application may have different per-Port prices, based on the
     Tiers of such Separate Applications. All Ports licensed in connection with
     a particular Separate Application shall be licensed at the same per-Port
     price for the applicable Tier.

     Tier Level. For purposes of this Exhibit A, all Applications are
     ----------
     categorized as falling within one of four levels of natural language
     understanding. The appropriate Tier of a licensed Application shall be
     determined in accordance with the definitions of Tier 1, Tier 2, Tier 3 and
     Tier 4 set forth below:

           "Tier 1 Application" means an Application having grammars recognizing
            ------------------
           only simple digit strings and "yes" and "no" synonyms thereof.

           "Tier 2 Application" means an Application:
            ------------------

           i)   having grammars recognizing only simple digit strings, "yes" and
                "no" and synonyms thereof, natural numbers, alphanumeric
                strings, date, time and currency;

           ii)  having not more than forty (40) total Unique Items in all
                grammars in such Application; and

           iii) in which no grammar contains more than one Unique Item in any
                single utterance. Notwithstanding the foregoing, Tier 2
                Applications developed before January 1, 2001 may include Menu
                Shortcuts.

           "Tier 3 Application" means an Application that:
            ------------------

           i)   either: (A) has grammars recognizing language in addition to
                simple digit strings, "yes" and "no" and synonyms thereof,
                natural numbers, alphanumeric strings, date, time and currency,
                and has more than forty (40) total Unique Items in all grammars
                in such Application; or (B) recognizes spelling; and

           ii)  in which no grammar contains more than one Unique Item in any
                single utterance. Notwithstanding the foregoing, Tier 3
                Applications developed prior to January 1, 2001 may include Menu
                Shortcuts.

           "Tier 4 Application" means any Application in which one or more
            ------------------
           grammars contain more than one Unique Item per utterance.

     For purposes of the classifications above, the number of Unique Items in an
     utterance is the largest number of prompts that could reasonably be used to
     ---------
     gather all of the data in such utterance. The number of Unique Items in an
     Application is the total number of all Unique Items that can be identified
     -----------
     by all prompts in the Application.

III. Nuance Verifier

     Through [***] the license price per Port of Nuance Verifier is [***]
     Beginning [***] the license price per Port of Nuance Verifier will be [***]

IV.  Nuance Grammars

     Nuance Grammar license fees are calculated on a per-Port basis. Grammar
     license fees shall be paid on the total number of Ports licensed for any
     Application in which callers have potential access to such grammar during a
     Call. The per-Port price for Nuance grammars is set forth in Exhibit B.

V.   Additional Languages

[*]=CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       22

<PAGE>

                                                     VAR Agreement Number_______
                                                  Nuance Agreement Number_______

                          Nortel--Nuance Confidential

    Additional charges will apply to the licensing of acoustic models for more
    than one (1) language per Application. Such additional charges shall be
    calculated as a percentage of all license fees payable for the total number
    of Ports licensed for any Application in which callers have potential access
    to more than language during a Call. The charges applicable to the
    additional language(s) licensed by VAR shall be calculated at the percentage
    rates set forth in Exhibit B.

VI. International Charges

    Additional charges will apply to Software run on computers physically
    located outside of the continental United States or Canada at the rates set
    forth in Exhibit B.

                                       23
<PAGE>

                                                     VAR Agreement Number_______
                                                  Nuance Agreement Number_______

                          Nortel--Nuance Confidential

                                   EXHIBIT B
                               NUANCE PRICE LIST

[***]

[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                       24

<PAGE>

                                                     VAR Agreement Number_______
                                                  Nuance Agreement Number_______

                          Nortel--Nuance Confidential

                                   EXHIBIT C
                             INTENTIONALLY DELETED

                                       25
<PAGE>

                                                     VAR Agreement Number_______
                                                  Nuance Agreement Number_______

                          Nortel-Nuance Confidential

                                  EXHIBIT C-1
                             INTENTIONALLY DELETED

                                       26
<PAGE>

                                                     VAR Agreement Number_______
                                                  Nuance Agreement Number_______

                          Nortel--Nuance Confidential

                                   EXHIBIT D
                             PROFESSIONAL SERVICES

Nuance and VAR agree that when Nuance Professional Services are desired by VAR
that an Exhibit D will be completed for each project or service. Each Exhibit D
shall include but not be limited to the following terms: scope of effort,
schedule for deliverables, acceptance criteria and payment terms.

NUANCE COMMUNICATIONS                    VAR

By:                                      By:
       ------------------------                  ------------------------
Title:                                   Title:
       ------------------------                  ------------------------
Date:                                    Date:
       ------------------------                  ------------------------

                                       27
<PAGE>

                                                     VAR Agreement Number_______
                                                  Nuance Agreement Number_______

                          Nortel--Nuance Confidential

                                   EXHIBIT E
                                 MINIMUM TERMS

VAR shall ensure that its End Users are not provided Software unless such End
Users first do one of the following:

     a)  sign VAR's own software license agreement (or modifications thereto),
         and VAR's standard order forms (such as VAR's "Schedule A" form),
         containing terms which substantially communicate the below stipulations
         with respect to the Software which is licensed to VAR by Nuance and
         relicensed by VAR to its End Users under this Agreement; or,

     b)  provide a purchase order or similar signed written agreement to VAR,
         referencing a proposal issued by VAR which substantially communicates
         the below stipulations with respect to the Software which is licensed
         to VAR by Nuance and relicensed by VAR to its End Users under this
         Agreement.

In either of the above cases, VAR shall ensure that the applicable agreement is
fully enforceable in all jurisdictions in which the Integrated System is sold.
All sublicenses of the Software shall be non-transferable unless the party to
whom an End User wishes to transfer such license agrees to be bound by the terms
of the original End User License Agreement.

The parties agree that as a condition of the rights and licenses granted by
Nuance hereunder, each End User License shall contain, at a minimum,
substantially the following terms, allowing reasonable modifications to keep
consistent terminology and without materially changing the associated meaning:

1.   End User accepts a non-exclusive, non-transferable license to use the
     Software that End User obtains from VAR under the Agreement, as follows:

     i)   to use the Software solely for End User's own internal business
          operations on the Integrated System or on a backup system, up to any
          applicable number of designated users or other limitation (if any
          limitation applies). End User shall not have the right to manufacture,
          sell, or otherwise commercially exploit, except in support of End
          User's own internal business operations, any product, system, or
          service based in whole or in part on the Software. End User agrees it
          will not sublicense, transfer, pledge, lease, rent, or share its
          rights under this Agreement;

     ii)  to use the Documentation provided with the Software in support of End
          User's authorized use of the Software;

     iii) to copy the Software for archival or backup purposes; no other copies
          shall be made without Nuance's prior written consent. End User may use
          the Software on a single backup Integrated System if the production
          Integrated System for which they were acquired is rendered inoperable.
          Under no circumstances shall End User use the Software on the
          production Integrated System and the backup Integrated System
          simultaneously. End User agrees not to alter, change, or remove from
          the Software any identifications, including copyright and trademark
          notices, and further agrees to place such markings on any copies of
          the Software. All archival and backup copies of the Software are
          subject to the terms of this Agreement.

End User shall not copy or use the Software (including the Documentation) except
as otherwise specified in the End User license.

2.   Nuance shall retain all right, title and interest in the Software,
     including patent, copyright, trade secret, and trademark rights. Except as
     otherwise expressly stated in the End User agreement, End User does not
     acquire any rights, express or implied, in the Software.

3.   End User shall not cause or permit the reverse engineering, decompilation,
     disassembly or other translation of the Software.

                                       28
<PAGE>

                                                     VAR Agreement Number_______
                                                  Nuance Agreement Number_______

                          Nortel--Nuance Confidential

4.   Foreign Government Agreements. VAR shall take all reasonable [review] steps
     in making proposals and agreements with foreign governments other than the
     United States which involve the Software and related documentation to
     ensure that Nuance's proprietary rights in such Software and related
     documentation receive the maximum protection available from such foreign
     government for commercial computer software and related documentation
     developed at private expense.

5.   Third Party Beneficiary. VAR shall ensure that each End User agrees that
     Nuance is a third-party beneficiary to the End User License Agreement. Such
     provisions are made expressly for the benefit of Nuance and are enforceable
     by Nuance in addition to VAR.

6.   No Warranty. The End User shall agree that VAR's SUPPLIERS DO NOT MAKE OR
     PASS ON TO END USER OR ANY OTHER THIRD PARTY, ANY EXPRESS, IMPLIED OR
     STATUTORY WARRANTY OR REPRESENTATION ON BEHALF OF NUANCE, INCLUDING BUT NOT
     LIMITED TO THE IMPLIED WARRANTIES OF NON-INFRINGEMENT, TITLE,
     MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

7.   Limitation of Liability. The End User shall agree that IN NO EVENT SHALL
     VAR's SUPPLIERS BE LIABLE TO END USER FOR ANY INDIRECT, SPECIAL,
     CONSEQUENTIAL, PUNITIVE OR INCIDENTAL DAMAGES, REGARDLESS OF HOW ARISING,
     REGARDLESS OF THE CAUSE OF ACTION, IN TORT, CONTRACT OR OTHERWISE, AND
     REGARDLESS OF WHETHER ADVISED BEFOREHAND OF THE POSSIBILITY OF SUCH
     DAMAGES.

8.   In-Service Data. In the event that VAR determines that In Service Data is
     required for the tuning or support of an Intergrated System, and subject to
     the right of the End User to waive, in writing, Nuance's right to the In-
     Service Data, the End User shall provide Nuance with reasonable access to
     all In-Service Data generated through the use of each Integrated System in
     which the Software is installed. Any such written waiver shall include
     all of the terms described in Subsection 13.5 ("In Service Data").

9.   End User shall not cause or permit any particular Call that has been
     Disconnected to thereafter be re-Connected, except in cases where a caller
     has been transferred to either a touch-tone system, text to speech system
     or live operator and such Call is re-Connected via the touch-tone system,
     text to speech system or live operator. Notwithstanding the foregoing, End
     User shall not cause or permit Calls that have been Disconnected to
     thereafter be re-Connected for the purpose of reducing the number of Ports
     required to provide voice recognition to simultaneous callers to the
     Integrated System.

Audit Rights. Upon request, End User will provide VAR with all assistance and
information required to enable VAR to determine whether End User is in
compliance with the license granted by VAR, including without limitation
information which will enable VAR to determine the Tier of the Application(s)
being run by End User.

                                       29
<PAGE>

                                                 VAR Agreement Number_______
                                                 Nuance Agreement Number_______

                          Nortel--Nuance Confidential

                                   EXHIBIT F
                          TECHNICAL SUPPORT SERVICES

                   DESCRIPTION OF TECHNICAL SUPPORT SERVICES
                   -----------------------------------------

1.   Responsibilities of Nuance and VAR:

  1.1  VAR shall be responsible for providing Level 1 and Level 2 Technical
       Support Services to End Users. Level 1 Technical Support Services means
       receipt of all calls from End Users for such services and the
       determination of the issue causing the condition reported by the end
       user. Level 2 Technical Support Services means resolving any End User
       issue caused by a defect in the Software when Nuance has provided
       electronic notice of the defect and the needed support action to VAR's
       Designated Personnel.

  1.2  Nuance shall be responsible for Level 3 Support to VAR. Level 3 Technical
       Support Services means the creation of modifications to the Software
       which enable the temporary or permanent resolution of a defect in the
       Software for which a resolution has not been electronically distributed
       to VAR's Designated Personnel.

  1.3  Nuance shall provide telephone hot line support to VAR's Designated
       Personnel for delivery of Technical Support Services. Nuance's telephone
       hot line shall be staffed by technical personnel with a detailed, working
       knowledge of the Software.

  1.4  VAR shall provide Designated Employees who have been trained on the
       Software and who are experienced in providing Technical Support Services
       to End Users.

2. Basic Level Support ("Basic Technical Support Services"):

   Nuance will provide Technical Support Services to Designated Employees of VAR
   on behalf of End Users who have signed Technical Support Agreements with VAR
   for Basic Level Technical Support Services. Such End User Technical Support
   Services agreements shall provide for service during a nine hour period
   between 7:30am and 5:30pm local time for the End User.

3. Premium Level Support ("Premium Technical Support Services"):

   Nuance will provide Technical Support Services to Designated Employees of VAR
   on behalf of End Users who have signed Technical Support Agreements with VAR
   for Premium Level Technical Support Services. Such End User Technical Support
   Services agreements shall provide for service twenty-four (24) hours per day,
   seven (7) days per week.

4. Technical Support Services Fees:

  4.1  Basic Level Technical Support Services fees are [***] Software installed
       at the End User.

  4.2  Premium Level Technical Support Services fees are [***] Software
       installed at the End User.

5. Determination of Defect Severity and Response Times:

  5.1  Upon receipt of a request for Level 3 Technical Support Services from
       Designated Employees of VAR, Nuance and VAR's Designated Employees will
       agree to the Severity of the specific defect and associated Nuance
       Response Times as defined below:

    Severity

[*]= CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                      30
<PAGE>

                                                     VAR Agreement Number_______
                                                  Nuance Agreement Number_______

                          Nortel--Nuance Confidential

    .    Severity 1 shall mean an incident in which the defect in the Software
         has created a situation in which the End User is unable to do
         productive work.

    .    Severity 2 shall mean that a major function of the Software is unusable
         and no known resolution is available that is mutually acceptable to
         Nuance and VAR, but that the user is able to do some production work.

    .    Severity 3 shall mean that there is a loss of function in the Software
         that does not seriously affect the End User's operations or schedules.
         Any defect which was originally reported as Severity 1 or Severity 2,
         but which has been temporarily resolved by a mutually acceptable
         temporary resolution, shall be reduced to Severity 3 at the time the
         temporary resolution has been electronically distributed to VAR,

    .    Severity 4 shall mean all other defects in the Software other than
         those falling within the categories above.

    .    Severity 5 as used herein shall mean requested enhancements to the
         product.

6. Response Times Objectives for Acknowledging Incident

  6.1  Upon receiving notice from Designated Employees of VAR of a defect in the
       Software, Nuance shall acknowledge receipt of such notice. Such
       acknowledgment shall contain a unique number identifying the particular
       incident for tracking purposes. Nuance shall provide VAR with a periodic
       status update for any defect reported by VAR identifying each defect by
       the tracking number assigned to it by Nuance. Each defect reported by VAR
       shall remain open until closure is agreed between Nuance and VAR.

  6.2  Nuance will acknowledge requests from VAR for Technical Support
       Services as follows:

       Severity 1 or 2 - [***]

       Severity 3 through 5 - within [***]

7. Response Time Objectives for Resolution of Incident. Nuance shall make
   reasonable commercial efforts to provide a work-around or resolution for
   the reported defect in the Software in conformance with the following
   objectives:

Severity 1: within [***] of receipt of notice of the defect from VAR

Severity 2: within [***] of receipt of notice of the defect from VAR

Severity 3, 4, or 5: resolved [***]

Defect Report Form

Nuance and VAR agree to define a Defect Report Form that is mutually acceptable
and which, as revised or replaced from time to time, shall be the means used for
the transfer of information defining suspected defects for resolution. Nuance
shall provide VAR with an electronic mail address for receipt of above forms.
Notwithstanding the foregoing, in case of a Severity 1 or Severity 2 incident
attributable to the Software, VAR's Designated Personnel may request Technical
Support Services through the telephone hot-line. VAR shall be provided
reasonable access to Nuance's defect database to review the status of defects
related to the Software.

On-Site Assistance

[*]=CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                      31
<PAGE>

                                                     VAR Agreement Number_______
                                                  Nuance Agreement Number_______

                          Nortel--Nuance Confidential

Upon VAR's request and subject to availability, Nuance may furnish qualified
personnel for on-site assistance to VAR and/or Sub-licensees to resolve defects
in the Software. In such event, VAR shall pay Nuance at its then current time
and materials rates for the time of required personnel and reimburse Nuance for
reasonable travel and living expenses of such personnel incurred in rendering
the requested assistance; provided, however, that Nuance shall not be entitled
to payment for the time of its personnel if such assistance is required to
resolve a Severity 1 defect in the Software and such defect cannot otherwise be
reasonable resolved in a timely manner.

Termination of Support for Products Listed on Exhibit A

In the event that Nuance should terminate support for a specific version or
release of a Nuance product listed in Exhibit A, Nuance's support obligations to
VAR with respect to that product shall terminate at the same time such support
is terminated for other Resellers or Nuance's end users and subject to the same
notice period. In addition, Nuance agrees to support the three previous Releases
of any Nuance product listed in Exhibit A (and licensed to VAR) or all Releases
licensed to VAR within any three year period, whichever is later, as current
under the terms of this Agreement (e.g. upon release of release 6.3 of the
Nuance RecServer, support for release 6.0 and its minor releases, 6.0.1, etc.,
may be terminated.

Miscellaneous Nuance Obligations

Nuance shall provide VAR's Designated Employees initial training in the
installation, maintenance, and operation of the Software.

If a major release or upgrade of any product listed on Exhibit A is made
available for which additional training becomes available, Nuance shall promptly
notify VAR, and as requested by VAR, enroll for up to two (2) Designated
Employees in the next available training course subject to prior enrollment
commitments. Such training shall be made available within 30 days of the
availability of the new release, if possible. The training will be of sufficient
detail to allow VAR's Designated Employees to each their co-workers as
appropriate and will include reproducible course materials.

Nuance will make available to VAR all Nuance tools that are commercially
available to other Value Added Resellers. Tools may be for use in deployment,
configuration, and performance improvement the Software. Nuance will also
provide VAR with reasonable support, under terms to be agreed, in VAR's efforts
to develop its capability to provide call script design, recognition grammar
development, and in-service application debugging and tuning.

NUANCE COMMUNICATIONS, INC.                NORTEL NETWORKS LIMITED

By:                                      By:
   ----------------------------             -----------------------------
Title:                                   Title:
      -------------------------                --------------------------
Date:                                    Date:
     --------------------------               ---------------------------

                                      32
<PAGE>

                                                    VAR Agreement Number_______
                                                 Nuance Agreement Number_______

                          Nortel--Nuance Confidential

                            SCHEDULE 1 TO EXHIBIT F

                          TECHNICAL SUPPORT SERVICES
                                 FEE SCHEDULE

The Fees for Technical Support Services provided pursuant to the Agreement,
EXHIBIT F ("TECHNICAL SUPPORT SERVICES"), and any applicable Purchase Order
shall be as follows:

For Basic Technical Support Services:     [***]

For Premium Technical Support Services:   [***]

For the purposes of this Agreement, [***]

[*]= CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                      33
<PAGE>

                                                    VAR Agreement Number_______
                                                 Nuance Agreement Number_______

                          Nortel--Nuance Confidential

                                   EXHIBIT G
                               NUANCE TRADEMARKS

The following trademarks and respective notices are subject to the terms of the
Agreement, specifically Section 3.6 ("Trademark License"), and shall be used in
accordance therewith in conjunction with an applicable Software License:

(1) "Nuance Communications" TM is a trademark of Nuance.

(2) "Nuance" is a registered trademark of Nuance.

(3) "Verifier" TM is a trademark of Nuance.

(4) "V-Commerce" TM is a trademark of Nuance.

(5) "SpeechObjects" TM is a trademark of Nuance.

Such other symbols and notices as may be prescribed by Nuance from time to time.

                                      34
<PAGE>

                                                    VAR Agreement Number_______
                                                 Nuance Agreement Number_______

                          Nortel--Nuance Confidential

                                   EXHIBIT H
                               NUANCE ORDER FORM

General Order Information
-------------------------
      --------------------------------------------------------------

      --------------------------------------------------------------

      --------------------------------------------------------------

      --------------------------------------------------------------

      --------------------------------------------------------------

      --------------------------------------------------------------

      --------------------------------------------------------------

      --------------------------------------------------------------

      --------------------------------------------------------------

      --------------------------------------------------------------

      --------------------------------------------------------------

      --------------------------------------------------------------
      Comments:
      --------------------------------------------------------------

*Represents fields that are to be filled out by Nuance personnel.
Orders for RU's and Speech Channels will be accepted through September 7, 2000.

Detailed Product and/or Software License Orders
-----------------------------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------
      Licenses & Ports
      ----------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------
      CD's & Manuals
      --------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------
      Grammars
      --------

      -------------------------------------------------------------------

      -------------------------------------------------------------------

                                      35
<PAGE>

                                                     VAR Agreement Number_______
                                                  Nuance Agreement Number_______

                          Nortel--Nuance Confidential

      -------------------------------------------------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------
      Name Dialer
      -----------

      -------------------------------------------------------------------

      -------------------------------------------------------------------
      Express
      -------

      -------------------------------------------------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------
      Dialog Specs
      ------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------
      Bundles/Programs
      ----------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------
      NDN Memberships/Miscellaneous
      -----------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------
      Subtotal
      --------

      -------------------------------------------------------------------
      Plus Applicable Sales Tax
      -------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------

The following items have been included in the drop down menus for your
convenience, but are not yet Generally Available:
Voyager CD -- Currently  targeted for September, 2000
V-Builder CD -- Currently targeted for end of July, 2000
7.0-NT Nuance CD --  Currently  targeted for June 15, 2000
7.0 Manual Set - Currently targeted for June 15, 2000
[***]

      -----------------------------------------------------

      -----------------------------------------------------

      -----------------------------------------------------

      -----------------------------------------------------

      -----------------------------------------------------

      -----------------------------------------------------

      -----------------------------------------------------

      -----------------------------------------------------

[*]= CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                      36
<PAGE>

                                                     VAR Agreement Number_______
                                                  Nuance Agreement Number_______

                          Nortel--Nuance Confidential

      -----------------------------------------------------

      -----------------------------------------------------

      -----------------------------------------------------

      -----------------------------------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------
      Basic Support - Licenses & Ports
      --------------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------
      Basic Support - Grammars
      ------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------
      Basic Support - Name Dialing
      ----------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------
      Basic Support - Express
      -----------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------
      Basic Support - NDN Memberships/Miscellaneous
      ---------------------------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------
      Premium Support - Licenses & Ports
      ----------------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------
      Premium Support - Grammars
      --------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------
      Premium Support - Name Dialing
      ------------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------
      Premium Support - Express
      -------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------
      Premium Support - NDN Memberships/Miscellaneous
      -----------------------------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------

      -------------------------------------------------------------------
      Subtotal
      --------

      -------------------------------------------------------------------
      Plus Applicable Sales Tax
      -------------------------

      -------------------------------------------------------------------

                                      37
<PAGE>

                                                     VAR Agreement Number_______
                                                  Nuance Agreement Number_______

                          Nortel--Nuance Confidential

Training -- Training Orders can be placed through Speech University. Fax
Training only orders to Speech University at (650) 847-7090. Classes can be
scheduled via the Corporate Website at www.nuance.com.

Pre-packaged Services

        ----------------------------------------------------------------

        ----------------------------------------------------------------

        ----------------------------------------------------------------

        ----------------------------------------------------------------

        ----------------------------------------------------------------
        Miscellaneous
        -------------

        ----------------------------------------------------------------

        ----------------------------------------------------------------
        Subtotal
        --------

        ----------------------------------------------------------------
        Plus Applicable Sales Tax
        -------------------------

        ----------------------------------------------------------------

        ----------------------------------------------------------------

Professional Consulting Services -- Requires a Statement of Work (SOW) be
completed and fully executed by the customer and Nuance

        ---------------------------------------------------------------------

        ---------------------------------------------------------------------

        ---------------------------------------------------------------------

        ---------------------------------------------------------------------

        ---------------------------------------------------------------------
        Miscellaneous
        -------------

        ---------------------------------------------------------------------

        ---------------------------------------------------------------------
        Subtotal
        --------

        ---------------------------------------------------------------------
        Plus Applicable Sales Tax
        -------------------------

        ---------------------------------------------------------------------

        ---------------------------------------------------------------------

This Order is placed by "INSERT COMPANY NAME HERE" under the Agreement
                         ------------------------
dated____, which is incorporated by reference as though set forth in full
herein. The effective date of this Order shall be the date set forth below. IT
IS SO AGREED.

Customer Name:

Authorized Signature: --------------------------------

Printed Name:

Title:

Date:

                                      38
<PAGE>

                                                    VAR Agreement Number_______
                                                 Nuance Agreement Number_______

                          Nortel--Nuance Confidential

                                   EXHIBIT I
                                   AMENDMENT

Notwithstanding anything to the contrary in this Agreement, the terms contained
in this EXHIBIT I ("AMENDMENT") shall be in addition to any other terms of the
Agreement, and shall supersede and take precedence over any conflicting terms
therein. Except as expressly modified by this EXHIBIT I ("AMENDMENT"), all terms
of this Agreement shall survive, and shall continue to bind the parties:

                                      39
<PAGE>

                                                     VAR Agreement Number_______
                                                  Nuance Agreement Number_______

                          Nortel--Nuance Confidential

                                   EXHIBIT J
                   CUSTOMER SPECIFIC ACCEPTANCE REQUIREMENTS

Nuance and VAR agree that the following customer specific acceptance
requirements shall apply to the Software in accordance with the Agreement and
this EXHIBIT J.

NUANCE COMMUNICATIONS                    NORTEL NETWORKS LIMITED

By:                                      By:
   ----------------------------             -----------------------------
Title:                                   Title:
      -------------------------                --------------------------
Date:                                    Date:
     --------------------------               ---------------------------

                                      40
<PAGE>

                                                    VAR Agreement Number_______
                                                 Nuance Agreement Number_______

                          Nortel--Nuance Confidential

                                   EXHIBIT K
                                     [***]

[***]

RECITALS

[***]

[***]

[***]

[***]

[*]=CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                      41

<PAGE>

                                                     VAR Agreement Number_______
                                                  Nuance Agreement Number_______

                          Nortel--Nuance Confidential

[***]

[*]= CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                      42
<PAGE>

                                                 VAR Agreement Number_______
                                                 Nuance Agreement Number_______

                          Nortel--Nuance Confidential

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[*]= CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                      43
<PAGE>

                                                    VAR Agreement Number_______
                                                 Nuance Agreement Number_______

                          Nortel--Nuance Confidential

[***]

[*]= CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                      44
<PAGE>

                                                    VAR Agreement Number_______
                                                 Nuance Agreement Number_______

                          Nortel--Nuance Confidential

[***]

[***]

[*]= CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                      45
<PAGE>

                                                     VAR Agreement Number_______
                                                  Nuance Agreement Number_______

                          Nortel--Nuance Confidential

[***]

[*]= CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.

                                      46
<PAGE>

                                                    VAR Agreement Number_______
                                                 Nuance Agreement Number_______

                          Nortel--Nuance Confidential

                                   Exhibit L
        Quarterly Report for Payment of Technical Support Services fees

The quarterly report for payment of technical support services fees shall
contain, at a minimum, the following information:

  Customer Name
  Customer State or Country
  Initial Support Date
  Number of Licenses Covered
  Platform
  Level of Support
  Amount Due
                                      47
<PAGE>

                                                    VAR Agreement Number_______
                                                 Nuance Agreement Number_______

                          Nortel--Nuance Confidential

                                   Exhibit M
                            Royalty Reporting Form

The Royalty Report provided by NNL under this Agreement shall contain at a
minimum, the following information:

  End User Name
  End User State and Country
  NNL Order Number
  Platform
  Languages
  License Tier
  Product
  Quantity
  Shipment Date
  Support Purchased
  List Price Per Unit
  Discount
  Extended Price
  License Term

                                      48
<PAGE>

                                                    VAR Agreement Number_______
                                                 Nuance Agreement Number_______

                          Nortel--Nuance Confidential

                                   Exhibit N
                              Accession Agreement

This agreement ("Accession Agreement") is entered into between Nuance
Communications, Inc. and _____________________, a subsidiary of Nortel Networks
Limited ("Additional Nortel Party"), and is supplemental to the Value Added
Reseller Agreement dated on or about August 31st, 2000 between Nortel Networks
Limited and Nuance Communications, Inc. (the "VAR Agreement"). Words and
expressions defined in the VAR Agreement shall have the same meaning when used
in this Accession Agreement.

This Accession Agreement shall become effective on the date set forth below upon
signing by an authorized representative of each of Nuance Communications, Inc.
and Additional Nortel Party. The undersigned each hereby agree that, upon the
issuance of a Purchase Order by Additional Nortel Party, as provided for in the
VAR Agreement, it will be bound by all of the terms and conditions contained in
the VAR Agreement as if it had been an original party thereto.

This Accession Agreement, and the VAR Agreement hereby incorporated and included
by this reference, constitute the entire agreement between the parties hereto
with respect to the subject matter hereof. This Accession Agreement supersedes
oral, written or other communications concerning the subject matter of this
Accession Agreement, and shall not be altered, amended, or modified except in a
writing signed by the duly authorized officers of each party hereto.

It is so agreed.

Nuance Communications, Inc.

----------------------------------------
(Authorized signature)

----------------------------------------
(Name)

----------------------------------------
(Title)

----------------------------------------
(Date)

----------------------------------------
[Insert name of Nortel Networks Limited subsidiary]

----------------------------------------
(Authorized signature)

----------------------------------------
(Name)

----------------------------------------
(Title)

----------------------------------------
(Date)

                                      49<PAGE>

                                                                    Exhibit 4(a)

                                   TOO, INC.

                          SECOND AMENDED AND RESTATED
               1999 STOCK OPTION AND PERFORMANCE INCENTIVE PLAN
   (Amended by the Board of Directors on May 10, 2000 and February 15, 2001)

                                    ARTICLE 1

                            Establishment and Purpose

     Section 1.1.  Establishment and Effective Date. Too, Inc., a Delaware
corporation (the "Company"), hereby establishes a stock incentive plan to be
known as the "Too, Inc. 1999 Stock Option and Performance Incentive Plan" (the
"Plan"). The Plan shall become effective on the date The Limited, Inc.
distributes (the "Distribution") to its shareholders the Company's common stock,
par value $.01 per share (the "Common Stock").

     Section 1.2.  Purpose. The Company desires to attract and retain the best
available executive and key management associates for itself and its
subsidiaries and to encourage the highest level of performance by such
associates in order to serve the best interests of the Company and its
stockholders. The Plan is expected to contribute to the attainment of these
objectives by offering eligible associates the opportunity to acquire stock
ownership interests in the Company, and other rights with respect to stock of
the Company, and to thereby provide them with incentives to put forth maximum
efforts for the success of the Company and its subsidiaries.

                                   ARTICLE 2

                                     Awards

     Section 2.1. Form of Awards. Awards under the Plan may be granted in any
one or all of the following forms: (i) incentive stock options ("Incentive Stock
Options") meeting the requirements of Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"); (ii) nonstatutory stock options ("Nonstatutory
Stock Options") (unless otherwise indicated, references in the Plan to "Options"
shall include both Incentive Stock Options and Nonstatutory Stock Options);
(iii) stock appreciation rights ("Stock Appreciation Rights"), as described in
Article 7, which may be awarded either in tandem with Options ("Tandem Stock
Appreciation Rights") or on a stand-alone basis ("Nontandem Stock Appreciation
Rights"); (iv) shares of Common Stock which are restricted as provided in
Article II ("Restricted Shares"); (v) units representing shares of Common Stock,
as described in Article 12 ("Performance Shares"); (vi) units which do not
represent shares of Common Stock but which may be paid in the form of Common
Stock, as described in Article 13 ("Performance Units"); (vii) shares of
unrestricted Common Stock ("Unrestricted Shares"); and (viii) tax offset
payments ("Tax Offset Payments"), as described in Article 15.

     Section 2.2. Maximum Shares Available. The maximum aggregate number of
shares of Common Stock available for award under the Plan is 5,150,000 subject
to adjustment pursuant to Article 16. In addition, Tax Offset Payments which may
be awarded under the Plan will not exceed the number of shares available for
issuance under the Plan. Shares of Common Stock issued pursuant to the Plan may
be either authorized but unissued shares or issued shares reacquired by the
Company. In the event that prior to the end of the period during which Options
may be granted under the Plan, any Option or any Nontandem Stock Appreciation
Right under the Plan expires unexercised or is terminated, surrendered or
canceled (other than in connection with the exercise of a Stock Appreciation
Right) without being exercised in whole or in part for any reason, or any
Restricted Shares, Performance Shares or Performance Units are forfeited, or if
such awards are settled in cash in lieu of shares of Common Stock, then such
shares or units may, at the discretion of the Committee (as defined below) to
the extent permissible under Rule 16b-3 under the Securities Exchange Act of
1934 (the "Act"), be made available for subsequent awards under the Plan, upon
such terms as the Committee may determine.

     Section 2.3. Return of Prior Awards. As a condition to any subsequent
award, the Committee shall have the right, at its discretion, to require
associates to return to the Company awards previously granted under this Plan.
<PAGE>

Subject to the provisions of this Plan, such new award shall be upon such terms
and conditions as are specified by the Committee at the time the new award is
granted to the extent permitted by Rule 16b-3 under the Act.

                                   ARTICLE 3

                                Administration

     Section 3.1. Committee. The Plan shall be administered by a Committee (the
"Committee") appointed by the Board and consisting of not less than two (2)
members of the Board. Each member of the Committee shall be an "outside
director" (within the meaning of Section 162(m) of the Code) and a "non-employee
director" (within the meaning of Rule l6b-3(b)(3)(i) under the Act).

     Section 3.2. Powers of Committee. Subject to the express provisions of the
Plan, the Committee shall have the power and authority (i) to grant Options and
to determine the purchase price of the Common Stock covered by each Option, the
term of each Option, the number of shares of Common Stock to be covered by each
Option and any performance objectives or vesting standards applicable to each
Option; (ii) to designate Options as Incentive Stock Options or Nonstatutory
Stock Options and to determine which Options, if any, shall be accompanied by
Tandem Stock Appreciation Rights; (iii) to grant Tandem Stock Appreciation
Rights and Nontandem Stock Appreciation Rights and to determine the terms and
conditions of such rights; (iv) to grant Restricted Shares and to determine the
term of the restricted period and other conditions and restrictions applicable
to such shares; (v) to grant Performance Shares and Performance Units and to
determine the performance objectives, performance periods and other conditions
applicable to such shares or units; (vi) to grant Unrestricted Shares; (vii) to
determine the amount of, and to make, Tax Offset Payments; and (viii) to
determine the associates to whom, and the time or times at which, Options, Stock
Appreciation Rights, Restricted Shares, Performance Shares, Performance Units
and Unrestricted Shares shall be granted.

     Section 3.3. Delegation. The Committee may delegate to one or more of its
members or to any other person or persons such ministerial duties as it may deem
advisable; provided, however, that the Committee may not delegate any of its
responsibilities hereunder if such delegation will cause (i) transactions under
the Plan to fail to comply with Section 16 of the Act or (ii) the Committee to
fail to qualify as "outside directors" under Section 162(m) of the Code. The
Committee may also employ attorneys, consultants, accountants or other
professional advisors and shall be entitled to rely upon the advice, opinions or
valuations of any such advisors.

     Section 3.4. Interpretations. The Committee shall have sole discretionary
authority to interpret the terms of the Plan, to adopt and revise rules,
regulations and policies to administer the Plan and to make any other factual
determinations which it believes to be necessary or advisable for the
administration of the Plan. All actions taken and interpretations and
determinations made by the Committee in good faith shall be final and binding
upon the Company, all associates who have received awards under the Plan and all
other interested persons.

     Section 3.5. Liability; Indemnification. No member of the Committee, nor
any person to whom duties have been delegated, shall be personally liable for
any action, interpretation or determination made with respect to the Plan or
awards made thereunder, and each member of the Committee shall be fully
indemnified and protected by the Company with respect to any liability he or she
may incur with respect to any such action, interpretation or determination, to
the extent permitted by applicable law and to the extent provided in the
Company's Certificate of Incorporation and Bylaws, as amended from time to time.

                                   ARTICLE 4

                                  Eligibility

     Awards shall be limited to executive and key management associates who are
regular, full-time associates of the Company and its present and future
subsidiaries. In determining the associates to whom awards shall be granted and
the number of shares to be covered by each award, the Committee shall take into
account the nature of the services rendered by such associates, their present
and potential contributions to the success of the Company and its subsidiaries
and such other factors as the Committee in its sole discretion shall deem
relevant. As used in this Plan, the term "subsidiary" shall mean any corporation
which at the time qualifies as a subsidiary of the Company under the definition
of "subsidiary corporation" set forth in Section 424(f) of the Code, or any
successor provision
<PAGE>

hereafter enacted. No associate may be granted in any calendar year awards
covering more than 1,100,000 shares of Common Stock.

                                   ARTICLE 5

                                 Stock Options

     Section 5.1. Grant of Options. Options may be granted under this Plan for
the purchase of shares of Common Stock. Options shall be granted in such form
and upon such terms and conditions, including the satisfaction of corporate or
individual performance objectives and other vesting standards, as the Committee
shall from time to time determine.

     Section 5.2. Option Price. The option price of each Option to purchase
Common Stock shall be determined by the Committee at the time of the grant, but
shall not be less than 100 percent of the fair market value of the Common Stock
subject to such Option at the time of grant. The option price so determined
shall also be applicable in connection with the exercise of any Tandem Stock
Appreciation Right granted with respect to such Option. The exercise price of an
option previously granted under the Plan shall not thereafter be reduced other
than pursuant to the provisions of Article 17 or Article 18.

     Section 5.3. Term of Options. The term of each Option granted under the
Plan shall not exceed ten (10) years from the date of grant, subject to earlier
termination as provided in Articles 9 and 10, except as otherwise provided in
Section 6.1 with respect to ten (10) percent stockholders of the Company.

     Section 5.4. Exercise of Options. An Option may be exercised, in whole or
in part, at such time or times as the Committee shall determine. The Committee
may, in its discretion, accelerate the exercisability of any Option at any time.
Options may be exercised by an associate by giving written notice to the
Committee stating the number of shares of Common Stock with respect to which the
Option is being exercised and tendering payment therefor. Payment for the Common
Stock issuable upon exercise of the Option shall be made in full in cash or by
certified check or, if the Committee, in its sole discretion, permits, in shares
of Common Stock (valued at fair market value on the date of exercise). As soon
as reasonably practicable following such exercise, a certificate representing
the shares of Common Stock purchased, registered in the name of the associate,
shall be delivered to the associate.

     Section 5.5. Cancellation of Stock Appreciation Rights. Upon exercise of
all or a portion of an Option, the related Tandem Stock Appreciation Rights
shall be canceled with respect to an equal number of shares of Common Stock.

                                   ARTICLE 6

              Special Rules Applicable to Incentive Stock Options

     Section 6.1. Ten Percent Stockholder. Notwithstanding any other provision
of this Plan to the contrary, no associate may receive an Incentive Stock Option
under the Plan if such associate, at the time the award is granted, owns (after
application of the rules contained in Section 424(d) of the Code) stock
possessing more than ten (10) percent of the total combined voting power of all
classes of stock of the Company or its subsidiaries, unless (i) the option price
for such Incentive Stock Option is at least 110 percent of the fair market value
of the Common Stock subject to such Incentive Stock Option on the date of grant
and (ii) such Option is not exercisable after the date five (5) years from the
date such Incentive Stock Option is granted.

     Section 6.2. Limitation on Grants. The aggregate fair market value
(determined with respect to each Incentive Stock Option at the time such
Incentive Stock Option is granted) of the shares of Common Stock with respect to
which Incentive Stock Options are exercisable for the first time by an associate
during any calendar year (under this Plan or any other plan of the Company or a
subsidiary) shall not exceed $100,000.

     Section 6.3. Limitations on Time of Grant. No grant of an Incentive Stock
Option shall be made under this Plan more than ten (10) years after the earlier
of the date of adoption of the Plan by the Board or the date the Plan is
approved by stockholders.
<PAGE>

                                   ARTICLE 7

                           Stock Appreciation Rights

     Section 7.1. Grants of Stock Appreciation Rights. Tandem Stock Appreciation
Rights may be awarded by the Committee in connection with any Option granted
under the Plan, either at the time the Option is granted or thereafter at any
time prior to the exercise, termination or expiration of the Option. Nontandem
Stock Appreciation Rights may also be granted by the Committee at any time. At
the time of grant of a Nontandem Stock Appreciation Right, the Committee shall
specify the number of shares of Common Stock covered by such right and the base
price of shares of Common Stock to be used in connection with the calculation
described in Section 7.04 below. The base price of a Nontandem Stock
Appreciation Right shall be not less than 100 percent of the fair market value
of a share of Common Stock on the date of grant. Stock Appreciation Rights shall
be subject to such terms and conditions not inconsistent with the other
provisions of this Plan as the Committee shall determine.

     Section 7.2. Limitations on Exercise. A Tandem Stock Appreciation Right
shall be exercisable only to the extent that the related Option is exercisable
and shall be exercisable only for such period as the Committee may determine
(which period may expire prior to the expiration date of the related Option).
Upon the exercise of all or a portion of Tandem Stock Appreciation Rights, the
related Option shall be canceled with respect to an equal number of shares of
Common Stock. Shares of Common Stock subject to Options, or portions thereof,
surrendered upon exercise of a Tandem Stock Appreciation Right, shall not be
available for subsequent awards under the Plan. A Nontandem Stock Appreciation
Right shall be exercisable during such period as the Committee shall determine.

     Section 7.3. Surrender or Exchange of Tandem Stock Appreciation Rights. A
Tandem Stock Appreciation Right shall entitle the associate to surrender to the
Company unexercised the related option, or any portion thereof, and to receive
from the Company in exchange therefor that number of shares of Common Stock
having an aggregate fair market value equal to (A) the excess of (i) the fair
market value of one (1) share of Common Stock as of the date the Tandem Stock
Appreciation Right is exercised over (ii) the option price per share specified
in such Option, multiplied by (B) the number of shares of Common Stock subject
to the Option, or portion thereof, which is surrendered. Cash shall be delivered
in lieu of any fractional shares.

     Section 7.4. Exercise of Nontandem Stock Appreciation Rights. The exercise
of a Nontandem Stock Appreciation Right shall entitle the associate to receive
from the Company that number of shares of Common Stock having an aggregate fair
market value equal to (A) the excess of (i) the fair market value of one (1)
share of Common Stock as of the date on which the Nontandem Stock Appreciation
Right is exercised over (ii) the base price of the shares covered by the
Nontandem Stock Appreciation Right, multiplied by (B) the number of shares of
Common Stock covered by the Nontandem Stock Appreciation Right, or the portion
thereof being exercised. Cash shall be delivered in lieu of any fractional
shares.

     Section 7.5. Settlement of Stock Appreciation Rights. As soon as is
reasonably practicable after the exercise of a Stock Appreciation Right, the
Company shall (i) issue, in the name of the associate, stock certificates
representing the total number of full shares of Common Stock to which the
associate is entitled pursuant to Section 7.03 or 7.04 hereof, and cash in an
amount equal to the fair market value, as of the date of exercise, of any
resulting fractional shares, and (ii) if the Committee causes the Company to
elect to settle all or part of its obligations arising out of the exercise of
the Stock Appreciation Right in cash pursuant to Section 7.06, deliver to the
associate an amount in cash equal to the fair market value, as of the date of
exercise, of the shares of Common Stock it would otherwise be obligated to
deliver.

     Section 7.6. Cash Settlement. The Committee, in its discretion, may cause
the Company to settle all or any part of its obligation arising out of the
exercise of a Stock Appreciation Right by the payment of cash in lieu of all or
part of the shares of Common Stock it would otherwise be obligated to deliver in
an amount equal to the fair market value of such shares on the date of exercise.

                                   ARTICLE 8

          Nontransferability of Options and Stock Appreciation Rights

     No Option or Stock Appreciation Right may be transferred, assigned, pledged
or hypothecated (whether by operation of law or otherwise), except as provided
by will or the applicable laws of descent and distribution, and no Option or
Stock Appreciation Right shall be subject to execution, attachment or similar
process. Any attempted assignment, transfer, pledge, hypothecation or other
disposition of an Option or a Stock Appreciation Right not
<PAGE>

specifically permitted herein shall be null and void and without effect. An
Option or Stock Appreciation Right may be exercised by an associate only during
his or her lifetime, or following his or her death pursuant to Article 10.

                                   ARTICLE 9

                           Termination of Employment

     Section 9.1. Exercise after Termination of Employment. Except as the
Committee may at any time provide, in the event that the employment of an
associate to whom an Option or Stock Appreciation Right has been granted under
the Plan shall be terminated (for reasons other than death or total disability),
such Option or Stock Appreciation Right may be exercised (to the extent that the
associate was entitled to do so at the termination of his employment) at any
time within three (3) months after such termination of employment.

     Section 9.2. Total Disability. In the event that an associate to whom an
Option or Stock Appreciation Right has been granted under the Plan shall become
totally disabled, except as the Committee may at anytime provide, such Option or
Stock Appreciation Right may be exercised at any time during the first nine (9)
months that the associate receives benefits under the Company's Long-Term
Disability Plan (the "Disability Plan"). For purposes hereof, "total disability"
shall have the definition set forth in the Disability Plan, which definition is
hereby incorporated by reference.

                                  ARTICLE 10

                              Death of Associate

     If an associate to whom an Option or Stock Appreciation Right has been
granted under the Plan shall die while employed by the Company or one of its
subsidiaries or within three (3) months after the termination of such
employment, except as the Committee may at anytime provide, such Option or Stock
Appreciation Right may be exercised to the extent that the associate was
entitled to do so at the time of his or her death, by the associate's estate or
by the person who acquires the right to exercise such Option or Stock
Appreciation Right upon his or her death by bequest or inheritance. Such
exercise may occur at any time within one (1) year after the date of the
associate's death or such other period as the Committee may at anytime provide,
but in no case later than the date on which the Option or Stock Appreciation
Right terminates.

                                  ARTICLE 11

                               Restricted Shares

     Section 11.1. Grant of Restricted Shares. The Committee may from time to
time cause the Company to grant Restricted Shares under the Plan to associates,
subject to such restrictions, conditions and other terms as the Committee may
determine.

     Section 11.2. Restrictions. At the time a grant of Restricted Shares is
made, the Committee shall establish a period of time (the "Restricted Period")
applicable to such Restricted Shares. Each grant of Restricted Shares may be
subject to a different Restricted Period. The Committee may, in its sole
discretion, at the time a grant is made, prescribe restrictions in addition to
or other than the expiration of the Restricted Period, including the
satisfaction of corporate or individual performance objectives, which shall be
applicable to all or any portion of the Restricted Shares. Except with respect
to grants of Restricted Shares intended to qualify as performance based
compensation for purposes of Section 162(m) of the Code, the Committee may also,
in its sole discretion, shorten or terminate the Restricted Period or waive any
other restrictions applicable to all or a portion of such Restricted Shares.
None of the Restricted Shares may be sold, transferred, assigned, pledged or
otherwise encumbered or disposed of during the Restricted Period or prior to the
satisfaction of any other restrictions prescribed by the Committee with respect
to such Restricted Shares.

     Section 11.3. Restricted Stock Certificates. If the Committee deems it
necessary or appropriate, the Company may issue, in the name of each associate
to whom Restricted Shares have been granted, stock certificates representing the
total number of Restricted Shares granted to the associate, provided that such
certificates bear an appropriate legend or other restriction on transfer. The
Secretary of the Company shall hold such certificates, properly endorsed for
transfer, for the associate's benefit until such time as the Restricted Shares
are forfeited to the Company, or the restrictions lapse.
<PAGE>

     Section 11.4. Rights of Holders of Restricted Shares. Except as determined
by the Committee either at the time Restricted Shares are awarded or any time
thereafter prior to the lapse of the restrictions, holders of Restricted Shares
shall not have the right to vote such shares or the right to receive any
dividends with respect to such shares. All distributions, if any, received by an
associate with respect to Restricted Shares as a result of any stock split-up,
stock distribution, a combination of shares, or other similar transaction shall
be subject to the restrictions of this Article 11.

     Section 11.5. Forfeiture. Except as the Committee may at any time provide,
any Restricted Shares granted to an associate pursuant to the Plan shall be
forfeited if the associate terminates employment with the Company or its
subsidiaries prior to the expiration or termination of the Restricted Period and
the satisfaction of any other conditions applicable to such Restricted Shares.
Upon such forfeiture, the Secretary of the Company shall either cancel or retain
in its treasury the Restricted Shares that are forfeited to the Company.

     Section 11.6. Delivery of Restricted Shares. Upon the expiration or
termination of the Restricted Period and the satisfaction of any other
conditions prescribed by the Committee, the restrictions applicable to the
Restricted Shares shall lapse and a stock certificate for the number of
Restricted Shares with respect to which the restrictions have lapsed shall be
delivered, free of all such restrictions, to the associate or the associate's
beneficiary or estate, as the case may be.

     Section 11.7. Performance-based Objectives. At the time of the grant of
Restricted Shares to an associate, and prior to the beginning of the performance
period to which performance objectives relate, the Committee may establish
performance objectives based on any one or more of the following: price of
Company Common Stock or the stock of any affiliate, shareholder return, return
on equity, return on investment, return on capital, sales productivity,
comparable store sales growth, economic profit, economic value added, net
income, operating income, gross margin, sales, free cash flow, earnings per
share, operating company contribution or market share. These factors shall have
a minimum performance standard below which, and a maximum performance standard
above which, no payments will be made. These performance goals may be based on
an analysis of historical performance and growth expectations for the business,
financial results of other comparable businesses, and progress towards achieving
the long-range strategic plan for the business. These performance goals and
determination of results shall be based entirely on financial measures. The
Committee may not use any discretion to modify award results except as permitted
under Section 162(m) of the Code.

                                  ARTICLE 12

                              Performance Shares

     Section 12.1. Award of Performance Shares. For each Performance Period (as
defined in Section 12.2), Performance Shares may be granted under the Plan to
such associates of the Company and its subsidiaries as the Committee shall
determine. Each Performance Share shall be deemed to be equivalent to one (1)
share of Common Stock. Performance Shares granted to an associate shall be
credited to an account (a "Performance Share Account") established and
maintained for such associate.

     Section 12.2. Performance Period. "Performance Period" shall mean such
period of time as shall be determined by the Committee in its sole discretion.
Different Performance Periods may be established for different associates
receiving Performance Shares. Performance Periods may run consecutively or
concurrently.

     Section 12.3. Right to Payment of Performance Shares. With respect to each
award of Performance Shares under this Plan, the Committee shall specify
performance objectives (the "Performance Objectives") which must be satisfied in
order for the associate to vest in the Performance Shares which have been
awarded to him or her for the Performance Period. If the Performance Objectives
established for an associate for the Performance Period are partially but not
fully met, the Committee may, nonetheless, in its sole discretion, determine
that all or a portion of the Performance Shares have vested. If the Performance
Objectives for a Performance Period are exceeded, the Committee may, in its sole
discretion, grant additional, full vested Performance Shares to the associate.
The Committee may also determine, in its sole discretion, that Performance
Shares awarded to an associate shall become partially or fully vested upon the
associate's death, total disability (as defined in Article 9) or retirement, or
upon the termination of the associate's employment prior to the end of the
Performance Period.

     Section 12.4. Payment for Performance Shares. As soon as practicable
following the end of a Performance Period, the Committee shall determine whether
the Performance Objectives for the Performance Period have been achieved (or
partially achieved to the extent necessary to permit partial vesting at the
discretion of the
<PAGE>

Committee pursuant to Section 12.3). If the Performance Objectives for the
Performance Period have been exceeded, the Committee shall determine whether
additional Performance Shares shall be granted to the associate pursuant to
Section 12.3. As soon as reasonably practicable after such determinations, or at
such later date as the Committee shall determine at the time of grant, the
Company shall pay to the associate an amount with respect to each vested
Performance Share equal to the fair market value of a share of Common Stock on
such payment date or, if the Committee shall so specify at the time of grant, an
amount equal to (i) the fair market value of a share of Common Stock on the
payment date less (ii) the fair market value of a share of Common Stock on the
date of grant of the Performance Share. Payment shall be made entirely in cash,
entirely in Common Stock (including Restricted Shares) or in such combination of
cash and Common Stock as the Committee shall determine.

     Section 12.5. Voting and Dividend Rights. Except as the Committee may
otherwise provide, no associate shall be entitled to any voting rights, to
receive any dividends, or to have his or her Performance Share Account credited
or increased as a result of any dividends or other distribution with respect to
Common Stock. Notwithstanding the foregoing, within sixty (60) days from the
date of payment of a dividend by the Company on its shares of Common Stock, the
Committee, in its discretion, may credit an associate's Performance Share
Account with additional Performance Shares having an aggregate fair market value
equal to the dividend per share paid on the Common Stock multiplied by the
number of Performance Shares credited to his or her account at the time the
dividend was declared.

                                  ARTICLE 13

                               Performance Units

     Section 13.1. Award of Performance Units. For each Performance Period (as
defined in Section 12.2), Performance Units may be granted under the Plan to
such associates of the Company and its subsidiaries as the Committee shall
determine. The award agreement covering such Performance Units shall specify a
value for each Performance Unit or shall set forth a formula for determining the
value of each Performance Unit at the time of payment (the "Ending Value"). If
necessary to make the calculation of the amount to be paid to the associate
pursuant to Section 13.3, the Committee shall also state in the award agreement
the initial value of each Performance Unit (the "Initial Value"). Performance
Units granted to an associate shall be credited to an account (a "Performance
Unit Account") established and maintained for such associate.

     Section 13.2. Right to Payment of Performance Units. With respect to each
award of Performance Units under this Plan, the Committee shall specify
Performance Objectives which must be satisfied in order for the associate to
vest in the Performance Units which have been awarded to him or her for the
Performance Period. If the Performance Objectives established for an associate
for the Performance Period are partially but not fully met, the Committee may,
nonetheless, in its sole discretion, determine that all or a portion of the
Performance Units have vested. If the Performance Objectives for a Performance
Period are exceeded, the Committee may, in its sole discretion, grant
additional, fully vested Performance Units to the associate. The Committee may
also determine, in its sole discretion, that Performance Units awarded to an
associate shall become partially or fully vested upon the associate's death,
total disability (as defined in Article 9) or retirement, or upon the
termination of employment of the associate by the Company.

     Section 13.3. Payment for Performance Units. As soon as practicable
following the end of a Performance Period, the Committee shall determine whether
the Performance Objectives for the Performance Period have been achieved (or
partially achieved to the extent necessary to permit partial vesting at the
discretion of the Committee pursuant to Section 13.2). If the Performance
Objectives for the Performance Period have been exceeded, the Committee shall
determine whether additional Performance Units shall be granted to the associate
pursuant to Section 13.2. As soon as reasonably practicable after such
determinations, or at such later date as the Committee shall determine, the
Company shall pay to the associate an amount with respect to each vested
Performance Unit equal to the Ending Value of the Performance Unit or, if the
Committee shall so specify at the time of grant, an amount equal to (i) the
Ending Value of the Performance Unit less (ii) the Initial Value of the
Performance Unit. Payment shall be made entirely in cash, entirely in Common
Stock (including Restricted Shares) or in such combination of cash and Common
Stock as the Committee shall determine.
<PAGE>

                                  ARTICLE 14

                              Unrestricted Shares

     Section 14.1. Award of Unrestricted Shares. The Committee may cause the
Company to grant Unrestricted Shares to associates at such time or times, in
such amounts and for such reasons as the Committee, in its sole discretion,
shall determine. No payment shall be required for Unrestricted Shares.

     Section 14.2. Delivery of Unrestricted Shares. The Company shall issue, in
the name of each associate to whom Unrestricted Shares have been granted, stock
certificates representing the total number of Unrestricted Shares granted to the
associate, and shall deliver such certificates to the associate as soon as
reasonably practicable after the date of grant or on such later date as the
Committee shall determine at the time of grant.

                                  ARTICLE 15

                              Tax Offset Payments

     The Committee shall have the authority at the time of any award under this
Plan or anytime thereafter to make Tax Offset Payments to assist associates in
paying income taxes incurred as a result of their participation in this Plan.
The Tax Offset Payments shall be determined by multiplying a percentage
established by the Committee by all or a portion (as the Committee shall
determine) of the taxable income recognized by an associate upon (i) the
exercise of a Nonstatutory Stock Option or a Stock Appreciation Right, (ii) the
disposition of shares received upon exercise of an Incentive Stock Option, (iii)
the lapse of restrictions on Restricted Shares, (iv) the award of Unrestricted
Shares, or (v) payments for Performance Shares or Performance Units. The
percentage shall be established, from time to time, by the Committee at that
rate which the Committee, in its sole discretion, determines to be appropriate
and in the best interests of the Company to assist associates in paying income
taxes incurred as a result of the events described in the preceding sentence.
Tax Offset Payments shall be subject to the restrictions on transferability
applicable to Options and Stock Appreciation Rights under Article 8.

                                  ARTICLE 16

                              Changes in Control

     Upon the occurrence of a Change in Control (as defined below), the
following shall occur:

     (1)  Options. At the date of such Change in Control, all outstanding and
unvested stock options granted under the Plan shall immediately and fully vest
and become exercisable.

     (2)  Stock Appreciation Rights. At the date of such Change in Control, all
outstanding and unvested Stock Appreciation Rights granted under the Plan shall
immediately vest and become exercisable.

     (3)  Restricted Shares. At the date of such Change in Control, Restricted
Shares granted under the Plan shall be deemed to be fully vested and the
Restricted Period shall be deemed to expire.

     (4)  Performance Shares and Performance Units. At the date of such Change
in Control, Performance Shares and Performance Units granted under the Plan
shall be deemed to be fully vested and payable.

     "Change in Control" means the occurrence of any of the following:

     (1)  Any "Person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) is or becomes
the "Beneficial Owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 25% or more of
the combined voting power of the Corporation's then outstanding securities (a
"25% Shareholder") provided however, that the term 25% Shareholder shall not
include any Person if such Person would not otherwise be a 25% Shareholder but
for a reduction in the number of outstanding voting shares resulting from a
stock repurchase program or other similar plan of the Company or from a self-
tender offer of the Company, which plan or tender offer commenced on or after
the date hereof, provided, however, that the term "25% Shareholder" shall
include such Person from and after the first date upon which (A) such Person,
since the date of the commencement of such plan or tender offer, shall have
acquired Beneficial Ownership of, in the aggregate, a number of voting shares of
the Company equal to
<PAGE>

1% or more of the voting shares of the Company then outstanding, and (B) such
Person, together with all affiliates and associates of such Person, shall
Beneficially Own 25% or more of the voting shares of the Company then
outstanding. In calculating the percentage of the outstanding voting shares that
are Beneficially Owned by a Person for purposes of this subsection (1), voting
Shares that are Beneficially Owned by such Person shall be deemed outstanding,
and voting shares that are not Beneficially Owned by such Person and that are
subject to issuance upon the exercise or conversion of outstanding conversion
rights, exchange rights, rights, warrants or options shall not be deemed
outstanding. Notwithstanding the foregoing, if the Board of Directors of the
Company determines in good faith that a Person that would otherwise be a 25%
Shareholder pursuant to the foregoing provisions of this subsection (1) has
become such inadvertently, and such Person (a) promptly notifies the Board of
Directors of such status and (b)as promptly as practicable thereafter, either
divests of a sufficient number of voting shares so that such Person would no
longer be a 25% Shareholder, or causes any other circumstance, such as the
existence of an agreement respecting voting shares, to be eliminated such that
such Person would no longer be a 25% Shareholder as defined pursuant to this
subsection (1), then such Person shall not be deemed to be a 25% Shareholder for
any purposes of this Plan. Any determination made by the Board of Directors of
the Company as to whether any Person is or is not a 25% Shareholder shall be
conclusive and binding; or

     (2)  A change in composition of the Board of Directors of the Corporation
occurring any time during a consecutive two-year period as a result of which
fewer than a majority of the Board of Directors are Continuing Directors (for
purposes of this section, the term "Continuing Director" means a director who
was either (A) first elected or appointed as a Director prior to May 10, 2000;
or (B) subsequently elected or appointed as a director if such director was
nominated or appointed by at least a majority of the then Continuing Directors);
or

     (3)  Any of the following occurs:

          (A)  a merger or consolidation of the Corporation, other than a merger
     or consolidation in which the voting securities of the Corporation
     immediately prior to the merger or consolidation continue to represent
     (either by remaining outstanding or being converted into securities of the
     surviving entity) 60% or more of the combined voting power of the
     Corporation or surviving entity immediately after the merger or
     consolidation with another entity;

          (B)  a sale, exchange, or other disposition (in a single transaction
     or a series of related transactions) of all or substantially all of the
     assets of the Corporation which shall include, without limitation, the sale
     of assets aggregating more than 50% of the assets of the Corporation on a
     consolidated basis;

          (C)  a liquidation or dissolution of the Corporation;

          (D)  a reorganization, reverse stock split, or recapitalization of the
     Corporation which would result in any of the foregoing; or

          (E)  a transaction or series of related transactions having, directly
     or indirectly, the same effect as any of the foregoing.

                                  ARTICLE 17

                   Adjustment upon Changes in Capitalization

     Notwithstanding any other provision of the Plan, the Committee may at any
time make or provide for such adjustments to the Plan, to the number and class
of shares available thereunder or to any outstanding Options, Stock Appreciation
Rights, Restricted Shares or Performance Shares as it shall deem appropriate to
prevent dilution or enlargement of rights, including adjustments in the event of
changes in the number of shares of outstanding Common Stock by reason of stock
dividends, extraordinary cash dividends, split-ups, recapitalizations, mergers,
consolidations, combinations or exchanges of shares, separations,
reorganizations, liquidations and the like.

                                  ARTICLE 18

                           Amendment and Termination

     The Board may suspend, terminate, modify or amend the Plan, provided that
any amendment that would (i) materially increase the aggregate number of shares
which may be issued under the Plan or (ii) reduce the exercise
<PAGE>

price of options previously granted under the Plan shall be subject to the
approval of the Company's stockholders, except that any such increase or
modification that may result from adjustments authorized by Article 16 does not
require such approval. If the Plan is terminated, the terms of the Plan shall,
notwithstanding such termination, continue to apply to awards granted prior to
such termination. No suspension, termination, modification or amendment of the
Plan may, without the consent of the associate to whom an award shall
theretofore have been granted, adversely affect the fights of such associate
under such award.

                                  ARTICLE 19

                               Written Agreement

     Each award of Options, Stock Appreciation Rights, Restricted Shares,
Performance Shares, Performance Units, Unrestricted Shares and Tax Offset
Payments shall be evidenced by a written agreement, executed by the associate
and the Company, and containing such restrictions, terms and conditions, if any,
as the Committee may require. In the event of any conflict between a written
agreement and the Plan, the terms of the Plan shall govern.

                                  ARTICLE 20

                           Miscellaneous Provisions

     Section 20.1. Fair Market Value. For purposes of this Plan, "fair market
value" will be determined in accordance with procedures established in good
faith by the Committee.

     Section 20.2. Tax Withholding. The Company shall have the right to require
associates or their beneficiaries or legal representatives to remit to the
Company an amount sufficient to satisfy federal, state and local withholding tax
requirements, or to deduct from all payments under this Plan, including Tax
Offset Payments, amounts sufficient to satisfy all withholding tax requirements.
Whenever payments under the Plan are to be made to an associate in cash, such
payments shall be net of any amounts sufficient to satisfy all federal, state
and local withholding tax requirements. The Committee may, in its discretion,
permit an associate to satisfy his or her tax withholding obligation either by
(i) surrendering shares owned by the associate or (ii) having the Company
withhold from shares otherwise deliverable to the associate. Shares surrendered
or withheld shall be valued at their fair market value as of the date on which
income is required to be recognized for income tax purposes. In the case of an
award of Incentive Stock Options, the foregoing fight shall be deemed to be
provided to the associate at the time of such award.

     Section 20.3. Compliance with Section 16(b) and Section 162(m). In the case
of associates who are or may be subject to Section 16 of the Act, it is the
intent of the Company that the Plan and any award granted hereunder satisfy and
be interpreted in a manner that satisfies the applicable requirements of Rule
16b-3, so that such persons will be entitled to the benefits of Rule 16b-3 or
other exemptive rules under Section 16 of the Act and will not be subjected to
liability thereunder. If any provision of the Plan or any award would otherwise
conflict with the intent expressed herein, that provision, to the extent
possible, shall be interpreted and deemed amended so as to avoid such conflict.
To the extent of any remaining irreconcilable conflict with such intent, such
provision shall be deemed void as applicable to associates who are or may be
subject to Section 16 of the Act. If any award hereunder is intended to qualify
as performance-based for purposes of Section 162(m) of the Code, the Committee
shall not exercise any discretion to increase the payment under such award
except to the extent permitted by Section 162(m) and the regulations thereunder.

     Section 20.4. Successors. The obligations of the Company under the Plan
shall be binding upon any successor corporation or organization resulting from
the merger, consolidation or other reorganization of the Company, or upon any
successor corporation or organization succeeding to substantially all of the
assets and businesses of the Company. In the event of any of the foregoing, the
Committee may, at its discretion prior to the consummation of the transaction,
cancel, offer to purchase, exchange, adjust or modify any outstanding awards, at
such time and in such manner as the Committee deems appropriate and in
accordance with applicable law.

     Section 20.5. General Creditor Status. Associates shall have no right,
title, or interest whatsoever in or to any investments which the Company may
make to aid it in meeting its obligations under the Plan. Nothing contained in
the Plan, and no action taken pursuant to its provisions, shall create or be
construed to create a trust of any kind, or a fiduciary relationship between the
Company and any associate or beneficiary or legal representative of such
associate. To the extent that any person acquires a right to receive payments
from the Company under the Plan, such right shall be no greater than the fight
of an unsecured general creditor of the Company. All payments to
<PAGE>

be made hereunder shall be paid from the general funds of the Company and no
special or separate fund shall be established and no segregation of assets shall
be made to assure payment of such amounts except as expressly set forth in the
Plan.

     Section 20.6. No Right to Employment. Nothing in the Plan or in any written
agreement entered into pursuant to Article 18, nor the grant of any award, shall
confer upon any associate any right to continue in the employ of the Company or
a subsidiary or to be entitled to any remuneration or benefits not set forth in
the Plan or such written agreement or interfere with or limit the right of the
Company or a subsidiary to modify the terms of or terminate such associate's
employment at any time.

     Section 20.7. Notices. Notices required or permitted to be made under the
Plan shall be sufficiently made if sent by registered or certified mail
addressed (a) to the associate at the associate's address set forth in the books
and records of the Company or its subsidiaries, or (b) to the Company or the
Committee at the principal office of the Company.

     Section 20.8. Severability. In the event that any provision of the Plan
shall be held illegal or invalid for any reason, such illegality or invalidity
shall not affect the remaining parts of the Plan, and the Plan shall be
construed and enforced as if the illegal or invalid provision had not been
included.

     Section 20.9. Governing Law. To the extent not preempted by federal law,
the Plan, and all agreements hereunder, shall be construed in accordance with
and governed by the laws of the State of Delaware.

     Section 20.10. Term of Plan. Unless earlier terminated pursuant to Article
18 hereof, the Plan shall terminate on the tenth anniversary of the
Distribution.

     IN WITNESS WHEREOF, the Company has caused this Second Amended and Restated
1999 Stock Option and Performance Incentive Plan to be executed by its duly
authorized officer this ___ day of May, 2001.

                                    TOO, INC.

                                    By:_____________________________________

                                    Name:___________________________________

                                    Title:__________________________________

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