Document:

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                                                                   Exhibit 10.11

                          LOAN AND SECURITY AGREEMENT
                             NUANCE COMMUNICATIONS
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                               TABLE OF CONTENTS

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<S>                                                                                                      <C>
1    ACCOUNTING AND OTHER TERMS                                                                             4
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2    LOAN AND TERMS OF PAYMENT                                                                              4
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     2.1  Credit Extensions                                                                                 4
     2.2  Interest Rate, Payments                                                                           5
     2.3  Fees                                                                                              5

3    CONDITIONS OF LOANS                                                                                    5
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     3.1  Conditions Precedent to Initial Credit Extension                                                  5
     3.2  Conditions Precedent to all Credit Extensions                                                     5

4    CREATION OF SECURITY INTEREST                                                                          6
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     4.1  Grant of Security Interest                                                                        6

5    REPRESENTATIONS AND WARRANTIES                                                                         6
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     5.1  Due Organization and Authorization                                                                6
     5.2  Collateral                                                                                        6
     5.3  Litigation                                                                                        6
     5.4  No Material Adverse Change in Financial Statements                                                7
     5.5  Solvency                                                                                          7
     5.6  Regulatory Compliance                                                                             7
     5.7  Subsidiaries                                                                                      7
     5.8  Full Disclosure                                                                                   7

6    AFFIRMATIVE COVENANTS                                                                                  7
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     6.1  Government Compliance                                                                             7
     6.2  Financial Statements, Reports, Certificates                                                       8
     6.3  Inventory; Returns                                                                                8
     6.4  Taxes                                                                                             8
     6.5  Insurance                                                                                         8
     6.6  Primary Accounts                                                                                  9
     6.7  Financial Covenants                                                                               9
     6.8  Further Assurances                                                                                9

7    NEGATIVE COVENANTS                                                                                     9
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     7.1  Dispositions                                                                                      9
     7.2  Changes in Business, Ownership, Management or Business Locations                                  9
     7.3  Mergers or Acquisitions                                                                           9
     7.4  Indebtedness                                                                                      9
     7.5  Encumbrance                                                                                      10
     7.6  Distributions; Investments                                                                       10
     7.7  Transactions with Affiliates                                                                     10
     7.8  Subordinated Debt                                                                                10
     7.9  Compliance                                                                                       10

8    EVENTS OF DEFAULT                                                                                     10
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     8.1  Payment Default                                                                                  10
     8.2  Covenant Default                                                                                 10
     8.3  Material Adverse Change                                                                          11
     8.4  Attachment                                                                                       11
     8.5  Insolvency                                                                                       11
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<TABLE>
<S>                                                                                                        <C>
     8.6  Other Agreements                                                                                 11
     8.7  Judgments                                                                                        11
     8.8  Misrepresentations                                                                               11

9    BANK'S RIGHTS AND REMEDIES                                                                            11
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     9.1  Rights and Remedies                                                                              11
     9.2  Power of Attorney                                                                                12
     9.3  Accounts Collection                                                                              12
     9.4  Bank Expenses                                                                                    12
     9.5  Bank's Liability for Collateral                                                                  13
     9.6  Remedies Cumulative                                                                              13
     9.7  Demand Waiver                                                                                    13

10   NOTICES                                                                                               13
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11   CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER                                                            13
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12   GENERAL PROVISIONS                                                                                    13
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     12.1 Successors and Assigns                                                                           13
     12.2 Indemnification                                                                                  14
     12.3 Time of Essence                                                                                  14
     12.4 Severability of Provision                                                                        14
     12.5 Amendments in Writing, Integration                                                               14
     12.6 Counterparts                                                                                     14
     12.7 Survival                                                                                         14
     12.8 Confidentiality                                                                                  14
     12.9 Attorneys' Fees, Costs and Expenses                                                              15

13   DEFINITIONS                                                                                           15
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     13.1 Definitions                                                                                      15
</TABLE>

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          THIS LOAN AND SECURITY AGREEMENT dated June 23, 1999, between SILICON
VALLEY BANK ("Bank"), whose address is 3003 Tasman Drive, Santa Clara,
California 95054 and NUANCE COMMUNICATIONS ("Borrower"), whose address is 1380
Willow Road, Menlo Park, California 94025 provides the terms on which Bank will
lend to Borrower and Borrower will repay Bank. The parties agree as follows:

1.        ACCOUNTING AND OTHER TERMS
          --------------------------

          Accounting terms not defined in this Agreement will be construed
following GAAP. Calculations and determinations must be made following GAAP. The
term "financial statements" includes the notes and schedules. The terms
"including" and "includes" always mean "including (or includes) without
limitation," in this or any Loan Document. This Agreement shall be construed to
impart upon Bank a duty to act reasonably at all times.

2         LOAN AND TERMS OF PAYMENT
          -------------------------

2.1       CREDIT EXTENSIONS.

          Borrower will pay Bank the unpaid principal amount of all Credit
Extensions and interest on the unpaid principal amount of the Credit Extensions.

2.1.1     EQUIPMENT ADVANCES.

          (a)  Through June 23, 2000 (the "Equipment Availability End Date"),
Bank will make advances ("Equipment Advance" and, collectively, "Equipment
Advances") not exceeding the Committed Equipment Line. The Equipment Advances
may only be used to finance Equipment purchased on or after 90 days before the
respective Equipment Advance and may not exceed 100% of the equipment invoice.
Software licenses, leasehold improvements and other soft costs (consisting of
taxes, shipping, warranty charges, freight discounts and installation expense)
may constitute up to 50% of the aggregate Equipment Advances. Each Equipment
Advance must be for a minimum of $25,000. In addition, the initial Equipment
Advance may be used to purchase Equipment purchased on or after January 1, 1999.

          (b)  Interest accrues from the date of each Equipment Advance at the
rate in Section 2.2(a) and is payable monthly until the Equipment Availability
End Date occurs.

          (c)  Equipment Advances outstanding on December 23, 1999 are payable
in 36 equal monthly installments of principal, plus accrued interest, beginning
on January 23, 2000 and ending on December 23, 2002.

          (d)  Equipment Advances made after December 23, 1999 and outstanding
on the Equipment Availability End Date are payable in 36 equal monthly
installments of principal, plus accrued interest, beginning on the 23rd of each
month following the Equipment Availability End Date and ending on June 23, 2003
(the "Equipment Maturity Date"). Equipment Advances when repaid may not be
reborrowed.

          (e)  To obtain an Equipment Advance, Borrower must notify Bank (the
notice is irrevocable) by facsimile no later than 3:00 p.m. Pacific time 1
Business Day before the day on which the Equipment Advance is to be made. The
notice in the form of Exhibit B (Payment/Advance Form) must be signed by a
Responsible Officer or designee and include a copy of the invoice for the
Equipment being financed.

2.1.2     CASH MANAGEMENT FACILITY.

          Borrower may use up to $250,000 for Bank's Cash Management Services,
which may include merchant services, direct deposit of payroll, business credit
card, and check cashing

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services identified in the Cash Management Services Agreement (the "Cash
Management Services"). The Cash Management Facility terminates on the Cash
Management Maturity Date, when all outstanding amounts under the Cash Management
Facility are immediately payable.

2.2  INTEREST RATE, PAYMENTS.

     (a)  Interest Rate. Equipment Advances accrue interest on the outstanding
principal balance at a per annum rate of 0.75 percentage points above the Prime
Rate. After the occurrence and during the continuance of an Event of Default,
Obligations accrue interest at 5 percent above the rate effective immediately
before the Event of Default. The interest rate increases or decreases when the
Prime Rate changes. Interest is computed on a 360 day year for the actual number
of days elapsed.

     (b)  Payments. Interest due on the Equipment Advances is payable on the 1st
of each month. Bank may debit any of Borrower's deposit accounts including
Account Number ____________________________ for principal and interest payments
or any amounts Borrower owes Bank under this Agreement. Bank will notify
Borrower when it debits Borrower's accounts. These debits are not a set-off.
Payments (OTHER THAN A WIRE TRANSFER OR IMMEDIATELY AVAILABLE FUNDS) received
after 12:00 noon Pacific time are considered received at the opening of business
on the next Business Day. When a payment is due on a day that is not a Business
Day, the payment is due the next Business Day and additional fees or interest
accrue.

2.3  FEES.

     Borrower will pay:

     (a)  Facility Fee. A fully earned, non-refundable Facility Fee of $5,000
due on the Closing Date; and

     (b)  Bank Expenses. All Bank Expenses (including reasonable attorneys' fees
and expenses) incurred through and after the date of this Agreement, when due.

3    CONDITIONS OF LOANS
     -------------------

3.1  CONDITIONS PRECEDENT TO INITIAL CREDIT EXTENSION.

     Bank's obligation to make the initial Credit Extension is subject to the
condition precedent that it receive the agreements, documents and fees it
requires.

3.2  CONDITIONS PRECEDENT TO ALL CREDIT EXTENSIONS.

     Bank's obligations to make each Advance, including the initial Advance, is
subject to the following:

     (a)  timely receipt of any Payment/Advance Form; and

     (b)  the representations and warranties in Section 5 must be materially
true on the date of the Payment/Advance Form and on the effective date of each
Credit Extension (except to the extent they relate specifically to an earlier
date, in which case such representations and warranties shall continue to have
been true and accurate as of such date) and no Event of Default may have
occurred and be continuing, or result from the Credit Extension. Each Credit
Extension is Borrower's representation and warranty on that date that the
representations and warranties of Section 5 remain true in all material
respects.

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4    CREATION OF SECURITY INTEREST
     -----------------------------

4.1  GRANT OF SECURITY INTEREST.

     Borrower grants Bank a continuing security interest in all presently
existing and later acquired Collateral to secure all Obligations and performance
of each of Borrower's duties under the Loan Documents. Except for Permitted
Liens, any security interest will be a first priority security interest in the
Collateral. Bank may place a "hold" on any deposit account pledged as
Collateral. Notwithstanding the foregoing, the security interest granted herein
does not extend to and the term "Collateral" does not include any license or
contract rights to the extent (i) the granting of a security interest in it
would be contrary to applicable law, or (ii) that such rights are nonassignable
by their terms (but only to the extent such prohibition is enforceable under
applicable law, including, without limitation, Section 9318(4) of the Code)
without the consent of the licensor or other party (but only to the extent such
consent has not been obtained). Except as disclosed on the Schedule, Borrower is
not a party to, nor is bound by, any license or other agreement that prohibits
or otherwise restricts Borrower from granting a security interest in Borrower's
interest in such license or agreement or any other property. Without prior
notice to Bank, Borrower shall not enter into, or become bound by, any such
license or agreement which is reasonably likely to have a material impact on
Borrower's business or financial condition. Borrower shall take such steps as
Bank reasonably requests to obtain the consent of, or waiver by, any person
whose consent or waiver is necessary for such licenses or contract rights to be
deemed "Collateral" and for Bank to have a security interest in it that might
otherwise be restricted or prohibited by law or by the terms of any such license
or agreement, whether now existing or entered into in the future. If the
Agreement is terminated, Bank's lien and security interest in the Collateral
will continue until Borrower fully satisfies its Obligations.

5    REPRESENTATIONS AND WARRANTIES
     ------------------------------

     Borrower represents and warrants as follows:

5.1  DUE ORGANIZATION AND AUTHORIZATION.

     Borrower and each Subsidiary is duly existing and in good standing in its
state of formation and qualified and licensed to do business in, and in good
standing in, any state in which the conduct of its business or its ownership of
property requires that it be qualified except for states as to which any failure
so to qualify would not cause a Material Adverse Change.

     The execution, delivery and performance of the Loan Documents have been
duly authorized, and do not conflict with Borrower's formation documents, nor
constitute an event of default under any material agreement by which Borrower is
bound. Borrower is not in default under any agreement to which or by which it is
bound in which the default would reasonably be expected to cause a Material
Adverse Change.

5.2  COLLATERAL.

     Borrower has good title to the Collateral, free of Liens except Permitted
Liens. All Inventory is in all material respects of good and marketable quality,
free from material defects.

5.3  LITIGATION.

     Except as shown in the Schedule, there are no actions or proceedings
pending or, to Borrower's knowledge, threatened by or against Borrower or any
Subsidiary in which a likely adverse decision would reasonably be expected to
cause a Material Adverse Change.

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5.4  NO MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS.

     All consolidated financial statements for Borrower, and any Subsidiary,
delivered to Bank fairly present in all material respects Borrower's
consolidated financial condition and Borrower's consolidated results of
operations. There has not been any material deterioration in Borrower's
consolidated financial condition since the date of the most recent financial
statements submitted to Bank.

5.5  SOLVENCY.

     Borrower is able to pay its debts (including trade debts) as they mature.

5.6  REGULATORY COMPLIANCE.

     Borrower is not an "investment company" or a company "controlled" by an
"investment company" under the Investment Company Act. Borrower is not engaged
as one of its important activities in extending credit for margin stock (under
Regulations G, T and U of the Federal Reserve Board of Governors). Borrower has
complied in all material respects with the Federal Fair Labor Standards Act.
Borrower has not violated any laws, ordinances or rules, the violation of which
could would reasonably be expected to cause a Material Adverse Change. None of
Borrower's or any Subsidiary's properties or assets has been used by Borrower or
any Subsidiary or, to the best of Borrower's knowledge, by previous Persons, in
disposing, producing, storing, treating, or transporting any hazardous substance
other than legally. Borrower and each Subsidiary has timely filed all required
tax returns and paid, or made adequate provision to pay, all taxes, except those
being contested in good faith with adequate reserves under GAAP. Borrower and
each Subsidiary has obtained all consents, approvals and authorizations of, made
all declarations or filings with, and given all notices to, all government
authorities that are necessary to continue its business as currently conducted
except where the failure to obtain such consent, approval or authorization to
make such declaration or filing or to give any such notice would not reasonably
be expected to cause a Material Adverse Change.

5.7  SUBSIDIARIES.

     Borrower does not own any stock, partnership interest or other equity
securities except for Permitted Investments.

5.8  FULL DISCLOSURE.

     No representation, warranty or other statement of Borrower in any
certificate or written statement given to Bank taken together with all such
certificates and written statements given to Bank contains any untrue statement
of a material fact or omits to state a material fact necessary to make the
statements contained in the certificates or statements not misleading (it being
recognized by Bank that the projections and forecasts provided by Borrower in
good faith and based upon reasonable assumptions are not to be viewed as facts
and that actual results during the period or periods covered by any such
projections and forecasts may differ from the projected or forecasted results).

6    AFFIRMATIVE COVENANTS
     ---------------------

     Borrower will do all of the following:

6.1  GOVERNMENT COMPLIANCE.

     Borrower will maintain its and all Subsidiaries' legal existence and good
standing in its jurisdiction of formation and maintain qualification in each
jurisdiction in which the failure to so qualify would reasonably be expected to
cause a Material Adverse Change in Borrower's

                                       7
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business or operations. Borrower will comply, and have each Subsidiary comply,
with all laws, ordinances and regulations to which it is subject, noncompliance
with which could have a material adverse effect on Borrower's business or
operations or cause a Material Adverse Change.

6.2  FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.

     (a)  Borrower will deliver to Bank: (i) as soon as available, but no later
than 30 days after the last day of each month, a company prepared consolidated
balance sheet and income statement covering Borrower's consolidated operations
during the period, in a form and certified by a Responsible Officer acceptable
to Bank; (ii) as soon as available, but no later than 120 days after the last
day of Borrower's fiscal year, audited consolidated financial statements
prepared under GAAP, consistently applied, together with an opinion which is
unqualified or otherwise consented to by Bank on the financial statements from
an independent certified public accounting firm acceptable to Bank; (iii) a
prompt report of any legal actions pending or threatened against Borrower or any
Subsidiary that could result in damages or costs to Borrower or any Subsidiary
of $100,000 or more; and (iv) budgets, sales projections, operating plans or
other financial information Bank requests.

     (b)  Within 30 days after the last day of each month, Borrower will deliver
to Bank with the monthly financial statements a Compliance Certificate signed by
a Responsible Officer in the form of Exhibit C, together with accounts
receivable and accounts payable agings.

     (c)  At such times as an Event of Default has occurred and is continuing
Bank has the right to audit Borrower's Collateral at Borrower's expense.

6.3  INVENTORY; RETURNS.

     Borrower will keep all Inventory in good and marketable condition, free
from material defects. Returns and allowances between Borrower and its account
debtors will follow Borrower's customary practices as they exist at execution of
this Agreement. Borrower must promptly notify Bank of all returns, recoveries,
disputes and claims, that involve more than $50,000.

6.4  TAXES.

     Borrower will make, and cause each Subsidiary to make, timely payment of
all material federal, state, and local taxes or assessments and will deliver to
Bank, on demand, appropriate certificates attesting to the payment.

6.5  INSURANCE.

     Borrower will keep its business and the Collateral insured for risks and in
amounts, as Bank requests. Insurance policies will be in a form, with companies,
and in amounts that are satisfactory to Bank. All property policies will have a
lender's loss payable endorsement showing Bank as an additional loss payee and
all liability policies will show the Bank as an additional insured and provide
that the insurer must give Bank at least 20 days notice before canceling its
policy. At Bank's request, Borrower will deliver certified copies of policies
and evidence of all premium payments. So long as no Event of Default has
occurred and is continuing, proceeds payable under any casualty policy will, at
Borrower's option, be payable to Borrower to replace the property subject to the
claim, provided that any such replacement property shall be deemed Collateral in
which Bank has been granted a first priority security interest. If an Event of
Default has occurred and is continuing, then, at Bank's option, all proceeds
payable under any such casualty policy shall be payable to Bank on account of
the Obligations.

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6.6  PRIMARY ACCOUNTS.

     Borrower will maintain its primary depository and operating accounts with
Bank.

6.7  FINANCIAL COVENANTS.

     Borrower will maintain as of the last day of each month:

               (i)  TANGIBLE NET WORTH. A Tangible Net Worth of at least
$2,000,000.

               (ii) LIQUIDITY COVERAGE. A ratio of cash plus 50% of net
Accounts, divided by the aggregate outstanding Equipment Advances of not less
than 2.00 to 1.00.

6.8  FURTHER ASSURANCES.

     Borrower will execute any further instruments and take further action
as Bank reasonably requests to perfect or continue Bank's security interest in
the Collateral or to effect the purposes of this Agreement.

7    NEGATIVE COVENANTS
     ------------------

     Borrower will not do any of the following:

7.1  DISPOSITIONS.

     Convey, sell, lease, transfer or otherwise dispose of (collectively
"Transfer"), or permit any of its Subsidiaries to Transfer, all or any part of
its business or property, other than Transfers (i) of Inventory in the ordinary
course of business; (ii) of non-exclusive licenses and similar arrangements for
the use of the property of Borrower or its Subsidiaries in the ordinary course
of business; or (iii) of worn-out or obsolete Equipment.

7.2  CHANGES IN BUSINESS, OWNERSHIP, MANAGEMENT OR BUSINESS LOCATIONS.

     Engage in or permit any of its Subsidiaries to engage in any business
other than the businesses currently engaged in by Borrower or have a material
change in its ownership of greater than 25% (other than the sale by Borrower of
equity securities of Borrower. Borrower will not, without at least 30 days prior
written notice, relocate its chief executive office or add any new offices or
business locations.

7.3  MERGERS OR ACQUISITIONS.

     Merge or consolidate, or permit any of its Subsidiaries to merge or
consolidate, with any other Person, or acquire, or permit any of its
Subsidiaries to acquire, all or substantially all of the capital stock or
property of another Person, except where (i) no Event of Default has occurred
and is continuing or would result from such action during the term of this
Agreement or result in a decrease of more than 25% of Tangible Net Worth; or
(ii) the merger or consolidation is (a) a Subsidiary into another Subsidiary or
(b) a Subsidiary into Borrower.

7.4  INDEBTEDNESS.

     Create, incur, assume, or be liable for any Indebtedness, or permit any
Subsidiary to do so, other than Permitted Indebtedness.

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7.5  ENCUMBRANCE.

     Create, incur, or allow any Lien on any of its property, or assign or
convey any right to receive income, including the sale of any Accounts, or
permit any of its Subsidiaries to do so, except for Permitted Liens, or permit
any Collateral not to be subject to the first priority security interest granted
herein, subject only to Permitted Liens.

7.6  DISTRIBUTIONS; INVESTMENTS.

     Directly or indirectly acquire or own any Person, or make any Investment in
any Person, other than Permitted Investments, or permit any of its Subsidiaries
to do so. Pay any dividends or make any distribution or payment or redeem,
retire or purchase any capital stock, except for repurchases of stock from
former employees or directors of Borrower under the terms of applicable
repurchase agreements in an aggregate amount not to exceed $50,000 in the
aggregate in any fiscal year, provided that no Event of Default has occurred, is
continuing or would exist after giving effect to the repurchases.

7.7  TRANSACTIONS WITH AFFILIATES.

     Directly or indirectly enter or permit any material transaction with any
Affiliate (other than a Subsidiary) except transactions that are in the ordinary
course of Borrower's business, on terms less favorable to Borrower than would be
obtained in an arm's length transaction with a non-affiliated Person.

7.8  SUBORDINATED DEBT.

     Make or permit any payment on any Subordinated Debt, except under the terms
of the Subordinated Debt, or amend any provision in any document relating to the
Subordinated Debt without Bank's prior written consent.

7.9  COMPLIANCE.

     Undertake as one of its important activities extending credit to purchase
or carry margin stock, or use the proceeds of any Credit Extension for that
purpose; fail to meet the minimum funding requirements of ERISA, permit a
Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail
to comply in any material respect with the Federal Fair Labor Standards Act or
violate any other law or regulation, if the violation could be reasonably
expected to have a material adverse effect on Borrower's business or operations
or cause a Material Adverse Change, or permit any of its Subsidiaries to do so.

8    EVENTS OF DEFAULT
     -----------------

     Any one of the following is an Event of Default:

8.1  PAYMENT DEFAULT.

     If Borrower fails to pay any of the Obligations within 3 days after their
due date. During the additional period the failure to cure the default is not an
Event of Default (but no Credit Extensions will be made during the cure period);

8.2  COVENANT DEFAULT.

     If Borrower does not perform any obligation in Section 6 or violates any
covenant in Section 7 or does not perform or observe any other material term,
condition or covenant in this Agreement, any Loan Documents, or in any agreement
between Borrower and Bank and as to any default under a term, condition or
covenant that can be cured, has not cured the default

                                      10
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within 10 days after it occurs, or if the default cannot be cured within 10 days
or cannot be cured after Borrower's attempts within 10 day period, and the
default may be cured within a reasonable time, then Borrower has an additional
period (of not more than 30 days) to attempt to cure the default. During the
additional time, the failure to cure the default is not an Event of Default (but
no Credit Extensions will be made during the cure period);

8.3  MATERIAL ADVERSE CHANGE.

     (i)  If there occurs a material impairment in the perfection or priority of
the Bank's security interest in the Collateral or in the value of such
Collateral which is not covered by adequate insurance or (ii) if the Bank
determines, based upon information available to it and in its reasonable
judgment, that there is a reasonable likelihood that Borrower will fail to
comply with one or more of the financial covenants in Section 6 during the next
succeeding financial reporting period.

8.4  ATTACHMENT.

     If any material portion of Borrower's assets is attached, seized, levied
on, or comes into possession of a trustee or receiver and the attachment,
seizure or levy is not removed in 10 days, or if Borrower is enjoined,
restrained, or prevented by court order from conducting a material part of its
business or if a judgment or other claim becomes a Lien on a material portion of
Borrower's assets, or if a notice of lien, levy, or assessment is filed against
any of Borrower's assets by any government agency and not paid within 10 days
after Borrower receives notice. These are not Events of Default if stayed or if
a bond is posted pending contest by Borrower (but no Credit Extensions will be
made during the cure period);

8.5  INSOLVENCY.

     If Borrower becomes insolvent or if Borrower begins an Insolvency
Proceeding or an Insolvency Proceeding is begun against Borrower and not
dismissed or stayed within 30 days (but no Credit Extensions will be made before
any Insolvency Proceeding is dismissed);

8.6  OTHER AGREEMENTS.

     If there is a default in any agreement between Borrower and a third party
that gives the third party the right to accelerate any Indebtedness exceeding
$50,000 or that could reasonably expected to cause a Material Adverse Change;

8.7  JUDGMENTS.

     If a money judgment(s) in the aggregate of at least $100,000 not covered by
insurance is rendered against Borrower and is unsatisfied and unstayed for 30
days (but no Credit Extensions will be made before the judgment is stayed or
satisfied); or

8.8  MISREPRESENTATIONS.

     If Borrower or any Person acting for Borrower makes any material
misrepresentation or material misstatement now or later in any warranty or
representation in this Agreement or in any writing delivered to Bank or to
induce Bank to enter this Agreement or any Loan Document.

9    BANK'S RIGHTS AND REMEDIES
     --------------------------

9.1  RIGHTS AND REMEDIES.

     When an Event of Default occurs and continues Bank may, without notice or
demand, do any or all of the following:

                                      11
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     (a)  Declare all Obligations immediately due and payable (but if an Event
of Default described in Section 8.5 occurs all Obligations are immediately due
and payable without any action by Bank);

     (b)  Stop advancing money or extending credit for Borrower's benefit under
this Agreement or under any other agreement between Borrower and Bank;

     (c)  Settle or adjust disputes and claims directly with account debtors for
amounts, on terms and in any order that Bank considers advisable;

     (d)  Make any payments and do any acts it considers necessary or reasonable
to protect its security interest in the Collateral. Borrower will assemble the
Collateral if Bank requires and make it available as Bank designates. Bank may
enter premises where the Collateral is located, take and maintain possession of
any part of the Collateral, and pay, purchase, contest, or compromise any Lien
which appears to be prior or superior to its security interest and pay all
expenses incurred. Borrower grants Bank a license to enter and occupy any of its
premises, without charge, to exercise any of Bank's rights or remedies;

     (e)  Apply to the Obligations any (i) balances and deposits of Borrower it
holds, or (ii) any amount held by Bank owing to or for the credit or the account
of Borrower;

     (f)  Ship, reclaim, recover, store, finish, maintain, repair, prepare for
sale, advertise for sale, and sell the Collateral; and

     (g)  Dispose of the Collateral according to the Code.

9.2  POWER OF ATTORNEY.

     Effective only when an Event of Default occurs and continues, Borrower
irrevocably appoints Bank as its lawful attorney to: (i) endorse Borrower's name
on any checks or other forms of payment or security; (ii) sign Borrower's name
on any invoice or bill of landing for any Account or drafts against account
debtors, (iii) make, settle, and adjust all claims under Borrower's insurance
policies; (iv) settle and adjust disputes and claims about the Accounts directly
with account debtors, for amounts and on terms Bank determines reasonable; and
(v) transfer the Collateral into the name of Bank or a third party as the Code
permits. Bank may exercise the power of attorney to sign Borrower's name on any
documents necessary to perfect or continue the perfection of any security
interest regardless of whether an Event of Default has occurred. Bank's
appointment as Borrower's attorney in fact, and all of Bank's rights and powers,
coupled with an interest, are irrevocable until all Obligations have been fully
repaid and performed and Bank's obligation to provide Credit Extensions
terminates.

9.3  ACCOUNTS COLLECTION.

     When an Event of Default occurs and continues, Bank may notify any Person
owing Borrower money of Bank's security interest in the funds and verify the
amount of the Account. Borrower must collect all payments in trust for Bank and,
if requested by Bank, immediately deliver the payments to Bank in the form
received from the account debtor, with proper endorsements for deposit.

9.4  BANK EXPENSES.

     If Borrower fails to pay any amount or furnish any required proof of
payment to third persons Bank may make all or part of the payment or obtain
insurance policies required in Section 6.5, and take any action under the
policies Bank reasonably deems prudent. Any reasonable amounts paid by Bank are
Bank Expenses and immediately due and payable, bearing

                                      12
<PAGE>

interest at the then applicable rate and secured by the Collateral. No payments
by Bank are deemed an agreement to make similar payments in the future or Bank's
waiver of any Event of Default.

9.5  BANK'S LIABILITY FOR COLLATERAL.

     If Bank complies with reasonable banking practices it is not liable for:
(a) the safekeeping of the Collateral; (b) any loss or damage to the Collateral;
(c) any diminution in the value of the Collateral; or (d) any act or default of
any carrier, warehouseman, bailee, or other person. Borrower bears all risk of
loss, damage or destruction of the Collateral.

9.6  REMEDIES CUMULATIVE.

     Bank's rights and remedies under this Agreement, the Loan Documents, and
all other agreements are cumulative. Bank has all rights and remedies provided
under the Code, by law, or in equity. Bank's exercise of one right or remedy is
not an election, and Bank's waiver of any Event of Default is not a continuing
waiver. Bank's delay is not a waiver, election, or acquiescence. No waiver is
effective unless signed by Bank and then is only effective for the specific
instance and purpose for which it was given.

9.7  DEMAND WAIVER.

     Borrower waives demand, notice of default or dishonor, notice of payment
and nonpayment, notice of any default, nonpayment at maturity, release,
compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees held by Bank on which Borrower is
liable.

10   NOTICES
     -------

     All notices or demands by any party about this Agreement or any other
related agreement must be in writing and be personally delivered or sent by an
overnight delivery service, by certified mail, postage prepaid, return receipt
requested, or by telefacsimile to the addresses set forth at the beginning of
this Agreement. A party may change its notice address by giving the other party
written notice.

11   CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER
     ------------------------------------------

     California law governs the Loan Documents without regard to principles of
conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction of
the State and Federal courts in Santa Clara County, California.

BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY CONTEMPLATED
TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS
WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT.
EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.

12   GENERAL PROVISIONS
     ------------------

12.1 SUCCESSORS AND ASSIGNS.

     This Agreement binds and is for the benefit of the successors and permitted
assigns of each party. Borrower may not assign this Agreement or any rights
under it without Bank's prior written consent which may be granted or withheld
in Bank's discretion. Bank has the right,

                                      13

<PAGE>

without the consent of or notice to Borrower, to sell, transfer, negotiate, or
grant participation in all or any part of, or any interest in, Bank's
obligations, rights and benefits under this Agreement.

12.2 INDEMNIFICATION.

     Borrower will indemnify, defend and hold harmless Bank and its officers,
employees, and agents against: (a) all obligations, demands, claims, and
liabilities asserted by any other party in connection with the transactions
contemplated by the Loan Documents; and (b) all losses or Bank Expenses
incurred, or paid by Bank from, following, or consequential to transactions
between Bank and Borrower (including reasonable attorneys fees and expenses),
except for losses caused by Bank's gross negligence or willful misconduct.

12.3 TIME OF ESSENCE.

     Time is of the essence for the performance of all obligations in this
Agreement.

12.4 SEVERABILITY OF PROVISION.

     Each provision of this Agreement is severable from every other provision in
determining the enforceability of any provision.

12.5 AMENDMENTS IN WRITING, INTEGRATION.

     All amendments to this Agreement must be in writing and signed by Borrower
and Bank. This Agreement represents the entire agreement about this subject
matter, and supersedes prior negotiations or agreements. All prior agreements,
understandings, representations, warranties, and negotiations between the
parties about the subject matter of this Agreement merge into this Agreement and
the Loan Documents.

12.6 COUNTERPARTS.

     This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when executed and
delivered, are an original, and all taken together, constitute one Agreement.

12.7 SURVIVAL.

     All covenants, representations and warranties made in this Agreement
continue in full force while any Obligations remain outstanding. The obligations
of Borrower in Section 12.2 to indemnify Bank will survive until all statutes of
limitations for actions that may be brought against Bank have run.

12.8 CONFIDENTIALITY.

     In handling any confidential information, Bank will exercise the same
degree of care that it exercises for its own proprietary information, but
disclosure of information may be made (i) to Bank's subsidiaries or affiliates
in connection with their present or prospective business relations with
Borrower, (ii) to prospective transferees or purchasers of any interest in the
loans, (iii) as required by law, regulation, subpoena, or other order, (iv) as
required in connection with Bank's examination or audit and (v) as Bank
considers appropriate exercising remedies under this Agreement. Confidential
information does not include information that either: (a) is in the public
domain or in Bank's possession when disclosed to Bank, or becomes part of the
public domain after disclosure to Bank; or (b) is disclosed to Bank by a third
party, if Bank does not know that the third party is prohibited from disclosing
the information.

                                      14

<PAGE>

12.9     ATTORNEYS' FEES, COSTS AND EXPENSES.

         In any action or proceeding between Borrower and Bank arising out of
the Loan Documents, the prevailing party will be entitled to recover its
reasonable attorneys' fees and other costs and expenses incurred, in addition to
any other relief to which it may be entitled.

13       DEFINITIONS
         -----------

13.1     DEFINITIONS.

         In this Agreement:

         "ACCOUNTS" are all existing and later arising accounts, contract
rights, and other obligations owed Borrower in connection with its sale or lease
of goods (including licensing software and other technology) or provision of
services, all credit insurance, guaranties, other security and all merchandise
returned or reclaimed by Borrower and Borrower's Books relating to any of the
foregoing.

         "AFFILIATE" of a Person is a Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is under
common control with the Person, and each of that Person's senior executive
officers, directors, partners and, for any Person that is a limited liability
company, that Person's managers and members.

         "BANK EXPENSES" are all reasonable audit fees and expenses and
reasonable costs and expenses (including reasonable attorneys' fees and
expenses) for preparing, negotiating, administering, defending and enforcing the
Loan Documents (including appeals or Insolvency Proceedings).

         "BORROWER'S BOOKS" are all Borrower's books and records including
ledgers, records regarding Borrower's assets or liabilities, the Collateral,
business operations or financial condition and all computer programs or discs or
any equipment containing the information.

         "BUSINESS DAY" is any day that is not a Saturday, Sunday or a day on
which the Bank is closed.

         "CASH MANAGEMENT FACILITY" is defined in Section 2.1.2.

         "CASH MANAGEMENT MATURITY DATE" is March 31, 2000.

         "CLOSING DATE" is the date of this Agreement.

         "CODE" is the California Uniform Commercial Code.

         "COLLATERAL" is the property described on Exhibit A.
                                                   ---------

         "COMMITTED EQUIPMENT LINE" is a Credit Extension of up to $2,000,000.

         "CONTINGENT OBLIGATION" is, for any Person, any direct or indirect
liability, contingent or not, of that Person for (i) any indebtedness, lease,
dividend, letter of credit or other obligation of another such as an obligation
directly or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly
liable; (ii) any obligations for undrawn letters of credit for the account of
that Person; and (iii) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; but "Contingent
Obligation" does not include endorsements in the ordinary course of business.
The amount of a Contingent Obligation

                                      15
<PAGE>

is the stated or determined amount of the primary obligation for which the
Contingent Obligation is made or, if not determinable, the maximum reasonably
anticipated liability for it determined by the Person in good faith; but the
amount may not exceed the maximum of the obligations under the guarantee or
other support arrangement.

         "CREDIT EXTENSION" is each Equipment Advance or any other extension of
credit by Bank for Borrower's benefit.

         "EQUIPMENT" is all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which Borrower has any interest.

         "EQUIPMENT ADVANCE" is defined in Section 2.1.1.

         "EQUIPMENT AVAILABILITY END DATE" is defined in Section 2.1.1.

         "EQUIPMENT MATURITY DATE" is defined in Section 2.1.1.

         "ERISA" is the Employment Retirement Income Security Act of 1974, and
its regulations.

         "GAAP" is generally accepted accounting principles.

         "INDEBTEDNESS" is (a) indebtedness for borrowed money or the deferred
price of property or services (other than trade debt incurred in the ordinary
course of business), such as reimbursement and other obligations for surety
bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations and (d)
Contingent Obligations.

         "INSOLVENCY PROCEEDING" are proceedings by or against any Person under
the United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.

         "INVENTORY" is present and future inventory in which Borrower has any
interest, including merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products intended for sale or
lease or to be furnished under a contract of service, of every kind and
description now or later owned by or in the custody or possession, actual or
constructive, of Borrower, including inventory temporarily out of its custody or
possession or in transit and including returns on any accounts or other proceeds
(including insurance proceeds) from the sale or disposition of any of the
foregoing and any documents of title.

         "INVESTMENT" is any beneficial ownership of (including stock,
partnership interest or other securities) any Person, or any loan, advance or
capital contribution to any Person.

         "LIEN" is a mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.

         "LOAN DOCUMENTS" are, collectively, this Agreement, any note, or notes
or guaranties executed by Borrower or Guarantor, and any other present or future
agreement between Borrower and/or for the benefit of Bank in connection with
this Agreement, all as amended, extended or restated.

         "MATERIAL ADVERSE CHANGE" is defined in Section 8.3.

         "OBLIGATIONS" are debts, principal, interest, Bank Expenses and other
amounts Borrower owes Bank now or later, including letters of credit and
Exchange Contracts and including interest

                                      16
<PAGE>

accruing after Insolvency Proceedings begin and debts, liabilities, or
obligations of Borrower assigned to Bank.

         "PERMITTED INDEBTEDNESS" is:

         (a)  Borrower's indebtedness to Bank under this Agreement or the Loan
Documents;

         (b)  Indebtedness existing on the Closing Date and shown on the
Schedule;

         (c)  Subordinated Debt;

         (d)  Indebtedness to trade creditors and with respect to surety bonds
and similar obligations incurred in the ordinary course of business;

         (e)  Indebtedness secured by Permitted Liens;

         (f)  Indebtedness of Borrower to any Subsidiary and Contingent
Obligations of any Subsidiary with respect to obligations of Borrower (provided
that the primary obligations are not prohibited hereby), and Indebtedness of any
Subsidiary to any other Subsidiary and Contingent Obligations of any Subsidiary
with respect to obligations of any other Subsidiary (provided that the primary
obligations are not prohibited hereby);

         (g)  Other Indebtedness not otherwise permitted by Section 7.4 not
exceeding Fifty Thousand Dollars ($100,000) in the aggregate outstanding at any
time; and

         (h)  Extensions, refinancings, modifications, amendments and
restatements of any items of Permitted Indebtedness (a) through (f) above,
provided that the principal amount thereof is not increased or the terms thereof
are not modified to impose more burdensome terms upon Borrower or its
Subsidiary, as the case may be.

         "PERMITTED INVESTMENTS" are:

         (a)  Investments shown on the Schedule and existing on the Closing
Date;

         (b)  (i) marketable direct obligations issued or unconditionally
guaranteed by the United States or its agency or any State maturing within 1
year from its acquisition, (ii) commercial paper maturing no more than 1 year
after its creation and having the highest rating from either Standard & Poor's
Corporation or Moody's Investors Service, Inc., (iii) Bank's certificates of
deposit issued maturing no more than 1 year after issue, and (iv) any
investments permitted by Borrower's investment policy, as amended from time to
time, provided that such investment policy (and any such amendment thereto) has
been approved by Bank;

         (c)  Investments consisting of the endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of Borrower;

         (d)  Investments accepted in connection with Transfers permitted by
Section 7.1;

         (e)  Investments of Subsidiaries in or to other Subsidiaries or
Borrower and Investments by Borrower in Subsidiaries not to exceed $100,000 in
the aggregate in any fiscal year;

         (f)  Investments consisting of (i) travel advances and employee
relocation loans and other employee loans and advances in the ordinary course of
business, (ii) loans to employees, officers or directors relating to the
purchase of equity securities of Borrower or its Subsidiaries pursuant to
employee stock purchase plans or agreements approved by Borrower's Board of
Directors; (iii) compensation of employees, officers and directors of Borrower
or its Subsidiaries so long as Borrower's board of directors determines that
such compensation is in the best

                                      17
<PAGE>

interests of Borrower; and (iv) after loans to officers and employees approved
by Borrower's board of directors in an aggregate amount not in excess of
$100,000 outstanding at any time.

         (g) Investments (including debt obligations) received in connection
with the bankruptcy or reorganization of customers or suppliers and in
settlement of delinquent obligations of, and other disputes with, customers or
suppliers arising in the ordinary course of business;

         (h) Investments consisting of notes receivable of, or prepaid royalties
and other credit extensions, to customers and suppliers who are not Affiliates,
in the ordinary course of business; provided that this paragraph (h) shall not
apply to Investments of Borrower in any Subsidiary; and

         (i) Joint ventures or strategic alliances in the ordinary course of
Borrower's business consisting of the non-exclusive licensing of technology, the
development of technology or the providing of technical support, provided that
any cash investments by Borrower do not exceed $100,000 in the aggregate in any
fiscal year.

         "PERMITTED LIENS" are:

         (a) Liens existing on the Closing Date and shown on the Schedule or
arising under this Agreement or other Loan Documents;

         (b) Liens for taxes, fees, assessments or other government charges or
levies, either not delinquent or being contested in good faith and for which
Borrower maintains adequate reserves on its Books, if they have no priority over
any of Bank's security interests;

         (c) Purchase money Liens (i) on Equipment acquired or held by Borrower
or its Subsidiaries incurred for financing the acquisition of the Equipment, or
(ii) existing on equipment when acquired, if the Lien is confined to the
property and improvements and the proceeds of the equipment;

         (d) Leases or subleases and licenses or sublicenses granted in the
ordinary course of Borrower's business, if the leases, subleases, licenses and
sublicenses permit granting Bank a security interest;

         (e) Liens incurred in the extension, renewal or refinancing of the
indebtedness secured by Liens described in (a) through (c), but any extension,
renewal or replacement Lien must be limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness may not increase;

         (f) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under Section 8.4 or 8.7;

         (g) Liens in favor of other financial institutions arising in
connection with Borrower's deposit accounts held at such institutions, provided
that Bank has a perfected security interest in the amounts held in such deposit
accounts; and

         (h) Other Liens not described above arising in the ordinary course of
business and not having or not reasonably likely to have a material adverse
effect on Borrower and its Subsidiaries taken as a whole.

         "PERSON" is any individual, sole proprietorship, partnership, limited
liability company, joint venture, company, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or government agency.

         "PERSON" is any individual, sole proprietorship, partnership, limited
liability company, joint venture, company association, trust, unincorporated
organization, association, corporation,

                                      18
<PAGE>

institution, public benefit corporation, firm, joint stock company, estate,
entity or government agency.

         "PRIME RATE" is Bank's most recently announced "prime rate," even if it
is not Bank's lowest rate.

         "RESPONSIBLE OFFICER" is each of the Chief Executive Officer, the
President, the Chief Financial Officer and the Controller of Borrower.

         "SCHEDULE" is any attached schedule of exceptions.

         "SUBORDINATED DEBT" is debt incurred by Borrower subordinated to
Borrower's debt to Bank (and identified as subordinated by Borrower and Bank).

         "SUBSIDIARY" is for any Person, or any other business entity of which
more than 50% of the voting stock or other equity interests is owned or
controlled, directly or indirectly, by the Person or one or more Affiliates of
the Person.

         "TANGIBLE NET WORTH" is, on any date, the consolidated total assets of
Borrower and its Subsidiaries minus,
                              -----

(i) any amounts attributable to (a) goodwill, (b) intangible items such as
unamortized debt discount and expense, Patents, trade and service marks and
names, Copyrights and research and development expenses except prepaid expenses,
and (c) reserves not already deducted from assets, and (ii) Total Liabilities.

         "TOTAL LIABILITIES" is on any day, obligations that should, under GAAP,
be classified as liabilities on Borrower's consolidated balance sheet, including
all indebtedness, and current portion Subordinated Debt allowed to be paid, but
excluding all other Subordinated Debt.

BORROWER:

Nuance Communications

By: /s/ Signature Illegible

Title: VP & CFD

BANK:

SILICON VALLEY BANK

By: /s/ Signature Illegible

Title: Vice President

                                      19
<PAGE>

                                   EXHIBIT A
                                   ---------

         The Collateral consists of all of Borrower's right, title and interest
in and to the following:

         All goods and equipment now owned or hereafter acquired, including,
without limitation, all machinery, fixtures, vehicles (including motor vehicles
and trailers), and any interest in any of the foregoing, and all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing, wherever located;

         All inventory, now owned or hereafter acquired, including, without
limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Borrower's custody or possession or in
transit and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the
foregoing and any documents of title representing any of the above;

         All contract rights and general intangibles now owned or hereafter
acquired, including, without limitation, goodwill, trademarks, servicemarks,
trade styles, trade names, patents, patent applications, leases, license
agreements, franchise agreements, blueprints, drawings, purchase orders,
customer lists, route lists, infringements, claims, computer programs, computer
discs, computer tapes, literature, reports, catalogs, design rights, income tax
refunds, payments of insurance and rights to payment of any kind;

         All now existing and hereafter arising accounts, contract rights,
royalties, license rights and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods, the licensing of technology or the
rendering of services by Borrower, whether or not earned by performance, and any
and all credit insurance, guaranties, and other security therefor, as well as
all merchandise returned to or reclaimed by Borrower;

         All documents, cash, deposit accounts, securities, securities
entitlements, securities accounts, investment property, financial assets,
letters of credit, certificates of deposit, instruments and chattel paper now
owned or hereafter acquired and Borrower's Books relating to the foregoing;

         All copyright rights, copyright applications, copyright registrations
and like protections in each work of authorship and derivative work thereof,
whether published or unpublished, now owned or hereafter acquired; all trade
secret rights, including all rights to unpatented inventions, know-how,
operating manuals, license rights and agreements and confidential information,
now owned or hereafter acquired; all mask work or similar rights available for
the protection of semiconductor chips, now owned or hereafter acquired; all
claims for damages by way of any past, present and future infringement of any of
the foregoing; and

         All Borrower's Books relating to the foregoing and any and all claims,
rights and interests in any of the above and all substitutions for, additions
and accessions to and proceeds thereof.

         Notwithstanding the foregoing, the security interest granted herein
does not extend to and the term "Collateral" does not include any license or
contract rights to the extent (i) the granting of a security interest in it
would be contrary to applicable law, or (ii) that such rights are nonassignable
by their terms (but only to the extent such prohibition is enforceable under
applicable law, including, without limitation, Section 9318(4) of the Code)
without the consent of the licensor or other party (but only to the extent such
consent has not been obtained). Except as disclosed on the Schedule, Borrower is
not a party to, nor is bound by, any license or other agreement that prohibits
or otherwise restricts Borrower from granting a security interest in Borrower's
interest in such license or agreement or any other property. Without prior
notice to Bank, Borrower shall not enter into, or become bound by, any such
license or agreement which is reasonably likely to have a material impact on
Borrower's business or financial condition. Borrower shall take such steps as
Bank reasonably requests to obtain the consent of, or waiver by, any person
whose consent or waiver is necessary for such licenses or contract rights to be
deemed "Collateral" and for Bank to have a security interest in it that might
otherwise be restricted or prohibited by law or by the terms of any such license
or agreement, whether now existing or entered into in the future. If the
Agreement is terminated, Bank's lien and security interest in the Collateral
will continue until Borrower fully satisfies its Obligations.
<PAGE>

                                   EXHIBIT B
                                   ---------

                  LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM

             DEADLINE FOR SAME DAY PROCESSING IS 3:00 P.M., P.S.T.

<TABLE>
<S>                                                                    <C>
TO: CENTRAL CLIENT SERVICE DIVISION                                    DATE: ______________________________

FAX#: (408) 496-2426                                                   TIME: ______________________________

FROM: Nuance Communications
      ---------------------
      CLIENT NAME (BORROWER)

REQUESTED BY:
_______________________________________________________________________________
                            AUTHORIZED SIGNER'S NAME

AUTHORIZED SIGNATURE:
_______________________________________________________________________

PHONE NUMBER:
_______________________________________________________________________________

FROM ACCOUNT #________________      TO ACCOUNT

#___________________________________________________________________

REQUESTED TRANSACTION TYPE                                    REQUESTED DOLLAR AMOUNT
--------------------------                                    -----------------------

PRINCIPAL INCREASE (ADVANCE)                                  $________________________________________________

PRINCIPAL PAYMENT (ONLY)                                      $________________________________________________

INTEREST PAYMENT (ONLY)                                       $________________________________________________

PRINCIPAL AND INTEREST (PAYMENT)                              $________________________________________________

OTHER INSTRUCTIONS:__________________________________________________________________________________________
</TABLE>

All Borrower's representations and warranties in the Loan and Security Agreement
are true, correct and complete in all material respects on the date of the
telephone request for and Advance confirmed by this Borrowing Certificate; but
those representations and warranties expressly referring to another date shall
be true, correct and complete in all material respects as of that date.

                                 BANK USE ONLY

TELEPHONE REQUEST:
-----------------

The following person is authorized to request the loan payment transfer/loan
advance on the advance designated account and is known to me.

_________________________

----------------------------------
         Authorized Requester                                 Phone #

_________________________

----------------------------------
         Received By (Bank)                                   Phone #

                   __________________________________________
                           Authorized Signature (Bank)
<PAGE>

                                   EXHIBIT C
                            COMPLIANCE CERTIFICATE

TO:    SILICON VALLEY BANK
       3003 Tasman Drive
       Santa Clara, CA 95054

FROM:  NUANCE COMMUNICATIONS

       The undersigned authorized officer of Nuance Communications
("Borrower") certifies that under the terms and conditions of the Loan and
Security Agreement between Borrower and Bank (the "Agreement"), (i) Borrower is
in complete compliance for the period ending ______________ with all required
covenants except as noted below and (ii) all representations and warranties in
the Agreement are true and correct in all material respects on this date.
Attached are the required documents supporting the certification. The Officer
certifies that these are prepared in accordance with Generally Accepted
Accounting Principles (GAAP) consistently applied from one period to the next
except as explained in an accompanying letter or footnotes. The Officer
acknowledges that no borrowings may be requested at any time or date of
determination that Borrower is not in compliance with any of the terms of the
Agreement, and that compliance is determined not just at the date this
certificate is delivered.

       PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES"
COLUMN.

<TABLE>
<CAPTION>
         REPORTING COVENANT                                   REQUIRED                                    COMPLIES
         ------------------                                   --------                                    --------
         <S>                                                  <C>                                         <C>
         Monthly financial statements + CC
         And A/R and A/P agings                               Monthly within 30 days                      Yes   No
         Annual (Audited)                                     FYE within 120 days                         Yes   No

         FINANCIAL COVENANT                                   REQUIRED              ACTUAL                COMPLIES
         ------------------                                   --------              ------                --------

         Maintain on a Monthly Basis:
         Minimum Tangible Net Worth                           $2,000,000            $________             Yes   No
         Minimum Liquidity Coverage*                          2.00:1.00             _____:1.00            Yes   No
</TABLE>

*        A ratio of cash plus 50% of net Accounts, divided by the aggregate
outstanding Equipment Advances.

COMMENTS REGARDING EXCEPTIONS: See Attached.

Sincerely,

Nuance Communications

---------------------------------
SIGNATURE

---------------------------------
TITLE

---------------------------------
DATE

                                 BANK USE ONLY

Received by: __________________________
                  AUTHORIZED SIGNER

Date: _________________________________

Verified: _____________________________
                  AUTHORIZED SIGNER

Date: _________________________________

Compliance Status:            Yes    No
<PAGE>

                              SILICON VALLEY BANK

                      PRO FORMA INVOICE FOR LOAN CHARGES

BORROWER:                           NUANCE COMMUNICATIONS

LOAN OFFICER:                       CHRIS WAGNER

DATE:                               JUNE 23, 1999

                                    EQUIPMENT LINE LOAN FEE            $5,000.00
                                    CREDIT REPORT                          35.00
                                    UCC SEARCH FEE                         75.00
                                    UCC FILING FEE                         20.00
                                    DOCUMENTATION FEE                     750.00

                                    TOTAL FEE DUE                      $5,880.00
                                    -------------                      ---------

Please indicate the method of payment:

         [_] A check for the total amount is attached.

         [X] Debit DDA # __________________ for the total amount.

         [_] Loan proceeds

BORROWER:

By:  /s/ Signature Illegible
     (Authorized Signer)

/s/ Signature Illegible
Silicon Valley Bank      (Date)
Account Officer's Signature
<PAGE>

                           NEGATIVE PLEDGE AGREEMENT

         This Negative Pledge Agreement is made as of June 23, 1999 by and
between Nuance Communications ("Borrower") and Silicon Valley Bank ("Bank").

In connection with, among other documents, the Loan and Security Agreement (the
"Loan Documents") being concurrently executed herewith between Borrower and
Bank, Borrower agrees as follows:

         1.    Except for (i) non-exclusive licenses granted in the ordinary
               course of business and exclusive licenses granted for a specific
               geographical location or technical field in the ordinary course
               of business, and (ii) other transfers not resulting in a Material
               Adverse Change (as defined in the Loan Documents), Borrower shall
               not sell, transfer, assign, mortgage, pledge, lease, grant a
               security interest in, or encumber any of Borrower's intellectual
               property, including, without limitation, the following:

               a.  Any and all copyright rights, copyright applications,
                   copyright registrations and like protections in each work or
                   authorship and derivative work thereof, whether published or
                   unpublished and whether or not the same also constitutes a
                   trade secret, now or hereafter existing, created, acquired or
                   held;

               b.  All mask works or similar rights available for the protection
                   of semiconductor chips, now owned or hereafter acquired;

               c.  Any and all trade secrets, and any and all intellectual
                   property rights in computer software and computer software
                   products now or hereafter existing, created, acquired or
                   held;

               d.  Any and all design rights which may be available to Borrower
                   now or hereafter existing, created, acquired or held;

               e.  All patents, patent applications and like protections
                   including, without limitation, improvements, divisions,
                   continuations, renewals, reissues, extensions and
                   continuations-in-part of the same, including without
                   limitation the patents and patent applications;

               f.  Any trademark and servicemark rights, whether registered or
                   not, applications to register and registrations of the same
                   and like protections, and the entire goodwill of the business
                   of Borrower connected with and symbolized by such trademarks,
                   including without limitation;

               g.  Any and all claims for damages by way of past, present and
                   future infringements of any of the rights included above,
                   with the right, but not the obligation, to sue for and
                   collect such damages for said use or infringement of the
                   intellectual property rights identified above;

               h.  All licenses or other rights to use any of the Copyrights,
                   Patents, Trademarks or Mask Works, and all license fees and
                   royalties arising from such use to the extent permitted by
                   such license or rights; and

               i.  All amendments, extensions, renewals and extensions of any of
                   the Copyrights, Trademarks, Patents, or Mask Works; and

               j.  All proceeds and products of the foregoing, including without
                   limitation all payments under insurance or any indemnity or
                   warranty payable in respect of any of the foregoing;
<PAGE>

         2.    It shall be an event of default under the Loan Documents between
               Borrower and Bank if there is a breach of any term of this
               Negative Pledge Agreement.

         3.    Capitalized terms used but not otherwise defined herein shall
               have the same meaning as in the Loan Documents.

BORROWER:

Nuance Communications

By: /s/ Signature Illegible

Name: Craham v. Smith

Title: VP c CFO

BANK:

SILICON VALLEY BANK

By: /s/ Signature Illegible

Name: Christopher Wagner

Title: VP

                                       2
<PAGE>

                        CORPORATE BORROWING RESOLUTION

BORROWER:  NUANCE COMMUNICATIONS               BANK:  SILICON VALLEY BANK
           1380 WILLOW ROAD                           3003 TASMAN DRIVE
           MENLO PARK, CA 94025                       SANTA CLARA, CA 95054-1191

I, the undersigned Secretary or Assistant Secretary of Nuance Communications
("Borrower"), HEREBY CERTIFY that Borrower is a corporation duly organized and
existing under and by virtue of the laws of the State of California.

I FURTHER CERTIFY that at a meeting of the Directors of Borrower (or by other
duly authorized corporate action in lieu of a meeting), duly called and held, at
which a quorum was present and voting, the following resolutions were adopted.

BE IT RESOLVED, that any one (1) of the following named officers, employees, or
agents of Borrower, whose actual signatures are shown below:

       NAMES                          POSITIONS               ACTUAL SIGNATURES
       -----                          ---------               -----------------

Ronald A ??                          President & CEO         /s/ Signature
Illegible

Graham V Smith                       VP & CFO                /s/ Signature
Illegible

_____________________________        _____________________
                                     ____________________

_____________________________        _____________________
                                     ____________________

acting for and on behalf of Borrower and as its act and deed be, and they hereby
are, authorized and empowered:

         BORROW MONEY. To borrow from time to time from Silicon Valley Bank
         ("Bank"), on such terms as may be agreed upon between the officers of
         Borrower and Bank, such sum or sums of money as in their judgment
         should be borrowed.

         EXECUTE LOAN DOCUMENTS. To execute and deliver to Bank the loan
         documents of Borrower, on Bank's forms, at such rates of interest and
         on such terms as may be agreed upon, evidencing the sums of money so
         borrowed or any indebtedness of Borrower to Bank, and also to execute
         and deliver to Bank one or more renewals, extensions, modifications,
         refinancings, consolidations, or substitutions for one or more of the
         loan documents, or any portion of the loan documents.

         GRANT SECURITY. To grant a security interest to Bank in any of
         Borrower's assets, which security interest shall secure all of
         Borrower's obligations to Bank

         NEGOTIATE ITEMS. To draw, endorse, and discount with Bank all drafts,
         trade acceptances, promissory notes, or other evidences of indebtedness
         payable to or belonging to Borrower or in which Borrower may have an
         interest, and either to receive cash for the same or to cause such
         proceeds to be credited to the account of Borrower with Bank, or to
         cause such other disposition of the proceeds derived therefrom as they
         may deem advisable.

         LETTERS OF CREDIT. To execute letter of credit applications and other
         related documents pertaining to Bank's issuance of letters of credit.

         FOREIGN EXCHANGE CONTRACTS. To execute and deliver foreign exchange
         contracts, either spot or forward, from time to time, in such amount
         as, in the judgment of the officer or officers herein authorized.
<PAGE>

         ISSUE WARRANTS. To issue warrants to purchase Borrower's capital stock,
         for such class, series and number, and on such terms, as an officer of
         Borrower shall deem appropriate.

         FURTHER ACTS. In the case of lines of credit, to designate additional
         or alternate individuals as being authorized to request advances
         thereunder, and in all cases, to do and perform such other acts and
         things, to pay any and all fees and costs, and to execute and deliver
         such other documents and agreements, including agreements waiving the
         right to a trial by jury, as they may in their discretion deem
         reasonably necessary or proper in order to carry into effect the
         provisions of these Resolutions.

BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these
Resolutions and performed prior to the passage of these resolutions are hereby
ratified and approved, that these Resolutions shall remain in full force and
effect and Bank may rely on these Resolutions until written notice of their
revocation shall have been delivered to and received by Bank. Any such notice
shall not affect any of Borrower's agreements or commitments in effect at the
time notice is given.

I FURTHER CERTIFY that the persons named above are principal officers of the
Borrower and occupy the positions set opposite their respective names; that the
foregoing Resolutions now stand of record on the books of the Borrower; and that
they are in full force and effect and have not been modified or revoked in any
manner whatsoever.

IN WITNESS WHEREOF, I have hereunto set my hand on June 23, 1999 and attest that
the signatures set opposite the names listed above are their genuine signatures.

CERTIFIED TO AND ATTESTED BY:

X /s/ Signature Illegible
  *Secretary or Assistant Secretary

X /s/ Signature Illegible

*NOTE: In case the Secretary or other certifying officer is designated by the
foregoing resolutions as one of the signing officers, this resolution should
also be signed by a second Officer or Director of Borrower.

                                       2
<PAGE>

                                 CHART OMITTED
<PAGE>

                                 CHART OMITTED
<PAGE>

                                 CHART OMITTED
<PAGE>

                                 CHART OMITTED
<PAGE>

                                   EXHIBIT A
                                   ---------

         The Collateral consists of all of Borrower's right, title and interest
in and to the following:

         All goods and equipment now owned or hereafter acquired, including,
without limitation, all machinery, fixtures, vehicles (including motor vehicles
and trailers), and any interest in any of the foregoing, and all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing, wherever located;

         All inventory, now owned or hereafter acquired, including, without
limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Borrower's custody or possession or in
transit and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the
foregoing and any documents of title representing any of the above;

         All contract rights and general intangibles now owned or hereafter
acquired, including, without limitation, goodwill, trademarks, servicemarks,
trade styles, trade names, patents, patent applications, leases, license
agreements, franchise agreements, blueprints, drawings, purchase orders,
customer lists, route lists, infringements, claims, computer programs, computer
discs, computer tapes, literature, reports, catalogs, design rights, income tax
refunds, payments of insurance and rights to payment of any kind;

         All now existing and hereafter arising accounts, contract rights,
royalties, license rights and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods, the licensing of technology or the
rendering of services by Borrower, whether or not earned by performance, and any
and all credit insurance, guaranties, and other security therefor, as well as
all merchandise returned to or reclaimed by Borrower;

         All documents, cash, deposit accounts, securities, securities
entitlements, securities accounts, investment property, financial assets,
letters of credit, certificates of deposit, instruments and chattel paper now
owned or hereafter acquired and Borrower's Books relating to the foregoing;

         All copyright rights, copyright applications, copyright registrations
and like protections in each work of authorship and derivative work thereof,
whether published or unpublished, now owned or hereafter acquired; all trade
secret rights, including all rights to unpatented inventions, know-how,
operating manuals, license rights and agreements and confidential information,
now owned or hereafter acquired; all mask work or similar rights available for
the protection of semiconductor chips, now owned or hereafter acquired; all
claims for damages by way of any past, present and future infringement of any of
the foregoing; and

         All Borrower's Books relating to the foregoing and any and all claims,
rights and interests in any of the above and all substitutions for, additions
and accessions to and proceeds thereof.

         Notwithstanding the foregoing, the security interest granted herein
does not extend to and the term "Collateral" does not include any license or
contract rights to the extent (i) the granting of a security interest in it
would be contrary to applicable law, or (ii) that such rights are nonassignable
by their terms (but only to the extent such prohibition is enforceable under
applicable law, including, without limitation, Section 9318(4) of the Code)
without the consent of the licensor or other party (but only to the extent such
consent has not been obtained). Except as disclosed on the Schedule, Borrower is
not a party to, nor is bound by, any license or other agreement that prohibits
or otherwise restricts Borrower from granting a security interest in Borrower's
interest in such license or agreement or any other property. Without prior
notice to Bank, Borrower's shall not enter into, or become bound by, any such
license or agreement which is reasonably likely to have a material impact on
Borrower's business or financial condition. Borrower shall take such steps as
Bank reasonably requests to obtain the consent of, or waiver by, any person
whose consent or waiver is necessary for such licenses or contract rights to be
deemed "Collateral" and for Bank to have a security interest in it that might
otherwise be restricted or prohibited by law or by the terms of any such license
or agreement, whether now existing or entered into in the future. If the
Agreement is terminated, Bank's lien and security interest in the Collateral
will continue until Borrower fully satisfies its Obligations.
<PAGE>

                       WILSON SONSINI GOODRICH & ROSATI
                           PROFESSIONAL CORPORATION

                              650 PAGE MILL ROAD
                       PALO ALTO, CALIFORNIA 94304-1050
                 TELEPHONE 650-493-9300 FACSIMILE 650-493-6811
                                 WWW.WSGR.COM

PALO ALTO, CALIFORNIA
KIRKLAND WASHINGTON
AUSTIN, TEXAS

JOHN ARNOT WILSON
RETIRED

                                  May 5, 1999

Toula Vertin
Director of Finance
Nuance Communications
1380 Willow Road
Menlo Park, CA 94025

         Re:      LOAN AND SECURITY AGREEMENT BETWEEN NUANCE COMMUNICATIONS AND
                  SILICON VALLEY BANK

Dear Ms. Vertin:

         You have asked us to represent you in connection with the
above-referenced finance transaction (the "Transaction") between Nuance
Communications (the "Company"), and Silicon Valley Bank ("SVB"). As you know,
our firm has represented SVB in the past and will continue to do so in the
future.

         Our representation of the Company in the Transaction may give rise to a
conflict of interest, although we have been advised by SVB that it will be
separately represented in the Transaction by other counsel. We are governed by
certain Rules of Professional Conduct promulgated by the State Bar of
California, including Rule 3-310 (a copy of which is attached hereto as Exhibit
A), which rules are relevant to our proposed representation of the Company in
the Transaction. Accordingly, we wish to disclose to you the nature and extent
of our prior relationships with both the Company and SVB and to obtain your
written consent to our participation as your counsel in connection with the
Transaction, including your ratification and acknowledgement of our
participation in this Transaction prior to the date hereof. We are also seeking
a similar written acknowledgement and authorization from SVB with respect to our
representation of the Company in the Transaction in light of our previous
representation of SVB.

         We would like you to be aware of the following in connection with your
decision to render your written consent as referred to above:

         1. We represent SVB in general corporate and certain lending matters
other than those relating to the Transaction. As a result of our relationship to
SVB, we are in possession of confidential information regarding SVB.
<PAGE>

Page 2

         2. We have represented the Company prior to the date hereof and will
continue to represent the Company in general matters. As a result of our
relationship to the Company, we are in or will be in possession of confidential
information regarding the Company and its subsidiaries.

         3. You have informed us that you decline to obtain independent counsel
in connection with the Transaction and have asked us to represent you in the
Transaction.

         In light of the above-cited rules and the disclosure we have made in
this letter, we hereby request your consent to our acting as your counsel in
connection with the Transaction and to the general representation of all parties
after the conclusion of the Transaction except in the case where a material
conflict would be present (such material conflict to include, without
limitation, any litigation among the parties arising from this Transaction). In
order to effect the foregoing, please complete and execute the enclosed copy of
this letter and send an executed copy to the undersigned.

         I would be more than happy to discuss any concerns or questions that
you may have with regard to this matter.

         We appreciate your cooperation in this matter.

                                            VERY TRULY YOURS,

                                            WILSON SONSINI GOODRICH & ROSATI
                                            PROFESSIONAL CORPORATION

                                            /s/ Signature Illegible

                                            ANDREW J. HIRSCH

ENCLOSURE
<PAGE>

Page 3

         I have read the foregoing, am aware of the possible conflicting
interests in the above mentioned transaction and hereby consent on behalf of the
Company to the representation of the Company by the law firm of Wilson Sonsini
Goodrich & Rosati, P.C. in this transaction.

Date:___________________________                NUANCE COMMUNICATIONS

                                                By:___________________________

                                                Title: _______________________
<PAGE>

                                   Exhibit A
                                   ---------

                            STATE BAR OF CALIFORNIA

                         RULES OF PROFESSIONAL CONDUCT
                         -----------------------------

Rule 3-310. AVOIDING THE REPRESENTATION OF ADVERSE INTERESTS

(A)      FOR PURPOSES OF THIS RULE:

         (1)      "Disclosure" means informing the client or former client of
                  the relevant circumstances and of the actual and reasonably
                  foreseeable adverse consequences to the client or former
                  client;

         (2)      "Informed written consent" means the client's or former
                  client's written agreement to the representation following
                  written disclosure;

         (3)      "Written" means any writing as defined in Evidence Code
                  section 250.

(B)      A member shall not accept or continue representation of a client
         without providing written disclosure to the client where:

         (1)      The member has a legal, business, financial, professional, or
                  personal relationship with a party or witness in the same
                  matter; or

         (2)      The member knows or reasonably should know that:

                  (a)      the member previously had a legal, business,
                           financial, professional, or personal relationship
                           with a party or witness in the same matter; and

                  (b)      the previous relationship would substantially affect
                           the member's representation; or

         (3)      The member has or had a legal, business, financial,
                  professional, or personal relationship with another person or
                  entity the member knows or reasonably should know would be
                  affected substantially by resolution of the matter; or

         (4)      The member has or had a legal, business, financial, or
                  professional interest in the subject matter of the
                  representation.

(C)      A member shall not, without the informed written consent of each
         client:

         (1)      Accept representation of more than one client in a matter in
                  which the interests of the clients potentially conflict; or

         (2)      Accept or continue representation of more than one client in a
                  matter in which the interests of the clients actually
                  conflict; or

         (3)      Represent a client in a matter and at the same time in a
                  separate matter accept as a client a person or entity whose
                  interest in the first matter is adverse to the client in the
                  first matter.

(D)      A member who represents two or more clients shall not enter into an
         aggregate settlement of the claims of or against the clients without
         the informed written consent of each client.
<PAGE>

(E)      A member shall not, without the informed written consent of the client
         or former client, accept employment adverse to the client or former
         client where, by reason of the representation of the client or former
         client, the member has obtained confidential information material to
         the employment.

(F)      A member shall not accept compensation for representing a client from
         one other than the client unless:

         (1)      There is no interference with the member's independence of
                  professional judgment or with the client-lawyer relationship;
                  and

         (2)      Information relating to representation of the client is
                  protected as required by Business and Professions Code section
                  6068, subdivision (e); and

         (3)      The member obtains the client's informed written consent,
                  provided that no disclosure or consent is required if:

                  (a)      such nondisclosure is otherwise authorized by law, or

                  (b)      the member is rendering legal services on behalf of
                           any public agency which provides legal services to
                           other public agencies or the public.<PAGE>

                                                                   EXHIBIT 10.12

                               LICENSE AGREEMENT

          THIS LICENSE AGREEMENT dated as of December 20, 1994 (the "Effective
Date"), is entered into between SRI INTERNATIONAL, a California nonprofit public
benefit corporation ("SRI"), having a place of business located at 333
Ravenswood Avenue, Menlo Park, California 94025-3493, and Corona Corporation, a
California corporation ("CORONA"), having a place of business located at 333
Ravenswood Avenue, Building 110, Menlo Park, California 94025-3493.

                                  WITNESSETH:

     WHEREAS, SRI owns or has rights in certain patent rights, copyrights, and
know-how relating to Speech Recognition Technology (as later defined herein).

     WHEREAS, CORONA desires to obtain a license under SRI's rights in such
patent rights, copyrights, and know-how, on the terms and subject to the
conditions of the Agreement.

     NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, the parties hereby agree as follows:

                                1. DEFINITIONS
                                --------------

     For purposes of the Agreement, the terms defined in this article shall have
the respective meanings set forth below:

     1.1  "Affiliate" means, with respect to any Person, any other Person which
directly or indirectly controls, is controlled by, or is under common control
with, such Person. A Person shall be regarded as in control of another Person if
it owns, or directly or indirectly controls, at least fifty percent (50%) of the
voting stock or other ownership interest of the other Person, or if it directly
or indirectly possesses the power to direct or cause the direction of the
management and policies of the other Person by any means whatsoever.

     1.2  "CORONA Improvements" means those improvements and/or new developments
in Speech Recognition Technology (including improvements to the SRI Software) in
which CORONA has an ownership or licensable interest (with the right to
sublicense without payment of royalties) and have been or are developed,
authored, conceived, or reduced to practice as of the Effective Date or during
the Exclusive Period. CORONA Improvements shall include inventions, trade
secrets, know-how, CORONA Know-How, discoveries, algorithms, and software (in
both source code and object code). CORONA Improvements shall not include such
improvements and/or new developments developed, authored, conceived, or reduced
to practice by or for CORONA after the Exclusive Period.

     1.3  "CORONA Know-How" means (i) information which is not generally known
by the public; and (ii) non-confidential information relating to Speech
Recognition Technology in which CORONA has an ownership or licensable interest
(with the right to sublicense without payment of royalties) as of the Effective
Date or developed or acquired during the Exclusive Period. Such information
includes but is not limited to technical data, trade secrets, algorithms,
formulae, procedures, protocols, rules of thumb, techniques and results of
experimentation and testing, including information contained in any invention
disclosures and/or patent applications which are CORONA Improvements.

     Corona License Agreement, December 20, 1994

[*] = 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.

     1
<PAGE>

     1.4   "CORONA Proprietary Rights" means any intellectual property rights
(including copyright(s), patent rights, CORONA Know-How and/or trade secrets) in
the CORONA Improvements in which CORONA has an ownership or licensable interest
(with the right to sublicense without payment of royalties).

     1.5   "Cumulative Revenues" means the total of all revenues for the period
specified as recorded in the financial statements of CORONA in accordance with
standard accounting procedures.

     1.6   "Exclusive Fields" means Speech Recognition Technology, provided,
however, that Nonexclusive Fields are specifically excluded from the definition
of Exclusive Fields.

     1.7   "Exclusive Period" means the period commencing with the Effective
Date and ending on the earlier of December 20, 1999 or a trigger event whereby
CORONA's exclusivity is terminated as described in Paragraphs 5.1, 7.1 and/or
7.2.

     1.8   "Existing SRI Software" means SRI Software existing on the Effective
Date in which SRI has an ownership or licensable interest (with the right to
sublicense without the payment of royalties).

     1.9   "Existing SRT" means Speech Recognition Technology existing on the
Effective Date in which SRI has an ownership or licensable interest (with the
right to sublicense without the payment of royalties).

     1.10  "Nonexclusive Fields" means

           (a)  Education/training including the use of Speech Recognition
     Technology for educational purposes and, in the case of language education,
     the use of Speech Recognition Technology for educational and entertainment
     purposes.

           (b)  Language translation including the use of Speech Recognition
     Technology in spoken language translation systems from any language to any
     language;

           (c)  Language and/or dialect identification except for telephony
     applications; and

           (d)  Topic spotting when used in conjunction with Speech Recognition
     Technology in the context of person-to-person conversation except for
     telephony applications.

     1.11  "Person" means an individual, corporation, partnership, trust,
business trust, association, joint stock company, joint venture, pool,
syndicate, sole proprietorship, unincorporated organization, governmental
authority or any other form of entity not specifically listed herein.

     1.12  "Speech Recognition Technology" means information and know-how,
whether or not patentable, related to the perception by a machine of human
speech, the conversion of such speech to text, and/or the establishment of the
meaning of speech so as to enable the machine to respond to the intentions of
the speaker by template-based methods. Speech Recognition Technology shall
include but not be limited to all forms of:

     Corona License Agreement, December 20, 1994
     2
<PAGE>

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

[***]

     1.13  "SRI Software" means the following computer programs and data sets,
in which SRI has an ownership or licensable interest (with the right to
sublicense without the payment of royalties), as further identified in Appendix
A:

[***]

     1.14  "SRI Improvements" means those improvements and/or new developments
in Speech Recognition Technology (including improvements to the SRI Software) in
which SRI has an ownership or licensable interest (with the right to sublicense
without the payment of royalties) and which are developed, authored, conceived,
or reduced to practice during the Exclusive Period. SRI Improvements shall
include inventions, trade secrets, know-how, discoveries, algorithms, and
software (in both source code and object code). SRI Improvements shall not
include (a) such improvements and/or new developments

     Corona License Agreement, December 20, 1994
     3
<PAGE>

developed, authored or invented by or for SRI after the Exclusive Period; and/or
(b) contract deliverables as provided in Paragraph 3.4(d).

     1.15   "SRI Know-How" means (i) information which is not generally known by
the public; and (ii) non-confidential information relating to Speech Recognition
Technology in which SRI has an ownership or licensable interest as of the
Effective Date or developed or acquired during the Exclusive Period, whether or
not it is of a confidential nature. Such information includes but is not limited
to technical data, trade secrets, algorithms, formulae, procedures, protocols,
rules of thumb, techniques and results of experimentation and testing, including
information contained in any invention disclosures and/or patent applications
which are SRI Improvements.

     1.16   "SRI Patent Rights" means:

            (a)  The pending United States patent application(s) and patents
     listed in Appendix B and all corresponding foreign patent applications
     heretofore or hereafter filed or having legal force in any jurisdiction
     worldwide owned by or licensed to SRI;

            (b)  All patent applications that claim any Existing SRT and/or an
     SRI Improvement heretofore or hereafter filed or having legal force in any
     jurisdiction worldwide in which SRI has ownership or licensable interest
     (with the right to sublicense without payment of royalties);

            (c)  All patents that have issued or in the future issue from the
     patent applications described in clauses (a) and (b) above, including
     utility, model and design patents and certificates of invention; and

            (d)  All divisionals, continuations, continuations-in-part,
     reissues, renewals, extensions or additions to any such patent applications
     and patents; all to the extent and only to the extent that SRI has the
     right to grant licenses, immunities or other rights thereunder as of the
     Effective Date or during the term of the Agreement.

     1.17   "SRI Proprietary Rights" means any intellectual property rights
(including copyright(s), patent rights, know-how and/or trade secrets) in the
Existing SRT and in the SRI Improvements, including but not limited to SRI's
copyright in the SRI Software, SRI Patent Rights and SRI Know-How, in which SRI
has an ownership and/or licensable interest (with the right to sublicense
without payment of royalties).

                       2. REPRESENTATIONS AND WARRANTIES
                       ---------------------------------

     2.1  DISCLAIMER OF WARRANTIES BY SRI. NOTHING IN THE AGREEMENT SHALL BE
          -------------------------------
CONSTRUED AS A REPRESENTATION MADE OR WARRANTY GIVEN BY SRI THAT ANY PATENT WILL
ISSUE BASED UPON ANY PENDING PATENT APPLICATION INCLUDED IN THE SRI PATENT
RIGHTS, THAT ANY PATENT INCLUDED IN THE SRI PATENT RIGHTS WHICH ISSUES WILL BE
VALID, OR THAT THE USE OF ANY SRI PATENT RIGHTS, SRI COPYRIGHTS OR SRI KNOW-HOW
WILL NOT INFRINGE THE PATENT OR PROPRIETARY RIGHTS OF ANY OTHER PERSON. SRI
PROVIDES ANY EXISTING SRI SOFTWARE AND ANY SOFTWARE IN THE SRI IMPROVEMENTS
(INCLUDING SOURCE CODE AND OBJECT CODE FORMS) "AS IS." FURTHERMORE, SRI MAKES NO
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE SRI
PATENT RIGHTS, SRI

     Corona License Agreement, December 20, 1994
     4
<PAGE>

COPYRIGHTS OR SRI KNOW-HOW, INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF NON-
INFRINGEMENT OF THIRD PARTY RIGHTS OR ANY WARRANTY OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE.

     2.2  LIMITATION OF LIABILITY.
          ------------------------

     (a)  SRI: IN NO EVENT SHALL SRI BE LIABLE TO CORONA OR ANY THIRD PARTY FOR
          ---
ANY INDIRECT, INCIDENTAL, EXEMPLARY, SPECIAL OR CONSEQUENTIAL DAMAGES HOWEVER
CAUSED AND ON ANY THEORY OF LIABILITY, ARISING OUT OF OR RELATED TO THIS
AGREEMENT, INCLUDING BUT NOT LIMITED TO LOSS OF ANTICIPATED PROFITS, EVEN IF SRI
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. IN NO EVENT SHALL SRI BE
LIABLE FOR COSTS OF PROCUREMENT OF SUBSTITUTE PRODUCTS OR SERVICES. IN NO EVENT
SHALL SRI'S LIABILITY TO CORONA AND ANY THIRD PARTY EXCEED THE AMOUNT OF MONEY
RECEIVED BY SRI FROM CORONA UNDER THIS AGREEMENT.

     (b)  CORONA: THE FOLLOWING LIMITATION OF LIABILITY FOR CORONA SHALL ONLY
          -------
APPLY TO SITUATIONS WHERE SRI HAS LICENSED CORONA IMPROVEMENTS TO THIRD PARTIES
AND CORONA DID NOT CONTRIBUTE TO THE RESULTING LIABILITY: IN SUCH CASES, CORONA
SHALL NOT BE LIABLE TO SRI OR ANY THIRD PARTY FOR ANY INDIRECT, INCIDENTAL,
EXEMPLARY, SPECIAL OR CONSEQUENTIAL DAMAGES HOWEVER CAUSED AND ON ANY THEORY OF
LIABILITY, INCLUDING BUT NOT LIMITED TO LOSS OF ANTICIPATED PROFITS, OR THE
COSTS OF PROCUREMENT OF SUBSTITUTE PRODUCTS OR SERVICES, EVEN IF CORONA HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

     2.3  DISCLAIMER OF WARRANTIES BY CORONA. NOTHING IN THE AGREEMENT SHALL BE
          ----------------------------------
CONSTRUED AS A REPRESENTATION MADE OR WARRANTY GIVEN BY CORONA THAT ANY PATENT
WILL ISSUE BASED UPON ANY PENDING PATENET APPLICATION INCLUDED IN THE CORONA
IMPROVEMENTS, THAT ANY PATENT INCLUDED IN THE CORONA IMPROVEMENTS WHICH ISSUES
WILL BE VALID, OR THAT THE USE OF ANY CORONA PATENT RIGHTS, CORONA COPYRIGHTS OR
CORONA KNOW-HOW WILL NOT INFRINGE THE PATENT OR PROPRIETARY RIGHTS OF ANY OTHER
PERSON. CORONA PROVIDES ANY SOFTWARE IN THE CORONA IMPROVEMENTS (INCLUDING
SOURCE CODE AND OBJECT CODE FORMS) "AS IS." FURTHERMORE, CORONA MAKES NO
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE CORONA
PATENT RIGHTS, CORONA COPYRIGHTS OR CORONA KNOW-HOW, INCLUDING WITHOUT
LIMITATION, ANY WARRANTY OF NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

     Each party hereby represents and warrants to the other party as follows:

     2.4  Corporate Existence and Power. Such party (a) is a corporation duly
          -----------------------------
organized, validly existing and in good standing under the laws of the state in
which it is incorporated; (b) has the corporate power and authority and the
legal right to own and operate its property and assets, to lease the property
and assets it operates under lease, and to carry on its business as it is now
being conducted and (c) is in compliance with all requirements of applicable
law, except to the extent that any noncompliance would not have

     Corona License Agreement, December 20, 1994
     5
<PAGE>

a material adverse effect on the properties, business, financial or other
condition of it and would not materially adversely affect its ability to perform
its obligations under the Agreement.

     2.5  Authorization and Enforcement of Obligations. Such party (a) has the
          --------------------------------------------
corporate power and authority and the legal right to enter into the Agreement
and to perform its obligations hereunder and (b) has taken all necessary
corporate action on its part to authorize the execution and delivery of the
Agreement and the performance of its obligations hereunder. The Agreement has
been duly executed and delivered on behalf of such party, and constitutes a
legal, valid, binding obligation, enforceable against such party in accordance
with its terms.

     2.6  No Consents. All necessary consents, approvals and authorizations of
          -----------
all governmental authorities and other Persons required to be obtained by such
party in connection with the Agreement have been obtained.

     2.7  No Conflict. The execution and delivery of the Agreement and the
          -----------
performance of such party's obligations hereunder (a) do not conflict with or
violate any requirement of applicable laws or regulations, and (b) do not
conflict with, or constitute a default under, any contractual obligation of it.

                          3. LICENSE AND OPTION GRANT
                          ---------------------------

     3.1  Exclusive License Grant to CORONA.
          ---------------------------------

          (a)  SRI hereby grants and CORONA hereby accepts a royalty-free,
     worldwide license in the Exclusive Fields under the SRI Proprietary Rights
     to:

               (i)    With respect to software, reproduce, distribute, use,
          make, modify, make derivatives of, and sublicense the Existing SRI
          Software (in both source code and object code forms), and any software
          in the SRI Improvements (in both source and object code forms), and
          sublicense such rights through multiple levels of sublicensees;

               (ii)   With respect to inventions and know-how, reproduce,
          distribute, use, make, modify, and sell products and services based on
          the Existing SRT (not including the SRI Software) and/or the SRI
          Improvements (not including any software in the SRI Improvements) and
          sublicense such rights through multiple levels of sublicensees; and

               (iii)  Establish trademarks in connection with the Existing SRT
          and/or the SRI Improvements, provided that they can not use the mark
          "SRI" or any other SRI trademarks.

          (b)  Notwithstanding the license grant above, in any event that CORONA
     discloses such SRI source code in the Exclusive Fields (other than
     disclosure to CORONA employees and/or to any independent contractors
     employed by CORONA without sublicense rights) CORONA shall promptly provide
     written notification of such disclosure to SRI.

          (c)  These rights shall be exclusive during the Exclusive Period and
     nonexclusive and perpetual (subject to Article 5 and Paragraphs 7.1, 7.3
     and 7.4) after the termination of the Exclusive Period. If CORONA does not
     exercise its

     Corona License Agreement, December 20, 1994
     6
<PAGE>

     right as stated in Paragraph 3.2 below, then such existing license rights
     shall remain royalty-free after the end of the Exclusive Period.

     3.2  Extension of Exclusivity. So as to extend the Exclusive Period, SRI
          ------------------------
grants CORONA the first right to negotiate a worldwide, exclusive license in the
Exclusive Fields under the SRI Proprietary Rights to the Existing SRT, Existing
SRI Software and the SRI Improvements. Such option shall expire on June 15,
1999. Both parties agree to make a good faith effort to negotiate a license
agreement under fair and reasonable terms which reflect the commercial potential
of the SRI Proprietary Rights at the time the right is exercised. If CORONA
fails to elect its right or if the parties fail to execute a license agreement
by June 15, 1999, then SRI shall be free to license the SRI Proprietary Rights
nonexclusively in all fields without restriction after the Exclusive Period.

     3.3  Nonexclusive License Grant to CORONA. SRI hereby grants and CORONA
          ------------------------------------
hereby accepts a royalty-free, perpetual (subject to Article 5 and Paragraphs
7.1, 7.3 and 7.4) worldwide license in the Nonexclusive Fields under the SRI
Proprietary Rights to:

          (a)  Reproduce, distribute, use, make, modify, make derivatives of,
     and sublicense the SRI Software (in both source code and object code forms)
     and any software in the SRI Improvements (in both source and object code
     forms) and sublicense such rights through multiple levels of sublicensees;
     and

          (b)  Reproduce, distribute, use, make, modify, sell and sublicense
     products and services based on the Existing SRT (not including the SRI
     Software) and/or the SRI Improvements (not including any software in the
     SRI Improvements) and sublicense such rights through multiple levels of
     sublicensees.

Notwithstanding the license grant above, CORONA shall not disclose (other than
disclosure to CORONA employees and/or to any independent contractors employed by
CORONA without sublicense rights), license for use, or distribute in any manner,
any SRI source code in the Nonexclusive Fields, without the prior written
consent of SRI. Such permission shall not be unreasonably withheld.

     3.4  Reservation of Certain Rights. Notwithstanding the foregoing, the
          -----------------------------
licenses granted in the Agreement are subject to SRI's retention of the
following rights:

          (a)  The non-exclusive right of SRI to use the SRI Proprietary Rights
     to solicit and execute research contracts from the U.S. Government in
     Speech Recognition Technology and in connection therewith, to execute
     government-use licenses, regardless of field of use or level of
     classification;

          (b)  Rights to the Japanese Toolkit to the extent granted under an
     agreement as amended between SRI and Nippon Data, a subsidiary of Nippon
     Telephone and Telegraph dated October 31, 1991.

          (c)  The non-exclusive right of SRI to use the SRI Proprietary Rights
     to solicit and execute commercial research and development contracts in
     Speech Recognition Technology, including those research projects which
     qualify for government matching funds (e.g. Small Business Technology
     Transfer (STTR), Advanced Technology Program (ATP), Technology Reinvestment
     Project (TRP)), provided that during the Exclusive Period:

     Corona License Agreement, December 20, 1994
     7
<PAGE>

               (i)  SRI shall obtain CORONA's consent if such contracts provide
     for deliverables or require licenses in the Exclusive Fields; and

               (ii) If SRI solicits and executes research or development
     contracts or enters into work for hire arrangements pertaining to Speech
     Recognition Technology, SRI shall secure an ownership or licensable
     interest to any Speech Recognition Technology developed under such
     arrangements so that such technology improvements are within the scope of
     this Agreement and CORONA receives rights and access to such technology as
     SRI Improvements.

          (d)  The right to grant to any commercial client which executes a
     research and development contract with SRI an exclusive license under such
     contract for deliverables which consist of a specific software application
     for that commercial client for use in the Nonexclusive Fields.

     3.5  License Grant to SRI. CORONA hereby grants and SRI hereby accepts a
          --------------------
royalty-free, perpetual (subject to Paragraphs 7.1 and 7.5), non-exclusive,
worldwide license in the Nonexclusive Fields under the CORONA Proprietary
Rights, to:

          (a)  Reproduce, distribute, use, make, modify, make derivatives of,
     and sublicense any software in the CORONA Improvements (in object code form
     only) and sublicense such rights through multiple levels of sublicensees;

          (b)  Reproduce, distribute, use, make, modify, sell, and sublicense
     products and services based on the CORONA Improvements (not including any
     software in the CORONA Improvements) and sublicense such rights through
     multiple levels of sublicensees;

          (c)  Reproduce, use, make, modify and make derivatives of the source
     code in the CORONA Improvements for SRI's own internal research purposes.

          (d)  Sublicense any CORONA Improvements in source code form:

               (i)  Only to the U.S. government in connection with research and
          development contracts executed with SRI. Consistent with the rights of
          a not-for-profit research corporation under the FARS, DFARS, the
          Stephenson-Wydler Act and the Baye-Dole Act, SRI shall use reasonable
          effort to control and restrict the distribution of CORONA Improvements
          to government contractors. Any such sublicense shall be subject to the
          confidentiality restrictions described in Section 8; and

               (ii) To commercial clients for use in the Nonexclusive Fields
          only with the prior written approval of CORONA. Such approval shall
          not be unreasonably withheld.

     3.6  Technical Assistance.
          ---------------------

          3.6.1  During the term of the Agreement, upon reasonable notice and
     during normal business hours, both parties shall provide the other such
     technical assistance regarding the Speech Recognition Technology as the
     other party reasonably requests to conduct its activities contemplated by
     the Agreement.

          3.6.2  Each party shall reimburse the other for its standard research
     or consulting costs for any such technical assistance, determined in
     accordance with its

     Corona License Agreement, December 20, 1994
     8
<PAGE>

     own normal business practice applied on a consistent basis at a billing
     rate no less favorable than the best terms offered to their other
     commercial research clients. Upon request, each party shall provide the
     other with estimates of the anticipated costs of any requested technical
     assistance prior to undertaking such technical assistance.

          3.6.3  During the term of the Agreement, CORONA shall give SRI first
     consideration with regards to third parties to provide any subcontract
     research or development services to CORONA regarding the research and
     development of potential and actual products and/or services based on
     Speech Recognition Technology.

     3.7  Government Rights.  This Agreement is subject to all of the terms and
          -----------------
conditions of Title 35 United States Code Sections 200 through 204, including an
obligation that products resulting from this license which are sold or produced
in the United States be "manufactured substantially in the United States," and
CORONA agrees to take all reasonable action necessary on its part as licensee to
enable SRI to satisfy its obligation thereunder, relating to the Existing SRI
Software, the Existing SRT, and the SRI Improvements.

                                4. COMPENSATION
                                ---------------

     Recognizing that the rights and licenses conveyed herein by each party to
the other constitute due compensation to each party, both parties agree to waive
all license issue fees, minimum royalties, and running royalties (but for those
fees and royalties which may be negotiated upon exercise of the option granted
CORONA in Paragraph 3.2).

                           5. DILIGENCE OBLIGATIONS
                           ------------------------

     CORONA shall be considered viable for purposes of the SRI Exclusive License
if, starting as of the Effective Date and:

          (a)  As of December 31, 1996, CORONA

               (i)  has raised no less than Two Million Dollars ($2,000,000) of
          capital in addition to any capital provided by SRI; or

               (ii) has Cumulative Revenues in an amount no less than One
          Million Dollars ($1,000,000);

          (b)  And, as of December 31, 1997, CORONA has Cumulative Revenues in
     an amount no less than Four Million Dollars ($4,000,000); and

          (c)  As of December 31, 1998, CORONA has Cumulative Revenues in an
     amount no less than Eight Million Dollars ($8,000,000); and

          (d)  As of December 31, 1999, CORONA has Cumulative Revenues in an
     amount no less than Thirteen Million Dollars ($13,000,000).

In the event that CORONA fails to meet the viability criteria stated above and
fails to correct such condition within one hundred and twenty (120) days after
receiving written notice thereof from SRI, SRI shall have the right to terminate
SRI's exclusive license to CORONA in the Exclusive Fields as conveyed in
Paragraph 3.1, terminate CORONA's

     Corona License Agreement, December 20, 1994
     9
<PAGE>

right to extend its exclusivity as conveyed in Paragraph 3.2, and convert
CORONA's license to a royalty-bearing nonexclusive license on a reasonable
industry standard basis. If, after ninety (90) days from SRI's written notice of
termination of exclusivity, the parties have failed to agree on a royalty, the
royalty dispute shall be submitted to binding arbitration as provided in
Paragraph 16.2

                             6. FINANCIAL REPORTS
                             --------------------

     Within ninety (90) days following the end of each calendar year during the
term of the Agreement, CORONA shall prepare and deliver to SRI a copy of
CORONA's year-end written financial statements prepared for review by the CORONA
board of directors.

                                7. TERMINATION
                                --------------

     7.1  Termination by CORONA. CORONA may terminate this Agreement by giving
          ---------------------
SRI notice in writing (by registered or certified mail, return receipt). The
Agreement shall terminate thirty (30) days after SRI's receipt of such notice.

     7.2  Bankruptcy. In the event that:
          -----------

          (a)  CORONA voluntarily commences any action or seeks any relief
     regarding its liquidation, reorganization, dissolution or similar act or
     under any bankruptcy, insolvency or similar law; or

          (b)  If a proceeding is commenced or an order, judgment or decree is
     entered seeking the liquidation, reorganization, dissolution or similar act
     or any other relief under any bankruptcy, insolvency or similar law against
     CORONA, without its consent, which continues undismissed or unstayed for a
     period of sixty (60) days;

then SRI may terminate the exclusivity granted to CORONA by SRI in Paragraph 3.1
and convert the rights and license granted by SRI to CORONA to a royalty-bearing
nonexclusive license with right to sublicense. Surviving are all other terms of
this Agreement, including:

          (i)  CORONA's obligation to pay any research fees and/or patent
     reimbursements outstanding as of the date of termination of exclusivity;
     and

          (ii) SRI's ability to terminate this Agreement as provided in
     Paragraph 7.3.

     7.3  Termination by SRI for Cause. SRI may terminate this Agreement upon
          -----------------------------
the occurrence of one of the events set forth below if CORONA fails to cure such
breach (or if such breach cannot be cured within such period, fails to commence
good faith efforts to cure the breach) within forty-five (45) days of notice of
such default by SRI:

          (a)  If CORONA is in material breach of its obligations under this
     Agreement;

          (b)  If CORONA provides false reports under Section 6 in an
     intentional or grossly negligent manner; or

          (c)  If the bankruptcy proceedings described in Paragraph 7.2 continue
     undismissed or unstayed for a period of more than one (1) calendar year
     after filing.

     Corona License Agreement, December 20, 1994
     10
<PAGE>

     7.4  Effect of Termination under 7.1 and/or 7.3. Surviving the
          -------------------------------------------
termination(s) described in Paragraphs 7.1 and/or 7.3 are:

          (a)  Any obligation accruing prior to such expiration or termination
     including the reimbursement of patent expenses;

          (b)  Any cause of action or claim of CORONA or SRI, accrued or to
     accrue, because of any breach or default by the other party;

          (c)  SRI's license to the CORONA Improvements, as stated in Paragraph
     3.5. Such license shall remain irrevocable;

          (d)  Any sublicense(s) with third party(ies) executed by CORONA prior
     to the date of termination provided that such third party(ies) shall pay
     all further royalties required in such sublicenses (if any) directly to
     SRI; and

          (e)  The provisions of Paragraphs 2.1, 2.2, 2.3 and Articles 8, 15,
16.

     If CORONA establishes or has established a trademark(s) in connection with
the SRI Proprietary Rights, all right, title, interest and ownership of such
trademark(s) shall be assigned to SRI upon termination of this Agreement.

     7.5  Termination by CORONA for Cause. If SRI is in material breach of its
          --------------------------------
obligations under this Agreement and fails to cure such breach (or if such
breach cannot be cured within such period, fails to commence good faith efforts
to cure the breach) within forty-five (45) days of notice of such default by
CORONA, CORONA may terminate its license grant to SRI under Paragraph 3.5.
Surviving termination by CORONA are:

          (a)  Any cause of action or claim of CORONA or SRI, accrued or to
     accrue, because of any breach or default by the other party;

          (b)  Any sublicense(s) with third party(ies) executed by SRI prior to
     the date of termination provided that such third party(ies) shall pay all
     further royalties required in such sublicenses (if any) directly to CORONA;
     and

          (c)  All other terms and conditions of this Agreement but for
     Paragraph 3.5.

     Corona License Agreement, December 20, 1994
     11
<PAGE>

                    8. PROPRIETARY INFORMATION AND SECRECY
                    --------------------------------------

     8.1  Each party agrees that all information, whether oral, written or in
other recorded form, that is, in the case of tangible items, conspicuously
labeled as "Confidential" or "Proprietary" or, in the case of an oral
disclosure, so identified at the time of such disclosure, and that is received
from the other party pursuant to this Agreement (the "Information"),

          (i)   Shall be kept confidential by the receiving party by using at
     least the same physical and other security measures used for its own
     confidential information, but not less than reasonable care and

          (ii)  Both parties shall use commercially reasonable methods to
     protect their own and each others' Information including requiring that the
     receiving party and its subcontractors and sublicensees be obligated in
     writing to use the same degree of care to hold such Information
     confidential as they normally use to preserve and safeguard their own
     confidential information, but not less than reasonable care.

For Purposes of this Agreement, Information includes SRI Software, Existing SRI
Software, Existing SRT, SRI Improvements, SRI Know-How, SRI Patent Rights, and
CORONA Know-How, and CORONA Improvements. Nothing herein contained shall be
construed as requiring the receiving party to keep confidential any Information
which:

          (a)   Has become available to the public through no fault of the
     receiving party;

          (b)   Has been lawfully disclosed to the receiving party, without
     restriction, by a third party who at the time of such disclosure was
     lawfully in possession of the Information and was lawfully entitled to
     divulge same;

          (c)   Is disclosed by the disclosing party to a third party without
     imposing restrictions similar to those contained herein; or

          (d)   Is independently developed by the receiving party without any
     use of Information.

It is understood and agreed that in each instance the receiving party shall have
the burden of proving that any of the above exceptions are applicable.

     8.2  Nothing contained herein shall be construed so as to prevent CORONA
from using Information, including, without limitation, SRI Proprietary Rights,
to make, use or sell any product and/or service, or from disclosing information
necessary in the opinion of its counsel to comply with securities laws.

     8.3  The obligation to keep Information confidential expressed in this
Article 8 shall survive the termination of this Agreement but shall expire in
respect of any Information five (5) years after receipt by the receiving party
of such Information.

                      9. IMPROVEMENTS AND OTHER RESEARCH
                      ----------------------------------

     9.1  Records. SRI and CORONA shall each maintain laboratory notebooks, in
          -------
sufficient detail and in good scientific manner appropriate for copyright and
patent purposes, which shall reflect all work done and results achieved in the
performance of its

     Corona License Agreement, December 20, 1994
12
<PAGE>

research and development regarding the SRI Proprietary Rights and CORONA
Improvements.

     9.2  Disclosure. During the Exclusive Period,
          -----------

          (a)  Each party shall be obliged to promptly disclose their respective
     improvements (SRI Improvements or CORONA Improvements, respectively), to
     the other.

          (b)  SRI and CORONA research staff shall meet quarterly to

               (i)  Disclose any SRI Improvements and/or CORONA Improvements;
          and

               (ii) Review for patentability any material which is in
          preparation for upcoming public disclosure, whether as technical
          publications or oral presentations.

          (c)  Each party shall provide the other with copies of their technical
     papers, prior to publication, at the same time as such papers are submitted
     for their own internal management review.

          (d)  Each party shall promptly disclose to the other any potential
     contractual relationships in the area of Speech Recognition Technology for
     use in the Nonexclusive Fields.

                 10. PATENT PROSECUTION AND ABATEMENT OF INFRINGEMENT
                 ----------------------------------------------------

     10.1 Ownership of Inventions. The entire right and title in all inventions,
          -----------------------
discoveries, processes, methods, compositions, formulae, techniques, information
and data, whether or not patentable, and any patent applications or patents
based thereon, relating to Speech Recognition Technology and conceived in the
performance of the parties' activities during the Agreement ("New Inventions"):

          (a)  By employees or others acting solely on behalf of SRI, shall be
     owned solely by SRI ("SRI New Inventions");

          (b)  By employees or others acting solely on behalf of CORONA shall
     be owned solely by CORONA ("CORONA New Inventions"); and

          (c)  By employees or others acting jointly on behalf of SRI and
     CORONA, shall be owned jointly by SRI and CORONA (the "Joint New
     Inventions").

During the Exclusive Period, each party promptly shall disclose to the other
party the making, conception or reduction to practice of New Inventions by
employees or others acting on behalf of such party. SRI and CORONA each hereby
represent that all employees and other Persons acting on its behalf in
performing obligations under the Agreement shall be obligated to assign to the
party on whose behalf they are working all New Inventions conceived by such
employees or other Persons.

     10.2 Patent Rights Generally. Subject to the provisions of this article,
          -----------------------
SRI shall be responsible for and shall control the preparation, filing,
prosecution, maintenance and enforcement of all patent applications and patents
regarding SRI New Inventions. CORONA shall be responsible for and shall control
the preparation, filing, prosecution,

     Corona License Agreement, December 20, 1994

13
<PAGE>

maintenance and enforcement of all patent applications and patents regarding
CORONA New Inventions. SRI and CORONA shall determine by mutual agreement the
party which shall be responsible for and shall control the preparation, filing,
prosecution, maintenance and enforcement of all patent applications and patents
regarding Joint New Inventions. The parties intend that they shall have rights
in the Joint New Inventions the same as in the SRI Proprietary Rights. SRI and
CORONA shall cooperate with the other party and shall execute all lawful papers
and instruments and make all rightful oaths and declarations as may be necessary
in the preparation, filing, prosecution, maintenance and enforcement of all
patent applications and patents as referred to in this section.

     10.3  SRI Patent Rights.
           ------------------

           10.3.1 Filing, Prosecution, and Maintenance. SRI shall seek to file
                  ------------------------------------
and prosecute patent applications based on SRI Know-How and/or SRI Improvements
in the United States, Canada, Japan, the European Patent Office (designating the
United Kingdom, France, Germany, Italy and the Netherlands) and such other
countries as the parties mutually agree. SRI shall provide CORONA with copies of
each such patent application as filed, together with notice of its filing date
and serial number, and copies of all office actions and responses thereto. SRI
shall use its good faith efforts to amend any such patent applications to
include claims reasonably requested by CORONA.

          10.3.2  Payment of Patent Costs.
                  -----------------------

          (a)   During the Exclusive Period,

               (i)   SRI shall bear all patent prosecution costs and attorneys
          fees incurred by SRI in connection with the prosecution of the patent
          applications listed in Appendix B;

               (ii)  CORONA shall pay for patent costs relating to CORONA
          Improvements.

               (iii) SRI shall disclose to CORONA appropriate invention
          disclosures concerning SRI New Inventions and SRI Improvements. CORONA
          shall have thirty days to notify SRI if CORONA wishes to pursue and
          pay for all related patent expenses and fees pertaining to such SRI
          New Inventions and SRI Improvements. If CORONA (a) elects not to
          pursue and pay for such patent expenses and fees or (b) fails to
          notify SRI of its intent within the required 30 day period, SRI, in
          its sole discretion, may elect whether or not to pursue and pay for
          such patent prosecution and CORONA shall have no license to SRI patent
          rights, exclusive or nonexclusive, under this Agreement for such SRI
          New Inventions and SRI Improvements for which SRI elects to apply for
          a patent and for which patents are eventually issued, provided however
          that SRI shall provide CORONA with a right of first negotiation for a
          separate license to such intellectual property on commercially
          reasonable terms, and provided however, that royalties due from CORONA
          to SRI under such license will be payable upon issuance of a patent to
          SRI retroactively for any use by CORONA of such SRI New Inventions and
          SRI Improvements prior to the issuance of a patent. Such right of
          first negotiation shall expire if a license agreement is not
          consummated within ninety days following notification by SRI to CORONA
          of SRI's offer to negotiate a license or option.

     Corona License Agreement, December 20, 1994
14
<PAGE>

               (b)  After the Exclusive Period, CORONA shall reimburse a pro-
          rated portion of the SRI patent expenses and fees incurred after the
          Exclusive Period. Such SRI Patent costs shall be shared equally by all
          nonexclusive licensees in direct proportion to the number of patents
          licensed by each party. For example if SRI has licensed five patents
          to CORONA and SRI has licensed three of those five to one other
          company, CORONA shall reimburse SRI patent expenses and fees for the
          two patents which have not been otherwise licensed in their entirety
          and reimburse one half of the Patent Costs for the remaining three
          patents. CORONA shall reimburse SRI within Thirty (30) days of
          invoicing unless CORONA believes the fees are incorrect, in which case
          CORONA shall have a right to audit SRI's records to determine the
          correct fees and the payment period shall be extended another Thirty
          (30) days. If CORONA declines to reimburse SRI for its pro-rated
          portion of any particular patent costs and attorneys fees after the
          Exclusive period, deemed owed and due, SRI may terminate the license
          granted to CORONA for such patent application and/or patent and remove
          such patent applications and/or patents from the definition of SRI
          Proprietary Rights.

          10.3.3  Suspected Infringement. Each party shall notify the other
                  -----------------------
party of any suspected infringement of the subject proprietary rights by a third
party. SRI and CORONA shall meet at a mutually agreeable time and place to
decide how to proceed. If SRI fails to bring suit based on the SRI Patent Rights
within forty-five (45) days of CORONA's request, CORONA may bring suit and, if
necessary, join SRI. The party bringing suit shall retain 75% of the proceeds or
damages awarded after deduction of the payment of costs (including attorney's
fees).

                                  11. NOTICE
                                  ----------

     All notices, requests, consents and other communications required or
permitted to be given hereunder, shall be in writing and shall be deemed to have
been duly given if delivered personally or sent by prepaid telex, telefax or
telegram, or mailed first-class, postage prepaid by registered or certified mail
(notices sent by telex or telefax, or telegram, shall be deemed to have been
given on the date sent; those mailed shall be deemed to have been given five (5)
days after mailing), as follows, or to such other address as any party shall
designate by notice in writing to the other in accordance herewith:

         If to SRI, for
         technical matters:         SRI International
                                    333 Ravenswood Avenue
                                    Menlo Park, California 94025-3493
                                    Attention:___________________________

         If to SRI, for
         all other matters:         SRI International
                                    333 Ravenswood Avenue
                                    Menlo Park, California 94025-3493
                                    Attention: Contract Administration

         If to CORONA, for
         technical matters:         Corona Corporation
                                    333 Ravenswood Avenue
                                    Menlo Park, California 94025-3493
                                    Attention:______________________________

     Corona License Agreement, December 20, 1994
15
<PAGE>

         If to CORONA, for
         all other matters:         Corona Corporation
                                    333 Ravenswood Avenue
                                    Menlo Park, California 94025-3493
                                    Attention: ________________________

                              12. APPLICABLE LAW
                              ------------------

     The Agreement shall be governed by and construed in accordance with the
laws of the State of California, without regard to the conflicts of law
principles thereof, and shall not be governed by the United Nations Convention
on Contracts for the International Sale of Goods.

                                13. ASSIGNMENT
                                --------------

     This Agreement shall not be assignable by either party hereto, whether
voluntarily, by operation of law, or otherwise, without first having obtained in
writing the consent of the other party, and any such purported assignment,
without the written consent of the other party, shall be null and void.

                             14. ENTIRE AGREEMENT
                             --------------------

     The Agreement embodies the entire understanding between the parties and
supersedes any prior understanding and agreements between and among them
respecting the subject matter hereof. There are no representations, agreements,
arrangements or understandings, oral or written, between the parties hereto
relating to the subject matter of the Agreement which are not fully expressed
herein. Any modification of this Agreement shall be in writing and shall be
signed by a duly authorized representative of each party.

                              15. INDEMNIFICATION
                              -------------------

     15.1  Indemnification. CORONA shall indemnify, defend and hold harmless
           ---------------
SRI, its directors, officers, employees and agents from all losses, liabilities,
damages and expenses (including reasonable attorneys' fees and costs) that they
may suffer as a result of any claims, demands, actions or other proceedings made
or instituted by any third Party or Affiliate against any of them and arising
out of or relating to (a) any negligence, recklessness or intentional act or
omission by or on behalf of CORONA in the performance of its activities
contemplated by the Agreement, or (b) any personal injury to or death of any
person or damage to any property in connection with any act or omission (without
regard to culpable conduct) by or on behalf of CORONA in the performance of its
activities contemplated by the Agreement.

     15.2  Indemnification Procedure. A party (the "Indemnitee") that intends to
           -------------------------
claim indemnification under this article shall promptly notify CORONA of any
loss, liability, damage or expense, or any claim, demand, action or other
proceeding with respect to which the Indemnitee intends to claim such
indemnification. CORONA's indemnity obligations under this article shall not
apply to amounts paid in any settlement if effected without the consent of
CORONA, which consent shall not be unreasonably withheld or delayed. CORONA
shall not settle or consent to an adverse judgment in any such claim, demand,
action or other proceeding that adversely affects the rights or interests of any
Indemnitee or imposes additional obligations on such Indemnitee, without the
prior express written consent of such Indemnitee. The Indemnitee, its employees
and agents, shall

     Corona License Agreement, December 20, 1994
16
<PAGE>

cooperate fully with CORONA and its legal representatives in the investigation
of any action, claim or liability covered by this indemnification.

                                16. ARBITRATION
                                ---------------

     16.1  If a dispute arises out of or relates to this Agreement, or its
breach, and the parties have not been successful in resolving such dispute
through negotiation, the parties agree first to endeavor to settle the dispute
through mediation by submitting the dispute to a sole mediator selected by the
parties, or at any time at the option of a party, to mediation by the American
Arbitration Association ("AAA"), 417 Montgomery Street, San Francisco,
California 94104. Each party shall bear its own expenses and an equal share of
the expenses of the mediator and the fees of the AAA. The parties, their
representatives, other participants and the mediator shall hold the existence,
content and result of mediation in confidence.

     16.2  If after ninety (90) days from the first written notice of dispute,
the parties fail to resolve the dispute by written agreement or mediation,
either party may submit the dispute to final and binding arbitration
administered by the AAA, pursuant to the Commercial Arbitration Rules at the
time of submission. California Arbitration Law shall govern except in the event
that a stay is sought pursuant to the California Code of Civil Procedure Section
1281.2(c), in which event the parties agree that the issue shall be resolved
under the United States Arbitration Act. The arbitration shall be held in San
Francisco, California. Unless the parties have agreed upon the selection of an
Arbitrator before then, the AAA shall appoint the Arbitrator as soon as
practical, but in any event within thirty (30) days after the submission to AAA
for binding arbitration. The Arbitrator's award shall be final and binding
determination of the dispute and shall be fully enforceable as an arbitration
award by the California courts in accordance with the California Arbitration
Law. The prevailing party shall be entitled to recover its reasonable attorney's
fees and expenses, including arbitration administration fees, incurred in
connection with such proceeding. The parties, their representatives, other
participants and the mediator shall hold the existence, content and result of
arbitration in confidence.

     16.3  Nothing in this Section shall be construed to preclude any party from
seeking injunctive relief in order to protect its rights pending mediation or
arbitration. A request by a party to a court for such injunctive relief shall
not be deemed a waiver of the obligation to mediate or arbitrate.

                               17. MISCELLANEOUS
                               -----------------

     17.1  U.S. Export Laws and Regulations. Each party hereby acknowledges that
           --------------------------------
the rights and obligations of the Agreement are subject to the laws and
regulations of the United States relating to the export of products and
technical information. Without limitation, each party shall comply with all such
laws and regulations.

     17.2  No Other Rights. The Agreement shall not be construed to grant any
           ---------------
license or other rights to CORONA in any patent rights, know-how or other
technology of SRI, except as expressly provided in the Agreement.

     17.3  Waivers and Amendments. No change, modification, extension,
           ----------------------
termination or waiver of the Agreement, or any of the provisions herein
contained, shall be valid unless made in writing and signed by duly authorized
representatives of the parties hereto.

     17.4  Severability. Any of the provisions of the Agreement which are
           ------------
determined to be invalid or unenforceable in any jurisdiction shall be
ineffective to the extent of such invalidity or unenforceability in such
jurisdiction, without rendering invalid or

     Corona License Agreement, December 20, 1994
17
<PAGE>

unenforceable the remaining provisions hereof and without affecting the validity
or enforceability of any of the terms of the Agreement in any other
jurisdiction.

     17.5  Waiver. The waiver by either party hereto of any right hereunder or
           ------
the failure to perform or of a breach by the other party shall not be deemed a
waiver of any other right hereunder or of any other breach or failure by said
other party whether of a similar nature or otherwise.

     17.6  Taxes.: All sales, use, and other transfer taxes, arising out of this
           -------
Agreement and the consummation of the transactions contemplated herein shall be
paid for by Corona.

     IN WITNESS WHEREOF, the parties have executed the Agreement as of the date
first set forth above.

     SRI INTERNATIONAL

     By: /s/ Signature Illegible
     Dated: 12/20/94
            --------
     Title: President and CEO
            -----------------

     CORONA CORPORATION

     By: /s/ Signature Illegible
     Dated: 12/20/94
            --------
     Title: PRESIDENT
            ---------

     Corona License Agreement, December 20, 1994
18
<PAGE>

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

[***]

     Corona License Agreement, December 20, 1994
<PAGE>

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

                                                          DR. WILLIAM P. SOMMERS
                                           President and Chief Executive Officer

                                                               December 21, 1994

Mr. Ronald Croen
President
Corona Corporation
Building 110
333 Ravenswood Avenue
Menlo Park, CA 94025

                               LETTER AGREEMENT

Dear Mr. Croen:

As we have discussed, a definition in the license agreement between SRI
International and Corona Corporation dated December 20, 1994 (the "Agreement")
requires further clarification. Please signify your agreement to the following
clarification, on behalf of Corona Corporation by signing and dating both copies
of this Letter Agreement.

     The term "Speech Recognition Technology", as used in paragraph 1.12 of the
     Agreement, shall specifically exclude

[***]

                                                                      Sincerely,

                                                         /s/  William P. Sommers

                                                              William P. Sommers

AGREED AND ACCEPTED:

By /s/ Signature Illegible

Date 12/21/94
     --------

SRI INTERNATIONAL
333 Ravenswood Ave. Menlo Park, CA 94025-3493 (415) 859-2951 Facsimile: (415)
859-2624

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