Ditech Communications Telogy Software License Agreement

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[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.


Exhibit 10.29


Ditech Communications TELOGY SOFTWARE LICENSE AGREEMENT

This Telogy Software Agreement (this "Agreement") sets forth the terms and conditions under which Ditech Communications, having a place of business at 825 East Middlefield Rd., Mountain View, CA 94043 (the "Licensee") shall receive the Software Licenses and other products specified in Exhibit A hereto from Texas Instruments Incorporated ("TI"), having a place of business at 12500 TI Boulevard, Dallas, TX 75243-4136 (Texas Instruments, together with its wholly owned subsidiary Telogy Networks, Inc. and other Texas Instruments subsidiaries is referred to herein as "Telogy"). The Effective Date of this Agreement is April 16, 2002. This Agreement also sets forth other agreements between the parties.

1. Definitions

1.1 "Initial Term" means, for purposes of the Voice Software (as defined below) 2 years from the Effective Date, and which for purposes of the Echo Cancellation Software (as defined below) means 4 years from the Effective Date.

1.2 "Additional Software" or "Testing Software" means the testing software acquired by TI pursuant to a certain Asset Purchase Agreement by and between Licensee and TI dated as of April 16, 2002.

1.3 "Defined Standard" means any software function which is incorporated in the Software licensed to Licensee under the Agreement and which is required to be implemented to comply with the published and industry recognized ITU Standard(s) contained in the Software delivered by Telogy to Licensee.

1.4 "Distributors" means resellers, distributors, subdistributors, or other channel partners.

1.5 "Echo Cancellation Software" means the Software Products as defined in, and as acquired by TI pursuant to, a certain Asset Purchase Agreement by and between Licensee and TI dated as of April 16, 2002, including updates, upgrades, enhancements, releases and developments of such computer programs.

1.6 "Echo Cancellation System" means a stand-alone echo cancellation device or product that includes a printed circuit board, one or more integrated circuits and echo cancellation software, the primary function for which device or product is to reduce echo in a network, provided, however, that "Echo Cancellation System" shall not include the echo cancellation component of a larger voice processing system the primary function of which is not to reduce echo in a network, even if the echo cancellation functions are segregated from the other voice processing functions within such system, so long as such echo cancellation component is distributed solely as part of such larger processing system and not as a separate product.

1.7 "Essential Patent" means any duly issued United States, European Union member country, Canadian, Japanese or Australian patent that is owned and/or asserted by an ITU Member and claimed by such ITU Member to be essential to the implementation of the "Defined Standard", wherein "essential to the implementation of the Defined Standard" means the applicable standard cannot be implemented without infringing the patent owned and/or being asserted.

Telogy Networks, Inc.
Proprietary and Confidential

1.8 "Other Patent" means any duly issued United States, European Union member country, Canadian, Japanese or Australian patent which is not "essential to the implementation of the Defined Standard" (i.e. the Defined Standard can be implemented without infringing the patent owned and/or being asserted).

1.9 "ITU Member" means a company that is a member of the International Telecommunications Union (which is an international telecommunications organization), and which ITU member is obligated to, or has expressed a willingness to, license patents which are essential to the Defined Standard under reasonable and non-discriminatory terms. In clarification of the foregoing, the definition "ITU Member" does not include an individual person who is a member of the ITU nor an incorporated entity which is a member of the ITU which exists primarily as a "holding company" for patents.

1.10 "Licensee's Products", or a "Product" means any device or product line manufactured by or for Licensee which utilizes TI or Telogy DSPs and which contains or embeds any Software licensed by Licensee from Telogy, it being understood that each such Licensee device or product shall be set forth on an Exhibit B attached hereto as updated from time to time by Licensee. The parties shall work together in good faith to determine when a Licensee product represents a new "Product" for which additional Starters Kit and Software Support fees are due, but in general each "Product" shall mean a distinct product or set of products or product line. A Product will generally be characterized by use of the same or similar processors, and the sharing of certain printed circuit board modules and will be aggregated in a single sub-exhibit within Exhibit B. Telogy agrees that the re-configuration of a Licensee Product to scale such product to run fewer or more channels shall not be considered a "new Product" if substantially the same Telogy Software is used in such re-configured Product and such re-configuration does not result in considerably more Software Support obligations for Telogy with respect to such re-configured Product.

1.11 "Reference Design" means schematics and documentation relating to the hardware design for a product incorporating the Software which are provided by Telogy to Licensee.

1.12 "Software" means DSP Software and the MCU Software.

1.13 "DSP Software" means the various computer programs (including Voice Software and Echo Cancellation Software) licensed under this Agreement as set forth on Exhibit A attached hereto which operate on TI digital signal processors together with related documentation and all updates, upgrades, enhancements, releases and developments of such computer programs. The parties understand that the DSP Starters Kit is provided in object code only.

1.14 "MCU Software" means the various computer programs (including Voice Software and Echo Cancellation Software) licensed under this Agreement as set forth on Exhibit A attached hereto which operate on microprocessors, together with related documentation and all updates, upgrades, enhancements, releases and developments of such computer programs. The parties understand that the MCU Starters Kit is provided in source and object code.

1.15 "Voice Software" means Telogy's integrated software products to send voice, fax or data over networks using, for example, Internet Protocol, frame relay and asynchronous transfer mode (ATM) technology.

2. Software and Reference Design License

a. License Unit License. Subject to the provisions of Section 6 entitled "Price & Payment" herein and provided that Licensee has committed to pay the fees (if any) for the applicable Starters Kit Licenses as set forth below, Telogy grants to Licensee a limited, nonexclusive, non-transferable (except as provided in Section 15), worldwide, royalty-bearing (subject to the terms in Section 6 and Exhibit A), object code license to use, copy and distribute (directly or indirectly through multiple tiers

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of Distributors), the object code of the Software solely on (with respect to the DSP Software) or in conjunction with (with respect to the MCU Software) TI DSPs and solely when embedded in Licensee's Products. Licensee may sublicense to Licensee's Distributors and customers the right to use the object code of the Software solely when embedded in Licensee's Product. Licensee agrees any such sublicense to the Software shall be pursuant to a written license agreement between Licensee and sublicensee which restricts sublicensee's use to object code embedded in the Product and prohibits sublicensee from copying the Software, or reverse engineering, decompiling, or disassembling the Software. Licensee may not sublicense the Software other than as explicitly set forth in this Section 1a. Licensee does not obtain any rights pursuant to the License Unit License other than as explicitly granted in this Agreement.

b. DSP Starters Kit License. Subject to the provisions of Section 6 entitled "Price & Payment" herein, Telogy grants to Licensee a limited, nonexclusive, non-transferable (except as provided in Section 15), object code license (i) to use the DSP Software for Licensee's internal use on the Product at the following location: 825 East Middlefield Rd., Mountain View, CA 94043 (the "Location") (and such other locations, as applicable, pursuant to Licensee's notification to Telogy that it desires to use the Software at another Licensee location), and (ii) to use the DSP Software to demonstrate Licensee's Product to Licensee's Distributors, customers and potential customers. This DSP Starters Kit License only entitles Licensee to use the DSP Software for internal use and demonstration as set forth herein, and does not give Licensee the right to use the DSP Software at a location other than the Location, modify the DSP Software or distribute, sublicense or otherwise transfer the DSP Software directly or indirectly through third parties. Licensee does not obtain any rights pursuant to the DSP Starters Kit License other than as explicitly granted in this Agreement.

c. MCU Starters Kit License. Subject to the provisions of Section 6 entitled "Price & Payment" herein, Telogy grants to Licensee a limited, nonexclusive, non-transferable (except as provided in Section 15), license (i) to use, reproduce, modify and have modified the source code of the MCU Software solely at the Location and for Licensee's internal use on the Project, and such other locations, as applicable, pursuant to Licensee's purchase of additional MCU Starters Kit licenses as set forth in Section 6a below, and (ii) to use the object code of the MCU Software to demonstrate Licensee's Product to Licensee's Distributors, customers and potential customers. This MCU Starters Kit License only entitles Licensee to use the MCU Software for internal use and demonstration as set forth herein, and does not give Licensee the right to use the MCU Software at a location other than the Location, or distribute, sublicense or otherwise transfer the MCU Software directly or indirectly through third parties. Licensee does not obtain any rights pursuant to the MCU Starters Kit License other than as explicitly granted in this Agreement.

d. Testing Software License. Telogy grants to Licensee a limited, nonexclusive, non-transferable (except as provided in Section 15), object code license (i) to use the Testing Software for Licensee's internal use on its Products at the applicable Locations, and (ii) to use the Testing Software to demonstrate Licensee's Product to Licensee's Distributors, customers and potential customers. This Testing Software License only entitles Licensee to use the Testing Software for internal use and demonstration as set forth herein, and does not give Licensee the right to use the Testing Software at a location other than the Location, modify the Testing Software or distribute, sublicense or otherwise transfer the Testing Software directly or indirectly through third parties. Licensee does not obtain any rights pursuant to the Testing Software License other than as explicitly granted in this Agreement.

e. Reference Design License. Subject to the provisions of Section 6 entitled "Price and Payment" herein, Telogy grants to Licensee a limited, non-exclusive, non-transferable (except as provided in Section 15), worldwide, royalty-free (except as set forth below) license to use the Reference Design in the development of its Product. Licensee may distribute Products developed utilizing the Reference Design solely in connection with its distribution of the Software, but may not sublicense or otherwise transfer or divulge the Reference Design to any third party or use the Reference Design or any part

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thereof in the development of any other product. Licensee does not obtain any rights pursuant to the Reference Design License other than as explicitly granted in this Agreement.

f. Limited Exclusive License. Notwithstanding the non-exclusive nature of the license rights granted above, Telogy hereby grants Licensee, solely with respect to the Echo Cancellation Software, an exclusive license as follows: (i) for a period of two (2) years after the Effective Date (the "Initial Exclusive Period"), Licensee shall have an exclusive license with respect to those Persons listed on Exhibit D and any other company with respect to use of the Echo Cancellation Software in Echo Cancellation Systems and (ii) for a period of two (2) additional years after the Initial Exclusive Period, Licensee shall have an exclusive license with respect to those Persons listed on Exhibit D with respect to use of the Echo Cancellation Software in Echo Cancellation Systems. Telogy further agrees for a period of four (4) years after the Effective Date that such exclusive license shall extend to Telogy in that Telogy shall not use the Echo Cancellation Software or Additional Software in Echo Cancellation Systems developed by or for Telogy. Finally, in clarification of the foregoing, such exclusive license shall mean that Telogy shall not license, nor sublicense another party to further sublicense, the Echo Cancellation Software or Additional Software to the Persons and companies defined above for use in Echo Cancellation Systems. This Limited Exclusive License shall not be interpreted in a manner that prevents Telogy from fulfilling its obligations under that certain Subcontractor Agreement between the parties of even date herewith.

g. Echo Cancellation Software Source Code for Escrow Purposes. Upon Licensee's reasonable request, Telogy agrees to work and cooperate in good faith and in an expeditious manner with Licensee and a Licensee customer which is requesting an escrow for the Echo Cancellation Software. If such customer demands that the Echo Cancellation Software be put into escrow following such cooperation and discussions, Telogy shall execute with such Licensee customer a source code escrow agreement granting such customer access to the source code of the Echo Cancellation Software in the event a release condition as set forth in such escrow agreement is triggered.

3. Title . As between the parties, title to the Software and Reference Design, including all copies and derivative works thereof shall be in and remain with Telogy. Licensee shall retain title to all software and intellectual property belonging to Licensee before the Effective Date, and any original software or hardware independently developed by Licensee after the Effective Date and incorporated in or added to the Software or Reference Design. Any confidential information, including without limitation the Software and Reference Design, disclosed by one party to the other under the terms of this Agreement, shall be governed by the terms of the Non-Disclosure Agreement executed by the parties on even date herewith. Licensee agrees not to "unlock", decompile, or reverse-assemble the binary or object code portions or versions of the Software, as the terms are generally used in the trade. Telogy claims and reserves all rights and benefits afforded federally and internationally copyrighted works. Licensee shall reproduce and include in all copies of the Software prepared by Licensee's organization the copyright notice(s) and proprietary legend(s) of Telogy as they appear in the Software.

4. Warranty . Telogy warrants for a period of six (6) months from Telogy's delivery of the Software to Licensee (the "Software Warranty Period") that the Software provided by Telogy to Licensee will conform in all material respects to Telogy's published specifications. Telogy does not warrant that the operation of the Software will be uninterrupted or error-free, or that the Software functions will meet Licensee's individualized requirements. Licensee understands that any such repairs or replacements to the Software supplied by Telogy shall not extend the Software Warranty Period. The warranties set forth in this article will not apply with respect to Software that has been altered or modified by Licensee or failures resulting from improper operation, interconnection, or installation unless such alteration, modification, operation, interconnection or installation was provided by Telogy.

Telogy represents and warrants that it has all title, right and interest to grant the licenses it grants Licensee under this Agreement in accordance with the terms of this Agreement and its Exhibits.

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TELOGY DISCLAIMS ALL OTHER WARRANTIES, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE WITH RESPECT TO THE SOFTWARE PROVIDED PURSUANT TO THIS AGREEMENT.

THE TELOGY REFERENCE DESIGN IS PROVIDED "AS IS" AND WITHOUT WARRANTY, INCLUDING BUT NOT LIMITED TO ANY WARRANTY AGAINST THIRD PARTY INTELLECTUAL PROPERTY INFRINGEMENT. LICENSEE UNDERSTANDS AND ACKNOWLEDGES THAT THE REFERENCE DESIGN HAS NOT BEEN TESTED OR CERTIFIED BY ANY GOVERNMENT OR INDUSTRY REGULATORY ORGANIZATION.

5. Software Support . In consideration for the Annual Software Support Fee (as set forth in Section 6 below), Telogy shall provide to Licensee Software support services for the Software.

a. Software Fixes. During the Software Support Period, Telogy shall, as its exclusive remedy for any nonconformity in the Software, and at its facilities in Germantown, Maryland, U.S.A., repair or replace (at its option) the Software with a conforming version thereof, provided that Licensee gives Telogy prompt notice of such non-conformity and supplies to Telogy reasonably requested documentation, error descriptions, program traces, or other debugging information related to the reported non-conformity as set forth in Exhibit C. Resolution may take the form of a written response, supplementary documentation, work-around, coding change, product patch, postponement to the next release, or other correctional aids as set forth in Exhibit C. Any supplied repair or replacement of the Software shall be supplied as a single copy in suitable electronic media format.

b. Technical Support. As further described in Exhibit C, Telogy will provide telephone, fax, pager, email, and written technical support as follows: 1. Telogy will assist Licensee in determining if problems Licensee may encounter are caused by Software errors,

2. Telogy will answer questions concerning the installation and configuration of the Software,

3. Telogy will offer assistance with resolving Licensee's problems which occur during the normal usage of the Software. Telogy may at its discretion refer Licensee to support consulting services, for which Telogy requires an additional fee, if Telogy determines that Licensee requires ongoing help with a particular problem which is not caused by Telogy, or that the problem involves customization of the Products.

c. MCU Software Special Provision. Licensee understands and acknowledges that for the purposes of determining Telogy's maintenance obligations the MCU Software is categorized and designated as follows: the "Porting Source Code" which is necessary for Licensee's porting of the MCU Software to its Product, and the "Core Source Code", which encompasses the remaining MCU software and includes the core functionality. Licensee's modification of the Porting Source Code shall not affect Telogy's Software support obligations under this agreement. Licensee's modification of the Core Source Code shall void Telogy's Software support obligations with respect to the MCU Software.

d. Future Updates. Telogy shall make all reasonable efforts to notify Licensee of each upcoming Update a minimum of sixty (60) days prior to the General Availability release date. The notification from Telogy shall consist of a written document containing, as applicable, a summary of planned changes. Future Updates do not include new features announced as extra cost options. Notwithstanding the foregoing, during the applicable Initial Period, Licensee shall be entitled to receive such new features, for no charge.

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6. Price & Payment. Licensee agrees to pay Telogy the following fees:

a. Software Starters Kit and Reference Design License Fees. In consideration for the Software Starters Kit and Reference Design License granted Licensee in Section 2 of this Agreement, Licensee agrees to pay Telogy the one-time license fee as set forth in Exhibit A. Licensee understands that the fees for the Software Starters Kit and Reference Design are due upon delivery.

b. License Unit Fee. Licensee agrees to purchase the License Units as set forth in Exhibit A, where such License Unit contains the number of licenses on a per channel basis for Licensee's Products. Licensee shall not owe any additional royalties for distribution of Products developed using the Reference Design provided that Licensee has paid the Software License Units for such Products. In consideration for the licenses in the Software License Unit License granted to Licensee in Section 2 of this Agreement, Licensee agrees to pay Telogy the license fees (if any) set forth in Exhibit A. Licensee may pay for the License Units in volume increments and at intervals in accordance with Licensee's requirements unless otherwise provided in Exhibit A. Within thirty (30) days following the end of each calendar quarter, Licensee agrees to pay Telogy the applicable Royalties due for Software distributed in the preceding quarter, such payment to be made concurrently with Licensee's report on Software Royalties due for such quarter. The amount of the Telogy Software Royalty and the method of calculating the amounts due are set forth in Exhibit A. The par ...