SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
RELATING TO ADOPTION OF A RIGHTS PLAN
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: March 30, 2001
(Date of earliest event reported: March 26, 2001)
DITECH COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
000-26209 94-2935531
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(Commission File No.) (IRS Employer Identification No.)
825 E. MIDDLEFIELD ROAD
MOUNTAIN VIEW, CA. 94043
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (650) 623-1300
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ITEM 5. OTHER EVENTS.
On March 26, 2001 the Board of Directors of DITECH COMMUNICATIONS
CORPORATION approved the adoption of a Preferred Share Purchase Rights Plan (the
"Plan"). Terms of the Plan provide for a dividend distribution of one preferred
share purchase right (a "Right") for each outstanding share of common stock, par
value $.001 per share (the "Common Shares"), of Ditech. The dividend is payable
on April 16, 2001 (the "Record Date") to the stockholders of record on that
date. Each Right entitles the registered holder to purchase from Ditech one
one-thousandth of a share of Series A Junior Participating Preferred Stock, par
value $.001 per share (the "Preferred Shares"), at a price of $75.00 per one
one-thousandth of a Preferred Share (the "Purchase Price"), subject to
adjustment. Each one one-thousandth of a share of Preferred Shares has
designations and powers, preferences and rights, and the qualifications,
limitations and restrictions which make its value approximately equal to the
value of a Common Share. The description and terms of the Rights are set forth
in a Rights Agreement (the "Rights Agreement"), dated as of March 26, 2001
entered into between Ditech and Wells Fargo Bank Minnesota, N.A., as rights
agent (the "Rights Agent").
Initially, the Rights will be evidenced by the stock certificates
representing the Common Shares then outstanding, and no separate Right
Certificates, as defined, will be distributed. Until the earlier to occur of (i)
the date of a public announcement that a person, entity or group of affiliated
or associated persons have acquired beneficial ownership of 16% or more of the
outstanding Common Shares (an "Acquiring Person") or (ii) 10 business days (or
such later date as may be determined by action of the Board of Directors prior
to such time as any person or entity becomes an Acquiring Person) following the
commencement of, or announcement of an intention to commence, a tender offer or
exchange offer the consummation of which would result in any person or entity
becoming an Acquiring Person (the earlier of such dates being called the
"Distribution Date"), the Rights will be evidenced, with respect to any of the
Common Share certificates outstanding as of the Record Date, by such Common
Share certificate with or without a copy of the Summary of Rights, which is
included in the Rights Agreement as Exhibit C thereof (the "Summary of Rights").
Until the Distribution Date, the Rights will be transferable with and only
with the Common Shares. Until the Distribution Date (or earlier redemption or
expiration of the Rights), new Common Share certificates issued after the Record
Date, upon transfer or new issuance of Common Shares, will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution Date (or
earlier redemption or expiration of the Rights), the surrender or transfer of
any certificates for Common Shares outstanding as of the Record Date, even
without such notation or a copy of the Summary of Rights being attached thereto,
will also constitute the transfer of the Rights associated with the Common
Shares represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Common Shares as of
the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on March 25, 2011 (the "Final Expiration Date"), unless the Rights are
earlier redeemed or exchanged by Ditech, in each case, as described below.
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The Purchase Price payable, and the number of Preferred Shares or other
securities or other property, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for or purchase Preferred Shares at a price, or
securities convertible into Preferred Shares with a conversion price, less than
the then current market price of the Preferred Shares or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness or
assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in Preferred Shares) or of subscription
rights or warrants (other than those referred to above). The exercise of Rights
for Preferred Shares is at all times subject to the availability of a sufficient
number of authorized but unissued Preferred Shares.
The number of outstanding Rights and the number of one one-thousandths of a
Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Shares or a stock
dividend on the Common Shares payable in Common Shares or subdivisions,
consolidation or combinations of the Common Shares occurring, in any case, prior
to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment of $10.00 but will be entitled to an aggregate
dividend of 1,000 times the dividend declared per Common Share. In the event of
liquidation, the holders of the Preferred Shares would be entitled to a minimum
preferential liquidation payment of $1,000 per share, but would be entitled to
receive an aggregate payment equal to 1,000 times the payment made per Common
Share. Each Preferred Share will have 1,000 votes, voting together with the
Common Shares. Finally, in the event of any merger, consolidation or other
transaction in which Common Shares are exchanged, each Preferred Share will be
entitled to receive 1,000 times the amount of consideration received per Common
Share. These rights are protected by customary anti-dilution provisions. Because
of the nature of the Preferred Shares' dividend and liquidation rights, the
value of one one-thousandth of a Preferred Share should approximate the value of
one Common Share. The Preferred Shares would rank junior to any other series of
Ditech's preferred stock.
In the event that any person or group of affiliated or associated persons
becomes an Acquiring Person, proper provision shall be made so that each holder
of a Right, other than Rights beneficially owned by the Acquiring Person and its
associates and affiliates (which will thereafter be void), will for a 60-day
period have the right to receive upon exercise that number of Common Shares
having a market value of two times the exercise price of the Right (or, if such
number of shares is not and cannot be authorized, Ditech may issue Preferred
Shares, cash, debt, stock or a combination thereof in exchange for the Rights).
This right will terminate 60 days after the date on which the Rights become
nonredeemable (as described below), unless there is an injunction or similar
obstacle to exercise of the Rights, in which event this right will terminate 60
days after the date on which the Rights again become exercisable.
Generally, under the Plan, an "Acquiring Person" shall not be deemed to
include (i) Ditech, (ii) a subsidiary of Ditech, (iii) any employee benefit or
compensation plan of Ditech, or (iv) any entity holding Common Shares for or
pursuant to the terms of any such employee benefit or compensation plan. In
addition, except under limited circumstances, no person or
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entity shall become an Acquiring Person as the result of the acquisition of
Common Shares by Ditech which, by reducing the number of shares outstanding,
increases the proportionate number of shares beneficially owned by such person
or entity to 16% or more of the Common Shares then outstanding.
In the event that Ditech is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold to an Acquiring Person, its associates or affiliates or certain
other persons in which such persons have an interest, proper provision will be
made so that each holder of a Right will thereafter have the right to receive,
upon the exercise thereof at the then current exercise price of the Right, that
number of shares of common stock of the acquiring company which at the time of
such transaction will have a market value of two times the exercise price of the
Right.
At any time after an Acquiring Person becomes an Acquiring Person and prior
to the acquisition by such Acquiring Person of 50% or more of the outstanding
Common Shares, the Board of Directors of Ditech may exchange the Rights (other
than Rights owned by such person or group which have become void), in whole or
in part, at an exchange ratio of one Common Share, or one one-thousandth of a
Preferred Share, per Right (or, at the election of Ditech, Ditech may issue
cash, debt, stock or a combination thereof in exchange for the Rights), subject
to adjustment.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares will be issued (other than
fractions which are integral multiples of the number of one one-thousandths of a
Preferred Share issuable upon the exercise of one Right, which may, at the
election of Ditech, be evidenced by depositary receipts), and in lieu thereof,
an adjustment in cash will be made based on the market price of the Preferred
Shares on the last trading day prior to the date of exercise.
At any time prior to the earliest of (i) the day of the first public
announcement that a person has become an Acquiring Person or (ii) the Final
Expiration Date, the Board of Directors of Ditech may redeem the Rights in
whole, but not in part, at a price of $0.01 per Right (the "Redemption Price").
Following the expiration of the above periods, the Rights become nonredeemable.
Immediately upon any redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.
The terms of the Rights may be amended by the Board of Directors of Ditech
without the consent of the holders of the Rights, except that from and after
such time as the rights are distributed no such amendment may adversely affect
the interest of the holders of the Rights excluding the interests of an
Acquiring Person.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of Ditech, including, without limitation, the right to
vote or to receive dividends.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire Ditech on
terms not approved by Ditech's Board of Directors. The Rights should not
interfere with any merger or other business combination
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approved by the Board of Directors since the Rights may be amended to permit
such acquisition or redeemed by Ditech at $.01 per Right prior to the earliest
of (i) the time that a person or group has acquired beneficial ownership of 16%
or more of the Common Shares or (ii) the final expiration date of the rights.
ITEM 7. EXHIBITS.
4.1 Registrant's Certificate of Designation of Series A Junior
Participating Preferred Stock.
99.1 Press Release, dated as of March 28, 2001 entitled "Ditech
Communications Corporation Adopts Preferred Share Purchase Rights
Plan."
99.2 Rights Agreement, dated as of March 26, 2001 among Ditech
Communications Corporation and Wells Fargo Bank Minnesota, N.A.
99.3 Form of Rights Certificate.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
DITECH COMMUNICATIONS CORPORATION
Dated: March 30, 2001 By: /S/ TIMOTHY K. MONTGOMERY
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Timothy K. Montgomery
Chief Executive Officer and President
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INDEX TO EXHIBITS
4.1 Registrant's Certificate of Designation of Series A Junior
Participating Preferred Stock.
99.1 Press Release, dated as of March 28, 2001 entitled "Ditech
Communications Corporation Adopts Preferred Share Purchase Rights
Plan."
99.2 Rights Agreement, dated as of March 26, 2001 among Ditech
Communications Corporation and Wells Fargo Bank Minnesota, N.A.
99.3 Form of Rights Certificate.
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