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SEC Filings

DITECH HOLDING CORP filed this Form 424B1 on 09/16/1997
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                              CERTAIN TRANSACTIONS
     Upon the closing of the Offering, HCHI, HCP and the Principals will enter
into a shareholders' agreement (the "HCP Shareholders' Agreement") that will
govern, among other things, (i) the rights of the Principals to transfer their
shares of HCP Common, and (ii) the purchase of shares of HCP Common from the
Principals by HCP, HCHI and the other Principals. Under the HCP Shareholders'
Agreement, a Principal may not transfer his or her shares of HCP Common other
than to a family member, an affiliate or another HCP stockholder without first
offering such HCP Common to HCP, the other holders of HCP Common and the holders
of HCP Preferred (in that order) on the same terms and conditions. In addition,
HCP, the other holders of HCP Common and the holders of HCP Preferred will have
the right to purchase the shares of HCP Common of a Principal (or of a permitted
transferee of a Principal) if such Principal (a) ceases to be employed by the
Company (including by death, disability or voluntary or involuntary
termination), (b) ceases to own any equity interest in HCHI, (c) becomes
bankrupt, or (d) transfers any shares of HCP Common in connection with a divorce
or by operation of law. The amount payable to a Principal who suffers any of the
foregoing events is based upon the valuation of HCP. To avoid the loss of HCHI's
REIT status, HCHI is permitted to assign its rights to purchase HCP Common and
to exchange any HCP Common it purchases for shares of nonvoting common stock of
     The terms of the Formation Transactions, including certain benefits to the
Principals, are described in "Structure and Formation Transactions -- The
Formation of HCHI."
     The Company will enter into employment agreements with each of the
Principals. Each employment agreement will provide for, among other things, an
initial term of five years. See "Management -- Employment Agreements."
     After the closing of the Offering, HCMC and HCS will continue to be
wholly-owned subsidiaries of HCP and the Principals will own all of the HCP
Common. The Principals will have the exclusive power to manage and conduct the
businesses of HCP, HCMC and HCS subject to certain limited exceptions. See
"Structure and Formation Transactions."
     Since the exchange by the Principals of their shares of HCP Preferred for
shares of Common Stock will be a taxable transaction, HCHI will make up to
$1,750,000 in loans available to the Principals to enable them to pay their
taxes. Each loan will have a term of five years and will bear interest at the
lowest "applicable federal rate" in effect for the month in which the loan is
made. No payments of principal on a loan will be due before maturity unless the
borrowing principal is terminated for "good cause" under his or her employment
agreement with HCHI, in which case the loan will become immediately due and
payable. See "Management -- Employment Agreements." Interest, however, will be
payable on a quarterly basis in arrears. The loans to the Principals will be
secured by 116,667 of their shares of Common Stock but will otherwise be
nonrecourse to them. A Principal will not be able to sell the shares of Common
Stock that are pledged to secure his or her loan. Accordingly, if a Principal
defaults in repaying his or her loan, HCHI will be able to look only to the
shares of Common Stock the Principal pledged to secure his or her loan and not
to any personal assets of the Principal. Thus, a decline in the value of the
Common Stock could result in a Principal's failure to repay his or her loan. As
additional consideration to the Principals for their contribution of the HCP
Preferred to HCHI, the outstanding balance of the loans will be forgiven to the
extent that the Earn-Out vests. See "Structure and Formation
Transactions -- HCHI." The terms of the loans were not determined through
arm's-length negotiations and may be more favorable to the Principals than would
otherwise be available to them.