Print Page  Close Window

SEC Filings

424B1
DITECH HOLDING CORP filed this Form 424B1 on 09/16/1997
Entire Document
 
<PAGE>   97
 
                                ERISA INVESTORS
 
     A fiduciary of a pension, profit-sharing, stock bonus plan or individual
retirement account, including a plan for self-employed individuals and their
employees or any other employee benefit plan (collectively, a "Plan") subject to
the prohibited transaction provisions of the Code or the fiduciary
responsibility provisions of the Employee Retirement Income Security Act of 1974
("ERISA"), should consider (1) whether the ownership of the Common Stock is in
accordance with the documents and instruments governing the Plan, (2) whether
the ownership of Common Stock in the Company is consistent with the fiduciary's
responsibilities and satisfies the requirements of Part 4 of Subtitle A of Title
I of ERISA (if applicable) and, in particular, the diversification, prudence and
liquidity requirements of Section 404 of ERISA, (3) the prohibitions under ERISA
on improper delegation of control over, or responsibility for "plan assets" and
ERISA's imposition of co-fiduciary liability on a fiduciary who participates in,
or permits (by action or inaction) the occurrence of, or fails to remedy a known
breach of duty by another fiduciary with respect to plan assets, and (4) the
need to value the assets of the Plan annually.
 
     In regard to the "plan assets" issue noted in clause (3) above, the Company
believes that the Common Stock should qualify as a "publicly-offered security,"
and therefore the acquisition of such Common Stock by Plans should not cause the
Company's assets to be treated as assets of such investing Plans for purposes of
the fiduciary responsibility provisions of ERISA or the prohibited transaction
provisions of the Code. The Department of Labor has issued final regulations
(the "DOL Regulations") as to what constitutes an asset of a Plan. Under the DOL
Regulations, if a Plan acquires an equity interest in an entity, which interest
is neither a "publicly-offered security" nor a security issued by an investment
company registered under the Investment Company Act of 1940, as amended, the
Plan's assets would include, for purposes of the fiduciary responsibility
provisions of ERISA and the prohibited transaction provisions of the Code, both
the equity interest and an undivided interest in each of the entity's underlying
assets, unless certain specified exemptions apply. The DOL Regulations define a
publicly-offered security as a security that is "widely held," "freely
transferable" and either part of a class of securities registered under the
Exchange Act, or sold pursuant to an effective registration statement under the
Securities Act (provided the securities are registered under the Exchange Act
within 120 days after the end of the fiscal year of the issuer during which the
offering occurred). The Common Stock offered hereby is being sold in an offering
registered under the Securities Act and has been registered under the Exchange
Act.
 
     The DOL Registrations provide that a security is "widely held" only if it
is part of a class of securities that is owned by 100 or more investors
independent of the issuer and of one another. A security will not fail to be
"widely held" because the number of independent investors falls below 100
subsequent to the initial public offering as a result of events beyond the
issuer's control. The Company expects the outstanding shares of its Common Stock
to be "widely held" upon the closing of the Offering.
 
     The DOL Regulations provide that whether a security is "freely
transferable" is a factual question to be determined on the basis of all
relevant facts and circumstances. The DOL Regulations further provide that when
a security is part of an offering in which the minimum investment is $10,000 or
less, as is the case with the Offering, certain restrictions ordinarily will
not, alone or in combination, affect the finding that such securities are freely
transferable. The Company believes that the restrictions imposed under the
Company's charter on the transfer of the Common Stock are limited to the
restrictions on transfer generally permitted under the DOL Regulations and are
not likely to result in the failure of the Common Stock to be "freely
transferable." The DOL Regulations only establish a presumption in favor of the
finding of free transferability, and therefore, no assurance can be given that
the Department of Labor and the Treasury Department will not reach a contrary
conclusion.
 
     Fiduciaries of ERISA Plans and IRA's should consult with and rely upon
their own advisors in evaluating the consequences under the fiduciary provisions
of ERISA and the Code of an investment in Common Stock in light of their own
circumstances.
 
                                       97