On October 28, 2009, Ditech Networks, Inc. (the "Company") issued a press release containing a Notice of Settlement of the consolidated shareholder derivative action pending in the United States District Court, Northern District of California captioned In re Ditech Networks, Inc. Derivative Litigation, No. C-06-05157-JF as well as the derivative action pending in the Superior Court of the State of California, County of Santa Clara, captioned Zhu v. Montgomery, et al., No. 1:06-CV-075695 (collectively, the "Litigation").

A copy of the press release is attached hereto as Exhibit 99.1.

A copy of the Notice of Settlement is attached hereto as Exhibit 99.2.

A copy of the Stipulation and Agreement of Settlement of the Litigation is attached hereto as Exhibit 99.3.

Item 9.01.    Financial Statements and Exhibits.

      (d)     Exhibits

Exhibit No.                     Document

99.1          Press Release containing Notice of Settlement

99.2          Notice of Settlement

99.3          Stipulation and Agreement of Settlement