8-K

   1


                       SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20549


                         -------------------------------


                                    FORM 8-K

                                 CURRENT REPORT



     PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



Date of Report (Date of earliest event reported)   DECEMBER 3, 1998
                                                 ---------------------


                           PAIRGAIN TECHNOLOGIES, INC.
               (Exact name of registrant as specified in charter)


          DELAWARE                       0-22202                 33-0282809
(State or other jurisdiction           (Commission             (IRS Employer
     of incorporation)                 File Number)          Identification No.)


   14402 FRANKLIN AVENUE, TUSTIN, CA                             92780-7013
(Address of principal executive offices)                         (Zip Code)


       Registrant's telephone number, including area code: (714) 832-9922


                                 Not Applicable
         (Former name or former address, if changed since last report.)

   2

ITEM 5. OTHER EVENTS.

        On November 27, 1998, the Board of Directors of PairGain Technologies,
Inc. (the "Company") declared a dividend of one preferred share purchase right
(a "Right") for each outstanding share of Common Stock (the "Common Stock"), par
value $.0005 per share, of the Company. The dividend is payable on December 14,
1998 (the "Record Date") to the stockholders of record on that date. Each Right
entitles the registered holder to purchase from the Company one ten-thousandth
of a share (a "Unit") of Series A Junior Participating Preferred Stock, par
value $.001 per share (the "Series A Preferred Stock"), of the Company at a
price of $55.00 per Unit (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights are set forth in a Rights Agreement dated as
of December 3, 1998 (the "Rights Agreement") between the Company and U.S. Stock
Transfer Corp., as Rights Agent (the "Rights Agent").

        Until the earlier to occur of (i) the close of business on the tenth
business day following the date of a public announcement that a person or group
of affiliated or associated persons (an "Acquiring Person") have acquired
beneficial ownership of 15% or more of the outstanding Common Stock or (ii) the
close of business on the tenth business day (or such later date as may be
determined by action of the Board of Directors prior to such time as any Person
becomes an Acquiring Person) following the commencement of, or announcement of
an intention to make, a tender offer or exchange offer the consummation of which
would result in the beneficial ownership by a person or group of 15% or more of
such outstanding Common Stock (the earlier of such dates being called the
"Distribution Date"), the Rights will be evidenced, with respect to any of the
Common Stock certificates outstanding as of the Record Date, by such Common
Stock certificate with a copy of this Summary of Rights attached thereto.

        The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Stock. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Stock certificates issued after the Record Date, upon transfer or new
issuance of Common Stock will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
Common Stock, outstanding as of the Record Date, even without such notation or a
copy of this Summary of Rights being attached thereto, will also constitute the
transfer of the Rights associated with the Common Stock represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Rights Certificates") will be mailed to
holders of record of the Common Stock as of the Close of Business on the
Distribution Date and such separate Rights Certificates alone will evidence the
Rights.

        The Rights are not exercisable until the Distribution Date. The Rights
will expire at the close of business on December 14, 2008 (the "Final Expiration
Date"), unless the Final Expiration Date is extended or unless the Rights are
earlier redeemed or exchanged by the Company, in each case as described below.

        The Purchase Price payable, and the number of Units of Series A
Preferred Stock or other securities or property issuable, 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 Series A Preferred Stock, (ii) upon the grant to
holders of the Units of Series A Preferred Stock of certain rights or warrants
to subscribe for or purchase Units of Series A Preferred Stock at a price, or
securities convertible into Units of Series A Preferred Stock with a conversion
price, less than the then current market price of the Units of Series A
Preferred Stock or (iii) upon the distribution to holders of the Units of Series
A Preferred Stock of evidences of indebtedness or assets (excluding regular
periodic cash dividends paid out of earnings or retained earnings or dividends
payable in Units of Series A Preferred Stock) or of subscription rights or
warrants (other than those referred to above).

        The number of outstanding Rights and the number of Units of Series A
Preferred Stock issuable upon exercise of each Rights are also subject to
adjustment in the event of a stock split of the Common Stock or a stock dividend
on the Common Stock payable in Common Stock or subdivisions, consolidations or
combinations of the Common Stock occurring, in any such case, prior to the
Distribution Date.


                                     Page 2


   3

        Units of Series A Preferred Stock purchasable upon exercise of the
Rights will not be redeemable. Each Unit of Series A Preferred Stock will be
entitled to an aggregate dividend equal to the dividend declared per share of
Common Stock. In the event of liquidation, each holder of the Units of Series A
Preferred Stock will be entitled to an aggregate payment equal to the payment
made per share of Common Stock. Each Unit of Series A Preferred Stock will have
one vote, voting together with the Common Stock. Finally, in the event of any
merger, consolidation or other transaction in which shares of Common Stock are
exchanged, each Unit of Series A Preferred Stock will be entitled to receive an
amount equal to the amount received per share of Common Stock. These rights are
protected by customary anti-dilution provisions.

        Because of the nature of the dividend, liquidation and voting rights,
the value of the Series A Preferred Stock, the Units of Series A Preferred Stock
purchasable upon exercise of each Rights should approximate the value of one
share of Common Stock.

        In the event that, after the Rights become exercisable, the Company is
acquired in a merger or other business combination transaction with an Acquiring
Person or an affiliate thereof, or 50% or more of its consolidated assets or
earning power are sold to an Acquiring Person or an affiliate thereof, proper
provision will be made so that each holder of a Rights will thereafter have the
right to receive, upon exercise thereof at the then current exercise price of
the Rights, 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 Rights.

        In the event that any person or group of affiliated or associated
persons becomes the beneficial owner of 15% or more of the outstanding shares of
Common Stock proper provision shall be made so that each holder of a Right,
other than Rights beneficially owned by the Acquiring Person (which will
thereafter be void), will thereafter have the right to receive upon exercise
that number of shares of Common Stock or Units of Series A Preferred Stock (or
cash, other securities or property) having a market value of two times the
exercise price of the Rights.

        At any time after the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 15% or more of the outstanding
shares of Common Stock and prior to the acquisition by such person or group of
50% or more of the outstanding Common Stock, the Board of Directors of the
Company 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 Unit
of Series A Preferred Stock (subject to adjustment) which shall equal, subject
to adjustment to reflect stock splits, stock dividends and similar transactions
occurring after the date hereof, that number obtained by dividing the Purchase
Price by the then current per share market price per Unit of Series A Preferred
Stock on the earlier of (i) the date on which any Person becomes an Acquiring
Person and (ii) the date on which a tender or exchange offer is announced by any
Person, if upon consummation thereof such Person would be the Beneficial Owner
of 15% or more of the shares of Company Common Stock then outstanding.

        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 shares of Series A Preferred Stock will be
issued (other than fractions which are integral multiples of one ten-thousandth
of a share of Series A Preferred Stock, which may, at the election of the
Company, be evidenced by depositary receipts) and, in lieu thereof, an
adjustment in cash will be made based on the market price of the Units of Series
A Preferred Stock on the last trading day prior to the date of exercise.

        At any time on or prior to the close of business on the first date of a
public announcement that a person or group of affiliated or associated persons
acquire beneficial ownership of 15% or more of the outstanding Common Stock
(unless the Board of Directors extends such ten-day period), the Board of
Directors of the Company may redeem the Rights in whole, but not in part, at a
price of $.001 per Right (the "Redemption Price). The redemption of the rights
may be made effective at such time on such basis and with such conditions as the
Board of Directors in its sole discretion may establish. 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 Rights are also redeemable under other circumstances as specified in the
Rights Agreement.


                                     Page 3


   4

        The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights except that from and
after a Distribution Date no such amendment may adversely affect the interests
of the holders of the Rights.

        Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, 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 the Company
on terms not approved by the Company's Board of Directors, except pursuant to an
offer conditioned on a substantial number of Rights being acquired. The Rights
should not interfere with any merger or other business combination approved by
the Board of Directors since the Rights may be redeemed by the Company at the
Redemption Price prior to the occurrence of a Distribution Date.

        The Rights Agreement, dated as of December 3, 1998, between the Company
and the Rights Agent, specifying the terms of the Rights, is attached hereto as
an exhibit and is incorporated herein by reference. The foregoing description of
the Rights is qualified in its entirety by reference to such exhibit. The
Certificate of Designation for the Series A Junior Participating Preferred Stock
is attached hereto as an exhibit. The foregoing description of the Series A
Junior Participating Preferred Stock is qualified in its entirety by reference
to such exhibit.

ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.

        (c) Exhibits

    Exhibit No.                      Exhibit Description
    -----------   --------------------------------------------------------------

         4        Rights Agreement, dated as of December 3, 1998, between the
                  Company and U.S. Stock Transfer Corp., which includes the form
                  of Certificate of Designation for the Series A Junior
                  Participating Preferred Stock as Exhibit A, the form of Rights
                  Certificate as Exhibit B and the Summary of Rights to Purchase
                  Series A Preferred Shares as Exhibit C, incorporated by
                  reference to the registrant's Registration Statement on Form
                  8-A, as filed with the Securities and Exchange Commission on
                  December 15, 1998.

        20(a)     Press Release dated December 8, 1998.

        20(b)     Form of Letter to Stockholders of PairGain Technologies, Inc.
                  regarding the adoption of the Rights Agreement.




                                     Page 4


   5

                                    SIGNATURE


        Pursuant to the requirements of Section 12 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.



DATE: DECEMBER 15, 1998                    PAIRGAIN TECHNOLOGIES, INC.


                                           /s/ CHARLES W. MCBRAYER
                                           ------------------------------------
                                           Charles W. McBrayer
                                           Senior Vice President,
                                           Chief Financial Officer and Secretary


                                     Page 5

   6

                                  EXHIBIT INDEX


Exhibit No.                        Exhibit Description
- -----------    -----------------------------------------------------------------

      4        Rights Agreement, dated as of December 3, 1998, between the
               Company and U.S. Stock Transfer Corp., which includes the form of
               Certificate of Designation for the Series A Junior Participating
               Preferred Stock as Exhibit A, the form of Rights Certificate as
               Exhibit B and the Summary of Rights to Purchase Series A
               Preferred Shares as Exhibit C, incorporated by reference to the
               registrant's Registration Statement on Form 8-A, as filed with
               the Securities and Exchange Commission on December 15, 1998.

     20(a)     Press Release dated December 8, 1998.

     20(b)     Form of Letter to Stockholders of PairGain Technologies, Inc.
               regarding the adoption of the Rights Plan pursuant to the Rights
               Agreement.

EX-20.A

   1
                                                                  EXHIBIT 20(a)


[LOGO]     PAIRGAIN TECHNOLOGIES, INC.  14402 Franklin Avenue   Tel 714.832.9922
                                        Tustin, CA  92780-7013  Fax 714.832.9924



                                                          N E W S  R E L E A S E


                                                           For more information:

                                                           Charles McBrayer
                                                           Kim Gower
                                                           714-832-9922


                           PAIRGAIN TECHNOLOGIES, INC.
                         ADOPTS STOCKHOLDER RIGHTS PLAN

        Tustin, CA -- (December 8, 1998) -- PairGain(R) Technologies, Inc.
(NASDAQ: PAIR) announced today that its Board of Directors adopted a Stockholder
Rights Plan in which preferred stock purchase rights will be distributed as a
dividend at the rate of one Right for each share of Common Stock held as of the
close of business on December 14, 1998.

        Each Right will entitle Stockholders to buy one ten-thousandth of a
share of a newly created series of preferred stock of the Company, Series A
Preferred Stock, at an Exercise Price of $55.00. The Rights are designed to
guard against partial tender offers and other abusive and coercive tactics that
might be used in an attempt to gain control of the Company or to deprive
Stockholders of their interest in the long-term value of the Company. The Rights
will be exercisable only if a person or group acquires 15% or more of the
Company's Common Stock or announces a tender offer the consummation of which
would result in ownership by a person or group of 15% or more of the Company's
Common Stock.

                                    - MORE -


   2

                                PAIRGAIN ADOPTS STOCKHOLDER RIGHTS PLAN / 2 OF 3


        The Rights are exercisable for fractional shares of Series A Preferred
Stock rather than shares of Common Stock to avoid the Company having to reserve
a significant amount of its Common Stock for issuance upon exercise of the
Rights. The Series A Preferred Stock is designed such that each one
ten-thousandth of a share is the economic equivalent of one share of the
Company's Common Stock. If the Rights to purchase these fractional shares of
Series A Preferred Stock become exercisable by virtue of a person or group
acquiring 15% or more of PairGain's outstanding Common Stock, then each
Stockholder, other than the acquiror, is entitled to purchase, for $55.00, that
number of fractional shares of Series A Preferred Stock (or, in certain
circumstances, shares of the Company's Common Stock, property or other
securities of the Company) having a market value worth twice that amount, or
$110.00. If, after the Rights become exercisable, PairGain is acquired by
another company in a merger or other business combination transaction, or sells
50% or more of its assets or earnings power, the Rights entitle each PairGain
Stockholder to purchase, for $55.00, that number of the acquiring company's
common shares having a market value worth $110.00. Each scenario results in
substantial economic dilution to the acquiring entity.

        At any time on or prior to the close of business on the tenth business
day after the date of a public announcement that a person or group has acquired
beneficial ownership of 15% or more of the Company's Common Stock, the Rights
are redeemable for $.001 per Right at the option of the Board of Directors.


                                    - MORE -


   3

                                PAIRGAIN ADOPTS STOCKHOLDER RIGHTS PLAN / 3 OF 3


        The Rights are intended to enable all stockholders to realize the
long-term value of their investment in the Company. The Rights will not prevent
a takeover attempt, but should encourage anyone seeking to acquire the Company
to negotiate with the Board prior to attempting a takeover.

        The dividend distribution will be made on December 14, 1998 payable to
stockholders of record on that date. The Rights will expire on December 14,
2008. The initial distribution of Rights is not taxable to stockholders.

ABOUT PAIRGAIN

        PairGain Technologies, Inc. is the world leader in the design,
manufacture and marketing of DSL (Digital Subscriber Line) networking systems.
Service providers and private network operators worldwide use PairGain's
products to deploy DSL-based services, such as high-speed Internet, remote LAN
access and enterprise LAN extensions over the existing infrastructure of copper
telephones lines.

        For more than ten years, PairGain has been recognized as a technology
leader and industry innovator. The company offers the widest range of HDSL, ADSL
and SDSL-based systems available. Its product lines include HiGain(R) T1/E1
access systems, small subscriber carrier systems, including PG-Flex(R) and
PG-Plus(TM), enterprise LAN systems and megabit access solutions, including the
Avidia(TM) System, integrated access concentrator and Megabit Modems(TM).
Currently, more than 1,000,000 PairGain DSL nodes are installed iN over 70
countries. Additional information about PairGain is available on the Internet at
www.pairgain.com.


                                      # # #

EX-20.B

   1

                                                                  EXHIBIT 20(b)


[LOGO]   PAIRGAIN TECHNOLOGIES, INC.   14402 Franklin Avenue    Tel 714.832.9922
                                       Tustin, CA 92780-7013    Fax 714.832.9924


December 15, 1998




To Our Stockholders:

On November 27, 1998, your Board of Directors declared a dividend distribution
of Preferred Stock Purchase Rights (the "Rights"). The Rights were issued on
December 14, 1998 to stockholders of record on that date and will expire in ten
years. This letter and its attachment summarize certain key features of the
Stockholder Rights Plan and the Board of Directors' reasons for adopting it.
These documents should be kept with your Common Stock Certificates.

The Rights contain provisions that should, along with certain charter and by-law
provisions and certain provisions of the Delaware General Corporation Law, help
protect the stockholders of PairGain Technologies, Inc. (the "Company") in the
event of an unsolicited attempt to acquire the Company, including a gradual
accumulation of shares in the open market, a partial or two-tier tender offer
that does not treat all stockholders equally, a squeeze-out merger and other
coercive or unfair takeover tactics. These tactics can unfairly pressure
stockholders, squeeze them out of their investment without giving them any real
choice and deprive them of the full value of their shares, and the Board of
Directors does not believe they are in the best interests of the Company's
stockholders.

Over 1,700 companies, including approximately half the Fortune 500 companies and
two-thirds of the Fortune 200 companies, have issued similar rights to protect
their stockholders against these tactics. We consider the Rights to be very
valuable in protecting both your right to retain your equity investment in the
Company and the full value of that investment, while not foreclosing a fair
acquisition bid for the Company.

Your Board of Directors was aware when it acted that some people have advanced
arguments that securities of the sort we are issuing deter legitimate
acquisition proposals. We carefully considered these views and concluded that
the arguments are speculative and do not justify leaving stockholders without
any protection. Your Board of Directors believes that these Rights represent a
sound and reasonable means of addressing the complex issues of corporate policy.

The Rights are not intended to prevent an acquisition of the Company and will
not do so. However, they should deter any attempt to acquire the Company in a
manner or on terms not approved by the Board of Directors. The Rights may be
redeemed by the Board of Directors at a price of $0.001 per Right prior to the
first public announcement of the accumulation, through open-market purchases, a
tender offer or otherwise, of 15% or more of the combined number of the
Company's shares of Common Stock by a single acquiror or group, and thereafter
in certain circumstances. Thus, the Rights should not interfere with any merger
or business combination approved by the Board of Directors prior to that time.


   2

To Our Shareholders
December 15, 1998                                                         Page 2


Issuance of the Rights does not in any way weaken the financial strength of the
Company or interfere with its business plans. The issuance of the Rights has no
dilutive effect, will not affect reported earnings per share and will not change
the way in which you can presently trade the Company's shares.

Rights certificates will not be issued to stockholders of record as of December
14, 1998 but will be represented by the Common Stock certificate. Common Stock
issued after the Record Date will contain a notation incorporating the Rights
Agreement by reference. Any transfer of Common Stock will also constitute the
transfer of the Rights associated with the Common Stock represented by such
certificate. The Rights Agreement provides that the Rights will be transferred
with and only with the Common Stock until such time that they are exercisable,
which occurs if a person or group acquires 15% or more of the Company's Common
Stock or announces a tender offer the consummation of which would result in
ownership by a person or group of 15% or more of the Company's Common Stock. As
soon as practicable after such event, separate certificates evidencing the
rights will be mailed to holders of record of the Common Stock and such separate
Rights Certificates alone will evidence the Rights.

The Rights will expire December 14, 2008, which should give the Company adequate
time to determine whether any further protection is required.

The Board of Directors has been advised by legal counsel for the Company that
the distribution of the Rights will not be taxable to you or to the Company.
However, stockholders may recognize taxable income upon the occurrence of
certain subsequent taxable events.

In declaring the Rights dividend, we have expressed our confidence in the future
of the Company and our determination that you, our stockholders, be given every
opportunity to participate in that future.

On behalf of the Board of Directors,


/s/ CHARLES W. MCBRAYER
- --------------------------------------
Charles W. McBrayer
Senior Vice President,
Chief Financial Officer and Secretary


Attachment: Summary of Rights to Purchase Shares of Series A Preferred Stock