Conference 7.286::digital

    [From VTX LIVEWIRE]
    
                       Digital adopts Stockholder Rights Plan

 On Dec. 11, Digital announced that its Board of Directors has adopted a 
 Stockholder Rights Plan.  This move is meant to deter coercive third-party, 
 take-over tactics, and to prevent an acquiror from gaining control of the 
 company without offering a fair price to all the company's stockholders.    

 The adoption of this plan is not in response to any known effort to acquire 
 control of the company.  Over 1,100 companies have adopted similar rights 
 plans since July 1984.

 Under this plan, common stock purchase rights will be distributed as a rights 
 dividend at the rate of one Right for each share of common stock held as of 
 the close of business on Dec. 21, 1989.  Each Right will entitle holders of 
 company common stock to buy one share of common stock of the company at an 
 exercise price of $400.  

 The rights will be exercisable only if a person or group acquires 20% or more 
 of the common stock, or announces a tender or exchange offer which would 
 result in its ownership of 30% or more of the common stock, or a person owning 
 10% or more of the common stock is determined by the Board to be an "Adverse 
 Person," as defined in the Rights Plan.  The Rights will expire on December 
 21, 1999.  Details will be mailed to all stockholders.

DEC is probably an excelent potential takeover target for at least the
following reasons:

o Low (undervalued) stock price
o Large Amounts of cash on hand - (Helps to pay off the junk bonds)
o Assets such as land that could be sold off.
o Bloated work force - One big layoff and the buyer is well on his way
to profitability
o Strong DEC's technological position

The major problems for a takeover would be shear size (although there
have been larger takeovers) and foreign companies would probably be
excluded from the bidding because they would probably be unable to get 
the approval of the DoD.

John

re: .2
Before everyone starts expecting a takeover any day now - it's worth pointing
out that high-tech companies have NOT been viewed as particularly good take-
over targets.  The problem is that so much of the value of the company is in
its top-level employees and in intangibles like reputation.  Employees can
leave if they want (at least the top ones can, even in troubled times like
this) and intangibles can be devalued very quickly.

That's not to say that a takeover is impossible - many companies that were
SURE they were safe found out otherwise.  However, there is really no history
of successful hostile takeovers of large high-tech companies.  The most recent
try - and probalby the biggest attempt in history - was MAI Basic's run at
Prime.  After dragging on for months, this failed (though it did force Prime
to find a "white knight" in JC Whitney, which is mainly a venture capital firm.)

							-- Jerry

Re: .1

Since our stock is selling for something like $85 a share, how would an option
to buy stock at $400 a share protect us from a takeover?  Who would exercise
the option?

				-- Bob

       According to the story on this that appeared in the Boston Globe
    this news caused a collective yawn on Wall Street. Seems this 'poison
    pill' is more routine than unusual.
                                      Denny

   The story I heard on WBUR began,
   "Financially-troubled Digital Equipment Corp...."

    
    RE: .3
    
    I don't think much of DEC's value is in it's top-level employee.
    Much of DEC's value is in the VAX architecture and DIGITAL logo.

    RE: .4
    
         I didn't write the article.
    
                                     Greg

    Re: [.3]:  I'd say the Prime takeover was a disaster, in that the
    company is now enduring decimating layoffs followed by worker 
    paralysis (as they wait for the next blow to fall).
    
    Heard directly from current employees; not rumor.

    Another reason we could be a target is our very large installed base.
    
    Agree there is not much danger, particularly as the Wall Street Raiders
    seem to be having trouble floating their trash bonds.

    See also SUBWAY::INVESTING note 1621

    How could such a "poison pill" (anti-takeover) measure be adopted
    without a vote of the stockholders?  Is this normal?
    

    Shareholders elect the directors at the scheduled annual meeting.
    The directors make these sorts of decisions, but they can be overruled
    by the shareholders in a special meeting.  In practice, such a special
    meeting is most rare.  Usually it's the final showdown to unseat the
    directors and officers.
    
    For the directors to create "shareholder rights" is quite normal.

I haven't even seen this reported in the WSJ.
Hard to believe?

    re:.14
       That's because they don't consider it a 'big deal'.
                                    Denny

    FWIW
    
    An individual stockholder is not expected to exercise their right;
    because no-one would exercise a $400.00 right when the price of
    the stock is at $85.00; however, in the event of a takeover attempt,
    the individual or investment group seeking to takeover a company,
    would have to buy the right as well as the outstanding stock.  That
    is the essence of the stockholder rights plan approved by the BOD.
    At $85.00 per share, the takeover price would be in the range of
    $10.2B; tack on the $400.00 right purchase, the amount would be
    both staggering and prohibitive.  
    
    Jay

re: .16

I'm glad you explained that.  I couldn't figure out why someone would want to
exercise their right to buy @$400/share.  But, what's to prevent a takeover
person from offering to buy your shares @$85 and your "right" @$42.50?

Bob

    
    Re: .16
    
    	Two points:
    
    	1)  Why do you believe they would have to buy the rights to take
    over the company?  Common stock has the voting privileges, the "rights"
    themselves do not.
    
    	2)  If the value of the stock during the takeover is significantly
    under $400 (like $85...;-), the intrinsic value of each right is near
    zero.  So even if they had to buy the rights, they certainly wouldn't
    have to pay $400 per for them.
    
    	     							-craig

    
    
    re. 18
    
    Right, if someone wanted 20% of the stock, he would still only have to 
    buy common stock. Whats the deal?
    
    ed

    What you are missing, is that you cannot buy one without the other.
                             FOR INSTANCE
    You as a holder of 100 shares of DEC stock, valued at $85.00 per
    share; you also own 100 rights with an fixed value of $400.00
    each, for a total holding value of $48,500.00; for someone to take
    control of your 100 shares of voting rights, which is what they
    would have to do to have a 20% voting share of DEC.
    
    Jay

> < Note 980.20 by AHOY::JWHITTAKER >
>
>    What you are missing, is that you cannot buy one without the other.
>                             FOR INSTANCE
>    You as a holder of 100 shares of DEC stock, valued at $85.00 per
>    share; you also own 100 rights with an fixed value of $400.00
>    each, for a total holding value of $48,500.00; for someone to take
>    control of your 100 shares of voting rights, which is what they
>    would have to do to have a 20% voting share of DEC.

This can't be right.
Aren't the "rights" the same as "options," albeit with a different
set of strike criteria?
The Rights don't have a market value of $400, that's the strike price
of the stock you can acquire with them.
The surface rationale, as I can understand it, is that a hostile takeover
would drive the price of the stock over $400, at which point the Rights
would be exercisable.  But then people would either sell the Rights
for bundle, or sell the stock they purchased under the Rights for an immediate
profit, aiding the takeover, unless the stock purchased under the Rights
is restricted somehow.  Is this the case?

Think about THIS:  If .20 were right, then you couldn't SELL your stock
without selling the Rights, and who will pay $485 for an $85 share of stock?

Will the Rights be transferrable, salable on the open market or through
normal options exchanges?

Can we get somebody who KNOWS what this plan means to us to explain 
the situation?

- tom]

    
    
    Is this a law that you have to sell your 'right' when you sell your
    stock?
    
    If I have 100 shares and 100 rights, couldn't someone buy 40 of my
    shares and still end up with 20% of the company???
    
    

    
    Re: .20
    
    >You as a holder of 100 shares of DEC stock, valued at $85.00 per
    >share; you also own 100 rights with a fixed value of $400.00
    >each, for a total holding value of $48,500.00; for someone to take
    
    	The first part is right - each share of DEC stock is valued at
    around $85 per share.  The second part is absolutely wrong -- the
    rights have a "fixed value" (ie. redeemable value) of a grand whopping
    total of one cent per right.  The market value, what someone will buy
    your rights for, might be higher but the rights certainly do not have a
    "fixed value" of $400 per.  If you believe the $400+$85 notion that
    strongly, I'm perfectly willing to sell all my shares/rights to you at
    that price!  :-)
    
    	Rights are similiar to options (stock market options, not the
    RSOP).  You can buy an option to buy DEC stock at $100/share for the
    next month or two for perhaps $1/share.  You pay $1/share for the
    ability to buy a share at $100 if you so choose before the option
    expires.  The option that you bought is worth $1, not $100 per share.
    (Don't quote me on these option prices -- this is a guess and is not
    verified by the WSJ.)
    
    	If you want to discuss options more, I'd suggesting taking this
    over to the INVESTING notesfile on SUBWAY::INVESTING.
    
    	 						-craig

    
    Legal and financial methodologies are not the only protection a company
    can take to discourage hostile takeovers by junk bond predators who
    would strip a company clean for personal gain.
    
    If for example, the company's employees were totally empowered with
    total responsibility with total authority to incur change at the lowest
    level, with each employee being a self-managed entity, even to a
    degree, each figuratively even marketing manager with customer
    satisfaction everyone's priority, with managers then filling only
    leadership roles without the authority of bureaucratic control (i.e.
    give every direct report a say in who a given group's leader will be)
    then any takeover artist would face taking over a company that was
    being managed by everyone employee versus an elite manager
    infrastructure (who dictates to the workforce the work to be done
    versus a workforce that is self-managed that dictates to itself what
    must be done, and changed, to grow more successfully the company).
    
    What all this would boil down to is that 125,000 employees working
    together cooperatively in harmony, all truly self-empowered, simply
    would not tolerate a hostile predator taking over to ruin the company
    for personal gain.  Without the workforce that creates the NEW money
    from the company's material resources, the value of the company drops
    to minimal value, which is essentially zero compared to the price tag
    required by any takeover artist to make a successful takeover in the
    first place.
    

    
    No one can take us over.  We are a cash rich, low debt company.

    Ken is a long range thinker who isn't fixated on quick profit but
    on long term benefit for the company.

    As soon as the government loosens up our out-dated trade and export
    laws we are going to make a fortune selling computers to the Eastern
    bloc countries.  
    
    We are firmly ensconced in Europe and will be ready to roll when the 
    European Common Market opens.
    
    Besides, even though I dropped out of the market back in 87, I and
    many, many other employees like me wouldn't think twice about
    investing heavily in a buyback of our own stock to protect us if it 
    became necessary.  As a matter of fact, I am just now getting back
    into the stock plan_:-)  The future is clear and we will be right
    on top where we belong._:-)   
    
    The big time predators are fighting for their lives right now.  No
    one is buying junk bonds anymore, the Japanese won't touch them.  
    Too many leveraged buyouts have ended in disaster... prosperous
    companies dying under the weight of debt. (Campeau for example).
                               
    All we have to do is sit tight and wait out the coming recession.
    Our place in the sun is coming again, and sooner than expected.
    Then we'll be back on top where we belong.
                                        
    Mary Stanley

    But Mary,  all of those things you mention are prime reasons FOR
    a takeover!
    
    Because DEC is cash-rich;  Because DEC has very low debt-to-equity;
    Because DEC has tons of undervalued assets (i.e. LAND on 495 which
    is valued on the books at _purchase_value_, but is now worth many
    times more!);  because DEC has excellent technology;  because DEC
    has a pretty good long-term outlook....
    
    All those things lead me to believe that DEC would be a _very_
    attractive takeover if the common stock falls to the mid-'70s.
    A raider could raise a lot of cash by selling undeveloped land.
    Add that to the billions in liquid assets and you have the means
    to pay off a lot of debt.   Also, since DEC has such a low
    debt-to-equity ratio, there is plenty of room for adding debt in
    a leveraged buyout.
    
    One more thing:  84% of DEC is owned by institutional investors.
    50% by investment companies.   It really wouldn't be all that difficult
    for one major investment company to corral 51% of the outstanding
    stock by floating some debt while DEC's market value is low.
    
    - -

    Then lets start now and buy back our stock.  Announce the program
    in DTW.  Spread the word.  Make employees aware of the danger. 
    Decrease the amount of outstanding stock available.  
    
    Concentrate our own pension plan investing in the area of our own 
    stock instead of in a broad portfolio of mutual funds.  
    
    Give people a choice to take their next years raises in stock instead 
    of cash.  
    
    Those of us who work here have faith in what we do and in how we do
    it.  Most of us will (in my opinion) put our money where our heart
    is.  All we have to do ....  is to do it.  
    
    These are changing times.  Talk is cheap today.  Its time for action.
                                             
    Mary

    There was a major stock buy-back about a year ago.  While it was
    not done primarily as a takeover defense, it certainly helps.
    
    As of December 1988,  employees owned about 8% of the company. 
    Individual investors owned only 2% of the stock.  With millions
    of shares outstanding, even 127,000 employees buying as much as
    they could afford would barely put a dent in the percentages.
    
    As for pension investing (a separate topic, I know, but what the
    heck), I'd say that the broad portfolio of mutual funds is a much
    safer investment than investing in our own stock.
    
    Still, it's important to realize that Digital simply is NOT at any
    high risk of a hostile takeover at this time.  The market value
    is still too high (and almost certainly always will be, as the breakup
    value per share is something like $60).  The company would not be
    of interest to a raider interested in breaking it up (selling the
    assets for more than the total stock price), because DEC has no
    diversified businesses to easily spin off.  Probably the only real
    tangible, saleable item is the land.  The biggest value in the company
    is in the employees:  the technology, the knowledge, the expertise,
    the product development.   Can't break that up and sell.
    No breakup, no interest in buying.   The only real incentive to
    make a run at buying the company would be because it does seem to
    be undervalued right now, and a raider might believe that he or
    she could immediately raise productivity and lower expenses by slicing
    out a huge chunk of the payroll -- yup, the L word:  layoff.
    
    I don't believe this could happen unless the stock continued down
    into the low 60s.  Otherwise, the offer price would be too expensive
    for the payback (since the company can't be broken up and sold).

Its not only the number of outstanding shares that pose a problem but also
the number of shares owned by people(employees & others) who would be more
than happy to sell them to somebody offering a big profit.
Lets assume I have been left millions by some distant uncle (boy, is that 
a wild one) I decide to buy all the DEC stock I can with it at the current
price, lets say $85. Now along comes mr. corporate raider and offers me
and others $185 per share because he figures that if he gets enough to buy
control he can use the ready cash to pay off any debts he occurs buying up the
stock and if need be he can sell off property that DEC owns. 
Would I sell and let this happen? You bet! So my point is that buying up all the
outstanding shares is not the complete solution, they need to be bought by 
people who will not sell to a raider.

- George

    Re: .24

    ;What all this would boil down to is that 125,000 employees working
    ;together cooperatively in harmony, all truly self-empowered, simply
    ;would not tolerate a hostile predator taking over to ruin the company
    ;for personal gain.  Without the workforce that creates the NEW money
    ;from the company's material resources, the value of the company drops
    ;to minimal value, which is essentially zero compared to the price tag
    ;required by any takeover artist to make a successful takeover in the
    ;first place.

    Hmm, that's basically the same thing K.O. said when he was on CNN's
    Pinnacle earlier this year.  He was asked about if he was worried
    about the possibility of a hostile takeover - to which he replied
    (paraphrased) "...Digital isn't the kind of company that could be
    broken up and it's parts sold off.  Besides, it's people wouldn't 
    work for a hostile management..." (to the best of my memory)


    =Jp=[Happy-Holidays!]

    re .29
    
    Gee, sounds like an ESOP (Employee Stock Ownership Plan).  Too bad
    we 'dissolved' ours in 1987.  The reason given was the tax advantages
    (to the company) had gone away.
    
    If so, why have there been recent announcements of major companies
    starting them?
    
    Maybe this should be continued in INVESTING?
    
    	-Barry_who_sold_all_in_Sep_87_to_buy_house_in_NJ-
    

    I still haven't heard an OFFICIAL explanation of how the rights thing
    works.  However, in Digital Review this week their write up put it in
    such a manner that I understood it and how it would fend off raiders. 
    Now just because it appears in DR does not make it official, but if
    they were right...
    
    The $400 right (according to DR) amounts to a credit to stockholders of
    record on 12/21.  If the board declares that we are in a hostile
    situation the right would double to $800.  What i interpret this to
    mean is that I would have a credit right of $800 for each share that I
    had owned on 12/21.  i could then purchase stock, at the then
    prevailing price, using the $800 credit to buy the stock.  What this
    obviously does is give me tremendous 'buying" power, and results in a
    dilution of the stock, so that the raider has difficulty in purchasing
    all of the shares. 
    
    So far this explanation is thte only one that I have understood and the
    only one which has made sense.  Therefore, that probably means that I
    and DR have it all wrong.
    
    This helps hope!!!

    Note a takeover target.  Hmmmmm.
    
    No break up value?  No seperate businesses?  Extreme employee loyality?
    
    The book value of the stock is in the $60+/share range.  That's
    based upon the accounting principle of "Lower of Cost or Market
    Value".

    Revenue from our PDP-11 business is in the billion range.  Its
    basically a cash cow, aimed at the installed base.
    
    The majority of our revenue is from our existing accounts.  Much
    of that add-on and growth business.
    
    Our software support contracts, field service business and warranty
    activities are high margin.
    
    We have patents on chip and manufacturing technology, protocols,
    etc. that we do not as of yet licence.
    
    The number of software products that we make that turn a profit
    is not a major percentage of all of our software.
    
    At the current stock price DEC could be purchaced at about 11 billion
    (less some change).   In April we had current assets valued at close
    to that.
    
    What if ...
    
    Some one bought us.  Spun off the PDP-11 business.  Maybe even spin
    off the VAX hardware business, the LAN network business, the field
    service business, etc.  
    
    Then laid off large parts of sales, support, manufacturing.  Retired a
    majority of product efforts.  Centralized our marketing and sales
    delivery (primary aim toward resales of installed base), or made deep
    OEM disconts and drastically cut sales.  Off boarded manufacturing
    under licence overseas, etc. Sell factories, office building, and land.

    Then keep a major Software engineering presence, and restructured the
    field into a prime contrator (with all its implications) aimed at doing
    large scale integration. 
    
    In other words maintain and milk the installed base.  Reduce hardware
    engineering investment.  Move to commodity technology and move into
    software, networks and integration.
    
Naaaaahh.
        
    
    

    re: .31  "Gee, sounds like an ESOP (Employee Stock Ownership Plan). 
              Too bad we 'dissolved' ours in 1987.  The reason given was 
    	      the tax advantages (to the company) had gone away.
              If so, why have there been recent announcements of major companies
    	      starting them?"
    
    ESOP's or ESPP's (Purchase Plans)? (to use Digital's terminology)
    
    __Rich
        

    We still have an ESPP. We used to but no longer have an ESOP.
    
    			Alfred

    
    Investor Services has set up a DECtalk unit which answers many
    questions surrounding the stockholder's "Takeover Protection" rights.
    It's at DTN 223-4825. 
            

    Can anyone explain to me how the recently announced Stockholder
    Rights Plan is supposed to work?  What is the logic behind offering
    a share of common stock at $400?  Why would any employee want to
    do that?  I can see the logic of offering stock to employees at
    $40....not 400.

    the following paraphrased from the Investor Services DECTalk
    explanation (see the INVESTING notesfile for a phone number
    reference)...
    
    "The $400 price reflects the long-term potential price of Digital stock
    during the life of the Rights Plan (until 1999)."
    
    OK...I don't see how that would protect against a takeover, say,
    tomorrow...
    
    As an aside...based on the DECTalk explanation, the writeup in Digital
    Review that explained the rights plan seems incorrect.  Of course, the
    DECTalk explanation might not be complete, given the purported size of
    the official Rights Plan document.

re .36:

    After listening to the "drunken Swede" I still don't know how the
    rights plan works.  It did say that the rights allow you to acquire
    DEC stock at a substantial discount (when made exercisable by the BOD),
    but didn't say how.

I moved replies .38 and .39 from a separate topic to this one.

		Steve

    The "right" when it becomes exercisible due to the provisions (e.g.
    someone has bought a lot of Digital stock) grants the buyer to purchase
    up to $400 worth of stock at half price.
    
    Example.  Donald Duck ( a know corperate raider)  takes a major
    stake in Digital stock.  When his holding reaches X% or is increased
    by y% (or whatever the specific tigger is) automatically triggers
    the right.  If Digital stock is selling for $100 at the time, each
    right (not in the hands of the party who triggered this) allows
    the holder (on for each share) to buy 8 shares of stock for $400
    (400/100*2=8 shares).
    
    This is the general case.  I assume the right is a 2 for 1, and
    I don't know the specific trigger numbers.   It dilutes the outstanding
    common stock rather quickly if it works.
    
    Its not foolproof.  If the tender is dropped and the stock drops
    by more than half, the shareholders then own lots of useless stock.
    Offers can also be made for the shares and the right.  For example
    a raider can offer $200/share for stock and the right, but nothing
    for the stock without the right.  
    
    If the stock were trading at $100 and you had 10 shares (assume
    purchased at 100) you could make a quick $1000.  If you excercised the
    rights and sold you'd get 80 additional shares for 4000.  Thinks you'd
    make a quick $4000 if the stock price would stay at 100. That however
    becomes less likely since the market for stock without the rights would
    be pretty small.

    Unfortunately I deleted the VOGON Newsletter from my mail account this
    morning...it had a verbose discussion of the "rights" clause...  It
    also stated:
    o	every stockholder of record (perhaps only those who are employees)
    will soon receive a notice describing the topic, and explaining what
    these "rights" are.
    o	it mentioned the right is not exercisable yet, and will become so
    only when the corporation sees a "threat"
    o	it states the value $400 is NOT to be construed as an estimate of
    the value of DEC stock by the year 1999 (when the 10 year program will
    expire)
    o	it states that in the event the rights are "turned on", they will
    allow employees to purchase stock at a significantly discounted price. 
    The object of this is to dilute the stock holdings and make a takeover
    more difficult.
    
    many more issues (questions and answers) discussed
    
    tony
    

<><><><><><><><>  T h e   V O G O N   N e w s   S e r v i c e  <><><><><><><><>

 Edition : 1971               Friday 29-Dec-1989            Circulation :  7720 

VNS COMPUTER NEWS:                            [Tracy Talcott, VNS Computer Desk]
==================                            [Nashua, NH, USA                 ]


 Digital - Questions & Answers on Digital's 'Stockholder Rights' Plan
	{Livewire, 28-Dec-89}
   On Dec. 11, Digital announced that its Board of Directors has adopted a
 Stockholder Rights Plan. This move is meant to deter coercive third-party,
 take-over tactics, and to prevent an acquiror from gaining control of the
 company without offering a fair price to all the company's stockholders. The
 adoption of this plan is not in response to any known effort to acquire
 control of the company. A letter will be sent to all Digital stockholders the
 week of December 25, detailing the provisions of this Plan. Digital's Investor
 Relations and Legal Departments have provided some answers for those who may
 have additional questions:
 Q:  What's the purpose of the Stockholder Rights Plan?
 A:  The purpose of the Stockholder Rights Plan is to protect all stockholders 
     from coercive and inadequate takeover tactics aimed at Digital. The plan 
     encourages third parties interested in acquiring Digital to negotiate with 
     the Board of Directors so that a fair value may be offered to all 
     stockholders. Essentially, with the adoption of this Plan a potential 
     acquiror of Digital would be confronted with the possibility that the 
     Company's other stockholders would be able to dilute substantially the 
     acquiror's equity interest by exercising Rights to buy additional stock 
     in the Company at a substantial discount, in the event that the acquiror 
     engaged in certain self-dealing or other transactions specified in the 
     Rights Plan.

 Q:  Why did the Board of Directors decide to adopt a Stockholder Rights Plan 
     at this time?
 A:  The adoption of the Stockholder Rights Plan was not in response to any 
     known effort to acquire control of the Company. Earlier this year the 
     Massachusetts Legislature passed a law which expressly permits the 
     issuance of Rights similar to those of Digital. The Board simply acted 
     to preserve its bargaining power and flexibility, in accordance with this 
     legislation, to seek maximum value for Digital stock for all stockholders 
     in the event a coercive and inadequate takeover were to be attempted.  
     Rights Plans are not unusual and since July, 1984 over 1,100 companies, 
     many of them Fortune 500, have adopted Rights Plans.

 Q:  What's the immediate impact of the distribution of Rights on me and my 
     stock in the Company?
 A:  The Rights Plan is not intended to convey present value to any
     stockholders. Rights are not compensation of any sort or an employee 
     benefit. There is no current dilutive impact on earnings per share (EPS) 
     or personal tax consequences.

 Q:  Why was the exercise price of a Right set at $400.00?
 A:  The price of a Right was set to reflect the potential long-term price of 
     Digital's common stock during the ten-year period the Rights could be 
     outstanding. This price, however, is not a prediction of the stock's 
     future price.  

 Q:  Under what circumstances would rights be exercised?
 A:  The Rights are not presently exercisable. However, should certain events 
     occur as described in your Summary of Rights, the Rights would become 
     exercisable and entitle the holder (other than the acquiror) to purchase 
     the common stock of Digital or that of an acquiring entity at a 
     substantial discount.

 Q:  Do the Rights ever expire?  Can they be redeemed?  If so, at what price?
 A:  The Rights expire in ten years on December 21, 1999 unless redeemed before 
     then by the Board of Directors under the provisions of the Rights Plan.  
     The redemption price is $.01 per Right.

 Q:  As an employee stockholder do I have to do anything regarding stock held 
     by me, as evidenced by stock certificates or referenced in the Statement 
     of Ownership, or stock options granted to me under the restricted stock 
     option plan (RSOP)?
 A:  At present, you needn't do anything as the Rights are neither exercisable 
     nor traded separately from the common stock. Each share of common stock 
     held by you represents both the common stock and one Right. The Right 
     will detach from the common stock and become exercisable only under the 
     circumstances described in your Summary of Rights package.  Rights attach 
     to option shares only upon acquisition of the stock upon exercise of the 
     option.

   Employees who have additional questions regarding the Stockholder Rights
 Plan may dial DECtalk at DTN 223-4825 or (508) 493-4825 for more information.

The Summary of Rights statement says the Right entitles the holder to 
purchase stock having 2 times the exercise price of the Right; ie the $400 
Right enables the holder to purchase $800 of stock for the $400 Right.
Makes sense that way.
/George