North Pittsburgh Systems, Inc. Adopts Shareholder Rights Plan

GIBSONIA, Pa.--(BUSINESS WIRE)--Sept. 25, 2003--North Pittsburgh Systems, Inc. (Nasdaq:NPSI) today announced that its Board of Directors has adopted a Shareholder Rights Plan designed to preserve long-term values and protect shareholders against unfair tactics to acquire control of the Company.

The Company stated that the Rights Plan has not been adopted in response to any major purchase of its stock and the Company is not aware of any such major purchase. Rather, the Company has adopted the Rights Plan at this time in order to safeguard the interests of its shareholders.

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Under the Plan, each shareholder -- at the close of business on October 6, 2003 -- will receive a dividend distribution of one right for each share of common stock held. The rights expire on October 6, 2013.

Each right entitles shareholders to purchase from North Pittsburgh one one-hundredth of a share of junior participating preferred stock at an exercise price of $60. The rights will become exercisable only if a person or group acquires 15% or more of North Pittsburgh's common stock (an "Acquiring Person"), or commences a tender or exchange offer which, if consummated, would result in the person or group becoming an Acquiring Person. Prior to that time, the rights will not trade separately from the common stock.

If a person or group becomes an Acquiring Person, each right will then entitle all other shareholders to purchase, by payment of the exercise price, North Pittsburgh common stock (or a common stock equivalent) with a value of twice the exercise price. In addition, at any time after a person or group becomes an Acquiring Person and prior to the acquisition by such Acquiring Person of 50% or more of the outstanding common stock, the Board of Directors may, at its option, require each outstanding right (other than rights held by the Acquiring Person) to be exchanged for one share of common stock (or one common stock equivalent).

If a person or group becomes an Acquiring Person and North Pittsburgh is subsequently acquired in a merger or other business combination or sells more than 50% of its assets or earning power to any person, each right will entitle all other holders to purchase, by payment of the $60 exercise price, common stock of the acquiring company with a value of twice the exercise price.

North Pittsburgh may redeem the rights at $.01 per right at any time prior to the time that any person or group becomes an Acquiring Person.

Details of the Shareholder Rights Plan will be outlined in the Company's Form 8-A filing with the SEC and in a letter which will be mailed to all shareholders.

North Pittsburgh also announced that its Board of Directors has amended the Company's By-Laws to provide that shareholders may not call a special meeting of the shareholders (unless expressly provided otherwise by applicable law or the Articles of Incorporation of the Company as then in effect).

North Pittsburgh Systems, Inc. has total assets of $146 million and operates an integrated high-technology telecommunications business in Western Pennsylvania providing competitive and local exchange services, long distance, business phone systems and Internet services through its subsidiaries, North Pittsburgh Telephone Company, Penn Telecom, Inc. and Pinnatech, Inc. (Nauticom). The Company serves approximately 76,000 access lines in its franchised local exchange territory and 41,000 access line equivalents in its CLEC edge-out markets. The Company's consolidated DSL lines number in excess of 8,700.