Tuesday, July 18, 2006

Phillip Goldstein/Bulldog Investors Urges North Pittsburgh Systems (NPSI) to Sell, Company Rejects Suggestion

In an amended 13D filing on North Pittsburgh Systems Inc. (Nasdaq: NPSI), Phillip Goldstein/Bulldog Investors disclosed a 7.84% stake. The group said it sent a leter to the Company on June 29, 2006 urging the company to put itself up for sale. On July 14th, the Company responded by rejecting the group's proposal to engage an investment banker for the purpose of marketing the company for sale.

Letter to Board of Directors

June 29, 2006

Board of Directors

North Pittsburgh Systems Inc.

4008 Gibsonia Road

Gibsonia, PA 15044-9311


On May 11, 2006 Phillip Goldstein, Larry Goldstein and I met with Charles Thomas and Harry Brown to discuss alternatives for enhancing the stock price of North Pittsburgh Systems (NPSI). Based upon our analysis and discussions with investment bankers that specialize in the rural telecommunications industry, we believed that NPSI shares were undervalued and that that undervaluation was largely attributable to NPSI's having a balance sheet that is overly conservative. Despite the fact that NPSI?s stock price has increased since then (which may be partially due to our 13-D group filing), we believe it is still undervalued.

At the May 11th meeting, we proposed that the board consider using NPSI?s excess cash along with modest borrowings to conduct a Dutch auction self-tender offer. While consolidation in the independent telephone industry is likely inevitable given escalating competition, we nevertheless agreed not to call for an immediate sale of the company if the board agreed to conduct a Dutch auction tender offer.

An announcement this week of a lucrative transaction with respect to another independent telephone company has caused us to reconsider our position. On Tuesday Hector Communications Corporation, a Minnesota based rural telephone company, announced that it would be acquired by a consortium of three independent local exchange carriers for $36.40 per share, which is a significant premium to its pre-announcement stock price. The Hector announcement demonstrates that there is a robust market for rural access line businesses and suggests to us that the time is right for NPSI to maximize shareholder value via a sale of the entire company. Therefore, we would like the board to promptly engage an investment banker for the purpose of marketing the company for sale.

We request a written response no later than July 14, 2006. Thank you.

Very truly yours,

Andrew Dakos



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