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Broadway Financial adopts stockholder rights plan

The board of directors of Los Angeles-based Broadway Financial Corp., the parent company of Broadway Federal Bank F.S.B., approved a stockholder rights plan Sept. 10 that will expire Sept. 10, 2029, unless earlier redeemed or exchanged by the company.

The company said the plan is meant to protect stockholders against any attempt to acquire control of or gain influence over the company through open market or privately negotiated purchases of the company's common stock without paying a fair price to the stockholders or through other tactics that do not give fair treatment to all stockholders.

Approved by the board of directors after consultation with the company's legal and financial advisers, the stockholder rights plan is intended to encourage potential acquirers of the company to negotiate directly with the board of directors and to help the board seek the greatest value for the stockholders.

The rights plan will not interfere with any merger, acquisition, business combination or capital financing opportunity that the board of directors deem to be in the best interest of the company's stockholders.

In connection with the plan, the company's board of directors also declared a dividend distribution of 1 preferred stock purchase right for each outstanding common share held by shareholders of record as of Sept. 23. Each right will initially entitle the holder to buy, at $3.60 per right, one-thousandth of a share of series B junior participating preferred stock of the company, which has voting and economic rights equivalent to 1 share of common share of the company.

The rights plan excludes from its 10% ownership trigger level any investor who currently owns 10% or more of the company's common shares. However, such an investor would lose exempted status upon acquisition of additional common shares or when the common shares held fall below the 10% trigger level after the date the rights plan was adopted.

The company's board of directors may redeem the rights at a redemption price of 0.1 cent per right at any time before the 10% ownership level has been reached. The cost may be paid in cash, common shares or other consideration.