-10-
Exhibit 10G
SELAS CORPORATION OF AMERICA
2001 STOCK OPTION PLAN
WHEREAS, Selas Corporation of America desires to award incentive and
nonqualified stock options to certain of its key employees;
NOW, THEREFORE, the Selas Corporation of America 2001 Stock Option
Plan is hereby adopted under the following terms and conditions:
SECTION 1 - PURPOSE AND DEFINITIONS
(a) Purpose. The Plan is intended to provide a means whereby the Company may,
through the grant of ISOs and NQSOs to Key Employees, attract and retain such
individuals and motivate them to exercise their best efforts on behalf of the
Company and of any Related Corporation.
(b) Definitions.
(1) "Board" shall mean the Board of Directors of the Company.
(2) "Cause" shall mean the Optionee has--
(A) demonstrated his or her personal dishonesty;
(B) engaged in willful misconduct;
(C) engaged in a breach of fiduciary duty involving personal profit;
(D) willfully violated any law, rule, or regulation, or final cease-and-desist
order (other than traffic violations or similar offenses); or
(E) engaged in other serious misconduct of such a nature that the continuation
of the Optionee's status as a Key Employee may reasonably be expected to affect
the Company and Related Corporations adversely.
(3) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(4) "Common Stock" shall mean the common stock of the Company, par value $1.00
per share.
(5) "Committee" shall mean the Compensation Committee of the Board which shall
consist solely of not fewer than two directors of the Company who shall be
appointed by, and serve at the pleasure of, the Board (taking into consideration
the rules under section 16(b) of the Exchange Act and the requirements of
section 162(m) of the Code).
(6) "Company" shall mean Selas Corporation of America.
(7) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
(8) "Fair Market Value" shall mean the following, arrived at by a good faith
determination of the Committee:
(A) the mean between the highest and lowest selling prices on the date of grant
as quoted by the American Stock Exchange Composite Transaction Tape, or if not
available or if the primary market for the shares shall not be the American
Stock Exchange;
(B) such other method of determining fair market value as shall be authorized by
the Code for the pricing of ISOs, or the rules or regulations thereunder, and
adopted by the Committee.
(9) "ISO" shall mean an option which, at the time such option is granted under
the Plan, qualifies as an incentive stock option within the meaning of section
422 of the Code, unless the Option Agreement states that the option will not be
treated as an ISO.
(10) "Key Employee" shall mean an officer or other key employee of the Company
or a Related Corporation.
(11) "NQSO" shall mean an option which, at the time such option is granted, does
not meet the definition of ISO, whether or not it is designated as a
nonqualified stock option in the Option Agreement.
(12) "Option Agreement" shall mean a written document evidencing the grant of an
Option, as described in Section 8.
(13) "Optionee" shall mean a Key Employee who has been granted an Option under
the Plan.
(14) "Options" shall mean ISOs and NQSOs.
(15) "Plan" shall mean the Selas Corporation of America 2001 Stock Option Plan
as set forth herein and as amended from time to time.
(16) "Related Corporation" shall mean either a "subsidiary corporation" of the
Company, as defined in section 424(f) of the Code, or the "parent corporation"
of the Company, as defined in section 424(e) of the Code.
(17) "Termination of Employment" shall mean the termination of the employment
relationship between the Key Employee and the Company and all Related
Corporations.
SECTION 2 - ADMINISTRATION
The Plan shall be administered by the Committee. Each member of the
Committee, while serving as such, shall be deemed to be acting in his or her
capacity as a director of the Company.
The Committee shall have full authority, subject to the terms of the
Plan, to select the Key Employees to be granted Options under the Plan, to grant
Options on behalf of the Company, and to set the date of grant and the other
terms of such Options in accordance with the Plan. The Committee may correct any
defect, supply any omission, and reconcile any inconsistency in the Plan and in
any Option granted hereunder in the manner and to the extent it deems desirable.
The Committee also shall have the authority to establish such rules and
regulations, not inconsistent with the provisions of the Plan, for the proper
administration of the Plan, to amend, modify, or rescind any such rules and
regulations, and to make such determinations and interpretations under, or in
connection with, the Plan, as it deems necessary or advisable. All such rules,
regulations, determinations, and interpretations shall be binding and conclusive
upon the Company, its shareholders, and all Optionees, upon their respective
legal representatives, beneficiaries, successors, and assigns, and upon all
other persons claiming under or through any of them. Except as otherwise
required by the bylaws of the Company or by applicable law, no member of the
Board or the Committee shall be liable for any action or determination made in
good faith with respect to the Plan or any Option granted under it.
SECTION 3 - ELIGIBILITY
The class of employees who shall be eligible to receive Options
under the Plan shall be the Key Employees (including any directors who also are
Key Employees) of the Company and/or of a Related Corporation. More than one
Option may be granted to an Optionee under the Plan.
SECTION 4 - STOCK
Options may be granted under the Plan to purchase up to a maximum of
1,000,000 shares of Common Stock; provided, however, that no Key Employee shall
receive Options for more than 250,000 shares of Common Stock under this Plan.
However, both limits in the preceding sentence shall be subject to adjustment as
hereinafter provided. Shares issuable under the Plan may be authorized but
unissued shares or reacquired shares, and the Company may purchase shares
required for this purpose, from time to time, if it deems such purchase to be
advisable.
If any Option granted under the Plan expires, or if any such Option
is cancelled for any reason whatsoever (including, without limitation, the
Optionee's surrender thereof), without having been exercised, the shares subject
to the unexercised portion of the Option shall continue to be available for the
granting of Options under the Plan as fully as if the shares had never been
subject to an Option. However, if an Option is cancelled, the shares of Common
Stock covered by the cancelled Option shall be counted against the maximum
number of shares specified above for which Options may be granted to a single
Key Employee.
SECTION 5 - GRANTING OF OPTIONS
From time to time until the expiration or earlier suspension or
discontinuance of the Plan, the Committee may, on behalf of the Company, grant
to Key Employees such Options as it determines are warranted; provided, however,
that grants of ISOs and NQSOs shall be separate and not in tandem. A member of
the Committee shall not participate in a vote approving the grant of an Option
to himself or herself to the extent provided under the laws of the Commonwealth
of Pennsylvania governing corporate self-dealing. In making any determination as
to whether a Key Employee shall be granted an Option, the type of Option to be
granted to a Key Employee, the number of shares to be covered by the Option, and
other terms of the Option, the Committee may take into account the duties of the
Key Employee, his or her present and potential contributions to the success of
the Company or a Related Corporation, the tax implications to the Company and
the Key Employee of any Option granted, and such other factors as the Committee
may deem relevant in accomplishing the purposes of the Plan.
SECTION 6 - ISO ANNUAL LIMIT
The aggregate Fair Market Value of the Common Stock with respect to
which ISOs are exercisable for the first time by a Key Employee during any
calendar year (counting ISOs under this Plan and under any other stock option
plan of the Company or a Related Corporation) shall not exceed $100,000. If an
Option intended as an ISO is granted to a Key Employee and the Option may not be
treated in whole or in part as an ISO pursuant to the $100,000 limitation, the
Option shall be treated as an ISO to the extent it may be so treated under the
limitation and as an NQSO as to the remainder. For purposes of determining
whether an ISO would cause the limitation to be exceeded, ISOs shall be taken
into account in the order granted. The annual limits set forth above for ISOs
shall not apply to NQSOs.
SECTION 7 - TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to the Plan shall include expressly or by
reference the following terms and conditions, as well as such other provisions
not inconsistent with the provisions of the Plan (and, for ISOs granted under
the Plan, the provisions of section 422(b) of the Code), as the Committee shall
deem desirable --
(a) Number of Shares. The Option shall state the number of shares of
Common Stock to which it pertains.
(b) Price. The Option shall state the option price which shall be
determined and fixed by the Committee in its discretion but
(1) with respect to an ISO, the option price shall not be less than the higher
of 100 percent (110 percent in the case of a more-than-10-percent shareholder,
as provided in subsection (k) below) of the Fair Market Value of the shares of
Common Stock subject to the Option on the date the ISO is granted, or the par
value thereof, and,
(2) with respect to an NQSO, the option price shall not be less than the higher
of 100 percent of the Fair Market Value of the optioned shares of Common Stock
on the date the NQSO is granted, or the par value thereof.
(c) Term
(1) ISOs. Subject to earlier termination as provided in subsections (e), (f),
(g) and (h) below and in Section 10 hereof, the term of each ISO shall be not
more than 10 years (five years in the case of a more-than-10-percent
shareholder, as discussed in subsection (k) below) from the date of grant of the
ISO.
(2) NQSOs. Subject to earlier termination as provided in subsections (e), (f),
(g) and (h) below and in Section 10 hereof, the term of each NQSO shall be not
more than ten years from the date of grant.
(d) Exercise. Options shall be exercisable in such installments and on such
dates as the Committee may specify but not earlier than one year from the date
of grant. In the case of new Options granted to an Optionee to replace options
(whether granted under the Plan or otherwise) held by the Optionee, the new
Options may be made exercisable, if so determined by the Committee, in its
discretion, at the earliest date the original Options were exercisable. The
Committee may accelerate the exercise date of any outstanding Options, in its
discretion, if it deems such acceleration to be desirable. Notwithstanding the
foregoing, Options shall be exercisable upon a change in control as defined
under the Change in Control Agreement in effect between the Company and the
Optionee.
Any exercisable Options may be exercised at any time up to the
expiration or termination of the Option. Exercisable Options may be exercised,
in whole or in part and from time to time, by giving written notice of exercise
to the Company at its principal office, specifying the number of shares to be
purchased and accompanied by payment in full of the aggregate Option exercise
price for such shares. Only full shares shall be issued under the Plan, and any
fractional share which might otherwise be issuable upon exercise of an Option
granted hereunder shall be forfeited.
The Option exercise price shall be payable in cash or its
equivalent, or if the Committee so provides in the Option Agreement, or in the
case of NQSOs if the Committee so determines at or prior to the time of
exercise, in whole or in part (1) through the transfer of shares of Common Stock
previously acquired by the Optionee; provided that (i) if such shares of Common
Stock were acquired through the exercise of an ISO and are used to pay the
option price for ISOs, such shares have been held by the Optionee for a period
of not less than the holding period described in section 422(a)(1) of the Code
on the date of exercise, or (ii) if such shares of Common Stock were acquired
through the exercise of an NQSO or ISO and are used to pay the option price of
an NQSO, such shares have been held by the Optionee for a period of more than
one year on the date of exercise, or (iii) if such shares of Common Stock were
acquired through exercise of a NQSO and are used to pay the option price of an
ISO, such shares have been held by the Optionee for more than one year; or (2)
by delivering a properly executed notice of exercise of the Option to the
Company and a broker, with irrevocable instructions to the broker promptly to
deliver to the Company the amount of sale or loan proceeds necessary to pay the
exercise price of the Option.
In the event the option price is paid, in whole or in part, with
shares of Common Stock, the portion of the option price so paid shall be equal
to the aggregate Fair Market Value (determined as of the date of exercise of the
Option, rather than the date of grant) of the Common Stock so surrendered in
payment of the option price.
(e) Termination of Employment for a Reason Other Than Retirement, Death or
Disability. If an Optionee's Termination of Employment occurs prior to the
expiration date fixed for his or her Option for any reason other than
retirement, death or disability, such Option may be exercised, to the extent of
the number of shares with respect to which the Optionee could have exercised it
on the date of such Termination of Employment, or to any greater extent
permitted by the Committee, by the Optionee at any time prior to the earliest of
(i) the expiration date specified in the Option Agreement, (ii) three months
after the date of such Termination of Employment, if the Termination was not for
Cause (unless the Option Agreement provides a different expiration date in the
case of such a Termination), and (iii) the date of such Termination of
Employment, if the Termination was for Cause (unless the Option Agreement
provides a later expiration date in the case of such a Termination).
(f) Retirement. If an Optionee retires in accordance with the retirement policy
of the Company, or with the express consent of the Board, prior to the
expiration date fixed for his or her Option, such Option may be exercised, to
the extent of the number of shares with respect to which the Optionee could have
exercised it on the date of such Termination of Employment, or to any greater
extent permitted by the Committee, by the Optionee at any time prior to the
earlier of (i) the expiration date specified in the Option Agreement or (ii)
five years after the date of such Termination of Employment. "Retirement" does
not include Termination of Employment for Cause, even if the Optionee is
otherwise eligible to retire.
(g) Disability. If an Optionee becomes disabled (within the meaning of section
22(e)(3) of the Code) prior to the expiration date fixed for his or her Option,
and the Optionee's Termination of Employment occurs as a consequence of such
disability, such Option may be exercised, to the extent of the number of shares
with respect to which the Optionee could have exercised it on the date of such
Termination of Employment, or to any greater extent permitted by the Committee,
by the Optionee at any time prior to the earlier of (i) the expiration date
specified in the Option Agreement, or (ii) one year after the date of such
Termination of Employment (unless the Option Agreement provides a different
expiration date in the case of such a Termination). In the event of the
Optionee's legal disability, such Option may be exercised by the Optionee's
legal representative.
(h) Death. If an Optionee's Termination of Employment occurs as a result of
death, prior to the expiration date fixed for his or her Option, or if the
Optionee dies following his or her Termination of Employment but prior to the
earlier of (i) the expiration date fixed for his or her Option, or (ii) the
expiration of the period determined under subsections (e), (f) and (g) above
(including any extension of such period provided in the Option Agreement), such
Option may be exercised, to the extent of the number of shares with respect to
which the Optionee could have exercised it on the date of his or her death, or
to any greater extent permitted by the Committee, by the Optionee's estate,
personal representative, or beneficiary who acquired the right to exercise such
Option by bequest or inheritance or by reason of the death of the Optionee. Such
post-death exercise may occur at any time prior to the earlier of (i) the
expiration date specified in such Option, or (ii) two years after the date of
the Optionee's death (unless the Option Agreement provides a different
expiration date in the case of death).
(i) Transferability. Except as provided in the following sentence, no Option
shall be assignable or transferable by an Optionee otherwise than by will or by
the laws of descent and distribution. The Committee may, in its discretion,
authorize all or a portion of a non-qualified stock option to be on terms which
permit transfer by the Optionee to (i) the spouse, children or grandchildren of
the Optionee ("Immediate Family Members"), (ii) a trust or trusts for the
exclusive benefit of such Immediate Family Members, or (iii) a partnership in
which such Immediate Family Members are the only partners, provided that (x)
there may be no consideration for any such transfer, (y) the Option Agreement
pursuant to which such Option is granted must be approved by the Committee and
expressly provide for transferability in a manner consistent with this Section,
and (z) subsequent transfers of the Option shall be prohibited other than by
will or the laws of descent and distribution.
A transferred Option shall continue to be subject to the same terms
and conditions as were applicable immediately prior to transfer, and the
Optionee shall remain subject to tax withholding under Section 7(m). The events
of termination of employment of Section 7 shall also continue to be applied with
respect to the original Optionee, following which the Option shall be
exercisable by the transferee only to the extent, and for the periods specified
in Sections 7(e), (f), (g) and (h).
If the Optionee is married at the time of exercise and if the
Optionee so requests at the time of exercise, the certificate or certificates
shall be registered in the name of the Optionee and the Optionee's spouse,
jointly, with right of survivorship.
(j) Rights as a Shareholder. An Optionee shall have no rights as a shareholder
with respect to any shares covered by his or her Option until the issuance of a
stock certificate to him or her for such shares.
(k) Ten-Percent Shareholder. If, after applying the attribution rules of section
424(d) of the Code, the Optionee owns more than 10 percent of the total combined
voting power of all shares of stock of the Company or of a Related Corporation
at the time an ISO is granted to him, the option price for the ISO shall be not
less than 110 percent of the Fair Market Value of the optioned shares of Common
Stock on the date the ISO is granted, and such ISO, by its terms, shall not be
exercisable after the expiration of five years from the date the ISO is granted.
The conditions set forth in this subsection shall not apply to NQSOs.
(l) Listing and Registration of Shares. Each Option and shall be subject to the
requirement that, if at any time the Committee shall determine, in its
discretion, that the listing, registration, or qualification of the Option or
the shares of Common Stock covered thereby upon any securities exchange or under
any state or federal law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or in connection
with, the granting of such Option or the exercise thereof, or that action by the
Company, its shareholders, or the Optionee should be taken in order to obtain an
exemption from any such requirement or to continue any such listing,
registration, or qualification, no such Option may be exercised, in whole or in
part, unless and until such listing, registration, qualification, consent,
approval, or action shall have been effected, obtained, or taken under
conditions acceptable to the Committee. Without limiting the generality of the
foregoing, each Optionee or his or her legal representative or beneficiary may
also be required to give satisfactory assurance that such person is an eligible
purchaser under applicable securities laws, and that the shares acquired upon
exercise of an Option are being acquired for investment and not with a view to
distribution; certificates representing such shares may be legended accordingly.
(m) Withholding and Use of Shares to Satisfy Tax Obligations. The obligation of
the Company to deliver shares of Common Stock upon the exercise of any Option
shall be subject to applicable federal, state, and local tax withholding
requirements.
If the exercise of any Option is subject to the withholding
requirements of applicable federal, state or local tax law, the Committee, in
its discretion, may permit or require the Optionee to satisfy the federal, state
and/or local withholding tax, in whole or in part, by electing to have the
Company withhold shares of Common Stock subject to the exercise (or by returning
previously acquired shares of Common Stock to the Company); provided, however,
that the Company may limit the number of shares withheld to satisfy the tax
withholding requirements to the extent necessary to avoid adverse accounting
consequences. Shares of Common Stock shall be valued, for purposes of this
subsection, at their Fair Market Value (determined as of the date the amount
attributable to the exercise of the Option is includible in income by the
Optionee under section 83 of the Code (the "Determination Date"), rather than
the date of grant). If shares of Common Stock acquired by the exercise of an ISO
are used to satisfy the withholding requirement described above, such shares of
Common Stock must have been held by the Optionee for a period of not less than
the holding period described in section 422(a)(1) of the Code as of the
Determination Date.
The Committee shall adopt such withholding rules as it deems
necessary to carry out the provisions of this subsection.
SECTION 8 - OPTION AGREEMENTS-- OTHER PROVISIONS
Options granted under the Plan shall be evidenced by Option
Agreements in such form as the Committee shall from time to time approve, and
containing such provisions not inconsistent with the provisions of the Plan
(and, for ISOs granted pursuant to the Plan, not inconsistent with section
422(b) of the Code), as the Committee shall deem advisable. The Option
Agreements shall specify whether the Option is an ISO or NQSO. Each Optionee
shall enter into, and be bound by, an Option Agreement as soon as practicable
after the grant of an Option.
SECTION 9 - ADJUSTMENT IN CASE OF CHANGES IN COMMON STOCK
The number of shares which may be issued under the Plan, and the
maximum number of shares with respect to which Options may be granted to any Key
Employee under the Plan, both as stated in Section 4 hereof, and the number of
shares issuable upon exercise of outstanding Options under the Plan (as well as
the option price per share under such outstanding Options) shall be adjusted, as
may be deemed appropriate by the Committee, to reflect any stock dividend, stock
split, spin-off, share combination, or similar change in the capitalization of
the Company; provided, however, that no such adjustment shall be made to an
outstanding ISO if such adjustment would constitute a modification under section
424(h) of the Code, unless the Optionee consents to such adjustment. In the
event any such change in capitalization cannot be reflected in a straight
mathematical adjustment of the number of shares issuable upon the exercise of
outstanding Options (and a straight mathematical adjustment of the exercise
price thereof), the Committee shall make such adjustments as are appropriate to
reflect most nearly such straight mathematical adjustment. Such adjustments
shall be made only as necessary to maintain the proportionate interest of
Optionees, and preserve, without exceeding, the value of Options.
SECTION 10 - CERTAIN CORPORATE TRANSACTIONS
In the event of a corporate transaction (such as, for example, a
merger, consolidation, acquisition of property or stock, separation,
reorganization, or liquidation) in which holders of shares are to receive cash,
securities or other property, the Committee may, in its unlimited discretion,
(a) terminate all outstanding Options if it determines that such termination is
in the best interests of the Company, upon not fewer than seven days' prior
notice to each Optionee and, if the Committee deems appropriate, to cause the
Company to pay to each Optionee an amount in cash with respect to each share to
which a terminated Option pertains equal to the difference between the Option
exercise price and the value, as determined by the Committee in its sole
discretion, of the consideration to be received by the holders of shares in
connection with such transaction, or (b) to provide for the exchange of Options
outstanding under the Plan for options to acquire securities or other property
to be delivered in connection with the transaction and in connection therewith
to make an equitable adjustment, as determined by the Committee in its sole
discretion, in the Option exercise price and number of shares or amount of
property subject to the Option and, if deemed appropriate, provide for a cash
payment to Optionees in partial consideration for such exchange.
Notwithstanding any other provision of the Plan, Options may be
granted hereunder in substitution for options held by officers and employees of
other corporations who have become officers or employees of the Company or a
subsidiary as a result of a merger, consolidation, share exchange, acquisition
of assets or similar transaction by the Company or a subsidiary. The terms,
including the option price, of the substitute Options so granted may vary from
the terms set forth in this Plan to such extent as the Committee may deem
appropriate to conform, in whole or in part, to the provisions of the options in
substitution for which they are granted.
SECTION 11 - AMENDMENT OF THE PLAN
(a) In General. The Board, pursuant to a written resolution, from time to time
may amend or suspend the Plan, and the Committee may amend any outstanding
Options in any respect whatsoever; except that the following amendments shall
require the approval of shareholders (given in the manner set forth in
subsection (b) below) --
(1) a material modification in the class of employees eligible to
participate in the Plan;
(2) except as permitted under Section 9 hereof, an increase in the maximum
number of shares of Common Stock with respect to which Options may be granted
under the Plan to any one employee or to all employees;
(3) an extension of the date, under Section 12 hereof, as of which no
Options shall be granted hereunder;
(4) a modification of the material terms of the "performance goal," within
the meaning of Treas. Reg.ss. 1.162-27(e)(4)(vi) or any successor thereto (to
the extent compliance with section 162(m) of the Code is desired); and
(5) any amendment for which shareholder approval is required under the rules of
the exchange or market on which the Common Stock is listed.
No such amendment or suspension shall alter or impair any outstanding Options or
cause the modification (within the meaning of section 424(h) of the Code) of an
ISO, without the consent of the Optionee affected thereby.
(b) Manner of Shareholder Approval. The approval of shareholders must comply
with all applicable provisions of the corporate charter and bylaws of the
Company, and applicable state law prescribing the method and degree of
shareholder approval required for the issuance of corporate stock or options. If
the applicable state law does not prescribe a method and degree of shareholder
approval in such case, the approval of shareholders must be effected by a
majority of the votes cast at a duly held shareholders' meeting at which a
quorum representing a majority of all outstanding voting stock is, either in
person or by proxy, present and voting on the Plan.
SECTION 12 - TERMINATION OF PLAN; CESSATION OF GRANTS
The Board, pursuant to written resolution, may terminate the Plan at
any time and for any reason. No Options shall be granted hereunder after
February 19, 2011, which date is within 10 years after the date the Plan was
adopted by the Board. Nothing contained in this Section, however, shall
terminate or affect the continued existence of rights created under Options
issued hereunder, and outstanding on the date the Plan is terminated, which by
their terms extend beyond such date.
SECTION 13 - SHAREHOLDER APPROVAL
This Plan shall become effective on February 20, 2001 (the date the
Plan was adopted by the Board); provided, however, that if the Plan is not
approved by the shareholders, in the manner described in Section 11(b) hereof,
within 12 months before or after the date the Plan was adopted by the Board, the
Plan and all Options granted hereunder shall be null and void and no additional
Options shall be granted hereunder.
SECTION 14 - MISCELLANEOUS
(a) Rights. Neither the adoption of the Plan nor any action of the Board or the
Committee shall be deemed to give any individual any right to be granted an
Option, or any other right hereunder, unless and until the Committee shall have
granted such individual an Option, and then his or her rights shall be only such
as are provided in the Option Agreement. Notwithstanding any provisions of the
Plan or the Option Agreement, the Company and any Related Corporation shall have
the right, in its discretion but subject to any employment contract entered into
with the Key Employee, to retire the Key Employee at any time pursuant to its
retirement rules or otherwise to terminate his or her employment at any time for
any reason whatsoever.
(b) Indemnification of Board and Committee. Without limiting any other rights of
indemnification which they may have from the Company and any Related
Corporation, the members of the Board and the members of the Committee shall be
indemnified by the Company against all costs and expenses reasonably incurred by
them in connection with any claim, action, suit, or proceeding to which they or
any of them may be a party by reason of any action taken or failure to act
under, or in connection with, the Plan, or any Option granted thereunder, and
against all amounts paid by them in settlement thereof (provided such settlement
is approved by legal counsel selected by the Company) or paid by them in
satisfaction of a judgment in any such action, suit, or proceeding, except a
judgment based upon a finding of willful misconduct or recklessness on their
part. Upon the making or institution of any such claim, action, suit, or
proceeding, the Board or Committee member shall notify the Company in writing,
giving the Company an opportunity, at its own expense, to handle and defend the
same before such Board or Committee member undertakes to handle it on his or her
own behalf. The provisions of this Section shall not give members of the Board
or the Committee greater rights than they would have under the Company's by-laws
or Pennsylvania law.
(c) Application of Funds. Any cash received in payment for shares upon exercise
of an Option shall be added to the general funds of the Company. Any Common
Stock received in payment for shares upon exercise of an Option shall become
treasury stock.
(d) No Obligation to Exercise Option. The granting of an Option shall
impose no obligation upon an Optionee to exercise such Option.
(e) Governing Law. The Plan shall be governed by the applicable Code provisions
to the maximum extent possible. Otherwise, the laws of the Commonwealth of
Pennsylvania shall govern the operation of, and the rights of Optionees under,
the Plan, and Options granted thereunder.