Item 6. Indemnification of Directors and Officers.
The Pennsylvania Business Corporation Law (Business Corporation Law) provides, in general, that a corporation may indemnify any
person, including its directors, officers and employees, who was or is a party or is threatened to be made a party to any threatened, pending or completed action or proceeding, whether civil, criminal, administrative or investigative (other than
actions by or in the right of the corporation) by reason of the fact that he or she is or was a representative of, or is or was serving at the request of the corporation as a representative of another domestic or foreign corporation for profit or
not-for-profit,
partnership, joint venture, trust or other enterprise, against express (including attorneys fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with the action or proceeding if he or she acted in good faith and in a manner reasonably believed to be in, or not opposed to, the best interests of the corporation and with respect to
any criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful. The Business Corporation Law permits similar indemnification in the case of actions by or in the right of the corporation. In any case, to the extent that a
representative of the corporation has been successful on the merits or otherwise in defense of any claim, issue or matter, he or she shall be indemnified against expenses (including attorneys fees) actually and reasonably incurred by him or
her in connection therewith. The Business Corporation Law also provides that the indemnification permitted or required by the law is not exclusive of any other rights to which a person seeking indemnification may be entitled, provided that
indemnification may not be made in any case where the act is determined by a court to have constituted willful misconduct or recklessness. The Business Corporation Law also provides that a corporation may pay expenses (including attorneys
fees), incurred by a party in an action subject to indemnification in advance of the final disposition of the action upon receipt of an undertaking by the party on whose behalf such expenses are paid to repay all amounts to the corporation in the
event it is ultimately determined that the party is not entitled to be indemnified.
Article 8.1 of the Companys Restated Articles
of Incorporation (the Articles) provides that, except as prohibited by law, every director and officer of the Company is entitled to be indemnified by the Company against expenses and any liabilities paid or incurred in connection with
any actual or threatened claim, action, suit or proceeding in which such person may be involved by virtue of serving, or having had served, in the capacity of director or officer. Section 6.01 of the Companys Restated
By-laws
(the
By-laws),
provides that to the fullest extent the laws of the Commonwealth of Pennsylvania permit elimination or limitation of liability of directors,
no director of the Company will be personally liable for monetary damages as such for any action taken, or any failure to take any action, as a director. Section 6.02(a) of the
By-laws
provide that,
except as prohibited by law, every director and officer of the Company is entitled as of right to be indemnified by the Company against expenses and any liabilities paid or incurred by such person in connection with any actual or threatened claim,
action, suit or proceeding, whether civil, criminal, administrative, investigative or other, whether brought by or in the right of the Company or otherwise, in which the director of officer may be involved in any manner, as a party, witness or
otherwise, is threatened to be made so involved, by reason of the director or officer being or having been a director or officer of the Company or a subsidiary of the Company, or by reason of the fact that the director or officer is or was serving
at the request of the Company as a director, officer, employee, fiduciary or other representative of another company, partnership, joint venture, trust, employee benefit plan or other entity. The rights of indemnification do not, however, apply
where (i) any act of giving rise to a claim for indemnification for expenses or liability is determined by a court to have constituted willful misconduct or recklessness or (ii) such indemnification would be otherwise prohibited by law,
and in an action brought by a Director or officer against the Company, the director or officer is only entitled to indemnification for expenses in certain circumstances. The right to indemnification conferred by this provision includes all
expenses actually and reasonably incurred by the director or officer, including fees and expenses of counsel selected by such person, and all judgments, excise taxes, fines, penalties and amounts paid in settlement.
Section 8.2 of the Articles and Section 6.02(b) of the
By-laws
provide that each director
and officer of the Company also will be entitled as of right to have his or her expenses in defending any action paid in advance by the Company prior to final disposition of such action, provided that the Company receives a written undertaking by or
on behalf of such director or officer to repay the amount advanced if it should ultimately be determined that such person is not entitled to be indemnified. In addition, rights to partial indemnification for expenses and liability are provided
in certain circumstances under Section 6.02(f) of the
By-laws,
and Section 6.02(c) permits a director or officer to bring an action against the Company if a written claim for indemnification or
advancement of expenses is not paid by the Company in full within 30 days after the claim has been presented. The director or officer also is entitled to advancement of expenses in this type of proceeding.
Section 8.4 of the Articles and Section 6.02(d) of the
By-laws
permit the Company to
purchase and maintain insurance to protect itself and any director, officer, or other person eligible to be indemnified by the Company under the
By-laws
against any liability or expense asserted or incurred by
such person in connection with any Action, whether or not the Company would have the power to indemnify such person against such liability or expense by law or under the provisions of the
By-Laws. The
Company may also create a trust fund, grant a security interest, cause a letter of credit to be issued or use other means to ensure the payment of such sums as may become necessary to effect a directors or officers right of
indemnification under the
By-laws.
As noted in Section 8.5 of the Articles and
Section 6.02(e) of the
By-laws,
the rights to indemnification and advancement of expenses provided are not deemed to be exclusive of any other rights, whether existing or created in the future, to which a
director or officer may be entitled under any agreement or by law, or any provision in the Articles or
By-Laws
of the Company, vote of shareholders or directors or otherwise; the rights to indemnification and
advancement of expenses will continue as to each director or officer who has ceased to have the status pursuant to which such person was initially entitled to indemnification and inure to the benefit of the heirs and legal representatives of such
person. Any amendment or repeal of Article VI of the
By-laws
(relating to indemnification) or adoption of any other
By-law
or other provision of the Articles of
Incorporation of the Company then in effect, which has the effect of limiting in any way the rights to indemnification or advancement under the
By-laws,
will operate prospectively only and will not affect any
action taken, or failure to act, by a director or officer prior to such amendment, repeal,
By-law
or other provision becoming effective.