UNITED STATES
                           SECURITIES AND EXCHANGE COMMISSION
                                 Washington, D.C.  20549
                                       FORM 10-K
      (Mark One)
      (X)          ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                             SECURITIES EXCHANGE ACT OF 1934
                       For the fiscal year ended December 31, 1996
                                           OR
      ( )       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                             SECURITIES EXCHANGE ACT OF 1934

          For the transition period from                to                

                             Commission File Number 1-5005

                              SELAS CORPORATION OF AMERICA
               (Exact name of registrant as specified in its charter)

                Pennsylvania                         23-1069060
      (State or other jurisdiction of      (IRS Employer Identification No.)
      incorporation or organization)              

             Dresher, Pennsylvania                        19025
      (Address of principal executive office)          (Zip Code)
      Registrant's telephone number, including area code (215) 646-6600
       
      Securities registered pursuant to Section 12(b) of the Act:

                    Name of each exchange on
           Title of each class                  which registered    
          Common Shares, $1 par     American Stock Exchange

      Securities registered pursuant to Section 12(g) of the Act:  None

      Indicate by check mark whether the registrant (1) has filed all reports
      required to be filed by Section 13 or 15(d) of the Securities Exchange
      Act of 1934 during the preceding 12 months (or for such shorter periods
      that the registrant was required to file such reports), and (2) has been
      subject to such filing requirements for the past 90 days. Yes X  No  

      Indicate by check mark if disclosure of delinquent filers pursuant to
      Item 405 of Regulation S-K is not contained herein, and will not be
      contained, to the best of registrant's knowledge, in definitive proxy or
      information statements incorporated by reference in Part III of this Form
      10-K or any amendment to this Form 10-K.              (X)

      The aggregate market value, as of March 3, 1997, of the voting stock held
      by non-affiliates of the registrant was approximately $58,176,000. 
      (Aggregate market value is estimated solely for the purposes of this
      report and shall not be construed as an admission for the purposes of
      determining affiliate status.)

      At March 3, 1997, there were 3,475,050 of the Company's common shares
      outstanding (exclusive of 242,376 treasury shares).

                          DOCUMENTS INCORPORATED BY REFERENCE
      Portions of the Company's 1996 annual report to shareholders are
      incorporated by reference into Part II of this report.  Portions of the
      Company's proxy statement for the 1997 annual meeting of shareholders are
      incorporated by reference into Part III of this report.  Except for the
      parts of such documents that have been specifically incorporated herein
      by reference, such documents shall not be deemed "filed" for the
      purposes of this report.



                                        -2-


                                     PART I

      ITEM 1.  Business

      Selas Corporation of America (together with its subsidiaries, unless the
      context otherwise requires, referred to herein as the ("Company")), was
      incorporated in Pennsylvania in 1930.  The Company is a diversified firm
      with international operations and sales that engages in the design,
      development, engineering and manufacturing of a range of products.  The
      Company, headquartered in Dresher, Pennsylvania with subsidiaries in
      Minnesota, Ohio, California, France, Germany and Italy, operates directly
      or through subsidiaries in three business segments.

      Under the SelasTM name, the Company designs and manufactures specialized
      industrial heat processing systems and equipment for steel, glass and
      other manufacturers worldwide.    The Company's subsidiary, Resistance
      Technology, Inc., designs and manufactures microminiature components and
      molded plastic parts primarily for the hearing instrument manufacturing
      industry worldwide.  The Company's subsidiary, RTI Electronics, Inc.,
      formed in 1997, has extended Resistance Technology, Inc.'s microminiature
      components business through the manufacture of heat sensitive resistors
      known as thermistors.  The Company's subsidiary, Deuer Manufacturing,
      Inc., manufactures spare tire holders and lifts and related products,
      primarily based on cable winch designs, for use principally as original
      equipment by the pick-up truck and minivan segment of the automotive
      industry.  

      Financial data relating to industry segments, geographical summary of
      assets and operations, export sales and major customers are set forth in
      Note 3 of the Company's consolidated financial statements.

                                HEAT PROCESSING

      The Company specializes in the controlled application of heat to achieve
      precise process and temperature control.  The Company's principal heat
      processing equipment and systems are large custom-engineered furnaces and
      smaller standard-engineered systems, burners and combustion control
      equipment.

      CUSTOM-ENGINEERED FURNACES

      Products and Industries Served.  The Company designs specialized furnaces
      for use primarily in the steel and glass industries worldwide.  The
      furnaces are engineered to subject a customer's products to carefully
      controlled heating and cooling processes in order to improve the physical
      characteristics of those products.  Each furnace is custom-engineered by
      the Company to meet the customer's specific requirements.  The Company
      believes that the SelasTM name, its reputation for quality and its
      leadership in the design and engineering of direct gas-fired heat
      processing furnaces are important factors in its business.  The Company
      also offers gas-fired radiant tube and electric heating technology for
      heat processing furnaces.

      The Company's custom-engineered systems for the steel industry include
      continuous annealing furnaces and continuous galvanizing furnaces. 
      Continuous annealing furnaces are used to heat-treat semi-finished steel
      sheet and strip to soften it to improve the ductility of the steel,
      thereby making it suitable for use in the


                                    -3-


      ITEM 1.  Business - (Continued)

      manufacture of automobiles, appliances and other items.  Continuous
      galvanizing furnaces consist of continuous annealing furnaces plus the
      components used to apply a zinc coating to steel strip to improve its
      resistance to corrosion. 

      The Company's furnaces for the glass industry are used for the tempering
      and bending of glass.  The glass tempering process toughens glass plate
      through a controlled process of heating and cooling. Glass manufacturers
      use the Company's glass bending furnaces to heat and bend plate glass for
      automotive and architectural uses.

      From time to time, the Company also designs various other specialized
      furnaces for use by manufacturers in a variety of industries to suit
      particular process requirements.  For example, over the years the Company
      has engineered large barrel line furnaces used for the continuous heat
      treatment of steel pipe, tube or bar.

      Marketing and Competition.  The Company markets its custom-engineered
      furnaces on a global basis.  Marketing personnel are located at the
      Company's offices in Dresher, Paris, Ratingen and Milan and at the
      offices of its 50%-owned affiliate, Nippon Selas Co., Ltd., in Tokyo. 
      Over the years, the Company has installed custom-engineered systems
      throughout the world, in Europe, North America, South America, Asia,
      Australia and Africa.  In a particular period, a single contract may
      account for a large percentage of sales, but the Company is not dependent
      on any custom-engineered systems customer on an ongoing basis.

      Company engineering and marketing personnel maintain contact with
      potential major steel and glass customers to determine their needs for
      new furnaces, typically for expansion or new technology.  The Company's
      furnaces have long useful lives, and replacement business is not a major
      factor in sales of custom-engineered systems.  

      The Company also markets its products and services through agents and
      licensees located in various parts of the world.  Typically, the
      Company's license agreements provide that the licensee will act as the
      Company's sales agent in a particular territory, is granted a license to
      utilize the Company's heat processing technology in that territory, and
      is granted the right to utilize technical services provided by the
      Company.  In exchange, the Company receives certain fees when the
      licensee sells the Company's products or services in the territory.

      Over the years, Japanese steel producers have aligned themselves in semi-
      exclusive relationships with furnace manufacturers.  For a number of
      years, the Company has licensed direct fired furnace technology to NKK
      Corporation, the second largest steel producer in Japan.

      Furnaces for continuous galvanizing and annealing lines generally utilize
      either direct fired or radiant tube technology.  The Company is the
      market leader for furnaces based on direct fired technology,




                                        -4-


      ITEM 1.  Business - (Continued)

      and also sells furnaces of the radiant tube design utilized primarily
      by   its competitors.  Some of the Company's competitors are larger and
      have greater financial resources. In recent years, the Company has faced
      increased competition from competitors supplying smaller, less
      sophisticated steel lines.  These competitors do not generally offer
      custom engineering on a par with the Company, but have been willing to
      offer a more standarized and less sophisticated furnace for a lower
      price.

      Operations.  The Company's custom-engineered furnace business is
      conducted principally by its wholly-owned subsidiaries, Selas S.A.
      (Paris), Selas Waermetechnik GmbH (Ratingen) and Selas Italiana, S.r.L.
      (Milan).  These subsidiaries currently employ approximately 92 persons,
      of whom 16 are administrative personnel and 76 are sales, engineering and
      operations personnel.  A small number of engineering and marketing
      management personnel located at the Company's Dresher, Pennsylvania
      headquarters facility are also involved from time to time in the custom-
      engineered furnace business.

      On large-scale projects, such as a continuous steel strip annealing or
      galvanizing line, the customer frequently contracts for the entire line
      on a turnkey basis with an engineering and construction firm specializing
      in line terminal equipment, and the Company acts as a subcontractor for
      the design, engineering, supply of material and installation of the
      furnace portion of the line, or, alternatively, as a subcontractor only
      for design and engineering.  When the Company provides only design and
      engineering services, the prime contractor handles the fabrication and
      erection of the furnace.  With the exception of certain proprietary
      parts, the Company does not manufacture the components used in such
      systems.

      The Company's custom-engineered furnace business is historically cyclical
      in nature.  


      STANDARD-ENGINEERED SYSTEMS, BURNERS AND COMBUSTION CONTROL EQUIPMENT

      Standard-Engineered Systems.  At its Dresher, Pennsylvania facility, the
      Company engineers and fabricates a variety of smaller furnaces and heat
      processing equipment.  Although these systems are based on standard
      designs, the Company often adapts or re-engineers them to meet particular
      customer needs.  These smaller systems are
      generally used by manufacturers in sophisticated applications for the
      heat treatment of finished and semi-finished parts.

      The Company's standard-engineered systems include atmosphere-
      controlled furnaces for heat treating finished metal parts.  Its
      continuous heat treating systems include not only the hardening and
      tempering furnaces central to the system, but also the ancillary loading,
      quenching and washing equipment.




                                        -5-

      ITEM 1.  Business - (Continued)

      The Company also manufacturers large non-atmosphere-controlled batch-type
      furnaces in a variety of designs.  The Company's carbottom furnaces
      enable its customers to remove the furnace hearth, running on tracks
      similar to a railroad car, from the stationary furnace for loading and
      unloading.  With its hood furnaces, the furnace itself can be lifted from
      the stationary hearth for loading and unloading.  Carbottom and hood
      furnaces are used to heat treat large, usually semi-finished, metal parts
      of a variety of shapes and sizes.  Clamshell furnaces designed by the    
      Company open and close around steel rolls to produce a gradation of metal
      characteristics due to the differential heating of the steel roll.  The
      Company's standard batch furnaces are supplied to customers with a need
      for the precise, accurately controlled application of heat to their
      products.

      The Company's standard systems also include automatic brazing and
      soldering systems used in the assembly of radiators, air conditioner
      coils and electrical appliances.  The precise application of heat in
      these systems improves a customer's product quality and uniformity while
      reducing production costs.  The Company also produces the fuel mixing and
      monitoring systems, burners and product handling equipment necessary for
      these systems.

      The Company also produces custom designed barrel furnaces used primarily
      to heat treat long metal parts, and also produces specialized glass lehrs
      for heating glass products.

      Burners and Combustion Control Equipment.  The Company designs,
      manufactures and sells an array of original equipment and replacement
      gas-fired industrial burners for many applications.  The Company is a
      producer of burners used in fluid processing furnaces serving the
      petrochemical industry.  One type of fluid processing burner is capable
      of minimizing the emission of oxides of nitrogen as combustion products. 
      As many jurisdictions reduce the permissable level of emissions of these
      compounds, the Company believes that the demand for "low NOx" burners
      will increase.  The Company also produces burners suitable for creating a
      high temperature furnace environment desirable in steel and glass heat
      treating furnaces.  The Company's burners accommodate a wide variety of
      fuel types, environmental constraints and customer production
      requirements.

      The Company furnishes many industries with gas combustion control
      equipment sold both as component parts and as systems that have been
      custom-engineered to meet a particular customer's needs.  This equipment
      is provided with the Company's original custom-engineered and standard
      heat treating equipment, as replacement or additional components for
      existing furnaces being refurbished or upgraded, and as original
      components for heat treating equipment manufactured by 
      others.  The components of the combustion control systems include mixing
      valves capable of mixing gas and air and controlling the air/gas ratio,
      pressure and total flow of the mixed gases.  The Company also produces
      its Qual-O-RimeterTM automated monitoring and control device used in
      conjunction with its mixing valves to maintain precise, uniform heat
      release and flame shape, despite fluctuations in fuel mix and quality,
      air temperature and humidity.




                                        -6-


      ITEM 1.  Business - (Continued)

      Additional combustion control products include Flo-ScopeTM flow meters,
      which measure the rate of flow of gases, and automatic fire checks and
      automatic blowouts, which arrest flame and pressure resulting from
      backfire from the burners into the pipe line.

      Marketing and Competition.  The Company markets its standard-engineered
      systems products on a global basis through its sales and marketing
      personnel located in Dresher, and also sells these products through
      licensees and agents located in various parts of the world.  Although the
      Company competes for orders for such products with many other 
      manufacturers, some of which are larger and have greater financial
      resources, the Company believes that its reputation and its high standard
      for quality allow it to compete effectively with other manufacturers.

      Operations.  At its Dresher facility, the Company employs approximately
      76 persons, of whom 18 are executive and administrative personnel, 20 are
      sales and engineering personnel and 38 are personnel engaged in
      manufacturing.  The hourly personnel are represented by a union, and the
      current union contract expires May 1, 1998.  The Company considers its
      relations with its employees to be satisfactory.

      The principal components used in the Company's heat processing equipment
      and other products are steel, special castings (including high-alloy
      materials), electrical and electronic controls and materials handling
      equipment.  These items are available from a wide range of independent
      suppliers.

      Research and Development.  The Company conducts research and development
      activities at its Dresher facility to support its heat processing
      services and products.  The Company's research efforts are designed to
      develop new products and technology as well as to improve existing
      products and technology.  The Company also conducts research on behalf of
      particular customers in connection with customers' unusual process needs. 
      Research and development expenditures for heat processing aggregated
      $56,000, $188,000 and $194,000 in 1996, 1995 and 1994, respectively.

      It is the Company's policy to apply for domestic and foreign patents on
      those inventions and improvements which it considers significant and
      which are likely to be incorporated in its products.  It owns a number of
      United States and foreign patents.  It is licensed under patents owned by
      others and has granted licenses to others on a fee basis.  The Company
      believes that, although these patents collectively are valuable, no one
      patent or group of patents is of material importance to its business as a
      whole.




                                        -7-


      ITEM 1.  Business - (Continued)

                 MICROMINIATURE COMPONENTS AND MOLDED PLASTICS

      Resistance Technology, Inc. ("RTI"), a wholly-owned subsidiary whose
      outstanding capital stock the Company acquired on October 20, 1993,
      manufactures microminiature components and molded plastic parts primarily
      for the hearing instrument manufacturing industry worldwide.  

      Products and Industries Served.  RTI is a leading manufacturer and
      supplier of microminiature electromechanical components to hearing
      instrument manufacturers.  These components consist of volume controls,
      trimmer potentiometers and switches.  RTI also manufactures hybrid
      amplifiers and integrated circuit components ("hybrid amplifiers"), along
      with faceplates for in-the-ear and in-the-canal hearing instruments. 
      Components are offered in a variety of sizes, colors and capacities in
      order to accommodate a hearing manufacturer's individualized
      specifications.  Sales to hearing instrument manufacturers represented
      approximately 89% of RTI's 1996 annual net sales.

      Hearing instruments, which fit behind or in a person's ear to amplify and
      process sound for a hearing impaired person, generally are composed of
      four basic parts and several supplemental components for control or
      fitting purposes.  The four basic parts are microphones, amplifier     
      circuits, miniature receivers/speakers and batteries.  RTI's hybrid
      amplifiers are a type of amplifier circuit.  Supplemental components
      include volume controls, trimmer potentiometers, which shape sound
      frequencies to respond to the particular nature of a person's hearing
      loss, and switches used to turn the instrument on and off and to go from
      telephone to normal speech modes.  Faceplates and an ear shell molded to
      fit the user's ear often serve as a housing for hearing instruments.

      The potential range of applications for RTI's molded plastic parts is
      broad.  RTI has produced intravenous flow restrictors for a medical
      instruments manufacturer and cellular telephone battery sockets for a
      telecommunications equipment manufacturer.  Sales to industries other
      than the hearing instrument industry represented approximately 11% of
      RTI's 1996 annual net sales.

      RTI manufactures its components on a short lead-time basis in order to
      supply "just-in-time" delivery to its customers.  Due to the short lead-
      time, the Company does not include orders from RTI's customers in its
      published backlog figures.

      Marketing and Competition.  RTI sells its hearing instrument components
      directly to domestic hearing instrument manufacturers through an internal
      sales force.  Sales of molded plastic parts to industries other than
      hearing instrument manufacturers are made through a combination of
      independent sales representatives and internal sales force.  In recent
      years, three companies have accounted for a substantial portion of the
      U.S.



                                        -8-


      ITEM 1.  Business - (Continued)

      hearing instrument sales.  In 1996, these three customers accounted for
      approximately 27% of RTI's net sales.

      Internationally, sales representatives employed by Resistance Technology,
      GmbH ("RT, GmbH"), a German company 80% of whose capital stock is owned
      by RTI, solicit sales from European hearing instrument manufacturers and
      facilitate sales with Japanese and Australian hearing instrument markets.

      RTI believes that it is the largest supplier worldwide of microminiature
      electromechanical components to hearing instrument manufacturers and that
      its full product line and automated manufacturing process allow it to
      compete effectively with other manufacturers with respect to these
      products.

      In the market of hybrid amplifiers and molded plastic faceplates, RTI's
      primary competition is from the hearing instrument manufacturers
      themselves.  The hearing instrument manufacturers produce a substantial
      portion of their internal needs for these components.

      Operations.  RTI currently employs 267 people, of whom 28 are executive
      and administrative personnel and 239 are sales, engineering and
      operations personnel at RTI's two facilities near Minneapolis, Minnesota. 
      A small number of sales personnel employed by RT, GmbH are located in
      Munich, Germany.

      As a consumer products manufacturer, RTI is subject to claims for
      personal injuries allegedly caused by its products.  While the Company
      maintains what it believes to be adequate insurance coverage, it retains
      a self-insured deductible under its liability insurance policies.
      Research and Development.  RTI conducts research and development
      activities primarily to improve its existing products and technology. 
      RTI's research and development expenditures were $1,083,000, $1,106,000
      and  $896,000  in 1996, 1995 and 1994, respectively.  

      RTI owns a number of United States patents which cover a number of
      product designs and processes.  The Company believes that, although these
      patents collectively add some value to the Company, no one patent or
      group of patents is of material importance to its business as a whole.

      Addition of Thermistor Products.  RTI Electronics, Inc. ("RTIE") is a
      wholly owned subsidiary of the Company that is under the management
      direction of RTI.  This subsidiary was established in February, 1997,
      when the Company acquired the assets and certain liabilities of the Rodan
      Division of Ketema, Inc.  RTIE manufactures and sells thermistors and
      thermistor assemblies, which are solid




                                        -9-


      ITEM 1.  Business - (Continued)

      state devices that produce precise changes in electrical resistance
      as a function of any change in absolute body temperature.RTIE's
      Surge-Gardtm product line, an inrush current limiting device use
      primarily in computer power supplies, represent 50% of RTIE's sales.
      The balance of
      sales represent various industrial, commercial and military sales for
      thermistor and thermistor assemblies to domestic and international
      markets.

      RTIE has many competitors, both domestic and foreign, that sell various
      thermistor and thermistor assemblies and some of the competitors are
      larger and have greater financial resources.  In addition, RTIE holds a
      relatively small market share in the world-market of thermistor products.

      At its facilities in Anaheim, California, RTIE employs 72 full-time
      employees, of which 21 are salaried and 51 hourly and are not represented
      by a union.

      RTIE's principal raw materials are various metal oxide powders and silver
      paste, for which there are multiple sources of supply.

      Certain information regarding the acquisition of the RTIE business is set
      forth in note 17 to the Company's Consolidated Financial Statements.

                   TIRE HOLDERS, LIFTS AND RELATED PRODUCTS

      Deuer Manufacturing, Inc. ("Deuer"), a wholly-owned subsidiary,
      manufactures tire holders, lifts, and other related products based
      principally on cable winch designs.

      Products and Industries Served.  Deuer is a leading supplier of spare
      tire holders used on light trucks and mini-vans manufactured by the major
      domestic automotive manufacturers.  Deuer's spare tire holder holds the
      spare tire to the underbody of the vehicle by means of a steel cable
      running to the underside of the vehicle's frame.  One end of the steel
      cable is attached to a hub placed through the center of the spare tire's
      rim, and the other end is attached to a hand-operated winch mounted at an
      accessible location on the vehicle.  The spare tire holding system
      permits the spare tire to be stored in a remote location and to be easily
      removed without the need to crawl under the vehicle.  During 1996, sales
      of spare tire holders accounted for approximately 86% of Deuer's net    
      sales.

      Deuer also produces a variety of hand-operated hoist-pullers, using
      primarily a cable winch design, sold under the Mini-MuleTM brand name. 
      These products, which retail from $30 to $60, are portable hand winches
      designed for a variety of uses, such as pulling objects, rigging loads
      and installing fencing.  Deuer furnishes these hoist-pullers in a variety
      of sizes and capacities.  It also manufactures accessories for use with
      the products, including slings, clamps, blocks and gantries.




                                       -10-


      ITEM 1.  Business - (Continued)

      Deuer manufactures products on a short lead time basis in order to
      furnish "just-in-time" delivery to its automotive customers.  Because of
      the substantial variances between manufacturers' estimated and actual
      requirements, the Company does not include blanket order commitments from
      automotive manufacturers in its published backlog figures.

      Marketing and Competition.  Deuer sells its spare tire holders directly
      to domestic automotive manufacturers.  Deuer's spare tire holders are
      sold to Chrysler Corporation, General Motors, Ford Motor Company, New
      United Motor Manufacturing, Inc. and Mobile Home Manufactures.  The
      design and quality of Deuer's spare tire holders have been recognized by
      its major customers.  The Company sells its hoist-pullers through a
      network of distributors as well as directly to some large retail outlets.

      Deuer is one of several suppliers of spare tire holders to domestic mini-
      van and light truck manufacturers.  Some of Deuer's competitors are
      larger and have greater financial resources.  The Company believes that
      price and Deuer's reputation for quality and reliability of delivery are
      important factors in competition for business from the domestic
      automotive manufacturers.  A number of other domestic and foreign
      manufacturers sell hoist-pullers to the retail market, and Deuer's share
      of this market is relatively small.

      Operations.  At its Dayton facility, Deuer employs 18 executive and
      administrative personnel and approximately 141 manufacturing employees. 
      Some of the manufacturing employees are represented by a union, and the
      current union contract expires in October 1998.  Deuer considers its
      relations with its employees to be satisfactory.

      Deuer's principal raw material is coil rolled steel and metal cable which
      is widely available.  Deuer also conducts research and development
      activities which consist of the development of new products and
      technology and the modification of existing products.  Deuer's research
      and development expenditures aggregated $265,000, $171,000 and $218,000
      in 1996, 1995 and 1994, respectively.

      As a consumer products manufacturer, Deuer is subject to claims for
      personal injuries allegedly caused by its products.  While the Company
      maintains what it believes to be adequate insurance coverage, it retains
      a self-insured deductible under its liability insurance policies.

      ITEM 2.  Properties

      The Company owns the manufacturing facility in Dresher, Pennsylvania in
      which its standard-engineered systems, burners and combustion control
      equipment are produced.  The Company's headquarters are
                                       -11-

      ITEM 2.  Properties  - (Continued)

      located on the same 17 acre site.  The 136,000 square foot Dresher
      facility has more space than is currently needed for the Company's
      operations and headquarters, and the Company is seeking to lease all or a
      portion of the excess office and manufacturing space to a suitable
      tenant.  This property is subject to a mortgage.  See note 7 of the
      Company's consolidated financial statements.

      RTI leases a 47,000 sq. ft. manufacturing facility in Arden Hills,
      Minnesota from a partnership consisting of two officers of RTI, one of
      whom, Mark S. Gorder, serves on the Company's Board of Directors.  At
      this facility, RTI manufactures all of its products other than plastic
      component parts.  The lease expires in October, 2003, with two successive 
      5-year renewal options.  In addition, RTI owns, subject to a mortgage
      from a third party lender, a 20,000 sq. ft. building in Vadnais Heights,
      Minnesota at which RTI produces plastic component parts.  (See notes 7
      and 16 of the Company's consolidated financial statements.)

      RTIE leases three buildings in an industrial park in Anaheim, California. 
      These buildings represent the manufacturing and offices of the Company
      and consist of a total of 38,400 square feet.  The lease on one property,
      consisting of 12,000 square feet, is based on a month-to-month lease. 
      The other two leases expiring April 30, 1997 are covered by an agreement
      in principle for two-year extensions.

      Deuer owns its 82,000 square foot manufacturing facility located on 6.5
      acres in Dayton, Ohio, where it produces its spare tire holders and
      hoist-pullers.  The facility is furnished with a variety of steel
      fabrication equipment, including punch presses, drill presses, screw
      machines, grinders, borers, lathes and welders.  

      Deuer owns and leases an additional 11,000 square feet of excess space to
      several tenants, principally for storage and office use.  This and the
      above designated Deuer property are subject to a mortgage.  See note 7 of
      the Company's consolidated financial statements.

      Selas S.A. owns the land and building which houses its engineering, sales
      and administrative operations in Gennevilliers, France (outside of
      Paris).  The land under the building is owned by Selas S.A. and the
      property outside of the building is jointly owned by the building owners
      in the office complex.  The building has 22,000 square feet.  This
      property is subject to a mortgage.  See note 7 of the Company's
      consolidated financial statements.

      Selas Italiana S.r.L., the Company's Italian subsidiary, and Selas
      Waermetechnik GmbH, the Company's German subsidiary, lease facilities in
      Milan, Italy and Ratingen, Germany, respectively.  The Milan facilities
      are comprised of engineering, sales and administrative offices with the
      lease expiring in October 2001.  The Ratingen facilities are used for
      sales, administrative and engineering activities and assembly of small
      furnaces and furnace components,




                                      -12-

      ITEM 2.  Properties - (Continued)

      with the lease expring February, 2000.  Resistance Technology, GmbH,
      leases office space in Munich, Germany, on a year-to-year basis, for
      its sales personnel.  Management expects to be able to extend these
      leases.

      ITEM 3.  Legal Proceedings

      The Company is a defendant along with a number of other parties in
      approximately 155 lawsuits as of December 31, 1996 (112 as of December
      31, 1995) alleging that plaintiffs have or may have contracted asbestos-
      related diseases as a result of exposure to asbestos products or
      equipment containing asbestos sold by one or more named defendants.  Due
      to the noninformative nature of the complaints, the Company does not know
      whether any of the complaints state valid claims against the Company. 
      The Company is also one of approximately 500 defendants in a class action
      on behalf of approximately 2700 present or former employees of a Texas
      steel mill alleging that products supplied by the defendants created a
      poisonous atmosphere that caused unspecified physical harm.  These cases
      are being defended by one or more of the Company's  insurance carriers
      presently known to be "at risk."  Through October 1993, the legal costs
      of defense of the asbestos and steel mill cases were shared among the
      insurance carriers (92%) and the Company (8%).  The lead insurance
      carrier settled a number of the cases in 1993 and requested that the
      Company pay a portion of the settlement amount.  The Company declined to
      do so because no such payment is required by the express terms of the
      policies.  The lead carrier then purported in October 1993 to abrogate
      the arrangement under which the defense costs had been shared, and the
      Company responded by tendering all of the cases to the lead carrier and
      demanding that the lead carrier honor its obligations under its policies
      to pay 100% of the costs of defense and 100% of all settlements and
      judgments up to the policy limits.  The lead carrier has settled
      approximately 17 and 98  claims in 1996 and 1995, respectively with no
      request for the Company to participate in any settlement.   The lead
      carrier has informed the Company that the primary policy for the period
      July 1, 1972 - July 1, 1975 has been exhausted and that the lead carrier
      will no longer provide a defense under that policy.  The Company has
      requested that the lead carrier substantiate this situation.  The Company
      has contacted representatives of the Company's excess insurance carrier
      for some or all of this period.  The Company does not believe that the
      asserted exhaustion of the primary insurance coverage for this period
      will have a material adverse effect on the financial condition or results
      of operations of the Company.

      In 1995, a dispute which was submitted to arbitration, arose under a
      contract between a customer and a subsidiary of the Company. Substantial
      claims were asserted against the subsidiary Company under the terms of
      the contract.  The Company recorded revenue of approximately $1,400,000
      in 1994 and has a current billed receivable of $140,000.

      ITEM 4.  Submission of Matters to a Vote of Security Holders

                None




                                        -13-


      ITEM 4A.  Executive Officers of the Company

      The names,  ages and offices (as  of February 27, 1997)  of the Company's
      officers were as follows:

           Name                 Age            Office

      Stephen F. Ryan           61           President and Chief
                                             Executive Officer
     
      Christian Bailliart       48           Vice President and Chairman-
                                             Director Generale of Selas S.A.

      Frank J. Boyle            67           Vice President, Sales and
                                             Engineering

      James C. Deuer            68           Vice President and President
                                             of Deuer Manufacturing, Inc.

      Mark S. Gorder            50           Vice President and President of
                                             Resistance Technology, Inc.

      Robert W. Ross            48           Vice President, Chief Financial
                                             Officer, Treasurer and Secretary


      Mr. Ryan joined the Company in May 1988, as President and Chief Executive
      Officer.  Mr. Bailliart joined Selas S.A. in 1974 and in January 1, 1993
      was promoted to Vice President of the Company and Chairman-Director
      Generale of Selas S.A.  In 1989 he was promoted to Chairman-Director
      Generale of Selas S.A. from Vice President,  
      Treasurer.  Mr. Boyle joined the Company in 1961 and has held various
      management positions in research and development, applications
      engineering and sales.  He was appointed Vice President-Sales and
      Engineering in July 1988.  Mr. Deuer joined the Company as President of
      Deuer Manufacturing when it was acquired in May, 1986 and was promoted to
      Vice President of the Company and President of Deuer Manufacturing in
      December, 1990.  From 1965 to 1986 he was President of Deuer
      Manufacturing.  Mr. Gorder joined the Company October 20, 1993 when
      Resistance Technology, Inc. (RTI) was acquired.  Prior to the
      acquisition, Mr. Gorder was President and one of the founders of RTI,
      which began operations in 1977.  Mr. Gorder was promoted to Vice
      President of the Company and elected to the Board of Directors in 1996. 
      Mr. Ross joined the Company in October 1990 as Vice President -
      Treasurer, was elected to Chief Financial Officer January 1, 1994 and
      Secretary February 21, 1995.  From 1981 to 1990 he was with ALPO Pet
      Foods, a division of Grand Metropolitan PLC, as a Controller from 1981
      and as Vice President, Controller from 1988.  





                                        -14-


                                     PART II


      ITEM 5.  Market for Registrant's Common Equity and Related
               Stockholder Matters                              


      The Company's common shares are listed on the American Stock Exchange. 
      The high and low sale prices during each quarterly period during the 
      past two years were as follows:

                                     1996                     1995      
                                     Market                   Market
                                  Price Range              Price Range  
      QUARTER                   HIGH     LOW             HIGH     LOW 

      First                     11-3/4    8-13/16        10        8-5/8
      Second                    11-1/2   10-3/8           9-3/4    7-7/8
      Third                     14-3/8   10               8-3/4    7-3/8
     
      Fourth                    17-1/4   13-1/2           9-7/8    7-3/16

      At March 3, 1997, the Company had 535 shareholders of record.  

      The payment of any future dividends is subject to the discretion of the
      Board of Directors and is dependent on a number of factors, including the
      Company's capital requirements, financial condition, financial covenants
      and cash availability.

                               1996         1995         1994

      Dividends per share:
        First Quarter          $.06         $.055        $.05
        Second Quarter          .06          .055         .05
        Third Quarter           .06          .06          .05
        Fourth Quarter          .065         .06          .055


      ITEM 6. Selected Financial Data

      Certain selected  financial data is  incorporated by reference  to "Selas
      Corporation  of  America Five-Year  Summary of  Operations", page  4, and
      "Other Financial Highlights" (excluding graphs), page 5, of the Company's
      1996 annual report to shareholders.

      ITEM 7. Management's Discussion and Analysis of Financial
              Condition and Results of Operations              
           
      Management's  Discussion and  Analysis  is incorporated  by reference  to
      pages 6 through 8 of the Company's 1996 annual report to shareholders.






                                       -15-



      ITEM 8.  Financial Statements and Supplementary Data

      The Company's consolidated  balance sheets  as of December  31, 1996  and
      1995, and the  related consolidated statements of  operations, cash flows
      and shareholders'  equity for each of the three years in the period ended
      December 31, 1996, and the report of independent auditors thereon and the
      quarterly results of operations (unaudited) for the two year period ended
      December 31, 1996  are incorporated by reference to pages  9 to 31 of the
      Company's 1996 annual report to shareholders.


      ITEM 9.  Changes in and Disagreements With Accountants on
               Accounting and Financial Disclosure             

               None






                                       -16-                       
                                     PART III



      The  information called  for  by Items  10,  11, 12  and  13 (except  the
      information  concerning  executive  officers  included  in  Item  4A)  is
      incorporated  by reference  to the  Company's definitive  proxy statement
      relating to its 1997 Annual Meeting  which the Company filed on March 18,
      1997.  However,  the portions  of such proxy  statement constituting  the
      report of  the Compensation Committee of  the Board of Directors  and the
      graph showing  performance of  the Company's  common  shares and  certain
      share indices  shall not be deemed to be incorporated herein or filed for
      purposes of the Securities Exchange Act of 1934.





                                       -17-


                                     PART IV

      ITEM 14.  Exhibits, Financial Statement Schedules and Reports on
                Form 8-K                                               

                (a)   The  following  documents are  filed as  a  part of  this
      report:

      1.   Financial   Statements  -   The  Company's   consolidated  financial
           statements,  as described  below, are  incorporated by  reference to
           pages  9   through  31   of  the  Company's  1996  annual report  to
           shareholders.

           Consolidated Balance Sheet at December 31, 1996 and 1995.

           Consolidated Statements  of Operations for the  years ended December
           31, 1996, 1995 and 1994.

           Consolidated Statements of Cash  Flows for the years  ended December
           31, 1996, 1995 and 1994.

           Consolidated Statements of Shareholders'  Equity for the years ended
           December 31, 1996, 1995 and 1994.

           Notes to Consolidated Financial Statements.

           Report of Independent Auditors.

           Financial  statements for  50%  or less  owned  companies which  are
           accounted for by the equity method have been omitted because they do
           not,  considered   individually  or  in  the  aggregate,  constitute
           significant subsidiaries.

      2.   Financial Statement Schedules
                                                             Page
           Report of Independent Auditors on the 
             Consolidated Financial Statement Schedules      21

           Schedule I - Condensed Financial Information
             of Registrant (Parent only)                     22,23,24,25

           Schedule II - Valuation and Qualifying
             Accounts                                        26, 27          
           All other schedules are omitted because they are
           not applicable, or because the required information
           is included in the consolidated financial statements or notes
           thereto.

      3.   Exhibits





                                      -18-

      ITEM 14.  Exhibits, Financial Statement Schedules and Reports on
                Form 8-K - (Continued)                                 

      3A.  The Company's Articles of Incorporation as amended May 18,
           1984 and April 25, 1991.  Exhibit 3A to the Company's report on Form
           10-K for the  year ended December  31, 1984 and  Exhibit 3A1 to  the
           Company's report on Form 10-K for  the year ended December 31,  1991
           are hereby incorporated herein by reference.

      3B.  The Company's By-Laws as  amended through January 8, 1996.   Exhibit
           3B to  the Company's Report on Form 10-K for the year ended December
           31, 1995 is hereby incorporated by reference.

      4A.  Credit  Agreement dated October 20, 1993 by and among First Fidelity
           Bank, N.A., Pennsylvania, the Company, RTI and Deuer.  Exhibit 4A to
           the Company's report  on Form 10-K  for the year ended  December 31,
           1995 is hereby incorporated by reference.

      4B.  Term Note, dated October 20, 1993,  of the Company in favor of First
           Fidelity  Bank, N.A.,  Pennsylvania.   Exhibit  4B to  the Company's
           report on Form 8-K filed on November 3, 1993  is hereby incorporated
           by reference.

      4C.  Amended Credit Agreement dated July 21, 1995 which amends the Credit
           Agreement dated October 20,  1993 by and among First  Fidelity Bank,
           N.A., Pennsylvania, the Company, RTI  and Deuer.  Exhibit 4C to  the
           Company's report  on Form 10-K for the  year ended December 31, 1995
           is hereby incorporated by reference.

      4D.  Amended  and Restated Revolving Credit Note, dated July 21, 1995, of
           the  Company in  favor of  First Fidelity  Bank, N.A.  Pennsylvania.
           Exhibit 4D to the Company's  report on Form 10-K for the  year ended
           December 31, 1995 is hereby incorporated by reference.

      4E.  Amended  and Restated Revolving Credit Note, dated July 21, 1995, of
           RTI in favor of First Fidelity Bank, N.A., Pennsylvania.  Exhibit 4E
           to the Company's report on Form 10-K for the year ended December 31,
           1995 is hereby incorporated by reference.

      4F.  Amended  and Restated Revolving Credit Note, dated July 21, 1995, of
           Deuer  in favor of First Fidelity Bank, N.A., Pennsylvania.  Exhibit
           4F to the Company's report on Form 10-K for the  year ended December
           31, 1995 is hereby incorporated by reference.

      4G.  Amended Credit Agreement  dated February 21,  1997 which amends  the
           Credit  Agreement dated  October  20, 1993  and  the July  21,  1995
           amendment with First Union/First Fidelity, N.A. Pennsylvania.

      10A. Form of termination agreement between  the Company and Messrs. Ryan,
           Boyle, Deuer, Gorder and Ross. 
 
                                    19-

      ITEM 14.  Exhibits, Financial Statement Schedules and Reports on
                Form 8-K - (Continued)                                 

      10B. 1985  Stock Option Plan,  as amended.  Exhibit  10C to the Company's
           Registration Statement  on Form S-2 filed on  June 15, 1990 (No. 33-
           35443) is hereby incorporated herein by reference.

      10C. Form  of Stock Option Agreements granted under the 1985 Stock Option
           Plan.  Exhibit 10D  to the Company's Registration Statement  on Form
           S-2 filed on  June 15,  1990 (No. 33-35443)  is hereby  incorporated
           herein by reference.

      10D. Form of Amendments to Stock Option Agreements granted under the 1985
           Stock Option  Plan.    Exhibit 10D  to  the  Company's  Registration
           Statement on  Form  S-2 filed  on June  15, 1990  (No. 33-35443)  is
           hereby incorporated herein by reference.

      10E. 1994 Stock Option Plan.  Exhibit 10E to the Company's report on Form
           10-K for the year ended December  31, 1993 is hereby incorporated by
           reference.

      10F. Form  of Stock Option Agreements granted under the 1994 Stock Option
           Plan.  Exhibit 10F to the Company's report on Form 10-K for the year
           ended December 31, 1995 is hereby incorporated by reference.

      10G. Agreement  between  Selas  S.A.,   a  wholly-owned  subsidiary,  and
           Europarc Gennevilliers dated May  16, 1991 relating to the  purchase
           of  land and building to house its operations in France, accompanied
           by an English translation.  Exhibit  10G to the Company's report  on
           Form  10-K  for  the   year  ended  December  31,  1995   is  hereby
           incorporated by reference.

      10H. Supplemental Retirement Plan (amended and restated effective January
           1, 1995).  Exhibit 10I to the Company's report  on Form 10-K for the
           year ended December 31, 1995 is hereby incorporated by reference.

      10I. Management  Employment  Agreement  dated  October  20, 1993  between
           Resistance Technology, Inc. and Mark S. Gorder.  Exhibit 10J  to the
           Company's report on Form  10-K for the year ended  December 31, 1995
           is hereby incorporated by reference.

      10J. Amended  and  Restated  Office/Warehouse Lease,  between  Resistance
           Technology,  Inc. and  Arden Partners  I, L.L.P.  (of which  Mark S.
           Gorder is one of the principal owners) dated November 1, 1996.

      13.  "Selas  Corporation  of  America  Five-Year  Summary  of Operations"
           contained  on  page  4  of  the  Company's  1996  annual  report  to
           shareholders;  "Other  Financial   Highlights"  (excluding   graphs)
           contained  on  page  5  of  the  Company's  1996  annual  report  to
           shareholders;  "Management's  Discussion and  Analysis  of Financial
           Condition and Results of  Operations" contained on pages 6-8  of the
           Company's  1996 annual  report  to shareholders;  and the  Company's
           consolidated   financial   statements,  including   the   "Notes  to
           Consolidated Financial  Statements" and  the "Report  of Independent
           Auditors"  contained on  pages  9-31 of  the  Company's 1996  annual
           report to shareholders.




                                    -20-
  ITEM 14.  Exhibits, Financial Statement Schedules and Reports on
                Form 8-K - (Continued)                                 

      21.  List of significant subsidiaries of the Company.  

      23.  Consent of Independent Auditors.

      24.  Powers of Attorney.

      99.  Portions of the  Company's definitive proxy  statement for its  1997
           Annual Meeting of shareholders responsive to Items 10, 11, 12 and 13
           in Part  III hereof, which was  filed on March 18,  1997, are hereby
           incorporated herein by  reference.   However, the  portions of  such
           proxy  statement   constituting  the  report  of   the  Compensation
           Committee  of  the   Board  of  Directors  and  the   graph  showing
           performance of the Company's common shares and certain share indices
           shall not be deemed to be incorporated herein  or filed for purposes
           of the Securities Exchange Act of 1934.

           (b) Reports on  Form 8-K - There  were no reports on  Form 8-K filed
      for the three months ended December 31, 1996.




                                      -21-



         REPORT OF INDEPENDENT AUDITORS ON FINANCIAL STATEMENT SCHEDULES







      The Board of Directors and Shareholders
      Selas Corporation of America:

      Under  date of February 17, 1997, we reported on the consolidated balance
      sheets  of Selas Corporation of  America and subsidiaries  as of December
      31, 1996 and 1995, and the related consolidated statements of operations,
      shareholders' equity, and cash flows for  each of the years in the three-
      year period  ended December 31,  1996, as  contained in  the 1996  annual
      report to shareholders.  These consolidated financial statements and  our
      reports thereon are  incorporated by  reference in the  annual report  on
      Form 10-K  for the  year 1996.   In  connection with  our  audits of  the
      aforementioned  consolidated financial  statements, we  also audited  the
      related financial statement schedules as listed in the accompanying index
      (Item 14).  These financial statement schedules are the responsibility of
      the Company's management.  Our responsibility is to express an opinion on
      these financial statement schedules based on our audits.

      In our opinion,  such financial statement  schedules, when considered  in
      relation to the basic consolidated financial statements taken as a whole,
      present  fairly  in all  material  respects,  the information  set  forth
      herein.





      Philadelphia, Pennsylvania
      February 17, 1997 


                                         -22-
                                                             SCHEDULE I



                SELAS CORPORATION OF AMERICA AND SUBSIDIARY COMPANIES

                    Condensed Financial Information of Registrant
                                   Balance Sheets
                             December 31, 1996 and 1995


      ASSETS                                        1996            1995   

      Current assets:

        Cash and cash equivalents                $ 2,945,610     $ 1,378,267

        Accounts receivable (including   
          $6,059,682 and $6,428,864 due from
          subsidiaries in 1996 and 1995,
          respectively, eliminated in con-
          solidation), less allowance for doubt-
          ful accounts of $10,000 in both years   11,105,398      10,191,115

        Inventories, at cost                       3,426,726       3,170,396

        Prepaid expenses and other current 
          assets                                   1,396,967         850,367

              Total current assets                18,874,701      15,590,145


      Investment in wholly-owned subsidiaries     42,734,949      39,853,600

      Property and equipment, at cost              5,806,599       5,594,309

      Less:  accumulated depreciation             (4,485,172)     (4,315,616)

                                                   1,321,427       1,278,693
      Other assets and investment in
        unconsolidated affiliate                   1,278,987       1,527,661

               Total Assets                      $64,210,064     $58,250,099
                                                 ===========     ===========




                                         -23-

                                                             SCHEDULE I


               SELAS CORPORATION OF AMERICA AND SUBSIDIARY COMPANIES

                    Condensed Financial Information of Registrant
                                   Balance Sheets
                              December 31, 1996 and 1995


      LIABILITIES AND SHAREHOLDERS' EQUITY          1996            1995        
 
      Current liabilities:

        Notes payable and current maturities
          of long-term debt                      $ 1,938,000     $ 1,900,000

        Accounts payable (including $12,251,876
          and $8,852,000 due to subsidiaries
          in 1996 and 1995, respectively,
          eliminated in consolidation)            13,894,157       9,224,558

        Accrued expenses                           2,816,398       2,667,584

            Total current liabilities             18,648,555      13,792,142
         
      Long-term debt                               3,953,669       5,851,117

      Other postretirement benefit obligations     3,517,429       3,513,715

      Deferred income taxes                          223,877         116,767

      Pension plan obligation                        225,060         320,184

      Contingencies and commitments

      Shareholders' equity

      Common stock                                 3,702,426       3,702,426

      Retained earnings and other equity          34,320,985      31,335,685

      Less:  242,376 common shares held in 
             treasury, at cost                      (381,937)       (381,937)
                                     
           Total shareholders' equity             
                                                  37,641,474      34,656,174
           Total Liabilities and
           Shareholders' Equity                  $64,210,064     $58,250,099
                                                 ===========     ===========


          See accompanying notes to the consolidated financial statements.


                                           -24-


                                                                    SCHEDULE I


                 SELAS CORPORATION OF AMERICA AND SUBSIDIARY COMPANIES
                      CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                                STATEMENTS OF OPERATIONS
                      YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994


                                           1996          1995          1994   


      Sales,  net                      $20,792,859   $13,729,233    $ 8,889,438

      Add back:  license fees and 
        corporate charges paid by 
        subsidiaries, eliminated in 
        consolidation                    1,512,699       720,192        992,930
                                        22,305,558    14,449,425      9,882,368

      Costs and expenses:

        Cost of goods sold              16,504,848     8,289,761      5,638,307

        Selling, general and adminis-
          trative expenses               3,894,184     3,467,857      3,644,655

        Rent and depreciation              398,207       337,845        305,321

                                        20,797,239    12,095,463      9,588,283

      Income before income taxes and
        equity in net income of 
        subsidiaries                     1,508,319     2,353,962        294,085

      Provision for income taxes           560,111       927,328         20,614


      Income before equity in net 
        income of subsidiaries             948,208     1,426,634        273,471

      Equity in net income of 
        subsidiaries                     3,181,987       873,390      2,830,568



            Net income                 $ 4,130,195   $ 2,300,024    $ 3,104,039
                                       ===========   ===========    ===========

             See accompanying notes to the consolidated financial statements.



                                           -25-
                                                                     SCHEDULE I

                  SELAS CORPORATION OF AMERICA AND SUBSIDIARY COMPANIES

                     CONDENSED FINANCIAL STATEMENTS OF THE REGISTRANT
                                 STATEMENTS OF CASH FLOWS
                       YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

                                         1996           1995            1994   

      OPERATING ACTIVITIES
        Net income                   $ 4,130,195    $ 2,300,024     $ 3,104,039
        Adjustments to reconcile net 
          income to net cash provided
          by operating activities:
            Depreciation and 
              amortization               227,377        201,806         186,666
            Other adjustments         (3,507,200)      (814,239)     (2,954,973)
            Net changes in operating 
              assets and liabilities   3,665,156     (1,495,030)      2,282,576

        
        Net cash provided by operating 
          activities                   4,515,528        192,561       2,618,308

      INVESTING ACTIVITIES
        Dividend from unconsolidated 
          affiliate                       16,742           --            34,538
        Acquisition of subsidiary 
          company                           --             --         (16,601)
        Purchase of property, plant and 
          equipment                     (257,767)      (217,158)      (99,331)
        Proceeds of sale from property, 
          plant and equipment               --              325            75


        Net cash (used) by investing 
          activities                    (241,025)      (216,833)      (81,319)

      FINANCING ACTIVITIES
        Proceeds from borrowings used 
          to acquire subsidiary             --             --         1,600,000
        Proceeds from exercise of 
          stock options                     --           28,281         124,437
        Repayments of short term 
          borrowings                        --             --        (1,600,000)
        Payment of dividends            (847,712)      (795,812)      (708,085)
        Repayment of long term debt   (1,859,448)    (2,148,883)     (1,650,000)
        Net cash (used) by 
          financing activities        (2,707,160)    (2,916,414)      2,233,648
      Increase (decrease) in cash
        and cash equivalents           1,567,343     (2,940,686)        303,341
      Cash and cash equivalents, 
        beginning of year              1,378,267      4,318,953       4,015,612

      Cash and cash equivalents, end 
        of year                      $ 2,945,610    $ 1,378,267     $ 4,318,953
                                     ===========    ===========     ===========
             See accompanying notes to the consolidated financial statements.


                                             -26-
                                                                SCHEDULE II

                SELAS CORPORATION OF AMERICA AND SUBSIDIARY COMPANIES
                                                                 
                           VALUATION AND QUALIFYING ACCOUNTS
                     Years Ended December 31, 1996, 1995 and 1994

                   Column A              Column B           Column C      
                                                           Additions      

                                         Balance at   Charged to
                                         Beginning    Costs and
                Classification           of Period    Expenses       Other  

      Year ended December 31, 1996:
        Reserve deducted in the balance
          sheet from the asset to which 
          they apply:
            Allowance for doubtful 
            accounts                 $  792,249   $  196,952   $  (35,428) (a)
                                      ==========   ==========   ==========
            Deferred tax asset valuation 
            allowance                $2,685,305   $ (285,681)  $  (84,187) (a)
                                      ==========   ==========   ==========
        Reserve not shown elsewhere:
          Reserve for estimated future
            costs of service and 
            guarantees               $  844,787   $1,000,677   $  (19,130) (a)
                                      ==========   ==========   ==========

      Year ended December 31, 1995:
        Reserve deducted in the balance
          sheet from the asset to which 
          it applies:
            Allowance for doubtful 
            accounts                 $  513,045   $  284,475   $   36,136  (a) 
                                      ==========   ==========   ==========
            Deferred tax asset valuation
            allowance                $2,203,780   $  412,646   $   68,879  (a)
                                      ==========   ==========   ==========
        Reserve not shown elsewhere:
          Reserve for estimated future
            costs of service and
            guarantees               $1,156,296   $  119,903   $   58,134  (a) 
                                      ==========   ==========   ==========
      Year ended December 31, 1994:
        Reserves deducted in the balance
          sheet from the asset to which 
          they apply:
            Allowance for doubtful 
            accounts                 $  468,308   $   25,879   $   38,639  (a) 
                                      ==========   ==========   ==========
            Deferred tax asset valuation 
            allowance                $2,102,682   $   (2,933)  $  104,031  (a) 
                                      ==========  ==========   ==========  

        Reserve not shown elsewhere:
          Reserve for estimated future 
            costs of service and
            guarantees               $  774,652   $  529,680   $   44,821  (a)
                                         ==========   ==========   ==========
                                                                        
      (Continued)


                                           -27-
                                                                 SCHEDULE II 

                  SELAS CORPORATION OF AMERICA AND SUBSIDIARY COMPANIES
                             VALUATION AND QUALIFYING ACCOUNTS
                       Years Ended December 31, 1996, 1995 and 1994


                   Column A                         Column D        Column E

                                                                    Balance at
                                                                      End of
                Classification                      Deductions        Period  

      Year ended December 31, 1996:    Reserve deducted in the balance sheet
          from the asset to which they apply:
            Allowance for doubtful accounts         $  166,652 (b)  $  787,121
                                                    ==========      ==========
            Deferred tax asset valuation allowance        --        $2,315,437
                                                    ==========      ==========
        Reserve not shown elsewhere:
          Reserve for estimated future costs
            of service and guarantees               $  100,644 (c)  $1,725,690
                                                    ==========      ==========

      Year ended December 31, 1995:
        Reserve deducted in the balance sheet
          from the asset to which it applies:
            Allowance for doubtful accounts         $   41,407 (b)  $  792,249
                                                    ==========      ==========
            Deferred tax asset valuation allowance  $     --        $2,685,305
                                                    ==========      ==========

        Reserve not shown elsewhere:
          Reserve for estimated future costs
            of service and guarantees               $  489,546 (c)  $  844,787
                                                    ==========      ==========
      Year ended December 31, 1994:
        Reserves deducted in the balance sheet
          from the asset to which they apply:
            Allowance for doubtful accounts         $   19,781 (b)  $  513,045
                                                    ==========      ==========
            Deferred tax asset valuation allowance        --        $2,203,780
                                                     ==========     ==========
        Reserve not shown elsewhere:
          Reserve for estimated future costs of
            service and guarantees                  $  192,857 (c)  $1,156,296
                                                    ==========      ==========




      (a)  Represents difference between translation rates of foreign currency
      at 
           beginning and end of year and average rate during year.
      (b)  Uncollectible accounts charged off.
      (c)  "After job" costs charged to reserve.




                                   SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities
      Exchange Act of 1934, the Registrant has duly caused this report to be
      signed on its behalf by the undersigned, thereunto duly authorized.

                                           SELAS CORPORATION OF AMERICA
                                                   (Registrant)

                                           By:   /s/Robert W. Ross       
                                                Robert W. Ross
                                                 Vice President and
                                                  Chief Financial Officer
      Dated:  March 18, 1997

      Pursuant to the requirements of the Securities Exchange Act of 1934, this
      report has been signed below by the following persons (including a
      majority of members of the Board of Directors) on behalf of the
      registrant and in the capacities and on the dates indicated.


      *By:                                  /s/ Stephen F. Ryan            
      Stephen F. Ryan                      Stephen F. Ryan
      Attorney-In-Fact                     President, Chief Executive
      March 18, 1997                       Officer and Director
                                           March 18, 1997

                   *                        /s/ Robert W. Ross             
      John H. Austin, Jr.                  Robert W. Ross 
      Director                             Vice President, Principal 
      March 18, 1997                       Financial and Accounting Officer
                                           March 18, 1997

                   *              
      Frederick L. Bissinger
      Director
      March 18, 1997


                   *              
      Roy C. Carriker
      Director
      March 18, 1997


                   *              
      Francis J. Dunleavy
      Director
      March 18, 1997 


                   *              
      Mark S. Gorder
      Director
      March 18, 1997


                   *              
      Ralph R. Whitney, Jr.
      Director
      March 18, 1997





                                       EXHIBIT INDEX


      EXHIBITS:

      4G.   Amended Credit Agreement dated February 21, 1997 which amends the
            Credit Agreement datd October 20, 1993 and the July 21, 1995
            amendment with First Union/First Fidelity, N.A. Pennsylvania.

      10J.  Amended and Restated Office/Warehouse Lease between Resistance
            Technology, Inc. and Arden Partners, Inc., L.L.P. (of which Mark S.
            Gorder is one of the principal owners) dated November, 1996.

      13.   "Selas Corporation of America Five-Year Summary of Operations"
            contained on page 4 of the Company's 1995 annual report to
            shareholders; "Other Financial Highlights" (excluding graphs)
            contained on page 5 of the company's 1995 annual report to
            shareholders; "Management's Discussion and Analysis of Financial
            Condition and Results of Operations" contained on pages 6-8 of the
            Company's 1995 annual report to shareholders; and the Company's
            consolidated financial statements, including the "Notes to
            Consolidated Financial Statements" and the "Report of Independent
            Auditors" contained on pages 9-30 of the Company's 1995 annual
            report to shareholders.

      21.   List of significant subsidiaries of the Company.

      23.   Consent of Independent Auditors.

      24.   Powers of Attorney.




      EXHIBIT 4G

                         AMENDMENT TO CREDIT AGREEMENT


            THIS AMENDMENT TO CREDIT AGREEMENT (together with all amendments
      and modifications hereto, this "AGREEMENT"), dated as of February 20,
      1997, is by and among FIRST UNION NATIONAL BANK, a national banking
      association formerly known as First Fidelity Bank, N.A., with an office
      at Broad and Walnut Streets, Philadelphia, Pennsylvania 19109 (the
      "BANK"), SELAS CORPORATION OF AMERICA, a Pennsylvania business
      corporation with offices at 2034 Limekiln Pike, Dresher, Pennsylvania
      19025 ("SELAS"), DEUER MANUFACTURING, INC., an Ohio business corporation
      with offices located at 2985 Springboro West, Dayton, OH 45439 ("DEUER"),
      and RESISTANCE TECHNOLOGY, INC., a Minnesota business corporation with
      offices located at 1260 Red Fox Road, Arden Hills, MN 55112 ("RTI," and
      together with Selas and Deuer, the "BORROWERS").

                               BACKGROUND


            The Bank and the Borrowers entered into that certain Credit
      Agreement, dated as of October 20, 1993 as amended by, inter alia, an
      Amendment dated as of July 21, 1995, a letter agreement dated June 28,
      1996, and an Amendment dated as of October 22, 1996 (as so amended, the
      "CREDIT AGREEMENT"), pursuant to which the Bank agreed to make available: 
      (1) to Selas, among other things, term loans of up to $12,500,000 and a
      revolving credit facility in a maximum principal amount of $2,000,000;
      (2) to Deuer, a revolving credit facility in a maximum principal amount
      of $500,000; and (3) to RTI, a revolving credit facility in a maximum
      principal amount of $1,000,000 (collectively, the "EXISTING LOANS").

                 In connection with the Credit Agreement and in order to
            evidence the Existing Loans:  

                 (1) Selas executed and delivered to the Bank (a) a Term Note A
      dated as of October 20, 1993 in the principal amount of $11,550,000, (b)
      a Term Note B dated as of October 20, 1993 in the principal amount of
      $950,000, and (c) a Revolving Credit Note dated as of October 20, 1993 in
      the principal amount of $2,000,000, which was amended and restated by an
      Amended and Restated Revolving Credit Note dated as of July 21, 1995 in
      like principal amount (collectively, the "SELAS NOTES"); 

                 (2) Deuer executed and delivered to the Bank a Revolving
      Credit Note dated as of October 20, 1993 in the principal amount of
      $500,000, which was amended and restated by an Amended and Restated
      Revolving Credit Note dated as of July 21, 1995 in like principal amount
      (the "DEUER NOTE"); and (3) RTI executed and delivered to the Bank
      a Revolving Credit  Note of RTI dated as of October 20, 1993 in
      the principal




      amount of $1,000,000, which was amended and restated by an Amended and
      Restated Revolving Credit Note of RTI dated as of July 21, 1995 in like
      principal amount (the "RTI NOTE", and together with the Selas Notes and
      the Deuer Note, the "EXISTING NOTES").

                 The Credit Agreement, the Existing Notes, and all of the
            documents, instruments and agreements executed and delivered in
            connection therewith, together with all amendments and
            modifications thereto, shall be referred to hereinafter as the
            "LOAN DOCUMENTS."

                 The Bank and the Borrowers, pursuant to the terms hereof, wish
            to amend certain of the terms of the Loan Documents.

            NOW, THEREFORE, incorporating the foregoing Background herein by
      reference and for other good and valuable consideration, the receipt and
      legal sufficiency of which is hereby acknowledged, and intending to be
      legally bound hereby, the parties agree as follows:

                 DEFINED TERMS.  Terms used herein which are capitalized but
      not defined herein shall have the meanings ascribed to such terms in the
      Credit Agreement.

                 AMENDMENTS.  

                      Section 1.1 of the Credit Agreement is hereby amended by
                 adding the following defined terms which shall appear in
                 alphabetical order:

                      "RTI Electronics" means RTI Electronics, Inc., a Delaware
                 corporation which is a wholly owned subsidiary of Selas.

                      "Swap Agreements" shall mean any and all swap agreements
                 (as defined in 11 U.S.C. section 101) now or hereafter entered
                 into between the Borrowers (or any of them) and the Bank or
                 any Affiliate thereof.

                      "Term Loan C" means the term loan made pursuant to
                 Section 2.1(e) of this Agreement.

                      "Term Note C" means the promissory note of Selas dated
                 February 21, 1997 payable to the order of the Bank in the
                 principal amount of $3,500,000, in the form of Exhibit A
                 attached to the Amendment to Credit Agreement dated as of
                 February 20, 1997, to be delivered to the Bank by Selas
                 pursuant to Section 4(b) of such Amendment, as such Note may
                 be amended, modified, extended or restated from time to time.




                      Section 1.1 of the Credit Agreement is hereby amended by
                 amending and restating the following defined terms as follows:
                      "Bank" means First Union National Bank, a national
                 banking association formerly known as First Fidelity Bank,
                 N.A.

                      "Borrower" means individually, (a) Selas, as to the Term
                 Loan, Term Loan C and the Selas Revolving Credit Facility;
                 (b) Deuer, as to the Deuer Revolving Credit Facility; and
                 (c) RTI, as to the RTI Revolving Credit Facility.

                      "Domestic Group" means Selas, Deuer, RTI, RTIE and other
                 subsidiaries of RTI, and RTI Electronics.

                      "Guaranty Agreement" means individually, and "Guaranty
                 Agreements" means collectively, the Guaranty Agreements to be
                 delivered to the Bank by Selas, Deuer, RTI and RTIE pursuant
                 to Section 5.1(e) of this Agreement and by RTI Electronics
                 pursuant to Section 5(h) of the Amendment to Credit Agreement
                 dated as of February 20, 1997, as each may be amended,
                 modified or restated from time to time.

                      "Guarantor" means (a) each of Deuer, RTI, RTIE and RTI
                 Electronics, as to the Term Loan and Term Loan C, and (b)
                 Selas, as to the Deuer Revolving Credit Facility and the RTI
                 Revolving Credit Facility.

                      "Loan" means the outstanding principal balance of
                 Indebtedness advanced under Section 2 of this Agreement
                 (including Term Loan C and Advances and Reimbursement
                 Obligations under Section 3 of this Agreement), together with
                 interest accrued thereon and fees and expenses incurred in
                 connection therewith.

                      "Notes" means collectively the Revolving Credit Notes,
                 the Term Notes and Term Note C.

                      "Security Agreement" means individually, and "Security
                 Agreements" means collectively, the security agreements to be
                 delivered to the Bank by Selas, Deuer, RTI and RTIE pursuant
                 to Section 5.1(c) of this Agreement and by RTI Electronics
                 pursuant to Section 5(i) of the Amendment to Credit Agreement
                 dated as of February 20, 1997, as each may be amended,
                 modified or restated from time to time.

                      Section 2.1 of the Credit Agreement is hereby amended by
                 adding the following new subsection (e) after  subsection (d):

                      (e)  Term Loan C.  Pursuant to the Amendment to Credit
                 Agreement dated as of February 20, 1997, the Bank will make a
                 term loan to Selas in the principal amount of $3,500,000
                 ("Term Loan C").  Any amounts of Term Loan C that are repaid
                 or prepaid may not be reborrowed hereunder.


                      Section 2.2 of the Credit Agreement is hereby amended by
                 adding the following new subsection (c) after  subsection (b):

                      (c)  Term Loan C.  The indebtedness of Selas under Term
                 Loan C shall be evidenced by Term Note C.

                      Section 2.3 of the Credit Agreement is hereby amended by
                 adding the following new subsection (e) after  subsection (d):

                      (e)  Term Loan C.  Funds advanced under Term Loan C shall
                 be used by Selas solely to finance a portion of its
                 acquisition (through its wholly owned subsidiary RTI
                 Electronics) of the assets of the Rodan Division of Ketema,
                 Inc.

                      Section 2.4 of the Credit Agreement is hereby amended by
                 adding the following new subsection (c) after  subsection
                 (b): (c)  Term Loan C.

                           (i)  Scheduled Payments.  The Term Loan shall be
                 payable in fifty-nine (59) consecutive monthly principal
                 installments of $58,333.33 each, commencing March 1, 1997 and
                 continuing on the first day of each month thereafter, with the
                 final, sixtieth (60th) installment of the remaining principal
                 balance of Term Loan C, together with all interest accrued
                 thereon and all fees and costs payable in connection
                 therewith, due and payable on February 1, 2002.  

                           (ii)  Mandatory Prepayments.  On or before May 15 of
                 each fiscal year, Selas shall pay to the Bank an amount equal
                 to forty percent (40%) of Excess Earnings of the Domestic
                 Group for the previous fiscal year, first to be applied to the
                 prepayment of the Term Loan as provided in Section 2.4(a)(ii)
                 hereof, and then as a mandatory prepayment of Term Loan C, to
                 be applied to scheduled principal payment installments of Term
                 Loan C, in the inverse order of their maturities.  The Chief
                 Financial Officer of Selas shall provide to the Bank on or
                 before March 31 of each year a certification of the
                 calculation of the amount of Excess Earnings for the previous
                 fiscal year.

                           (iii)  Optional Prepayments.  Selas shall have the
                 right to prepay Term Loan C in whole at any time or in part
                 from time to time; provided, however, that (i) any such
                 prepayment shall be applied to the outstanding principal of
                 Term Loan C in the inverse order of maturity of the
                 installments thereof, and (ii) any such prepayment shall be
                 accompanied by any additional payment required to compensate
                 the Bank for any loss, cost or expense incurred as a result of
                 such prepayment as provided in Section 2.13(e) hereof and any
                 amount due in connection with the termination of any Swap
                 Agreement entered into for purposes of hedging Term Loan C.


                           (iv)  Swap Agreements.  Any prepayment of the Loans
                 shall not release the obligations of any Borrower under any
                 Swap Agreement.

                      Section 2.5 of the Credit Agreement is hereby amended by
                 adding the following new subsection (c) after  subsection (b):

                      (c)  Term Loan C.  Prior to an Event of Default, interest
                 on Term Loan C shall accrue at the Eurodollar Rate plus the
                 Applicable Margin and shall be payable on the last day of the
                 applicable Interest Period and on the maturity of Term Loan C
                 .  Interest will be calculated on the basis of a 360-day year
                 and the actual number of days elapsed.  For purposes of this
                 Agreement (including without limitation Sections 2.13
                 thereof), Term Loan C shall be treated as a Eurodollar Loan;
                 provided, however, that (i) the Interest Period for Term Loan
                 C shall be limited to one, two or three month periods, and
                 (ii) Selas shall have no right to convert Term Loan C into a
                 Base Rate Loan (but Term Loan C may be converted by the Bank
                 to a Base Rate Loan under the circumstances set forth in
                 Section 2.13 hereof).  If Selas shall fail to timely select
                 the duration of the Interest Period for Term Loan C, Selas
                 shall be deemed to have selected a one month Interest Period.

      and the references in the former subsection (c) (which shall be
      redesignated as subsection (d)) to "subsections (a) and (b)" and
      "Sections 2.5(a) and (b)" shall be amended to read "subsections (a), (b)
      and (c)" and "Sections 2.5(a), (b) and (c)", respectively.
      Section 6 of the Credit Agreement is hereby amended by
                 adding "and RTI Electronics" after "RTIE" in the lead-in
                 paragraph on page 39 of the Credit Agreement.

                      Section 7 of the Credit Agreement is hereby amended by
                 adding "or RTI Electronics" after "RTIE" in the lead-in
                 paragraph on page 45 of the Credit Agreement.

                      Section 7.3(a) of the Credit Agreement is hereby amended
                 by adding "or RTI Electronics" after "RTIE (including without
                 limitation, to Foreign Subsidiaries)."

                      Sections 8 and 9 of the Credit Agreement are hereby
                 amended by adding "or RTI Electronics" after "RTIE" wherever
                 it appears in such Sections.

                 CONSENT TO INVESTMENT IN RTI ELECTRONICS.  The Bank hereby
      consents to Selas' investment in RTI Electronics for the purpose of
      funding RTI Electronics' acquisition of the Rodan Division of Ketema,
      Inc. on the terms previously disclosed to the Bank.

                 FACILITY FEE.  On the date of execution of this Agreement,
            Selas shall pay to the Bank a nonrefundable facility fee (the
            "FACILITY FEE") equal to one-half percent (0.5%) of the principal
            amount of Term Loan C, which was fully earned upon Selas'
            acceptance of the Bank's commitment letter for Term Loan C.


                 CONDITIONS PRECEDENT.  The effectiveness of this Agreement and
      the Bank's obligations hereunder are conditioned upon the satisfaction of
      the following conditions precedent:

                      The Borrowers shall have delivered to the Bank this
                 Agreement, duly executed by each of the Borrowers.

                      Selas shall have delivered to the Bank Term Note C, dated
                 as of the date hereof, duly executed by Selas;

                      Selas shall have delivered to the Bank an Amended and
                 Restated Pledge Agreement, dated as of the date hereof, duly
                 executed by Selas, together with the stock certificates for
                 all of the issued and outstanding capital stock of RTI
                 Electronics, Inc., a Delaware corporation ("RTI ELECTRONICS"),
                 and stock powers executed by Selas in blank;

                      Selas shall have delivered to the Bank a Second Amendment
                 to First Mortgage and Security Agreement, dated as of the date
                 hereof, duly executed by Selas;

                      Selas shall have delivered to the Bank a title report in
                 form and substance to the Bank with respect to the premises
                 covered by the First Mortgage and Security Agreement of Selas;

                      Deuer shall have delivered to the Bank a Second Amendment
                 to Open-End First Mortgage and Security Agreement, dated as of
                 the date hereof, duly executed by Deuer;

                      Deuer shall have delivered to the Bank a title report in
                 form and substance to the Bank with respect to the premises
                 covered by the Open-End First Mortgage and Security Agreement
                 of Deuer;

                      RTI Electronics shall have delivered to the Bank a
                 Guaranty Agreement, dated as of the date hereof, duly executed
                 by RTI Electronics; RTI Electronics shall have delivered to
                 the Bank a Security Agreement, dated as of the date hereof,
                 duly executed
                 by RTI Electronics, together with such financing statements,
                 landlords waivers and other waivers or documents as may be
                 required by the Bank to perfect the security interest in favor
                 of the Bank thereunder;

                      Selas shall have delivered to the Bank copies of the
                 purchase agreement and all related documents for its
                 acquisition of the Rodan Division of Ketema, Inc.;

                      The Bank shall have received an opinion of counsel from
                 Drinker Biddle & Reath, counsel for the Borrowers, in form and
                 substance satisfactory to the Bank and its counsel;

                      Selas shall have paid the Facility Fee to the Bank;


                      All proceedings required to be taken by the Borrowers in
                 connection with the transactions contemplated by this
                 Agreement shall be satisfactory in form and substance to the
                 Bank and its counsel, and the Bank shall have received all
                 such counterpart originals or certified or other copies of
                 such documents as the Bank may reasonably request;

                      The Borrowers shall have executed and delivered to the
                 Bank such other documents, instruments and agreements as the
                 Bank may reasonably request.

      The documents delivered by the Borrowers or any of them pursuant to
      Section 4(a), (b), (c), (d), (f), (h) and (i) are referred to herein as
      the "AMENDMENT DOCUMENTS".

                 REPRESENTATIONS, WARRANTIES AND COVENANTS.  In order to induce
      the Bank to enter into this Agreement, the Borrowers hereby represent,
      warrant and covenant to the Bank as follows:

                      The representations and warranties contained in the Loan
                 Documents are true and correct on and as of the date of this
                 Agreement and, after giving effect hereto, no Event of Default
                 (other than those that have been waived in writing by the
                 Bank) will be in existence or will occur as a result of giving
                 effect hereto.

                      The execution, delivery and performance of this Agreement
                 will not violate any provision of any law or regulation or of
                 any writ or decree of any court or governmental
                 instrumentality, or any of the Borrowers' certificate or
                 articles of incorporation, by-laws or other similar
                 organizational documents.

                      Each of the Borrowers has the power to execute, deliver
                 and perform this Agreement and each of the documents,
                 instruments and agreements to be executed and/or delivered in
                 connection herewith and has taken all necessary action to
                 authorize the execution, delivery and performance of this
                 Agreement and each of the documents, instruments and
                 agreements executed and/or delivered in connection herewith
                 and the performance of the Credit Agreement as amended hereby.

                      The execution, delivery and performance of this Agreement
                 and each of the documents, instruments and agreements to be
                 executed and/or delivered in connection herewith does not
                 require the consent of any other party or the consent,
                 license, approval or authorization of, or registration or
                 declaration with, any governmental body, authority, bureau or
                 agency and the Loan Documents, this Agreement and each of the
                 documents, instruments and agreements executed and/or
                 delivered in connection herewith constitute legal, valid and
                 binding obligations of each of the Borrowers, enforceable in
                 accordance with their respective terms, subject to bankruptcy,
                 insolvency, reorganization and other laws of general
                 applicability relating to or affecting creditors' rights and
                 except as enforcement may be subject to general equitable
                 principles.


                      Selas and RTI Electronics will use their best efforts to
                 obtain a landlord's waiver, in form and substance satisfactory
                 to the Bank, from the owner of the premises in Anaheim,
                 California, which are leased by RTI Electronics.

                 REAFFIRMATION BY BORROWERS.  Except as amended hereby, all of
      the terms, covenants and conditions of the Credit Agreement and each of
      the other Loan Documents (INCLUDING, BUT NOT LIMITED TO, PROVISIONS
      RELATING TO ANY AUTHORITY GRANTED TO THE BANK TO CONFESS JUDGMENT AGAINST
      THE BORROWERS, OR ANY OF THEM, AND ANY WAIVER OF THE RIGHT TO TRIAL BY
      JURY) are ratified, reaffirmed and confirmed and shall continue in full
      force and effect as therein written and are not intended to be reenacted
      as of the above date, but rather to be effective as of the original date
      of such documents.  Each of the Borrowers hereby reaffirms and ratifies
      all of the terms, covenants, and conditions contained in each of their
      respective guarantees and confirms that such guarantees are binding and
      enforceable against the parties thereto as if such guarantees had been
      executed as of the date hereof.

                 REAFFIRMATION BY SELAS AS GUARANTOR AND DEBTOR. 

                      Selas hereby acknowledges that the term "Obligations," as
                 defined in its Security Agreement, includes all of Selas'
                 obligations under the Loan Documents as amended by the
                 Amendment Documents (including without limitation Selas'
                 obligations under Term Note C), and such Obligations are and
                 shall continue to be secured by the Collateral.

                      Selas hereby ratifies, affirms, reaffirms and confirms in
                 all respects its Guaranty and Security Agreement, including
                 without limitation all terms, covenants, conditions,
                 representations and warranties in such agreements, and hereby
                 certifies that there exists no defenses, offsets or
                 counterclaims thereto as of the date hereof.

                      Selas hereby acknowledges the continued existence,
                 validity and enforceability of its Guaranty and Security
                 Agreement, and agrees that the terms, covenants, conditions,
                 representations and warranties of such agreements are binding
                 upon it (including, but not limited to, the right of the Bank
                 to enter judgment by confession against Selas and the waiver
                 of the right to trial by jury, if any).

                 AMENDMENT TO DEUER GUARANTY AND 
                 REAFFIRMATION BY DEUER AS GUARANTOR AND DEBTOR. 

                      Deuer hereby agrees that Section 2(a) of its Guaranty is
                 hereby amended to add "and Term Loan C" after "the Term Loan"
                 (in the seventh line) and to add "and Term Note C" after "the
                 Term Note" (in the eighth line).

                      Deuer hereby acknowledges that the term "Obligations," as
                 defined in its Security Agreement, includes all of Deuer's
                 obligations under the Loan Documents as amended by the
                 Amendment Documents (including without limitation Deuer's
                 obligations under the its Guaranty, as amended hereby), and
                 such Obligations are and shall continue to be secured by the
                 Collateral.

                      Deuer hereby ratifies, affirms, reaffirms and confirms in
                 all respects its Guaranty and Security Agreement, including
                 without limitation all terms, covenants, conditions,
                 representations and warranties in such agreements, and hereby
                 certifies that there exists no defenses, offsets or
                 counterclaims thereto as of the date hereof.

                      Deuer hereby acknowledges the continued existence,
                 validity and enforceability of its Guaranty and Security
                 Agreement, and agrees that the terms, covenants, conditions,
                 representations and warranties of such agreements are binding
                 upon it (including, but not limited to, the right of the Bank
                 to enter judgment by confession against Deuer and the waiver
                 of the right to trial by jury, if any).

                 AMENDMENT TO RTI GUARANTY AND
                 REAFFIRMATION BY RTI AS GUARANTOR AND DEBTOR. 

                      RTI hereby agrees that Section 2(a) of its Guaranty is
                 hereby amended to add "and Term Loan C" after "the Term Loan"
                 (in the seventh line) and to add "and Term Note C" after "the
                 Term Note" (in the eighth line).

                      RTI hereby acknowledges that the term "Obligations," as
                 defined in its Security Agreement and in its Patent and
                 Trademark Security Agreement, includes all of RTI's
                 obligations under the Loan Documents as amended by the
                 Amendment Documents (including without limitation RTI's
                 obligations under its Guaranty, as amended hereby), and such
                 Obligations are and shall continue to be secured by the
                 Collateral.

                      RTI hereby ratifies, affirms, reaffirms and confirms in
                 all respects its Guaranty and Security Agreement, including
                 without limitation all terms, covenants, conditions,
                 representations and warranties in such agreements, and hereby
                 certifies that there exists no defenses, offsets or
                 counterclaims thereto as of the date hereof.

                      RTI hereby acknowledges the continued existence, validity
                 and enforceability of its Guaranty and Security Agreement, and
                 agrees that the terms, covenants, conditions, representations
                 and warranties of such agreements are binding upon it
                 (including, but not limited to, the right of the Bank to enter
                 judgment by confession against RTI and the waiver of the right
                 to trial by jury, if any).

                 BINDING EFFECT.  This Agreement shall be binding upon and
      inure to the benefit of the Borrowers and the Bank and their respective
      heirs, executors, administrators, successors and assigns; provided,
      however, that the Borrowers may not assign any of their rights, nor
      delegate any of their obligations, under this Agreement without the prior
      written consent of the Bank and any purported assignment or delegation
      absent such consent shall be void. 

                 COUNTERPARTS; EFFECTIVENESS.  This Agreement may be executed
      in any number of counterparts and by the different parties on separate
      counterparts.  Each such counterpart shall be deemed to be an original,
      but all such counterparts shall together constitute one and the same
      agreement.  This Agreement shall be deemed to have been executed and
      delivered when the Bank has received counterparts hereof executed by all
      parties listed on the signature page(s) hereto.

                 AMENDMENT AND WAIVER.  No amendment of this Agreement, and no
      waiver of any one or more of the provisions hereof shall be effective
      unless set forth in a writing and signed by the parties hereto.

                 GOVERNING LAW.  This Agreement shall be governed by and
      construed in accordance with the internal laws of the Commonwealth of
      Pennsylvania

                 SEVERABILITY.  Any provision of this Agreement that is held to
      be inoperative, unenforceable, voidable or invalid in any jurisdiction
      shall, as to that jurisdiction, be ineffective, unenforceable, void or
      invalid without affecting the remaining provisions in that or any other
      jurisdiction, and to this end the provisions of this Agreement are
      declared to be severable.

                 JUDICIAL PROCEEDINGS.  Each party to this Agreement agrees
      that any suit, action or proceeding, whether claim or counterclaim,
      brought or instituted by any party hereto or any successor or assign of
      any party, on or with respect to this Agreement, the documents,
      instruments and agreements executed in connection herewith, the Loan
      Documents or the dealings of the parties with respect hereto and thereto,
      shall be tried only by a court and not by a jury.  EACH PARTY HEREBY
      KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT TO A TRIAL BY
      JURY IN ANY SUCH SUIT, ACTION OR PROCEEDING.  Further, each party

      waives any right it may have to claim or recover, in any such suit,
      action or proceeding, any special, exemplary, punitive or consequential
      damages or damages other than, or in addition to, actual damages.  THE
      BORROWERS ACKNOWLEDGE AND AGREE THAT THIS SECTION IS A SPECIFIC AND
      MATERIAL ASPECT OF THIS AGREEMENT AND THAT THE BANK WOULD NOT ENTER INTO
      THIS AGREEMENT IF THE WAIVERS SET FORTH IN THIS SECTION WERE NOT A PART
      OF THIS AGREEMENT.

                 EXPENSES.  The Borrowers agree to pay all costs and expenses
      of the Bank, including without limitation the costs incurred by the Bank
      for regulatory compliance audits, environmental investigations,
      reasonable fees and costs of its legal counsel, filing and recording
      costs, and other expenses incurred in connection with the preparation,
      execution and delivery of this Agreement and the transactions
      contemplated hereby. 




            IN WITNESS WHEREOF, the parties hereto have caused this Agreement
      to be duly executed and delivered as of the day and year first above
      written.

                                         SELAS CORPORATION OF AMERICA
      Attest:

                                         By:                      By:           
                      Name:
      Name:                              Title:
      Title:


                                         DEUER MANUFACTURING, INC.
      Attest:

                                         By:                       By:          
        Name:
      Name:                              Title:
      Title:


                                         RESISTANCE TECHNOLOGY, INC.
      Attest:

                                         By:                      By:           
                                         Name:
      Name:                              Title:
      Title:


                                         FIRST UNION NATIONAL BANK



                                         By:                          
                                         Name:
                                         Title:




                                                             TERM NOTE C


      $3,500,000.00                         February 21, 1997
                                            Philadelphia, Pennsylvania


            FOR VALUE RECEIVED, the undersigned, SELAS CORPORATION OF AMERICA,
      a Pennsylvania corporation with offices at 2034 Limekiln Pike, Dresher,
      Pennsylvania 19025 ("BORROWER"), promises to pay to the order of FIRST
      UNION NATIONAL BANK, a national banking association formerly known as
      First Fidelity Bank, N.A. ("BANK"), with an office at Broad and Walnut
      Streets, Philadelphia, Pennsylvania 19109, the principal sum of Three
      Million Five Hundred Thousand Dollars ($3,500,000) ("TERM LOAN C") in
      fifty-nine (59) consecutive monthly principal installments of Fifty-Eight
      Thousand Three Hundred Thirty-Three Dollars and 33/100 ($58,333.33) each,
      commencing March 1, 1997 and continuing on the first day of each month
      thereafter with the final, sixtieth (60th) installment of the remaining
      principal balance of Term Loan C, together with all interest accrued
      thereon and all fees and costs payable in connection therewith, due and
      payable on February 1, 2002.  

            In addition, in accordance with Paragraph 2.4(c)(ii) of the Credit
      Agreement referenced below, Term Loan C is subject to mandatory
      prepayments in connection with certain events referenced therein, to be
      applied in accordance with Paragraph 2.8 of the Credit Agreement.  

            Until maturity (whether by acceleration or otherwise), the
      outstanding principal balance hereunder shall bear interest at the rates
      and shall be payable at the times and in the manner set forth in the
      Credit Agreement.  Subsequent to maturity, including after judgment,
      interest on the outstanding principal balance hereunder shall accrue at
      an annual rate which shall be two percent (2%) above the rate of interest
      otherwise payable hereunder.  

            All such principal and interest shall be payable in lawful money of
      the United States of America in immediately available funds on a Business
      Day at the offices set forth above.

            This Term Note C (this "NOTE") arises out of a certain Credit
      Agreement dated as of October 23, 1993 (together with all amendments and
      modifications thereto, the "Credit Agreement"), among Borrower, Deuer
      Manufacturing, Inc., an Ohio corporation, Resistance Technology, Inc., a
      Minnesota corporation, and Bank, and evidences a term loan in the
      aggregate principal amount of Three Million Five Hundred Thousand Dollars
      ($3,500,000) made pursuant to the Credit Agreement.  Capitalized terms
      used but not otherwise defined in




      this Note shall have the respective meanings given to such terms in the
      Credit Agreement.  Reference is made to the Credit Agreement for a
      statement of the respective rights and obligations of the parties and the
      terms and conditions therein provided under which all or a part of the
      principal hereof, accrued interest thereon, and other amounts payable
      under the Credit Agreement may become immediately due and payable.  The
      collateral specified in the Collateral Security Documents shall secure
      the obligations of Borrower under this Note.

            Notwithstanding the face amount of this Note, Borrower's liability
      hereunder shall be limited at all times to the actual aggregate
      outstanding indebtedness to Bank (principal, interest and fees) under
      Term Loan C, as established by Bank's books and records, which books and
      records shall be conclusive absent manifest error.

            The occurrence of an Event of Default under the Credit Agreement
      constitutes an Event of Default under this Note and entitles Bank, in
      accordance with the Credit Agreement, to declare this Note, immediately
      due and payable in full.

            Borrower hereby waives presentment, demand for payment, notice of
      dishonor or acceleration, protest and notice of protest, and any and all
      other notices or demands in connection with the delivery, acceptance,
      performance, default or enforcement of this Note, excepting any notice
      requirements set forth in the Credit Agreement.

            In the event any interest rate applicable hereto is in excess of
      the highest rate allowable under applicable law, then the rate of such
      interest will be reduced to the highest rate not in excess of such
      maximum allowable interest and any excess previously paid by Borrower
      shall be deemed to have been applied against principal.

            BORROWER HEREBY AUTHORIZES AND EMPOWERS ANY ATTORNEY OR ATTORNEYS
      OR THE PROTHONOTARY OR CLERK OF ANY COURT OF THE COMMONWEALTH OF
      PENNSYLVANIA, OR ELSEWHERE, TO APPEAR FOR THE BORROWER AT ANY TIME
      FOLLOWING THE OCCURRENCE OF AN EVENT OF DEFAULT UNDER THE CREDIT
      AGREEMENT IN ANY SUCH COURT IN AN APPROPRIATE ACTION THERE OR ELSEWHERE
      BROUGHT OR TO BE BROUGHT AGAINST BORROWER BY BANK ON THIS NOTE, WITH OR
      WITHOUT DECLARATIONS FILED, AS OF ANY TERM OR TIME OF COURT THERE OR
      ELSEWHERE TO BE HELD AND THEREIN TO CONFESS OR ENTER JUDGMENT AGAINST
      BORROWER FOR ALL SUMS DUE BY BORROWER TO BANK UNDER THIS NOTE AND THE
      CREDIT AGREEMENT, TOGETHER WITH THE COSTS OF SUIT AND REASONABLE
      ATTORNEYS' FEES, AND FOR SO DOING THIS NOTE OR COPY HEREOF VERIFIED BY
      AFFIDAVIT SHALL BE A SUFFICIENT WARRANT.




            BORROWER AND BANK EACH HEREBY KNOWINGLY, VOLUNTARILY, AND
      INTENTIONALLY WAIVE ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
      OF ANY LITIGATION HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
      THIS NOTE OR THE CREDIT AGREEMENT OR THE MAKING OF THE LOANS OR ANY
      COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
      WRITTEN) OR ACTIONS OF BORROWER OR BANK OR EITHER OF THEM. 
      THIS PROVISIONS IS A MATERIAL INDUCEMENT FOR BANK'S ENTERING INTO THE
      CREDIT AGREEMENT.

            BORROWER ACKNOWLEDGES THAT IT HAS HAD THE ASSISTANCE OF COUNSEL IN
      THE REVIEW AND EXECUTION OF THIS NOTE AND FURTHER ACKNOWLEDGES THAT THE
      MEANING AND EFFECT OF THE CONFESSION OF JUDGMENT AND WAIVER OF JURY TRIAL
      HAVE BEEN FULLY EXPLAINED TO BORROWER BY SUCH COUNSEL.

            Borrower's liability under this Note shall include all fees and
      expenses provided in the Credit Agreement.

            This Note shall be binding upon Borrower and its successors and
      assigns and shall inure to the benefit of the Bank and its successors and
      assigns and shall be governed as to validity, interpretation and effect
      by the laws of the Commonwealth of Pennsylvania.


            IN WITNESS WHEREOF, the undersigned, by its duly authorized
      officer, has executed this Term Note C the day and year first above
      written.


      ATTEST:                         SELAS CORPORATION OF AMERICA




      By:                            By:                          
      Name:                          Name:
      Title:                         Title:


      [Corporate Seal]




      EXHIBIT 10A


                     AGREEMENT RE: TERMINATION FOLLOWING
                       CHANGE OF CONTROL OR ASSET SALE


               AGREEMENT dated as of March 1, 1997 between Mark S. Gorder
      ("Executive") and Selas Corporation of America ("Selas").

               WHEREAS, Executive has been effective in performing his services
      to Resistance Technology, Inc. ("RTI"), a wholly-owned subsidiary of
      Selas, and Selas recognizes the valuable services that Executive has
      rendered and desires to induce Executive to continue his active
      participation in the business of RTI by giving Executive certain
      assurances in the event of major changes in the structure or control of
      Selas.

               NOW, THEREFORE, in consideration of the agreements herein
      contained, and intending to be legally bound, the parties hereto agree as
      follows:

               1.  Termination Payment.  If a Change of Control of Selas occurs
      during the term of this Agreement, and if Executive's employment by RTI
      is Involuntarily Terminated within two years after such Change of
      Control, Selas shall pay or cause to be paid to Executive, simultaneously
      with such Involuntary Termination, two year's base salary at the base
      salary rate being earned by Executive immediately prior to the
      preceding Change of Control.  If an Asset Sale occurs during the term
      of this Agreement, and if Executive's employment by RTI is Involuntarily
      Terminated within two years after such Asset Sale, Selas shall pay or
      cause to be paid to Executive, simultaneously with such Involuntary
      Termination, two year's base salary at the base salary rate being earned
      by Executive immediately prior to such Asset Sale, provided, however that
      Selas need not make such payment if the purchaser in such Asset Sale or
      an affiliate of such purchaser offers to employ Executive commencing at
      the time of the Asset Sale at not less than the same rate of compensation
      and level of benefits as Executive was receiving immediately prior to the
      Asset Sale and does not Involuntarily Terminate Executive's employment
      during the two year period after the consummation of the Asset Sale.  Any
      payment required under this paragraph shall be accompanied by
      compensation to Executive for any accrued but unused vacation time
      through the date of Involuntary Termination.  Notwithstanding any other
      provision hereof, the obligations of Selas hereunder shall arise, if at
      all, only in connection with the earlier of the first Change of Control
      or first Asset Sale to occur after the date hereof; any second Change of
      Control or second Asset Sale which may occur within the two year period
      following the first Change of Control or first Asset Sale shall neither
      diminish nor trigger again the obligations set forth




      obligations set forth herein to the extent that such obligations may be
      applicable, it being understood that such obligations shall in no event
      extend beyond two years after the first Change of Control or Asset Sale.

                   The following terms used herein have the meanings set forth
      below:

                   "Asset Sale" means the sale, other than any such sale
      approved in advance by a majority of the Continuing Directors of Selas, 

                       (a)  by Selas of 90% or more of the outstanding shares
      of stock of RTI entitled to vote in the election of Directors of RTI, or

                       (b)  by RTI of a number of shares of stock of RTI
      entitled to vote in the election of Directors of RTI that would reduce
      the percentage ownership of Selas of such stock to 10% or less, or

                       (c)  by RTI of the assets of RTI to which are
      attributable 90% or more of the volume of sales of RTI.

                   "Cause."  Executive's employment shall be deemed to have
      been terminated for "Cause" only if termination shall have taken place
      (a) following conviction of Executive for an act constituting a felony
      under applicable law, (b) because of the willful and continued
      substantial failure by Executive to perform his duties continued for at
      least 30 days after written demand for performance is delivered to
      Executive specifically identifying the manner in which Executive has not
      substantially performed his duties, (c) because of the death of
      Executive, (d) because of the Disability of Executive or (e) as a result
      of voluntary retirement or resignation of Executive.  For purposes of
      this paragraph, no act or failure to act on Executive's part shall be
      deemed "willful" unless done, or omitted to be done, by him not in good
      faith or without reasonable belief that his action or omission was in the
      best interest of his employer.

                   "Change of Control" of Selas means the acquisition, other
      than any such acquisition approved in advance by a majority of the
      Continuing Directors of Selas, by any person, entity or group of
      associated persons acting in concert of beneficial ownership (as defined
      in Rule 13d-3 under the Securities Exchange Act of 1934) of 50% or more
      of the then outstanding shares of capital stock of Selas entitled to vote
      for the election of Directors of Selas.




                   "Continuing Directors" means those directors duly elected
      prior to the time that any person, entity or group of associated persons
      acting in concert has acquired beneficial ownership (as defined in Rule
      13d-3 under the Securities Exchange Act of 1934) of 50% or more of the
      then outstanding shares of capital stock of Selas entitled to vote for
      the election of Directors of Selas, and those directors who were
      recommended to succeed Continuing Directors by a majority of Continuing
      Directors.

                   "Disability" of Executive means that the Executive shall be
      physically or mentally incapacitated and as a result thereof shall be
      unable to continue substantially proper performance of his duties
      (reasonable absences because of sickness for up to six consecutive months
      excepted).  If Executive shall not agree with a determination to
      terminate him because of Disability, the question of Executive's ability
      shall be submitted to an impartial and reputable physician selected
      either by a mutual agreement of the parties or by the then president of
      the Medical Society of the county in which Executive is employed, and
      such physician's determination of disability shall be binding on the
      parties.

                   "Involuntary Termination" (or "Involuntarily Terminated")
      means (a) any reduction in the amount of annual base compensation or in
      the employee benefits (but not in the amount of bonuses) inuring to
      Executive below the level of base compensation or benefits inuring to
      Executive immediately prior to the preceding Change of Control or Asset
      Sale, (b) the imposition on Executive of a requirement that he change the
      location of his principal employment from its location immediately prior
      to the Change of Control or Asset Sale in order to maintain his
      employment or to maintain his compensation at its level immediately prior
      to the preceding Change of Control or Asset Sale if such change of
      location would impose a substantial burden on the Executive in commuting
      from his then residence to the new place of employment, (c) the
      assignment to the Executive of duties that do not constitute managerial
      duties or duties for which his training and experience do not qualify him
      or (d) any termination of the employment of Executive other than for
      Cause.

                   2.  Other Benefits.  This Agreement shall not prejudice
      Executive's or his beneficiary's right to receive any death, disability,
      pension, or other benefits otherwise due to Executive upon or following
      termination.

                   3.  No Duty to Mitigate.  Executive's benefits hereunder
      shall be considered severance pay in consideration of his past service to
      RTI, and pay in consideration of his  continued service from the date
      hereof, and his entitlement




      thereto shall not be governed by any duty to mitigate his damages by
      seeking further employment, nor offset by any compensation which he may
      receive from future employment.

                   4.  Withholding.  Any payment required under this Agreement
      shall be subject to all applicable requirements of law with regard to
      withholding, filing, making of reports and the like.
                   5.  Term.  This Agreement shall terminate, except to the
      extent that any obligation hereunder remains unpaid as of such time, upon
      the earliest of (i) December 31, 1997 if a Change of Control or Asset
      Sale has not occurred by such date; or (ii) the termination of
      Executive's employment with RTI prior to a Change of Control or Asset
      Sale; or (iii) the termination of Executive's employment with RTI after a
      Change of Control of Selas, other than by Involuntary Termination. 

                   6.  Miscellaneous.
                       a.  This Agreement represents the entire agreement of
      the parties hereto with respect to the subject matter hereof and
      supersedes all prior agreements in connection therewith.  Without
      limiting the generality of the preceding sentence, Executive hereby
      acknowledges that Selas shall have no obligation to him under the
      termination program established in 1986. 

                       b.  In the event that any provision of this Agreement
      shall be determined to be invalid, the remaining provisions shall be
      unaffected thereby and shall remain in full force and effect.

                       c.  This Agreement shall not be assignable by Executive,
      but Selas' obligation under the second sentence of Section 1 in
      connection with an Asset Sale may be assigned by Selas to the purchaser
      in connection with such Asset Sale if the Executive becomes an employee
      of the purchaser or an affiliate immediately after the Asset Sale, in
      which case the assignee shall expressly assume and agree to perform the
      obligations set forth in the second sentence of Section 1 in connection
      with such Asset Sale in the same manner and to the same extent as if it
      were Selas and Selas shall by virtue thereof and without further act be
      released from its obligations hereunder.  

                       d.  Any notice given hereunder shall be deemed to be
      given when personally delivered or mailed by certified or registered
      mail, return receipt requested, addressed to Selas at its principal
      offices or addressed to Executive at his latest address shown on the
      employment records.




                   e.  A waiver of breach of any provision hereof shall not be
      construed as a waiver of any subsequent breach hereof.

                   f.  If it is necessary for Executive to sue for payment
      hereunder, and such suit results in any payment to Executive, the
      employer shall pay Executive's reasonable counsel fees relating to such
      litigation.

                   g.  This Agreement may be amended, waived or terminated only
      by written instrument signed by both parties hereto.

                   h.  This Agreement shall be construed in accordance with the
      laws of the Commonwealth of Pennsylvania.

                   i.  Upon the occurrence of a Change of Control or Asset
      Sale, the employer waives, and will not assert, any right to set off the
      amount of any claims, liabilities, damages or losses the employer may
      have against any amounts payable by it to Executive hereunder, and any
      amounts payable to or otherwise accrued for the account of Executive in
      respect of any period prior to the termination of this Agreement shall be
      paid when due.

                   j.  Nothing herein shall diminish Selas' or RTI's right to
      terminate the employment of the Executive prior to a Change of Control or
      Asset Sale or impose any obligation to make any payment to the
      Executive in connection with any such termina tion.  Nothing herein
      shall alter in  any manner the rights or obligations of RTI or
      Executive under the  Management Employment Agreement dated October 20,
      1993 between RTI and Executive.

                   IN WITNESS WHEREOF, Selas and Executive have executed this
      Agreement as of the date first above written.
                               SELAS CORPORATION OF AMERICA


                               By:                             
                                  Robert W. Ross
                                  Secretary 



                                                               
                                  Mark S. Gorder




                                                           EXHIBIT 10A

                          SECOND EXTENSION AGREEMENT


                AGREEMENT    dated    as    of   March    1,    1997    between
      ____________________________  ("Executive")  and  Selas   Corporation  of
      America ("Selas").


                                   BACKGROUND

                Executive  and Selas are parties  to an Agreement,  dated as of
      March 9,  1993, the term of  which was extended pursuant  to an Extension
      Agreement dated as of  March 1, 1995 (as  so extended, the  "Agreement"),
      which, as an inducement to Executive to continue his active participation
      in the business of Selas  or an affiliate of Selas, provides  for certain
      payments to the  Executive under  the circumstances and  pursuant to  the
      terms  therein  set  forth.   Capitalized  terms  used  herein have  such
      meanings as are ascribed thereto in the Agreement.

                Executive and  Selas desire to  confirm in writing  their prior
      understandings  that the  term  of the  Agreement,  insofar as  the  term
      thereof is a function  of the period during which a  Change of Control or
      Asset Sale  may occur, is extended  from June 1, 1996  until December 31,
      1997.

                NOW, THEREFORE,  in  consideration  of  the  agreements  herein
      contained and contained  in the  Agreement, and intending  to be  legally
      bound, the parties hereto agree as follows:

                1.   Clause (i)  in  paragraph 5  of  the Agreement  is  hereby
                further  amended  by  changing  the  date  "June  1,  1996"  to
                "December 31, 1997."

                2.   The Agreement,  as amended hereby, is  hereby ratified and
                confirmed in all respects.

                IN  WITNESS WHEREOF,  Selas  and Executive  have executed  this
      Agreement as of the date first above written.

                                    SELAS CORPORATION OF AMERICA
                                    By:______________________________



                                    _________________________________



                                                          EXHIBIT 10J











                            AMENDED AND RESTATED
                           OFFICE/WAREHOUSE LEASE

                                BY AND BETWEEN

                          ARDEN PARTNERS I, L.L.P.

                                      AND

                         RESISTANCE TECHNOLOGY, INC.











      EFFECTIVE NOVEMBER 1, 1996


                             TABLE OF CONTENTS

                                                      PAGE


            DEFINITIONS                               1

            TERM                                      1

            BASE RENT                                 1

            ADDITIONAL RENT                           2

            COVENANT TO PAY RENT                      3

            UTILITIES                                 3

            CARE AND REPAIR OF BUILDING               3

            SIGNS                                     4

            ALTERATIONS, INSTALLATION, FIXTURES       4

            POSSESSION                                5

            SECURITY AND DAMAGE DEPOSIT               5

            USE                                       5

            ACCESS TO BUILDING                        5

            EMINENT DOMAIN                            6

            DAMAGE OR DESTRUCTION                     7

            CASUALTY INSURANCE                        7

            PUBLIC LIABILITY INSURANCE                8

            DEFAULT OF LESSEE                         8

            COVENANTS TO HOLD HARMLESS                9

            NON-LIABILITY                             10

            SUBORDINATION                             10

            ASSIGNMENT OR SUBLETTING                  11

            ATTORNMENT                                11

            NOVATION IN THE EVENT OF SALE             11

            SUCCESSORS AND ASSIGNS                    11




                                                      EXHIBIT 10J

                           OFFICE/WAREHOUSE LEASE


           THIS LEASE effective  the 1st day of November, 1996,  by and between
      ARDEN  PARTNERS  I, L.L.P.,  a  Minnesota  limited liability  partnership
      ("Lessor"),  and RESISTANCE  TECHNOLOGY, INC.,  a  Minnesota corporation,
      ("Lessee").

      RECITALS

           WHEREAS, Lessor  and Lessee  entered into an  Office/Warehouse Lease
      dated the  31st day  of November,  1991 to  terminate on  the 1st  day of
      November, 1996 for the Premises described below;

           WHEREAS, Lessor and Lessee entered into the  Agreement dated October
      20, 1993 to  extend said Lease from November 1, 1996  to October 31, 2003
      (the "Extension Agreement");

           WHEREAS, Lessor and  Lessee have  agreed to amend  and restate  said
      Office/Warehouse Lease; 

           NOW, THEREFORE, Lessor and Lessee agree as follows:

      DEFINITIONS:

           "Premises" That certain real  property located in the City  of
            Arden Hills, County  of Ramsey, and State of Minnesota and
            legally described on EXHIBIT  "A"  attached  hereto and  made  a
            part  hereof, including  all buildings and site improvements
            located thereon.

           "Building"   That   certain  office/warehouse   building  containing
      approximately 47,100  square feet  (14,118 square feet  of office  space,
      7,850 square feet  of clean room  space, 4,000 square  feet of  warehouse
      space and 21,132  square feet  of manufacturing space)  located upon  the
      Premises  and commonly  described  as 1260  Red  Fox Road,  Arden  Hills,
      Minnesota.

      WITNESSETH:

      TERM:

           1. For  and in consideration of  the rents, additional rents, terms,
      covenants, terms and provisions  herein contained, Lessor hereby demises,
      leases and lets to Lessee  the Premises for the term of  eighty-four (84)
      months  commencing  on the  first  day of  November,  1996 ("Commencement
      Date")  and expiring  on  October 31,  2003  ("Expiration Date"),  unless
      sooner  terminated as hereinafter provided (which is Extension Term No. 1
      in the Extension Agreement).



      BASE RENT:

           2. Lessee  shall pay Base Rent to Lessor during the eighty-four (84)
      months of the term  of this Lease in the  annual amount of Three  Hundred
      Thirty Thousand  and No/100 Dollars  ($330,000) payable in  equal monthly
      installments  of Twenty-Seven  Thousand Five  Hundred and  No/100 Dollars
      ($27,500)  on the  first  day of  each month  commencing  with the  first
      payment  on November  1, 1996.   Monthly  Base Rent  shall be  payable in
      advance the  first day  of each month  during the  term of this  Lease in
      lawful  money of  the United  States, to  Lessor, without  any deduction,
      offset, counterclaim or reduction whatsoever.

      ADDITIONAL RENT:

           3. Lessee shall pay to Lessor throughout the term of this  Lease the
      following:

           a. Lessee shall pay a sum equal to one hundred percent (100%) of the
      Real Estate  Taxes.   The term  "Real Estate Taxes"  shall mean  all real
      estate taxes,  all assessments and any taxes in lieu thereof which may be
      levied upon or assessed against the Premises.  Lessee, in addition to all
      other  payments to  Lessor  by Lessee  required  hereunder shall  pay  to
      Lessor,  in each year during the term  of this Lease and any extension or
      renewal thereof, such Real Estate Taxes and assessments paid in the first
      instance by Lessor.

           b. A sum equal to one hundred percent (100%) of the annual aggregate
      operating expenses incurred  by Lessor in the  operation, maintenance and
      repair of the Premises.  The term "Operating Expenses" shall include, but
      not  be  limited to,  maintenance, repair,  replacement  and care  of all
      plumbing and  roofs, parking and  landscaped areas, signs,  snow removal,
      non-structural repair  and maintenance of  the exterior of  the Building,
      public  liability  and  casualty   insurance  premiums,  work,  costs  of
      equipment  purchased and used for such purposes,  and the cost or portion
      thereof  properly   allocable  to  the  Premises   (amortized  over  such
      reasonable period as Lessor shall determine together with the interest at
      the rate of twelve percent (12%) per annum on the unamortized balance) of
      any  capital improvements made to  the Building by  Lessor after the Base
      Year  (November 1, 1996 to October 31,  1997) which result in a reduction
      of Operating Expenses or made to the Building by Lessor after the date
      of this Lease that  are required  under any governmental  law or 
      regulation that was not applicable to the Building at the time it was
      constructed.

           c. In no event shall  the total adjusted Monthly  Base Rent be  less
      than Twenty-Seven Thousand Five Hundred and No/100 Dollars  ($27,500) per
      month during the term of  this Lease (which term is Extension Term  No. 1
      of the Extension Agreement).




           The payment  of the  sums set forth  in this Article  3 shall  be in
      addition to the Base Rent payable pursuant to Article 2 herein.  All sums
      due  hereunder shall  be  due  and payable  within  thirty (30)  days  of
      delivery of written certification by Lessor setting forth the computation
      of  the amount due from Lessee.  In the event this Lease term shall begin
      or  expire  at  any  time  during  the  calendar year,  Lessee  shall  be
      responsible for its pro-rata share of Additional  Rent under subdivisions
      a. and b. above during this Lease and/or occupancy time.

           Prior  to commencement of this  Lease, and prior  to commencement of
      each calendar year thereafter commencing during the term of this Lease or
      any renewal or extension  thereof, Lessor may estimate for  each calendar
      year  (i) the total amount of Real Estate Taxes; (ii) the total amount of
      Operating Expenses; and (iii)  the computation of the annual  and monthly
      rental payable  during such  calendar year  as a  result of increases  or
      decreases  in Real Estate Taxes  and Operating Expenses.   Such estimates
      shall be in  writing and shall  be delivered or mailed  to Lessee at  the
      Premises.

           The  amount of  Real Estate  Taxes and  Operating Expenses  for each
      calendar  year, so  estimated, shall  be payable  as Additional  Rent, in
      equal monthly installments,  in advance, on the  first day of each  month
      during  such calendar year  at the option  of Lessor.   In the event that
      such estimate is  delivered to Lessee before the first  day of January of
      such  calendar year,  said  amount, so  estimated,  shall be  payable  as
      Additional Rent in equal  monthly installments, in advance, on  the first
      day of  each month  during such calendar  year.  In  the event  that such
      estimate is  delivered to Lessee after  the first day of  January of such
      calendar  year, said amount, so estimated, shall be payable as Additional
      Rent in equal monthly installments, in  advance, on the first day of each
      month  over  the  balance  of  such calendar  year,  with  the  number of
      installments  being equal to the number of full calendar months remaining
      in such calendar year.

           Upon completion of each calendar year during the term of this  Lease
      or any renewal or  extension thereof, Lessor shall cause  its accountants
      to determine the  actual amount  of the Real  Estate Taxes and  Operating
      Expenses  payable  in   such  calendar   year  and   deliver  a   written
      certification of the amounts thereof to Lessee.   If Lessee has underpaid
      Real  Estate Taxes or Operating  Expenses for such  calendar year, Lessee
      shall pay the balance of the same within ten (10) days  after the receipt
      of such statement.  If Lessee has overpaid Real Estate Taxes or Operating
      Expenses  for such  calendar year,  Lessor either  shall (i)  refund such
      excess  or (ii)  credit  such excess  against  the most  current  monthly
      installment  or installments due Lessor  for its estimate  of Real Estate
      Taxes and Operating Expenses for the




      next following calendar year.  A  pro-rata adjustment shall be made for a
      fractional calendar year occurring  during the term of this  Lease or any
      renewal or extension thereof based upon the number of days of the term of
      this Lease during said calendar year  as compared to three hundred
      sixty-five (365) days and all additional sums payable by Lessee  or
      credits due Lessee as a result of the provisions of  this Article 3
      shall be adjusted accordingly.

      COVENANT TO PAY RENT:

           4. The covenants  of Lessee to pay the  Base Rent and the Additional
      Rent are each independent of any other agreement, condition, or provision
      contained in this Lease.  All Rents are payable to Lessor at 1260 Red Fox
      Road, Arden Hills, Minnesota 55112.

      UTILITIES:

           5. Lessor shall  provide mains and  conduits to  supply water,  gas,
      electricity and sanitary sewage  to the Premises.  Lessee shall pay, when
      due, all charges  for sewer  usage or rental,  garbage, disposal,  refuse
      removal, water,  electricity, gas,  fuel oil,  L.P gas,  telephone and/or
      other  utility services or energy source furnished to the Building during
      the term of this Lease,  or any renewal or extension thereof.   If Lessor
      elects to furnish any of the foregoing utility services or other services
      furnished or caused to be  furnished to Lessee, then the rate  charged by
      Lessor shall  not exceed the rate  Lessee would be  required to pay  to a
      utility company  or  service  company  furnishing any  of  the  foregoing
      utilities  or services.  The  charges thereof shall  be deemed Additional
      Rent in accordance with Article 3 herein.

      CARE AND REPAIR OF BUILDING:

           6. Lessee  at all times throughout the term of this Lease, including
      renewals  and extension, and at its sole expense, shall keep and maintain
      the  Premises and  Building in  a clean,  safe, sanitary and  first class
      condition and in compliance with all applicable laws,  codes, ordinances,
      rules and regulations.  Lessee's obligations hereunder shall include, but
      not be limited to, the maintenance, repair and replacement, if necessary,
      of  heating,  air  conditioning  fixtures, equipment,  and  systems,  all
      lighting  and  plumbing  fixtures  and equipment,  fixtures,  motors  and
      machinery, all  interior walls, partitions, doors  and windows, including
      the regular  painting thereof, all exterior entrances, windows, doors and
      docks and  the  replacement of  all  broken glass.    When used  in  this
      provision, the term "repairs" shall include replacements or renewals when
      necessary, and all such repairs made  by Lessee shall be equal in quality
      and class to the original work.  Lessee shall keep and maintain all
      portions  of the  Premises  and  Building  and  the  sidewalk  and  areas
      adjoining the same in a clean and orderly condition, free of accumulation
      of dirt, rubbish, snow and ice.

           If  Lessee  fails, refuses  or neglects  to  maintain or  repair the
      Premises and Building as  required in this Lease after  notice shall have
      been given  by Lessor  to Lessee, in  accordance with Article  33 herein,
      Lessor may  make such repairs without liability to Lessee for any loss or
      damage  that  may  accrue  to  Lessee's  merchandise,  fixtures  or other
      property  or to  Lessee's business  by reason  thereof.   Upon completion
      thereof, Lessee shall pay to Lessor all costs plus fifteen percent  (15%)
      for  overhead incurred by Lessor in making such repairs upon presentation
      to Lessee of bill thereto.

           Lessor  shall repair, at its expense, the structural portions of the
      Building; provided, however, where structural  repairs are required to be
      made  by reason of the business or operational needs of Lessee or acts of
      Lessee, the costs thereof shall be borne by Lessee and  payable by Lessee
      to Lessor upon demand. Lessee,  at  its cost  and expenses,  shall  be
      responsible  for all  outside maintenance of the Building, including
      grounds and parking areas.


      SIGNS:

           7. Any advertisement lettering, notice, picture or sign installed on
      or in  any part  of the Premises  and visible  from the  exterior of  the
      Building shall be approved  and installed by Lessee at  Lessee's expense.
      In the event of a violation of the foregoing by Lessee, Lessor may remove
      the same without  any liability and  may charge  the expense incurred  by
      such removal to Lessee.

      ALTERATIONS, INSTALLATION, FIXTURES:

           8. Except  as  hereinafter  provided,  Lessee  shall  not  make  any
      additions, alterations, or improvements in or to the Premises or Building
      or  add, disturb  or in  any way  change any  plumbing or  wiring therein
      without the prior written consent of Lessor if such addition, alteration,
      improvement,  plumbing  or wiring  costs  Lessee  more than  Seventy-five
      Thousand  and  No/100  Dollars  ($75,000)  which  consent  shall  not  be
      unreasonably conditioned, delayed or withheld.  In the event alterations,
      additions  or improvements  are  required by  any governmental  agency by
      reason of the use and  occupancy of the Premises and Building  by Lessee,
      Lessee  shall make such alterations, additions or improvements at its own
      cost and expense  after first  obtaining Lessor's approval  of plans  and
      specifications therefor and furnishing such indemnification as Lessor may
      reasonably require against liens, costs, damages and expenses arising out
      of such  alterations, additions or improvements.   Additions, alterations
      or  improvements by  Lessee must  be built in  compliance with  all laws,
      ordinances and  governmental regulations affecting the  Premises.  Lessee
      shall  warrant  to  Lessor  that  all  such  additions,   alterations  or
      improvements  shall  be in  strict  compliance  with  all relevant  laws,
      ordinances,   governmental   regulations   and  insurance   requirements.
      Construction  of  such additions  or  alterations  or improvements  shall
      commence  only  upon  Lessee  obtaining  and  exhibiting  to  Lessor  the
      requisite  approvals,  licenses and  permits and  indemnification against
      liens.  All additions,  alterations or improvements to the  Building made
      by  Lessee  shall at  once become  the property  of  Lessor and  shall be
      surrendered  to  Lessor upon  the  termination of  this  Lease; provided,
      however,  this clause shall not  apply to movable  equipment or furniture
      owned by Lessee which  may be removed by Lessee at the end of the term of
      this Lease if Lessee is not then in default.

      POSSESSION:

           9. Except as  hereinafter provided, Lessor shall  deliver possession
      of the  Premises and Building to Lessee in the condition required by this
      Lease  on or  before the  Commencement Date,  but delivery  of possession
      prior to  or  later than  such  Commencement Date  shall not  affect  the
      Expiration Date.  The rentals herein reserved shall commence on  the date
      when  possession of the Premises  and Building is  delivered by Lessor to
      Lessee which Lessor and Lessee agree  is November 1, 1996.  Any occupancy
      by Lessee prior to the beginning of the term shall in all respects be the
      same  as that  of  a Lessee  under  this Lease.    Lessor shall  have  no
      responsibility or liability for loss or damage to facilities, fixtures or
      equipment  installed or left  on the Building.   If the  Premises are not
      ready for occupancy  by Commencement  Date and possession  is later  than
      Commencement Date, rent shall begin on the date of possession.

      SECURITY AND DAMAGE DEPOSIT:

           10.   There is no security or damage deposit under this Lease.

      USE: 11.   The Premises and Building shall be used and occupied by Lessee
      solely for the  purposes of office and manufacturing so  long as such use
      is in  compliance with all  applicable laws, ordinances  and governmental
      regulations  affecting  the  Building and  Premises.    The Premises  and
      Building shall  not be used in  such manner that, in  accordance with any
      requirement of law or of any public authority, Lessor shall be obliged on
      account of  the purpose  or  manner of  said use  to  make any  addition,
      alteration or improvement to or in  the Building.  The Premises shall not
      be used in any manner  which will increase the rates.required to  be paid
      for public liability or for fire and extended coverage insurance covering
      the Premises.  Lessee shall occupy the  Premises and conduct its business
      and control its agents, employees, invitees and visitors in such a way as
      is lawful,  and reputable  and will not  permit or  create any  nuisance,
      noise, odor,  or otherwise interfere with, annoy or disturb Lessor in its
      management of the Premises and Building.  

      ACCESS TO BUILDING:

           12.   Lessee   agrees   to   permit  Lessor   and   the   authorized
      representatives of Lessor to enter the Premises and Building at all times
      during usual  business hours for the  purpose of inspecting the  same and
      making  any necessary repairs to the Premises and Building and performing
      any  work  therein  that  may  be  necessary  to  comply with  any  laws,
      ordinances, rules, regulations or requirements of any public authority or
      of the Board of Fire Underwriters or  any similar body or that Lessor may
      deem necessary to prevent  waste or deterioration in connection  with the
      Premises and Building.  Nothing herein shall imply any duty upon the part
      of Lessor to do any  such work which, under any provision  of this Lease,
      Lessee may  be required to perform and  the performance thereof by Lessor
      shall not constitute a  waiver of Lessee's default in  failing to perform
      the  same.  Lessor, during the  progress of any work  in the Premises and
      Building, may keep and store upon the Premises and Building all necessary
      materials, tools  and equipment.  Lessor shall not in any event be liable
      for  inconvenience, annoyance,  disturbance, loss  of business,  or other
      damage of  Lessee by reason of  making repairs or the  performance or any
      work in  the Premises and Building  or on account  of bringing materials,
      supplies and equipment into  or through the Premises and  Building during
      the course thereof  and the obligations of Lessee under  this Lease shall
      not thereby be affected in any manner whatsoever.

           Lessor reserves the right to enter upon the Premises and Building at
      any time in the event of an emergency and at reasonable hours to  exhibit
      the  Premises and  Building to  prospective purchasers  or others  and to
      exhibit  the  Premises and  Building to  prospective  Lessees and  to the
      display "For Rent" or similar  signs on windows or doors in  the Premises
      and Building during the last ninety (90)  days of the term of this Lease,
      all without hindrance or molestation by Lessee.

      EMINENT DOMAIN:

           13.   If there is  any condemnation or eminent domain  proceeding or
      private  sale in  lieu thereof  in respect to  the Premises  and Building
      during the term hereof, the following provisions shall apply:


           a. If the  whole of the  Premises shall be acquired  or condemned by
      eminent domain for any  public or quasi-public  use or purpose, then  the
      term of  this Lease shall cease  and terminate as of  the date possession
      shall be  taken in such  proceeding and all rentals  shall be paid  up to
      that date.

           b. If  any part  constituting less  than the  whole of  the Premises
      shall be acquired or condemned  as aforesaid, and in the event  that such
      partial taking or condemnation shall materially affect the Building so as
      to render  the Building  unsuitable for  the business  of Lessee,  in
      the reasonable opinion of Lessor, then the term of this Lease shall
      authority and rent shall be paid to the date of such termination.

           In the  event of a  partial taking  or condemnation of  the Premises
      which shall  not  materially affect  the  Building so  as to  render  the
      Building unsuitable for the business of Lessee, in the reasonable opinion
      of Lessor, this Lease shall continue in full force and effect but  with a
      proportionate abatement of the Base Rent and Additional Rent based on the
      portion, if  any, of the Building  taken.  Lessor reserves  the right, at
      its option, to restore the Building and the Building to substantially the
      same condition as they were  prior to such condemnation.  In  such event,
      Lessor  shall  give written  notice to  Lessee,  within thirty  (30) days
      following the date possession shall be taken by the condemning authority,
      of Lessor's intention to  restore.  Upon Lessor's  notice of election  to
      restore, Lessor shall commence restoration and shall restore the Building
      and the  Building with  reasonable promptness,  subject to  delays beyond
      Lessor's  control  and  delays in  the  making  of  condemnation or  sale
      proceeds  adjustments by Lessor.  Lessee shall have no right to terminate
      this   Lease  except  as  herein  provided.    Upon  completion  of  such
      restoration, the rent  shall be adjusted based upon the  portion, if any,
      of the Building restored.

           c. If  there is  any condemnation  or  taking as  aforesaid, whether
      whole or partial, Lessee  shall not be entitled to any  part of the award
      paid for such condemnation.  Lessor is to receive the full amount of such
      award Lessee  hereby expressly  waiving any  right to  claim to  any part
      thereof.

           d. Although  all damages  in  the event  of  any condemnation  shall
      belong to Lessor  whether such  damages are awarded  as compensation  for
      diminution in value of  the leasehold or  to the fee  of the Premises  or
      Building,  Lessee  shall have  the right  to claim  and recover  from the
      condemning  authority, but not from  Lessor, such compensation  as may be
      separately  awarded or  recoverable by  Lessee in  Lessee's own  right on
      account  of any  and all  damage to  Lessee's business  by reason  of the
      condemnation  and for or on  account of any cost or  loss to which Lessee
      might  be  put in  removing  Lessee's  merchandise, furniture,  fixtures,
      leasehold  improvements and  equipment;   provided, however,  that Lessee
      shall have no claim against Lessor or make any claim  with the condemning
      authority for  the loss of  its leasehold estate,  any unexpired term  or
      loss of any possible  renewal or extension of this  Lease or loss of  any
      possible value of this Lease, any unexpired term, renewal or extension of
      this Lease.

      DAMAGE OR DESTRUCTION:

           14.   If  there  is any  damage or  destruction  to the  Premises or
      Building by  fire or other  cause during  the term hereof,  the following
      provisions shall apply:

           a. If the Building  is damaged by  fire or any  other cause to  such
      extent that the cost  of restoration, as reasonably estimated  by Lessor,
      will equal or exceed thirty percent (30%) of the replacement value of the
      Building (exclusive of foundations)  just prior to the occurrence  of the
      damage, then Lessor, no later than the sixtieth (60th)  day following the
      damage,  may give Lessee written notice of Lessor's election to terminate
      this Lease.

           b. If the cost  of restoration as estimated by Lessor  will equal or
      exceed  fifty  percent (50%)  of the  replacement  value of  the Building
      (exclusive  of foundations) just prior  to the occurrence  of the damage,
      and if the Building  are not suitable as a result of  said damage for the
      purposes  for which they are demised hereunder, in the reasonable opinion
      of Lessee, then  Lessee, no later than the sixtieth  (60th) day 
      following the damage,  may give Lessor  a written notice  of election
      to terminate this Lease.

           c. If the cost of restoration as estimated by Lessor shall amount to
      less than thirty percent (30%) of said replacement value of the Building,
      as provided  in Section 14.c herein, or if, despite the cost, Lessor does
      not  elect to  terminate this  Lease, Lessor  shall restore  the Building
      with reasonable promptness, subject to delays beyond Lessor's control and
      delays in the  making of insurance adjustments  by Lessor.   Lessee shall
      have no right to terminate this Lease, except as herein provided.  Lessor
      shall   not  be   responsible  for   restoring  or   repairing  leasehold
      improvements of Lessee.

           d. If  either of the elections to terminate is exercised, this Lease
      shall be deemed to terminate on the date of the receipt  of the notice of
      election.   All rentals shall be paid up to that date.  Lessee shall have
      no  claim against  Lessor for  the value  of any  unexpired term  of this
      Lease.

           e. If damage to the Building shall materially affect the Building so
      as to render it unsuitable in whole or in part for the purposes for which
      they are demised hereunder,  then, unless such destruction was  wholly or
      partially caused by  the negligence or breach of the  terms of this Lease
      by Lessee, its employees, contractors or licensees, a portion of the rent
      based upon the  amount of the  extent to which  the Building is  rendered
      unsuitable   shall  be  abated  until  repaired  or  restored.    If  the
      destruction or damage  was wholly  or partially caused  by negligence  or
      breach of the terms  of this Lease by  Lessee as aforesaid and  if Lessor
      shall elect to rebuild, the rent  shall not abate and Lessee shall remain
      liable for the same.

      CASUALTY INSURANCE:

           15.a. Lessee, at  all times during  the term of  this Lease, at  its
      expense, shall maintain a  policy or policies of insurance  with premiums
      paid in advance issued by an insurance company licensed to do business in
      the State of Minnesota  insuring the Building against  loss or damage  by
      fire, explosion or other insurable hazards and contingencies for the full
      replacement  value  with Lessor  as an  additional  named insured  as its
      interest may appear.

              b. Lessee shall not carry any stock of goods or do anything in or
      about  the Building  which  will  in any  way  impair  or invalidate  the
      obligation of the insurer under any policy  of insurance required by this
      Lease.

              c. Lessor hereby waives and  releases all claims, liabilities and
      causes  of action against Lessee  and its agents,  servants and employees
      for loss or  damage to, or  destruction of, the  Premises or any  portion
      thereof, including the buildings and other improvements situated thereon,
      resulting  from fire,  explosion and  other  perils included  in standard
      extended coverage insurance, whether  caused by the negligence of  any of
      said persons or otherwise.  Lessee hereby waives and releases all claims,
      liabilities  and causes of action against Lessor and its agents, servants
      and employees  for loss  or  damage to,  or destruction  of,  any of  the
      improvements,  fixtures,  equipment,   supplies,  merchandise  and  other
      property,  whether that  of Lessee  or of  others in,  upon or  about the
      Premises resulting from fire,  explosion or the other perils  included in
      standard extended coverage insurance, whether caused by the negligence of
      any  of said  persons or  otherwise.   The waiver  shall remain  in force
      whether or not Lessee's insurer shall consent thereto.

              d. If the use  of the  Building by Lessee  increases the  premium
      rate  for insurance carried by Lessor on  the Building , Lessee shall pay
      Lessor, upon  demand, the  amount of  such premium  increase. If
      Lessee installs any electrical equipment  that overloads the power
      lines  to the Building or its wiring, Lessee ,  at its own expense,
      shall make whatever changes  are necessary to comply  with the
      requirements  of the insurance underwriter, insurance rating bureau and
      governmental  authorities having jurisdiction.

       PUBLIC LIABILITY INSURANCE:

           16.   Lessee, during the term  hereof, shall keep in full  force and
      effect,  at its  expense,  a  policy  or  policies  of  public  liability
      insurance with respect to  the Premises and Building and the  business of
      Lessee,  on terms with companies approved  in writing by Lessor, in which
      both Lessee and Lessor shall be covered by being named as insured parties
      under  reasonable  limits  of  liability  not  less  than $1,000,000  for
      injury/death  to any one person; $5,000,000 for injury/death to more than
      one person;  and $1,000,000  with respect  to damage  to property.   Such
      policy or policies  shall provide  that thirty (30)  days written  notice
      must  be given  to Lessor prior  to cancellation  thereof.   Lessee shall
      furnish  evidence  satisfactory  to Lessor  at  the  time  this Lease  is
      executed that such coverage is in full force and effect.

      DEFAULT OF LESSEE:

           17.a. If Lessee fails to pay any rent due hereunder within ten  (10)
      days after the same shall be due, or any  failure to perform any other of
      the  conditions,  covenants or  terms of  this  Lease to  be  observed or
      performed by Lessee  for more than thirty (30) days  after written notice
      of such failure shall have been given to Lessee, or if Lessee or an agent
      of Lessee shall  falsify any report  required to be  furnished to  Lessor
      pursuant to the  terms of this Lease,  or if Lessee  or any guarantor  of
      this  Lease  shall  become bankrupt  or  insolvent,  or  file any  debtor
      proceedings  or any  person  shall take  or have  against  Lessee or  any
      guarantor of  this Lease in any  court pursuant to any  statute either of
      the United States or of any state a petition in  bankruptcy or insolvency
      or for reorganization or for the  appointment of a receiver or trustee of
      all or  a portion of  Lessee's or  any such guarantor's  property, or  if
      Lessee  or any  such guarantor  makes an  assignment for  the  benefit of
      creditors, or  petitions to or enters  into an arrangement, or  if Lessee
      shall  abandon the Premises  or suffer this  Lease to be  taken under any
      writ  of execution,  then in any  such event  Lessee shall  be in default
      hereunder, and  Lessor, in addition  to other rights  or remedies it  may
      have,  shall have  the immediate  right  of reentry  and  may remove  all
      persons and property  from the Premises and such property  may be removed
      and stored in a public warehouse or elsewhere at the cost of, and for the
      account  of Lessee,  all  without service  of notice  or resort  to legal
      process and without being guilty of trespass, or becoming liable for  any
      loss or damage which may be occasioned thereby.

           b. If  Lessor elects to reenter the Premises, as herein provided, or
      should it take possession  of the Premises pursuant to  legal proceedings
      or pursuant to any  notice provided for by law, it  may either  terminate
      this  Lease or it may from time  to time, without terminating this Lease,
      make such alterations  and repairs as may be necessary  in order to relet
      the Premises, and relet the Building or any  part thereof on such term or
      terms (which may  be for a term extending beyond the  term of this Lease)
      and at such rental or rentals and upon such other terms and conditions as
      Lessor  in  its  sole discretion  may  deem advisable.    Upon  each such
      subletting  all rentals received by  Lessor from such  reletting shall be
      applied first  to the  payment of  any indebtedness  other than rent  due
      hereunder from  Lessee to Lessor; second, to the payment of any costs and
      expenses of such  reletting, including brokerage fees and attorney's fees
      and costs of  such alterations and repairs; third, to  the payment of the
      rent due and upon  payment of future rent as the same  may become due and
      payable hereunder.  If  such rentals received from such  reletting during
      any  month  less than that  to be paid during that  month by Lessee,
      upon  demand  by Lessor,  shall pay  any such  deficiency to  Lessor. 
      No such    reentry or taking possession of the Premises by Lessor shall
      be construed as  an election  on its  part to  terminate this  Lease
      unless  a written notice of such  intention be  given to Lessee  or
      unless the  termination thereof be decreed by a court of competent
      jurisdiction.  Notwithstanding any such reletting without termination,
      Lessor may at any time after such reentry and reletting elect to
      terminate this Lease for any  such breach. In addition  to any other
      remedies  Lessor may have, it  may recover from Lessee all damages it
      may  incur by reason of such breach,  including the cost  of
      recovering  the   Premises,  reasonable  attorney's  fees,  and
      including the  worth at the  time of such  termination of the  excess, if
      any,  of the amount  of rent and  charges equivalent to  rent reserved in
      this Lease for the remainder of the stated term over  the then reasonable
      rental value of the Premises for the remainder of the stated term, all of
      which amounts shall be immediately due and payable from Lessee to Lessor.

           c. Lessor,  at its option, instead of exercising any other rights or
      remedies available  to it in this  Lease or otherwise by  law, statute or
      equity, may  spend such  money as  is  reasonably necessary  to cure  any
      default of  Lessee herein  and the amount  so spent, and  costs incurred,
      including  attorney's fees  in  curing such  default,  shall be  paid  by
      Lessee, as Additional Rent, upon demand.

           d. If  suit shall  be  brought for  recovery  of possession  of  the
      Premises,  for the  recovery of rent  or any  other amount  due under the
      provisions of this Lease, or because  of the breach of any other covenant
      herein  contained on the part  of Lessee to  be kept or  performed, and a
      breach  shall be  established, Lessee  shall pay  to Lessor  all expenses
      incurred therefor,  including a reasonable attorney's  fee, together with
      interest  on all such  expenses at the  rate of twelve  percent (12%) per
      annum from the date of such breach of the covenants of this Lease.

           e. Lessee hereby expressly  waives any and all rights  of redemption
      granted  by or under  any present or  future laws in  the event Lessee is
      evicted  or  dispossessed for  any  cause,  or  in the  event  of  Lessor
      obtaining  possession  of the  Premises, by  reason  of the  violation by
      Lessee of any of the conditions or covenants of this Lease, or otherwise.
      Lessee waives any  demand for possession of the Premises,  and any demand
      for payment of rent and any notice of intent to reenter  the Premises, or
      of intent to terminate this Lease, other than the notices  above provided
      in  this Article  17, and  waives any  and every  other notice  or demand
      prescribed by any applicable statutes or laws.

           f. No remedy herein or elsewhere in this  Lease or otherwise by law,
      statute  or equity, conferred upon or  reserved to Lessor or Lessee shall
      be exclusive of  any other remedy,  but shall be  cumulative, and may  be
      exercised from time to time and as often as the occasion may arise.

      COVENANTS TO HOLD HARMLESS:
           18.   Unless  the  liability for  damage or  loss  is caused  by the
      negligence of Lessor, its agents or employees, Lessee shall hold harmless
      Lessor from any  liability for damages  to any person  or property in  or
      upon the Building and the Premises, including the person and the property
      of Lessee and  its employees and  all persons in the  Building at its  or
      their  invitation  or sufferance,  and  from all  damages  resulting from
      Lessee's failure  to perform the  covenants of this Lease.   All property
      kept, maintained or  stored on the Premises shall  be so kept, maintained
      or stored at the sole  risk of Lessee.  Lessee agrees to pay  all sums of
      money  in respect of any labor, service, materials, supplies or equipment
      furnished  or alleged to  have been furnished  to Lessee in  or about the
      Premises,  and not furnished on order of  Lessor, which may be secured by
      any Mechanic's, Materialmen's or other lien to be discharged at  the time
      performance of any obligation secured thereby matures; provided, however,
      that  Lessee may contest such lien; however,  but if such lien is reduced
      to final judgment and if such judgment or process thereon is not stayed,
      or if stayed and said stay  expires, then and in each such event,  Lessee
      shall forthwith pay  and discharge said judgment.   Lessor shall have the
      right to post and maintain  on the Premises and Building notices  of non-
      responsibility under the laws of the State of Minnesota.

      NON-LIABILITY:

           19.   Subject  to the  terms and  conditions of  Article 14  herein,
      Lessor shall  not be liable for  damage to any  property of Lessee  or of
      others located on the Premises or Building, nor for the loss of or damage
      to any property  of Lessee or  of others by  theft or otherwise.   Lessor
      shall  not be  liable for  any injury  or damage  to persons  or property
      resulting from fire, explosion, failing plaster, steam, gas, electricity,
      water, rain or snow or leaks from any part of the Premises or Building or
      from the pipes. appliances, or plumbing works or from the roof, street or
      subsurface or from  any other place or by dampness or  by any other cause
      of whatsoever  nature.  Lessor  shall not be  liable for any  such damage
      caused  by  other  persons in  the  Premises  or  Building, occupants  of
      adjacent property or the  public or caused by operations  in construction
      of any private, public or quasi-public  work.  Lessor shall not be liable
      for  any latent  defect in  the Premises  or Building.   All  property of
      Lessee kept or stored on the Premises or in the Building shall be so kept
      or stored at the risk of only Lessee.   Lessee shall hold Lessor harmless
      from any claims arising out of damage to the same, including  subrogation
      claims by Lessee's insurance carrier.

      SUBORDINATION:

           20.   This Lease shall be subordinated to any mortgages that may now
      exist  or that may hereafter  be placed upon the  Premises and to any and
      all advances made thereunder,  and to the interest upon  the indebtedness
      evidenced by  such  mortgages,  and  to all  renewals,  replacements  and
      extensions thereof.  In the  event of execution by Lessor after  the date
      of  this Lease of any  such mortgage, renewal,  replacement or extension,
      Lessee  agrees  to execute  a  subordination  agreement with  the  holder
      thereof which agreement shall provide:

           a. That  such holder  shall  not disturb  the  possession and  other
      rights of Lessee  under this Lease  so long as  Lessee is not in  default
      hereunder;

           b. That in the event of acquisition of title to the Premises by such
      holder, such holder  shall accept Lessee as Lessee of  the Premises under
      the  terms  and  conditions of  this  Lease  and  shall  perform all  the
      obligations of Lessor hereunder; and

           c. That  Lessee shall  recognize  such holder  as Lessor  hereunder.
      Lessee, upon receipt of a request from Lessor therefor, shall execute and
      deliver to Lessor or to any  proposed holder of a mortgage or  trust deed
      or to any proposed purchaser of the Premises, a certificate in recordable
      form, certifying  that this Lease is  in full force and  effect, and that
      there  are no offsets against  rent nor defenses  to Lessee's performance
      under this Lease, or setting forth  any such offsets or defenses  claimed
      by Lessee, as the case may be.

      ASSIGNMENT OR SUBLETTING:

           21.   Lessee agrees to  use and occupy  the Premises throughout  the
      entire term hereof  for the  purposes herein specified  and for no  other
      purposes, in the manner and to substantially the extent now intended, and
      not to transfer or assign this Lease or sublet said Premises, or any part
      thereof,  whether  by voluntary  act,  operation  of law,  or  otherwise,
      without obtaining the prior  consent of Lessor in each  instance.  Lessee
      shall seek such  consent of Lessor by a written request therefor, setting
      forth such information  as Lessor may deem necessary. Lessor agrees not  
      to withhold consent unreasonably.Consent by Lessor to any assignment of
      this  Lease or to any subletting of the Premises shall not be a waiver of
      Lessor's rights  under this Article 21 as to any subsequent assignment or
      subletting.  Lessor's rights  to assign this Lease  are and shall  remain
      unqualified.   No such assignment or subleasing shall relieve Lessee from
      any  of Lessee's obligations  in this Lease, nor  shall any assignment or
      sublease  or other  transfer  of  this  Lease  be  effective  unless  the
      assignee, sublessee or transferee  shall at the time of  such assignment,
      sublease or transfer,  assume in writing for  the benefit of  Lessor, its
      successors or assigns, all of the conditions, covenants and terms of this
      Lease thereafter to be performed by  Lessee and shall agree in writing to
      be bound  thereby.  If Lessee  subleases in accordance with  the terms of
      this  Lease, fifty percent  (50%) of any  increase in rental  received by
      Lessee over the per square foot rental rate which is being paid by Lessee
      shall be  forwarded to and retained by Lessor, which increase shall be in
      addition  to the  Base Rent  and Additional  Rent due  Lessor under  this
      Lease.

      ATTORNMENT:

           22.   In the event  of a sale or assignment of  Lessor's interest in
      the  Premises is, or this Lease, or  if the Premises come into custody or
      possession  of a  mortgagee  or any  other  party  whether because  of  a
      mortgage foreclosure, or otherwise,  Lessee shall attorn to such assignee
      or  other party and recognize  such party as  Lessor hereunder; provided,
      however, Lessee's peaceable possession  will not be disturbed so  long as
      Lessee faithfully  performs  its obligations  under this  Lease.   Lessee
      shall execute, on demand,  any attornment agreement required by  any such
      party  to   be  executed,  containing  such  provisions  and  such  other
      provisions as such party may require.

      NOVATION IN THE EVENT OF SALE:

           23.   In the event of the sale of the Premises, Lessor  shall be and
      hereby is relieved of all of the covenants and obligations created hereby
      accruing from  and after the  date of  sale, and such  sale shall  result
      automatically in the purchaser assuming and agreeing to carry out all the
      covenants  and  obligations of  Lessor.    Notwithstanding the  foregoing
      provisions  of this  Article 23, Lessor,  in the  event of a  sale of the
      Premises,  shall  cause to  be  included in  the  agreement  of sale  and
      purchase a covenant  whereby the  purchaser of the  Premises assumes  and
      agrees to carry out all of the covenants and obligations of Lessor.

           Lessor agrees at any time and from  time to time upon not less  than
      ten (10) days prior written request by Lessor to execute, acknowledge and
      deliver to Lessor a  statement in writing  certifying that this Lease  is
      unmodified  and in  full force  and effect  as  modified and  stating the
      modifications, and the dates  to which the Basic  Rent and other  charges
      have been  paid in  advance,  if any,  it being  intended  that any  such
      statement delivered pursuant to this Article 23 may be relied upon by any
      prospective purchaser of the fee or mortgagee or assignee of any mortgage
      upon the fee of the Premises.

      SUCCESSORS AND ASSIGNS:

           24.   The  conditions, covenants  and terms hereof shall be  binding
      upon and inure to the successors and assigns of the parties hereto.

      REMOVAL OF FIXTURES:

           25.   Notwithstanding anything contained in Article 8 and Article 29
      herein or elsewhere in this Lease, if Lessor requests, then  Lessee shall
      promptly  remove at its sole cost and expense all fixtures, equipment and
      alterations made by Lessee simultaneously with vacating the Premises  and
      Building  and Lessee will promptly  restore the Premises  and Building
      to the condition that existed immediately prior to said fixtures,
      equipment and alterations  having been  made all  at the sole  cost and
      expense of Lessee.

      QUIET ENJOYMENT:

           26.   Lessor  warrants  that it  has full  right  to execute  and to
      perform this Lease and to grant the estate demised, and that Lessee, upon
      payment of the rents and other amounts due and the performance of all the
      agreements,  conditions, covenants  and  terms  on  Lessee's part  to  be
      observed  and performed under this Lease, may peaceably and quietly enjoy
      the  Premises and  Building for  the business  uses permitted  hereunder,
      subject, nevertheless, to the terms and conditions of this Lease.

      RECORDING:

           27.   Lessee shall not  record this Lease without  the prior written
      consent  of Lessor; provided, however,  upon the request  of either party
      hereto, the  other party shall join  in the execution of  a Memorandum of
      Lease  for the purposes of  recordation.  Said  Memorandum shall describe
      the  parties,  the  Premises  and  the  term  of  this  Lease  and  shall
      incorporate  this  Lease by  reference.   This  Article 27  shall  not be
      construed to  limit Lessor's right  to file this  Lease under  Article 22
      herein.

      OVERDUE PAYMENTS:

           28.   All monies due under this Lease from Lessee to Lessor shall be
      due  on demand,  unless otherwise specified,  and if  not paid  when due,
      shall result  in the imposition of a service charge for such late payment
      in the amount of twelve percent (12%) of the amount due.

      SURRENDER:

           29.   On the Expiration Date  or upon the termination hereof  upon a
      day  other than the Expiration Date, Lessee shall peaceably surrender the
      Premises broom-clean in good order, condition and repair, reasonable wear
      and  tear only  excepted.   On  or  before the  Expiration  Date or  upon
      termination of this Lease on a day other than the Expiration Date, Lessee
      at  its expense, shall remove  all trade fixtures,  personal property and
      equipment  and signs from the Premises and any property not removed shall
      be deemed to have  been abandoned.  Any damage  caused in the removal  of
      such items shall be repaired by Lessee at its expense.   All alterations,
      additions, improvements  and fixtures  (other than trade  fixtures) which
      shall have been made or  installed by Lessor or Lessee upon  the Premises
      and all floor covering so installed shall remain upon and be  surrendered
      with  the Premises as a part thereof, without disturbance, molestation or
      injury  and  without charge,  at the  expiration  or termination  of this
      Lease.  If the Premises are not surrendered on the Expiration Date or the
      date of  termination,  Lessee  shall  indemnify Lessor  against  loss  or
      liability,  claims, without  limitation,  made by  any succeeding  Lessee
      based upon such delay.  Lessee shall promptly surrender all  keys for the
      Premises to Lessor  at the place then fixed for payment of rent and shall
      inform Lessor of combinations of any locks and safes on the Premises.

      HOLDING OVER:

           30.   In the event of a  holding over by Lessee after  expiration or
      termination  of  this Lease  without the  consent  in writing  of Lessor,
      Lessee shall be deemed a lessee at sufferance and shall pay rent for such
      occupancy  at the rate of  twice the last-current  aggregate Monthly Base
      Rent and Additional Rent,  prorated for the entire holdover  period, plus
      all  attorney's fees  and expenses  incurred by  Lessor in  enforcing its
      rights hereunder, plus any other damages occasioned by such holding over.
      Except as otherwise agreed, any holding  over with the written consent
      of Lessor shall constitute Lessee a month-to-month lessee.

      ABANDONMENT:

           31.   In the  event Lessee shall  remove its fixtures,  equipment or
      machinery or shall vacate the  Building or any part thereof prior  to the
      Expiration Date, or  shall discontinue  or suspend the  operation of  its
      business conducted in the Building for  a period of more than thirty (30)
      consecutive  days  (except  during any  time  when  the  Building may  be
      rendered untenantable by  reason of fire or other casualty),  then in any
      such event Lessee shall be deemed  to have abandoned the Premises and the
      Building and Lessee shall be in default under the terms of this Lease.

      CONSENTS BY LESSOR:

           32.   Whenever  provision  is  made  under  this  Lease  for  Lessee
      securing  the approval  or consent  by Lessor,  such consent  or approval
      shall only be in writing.

      NOTICES:

           33.   Any notice required  or permitted  under this  Lease shall  be
      deemed sufficiently given or  secured if sent by registered  or certified
      return  receipt  mail to  Lessee  at  1260  Red Fox  Road,  Arden  Hills,
      Minnesota  55112 and to Lessor at the  address then fixed for the payment
      of rent  as provided  in  Article 4  herein.   Either party  may by  like
      written notice at any time designate a different address to which notices
      shall subsequently be sent or rent to be paid.

      RULES AND REGULATIONS:

           34.   None.

      INTENT OF PARTIES:

           35.   Except   as  otherwise  provided  herein,  Lessee  agrees  and
      covenants that if it shall any time fail to pay any such cost or expense,
      or fail to  take out, pay for,  maintain or deliver any  of the insurance
      policies above required, or fail to make any other payment or perform any
      other act on its part to be made or performed as in this  Lease provided,
      then Lessor may, but shall not be obligated  so to do, and without notice
      to or demand upon Lessee and without waiving or releasing Lessee from any
      obligations  of Lessee  in this  Lease contained,  pay any  such cost  or
      expense, effect  any such insurance  coverage and pay  premiums therefor,
      and  may make any other  payment or perform any other  act on the part of
      Lessee to be made and performed as in this Lease provided, in such manner
      and to  such extent as Lessor  may deem desirable, and  in exercising any
      such right, to also  pay all necessary and incidental costs and expenses,
      employ legal counsel  and incur and pay reasonable attorneys'  fees.  All
      sums so  paid  by Lessor  and  all  necessary and  incidental  costs  and
      expenses in connection  with the performance  of any such act  by Lessor,
      together  with interest thereon at  the rate of  twelve percent (12%) per
      annum from  the date of making  of such expenditure, by  Lessor, shall be
      deemed  Additional  Rent hereunder,  and shall  be  payable to  Lessor on
      demand.  Lessee covenants  to pay any such sum  or sums with interest  as
      aforesaid. Lessor shall have the same rights and remedies in the event of
      the nonpayment thereof by Lessee as in  the case of default by Lessee  in
      the payment of the Base Rent.

       GENERAL:

           36.   This Lease does  not create the relationship  of principal and
      agent or of partnership or of joint venture or of any association between
      Lessor and Lessee, the sole relationship between the parties hereto being
      that of Lessor and Lessee.
           No waiver of  any default of Lessee hereunder  shall be implied from
      any omission by  Lessor to take any action on account  of such default if
      such default persists or  is repeated, and no express waiver shall affect
      any default  other than the default  specified in the express  waiver and
      that only  for the time  and to the extent  therein stated.   One or more
      waivers  by Lessor  shall not be  construed as  a waiver  of a subsequent
      breach  of the  same condition,  covenant or  term.   The approval  by or
      consent of  Lessor of  any act by  Lessee requiring Lessor's  approval or
      consent or shall  not waive  or render unnecessary  Lessor's approval  or
      consent to any subsequent similar act  by Lessee shall be construed to be
      both a covenant and  a condition.  No action permitted  or required to be
      taken by or  on behalf of  Lessor under the  terms or provisions of  this
      Lease  shall  be  deemed to  constitute  an  eviction  or disturbance  of
      Lessee's  possession of the  Premises.  All  preliminary negotiations are
      merged into  and incorporated in  this Lease.   The laws of  the State of
      Minnesota shall govern the enforcement,  performance and validity of this
      Lease.

           a. This Lease and EXHIBIT  A attached hereto, constitute the  entire
      agreement  between Lessor and Lessee affecting the Premises and there are
      no other agreements, either oral or written,  between them other than are
      herein  set forth.    No subsequent  addition,  alteration, amendment  or
      change to  this  Lease shall  be  binding upon  Lessor  or Lessee  unless
      reduced to writing and executed in the same form and manner in which this
      Lease is executed.

           b. If  any agreement,  condition or  covenant of  this Lease  or the
      application  thereof  to any  person or  circumstances  shall be,  to any
      extent, invalid or  unenforceable, the  remainder of this  Lease, or  the
      application  of  such  agreement, condition  or  covenant  to persons  or
      circumstances  other  than those  as  to  which  it  is held  invalid  or
      unenforceable,  shall  not  be   affected  thereby  and  each  agreement,
      condition or covenant of this Lease shall be valid and be enforced to the
      fullest extent permitted by law.

      HAZARDOUS MATERIAL:

           37.a. The  Premises shall  be used  by and/or  at the  sufferance of
      Lessee for only  the purposes set forth  in Article 11 herein and  for no
      other purposes.  Lessee shall  not use or permit the use  of the Premises
      in any manner that will tend to create waste or a nuisance.


           b. Lessee covenants  that  throughout the  term  of this  Lease,  at
      Lessees sole cost and expense, Lessee shall promptly comply with all laws
      and  ordinances and the orders, rules and regulations and requirements of
      all federal, state and municipal governments and appropriate departments,
      commissions  and boards,  and the  orders, rules  and regulations  of the
      Board of  Fire  Underwriters in  Minnesota and  whether or  not the  same
      require structural repairs or alterations, which may be applicable to the
      Premises,  or the  use or manner  of use  of the  Premises.   Lessee will
      likewise  observe and  comply with  the requirements  of all  policies of
      public liability, fire and all other policies of insurance at any time in
      force with respect to  the Building and improvements on the  Premises and
      the equipment thereof.

           c. In  the event  any  Hazardous Material  (hereinafter defined)  is
      brought or caused to be brought into or onto the Premises or the Building
      by Lessee, Lessee  shall handle any such material in  compliance with all
      applicable federal, state and/or local regulations.  For purposes of this
      Article 37, "Hazardous Material" means  and includes any hazardous, toxic
      or  dangerous waste,  substance or  material defined as  such in  (or for
      purposes  of) the Comprehensive Environmental Response, Compensation, and
      Liability  Act, any  so-called  "Superfund" or  "Superlien"  law, or  a
      ny federal, state or local statute, law, ordinance, code, rule,
      regulation, order decree  regulating, relating to, or imposing
      liability or standards of conduct concerning, any hazardous, toxic or
      dangerous waste, substance or material, as  now or at any  time
      hereafter in  effect.  Lessee  shall   submit to  Lessor on  an annual 
      basis copies  of its  approved hazardous
      materials communication  plan, OSHA monitoring plan  and permits required
      by the  Resource Recovery  and  Conservation Act  of 1976,  if Lessee  is
      required to  prepare, file or obtain  any such plans or  permits.  Lessee
      will  indemnity and hold  harmless Lessor  from any  losses, liabilities,
      damages, costs  or expenses (including reasonable  attorneys' fees) which
      Lessor may suffer  or incur as a result of  Lessee's introduction into or
      onto the  Premises or Building  of any Hazardous Material.   This Article
      shall survive the expiration or sooner termination of this Lease.

      CAPTIONS:

           38.   The  captions are inserted only as a matter of convenience and
      for reference, and in no way define, limit or describe  the scope of this
      Lease nor the intent or any provision thereof.

      EXHIBITS:

           39.   Reference  is made  to  EXHIBIT A,  which Exhibit  is attached
      hereto and made a part hereof.




              EXHIBIT                      DESCRIPTION

              EXHIBIT A                    Legal Description


      EXTENSION AGREEMENT:

           40.   Lessor and  Lessee hereby  agree that the  Extension Agreement
      shall remain  in full force and  effect, shall not be  superseded by this
      Lease and that  the "Lease" referred to in the  Extension Agreement shall
      be deemed to be a reference to this Lease.

      SEE GUARANTY ATTACHED HERETO AND MADE A PART HEREOF.

           IN  WITNESS WHEREOF, Lessor and Lessee have caused these presents to
      be  executed in form and manner sufficient to bind them at law, as of the
      day and year first above written.

      Lessee:                              Lessor:

      RESISTANCE TECHNOLOGY, INC.          ARDEN PARTNERS I , L.L.P.


      By:                                  By:                       
             Mark S. Gorder                       Thomas A. Giguere
           Its:  President and                 Its:  Managing Partner
           Chief Executive Officer


       STATE OF MINNESOTA                  )
                                           ) ss.
      COUNTY OF                            )

           On  this _____  day of  _______________, 1996,  before me,  a notary
      public, personally  appeared Mark S. Gorder, to me known to be the person
      described in and  who executed the foregoing instrument, who, being by me
      duly sworn, did say that he  is the President and Chief Executive Officer
      of Resistance  Technology,  Inc.,  a Minnesota  corporation;  that  said
      corporation has no corporate  seal; that said instrument was  executed on
      behalf of  said corporation by authority  of its Board  of Directors; and
      that  the execution of said  instrument is his free  act and deed and the
      free act and deed of said corporation.



                                  
              Notary Public



      STATE OF MINNESOTA                   )
                                           ) ss.
      COUNTY OF                            )

           On  the  _______ day  of _____________,  1996,  before me,  a notary
      public,  personally appeared  Thomas A.  Giguere, to me  known to  be the
      person  described  in the  foregoing instrument,  who,  being by  me duly
      sworn, did say that he is the Managing Partner of Arden Partners  I, LLP,
      a Minnesota limited liability  partnership; that said partnership  has no
      partnership seal; that  said instrument  was executed on  behalf of  said
      partnership by  authority  of its  partnership  agreement; and  that  the
      execution of said instrument is a free act and deed of said partnership.


                                                                    
                                  
           Notary Public



                        EXHIBIT "A" OF AMEND AND RESTATED
                            OFFICE/WAREHOUSE LEASE
                    EFFECTIVE THE 1ST DAY OF NOVEMBER, 1996
                                BY AND BETWEEN
                           ARDEN PARTNERS I, L.L.P.
                                      AND
                           RESISTANCE TECHNOLOGY, INC.


                             LEGAL DESCRIPTION


      That part  of the  North  703.50 feet  of the  Northwest  Quarter of  the
      Southeast  Quarter of Section 27,  Township 30, Range  23, Ramsey County,
      Minnesota described as follows:

      Beginning  at  the  Northeast corner  of  the  Northwest  Quarter of  the
      Southeast Quarter; thence Westerly along the North line of said Northwest
      Quarter of the Southeast Quarter a distance of 350 feet; thence Southerly
      parallel with the  East line of said  Northwest Quarter of  the Southeast
      Quarter  a distance  of 483.68  feet; thence  Southeasterly along  a non-
      tangential curve, concave  to the  Southwest, having a  radius of  483.07
      feet  for a distance of  349.17 feet, more or  less (chord = 341.62 feet,
      chord bearing =  S50 02'34"E) to its intersection with  the South line of
      said North  703.50 feet of the Northwest Quarter of the Southeast Quarter
      at  a point  on said  South  line distant  89.16 feet  Westerly from  the
      Southeast corner  of said North 703.50  feet of the Northwest  Quarter of
      the Southeast Quarter,  as measured along said Southline; thence Easterly
      along  said South line to  said Southeast corner;  thence Northerly along
      the East line of said  Northwest Quarter of the Southeast Quarter  to the
      point of beginning; for the purpose of this description the  East line of
      said Northwest  Quarter of the  Southeast Quarter  is considered to  be a
      line bearing SO 16'00"E;

      EXCEPT the Northerly 240 feet of the Easterly 150 feet thereof.







      This instrument was drafted by:
      William J. Cosgriff
      Doherty, Rumble & Butler 
      Professional Association
      2800 Minnesota World Trade Center
      30 East Seventh Street
      St. Paul, Minnesota 55101-4999
      Telephone: (612) 291-9294
      Fax: (612) 291-9313



           REMOVAL OF FIXTURES                 12

           QUIET ENJOYMENT                     12

           RECORDING                           12

           OVERDUE PAYMENTS                    12

           SURRENDER                           12

           HOLDING OVER                        13

           ABANDONMENT                         13

           CONSENTS BY LESSOR                  13

           NOTICES                             13

           RULES AND REGULATIONS               13

           INTENT OF PARTIES                   13

           GENERAL                             14

           HAZARDOUS MATERIAL                  14

           CAPTIONS                            15

           EXHIBITS                            15

           EXTENSION AGREEMENT                 15

      LEGAL DESCRIPTION                                             EXHIBIT "A"



                                                                  EXHIBIT 13
      SELAS CORPORATION OF AMERICA
      is a diversified firm with international operations and sales that
      engages in the design, development, engineering and manufacturing of a
      range of products.  The Company, headquartered in Dresher, Pennsylvania
      with subsidiaries in Minnesota, Ohio, California, France, Germany and
      Italy, operates directly or through subsidiaries in three business
      segments.  TM   Under the Selas   name, the Company designs and
      manufactures specialized industrial heat processing systems and
      equipment for steel, glass and  other manufacturers worldwide.  The
      Company's subsidiary, Resistance Technology, Inc., designs and 
      manufactures microminiature components and molded plastic parts
      primarily for the hearing instrument manufacturing
      industry worldwide.  The Company's subsidiary, RTI Electronics, Inc., 
      formed in 1997, manufactures heat sensitive resistors known as
      thermistors.  The Company's subsidiary, Deuer Manufacturing, Inc.,
      manufactures spare tire holders and lifts and related products, primarily
      based on cable winch designs, for use principally as original equipment
      by the pick-up truck and minivan segment of the automotive industry.
      FINANCIAL HIGHLIGHTS
      YEARS ENDED DECEMBER 31                   1996             1995
      Net sales . . . . . . . . . . . .  $103,426,000     $71,215,000
      Operating income  . . . . . . . .  $  7,522,000     $ 4,758,000
      Net income  . . . . . . . . . . .  $  4,130,000     $ 2,300,000
      Earnings per common and 
        common equivalent share:
          Primary   . . . . . . . . . .         $1.17            $.66
          Fully diluted . . . . . . . .         $1.16            $.66
      Working capital . . . . . . . . .  $ 19,822,000     $15,751,000
      Total assets  . . . . . . . . . .  $ 91,162,000     $67,960,000
      Total shareholders' equity  . . .  $ 37,641,000     $34,656,000

      MARKET AND DIVIDEND INFORMATION
                                        1996                  1995     
                                       Market                Market
                                     Price Range           Price Range 
      QUARTER                       HIGH     LOW          HIGH     LOW
      First   . . . . . . . . . . . 11-3/4    8-13/16     10       8-5/8
      Second  . . . . . . . . . . . 11-1/2   10-3/8        9-3/4   7-7/8
      Third   . . . . . . . . . . . 14-3/8   10            8-3/4   7-3/8
      Fourth  . . . . . . . . . . . 17-1/4   13-1/2        9-7/8   7-3/16

      At February 12, 1997, the Company had 539 shareholders of record.  

                                    1996        1995        1994
      Dividends per share:
        First Quarter               $.06        $.055       $.05
        Second Quarter               .06         .055        .05
        Third Quarter                .06         .06         .05
        Fourth Quarter               .065        .06         .055

      The payment of any future dividends is subject to the discretion of the
      Board of Directors and is dependent on a number of factors, including the
      Company's capital requirements, financial condition, financial covenants
      and cash availability.

      Selas is an equal opportunity employer.

      THE COMMON STOCK OF SELAS CORPORATION OF AMERICA IS LISTED ON THE
      AMERICAN STOCK EXCHANGE UNDER THE SYMBOL SLS.


      SELAS CORPORATION OF AMERICA
      FIVE-YEAR SUMMARY OF OPERATIONS
      (In thousands, except for share data)

      Years Ended December 31                1996        1995       1994 
      Sales, net                         $103,426    $ 71,215     $ 73,663 

      Cost of sales                        80,870      52,060       52,813
      Selling, general and admin-
      istrative expenses                   15,034      14,397       14,727
      Interest expense                      1,212       1,336        1,282
      Interest (income)                      (298)       (340)        (303)
      Other (income) expense, net              83          36          165 

      Income (loss) before income taxes
        (benefits) and cumulative effect 
        of changes in accounting 
        principles                          6,525       3,726        4,979
      Income taxes (benefits)               2,395       1,426        1,875

      Income (loss) before cumulative
        effect of changes in 
        accounting principles               4,130       2,300        3,104

      Cumulative effect at January
        1, 1992 of changes in
        accounting principles (b)             --         --             -- 
      Net income (loss)                  $  4,130    $  2,300     $  3,104 
                                         =========   =========    =========
      Earnings (loss) per share:
        Primary
          Income (loss) before cumula-
            tive changes in accounting
            principles                      $1.17        $.66        $ .89 
          Cumulative effect of changes
            in accounting principles           --         --           -- 

        Net income (loss)                   $1.17        $.66        $ .89
                                         ========    ========     =========
        Fully diluted
          Income (loss) before cumula-
            tive effect of changes in
            accounting principles           $1.16        $.66        $ .89
          Cumilative effect of changes
            in accounting principles         --          --            -- 

        Net income (loss)                  $1.16         $.66        $ .89
                                         ========    =========    =========
      Weighted average number of
        common and common equivalent
        shares outstanding during
        year 

        Primary                          3,514,996   3,468,012    3,483,381
                                         =========   =========    =========
        Fully diluted                    3,567,701   3,486,244    3,483,381
                                         =========   =========    =========


                                                                  Continued . .


      SELAS CORPORATION OF AMERICA
      FIVE-YEAR SUMMARY OF OPERATIONS
      (In thousands, except for share data)

      Years Ended December 31                1993 (a)        1992
      Sales, net                         $  52,268       $  27,566

      Cost of sales                         39,962          20,940
      Selling, general and admin-
        istrative expenses                   9,687           8,618
      Interest expense                         601             421
      Interest (income)                       (346)           (644)
      Other (income) expense, net              (12)             (4) 

      Income (loss) before income taxes
        (benefits) and cumulative effect 
        of changes in accounting 
        principles                           2,376          (1,765)
      Income taxes (benefits)                1,029            (398)

      Income (loss) before cumulative
        effect of changes in 
        accounting principles                1,347          (1,367)

      Cumulative effect at January
        1, 1992 of changes in
        accounting principles (b)              --           (3,566)
      Net income (loss)                  $   1,347       $  (4,933)
                                         =========       =========
      Earnings (loss) per share:
        Primary
          Income (loss) before cumula-
            tive changes in accounting
            principles                      $  .42         $  (.43)
          Cumulative effect of changes
            in accounting principles           --            (1.12)
        Net income (loss)                   $  .42        $  (1.55)
                                         =========       =========
        Fully diluted
          Income (loss) before cumula-
            tive effect of changes in
            accounting principles           $  .41          $ (.43)
          Cumilative effect of changes
            in accounting principles            --           (1.12)
        Net income (loss)                   $  .41          $(1.55)
                                         =========       =========
      Weighted average number of
        common and common equivalent
        shares outstanding during
        year 

        Primary                          3,246,588       3,186,942
                                         =========       =========
        Fully diluted                    3,258,080       3,187,790
                                         =========       =========

      (a)  On October 20, 1993, the Company acquired all of the outstanding 
           common shares of Resistance Technology, Inc.
      (b)  Effective January 1, 1992, the Company adopted Statements of 
           Financial Accounting Standards No. 106 and 109. 





      OTHER FINANCIAL HIGHLIGHTS
      Years Ended December 31                1996       1995          1994
      (In thousands, except for share 
       data)

      Working capital                    $ 19,822    $ 15,751     $ 17,935
      Total assets                       $ 91,162    $ 67,960     $ 70,120
      Long-term debt                     $  6,837    $  9,100     $ 11,136
      Long-term benefit obligations      $  4,310    $  4,409     $  4,431
      Shareholders' equity:
        Capital stock and additional
         paid-in capital                 $ 17,214    $ 17,214     $ 17,182
        Retained earnings                  19,673      16,390       14,886
        Foreign currency translation
         adjustment                         1,136       1,440        1,524
        Minimum pension liability
         adjustment                           --           (6)        (112)
        Treasury stock                       (382)      (382)         (382)

          Total shareholders' equity     $ 37,641    $ 34,656     $ 33,098

      Depreciation and amortization      $  2,826    $  2,771     $  2,732  
      Dividends per share                   $.245       $ .23        $.205




      Years Ended December 31                1993 (a)     1992
      (In thousands, except for share data)

      Working capital                    $ 14,722      $21,629
      Total assets                       $ 72,864      $41,666
      Long-term debt                     $ 11,579      $ 2,717
      Long-term benefit obligations      $  4,553      $ 4,113
      Shareholders' equity:
        Capital stock and additional
         paid-in capital                 $ 16,980      $14,534
        Retained earnings                  12,490       11,788
        Foreign currency translation
         adjustment                           587          945
        Minimum pension liability
         adjustment                          (248)          --
        Treasury stock                       (382)        (382)

          Total shareholders' equity     $ 29,427      $26,885

      Depreciation and amortization      $  1,326      $   906    
      Dividends per share                    $.20         $.20









      MANAGEMENT'S DISCUSSION AND ANALYSIS
      OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

      1996 COMPARED WITH 1995

      Consolidated sales increased 45.2% to $103.4 million in 1996 from $71.2
      million in 1995.  Net sales for the heat processing segment increased to
      $62.8 million in 1996 from $32.6 million in 1995.  The sharp increase in
      sales was due to the record level of backlog at the end of 1995, along
      with additional bookings of several large engineering contracts in 1996. 
      Consolidated backlog for the heat processing segment was $55.5 million at
      December 31, 1996 compared to $69.3 million at December 31, 1995.

      The Company's precision electromechanical and plastics components
      business segment had sales of $27.4 million in 1996 compared to sales of
      $24.9 million in 1995.  The sales increase in this segment is due to
      higher unit sales to the hearing aid industry.

      Net sales of the tire holders, lifts and related products segment
      decreased to $13.2 million in 1996 from $13.8 million in 1995.  The
      decrease in sales for this segment is due to the previously disclosed
      finalization of the Chrysler mini-van contract after the first quarter
      of 1995.

      The Company's gross profit margin as a percentage-of-sales decreased to
      21.8% in 1996 from 26.9% in 1995.  Gross profit margins for the heat
      processing segment decreased to 16.0% in 1996 from 25.8% in 1995.  Heat
      processing gross profit margins vary markedly from contract to contract,
      depending on customer specifications and other conditions related to the
      contract.  The lower gross profit margins for 1996 were also impacted by
      a large engineered contract that resulted in a loss.  Heat processing
      reserves for guarantee obligations and estimated future costs of services
      increased to $1.7 million in 1996 from $.8 million in 1995 due to a
      larger number of projects covered in 1996.

      Gross profit margins for the precision electromechanical and plastics
      segment increased to 39% for 1996 compared to 36% for 1995.  Productivity
      improvement in manufacturing, along with higher unit sales, generated the
      higher gross profit margins for the segment in 1996.

      Gross profit margins for the tire holders, lifts and related products
      segment improved to 13.6% in 1996 compared to 12.9% in 1995.  The
      improvement for this segment in 1996 is due to productivity improvement
      and a more favorable product mix.

      Selling, general and administrative (SG&A) expenses increased 4.4% in
      1996 to $15 million from $14.4 in 1995.  SG&A expense, as a percentage-
      of-sales, represented 14.5% in 1996, down from 20.2% in 1995 due to the
      higher amount of sales in 1996, which is up 45.2%, compared to the 4.4%
      increase in SG&A expense in 1996.  The majority of the SG&A increase is
      in the Company's precision and electromechanical and plastics segment
      which increased $.8 million in 1996.


       MANAGEMENT'S DISCUSSION AND ANALYSIS
      OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

      Research and development costs amounted to $1.4 million in 1996 compared
      to $1.5 million in 1995.

      Interest expense decreased to $1,212,000 in 1996 from $1,336,000 in 1995
      due to lower borrowings in 1996.  Interest income for 1996 decreased to
      $298,000 from $340,000 in 1995 due to fewer funds available for
      investment in 1996.

      Other (income) expense includes losses on foreign currency transactions
      of $8,000 in 1996 and $123,000 in 1995.

      The effective tax rate in 1996 and 1995 on income before income taxes was
      36.7% and 38.3%, respectively.  The higher rate in 1995 is due to foreign
      operating losses not subject to tax benefits.

      Consolidated net income of $4.1 million in 1996 is up 79.6% from $2.3
      million in 1995.  The Company's heat processing segment's net income for
      1996 increased to $2.0 million in 1996 from $.6 million in 1995 due
      primarily to the strong increase in sales.  The precision
      electromechanical and plastic components segment net income increased to
      $2 million in 1996 from $1.5 million in 1995 due to higher sales and
      improved gross profit margins.




      MANAGEMENT'S DISCUSSION AND ANALYSIS
      OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) LIQUIDITY
      AND CAPITAL RESOURCES

      Consolidated net working capital increased to $19.8 million at December
      31, 1996 from $15.8 million at December 31, 1995.  The increase in
      working capital is due primarily to the net income of $4.1 million in
      1996 and favorable changes in operating assets and liabilities, partially
      offset by the repayment of long-term debt of $2.1 million, repayment of
      short-term borrowings of $2 million and dividend payments of $.8 million. 
      The major changes in the components of working capital are higher
      accounts receivable of $21.4 million attributed to higher sales in the
      heat processing segment and higher cash balances of $4.4 million,
      partially offset by higher current liabilities of $22.6 million due to
      increased activity in the heat processing segment.

      The Company's long-term debt at December 31, 1996 is $6.8 million.  Under
      the terms of the Company's credit facility, there are covenants that may
      restrict the payment of future dividends.  The credit facility requires
      the Company to maintain consolidated tangible capital funds of
      approximately $18.4 million through December 31, 1996 consisting of
      shareholders' equity, plus subordinated debt, less intangible assets
      increased annually by 60% of net income and 60% of the aggregate amount
      of contributions to capital.  At December 31, 1996, the Company exceeded
      the amount required to satisfy this covenant in the credit facility by
      $7.1 million.

      The Company's French subsidiary has an interest rate swap agreement for
      the purpose of managing interest rate expense.  The total notional amount
      of $2.2 million at December 31, 1996 will decrease with the terms of the
      long-term debt agreement.  The swap agreement requires fixed interest
      rate payments of 8.55% through May, 2006.  Additional interest incurred
      in connection with the swap arrangement amounted to $101,738.  See note 8
      of the Consolidated Financial Statements for discussion of this
      agreement.

      See note 15 to the Consolidated Financial Statements regarding
      commitments and contingencies.

      See note 17 to the Consolidated Financial Statements regarding subsequent
      events.

      The Company believes that its present working capital position combined
      with funds expected to be generated from operations and the available
      borrowing capacity through its revolving credit loan facilities will be
      sufficient to meet its anticipated cash requirements for operating needs
      and capital expenditures.





      MANAGEMENT'S DISCUSSION AND ANALYSIS
      OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

      1995 COMPARED WITH 1994

      Consolidated net sales decreased 3.4% to $71.2 million in 1995 from $73.7
      million in 1994.  Net sales from the heat processing segment decreased to
      $32.6 million in 1995 from $34.5 million in 1994.  The decline in sales
      in this segment is due primarily to the timing of the recognition of
      sales arising from several large engineering contracts that were
      completed, or near completion in 1995, as reflected in the backlog for
      this segment at December 31, 1994.  In addition, backlog for this segment
      did not substantially increase until several large engineering contracts
      were received at the end of 1995, and the timing of their receipt meant
      that they only had a minimal impact on 1995 sales. Consolidated backlog
      for the heat processing segment increased substantially due to large
      custom engineering contracts received at the end of 1995 and at December
      31, 1995 this segment's backlog was $69.3 million versus $16.6 million at
      December 31, 1994.

      The Company's precision electromechanical and plastics components
      business segment had sales of $24.9 million in 1995 compared to sales of
      $22.5 million in 1994.  Sales in this segment increased due to higher
      unit sales to the hearing aid industry along with plastic component sales
      to the communications industry.

      Net sales of the tire holders, lifts and related products segment
      decreased to $13.8 million in 1995 from $16.7 million in 1994.  The
      decrease in sales is due to the previously disclosed loss of the 
      Chrysler mini-van contract in the first quarter of 1995.

      The Company's gross profit margin as a percentage-of-sales decreased to
      26.9% in 1995 from 28.3% in 1994.  Gross profit margin for the heat
      technology segment decreased to 25.8% in 1995 from 26.8% in 1994.  Heat
      processing gross profit margins vary markedly from contract to contract
      depending on customer specifications and other conditions related to the
      contract.  Heat processing reserves for guarantee obligations and
      estimated future costs of services decreased to $.8 million in 1995 from
      $1.2 million due to the completion of several contracts in 1995.

      Gross profit margin for the precision electromechanical and plastics
      segment decreased to 36% in 1995 from 36.7% in 1994.  The decline in
      gross profit margin is due in part to the mix of product sales and to the
      introduction of new products which increased the segments total sales but
      at lower gross profit margins.

      Gross profit margins for the tire holders, lifts and related products
      segment decreased to 12.9% in 1995 from 20.2% in 1994.  The lower gross
      profit margin is due to the loss of the Chrysler mini-van contract in the
      first quarter of 1995, along with labor, direct material and overhead
      increases in 1995 which were not passed along as selling price increases
      to the segment's automotive customers.






      MANAGEMENT'S DISCUSSION AND ANALYSIS
      OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

      Selling, general and administrative (SG&A) expenses declined by 2% in
      1995 to $14.4 million from $14.7 million in 1994.  The decrease in SG&A
      of $.3 million is due primarily to lower expenses for the heat processing
      segment which was down $.8 million in 1995, partially offset by the
      growth in the precision electromechanical and plastic components segment
      which increased $.6 million in 1995.

      Interest expense increased to $1,336,000 in 1995 from $1,282,000 in 1994
      due to higher short-term borrowings in Europe for 1995.  Interest income
      increased to $340,000 in 1995 from $303,000 in 1994 due to an increase in
      funds available for investment in 1995.

      Other (income) expense includes losses on foreign currency transactions
      of $123,000 in 1995 and gains of $41,000 in 1994.  Also included in 1995
      was a gain of $172,000 on the sale of the investment in Isiglass SPA.  

      The effective tax rate in 1995 and 1994 on income before income taxes was
      38.3% and 37.6%, respectively.  Consolidated net income of $2.3 million
      in 1995 is down from $3.1 million in 1994.  The heat processing segment's
      net income declined to $.6 million in 1995 from $1 million in 1994 as
      this segment incurred a reorganizational charge and German tax
      adjustment in the second quarter of 1995. The precision electro-
      mechanical and plastic components segment net income increased to $1.5
      million in 1995 from $1.1 million in 1994 due to increased sales.
      Net income for the tire holders, lifts and related products segment
      decreased to $.1 million in 1995 from $1 million in 1994 due to lower
      sales and lower gross profit margins.





      SELAS CORPORATION OF AMERICA
      CONSOLIDATED STATEMENTS OF OPERATIONS

      YEARS ENDED DECEMBER 31                1996            1995         1994

      Sales, net . . . . . . . . . .   $103,426,075   $71,215,413  $73,663,182

      Operating costs and expenses
        Cost of sales  . . . . . . .     80,870,331    52,060,118   52,813,289
        Selling, general and
          administrative expenses  .     15,033,728    14,397,489   14,726,715 

      Operating income . . . . . . .      7,522,016     4,757,806    6,123,178

      Interest expense . . . . . . .      1,212,194     1,336,386    1,281,811
      Interest (income). . . . . . .       (297,806)     (339,895     (303,239)
      Other expense, net . . . . . .         82,475        35,732      165,872 

      Income before income taxes . .      6,525,153     3,725,583    4,978,734
      Income taxes   . . . . . . . .      2,394,958     1,425,559    1,874,695 

      Net income . . . . . . . . . .  $   4,130,195   $ 2,300,024 $  3,104,039
                                      =============   ===========  ===========


      Earnings per common and 
        common equivalent share 

        Primary  . . . . . . . . . .        $  1.17        $  .66   $      .89
                                      =============   ===========   ===========

        Fully diluted  . . . . . . .        $  1.16        $  .66   $      .89
                                      =============   ===========   ===========










               See accompanying notes to the consolidated financial statements.



                                                                              

                             CONSOLIDATED  BALANCE  SHEETS

      ASSETS                                                 1996       1995

      Current assets

        Cash, including cash equivalents
          of $7,532,000 in 1996 and
          $ 1,865,000 in 1995. . . . . . . . . . .    $ 8,343,820  $ 3,912,364

        Accounts and notes receivable, less allow-
          ance for doubtful accounts of $787,000
          and $792,000 . . . . . . . . . . . . . .     41,660,153   20,227,323

        Inventories  . . . . . . . . . . . . . . .      8,433,522    7,792,134

        Deferred income taxes  . . . . . . . . . .      2,051,580    1,323,932

        Other current assets . . . . . . . . . . .        623,169    1,219,447

            Total current assets . . . . . . . . .     61,112,244   34,475,200


      Investment in unconsolidated affiliates  . .        538,278      673,954


      Property, plant and equipment

        Land   . . . . . . . . . . . . . . . . . .      1,118,802    1,150,956

        Buildings  . . . . . . . . . . . . . . . .     11,499,609   11,790,131

        Machinery and equipment  . . . . . . . . .     19,455,946   16,954,756

                                                       32,074,357   29,895,843
        Less:  Accumulated depreciation  . . . . .     15,362,577   13,231,646 

            Net property, plant and equipment. . .     16,711,780   16,664,197

      Deferred pension cost  . . . . . . . . . . .        225,060      313,675

      Excess of cost over net assets of acquired
        subsidiaries, less accumulated
        amortization of $1,140,000 and $808,000  .     12,126,709   12,458,364


      Accounts and note receivable . . . . . . . .           --      2,828,185

      Other assets, less amortization  . . . . . .        448,201      545,945

                                                      $91,162,272   $67,959,520
                                                      ===========   ===========



               See accompanying notes to the consolidated financial statements.





      December 31, 1996 and 1995

      LIABILITIES AND SHAREHOLDERS' EQUITY                  1996      1995 

      Current liabilities

        Notes payable . . . . . . . . . . . . . . .  $   583,767   $ 2,651,188

        Current maturities of long-term debt  . . .    2,271,830     2,258,894

        Accounts payable  . . . . . . . . . . . . .   20,169,143     5,490,967

        Federal, state and foreign income taxes . .      926,823       250,445

        Customers' advance payments on contracts  .    4,854,880     2,338,231

        Guarantee obligations and estimated future 
          costs of service  . . . . . . . . . . . .    1,725,690       844,787

        Other accrued liabilities . . . . . . . . .   10,758,185     4,889,993

            Total current liabilities . . . . . . .   41,290,318    18,724,505
      Long-term debt  . . . . . . . . . . . . . . .    6,836,593     9,100,401

      Pension plan obligation . . . . . . . . . . .      225,060       320,184

      Other postretirement benefit obligations  . .    4,084,768     4,089,234

      Deferred income taxes . . . . . . . . . . . .    1,084,057     1,069,022

      Contingencies and commitments

      Shareholders' equity

        Common shares, $1 par; 10,000,000 shares
          authorized; 3,702,426 shares issued . . .    3,702,426    3,702,426
       
        Additional paid-in capital  . . . . . . . .   13,512,005   13,512,005

        Retained earnings . . . . . . . . . . . . .   19,672,730   16,390,247

        Foreign currency translation adjustment . .    1,136,252    1,439,943

        Minimum pension liability adjustment  . . .         --         (6,510)
                                                      38,023,413   35,038,111

        Less:  242,376 common shares held in
          treasury, at cost . . . . . . . . . . . .      381,937      381,937

            Total shareholders' equity  . . . . . .   37,641,476   34,656,174

                                                     $91,162,272  $67,959,520
                                                     ===========  ===========

               See accompanying notes to the consolidated financial statements.



      CONSOLIDATED STATEMENTS OF CASH FLOWS

      YEARS ENDED DECEMBER 31                                           1996

      Cash flows from operating activities:
        Net income . . . . . . . . . . . . . . . . . . . . . .   $  4,130,195
        Adjustments to reconcile net income to net cash provided
          by operating activities:
            Depreciation and amortization  . . . . . . . . . .      2,826,038
            Equity in (income) losses of unconsolidated affiliate s   115,880
            (Gain) on sale of equity in affiliate  . . . . . .           --   
            (Gains) losses on sale of property and equipment .         (1,163)
            Deferred taxes . . . . . . . . . . . . . . . . . .       (718,935)
            Changes in operating assets and liabilities:
                (Increase) decrease in accounts receivable . .    (19,912,666)
                (Increase) decrease in inventories . . . . . .       (677,400)
                (Increase) decrease in other assets  . . . . .        788,452
                 Increase (decrease) in accounts payable . . .     15,103,964
                 Increase (decrease) in accrued expenses . . .      7,635,111
                 Increase (decrease) in customer advances  . .      2,553,785 
                 Increase (decrease) in other liabilities  . .        (53,122)

                   Net cash provided by operating activities  .    11,790,139 

      Cash flows from investing activities:
        Purchases of property, plant and equipment . . . . . .     (2,859,166)
        Proceeds from sale of equity in affiliate  . . . . . .        575,826
        Proceeds from sales of property and equipment. . . . .         35,827
        Dividend from unconsolidated affiliate . . . . . . . .         16,742
        Investment in unconsolidated affiliate . . . . . . . .           --
        Acquisition of subsidiary company, net of cash acquired          --  
       

                   Net cash (used) by investing activities . .     (2,230,771)

      Cash flows from financing activities:
        Proceeds from short-term borrowings  . . . . . . . . .           --
        Repayments of short-term borrowings  . . . . . . . . .     (2,012,413)
        Proceeds from borrowings used to acquire
          subsidiary company   . . . . . . . . . . . . . . . .           --  
        Repayments of long-term debt . . . . . . . . . . . . .     (2,102,684)
        Proceeds from exercise of stock options  . . . . . . .           --   
        Payment of dividends   . . . . . . . . . . . . . . . .      (847,712)

                   Net cash (used) by financing activities . .     (4,962,809) 

      Effect of exchange rate changes on cash  . . . . . . . .       (165,103)

      Increase (decrease) in cash and cash equivalents . . . .      4,431,456

      Cash and cash equivalents beginning of year. . . . . . .      3,912,364 

      Cash and cash equivalents end of year. . . . . . . . . .   $  8,343,820 
                                                                 ============

            See accompanying notes to the consolidated financial statements.


       CONSOLIDATED STATEMENTS OF CASH FLOWS

      YEARS ENDED DECEMBER 31                                           1995

      Cash flows from operating activities:
        Net income . . . . . . . . . . . . . . . . . . . . . . .  $ 2,300,024
        Adjustments to reconcile net income to net cash provided
          by operating activities:
            Depreciation and amortization  . . . . . . . . . . .    2,770,728
            Equity in (income) losses of unconsolidated affiliates    (14,024)
            (Gain) on sale of equity in affiliate  . . . . . . .     (171,983)
            (Gains) losses on sale of property and equipment . .       (4,199)
            Deferred taxes . . . . . . . . . . . . . . . . . . .     (108,437)
            Changes in operating assets and liabilities:
                (Increase) decrease in accounts receivable . . .    1,383,444
                (Increase) decrease in inventories . . . . . . .      425,641
                (Increase) decrease in other assets  . . . . . .      (82,004)
                 Increase (decrease) in accounts payable . . . .   (6,977,690)
                 Increase (decrease) in accrued expenses . . . .     (610,643)
                 Increase (decrease) in customer advances  . . .    1,516,404
                 Increase (decrease) in other liabilities  . . .       63,638   
                    Net cash provided by operating activities . .     490,899 

      Cash flows from investing activities:
        Purchases of property, plant and equipment . . . . . .    (2,277,075)
        Proceeds from sale of equity in affiliate  . . . . . .       294,127
        Proceeds from sales of property and equipment. . . . .        43,243
        Dividend from unconsolidated affiliate . . . . . . . .          --
        Investment in unconsolidated affiliate . . . . . . . .          --
        Acquisition of subsidiary company, net of cash acquired         --   

                   Net cash (used) by investing activities . .    (1,939,705)
  
      Cash flows from financing activities:
        Proceeds from short-term borrowings  . . . . . . . . .     2,604,370
        Repayments of short-term borrowings  . . . . . . . . .          --
        Proceeds from borrowings used to acquire subsidiary 
          company                                                      -- 
        Repayments of long-term debt . . . . . . . . . . . . .    (2,397,789)
        Proceeds from exercise of stock options  . . . . . . .        28,281
        Payment of dividends   . . . . . . . . . . . . . . . .      (795,812)

                   Net cash (used) by financing activities . .      (560,950)

      Effect of exchange rate changes on cash  . . . . . . . .       109,612

      Increase (decrease) in cash and cash equivalents . . . . .  (1,900,144)

      Cash and cash equivalents beginning of year. . . . . . . .   5,812,508

      Cash and cash equivalents end of year. . . . . . . . . . .   3,912,364
                                                                 ===========

           See accompanying notes to the consolidated financial statements.


       CONSOLIDATED STATEMENTS OF CASH FLOWS

      YEARS ENDED DECEMBER 31                                           1994

      Cash flows from operating activities:
        Net income . . . . . . . . . . . . . . . . . . . . . . . $ 3,104,039
        Adjustments to reconcile net income to net cash provided
          by operating activities:
            Depreciation and amortization  . . . . . . . . . . .   2,732,283
            Equity in (income) losses of unconsolidated affiliates   300,730
            (Gain) on sale of equity in affiliate  . . . . . . .      --   
            (Gains) losses on sale of property and equipment . .      11,070
            Deferred taxes . . . . . . . . . . . . . . . . . . .    (304,708)
            Changes in operating assets and liabilities:
                (Increase) decrease in accounts receivable . . .   2,908,458
                (Increase) decrease in inventories . . . . . . .    (564,901)
                (Increase) decrease in other assets  . . . . . .     232,766
                 Increase (decrease) in accounts payable . . . .  (2,884,253)
                 Increase (decrease) in accrued expenses . . . .   1,350,735
                 Increase (decrease) in customer advances  . . .    (537,675)
                 Increase (decrease) in other liabilities  . . .      74,904

                    Net cash provided by operating activities . .  6,423,448 

      Cash flows from investing activities:
        Purchases of property, plant and equipment . . . . . .    (2,032,890)
        Proceeds from sale of equity in affiliate  . . . . . .         --
        Proceeds from sales of property and equipment. . . . .        25,309
        Dividend from unconsolidated affiliate . . . . . . . .        34,538 
        Investment in unconsolidated affiliate . . . . . . . .      (247,104)   
        Acquisition of subsidiary company, net of cash acquired      (16,601) 

                   Net cash (used) by investing activities . .    (2,236,748)

      Cash flows from financing activities:
        Proceeds from short-term borrowings  . . . . . . . . .          --
        Repayments of short-term borrowings  . . . . . . . . .    (4,744,585)
        Proceeds from borrowings used to acquire subsidiary 
          company   . .  . . . . . . . . . . . . . . . . . . .     1,600,000
        Repayments of long-term debt . . . . . . . . . . . . .    (1,873,724)
        Proceeds from exercise of stock options  . . . . . . .       124,437
        Payment of dividends   . . . . . . . . . . . . . . . .      (708,085)

                   Net cash (used) by financing activities . .    (5,601,957)

      Effect of exchange rate changes on cash  . . . . . . . .        80,407 

      Increase (decrease) in cash and cash equivalents . . . .    (1,334,850)

      Cash and cash equivalents beginning of year. . . . . . .     7,147,358

      Cash and cash equivalents end of year. . . . . . . . . .   $ 5,812,508   
                                                                 ===========

           See accompanying notes to the consolidated financial statements.



      Consolidated Statements of Shareholders' Equity
      Years ended December 31, 1996, 1995 and 1994
                                              
                                           Common Stock             Additional
                                    Number of                       Paid-In
                                     Shares          Amount         Capital  

      Balance, January 1, 1994      3,675,426      $3,675,426      $13,304,103

      Net income
      Translation gain
      Exercise of 22,000 stock
        options                        22,000          22,000          180,537
      Change in minimum
        pension liability
      Cash dividends paid 
        ($.205 per share)                                                     

      Balance, December 31, 1994    3,697,426       3,697,426       13,484,640

      Net income
      Translation (loss)
      Exercise of 5,000 stock 
        options                         5,000           5,000           27,365
      Change in minimum
        pension liability
      Cash dividends paid
        ($.23 per share)                                                      

      Balance, December 31, 1995    3,702,426       3,702,426       13,512,005

      Net income
      Translation  (loss)
      Change in minimum
        pension liability
      Cash dividends paid
        ($.245 per share)             
                                           Balance, December 31, 1996
                                    3,702,426      $3,702,426      $13,512,005
                                    ==========     ==========      ===========

          See accompanying notes to the consolidated financial statements.



      Consolidated Statements of Shareholders' Equity
      Years ended December 31, 1996, 1995 and 1994
                                                      Foreign        Minimum
                                                      Currency       Pension
                                      Retained       Translation     Liability
                                    Earnings         Adjustment     Adjustment

      Balance, January 1, 1994      $12,490,081     $   587,440     $(247,685)

      Net income                      3,104,039
      Translation gain                                  936,932 
      Exercise of 22,000 stock
        options                       
      Change in minimum
        pension liability                                             135,062
      Cash dividends paid 
        ($.205 per share)              (708,085)                             

      Balance, December 31, 1994     14,886,035       1,524,372      (112,623)

      Net income                      2,300,024
      Translation (loss)                                (84,429)
      Exercise of 5,000 stock 
        options                        
      Change in minimum
        pension liability                                             106,113
      Cash dividends paid
        ($.23 per share)                                                     

      Balance, December 31, 1995     16,390,247       1,439,943        (6,510)

      Net income                      4,130,195
      Translation  (loss)                              (303,691)
      Change in minimum
        pension liability                                               6,510
      Cash dividends paid
        ($.245 per share)              (847,712)                             

      Balance, December 31, 1996    $19,672,730     $ 1,136,252     $    --   
                                    ==========      ===========     =========

         See accompanying notes to the consolidated financial statements.



      Consolidated Statements of Shareholders' Equity
      Years ended December 31, 1996, 1995 and 1994

                                                       Total
                                    Treasury        Shareholders'
                                     Shares            Equity  

      Balance, January 1, 1994      $(381,937)      $29,427,428

      Net income                                      3,104,039
      Translation gain                                  936,932 
      Exercise of 22,000 stock
        options                                         202,537
      Change in minimum
        pension liability                               135,062
      Cash dividends paid 
        ($.205 per share)                              (708,085)

      Balance, December 31, 1994     (381,937)       33,097,913

      Net income                                      2,300,024
      Translation (loss)                                (84,429)
      Exercise of 5,000 stock 
        options                                          32,365
      Change in minimum
        pension liability                               106,113
      Cash dividends paid
        ($.23 per share)                               (795,812)

      Balance, December 31, 1995     (381,937)       34,656,174

      Net income                                      4,130,195
      Translation  (loss)                              (303,691)
      Change in minimum
        pension liability                                 6,510
      Cash dividends paid
        ($.245 per share)                              (847,712)

      Balance, December 31, 1996    $(381,937)      $37,641,476
                                    ==========      ===========

      See accompanying notes to the consolidated financial statements.






                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

      1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      Selas Corporation of America is a diversified firm with international
      operations and sales that engages in the design, development, engineering
      and manufacturing of a range of products.  The Company, headquartered in
      Dresher, Pennsylvania with subsidiaries in Minnesota, Ohio, California,
      France, Germany and Italy, operates directly or through subsidiaries in
      three business segments.

                     TM      Under the Selas   name, the Company designs and
      manufactures specializedindustrial heat processing systems and
      equipment for steel, glass and other manufacturers worldwide.     
      The Company's subsidiary, Resistance Technology, Inc. (RTI), designs
      and manufactures microminiature components and molded plastic parts
      primarily for the hearing instrument manufacturing industry worldwide.
      The Company's subsidiary, RTI Electronics, Inc., formed in 1997,
      manufactures heat sensitive resistors
      known as thermistors.  The Company's subsidiary, Deuer Manufacturing,
      Inc., manufactures spare tire holders and lifts and related products,
      primarily based on cable winch designs, for use principally as original
      equipment by the pick-up truck and minivan segment of the automotive
      industry.

      CONSOLIDATION - The consolidated financial statements include the
      accounts of the Company and its wholly-owned subsidiaries.  All material
      intercompany transactions have been eliminated in consolidation.

      AFFILIATED COMPANIES - The Company accounts for its investment in 50% or
      less owned affiliates on the equity method.  At December 31, 1996 and
      1995 the Company owned a 50% interest in Nippon Selas Co. Ltd., Tokyo,
      Japan. 

      CASH EQUIVALENTS - The Company considers all highly liquid debt
      instruments purchased with an original maturity of three months or less
      to be cash equivalents.  

      INVENTORIES - Inventories, other than inventoried costs relating to long-
      term contracts, are stated at the lower of cost or market. The cost of
      the inventories was determined by the average cost and first in, first
      out method. Inventoried costs relating to long-term contracts are stated
      at the production and engineering cost, including overhead as well as
      actual costs incurred from sub-contractors, which are not in excess of
      estimated realizable value.  

      REVENUE RECOGNITION - As long-term contracts progress, the Company
      records sales and cost of sales based on the percentage-of-completion
      method, whereby the sales value is determined by multiplying the total
      contract amount by the percent of costs incurred to estimated total
      costs.  Such contract costs and expenses incurred on a progress basis at
      the time the sales value is recorded are charged to cost of sales. 
      General and administrative costs are expensed as incurred.  The Company
      provides currently for anticipated and known contract losses.  In
      addition, it provides for guarantee obligations and estimated future
      costs of service based on past experience of similar projects.  Revisions
      in cost estimates during the progress of the work under the contracts
      have the effect of including in the current accounting period adjustments
      necessary to reflect the results indicated by the revised estimates of
      final cost.


       1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)

      Sales of manufactured products not sold under long-term contracts are
      recorded upon shipment to the customer.

      License fees under agreements not requiring substantial services are
      recognized at time of effectiveness of the license agreement.

      PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment are carried
      at cost.  Depreciation is computed by straight line and accelerated
      methods using estimated useful lives of 5 to 50 years for buildings and
      improvements, and 3 to 12 years for machinery and equipment. 
      Improvements are capitalized and expenditures for 
      maintenance, repairs and minor renewals are charged to expense when
      incurred.  At the time assets are retired or sold, the costs and
      accumulated depreciation are eliminated and the resulting gain or loss,
      if any, is reflected in the consolidated statement of operations.

      EXCESS OF COST OVER NET ASSETS OF ACQUIRED SUBSIDIARIES  - Goodwill
      represents the excess of purchase price over fair value of net assets
      acquired and is amortized on a straight-line basis over the expected
      periods to be benefited, which currently is forty years.  

      Patents and other intangible assets are valued at the lower of amortized
      cost or fair market value and are amortized on a straight-line basis over
      the expected periods to be benefited, which currently is 5 to 20 years.  


      The Company assesses the recoverability of intangible assets by
      determining whether the amortization of the balance over its remaining
      life can be recovered through projected undiscounted future cash flows of
      the business for which the intangible assets arose.  The amount of the
      impairment, if any, is measured based on projected discounted future
      operating cash flows using a discount rate reflecting the Company's
      average cost of funds or fair value of the asset, where appropriate.  The
      assessment of the recoverability of intangible assets will be impacted if
      estimated future operating cash flows are not achieved.

      INCOME TAXES - Income taxes are accounted for under the asset and
      liability method.  Deferred tax assets and liabilities are recognized for
      the future tax consequences attributable to differences between the
      financial statement carrying amounts of existing assets and liabilities
      and their respective tax bases and operating loss and tax credit
      carryforwards.  Deferred tax assets and liabilities are measured using
      enacted tax rates expected to apply to taxable income in the years in
      which those temporary differences are expected to be recovered or
      settled.  The effect on deferred tax assets and liabilities of a change
      in tax rates is recognized in income in the period that includes the
      enactment date.

      DERIVATIVE FINANCIAL INSTRUMENTS - The Company has only limited
      involvement with derivative financial instruments and does not use them
      for trading purposes.  They are used to manage well-defined interest rate
      and foreign currency risks.  The differential to be paid or received on
      interest rate swap agreements is accrued as interest rates change and
      recognized as an adjustment to interest expense.  The gains and losses on
      foreign currency exchange contracts are deferred and recognized when the
      offsetting gains and losses are recognized on the related hedged items.





      1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)

      EMPLOYEE  BENEFIT OBLIGATIONS - The Company provides health care
      insurance for certain domestic retirees and employees.  The Company also
      provides retirement related benefits for certain foreign employees.  The
      Company measures the costs of its obligation based on its best estimate.
      The net periodic costs are recognized as employees render the services
      necessary to earn the postretirement benefit.

      Deferred pension costs are actuarially determined and are amortized on a
      straight-line basis over the expected periods to be benefited, which
      currently is 15 years.

      RESEARCH AND DEVELOPMENT COSTS - Research and development costs,
      including supporting services, amounted to $1,404,000 in 1996, $1,466,000
      in 1995 and $1,308,000 in 1994.  Such costs are charged to expense when
      incurred.

      EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE - Primary and fully
      diluted earnings per common and common equivalent share are computed
      using the treasury stock method based on the weighted average number of
      shares outstanding each year, giving effect to the exercise of
      outstanding stock options.

      USE OF ESTIMATES  - Management of the Company has made a number of
      estimates and assumptions relating to the reporting of assets and
      liabilities, the recording of reported amounts of revenues and expenses
      and the disclosure of contingent assets and liabilities to prepare these
      financial statements in conformity with generally accepted accounting
      principles.  Actual results could differ from those estimates.

      2.  STATEMENTS OF CASH FLOWS

      Supplemental disclosures of cash flow information:

                                               Years Ended December 31       
                                       1996            1995            1994  

      Interest received             $  283,353      $  277,888      $  268,895
      Interest paid                 $1,010,092      $1,306,636      $1,347,193
      Income taxes paid             $2,179,053      $2,410,060      $1,763,931

      During 1994, the Company converted approximately $244,000 of loans to an
      unconsolidated affiliate to investment in the affiliate.

      During 1995, in connection with the sale of the investment in Isiglass
      SPA, which resulted in a gain of $172,000, the Company received notes
      receivable amounting to $943,000 of which $315,000 was repaid during 1995
      and the remainder in 1996.

      At December 31, 1996, the Company had restricted cash of $2,496,000. 
      These funds are released upon performance relating to long-term
      contracts.  All of the funds are expected to be released during 1997.



      3.  BUSINESS SEGMENT INFORMATION

      The Company is engaged in providing engineered heat  processing equipment
      and services  to  industries throughout  the  world, the  manufacture  of
      precision electromechanical and plastic component parts predominantly for
      the hearing instrument industry and the manufacture of spare tire holders
      and lifts for U.S.  manufacturers of original equipment for  light trucks
      and vans.  The results of operations and assets of these segments for the
      years ended December 31, 1996, 1995 and 1994 included in the consolidated
      financial statements are as follows:

      For the year ended
      December 31, 1996                            Segments               

                                                         Tire Holders, Lifts 
                                           Heat             and Related  
                                        Processing           Products 
      Operations
        Sales, net                      $ 62,801,105       $ 13,208,814
        Operating costs and expenses      58,696,391         13,104,340
        General corporate expenses, net         --                 -- 
        Operating income                $  4,104,714       $    104,474
                                        ============       ============
        Interest expense
        Interest (income)                                              
        Other (income) expense, net
        Income before income taxes

      Depreciation and amortization     $    487,422       $    318,039
                                        ============       ============
      Property, plant and equipment
        additions                       $    504,384       $    109,940
                                        ============       ============
      Total assets                      $ 59,138,027       $  5,212,886
                                        ============       ============


                                          Precision
                                        Electromechanical
                                        & Plastic Component
                                            Parts             Total   
      Operations
        Sales, net                      $ 27,416,156       $103,426,075
        Operating costs and expenses      23,563,515         95,364,246
        General corporate expenses, net         --              539,813
        Operating income                $  3,852,641       $  7,522,016
                                        ============
        Interest expense                                      1,212,194
        Interest (income)                                      (297,806)
        Other (income) expense, net                              82,475
        Income before income taxes                         $  6,525,153
                                                           ============
      Depreciation and amortization     $  2,020,577       $  2,826,038
                                        ============       ============
      Property, plant and equipment
        additions                       $  2,244,842       $  2,859,166
                                        ============       ============
      Total assets                      $ 26,811,359       $ 91,162,272
                                        ============       ============



      3.  BUSINESS SEGMENT INFORMATION  (Continued)


      For the year ended
      December 31, 1995                            Segments        

                                                       Tire Holders, Lifts
                                           Heat            and Related 
                                        Processing          Products 
      Operations
        Sales, net                      $32,551,967        $13,789,543
        Operating costs and expenses     30,115,903         13,618,682
        General corporate expenses, net        --                 --  
        Operating income                $ 2,436,064        $   170,861
                                        ===========        ===========
        Interest expense
        Interest (income)                                         
        Other (income) expense, net
        Income before income taxes

      Depreciation and amortization     $   480,362        $   417,706
                                        ===========        ===========
      Property, plant and equipment
        additions                       $   249,215        $   171,975
                                        ===========        ===========
      Total assets                      $36,148,264        $ 5,476,449
                                        ===========        ===========


                                           Precision
                                        Electromechanical
                                        & Plastic Component
                                             Parts            Total   
      Operations
        Sales, net                      $24,873,903        $71,215,413
        Operating costs and expenses     22,057,423         65,792,008
        General corporate expenses, net        --              665,599
        Operating income                $ 2,816,480          4,757,806
                                        ===========
        Interest expense                                     1,336,386
        Interest (income)                                     (339,895)
        Other (income) expense, net                             35,732
       
        Income before income taxes                         $ 3,725,583
                                                           ===========
      Depreciation and amortization     $ 1,872,660        $ 2,770,728
                                        ===========        ===========
      Property, plant and equipment
        additions                       $ 1,855,885        $ 2,277,075
                                        ===========        =========== 
      Total assets                      $26,334,807        $67,959,520
                                        ===========        ===========






      3.  BUSINESS SEGMENT INFORMATION  (Continued)

      For the year ended
      December 31, 1994                            Segments               

                                                         Tire Holders, Lifts 
                                           Heat             and Related  
                                        Processing           Products 
      Operations
        Sales, net                      $34,448,006        $16,713,101
        Operating costs and expenses     32,203,330         15,099,745
        General corporate expenses, net        --               --  

        Operating income                $ 2,244,676        $ 1,613,356
                                        ===========        ===========
        Interest expense
        Interest (income)                                     
        Other (income) expense, net
       
        Income before income taxes

      Depreciation and amortization     $   487,095        $   404,069
                                        ===========        ===========
      Property, plant and equipment
        additions                       $   156,653        $   226,657
                                        ===========        ===========

      Total assets                      $36,753,543        $ 7,236,264
                                        ===========        ===========


                                           Precision
                                        Electromechanical
                                        & Plastic Component
                                            Parts             Total   
      Operations
        Sales, net                      $22,502,075        $73,663,182
        Operating costs and expenses     19,822,902         67,125,977
        General corporate expenses, net        --              414,027

        Operating income                $ 2,679,173          6,123,178
                                        ===========
        Interest expense                                     1,281,811
        Interest (income)                                     (303,239)
        Other (income) expense, net                            165,872
       
        Income before income taxes                         $ 4,978,734
                                                           ===========
      Depreciation and amortization     $ 1,841,119        $ 2,732,283
                                        ===========        ===========
      Property, plant and equipment
        additions                       $ 1,649,580        $ 2,032,890
                                        ===========        ===========

      Total assets                      $26,130,516        $70,120,323
                                        ===========        ===========








      3.  BUSINESS SEGMENT INFORMATION - (Continued)

      The geographical  distribution of identifiable  assets and net  assets at
      December 31, 1996,  1995 and 1994, and income  (loss) before income taxes
      (benefits) for the years then ended is set forth below:

                                                                Income (loss)
                          Identifiable            Net           before taxes
                             assets             assets           (benefits) 

                                                 1996                       

      United States   . .   53,007,230        $ 33,751,368      $ 5,509,966
      Europe          . .   44,315,117           3,890,108        1,015,187
      Eliminations    . .   (6,160,075)               --               --   
      Consolidated    . . $ 91,162,272        $ 37,641,476      $ 6,525,153
                          ============        ============      ===========



                                              1995                       

      United States   . . $49,813,578         $30,974,151       $ 5,454,734
      Europe          . .  24,759,046           3,682,023        (1,729,151)
      Eliminations    . .  (6,613,104)               --                --  
      Consolidated    . . $67,959,520         $34,656,174       $ 3,725,583
                          ===========         ===========       ===========


                                              1994                       

      United States   . . $50,344,311         $28,424,454       $ 4,447,941 
      Europe          . . 24,521,791            4,673,459           530,793
      Eliminations    . .  (4,745,779)               --                --   
      Consolidated    . . $70,120,323         $33,097,913       $ 4,978,734
                          ===========         ===========       ===========








      3.  BUSINESS SEGMENT INFORMATION - (Continued)

      Net sales by geographic area for  the years ended December 31, 1996, 1995
      and 1994 are as follows:

                                                           Transfers
                                       Sales to            between
                                     unaffiliated         geographic
                                      customers             areas   


                                                  1996              
      United States   . . . . .      $ 59,922,640 (a)    $ 1,420,690
      Europe          . . . . .        43,503,435 (b)        314,027
      Eliminations    . . . . .              --           (1,734,717)
      Consolidated    . . . . .      $103,426,075        $      --
                                     ============        ===========


                                                  1995              

      United States   . . . . .      $ 50,387,079 (a)    $ 1,767,546
      Europe          . . . . .        20,828,334 (b)      1,054,656
      Eliminations    . . . . .              --           (2,822,202) 
      Consolidated    . . . . .      $ 71,215,413        $      --
                                     ============        ===========


                                                  1994              

      United States  . . . . . .     $ 46,127,967 (a)    $ 1,851,414
      Europe         . . . . . .       27,535,215 (b)        548,277
      Eliminations   . . . . . .             --           (2,399,691)
      Consolidated   . . . . . .     $ 73,663,182        $      --
                                     ============        ===========



      (a) Includes export sales of approximately $15,026,000 in 1996,
          $16,480,000 in 1995 and $14,972,000 in 1994, principally
          to Europe, Asia, Canada and South America.

      (b) Includes export sales of approximately $40,549,000 in 1996,
          $9,034,000 in 1995 and $20,112,000 in 1994, principally to
          Austria, the United States, Asia and Turkey.

      Transfers between geographic areas are recorded at amounts which
      approximate prevailing selling prices.

      Consolidated net sales in 1996 include approximately $22,132,000 or 21%
      from contracts with one customer executed by the Company's wholly-owned
      European subsidiary, Selas S.A.  Due to the nature of the Company's
      engineered systems products, one contract may account for a large
      percentage of sales in a particular period; however, the Company is not
      dependent on any one engineered systems customer on an ongoing basis.  
      Approximately $45,258,000 of consolidated net sales were attributable to
      customers in the steel industry.  





      3.  BUSINESS SEGMENT INFORMATION - (Continued)

      Consolidated net sales in 1995 do not result from sales to any one
      individual customer in excess of 10% of total sales.   Consolidated net
      sales in 1995 include approximately $13,321,000 attributable to the steel
      industry.

      Consolidated net sales in 1994 include approximately $15,446,000 or 21%
      from contracts with one customer executed by the Company's wholly-owned
      European subsidiary , Selas S.A.  Approximately $19,983,000 of
      consolidated net sales were attributable to the steel industry.  In
      addition, approximately $11,210,000 or 15% of consolidated revenue in
      1994 was derived from sales of tire holders and lifts to a single
      customer.    4.  FAIR VALUE OF FINANCIAL INSTRUMENTS

      The following table presents the carrying amounts and estimated fair
      values of the Company's financial instruments at December 31, 1996 and
      1995.  FASB Statement No. 107, Disclosures about Fair Value of Financial
      Instruments, defines the fair value of a financial instrument as the
      amount at which the instrument could be exchanged in a current
      transaction between willing parties.

                                                         1996        
                                              Carrying           Fair
                                              Amount            Value  

      Financial assets
        Cash, including cash
          equivalents . . . . . . . . . .   $ 8,343,820       $ 8,343,820
        Accounts and notes 
          receivables, including
          non-current portion . . . . . .    41,660,153        41,609,153

      Financial liabilities
        Notes payable . . . . . . . . . .       583,767           583,767
        Trade accounts 
          payables. . . . . . . . . . . .    20,169,143        20,169,143
        Customer advance 
          payments on
          contracts . . . . . . . . . . .     4,854,880         4,854,880
        Other accrued 
          liabilities . . . . . . . . . .    10,758,185        10,758,185
       
        Long-term debt. . . . . . . . . .     9,108,423         8,923,577





      4.  FAIR VALUE OF FINANCIAL INSTRUMENTS - (Continued)

                                                         1995        
                                              Carrying           Fair
                                              Amount            Value

      Financial assets
        Cash, including cash
          equivalents . . . . . . . . . .   $ 3,912,364       $ 3,912,364
        Accounts and notes 
          receivables, including
          non-current portion . . . . . .    23,055,508        22,902,508

      Financial liabilities
        Notes payable . . . . . . . . . .     2,651,188         2,651,188
        Trade accounts 
          payables. . . . . . . . . . . .     5,490,967         5,490,967
        Customer advance 
          payments on
          contracts . . . . . . . . . . .     2,338,231         2,338,231
        Other accrued 
          liabilities . . . . . . . . . .     4,889,993         4,889,993
       
        Long-term debt. . . . . . . . . .    11,359,295        11,134,567




       4.  FAIR VALUE OF FINANCIAL INSTRUMENTS - (CONTINUED)
      The carrying amounts shown in the table are included in the statement of
      financial position under the indicated captions.

      The following methods and assumptions were used to estimate the fair
      value of each class of financial instruments:

      Cash, including cash equivalents, short-term accounts and notes
      receivables, other current assets, notes payable to banks, trade accounts
      payables, and other accrued expenses:  The carrying amounts approximate
      fair value because of the short maturity of those instruments.

      Accounts and notes receivable long-term:  The fair value of the
      receivables is determined as the present value of expected future cash
      flows discounted at a rate of 6%.

      Long-term debt:  The fair value of the Company's long-term debt is
      estimated by discounting the future cash flows of each instrument at
      rates currently offered to the Company for similar debt instruments of
      comparable maturities by the Company's bankers.

      See note 8 regarding the fair value of derivative financial instruments.

      The estimated fair value of financial instruments has been determined
      based on available market information and appropriate valuation
      methodologies.  However, considerable judgment is necessarily required in
      interpreting market data to develop the estimates of fair value. 
      Accordingly, the estimates presented herein are not necessarily
      indicative of the amounts that the Company might realize in a current
      market exchange.  The use of different market assumptions and/or
      estimation methodologies may have a material effect on the estimated fair
      value.



       5.  INVENTORIES

      Inventories consist of the following:
                                               Raw             Work-in- 
         December 31                        materials          process  
      1996
      Domestic . . . . .                    $2,431,182        $1,731,479 
      Foreign  . . . . .                       170,745            17,892
        Total  . . . . .                    $2,601,927        $1,749,371
                                            ==========        ==========

                                              Finished
                                            products and
                                             components          Total  
      1996
      Domestic . . . . .                    $3,849,215        $8,011,876
      Foreign  . . . . .                       233,009           421,646
        Total  . . . . .                    $4,082,224        $8,433,522
                                            ==========        ==========
         December 31  
      1995
      Domestic . . . . .                    $2,252,832        $1,305,895
      Foreign  . . . . .                       150,315            28,636
        Total  . . . . .                    $2,403,147        $1,334,531
                                            ==========        ==========

      1995
      Domestic . . . . .                    $3,829,585        $7,388,312
      Foreign  . . . . .                       224,871           403,822
        Total  . . . . .                    $4,054,456        $7,792,134
                                            ==========        ==========

      6.  LONG-TERM CONTRACTS AND RECEIVABLES

      Accounts and notes receivable at December 31, 1996 and 1995 include the
      following elements from long-term contracts:

                                                1996              1995   

      Amounts billed . . . . . . . . .      $21,721,085       $ 7,292,320
      Retainage, due upon completion .        2,179,825         5,091,650
      Unbilled receivables . . . . . .        7,782,606           980,264
        Total  . . . . . . . . . . . .      $31,683,516       $13,364,234
                                            ===========       ===========

      The balances billed but not paid by customers, pursuant to retainage
      provisions included in long-term contracts, will be due upon completion
      of the contracts and acceptance by the customer.  The retainage balances
      at December 31, 1996 are anticipated to be collected in 1997.

      The unbilled receivables are comprised principally of amounts of revenue
      recognized on contracts (on the percentage-of-completion method) for
      which billings had not been presented to the customers because the
      amounts were not billable under the contract terms at the balance sheet
      date.  In accordance with the contract terms the unbilled receivables at
      December 31, 1996 will be billed in 1997. 

      Inventories include costs relating to long-term sales contracts of
      $140,611 and $20,084  at December 31, 1996 and 1995, respectively. 

       At December 31, 1996 and 1995, the Company had $1,283,201 and
      $1,257,043, respectively, of trade accounts receivable due from major
      U.S. automotive manufacturers.  At December 31, 1996 and 1995, the
      Company had $2,722,501 and $2,868,988, respectively, of trade accounts
      receivable due from hearing aid manufacturers.  The Company also had
      $28,512,481 and $8,261,904  at December 31, 1996 and 1995, respectively,
      in currently billed and unbilled receivables from long-term contracts for
      customers in the steel industry in North America, Europe and Asia.




      7.  NOTES PAYABLE AND LONG-TERM DEBT 

      NOTES PAYABLE

      Notes payable at December 31, 1996 and 1995 are summarized below:

                                                1996              1995   
      Notes payable:

        Short term borrowings, 
         European banks                     $   583,767       $ 2,651,188
                                            ===========       ===========

      Consolidated European subsidiaries have working capital credit
      arrangements with European banks aggregating $20,056,000.  Of this
      amount, $2,152,000 may be used to borrow funds for working capital or
      guarantee customer advance payments on contracts.  The remaining
      $17,904,000 may be used only for guaranteeing customer advance payments,
      of which $14,997,000 was utilized at December 31, 1996 at interest rates
      ranging from .65% to 7.2%.  At December 31, 1996 the Company's European
      subsidiaries had borrowings of $583,767, which bear interest at annual
      rates ranging from 12% to 15.25%.  These credit arrangements have no
      expiration dates and are guaranteed by the Company.  
      The maximum amounts of short-term borrowings and bank guarantees at any
      month end were $21,954,000 in 1996, $6,030,000 in 1995 and $8,137,000 in
      1994.  The average short-term borrowings and bank guarantees outstanding
      during 1996, 1995 and 1994 amounted to $10,636,000, $4,389,000 and
      $3,551,000, respectively.  The average short-term interest rates in 1996,
      1995 and 1994 for outstanding borrowings were 11%, 9% and 9%,
      respectively. 

      LONG-TERM DEBT

      Long-term debt at December 31, 1996 and 1995 is summarized below:

                                              1996             1995   
      Long-term debt:        
        Term loan, Domestic banks         $ 5,891,669      $ 7,751,117
        Term loans, European banks and 
          government agency                 2,289,262        2,671,825
        Mortgage note                         927,492          936,353
                                            9,108,423       11,359,295
        Less:  current maturities           2,271,830        2,258,894

                                          $ 6,836,593      $ 9,100,401
                                          ===========      ===========

      Under the terms of the domestic term loan agreement with a commercial
      bank, principal amounts are repayable over the next four years on a
      monthly basis with aggregate principal payments of $1,650,000 per year. 
      Additional payments of principal are required depending upon the annual
      earnings of the Company's domestic operations and as a result of this
      requirement, the Company will have an additional principal payment of
      approximately $288,000 in 1997 and paid $209,448 in 1996 based upon the
      Company's 1996 and 1995 domestic earnings.  At December 31, 1996, all
      borrowings under the credit agreement bore interest, payable monthly, at
      a fixed interest rate of 6-3/4%.  The credit agreement is subject to a
      prepayment penalty of 3%, to the extent the loan is paid off with
      additional borrowings.




      7.  NOTES PAYABLE AND LONG-TERM DEBT  - (Continued)

      The Company and its domestic subsidiaries entered into revolving credit
      loan facilities  under which borrowings or letters of credit aggregating
      $3,500,000 could be outstanding at any one time.  At December 31, 1996,
      there were no borrowings under the revolving credit loan facility. 
      Borrowings under the facility bear interest at a rate of 1.5% above the
      London Inter-Bank Offered Rate (LIBOR) and a commitment fee of 1/4% per
      annum is payable on the unborrowed portion of the line.  The credit
      facility expires on June 1, 1997.

      The credit agreement and revolving credit loan facilities are secured by
      the Company's domestic assets, except RTI's land and building which is
      pledged under a separate agreement, and the Company's  domestic
      subsidiaries' stock.  The agreements contain restrictive covenants
      regarding the payment of cash dividends, maintenance of working capital,
      net worth, and shareholders' equity, along with the maintenance of
      certain financial ratios.  The Company and its domestic subsidiaries are
      required to maintain consolidated tangible capital funds of approximately
      $18.4 million through December 31, 1996 consisting of shareholders'
      equity, plus subordinated debt, less intangible assets, increased
      annually after December 31, 1996 by 60% of net income and contributions
      to capital.  At December 31, 1996, the Company exceeded the amount
      required to satisfy this covenant in the loan agreement by $7.1 million   
      The Company's French subsidiary, Selas S.A., financed its premises
      outside of Paris with bank borrowings maturing August 31, 2006 with
      required quarterly installments of principal of $57,803 (FF 300,000). 
      The loan carries interest payable quarterly at a fixed rate of 8.55%. 
      The loan balances as of December 31, 1996 and 1995 were $2,196,532 (FF
      11,400,000) and $2,566,191 (FF 12,600,000), respectively.  This loan can
      be prepaid, subject to a premium of 3% of the amount prepaid.  The debt
      is secured by the land and building of Selas S.A.  The subsidiary also
      has a term loan with a French government agency which is non-interest
      bearing and payable in 1997.  The loan balance as of December 31, 1996
      was $92,730 (FF 481,268) and $105,634 (FF 518,663) as of December 31,
      1995.

      The Company assumed a mortgage at the date of acquisition of RTI which is
      payable in monthly installments of $9,285, including interest, through
      July 1, 2019.  The mortgage has an interest rate of 11% and is secured by
      the land and building of RTI.  Prepayment of the mortgage is permitted;
      however, it is subject to a penalty which is tied to the current interest
      rates and the length of the loan.  The lender has the right to call the
      loan at any time after July 1, 1999 on ninety days written notice to the
      Company.





      7.  NOTES PAYABLE AND LONG-TERM DEBT - (Continued)

      The aggregate maturities of long-term debt for the five years ending
      December 31, 2001 and thereafter are as follows:

      Years ending December 31,                      Aggregate Maturity

            1997 . . . . . . . . . . . . . . . . .     $  2,271,830
            1998 . . . . . . . . . . . . . . . . .        1,892,244
            1999 . . . . . . . . . . . . . . . . .        2,787,790
            2000 . . . . . . . . . . . . . . . . .          884,883
            2001 . . . . . . . . . . . . . . . . .          231,214
            2002 and thereafter  . . . . . . . . .        1,040,462    
                                                       $  9,108,423
                                                     ==============

      8.  DERIVATIVE FINANCIAL INSTRUMENTS

      Interest rate swap agreements are used to reduce the potential impact of
      increases in interest rates on floating-rate long-term debt.  At December
      31, 1996, the Company's French subsidiary was a party to one interest
      rate swap agreement.  The interest rate swap agreement is with major
      European financial institutions having a total notional amount of $2.2
      million at December 31, 1996.  The notional amount will decrease
      consistent with the terms of the related long-term debt agreement.  The
      swap agreement requires fixed interest payments based on an effective
      rate of 8.55% for the remaining term through May, 2006.  The subsidiary
      continually monitors its position and the credit ratings of its
      counterparties and does not anticipate nonperformance by the
      counterparties.  Additional interest incurred during 1996 in connection
      with the swap agreement amounted to $101,738.

      The fair value of the interest rate swap agreement was $2 million at
      December 31, 1996.  The fair value of this financial instrument (used for
      hedging purposes) represents the aggregate replacement cost based on
      financial institution quotes.  The Company is exposed to market risks
      from changes in interest rates and fluctuations in foreign exchange
      rates.





       9.  OTHER ACCRUED LIABILITIES

      Other accrued liabilities at December 31, 1996 and 1995 are as follows:

                                                   1996            1995  

      Salaries, wages and commissions . . .    $ 3,591,356     $ 2,589,958
      Taxes, including payroll withholdings 
        and VAT, excluding income taxes . .      5,594,441         849,055
      Accrued pension costs . . . . . . . .        532,582         697,314
      Accrued professional fees . . . . . .        432,207         402,862
      Accrued insurance . . . . . . . . . .        377,478         132,171
      Other . . . . . . . . . . . . . . . .        230,121         218,633
                                               $10,758,185     $ 4,889,993
                                               ===========     ============

      10.  DOMESTIC AND FOREIGN INCOME TAXES

      Domestic and foreign income taxes (benefits) are comprised as follows:

                                         Years Ended December 31          
                                     1996           1995           1994   

      Current
        Federal   . . . . . . . $ 2,168,819     $ 1,901,334     $1,706,261
        State     . . . . . . .     454,367         255,666        258,532
        Foreign   . . . . . . .     490,707        (623,004)       214,610 

                                  3,113,893       1,533,996      2,179,403 

      Deferred
        Federal   . . . . . . .    (552,526)       (251,078)      (252,033)
        State     . . . . . . .     (61,116)         36,400        (10,577)
        Foreign   . . . . . . .    (105,293         106,241        (42,098)

                                   (718,935)       (108,437)      (304,708)

      Income taxes  . . . . . . $ 2,394,958     $ 1,425,559     $1,874,695
                                ===========     ===========     ==========

      Income (loss) before income taxes is as follows:

        Foreign   . . . . . . . $  1,015,187    $(1,729,151)    $  530,793
        Domestic  . . . . . . .    5,509,966      5,454,734      4,447,941

                                $  6,525,153    $ 3,725,583     $4,978,734
                                ============    ===========     ==========




      10.  DOMESTIC AND FOREIGN INCOME TAXES - (Continued)

      The following is a reconciliation of the statutory federal income tax
      rate to the effective tax rate based on income (loss): 

                                           Years Ended December 31    
                                         1996        1995         1994 
      Tax provision at statutory
        rate  . . . . . . . . . . .    34.0%        34.0%        34.0%
      Foreign operating losses not
        subject to tax benefits . .     0.3          4.9          3.1
      Effect of foreign tax rates .     1.8         (5.2)         (.8)
      State taxes net of federal
        benefit   . . . . . . . . .     4.0          5.5          3.4
      Tax benefits related to 
        export sales  . . . . . . .    (2.7)        (3.4)        (1.5)
      Other . . . . . . . . . . . .    (0.7)         2.5         (0.6)

      Domestic and foreign income 
        tax rate  . . . . . . . . .    36.7%        38.3%        37.6%
                                       =====        =====        =====


      The significant components of deferred income taxes (benefits) for the
      years ended December 31, 1996, 1995 and 1994 are as follows:

                                                Years Ended December 31    
                                          1996         1995         1994   

        Deferred income tax (benefit)  $(342,743)   $(604,443)   $(420,784)
        Increase (decrease) in 
          beginning-of-the-year 
          balance of the valua-
          tion allowance for 
          deferred tax assets           (369,868)     481,525      101,098 
        Other                             (6,324)      14,481      14,978 

                                       $(718,935)   $(108,437)   $(304,708)
                                       =========    =========    =========





      10.  DOMESTIC AND FOREIGN INCOME TAXES - (Continued)

      The tax effects of temporary differences that give rise to significant
      portions of the deferred tax assets and deferred tax liabilities at
      December 31, 1996 and 1995 are presented below:

      DEFERRED TAX ASSETS:                            1996           1995   

        Postretirement benefit obligations         $1,284,333     $1,272,330
        Net operating loss carryforwards            1,372,575      1,449,300
        State income taxes                            374,689        336,773
        Guarantee obligations and estimated future
          costs of service accruals                   528,586        243,461
        Employee pension plan obligations             181,078        193,828
        Compensated absences, principally due to
          accrual for financial reporting purposes    273,910        247,256
        Other                                         624,765        533,118

          Total gross deferred tax assets           4,639,936      4,276,066
          Less:  valuation allowance                2,315,437      2,685,305

          Net deferred tax assets                   2,324,499      1,590,761

      Deferred tax liabilities:

        Plant and equipment, principally due
          to differences in depreciation and
          capitalized interest                      1,152,692      1,257,001
        Other                                         204,284         78,850
          Total gross deferred tax liabilities      1,356,976      1,335,851

          Net deferred tax assets                  $  967,523     $  254,910
                                                   ==========     ==========


      Domestic and foreign deferred taxes are comprised as follows:

      December 31, 1996                           Federal          State  

      Current deferred asset                    $1,260,593       $  311,697
      Non-current deferred
        (liability)                               (734,607)         (60,001)

      Net deferred tax asset                    $  525,986       $  251,696
                                                ==========       ==========


                                                 Foreign            Total  

      Current deferred asset                    $   479,290      $2,051,580
      Non-current deferred
        (liability)                                (289,449)     (1,084,057)

      Net deferred tax asset                    $   189,841      $  967,523
                                                ===========      ==========




      10.  DOMESTIC AND FOREIGN INCOME TAXES - (Continued)

      December 31, 1995                           Federal          State  

      Current deferred asset                    $  729,850       $  273,781
      Non-current deferred
        (liability)                               (778,756)         (60,835)

      Net deferred tax asset
        (liability)                             $  (48,906)      $  212,946
                                                ===========      ==========


                                                 Foreign            Total  

      Current deferred asset                    $  320,301       $1,323,932
      Non-current deferred
        (liability)                               (229,431)      (1,069,022)

      Net deferred tax asset
        (liability)                             $   90,870       $  254,910
                                                ==========       ==========







      10.  DOMESTIC AND FOREIGN INCOME TAXES - (Continued)

      At December 31, 1996, the Company had $732,655 of income tax receivable
      included in accounts and notes receivable.

      The valuation allowance for deferred tax assets as of January 1, 1996
      was    $2,685,305.  The net change in the total valuation allowance for
      the year
      ended December 31, 1996 was a decrease of $369,868.  Subsequently
      recognized tax benefits relating to the valuation allowance for deferred
      tax assets will be reported in the consolidated statement of operations.

      In assessing the realizability of deferred tax assets, management
      considers whether it is more likely than not that some portion or all of
      the deferred tax assets will not be realized.  The ultimate realization
      of deferred tax assets is dependent upon the generation of future taxable
      income during the periods in which those temporary differences become
      deductible.  Management considers the scheduled reversal of deferred tax
      liabilities and projected future taxable income in making this
      assessment.  Based upon the level of historical taxable income and
      projections for future taxable income over the periods which the deferred
      tax assets are deductible, management believes it is more likely than not
      the Company will realize the benefits of these deductible differences,
      net of the existing valuation allowances, at December 31, 1996. 

      At December 31, 1996 the Company has net operating loss carryforwards for
      foreign income tax purposes of $4,189,000 of which $307,000 expire in
      1998 and $3,882,000 have no expiration date and are available to offset
      future foreign taxable income.

      No provision has been made for United States income tax which may be
      payable on undistributed income of the Company's foreign subsidiaries
      since it is the Company's intention to reinvest the unremitted earnings. 
      Furthermore, based on current federal income tax laws, the federal income
      tax on future dividends will be offset by foreign tax credits in certain
      instances.  At December 31, 1996, the Company has not recognized a
      deferred tax liability of approximately $1,891,000 on undistributed
      retained earnings of such subsidiaries of $5,563,000.





      11. EMPLOYEE BENEFIT PLANS

      The parent Company has two defined benefit pension plans.  One covers
      salaried employees and is a career average compensation plan.  The other
      plan covers hourly employees and is based on a fixed benefit and years of
      credited service.  Pension costs are determined by independent actuaries
      and include current service costs and the amortization of past service
      costs.  The Company makes annual contributions to the plans in conformity
      with ERISA funding requirements.

      The following table sets forth the plans' funded status and amounts
      recognized in the Company's statements of financial position at December
      31,
      1996 and 1995:


                                                 December 31, 1996    
                                                Union           Salaried
                                                Plan              Plan  
      Actuarial present value of benefit
        obligations:
        Vested benefit obligation            $(2,498,941)      $(1,754,530)
                                             ===========       ===========

        Accumulated benefit obligation       $(2,528,777)      $(1,797,321)
                                             ===========       ===========
        Projected benefit obligation for
        service rendered to date             $(2,528,777)      $(2,019,916)
        Plan assets at contract or fair value, 
        including insurance contracts 
        and various common trust fund
        investments                            1,714,493         1,932,219

      Projected benefit obligation (in ex-
        cess of) plan assets                    (814,284)          (87,697)
      Unrecognized prior service costs            29,348             7,862
      Unrecognized net (gain) or loss            (24,775)          136,477
      Unrecognized net obligation at
        January 1, 1986 being recognized
        over 15 years                            220,487              --  
      Accrued pension cost liability included
        in current liabilities before     
        adjustment of additional minimum
        liability                               (589,224)           56,642
      Adjustment required to recognize
        additional minimum liability            (225,060)             --  
      Accrued pension cost after adjust-
        ment of additional minimum liability
        at December 31, 1996 and 1995        $  (814,284)      $    56,642
                                             ===========       =========== 



       11. EMPLOYEE BENEFIT PLANS (Continued)


                                                 December 31, 1995    
                                                Union           Salaried
                                                Plan              Plan  
      Actuarial present value of benefit
        obligations:
        Vested benefit obligation            $(2,527,313)      $(1,524,941)
                                             ===========       ===========

        Accumulated benefit obligation       $(2,553,016)      $(1,575,617)
                                             ===========       ===========
        Projected benefit obligation for
        service rendered to date             $(2,553,016)      $(1,745,370)

      Plan assets at contract or fair value, 
        including insurance contracts 
        and various common trust fund
        investments                            1,648,258         1,588,693

      Projected benefit obligation (in ex-
        cess of) plan assets                    (904,758)         (156,677)
      Unrecognized prior service costs            38,067             9,570
      Unrecognized net (gain) or loss              6,510           161,598 
      Unrecognized net obligation at
        January 1, 1986 being recognized
        over 15 years                            275,608              --   
      Accrued pension cost liability included
        in current liabilities before     
        adjustment of additional minimum
        liability                               (584,573)           14,491
      Adjustment required to recognize
        additional minimum liability            (320,185)            --   
      Accrued pension cost after adjust-
        ment of additional minimum liability
        at December 31, 1996 and 1995        $  (904,758)      $    14,491
                                             ===========       =========== 
      As of December 31, 1996, the Company has recognized the additional
      minimum liability of $225,060 and an intangible asset of $225,060.







      11.  EMPLOYEE BENEFIT PLANS- (Continued)

      Net periodic pension cost for these plans for the years 1996, 1995 and
      1994 included the following components:

                                              Years Ended December 31       
                                          1996          1995          1994  

      Service cost - benefits
        earned during the period      $ 187,955      $ 160,038    $ 209,448

      Interest cost on projected
        benefit obligation              306,788        304,065      282,295

      Actual return on assets          (419,872)      (638,756)      60,661

      Net amortization and deferral     228,214        497,947     (197,978)

      Net periodic pension cost       $ 303,085      $ 323,294    $ 354,426
                                      =========      =========    ========= 

      The discount rate used to determine the projected benefit obligation for
      both the salaried and union plans was 7.25% for 1996 and 1995 and 8.5%
      for 1994.

      The projected benefit obligation was determined by using an assumed rate
      of increase in compensation levels of 5% for 1996, 1995 and 1994 for the
      salaried plan.  The expected long-term rate of return on assets for both
      plans was 8%.

      The Company's French subsidiary is obligated to contribute to an employee
      profit sharing plan under which annual contributions are determined on
      the basis of a prescribed formula using capitalization, salaries and
      certain revenues.  Amounts are paid into a bank trust fund the year
      following the contribution calculation.  Profit sharing expense for 1996,
      1995 and 1994 was $96,970, $0 and $20,000, respectively. 

      The Company has defined contribution plans for most of its domestic
      employees not covered by collective bargaining agreements.  Under these
      plans, eligible employees may contribute amounts through payroll
      deductions supplemented by employer contributions for investment in
      various investments specified in the plans.  The Company contribution to
      these plans for 1996, 1995 and 1994 was $288,556, $273,675 and $277,422,
      respectively.





      11.  EMPLOYEE BENEFIT PLANS- (Continued)


      The Company provides postretirement medical benefits to certain domestic
      full-time employees who meet minimum age and service requirements.  The
      Company's policy is to pay the cost of these postretirement benefits when
      required on a cash basis. The Company also has provided certain foreign
      employees with retirement related benefits.

      The following table presents the amounts recognized in the Company's
      consolidated balance sheet at December 31, 1996 and 1995 for
      postretirement medical benefits:

      Accrued postretirement medical benefits:


                                                      December 31      
      Accumulated postretirement medical 
      benefit obligation                             1996          1995  

        Retirees                                 $ 1,922,719   $ 2,011,389
        Fully eligible active plan participants      515,701       481,272
        Other active plan participants               345,098       297,682
                                                   2,783,518     2,790,343
      Unrecognized net gain                          533,423       551,594

        Accrued postretirement medical
        benefit cost                             $ 3,316,941   $ 3,341,937
                                                 ===========   ===========

      Accrued postretirement medical benefit costs are classified as other
      postretirement benefit obligations as of December 31, 1996 and 1995.  

      Net periodic postretirement medical benefit costs for 1996, 1995 and 1994
      include the following components:

                                          Years Ended December 31       
                                      1996          1995          1994  

        Service cost               $ 25,834      $ 20,210      $  32,733
        Interest cost               194,081       206,227        230,777
        Net gain                    (18,171)      (33,660)          --  

        Net periodic postretirement 
          medical benefit cost     $201,744      $192,777      $ 263,510
                                   ========      ========      =========





      11.  EMPLOYEE BENEFIT PLANS - (Continued) 


      For measurement purposes, a 11% annual rate of increase in the per capita
      cost of covered benefits (i.e., health care cost trend rate) was assumed
      for 1996; the rate was assumed to decrease gradually to 6% by the year
      2006 and remain at that level thereafter.  The health care cost trend
      rate assumption has a significant effect on the amounts reported.  For
      example, increasing the assumed health care cost trend rates by one
      percentage point in each year would increase the accumulated
      postretirement medical benefit obligation as of December 31, 1996 by
      $220,000 and the aggregate of the service and interest cost components of
      net periodic postretirement medical benefit cost for the year ended
      December 31, 1996 by $16,000.

      The weighted-average discount rate used in determining the accumulated
      postretirement medical benefit obligation at December 31, 1996 and 1995
      was 7.25%.  

      The Company provides retirement related benefits to a former employee,
      and to certain foreign subsidiary employees in accordance with industry
      wide collective labor agreements.  The liabilities established for these
      benefits at December 31, 1996 and 1995 were $742,831 and $747,297,
      respectively, and are classified as other postretirement benefit
      obligations as of December 31, 1996 and 1995.

      12.  CURRENCY TRANSLATION ADJUSTMENTS

      All assets and liabilities of foreign operations are translated into U.S.
      dollars at prevailing rates of exchange in effect at the balance sheet
      date.  Revenues and expenses are translated using average rates of
      exchange for the year.  The functional currency of the Company's foreign
      operations is the currency of the country in which the entity resides;
      such currencies are the French franc, German mark, Italian lira and
      Japanese yen.  Adjustments resulting from the process of translating the
      financial statements of foreign subsidiaries into U.S. dollars are
      reported as a separate component of shareholders' equity, net of tax
      where appropriate.  Gains and losses arising from foreign currency
      transactions are reflected in the consolidated statements of operations
      as incurred.  Foreign currency transaction gains (losses) included in the
      statement of operations for 1996, 1995 and 1994 were $(8,200), $(123,419)
      and  $40,722, respectively.

      13.   COMMON STOCK AND STOCK OPTIONS

      Under the Company's 1985 and 1994 Stock Option Plans, options to an
      aggregate of 600,000 shares of common stock may be granted to certain
      officers and key employees at no less than 100% of the fair market value
      at the date of grant.  All options are exercisable until the earlier of
      termination pursuant to the plans or ten years from date of grant.




       13.   COMMON STOCK AND STOCK OPTIONS (Continued)

      At December 31, 1996, there were 208,000 additional shares available for
      grant under the 1994 plan.  The per share weighted-average fair value of
      stock options granted during 1995 was $3.23 on the date of grant using
      the Black Scholes option-pricing model with the following weighted-
      average assumptions:  1995 - expected dividend yield 2.1%; risk free
      interest rate of 5.58%; expected life of 6 years and expected volatility
      of the stock over the life of the options which is based on the past 6
      years of the stock's activity.

      The Company applies APB Opinion No. 25 in accounting for its Plans, and,
      accordingly, no compensation cost has been recognized for its stock
      options in the financial statements.  Had the Company determined
      compensation cost based on the fair value at the grant date of its stock
      options under SFAS No. 123, the Company's net income would have been
      reduced to the proforma amount indicated below:

                                                    1996          1995   
      Net income as reported                     $4,130,195    $2,300,024
      Net income proforma                        $4,092,615    $2,263,394
      Primary earnings per share as reported          $1.17          $.66
      Primary earnings per share proforma             $1.16          $.65

      No options were granted in 1996.  Proforma net income reflects options
      granted in 1995.  Therefore, the full impact of calculating compensation
      cost for stock options under SFAS No. 123 is not reflected in the
      proforma net income amounts presented above because compensation cost is
      reflected over the options vesting period of 5 years and compensation
      cost for options granted prior to January 1, 1995 is not considered.

      Stock option activity during the periods indicated is as follows:
                                             Number of      Weighted-average
                                              Shares         Exercise Price
      Outstanding at January 1, 1994          229,325          $ 11.13 
        Options exercised                     (22,000)            5.65

      Outstanding at December 31, 1994        207,325          $ 11.71
        Options exercised                      (5,000)            5.65
        Options granted                        92,000             8.03

      Outstanding at December 31, 1995        294,325          $ 10.66
        Options forfeited                     (15,000)           14.00

      Outstanding at December 31, 1996        279,325          $ 10.48
                                              =======
      At December 31, 1996, the range of exercise prices were $5.65-$17.12 and
      weighted-average remaining contractual life of outstanding options was
      5.8 years.

      At December 31, 1996 and 1995, the number of options exercisable was
      179,725 and 126,425, respectively and the weighted average price of these
      options were $11.56 and $11.75, respectively.





      14. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

      The following is a tabulation of unaudited quarterly results of   
      operations.  



      1996                                      First         Second
                                               Quarter        Quarter  

      Net sales . . . . . .                  $18,571,000    $25,460,000
                                             ===========    ===========

      Gross profit  . . . .                  $ 4,728,000    $ 5,292,000
                                             ===========    ===========

      Net income  . . . . .                  $   574,000    $   807,000
                                             ===========    ===========
      Earnings 
        per common and
        common equivalent 
        share

          Primary                                  $ .16          $ .23 
                                             ===========    ===========

          Fully diluted                            $ .16          $ .23
                                             ===========    ===========


      1996                                     Third           Fourth
                                               Quarter        Quarter  

      Net sales . . . . . .                  $29,724,000    $29,671,000
                                             ===========    ===========

      Gross profit  . . . .                  $ 5,984,000    $ 6,552,000
                                             ===========    ===========
      Net income  . . . . .                  $ 1,340,000    $ 1,409,000
                                             ===========    ===========
      Earnings 
        per common and
        common equivalent 
        share

          Primary                                  $ .38          $ .40 
                                             ===========    ===========

          Fully diluted                            $ .38          $ .39
                                             ===========    ===========





      1995                                      First         Second
                                               Quarter      Quarter(a)

      Net sales . . . . . .                  $21,471,000    $16,974,000
                                             ===========    ===========

      Gross profit  . . . .                  $ 5,529,000    $ 4,603,000
                                             ===========    ===========

      Net income (loss) . .                  $ 1,164,000    $   (63,000) 
                                             ===========    ===========
      Earnings (loss)
        per common and
        common equivalent 
        share

          Primary                                  $ .34          $(.02)
                                             ===========    ===========

          Fully diluted                            $ .34          $(.02)
                                             ===========    ===========

      1995                                     Third           Fourth
                                               Quarter        Quarter  

      Net sales . . . . . .                  $15,714,000    $17,056,000
                                             ===========    ===========

      Gross profit  . . . .                  $ 4,353,000    $ 4,670,000
                                             ===========    ===========

      Net income (loss) . .                  $   374,000    $   826,000 
                                             ===========    ===========
      Earnings (loss)
        per common and
        common equivalent 
        share

          Primary                                  $ .11          $ .24 
                                             ===========    ===========

          Fully diluted                            $ .11          $ .24
                                             ===========    ===========



      (a)   Includes unusual charges of $285,000 resulting from restructuring
            of certain European operations and $135,000 for settlement of a
            tax issue in Germany.




      15.  CONTINGENCIES AND COMMITMENTS

      The  Company is  a defendant  along  with a  number of  other parties  in
      approximately 155 lawsuits  as of December 31,  1996 (112 as  of December
      31,  1995) alleging that plaintiffs have or may have contracted asbestos-
      related  diseases as  a  result  of  exposure  to  asbestos  products  or
      equipment containing asbestos sold by one or more named  defendants.  Due
      to the noninformative nature of the complaints, the Company does not know
      whether any of  the complaints  state valid claims  against the  Company.
      The Company is also one of approximately 500 defendants in a class action
      on behalf  of approximately 2700 present  or former employees of  a Texas
      steel  mill alleging that products  supplied by the  defendants created a
      poisonous atmosphere that caused unspecified physical harm.   These cases
      are being  defended by one or  more of the Company's   insurance carriers
      presently known to  be "at risk."  Through October  1993, the legal costs
      of  defense of the  asbestos and steel  mill cases were  shared among the
      insurance  carriers (92%)  and  the Company  (8%).   The  lead  insurance
      carrier settled  a number  of the  cases in 1993  and requested  that the
      Company pay  a portion of the settlement amount.  The Company declined to
      do so  because no such  payment is required by  the express terms  of the
      policies.  The lead  carrier then purported in  October 1993 to  abrogate
      the arrangement  under which the defense  costs had been shared,  and the
      Company  responded by tendering all of the  cases to the lead carrier and
      demanding  that the lead carrier honor its obligations under its policies
      to pay  100% of  the costs  of defense  and 100%  of all settlements  and
      judgments  up  to  the  policy  limits.   The  lead  carrier  has settled
      approximately 17  and 98  claims  in 1996 and 1995,  respectively with no
      request for  the Company to  participate in  any settlement.    The  lead
      carrier  has informed the Company that  the primary policy for the period
      July 1, 1972 - July 1, 1975  has been exhausted and that the lead carrier
      will no  longer provide a  defense under  that policy.   The Company  has
      requested that the lead carrier substantiate this situation.  The Company
      has contacted  representatives of the Company's  excess insurance carrier
      for some or all of  this period.  The  Company does not believe that  the
      asserted exhaustion of  the primary  insurance coverage  for this  period
      will have a material adverse effect on the financial condition or results
      of operations  of the Company.   Management  is of the  opinion that  the
      number of insurance carriers involved in the defense of the suits and the
      significant  number  of policy  years and  policy  limits to  which these
      insurance carriers are insuring the Company make the ultimate disposition
      of these lawsuits  not material to  the Company's consolidated  financial
      position or results of operations.

      In  1995, a  dispute which  was submitted  to arbitration  arose under  a
      contract between a customer and a subsidiary of the Company.  Substantial
      claims were asserted against the subsidiary Company.  Under the  terms of
      the  contract, the Company recorded   revenue of approximately $1,400,000
      in 1994  and has a  current billed receivable  of $140,000.   The Company
      believes  that the disposition of  this claim will  not materially affect
      the Company's consolidated financial position or results of operations.

      The Company  is also  involved in other  lawsuits arising  in the  normal
      course of business.  While it is not possible to predict


       15.  CONTINGENCIES AND COMMITMENTS- (Continued)

      with certainty the outcome of these matters, management is of the opinion
      that the disposition  of these  lawsuits will not  materially affect  the
      Company's consolidated financial position or results of operations.
      Total  rent  expense for  1996, 1995,  and  1994 under  leases pertaining
      primarily  to   engineering,  manufacturing,  sales   and  administrative
      facilities,  with an  initial  term  of  one  year  or  more,  aggregated
      $904,000, $846,000 and $763,000, respectively.  Remaining rentals payable
      under such leases are as follows:  1997 - $817,000; 1998 - $695,000; 1999
      - $659,000; 2000 - $605,000; 2001 - $1,342,000.

      16.  RELATED-PARTY TRANSACTIONS

      One of the Company's subsidiaries leases  office and factory space from a
      partnership  consisting  of  three  officers  of  the  subsidiary.    The
      subsidiary  is  required  to pay  all  real  estate  taxes and  operating
      expenses.  In the opinion of management, the terms of the lease agreement
      are comparable to those  which could be obtained from  unaffiliated third
      parties.    The  total   rent  expense  incurred  under  the   lease  was
      approximately $373,000 for the year ended December 31, 1996, $485,000 for
      the year  ended December 31, 1995  and $485,000 for the  year ended 1994.
      Annual lease commitments approximate $330,000 through October, 1997.

      17.  SUBSEQUENT EVENT

      In  February,  1997,  the   Company  acquired  the  assets   and  certain
      liabilities  of  Rodan  Division  of  Ketema,  Inc.  a   manufacturer  of
      thermistors  and  thermistor assemblies  used  primarily  as an  electric
      current  limiting device  to  protect computer  installations.   Ketema's
      Rodan Division  had sales  in the  year ended February  28, 1996  of $6.4
      million (unaudited).   The purchase price was $4.75 million  in cash and,
      additionally,  up to a  maximum of almost 57,000  shares of the Company's
      common  stock tied to future earnings performance.  This acquisition will
      be accounted for as a  purchase and the excess of the purchase price over
      the  fair value of the assets (goodwill)  will be amortized on a straight
      line basis over  15 years.  To finance this  acquisition, the Company has
      increased its bank borrowings by $3.5 million.







      REPORT OF INDEPENDENT AUDITORS



      The Board of Directors and Shareholders
      Selas Corporation of America:

      We have  audited the  accompanying consolidated  balance sheets  of Selas
      Corporation of America and subsidiaries as of December 31, 1996 and 1995,
      and  the  related consolidated  statements  of operations,  shareholders'
      equity,  and cash flows  for each of  the years in  the three-year period
      ended December 31, 1996.  These consolidated financial statements are the
      responsibility of  the Company's  management.   Our responsibility  is to
      express  an opinion on  these consolidated financial  statements based on
      our audits.

      We conducted  our audits in  accordance with generally  accepted auditing
      standards.  Those standards require that we plan and perform the audit to
      obtain reasonable  assurance about  whether the financial  statements are
      free of  material misstatement.  An  audit includes examining, on  a test
      basis,  evidence supporting the amounts  and disclosures in the financial
      statements.  An  audit also includes assessing  the accounting principles
      used  and significant estimates made by management, as well as evaluating
      the overall financial statement presentation.  We believe that our audits
      provide a reasonable basis for our opinion. In our  opinion, the
      consolidated financial statements  referred to above    present fairly,
      in all material respects, the financial position of Selas
      Corporation  of America and subsidiaries  at December 31,  1996 and 1995,
      and the results of their  operations and their cash flows for each of the
      years in the  three-year period  ended December 31,  1996, in  conformity
      with generally accepted accounting principles.






                                         KPMG PEAT MARWICK LLP


      Philadelphia, Pennsylvania
      February 17, 1997





                                                        EXHIBIT    21


                             
                                  

                              SIGNIFICANT SUBSIDIARIES OF
                              SELAS CORPORATION OF AMERICA





                                               
                                            
      SUBSIDIARY                           PLACE OF INCORPORATION

      Deuer Manufacturing, Inc.                Ohio


      Resistance Technology GmbH               Germany
      Vertrieb von Elecktronikteilen


      Resistance Technology, Inc.              Minnesota


      RTI Electronics, Inc.                    Delaware


      Selas S.A.                               France


      Selas Italiana, S.A                      Italy


      Selas Waermetechnik, GmbH                Germany
                                                                    EXHIBIT 23






                       SELAS CORPORATION OF AMERICA

                                 EXHIBIT 23

                       CONSENT OF INDEPENDENT AUDITORS



                                                                   

      The Board of Directors 
      Selas Corporation of America:

      We consent to the incorporation by reference in the Registration
      Statement File No. 33-33712, on Form S-3, No. 33-35802, on Form S-8, and
      No. 333-16377, on Form S-8 of Selas Corporation of America and
      subsidiaries of our report dated February 17, 1997 relating to the
      consolidated balance sheets of Selas Corporation of America and
      subsidiaries as of December 31, 1996 and 1995 and the related
      consolidated statements of operations, shareholders' equity, and cash
      flows and related financial statement schedules for each of the years in
      the three-year period ended December 31, 1996, which report appears in
      the December 31, 1996 annual report on Form 10-K of Selas Corporation of
      America.








      Philadelphia, Pennsylvania
      March 2, 1997




                                                                     EXHIBIT 24



                             POWER OF ATTORNEY



                KNOW ALL MEN BY THESE PRESENTS that the undersigned does hereby
      consent and appoint Stephen F. Ryan and Robert W. Ross, or either of
      them, his attorney to do any and all acts, including the execution of
      documents, which said attorneys, or either of them, may deem necessary or
      advisable to enable Selas Corporation of America (the "Company") to
      comply with the Securities Exchange Act of 1934, as amended, and the
      rules, regulations and requirements of the Securities and Exchange
      Commission, in connection with the filing under said Act of an annual
      report of the Company on Form 10-K for the year ended December 31, 1996,
      including the power and authority to sign in the name and on behalf of
      the undersigned, in any and all capacities in which the signature of the
      undersigned would be appropriate, such annual report and any and all
      amendments thereto and generally to do and perform all things necessary
      to be done in the premises as fully and effectually in all respects as
      the undersigned could do if personally present.

                IN WITNESS WHEREOF, the undersigned has hereunto set his hand
      and seal this 18th day of March, 1997.



                                      /s/ John H. Austin, Jr.   
                                           John H. Austin, Jr.

                                      /s/ Frederick L. Bissinger 
                                          Frederick L. Bissinger

                                      /s/ Roy C. Carriker        
                                          Roy C. Carriker

                                      /s/ Francis J. Dunleavy    
                                          Francis J. Dunleavy

                                      /s/ Mark S. Gorder         
                                          Mark S. Gorder

                                      /s/ Ralph R. Whitney, Jr.   
                                          Ralph R. Whitney, Jr.









      March 21, 1997



      Securities and Exchange Commission
      Judiciary Plaza
      450 Fifth Street, N.W.
      Washington, D.C.  20549

      Reference:  Commission File #1-5005

      Gentlemen:

      The Company's 1996 Annual Report on Form 10-K has been filed
      electronically, via Edgar.   

      The financial statements for the year ended December 31, 1996 do not
      reflect any changes in accounting principles or practices, or the method
      of applying any such principles or practices from the preceding year.

      Very truly yours,




      Robert W. Ross
      Vice President and CFO

      RWR:jc
      Enclosures

      cc:  American Stock Exchange
           Attention:  Mr. Tom Witterchein
           86 Trinity Place
           New York, NY  10006
           (Three copies, one with Exhibits)
           Via Certified Mail 
 

5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF SELAS CORPORATION OF AMERICA FOR THE TWELEVE MONTHS ENDED DECEMBER 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 12-MOS DEC-31-1996 DEC-31-1996 8,343,820 0 42,447,274 787,121 8,433,522 61,112,244 32,074,357 15,362,577 91,162,272 41,290,318 6,836,593 0 0 3,702,426 33,939,050 91,162,272 103,426,075 103,426,075 80,870,331 80,870,331 0 196,952 1,212,194 6,525,153 2,394,958 4,130,195 0 0 0 4,130,195 1.17 1.16