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Home My WebLink About02-12-07 COMMONWEALTH OF PENNSYLVANIA DEPARTMENT OF REVENUE DEPT. 280601 HARRISBURG, PA 17128-0601 REV-1500 INHERITANCE TAX RETURN RESIDENT DECEDENT OFFICIAL USE ONLY RE\L 1500 EX (6-00) FILE NUMBER 21-05-0683 COtMY CODE YEAR ----- N.NlIER t- DECEDENl'S NAME (lAST, FIRST, AND MIDDLE INITIAL) SOCIAL SECURITY NUMBER Z Fries, Charles S. 187-12-0752 W DATE OF DEATH (MMOO-YEAR) DATE OF BIRTH (MM-D()" YEAR) THS RETURN MUST BE FIlED IN DUPUCATEWlTH THE C W 06-07-2005 REGISTER OF WILLS 0 W (IF APPLICABLE) SURVIW1G SPOUSE'S NAME (lAST, FIRST, AND MIDDLE INITIAL) SOCIAL SECURITY NUMBER C Fries, Evelyn M. UJ o 1. Orlginal Return 0 2. Supplemental Retum 0 3. Remainder Reilm (dIIIa oldealh piarlo 12-13-82) I-: lo::::!:~ o 4. Umited Estate 0 4a. Future ~erest Compromise (dale of death after 12-12-82) 0 5. Federal Estate Tax Re!Im Required olfg UJo IX1 6. Decedent Died Testate (Alladll:Opy ofWil) 0 7. Decedent Maintained a Living Trust (Al\ach COf7t of TrusI) _ 8. Total Number c:l Safe Deposit Bolles 5lfffi ~ o 9. Utigation Proceeds Received o 10. Spousal Poverty Credit (dale of deelll beIween 12-31-91 arxIl-l-95) o 11. 8ection to tax under Sec. 9113(A) (AlIacIlSc:llO) ... ............'tHIS..SEctION.MOST.BE.COMPLaei:);.ALL..CO~SPONDENCE.ANDe()"'f=IDEN'1'IAL;TAx.."NF~Atlc;)N..siiOOlJ:).aE.DI~cn:D.TO:'....'... . z NAME COMPLETE MAIlING ADDRESS UJ c SAMUEL L. ANDES z 0 FIRM NAfv'f Of Awlcable) P.O. BOX 168 D- C/) UJ LEMOYNE, PA 17043 a: TELEPHONE NUMBER a: 0 717-761-5361 0 1. Reel Estate (Schedule A) (1) OFFICIAL USE ONLY 2. Stocks and Bonds (Schedule B) (2) 3. Closely Held Corporation, Par1nership or Sole-Proprietorship (3) 4. Mortgages & Noles Receivable (Schedule D) (4) 5. Cash, Sri Deposits & Miscellaneous Personal Property (5) 1,547.10 "- (Schedule E) - Z i'v 0 6. Jointly Owned Properly (Schedule F) (6) - , ~ o Sepll'ate Billing Requested i' -,... - 7. ~-V1\'OS Trnfers & MisceIllIleOUS Non-Probate Property (7) ~'.~- ~ ..' " (Schedule G or L) -- t- ' '.-' ~ (_,J 8. Total Grcss Assets (total Unes 1 - 7) (8) 1,547.10 9. FWleraI Expenses & Administrative Costs (Schedule H) (9) 4,904.25 W ~ 10. Debts c:l Decedent, Mortgage Uabilities, & Uens (Schedule I) (10) 11. TetaI DeductIons (1oIaI Lines 9 & 10) (11) 4,904.25 12. Net Value of Estate (Una 8 minis Una 11) (12) 13. Charitable and GClYernnenla1 BequestslSec 9113 Trusts forwhich an election 10 tax has not been (13) 0,00 made (Schedule J) 14. Net Value Subject to Tax (Una 12 minus Line 13) (14) none SEE INSTRUCTIONS FOR APPUCABLE RATES SEE STATEMENT ATTACHED. z 0 15. Amou1I c:l Une 14 taxable at the spousal tax ~ rate, or transfers lIllIer See. 9116 (a)(1.2) X.O_ (15) ~ 16. ArnoIIIt of Una 14 taxable at lineal rate X.O_ (16) ~ n. 17. Amount c:l Une 14 taxable at sibling rate X .12 (17) :E 0 18. ArnoIIIt of Une 14 taxable at collateral rate X .15 (18) 0 ~ 19. Tax Due (19) none 20. 0 ICHECKHEREIFYOOAAE~QOE$T1NG AR,EFUNDQFANo\lJ;RPAYMelrtl >;>BE SURE TO ANSWER ALL QUESTIONS ON REVE~$ESIDEAND~CHECKMATH:<< ....... '. . ~ STF PA42D21F.1 Decedenfs Complete Address: STREET ADDRESS 1114 Charles Street CIlY Mechanicsburg I STATE PA I ZIP 17055 Tax Payments and Credits: 1. Tax Due (Page 1 Une 19) 2. Credits/Payments A Spousal Poverty Credit B. Prior Payments C. Discount (1) none Total Credits (A + B + C) (2) none 3. InteresUPenalty if applicable D. Interest E. Penalty TotallnterestlPenalty (0 + E) (3) 4. If Une 2 is greater than Une 1 + Une 3, enter the difference. This is the OVERPAYMENT, Check box on Page 1 Une 20 to request a refund (4) 5. If Une 1 + Une 3 is greater than Une 2, enter the difference. This is the TAX DUE. (5) A Enter the interest on the tax due. (SA) B. Enter the total of Une 5 + SA This is the BAlANCE DUE. (58) none Make Check Payable to: REGISTER OF WILLS, AGENT PLEASE ANSWER THE FOLLOVVlNG QUESTIONS BY PLACING AN "X" IN THE APPROPRIATE BLOCKS 1. Did decedent make a transfer and: Yes No a retain the use or income of the property trmsferred; ........................................ D ~ b. retain the right to designate who shall use the property transferred or its income; . . . . . . . . . . . . . . . . . .. D KJ c. retain a reversionary interest; or ....................................................... D [!I d. receive the promise for life of either payments, benefits or care? ............................... D lIS] 2. If death occurred after December 12, 1982, did decedent transfer property within one year of death without receiving adequate consideration? . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. D IKI 3. Did decedent own an "in trust for" or payable upon death bank account or security at his or her death? . . . .. D IRI 4. Did decedent own an Individual Retirement Account, annuity, or other non-probate property which contains a beneficiary designation? . . . . . . . . . . , . . , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. D ~ IF THE ANSWER TO AN( OF THE ABOVE QUESTIONS IS YES, YOU MUST COMPLETE SCHEDULE G AND FILE IT AS PART OF THE RETURN. Under perBties d perjI.ry, I decln that I have examilecIlhis reIum. including accompanying schedules and stalemelU, and 10 the best d my koowIedge and belief, it is true, COITllCt lI'Id COI11lIete. DecIaraIia'I d pr&pallI' other Iha1lhe personal representallve Is based 00 all infcnnatial d which preparer has any kroNIedge. SIGNATURE 0 ERSON RE ONSI OR FILING RETURN pA ~ fc2'd ADDRESS Bemetta J. Frie ,200 South 16th Street, Camp Hill, PA17011 SIGNATtIlE~ATIVE ADDRESS Samuel L. Andes, P.O. Box 168, Lemoyne, PA 17043 DATE /3 ~ 4:7b For dates of death on or after July 1,1994 and before January 1, 1995, the tax rate imposed on the net value of transfers to or for the use oftheswviving spouse is 3% [72 P.S. ~9116 (a) (1.1) Q)}. For dates of death on or after JiIlUary 1, 1995, the tax rate imposed on the net value of transfers to or for the use of the surviving spouse is 0% [72 P.S. ~9116 (a) (1.1) Oi)). The statute does not exempt a lra1sfer to a swviving spouse from tax, and the statutory requirements for disclosure of assets arid filing a tax return are still applicable even if the surviving spouse is the only beneficiary. For dates of death on or after July 1, 2000: The tax rate imposed on the net value of transfers from a deceased child twenty-one years of age or younger at death to or for the use of a natural parent, an adoptive parent, or a steppa-ent of the child is 0% [72 P.S. ~9116(a)(1.2)]. The tax rate imposed on the net value of transfers to or for the use of the decedent's lineal beneficiaries is 4.5%, except as noted in 72 P.S. ~9116(1.2) [72 P.S. ~9116(a)(1)]. The tax rate imposed on the net value of transfers to or for the use of the decedent's siblings is 12% [72 P.S. ~9116(a)(1.3)]. A sibling is defined, under Section 9102, as an individual who has at least one parent in common with the decedent, whether by blood or adoption. STF PA42ll21F.2 RE: Pennsylvania Inheritance Tax Return FOR: Fries, Charles S. (deceased) FILE NO. 21-05-0683 On 10 February 1993 Charles S. Fries ("Decedent") created a trust with his spouse, Evelyn M. Fries. A copy of the trust agreement is attached to this statement. By an amendment dated 10 January 2005, the Decedent and his wife modified one provision of the trust agreement. That provision, however, did not affect the distribution of property by the trust upon Decedent's death. Upon the execution of the trust agreement and the creation of the trust, Decedent and his wife transferred virtually all of their assets into the name of the trust. Thereafter, the trust held and managed those assets. At the time of Decedent's death, the only assets he owned which were not held by the trust were: A. Several individual retirement accounts and policies of insurance on Decedent's life, all of which named Decedent's widow, Evelyn M. Fries, as the beneficiary. Because Evelyn M. Fries survived Decedent's death, all of these assets passed to her. B. One or more small bank accounts which were held in the joint names of Decedent and his wife, Evelyn M. Fries. Because Evelyn M. Fries survived Decedent's death, all of the funds in these accounts passed to her alone. C. Eight U.S. Savings Bonds which Decedent held in his name alone. Those bonds were liquidated shortly after Decedent's death and the value of those bonds is included on Schedule E of the Pennsylvania Inheritance Tax Return. Because all of these assets were held jointly by Decedent and his spouse, and because his spouse survived Decedent's death and, therefore, all of the property passed to her, it is the estate's position that none of these assets are taxable except for the U.S. Savings Bonds which are properly reported on the inheritance tax return. All of the assets held in the trust created by Decedent and his spouse passed to a trust for the benefit of Decedent's spouse, pursuant to Article IV of the trust agreement (attached hereto as Exhibit A). The gross value of all of those assets was less than $1,000,000.00 and, as a result, under the clear dictates of the trust agreement, all of those assets passed to the "marital fund" which was held in further trust for the benefit of Decedent's spouse, Evelyn M. Fries. The estate did not make an election under Section 9113 to pay inheritance tax on any of the funds or assets in the trust. Accordingly, it is the estate's position that, because all of the assets within the trust passed to the decedent's surviving spouse and widow, no inheritance tax is due on those assets or funds. Samuel L. Andes Counsel for Executrix ll!11!I(f()Pu/A'J Executrix of the Estate of Charles S. Fries REV-1508 EX + (1-97) (I) CG.1MONWEALTH OF PENNSYlIANIA INHERITANCE TAX RETURN RESIDENT DECEDENT SCHEDULE E CASH, BANK DEPOSITS, & MISC. PERSONAL PROPERTY ESTATE OF FILE NUMBER Fries, Charles S. 21-05-0683 Include the proceeds Ii lillgalion and the date the proceeds were received by the esIaIe. All property Jolntly-owned with the right of swvivorshlp must be disclosed OIl Schedule F. ITEM VALUE AT DATE NUMBER DESCRIPTION OF DEATH 1. Eight U.S. Savings Bonds redeemed in August of 2005. Per the attached schedule, $1,547.10 the value of those bonds on the date of death was: TOTAL (Also enter on line 5, Recapitulation) $ 1,547.10 (If more space is needed, insert additional sheets of the same size) STFPA42021F.9 u.s. Savings Bond Redemption Receipt Branch ID: BP174192 Transaction Number: 05812135011-450BP1741921 Charles S Fries 187-12-0752 1114 Charles Street Mechanicsburg, PA 17055 Redemption Date: 08/12/2005 Teller ID: honafiee Issue Interest Redemption Serial Number Series Denom Date Issue Price Earned Value L2169062920-E E $50 11/1979 $37.50 $147.64 $185.14 C12512499-EE EE 100 12/1980 50.00 196.80 246.80 C16455847-EE EE 100 10/1981 50.00 177.12 227.12 C48936029-EE EE 100 10/1983 50.00 124.20 174.20 C80677818-EE EE 100 11/1985 50.00 102.16 152.16 R53693259-EE EE 200 10/1989 100.00 133.52 233.52 R68665148-EE EE 200 10/1990 100.00 124.48 224.48 C362090857-EE EE 100 11/1992 50.00 53.68 103.68 Total number of bonds redeemed: 8 Total Price Total Interest Total Value 487.50 1 059.60 1 547.10 Customer Signature Customer ID: 13861662 HARRISBURG(SIMPSON FERRY) 5032 Simpson Ferry RoadMechan Mechanicsburg, PA 17055 717-766-6800 Page 1 Of 1 -- November 1979 <<ti~~roiir--,~.,r4"-'- - NAT16NAL BANK ", , , , I I , , , , , , __.._,t_ If '. " " :.. t _"' w: ..- . . . -- : -, '. t ,~~.:r:.dI5'!1-.. ~'~II!tH-DJ~!lg(Qf4\l'.mJI~ AT THE: ORIGINAL NATURITV HEREOF WILL P4Y g!{~!!N!.'Ir..~~ ISSUING AGENT" NO Y IJ.J~LS ~- . 'WILLI~HSPQ~r. A\' . ,.s ...." .""....... ""'",.h.. A: .... ." .s -._ ...".... . c-SEIUES E ~~=-=.;"" V~':;;;~;~L 2 169 062 920 E .I~~I~::;~~~-;;:~~~. Gift 173-09-9489 Charles S. Fries 1114 Charles Street Mechanicsburg, Pa. : -- --; . . -- : , .. ~ ---! ~__il~_~~ AT THE MATuRITV HEREOf WILL PAV '@1J~!!fii~l~Jm!!!>~!!!~~~L@ Gift 173-09-9489 Charles S. Fries 1114 Charles Street Mechanicsburg, PA 17055 December 1980 -IMONT-"'-l ~ .:.-: -: ~- ..-('vi-AI'l-I- - W1LLlAMSPORT, , I'tATIONAL BA~1< ", I!>SIJ1NQ AGENTS I ;': I ,. n. --1000,' :)-t.. ~"":J!f'lG a~ .' = .. . i -,.: ~ . .1. 1nL~PCJRT, PA ">"~Zt~:";:;':::;'''':e' <,0': .:,,:~.:.,.~=\~ ......,.. ""':"" '. ~ . '-'-', "'--,",.'. <'II.~"<'.,- ..... .. ~ .. . ..... '" ~'~-=-'a .. .... ~ .. 4 .. '.. .. .. ..,J"............~............\-4........ C12 512 499EE j i ! i .~j _, 'TtTI. , ',-W If~=':_~_~.~--::-1i1T1Tf11 ~ ATTH€MATURITYHEREOFWILLPAY -: >ftl'lHfIBmlQftm~l)~mn"~ ISSUE DATE Gift 17~6~W' ~ WIlICH IS llltflRSTDAYOF ~ 70 Mr. Charlps S. Pries 1114 ChJrles street Mechanicsburg, PA 17055 Q~"t . J- - J._'iB): - - -- ,.i (MO"lTH ....____...\~) W1U1':W~PURT--',i H"'''\O:';~' 8~ NK \, . J l......lNO AOENT'. \ 1 : : :i f'\~' HIO'l' U L\ DATIt"'O ~ ,/ , , j - ' W'LUM~1-::7x:.'K'f'" ",Ii. ""'~"""~"h"C""'''e'''''''>'''''' ....,"'''. ""<u"',"'"..,,,, ",. .~u,."".,.,.,'..n'~, . ,". . . . lJv....'....~.r".,....'..!..~,_~( '.:," ~~ "'~''''''TOh .,";.r,_,,."_"-;,,,,,,,,, C16 455 847 EE . ., . '~-c:..."-"'~i!I,-.u.~~;";"...I.::.iIt'i&:~~~""~"1<lJ:~~'.a.'=fi.~'.&' .~~. " l.t) _ . . - (I m Charles 5. Fries Gift 173-09-9489 1114 Charles Street Mechanicsburg, PA 17055 -(~f~_-~:-!l" - - N~ . '.,' "'~'. - ~l b)>)jJ( "', DCj OJ,l9iI .:t"I; i.\""... " 'c -- '';!~?:if.(~ ,Pit.. " "-... ~ sERmsEE - - '_-=::.=.,,:,:,.:.,::,e' ,::.'J:=-'=:'~ C 4 8 936 029 E E -..,..".- :.:" ~>. ./!- ~ Jifr~""~-";;1" . ---_.~ AT TMIt Ml'TURltYHt:_WIU. '''Y _UD!!'q~~ ISSUE DATE WHICH tS tHE FIRST 04 Y OF 17J-09-9h89 _ - _No;r-~ _ _19.a~ -,- I twION"TH~ H t !"::~,$1.~"'1 , . Charles S. Fries 1114 Charles St. Mechanicsburg, Pa. 17055 , , , . , , , , , ,aeutNG- AOItNT'e S OAT1NO aTANf" GIFT l_tIOlIlO....~.~" ,", LIIII..nlOlllD'O.........IIMIID. ___:~:~""n-: .':,.:.' '''.~5t=> ~i- 'UlMlIIIG.'lOII . s-.."...,.." e80 677 818 EE . -----~_._--~~----_.- _."-._--------_.._--,~----_._._._.. --...-----------. . REV-1509 EX + (1-97) (I) COMMONWEALTH OF PENNSYUD\NIA INHERITANCE TAX RETURN RESIDENT DECEDENT SCHEDULE F JOINTLY-QWNED PROPERTY ESTATE OF FILE NUMBER Fries, Charles S. If 111 asset was made Joint within one year of the decedent's date of death, It must be reported on Schedule G. 21-05-0683 SURVMNG JOINT TENANT(S) NAME ADDRESS RElATKlNSHIP TO DECEDENT A NONE B. c. JOINTLY -OWNED PROPERlY: LEIlER DATE DESCRIPTION OF PROPERTY %OF DATE OF DEATH ITEM FOR JOINT MADE kdIle name of fum:iallnslilUlon ard barillICCOIIt ruTter or simBl' ideI1IfyiJV runbet DATE OF DEATH DECD'S VALUE OF NUMBER TENANT JOINT AlIach deed for joinly-/1eld real es1ate. W.UEOFASSET INTEREST DECEDENrS INTEREST 1. A NONE TOTAL (Also enter on line 6, Recapitulation) $ (If more space is needed, insert additional sheets of the same size) SlFPA42D21F.10 REV-1510 EX + (1-97) (I) CCMIONYQLTH OF PENNSYLVANIA INHERITANCE TAX RETURN RESIDENT DECEDENT SCHEDULE G INTER-VIVOS TRANSFERS & MISC. NON-PROBATE PROPERTY ESTATE OF FILE NUMBER Fries, Charles S. 21-05-0683 This schedlJe I1Il5l be completed and filed W the answer 10 alY of questions 11hrough 4 on the reverse side of the REV-1500 COVER SHEEr is yes. DESCRIPTION OF PROPERTY %OF ITEM II<<:I.I.IlE TIE NAME OF TIE TRANSFEREE, TH:IR RELATlONSHP TO IlECEIlENf AN> TIE DAlE DATE OF DEATH DECO'S EXCLUSION TAXABLE VALUE NUMBER OFlRANSFER. ATTACHA COPY OFnE llEEDFOR REAL ESTATE. VALUE OF ASSET INTEREST OF AFPUCASlE) 1. NONE TOTAL (Also enter on line 7, Recapitulation) $ (If more space is needed, insert additional sheets of the same size) S1FPM2021F.11 REV-1511 EX + (1-97) (I) SCHEDULE H C(JJIMONWEALTH OF PENNSYUlANIA FUNERAL EXPENSE~ I INHERITANCE TAX RETURN ADMINISTRATIVE eOl JI; RESIDENT DECEDENT ESTATE OF FILE NUMBER Fries, Charles S. 21-05-0683 Debts of deced8lll must be reported on Schedule I. ITEM NUMBER DESCRIPTION AMOUNT A. FUNERAL EXPENSES: 1. Auer Memorial Home and Cremation Services, Inc. $1,175.00 B. ADMINISTRATIVE COSTS: 1. Personal Represenlalive's Convnissions Name of Personal Represerdative(s) Social5ecl.rity Number(s) I EIN Number of Personal Representalive(s) Street Address City Slate I :zip Year(s) Conmisslon Paid: 2. AItomey Fees SAMUEL L. ANDES $2,760.00 , 3. FlI11ily Exemption: (I decedent's address is nollhe same as c1a1marfs, attach expla1 "0 ClaimII1t I Street Address City Slate _I lip ReIatIa1ship of Claimant to Decedent 4. Probate Fees Register of Wills $54.00 5. AccolmIant's Fees Brown Schultz Sheridan & Fritz $725.00 6. Tax Return PrepS'er's Fees 7. The Sentinel (advertising) $115.25 Cumberland Law Journal (advertising) $75.00 TOTAl ~~llI""Ieron line 9, Recapitulation) $ 4,904.25 (If more space is needed, insert additional U hllWll~ size) SlF PA42021 F.12 REV-1513 EX + (9-00) ~1HOFPEHHSYW\N1A INHEflITN<<:E TAX RETURN RESIDENT DECEDENT SCHEDULE J BENEFICIARIES ESTATE OF Fries, Charles S. FILE NUMBER 21-05-0683 RELATIONSHIP TO DECEDENT AMOUNT OR SHARE NUMBER NAME AND ADDRESS OF PERSON(S) RECEIVING PROPERlY Do Not list Trustee(s) OF ESTATE L TAXABlE DISTRIBUTIONS pnclude outright spousal distributions, and transfers under Sec. 9116 (a) (1.2)] 1. A trust created for the benefit of the decedent's widow, Spouse 100% Eveyln M. Fries, pursuant to the trust agreement dated 10 February 1993, a copy of which is attached to this return. ENTER DOlLAR AMOUNTS FOR DISTRIBUTIONS SHOWN ABOVE ON UNES 15 THROUGH 18, AS APPROPRIATE, ON REV-1500 COVER SHEET n. NON-TAXABLE DISTRIBUTIONS: A. SPOUSAL DISTRIBUTIONS UNDER SECTION 9113 FOR WHICH AN ELECTION TO TAX IS NOTB8NG MADE 1. none B. CHARITABLE AND GOVERNMENTAL DISTRIBUTIONS 1. none TOTAL OF PART n - ENTER TOTAL NON- TAXABLE DISTRIBUTIONS ON UNE 13 OF REV.1500 COVER SHEET $ 0.00 Of more space is needed, insert additional sheets of the same size) STFPA42021F.14 THE CHARLES S. FRIES FAMILY REVOCABLE TRUST THIS TRUST AGREEMENT is executed in triplicate on this day of ~~~~__' 1993, by and between CHARLES S. FRIES, of 1114 Charles treet, Mechanlcsburg, Cumberland County, Pennsylvania 17055 (herein called "Settlor") and CHARLES S. FRIES and EVELYN M. FRIES, now of 1114 Charles Street, Mechanicsburg, Cumberland County, Pennsylvania 17055 (herein called "Trustees" or "Co-Trustees"). /oK now ARTICLE I. PARTIES, PERSONAL DATA AND TABLE OF CONTENTS 1.01. Parties and Personal Data. The Settlor is married to EVELYN M. FRIES. The Settlor's children are ROBERT S. FRIES, BERNETTA J. FRIES, and JEAN F. WADLINGER (and any children born to or legally adopted by the Settlor hereafter). Throughout this Agreement: (a) CHARLES S. FRIES will be referred to as the Settlor; (b) EVELYN M. FRIES will be referred to as Settlor's spouse; (c) ROBERT S. FRIES, BERNETTA J. FRIES, and JEAN F. WADLINGER, and any other children born to or legally adopted by the Settlor will be referred to as the children of the Settlor or the Settlor's children; and, (d) the word "issue" will include all of the Settlor's children as well as his other descendants. 1.02. Table of Contents. PAGE ARTICLE I. PARTIES, PERSONAL DATA AND TABLE OF CONTENTS 1.01 PARTIES AND PERSONAL DATA 1 1.02 TABLE OF CONTENTS 1 ARTICLE II. TRUST ESTATE 2.01 Transfer of Trust 2 2.02 Additional Transfers to Trust 3 ARTICLE III. LIFE 3.01 3.02 3.03 3.04 INSURANCE POLICIES Transfers of Life Insurance to Trust payment of Premiums Rights in the Life Insurance Reserved to Settlor Duties of Trustees Regarding the Life Insurance 3 3 4 5 ARTICLE IV. DISTRIBUTIONS FROM TRUST 4.01 Distributions During Settlor's Life 5 4.02 Formula Division into Marital and Non-Marital Portions 4.03 Disposition of Marital Portion 4.04 Disposition of Non-Marital Portion; the By-pass Trust 5 9 10 ARTICLE V. POWERS OF TRUSTEE 5.01 General Powers 5.02 Voting by Trustees 14 18 ARTICLE VI. SPENDTHRIFT PROVISION 6.01 General provisions 18 ARTICLE VII. CONSTRUCTION OF TRUST 7.01 Choice of Law 7.02 Code 7.03 Other Terms 7.04 Captions and Table of Contents 7.05 Situs of Trust 19 19 19 19 19 ARTICLE VIII. COMPENSATION OF TRUSTEE AND APPOINTMENT OF SUCCESSOR TRUSTEES 8.01 Compensation 19 8.02 Removal of Trustees 19 8.03 Successor Trustees 20 ARTICLE IX. PERPETUITIES CLAUSE 9.01 General provisions 20 ARTICLE X. REVOCATION AND AMENDMENTS 10.01 Reservation and Powers 20 10.02 Effect of Settlor's Incapacity 21 ARTICLE XI. ACQUISITION OF UNITED STATES TREASURY BONDS ELIGIBLE FOR TAX PAYMENT; PAYMENT OF TAXES, FUNERAL EXPENSES, AND EXPENSES OF ADMINISTRATION 11.01 Acquisition of Bonds 22 11.02 PaYment of United State Estate Tax by Bond Redemption 22 11.03 PaYment of Death Taxes and Other Estate Settlement Costs 23 ARTICLE II. TRUST ESTATE 2.01. Transfer to Trust. Settlor does hereby assign, transfer and deliver to the Trustees and their successors and assigns the property described in Schedule "A" attached hereto 2 and made a part hereof, or as Schedule "A" may be amended. As further evidence of such assignment, the Settlor has executed or will execute or cause to be executed such other instruments as may be required for the purposes of completing the assignment or transfer of title to such property to the Trustees. The Trustees accept such transfer and assignment to themselves as Trustees, and undertake to hold, manage, invest and reinvest the assets of this Trust, and to distribute the income and principal of the Trust in accordance with the provisions of this Agreement. 2.02. Additional Transfers to Trust. The Settlor, and any other person, with the consent of the Trustees, shall have the right at any time to make additions to the corpus of this Trust or any shares thereof hereby established. All such additions shall be held, controlled, and distributed by the Trustees in accordance with the terms and conditions of this Agreement. ARTICLE III. LIFE INSURANCE POLICIES 3.01 Transfers of Life Insurance to Trust. If any insurance pOlicies are transferred into this Trust, the Trustees shall be vested with all right, title, and interest in and to the transferred policies of insurance, and are authorized and empowered to exercise and enjoy, for the purposes of the Trust herein created and as absolute owner of such policies of insurance, all the options, benefits, rights and privileges under such pOlicies, including the right to borrow upon and to pledge them for a loan or loans. The Trustees take all rights, title, and interest in and to such insurance pOlicies subject to any prior split-dollar life insurance agreement which may be in effect at the time of the transfer. The insurance companies which have issued such pOlicies are hereby authorized and directed to recognize the Trustees as absolute owners of such pOlicies of insurance and as fully entitled to all options, rights, privileges, and interests under such pOlicies, and any receipts, releases, and other instruments executed by the Trustees in connection with such pOlicies shall be binding and conclusive upon the insurance companies and upon all persons interested in this Trust. 3.02 Payment of Premiums. It is the intention of the Settlor to pay any and all premiums, assessments or other charges necessary to keep each pOlicy included in the Trust in force unless such premiums shall be paid by the insured thereunder (where the insured is someone other than the Settlor) or in some other manner, but the Settlor shall be under no duty in this respect and shall incur no liability to the beneficiaries of the Trust or to any other person if the Settlor shall permit any such 3 pOlicy to lapse for nonpayment of premiums, assessments or charges, or otherwise permit any such pOlicy to become uncollectible. The Trustees shall be under no obligation to pay the premiums which may become due and payable under the provisions of any policy of insurance which may be transferred or assigned to this Trust, or to make certain that such premiums are paid by the transferor of such policy, or to notify any persons of the nonpayment of such premiums, and the Trustees shall be under no responsibility or liability of any kind in case such premiums are not paid, except that the Trustees shall apply any dividends received by the Trustees on such pOlicies to the payment of premiums thereon. Upon notice at any time during the continuance of this Trust that the premiums due upon such pOlicies are in default, or that premiums which will become due will not be paid, either by the transferor or by any other person, the Trustees, within their sole discretion, may apply any cash values attributable to such policy to the purchase of paid-up insurance or of extended insurance, or may borrow upon such pOlicy for the payment of premiums due thereon, or may accept the cash values of such policy upon its forfeiture. In the event that the Trustees receive the cash value of such pOlicy upon its forfeiture for nonpayment of premiums, the amount received shall be added to the corpus of this Trust, and shall be administered according to the terms of this Agreement. If the insured under such pOlicies of insurance, becomes totally and permanently disabled within the meaning of any pOlicies and because thereof the payment of premiums, or any of them, shall, during the pendency of such disability, be waived, the Trustees, upon receipt of such knowledge, shall promptly notify the insurance company which has issued such pOlicies, and shall take any and all steps necessary to make such waiver of pr~ium provision effective. 3.03. Rights in the Life Insurance Reserved to Settlor. The following rights, exercisable without the consent of the Trustees or the beneficiaries of the Trust, are expressly reserved by the Settlor during the Settlor's lifetime with respect to each pOlicy included in the Trust insuring the Settlor's life and/or owned by the Settlor and made payable to the Trustees hereunder: {i} to exercise all options, elections, rights and privileges accorded to the Settlor under the terms of any such policy, {ii} to obtain all or any part of the loan value of any such pOlicy, {iii} to use any such pOlicy as collateral for a loan, {iv} to sell, assign or pledge any such pOlicy, {v} to receive any dividends, distributive shares of surplus earnings, disability benefits, surrender values or the proceeds of matured endowments, {vi} to 4 change the named beneficiary to whom the proceeds of such pOlicy are payable on the insured's death, and (vii) to convert any or all pOlicies into other forms of insurance or annuities or to permit the same to lapse. The Trustees agree to execute any and all instruments that may be necessary to permit the exercise of any such right by the Settlor, without liability to anyone for so doing. Upon the maturity of any life insurance pOlicy included in the Trust, whether at the insured's death or at any other time, the Trustees shall collect the proceeds thereof. 3.04 Duties of Trustees Regarding the Life Insurance. The Trustees shall be under no obligation or duty whatsoever except with respect to the safekeeping of such pOlicies of insurance and the duty to receive such sums as may be paid to the Trustees, in accordance with the requirements of this Trust, by the companies issuing such pOlicies, and to hold, manage and disburse such proceeds subject to the terms of this Agreement. Upon the death of the insured, the Trustees shall make reasonable efforts to carry out the provisions of this Agreement, including the maintenance or defense of any suit, provided, however, the Trustees shall be under no duty to maintain or enter into any litigation unless their expenses, including counsel fees and costs, have been advanced or guaranteed in an amount and in a manner reasonably satisfactory to them. The Trustees may repay any advances made by them or reimburse themselves for any such fees and costs from any corpus or income of this Trust. ARTICLE IV. DISTRIBUTIONS FROM TRUST 4.01. Distributions During Settlor's Life. If more than ONE HUNDRED DOLLARS ($100) worth of cash, property or other assets (besides pOlicies of insurance) is added to the Trust during the Settlor's life, then the Trustees shall pay to, or apply for the benefit of, the Settlor: (1) so much of or all of the income and so much of or all of the principal as the Trustees deem desirable for the most comfortable care, support, maintenance, welfare, education, happiness, luxuries and any needs arising from illness, accidents or other emergencies of the Settlor; and, (2) so much of or all of the income and so much of or all of the principal as the Settlor shall request. 4.02. Formula Division into Marital and Non-Marital Portions. (A) General Explanation of Plan. If the Settlor's spouse survives the Settlor, the Trustees ~hall upon the Settlor's death divide the trust property into marital and'non-marital portions, pursuant to the formula set forth in Section 4.02(B), below. If 5 the Settlor's spouse does not survive the Settlor all of the trust property shall be disposed of as provided in Paragraph 4.04, below (applicable to the non-marital portion of this Trust) . (B) Formula Division into Non-Marital and Marital Portions. (1) Non-Marital Portion. The non-marital portion of this Trust shall be an amount equal to the largest amount that can pass from the Settlor's estate free of any federal estate tax as a result of the allowance of the Unified Credit under IRC Section 2010 (or the corresponding provisions of any subsequent federal tax law), and the State Death Tax Credit under Section 2011 (or the corresponding provisions of any subsequent federal tax law), but only to the extent that the use of such Death Tax Credit does not incur or increase any state death taxes otherwise payable by Settlor's estate. The non-marital portion of this Trust shall be determined after taking into consideration, among other things, the following: (i) the value of any and all bequests or transfers from the Settlor's estate or this Trust which do not qualify for the marital or charitable deduction; (ii) all charges against principal in the Settlor's estate or this Trust that are not allowed as deductions in computing the federal estate tax; (iii) all administration and other expenses claimed on the Settlor's estate tax return; (iv) any prior adjusted taxable gifts made by Settlor; (v) all disclaimers, renunciations and elections (except any elections under IRe Section 2056(b) (7) which may be available with respect to the disposition in this Article IV; and, (vi) any available elections under Section 2056(b) (7) with respect to any interests in property other than the disposition under this Article IV shall, for purposes of computing the fraction, be conclusively presumed to have been made, whether or not any such election is in fact made. (2) Marital Portion. Trust shall be the portion entire amount held in this portion. The marital portion of this remaining after reducing the Trust by the non-marital ~ (e) Non-Marital Portion to Pass to the By-PaSS Trust. The non-marital portion of this Trust shall pass into the By-Pass Trust (herein referred to as the "By-Pass Trust") to be held and disposed of in accordance with the terms set forth below. 6 (D) Distribution of Marital Portion. If the Settlor's spouse survives the Settlor, the entire marital portion shall be distributed to the then-current Trustee(s) of the EVELYN M. FRIES FAMILY REVOCABLE TRUST dated February~, 1993, as now in effect or as may hereafter be amended, to be held and disposed of in accordance with the terms of that Trust. (E) Valuation Elections and Selection of Assets. (1) Valuation Elections, Meaning of Terms and Date of Distribution Values to Govern. For the purpose of determining the amount of the marital portion, values shall be those which are finally determined for federal estate tax purposes. Elections made by the Settlor's fiduciaries with respect to an alternate valuation date and with respect to taking certain deductions for income tax purposes (rather than estate tax purposes) shall determine the values and this the formula amount as computed under Section 4.02(B). Throughout this instrument, the words "marital deduction," "gross estate" and "alternate valuation date" shall have the same meanings as such words have for marital deduction purposes under the federal tax laws applicable at the Settlor's death. Subject to the requirements of Section 4.02(E) (2) and (3), below, the Trustees are authorized, in their sole discretion, to satisfy the marital portion in cash or in kind, or partly in each; and if wholly or partly in kind, to place in the marital portion the specific asset or assets so selected; provided, however, that any assets placed in the marital portion in kind shall be valued for the purpose of being placed in the marital portion at their fair market value as determined as of their respective dates of distribution to the marital portion. The Trustees are further authorized, in their sole discretion, to estimate the size of the marital portion and to fund that portion subject, however, to any adjustments which may be required upon final determination of the federal estate tax on the Settlor's estate. (2) Assets to go into the Marital Portion. Unless and except to the extent that other assets of the Settlor's estate which qualify for the marital deduction are not sufficient to satisfy the amount to be placed in the marital portion in full, the marital portion shall be satisfied with assets which are includable in the Settlor'S gross estate for federal estate tax purposes and which are also subject, by 7 reason of the Settlor's death, to any estate, transfer, inheritance, legacy, succession or other death tax or duty imposed by any foreign country or a possession or political subdivision thereof, or the proceeds from such assets. The marital portion shall not, under any circumstances, be satisfied with assets which would not qualify for the marital deduction or with any unmatured life insurance pOlicy or in any other manner which would not qualify for the marital deduction under applicable law. If the Settlor's estate includes united States bonds redeemable to pay-the federal estate tax at more than their market value, any excess of such bonds over the amount needed to pay said tax due by reason of the Settlor's death shall be first used to satisfy the marital portion, whether said bonds are held in this Trust at the Settlor's death or subsequently distributed to this Trust from the Settlor's estate. Any reference in this Agreement to a distribution of an asset not includable in the decedent's gross estate for federal estate tax purposes shall be deemed to include that portion of any asset partially includable in the decedent's estate that is not so includable. (' / I I j (3) Special Treatment for Certain Other Assets. If any distributions are includable in the Settlor's gross estate are made from any pension, stock bonus, profit sharing or other plan or trust funds, retirement annuity contract, self-employed retirement plan or individual retirement account, annuity or bond qualified for special tax treatment under Sections 401, 403, 40B, or 409, or Chapter 73 of Title 10 of the United States Code or corresponding provisions of applicable laws, or any death benefits paid by an employer which are distributions not includable in the Settlor's gross estate shall be payable to the Trustees, such distributions shall be added to the non- marital portion, after being segregated, as provided herein, if the Settlor's spouse survives the Settlor, and administered in the same manner as is the non- marital portion. If the Settlor's spouse does not survive the Settlor, such distributions shall be held under the terms of this Agreement as any other property received from the Settlor's estate. However, where any distributions not includable in the Settlor's gross estate are received by the Trustees hereunder from any such qualified plan, trust, contract, account, annuity or bond, or received as death benefits paid by an employer not includable in the Settlor's gross estate, 8 such distributions shall be segregated until such time as all of the death taxes on the Settlor's estate are paid in full. The Trustees are prohibited from using any portion of such distributions for the paYment of the Settlor's death taxes, debts, administration expenses of Settlor's estate or Settlor's funeral expenses. The provisions of this Section 4.02(E) (3) shall not apply to distributions includable in the Settlor's gross estate, except insofar as the Trustees, in their sole discretion, desire to make some or all of said provisions applicable, and the term "distributions not includable in the Settlor's gross estate" includes a distribution received by the Trustees where the recipient may elect whether to include or exclude said distribution and has elected to exclude it. 4.03. Disposition of Marital Portion. (A) Marital Bequest. If the Settlor's spouse survives the Settlor, the entire marital portion shall be distributed to the then-current Trustee(s)~of the EVELYN M. FRIES FAMILY REVOCABLE TRUST dated February~, 1993, as now in effect or as may hereafter be amended, to be held and disposed of in accordance with the terms of that Trust. (B) Disposition of Marital portion in Event of Disclaimer by Spouse or Spousels Fiduciary. Notwithstanding anything to the contrary contained in this Agreement, the Settlor's spouse may disclaim the spouse's rights to all or any part of the Marital portion. If the Settlor's spouse dies or has a fiduciary (which term includes, for purposes of this Paragraph 4.03, but is not limited to, an executor, administrator, conservator, committee, guardian, curator or tutor) appointed by a court to act for the spouse within nine (9) months after the Settlor's death and if the spouse has not fully exercised the spouse's disclaimer rights, then the spouse's fiduciary may, within the nine (9) months, file one or more disclaimers on behalf of the spouse and the estate of the spouse in the same manner as the spouse could have disclaimed had the spouse been then-living without a fiduciary acting for the spouse. A disclaimer by the spouse or the spouse's fiduciary shall be made in one or more written instruments, signed by the spouse or the spouse's fiduciary, as the case may be, and delivered to the Trustees within nine (9) months after the Settlor's death, and in such event the portion or all of the disclaimed Marital Portion shall pass to and shall be managed in accordance with the By-pass Trust hereinafter more fully described in Paragraph 4.04, below. (C) Restrictions Regarding Marital Portion. It is the 9 intention of the Settlor that the marital portion, established by Subparagraph 4.02{B}, above, shall qualify for the marital deduction allowed under the United States Internal Revenue Code. All questions relating to the administration of the marital portion shall be resolved accordingly. The Trustees shall have no power to purchase insurance or annuity contracts or pay premiums thereon from any of the funds in the marital portion. If any property unproductive of income is acquired or held in any trusts set up to qualify for the marital deduction, the Trustees shall, upon request made at any time by the Settlor's spouse, sell, exchange or otherwise dispose of said property and acquire income producing property in lieu thereof. Notwithstanding any provisions to the contrary contained in or incorporated into this Agreement, no one shall have the power to make any equitable adjustments {adjustments to trust corpus or income of both, which involve a reallocation of assets from the account of one beneficiary to that of another to compensate for disproportionate sharing of a tax burden resulting from a tax election} . 4.04. Disposition of Non-Marital Portion; the By-pasS Trust. The non-marital portion, after compliance with Paragraph 4.02, above, shall be placed in a trust called the By-pass Trust, to be held and disposed of as follows: (A) Hold By-pass Trust Undivided Until Death of Spouse. If the Settlor's spouse survives the Settlor, the Trustees shall hold the By-pass Trust undivided, until the death of the Settlor's spouse. The Trustees shall distribute to, or for the benefit of, the Settlor's spouse, for and during the spouse's lifetime, so much of the net income and principal from the Trust as the Trustees, in their sole discretion, shall deem advisable for the health, education, support and maintenance of Settlor's spouse, and shall accumulate and add to the principal of the Trust any of the net income not so expended. (B) Spouse's Special Power of APpointment. The Settlor's spouse shall have the power at any time, exercisable either {i} by instrument or instruments in writing delivered to the Trustees during the spouse's life, or (ii) by the spouse's will, admitted to probate within three hundred and sixty-five (365) days from the spouse's death, specifically referring to this Subparagraph 4.04(B}, to appoint all or any portion of the principal and any accumulated and accrued income of this Trust, except any pOlicies of insurance on the life of the Settlor's spouse. Any appointment made under this Subparagraph 4.04(B} may be upon any terms and conditions (including further trusts, the beneficiaries of which are only Settlor's issue and spouses of the Settlor's issue) to or for the benefit of anyone or more of the Settlor's issue and spouses of the Settlor's issue. However, no such 10 appointment may be made to the Settlor's spouse, nor to the estate, the creditors, nor the creditors of the estate of Settlor's spouse, nor to anyone other than the Settlor's issue and spouses of the Settlor's issue, nor for the health, education, support, or maintenance of any children of the Settlor whom the Settlor or the Settlor's spouse is legally obligated to support or maintain, nor may any general powers of appointment be created by the exercise of the special power of appointment created herein. (C) Spouse's Limited General Power of APpointment. The Settlor's spouse is hereby granted the power to appoint a maximum amount of the principal of this By-pass Trust by instrument in writing delivered to the Trustees during the spouse's life, to the spouse, the spouse's estate, the spouse's creditors, or the creditors of the spouse's estate, or any other individual, in such proportions and upon such terms (in trust or outright gifts), as the Settlor's spouse deems advisable. The maximum amount which Settlor's spouse may appoint under this paragraph, per calendar year, shall be the greater of $5,000, or five (5%) per cent of the entire principal of the By-pass Trust. At the end of each calendar year, the spouse's right to appoint the maximum amount shall lapse, if not exercised, and the unused maximum amounts shall not accumulate. This power shall not be exercisable under the Settlor's spouse's will. If Settlor's spouse fails, either in whole or in part, to exercise this power of appointment, herein granted, the unappointed principal shall continue in trust and shall be administered according to the terms of this By-pass Trust under this Paragraph 4.04. (~~~ f-~/p)" ol~ 11J#~<.Nf ~f7-a:;:(;&d.J-'), C5r 1"/4o-y (D) Disposition of Remainder of By-paSS Trust. At the Settlor's spouse's dea'th, to the extent the spouse has not exercised the spouse's power of appointment under Section 4.04(B), above, or upon the Settlor's death, if the Settlor's spouse predeceases Settlor, the remaining principal and accrued income of the By-pass trust shall distributed as follows: (1) The Trustees shall distribute all of the Pennsylvania Power & Light stock owned by the Trust, absolutely, to Settlor's daughter, JEAN F. WADLINGER, stirpes. per (2) The Trustees shall distribute the sum of Five Thousand Dollars ($5,000.00), absolutely, to Settlor's granddaughter, TAMMIE L. WADLINGER, per stirpes. (3) After taking into consideration the specific gifts listed in paragraphs (1) & (2), above, the Trustees shall distribute twenty (20%) percent of the remaining trust 11 estate to the Settlor's son, ROBERT SCOTT FRIES, per stires. If Settlor's son predeceases the Settlor and the Settlor's spouse, then his share shall be distributed to his then- living issue, per stirpes. If Settlor's son predeceases the Settlor and the Settlor's spouse without leaving issue, then his share shall be distributed to the Settlor's then-living issue, per stirpes. (4) After taking into consideration the specific gifts listed in paragraphs (1) & (2), above, the Trustees shall distribute twenty (20%) percent of the remaining trust estate to the Settlor's daughter, JEAN F. WADLINGER, per stires. If Settlor's daughter predeceases the Settlor and the Settlor's spouse, then her share shall be distributed to her then-living issue, per stirpes. If Settlor's daughter predeceases the Settlor and the Settlor's spouse without leaving issue, then her share shall be distributed to the Settlor's then-living issue, per stirpes. (5) After taking into consideration the specific gifts listed in paragraphs (1) & (2), above, the Trustees shall hold twenty (20%) percent of the remaining trust estate, IN FURTHER SEPARATE TRUST, for the benefit of the Settlor's daughter, BERNETTA J. FRIES, during her lifetime, or until the earlier termination of her trust, for the following uses and purposes: (a) To pay any part or all of the income to, or for the benefit of, the Settlor's daughter, BERNETTA J. FRIES, or to accumulate any part or all of the income, which in the sole discretion of the Trustees is determined to be reasonably necessary for the her needs for health, education, support and maintenance. Any income not so paid shall be added to the principal of the Trust. To the extent possible, all payments of principal or income shall be paid directly to the third-party for the benefit of the Settlor's daughter rather than directly to the Beneficiary. (b) To pay to, or for the benefit of, the Settlor's daughter at any time or times prior to the termination of her separate Trust, such sums from or any part or all of the principal as the Trustees may, in their sole discretion, determine to be reasonably necessary for her needs for health, education, support and maintenance. To the extent possible, all payments of principal or income shall be paid directly to the third party for the benefit of the Settlor's daughter rather than directly to the Beneficiary. 12 7 7 \ 7 (c) At such time as the Trustees have determined that there exist no tax liens, liabilities, encumbrances, or other debts of any tax authority against Settlor's daughter, BERNETTA J. FRIES, then the Trust shall terminate and the entire trust principal and accrued income shall be distributed to the Settlor's daughter, BERNETTA J. FRIES, per stirpes. Upon the death of the Settlor's daughter prior to the termination of the Trust, the Trustees shall pay the remaining principal, if any, to her then-living issue, or if she has no such issue, to the Settlor's then- living issue, per stirpes, provided that any distribution to Settlor's issue shall be added to the Beneficiary's separate trust if a trust is then in existence. (6) After taking into consideration the specific gifts listed in paragraphs (1) & (2), above, forty (40%) percent of the remaining Trust principal shall be divided into separate and equal shares and one such share shall be held by the Trustees, IN FURTHER SEPARATE TRUST, for each of Settlor's then-living grandchildren (including ZACKARAY T. MARTIN, LAUREN M. MARTIN, KELLY A. WADLINGER, and AMY E. WADLINGER, or any grandchildren born to or legally adopted hereafter by Settlor's children) or for the then-living issue of any deceased grandchild. If any of Settlor's grandchildren predecease the Settlor and Settlor's spouse, without leaving issue, then that grandchild's share shall be divided equally among Settlor's then-living issue, per stirpes. The Trustees shall, during the lifetime of each grandchild or the then-living issue of any deceased grandchild (herein referred to as the "Beneficiary"), or until the earlier termination of the Beneficiary's trust, hold each separate trust for the following uses and purposes: (a) During the minority of the Beneficiary, which Settlor defines as not having attained age twenty-two (22), to pay any part or all of the income to, or for the benefit of, the Beneficiary, or to accumulate any part or all of the income, which in the sole discretion of the Trustees is determined to be reasonably necessary for the Beneficiary'S needs for health, education, support and maintenance. Any income not so paid shall be added to the principal of the Trust. To the extent possible, all paYments of principal or income shall be paid directly to the third-party for the benefit of the Beneficiary rather than directly to the Beneficiary. 13 (b) After the Beneficiary has attained the age of twenty-two (22) years, to pay all of the income to, or for the benefit of, the Beneficiary in such periodic installments as the Trustees and the Beneficiary shall agree, but at least monthly. To the extent possible, all payments of principal or income shall be paid directly to the third party for the benefit of the Beneficiary rather than directly to the Beneficiary. (c) To pay to, or for the benefit of, the Beneficiary at any time or times prior to the termination of the Beneficiary's separate Trust, such sums from or any part or all of the principal as the Trustees may, in their sole discretion, determine to be reasonably necessary for the Beneficiary's needs for health, education, support and maintenance. TO the extent possible, all payments of principal or income shall be paid directly to the third party for the benefit of the Beneficiary rather than directly to the Beneficiary. (d) To pay to, or for the benefit of, the Beneficiary, upon his attaining the age of thirty (30), up to one-half (1/2), cumulatively, of the initial principal of his trust, for the purpose of investing in a business, purchasing a home provided that the loan- to-value ratio on the home is no more than seventy-five (75%) percent, or any other reasonable purpose. (e) To pay to, or for the benefit of, the Beneficiary, upon his attaining the age of forty (40), the entire principal of his trust remaining at that time. (f) Upon the death of a Beneficiary prior to his fortieth (40th) birthday, the Trustees shall pay the remaining principal, if any, to the predeceased Beneficiary's then-living issue, or if the Beneficiary has no such issue, to the Settlor's then-living issue, per stirpes, provided that any distribution to Settlor's issue shall be added to the Beneficiary's separate trust if a trust is then in existence. ARTICLE v. POWERS OF TRUSTEES 5.01. General Powers. In addition to such other powers and duties as may have been granted elsewhere in this Trust, but subject to any limitations contained elsewhere in this Trust, the 14 Trustees shall have the following powers and duties: (A) In the management, care and disposition of this Trust, the Trustees shall have the power to do all things and to execute such deeds, mortgages, instruments, and documents as may be deemed necessary and proper, including the following powers, all of which may be exercised without order of or report to any court: (1) To sell, exchange, or otherwise dispose of any property, real, personal or mixed, at any time held or acquired hereunder, at public or private sale, for cash or on terms, without advertisement, including the right to lease for any term notwithstanding the period of the Trust, and to grant options, including an option for a period beyond the duration of the Trust; and to execute such deeds or other instruments as are necessary. (2) To invest all monies in such stocks, bonds, securities, investment companies or trust shares, mortgages, notes, choses in action, real estate, improvements thereon, and other property as the Trustees may deem best, without regard to any law now or hereafter in force limiting investments of fiduciaries; except that the Trustees may not invest in any stock or securities issued by the corporate Trustee or issued by a parent or affiliate company of the corporate Trustee. (3) To retain for investment any property deposited with the Trustees hereunder; except that the Trustees may not retain for investment any stock or securities in the corporate Trustee or in a parent or affiliate company of the corporate Trustee. (4) To vote in person or by proxy any corporate stock or other security and to agree to or take any other action in regard to any reorganization, merger, consolidation, liquidation, bankruptcy or other procedure or proceedings affecting any stock, bond, note or other security held by this Trust. (5) To use lawyers, real estate brokers, accountants and other agents, if such emploYment is deemed necessary or desirable, and to pay reasonable compensation for their services. (6) To compromise, settle or adjust any claim or 15 demand by or against the Trust and to agree to any rescission or modification of any contract or agreement affecting the Trust. (7) To renew any indebtedness, as well as to borrow money, and to secure the same by mortgaging, pledging or conveying any property of the Trust, including the power to borrow from the Trustees (in either or both of the Trustee's individual capacity) at a reasonable rate of interest. (8) To retain and carry on any business in which the Trust may acquire any interest, to acquire additional interests in any such business, to agree to the liquidation in kind of any corporation in which the Trust may have any interest and to carry on the business thereof, to join with other owners in adopting any form of management for any business or property in which the Trust may have an interest, to become or remain a partner, general or limited, in regard to any such business or property and to hold the stock or other securities as an investment, and to employ agents and confer on them authority to manage and operate the business, property or corporation, without liability for the acts of any such agent or for any loss, liability or indebtedness of such business if the management is selected or retained with reasonable care. (9) To register any stock, bond or other security in the name of a nominee, without the addition of words indicating that such security is held in a fiduciary capacity, but accurate records shall be maintained showing that the stock, bond or other security is a trust asset and the Trustees shall be responsible for the acts of the nominee. (10) To merge this Trust with any other trust created in Settlor's will or otherwise, with similar provlslons and purposes and the same beneficiary or beneficiaries, but only to the extent that the merger of the trusts will not cause the imposition of gift tax, or generation-skipping tax, federal or otherwise. (B) Whenever the Trustees are directed to distribute any trust principal in fee simple to a person who is then under twenty-one (21) years of age, the Trustees shall be authorized to hold such property in trust for such person until he becomes twenty-one (21) years of age, and in the meantime shall use such 16 part of the income and the principal of the Trust as the Trustees may deem necessary to provide for the proper support and education of such person in the standard of living to which he has become accustomed. If such person should die before becoming twenty-one (21) years of age, the property then remaining in trust shall be distributed to the personal representative of such person's estate. (C) In making distributions from the Trust to or for the benefit of any minor or other person under a legal disability, the Trustees need not require the appointment of a guardian, but shall be authorized to payor deliver the distribution to the custodian of such person, to payor deliver the distribution to such person without the intervention of a guardian, to payor deliver the distribution to the legal guardian of such person if a guardian has already been appointed, or to use the distribution for the benefit of such person. (D) Subject to the limitations in Paragraph 4.02 and 4.03, in the distribution of the Trust and any division into separate trusts and shares, the Trustees shall be authorized to make the distribution and division in money or in kind or in both, regardless of the basis for income tax purposes of any property distributed or divided in kind, and the distribution and division made and the values established by the Trustees shall be binding and conclusive on all persons taking hereunder. The Trustees may, in making such distribution or division, allot undivided interests in the same property to several trusts or shares. (E) If at any time after Settlor's death the total fair market value of the assets of any trust established or to be established hereunder is so small that the Trustees' annual fee for administering the trust would be equal to or less than the minimum annual fee set forth in the Trustees' regularly published fee schedule then, in effect, the Trustees, in their discretion, shall be authorized to terminate such trust or to decide not to establish such trust, and in such event the property then held in or to be distributed to such trust shall be distributed to the persons who are then or would be entitled to the income of such trust. If the amount of income to be received by such persons is to be determined in the discretion of the Trustees, then the Trustees shall distribute the property among such of the persons to whom the Trustees are authorized to distribute income, and in such proportions, as the Trustees, in their discretion, shall determine. > (F) The Trustees shall be authorized to lend or borrow, including the right to lend to or borrow from the Settlor's estate or the estate of the Settlor's spouse, at an adequate rate 17 of interest and with adequate security and upon such terms and conditions as the Trustees shall deem fair and equitable. (G) The Trustees shall be authorized to sell or purchase, at the fair market value as determined by the Trustees, any property including any property to or from Settlor's estate or the estate of the Settlor's spouse, or any trust created by Settlor or Settler's spouse, during life or by will, even though the same person or corporation may be acting as executor of Settlor's estate or as trustee of any of such other trusts and as the Trustees of this Trust. (H) Subject to the limitations in Paragraph 4.02 and 4.03, the Trustees shall have discretion to determine whether items should be charged or credited to income or principal or allocated between income and principal as Trustees may deem equitable and fair under all the circumstances, including the power to amortize or fail to amortize any part or all of any premium or discount, to treat any part or all of the profit resulting from the maturity or sale of any asset, whether purchased at a premium or at a discount, as income or principal or apportion the same between income and principal, to apportion the sales price of any asset between income and principal, to treat any dividend or other distribution on any investment as income or principal or to apportion the same between income and principal, to charge any expense against income or principal or apportion the same, and to provide or fail to provide a reasonable reserve against depreciation or obsolescence on any asset subject to depreciation or obsolescence, all as the Trustees may reasonably deem equitable and just under all of the circumstances. (I) Except as limited herein, the Trustees are hereby authorized and empowered to purchase such insurance pOlicies as they deem appropriate. 5.02. Voting by Trustees. When the authority and power under this Trust is vested in two (2) or more Trustees or Co- Trustees, the authority and power under this Trust or granted by law shall be vested in, and exercised by, each of the Trustees individually or all of the Trustees jointly, such that each Trustee may act independently, or the trustees may act jointly, in the administration or under the terms of the Trust agreement. ARTICLE VI. SPENDTHRIFT PROVISION 6.01. General provisions. No beneficiary shall have the power to anticipate, encumber or transfer his interest in the Trust Estate in any manner other than by the valid exercise of a 18 Power of Appointment. No part of the Trust Estate shall be liable for or charged with any debts, contracts, liabilities or torts of a beneficiary or subject to seizure or other process by any creditor of a beneficiary. ARTICLE VII. CONSTRUCTION OF TRUST 7.01. Choice of Law. This Trust shall be administered and interpreted in accordance with the laws of the Commonwealth of Pennsylvania. 7.02. Code. Unless otherwise stated, all references in this Trust to section and chapter numbers are to those of the Internal Revenue Code of 1986, as amended, or corresponding provisions of any subsequent federal tax laws applicable to this Trust. 7.03. Other Terms. Unless the context otherwise requires, the use of one or more genders in the text includes all other genders, and the use of either the singular or the plural in the text includes both the singular and the plural. . 7.04. CaPtions and Table of Contents. The underlined captions set forth in this Agreement at the beginning of the various divisions hereof and the Table of Contents appearing at the beginning of this Agreement are for convenience of reference only and shall not be deemed to define or limit the provisions hereof or to affect in any way their construction and application. 7.05. Situs of Trust. The Trust shall have its legal situs at Cumberland County, pennsylvania. ARTICLE VIII. COMPENSATION OF TRUSTEES AND APPOINTMENT OF SUCCESSOR TRUSTEES 8.01. Compensation. The Trustees shall receive as their compensation for the services performed hereunder that sum of money which the Trustees normally and customarily charge for performing similar services during the time which they perform these services. 8.02. Removal of Trustees. Settlor may remove the Trustees, or any of them, at any time or times, with or without cause, upon thirty (30) days' written notice given to the current Trustees. Upon the death of Settlor, a majority of the current beneficiaries may remove the Trustees, or any of them, at any -, / " 19 ~~(J( time or times, with or without cause, upon thirty (30) days' written notice given to the current Trustees. Upon the removal of the Trustees, or any of them, one or more successor Trustee(s) shall be appointed in accordance with the terms set forth in Paragraph 8.03. 8.03. Successor Trustees. The Trustees, or any of them, may resign at any time upon thirty (30) days' written notice given to the Settlor if Settlor is living, or in the event of Settlor's death, upon thirty (30) days' written notice given to the current beneficiary or beneficiaries (including a beneficiary's natural or legal guardian or legal representative), hereunder. Upon the death, resignation, removal or incapacity of the Trustees, or any of them, one or more successor trustee(s) may be appointed by the Settlor during Settlor's lifetime, or, after Settlor's death, by a majority of the current beneficiaries. Settlor prohibits the appointment of the beneficiary's or beneficiaries' natural or legal guardian or legal representative as Trustee and any attempt to do so shall be without authority under this Agreement. Any successor trustee thus appointed, or, if the Trustee shall merge with or be consolidated with another corporate fiduciary, then such corporate fiduciary, shall succeed to all the duties and to all the powers, including discretionary powers, herein granted to the Trustees. ARTICLE IX. PERPETUITIES CLAUSE 9.01. General Provisions. Notwithstanding anything to the contrary in this Trust, each disposition Settlor has made here, legal or equitable, to the extent it can be referred in its postponement of becoming a vested interest to a duration measured by some life or lives in being at the time of Settlor's death is definitely to vest in interest, although not necessarily in possession, not later than twenty-one (21) years after such lives (and any period of gestation involved); or, to the extent it cannot be referred in any such postponement to such lives, is to so vest not later than twenty-one (21) years from the time of Settlor's death. ARTICLE X. REVOCATION AND AMENDMENTS 10.01. Reservation of Powers. The Settlor expressly reserves the powers to: (i) revoke this Agreement by an instrument in writing delivered to the Trustees while the Settlor is alive; (ii) to alter, amend or modify this Agreement at any (}~rf C52T 20 time or from time to time by an instrument or instruments in writing delivered to the Trustees while the Settlor is alive, but no such alteration, amendment or modification shall increase the duties nor change the basis for compensation of the Trustees without the Trustees' written consent; and (iii) withdraw from this Trust any life insurance pOlicy or other property forming a part of this Trust, which property or the proceeds therefrom was added to this Trust by Settlor. Any such withdrawal by the Settlor shall be considered a revocation of this Trust solely with respect to the pOlicy or other property withdrawn. 10.02. Effect of Settlor's Incapacity. (A) If Settlor Incapacitated. If at the time of any attempted exercise of (a) the powers reserved to the Settlor or (b) any other powers to demand and receive the principal of this Trust (if any are granted in this Agreement), the Settlor is incapacitated (as defined below in subparagraph (C)), through illness, age or other cause, then the Trustees shall disregard any instructions from the Settlor which have the effect of remaking, altering, amending or modifying this Agreement in whole or in part or enabling the Settlor to withdraw from the Trust any life insurance pOlicy or any other property forming a part of this Trust. (B) Settlor's Retained General Power of Appointment. Notwithstanding the above provisions, the Settlor shall always have the right to exercise a general power of appointment, by a will, specifically referring to the reservation of this general power of appointment in this subparagraph (B), to appoint all of the Trust property to the estate of the Settlor, the creditors of the Settlor, or the creditors of the Settlor's estate. (C) Definition of Incapacity. For purposes of this Trust, the Settlor or a Trustee shall be deemed to have become incapacitated upon the happening of either one of the following events: (1) Admission of Incapacity. Delivery, by hand, or by mail to the Trustees then serving, of a written instrument from the Settlor or a Trustee declaring that said person no longer considers that he or she should possess the power (as Settlor) to exercise any of the powers reserved by the Settlor in this Article X or any other powers to demand and receive the principal of this Trust, except the general power of appointment reserved above in subparagraph 10.02(B), or the power (as Trustee) to continue to serve as Trustee, or 21 (2) Medical Certification of Lack of Capacity. Delivery, by hand or by mail, to the Trustees then serving, of written instruments by two physicians licensed to practice medicine, one of whom must be a board certified psychiatrist and the other of whom may be the attending physician, that the Settlor or a Trustee no longer has the capacity, as a result of illness, age or other cause: (i) in the case of the Settlor, to exercise any powers reserved by the Settlor over the Trust under the terms of this Article X or any other powers to demand and receive the principal of this Trust, except that notwithstanding any other <- provision to the contrary, the reserved general power of appointment of the Settlor, as set forth in subparagraph 10.02(B) above, shall always be exercisable by the Settlor, or (ii) in the case of a Trustee, to continue to serve as a Trustee. (3) Powers personal to Settlor. The powers reserved by and to the Settlor in this Article X shall be personal to the Settlor and shall not be exercisable by any conservator, committee, guardian or like fiduciary, except a valid Durable Power of Attorney, nor shall they be assignable to nor extend to the executor or administrator of the Settlor's estate, nor to any beneficiary named herein. Upon the death of the Settlor this Trust shall be deemed irrevocable. ARTICLE XI. ACQUISITION OF UNITED STATES TREASURY BONDS ELIGIBLE FOR TAX PAYMENT; PAYMENT OF TAXES, FUNERAL EXPENSES, AND EXPENSES OF ADMINISTRATION 11.01. Acquisition of Bonds. The Trustees may, at any time, without the prior approval or direction of the Settlor and whether or not the Settlor is able to manage his own affairs, acquire United States Treasury Bonds selling at a discount, which bonds are redeemable at their par value plus accrued interest thereon for the purposes of applying the proceeds to the payment of the United States estate tax on the Settlor's estate; and the Trustees may borrow from any lender, including themselves, with or without security, to so acquire these bonds. 11.02. Payment of united States Estate Tax by Bond Redemption. After the Trustees have complied with the provisions of Paragraph 4.02, above, by establishing marital and non-marital portions, the Settlor directs that any United States Treasury Bonds which may be redeemed at their par value plus accrued interest thereon for the purpose of applying the proceeds to the 22 payment of the United States estate tax imposed on the Settlor's estate, and which are held by the Trustees, shall, to the extent of the amount determined to be required for payment of the estate tax, be distributed to the legal representative of the Settlor's estate to be used by the legal representative ahead of any other assets and to the fullest extent possible to pay the estate tax. 11.03. Payment of Death Taxes and Other Estate Settlement Costs. After the Trustees have complied with paragraph 11.02, above, and ascertained from the legal representative that all such bonds have been redeemed in payment of the United States estate tax, the Trustees shall also ascertain from the legal representative whether the legal representative has sufficient assets to pay the remaining inheritance, estate and other death taxes or duties (except the additional estate tax imposed by Section 2032(c), or corresponding provisions of the Internal Revenue Code of 1986 applicable to the Settlor's estate and imposing the tax), levied or assessed against the Settlor's estate (including all interest and penalties thereon), all of which taxes, interest and penalties are hereinafter referred to as the death taxes, interest and penalties. If the legal representative advises the Trustees that insufficient funds exist to pay all the death taxes, interest and penalties, the Trustees shall then pay to the legal representative from the trust property remaining after compliance with those provisions of Paragraphs 4.02 and 4.03, above, an amount equal to all the death taxes, interest and penalties in excess of the funds available to the legal representative for this purposes, which payments are to be made without apportionment. In making the payments, the Trustees shall use only those assets or their proceeds which are includable in the Settlor's gross estate for purposes of the United States estate tax, shall not impair the marital portion without first exhausting the entire non-marital portion. If the Settlor's legal representative advises the Trustees that there are sufficient funds available to pay the death taxes, interest and penalties, then the Trustees may nonetheless pay to the legal representative from the trust property remaining after compliance with the provisions of Paragraphs 4.02 and 4.03, above, which sets aside the marital portion, all or any portion, as the Trustees, in their sole discretion, deem advisable and in the best interests of the Settlor'S beneficiaries named in this Trust, of (a) any such death taxes, interest and penalties, whether or not on property held in or payable to the Trust, said payments to be made without apportionment, (b) the Settlor's funeral expenses, (c) claims and other debts of the Settlor, whether allowed against the Settlor's estate or not, (d) expenses of administering the Settlor'S estate, and, (e) bequests under any will or codicil executed by the Settlor. In making any such 23 payments, other than to satisfy bequests under any will or codicil executed by the Settlor, the Trustees shall use only those assets or their proceeds which are includable in the Settlor's gross estate for purposes of the United States estate tax and shall not impair the marital portion without first exhausting the non-marital portion. IN WITNESS WHEREOF, the Settlor and Trustees have hereunto set their hands and seals as of the day and year first above written. ~ 5~":- CHARLES S. FRIES, SETTLOR ( SEAL) COMMONWEALTH OF PENNSYLVANIA : I' _ I. 11 A /) h "" rJ: SS: COUNTY OF(AA./rf\../V'"V~''-V\' : J . -- On t~iS, the 10 yJ. day Of~Ahi: ,1993, before me, a Notary Public, the undersigned officer, p rsonally appeared CHARLES S. FRIES, known to me (or satisfactorily proven) to be the person whose name is subscribed to the within Trust Agreement, and acknowledged that he executed the same for the purposes therein contained. IN WITNESS WHEREOF, I have s The foregoing Trust Agreement was delivered, and is hereby ac epted, at L~~ , Pennsylvania, on the to fit day of ~ , 1993. ~5-.::7~ CHARLES S. FRIES, TRUSTEE ~ '171.!!~ EVELYN . FRIES, TRUSTEE 24 SCHEDULE "A" SCHEDULE REFERRED TO IN THE ANNEXED TRUST AGREEMENT DATED f'e~~ /0, 1993 FROM CHARLES S. FRIES, SETTLOR TO CHARLES S. FRIES AND EVELYN M. FRIES, CO-TRUSTEES PROPERTY DESCRIPTION: 25 SCHEDULE "A" PAGE 1 OF 1 SCHEDULE AS REFERRED TO IN THE ANNEXED TRUST AGREEMENT DATED FER 10, 1993 FROM CHARLES S. FRIES, SETTLOR TO CHARLES S. FRIES AND EVELYN M. FRIES, CO-TRUSTEES PROPERTY DESCRIPTION AS OF 12-07-04 CERTIFICATES OF DEPOSIT FOR RUNNING UPDATES, REFER TO WHITE TAB IN "THE WHITE BINDER" ABOVE WRITING DESK SECURITIES HELD REFER TO MONTHL Y STATEMENTS IN FILE DRAWER FROM W A YPOINT BROKERAGE, YORK, P A. Acct. #285-22719-11 (ATTACHED "SPECIAL SITUATIONS" NOT INCLUDED IN TRUSTS.) Revised 12-07-04 SPECIAL SITUATIONS--ASSETS NOT INCLUDED IN EITHER TRUST AS PART OF A SCHEDULE "A". TAP PROGRAM CONTRIBUTIONS AS OF NOVEMBER 2002, $80,000 HAD BEEN PLACED IN P A.ST A TE ACCOUNTS FOR COLLEGE EDUCATION OF KELLY AND AMY. CHARLES IS LISTED AS THE OWNER AND EVELYN IS THE CONTINGENT OWNER. AUTOS 2003 HONDA ODYSSEY REGISTERED IN BOTH NAMES. 1994 CHEVROLET CAPRICE REGISTERED IN CHARLES NAME. JOINT SAVINGS COMMERCE BANK #322710-8 "H"/"HH" BONDS REGISTERED AS JOINT OWNERS, EVELYN WITH EITHER NETT A OF JEANNIE. "E"/"EE" BONDS REGISTERED UNDER CHARLES, EVELYN OR BOTH. LIFE INSURANCE ON CHARLES (NONE ON EVELYN) NATIONWIDE $20,000 VA 10,536 BELL GROUP 26,000 BELL SURVIVOR 52,000 IRA (DAUPHIN MERGED WITH ALL FIRST WHO MERGED WITH TO M and T) Account "10 for 10" Account "PREMIUM" MASONIC HOMES ANNUITY AMENDMENT TO THE CHARLES S. FRIES FAMILY REVOCABLE TRUST -/fI THIS TRUST AMENDMENT is executed in triplicate on this ~ day of January, 2005, by and between CHARLES S. FRIES, now of 1114 Charles Street, Mechanicsburg, Cumberland County, Pennsylvania 17055 (herein called "Settlor") and CHARLES S. FRIES and EVELYN M. FRIES, now of 1114 Charles Street, Mechanicsburg, Cumberland County, Pennsylvania 17055 (herein called "Trustees" or "Co-Trustees"). WHEREAS, on February 10, 1993 CHARLES S. FRIES as Settlor and CHARLES S. FRIES and EVELYN M. FRIES as Co-Trustees created "The Charles S. Fries Family Irrevocable Trust," (herein "Trust Agreement" or "Agreement"). WHEREAS, pursuant to Article 10.01 the Settlor, may by written instrument delivered to the Trustees amend, alter or modify the Trust Agreement. WHEREAS, Settlor desires to amend Article 4.04(D) of the Trust Agreement, that provides for distributions and disposition of the Marital Portion of the Trust. NOW THEREFORE, BE IT RESOL VED, Settlor hereby revokes in its entirety Article 4.04(D) and replaces Article 4.04(D) with the new provision provided in Exhibit "A", attached hereto and incorporated by reference. RESOLVED FURTHER, that the Trustees of "The Charles S. Fries Family Revocable Trust" hereby acknowledge receipt of and accept the amendment to the Trust Agreement provided in Exhibit "A". SIGNATURE PAGE FOLLOWS IN WITNESS WHEREOF, the above Amendment to The Charles S. Fries Family Revocable Trust is signed this /(7 ~ day of January, 2005. WITNESS !~'J.JjL~ d~3d~ CHARLES S. FRIES, SETTLOR f~;;f, .:f~ a~ ~.-7~ CHARLES S. FRIES, TRUSTEE f~Y!.J~ ~ in .~~ EVELYN . FRIES, TRUSTEE EXHIDIT "A" AMENDED ARTICLE 4.04(D) 4.04(D) shall be revoked in its entirety and replaced with the following provision: (D) Disposition of Remainder of Bv-pass Trust. At the Settlor's spouse's death, to the extent the spouse has not exercised the spouse's power of appointment under Section 4.04(B), above, or upon the Settlor's death, if the Settlor's spouse predeceases Settlor, the remaining principal and accrued income of the By-pass trust shall distributed as follows: (1) Trustees shall distribute twenty (20%) percent of the remaining trust estate to the Settlor's son, ROBERT SCOTT FRIES. If Settlor's son predeceases the Settlor and the Settlor's spouse, then his share shall be distributed to his then-living issue, per stirpes. If Settlor's son predeceases the Settlor and the Settlor's spouse without leaving issue, then his share shall be distributed to the Settlor's then-living issue, per stirpes. (2) Trustees shall distribute thirty-five (35%) percent of the remaining trust estate to the Settlor's daughter, JEAN F. W ADLINGER. If Settlor's daughter predeceases the Settlor and the Settlor's spouse, then her share shall be distributed to her then-living issue, per stirpes. If Settlor's daughter predeceases the Settlor and the Settlor's spouse without leaving issue, then her share shall be distributed to the Settlor's then-living issue, per stirpes. (3) Trustees shall distribute thirty-five (35%) percent of the remaining trust estate to the Settlor's daughter, BERNETT A J. FRIES. If Settlor's daughter predeceases the Settlor and the Settlor's spouse, then her share shall be distributed to her then-living issue, per stirpes. If Settlor's daughter predeceases the Settlor and the Settlor's spouse without leaving issue, then her share shall be distributed to the Settlor's then-living issue, per stirpes.: (4) Trustees shall distribute five (5%) percent of the remaining trust estate to the Settlor's brother, ROBERT O. FRIES. If Settlor's brother predeceases the Settlor and the Settlor's spouse, then his share shall be distributed to his then-living issue, per stirpes. If Settlor's brother predeceases the Settlor and the Settlor's spouse without leaving issue, then his share shall be distributed to the Settlor's then-living issue, per stirpes. (5) Trustees shall distribute five (5%) percent of the remaining trust estate to the Settlor's brother, ROLLIN L. FRIES. If Settlor's brother predeceases the Settlor and the Settlor's spouse, then his share shall be distributed to his then-living issue, per stirpes. If Settlor's brother predeceases the Settlor and the Settlor's spouse without leaving issue, then his share shall be distributed to the Settlor's then-living issue, per stirpes. LAST WILL AND TESTAMENT OF CHARLES S. FRIES I, CHARLES S. FRIES, now of 1114 Charles Street, Mechanicsburg, Cumberland County, Pennsylvania 17055, do publish and declare this to be my Last will and Testament, hereby revoking all other prior wills and codicils made by me. FIRST: Family Background and Appointment of Executor. (A) Family and Background Information. I am married to EVELYN M. FRIES. The children of our marriage are ROBERT SCOTT FRIES, BERNETTA J. FRIES, and JEAN F. WADLINGER. Throughout this Will, EVELYN M. FRIES will be referred to as "my wife" or "my spouse" and ROBERT SCOTT FRIES, BERNETTA J. FRIES, and JEAN F. WADLINGER, (and any children born to or legally adopted by me hereafter) will be referred to as "my children." The word" issue" will include my children as well as my other descendants. (B) APpointment of Executor. I appoint as my Executor and successor Executor (all hereinafter referred to as Executor or Executors) under this Will, the following named persons or corporations to serve without bond and without being required to account to any Court: Executor: My spouse, EVELYN M. FRIES. Successor Executor: My son, ROBERT S. FRIES, my daughter, BERNETTA J. FRIES, and my daughter, JEAN F. WADLINGER, or the survivor of them, to act jointly. (C) Inter vivos Trust. The inter vivos trust agreement referred to in this Will is "THE CHARLES S. FRIES FAMILY REVOCABLE TRUST," dated February 10th, 1993, by and between CHARLES S. FRIES, as Settlor, and CHARLES S. FRIES and EVELYN M. FRIES, as Trustees, as now in effect or as may hereafter be amended. SECOND: Funeral and Last Illness Expenses; Taxes. C5r= (A) Expenses of Funeral and Last Illness. Notwithsta that my spouse survives me, I direct my Executor to pay my f expenses and the expenses of my last illness from my estat . V"\j~) LAST WILL AND TESTAMENT OF CHARLES S. FRIES PAGE 2 addition, my Executor may notify the Trustee of the Trust described in paragraph FIRST (C) of any such expenses and my Executor may accept reimbursement from such Trustee. (B) Taxes. I direct my Executor to pay any and all estate, inheritance, succession, legacy, transfer and other death taxes or duties, by whatever name called, including any and all interest and penalties thereon, imposed under the laws of any jurisdiction by reason of my death, upon or with respect to any and all property included in my gross estate for the purpose of such taxes, whether such property passes under or outside of this Will. Without any apportionment otherwise required by law and without being prorated or apportioned among or charged against the respective devises, legatees, beneficiaries, transferees, or other recipients of any such property or charged against any property passing or which may have passed to any of them, I direct that any taxes so paid shall be charged as follows: (1) If my spouse, EVELYN M. FRIES, survives me, I direct that any taxes so paid shall be charged entirely against that portion of my residuary estate, if any, which does not qualify for the marital deduction from my taxable estate under Internal Revenue Code of 1986 (hereinafter "IRC") Section 2056 or, to the extent, if any, that said portion is insufficient, then against that portion of my residuary estate, if any, which does not qualify for the marital deduction from my taxable estate under IRC Section 2056. (2) If my spouse, EVELYN M. FRIES, does not survive me, I direct that any taxes so paid shall be charged against my residuary estate. My Executor shall not be entitled to reimbursement for any portion of any such taxes from any such person. The foregoing provisions of this Article SECOND shall not apply to the following: (1) The amount, if any, by which taxes, interest and penalties thereon shall be increased as a result of the inclusion in my gross estate of property (a) in which I may 'have a qualifying income interest for life, under. IRC Section 2044 (or the corresponding provisions of an ~'.)" . ,. I I (!5P LAST WILL AND TESTAMENT OF CHARLES S. FRIES PAGE 3 subsequent federal tax laws) or corresponding provisions of state law, or (b) over which I may have a general power of appointment under IRC Section 2041 (or the corresponding provisions of any subsequent federal tax laws) or corresponding provisions of state law, or (c) over which I may have retained an interest as defined in IRC Section 2036 (or the corresponding provisions of any subsequent federal tax laws) or corresponding provisions of state law, and any taxes, interest and penalties on said incremental amount shall either be paid from said property directly or shall be recovered by my Executor from the person holding or receiving said property as provided in IRC Sections 2207, 2207A, or 2207B (or the corresponding provisions of any subsequent federal tax laws); (2) The generation skipping tax imposed by Chapter 13 or the additional estate tax imposed by Section 2032A(c) or corresponding provisions of federal or state law applicable to my estate and imposing said taxes), and any and all interest and penalties on said Chapter 13 and Section 2032(c) and comparable state taxes; and, (3) Such portion or portions of said taxes, interest and penalties which may be required to be paid, or are actually paid or reimbursed, by the Trustee of the Trust described in Paragraph FIRST (C), above. THIRD: Tangible Personal Property. Except for those items excluded below and those items enumerated in the Letter of Instruction, I bequeath all my tangible personal property, inCluding but not limited to clothing, jewelry, furniture, household furnishings, household goods, personal effects, motor vehicles, and all other similar articles, which I own, and the insurance thereon, to my spouse, EVELYN M. FRIES, if she survives me. Tangible personal property shall not include: (1) any and all property used by me in any business, (2) cash on hand or on deposit in banks, (3) stock or securities, (4) any type of evidence of indebtedness, and (5) any life, health or accident insurance policies. If my spous e does not survive me, I leave such t (!5F C!AY~ LAST WILL AND TESTAMENT OF CHARLES S. FRIES PAGE 4 personal property to my children, per stirpes, to be divided among them as they may select in as nearly equal shares as is practical. If there is any disagreement as to distribution, I direct my Executor to make such distribution. The decision of my Executor shall be final and binding. Any items not selected or any items which my Executor considers unsuitable for my children may be distributed or sold in the sole discretion of my Executor and, if sold, the net proceeds therefrom shall be added to the residue of my estate. Any such article allocated to a minor may, as my Executor deems advisable, either be delivered to the minor or to any person to safeguard on behalf of the minor. Notwithstanding any other provisions in this Article THIRD, I may leave a separate, dated and unsigned Letter of Instruction, which I shall place with my will, containing directions as to the ultimate disposition of certain of the property bequeathed under this Article THIRD, and such Letter of Instruction shall determine the distribution of such items. FOURTH: [THIS ARTICLE HAS BEEN INTENTIONALLY LEFT BLANK.] FIFTH: Residuary Estate. I devise and bequeath all of the rest, residue and remainder of my estate, real, personal and mixed, of whatever nature and wherever situated to which I am legally or equitably entitled, including the insurance thereon, to the then- acting Trustee(s) of the Trust described in paragraph FIRST (C) of this Will, to be held, administered and distributed pursuant to the terms thereof, as the same may be amended from time to time. By this devise and bequest of my residuary estate I hereby exercise all powers of Appointment I possess at the time of my death except any power of appointment which I possess under the Trust described in Paragraph FIRST (C) of this will, or which I possess under any trust created by my spouse during my spouse's life or under my spouse I sWill. SIXTH: Powers of Executor. In addition to the powers and duties as may have been granted elsewhere in this will, but subject to any limitations stated elsewhere in this will, the Executor shall have and exercise exclusive management and control of the Estate and shall be vested with the following specific power. and discretion, in addition to the powers as may be generally conrred from time to time upon the Executor by law: {! 5 3J; ~ LAST WILL AND TESTAMENT OF CHARLES S. FRIES PAGE 5 (A) In the management, care and disposition of the Estate, the Executor shall have the power to do all things and to execute such ins trurnents , deeds, or other documents as may be deemed necessary or proper, inCluding the fOllowing powers, all of which may be exercised without order of or report to any Court: (1) To sell, exchange or otherwise dispose of any property, real, personal or mixed, at any time held or acquired hereunder, at public or private sale, for cash or on terms, without advertisement, including the right to lease for any term notwithstanding the period of the Estate, and to grant options, including any option for a period beyond the duration of the Estate; except that, in lieu of any binding shareholder agreement or buy/sell agreement to the contrary, the Executor shall not be permitted to sell the stock or any other ownership interest in any business owned by me, or held in trust, at my death, without first offering the same for sale to my children, or without next offering the same to the corporation or business represented by such ownership interest for redemption. (2) To invest all monies in such stocks, bonds, securities, mortgages, notes, choses in action, real estate or improvements thereon, and any other property as the Executor may deem best, without regard to any law now or hereafter enforced limiting investments of fiduciaries, except that the Executor may not invest in any securities issued by the corporate Executor, or issued by a parent or affiliate company of such Executor, or issued by a parent or affiliate company of such Executor. (3) To retain for investment any property deposited with the Executor hereunder; except that the Executor may not retain for investment any stock in the corporate Executor, or in a parent or affiliate company of such Executor. (4) To vote in person or by proxy any corporate stock or other security and to agree to or take any other action in regard to any reorganization, merge, {"53- f~ L{/\ ' LAST WILL AND TESTAMENT OF CHARLES S. FRIES PAGE 6 consolidation, liquidation, bankruptcy or other procedure or proceedings affecting any stock, bond, note or other security. (5) To use attorneys, accountants and other agents, deemed necessary or desirable, compensation for their services. real estate brokers, if such employment is and to pay reasonable (6) To compromise, settle or adjust any claim or demand by or agains t the Es ta te and to agree to any rescission or modification of any contract or agreement affecting the Estate. (7) To renew any indebtedness, as well as to borrow money, and to secure the same by mortgaging, pledging or conveying any property of the Estate. (8) TO retain and carry on any business in which the Estate may acquire an interest, to acquire additional interest in any such business, to agree to the liquidation in kind of any corporation in which the Estate may have an interest and to carry on the business thereof, to join with other owners in adopting any form of management for any business or property in which the Estate may have an interest, to become or remain a partner, general or limited, in regard to any such business or property and to hold the stock or other securities as an investment, and to employ agents and confer on them authority to manage and operate the business, property or corporation, without liability for the acts of such agent or for any loss, liability or indebtedness of such business if the management is selected or retained with reasonable care. (9) To register any stock, bond or other security in the name of a nominee, without the addition of words indicating that such security is held in a fiduciary capacity, but accurate records shall be maintained Showing that such security is a Estate asset and the Executor shall be responsible for the acts of suc nominee. ~.5 :::7-?~ (I I1{I. \,,/0 . . ~ LAST WILL AND TESTAMENT OF CHARLES S. FRIES PAGE 7 (B) Whenever the Executor is directed to distribute any Estate assets in fee simple to a person who is then under twenty- one (21) years of age, the Executor shall be authorized to hold such property in Trust for such person until he/she becomes twenty- one (21) years of age, and in the meantime shall use such part of the income and the principal of the Estate as the Executor may deem necessary to provide for the proper support and education of such person. If such person should die before becoming twenty-one (21) years of age, the property then remaining in trus t shall be distributed to the personal representative of such person's estate. (C) In making distributions from the Estate to or for the benefit of any minor or other person under a legal disability, the Executor need not require the appoi~tment of a guardian, but shall be authorized to payor deliver the same to the custodian of such person, to payor deliver the same to such person without the intervention of a guardian, to payor deliver the same to a legal guardian of such person if one has already been appointed, or to use the same for the benefit of such person. (D) In the disbursement of the Estate and any division into separate trusts or shares, the Executor shall be authorized to make the distribution and division in money or in kind, or both, regardless of the basis for income tax purposes of any property distributed or divided in kind, and the distribution and division made and the values established by the Executor shall be binding and conclusive on all persons taking hereunder. The Executor may in making such distribution or division allot undivided interests in the same property to several trusts or shares. (E) The Executor shall be authorized to lend or borrow, including the right to lend to or borrow from any trusts which I or my spouse may have established during life or by will at an adequate rate of interest and with adequate security, and upon such terms and conditions as the Executor shall deem fair and equitable. (F) The Executor shall be authorized to sell or purchase at the fair market value as determined by the Executor, any property to or from any trust created by me or my spouse during life or by Will, even though the same person or corporation may be actin as Executor of my estate or as Trustee of any of my other trus e57- ~ LAST WILL AND TESTAMENT OF CHARLES S. FRIES PAGE 8 (G) The Executor shall have discretion to determine whether i terns should be charged or credited to income or principal or allocated between income and principal as the Executor may deem equitable and fair under all the circumstances, including the power to amortize or fail to amortize any part or all of any premium or discount, to treat any part or all of the profit resulting from the maturity or sale of any asset, whether purchased at a premium or at a discount, as income or principal or apportion the same between income and principal, to apportion the sales price of any asset between income and principal, to treat any dividend or other distribution of any investment as income or principal, or apportion the same between income and principal, to charge any expense against income or principal or apportion the same, and to provide or fail to provide a reasonable reserve against depreciation or obsolescence on any assets subject to depreciation or obsolescence, all as the Executor may reasonably deem equitable and just under all the circumstances. If the Executor does not exercise the above discretionary power, the cash or accrual allocation shall be in accordance with Chapter 81 of Title 20 of the pennsylvania Consolidated Statutes, or the corresponding provisions of subsequent state law. (H) If at any time the total fair market value of the assets of any trust established or to be established hereunder is so small that the corporate Trustee's annual fee for administering the trust would be equal to or less than the minimum annual fee set forth in the Trustee's regularly published fee schedule then, in effect, the Trustee in its discretion shall be authorized to terminate such trust or to decide not to establish such trust, and in such event the property then held in or to be distributed to such trust shall be distributed to the persons who are then or would be entitled to the income of such trust. If the amount of income to be received by such persons is to be determined in the discretion of the Trustee, then the Trustee shall distribute the property among such of the persons to whom the Trustee is authorized to distribute income, and in such proportions, as the Trustee in its discretion shall determine. ( I) authority Executors jointly by Except as otherwise provided in this will, when and power under this will is vested in two (2) or or Trustees, the authority and powers are to b the Executors or Trustees, respectively. A majo i eS3'- drntf LAST WILL AND TESTAMENT OF CHARLES S. FRIES PAGE 9 the Executors or Trustees only may exercise any authority or power granted under this will or granted by law, and may act under this will. Any attempt by one such Executor or Trustee to act under this will on other than ministerial acts shall be void. The action of one such Executor or Trustee under this will may be validated by a subsequent ratification of the act by a majority of the Executors or Trustees. SEVENTH: Rights and Liabilities of Executor. (A) No bond or other security shall be required of any Executor. (B) This instrument always shall be construed in favor of the validity of any act or omission by any Executor, and any Executor shall not be liable for any act or omission except in the case of gross negligence, bad faith or fraud. Specifically, in assessing the propriety of any investment, the overall performance of the entire Estate shall be taken into account. (C) Each Executor shall be entitled to receive reasonable compensation for services actually rendered to my estate, in an amount the Executor normally and customarily charges for performing similar services during the time which he/she performs the services. EIGHTH: Tax Elections. (A) Except as otherwise provided in this Article EIGHTH, in determining the estate, inheritance. and income tax liability relating to my Estate, the Executor shall, with the advice of the Trustee of the Trust described in Article FIRST (c), determine all available tax elections, which shall be conclusive on all concerned. If the Executor joins with my spouse in filing income tax returns, or consenting for gift tax purposes to having gifts made by either of us during my life considered as having been made one-half by each of us, any resulting liability shall be borne by my Estate and my spouse in such proportions as they may agree. In accordance with IRC Section 2632(a} and without regard to whether a Federal estate tax return is actually filed, my Executor 11 allocate so much of the Federal Generation Skipping Transfer G T} e.5'3- C'A'vwt LAST WILL AND TESTAMENT OF CHARLES S. FRIES PAGE 10 exemption amount as will fUlly exempt any generation skipping transfer which may occur under this will. (B) The Executor may, with the advice of the Trustee of the Trustee described in Article FIRST (C), determine the date as of which my gross estate shall be valued for the purpose of determining the federal estate tax payable by reason of my death. (C) The Executor may, with the advice of the Trustee of the Trust described in Article FIRST (C), decide whether all or any part of certain deductions shall be taken as income tax deductions (even though they may equal or exceed the taxable income of my estate and whether or not claimed or of benefit on my estate's income tax return) or as estate tax deductions when a choice is available; and in the event that all or any part of such deductions are taken as income tax deductions, no adjustment of income and principal accounts in my estate shall be made as a result of such decisions. (D) The Trust described in Paragraph FIRST (C) of this Will, into which a portion of my probate estate is added under Article FIFTH of this will, may contain a marital deduction trust for my spouse. The Executor shall, with the advice and consent of the Trustee of the Trust described in Article FIRST (C), determine whether to elect to qualify part or all of said Trust for the federal estate tax marital deduction. I hereby exculpate and exonerate my Executor from any and all liability for following the direction of the Trustee in making the election. NINTH: Spendthrift Provision. No beneficiary shall have the power to anticipate, encumber or transfer his or her interest in the estate in any manner other than by the valid exercise of a power of appointment. No part of the estate shall be liable for or charged with any debts, contracts, liabilities or torts of a beneficiary or subject to seizure or other process by any creditor of a beneficiary. TENTH: Definitions and General Provisions. r!59- c~ (A) Survival. Any beneficiary who dies within sixty days after my death shall be considered not to have survive LAST WILL AND TESTAMENT OF CHARLES S. FRIES PAGE 11 (B) Captions. The captions set forth in this will at the beginning of the various articles hereof are for convenience of reference only and shall not be deemed to define or limit the provisions hereof or to affect in any way their construction and application. (C) Children. As used in this will, the words "child" and "children" shall include persons who are legally adopted and the issue of said persons, whether born in or out of wedlock, so long as any person born out of wedlock is acknowledge in a written instrument executed by the one of their natural parents who is a descendant of mine to be the child of said descendant. The word II issue" shall include descendants of all generations but shall exclude adopted persons. A posthumous child shall be considered as Ii ving at the death of his parent. The birth to me or the adoption by me of a child or children subsequent to the execution of this will shall not operate to revoke this Will. Except for discretionary distributions which may be made unequally among a group of persons and distributions pursuant to a valid exercise of a power of appointment, in making a distribution to the children of any person, the property to be distributed shall be divided into as many shares as there are living children of the person and deceased children of the person who left children who are then living. Each living child shall take one share and the share of each deceased child shall be divided among his then-living descendants in the same manner. (D) Code. Unless otherwise stated, all references in my will to section and chapter numbers are to those of the Internal Revenue Code of 1986, as amended, or the corresponding provisions of any subsequent federal tax laws applicable to my estate. (E) Other terms. The use of any gender includes the other genders, and the use of either the singular or the plural includes the other. (F) Powers of Appointment are Exercised. By this will I exercise any and all Powers of Appointment which I possess at the time of my death except any power of appointment which unqer the Trust described in Paragraph FIRST (C), above, c! :59- .1 _ Q/iltfr/ LAST WILL AND TESTAMENT OF CHARLES S. FRIES PAGE 12 I possess under any trust created by my spouse during my spouse's life or under my spouse's Will. IN WITNESS WHEREOF, I, CHARLES S. FRIES, the Testator, have to this my Last will and Testament, typewritten on thirteen (13) pages, including the Acknowledgment and Affidavit, set my hand and seal this 14th day of January, 1997. daJu/5~~ CHARLES S. FRIES Signed, sealed, published and declared by the above-named Testator, as and for his Last will and Testament, in the presence of us, who have hereunto subscribed our names at his request, as witnesses hereto, i the presence of the said Testator, and in the presence of each t,er. Each of us further declares that he or she believes the Te ta i or to be of sound mind and memory. The preceding inst en consists of this and twelve (12) other consecutively numbe ed typewritten pages including the Acknowledgement and Affi avo . ^-- - residing at ~/'vfVl1 PWJJf /?LM/t I I (Jtf- LtJvJf!U., fL G int name) ~\ ~f" -fY/fltfttf residing at G~~U to {(l\\f\'\ \1\. rlorpzkG{" . (print name) ,IJ t4 ) i 13:x 5 ACKNOWLEDGMENT AND AFFIDAVIT COMMONWEALTH OF PENNSYLVANIA SS: COUNTY OF CUMBERLAND The Testator and the witnesses whose names are signed and subscribed to the attached or foregoing instrument, being first duly sworn and qualified according to law, do hereby acknowledge, depose and say to the undersigned authority, that the Testator signed and executed the instrument as his Last will in the presence of the witnesses; that he signed it willingly or willingly directed another to sign it for him; that he executed it as his free and voluntary act for the purposes therein expressed; that each of the witnesses were present and saw the Testator sign and execute the instrument as his Last Will; that each subscribing witness in the hearing and sight of the Testator signed the will as witnesses; and that to the best of their knowledge the Testator was at that time eighteen years of age or older, of sound mind and under no constraint or undue influence. Testator v vtI- Witness ~~ IffJ-!f:/!~Iu~ Wltne Sworn to or affirmed, subscribed to, and acknowledge~~Abefore me by the above-named Testator and witnesses, this /V: tlay of \771 J1U {f r (/ , 1997. ~a~ (I.)L<< m/&0 )No ary ~~ic . My Commlsslon Explres: Notarial Seal Janet C. Naclerio, Notarv Public lemoyne Bora, Cumberland County My Commission Expires April 19, 1999 Member, Pennsylvania Association of Notaries