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11-04-10
~ s IN RE: THE MOSHER FAMILY IRREVOCABLE TRUST FRANK A. MOSHER, ANNE CORBIN and EILEEN MOSHER FREEBY, Petitioners IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA ORPHANS' COURT NO: 21-10-1039 v. PAUL M. MOSHER, Respondent ANSWER TO PETITION FOR CITATION TO ACCOUNT AND CITATION AND NOW, comes the Respondent, Paul M. Mosher ("Respondent" or "Paul"), by and through his counsel, Bruce J. Warshawsky, Esquire and Cunningham & Chernicoff, P.C., to file an Answer to Petition for Citation to Account filed in this matter on October 14, 2010 and the Citation issued by this Honorable Court October 15, 2010 and answers as follows: 1. Admitted. 2. Admitted. 3. Admitted. 4. Admitted. 5. Admitted. 6. Admitted. 7. Admitted. o n C o '~ ~, ~~-~ 8. Admitted. ~ c~ ~z `~ ~ ~ < m ~ c.:~t n~r~ ~~° r 9 Admitted ~ =~''~-~ . . p _ 0~ ' °_; ~.` i C 3 10. Admitted ~~ _ ,. =~' =~ . ~~ r t- ~ ~n 11. Admitted. w 12. Admitted. 13. Admitted in part and denied in part. It is admitted that Frank and Virginia created the Trust in 1993. With respect to the remainder of this averment, to the extent that the averment is consistent with the terms contained in the Trust, a writing which is attached to the Petition, they are admitted, and to the extent that they are inconsistent, they are denied. By way of further answer, after reasonable investigation, the Respondent is without sufficient information or knowledge to form a belief as to the truth of the remainder of the averments not admitted in this Paragraph and strict proof is demanded. 14. Admitted in part and denied in part. It is admitted that an insurance policy issued by New York Life Insurance Company, Policy Number 44964091 was purchased in 1993 for the benefit of the Trust. It is believed, and therefore averred, that the Insurance Policy (as defined in the Petition) is a "Second to Die" policy on the lives of Frank A. Mosher and Virginia B. Mosher. By way of further answer, the Insurance Policy was not purchased by the Trustee, using any of the Trustee's personal funds, but rather, it is believed, and therefore averred, that the funds of either Security Savings System, Ina ("Security"), Frank or Virginia or both were utilized to purchase the Insurance Policy. 15. After reasonable investigation, the Respondent is without knowledge or information sufficient to form a belief as to the truth of the averments set forth herein, therefore, they are denied, and strict proof is demanded. By way of further response, Respondent is not in possession of any information with respect to the Insurance Policy which pre-dates December 31, 2009. 1 16. Denied as stated. Upon information and belief, all the premiums paid to maintain the Insurance Policy, after its initial purchase, were paid by Security. By way of further information and belief, the Petitioner's counsel fees and costs in connection with this litigation are also being paid by Security. 17. Admitted in part and denied in part. To the extent that the averments of this Paragraph are consistent with the Trust Agreement, they are admitted, to the extent that they are inconsistent, they are denied. 18. Admitted in part and denied in part. To the extent that the averments of this Paragraph aze consistent with the Trust Agreement, they are admitted, to the extent that they are inconsistent, they are denied. 19. Admitted in part and denied in part. To the extent that the averments of this Paragraph are consistent with the Trust Agreement, they aze admitted, to the extent that they aze inconsistent, they are denied. By way of further answer, while Respondent has been serving as the Sole Trustee of the Trust since the Trust's inception, the Respondent, prior to November, 2009, provided no active and/or affirmative role as Trustee, but rather, the Petitioner, Frank A. Mosher ("Frank"), at all relevant times prior to November, 2009, managed the Trust, the Insurance Policy and all other matters thereunder. 20. Admitted. 21. After reasonable investigation, the Respondent is without knowledge or information sufficient to form a belief as to the truth of the averments set forth herein, therefore, they are denied, and strict proof is demanded. 22. Admitted upon information and belief. 23. Admitted. By way of further answer, Security's primary business focus is the production of payment coupon books for the banking, insurance and condominium markets. In addition, Security specializes in direct market mailings. Security also produces newsletters, brochures, banquet programs and tax statements to a significant number of customers. 24. Denied as stated. Respondent and his wife, Jean M. Mosher ("Jean") were employed by Security until November 10, 2009. 25. Denied as stated. Respondent was the President of Security until November 10, 2009. 26. Denied as stated. It is admitted that Anne and Eileen have never been involved in the management of Security. By way of further answer, Frank has always been in control of Security and retained the authority to make all decisions on its behalf of any financial nature. 27. Denied as stated. While transfers of Security common stock were made from Frank (and from Virginia while she was alive) to Respondent and Jean, the transfers were a form of compensation for the hard work and sweat equity which they invested in Security. By way of further answer, Jean worked for Security since 1997 and did not draw a salary unti12008. Additionally, Frank and Virginia promised Paul that he would become the owner of Security after both Frank and Virginia passed away. Transfers of stock in Security made to Paul (and Jean) were advances toward his ultimate ownership of Security and to fulfill the agreement Frank and Virginia made with Paul in May, 1993 when he relocated his family from Maryland to Pennsylvania in preparation for Security's then Vice President and General Manager, Lester Shoop's, retirement, which occurred in 1996. 28. Denied as stated. Respondent incorporates his answer to Pazagraph 27 above with respect to his denial that the transfers of common stock were not gifts. It is admitted that as of July 12, 2009, Paul and Jean each owned 12,070 Shares (207 Class B Voting Shares and 11,863 Class ANon-Voting Shares). By way of further answer, as of July 12, 2009 between Frank and Virginia (and now Virginia's Estate), they owned, collectively, 3,543 of the Class B Voting Shares and 11,887 of the Class ANon-Voting Shares. Thus, as of July 12, 2009, Paul and Jean each owned 5.23% of the Class B Voting Shares and 33.31 % of the Class ANon-Voting Shares. By way of further answer, prior to January 2, 2001, all Shares of Security were Voting Shazes. On January 2, 2001, Security's Shares were divided into the Class ANon-Voting Shares and Class B Voting Shazes. At all relevant times, Frank and Virginia controlled the majority of the Voting Shares of Security, as they collectively held the majority of the total Shares prior to January 2, 2001 and the majority of Class B Voting Shares after January 2, 2001. 29. The Respondent incorporates by reference to answer to Paragraph 28 above as if more specifically set forth herein. By way of further answer, on July 12, 2009, Frank owned 1,961 Class B Voting Shares, which represented 49.56% of the Class B Shazes then outstanding and 7,649 of the Class ANon-Voting Shares, which represented 21.48% of Class ANon-Voting Shazes then outstanding. On that date, Virginia owned 1,582 Class B Voting Shazes, which represented 39.98% of the Class B Voting Shares and 4,238 Class ANon-Voting Shares, which represented 11.90% of the Class ANon-Voting Shares. 30. The averments of this Paragraph are legal conclusions to which no response is required. To the extent that a response is deemed to be required, it is admitted that the shares in Security owned by Virginia passed in accordance with her Will, to a Testamentary Trust established thereunder. By way of further response, the aforementioned Will is currently in Probate in Cumberland County and its terms and conditions are known and a part of the Public Record contained therein. By way of further answer, it is believed, and therefore averred, that it was Virginia's intent, in executing her Will containing the said Testamentary Trust, that her son, Paul M. Mosher, the Respondent, would ultimately receive all Shares of stock she owned in Security after Frank's death. 31. Denied as stated. It is believed, and therefore averred, that Frank and Virginia, in their Estate plans, wished to provide for all of their children, but because of Paul's employment at Security and essential role in its day-to-day management and because of the aforementioned agreement that Paul would become the sole owner of the Company upon the last to die between Frank and Virginia, Frank and Virginia's Estate plan included provisions to ensure that Paul would become the owner of Security upon the second to die. 32. Denied as stated. Respondent incorporates by reference his answers to Paragraph 27 with respect to the averment that Stock in Security was not a gift. By way of further answer with respect to the remaining averments, after reasonable investigation, the Respondent is without sufficient information or knowledge to form a belief as to the truth of the remainder of the averments not admitted in this Pazagraph and strict proof is demanded. 33. Admitted. By way of further answer, upon information and belief, in October, 2009, Frank essentially disinherited Respondent from his rights to receive the sole ownership of Security after Frank's death by changing his Will and/or exercising a Power of Appointment under Virginia's Testamentary Trust. 34. Admitted. 35. Admitted in part and denied in part. To the extent that the averments of this Paragraph are consistent with the document attached as Exhibit "B" to the Petition, they are admitted, to the extent that they are inconsistent, they aze denied. 36. Admitted. 37. The averments of this Paragraph are legal conclusions to which no response is required. By further answer, Respondent and Jean did not request that Frank "gift" the Stock held by him as Trustee of Virginia's Testamentary Trust, but rather "transfer", the Stock consistent with Virginia's testamentary wishes and in concert with her and Frank's contractual obligation with Paul previously set forth herein. 38. Admitted in part and denied in part. To the extent that the averments of this Paragraph aze consistent with the document attached as Exhibit "C" to the Petition, they are admitted, to the extent that they are inconsistent, they are denied. 39. Admitted. By way of further answer, the said Stock Powers attached hereto as Exhibit "A'. 40. Admitted. By way of further answer, the remaining monies borrowed by the Trust, net of expenses, are still being held for the benefit of and in the name of the Trust at PNC Bank. 41. Denied as stated. The Stock in Security has significant value for the following reasons: a. Security owns valuable real estate at 901 Market Street, New Cumberland, Cumberland County, Pennsylvania (the "Real Estate"); b. Security recently refinanced its debt and made significant renovations to the Real Estate and obtained working capital to enhance its business from PNC Bank, within the last twelve (12) months. Security improved the Real Estate to accommodate the needs of its largest customer which is a Fortune 500 Company in the healthcare sector and to facilitate growth in other areas; c. Security's Sub-Chapter S status was revoked before Jean's Shares were transferred to the Trust and, therefore, minority owners who do not participate in Security's management are no longer burdened with the tax effect of Security's profitability without receiving a cash distribution in connection therewith; d. Security's liquidation value is significant and the interest purchased by the Trust, 12,070 Shares, representing 30.5% of the Company, is significantly greater than $983,606.56, the "break even" value for the Trust's stock in Security (in fact, the Real Estate alone for real estate tax purposes is valued at $863,625.00 as the 2004 assessment is $690,900.00 and the ' Derived by dividing 300,000.00 by .305, but this is an "inflated" break even value because it does not account for the imputed discounted value of the second payment to Jean by the Trust which does not occur until sixty (60) days after Frank's death. common level ratio is 1.25). Additionally, attached hereto as Exhibit "B", are Security's financial statements for the years ending 2008 and 2009 which show the total stockholder's equity at $976,508.00 and $811,391.00, respectively; and e. Security has been in business for eighty (80) years and is among the top 20% in the number of employees of businesses in its industry in the entire United States. 42. Admitted in part and denied in part. While it is admitted that Security is a family company, it is afor-profit Corporation and does not enjoy any statutorily close protection. Therefore, the shares are saleable on the open market, with certain restrictions, however, because a majority of the shares owned by the Trust are Class ANon-Voting Shares, and Frank owns a majority of the Class B Voting Shares, either individually or as the Trustee of Virginia's Trust, Frank controls the saleability of the shares on the open market, and their ultimate value, thus the claims in the Petition are misplaced. 43. The averments of this Paragraph are legal conclusions to which no response is required. To the extent that a response is deemed to be required, the Respondent has safeguarded the Trust and its assets for the benefit of the Trust Beneficiaries and has purchased, for $150,000.00 cash, an asset which has significantly far greater value. Additionally, the Trust vests broad powers in the Trustee, to "borrow against any [life insurance] policy reserves " (Art. VII, ¶B.i.(b); and to "buy assets of any type" (Art. VII ¶8) 44. Admitted. By way of further answer, until November, 2009, Paul had no access to the Trust records because all matters relating to the Trust were sent to and kept at Security's Real Estate and because Respondent was Trustee in name only, as Frank controlled all management aspects of the Trust. Respondent does not have Trust records which pre-date November, 2009, nor does Respondent have any records of any premium payments made, all of which, upon information and belief, are in Frank's or Security's possession. 45. The averments of this Paragraph are legal conclusions to which no response is required. To the extent that a response is deemed to be required, Respondent denies that he engaged in any improprieties as stated herein and owes no restitution to the Trust and should not be surcharged therefor. By way of further answer, the $200,000.00 loan ("Loan") which the Trust obtained against the Life Insurance Policy was used as follows: a. $150,000.00 to purchase 12,070 Shares of Security from Jean; and b. $50,000, net of expenses and interest on the Loan paid to date, remains in a financial account with PNC Bank, the statements for which (since its inception) and a current valuation as of November 2, 2010 ($49,626.15) are attached hereto as Exhibit "C". By way of further answer, an agreement exists between Paul, as Trustee, and Jean to provide for Jean to repay any Loan interest paid by the Trust (up to $50,000.00) upon the second installment under the Stock Purchase Agreement (of $150,000.00) being paid to Jean. By way of further answer, Respondent has provided an accounting as set forth above and in the Exhibits attached hereto including the attached Exhibit "D": The February 8, 2010 Life Insurance Policy statement evidencing the net cash value thereof of $266,763.94 on that date; ii. The August 3, 2010 Life Insurance Policy statement evidencing the net cash value thereof of $71,002.73 on that date; and iii. The November 3, 2010 Life Insurance Policy statement evidencing the net cash value thereof of $71,094.33 on that date. WHEREFORE, Respondent, Paul M. Mosher, respectfully requests that this Honorable Court accept the Accounting set forth herein and dismiss the remaining relief requested by the Petitioners in this case. Respectfully submitted, CUNNINGHAM & CHERNICOFF, P.C. By / / ce J. Warshawsky, Es Attorney LD. No. 58799 2320 North Second Street Harrisburg, PA 17110-0457 Telephone: (717) 238-6570 Dated: November 4, 2010 STOCK POWER FOR VALUE RECEIVED, I hereby sell, assign and transfer untoTHE MOSHER FAMILY IRREVOCABLE TRUST, 12,070 shares being part of: • Certificate A-4 - 1,863 shares; • Certificate A-6 - 5,000 shares; • Certificate A-12 - 5,000 shares; and • Certificate B-4 - 207 shares as issued by SECURITY//SAVINGS SYSTEMS, INC. and I do hereby irrevocably constitute and appoint ~ ~lYf/d~~~"O~~J~Lf J~ ~, ~, or his/her substitute, Attorney-in- Fact, to transfer said shares of stock on the books of the within named Company with full power of substitution in the premises. 'This Stock Power is granted under and in connection with a transfer of stock as aforesaid and is to be used only for such purposes. Date: ~ ~ ~ 0 COMMONWEA//~~LTH OF PENNSYLVAMA COUNTY OF b.~~~ L ~"L - M. Mosher . SS. On this, the V day o~~~i:~.h.l~%2010, before me, a Notary Public, the undersigned officer, personally appeared Jean M. Mosher, known to me (or satisfactorily proven) to be the person described in the within instrument, and acknowledged that she executed the same in tha capacity therein stated and for the purposes therein contained. IN WITNESS WHEREOF, I hereunto set my hand and official seal. t F:Viama1B1W1DOCSISECURITY SAVINGS SYSTEbi$I.Stocli Pow•r.wpd ~1 VI •, \ ' Notary Public SECURITY SAVINGS SYSTEMS, INC. NEW CUMBERLAND, PENNSYLVANIA REVIEW FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 ~6 ............. .............Y C.i'1Tr~~~a axxr.~ c: eru~~r~~a6~i :a~unrs :x ~~~~o~aa~R PAGE Accountant's Review Report Financial Statements: Balance Sheets Statements of Income Statements of Retained Earnings Statements of Cash Flows Notes to Financial Statements 6-10 \~+~i~ + `ertt~llt~~t[,+~CtO#1r~'tttltts ;7mz ~f: Y7bra~:.:i~,. C~Y+~ „rC~IN.,~. (.~tSaC~y C!P.,~ pay,,, _~ _r ,/~ YIV~.u~J(lil ~QJY~r~}~ ;~w.w~"~. ('AiRRTfiV1, ('~/7 ~ .f1S,SoutJF Z9tli,5'irtet _.___...._.__._ 1„~~'1°. ro~R. cn~a~ 9lams6re~, ~P.R 1T1G4-2iQ4 ~_ ~ ~ . _.e.. ,_..Wd~mm~ ~ . .~ . ~,~ lg - ~_._ .. ~... .... .. ,. ....~ . ~~ __m.m... Q~ To the Boats of Directors of Security Savings Systems, Inc. New Cumberland, PA 17070 ACCOUNTANT'S REVIEW REPORT We have reviewed the accompanying balance sheets of Security Savings Systems, Inc. (an S corporation) as of December 31,2 009 and 2008 and the related statements of income, retained earnings and of cash flows for the years then ended, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. All information included in these financial statements is the representation of the management of Security Savings Systems, Inc. A review cpnsists principally of inquiries of company personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with U.S. generally accepted accounting principles. ~.~~IIrG~'l ~! C~,E. Wildeman and Obrock, CPA's August 10,20 10 #sne6err of eke Aa~rr~ r~rroe i+'rT) ~e r-~x~„ to died ~7irronxyCr?unia /roettutea t~ti t`%rY„a ~bt-fA!~.7d4 c f C'rrtr/`ur/'7!'u6du-,~lccvrneunta 1 rs^r~+rc~. uili~'eriuYmanrldbrcrrk, cewm SECURITY SAVINGS SYSTEMS, INC. BALANCE SHEETS DECEMBER 31, 2008 AND 2008 ASSETS 2009 2008 CURRENT ASSETS Cash and cash equivalents $ 283,981 $ 223,340 Cash in bank -customer postage account 46,293 -0- Accounts receivable (Trade) 504,066 507,359 Inventory 133,299 150,617 Other assets 632 393 Total current assets 968,271 881,709 PLANT, PROPERTY AND EQUIPMENT Land and buildings 1,128,332 589,261 Equipment, furniture and fixtures 2,749,989 2,728,382 Automobiles 67,068 67,068 Total depreciable assets 3,945,389 3,384,711 Less: Accumulated depreciation 2,824,997 2,660,698 Net plant, property and equipment 1,120,392 724,013 OTHER ASSETS Cash surrender value of life insurance 470,229 455,421 Total other assets 470,229 455,421 Total assets $ 2,558 892 $ 2,061,143 CURRENT LIABILITIES LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable $ 107,103 $ 171,169 Taxes payable 11,567 14,828 Customer postage deposits payable 46,293 -0- Current portion of notes payable 66,741 60,162 PNC Bank line of credit 200,488 200,000 PNC Bank construction loan 537,364 -0- Retirement plan 401(k) payable 11,950 -0- Other liabilities 10.511 3.549 Total current liabilities 992,017 449,708 LONG-TERM LIABILITIES Notes payable, net of current portion 35,241 105,492 Advance from Officer 249,325 154,325 Loans payable life insurance policies 470,918 375,110 Total long-term liabilities 755,484 634,927 Total liabilities 1,747,501 1,084,635 COMMITMENTS AND CONTINGENCIES (NOTES 8 AND 11) STOCKHOLDERS' EQUITY Capital stock - no par value, 39,570 shares issued and outstanding 175,412 175,412 Retained earnings and accumulated adjustments account 635,979 801,096 Total stockholders' equity 811,391 976,508 Total liabilities and stockholders' equity $ 2,558,892 $ 2,061,143 See accountant's review report and accompanying notes. 2 SECURITY SAVINGS SYSTEMS, INC. STATEMENTS OF INCOME YEARS ENDED DECEMBER 31, 2009 AND 2008 INCOME Sales COST OF GOODS 8OLD 2009 RATIO TO AMOUNT SALES $ 2,927,468 100.00 °k 2008 RATIO TO AMOUNT SALES $ 3,344,484 100.00 Beginning inventory 150,617 5.14 174,398 5.21 Purchases 399,345 13.64 443,220 13.25 Direct labor 749,027 25.59 830,381 24.83 Commissions 17,286 0.59 18,212 0.54 Freight 325,502 11.12 455,859 13.63 Shop and utilities 156,555 5.35 136,392 4.08 Total 1,798,332 61.43 2,058,462 61.54 Less: Ending inventory 133,299 4.55 150,617 4.50 Total cost of goods sold 1,665,033 56.88 1,907,845 57.04 Gross profit 1,262,435 43.12 1,436,639 42.96 OPERATING EXPENSES Officers'salaries 361,727 12.36 282,937 8.46 Office salaries 167,156 5.71 145,945 4.36 Taxes 115,567 3.95 111,804 3.34 Retirement plan - 401(k) 39,137 1.34 45,530 1.36 Employee benefits 155,964 5.33 156,742 4.69 Depreciation 171,826 5.87 187,813 5.62 Advertising 8,127 0.28 10,593 0.32 Insurance 35,026 1.20 35,716 1.07 Officers' life insurance 14,824 0.51 18,857 0.56 Telephone 13,264 0.45 12,935 0.39 Legal and accounting 17,327 0.59 22,136 0.66 Computer consultation services 1,590 0.05 5,010 0.15 Office expense 27,158 0.93 39,036 1.17 Travel, auto and entertainment 10,167 0.35 13,512 0.40 Leases 117,222 4.00 107,553 3.22 Repairs and maintenance 137,922 4.71 137,835 4.12 Software -0- 0.00 28,561 0.85 Total operating expenses 1,394,004 47.63 1,362,515 40.74 Incomefromoperations ( 131,569) ( 4.51) 74,124 2.22 OTHER INCOME Gain on sale of equipment 6,000 0.20 -0- 0.00 Gain on sale of silver 32,446 1.11 -0- 0.00 Increase in cash value of life insurance 14,808 0.51 20,986 0.63 Interest and dividend income 68 0.00 1,238 0.04 Interest expense ( 52,118) ( 1.77) ( 32,692) ( 0.98) Bad debt expense ( 1,859) ( 0.06) -0- 0.00 PA 8 TN corporation taxes ( 262) ( 0.01) ( 1,093) ( 0.03) Total other income ( 918) ( 0.02) ~ 11,561) ( 0.34) Net income $( 132,487) 4.53 % $ 62,563 1.88 % See accountant's review report and accompanying notes 3 SECURITY SAVINGS SYSTEMS, INC. STATEMENTS OF RETAINED EARNINGS YEARS ENDED DECEMBER 31, 2009 AND 2008 RETAINED EARNINGS AT BEGINNING OF YEAR Net income Asset adjustment Distributions to Stockholders RETAINED EARNINGS AT END OF YEAR 2009 2008 $ 801,096 ( 132,487) ( 12,657) ( 19,973) $ 760,629 62,563 15,404 { 37,500) $ 635,979 $ 801,096 See accountant's review report and accompanying notes. 4 SECURITY SAVINGS 3Y3TEM3, INC. STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2009 AND 2008 2008 2008 RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY pPERATING ACTIVITIES Net income (loss) $( 132,487) $ 62,563 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 171,826 187,813 (Increase) decrease in: Accounts receivable 3,293 219,776 Inventory 17,318 23,781 Cash sun-ender value of life insurance ( 14,808) ( 21,296) Other assets ( 239) ( 372) Increase (decrease) in: Accounts payable ( 64,066) ( 49,760) Taxes payable ( 3,261) ( 10,308) Retirement plan 401(k) payable 11,950 -0- Other liabilities 9,034 ( 1,249) Net cash provided (used) by operating activities ( 1,440) 410,948 CASH FLOWS FROM INVESTING ACTIVITIES Interest income 68 1,238 Payments for purchase of fixed assets ( 568,178) ( 433,335) Payment of life insurance premiums ( 14,824) ( 18,857) Distribution to Shareholders ( 19,973) ( 37,500) Net cash (used) by investing activities ( 602,907) ( 488,454) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from notes payable 537,852 16,098 Payments on notes payable ( 63,672) ( 68,175) Proceeds from life insurance loans 95,808 77,399 Advances from officer 95,000 -0- Net cash provided by financing activities 664,988 25,322 NET CHANGE IN CASH AND CASH EQUIVALENTS 60,641 ( 52,184) CASH AND CASH EQUIVALENTS, Beginning 223,340 275,524 CASH AND CASW EQUIVALENTS, Ending $ 283,981 $ 223,340 SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION Cash paid during the year for: Interest paid $ 52,119 $ 32,692 See accountant's review report and accompanying notes. 5 SECURITY 3AVING8 SYSTEM8, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2008 AND 2008 NOTE 1: NATURE OF OPERATIONS Security Savings Systems, Inc. (the Company) (a Pennsylvania S corporation) is in the business of printing consumer, commercial and mortgage loan coupon books and savings club materials for the banking industry. The Company derives substantially all of its revenue from these activities. The Company's projects are generally located in Central Pennsylvania. NOTE 2: SUMMARY OF 81GNIFICANT ACCOUNTING POLICIES This summary of significant accounting policies of the Company is presented to assist in understanding the Company's financial statements. The financial statements and notes are representations of the Company's management who is responsible for the integrity and objectivity of the financial statements. These accounting policies conform to generally accepted accounting principles and have been consistently applied in the preparation of the financial statements. Method of accounting The Corporation's policy is to prepare its financial statements on the accrual basis. Revenues and related assets are recognized when earned and expenses are recognized when the obligation is incurred. Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disGosure of contingent assets and liabilities, if any, at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Cash equivalents For purposes of the statement of cash flows, the Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. Trade accounts receivable Trade accounts receivable is recorded at the amount the Company expects to collect on balances outstanding at year-end. Management Gosely monitors outstanding balances and writes-off, as of year-end, any balance determined to be uncollectible using the direct write-off method. While the direct write-off method is not considered generally accepted, the amounts are normally not material. Inventories Inventories, consisting of printing materials and supplies, are valued at the lower of cost or market, using the first-in, first-out method. Property and equipment Property and equipment are stated at cost and are depreciated or amortized using the straight- line method over the estimated average useful lives of the assets as follows: building improvements, forty (40) years; office equipment, three (3) to ten (10) years and tools and construction equipment, five (5) to fifteen (15) years. 6 8ECURITY 3AVING3 SYSTEMS, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 NOTE 3: LIFE INSURANCE POLICIES AND LOANS The Company owns life insurance policies on officers and key personnel. The life insurance loans are not required to be paid currently. As of December 31,20 09 these policies were as follows: COMPANY NUMBER Principal 4247320 Principal Principal Principal Principal Principal Guardian N.Y. Life 4247321 4247322 4247324 4355351 4486936 5397583 46668139 2009 2008 APPROXIMATE APPROXIMATE CASH VALUE CASH VALUE INSURED OWNER AMOUNT AMOUNT Kreitzer Security Savings $ 7,947 $ 7,526 Mosher, F. Security Savings 298,889 295,746 Shoop Security Savings 25,219 24,587 Stedman Security Savings 13,351 13,743 Mosher, P. Security Savings 40,807 35,631 Snyder Security Savings 6,828 6,047 Mosher, S. Security Savings 546 -0- Mosher, P. Security Savings 76,642 72,141 Gross cash value of life insurance policies 470,229 455,421 Less: life insurance loans (Interest rates range from 5.60°~-7.60%) ( 470,918) ( 375,110) Net cash value of life insurance policies $( 689) $ 80,311 NOTE 4: NOTES PAYABLE Notes Davable consist of the followin 2008 2008 INTEREST CURRENT LONG-TERM CURRENT LONG-TERM DE8CRIPTION CREDITOR RATE PORTION PORTION PORTION PORTION Line of credit PNC 3.25°k $ 200,488 $ -0- $ 200,000 $ -0- Note payable Equip. PNC 6.00°~ 58,165 35,241 48,589 91,406 Note payable Equip. PNC 6.00% 10,576 -0- 11,573 14,086 Note payable Mosher, F. 8.00°~ -0- 249,325 -0- 154,325 Construction loan PNC 3.25% 537,364 -0- -0- -0- Total current portion $ 804,593 $ 260,162 Total long-term portion $ 284,566 $ 259,817 Maturities of lono-term debt are as follows: AMOUNT 2010 $ 35,241 2011 -0- 2012 -0- 2013 -0- 2014 and thereafter 249,325 Total $ 284,566 7 SECURITY SAVINGS SYSTEMS, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 NOTE 5: LINE OF CREDIT The Company has a $275,000 working capital line of credit with PNC Bank. Borrowings against this line of credit bear interest at the Wall Street Journal prime rate, 3.25% as of December 31, 2009. The line of credit is collateralized by a blanket lien on all the assets of the Company. The balances outstanding on this line were $200,488 and $200,000 as of December 31,20 09 and 2008, respectively. NOTE 6: On September 20, 2005 the Company entered into a lease agreement for printing equipment. The lease agreement requires monthly rental payments of $6,047 per month for 60 months. The lease qualifies as an operating lease. The lease has 4 payments remaining. On July 28, 2006 the Company entered into a lease agreement for printing equipment. The lease agreement requires monthly rental payments of $3,111 per month for 60 months. The lease qualifies as an operating lease. The lease has 19 payments remaining. On April 28, 2009 the Company entered into a lease agreement for printing equipment. The lease agreement requires monthly rental payments of $4,851 per month for 60 months. The lease qualifies as an operating lease. The lease has 53 payments remaining. On December 21, 2009 the Company entered into a lease agreement for mailing equipment. The lease agreement requires monthly rental payments of $833 per month for 69 months. The lease qualifies as an operating lease. The lease has 69 payments remaining. Future minimum operating lease commitments consist of the following at December 31,20 09 December 31, Total 2010 $ 129,732 2011 89,987 2012 68,208 2013 68,208 Thereafter 41,748 $ 397,883 NOTE 7: CAPITAL STOCK The Corporation's total voting and non-voting stock ownership is as follows: 2008 2008 NAME Shares Percent Shares Percent Frank A. Mosher 9,610 24.29% 9,610 24.29% Virginia B. Mosher Estate 5,820 14.71°k 5,820 14.71% Paul M. Mosher 12,070 30.50% 12,070 30.50°k Jean M. Mosher 12,070 30.50°k 12,070 30.50% Total 39,570 100.00% 39,570 100.00°~ 8 SECURITY SAVING8 SYSTEMS, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 NOTE 7: CAPITAL STOCK (continued) Stock ownership is voting and non-voting stock as follows: NAME Frank A. Mosher Virginia B. Mosher Estate Paul M. Mosher Jean M. Mosher Total 2009 Voting Non-Voting Shares Percent Shares Percent 1,961 49.56% 7,649 21.48% 1,582 39.98% 4,238 11.90°~ 207 5.23% 11,863 33.31°k 207 5.23% 11,863 33.31% 3,957 100.00% 35,613 100.00% NOTE 8: 401K AND PROFIT SHARING PLANS The Corporation has a 401(k) plan covering substantially all full time employees over eighteen years of age and with over throe months of service. The entrance date is the 1st of the month following three months of service. Vesting for employee contributions and safe harbor matching contributions is 100°~ immediate at att times. Vesting for regular employer matching contribution and discretionary profit sharing contribution is 20% after 2 years; 20% additional each year with 100% after 6 years of service with the employer. Financial information relating to the plan may be obtained through the plan administrator. The employees may elect to be in the 401(k) and the amount to be deferred may be withheld from the employee's W-2 income before taxes. The limit is the dollar maximum of $15,500 for the year if the employee is under age 50 and $20,500 if the employee is age 50 or older for the year. The employer matching contribution is a safe harbor match of $1.00 per $1.00 of employee contributions up to 4°k employee contribution level. The employer may decide from year to year whether or not to make a discretionary matching contribution. Plan loans are permitted. Hardships withdrawals are not permitted. NOTE 9: CONCENTRATIONS OF CREDIT RISK The Corporation maintains cash balances in various financial institutions located in the Harrisburg, Pennsylvania area. At times during the years ended December 31, 2009 and 2008, the Company's cash balances may have exceeded the federally insured limit of $250,000. The Company did not have any uninsured cash balances as of December 31,20 09 and 2008, respectively. NOTE 10: ADVERTISING AND PROMOTIONAL COSTS Advertising and promotional costs are expensed as incurred. Advertising and promotional expense totaled $8,127 and $10,593 for the years ended December 31,20 09 and 2008, respectively. NOTE 11: RELATED PARTY TRANSACTIONS The President of the corporation has loaned money to the company. The loan is unsecured with an interest rate of 8% and interest is payable at the discretion of the President. The loan amount outstanding totaled $249,325 and $154,325 as of December 31, 2009 and 2008,re spectively. SECURITY SAVINGS SYSTEMS, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 NOTE 12: Management is of the opinion that there are no contingencies that have not been recognized and provided for as of our report date. NOTE 13: MAJOR CUSTOMERS The Company had revenue with two major customers which accounted for 71 % of total revenue for the year ended December 31, 2009. For the prior year ended December 31, 2008, the Company had revenue with two major customers that accounted for 68°~6 of total revenue. NOTE 14: INCOME TA~CE3 The Company, with the consent of its Stockholders, has elected S corporation status for federal and state income tax purposes. The Company's taxable income is passed through to the stockholders for reporting on their income tax returns; accordingly, the accompanying financial statements do not include provisions for income taxes. To the extent necessary, the Company funds the stockholder's personal income tax liability arising from the pass-through of taxable income from the Company. NOTE 15: SUBSEQUENT EVENTS Management has evaluated events and transactions subsequent to December 31, 2009 for potential recognition or disclosure in the financial statements. The Company did not have subsequent events that required recognition or disclosure in the financial statements for the year ended December 31, 2009. Subsequent events have been evaluated through the date the financial statements became available to be issued, August 10,20 10. 10 Free Checking Account Statement I'NC Bank ~« t4r. r..rr.t+ was~s~~• a fa.ras~s~,te 000190 NOSHER FAMILY TRT PAUL M MOSHER TTEE UITAD 08/03/1993 256 YINDINB MAY CAMP HILL PA 17011-8463 PNCBANK Primary aooount numlwr:51-1268-8396 Paps 1 of 3 Number of snebsuros:0 For 24hour bantlnp, and trorrsadion or irttareK rats Mformetbn, sign on to PNC Bank Online Bantlrl9 at pnc.oom. a Forcustomsrssrviosn111-eBe-PNC-BANK Mosday - Friday: 7 AM -10 PM ET Saturday 8 Sunday: 8 AM - 5 PM Et Pan esrvk~b sn sspafiol, 165-HOLA-PNC MerYrN7 Pksee contact us at 1.888-PNC-BANK ® Write to: Customer Servios _ .. P68eu869- PUtebur9h PA 1523x9738 Visk to at pnc.oom ® TDDtsrmina1:1~00331-1646 Far bearing ta~patred elierw only kN ~'~"~ ~~ ~~~ Pant ul M MosM TTEE At+oottnt number. 51-1286.9396 URAD 06A3/1893 Overdraft Protection Provided ey: t6enteee t#(AIC M ee,9iMls tlrresrareit ~roeeratJe~ ~a ~ Bplnnlrq Daposna and Cheeks end atfNr Ending balanor, otMrsdditbns OWUetbns balance .00 200,001.00 87.00 199.964.00 Average mouthy CMryas Oalana and Teas 199,986.Y0 .00 r...e~sa0t.« swr..nl l.luekt geld/ Chadt Card F'OB ~rHhdwwda alpnad tnnsaetbna 1 Total ATM ____ _._tranaactiona 0 0 PNC Bank ATM transaetbns 0 Cheek CaN/BanpeaM POS PIN tnnsadbns 0 OtMr Bank ATM transaetbns 0 ~~ ts11+ ~~ Thsro rwro 2 Deposits and OtMr Additions Data Amount Oateriptbn tota9rq>jiN,ftH.N. 08/06 200,000.00 Deposit Reference No 529895107 08/06 1.00 Brsnch Deposit Tel 0400011405 0122 OIUe>r OeietlMe oeta Amount Description 08/18 9y.00 Withdrawal Te104000114160056 Thera was 1 Other Deduction totalirq q7+M. iDt~r SIN ~v raw Balance Dab Balance 08/06 200,001.00 OS/18 199,964.00 `L~.' PNDMLT01 J0877260-N40-NNNNNN-002-000814 Free PNC Bank Statement Per tfie Perlei CiM/iC1• N MIZ4/CC1• 000484 MOSHfrR FAMILY TRT PAUL M MOSHER TTEE UITAO 00/03/1993 256 iIINDINB MAY CAMP HILL PA 17011-0463 ~PNCBANK Primary account number: 51-1288.9396 Paps 1 of 2 Number of enclosure: 0 For 24hour banking, and tranpctbn or Mterost rate fnforntatbn, sign on to PNC Bank Online Banking at pnc.oom. ~ For eustontsr prvlas call 1-888-PNC-BANK Monday - Friday: 7 AM - 10 PM ET SatuMay di Sunday: 8 AM - 5 PM ET Para prvkio sn sspefbl, t-888-FIOLA-PNC MetraLgi Pkap contact us at 1.888-PNGBANK ® Wribto:CustomerSsrvlce PO Bflx609 Pkbhurgh PA 15230-9738 Vk+k us at pne.oom ® TDDterminal:l-8g0-531-1648 F« bevkig impaked climb mly ~ry Moshsr Fsmily Trt Aooount nurttber: 51-1288.9398 Paul M Mosher TTEE URAD OBp3/1993 Overdraft Ptoasatlon Pharklsd ey: CerMBet PNC tae eetaMeM OtrssMaltt Mteet'Nw ~a ~r Bpinnlnp OaposNs aM Cheeks and otMr Endtnp Oalanas othoraddkions dWUOtlons baNna 199,964.00 .00 150,000.00. 49,964.00 Avenge mOMhy Charges tadana and rocs 109,964.00 .00 Cheeks paid/ Check Grd POS Chock Grd/Bankcard wnhdrawala ognod tnn»dlons POS PIN tnnsadlons 1 0 0 Total ATM PNC Bonk OtMr Bank tnnsaetbns ATY ttansadbns ATM Innsadlons 0 0 0 Chock Ooh ttogmrca numtw Amount paid numWr 150,000.00 os/o7 6ttas>~e TMn b 1 cheek Ik~tsd totaling s,s.....:.. o.^~ wee. O.t~N naM B.bna o.ta B.loneo 08/36 199,964.00 09/07 49,964.00 t wunaut m~_ tnao»n~_uerLUUUUUUSm~nmGa Interest Checking Account Statement PNC Bank tfetr tllae ~~ N/=i/2ft1• a 1~/=i/=ilfi s ~~ MOSNffR FAMILY TRT PAUL M MOSNER TTEE UITAD 08/03/1993 256 WINDING WAY CAMP HILL PA 17011-8463 PNCBANK Primary account numbsr:57-1288-9396 Paps 1 of 3 Number of enclosures: 0 For 24hour banWrq, and troneadion or Interest rote Informstbn, sign on to PNC BankOnlins Banking at pnc.oom. S For customer arvbe call 1-888-PNC-BANK Monday - Fridsy: 7 AM - t0 PM ET Saturday dt Surday: 8 AM - 5 PM ET Para ssrvkb en sspafbl, 1-868-HOLA-PNC NNtrhaif Plsass contact us at 1-888-PNC-BANK ® Wrks to: Customer Service PO Box 809 Pktaburgh PA 15230-9738 Vlsk ue at pnc.com ® TDOterminal: ~-eoa5a~-~5ae For hewing impaired climb only ~ C~ ~O~t ~gy MosMr Famlly Trt AooouMnumber.51-f288A396 UITAD~ib3199 EE Ovetdroft Protedbn Provkled By: NsseNt PNQ m eesebiela tatreAnk rr~teelles Baplnnina l>.posNa and CMeka and otMr Endlnp balan¢a MMraddKlona dadudlons Wlanq 49,964.00 149,893.61 150,Y31.46 49,6Y6.15 Avarspa monthly Charyaa Dalana and lass 49,920.91 .00 Tt~sltisWidn f1111t1t;iltiti/y Chaska paid/ Cheek Gni P06 CMek Card/Bankuni wKhdnawala al9nad tnnsactlona POR PIN tranaactbns 1 0 0 Total AT#A PHC Bank OtMr Bank transaetbna ATM tnnaaetlons ATM tnnaaetlons 0 0 0 I~stNtattt =110MMary Annwl ParcaMaga Numaar or days Avarapa eollactad Inbtaat Pald Vlald Eamatl IdWYE) In IidanaR paned WbngforAPYE thla paned 0.05X 21 49,899.49 1.43 Aeflrlty stall As of 70/25, a total of :1 ~! in Interoat was pakt this year. ~~~ alls+ ~~ i Then wero 5 Oeposks and OthsrAddkbns Data Amount Dascnptlon totalirq>t14ft/i.it. 09/49 49,964.00 Tmsfr To Interest Checking 09/30 .O6 Interest Pymt - 0 04 96 APYE For 1 Days 09/!0 49,964.06 Ttnsfr To Free C}tecking l0/05 49,964.06 Trnafr To Interest Checking l0/Y5 1.43 Interest Payment PNOMLT01-J 0881389-N40-YNN NNN-002-000755 Interest Checking Account Statement Iex tie ~ee1M 81~1af/a~1• M 1~/ai/aN~ For 24hour krlomwtbn, aqn on to PNC Bank Online Banking MOSI#R FAMILY TRT on pncoom. Primary aooount number: 51-1288-9396 Asoomt aww6ers 51.1!88.8!98 - oontiaasd Page 2 of 3 G~~eln atad sMiNN~b~ gMaln CMCk Wh R~hnma num6~r AlReunt p~W number 389.94 10/22 aee61ex5e OI~N o.a ~nR 09/29 49,964.00 09/80 49,964.06 10/05 49,984.06 Dnwridtlon Trn~Er Fr Free (pecking Trnr& Fr Interest (pecking Trn~fr Fr Free (pecking TMro k 1 chaCit 8tt~d totaling giti~. TMro rwra 3 Othsr Deductbm totalkq Nuaa.~a. aiY ~iwN ON~^ 0~ B~gnp 09/$5 49,984.00 09/Y9 49,964.00 tM~ t)d~np Drh •. J..... BN~nc~ 09/30 49,984.08 10/22 49,629.Y2 10/05 49,964.06 10/25 49,626.15 FORMt88R PNC Online Banking QPNC Online Banking Account Activity Interest Checking XXXXXX9396 Account Summary https://www.onlinebanking.pno.com/alservleUDepositActivityServlet?ac... Tuesday, November 02, 2010 Available Balance: 549,626.15 Interest Paid to Date: Interest Paid Last Year: Last Deposit Amount: Available Balance: $49,626.15 Ledger Balance: $49,626.15 Pending Withdrawals: $0.00 Pending Deposits: __ Account Details Nickname: Type: Text Banking Nickname: Address: Account Alerts You currently have no Account Alerts for this account. $1.49 $0.00 $1.00 08!06/2010 $49,626.15 10/25/2010 None Interest Checking Not Enrolled 256 WINDING WAY CAMP HILL, PA 17011 - 8463 Pending Transactions These transactions have been submitted to us since the last business day and are not yet posted to your account When they have posted, they will be reflected in your Posted Transactions. Pending items may affect your Available Balance and are not a statement of your account. Dete Descrlpdon Withdrawals Deposits This account has no Pending Transactions Posted Tra nsactions Date Desalptlon Withdrawals Deposits Balance 10/25/2010 INTEREST PAYMENT $1.43 $49,626.15 10/22/2010 CHECK 086929259 $339.34 $49,624.72 10/05/2010 TRNSFR TO INTEREST CHECKING $49,964.06 $49,964.06 10/05/2010 TRNSFR FR FREE CHECKING $49,964.06 $0.00 09/30/2010 TRNSFR TO FREE CHECKING $49,964.06 $49,964.06 09/30/2010 TRNSFR FR INTEREST CHECKING $49,964.06 $0.00 0 9/3012 0 1 0 INTEREST PYMT - 0.04 % APYE FOR 1 DAYS $0.06 $49,964.06 09/29/2010 TRNSFR TO INTEREST CHECKING $49,964.00 $49,964.00 09/29!2010 TRNSFR FR FREE CHECKING $49,964.00 $0.00 09/07!2010 CHECK 522832346 $150,000.00 $49,984.00 ®Copyright 2010. The PNC Financial Services Group, Inc. All Righla Reserved $0.00 Laat Statement Balance: 1 of 1 11/2/2010 12:14 PM New 'fork Life .Policy Viewer hl~'. '~~{ Policy Number: 44964091 Insured: FRANK A MOSHER / VIRGINIA B MOSHER Policy Dah: 08/03/1993 Owner: MOSHER FAMILY IRR TRUST DTD 080393 Poliey Status: PREM PAY Plan: SURVIVORSHIP WHOLE LIFE Paid to pate: 08/0312010 Face Amount: 500,000.00 Tax Ouatlfied: NO AD Series : AD089 Modified Endow: NO Prepared On: 0210 812 01 0 Issue Date: 08119!1993 .e c..9r Ya~a:~~... r _ .. , . ~~ , .~ ; -~., a < ..•: <z • . .. I.: ~ a ,~ "+.r , JJ ~- "~ 'tarot I 'WARNIl0.i VUR !ik'lEC1tU IDYD 7 tiHt AND kYA OR Atifl 3 'hCi.+lHU I<Dtl lrilf B OA$S ACI Ir.~tu RFGI'(N:Sr' 1 'Dn. EFr DATE IS pAt• 1097 Lat.F 9 CRi S TERM DATA l'liBE6lli 177G.1 ~ ~ ' .{ .p & y'i ~ I L', i ;,, Policy Cash Value: 223,320.00 Policy Death Benefit: 500.000.00 Paid Up Additions: 9,836.33 Pafd Up Additions: 12,613.00 OPP Riders OPP Rider. Gross Cash Value: 232,956.33 1-Year Term: Outstanding Loan(s) Term Ritler(s): Amt: Loan Interest Due: Gross Osath Benefit: 512,613.00 Outstanding Loan(s) Amt: loan Interest Due: • Accumulated Adjust: 33,807.61 . ®y~ • Accumulated Adjust: 32,643.25 "Net Caah Value: .~/ 266.763.94 d' ~ I~~ Net Death Benefit: 545,256.25 ' InGudes unused premium, premiu m due, surrender charges, termination dividend, etc. "Maybe subject ro withholding ` , '"~~°""~`'~ ~1t11LUltEi~ AGCUMULJ1TEbJ1DJllSTN ~, 3 r `G`wah Vfiiir ~ ~ ~ ~ Increase In CY Of ~,~ y; ti Paid-up Additions : 189.20 Total Net Annua! aV Premium Refund : 17,855.50 Pro-rate Dividend Refund : 15,762.91 CV Accumulated 33,807.61 Adjust: VALUES - DIVIDEND pRAYL$ DiWdsnd Mfonrtatlon ~~ ~ Last Anniversary 2009 Year: Last Anniversary 29,417.95 Dividend: - 1 Year Term Face Amount: - 1 Yoar Term Premium: DETAILS itrath~ltettetjt ~" Post-Mortem ^A" Oividond 17,212.85 Premium Adjustment Mortuary • Renewal Pr: 15,430.40 DB Accumulated Adjust: 32,643.25 Dltrldends AvaRable ' Max Dividends Available: 9,825.53 " Federal Withholding: ' State Withholding: ' ° DIv Net of Withholding: 9,825.53 hops://www.fls.newyorklife.com/ftviewer/policyWebRequesl.jsp[2/8i201U 2:46:50 PM] New York Life • Policy Viewer Last Dividend 0710812009 FederallState Gain: Activity: Current Dividend Option; PAID UP ADDITIONS Dividend Suspense Amount R Reason: ' As o/ tho Prepared On Oate shown above "Signed Withholding Election loan needed to avatl tax withholdings Outstanding Loan Amt: • Max Loan Available: 235,434.00 Loan Interest Due: "Federal Withholding: Loan Interest Rate: 5.63% '• State Withholding: loan Type: ., Loan Value Net of 235.434.00 Withhold: Loan Int Paid to Date: Last Loan Aet{vity Oates FederallState Gain: C-O-M Loan Repay Amt: r ~^'~ ;~,' r, ~ - ~ i ~,~ 7 i'"* i:' As o(the Prepared On Date shown Above y ~,. : x "Signed Withholding Election /arm needed td avoid tax wihholdrng }. ^^ *} rep ....:n~~,t'.-'!+~~:" s ~ a ~~ ua~ t,Rla.,'..,- "I ' ~'' ~ Last Anniwrsary Year: 2009 Base Annualized 37,030.00 t; w Premium: k, 'Last Anniwrsary 29,417.95 Net Annualised 37 030 00 Y~Dlvidends premium: , . :Prior Year CV Increase: 19,500.00 Curront Year GV 18 000 00 ~_ ...-K~ Increaso , . Total Prior Year 48,917.95 Increases `+~ ~ ~~`~~'~N 7b ~ PAIL-~eIJP-IMbDi~l'IOi~iS f~E~Aii.;~ , . ; 'S, y~~ ,i<, i~~~ ,tits. ro. vF v a t~ •aIr>~~'- B _ i. a ~`~~W , Tottids. 'CUttirtt'YiMir ! `°P~tilotrlPtj~' , OPP Premiums Remitted: .00 .00 .00 "~ ` t ..,~ q~~>~ ~'1,~~_•~',OPP Face Amount Purchased: .00 .00 ° ,E"~~`^~t~~t 4 ~ "'OPP Cash Value: OPP Status Btllabls OPP " OPP Rider Status: ACTIVE OPP Mode: SINGLE LUMP SUM ' ' ' OPP AD Series: AD089 OPP 00 a Premium: OPP Rating: "Maybe subject to wiihholdiny r ° , VALU[S -OPTIONAL PREMIUM LOAN DLrTAILS ---Eligible 2 Loans Current OPL Interest 0.70°~ Losns: Taken: _ Rate: ~lifdailwDate ~~PYid to-.Date ': Original Amount Currant OPL tlalancr.'I ",Loan Balance: Total Amount Dus: loan Interest Due: VALUES -TAX DETAILS Lapse Taxation IMormation Surrender Texatlwr Information hops:Hwww.fls.newyorklifacom/ftviewer/policyWebRequest.jsp[2/8/2010 2:46:50 PMj t • ~c++ 1"orA Lili~ - I'ulicy Viewer ' FederollState Gain: .00 ,j j Lapse Cost Basis: 156,809.00 ;~ Lapse Information As 08!0312010 9 Of: ~~ .. 4±:E "X442~AI11i1#~ta': .~ r.~5 { ~ Si- ~.~ Y.~,w• iyyy .W' `t`~ 2008 .00! • FederallState Gain: 109,954.94 Surrender Cost Basis: 141,046.09 ''~~~ "~, 'FederoUState Galn: .00 1035 Exchange Amount: 266,763.94 7035 Exchange Cost 172,571.91 Basis: 'May be sub/ect to withholding "`"" Promium Modr. ;~s ANNUAL ';^,'' Policy Premium: 37,030.00 ~„ Partial POP Amt: ;'7+1;E Out-of•Pocket Premium: SINGLE LUMP OPP Mode: SUM '' OPP Premium: .00 Cunent POP Status: POP SELECT "UNPOP Date: 08!0312011 Last Prem Activity: 07/08/2009 Next Bill Date: 08!03/2010 Default Prem Pay Option: State Jurisdiction: PA n Premium Suspense Amount b a, Reason: ;~ "This policy is cuvendy on POP Select. This does NOT make the policy paid-up or reduce fhe number of ;premiums that must be yard. Premiums are assumed to be paid by appdcation of dividend values. Loan `;'° interest due, it any, is assumed to be paid with out-ot-pocket cosh. A reduction in the tureen! scale could ;,?` require additional out-of-pocket cash outlays in hrture years ~ p p~,~~ '_ Component: BASE PLAN Name: FRANK A MOSHER / VIRGINIA B MOSHER 4' Face Amount: 500,000.00 Date Added: 08/03/1993 Issue Age: 69/71 NON-SMOKER Extra Prem r Rating: /NON-SMOKER Prem: 36,950.00 Ending Yesr. +s:~AD Series: AD089 Unite: Rider ID: Component: BASE FEES Name: FRANK A MOSHER /VIRGINIA 8 MOSHER 1 Face Amount: 500,000.00 Data Added: 08/03/1993 Issue Age: B9/71 NON-SMOKER Extra Prem Rating: /NON-SMOKER Pram: 60.00 Ending Year: `' AD Series: AD069 Vnlts: Rider ID: Pk~[±~ .t~OfT4 PA16fitEN't ARRK~1~~A~1.l, " ... ~, °; • . ~ ' , ' PRE 7' TiN~ebIURE DPT~A.. r ANNUAL _ __ _ _ 3703000 SEMI-ANNUAL 16,999.00 _ OUARTERLY ; ___ _ ~ 9,630.00 i MONTHL . ~ Y 3,245.1 ~NY .. ---.._._.._-. O M __.__.-..._..._._ _ _.._ ._..__.__-__34243.00 1/12TH ANNUAL ~ 3,088.00 PRl?MIUMS ~-,;piECK-O-MATIC t)E'i'AZ Lt4 :,' ~ +.", -,` ='. PREMfUMS -:t:`OMBIf1ED BILLING QETAILS PREMIUf45 - ?!IODIFIfD ENDOWMENT CONTRKCT IkETAILS MEC Status: NOT MODIFIED ENDOWMENT '1035 Exchange Status: Oate Became a MEC: Accumulation Start .q=~ v ,; e ,, ,, + x,~w.;< ,; hnp>: +uu+ fi:.ne++~ork6fe.com/fiviewer/policy WebRequesl.jsp~2/R/20102:46:SOPMJ ~ ~ New York Life -Policy Viewer ~~,~x~~~~1 x.Matenal Ghange Date '24T t Date: 08!03(1993 `q~~{T•jjY i1.'".. . ~' ~ a 1 ~ ~ A! ~h• .'W ~ A •••iii .. aff 5j S 35,710.00 Sq ..... ~+ 19,476.00 i~ ~~~II , /A . i.y~ 35 710.00 ~ i .. 19,476.00 ~»]'~'' '~ ~~~ ~#c~ 2 35,710.00 19,476.00 71,420.00 __ A 38,952.00 +~~ ~"} 3 35,710.00 19,476.00 _ ~_ _ ~-^ 107,130.00 ,^_ _ 58,428.001 `j ' " 4 35.710.00 19,476.00 142,840.00, 77,904.00 y~"; ,' ~y~ - 5 35,710.00 19,476.00 178,550.00 97,380.00 'A %' a: 6 35,710.00 19,476.00 214,260.00 116,856.00 ~ ~ '~,~ s , ~"" 7 35,710.00 18,478.00 249,970.00' 136,332.00 ~ , POLICY IS PAST SEVENTH YEAR -PLEASE CONTACT THE SERVICE CENTER FOR MORE INFORMATION Default Premium Pay Premium Mode: ANNUAL Option: APL Provision: 2 YEAR APL Expiration Date: Available Premium Loan to Next Modal Anniversary e~C~i„~,x'x~i;Ns~7C1~ 08/03/1993 Survivorship Whole LNe Insurance -Primary Beneficiary - PAUL M MOSHER AS TRUSTEEIN ACCORDANCE WITH TERMSOF THE MOSHER FAMILYIRREVOCABLE TRUSTDATED AUGUST 3RD, 1993 ; Vag ~'', ~~ C~] ~' ~1 ~ `©~ +~0 ] ~~~ '., . Part t Date: Part tl .Type: L~ Name: L Client 10: SSNrTax l: ID: ur Address: Name: Client ID: SSN/Tax ID: Address: Name: o a~~ 0 Q rtiw, Ban MEDICAL Part II 06/2211993 Date: MOSHER FAMILY IRR TRUST DTD Role: PRIMARY OWNER 080393 006417182 HouseHoldID: 0203120000181668 -'^4048 DOB: Sex: SECURITY SAVINGS SYSTEMS INC Phone: PO BOX 373 NEW CUMBERLND,PA 17070-0373 VIRGINIA B MOSHER !DECEASED Role: PRIMARY INSURED 006398901 HouseHOldID: ' -"-3240 DOB: 1 111 9/1 922 Sek: F Phone: FRANK A MOSHER Rnle: PRIMARY INSURED httpsa/www.fls.ne+ryorklife.comJftviewer/policyWebRequest.jsp(2/82010 2:46:SD PM] t • New York Life -Policy Viewer Client FD: 006398900 88NlTax ..:.._8668 ID: Address: BETHANY VILLAGE 5245 MAGNOLIA CT MECHANICSBURG , PA 17055-0000 Name: JAMES H ARNOLD CLU CHFC NouseHoldlD: DOB: 02/0711924 Phone: 717-766-1491 HOME Code: 279431 Role: ORIGINAL Status: ACTIVE Percent: 50' Phone: 610-722-3300 Exp. GO: VALLEY FORGE GENERAL OFFICE Date: Name: BRETT J HEINRICHS Code: 319518 Role: ORIGINAL Status: RESIGND Percent: 50 Phono: Exp. GO: VALLEY FORGE GENERAL OFFICE Date: Commission Policy Dolivery Option: Raeelot Date: 08/31/1993 Life, Heahh A Annuity Policies_ _ 44964091 N/A ~~ , ' Sex: M hops://www.fls.newyorklifc.com/fl~'iewer/policyWebRequest.jsp[2/8/2010 2:46:50 PMJ te. awe rw x~ N~1Y1pjq( LIFE aVeland,OH q,N01.1916 www ~yprklHa'eoro PoUey~t T1•Iig la NOT A BILL lf~~ 4F63A~Y IRR TRUST DTD 080383 ~ ~ WAY CAMM' WE•1-, PA 17011-6483 t MNii~ to Pollcyowr1ere: Dwldends pay ur New 's dividend scale reflecting last yen or requea an n cI'ce llllustration, please contact yo m re9uding the dividend redu Agent listed above. FRANK A MOSHER for our policy during the period from Aug 4, 2009 Thy annual sumrtMry hlghlighls the flnancyl actlvitY y Ilceble on the date the stet um PeYr'nents~red. to/1r~g 3,1010. AM values quoted in this statement are apP Your fiuhr<e values may be higher or bwer b~~ New York Uferagent lyted bare or~ of our Customer It you have arty gUetrtions, Please contact y 5ervbe Rapreser-tatlves at 1-600.895.9873. able in 2010 represent a rtedudi For more York Cov4ra9e Insured: policy Number: Policy Plan: Base Plan Death Benefit: policy Date: premiums are Paid To: Annual Premium: Page 1 of 3 Ag~Rep~erttatNe (g1p 722-3300 PATE PREPARED: AUG 3, 2010 44 964 091 gurvivorehip whole Life Insurance ssoo,ooo Aug 3,1993 Aug 3, 2011 537,030.00 L.ifO Insurance Total Death Benefit on Aug 3, 2010: Death BMefit (Sae Page 3 tot details.) Nat Cash Value on Aug 3, 2010: PollicY ~ 3 for details.) Cr1sh Value ($°° Pte' Outstanding Policy Loan Balance on Aug 3, 2010: (See Page 3rordetaila.) S mmary " 2010 DIVIDEND on Aug 3.2010: DlvWend ~« (gee Page 3 for dataUs.) 5339,656.66 671,002.73 6~pp,000.00 629,7.92 ssomre gummary 00 from ast ear, your Base Plan C,uaranteed Cash Value increased 516,000• During the p Y our annual dividend was X1214,000.00 to 6232+000.00. In addition to this Increase, y 6~g,507.92. lease visit us at ----~ ~w•n~°rklife.comNsc For,policy inforrnatlon and online service, P or lapeea D~a to the doatlt of the IMUred. trap. W the deem plet~ t~ m ure+e v~ ^"~' be os"a°a ~ ~ °A n a Ie war Idef sO anon on the ~u~~ livens arsPagde~ded .. ppaynanl at lint ben wIN IrKxMee lhs Pape de~h ~~ ~ cabh wIW becww benefit K a ONth dalm b psyads, tX (u) ~ a-~ nrrendx value H iM Poucy y surrendnsd. myy be the IMUrer. Thgetore, the 01vi0end credimd b your Pdb1l ..pµ~,oe are nst gurantasd ° u~imly ttw. chan0e tri dNrerent tiro the dhM1derds aW New Y AnnulaBPoN Y Summa~Ympany New Y An uasPo$ y SummarYmpa~Y Policy Number: 44 964 091 Pegs 2 of S Date Prepared: A_ u9~ ~ Insured: FRAI K A_ NI_~ ER Imporvnt information about Your policy: roblems in pr~essmg claims is inaccurate or invalid beneficiary LIMBER ONE cause of p ours. rations -Call your Agent TODAY to review Y our licy lap:ws h loans:lf You have a policy loan andy Po Impo+ltant irtiormatlon for policies wit loan plus the rash surrendeNalue is more than the sum surrender it and the amount of the or yotl ~~ ~~, You will generally be liable for taxes on ~ excess. Such amount will bdexe of Prdm as ordinary income. --...-> www.newyorklife.co~sc Fpr policy Information and online service, please visit us at nltlon of Tsrms and other Information on the rowroe side of pegs 3• bssed on our girrcnt dMdand >~° coMad Ya+r please rofer >p the Daft To optaln an u~~ ~ N~ ~~ aoe It, Y~ ~Id Immsdie~elY ~~ ER NOTICE: cane of 1°a I~ppRTANT POLICYOWN uveset t-eoo~asa'9e~a. _a)• ~' Ypur pdicy ~ • vsWaWs ldour aO~N) tlNed abpY° or oro or out customer New York Life Insurance Company Annual Policy Summary POlicy Number: 44 884 081 n,. oaro.v w, ~. Insured: FRANK A MOSHER I Date Prepared: Aug S, 2010 Page 3 of 3 I Ufe Inaunnes Lath Bdneflt As of Policy Cash Value Aa of Aug 3, 2010 Aug 3, 2010 Bass Plan Dsalh Benefit Death Benefit of Paid up Addkbnal Life Insunnw purchased by Dividends Promlums paid beyond Aug 3, 2010 SUBTOTAL Lest Outstanding Pollq Loan Balanoe Less Unpsld Bified Losn Imersst TOTAL DEATH BENEFIT ifi00,000.00 Base Plan Guaranteed Cash Vaiue Cash Value of Psid up Addkbnal Life 2,988.00 Insunnp purchased by dividends 37.030.00 Premiums paid beyond Aug 3, 2010 ;639,995.00 SUBTOTAL 200,000.00 less Outstanding Policy Loan Balance 339.34 Less Unpsid Bllbd Lwn Interost sass NET CASH VALUE ( 171,002.73 may be subject to taxation tf the policy b sunendsnd or lapsed.) ;232,000,00 2,312.07 37.030.00 ooo+rn ;271,342.07 200,000.00 339.34 t7 aa~ Loan Summary Period from Aug 4, 2008 Dividend Summary As to Aug 3, 2010 Aug 3, 2010 Outstanding PoNcy Loan Balance on Aug 4,2008 Incroassd by: Totsl Loan(s) paid in Cash OUTSTANDING POLICY LOAN BALANCE on Aug 3, 2010 (Currsrd Loan Interest Rats ~ 5.83% and an be adjusted quarMrly) Ths 2010 DIVIDEND credited to your policy ;0.00 The dh+ldend was used as follows: 1) :29,507.92 provided 537,590 of 200.000.00 ineroased Paid up Addfibnai Life Insurance 2) Utilizing the Premium Oflsat Propossl (POP) payment arrsngement you selected, we sunendsnd 547,535 of Paid up LNelnsurencp Desth 8enefilto pay the;37,030.00 pnm)um due Aug 3, 2010 Summary of Our Period from Aug 4, 2008 Summary of Your Period from Aug 4, 2008 Dbbwsentenis to Aug 3, 2010 Payments to Aug 3, 2010 Cash Loan(s) (200.000.00 No adhrity during the period TOTAL DISBURSEMENTS VERIFICATION I, Paul M. Mosher, hereby verify that the statements made in the foregoing ANSWER TO PETITION FOR CITATION TO ACCOUNT AND CITATION aze true and correct based on my personal knowledge or upon information and belief. I understand that false statements herein are made subject to the penalties of 18 Pa.C.S. §4904, relating to unsworn falsification to authorities Date: I ~ - '7 - I(~ ~~ Paul M. Mosher CERTIFICATE OF SERVICE I, Julieanne Ametrano, Legal Assistant, of the law firm of Cunningham & Chemicoff, P.C., hereby certify that a true and exact copy of the ANSWER TO PETITION FOR CITATION TO ACCOiJNT AND CITATION will be served by electronic means and/or first class U.S. Mail on the following parties indicated: Ronald L. Finck, Esquire Mette Evans and Woodside PC 3401 North Front Street Harrisburg, PA 17110 sy: Date: November 4, 2010 F:U-Iotne~B.1WtDOCS4SECURITY SAVQ~IGS SYSTEM55Answer to Petition for Citation to ;anne Ametrano and Citation2.wpd