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HomeMy WebLinkAbout09-29-11tll.i l ,~i ,~:Iln - ..,~ ~'i i..~'J WIX, WENGER &WEIDNER Stephen J. Dzuranin, I.D. # 52653 sdzuraninCc~wwwpalaw.com 508 North Second Street P.O. Box 845 Harrisburg, PA 17108-0845 (717) 234-4182 °^,C ~ ~~~... t r ; [-' C[.~'PK nF C"''i-~^d~S ~~~,~ l~,T ,.-.-~ ut.', r.. Cll~ti~,b~~;t~,r,; C,t~. P,4 IN RE: ESTATE OF :COURT OF COMMON PLEAS WENDELL B. STOCKDALE, JR., :CUMBERLAND COUNTY, PENNSYLVANIA Deceased ORPHAN'S COURT DIVISION File No. 2009-01040 ANSWER TO OBJECTIONS TO FIRST AND PARTIAL ACCOUNTING OF FILED JUNE 24 2011 AND SURCHARGE ACTION AGAINST EXECUTORS AND WIX, WENGER 8~ WEIDNER The Executors, Wendell B. Stockdale, Sr. and Jane Stockdale, (the "Executors"), by and through their attorneys, Wix, Wenger & Weidner ("Executors' Counsel") answer the Objector's Objections to the First and Partial Accounting and Statement of Proposed Distribution in the above-referenced action as follows': BACKGROUND 1. Admitted. 2. Admitted. 3. Admitted. 4. Admitted with clarification. Objector correctly identifies the assets of the ' Unless otherwise defined, capitalized terms herein shall have the same meaning as set forth in the Objection. Decedent's estate as reported in the Executor's Accounting. However, Executors object to the classification of the Estate as a "modest" estate to the extent the term is intended to imply that there were not complicated issues to be resolved by the Executors and Executors' Counsel. To the contrary, resolution of issues for the Estate involved and required repeated letters, legal research, and demands, as a direct and proximate result of the adversarial, hostile and interfering actions of both the beneficiaries of the Testamentary Trusts and their mother, Laurie J. Stockdale ("Decedent's Ex-wife"). As further clarification, Executors object to the classification of the vehicles as "late model" to the extent that the Objector intended to imply that the Estate was of little or modest value. 5. Admitted in part and denied in part. The Will is a written document that speaks for itself and any statements contrary to the written document are specifically denied. Byway of clarification, it is important to note that the Will provides no benefits for Decedent's sons; rather all property of the Decedent is given to the Decedent's Ex-wife, or if she does not survive (or because of divorce and statutory laws), to a named trustee, who declined to serve, for the benefit of the sons. 6. Admitted. 7. Admitted. 8. Admitted in part and denied in part. The amount of legal fees to Executors' Counsel reported in the Accounting was $76,721.35 and included expenses of Executors' Counsel. To the extent Objectors imply that the amount of the 2 Executors' Counsel's fees is unreasonable or not justified, the same is specifically denied. By way of further answer and clarification, ongoing services provided by Executors' Counsel to the Estate generate further legal fees and expenses, because of the refusal of the beneficiaries of the Testamentary Trusts and of the Objector to accept the Estate assets and release the Executors from claims, and because of the actions more fully set forth herein, especially, of Decedent's Ex-wife, as to avoidable income tax issues that remain unresolved. 9. Admitted in part and denied in part. It is admitted that the Objector questioned the amount of the legal fees and that the Executors and Executors' Counsel fully cooperated with Objector to provide the agreement for legal fees as well as the itemized invoices requested by the Objectors. However, it is specifically denied that the Estate was of a "modest and less than complex nature." 10.Admitted in part and denied. tt is admitted that Exhibit "E" to the Objection is a copy of Executors' Counsel's invoice dated March 29, 2011. However, such invoice is a writing that speaks for itself and any averments contrary to the writing are specifically denied. 11.Admitted in part and denied in part. It is admitted that Executors' Counsel provided the services to and for the benefit of, and in accordance with a written agreement with James W. Stockdale, and were paid $4,000 for the same. However, it is denied that the legal work related thereto was neither required nor properly requested and contracted for. Pursuant to request from the administrator of an employee benefit plan of the Decedent, and as an 3 accommodation to one of the Decedent's sons, James W. Stockdale, he employed Wix Wenger and Weidner to prepare and process a guardianship petition so that he could collect certain employee benefits from one of Decedent's employee benefits plans, which were to be payable directly to James W. Stockdale. The payer/administrator of said plan, JP Morgan, refused to pay such benefits to James W. Stockdale or to his mother, Decedent's Ex-wife, for the benefit of James W. Stockdale without the appointment of a court appointed guardian. Objector has been provided with copies of the refusals by JP Morgan to pay without a guardian having been appointed, but fails to mention same. It is admitted that Wix, Wenger and Weidner charged James W. Stockdale for these services, and that he, by arrangements with the Estate, paid to Wix, Wenger & Weidner the sum of $4000 for the guardianship services, in accordance with a detailed invoice provided to him, detailing the rates charged and the services rendered, and, in contrary to his sworn affidavit, James W. Stockdale, being the age of majority at the time, did agree to pay for such services pursuant to a detailed engagement letter titled "Notice/Agreement for Provision of Limited Legal Services as to Estate Planning Matters, and Privacy Notice and Guarantee of Payment" and dated 5/18/2010, a true and correct copy of which is attached hereto as Executors' Exhibit A and incorporated herein by reference as if set forth in full (the "JS Engagement Agreement"). Executors further aver that the charges were as great as they were because of the actions of James W. Stockdale and his mother, Decedent's Ex-wife, rendering this task inordinately 4 long and time consuming. By way of further answer, the Executors deny that this claim is properly brought by the Objector because the only relation of the Estate or of the Objection to this scenario was that the Executors loaned to James W. Stockdale the funds with which he paid for the services, evidenced by executed Notes dated 5/17/2010 and July 1, 2010, true and correct copies of which are attached hereto as Executors' Exhibit B (the "JS Notes"), and incorporated herein by reference as if set forth in full. The services were rendered to and for the benefit of James W. Stockdale individually and not to the Estate; but were reported on the Accounting to evidence the JS Notes as assets of the Estate and the disbursement of payment from the Estate funds in exchange for the JS Notes. 12.Admitted in part and denied in part. It is admitted that invoices were based on contemporaneous time entries/slips in Wix, Wenger and Weidner billing records. However, that was not the sole record of the support for the time incurred for the said invoices and to the extent Objector's paragraph 12 implies otherwise, the same is specifically denied. By way of further response, the rates for the services of attorney Robert Spitzer were discounted from his regular rate of $265 per hour to $200 per hour, as reflected in the Notice/Agreement For Provision of Limited Legal Services dated November 4, 2009 (the "Engagement Agreement"), a copy of which is attached to the Objection as Exhibit D, because of the troubled circumstances of the parents and children of the Decedent, and because of what at first appeared to be (as Executors' Counsel advised the 5 Executors several times) either an insolvent Estate or genuinely a very, very modest Estate, a fact proven to be incorrect based on the work and actions of the Executors and of the Executors' Counsel. 13. Denied. It is denied that Executors' Counsel "attempted to reconstruct their time" in response to Objector's questioning the amount of legal fees. To the contrary, Executors' Counsel provided the more detailed description of services rendered and time expended in response to some limited specific questions regarding narratives in the invoices, and to which both parties agreed that a more detailed explanation would be helpful. The Additions/Supplements to Timeslip Records Submitted June 17, 2010, which is attached to the Objection as Exhibit I, (the "Additions/Supplements") was prepared at the request of Objector's counsel to assist in resolving their concerns. Executors' Counsel researched both the voluminous paper and substantial electronic files and records evidencing the services rendered. Some of the entries on the billing statements, admittedly, were lacking in detail. By way of example, there were no entries for November 3, or November 4, 2009 and a description of services on November 5, 2009 listed only "review" for 4.3 hours. However, the services were in fact performed on these days, are more fully shown on Exhibit I, as follows: "November 3, 2009 telephone conference with Mr. Wendell Stockdale Sr., regarding representation of Estate of his deceased son, Wendell, Jr, divorced father of two, request Mr. Howland to obtain statutes regarding forfeiture of rights upon divorce, 1999 Will. " 6 "November 4, 2009 prepared various representation and Estate administration documents including Notice Agreement For Limited Legal Services, Petition For Probate, with notations concerning statutory moditrcations to will as to the participation of surviving but divorced spouse. Conference with David, James, Wendell Sr. and Jane Stockdale and review and approval of documents and discussion of facts and circumstances of estate and prospects of informal, abbreviated administration (Letter regarding same "tabled" because of expressed concerns by David and James as to motives of attorneys);" "November 5, 2009, review and prepare Estate administration documentation, correspondence, filings, account lists, asset lists, requests for further information, reviewing materials provided in records; consideration of Pennsylvania statutes (research by Peter Howland) governing or purportedly governing entitlement of divorced spouse to employee benefits and qualified plans governed by ERISA, and life insurance, as named beneficiary, and entitlement to participate in administration of the Estate (named Executrix and residuary beneficiary of Estate under unrevoked will); finalize Petition For Probate, noting divorce and statutes and PROPERTY SETTLEMENT AND SEPARATION AGREEMENT as to no role for Laurie Stockdale even though she was named Executrix as to administration; Probate of will and further conference with Mr. And Mrs. Stockdale in Cumberland County; " 7 14. Denied. It is specifically denied that the Estate was "fairly unremarkable." Rather it is averred that, in more than 40 years of practice in this area, attorney Robert Spitzer has never seen an Estate with so many requirements to reconstruct and process the assets, debts, tax returns and claims from disorganized boxes of materials provided to Executors' Counsel by the Executors, including, but not limited to: a. stacks of more than one hundred uncashed checks gathered by the Executors from different places at different times, some many years old; b. the failure of Decedent to file income tax returns; c. escheated property in two states; d. approximately 35 certificates of stock holdings (requiring reconstruction) in (except for Fulton Bank and Kronos) essentially (ultimately discovered) valueless entities and a closely held corporation; e. more than $1600 per month mortgage obligation on the Decedent's home (as to which the Executors undertook lengthy and time consuming rehabilitation [over 1600 man hours], performed at no charge by the Executors and others in the family besides the sons of Decedent to make marketable) f. limited ($28,000) life insurance proceeds payable to the Estate; g. numerous various kinds of employee benefits and bonuses; h. one of the Executors, Mr. Wendell B. Stockdale, Sr., an experienced business man and commercial realtor who has dealt with lawyers throughout his career, frequently requesting and promptly being provided with explanations 8 of requirements and processes and assistance to assure his awareness of ongoing activities and performance of his obligations; i. repeated requests to the Decedent's Ex-wife to endorse a $2000.17 check in which she had no equitable interest; j. interference by Decedent's Ex-wife with claims to the assets to which the Estate was entitled (life insurance and employee benefits as to which she was named beneficiary, but interests in which had been released through the Property Settlement Agreement and two further agreements, but which resulted in issues relative to enforceability of the same and substantial legal questions); k. repeated but unsuccessful efforts to obtain the cooperation of the Decedent's Ex-wife and compliance with her obligations, and to cease her efforts to collect those claims for herself and her own account, not the Estate. 15. Admitted with clarification. It is admitted that the Estate ultimately, after substantial efforts, received the life insurance and ERISA benefits funds totaling approximately $412,989.25. These funds (less withholdings for income taxes thereon) were delivered to the Estate by Decedent's Ex-wife, but such delivery was required pursuant to the Pennsylvania law and the Property Settlement And Separation Agreement between the Decedent and Decedent's Ex-wife dated January 19, 2009, a true and correct copy of which is attached hereto as Executors' Exhibit C (the "Divorce Agreement"), but which funds were not delivered until after substantial efforts by the Executors and Executors' Counsel 9 culminating in eventual additional further agreements consisting of a ConfirmationNVaiver of Benefits dated January 12, 2010, Supplementary Agreement dated 1/21/2010, and a SettlementAgreement made effective May 1, 2010, copies of which are attached hereto as Executors' Exhibit D2. Prior to entry of such agreements, Decedent's Ex-wife asserted and pursued claims to such funds herself. 16. Denied. First, Executors do not have sufficient knowledge or the means to determine what the Objector became aware of or when and the same is therefore specifically denied. Further, it is specifically denied that the Executors improperly included the pension benefits the Estate received and to which it was legally entitled, as income to the Estate. To the contrary, the Executors, through the Executors' Counsel, after consultation with an independent certified public accountant, advised Decedent's Ex-wife, of the income tax consequences of her receipt of these funds as an intermediary, having no equitable interest therein and provided to her an Attachment to Form 1040, and delivered by explanatory letter from attorney Robert Spitzer dated November 8, 2010, true and correct copies of which is attached hereto as Executors' Exhibit E and incorporated herein by reference as if set forth in full (the "Tax Memo"), to accompany her income tax returns, explaining that the funds were properly taxable to the Estate as the beneficial owner thereof, and would be reported on the Estate income tax return, form 1041. Despite this advice, Decedent's Ex-wife failed or refused to z Executors and Executors' Counsel were not provided a signed copy of the May 1, 2010 Settlement Agreement and attach the version which the Executors signed and delivered to Hoffmann-LaRoche, Inc. 10 follow any of these arrangements and reported the benefits as income to herself, on her income tax return, collected the refund for over-withholding, and tendered to the Estate a check in an amount claimed to be the refund to which the Estate was entitled (but without, despite numerous requests, any support or explanation therefor), having ignored the advice provided to her; thereby generating still another controversy that the Estate must resolve and has tried to resolve through the Internal Revenue Service. It is further averred that Objector is attempting to manage the Estate's tax affairs, by its request for a court order to compel it to file an amended income tax return. 17.Admitted with clarification. The answer to paragraph 16 above is incorporated herein as if set forth in full. 18.Admitted in part and denied in part. The Executors object to the characterization of their actions, which are legally supportable, as a threat to report Decedent's Ex-wife to the Internal Revenue Service. To the contrary, the Estate believes that it has handled the income tax issue properly. To receive confirmation on the issue, the Estate tax advisor, Keith A. Huntzinger, CPA, has notified the Internal Revenue Service of the situation and requested confirmation of the proper filings for both parties by letter dated August 8, 2011, a true and correct copy of which is attached hereto as Executors' Exhibit F. In addition, this situation was caused solely by the actions of Decedent's Ex-wife who failed or refused to utilize the services of the Estate's CPA to assist Decedent's Ex-wife, at no charge to her, at the cost of the Estate, to prepare or assist in preparing her income tax return. 11 Despite this, she ignored this offer, and the Estate's advice, and has generated a situation where both she and the Estate have reported certain employee benefits as income, and taken credit for withholding more than $60,000 against the taxes of the Estate and Decedent's Ex-wife. Because of Decedent's Ex-wife's ignoring the Estate's income tax procedure and instructions for handling these funds, there has been a double "credit" from the withholding, which will inexorably, generate further fees and controversy. 19.Admitted in part and denied in part. It is admitted that the Executors ceased their practice of generously and creatively making funds available for the beneficiaries of the trust, from the Estate, by "loans" (many previously made to the benefit of the beneficiaries) after counsel for the Decedent's sons, Stephanie Klinefelter and the Decedent's sons refused in September or October of 2010, to release the Executors from these claims of having paid excessive fees, and other claims, so that the Estate could be closed promptly and as efficiently as possible, without the additional costs and expenses of this prolonged and wasteful litigation. However, after such parties refused to grant such releases, the Executors did nothing more than protect their interests while complying with their obligation to fulfill the wishes of the Decedent as evidenced in the provisions of the Decedent's will as impacted by the Divorce Agreement and Pennsylvania law subsequent to the divorce of the Decedent and Decedent's Ex-wife. 20. Admitted in part and denied in part. It is admitted that the Objector filed a Petition to compel an accounting, despite the Executors' having previously 12 agreed to file an accounting voluntarily. However it is denied that the Objector was willing to enter into a reasonable settlement agreement regarding the legal fees based on the Objector's blind reliance on the determination that the fees were "excessive and unreasonable" based upon the discredited "Johnson Estate" or "Attorney General's" guidelines (see Preston Estate, 385 Pa. Super. 48, 560 A. 2d 160 (Pa. Super Ct. 1989), calling it "egregious error" to follow those guidelines). By way of further answer, paragraphs 26 and 27 hereof are incorporated herein by reference. Estate Counsel's Administration and Asset Recovery Fees Entries 21.Admitted in part and denied in part. It is specifically denied that the itemized invoices or time entries or the time and effort expended for the administration of the Estate were excessive. To the extent that Objector's paragraph 21 recites the written invoice documents, the invoices are writings that speak for themselves and any averments to the contrary are specifically denied. It is further denied that the entries cited fully reflect the work done or the extent of the issues addressed, tasks completed or results obtained. The paragraph also ignores the Additions/Supplements. In addition, to the extent Objector's paragraph 21 implies that the time entries were not reasonable, the same is specifically denied. The reasonableness or not of the charges depends upon many factors beyond the discredited "Johnson Estate" guidelines, one of which is the proper consideration to be given to the Additions/Supplements further detailing the services rendered and prepared at the direct request of Objectors 13 Executors' Counsel. Without addressing in this Answer each time entry, and its explanation or amplification as set forth in the Additions/Supplements, it is interesting to note that no charges were made for the November 3, 2009 and November 4, services; that the November 5 services (in artfully called "review" on the bill, because the day started with such a review, and this detailed statement was inadvertently not revisited the next day) included conferences, document preparation, research, revised/supplemented petition for probate, actual Probate of the Will in Carlisle Pennsylvania, and further conferences with the Executors and representatives of the Office Of The Register Of Wills, explaining why the named Executrix was ineligible to serve, and that the successor Executors were entitled to Letters Testamentary under the will. Executors reiterate that Mr. Spitzer prepared the Additions/Supplements at the direct request of Objector. It is further averred that the initial detailed invoices, together with the Additions/Supplements clearly document the services required to be rendered and the reasonableness of the charges therefor. It is further averred that the records of Executors' Counsel, though not perfectly stated, establish the reasonableness of these fees and charges. 22. Denied. It is specifically denied that the Executors' Counsel did not create a fund in excess of $400,000 (approximately one-half of the total amount of the Estate). To the contrary, presumptively and as finally determined by the Payor of the employee benefits and life insurance proceeds (Roche), after considering the competing claims of the Estate and of Decedent's Ex-wife (her claim in violation 14 of her written agreements to assert no interest in these assets) these funds would have been paid to Decedent's Ex-wife for her personal account. Years of familiarity with her conduct and character led the Executors and Executors' Counsel to doubt her "intention... that the proceeds... be used for... my... sons," which does not say the assets would be paid to the Estate for management as the Decedent planned in his Will and testamentary trust, but rather that somehow, she would make funds "available" and use the funds for her sons. Despite Decedent's Ex-wife's statement in her affidavit that "... I would have also withdrawn my claim... [i]f I was presented with such a disclaimer... so that the monies would pass through the Estate to the... trusts," her actions reflected the exact opposite. In fact, attorney Robert Spitzer discussed a "disclaimer" with counsel for Roche and reviewed voluminous Roche insurance and retirement benefit plan documents to ascertain if a disclaimer would have been effective; but Executors' Counsel was advised by Roche counsel -and the advice was supported by the Roche documents - that a disclaimer would not be effective because of ERISA, and its mandate - as interpreted by the courts - to look only to the plan documents and beneficiary designations, without regard to other vagaries of individual state laws. It is further averred that the Decedent's sons' (who are not beneficiaries of the Decedent's will) separate legal counsel, Stephanie Kleinfelter, explained that she was aware of these issues, felt a disclaimer would be effective, but chose to sit back, silently, and not communicate with Executors' Counsel until Executors' Counsel had generated 15 the actual collection of the proceeds of these benefits and insurance monies for the Estate. These issues were generated because the Decedent's divorce counsel did not obtain a Qualified Domestic Relations Order ("QDRO") and because Decedent did. not change the beneficiary on his benefits and insurance proceeds after his divorce. Both the United States Supreme Court and the Pennsylvania Supreme Court are facing or soon to face the undecided issue of whether the Pennsylvania statutes divesting a divorced spouse of benefits are enforceable by a post distribution claim by the estate against the former spouse, or whether they are preempted under ERISA. See Estate of Kennedy v. Plan Administrator for DuPont Savings and Investment Plan, 129S. Ct. 865, 172 L. Ed. 2d 662 (U.S. 2009) WL 160440, and Estate of Paul J. Sauers, Ill, 2009 Pa. Super. 75, 971 A.2d 1265, (2009), and dissenting opinion therein and the Pa. Supreme Court's per curiam Order/Opinion of 9/11/2009 (as yet undecided), stating: "... the Petition For Allowance Of Appeal is hereby GRANTED. The issues, rephrased and combined for clarity, are as follows: 1. Whether, and to what degree, the Employee Retirement Income Security Act of 1974 29 USCS sections 1001 through 1461 preempts Section 6111.2 of the Probate, Estates And Fiduciaries Code, 20 PA. C. S. Section 101 -- 8815?" Given this remaining serious and grave uncertainty in the law, and the weight of authority supporting the deceased's divorced spouse's claim to retain these benefits and proceeds, the efforts of Executors' Counsel were the proximate cause of more than $400,000 of assets now comprising Decedent's Estate being 16 paid to it, and available for administration as Decedent intended through his Will and testamentary trusts. 23.Admitted in part and denied in part. It is admitted that the Executors did not present Decedent's Ex-wife with the disclaimer she now claims she would have signed. However, it is specifically denied that the Executors or the Executors' Counsel did not reasonably believe that such action would have been fruitless. By way of further answer, paragraph 22 hereof is incorporated herein by reference as if set forth in full. 24. Denied. It is specifically denied that James W. Stockdale did not retain Wix Wenger and Weidner as his lawyer (not as the Estate's lawyer) to assist him in fulfilling the administrator's requirement that acourt-appointed guardian was necessary to receive the funds. The services of which Wix Wenger and Weidner rendered to James Stockdale are irrelevant to this proceeding, except only that James caused these fees to be paid to Wix Wenger and Weidner by borrowing money from the Estate, and signing two $2000 notes therefor, which are assets of the Estate. These were services rendered to a third-party to the Estate, and these fees were not charged to the Estate, but directly to James, and James caused those fees to be paid. FIRST OBJECTION 25. Denied. It is specifically denied that the services and charges of Executors' Counsel were excessive or unreasonable. To the contrary, the services were required to administer the Estate and gather both what were and what otherwise 17 would not have been Estate assets, were rendered according to a written fee agreement with the Executors, were required under the circumstances of uncooperative, hostile and interfering actions by the beneficiaries and their Mother, were charged a discounted hourly rate because of the initial conclusions of Executors' Counsel as to the Estate's solvency and regrettable circumstances of losing both a Father (the beneficiaries) and a child (the Executors). Executors' Counsel rate is also $40 per hour lower than the rate Decedent's sons agreed to pay Ms. Klinefelter, by agreement dated in or around July, 2010. Executors' Counsel's services were requested by the Executors, and were thorough, competent, rendered by experienced, capable and respected Executors' Counsel generating virtually 100% of the assets ultimately passing to fund the Testamentary Trusts. The absence of litigation is not a bar to Executors' Counsel's recovery of reasonable fees, but a tribute to the efforts of Executors' Counsel to resolve the issues generated by the interference and contract violations of Decedent's Ex-wife with the Estate administration (Executors' Counsel has suggested several times pursuing a claim against her for breach of her agreements, and recovery of fees caused by her interference; and Executors' Counsel suggested potential claims against Decedent's divorce attorney for not obtaining a QDRO to assure benefits being paid to the Estate, and not Decedent's Ex-wife; and Executors' Counsel suggested potential claims against Roche for not delivering these assets to the Estate as Pennsylvania law presumably requires. That these beneficial results were obtained without 18 interfamily litigation, and expensive third party litigation, is a tribute to the efforts of Executors' Counsel, not a reason for denying reasonable and appropriate charges for such services. 26. Denied. As indicated above, the Johnson Estate case has been directly and forcefully repudiated by the Pennsylvania Superior Court, and provides no guidance, precedent, or role as to determining the reasonableness of the fees and services paid and performed for the Executors to perform their fiduciary duties. See Preston Estate, 385 Pa. Super. 48, 560 A.2d 160 (1989), calling most of such "schedules" as "egregious." 27. Denied. Similarly this "fee schedule" has no bearing on the court's determination of the reasonableness of fees paid and services rendered; rather, the Auditor should look to the LaRocca Estate, 431 PA. 532, 246 A. 2D 337 (1968) standards for evaluation of the reasonableness of these services and fees, as to which the following apply: - The amount of work performed; - The character of the services rendered; - The difficulty of the problems involved; - The importance of litigation; - The amount of money or value of the property in question; - The degree of responsibility incurred; - Whether the fund involved was "created" by the attorney; - The professional skill and standing of the attorney in his profession; 19 - The results he was able to obtain; - The ability of the client to pay a reasonable fee for the services rendered; and, - very importantly, the amount of money or the value of the property in question. SECOND OBJECTION 28. Denied. There was no charge to the Estate for these personal legal services agreed-upon for the benefit of James Stockdale and by James Stockdale, who obtain funds from the employer, through J.P. Morgan, for these charges by notes/loans to and from the Estate. This activity has no bearing on Estate issues, and represents one of the many efforts by Executors' Counsel and the Executors to provide necessary benefits to the beneficiaries, within the guidelines of the law and their duties to the Estate, and adherence to the terms of the Will. These loans, and others to purchase a car and other personal property, for tuition, and for living expenses were made creatively by the Executors willingly, for the beneficiaries' benefit, until the beneficiaries obtained counsel who objected to the Estate administration, and advised she would attempt to surcharge the Executors. THIRD OBJECTION 29. Denied. The Estate advised Ms. Stockdale of how to handle the tax consequences of receiving these funds as an intermediary. The Estate offered professional services at no cost to her by Mr. Keith A. Huntzinger, CPA, to 20 prepare her income tax returns, which she rejected. She disregarded this advice, and this offer of services, ignored the advice as to how to handle this issue, did not consult with the Estate, ignored the Tax Memo the Estate suggested she include with her return, and proceeded to act in such a way as to generate this tax controversy, based upon her apparent belief that she was the equitable owner of the employee benefit funds. FOURTH OBJECTION AND CLAIM FOR SURCHARGE 30. Denied. As set forth in paragraph 29, above, which is incorporated herein by reference as if set forth in full, as to this income tax issues, the Executors have consulted with experts as to handling this matter, advised Decedent's Ex-wife how the matter should be handled, offered her expert tax services at no cost to her to prepare for return, and otherwise guided her by the Tax Memo as to handling this tax issue. Notwithstanding this, she unilaterally, without notice to the Executors, proceeded to complicate this issue by claiming the benefits as income on her own individual tax return, offsetting this income by the withheld taxes, as a credit/deduction. Objector is asking the court to give federal tax law directions to the Executors, ignoring the sound and proper advice the Estate gave Decedent's Ex-wife as to how to handle this issue. 31. Denied. In addition to the issues raised by the Objector, the Executors have a potential claim against the Objector for the additional costs and expenses incurred in defending this action. 32.Denied. Decedent's Ex-wife was not the equitable owner - as she now concedes 21 - of these employee benefits, and she received those benefits as an intermediary thereto, and she should be directed to amend her return to delete the apparently reported income of the employee benefits, and to eliminate the credit she took for the withheld tax against that income. Again, until a final resolution of all these income tax issues, no further distributions to the trust should be made. Objector is not entitled to recover its attorney's fees in pursuit of this surcharge claim, for the reasons set forth above. FIFTH OBJECTION AND CLAIM FOR SURCHARGE 33. Denied. It is denied that the Executors failed properly to administer the Estate, and that they paid excessive attorney's fees and, to the contrary, is averred that the Executors, parents of the Decedent and grandparents of the trust beneficiaries now making these objections, properly, prudently and effectively perform their duties and beyond for no claimed compensation. Further, it is denied that the Executors failed to file an accounting -they agreed to file an account, which agreement was ignored by Objector, initiating these and earlier proceeding through the court. 34. Denied. Executors deny that they should be surcharged because no "excessive fees" were paid, because the conduct of the beneficiaries of the trust and their mother were responsible for many of the services performed and consequent time and charges generated thereby. SIXTH OBJECTION AND CLAIM IN SURCHARGE 35. Denied. Objector's paragraph 35 is a conclusion of law to which no response is 22 required. To the extent this Court determines that a response is required, is specifically denied that the Rule of Professional Conduct is applicable in the instant matter. It is further specifically denied that the legal fees are excessive fees. In addition, the claim of the Objectors against Executors' Counsel is irrelevant as Executors' Counsel is not a named party to the instant action. 36. Denied. The Executors deny that the Estate was charged "grossly and excessive and unreasonable fees" and aver that no breach of any standard of care has taken place, and deny any obligation for the unnecessary and unwarranted actions of Objector and its counsel -whatever the charge - in pursuing these objections. WHEREFORE, the Executors request this Honorable Court to enter an order including the following: 1. Dismissing the objections, with prejudice; 2. Approving the first partial account and schedule of distribution set forth; 3. Directing the Executors to resolve the tax issue in the interests of the Estate; 4. Directing the trustee that no legal fees for these Objections be paid from the trust; 5. Strike the averments as to the violation of the Rules of Professional Conduct as unfounded and contemptuous. 6. Direct Executors' Counsel to continue to represent the interests of the Estate and the Executors, as to which services and duties the court reserves jurisdiction pending the filing of a Second and Final Account, to be prepared and filed after a 23 resolution, satisfactory to the Executors, of the outstanding income tax issues. 7. Surcharge the Objectors for all costs and expenses incurred in defending the Objections out of funds other than the trust funds from the Estate, or, in the alternative, out of the Testamentary Trust Funds. 8. Grant such further relief as is just and appropriate. Respecttully~ubmitted, Wix, Wer~g~r 8~ Weid r, .C. By. Dated: September 23, 2011 St ph J. D in, . # 52653 ~P.O. Box 845 ' Harrisburg, PA 17108-0845 Telephone No.: (717) 234-4182 Attorneys for Executors 24 VERIFICATION The undersigned have read the foregoing document and verity that the facts set forth therein are true and correct to the best of my/our knowledge, information and belief. INve understand that a~ny9fQal~s/e statements made herein are subject to the provisions of 18 Pa. C.S.A § relating to unswom falsification to authorities. DATED: September ~ , 2011 ~~ Wendel . Stodcdale, Sr. ane Stockdale 25 IN RE: ESTATE OF :COURT OF COMMON PLEAS WENDELL B. STOCKDALE, JR., :CUMBERLAND COUNTY, PENNSYLVANIA Deceased ORPHAN'S COURT DIVISION File No. 2009-01040 CERTIFICATE OF SERVICE I hereby certify that copies of the Answer to Objections to First and Partial Accounting of Wendell B. Stockdale, Sr. and Jane Stockdale, Executors and Statement of Proposed Distribution Field June 24,2011 and Surcharge Action Against Executors and Wix, Wenger & Weidner was served by United States first-class mail, postage paid and email, this day to the following: Matthew E. Hamlin, Esquire Persun & Heim, P.C. 1700 Bank Creek Boulevard, Suite 160 P.O. Box 659 Mechanicsburg, PA 17055-0659 mehamlinCa)persunheim.com William A. Duncan, Esquire Duncan & Hartman, P.C. One Irvine Row Carlisle, PA 17013 bill _duncanhartmanlaw.com WIX, W~'NGER ~WEIDNER ~te~en J"~frap(' ,Esquire Atto neylD 52 3 508 North Second Street P.O. Box 845 Harrisburg, PA 17108-0845 (717) 234-4182 Dated: September ~ ~ , 2011 EXECUTORS' EXHIBIT A LAW OFFICES OF W]IX, WENGER & WEIDNER, P.C. 508 NORTH SECOND STREET P. O. BOX 845 HARRISBURG, PA 17108-0845 Telephone No. (717) 234-4182 Fax No. (717) 234-4224 rspitzer@wwwpalaw.com WIX, WENGER & WEIDNER, A PROFESSIONAL CORPORATION (Attorney) hereby ~~ acknowledges as received from JAMES STOCKDALE, one or more (Client), the sum of $ 4000, as a retainer to be held and applied for the rendition of legal services on a limited basis [based upon C1ienPs limited objectives, conveyed to Attorney, and Client's expressed desire to exclude certain means that could achieve those objectives, but increase the costs of representation, such as planning techniques that involve substantial potential tax risks, or excessive administrative costs and complexity], set forth herein, and as the Matter proceeds, and only as to the Matter, identified as follows: GUARDIANSHIP matters, for purposes of this NOTICE/AGREEMENT, shall consist of such of the following steps, as deemed reasonably appropriate under the circumstances by Attorney: obtain court order appointing Mr. and~dzs. Wendell B. Stockdale, Sr., as Guardian of the Estate of James Stockdale, to facilitate payment of benefits to James Stockdale, (hereafter called Matter). REPRESENTATIONS OF THE CLIENT AS TO THE FACTS AND CIItCUMSTANCES CONCERNING THE MATTER HAVE A DIRECT BEARING UPON THE DECISION AS TO WHETHER AND HOW TO RENDER OR NOT LEGAL SERVICES. CLIENT UNDERSTANDS THAT ATTORNEY IS HEREBY RELYING AND SHALL HEREAFTER RELY UPON SUCH REPRESENTATIONS AS TRUE AND CORRECT AND ACCURATE AND COMPLETE. A. FEES 1. APPLICATION OF RETAINER: This retainer, if any, will be applied to the balances due hereunder, as earned/incurred. If the final bill is less than the retainer, the balance will be refunded at the end of the matter. 2. FEE BASIS: Many elements enter into setting professional fees, including but not limited to the time required, nature, scope, size, complexity and outcome of the Matter. Attorney will represent Client on a basis of either: (a) time expended on the Matter (including conferences; factual investigations; telephone conferences -- minimum time allocated is between six and fifteen minutes- correspondence; document preparation; travel time; analysis; legal NOTICE/AGREEMENT FOR PROVISION OF LIlVIITED LEGAL SERVICES AS TO ESTATE research; file reviews and other services) times its hourly rate. Currently, ow hourly billing rates range from $150.00 to $265.00 for attorneys, $45.00 to $110.00 for paralegals, and $100.00 for law clerks. Rates are reviewed periodically and may increase during the course of our representation of you. We will advise you of any increase of Mr. Spitzer's rate of $200 per hour, or (b) 3. BILLING: Attorney will bill Client on a monthly or other basis, and, at the conclusion of this representation may send a final bill which may include an additional completion and result fee based upon the result accomplished, the amounts involved, the importance of the issues, and the skill required as to the services. Attorney expects Client to keep current with its billings and it reserves the right to terminate our Attorney-Client relationship for non-payment of fees or costs. 4. COSTS: Costs include expenses such as travel, filing fees, transcripts, facsimile and computer costs, phone calls, duplication, witness and notary fees and the like, both direct and indirect. Costs may be advanced and will be billed on a monthly or other basis, except that as to some cost items Client may be asked to pay such costs directly. 5. ADMII~TISTRATIVE CHARGES: If our statement of fees and costs is not paid within thirty (30) days from date received, Attorney reserves the right to impose a charge of one (1%) per cent per month on the unpaid balance. This charge will help pay the administration required for such amounts. B. COOPERATION/COMMUNICATIONS 1. DOCUMENTS AND MATERIAL FACTS TO ATTORNEY: Client is expected to cooperate reasonably as to the Matter, and provide to Attorney all material facts, information and documents with reasonable promptness and reasonable accuracy. This is essential to the performance of the services contemplated herein, and the successful completion of the Matter. Therefore, it is extremely important that client provide immediately to attorney any documents, papers or correspondence which have been sent directly to client from others, that have any bearing on this Matter, or that have been requested by Attorney. FAILURE TO COMPLY WITH THIS REQUIREMENT CAN HAVE AN ADVERSE IMPACT UPON THE SUCCESSFUL COMPLETION OF THE MATTER AND THE PROVISION OF APPROPRIATE LEGAL SERVICES. 2. STATUS/ INFORMATION: Attorney will keep Client informed as to the progress of the Matter, and provide Client with copies of all material papers received and transmitted. Client acknowledges the importance of accurate information being provided by all of Client's representatives seeking to assist Client as to the Matter. Accordingly, Client authorizes Attorney to disclose facts and communications from Client to Attorney and from Attorney to Client to others, to utilize the services of client representatives effectively. Increasingly, communications take place as to business and personal matters over more than the traditional land line telephone and United States mail. Accordingly, and recognizing that no method of communication is fool proof as to its safety and conftdentiality, and that no method ojencrypting communications is fully secure, Client authorizes Attorney to communicate with Client, and Client to communicate with Attorney, by way of cellular telephone, electronic mail, portable telephone, facsimile, or such other method or methods deemed reasonably secure by Attorney. Client is encouraged to call at any time to discuss any aspect of the Matter. There may be times when Attorney will be unavailable, and thus unable to return Client's call as promptly as each of us might like. Attorney will do his best to return Client's call as promptly as possible, and communicate as necessary. C. REPRESENTATION Client acknowledges that Attorney has made no guarantee or promise that the Matter will be successfully concluded; rather Attorney has represented only that he would use REASONABLE PROFESSIONAL CARE to attempt to conclude the Matter successfully. It is understood that the scope of the Matter may change, depending Client's further developments and Client's instructions. This Agreement shall apply to the Matter and such other tasks undertaken for Client by Attorney, as mutually agreed. Many factors enter into concluding the Matter, and every situation is different; mistakes, unforeseen issues, and misunderstandings can occur, with an adverse effect upon the completion of the Matter; the Matter may not be successfully completed. Attorney's advice, recommendations or opinions are only that, not a guarantee or assurance that others could not or would not give different advice, or reach other conclusions or complete the matter in a different way; Client's active cooperation can have a positive effect upon completion of the Matter. D. CONFLICTS: CONDITIONS Client acknowledges that Attorney has disclosed to Client the following Conflicts or Conditions or Limitations, and understanding same, Client wishes to confum engagement of Attorney: 1. In some matters, siblings, Grandparent and child, Estate or trustee and beneficiary, corporation or officer/employee/dvector/shareholder, co-fiduciazies, may have conflicting interests. issues. 2. Attorney may consult with or recommend engagement of special counsel for particular 3. This engagement is limited to the Matter described above. 4. Attorney represents the "Client" -multiple parties, INCLUDING ESTATE OF WENDELL B. STOCKDALE, JR, its Co-Executors, WENDELL B. STOCKDALE, SR, and JANE I3. STOCI~ALE, individually as well as to limited matters, and Brother, DAVID E. STOCKDALE. 5. Other: See attached Supplement. E. TERMINATION Attorney reserves the right to terminate our Attorney-Client relationship for failure of Client to cooperate as described, if representations are not accurate and complete, or for failure to pay the fees and costs set forth above, upon presentation. Client has the right to terminate this Agreement at any time, for any reason, subject to payment for services rendered and costs advanced. On termination by Client, Attorney will cooperate with Client and/or successor counsel, but the costs, expenses and fees for such cooperation must be paid in advance by Client. If conflict or condition is listed above, or if Attorney is to be paid by a third party, Client, after appropriate and full consultation, explanation and investigation, consents, and after full disclosure (including such explanation of the implications of the conflicts and/or common representation, and the advantages, disadvantages and risks involved, and acknowledging that such common representation will not adversely affect Client or others) hereby consents, authorizes and approves the representation of Client and others by W1X, WENGER & WEIDNER, A PROFESSIONAL CORPORATION, Client acknowledges having been advised of his/her/their right to seek advice of independent counsel as to this Matter and hereby consents to waiver of and does hereby waive such right. As our relationship continues, there may well be changed circumstances of which Client becomes aware that would or could cause Client to reconsider consent to this joint representation. if this occurs, Client is urged to communicate immediately with Attorney about any such changed circumstances so that these issues can be addressed fully, directly, openly, and consistent with the duties of our office to each person or entity involved. Having read and understood and discussed or having waived reading, understanding and discussion of the foregoing, Client and Attorney have signed this Notice/Agreement for Le 1 Services the day and year set forth above, and/or acknowledge receipt of this Notice. WIX, WENGER ~NER, Pte. By: Payment hereb~id~fguaranteed by Estate of Wendell B. Stockdale Junior __. >° JAMES CKDALE "Client" LAW OFFICES OF Wlx, WENGER & WEIDNER, P.C. 508 NORTH SECOND STREET P. O. BOX 845 HARRISBURG, PA 17108-0845 Telephone No. (717) 234-4182 Fax No. (717) 234-4224 May 18, 2010 Re: Proposed Engagement of WIX, WENGER & WEIDNER, A PROFESSIONAL CORPORATION, as Counsel to you both involving the Matter identified in the Notice/Agreement for Limited Legal Services Dear Prospective Clients: The purpose of this letter is to review several important points to which there must be mutual agreement and understanding before we can proceed as counsel to you both-representing two or more persons- in performing legal services as to the Matter. Because we may have or have had client relationships with one or more of the parties in this matter, and/or because all parties to the matter have requested this office to undertake this engagement without the participation of other, independent counsel, it is important that we describe the limiting circumstances and considerations which affect our ability to proud and with respect to which we will require your consent. 1. THE SCOPE OF ENGAGEMENT: You have asked that we perform legal services in connection with the Matter. Because of these relationships of counsel and the parties, and the parties' belief that an counsel to you both can perform these services effectively and expeditiously, without each party engaging separate and independent counsel, the parties have indicated to us that they are satisfied to proceed by participation in the representation by the office, without the necessity of engaging other counsel to advise them as to these matters. 2. LAWYER AS COUNSEL TO YOU BOTH: Under the Rules of Professional Conduct, we believe that this fum can act as an counsel to you both under the circumstances. We can proceed to act in this limited capacity, as the sole lawyer acting between clients, if (a) We consult with each of you concerning the implications of joint representation, including the advantages and risks involved and the effect on the attorney-client privilege, and provided that you consent to common representation after such disclosure; WHICH YOU ACKNOWLEDGE; (b) We reasonably conclude that our work can be concluded on terms that are compatible with the best interests of all parties, that each of the parties is able to make adequately informed decisions in the matter, and that there is little risk of material prejudice to either party's interests if we are unable to complete this task successfully; WHICH YOU ACKNOWLEDGE; and (c) We reasonably believe that joint representation can be undertaken by us impartially and without improper effect on other representations this office has with respect to either party. We believe that each of the above-referenced considerations is met under the circumstances which have been presented to us, and we are prepared to proceed with the undertaking, provided that you indicate yow consent by signing a duplicate copy of this letter and returning it to us for retention, or indicate yow objection thereto in writing. 3. PRNILEGED COMMUNICATIONS: One of the limitations of this undertaking is that we have an obligation to all parties to communicate fully on all matters that come to our attention that have any bearing on this matter. Accordingly, the parties must assume that anything disclosed to us orally or in writing will be available to the other party. Attorney-client privilege will not apply for a party, and so our communications with either party would not be privileged in a subsequent dispute between them. 4. ABSENCE OF MATERIAL ADVERSITY OR PREJUDICE FUTURE DISPUTES: On the basis of the presentation made to us by the parties, as to the facts and circumstances as to which the legal services will be rendered, we do not believe that there is any significant or substantial disagreement concerning the fundamental goals and objectives for the Matter. )f disagreements or disputes arise which prevent us from completing ow engagement as counsel to you both, or if we determine that the considerations discussed no longer apply, or upon the request of either party, we will terminate our representation. Upon such termination and payment of our fees through that date, we will suspend our work and make ow files and work product available to new counsel for both sides, and we will represent neither side in the further rendition of legal services arising out of the Matter. In fact, we will be unable to represent either party in future disputes between the parties even if the Matter is successfully accomplished. 5. WANER AND DISCLAIMER: In the event of some future dispute between the parties, either party may wish to contend that our firm was somehow unable to discharge its responsibilities as counsel to you both. In the futwe, you may believe some aspect of the Matter should have been treated differently in order to preserve or serve your best interests. We expect to use ow sound judgment and discretion in order to avoid any concern or claims of that sort on yow part. Nonetheless, as an inducement to WIX, WENGER & WEIDNER, P. C., to undertake this engagement as counsel to you both, you hereby specifically agree to waive any future claim that you might otherwise assert, arising out of our engagement in this capacity as Counsel to you both. Ow willingness to proceed is based upon our bona fide belief that the interests of both parties are sufficiently compatible that the rendition of legal services as to the MATTER can be accomplished in a straightforward and reasonable way, minimizing the costs of the MATTER for the parties. However, by accepting the terms of this letter, the parties agree not to argue in the future that we somehow failed in our professional responsibility to you because of ow relationship as counsel to you both in this transaction. Very truly yours, W]X, WE & VGE NER, P.C. sy: R e .Spitzer Having read and understood the foregoing, the undersigned hereby consent to the role of WD{, WENGER & WEIDNER, P.C., as counsel to you both in the transactions described herein. J SSTOCKDALE Dated: S~ ~ ~r~"C~ ~ l~ JOINT REPRESENTATION ADVISORY AND CONSENT Any two or more people or entities can have differing, and sometimes conflicting, interests and objectives regarding their GUARDIANSHIP, or other legal matters. For example, they may have different views on how property could pass after the death of one or both of them. If you each had a separate lawyer, you would each have an advocate for your position and would receive totally independent advice. Information given to your own lawyer is confidential and cannot be obtained by the other party without your consent. That is not the case when one firm advises both of you. One firm cannot be an advocate for only one of you. Information that either of you gives to the firm relating to your planning cannot be kept from the other. We will have to immediately tell the other anything material which one of you tells us that relates to the GUARDIANSHIP of either of you, since not to reveal such information to the other would be a violation of the attorney-client joint relationship. If you ask us to continue to serve you jointly, our effort will be to assist in developing a coordinated overall plan and to encourage the resolution of differing interests in an equitable manner and in your mutual best interests. If, in the future, a difference of opinion between you with regard to a major legal issue arises, or strategies to achieve your objectives, is incumbent upon you to bring this to our attention. It will be our duty to explore these issues with you. If these material differences on one or more of these issues cannot be resolved amicably, or if we conclude that they cannot be resolved on terms compatible with the best interests of each party, then we must then withdraw from representation at that time. FTC PRIVACY NOTICE NOTICE OF PRIVACY PRACTICES OF WIX, WENGER & WEIDNER, A PROFESSIONAL CORPORATION Congress has passed the Gramm-Leach-Bliley Act (GLB Act). In part, the GLB Act deals with how financial institutions treat nonpublic personal financial information. The Federal Trade Commission (FTC) has taken the position that law Earns that provide clients with Tax planning or Tax preparation services are included within the scope of the GLB Act because the underlying Bank Holding Company Act of 1956 (which has been amended in part by the GLB Act) includes providing Tax planning and Tax preparation services to any person" within its definition of financial activities. Therefore, we are advising you of our privacy practices in this Letter. ACQUISITION OF CLIENT INFORMATION Our firm can collect nonpublic personal financial information (subsequently in this letter called "information") about our clients from information provided by our clients so that we can perform services on their behalf as part of our business relationship. We may obtain such information from other sources, such as your accountant, stockbroker, and financial institutions with which you do business. Unless you give us permission or we let you know, ordinarily, we would not obtain information from sources such as consumer reporting agencies. )n general, we only collect information in conjunction with GUARDIANSHIP and Tax matters. But sometimes we collect information covered by this notice in other matters, such as loan representation, business planning, or in the course of litigation (in which you m y or may not be an actual party of record). DISCLOSURE OF CLIENT INFORMATION If, as a result of representing you, we obtain information about you, regardless of the source, unless reasonably required because of the nature of the particular representation or because of the nature of the particular activity in which we are engaged (without regard to the person or entity on whose behalf we are so engaged), unless we receive your permission, we will not disclose such information to persons outside our law firm and/or to any title insurance agency/agent, except any in which a lawyer in our firm is an agent or principal. Of course, if disclosure of information to opposing parties or counsel is required during the course of litigation, whether or not you or we are parties to such litigation, such disclosure will have to occur. While the GLB permits a financial institution to share information with its affiliates, including insurance companies and insurance service providers, except as indicate in the paragraph above with respect to title insurance, at the present time, we have no affiliates. But, the whole issue ofmulti-disciplinary practice is changing for lawyers, and, if we should have affiliates or practice in combination with others in a manner considered ethical for attorneys practicing in Pennsylvania, we would feel free to share information with such affiliates or other related entities. The law also permits us to share this information with companies that perform marketing services for us, or other financial institutions that have joint marketing agreements with us. Except as noted above, we do not provide financial information to others, and we do not have joint mazketing agreements. However, in the normal course of events, a possibility exists that information might be observed by someone (such as a computer technician) working on our computers or by professionals rendering services to us such as accountants. OPT-OUT PROVISION FTC regulations provide that ow notice to you must include a provision for you to request that the firm not release yow information. While we believe that such a request is (or may be) unnecessary for the reasons set forth above, in order to satisfy the regulations, we are including this opt-out provision. If you object to any of the circumstances listed above that indicate when your information is disclosed or may have a potential to be observed or disclosed, please provide us with a written request, to the address on ow letterhead to prevent any such disclosure or potential discloswe to be observed and we will follow yow wishes. Alternatively, if you prefer, please advise us, and we will prepare a form for you to sign and return to us. I presume that you have received a number of other Notices of Privacy Practices from various financial institutions. These can be additional sources of information on the GLB Act. You do not have to call us or do anything as a result of receiving this notice. It is meant to inform you of how we safeguard your information. You may wish to file this notice with your important papers. If you have any questions, please feel free to give us a call. WIX, WENGER & WEIDNER, P.C. EXECUTORS' EXHIBIT B NOTE $$ ~~ ~ ~~ ~~~ On demand, after date, I/we ~~ ~~S ~ ~C~~'~~~.and/or individually an~iseu~ally, Maker, promise to pay to the order of the Estate of WENDELL B. STOCKDALE, JR,, Creditor, or its successors and assigns, at 47 Deer Ford Drive, Lancaster, PA, 17601, or such other location specified by Creditor, the sum ©QOf '~i~->o ~~~.~ (J /~N~ Mars and /JC~/1 OOs ($aCL`~~ --~x-~, without defalcation, value received, representing the fl~lkAx'p i-oR ~(~ / ~Z ~~c~s ~~ ~ ~~ r..E~S,~frP from Creditor. This Note shall ear interest in the amount f two per cent (2 /o) per annum. The principal balance andlor interest, shall be payable on demand of Creditor, or, at Creditor's option, may be set off from the distribution to Maker of funds from the testamentary trust(s) to which Maker may be entitled as beneficiary of the trust(s) created under the LAST WILL AND TESTAMENT OF WENDELL B. STOCKDALE JR. _ (SEAL) ~/ Witness ~~ NOTE U Oo ~ ~t~ ~~, (~ -// '// ~~lo ~y ~y~, 2669 On demand, after date, I/uve •~~ ~~~_~ ~s~~C~~and/or ~~ ,individually and severally, Maker, promise to pay to the order of the Estate of WENDELL B. STOCKDALE, JR., Creditor, or its successors and assigns, at 47 Deer Ford Drive, Lancaster, PA, 17601, or such other location specified by Creditor, the sum of -~ f~c`>~1~c7 V S/-~N d - ----- _ -__ -.Dollars and(1~ /1 OOs($~,OpQj ~~ without defalcation, . value received, representing the purchase price of - _ -. _ ___ from Creditor. This Note shall bear interest in the amount of two per cent (2%) per annum. The principal balance and/or interest, shall be payable on demand of Creditor, or, at Creditor's option, may be set off from the distribution to Maker of funds from the testamentary trust(s) to which Maker may be entitled as beneficiary of the trust(s) created under the LAST WILL AND TESTAMENT OF WENDELL B. STOCKDALE JR. - SEAL) SEAL) ~} Witness EXECUTORS' EXHIBIT C LAURIE J. STOCKDALE, v. WENDELL B. STOCKDALE, JR., DIVORCE DECREE March 10 2009 AND NOW, , it is ordered and decreed that LAURIE J. STOCKDALE, IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA NO. 05 - 3963 plaintiff, and WENDELL B. STOCKDALE, JR., ,defendant, are divorced from the bonds of matrimony. Any existing spousal support order shall hereafter be deemed an order for alimony pendente lite if any economic claims remain pending. The court retains jurisdiction of any claims raised by the parties to this action forwhich a final order has not yet been entered. Those claims are as follows: (If no claims remain indicate "None.") None. The Property Settlement and Separation Agreement between the parties shall be incorporated into the final decree for purposes of enforcement, but shall not merge with the final Decree 'in Divorce. By the Court, M. L. Ebert, Jr. Attest: J. ;' /~ ~ Prothonotary Certified Copy Issued: March 10, Zoos Date LAURIE J. STOCKDALE, ~~ IN THE COURT OF COMMON PLEAS Plaintiff : CUMBERLAND COUNTY, PENNSYLVANIA v. CIVIL ACTION -LAW NO. 05-3963 WENDELL B. STOCKDALE, JR., Defendant IN DIVORCE THIS AGREEMENT made this ~~ day of . N~ L 200 between WENDELL B. STOCKDALE, JR., of 22 Fieldstone Drive, Mechanicsburg, Cumberland County, Pennsylvania 17050, hereinafter referred to as Husband, and LAURIE J. STOCKDALE, of-1400 Bent Creek Boulevard, Apartment 117, Mechanicsburg, Cumberland County, Pennsylvania 17050, hereinafter referred to as Wife. RECITALS: R.1: The partjies hereto are husband and wife, having been joined in marriage on May 16, 1986, in I I and R.2: A Complaint for Divorce has been filed in the Court of Common Pleas of Cumberland County, Commonwealth of Pennsylvania, to Number 05-3963 Civil Term; and R.3: The parties hereto desire to settle fully and finally their respective financial and _-~_ property rights and obligations including, but not limited to, all matters between them relating to the ownership of real and personal property, claims for spousal support, alimony, alimony pendente life, counsel fees and costs; and. the settling of any and all claims and possible claims against the other or against their respective estates. NOW THEREFORE, in consideration of the covenants and promises hereinafter to be mutually kept and performed by each party, as well as-for other good and valuable consideration and intending to be legally bound, it is agreed as follows: 1 (1) SEPARATION: It shall be lawful for each party at all times hereafter to live separate and apart from the other party at such place or places as he or she from time to time may choose or deem fit, free from any control, restraint or interference from the other. Neither party will molest the other or endeavor to compel the other to cohabit or dwell with. him or her by any legal or other proceeding. Each party shall be free of the interference, authority or contact by the other as if he or she was single and unmarried except as maybe necessary to cant' out the terms of this agreement. (2) DIVORCE: The parties acknowledge that the marriage is irretrievably broken and that they will secure a mutual consent no-fault divorce decree in the above-captioned divorce action. On the same day as they execute this Agreement, the parties shall execute and file Affidavits of Consent and Waivers of Notice, necessary to finalize the divorce. Wife will promptly transmit the record. (3) REAL PROPERTY: The parties are the owners of certain real estate with improvements thereon. erected and known and numbered as 22 Fieldstone Drive, Mechanicsburg, Cumberland County, Pennsylvania. On the same day as she executes this Agreement, Wife will sign a special warranty deed transferring to Husband all of her.right, title and interest in the marital home. Said special warranty deed shall be held by Wife's counsel in escrow pending the ~~ refinance of the marital home by Husband as set forth below. Husband will pay for all household expenses including, but not limited to, mortgages and liens of record, utility bills, insurance- and real estatesaxes in connection with said property. With regard to all such expenses, Husband hereby shall hold Wffe harmless and indemnify her from any loss thereon. Husband shall refinance said mortgage obligation within forty-five (45) days of the date of this Agreement at which time the escrowed deed shall be released to him.. At the time of the refinance, Husband will pay to Wife $75,000.00. Husband avers that he is pre-qualified to z obtain a mortgage in the amount of the current payoff on the marital home and an additional $75,000.00. However, in the event that Husband cannot obtain a refinance of the marital home in an amount sufficient to pay to Wife $75,000.00, the parties will immediately place the house for sale. Upon sale, after payment of the usual costs of sale, and payoff of the mortgages, Wife will receive the first $75,000.00 of the proceeds. (4) DEBT: A. Marital Debt: Husband and Wife acknowledge and agree that there are no other outstanding debts and obligations which are marital or for which the other might be liable incurred prior to the signing of this Agreement, except as follows: i. A deficit in the escrow for the mortgage on the marital home which deficit was exclusively paid by Husband; and Each party shall pay the outstanding debts as set forth herein and further indemnifies and save harmless the other from any and all claims and demands made against either of them by reason of such debts or obligations. B: Post Separation Debt: In the event that either party contracted or incurred any debt since the date of separation on September 16, 2005; the party who incurred said debt shall be responsible for the payment thereof regardless of the name in which the debt may have been incurred. C: Future Debt: From the date of this Agreement, neither party shall contract or incur any debt or liability for which the other parry or his or her property or estate might be responsible and shall indemnify and save the other party harmless from -any and all claims or demands made against him or her by reason of debts or obligations incurred by the other party. (5) MOTOR VEHICLES: Each party relinquishes any right, title and interest he or she may have to any and atl motor vehicles currently ih possession of the other party: Within ten (10) 3 days of the date of this Agreement, each party shall execute any documents necessary to have said vehicles properly. registered in the other party's name with the Pennsylvania Department of Transportation. (6) TANGIBLE PERSONAL PROPERTY: The parties hereto mutually agree that they have effected a satisfactory division of the furniture, household furnishings, appliances, tools and other household personal property between them, and they mutually agree that each party shall from and after the date hereof be the sole and separate owner of all such property presently in his or her possession whether said property was heretofore owned jointly or individually by.the parties hereto. This Agreement shall have the effect of an assignment or bill of sale from each party to the other for such property as may be in the individual possession of each of the parties hereto. (7) INTANGIBLE PERSONAL PROPERTY: Each parry hereby relinquishes any right, title or interest he or she may have in or to any intangible personal property currently titled in the name of or in the possession of the other party, including, but not limited to, stocks, bonds, insurance, bank accounts, individual retirement accounts, employment benefits including retirement accounts, savings plans, pension plans, stock plans, 401 K plans and the like. Wife will retain the one-half share she received from the joint Commerce savings account and the joint Commerce checking account. Furthermore, Wife will retain the certificate of deposit with Commerce Bank, her Commerce Roth IRA and her PSERS pension free of any claim from Husband. Husband will retain his Smith Barney account and any stock he owned prior to the parties' marriage as well as the Stanford Federal Credit Union account, the. Astellas U.S. Retirement and Savings Plan, the Syntex U.S. Employees Retirement Plan with Fidelity Investments, the Roche Savings and Pay Deferral Plan, his Roth IRA at Commerce, and one-half of the joint Commerce savings and checking accounts. 4 (8) WAIVER OF ALIMONY: The parties acknowledge that each has income and assets satisfactory to his and her own reasonable needs. Each party waives any claim he or she may have one against the other for alimony, spousal support or alimony and alimony pendente lite. (9) ADVICE OF COUNSEL: The parties hereto acknowledge that each has been notified of his or her right to consult with counsel of his or her choice, and have been provided a copy of this agreement with which to consult with counsel. Husband is represented by Canol J. Lindsay, Esquire and Wife is represented by Elizabeth S. Beckley, Esquire. Each party acknowledges and accepts that this Agreement is, under the circumstances, fair and equitable, and that it is being entered into freely and voluntarily after having received such advice and with such knowledge as each has sought from counsel, and the execution of this agreement is not the result of any duress or undue influence, and that it is not the result of any improper or illegal agreement or agreements. Each- party shall pay his or her own attorney for all legal services rendered or to be rendered on his or her behalf. (10) ADDITIONAL INSTRUMENTS: Each of the parties shall from time to time, at the request 'of the other, execute, acknowledge and deliver to the other party any and all further instruments that may be reasonably required to give full force and effect to the provisions of this Agreement. (11) INCOME TAX: The parties have heretofore filed joint Federal and State Tax returns. Both parties agree that in the event any deficiency in Federal, state or local income tax is proposed, or assessment of any such tax is made against either of them, each will indemnify and hold harmless the other from and against any loss or liability for any such tax deficiency or assessment and any interest, penalty and expense incurred in connection therewith. Such tax, interest, penalty or expense shall be paid solely and entirely by the individual who is finally 5 determined to be the cause of the misrepresentations or failures to disclose the nature and extent of his or her separate income on the aforesaid joint. returns. (12) BANKRUPTCY: The parties hereby agree that the provisions of this Agreement shall not be dischargeable in Bankruptcy and expressly agree to reaffirm any and all obligations contained herein. In the event a party files such bankruptcy and pursuant thereto obtains a discharge of any obligations assumed hereunder, the other party shall have the right to declare this Agreement to be null and void and to terminate this Agreement in which event the division of the parties' marital assets and all other rights determined by this Agreement including alimony shall be subject to court determination the same as if this Agreement had never been entered into. (13) COMPLETE DISCLOSURE: The parties do hereby warrant, represent, acknowledge and agree that each is fully and completely informed of, and is familiar with, the wealth, real and personal property, estate and assets, earnings and income of the other and has made any inquiry he or she desires into the income or estate of the other and received any such information requested. Each has made a full and complete disclosure to the other of his and her entire assets, liabilities, income and expenses and any further enumeration or sta#ement thereof in this Agreement is specifically waived. (14) RIGHTS AND RESPONSIBILITIES: Husband and Wife acknowledge that each of them has read and understand his and her rights and responsibilities under this Agreement and that they have executed this Agreement under no compulsion to do so but as a voluntary act. (15) FULL SETTLEMENT: Except as herein otherwise provided, each party hereby releases the other from any and all claims, or demands up to the date of execution hereof. It is further specifically understood and agreed by and between the parties hereto that each party accepts the provisions herein made in lieu of and in full settlement and satisfaction of any and all 6 of said party's rights against the other for past, present and future claims on account of support, maintenance, alimony; alimony pendente life, counsel fees, costs and expenses, equitable distribution of marital property and any other claims of the party, including all claims which have been raised or may be raised in an action for divorce. (16) RELEASE OF ALL CLAIMS: Except as may be otherwise specifically provided in this. Agreement, Husband and Wife, for themselves, their heirs, representatives and assigns, each hereby forever releases, remises, discharges and quitclaims- the other, and such other's heirs, representatives, assigns and estate, from and with respect to the following: A. All liability, claims, causes of action, damages, costs, contributions and expenses or demands whatsoever in law or in equity; B. All rights, title, interest or claims in or to any property of the other, whether real, personal or mixed and whether now owned or hereafter acquired; C. All rights of courtesy and dower and all claims or rights in the nature of courtesy and dower; D. All widow or widower's rights; E. All right, title, interest or claim in or to the other's estate, whether now owned or hereafter acquired, including but not limited to all rights or claims: (1) to take against the other's will; (2) under the laws of intestacy; (3) to a family exemption or similar allowance; and (4) all other rights or authority to participate or intervene in a deceased spouse's estate in any way, whether arising under the laws of Pennsylvania or any other country, territory, state or political subdivision. F. All rights or claims to any accounting; G. All rights, claims, demands, liabilities and obligations arising out of or in connection with the marital relationship or the joint ownership of property, whether real, personal or mixed; H. All rights, claims, demands, liabilities and obligations arising under the provisions of the Pennsylvania Divorce Code, as the same may be amended from time to time, and under the provisions of any similar statute enacted by any other country, state, territory or political subdivision; 1. All rights, claims, demands, liabilities and obligations each party now has,. or may hereafter have, against or with respect to the other. (17) GOVERNING LAW: This Agreement shall be construed under the law of the Commonwealth of Pennsylvania. If any provision of this Agreement is determined to be invalid or unenforceable, all other provisions shall continue in full force and effect. (18) INCORPORATION INTO DECREE: In the event that either of the parties shall recover a final judgment or decree of absolute divorce against the other in a court of competent jurisdiction, the provisions of this Agreement may be incorporated by reference or in substance but shall not be merged into such judgment or decree and this Agreement shall survive any such final judgment or decree of absolute divorce and shall be entirely independent thereof. (19) BREACH: In the event that either party breaches any provision of this Agreement, he or she shall be responsible for any and all costs incurred to enforce the Agreement, including, but not limited to, court cost and counsel fees of the other parry. In the event of breach, the other party shall have the right, at his or her election; to sue for damages for such breach or to seek such other and additional remedies as may be available to him or her. (20) ENTIRE UNDERSTANDING: This Agreement constitutes the entire understanding between the parties and there are no covenants, conditions, representations, or agreements, oral or written, of any nature whatsoever, other than those herein contained. (21) AGREEMENT BINDING ON PARTIES AND HEIRS: This Agreement shall bind s the parties hereto, their respective heirs, executors and assigns. IN WITNESS WHEREOF, the parties hereto intending to be legally bound have hereunto set their hands and seals the day and year first written above. WITNESS: ,~ ~ ,- .d.~~Lr_v , ~~ ~ ~ Laurie J. Stoc a e .- ~~~~~~ ,_ ~ ~~~~.>~c~ Wendell B. Stock Jr. 9 EXECUTORS' EXHIBIT D CONFIRMATION/WAIVER OF BENEFITS Intending to be legally bound hereby, Laurie J. Stockdale, having been formerly married to Wendell B. Stockdale, Jr., Deceased, hereby confirms, waives, assigns and sets over to Wendell B. Stockdale, Sr., and Jane Stockdale, in their capacities as Co-executors of the ESTATE OF WENDELL B. STOCKDALE, JR., all of her right title and interest, if any, in or to any and all benefits from various life insurance policies, Pmployee benefts, and other similar arrange~rients, as to which she may be a named a beneficiary, or otherwise. Third parties may rely upon this "CONFIRMATION/WAIVER OF BENEFITS" in making payments to the Estate. ,~a~o Dated: „~ i,~,r , ~66~- `,,~ ~, -,GJ4~-~-K c~~ LAURIE JJSTZSCKDALE: SUPPLEMENTARY AGREEMENT This agreement is supplementary to, and intended to carry out the terms of that "PROPERTY SETTLEMENT AND SEPARATION AGREEMENT" dated January 19, 2009, between Wendell B. Stockdale, Jr., hereafter "DECEDENT" and Laurie J. Stockdale, "FORMER WIFE," hereafter AGREEMENT. BACKGROUND: This Supplementary Agreement is between Wendell B. Stockdale, Sr., and Jane Stockdale, in their capacities as Co- executors of the ESTATE of Wendell B. Stockdale, Jr., "ESTATE," and Laurie J. Stockdale, "FORMER WIFE." Wendell B. Stockdale, Jr,, died October 29, 2009 after DECEDENT and FORMER WIFE entered into the above AGREEMENT, and after a divorce decree was entered in the Court of Common Pleas of Cumberland County, Pennsylvania, to number OS -- 3963 of 2009. The AGREEMENT was expressly incorporated into the Final Decree of Judge Ebert dated March 10, 2009. DECEDENT died before changing the beneficiary (or recipient) of various life insurance policies, employee benefits, and other similar arrangements from his FORMER WIFE to his ESTATE, or his children, or otherwise. The parties acknowledge. that, both pursuant to the AGREEMENT, and pursuant to the law of Pennsylvania, FORMER W[FE's interests in these financial benefits generated by DECEDENT'S death are void and to no effect, and that such interests belong to the ESTATE of DECEDENT. The purpose of this Supplementary Agreement is to assure the proper disposition of such property interests, and to allow and accommodate the collection of such property interests from third parties in as simple, and informal manner as reasonably possible, without adverse consequences to FORMER WIFE. AGREEMENT: In consideration of the premises, the mutual promises contained in this Supplementary Agreement, and intending to be legally bound hereby, ESTATE and FORMER WIFE agree as follows: 1. FORMER WIFE agrees to deliver to ESTATE all proceeds of life insurance, employee benefits, and similar funds she receives by virtue of the death of the DECEDENT, and her having been named as a beneficiary or beneficial recipient under any policy or contract or the like, within 10 days of receipt thereof. 2. FORMER WIFE agrees to execute such documents as third parties request to enable collection of life insurance proceeds, employee benefits, and similar financial interests, in her name, but with the acknowledgment made hereunder to ESTATE that she is so proceeding as agent for the ESTATE, and with the obligation to endorse, or turnover all benefits she receives to the ESTATE. 3. ESTATE, for its part, agrees to indemnify and defend FORMER WIFE of and from any claims that might be asserted against her for so preceding, or for so acting as intermediary to cause such benefits to be delivered to the ESTATE. This indemnification includes providing to FORMER WIFE such statements or memoranda to accompany her filing of an income tax return or returns to explain why interest or other financial benefit purportedly taxed to her should not be so taxed to her. If such statements or memoranda do not resolve any income tax question, the ESTATE agrees to be responsible for any income tax consequences FORMER WIFE may so encounter. 4. FORMER WIFE agrees to provide any and all documentation of financial benefits she might receive based upon the death of DECEDENT to the ESTATE, establishing the amounts of payment she makes to the ESTATE pursuant to her obligations above. LAURIE J. STOCKDALE: ESTATE OF WENDELL B. STOCKDALE, JR. WENDELL B. STOCKD LE, SR. ~a(~~r~ E STOCKDALE SETTLEMENT AGREEMENT THIS SETTLEMENT AGREEMENT is made effective as of May 1, 2010 between Hoffinann-La Roche Inc., with its principal office at 340 Kingsland Street, Nutley, New Jersey 07110; the Roche Savings and Pay Deferral Plan (the "Savings Plan"), with its office at 340 Kingsland Street, Nutley, New Jersey 07110; the Basic Life Insurance Plan of Hoffinann-La Roche Inc. (the "Basic Life Plan"), with its office at 340 Kingsland Street, Nutley, New Jersey 07110; the Optional Life Insurance Plan of Hoffmann-La Roche Inc. (the "Optional Life Plan"), with its office at 340 Kingsland Street, Nutley, New Jersey 07110; the Estate of Wendell B. Stockdale, with an address at 47 Deer Ford Drive, Lancaster, Pennsylvania 17601; and Laurie J. Stockdale, with an address at 2222 Gleim Court, Enola, Pennsylvania 17025. WHEREAS, Wendell B. Stockdale was a former employee of Hoffrnann-La Roche Inc.; and died on October 29, 2009; WHEREAS, Wendell B. Stockdale participated in the Savings Plan, Basic Life Plan, and Optional Life Plan; WHEREAS, the beneficiary designations completed by Wendell B. Stockdale name Laurie J. Stockdale as his beneficiary under the Savings Plan, Basic Life Plan, and Optional Life Plan; WHEREAS, Laurie J. Stockdale is the former spouse of Wendell B. Stockdale pursuant to a divorce decree entered by the Court of Common Pleas of Cumberland County, Pennsylvania dated March 10, 2009; WHEREAS, Wendell B. Stockdale and Laurie J. Stockdale entered into a Property Settlement and Separation Agreement dated January 19, 2009 in which Wendell B. Stockdale retained his interest in the Savings Plan, and Laurie J. Stockdale relinquished any right, title, and interest in any intangible property titled in the name of Wendell B. Stockdale; WHEREAS, the Estate of Wendell B. 5tockdale and Laurie J. Stockdale entered into a Supplemental Agreement dated January 21, 2010, in which Laurie J. Stockdale agreed to deliver to the Estate of Wendell B. Stockdale all proceeds of life insurance, employee benefits, and similar funds she receives by virtue of the death of Wendell B. Stockdale; WHEREAS, the Estate of Wendell B. Stockdale and Laurie J. Stockdale have each made claims to the benefits of Wendell B. Stockdale under the Savings Plan, Basic Life Plan, and Optional Life Plan; WHEREAS, the claims raise complex legal issues under the Employee Retirement Income Security Act of 1974, as amended; and WHEREAS, to avoid the costly adjudication of the claims by the plan administrators of the Savings Plan, Basic Life Plan, and Optional Life Plan, and the risk of further costly litigation over the result of the adjudication, the parties wish to enter into this Settlement Agreement. #1503042 v3 036835-64176 NOW, THEREFORE, the parties agree as follows: 1. Within thirty (30) days after Hoffinann-La Roche Inc. receives this Settlement Agreement executed by all the parties, the Savings Plan shall distribute to Laurie J. Stockdale the amount in the account for Wendell B. Stockdale in the Savings Plan, and the Basic Life Plan and Optional Life Plan shall distribute to Laurie J. Stockdale the death benefits of Wendell B. Stockdale in the Basic Life Plan and Optional Life Plan. The plan administrator, trustee, plan sponsor, or insurer of each Plan shall withhold taxes as follows: (a) thirty percent federal income tax from the distribution from the Savings Plan; and (b) ING shall not withhold any federal or state income tax from the interest portion of the distribution from the Basic Life Plan and Optional Life Plan. In addition, the plan administrator, trustee, plan sponsor, or insurer of each Plan shall issue to Laurie J. Stockdale an IRS Form 1099 and all other appropriate state tax forms with respect to the foregoing distributions. 2. Laurie J. Stockdale shall complete the Distribution Election Form for the Savings Plan attached as Exhibit A by electing a lump sum payment, thirty percent federal income tax withholding, and no state income tax withholding. Laurie J. Stockdale shall complete the Death Claim Form and IRS Form W-9 attached as Exhibit B for the Basic Life Plan and Optional Life Plan. 3. Within ten (10) days of Laurie J. Stockdale's receipt of the distribution from each Plan, Laurie J. Stockdale shall pay the amount distributed to her to the Estate of Wendell B. Stockdale. 4. The Estate of Wendell B. Stockdale releases Hoffinann-La Roche Inc., and its directors, officers, and employees, the Savings Plan, the Basic Life Plan, the Optional Life Plan, all other employee benefit plans sponsored by Hoffinann-La Roche Inc., and the fiduciaries, insurers, and service providers of these plans, from all claims, liabilities, and obligations arising under or related to Wendell B. Stockdale's participation in these plans. This release is effective regardless of whether Laurie J. Stockdale pays the distributions to the Estate of Wendell B. Stockdale. 5. Laurie J. Stockdale releases Hoffinann-La Roche Inc., and its directors, officers, and employees, the Savings Plan, the Basic Life Plan, the Optional Life Plan, all other employee benefit plans sponsored by Hoffinann-La Roche Inc., and the fiduciaries, insurers, and service providers of these plans, from all claims, liabilities, and obligations arising under or related to Wendell B. Stockdale's participation in these plans. 6. Each party is aware of its or her right to obtain the advice of counsel prior to entering into this Settlement Agreement. Should a party enter into this Settlement Agreement without the advice of counsel, that party represents that it or she has decided to enter into this Settlement Agreement without the advice of counsel. 7. This Settlement Agreement maybe executed in any number of counterparts, each of which constitutes an original, but all of which together constitute one Settlement Agreement. #1503042 v3 2 036835-64176 'The parties have executed this Settlement Agreement effective as of May 1, 2010 on the date set forth on each party's signature line below. HOFFMANN-LA ROCHE INC. By: Date: ROCHE SAVINGS AND PAY DEFERRAL PLAN By: Date: BASIC LIFE INSURANCE PLAN OF HOFFMANN-LA ROCHE INC. By: Date: OPTIONAL LIFE INSURANCE PLAN OF HOFFMANN-LA ROCHE INC. By: Date: #1503042 v3 3 036835-64176 ESTATE OF WENDELL B. STOCKDALE By: By: Wendell B. Stockdale, Sr., Co-Executor Date: Jane Stockdale, Co-Executor Date: Laurie J. Stockdale Date: #1503042 v3 _ 4 036835-64176 EXECUTORS' EXHIBIT E WIX, WENGER &WEIDNER A PROFESSIONAL CORPORATION RICHARD H. wlx ATTORNEYS AT LAW STEVEN C. WILDS THERESA L. SHADE Wlx' 508 NORTH SECOND STREET DAVID R. GETZ POST OFFICE BOX 845 STEPHEN J. DZURANIN HARRISBURG PENNSYLVANIA 17108-0845 JEFFREY G CLARK , PETER G. HOWLAND (717)234-4182 w'0 Mao°°"ss°if iuiatl` a" FAX (717) 234-4224 www.wwwpalaw.com November 8, 2010 Ms. Laurie Jo Stockdale 2222 Gleim Court Enola, PA. 17025 Dear Ms. Stockdale: IN RE: Estate of Wendell B. Stockdale, Jr. THOMAS L. WENGER DEAN A. WEIDNER ROBERT C. SPITLER Of Counsel Suburban OlBU: 4705 DUKE STREET HARRISBURG, PA 17109-3041 (717) 652-8455 As provided for in various agreements, both with Wendell Stockdale, and his Estate, we acknowledge having received from you the Plan proceeds, and the Life insurance benefits generated by the unfortunate death of Wendell B. Stockdale, Jr. We have filed an Estate income tax return, reporting the taxable proceeds from the Plan ($125,108.04) as income, for the tax year ended June 30, 2010, to the Estate, but offset by the $62,554.02 withholding by Roche from the sums paid to you. Please review the attached memorandum, proposed to be attached to your income tax return (to be filed before 4/1512011), explaining the Estate's having reported this sum as income, and taking credit for this withholding of tax. As agreed, Mr. Keith Huntzinger, CPA, will prepare-at estate expense-your income tax return if you so choose, so long as you cooperate on a timely basis with providing to him required documents and information. He can be reached at 580-2463, 516 Main Street, Mechanicsburg Pa 17055, 791/0246. If you do not choose to use his services, this memorandum should be attached to your return, explaining the above. Thank you for your cooperation in this regrettable task of clearing up issues generated by Wendell Jr.'s death. Very truly yours, WIX, ER 8~ 1DNER By: ob .Spitzer RS: s Encl. above Cc: Mr. and Mrs. Wendell B. Stockdale, Sr. r/ 47 Deer Ford Drive Lancaster. PA 17601 Mr. Keith Huntzinger, CPA, 516 Main Street, ~~ Mechanicsburg Pa 17055 ATTACHMENT TO FORM 1040, FEDERAL INCOME TAX RETURN OF LAURIE J. STOCKDALE, TAXPAYER, SSN 177-52-6768 During the 2010 Income tax year, the Taxpayer, LAURIE J. STOCKDALE, SSN 177-52- 6768, received a lump sum distribution from the salary deferral plan of her deceased ex- husband's employer, Roche-see attached. Because of various agreements between the Taxpayer and her former husband, and his "Estate (ESTATE OF WENDELL B. STOCKDALE, JR., EIN 27-6301616), the Taxpayer was not legally entitled to retain beneficial ownership of the funds so received, but the Taxpayer was legally obligated to turn over to the Estate the funds so received from the lump sum distribution, less only income tax withheld therefrom by the employer. .The Taxpayer has paid over to the Estate these funds so received, during the income tax year, 2010. Accordingly, all of the funds so received, and paid by the Taxpayer to the Estate and the credit for the withheld tax thereon, were properly reported on the income tax return of the Estate for the fiscal year ended June 30, 2010. No portion of these items is reported on this return of the Taxpayer. The gross amount of the distribution to the Taxpayer was $158,351.81, (taxable portion $125,108.04), and the Federal income tax withheld thereon was $62,554.02; Copy of statement issued by the employer contemporaneously with the distribution is attached to this return. ~'` Roche :, May 27, 2010 Roche Savings and Pay Deferral Plan NA4K 89528 LAURIE J STOCKDALE 2222 GLEIM COURT ENOLA, PA 17025 Important Distribution Information Please verify your transaction for accuracy, and report any discrepancies within 30 days. Discuss the taxability of this distribution with your tax advisor. (QI Web: www.401 k.com £j1 Phone: 1-800-269-40)5 Lv Hours• Weekdays 8.30 a.m. -Midnight ET Important Information on Reviewing This Distribution Statement The following is a summary~of a death benefit distribution processed from your account. Please keep this report until you receive a tax form in January of next year. Remember to keep your address up-to-date. Distribution Summary Below is your total account balance after your withdrawal. Please verify the Information for accuracy. Beginning Balance $158.351.84 Less Withdrawal -158,351.84 Ending Balance $0.00 Tax Information Please verify the information for accuracy. Total Total Distribution Retum of After- $158,351.84 Tax Contributions Total Taxable $33,243.80 Amount OMinary Income $125,108.04 Amount $125,108.04 Check Information Please verify the actual information agrees with this. LAURIE J STOCKDALE 2222 GLEIM COURT ENOLA, PA 17025 Check Dete: 05/27/2010 Gross Amount $158,351.84 Check Number: 243391302 Federal Tax 562,554.02 Net Amount $96,797.82 Fidelity Investments, PO Box 5424, Cincinnati, OH 45250-5424 Page 1 of 2 Confidential Informatbn .~ HOFFMANN-LAROCHE INC 89528 LAURIE J NA STOCI~ALE 2222 GLE1M COURT ENOLA, PA 17025 Payment type: Death Benefit -non-spousal beneficiary' Check Number: 00243391302 Check Date: May 27,2010 Description Current Gross Taxable $158,351.84 Non-Taxable $125,108.04 FEDERAL TAX $33,243.80 Net $62,554.02 $95,797.82 EXECUTORS' EXHIBIT F Keith R. Huntzinger, CPA, CPP, CSEP, MST Department of the Treasury Internal Revanue Service Cincinnati, dH 45999 August 8, 201 I Re: Estate of Wendell B. Stockdale, Jr FEW: 27-6301616 To Whom It May Concern: i am writing to you on behalf of my client, the estate of Wendell B. Stockdale, Jr. (FEIN 27-6301616). The co-executors ofthe estate, Mr. Wendell B. Stoekda}e, Sr. and Mrs. Jane Stockdale have authorized me to represent the estate via IRS Fortis. 2848 Power of Attorney. Additionally, Mr. Robert Spitzer, Esq. and Mr. Stephen Dzuranin, Esq. are authorized. to represent the estate on the Form 2848. The Form 2848 is included with this corresponder-ce. The date of death of Mr. Wendell B. Stockdale, Jr. (SSN 510-54-9318) was October 29, 2009. The eo-executors elected a fiscal year ending June 30s' for the estate, with the first fiscal year ending June 30, 2010. In May of 2010, the decedem's former employer, Roche Pharmaceuticals (FEIN 04-656$107), paid various employment benefits to the decedent's former spouse, Ms. Laurie Stockdaie (SSN 177-52-6768). Based upon Pennsylvania law and an agreement entered into between Ms. Stockdale and the decedent in conjunction with their divorce prior to the decedent's death, and confirmed by agreements between the estate Ms. Stockdale prior to the distribution of the employment benefits, Ms. Stockdale forwarded the entire amount she received. from Roche to the estate in June of 2010, due to the fact that the estate was ultimately entitled to the funds. On the Form 1041 far the estate's fiscal year ending June 30, 2010, the estate reported the income received from Roche via Ms. Stockdaie. The taxable income in the amount of $125,108 was included on line 8 of Form 1041. Additionally, the Federal withholding tax in the amount of $62,554 which was withheld by Roche was claimed as a tax payment on line 24e of Form 1041. The estate attached an explanatory statement to the Form. 1041 to inform IRS that the income was suhjeet to the trust and estate income tsx rates and subject to tax by the estate, rather than to the individual income tax rates on Ms. Stockdale's 2010 individual income tax return and subject to tax by Ms. Stockdale. It has come to our attention that despite being informed by the estate that the income and withholding would be reported on the estate's Form 1041, Ms. Stockdale included the income and withholding on her 2010 individual income tax return. We were subsequently informed by Ms. Stockdale's accountant that NIs. Stockdale received a tax refund to which she was not entitled. Furthermore, Ms. Stockdale has refused the estate's request to file an amended income tax return for tax yeaz ZO10, in order to remedy the situation. Pursuant to the preceding facts, the estate requests that IRS review this situation and issue a written reply indicating how the respective parties should have filed their respective income tax returns and. how it will require the parties to correct the situation. 516 W. Main Street • Mechanicsburg, PA 17055 ~ Phone: 717.580.2463 d krhCpat~hotmait:com It is the estate's position that Ms. Stoclcdale was merely a conduit in the payment of the employment benefits to the estate based on the fact that: 1.) Ms. Stockdale had no legal rights to the funds (due to Pennsylvania law and the agreements referred. to above); and 2.)Ms. Stockdale received no economic benefit from the receipt of the fiords and in face subsequently transfisred the funds to the estate. Accordingly, the estate believes that it has reported the economic result ofthese transactions properly by including the income and withholding tax on the Form 1041 for the fiscal year ending 3une 30, 2010. Furthermore, the estate believes that Ms. Stockdale should amend her Form 1040 for tax year 20 ] 0 to remove the income and withholding, .and should be responsible for any resulting penalties and interest, due to the fact that she was informed in advance of how the estate would be treating the transactions. If you have any questions, please da not hesitate to contact myself, Mr. Spitzer, or Mr. Dzuranin. Thank you for your assistance in this matter. Si//ncerely, f ~~%~r~p Keith R. Huntzinger, CPA, CPP, CSEP, MST Enclosure Cc: Mr. Wendel! Stockdale, Sr. and Mrs. Jane Stockdale Mr. Robert Spitzer, Esq. Ivir. Stephen Dzuranin, Esq. Form ~S~V Power of Attorney (Rev. June 2008) and Declaration of Represents#ive Department of the Treasury intamar Revenue 9avice - Type or print. - See the separate instructions. Power of Attorney Caution: Form 2848 wil! not be honored for any purpose other than representation before the 1 Taxpayer information. Taxpayer(s) must sign and date this form on page 2, line 9. Taxpayer name(s) and address Social security number(6) Estate of Wendell B. Stockdale, Jr. 47 Ga@r Ford Drive Lancaster, PA 17601 , Daytime telephone number For IRS Use Ony Received by: Name Tetepnone IRS. Function Date / / number 27 ; 6301616 Pion number (If app1ical hereby appoint(s) the following representative(s) as attorney(s)-in-fact: 2 Representative(s) must sign and date this form on page 2, Pan II. Name and address CAF No. 2605-75064~R Ke(th R. Huntxinger, CPA Tele hone No. p . _ 717-580.2483 . ......... 516 W. Main Street Fax No. ...................:.. M@ChaniCSbu PA 17055 Check if new: Address ^ Telephone No. ^ Fax No. Name and address CAF No. Rob@rt 5pitzer, Esq. Tele hone No. p . 717-234-4182 . ..............._...-.-, 508 N. Second Street Fax No. ...- .-.- Harrisbur PA 17108 -.- -_.. Check if new: Address ~] -..--•----------------------- Telephone No. [~ Fax No. ~ Name and address CAF No. Stephen Dzuranin, Esq. Tele hone No. 717-234.4182 P .................................. S08 N. S@cond Street Fax No. _ _ _ _ arrisbur PA 17108 Check ii new: Address ^ Telephone No. ^ Fax No. ^ to represent the taxpayer(s) before the Internal .Revenue Service for tfie foFlowing tax matters 3 Tax matters Type of Tax (Income, Employment, Excise, etc.) or Civil Penalty (see the instructions for Ilne 3} Tax Form Number (1040, 941, 720, etc.) Year(s) or Period(s) (see the instructions for tine 3) Incam@ Tax 1041 2009 (FYE 6/30/40) q apecmc use not recorded on Centralized Authorization Fite (CAF). If the power of attorney is fora specific use not recorded on CAF, check this box. See the instructions for Line 4. Specific Uses Not Recorded on CAF _ - 5 Acts authorized. Tha representatives era authorzed to receive and inspect confidential tax information and to pertorm any and all acts that 1 (we) can perform with respect to the tax matters described on line 3, for example, the authority to sign any agreements, consents,. or other documents. Tha authority does noCinelude the power to receive refund checks (see line 6 below), the power to sutrstitute another representative or add additional representatives, the power to sign certain returns, or the power to execute a request for disclosure of tax returns or return information to a third party. See the line 5 instructions for more information. Exceptlona. An unenroHed return preparer cannot sign any document for a taxpayer and may only represent taxpayers in limited situatuons. See Unenroiled Return Preparer on page 1 of the instructions. An enrolled actuary may only represent taxpayers to the extant prcvfded in section 10.3(d) of Treasury Department Circular No. 230 (Circular 230). An enrolled retiremaM glen administrator may only repn33ent taxpayers to the extent provided in section t0.3(e) of Circular 230. See the line 5 instructions for restrictions on tax matters partners. In most cases, the student practitioner's (levels k and I) authority is limited (for example, they may only practice under the supervision of another practitioner). Ust any specific additions or deletions to [he acts otherwise authorized in this power of attorney 8 Receipt of refund checks. If you want to authorize a representative named on line 2 to receive, eLJr NOT TO ENDORSE OR CASH, refuhd checks, initial here and list the name of that representative below. Name of representative to receive refund check(s) - For Privacy Act and Paperwork Reduction Act Notice, see page 4 of the instructions. Cat. No. ~ 1980J Form 284$ (Rev. 6-2008) c'--e` Form 2848 (Rev. 8-2008) page 2 7 Notices end communications. Original notices and other written communications will 6e sent to you and a copy to the first representative listed on line 2. a If you also want the second representative listed to receive a copy of notices and communications, check this box . - ~} b If you do not want any notices or communications sent to your representative(s), check this box S Retention/revocation of prior power(s) of attorney. The filing of this power of attorney automatically revokes all earlier power(s) of attorney on file with the Internal Revenue Service for the same tax matters and years or periods covered by this document. If youdo not ^ want to revoke a prior power of attorney, check here. - YOU MUST ATTACH A COPY OF ANY POWER OF ATTORNEY YOU WANT TO REMAIN IN EFFECT. 8 Signature of taxpayer(s). If a tax matter concerns a joint return, both husband and wife must sign if joint representation is requested, otherwise, see the instructions. If signed by a corporate officer, partner, guardian, tax matters partner, executor, receiver, administrator, or trustee on behalf of the taxpayer, I certify that I have the authority to execute this form on behalf of the taxpayer. - IF NOT 51GNED AND DATED, THIS POWER OF ATTORNEY WILL BE RETURNED. -~j'/ i f~~1~~,p ~- - - ~~~ .~?I-/ Co-Executor '~` - -----------•----- ~---'Pp-------~-------- Signature D e Title rf a livable Wendell B. Stockdale, Sr. ~ ^ ~ o Print Name PIN Number U5~ ~~(~ Signs ure Jane Stockdale ~ ^ ^ ^ Print Name PIN Number Estate of Wendell B. Stockdale, Jr. Print name of taxpayer from line 1 if other than individual ~~~~ j ~ Co-Executor to Title If appiisable ' Declaration of Representative Caution: Students with a special order to represent taxpayers in quatified Low /ncome Taxpayer Clinics or the Student Tax Clinic Program (levels k and i), see the fnstntctions for Part ll. Under penalties of perjury, i declare that: • I am not currently under suspension or disbarment from practice before the Internal Revenue Service; • I am aware of regulations contained in Circular 230 (31 CFR, Part 10), as amended, concerning the practice of attorneys, certified public accountants, enrolled agents, enrolled actuaries, and others; • 1 am authorized to represent the taxpayers} identified in Part I for the tax matter(s) specified there; and I am one of the following: a Attorney-a member in good standing of the bar of the highest court of the jurisdiction shown below. b Certified Public Accountant-duly qualified to practice as a certified public accountant in the jurisdiction shown below. c Enrolled Agent-enrolled as an agent under the requirements of Circular 230. d Officer-a bona fide officer of the taxpayer's organization. e Full-Time Employee-a full-time employee of the taxpayer. f Family Member-a member of the taxpayer's immediate family (for example, spouse, parent, child, brother, or sister). 9 Enrolled Actuary-enrolled as an actuary by the Joint Board for the Enrollment of Actuaries under 29 U.S.C. 1242 (the authority to practice before the Interne; Revenue Service is limited by section 10.3(d) of Circular 230). h Unenrolled Return Preparer-the authority to practice before the Internal Revenue Service is limited by Circular 230, sedkion 10.7(c)(T)(viii). You must have prepared the return in question and the return must be under examination by the IRS. SeeUnenrolled Return Preparer on page 1 of the instructions. k Student Attorney-student who receives permission to practice before the IRS by virtue of their status es a law student under section 10.7(4) of Circular 230. 1 Student CPA-student who receives permission to practice before the IRS by virtue of their status as a CPA student under section 10.7(d) of Circular 230. r Enrolled Retirement Plan Agent-enrolled as a retirement plan agent under the requirements of Circular 230 (the authority to practice before the Internal Revenue Service is limited by section 10.3(e)). - IF THIS DECLARATION OF REPRESENTATIVE IS NOT SIGNED AND DATED, THE POWER OF ATTORNEY WILL BE RETURNED. See the Part II instructions. Designation-Insert above letter (a-r) Jurisdiction (state) or identification Signature Date b PA ~ ~ ~~ ~DA Y tS a PA ~ ` / ~/r~~~ J - !J Fonn 2848 iRe~. s-zoos)