PROPOSED AGREEMENT OF MERGER (03/15/98)

Proposed Agreement of merger between the UNA and the UFA

PROPOSED AGREEMENT OF MERGER

THIS AGREEMENT is made and entered into this _____ day of January, 1998, by and between the UKRAINIAN NATIONAL ASSOCIATION, INC., a fraternal benefit association organized and existing under the laws of the State of New Jersey, with principal offices located at 2200 Route 10, Parsippany, New Jersey 07054 (hereinafter sometimes UNA); and the UKRAINIAN FRATERNAL ASSOCIATION, INC., a fraternal benefit association organized and existing under the laws of the State of Pennsylvania, with its principal offices located at 440 Wyoming Avenue, Scranton, Pennsylvania (hereinafter sometimes UFA).

WHEREAS, the UNA and the UFA are both fraternal benefit associations with compatible objectives and were once part of the same fraternal benefit association until 1910, and now wish to again be part of the same organization.

WHEREAS, these objectives can be accomplished more readily if the members of both organizations make a common effort through a single society,

NOW, THEREFORE, it is mutually agreed between these parties hereto as follows:

ARTICLE ONE

1. The Ukrainian National Association, Inc. and the Ukrainian Fraternal Association, Inc. shall merge into a single fraternal association to be known as the Ukrainian National Association, Inc. or the Ukrainian National Fraternal Association, Inc., as of the effective date of this Agreement, i.e. the latter of the dates of receipt and filing of the Certificates of Approval from the Commonwealth of Pennsylvania and the State of New Jersey Commissioners of Insurance. The selection of the name shall be in accordance with Article V, Paragraph 3.

2. On the effective date of this Agreement, the separate existence of each society shall cease, and the two associations shall be merged in one fraternal benefit association, and the branches of both the UNA and the UFA shall become chartered branches of the surviving society. Such branches and its members are to be governed thenceforth by the Constitution, By-laws and regulations of the surviving society, as amended.

3. On the effective date of this Agreement, all members of the Ukrainian National Association, Inc. and Ukrainian Fraternal Association, Inc. shall cease to be members of the individual societies and shall become members of the Ukrainian National (Fraternal) Association, Inc. and its branches with all rights, privileges and obligations pertaining thereto. The officers elected for the branches of the Ukrainian National Association, Inc. and Ukrainian Fraternal Association, Inc. shall become officers of branches of the Ukrainian National (Fraternal) Association, Inc. in corresponding capacities without formality or necessity of election and shall serve until their successors have been elected and installed in compliance with the by-laws of the new society. Except as hereinafter set forth, National Officers of the UFA shall cease holding office on that date.

ARTICLE II

1. On the effective date of this Agreement, all obligations of the Ukrainian National Association, Inc. and Ukrainian Fraternal Association, Inc. relating to certificates and contracts of insurance issued by both associations and in force or subject to reinstatement on that date shall be assumed by and become obligations of the Ukrainian National (Fraternal) Association, Inc., subject to all defenses and set-offs which would have been available to either of said associations had this Agreement not been made.

2. The Ukrainian National (Fraternal) Association, Inc. will administer certificates and contracts to which such obligations relate according to their terms, which, to the extent applicable, are intended to include: (a) the terms of the current Articles of Incorporation, Constitution, By-Laws, and Rules and Regulations of the Ukrainian National Association, Inc.; (b) The Articles of Incorporation, Constitution, and By-Laws of said Ukrainian National Association, Inc. as same shall be proposed to be amended for the purpose of this merger. The proposed Amendments are attached hereto and marked as Exhibit #1.

3. Certificates and contracts shall participate in future distribution of surplus by the Ukrainian National (Fraternal) Association, Inc. as permitted by law and to the extent determined by the actuary and approved by the Board of Directors of the Ukrainian National (Fraternal) Association, Inc., if in force at the time of such distribution.

4. On and after the effective date of this Agreement, premiums and other payments required by such certificates and contracts of both associations, shall be due only to the Ukrainian National (Fraternal) Association, Inc. and paid to it through its established systems, or such systems as may hereafter be established.

5. Upon the effective date of the merger, all the rights, franchises, and interests of the merged societies in and to every type of property real, personal or mixed and things in action thereunto belonging, shall be vested in the Ukrainian National (Fraternal) Association, Inc., without any other instrument needing to be executed, except as may be required by the Insurance Commissioner of any state or province. Conveyances of real property may be evidenced by proper deeds as set forth in N.J.S.A.17:44A-8.

6. On the effective date of this Agreement, all obligations of the Ukrainian National Association, Inc. and of the Ukrainian Fraternal Association, Inc., of whatever nature, shall be assumed by and become the obligation of the Ukrainian National (Fraternal) Association, Inc. subject, however, to all defenses and set-offs that would have been available to both associations had this Agreement not been made. On the effective date of this Agreement, the Ukrainian National Association, Inc. and the Ukrainian Fraternal Association, Inc. shall deliver to the Ukrainian National (Fraternal) Association, Inc., assembled in such form as shall be required, all information in its possession or control relating to its (I) certificates and contracts of insurance then in force or subject to reinstatement, (ii) members, (iii) groups or branches, and (iv) obligations other than those relating to certificates and contracts of insurance then in force or subject to reinstatement.

7. On the effective date of this Agreement, the UNA and the UFA shall, by proper acts and instruments, unless exempted by N.J.S.A.17:44A-8, transfer and convey to the Ukrainian National (Fraternal) Association, Inc. all property, of whatever nature, then belonging to both associations such property to be co-mingled with and become part of the general assets of the Ukrainian National (Fraternal) Association, Inc.

8. Nothing contained herein shall affect the property of branches of the Ukrainian National Association, Inc. and of the Ukrainian Fraternal Association, Inc., which property shall become the property of the Ukrainian National (Fraternal) Association branches as these will now become.

9. After the execution of this Agreement, neither the Ukrainian National Association, Inc. nor the Ukrainian Fraternal Association, Inc. will incur any liability or expend or exchange any assets except in the regular and customary course of business.

ARTICLE III

1. Upon execution of this Agreement, UFA shall commence or continue efforts to sell or otherwise dispose of real property it owns at 440 Wyoming Avenue, Scranton, Pennsylvania and its "Verkhovyna" Resort in Glen Spey, New York.

2. Upon execution of this Agreement, each society shall commence appropriate due diligence, shall freely exchange all relevant financial and other information, and shall execute such documents and resolutions as may be required to effectuate such merger. The Ukrainian Fraternal Association represents that there are no claims current or pending which have not been disclosed to the Ukrainian National Association. If conventions or balloting by mail are required, each society shall promptly arrange for such to be held, in compliance with all applicable laws and regulations.

3. Each society reserves the right to terminate this Agreement no later than the 61st day after the execution of this contract, if the due diligence shows a financial condition substantially inferior to the 1996 and 1997 annual statements, and subsequent quarterly statements which are to be promptly exchanged, or, if the representations made in Article IV hereinafter set forth are inaccurate.

4. It is understood and agreed that the merged societies shall be domiciled in New Jersey, and that "Svoboda", The Ukrainian Weekly, "Narodna Volya" and "Forum" shall continue to be published by the merged society, as determined by the General Assembly.

ARTICLE IV

1. Each society is a fraternal benefit association duly chartered, incorporated, validly existing and in current good standing under the laws of its parent state as set forth in the preamble. All representations and warranties of each are as of the date of this agreement and through to the effective date of the Merger. Each society has unencumbered and complete title to all assets being transferred hereunder. There are no outstanding claims against either society by any governmental or other entity, nor violations of any laws by either party which have not been previously disclosed. Each party has and shall continue to comply with all laws and regulations governing its business.

2. Each society has full and requisite corporate power to enter this agreement subject to the approval of the Appropriate Departments of Insurance and the consents of its delegates assembled at a regular or special Convention to approve this Merger. Such Merger will not constitute a default in any provision of the Charter, Certificate of Incorporation or By-Laws or any contract, mortgage, lease or any other document binding upon either society, nor with any agreement with any governmental entity having jurisdiction over either society.

3. Each financial statement and document delivered from time to time to the other society by either society is a true and complete representation of the material facts and figures set forth therein, and each society shall rely and has relied upon the accuracy of same to make its decision to proceed with the Merger.

4. The Ukrainian Fraternal Association has no undisclosed liabilities, litigation, pending or ongoing, or causes of action against it, other than as set forth in its 1997 Annual Statement and any subsequent quarterly statements and as disclosed to the Ukrainian National Association in Exhibit "2", annexed. Any liabilities which it will incur between the date of this agreement and the effective date of this Merger shall be in the ordinary course of business. If any outside the regular course of business should arise, it shall promptly notify the other party. All employee benefits, compensation, payroll, benefit and other contracts and obligations have been previously disclosed to the Ukrainian National Association and are annexed as Exhibit "3", and there are no adverse material changes to any of them.

5. All representations made herein are deemed to be material and are conditions precedent to the execution of this agreement.

ARTICLE V

1. The effective date of this Agreement shall be in accordance with New Jersey Statutes Annotated Title 17, Chapter 44A-8(d) provided that (a) on or before such date, this Agreement will have been approved by the highest Governing Bodies of the Ukrainian National Association, Inc. and the Ukrainian Fraternal Association, Inc., respectively, at any regular or Special Convention thereof, or by ballot of the respective delegates in lieu of a Special Convention, provided a copy or summary of this Agreement shall have been included in or enclosed with the notice of such meeting or balloting by mail, or published in the official publications of each society. Notice shall be given as provided in the by-laws of the respective associations and by the laws of New Jersey and/or Pennsylvania, as relevant; (b) that the Agreement has been approved by an affirmative active vote of two-thirds (2/3) of all members of such Supreme Legislative and governing body of the Ukrainian National Association, Inc.; (c) that the Agreement has been approved by two-thirds (2/3) of all members of such Supreme Legislative and governing body of the Ukrainian Fraternal Association, Inc.; (d) that on such date, the Ukrainian National Association, Inc. and Ukrainian Fraternal Association, Inc., under the basis of a report rendered by an actuary of its choice, is satisfied that the ratio of the value of the admitted assets to the value of the liabilities of the Ukrainian Fraternal Association, Inc. will not be less than the corresponding ratio from the 1997 annual statement of the Ukrainian Fraternal Association, Inc.; and that (e) this Agreement of Merger will have been approved by the Commissioner of Insurance of the State of New Jersey and by the Commissioner of Insurance of the Commonwealth of Pennsylvania, and any other Commissioners of Insurance or equivalent State, Federal, Canadian or Provincial Officials who have jurisdiction over these societies.

2. If not all the approvals required in the paragraphs hereinabove stated have been granted, on or before the effective date or a mutually agreed later date, or if the Ukrainian National Association, Inc. or Ukrainian Fraternal Association, Inc. are/is not satisfied as to the ratio described in Paragraph (c) above, until the effective date, this Agreement shall terminate.

3. a) The parties agree that the merger shall take place regardless of whether or not both societies' Conventions or equivalents accept by a 2/3 majority vote the change of name to Ukrainian National Fraternal Association.

b) Each Society agrees to first place on the ballot the issue of the change of name, which shall only become effective if passed by 66.67% of the eligible and voting delegates of both Conventions or equivalents. If insufficient "yay" votes are obtained by either Convention for the change of the name of the surviving society to Ukrainian National Fraternal Association, the name of the surviving society shall be Ukrainian National Association, Inc.

c) The parties agree to place the merger on the ballot immediately thereafter, with the name predetermined by the prior balloting as above in paragraph 3(a) and all remaining terms and conditions of this agreement to be voted upon as a unit, with no amendments to the agreement and only a "yay" or "nay" vote permitted to the agreement as a whole, other than the name as set forth above.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective Presidents, attested to by their respective Secretaries, and their respective corporate seals to be affixed thereto on the day and year first above written.

UKRAINIAN NATIONAL ASSOCIATION, INC.
Attested to:

By: ULANA M. DIACHUK, President
MARTHA LYSKO, Secretary

UKRAINIAN FRATERNAL ASSOCIATION, INC.