PLAIN LANGUAGE SYNOPSIS OF UNA-UFA MERGER AGREEMENT (03/15/98)

Proposed Agreement of merger between the UNA and the UFA

PLAIN LANGUAGE SYNOPSIS

OF UNA-UFA MERGER AGREEMENT

The Contract of Merger first recites who the parties to the contract are, together with their official addresses. It recites that they were once the same organization, but separated in 1910. They now wish to combine into one.

Article One states that they will become one organization upon the approval of the merger in writing by the Insurance Commissioners of the State of New Jersey and the Commonwealth of Pennsylvania. That is called the "effective date" of the merger or agreement.

All branches of each society shall become the branches of the "surviving" or "successor" society, officers of the branches of the former societies will remain officers of the branches, but now of the surviving society and all the members will likewise become members of the successor society.

The National Officers of the Ukrainian Fraternal Association will cease holding office on the effective date of the merger.

Article Two states that, as of the date of merger all separate insurance, contractual and other obligations become obligations of the successor society in accordance with the the laws and bylaws of the Ukrainian National Association as they now exist and as they may be amended by the merger and thereafter. The proposed bylaw amendments are attached to the end of the contract.

Dividends shall be distributed if permitted by law and as determined by the actuary of the surviving society and as approved by the Board of Directors of the Society. All dues payable previously to the UFA or the UNA will thereafter be payable to the Successor Society. All property owned by either Society will now become the property of the Successor Society.

The separate existence of each society will cease, the property of the branches shall remain the property of the branches which now become the branches of the successor society. Finally, after the signing of the agreement, neither Society shall make an extraordinary disposition of assets or acceptance of any extraordinary liability until the effective date of the merger. In other words, each shall do business as usual.

Article Three requires the UFA to continue its ongoing efforts to sell Verkhovyna. Each party shall begin, after the signing of the contract, examining the other party's financial condition, review contracts, liabilities, assets, claims, policies, real estate, etc., a process known as "due diligence". If there are any claims current or pending against the UFA, these have been or will be disclosed in the contract or during due diligence.

Each society is required to schedule its Regular or Special Convention for purposes of voting on the merger, in compliance with all applicable laws.

Each society has the right to void the merger for up to 61 days after the execution of the agreement if its due diligence shows a deteriorated condition in the finances of the other society from the condition shown in its most recent annual reports, or if there have been any misrepresentations made in the Contract of Merger.

Article Three concludes with the understanding that the successor society will be located in New Jersey, and that all the publications of both prior societies will continue to be published by the successor society as governed by its new General Assembly.

Article Four contains the representations made by each society to the other. Among the more important ones are the following - Each society is and shall continue to be:

Validly existing and in good standing.
Possessor of good title to all its assets.
Free of claims from any governmental unit unless previously or contemporaneously disclosed.
Free of claims from anyone unless previously or contemporaneously disclosed.
Able to enter into this agreement without breaching any other contract or any laws.
Entering this agreement subject to the consent of its Convention and the appropriate Insurance Commissioners.
Forthright in its representations, knowing that the other society is relying on these.
Disclosing to the other all liabilities, litigation, employee benefit contracts, pensions, etc.
Agreeing that the representations are a critical part of this agreement and that if any of these are false, the other society may void the contract.

Article Five sets forth the procedural requirements of the merger in accordance with the laws of the State of New Jersey and the Commonwealth of Pennsylvania, the current domicile states of each society. These requirements are:

That the Convention ratify the contract of merger, which shall be disseminated by mail or by publication in the official publication of the society in advance of the Convention as required by law.
That 66.67% of the delegates at each convention who vote on the issue of merger vote in favor.
That the financial condition of the UFA is such that the ratio of its assets to its liabilities is not worse than such ratio was at the end of 1997 as calculated by its actuary to the satisfaction of the UNA.
That the appropriate Commissioners of Insurance approve the final version of the contract as passed by the conventions.
If the approvals are not granted by the date agreed upon by both parties, or if the ratio of assets to liabilities is insufficient, the agreement becomes void, unless otherwise agreed.

The contract further calls for the merger to occur regardless of what happens on the vote for the name of the new Society. It requires the issue of the name to be placed upon the ballot at the convention before the contract of merger is voted upon. The vote shall be for the name of the Surviving Society to be Ukrainian National Fraternal Association.

If 66.67% of the delegates voting on this issue vote in favor of the name change, then the name of the Society shall be such. If, however, less than 66.67% of the voting delegates vote in favor of the name change, the name of the successor society shall be Ukrainian National Association.

If only one of the Conventions passes the name change by the appropriate vote, the name shall be Ukrainian National Association. For the name to change, both Conventions must pass the change by a (2-1) Two to One Margin - 66.67%.

As to the ballot on the merger, the present contract calls for the balance of the merger contract to be voted on only "yes" or "no" as a whole, without discussing individual paragraphs and renegotiating any terms agreed upon by the negotiators for each society.

Finally, as Exhibit 1, is attached the Amendment to the by-laws which would be required to be approved to effectuate the negotiated terms of the merger. These terms include:

The name change if applicable
The addition of a Senior Vice President position for a representative of the former UFA until the year 2002.
A reservation of one position on the Auditing Committee for a representative of the former UFA until 2002. This position may also fulfill the Canadian representative requirement of the Auditing Committee.

d.A reservation of three positions on the Board of Advisors for UFA candidates of the 14 to be elected in 1998. In 2002, there shall be no reservations and the board shall be reduced to 11.

e.The addition of 4 honorary memberships in the General Assembly of the new society from the UFA. These positions shall last until 2006. At that point, the Honorary Membership of the successor society shall revert to 50% of the number of members of the General Assembly as it shall then be constituted.

f.The other amendments to the by-laws are ministerial.

Exhibit 2 contains the list of liabilities, claims, causes of action, etc. against the UFA, which are not otherwise disclosed in the financial statements given to the UNA.

Exhibit 3 is a list of existing and surviving contracts of employment, pensions, benefits and all other contracts of the UFA.