HomeMy WebLinkAbout01-0263IN RE:
PETITION OF LEGAL SERVICES, INC.,
a Pennsylvania non-profit corporation
CUMBERLAND COUNTY, PENNSYLVANIA
ORPHANS' COURT DMSION
:NO.
PETITION FOR DECLARATORY JUDGMENT OF
NONDIVERSION OF PROPERTY
Petitioner Legal Services, Inc., by and through its counsel, Goldberg, Katzman & Shipman,
P.C., respectfully represents as follows:
1. Legal Services, Inc. ("LSI") is anon-profit charitable corporation, incorporated under
the Non-Profit Corporation Law of Pennsylvania, 15 Pa. C.S. {}5101 et seq., is exempt from federal
income tax under Section 501(c)(3) of the Internal Revenue Code, with its headquarters located at
8 Irvine Row, Carlisle, Cumberland County, Pennsylvania.
2. Pursuant to its By-laws the purpose of the corporation is to "work toward the goal
of equal access to justice for all needy people." Attached as Exhibit "A".
3. This Court has jurisdiction of this matter pursuant to Pennsylvania Rule of Judicial
Administration 2156(1) and is also proper venue for this action pursuant to 20 Pa. C.S.A. §726.
L About Petitioner and Its History
4. LSI provides legal services to the poor and needy in Cumberland, Franklin, Fulton and
Adams counties. LSI obtains its funding from Legal Services Corporation CLSC"), Pennsylvania
Legal Services ("PLS") and the Pennsylvania Interest on Lawyers Trust Account Board ("IOLTA").
LSC, PLS and IOLTA then contracts with the various regional legal service organizations to provide
services to the poor and needy in particular areas of Pennsylvania. LSI has the contract for the
Cumberland, Franklin, Fulton and Adams counties.
5. Additional funding is obtained through the county, the United Way and other
charitable grants.
6. Pursuant to its current By-laws, a majority of the Board of Directors of LSI are local
attorneys and local law professors. Other Board members include community participants and
persons financially eligible for legal representation by LSI.
7. LSI was incorporated on July 24, 1970, under the name Cumberland County Legal
Service Association, and filed amended and restated Articles of Incorporation as of October 12,
1973, whereby the name of the organization was changed to Legal Services, Inc.; copies thereof are
attached hereto as Exhibit "B".
8. During its existence, LSI has received various gifts and donations, all of which were
for its general use and the operation of its various programs.
9. LSI has maintained the integrity of the donor intent by adhering to its charitable
purpose.
2
10. In 1998, LSC began to mandate that regional legal service organizations merge so to
more efficiently utilize the shrinking funds bein8 provided for legal services to the poor. As a result
of this mandate, LSI was forced to evaluate potential merger partners in its region.
11. As of July 1, 2000, other legal service agencies of the LSC, Central Pennsylvania
Legal Services and Keystone Legal Services merged and formed MidPenn Legal Services, Inc.
(MidPenn"). This merged entity provides services very similar to LSI in the Dauphin, Perry, Juniata,
Clearfield, Huntingdon, York, Berks, Lancaster, Schuylkill, Lebanon, Mifflin, and Centre counties.
12. MidPenn now maintains its corporate office at 3540 North Progress Avenue, Suite
102, Harrisburg, Dauphin County, Pennsylvania.
IL The Merger
13. As indicated above, there has been a trend of legal service organizations in
Pennsylvania acting in concert and combination in order to provide services more economically and
efficiently, and to use resources in a more effective manner.
14. Continuing this trend, LSI and MidPenn began discussions to determine if the two
organizations could achieve more faithful and effective stewardship of their respective assets by
conducting their activities in a closer, more cooperative manner.
15. MidPann is also a legal service agency of the LSC, engages generally in the same kinds
of programs and services as does LSI, and is an organization incorporated under the Non-Profit Law
of Pennsylvania; it is also exempt from federal income tax.
16. These discussions have resulted in the two agencies developing a Plan of Merger
("Plan"), whereby the two corporations would merge and MidPenn would be the surviving
Pennsylvania non-profit corporation, which is intended to be in charge of the operations of both LSI
and MidPenn; MidPenn would continue as non-profit corporation, and continue to carry out the
respective programs as heretofore.
17. The purpose of this Petition is to secure the Court's Judgment that a merger among
MidPenn, a Pennsylvania non-profit charitable corporation, LSI, also a Pennsylvania non-profit
charitable corporation, will not result in a diversion of property committed to charitable purposes.
18. After the merger is complete, MidPenn will operate the two legal service programs
in the same manner in accordance with the executed Plan of Merger. A copy of the proposed Plan
of Merger (the "Plan") is attached as Exhibit "C'.
19. MidPenn and LSI intend to effectuate amendments to their respective Articles of
Incorporation and By-laws to accommodate to the provisions of the Plan. The most notable changes
include: increasing the size of the board ofdkectors from twenty-two (22) to fifty-eight (58); and a
requirement that LSI's assets be given to MidPenn. A copy of the proposed Articles of Merger and
By-laws for the merged entity are attached hereto as Exhibit "D".
20. Pursuant to Article 5 of the Plan, MidPenn will assume all of the debts and assets of
LSI, and MidPenn shall continue the respective programs and services in the communities that it
serveS.
21. MidPenn, in accordance with its proposed Articles of Incorporation and By-laws, will
be affiliated with the LSC, and will be exempt from federal income tax under Section 501(e)(3) of
4
the Internal Revenue Code; a majority of its directors will be selected from members of the bar and
clients in the respective areas that it serves.
22. After the merger, infrastructure will be centralized at MidPenn's offices. MidPenn
will be responsible for corporate policies, staffin8 and ordering systems for both operating programs.
This merger will cause a significant reduction in overhead costs as compared to the cost of operating
each entity independently, and will allow LSI as well as MidPenn to take full advantage of financial
and human resources, reduce duplication, maintain and enhance partnerships with local bars and be
better stewards of limited human and financial resources.
23. The changes discussed above do not impact the scope and nature ofLSI's charitable
mission; they affect how LSI will accomplish its mission, but do not affect the mission itself.
24. All appropriate and required approvals to the Plan and the related amendments to the
LSI Articles of Incorporation and By-laws have been obtained from the Board of Directors, all
subject to approval by the Court of this Petition.
25. The proposed Plan and amended Articles of Incorporation and By-laws are planned
to be effective as of January 1, 2001.
The Proposed Mer~er Will Not Cause a Diversion of Charitable Assets Under 15 Pa.
C,S.A. §47(b)
26. The proposed affiliation will effect a more efficient use of charitable assets currently
employed by LSI as well as by MidPerm, but it will not in any way cause such assets to be used for
5
any purpose that is not currently contemplated or required under either entity's existing governing
documents.
27. In its endeavors with MidPenrh LSI' s assets will continue to be used for all these same
purposes as per LSI's amended Articles of Incorporation.
28. A condensed financial summary for LSI reflecting its strong financial standing for the
period ending June 30, 2000 is contained as Exhibit "E".
29. Notice of the presentation of this Petition has been given to the Attorney General, as
parenspatriae for the Commonwealth of Pennsylvania, who is the only party in interest.
WltEREFORE, LSI respectfully requests that this Court enter a declaratory judgment that
the merger among MidPenn and LSI, as well as amendmem by LSI of its Articles of Incorporation
and By-laws as described above, will not cause a diversion of assets committed to charitable purposes
pursuant to 15 Pa. C.S.A. §5547(a).
Date: January 10, 2001
54284.1
By:
Respectfully submitted,
GOLDBERG, KATZMAN & SHIPMAN, P.C.
~Sfipr. I.D. #72190
320 Market Street
P. O. Box 1268
Harrisburg, PA 17108-1268
(717) 234-4161
Attorneys for Petitioner
IN RE:
PET1T~ OF LEGAL SERVICES, INC.,
a P~nsylvania non-profit corporation
: CUMBERLAND COUNTY, PENNSYLVANIA
: ORPHANS' COURT DIVISION
;
:NO. ~/- ~6~ C&-ct
AND NOW, this~
petition and all other relevant matters of record
ORDER
day of ( ~~ , 2001, upon consideration of the annexed
by ORDERED that:
The Court finds, and so declares, that the merger among MidPenn Legal Services, Inc., and
Legal Services, Inc., pursuant to a Plan of Merger and the proposed amended Articles of
Incorporation and By-laws, on the terms described in the attached Petition will not cause a diversion
of charitable assets within the meaning of 15 Pa. C.S.A. §5574(a).
BY THE COURT:
Sec~£on $
Services,
~c~ion 2
LEGaT, S~RVICES. INC.
revised 2/22/96
ARTICLE I
Inc.
The corporation may at its pleasure, by vote of its member-
ship, change its name.
~ection 3
The principal office of the corporation shall be at ~ Zrvine
Row, carlisle, Pennsylvania, or at such other place as the Board of
Directors may determine from time to time.
ARTICLE
The purposes and powerm of the corporation shall be those
authorized by the Acts, Statutes end Regulations of the
commonwealth o~ Pennsylvania, governing the purposes &nd powers of
private, nonprofit corporations. Without limiting the generality
o~ ~e foregoing purposes a~%d powers, the object Of the corporation
shall be to work toward the goal of equal access to Justice for all
~ee~y. people in our program area, specifically:
~ec~cion ~
To provide hiph quality legal representation, advice and
assistance to low income people in our program area.
~sction 2
To provide educational information to iow income people and
people in resolving problems wi?/%out legal aseis~ance.
~sctien 3
To involve law students and private attorneys in providing
legal services to iow income people in need of such sarvlcas,
~ection ~
Notwithstanding anything herein, ~he purposes shall be
exclusively those se= £or~h 'in seotion S01(c)(~) of the Internal
~evenue Code of 1954 al~d its regulations as ~hey now exits or may
~eraafta= be amended.
ARTICLE III
Powers of the Cor~oration
Aa & means of accomplishing the following purposes,
corporation a~&ll ~avsr the following powers:
~ecCio~ 1
To accept, acc~Alre, reosivs, t~ken and hold by bec~est,
devise, grant, gift, purchase, exchange, lease, transfer, Judicial
any property, bot~ real s~d perlonal, of whatever ~ind, nature or
description and wherever al~uace~.
To sell, exchange, convey, ~or~gage, .lease, tr~na~ar, or
otherwise ~iaposa of any such property, both =esl and person&l~ as
the objects and p~rposea of the corporation may rsquire, sub, sot =o
su=h limitations as may be prescribed by law.
~eotion 3
To ~orrow money, and fcom time ~o time, to make, accept,
endorse, execute and issue bonds, deben~uras~ promlsaur¥ notes,
~ills o~ ~x~henge, and other obl£g&Cicns of ~he corporation
monies borrowed or in payment for property acquired or ~or any of
~e o~er purposes of ~he corporation, and to secure the payman~ of
any such obligations by mortgage, pledge, ~esd, inden=urs,
agreement, or other lns~rumsn~ of to.tat, or by other lienupon all
or any part of =he property, rights, or privileges of t~e corpora-
~lon w~srever situs=ed, whether now owned or hereafter ~0 be
acguired.
TO i~ves= end reinvest i~s funds to such stock, common or
preferred, bones, debentures, mcr%gages, ~r ~n such other seouri-
subject ~c =he limitations a~doondit~onl contained in any bequest,
are not in conflict with =he provisions of Section so1(c)(3) of ~he
Internal Revenue Coda and its rsqt~lations am :hey now exist or as
they may hereafter be amended.
To work in conjunction with and to contract with, for any
Governmen~ o~ the United States and ~e Commonwealth o~ Pennsylva-
nia and los counties an~ municipali~ies, and all lns~itutions
licenses =hereby, insured thereby and operating under =he laws and
In general, and subject %o such limits=ions and conditions as
ars or may be prescribed by law, to exercise such other powers
which are now, or ~ereafter may be con£erred by law upon a
corpora=ion organized for the purposes hereinafter sst forth.
ARTICLE IV
SectiQn ~
Membership in the corpora=ion s~all be open ~o
without regard to seX, race, religion, natioHal origin
belief.
all parmons
or po~itical
~sc~ion 2
support effor%~ ~o provide legal assistance to 'chose who face an
economic barrier to obtainin~ adequate legal counsel and sh~ll
consis~ of;
a. Eleven a%tornsys, who are admitted to practice in
Pennsylvania and w~o have an interest in and knowledge of %he
delivery of queli~y lege~ services to low-income people &nd who
shall be appointed as follows: four by the Cumberland County ~ar
AssoCiation; four by the Franklin County Bar Association; two by
the Adams County Bar Association; one ~y the President o~ =~e
Fulton County ~ar Association.
b. Two professors uf =he Dickinson School Of Law who are
admitted =o practice in =he Com~onwealUh of Pennsylvania and who
shall be appointed by its Dean.
c. One person ~bo is engaged in social welfare or civic
activities in Cumberland, Adams, ~ra~klin ur Fulton County to he
chosen by the Board cf Directors at its first regular meeting of
each calendar year.
d. Seven parsons financially eligible ~or 1Bgal representa-
tion hy Legal Services, Inc. at ~he time of ~heir appointment, who
are residents of Cumberland, Adams, Franklin or FUlton coon=y, and
who shall he appointed by cr~anizations primarily composed of i0w-
income persons designated from =i~e-to-time, such as:
a. Opportunities Zndustrializaticn Center -
T=ainee~ (CarliBle)
b. Shippensburg ACtion Council, Inc.
c. New Cum~erlamd Senior Action Center
d. Franklin County Parent Policy council of Headstart
e. Pennsylvania Council o~ ~armwor~ers Advisory
committee
f. Adams County Headstart Parents Policy Council
g. Abused Women Suppcr~ GrOups
A Fulton county Organization primarily composed
o~ iow-income persons to be deei~nated by the
Board o~ Direo~ors of Legal Services, Inc.
In the event any organization ~a£1s to appoint a
member promptly, ~he ~oard of Directors c~ Legal
Services, Inc. s~all designate another appropriate
organize=ion ~o appoint a ~oard member. The
Executive Committee of the Board of Directors of
Legal Services, Inc. ~hall have authority ~o
designate such appropriate organization between
meetings of the ~Oard of Directors, subject to
ratification by ~he Board.
e. The Dean of the Dickinson School of Law and the Presidents
of the Adams, C~mberland, Franklin, and Yulboa County Bar Associa-
tions shall serve in an advisory capacity.
f. For each board me~ber appointed ~nder Article IV, SeCtion
2(d), ~he appointing authority may designate an alternate, who
shall meet the same eliqibility requirements as regular appointees.
If the regular appointee's, position becomes vacant,
~ection 1 - Membership
ARTICLE V
~card q~ Directors
a. The business of this corporation shall be managed by a
Soard c~ Directors consisting of=he membership Of the corporation.
The term of each director shall be for two calendar
a majority vote of =hose ~em~srs present.
the year b~ the same appointing authority responsible for the
initial appointment.
The maximum ~erm °fTaNYhi~ director shall be five (5)
consecutive two-year terms, maxim~ term limit shall bm
effective prospectively, as of the current term of :ha Board on
d~e c~ its adoptLon. This provision need not be strictly applied
if it shall result in the approved reduction of the Boar~ mem~a~-
ship ~y more =ham oma ~hird (1/]) in any given year. in the event
that s~rict application of the provision would result in such lose
of membership, Ohm Board shall =~ks such action as it ~ay deem
appropriate under the circumstances.
~ec=ion 2 - Responsibilities
The authority and power of the Board shall bs tO:
a. Establish the policies an~ priorities of the corporation,
adopt rules and regulations ne~eesar~ ~r the attainment of ~he
~urposas of the corporation which are consistent with these By-
ewe,
h. Asses SOlS responsibility for ~he care, custody and
distribution of all asss~s of the oorporation~
c. Approve ~he corporation's budTet and raise funds necessary
to operate the corporation.
· d. Exercise powers granted =h~ corpora~ion in foregoimq
Article III.
s. Hire and fix the compensation, terms, and conditions of
employment for ~11 employees which it may da=ermine uo be necessary
to ~cnduot the business Of ~he corporation.
f. A~o]d interference in any way with the lawyer-client
relationship or the manner i~ which the client is r~prseent~t.
ccmmunioa=i~n~ between ~he lawyer and the client or applicant
any organize=ion or person except with the consent of ~e clien~ or
applicant.
NO Director of the Corporation shell ba personally liable for
monetary damages as such for action taken, or any ~ailurs to
amy action, unless he or she has both (i) breached the standards or
42, Chapter S3, Section 8563 of ~he Psn~e¥1venia Consolidated
Statutes relating to standardof care and Justifiable reliance;
(ii) much breach of failure to psrform constitutes self-dealing,
wilful misconduct or recklessness. .The foregoing limitation of
liability mhall bm retroactive to the ~ullmst extent permitted by
law. This exemption from liability shall not apply to
responsibility or li&bility of a Dlrmctor pursuant to any criminal
statute or the liability for a Director for ~he payment of taxes
pursuant to local, stetu or ?ederal law.
ARTICLE VI
Section
Regular msetin~of the Board of Directors shall be held four
times a year at ~.~e principal office of ~h~ ~orporetion or any
place chosen by the Board. The proposed meeting schedule shall be
announced by the first meeting o~ the year. The Secrmta~ shall be
responsible for giving no, ica to every member of the time and place
of each regular meeting.
~ection 2
The President shall prepare in advance of any msetin~ an
agenda of matters ~o be di~cussed.
Special meetings o~ the Board of Directors may be Called by
the President when he deems it for the Mast interest of =~e
corporation, or at the request of a majority of the Board of
Directors. The Secretary shall he responsible for giving notice to
every member of the =imm and place of much special meeting.
~ection 4
Five or more members of the Board of Directors present et any
duly called meeting shall constitute a quorum.
~action 5
FILE No.447 02/0~ 'DO l~:b¥ ~.U:L~-L~L ~NVI~.,4~.. v~^-~e,,~ov~v ~ ~
Notice shall be given to the members no less than two days
baforsa regular or special meeting.
ARTICLE vii
At meetings of the Boar~ of DireCtors all votes shell be by
voice, unless otherwise determined upon a motion passed by a
majority vote of those members present, et which time ballots Shall
bm provided and there shall not appear at any place on such ballot
any mark or markings that might tens =o i~entif¥ the person who
cast such ballot.
ARTICLE VIII
The following order cf Business shall govern all corporation
meetings:
1. Roll Call 5. Unfinished business
2. Minutes of the preceding meeting 6. New business
3. Reports of committees
&. Reports of officers
7. Announcements
8. Set~ing of next meeting
9. Adjournment
ARTICLE IX
Section 1 Purism of the President
its meetings. He shall act as chief administrative officer to the
policies of the corporation. H$ shall appoint all permanent or
temporary committees. He may be one of the officers who shall sign
~sc=lon 2 - Do=les of ~he Vics-Premi~sn=
The Vice-President ~hall preside at the meetings n~ the Board
of Directors in the absence of the President. I£ the President is
absent from the state of Pennsylv&ni=, the Vioe-~reeidsnt shall act
7
~iecal year, e~d shall ~ep&rs a fi~ancial sta~am~tt ~or each
regular maa~in~ of ~. ~ga~d o~ Oi~ec~ors. Ka shall meek new
fund~ proposals, utu~M ava/l~la ~an~. and complete g~an~
~e officers ~ho shall sign che~kt or ~a~e of =~a ~orpo=abion.
Election of OffLc~rs
year. glectimnm shall bm conducted by the ~resi~ent.
~ - Vacancies
In ~ha event of a va~an~j in any o~ica, a special election
bls for givin~ notice of and cenduc~In~ ~his sp*cial msetinq.
A~TICLE x
Composition
~a~ul~y me,her cf ~he Dic~inso~ School o£ Law, throe atto~ey
Board u~ Directors appoin=~ under ~ha provisions o~ Article ~,
~ - Selection
The ~xs~u~lve Co~ittes shall be app~J.~ted annually ~y ~he
~rei£dsnt who shall serve, ew-o~icio, aa C~ei~man of the commit-
EXHIBIT "B"
3.1.70,27
hereby ~e~ly:
The pU~I: or purpo?¢~ of the ¢.nrpnrutkql w~ich ~11 bi o;~.~d under ~il Act ara ~ [~llows: ~**)
4, The eorpor~l,~on doeu
6. A. ~ The corlx~ration i~ or,~nnized upon u non stock b~iL
Ii, L-] Th~ u~r~guf~ number ,,f ~lm,es which the curporad0n
tho provisions o~ ~Jn Act.
(*') It shall not ~ no~ ~ ~t (o~ ~my ~ ~num~r~tod in ~rion 302 a{ dm A~.
("0} ~cm ~ld h~ a~t forfli Ihe num~ ~nd p~ ~l~l ol ~ ~a~ h~vlng par v~; ~O aunt~r of i~s wi~out
pr value, and The ,tsl~t,t c~pital ttp~'a~o ~e~to. It the ~aff~. are ~ be
~tcle~. co~pumd by nml/.ply~g ta~ nu~bor o~ nutho~d ,har~ having par vnl,t hy II~;r par value, or I~ sha~
ONLY A CLILOJfLY LEGI.BI.E ORIGI~AI. IIIIUUIA.) BE SUBMI'rTRTL
5IGNATUI~ .~HUUI,U fiE, IN BP,ACK INK,
3,1 ~.27. 1t73
I
(~E^I)
.... (SISAL)
Pled In the l.~l~rt, nent ~f .St*t~ ~. *he .... 24.?h__.. & y ut -.-.~U:4'-'Y_-- A,D, i':.?0 .
2.
~rou%,',r. un Sopt~nb~r ;";, Z?7. i.
EXHIBIT "C"
PLAN OF MERGER
Merger of Legal Services, Inc.,
with and into
MidPenn Legal Services, Inc.
This Plan of Merger dated as of thc 1st day of January, 2001, is by and between Legal
Serviccs, Inc., a Pennsylvania nonprotlt corporation CLSI") and MidPenn Legal Services, Inc., a
Pcnnsylvania nonprofit corporation CMidPenn"). In consideration of the mutual covenants herein,
and intending to he legally bound hcreby, the partic,~ agr~ as follows:
1. Background The Boards of Directors of LSI and MtdPenn deem it desirable for the
benefit of both corporations that the properties, businesses, a~sets and liabilities of both corporations
shall be combined into one ~urviving corporation which shall be MidPenn, pursuant to Section .~921
of the Pennsylvania Nonprofit Corporation Law of 1988, as amended (the "NCL").
2. Merger. Pursuant to this Plan of Merger and upon the Effective Date, 1.3I shall be
merged with and into MidPenn, which shall be the surviving corporation and shall continue to exist
as a domestic nonprofit corporation under the laws of Pennsylvania with all the rights and
obligations of 8ueh surviving domestic nonprofit corporation as am provided by the NCL.
3. Articles of Incorporation, The Articles of Incorporation of MidPenn, as in effect on
the Effective Date, shall continue in full rome and effect a~ the Articles of Incorporation of the
,~urviving corporation and shall not be changed or amended by the merger. MidPenn reserves the
right and power, after the Effective Date, to alter, amend~ change or repeal any of the provisions
contained in the Articles of Inco~poration in the manner now or hereafter prescribed by statute, and
all rights conferred on officers, directors or stockholders are subject to this reservation.
4. Bylaws. The Bylaws of MidPenn, e.~ amended by MidPenn with the consent of LSI,
end as in of'l'~ct on the Effective Date, shall continue in tull force and effect ~ the Bylaws of the
surviving corIx)ration and shall not be cheJ~ged or amended by the merger. MidPenn reserves the
right and power, after the Effective Date, to alter, amend, change or repeal any of the provisions
contained in the Bylaws in the manner now or hereafter prescribed by statute, and all rights conferred
on officers, dirr. ctors or stockholders ere subject tu this reservation.
5. CorporaleExistence. On the Effective Date, the separate existence of LSl'shall cease
and all of its property, rights, privileges and 'franchises of whatever nature and description, shall
transfer to, vest in, and devolve upon MidPenn, without further act or deed. On the Effective Date,
all property of LSI and all debts due on whatever account shall be taken and shall be deemed to be
transferred to and vested in MidPenn without ~'urther act or deed. MidPenn on the Effective Date
shall become responsible for all liabilities and obligations of LSd. The rights of the creditors of LSI
or any person dealing with LSI or any lieus on any property of LSI shall not be impinged upon by
the merger contemplated herein. Any existing claims or pending actions or proceedings by or against
LSI may be prosecuted to judgment as if thc merger contemplated herein had not taken place, or
MidPenn may he proceeded against as substituted in the place of LSL
6, Directors and Q£ficers. The directors of MidPcnu and LSI shall serve as the directors
of MidPenn as of the Effective Date until the next election of directors of MidPenn, and the Bylaws
of MidPenn shall be amended before the Effective Date to accommodate the appointment of the LSI
directors as directors of the surviving corporation. The following officer of MidPenn immediately
prior t~ thc Effective Date shall continue in office after the Effective Date:
2
MicbelleDeBord:
Executive Director
7. Approval. Under Section $924(b) of the NCL, the Plan of Merger shall be deemed
adopted by LSI and MidPenn upon adoption by their respective Boards of Directors.
8. Authori~. to Merge. LSI and MidPenn have all requisite power and authority to
executc, deliver and perform this Plan of Merger. All necessary corporate proceedings of LSI and
MidPenn have been duly taken to authoflzc the execution, delivery and performance of this PIm~ of
Merger. This Plan of Merger ha~ been duly authorized, executed and delivered by LSI and MJdPcnn
and constitutes the legal, valid and binding obligation of each corporation and ia enforceable a.~ to
each of them in accordance with its terms.
9. Effective Date. The Effective Date of the Merger shall be Janum'y l, 2001.
I0. FilingoJArticlesofMerger. On or before the Effective Date, Articles of Merger shall
be executed by the officer.~ ol~eaeh merging corporation and filed with the Pennsylvania Department
of State.
I I. Termination qf Merger. Anything herein or elsewhere to the contrary
notwithstanding, this merger may be terminated and abandoned by the Board of Directors of either
constituent corporation at any time prior to the date of filing of the Articles of Merger with the
Department of State.
12. Governing Law.
Commonwealth o£ Pennsylvania.
This Plan of Merger shall be governed by the laws of the
l]q WITNESS WHEREOF, the parties have caused this Plan of Merger to be executed and
attested by their duly authorized offJc~ea on this day of D~ccmbcr, 2000.
ATTEST:
LEGAL SERVICES. INC,
ATTEST:
· Secretary
,Sccrctary
By: Connie Thomas
Title: Executive Director
4
EXHIBIT "D"
Microfilm Number
Flied with the D,.,,artment cf StMe on
Entity Number
8e~ret~ry of the Commonwealth
ARTICLES OF MERGER-DOMESTIC NONPROFIT CORPORATION
DaGB: 1 e~e~e (Rev
In compliance with the requlrement~ of 16 Pa.C,8, ~ 6026 (relating to ertlolee of merger or coneolldetlon), the underelgned
nonprofit corporations, dee&lng to effect a merger, hereby crete that:
1. The nm or the corporation surviving the merger Is: MidPenn Legal Sorvieo~, ]nc.
2. (~h~eok end complete eno of the following):
~ The eurviving corporation la a domeeflo nonprofit corporation end the (e) eddreee of Itc current reglltared office In this
Commonwealth or (b) name of Its commercial reglotered office provkler and the county of venue la (the Department Ii
hereby authorized to correct the following Information to conform to the recordl of the Department);
3540 North Pm~# Ave, Suile 10:2
Number end Street
Haniabur~ Pa 17110 Dauphia
Sty 8tare Zip County
(b) c/o:
Name of Commercial Reglaterad Office Provider
County
For I corporation represented by · commercial rsg~er~ o~llee provider, the county In (1~) shell be deemed the county in which the
corporaUon la towered for venue and ofilolel publlcotlon purpocoe.
- The aurvJvlng corporation ii · qualified foreign nonprofit corporation Incorporated under the lava of
end the (a) addeeea of Itc current ragletarad office In this Commonwealth or (b) naa of Itc'commercial regletered offioe
provider end tho county of venue Is (the Department le hereby authorized to correct the following Information to conform
to the records of tho Department):
Number end Street City 8tote Zip Couch/
{b) c/o:
Name of Commercial Ragietcred Office Provider
Coun~
For e corporation represented by a commercial reglMered or,ce provider, the county in (b) shell be deemed the county In which the
corporation i~ located for venue and ofiicill publicollon purposes.
__The eurvivtng corporation is e nonquallfled foreign nonprofit corporation Incorporated under the lava of
and the addrele of Itc principal office under the IIWI of euoh domiciliary Jurisdiction lo;
Number and Street CH ~tate ZIp County
3. The name and the &dd~eee of the reglatered office In thla Commonwealth or name of Itc commercial reglltered office
provider and the coun~ of venue of each other domem~ nonprofit oo~oratlon end qualified foreign nonproffi co~oretlon
which lc a party to the plan cf merger ara la followe:
Name of Corporation Addrele of Reglltered olftoe or Name of Commercial Reglatered Office Provider County
Lcfii Services, htc. 8 Irvino Row, Carlisle. PA 17013 Cumberland
MidPenn Lc&al Services, I~c. 3540 Nottlt Ping.ss Ave., Suite |02, Ha~d~urg, PA 171 l0 Dnuphilt
DSCS: 1 5-5928 (Rev 90)-2
4. (Check, arid it appropriate complete, one of the following):
The plan of rna(gar shall be effe~lv~ upon filing these Artleios of Merger In the Department of State.
~(; The plan of merger shall ba effective on; 0J/0]~00l at ]2:01 am
Date
5, The manner In which the plan of merger was adopted by each dcmeetlc cerporetlco ioea fellows:
Name of corporation Minitel' of adoptloa
MidPoml Le~I Servica~, Inc,
Hour
Adoption by a~tton of lbo Boa~l of Dare.om pmsuant to section
5922 of the Non.Profit CorporaUon Law of 19~. as az~ded
Adoplion by ~on of tl~ l~oa.~ ofD(recto~ pu~am to ~ecdon
~922 el' the Non-Patti Cor~omUon Law of 1988, as amended
6. (Strike out this paragraph If no foreign oorporatlolt II a party to the I~lerger): The plan was authorized, adopted or
approved, aa the coal may be. by the foreign nonprofit oorporetfon (or each of the foreign nonprofit corporations) percy
to the plan in accordance with the laws of the Jurt~llctlon In which It Is Incorporated.
7. (Check, and if appropriate complete, one of tho following):
X Tha plan of merger ia set forth In full in Exhibit A attached hereto and made a part hereof.
. Pursuant to 15 Pa.c.s. § 6901 (relating to OmllllOn of certlln provisions Il'om filed plins) the provisions, If any, of the
plan of merger that ",mend or constitute ~he operative A~iolal of Incorporation cf the surviving corporation e. In effect
subAequent to the effective dlte of the plan are lit forth In full In Exhibit A attached hereto and made · part hereof.
The full text of the plan of merger is on file At the principal place of business of the surviving corporation, the Addres.
of which I$:
Number and Street City State ZIp County
IN TESTIMONY WHEREOF, each undersigned oorporeflon hal ~luled these Artlclel of Merger to be Ilgned by a duly
authorized officer thereof thio ~ day of , ~19
BY:
TITLE:
BY: _
TITLE:
Legal Sorvicco, TM,
(Name cf Corporation)
(Signature)
Thomas. Exec, Pit'.
AMENDED AND R~STATED
BYLAWS OF
MIDPENN LEGAL SERVICES, 1NC.
A PENNSYLVANIA
NONPROFIT CORPORATION
Adopted: l~cember 13, 2000
AMENDED A ND PQ2STATED
BYLAWS OF
MIDPENN LEGAL SERVICES, ~N'C.
Table of Contents
At%Jcle I -
Article TI' -
Article ITl'
Article IV
Article V -
Article VI
Article VII
Articl= VK[
Article DC
Article X
Ar~i¢le XI
Article X~T
Arl'i¢le XIV
Article XV
pqge
Corporate Name and Registered Office ................................. 1
Corporate Purpos¢s ............................................... I
Meml~rs ...................................................... 2
Community Advisory Committees ..................................... 2
Board of Directors .................................................
Meetings of Directors ..................... ; ......................... 5
LiabiliTy o[' Ditto:tots ............................................... 6
Executive Director and Fiscal Manager .................................. 8
Indemnification of Officers, Directors, Employees and Agents ............... 8
Compensation of Directors and Officers ...............................
Executive Committee .............................................. 1
Committees ........................................
Rules ..............................................
Manner of Giving Written Notice; Waiver of Notice ......................
Amendment.~ ..................................................... 13
AMENDED AND RESTATED BYLAWS
OF
MIDPENN LEGAL SERVICES, INC.
ARTICLE I
CORPORATE NAME AND REGISTERED OFFICE
I, I Name: The name or thc Colporation is MidPenn l~gal Services, Inc.
1,2 Registered Office: Thc C. orporation shall have aud continuously maintain Ju the
Commonwealth of Pennsylvania a mgismred office at an address to be designated fcom time to time by
the Board of Directors and may have offices at such other places as tile Board of Directors may from
time to time designate or thc business of the Corporation may require.
ARTICLE II
CORPORATE PURPOSF~q
The purpose.~ of the Corpo~ion are excfu,~,ively charitable and educational and include the
tbllowing:
2,! To furnish civil legal services, aid and assistance of any kind or nature to persons or
groups of persons wi.lo ara unable to afford adequate legal counse];
2.2 To cooperate with and assist in any program of the Govern ment of the United States of
America, the Commonwealth o1' Pennsylvania or any local government, or of any private corporation,
aasoeiatinn, I%undation, organization or person which is designed to provide leg's] service, aid and
a.~sistancc for persons or groups of persons who are uuablc to afford adequate legal counsel;
2.3 In furtherance of tho foregoing, to request, receive, hold and utilize fonds,
appropriations or grants made available for such purposes by the Govelll!c;ellt of the United State~ of
America, ti.lc Commonwealth of Pennsylvania, or any ]oc~1 government, and to request, hold and
utilize contributions, gifts or grants made available for such purpn.~es by any private eorporntioll,
association, foundation, organization or parson;
2.4 To provide community aducadon for clients or potential clients or groups in their rights
and responsibilities under thc law: and
2.5 To do any lawful act neces.~ary, suitable, proper, convenient and incidental to the
aforesaid purposes or which may be done by a nonprofit corporation organized under the laws of thc
Commonwealth of Pennsylvania.
ARTICLE IH
MEMBERS
3.1 Thc Corporation shall have no members. Any provision of law requiring notice to, the
presence of or the vote, consent ar other action by, members shall be satisfied by notice to, the presence
of or the vote, consent or other action by, the Board of Directors of the Cocporation.
ARTICLE IV
BOARD OF DIRECTORS
4. I Number of Directors: The number of directors shall be determined by the Board of
Directors fi'om time to time, but shall not bc f'awcr than twelve (12) not' more than sixty (60).
4,2 Eligibility: Each director sh~,ll be a natural person of the age eighteen (I 8) years or
older and nccd not bca resident of the Commonwealth of Pennsylvania.
4_3 Board Composition: Composition of tile Board of Directors shall be consistent with
regulations promulgated by I-~gal Services Corporation pursuant to 42 U.S.C. §2996 et ,veq. The Board
shall consist of the following closes of directors:
4.3.1 Attorney Directors: At lea.st sixty percent (60%) of the directors serving at any
time shall consist of attorneys 'admitted, and eligible to practice in the Commonwealth of
Pennsylvania who have been appointed by r3e bar associations that collectively represent a
[n;~iority of the attorneys practicing law in tile Corporation's servtcc area (the Local unty Bar
Association(s)")
4.3.2 Client Directors: At least one third (1/3) of the directors designated to serve at
m~y time shall be ~ligible clients of the Corporation when appointed Io the Board of Directors
who have been designated to serve all the Bom'd of Directors by a neighborhood association or
community-based organiz:ttion which advocates thc or delivers services or resources to tile
c.' ie0t common ty served by the Corpor. ation in the Corporation's service ar~a (a "Loc;ti Client:
Based O 'ga lization '). The President of the Board et' Directors shall rotate the designation
~mong the Local Client-Based Organizations scrvin~ the service area.
.z~ · 4.3.3 At-L~rge Directors: The Board of Director~ shall appoint At-Large Directors to
fill availabl~ seats on the Board of Dirextors that are not rgquired to be occupied in accordance
with Sections 4.3. I and 4.3.2 above. All At-l.arge Directors sball bo individuals who have
demon.~trated an interest in, or ~voc,,tcd for, the del}very of legal services or resources to the
client community served by the Corporation.
4.3.4 Prior Service Area Representation: Eligibility criteria for Attorney Directors,
Clicn! Directors and At. Large Directors shall be dctermitlcd by tho Board of Directors by
me.ns of a resolution providin~ for represeutation from geographic areas served by tile
Corporation.
4.4 Term of Office
4.4.1 Except as otherwise provided by resolution of the Board of Directors, each
director shall bc circled for a tcl'm of three (3) years comrnencing on July I and ending oil June
30 in th,- appropriate calendar year. The tcrlllS o1" directors colTtprising the Initial Board of
Dimcters shall be staggered as determined by insolation 'adopted by tho Board of Directors for
three-year terms, two-year mrms and one-year terms.
4.4.2 It shall be the duty of the Local County Bar Associations and Local Client-Based
OJ'ganizations to dcsJg~late directors before the July meeting of the Corporalion's Bom'd of
Directors in thc year each director's tcnn is to commence. If the d~sJgna£ion is not made by
such July meeting, [he Board of Dimcton shall Fill the vacaJ~Cy with a director of thc class or
cal~gory represented by the vacancy.
4.5 Renmval and Replacement of Direetors
4.5,1 If a vacancy occurs Oll the Board of Directors because el' resignation, removal or
any other reason, thc entity authorized to designate a director in the appropriate category
spcci fled in Sections 4.3.1,4.3.2 and 4.3.3 above shall he so notified and shall designalc a
d/rector for the remainder of the term. [fthe Client-Based Organization or Local County Bar
Association tails to make the designation within two (2) months after notice oi~ the vacm]cy is
s~nt by the Corporation, the Board of Directors shall fill the vacancy with a director of thc class,
category or community represented by the vacancy.
4.5.2 Should any director i1~Jss two consecutive meetings, written notice shall be givel~
to such director and £he appointive body that the director's position will be declared vacant if
the director misses a third consecutive meeting. It'. alter such notice, the director misses a third
consecutive m~ting, the director's position shall be declared vacant and a replacement[ made in
accordance with Section 4.5.1 above.
4.6 Function of the Board of Directors
4.6.1 The Bom'd of Directors shall manage the affairs m~d husine, ss and determine the
priorities For thc progt'ams of the Corporation, except at those times when thc Executive
Committee may function a,s the Board of Directors.
4.6.2 The Board of Directors shall autltorize the appointment of and fix the
compansalion o~ all attorneys and staffemployed hy thc Corporation, except that the Board of
Directors may delegat,,- any or ali of the authority to appoint and fix coml~nsation for attorneys
and .~taff to thc Executive Director.
ARTICLE V
MEETING~ OF DIRECI'OR,~
5.1 Regular Quarterly Meetings
5. I, I Tho Board of Diree!:ors shall meet no less than four (4) times a year. The rime
and place of thc next regular meeting shall bc schcdu{ed :la the last oJ'der of business at the prior
meeting.
5.1.2 A notice of a regular meeting and a proposed agenda shall he given Ilo less than
ten (10) days prior to the mccting,
5.2 Annual Meeting
5.2.1 The regular muting of the Board of Directors held in July of each year shall be
tile annual meeting of thc Board,
5,3 Spccial Mcctiags
5.3. l Special meetings may be called by the President of the Board of Directors a~ he or
silo so deems or shall be called at the written request to the President of riva (5) directors.
5.3.2 Notice of a special mccting shall contain a statement of business to bc conducted
and must be given at least tell (10) days prior to the meeting. No other business but that
specified ill thc notice may ~ transac~d at such sp~ial m~ting without the unanimous
consent or' all pr~ent at thc m~ting.
5.3.3 All voting shall be done by open vote of those directors present and voting unless
two-thirds (~3) of those present consent to a vote by ballot. No votes shall bc cast by proxy.
5.3.4 A quorum to conduct business shall consist often (10) directors.
ARTICLE VI
LIABILITY OF DIRECTORS
6. I A director of the Corporation shall stand in a fiduciary relation to the Corporation and
shall perform his/her duties as a director, including his/her duties as a member of any committee of the
Board of Directors upon which h~lshe may serve, iu good faith, in a manner heft.she reasonably believes
to be in the bast interests of tho Corporation. and with such cam, including reasonable inquiry, skill and
diligence, as a person of ordinary prudence would use under similar circumsmncos. In performing
his/her duties, a director shall bc entitled to rely in good faith on information, opinions, reporL~ nr
sta[ements, including financial statements and other financial data, iii each case prepared or presented
by any of t'he following: Ca) one or moro officers or employe~s of the Corporation whom the director
reasonably believes to he reliable and competent in the matters preseuted; (b) legal counsel, public
a~ountants or other persons aa to metiers which the director reasonably believes to bc within the
professional or exper~ competence of such pe~on.~; or (c) a committee of the Board of Directors upon
which he/she does not ~rve, duly designed in accordance with law, as to matters withi,~ ils designarccl
authority, which committee thc director rca.sonably believes to merit confidence. A dir~tor shall not
bc considered Lo be acting in good faith il' he/she has personal knowledge concerning thc matter in
question that would cause his/her rcJiance to be unwarranted.
6.2 In discharging the duties of their respective positions, thc Board of Directors,
committees of the Board of Directors and individual di~ctors may, in considering the best interests of
:he Corporation, consider thc effects of any action upon clnployees, clients and suppliers of the
Corporation and communities in which offices or other establishments of tho Corporation are located,
and all other pertitlent factor~. The consideration of these Factors shall not constitute a violation of
Section 6.1 hereof.
6.3 Absent breach of fiduciary duty, lack of good faith or self-dealing, actions taken a.~ a
director or any failure to rake any action shall be pre.~umcd to be ia thc best interest of tho Corporation.
6.4 A director of Ibc Corporation shall not be personally liable, as such, t'or monetary
damages for any act, ion taken, or any failure to tak~ any action, unless: (al the director has bcoached or
failed to perform the duties of his/bet of/ice under Section 6. I through 6.3 hereof; and (b) the breach or
failure to perform constitutes self-dealing, willful mJ~onduct or recklessness,
6.5 Thc prnvisions of Section 6.4 hereof shall qot apply to:
thc responsibility or liability or a director pursuant to any criminal .statute; or (b) the liability of a
directnr for thc payment of taxes pursuant to local, state or federal law.
6.6 Notwithstanding any off,er provisions of these Bylaws, th~ approval of thc Board of
Director's shall be required m amend, repeal or adopt any provision as part of these Bylaws that is
it~col~istent with the pu~ose or intent of Sections 6.1, 6.2, 6.3, 6,4, 6.5 or 6.6 of this Article ~, and, if
any such ~tion shall be tarn, it shall b~ome eff~tiva only on a prospective basis from and afar the
date of such Bo~d of Directors approval.
ARTICLE VH
OI~CERS
7. I Offices: The officers of the organization shall be as follows: President, President-
Elect, Secretary and Trcasut~or, each of whom must be a director when elected and continue to qualify
as a director dm'Jag his or her t~rm.
7.2 Term of Office: The Terms of office for all officers shall be three (3) years. An officer
may be re-elected to that office hut may not immediately succeed him or herself.
7.3
Follows:
President: The duties, authority and responsibilities of the President shall be a~s
7.3.1 To preside a~ all meetings;
5
7.3.2 To appoint ali committees except the Bxecutive Committee;
7.3.3 To see that all books, repons and certificates as required by law arc properly kept
or tiled; and
7.3.4 To have such powers as are necessary and proper for the discharge of his or her
duties as President,
7.4 President-Fleet: The President-Elect shall, in the event of the absence or inability of
the President to exercise his or her et'lice, become acting President of thc Corporation with all the
rights, pcivilcges and powers as if he or she has beclm duly elected President. The Prc~ident-Elect shall
assume the position of President aA.er thc expiration of thc full term of the Pre.~ident.
7.5 Secretary: Thc Societally shall have tl~c following responsibilities and perform thc
following duties:
7.5. l Keep the minute.~ and ~cords of the organization iq appropriate books;
7.5.2 To file any certificate required by any stattltc, ordinance or regulation;
7.5.3 To submit to thc Board of Directors any communications which shall be
',tddrcsscd to him or her as Secretary of thc Corporation; and
7.5,4 To exercise all duties incident to thc office of the Secretary.
7,6 Treasurer: The Treasurer shall have the following responsibilities and perform tile
{:ol{owing duties:
7.6.1 To supervise the care and accounting for all monies belonging to thc cooperation
and be responsible tot such monies or securities o1' the organization;
7,6.2 To cause the funds of the organization to be deposited ~n a regular business bank
or trust company authorized to do business in the Commonwealth of Pennsylvania, or when
instructed by the Board of Directors, in a savings bank authorized to do business in the
Commonwealth of Pennsylvania;
7,6.3 To tender, through the Director of Finance, at stated periods as the Board of
Directors shall d~termine, a written account of the finances of the organization and such report
shall be physically affixed to the minutes et' thc Board of Director~ of such meeting; and
7.6.4 To ex'excise all duties incident to thc office of th,' Trea.~ures.
7.7 Igleetion of Officers: Thc officers shall be elected at thc annual meeting of thc Bom'd
of Directors.
ARTICLE VIII
EXECUTIVE, DIRECTOR AND FISCAL MANAGER
8. I Executive Director: The Board o£DJrcctors shall employ an Executive Director and
shall fix his or her salary :,nd benefits, subject to thc terms and conditions set Forth in a contract oF
employment or agreed upon by the Curporation and the proposed Executive Director aud approved by
tile Board of DJ. sec:ors. The duties of the Executive Director shall include the following:
(il implementing and operating the program and policies established by the Board
of Directors:
(ii) hiring, ~upervising, directing the work o1" and terminating employees of the
Corporation, except that the employment of the Dh'error of Finance shall be terminated only by
action of tile Board of Directors;
(iii) executing all contracts, agreements, lea~es and other documents m~d instruments:
on behalf of thc Corporation which are necessary or appropriate to the conduct by the
Corporation of its business and to thc implementation of policies and priorities established by
tile Board of Directors;
(iv} maintaining the fiscal integrity and responsibility of the Corporation;
(v) appointing al2firecmr of Finance;
(vi) performing such other functions as the chief executive of the Corporation as may
bc flecessary and appropriate to enable the Corporation to achieve its purpo~s.
8.2 Director of Finance: Thc F..xecufive Director shall appoint a Director of Financ,- m
supervise and manage all fiscal opcradous of the Corporation and to report to the Board of Directors
about the fiscal condition of the Corporation. The Director of Finance sllall serve at the pleasure of the
Board of Directors and shall not be subject to termination or dismissal accept by action of the Board of
Directors.
ARTICLE IX
INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEF~q AND AGENTS
9.] Indemnity a.,~ Io Witness: Tile Corporation .~hal} indemnify any director or officer, and
may indemnify any other employee or agent who was or is a party to, or is threatened to be made a
pm'ty to, or who is called as a witness in connection with, any threatened, pending, or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, other than an action by or in
the right of the Corporation, by reamn of the fact filet hedshe is or was a director, officer, employee or
agent of the Corporation. or i$ or was serving at thc request of the C,~rporation as a director, officer,
employcc or agent of another domestic or foreign corporation for profit or not-for-profit, partnership,
7
joim vent,urn, trust or other enterprise, again.~t expenses, including attorneys' fees, judgments, flues and
amounts paid in settlement, actually and reasoaably incurred by him/her in connection with such
action, suit or proceeding if such person acted in good faith and in a manner ho/she rea.~onably believed
to be in. or not opposed to, the best interests of the Corporation, and, with respect to any criminal
action or p~'occeding, had no reasonable cause to believe hi.~ or her conduct was unlawful.
9.2 ]lldemnity us to Party: The Corporation shall indemnify any director or officer, and
may indemnify any other employee o~' aganl., who was or is a party to, or is threatened to be made a
parry to, any threatened, pending or completed action or suit by or in the right of the Corporation to
procure a judgement in il,s favor by mason of l,he fact that heffsbe is or was a director, officer, employee
or agent of the Corlx~ration or is or was serving at the toques[ et' the Corrx~ration as a director, officer,
employes or agent of another domestic or foreiga] corporation for profit or not-[or-profit, partnership,
joint venture, trust or other enterprise against oxp~n~s, including attorneys~ I'~es, actually and
reasonably incurred by him/her in connection with the defen, se or .~el,tlemenl, of such action or suit ii'
such per,on acted in good I'aith and in a manner ho/she reasonably believed to be in, or not opposed to,
~h¢ Dc:st intor~st.~ of the Corporatioll and except that no indemnification shah be made in respect o1' any
claim, issue or matter as to which such per,on shall have been adjudged to he liable for negligence or
mi~onduct in the performance u£ his/her duty to thc Corporation unless and only to the extent that the
court of common pie. as of the county in which the registered office of the Corporation is ]coaled or the
court in which such action or suit was brought shall determine upon application that, despit~ the
adjudicaLion of liability bul' in view of' all lhe circumstances of tim case, such person is fairly and
reasonably entitled to indemnity for such expenses which the court of common pleas or such other
cour£ si}aU deem proper.
9.3 Survival of Other Rights: The indcmnLfication and advanc.:mcnt of expenses provided
by, or granmd pursuant to, tills Article IX shall not be deemed exclusive of any other fights to which
those s~king i ndemni fication or advancement al' expenses may be entitled raider any Bylaw,
agreement, vote of disinterested di~octors or otherwise, both as to action in his/her official capacity and
as to action in anotller capacity while holding such office. It is l,he policy of the Corporation that
indemnification ur, and advancement of expenses to, directors and officers of the Corporation shall be
made to the Fullest extent p~rmittod by law. To this end, file provisions of this Article IX shall be
deemed to have been ,qmcnded for the benefit of directors and officers o£the Corporation effective
immedial~ly upon any modification of the Nonpt'ofit Corporation Law o~ 1988 ("NPCL") or any
modification, or adoption of '-,ny other law that expands or enlarges the power or obligation of
corporations organized under the NPCL to instantly, or advance expenses to. directors and officers of
corporations.
9.4 Payment o~ ~',xpense,s: Tile Corporation shall pay cxpens~ incun'ed by alt officer or
director, and m,~y pay ~xpenses incun "od by any other employee or agent, in defending mi action, or
procex~ding referred to in this Article IX in edvallce of the final disposil,ion of such aciion er proceeding
upon receipt of an undcrl.aking by or on behalf of .such person to repay such amount jf it shall
ul~imamly be deten~ined that helsho is not entiUed to De indemnified by [he Corporation.
9.5 Continuation of Indemnity and Expense Advances: Thc indemnification and
advancement of expenses provided by, or granted pursuant re, this Article DC shall, unless otherwise
provided when authorized o~' ratified, continua us to a person who has ceased to be a director, officer,
employee or agent of die Cor~ration and shall inuru Lo the bellefit of the heirs, executors and
administrators of sucb per, on.
9.6 lndemni~y Fund: Thc Corporation shall have thc authority [o create a fund of any
nature, which may, but need not [~, under the centre! of a trustee, or otherwise secure or insure in any
manner, irs indemnification obligations, whether arising under these Bylaws or otherwise. This
authority shall include, without limitation, the authority to: (il deposit funds in trust or in escrow; (ii)
establish any form of self-insurance; (iii) secure its indemnity obligation by grant of a security interest,
mortgage or other lien oil the assets of thc Corporation; or (iv) establish a letter of credit, guaranty or
surety arrangement for the benefit of such persons itl connection with the anticipated indet~qnification
or advancement ~f expenses contemplated by this Article IX. The provisions of this Article IX shall
net be de~med to preclude the indemnification of, or advancement of expenses to, any person who is
not specified in Section 9.1 or Section 9.2 of this A~ticlc IX but whom the Corporation has the power
or obligation to indemnify, or to advance expenses for, under the provisions of the NPCL or otherwise.
The authority granted by this Section 9.6 shall be exercised by the Board of Directors ~f tile
Corporation,
9.7 Indemnification Agreements: The Corporation shall have the authority to enter iltto a
separate indemnification agreement with any officer, director, employee or agent of the Corporation or
any sub,idler3/providing for such indemnification el'such person as the Board of Directors shall
determine up to the fullest extent permitted by law.
9.8 Notice of Indemnity Claim: As soon as practicable after receipt by any person
specified in Section 9.1 or Section 0.2 ct' this Article IX of notice ct' the commencement of any action,
suit or proceeding specified in Section 9. I or Section 9.:2 of this Article IX, such person shall, if a claim
with respect thereto may be made against the Corporation under Article IX of these Bylaws, notify the
Corporation in writing of the commencement or threat thereof; however, the omission so to notify tile
Corporation shall not relieve the Corporation from ally liability under Article IX of these Bylaws unless
the Corporation shall have been prejudiced thereby or from any other liability which it may have to
such person other than under Article tX of these Bylaws. With respect to any such action -',~ to which
such person notifies the Corgora~ion of the commencement or threat thereof, the Corporation may
participate therein at its own expense and, except as ofllei~'ise provided herein, to the extent that it
desires, the Corporation, jointly with any other indemnifying puny similarly notified, shall be entitled
to assume the defense thereof, with counsel selected by the Corporation to the reu.~onable satisfaction
of ~uch person. After notice from the Corporation to such person o~ its election to asSUlnC the defense
thereof, tile Corporation shall not be liable to such person under Article IX of these Bylaws for any
legal or other expenses subsequently incurred by such person in connection with the defense thereof
other than as otherwise provided herein. Sucll person shall have the t'Jgllt to employ his/her own
counsel in such action, hut the f~s and expends of such comucl incurred after notice from thc
Corporation of its assumption of thc defense thereof shrill be at the expense of such person unless: (i)
the emplolanent of counsel by such person shall have been attthorized by the Corporation; (ii) soch
person shall have reasonably concluded that there may be a conflict of interest between thc Corporation
and such person in the conduct of the defense of such proceeding; or (iii) the Corporation .~hall not in
fact have employed coun~l to assume the defense of such action. The Corporation shall not be entitled
to ~sume the defense of any proceeding brought by or on behalf of the Corporation or as to which such
person sha~l have re0.~onably concluded tlta[ there may be a conflict of interest. If indemnification
under Article DC of these Bylaws or adveJ~cemant of expen,~..s am uot paid or made by thc Corporation,
or on its behalf, within 90 days after a written claim for JndcmniJ]cation or a request for an
advancement of expense,~ has been ~'eceived hy the Corporation, ~uch person may, at any time /
Ihercaftct', bring suit against thc Corporation to recover the unpaid m~ount of the claim or the
advancement of expenses. The right to indemnification and advallccmenLs of expenses provided
hereunder sl~al] be enforceable by such per.~on in any court of competentiurisdicdon. The burden Et'
proving that indemnification is not apprnpriat~ shall be on the Corporation. f:.xpenses reasonably
incurred hy such person in connection with successl'ully establishing the right to indemrtit'icadon or
~vancement of expenses, in whale or in pan, shall also be indemnified by the Coq~oration,
9.9 [naurance: Tho Corporation shaJJ have tho power to purchase a~d maintain insuranc~
on bahs] ~ o~ ~y person who is or was a clil=c~r, officer, employee or agent o~ the Co~oration, or is or
w~ ~erving ut the r~uest o~ ~e Co~oration ~ a dir~tor, o~icer, ¢mploy~ or agent of anothm'
domestic or foreign co.ration for profit or not-for-profit, partne~hip, joint venture, trust or other
enterprise against ~y liability asse~] against him/her and incu~ by him/her in any such capacity, m'
arising out o~ hi~ller status as such, whether et' not the Co~oration would hav~ tho power to indemnify
him/her against ~uch liability under ~e provision~ ~ff this Article iX,
9. I 0 Amendments Inconsistent with Article IX: Notwithstanding any o~her provisions of
these Bylaws, thc approval of thc Board nf L~ir~cto,s shall be required to amend, repeal or adopt any
provision as part o~ these Rylaws which is inco,~sistom with the purpose or intent of this Article DC,
and, if any such action .~hall bc taken, it shall become effective only on a prospective ba,~is from and
after the date of such Board of Directors approval,
ARTICLE X
COMPENSATION OF DIRECTORS AND OFFICEILq
10.! No officer or dirootor shall by rea.son of his/her offic~ be entitled to receive any salary or
compensazion, bu~ nothing herein shall he construed to prevon~ any officer or director from receiving
~ny compensation from the organization for duties other than as director or offi~r, or r~imbursement
for expenses actu'.flly incurred on behalf of tl~e Corporation.
ARTICLE XI
EXECUTIVE COMMITTEE
I 1.1 Membership: There shall be a standing Executive Committee composed of~i] all
elected ell'leers of the Corporation and (ii) one di~ctor fmm~acl~ county in the Co~oration's se~wice
~a that is rcp~cnt~ on the Bo~ o~ Directors by ~ directorI grovided, however, their no county sh~ll
be reore~en~ nn The ~x~u[ive ~U~ftec hy ~p~ than ~qe direclor.
] 1.2 Authority: The Executive Committee shall have full authority to function as a ~oard of
Directors between directors' meetings when, in/he opinion t~f the President, a decision mu~t be made
or action taken which would not wan"mt tho.calling of a special meeting betbre the next regttlarly
scheduled meeting, For information purposes only~ written notification of any action takcn by the
Executive Committee shall bo mailed to tho entire Board of'Ditr.~tors within one week after thc
Executive Committee has taken such action.
ARTICLE XH
COMMITTEES
12.1 All committees of~heCm~oration shall be appointed by thc President .~nd shall
continue until thc end of the appointing President's term of office unless terminated soonm' by thc
President
Order.
13.1
ARTICLE XIII
RULE~q
The Board of Directors shall conducts itl meetings in accordance with Roberts' Rules of
ARTICL~
MANNER OF GIVING WRITTEN NOTICEI WAIVERS OF NOTICE
14.1 Delivery of Notice: Whenever written notice is required to be given to any person
under the provisions of the~ Bylaws, it ma), be given tn the person either personally or by sending a
copy thereof by first class or express mail. postage prepaid, or by telegram (with messenger service
specified), telex or TWX (with answer back received) or courier service, charges prepaid, or by
~'acsimiic transmission, to his address (or to his telex, TWX or facsimile number) appearing on the
book.~ el~ the Cmporation or, in the ease of written notice to directors, supplied by each director to t ~o
Corporation for the purpose of the notice. I1' the notice is sent by mail, telegraph or courier service, it
shall be deemed to have be~n given to the posen entitled thereto when deposited in the United Stares
mail or with a telegraph office or courier ~rvice ~'or delivery to that person or, in the case of telex,
TWX, or facsimile transmission, when dispatched.
14.2 Waiver of Notice: Any written notice required to he given to ney p~rson tinder the
provisions el~ statute, the Corporation's Articles of I'ncorporation or these Bylaws may be waived in a
writing signed by the person entided to such notice whether before or alter the time stated therein.
Except as otherwise required by statute, and except in the ens~ o£ a special me~ing, neither the
l~usiness to be transacted at, nor the purpose o~, a meeting need be specified in thc waiver of notice.
Attendance of a pet'son, whether in person or by proxy, at any meeting shall constitute a waiver et'
notice of such meeting, except wlter~ a person attends a meeting fo,' tho express purpo,se et' objecting,
the beginning of the meeting, to thc transaction or :ny business bec~tusc thc mooting was not ]awfully
oall,ud or convened,
ARTICLE XV
AMENDMENTS
15. I l~xcept ~ provided in Section 9.10 above, and except as provided in Section 5504(c) of
the NPCI., tllesc Bylaws may be altered, amended, repealed or added to by an affirmative vote of not
less than a majority of thc directors ut any regular or special meeting duly convened and after ten (]0)
days written notice has been given of the propo~d amendments.
Thc t'm'egoing Amended and Re~tated I~ylawa of MidPcnn Legal Services, Inc., were adopted
and approved by thc Board of Directors of MJdPenn Legal Service, s, Inc., at a duly convened meeting
o£ thc Board of Directors an 13e~cmb~r 13~ 2000,
Roy Price, Secretary
12
EXHIBIT "E"
LEGAL SERVICES, INC.
FIN~CIAL STATEMENTS
WITH SUPPLEMENTARY INFORMATION
YEAR ENDED J~NE 30, 2000
(WITH COMPARATIVE TOTALS FOR 1999)
AND
INDEPENDENT AUDITOR'S REPORT
CERTIFIED PUI~[IC ACCOUNTANTS
LEGAL SERVICES, INC.
TABLE OF CONTENTS
Independent Auditor's Report
Statement of Financial Position
Statement of Activities
Statement of Functional Expenses
Statement of Cash Flows
Notes to Financial Statements
Supplementary Information
Combining Schedule of Support, Revenues and
Detailed Expenses and Changes in Net Assets
Schedule of Federal Awards
Report on Compliance and on Internal Control
Over Financial Reporting Based on an Audit of
Financial Statements Performed in Accordance
With Government Auditing Standards
Report on Compliance With Requirements Applicable
to Each Major Program and Internal Control Over
Compliance in Accordance With OMB Circular A-133
Summary Schedule of Prior Audit Findings
Schedule of Findings and Questioned Costs
Page
1
3
4
5
6
7
15
17
18
20
22
23
CERTIFIED PUBLIC ACCOUNTANTS
CLARE E ASBURY, CPA, CVA
TERRY L. HARRIS, CPA
ROBERT A. ROMAKO, CFA
GARY J. DUBAS, CPA
SCOTT A H£1NTZELMAN, CPA, CMA, CF£
GREGORY J. GAUDIO, CPA
MEMBERS
AMERICAN AND P£NNSY£VANIA
INSTITUTES Of CERT~£[ED PUBLIC
ACCOUNTANTS
INTERNATIONAl_ GROUP
ACCOUNTING FIRM5
INDEPENDENT AUDITOR'S REPORT
The Board of Directors
Legal Services, Inc.
Carlisle, Pennsylvania
We have audited the statement of financial position of Legal Services, I~c.
(LS) as of June 30, 2000 and the related statements of activities, functional
expenses, and cash flows for the year then ended. These financial statements
are the responsibility of LS's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
and the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of LS at June 30, 2000, and the
changes in its net assets and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
In accordance with Government ~uditing Standards, we have also issued a report
dated August 24, 2000 on our consideration of LS's internal control over
financial reporting and over tests of its corapliance with certain provisions of
laws, regulations, contracts and grants.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements of LS taken as a whole. The supplementary information on
pages 15 to 16 is presented for purposes of additional analysis and is not a
required part of the financlal statements of LS. The accompanying schedule of
federal awards is presented for purposes of additional analysis as required by
U.S. Office of Managew~nt and Budget Circular A-133, Audits of States, Local
Governments, and Non-Profit Organizations, and is also not a required part of
the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, is fairly stated, in all material respects, in relation to the
basic financial statements taken as a whole.
Harrisburg, Pennsylvania
August 24, 2000
2
LEGAL SERVICES, INC.
STATEMENT OF FINANCIAL POSITION
jLTN~ 30, 2000
(WITH COMPARATIVE TOTALS FOR JL'NE 30,
1999)
Cash and cash equivalents
Investments
Accounts receivable
Pennsylvania Legal Services
Disability Advocacy Program
Other
Prepaid expenses
Furniture and equipment
Law library
Accumulated depreciation
Total assets
ASSETS
2OOO
$ 173,163
143,346
11,114
1,388
39,474
1,307
98,773
45,835
(96,751)
$ 417,649
1999
107,247
134,059
11,202
1,409
18,179
2,008
85,102
49,296
(86,351)
$ 322,151
LIABILITIES AND NET ASSETS
Accounts payable and accrued expenses
Accrued compensated absences
Payroll taxes payable
Refundable advances
Legal Services Corporation
Other
Total liabilities
· Net assets - unrestricted
$ 21,592
25,934
16,183
17,895
13,784
95,388
322,261
$ 11,896
29,908
14,574
17,922
1,260
75,560
246,591
Total liabilities and net assets $ 417,649 $ 322,151
The accompanying notes are an integral
part of these financial statements.
LEGAL SERVICES, INC.
STATEMENT OF ACTIVITIES
YEAR ENDED JI)NE 30, 2000
(WITH COMPARATIVE TOTALS FOR 1999)
Revenue, gains and other support
Contracts and grants
Contributions
In-kind contributions
Other
Court awards
Interest income
Net realized and unrealized
gains on investments
Total revenues, gains and other support
Program services
Management and general
Fundraising
Total expenses
Change in net assets
Net assets - beginning
200O
$ 714,050
174,488
182,102
7,486
5,125
9,287
1,092,538
913,371
101,745
1,752
1,016,868
75,670
246,591
Net assets - ending $ 322,261
1999
$ 614,253
236,089
182,546
9,595
6,032
9,580
1,058,095
917,127
83,219
1,899
1,002,245
55,850
190,741
$ 246,591
The accompanying notes are an integral
part of these financial statements.
4
LEGAL SERVICES, INC.
STATEMENT OF FUNCTIONAL EXPENSES
YEAR ENDED JUNE 30, 2000
(WITH COMPARATIVE TOTALS FOR 1999}
Program Management
Services and General
Salaries $ 491,974 $ 72,318
volunteer services 162,608 -
Fringe benefits 114,612 12,059
Consultants and
contractors 12,406 1,306
Travel 5,168 577
Space costs 38,111 2,760
Consumable supplies 18,313 1,927
Equipment-related
expense 3,268
Other 51,811 10,798
Depreciation 15,100
Total Total
Fundraising 2000 1999
$ 653 $ 564,945 $ 517,618
162,608 224,209
169 126,840 113,058
13,712 10,127
5,745 4,618
35 40,906 40,788
25 20,265 16,059
- 3,268 4,789
870 63,479 58,214
15,100 12,765
Total expenses $ 913,371 $ 101,745 $ 1,752
$1,016,868
$1,002,245
The accompanying notes are an integral
part of these financial statements.
5
LEGAL SERVICES, INC.
STATEMENT OF CASH FLOWS
YEAR ENDED JUNE 30, 2000
(WITH COMPARATIVE TOTALS FOR 1999)
Cash flows from operating activities
Change in net assets
Adjustments to reconcile change in net
assets to net cash provided by operating
activities
Depreciation
Donation of fixed assets
(Increase) decrease in
Accounts receivable
Pennsylvania Legal Services
Disability Advocacy Program
Other
Prepaid expenses
Increase (decrease) in
Accounts payable and accrued expenses
Accrued compensated absences
Payroll taxes payable
Deferred revenue
Net cash provided by operating activities
Cash flows from investing activities
Purchases of property and equipment
Purchases for law library
Increase in investments
Net cash used in investing
activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents - beginning
Cash and cash equivalents - ending
2000 1999
$ 75,670 $ 55,850
15,100 12,765
(1,500)
88 52
21 75
(21,295) 2,696
701 222
9,696 4,876
(3,974) (1,090)
1,609 (50)
12,497 (17,812)
88,613 57,584
(13,410) (45,539)
(3,583)
(9,287) (12,130)
(22,697) (61,252)
65,916 (3,668)
107,247 110,915
$ 173,163 $ 107,247
Noncash Investing and Financing Activities
During 2000, the Corporation received donated fixed assets having a fair market value
of $1,500.
The accompanying notes are an integral
part of these financial statements.
6
LEGAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Baok~fround
Legal Services, Inc. (Corporation) is a nonprofit corporation organized to
provide civil legal representation for the poor and disadvantaged in the
Commonwealth of Pennsylvania. The Corporation is part of a network of twenty-two
separate organizations, each with their own management team, maintaining 67
offices, and servicing all of Pennsylvania's 67 counties, with its reliance on
discretionary government funding, the philanthropic community and the volunteer
services of attorneys and others, it represents its targeted clientele in
matters such as protection from abuse, custody, governmental benefits including
social security, food stamps, housing assistance, and unemployment compensation,
eviction, consumer fraud and other emerging civil matters.
The Corporation is funded on a year-to-year basis through a contract with
Pennsylvania Legal Services (PLS). Funding for the contract is provided by the
Commonwealth of Pennsylvania Department of Public Welfare (DPW) with
commonwealth and Federal Title XX funds. Additional funding is obtained from
Legal Services Corporation (LSC), a nonprofit corporation organized by the U.S.
Congress to administer a nationwide legal assistance program, from United Ways,
county government, IOLTA and other public and private sources.
Basis of Accounting
The Corporation follows the accrual basis of accounting and accordingly has
reflected all significant receivables, payables, and other liabilities. The
Corporation recognizes contract revenue earned to the extent that eligible costs
are incurred. The financial statements also incorporate applicable provisions of
the Legal Services Corporation, Audit and Accounting Guide for Recipients and
Auditors.
Basis of Presentation
The Corporation presents its financial statements in accordance with Statement
of Financial Accounting Standard (SFAS) No. 117, Financial Statements of Not-
for~Profit Organizations. Under SFAS No. 117, the Corporation is required to
report information regarding its financial position and activities according to
three classes of net assets: unrestricted net assets, temporarily restricted net
assets, and permanently restricted net assets. In addition, the Corporation is
required to present a statement of cash flows,
(continued)
LEGAL SERVICES, 1NC.
NOTES TO FINANCIAL STATEMENTS (Cont'd)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
Contributions
The Corporation reports contributions in accordance with SFAS No. 116,
Accounting for Contributions Received and Made. Under SFAS No. 116,
contributions received are recorded as unrestricted, temporarily restricted, or
permanently restricted support. This requirement is dependent on the existence
and/or nature of any donor restrictions. Support that is restricted by the donor
is reported as an increase in unrestricted net assets if the restriction expires
in the reporting period in which the support is recognized. All other donor-
restricted support is reported as an increase in temporarily or permanently
restricted net assets, depending on the nature of the restriction. When a
restriction expires (that is, when a stipulated time restriction ends or purpose
restriction is accomplished), temporarily restricted net assets are reclassified
to unrestricted net assets and reported in the Statement of Activities as net
assets released from restrictions.
Promises to Give
Unconditional promises to give that are expected to be collected within one year
are recorded at net realizable value. Unconditional promises to give that are
expected to be collected in future years are recorded at the present value of
their estimated future cash flows. The discounts on those amounts are computed
using risk-free interest rates applicable to the years in which the promises are
received. Amortization on the discounts is included in contribution revenue.
Conditional promises to give are not included as support until the conditions
are substantially met.
Ma~agement's Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Functional Allocation of Expenses
The costs of providing the various programs and activities have been summarized
on a functional basis on the statement of activities. Accordingly, certain costs
have been allocated among programs and support services.
Cash and Cash Equivalents
The Corporation considers all highly liquid deposits with an original maturity
of three months or less when purchased to be cash equivalents.
(continued)
8
LEGAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS {Cont'd)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
The Corporation carries investments in a bank administered investment account at
fair market value. Unrealized gains and losses are included in the change in net
assets in the accompanying statement of activities,
Property and Equipment
Property, consisting of office furniture, equipment and law library items,
including library books and multiple volume sets, has been capitalized at cost.
Depreciation and amortization is computed using the straight-line method over
the estimated useful lives of the respective assets, which range from 5 to 10
years.
Compensated Absences
Employees are permitted to carry over a predetermined maximum number of unused
vacation days from one fiscal year to the next. Employees receive payment for
their unused vacation, up to that maximum, at termination. In accordance with
generally accepted accounting principles, the Corporation has established a
liability for unused vacation up to the current maximum.
In-Kind Contributions
Donated in-kind contributions are recorded at fair market value at the time of
receipt. These contributions are recognized as both support and expenses in the
statement of activities. Only those contributed services that create or enhance
nonfinancial assets, require skills and are provided by such individuals
possessing those skills and would typically need to be purchased, if not
provided by donation, are so recognized in the financial statements. Local
attorneys, law students and secretarial personnel volunteered services in the
amount of $162,608. In addition, in-kind rent of the Chambersburg office was
$11,880 and equipment was donated valued at $1,500. The rate used in deter~nining
the value of in-kind contributions from local attorneys was $75 per hour.
Ex~ense Allocation
The Corporation allocates expenses among the Pennsylvania Legal Services (PLS),
the Legal Services Corporation (LSC) and other funding sources. The expense
allocation among funding sources is made based on annualized budgetary revenue
relationships and by specific identification.
(continued)
LEGAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS (Cont'd)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
Comparative Totals
The financial statements include certain prior-year sun~arized comparative
information in total but not by net asset class. Such information does not
include sufficient detail to constitute a presentation in conformity with
generally accepted accounting principles. Accordingly, such information should
be read in conjunction with the Corporation's financial statements for the year
ended June 30, 2000 from which the summarized information was derived.
INVESTMENTS
A schedule of investments at June 30, 2000 follows:
Unrealized
Fair Value Cost Appreciation
Mellon Bank
Invested cash $ 11,340 $ 11,340 $
Mutual fund 132,006 100,093 31,913
$ 143,346 $ 111,433 $ 31,913
PROPERTY AND EQUIPMENT
Property, equipment and law library together with estimated useful lives are as
follows at June 30, 2000:
Furniture and equipment
Law library
Depreciation expense was $15,100 for the year ended June 30,
2000
98,773
45,$35
144,608
2000.
Estimated
Useful
Lives
5 years
10 years
(continued)
10
LEGAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS (Cont'd)
LEASES
The Corporation leases office facilities at Carlisle, Gettysburg, and
Chambersburg, Pennsylvania. The leases provide for annual fixed rental payments
plus certain real estate expenses. The Gettysburg lease extends for a period
longer than one year; however, it is cancelable without penalty in the event the
Corporation is unable to secure sufficient funding to finance its programs.
Total rent expense for the year ended June 30, 2000 was $34,132.
FUNDING
The receivable from PLS as of June 30, 2000 represents reimbursements due to the
Corporation for eligible expended or obligated program costs incurred during the
year.
Additional funding is obtained from
the U.S. Congress to administer a
requires programs receiving funding
minimum a predetermined portion of
involvement (PAI). This requirement
participation in service delivery
cooperation with state and local bar
LSC, a nonprofit corporation organized by
nationwide legal assistance program. LSC
to implement procedures to expense at a
its funding activity for private attorney
was intended to increase private attorney
and lead to increased communication and
associations.
LSC funds remaining unused at the end of an accounting period are carried in the
applicable net assets balance. In accordance with the normal policies of LSC,
the Corporation may retain unexpended funds for use in future periods, provided
that expenses incurred are in compliance with the specified terms of the grant.
LSC may, at its discretion, require reimbursement for expenses or return of
funds, or both, as a result of noncompliance by the Corporation with its terms.
In addition, if the Corporation terminates its legal assistance activities, all
unexpended funds are to be returned to the funding source. LSC also retains a
reversionary interest in property, as well as the right to determine the
ultimate use of any proceeds from the sale of assets purchased with its funding.
Continued operations of the Corporation are contingent upon its future funding
by DPW and LSC. DPW's and LSC's funding are dependent on the budgeting processes
of the Commonwealth of Pennsylvania and the federal government. The Corporation
has no contingency plan in the event such funding is no longer available.
(continued)
11
LEGAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS (Cont*d)
6. INCOME TAXES
The Corporation is exempt from Federal income taxes under Section $01(c)(3) of
the Internal Revenue Service Code, as well as from Pennsylvania State corporate
taxes. In addition, the Corporation has been determined by the Internal Revenue
Service not to be a "Private Foundation" within the meaning of Section 509(a) of
the Code.
7. COMMITMENTS AND CONTINGENCIES
Grants received are subject to audit and adjustment by grantor agencies,
principally LSC and PLS. Any disallowed claims, including amounts already
collected, may constitute a liability of the applicable funds. The amount, if
any, of expenses which may be disallowed by the grantor cannot be determined at
this time, although the Corporation expects such amounts, if any, to be
immaterial.
NET ASSETS
Net assets for the year ended June 30, 2000 consists of the following:
Property and equipment
Other unrestricted
Total
Unrestricted
$ 47,857
274,404
$ 322,261
9. CONDITIONAL PROMISES TO GIVE
The Corporation has a contract with Legal Services Corporation to provide
legal services. The contract runs from January 1, 2000 to December 31, 2000.
At June 30, 2000 the remaining six months of the contract totaling $107,370 is
considered a conditional promise to give, conditional upon the submission of
allowable costs.
(continued)
12
LEGAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS (Cont'd)
10. PLAN TO MERGE
A me~randum of understanding dated August 24, 2000 states the intent of the
Corporation to merge with two other legal service entities - Central
Pennsylvania Legal Services and Keystone Legal services (collectively known as
Mid-Penn Legal Services) on or before January 1, 2001. It is not presently
determinable what effect the merger will have on the Corporation's financial
position.
In addition, these entities received a joint grant in the amount of $55,000
from the Pennsylvania Interest on Lawyers Trust Account Board (PAIOLTA). LS
was designated as the lead recipient of the grant and was responsible for
oversight and financial reporting to PAIOLTA. For the year ended June 30,
2000, $7,000 of the grant was recorded as revenue by
11. FINANCIAL INSTRUMENTS
The Corporation maintains its cash balances at various financial institutions.
The balances are insured by the Federal Deposit Insurance Corporation (FDIC)
up to an aggregate amount of $100,000 per financial institution. At June 30,
2000, the Corporation maintained several cash balances at Keystone Financial
that in total exceeded the FDIC insurance limit by $95,777.
13
SUPPLEMENTARY INFORMATION
14
LEGAL SERVICES, INC.
SCHEDULE OF FEDERAL AWARDS
~ ENDED J%INE 30, 2000
Federal Grantor/Pass-Through Grantor/Program Title
U.S. Department of Health and Human Services
Passed through Commonwealth of Pennsylvania
Department of Public Welfare:
Pennsylvania Legal Services:
Title XX Social Services Block Grant
U.S. Department of Justice
Domestic Violence Victims' Civil Legal Assistance
Program
Passed through Cumberland County
Stop Violence Against Women Formula
Grant Program
Passed through Adams County
Stop Violence Against Women Formula
Grant Program
Passed through Franklin County
Stop Violence Against Women Formula
Grant Program
Passed through Fulton County
Stop Violence Against Women Formula
Passed through Community Legal Services
Administration on Developmental Disabilities
U.S. Congress
Legal Services Corporation
Agency
Number
93.667
16.524
16.588
16.588
16.588
~6.588
93.631
09
Total $
Total
Expenses
$ 91,618
61,461
20,000
584
37,300
14,700
13,878
214,893
454,434
· GENERAL
The schedule of federal awards reflects the activity of all federal financial
assistance programs of Legal Services, Inc.
· BASIS OF ACCOUNTING
The schedule of federal awards is prepared using the accrual basis of accounting·
17
CERTIFIED PUBLIC ACCOUNTANTS
CLAREN,~ . ASBURY, CF'A, CVA
TERRY L. HARRIS, CPA
ROBERT A. ROMAKO, CPA
GARY J. OUBAS, CPA
SCOTT A. HEINTZELMAN, CPA, CMA, CfE
GREGORY J. GAUDIO, CPA
MEMBERS
AMERICAN AND PENNSYLVANIA
INSTITUTES OF CERTIEIED PUBLIC
ACCOUNTANTS
INTERNATIONAL GROUP OF
ACCOUNTING FIRMS
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER
FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL
STATEMENTS PERFORMED IN ACCORDANCE WITH
GO I/ERNMENT AUDITING ST/INDARDS
The Board of Directors
Legal Services, Inc.
Carlisle, Pennsylvania
We have audited the financial statements of Legal Services, Inc. (LS) as of and
for the year ended June 30, 2000, and have issued our report thereon dated
August 24, 2000. We conducted our audit in accordance with generally accepted
auditing standards and the standards applicable to financial audits contained
in Government Auditing Standards, issued by the Comptroller General of the
United States.
Compliance
As part of obtaining reasonable assurance about whether LS's financial
statements are free of material misstatement, we performed tests of its
compliance with certain provisions of laws, regulations, contracts and 9rants,
noncompliance with which could have a direct and material effect on the
determination of financial statement amounts. However, providing an opinion on
compliance with those provisions was not an objective of our audit and,
accordingly, we do not express such an opinion. The results of our tests
disclosed no instances of noncompliance that are required to be reported under
Government Audi ting Standards.
Internal Control Over Financial Reportinq
In planning and performin~ our audit, we considered LS's internal control over
financial reportin~ in order to determine our auditin~ procedures for the
purpose of expressin~ our opinion on the financial statements and not to
provide assurance on the internal control over financial reporting. Our
consideration of the internal control over financial reportin~ would not
necessarily disclose all r~atters in the internal control over financial
415 FALL()WFIEt D ROAD
2[q[) FLOOR · (AMP HII h PA 1701l
(continued)
18
reporting that might be mater/al weaknesses. A material weakness is a condition
in which the design or operation of one or more of the internal control
components does not reduce to a relatively low level the risk that
misstatements in amounts that would be material in relation to the flnancial
statements being audited may occur and not he detected within a timely per/od
by employees in the normal course of performing their assigned functions. We
noted no matters involving the internal control over flnancial reporting and
/ts operation that we consider to be mater/al weaknesses.
This report is intended for the information of the audit co~mmittee, management
and federal awarding agencies and pass-through entities and is not intended to
be and should not be used by anyone other than these specified parties.
Harrisburg, Pennsylvania
August 24, 2000
19
CLARE, ~ E. ASBURY, CPA, CVA
TERRY L HARRIS, CPA
ROBERT A. ROMAKO, CPA
GARY I. DUBAS, CPA
SCOTT A. HEINTZELMAN, CPA, CMA, CFE
GREGORY I GAUDIO, CPA
MEMBERS
AMERICAN AND PENNSYLVANIA
INSTITLJTES OE CERTIFIED PUBLIC
ACCOUNTANTS
~_~ ~NTERNAr~ON^L GROUP OF
ACCOUNTING FIRMS
REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE
TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE
IN ACCORDANCE WITH OMB CIRCULAR A-133
The Board of Directors
Legal Services, Inc.
Carlisle, Pennsylvania
Com~llance
We have audited the compliance of Legal Services, Inc. (LS) with the types of
compliance requirements described in the U. S. Office of Man&ge~ent and Budget
(ObfB) Circular A-133 Compliance Supplement and Legal Services Corporation (LSC)
Audit Guide for Recipients and Auditors and Compliance Supplement that are
applicable to each of its major federal pro~rams for the year ended June 30,
2000. LS's major federal programs are identified in the summary of auditor's
results section of tke accompanying schedule of findings and questioned costs.
Compliance with the requirements of laws, regulations, contracts and grants
applicable to each of its major federal programs is the responsibility of L$'s
management. Our responsibility is to express an opinion on LS's compliance
based on our audit.
We conducted our audit of compliance in accordance with 9enerally accepted
auditing standards; the standards applicable to financial audits contained in
Government Auditing Standards, issued by the Comptroller General of the United
States; and OMB Circular A-133, Audits of States, Local Governfnents, and Non-
Profit Organizations; and the L$C Audit Guide for Recipients and ~uditors.
Those standards and OMB Circular A-133 require that we plan and perform the
audit to obtain reasonable assurance about whether noncompliance with the types
of compliance requirements referred to above that could have a direct and
material effect on a major federal program occurred, An audit includes
examining, on a test basis, evidence about LS'S compliance with those
requirements and performin9 such other procedures as we considered necessary in
the circumstances. We believe that our audit provides a reasonable basis for
our opinion. Our audit does not provide a legal determination on LS's
compliance with those requirements.
(continued)
20
In our opinion, LS complied, in all mater/al respects, with the requirements
referred to above that are applicable to each of its major federal programs for
the year ended June 30, 2000.
Internal Control Over Compliance
The management of LS is responsible for establishing and maintaining effective
internal control over compliance with requirements of laws, regulations,
contracts and grants applicable to federal programs. In planning and performing
our audit, we considered bS's internal control over compliance with
requirements that could have a direct and material effect on a major federal
program in order to determine our auditing procedures for the purpose of
expressing our opinion on compliance and to test and report on internal control
over compliance in accordance with OMB Circular A-133.
Our consideration of the internal control over compliance would not necessarily
disclose all matters in the internal control that might be material weaknesses.
A material weakness is a condition in which the design or operation of one or
more of the internal control components does not reduce to a relatively low
level the risk that noncompliance with applicable requirements of laws,
regulations, contracts and grants that would be material in relation to a major
federal program being auditsd may occur and not be detected within a timely
period by employees in the normal course of performing their assigned
functions. We noted no matters involving the internal control over compliance
and its operation that we consider to be material weaknesses.
This report is intended for the information of the audit committee, management
and federal awarding agencies and pass-through entities and is not intended to
be and should not be used by anyone other than these specified parties.
Harrisburg, Pennsylvania
August 24, 2000
21
LEGAL SERVICES, INC.
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
YEAR ENDED JUNE 30, 2000
Prior Year Findings
22
LEGAL SERVICES, INC.
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2000
l) summary of Auditor's Results
(i) An unqualified opinion was issued on the financial statements.
(ii) There were no reportable conditions in internal controls.
(iii) There was no noncompliance which was material to the financial
statements.
(iv) There were no reportable conditions in internal control over major
programs.
(v) An unqualified opinion was issued on compliance for major
programs.
(vi) There were no audit findings which were required to be reported
under OMB Circular A-133 §.510(a).
(vii) Major programs consisted of the following:
a) Legal Services Corporation
b) Title XX Social Services Block Grant 93.667
(viii) The dollar threshold used to distinguish between Type A and Type B
programs was $300,000.
(ix) In accordance with the Legal Services Corporation Compli6tuce
Supplement for Audits of LSC Recipients, Legal Services, Inc. was
determined not to be a low-risk auditee. ~.
2) There were no findings relating to the financial statements which are
required to be reported in accordance with GAGAS.
3) There were no findings and questioned costs for federal awards which would
include audit findings as defined in OMB Circular A-133 §.510(a).
23
I~ RE:
i~'l'l nON OF' LBOAX, SBP. VICBS,
I Peflnfylvini& flo~proflt eor~oro~
CUM~ERLA~3) COUNTY, PI:IYNSYLYANIA
COURT
I. THOMAS PLACId, yeflf~ that I sm the Chih'm&~ oi'the
~ ~ont ~ ~c ~ ~ to ~e best of my
~d ~ ~ m~ ~ ~ ~e ~bJ~ to b p~tles o~ 1S ~, C,S.~ 0~904
IN RE:
PETITION OF LEGAL SERVICES, INC.,
a Pennsylvania non-profit corporation
: CUMBERLAND COUNTY, PENNSYLVANIA
: ORPHANS' COURT DIVISION
: NO.
CERTIFICATE OF SERVICE
I, JOHN DELORENZO, ESQUIRE, certify that on this date, I served a certified tree and
correct copy of the foregoing Petition for Declaratory Judgment of Nondiversion of Property upon
the following counsel of record, by hand-delivery to:
Commonwealth of Pennsylvania
Office of the Attorney General
16a' Floor, Strawberry Square
Harrisburg, PA 17120
lire
Date: January 10, 2001