As filed with the Securities and Exchange Commission on May 12, 1998
Registration No. 333-48003
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
PRE-EFFECTIVE AMENDMENT NO. 2 TO THE
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
LIBERTY BANCORP, INC.
(Name of Small Business Issuer in Its Charter )
Federal 6712 (To be applied for)
(State or Jurisdiction (Primary Standard (I.R.S. Employer
of Incorporation or Industrial Classification Code Identification No.)
Organization) Number)
1410 St. Georges Avenue
Avenel, New Jersey 07001
(732) 499-7200
(Address and Telephone Number of Principal Executive Offices)
1410 St. Georges Avenue
Avenel, New Jersey 07001
(Address of Principal Place of Business or Intended Principal Place of Business)
John R. Bowen
1410 St. Georges Avenue
Avenel, New Jersey 07001
(732) 499-7200
(Name, Address and Telephone Number of Agent for Service)
Copies to:
Eric Luse, Esq.
Kenneth R. Lehman, Esq.
Luse Lehman Gorman Pomerenk & Schick, P.C.
5335 Wisconsin Avenue, N.W., Suite 400
(202) 274-2000
Washington, D.C. 20015
Approximate date of proposed sale to the public: As soon as practicable after
this registration statement becomes effective.
If this Form is filed to register additional shares for an offering pursuant to
Rule 462(b) under the Securities Act please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering: |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: |_|
If the delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: |_|
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: |X|
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed
Proposed maximum
maximum aggregate
Title of each class of Amount to be offering price offering price Amount of
securities to be registered registered per share (1) registration fee
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $1.00 par value per share 1,888,655 shares $10.00 $18,886,550 $5,572.00
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) A fee of $5,572 was submitted with the registrant's previous filings.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration shall
thereafter become effective in accordance with Section 8(a) of the Securities
Act of 1933 or until the registration statement shall become effective on such
date as the Securities and Exchange Commission, acting pursuant to said Section
8(a), may determine.
<PAGE>
PART II: INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers of Axia Federal Savings Bank,
and Liberty Bancorp, Inc.
Generally, federal regulations define areas for indemnity coverage for
federal savings associations, and proposed federal regulations define areas for
indemnity coverage for federal MHC subsidiary holding companies, as follows:
(a) Any person against whom any action is brought by reason of the
fact that such person is or was a director or officer of the savings
association shall be indemnified by the savings association for:
(i) Reasonable costs and expenses, including reasonable
attorneys' fees, actually paid or incurred by such person in
connection with proceedings related to the defense or settlement of
such action;
(ii) Any amount for which such person becomes liable by reason of
any judgment in such action;
(iii) Reasonable costs and expenses, including reasonable
attorneys' fees, actually paid or incurred in any action to enforce
his rights under this section, if the person attains a final judgment
in favor of such person in such enforcement action.
(b) Indemnification provided for in subparagraph (a) shall be made to
such officer or director only if the requirements of this subsection are
met:
(i) The savings association shall make the indemnification
provided by subparagraph (a) in connection with any such action which
results in a final judgment on the merits in favor of such officer or
director.
(ii) The savings association shall make the indemnification
provided by subparagraph (a) in case of settlement of such action,
final judgment against such director or officer or final judgment in
favor of such director or officer other than on the merits except in
relation to matters as to which he shall be adjudged to be liable for
negligence or misconduct in the performance of duty, only if a
majority of the directors of the savings association determines that
such a director or officer was acting in good faith within what he was
reasonably entitled to believe under the circumstances was the scope
of his employment or authority and for a purpose which he was
reasonably entitled to believe under the circumstances was in the best
interest of the savings association or its members.
(c) As used in this paragraph:
(i) "Action" means any action, suit or other judicial or
administrative proceeding, or threatened proceeding, whether civil,
criminal, or otherwise, including any appeal or other proceeding for
review;
(ii) "Court" includes, without limitation, any court to which or
in which any appeal or any proceeding for review is brought;
(iii) "Final Judgment" means a judgment, decree, or order which
is appealable and as to which the period for appeal has expired and no
appeal has been taken;
(iv) "Settlement" includes the entry of a judgment by consent or
by confession or upon a plea of guilty or of nolo contendere.
<PAGE>
Item 25. Other Expenses of Issuance and Distribution Amount
* Legal Fees and Expenses.............................. $ 90,000
* Printing, Postage, Mailing, EDGAR and Application
photocopying ...................................... 150,000
* Appraisal and Business Plan Fees and Expenses........ 25,000
* Accounting Fees and Expenses......................... 30,000
** Underwriter's Fees and Expenses...................... 175,000
* Filing Fees (NASD, OTS and SEC)...................... 65,000
* State Securities fees................................ 15,000
* Other Expenses....................................... 40,000
-----------
* Total ............................................... $ 600,000
===========
* Estimated
** Liberty Bancorp, Inc. has retained Ryan, Beck & Co. ("Ryan Beck") to assist
in the sale of common stock on best efforts basis in the Offerings.
Item 26. Recent Sales of Unregistered Securities
Not Applicable.
Item 27. Exhibits:
The exhibits filed as part of this registration statement are
incorporated by reference from the Exhibit Index.
Item 28. Undertakings
The undersigned Registrant hereby undertakes to:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) Reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any duration from the low or high and of the estimated
maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than 20
percent change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement;
(iii) Include any additional or changed material information on
the plan of distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial
bona fide offering.
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
<PAGE>
The small business issuer will provide to the underwriter at the
closing specified in the Underwriting Agreement certificates in such
documentation and registered in such names as required by the underwriter to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the small business issuer pursuant to the foregoing provisions, or otherwise,
the small business issuer has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act, and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the small business issuer of expenses incurred or paid by a director, officer or
controlling person of the small business issuer in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the small business
issuer will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
questions whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the Township of
Woodbridge, State of New Jersey, on May 11, 1998.
LIBERTY BANCORP, INC. (In formation)
By: /s/ John R. Bowen
----------------------------------
John R. Bowen
President and Chief Executive Officer
(Duly Authorized Representative)
POWER OF ATTORNEY
We, the undersigned directors and officers of Liberty Bancorp, Inc. (in
formation, and the "Company") hereby severally constitute and appoint John R.
Bowen as our true and lawful attorney and agent, to do any and all things in our
names in the capacities indicated below which said John R. Bowen may deem
necessary or advisable to enable the Company to comply with the Securities Act
of 1933, and any rules, regulations and requirements of the Securities and
Exchange Commission, in connection with the registration statement on Form SB-2
relating to the offering of the Company's Common Stock, including specifically,
but not limited to, power and authority to sign for us in our names in the
capacities indicated below the registration statement and any and all amendments
(including post-effective amendments) thereto; and we hereby approve, ratify and
confirm all that said John R. Bowen shall do or cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and as of the dates indicated.
Signatures Title Date
---------- ----- ----
/s/ John R. Bowen President, Chief Executive May 11, 1998
- ----------------------- Officer and Chairman of the
John R. Bowen Board
(Principal Executive Officer)
/s/ Michael J. Widmer Executive Vice President, Chief May 11, 1998
- ----------------------- Financial Officer and Director
Michael J. Widmer (Principal Financial Officer)
/s/ Joseph F. Coccaro Treasurer May 11, 1998
- ----------------------- (Principal Accounting Officer)
Joseph F. Coccaro
/s/ Neil R. Bryson, DDS Director May 11, 1998
- -----------------------
Neil R. Bryson, DDS
/s/ Anthony V. Caruso Director May 11, 1998
- -----------------------
Anthony V. Caruso
/s/ John W. Fox Director May 11, 1998
- -----------------------
John W. Fox
<PAGE>
Signatures Title Date
---------- ----- ----
/s/ Donald F. Marsh Director May 11, 1998
- -----------------------
Donald F. Marsh
/s/ John C. Marsh Director May 11, 1998
- -----------------------
John C. Marsh
/s/ Paul J. McGovern Director May 11, 1998
- -----------------------
Paul J. McGovern
/s/Nelson L. Taylor, Jr. Director May 11, 1998
- ----------------------
Nelson L. Taylor, Jr.
<PAGE>
As filed with the Securities and Exchange Commission on May 12, 1998
================================================================================
Registration No. 333-48003
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------
EXHIBITS
TO
PRE-EFFECTIVE AMENDMENT NO. 2 TO THE
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------------
LIBERTY BANCORP, INC.
AVENEL, NEW JERSEY
<PAGE>
EXHIBIT INDEX
1.1 Engagement Letter between Axia Federal Savings Bank and Ryan, Beck &
Co., Inc.*
1.2 Agency Agreement among Liberty Bancorp, Inc., Axia Federal Savings Bank
and Ryan, Beck & Co., Inc.*
2 Plan of Reorganization from Mutual Savings Association to Mutual
Holding Company and Stock Issuance Plan*
3.1 Proposed Federal Holding Company Charter of Liberty Bancorp,
Inc.(contained in Exhibit 2)
3.2 Proposed Bylaws of Liberty Bancorp, Inc.(contained in Exhibit 2)
4 Form of Common Stock Certificate of Liberty Bancorp, Inc.*
5 Opinion of Luse Lehman Gorman Pomerenk & Schick, P.C. regarding
legality of securities being registered*
8.1 Form of Federal Tax Opinion of Luse Lehman Gorman Pomerenk & Schick,
P.C.
8.2 Form of State Tax Opinion
8.3 Opinion of FinPro, Inc. with respect to Subscription Rights*
10.1 Form of Employment Agreement*
10.2 Form of Employee Stock Ownership Plan*
21 Subsidiaries of the Registrant*
23.1 Consent of Luse Lehman Gorman Pomerenk & Schick, P.C. (contained in
Opinions included on Exhibits 5 and 8.1)
23.2 Consent of Radics & Co., LLC*
23.3 Consent of FinPro, Inc.*
24 Power of Attorney (set forth on signature page)
27 EDGAR Financial Data Schedule*
99.1 Appraisal Agreement between Axia Federal Savings Bank and FinPro, Inc.*
99.2 Appraisal Report of FinPro, Inc.*
99.3 Proxy Statement*
99.4 Marketing Materials*
99.5 Order and Acknowledgment Form and Certification Form*
* Previously filed.
** To be filed supplementally or by amendment.
[LETTERHEAD OF LUSE LEHMAN GORMAN POMERENK & SCHICK]
May 6, 1998
Board of Directors
Axia Federal Savings Bank
1410 St. George Avenue
Avenel, New Jersey 07001
Re: Mutual Holding Company Formation and Stock Issuance
Ladies and Gentlemen:
We have been requested as special counsel to Axia Federal Savings Bank
to express our opinion concerning the Federal income tax consequences relating
to the proposed conversion of the Bank from a federally chartered mutual savings
and loan association (the "Bank") to a federally chartered stock savings bank to
be called Liberty Bank ("Stock Bank") and the formation of Liberty Bancorp, MHC,
a federal mutual holding company ("Mutual Holding Company") which will acquire
the outstanding stock of Stock Bank and subsequently contribute Stock Bank's
stock to Liberty Bancorp, Inc. ("Stock Holding Company").
In connection therewith, we have examined the Plan of Reorganization
(as defined below) and certain other documents of or relating to the
Reorganization (as defined below), some of which are described or referred to in
the Plan of Reorganization and which we deemed necessary to examine in order to
issue the opinions set forth below. Unless otherwise defined, all terms used
herein have the meanings given to such terms in the Plan of Reorganization.
In our examination, we have assumed the authenticity of original
documents, the accuracy of copies and the genuineness of signatures. We have
further assumed the absence of adverse facts not apparent from the face of the
instruments and documents we examined.
In issuing our opinions, we have assumed that the Plan of
Reorganization has been duly and validly authorized and has been approved and
adopted by the board of directors of the Bank at a meeting duly called and held;
that the Bank will comply with the terms and conditions of the Plan of
Reorganization, and that the various representations and warranties which are
provided to us are accurate, complete, true and correct. Accordingly, we express
no opinion concerning the effect, if any, of variations from the foregoing. We
specifically express no opinion concerning tax matters relating to the Plan of
Reorganization under state and local tax laws and under Federal income tax laws
except on the basis of the documents and assumptions described above.
<PAGE>
Board of Directors
Axia Federal Savings Bank
May 6, 1998
Page 2
For purposes of this opinion, we are relying on the representations
provided to us by the Bank, which are incorporated herein by reference.
In issuing the opinions set forth below, we have referred solely to
existing provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), existing and proposed Treasury Regulations thereunder, current
administrative rulings, notices and procedures and court decisions. Such laws,
regulations, administrative rulings, notices and procedures and court decisions
are subject to change at any time. Any such change could affect the continuing
validity of the opinions set forth below. This opinion is as of the date hereof,
and we disclaim any obligation to advise you of any change in any matter
considered herein after the date hereof.
In rendering our opinions, we have assumed that the persons and
entities identified in the Plan of Reorganization will at all times comply with
the requirements of Code sections 368 and 351, the other applicable state and
Federal laws and the representations of the Bank. In addition, we have assumed
that the activities of the persons and entities identified in the Plan of
Reorganization will be conducted strictly in accordance with the Plan of
Reorganization. Any variations may affect the opinions we are rendering.
We emphasize that the outcome of litigation cannot be predicted with
certainty and, although we have attempted in good faith to opine as to the
probable outcome of the merits of each tax issue with respect to which an
opinion was requested, there can be no assurance that our conclusions are
correct or that they would be adopted by the IRS or a court.
SUMMARY OF OPINIONS
Based on the facts, representations and assumptions set forth herein,
we are of the opinion that:
With Respect to the Exchange of the Bank's Charter for a Stock Charter
("Bank Conversion"):
1. Bank's exchange of its charter for a federal stock savings bank
charter is a mere change in identity and form and therefore qualifies as a
reorganization within the meaning of Section 368(a)(1)(F) of the Internal
Revenue Code ("Code").
<PAGE>
Board of Directors
Axia Federal Savings Bank
May 6, 1998
Page 3
2. No gain or loss will be recognized by Bank upon the transfer of its
assets to Stock Bank solely in exchange for shares of Stock Bank stock and the
assumption by Stock Bank of the liabilities of Bank. (Code Sections 361(a) and
357(a)).
3 No gain or loss will be recognized by Stock Bank upon the receipt of
the assets of Bank in exchange for shares of Stock Bank common stock. (Code
Section 1032(a)).
4. Stock Bank's holding period in the assets received from Bank will
include the period during which such assets were held by the Bank. (Code Section
1223(2)).
5. Stock Bank's basis in the assets of Bank will be the same as the
basis of such assets in the hands of Bank immediately prior to the proposed
transaction. (Code Section 362(b)).
6. Bank members will recognize no gain or loss upon the constructive
receipt of Stock Bank common stock solely in exchange for their membership
interests in Bank. (Code Section 354(a)(1)).
7. The basis of the Stock Bank common stock to be constructively
received by the Bank's members will be the same as their basis in their
membership interests in the Bank surrendered in exchange therefor. (Code Section
358(a)(1)).
8. The holding period of the Stock Bank common stock constructively
received by the members of the Bank will include the period during which the
Bank members held their membership interests, provided that the membership
interests were held as capital assets on the date of the exchange. (Code Section
1223(1)).
9. The Stock bank will succeed to and take into account the Bank's
earnings and profits or deficit in earnings and profits, as of the date of the
proposed transaction. (Code Section 381).
<PAGE>
Board of Directors
Axia Federal Savings Bank
May 6, 1998
Page 4
With Respect to the Transfer of Stock Bank Stock to Mutual Holding
Company for Membership Interests (the "351 Transaction"):
10. The exchange of stock by the Stock Bank stockholders in exchange
for membership interests in the Mutual Holding Company will constitute a
tax-free exchange of property solely for voting "stock" pursuant to Section 351
of the Internal Revenue Code.
11. Stock Bank's stockholders will recognize no gain or loss upon the
transfer of the Stock Bank stock they constructively received in the Bank
conversion to the Mutual Holding Company solely in exchange for membership
interests in the Mutual Holding Company. (Code Section 351).
12. Stock Bank stockholder's basis in the Mutual Holding Company
membership interests received in the transaction will be the same as the basis
of the property transferred in exchange therefor, reduced by the sum of the
liabilities assumed by Mutual Holding Company or to which assets transferred are
taken subject. (Code Section 358(a)(1)).
13. Stock Bank stockholder's holding period for the membership
interests in Mutual Holding Company received in the transaction will include the
period during which the property exchanged was held by Stock Bank stockholders,
provided that such property was a capital asset on the date of the exchange.
(Code Section 1223(1)).
14. Mutual Holding Company will recognize no gain or loss upon the
receipt of property from Stock Bank stockholders in exchange for membership
interests in the Mutual Holding Company. (Code Section 1032(a)).
15. Mutual Holding Company's basis in the property received from Stock
Bank stockholders will be the same as the basis of such property in the hands of
Stock Bank stockholders immediately prior to the transaction. (Code Section
362(a)).
16. Mutual Holding Company's holding period for the property received
from Stock Bank's stockholders will include the period during which such
property was held by Stock Bank stockholders. (Code Section 1223(2)).
17. Stock Bank depositors will recognize no gain or loss solely by
reason of the transaction.
<PAGE>
Board of Directors
Axia Federal Savings Bank
May 6, 1998
Page 5
With Respect to the Transfers to the Stock Holding Company in Exchange
for Common Stock in the Stock Holding Company
18. The Mutual Holding Company and the persons who purchased Common
Stock of the Stock Holding Company in the Subscription and Community Offering
("Minority Stockholders") will recognize no gain or loss upon the transfer of
Stock Bank stock and cash, respectively, to the Stock Holding Company in
exchange for stock in the Stock Holding Company.
Code Sections 351(a) and 357(a).
19. Stock Holding Company will recognize no gain or loss on its receipt
of Stock Bank stock and cash in exchange for Stock Holding Company Stock. (Code
Section 1032(a)).
20. The basis of the Stock Holding Company Common Stock to the Minority
Stockholders will be the actual purchase price thereof, and a shareholders
holding period for Common Stock acquired through the exercise of subscription
rights will begin on the date the rights are exercised.
PROPOSED TRANSACTION
On October 15, 1997, the board of directors of the Bank adopted that
certain Plan of Reorganization From A Mutual Savings Association to A Mutual
Holding Company and Stock Issuance Plan, which was amended on April 15, 1998 (as
amended, the "Plan of Reorganization"). For what are represented to be valid
business purposes, the Bank's board of directors has decided to convert to a
mutual holding company structure pursuant to statutes. The following steps are
proposed:
(i) The Bank will organize an interim stock savings bank (Interim
One) as its wholly-owned subsidiary;
(ii) Interim One will organize a federal mid-tier holding company
as its wholly-owned subsidiary (Stock Holding Company); and
(iii) Interim One will also organize another interim federal stock
savings bank as its wholly-owned subsidiary (Interim Two).
The following transactions will occur simultaneously:
<PAGE>
Board of Directors
Axia Federal Savings Bank
May 6, 1998
Page 6
(iv) The Bank will exchange its charter for a federal stock savings
bank charter and become a stock savings bank that will
constructively issue its common stock to members of the Bank;
(v) Interim One will cancel its outstanding stock and exchange its
charter for a federal mutual holding company charter and
thereby become the Mutual Holding Company;
(vi) Interim Two will merge with and into the Bank with the Bank as
the surviving entity, the former members of the Bank who
constructively hold stock in the Bank will exchange their
stock in the Bank for membership interests in the Mutual
Holding Company; and
(vii) The Mutual Holding Company will contribute the Bank's stock to
the Stock Holding Company, a wholly-owned subsidiary of the
Mutual Holding Company for additional shares of Bank Stock.
(viii) Contemporaneously, with the contribution set forth in "(vii)"
the Stock Holding Company will offer to sell up to 49.9% of
its Common Stock in the Subscription Offering and, if
applicable, the Direct Community Offering.
These transactions are referred to herein collectively as the
"Reorganization."
Those persons who, as of the date of the Bank Conversion (the
"Effective Date"), hold depository rights with respect to the Bank will
thereafter have such rights solely with respect to the Stock Bank. Each deposit
account with the Bank at the time of the exchange will become a deposit account
in the Stock Bank in the same amount and upon the same terms and conditions.
Following the completion of the Reorganization, all depositors and borrowers who
had membership rights with respect to the Bank immediately prior to the
Reorganization will continue to have such rights solely with respect to the
Mutual Holding Company so long as they continue to hold deposit accounts or
borrowings with the Stock Bank. All new depositors of the Stock Bank after the
completion of the Reorganization will have ownership rights solely with respect
to the Mutual Holding Company so long as they continue to hold deposit accounts
with the Stock Bank.
The shares of Interim Two common stock owned by the Mutual Holding
Company prior to the Reorganization shall be converted into and become shares of
common stock of the Stock Bank on the Effective Date. The shares of Stock Bank
common stock constructively received by
<PAGE>
Board of Directors
Axia Federal Savings Bank
May 6, 1998
Page 7
the Stock Bank stockholders (formerly the members holding liquidation rights of
the Bank) will be transferred to the Mutual Holding Company by such persons in
exchange for liquidation rights in the Mutual Holding Company.
The Stock Holding Company will have the power to issue shares of
capital stock (including common and preferred stock) to persons other than the
Mutual Holding Company. So long as the Mutual Holding Company is in existence,
however, it must own a majority of the voting stock of Stock Holding Company.
Stock Holding Company may issue any amount of non-voting stock to persons other
than Mutual Holding Company. No such non-voting stock will be issued as of the
date of the Reorganization.
* * *
The opinions set forth above represent our conclusions as to the
application of existing Federal income tax law to the facts of the instant
transaction, and we can give no assurance that changes in such law, or in the
interpretation thereof, will not affect the opinions expressed by us. Moreover,
there can be no assurance that contrary positions may not be taken by the IRS,
or that a court considering the issues would not hold contrary to such opinions.
All of the opinions set forth above are qualified to the extent that
the validity of any provision of any agreement may be subject to or affected by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally. We do not express any opinion as to
the availability of any equitable or specific remedy upon any breach of any of
the covenants, warranties or other provisions contained in any agreement. We
have not examined, and we express no opinion with respect to the applicability
of, or liability under, any Federal, state or local law, ordinance, or
regulation governing or pertaining to environmental matters, hazardous wastes,
toxic substances, asbestos, or the like.
It is expressly understood that the opinions set forth above represent
our conclusions based upon the documents reviewed by us and the facts presented
to us. Any material amendments to such documents or changes in any significant
fact would affect the opinions expressed herein.
<PAGE>
Board of Directors
Axia Federal Savings Bank
May 6, 1998
Page 8
We have not been asked to, and we do not, render any opinion with
respect to any matters other than those expressly set forth above.
We hereby consent to the filing of the opinion as an exhibit to the
Bank's combined Form MHC-1/MHC-2 Notice of Mutual Holding Company Reorganization
and Application for Approval of a Minority Stock Issuance by a Subsidiary of
Mutual Holding Company as filed with the OTS and to the Stock Holding Company's
Registration Statement on Form SB-2 as filed with the SEC. We also consent to
the references to our firm in the Prospectus contained in the Forms MHC- 1/MHC-2
and SB-2 under the captions "The Reorganization and Offering - Tax Effects of
the Reorganization" and "Legal and Tax Opinions," and to the summarization of
our opinion in such Prospectus.
Very truly yours,
/s/ Luse Lehman Gorman Pomerenk & Schick
LUSE LEHMAN GORMAN POMERENK & SCHICK
A Professional Corporation
[RADICS & CO. LLC LETTERHEAD]
May 6, 1998
Board of Directors
Axia Federal Savings Bank
Gentlemen:
You have requested our opinion relating to the New Jersey tax consequences of
the Plan of Reorganization from Mutual Savings Association to Mutual Holding
Company and Stock Issuance Plan (the "Plan") pursuant to which Axia Federal
Savings Bank (the "Bank") proposes to reorganize from a federally-chartered
mutual savings bank into the mutual holding company structure (the
"Reorganization") under the laws of the United States of America and the
regulations of the Office of Thrift Supervision ("OTS"). The mutual holding
company (the "MHC") will be a mutually-owned federal corporation, and all of the
current ownership and voting rights of the Members of the Bank will be
transferred to the MHC. As part of the Reorganization and the Plan, the Bank
will convert to a federal stock savings bank (the "Stock Bank") and will
establish a stock holding company (the "Holding Company") which will be a
majority-owned subsidiary of the MHC at all times so long as the MHC remains in
existence. Concurrently with the Reorganization, the Holding Company intends to
offer for sale up to 49.9% of its Common Stock in the Stock Offering. The Common
Stock will be offered on a priority basis to depositors and Tax-Qualified
Employee Plans of the Bank, with any remaining shares offered to the public in a
Direct Community Offering.
The proposed transaction and its federal income tax consequences are described
in an opinion letter from Luse, Lehman, Gorman, Pomerenk & Schick, dated May 6,
1998, (the "Federal Opinion Letter"). The facts, assumptions and representations
and the federal tax consequences set forth in the Federal Opinion Letter are
incorporated in this opinion letter by reference as if fully set forth herein.
References and abbreviations used in the Federal Opinion Letter are also used
herein.
SUPPLEMENTAL REPRESENTATIONS
In addition to the facts, assumptions and representations set forth in the
Federal Opinion Letter, you have provided the following additional
representations concerning the Reorganization:
1. The Bank is subject to and has been filing returns and paying tax
under the New Jersey Savings Institution Tax Act, N.J.S.A. 54:01D-1,
et seq. (the "SIT").
2. The transfer of tangible personal property by the Bank to the Stock
Bank in connection with the Reorganization will not be in the ordinary
course of the Bank's business and will be in exchange solely for the
common stock of the Stock Bank.
3. The real property transferred by the Bank to the Stock Bank in
connection with the Reorganization will not be subject to any
mortgage, lien or other encumbrance.
<PAGE>
OPINION
Based solely on the facts, assumptions and representations set forth
in the Federal Opinion Letter and the foregoing supplemental
representations and assuming the Reorganization occurs in accordance
with the Plan of Reorganization, it is our opinion that:
1. To the extent that consummation of the Reorganization will not result
in the recognition of gain or loss by the Bank and other Transferors
and will otherwise qualify as "tax free" under the Internal Revenue
Code of 1986, as amended (the "Code"), all as more fully described in
the Federal Opinion Letter, consummation of the Reorganization will
not result in any additional tax liabilities under the SIT.
Except for certain state adjustment under the SIT which are not
impacted by consummation of the Reorganization, the SIT is imposed on
a taxpayer's net income, which is deemed to be federal taxable income
before net operating loss deduction and special deductions
N.J.S.A.54:10D-2(d). Accordingly, since the SIT is based on federal
taxable income, the nonrecognition events, carryovers, and tax free
exchanges under federal income tax law resulting from the
Reorganization, all as more fully described in the Federal Opinion
Letter, will be afforded the same treatment for purposes of the SIT.
2. The transfer by the Bank of substantially all of its assets and
liabilities in exchange for common stock of the Stock Bank will not
result in any liability under the New Jersey Sales and Use Act,
N.J.S.A. 54:32B-1, et seq. (the "Sales and Use Tax").
The Sales and Use Tax specifically exempts as a taxable transaction
the transfer of tangible personal property to a corporation upon its
reorganization in consideration for the issuance of its stock.
N.J.S.A. 54:32B-2(e)(3)(E).
3. For New Jersey income tax purposes, the Bank's depositors will
recognize no gain or loss by reason of the Reorganization.
4. It is uncertain whether the transfer of real property by the Bank to
the Stock Bank in connection with the Reorganization will subject the
transfer of such real property to the New Jersey Realty Transfer Fee
Law, N.J.S.A. 46:15-5 et seq. (the "Realty Transfer Fee"). The Realty
Transfer Fee is a fee on the transfer of real property which must be
paid as a prerequisite for the recording of all deeds for non-exempt
realty transfers. It is imposed on the grantor at the rate of $1.75
for each $500 in consideration or fraction thereof. For each $500 in
consideration in excess of $150,000, the Realty Transfer Fee rises to
$2.50 per $500 consideration. "Consideration" is equal to the actual
amount of money and the "monetary value of an other thing of value"
constituting the compensation paid or to be paid for the transfer of
title. Included in the definition of consideration is the amount of
any mortgage, lien or other encumbrance to which the transfer is
subject or which is to be assumed or agreed to be paid by the grantee,
N.J.S.A. 46:15-5(c).
<PAGE>
New Jersey may take the position that the common stock of the Stock Bank
received by the Bank in exchange for real property transferred by the Bank to
the Stock Bank in connection with the Reorganization constitute consideration
under the Realty Transfer Fee. New Jersey would consider the value of the
consideration to be the assessed value of the transferred real property for
local property tax purposes.
* * * * *
Since this letter is provided in advance of the closing of the transactions
contemplated by the Reorganization, we have assumed that such transactions will
be consummated in accordance with the Plan of the Reorganization, as well as the
information and representations referred to herein. Any change in the
Reorganization could cause us to modify the opinions expressed herein.
The opinions expressed herein are based solely on current New Jersey tax law,
including applicable regulations thereunder, and current judicial and
administrative authority. Any future amendments to the tax statutes cited herein
or applicable regulations, or new judicial decisions or administrative
interpretations, many of which could be retroactive in effect, could cause us to
modify the opinions expressed herein.
We express no opinion with respect to the tax treatment of the Reorganization
under the Code or any other law of the State of New Jersey not specifically
addressed herein or the law of any other state or locality, or to the tax
treatment of any conditions existing at the time of, or effects resulting from
the Reorganization which are not specifically covered by the items set forth in
this opinion letter.
We hereby consent to the filing of this opinion letter as an exhibit to the
Notice of Mutual Holding Company Reorganization ("Form MHC-1") of the Bank filed
with the Office of Thrift Supervision, and to the reference to us in the
prospectus which will be part of the application for Stock Issuance ("Form
MHC-2"). We also consent to the filing of this opinion letter as an exhibit to
the Form SB-2 Registration Statement filed with the Securities and Exchange
Commission and to the reference to us in the prospectus contained therein.
Very Truly Yours,
/s/ Radics & Co., LLC
Radics & Co., LLC
