Document:

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                              SUPERVISORY AGREEMENT                Exhibit 10.13
                                                                   -------------

                                                            OTS Docket No. 05030

         This Supervisory Agreement ("Agreement") is made, as of the Effective
Date (defined below), by and between Crusader Savings Bank, F.S.B. (the
"'Bank"), a federally-chartered savings bank having its main office located at
1230 Walnut Street, Philadelphia, Pennsylvania, and the Office of Thrift
Supervision ("OTS"), an office within the United States Department of the
Treasury, having its principal executive offices located at 1700 G Street, N.W.,
Washington, D.C., acting through its Northeast Regional Director or his/her
designee ("Regional Director").

                                    Recitals

         WHEREAS, the OTS is the primary federal regulator of the Bank; and

         WHEREAS, based on the information in the report of the OTS's regular
federal examination of the Bank started on July 12, 1999 (the "1999 Exam
Report"), the OTS is of the opinion that the Bank has engaged in acts and
practices that: (i) have resulted in violations of certain of the laws and/or
regulations to which the Bank is subject; and/or (ii) are considered to be
unsafe or unsound; and

         WHEREAS, the OTS is of the opinion that grounds exist for the
initiation of administrative proceedings against the Bank; and WHEREAS, the OTS
is of the view that it is appropriate to take measures intended to ensure that
the Bank will operate safely and soundly and comply with all applicable laws and
regulations; and

         WHEREAS, the Bank, acting through its Board of Directors ("Board"), and
without admitting or denying any violations of laws or regulations and/or unsafe
or unsound practices, wishes to cooperate with the OTS and to evidence the
Bank's commitment to operate prudently and comply with all applicable laws and
regulations.

         NOW THEREFORE, in consideration of the above premises and the mutual
undertakings set forth herein, the parties hereto agree as follows:

         1. Compliance with Laws and Regulations. The Bank shall comply with the
following federal laws and regulations:

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         (i)    12 U.S.C. section 1828(m)(1) and 12 C.F.R. section 559.11
                (requiring certain notices or applications to be filed with the
                OTS and the Federal Deposit Insurance Corporation prior to
                establishing or acquiring a subsidiary);

         (ii)   12 C.F.R. section 560.101 (requiring savings associations and
                their subsidiaries to adopt and comply with prudent written
                lending policies);

         (iii)  12 C.F.R. section 560.160 (requiring classification of assets
                and establishment of adequate valuation allowances);

         (iv)   12 C.F.R. section 560.170 (requiring savings associations and
                their subsidiaries to establish and maintain certain records
                relating to lending transactions);

         (v)    12 C.F.R. section 563.161 (requiring savings associations and
                their subsidiaries to maintain safe and sound management,
                including board of director oversight);

         (vi)   12 C.F.R. section 563.170(c) (requiring savings associations and
                their subsidiaries to establish and maintain accounting and
                other records as will provide an accurate and complete record of
                all business transacted); and

         (vii)  12 C.F.R. Part 570, Appendix A (the "Part 570 Safety and
                Soundness Standards" about minimum operational and managerial
                standards).

          2.    Improvement of Board Oversight.

                (a) The Bank's Board must fulfill its responsibility for
overseeing the safe and sound operation of the Bank and shall: (i) establish
and/or maintain policies, procedures and controls to ensure the safe and sound
operation of the Bank, (ii) monitor compliance with such policies and
procedures, as well as with the laws and regulations governing the Bank, (iii)
closely supervise management's performance; and (iv) closely monitor on a
monthly basis the activities engaged in by the Bank through its subsidiaries and
agents. All policies and procedures adopted by the Board of the Bank shall be in
writing and shall be communicated to all appropriate officers and employees.

                (b) The meetings of the Board shall be held at least monthly,
and each Board member shall actively and fully participate at such meetings
unless otherwise excused from attendance pursuant to rules adopted by the Board.
A written agenda, together with a package of materials for the board's
consideration, shall be prepared in advance of each Board meeting. Such agenda
shall not preclude consideration of any other matter.

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                (c) Detailed minutes of all Board and committee meetings shall
be maintained and recorded on a timely basis in a sequentially-numbered minute
book. All minutes must be properly signed and must -- (i) document important
matters considered; (ii) reflect discussions held and views and opinions
proffered by Board member(s); (iii) delineate both policies and procedures
approved and exceptions to approved policies and procedures; (iv) recite
information reported by management to the Board and describe the Board's review
thereof; and (v) record the results of all votes taken and how each member of
the Board voted. The agenda shall be attached to the minutes of the meeting.

         3.  Bank Management.

                (a) The Bank shall take all appropriate actions to hire, by June
30, 2000, a qualified individual with appropriate banking/thrift industry
experience to fill the position of Chief Executive Officer. The Bank's actions
hereunder shall be consistent with the restrictions and requirements imposed by
paragraph 10 of this Agreement.

                (b) Until the Bank has hired a new Chief Executive Officer, the
Bank will provide the OTS with written status reports, on no less than a monthly
basis, on its efforts and progress in hiring a Chief Executive Officer. In
connection with any Bank requests, under paragraph 22 of this Agreement, for
relief from the deadlines imposed by paragraph 3(a), the Regional Director will
consider the Bank's recruitment efforts and progress as reflected in such status
reports.

         4. Internal and External Audit System; Audit Committee; Internal Loan
Review.

                (a) By June 15, 2000, the Bank's Board shall adopt and the Bank
shall implement written prudent policies and procedures for its internal audit
system that conform with the requirements and guidelines at section II.B. of the
Part 570 Safety and Soundness Standards. At a minimum, such written policies and
procedures must satisfy the following requirements:

         (i)    They shall provide for an Internal Audit Department ("Audit
                Department"), which shall include and be supervised and managed
                by a Bank officer designated as Internal Auditor, but which may
                nonetheless outsource selected audit functions subject to the
                supervision of the Internal Auditor and/or the Audit Committee
                (as hereinafter defined);

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         (ii)   The Board shall designate an independent audit committee of the
                Board ("Audit Committee"). The Audit Committee, comprised of no
                less than 3 members, shall be composed of "outside" directors
                who are "independent of management" of the Bank and of the
                Bank's holding company and any affiliates. The phrase
                "independent of management" as used herein means the person is
                not an officer, employee or consultant of the institution, and
                to the extent not inconsistent with the foregoing, has the
                meaning otherwise assigned thereto at 12 C.F.R. Part 363 and
                Appendix A thereof,

         (iii)  The Audit Department shall be subject to direction, discipline
                and termination solely by the Internal Auditor, the Audit
                Committee and/or the Board and shall have direct reporting
                responsibility to the Audit Committee;

         (iv)   The Audit Committee, on an ongoing basis, must take all
                appropriate actions so that: (x) the Audit Department is
                adequately staffed with qualified personnel (including employees
                and/or independent contractors); and (y) such in-house Audit
                Department staff receive such ongoing training as is necessary
                to provide for the department's effectiveness;

         (v)    On an annual basis, the Audit Committee shall establish in
                writing, and assure the completion of, a schedule of assignments
                for the Audit Department encompassing all of the Bank's
                operations (including activities through subsidiaries and
                agents) and departments. Such Audit Department assignments shall
                be designed to determine:

                  (1)   whether the Bank is in compliance with applicable
                        statutes, regulations, and internal Bank policies;

                  (2)   whether the internal controls system is working
                        properly;

                  (3)   whether all significant deficiencies noted in internal
                        and/or external audit reports have been or are being
                        corrected by management;

                  (4)   the soundness and adequacy of information systems and of
                        accounting, operating, and administrative controls;

                  (5)   the effectiveness of internal policies and procedures;
                        and

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                  (6)   the extent to which the Bank's assets are protected
                        against loss.

                (b) On a quarterly basis, the Audit Department also shall
prepare a report for the Audit Committee that must, at a minimum, discuss: (i)
the scope of the reviews conducted by the Audit Department during the preceding
quarter, (ii) whether the Bank is in compliance with its policies and procedures
and outstanding OTS enforcement actions; (iii) whether the internal controls
system is effective, (iv) any material exceptions noted during the review, and
(v) the response of management to the material exceptions.

                (c) The Audit Committee shall direct appropriate corrective
action by Bank management to address deficiencies cited by the Audit Department.
The Audit Committee shall periodically (and no less than quarterly) report to
the Board: (i) the Audit Department's findings and (ii) corrective actions
required. Such reports by the Audit Department shall be reflected in the Board's
minutes.

                (d) The Audit Committee at a minimum must review with the Bank's
management and its independent public accountant the scope of services required
by the annual independent audit of the Bank, the basis for the independent
accountant's audit report, significant accounting policies, and audit
conclusions regarding significant accounting estimates. The Bank's Board should
determine other appropriate duties for the Audit Committee, and in so doing
should be guided by 12 C.F.R. Part 363, Appendix A, paragraph 31.

                (e) On a quarterly basis, the Audit Department (and/or one or
more other qualified and competent Bank departments completely independent of
the Bank's lending function) must -- (i) perform an internal loan review to
determine compliance with Board-approved lending policies, underwriting
standards, and loan servicing procedures; and (ii) provide the Board (or an
appropriate Board committee the majority of whose members must be independent of
management) with one or more written reports concerning the independent,
internal loan review performed by it. Such quarterly loan reviews and the
reports thereon must be based on -- (x) review of files for all new loans equal
to or greater than $350,000 that were made by the Bank (or its subsidiaries)
during the preceding quarter; and (y) a statistically significant review of
samples of the entire portfolio of loans made by the Bank (and its subsidiaries)
and not just new or large loans. The internal loan reviews and reports should
conform with the standards set out in the OTS's "Director's Guide to Management

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Reports," and at a minimum, the quarterly written internal loan review reports
must provide meaningful information about:

         (i)    each loan that represents an exception to applicable Bank loan
                policies and procedures (including each loan that was not
                properly approved) and the nature of the exception; and

         (ii)   each loan file lacking complete documentation (as required by
                the Bank's lending policies, underwriting standards,
                loan-servicing procedures, or other applicable guidance) and the
                nature of the exception.

         5. Internal Controls. By May 30, 2000, the Bank's Board shall adopt and
the Bank shall implement written policies and procedures on internal controls
and information systems that: (1) conform with section II.A. of the Part 570
Safety and Soundness Standards; (2) are designed to cause the Bank and its
subsidiaries to comply with 12 C.F.R. section 563.161; and (3) are established
following consideration of the guidance at paragraph 10 of Appendix A to 12
C.F.R. Part 363. At a minimum such policies and procedures must take into
account the scope and risk of the Bank's activities and provide for:

         (i)    An organizational structure that establishes clear lines of
                authority and responsibility for monitoring adherence to
                established policies;

         (ii)   Effective risk management;

         (iii)  Timely and accurate financial, operational and regulatory
                reports;

         (iv)   Adequate procedures to safeguard and manage assets; and

         (v)    Compliance with applicable laws and regulations.

         6. Asset Growth Restriction; Asset Growth and Diversification Policies.

                (a) Asset Growth Restricted. Unless otherwise permitted in
writing by the OTS's Regional Director (or his authorized representative), the
Bank shall limit its asset growth in any quarter to an amount not to exceed net
interest credited on deposit liabilities during the quarter.

                (b) Policies. In the event the OTS lifts the asset growth
restrictions set out in subparagraph (a) above, the Bank shall implement and
comply with prudent written asset growth and diversification policies
established by the Bank's Board and found unobjectionable by the OTS in writing.
With a view to the

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eventual lifting of subparagraph (a)'s restrictions, the Bank's Board should
promptly adopt and submit to the OTS written prudent asset growth and
diversification policies that conform with: (1) the standards at section II.F.
of the Part 570 Safety and Soundness Standards; and (2) the real estate lending
standards at 12 C.F.R. section 560.101. At a minimum such policies must:

         (i)    Consider the source, volatility and use of the funds that
                support asset growth;

         (ii)   Provide for prudent diversification of funding sources without
                excessive reliance on volatile sources, and this may be done by,
                inter alia, establishing prudent numerical percentage-of-total
                liabilities limitations on volatile sources such as brokered
                deposits;

         (iii)  Establish prudent numerical percentage-of-total assets
                limitations on the higher risk components of its loan portfolio,
                e.g., sub-prime mortgage loan and commercial loan components;

         (iv)   Consider any increase in credit risk or interest rate risk as a
                result of growth; and

         (v)    Consider the effect of growth on the Bank's capital.

         7. Policies and Procedures for Loan Administration and Documentation.
By May 30, 2000, the Bank's Board shall adopt and the Bank shall implement
written prudent policies and procedures for credit administration and loan
documentation that conform with the requirements of: 12 C.F.R. sections 560.170
and 560.101 (including the Interagency Guidelines for Real Estate Lending
Policies at Appendix A thereof); and section II.C. of the Part 570 Safety and
Soundness Standards. Among other things, the loan administration policies and
procedures must establish a loan file and record retention and administration
system that is designed to provide for all required records, filings, and
documents to be retained, reviewed, renewed and updated as appropriate.

         8. Policies on Asset Quality and Classification. By May 30, 2000, the
Bank's Board shall adopt and the Bank shall implement a formal written program
to identify and classify problem assets that satisfies the requirements of: (1)
12 C.F.R. section 560.160; (2) section II.G. of the Part 570 Safety and
Soundness Standards; and the (3) Interagency Policy Statement on the Allowance
for Loan and Lease Losses (ALLL), dated December 21, 1993 (OTS Thrift Activities

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Handbook section 261A). Among other things, the program must have the following
characteristics:

         (i)    it must be supervised by a designated management official who is
                independent of the loan origination, approval and appraisal
                processes and functions and who reports directly to the Board;

         (ii)   it must identify, monitor, and address asset quality problems in
                an accurate and timely manner;

         (iii)  it must ensure the proper identification of assets as "loss",
                "doubtful", or "substandard" (collectively referred to as
                "classified assets") or as "special mention" and the reporting
                of each such asset and the status thereof to the Board on a not
                less than quarterly basis;

         (iv)   it must provide for the maintenance of an adequate allowance for
                loan and lease losses to reflect credit risk in the Bank's loan
                and lease portfolio;

         (v)    it must ensure the prompt charge-off of loans, or portions of
                loans, that available information confirms to be uncollectible;

         (vi)   it must require the timely and accurate reporting of the ALLL
                and charge-offs, as appropriate, in the Thrift Financial Reports
                required to be filed pursuant to 12 C.F.R. section 563.180(a);
                and

         (vii)  it must provide that the Board, on at least a quarterly basis,
                shall prepare a resolution certifying that it has reviewed all
                classified assets and special mention assets as determined
                either by the OTS or by way of the Bank's internal evaluation
                and has determined that the Bank's allowance for loan and lease
                losses is proper and appropriate and adequately reflects the
                Bank's credit risk in its loan and lease portfolio.

         9. Applicability of Agreement Requirements to Subsidiaries.

         (a) All of the Bank's subsidiaries are required to comply with the
requirements and restrictions of the following paragraphs of this Agreement as
if references to the Bank in such paragraphs referred to each such subsidiary:
paragraph 1 (compliance with laws and regulations); paragraph 2 (oversight);
paragraph 5 (internal controls); paragraph 7 (loan documentation and
administration); paragraph 8 (asset classification); and paragraph 11
(compensation and benefits).

         (b) Each Bank subsidiary that participates in the origination of Bank
loans or otherwise acts as a Bank agent shall comply in all respects with: (1)
the Bank's written policies and procedures governing such activities; and (2)
all applicable laws and regulations.

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         (c) By June 15, 2000, each board of directors of each active Bank
subsidiary shall: (1) adopt, at a duly called and held meeting, a resolution
stating such board of directors shall cause the subsidiary to comply fully with
the applicable provisions of this Agreement; and (2) cause to be sent to the
Bank's Board a certified true copy of such resolution.

         (d) After June 15, 2000, the Bank may not directly or indirectly (1)
fund (or commit to fund) any loans originated or processed by a Bank subsidiary
or (2) otherwise fund any subsidiary activities or transactions unless
previously --

         (i)    the board of directors of such subsidiary has adopted and
                transmitted to the Bank Board the board of director resolution
                required by the preceding subparagraph; and

         (ii)   the Bank's Board has adopted, at a duly called and held meeting,
                a resolution stating that the Board, following due inquiry, has
                reason to believe that the subsidiary will comply with
                applicable provisions of this Agreement and will engage in
                activities in a lawful and safe and sound manner.

         (e) The Bank (including its Board and officers) shall take all
necessary or appropriate actions to provide reasonable assurance that each of
its active subsidiaries will comply fully with the applicable requirements of
this Agreement. To accomplish this, the Bank shall vote its shares of subsidiary
stock, use its influence and otherwise use its best reasonable efforts to
effectuate subsidiary compliance with all applicable requirements of this
Agreement. The Bank shall promptly provide the Regional Director with written
notice in the event that it becomes aware that the acts or omissions of any
subsidiary would contravene applicable restrictions, limitations or requirements
of this Agreement.

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                 RESTRICTIONS PER OTS POLICY; GENERAL PROVISIONS
                 -----------------------------------------------

         10. Board and Management Changes. The Bank shall be and is subject to
the requirements and limitations set out in Subpart H of Part 563 of the OTS's
regulations (12 C.F.R. sections 563.550 - .590). Without limitation on such
requirements and limitations, this means, among other things, that, except as
otherwise permitted by 12 C.F.R. section 563.590, no person shall be appointed
to the position of or be hired as a member of the Board or as a senior executive
officer of the Bank unless -- (1) the Bank (or the individual, if appropriate)
previously has filed with the OTS an appropriate and complete notice pursuant to
12 C.F.R. Part 563, Subpart H; and (2) the person's commencement of service on
behalf of the Bank is permissible under 12 C.F.R. section 563.585 and 12 U.S.C.
section 1831i.

         11. Compensation and Benefit Arrangements. Pursuant to OTS Regulatory
Bulletin 27a, the Bank and its subsidiaries shall not enter into, renew, extend
or revise any contractual arrangement related to compensation or benefits with
any director or senior executive officer of the Bank or subsidiary thereof
unless the Bank or subsidiary, as appropriate, first -- (1) provides a minimum
of 30 days advance notice of the proposed transaction and (2) receives a written
notice of non-objection from the Regional Director.

         12. No "Golden Parachutes". The restrictions at 12 C.F.R. Part 359
(concerning "golden parachute payments" and "prohibited indemnification
payments") are applicable to the Bank and its holding company. Without
limitation on the generality of the foregoing, this means, inter alia, that the
Bank shall not make any "golden parachute payment", as that term is defined 12
U.S.C. section 1828(k) and in 12 C.F.R. Part 359, except as may be permitted by
the aforesaid statutory provision and regulations.

         13. Appraisal Requirements. The Bank shall obtain written appraisals
performed by a State certified or licensed appraiser for each real
estate-related financial transaction over $100,000, as if 12 C.F.R. section
564.3(a)(1) established a $100,000 transaction value "floor" instead of the
$250,000 transaction value "floor" set forth therein; the remaining exceptions
at subparagraphs (2) through (12) of section 564.3(a) shall remain available to
the Bank.

         14. No Derogation of Board Responsibility. Notwithstanding the
requirements of this Agreement that the Board submit various matters to the
Regional Director or his designee for the purpose of receiving his approval,
non-objection or notice of acceptability, such regulatory oversight does not

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derogate or supplant each individual Board member's continuing fiduciary duty to
the Bank. The Board shall have the ultimate responsibility for overseeing the
safe and sound operation of the Bank at all times, including compliance with the
determinations of the Regional Director as required by this Agreement.

         15. Compliance with Agreement. The Board and officers of the Bank shall
take immediate action to cause the Bank to comply fully with the terms of this
Agreement. On an ongoing basis, the Board and officers of the Bank also shall
take all actions necessary or appropriate to cause the Bank to continue to carry
out the provisions of this Agreement. The Board also shall be responsible for
regularly monitoring the Bank's compliance with this Agreement by, inter alia,
making diligent inquiry of relevant information, including information provided
by the Internal Auditor, the Audit Committee and the Bank's senior officers. The
Board's monitoring efforts must be accurately reflected in the minutes of its
meetings. The Bank's Board shall take appropriate actions to ensure that a copy
of this Agreement is delivered to each board of directors of each Bank
subsidiary within ten (10) days of the Effective Date of this Agreement.

         16. Definitions. All technical words or terms used in this Agreement
for which meanings are not specified or otherwise provided by the provisions of
this Agreement shall, insofar as applicable, have meanings as defined in Chapter
V of Title 12 of the Code of Federal Regulations, Home Owners' Loan Act
("HOLA"), Federal Deposit Insurance Act ("FDI Act"), or OTS Memoranda. Any such
technical words or terms used in this Agreement and undefined in said Code of
Federal Regulations, HOLA, FDI Act, or OTS Memoranda shall have meanings that
are in accordance with the best custom and usage in the savings and loan
industry.

         17. Successor Statutes, Regulations, Guidance, Amendments. Reference in
this Agreement to provisions of statutes, regulations, and OTS Memoranda shall
be deemed to include references to all amendments to such provisions as have
been made as of the Effective Date and references to successor provisions as
they become applicable.

         18. Time Limits. Time limitations for compliance with the terms of this
Agreement run from the Effective Date unless otherwise noted.

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      19. Rules of Interpretation; Integration Clause.

         (a) Nothing in this Agreement shall be construed as:

         (i)    allowing the Bank to violate any law, rule, regulation, or
                Policy statement to which it is subject; or

         (ii)   restricting the OTS from taking such action(s) that are
                appropriate in fulfilling the responsibilities placed upon it by
                law, including, without limitation, any type of supervisory,
                enforcement or resolution action that the OTS determines to be
                appropriate.

         (b) The paragraph and section headings herein are for convenience only
and shall not affect the construction hereof.

         (c) This Agreement represents, as of the Effective Date, the final
written agreement of the parties with respect to the subject matter hereof and
constitutes the sole agreement of the parties, as of the Effective Date, with
respect to such subject matter, except that it is understood that the Bank also
is bound by the terms of the Stipulation and Consent to the Issuance of an Order
of Assessment of Civil Money Penalties that it also has executed
contemporaneously herewith. This Agreement does not revoke or otherwise affect
the OTS's supervisory directive letter dated August 26, 1999 (concerning two
Bank subsidiaries that have since ceased operations). The provisions of this
Agreement, however, do supersede, as of the Effective Date hereof, the five
directives set out in the OTS Assistant Director's two-page letter dated
November 12, 1999, relating to the 1999 Exam Report.

         (d) In case any provision in this Agreement is ruled to be invalid,
illegal or unenforceable by the decision of any Court of competent jurisdiction,
the validity, legality and enforceability of the remaining provisions hereof
shall not in any way be affected or impaired thereby, unless the Regional
Director in his/her sole discretion determines otherwise.

      20. Successors in Interest/Benefit. The terms and provisions of this
Agreement shall be binding upon, and inure to the benefit of, the parties hereto
and their successors in interest. Nothing in this Agreement, express or implied,
shall give to any person or entity, other than the parties hereto, the Federal
Deposit Insurance Corporation, and their successors hereunder, any benefit or
any legal or equitable right, remedy or claim under this Agreement.

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<PAGE>

      21. Enforceability of Agreement.

         (a) The Bank represents and warrants that this Agreement has been duly
authorized, executed, and delivered, and constitutes, in accordance with its
terms, a valid and binding agreement of the Bank. The Bank acknowledges that
this Agreement is a "written agreement" entered into with the OTS within the
meaning of Section 8 of the FDI Act, 12 U.S.C. section 1818.

         (b) Each Bank director signing this Agreement attests, by such act,
that she or he, as the case may be, voted in favor of' the Board resolution
(copy attached) authorizing the execution of' this Agreement by the Bank.

      22. Effective Date; Duration; Termination or Suspension of Agreement.

         (a) This Agreement shall be effective and enforceable as of' the date
the OTS's Regional Director executes this Agreement ("Effective Date"), which
date appears after the Regional Director's signature below.

         (b) This Agreement shall remain in effect until terminated, modified or
suspended in writing by the OTS, acting through its Director or the Regional
Director (including any authorized designee thereof).

         (c) The Regional Director, in his or her sole discretion, may, by
written notice, suspend any or all provisions of this Agreement.

      IN WITNESS WHEREOF, the OTS and the Bank (in accordance with a duly
adopted resolution of its Board) hereby execute this Agreement.

OFFICE OF THRIFT SUPERVISION                CRUSADER SAVINGS BANK, F.S.B.

By:/s/   Robert C. Albanese                 By:/s/  Thomas J. Knox
   ------------------------------              --------------------------------
         Robert C. Albanese                         Thomas J. Knox
         Regional Director                          Chairman of the Board

         Date: April 26, 2000                       Date: April 17, 2000
              (the Effective Date)

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<PAGE>

                   DIRECTORS OF CRUSADER SAVINGS BANK, F.S.B.

/s/  Joseph T. Crowley                            /s/  Paul Bachow
------------------------------                    ------------------------------
     Joseph T. Crowley                                 Paul Bachow
     Director                                          Director

/s/  Ronald L. Caplan                             /s/  D. Walter Cohen
------------------------------                    ------------------------------
     Ronald L. Caplan                                  D. Walter Cohen
     Director                                          Director

/s/  Daniel M. Dilella                            /s/  Linda R. Knox
------------------------------                    ------------------------------
     Daniel M. Dilella                                 Linda R. Knox
     Director                                          Director

/s/  Thomas J. Knox                               /s/  Joel S. Lawson, III
------------------------------                    ------------------------------
     Thomas J. Knox                                    Joel S. Lawson, III
     Director                                          Director

/s/  Bruce A. Levy                                /s/  Brian McAdams
------------------------------                    ------------------------------
     Bruce A. Levy                                     Brian McAdams
     Director                                          Director<PAGE>

                  WARRANT AGREEMENT dated as of _________, 2000 between Delcath
Systems, Inc., a Delaware corporation (the "Company"), and Whale Securities Co.,
L.P. (hereinafter referred to as the "Underwriter").

                              W I T N E S S E T H:

                  WHEREAS, the Company proposes to issue to the Underwriter
warrants (the "Warrants") to purchase up to 200,000 (as such number may be
adjusted from time to time pursuant to Article 8 of this Agreement) shares (the
"Shares") of common stock, par value $.01 per share (the "Common Stock"), of the
Company; and

                  WHEREAS, the Underwriter has agreed, pursuant to the
underwriting agreement (the "Underwriting Agreement") dated ____________, 2000
between the Underwriter and the Company, to act as the underwriter in connection
with the Company's proposed public offering (the "Public Offering") of 2,000,000
shares of Common Stock (the "Public Shares") at an initial public offering price
of $6.00 per Public Share; and

                  WHEREAS, the Warrants issued pursuant to this Agreement are
being issued by the Company to the Underwriter or to its designees who are
officers and partners of the Underwriter or to members of the selling group
participating in the distribution of the Public Shares to the public in the
Public Offering and/or their respective officers or partners (collectively, the
"Designees"), in consideration for, and as part of the Underwriter's
compensation in connection with, the Underwriter acting as the Underwriter
pursuant to the Underwriting Agreement;

                  NOW, THEREFORE, in consideration of the premises, the payment
by the Underwriter to the Company of ONE HUNDRED DOLLARS ($100.00), the
agreements herein set forth and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

<PAGE>

                  1.       Grant.

                  The Underwriter and/or the Designees are hereby granted the
right to purchase, at any time from ____________, 2000 until 5:00 P.M., New York
time, on _______, 2005 (the "Warrant Exercise Term"), up to 200,000 fully-paid
and non-assessable Shares at an initial exercise price (subject to adjustment as
provided in Article 8 hereof) of $9.90 per Share.

                  2.       Warrant Certificates.

                  The warrant certificates delivered and to be delivered
pursuant to this Agreement (the "Warrant Certificates") shall be in the form set
forth in Exhibit A attached hereto and made a part hereof, with such appropriate
insertions, omissions, substitutions and other variations as required or
permitted by this Agreement.

                  3.       Exercise of Warrant.

                  3.1. Cash Exercise. The Warrants initially are exercisable at
a price of $9.90 per Share, payable in cash or by check to the order of the
Company, or any combination thereof, subject to adjustment as provided in
Article 8 hereof. Upon surrender of the Warrant Certificate with the annexed
Form of Election to Purchase duly executed, together with payment of the
Exercise Price (as hereinafter defined) for the Shares purchased, at the
Company's principal offices in New York (currently located at 1100 Summer
Street, Stamford, Connecticut 06905) the registered holder of a Warrant
Certificate ("Holder" or "Holders") shall be entitled to receive a certificate
or certificates for the Shares so purchased. The purchase rights represented by
each Warrant Certificate are exercisable at the option of the Holder thereof, in
whole or in part (but not as to fractional Shares). In the case of the purchase
of less than all the Shares purchasable under any Warrant Certificate, the
Company shall cancel said Warrant Certificate upon the surrender thereof and
shall execute and deliver a new Warrant Certificate of like tenor for the
balance of the Shares purchasable thereunder.

                                       2

<PAGE>

                  3.2. Cashless Exercise. At any time during the Warrant
Exercise Term, the Holder may, at the Holder's option, exchange, in whole or in
part, the Warrants represented by such Holder's Warrant Certificate (a "Warrant
Exchange"), into the number of Shares determined in accordance with this Section
3.2, by surrendering such Warrant Certificate at the principal office of the
Company or at the office of its transfer agent, accompanied by a notice stating
such Holder's intent to effect such exchange, the number of Warrants to be so
exchanged and the date on which the Holder requests that such Warrant Exchange
occur (the "Notice of Exchange"). The Warrant Exchange shall take place on the
date specified in the Notice of Exchange or, if later, the date the Notice of
Exchange is received by the Company (the "Exchange Date"). Certificates for the
Shares issuable upon such Warrant Exchange and, if applicable, a new Warrant
Certificate of like tenor representing the Warrants which were subject to the
surrendered Warrant Certificate and not included in the Warrant Exchange, shall
be issued as of the Exchange Date and delivered to the Holder within three (3)
days following the Exchange Date. In connection with any Warrant Exchange, the
Holder shall be entitled to subscribe for and acquire (i) the number of Shares
(rounded to the next highest integer) which would, but for the Warrant Exchange,
then be issuable pursuant to the provision of Section 3.1 above upon the
exercise of the Warrants specified by the Holder in its Notice of Exchange (the
"Total Number") less (ii) the number of Shares equal to the quotient obtained by
dividing (a) the product of the Total Number and the existing Exercise Price (as
hereinafter defined) by (b) the Market Price (as hereinafter defined) of a
Public Share on the day preceding the Warrant Exchange. "Market Price" at any
date shall be deemed to be the last reported sale price, or, in case no such
reported sales takes place on such day, the average of the last reported sale
prices for the last three (3) trading days, in either case as officially
reported by the principal securities exchange on which the Common Stock is
listed or admitted to trading or as reported in the NASDAQ National Market
System, or, if the Common Stock is not listed or admitted to trading on any
national securities exchange or quoted on the NASDAQ National Market System, the
closing bid price as furnished by (i) the National Association of Securities
Dealers, Inc. through Nasdaq or (ii) a similar organization if Nasdaq is no
longer reporting such information.

                                       3

<PAGE>

                  4.       Issuance of Certificates.

                  Upon the exercise of the Warrants, the issuance of
certificates for the Shares purchased shall be made forthwith (and in any event
within three (3) business days thereafter) without charge to the Holder thereof
including, without limitation, any tax which may be payable in respect of the
issuance thereof, and such certificates shall (subject to the provisions of
Article 5 hereof) be issued in the name of, or in such names as may be directed
by, the Holder thereof; provided, however, that the Company shall not be
required to pay any tax which may be payable in respect of any transfer involved
in the issuance and delivery of any such certificates in a name other than that
of the Holder and the Company shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.

                  The Warrant Certificates and the certificates representing the
Shares shall be executed on behalf of the Company by the manual or facsimile
signature of the present or any future Chairman or Vice Chairman of the Board of
Directors, Chief Executive Officer or President or Vice President of the Company
under its corporate seal reproduced thereon, attested to by the manual or
facsimile signature of the present or any future Secretary or Assistant
Secretary of the Company. Warrant Certificates shall be dated the date of
execution by the Company upon initial issuance, division, exchange, substitution
or transfer.

                                       4

<PAGE>

                  Upon exercise, in part or in whole, of the Warrants,
certificates representing the Shares shall bear a legend substantially similar
to the following:

         "The securities represented by this certificate have not been
         registered for purposes of public distribution under the Securities Act
         of 1933, as amended (the "Act"), and may not be offered or sold except
         (i) pursuant to an effective registration statement under the Act, (ii)
         to the extent applicable, pursuant to Rule 144 under the Act (or any
         similar rule under such Act relating to the disposition of securities),
         or (iii) upon the delivery by the holder to the Company of an opinion
         of counsel, reasonably satisfactory to counsel to the Company, stating
         that an exemption from registration under such Act is available."

                  5.       Restriction on Transfer of Warrants.

                  The Holder of a Warrant Certificate, by the Holder's
acceptance thereof, covenants and agrees that the Warrants are being acquired as
an investment and not with a view to the distribution thereof, and that the
Warrants may not be sold, transferred, assigned, hypothecated or otherwise
disposed of, in whole or in part, for a period of one (1) year from the date
hereof, except to the Designees.

                  6.       Price.

                  6.1. Initial and Adjusted Exercise Price. The initial exercise
price of each Warrant shall be $9.90 per Share. The adjusted exercise price per
Share shall be the price which shall result from time to time from any and all
adjustments of the initial exercise price per Share in accordance with the
provisions of Article 8 hereof.

                                       5

<PAGE>

                  6.2. Exercise Price. The term "Exercise Price" herein shall
mean the initial exercise price or the adjusted exercise price, depending upon
the context.

                  7.       Registration Rights.

                  7.1. Registration Under the Securities Act of 1933. None of
the Warrants or Shares have been registered for purposes of public distribution
under the Securities Act of 1933, as amended (the "Act").

                  7.2. Registrable Securities. As used herein the term
"Registrable Security" means each of the Warrants, the Shares and any shares of
Common Stock issued upon any stock split or stock dividend in respect of such
Shares; provided, however, that with respect to any particular Registrable
Security, such security shall cease to be a Registrable Security when, as of the
date of determination, (i) it has been effectively registered under the Act and
disposed of pursuant thereto, (ii) registration under the Act is no longer
required for the subsequent public distribution of such security or (iii) it has
ceased to be outstanding. The term "Registrable Securities" means any and/or all
of the securities falling within the foregoing definition of a "Registrable
Security." In the event of any merger, reorganization, consolidation,
recapitalization or other change in corporate structure affecting the Common
Stock, such adjustment shall be made in the definition of "Registrable Security"
as is appropriate in order to prevent any dilution or enlargement of the rights
granted pursuant to this Article 7.

                                       6

<PAGE>

                  7.3. Piggyback Registration. If, at any time during the seven
(7) years following the effective date of the Public Offering, the Company
proposes to prepare and file one or more post-effective amendments to the
registration statement filed in connection with the Public Offering or any new
registration statement or post-effective amendments thereto covering equity or
debt securities of the Company, or any such securities of the Company held by
its stockholders (in any such case, other than in connection with a merger,
acquisition or pursuant to Form S-8 or successor form), (for purposes of this
Article 7, collectively, the "Registration Statement"), it will give written
notice of its intention to do so by registered mail ("Notice"), at least thirty
(30) business days prior to the filing of each such Registration Statement, to
all holders of the Registrable Securities. Upon the written request of such a
holder (a "Requesting Holder"), made within twenty (20) business days after
receipt of the Notice, that the Company include any of the Requesting Holder's
Registrable Securities in the proposed Registration Statement, the Company
shall, as to each such Requesting Holder, use its best efforts to effect the
registration under the Act of the Registrable Securities which it has been so
requested to register ("Piggyback Registration"), at the Company's sole cost and
expense and at no cost or expense to the Requesting Holders (except as provided
in Section 7.5(b) hereof).

                  7.4.     Demand Registration.

                           (a) At any time during the Warrant Exercise Term, any
"Majority Holder" (as such term is defined in Section 7.4(c) below) of the
Registrable Securities shall have the right (which right is in addition to the
piggyback registration rights provided for under Section 7.3 hereof),
exercisable by written notice to the Company (the "Demand Registration
Request"), to have the Company prepare and file with the Securities and Exchange
Commission (the "Commission"), on one occasion, at the sole expense of the
Company (except as provided in Section 7.5(b) hereof), a Registration Statement
and such other documents, including a prospectus, as may be necessary (in the
opinion of both counsel for the Company and counsel for such Majority Holder),
in order to comply with the provisions of the Act, so as to permit a public
offering and sale of the Registrable Securities by the holders thereof. The
Company shall use its best efforts to cause the Registration Statement to become
effective under the Act, so as to permit a public offering and sale of the
Registrable Securities by the holders thereof. Once effective, the Company will
use its best efforts to maintain the effectiveness of the Registration Statement
until the earlier of (i) the date that all of the Registrable Securities have
been sold or (ii) the date that the holders of the Registrable Securities
receive an opinion of counsel to the Company that all of the Registrable
Securities may be freely traded (without limitation or restriction as to
quantity or timing and without registration under the Act) under Rule 144(k)
promulgated under the Act or otherwise.

                                       7

<PAGE>

                           (b) The Company covenants and agrees to give written
notice of any Demand Registration Request to all holders of the Registrable
Securities within ten (10) business days from the date of the Company's receipt
of any such Demand Registration Request. After receiving notice from the Company
as provided in this Section 7.4(b), holders of Registrable Securities may
request the Company to include their Registrable Securities in the Registration
Statement to be filed pursuant to Section 7.4(a) hereof by notifying the Company
of their decision to have such securities included within ten (10) days of their
receipt of the Company's notice.

                           (c) The term "Majority Holder" as used in Section 7.4
hereof shall mean any holder or any combination of holders of Registrable
Securities, if included in such holders' Registrable Securities are that
aggregate number of shares of Common Stock (including Shares already issued and
Shares issuable pursuant to the exercise of outstanding Warrants) as would
constitute a majority of the aggregate number of Shares (including Shares
already issued and Shares issuable pursuant to the exercise of outstanding
Warrants) included in all the Registrable Securities.

                                       8

<PAGE>

                  7.5. Covenants of the Company With Respect to Registration.
The Company covenants and agrees as follows:

                           (a) In connection with any registration under Section
7.4 hereof, the Company shall file the Registration Statement as expeditiously
as possible, but in any event no later than twenty (20) days following receipt
of any demand therefor, shall use its best efforts to have any such Registration
Statement declared effective at the earliest possible time, and shall furnish
each holder of Registrable Securities such number of prospectuses as shall
reasonably be requested.

                           (b) The Company shall pay all costs, fees and
expenses (other than underwriting fees, discounts and nonaccountable expense
allowance applicable to the Registrable Securities and the fees and expenses of
counsel retained by the holders of Registrable Securities) in connection with
all Registration Statements filed pursuant to Sections 7.3 and 7.4(a) hereof
including, without limitation, the Company's legal and accounting fees, printing
expenses, and blue sky fees and expenses.

                           (c) The Company will take all necessary action which
may be required in qualifying or registering the Registrable Securities included
in the Registration Statement for offering and sale under the securities or blue
sky laws of such states as are reasonably requested by the holders of such
securities.

                                       9

<PAGE>

                           (d) The Company shall indemnify any holder of the
Registrable Securities to be sold pursuant to any Registration Statement and any
underwriter or person deemed to be an underwriter under the Act and each person,
if any, who controls such holder or underwriter or person deemed to be an
underwriter within the meaning of Section 15 of the Act or Section 20(a) of the
Securities Exchange Act of 1934, as amended ("Exchange Act"), against all loss,
claim, damage, expense or liability (including all expenses reasonably incurred
in investigating, preparing or defending against any claim whatsoever) to which
any of them may become subject under the Act, the Exchange Act or otherwise,
arising from such Registration Statement to the same extent and with the same
effect as the provisions pursuant to which the Company has agreed to indemnify
the Underwriter as set forth in Section 7 of the Underwriting Agreement and to
provide for just and equitable contribution as set forth in Section 8 of the
Underwriting Agreement.

                           (e) Any holder of Registrable Securities to be sold
pursuant to a Registration Statement, and such holder's successors and assigns,
shall severally, and not jointly, indemnify, the Company, its officers and
directors and each person, if any, who controls the Company within the meaning
of Section 15 of the Act or Section 20(a) of the Exchange Act, against all loss,
claim, damage or expense or liability (including all expenses reasonably
incurred in investigating, preparing or defending against any claim whatsoever)
to which they may become subject under the Act, the Exchange Act or otherwise,
arising from information furnished by or on behalf of such holder, or such
holder's successors or assigns, for specific inclusion in such Registration
Statement to the same extent and with the same effect as the provisions pursuant
to which the Underwriter has agreed to indemnify the Company as set forth in
Section 7 of the Underwriting Agreement and to provide for just and equitable
contribution as set forth in Section 8 of the Underwriting Agreement.

                                       10

<PAGE>

                           (f) Nothing contained in this Agreement shall be
construed as requiring any Holder to exercise the Warrants held by such Holder
prior to the initial filing of any Registration Statement or the effectiveness
thereof.

                           (g) If the Company shall fail to comply with the
provisions of this Article 7, the Company shall, in addition to any other
equitable or other relief available to the holders of Registrable Securities, be
liable for any or all incidental, special and consequential damages sustained by
the holders of Registrable Securities, requesting registration of their
Registrable Securities.

                           (h) The Company shall promptly deliver copies of all
correspondence between the Commission and the Company, its counsel or auditors
and all memoranda relating to discussions with the Commission or its staff with
respect to the Registration Statement to each holder of Registrable Securities
included for such registration in such Registration Statement pursuant to
Section 7.3 hereof or Section 7.4 hereof requesting such correspondence and
memoranda and to the managing underwriter, if any, of the offering in connection
with which such holder's Registrable Securities are being registered and shall
permit each holder of Registrable Securities and such underwriter to do such
reasonable investigation, upon reasonable advance notice, with respect to
information contained in or omitted from the Registration Statement as it deems
reasonably necessary to comply with applicable securities laws or rules of the
National Association of Securities Dealers, Inc. Such investigation shall
include access to books, records and properties and opportunities to discuss the
business of the Company with its officers and independent auditors, all to such
reasonable extent and at such reasonable times and as often as any such holder
of Registrable Securities or underwriter shall reasonably request.

                                       11

<PAGE>

                  8.       Adjustments of Exercise Price and Number of Shares.

                  8.1. Computation of Adjusted Price. In case the Company shall
at any time after the date hereof pay a dividend in shares of Common Stock or
make a distribution in shares of Common Stock, then upon such dividend or
distribution the Exercise Price in effect immediately prior to such dividend or
distribution shall forthwith be reduced to a price determined by dividing:

                           (a) an amount equal to the total number of shares of
Common Stock outstanding immediately prior to such dividend or distribution
multiplied by the Exercise Price in effect immediately prior to such dividend or
distribution, by

                           (b) the total number of shares of Common Stock
outstanding immediately after such issuance or sale.

                  For the purposes of any computation to be made in accordance
with the provisions of this Section 8.1, the Common Stock issuable by way of
dividend or other distribution on any stock of the Company shall be deemed to
have been issued immediately after the opening of business on the date following
the date fixed for the determination of stockholders entitled to receive such
dividend or other distribution.

                  8.2. Subdivision and Combination. In case the Company shall at
any time subdivide or combine the outstanding shares of Common Stock, the
Exercise Price shall forthwith be proportionately decreased in the case of
subdivision or increased in the case of combination.

                                       12

<PAGE>

                  8.3. Adjustment in Number of Shares. Upon each adjustment of
the Exercise Price pursuant to the provisions of this Article 8, the number of
Shares issuable upon the exercise of each Warrant shall be adjusted to the
nearest full number by multiplying a number equal to the Exercise Price in
effect immediately prior to such adjustment by the number of Shares issuable
upon exercise of the Warrants immediately prior to such adjustment and dividing
the product so obtained by the adjusted Exercise Price.

                  8.4. Reclassification, Consolidation, Merger, etc. In case of
any reclassification or change of the outstanding shares of Common Stock (other
than a change in par value to no par value, or from no par value to par value,
or as a result of a subdivision or combination), or in the case of any
consolidation of the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger in which the Company is the
surviving corporation and which does not result in any reclassification or
change of the outstanding shares of Common Stock, except a change as a result of
a subdivision or combination of such shares or a change in par value, as
aforesaid), or in the case of a sale or conveyance to another corporation of the
property of the Company as an entirety, the Holders shall thereafter have the
right to purchase the kind and number of shares of stock and other securities
and property receivable upon such reclassification, change, consolidation,
merger, sale or conveyance as if the Holders were the owners of the shares of
Common Stock underlying the Warrants immediately prior to any such events at a
price equal to the product of (x) the number of shares of Common Stock issuable
upon exercise of the Holder's Warrants and (y) the Exercise Price in effect
immediately prior to the record date for such reclassification, change,
consolidation, merger, sale or conveyance as if such Holders had exercised the
Warrants.

                                       13

<PAGE>

                  8.5. Determination of Outstanding Shares of Common Stock. The
number of shares of Common Stock at any one time outstanding shall include the
aggregate number of shares of Common Stock issued and the aggregate number of
shares of Common Stock issuable upon the exercise of options, rights, warrants
and upon the conversion or exchange of convertible or exchangeable securities.

                  8.6. Dividends and Other Distributions with Respect to
Outstanding Securities. In the event that the Company shall at any time prior to
the exercise of all Warrants make any distribution of its assets to holders of
its Common Stock as a liquidating or a partial liquidating dividend, then the
holder of Warrants who exercises its Warrants after the record date for the
determination of those holders of Common Stock entitled to such distribution of
assets as a liquidating or partial liquidating dividend shall be entitled to
receive for the Warrant Price per Warrant, in addition to each share of Common
Stock, the amount of such distribution (or, at the option of the Company, a sum
equal to the value of any such assets at the time of such distribution as
determined by the Board of Directors of the Company in good faith) which would
have been payable to such holder had he been the holder of record of the Common
Stock receivable upon exercise of his Warrant on the record date for the
determination of those entitled to such distribution. At the time of any such
dividend or distribution, the Company shall make appropriate reserves to ensure
the timely performance of the provisions of this Subsection 8.6.

                  8.7. Subscription Rights for Shares of Common Stock or Other
Securities. In the case that the Company or an affiliate of the Company shall at
any time after the date hereof and prior to the exercise of all the Warrants
issue any rights, warrants or options to subscribe for shares of Common Stock or
any other securities of the Company or of such affiliate to all the stockholders
of the Company, the Holders of unexercised Warrants on the record date set by
the Company or such affiliate in connection with such issuance of rights,
warrants or options shall be entitled, in addition to the shares of Common Stock
or other securities receivable upon the exercise of the Warrants, to receive
such rights, warrants or options that such Holders would have been entitled to
receive had they been, on such record date, the holders of record of the number
of whole shares of Common Stock then issuable upon exercise of their outstanding
Warrants (assuming for purposes of this Section 8.7), that the exercise of the
Warrants is permissible immediately upon issuance).

                                       14

<PAGE>

                  9.       Exchange and Replacement of Warrant Certificates.

                  Each Warrant Certificate is exchangeable without expense, upon
the surrender thereof by the registered Holder at the principal executive office
of the Company, for a new Warrant Certificate of like tenor and date
representing in the aggregate the right to purchase the same number of
securities in such denominations as shall be designated by the Holder thereof at
the time of such surrender.

                  Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of any Warrant
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it, and reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
the Warrant Certificate, if mutilated, the Company will make and deliver a new
Warrant Certificate of like tenor, in lieu thereof.

                  10.      Elimination of Fractional Interests.

                  The Company shall not be required to issue certificates
representing fractions of Shares, nor shall it be required to issue scrip or pay
cash in lieu of fractional interests, it being the intent of the parties that
all fractional interests shall be eliminated by rounding any fraction up to the
nearest whole number of Shares.

                                       15

<PAGE>

                  11.      Reservation and Listing of Securities.

                  The Company shall at all times reserve and keep available out
of its authorized shares of Common Stock, solely for the purpose of issuance
upon the exercise of the Warrants, such number of shares of Common Stock as
shall be issuable upon the exercise thereof. The Company covenants and agrees
that, upon exercise of the Warrants and payment of the Exercise Price therefor,
all Shares issuable upon such exercise shall be duly and validly issued, fully
paid, non-assessable and not subject to the preemptive rights of any
stockholder. As long as the Warrants shall be outstanding, the Company shall use
its best efforts to cause all shares of Common Stock issuable upon the exercise
of the Warrants to be listed on or quoted by Nasdaq or listed on such national
securities exchange, in the event the Common Stock is listed on a national
securities exchange.

                  12.      Notices to Warrant Holders.

                  Nothing contained in this Agreement shall be construed as
conferring upon the Holder or Holders the right to vote or to consent or to
receive notice as a stockholder in respect of any meetings of stockholders for
the election of directors or any other matter, or as having any rights
whatsoever as a stockholder of the Company. If, however, at any time prior to
the expiration of the Warrants and their exercise, any of the following events
shall occur:

                           (a) the Company shall take a record of the holders of
                  its shares of Common Stock for the purpose of entitling them
                  to receive a dividend or distribution payable otherwise than
                  in cash, or a cash dividend or distribution payable otherwise
                  than out of current or retained earnings, as indicated by the
                  accounting treatment of such dividend or distribution on the
                  books of the Company; or

                                       16

<PAGE>

                           (b) the Company shall offer to all the holders of its
                  Common Stock any additional shares of capital stock of the
                  Company or securities convertible into or exchangeable for
                  shares of capital stock of the Company, or any option, right
                  or warrant to subscribe therefor; or

                           (c) a dissolution, liquidation or winding up of the
                  Company (other than in connection with a consolidation or
                  merger) or a sale of all or substantially all of its property,
                  assets and business as an entirety shall be proposed; or

                           (d) reclassification or change of the outstanding
                  shares of Common Stock (other than a change in par value to no
                  par value, or from no par value to par value, or as a result
                  of a subdivision or combination), consolidation of the Company
                  with, or merger of the Company into, another corporation
                  (other than a consolidation or merger in which the Company is
                  the surviving corporation and which does not result in any
                  reclassification or change of the outstanding shares of Common
                  Stock, except a change as a result of a subdivision or
                  combination of such shares or a change in par value, as
                  aforesaid), or a sale or conveyance to another corporation of
                  the property of the Company as an entirety is proposed; or

                                       17

<PAGE>

                           (e) The Company or an affiliate of the Company shall
                  propose to issue any rights to subscribe for shares of Common
                  Stock or any other securities of the Company or of such
                  affiliate to all the shareholders of the Company;

then, in any one or more of said events, the Company shall give written notice
to the Holder or Holders of such event at least fifteen (15) days prior to the
date fixed as a record date or the date of closing the transfer books for the
determination of the stockholders entitled to such dividend, distribution,
convertible or exchangeable securities or subscription rights, options or
warrants, or entitled to vote on such proposed dissolution, liquidation, winding
up or sale. Such notice shall specify such record date or the date of closing
the transfer books, as the case may be. Failure to give such notice or any
defect therein shall not affect the validity of any action taken in connection
with the declaration or payment of any such dividend or distribution, or the
issuance of any convertible or exchangeable securities or subscription rights,
options or warrants, or any proposed dissolution, liquidation, winding up or
sale.

                  13.      Notices.

                  All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly made when
delivered, or mailed by registered or certified mail, return receipt requested:

                           (a) If to a registered Holder of the Warrants, to the
                  address of such Holder as shown on the books of the Company;
                  or

                           (b) If to the Company, to the address set forth in
                  Section 3 of this Agreement or to such other address as the
                  Company may designate by notice to the Holders.

                  14.      Supplements and Amendments.

                  The Company and the Underwriter may from time to time
supplement or amend this Agreement without the approval of any Holders of
Warrant Certificates in order to cure any ambiguity, to correct or supplement
any provision contained herein which may be defective or inconsistent with any
provisions herein, or to make any other provisions in regard to matters or
questions arising hereunder which the Company and the Underwriter may deem
necessary or desirable and which the Company and the Underwriter deem not to
adversely affect the interests of the Holders of Warrant Certificates.

                                       18

<PAGE>

                  15.      Successors.

                  All the covenants and provisions of this Agreement by or for
the benefit of the Company and the Holders inure to the benefit of their
respective successors and assigns hereunder.

                  16.      Termination.

                  This Agreement shall terminate at the close of business on
__________, 2008. Notwithstanding the foregoing, this Agreement will terminate
on any earlier date when all Warrants have been exercised and all the Shares
issuable upon exercise of the Warrants have been resold to the public; provided,
however, that the provisions of Section 7 shall survive any termination pursuant
to this Section 16 until the close of business on _________, 2011.

                  17.      Governing Law.

                  This Agreement and each Warrant Certificate issued hereunder
shall be deemed to be a contract made under the laws of the State of New York
and for all purposes shall be construed in accordance with the laws of said
State.
                  18.      Benefits of This Agreement.

                  Nothing in this Agreement shall be construed to give to any
person or corporation other than the Company and the Underwriter and any other
registered holder or holders of the Warrant Certificates, Warrants or the Shares
any legal or equitable right, remedy or claim under this Agreement; and this
Agreement shall be for the sole and exclusive benefit of the Company and the
Underwriter and any other holder or holders of the Warrant Certificates,
Warrants or the Shares.

                                       19

<PAGE>

                  19.      Counterparts.

                  This Agreement may be executed in any number of counterparts
and each of such counterparts shall for all purposes be deemed to be an
original, and such counterparts shall together constitute but one and the same
instrument.

                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above written.

                                           DELCATH SYSTEMS, INC.

                                           By:__________________________________
                                              Name:  M.S. Koly
                                              Title: Chief Executive Officer

                                            WHALE SECURITIES CO., L.P.

                                            By:   Whale Securities Corp.,
                                                  General Partner

                                           By:__________________________________
                                              Name:  William G. Walters
                                              Title: Chairman

                                       20

<PAGE>

                                                                       EXHIBIT A

THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED FOR PURPOSES OF PUBLIC
DISTRIBUTION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY
NOT BE OFFERED OR SOLD EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE, PURSUANT TO RULE 144
UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION
OF SECURITIES), OR (iii) UPON THE DELIVERY BY THE HOLDER TO THE COMPANY OF AN
OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE COMPANY, STATING
THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.

THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.

                            EXERCISABLE ON OR BEFORE
                    5:00 P.M., NEW YORK TIME, _________, 2005

No. W-                                                          _______ Warrants

                               WARRANT CERTIFICATE

                  This Warrant Certificate certifies that _______________
___________________ or registered assigns, is the registered holder of
____________ (________) Warrants to purchase, at any time from ____________,
2000 until 5:00 P.M. New York City time on ___________, 2005 ("Expiration
Date"), up to _________ fully-paid and non-assessable shares ("Shares") of
common stock, par value $.01 per share (the "Common Stock"), of Delcath Systems,
Inc., a Delaware corporation (the "Company"), at the initial exercise price,
subject to adjustment in certain events (the "Exercise Price"), of $9.90 per
Share upon surrender of this Warrant Certificate and payment of the Exercise
Price at an office or agency of the Company, but subject to the conditions set
forth herein and in the warrant agreement dated as of ____________, 2000 between
the Company and Whale Securities Co., L.P. (the "Warrant Agreement"). Payment of
the Exercise Price may be made in cash, or by certified or official bank check
in New York Clearing House funds payable to the order of the Company, or any
combination thereof.

                  No Warrant may be exercised after 5:00 P.M., New York City
time, on the Expiration Date, at which time all Warrants evidenced hereby,
unless exercised prior thereto, shall thereafter be void.

<PAGE>

                  The Warrants evidenced by this Warrant Certificate are part of
a duly authorized issue of Warrants issued pursuant to the Warrant Agreement,
which Warrant Agreement is hereby incorporated by reference in and made a part
of this instrument and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the
Company and the holders (the words "holders" or "holder" meaning the registered
holders or registered holder) of the Warrants.

                  The Warrant Agreement provides that upon the occurrence of
certain events, the Exercise Price and the type and/or number of the Company's
securities issuable thereupon may, subject to certain conditions, be adjusted.
In such event, the Company will, at the request of the holder, issue a new
Warrant Certificate evidencing the adjustment in the Exercise Price and the
number and/or type of securities issuable upon the exercise of the Warrants;
provided, however, that the failure of the Company to issue such new Warrant
Certificates shall not in any way change, alter, or otherwise impair, the rights
of the holder as set forth in the Warrant Agreement.

                  Upon due presentment for registration of transfer of this
Warrant Certificate at an office or agency of the Company, a new Warrant
Certificate or Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Warrants shall be issued to the transferee(s) in
exchange for this Warrant Certificate, subject to the limitations provided
herein and in the Warrant Agreement, without any charge except for any tax, or
other governmental charge imposed in connection therewith.

                  Upon the exercise of less than all of the Warrants evidenced
by this Certificate, the Company shall forthwith issue to the holder hereof a
new Warrant Certificate representing such number of unexercised Warrants.

                  The Company may deem and treat the registered holder(s) hereof
as the absolute owner(s) of this Warrant Certificate (notwithstanding any
notation of ownership or other writing hereon made by anyone), for the purpose
of any exercise hereof, and of any distribution to the holder(s) hereof, and for
all other purposes, and the Company shall not be affected by any notice to the
contrary.

                  All terms used in this Warrant Certificate which are defined
in the Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.

                  IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed under its corporate seal.

Dated:  ___________, 2000

                                              DELCATH SYSTEMS, INC.

                                               By:__________________________
                                                  Name:  M.S. Koly
                                                  Title: Chief Executive Officer

                                       2
<PAGE>

                         [FORM OF ELECTION TO PURCHASE]

                  The undersigned hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to purchase _________ shares of
Common Stock and herewith tenders in payment for such securities cash or a
certified or official bank check payable in New York Clearing House Funds to the
order of Delcath Systems, Inc. in the amount of $ _____, all in accordance with
the terms hereof. The undersigned requests that a certificate for such
securities be registered in the name of __________, whose address is
__________________, and that such Certificate be delivered to
__________________, whose address is _____________.

Dated:                      Signature: ____________

                              (Signature must conform in all respects to name of
                              holder as specified on the face of the Warrant
                              Certificate.)

                        --------------------------------

                        --------------------------------
                        (Insert Social Security or Other
                          Identifying Number of Holder)

<PAGE>

                              [FORM OF ASSIGNMENT]

             (To be executed by the registered holder if such holder
                  desires to transfer the Warrant Certificate.)

                  FOR VALUE RECEIVED _________________

hereby sells, assigns and transfers unto

---------------------------------------------
(Please print name and address of transferee)

this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _______________, Attorney, to
transfer the within Warrant Certificate on the books of the within-named
Company, with full power of substitution.

Dated:                      Signature: ___________

                              (Signature must conform in all respects to name of
                              holder as specified on the face of the Warrant
                              Certificate)

-------------------------------

-------------------------------
(Insert Social Security or Other
Identifying Number of Assignee)

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