Registration No. 333-_________
As filed with the Securities and Exchange Commission on March 3, 2006
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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BOARDWALK BANCORP, INC.
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(Exact name of registrant as specified in charter)
New Jersey 6021 20-4392739
- ---------------------------- ------------------------- -----------------------
(State or other jurisdiction (Primary Standard (I.R.S. Employer
incorporation or Industrial Classification Identification Number)
organization) Code No.)
201 Shore Road
Linwood, New Jersey 08221
(609) 601-0600
-------------------
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Michael D. Devlin President and CEO
Boardwalk Bancorp, Inc.
201 Shore Road
Linwood, New Jersey 08221
(609) 601-0600
-------------------
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
copies to:
David W. Swartz, Esquire
Stevens & Lee, P.C.
111 North Sixth Street
Reading, Pennsylvania 19603
(610) 478-2000
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(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Approximate date of commencement of proposed sale to the public: AS
SOON AS PRACTICABLE AFTER EFFECTIVENESS.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ X ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) 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 this Form is a post-effective amendment filed pursuant to Rule
462(d) 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.[ ]
CALCULATION OF REGISTRATION FEE
PROPOSED
TITLE OF EACH PROPOSED MAXIMUM
CLASS OF MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
BE REGISTERED REGISTERED(1) PER UNIT(2) PRICE(2) FEE
- ----------------------- ---------------------- ---------------------- ---------------------- ----------------------
Common Stock, 4,359,872 shares $18.82 $82,052,791 $8,780
$5.00 par value
(1) Based on the approximate number of shares to be issued in respect of the
same number of outstanding shares of common stock of Boardwalk Bank, plus
shares issuable pursuant to outstanding exercisable options and warrants to
acquire such stock.
(2) Pursuant to Rule 457(c), the proposed maximum offering price per share is
based on the average of the high and low sales prices of the common stock,
as reported on the NASDAQ National Market System on March 1, 2006.
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BOARDWALK BANK
The Board of Directors of Boardwalk Bank has approved the formation of
a bank holding company for Boardwalk Bank. The holding company structure will
provide Boardwalk Bank with additional flexibility for structuring acquisitions
and also for taking advantage of opportunities under the continually evolving
laws governing financial institutions.
IF WE COMPLETE THE HOLDING COMPANY FORMATION, SHAREHOLDERS OF BOARDWALK
BANK WILL RECEIVE ONE SHARE OF COMMON STOCK OF THE NEW HOLDING COMPANY,
BOARDWALK BANCORP, INC., FOR EACH SHARE OF COMMON STOCK OF BOARDWALK BANK THAT
THEY OWN. THE CONVERSION OF BOARDWALK BANK SHARES INTO SHARES OF THE HOLDING
COMPANY GENERALLY WILL BE TAX-FREE FOR U.S. FEDERAL INCOME TAX PURPOSES.
We are requesting that shareholders of Boardwalk Bank approve the plan
of acquisition that will result in the holding company formation. YOUR VOTE IS
VERY IMPORTANT. We have scheduled a meeting of shareholders to consider the
holding company formation at the following date, time and place:
April 27, 2006
10:00 a.m. local time
Central United Methodist Church
Linwood, New Jersey 08221
At the meeting, you will also consider the election of 14 directors for
Boardwalk Bank, the approval of the Boardwalk Bancorp, Inc. 2006 Employee Stock
Purchase Plan, the approval of the Boardwalk Bancorp, Inc. 2006 Stock Incentive
Plan, the ratification of the appointment of KPMG LLP as independent registered
public accountants for the fiscal year ending on December 31, 2006 and a
proposal to adjourn the meeting. This document gives you detailed information
about the meeting, the proposed holding company formation, the approval of the
employee stock purchase plan and the stock incentive plan and the election of
Boardwalk Bank directors. We encourage you to read it carefully.
The certificate of incorporation and bylaws of the holding company
differ in certain respects from the certificate of incorporation and bylaws of
Boardwalk Bank, and contain provisions that can be considered "antitakeover" in
nature. These provisions and related issues are described on page ___.
We, together with the rest of Boardwalk Bank's Board of Directors,
enthusiastically support the holding company formation and recommend that you
vote to approve it.
[SIGNATURE]
Michael D. Devlin
Chairman, President and Chief Executive Officer
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THE PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
These securities are not savings or deposit accounts or other
obligations of any bank, and they are not insured by the Federal Deposit
Insurance Corporation or any governmental agency.
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This proxy statement/prospectus is dated March 23, 2006 and was first
mailed to shareholders on March 24, 2006.
BOARDWALK BANK
201 SHORE ROAD
LINWOOD, NEW JERSEY 08221
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 27, 2006
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We will hold the annual meeting of shareholders of Boardwalk Bank, at
the Central United Methodist Church, Linwood, New Jersey 08221, on Thursday,
April 27, 2006 at 10:00 a.m. local time.
The annual meeting is for the following purposes which are more
completely described in the accompanying proxy statement/prospectus:
1. The approval of the reorganization of Boardwalk Bank into the
holding company form of ownership by approving a plan of acquisition, pursuant
to which Boardwalk Bank will become a wholly owned subsidiary of a holding
company, Boardwalk Bancorp, Inc., a newly formed New Jersey corporation, and
each outstanding share of common stock of Boardwalk Bank will be converted into
one share of common stock of the holding company.
2. The election of 14 directors of Boardwalk Bank.
3. The approval of the Boardwalk Bancorp, Inc. 2006 Employee Stock
Purchase Plan.
4. The approval of the Boardwalk Bancorp, Inc. 2006 Stock Incentive
Plan.
5. To ratify the appointment of KPMG LLP as independent registered
public accountants for the fiscal year ending on December 31, 2006.
6. The adjournment of the meeting, if necessary, to permit further
solicitation of proxies in the event there are not sufficient votes at the time
of the meeting to constitute a quorum or to approve the holding company
reorganization.
7. Any other matters as may properly come before the meeting or any
adjournment thereof.
The board of directors of Boardwalk Bank has fixed the close of
business on March 8, 2006 as the record date for determining shareholders
entitled to notice of, and to vote at, the annual meeting.
Your vote is important regardless of the number of shares you own.
Whether or not you plan to attend the meeting, we urge you to complete, sign,
date and return the enclosed proxy card as soon as possible in the enclosed
postage-paid envelope. This will not prevent you from voting in person at the
meeting but will assure that your vote is counted if you are unable to attend.
If you are a shareholder whose shares are not registered in your own name, you
will need additional documentation from your record holder in order to attend
and vote personally at the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
[SIGNATURE]
Joan B. Ditmars
Corporate Secretary
Linwood, New Jersey
March 24, 2006
TABLE OF CONTENTS
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Page
QUESTIONS AND ANSWERS REGARDING THE HOLDING COMPANY
REORGANIZATION....................................................................................................1
THE MEETING.......................................................................................................6
Date, Time and Place........................................................................................6
Matters To Be Considered at the Meeting.....................................................................6
Record Date; Stock Entitled to Vote; Quorum.................................................................6
Votes Required..............................................................................................7
Voting of Proxies...........................................................................................7
Revocability of Proxies.....................................................................................8
Solicitation of Proxies.....................................................................................8
PROPOSAL I -- PROPOSED HOLDING COMPANY REORGANIZATION.............................................................9
Summary.....................................................................................................9
Reasons For The Holding Company Reorganization..............................................................9
Plan of Acquisition........................................................................................11
Effective Date.............................................................................................12
Exchange Of Stock Certificates.............................................................................12
Dissenters' Rights.........................................................................................12
Tax Consequences...........................................................................................14
Consequences under Federal Securities Laws.................................................................16
Conditions to the Holding Company Reorganization...........................................................17
Regulatory Approvals.......................................................................................17
Amendment, Termination Or Waiver...........................................................................18
Comparison Of Shareholders' Rights.........................................................................18
Certain Anti-Takeover Provisions...........................................................................23
Provisions of the Holding Company's Certificate of Incorporation and Bylaws.............................24
Applicable Provisions of the New Jersey Business Corporation Act........................................25
Purpose and Takeover Defensive Effects of Charter Provisions and New Jersey
Law.................................................................................................25
Business of the Holding Company and Boardwalk Bank.........................................................26
General....................................................................................................26
Regulation.................................................................................................27
Properties.................................................................................................29
Legal Proceedings..........................................................................................29
Employees..................................................................................................29
Competition................................................................................................30
Management.................................................................................................30
Limitation of Liability of Directors and Officers..........................................................32
Indemnification of Directors and Officers..................................................................32
Regulatory Matters.........................................................................................32
Description Of Holding Company Capital Stock...............................................................35
i
Holding Company Common Stock...............................................................................35
Accounting Treatment.......................................................................................36
Legal Opinion..............................................................................................36
Recommendation of Board of Directors.......................................................................36
PROPOSAL II -- ELECTION OF DIRECTORS.............................................................................36
Biographical Information for Directors and Executive Officers..............................................37
Remuneration of Directors and Officers.....................................................................41
Employment Agreement.......................................................................................42
Change in Control Agreements...............................................................................43
Compensation Committee Report..............................................................................43
Certain Relationships and Related Transactions.............................................................44
Section 16(a) Beneficial Ownership Reporting Compliance....................................................45
Beneficial Ownership of Common Stock.......................................................................45
Board Committees and Meetings..............................................................................47
Audit Committee Report.....................................................................................49
Audit Fees.................................................................................................50
Audit Related Fees.........................................................................................50
Tax Fees...................................................................................................50
All Other Fees.............................................................................................50
Auditor Independence.......................................................................................50
Pre-Approval of Audit and Permissible Non-Audit Services...................................................50
Annual Report..............................................................................................50
Performance Graph..........................................................................................51
PROPOSAL III - APPROVE BOARDWALK BANCORP, INC. 2006 EMPLOYEE
STOCK PURCHASE PLAN..............................................................................................53
Purpose of the Purchase Plan...............................................................................53
Key Terms..................................................................................................53
Eligibility................................................................................................54
Administration of the Purchase Plan........................................................................54
Participation in the Purchase Plan.........................................................................54
Purchasing Stock...........................................................................................54
Limitations................................................................................................55
Written Statements.........................................................................................55
Withdrawing from the Purchase Plan.........................................................................55
Termination and Amendments.................................................................................56
Certain Federal Income Tax Consequences of the Purchase Plan...............................................56
Summary of Benefits........................................................................................57
Recommendation.............................................................................................57
PROPOSAL IV - APPROVE BOARDWALK BANCORP, INC. 2006 STOCK
INCENTIVE PLAN...................................................................................................57
Purpose of Plan............................................................................................57
Key Terms..................................................................................................58
Eligibility................................................................................................59
Shares Authorized; Adjustments.............................................................................59
ii
Awards.....................................................................................................59
Vesting of Awards..........................................................................................59
Exercise Price and Term of Stock Options...................................................................59
Payment of Exercise Price and Withholding..................................................................60
Transferability............................................................................................60
Change in Control..........................................................................................60
Termination of Employment or Service.......................................................................60
Plan Administration........................................................................................60
Amendments.................................................................................................61
Certain Federal Income Tax Consequences of the Incentive Plan..............................................61
Other Information..........................................................................................62
Summary of Benefits........................................................................................62
Recommendation.............................................................................................63
PROPOSAL V - RATIFICATION OF THE SELECTION OF KPMG, LLP..........................................................63
PROPOSAL VI - ADJOURNMENT PROPOSAL...............................................................................64
Shareholder Proposals......................................................................................64
COSTS OF SOLICITATION............................................................................................65
OTHER MATTERS....................................................................................................65
Exhibit A Plan of Acquisition...............................................................................B-1
Exhibit B Certificate of Incorporation of Boardwalk Bancorp, Inc............................................B-1
Exhibit C Bylaws of Boardwalk Bancorp, Inc..................................................................C-1
Exhibit D Sections 140 to 145 of the New Jersey Banking Act of 1948 (Rights of
Dissenting Shareholders)..........................................................................D-1
Exhibit E Boardwalk Bancorp, Inc. 2006 Employee Stock Purchase Plan.........................................D-1
Exhibit F Boardwalk Bancorp, Inc. 2006 Stock Incentive Plan.................................................F-1
iii
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QUESTIONS AND ANSWERS REGARDING
THE HOLDING COMPANY REORGANIZATION
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THE FOLLOWING QUESTION AND ANSWER SECTION HIGHLIGHTS SELECTED
INFORMATION FROM THIS PROXY STATEMENT/PROSPECTUS AND MAY NOT CONTAIN ALL OF THE
INFORMATION THAT IS IMPORTANT TO YOU. TO UNDERSTAND THE HOLDING COMPANY
REORGANIZATION FULLY, WE URGE YOU TO READ CAREFULLY THIS ENTIRE DOCUMENT,
INCLUDING THE ATTACHMENTS.
WHY IS THE BOARD PROPOSING THE HOLDING COMPANY REORGANIZATION?
Your board of directors believes that the holding company
reorganization will provide Boardwalk Bank with greater financial and corporate
flexibility. With a holding company, we will have more options for structuring
acquisitions, particularly of other financial institutions organized in a
holding company structure. In addition, the holding company structure will
provide flexibility to address opportunities that have become available under
the laws governing financial institutions.
WILL THE HOLDING COMPANY REORGANIZATION CHANGE THE BUSINESS OF BOARDWALK BANK?
No. The holding company reorganization will not change the current
business of Boardwalk Bank. Following the reorganization, the principal activity
of the new holding company, Boardwalk Bancorp, Inc., will be owning and
operating Boardwalk Bank, which will continue to conduct its current business
from its current offices. The principal executive offices of both Boardwalk Bank
and the holding company will be located at 201 Shore Road, Linwood, New Jersey
08821 and their telephone number will be (609) 601-0600.
HOW WILL THE HOLDING COMPANY REORGANIZATION AFFECT SHAREHOLDERS?
If shareholders approve the holding company reorganization, you will
receive one share of common stock of the holding company for each share of
common stock of Boardwalk Bank which you currently own. Outstanding stock
certificates will no longer represent an interest in stock of Boardwalk Bank,
but will instead represent an interest in stock of the holding company.
As a result, you will no longer own stock directly in Boardwalk Bank,
but will instead own stock in the holding company. Your rights will be governed
by the holding company's certificate of incorporation and bylaws and the New
Jersey Business Corporation Act rather than by Boardwalk Bank's certificate of
incorporation and bylaws and the New Jersey Banking Act of 1948. For a detailed
discussion of the differences in the rights of shareholders, see the disclosure
beginning on page ___.
1
WHAT IS THE VOTE REQUIRED FOR APPROVAL OF THE HOLDING COMPANY REORGANIZATION?
The holding company reorganization must be approved by holders of at
least two-thirds of Boardwalk Bank's outstanding shares. Your board of directors
has unanimously approved the holding company reorganization and recommends that
you vote for it as well. Because the vote is based on the total number of shares
outstanding rather than the votes cast at the meeting, your failure to vote has
the same effect as a vote against the holding company reorganization. As a
result, your board of directors recommends that you sign and return your proxy
card at your earliest convenience even if you currently plan to attend the
meeting. As of March 1, 2006, Directors and executive officers of Boardwalk Bank
owned 484,231 shares of Boardwalk Bank's stock, or 15.6% of the shares
outstanding, and have indicated their intention to vote for the holding company
reorganization.
IS THE HOLDING COMPANY REORGANIZATION SUBJECT TO ANY OTHER APPROVALS?
Yes. The holding company reorganization must also be approved by
certain federal and state agencies that regulate bank holding companies and
state-chartered banks. In the case of the holding company reorganization, this
is the New Jersey Department of Banking and Insurance. We have filed an
application for this approval. We have also provided a required notice to the
Board of Governors of the Federal Reserve System.
DO SHAREHOLDERS HAVE THE RIGHT TO DISSENT FROM THE HOLDING COMPANY
REORGANIZATION?
Yes. The New Jersey Banking Act of 1948 provides shareholders of
Boardwalk Bank with the right to dissent from the holding company
reorganization, and to demand and receive cash for the "fair value" of their
shares of stock instead of receiving holding company common stock in the holding
company reorganization. In order to assert these dissenters rights, shareholders
must:
o file a written notice of dissent with the Bank at its
principal office, 201 Shore Road, Linwood, New Jersey 08221.
The notice of dissent must be received by the Bank no later
than the third day prior to the shareholder vote at the
meeting;
o not vote in favor of the plan of acquisition;
o within 30 days of the filing of the Plan of Acquisition by
Boardwalk Bank with the New Jersey Department of Banking and
Insurance, file a written demand for payment of the value of
his or her shares; and
o comply with certain other statutory procedures set forth in
New Jersey law.
If you sign and return your proxy without voting instructions, we will
vote your proxy in favor of the holding company reorganization and you will lose
any dissenters rights that you may have. We have included a copy of the sections
of New Jersey law dealing with dissenters rights to this proxy
statement/prospectus as Exhibit D.
2
If you do not follow the procedures required by New Jersey law, you may
lose your dissenters rights with respect to the reorganization. We urge you to
read carefully the complete description of dissenters rights beginning on page
___ and Exhibit D to this proxy statement/prospectus.
The holding company reorganization may not be completed if the number
of shares with respect to which dissenters rights are exercised would, in the
judgment of the board of directors of Boardwalk Bank, render completion of the
reorganization inadvisable.
WHAT ARE THE TAX CONSEQUENCES TO SHAREHOLDERS?
We have received an opinion from our attorneys that shareholders
generally will not recognize gain or loss for federal income tax purposes for
the shares of holding company common stock they receive in the holding company
reorganization. Our attorneys have issued a legal opinion to this effect, which
we have included as an exhibit to the registration statement filed with the SEC
for the shares to be issued in the holding company reorganization. Shareholders
should note that the opinion of our attorneys is not binding on the Internal
Revenue Service or any state taxing authority. Shareholders who dissent from the
holding company reorganization will be subject to potential federal income tax
on cash received for their shares.
ARE THERE ANY RISK FACTORS THAT WE SHOULD CONSIDER IN THE HOLDING COMPANY
REORGANIZATION?
Certain provisions of the holding company's certificate of
incorporation and bylaws may have the effect of deterring or discouraging, among
other things, a nonnegotiated tender or exchange offer for the holding company's
common stock, a proxy contest for control of the holding company, the assumption
of control of the holding company by a holder of a large block of the holding
company's common stock, and the removal of incumbent management.
These provisions:
o Require a vote of holders of at least 66 2/3% of the
outstanding shares to approve mergers and similar transactions
if the transaction is not approved in advance by 66-2/3% or
more of the members of the board of directors;
o Divide the holding company's board into three classes with
each class serving a staggered three-year term;
o Do not authorize cumulative voting in the election of
directors;
o Require 90 days advance written notice of nominations by
shareholders for the election of directors at meetings of
shareholders and the presentation of any shareholder proposals
at meetings of shareholders;
o Do not authorize shareholders of the holding company to call
special meetings of shareholders or to propose amendments to
the holding company's certificate of incorporation; and
o Require a supermajority vote of shareholders of the holding
company to amend the holding company's bylaws and certain
provisions of the holding company's certificate of
incorporation.
3
In addition, certain provisions of the New Jersey Shareholders'
Protection Act, which will apply to the holding company following the holding
company reorganization, may have similar effects. These provisions:
o provide for a five-year prohibition on consummation of a
business combination with the target from the date an acquirer
becomes an "interested shareholder" (i.e. holds 10% or more of
the target corporation's voting stock) unless the business
combination is approved by the board of directors prior to the
time the interested shareholder acquired its 10% holding.
o prohibit a business combination with an interested shareholder
at any time unless one of the following three conditions is
met: (1) approval by the target's board of directors, prior to
the 10% acquisition; (2) an affirmative vote of two-thirds of
the outstanding voting stock not owned by the interested
shareholder; or (3) compliance with certain financial
formulations designed to assure a fair price for the target's
shareholders in exchange for their ownership interest.
A corporation may exempt itself from the requirements of the statute by
so specifying in its certificate of incorporation. The certificate of
incorporation of Boardwalk Bancorp, Inc. does not opt out of the New Jersey
Shareholders' Protection Act.
While your board of directors is not aware of any effort that might be
made to obtain control of Boardwalk Bank, the board believes that it is
appropriate to include these provisions to protect the interests of the holding
company and its shareholders from non-negotiated takeover attempts which your
board of directors might conclude are not in the best interests of the holding
company or its shareholders. These provisions may have the effect of
discouraging a future takeover attempt which is not approved by the board of
directors, but which you might deem to be in your best interests or in which you
might receive a substantial premium for your shares over the current market
prices. As a result, shareholders who might desire to participate in such a
transaction may not have an opportunity to do so. Such provisions will also make
it more difficult to remove the current board of directors or management of the
holding company. Approval of the holding company reorganization will, in effect,
constitute approval of these provisions by shareholders.
WHO WILL SERVE AS MANAGEMENT OF THE HOLDING COMPANY?
The holding company reorganization will not result in a change in
management. The executive officers and board of directors of the holding company
will consist of essentially the same persons who hold those positions with
Boardwalk Bank. The board of directors of the holding company will, however, be
divided into three classes with each class of directors serving a three-year
term.
WHAT DO I NEED TO DO NOW?
Just indicate on your proxy card how you want your shares to be voted,
then sign and mail it in the enclosed prepaid return envelope as soon as
possible, so that your shares may be represented and voted at the meeting to be
held on April 27, 2006.
4
IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME?
Maybe. Your broker will vote your shares only if you provide
instructions on how to vote. You should follow the directions provided by your
broker. Without instructions, your shares will not be voted on the plan of
acquisition.
CAN I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY CARD?
Yes. There are three ways for you to revoke your proxy and change your
vote. First, you may send a written notice to the person to whom you submitted
your proxy stating that you would like to revoke your proxy. Second, you may
complete and submit a new proxy card with a later date. Third, you may vote in
person at the meeting. If you have instructed a broker to vote your shares, you
must follow directions received from your broker to change your vote.
SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
No. Shortly after the merger is completed, we will send you written
instructions for exchanging your stock certificates.
WHOM SHOULD I CALL WITH QUESTIONS OR TO OBTAIN ADDITIONAL COPIES OF THIS PROXY
STATEMENT/PROSPECTUS?
You should contact:
Boardwalk Bank
201 Shore Road
Linwood, New Jersey 08221
Attention: Joan B. Ditmars,
Corporate Secretary
Telephone: (609) 601-8953
5
THE MEETING
DATE, TIME AND PLACE
Boardwalk Bank will hold the meeting at the Central United Methodist
Church, Linwood, New Jersey, at 10:00 a.m. local time, on Thursday, April 27,
2006.
MATTERS TO BE CONSIDERED AT THE MEETING
At the meeting, holders of Boardwalk Bank common stock will consider
and vote upon proposals to:
o approve and adopt the plan of acquisition to form the holding
company;
o elect 14 directors of Boardwalk Bank;
o approve the Boardwalk Bancorp, Inc. 2006 Employee Stock
Purchase Plan;
o approve the Boardwalk Bancorp, Inc. 2006 Stock Incentive Plan;
o ratify the appointment of KPMG LLP as independent registered
public accountants for the fiscal year ending on December 31,
2006; and
o approve a proposal to adjourn the meeting if more time is
needed to solicit proxies.
A vote for approval of the plan of acquisition is a vote for approval
of the holding company formation. If the holding company formation is completed,
you will receive one share of holding company common stock in exchange for each
share of Boardwalk Bank common stock that you hold.
RECORD DATE; STOCK ENTITLED TO VOTE; QUORUM
Only holders of record of Boardwalk Bank common stock on March 8, 2006
will receive notice of, and can vote at, the meeting. On March 8, 2006,
_________ shares of Boardwalk Bank common stock were issued and outstanding and
held by approximately _________ holders of record.
A quorum requires the presence, in person or by proxy, of shareholders
entitled to cast at least a majority of the votes which all shareholders of
Boardwalk Bank are entitled to cast on the record date.
We intend to count the following shares as present at the meeting for
the purpose of determining a quorum:
o shares of Boardwalk Bank common stock present in person at the
meeting but not voting;
6
o shares of Boardwalk Bank common stock represented by proxies
on which the shareholder has abstained on any matter; and
o shares of Boardwalk Bank common stock represented by proxies
from a broker with no indication of how the shares are to be
voted.
VOTES REQUIRED
Approval of the plan of acquisition and the holding company formation
requires the affirmative vote of two-thirds of the outstanding shares of
Boardwalk Bank common stock entitled to vote at the meeting. Approval of the
Boardwalk Bancorp, Inc. 2006 Employee Stock Purchase Plan, the Boardwalk
Bancorp, Inc. 2006 Stock Incentive Plan, the ratification of the selection of
KPMG LLP, and the adjournment proposal require the affirmative vote of a
majority of the votes cast in person or by proxy at the meeting. Directors are
elected by a plurality of the votes cast at the meeting.
You have one vote for each share of Boardwalk Bank common stock that
you hold of record on each matter to be considered at the meeting.
The directors and executive officers of Boardwalk Bank have agreed to
vote all shares of Boardwalk Bank common stock that they own for approval and
adoption of the plan of acquisition. As of the record date for the meeting,
directors and executive officers of Boardwalk Bank and their affiliates
beneficially owned and were entitled to vote approximately _________ shares of
Boardwalk Bank common stock, which represented approximately _________% of the
shares of Boardwalk Bank common stock outstanding on the record date.
VOTING OF PROXIES
We will vote shares represented by all properly executed proxies
received in time for the meeting in the manner specified on each proxy. We will
vote properly executed proxies that do not contain voting instructions in favor
of the plan of acquisition, in favor of the Board's nominees for election as
directors, in favor of the approval of the Boardwalk Bancorp, Inc. 2006 Employee
Stock Purchase Plan, in favor of the Boardwalk Bancorp, Inc. 2006 Stock
Incentive Plan, and in favor of the ratification of the selection of KPMG LLP.
If you abstain from voting on any proposal considered at the meeting,
we will not count the abstention as a vote "for" or "against" the plan of
acquisition for purposes of the meeting. Under rules relating to how brokers
vote shares held in brokerage accounts, brokers who hold your shares in street
name cannot give a proxy to vote your shares on the plan of acquisition or the
adjournment proposal without receiving specific instructions from you. We will
not count these broker non-votes as a vote "for" or "against" the plan of
acquisition, the 2006 Employee Stock Purchase Plan, the 2006 Stock Incentive
Plan, the ratification of the selection of KPMG LLP, or the adjournment proposal
for purposes of the meeting. As a result:
7
o because approval of the plan of acquisition and the holding
company formation requires the affirmative vote of two-thirds
of all outstanding shares, abstentions and broker non-votes
will have the same effect as a vote against plan of
acquisition; and
o because approval of the 2006 Employee Stock Purchase Plan, the
2006 Stock Incentive Plan, the ratification of the selection
of KPMG LLP, and the adjournment proposal requires the
affirmative vote of a majority of the votes cast at the
meeting and because directors are elected by a plurality of
the votes cast, abstentions and broker non-votes will not
affect the vote on these matters.
REVOCABILITY OF PROXIES
If you grant a proxy, you may revoke your proxy at any time until it is
voted by:
o delivering a notice of revocation or delivering a later dated
proxy to Joan B. Ditmars, Corporate Secretary, Boardwalk Bank,
201 Shore Road, Linwood, New Jersey 08221;
o submitting a proxy card with a later date; or
o appearing at the meeting and voting in person.
Attendance at the meeting will not in and of itself revoke a proxy that
you submitted prior to the meeting.
SOLICITATION OF PROXIES
Boardwalk Bank will bear the cost of the solicitation of proxies from
its shareholders.
Boardwalk Bank will solicit proxies by mail. In addition, the
directors, officers and employees of Boardwalk Bank may solicit proxies from
shareholders by telephone, in person or any other lawful means. Boardwalk Bank
will make arrangements with brokerage houses and other custodians, nominees and
fiduciaries for forwarding proxy solicitation material to the beneficial owners
of stock held of record by those persons, and Boardwalk Bank will reimburse them
for reasonable out-of-pocket expenses.
You should not send in your stock certificates with your proxy card. As
described below under the caption "Exchange of Stock Certificates" on page ___
you will receive materials for exchanging shares of Boardwalk Bank common stock
for shares of holding company common stock shortly after the holding company
reorganization is completed.
8
PROPOSAL I -- PROPOSED HOLDING COMPANY REORGANIZATION
SUMMARY
We are seeking your approval of a plan of acquisition, dated as of
February ___, 2006. The plan of acquisition provides that Boardwalk Bank will
become a wholly owned subsidiary of Boardwalk Bancorp, Inc., a New Jersey
corporation recently formed by Boardwalk Bank for the purpose of becoming a
holding company for Boardwalk Bank.
Under the plan of acquisition, each outstanding share of Boardwalk Bank
common stock (other than shares as to which dissenters rights are properly
exercised) will convert automatically into one share of holding company common
stock, and the former holders of Boardwalk Bank common stock will become the
holders of all of the outstanding shares of holding company common stock. The
holding company was incorporated on February 22, 2006, and has no prior
operating history. Following the reorganization, Boardwalk Bank will continue
its operations at the same location, with the same management, and subject to
all the rights, obligations and liabilities of Boardwalk Bank existing
immediately prior to the reorganization.
REASONS FOR THE HOLDING COMPANY REORGANIZATION
Your board of directors believes that the formation of a holding
company will provide Boardwalk Bank with greater flexibility in structuring
acquisitions of banks and other companies, allow greater diversification in
activities and expand the means by which capital can be raised. Various
provisions of the holding company's certificate of incorporation and bylaws and
of New Jersey law will also reduce our vulnerability to attempts to acquire
control of our institution against the board's wishes and help it to remain a
locally owned and oriented community bank.
ACQUISITION FLEXIBILITY. The holding company structure can be used to
facilitate acquisitions of other banks and potentially allows the acquisition of
a greater range of organizations. As a state-chartered bank, Boardwalk Bank is
currently prohibited from having another bank as a subsidiary. Consequently, any
acquisition of another bank must be structured as a direct merger of that bank
with Boardwalk Bank in which one of the parties will disappear as a separate
entity. Any merger must also be approved by two-thirds of outstanding shares.
With a holding company, an acquisition may be structured so that the other bank
is acquired as a separate subsidiary that can continue to operate under its
original name and under the direction of a separate board of directors. The
ability to allow an acquired bank to operate with some degree of autonomy may be
an important factor in negotiating an acquisition and allows the holding company
to take advantage of the acquired bank's name recognition and goodwill. In
addition, an acquisition of another bank by the holding company can be
structured so that approval of the holding company's shareholders is not
required or, if required, to reduce the percentage vote required. As a result,
the holding company could avoid the expense of a shareholder meeting and can
negotiate acquisitions with greater certainty that the transaction will be
completed. Greater acquisition flexibility will, however, also permit the
holding company to enter into and facilitate the completion of transactions that
may result in a dilution of voting power, book value or earnings per share or
provide for other terms which an individual shareholder might consider
disadvantageous.
9
FINANCING FLEXIBILITY. The holding company structure will allow us to
raise capital in ways that are not available to Boardwalk Bank on a stand-alone
basis. For example, the holding company can raise funds through the issuance of
debt or trust preferred securities and invest the proceeds in its banking
subsidiaries in a manner that will qualify as Tier 1 capital. In this way,
capital can be increased at Boardwalk Bank level without diluting the percentage
ownership interest of current shareholders. Although the holding company will be
subject to capital requirements that are similar to those applied to Boardwalk
Bank, bank holding companies are permitted to include a broader range of
instruments in capital. For example, bank holding companies may include some
cumulative preferred stock in Tier 1 capital while preferred stock will only
count as regulatory capital for Boardwalk Bank if it is non-cumulative.
DIVERSIFICATION. Bank holding companies are authorized to engage in a
variety of non-banking activities that have been determined to be closely
related to banking under the Bank Holding Company Act of 1956. As a result, a
bank holding company is permitted to diversify into banking related activities.
Although Boardwalk Bank may establish operating subsidiaries that engage in
activities that are incidental or part of the business of banking, the range of
pre-approved activities is currently less extensive than that permitted to bank
holding companies. Additionally, the Gramm-Leach-Bliley Act of 1999, which
significantly changed the landscape for financial institutions and financial
services integration in the United States, authorizes a bank holding company to
elect status as a "financial holding company" and to conduct a broad array of
financial activities, some of which are or will be unavailable to banks not
organized in a holding company structure. Insurance underwriting and merchant
banking activities are examples of activities which presently must be conducted
through subsidiaries of a holding company. Although there is no present plan to
engage in such activities at present, the board of directors may under
appropriate circumstances consider these activities in the future. In addition,
the Federal Reserve Board may in the future authorize additional activities
which are financial in nature or complementary to a financial activity and which
must be conducted other than through a bank subsidiary. The holding company
structure will permit the board of directors maximum flexibility to take
advantage of appropriate opportunities in the future regardless of the
requirements relating to holding company versus bank subsidiary.
CORPORATE FLEXIBILITY. As a state-chartered bank, Boardwalk Bank is
chartered under and governed by the New Jersey Banking Act which was enacted in
1948 and contains many of its original provisions regarding the corporate
governance of state banks. The New Jersey Banking Act does not permit the same
operating flexibility for state banks as New Jersey's corporate statute confers
on private corporations. As noted previously, the board of directors of the
holding company will be able to approve certain acquisitions of other
institutions without the need for incurring the expense of holding a meeting of
shareholders. Also, the shareholder voting requirements for approval of matters
submitted for a vote are generally lower under New Jersey's corporate statute,
which will govern the holding company's activities, than under the New Jersey
Banking Act. Finally, the holding company structure will make it easier to
repurchase shares should the Board of Directors ever conclude that it would be
in the interests of shareholders and the holding company to do so. By
incorporating the holding company under New Jersey's corporate statute, your
board of directors will have greater flexibility to conduct business.
10
ENHANCEMENT OF INDEPENDENCE. Your board of directors believes the
formation of a holding company will help Boardwalk Bank remain an independent,
locally-owned community bank. The holding company's certificate of incorporation
and bylaws and certain provisions of the New Jersey Business Corporation Act
also contain provisions that can deter hostile acquisitions of control. These
provisions would not prevent a sale of the holding company, but would make it
difficult for an acquirer to force a sale of the company without the support of
the board of directors.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE PLAN OF
ACQUISITION AND RECOMMENDS THAT YOU VOTE "FOR" THE PLAN OF ACQUISITION.
PLAN OF ACQUISITION
The holding company reorganization will be accomplished under the plan
of acquisition, which is attached as Exhibit A to this proxy
statement/prospectus. The following discussion is qualified in its entirety by
reference to the plan of acquisition which is incorporated into this proxy
statement/prospectus by reference. The plan of acquisition was unanimously
approved by Boardwalk Bank's board of directors on January 23, 2006.
The holding company is a newly organized New Jersey corporation formed
by Boardwalk Bank solely for the purpose of effecting the holding company
reorganization. The holding company has no prior operating history. The holding
company and Boardwalk Bank are all of the parties to the plan of acquisition.
The holding company reorganization will be accomplished by converting
all of the issued and outstanding shares of Boardwalk Bank common stock (other
than shares as to which dissenters rights are properly exercised) by operation
of law on a one-for-one basis into an equal number of issued and outstanding
shares of holding company common stock.
After the holding company reorganization, the former holders of
Boardwalk Bank common stock will be the holders of all of the outstanding shares
of holding company common stock. Because the holding company will hold all of
the issued and outstanding voting stock of Boardwalk Bank, Boardwalk Bank may be
referred to in this proxy statement/prospectus as a "wholly owned" subsidiary of
the holding company following the holding company reorganization.
After the holding company reorganization, Boardwalk Bank will make a
capital distribution to the holding company to allow it to pay for the expenses
incurred by the holding company in the reorganization. Future capitalization of
the holding company will depend primarily upon dividends declared by Boardwalk
Bank or the raising of additional capital by the holding company through a
future issuance of securities or debt or through other means. The board of
directors of the holding company has no present plans or intentions with respect
to any future issuance of securities or debt for capital raising purposes.
11
After the holding company reorganization, Boardwalk Bank will continue
its existing business and operations as a wholly owned subsidiary of the holding
company. The consolidated capitalization, assets, liabilities, income and
financial statements of the holding company immediately following the
reorganization will be substantially the same as those of Boardwalk Bank
immediately prior to the reorganization. The certificate of incorporation and
bylaws of Boardwalk Bank will continue in effect, and will not be initially
affected in any manner by the reorganization. The corporate existence of
Boardwalk Bank will continue unaffected and unimpaired by the holding company
reorganization.
EFFECTIVE DATE
The "effective date" of the holding company reorganization will be the
date specified in the certificate to be issued by the New Jersey Department of
Banking and Insurance on or prior to the Effective Date. The certificate of
reorganization will set forth the effective date, which the parties presently
expect will occur shortly after the meeting date. We do not anticipate any
significant delay in obtaining required regulatory approvals or the certificate
of reorganization.
EXCHANGE OF STOCK CERTIFICATES
The outstanding stock certificates that presently represent shares of
Boardwalk Bank common stock will be deemed automatically to represent the same
number of shares of holding company common stock. You will not be required to
immediately exchange your present stock certificates (bearing the name
"Boardwalk Bank") for new stock certificates (bearing the name "Boardwalk
Bancorp, Inc.").
Upon completion of the holding company reorganization, the holding
company will mail you a letter of transmittal and instructions related to the
exchange of your certificates representing shares of Boardwalk Bank common stock
for certificates representing the number of shares of holding company common
stock into which your Boardwalk Bank common stock has been converted as a result
of the reorganization.
YOU SHOULD NOT SEND IN YOUR STOCK CERTIFICATES UNTIL WE NOTIFY YOU TO
DO SO.
DISSENTERS' RIGHTS
GENERAL
In accordance with the New Jersey Banking Act of 1948, which governs
New Jersey state-chartered banks, shareholders of Boardwalk Bank will be
entitled to the rights and remedies applicable to dissenting shareholders and
will be subject to the limitations on such rights and remedies under those
provisions.
If the reorganization is not consummated for any reason, the demand for
appraisal will be of no effect. Any shareholder who objects to the
reorganization may seek the remedies provided under the New Jersey Banking Act
of 1948. The following summary of this law does not purport to be complete and
is qualified in its entirety by reference to Exhibit D to this proxy
statement/prospectus, which contains the complete text of this law.
12
A shareholder wishing to demand appraisal rights must file at Boardwalk
Bank's principal office, 201 Shore Road, Linwood, New Jersey 08221, a written
notice of dissent to the reorganization. The notice of dissent must be received
by Boardwalk Bank no later than the third day prior to the date fixed for the
meeting of shareholders to vote upon the reorganization. The notice of dissent
must be sent via registered mail or delivered in person by the dissenting
shareholder or his agent. Voting against the reorganization, by proxy or
otherwise, is not sufficient to enable a shareholder to perfect the rights of a
dissenting shareholder. However, any shareholder who files the required notice
of dissent and votes in favor of the reorganization, whether in person or by
proxy (including those shareholders who return the enclosed proxy card executed
but without a designation as to the vote on the reorganization) will be deemed
to have waived the right to qualify as a dissenter. If the reorganization is not
consummated for any reason, appraisal rights will not be available.
Following approval by the shareholders, if obtained, Boardwalk Bank
will on the effective date of the reorganization file the plan of acquisition
with the New Jersey Department of Banking and Insurance along with the
certification of the president of Boardwalk Bank that the plan was approved at
the meeting by the holders of at least two-thirds of the outstanding shares of
Boardwalk Bank. A dissenting shareholder who filed a timely written notice of
dissent and did not vote in favor of the reorganization, may within 30 days of
the filing of the plan with the New Jersey Department of Banking and Insurance
serve a demand upon Boardwalk Bank at its principal office for payment of the
value of his shares.
Boardwalk Bank may, within ten days after the receipt of such demand,
offer to pay the shareholder a sum for his shares, which, in the opinion of
Boardwalk Bank's Board of Directors, does not exceed the amount which would be
paid upon such shares if the business and assets of Boardwalk Bank were
liquidated on the effective date. If a dissenting shareholder fails to accept
such sum offered by Boardwalk Bank for his shares, he may, within three weeks
after the receipt by him of Boardwalk Bank's offer of payment, or, if no offer
is made by Boardwalk Bank, within three weeks after the date upon which his
demand for payment was served upon Boardwalk Bank, institute an action in the
Superior Court for the appointment of three appraisers. The Superior Court shall
fix the compensation of the appraisers, which shall be paid by Boardwalk Bank.
Boardwalk Bank and each dissenting shareholder may be represented by attorneys
in the proceedings before such appraisers, and may present evidence. The
determination of any two of the appraisers shall control. Upon the conclusion of
their deliberations, the appraisers shall file in the Superior Court a report
and appraisal of the value of the shares.
Boardwalk Bank and each dissenting shareholder shall have ten days
after the appraisers file their report and appraisal to object to the
appraisers' determination. If no objections are made, the report and appraisal
shall be binding upon Boardwalk Bank and upon the dissenting shareholders, and
Boardwalk Bank shall pay each such shareholder the value as determined by the
appraisers, with interest from the effective date. If objections are made, the
court shall make such order or judgment thereon as the court shall find just.
No notification of the beginning or end of any statutory period will be
given by Boardwalk Bank or Boardwalk Bancorp, Inc. to any dissenting shareholder
except as required by law.
13
SHAREHOLDERS WHO ARE CONSIDERING DISSENTING AND CLAIMING AN APPRAISAL
REMEDY ARE URGED TO CONSULT THEIR OWN LEGAL COUNSEL.
TAX CONSEQUENCES
In the opinion of Stevens & Lee, PC, counsel to Boardwalk Bank, the
following discussion addresses the material United States federal income tax
consequences of the acquisition of the outstanding common stock of Boardwalk
Bank by the holding company in exchange for holding company common stock,
pursuant to the plan of acquisition, to the holding company, Boardwalk Bank, and
a Boardwalk Bank shareholder who (i) is a United States person within the
meaning of section 7701(a)(30) of the Internal Revenue Code of 1986, as amended
(the "Code"), (ii) holds shares of Boardwalk Bank common stock as a capital
asset, and (iii) exchanges such shares of Boardwalk Bank common stock pursuant
to the plan of acquisition solely for shares of holding company common stock.
This discussion is based upon the Code, Treasury regulations promulgated under
the Code, judicial authorities, published positions of the Internal Revenue
Service (the "IRS") and other applicable authorities, all as in effect on the
date of this proxy statement/prospectus and all of which are subject to change
(possibly with retroactive effect) and to differing interpretations. This
discussion does not address all aspects of United States federal income taxation
that may be relevant to Boardwalk Bank shareholders in light of their particular
circumstances and does not address aspects of United States federal income
taxation that may be applicable to Boardwalk Bank shareholders subject to
special treatment under the Code (including, by way of illustration and without
limitation, banks, tax-exempt organizations, insurance companies, dealers in
securities, traders in securities that elect to use a mark-to-market method of
accounting, investors in pass-through entities, Boardwalk Bank shareholders who
hold their shares of Boardwalk Bank common stock as part of a hedge, straddle or
conversion transaction, Boardwalk Bank shareholders who acquired their shares of
Boardwalk Bank common stock pursuant to the exercise of employee stock options
or otherwise as compensation, or Boardwalk Bank shareholders who are not United
States persons). In addition, this discussion does not address the tax treatment
of cash payments to Boardwalk Bank shareholders who exercise dissenter's rights
or any aspect of state, local or foreign taxation.
This discussion is intended to provide general information and should
not be construed or relied upon as tax advice. No ruling will be requested from
the IRS regarding the tax consequences of the transaction. Moreover, the
information provided in this discussion is not binding on the IRS and nothing
stated herein would prevent the IRS from challenging the United States federal
income tax treatment of the acquisition of Boardwalk Bank by the holding company
pursuant to the plan of acquisition. Accordingly, no assurance can be given that
the IRS will not assert, or that a court would not sustain, a position contrary
to any of the tax aspects set forth below.
The material United States federal income tax consequences of the
acquisition of the outstanding common stock of Boardwalk Bank by the holding
company in exchange for holding company common stock, pursuant to the plan of
acquisition, to the holding company, Boardwalk Bank, and a Boardwalk Bank
shareholder described above will be as follows:
14
o Neither Boardwalk Bank nor the holding company will recognize any
gain or loss upon the exchange of the holding company common stock
for Boardwalk Bank common stock;
o You will not recognize any gain or loss upon your exchange of
Boardwalk Bank common stock solely for shares of holding company
common stock;
o Your aggregate basis in your shares of holding company common stock
received in exchange for your Boardwalk Bank common stock pursuant
to the plan of acquisition will be equal to the aggregate basis of
your shares of Boardwalk Bank common stock you surrendered in the
exchange; and
o The holding period of your shares of holding company common stock
received in exchange for your Boardwalk Bank common stock pursuant
to the plan of acquisition will include the period during which you
held the shares of Boardwalk Bank common stock you surrendered in
the exchange, provided you held your Boardwalk Bank common stock as
a capital asset on the date of the exchange.
The opinion of Stevens & Lee, is based in part upon, and subject to the
continuing validity in all material respects through the date of the share
exchange of, various written representations of Boardwalk Bank and upon certain
assumptions and qualifications, including: (i) the assumption that the
acquisition by the holding company of the outstanding common stock of Boardwalk
Bank in exchange for holding company common stock will be completed in the
manner and according to the terms provided in the plan of acquisition; (ii) the
assumption that the facts relating to the share exchange as described in this
proxy statement/prospectus are true, correct and complete in all material
respects, including the representation that the only class of holding company
stock that will be issued in the transaction will be holding company voting
common stock (i.e., the holding company common stock); (iii) the assumption that
Boardwalk Bank will continue its historic business operations following
consummation of the share exchange; and (iv) the assumption that there is no
plan or intention by the holding company or any of its affiliates to reacquire
any holding company common stock issued in the transaction or to liquidate
Boardwalk Bank following consummation of the transaction. In addition, the
opinion is qualified by reference to the statutory, judicial and administrative
tax authorities then in effect, the subsequent change of which may have
retroactive effect or render the opinion invalid.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE ADDRESSES THE
MATERIAL FEDERAL INCOME TAX CONSEQUENCES TO YOU IF YOU EXCHANGE YOUR BOARDWALK
BANK COMMON STOCK SOLELY FOR HOLDING COMPANY COMMON STOCK. HOWEVER, THIS
DISCUSSION DOES NOT ADDRESS ALL ASPECTS OF FEDERAL INCOME TAXATION WHICH MAY BE
RELEVANT TO YOU IF YOU ARE ENTITLED TO SPECIAL TREATMENT UNDER THE INTERNAL
REVENUE CODE, SUCH AS TRUSTS, INDIVIDUAL RETIREMENT ACCOUNTS, OTHER EMPLOYEE
BENEFIT PLANS, EXEMPT ORGANIZATIONS, INSURANCE COMPANIES, AND SHAREHOLDERS WHO
ARE NOT CITIZENS OR RESIDENTS OF THE UNITED STATES. DUE TO THE INDIVIDUAL NATURE
OF TAX CONSEQUENCES, YOU ARE URGED TO CONSULT YOUR OWN TAX AND FINANCIAL ADVISOR
AS TO THE EFFECT OF THE FEDERAL INCOME TAX CONSEQUENCES ON YOUR OWN FACTS AND
CIRCUMSTANCES AND ALSO AS TO ANY STATE, LOCAL, FOREIGN OR OTHER TAX CONSEQUENCES
ARISING OUT OF THE HOLDING COMPANY REORGANIZATION.
15
Cash payments made to shareholders who exercise their right to dissent
to the share exchange transaction will, in general, be subject to potential
United States federal income tax and will be subject to a 28% backup withholding
tax under United States federal income tax law unless certain requirements are
met. Generally, Boardwalk Bank will be required to deduct and withhold the tax
if: (1) the shareholder fails to furnish a taxpayer identification number to
Boardwalk Bank or fails to certify under penalty of perjury that his or her
taxpayer identification number is correct; (2) the IRS notifies Boardwalk Bank
that the taxpayer identification number furnished by the shareholder is
incorrect; or (3) the IRS notifies Boardwalk Bank that the shareholder has
failed to report interest, dividends or original issue discount in the past. Any
amounts withheld by Boardwalk Bank in collection of the backup withholding tax
will reduce the federal income tax liability of the shareholder from whom such
tax was withheld. The TIN of an individual shareholder is that shareholder's
Social Security number.
CONSEQUENCES UNDER FEDERAL SECURITIES LAWS
The holding company has filed with the Securities and Exchange
Commission a registration statement under the Securities Act for the
registration of the holding company common stock to be issued and exchanged
pursuant to the plan of acquisition. This proxy statement and the accompanying
notice of annual meeting constitute the prospectus of the holding company filed
as part of such registration statement. Upon completion of the holding company
reorganization, the holding company will be required to comply with the periodic
reporting requirements under the Securities Exchange Act of 1934 for as long as
it has at least 300 shareholders. Boardwalk Bank is presently subject to these
reporting requirements under the Exchange Act, but files with the FDIC not the
SEC. The holding company will also be subject to the general anti-fraud
provisions of the federal securities laws after the reorganization.
Filings made by Boardwalk Bank with the FDIC are available from the
FDIC's Accounting and Securities Disclosure Section, FDIC, Division of
Supervision and Consumer Protection, Room F-6043, 550 17th Street NW, Washington
DC 20549, (Telephone: (202) 998-8913; Facsimile: (202) 898-3909). Filings made
by the holding company after the reorganization will be available at the SEC's
public reference rooms at 100 F Street NE, Washington, DC 20549. The holding
company's filings will also be available on the SEC's internet site at
http:\\www.sec.gov.
The registration under the Securities Act of shares of holding company
common stock to be issued in connection with the reorganization does not cover
the resale of such shares. The holding company common stock acquired by persons
who are not affiliates of the holding company or Boardwalk Bank may be resold
without registration. Shares received by affiliates of Boardwalk Bank will be
subject to the resale restrictions of Rule 145 under the Securities Act, which
are substantially the same as the restrictions of Rule 144 discussed below. For
purposes of these Rules, an "affiliate" of an issuer is any person that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such issuer. The Rule 145
restrictions generally terminate after one year if the holding company continues
to comply with the reporting requirements under the Securities Exchange Act of
1934, but any affiliate of Boardwalk Bank who becomes an affiliate of the
holding company will continue to be subject to the restrictions on sales by
affiliates under Rule 144.
16
If the holding company meets the current public information
requirements of Rule 144 under the Securities Act, each affiliate of Boardwalk
Bank who complies with the other conditions of Rule 144, including those that
require the affiliate's sales to be aggregated with those of certain other
persons, would be able to sell in the public market, without registration, in
any three-month period, a number of shares not to exceed the greater of:
o 1.0% of the outstanding shares of the holding company, or
o the average weekly volume of trading in such shares during the
preceding four calendar weeks.
Provision may be made in the future by the holding company to permit affiliates
to have their shares registered for sale under the Securities Act under certain
circumstances.
CONDITIONS TO THE HOLDING COMPANY REORGANIZATION
The plan of acquisition sets forth a number of conditions which must be
met before the reorganization will be consummated, including, among others:
o the approval of the plan of acquisition by the holders of
two-thirds of the outstanding shares of Boardwalk Bank common
stock;
o the number of outstanding shares of Bank common stock with
respect to which dissenters rights have been exercised shall
not be such as would, in the opinion of the board of directors
of the Bank, render completion of the reorganization
inadvisable; and
o the approval of the reorganization by the New Jersey
Department of Banking and Insurance and the receipt of all
approvals from any other governmental agencies which may be
required for completion of the holding company reorganization.
REGULATORY APPROVALS
An applications for approval of the reorganization of Boardwalk Bank
and the holding company have been filed with the New Jersey Department of
Banking and Insurance. The holding company has also filed a notice with the
Board of Governors of the Federal Reserve System for permission to become a bank
holding company.
In general, the regulators may disapprove this transaction if the
reorganization of Boardwalk Bank into a one-bank holding company would not be
consistent with adequate sound banking practices and would not be in the public
interest.
17
In addition, we cannot complete the reorganization for 15 days from the
date of the approval by the New Jersey Department of Banking and Insurance if
there has been no challenge issued by the United States Department of Justice on
anti-trust grounds in which case the period of time before which completion may
occur may be extended. The reorganization of Boardwalk Bank into a one-bank
holding company cannot proceed in the absence of requisite regulatory approvals.
The approval of the New Jersey Department of Banking and Insurance and the Board
of Governors of the Federal Reserve System reflect only the view that the
transaction does not contravene the competitive standards of the law and is
consistent with regulatory concerns relating to bank management and to the
safety and soundness of the subject banking organizations. You should not
interpret regulatory approval as an opinion by the New Jersey Department of
Banking and Insurance or the Board of Governors of the Federal Reserve System
that the reorganization is favorable to shareholders. NEITHER THE NEW JERSEY
DEPARTMENT OF BANKING AND INSURANCE NOR ANY OTHER AGENCY APPROVAL IS AN
ENDORSEMENT OR RECOMMENDATION OF THE HOLDING COMPANY REORGANIZATION.
There can be no assurance that the New Jersey Department of Banking and
Insurance will approve the reorganization, and, if approval is granted, there
can be no assurance as to the grant date of such approval.
AMENDMENT, TERMINATION OR WAIVER
We may amend or terminate the plan of acquisition if we determine for
any reason that such amendment or termination is advisable. Such amendment or
termination may occur at any time prior to the effective date of the
reorganization, whether before or after shareholder approval of the plan of
acquisition, by resolution adopted by the board of directors of Boardwalk Bank.
Additionally, any of the terms or conditions of the plan of acquisition may be
waived by the party which is entitled to the benefit of such terms and
conditions.
COMPARISON OF SHAREHOLDERS' RIGHTS
As a result of the proposed reorganization, you will become a
shareholder in the holding company and your rights in the future will be
governed by the New Jersey Business Corporation Act of 1969. As a shareholder of
Boardwalk Bank, your rights are now governed by the New Jersey Banking Act of
1948 and the regulations of the New Jersey Department of Banking and Insurance.
Another result is that the certificate of incorporation and bylaws of the
holding company differ in several aspects from those of Boardwalk Bank. The
certificate of incorporation and bylaws of the holding company are attached to
this proxy statement/prospectus as Exhibits B and C. You should review them for
more detailed information.
The following table compares your rights as a shareholder of Boardwalk
Bank with your rights as a shareholder of the holding company. This table is
qualified by the more detailed information appearing elsewhere in this proxy
statement/ prospectus and in the attached exhibits and is not intended to be an
exhaustive comparison.
18
BOARDWALK THE HOLDING
BANK COMPANY
--------- ------------
COMMON STOCK Authorized Authorized 12,500,000 shares,
12,500,000 shares, $5.00 $5.00 par value; approximately
par value; 3,111,784 shares 3,111,784 shares of common stock
outstanding at March 1, expected to be outstanding
2006. immediately following the
reorganization.
PREFERRED STOCK None authorized or None authorized or outstanding.
outstanding. Any issuance Any issuance of preferred stock
of preferred stock would would require an amendment to
require an amendment to the the certificate of incorporation
certificate of approved by the shareholders.
incorporation approved by
the shareholders.
VOTING RIGHTS One vote per share without One vote per share without
cumulative voting in cumulative voting in elections
elections of directors. of directors.
ASSESSABILITY OF SHARES Nonassessable. Nonassessable.
PREEMPTIVE RIGHTS None. None.
DIVIDENDS As declared by the board of As declared by the board of
directors out of directors; New Jersey law
accumulated net earnings. permits payment of
dividends if, after giving
effect to the dividend, the
holding company is able to
pay its debts as they come
due in the usual course of
business and its assets
are equal to or
exceed its liabilities.
Boardwalk Bank dividend
restrictions apply indirectly
to the holding company
because cash available for
dividend distributions will
initially come from
dividends paid to the
19
holding company by
Boardwalk Bank. Federal
Reserve Board policy states
that a bank holding
company should pay cash
dividends only out of
income over the past year
and only if prospective
earnings retention is
consistent with the
organization's expected
future needs and financial
condition. In addition, the
holding company may not
pay a dividend if: (1) after
giving effect to the
dividend, the holding
company would be
insolvent or (2) the dividend
exceeds the surplus of the
holding company.
20
REPURCHASE OF CAPITAL STOCK Cannot repurchase or retire Stock can be repurchased without
any part of its stock regulatory approval if, after giving
without regulatory approval. effect to the purchase, the holding
company is able to pay its debts
as they become due in the usual
course of business and its assets
are equal to or exceed
its liabilities. Permitted
under Federal Reserve Board
regulations with no prior
approval required for well-
capitalized, well-managed holding
companies. In all other cases,
no more than ten percent of the
outstanding shares of holding
company common stock may be
repurchased in any 12-month
period without prior regulatory
approval.
MERGERS, CONSOLIDATIONS, Approval by vote of at Approval by a vote of at least
LIQUIDATIONS, SALE OF least 66-2/3% of 66-2/3% of outstanding shares
SUBSTANTIALLY ALL OF THE ASSETS outstanding shares required. required, unless approved in
advance by at least 66-2/3% of
the directors in which case
approval requires a vote of at
least a majority of shares voted
at the meeting considering the
proposal.
CALLING SPECIAL SHAREHOLDER Upon request of a majority Upon request of a majority of
MEETINGS of the board of directors, the board of directors or the
the Chairman of the Board, President. Shareholders are not
the President, or by entitled to call special
shareholders owning not meetings of shareholders, except
less than 20% of as otherwise provided by law.
outstanding shares.
21
AUTHORIZATION OF ADDITIONAL Approval by a vote of at Approval by a vote of at least a
SHARES least a majority of majority of shares voted at the
outstanding shares. meeting considering the proposal.
AMENDMENT OF CERTIFICATE OF Approval by a vote of at Approval by a vote of at least a
INCORPORATION (OTHER THAN least a majority of majority of outstanding shares;
FOR PURPOSES STATED ABOVE) outstanding shares. however, certain articles
Shareholders owning not dealing with cumulative voting,
less than 10% of classified board of directors,
outstanding shares can preemptive rights, removal of
petition board to propose directors, fundamental
amendment to certificate of transactions, limitation on
incorporation. liability of directors and
officers and amendment of the
bylaws and certificate of
incorporation require approval
either by at least 66-2/3% of
the directors or by at least
66-2/3% of outstanding shares.
Shareholders cannot propose
amendments to certificate of
incorporation.
AMENDMENT OF BYLAWS May be amended by a May only be amended by a vote of
majority vote of the at least 66-2/3% of the board of
shareholders or by a directors present at a meeting or
majority vote of the board a vote of at least 66-2/3% of the
of directors. outstanding shares.
NOTICE OF SHAREHOLDER No prior notice required. Written notice must be made not
PROPOSALS FOR CONSIDERATION less than 90 days prior to the
AT SHAREHOLDER MEETINGS meeting.
22
TERM OF DIRECTORS All directors elected Directors have staggered
annually. three-year terms with one-third
of the board standing for
election each year.
REMOVAL OF DIRECTORS Directors can be removed Directors cannot be removed
with or without cause by a without cause by the shareholders,
vote of a majority of and removal for cause requires a
outstanding shares. vote of at least 66-2/3% of outstanding
shares.
NOTICE OF SHAREHOLDER Must be delivered in Must be made in writing,
NOMINATIONS writing at least 15 days together with specified
before the meeting at which information set forth in the
directors will be elected. bylaws, not more than 120 and
not less than 90 days prior to
the meeting.
CERTAIN ANTI-TAKEOVER PROVISIONS
The following discussion is a general summary of the provisions of the
certificate of incorporation and bylaws of the holding company and certain other
provisions of New Jersey law which may be deemed to have an anti-takeover
effect. The description of these provisions is necessarily general and you
should refer, in each case, to the certificate of incorporation and bylaws of
the holding company, which are attached as Exhibits B and C and incorporated
into this proxy statement/prospectus by reference.
While your board of directors is not aware of any effort that might be
made to obtain control of Boardwalk Bank, the board of directors believes that
it is appropriate to include certain provisions as part of the holding company's
certificate of incorporation and bylaws to protect the interests of the holding
company and its shareholders from non-negotiated takeover attempts which your
board of directors might conclude are not in the best interests of the holding
company or its shareholders. These provisions may have the effect of
discouraging a future takeover attempt which is not approved by the board of
directors but which you might deem to be in your best interests or in which you
might receive a substantial premium for your shares over the current market
prices. As a result, shareholders who might desire to participate in such a
transaction may not have an opportunity to do so. Such provisions will also make
it more difficult to remove the current board of directors or management of the
holding company. BECAUSE OF THE POSSIBLE ADVERSE EFFECT THIS PROVISIONS MAY HAVE
ON BOARDWALK BANK'S SHAREHOLDERS, SUCH DISCUSSION AND THE CERTIFICATE OF
INCORPORATION AND BYLAWS THEMSELVES SHOULD BE READ CAREFULLY. APPROVAL OF THE
HOLDING COMPANY REORGANIZATION WILL, IN EFFECT, CONSTITUTE APPROVAL OF THESE
PROVISIONS BY SHAREHOLDERS.
23
PROVISIONS OF THE HOLDING COMPANY'S CERTIFICATE OF INCORPORATION AND BYLAWS
The following summarizes certain provisions of the holding company's
certificate of incorporation and bylaws relating to corporate governance. The
description is necessarily general and qualified by reference to the certificate
of incorporation and bylaws attached as Exhibit B and Exhibit C to this proxy
statement/prospectus.
ELECTION OF DIRECTORS. The holding company's certificate of
incorporation provides that the board of directors of the holding company will
be divided into three staggered classes, with directors in each class elected
for three-year terms. As a result of this provision, it would take two annual
elections to replace a majority of the holding company's board. The certificate
of incorporation also provides that any vacancy occurring in the board of
directors, including a vacancy created by an increase in the number of
directors, will be filled by the board of directors, and any director so chosen
shall serve until the annual meeting at which the other members of his class
must stand for election. Finally, the bylaws impose certain notice and
information requirements in connection with the nomination by shareholders of
candidates for election to the board of directors or the proposal by
shareholders of business to be acted upon at an annual meeting of shareholders.
ABSENCE OF CUMULATIVE VOTING. The holding company's certificate of
incorporation, as does the certificate of incorporation of Boardwalk Bank,
provides that shareholders may not cumulate their votes in elections of
directors. Cumulative voting would permit a shareholder to multiply the number
of shares owned by the shareholder by the number of directors to be elected and
then to cast the total number of resulting votes for the directors up for
election in whatever manner the shareholder deems appropriate. With cumulative
voting it is mathematically possible at some share ownership level (depending on
the number of directors to be elected and the number of shares voted at the
meeting) for a shareholder to be assured that the shareholder can elect at least
one director. Without cumulative voting, a shareholder cannot be assured of the
ability to elect a director unless the shareholder owns at least a majority of
the outstanding shares.
PROCEDURES FOR CERTAIN BUSINESS COMBINATIONS. The certificate of
incorporation requires the affirmative vote of at least 66-2/3% of the
outstanding shares of the holding company entitled to vote in the election of
directors in order for the holding company to engage in or enter into certain
business combinations. This supermajority voting provision does not apply if the
proposed transaction has been approved in advance by 66-2/3% or more of the
holding company's board of directors.
AMENDMENTS TO CERTIFICATE OF INCORPORATION. Amendments to the holding
company's certificate of incorporation must be approved by the holding company's
board of directors and also by a majority of the outstanding shares of the
holding company's voting stock, except that approval by at least 66-2/3% of the
outstanding voting stock is generally required for amendments to provisions
relating to: (1) cumulative voting in the election of directors; (2) number,
classification and election of directors; (3) preemptive rights; (4) limitations
on directors' and officers' liability; (5) approval of business combinations;
(6) removal of directors and (7) amendments to provisions relating to the
foregoing in the certificate of incorporation.
24
AMENDMENTS TO BYLAWS. The bylaws may only be amended by a vote of
66-2/3% or more of the board of directors present at a meeting, subject always
to the power of the shareholders to change such action by an affirmative vote of
at least 66-2/3% of the votes shareholders are entitled to cast.
APPLICABLE PROVISIONS OF THE NEW JERSEY BUSINESS CORPORATION ACT
Certain provisions of the New Jersey Shareholders' Protection Act,
which will apply to the holding company following the holding company
reorganization, may have the effect of discouraging non-negotiated attempts to
gain control of the holding company. These provisions:
o provide for a five-year prohibition on consummation of a
business combination with the target from the date an acquirer
becomes an "interested shareholder" (i.e. holds 10% or more of
the target corporation's voting stock) unless the business
combination is approved by the board of directors prior to the
time the interested shareholder acquired its 10% holding.
o prohibit a business combination with an interested shareholder
at any time unless one of the following three conditions is
met: (1) approval by the target's board of directors, prior to
the 10% acquisition; (2) an affirmative vote of two-thirds of
the outstanding voting stock not owned by the interested
shareholder; or (3) compliance with certain financial
formulations designed to assure a fair price for the target's
shareholders in exchange for their ownership interest.
A corporation may exempt itself from the requirements of the statute by
so specifying in its certificate of incorporation. The certificate of
incorporation of Boardwalk Bancorp, Inc. does not opt out of the New Jersey
Shareholders' Protection Act.
One of the effects of these provisions may be to make it more difficult
for a shareholder to successfully challenge the actions of the holding company's
board of directors in a potential change in control context. Pennsylvania case
law appears to grant directors wide latitude to reject or refuse to consider
potential or proposed acquisitions of the corporation.
PURPOSE AND TAKEOVER DEFENSIVE EFFECTS OF CHARTER PROVISIONS AND NEW JERSEY LAW.
We believe that the provisions described above are prudent and will
reduce the holding company's vulnerability to takeover attempts and certain
other transactions which have not been negotiated with and approved by its board
of directors. We believe these provisions are in the best interest of the
holding company and its shareholders. In our judgment, the board will be in the
best position to determine the true value of the holding company and to
negotiate more effectively for what may be in the best interests of its
shareholders. Accordingly, we believe that it is in the best interests of the
holding company and its shareholders to encourage potential acquirors to
negotiate directly with the board of directors and that these provisions will
encourage such negotiations and discourage hostile takeover attempts. It is also
our view that these provisions should not discourage persons from proposing a
merger or other transaction at prices reflective of the true value of the
holding company and which is in the best interests of all shareholders.
25
Takeover attempts which have not been negotiated with and approved by
the board of directors present to shareholders the risk of a takeover on terms
which may be less favorable than might otherwise be available. A transaction
which is negotiated and approved by the board of directors, on the other hand,
can be carefully planned and undertaken at an opportune time in order to obtain
maximum value for the holding company and its shareholders, with due
consideration given to matters such as the management and business of the
acquiring corporation and maximum strategic development of the holding company's
assets.
An unsolicited takeover proposal can seriously disrupt the business and
management of a corporation and cause it great expense. Although a tender offer
or other takeover attempt may be made at a price substantially above then
current market prices, such offers are sometimes made for less than all of the
outstanding shares of a target company. As a result, shareholders may be
presented with the alternative of partially liquidating their investment at a
time that may be disadvantageous, or retaining their investment in an enterprise
which is under different management and whose objectives may not be similar to
those of the remaining shareholders. The concentration of control, which could
result from a tender offer or other takeover attempt, could also deprive the
holding company's remaining shareholders of the benefits of certain protective
provisions of the Securities Exchange Act of 1934 if the number of beneficial
owners becomes less than the 300 required for Exchange Act registration.
Despite our belief as to the benefits of shareholders of these
provisions, the provisions may also have the effect of discouraging a future
takeover attempt which would not be approved by the holding company's board, but
pursuant to which shareholders may receive a premium for their shares over then
current market prices. As a result, shareholders who might desire to participate
in such a transaction may not have any opportunity to do so. Such provisions
will also render the removal of the holding company's board of directors and
management more difficult.
BUSINESS OF THE HOLDING COMPANY AND BOARDWALK BANK
GENERAL
Upon the completion of the reorganization, Boardwalk Bank will become a
wholly owned subsidiary of the holding company, and you will become a
shareholder of the holding company with the same ownership interest in the
holding company as you presently hold in Boardwalk Bank.
Immediately after completion of the reorganization, we expect that the
holding company will not engage in any business activity other than to hold all
of the stock of Boardwalk Bank. The holding company does not presently have any
arrangements or understandings regarding any acquisition or merger
opportunities. It is anticipated, however, that the holding company in the
future may pursue other investment opportunities, including possible
diversification through acquisitions and mergers.
26
Boardwalk Bank is a state-chartered commercial banking institution
which was incorporated under the laws of the State of New Jersey, on June 24,
1999. Boardwalk Bank's deposits are insured by the Federal Deposit Insurance
Corporation. As of December 31, 2005, Boardwalk Bank had total assets of
$401,666,000, total deposits of $272,494,000 and total stockholders' equity of
$35,343,000.
Boardwalk Bank's administrative headquarters and full service main
office are located at 201 Shore Road, Linwood, New Jersey 08221; the main
telephone number is (609) 601-0600.
REGULATION
Set forth below is a brief description of certain laws which relate to
the regulation of Boardwalk Bank. The description does not purport to be
complete and is qualified in its entirety by reference to applicable laws and
regulations. Boardwalk Bank operates in a highly regulated industry. This
regulation and supervision establishes a comprehensive framework of activities
in which a bank may engage and is intended primarily for the protection of the
deposit insurance fund and depositors and not shareholders of Boardwalk Bank or
the holding company.
Any change in applicable statutory and regulatory requirements, whether
by the New Jersey Department of Banking and Insurance, the Federal Deposit
Insurance Corporation (the "FDIC") or the United States Congress could have a
material adverse impact on Boardwalk Bank, and its operations. The adoption of
regulations or the enactment of laws that restrict the operations of Boardwalk
Bank or impose burdensome requirements upon it could reduce its profitability
and could impair the value of Boardwalk Bank's franchise, which could hurt the
trading price of the holding company's stock.
On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act
of 2002 (the "Act"). The Securities and Exchange Commission (the "SEC") has
promulgated certain regulations under the Act and will continue to propose
additional implementing or clarifying regulations as necessary in furtherance of
the Act. The passage of the Act and the regulations implemented by the SEC
subject publicly-traded companies to additional and more cumbersome reporting
regulations and disclosure. Compliance with the Act and corresponding
regulations will increase the expenses of Boardwalk Bank and the holding
company.
As a New Jersey-chartered commercial bank, Boardwalk Bank is subject to
the regulation, supervision, and control of the New Jersey Department of Banking
and Insurance. As an FDIC-insured institution, Boardwalk Bank is subject to
regulation, supervision and control of the FDIC, an agency of the federal
government. The regulations of the FDIC and the New Jersey Department of Banking
and Insurance affect virtually all activities of Boardwalk Bank, including the
minimum level of capital Boardwalk Bank must maintain, the ability of Boardwalk
Bank to pay dividends, the ability of Boardwalk Bank to expand through new
branches or acquisitions and various other matters.
27
Insurance of Deposits. The FDIC has a risk-related premium schedule for
all insured depository institutions that results in the assessment of premiums
based on capital and supervisory measures. Under the risk-related premium
schedule, the FDIC assigns, on a semiannual basis, each depository institution
to one of three capital groups (well-capitalized, adequately capitalized or
undercapitalized) and further assigns such institution to one of three subgroups
within a capital group. The institution's subgroup assignment is based upon the
FDIC's judgment of the institution's strength in light of supervisory
evaluations, including examination reports, statistical analyses and other
information relevant to measuring the risk posed by the institution. Only
institutions with a total capital to risk-adjusted assets ratio of 10% or
greater, a Tier 1 capital to risk-based assets ratio of 6% or greater, and a
Tier 1 leverage ratio of 5% or greater, are assigned to the well-capitalized
group. As of December 31, 2005, the Bank was well capitalized for purposes of
calculating insurance assessments.
The present 2006 Bank Insurance Fund assessment rates range from zero
for those institutions with the least risk, to $0.27 for every $100 of insured
deposits for institutions deemed to have the highest risk. The Bank is in the
category of institutions that presently pay nothing for deposit insurance. The
FDIC adjusts the rates every six months. While the Bank presently pays no
premiums for deposit insurance, it is subject to assessments to pay the interest
on Financing Corporation bonds. The Financing Corporation was created by
Congress to issue bonds to finance the resolution of failed thrift institutions.
Commercial banks and thrifts are subject to the same assessment for Financing
Corporation bonds. The FDIC sets the Financing Corporation assessment rate every
quarter. The Financing Corporation assessment for the Bank (and all other banks)
for the first quarter of 2006 is an annual rate of $.0132 for each $100 of
deposits.
In February 2006, deposit insurance modernization legislation was
enacted. The new law merges the Bank Insurance Fund and the Savings Association
Insurance Fund into a single Deposit Insurance Fund, increases deposit insurance
coverage for IRAs to $250,000, provides for the future increase of deposit
insurance on all accounts by indexing the coverage to the rate of inflation,
authorizes the FDIC to set the reserve ratio of the combined Deposit Insurance
Fund at a level between 1.15% and 1.50%, and permits the FDIC to establish
assessments to be paid by insured banks to maintain the minimum ratios. New
deposit insurance assessment rates will not be known until the FDIC conducts
extensive research and issues new assessment rates, expected by the fourth
quarter of 2006. While the possible assessment rates are unknown, the FDIC has
stated that it expects that all banks will be assessed some amount for deposit
insurance based upon present expectations. Banks in existence prior to 1996 will
receive a partial credit for past deposit insurance premiums paid, but the
amount of the credit for a specific bank will not be known until new regulations
implementing the assessments and the credits are adopted.
Capital Adequacy Guidelines. Boardwalk Bank is subject to risk-based
capital guidelines promulgated by the FDIC that are designed to make regulatory
capital requirements more sensitive to differences in risk profile among banks,
to account for off-balance sheet exposure, and to minimize disincentives for
holding liquid assets. Under the guidelines, assets and off-balance sheet items
are assigned to broad risk categories, each with appropriate weights. The
resulting capital ratios represent capital as a percentage of total
risk-weighted assets and off-balance sheet items.
The minimum ratio of total capital to risk-weighted assets (including
certain off-balance sheet activities, such as standby letters of credit) is 8%.
At least 4% of the total capital is required to be "Tier I Capital," consisting
of common shareholders' equity and qualifying preferred stock, less certain
goodwill items and other intangible assets. The remainder ("Tier II Capital")
may consist of (a) the allowance for loan losses of up to 1.25% of risk-weighted
assets, (b) excess of qualifying preferred stock, (c) hybrid capital
instruments, (d) perpetual debt, (e) mandatory convertible securities, and (f)
qualifying subordinated debt and intermediate-term preferred stock up to 50% of
Tier I capital. Total capital is the sum of Tier I and Tier II capital less
reciprocal holdings of other banking organizations, capital instruments,
investments in unconsolidated subsidiaries and any other deductions as
determined by the FDIC (determined on a case-by-case basis or as a matter of
policy after formal rule-making).
28
In addition to the risk-based capital guidelines, the FDIC has adopted
a minimum Tier I capital (leverage) ratio, under which a bank must maintain a
minimum level of Tier I capital to average total consolidated assets of at least
3% in the case of a bank that has the highest regulatory examination rating and
is not contemplating significant growth or expansion. All other banks are
expected to maintain a leverage ratio of at least 100 to 200 basis points above
the stated minimum.
At December 31, 2005, Boardwalk Bank had the requisite capital levels
to qualify as "well capitalized."
PROPERTIES
The holding company does not own any real estate and currently does not
expect to own any real estate in the future.
Boardwalk Bank owns its main office located at 201 Shore Road, Linwood,
New Jersey, which consists of a freestanding building containing 8,454 square
feet of office space. In addition to its main office, Boardwalk Bank leases a
property on Central Avenue in Linwood, New Jersey which it operates as a
separate lending office. Boardwalk Bank also owns branch offices located at 67
East Jimmie Leads Road, Galloway Township, New Jersey, 9312 Ventnor Avenue,
Margate, New Jersey, 4096 English Creek Road, Egg Harbor Township, New Jersey,
907 Route 9 South, Cape May Court House, New Jersey and branch sites under
construction on Ocean Heights Avenue in Egg Harbor Township, New Jersey and at
315 Ocean Avenue, Cape May City, New Jersey.
LEGAL PROCEEDINGS
The holding company has not, since its organization, been a party to
any legal proceedings.
Although Boardwalk Bank from time to time is involved in various legal
proceedings in the normal course of business, there are no material legal
proceedings to which it is a party or to which its property is subject.
EMPLOYEES
At the present time, the holding company does not intend to employ any
persons other than its management. It will utilize Boardwalk Bank's support
staff from time to time and reimburse Boardwalk Bank for the time of its
employees. If the holding company acquires other banks or pursues other lines of
business, it may hire additional employees at such time.
At December 31, 2005, Boardwalk Bank had 67 full-time and 11 part-time
employees.
29
COMPETITION
Boardwalk Bank competes with other financial institutions for deposit
and loan business. Competitors include other commercial banks, savings banks,
savings and loan associations, insurance companies, securities brokerage firms,
credit unions, finance companies, mutual funds, money market funds, and certain
government agencies. Financial institutions compete mostly on the quality of
services rendered, interest rates offered on deposit accounts, interest charged
on loans, service charges, the convenience of banking facilities, location and
hours of operation and, in the case of loans to larger commercial borrowers,
relative lending limits.
Many of these competitors are significantly larger than Boardwalk Bank
and have significantly greater financial resources, personnel and locations from
which to conduct business. In addition, Boardwalk Bank is subject to regulation
while certain competitors are not. Non-regulated companies face relatively few
barriers for entry into the financial services industry. For more information,
see "Supervision and Regulation."
Boardwalk Bank's larger competitors have greater name recognition and
greater financial resources than Boardwalk Bank to finance wide-ranging
advertising campaigns. Boardwalk Bank utilizes media advertising, directors'
referrals and employee calling programs to attract prospective customers.
Boardwalk Bank competes for business principally on the basis of high quality,
personal service to customers, customer access to the bank's decision-makers and
competitive interest rates and fees. Boardwalk Bank strives to provide the best
possible access to its banking services by exploring innovative delivery
vehicles, such as Internet banking and commercial deposit courier service. As a
small, independent, community-based bank, Boardwalk Bank has hired high quality
experienced employees seeking greater responsibility than may be granted by a
larger employer and the ability to provide better service from a smaller, more
responsive bank.
Boardwalk Bank believes that it is able to compete favorably with its
competitors because it provides responsive personalized services through
management's knowledge and awareness of its market area, customers and
businesses.
MANAGEMENT
DIRECTORS. The holding company's certificate of incorporation provides
that the board of directors will consist of not less than three nor more than
twenty-five members. The board of directors will initially consist of fourteen
members who will be divided into three classes. Directors will be elected for
staggered terms of three years so that approximately one-third of the directors
are elected each year. The directors of the holding company will upon completion
of the holding company reorganization be the same persons who are at present the
directors of Boardwalk Bank.
30
The directors of Boardwalk Bank and their proposed classes as directors
of the holding company are listed below:
Name Class Term to Expire
---- ----- --------------
Mark A. Benevento I 2007
Joseph M. Brennan II 2008
Rudolph M. Chiorazzo III 2009
Arthur R. Coslop I 2007
Michael D. Devlin III 2009
Agostino R. Fabietti, CPA II 2008
James L. Fraser I 2007
Arthur J. Galletta II 2008
Thomas L. Glenn, III III 2009
Roy Goldberg I 2007
Carol Nugent Harris II 2008
Patricia C. Koelling, RN, BSN III 2009
Thomas S. Rittenhouse II 2008
Thomas K. Ritter, CPA (ret) I 2007
For information regarding the principal occupation and business
experience of the directors for the past five years, see "Proposal II --
Election of Directors."
EXECUTIVE OFFICERS. The executive officers of the holding company are,
and upon completion of the reorganization will be, the following persons, each
of whom is an officer with Boardwalk Bank:
Name Position
---- --------
Michael D. Devlin Chairman of the Board, President and Chief
Executive Officer
Wayne S. Hardenbrook Executive Vice President and Chief
Financial Officer
Guy A. Deninger Executive Vice President and Chief Lending Officer
Joan B. Ditmars Corporate Secretary
31
For information regarding the principal occupation and business
experience for the past five years of the executive officers, see "Proposal II
- -- Election of Directors."
EXECUTIVE COMPENSATION. Since the formation of the holding company,
none of its executive officers or directors has received any remuneration from
the holding company. It is expected that unless and until the holding company
becomes actively involved in additional businesses, no separate compensation
will be paid to its directors and officers in addition to compensation paid to
them by Boardwalk Bank. The holding company may, however, determine that such
separate compensation is appropriate in the future. At the present time, the
holding company does not intend to employ any persons other than its present
management. If the holding company acquires other businesses, it may at such
time hire additional employees.
LIMITATION OF LIABILITY OF DIRECTORS AND OFFICERS.
The holding company's certificate of incorporation includes provisions
that limit the scope of personal liability of its directors and officers to the
corporation or the shareholders for monetary damages for breach of certain
fiduciary duties. The provisions are designed to encourage qualified individuals
to serve as directors and officers.
The provisions, however, will not relieve a director or officer from
liability for: (i) damages from any breach of duty based upon an act or omission
in breach of his duty of loyalty to the corporation or the shareholders; (ii)
damages from acts or omissions that are not in good faith or that the director
or officer knows involve a violation of law; or (iii) damages from acts or
omissions resulting in receipt by the director or officer of an improper
personal benefit.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The holding company's bylaws provide that it must, to the fullest
extent permitted by applicable law, indemnify its officers and directors who are
or were a party, or are threatened to be made a party, to any threatened,
pending or completed action or proceeding by reason of the fact that they were
or are directors or officers of the corporation, or are serving in certain
capacities with respect to other companies at the corporation's request, against
expenses, judgments, fines, penalties and settlement amounts that they incur in
connection with such action or proceeding.
REGULATORY MATTERS
ACTIVITIES RESTRICTIONS. The holding company is required to obtain
prior approval of the Federal Reserve Board before acquiring control, directly
or indirectly, of more than five percent of the voting shares or substantially
all of the assets of any institution, including another bank.
32
A bank holding company is prohibited from engaging in or acquiring
direct or indirect control of more than five percent of the voting shares of any
company engaged in non-banking activities unless the Federal Reserve Board, by
order or regulation, has found such activities to be so closely related to
banking, managing, or controlling banks as to be a proper incident thereto. In
making this determination, the Federal Reserve Board considers whether these
activities offer benefits to the public that outweigh any possible adverse
effects.
Further, under the Bank Holding Company Act and the Federal Reserve
Board's regulations, a bank holding company and its subsidiaries are prohibited
from engaging in certain tie-in arrangements in connection with any extension of
credit or provision of credit or provision of any property or services. The
so-called "anti-tie-in" provisions state generally that a bank may not extend
credit, lease, sell property or furnish any service to a customer on the
condition that the customer provide additional credit or service to the bank, to
its bank holding company or to any other subsidiary of its bank holding company
or on the condition that the customer not obtain other credit or service from a
competitor of the bank, its bank holding company or any subsidiary of its bank
holding company.
CAPITAL REQUIREMENTS. The Federal Reserve Board has established
guidelines with respect to the maintenance of appropriate levels of capital by
bank holding companies with consolidated assets of $150 million or more. For
bank holding companies with less than $150 million in consolidated assets, the
Federal Reserve Board applies the guidelines on a bank-only basis unless the
bank holding company has publicly held debt securities or is engaged in non-bank
activities involving significant leverage.
The regulations impose two sets of capital adequacy requirements:
minimum leverage rules, which require bank holding companies and state
non-member banks to maintain a specified minimum ratio of capital to total
assets, and risk-based capital rules, which require the maintenance of specified
minimum ratios of capital to "risk-weighted" assets.
The regulations require bank holding companies to maintain a minimum
leverage ratio of "Tier 1 capital" to total assets of 3.0%. Tier 1 capital is
the sum of common shareholders' equity, certain perpetual preferred stock (which
must be noncumulative with respect to banks), including any related surplus, and
minority interests in consolidated subsidiaries; minus all intangible assets
(other than certain purchased mortgage servicing rights and purchased credit
card receivables), identified losses and investments in certain subsidiaries.
Although setting a minimum 3.0% leverage ratio, the capital regulations state
that only the strongest bank holding companies, with composite examination
ratings of 1 under the rating system used by the federal bank regulators, would
be permitted to operate at or near such minimum level of capital. All other bank
holding companies are expected to maintain a leverage ratio of at least 1% to 2%
above the minimum ratio, depending on the assessment of an individual
organization's capital adequacy by its primary regulator. Any bank holding
companies experiencing or anticipating significant growth would be expected to
maintain capital well above the minimum levels. In addition, the Federal Reserve
Board has indicated that whenever appropriate, and in particular when a bank
holding company is undertaking expansion, seeking to engage in new activities or
otherwise facing unusual or abnormal risks, it will consider, on a case-by-case
basis, the level of an organization's ratio of tangible Tier 1 capital to total
assets in making an overall assessment of capital.
33
In addition to the leverage ratio, the regulations of the Federal
Reserve Board require bank holding companies to maintain a minimum ratio of
qualifying total capital to risk-weighted assets of at least 8.0% of which at
least four percentage points must be Tier 1 capital. Qualifying total capital
consists of Tier 1 capital plus Tier 2 or supplementary capital items which
include allowances for loan losses in an amount of up to 1.25% of risk-weighted
assets, cumulative preferred stock and preferred stock with a maturity of 20
years or more and certain other capital instruments. The includable amount of
Tier 2 capital cannot exceed the institution's Tier 1 capital. Qualifying total
capital is further reduced by the amount of the bank's investments in banking
and finance subsidiaries that are not consolidated for regulatory capital
purposes, reciprocal cross-holdings of capital securities issued by other banks
and certain other deductions. The risk-based capital regulations assign balance
sheet assets and the credit equivalent amounts of certain off-balance sheet
items to one of four broad risk weight categories. The aggregate dollar amount
of each category is multiplied by the risk weight assigned to that category
based principally on the degree of credit risk associated with the obligor. The
sum of these weighted values equals the bank holding company's risk-weighted
assets.
RESTRICTIONS ON ACQUISITIONS. Bank holding companies are prohibited
from acquiring, without prior approval of the Federal Reserve Board, (i) control
of any other bank or bank holding company or substantially all the assets
thereof or (ii) more than 5% of the voting shares of a bank or holding company
thereof which is not a subsidiary.
TRANSACTIONS WITH AFFILIATES. Transactions between banks and any
affiliate are governed by Sections 23A and 23B of the Federal Reserve Act. An
affiliate of a bank is any company or entity which controls, is controlled by or
is under common control with the bank. In a holding company context, the parent
holding company of a bank (such as the holding company) and any companies which
are controlled by such parent holding company are affiliates of the bank.
Generally, Sections 23A and 23B (i) limit the extent to which the bank or its
subsidiaries may engage in "covered transactions" with any one affiliate to an
amount equal to 10% of such bank's capital stock and surplus, and contain an
aggregate limit on all such transactions with all affiliates to an amount equal
to 20% of such capital stock and surplus and (ii) require that all such
transactions be on terms substantially the same, or at least as favorable to the
institution or subsidiary, as those provided to a non-affiliate. The term
"covered transaction" includes the making of loans, purchase of assets, issuance
of a guarantee and similar other types of transactions.
The restrictions contained in Section 22(h) of the Federal Reserve Act
apply to loans by banks to executive officers, directors and principal
shareholders (such as the holding company). Section 22(h) requires that loans to
directors, executive officers and greater than 10% shareholders be made on terms
substantially the same as offered in comparable transactions to other persons.
Under Section 22(h), loans to an executive officer and to a greater than 10%
shareholder of a bank (18% in the case of institutions located in an area with
less than 30,000 in population), and certain affiliated entities of either, may
not exceed together with all other outstanding loans to such person and
affiliated entities the bank's loan-to-one borrower limit (generally equal to
15% of the institution's unimpaired capital and surplus and an additional 10% of
such capital and surplus for loans fully secured by certain readily marketable
collateral). Section 22(h) also prohibits loans, above amounts prescribed by the
appropriate federal banking agency, to directors, executive officers and greater
than 10% shareholders of a bank, and their respective affiliates, unless such
loan is approved in advance by a majority of the board of directors of the
association with any "interested" director not participating in the voting. The
Federal Reserve Board has prescribed the loan amount (which includes all other
outstanding loans to such person), as to which such prior board of director
approval is required, to be the greater of $25,000 or 5% of capital and surplus
(up to $500,000).
34
DESCRIPTION OF HOLDING COMPANY CAPITAL STOCK
The holding company is authorized to issue 12,500,000 shares of common
stock, $5.00 par value per share. The holding company currently expects to issue
approximately 3,111,784 shares of holding company common stock in the holding
company reorganization. Each share of common stock will have the same relative
rights as, and will be identical in all respects with, each other share of
common stock.
HOLDING COMPANY COMMON STOCK
VOTING RIGHTS. Each share of the holding company common stock will have
the same relative rights and will be identical in all respects with every other
share of the common stock. The holders of the holding company common stock will
possess exclusive voting rights in the holding company, except to the extent
that shares of preferred stock issued in the future may have voting rights, if
any. Each holder of holding company common stock will be entitled to only one
vote for each share held of record on all matters submitted to a vote of holders
of the holding company common stock and will not be permitted to cumulate their
votes in elections of the holding company's directors.
LIQUIDATION. In the unlikely event of the complete liquidation or
dissolution of the holding company, the holders of the common stock will be
entitled to receive all assets of the holding company available for distribution
in cash or in kind, after payment or provision for payment of (1) all debts and
liabilities of the holding company; (2) any accrued dividend claims; and (3)
liquidation preferences of any preferred stock which may be issued in the
future.
DIVIDENDS. From time to time, dividends may be declared and paid to the
holders of the holding company common stock, who will share equally in any such
dividends.
OTHER CHARACTERISTICS. Holders of the holding company common stock will
not have preemptive rights with respect to any additional shares of the common
stock which may be issued. Therefore, the board of directors may sell shares of
capital stock of the holding company without first offering such shares to
existing shareholders of the holding company. The common stock is not subject to
call for redemption, and the outstanding shares of common stock when issued and
upon receipt by the holding company of the full purchase price therefor will be
fully paid and non-assessable.
REGISTRAR AND TRANSFER AGENT. Stock Trans and Trust Co. will act as
Registrar and Transfer Agent for the holding company's common stock.
35
ACCOUNTING TREATMENT
The reorganization will be accounted for as a reorganization under
common control and the assets, liabilities and shareholders' equity of Boardwalk
Bank immediately prior to the organization will be carried forward on either
separate or consolidated financial statements of Boardwalk Bank and the holding
company after the reorganization at the amounts carried on their respective
books at the effective date of the reorganization. Therefore, the consolidated
capitalization, assets, liabilities, income and other financial data of the
holding company immediately following the reorganization will be substantially
the same as those of Boardwalk Bank immediately prior to the reorganization,
and, after the reorganization, will be shown in the holding company's
consolidated financial statements at Boardwalk Bank's historical recorded
values. Because the reorganization will not result in a change in such financial
statements, this proxy statement/prospectus does not include financial
statements of Boardwalk Bank or the holding company.
LEGAL OPINION
The validity of the shares of the holding company common stock issuable
upon consummation of the reorganization will be passed upon by Stevens & Lee,
Reading, Pennsylvania.
RECOMMENDATION OF BOARD OF DIRECTORS
The board of directors recommends that you vote "FOR" the approval of
the plan of acquisition.
PROPOSAL II -- ELECTION OF DIRECTORS
Boardwalk Bank's bylaws provide that the affairs of Boardwalk Bank will
be managed by a Board of Directors of not less than 5 nor more than 25 in
number. The exact number within such minimum and maximum limits is to be fixed
and determined from time to time by resolution of a majority of the full Board
of Directors or by resolution of Boardwalk Bank's shareholders at any meeting at
which directors are to be elected. The Board of Directors of Boardwalk Bank has,
by duly adopted resolution, fixed the number of directors of the Bank at
fourteen.
At the Annual Meeting, shareholders will elect fourteen directors, all
of whom are members of the present Board of Directors, to serve until the next
Annual Meeting of Shareholders and until their successors are duly elected and
qualified. In the event that any director nominees are unable to serve, the
Board of Directors will designate a substitute for each such nominee and the
proxies will vote for the individuals so substituted.
The Board of Directors has affirmatively determined that all of
Boardwalk Bank's directors are independent within the meaning of the NASD's
listing standards, except for Michael D. Devlin, Chairman, President and Chief
Executive Officer of the Bank, Thomas L. Glenn, III and Carol Nugent Harris,
whose businesses from time to time provide certain insurance brokerage or
construction services to Boardwalk Bank in connection with Boardwalk Bank's
business. Services provided to Boardwalk Bank by companies affiliated with
36
Directors Glenn and Harris were reviewed and approved in advance by the Board of
Directors, and the Board believes that such services are being provided on terms
at least as favorable as would be available for similar services from an
unaffiliated third party. The Board categorically determined that a lending
relationship resulting from a loan made by Boardwalk Bank to a director would
not affect the determination of independence if the loan complies with
Regulation O under the federal banking laws. The Board also categorically
determined that maintaining with Boardwalk Bank a deposit, savings or similar
account by a director or any of the director's affiliates would not affect the
determination of independence if the account is maintained on the same terms and
conditions as those available to similarly situated customers.
The following table sets forth information regarding each of the
director nominees to be voted upon at the Annual Meeting, including: (a) their
age, and (b) the year in which they first became a director of Boardwalk Bank.
Name Age Director Since
---- --- --------------
Mark A. Benevento 46 2002
Joseph M. Brennan 54 2002
Rudolph M. Chiorazzo 61 1999
Arthur R. Coslop 60 1999
Michael D. Devlin 56 1999
Agostino R. Fabietti, CPA 61 1999
James L. Fraser 58 1999
Arthur J. Galletta 52 1999
Thomas L. Glenn, III 42 1999
Roy Goldberg 50 1999
Carol Nugent Harris 50 1999
Patricia C. Koelling, RN, BSN 60 2001
Thomas S. Rittenhouse 64 1999
Thomas K. Ritter, CPA (ret) 50 1999
BIOGRAPHICAL INFORMATION FOR DIRECTORS AND EXECUTIVE OFFICERS
MICHAEL D. DEVLIN has been the Chairman, President and Chief Executive
Officer of Boardwalk Bank since its inception in 1999. Mr. Devlin currently
serves as a member of the Board of Directors of Marquette National Corporation,
a bank holding company based in Chicago, Illinois. Mr. Devlin is a graduate of
St. Joseph's University.
37
WAYNE S. HARDENBROOK (age 56) has been Executive Vice President and
Chief Financial Officer of Boardwalk Bank since its inception. He has over 27
years of diversified management experience with financial institutions of
varying size, from small community banks to multi-billion dollar institutions,
including executive management positions in asset/liability management,
treasury, accounting and portfolio management. He held the position of Treasurer
of Empire of America F.S.B. until 1989, when he left to organize and lead the
Structured Finance Division of Westinghouse Credit Corp. through 1991. Mr.
Hardenbrook was CFO of Westinghouse Savings Corp. until 1992, Vice President of
Portfolio Management at Meridian Bancorp, Inc. from 1992 to 1996 and CFO of
Premium Bank from 1996 until 1998. Mr. Hardenbrook graduated from the University
of Massachusetts at Fitchburg and holds a masters degree in Accounting from
SUNY, Albany.
GUY A. DENINGER (age 58) has served as Executive Vice President and
Chief Lending Officer of Boardwalk Bank since Boardwalk Bank's inception. He has
over thirty five years of credit, business development and administrative
management experience. His career includes over twenty-five years in commercial
lending or mortgage lending in the South Jersey area. He started his banking
career and received his credit training in the New York City area in 1968 and
moved to South Jersey in 1978 to join Midlantic National Bank in Atlantic City,
New Jersey. He then joined Marine National Bank (Chemical Bank) in 1982 where he
served as Senior Vice President/Real Estate Division and Senior Vice
President/Middle Market Shore Division, with responsibility for a $500 million
loan portfolio. In 1991 he joined Covenant Bank, a community bank, as Senior
Vice President in charge of the Shore Lending Division and the Construction
Mortgage Department with direct responsibility for a $250 million loan
portfolio. Following the sale of Covenant Bank to First Union Bank in 1998, Mr.
Deninger held senior lending positions at Commerce Bank and Farmers and
Merchants National Bank before joining Boardwalk Bank. Mr. Deninger is a
graduate of St. Francis College, Brooklyn, New York, with a Bachelors degree in
Business Administration.
MARK A. BENEVENTO has served as a director of Boardwalk Bank since
2002. Mr. Benevento is CEO of Greate Bay Golf Club located in Somers Point, New
Jersey. He has been the President of Shore Racquet and Fitness Club in Somers
Point, New Jersey since April 1999. Since 1992, Mr. Benevento has also been the
President of Sports Development Inc., located in Ocean City, New Jersey. Sports
Development, Inc. is a real estate development company that owns and operates
family entertainment centers in Avalon, Sea Isle City and Ocean City, New
Jersey. Mr. Benevento was a member of the Somers Point Planning Board from
2000-2004. He is a member of the Ocean City, Sea Isle City and Avalon Chamber of
Commerce, as well as a member of the Ocean City Boardwalk Merchants.
JOSEPH M. BRENNAN, CPA, CFP has served as a director since October
2002. He is a principal in the accounting firm of Tracey Heun Brennan & Company,
CPA, PA. Mr. Brennan manages the Cape May Court house office in NJ. He is a past
Board member and officer of Burdette Tomlin Memorial Hospital, a founding member
of the Middle Township Chamber of Commerce, and a member of the Cape May County
Chamber of Commerce. He is a graduate of the University of Scranton, and the
College of Financial Planning.
38
RUDOLPH M. CHIORAZZO has served as a director of Boardwalk Bank since
1999. He has been the President and owner of South Shore Auto World located in
Marmora, New Jersey since 1973. Dealerships at this center include Ford, Volvo,
Chrysler, Plymouth, Dodge, Jeep and Eagle. In 2000, Mr. Chiorazzo added a
General Motors Dealership in Mays Landing. Mr. Chiorazzo is also the President
and owner of South Shore Leasing & Rental, a position that he has held since
1978. From 1991 through 1993, Mr. Chiorazzo was a member of the Board of
Directors of Coastal Bank in Ocean City, New Jersey. Currently, Mr. Chiorazzo
serves as a member of the Board of the Shop-Rite LPGA Golf Classic. He is a
member of Unico, Atlantic City Chamber and Ocean City Chamber.
ARTHUR R. COSLOP has served as a director of Boardwalk Bank since 1999.
He is currently a real estate investor based in Vineland, New Jersey. Mr. Coslop
was the President and former owner of the Ramada Inn of Hammonton, New Jersey
from 1986 to 1999. He has also been the President of Buena Boro Bar, Inc., a bar
and restaurant which trades as the Frosted Mug, since 1977. Mr. Coslop attended
Rutgers University.
AGOSTINO R. FABIETTI, CPA, has served as a director of Boardwalk Bank
since 1999. He is a principal of Fabietti, Hale and Associates, a regional
accounting firm which provides accounting and financial services to businesses,
professional corporations and individuals. Mr. Fabietti has been employed by the
firm since 1967. Mr. Fabietti also serves as Treasurer on the Board of Trustees
for St. Augustine Preparatory School in Richland, New Jersey. He was a member of
the Board of Directors of Premium Bank and Direct Financial Corporation from
1995 until its sale in 1998. Mr. Fabietti is a graduate of Villanova University.
JAMES L. FRASER has served as a director of Boardwalk Bank since 1999.
He has been the managing partner of Fraser Associates since 1988. This firm
provides consulting and management services to golf courses. In addition, Mr.
Fraser has been the President of Mays Landing Golf Club, a public golf course in
Mays Landing, New Jersey, since 1992. He is also a Partner/Owner of The Majors
Golf Club in Palm Bay, Florida. Mr. Fraser was the President and owner of
Atlantic City Country Club, a private golf club in Northfield, New Jersey, from
1986 until its sale in 1997. Mr. Fraser was a founding director of Premium Bank
and Direct Financial Corporation from 1987 until its sale in 1998. Currently,
Mr. Fraser serves a member of the Board of the Shop-Rite LPGA Golf Classic. Mr.
Fraser attended the Peddie School in Hightstown, New Jersey, and the University
of Maryland.
ARTHUR J. GALLETA has served as a director of Boardwalk Bank since
1999. He is a director and owner of Atlantic Blueberry Co., in Hammonton, New
Jersey, a position that he has held since 1971. Atlantic Blueberry is the
largest cultivated blueberry farm in the world and sells both fresh and frozen
fruit. Mr. Galletta is active in farm and agricultural groups, including the New
Jersey Farm Bureau, the New Jersey Blueberry Council, the Blueberry/Cranberry
Research Council, the United States Highbush Blueberry Council and the North
American Blueberry Council. Mr. Galletta is a graduate of Drexel University.
THOMAS L. GLENN, III has served as a director of Boardwalk Bank since
1999. He serves as President of Glenn Insurance Incorporated, Absecon and
Vineland, New Jersey. Mr. Glenn has been employed at Glenn Insurance since 1987.
Glenn Insurance provides insurance products to individuals and commercial
accounts throughout Southern New Jersey. Mr. Glenn also serves on the Board of
Trustees of The AtlantiCare Foundation, and on the Board of Atlantic City
Regional Chamber of Commerce, and Classic Partners of Atlantic County. He is
also a member of the American Heart Walk Executive Committee. Mr. Glenn obtained
his Certified Insurance Counselor designation in 2000. Mr. Glenn is a graduate
of Colgate University.
39
ROY GOLDBERG has served as a director of Boardwalk Bank since 1999. He
graduated from the Hun School of Princeton in 1973 and the University of Denver
in 1977 with a BSBA degree. Mr. Goldberg serves as the President of Gold
Transportation Group, Inc. which has assumed the leadership position as the
premier supplier of air transportation services to the Atlantic City, New Jersey
and the Tunic, Mississippi casino industry. He serves as vice chairman of The
Bacharach Institute for Rehabilitation in Galloway Township, the AtlantiCare
Health System Board of Trustees and serves as Chairman of The Gold Foundation
and a board member emeritus for The ARC of Atlantic County. He previously served
on the board of the Jewish Community Center in Margate, New Jersey.
CAROL NUGENT HARRIS has served as a director of Boardwalk Bank since
1999. Ms. Harris has also served as the President of Massett Building Company, a
general contracting and building firm located in Egg Harbor Township, New Jersey
which specializes in commercial construction, since 1988. She has worked at
Massett Building since 1976. Ms. Harris served as a member of the Advisory Board
of Premium Bank and Direct Financial Corporation from 1990 through 1995. She is
a member of the Governance Board of the Vicariate for Human Services for the
Diocese of Camden. Ms. Harris has both undergraduate and graduate degrees from
Purdue University and a master's degree from Georgian Court College.
PATRICIA KOELLING, RN, BSN has served as a director of Boardwalk Bank
since 2001. She has also served as President and Chief Executive Officer for
AtlantiCare Health Plans since 1998. AtlantiCare Health Plans is located in
Hammonton, New Jersey and is the managed care division of AtlantiCare Health
System, a not for profit integrated delivery system. AtlantiCare Health Plans
completed a joint venture with Horizon Blue Cross and Blue Shield of New Jersey
in 2001 with Ms. Koelling serving as general manager. Prior to joining
AtlantiCare as Chief Operating Officer in 1993, Ms. Koelling held various
positions with PruCare, the national managed care division of Prudential
Insurance, for 14 years. Before joining Prudential Insurance, she was an
emergency room nurse. Ms. Koelling also serves on a variety of Boards including
the United Way, Greater Atlantic City Chamber of Commerce and Gilda's Club of
South Jersey. Ms. Koelling is a graduate of Stockton State College.
THOMAS S. RITTENHOUSE has served as a director of the Bank since 1999.
He is currently Managing Director of Ralston Center, a not for profit
organization which develops programs and services that address the medical,
mental health and quality of life needs of older adults. Prior to joining
Ralston Center, he served as President and Chief Executive Officer of the
Uniform Code Council, Inc. from January 1997 until his retirement on January 1,
2004. The Uniform Code Council is a global organization which is headquartered
in Lawrenceville, New Jersey and sets the standards for bar-coding and
electronic commerce. From 1965 to 1997, Mr. Rittenhouse was employed by
Strawbridge & Clothier, a Philadelphia-based department and discount store
chain. In 1996, Mr. Rittenhouse was appointed as President of Strawbridge &
Clover, Inc. Mr. Rittenhouse also serves as a member of the Board of Directors
and Chairman of the Audit Committee and a member of the Compensation Committee
of StarCite, Inc. Mr. Rittenhouse served as a member of the Board of Directors
of Premium Bank and Direct Financial Corporation from 1993 until its sale in
1998. Mr. Rittenhouse is a graduate of LaSalle University.
40
THOMAS K. RITTER, CPA (RET.) has served as a director of Boardwalk Bank
since 1999. He is also the owner and serves as President of A. E. Stone, Inc. of
Pleasantville, New Jersey. A. E. Stone, Inc. is a company engaged in the
manufacture of asphalt and an asphalt paving contractor. Mr. Ritter sits on the
Boards of the Mainland Regional High School Board of Education serving as
President and Literacy Volunteers of America Cape-Atlantic, Inc. Mr. Ritter is a
graduate of Westminster College.
REMUNERATION OF DIRECTORS AND OFFICERS
Director fees are $600 for each board meeting attended and $200 for
each committee meeting attended, except the Audit Committee which is $400. Mr.
Devlin does not receive fees for his attendance at Board or committee meetings.
The following table summarizes the compensation paid to Boardwalk Bank's chief
executive officer and to other executive officers who earned in excess of
$100,000 for the year ended December 31, 2005.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM
COMPENSATION
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
SALARY BONUS COMPENSATION OPTIONS/SARS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)
--------------------------- ---- ------- ------ ------------ ------------ -------------
Michael D. Devlin, CEO 2003 171,123 25,038 17,036 ---- ---
2004 190,362 28,509 16,046 ---- ----
2005 192,780 57,834 15,396 ---- ----
Wayne S. Hardenbrook, EVP/CFO 2003 131,154 19,673 --- --- ----
2004 147,497 22,125 --- --- ---
2005 147,209 36,802 ---- ---- ----
Guy A. Deninger, EVP/CLO 2003 131,154 19,673 ---- ---- ----
2004 143,677 21,552 --- --- ---
2005 145,530 36,283 ---- ---- ----
The Other Annual Compensation listed as being paid to Mr. Devlin
represents payments for life and long term disability insurance premiums, and
personal use of a Bank automobile.
Boardwalk Bank did not grant any stock options during the year ended
December 31, 2005.
The following table sets forth certain information pertaining to the
shares acquired by the individuals named in the Summary Cash Compensation Table
upon exercise of stock options in fiscal year 2005 and pertaining to the number
and value of options held by such individuals at year end:
41
FISCAL 2005 OPTION EXERCISES AND YEAR END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-THE-
VALUE UNDERLYING UNEXERCISED MONEY OPTIONS
SHARES REALIZED OPTIONS AT 12/31/2005 12/31/2005 (2)
ACQUIRED ON -------- --------------------- ----------
NAME EXERCISE ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- -------- ----------- ------------- ----------- -------------
Michael D. Devlin 12,600 $140,263 16,800 --- $179,458 ---
Wayne S. Hardenbrook 2,961 $32,504 19,614 --- $209,517 ---
Guy A. Deninger --- --- --- --- --- ---
- ------------------
(1) Value realized is the difference between the market value of a
share of Boardwalk Bank's common stock on the date of exercise
and the exercise price of the option, multiplied by the number of
shares underlying the option.
(2) Value of in-the-money options is based on a market value of
$17.23 per share of Boardwalk Bank's common stock on December 30,
2005.
EMPLOYMENT AGREEMENT
Boardwalk Bank has an employment agreement with Michael Devlin,
Boardwalk Bank's Chairman, President, and Chief Executive Officer. Under the
terms of the agreement, Mr. Devlin is required to devote his full time,
attention and energies to the business of Boardwalk Bank with limited
exceptions, such as involvement in community and civic activities. He also
agreed not to compete, directly or indirectly, with Boardwalk Bank during the
term of his employment and to maintain the confidentiality of Boardwalk Bank's
confidential information during the term of his employment and for one year
thereafter. Mr. Devlin's compensation includes salary, bonus under any incentive
plan for Bank officers as determined by the Board, an automobile, pension and
welfare benefits available to all employees and stock options and/or grants as
decided by the Board.
In the event Mr. Devlin's employment by Boardwalk Bank is terminated
without cause, Boardwalk Bank undergoes a change in control and Mr. Devlin
resigns within six months or Mr. Devlin resigns for good reason (as defined in
the Agreement), he is entitled to receive severance pay. Under the agreement
"cause" includes: conviction for a felony or a crime involving fraud; willful
and repeated failure to follow the instructions of the Board; a government order
requiring Mr. Devlin's termination; or a violation of the non-competition or
confidentiality provisions of the agreement. A change in control occurs if: any
person or entity which is not an affiliate of Boardwalk Bank acquires more than
20% of Boardwalk Bank's voting securities; there is a sale of all or
substantially all of the assets of Boardwalk Bank; or Boardwalk Bank merges with
another entity, unless Boardwalk Bank's shareholders own a majority of the
voting power and Boardwalk Bank's directors initially represent a majority of
the directors of the surviving entity after the merger. Under the agreement,
"good reason" includes: a reduction in Mr. Devlin's salary or a material change
in his duties; his reassignment to a principal office more than 50 miles from
Linwood, New Jersey; removal from office except for cause or disability; a
reduction in base salary; or if he is not re-elected as a member of the Board or
re-appointed as Chairman. Mr. Devlin's severance pay will be three times the sum
of (i) the highest annualized base salary paid to him during the year of
termination or the immediately preceding two calendar years, and (ii) the
highest bonus paid to him with respect to one of the three years immediately
42
preceding the year of termination. In addition, Mr. Devlin would also be paid,
in lieu of continued pension, welfare and other benefits, a lump sum cash
payment equal to 90% of his base salary immediately prior to the date of
termination. In the event that such payments become subject to excise taxes,
Boardwalk Bank will pay Mr. Devlin such amounts as will result in Mr. Devlin
retaining a net amount equal to the net amount he was to have received had the
amounts not been subject to excise taxes.
The employment agreement is automatically renewed annually on each
January 1 for an additional three-year period beginning on the renewal date.
Under this agreement, Mr. Devlin may resign his employment at any time.
CHANGE IN CONTROL AGREEMENTS
Boardwalk Bank is a party to change in control agreements with each of
Wayne S. Hardenbrook, Executive Vice President and Chief Financial Officer, and
Guy A. Deninger, Executive Vice President and Chief Lending Officer. Each of
these agreements provides that, at any time within 180 days following a "change
in control" of Boardwalk Bank, the executive can resign from employment for any
reason and receive a lump-sum cash payment equal to two times the sum of (i) the
executive's highest annualized base salary paid during the year of termination
or the preceding three years plus (ii) the highest cash bonus paid to the
executive with respect to the year of termination or the preceding three years.
In addition, the executive will be entitled to two years of continued health
insurance coverage or, if the executive is ineligible to receive such continued
coverage because he is no longer an employee, a dollar amount equal to the
after-tax cost of obtaining substantially similar benefits. Under the
agreements, a "change in control" occurs if: any person or entity which is not
an affiliate of Boardwalk Bank acquires beneficial ownership of 24.99% or more
of Boardwalk Bank's voting securities; Boardwalk Bank sells substantially all of
its assets; Boardwalk Bank merges with another entity, unless Boardwalk Bank's
shareholders own a majority of the voting securities and Boardwalk Bank's
directors initially represent a majority of the directors of the surviving
entity after the merger; or there is a change during any year in the composition
of the Board of Directors unless the election of the new directors was approved
by a majority of the Board members at the beginning of the year. No benefits
under the agreements are payable in the event of a termination for cause as
defined in the agreements. Payments under the agreements will be reduced to the
extent that the amount of such payments, together with any other payments made
contingent on a change in control of Boardwalk Bank, would subject the executive
to excise taxes under federal tax laws.
COMPENSATION COMMITTEE REPORT
The principal components of compensation for Boardwalk Bank's employees
are base salary, annual incentive compensation, and long-term compensation under
Boardwalk Bank's stock option program. The Compensation Committee of the Board
of Directors, which is comprised solely of three independent directors within
the meaning of NASDAQ listing standards, administers these programs.
43
Base salary levels are determined, including for executive officers,
are determined for specific job descriptions by reference to salary information
available and other data collected for employees at comparable institutions. The
Chief Executive Officer makes recommendations to the Compensation Committee
annually with respect to base salary increases for employees, including
executive officers, other than himself. The Compensation Committee considers
these recommendations and submits them to the full Board of Directors for
approval. The Chief Executive Officer does not participate in discussions or
approval with respect to his own annual base salary. For 2005, Mr. Devlin's base
salary was $192,780 based on an assessment by the independent members of the
Board of salaries of similarly situated executive officers, Mr. Devlin's
performance, and the Bank's growth and financial performance.
For 2005, Boardwalk Bank maintained an employee incentive compensation
plan for executive officers and other employees. Under the plan as in effect for
2005, incentive compensation payments are made based on both the performance of
Boardwalk Bank and the performance of the individual employee provided that
pre-determined targets stated in terms of earnings before income taxes are met.
If earnings targets are met, an employee can receive an incentive bonus up to a
maximum stated percentage of base salary (for 2005, up to 30% of base salary in
the case of Mr. Devlin and up to 25% of base salary in the case of Messrs.
Hardenbrook and Deninger). A pre-set portion of the bonus calculation is
dependent on Boardwalk Bank's earnings performance and a pre-set portion of the
bonus calculation is dependent on an assessment of the individual's performance
based on individual performance reviews for the year. Employees who receive a
marginal or unsatisfactory rating are not eligible to receive a bonus under the
plan. Individuals with more company-wide responsibilities, such as the senior
management team, have a greater portion of their bonus calculation dependent on
the achievement of earnings targets.
Long-term incentive compensation is provided to Boardwalk Bank's
executive officers primarily by means of Boardwalk Bank's long-term incentive
plan, which was previously approved by Boardwalk Bank's shareholders. Under the
Plan, the Board may grant incentive stock options or nonqualified stock options
to employees based on the recommendation of the Chief Executive Officer. The
exercise price of options granted under the Plan must equal the fair market
value of a share of the Bank's common stock on the date of grant. The Board did
not grant any options for the year ended December 31, 2005.
Thomas S. Rittenhouse Patricia C. Koelling Agostino R. Fabietti
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Boardwalk Bank's Loan Policy prohibits Boardwalk Bank from making any
loans or extensions of credit to directors, officers or principal shareholders
of Boardwalk Bank, or to any corporation or other entity in which any such
person has a controlling interest, except on substantially the same terms
(including interest rate and collateral), as the terms prevailing at the time
for comparable banking transactions with other persons who are not Boardwalk
Bank affiliates and who are not subject to Regulation O. These loans cannot
involve more than the normal risk of repayment or present other unfavorable
features.
44
Boardwalk Bank has had, and expects to have in the future, various
loans and other banking transactions in the ordinary course of business with the
directors, officers and, principal shareholders of Boardwalk Bank (or associates
of such persons). All such transactions: (a) have been and will be made or
conducted on substantially the same terms, including interest rates and required
collateral for loans, as those prevailing at the time for comparable
transactions with unrelated persons; (b) have been and will be made or conducted
in the ordinary course of business; and (c) in the opinion of management do not
and will not involve more than the normal risk of collectibility or present
other unfavorable features.
For the fiscal year ended December 31, 2005, the highest aggregate
dollar amount of all indebtedness owed to Boardwalk Bank by its directors and
executive officers, and their affiliates, as a group, on any date during such
year was $11,943,179, which represented approximately 34.17% of Boardwalk Bank's
total equity capital accounts as of September 30, 2005. During the fiscal year
ended on December 31, 2005, the highest aggregate amount of indebtedness owed to
Boardwalk Bank by any officer or director of Boardwalk Bank, together with their
respective affiliates, did not exceed 10% of Boardwalk Bank's total equity
capital accounts as of December 31, 2005.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934 requires
Boardwalk Bank's executive officers and directors, and persons who own more than
10% of its common stock, to file reports of ownership and changes in ownership
of Boardwalk Bank's securities with the FDIC. Executive officers, directors, and
greater than ten percent (10%) shareholders are required by FDIC regulation to
furnish Boardwalk Bank with copies of all Section 16(a) forms they file. Based
solely on its review of the copies of such forms received by it, or written
representations from certain reporting persons, Boardwalk Bank believes that
during the fiscal year ended December 31, 2005 all Section 16(a) filing
requirements applicable to its executive officers, directors and greater than
10% beneficial owners were timely satisfied.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth information concerning ownership of the
Common Stock by (i) the directors of Boardwalk Bank, (ii) the executive officers
named in the Summary Compensation Table included elsewhere herein, (iii) all
directors and officers of Boardwalk Bank as a group and (iv) all persons known
by Boardwalk Bank to beneficially own 5% or more of its outstanding shares.
Except as otherwise indicated in the footnotes below, such information is
provided as of December 31, 2005. According to the rules adopted by the SEC, a
person is the "beneficial owner" of securities if he or she has or shares the
power to vote them or to direct their investment or has the right to acquire
beneficial ownership of such securities within 60 days through the exercise of
an option, warrant or right, the conversion of a security or otherwise. Except
as otherwise noted, the indicated owners have sole voting and investment power
with respect to the shares beneficially owned.
45
AMOUNT AND NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER (1) BENEFICIAL OWNERSHIP OF CLASS
Michael D. Devlin 107,805 (2) 3.48%
Wayne S. Hardenbrook 24,706 (3) 0.67%
Guy A. Deninger 36,316 (4) 1.18%
Mark A. Benevento 19,238 (5) 0.62%
Joseph M. Brennan 3,150 0.10%
Rudy Chiorazzo 24,796 (6) 0.80%
Arthur R. Coslop 35,285 (7) 1.14%
Agostino R. Fabietti, CPA 45,855 (8) 1.48%
James L. Fraser 50,822 (9) 1.64%
Arthur J. Galletta 47,330 (10) 1.53%
Thomas L. Glenn, III 44,671 (11) 1.45%
Roy Goldberg 43,600 (12) 1.41%
Carol Nugent Harris 58,395 (13) 1.88%
Patricia C. Koelling 13,906 (14) 0.45%
Thomas S. Rittenhouse 22,695 (15) 0.74%
Thomas K. Ritter, CPA (ret) 148,273 (16) 4.64%
-------
All directors and executive officers as a group 722,841 (17) 21.69%
(16 persons)
- --------------------------------
(1) The address for all named individuals is c/o Boardwalk Bank, 201
Shore Road, Linwood, New Jersey 08221.
(2) Includes 16,800 shares of common stock issuable upon exercise of
options held by Mr. Devlin under our 2000 Employee Stock Option
Plan (the "Employee Plan"), 31,105 shares held by Mr. Devlin's
spouse and 789 shares held by Mr. Devlin's children.
(3) Includes 19,614 shares of common stock issuable upon exercise of
options held by Mr. Hardenbrook under our Employee Plan.
(4) Includes 1,050 shares of common stock issuable upon exercise of
warrants held by Mr. Deninger.
(5) Includes 7,067 shares of common stock issuable upon exercise of
warrants held by Mr. Benevento, 1,356 shares of common stock
issuable upon exercise of warrants held by Mr. Benevento's
spouse, and 1,195 shares held by Mr. Benevento's spouse.
(6) Includes 2,100 shares of common stock issuable upon exercise of
warrants held by Mr. Chiorazzo and 1,050 shares held jointly with
his spouse.
(7) Includes 1,050 shares of common stock issuable upon exercise of
warrants held by Mr. Coslop.
(8) Includes 4,845 shares of common stock issuable upon exercise of
options held by Mr. Fabietti under our Director Plan, 7350 shares
held through his company's profit sharing plan, 7,350 shares of
common stock issuable upon exercise of warrants held through his
company's profit sharing plan and 23,100 shares held by Mr.
Fabietti's spouse.
(9) Includes 7,350 shares of common stock issuable upon exercise of
warrants held by Mr. Fraser, 9,976 shares held as custodian for
his children and 2,100 shares of common stock issuable upon
exercise of warrants held as custodian for his children.
46
(10) Includes 4,845 shares of common stock issuable upon exercise of
options held by Mr. Galletta under our Director Plan, 3,150
shares of common stock issuable upon exercise of warrants, 5,250
shares held through his company's profit sharing plan, 2,500
shares of common stock held by a trust for which Mr. Galletta is
trustee and 14,700 shares held by his spouse.
(11) Includes 8,925 shares of common stock issuable upon exercise of
warrants, 525 shares held by his spouse and 1575 shares held by
Mr. Glenn as custodian for his children.
(12) Include 4,845 shares of common stock issuable upon exercise of
options held by Mr. Goldberg under our Director Plan, 10,605
shares of common stock issuable upon exercise of warrants, 3,150
shares of common stock issuable upon exercise of warrants held by
Mr. Goldberg as custodian for his children and 2,100 shares held
through his company's profit sharing plan.
(13) Includes 4,845 shares of common stock issuable upon exercise of
options held by Ms. Harris under our Director Plan, 11,550 shares
of common stock issuable upon exercise of warrants and 10,500
shares held by her spouse.
(14) Includes 5,250 shares of common stock issuable upon exercise of
warrants held by Mrs. Koelling.
(15) Includes 4,845 shares of common stock issuable upon exercise of
options held by Mr. Rittenhouse under our Director Plan and 1,050
shares of common stock issuable upon exercise of warrants.
(16) Includes 1,575 shares of common stock issuable upon exercise of
warrants held by Mr. Ritter, 1,576 shares of common stock
issuable upon exercise of warrants held by Mr. Ritter as
custodian for his children, 92,715 shares of common stock
issuable upon exercise of warrants held by his spouse, 20,895
shares of common stock issuable upon exercise of warrants held by
Mr. Ritter through his company's profit sharing plan, 3,152
shares held by Mr. Ritter as custodian for his children, 21,430
shares held by his spouse and 5,355 shares held by Mr. Ritter
through his company's profit sharing plan.
(17) Includes an aggregate of 60,639 shares issuable upon the exercise
of options under our Employee Plan and our Director Plan and an
aggregate of 189,862 shares issuable upon exercise of warrants
held.
BOARD COMMITTEES AND MEETINGS
The Board of Directors has the following standing committees, the
members of which are appointed annually:
Audit Committee: The Board of Directors of Boardwalk Bank has
determined that the members of the Audit Committee are independent (as
independent is defined in Rule 4200(a) (15) of the National Association of
Securities Dealers ("NASD") listing standards. The Audit Committee is
responsible for reviewing the adequacy of internal procedures and controls and
for reviewing the audit and implementation of appropriate recommendations of
Boardwalk Bank's independent auditors. The Audit Committee operates under a
47
written charter. A copy of the charter is available on Boardwalk Bank's website
at www.boardwalkbank.com under the section entitled "Governance Documents."
Members of the Audit Committee are Thomas S. Rittenhouse (Chairman), Arthur J.
Galletta, Patricia C. Koelling, and Joseph M. Brennan. The Board of Directors
has designated Mr. Brennan as the audit committee financial expert, and has
determined that Mr. Brennan is independent within the meaning of the NASD's
listing standards. The Audit Committee met 4 times in fiscal year 2005.
Executive Committee: The Executive Committee generally acts on
behalf of the Board of Directors between meetings of the Board of Directors. Its
current members are Michael D. Devlin, Agostino R. Fabietti, Thomas S.
Rittenhouse and Thomas R. Ritter (floating member). The Executive Committee did
not meet in fiscal year 2005.
Investment Committee: The Investment Committee reviews
Boardwalk Bank's asset and liability management, funds management, and
investments. Its members are Thomas L. Glenn, III, Carol E. Harris, Mark A.
Benevento, Joseph M. Brennan, Michael D. Devlin and Wayne S. Hardenbrook (Chief
Financial Officer of Boardwalk Bank). The Investment Committee met 12 times in
fiscal year 2005.
Loan Committee: The Loan Committee reviews and adopts loan
policies for Boardwalk Bank and approves significant loans. Its members are Roy
Goldberg (Chairman), Rudolph M. Chiorazzo, Thomas K. Ritter, James L. Fraser,
Arthur R. Coslop, Mark A. Benevento, Michael D. Devlin, and Guy A. Deninger
(Boardwalk Bank's Chief Lending Officer). The Loan Committee met 20 times in
fiscal year 2005.
Stock Option Committee: The Stock Option Committee
administers, and provides recommendations concerning, Boardwalk Bank's stock
option plans. Its members are Michael D. Devlin and Thomas Rittenhouse. The
Stock Option Committee did not meet in fiscal year 2005.
Compensation Committee: The Compensation Committee meets as
necessary to review compensation and benefit plans for officers and employees of
Boardwalk Bank. With respect to the compensation of the chief executive officer
and the other executive officers, the Compensation Committee makes specific
recommendations for approval to the independent directors meeting in executive
session. Its members are Thomas S. Rittenhouse, Agostino R. Fabietti and
Patricia C. Koelling. The Compensation Committee met 4 times in fiscal year
2005.
Boardwalk Bank does not have a standing Nominating Committee. In the
view of the Board of Directors, all directors who are independent within the
meaning of the NASD's listing standards should participate in the selection of
director nominees. Accordingly, all directors, except for Directors Devlin,
Glenn and Harris, participate in the selection of director nominees. Independent
directors who participate in the selection of director nominees operate under a
written charter. A copy of the charter is available on Boardwalk Bank's website
at www.boardwalkbank.com under the section entitled "Governance Documents."
Independent directors considering the selection of director nominees will
consider candidates recommended by shareholders. Shareholders desiring to submit
a candidate for consideration as a nominee of the Board of Directors must submit
the same information with regard to the candidate as that required to be
included in Boardwalk Bank's proxy statement with respect to nominees of the
48
Board of Directors. Shareholder recommendations should be submitted in writing
to Boardwalk Bank, 201 Shore Road, Linwood, New Jersey 08221 (Attention:
Corporate Secretary), on or before December 31 of the year preceding the year in
which the shareholder desires the candidate to be considered as a nominee.
Although the Board of Directors at this time does not utilize specific written
qualifications for directors, candidates generally should possess superior
character and integrity, have some experience with or understanding of the
financial services industry or otherwise be able to provide some form of benefit
to Boardwalk Bank's business, possess the skills and capacity necessary to
provide strategic direction to Boardwalk Bank, be willing to represent the
interests of all shareholders, be able to work in a collegial board environment,
and be available to devote the necessary time to the business of Boardwalk Bank.
In addition to these requirements, candidates will be considered on the basis of
diversity of experience, skills, qualifications, occupations, education and
backgrounds, and whether the candidate's skills and experience are complementary
to the skills and experience of other Board members. Candidates recommended by
shareholders will be evaluated on the same basis as candidates selected by the
independent directors.
The Board of Directors held 13 regular meetings during the fiscal year
ending December 31, 2005. All incumbent Board members attended at least 75% of
the aggregate meetings of the Board and all committees on which the director
served.
All Directors are expected to attend Boardwalk Bank's Annual Meeting of
Shareholders. Thirteen directors attended the 2005 Annual Meeting of
Shareholders.
Shareholders may communicate with the directors and executive officers
of Boardwalk Bank by attending Boardwalk Bank's Annual Meeting. Communications
with directors between Annual Meetings can be arranged by contacting Boardwalk
Bank's Corporate Secretary, Joan Ditmars, at 888-720-2265. All bona fide
communications received by the Corporate Secretary will be relayed to the
applicable director, or, if no specific director is designated to receive the
communication, to the Chairman of the Board of Directors.
AUDIT COMMITTEE REPORT
The Audit Committee has reviewed and discussed the audited financial
statements with management. The Audit Committee has discussed with the
independent registered public accounting firm the matters required to be
discussed by SAS 61. The Audit Committee has received the written disclosures
and the letter from the independent registered public accounting firm required
by Independence Standards Board Standard No. 1 (Independence Standards Board
Standard No. 1, Independence Discussion with Audit Committees), and has
discussed with the independent registered public accounting firm the independent
accountant's independence, and based on such review and discussions the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in Boardwalk Bank's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 2005.
Thomas S. Rittenhouse Patricia C. Koelling
Arthur J. Galletta Joseph M. Brennan
49
AUDIT FEES
The total fees for professional services incurred by Boardwalk Bank for
services rendered by Boardwalk Bank's independent auditors in connection with
the audit of Boardwalk Bank's financial statements for the fiscal years ended on
December 31, 2005 and December 31, 2004, the reviews of Boardwalk Bank's Forms
10-Q for such fiscal years and services pertaining to the common stock unit
offering during 2005 were $267,634 and $113,594, respectively.
AUDIT RELATED FEES
There were no audit fees for assurance and related services that were
reasonably related to the performance of the audit or review of the bank's
financial statements for the years ended December 31, 2005 and December 31,
2004.
TAX FEES
The aggregate fees billed for professional services rendered by KPMG
LLP for tax compliance, tax advice and tax planning were $8,205 and $9,350 for
the years ended December 31, 2005 and December 31, 2004, respectively.
ALL OTHER FEES
There were no other fees billed to Boardwalk Bank for professional
services rendered by Boardwalk Bank's independent auditors (other than the fees
for services disclosed under Audit Fees, Audit-Related Fees, or Tax Fees) for
the fiscal year ended on December 31, 2005.
AUDITOR INDEPENDENCE
Boardwalk Bank's Audit Committee has reviewed the total fees paid by
Boardwalk Bank to KPMG LLP for the fiscal year ended December 31, 2005 and has
concluded that the payment of such fees is compatible with maintaining the
independence of such firm.
PRE-APPROVAL OF AUDIT AND PERMISSIBLE NON-AUDIT SERVICES
The Audit Committee pre-approves all audit and all permissible
non-audit services provided by Boardwalk Bank's independent registered public
accounting firm. All of the services provided by KPMG LLP set forth above were
pre-approved by the Audit Committee.
ANNUAL REPORT
A copy of the annual report of Form 10-K for the fiscal year ended
December 31, 2005 is available upon request from Boardwalk Bank and is available
from its website at www.boardwalkbank.com. The Form 10-K serves as Boardwalk
Bank's annual disclosure statement under FDIC regulations (12 CFR part 350). If
you would like to receive a copy of the annual disclosure statement, please
contact Joan Ditmars, Corporate Secretary, by telephone at (888) 720-2265, or in
writing at the address of Boardwalk Bank set forth above.
50
PERFORMANCE GRAPH
Set forth below is a graph comparing the yearly percentage change in
the cumulative total shareholder return on Boardwalk Bank's common stock against
the cumulative total return on the S&P 500 and the NASDAQ Bank Index for the
five-year period commencing December 31, 2000, and ending December 31, 2005.
Cumulative total return on Boardwalk Bank's common stock, the S&P 500
and the NASDAQ bank index equals the total increase in value since December 31,
2000, assuming reinvestment of all dividends. The graph was prepared assuming
that $100 was invested on December 31, 2000 in Boardwalk Bank's common stock,
the S&P 500 and the NASDAQ Bank Index, and reflects all stock dividends and
stock splits.
51
|--------------|--------------|-------------|--------------|-------------|------------|
| 12/31/05 | 12/31/04 | 12/31/03 | 12/31/02 | 12/31/01 | 12/31/00 |
|-----------------------------|--------------|--------------|-------------|--------------|-------------|------------|
| --<>-- NASDAQ Bank Stocks | 158.7264431 | 165.9161102 | 149.4846477 | 115.0480806 | 110.0770837 | 100 |
|-----------------------------|--------------|--------------|-------------|--------------|-------------|------------|
| --[ ]-- S & P 500 | 94.54736874 | 91.79265004 | 84.21849911 | 66.63889478 | 86.95731209 | 100 |
|-----------------------------|--------------|--------------|-------------|--------------|-------------|------------|
| ---^--- Boardwalk Bank | 276.830 | 289.036 | 163.828 | 115.346 | 90.000 | 80.882 |
|-----------------------------|--------------|--------------|-------------|--------------|-------------|------------|
52
PROPOSAL III - APPROVE BOARDWALK BANCORP, INC. 2006
EMPLOYEE STOCK PURCHASE PLAN
Boardwalk is requesting that shareholders vote to approve the Boardwalk
Bancorp, Inc. Employee Stock Purchase Plan (the "Purchase Plan"). The following
summary of major features of the Purchase Plan is subject to the specific
provisions in the full text of the Purchase Plan set forth as Exhibit "E" to
this Proxy Statement/Prospectus.
The Purchase Plan will permit participants to purchase shares of
Boardwalk common stock directly from Boardwalk from authorized but previously
unissued shares or shares held in the treasury. Boardwalk will use the proceeds
it receives from the sale of the common stock pursuant to the Purchase Plan for
general corporate purposes. It is Boardwalk's intention that the Purchase Plan
qualify as an "employee stock purchase plan" under Section 423 of the Internal
Revenue Code of 1986, as amended (the "Code").
PURPOSE OF THE PURCHASE PLAN
The purpose of the Purchase Plan is to encourage and enable employees
of Boardwalk and its subsidiaries to acquire a proprietary interest in Boardwalk
through the ownership of shares in Boardwalk common stock. Boardwalk believes
that employees who participate in the Purchase Plan will have a closer
identification with Boardwalk by virtue of their ability, as shareholders, to
participate in Boardwalk's growth and earnings.
KEY TERMS
The Purchase Plan is designed to meet the requirements of Code Section
423 and to reflect prevailing corporate governance and compensation best
practices. The following is a summary of the key provisions of the Purchase
Plan:
Plan Effective Date: May 1, 2006.
Plan Term: The Purchase Plan will remain in
effect until all shares of common stock
reserved thereunder have been purchased
unless terminated earlier by Boardwalk's
Board of Directors.
Eligible Participants: Each employee who has six
months of continuous service and whose
customary employment is more than five
months in a calendar year and is scheduled
to work 20 or more hours per week is
eligible to participate once such employee
has executed a stock purchase agreement.
Shares Authorized: 433,155 shares of Boardwalk's common stock,
par value $5.00 per share.
53
Shares Authorized as a 10% of fully diluted shares outstanding on
Percent of Outstanding December 31, 2005.
Common Stock:
Purchase Price: The Compensation Committee will determine
and set a discount of up to 15% of the fair
market value on the date of purchase, at
which participants may purchase shares under
the Purchase Plan.
Share Limits Per Person: Shares having a fair market value of $25,000
per employee per calendar year.
ELIGIBILITY
Any employee, who, on the offering date, has at least six months of
continuous service with Boardwalk or a subsidiary of Boardwalk, customarily
works at least five months in a calendar year and at least 20 hours per week is
eligible to participate in the Purchase Plan. Non-employee directors of
Boardwalk or Boardwalk Bank are ineligible to participate in the Purchase Plan.
ADMINISTRATION OF THE PURCHASE PLAN
The Compensation Committee of the Board administers the Purchase Plan.
The Compensation Committee has the authority to make a final and binding
determination of all questions of, and interpretations with respect to, the
operation of the Purchase Plan.
PARTICIPATION IN THE PURCHASE PLAN
There are four consecutive quarterly subscription periods under the
Purchase Plan in each calendar year. A subscription period begins on the first
day of the pay period in which each January 1, April 1, July 1, and October 1
falls and continues until the next subscription period commences. Subject to
certain limitations, an employee may begin participating in the Purchase Plan
effective at the beginning of a subscription period by submitting a stock
purchase agreement during the enrollment period that is immediately preceding
the applicable subscription period. The enrollment periods are each February,
May, August, and November. Once enrolled in the Purchase Plan, a participant is
able to purchase Boardwalk common stock with payroll deductions at the end of
each pay period. Once a quarterly subscription period is over, a participant is
automatically enrolled in the next subscription period, unless such participant
chooses to withdraw from the Purchase Plan (as described below).
PURCHASING STOCK
A participant may designate payroll deductions to be used to purchase
stock at a rate that is at least 1% and that does not exceed 15% of such
participant's earnings (which maximum rate is set and may be changed by the
Compensation Committee from time to time). Subject to certain limitations, a
participant may only change the percentage of earnings that is deducted to
purchase shares under the Purchase Plan (other than to withdraw entirely from
the Purchase Plan, as set forth below) effective at the beginning of the
following subscription period.
54
At the end of each bi-weekly pay period, payroll deductions are applied
automatically to purchase Boardwalk common stock. The price of each share of
Boardwalk common stock purchased under the Purchase Plan will be equal to its
fair market value on the relevant purchase date less a discount. The discount
can range from 0% to 15%, as determined by the Board. The Purchase Plan defines
"fair market value" as the closing sale price per share as listed on the
national securities exchange or quotation system on which Boardwalk's common
stock is listed or reported on such date. The number of shares purchased is
determined by dividing the payroll deductions for the payroll period by the
price paid by the participant. Fractional shares are issued, so no funds will be
carried over to the next period. All shares purchased are credited to the
participant but are initially registered in the name of Boardwalk's transfer
agent. Once the shares are deposited with the transfer agent, the participant is
free to do whatever the participant wishes with the shares, including sell them
or have the shares transferred directly into such participant's name or into the
participant's name with another as joint tenants with right of survivorship.
LIMITATIONS
If the event of a stock dividend, stock split, reverse stock split,
recapitalization, reorganization, merger, spin-off, or similar event affecting
the common stock, the Board will appropriately adjust the number of shares
available under the Purchase Plan.
The Purchase Plan does not permit a participant to purchase shares
under the Purchase Plan if the participant would own Boardwalk common stock
possessing 5% or more of the total combined voting power or value of all classes
of Boardwalk stock. The Purchase Plan also does not permit a participant to
purchase Boardwalk common stock with a fair market value in excess of $25,000 in
any one calendar year. These limitations are to ensure that the Purchase Plan
complies with Code requirements.
A participant does not have the rights of a shareholder until the
participant actually purchases the shares of stock. A participant may not
transfer the right to purchase stock under the Purchase Plan.
WRITTEN STATEMENTS
The Purchase Plan's administrator will provide each participant with a
quarterly written statement indicating the number of shares of stock purchased
under the Purchase Plan for such quarter, the aggregate number of shares
accumulated under the Purchase Plan, and other relevant information.
WITHDRAWING FROM THE PURCHASE PLAN
Subject to certain limitations, a participant may stop participating in
the Purchase Plan at any time. If a participant withdraws from the Purchase
Plan, participation will end effective at the beginning of the next bi-weekly
payroll period. If an employee that has previously withdrawn from the Purchase
Plan wishes to resume participation, the employee must re-enroll effective
beginning the next quarterly subscription period. If a participant terminates
employment at Boardwalk at any time, participation in the Purchase Plan
automatically terminates.
55
TERMINATION AND AMENDMENTS
The Board has the power to amend or terminate the Purchase Plan at any
time, except that the Board may not, without first obtaining shareholder
approval, increase the number of shares reserved under the Purchase Plan other
than as otherwise provided in the Purchase Plan, change the eligibility
requirements to participate in the Purchase Plan, or otherwise materially change
the benefits provided in the Purchase Plan.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PURCHASE PLAN
The following summarizes the federal income tax consequences of a
employee's participation in the Purchase Plan. This summary does not address
federal employment taxes, state and local income taxes, and other taxes that may
be applicable and is not intended to be a complete description of the tax
consequences of participation in the Purchase Plan.
Boardwalk intends that the Purchase Plan qualify as an "employee stock
purchase plan" within the meaning of Code Section 423. As such, a participant
will not recognize taxable income upon enrollment in the Purchase Plan or
purchasing shares. In general, a participant recognizes taxable income in the
year in which the shares of stock purchased under the Purchase Plan is sold or
otherwise disposed of (including by gift).
Qualifying Dispositions. If a participant does not dispose of shares
acquired pursuant to the Purchase Plan until at least two years have passed from
start of the bi-weekly period in which the participant acquired such shares (a
"qualifying disposition"), the participant will have ordinary income in the year
of the qualifying disposition equal to the lesser of (i) the amount by which the
fair market value of the shares on the start of the applicable bi-weekly period
exceeds the purchase price paid for such shares or (ii) 15% of the fair market
value of the shares on the start of the applicable bi-weekly period in which the
shares were acquired. The amount of ordinary income will be added to the basis
of the stock and any additional gain recognized upon the qualifying disposition
will be a long-term capital gain. If the fair market value on the date of the
qualifying disposition is less than the purchase price paid for the shares,
there will be no ordinary income and any loss will be a long-term capital loss.
Disqualifying Dispositions. If a participant disposes of shares
acquired pursuant to the Purchase Plan at any time within two years from the
start of the bi-weekly period in which the participant acquired such shares (a
"disqualifying disposition"), the participant will have ordinary income in the
year of the disqualifying disposition equal to the amount by which the fair
market value of the shares on the purchase date exceeded the purchase price. The
amount of the ordinary income will be added to the basis of the stock, and any
resulting gain or loss upon the disposition will be a capital gain or loss. The
capital gain or loss will be long-term if the stock has been held for more than
one year.
56
When a participant disposes of shares acquired under the Purchase Plan
in a disqualifying disposition, Boardwalk may take a deduction for federal
income tax purposes in an amount equal to the ordinary income the participant
recognizes in the disposition. Boardwalk is not entitled to any other deductions
if shares are disposed of in a qualifying disposition. Participants may be
limited in their ability to take capital losses that may be incurred. Maximum
tax rates applicable to capital gains vary, so treatment of any particular
participant's capital gains will also vary.
SUMMARY OF BENEFITS
It is not possible to determine the number of shares of stock that will
be purchased under the Purchase Plan in the future by any particular individual.
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
PURCHASE PLAN. The affirmative vote of a majority of all votes cast at the
Meeting is required to approve the Purchase Plan. Abstentions and broker
non-votes will not constitute or be counted as "votes" cast for purposes of the
Meeting. All proxies will be voted "FOR" approval of the Purchase Plan unless a
shareholder specifies to the contrary on such shareholder's proxy card.
PROPOSAL IV - APPROVE BOARDWALK BANCORP, INC. 2006 STOCK INCENTIVE PLAN
Boardwalk is requesting that the shareholders vote to approve the
Boardwalk Bancorp, Inc. 2006 Stock Incentive Plan (the "Plan"), which will
provide stock compensation to Boardwalk employees and non-employee directors
based on Boardwalk's performance and other factors. The following summary of
major features of the Plan is subject to the specific provisions in the full
text of the Plan set forth as Exhibit "F" to this Proxy Statement/Prospectus.
The Plan will give Boardwalk flexibility to respond to changes in
compensation practices given the changes in the accounting treatment of stock
options and other regulatory requirements. Boardwalk anticipates that the Plan
will assist Boardwalk in achieving its objective of continuing to provide
appropriate incentives to motivate the achievement of competitively superior
performance.
Boardwalk believes strongly that its emphasis on employee and director
stock ownership has been integral to its success in the past and will be
important to its ability to achieve consistently superior performance in the
years ahead. Boardwalk also believes strongly that Boardwalk will have a
performance-oriented culture, and will create greater shareholder value if
employee stock ownership levels are increased at all levels of Boardwalk.
Therefore, the approval of the proposed Plan is vital to Boardwalk's ability to
achieve its future goals.
57
PURPOSE OF PLAN
The Plan will allow Boardwalk, under the supervision of the
Compensation Committee, to make stock option and restricted stock awards to
employees and non-employee directors. The purpose of these stock awards is to
attract and retain competitively superior people, align employee and director
with the interests of shareholders, closely link employee and director
compensation with Boardwalk's performance, and maintain high levels of employee
and director stock ownership. The Plan also provides an essential component of
the total compensation package offered to key employees and reflects the
importance placed on motivating and rewarding superior results with long-term
incentives.
KEY TERMS
The Plan is designed to reflect prevailing corporate governance and
executive compensation best practices. The following is a summary of its key
provisions:
Plan Effective Date: May 1, 2006.
Plan Term 10 years from the effective date (May 1,
2016).
Eligible Participants: All employees and non-employee directors of
Boardwalk and its subsidiaries.
Shares Authorized: 433,155 shares of Boardwalk's common stock,
par value $5.00 per share, subject to
automatic annual increases by a number of
shares equal to the lesser of (i) 10% of the
positive difference, if any, between the
number of outstanding shares outstanding on
the last trading day of the immediately
preceding year and the number of shares
outstanding on the first trading day of such
immediately preceding year and (ii) an amount
determined by the Board. No incentive stock
options may be granted on the basis of the
automatic annual increase.
Shares Authorized as a 10% of fully diluted shares outstanding on
Percent of Outstanding December 31, 2005, subject to automatic
Common Stock: annual increases as described above.
Award Types: (1) Incentive stock options with a term no
longer than 10 years;
(2) Non-qualified stock options with a term
no longer than 10 years and one month;
and
(3) Restricted stock.
Share Limits Per Options to purchase no more than 75,000
Person: shares may be granted to any single
participant over any 12 consecutive month
period.
Vesting: Determined by Compensation Committee subject
to a minimum vesting period of one year of
continuous employment or service with
Boardwalk or a subsidiary.
Performance Criteria: Determined by Compensation Committee.
58
Not Permitted: (1) To increase number of shares authorized
under Plan;
(2) To grant stock options at a price below
fair market value;
(3) To authorize repricing of stock options;
and
(4) To change per person share limit.
ELIGIBILITY
Only employees and non-employee directors of Boardwalk and its
subsidiaries are eligible to receive awards under the Plan. The Compensation
Committee will determine which employees and directors will be eligible to
receive awards under the Plan.
SHARES AUTHORIZED; ADJUSTMENTS
433,155 shares of Boardwalk's common stock are authorized for awards
under the Plan. This amount is subject to automatic annual increases by a number
of shares equal to the lesser of (i) 10% of the positive difference, if any,
between the number of outstanding shares outstanding on the last trading day of
the immediately preceding year and the number of shares outstanding on the first
trading day of such immediately preceding year and (ii) an amount determined by
the Board. No incentive stock options may be granted on the basis of the
automatic annual increase.
In the event of a stock dividend, recapitalization, stock split,
reorganization, merger, spin-off, repurchase, or exchange of Boardwalk's common
stock or similar event affecting the common stock, the number and kind of shares
granted under the Plan, the number and kind of shares subject to outstanding
stock options and restricted stock awards and the exercise price of outstanding
stock options will be automatically adjusted.
AWARDS
Subject to Plan limits, the Compensation Committee has the
discretionary authority to determine the size of an award, any continuous
service or performance-based vesting requirements, and other conditions of the
award. Boardwalk's performance will directly affect the size of stock option
grants and restricted stock awards made under the Plan.
VESTING OF AWARDS
Each option and restricted stock award will be subject to the terms and
conditions specified in the agreement evidencing the award, as determined by the
Compensation Committee. Each award must provide that the restrictions will not
lapse and the award will not vest until the participant has completed at least
one year of employment or service (or longer period of time as specified in the
relevant option or restricted stock agreement) with Boardwalk or a subsidiary.
In addition, in the discretion of the Compensation Committee, vesting of options
and restricted stock awards may be tied to the satisfaction of one or more
performance goals.
EXERCISE PRICE AND TERM OF STOCK OPTIONS
The exercise price of stock options granted under the Plan may not be
less than the fair market value of the common stock on the date of grant and the
option term may not be longer than 10 years in the case of an incentive stock
option and 10 years and one month in the case of a nonqualified stock option.
59
PAYMENT OF EXERCISE PRICE AND WITHHOLDING
A participant may pay the exercise price of a stock option in cash,
common stock owned by the participant, or by a combination of cash and common
stock. Boardwalk will require, prior to issuing common stock under the Plan,
whether upon the exercise of an option or vesting of restricted stock, that the
participant remit an amount in cash or common stock sufficient to satisfy any
tax withholding requirements.
TRANSFERABILITY
In general, stock options granted under the Plan may be transferred
only by will and the laws of descent and distribution. A participant, however,
may transfer a nonqualified stock option with the approval of the Compensation
Committee to one or more members of the participant's immediate family. A
participant may not transfer or otherwise encumber restricted stock awarded
under the Plan until the applicable restrictions lapse.
CHANGE IN CONTROL
Unless otherwise provided in an agreement evidencing an award, all
stock options and restricted stock awarded under the Plan will become
exercisable/fully vested upon the occurrence of a change in control as defined
in the Plan.
TERMINATION OF EMPLOYMENT OR SERVICE
In general, upon a participant's termination of employment or service
with Boardwalk or a subsidiary, such participant will forfeit any unvested
options or restricted stock. Unless otherwise provided in an agreement
evidencing an award, however, stock options and restricted stock awarded to a
participant under the Plan will vest upon a participant's termination of
employment or service due to death, disability, or retirement (as such terms are
defined in the Plan). In addition, the Compensation Committee may, in its
discretion, waive any service requirement attached to an option or restricted
stock award upon a termination of a participant's employment or service in
circumstances other than those described in the preceding sentence. Subject to
certain exceptions, vested nonqualified stock options will expire one year after
the termination of a participant's employment or service. Vested incentive stock
options will expire three months after termination of a participant's employment
or service.
PLAN ADMINISTRATION
The Compensation Committee will administer the Plan. The Compensation
Committee will select the Boardwalk employees and non-employee directors who
will receive awards under the Plan, determine the number of shares covered
thereby, and establish the terms, conditions, and other provisions of the
awards. The Compensation Committee may interpret the Plan and establish, amend,
and rescind any rules relating to administration of the Plan.
60
AMENDMENTS
Subject to approval of the Board of Directors, where required, the
Compensation Committee may terminate, amend, or suspend the Plan at any time,
provided that the Compensation Committee (or Board) may not amend the Plan
without the approval of the shareholders if the amendment:
(1) Increases the number of shares that may be issued under the Plan;
(2) Changes the class of eligible participants;
(3) Otherwise requires the approval or shareholders under federal or
state law.
In addition, no amendment, termination, or suspension of the Plan may
affect any award granted to a participant under the Plan without the consent of
such participant.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE INCENTIVE PLAN
The following summarizes the federal income tax consequences of a
employee's participation in the Plan. This summary does not address federal
employment taxes, state and local income taxes, and other taxes that may be
applicable and is not intended to be a complete description of the tax
consequences of participation in the Plan.
Incentive Stock Options. For federal income tax purposes, a participant
who is granted an incentive stock option under the Plan does not receive taxable
income at the time of the grant or exercise of such incentive stock option. If
such participant retains the shares acquired pursuant to the exercise of the
incentive stock option for a period of at least two years after the option is
granted and one year after the option is exercised, any gain upon the subsequent
sale of the shares will be taxed as a long-term capital gain. A participant who
disposes of shares acquired by exercise of an incentive stock option prior to
the expiration of two years after the option is granted or one year after the
option is exercised will realize ordinary income as of the exercise date equal
to the difference between the exercise price and fair market value of the share
on the exercise date. Any additional gain or loss recognized upon any later
disposition of the shares would be capital gain or loss. The difference between
the option exercise price and the fair market value of the shares on the
exercise date of an incentive stock option is an adjustment in computing the
participant's alternative minimum taxable income and may be subject to the
alternative minimum tax.
Nonqualified Stock Options. A participant who receives a nonqualified
stock option with an exercise price equal to the fair market value of the stock
on the grant date generally will not realize taxable income on the grant of such
option, but will realize ordinary income at the time of exercise of the option
equal to the difference between the option exercise price and the fair market
value of the shares on the date of exercise. Any additional gain or loss
recognized upon any later disposition of shares would be capital gain or loss.
Any taxable income recognized in connection with an option exercise by an
employee or former employee of Boardwalk or a subsidiary is subject to tax
withholding.
61
Restricted Stock Awards. Restricted stock awarded under the Plan will
generally be taxed in the same manner as non-statutory stock options. Restricted
stock awards are subject to a "substantial risk of forfeiture" within the
meaning of Code Section 83 to the extent the award will be forfeited in the
event that the participant ceases to provide services to Boardwalk or a
subsidiary or any performance-based requirements set forth in the agreement
evidencing such award are not satisfied. A participant will recognize ordinary
income in the year when the stock is no longer subject to a substantial risk of
forfeiture. The participant's ordinary income is measured as the difference
between the amount paid for the stock, if any, and the fair market value of the
stock on the date the stock is no longer subject to forfeiture.
A participant may accelerate his or her recognition of ordinary income,
if any, and begin the participant's capital gains holding period by filing
within thirty days of the award of restricted stock an election pursuant to Code
Section 83(b). If such an election is made, the ordinary income recognized, if
any, is measured as the difference between the amount paid for the stock, if
any, and the fair market value of the stock on the date of award, and the
capital gain holding period commences on such date. The ordinary income
recognized by an employee or former employee will be subject to tax withholding
by Boardwalk.
Tax Effects for Boardwalk. Unless limited by Code Section 162(m), as
described below, Boardwalk generally will be entitled to a tax deduction in
connection with an award under the Plan in an amount equal to the ordinary
income realized by a participant at the time the participant recognizes such
income (for example, upon the exercise of a stock option).
Code Section 162(m). Code Section 162(m) places a limit of $1,000,000
on the amount of compensation that Boardwalk may deduct in any one year with
respect to each of its five most highly paid executive officers. Certain
performance-based compensation approved by stockholders is not subject to the
deduction limit. The Plan is qualified such that awards under the Plan may
constitute performance-based compensation not subject to Code Section 162(m) and
Boardwalk intends that a significant portion of awards to executive officers
will be performance-based and designed to comply with Code Section 162(m). In
order for stock option grants to be considered performance-based compensation
under Code Section 162(m), the Plan must set forth a limit to the number of
shares that may be granted pursuant to options to any one individual in a
specified period. Accordingly, the Plan provides that no person may be granted
options to purchase more than 75,000 shares in any 12-month period.
OTHER INFORMATION
For a discussion of Boardwalk's executive compensation policy, refer to
the Report of the Compensation Committee on page ___.
The Plan is not qualified under the provisions of Code Section 401(a)
and is not subject to any provisions of the Employee Retirement Income Security
Act of 1974, as amended.
SUMMARY OF BENEFITS
Because Boardwalk has not yet made any awards under the Plan and
because future awards under the Plan are discretionary and not yet determined,
benefits to be received by individual participants are not determinable at this
time and we have therefore not included a table estimating future awards.
Information concerning certain past stock option grants is set forth in the
Report of the Compensation Committee on page ___.
62
If the shareholder approve the Plan, Boardwalk anticipates that it will
register the shares subject to the Plan with the Securities and Exchange
Commission and with any applicable state securities commission where
registration is required. Boardwalk will bear the cost of such registrations.
As provided above, only employees and non-employee directors of
Boardwalk and its subsidiaries will be eligible to receive stock options or
restricted stock under the Plan. This includes the executive officers listed in
the Summary Compensation Table including under the section entitled
"Compensation of Executive Officers" in this Proxy Statement/Prospectus.
The stock options previously granted to senior officers of Boardwalk
Bank under its prior stock option plans, and information on options exercised
during the last fiscal year, are reflected in tables contained in the section of
this Proxy Statement/Prospectus entitled "Remuneration of Directors and
Officers."
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
Plan. The affirmative vote of a majority of all votes cast at the Meeting is
required to approve the Plan. Abstentions and broker non-votes will not
constitute or be counted as "votes" cast for purposes of the Meeting. All
proxies will be voted "FOR" approval of the Plan unless a shareholder specifies
to the contrary on such shareholder's proxy card.
PROPOSAL V - RATIFICATION OF THE SELECTION OF KPMG, LLP
The Board of Directors, by resolution, has selected KPMG LLP,
independent registered public accounting firm, to audit the books, records and
accounts of Boardwalk Bank for the fiscal year ending December 31, 2006. The
Bank has been advised by KPMG LLP that none of its members has any financial
interest in Boardwalk Bank. Ratification of the selection of KPMG LLP will
require the affirmative vote of holders of a majority of the shares represented
in person or by proxy at the Annual Meeting. KPMG LLP served as Boardwalk Bank's
independent registered public accounting firm for Boardwalk Bank's 2005 fiscal
year.
In the event that the shareholders do not ratify the selection of KPMG
LLP as Boardwalk Bank's independent registered public accounting firm to perform
audit services for the 2006 fiscal year, another accounting firm may be chosen
to provide audit services for the 2006 fiscal year. It is anticipated that
representatives of KPMG LLP will be present at the meeting to respond to
appropriate questions and, if they desire, to make a statement.
The Board of Directors unanimously recommends a vote "FOR" ratification
of KPMG LLP as the independent registered public accounting firm of Boardwalk
Bank for the fiscal year ending December 31, 2006.
63
PROPOSAL VI - ADJOURNMENT PROPOSAL
In the event that there are not sufficient votes to constitute a quorum
or approve the adoption of the holding company reorganization at the time of the
meeting, such proposal could not be approved unless the meeting is adjourned in
order to permit further solicitation of proxies. In order to allow proxies which
have been received by Boardwalk Bank, at the time of the applicable meeting to
be voted for such adjournment, if necessary, Boardwalk Bank has submitted the
question of adjournment under such circumstances to its shareholders as a
separate matter for their consideration.
The board of directors of Boardwalk Bank recommends that shareholders
vote their proxies in favor of the adjournment proposal so that their proxies
may be used for such purposes in the event it becomes necessary. Properly
executed proxies will be voted in favor of the adjournment proposal unless
otherwise indicated thereon. If it is necessary to adjourn the meeting, no
notice of the time and place of the adjourned meeting is required to be given to
shareholders other than an announcement of such time and place at the meeting.
SHAREHOLDER PROPOSALS
HOLDING COMPANY. If the holding company reorganization is completed,
the 2007 annual meeting of shareholders will be held in accordance with the
certificate of incorporation and bylaws of the holding company rather than the
certificate of incorporation and bylaws of Boardwalk Bank. A shareholder who
desires to submit a proposal to be considered for inclusion in the holding
company's proxy statement for 2007 must submit the proposal to the holding
company at 201 Shore Road, Linwood, New Jersey 08221 on or before January 27,
2007, and meet certain other requirements of the SEC's regulations relating to
shareholder proposals.
A shareholder proposal which is not submitted in accordance with these
requirements will not be included in the holding company's proxy materials but
may nonetheless be presented at the annual meeting of shareholders in 2007. The
holding company's bylaws provide that, to be presented at the meeting of the
holding company's shareholders, a proposal must be delivered or mailed to the
Secretary not more than 120 nor less than 90 days prior to the anniversary of
the immediately preceding annual meeting.
BOARDWALK BANK. If the holding company reorganization is not completed,
Boardwalk Bank presently anticipates that its 2007 Annual Meeting of
Shareholders will be held on or about April 26, 2007.
Shareholder proposals intended to be considered at the 2007 Annual
Meeting of Shareholders and which the proponent would like to have considered
for inclusion in the proxy materials distributed by Boardwalk Bank in connection
with such meeting, pursuant to Rule 14a-8 promulgated under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), must be received at the
principal executive offices of Boardwalk Bank no later than November 22, 2006.
In accordance with SEC Rule 14a-4(c), the holders of proxies solicited by the
Board of Directors of Boardwalk Bank in connection with Boardwalk Bank's 2006
Annual Meeting of Shareholders may vote such proxies in their discretion on
certain matters as more fully described in such Rule, including without
limitation on any matter coming before the meeting as to which Boardwalk Bank
does not have notice on or before February 5, 2007.
64
COSTS OF SOLICITATION
The entire cost of soliciting proxies will be borne by Boardwalk Bank.
Arrangements may be made with brokerage houses and other custodians, nominees
and fiduciaries to send proxies and proxy materials to the beneficial owners of
stock, and reimbursement for expenses may be made. Proxies may be solicited in
person or by telephone or telegraph by directors, officers or regular employees
of Boardwalk Bank, none of whom will receive additional compensation therefor.
OTHER MATTERS
The Board of Directors is not aware of any other matters to be
presented at the meeting. If any other matter properly comes before the meeting
requiring a vote of the shareholders it is the intention of the persons named in
the accompanying proxy to vote the shares represented thereby on such matters in
accordance with their best judgment.
Boardwalk Bank's Annual Report to shareholders for the year ended
December 31, 2005, accompanies this proxy statement/prospectus.
BOARDWALK BANK WILL PROVIDE TO EACH PERSON SOLICITED, UPON WRITTEN REQUEST,
WITHOUT CHARGE EXCEPT FOR EXHIBITS, A COPY OF ITS ANNUAL REPORT ON FORM 10-K,
WHICH ALSO SERVES AS THE BANK'S ANNUAL DISCLOSURE STATEMENT UNDER PART 350 OF
THE FDIC'S REGULATIONS. SUCH REPORT WILL BE FILED WITH THE FEDERAL DEPOSIT
INSURANCE CORPORATION ON OR ABOUT MARCH 24, 2006. REQUESTS SHOULD BE ADDRESSED
TO WAYNE S. HARDENBROOK, EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER,
BOARDWALK BANK, 201 SHORE ROAD, LINWOOD, NEW JERSEY 08221.
By Order of the Board of Directors
Joan B. Ditmars, Corporate Secretary
Linwood, New Jersey
65
EXHIBIT A
PLAN OF ACQUISITION
OF ALL THE OUTSTANDING STOCK
OF BOARDWALK BANK
BY
BOARDWALK BANCORP, INC.
THIS PLAN OF ACQUISITION (the "Plan") is entered into as of
this __ day of February 2006, by and between BOARDWALK BANK, a commercial bank
organized under the laws of the State of New Jersey, with its principal office
at 201 Shore Road, Linwood, New Jersey 08221 (the "Bank"), and BOARDWALK
BANCORP, INC., a corporation organized under the laws of the State of New Jersey
with its principal office at 201 Shore Road, Linwood, New Jersey 08221
("Bancorp").
WHEREAS, the Bank's Board of Directors desires to form a bank
holding company to own all of the outstanding capital stock of the Bank because
it believes that a holding company structure will provide it with future
flexibility in undertaking the Bank's current activities and future new
activities and will, among other things, provide additional flexibility in
managing capital; and
WHEREAS, the Bank's Board of Directors has determined that the
formation of a holding company is in the best interest of the Bank's
shareholders; and
WHEREAS, Bancorp was formed under the New Jersey Business
Corporation Act on behalf of the Bank at the direction of the Bank's Board of
Directors; and
WHEREAS, N.J.S. 17:9A-355 et seq. authorizes a New Jersey
corporation and a New Jersey state-chartered bank to enter into a plan of
acquisition to exchange shares in the bank for shares in the holding company, to
submit the plan to the New Jersey Department of Banking and Insurance for
approval and implement the plan if it is approved by the Bank's shareholders,
subject to the right of the Bank's shareholders to dissent and receive the fair
value of their shares; and
WHEREAS, the Boards of Directors of the Bank and Bancorp have
adopted this Plan pursuant to the provisions of N.J.S. 17:9A-357.
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NOW, THEREFORE, the parties hereto agree as follows:
1. Plan of Acquisition Required by Section 17:9A-357.
1.1. Name and Address of Acquiring Corporation. The name
and the address of the acquiring corporation is:
Boardwalk Bancorp, Inc.
201 Shore Road
Linwood, New Jersey 08221
1.2. Name and Address of Participating Bank. The name and
address of the participating bank is:
Boardwalk Bank
201 Shore Road
Linwood, New Jersey 08221
1.3. Names and Addresses of Directors of the Acquiring
Corporation. The names and addresses of the initial members of the Board of
Directors of Bancorp are:
Name Mailing Address
---- ---------------
Michael D. Devlin 201 Shore Road
Linwood, New Jersey 08221
Carol Nugent Harris 201 Shore Road
Linwood, New Jersey 08221
Thomas K. Ritter 201 Shore Road
Linwood, New Jersey 08221
1.4. Shares of Other Banks Owned by Acquiring Corporation.
Bancorp does not own any shares of capital stock of any other bank.
1.5. Terms and Conditions of Acquisition. The terms and
conditions of the acquisition are the terms set forth in Sections 2, 3, 5, and 6
hereof.
1.6. Effective Date. The effective date shall be the date
selected in accordance with Section 7 hereof.
A-2
1.7. Other Provisions. There are no other provisions of the
Plan except as set forth herein.
2. Capitalization; Terms of Acquisition.
2.1. Capitalization of Bancorp. Bancorp is authorized to
issue 12,500,000 shares of common stock, par value $5.00 per share ("Common
Stock"). Bancorp shall not issue any shares of capital stock prior to the
Effective Date.
2.2. Capitalization of the Bank. The Bank is authorized to
issue 12,500,000 shares of common stock, par value $5.00 per share (the "Bank
Common Stock"). As of December 31, 2005, 3,081,639 shares of Bank Common Stock
were issued and outstanding.
2.3. Terms of Exchange. Upon the Effective Date, each
outstanding share of Bank Common Stock shall be converted into one share of
Common Stock, subject to the rights of dissenting shareholders as provided in
Section 4 hereof. Each outstanding option to purchase a share of Bank Common
Stock under the Bank's 1999 Employee Stock Option Plan and the Bank's 2000
Director Stock Option Plan shall be converted into an option to purchase the
same number of shares of Common Stock on the same terms and conditions, and each
outstanding warrant to purchase Bank Common Stock issued pursuant to a unit
offering completed in 2003 shall be converted into a warrant to purchase the
same number of shares of Common Stock on the same terms and conditions.
3. Mode of Carrying into Effect the Plan of Exchange.
3.1. Exchange Effective Immediately. Upon the Effective
Date, each certificate representing shares of the Bank Common Stock (other than
shares held by a dissenting shareholder) shall by virtue of the Plan and without
any action on the part of the holder thereof, be deemed to represent the same
number of shares of Common Stock, and shall no longer represent a share of Bank
Common Stock. As set forth in Section 4 hereof, after the Effective Date, any
dissenting shareholder who complies with the requirements of N.J.S. 17:9A-360 et
seq. shall have only the rights accorded dissenting shareholders and such stock
certificates shall not be deemed to represent shares of Common Stock or Bank
Common Stock.
A-3
3.2. Issuance of Shares of Bank to Bancorp. Upon the
Effective Date, the Bank shall issue to Bancorp one share of Bank Common Stock
for each share of Bank Common Stock outstanding immediately prior to the
Effective Date.
3.3. Means of Effecting Exchange of Certificates or
Warrants. Upon or immediately after the Effective Date, the Bank shall notify
each holder of record on the Effective Date of certificates representing shares
of Bank Common Stock or stock purchase warrants to purchase shares of Bank
Common Stock (except a shareholder who is a dissenting shareholder as provided
in Section 4 hereof) of the procedure by which certificates representing the
Bank Common Stock may be exchanged for certificates of Common Stock or stock
purchase warrants to purchase shares of Bank Common Stock may be exchanged for
stock purchase warrants to purchase shares of Common Stock. The Bank's transfer
agent, StockTrans, Ardmore, Pennsylvania, shall act as exchange agent in
effecting any exchange of stock or warrant certificates. After receipt of such
notification, each such holder shall be obligated to surrender the certificates
representing shares of Bank Common Stock for exchange into certificates
representing shares of Common Stock or stock purchase warrants to purchase
shares of Bank Common Stock for exchange into stock purchase warrants to
purchase shares of Common Stock as promptly as possible to the extent provided
in such notification.
4. Dissenting Shareholders.
Any shareholder of the Bank who desires to dissent from the
transactions contemplated by the Plan shall have the right to dissent by
complying with all of the requirements set forth in N.J.S. 17:9A-360 et seq.,
and, if the transactions contemplated by the Plan are consummated, shall be
entitled to be paid the fair value of his shares in accordance with such
provisions.
5. Conditions for Consummation of the Plan and Right of the
Bank to Terminate the Plan Prior to Consummation.
5.1. Conditions for Consummation. The consummation of the
transactions provided for under the Plan is conditioned upon the following:
(a) Approval of the Plan by the Commissioner of the
Department of Banking and Insurance of the State of New Jersey;
A-4
(b) Approval of the Plan by the holders of two-thirds
(2/3) or more of the outstanding shares of Bank Common Stock entitled
to vote; and
(c) Non-objection of the Board of Governors of the
Federal Reserve System to a notification by Bancorp of its proposed
acquisition of Bank.
5.2. Right of Bank to Terminate Plan Prior to the Effective
Date. At any time prior to the Effective Date, the Board of Directors of the
Bank may terminate the Plan if in the judgment of the Board of Directors the
consummation of the Plan is inadvisable for any reason. To terminate the Plan,
the Bank's Board of Directors shall adopt a resolution terminating the Plan and,
in the event such termination occurs after the shareholders of the Bank have
voted on the Plan, promptly give written notice that the Plan has been
terminated to the shareholders of the Bank. Upon the adoption of the Board
resolution, the Plan shall be of no further force or effect and the Bank and
Bancorp shall not be liable to each other, to any shareholder of the Bank or to
any other person by reason of the Plan or the termination thereof. Without
limiting the reasons for which the Bank's Board of Directors may terminate the
Plan, the Board may terminate the Plan if:
(a) the number of shareholders dissenting from the
Plan and demanding payment of the fair value of their shares would in
the judgment of the Board render the Plan inadvisable; or
(b) the Bank or Bancorp fails to receive, or fails to
receive in form and substance satisfactory to the Bank or Bancorp, any
permit, license or qualification from any federal or state authority
required in connection with the consummation of the Plan.
6. Expenses.
The Bank will bear all of the expenses incurred by the Bank
and by Bancorp in connection with the Plan, including, without limiting the
foregoing, all attorneys, accountants, and printing fees and all licensing fees
incurred in connection with the Plan and the formation of Bancorp.
A-5
7. Effective Date.
The Plan shall become effective upon a date selected by the
mutual agreement of the parties hereto (the "Effective Date"). The date so
selected shall be within a reasonable period after the conditions set forth in
Section 5.1 have been complied with and the Bank has received any approvals or
consents without which it might terminate the Plan under Section 5.2. At least
one week prior to the agreed upon Effective Date, the Plan shall be filed with
the New Jersey Department of Banking and Insurance together with a certification
by the President or a Vice President of the Bank that the Bank's shareholders
have approved the Plan and a writing specifying the Effective Date.
IN WITNESS WHEREOF, the Board of Directors of each of
Boardwalk Bank and Boardwalk Bancorp, Inc. have authorized the execution of the
Plan and caused the Plan to be executed as of the date first written above.
BOARDWALK BANK
ATTEST:
By:_______________________________________
__________________________ Michael D. Devlin
Joan B. Ditmars Chairman, President and Chief Executive
Corporate Secretary Officer
BOARDWALK BANCORP, INC.
ATTEST:
By:_______________________________________
__________________________ Michael D. Devlin
Joan B. Ditmars Chairman, President and Chief Executive
Corporate Secretary Officer
A-6
EXHIBIT B
CERTIFICATE OF INCORPORATION OF BOARDWALK BANCORP, INC.
CERTIFICATE OF INCORPORATION
OF
BOARDWALK BANCORP, INC.
ARTICLE 1
Name
----
The name of the corporation is Boardwalk Bancorp, Inc. (herein the
"Corporation").
ARTICLE 2
Registered Office
-----------------
The address of the Corporation's registered office in the State of New
Jersey is 201 Shore Road, Linwood, New Jersey in the County of Atlantic. The
name of the Corporation's registered agent at such address is Michael D. Devlin.
ARTICLE 3
Powers
------
The purpose of the Corporation is to engage in any activity within the
purposes for which corporations may be organized under 14A:2-1 of the New Jersey
Business Corporation Act.
ARTICLE 4
Term
----
The Corporation shall have perpetual existence.
ARTICLE 5
Initial Directors
-----------------
The number of directors constituting the initial board of directors of
the Corporation is three (3) and the names and addresses of the persons who are
to serve as directors until their successors are elected and qualified, are:
B-1
Name Mailing Address
---- ---------------
Michael D. Devlin 201 Shore Road
Linwood, New Jersey 08221
Carol Nugent Harris 201 Shore Road
Linwood, New Jersey 08221
Thomas K. Ritter 201 Shore Road
Linwood, New Jersey 08221
ARTICLE 6
Capital Stock
-------------
The aggregate number of shares of all classes of capital stock which
the Corporation has authority to issue is 12,500,000 shares of common stock,
$5.00 par value per share. The consideration for the issuance of the shares
shall be paid to or received by the Corporation in full before their issuance
and shall not be less than the par value per share.
ARTICLE 7
No Preemptive Rights
--------------------
No holder of any of the shares of any class or series of capital stock
or of options, warrants or other rights to purchase shares of any class or
series of stock or of other securities of the Corporation shall have any
preemptive right to purchase or subscribe for any unissued capital stock of any
class or series, or any unissued bonds, certificates of indebtedness, debentures
or other securities convertible into or exchangeable for stock of any class or
series or carrying any right to purchase stock of any class or series.
ARTICLE 8
Repurchase of Securities
------------------------
The Corporation may from time to time, pursuant to authorization by the
board of directors of the Corporation and without action by the shareholders,
purchase or otherwise acquire shares of capital stock of any class, bonds,
debentures, notes, warrants, evidences of indebtedness, or other securities of
the Corporation in such manner, upon such terms, and in such amounts as the
board of directors shall determine; subject, however, to such limitations or
restrictions, if any, as are contained in the express terms of any class of
securities or imposed by law.
ARTICLE 9
Meetings of Shareholders; No Cumulative Voting
----------------------------------------------
A. Notwithstanding any other provision of this Certificate or the
Bylaws of the Corporation, any action required to be taken or which may be taken
at any annual or special meeting of shareholders of the Corporation may be taken
without a meeting, if all shareholders entitled to vote thereon consent thereto
in writing. Shareholders of the Corporation shall not have the power to take
action by less than unanimous written consent.
B-2
B. Special meetings of the shareholders of the Corporation for any
purpose or purposes may be called at any time by the President of the
Corporation or by a majority of the board of directors of the Corporation, but
such special meetings of the shareholders may not be called by any other person
or persons unless otherwise required by law.
C. Shareholders of the Corporation shall not be entitled to cumulate
votes in the election of directors of the Corporation.
ARTICLE 10
Directors
---------
A. The number of directors of the Corporation shall be such number as
shall be provided from time to time in or in accordance with the Bylaws, which
shall be not less than three (3) or more than twenty-five (25), provided that a
decrease in the number of directors shall not have the effect of shortening the
term of any incumbent director. Vacancies in the board of directors of the
Corporation, however caused, and newly-created directorships, shall be filled by
a vote of a majority of the directors then in office, whether or not a quorum,
and any director so chosen shall hold office for a term expiring at the next
annual meeting of shareholders.
B. The board of directors of the Corporation shall be divided into
three classes of directors which shall be designated Class I, Class II and Class
III. The members of each class shall be elected for a term of three years and
until their successors are elected and qualified. Such classes shall be as
nearly equal in number as the then total number of directors constituting the
entire board of directors shall permit, with the terms of office of all members
of one class expiring each year. At the first annual meeting of shareholders:
directors in Class I shall be elected to hold office for a term expiring at the
first succeeding annual meeting thereafter, directors of Class II shall be
elected to hold office for a term expiring at the second succeeding annual
meeting thereafter, and directors of Class III shall be elected to hold office
for a term expiring at the third succeeding annual meeting thereafter. Subject
to the foregoing, at each annual meeting of shareholders, the successor to a
director whose term shall then expire shall be elected to hold office for a term
expiring at the third succeeding annual meeting and until his or her successor
shall have been duly elected and qualified.
The initial board of directors shall consist of three individuals. The
following individuals divided into the following classes shall serve as
directors until the first annual meeting and until their successors are elected
and qualified:
Class I Class II Class III
------- -------- ---------
Thomas K. Ritter Carol Nugent Harris Michael D. Devlin
B-3
ARTICLE 11
Removal of Directors
--------------------
Notwithstanding any other provision of this Certificate or the Bylaws
of the Corporation, any director or the entire board of directors of the
Corporation may be removed for cause, at any time, by the affirmative vote of
the holders of at least two-thirds of the outstanding shares of capital stock of
the Corporation entitled to vote generally in the election of directors cast at
a meeting of the shareholders called for that purpose. In addition, the board of
directors shall have the power to remove directors for such proper cause as the
board of directors may specify and to suspend directors pending a final
determination that cause exists for removal.
ARTICLE 12
Shareholder Approval of Certain Transactions
--------------------------------------------
Any merger, consolidation, share exchange, liquidation, or dissolution
of the Corporation or any action that would result in the sale or other
disposition of all or substantially all of the assets of the Corporation shall
require the affirmative vote of the holders of at least two-thirds (?) of the
outstanding shares of capital stock of the Corporation. The provisions of this
Article 12 shall not apply to any transaction referred to in the preceding
sentence, and such transaction shall require only such shareholder vote, if any,
as would be required by applicable law, if such transaction is approved in
advance by at least two-thirds (?) of the members of the board of directors of
the Corporation.
ARTICLE 13
Elimination of Directors' and Officers' Liability
-------------------------------------------------
Directors and officers of the Corporation shall have no personal
liability to the Corporation or its shareholders for damages for breach of any
duty owed to the Corporation or its shareholders, provided that this Article 13
shall not relieve a director or officer from liability for any breach of duty
based upon an act or omission (i) in breach of the director's or officer's duty
of loyalty to the Corporation or its shareholders, (ii) not in good faith or
involving a knowing violation of law, or (iii) resulting in receipt by such
person of an improper personal benefit. Any repeal or modification of this
Article 13 by the shareholders of the Corporation shall not adversely affect any
right or protection of a director or officer of the Corporation hereunder or
otherwise with respect to any act or omission occurring before such repeal or
modification is effective. If the New Jersey Business Corporation Act is amended
to further limit the personal liability of directors and officers, then such
liability will be limited to the fullest extent permitted under the law.
B-4
EXHIBIT C
BYLAWS OF BOARDWALK BANCORP, INC.
ARTICLE 14
Amendment of Bylaws
-------------------
The board of directors of the Corporation is expressly authorized to
make, alter, amend and repeal the Bylaws of the Corporation by a vote of
two-thirds of the board of directors present at a legal meeting held in
accordance with the provisions of the Bylaws. Notwithstanding any other
provision of this Certificate or the Bylaws of the Corporation (and
notwithstanding the fact that some lesser percentage may be specified by law),
the Bylaws shall not be made, repealed, altered, amended or rescinded by the
shareholders of the Corporation except by the vote of the holders of not less
than two-thirds of the outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of directors cast at a
meeting of the shareholders called for that purpose (provided that notice of
such proposed action is included in the notice of such meeting).
ARTICLE 15
Amendment of Certificate of Incorporation
------------------------------------------
The Corporation reserves the right to repeal, alter, amend or rescind
any provision contained in this Certificate in the manner now or hereafter
prescribed by law, and all rights conferred on shareholders herein are granted
subject to this reservation. Notwithstanding the foregoing, the provisions set
forth in Articles 7, 9, 10, 11, 12, 13, 14 and this Article 15 of this
Certificate may not be repealed, altered, amended or rescinded in any respect
unless such action is approved by the affirmative vote of the holders of not
less than two-thirds of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors cast at a
meeting of the shareholders called for that purpose (provided that notice of
such proposed action is properly included in the notice of such meeting).
ARTICLE 16
Incorporator
------------
The name and address of the incorporator is as follows:
Name Mailing Address
---- ---------------
Michael D. Devlin 201 Shore Road
Linwood, New Jersey 08221
------------------------------
IN WITNESS WHEREOF, this Certificate of Incorporation has been duly
executed this 22nd day of February 2006.
-------------------------------
Michael D. Devlin
C-1
EXHIBIT D
SECTIONS 140 TO 145 OF THE NEW JERSEY BANKING ACT OF 1948
(RIGHTS OF DISSENTING SHAREHOLDERS)
17:9A-140. Rights of dissenting stockholders: settlement by agreement
A. A stockholder who:
(1) is entitled to vote at the meeting of stockholders prescribed by
section 137; and who
(2) serves a written notice of dissent from the merger agreement, in
the manner, at the place, and within the time prescribed in
subsections B and C of this section; and who
(2) does not vote to approve the merger agreement at the meeting
prescribed by section 137, or at any adjournment thereof,
may, within thirty days after the filing of the agreement in the
department as provided by section 137, serve a demand upon the receiving bank at
its principal office, for the payment to him of the value of his shares of
stock. The receiving bank may, within ten days after the receipt of such demand,
offer to pay the stockholder a sum for his shares, which, in the opinion of the
board of directors of the receiving bank, does not exceed the amount which would
be paid upon such shares if the business and assets of the bank whose stock such
stockholder holds were liquidated on the day of the filing of the agreement
pursuant to section 137.
B. Service of the notice of dissent prescribed by paragraph (2) of
subsection A of this section shall be made at the principal office of the bank
whose stock is held by the dissenting stockholder, and shall be made not later
than the third day prior to the day fixed for the meeting of the stockholders of
such bank pursuant to section 137.
C. Service of the notice of dissent and of the demand for payment
prescribed by this section may be made by registered mail or personally by the
dissenting stockholder or his agent.
17:9A-141. Appointment of appraisers
If a stockholder fails to accept the sum offered for his shares
pursuant to section 140, he may, within three weeks after the receipt by him of
the bank's offer of payment, or, if no offer is made by the bank, within three
weeks after the date upon which his demand was served upon the bank as specified
in section 140, institute an action in the Superior Court for the appointment of
a board of three appraisers to determine the value of his shares of stock as of
the day of the filing of the merger agreement pursuant to section 137. The court
may proceed in the action in a summary manner or otherwise. Any other
stockholder who has the right to institute a similar action may intervene. The
court shall, in respect to any one bank, appoint a single board of three
appraisers to determine the value of the shares of all stockholders of such bank
who are parties to such action.
D-1
17:9A-142. Duties of appraisers; objections; compensation; vacancies
A. The appraisers shall be sworn to the faithful discharge of their
duties. They shall meet at such place or places, and shall give such notice of
their meetings as the court may prescribe. The bank and each stockholder who is
a party to the action instituted pursuant to section 141, may be represented by
attorneys in the proceedings before such appraisers, and may present such
evidence to them as shall be material to the issue. The determination of any two
of the appraisers shall control. Upon the conclusion of their deliberations, the
appraisers shall file in the Superior Court a report and appraisal of the value
of the shares of stock, and shall mail a copy thereof to the bank and to each
stockholder who is a party to said action.
B. The bank and each stockholder who is a party to said action shall
have ten days after the filing of the report and appraisal within which to
object thereto in the Superior Court. In the absence of any objections, the
report and appraisal shall be binding upon the bank and upon such stockholders,
and the bank shall pay each such stockholder the value of his shares, as
reported by the appraisers, with interest from the date of the filing of the
merger agreement pursuant to section 137, at such rate, not in excess of the
legal rate, as shall be fixed by the appraisers. If objections are made, the
court shall make such order or judgment thereon as shall be just.
C. The Superior Court shall fix the compensation of the appraisers,
which shall be paid by the bank, and shall be vested with full jurisdiction over
all matters arising out of any action instituted pursuant to section 141. In the
case of a vacancy in the board of appraisers, the Superior Court shall, on its
own motion, or upon motion of a stockholder, or of the receiving bank, fill such
vacancy.
17:9A-143. Assignment of stock to bank
Upon payment by the bank of the value of shares of stock pursuant to
this article, the holder thereof shall assign such shares to the bank.
17:9A-144. Effect of stockholder's failure to act
A stockholder who fails to act pursuant to sections 140 and 141 shall
be forever barred from bringing any action to enforce his right to be paid the
value of his shares in lieu of continuing his status as a stockholder in the
receiving bank.
D-2
EXHIBIT E
[GRAPHIC OMITTED]
BOARDWALK BANCORP, INC.
EMPLOYEE STOCK PURCHASE PLAN
EFFECTIVE MAY 1, 2006
(AS APPROVED BY SHAREHOLDERS ON APRIL 27, 2006)
ARTICLE I
PURPOSE AND SCOPE OF THE PLAN
Section 1.1 PURPOSE.
The Boardwalk Bancorp, Inc. Employee Stock Purchase Plan is
intended to encourage employee participation in the ownership and economic
progress of the Company. The Plan is intended to qualify as an "employee stock
purchase plan" under Code Section 423 and to be exempt from the application and
requirements of Code Section 409A, and shall be construed accordingly.
Section 1.2 DEFINITIONS.
Unless the context clearly indicates otherwise, the following
terms have the meaning set forth below:
"Board of Directors" means the board of directors of the
Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the Compensation Committee of the Board of
Directors, which shall administer the Plan as provided in Section 1.3.
"Common Stock" means the common stock of the Company, par
value $5.00 per share.
"Company" means Boardwalk Bancorp, Inc.
"Compensation" means an Employee's salary or hourly base rate
of pay, as the case may be, and commissions but excludes overtime pay, bonuses,
disability payments, workers' compensation payments, and any other payment in
excess of normal salary or hourly pay, received by an Employee for services
performed for the Company or a Subsidiary during an Option Period. Any
adjustments to Compensation shall be made on the next available Pay Date.
"Continuous Service" means the period of time, uninterrupted
by a termination of employment, that an Employee has been employed by the
Company or a Subsidiary, or both, immediately preceding the first day of the
Subscription Period in which such Employee wishes to participate in the Plan.
Such period of time shall include any leave of absence permitted or required to
be taken into account by applicable Treasury Regulations.
"Employee" means any common law employee of the Company or a
Subsidiary.
"Enrollment Period" means each period of each Plan Year from
February 1 through February 28 (or February 29, if the Plan Year is a leap
year), from May 1 though May 31, from August 1 through August 31, and from
November 1 through November 30.
"Exercise Date" means each Pay Date.
E-1
"Fair Market Value" of a share of Common Stock on any given
date means the closing sale price for such shares on that date as listed on the
New York Stock Exchange (or any national securities exchange or quotation system
on which the Common Stock is then listed or reported). If a closing sale price
for the Common Stock for the given date is not listed or reported, or if there
is none, the Fair Market Value shall be equal to the closing sale price on the
nearest trading day preceding such date. Notwithstanding the foregoing, if, in
the Board of Directors' judgment, there are unusual circumstances or occurrences
under which the otherwise determined Fair Market Value of the Common Stock does
not represent the actual fair value thereof, then the Fair Market Value of such
Common Stock shall be determined by the Board of Directors on the basis of such
prices or market quotations as it shall deem appropriate and fairly reflective
of the then fair value of such Common Stock.
"Human Resources Department" means the department responsible
for personnel matters pertaining to the Employees.
"Leave of Absence" means, for purposes of participation in the
Plan, an Employee's sick leave or other leave of absence approved by the
Company, except that where the period of leave exceeds 3 months and the
Employee's right to reemployment is not guaranteed by statute or by contract,
(i) the Employee shall not be deemed on a Leave of Absence as of the 1st day
following the end of such three month period, (ii) such Employee's employment
relationship with the Company shall be deemed terminated, and (iii) such
Employee's right to participate in the Plan and to purchase Common Stock
hereunder shall terminate.
"Offering Date" means the day beginning at 12:01 a.m. on the
Saturday following each Pay Date.
"Option Period" means each period beginning on an Offering
Date and ending on the next succeeding Exercise Date. The initial Option Period
shall begin on July 1, 2006, subject to the Plan being approved by shareholders
of the Company; provided that the Board may designated a later initial Option
Period.
"Option Price" means the purchase price of a share of Common
Stock hereunder as provided in Section 3.1.
"Participant" means any Employee who (i) is eligible to
participate in the Plan under Section 2.1 and (ii) elects to participate.
"Pay Date" means the Company's regularly scheduled bi-weekly
date in which Employees receive their paychecks.
"Plan" means the Boardwalk Bancorp, Inc. Employee Stock
Purchase Plan, as the same may be amended from time to time.
"Plan Year" means the 12-consecutive-month period beginning on
January 1st and ending on the following December 31st.
E-2
"Stock Purchase Account" or "Account" means an account
established and maintained in the name of each Participant to record the dollar
amounts accumulated on such Participant's behalf each Option Period.
"Stock Purchase Agreement" means the form prescribed by the
Committee that must be executed by an Employee who elects to participate in the
Plan. The proper execution and filing of such form shall constitute the grant of
an option from time to time to the Employee in accordance with the terms of the
Plan and the terms of such form.
"Subscription Period" means each period in each Plan Year (i)
beginning on the pay period in which each January 1 falls and continuing through
each March 31; (ii) beginning on the pay period in which each April 1 falls and
continuing through each June 30; (iii) beginning on the pay period in which each
July 1 falls and continuing through September 30; and (iv) beginning on the pay
period in which each October 1 falls and continuing through December 31.
"Subsidiary" means any corporation in which the Company owns,
directly or indirectly, 50 percent or more of the total combined voting power of
all classes of stock as determined pursuant to Code Section 424(f).
Section 1.3 ADMINISTRATION OF PLAN.
The Plan shall be administered by the Committee. Subject to
direction by the Board of Directors and the express provisions of this Plan, the
Committee shall be authorized to prescribe, amend, and rescind rules and
regulations relating to the Plan and the Committee's administration thereof; to
interpret the Plan; to fix the terms of an offering under the Plan; to prescribe
the maximum percentage of payroll deductions permitted for a Subscription
Period; to restrict participation in the Plan consistent with any requirement of
law or regulation; and to make all other determinations necessary to the
administration of the Plan, including appointment of individuals to facilitate
the day-to-day operation thereof. The Committee's determinations as to the
interpretation and operation of the Plan shall be final and conclusive.
Section 1.4 EFFECTIVE DATE OF PLAN.
The effective date of the Plan is May 1, 2006, subject to the
Plan being approved by shareholders of the Company within 12 months before or
after the adoption of the Plan by the Board of Directors.
Section 1.5 TERMINATION OF PLAN.
The Board of Directors shall have the right to terminate the
Plan at any time. Upon any such termination, the dollar amount, if any, in each
Participant's Account shall be distributed to such Participant.
E-3
ARTICLE II
PARTICIPATION
Section 2.1 ELIGIBILITY.
Each Employee, who on an Offering Date (i) will have at least
six months of Continuous Service, (ii) whose customary employment with the
Company or a subsidiary is more than five months in a calendar year, and (iii)
whose customary employment with the Company or a Subsidiary is 20 hours or more
per week, may become a Participant by executing and filing with the Human
Resources Department a Stock Purchase Agreement during an Enrollment Period.
Such participation shall begin on the next Subscription Period following the
Human Resources Department's receipt of the Participant's properly completed
Stock Purchase Agreement. Any election to participate shall be effective subject
to the Company's Code of Conduct and Ethics or similar policy that may be in
effect at the time of such election. An election to participate shall continue
in effect until termination of participation occurs in accordance with Article
V.
Section 2.2 PAYROLL DEDUCTIONS.
Payment for shares of Common Stock purchased under the Plan
shall be made solely by authorized payroll deduction from each payment of
Compensation in accordance with the Participant's Stock Purchase Agreement.
Deductions from payroll shall be expressed as a percentage of Compensation
(determined on the first day of each Subscription Period) no greater than the
percentage set by the Committee, but shall not be less than 1% of such
Participant's Compensation, per Option Period. The maximum such percentage that
may be fixed by the Committee shall be 15%. A Participant may not increase or
decrease the percentage deduction during a Subscription Period (other than to
withdraw or terminate participation pursuant to Article V hereunder). Subject to
the Company's Code of Conduct and Ethics or similar policy that may be in effect
at the time of such election, however, a Participant may change the percentage
deduction for any subsequent Subscription Period by filing notice thereof with
the Human Resources Department during the time period described in Section 2.1
for filing a Stock Purchase Agreement. Amounts deducted from a Participant's
Compensation pursuant to this section shall be credited to such Participant's
Account.
Section 2.3 TRANSFER OF PAYROLL DEDUCTIONS.
All payroll deductions withheld by a Subsidiary under the Plan
shall be immediately transferred to the Company.
Section 2.4 LEAVE OF ABSENCE.
If a Participant goes on a Leave of Absence, such
Participant's participation in the Plan shall continue provided that such
Participant continues to receive Compensation. If such Participant ceases to
receive Compensation while on a Leave of Absence, such Participant's
participation shall automatically terminate.
E-4
ARTICLE III
PURCHASE OF SHARES
Section 3.1 OPTION PRICE.
The Option Price shall not be less than 85%, nor more than
100%, as set by the Committee from time to time, of the Fair Market Value of a
share of Common Stock on a relevant Exercise Date.
Section 3.2 PURCHASE OF SHARES.
On each Exercise Date, the amount in a Participant's Stock
Purchase Account shall be charged with the aggregate Option Price of the largest
number of shares of Common Stock (including fractional shares) that can be
purchased with such amount.
Section 3.3 LIMITATIONS ON PURCHASE.
No Participant shall purchase Common Stock hereunder in any
calendar year having an aggregate Fair Market Value, determined on each Offering
Date, of more than $25,000, provided that any such purchase shall not exceed the
limitations imposed by Code Section 423(b)(8). Further, no Participant shall
purchase Common Stock hereunder if, by reason of such purchase, such Participant
shall be deemed to possess five percent or more of the total combined voting
power or value of all classes of stock of the Company or a Subsidiary. For
purposes of the preceding sentence, the rules promulgated pursuant to Code
Section 424(d) shall apply and Common Stock that a Participant may purchase
under outstanding options granted pursuant to any plan of the Corporation or a
Subsidiary shall be treated as stock owned by the Participant.
Section 3.4 RESTRICTION ON TRANSFERABILITY.
Rights to purchase shares hereunder shall be exercisable only
by the Participant. Such rights shall not be transferable except by will and the
laws of descent and distribution.
ARTICLE IV
PROVISIONS RELATING TO COMMON STOCK
Section 4.1 COMMON STOCK RESERVED.
Except as provided in Section 4.2, no more than 433,155 shares
of Common Stock may be sold pursuant to options granted under the Plan. Such
number shall be subject to adjustments effected in accordance with Section 4.2.
Such numbers of shares authorized under the Plan shall be subject to adjustment
effected in accordance with Section 4.2.
Section 4.2 ADJUSTMENT FOR CHANGES IN COMMON STOCK.
(i) In the event that the shares of Common Stock of the
Company as presently constituted, shall be changed into or exchanged for a
different number or kind of shares of stock or other securities of the Company
or of another corporation (whether by reason of merger, consolidation,
recapitalization, reclassification, split-up, combination of shares or
otherwise) or if the number of such shares of Common Stock shall be increased or
E-5
decreased through the payment of a stock dividend, stock split, or reverse stock
split, then, subject to the provisions of subsection (iii) below, there shall be
substituted for or added to each share of Common Stock that was theretofore
appropriated, or that thereafter may become subject to an offering under the
Plan, the number and kind of shares of stock or other securities into which each
outstanding share of the Common Stock shall be so changed or for which each such
share shall be exchanged or to which such share shall be entitled, as the case
may be. Outstanding Stock Purchase Agreements shall be deemed to be amended as
to price and other terms, as may be necessary to appropriately reflect the
foregoing events.
(ii) If there shall be any other change in the number or kind
of the outstanding shares of Common Stock, or of any stock or other securities
in which such stock shall have been changed or for which it shall have been
exchanged, and if a majority of the disinterested members of the Board of
Directors shall, in its sole discretion, determine that such change equitably
requires an adjustment in any offering that was theretofore made or that may
thereafter be made under the Plan, that such adjustment shall be made in
accordance with such determination.
(iii) An offering pursuant to the Plan shall not affect in any
way the right or power of the Company to make adjustments or reclassifications,
reorganizations or changes in its capital or business structure, to merge, to
consolidate, to dissolve, to liquidate, or to sell or transfer all or any part
of its business or assets.
Section 4.3 INSUFFICIENT SHARES.
If the aggregate funds available for the purchase of Common
Stock on any Exercise Date would cause an issuance of shares in excess of the
number provided for in Section 4.1, (i) the Committee shall proportionately
reduce the number of shares that would otherwise be purchased by each
Participant in order to eliminate such excess, (ii) any cash remaining in each
Participant's Stock Purchase Account shall be distributed to such Participant at
the next available Pay Date, and (iii) the Plan shall automatically terminate
immediately after such Exercise Date.
Section 4.4 CONFIRMATION OF PURCHASES; REGISTRATION OF SHARES.
Each Participant shall be provided with a quarterly written
statement indicating the number of shares of Common Stock purchased under the
Plan by the Participant in such quarter, the aggregate number shares of Common
Stock accumulated under the Plan by the Participant, and other relevant
information with respect to the Participant's participation in the Plan. All
shares purchased shall be credited to such Participant, but shall initially be
registered in the name of the Company's nominee, as agent for the Participant.
Such nominee will hold the Participant's share certificates until such time as
such Participant's participation in the Plan terminates or such Participant
files a written request with the nominee to have a certificate or certificates
issued in such Participant's name. Except in the case of death, any certificate
issued to a Participant must initially be issued in the Participant's name alone
or in such Participant's name and another as joint tenants with right of
survivorship. Registration of any shares following the death of a Participant
will be subject to the same rules as are then applicable to decedent
shareholders generally.
E-6
Section 4.5 RIGHTS AS SHAREHOLDERS.
The shares of Common Stock purchased by a Participant on an
Exercise Date shall, for all purposes, be deemed to have been issued and sold at
the close of business on such Exercise Date. Participants for whom shares have
been purchased shall be entitled to all rights of a shareholder with respect to
such shares, including the right to receive dividends and the right to vote. The
Company will take such steps as may be necessary to ensure that each Participant
whose shares are held in name of the Company's nominee enjoys such rights.
Section 4.6 CORPORATE REORGANIZATIONS, LIQUIDATION, ETC.
In the event of any corporate merger, consolidation,
acquisition of property or stock, separation, reorganization, or liquidation,
provision may be made for the substitution of a new option for an old option, or
an assumption of an old option, by an employer corporation or a corporation
related to such corporation. Any provision for such substitution or assumption
shall be subject to the limitations and provisions of Code Section 424.
ARTICLE V
TERMINATION OF PARTICIPATION
Section 5.1 WITHDRAWAL.
Subject to the Company's Code of Conduct and Ethics or similar
policy that may be in effect at the time, a Participant may withdraw from the
Plan at any time by filing notice of withdrawal with the Company's nominee prior
to an Offering Date. Upon filing proper notice, participation in the Plan will
cease effective the following Offering Date. Any Participant who withdraws from
the Plan may again become a Participant by satisfying the eligibility
requirements and filing a Stock Purchase Agreement as set forth in Section 2.1.
Section 5.2 TERMINATION OF ELIGIBILITY.
If a Participant ceases to be employed by the Company or a
Subsidiary or otherwise becomes ineligible to participate in the Plan as set
forth in Section 2.1, such Participant's participation in the Plan shall
thereupon automatically terminate. In such event, the dollar amount, if any, in
such Participant's Stock Purchase Account shall be distributed to such
Participant (or in the case of death, to such Participant's designated
beneficiary(ies)) and no further shares will be purchased on such Participant's
behalf. For purposes of this section, a Participant's participation in the Plan
will not automatically terminate if such Participant becomes an individual on a
Leave of Absence permitted or required to be taken into account by applicable
Treasury Regulations or other law. Any Participant whose participation in the
Plan is terminated pursuant to this Section may again become a Participant by
satisfying the eligibility requirements and by executing and filing a Stock
Purchase Agreement as set forth in Section 2.1.
Section 5.3 NO INTEREST.
No interest will be credited or paid on cash balances in a
Participant's Stock Purchase Account.
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ARTICLE VI
GENERAL PROVISIONS
Section 6.1 TAX WITHHOLDING; INFORMATION RETURNS.
Each Participant shall be deemed to have consented to any
income tax withholding that may hereafter be required by reason of such
Participant's participation in the Plan or the disposition of, or payment of any
dividends on, shares acquired by such Participant under the Plan. The proper
officers of the Company and each Subsidiary shall prepare and, where required,
timely file such tax information returns and other notices as may be required by
law from time to time.
Section 6.2 NOTICES.
Any notice that an Employee files pursuant to the Plan shall
be made on forms prescribed by the Committee and shall be effective as soon as
administratively possible after such notice is received by the Human Resources
Department or by the Company's nominee, as the case may be.
Section 6.3 CONDITION OF EMPLOYMENT.
Neither the creation of the Plan, nor participation therein,
shall be deemed to create any right of continued employment or in any way affect
the right of the Company or a Subsidiary to terminate an Employee.
Section 6.4 AMENDMENT OF THE PLAN.
The Board of Directors may at any time, and from time to time,
amend the Plan in any respect, except, that without approval of the Company's
shareholders, no amendment may (i) increase the aggregate number of shares
permitted to be reserved by the Board of Directors under the Plan other than as
provided in Section 4.2, (ii) materially change the Plan benefits provided for
herein, (iii) change the definition of a Subsidiary, or (iv) materially change
the eligibility requirements for Employees. Any amendment of the Plan must be
made in accordance with applicable provisions of the Code.
Section 6.5 APPLICATION OF FUNDS.
All funds received by the Company by reason of a purchase of
shares hereunder may be used for any corporate purpose.
Section 6.6 LEGAL RESTRICTIONS.
The Company shall not be obligated to sell shares of Common
Stock hereunder if counsel to the Company determines that such sale would
violate any applicable law or regulation.
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Section 6.7 NUMBER.
Whenever used herein, singular words shall include the plural,
and vice versa, as the context requires.
Section 6.8 GOVERNING LAW.
Except to the extent preempted by Federal law, the Plan and
all rights and obligations thereunder shall be construed and enforced in
accordance with the domestic internal law of the State of New Jersey.
E-9
EXHIBIT F
BOARDWALK BANCORP, INC.
2006 STOCK INCENTIVE PLAN
EFFECTIVE MAY 1, 2006
(AS APPROVED BY SHAREHOLDERS ON APRIL 27, 2006)
BOARDWALK BANCORP, INC.
2006 STOCK INCENTIVE PLAN
TABLE OF CONTENTS
ARTICLE PAGE
- ------- ----
ARTICLE 1. PURPOSE OF THE PLAN; TYPES OF AWARDS..............................................F-1
ARTICLE 2. DEFINITIONS.......................................................................F-1
ARTICLE 3. ADMINISTRATION....................................................................F-5
ARTICLE 4. COMMON STOCK SUBJECT TO THE PLAN..................................................F-6
ARTICLE 5. ELIGIBILITY.......................................................................F-7
ARTICLE 6. STOCK OPTIONS IN GENERAL..........................................................F-7
ARTICLE 7. TERM, VESTING AND EXERCISE OF OPTIONS.............................................F-9
ARTICLE 8. EXERCISE OF OPTIONS FOLLOWING TERMINATION OF EMPLOYMENT OR SERVICE...............F-10
ARTICLE 9. RESTRICTED STOCK.................................................................F-11
ARTICLE 10. ADJUSTMENT PROVISIONS...........................................................F-12
ARTICLE 11. GENERAL PROVISIONS..............................................................F-13
ARTICLE 1. PURPOSE OF THE PLAN; TYPES OF AWARDS
1.1 Purpose. The Boardwalk Bancorp, Inc. 2006 Stock Incentive Plan is
intended to provide selected employees and non-employee directors of Boardwalk
Bancorp, Inc. and its Subsidiaries with an opportunity to acquire Common Stock
of the Corporation. The Plan is designed to help the Corporation attract,
retain, and motivate employees and non-employee directors to make substantial
contributions to the success of the Corporation's business and the businesses of
its Subsidiaries. Awards will be granted under the Plan based, among other
things, on a participant's level of responsibility and performance.
1.2 Authorized Plan Awards. Incentive Stock Options, Nonqualified Stock
Options, and Restricted Stock may be awarded within the limitations of the Plan
herein described.
ARTICLE 2. DEFINITIONS
2.1 "Agreement." A written or electronic agreement between the Corporation
and a Participant evidencing the grant of an Award. A Participant may be issued
one or more Agreements from time to time, reflecting one or more Awards.
2.2 "Adoption Date." The date on which the Board adopts this Plan subject
to the approval of the Corporation's shareholders.
2.3 "Award." The grant of a Stock Option or Restricted Stock.
2.4 "Board." The Board of Directors of the Corporation.
2.5 "Change in Control." Except as otherwise provided in an Agreement, the
first to occur of any of the following events:
(a) any "Person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), except for any of the Corporation's employee benefit
plans, or any entity holding the Corporation's voting securities for, or
pursuant to, the terms of any such plan (or any trust forming a part
thereof) (the "Benefit Plan(s)"), is or becomes the beneficial owner,
directly or indirectly, of the Corporation's securities representing 40% or
more of the combined voting power of the Corporation's then outstanding
securities other than pursuant to a transaction excepted in Clause (d);
(b) a binding written agreement is executed providing for a sale,
exchange, transfer or other disposition of all or substantially all of the
assets of the Corporation to another entity, except to an entity controlled
directly or indirectly by the Corporation;
(c) the shareholders of the Corporation approve a merger,
consolidation, or other reorganization of the Corporation, unless:
(i) under the terms of the agreement providing for such merger,
consolidation or reorganization, the shareholders of the Corporation
immediately before such merger, consolidation or reorganization, will
own, directly or indirectly immediately following such merger,
consolidation or reorganization, at least 51% of the combined voting
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power of the outstanding voting securities of the Corporation
resulting from such merger, consolidation or reorganization (the
"Surviving Corporation") in substantially the same proportion as their
ownership of the voting securities immediately before such merger,
consolidation or reorganization;
(ii) under the terms of the agreement providing for such merger,
consolidation or reorganization, the individuals who were members of
the Board immediately prior to the execution of such agreement will
constitute at least 51% of the members of the board of directors of
the Surviving Corporation after such merger, consolidation or
reorganization; and
(iii) based on the terms of the agreement providing for such
merger, consolidation or reorganization, no Person (other than (A) the
Corporation or any Subsidiary of the Corporation, (B) any Benefit
Plan, (C) the Surviving Corporation or any Subsidiary of the Surviving
Corporation, or (D) any Person who, immediately prior to such merger,
consolidation or reorganization had beneficial ownership of 40% or
more of the then outstanding voting securities) will have beneficial
ownership of 40% or more of the combined voting power of the Surviving
Corporation's then outstanding voting securities;
(d) a plan of liquidation or dissolution of the Corporation, other
than pursuant to bankruptcy or insolvency laws, is adopted;
(e) during any period of two consecutive years, individuals, who at
the beginning of such period, constituted the Board cease for any reason to
constitute at least a majority of the Board unless the election, or the
nomination for election by the Corporation's shareholders, of each new
director was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of the period; or
(f) any other event that is at any time irrevocably designated as a
"Change in Control" for purposes of this Plan by resolution adopted by a
majority of the non-employee directors of the Board.
2.6 "Code." The Internal Revenue Code of 1986, as amended.
2.7 "Code of Conduct." The policies and procedures related to employment of
employees by the Corporation or a Subsidiary set forth in the Corporation's
employee handbook. The Code of Conduct may be amended and updated at any time.
The term "Code of Conduct" shall also include any other policy or procedure that
may be adopted by the Corporation or a Subsidiary and communicated to Employees
and Non-Employee Directors of the Corporation or a Subsidiary.
2.8 "Committee." The Compensation Committee of the Board, or such other
Committee designated by the Board to perform similar functions.
2.9 "Common Stock." The common stock of the Corporation (par value $1.00
per share) as described in the Corporation's Certificate of Incorporation, or
such other stock as shall be substituted therefor.
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2.10 "Corporation." Boardwalk Bancorp, Inc., a New Jersey corporation.
2.11 "Employee." Any common law employee of the Corporation or a
Subsidiary. An Employee does not include any individual who: (i) does not
receive payment for services directly from the Corporation's or a Subsidiary's
payroll; (ii) is employed by an employment agency that is not a Subsidiary; or
(iii) who renders services pursuant to a written arrangement that expressly
provides that the service provider is not eligible for participation in the
Plan, regardless if such person is later determined by the Internal Revenue
Service or a court of law to be a common law employee.
2.12 "Exchange Act." The Securities Exchange Act of 1934, as amended.
2.13 "Incentive Stock Option." A Stock Option intended to satisfy the
requirements of Code Section 422(b).
2.14 "Non-Employee Director." A member of the Board or of the board of
directors of a Subsidiary who is not an Employee.
2.15 "Nonqualified Stock Option." A Stock Option that does not satisfy the
requirements of Code Section 422(b).
2.16 "Optionee." A Participant who is granted a Stock Option pursuant to
the provisions of the Plan.
2.17 "Participant." An Employee or Non-Employee Director to whom an Award
has been granted and remains outstanding.
2.18 "Performance Criteria." Any objective determination based on one or
more of the following areas of performance of the Corporation, a Subsidiary, or
any division, department or group of either which includes, but is not limited
to: (a) earnings, (b) cash flow, (c) revenue, (d) financial ratios, (e) market
performance, (f) shareholder return, (g) operating profits (including earnings
before interest, taxes, depreciation and amortization), (h) earnings per share,
(i) return on assets, (j) return on equity, (k) return on investment, (l) stock
price, (m) asset quality, (n) expense reduction, (o) systems conversion, (p)
special projects as determined by the Committee, and (q) acquisition integration
initiatives. Performance Criteria shall be established by the Committee prior to
the issuance of a Performance Grant.
2.19 "Performance Goal." One or more goals established by the Committee,
with respect to an Award intended to constitute a Performance Grant, that relate
to one or more Performance Criteria. A Performance Goal shall relate to such
period of time, not less than one year (unless coupled with a vesting schedule
of at least one year) or more than five years, as may be specified by the
Committee at the time of the awarding of a Performance Grant.
2.20 "Performance Grant." An Award, the vesting or receipt without
restriction of which, is conditioned on the satisfaction of one or more
Performance Goals.
2.21 "Plan." The Boardwalk Bancorp, Inc. 2006 Stock Incentive Plan.
F-3
2.22 "Restricted Stock." An award of Common Stock pursuant to the
provisions of the Plan, which award is subject to such restrictions and other
conditions, including achievement of one or more performance goals, as may be
specified by the Committee at the time of such award.
2.23 "Retirement." The termination of a Participant's employment or service
as a Non-Employee Director following the first day of the month coincident with
or next following attainment of age 65.
2.24 "Securities Act." The Securities Act of 1933, as amended.
2.25 "Stock Option" or "Option." A grant of a right to purchase Common
Stock pursuant to the provisions of the Plan.
2.26 "Subsidiary." A subsidiary corporation, as defined in Code Section
424(f), that is a subsidiary of the Corporation.
2.27 "Termination or Dismissal For Cause." Termination of an Employee by
the Corporation or a Subsidiary or dismissal of a Non-Employee Director from the
Board after:
(a) any government regulatory agency recommends or orders in writing
that the Corporation or a Subsidiary terminate the employment of such
Employee or service as a Non-Employee Director or relieve him or her of his
or her duties;
(b) such Employee or Non-Employee Director is convicted of or enters a
plea of guilty or nolo contendere to a felony, a crime of falsehood, or a
crime involving fraud or moral turpitude, or the actual incarceration of
the Employee or Non-Employee Director for a period of 45 consecutive days;
(c) a determination by the Committee that such Employee willfully
failed to follow the lawful instructions of the Board or any officer of the
Corporation or a Subsidiary after such Employee's receipt of written notice
of such instructions, other than a failure resulting from the Employee's
incapacity because of physical or mental illness;
(d) a determination by the Committee that the willful or continued
failure by such Employee or Non-Employee Director to substantially and
satisfactorily perform his duties with the Corporation or a Subsidiary
(other than any such failure resulting from the Employee or Non-Employee
Director being "disabled" (within the meaning of the Corporation's Benefit
Plans or group long-term disability policy) or as a result of physical or
mental illness), within a reasonable period of time after a demand for
substantial performance or notice of lack of substantial or satisfactory
performance is delivered to the Employee or Non-Employee Director, which
demand identifies the manner in which the Employee or Non-Employee Director
has not substantially or satisfactorily performed his or her duties; or
(e) a determination by the Committee that such Employee or
Non-Employee Director has failed to conform to the Corporation's Code of
Conduct in any material respect.
For purposes of the Plan, no act, or failure to act, on a Employee's or
Non-Employee Director's part shall be deemed "willful" unless done, or omitted
to be done, by such Employee or Non-Employee Director not in good faith and
without reasonable belief that such Employee's or Non-Employee Director's action
or omission was in the best interest of the Corporation or a Subsidiary.
F-4
ARTICLE 3. ADMINISTRATION
3.1 The Committee. The Plan shall be administered by the Committee, which
Committee shall be composed of two or more members of the Board, all of whom are
(a) "non-employee directors" as such term is defined under the rules and
regulations adopted from time to time by the Securities and Exchange Commission
pursuant to Section 16(b) of the Exchange Act, and (b) "outside directors"
within the meaning of Code Section 162(m). The Board may from time to time
remove members from, or add members to, the Committee. Vacancies on the
Committee, however caused, shall be filled by the Board.
3.2 Powers of the Committee.
(a) The Committee shall be vested with full authority to make such
rules and regulations as it deems necessary or desirable to administer the
Plan and to interpret the provisions of the Plan. Any determination,
decision, or action of the Committee in connection with the construction,
interpretation, administration, or application of the Plan shall be final,
conclusive, and binding upon all Participants and any person claiming under
or through a Participant, unless otherwise determined by the Board.
(b) Subject to the terms, provisions and conditions of the Plan and
subject to review and approval by the Board, the Committee shall have
exclusive jurisdiction to:
(i) determine and select the Employees and Non-Employee Directors
to be granted Awards (it being understood that more than one Award may
be granted to the same person);
(ii) determine the number of shares subject to each Award;
(iii) determine the date or dates when the Awards will be
granted;
(iv) determine the exercise price of shares subject to an Option
in accordance with Article 6;
(v) determine the date or dates when an Option may be exercised
within the term of the Option specified pursuant to Article 7;
(vi) determine whether an Option constitutes an Incentive Stock
Option or a Nonqualified Stock Option;
(vii) determine the Performance Criteria and establish
Performance Goals with respect thereto, if any, to be applied to an
Award; and
(viii) prescribe the form, which shall be consistent with the
Plan document, of the Agreement evidencing any Awards granted under
the Plan.
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3.3 Liability. No member of the Board or the Committee shall be liable for
any action or determination made in good faith by the Board or the Committee
with respect to this Plan or any Awards granted under this Plan.
3.4 Establishment and Certification of Performance Goals. The Committee
shall establish, prior to grant, Performance Goals with respect to each Award
intended to constitute a Performance Grant. Except as may otherwise be provided
in Article 8 hereof, no Option that is intended to constitute a Performance
Grant may be exercised until the Performance Goal or Goals applicable thereto is
or are satisfied, nor shall any share of Restricted Stock that is intended to
constitute a Performance Grant be released to a Participant until the
Performance Goal or Goals applicable thereto is or are satisfied.
3.5 Performance Grants Not Mandatory. Nothing herein shall be construed as
requiring that any Award be made a Performance Grant.
ARTICLE 4. COMMON STOCK SUBJECT TO THE PLAN
4.1 Common Stock Authorized.
(a) The initial total aggregate number of shares of Common Stock for
which Options may be granted under the Plan or which may be awarded as
Restricted Stock under the Plan shall not exceed 433,155. Notwithstanding
the foregoing, the number of shares of Common Stock available for issuance
under the Plan, including shares subject to then outstanding Awards, shall
automatically increase on the first trading day of January of each calendar
year during the term of the Plan, beginning with calendar year 2007, by an
amount equal to the lesser of (i) 10% of the positive difference, if any,
between the number of outstanding shares of Common Stock, including shares
subject to outstanding Awards, on the last trading day of the immediately
preceding calendar year and the number of outstanding shares of Common
Stock including shares subject to outstanding Awards, on first trading day
of such immediately preceding calendar year; or (ii) an amount determined
by the Board. No Incentive Stock Options may be granted on the basis of the
additional shares of Common Stock resulting from such annual increases. The
limitation established by the preceding sentence shall also be subject to
adjustment as provided in Article 10.
(b) If any Option is exercised by tendering Common Stock, either
actually or by attestation, to the Corporation as full or partial payment
in connection with the exercise of such Option under the Plan, or if the
tax withholding requirements are satisfied through such tender, only the
number of shares of Common Stock issued net of the Common Stock tendered
shall be deemed delivered to such Participant for purposes of determining
the maximum number of shares available for Awards under the Plan.
4.2 Shares Available. The Common Stock to be issued under the Plan shall be
the Corporation's Common Stock which shall be made available at the discretion
of the Board, either from authorized but unissued Common Stock or from Common
Stock acquired by the Corporation, including shares purchased in the open
market. In the event that any outstanding Award under the Plan for any reason
expires, terminates, or is forfeited, the shares of Common Stock allocable to
such expiration, termination, or forfeiture may thereafter again be made subject
to an Award under the Plan.
F-6
ARTICLE 5. ELIGIBILITY
5.1 Participation. Awards shall be granted by the Committee only to persons
who are Employees and Non-Employee Directors.
5.2 Incentive Stock Option Eligibility. Incentive Stock Option Awards may
only be granted to Employees of the Corporation. Notwithstanding any other
provision of the Plan to the contrary, an individual who owns more than ten
percent of the total combined voting power of all classes of outstanding stock
of the Corporation shall not be eligible for the grant of an Incentive Stock
Option, unless the special requirements set forth in Sections 6.1 and 7.1 are
satisfied. For purposes of this section, in determining stock ownership, an
individual shall be considered as owning the stock owned, directly or
indirectly, by or for his brothers and sisters (whether by the whole or half
blood), spouse, ancestors and lineal descendants. Stock owned, directly or
indirectly, by or for a corporation, partnership, estate or trust shall be
considered as being owned proportionately by or for its shareholders, partners
or beneficiaries. "Outstanding stock" shall include all stock actually issued
and outstanding immediately before the grant of the Option. "Outstanding stock"
shall not include shares authorized for issue under outstanding Options held by
the Optionee or by any other person.
ARTICLE 6. STOCK OPTIONS IN GENERAL
6.1 Exercise Price. The exercise price of an Option to purchase a share of
Common Stock shall be, in the case of an Incentive Stock Option, not less than
100% of the fair market value of a share of Common Stock on the date the Option
is granted, except that the exercise price shall be not less than 110% of such
fair market value in the case of an Incentive Stock Option granted to any
individual described in the second sentence of Section 5.2. The exercise price
of an Option to purchase a share of Common Stock shall be, in the case of a
Nonqualified Stock Option, not less than 100% of the fair market value of a
share of Common Stock on the date the Option is granted. In no event shall the
exercise price of an Option granted be less than the fair market value (as
determined under Code Section 409A and the guidance promulgated thereunder) from
the date of grant. The exercise price shall be subject to adjustment pursuant to
the limited circumstances set forth in Article 10.
6.2 Limitation on Incentive Stock Options. The aggregate fair market value
(determined as of the date an Option is granted) of the Common Stock with
respect to which Incentive Stock Options are exercisable for the first time by
any individual in any calendar year (under the Plan and all other plans
maintained by the Corporation and Subsidiaries) shall not exceed $100,000.
6.3 Determination of Fair Market Value.
(a) If the Common Stock is not listed on an established stock exchange
or exchanges but is listed on NASDAQ, the fair market value per share shall
be the closing sale price for the Common Stock on the day an Option is
granted. If no sale of Common Stock has occurred on that day, the fair
market value shall be determined by reference to such price for the next
preceding day on which a sale occurred.
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(b) If the Common Stock is not listed on an established stock exchange
or on NASDAQ, fair market value per share shall be the mean between the
closing dealer "bid" and "asked" prices for the Common Stock for the day an
Option is granted, and if no "bid" and "asked" prices are quoted for the
day an Option is granted, the fair market value shall be determined by
reference to such prices on the next preceding day on which such prices
were quoted.
(c) If the Common Stock is listed on an established stock exchange or
exchanges, the fair market value shall be deemed to be the closing price of
Common Stock on such stock exchange or exchanges on the day an Option is
granted. If no sale of Common Stock has been made on any stock exchange on
that day, the fair market value shall be determined by reference to such
price for the next preceding day on which a sale occurred.
(d) In the event that the Common Stock is not traded on an established
stock exchange or on NASDAQ, and no closing dealer "bid" and "asked" prices
are available on the day an Option is granted, then fair market value will
be the price established by the Committee in good faith.
(e) In connection with determining the fair market value of a share of
Common Stock on any relevant day, the Committee may use any source deemed
reliable; and its determination shall be final and binding on all affected
persons, absent clear error.
6.4 Limitation on Option Awards. Awards under this Plan (and any other plan
of the Corporation or a Subsidiary providing for stock option awards) to any
individual Employee shall not exceed, in the aggregate, Options to acquire
75,000 shares of Common Stock during any period of 12 consecutive months. Such
limitation shall be subject to adjustment in the manner described in Article 10.
6.5 Transferability of Options.
(a) Except as provided in Subsection (b), an Option granted hereunder
shall not be transferable other than by will or the laws of descent and
distribution, and such Option shall be exercisable, during the Optionee's
lifetime, only by him or her.
(b) An Optionee may, with the prior approval of the Committee,
transfer a Nonqualified Stock Option for no consideration to or for the
benefit of one or more members of the Optionee's "immediate family"
(including a trust, partnership or limited liability company for the
benefit of one or more of such members), subject to such limits as the
Committee may impose, and the transferee shall remain subject to all terms
and conditions applicable to the Option prior to its transfer. The term
"immediate family" shall mean an Optionee's spouse, parents, children,
stepchildren, adoptive relationships, sisters, brothers and grandchildren
(and, for this purpose, shall also include the Optionee).
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ARTICLE 7. TERM, VESTING AND EXERCISE OF OPTIONS
7.1 Term and Vesting. Each Option granted under the Plan shall terminate on
the date determined by the Committee, and specified in the Agreement; provided,
however, that (i) each intended Incentive Stock Option granted to an individual
described in the second sentence of Section 5.2 shall terminate not later than
five years after the date of the grant, (ii) each other intended Incentive Stock
Option shall terminate not later than ten years after the date of grant, and
(iii) each Option granted under the Plan which is intended to be a Nonqualified
Stock Option shall terminate not later than ten years and one month after the
date of grant. Each Option granted under the Plan shall be fully exercisable
(i.e., become 100% vested) only after the earlier of the date on which (i) the
Optionee has completed one year of continuous employment with, or service with
respect to, the Corporation or a Subsidiary immediately following the date of
the grant of the Option (or such later date as may be specified in an Agreement,
including a date that may be tied to the satisfaction of one or more Performance
Goals); (ii) unless otherwise provided in an Agreement, a Change in Control
occurs; and (iii) unless otherwise provided in an Agreement, the Optionee's
death, being "disabled" (within the meaning of the Corporation's Benefit Plans
or group long-term disability policy). Except as provided in Article 8, an
Option may be exercised only during the continuance of the Optionee's employment
with, or service with respect to, the Corporation.
7.2 Exercise.
(a) A person electing to exercise an Option shall give notice to the
Corporation of such election and of the number of shares he or she has
elected to purchase and shall at the time of exercise tender the full
exercise price of the shares he or she has elected to purchase. The
exercise notice shall be delivered to the Corporation in person, by
certified mail, or by such other method (including electronic transmission)
and in such form as determined by the Committee. The exercise price shall
be paid in full, in cash, upon the exercise of the Option; provided,
however, that in lieu of cash, with the approval of the Committee at or
prior to exercise, an Optionee may exercise an Option by tendering to the
Corporation shares of Common Stock owned by him or her and having a fair
market value equal to the cash exercise price applicable to the Option
(with the fair market value of such stock to be determined in the manner
provided in Section 6.3) or by delivering such combination of cash and such
shares as the Committee in its sole discretion may approve; further
provided, however, that no such manner of exercise shall be permitted if
such exercise would violate Section 402 of the Sarbanes-Oxley Act of 2002.
Notwithstanding the foregoing, Common Stock acquired pursuant to the
exercise of an Incentive Stock Option may not be tendered as payment unless
the holding period requirements of Code Section 422(a)(1) have been
satisfied, and Common Stock not acquired pursuant to the exercise of an
Incentive Stock Option may not be tendered as payment unless it has been
held, beneficially and of record, for at least six months (or such longer
time as may be required by applicable securities law or accounting
principles to avoid adverse consequences to the Corporation or a
Participant).
(b) A person holding more than one Option at any relevant time may, in
accordance with the provisions of the Plan, elect to exercise such Options
in any order.
F-9
(c) At the request of the Participant and to the extent permitted by
applicable law, the Committee may, in its sole discretion, selectively
approve arrangements whereby the Participant irrevocably authorizes a third
party to sell shares of Common Stock (or a sufficient portion of the
shares) acquired upon the exercise of an Option and to remit to the
Corporation a sufficient portion of the sales proceeds to pay the entire
exercise price and any tax withholding required as a result of such
exercise.
ARTICLE 8. EXERCISE OF OPTIONS FOLLOWING TERMINATION OF EMPLOYMENT OR SERVICE
8.1 Retirement; Other Termination by Corporation or Subsidiary; Change in
Control. In the event of an Optionee's termination of employment or service as a
Non-Employee Director (i) due to Retirement, (ii) by the Corporation or a
Subsidiary other than Termination for Cause, or (iii) due to a Change in
Control, such Optionee's Option shall lapse at the earlier of the expiration of
the term of such Option or:
(a) in the case of an Incentive Stock Option, three months from the
date of such termination of employment; and
(b) in the case of a Nonqualified Stock Option, one year from the date
of such termination of employment or service as a Non-Employee Director.
8.2 Death or Total Disability. In the event of an Optionee's termination of
employment or service as a Non-Employee Director due to death or being
"disabled" (within the meaning of the Corporation's Benefit Plans or group
long-term disability policy), such Optionee's Option shall lapse at the earlier
of the expiration of the term of such Option or:
(a) in the case of an Incentive Stock Option, one year from the date
of such termination of employment; and
(b) in the case of a Nonqualified Stock Option, the later of the 15th
day of the month following or the December 31 of the calendar year of the
date of such termination of employment or service as a Non-Employee
Director.
8.3 Termination or Dismissal For Cause; Other Termination by Optionee. In
the event of an Optionee's Termination or Dismissal For Cause, or in the event
of termination of employment at the election of an Optionee, such Optionee's
Option shall lapse upon such termination.
8.4 Special Termination Provisions for Options.
(a) In the event that an Optionee's employment or service as a
Non-Employee Director is terminated and the Committee deems it equitable to
do so, the Committee may, in its discretion and subject to the approval of
a majority of the disinterested members of the Board, waive any continuous
service requirement for vesting specified in an Agreement pursuant to
Section 7.1 and permit exercise of an Option held by such Optionee prior to
the satisfaction of such continuous service requirement. Any such waiver
may be made with retroactive effect, provided it is made within 60 days
following the Optionee's termination of employment or service as a
Non-Employee Director.
F-10
(b) In the event the Committee waives the continuous service
requirement with respect to an Option as set forth in Section 8.4(a) above
and the circumstance of an Optionee's termination of employment or service
as a Non-Employee Director is described in Sections 8.1 or 8.2, such Option
shall lapse as otherwise provided in the relevant section.
(c) Except as provided in Section 8.4(b) above, in the event the
Committee waives the continuous service requirement with respect to an
Option as set forth in Section 8.4(a) above, such Option shall lapse at the
earlier of the expiration of the term of such Option or:
(i) in the case of an Incentive Stock Option, three months from
the date of termination of employment; and
(ii) in the case of a Nonqualified Stock Option, one year from
the date of termination of employment or service as a Non-Employee
Director.
ARTICLE 9. RESTRICTED STOCK
9.1 In General. Each Restricted Stock Award shall be subject to such terms
and conditions as may be specified in the Agreement issued to a Participant to
evidence the grant of such Award. A Restricted Stock Award shall be subject to a
vesting schedule or Performance Goals, or both.
9.2 Minimum Vesting Period for Certain Restricted Stock Awards. Each
Restricted Stock Award granted to a Participant shall be fully exercisable
(i.e., become 100% vested) only after the earlier of the date on which (i) the
Participant has completed one year of continuous employment with, or service
with respect to, the Corporation or a Subsidiary immediately following the date
that the Restricted Stock was awarded (or such later date as may be specified in
an Agreement, including a date that may be tied to the satisfaction of one or
more Performance Goals); (ii) unless otherwise provided in an Agreement, a
Change in Control occurs; or (iii) unless otherwise provided in an Agreement,
the Participant's death, being "disabled" (within the meaning of the
Corporation's Benefit Plans or group long-term disability policy) or Retirement
after completing three or more years of service from the date of the Award.
9.3 Waiver of Vesting Period for Certain Restricted Stock Awards. In the
event that a Participant's employment or service as a Non-Employee Director is
terminated and the Committee deems it equitable to do so, the Committee may, in
its discretion and subject to the approval of a majority of the disinterested
members of the Board, waive any minimum vesting period with respect to a
Restricted Stock Award held by such Participant. Any such waiver may be made
with retroactive effect, provided it is made within 60 days following such
Participant's termination of employment or service as a Non-Employee Director.
9.4 Issuance and Retention of Share Certificates By Corporation. One or
more share certificates shall be issued upon the grant of a Restricted Stock
Award; but until such time as the Restricted Stock shall vest or otherwise
become distributable by reason of satisfaction of one or more Performance Goals,
the Corporation shall retain such share certificates.
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9.5 Stock Powers. At the time of the grant of a Restricted Stock Award, the
Participant to whom the grant is made shall deliver such stock powers, endorsed
in blank, as may be requested by the Corporation.
9.6 Release of Shares. Within 30 days following the date on which a
Participant becomes entitled under an Agreement to receive shares of previously
Restricted Stock, the Corporation shall deliver to him or her a certificate
evidencing the ownership of such shares, together with an amount of cash
(without interest) equal to the dividends that have been paid on such shares
with respect to record dates occurring on and after the date of the related
Award.
9.7 Forfeiture of Restricted Stock Awards. In the event of the forfeiture
of a Restricted Stock Award, by reason of a Participant's termination of
employment or termination of service as a Non-Employee Director prior to
vesting, the failure to achieve a Performance Goal or otherwise, the Corporation
shall take such steps as may be necessary to cancel the affected shares and
return the same to its treasury.
9.8 Assignment, Transfer, Etc. of Restricted Stock Rights. The potential
rights of a Participant to shares of Restricted Stock may not be assigned,
transferred, sold, pledged, hypothecated, or otherwise encumbered or disposed of
until such time as unrestricted certificates for such shares are received by him
or her.
ARTICLE 10. ADJUSTMENT PROVISIONS
10.1 Share Adjustments.
(a) In the event that the shares of Common Stock of the Corporation,
as presently constituted, shall be changed into or exchanged for a
different number or kind of shares of stock or other securities of the
Corporation, or if the number of such shares of Common Stock shall be
changed through the payment of a stock dividend, stock split or reverse
stock split, then (i) the shares of Common Stock authorized hereunder to be
made the subject of Awards, (ii) the shares of Common Stock then subject to
outstanding Awards and the exercise price thereof (where relevant), (iii)
the maximum number of Awards that may be granted within a 12-month period
and (iv) the nature and terms of the shares of stock or securities subject
to Awards hereunder shall be increased, decreased or otherwise changed to
such extent and in such manner as may be necessary or appropriate to
reflect any of the foregoing events.
(b) If there shall be any other change in the number or kind of the
outstanding shares of the Common Stock of the Corporation, or of any stock
or other securities into which such Common Stock shall have been changed,
or for which it shall have been exchanged, and if a majority of the
disinterested members of the Board shall, in its sole discretion, determine
that such change equitably requires an adjustment in any Award which was
theretofore granted or which may thereafter be granted under the Plan, then
such adjustment shall be made in accordance with such determination.
(c) The grant of an Award pursuant to the Plan shall not affect in any
way the right or power of the Corporation to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure, to merge, to consolidate, to dissolve, to liquidate or to sell
or transfer all or any part of its business or assets.
F-12
10.2 Corporate Changes. A liquidation or dissolution of the Corporation, a
merger or consolidation in which the Corporation is not the surviving
Corporation or a sale of all or substantially all of the Corporation's assets,
shall cause each outstanding Award to terminate, except to the extent that
another corporation may and does, in the transaction, assume and continue the
Award or substitute its own awards.
10.3 Fractional Shares. Fractional shares resulting from any adjustment in
Awards pursuant to this article may be settled as the Committee shall determine.
10.4 Binding Determination. To the extent that the foregoing adjustments
relate to stock or securities of the Corporation, such adjustments shall be made
by a majority of the disinterested members of the Board, whose determination in
that respect shall be final, binding and conclusive. Notice of any adjustment
shall be given by the Corporation to each holder of an Award which shall have
been so adjusted.
ARTICLE 11. GENERAL PROVISIONS
11.1 Effective Date. The Plan shall become effective on the Adoption Date,
provided that shareholder approval is obtained within 12 months of the adoption
of the Plan by the Board.
11.2 Termination of the Plan. Unless previously terminated by the Board,
the Plan shall terminate on, and no Award shall be granted after, the day
immediately preceding the tenth anniversary of the Adoption Date.
11.3 Limitation on Termination, Amendment or Modification.
(a) The Board may at any time terminate, amend, modify or suspend the
Plan, provided that, without the approval of the shareholders of the
Corporation, no amendment or modification shall be made solely by the Board
which:
(i) increases the maximum number of shares of Common Stock as to
which Awards may be granted under the Plan (except as provided in
Section 10.1);
(ii) changes the class of eligible Participants; or
(iii) otherwise requires the approval of shareholders under
applicable state law or under applicable federal law to avoid
potential liability or adverse consequences to the Corporation or a
Participant.
(b) No amendment, modification, suspension or termination of the Plan
shall in any manner affect any Award theretofore granted under the Plan
without the consent of the Participant or any person validly claiming under
or through the Participant.
11.4 No Right to Grant of Award or Continued Employment or Service. Nothing
contained in this Plan or otherwise shall be construed to (a) require the grant
of an Award to an individual who qualifies as an Employee or Non-Employee
Director, or (b) confer upon a Participant any right to continue in the employ
or service of the Corporation or any Subsidiary or limit in any respect the
right of the Corporation or of any Subsidiary to terminate the Participant's
employment or service at any time and for any reason.
F-13
11.5 No Obligation. No exercise of discretion under this Plan with respect
to an event or person shall create an obligation to exercise such discretion in
any similar or same circumstance, except as otherwise provided or required by
law.
11.6 Code Section 409A. This Plan is intended to be exempt from the
provisions of Code Section 409A by reason of not being deemed a "nonqualified
deferred compensation plan" within the meaning of Code Section 409A(d)(1). Each
of the provisions of this Plan document, however, are qualified by reference to
provisions of Code Section 409A, and the guidance promulgated thereunder, to the
extent such section applies to this Plan. Notwithstanding anything herein to the
contrary, if Code Section 409A is applicable the exercise of any discretionary
authority and the implementation or carrying out of each other provision of the
Plan shall be conditioned upon the conditions and limitations of Code Section
409A and compliance with its specific terms, as the same may have been
interpreted by regulatory, case law, or other governing authority. Further, if
this Plan or any Option granted hereunder is, or shall become subject to the
provisions of Code Section 409A, each such affected Option shall be deemed
exercised on the date it vests, or the date the Plan or such Option, as
applicable, becomes subject to Code Section 409A; provided, however, that if an
Optionee is unable to deliver the exercise price and required withholding taxes
to the Corporation, such Optionee shall be paid in one lump sum as soon as
practicable, to the extent permitted by tax, corporate, securities, and any
other relevant laws, (a) the excess (if any) of the Fair Market Value of the
Option at the relevant time over the exercise price, less (b) the required tax
withholdings.
11.7 Withholding Taxes.
(a) Subject to the provisions of Subsection (b), the Corporation will
require, where sufficient funds are not otherwise available, that a
Participant who is an Employee pay or reimburse to it any withholding taxes
at such time as withholding is required by law.
(b) With the permission of the Committee, a Participant who is an
Employee may satisfy the withholding obligation described in Subsection
(a), in whole or in part, by electing to have the Corporation withhold
shares of Common Stock (otherwise issuable to him or her) having a fair
market value equal to the amount required to be withheld. An election by a
Participant who is an Employee to have shares withheld for this purpose
shall be subject to such conditions as may then be imposed thereon by any
applicable securities law.
11.8 Listing and Registration of Shares.
(a) No Option granted pursuant to the Plan shall be exercisable in
whole or in part, and no share certificate shall be delivered, if at any
relevant time the Committee determines in its discretion that the listing,
registration or qualification of the shares of Common Stock subject to an
Award on any securities exchange or under any applicable law, or the
consent or approval of any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with, such Award, until such
listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the
Committee.
F-14
(b) If a registration statement under the Securities Act with respect
to the shares issuable under the Plan is not in effect at any relevant
time, as a condition of the issuance of the shares, a Participant (or any
person claiming through a Participant) shall give the Committee a written
or electronic statement, satisfactory in form and substance to the
Committee, that he or she is acquiring the shares for his or her own
account for investment and not with a view to their distribution. The
Corporation may place upon any stock certificate for shares issued under
the Plan the following legend or such other legend as the Committee may
prescribe to prevent disposition of the shares in violation of the
Securities Act or other applicable law:
`THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 ("ACT") AND MAY NOT
BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR
OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT WITH RESPECT TO THEM UNDER THE ACT OR A WRITTEN OPINION
OF COUNSEL FOR THE CORPORATION THAT REGISTRATION IS NOT
REQUIRED.'
11.9 Disinterested Director. For purposes of this Plan, a director shall be
deemed "disinterested" if such person could qualify as a member of the Committee
under Section 3.1.
11.10 Gender; Number. Words of one gender, wherever used herein, shall be
construed to include each other gender, as the context requires. Words used
herein in the singular form shall include the plural form, as the context
requires, and vice versa.
11.11 Applicable Law. Except to the extent preempted by federal law, this
Plan document, and the Agreements issued pursuant hereto, shall be construed,
administered, and enforced in accordance with the domestic internal law of the
State of New Jersey.
11.12 Headings. The headings of the several articles and sections of this
Plan document have been inserted for convenience of reference only and shall not
be used in the construction of the same.
F-15
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The certificate of incorporation of the holding company provides for
the elimination of liability of its directors and officers for damages to the
fullest extent permitted by New Jersey law.
The New Jersey Business Corporation Act (the "Act") empowers a
corporation to indemnify a corporate agent against his expenses and liabilities
incurred in connection with any proceeding (other than a derivative lawsuit)
involving the corporate agent by reason of his being or having been a corporate
agent if (a) the agent acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation, and
(b) with respect to any criminal proceeding, the corporate agent had no
reasonable cause to believe his conduct was unlawful. For purposes of the Act,
the term "corporate agent" includes any present or former director, officer,
employee or agent of the corporation, and a person serving as a "corporate
agent" at the request of the corporation for any other enterprise.
With respect to any derivative action, a corporation is empowered to
indemnify a corporate agent against his expenses (but not his liabilities)
incurred in connection with any proceeding involving the corporate agent by
reason of his being or having been a corporate agent if the agent acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation. However, only the court in which the proceeding
was brought can empower a corporation to indemnify a corporate agent against
expenses with respect to any claim, issue or matter as to which the agent was
adjudged liable for negligence or misconduct.
The corporation may indemnify a corporate agent in a specific case if a
determination is made by any of the following that the applicable standard of
conduct was met: (i) the board of directors, or a committee thereof, acting by a
majority vote of a quorum consisting of disinterested directors; (ii) by
independent legal counsel, if there is not a quorum of disinterested directors
or if the disinterested quorum empowers counsel to make the determination; or
(iii) by the shareholders.
A corporate agent is entitled to mandatory indemnification to the
extent that the agent is successful on the merits or otherwise in any
proceeding, or in defense of any claim, issue or matter in the proceeding. If a
corporation fails or refuses to indemnify a corporate agent, whether the
indemnification is permissive or mandatory, the agent may apply to a court to
grant him the requested indemnification. In advance of the final disposition of
a proceeding, the corporation may pay a corporate agent's expenses if the
corporate agent agrees to repay the expenses unless it is ultimately determined
he is entitled to indemnification.
The holding company's directors and officers on and after the effective
date of the reorganization will be insured against certain liabilities for their
actions, as such, by an insurance policy obtained by the holding company.
II-1
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The exhibits and financial statement schedules filed as part of this
Registration Statement are as follows:
(a) Exhibits
The following is a list and index of the exhibits filed with this
Registration Statement.
Exhibit Number Description of Document
-------------- -----------------------
2.1 Plan of Acquisition dated February
__, 2006, between Boardwalk Bancorp,
Inc. and Boardwalk Bank (included as
Exhibit A to the Proxy
Statement/Prospectus)
3.1 Certificate of Incorporation of
Boardwalk Bancorp, Inc. (Attached as
Exhibit B to the Proxy
Statement/Prospectus).
3.2 Bylaws of Boardwalk Bancorp, Inc.
(Attached as Exhibit C to the Proxy
Statement/Prospectus).
5.1 Opinion of Stevens & Lee re: Legality
of Shares Being Registered.
8.1 Opinion of Stevens & Lee re: Tax
Matters.*
10.1 Boardwalk Bancorp, Inc. 2006 Employee
Stock Purchase Plan. (Attached as
Exhibit E to the Proxy
Statement/Prospectus).
10.2 Boardwalk Bancorp, Inc. 2006 Stock
Incentive Plan. (Attached as Exhibit
F to the Proxy Statement/Prospectus).
10.3 Employment Agreement dated as of June
1, 1999, between Boardwalk Bank and
Michael D. Devlin.
10.4 Change in Control Agreement dated as
of February 22, 2005, between
Boardwalk Bank and Wayne S.
Hardenbrook.
10.5 Change in Control Agreement dated as
of February 22, 2005, between
Boardwalk Bank and Guy A. Deninger.
II-2
Exhibit Number Description of Document
-------------- -----------------------
10.6 Boardwalk Bank 2000 Employee Stock
Option Plan
10.7 Boardwalk Bank 2000 Director Stock
Option Plan
23.1 Consent of Stevens & Lee (included in
Exhibit 5.1).
24.1 Power of Attorney of Directors and
Officers (included in signature
page).
99.1 Form of Proxy for the Annual Meeting
of Shareholders of Boardwalk Bank.
- -------------------------
* To be filed by amendment
(b) Financial Statement Schedules.
None required.
(c) Report or Appraisal
Not applicable.
ITEM 22. UNDERTAKINGS
(a) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the bylaws of the registrant, or
otherwise, the registrant 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
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant 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 registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question 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.
(b) The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
II-3
(c) The undersigned registrant hereby undertakes to supply by means of
a post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(d) The undersigned registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.
(e) The registrant undertakes that every prospectus (i) that is filed
pursuant to the paragraph immediately preceding, or (ii) that purports to meet
the requirements of section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the State of New
Jersey, on February 28, 2006.
BOARDWALK BANCORP, INC.
(Registrant)
By: /s/ Michael D. Devlin
----------------------------------------
Michael D. Devlin, Chairman, President
and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Michael D. Devlin, Wayne S. Hardenbrook,
Wesley R. Kelso, Esquire or David W. Swartz, Esquire, and each of them (with
full power to act alone), as his true and lawful attorneys-in-fact and agents,
with full powers of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments
(including pre-effective and post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents full power and authority to do and
perform each and every act and thing requisite or necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or their substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-4 has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Michael D. Devlin Chairman, President and Chief February 28, 2006
- --------------------- Executive Officer
Michael D. Devlin
/s/ Wayne S. Hardenbrook Executive Vice President and Chief February 28, 2006
- ------------------------ Financial Officer (Principal
Wayne S. Hardenbrook Financial and Accounting Officer)
/s/ Carol Nugent Harris Director February 28, 2006
- -----------------------
Carol Nugent Harris
/s/ Thomas K. Ritter Director February 28, 2006
- --------------------
Thomas K. Ritter
II-5
EXHIBIT INDEX
DESCRIPTION
Number Description Sequentially Numbered Page
- ------ ----------- --------------------------
2.1 Plan of Acquisition dated February ____, 2006, between
Boardwalk Bancorp, Inc. and Boardwalk Bank (included as
Exhibit A to the Proxy Statement/Prospectus).
3.1 Certificate of Incorporation of Boardwalk Bancorp, Inc.
(Attached as Exhibit B to the Proxy Statement/Prospectus).
3.2 Bylaws of Boardwalk Bancorp, Inc. (Attached as Exhibit C to
the Proxy Statement/Prospectus).
5.1 Opinion of Stevens & Lee re: Legality of Shares Being
Registered.
8.1 Opinion of Stevens & Lee re: Tax Matters*
10.1 Boardwalk Bancorp, Inc 2006 Employee Stock Purchase Plan.
(Attached as Exhibit E to the Proxy Statement/Prospectus).
10.2 Boardwalk Bancorp, Inc. 2006 Stock Incentive Plan. (Attached
as Exhibit F to the Proxy Statement/Prospectus).
10.3 Employment Agreement dated as of June 1, 1999, between
Boardwalk Bank and Michael D. Devlin.
10.4 Change in Control Agreement dated as of February 22, 2005
between Boardwalk Bank and Wayne S. Hardenbrook.
10.5 Change in Control Agreement dated as of February 22, 2005
between Boardwalk Bank and Guy A. Deninger
10.6 Boardwalk Bank 2000 Employee Stock Option Plan
10.7 Boardwalk Bank 2000 Director Stock Option Plan
23.1 Consent of Stevens & Lee (contained in Exhibit 5.1).
24.1 Power of Attorney of Directors and Officers (included in
signature page)
99.1 Form of Proxy for the Annual Meeting of Shareholders of
Boardwalk Bank
- ------------------------
*To be filed by amendment.
II-6