STEVENS & LEE
LAWYERS & CONSULTANTS
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111 North 6th Street
P.O. Box 679
Reading, PA 19603-0679
(610) 478-2000 Fax (610) 376-5610
www.stevenslee.com
March 20, 2006
Board of Directors
Boardwalk Bancorp, Inc.
201 Shore Road
Linwood, New Jersey 08221
Re: Acquisition of all of the capital stock of Boardwalk Bank by
Boardwalk Bancorp, Inc.
Ladies and Gentlemen:
You have asked us to provide you with our opinion regarding certain
material federal income tax consequences of the proposed acquisition (the
"Acquisition") by newly-formed Boardwalk Bancorp, Inc., a New Jersey corporation
("Boardwalk") of all of the outstanding common stock of Boardwalk Bank, a New
Jersey banking corporation (the "Bank"), as provided in the Plan of Acquisition
between Boardwalk and the Bank, dated February 22, 2006. The Acquisition is
further described in and will be in accordance with Boardwalk's Securities and
Exchange Commission Form S-4 Registration Statement (the "Registration
Statement") with which this opinion letter is being filed.
The Acquisition is structured, and will be completed, as an exchange by
the Bank's shareholders of their Bank voting common stock (the "Bank Common
Stock") for Boardwalk voting common stock ("Boardwalk Common Stock"). The
exchange will be made on a one-share-for-one-share basis. The Bank Common Stock
is the only class of stock presently outstanding and will be the only class of
capital stock of the Bank outstanding as of the Effective Date. Bank
shareholders will be entitled to exercise their statutory rights of dissent to
the Acquisition and be paid in cash for their Bank Common Stock by the Bank in
accordance with the provisions of New Jersey law. Except as otherwise indicated,
capitalized terms used herein have the meanings set forth in the Plan of
Acquisition.
We have acted as counsel to Boardwalk and the Bank in connection with
the Acquisition. As such, and for purposes of providing this opinion, we have
examined and are relying upon (without any independent verification or review
thereof) the truth and accuracy, at all relevant times, of the statements,
covenants, representations and warranties contained in the following documents
(including all schedules and exhibits thereto):
A PROFESSIONAL CORPORATION
Philadelphia o Reading o Valley Forge o Lehigh Valley o Harrisburg o Lancaster
Scranton o Wilkes-Barre o Princeton o Cherry Hill o New York o Wilmington
STEVENS & LEE
LAWYERS & CONSULTANTS
---------------------
Board of Directors, Boardwalk Bancorp, Inc.
March 20, 2006
Page 2
1. the Registration Statement;
2. the Plan of Acquisition;
3. the Officer's Certificate provided to us; and
4. such other instruments and documents related to Boardwalk and the
Bank as we have deemed necessary or appropriate.
In addition, in connection with providing this opinion, we have assumed
(without any independent investigation thereof) that:
1. original documents (including signatures) are authentic; documents
submitted to us as copies conform to the original documents; and there has been
(or will be by the Effective Date) due execution and delivery of all documents
where due execution and delivery are prerequisites to the effectiveness thereof;
2. any representation or statement referred to above made "to the best
of knowledge" or otherwise similarly qualified is correct without such
qualification, and all statements and representations, whether or not qualified,
are true and will remain true through the Effective Date and thereafter where
relevant;
3. the Acquisition will be consummated pursuant to the Plan of
Acquisition and will be effective under the law of the State of New Jersey and
applicable federal and state banking laws; and
4. at all relevant times prior to and including the Effective Date, (i)
no outstanding indebtedness of the Bank has represented or will represent equity
for tax purposes; (ii) no outstanding equity of the Bank has represented or will
represent indebtedness for tax purposes; and (iii) no outstanding security,
instrument, agreement or arrangement that provides for, contains or represents
either a right to acquire Bank capital stock or to share in the appreciation
thereof constitutes or will constitute "stock" for purposes of applying Section
368(c) of the Internal Revenue Code of 1986, as amended (the "Code").
Based on the foregoing documents, materials, assumptions and
information, and subject to the qualifications and assumptions set forth herein,
and if the Acquisition is consummated in accordance with the provisions of the
Plan of Acquisition (and without any waiver, breach or amendment of any of the
provisions thereof), we are of the opinion that the statements made under the
caption "Tax Consequences" in the Registration Statement, insofar as they
constitute statements of law or legal conclusions, are correct in all material
respects.
STEVENS & LEE
LAWYERS & CONSULTANTS
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Board of Directors, Boardwalk Bancorp, Inc.
March 20, 2006
Page 3
Our opinion set forth above is based on the existing provisions of the
Code, Treasury Regulations (including Temporary Treasury Regulations)
promulgated under the Code, published Revenue Rulings, Revenue Procedures and
other announcements of the Internal Revenue Service (the "Service") and existing
court decisions, any of which could be changed at any time. Any such changes
might be retroactive with respect to transactions entered into prior to the date
of such changes and could significantly modify the opinion set forth above.
Nevertheless, we undertake no responsibility to advise you of any subsequent
developments in the application, operation or interpretation of the U.S. federal
income tax laws.
As you are aware, no ruling has been or will be requested from the
Service concerning the U.S. federal income tax consequences of the Acquisition.
In reviewing this opinion, you should be aware that the opinion set forth above
represents our conclusion regarding the application of existing U.S. federal
income tax law to the instant transaction. If the facts vary from those relied
upon (or if any representation, covenant, warranty or assumption upon which we
have relied is inaccurate, incomplete, breached or ineffective), our opinion
contained herein could be inapplicable in whole or in part. You should be aware
that an opinion of counsel represents only counsel's best legal judgment, and
has no binding effect or official status of any kind, and that no assurance can
be given that contrary positions may not be taken by the Service or that a court
considering the issues would not hold otherwise.
This opinion is being delivered to the Board of Directors solely for
the purpose of being included as an exhibit to the Registration Statement. It
may not be relied upon or utilized for any other purpose. We consent to the
filing of this opinion as an exhibit to the Registration Statement and to the
use of our name in the Registration Statement wherever it appears. In giving
this consent, however, we do not hereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended, or the rules or regulations promulgated thereunder.
Very truly yours,
STEVENS & LEE, P. C.
/s/ Stevens & Lee, P.C.
BOARDWALK BANK
OFFICER'S CERTIFICATE
In connection with the opinion of Stevens & Lee to be filed as part of
the Registration Statement on Securities and Exchange Commission Form S-4 by
Boardwalk Bank, Inc., a New Jersey corporation ("Boardwalk"), as to certain of
the federal income tax consequences of the proposed holding company formation
transaction pursuant to which Boardwalk Bank, a New Jersey banking corporation
(the "Bank"), will become a wholly-owned subsidiary of Boardwalk and the
shareholders of the Bank will become the shareholders of Boardwalk, and
recognizing that Stevens & Lee will rely on this Certificate in delivering such
opinion, the undersigned authorized officer of the Bank hereby certifies on
behalf of Boardwalk and the Bank that, to the best knowledge and belief of the
managements of Boardwalk and the Bank, at all times up to and including the
effective date of the holding company formation transaction (the "Effective
Date"):
1. The fair market value of the Boardwalk voting common stock
("Boardwalk Common Stock") to be received by each Bank shareholder will be
approximately equal to the fair market value of the Bank voting common stock
("Bank Common Stock") surrendered in the exchange.
2. There is no plan or intention on the part of the shareholders of the
Bank to sell, exchange, or otherwise dispose of, to Boardwalk or the Bank and/or
any person related to any of them (as determined under Treasury Regulation
Section 1.368-1(e)), a number of shares of Boardwalk Common Stock to be received
in the transaction that would reduce such shareholders' ownership of Boardwalk
Common Stock to a number of shares having a value, as of the Effective Date, of
less than 40% of the value of all of the formerly outstanding Bank Common Stock
as of that date. Shares of Bank Common Stock surrendered by dissenters will be
considered in making this representation. Moreover, shares of Bank Common Stock
held by the Bank's shareholders and otherwise sold, redeemed, or disposed of
prior or subsequent to the transaction will be considered in connection with
this representation.
3. The Bank has no plan or intention to issue additional shares of Bank
Common Stock that would result in Boardwalk losing "control" of the Bank within
the meaning of Section 368(c) of the Internal Revenue Code of 1986, as amended
(the "Code").
4. Boardwalk has no plan or intention to liquidate the Bank; to merge
the Bank into another corporation; to cause the Bank to sell or otherwise
dispose of any of its assets, except for dispositions made in the ordinary
course of business; or to sell or otherwise dispose of any of the Bank Common
Stock acquired in the transaction, except for transfers described in Code
Section 368(a)(2)(C).
5. Boardwalk has no plan or intention to reacquire any of its stock
issued in the transaction.
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6. Boardwalk, the Bank and the shareholders of the Bank will pay their
respective expenses, if any, incurred in connection with the transaction;
provided, however, that the Bank will directly pay or indirectly pay (through
the payment of post-transaction dividends) those expenses incurred by Boardwalk,
which expenses include (i) the cost of formation of Boardwalk, its qualification
as a bank holding company, and similar costs, and (ii) costs in the nature of
the expenses described in Revenue Ruling 73-54, 1973-1 C.B. 187.
7. Boardwalk will acquire Bank Common Stock solely in exchange for
Boardwalk Common Stock. For purposes of this representation, Bank Common Stock
redeemed for cash or other property furnished by Boardwalk will be considered as
acquired by Boardwalk. Further, no liabilities of the Bank or the shareholders
of the Bank will be assumed by Boardwalk, nor will any of the Bank Common Stock
be subject to any liabilities.
8. Immediately after the transaction, the Bank will not have any
outstanding any warrants, options, convertible securities, or any other type of
right pursuant to which any person could acquire stock in the Bank that, if
exercised or converted, would affect Boardwalk's acquisition or retention of
"control" of the Bank within the meaning of Code Section 368(c).
9. Boardwalk does not own, directly or indirectly, nor has it owned
during the past five years, directly or indirectly, any stock of the Bank.
10. Following the transaction, the Bank will continue its "historic
business" use a "significant portion" of its "historic business assets" in a
business (as such terms are used in Treasury Regulation Section 1.368-1(d)).
11. No two parties to the transaction are "investment companies" as
defined in Code Sections 368(a)(2)(F)(iii) and (iv).
12. The Bank will pay its dissenting shareholders the value of their
Bank Common Stock out of its own funds. No funds will be supplied for that
purpose, directly or indirectly, by Boardwalk, nor will Boardwalk directly or
indirectly reimburse the Bank for any payments to dissenters.
13. On the Effective Date, the fair market value of the assets of the
Bank will exceed the sum of its liabilities plus the liabilities, if any, to
which the assets of the Bank are subject.
14. None of the compensation to be received by any
shareholder-employees of the Bank will be separate consideration for, or
allocable to, any of their shares of Bank Common Stock. The compensation to be
paid to shareholder-employees under employment agreements will be for services
actually rendered and will be commensurate with amounts paid by third parties
bargaining at arm's length for similar services. None of the Boardwalk Common
Stock to be received by any shareholder-employee of the Bank is separate
consideration for any compensation owed to such shareholder-employee.
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IN WITNESS WHEREOF, I have, on behalf of Boardwalk and the Bank, signed
this certificate as of the 20th day of March, 2006.
BOARDWALK BANCORP, INC.
By: /s/ Michael D. Devlin
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Name: Michael D. Devlin
Title: Chairman, President and CEO
BOARDWALK BANK
By: /s/ Michael D. Devlin
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Name: Michael D. Devlin
Title: Chairman, President, CEO
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