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Exhibit 8.1
6225 Smith Avenue
Baltimore, Maryland 21209-3600
www.piperrudnick.com
PHONE (410) 580-3000
FAX (410) 580-3001
September 27, 2000
Shore Bancshares, Inc.
109 North Commerce Street
P.O. Box 400
Centreville, Maryland 21617
Talbot Bancshares, Inc.
18 East Dover Street
Easton, Maryland 21601
Merger of Talbot Bancshares with and into Shore Bancshares
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Ladies and Gentlemen:
We have acted as special counsel to Talbot Bancshares in connection with
the transactions contemplated by the Plan and Agreement to Merge, dated as of
July 25, 2000 (the "Merger Agreement"), by and between Shore Bancshares and
Talbot Bancshares. This opinion is delivered in connection with the filing with
the Securities and Exchange Commission on September 28, 2000, of a
Registration Statement on Form S-4 (the "Registration Statement"), which
includes the Proxy Statement/Prospectus of Shore Bancshares and Talbot
Bancshares (the "Proxy Statement/Prospectus"), with respect to the transactions
contemplated by the Merger Agreement. The delivery of a letter expressing
opinions in substantially the form hereof, and the reconfirmation of such
opinions on and as of the Effective Date, are conditions to the obligations of
Talbot Bancshares and Shore Bancshares to consummate the Merger pursuant to
sections 7.8 and 8.8 of the Merger Agreement. All capitalized terms used herein,
unless otherwise specified, shall have the meanings ascribed to them in the
Merger Agreement.
In rendering our opinions, we have examined and relied upon the accuracy
and completeness of the facts, information, covenants and representations
contained in originals or copies, certified or otherwise identified to our
satisfaction, of the Merger Agreement, the Proxy Statement/Prospectus and such
other documents as we have deemed necessary or appropriate as a basis for the
opinions set forth below. Our opinions assume, among other things, the accuracy
as of the date hereof, and the accuracy as of the Effective Date, of such facts,
information, covenants, statements and representations, as well as an absence of
any change in the foregoing that are material to such opinions between the date
hereof and the Effective Date.
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We have assumed the genuineness of all signatures, the legal capacity of
all natural persons, the authenticity of all documents submitted to us as
originals, the conformity to original documents of all documents submitted to us
as certified or photostatic copies and the authenticity of the originals of such
documents. We have also assumed that the transactions related to the Merger or
contemplated by the Merger Agreement that are to be consummated at the Effective
Date will be consummated at the Effective Date in accordance with the Merger
Agreement and as described in the Proxy Statement/Prospectus. In addition, our
opinions are expressly conditioned on, among other things, the accuracy as of
the date hereof, and the accuracy as of the Effective Date, of statements and
representations contained in certificates executed by officers of Shore
Bancshares and Talbot Bancshares as to certain facts relating to, and knowledge
and intentions of, Shore Bancshares and Talbot Bancshares, and certain facts
relating to the Merger. We have assumed that such statements and representations
will be reconfirmed as of the Effective Date.
In rendering our opinion, we have considered the applicable provisions of
the U.S. Internal Revenue Code of 1986, as amended (the "Code"), Treasury
Regulations promulgated thereunder by the Treasury Department (the
"Regulations"), pertinent judicial authorities, rulings of the U.S. Internal
Revenue Service and such other authorities as we have considered relevant. It
should be noted that the Code, the Regulations, judicial decisions,
administrative interpretations and such other authorities are subject to change
at any time and, in some circumstances, with retroactive effect. A material
change in any of the authorities upon which our opinions are based could affect
our conclusions stated herein. In addition, there can be no assurance that the
Internal Revenue Service would not take a position contrary to that which is
stated in this opinion letter.
Based upon and subject to the foregoing, we are of the opinion that, for
United States federal income tax purposes:
(1) The transfer of all of the assets of Talbot Bancshares to Shore
Bancshares, and the assumption by Shore Bancshares of the liabilities of
Talbot Bancshares pursuant to the terms of the Plan, will constitute a
reorganization within the meaning of Section 368(a)(1)(A) of the Code.
Talbot Bancshares and Shore Bancshares will each be a "party to the
reorganization" within the meaning of Section 368(b) of the Code.
(2) A holder of Talbot Bancshares Common Stock who receives solely
shares of Shore Bancshares Common Stock in exchange for his Talbot
Bancshares Common Stock (including fractional shares of Shore Bancshares
Common Stock deemed issued as described below) will not recognize any gain
or loss upon the exchange.
(3) A holder of Talbot Bancshares Common Stock who receives cash in
lieu of a fractional share of Shore Bancshares Common Stock will be treated
as if he received a fractional share of Shore Bancshares Common Stock
pursuant to the Merger and Shore Bancshares then redeemed such fractional
share for the cash received. Such a holder will recognize capital gain or
loss on the constructive
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redemption of the fractional share in an amount equal to the difference
between the cash received and the adjusted basis of the fractional share.
(4) The basis of the Shore Bancshares Common Stock received by the
Talbot Bancshares stockholders (including fractional shares of Shore
Bancshares Common Stock deemed issued as described above) will be the same
as the basis of the Talbot Bancshares Common Stock surrendered in exchange
therefor.
(5) The holding period of the Shore Bancshares Common Stock received
by the Talbot Bancshares stockholders will include the period during which
the Talbot Bancshares Common Stock surrendered in exchange therefor was
held, provided that the Talbot Bancshares Common Stock is held as a capital
asset in the hands of the Talbot Bancshares stockholders on the date of the
exchange.
(6) No gain or loss will be recognized by Talbot Bancshares upon the
transfer of all of its assets to Shore Bancshares in exchange for shares of
the Common Stock of Shore Bancshares and the assumption by Shore Bancshares
of the liabilities of Talbot Bancshares.
(7) No gain or loss will be recognized by Shore Bancshares upon the
receipt by Shore Bancshares of all of the assets of Talbot Bancshares in
exchange for shares of the Common Stock of Shore Bancshares and the
assumption by Shore Bancshares of the liabilities of Talbot Bancshares.
(8) The basis of each asset of Talbot Bancshares in the hands of
Shore Bancshares will be the same as the basis of such asset in the hands
of Talbot Bancshares immediately prior to the Merger; the holding period of
each such asset in the hands of Shore Bancshares will include the periods
during which such asset was held by Talbot Bancshares.
(9) No gain or loss will be recognized to the stockholders of Shore
Bancshares as a result of the transactions contemplated by the Plan.
(10) The accumulated earnings and profits of Talbot Bancshares on the
Effective Date will be added to the accumulated earnings and profits of
Shore Bancshares and will be available for subsequent distributions of
dividends within the meaning of Section 316 of the Code.
(11) The summary of Federal income tax consequences set forth in the
Proxy Statement/Prospectus under the heading "The Merger - Material Federal
Income Tax Considerations" are accurate in all material respects as to
matters of law and legal conclusions.
Except as set forth above, we express no opinion to any party as to any
consequences of the Merger or any transactions related thereto. We are
furnishing this opinion to you solely in connection with the effectiveness of
the Registration Statement, and it is not to be used, relied
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upon, circulated, quoted or otherwise referred to by any other person for any
other purpose without our prior written consent. In accordance with the
requirements of Item 601(b)(23) of Regulation S-K under the Securities Act, we
hereby consent to the use of our name in the Proxy Statement/Prospectus and to
the filing of this opinion as an Exhibit to the Registration Statement. In
giving this consent, we do not admit that we come within the category of persons
whose consent is required under Section 7 of the Securities Act or the rules and
regulations of the Securities and Exchange Commission thereunder. This opinion
is expressed as of the date hereof, and we disclaim any undertaking to advise
you of any subsequent changes of the matters stated, represented or assumed
herein or any subsequent changes in applicable law.
Very truly yours,
/s/ Piper Marbury Rudnick & Wolfe LLP
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