EXHIBIT 8.1
STRADLEY, RONON, STEVENS & YOUNG, LLP
December __, 1996
Board of Directors
Prime Bancorp., Inc.
6425 Rising Sun Avenue
Philadelphia, PA 19111
Re: Reorganization of Prime Bancorp., Inc. and First
Sterling Bancorp, Inc.
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Gentlemen:
In our capacity as counsel to Prime Bancorp., Inc., a Delaware
corporation ("Prime"), you have requested our opinion as to certain Federal
income tax consequences to Prime and its stockholders under the Internal Revenue
Code of 1986, as amended (the "Code"), of the reorganization ("Reorganization")
of Prime pursuant to (i) an Agreement and Plan of Reorganization dated June 12,
1996, as modified by a First Amendment thereto dated September 12, 1996 (the
"Merger Agreement") by and among Prime, First Sterling Bancorp, Inc., a
Pennsylvania corporation ("First Sterling") and Prime Newco, Inc., a
Pennsylvania corporation ("PA Prime"), (ii) an Agreement and Plan of Merger
dated September 12, 1996 (the "Prime Plan") by and between Prime and PA Prime,
and (iii) an Agreement and Plan of Merger dated December ___, 1996 (the "First
Sterling Plan") by and between First Sterling and PA Prime.
Pursuant to the Merger Agreement, the Prime Plan and the First
Sterling Plan, Prime and First Sterling will each merge with and into PA Prime,
with PA Prime as the survivor (the "Merger"). Each outstanding share of the
Prime common stock, par value $1.00 per share (together with each Prime
stockholder's proportionate interest in 10 shares of common stock of Prime (the
"Trust Shares") which have been sold and issued by Prime to a
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December __, 1996
Page 2
trustee who holds those shares under a Declaration of Trust for the
proportionate benefit of the holders of the Prime common stock as reflected on
the official stock transfer records of Prime, and for the sole purpose of
validating the corporate transactions involving Prime that are described herein)
("Prime Common Stock") will be converted into one share of PA Prime common
stock, par value $1.00 per share ("PA Prime Common Stock"), and each outstanding
share of the First Sterling common stock, par value $1.00 per share ("First
Sterling Common Stock"), will be converted into one share of PA Prime Common
Stock, par value $1.00 per share and the right to receive a cash payment in lieu
of fractional shares.
In rendering our opinion, we have considered and relied upon
(a) the Merger Agreement, (b) the Prime Plan, (c) the First Sterling Plan,
(d) the Prospectus/Joint Proxy Statement filed by Prime and PA Prime with the
Securities and Exchange Commission on October 8, 1996 (the "Registration
Statement"), (e) the opinion of Berwind Financial Group, L.P. to Prime dated
October 8, 1996 (which concludes that the consideration to be received in the
Merger is fair, from a financial point of view, to the holders of Prime Common
Stock), (f) certain representations concerning the Reorganization made to us by
First Sterling and Prime in letters dated December __, 1996 (the "Representation
Letters"), (g) the opinion of the law firm of Kania, Lindner, Lasak and Feeney
to Prime of even date herewith, (h) all other documents, financial and other
reports and corporate minutes which we deemed relevant or appropriate, and
(i) such statutes, regulations, rulings and decisions as we deemed material to
the rendition of this opinion. In addition, at your direction we have considered
the opinion of the law firm of Morris, Nichols, Arsht & Tunnell dated May 13,
1992 (as to certain matters of Delaware law relating to the authorization and
issuance of 1,380,000 shares of the common stock, par value $1.00 per share of
Prime, in a Subscription and Community Offering effected in November, 1988).
Our review of items (a) through (i) of the preceding paragraph
has been without independent verification. We have also relied upon the truth,
authenticity, accuracy and completeness of all documents, certifications and
instruments examined and the statements, covenants, representations and
warranties contained therein, the genuineness of all documents submitted to
us as originals, the conformity of the originals of all documents submitted
to us as certified or photostatic copies
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December __, 1996
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and the due execution and delivery of all documents where execution and delivery
are pre-requisites to the effectiveness thereof.
In addition, you have directed us to assume for purposes of
numbered paragraphs 6, 7 and 8 of this opinion (but not for purposes of numbered
paragraphs 1 through 5 and 9 and 10 of this opinion) that either (i) the Prime
Common Stock (other than the Trust Shares) is duly authorized, validly issued,
fully paid and nonassessable as a matter of Delaware corporate law, or (ii) that
the holders of the Prime Common Stock (other than the Trust Shares), by virtue
of such holdings, possess a proprietary interest in Prime (consisting of the
sole proprietary interest) of such a nature that the Prime Common Stock (other
than the Trust Shares) would be considered stock or securities for federal
income tax purposes.
Based on the foregoing and provided the Reorganization is
carried out in accordance with the applicable laws of the State of Delaware and
the Commonwealth of Pennsylvania, the Merger Agreement, the Prime Plan, the
First Sterling Plan, and the Representation Letters, it is our opinion that for
federal income tax purposes:
1. The Reorganization will constitute a reorganization within
the meaning of Section 368(a) of the Code and Prime, First Sterling and PA Prime
will each be "a party to a reorganization" within the meaning of Section 368(b)
of the Code.
2. No gain or loss will be recognized by Prime upon the
transfer of its assets to PA Prime in exchange for PA Prime Common Stock and the
assumption by PA Prime of the liabilities of Prime, pursuant to sections 361(a)
and 357(a) of the Code.
3. No gain or loss will be recognized by PA Prime on the
receipt of Prime's and First Sterling's assets in exchange for PA Prime Common
Stock, pursuant to Section 1032(a) of the Code.
4. The basis of the assets of Prime and First Sterling
received by PA Prime will, in each instance, be the same as the basis of those
assets to Prime and First Sterling,
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December __, 1996
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respectively, immediately prior to the transaction, pursuant to Section 362(b)
of the Code.
5. The holding period of the assets of Prime and First
Sterling received by PA Prime will, in each instance, include the period for
which such assets were held by Prime and First Sterling, respectively, pursuant
to Section 1223(2) of the Code.
6. No gain or loss will be recognized by the stockholders of
Prime upon the receipt of PA Prime Common Stock solely in exchange for their
Prime Common Stock, pursuant to Section 354(a)(1) of the Code.
7. The basis of the PA Prime Common Stock received by the
stockholders of Prime will be the same as the basis of the shares of the Prime
Common Stock surrendered in exchange therefor, pursuant to Section 358(a)(1) of
the Code.
8. The holding period of the PA Prime Common Stock received by
the stockholders of Prime for their shares of Prime Common Stock will include
the period during which the Prime Common Stock surrendered therefor was held,
provided that such shares are held as a capital asset on the date of the
exchange, pursuant to Section 1223(1) of the Code.
9. No gain or loss will be recognized by the shareholders of
First Sterling upon the receipt of PA Prime Common Stock solely in exchange
for their First Sterling Common Stock, pursuant to Section 354(a)(1) of the
Code, except that a First Sterling shareholder who receives cash in lieu of
a fractional share of First Sterling Common Stock will be treated for federal
income tax purposes as having received cash in redemption of such fractional
share interest and will recognize gain or loss as a result thereof. Such
gain or loss will generally be capital gain or loss if the shareholder holds
such First Sterling Common Stock as a capital asset.
10. Pursuant to Section 381(a) of the Code, PA Prime will
succeed to and take into account as of the date of the proposed transfer (as
defined in Section 1.381(b)-1(b) of the Income Tax Regulations) the items of
Prime and First Sterling described in Section 381(c) of the Code, subject to the
conditions and limitations specified in Sections 381(b) and (c), 382, 383 and
384 of the Code.
Notwithstanding the assumption (for purposes of numbered
paragraphs 6, 7 and 8 above) that the Prime Common Stock (other than the Trust
Shares) would be considered stock or securities for federal income tax purposes,
we believe the Prime Common Stock should be considered stock or securities for
federal income tax purposes. However, if the Prime Common Stock were determined
not to be stock or securities for federal income tax purposes due to the
technical questions relating to the initial issuance of the Prime Common Stock
in 1988, then gain or loss
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December __, 1996
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would be recognized by the stockholders of Prime upon the exchange of their
Prime Common Stock for PA Prime Common Stock in connection with the Merger. See
the discussion in the Registration Statement under the heading "The Merger --
Reasons for the Merger -- Prime."
Our opinions are based upon the Code, the applicable Treasury
Regulations promulgated thereunder, the present position of the Internal Revenue
Service as set forth in published revenue rulings and revenue procedures,
present administrative positions of the Internal Revenue Service, and existing
judicial decisions, all of which are subject to change either prospectively or
retroactively. Our opinions are not binding on the Internal Revenue Service or
the courts and all opinions and conclusions are subject to the normally
applicable review and audit procedures of the Internal Revenue Service.
Our opinions are conditioned upon the performance by Prime and
First Sterling of the undertakings in the Representation Letters. We assume no
obligation to advise you of any changes in law which may occur, whether the same
are retroactively or prospectively applied, or to update or supplement this
letter in any fashion to reflect any facts or circumstances which hereafter come
to our attention.
These opinions are being rendered to Prime, and may be relied
upon only by it, its stockholders and PA Prime. We consent to the use of these
opinions as an exhibit to the Registration Statement and to the reference to our
firm name in such Registration Statement as counsel which will pass upon certain
federal income tax matters relating to the Reorganization.
Very truly yours,
STRADLEY, RONON, STEVENS & YOUNG, LLP
By: ________________________________
Zachary P. Alexander, a Partner