[Letterhead of
Stradley Ronon Stevens & Young, LLP]
August 29, 2000
Board of Directors
Patapsco Bancorp, Inc.
1301 Merritt Boulevard
Dundalk, MD 21222-2194
Attention: Thomas P. O'Neill, Chairman
RE: Agreement of Merger dated as of May 16, 2000 by and between
Patapsco Bancorp, Inc., and PN Financial, Inc., and Northfield
Bancorp, Inc.; Proposed Plan of Liquidation of Northfield
Bancorp, Inc. by Patapsco Bancorp Inc.; Proposed Agreement of
Merger by and between Patapsco Bank and Northfield Savings Bank.
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Ladies and Gentlemen:
You have requested our opinion with regard to certain federal income tax
consequences of the proposed merger ("Merger") of PN Financial, Inc. ("PN") with
and into Northfield Bancorp, Inc. ("Northfield") followed by the complete
liquidation ("Liquidation") of Northfield by Patapsco Bancorp, Inc. ("Patapsco")
and the cross-merger ("Cross-Merger") of Northfield Federal Savings Bank
("NFSB") with and into the Patapsco Bank.
In connection with the preparation of our opinion, we have examined and
have relied upon the following:
(i) The Agreement of Merger ("Merger Agreement") dated as of May
16, 2000 by and between Patapsco and Northfield, including the
exhibits thereto, the Resolution of Patapsco's Board of Directors
to undertake the Merger and the Resolution of Northfield's
shareholders approving the Merger;
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Board of Directors
August 29, 2000
Page 2
(ii) The proposed Plan of Liquidation of Northfield by Patapsco
including any exhibits thereto and the Resolution of Patapsco's
Board of Directors to undertake the Liquidation;
(iii) The proposed Agreement of Merger ("Cross-Merger Agreement")
by and between Patapsco Bank and NFSB, including the exhibits
thereto, the Resolution of Patapsco Bank's Board of Directors to
undertake the merger and the Resolution of NFSB's Board of
Directors approving the merger; and
(iv) The representations and undertaking of Patapsco
substantially in the form of Exhibits A and B.
In rendering this opinion, we have assumed that prior to consummation of
the Liquidation, the Plan of Liquidation will be duly and validly adopted, in
substantially the same form as proposed, in a manner in accordance with the
Bylaws of Northfield then in effect, by the Board of Directors and the
stockholders of Northfield. In addition, in rendering this opinion, we have
assumed that prior to consummation of the Cross-Merger, the Cross-Merger
Agreement will be duly and validly adopted, in substantially the same form as
proposed, in a manner in accordance with the respective Bylaws of The Patapsco
Bank and NFSB then in effect, by the respective Boards of Directors and the
stockholders of The Patapsco Bank and NFSB.
Our opinion is based solely upon applicable law and the factual information
and undertakings contained in the above-mentioned documents. In rendering our
opinion, we have assumed the accuracy of all information and the performance of
all undertakings contained in each of such documents in the manner described in
such documents, and we have assumed that all representations made to the
knowledge of any person or entity or with similar qualification will be true and
correct as if made without such qualification. We also have assumed the
authenticity of all original documents, the conformity of all copies to the
original documents, and the genuineness of all signatures. We have not attempted
to verify independently the accuracy of any information in any such document,
and we have assumed that such documents accurately and completely set forth all
material facts relevant to this opinion. We assume that the value of the "Merger
Consideration" described in the Merger Agreement will be equal in value, on a
per share basis, to each Northfield share for which it is exchanged and that any
transfer of property pursuant to the Liquidation will be accomplished within the
taxable year. All of our assumptions are made with your consent. If any fact or
assumption described herein or below is incorrect, any or all of the federal
income tax consequences described herein may be inapplicable. References herein
to the "Code" shall be to the Internal Revenue Code of 1986, as amended to the
date hereof.
OPINION
Subject to the foregoing, to the conditions and limitations expressed
elsewhere herein, and assuming that the Merger, Liquidation, and Cross-Merger
are consummated in accordance with the Merger Agreement, Plan of Liquidation,
and Cross-Merger Agreement respectively, we are of the opinion that for federal
income tax purposes:
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Board of Directors
August 29, 2000
Page 3
1. The merger of PNP Financial into Northfield under the Merger
Agreement will be treated as a purchase of Northfield's stock by
Patapsco.
2. None of PNP Financial, Northfield, nor Patapsco will recognize
gain or loss on Patapsco's deemed purchase of Northfield's
shares.
3. A stockholder of Northfield ("Northfield stockholder") may
realize gain or loss on the exchange ("Exchange") of such
stockholder's Northfield Bancorp Common Stock for the "Merger
Consideration" (as defined in the Merger Agreement) depending on
the stockholder's adjusted basis in the Northfield Bancorp Common
Stock the stockholder surrenders.
4. A Northfield stockholder's basis in the shares of Patapsco
Preferred Stock received will equal their fair market value, on
the date of the Exchange.
5. The character of any gain or loss a Northfield stockholder
recognizes as a result of the Merger will be either capital or
ordinary depending on whether the Northfield Common Stock the
Northfield stockholder surrenders is a capital asset in the
Northfield stockholder's hands and, if capital, long-term or
short-term depending on the length of time the Northfield
stockholder held the Northfield Common Stock the stockholder
surrenders.
6. The holding period of the shares of Patapsco Preferred Stock to
be received by a Northfield stockholder will commence on the day
immediately following the date of the Exchange.
7. Neither Patapsco nor Northfield will recognize gain or loss on
the Liquidation pursuant to sections 332(a) and 337(a) of the
Code.
8. On the date the Cross-Merger is undertaken, Patapsco Bank and
NFSB will each be a party to a reorganization under section
368(b)(2) of the Code.
9. The Cross-Merger of NFSB into Patapsco Bank will qualify as a
reorganization under section 368(a)(1)(A) of the Code.
10. Neither Patapsco Bank nor NFSB will recognize gain or loss on the
Cross-Merger under section 354(a)(1) of the Code.
We express no opinion with regard to: (1) the federal income tax
consequences of the Merger, Liquidation, and Cross-Merger not addressed
expressly by this opinion, including without limitation, (1) the tax
consequences, if any, to special classes of shareholders, if any, including
without limitation, foreign persons, insurance companies, tax-exempt entities,
retirement plans, dealers in securities, and persons who hold their PNP,
Northfield, or NFSB common stock as part of a "straddle," "hedge" or "conversion
transaction," and (2) federal, state,
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Board of Directors
August 29, 2000
Page 4
local and foreign taxes (or any other federal, state, local, or foreign laws)
not specifically referred to and discussed herein. Further, our opinion is based
upon the Code, Treasury Regulations proposed or promulgated thereunder, and
administrative interpretations and judicial precedents relating thereto, all of
which are subject to change at any time, possibly with retroactive effect, and
we assume no obligation to advise you of any subsequent change thereto. If there
is any change in the applicable law or regulations, or if there is any new
administrative or judicial interpretation of the applicable law or regulations,
any or all of the federal income tax consequences described herein may become
inapplicable.
The foregoing opinion reflects our legal judgement solely on the issues
presented and discussed herein. This opinion has no official status or binding
effect of any kind. Accordingly, we cannot assure you that the Internal Revenue
Service or any court of competent jurisdiction will agree with this opinion.
This opinion is provided solely for the benefit of Patapsco and Northfield.
Very truly yours,
Stradley, Ronon, Stevens & Young
/s/ Zachary P. Alexander
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Zachary P. Alexander, Esq.
