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LAW OFFICES OF
XXXXXX XXXXXXXX L.L.P.
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A PROFESSIONAL LIMITED LIABILITY PARTNERSHIP
EXHIBIT 8
__________________, 2000
Frontier Financial Corporation Liberty Bay Financial Corporation
000 XX Xxxxxxx Xxxx Xxx 00000 0xx Xxxxxx X.X.
Everett, Washington 98204 Poulsbo, Washington 98370
Re: HOLDING COMPANY MERGER/TAX CONSEQUENCES
Ladies and Gentlemen:
This letter responds to your request for our opinion as to certain of
the federal income tax consequences of the proposed merger (the "Merger") of
Liberty Bay Financial Corporation ("Liberty") into Frontier Financial
Corporation ("Frontier").
We have acted as legal counsel to Frontier in connection with the
Merger. For the purpose of rendering this opinion, we have examined and relied
upon originals, certified copies, or copies otherwise identified to our
satisfaction as being true copies of the originals of the following documents,
including all exhibits and schedules attached to them:
(a) The Agreement and Plan of Mergers, dated as of March 15, 2000,
between Frontier, Frontier Bank, Liberty and North Sound Bank
(the "Merger Agreement").
(b) Form S-4 Registration Statement of Frontier declared effective
by the Securities and Exchange Commission on May ____, 2000.
(c) The Proxy Statement of Liberty (included as part of the
Registration Statement); and
(d) Such other documents, instruments, records and information
pertaining to the Merger as we have deemed necessary for
rendering our opinion.
We have assumed, without independent investigation or review, the
accuracy and completeness of the facts and representations and warranties
contained in those documents or otherwise made known to us, and that the Merger
will be effected in accordance with the terms of the Merger Agreement.
In connection with the Merger and pursuant to the Merger Agreement, each
share of Liberty voting common stock will be exchanged for that number of shares
of Frontier voting common stock based on the exchange rate established in the
Merger Agreement. Cash will be paid in exchange for fractional shares as
described in the Merger Agreement. Liberty shareholders who perfect their
dissenter's rights under state law will be paid the cash value for their Liberty
shares by Frontier. Upon the consummation of the Merger, Frontier will continue
the historic business of Liberty.
Based upon our review of the facts described above and our analysis of
the law, and subject to the qualifications and limitations set forth herein, and
the completion of the transactions described in the matter contemplated, it is
our opinion that:
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1. The merger of Liberty into Frontier solely for Frontier voting common
stock, as described above, will constitute a reorganization within the
meaning of Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as
amended (the "Code"). Liberty and Frontier 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 Liberty shareholders upon the
receipt of Frontier voting common stock solely in exchange for their
shares of Liberty stock, pursuant to Section 354(a)(1) of the Code.
3. The basis of the shares of Frontier voting common stock received by
Liberty shareholders will be the same as the basis of the Liberty stock
surrendered in exchange therefor, pursuant to Section 358(a)(1) of the
Code.
4. The holding period of the shares of Frontier voting common stock
received by Liberty shareholders will include the holding period during
which the Liberty stock surrendered in exchange therefor was held,
provided that the shares of Liberty stock were held as a capital asset
in the hands of the exchanging shareholders on the date of the exchange,
pursuant to Section 1223(1) of the Code.
5. Where cash is received by any dissenting shareholder of Liberty in
exchange for the surrender of all of such shareholder's Liberty stock,
the cash will be treated as received by the shareholder as a
distribution in redemption of his or her Liberty stock, subject to the
provisions and limitations of Section 302 of the Code.
6. A Liberty shareholder who receives cash in lieu of a fractional share of
Frontier voting common stock and who holds such fractional share as a
capital asset will recognize gain or loss equal to the difference
between the cash received and the shareholder's basis in that fractional
share.
7. No gain or loss will be recognized by Liberty upon the transfer of its
assets to Frontier, pursuant to Sections 361 and 357(a) of the Code.
8. The basis of the assets of Liberty acquired by Frontier will be the same
as the basis of Liberty in the assets immediately before the Merger,
pursuant to Section 362(b) of the Code.
9. The holding period of the assets acquired by Frontier will include the
period such assets were held by Liberty, pursuant to Section 1223(2) of
the Code.
10. No gain or loss will be recognized by Frontier upon the receipt by
Frontier of the assets of Liberty, as described above.
We have assumed, with your consent, that the Merger will be completed in
the manner set forth in the Merger Agreement and Registration Statement without
waiver or breach of any material provision thereof, and all of the
representations, warranties, statements and assumptions upon which we relied are
true and accurate at all relevant times. In the event any one of the statements,
representations, warranties
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or assumptions upon which we have relied to issue this opinion is incorrect, our
opinion might be adversely affected and may not be relied upon.
Our opinion represents only our best legal judgment as to the probable
federal income tax consequences of the transaction described, based upon
existing law. Our opinion is not intended to be a conclusive statement as to all
of the tax consequences of the transaction and is expressly limited to the
matters addressed. Further, our opinion is not binding upon the Internal Revenue
Service (the "IRS") or any court and has no official status of any kind, and no
private ruling regarding the matters discussed has been or will be requested
from the IRS. The IRS has ruled in a number of private rulings that transactions
substantially identical to the Merger result in tax consequences consistent with
those described in this opinion. Although such rulings do not constitute
authority on which we can rely in expressing our opinion, such rulings generally
do reflect the position of the IRS. Each shareholder, however, is urged to
consult with his or her own tax advisor with respect to their individual tax
situation. Our opinion is intended solely for the benefit of Frontier, the
shareholders of Frontier and the shareholders of Liberty, and may not be relied
upon for any other purpose or by any other person or entity or made available to
any other person or entity without our prior written consent.
Very truly yours,
XXXXXX XXXXXXXX, LLP
