[LETTERHEAD OF SILVER, FREEDMAN & TAFF]
July 24, 2000
Cascade Financial Corporation
2828 Colby Avenue
Everett, Washington 98201
Cascade Capital Trust I
2828 Colby Avenue
Everett, Washington 98201
Re: Registration Statement on Form S-4
Ladies and Gentlemen:
We have acted as special tax counsel to Cascade Financial Corporation,
a Delaware corporation ("Cascade Financial Corporation"), and Cascade Capital
Trust I, a business trust formed under the Business Trust Act of the State of
Delaware (the "Trust"), in connection with the exchange offer registration
statement on Form S-4 (the "Registration Statement") filed with the Securities
and Exchange Commission (the "Commission") for the purpose of (i) registering
under the Securities Act of 1933, as amended (the "Securities Act"), (a) the
guarantee by the Corporation of up to 10,000 of the Trust's 11.00% Capital
Securities, Series B, liquidation amount of $1,000 per capital security (the
"Exchange Capital Securities") with respect to distributions and payments upon
liquidation, redemption and otherwise (the "Exchange Guarantee"), (b) up to
$10,000,000 principal amount of 11.00% Junior Subordinated Deferrable Interest
Debentures due March 1, 2030, Series B (the "Exchange Junior Subordinated
Debentures") issued by the Corporation and (c) an aggregate of up to 10,000
11.00% Exchange Capital Securities (liquidation amount of $1,000 per security)
of the Trust, and (ii) exchanging (such event, the "Exchange") (a) the Exchange
Guarantee for the previously issued guarantee, (b) the Exchange Junior
Subordinated Debentures for the previously issued junior subordinated debentures
(the "Original Junior Subordinated Debentures") and (c) the Exchange Capital
Securities for the previously issued 11.00% Capital Securities, Series A,
liquidation amount of $1,000 per capital security (the "Original Capital
Securities"). Capitalized terms used and not defined herein shall have the
respective meanings set forth in the Registration Statement.
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of (i) the certificate of
trust of the Trust filed with the Secretary of State of the State of Delaware on
February 7, 2000; (ii) the Amended and Restated Declaration of Trust (including
the designations of the terms of the Trust Securities annexed thereto), dated
March 1, 2000 (the "Amended Declaration"), by and among Cascade Financial
Corporation, as Sponsor, Wilmington Trust Company, as Property Trustee and the
Delaware Trustee, and Frank M. McCord and C. F. Safstrom (collectively, the
"Administrative Trustees"); (iii) the form of certificates evidencing the
Original Capital Securities and the Exchange Capital Securities and annexed to
the Amended Declaration; (iv) the Registration Rights Agreement, dated February
25, 2000, by and among Cascade Financial Corporation, the Trust and the Initial
Purchaser; (v) the Indenture and the form of certificate evidencing the Original
Junior Subordinated Debentures and the Exchange Junior Subordinated Debentures;
and (vi) the Exchange Guarantee Agreement, by and between Cascade Financial
Corporation, as guarantor, and Wilmington Trust Company for the benefit of the
holders of the Exchange Capital Securities. We have also examined originals or
copies, certified or otherwise identified to our satisfaction, of such other
documents, certificates and records as we have deemed necessary or appropriate
as a basis for the opinions set forth herein.
In rendering the opinions expressed below, we have participated in the
preparation of the Registration Statement. Our opinion is conditioned on, among
other things, the initial and continuing accuracy of the facts, information,
covenants and representations set forth in the documents referred to above and
the statements and representations made by officers of Cascade Financial
Corporation and others. In our examination, we have assumed the genuineness of
all signatures, the legal capacity of 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 also have assumed that the
transactions related to the issuance of the Exchange Capital Securities and the
Exchange Junior Subordinated Debentures will be consummated in the manner
contemplated by the Registration Statement.
In rendering our opinion, we have considered the current provisions of
the Internal Revenue Code of 1986, as amended, Treasury regulations promulgated
thereunder, judicial decisions and Internal Revenue Service rulings, all of
which are subject to change, which changes may be retroactively applied. A
change in the authorities upon which our opinion is based could affect our
conclusions. There can be no assurances, moreover, that any of the opinions
expressed herein will be accepted by the Internal Revenue Service or, if
challenged, by a court.
Based solely upon the foregoing, we are of the opinion that under
current federal income tax law, as of the date hereof:
(i) although the discussion set forth in the Registration
Statement under the heading "CERTAIN FEDERAL INCOME TAX
CONSEQUENCES" does not purport to discuss all possible federal
income tax consequences of the Exchange and the ownership and
disposition of the Exchange Capital Securities or the Exchange
Junior Subordinated Debentures, such discussion constitutes,
in all material respects, a fair and accurate summary under
current law of the material federal income tax consequences of
such matters; and
(ii) the exchange of the Original Capital Securities for
Exchange Capital Securities will not be a taxable event for
federal income tax purposes.
For purposes of this letter, we do not express any opinion concerning
any law other than the federal income tax law of the United States. Furthermore,
our opinion is limited solely to the specific questions and conclusions set
forth herein and we express no opinion to any party as to the tax consequences,
whether federal, state, local or foreign, of the issuance of the Exchange Junior
Subordinated Debentures and the Exchange Capital Securities or of any
transaction related to or contemplated by such issuance.
We assume no obligation to advise you of any changes in the foregoing
subsequent to the delivery of this opinion. This opinion letter is rendered for
the benefit of the Cascade Financial Corporation, the Trust and the holders of
the Exchange Capital Securities. Copies of this opinion letter may not be
furnished to any other person, nor may any portion of this opinion letter be
quoted, circulated or referred to in any other document, without our prior
written consent.
We consent to the filing of this opinion as an Exhibit to the
Registration Statement, and to the reference to our firm under the heading
"Legal Matters" in the prospectus which is part of the Registration Statement.
Very truly yours,
By: /s/ Silver, Freedman & Taff, L.L.P.
Silver, Freedman & Taff, L.L.P.