Exhibit 8.1
[WILLIAMS, MULLEN, CLARK & DOBBINS LETTERHEAD]
July __, 2000
Board of Directors Board of Directors
Marathon Financial Corporation Rockingham Heritage Bank
4095 Valley Pike 110 University Boulevard
Winchester, Virginia 22602 Harrisonburg, Virginia 22801
Re: Tax Opinion -- Merger of Marathon Merger Bank,
a Wholly-Owned Subsidiary of Marathon Financial
Corporation, with and into Rockingham Heritage Bank
Ladies and Gentlemen:
You have requested our opinion as to certain federal income tax
consequences of the proposed merger (the "Merger") of Marathon Merger Bank
("Acquisition Subsidiary"), a wholly-owned subsidiary of Marathon Financial
Corporation ("MFC"), with and into Rockingham Heritage Bank ("Rockingham"),
pursuant to the Amended and Restated Agreement and Plan of Merger, made and
entered into as of June 21, 2000, between these parties (the "Agreement"). Our
opinion is given pursuant to Section 6.1(d) of the Agreement.
FACTS:
Rockingham is a corporation and a Virginia state bank organized under
Virginia law. Rockingham's principal executive offices are located at 110
University Boulevard, Harrisonburg, Virginia 22801.
MFC is a Virginia corporation and registered bank holding company under
the Bank Holding Company Act of 1956, as amended. Acquisition Subsidiary, a
wholly-owned bank subsidiary of MFC, is a corporation organized under Virginia
law. MFC's principal executive office is located at 4095 Valley Pike,
Winchester, Virginia 22602.
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Pursuant to the Agreement, Acquisition Subsidiary will be merged with
and into Rockingham in accordance with the provisions of Title 13.1 of the Code
of Virginia of 1950, as amended. Each outstanding share of Rockingham common
stock will automatically become and be converted into 1.58 shares of MFC common
stock. Cash will be paid in lieu of fractional shares. After the Merger,
Rockingham will continue its existing business and operations as a wholly-owned
subsidiary of MFC.
In connection with this opinion, we have reviewed (i) the Agreement,
(ii) MFC's Registration Statement on Form S-4, dated July __, 2000, including
the joint Proxy Statement/Prospectus contained therein, and (iii) such other
documents concerning the Merger as we have deemed necessary ((i), (ii) and (iii)
collectively, the "Merger Documents"). With respect to the various factual
matters material to our opinions, we have relied upon certificates of certain
officers of MFC and Rockingham (the "Officers' Certificates"). We have assumed
the correctness of the factual matters contained in such reliance sources and
have made no independent investigation for the purpose of confirming that such
factual matters are correct. As to all matters in which a person or entity has
represented that such person or entity either is not a party to, does not have,
or is not aware of, any plan or intention, understanding or agreement, we have
assumed that there is in fact no plan, intention, understanding or agreement. We
have also assumed that the Merger will be consummated in accordance with the
Agreement.
We have assumed (i) the genuineness of all signatures on the Merger
Documents, (ii) the due authorization, execution and delivery of all documents
and the validity and binding effect thereof, (iii) the authenticity of all
documents submitted to us as originals, (iv) the conformity to the originals of
all documents submitted to us as copies and the authenticity of the originals
from which the copies were made and (v) the legal capacity of natural persons.
OPINION:
Based on the foregoing and subject to the limitations and
qualifications set forth herein, we give our opinion as follows:
1. The Merger will qualify as a reorganization within the meaning
of Sections 368(a)(1)(A) and 368(a)(2)(E) of the Internal Revenue Code (the
"Code") and MFC and Rockingham will each qualify as a "party to a
reorganization" within the meaning of Section 368(b) of the Code.
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2. No gain or loss will be recognized for federal tax purposes by
MFC or Rockingham as a result of the Merger.
3. No gain or loss will be recognized for federal tax purposes by
the shareholders of Rockingham as a result of the exchange of their Rockingham
common stock solely for the common stock of MFC.
4. Any shareholder of Rockingham who receives cash in lieu of a
fractional share interest shall be treated as receiving a payment in redemption
of such fractional interest subject to the provisions of Section 302 of the
Code. Gain or loss will be realized and recognized with respect to such
shareholder and shall be measured by the difference between the redemption price
and the portion of the shareholder's basis in Rockingham stock allocable to such
fractional share interest.
5. The aggregate tax basis of the shares of MFC stock received by
each shareholder of Rockingham will be equal to the aggregate tax basis of such
shareholder's shares of Rockingham stock surrendered therefor in the Merger.
6. The holding period under Section 1223 of the Code for the
shares of MFC stock received by each shareholder of Rockingham will include the
holding period for the shares of Rockingham stock of such shareholder
surrendered therefor in the Merger, provided that the Rockingham shareholder
held such stock as a capital asset on the date of the Merger.
In rendering our opinion, we have considered the applicable provisions
of the Code, Treasury Regulations promulgated thereunder, pertinent judicial
authorities, interpretive rulings of the Internal Revenue Service and other
authorities as we have considered relevant. Our opinion is limited to the
federal tax law of the United States of America and is expressed as of the date
hereof. We do not assume any obligation to update or supplement our opinion to
reflect any fact or circumstance which hereafter comes to our attention or any
change in law which hereafter occurs. Our opinions are limited to the matters
expressly stated. No opinion is implied or may be inferred beyond such matters.
Our opinion expressed herein is made in connection with the Merger and
is solely for the benefit of MFC, Acquisition Subsidiary and Rockingham's
shareholders. We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement, which has been filed by MFC with the Securities and
Exchange Commission, and to the reference to our firm under the caption "Certain
Federal Income Tax Consequences" in the Prospectus and Proxy Statement forming a
part of the Registration Statement. This opinion may not, without our prior
written
consent, be otherwise distributed or relied upon by any other person, filed with
any other government agency or quoted in any other document.
Very truly yours,
Williams, Mullen, Clark & Dobbins, P.C.
By:
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