Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022-3897
Tel: (212) 735-3000
Fax: (212) 735-2000
May 14, 1997
Travelers Group Inc.
388 Greenwich Street
New York, NY 10013
Travelers Capital IV
Travelers Capital V
Travelers Capital VI
Travelers Capital VII
c/o Travelers Group Inc.
388 Greenwich Street
New York, New York 10013
Re: Travelers Group Inc.
Travelers Capital IV
Travelers Capital V
Travelers Capital VI
Travelers Capital VII
Registration Statement on Form S-3
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Ladies and Gentlemen:
We have acted as special counsel to (1) Travelers Capital IV,
Travelers Capital V, Travelers Capital VI and Travelers Capital VII (each, a
"Travelers Trust" and, together, the "Travelers Trusts"), each a statutory
business trust formed under the laws of the State of Delaware, and (2)
Travelers Group Inc. (the "Company"), a corporation organized under the laws
of the State of Delaware, in connection with the preparation of a
Registration Statement on Form S-3 (the "Registration Statement"), to be
filed by the Company and the Travelers Trusts with the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended
Travelers Group Inc.
Travelers Capital IV
Travelers Capital V
Travelers Capital VI
Travelers Capital VII
May 14, 1997
Page 2
(the "Act"). The Registration Statement relates to the issuance and sale
from time to time pursuant to Rule 415 of the General Rules and Regulations
promulgated under the Act, of the following securities with an aggregate
public offering price of up to $1,000,000,000: (i) preferred securities (the
"Trust Preferred Securities") of each of the Travelers Trusts, (ii) unsecured
junior subordinated debt securities (the "Junior Subordinated Debt
Securities") of the Company which are to be issued pursuant to an Indenture,
dated as of October 7, 1996 (the "Indenture"), between the Company and The
Chase Manhattan Bank, as debt trustee (the "Debt Trustee"), (iii) shares of
preferred stock, par value $1.00 per share (the "Preferred Stock"), of the
Company to be issued in one or more series, which may also be issued in the
form of depositary shares (the "Depositary Shares") evidenced by depositary
receipts (the "Receipts") pursuant to one or more deposit agreements (each, a
"Deposit Agreement") proposed to be entered into between the Company and a
depositary to be named (the "Depositary") and (iv) shares of common stock,
par value $.01 per share, of the Company as may be issuable upon conversion
of some or all of the Preferred Stock (the "Offered Common Stock"). The
Trust Preferred Securities, the Junior Subordinated Debt Securities, the
Preferred Stock, the Depositary Shares and the Offered Common Stock are
collectively referred to herein as the "Offered Securities."
The Trust Preferred Securities of each Travelers Trust are to be
issued pursuant to the Amended and Restated Declaration of Trust of such
Travelers Trust (each, a "Declaration" and, collectively, the
"Declarations"), each such Declaration being among the Company, as sponsor
and as the issuer of the Junior Subordinated Debt Securities to be held by
the Property Trustee (as defined below) of such Travelers Trust, Chase
Manhattan Bank Delaware, as Delaware trustee (the "Delaware Trustee"), The
Chase Manhattan Bank, as property trustee (the "Property Trustee"), and Heidi
G. Miller and Irwin R.
Travelers Group Inc.
Travelers Capital IV
Travelers Capital V
Travelers Capital VI
Travelers Capital VII
May 14, 1997
Page 3
Ettinger, as regular trustees (together, the "Regular Trustees").
This opinion is being delivered in accordance with the requirements
of Item 601(b)(5) of Regulation S-K under the Act. Capitalized terms used
but not otherwise defined herein have the meanings ascribed to them 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
form of the Registration Statement relating to the Offered Securities; (ii)
the certificates of trust of Travelers Capital IV and Travelers Capital V
filed with the Secretary of State of the State of Delaware on September 19,
1996 and the certificates of trust of Travelers Capital VI and Travelers
Capital VII filed with the Secretary of State of the State of Delaware on May
14, 1997 (collectively, the "Certificates of Trust"); (iii) the form of the
Declaration of each of the Travelers Trusts (including the designations of
the terms of the Trust Preferred Securities of such Travelers Trust annexed
thereto); (iv) the form of the Trust Preferred Securities of each of the
Travelers Trusts; (v) the form of the preferred securities guarantee
agreement (the "Preferred Securities Guarantee"), between the Company and The
Chase Manhattan Bank, as guarantee trustee (the "Preferred Securities
Guarantee Trustee"); (vi) the form of the Junior Subordinated Debt
Securities; (vii) an executed copy of the Indenture; (viii) the Restated
Certificate of Incorporation of the Company, as amended to date (the
"Certificate of Incorporation"); (ix) the Restated By-Laws of the Company, as
currently in effect (the "By-Laws"); and (x) a specimen certificate
evidencing the common stock, par value $.01 per share, of the Company (the
"Common Stock"). We have also examined originals or copies, certified or
otherwise identified to our satisfaction, of such other documents,
certificates and records as we have
Travelers Group Inc.
Travelers Capital IV
Travelers Capital V
Travelers Capital VI
Travelers Capital VII
May 14, 1997
Page 4
deemed necessary or appropriate as a basis for the opinions set forth herein.
In our examination, we have assumed the legal capacity of all
natural persons, the genuineness of all signatures, 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 copies. In making our examination of
documents executed or to be executed by parties other than the Company and
the Travelers Trusts, we have assumed that such parties had or will have the
power, corporate or other, to enter into and perform all obligations
thereunder and have also assumed the due authorization by all requisite
action, corporate or other, and execution and delivery by such parties of
such documents and that such documents constitute valid and binding
obligations of such parties. In addition, we have assumed that the
Declaration of each Travelers Trust, the Preferred Securities of each
Travelers Trust, the Preferred Securities Guarantee and the Junior
Subordinated Debt Securities will be executed in substantially the form
reviewed by us and that the terms of the Offered Trust Preferred Securities,
the Offered Debt Securities, the Offered Preferred Stock and the Depositary
Shares will have been established so as not to violate any applicable law,
the Certificate of Incorporation or By-Laws of the Company or result in a
default under or breach of any agreement or instrument binding upon the
Company or the Travelers Trusts and so as to comply with any requirement or
restriction imposed by any court or governmental body having jurisdiction
over the Company or the Travelers Trusts. We have also assumed that (i) the
liquidation preference of a share of the Preferred Stock will exceed the par
value thereof, (ii) the stock certificates evidencing the Preferred Stock to
be issued will be in a form that complies with, and the terms of such
Preferred Stock will be duly established in accordance with, the Delaware
General Corporation Law (the "DGCL"), and (iii)
Travelers Group Inc.
Travelers Capital IV
Travelers Capital V
Travelers Capital VI
Travelers Capital VII
May 14, 1997
Page 5
the stock certificate evidencing any Offered Common Stock issued will conform
to the specimen certificate examined by us and will be manually signed by an
authorized officer of the transfer agent and registrar for the Common Stock
and registered by such transfer agent and registrar. As to any facts
material to the opinions expressed herein which were not independently
established or verified, we have relied upon oral or written statements and
representations of officers, trustees and other representatives of the
Company, the Travelers Trusts and others.
Members of our firm are admitted to the bar in the States of
Delaware and New York, and we express no opinion as to the laws of any other
jurisdiction other than the laws of the United States of America to the
extent specifically referred to herein.
Based on and subject to the foregoing and to the other
qualifications and limitations set forth herein, we are of the opinion that:
1. With respect to the Trust Preferred Securities of each
Travelers Trust (the "Offered Trust Preferred Securities"), when (i) the
Registration Statement, as finally amended (including all necessary
post-effective amendments), has become effective under the Act; (ii) an
appropriate prospectus supplement with respect to the Offered Trust Preferred
Securities has been prepared, delivered and filed in compliance with the Act
and the applicable rules and regulations thereunder; (iii) the Declaration of
such Travelers Trust is duly executed and delivered by the parties thereto;
(iv) the terms of the Offered Trust Preferred Securities have been
established in accordance with the Declaration; (v) the Offered Trust
Preferred Securities have been issued and executed in accordance with the
Declaration and paid for in the manner contemplated in the Registration
Statement or any prospectus supplement relating thereto; and (vi) if the
Offered Trust Preferred Securities are to be sold pursuant to a firm
commitment underwritten offering, the
Travelers Group Inc.
Travelers Capital IV
Travelers Capital V
Travelers Capital VI
Travelers Capital VII
May 14, 1997
Page 6
underwriting agreement with respect to the Offered Trust Preferred Securities
has been duly authorized, executed and delivered by the applicable Travelers
Trust and the other parties thereto, (1) the Offered Trust Preferred
Securities will be duly authorized for issuance and will be validly issued,
fully paid and nonassessable, representing undivided beneficial interests in
the assets of such Travelers Trust and (2) the holders of the Offered Trust
Preferred Securities will be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit
organized under the DGCL. We bring to your attention, however, that the
holders of the Offered Trust Preferred Securities may be obligated, pursuant
to the Declaration of such Travelers Trust, to (i) provide indemnity and/or
security in connection with, and pay taxes or governmental charges arising
from, transfers of Offered Trust Preferred Securities and (ii) provide
security and indemnity in connection with the requests of or directions to
the Property Trustee of such Travelers Trust to exercise its rights and
powers under the Declaration of such Travelers Trust.
2. The Preferred Securities Guarantee, when duly executed and
delivered by the parties thereto, will be a valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms,
except to the extent that enforcement thereof may be limited by (i)
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, or
other similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).
3. With respect to any series of Junior Subordinated Debt
Securities (the "Offered Debt Securities"), when (i) the Registration
Statement, as finally amended (including all necessary post-effective
amendments), has become effective under the Act; (ii) an appropriate
prospectus supplement with respect to the
Travelers Group Inc.
Travelers Capital IV
Travelers Capital V
Travelers Capital VI
Travelers Capital VII
May 14, 1997
Page 7
Offered Debt Securities has been prepared, delivered and filed in compliance
with the Act and the applicable rules and regulations thereunder; (iii) the
Board of Directors, including any appropriate committee appointed thereby,
and appropriate officers of the Company have taken all necessary corporate
action to approve the issuance and terms of the Offered Debt Securities and
related matters; (iv) the terms of the Offered Debt Securities have been
established in conformity with the Indenture and (v) the Offered Debt
Securities are duly executed, delivered, authenticated and issued in
accordance with the Indenture and delivered and paid for in the manner
contemplated in the Registration Statement or any prospectus supplement
relating thereto, the Offered Debt Securities will be valid and binding
obligations of the Company, entitled to the benefits of the Indenture and
enforceable against the Company in accordance with their terms, except to the
extent that enforcement thereof may be limited by (i) bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium, or other similar laws now
or hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity).
4. With respect to the shares of any series of Preferred Stock
(the "Offered Preferred Stock"), when (i) the Registration Statement, as
finally amended (including all necessary post-effective amendments), has
become effective under the Act; (ii) an appropriate prospectus supplement
with respect to the shares of the Offered Preferred Stock has been prepared,
delivered and filed in compliance with the Act and the applicable rules and
regulations thereunder; (iii) the Board of Directors, including any
appropriate committee appointed thereby, and appropriate officers of the
Company have taken all necessary corporate action to approve the issuance and
terms of the shares of the Offered Preferred Stock and related matters,
including the adoption of a Certificate of Designation for the Offered
Preferred Stock; (iv) the
Travelers Group Inc.
Travelers Capital IV
Travelers Capital V
Travelers Capital VI
Travelers Capital VII
May 14, 1997
Page 8
filing of the Certificate of Designation with the Secretary of State of the
State of Delaware has duly occurred; (v) the terms of the Offered Preferred
Stock and of their issuance and sale have been duly established by all
necessary corporate action in conformity with the Company's Certificate of
Incorporation including the Certificate of Designation relating to the
Offered Preferred Stock and the By-Laws of the Company; (vi) if the Offered
Preferred Stock is to be sold pursuant to a firm commitment underwritten
offering, the underwriting agreement with respect to the shares of the
Offered Preferred Stock has been duly authorized, executed and delivered by
the Company and the other parties thereto; and (vii) certificates
representing the shares of the Offered Preferred Stock are duly executed,
countersigned, registered and delivered by the proper officers of the Company
to the purchasers thereof against payment of the agreed-upon consideration
therefor in the manner contemplated in the Registration Statement or any
prospectus supplement or term sheet relating thereto, (1) the shares of the
Offered Preferred Stock, when issued and sold in accordance with the
applicable underwriting agreement or any other duly authorized, executed and
delivered applicable purchase agreement, will be duly authorized, validly
issued, fully paid and nonassessable, provided that the consideration
therefor is not less than the par value thereof; and (2) if the Offered
Preferred Stock is convertible into Offered Common Stock, the Offered Common
Stock issuable upon conversion of the Offered Preferred Stock will be duly
authorized, validly issued, fully paid and nonassessable, assuming the
execution, authentication, issuance and delivery of the Offered Preferred
Stock and the conversion of the Offered Preferred Stock in accordance with
the terms of the Certificate of Designation. In rendering the opinion set
forth in clause (2) of this paragraph 4, we have assumed that, at the time of
issuance of any Offered Common Stock upon conversion of the Offered Preferred
Stock, the Certificate of Incorporation, the By-Laws and the DGCL shall not
have been amended so as to affect the validity of such issuance.
Travelers Group Inc.
Travelers Capital IV
Travelers Capital V
Travelers Capital VI
Travelers Capital VII
May 14, 1997
Page 9
5. With respect to Depositary Shares representing fractional
interests in any Offered Preferred Stock, when (i) the Registration
Statement, as finally amended (including all necessary post-effective
amendments), has become effective under the Act; (ii) an appropriate
prospectus supplement with respect to the Depositary Shares has been
prepared, delivered and filed in compliance with the Act and the applicable
rules and regulations thereunder; (iii) the Board of Directors, including any
appropriate committee appointed thereby, and appropriate officers of the
Company have taken all necessary corporate action to approve the issuance and
terms of the Depositary Shares and related matters, including the adoption of
the Certificate of Designation for the related Offered Preferred Stock; (iv)
the filing of the Certificate of Designation with the Secretary of State of
the State of Delaware has duly occurred; (v) the Deposit Agreement has been
duly executed and delivered; (vi) the terms of the Depositary Shares and of
their issuance and sale have been duly established by all necessary corporate
action in conformity with the Deposit Agreement; (vii) the related Offered
Preferred Stock that is represented by Depositary Shares has been duly
authorized, validly issued and delivered to the Depositary for deposit in
accordance with the laws of the States of Delaware and New York; (viii) if
the Depositary Shares are to be sold pursuant to a firm commitment
underwritten offering, the underwriting agreement with respect to the
Depositary Shares has been duly authorized, executed and delivered by the
Company and the other parties thereto; and (ix) the Receipts evidencing the
Depositary Shares are duly issued against the deposit of the Offered
Preferred Stock in accordance with the Deposit Agreement, such Receipts will
be validly issued and will entitle the holders thereof to the rights
specified therein and in the Deposit Agreement.
6. There is no provision in the Certificate of Incorporation which
purports to restrict the surplus of the Company by reason of the excess, if
any, of the
Travelers Group Inc.
Travelers Capital IV
Travelers Capital V
Travelers Capital VI
Travelers Capital VII
May 14, 1997
Page 10
liquidation preference of the shares of Preferred Stock over their par value.
The applicable provisions of the DGCL, 8 Del. C. Sections 154 and 170(a),
which define capital and surplus of a Delaware corporation available for the
payment of dividends, do not purport to restrict such surplus by reason of
any such excess. Moreover, we are not aware of any applicable provisions of
the Constitution of the State of Delaware nor any controlling Delaware case
law which would suggest that surplus would be restricted by the excess of the
liquidation preference over the par value of the shares of Preferred Stock.
Accordingly, while there are no authorities specifically addressing this
issue, it is our opinion that (i) there should be no restriction upon the
surplus of the Company available for the payment of dividends on any
outstanding capital stock of the Company solely by reason of the fact that
the liquidation preference of any shares of any series of Preferred Stock
exceeds the par value of such shares and (ii) no remedy should be available
to the holders of shares of any series of Preferred Stock before or after
payment of any dividend solely because such dividend would reduce the surplus
of the Company to an amount less than the amount of such excess, assuming
that the payment of such dividend is in accordance with the provisions of the
DGCL, and of the Certificate of Incorporation including the applicable
Certificate of Designation.
We hereby consent to the filing of this opinion with the Commission
as an exhibit to the Registration Statement. We also hereby consent to the
use of our name under the heading "Legal Matters" in the prospectus which
forms a part of the Registration Statement. In giving this consent, we do
not thereby admit that we are within the category of persons whose consent is
required under Section 7 of the Act or the rules and regulations of the
Commission promulgated thereunder. This opinion is expressed as of the date
hereof unless otherwise expressly stated and we disclaim any undertaking to
advise you
Travelers Group Inc.
Travelers Capital IV
Travelers Capital V
Travelers Capital VI
Travelers Capital VII
May 14, 1997
Page 11
of the facts stated or assumed herein or any subsequent changes in applicable
law.
Very truly yours,
/s/ Skadden, Arps, Slate, Meagher & Flom LLP