[Letterhead of Morris, Nichols, Arsht and Tunnell]
June 2, 1998
Providian Financing I
c/o Providian Financial Corporation
201 Mission Street
San Francisco, California 94105
Re: Providian Financing I
Ladies and Gentlemen:
We have acted as special Delaware counsel to Providian Financing I, a
Delaware statutory business trust (the "Trust"), in connection with certain
matters relating to the organization of the Trust and the proposed issuance of
Preferred Securities to beneficial owners pursuant to and as described in the
Registration Statement (and the prospectus forming a part thereof (the
"Prospectus")) on Form S-3 filed by Providian Financial Corporation, Providian
Financing II, Providian Financing III, Providian Financing IV and the Trust with
the Securities and Exchange Commission (the "Commission") on or about the date
hereof (the "Registration Statement"). Capitalized terms used herein and not
otherwise herein defined are used as defined in the Amended and Restated
Declaration of Trust of the Trust in the form attached as Exhibit 4.13 to the
Registration Statement (the "Governing Instrument").
In rendering this opinion, we have examined copies of the following
documents in the forms provided to us: the Certificate of Trust of the Trust as
filed in the Office of the Secretary of State of the State of Delaware (the
"State Office") on May 29, 1998 (the "Certificate"); a Declaration of Trust of
the Trust dated as of May 29, 1998 (the "Original Governing Instrument"); the
Governing Instrument; the Registration Statement; and a certification of good
standing of the Trust obtained as of a recent date from the State Office. In
such examinations, we have assumed the genuineness of all signatures, the
conformity to original documents of all documents submitted to us as drafts or
copies or forms of documents to be executed and the legal capacity of natural
persons to complete the execution of documents. We have further assumed for
purposes of this opinion: (i) the due formation or organization, valid existence
and good standing of each entity (other than the Trust) that is a party to any
of the documents reviewed by us under the laws of the jurisdiction of its
respective formation or organization; (ii) the due authorization, execution and
delivery by, or on behalf of, each of the parties thereto of the
above-referenced documents (including, without limitation, the due execution and
delivery of the Governing Instrument and the underwriting agreement and the
pricing agreement relating to the
Providian Financing I
June 2, 1998
Page 2
Preferred Securities (which underwriting agreement and pricing agreement will
have terms consistent with the requirement of the Governing Instrument)
(respectively, the "Underwriting Agreement" and the "Pricing Agreement") prior
to the first issuance of Preferred Securities); (iii) that no event has occurred
subsequent to the filing of the Certificate, or will occur prior to the issuance
of the Preferred Securities, that would cause a dissolution or liquidation of
the Trust under the Original Governing Instrument or the Governing Instrument,
as applicable; (iv) that the activities of the Trust have been and will be
conducted in accordance with the Original Governing Instrument or the Governing
Instrument, as applicable, and the Delaware Business Trust Act, 12 Del. C.
sections 3801 et seq. (the "Delaware Act"); (v) that each Holder of a Preferred
Security will make payment of the required consideration therefor and will have
a Preferred Security or Preferred Securities registered in the name of such
Holder in the Register in consideration thereof, all in accordance with the
terms and conditions of the Governing Instrument, the Registration Statement,
the Underwriting Agreement and the Pricing Agreement; (vi) that the Preferred
Securities are issued and sold to the Preferred Securities Holders in accordance
with the terms, conditions, requirements and procedures set forth in the
Governing Instrument, the Registration Statement, the Underwriting Agreement and
the Pricing Agreement; and (vii) that the documents examined by us are in full
force and effect (or, as applicable, will be in full force and effect prior to
the issuance of the Preferred Securities), express the entire understanding of
the parties thereto with respect to the subject matter thereof and have not been
(or, as applicable, at the time of issuance of the Preferred Securities will not
have been) modified, supplemented or otherwise amended, except as herein
referenced. No opinion is expressed with respect to the requirements of, or
compliance with, federal or state securities or blue sky laws. We have not
participated in the preparation of the Registration Statement or any other
offering materials relating to the Preferred Securities and we assume no
responsibility for their contents. As to any fact material to our opinion, other
than those assumed, we have relied without independent investigation on the
above-referenced documents and on the accuracy, as of the date hereof, of the
matters therein contained.
Based on and subject to the foregoing (and the further assumptions set
forth below), and limited in all respects to matters of Delaware law, it is our
opinion that:
1. The Trust is a duly organized and validly existing business trust in
good standing under the laws of the State of Delaware.
2. The Preferred Securities, upon issuance, will constitute validly
issued and, subject to the qualifications set forth in paragraph 3 below, fully
paid and nonassessable beneficial interests in the trust.
3. Under the Delaware Act and the terms of the Governing Instrument,
each Preferred Security Holder of the Trust, in such capacity, will be entitled
to the same limitation of personal liability as that extended to stockholders of
private corporations for
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June 2, 1998
Page 3
profit organized under the General Corporation Law of the State of Delaware;
provided, however, we express no opinion with respect to the liability of any
Preferred Security Holder who is, was or may become a named Trustee of the
Trust. Notwithstanding the foregoing, we note that pursuant to the Governing
Instrument, the Trust may withhold amounts otherwise distributable to a Holder
and pay over such amounts to the applicable jurisdictions in accordance with
federal, state and local law and any amount withheld will be deemed to have been
distributed to such Holder and that, pursuant to the Governing Instrument,
Preferred Security Holders may be obligated to make payments or provide
indemnity or security under the circumstances set forth therein.
In connection with the foregoing opinions, we have assumed that at or
prior to the time of the issuance and delivery of any applicable Preferred
Securities, the registration Statement and any amendments thereto (including
post-effective amendments) will have been delivered and remain effective, a
prospectus supplement will have been prepared and filed with the commission
describing the Preferred Securities offered thereby (the terms of which will be
consistent with the requirements of the Governing Instrument), all required
approvals for the issuance of such Preferred Securities under the Governing
Instrument, the Underwriting Agreement and the Pricing Agreement will be in full
force and effect and will not have been modified or rescinded and there shall
not have occurred any change in law affecting the validity or enforceability of
such Preferred Securities. We have also assumed that none of the terms of any
Preferred Security to be established subsequent to the date hereof nor the
issuance and delivery of such Preferred Security, nor the compliance by the
Trust with the terms of such Preferred Security, will violate any applicable
federal or state law or will result in a violation of any provision of any
instrument or agreement then binding on the Trust or any restriction imposed by
any court or governmental body having jurisdiction over the Trust.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the heading "LEGAL
MATTERS" in the Prospectus and the prospectus supplement relating to the
issuance of Preferred Securities. In giving this consent, we do not thereby
admit that we come within the category of person whose consent is required under
section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Commission thereunder. This opinion speaks only as of the
date hereof and is based on our understandings or assumptions as to present
facts, and on our review of the above-referenced documents and the application
of Delaware law as the same exist as of the date hereof, and we undertake no
obligation to update or supplement this opinion after the date hereof for the
benefit of any person or entity with respect to any facts or circumstances that
may hereafter come to our attention or any changes in facts or law that may
hereafter occur or take effect. This opinion is intended solely for the benefit
of the
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June 2, 1998
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addressee hereof in connection with the matters contemplated hereby and may not
be relied on by any other person or entity or for any other purpose without our
prior written consent.
Very truly yours,
/s/ MORRIS, NICHOLS, ARSHT & TUNNELL
MORRIS, NICHOLS, ARSHT & TUNNELL