July 27, 2001
Cendant Corporation
9 West 57th Street
New York, NY 10019
Re: Offering of Upper DECS
Ladies and Gentlemen:
We have acted as special counsel to Cendant Corporation, a
Delaware corporation (the "Company"), in connection with the preparation of the
Prospectus Supplement, dated July 20, 2001 (the "Prospectus Supplement"),
relating to certain investment units (the "Upper DECS"), initially comprised of
forward purchase contracts to purchase shares of common stock of the Company,
par value $0.01 per share, and senior notes due 2006 (the "Notes") issued by the
Company.
In connection with this opinion, we have examined and relied
on originals or copies, certified or otherwise identified to our satisfaction,
of (i) the Underwriting Agreement, dated July 20, 2001, between Salomon Smith
Barney Inc. and the Company, (ii) the Registration Statement on Form S-3 (File
No. 333-49405) of the Company filed with the Securities and Exchange Commission
(the "Commission") on April 13, 1998, under the Securities Act of 1933, as
amended (the "Securities Act"), and the Registration Statement on Form S-3 (File
No. 333-65456) of the Company filed with the Commission on July 19, 2001, under
the Securities Act, (iii) the Prospectus of the Company, dated November 18, 1998
(the "Prospectus"), (iv) the Prospectus Supplement, (v) the Senior Indenture,
dated as of February 24, 1998, between the Company and The Bank of Nova Scotia
Trust Company of New York, as trustee (the "Trustee"), as supplemented by the
Fourth Supplemental Indenture, dated as of July 27, 2001, between the Company
and the Trustee, (vi) the Purchase Contract Agreement between the Company and
Bank One Trust Company, National Association, as Purchase Contract Agent, dated
as of July 27, 2001, and (vii) such
Cendant Corporation
July 27, 2001
Page 2
other documents, certificates, and records as we have deemed necessary or
appropriate as a basis for the opinion set forth herein. We have also relied
upon statements and representations made to us by representatives of the
Company. For purposes of this opinion, we have assumed the validity and accuracy
of the documents, certificates, records, statements, and representations
referred to above.
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, conformed or photostatic copies, and
the authenticity of the originals of such latter documents. In making our
examination of documents executed, or to be executed, by the parties indicated
therein, we have assumed that each party has, or will have, the power, corporate
or other, to enter into and perform all obligations thereunder and we have also
assumed the due authorization by all requisite action, corporate or other, and
execution and delivery by each party indicated in the documents and that such
documents constitute, or will constitute, valid and binding obligations of each
party.
Based upon the foregoing and in reliance thereon, and subject
to the qualifications, exceptions, assumptions and limitations herein contained,
we are of the opinion that:
(1) although the discussion set forth in the Prospectus
Supplement under the heading "CERTAIN UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES" does not purport to discuss all possible United States federal
income tax consequences of the purchase, ownership and disposition of the Upper
DECS, such discussion constitutes, in all material respects, a fair and accurate
summary of the United States federal income tax consequences of the purchase,
ownership and disposition of the Upper DECS, based upon current United States
federal income tax law; and
(2) the Notes will be treated as indebtedness of the Company
for United States federal income tax purposes.
We express no opinion concerning any tax consequences
associated with the Upper DECS other than those specifically set forth herein.
Cendant Corporation
July 27, 2001
Page 3
This opinion is delivered in accordance with the requirements
of Item 601(b)(8) of Regulation S-K under the Securities Act. In rendering our
opinion, we have considered the applicable provisions of the Internal Revenue
Code of 1986, as amended, Treasury Department regulations promulgated
thereunder, pertinent judicial authorities, interpretive rulings of the Internal
Revenue Service and such other authorities as we have considered relevant. It
should be noted that statutes, regulations, judicial decisions and
administrative interpretations are subject to change or differing
interpretations, possibly with retroactive effect. Moreover, there can be no
assurance that the opinion expressed herein will be accepted by the Internal
Revenue Service or, if challenged, by a court of law. A change in the
authorities or the accuracy or completeness of any of the information,
documents, certificates, records, statements, representations, covenants, or
assumptions on which our opinion is based could affect our conclusions. This
opinion is expressed as of the date hereof, and we are under no obligation to
supplement or revise our opinion to reflect any changes (including changes that
have retroactive effect) in applicable law or any information, document,
certificate, record, statement, representation, covenant or assumption relied
upon herein that becomes incorrect or untrue.
This opinion is delivered to you solely for use in connection
with the Prospectus Supplement and is not to be used, circulated, quoted or
otherwise referred to for any other purpose, or relied upon by any other person,
without our express written permission. In accordance with the requirements of
Item 601(b)(23) of Regulation S-K under the Securities Act, we hereby consent to
the filing of this opinion as an exhibit to the Prospectus Supplement and to the
reference to our firm in the Prospectus Supplement. In giving such consent, we
do not hereby admit that we are in the category of persons whose consent is
required under Section 7 of the Securities Act or the rules or regulations of
the Commission thereunder.
Very truly yours,
/s/ Skadden, Arps, Slate, Meagher &
Flom LLP