SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: (Date of earliest event reported) September 29, 1998
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Franklin Auto Trust 1998-1
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(Exact Name of Registrant as Specified in Charter)
Delaware 333-5869 51-6510047
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(State of Incorporation) (Commission (I.R.S. Employer
File Number) Identification No.)
47 West 200 South, Suite 500
Salt Lake City, Utah 84101
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including area code (302) 636-3305
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(Former Name or Former Address, if Changed Since Last Report)
NYFS08...:\60\46360\0040\2296\FRM9278S.580
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ITEM 5. Other Events
On September 29, 1998, Franklin Receivables LLC transferred
$131,394,000 of Prime, Non-Prime and Sub-Prime motor vehicle retail installment
sale contracts (the "Receivables"), to Franklin Auto Trust 1998-1 (the "Trust").
The Trust transferred the Receivables to The Chase Manhattan Bank, as indenture
trustee ("Indenture Trustee"), who in turn issued Class A-1 5.50% Asset Backed
Notes (the "Class A-1 Notes") in the aggregate original principal amount of
$109,000,000 due January 15, 2002 and Class A- 2 Asset Backed Notes (the "Class
A-2 Notes") in the aggregate original principal amount of $22,394,000 due
January 16, 2006.
ITEM 7. Financial Statements and Exhibits
(a) Financial Statements - Not Applicable
(b) Pro Forma Financial Information - Not Applicable
(c) Exhibits
Item 601(a)
of Regulation S-K
Exhibit No. Description
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4.1 Opinion of Weil, Gotshal & Manges LLP as to Legality
4.2 Opinion of Daniel Carr, in-house counsel to Franklin Capital
Corporation, the managing member of Franklin Receivables LLC
8.1 Opinion of Weil, Gotshal & Manges LLP as to certain tax matters
23.1 Consents of Experts and Counsel and Consent of
Pricewaterhousecoopers LLP as to the financial statements
23.2 (Consent of Weil, Gotshal & Manges LLP included in Exhibits 4.1
and 8.1)
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the Trust has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FRANKLIN AUTO TRUST 1998-1, by
Franklin Capital Corporation as
the Servicer
/s/ Jennifer J. Bolt
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Name: Jennifer J. Bolt
Title: President
September 29, 1998
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INDEX TO EXHIBITS
Exhibit No. Description
----------- -----------
4.1 Opinion of Weil, Gotshal & Manges LLP as to
Legality
4.2 Opinion of Daniel Carr in-house counsel to
Franklin Capital Corporation, the managing member
of Franklin Receivables LLC
5.1 Opinion of Weil, Gotshal & Manges LLP dated
September 29, 1998 as to certain tax matters
23.1 Consents of Experts of Counsel and Consent of
Pricewaterhousecoopers LLP as to the financial
statements
23.2 (consents of Weil, Gotshal & Manges LLP included
in Exhibits 4.1 and 8.1)
WEIL, GOTSHAL & MANGES LLP
A LIMITED LIABILITY PARTNERSHIP
INCLUDING PROFESSIONAL CORPORATIONS
767 FIFTH AVENUE
NEW YORK, NY 10153
212-310-8000
(FAX) 212-310-8007
September 29, 1998
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
MBIA Insurance Corporation
113 King Street
Armonk, NY 10504
Ladies and Gentlemen:
We have acted as counsel to Franklin Receivables LLC, a Delaware
limited liability company, as seller (the "Company"), Franklin Capital
Corporation, a Utah corporation, in its individual capacity and as servicer (in
its individual capacity, "Franklin Capital" and, as servicer, the "Servicer"),
FCC Receivables Corp., a Delaware corporation ("FCC Receivables"), and Franklin
Resources, Inc., a Delaware corporation ("Franklin Resources") in connection
with the preparation, authorization, execution and delivery of, and the
consummation of the transactions contemplated by: (i) the Sale and Servicing
Agreement, dated as of September 1, 1998 (the "Sale and Servicing Agreement")
among the Company, the Servicer, Franklin Resources, as representative, Bankers
Trust (Delaware) as the Owner Trustee (the "Owner Trustee") for Franklin Auto
Trust 1998-1 (the "Trust" or "Issuer") and the Trust, as Issuer, and
acknowledged and accepted by The Chase Manhattan Bank as the Indenture Trustee
and as the Indenture Collateral Agent (the "Indenture Trustee" and the
"Indenture Collateral Agent"); (ii) the Purchase Agreement dated as of September
1, 1998 (the "Purchase Agreement") between the Company and Franklin Capital, in
its individual capacity; (iii) the Insurance and Reimbursement Agreement, dated
as of September , 1998 (the "Insurance Agreement") among the Company, MBIA
Insurance Corporation ("MBIA"), as the Insurer (the "Insurer"), Franklin
Resources, Franklin Capital, in its individual capacity and as Servicer, and the
Indenture Trustee; (iv)
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the Spread Account and Payment Agreement, dated September 1, 1998 (the "Spread
Account Agreement") among the Company, the Servicer, Franklin Resources, as
payment provider, the Insurer, and The Chase Manhattan Bank, as the Insurer's
agent; (v) the Trust Agreement, dated September 1, 1998 (the "Trust Agreement")
between the Company and the Owner Trustee; (vi) the Premium Side Letter
Agreement, dated September 29, 1998 (the "Premium Agreement"), among the
Insurer, the Company and Franklin Resources; (vii) the Indenture, dated as of
September 1, 1998, (the "Indenture") among the Trust, the Indenture Trustee and
the Indenture Collateral Agent, (viii) the Class A-1 5.50% Notes and Class A-2
5.65% Notes (collectively, the "Notes") and (ix) the Servicer Deposit Support
Agreement, dated September 29, 1998 (the "Support Agreement"), between Franklin
Resources and the Indenture Trustee. The Sale and Servicing Agreement, the
Purchase Agreement, the Insurance Agreement, the Spread Account Agreement, the
Trust Agreement, the Premium Agreement, the Indenture and the Support Agreement
are collectively referred to as the "Agreements." We have also acted as counsel
to the Company, Franklin Capital, in its individual capacity and as Servicer,
and Franklin Resources in connection with the preparation, authorization,
execution, and delivery of, and the consummation of the transactions
contemplated by: (i) the Underwriting Agreement, dated as of September 24, 1998
(the "Underwriting Agreement") among the Company, Franklin Capital, FCC
Receivables and Goldman, Sachs & Co., as the underwriter (the "Underwriter"),
and (ii) the Letter Agreement, dated September 24, 1998 (the "Letter Agreement")
between Franklin Resources and the Underwriter, and (iii) the Indemnification
Agreement, dated September 29, 1998 (the "Indemnification Agreement") among the
Insurer, the Company, Franklin Resources and the Underwriter. Capitalized terms
defined in the Agreements, the Underwriting Agreement, the Letter Agreement and
Indemnification Agreement and used but not otherwise defined herein are used
herein as so defined.
In so acting, we have examined originals or copies, certified or
otherwise identified to our satisfaction, of the Agreements, the Notes, the
Underwriting Agreement, the Letter Agreement and the Indemnification Agreement
and such corporate records, agreements, documents and other instruments, and
such certificates or comparable documents of public officials and of officers
and representatives of the Company, Franklin Capital, FCC Receivables and
Franklin Resources, and have made such inquiries of such officers and
representatives, as we have
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deemed relevant and necessary as a basis for the opinions hereinafter set forth.
In such 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, conformed or photostatic copies and
the authenticity of the originals of such latter documents. As to all questions
of fact material to this opinion that have not been independently established,
we have relied upon certificates or comparable documents of officers and
representatives of the Company and upon the representations and warranties of
the Company, Franklin Capital, FCC Receivables and Franklin Resources contained
in the Agreements. We have also assumed, with your consent, (i) the due
formation and valid existence of Franklin Capital, FCC Receivables and Franklin
Resources, (ii) that each of Franklin Capital, FCC Receivables and Franklin
Resources has the requisite corporate power and authority to enter into and
perform the Agreements, the Underwriting Agreement, the Letter Agreement and the
Indemnification Agreement (as applicable) and (iii) the due authorization,
execution and delivery of the Agreements and the Underwriting Agreement, the
Letter Agreement and the Indemnification Agreement (as applicable) by Franklin
Capital in its individual capacity and as the managing member of the Company,
FCC Receivables and Franklin Resources, and (iv) that the execution, delivery
and performance of any of Franklin Capital's, FCC Receivables' or Franklin
Resources' obligations under the Agreements, the Notes, the Underwriting
Agreement, the Letter Agreement, and Indemnification Agreement (as applicable),
do not and will not conflict with or result in a material breach of, or
constitute a default under, or result in the creation or imposition of any
material lien, charge or encumbrance (other than as provided in the Agreements)
upon any of the property or assets of Franklin Capital, FCC Receivables and
Franklin Resources, pursuant to the terms of any indenture, mortgage, deed of
trust, loan agreement, guarantee, lease financing agreement or similar agreement
under which Franklin Capital, FCC Receivables or Franklin Resources is a debtor
or guarantor, nor will such action result in any violations of the provisions of
the Certificate or Articles of Incorporation, as amended or restated, or by-laws
of Franklin Capital, FCC Receivables or Franklin Resources.
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As used herein "to our knowledge" and "of which we are aware" means
the conscious awareness of facts or other information by any lawyer in our firm
actively involved in the transactions contemplated by the Agreements.
Unless otherwise indicated, references in this opinion to the "New
York UCC" mean the Uniform Commercial Code as in effect in New York on the date
hereof.
Based on the foregoing, and subject to the qualifications stated
herein, we are of the opinion that:
1. The Company is a limited liability company duly formed, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite limited liability company power and authority to own its
properties and to carry on its business as now being conducted. The Company is
duly qualified to transact business and is good standing as a foreign
corporation in each jurisdiction where the character of its activities requires
such qualification, except where the failure of the Company to be so qualified
would not have a material adverse effect on the business or operations of the
Company.
2. Assuming that the execution, delivery and performance of the Agreements
(to which the Company is a party), the Underwriting Agreement and the
Indemnification Agreement by the Company and the consummation by the Company of
the transactions contemplated thereby have been duly authorized by Franklin
Capital, as the managing member of the Company, the Agreements (to which the
Company is a party), the Underwriting Agreement, the Indemnification Agreement
and the written orders to the Owner Trustee to execute and deliver the Issue
Order and to execute and deliver the Certificates have been duly and validly
executed and delivered by the Company and the Company has full power and
authority to sell and assign the Trust Property to the Trust pursuant to the
Sale and Servicing Agreement and has duly authorized such sale and assignment.
3. The Agreements to which the Company is a party (except for the Trust
Agreement which is governed by Delaware law and as to which we give no opinion),
the Underwriting Agreement and the Indemnification Agreement (assuming the due
authorization, execution and delivery thereof by the other parties thereto
except Franklin Capital, FCC Receivables and Franklin Resources) constitute the
legal, valid and binding obligations of the Company,
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enforceable against it in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity) and except
to the extent that rights to indemnification and contribution thereunder may be
limited by federal or state securities laws or public policy relating thereto
and subject to the qualification that (i) certain remedial provisions of the
Agreements, the Underwriting Agreement and Indemnification Agreement may be
limited by federal or state securities laws or public policy relating thereto
and subject to the qualification that (ii) certain remedial provisions of the
Agreements, the Underwriting Agreement and Indemnification Agreement may be
unenforceable in whole or in part under the laws of the State of New York, but
the inclusion of such provisions does not affect the validity of the Agreements,
the Underwriting Agreement and Indemnification Agreement, and the Agreements,
the Underwriting Agreement and Indemnification Agreement contain adequate
provisions for enforcing payment of the obligations thereunder and for the
practical realization of the rights and benefits afforded thereby, and (iii) we
express no opinion as to the effect on the Agreements, the Underwriting
Agreement and the Indemnification Agreement, of the laws in any jurisdiction
other than the State of New York, including laws which limit the rates of
interest legally chargeable or collectable. No opinion is expressed in this
paragraph as to the perfection or priority of any liens granted pursuant to the
Agreements.
4. The Agreements to which Franklin Capital is a party (except for the
Trust Agreement which is governed by Delaware law and as to which we give no
opinion) and the Underwriting Agreement (assuming the due authorization,
execution and delivery thereof by the other parties thereto other than the
Company, FCC Receivables and Franklin Resources) constitute the legal, valid and
binding obligations of Franklin Capital, enforceable against it in accordance
with their respective terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial reasonableness,
good faith and fair
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dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity) and except to the extent that rights to indemnification and
contribution thereunder may be limited by federal or state securities laws or
public policy relating thereto and subject to the qualification that (i) certain
remedial provisions of the Agreements and the Underwriting Agreement may be
limited by federal or state securities laws or public policy relating thereto
and subject to the qualification that (ii) certain remedial provisions of the
Agreements and the Underwriting Agreement may be unenforceable in whole or in
part under the laws of the State of New York, but the inclusion of such
provisions does not affect the validity of the Agreements and the Underwriting
Agreement, and the Agreements and the Underwriting Agreement contain adequate
provisions for enforcing payment of the obligations thereunder and for the
practical realization of the rights and benefits afforded thereby, and (iii) we
express no opinion as to the effect on the Agreements and the Underwriting
Agreement of the laws in any jurisdiction other than the State of New York,
including laws which limit the rates of interest legally chargeable or
collectable. No opinion is expressed in this paragraph as to the perfection or
priority of any liens granted pursuant to the Agreements.
5. The Agreements to which Franklin Resources is a party (except for the
Trust Agreement which is governed by Delaware law and as to which we give no
opinion), the Letter Agreement and the Indemnification Agreement (assuming the
due authorization, execution and delivery thereof by the other parties thereto
other than the Company, FCC Receivables and Franklin Capital) constitute the
legal, valid and binding obligations of the Franklin Resources, enforceable
against it in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and subject, as
to enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity) and except to the
extent that rights to indemnification and contribution thereunder may be limited
by federal or state securities laws or public policy relating thereto and
subject to the qualification that (i) certain remedial provisions of the
Agreements may be limited by federal or state securities laws or public policy
relating thereto and subject to the qualification that
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(ii) certain remedial provisions of the Agreements, the Letter Agreement and the
Indemnification Agreement may be unenforceable in whole or in part under the
laws of the State of New York, but the inclusion of such provisions does not
affect the validity of the Agreements, the Letter Agreement and the
Indemnification Agreement, and the Agreements, the Letter Agreement and the
Indemnification Agreement contain adequate provisions for enforcing payment of
the obligations thereunder and for the practical realization of the rights and
benefits afforded thereby, and (iii) we express no opinion as to the effect on
the Agreements, the Letter Agreement and the Indemnification Agreement of the
laws in any jurisdiction other than the State of New York, including laws which
limit the rates of interest legally chargeable or collectable. No opinion is
expressed in this paragraph as to the perfection or priority of any liens
granted pursuant to the Agreements.
6. The Underwriting Agreement (assuming the due authorization, execution
and delivery thereof by the other parties thereto other than the Company and
Franklin Capital) constitute the legal, valid and binding obligation of FCC
Receivables, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity) and except
to the extent that rights to indemnification and contribution thereunder may be
limited by federal or state securities laws or public policy relating thereto
and subject to the qualification that (i) certain remedial provisions of the
Underwriting Agreement may be limited by federal or state securities laws or
public policy relating thereto and subject to the qualification that (ii)
certain remedial provisions of the Underwriting Agreement, may be unenforceable
in whole or in part under the laws of the State of New York, but the inclusion
of such provisions does not affect the validity of the Underwriting Agreement,
contains adequate provisions for enforcing payment of the obligations thereunder
and for the practical realization of the rights and benefits afforded thereby,
and (iii) we express no opinion as to the effect on the Underwriting Agreement
of the laws in any jurisdiction other than the State of New York, including laws
which limit the rates of interest legally chargeable or collectable. No
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opinion is expressed in this paragraph as to the perfection or priority of any
liens granted pursuant to the Underwriting Agreement.
7. Neither the transfer of the Receivables by the Company to the Indenture
Trustee on behalf of the Trust, nor the assignment by the Company of the Trust
Estate to the Trust, nor the grant by the Trust of the security interest in the
Collateral to the Indenture Trustee pursuant to the Indenture, nor the execution
and delivery of the Agreements (to which it is a party), the Underwriting
Agreement and the Indemnification Agreement by the Company, and the consummation
of the transactions contemplated thereby and the compliance by it of the
provisions thereof will conflict with or constitute a default under or violate
(i) any of the terms, conditions or provisions of the certificate of formation
or the limited liability company operating agreement, as amended and restated,
of the Company; (ii) any of the terms, conditions, or provisions of any material
document, agreement or other instrument to which the Company is a party or by
which it is bound of which we are aware; (iii) any New York, Delaware corporate
or limited liability company or federal law or regulation (other than federal
and state securities or blue sky laws, as to which we express no opinion) or
(iv) any judgment, writ, injunction, decree, order or ruling of any court or
governmental authority binding on the Company, of which we are aware.
8. No consent, approval, waiver, license or authorization or other action
by or filing with any New York or federal governmental authority is required in
connection with the execution and delivery by the Company, FCC Receivables,
Franklin Capital and Franklin Resources of the Agreement, the Underwriting
Agreement, the Indemnification Agreement and the Letter Agreement (to which the
Company, FCC Receivables, Franklin Capital and Franklin Resources is a party,
respectively) or the consummation by the Company, FCC Receivables, Franklin
Capital and Franklin Resources of the transactions contemplated thereby, except
for filings in connection with perfecting security interests.
9. The execution and delivery of the Indenture is effective to create a
valid security interest (as defined in the New York UCC) in favor of the
Indenture Collateral Agent in the Trust's interest in the Collateral (as such
term is defined in the Indenture) and the proceeds thereof to secure the
obligations of the Trust set forth in the Indenture.
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10. Assuming that the Trust Agreement validly forms the Trust grants the
power to issue the Class A-1 Notes and the Class A-2 Notes and authorizes the
Trust to execute and deliver the Class A-1 and Class A-2 Notes, the Class A-1
Notes and Class A-2 Notes have been duly authorized and when executed and
authenticated by the Indenture Trustee as contemplated by the Agreements and
delivered and paid for pursuant to the Underwriting Agreement, will be duly and
validly issued, outstanding and enforceable and entitled to the benefits
provided by the Agreements, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
11. To the best of our knowledge, no contracts or documents of the Company
which are required to be filed as exhibits to the registration statement on Form
S-3 (No. 333- 56869), filed with the Securities and Exchange Commission (the
"Commission") on June 15, 1998, as amended, (the "Registration Statement")
pursuant to the Securities Act of 1933, as amended, (the "Act") or the rules or
regulations thereunder have not been so filed.
12. The Registration Statement has become effective under the Act as of
September 18, 1998 and, to our knowledge, no stop order suspending the
effectiveness of the Registration Statement or any part thereof or amendment
thereto has been issued and no proceeding for that purpose has been instituted
or threatened by the Commission.
13. The Company is not and will not become as a result of execution of the
Agreements an "investment company" as defined in the Investment Company Act of
1940, as amended (the "Investment Company Act"), or a company "controlled by" an
"investment company within the meaning of the Investment Company Act.
14. The Trust Agreement is not required to be qualified under the Trust
Indenture Act of 1939, as amended, (the "Trust Indenture Act") and the Trust is
not required to be registered as an "investment company" under the Investment
Company Act of 1940, as amended.
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15. The Indenture has been duly qualified under the Trust Indenture Act.
16. Assuming full compliance with all the terms of the Agreements, it is
our opinion that the statements contained in the Prospectus and in the
Prospectus Supplement under the caption "ERISA Considerations," insofar as such
statements constitute matters of law or legal conclusions and except to the
extent qualified therein, are correct in all material respects.
17. The Registration Statement and the Prospectus (except for the
financial statements and the notes thereto, the exhibits, annexes and other
financial, statistical, numerical and accounting data and portfolio data,
economic conditions and financial condition of the portfolio information
included in or which should be included in, or incorporated by reference into,
the Registration Statement or the Prospectus, as to which we express no opinion)
comply as to form in all material respects with the requirements of the
Securities Act of 1933, as amended, and the rules and regulations thereunder.
We have participated in conferences with directors, officers and
other representatives of the Company, Franklin Capital, FCC Receivables and
Franklin Resources, representatives of the independent public accountants for
the Company, Franklin Capital, FCC Receivables and Franklin Resources,
representatives of the Underwriter and representatives of counsel for the
Underwriter, at which conferences the contents of the Registration Statement and
the Prospectus and related matters were discussed, and, although we have not
independently verified and are not passing upon and assume no responsibility for
the accuracy, completeness or fairness of the statements contained in the
Registration Statement and Prospectus (except to the extent specified in the
foregoing opinion), no facts have come to our attention which lead us to believe
that the Registration Statement, on the effective date thereof, contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements contained therein not
misleading or that the Prospectus, on the date thereof or on the date hereof,
contained or contains an untrue statement of a material fact or omitted or omits
to state a material fact required to be stated therein or necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not
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misleading (it being understood that we express no view with respect to the
financial statements and related notes, the financial statement schedules and
the other financial, statistical and accounting data included in the
Registration Statement or Prospectus or any information therein regarding MBIA
or provided by the Underwriter).
The opinions expressed herein are limited to the laws of the State
of New York, the corporate and limited liability company laws of the State of
Delaware and the federal laws of the United States, and we express no opinion as
to the effect on the matters covered by this letter of the laws of any other
jurisdiction.
The opinion expressed in paragraph 16 to the extent it relates to
federal law is based on current provisions of the Employee Retirement Income
Security Act of 1974, as amended, the Department of Labor Regulations
promulgated thereunder, the Internal Revenue Code of 1986, the Treasury
Regulations promulgated thereunder, published pronouncements of the Department
of Labor and Internal Revenue Service, and case law. Any rules set forth in any
of the foregoing authorities may be changed at any time with retroactive effect.
Further, you should be aware that opinions of counsel are not binding on the
Department of Labor, the Internal Revenue Service or the courts. We express no
opinion either as to any matters not specifically covered by the opinion
expressed in paragraph 16 or as to the effect on the matters covered by opinion
of the laws of any other jurisdictions. Additionally, we undertake no obligation
to update this opinion in the event there is either a change in the legal
authorities, in the facts, including the taking of any action by any party to
any of the transactions described in the Agreements pursuant to any opinion of
counsel as required by any of the Agreements relating to such transactions, or
in the Agreements on which this opinion is based, or an inaccuracy in any of the
representations or warranties upon which we have relied in rendering such
opinion.
The opinions expressed herein are rendered solely for your benefit
in connection with the transactions described herein. Those opinions may not be
used or relied upon by any other person, except by each of Standard & Poor's, a
division of The McGraw-Hill Companies, Inc. and Moody's Investors Service, Inc.,
may rely on this opinion as if it had been addressed to them, nor may this
letter or any copies thereof be furnished to a third party, filed with a
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governmental agency, quoted, cited or otherwise referred to without our prior
written consent.
Very truly yours,
/s/ Weil, Gotshal & Manges LLP
12
[LETTERHEAD OF FRANKLIN RESOURCES, INC.]
September 29, 1998
Goldman Sachs & Co.
85 Broad Street
New York, New York 10004
MBIA Insurance Corporation
113 King Street
Armonk, New York 10504
Re: Franklin Auto Trust 1998-1
Ladies and Gentlemen:
The undersigned is in-house counsel for Franklin Resources, Inc.
("Resources"), a Delaware corporation, Franklin Capital Corporation, a Utah
corporation ("FCC") that formed and is the managing member of Franklin
Receivables LLC, a Delaware limited liability company ("LLC"), and FCC
Receivables Corp. ("FRC"), a Delaware corporation, which is a member of LLC.
Resources, FCC, LLC and FRC are referred to in this letter individually as a
"Franklin Company" and collectively as the "Franklin Companies".
The undersigned has acted in the capacity of in-house counsel for the
Franklin Companies in connection with:
(i) the sale and assignment of a pool of certain motor vehicle retail
installment sales contracts secured by new and used automobiles and
light duty trucks (the "Receivables") by FCC to LLC pursuant to a
Purchase Agreement dated as of September 1, 1998 (the "Purchase
Agreement") between FCC and LLC;
(ii) the purchase by Goldman, Sachs & Co. as underwriter (the
"Underwriter") of the Class A-1 Notes and Class A-2 Notes
(collectively, the "Notes") to be issued by the trust (the "Franklin
Auto Trust 1998-1" orthe "Trust") created pursuant to the Amended and
Restated Trust Agreement (the "Trust Agreement") dated as of September
1, 1998 by LLC as trustor and Bankers Trust (Delaware) as trustee (the
"Owner Trustee") to LLC in payment for the Receivables which will be
transferred by LLC to the Owner Trustee for the Trust pursuant to a
Sale and Servicing Agreement dated as of September 1, 1998 (the "Sale
and Servicing Agreement") among Resources, FCC, LLC, the Owner Trustee
and the Trust, and the Chase Manhattan Bank, as the indenture trustee
and indenture collateral agent; and
(iii) the following agreements and undertakings:
(A) A letter agreement dated as of September 24, 1998 to be
executed by Resources in favor of the Underwriter by which
Resources undertakes to guarantee certain obligations of FCC, FCR
and LLC in connection with an underwriting agreement dated as of
September 24 , 1998 among the Underwriter, FFC, LLC and FRC;
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Goldman Sachs/MBIA Insurance Corporation
September 29, 1998
Page 2
(B) An Insurance and Reimbursement Agreement dated as of
September 29 , 1998 and a Spread Account and Payment agreement
dated as of September 1 , 1998, in each case, among Resources,
FCC, LLC, Chase Manhattan Bank and MBIA Insurance Corporation;.
(C) An Indemnification Agreement among Resources, LLC, MBIA
Insurance Corporation and the Underwriter dated September 29,
1998;
(D) A Servicer Deposit Support Agreement executed by Resources as
of September 29, 1998 in favor of Chase Manhattan Bank, in its
capacity as Trustee (the "Trustee") under Indenture dated as of
September 1, 1998 between the Franklin Auto Trust 1998-1 and the
Trustee;
(E) A Premium Side Letter Agreement dated as of September 29,
1998 among MBIA Insurance Corporation, FRI and LLC.
The Receivables sold by FCC to LLC under the Purchase Agreement and transferred
by LLC (in such capacity, the "Seller") to the Owner Trustee for the Trust will
continue to be serviced by FCC (in such capacity, the "Servicer"). Each of the
agreements identified above and entered into by, as applicable, Resources, FCC,
FRC and/or LLC in connection with the sale by the Seller of the Notes to the
Underwriter, shall be referred to in this letter collectively as the "Franklin
Auto Trust Agreements" and the transactions described therein shall be referred
to as the "Franklin Auto Trust Transaction".
The terms used in this opinion which are defined in any of the Franklin
Auto Trust Agreements shall have the same definitions when used herein, unless
otherwise defined herein.
The undersigned has obtained and relied upon such certificates of
public officials and other documents as the undersigned has deemed it necessary
to require as a basis for the opinions hereinafter expressed.
The undersigned has investigated such questions of law for the purpose
of rendering this opinion as the undersigned has deemed necessary. In addition,
the undersigned expresses no opinion with respect to state or federal securities
or "blue sky" laws or state or federal antifraud laws.
In the undersigned's capacity as in-house counsel to the Franklin
Companies, the undersigned is familiar with all relevant corporate or other
agreements, documents and affairs of the Franklin Companies. Based on a review
of those documents, and other investigations deemed appropriate, the undersigned
is of the following opinion:
(i) Each of Resources and FRC has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the state of its
incorporation, with full corporate power and authority to own its properties and
conduct its business as described in the registration statement filed in
connection with the Franklin Auto Trust Transaction (the "Registration
Statement"), and each is duly qualified to transact business and is in good
standing in each jurisdiction in which its failure to qualify would have a
material adverse effect upon the business or the ownership of its property.
(ii) Each Franklin Auto Trust Agreement to which Resources, LLC and/or FRC is a
party has been duly authorized, executed and delivered by that Franklin Company
<PAGE>
Goldman Sachs/MBIA Insurance Corporation
September 29, 1998
Page 3
(iii) The execution, delivery and performance of the Franklin Auto Trust
Agreements to which Resources and/or FRC is a party will not conflict with or
result in a breach of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any of the properties or assets of of Resources or FRC,
pursuant to the terms of each company's Certificate of Incorporation or the
Articles of Incorporation, as the case may be, or its By-Laws, any statute, any
rule, regulation or order of any governmental agency or body or any court having
jurisdiction over Resources and/or FRC or any of their properties or any
material agreement or instrument to which either Resources and/or FRC is a party
or by which either Resources or FRC of any of their properties are bound.
(iv) To the best of the undersigned's knowledge, there are no legal or
governmental proceedings pending to which any Franklin Company is a party or of
which any property of a Franklin Company is the subject, and no such proceedings
are known to the undersigned to be threatened or contemplated by governmental
authorities or threatened by others (i) asserting the invalidity of all or any
part of the Franklin Auto Trust Agreements or (ii) that could materially
adversely affect the ability of FCC, LLC or Resources to perform their
obligations under any of the Franklin Auto Trust Agreements to which any is a
party.
(v) The FCC has full corporate power and authority to sell and assign the
property to be sold and assigned to the Seller pursuant to the Purchase
Agreement and has duly authorized such sale and assignment to the Seller by all
necessary corporate action.
(vi) The undersigned is familiar with FCC's standard operating procedures
relating to FCC's acquisition of a perfected first priority security interest in
the motor vehicles financed by the retail installment sale contracts purchased
by FCC in the ordinary course of FCC's business and relating to the sale by FCC
to Seller of such contracts and such security interests in the Financed
Vehicles. Assuming that FCC's standard procedures are followed with respect to
the perfection of security interests in the Financed Vehicles (and such counsel
has no reason to believe that the FCC has not or will not continue to follow its
standard procedures in connection with the perfection of security interests in
the Financed Vehicles), FCC has acquired or will acquire a perfected first
priority security interest in the Financed Vehicles.
(vii) FCC has all necessary licenses required by law in connection with
performance as Servicer pursuant to the Sale and Servicing Agreement
(viii) Immediately prior to the transfer of certain of the Receivables by FCC
pursuant to the Purchase Agreement, FCC was the sole owner of all right, title
and interest in the Receivables and the other property transferred by it to the
Seller. Immediately prior to the transfer of certain of the Receivables by the
Seller pursuant to the Sale and Servicing Agreement, the Seller was the sole
owner of all right, title and interest in the Receivables and the other property
transferred by it to the Trust.
(ix) To the best of the undersigned's knowledge, there are no material legal or
governmental proceedings pending or threatened against FCC, FRC or Resources
other than those disclosed in the registration statement filed with the
Securities and Exchange Commission on June 15, 1998, as amended (the
"Registration Statement") pursuant to the Securities Act of 1933, as the amended
(the "Act"), or the rules or regulations thereunder, which Registration
Statement became effective under the Act as of September 18, 1998.
<PAGE>
Goldman Sachs/MBIA Insurance Corporation
September 29, 1998
Page 4
The opinions expressed herein are rendered solely for your benefit in
connection with the transactions described herein. Those opinions may not be
used or relied upon by any other person, excepting, however, Standard & Poor's,
a division of The McGraw-Hill Companies, Inc. and Moody's Investors Service,
Inc., which companies may rely on this opinion as if it had been addressed to
each of them. You may not furnish this letter or any copies of this letter to a
third party or permit this letter or any copy of this letter to be filed with a
governmental agency, quoted, cited or otherwise referred to without our prior
written consent.
Very truly yours,
/s/ Daniel L. Carr
Daniel L. Carr
Senior Corporate Counsel
WEIL, GOTSHAL & MANGES LLP
A LIMITED LIABILITY PARTNERSHIP
INCLUDING PROFESSIONAL CORPORATIONS
767 FIFTH AVENUE
NEW YORK, NY 10153
212-310-8000
(FAX) 212-310-8007
September 30, 1998
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Re: Franklin Auto Trusts Asset Backed Notes
---------------------------------------
Ladies and Gentlemen:
We have acted as counsel to Franklin Receivables LLC ("FCC LLC"), a
Delaware limited liability company, and FCC Receivables Corp. ("FCC"), a
Delaware corporation (together with FCC LLC, the "Companies"), in connection
with the preparation, authorization, execution and delivery of, and the
consummation of the transactions contemplated by (i) the Sale and Servicing
Agreement, dated as of September 1, 1998 (the "Sale and Servicing Agreement"),
among the FCC LLC, Franklin Capital Corporation ("Franklin Capital"), as
Servicer, Franklin Resources Inc. ("Franklin Resources"), as Representative,
Bankers Trust (Delaware), as Owner Trustee (the "Owner Trustee"), and Franklin
Auto Trust 1998-1 (the "Trust" or "Issuer"), and acknowledged and accepted by
The Chase Manhattan Bank, as Indenture Trustee and Indenture Collateral Agent
(the "Indenture Trustee" and the "Indenture Collateral Agent"), (ii) the
Purchase Agreement, dated as of September 1, 1998 (the "Purchase Agreement"),
between FCC LLC and Franklin Capital, in its individual capacity and as
Servicer, (iii) the Insurance and Reimbursement Agreement, dated as of September
29, 1998 (the "Insurance Agreement"), among the Company, MBIA Insurance
Corporation, as the Insurer (the "Insurer"), Franklin Resources, Franklin
Capital, in its individual capacity and as Servicer, and the Indenture Trustee,
(iv) the Spread Account and Payment Agreement, dated September 1, 1998 (the
"Spread Account Agreement"), among the FCC LLC, Franklin Capital, Franklin
Resources, as Payment Provider, the Insurer, and The Chase Manhattan Bank, as
the Insurer's Agent, (v) the Trust Agreement, dated September 1, 1998 (the
"Trust Agreement"), between FCC LLC and the Owner Trustee, (vi) the Premium Side
Letter Agreement, dated September 29, 1998 (the "Premium Side Letter
Agreement"), between the Insurer and Franklin Resources, (vii) the Indenture,
dated as of September 1, 1998 (the "Indenture"), among the Trust, the Indenture
Trustee and the Indenture Collateral Agent, and (ix) the Class A-1 5.50% Notes
and Class A-2 5.65% Notes (collectively, the "Notes"). The foregoing documents
are herein collectively referred to as the "Agreements." Capitalized terms
defined in the Trust Agreement and used but not otherwise defined herein are
used herein as so defined.
NYFS08...:\60\46360\0040\295\OPN9148M.06A
<PAGE>
Goldman, Sachs & Co.
September 30, 1998
In so acting, we have examined originals or copies, certified or
otherwise identified to our satisfaction, of the Registration Statement,
including the Prospectus pursuant to which the Notes were sold which is a part
thereof (the "Prospectus"), drafts of the Agreements, and such corporate
records, agreements, documents and other instruments (the aforementioned
documents together, the "Documents"), and have made such inquiries of such
officers and representatives of the Companies and such other persons, as we have
deemed relevant and necessary as a basis for the opinion hereinafter set forth.
In such examination, we have assumed 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, the authenticity of the
originals of such latter documents, the genuineness of all signatures, and the
correctness of all representations made therein. (The terms of the Documents are
incorporated herein by reference.) We have further assumed that the final
executed Documents will be substantially the same as those which we have
reviewed and that there are no agreements or understandings between or among the
parties to the Documents with respect to the transactions contemplated therein
other than those contained in the Documents.
Based on the foregoing, subject to the next succeeding paragraph,
and assuming full compliance with all the terms of the Documents, it is our
opinion that the statements contained in the Prospectus under the captions
"Summary of Terms -- Tax Status" and "Federal Income Tax Consequences," insofar
as such statements constitute matters of law or legal conclusions and except to
the extent qualified therein, are correct in all material respects.
The foregoing opinion is based on current provisions of the Internal
Revenue Code of 1986, as amended, the Treasury Regulations promulgated
thereunder, published pronouncements of the Internal Revenue Service, and case
law, any of which may be changed at any time with retroactive effect. Further,
you should be aware that opinions of counsel are not binding on the Internal
Revenue Service or the courts. We express no opinion either as to any matters
not specifically covered by the foregoing opinion or as to the effect on the
matters covered by this opinion of the laws of any other jurisdictions.
Additionally, we undertake no obligation to update this opinion in the event
there is either a change in the legal authorities, in the facts, including the
taking of any action by any party to any of the transactions described in the
Documents pursuant to an opinion of counsel as required by any of the Documents
relating to such transactions, or in the Documents on which this opinion is
based, or an inaccuracy in any of the representations or warranties upon which
we have relied in rendering this opinion.
<PAGE>
Goldman, Sachs & Co.
September 30, 1998
This opinion is being delivered solely to the addressee and may not
be used for any other purpose and may not otherwise be relied upon by, or
disclosed, quoted or referred to, any other person.
Very truly yours,
/s/ Weil, Gotshal & Manges LLP
[PRICEWATERHOUSECOOPERS LETTERHEAD]
REPORT OF INDEPENDENT ACCOUNTANTS
September 24, 1998
To the Trustee
Franklin Auto Trust 1998-1
We have audited the accompanying balance sheet of Franklin Auto Trust 1998-1
(the Trust) as of September 24, 1998. This balance sheet is the responsibility
of the management of the Trust. Our responsibility is to express an opinion on
this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the balance sheet is free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the balance sheet. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall balance sheet presentation. We believe that our
audit of the balance sheet provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above, presents fairly, in all
material respects, the financial position of Franklin Auto Trust 1998-1 as of
September 24, 1998, in conformity with generally accepted accounting principles.
/s/ PriceWaterhouseCoopers LLP
<PAGE>
FRANKLIN AUTO TRUST 1998-1
BALANCE SHEET
SEPTEMBER 4, 1998
Assets
Cash $200
----
$200
====
Interest of Equity Holder $200
----
$200
====
See accompanying Notes to Balance Sheet.
A-2
<PAGE>
FRANKLIN AUTO TRUST 1998 -- 1
NOTES TO BALANCE SHEET
1. Nature of Operations
Franklin Auto Trust 1998 -- 1 (the Trust), formed on September 23, 1998, is
a Delaware business trust, the beneficial interest in which is owned by
Franklin Receivables LLC. The Trust's activities will consist of the
issuance and sale of securities (the Notes) collateralized by certain motor
vehicle installment sales contracts (the Receivables). The Trust intends to
purchase the Receivables simultaneously with the issuance of the Notes. The
Notes will represent obligations solely of the Trust. The Trust has not
commenced operations except for accepting the interest of the equity
holder.
2. Tax Status
For federal income tax purposes the Notes will be characterized as debt and
the Trust will not be characterized as an association (or publicly traded
partnership) taxable as a corporation. Each Noteholder, by the acceptance
of a Note, will agree to treat the Note as debt for federal income tax
purposes.
A-3
