SALE AND SERVICING AGREEMENT

EXECUTION COPY

SALE AND SERVICING AGREEMENT

among

FRANKLIN AUTO TRUST 2008-A,
as Issuer,

FRANKLIN RECEIVABLES LLC,
as Depositor,

FRANKLIN CAPITAL CORPORATION,
as Servicer and Sponsor,

and

FRANKLIN RESOURCES, INC.,
as Representative

Dated as of May 1, 2008

Table of Contents

Page

ARTICLE I

Definitions

SECTION 1.1

Definitions

1

SECTION 1.2

Other Definitional Provisions.

23

ARTICLE II

Conveyance of Receivables

SECTION 2.1

Conveyance of Receivables

24

ARTICLE III

The Receivables

SECTION 3.1

Representations and Warranties of the Depositor

25

SECTION 3.2

Repurchase upon Breach

29

SECTION 3.3

Custody of Receivable Files

30

SECTION 3.4

Duties of Servicer as Custodian

31

SECTION 3.5

Instructions; Authority To Act

32

SECTION 3.6

Custodian’s Indemnification

32

SECTION 3.7

Effective Period and Termination

32

SECTION 3.8

Article Nine Provisions

33

ARTICLE IV

Administration and Servicing of Receivables

SECTION 4.1

Duties of Servicer

34

SECTION 4.2

Collection and Allocation of Receivable Payments

34

SECTION 4.3

Realization upon Receivables

36

SECTION 4.4

Financed Vehicle Insurance

37

SECTION 4.5

Maintenance of Security Interests in Financed Vehicles

37

SECTION 4.6

Covenants of Servicer

37

SECTION 4.7

Purchase of Receivables upon Breach

38

SECTION 4.8

Servicing Fee

38

SECTION 4.9

Servicer’s Certificate

38

SECTION 4.10

Assessment as to Compliance and Accountants’ Attestation;

Notice of Default.

39

SECTION 4.11

[Reserved].

40

SECTION 4.12

Access to Certain Documentation and Information Regarding

Receivables

40

SECTION 4.13

Servicer Expenses

41

SECTION 4.14

Appointment of Subservicer

41

SECTION 4.15

Obligations under Basic Documents

42

SECTION 4.16

Reports to the Rating Agencies

42

SECTION 4.17

Information to be Provided by the Servicer

42

SECTION 4.18

Remedies

42

ARTICLE V

Distributions; Statements to Certificateholders and Noteholders

SECTION 5.1

Establishment of Trust Accounts.

43

SECTION 5.2

Collections

45

SECTION 5.3

Application of Collections

46

SECTION 5.4

Letter of Credit

46

SECTION 5.5

Additional Deposits

47

SECTION 5.6

Distributions

48

SECTION 5.7

Spread Account

49

SECTION 5.8

Statements to Certificateholders, Noteholders and the Swap

Counterparty

50

SECTION 5.9

Net Deposits

51

SECTION 5.10

Control of Trust Accounts and Spread Account.

52

ARTICLE VI

The Depositor

SECTION 6.1

Representations of the Depositor

54

SECTION 6.2

Corporate Existence

56

SECTION 6.3

Liability of Depositor; Indemnities

56

SECTION 6.4

Merger or Consolidation of, or Assumption of the Obligations

of, the Depositor

58

SECTION 6.5

Limitation on Liability of Depositor and Others

58

SECTION 6.6

Depositor May Own Certificates or Notes

58

ARTICLE VII

The Servicer

SECTION 7.1

Representations of Servicer

59

SECTION 7.2

Indemnities of Servicer

60

SECTION 7.3

Merger or Consolidation of, or Assumption of the Obligations

of, the Servicer

61

SECTION 7.4

Limitation on Liability of the Servicer and Others

62

SECTION 7.5

Servicer Not To Resign

62

ARTICLE VIIA

The Representative

SECTION 7A.1     Representations of Franklin Resources.

63

SECTION 7A.2     Limitation on Liability of Franklin Resources and Others.

64

ARTICLE VIII

Default

SECTION 8.1

Servicer Default

64

SECTION 8.2

Appointment of Successor

66

SECTION 8.3

[Reserved].

67

SECTION 8.4

Notification to Noteholders and Certificateholders

67

SECTION 8.5

Waiver of Past Defaults

67

ARTICLE IX

Termination

SECTION 9.1

Optional Purchase of All Receivables

67

ARTICLE X

Administrative Duties of the Servicer

SECTION 10.1

Administrative Duties.

69

SECTION 10.2

Records

71

SECTION 10.3

Additional Information to be Furnished to the Issuer

71

SECTION 10.4

[Reserved].

71

SECTION 10.5

Relocation of Receivables

71

ARTICLE XI

Miscellaneous Provisions

SECTION 11.1

Amendment

71

SECTION 11.2

Protection of Title to Trust

72

SECTION 11.3

Notices

75

SECTION 11.4

Assignment

76

SECTION 11.5

Limitations on Rights of Others

76

SECTION 11.6

Severability

76

SECTION 11.7

Separate Counterparts

76

SECTION 11.8

Headings

76

SECTION 11.9

Governing Law

76

SECTION 11.10

Assignment to Indenture Trustee

76

SECTION 11.11

Nonpetition Covenants

77

SECTION 11.12

Limitation of Liability of Owner Trustee, Indenture Trustee,

Indenture Administrator and Indenture Collateral Agent

77

SECTION 11.13

Independence of the Servicer

78

SECTION 11.14

No Joint Venture

78

SECTION 11.15

Third-Party Beneficiaries

78

SECTION 11.16

Intent of the Parties; Reasonableness

78

SCHEDULES

EXHIBITS

SALE AND SERVICING AGREEMENT, dated as of May 1, 2008 among FRANKLIN AUTO TRUST 2008-A, a Delaware statutory trust (the “Issuer”), FRANKLIN RECEIVABLES LLC, a Delaware limited liability company (the “Depositor”), FRANKLIN CAPITAL CORPORATION, a Utah corporation (the “Servicer,” the “Sponsor” or “Franklin Capital”), and FRANKLIN RESOURCES, INC., a Delaware corporation (“Franklin Resources” or the “Representative”).

WHEREAS, the Issuer desires to purchase a portfolio of receivables arising in connection with motor vehicle retail installment sale contracts acquired by Franklin Capital and Franklin SPE LLC (“Franklin SPE”);

WHEREAS, the Depositor has purchased such receivables from Franklin Capital and Franklin SPE and is willing to sell such receivables to the Issuer; and

WHEREAS, the Servicer is willing to service all such receivables.

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the parties hereto agree as follows:

ARTICLE I

Definitions

SECTION 1.1

Definitions .  Whenever used in this Agreement, the following words and phrases shall have the following meanings:

“Additional Servicing Fee” means, with respect to any Distribution Date, the fee payable to the Servicer for services rendered, which shall be equal to one-twelfth (or in the case of the June 2008 Distribution Date, 7/360) of the excess, if any of (a) the applicable Servicing Fee Rate multiplied by the Pool Balance applicable to Prime Receivables, Non-Prime Receivables and Sub-Prime Receivables, as applicable as of the last day of the second Monthly Period preceding such Distribution Date over (b) 1.25% multiplied by the Pool Balance as of the last day of the second Monthly Period preceding such Distribution Date.

“Affiliate” means, with respect to any specified Person, any other Person controlling or controlled by or under common control with such specified Person.  For the purposes of this definition, “control” when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.  A Person shall not be deemed to be an Affiliate of any person solely because such other Person has the contractual right or obligation to manage such Person unless such other Person controls such Person through equity ownership or otherwise.

“Agreement” means this Sale and Servicing Agreement, as the same may be amended and supplemented from time to time.

“Amount Financed” means, with respect to a Receivable, the aggregate amount advanced under such Receivable toward the purchase price of the Financed Vehicle and any related costs, including amounts advanced in respect of accessories, insurance premiums, service, car club and warranty contracts, other items customarily financed as part of retail automobile installment sale contracts or promissory notes, and related costs.

“Annual Percentage Rate” or “APR” of a Receivable means the annual percentage rate of finance charges as stated in the related Contract or as recalculated based upon the terms of such Contract.

“Available Collections” means, with respect to any Determination Date, the sum (without double counting) of (i) the Collected Funds for such Determination Date, (ii) all Purchase Amounts deposited in the Collection Account during the related Monthly Period, and proceeds of any repurchase by a Dealer pursuant to Dealer Agreement, (iii) following the acceleration of the Notes pursuant to Section 5.2 of the Indenture, the amount of money or property collected pursuant to Section 5.4 of the Indenture since the preceding Determination Date by the Indenture Administrator for distribution pursuant to Section 5.6 of the Indenture, and (iv) any Insolvency Proceeds received pursuant to Section 9.1(b) of this Agreement.

“Available Funds” means, with respect to any Determination Date, the sum, for such Determination Date, of (a) Available Collections, (b) the Spread Account Transfer Amount, (c) the Letter of Credit Draw Amount, (d) the Net Swap Receipts and (e) any Swap Termination Payment from the Swap Counterparty to the Issuer to the extent not used to enter into a replacement swap agreement.

“Base Servicing Fee” means, with respect to Distribution Date, the fee payable to the Servicer for services rendered, which shall be equal to one-twelfth (or in the case of the June 2008 Distribution Date, 7/360) of the applicable Servicing Fee Rate multiplied by the Pool Balance applicable to Prime Receivables, Non-Prime Receivables and Sub-Prime Receivables, as applicable as of the last day of the second Monthly Period preceding such Distribution Date; provided that the Base Servicing Fee shall not be greater than one-twelfth of 1.25% per annum multiplied by the Pool Balance as of the last day of the second Monthly Period preceding such Distribution Date.

“Basic Documents” means the Certificate of Trust, the Trust Agreement, this Agreement, the Indenture, the Letter of Credit Reimbursement Agreement, the Letter of Credit, the Servicer Deposit Support Agreement, the Swap Agreement, the Purchase Agreement, the Depository Agreement and other documents and certificates delivered in connection therewith.

“Business Day” means a day other than a Saturday, a Sunday or other day on which commercial banks located in the states of California, Delaware, New York or Utah are authorized or obligated to be closed.

“Certificate” means a certificate evidencing the beneficial interest of a Certificateholder in the Trust.

“Certificate Distribution Account” has the meaning assigned to such term in the Trust Agreement.

“Certificateholder” means each person in whose name a Certificate is registered.

“Class” means the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class B Notes, Class C Notes or Class D Notes, as the context requires.

“Class A Notes” means the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4a Notes and Class A-4b Notes .

“Class A-1 Notes” has the meaning assigned to such term in the Indenture.

“Class A-2 Notes” has the meaning assigned to such term in the Indenture.

“Class A-3 Notes” has the meaning assigned to such term in the Indenture.

“Class A-4 Notes” has the meaning assigned to such term in the Indenture.

“Class A Noteholders’ Interest Distributable Amount” means, with respect to any Distribution Date, the sum of the Noteholders’ Monthly Interest Distributable Amount for each class of Class A Notes for such Distribution Date and the Noteholders’ Interest Carryover Shortfall for each class of Class A Notes for such Distribution Date.

“Class B Noteholders’ Interest Distributable Amount” means, with respect to any Distribution Date, the sum of the Noteholders’ Monthly Interest Distributable Amount for the Class B Notes for such Distribution Date and the Noteholders’ Interest Carryover Shortfall for the Class B Notes for such Distribution Date.

“Class B Notes” has the meaning assigned to such term in the Indenture.

“Class C Noteholders’ Interest Distributable Amount” means, with respect to any Distribution Date, the sum of the Noteholders’ Monthly Interest Distributable Amount for the Class C Notes for such Distribution Date and the Noteholders’ Interest Carryover Shortfall for the Class C Notes for such Distribution Date.

“Class C Notes” has the meaning assigned to such term in the Indenture.

“Class D Noteholders’ Interest Distributable Amount” means, with respect to any Distribution Date, the sum of the Noteholders’ Monthly Interest Distributable Amount for the Class D Notes for such Distribution Date and the Noteholders’ Interest Carryover Shortfall for the Class D Notes for such Distribution Date.

“Class D Notes” has the meaning assigned to such term in the Indenture.

“Closing Date” means June 13, 2008.

“Code” means the Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated thereunder.

“Collected Funds” means, with respect to any Determination Date, the amount of funds in or to be deposited in the Collection Account representing collections (excluding amounts constituting the Supplemental Servicing Fee) on the Receivables during the related Monthly Period, including all Net Liquidation Proceeds collected during the related Monthly Period (but excluding any Purchase Amounts).

“Collection Account” means the account designated as such, established and maintained pursuant to Section 5.1 of this Agreement.

“Commission” means the Securities and Exchange Commission.

“Computer Tape” means the computer tapes or other electronic media furnished by or on behalf of the Depositor to the Issuer and its assigns describing certain characteristics of the Receivables as of the Cutoff Date.

“Contract” means a motor vehicle retail installment sale contract.

“Control” has the meaning specified in Section 8-106 of the New York UCC.

“Controlling Class” will be the Class A Notes until they are paid in full; thereafter the Class B Notes until they are paid in full; thereafter the Class C Notes until they are paid in full; and thereafter the Class D Notes.

“Corporate Trust Office” means (i) with respect to the Owner Trustee, the principal corporate trust office of the Owner Trustee, which at the time of execution of this Agreement is 1011 Centre Road, Suite 200, Wilmington, Delaware 19805, Attention:  Corporate Trust Department; (ii) with respect to the Indenture Trustee and the Indenture Collateral Agent, the office at which any particular time its corporate trust business shall be administered, which office at date of the execution of this Agreement is located at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attn: Corporate Trust Administration; and (iii) with respect to the Indenture Administrator (a) solely for purposes of the transfer, surrender or exchange of the Notes, 111 Wall Street, 15 ^th Floor Window, New York, New York 10005, Attn: Corporate Trust Services – Franklin Auto Trust 2008-A, and (b) for all other purposes, 388 Greenwich Street, 14 ^th Floor, New York, New York 10013, Attn: Structured Finance Agency and Trust – Franklin Auto Trust 2008-A, or at such other address as the Owner Trustee, the Indenture Trustee or the Indenture Administrator, as applicable, may designate from time to time by notice to the Noteholders, the Servicer and the Issuer, or the principal corporate trust office of any successor Owner Trustee, successor Indenture Trustee or successor Indenture Administrator (the address of which the successor Owner Trustee, successor Indenture Trustee or the successor Indenture Administrator will notify the Servicer, the Noteholders and the Issuer).

“Cram Down Loss” means, with respect to a Receivable, if a court of appropriate jurisdiction in an insolvency proceeding shall have issued an order reducing the amount owed on such Receivable or otherwise modifying or restructuring the scheduled payments to be made on such Receivable, an amount equal to the excess of (i) the principal balance of such Receivable immediately prior to such order over (ii) the principal balance of such Receivable as so reduced.  A “Cram Down Loss” shall be deemed to have occurred on the date of issuance of such order.

“Credit Enhancement Target Amount” means, with respect to any Distribution Date, the lesser of (1) the aggregate outstanding principal amount of the Notes immediately after all distributions on such Distribution Date and (2) the greatest of (a) 10.25% of the Pool Balance as of the end of the related Monthly Period, (b) 1.50% of the Original Pool Balance and (c) if a Cumulative Net Loss Trigger is in effect for such Distribution Date, the sum of the amount on deposit in the Spread Account immediately after the prior Distribution Date and the Letter of Credit Available Amount for the prior Distribution Date less any Letter of Credit Draw Amounts on the prior Distribution Date.

“Cumulative Net Loss Trigger” will be in effect for a Distribution Date if the percentage equivalent of a fraction, the numerator of which is the difference of (1) the aggregate Principal Balance of all Receivables that became Liquidated Receivables from the Cutoff Date through and including the end of the related Monthly Period and (2) all amounts collected with respect to such Receivables after they became Liquidated Receivables, and the denominator of which is the Original Pool Balance, exceeds the percentage set forth below for such Distribution Date:

“Cutoff Date” means May 1, 2008.

“Dealer” means a dealer who sold a Financed Vehicle and who originated and assigned the respective Receivable to Franklin Capital under an existing agreement between such dealer and Franklin Capital.

“Dealer Agreement” means any agreement between a Dealer and Franklin Capital relating to the acquisition of Receivables from a Dealer by Franklin Capital.

“Delivery” when used with respect to Trust Account Property means:

(a)

with respect to bankers’ acceptances, commercial paper, negotiable certificates of deposit and other obligations that constitute instruments and are susceptible of physical delivery (“Physical Property”):

(i)

transfer of possession thereof to the Indenture Trustee, endorsed to, or registered in the name of, the Indenture Trustee or its nominee or endorsed in blank;

(b)

with respect to a certificated security:

(i)

delivery thereof in bearer form to the Indenture Collateral Agent; or

(ii)

delivery thereof in registered form to the Indenture Collateral Agent and

(A)

the certificate is endorsed to the Indenture Collateral Agent or in blank by effective endorsement; or

(B)

the certificate is registered in the name of the Indenture Collateral Agent, upon original issue or registration of transfer by the Issuer;

(c)

with respect to an uncertificated security:

(i)

the delivery of the uncertificated security to the Indenture Collateral Agent; or

(ii)

the Issuer has agreed that it will comply with instructions originated by the Indenture Collateral Agent without further consent by the registered owner;

(d)

with respect to any security issued by the U.S. Treasury that is a book-entry security held through the Federal Reserve System pursuant to Federal book-entry regulations:

(i)

a Federal Reserve Bank by book entry credits the book-entry security to the securities account (as defined in 31 CFR Part 357) of a participant (as defined in 31 CFR Part 357) which is also a securities intermediary; and

(ii)

the participant indicates by book entry that the book-entry security has been credited to the Indenture Collateral Agent securities account; and

(e)

with respect to a security entitlement:

(i)

the Indenture Collateral Agent becomes the entitlement holder; or

(ii)

the securities intermediary has agreed that it will comply with entitlement orders originated by the Indenture Collateral Agent without further consent by the entitlement holder.

(f)

For the purpose of  (b) and (c) hereof “delivery” means:

(i)

with respect to a certificated security:

(A)

the Indenture Collateral Agent acquires possession thereof;

(B)

another person (other than a securities intermediary) either acquires possession thereof on behalf of the Indenture Collateral Agent or, having previously acquired possession thereof, acknowledges that it holds for the Indenture Collateral Agent; or

(C)

a securities intermediary acting on behalf of the Indenture Collateral Agent acquires possession thereof, only if the certificate is in registered form and has been specially endorsed to the Indenture Collateral Agent by an effective endorsement;

(ii)

with respect to an uncertificated security:

(A)

the issuer registers the Indenture Collateral Agent as the registered owner, upon original issue or registration of transfer; or

(B)

another person (other than a securities intermediary) either becomes the registered owner thereof on behalf of the Indenture Collateral Agent or, having previously become the registered owner, acknowledges that it holds for the Indenture Collateral Agent;

(g)

for purposes of this definition, except as otherwise indicated, the following terms shall have the meaning assigned to each such term in the UCC:

(i)

“certificated security”

(ii)

“effective endorsement”

(iii)

“entitlement holder”

(iv)

“instrument”

(v)

“securities account”

(vi)

“securities entitlement”

(vii)

“securities intermediary”

(viii)

“uncertificated security”

(h)

in each case of Delivery contemplated herein, the Indenture Collateral Agent shall make appropriate notations on its records, and shall cause the same to be made on the records of its nominees, indicating that securities are held in trust pursuant to and as provided in this Agreement.

“Depositor” means Franklin Receivables LLC, a Delaware limited liability company, and its successors in interest to the extent permitted hereunder.

“Depositor Indemnification Cap” has the meaning assigned thereto in Section 6.3 of this Agreement.

“Depository Agreement” means the Note Depository Agreement.

“Determination Date” means, with respect to any Distribution Date, the fifth Business Day immediately preceding such Distribution Date.

“Distribution Date” means, with respect to each Monthly Period, the twentieth day of the following calendar month, or if such day is not a Business Day, the immediately following Business Day, commencing in June 2008.

“Eligible Deposit Account” means either (a) an account with an Eligible Institution or (b) a segregated trust account with the corporate trust department of a depository institution organized under the laws of the United States of America or any one of the states thereof or the District of Columbia (or any domestic branch of a foreign bank), having corporate trust powers and acting as trustee for funds deposited in such account, so long as any of the securities of such depository institution have a credit rating from each Rating Agency in one of its generic rating categories which signifies investment grade.

“Eligible Institution” means (a) the corporate trust department of the Indenture Trustee, the Indenture Administrator or any other entity specified in this Agreement or (b) a depository institution organized under the laws of the United States of America, or any one of the states thereof or the District of Columbia (or any domestic branch of a foreign bank), which (i) has either (A) a long-term unsecured debt rating of “AA-” or better by Standard & Poor’s and “Aa2” or better by Moody’s or (B) a certificate of deposit rating of “A-1+” or better by Standard & Poor’s and “Prime-1” or better by Moody’s, or any other short-term or certificate of deposit rating acceptable to the Rating Agencies and (ii) whose deposits are insured by the FDIC.  If so qualified under clause (b) above, the Owner Trustee, the Indenture Administrator or the Indenture Trustee may be considered an Eligible Institution.

“Eligible Investments” mean book-entry securities, negotiable instruments or securities represented by instruments in bearer or registered form which evidence:

(a)

direct obligations of, and obligations fully guaranteed as to timely payment by, the United States of America;

(b)

demand deposits, time deposits or certificates of deposit of any depository institution or trust company incorporated under the laws of the United States of America, or any state thereof or the District of Columbia (or any domestic branch of a foreign bank) and subject to supervision and examination by Federal or state banking or depository institution authorities (including depository receipts issued by any such institution or trust company as custodian with respect to any obligation referred to in clause (a) above or portion of such obligation for the benefit of the holders of such depository receipts); provided , however , that at the time of the investment or contractual commitment to invest therein (which shall be deemed to be made again each time funds are reinvested following each Distribution Date), the commercial paper or other short-term senior unsecured debt obligations (other than such obligations the rating of which is based on the credit of a Person other than such depository institution or trust company) of such depository institution or trust company shall have a credit rating from Standard & Poor’s of “A-1+” and from Moody’s of “Prime-1”;

(c)

commercial paper having, at the time of the investment or contractual commitment to invest therein, a rating from Standard & Poor’s of “A-1+” and from Moody’s of “Prime-1”;

(d)

investments in money market funds (including funds managed or advised by the Indenture Trustee, the Indenture Administrator or the Owner Trustee or for which any of their respective Affiliates is investment manager or advisor) having a rating from Standard & Poor’s of “AAA-m” or “AAAm-G” and from Moody’s of “Aaa”;

(e)

bankers’ acceptances issued by any depository institution or trust company referred to in clause (b) above;

(f)

repurchase obligations with respect to any security that is a direct obligation of, or fully guaranteed by, the United States of America or any agency or instrumentality thereof the obligations of which are backed by the full faith and credit of the United States of America, in either case entered into with a depository institution or trust company (acting as principal) referred to in clause (b) above;

(g)

any demand deposit in a trust account maintained by the Indenture Administrator, the Indenture Collateral Agent or the Indenture Trustee; provided that such deposits shall consist of direct obligations of, and obligations guaranteed as to timely payment by, the Indenture Administrator, the Indenture Collateral Agent or the Indenture Trustee, as applicable; provided, further, that the Indenture Administrator, the Indenture Collateral Agent or the Indenture Trustee, as applicable, is rated at least “A-1” by Standard & Poor’s and “P-1” by Moody’s and that such deposits shall not represent more than 20% of the outstanding amount of the Notes; and

(h)

any other investment which would satisfy the Rating Agency Condition and is consistent with the ratings of the Notes.

Any of the foregoing Eligible Investments may be purchased by or through the Owner Trustee, the Indenture Trustee or any of their Affiliates.

“Eligible Letter of Credit Bank” means an institution with (i) a short-term unsecured debt rating at least equal to “A-1+” from Standard & Poor's and “Prime-1” from Moody’s (in either case, such lower ratings as may be permitted by Standard & Poor’s or Moody’s) and (ii) a long-term unsecured debt rating at least equal to “A1” by Moody’s (or such lower rating as may be permitted by Moody’s).

“Entitlement Order” shall have the meaning specified in Section 8-102 of the New York UCC.

“FCC Receivables” shall mean the Receivables listed on Schedule A hereto on the Closing Date.

“FDIC” means the Federal Deposit Insurance Corporation.

“Final Scheduled Distribution Date” means with respect to (i) the Class A-1 Notes, the June 2009 Distribution Date, (ii) the Class A-2 Notes, the October 2011 Distribution Date, (iii) the Class A-3 Notes, the June 2012 Distribution Date, and (iv) the Class A-4a Notes, Class A-4b Notes, Class B Notes, Class C Notes and Class D Notes, the May 2016 Distribution Date.

“Final Scheduled Maturity Date” means May 20, 2016.

“Financed Vehicle” means a new or used automobile or light-truck, together with all accessions thereto, securing an Obligor’s indebtedness under the respective Receivable.

“Financial Asset” has the meaning specified in Section 8-102(a)(9) of the New York UCC.

“First Payment Default” means any Receivable for which the first scheduled payment remains unpaid as of the date upon which the second scheduled payment has become due.

“First Priority Principal Distribution Amount” means, with respect to any Distribution Date, the excess of (i) the aggregate Outstanding Amount of the Class A Notes as of the preceding Distribution Date (after giving effect to distributions thereon) or in the case of the first Distribution Date, as of the Closing Date, over (ii) the Pool Balance as of the end of the related Monthly Period; provided, however that such amount shall not be less than zero; provided, further, that, on the Final Scheduled Distribution Date for a Class of Class A Notes, the First Priority Principal Distributable Amount will not be less than the aggregate Outstanding Amount of such Class of Notes and all earlier maturing Class A Notes.

“Franklin SPE” means Franklin SPE LLC and its successors in interest.

“Indenture” means the Indenture dated as of May 1, 2008 among the Issuer, the Indenture Collateral Agent, the Indenture Trustee and the Indenture Administrator as the same may be amended and supplemented from time to time.

“Indenture Collateral Agent” means the Person acting as Indenture Collateral Agent under the Indenture, its successors in interest and any successor Indenture Collateral Agent under the Indenture.

“Indenture Trustee” means the Person acting as Indenture Trustee under the Indenture, its successors in interest and any successor trustee under the Indenture.

“Initial Spread Account Deposit Amount” means $10,921,746.29, representing 2.25% of the aggregate Outstanding Amount of the Notes as of the Closing Date.

“Insolvency Event” means, with respect to a specified Person, (a) the filing of a petition against such Person or the entry of a decree or order for relief by a court having jurisdiction in the premises in respect of such Person or any substantial part of its property in an involuntary case under any applicable federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator, or similar official for such Person or for any substantial part of its property, or ordering the winding-up or liquidation of such Person’s affairs, and such petition, decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or (b) the commencement by such Person of a voluntary case under any applicable federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or the consent by such Person to the entry of an order for relief in an involuntary case under any such law, or the consent by such Person to the appointment of or taking possession by, a receiver, liquidator, assignee, custodian, trustee, sequestrator, or similar official for such Person or for any substantial part of its property, or the making by such Person of any general assignment for the benefit of creditors, or the failure by such Person generally to pay its debts as such debts become due, or the taking of action by such Person in furtherance of any of the foregoing.

“Insolvency Proceeds” shall have the meaning set forth in Section 9.1(b) of this Agreement.

“Interest Period” means, with respect to any Distribution Date (i) with respect to the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the Class A-4b Notes, from and including the most recent Distribution Date on which interest has been paid (or from and including the Closing Date in the case of the first Distribution Date) to but excluding the following Distribution Date and (ii) with respect to the Class A-4a Notes, the Class B Notes, the Class C Notes and the Class D Notes, from and including the twentieth day of the calendar month preceding each Distribution Date (or from and including the Closing Date in the case of the first Distribution Date) to but excluding, the twentieth day of the following calendar month.

“Interest Rate” means, with respect to (i) the Class A-1 Notes, 2.72588% per annum, (ii) the Class A-2 Notes, One-Month LIBOR plus 1.00% per annum, (iii) the Class A-3 Notes, One-Month LIBOR plus 1.58% per annum, (iv) the Class A-4a Notes, 5.36% per annum, (v) the Class A-4b Notes, One-Month LIBOR plus 1.95% per annum, (vi) the Class B Notes, 6.10% per annum, (vii) the Class C Notes, 7.16% per annum and (viii) the Class D Notes, 8.18% per annum (in the case of the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the Class A-4b Notes, computed on the actual number of days elapsed and a 360-day year, and in the case of all other Classes of Notes, computed on the basis of a 360-day year consisting of twelve 30-day months).

“Investment Earnings” means, with respect to any Distribution Date, the investment earnings (net of losses and investment expenses) on amounts on deposit in the Trust Accounts (other than the Spread Account) and the Certificate Distribution Account.

“Issuer” means Franklin Auto Trust 2008-A.

“Letter of Credit”  means the letter of credit dated June 13, 2008 provided by the Letter of Credit Provider and any replacement Letter of Credit issued thereafter.

“Letter of Credit Available Amount”  means, for any Distribution Date, the least of (1) the aggregate outstanding principal amount of the Notes immediately after giving effect to all distributions on the prior Distribution Date, (2) the Letter of Credit Available Amount for the prior Distribution Date less any Letter of Credit Draw Amounts on the previous Distribution Date and (3) so long as a Cumulative Net Loss Trigger is not in effect for the Distribution Date, the greater of (a) 10.25% of the Pool Balance as of the end of the Monthly Period preceding the related Monthly Period and (b) 1.50% of the Original Pool Balance, minus the lesser of (i) 0.50% of the Original Pool Balance and (ii) the amount on deposit in the Spread Account immediately after the preceding Distribution Date.

“Letter of Credit Commitment Fee”  shall have the meaning assigned to “Letter of Credit Fee” under the Letter of Credit Reimbursement Agreement.

“Letter of Credit Demand” shall have the meaning set forth in Section 5.4(a) of this Agreement.

“Letter of Credit Draw Amount” means, (1) with respect to any Distribution Date, an amount equal to the lesser of (a) the excess, if any, of the Total Required Payment over Available Funds (excluding any Letter of Credit Draw Amounts) and (b) the Letter of Credit Available Amount for that Distribution Date, (2) with respect to all other events allowing the Letter of Credit to be drawn upon, other than events covered under clause (1) or (3) of this definition of “Letter of Credit Draw Amount”, the Letter of Credit Available Amount for the preceding Distribution Date less any Letter of Credit Draw Amount for the preceding Distribution Date and (3) with respect to draw pursuant to a notice from the Servicer to the Indenture Trustee that the Letter of Credit Available Amount represents 9% or more of the cash flow supporting the Notes as determined by Franklin Capital Corporation, the Letter of Credit Available Amount.

“Letter of Credit Draw Amount Claim Date” means, (1) with respect to the Letter of Credit Draw Amount for any Distribution Date, the fourth Business Day immediately preceding such Distribution Date, (2) the sixth Business Day following the receipt of a Moody’s Down-Grade Notice by the Indenture Trustee if an Eligible Letter of Credit Bank has not entered into a replacement Letter of Credit by such day, (3) the fourth Business Day immediately preceding the thirtieth day following the receipt of an S&P Down-Grade Notice by the Indenture Trustee if an Eligible Letter of Credit Bank has not entered into a replacement Letter of Credit by such day, (4) the fourth Business Day immediately preceding the Letter of Credit Stated Termination Date and (5) the fourth Business Day immediately following notice by the Servicer to the Indenture Trustee that the Letter of Credit Available Amount represents 9% or more of the cash flow supporting the Notes as determined by Franklin Capital Corporation.

“Letter of Credit Provider” means Citibank, N.A., its successors in interest and any successor Letter of Credit Provider under the Letter of Credit.

“Letter of Credit Reduction Amount” means with respect to any Distribution Date (1) the Letter of Credit Available Amount for the preceding Distribution Date less any Letter of Credit Draw Amounts for such Distribution Date minus (2) the Letter of Credit Available Amount for the Current Distribution Date.

“Letter of Credit Reimbursement Agreement” means the agreement dated as of June 13, 2008 among the Letter of Credit Provider, the Issuer, Franklin Resources and the Servicer, and any replacement Letter of Credit Reimbursement Agreement entered into with any replacement Letter of Credit Provider.

“Letter of Credit Stated Termination Date” means the date on which the Letter of Credit terminates which automatically extends unless the Letter of Credit Provider provides notice as provided in the Letter of Credit.

“LIBOR Business Day” means any day other than a Saturday, Sunday or any other day on which banks in London are required or authorized to be closed.

“LIBOR Determination Date” means, for each Interest Period, the second LIBOR Business Day before the beginning of that Interest Period, or, in the case of the initial Distribution Date, on the day that is two LIBOR Business Days prior to the Closing Date.

“Lien” means a security interest, lien, charge, pledge, equity, or encumbrance of any kind, other than tax liens, mechanics’ liens and any liens that attach to the respective Receivable by operation of law as a result of any act or omission by the related Obligor.

“Lien Certificate” means, with respect to a Financed Vehicle, an original certificate of title, certificate of lien or other notification issued by the Registrar of Titles of the applicable state to a secured party which indicates that the lien of the secured party on the Financed Vehicle is recorded on the original certificate of title.  In any jurisdiction in which the original certificate of title is required to be given to the Obligor, the term “Lien Certificate” shall mean only a certificate or notification, if any, issued to a secured party.

“Liquidated Receivable” means, with respect to any Determination Date, a Receivable as to which, as of the last day of the related Monthly Period, any of the following events has occurred (i.e., the earliest to occur of the following events):  (i) the Servicer has determined in good faith that all amounts it expects to recover have been received, (ii) other than with respect to a Receivable for which the related Obligor is subject to a bankruptcy proceeding, more than $25.00 of a scheduled payment is 120 or more days delinquent and the Financed Vehicle has been in the Servicer’s possession for a period of at least 45 days, (iii) more than $25.00 of a scheduled payment is 120 or more days delinquent, the Servicer has not repossessed the Financed Vehicle and the Obligor has not declared bankruptcy or (iv) the Financed Vehicle has been sold and the proceeds received.  In any case, if more than $25.00 of principal and interest on a Receivable as of the last day of the related Monthly Period is 180 or more days delinquent, then such Receivable shall be a Liquidated Receivable and shall have a Principal Balance of zero.

“Monthly Noteholder and Certificateholder Statement” means a statement delivered by the Servicer pursuant to Section 6.1 of this Agreement, substantially in the form of Exhibit C to this Agreement.

“Monthly Period” means, with respect to each Distribution Date, the calendar month preceding the month in which such Distribution Date occurs.

“Moody’s” means Moody’s Investors Service, Inc., or its successor.

“Moody’s Down-Grade” means the short-term unsecured debt rating of the Letter of Credit Bank has been downgraded below “Prime-1” by Moody’s or the long-term senior unsecured debt rating of the Letter of Credit Bank has been withdrawn or downgraded below “A1” by Moody’s.

“Moody’s Down-Grade Notice” means the notice that the Servicer shall provide to the Indenture Trustee within one Business Day after a Moody’s Down-Grade.

“Net Liquidation Proceeds” means, with respect to Liquidated Receivables, (i) proceeds from the disposition of the Financed Vehicles relating to the Liquidated Receivables, less reasonable Servicer out-of-pocket costs, including repossession and resale expenses not already deducted from such proceeds, and any amounts required by law to be remitted to the Obligor, (ii) any proceeds from an Insurance Policy or (iii) other monies received from the Obligor or otherwise.

“Net Swap Payment” means for the Swap Agreement, the net amount with respect to regularly scheduled payments, if any, owed by the Issuer to the Swap Counterparty on any Distribution Date, including prior unpaid Net Swap Payments and any accrued interest thereon under the Swap Agreement, but excluding any Swap Termination Payment.

“Net Swap Receipts” means for the Swap Agreement, the net amounts owed by the Swap Counterparty to the Issuer, if any, on any Distribution Date, but excluding any Swap Termination Payment.

“Non-Prime Receivables” means those Receivables indicated on Schedule A hereto as non-prime.

“Note Distribution Account” means the account designated as such, established and maintained pursuant to Section 5.1(a)(ii) of this Agreement.

“Note Pool Factor” means, with respect to each Class of Notes and the close of business on any Distribution Date, a seven-digit decimal figure equal to the outstanding principal amount of such Class of Notes as of such Distribution Date after giving effect to principal distributions on such date divided by the original outstanding principal amount of such Class of Notes.  

“Noteholder” or “Holder” means the Person in whose name a Note is registered on the Note Register.

“Noteholders’ Interest Carryover Shortfall” means, with respect to the first Distribution Date and a Class of Notes, zero, and with respect to any other Distribution Date and a Class of Notes, the excess of the Noteholders’ Interest Distributable Amount for such Class for the preceding Distribution Date, over the amount in respect of interest that was actually deposited in the Note Distribution Account with respect to such Class on such preceding Distribution Date, plus interest on the amount of interest due but not paid to Noteholders of such Class on the preceding Distribution Date, to the extent permitted by law, at the respective Interest Rate borne by such Class of Notes and calculated for the related Interest Period.

“Noteholders’ Interest Distributable Amount” means, with respect to any Distribution Date and a Class of Notes; the sum of the Noteholders’ Monthly Interest Distributable Amount for such Class of Notes for such Distribution Date and the Noteholders’ Interest Carryover Shortfall for such Class of Notes for such Distribution Date.

“Noteholders’ Monthly Interest Distributable Amount” means, with respect to any Distribution Date and any Class of Notes, interest accrued during the related Interest Period at the Interest Rate borne by such Class of Notes on the outstanding principal amount of the Notes of such Class immediately preceding such Distribution Date, calculated (i) in the case of the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and Class A-4b Notes, on the basis of the actual number of days elapsed in the related Interest Period and a 360-day year and (ii) in the case of all other Classes of Notes, on the basis of a 360-day year consisting of twelve 30-day months.

“Notes” means the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, Class B Notes, Class C Notes and Class D Notes.

“Obligor” on a Receivable means the purchaser or co-purchasers of the Financed Vehicle and any other Person who owes payments under the Receivable.

“Officer’s Certificate” means a certificate signed by the (a) chairman of the board, the president, any executive vice president or any vice president and (b) any executive vice president, vice president, treasurer, assistant treasurer, controller, secretary or assistant secretary of the Representative, the Depositor or the Servicer, as appropriate.

“One-Month LIBOR” means, with respect to any Interest Period, the rate for deposits in U.S. Dollars for a period of one month which appears on the Reuters Screen LIBOR01 Page as of 11:00 a.m., London time on the LIBOR Determination Date.  If that rate does not appear on the Reuters Screen LIBOR01 Page (as reported by Bloomberg Financial Commodities News), then One-Month LIBOR will be the Reference Bank Rate.

“Opinion of Counsel” means one or more written opinions of counsel who may be an employee of or counsel to the Representative, the Depositor or the Servicer, which counsel shall be reasonably acceptable to the addressees.

“Original Pool Balance” means the aggregate Principal Balance of the Receivables as of the Cutoff Date.

“Owner Trust Estate” has the meaning assigned to such term in the Trust Agreement.

“Owner Trustee” means Deutsche Bank Trust Company Delaware, not in its individual capacity but solely as Owner Trustee under the Trust Agreement, its successors in interest or any successor Owner Trustee under the Trust Agreement.

“Person” means any individual, corporation, estate, partnership, joint venture, association, joint stock company, trust (including any beneficiary thereof), unincorporated organization or government or any agency or political subdivision thereof.

“Physical Property” has the meaning assigned to such term in the definition of “Delivery” above.

“Pool Balance” means, as of the end of any Monthly Period (other than the initial Monthly Period), the Pool Balance for the immediately preceding Monthly Period, or in the case of the initial Monthly Period the Original Pool Balance, less an amount equal to the sum of the following amounts with respect to the related Monthly Period, computed in accordance with the Simple Interest Method:  (i) that portion of all collections on Receivables allocable to principal, including full and partial principal prepayments, received during such Monthly Period, (ii) the Principal Balance of each Receivable that was purchased or repurchased by Franklin Capital, the Depositor, the Servicer or any affiliate of any of them as of the last day of such Monthly Period, (iii) without duplication of amounts in clause (ii), the Principal Balance of each Receivable that became a Liquidated Receivable during such Monthly Period and (iv) the aggregate amount of Cram Down Losses during such Monthly Period.

“Prime Receivables” means those Receivables indicated on Schedule A hereto as prime.

“Principal Balance” means, with respect to any Receivable, as of any date, the Amount Financed minus (i) that portion of all amounts received on or prior to such date and allocable to principal in accordance with the terms of the Receivable and (ii) any Cram Down Loss in respect of such Receivable.

“Purchase Agreement” means the Purchase Agreement dated as of May 1, 2008 among the Depositor, Franklin Capital and Franklin SPE LLC pursuant to which the Depositor acquired the Receivables, as such Agreement may be amended from time to time.

“Purchase Amount” means, with respect to any Receivable required to be repurchased or purchased pursuant to Section 3.2 or Section 4.7 of this Agreement or as to which the Servicer has exercised the purchase option pursuant to Section 9.1(a) of this Agreement, an amount equal to the sum of (i) 100% of the Principal Balance thereof and (ii) all accrued and unpaid interest thereon (including one month’s interest thereon, in the month of payment, at the APR less, so long as Franklin Capital is the Servicer, the Base Servicing Fee) after giving effect to the receipt of any amounts collected (from whatever source) on such Receivable, if any.

“Purchased Receivable” means a Receivable purchased as of the close of business on the last day of a Monthly Period by the Servicer pursuant to Section 4.7 of this Agreement, repurchased by the Depositor, or the Representative pursuant to Section 3.2 of this Agreement or purchased by Franklin Capital pursuant to the Purchase Agreement.

“Rating Agency” means Moody’s and Standard & Poor’s.

“Rating Agency Condition” means, with respect to any action or amendment that each Rating Agency confirms in writing that such amendment will not result in a reduction or withdrawal of such rating.

“Realized Losses” means, with respect to any Receivable that becomes a Liquidated Receivable, the excess of the Principal Balance of such Liquidated Receivable (immediately prior to it becoming a Liquidated Receivable) over the Net Liquidation Proceeds to the extent allocable to principal.

“Receivable” means any Contract listed on Schedule A (which Schedule may be in electronic form or in the form of microfiche).

“Receivable Files” means the documents specified in Section 3.3 of this Agreement.

“Receivables Property” shall have the meaning specified in Section 2.1.

“Record Date” means, with respect to each Distribution Date, the day immediately preceding such Distribution Date, unless otherwise specified in this Agreement.

“Reference Bank Rate”   means, with respect to any Interest Period, a rate determined on the basis of the rates at which deposits in U.S. dollars are offered by Reference Banks as of 11:00 a.m., London time, on the day that is the LIBOR Determination Date to prime banks in the London interbank market for a period of one month commencing on the first day of the related Interest Period for the Class A-2 Notes, Class A-3 Notes and Class A-4b Notes, in amounts approximately equal to the then outstanding principal amount of the applicable class of such Notes. The Indenture Administrator will request the principal London office of each of the Reference Banks to provide a quotation of its rate. If at least two quotations are provided, the rate will be the arithmetic mean of the quotations, rounded to the nearest one hundred-thousandth of one percent. If on that date fewer than two quotations are provided as requested, the rate will be the arithmetic mean, rounded to the nearest one hundred-thousandth of one percent, of the rates quoted by major banks in New York City, selected by the Indenture Administrator as directed by the Swap Counterparty, as of 11:00 a.m., New York City time, on that date for loans in U.S. dollars to leading European banks for a period of one month commencing on the first day of the related Interest Period for the Class A-2 Notes, Class A-3 Notes and Class A-4b Notes in amounts approximately equal to the principal amount of the then outstanding Class A-2 Notes, Class A-3 Notes and Class A-4b Notes.

“Reference Banks” means four major banks in the London interbank market selected by the Indenture Administrator, as directed by the Swap Counterparty.

“Registrar of Titles” means, with respect to any state, the governmental agency or body responsible for the registration of, and the issuance of certificates of title relating to, motor vehicles and liens thereon.

“Regular Principal Distribution Amount” means, with respect to any Distribution Date, an amount not less than zero equal to the difference between: the excess, if any, of (a) the aggregate outstanding principal amount of the Notes immediately preceding such Distribution Date over (b) the Pool Balance as of the last day of the related Monthly Period; and the sum of (i) the First Priority Principal Distribution Amount, (ii) the Second Priority Principal Distribution Amount and (iii) the Third Priority Principal Distribution Amount; provided, however, that the Regular Principal Distribution Amount on or after the Final Scheduled Distribution Date for the Class D Notes shall not be less than the amount that is necessary to reduce the outstanding principal amount of the Class D Notes to zero.

“Regulation AB” means Subpart 229.1100 – Asset Backed Securities (Regulation AB), 17 C.F.R. §§229.1100-229.1123, as such may be amended from time to time, and subject to such clarification and interpretation as have been provided by the Commission in the adopting release (Asset-Backed Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the staff of the Commission, or as may be provided by the Commission or its staff from time to time.

“Representative” means Franklin Resources, Inc., a Delaware corporation, and its successors and assigns.

“Reuters LIBOR01 Page” means the display page so designated on the Reuters Monitor Money Rates Service or any other page (as reported by Bloomberg Financial Commodities News) that may replace that page on that service for the purpose of displaying comparable rates or prices.

“S&P Down-Grade” means the short-term unsecured debt rating of the Letter of Credit Bank has been withdrawn or downgraded below “A-1+” by Standard & Poor’s.

“S&P Down-Grade Notice” means the notice that the Servicer is required to provide to the Indenture Trustee promptly after it has learned the Letter of Credit Provider is subject to a S&P Down-Grade.

“Schedule of Receivables” has the meaning assigned thereto in Section 3.1(d) of this Agreement.

“Second Priority Principal Distribution Amount” means, with respect to any Distribution Date, the excess of (i) the aggregate Outstanding Amount of the Class A Notes and Class B Notes as of the preceding Distribution Date (after giving effect to distributions thereon) or in the case of the first Distribution Date, as of the Closing Date, over (ii) the sum of (a) the Pool Balance and (b) the First Priority Principal Distribution Amount; provided, however that such amount shall not be less than zero; provided, further, that, on the Final Scheduled Distribution Date for any Class of Notes, the Second Priority Principal Distribution Amount will not be less than the Outstanding Amount of the Class B Notes.

“Securities Act” means the Securities Act of 1933, as amended.

“Senior Swap Termination Payment” means any Swap Termination Payment owed by the Issuer to the Swap Counterparty under the Swap Agreement resulting from (1) a Tax Event or Illegality (each as defined in the Swap Agreement) under the Swap Agreement or (2) any other “event of default” or “termination event” under the Swap Agreement where the Swap Counterparty is neither the defaulting party nor the sole affected party.

“Servicer” means Franklin Capital, as the servicer of the Receivables, and each successor Servicer pursuant to Section 7.3 or 8.2 of this Agreement.

“Servicer Default” means an event specified in Section 8.1 of this Agreement.  

“Servicer Deposit Support Agreement” means the Servicer Deposit Support Agreement dated June 13, 2008, made by Franklin Resources in favor of the Indenture Trustee under the Indenture.

“Servicer’s Certificate” means an Officer’s Certificate of the Servicer delivered pursuant to Section 4.9 of this Agreement, substantially in the form of Exhibit A to this Agreement.

“Servicing Fee” has the meaning specified in Section 4.8 of this Agreement.

“Servicing Fee Rate” means with respect to (i) Prime Receivables, 1.0% per annum, (ii) Non-Prime Receivables, 1.5% per annum and (iii) Sub-Prime Receivables, 2.0% per annum.

“Simple Interest Method” means the method of allocating a fixed level payment to principal and interest, pursuant to which the portion of such payment that is allocated to interest is equal to the product of the fixed rate of interest multiplied by the unpaid principal balance multiplied by the period of time elapsed since the preceding payment of interest was made (in some states assuming 30 day months), divided by the actual number of days in a year (360 days in states which assume 30 day months) and the remainder of such payment is allocable to principal.

“Simple Interest Receivable” means any Receivable under which the portions of a payment allocable to interest and principal are determined in accordance with the Simple Interest Method.

“Specified Spread Account Balance” means for each Distribution Date, the Credit Enhancement Target Amount for such Distribution Date minus the Letter of Credit Available Amount for such Distribution Date.

“Sponsor” means Franklin Capital and its successor and assigns.

“Spread Account” means the account designated as such, established and maintained pursuant to Section 5.1 of this Agreement.

“Spread Account Deposit Amount” means with respect to any Distribution Date the Specified Spread Account Balance for such Distribution Date less the amount on deposit in the Spread Account immediately prior to such Distribution Date.

“Spread Account Excess Amount” means, with respect to any Distribution Date, an amount equal to the excess, if any, of (a) the amount of cash or other immediately available funds in the Spread Account on that Distribution Date, after giving effect to any other withdrawals from and deposits to the Spread Account relating to that Distribution Date, over (b) the Specified Spread Account Balance with respect to that Distribution Date.

“Spread Account Transfer Amount” means, with respect to any Distribution Date, an amount equal to the lesser of (a) the amount of cash or other immediately available funds on deposit in the Spread Account on such Distribution Date, before giving effect to any other withdrawals therefrom relating to such Distribution Date, and (b) the amount, if any, by which (1) the Total Required Payments for such Distribution Date exceeds (2) the Available Collections for such Distribution Date.

“Standard & Poor’s” means Standard & Poor’s, a division of The McGraw-Hill Companies, Inc.

“Subcontractor” means any vendor, subcontractor or other Person that is not responsible for the overall servicing (as “servicing” is commonly understood by participants in the asset-backed securities market) of the Receivables but performs one or more discrete functions identified in Item 1122(d) of Regulation AB with respect to the Receivables under the direction or authority of the Servicer or a Subservicer.

“Subordinated Swap Termination Payment” means any Swap Termination Payment owed by the Issuer to the Swap Counterparty under the Swap Agreement other than a Senior Swap Termination Payment.

“Sub-Prime Receivables” means those Receivables indicated on Schedule A hereto as sub-prime.

“Subservicer” means any Person that services Receivables on behalf of the Servicer or any Subservicer and is responsible for the performance (whether directly or through Subservicers or Subcontractors) of a substantial portion of the material servicing functions required to be performed by the Servicer under this Agreement that are identified in Item 1122(d) of Regulation AB.

“Supplemental Servicing Fee” means, with respect to any Monthly Period, charges collected (from whatever source) on the Receivables during such Monthly Period including late fees, prepayment fees, administrative fees and expenses or similar charges allowed by applicable law with respect to Receivables, plus reinvestment proceeds on any payments received in respect of Receivables during the related Monthly Period.

“Swap Agreement” means 1992 ISDA Master Agreement dated as of  June 13, 2008, including all schedules and confirmations thereto, between the Issuer and the Swap Counterparty, as modified, amended, supplemented, renewed, extended or replaced from time to time.

“Swap Counterparty” means Citibank, N.A., or its successor or replacement pursuant to the Basic Documents.

“Third Priority Principal Distribution Amount” means, with respect to any Distribution Date, an amount not less than zero equal to the difference between: the excess, if any, of (a) the aggregate outstanding principal amount of the Class A Notes, Class B Notes and Class C Notes immediately preceding such Distribution Date over (b) the Pool Balance as of the last day of the related Monthly Period; and the sum of (i) the First Priority Principal Distribution Amount and (ii) the Second Priority Principal Distribution Amount; provided, however, that the Third Priority Principal Distribution Amount on and after the Final Scheduled Distribution Date for the Class C Notes shall not be less than the amount that is necessary to reduce the outstanding principal amount of the Class C Notes to zero.

“Total Required Payment” means, with respect to any Distribution Date, the sum of all amounts due and payable under Section 5.6(a)(i) through (xi); provided, however, that following the occurrence and during the continuation of an Event of Default which has resulted in an acceleration of the Notes, on any Distribution Date until the Distribution Date on which the outstanding principal amount of all the Notes has been paid in full, the Total Required Payment shall mean the sum of specified amounts payable under clauses FIRST through NINTH of Section 5.6(a) of the Indenture.

“Trust” means the Issuer.

“Trust Account Property” means the Trust Accounts, all amounts and investments held from time to time in any Trust Account (whether in the form of deposit accounts, Physical Property, book-entry securities, uncertificated securities or otherwise), and all proceeds of the foregoing.

“Trust Accounts” has the meaning assigned thereto in Section 5.1(b) of this Agreement.

“Trust Agreement” means the Amended and Restated Trust Agreement dated as of June 13, 2008 between the Depositor and the Owner Trustee, as the same may be amended and supplemented from time to time.

“Trust Officer” means, (i) in the case of the Indenture Trustee or the Indenture Administrator, respectively, any officer within the Corporate Trust Office of the Indenture Trustee or any officer within the Agency and Trust Group (or any successor group thereto) of the Indenture Administrator, as applicable, including any vice president, assistant vice president, assistant treasurer, assistant secretary, or any other officer of the Indenture Trustee or the Indenture Administrator customarily performing functions similar to those performed by any of the above designated officers and, with respect to a particular matter, any other officer to whom such matter is referred because of such officer’s knowledge of and familiarity with the particular subject, in each case having direct responsibility for the administration of the Indenture, and (ii) in the case of the Owner Trustee, any officer in the corporate trust office of the Owner Trustee with direct responsibility for the administration of this Agreement or any of the Basic Documents on behalf of the Owner Trustee.

“Trust Property” has the meaning assigned thereto in Section 2.1 of this Agreement.

“UCC” means the Uniform Commercial Code as in effect in any relevant jurisdiction.

SECTION 1.2

Other Definitional Provisions .

(a)

Capitalized terms used herein and not otherwise defined herein have the meanings assigned to them in the Indenture, or, if not defined therein, in the Trust Agreement.

(b)

All terms defined in this Agreement shall have the defined meanings when used in any instrument governed hereby and in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein.

(c)

As used in this Agreement, in any instrument governed hereby and in any certificate or other document made or delivered pursuant hereto or thereto, accounting terms not defined in this Agreement or in any such instrument, certificate or other document, and accounting terms partly defined in this Agreement or in any such instrument, certificate or other document to the extent not defined, shall have the respective meanings given to them under generally accepted accounting principles as in effect on the date of this Agreement or any such instrument, certificate or other document, as applicable.  To the extent that the definitions of accounting terms in this Agreement or in any such instrument, certificate or other document are inconsistent with the meanings of such terms under generally accepted accounting principles, the definitions contained in this Agreement or in any such instrument, certificate or other document shall control.

(d)

The words “hereof,” “herein,” “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement; Section, Schedule and Exhibit references contained in this Agreement are references to Sections, Schedules and Exhibits in or to this Agreement unless otherwise specified; and the term “including” shall mean “including without limitation.”

(e)

The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms.

(f)

Any agreement, instrument or statute defined or referred to herein or in any instrument or certificate delivered in connection herewith means such agreement, instrument or statute as from time to time amended, modified or supplemented and includes (in the case of agreements or instruments) references to all attachments thereto and instruments incorporated therein; references to a Person are also to its permitted successors and assigns.

ARTICLE II

Conveyance of Receivables

SECTION 2.1

Conveyance of Receivables .  In consideration of the Issuer’s delivery to or upon the order of the Depositor on the Closing Date of (x) the net proceeds from the sale of the Class A Notes, (y) the Class B Notes, Class C Notes, Class D Notes and the Certificates and (z) the other amounts to be distributed from time to time to the Depositor in accordance with the terms of this Agreement, the Depositor does hereby transfer, assign, set over and otherwise convey to the Issuer on the Closing Date, without recourse (subject to the obligations set forth herein), all right, title and interest of the Depositor in and to, whether now owned or existing or hereafter acquired or arising (collectively, the “Receivables Property” or the “Trust Property”):

(a)

the Receivables and all monies received thereunder on and after the Cutoff Date;

(b)

the security interests in the Financed Vehicles granted by Obligors pursuant to the Receivables and any other interest of the Depositor in such Financed Vehicles;

(c)

any proceeds with respect to the Receivables from claims on any physical damage, credit life or disability insurance policies covering Financed Vehicles or Obligors and any proceeds from the liquidation of the Receivables;

(d)

any proceeds from any Receivable repurchased by a Dealer, pursuant to a Dealer Agreement, as a result of a breach of representation or warranty in the related Dealer Agreement;

(e)

all funds on deposit from time to time in the Trust Accounts and in all investments and proceeds thereof and all rights of the Issuer therein;

(f)

any extended warranty service contracts on the related Financed Vehicles;

(g)

the related Receivable Files;

(h)

the Depositor’s rights and benefits, but none of its obligations or burdens, under the Purchase Agreement, including the delivery requirements, the representations and warranties and the cure and repurchase obligations of Franklin Capital and Franklin SPE under the Purchase Agreement; and

(i)

the proceeds of any and all of the foregoing.

It is the intention of the Depositor that the transfer and assignment contemplated by this Agreement shall constitute a sale of the Receivables and other Trust Property from the Depositor to the Issuer for non-tax purposes and the beneficial interest in and title to the Receivables and the other Trust Property shall not be part of the Depositor’s estate in the event of the filing of a bankruptcy petition by or against the Depositor under any bankruptcy law.  In the event that, notwithstanding the intent of the Depositor, the transfer and assignment contemplated hereby is held not to be a sale, this Agreement shall constitute a security agreement, and the Depositor hereby grants to the Issuer for the benefit of the Noteholders, the Certificateholders and the Indenture Trustee, a security interest in the property referred to in Section 2.1 whether now owned or existing or hereafter acquired or arising.

ARTICLE III

The Receivables

SECTION 3.1

Representations and Warranties of the Depositor .  The Depositor makes the following representations and warranties as to the Receivables on which the Issuer is deemed to have relied in acquiring the Receivables.  Such representations and warranties speak as of the execution and delivery of this Agreement and as of the Closing Date (unless another date or time period is otherwise specified or indicated in the particular representation or warranty), but shall survive the sale, transfer and assignment of the Receivables to the Issuer and the pledge thereof to the Indenture Collateral Agent for the benefit of the Indenture Trustee pursuant to the Indenture.  The representations set forth in Sections 3.1(a), (b), (h), (i) and (r) may not be waived.

(a)

Title .  Immediately prior to the transfer and assignment herein contemplated, the Depositor had good and marketable title to each Receivable, free and clear of all Liens and, immediately upon the transfer thereof, the Trust shall have good and marketable title to each such Receivable, free and clear of all Liens (or a valid first priority perfected security interest in such Receivable); and the transfer of the Receivables to the Trust has been perfected under the UCC.  No Dealer or any other Person has any right to receive proceeds of any Receivables.

(b)

All Filings Made .  All filings (including, without limitation, UCC filings) necessary in any jurisdiction to give the Trust a first priority perfected ownership interest in the Receivables, and to give the Indenture Collateral Agent a first priority perfected security interest therein, on behalf of the Issuer Secured Parties shall have been made.  All financing statements filed or to be filed against the Depositor in favor of the Trust in connection herewith describing the Receivables contain a statement to the following effect “A purchase of or security interest in any collateral described in this financing statement will violate the rights of the Trust.”

(c)

Characteristics of Receivables .  Each Receivable (i) was originated in the United States of America and is denominated in United States dollars by a Dealer in connection with the retail sale of a Financed Vehicle in the ordinary course of such Dealer’s business, was fully and properly executed by the parties thereto, was purchased by the Depositor from Franklin Capital or Franklin SPE, which in turn shall have been purchased by Franklin Capital from such Dealer under an existing dealer agreement with Franklin Capital, and shall have been validly assigned by Franklin Capital or Franklin SPE to the Depositor in accordance with its terms, (ii) shall have created a valid, subsisting and enforceable first priority perfected security interest in favor of Franklin Capital or Franklin SPE in the Financed Vehicle, which security interest has been assigned by Franklin Capital or Franklin SPE, as applicable, to the Depositor, which in turn has been assigned by the Depositor to the Trust, (iii) shall contain customary and enforceable provisions such that the rights and remedies of the holder thereof shall be adequate for realization against the collateral of the benefits of the security, (iv) shall provide for level monthly payments (provided that the payment in the first or last month in the life of the Receivable may be different from the level payment) that fully amortize the Amount Financed by maturity and (v) provides for calculation of interest in accordance with the Simple Interest Method. Except as otherwise evidenced in the Receivable File relating thereto, the terms of each Receivable have not been amended and collections relating to such Receivable have not been waived.

(d)

Schedule of Receivables .  The information set forth in Schedule A to this Agreement (the “Schedule of Receivables”) is true and correct in all material respects as of the Cutoff Date, and no selection procedures believed by the Depositor to be adverse to the Noteholders were utilized in selecting the Receivables.  The Computer Tape regarding the Receivables is true and correct in all material respects as of the Cutoff Date.

(e)

Compliance With Law .  Each Receivable complied at the time it was originated or made and, complies at the execution of this Agreement in all material respects with all requirements of applicable Federal, state and local laws and regulations thereunder, including, without limitation, usury laws, the Federal Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Federal Trade Commission Act, the Magnuson-Moss Warranty Act, the Rees-Levering Act, the Federal Reserve Board’s Regulations B and Z, state adaptations of the National Consumer Act and other consumer credit laws and equal credit opportunity and disclosure laws.

(f)

Binding Obligation .  Each Receivable represents the legal, valid and binding payment obligation in writing of the Obligor thereunder, enforceable by the holder thereof in accordance with its terms except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium, fraudulent conveyance, reorganization and similar laws now or hereafter in effect related to or affecting creditors’ rights generally and subject to general principles of equity (whether applied in a proceeding at law or in equity); and all parties to each Receivable had full legal capacity to execute and deliver such Receivable and all other documents related thereto and to grant the security interest purported to be granted thereby.

(g)

No Government Obligor .  None of the Receivables are due from the United States of America or any State or from any agency, department or instrumentality of the United States of America or any State.

(h)

Valid and Continuing Security Interest; No other pledges .  This Agreement creates a valid and continuing security interest in the Receivables in favor of the Trust, which security interest is prior to all other Liens, and is enforceable against such creditors of and purchasers from the Depositor to the Trust.  Other than the security interest granted to the Trust pursuant to this Agreement, the Depositor has not pledged, assigned, sold or granted a security interest in, or otherwise conveyed any of the Receivables.  The Depositor has not authorized the filing of and is not aware of any financing statements against the Depositor that include a description of collateral covering the Receivables other than any financing statement related to the security interest granted to the Trust pursuant to this Agreement.

(i)

Security Interest in Financed Vehicle .  Immediately prior to the sale, assignment and transfer thereof to the Trust, each FCC Receivable and each Franklin SPE Receivable is secured by a validly perfected first priority security interest in the Financed Vehicle in favor of Franklin Capital and Franklin SPE, respectively, as secured parties or all necessary and appropriate actions have been commenced that would result in the valid perfection of a first priority security interest in the Financed Vehicle in favor of Franklin Capital and Franklin SPE, respectively, as secured parties.  Immediately after the sale, assignment and transfer thereof to the Trust pursuant to this Agreement, although the Lien Certificate will indicate Franklin Capital as lienholder and will not indicate the Trust or Owner Trustee as secured party, each Receivable will be secured by an enforceable and perfected security interest in the Financed Vehicle in favor of the Trust as secured party for the benefit of the Noteholders, which security interest is prior to all other Liens in such Financed Vehicle.

(j)

Receivables in Force .  As of the Closing Date, no Receivable has been satisfied, subordinated or rescinded, nor has any related Financed Vehicle been released from the Lien granted by the related Receivable in whole or in part.  

(k)

No Waiver .  No provision of a Receivable has been waived except as reflected in the Receivable File relating to such Receivable.

(l)

No Defenses .  As of the Closing Date, no right of rescission, setoff, counterclaim or defense, including, without limitation, the defense of usury, has been asserted or threatened with respect to any Receivable.

(m)

No Liens .  To the best of the Depositor’s knowledge, as of the Closing Date there are no Liens or claims, including Liens for work, labor, materials or unpaid state or federal taxes relating to any Financed Vehicle securing the related Receivable, that are or may be prior to or equal to the Lien granted by such Receivable.

(n)

No Default .  No Receivable has a payment that is more than 30 days delinquent as of the Cutoff Date and, except for any delinquency in payment on any Receivable not more than 30 days delinquent, no default, breach, violation or event (in any such case) permitting acceleration under the terms of any Receivable has occurred; and except for any delinquency in payment on any Receivable not more than 30 days delinquent, no continuing condition that with notice or the lapse of time would constitute a default, breach, violation or event (in any such case) permitting acceleration under the terms of any Receivable shall have arisen as of the Cutoff Date; and the Depositor has not waived and shall not waive any of the foregoing.  For purposes of this clause (n), a Receivable is considered 30 days delinquent if 30 days have elapsed since the date on which a scheduled payment had been due but not been made.  As of the Closing Date, no Receivable has had an uncured First Payment Default.  

(o)

No Bankruptcies .  No Obligor on any Receivable was the subject of a bankruptcy proceeding commenced following the execution of the related Contract except an Obligor that has received a discharge or dismissal under the United States Bankruptcy Code.

(p)

No Repossessions .  As of the Cutoff Date, no Financed Vehicle securing any Receivable is in repossession status.

(q)

Adverse Selection .  No selection procedures adverse to the Noteholders were utilized in selecting the Receivables from those owned by Franklin Capital or Franklin SPE, as applicable, which met the selection criteria contained in this Agreement.

(r)

Chattel Paper .  Each Receivable constitutes “tangible chattel paper” as defined in the UCC.  The Receivables do not have any marks or notations indicating that they have been pledged, assigned or otherwise conveyed to any Person other than the Trust or the Indenture Trustee.  

(s)

Insurance .  Under the terms of each Receivable the Obligor is required to maintain physical damage insurance or comprehensive and collision insurance covering the Financed Vehicle.

(t)

Lawful Assignment .  No Receivable was originated in, as of the Cutoff Date, or is subject to the laws of, any jurisdiction under which the sale, transfer and assignment of such Receivable or this Agreement is unlawful, void or voidable.

(u)

Reserved .

(v)

One Original .  There is only one original executed copy of each Receivable; immediately prior to the delivery thereof to the Indenture Trustee pursuant to Section 3.3, such copy shall have been in the custody and possession of the Depositor, Franklin SPE or Franklin Capital.

(w)

Location of Receivable Files .  The Receivable Files are kept at one or more of the locations listed in Schedule B and each item required to be in a Receivable File is in such Receivable File.

(x)

Computer Records .  As of the Closing Date, the accounting and computer records relating to the Receivables of the Depositor have been marked to show the absolute ownership by the Owner Trustee on behalf of the Trust of the Receivables.

(y)

Taxes .  To the knowledge of the Depositor, there are no state or local taxing jurisdictions which have asserted that nonresident holders of notes issued by a trust which holds assets similar to the assets to be held by the Trust are subject to the jurisdiction’s income or other taxes solely by reason of the location in the jurisdiction of the Owner Trustee, the Depositor, the Servicer, the Representative or the obligors on or the assets securing the Receivables held by the Trust.

(z)

Maturity of Receivables .  As of the Cutoff Date, each Receivable has a final maturity date not later than July 13, 2015; each Receivable has an original term to maturity of not more than 84 months; the weighted average original term of the Receivables is approximately 71 months; and the weighted average remaining term of the Receivables is approximately 63 months.  No Receivable shall have a remaining term of less than six months as of the Cutoff Date.

(aa)

Financing .  As of the Cutoff Date, approximately 44.39% of the aggregate Principal Balance of the Receivables represent new vehicles; the remainder of the Receivables represent used vehicles; and 100% of the aggregate Principal Balance of the Receivables represent Simple Interest Receivables.  As of the Cutoff Date, approximately 48.63% of the aggregate Principal Balance of the Receivables represent Prime Receivables, approximately 49.01% of the aggregate Principal Balance of the Receivables represent Non-Prime Receivables and approximately 2.36% of the aggregate Principal Balance of the Receivables represent Sub-Prime Receivables.  As of the Cutoff Date, the aggregate Principal Balance of the Receivables is $485,410,946.28.

(bb)

APR .  As of the Cutoff Date, the weighted average Annual Percentage Rate of the Receivables is approximately 10.57%.  Each Receivable has an APR equal to or greater than 3.75%.

(cc)

Number .  As of the Cutoff Date, there are 27,212 Receivables.

(dd)

Balance .  As of the Cutoff Date, each Receivable has a remaining Principal Balance of not less than $1,014.81 and not more than $115,691.41, and as of the Cutoff Date the average Principal Balance of the Receivables is $17,838.12.

(ee)

Finance Charge .  Each Receivable provides for the payment of a finance charge calculated on the basis of the APR stated in the related Contract and such APR has not been modified except as otherwise required under the Servicemembers Civil Relief Act, as amended.

(ff)

Force Placed Insurance . No Receivable is subject to a force placed insurance policy on the related Financed Vehicle.

SECTION 3.2

Repurchase upon Breach .  (a)  The Representative, the Depositor, the Servicer or the Issuer, as the case may be, shall inform the other parties to this Agreement, the Indenture Trustee and the Indenture Administrator promptly, in writing, upon the discovery of any breach of the Representative’s or the Depositor’s representations and warranties made pursuant to Section 3.1.  The Representative, the Depositor, the Servicer or the Issuer, as the case may be shall inform Franklin Capital, promptly, in writing, upon the discovery of any breach of Franklin Capital’s or Franklin SPE’s representations and warranties made pursuant to Section 3.02(a) or Section 3.02(b) of the Purchase Agreement.  As of the last day of the second (or, if the Representative or the Depositor so elects, the first) month following the discovery by the Representative or the Depositor or receipt by the Representative or the Depositor of notice from any of the Representative, the Depositor, the Servicer, the Indenture Trustee, the Indenture Administrator, the Indenture Collateral Agent or the Issuer of such breach, unless such breach is cured by such date, the Representative and the Depositor shall jointly and severally have an obligation to repurchase any Receivable in which the interests of the Noteholders are materially and adversely affected by any such breach as of such date.  The “second month” shall mean the month following the month in which discovery occurs or notice is given, and the “first month” shall mean the month in which discovery occurs or notice is given.  In consideration of and simultaneously with the repurchase of the Receivable, the Representative and/or the Depositor shall remit, or the Depositor shall cause Franklin Capital or Franklin SPE, as applicable, to remit pursuant to the Purchase Agreement, to the Collection Account the Purchase Amount in the manner specified in Section 5.5 and the Issuer shall execute such assignments and other documents reasonably requested by such person in order to effect such repurchase.  The sole remedy of the Issuer, the Owner Trustee, the Indenture Trustee, the Indenture Administrator, the Noteholders or the Certificateholders with respect to a breach of representations and warranties pursuant to Section 3.1 and the agreement contained in this Section shall be the repurchase of Receivables pursuant to this Section, subject to the conditions contained herein or to enforce the obligations of Franklin Capital or Franklin SPE, as applicable, to the Depositor to repurchase such Receivables pursuant to the Purchase Agreement.  None of the Owner Trustee, the Indenture Trustee or the Indenture Administrator shall have a duty to conduct any affirmative investigation as to the occurrence of any conditions requiring the repurchase of any Receivable pursuant to this Section.

(b)

Pursuant to Section 2.1 of this Agreement, the Depositor conveyed to the Trust all of the Depositor’s right, title and interest in its rights and benefits, but none of its obligations or burdens, under the Purchase Agreement including the Depositor’s rights under the Purchase Agreement and the delivery requirements, the representations and warranties of Franklin Capital and Franklin SPE and the cure or repurchase obligations of Franklin Capital thereunder.  The Depositor hereby represents and warrants to the Trust that such assignment is valid, enforceable and effective to permit the Trust to enforce such obligations of Franklin Capital and Franklin SPE under the Purchase Agreement.

SECTION 3.3

Custody of Receivable Files .  To assure uniform quality in servicing the Receivables and to reduce administrative costs, the Issuer hereby revocably appoints the Servicer, and the Servicer hereby accepts such appointment, to act as the agent of the Issuer and the Indenture Trustee as custodian of the following documents or instruments which are hereby constructively delivered to the Indenture Trustee and the Indenture Trustee, as of the Cutoff Date as pledgee of the Issuer with respect to each Receivable:

(a)

the original Receivable;

(b)

a record of the information supplied by the Obligor in the original credit application;

(c)

the original certificate of title or such documents that the Servicer shall keep on file, in accordance with its customary procedures, evidencing the security interest of Franklin Capital in the Financed Vehicle (it being understood that (i) the original certificates of title generally are not delivered to Franklin Capital for 120 days but that promptly upon delivery they shall be delivered to the Servicer as custodian hereunder and (ii) in California, Franklin Capital participates in the California electronic lien and title system and does not receive physical documentation); and

(d)

any and all other documents that the Servicer shall keep on file, in accordance with its customary procedures, relating to a Receivable, an Obligor or a Financed Vehicle.

provided , that the Servicer may appoint one or more agents to act as subcustodians of certain items contained in a Receivables File pursuant to Section 4.14.

SECTION 3.4

Duties of Servicer as Custodian .  (a)   Safekeeping .  The Servicer shall hold the Receivable Files on behalf of the Issuer, the Indenture Collateral Agent, the Indenture Administrator and the Indenture Trustee and maintain such accurate and complete accounts, records and computer systems pertaining to each Receivable File as shall enable the Issuer to comply with this Agreement.  In performing its duties as custodian the Servicer shall act with reasonable care, using that degree of skill and attention that the Servicer exercises with respect to the Receivable Files relating to all comparable automotive receivables that the Servicer services for itself or others, except that the Servicer shall not be obligated, and does not currently intend, to (i) pay any premium of force-placed insurance concerning any Financed Vehicle or (ii) monitor any Obligor’s maintenance of such insurance.  The Servicer shall conduct, or cause to be conducted, periodic audits of the Receivable Files held by it under this Agreement and of the related accounts, records and computer systems, in such a manner as shall enable the Issuer, the Indenture Administrator or the Indenture Trustee to verify the accuracy of the Servicer’s record keeping.  The Servicer shall promptly report to the Issuer, the Indenture Administrator and the Indenture Trustee any failure on its part to hold the Receivable Files and maintain its accounts, records and computer systems as herein provided and promptly take appropriate action to remedy any such failure.

(b)

Maintenance of Records .  The Servicer shall maintain each Receivable File at the offices specified in Schedule B to this Agreement or at such other office as shall be specified to the Issuer, the Indenture Administrator and the Indenture Trustee by written notice not later than 10 days after any change in location.  The Servicer shall at all times maintain the original of the fully executed Receivable and store such original Receivable in a fireproof facility.  Additionally, the Servicer shall maintain the Receivable Files in an organized and orderly manner.

(c)

Access to Records .  The Servicer will provide to the Indenture Trustee, the Indenture Administrator, the Issuer and the Depositor, on the Closing Date, an Officer’s Certificate stating that the Receivable Files with respect to the Receivables contain all materials which are required to be kept therein by Section 3.3(a), (b), (c) and (d).  

Upon reasonable prior notice, the Servicer shall make available to the Issuer, the Indenture Administrator, the Indenture Trustee or any duly authorized representatives, attorneys or auditors of any of the foregoing, a list of locations of, and access to, the Receivable Files and records and computer systems maintained by the Servicer at such times during normal business hours as the Issuer, the Indenture Administrator or the Indenture Trustee shall instruct.

(d)

Release of Documents .  Upon written instruction from the Indenture Trustee or the Indenture Administrator at any time following a Servicer Default or termination of the Servicer’s appointment pursuant to Section 3.7 the Servicer shall release any Receivable File to the Indenture Trustee, the Indenture Trustee’s agent, or the Indenture Trustee’s designee, as the case may be, at such place or places as the Indenture Trustee may designate, as soon as practicable.

SECTION 3.5

Instructions; Authority To Act .  The Servicer shall be deemed to have received proper instructions with respect to the Receivable Files upon its receipt of written instructions signed by a Trust Officer of the Indenture Trustee.  The Indenture Trustee shall not have any duty or obligation to provide the Servicer with any such instructions with respect to the Receivable Files.

SECTION 3.6

Custodian’s Indemnification .  The Servicer as custodian shall indemnify and hold harmless the Trust, the Owner Trustee, the Indenture Administrator, the Indenture Collateral Agent and the Indenture Trustee and each of their officers, directors, employees and agents for any and all liabilities, obligations, losses, compensatory damages, payments, costs or expenses (including reasonable attorneys’ fees and expenses) that may be imposed on, incurred by or asserted against the Trust, the Owner Trustee, the Indenture Administrator, the Indenture Collateral Agent or the Indenture Trustee or any of their officers, directors, employees and agents as the result of any improper act or omission in any way relating to the maintenance and custody by the Servicer as custodian of the Receivable Files; provided, however, that the Servicer shall not be liable to the Trust, the Owner Trustee, the Indenture Administrator, the Indenture Collateral Agent or the Indenture Trustee, as the case may be, for any portion of any such amount resulting from the willful misfeasance, bad faith or negligence of the Owner Trustee, the Indenture Administrator, the Indenture Collateral Agent or the Indenture Trustee, as the case may be.  This provision shall not be considered to limit the Servicer’s or any other party’s rights, obligations, liabilities, claims or defenses which arise as a matter of law or pursuant to any other provision of this Agreement.

SECTION 3.7

Effective Period and Termination .  The Servicer’s appointment as custodian shall become effective as of the Cutoff Date and shall continue in full force and effect until terminated pursuant to this Section 3.7.  If Franklin Capital shall resign as Servicer in accordance with the provisions of this Agreement or if all of the rights and obligations of any Servicer shall have been terminated under Section 8.1, the appointment of such Servicer as custodian shall be terminated, in the same manner as the Servicer may be terminated under Section 8.1. As soon as practicable after any termination of such appointment, the Servicer shall deliver the Receivable Files to the Indenture Trustee or the Indenture Trustee’s agent at such place or places as the Indenture Trustee shall reasonably designate in writing.  If the Servicer shall be terminated as custodian hereunder for any reason but shall continue to serve as Servicer, the Indenture Trustee shall, or shall cause its agent to, make the Receivable Files available to the Servicer during normal business hours upon reasonable notice so as to permit the Servicer to perform its obligations as Servicer hereunder.

SECTION 3.8

Article Nine Provisions .  The representations and warranties set forth in this Section 3.8 speak as of the Closing Date in the case of Receivables, but shall survive the sale, transfer and assignment of the Receivables to the Issuer and pledge thereof to the Indenture Trustee pursuant to the Indenture.  The representations set forth in this Section 3.8 may not be waived.

(a)

This Agreement creates a valid and continuing security interest (as defined in the applicable UCC) in the Receivables in favor of the Issuer, which security interest is prior to all other Liens, and is enforceable as such as against creditors of and purchasers from the Depositor.

(b)

The Depositor has taken all steps necessary to perfect its security interest against Franklin Capital and Franklin SPE in the Receivables.

(c)

The Receivables constitute “tangible chattel paper” within the meaning of the applicable UCC.

(d)

The Depositor owns and has good and marketable title to the Receivables free and clear of any Lien, claim or encumbrance of any Person.

(e)

The Depositor has caused or will have caused, within ten days, the filing of all appropriate financing statements in the proper filing office in the appropriate jurisdictions under applicable law in order to perfect the security interest in the Receivables granted to the Issuer hereunder.

(f)

Other than the security interest granted to the Issuer pursuant to this Agreement, the Depositor has not pledged, assigned, sold, granted a security interest in, or otherwise conveyed any of the Receivables.  The Depositor has not authorized the filing of and is not aware of any financing statements against the Depositor that include a description of collateral covering the Receivables other than any financing statement relating to the security interest granted to the Issuer hereunder or that has been terminated.  The Depositor is not aware of any judgment or tax lien filings against the Depositor.

(g)

Franklin Capital has in its possession all original copies of the Receivables Files that constitute or evidence the Receivables.  The Receivables Files that constitute or evidence the Receivables do not have any marks or notations indicating that they have been pledged, assigned or otherwise conveyed to any Person other than the Issuer.  All financing statements filed or to be filed against Depositor, in favor of the Issuer in connection herewith describing the Receivables contain a statement to the following effect:  “A purchase of or security interest in any collateral described in this financing statement will violate the rights of the Issuer.”

ARTICLE IV

Administration and Servicing of Receivables

SECTION 4.1

Duties of Servicer .  The Servicer, as agent for the Issuer, shall manage, service, administer and make collections on the Receivables (other than Purchased Receivables) with reasonable care, using that degree of skill and attention that the Servicer exercises with respect to all comparable automotive receivables that it services for itself or others, except that the Servicer shall not be obligated, and does not currently intend, to (i) pay any premium of force-placed insurance concerning any Financed Vehicle or (ii) monitor any Obligor’s maintenance of such insurance.  The Servicer’s duties shall include collection and posting of all payments, responding to inquiries of Obligors on such Receivables, investigating delinquencies, sending payment statements or coupon books to Obligors, accounting for collections and furnishing monthly and annual statements to the Owner Trustee, the Indenture Trustee and the Indenture Administrator with respect to distributions.  Subject to the provisions of Section 4.2(b), the Servicer shall follow its customary standards, policies and procedures in performing its duties as Servicer.  Without limiting the generality of the foregoing, the Servicer is authorized and empowered to execute and deliver, on behalf of itself, the Issuer, the Owner Trustee, the Indenture Trustee, the Indenture Administrator, the Indenture Collateral Agent, the Certificateholders and the Noteholders or any of them, any and all instruments of satisfaction or cancellation, or partial or full release or discharge, and all other comparable instruments, with respect to such Receivables or to the Financed Vehicles securing such Receivables.  If the Servicer shall commence a legal proceeding to enforce a Receivable, the Issuer (in the case of a Receivable other than a Purchased Receivable) shall thereupon be deemed to have automatically assigned, solely for the purpose of collection, such Receivable to the Servicer.  If in any enforcement suit or legal proceeding it shall be held that the Servicer may not enforce a Receivable on the ground that it shall not be a real party in interest or a holder entitled to enforce such Receivable the Owner Trustee shall, at the Servicer’s expense and direction, take steps to enforce such Receivable, including bringing suit in its name or the name of the Trust, the Indenture Administrator, the Indenture Trustee, the Certificateholders or the Noteholders.  The Owner Trustee shall upon the written request of the Servicer furnish the Servicer with any powers of attorney and other documents reasonably necessary or appropriate (as certified to the Owner Trustee by the Servicer) to enable the Servicer to carry out its servicing and administrative duties hereunder.

SECTION 4.2

Collection and Allocation of Receivable Payments .  (a)  The Servicer shall make reasonable efforts to collect all payments called for under the terms and provisions of the Receivables as and when the same shall become due and shall follow such collection procedures as it follows with respect to all comparable automotive receivables that it services for itself or others.  The Servicer shall allocate collections between principal and interest in accordance with its customary servicing procedures.

(b)

The Servicer may, in accordance with its customary servicing policies grant extensions, rebates or adjustments on a Receivable; provided , however , that the Servicer shall not, unless required by law or court order, modify the original due day of any Receivable by any period in excess of 25 days, shall not reduce the amount of the scheduled payments on a Receivable (unless the related Obligor is in default on such Receivable or, in the judgment of the Servicer, such default is imminent), and shall not extend the final payment date of any Receivable beyond the Final Scheduled Maturity Date; provided further that if the Servicer extends the date for final payment by the Obligor of any Receivable beyond the Final Scheduled Maturity Date or grants any other extension, rebate or adjustment on a Receivable, in any case, contrary to the limitations set forth in this Section 4.2, it shall promptly repurchase such Receivable from the Trust in accordance with Section 4.7.  The Servicer may in its discretion waive any late payment charge or any other fees that may be collected in the ordinary course of servicing a Receivable.  The Servicer shall not, except as provided in clause (c) below, voluntarily agree to any alteration of the interest rate on any Receivable.  The Servicer covenants that it will not intentionally extend the final payment of a Receivable past the Final Scheduled Maturity Date with the intention of purchasing such Receivable as this Agreement would require.

(c)

The Servicer may modify the interest rate and extend the terms on a Receivable under the following circumstances:

(1)

The Servicer determines that payment in full on the Receivable is unlikely at the current interest rate of the Receivable and authorizes repossession of the related Financed Vehicle;

(2)

Based on published Manheim data, the Servicer estimates the Realized Loss that would be incurred as a result of repossession of the related Financed Vehicle exceeds $3,000;

(3)

The Receivable must have been originated at least twelve months prior to an interest rate modification;

(4)

The Obligor must have experienced a “qualifying event” of one or more of the following:

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Divorce or separation;

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Death in immediate family;

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