Document:

EXHIBT 14 (a)(2)(4)(ii)

                          REGISTRATION RIGHTS AGREEMENT

         REGISTRATION RIGHTS AGREEMENT, dated as of February 22, 2000, among
Franklin Capital Corporation, a Delaware corporation (the "Company"), and the
other undersigned parties hereto (collectively, with the purchasers that execute
the Joinder Agreement referred to below, the "Holders").

         1. INTRODUCTION. The Company and the Holders are, parties to the
Preferred Stock Purchase Agreement (the "Stock Purchase Agreement") in the form
set forth in Exhibit A pursuant to which the Company has agreed, among other
things, to issue to each of the Holders the number of shares of its Class A
Convertible Preferred Stock, par value $1.00 per share (the "Preferred Stock")
which is set forth on the signature page to such Exhibit. The Company also may
enter into similar preferred stock purchase agreements after the date hereof for
the purchase of Preferred Stock with certain other parties (the "Other Purchase
Agreements" and such agreements collectively with the Stock Purchase Agreement,
the "Stock Purchase Agreements"). In connection with the consummation of those
closings under the Other Purchase Agreements, each of the purchasers thereunder
shall sign a joinder agreement in the form attached hereto as Exhibit B (each
such agreement, a "Joinder Agreement"), pursuant to which such party will become
a party to this agreement as a Holder of Registrable Securities. Pursuant to the
terms of the Certificate of Designation with respect to the Preferred Stock (the
"Certificate of Designation"), the Preferred Stock is convertible into shares of
the Company's common stock, par value $1.00 per share (the "Common Stock").
Certain capitalized terms used in this Agreement are defined in section 3
hereof; references to a "section" shall be to one of the sections of this
Agreement.

2. REGISTRATION UNDER SECURITIES ACT, ETC.

     2.1 REGISTRATION ON REQUEST.

      (a) REQUEST. At any time prior to the second anniversary of the Closing
Date, upon the written request of one or more Initiating Holders, requesting
that the Company effect the registration under the Securities Act of all or part
of such Initiating Holders' Registrable Securities, and specifying the intended
method of disposition thereof, the Company will promptly give written notice of
such requested registration to all registered holders of Registrable Securities,
and thereupon the Company will, subject to the terms of this Agreement, use
commercially reasonable efforts to effect the registration under the Securities
Act of:

                    (i) the Registrable Securities which the Company has been so
               requested to register by such Initiating Holders for disposition
               in accordance with the intended method of disposition stated in
               such request unless, an underwritten offering is requested, the
               Company is unable, after good faith

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               efforts, to engage a nationally recognized investment bank to act
               as underwriter for such offering;

                    (ii) all other Registrable Securities the holders of which
               shall have made a written request to the Company for registration
               thereof within 15 days after the giving of such written notice by
               the Company (which request shall specify the intended method of
               disposition of such Registrable Securities); and

                    (iii) all shares of Common Stock which the Company or other
               holders of the Company's Common Stock having registration rights
               may elect to register in connection with the offering of
               Registrable Securities pursuant to this Section 2.1,

               all to the extent required to permit the disposition (in
               accordance with the intended methods thereof as aforesaid) of the
               Registrable Securities and the additional shares of Common Stock,
               if any so to be registered; provided, that the Company shall not
               be required to effect any registration requested by Initiating
               Holders pursuant to this Section 2.1 (x) on more than one
               occasion (y) if the Registrable Securities requested to be
               registered are eligible for resale pursuant to Rule 144 under the
               Securities Act and (z) unless the Holders have requested the sale
               of shares of Registrable Securities that have a fair market value
               (based upon the closing price of such Registrable Securities
               quoted on the securities exchange or over-the-counter quotation
               system on which such Registrable Securities are listed or quoted,
               as the case may be, on the trading day immediately preceding any
               request pursuant to this Section 2.1) of at least $1,000,000.

      (b) REGISTRATION STATEMENT FORM. Registrations under this Section 2.1
shall be on such appropriate registration form of the Commission as shall permit
the disposition of such Registrable Securities in accordance with the intended
method or methods of disposition specified in their request for such
registration and as shall be permitted under the Securities Act; provided, that
such form shall not indicate that the securities to be registered thereunder are
to be offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act.

      (c) EXPENSES. The Company will pay all Registration Expenses in connection
with any registration requested pursuant to this Section 2.1 by any Initiating
Holders. All other expenses (including underwriting discounts, commissions and
transfer taxes, if any and attorney fees for the Initiating Holders) in
connection with each other registration requested under this Section 2.1 shall
be allocated pro rata among all Persons on whose behalf securities of the
Company are included in such registration, on the basis of the respective
amounts of the securities then being registered on their behalf.

      (d) EFFECTIVE REGISTRATION STATEMENT. A registration requested pursuant to
this Section 2.1 shall not be deemed to have been effected (i) unless a

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registration statement with respect thereto has become effective, provided that
a registration which does not become effective after the Company has filed a
registration statement with respect thereto by reason of the refusal to proceed
of the Initiating Holders (other than a refusal to proceed based upon the
written advice of counsel relating to a matter with respect to the Company)
shall be deemed to have been effected by the Company at the request of such
Initiating Holders (ii) if, after it has become effective, such registration
becomes subject to any stop order, injunction or other order or requirement of
the Commission or other governmental agency or court for any reason, other than
by reason of some act or omission by such Initiating Holders with respect
thereto, (iii) if the conditions to closing specified in the purchase agreement
or underwriting agreement entered into in connection with such registration are
not satisfied, other than by reason of some act or omission by such Initiating
Holders or (iv) if the sale of the securities is not consummated due to the lack
of agreement between the Initiating Holders and the underwriters with respect to
the underwriting discount on the securities to be sold.

      (e) SELECTION OF UNDERWRITERS. If a requested registration pursuant to
this Section 2.1 involves an underwritten offering, the managing or lead
underwriter, and any co-managing and co-lead underwriters shall be selected by
the Company.

      (f) PRIORITY IN REQUESTED REGISTRATIONS. If a requested registration
pursuant to this Section 2.1 involves an underwritten offering, and the managing
underwriter shall advise the Company that, in its opinion, the number of
securities requested to be included in such registration (including Common Stock
of the Company or other Persons which are not Registrable Securities) exceeds
the number which can be sold in such offering within a price range acceptable to
the holders of a majority of the Registrable Securities requested to be included
in such registration, the Company will include in such registration, to the
extent of the number which the Company is so advised can be sold in such
offering, (i) first, Registrable Securities requested to be included in such
registration by the holder or holders of Registrable Securities, and the holder
or Holders of any other similar registration rights which hold shares of capital
stock of the Company that rank senior or pari passu to the Preferred Stock, pro
rata among such holders requesting such registration on the basis of the number
of such securities requested to be included by such holders, (ii) second, Common
Stock the Company proposes to sell and (iii) third, Common Stock of the Company
held by other Persons having registration rights, other than as contemplated in
sub-clause (i) above proposed to be included in such registration by the holders
thereof. Notwithstanding the foregoing, in connection with any requested
registration pursuant to this Section 2.1, the Company shall in all events be
entitled to register and sell up to 25% of the total number of shares of Common
Stock to be registered.

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2.2 INCIDENTAL REGISTRATION.

      (a) RIGHT TO INCLUDE REGISTRABLE SECURITIES. If the Company at any time
prior to the second anniversary of the Closing Date proposes to register any of
its securities under the Securities Act (other than by a registration on Form
S-4 or any successor form, Form S-8, or any successor form thereto, relating to
a stock option plan, stock purchase plan, managing directors' plan, savings or
similar plan and other than pursuant to Section 2.1), whether or not for sale
for its own account, it will each such time give prompt written notice to all
holders of Registrable Securities of its intention to do so and of such holders'
rights under this Section 2.2. Upon the written request of any such holder made
within 10 Business Days after the receipt of any such notice (which request
shall specify the number of Registrable Securities intended to be disposed of by
such holder and the intended method of disposition thereof), the Company will,
subject to the terms of this Agreement, use commercially reasonable efforts to
effect the registration under the Securities Act of all Registrable Securities
which the Company has been so requested to register by the holders thereof, to
the extent required to permit the disposition (in accordance with the intended
methods thereof as aforesaid) of the Registrable Securities so to be registered,
by inclusion of such Registrable Securities in the registration statement which
covers the securities which the Company proposes to register, provided that if,
at any time after giving written notice of its intention to register any
securities and prior to the effective date of the registration statement filed
in connection with such registration, the Company shall determine for any reason
either not to register or to delay registration of such securities, the Company
may, at its election, give written notice of such determination to each holder
of Registrable Securities and, thereupon, (i) in the case of a determination not
to register, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration, without prejudice, however, to
the rights of any holder or holders of Registrable Securities entitled to do so
to request that such registration be effected as a registration under Section
2.1, and (ii) in the case of a determination to delay registering, shall be
permitted to delay registering any Registrable Securities, for the same period
as the delay in registering such other securities. No registration effected
under this Section 2.2 shall relieve the Company of its obligation to effect any
registration upon request under Section 2.1, nor shall any such registration
hereunder be deemed to have been effected pursuant to Section 2.1. The Company
will pay all Registration Expenses in connection with each registration of
Registrable Securities requested pursuant to this Section 2.2.

      (b) PRIORITY IN INCIDENTAL REGISTRATIONS. If the Company at any time
proposes to register any of its securities under the Securities Act as
contemplated by this Section 2.2 and such securities are to be distributed by or
through one or more underwriters, the Company will, if requested by any holder
of Registrable Securities use commercially reasonable efforts to arrange for
such underwriters to include all the Registrable Securities to be offered and
sold by such holder among the securities to be distributed by such underwriters,
PROVIDED that if the managing underwriter of such

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underwritten offering shall inform the holders of the Registrable Securities
requesting such registration the holders of any Common Stock or other securities
of the Company which shall have exercised, in respect of such underwritten
offering, registration rights comparable to the rights under this Section 2.2,
by letter of its belief that inclusion in such underwritten distribution of all
or a specified number of such Registrable Securities or of such other securities
of the Company so requested to be included would interfere with the successful
marketing of the securities so being registered (other than such Registrable
Securities, Common Stock or other securities of the Company so requested to be
included) by the underwriters (such writing to state the basis of such belief
and the approximate number of such Registrable Securities, shares of Common
Stock or other securities of the Company so requested to be included which may
be included in such underwritten offering without such effect), then the Company
may, upon written notice to all holders of such Registrable Securities, and
holders of Common Stock or other securities of the Company so requested to be
included, exclude pro rata from such underwritten offering (if and to the extent
stated by such managing underwriter to be necessary to eliminate such effect)
the number of such Registrable Securities, and shares of such Common Stock or
other securities of the Company so requested to be included the registration of
which shall have been requested by each holder of Registrable Securities, and by
the holders of such Common Stock or other securities of the Company so that the
resultant aggregate number of such Registrable Securities and of such other
shares of Common Stock or other securities of the Company so requested to be
included which are included in such underwritten offering shall be equal to the
approximate number of shares stated in such managing underwriter's letter.

     2.3 REGISTRATION PROCEDURES. If and whenever the Company is required to use
commercially reasonable efforts to effect the registration of any Registrable
Securities under the Securities Act as provided in Sections 2.1 and 2.2, the
Company shall, as expeditiously as possible:

                    (i) prepare and file with the Commission the requisite
               registration statement to effect such registration (including
               such audited financial statements as may be required by the
               Securities Act or the rules and regulations promulgated
               thereunder) and thereafter use commercially reasonable efforts to
               cause such registration statement to become and remain effective,
               provided however that the Company may discontinue any
               registration of its securities which are not Registrable
               Securities (and, under the circumstances specified in Section
               2.2(a), its securities which are Registrable Securities) at any
               time prior to the effective date of the registration statement
               relating thereto, and provided further that before filing such
               registration statement or any amendments thereto, the Company
               will furnish to the counsel selected by the holders of
               Registrable Securities which are to be included in such
               registration copies of all such documents proposed to be filed,
               which documents will be subject to the review, but not the prior
               approval, of such counsel;

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                    (ii) prepare and file with the Commission such amendments
               and supplements to such registration statement and the prospectus
               used in connection therewith as may be necessary to keep such
               registration statement effective and to comply with the
               provisions of the Securities Act with respect to the disposition
               of all securities covered by such registration statement until
               the earlier of such time as all of such securities have been
               disposed of in accordance with the intended methods of
               disposition by the seller or sellers thereof set forth in such
               registration statement or (i) in the case of a registration
               pursuant to Section 2.1, the expiration of 90 days after such
               registration statement becomes effective, or (ii) in the case of
               a registration pursuant to Section 2.2, the expiration of 30 days
               after such registration statement becomes effective;

                    (iii) furnish to each seller of Registrable Securities
               covered by such registration statement and each underwriter, if
               any, of the securities being sold by such seller such number of
               conformed copies of such registration statement and of each such
               amendment and supplement thereto (in each case including all
               exhibits), such number of copies of the prospectus contained in
               such registration statement (including each preliminary
               prospectus and any summary prospectus) and any other prospectus
               filed under Rule 424 under the Securities Act, in conformity with
               the requirements of the Securities Act, and such other documents,
               as such seller and underwriter, if any, may reasonably request;

                    (iv) use commercially reasonable efforts to register or
               qualify all Registrable Securities and other securities covered
               by such registration statement under such other securities laws
               or blue sky laws of such jurisdictions as any seller thereof and
               any underwriter of the securities being sold by such seller shall
               reasonably request, to keep such registrations or qualifications
               in effect for so long as such registration statement remains in
               effect, and take any other action which may be reasonably
               necessary or advisable to enable such seller and underwriter to
               consummate the disposition in such jurisdictions of the
               securities owned by such seller, except that the Company shall
               not for any such purpose be required to qualify generally to do
               business as a foreign corporation in any jurisdiction wherein it
               would not but for the requirements of this subdivision (iv) be
               obligated to be so qualified, to subject itself to taxation in
               any such jurisdiction or to consent to general service of process
               in any such jurisdiction;

                    (v) notify the holders of Registrable Securities and the
               managing underwriter or underwriters, if any, promptly and
               confirm such advice in writing promptly thereafter:

         (a) when the registration statement, the

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     prospectus or any prospectus supplement related thereto or post-effective
     amendment to the registration statement has been filed, and, with respect
     to the registration statement or any post-effective amendment thereto, when
     the same has become effective;

          (b) of any request by the Commission for amendments or supplements to
the registration statement or the prospectus or for additional information;

          (c) of the issuance by the Commission of any stop order suspending the
effectiveness of the registration statement or the initiation of any proceedings
by any Person for that purpose; and

          (d) of the receipt by the Company of any notification with respect to
the suspension of the qualification of any Registrable Securities for sale under
the securities or blue sky laws of any jurisdiction or the initiation or threat
of any proceeding for such purpose; and

                    (vi) notify each seller of Registrable Securities covered by
               such registration statement, at any time when a prospectus
               relating thereto is required to be delivered under the Securities
               Act, upon the discovery that, or upon the happening of any event
               as a result of which, the prospectus included in such
               registration statement, as then in effect, includes an untrue
               statement of a material fact or omits to state any material fact
               required to be stated therein or necessary to make the statements
               therein not misleading in the light of the circumstances under
               which they were made, and at the request of any such seller
               promptly prepare and furnish to such seller and each underwriter,
               if any, a reasonable number of copies of a supplement to or an
               amendment of such prospectus as may be necessary so that, as
               thereafter delivered to the purchasers of such securities, such
               prospectus shall not include an untrue statement of a material
               fact or omit to state a material fact required to be stated
               therein or necessary to make the statements therein not
               misleading in the light of the circumstances under which they
               were made;

                    (vii) make every reasonable effort to obtain the withdrawal
               of any order suspending the effectiveness of the registration
               statement at the earliest possible moment;

                    (viii) otherwise use commercially reasonable efforts to
               comply with all applicable rules and regulations of the
               Commission, and make available to its security holders, as soon
               as reasonably practicable, an earnings statement covering the
               period of at least twelve months, but not more than eighteen
               months, beginning with the first full calendar month after the
               effective

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               date of such registration statement, which earnings statement
               shall satisfy the provisions of Section 11(a) of the Securities
               Act and Rule 158 thereunder, and will furnish to each such seller
               at least five business days prior to the filing thereof a copy of
               any amendment or supplement to such registration statement or
               prospectus and shall not file any thereof to which any such
               seller shall have reasonably objected on the grounds that such
               amendment or supplement does not comply in all material respects
               with the requirements of the Securities Act or of the rules or
               regulations thereunder;

                    (ix) provide and cause to be maintained a transfer agent and
                registrar for all Registrable Securities covered by such
                registration statement from and after a date not later than the
                effective date of such registration statement;

                    (x) use commercially reasonable efforts to list all
                Registrable Securities covered by such registration statement on
                any securities exchange on which any of the securities of the
                same class as the Registrable Securities are then listed; and

                    (xi) use commercially reasonable efforts to provide a CUSIP
                number for the Registrable Securities, not later than the
                effective date of the registration statement.

     The Company may require each seller of Registrable Securities as to which
any registration is being effected to furnish the Company such information
regarding such seller and the distribution of such securities as the Company may
from time to time reasonably request in writing.

     The Company will not file any registration statement or amendment thereto
or any prospectus or any supplement thereto (including such documents
incorporated by reference and proposed to be filed after the initial filing of
the registration statement) to which the holders of at least a majority of the
Registrable Securities covered by such registration statement or the underwriter
or underwriters, if any, shall reasonably object, provided that the Company may
file such document in a form required by law or upon the advice of its counsel.

     Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
occurrence of any event of the kind described in subdivision (vi) of this
Section 2.3, such holder will forthwith discontinue such holder's disposition of
Registrable Securities pursuant to the registration statement relating to such
Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by subdivision (vi) of this
Section 2.3 and, if so directed by the Company, will deliver to the Company (at
the

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Company's expense) all copies, other than permanent file copies, then in such
holder's possession of the prospectus relating to such Registrable Securities
current at the time of receipt of such notice. In the event the Company shall
give any such notice, the period mentioned in paragraph (ii) of this Section 2.3
shall be extended by the length of the period from and including the date when
each seller of any Registrable Securities covered by such registration statement
shall have received such notice to the date on which each such seller has
received the copies of the supplemented or amended prospectus contemplated by
paragraph (vi) of this Section 2.3.

2.4 UNDERWRITTEN OFFERINGS.

          (a) REQUESTED UNDERWRITTEN OFFERINGS. If requested by the underwriters
for any underwritten offering by holders of Registrable Securities pursuant to a
registration requested under Section 2.1, the Company will enter into an
underwriting agreement with such underwriters for such offering, such agreement
to be satisfactory in substance and form to the Company, each such holder and
the underwriters, and to contain such representations and warranties by the
Company and such other terms as are generally prevailing in agreements of this
type. The holders of the Registrable Securities will cooperate with the Company
in the negotiation of the underwriting agreement and will give consideration to
the reasonable suggestions of the Company regarding the form thereof, provided
that nothing herein contained shall diminish the foregoing obligations of the
Company. The holders of Registrable Securities to be distributed by such
underwriters shall be parties to such underwriting agreement. Any such holder of
Registrable Securities shall not be required to make any representations or
warranties to or agreements with the Company or the underwriters other than
representations and warranties or agreements regarding such holder, such
holder's Registrable Securities and such holder's intended method of
distribution and any other representation required by law.

          (b) INCIDENTAL UNDERWRITTEN OFFERINGS. With respect to an Incidental
Registration as contemplated in Section 2.2, the holders of Registrable
Securities to be distributed by such underwriters shall be parties to the
underwriting agreement between the Company and such underwriters. Any such
holder of Registrable Securities shall not be required to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements regarding such
holder, such holder's Registrable Securities and such holder's intended method
of distribution and any other representation required by law.

(c) HOLDBACK AGREEMENTS.

          (i) Each holder of Registrable Securities agrees, (x) if so required
     by the managing underwriter, not to sell, make any short sale of, loan,
     grant any option for the purchase of, effect any public sale or
     distribution of or

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     otherwise dispose of or enter into any hedging or similar transaction
     relating to any Common Stock or Registrable Securities not to be sold in an
     underwritten offering pursuant to Section 2.1 or 2.2, during the 30 days
     prior to the anticipated consummation of such underwritten offering and 90
     days after the applicable underwritten registration pursuant to Section 2.1
     or 2.2 has become effective, except as part of such underwritten
     registration and (y) in connection with any acquisition by or merger with
     the Company which is accounted for under generally accepted accounting
     principles as a pooling of interest, upon the request of the Company, not
     to sell, make any short sale of, loan, grant any option for the purchase
     of, effect any public sale or distribution of or otherwise dispose of or
     enter into any hedging or similar transaction relating to any Common Stock
     or Registrable Securities, for the period commencing 30 days before the
     effective date of such acquisition or merger until the publication of the
     Company's financial results covering a period of at least 30 days following
     such acquisition or merger which is sufficient in accordance with
     Accounting Series Release No. 135, or such shorter period if consistent
     with the requirements for pooling of interests accounting treatment.
     Notwithstanding clause (x) of the foregoing sentence and subject to clause
     (y), during any period described above, each holder of Registrable
     Securities subject to the foregoing sentence shall be entitled to sell
     securities in a private sale so long as the purchaser of such securities
     agrees to be bound by the restrictions set forth above to the same extent
     as the seller for the remainder of the applicable period.

          (ii) The Company agrees if so required by the managing underwriter (x)
     not to sell, make any short sale of, - loan, grant any option for the
     purchase of, effect any public sale or distribution of or otherwise dispose
     of its equity securities or securities convertible into or exchangeable or
     exercisable for any of such securities during the 30 days prior to and the
     90 days after any underwritten registration pursuant to Section 2.1 has
     become effective, except as part of such underwritten registration and
     except in connection with (A) a merger or acquisition by the Company in
     which securities of the Company are issued directly to shareholders of the
     target entity or sellers of assets in exchange for shares of such target
     entity or such assets or (B) a stock option plan, stock purchase plan,
     managing directors' plan, savings or similar plan, or an acquisition of a
     business, merger or exchange of stock for stock, provided that no such
     agreement pursuant to this clause (x) shall prevent the Company from
     fulfilling its obligations pursuant to Section 2.1 or 2.2, subject to the
     provisions of Section 2.7 and (y) to use - reasonable commercially
     reasonable efforts to cause each director and executive officer of the
     Company and any holder (other than the Holders) of its equity securities or
     any securities convertible into or exchangeable or exercisable for any of
     such equity securities, in each case purchased from the Company at any time
     after the date of this Agreement (other than in a public offering and other
     than securities issued to employees who are not directors or

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     executive officers of the Company pursuant to an employee benefit plan or
     similar arrangement) to agree not to sell, make any short sale of, loan,
     grant any option for the purchase of, effect any public sale or
     distribution of or otherwise dispose of such securities during such period,
     it being understood that no action is required by the Company pursuant to
     this clause (y) until the managing underwriter requests.

     (d) PARTICIPATION IN UNDERWRITTEN OFFERINGS. No Person (other than the
Company, which will be subject to and governed by the other terms and provisions
of this Agreement) may participate in any underwritten offering hereunder unless
such Person (i) agrees to sell such Person's securities on the basis provided in
any underwriting arrangements approved, subject to the terms and conditions
hereof, by the holders of a majority of Registrable Securities to be included in
such underwritten offering and (ii) completes and executes all questionnaires,
indemnities, underwriting agreements and other documents (other than powers of
attorney) required under the terms of such underwriting arrangements.
Notwithstanding the foregoing, no underwriting agreement (or other agreement in
connection with such offering) shall require any holder of Registrable
Securities to make any representations or warranties to or agreements with the
Company or the underwriters other than representations and warranties or
agreements regarding such holder, such holder's Registrable Securities and such
holder's intended method of distribution and any other representation required
by law.

     2.5 PREPARATION; REASONABLE INVESTIGATION. In connection with the
preparation and filing of each registration statement under the Securities Act
pursuant to this Agreement, the Company will give the holders of Registrable
Securities registered under such registration statement, their underwriters, if
any, and their respective counsel and accountants, the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each amendment thereof or
supplement thereto, and upon execution of an appropriate confidentiality
agreement, will give each of them such access to its books and records
(collectively, the "Records") and such opportunities to discuss the business of
the Company with its officers and the independent public accountants who have
certified its financial statements as shall be necessary, in the opinion of such
holders' and such underwriters' respective counsel, to conduct a reasonable
investigation within the meaning of the Securities Act; provided, that Records
which the Company determines, in good faith, to be confidential and which it
notifies such holder, underwriter, counsel or accountant are confidential shall
not be disclosed by such Person (other than to any holder of Registrable
Securities) unless (a) such Records have become generally available to the
public or (b) the disclosure of such Records may be necessary or, in the case of
clause (z) below, appropriate (x) in compliance with any law, rule, regulation
or order applicable to any such holder, underwriter, counsel or accountant, (y)
in response to any subpoena or other legal process or (z) in connection with any
litigation to which such holder,

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underwriter, counsel or accountant is a party, and such Person shall sign an
agreement to such effect that shall be customary in form and reasonably
acceptable to the Company.

2.6 INDEMNIFICATION.

     (A) INDEMNIFICATION BY THE COMPANY. In the event of any registration of any
securities of the Company under the Securities Act pursuant to this Agreement,
the Company will, and hereby does agree to, indemnify and hold harmless in the
case of any registration statement filed pursuant to Section 2.1 or 2.2, the
holder of any Registrable Securities covered by such registration statement, its
directors and officers, each Person, if any, who controls such holder within the
meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which such holder or any such director or
officer or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in the case of any preliminary prospectus, final prospectus or summary
prospectus, in light of the circumstances under which they were made, not
misleading, and the Company will reimburse such holder and each such director,
officer, and controlling person for any legal or any other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, liability, action or proceeding, provided that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense arises out of
or is based upon (i) an untrue statement or alleged untrue statement or omission
or alleged omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement in
reliance upon and in conformity with information furnished to the Company by or
on behalf of such holder specifically for use therein and (ii) an untrue
statement or alleged untrue statement, or omission or alleged omission made in
such registration statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement if such untrue statement or alleged
untrue statement, omission or alleged omission is corrected in an amendment or
supplement to such which amendment or supplement is delivered to holder in a
timely manner and holder thereafter fails to deliver such Prospectus as so
amended or supplemented prior to or concurrently with the sale of such
Registrable Securities to the Person asserting such Damages. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such holder or any such director, officer, underwriter or
controlling person and shall survive the transfer of such securities by such
holder.

                                       12

<PAGE>

     (b) INDEMNIFICATION BY THE SELLERS. As a condition to including any
Registrable Securities in any registration statement filed pursuant to Section
2.3, the Company shall have received from each seller of Registrable Securities
a written undertaking satisfactory to it from the prospective seller of such
Registrable Securities, to indemnify and hold harmless (in the same manner and
to the same extent as set forth in subdivision (a) of this Section 2.6) the
Company, each director of the Company, each officer of the Company and each
other person, if any, who controls the Company within the meaning of the
Securities Act, with respect to any statement or alleged statement in or
omission or alleged omission from such registration statement, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, if such statement or alleged statement or
omission or alleged omission was made in reliance upon and in conformity with
information furnished to the Company by or on behalf of such seller. Any such
indemnity shall remain in full force and effect, regardless of any investigation
made by or on behalf of the Company or any such director, officer or controlling
person and shall survive the transfer of such securities by such seller.

     (c) NOTICES OF CLAIMS, ETC. Promptly after receipt by an indemnified party
of notice of the commencement of any action or proceeding involving a claim
referred to in the preceding subdivisions of this Section 2.6, such indemnified
party will, if a claim in respect thereof is to be made against an indemnifying
party, give written notice to the latter of the commencement of such action,
provided that the failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its obligations under the
preceding subdivisions of this Section 2.6, except to the extent that the
indemnifying party is actually prejudiced by such failure to give notice. In
case any such action is brought against an indemnified party, unless in such
indemnified party's reasonable judgment based on written advice of counsel, a
conflict of interest between such indemnified and indemnifying parties may exist
in respect of such claim, the indemnifying party shall be entitled to
participate in and to assume the defense thereof, jointly with any other
indemnifying party similarly notified, to the extent that the indemnifying party
may wish, with counsel reasonably satisfactory to such indemnified party. After
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof. No indemnifying party shall,
without the consent of the indemnified party, consent to entry of any judgment
or enter into any settlement of any such action which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation. No indemnified party shall consent to entry of any judgment or enter
into any settlement of any such action the defense of which has been assumed by
an indemnifying party without the consent of such indemnifying party.

                                       13
<PAGE>

     (d) CONTRIBUTION. If the indemnification provided for in the preceding
subdivisions of this Section 2.6 is unavailable to an indemnified party in
respect of any expense, loss, claim, damage or liability referred to therein,
then each indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such expense, loss, claim, damage or liability (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company on
the one hand and the Holder or other Person, as the case may be, on the other
from the distribution of the Registrable Securities or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company on the one
hand and of the Holder or other Person, as the case may be, on the other in
connection with the statements or omissions which resulted in such expense,
loss, damage or liability, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Holder or other Person, as the case may be, on the other in connection
with the distribution of the Registrable Securities shall be deemed to be in the
same proportion as the total net proceeds received by the Company from the
initial sale of the Preferred Stock by the Company to the purchasers pursuant to
the Stock Purchase Agreements bear to the gain, if any, realized by the selling
holder or the underwriting discounts and commissions received by the
underwriter, as the case may be. The relative fault of the Company on the one
hand and of the Holder or other Person, as the case may be, on the other shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission to state a material fact relates
to information supplied by the Company, by the holder or by the other Person and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission, provided that the foregoing
contribution agreement shall not inure to the benefit of any indemnified party
if indemnification would be unavailable to such indemnified party by reason of
the provisions contained in the first sentence of subdivision (a) of this
Section 2.6, and in no event shall the obligation of any indemnifying party to
contribute under this subdivision (e) exceed the amount that such indemnifying
party would have been obligated to pay by way of indemnification if the
indemnification provided for under subdivisions (a) or (b) of this Section 2.6
had been available under the circumstances.

     The Company and the holders of Registrable Securities agree that it would
not be just and equitable if contribution pursuant to this subdivision (e) were
determined by pro rata allocation (even if the holders and any underwriters were
treated as one entity for such purpose) or by any other method of allocation
that does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages and liabilities referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth in the preceding sentence and subdivision (c) of this

                                       14
<PAGE>

Section 2.6, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.

     Notwithstanding the provisions of this subdivision (e), no holder of
Registrable Securities or underwriter shall be required to contribute any amount
in excess of the amount by which (i) in the case of any such holder, the net
proceeds received by such holder from the sale of Registrable Securities or (ii)
in the case of an underwriter, the total price at which the Registrable
Securities purchased by it and distributed to the public were offered to the
public exceeds, in any such case, the amount of any damages that such holder or
underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.

     2.7 SUSPENSION OF REGISTRATION. Notwithstanding anything to the contrary
contained herein, the Company will not be required to file any registration
statement pursuant to Section 2.1(a) or furnish any supplement to a prospectus
pursuant to Section 2.3(vi) during any of the following periods: (i) 30 days
prior to the anticipated consummation of a public offering by the Company of its
securities and 90 days subsequent to the consummation of such public offering
where, in the good faith judgment of the managing underwriter or underwriters
thereof, such filing or furnishing of such supplement would have an adverse
effect on such offering, (ii) if such filing or furnishing of such supplement is
prohibited by applicable law, (iii) if the filing of such registration statement
     or furnishing of such supplement could require the Company to disclose a
material financing, acquisition or other corporate development (iv) during the
period described in Section 2.4(c)(ii), provided that the Company may not delay
the filing of any registration statement or furnishing of such supplement
pursuant to this Section 2.7 for more than an aggregate of 120 days in any
twelve-month period.

     2.8 OTHER AGREEMENTS. The Company shall not enter into any agreement or
instrument which would conflict with or result in a breach or violation of any
of the terms or provisions of this Agreement.

     3. DEFINITIONS. As used herein, unless the context otherwise requires, the
following terms have the following respective meanings:

          BENEFICIAL OWNERSHIP or BENEFICIALLY OWNED: With respect to any
person, any securities with respect to which such person is deemed to have
"beneficial ownership" as defined in rule 13d-3 under the Securities Exchange
Act of 1934, as amended. For purposes of this Agreement only, any holder of
Preferred Stock shall be deemed to be the beneficial owner of any shares of
Common Stock of the Company issuable upon conversion of such Preferred Stock.

                                       15
<PAGE>

          BUSINESS DAY: Any day except a Saturday, Sunday or nationally
recognized holiday in the State of New York, United States of America.

          COMMISSION: The Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act.

          COMMON STOCK: As defined in Section 1.

          COMPANY: As defined in the introductory paragraph of this Agreement.

          EXCHANGE ACT: The Securities Exchange Act of 1934, or any similar
Federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time. Reference to a particular section of
the Securities Exchange Act of 1934 shall include a reference to the comparable
section, if any, of any such similar Federal statute.

          HOLDERS: As defined in the introductory paragraph of this Agreement.

          INITIATING HOLDERS: Any holder or holders of Registrable Securities
holding more than 50% of the Registrable Securities issued and outstanding at
the time given, and initiating a request pursuant to Section 2.1 for the
registration of all or part of such holder's or holders' Registrable Securities.

          PERSON: A corporation, limited liability company, an association, a
partnership, an organization, business, an individual, a governmental or
political subdivision thereof or a governmental agency.

          PREFERRED STOCK: As defined in Section 1.

          REGISTRABLE SECURITIES: The Common Stock or any other securities
issuable upon conversion of the Preferred Stock issued pursuant to any and all
of the Stock Purchase Agreements and any securities issued or issuable with
respect to any such Common Stock by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization or otherwise which the holders thereof are entitled to
receive. As to any particular Registrable Securities, once issued such
securities shall cease to be Registrable Securities when (a) a registration
statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been disposed
of in accordance with such registration statement, (b) they shall have been
distributed or are eligible for distribution to the public pursuant to Rule 144
(or any successor provision)

                                       16
<PAGE>

under the Securities Act, (c) they shall have been otherwise transferred, new
certificates for them not bearing a legend restricting further transfer shall
have been delivered by the Company and subsequent disposition of them shall not
require registration or qualification of them under the Securities Act or any
similar state law then in force, or (d) they shall have ceased to be
outstanding.

          REGISTRATION EXPENSES: All expenses incident to the Company's
performance of or compliance with Section 2, including, without limitation, (a)
all Commission and any NASD registration and filing fees and expenses, (b) all
fees and expenses in connection with the registration or qualification of the
Registrable Securities for offering and sale under the State securities and blue
sky laws, (c) all expenses relating to the preparation, printing, distribution
and reproduction of the registration statement required to be filed hereunder,
each prospectus included therein or prepared for distribution pursuant hereto,
each amendment or supplement to the foregoing, the expenses of preparing the
Registrable Securities for delivery and the expenses of printing or producing
any underwriting agreement(s) among underwriters and "Blue Sky" or legal
investment memoranda, any selling agreements and all other documents in
connection with the offering, sale or delivery of Registrable Securities to be
disposed of, (d) fees, disbursements and expenses of counsel and independent
certified public accountants of the Company (but not for any attorney's fee of
the Holders), (e) fees, expenses and disbursements of any other persons retained
by the Company, including special experts retained by the Company in connection
with such registration and, (f) all fees and expenses incurred in connection
with the qualification of the shares of Common Stock constituting Registrable
Securities for quotation on the Nasdaq National Market, any over-the-counter
market, or the listing of such shares on any securities exchange.

          SECURITIES ACT: The Securities Act of 1933, or any similar Federal
statute, and the rules and regulations of the Commission thereunder, all as of
the same shall be in effect at the time. References to a particular section of
the Securities Act of 1933 shall include a reference to the comparable section,
if any, of any such similar Federal statute.

                    STOCK PURCHASE AGREEMENTS: As defined in Section 1.

     4. RULES 144 AND 144A. The Company shall timely file the reports required
to be filed by it under the Securities Act and the Exchange Act (including but
not limited to the reports under Sections 13 and 15(d) of the Exchange Act
referred to in subparagraph (c) of Rule 144 adopted by the Commission under the
Securities Act) and

                                       17
<PAGE>

the rules and regulations adopted by the Commission thereunder and will take
such further action as any holder of Registrable Securities or any broker
facilitating such sale may reasonably request, all to the extent (i) required
from time to time to enable such holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (a) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or (b) any similar rule or regulation hereafter adopted by
the Commission. Upon the request of any holder of Registrable Securities, the
Company will deliver to such holder any information to be delivered or filed in
connection with the requirements of this Section 4.

     5. AMENDMENTS AND WAIVERS. This Agreement may be amended and the Company
may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company shall have obtained the
written consent to such amendment, action or omission to act, of the holder or
holders of 50% or more of the shares of Registrable Securities and, in the case
of any such amendment, action or omission to act in respect of the first
sentence of Section 4 the written consent of each holder affected thereby. Each
holder of any Registrable Securities at the time or thereafter outstanding shall
be bound by any consent authorized by this Section 5, whether or not such
Registrable Securities shall have been marked to indicate such consent.
Notwithstanding the foregoing, each signatory hereby agrees that without
obtaining any additional consent of any other Holder, any purchaser under any
and all of the Other Purchase Agreements shall become a party hereto by signing
a Joinder Agreement.

     6. NOMINEES FOR BENEFICIAL OWNERS. In the event that any Registrable
Securities are held by a nominee for the Beneficial Owner thereof, the
Beneficial Owner thereof may, at its election, be treated as the holder of such
Registrable Securities for purposes of any request or other action by any holder
or holders of Registrable Securities pursuant to this Agreement or any
determination of any number or percentage of shares of Registrable Securities
held by any holder or holders of Registrable Securities contemplated by this
Agreement. If the Beneficial Owner of any Registrable Securities so elects, the
Company may require assurances reasonably satisfactory to it of such owner's
beneficial ownership of such Registrable Securities.

     7. NOTICES. Except as otherwise provided in this Agreement, all notices,
requests and other communications to any Person provided for hereunder shall be
in writing and shall be given to such Person (a) in the case of a party hereto
other than the Company, addressed to such party in the manner set forth in the
Stock Purchase Agreements or at such other address as such party shall have
furnished to the Company in writing, or (b) in the case of any other holder of
Registrable Securities, at the address that such holder shall have furnished to
the Company in writing, or, until any such other holder so furnishes to the
Company an address, then to and at the address of the last holder of such
Registrable Securities who has furnished an address to the Company, or (c)

                                       18
<PAGE>

in the case of the Company, at 450 Park Avenue, 10th Floor, New York, New York
10022 to the attention of its Chief Executive Officer, or at such other address,
or to the attention of such other officer, as the Company shall have furnished
to each holder of Registrable Securities at the time outstanding. Each such
notice, request or other communication shall be effective (i) if given by mail,
72 hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (ii) if given by any other means
(including, without limitation, by air courier), when delivered at the address
specified above, provided that any such notice, request or communication to any
holder of Registrable Securities shall not be effective until received.

     8. ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
successors and assigns. In addition, the provisions of this Agreement which are
for the benefit of the parties hereto other than the Company shall also be for
the benefit of and enforceable by any subsequent holder of any Registrable
Securities that acknowledges such assignment in writing and agrees to the terms
hereof.

      9. DESCRIPTIVE HEADINGS. The descriptive headings of the several sections
and paragraphs of this Agreement are inserted for reference only and shall not
limit or otherwise affect the meaning hereof.

     10. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAWS OF
THE STATE OF NEW YORK WITHOUT REFERENCE TO THE PRINCIPLES OF CONFLICTS OF LAW.

     11. COUNTERPARTS. This Agreement may be executed simultaneously in any
number of counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.

     12. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the Company and each other party hereto relating to the
subject matter hereof and supersedes all prior agreements and understandings
relating to such subject matter.

     13. SUBMISSION TO JURISDICTION. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT
TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF
THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, THE COMPANY HEREBY ACCEPTS FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION
OF THE AFORESAID COURTS AND APPELLATE COURTS FROM ANY THEREOF. THE COMPANY
HEREBY

                                       19
<PAGE>

IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED
COURTS IN ANY ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF TO THE
COMPANY BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, RETURN RECEIPT
REQUESTED, TO THE COMPANY AT ITS ADDRESS SPECIFIED IN SECTION 7. THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVE TRIAL BY JURY, AND THE COMPANY HEREBY
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION
TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN
SUCH RESPECTIVE JURISDICTIONS.

     14. SEVERABILITY. If any provision of this Agreement, or the application of
such provisions to any Person or circumstance, shall be held invalid, the
remainder of this Agreement, or the application of such provision to Persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.

                                       20
<PAGE>

                  IN WITNESS WHEREOF,  the parties have caused this Agreement to
be executed and delivered by their respective officers thereunto duly authorized
as of the date first above written.

                                         FRANKLIN CAPITAL CORPORATION

                                         By: /s/
                                             ----------------------------------
                                             Spencer L. Brown
                                             Secretary

                                         Holders:

                                         COPLEY FUND INC.

                                         By: /s/
                                             ----------------------------------
                                             Name: Irving Levine
                                             Title: Chairman

                                         KUBY GOTTLIEB SPECIAL VALUE FUND

                                         By: /s/
                                             ----------------------------------
                                             Name: Peter Gottleib
                                             Title: Portfolio Manager

                                         MARSHALL RATTNER INC.

                                         By: /s/
                                             ----------------------------------
                                             Name: Mark Rattner
                                             Title: Chief Executive Officer

                                       21

<PAGE>

                [SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]

                                         By: /s/
                                             ----------------------------------
                                             Wendy S. Brown

                                         By: /s/
                                             ----------------------------------
                                             Peter Gottlieb

                                         By: /s/
                                             ----------------------------------
                                             Susan Gottlieb

                                         By: /s/
                                             ----------------------------------
                                             Daniel S. Kampel

                                         By: /s/
                                             ----------------------------------
                                             Patricia Karpas

                                         By: /s/
                                             ----------------------------------
                                             Hiram Lazar

                                       22
<PAGE>

                [SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]

                                         By: /s/
                                             ----------------------------------
                                             Jonathan A. Marshall

                                         By: /s/
                                             ----------------------------------
                                             David Meitus

                                         By: /s/
                                             ----------------------------------
                                             Leslie Murdock

                                         By: /s/
                                             ----------------------------------
                                             John Nebens

                                         By: /s/
                                             ----------------------------------
                                             Meg Nebens

                                         By: /s/
                                             ----------------------------------
                                             Mark Rattner

                                         By: /s/
                                             ----------------------------------
                                             Gerry M. Ritterman

                                         By: /s/
                                             ----------------------------------
                                             Edward Sheldon

                                       23
<PAGE>

                                    EXHIBIT A

Stock Purchase Agreement dated February 22, 2000 among the Company and the other
parties listed on the signature page attached thereto.

                                       24
<PAGE>

                                    EXHIBIT B

                          Franklin Capital Corporation
                                 450 Park Avenue
                              New York, N.Y. 10022

         Reference is hereby made to the (i) Preferred Stock Purchase  Agreement
dated the date  hereof,  pursuant to which  Franklin  Capital  Corporation  (the
"Company"),  issued  to  the  undersigned  purchasers  shares  of its  Series  A
Convertible  Preferred  Stock  and  (ii)  Registration  Rights  Agreement  dated
February 22, 2000 (the "Registration  Rights Agreement"),  pursuant to which the
Company,  among other things,  has granted to certain  holders of such series of
preferred stock certain  registration  rights relating to shares of common stock
of the Company into which such preferred stock is convertible.

         By  executing  the  acknowledgement  below each of you hereby  agree to
become a party to the Registration Rights Agreement and shall be entitled to all
of the benefits and subject to all of the obligations as a Holder of Registrable
Securities  (in each case as such term is  defined  in the  Registration  Rights
Agreement).

                                        FRANKLIN CAPITAL CORPORATION

                                         By: /s/
                                             ----------------------------------
                                             Name:    Spencer L. Brown
                                             Title:   Senior Vice-President
                                                      and Secretary

ACKNOWLEDGED AND AGREED

Name of Purchaser

By: /s/
    --------------------------------
       Name:
       Title:

By: /s/
    --------------------------------
       Name:
       Title:

                                       25EXHIBIT (a)(2)(4)(iii)

                          FRANKLIN CAPITAL CORPORATION

                      SERIES A CONVERTIBLE PREFERRED STOCK,
                                 $1.00 Par Value

                       PREFERRED STOCK PURCHASE AGREEMENT

February 22, 2000

<PAGE>

                                TABLE OF CONTENTS

                                                                            PAGE

1.   Authorization of Stock................................................... 1

2.   Sale and Purchase of Stock............................................... 1

3.   Closing Date; Payment of Purchase Price.................................. 2

4.   Closing Deliveries....................................................... 2

5.   Representations and Warranties........................................... 2

     5.1.  Organization, Standing, etc........................................ 2

     5.2.  Subsidiaries....................................................... 2

     5.3.  Qualification...................................................... 3

     5.4.  Business; Financial Statements..................................... 3

     5.5.  Changes, etc....................................................... 3

     5.6.  Capital Stock and Related Matters.................................. 4

     5.7.  Tax Returns and Payments........................................... 4

     5.8.  Compliance With Laws............................................... 4

     5.9.  Litigation, etc.................................................... 4

     5.10. Compliance with Other Instruments, etc............................. 5

     5.11. Governmental Consents, etc......................................... 5

     5.12. Offering of Securities............................................. 5

     5.13. Certain Fees....................................................... 6

     5.14. Disclosure......................................................... 6

     5.15. Enforceability..................................................... 6

6.   Investment Representations............................................... 6

     6.1.  Acquisition for Own Account........................................ 6

     6.2.  Ability to Protect Own Interests................................... 6

     6.3.  Accredited Investor................................................ 7

     6.4.  Access to Information.............................................. 7

     6.5.  No Brokers......................................................... 7

     6.6.  Compliance with Laws............................................... 7

     6.7.  Enforceability..................................................... 7

     6.8.  Litigation, etc.................................................... 7

                                       1
<PAGE>

                                TABLE OF CONTENTS
                                   (CONTINUED)
                                                                            PAGE

     6.9.  No Violations; Consents............................................ 8

 7.  Affirmative Covenants.................................................... 8

     7.1.  Reservation of Common Stock........................................ 8

     7.2.  Availability of Information........................................ 8

 8.  Registration, Transfer and Substitution of Certificates for Stock........ 8

     8.1.  Stock Register; Ownership of Stock................................. 8

     8.2.  Replacement of Certificates........................................ 9

     8.3.  Restrictive Legends................................................ 9

     8.4.  Notice of Proposed Transfer; Opinions of Counsel...................10

     8.5.  Termination of Restrictions........................................10

 9.  Definitions..............................................................11

     9.1. Certain Defined Terms...............................................11

     9.2. Other Provisions Regarding Definitions..............................13

10.  Expenses, etc............................................................13

11.  Survival of Representations and Warranties and Indemnification; Certain
       Limitations............................................................13

12.  Amendments and Waivers...................................................14

13.  Notices, etc.............................................................14

14.  Indemnification..........................................................14

15.  Miscellaneous............................................................15

                                       2
<PAGE>

                          Franklin Capital Corporation
                                 450 Park Avenue
                            New York, New York 10022

                                                              February 22, 2000

To the Purchasers listed on the signature page

Gentlemen:

      Franklin Capital Corporation, a Delaware corporation (the "Company"),
agrees with the entities who are signing this Agreement as purchasers (together,
the "Purchasers") as follows:

      1. AUTHORIZATION OF STOCK. The Company authorized 500,000 shares of its
Series A Convertible Preferred Stock, $1.00 par value, designated as its "Series
A Convertible Preferred Stock" (the "Stock"). The relative rights, preferences
and limitations of the Stock, including, without limitation, the right to
convert Stock into shares of the Company's common stock, par value $1.00 per
share (the "Common Stock"), are set forth in the form of the Certificate of
Designation of the Stock of the Company attached as Exhibit A hereto (the
"Certificate of Designation"). Certain capitalized terms used in this Agreement
are defined in Section 9; references to a "Schedule" or an "Exhibit" are, unless
otherwise specified, to a Schedule or an Exhibit attached to this Agreement and
references to a "section" are, unless otherwise specified, to one of the
sections of this Agreement.

2. SALE AND  PURCHASE  OF STOCK.  Subject  to the terms and  conditions  of this
Agreement,  the Company  issued and sold to the  Purchasers,  and the Purchasers
purchased from the Company, at the closing described in Section 3, 16,450 shares
of the  Stock  (collectively,  the  "Shares")  free  and  clear of any Lien at a
purchase price of $100 per share (the "Purchase Price").

      3. CLOSING DATE; PAYMENT OF PURCHASE PRICE. The sale of the Shares to the
Purchasers by the Company took place at the offices of Weil, Gotshal & Manges
LLP at 9:00 a.m., New York City time, at a closing (the "Closing") on February
22, 2000 (the "Closing Date").

      The name or names in which the Company registered the Shares are as set
forth on the signature page of this Agreement. At the Closing, the Company
delivered the Shares to the Purchasers in the form of and in the number of
certificates previously requested by Purchasers, and each Purchaser tendered to
the Company, in immediately available funds, the Purchase Price for the amount
of Shares purchased by such Purchaser.

<PAGE>

      4. CLOSING DELIVERIES. (a) All proceedings taken and all documents
executed and delivered by the parties at the Closing were deemed taken and
executed simultaneously, and no proceedings was deemed taken nor any document
executed or delivered until all were taken, executed and delivered.

            (b) At the Closing, the Company delivered or caused to be delivered
to the Purchasers the following:

            (i) the Certificate of Designation in the form attached hereto as
Exhibit A, which Exhibit was filed contemporaneously with the Secretary of State
of Delaware; and

            (ii) the Registration Rights Agreement in the form attached hereto
as Exhibit B.

            (c) At the Closing, the Purchasers delivered or caused to be
delivered to the Company via wire transfer, in immediately available funds, the
aggregate Purchase Price for the Shares.

      5. REPRESENTATIONS AND WARRANTIES. Except as disclosed in Exhibit C, the
Company represents and warrants that:

      5.1. ORGANIZATION, STANDING, ETC. The Company is a corporation validly
existing and in good standing under the laws of the State of Delaware and has
all requisite corporate power and authority to own and operate its properties,
to carry on its business as now conducted and as proposed to be conducted, to
enter into and perform all of its obligations under this Agreement and each of
the Collateral Agreements, to issue and sell the Shares and to carry out the
transactions contemplated hereby and thereby.

      5.2. SUBSIDIARIES. Exhibit D correctly lists as to each Subsidiary of the
Company on the date of this Agreement (a) its name, (b) the jurisdiction of its
incorporation and (c) the percentage of its issued and outstanding shares owned
by the Company. Each Subsidiary of the Company is a corporation validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
has all requisite corporate power and authority to own and operate its
properties and to carry on its business as now conducted and as proposed to be
conducted. All the outstanding shares of capital stock of each Subsidiary of the
Company are validly issued, fully paid and nonassessable, and all such shares
indicated in Exhibit D as owned by the Company are so owned beneficially and of
record by the Company, free and clear of any Lien.

      5.3. QUALIFICATION. Each of the Company and its Subsidiaries is duly
qualified and in good standing as a foreign corporation authorized to do
business in each jurisdiction (other than the jurisdiction of its incorporation)
in which the nature of its activities or the character of the properties it owns
or leases makes

                                       2
<PAGE>

such qualification  necessary and in which the failure to so qualify would have
a Material Adverse Effect.

      5.4. BUSINESS; FINANCIAL STATEMENTS. The audited balance sheet of the
Company and the related statements of operations, cash flows and changes in net
assets included in the Company's Annual Report on Form 10K for the year ended
December 31, 1998 (collectively, the "Financial Statements") have been prepared
in accordance with GAAP consistently applied throughout the periods involved
(except as otherwise specified therein) and present fairly the financial
position of the Company as of the respective dates specified and the results of
its operations and changes in financial position for the respective periods
specified. The Company has also delivered to the Purchasers complete and correct
copies of its balance sheet as of September 30, 1999, and the related statements
of operations, cash flows and changes in net assets for the three month period
ended on such date (the "Unaudited Statements"). The Unaudited Statements have
been prepared in accordance with GAAP consistently applied throughout the
periods involved (except as otherwise specified therein) and present fairly the
financial position of the Company as of the respective dates specified, and the
results of its operations and changes in cash flows for the respective periods
specified.

      5.5. CHANGES, ETC. Since September 30, 1999, neither the Company nor any
of the Subsidiaries has sustained any loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or
decree which would be material to the Company and the Subsidiaries taken as a
whole, otherwise than as reserved for as disclosed in the Company's financials
statements; and there has not been any change in the capital stock of the
Company or increase in the long-term debt (other than accretion or scheduled
repayments thereof) of the Company and the Subsidiaries taken as a whole, or any
material adverse change which has had a Material Adverse Effect.

      5.6. CAPITAL STOCK AND RELATED MATTERS. After giving effect to the
transactions contemplated by this Agreement, the authorized capital stock of the
Company on the date hereof will consist of (a) 10,000,000 shares of Common
Stock, of which 730,588 shares will be outstanding and (b) 500,000 shares of
Stock, of which 16,450 shares shall be outstanding. The Common Stock and the
Stock are hereinafter collectively referred to as "Capital Stock". All of the
outstanding shares of Capital Stock are, as of the date hereof, validly issued
and outstanding, fully paid and non-assessable. Except as set forth above, the
Company has no outstanding stock or securities convertible into or exchangeable
for any shares of its Capital Stock, or any outstanding rights (either
preemptive or other) to subscribe for or to purchase, or any outstanding options
for the purchase of, or any agreements providing for the issuance (contingent or
otherwise) of, or any outstanding calls, commitments or claims of any character
relating to, any Capital Stock or any stock or securities convertible into or
exchangeable for any Capital Stock of the Company. Except as set forth above,
the

                                       3
<PAGE>

Company is not subject to any obligation (contingent or otherwise) to repurchase
or otherwise acquire or retire any shares of its Capital Stock or any
convertible securities, rights or options of the type described in the preceding
sentence. Neither the Company nor any of its Subsidiaries is a party to, or has
knowledge of, any agreement restricting the transfer of any shares of the
Capital Stock which would affect the transferability of the Common Stock
issuable upon conversion of the Stock.

      5.7. TAX RETURNS AND PAYMENTS. The Company and each of the Subsidiaries
have filed all necessary-material federal, state, local and foreign income,
payroll, franchise and other tax returns (after giving effect to extensions) and
have paid all taxes shown as due thereon (except where the failure to so file or
pay would not, singly or in the aggregate, have a Material Adverse Effect), and
there is no tax deficiency that has been, or to the knowledge of the Company is
likely to be, asserted against the Company, any of the Subsidiaries or any of
their properties or assets that would result in a Material Adverse Effect,
except for taxes that are being contested in good faith by appropriate
proceedings and with respect to which the Company has established adequate
reserves in accordance with United States GAAP.

      5.8. COMPLIANCE WITH LAWS. The Company and each of the Subsidiaries are in
material compliance with all laws applicable to the Company and the Subsidiaries
or to the conduct of the business or operations of the Company and the
Subsidiaries, except for such non-compliances as would not have a Material
Adverse Effect. The Company and each of the Subsidiaries have all permits from
Governmental Authorities which are required for the Company and each of the
Subsidiaries to operate its business, except for those the absence of which
would not result in a Material Adverse Effect.

      5.9. LITIGATION, ETC. There is no action, proceeding or investigation
pending or (to the knowledge of the Company) threatened which questions the
validity of this Agreement, the Shares or any action taken or to be taken
pursuant to this Agreement, the Shares or the Collateral Agreements. There are
no legal or governmental proceedings pending to which the Company or any of the
Subsidiaries is a party or of which any property of the Company or the
Subsidiaries is the subject, which if determined adversely to the Company or any
of the Subsidiaries, would individually or in the aggregate have a Material
Adverse Effect; and, to the Company's knowledge, no such proceedings which would
in the aggregate have a Material Adverse Effect are threatened or contemplated
by Governmental Authorities or threatened by others.

      5.10. COMPLIANCE WITH OTHER INSTRUMENTS, ETC. Neither the Company nor any
of the Subsidiaries is in violation of any term of its certificate or articles
of incorporation or by-laws. The compliance by the Company with all of the
provisions of this Agreement and the Registration Rights Agreement, the
execution, delivery and performance by the Company of this Agreement and the
Registration Rights Agreement, the issuance by the Company of the Common Stock
upon the conversion

                                       4
<PAGE>

of the Shares, and the compliance with the terms of the Certificate of
Designation will not conflict with or result in a breach or violation of any of
the material terms and provisions of, or constitute a material default under,
any material indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of the Subsidiaries is a
party or by which the Company or any of the Subsidiaries is bound or to which
any of the property or assets of the Company or any of the Subsidiaries is
subject, nor will such actions result in any violation of the provisions of the
certificate of incorporation or bylaws of the Company or any of the Subsidiaries
or any statute or any order, rule or regulation of any court or Governmental
Authority having jurisdiction over the Company or any of the Subsidiaries or any
of their properties except in each case as would not, individually or in the
aggregate have a Material Adverse Effect.

      5.11. GOVERNMENTAL CONSENTS, ETC. No consent, approval or authorization
of, or declaration or filing with, any Governmental Authority on the part of the
Company is required for the valid execution and delivery of this Agreement, the
valid offer, issue, sale and delivery of the Shares pursuant to this Agreement
or the valid issue and delivery of shares of Common Stock issuable upon
conversion of the Stock. Except for (a) applicable state securities or blue sky
laws, and (b) any consents, approvals, filings or notices given on or prior to
the date hereof, neither the Company nor any of its Subsidiaries is required to
obtain any consent, approval or authorization of, or to make any declaration or
filing with, any Governmental Authority as a condition to the valid execution,
delivery or performance of any of the Collateral Agreements or the consummation
of the transactions contemplated thereby.

      5.12. OFFERING OF SECURITIES. Neither the Company nor any Person acting on
behalf of the Company has taken or will take any action which would subject the
offering, issuance or sale of any of the Stock to the provisions of Section 5 of
the Securities Act.

      5.13. CERTAIN FEES. No broker's or finder's fees or commissions will be
payable by the Company with respect to the transactions contemplated by this
Agreement and the Collateral Agreements.

      5.14. Disclosure. None of the Financial Statements, the Annual Report on
Form 10K for the year ended December 31, 1998 or any document filed by the
Company with the Securities and Exchange Commission pursuant to the Exchange Act
since the Annual Report on Form 10K for the year ended December 31, 1998,
contains (in each case, as of its date) any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances under which they are
made, not misleading.

      5.15. ENFORCEABILITY. This Agreement and the Registration Rights Agreement
have been duly authorized and validly executed and delivered by the Company and
(assuming the due authorization, execution and delivery thereof by the other
parties thereto) constitute the valid and binding obligations of the Company,

                                       5
<PAGE>

enforceable in accordance with their respective terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency (including, without limitation,
all laws relating to fraudulent transfers), reorganization, moratorium or other
similar laws relating to or affecting enforcement of creditors' rights
generally, or by general principles of equity (regardless of whether enforcement
is sought in a proceeding at law or in equity).

      6. INVESTMENT REPRESENTATIONS. Each Purchaser understands that neither the
Shares nor any Common Stock issuable upon conversion, if any, of the Shares has
been registered under the Securities Act and that the certificates for the
Shares and such Common Stock will bear a legend to that effect. Each Purchaser
also understands that the Shares are being offered and sold pursuant to an
exemption from registration contained in the Securities Act, based in part upon
their representations contained in this Agreement. Each Purchaser hereby
severally represents and warrants to the Company as follows:

      6.1. ACQUISITION FOR OWN ACCOUNT. Such Purchaser is acquiring the Shares
for its own account for investment and not with a view toward distribution in a
manner which would violate the Securities Act.

      6.2. ABILITY TO PROTECT OWN INTERESTS. Such Purchaser represents that by
reason of its business or financial experience, or the business and financial
experience of its management, such Purchaser has the capacity to protect its own
interests in connection with the transaction contemplated in this Agreement.
Such Purchaser is not a corporation formed for the specific purpose of
consummating this transaction.

      6.3. ACCREDITED INVESTOR. Such Purchaser represents that it is an
"accredited investor" as that term is defined in Rule 501 of Regulation D
promulgated under the Securities Act.

      6.4. ACCESS TO INFORMATION. Such Purchaser has been given access to all
Company documents, records, and other information, has received physical
delivery of all those which Purchaser has requested, and has had adequate
opportunity to ask questions of, and receive answers from, the Company's
officers, employees, agents, accountants and representatives concerning the
Company's business, operations, financial condition, assets, liabilities, and
all other matters relevant to its investment in the Shares.

      6.5. NO BROKERS. No broker's or finder's fees or commissions will be
payable by such Purchaser with respect to the transactions contemplated by this
Agreement and the Collateral Agreements, and such Purchaser hereby severally
indemnifies and holds the Company harmless from any claim, demand or liability
for broker's or finder's fees alleged to have been incurred by such Purchaser,
its affiliates or agents or any Person acting on behalf of or at the request of
such Purchaser, its affiliates or agents.

                                       6
<PAGE>

      6.6. COMPLIANCE WITH LAWs. Such Purchaser and its transferees will comply
with all filing and other reporting obligations under all Requirements of Law
which shall be applicable to such Purchaser with respect to the Shares and to
the Common Stock issuable or issued on conversion of the Shares.

      6.7. ENFORCEABILITY. This Agreement and the Registration Rights Agreement
has been duly authorized and when validly executed and delivered by such
Purchaser (assuming the due authorization, execution and delivery thereof by the
other parties thereto) shall constitute the valid and binding obligations of
such Purchaser, enforceable in accordance with their respective terms, except as
the enforcement thereof may be limited by bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or other similar laws relating to or affecting enforcement of
creditors' rights generally, or by general principles of equity (regardless of
whether enforcement is sought in a proceeding at law or in equity).

      6.8. LITIGATION, ETC. There is no action, proceeding or investigation
pending or (to the knowledge of each Purchaser) threatened which questions the
validity of this Agreement, the Shares or any action taken or to be taken
pursuant to this Agreement, the Shares or the Collateral Agreements. There are
no legal or governmental proceedings pending to which any Purchaser is a party
or of which any property of a Purchaser is the subject, which if determined
adversely to such Purchaser, would individually or in the aggregate have a
material adverse effect on the consummation of the transactions contemplated
hereby; and, to such Purchaser's knowledge, no such proceedings which would in
the aggregate have such a material adverse effect are threatened or contemplated
by Governmental Authorities or threatened by others.

      6.9. NO VIOLATIONS; CONSENTS. No consent, waiver, approval, order, permit
or authorization of, or declaration or filing with, or notification to, any
Person, including, without limitation, any Governmental Authority, is required
on the part of any Purchaser in connection with the execution and delivery of
this Agreement or the Registration Rights Agreement, or the compliance by such
Purchaser with any of the provisions hereof or thereof, except, in each case,
for violations, conflicts, breaches or defaults which individually or in the
aggregate would not have a material adverse effect on the transactions
contemplated hereby.

      7. AFFIRMATIVE COVENANTS. The Company covenants that from and after the
date of this Agreement:

      7.1. RESERVATION OF COMMON STOCK. The Company will at all times reserve
and keep available, solely for issuance and delivery upon conversion of the
Stock, the number of shares of Common Stock from time to time issuable upon
conversion of all shares of the Stock at the time outstanding. All shares of
Common

                                       7
<PAGE>

Stock issuable upon conversion of the Stock shall be duly authorized and, when
issued upon such conversion, shall be validly issued, fully paid and
non-assessable.

      7.2. AVAILABILITY OF INFORMATION. Insofar as required by law, the Company
will comply with the reporting requirements of Sections 13 and 15(d) of the
Exchange Act and will comply with all other public information reporting
requirements of the Securities and Exchange Commission (including Rule 144 under
the Securities Act) from time to time in effect and relating to the availability
of an exemption from the Securities Act for the sale of any Restricted
Securities. The Company will also reasonably cooperate with each holder of any
Restricted Securities in supplying such information as may be necessary for such
holder to complete and file any information reporting forms presently or
hereafter required by the Securities and Exchange Commission as a condition to
the availability of an exemption from the Securities Act for the sale of any
Restricted Securities.

      8. REGISTRATION, TRANSFER AND SUBSTITUTION OF CERTIFICATES FOR STOCK.

      8.1. STOCK REGISTER; OWNERSHIP OF STOCK. (a) Each Purchaser agrees that it
will not sell, assign, transfer or otherwise dispose of (collectively, a
"Transfer") any Shares prior to the first anniversary of the Closing Date other
than a Transfer to any Affiliate of such Purchaser. The Company will keep at its
principal office a register in which the Company will provide for the
registration of the Stock and the registration of transfers or conversion of the
Stock. The Company may treat the Person in whose name any of the Shares or
shares issued upon conversion of any of the Stock are registered on such
register as the owner thereof and the Company shall not be affected by any
notice to the contrary. All references in this Agreement to a "holder" of any
Shares or shares issued upon conversion of any of the Stock shall mean the
Person in whose name such Shares or shares issued upon conversion of any of the
Stock are at the time registered on such register.

            (b) Upon the surrender of any certificate for Stock, properly
endorsed, for registration of transfer or for conversion at the office of the
Company maintained pursuant to subdivision (a) of this Section 8.1, the Company
at its expense will (subject to compliance with Section 8.2 hereof, if
applicable) execute and deliver to or upon the order of the holder thereof (i) a
new certificate or certificates for the same aggregate number of shares of Stock
less the number of shares of Stock being converted, if any, in the name of such
holder or as such holder (upon payment by such holder of any applicable transfer
taxes) may direct, and (ii) a certificate or certificates for the number of
shares of Common Stock to be issued upon conversion of the shares of Stock so
surrendered.

      8.2. REPLACEMENT OF CERTIFICATES. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
certificate representing shares of Stock or Common Stock issued upon the
conversion of shares of Stock and, in the case of any such loss, theft or
destruction of

                                       8
<PAGE>

any certificate representing shares of Stock or Common Stock issued upon the
conversion of shares of Stock held by a Person other than the Purchasers, upon
delivery of indemnity reasonably satisfactory to the Company in form and amount
or, in the case of any such mutilation, upon surrender of such certificate
representing shares of Stock or Common Stock issued upon the conversion of
shares of Stock for cancellation at the office of the Company maintained
pursuant to subdivision (a) of Section 8.1 hereof, the Company at its expense
will execute and deliver, in lieu thereof, a new certificate representing shares
of Stock or Common Stock of like tenor.

      8.3. RESTRICTIVE LEGENDS. Except as otherwise permitted by this Section 8,
each certificate for Stock (including each certificate for Stock issued upon the
transfer of any certificate for Stock) shall be stamped or otherwise imprinted
with a legend in substantially the following form:

                        "The shares represented by this
                  Certificate and any shares of Common Stock
                  issuable upon conversion of any such
                  shares have not been registered under the
                  Securities Act of 1933 and may not be
                  transferred in the absence of such
                  registration or an exemption therefrom
                  under such Act. Such shares and any such
                  shares of Common Stock may be transferred
                  only in compliance with the conditions
                  specified in the Preferred Stock Purchase
                  Agreement dated February 22, 2000 between
                  Franklin Capital Corporation (the
                  "Company") and the purchasers identified
                  therein. A complete and correct copy of
                  such Agreement is available for inspection
                  at the principal office of the Company and
                  will be furnished without charge to the
                  holder of such shares upon written
                  request."

Except as otherwise  permitted by this  Section 8, each  certificate  for Common
Stock  issued  upon the  conversion  of any of the Stock,  and each  certificate
issued upon the transfer of any such Common Stock, shall be stamped or otherwise
imprinted with a legend in substantially the following form:

                        "The shares represented by this
                  certificate have not been registered under
                  the Securities Act of 1933 and may not be
                  transferred in the absence of such
                  registration or an exemption therefrom
                  under such Act. Such shares may be
                  transferred only in compliance with the
                  conditions specified in the Preferred
                  Stock Purchase Agreement dated February
                  22, 2000 between Franklin Capital
                  Corporation (the "Company") and the
                  purchasers identified therein. A complete
                  and correct copy of such Agreement is
                  available for inspection at the principal

                             9
<PAGE>

                  office of the Company and will be
                  furnished without charge to the holder of
                  such shares upon written request."

      8.4. NOTICE OF PROPOSED TRANSFER; OPINIONS OF COUNSEL. Prior to any
transfer of any Restricted Securities which are not registered under an
effective registration statement under the Securities Act, the holder thereof
will give written notice to the Company of such holder's intention to effect
such transfer and to comply in all other respects with this Section 8.4. Each
such notice shall describe the manner and circumstances of the proposed transfer
and shall be accompanied by an opinion of counsel for such holder, which counsel
and opinion shall each be reasonably satisfactory to the Company, that the
proposed transfer may be effected without registration of such shares of
Restricted Securities under the Securities Act. Such holder shall thereupon be
entitled to transfer such shares in accordance with the terms of the notice
delivered by such holder to the Company. Each certificate representing such
shares issued upon or in connection with such transfer shall bear the
restrictive legends required by Section 8.3, unless the related restrictions on
transfer shall have ceased and terminated as to such shares pursuant to Section
8.5 hereof.

      8.5. TERMINATION OF RESTRICTIONS. The restrictions imposed by this Section
8 upon the transferability of Restricted Securities shall cease and terminate as
to any particular Restricted Securities when such restrictions are no longer
required in order to insure compliance with the Securities Act. Whenever such
restrictions shall cease and terminate as to any Restricted Securities, the
holder thereof shall be entitled to receive from the Company, without expense
(other than applicable transfer taxes, if any), new certificates for such
securities of like tenor not bearing the applicable legends required by Section
8.3 hereof.

      9. DEFINITIONS.

      9.1. CERTAIN DEFINED TERMS. As used in this Agreement the following terms
have the following respective meanings:

      AFFILIATE: With respect to any entity, any other entity directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, such specified entity. For purposes of this definition, the term
"control" means (i) the power to direct the management and policies of an
entity, directly or through one or more intermediaries, whether through the
ownership of voting securities, by contract or otherwise or (ii) without
limiting the foregoing, the beneficial ownership of 50% or more of the voting
power of the voting common equity of such entity (on a fully diluted basis).

      CAPITAL STOCK: As defined in Section 5.6 of this Agreement.

      CERTIFICATE OF DESIGNATION: As defined in Section 1 of this Agreement.

                                       10
<PAGE>

      CLOSING: As defined in Section 3 of this Agreement.

      CLOSING DATE: As defined in Section 3 of this Agreement.

      COLLATERAL AGREEMENTS: The Registration Rights Agreement and the
Certificate of Designation.

      COMMON STOCK: As defined in Section 1 of this Agreement.

      COMPANY: As defined in the introduction to this Agreement.

      EXCHANGE ACT: At any time, the Securities Exchange Act of 1934 as then in
effect or any similar federal statute then in effect, and any reference to a
particular Section of such Act shall be deemed to include a reference to the
comparable section, if any, in any such similar federal statute.

      FINANCIAL STATEMENTS: As defined in Section 5.4 of this Agreement.

      GAAP: Generally accepted accounting principles set forth in the Opinions
of the Accounting Principles Board of the American Institute of Certified Public
Accountants and in statements by the Financial Accounting Standards Board or in
such other statement by such other entity as may be approved by a significant
segment of the accounting profession; and the requisite that such principles be
applied on a consistent basis shall mean that the accounting principles observed
in a current period are comparable in all material respects to those applied in
a preceding period.

      GOVERNMENTAL AUTHORITY: Any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.

      LIEN: Any mortgage, pledge, hypothecation, assignment, security interest,
lien, charge or encumbrance, or preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effects as any of the
foregoing, and the filing of, or agreement to give, any financing statement
under the Uniform Commercial Code or comparable law of any jurisdiction).

      MATERIAL ADVERSE EFFECT: Any effect that is materially adverse to the
properties, business, results of operations or financial condition of the
Company and its Subsidiaries taken as a whole.

      MAJORITY IN INTEREST: At any time, the holders of a majority, by number of
shares, of the outstanding Shares and the outstanding shares of Common Stock
issued upon conversion of any Shares, such majority to be determined by
reference to

                                       11
<PAGE>

the number of shares of Common Stock into which all outstanding Shares are at
the time convertible.

      PERSON: An individual, a partnership, a joint venture, a corporation, a
limited thereof.

      REGISTRATION RIGHTS AGREEMENT: As defined in Section (b)(ii) of this
Agreement.

      REQUIREMENT OF LAW: As to any Person, the Certificate of Incorporation and
By-Laws or other organizational or governing documents of such Person, and any
law, treaty, rule or regulation, or determination of an arbitrator or a court or
other Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject.

      RESTRICTED SECURITIES: All of the following: (a) any certificates for
Stock bearing the applicable legend or legends referred to in Section 8.3
hereof, (b) any shares of Common Stock which have been issued upon the
conversion of any of the Stock and which are evidenced by a certificate or
certificates bearing the applicable legend or legends referred to in such
Section and (c) unless the context otherwise requires, any shares of Common
Stock which are at the time issuable upon the conversion of Stock and which,
when so issued, will be evidenced by a certificate or certificates bearing the
applicable legend or legends referred to in such section.

      SECURITIES ACT: At any time, the Securities Act of 1933 as then in effect
or any similar federal statute then in effect, and any reference to a particular
Section of such Act shall be deemed to include a reference to the comparable
section, if any, in any such similar federal statute.

      SHARES: As defined in Section 2 of this Agreement.

      STOCK: As defined in Section 1 of this Agreement.

      SUBSIDIARIES: With respect to any Person, any corporation with respect to
which more than 50% of the outstanding shares of stock of each class having
ordinary voting power (other than stock having such power only by reason of the
happening of a contingency) is at the time owned by such Person or by one or
more Subsidiaries of such Person or by such Person and one or more Subsidiaries
of such Person.

      Any of the above-defined terms may, unless the context otherwise requires,
be used in the singular or plural depending on the reference.

      9.2. OTHER PROVISIONS REGARDING DEFINITIONS. (a) Unless otherwise defined
therein, all terms defined in this Agreement shall have the defined meanings

                                       12
<PAGE>

when used in any certificate, report or other document made or delivered
pursuant to this Agreement.

            (b) The words "hereof", "herein", and "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.

      10. EXPENSES, ETC. Whether or not the transactions contemplated by this
Agreement shall be consummated, each party will bear all of its own expenses in
connection with such transactions and in connection with any amendments or
waivers (whether or not the same become effective) under or in respect of this
Agreement or the Shares purchased by the Purchasers hereunder.

      11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND INDEMNIFICATION;
CERTAIN LIMITATIONS. The Company's indemnification obligations and all
representations and warranties contained in this Agreement shall survive the
execution and delivery of this Agreement, any investigation at any time made by
the Purchasers or on their behalf and the purchase of the Shares by the
Purchasers under this Agreement and any conversion of any of the Stock or any
disposition of any shares of Common Stock issued upon conversion of any of the
Stock; provided that all representations and warranties (and the indemnities in
respect thereof with respect to claims not made prior to such date) shall expire
60 days after the date hereof. No written or oral statements made by or on
behalf of the Company, other than those express representations and warranties
contained in this Agreement, shall constitute representations or warranties
within the meaning of this Agreement. In no event shall Purchasers be entitled
to the remedy of rescission.

      12. AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended or
modified and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or prospectively)
only with the written consent of the Company and a Majority in Interest.

      13. NOTICES, ETC. Except as otherwise provided in this Agreement, notices
and other communications under this Agreement shall be in writing and shall be
delivered, or mailed by first-class mail, postage pre-paid, addressed, (a) if to
the Purchasers, at the address set forth on the signature pages hereto, or at
such other address as the Purchasers shall have furnished to the Company in
writing, or (b) if to any other holder of any Shares or shares of Common Stock
into which any of the Shares have been converted, at such address as such other
holder shall have furnished to the Company in writing, or, until any such other
holder so furnishes to the Company an address, then to and at the address of the
last holder of such Shares or shares of Common Stock into which such Shares have
been converted who has furnished an address to the Company, or (c) if to the
Company at the address of the Company set forth at the beginning of this
Agreement, to the attention of its President, or at such

                                       13
<PAGE>

other address, or to the attention of such other officer, as the Company shall
have furnished to the Purchasers and each such other holder in writing.

      14. INDEMNIFICATION. (a) The Company shall indemnify, defend and hold
harmless the Purchasers, their affiliates, partners, officers, employees and
agents (each, an "Indemnified Person") from and against any and all losses,
liabilities, damages, judgments, settlements and expenses (including reasonable
attorneys' fees and expenses incurred in the investigation or defense of any of
the same or in asserting, preserving or enforcing any of rights hereunder), that
arise out of any breach by the Company of any of its representations and
warranties or covenants contained in this Agreement.

            (b) The Purchasers shall give the Company prompt notice of any
third-party claim that may give rise to any indemnification obligation under
this Section 14 and the Company shall (except as set forth below) have the right
to assume and control the defense (at its expense) and settlement of any such
claim through the Company's own counsel or through other counsel reasonably
acceptable to the Purchasers. The Purchasers, together with any other purchaser
who may have asserted a similar claim under any other preferred stock purchase
agreement relating to the Preferred Stock, may retain one additional counsel to
represent the interests of all of such purchasers at their own expense if, under
applicable standards of professional conduct, a conflict with respect to any
significant issue between such purchasers and the Company exists in respect of
such third-party claim. In such event, the Company shall not assume the defense
of such claim and shall also pay the reasonable fees and expenses of one counsel
selected by such purchasers in respect of such claim. Notwithstanding the
foregoing, without such purchasers' consent, the Company will not settle any
action or proceeding which does not provide such purchasers a full,
unconditional release from all liability with respect to such claim by each
claimant or plaintiff in a form reasonably acceptable to such purchasers'
counsel, nor will the Company consent to any injunctive or other non-monetary
relief affecting any Indemnified Person.

      15. MISCELLANEOUS. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of the
parties hereto, whether so expressed or not, and, in particular, shall inure to
the benefit of and be enforceable by any holder or holders at the time of the
Shares or shares of Common Stock into which any of the Shares have been
converted. Except as aforesaid, this Agreement shall not inure to the benefit of
any third party. This Agreement embodies the entire agreement and understanding
between the Purchasers and the Company and supersedes all prior agreements and
understandings relating to the subject matter hereof (including all term sheets
relating thereto). This Agreement shall be construed and enforced in accordance
with and governed by the law of the State of New York without regard to the
principles regarding conflicts of laws. The headings in this Agreement are for
purposes of reference only and shall not limit or otherwise affect the meaning
hereof. This Agreement may be executed in any number

                                       14
<PAGE>

of counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.

                                       15
<PAGE>

      If the Purchasers are in agreement with the foregoing, please sign the
form of agreement on the accompanying counterparts of this letter and return one
of the same to the Company, whereupon this letter shall become a binding
agreement between the Purchasers and the Company.

                                               Very truly yours,

                                               FRANKLIN CAPITAL CORPORATION

                                               By: /s/
                                                   -----------------------------
                                                   Spencer L. Brown
                                                   Secretary

The foregoing Agreement is hereby
agreed to as of the date hereof.

COPLEY FUND, INC.

By: /s/
    -------------------------------------
   Name: Irving Levine
   Title:   Chairman

   Address and Telecopy Number
   for Notices

   Copley Fund, Inc.
   Att: Irving Levine
   315 Pleasant Street, 5th Floor
   Fall River, MA  02722
   (___)
        -------------------------------

   Number of Shares Purchased:  4750

   Conversion Rate:  $20

                                       16
<PAGE>

[SIGNATURE PAGE TO PREFERRED STOCK PURCHASE AGREEMENT]

KUBY GOTTLIEB SPECIAL VALUE FUND

By: /s/
    -------------------------------------------
    Name:  Peter Gottlieb
    Title: Portfolio Manager

    Address and Telecopy Number
    for Notices

    c/o First Albany Asset Mgmt
    500 W. Madison #2740
    Chicago, IL  60661
    (___)
         --------------------------------------

    Number of Shares Purchased:  4000

    Conversion Rate:  $20

MARSHALL RATTNER INC.

By: /s/
    -------------------------------------------
    Name:  Mark Rattner
    Title: Chief Executive Officer

    Address and Telecopy Number
    for Notices

    c/o Professional Indemnity Agency, Inc. of N.Y.
    37 Radio Circle Drive
    Mount Kisco, NY  10549-5000
    (___)
         --------------------------------------

    Number of Shares Purchased:  1000

    Conversion Rate:  $20

                                       17
<PAGE>

   [SIGNATURE PAGE TO PREFERRED STOCK PURCHASE AGREEMENT]

By: /s/
    -------------------------------------------
    Wendy S. Brown

    Address and Telecopy Number
    for Notices

    220 East 72nd Street
    Apartment 15C
    New York, NY  10021
    (___)
         --------------------------------------

    Number of Shares Purchased:  250

    Conversion Rate:  $20

By: /s/
    -------------------------------------------
    Peter Gottlieb

    Address and Telecopy Number
    for Notices

    c/o PrivateBank & Trust
    Attn:  Lauren Hunzel
    10 N. Dearborn
    Chicago, IL  60202
    (___)
         --------------------------------------

    Number of Shares Purchased:  500

    Conversion Rate:  $20

                                       18
<PAGE>

   [SIGNATURE PAGE TO PREFERRED STOCK PURCHASE AGREEMENT]

By: /s/
    --------------------------------------------
    Susan Gottlieb

    Address and Telecopy Number
    for Notices

    c/o LaSalle National Trust
    Attn:  Gail Levine
    135 S. LaSalle
    Chicago, IL  60603
    (___)
         --------------------------------------

    Number of Shares Purchased:  500

    Conversion Rate:  $20

By: /s/
    --------------------------------------------
    Daniel S. Kampel

    Address and Telecopy Number
    for Notices

    c/o Daniel S. Kampel Associates, Inc.
    600 Third Avenue
    New York, NY  10016
    (___)
         --------------------------------------

    Number of Shares Purchased:  500

    Conversion Rate:  $20

                                       19
<PAGE>

     [SIGNATURE PAGE TO PREFERRED STOCK PURCHASE AGREEMENT]

By: /s/
    ------------------------------------
    Patricia Karpas

    Address and Telecopy Number
    For Notices

    124 West 60th Street
    New York, NY 10023
    (___)-------------------------------

    Number of Shares Purchased:   200

    Conversion Rate:   $20

By: /s/
    ------------------------------------
    Hiram Lazar

    Address and Telecopy Number
    for Notices

    2145 Wantagh Park Drive
    Wantagh, NY  11793
    (___)
         -------------------------------

    Number of Shares Purchased:  100

    Conversion Rate:  $20

                                       20
<PAGE>

     [SIGNATURE PAGE TO PREFERRED STOCK PURCHASE AGREEMENT]

By: /s/
    ------------------------------------
    Jonathan A. Marshall

    Address and Telecopy Number
    for Notices

    c/o Pennie & Edmonds
    1155 6th Avenue, 22nd Fl.
    New York, NY  10036
    (___)
         -------------------------------

    Number of Shares Purchased:  500

    Conversion Rate:  $20

By: /s/
    ------------------------------------
    David Meitus

    Address and Telecopy Number
    for Notices

    c/o LaSalle National Trust
    Attn:  Gail Levine
    135 S. LaSalle
    Chicago, IL  60603
    (___)
         -------------------------------

    Number of Shares Purchased:  500

    Conversion Rate:  $20

                                       21
<PAGE>

    [SIGNATURE PAGE TO PREFERRED STOCK PURCHASE AGREEMENT]

By: /s/
    ------------------------------------
    Leslie Murdock

    Address and Telecopy Number
    for Notices

    120 East 87th Street
    Apartment R28A
    New York, NY  10128
    (___)
         -------------------------------

    Number of Shares Purchased:  250

    Conversion Rate:  $20

By: /s/
    ------------------------------------
    John Nebens

    Address and Telecopy Number
    for Notices

    2 Osborn Hill
    San Antonio, TX  78209
   (___)
        --------------------------------

    Number of Shares Purchased Jointly with Meg Nebens:  500

    Conversion Rate:  $20

                                       22
<PAGE>

                          [SIGNATURE PAGE TO PREFERRED STOCK PURCHASE AGREEMENT]

By: /s/
    ------------------------------------
    Meg Nebens

    Address and Telecopy Number
    For Notices

    2 Osborn Hill
    San Antonio, TX 78209
    (___)--------------------------

    Number of Shares Purchased Jointly with John Nebens:   500

    Conversion Rate:   $20

By: /s/
    ------------------------------------
    Mark Rattner

    Address and Telecopy Number
    for Notices

    c/o Professional Indemnity Agency, Inc. of N.Y.
    37 Radio Circle Drive
    Mount Kisco, NY  10549-5000
    (___)
         -------------------------------

    Number of Shares Purchased:  1000

    Conversion Rate:  $20

                                       23
<PAGE>

    [SIGNATURE PAGE TO PREFERRED STOCK PURCHASE AGREEMENT]

By: /s/
    ------------------------------------
    Gerry M. Ritterman

    Address and Telecopy Number
    for Notices

    47 Lawrence Farms Crossway
    Chappaqua, NY  10514
    (___)
         -------------------------------

    Number of Shares Purchased:  1500

    Conversion Rate:  $20

By: /s/
    ------------------------------------
    Edward Sheldon

    Address and Telecopy Number
    for Notices

    20 Punchbowl Drive
    Westport, CT  06880
    (___)
         -------------------------------

    Number of Shares Purchased:  400

    Conversion Rate:  $20

                                       24
<PAGE>

                               EXHIBITS

Exhibit A     Certificate of Designation

Exhibit B     Form of Registration Rights Agreement

Exhibit C     Exceptions to Representations and Warranties

Exhibit D     Subsidiaries of the Company

<PAGE>

                                    EXHIBIT A

                           Certificate of Designation

                           See Exhibit 14(a)(2)(4)(i)

<PAGE>

                                    EXHIBIT B

                          Registration Rights Agreement

                           See Exhibit 14(a)(2)(4)(ii)

<PAGE>

                                   EXHIBIT C

                  Exceptions to Representations and Warranties

                  NONE

<PAGE>

                                    EXHIBIT D

--------------------------------------------------------------------------------
                                                     STATE OF         EQUITY
                          NAME OF SUBSIDIARY       INCORPORATION     OWNERSHIP
--------------------------------------------------------------------------------
eCom Capital Corporation                             Delaware          100%
--------------------------------------------------------------------------------
eMattress.com                                        Delaware         87.19%
--------------------------------------------------------------------------------

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