TERMINATION AGREEMENT
                              (185 Franklin Street)

      This Termination Agreement (this "AGREEMENT"), dated as of May 12, 2005,
is entered into by and between 185 Franklin Street Development Associates L.P.,
a New York limited partnership ("LANDLORD"), and Franklin Credit Management
Corporation, a Delaware Corporation ("FCMC").

                                    RECITALS

      WHEREAS,LANDLORD, as landlord, and FCMC, as tenant, executed those certain
leases agreements identified on the attached Exhibit A, as amended (the "185
FRANKLIN LEASES") for premises consisting of the Basement, First Floor and Third
through Sixth Floors (the "185 FRANKLIN PREMISES") of the building located at
185 Franklin Street, New York, New York.

      WHEREAS, LANDLORD and FCMC desire to terminate the 185 FRANKLIN LEASES
prior to the end of the terms of such leases.

                                    AGREEMENT

      NOW, THEREFORE, in order to settle and dispose of, fully and completely,
any and all claims, demands and cause or causes of action now existing or
hereafter arising out of, in connection with, or incidental to the termination
of the 185 FRANKLIN LEASES or the 185 FRANKLIN PREMISES, and in consideration
for the mutual promises contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are mutually acknowledged,
LANDLORD and FCMC agree, effective as of the date hereof, as follows:

      1. Recitals. The foregoing recitals are hereby incorporated herein by
reference and acknowledged as true and correct by the parties hereto.

      2. Termination. Provided that FCMC has complied with its obligations
contained in Section 3 below and the 185 FRANKLIN LEASES, effective as of the
TERMINATION DATE (hereinafter defined), the 185 FRANKLIN LEASES shall terminate.
Except to the extent inconsistent with the terms hereof, FCMC shall observe and
perform each of the covenants and provisions of the 185 FRANKLIN LEASES to be
performed by FCMC, including without limited the payment of rent and additional
rent accruing prior to the TERMINATION DATE.

      3. Termination Payment. In consideration for the termination of the 185
FRANKLIN LEASES, FCMC shall pay to LANDLORD the amount of $462,859.00 (the
"TERMINATION PAYMENT") payable as follows:

      a) The sum of $45,000 shall be paid with in ten (10) days of execution of
this Agreement.
<PAGE>

      b) The balance of the TERMINATION PAYMENT shall be paid on the TERMINATION
DATE.

      4. Vacation of Premises.

      a) Scheduled Surrender Date/Termination Date. Subject to extensions of the
SCHEDULED SURRENDER DATE as set forth in this Section, FCMC shall fully vacate
the 185 FRANKLIN PREMISES on or before August 31, 2005, (such date, as it may be
extended is hereinafter referred to as the "SCHEDULED SURRENDER DATE"; the date
on which FCMC actually vacates the 185 FRANKLIN PREMISES is hereinafter referred
to as the "TERMINATION DATE").

      b) Extension of Termination Date. FCMC may extend the SCHEDULED SURRENDER
DATE for all or any portion of the 185 FRANKLIN PREMISES in one month increments
up to and including November 30, 2005. FCMC shall give LANDLORD not less than 30
days prior written notice of any extension of the SCHEDULED SURRENDER DATE. The
rent during the extension period shall be the rent as provided for under the 185
FRANKLIN LEASES. In the event that only a portion of the 185 FRANKLIN PREMISES
is subject to the extension period, the rent shall be pro-rated accordingly.

      c)

      d) Termination. Notwithstanding any contrary term herein, the TERMINATION
DATE shall occur not latter than November 30, 2005 regardless of whether or not
FCMC vacates the 185 FRANKLIN PREMISES. FCMC shall have no further rights with
respect to the use of the 185 FRANKLIN PREMISES from and after the TERMINATION
DATE.

      e) Condition on Surrender. FCMC shall surrender the 185 FRANKLIN PREMISES
(i) free of all occupants; (ii) in broom clean condition; and (iii) free of all
movable personality and equipment; and (iv) otherwise in its current "AS IS
condition."

      5. Cooperation. Following the execution of this Agreement, FCMC shall
reasonably cooperate in the re-leasing of the 185 FRANKLIN PREMISES. Such
cooperation shall include, but shall not be limited to, allowing prospective
tenants to view and inspect the 185 FRANKLIN PREMISES.

      6. Holdover.

      a) In the event FCMC fails to comply with the terms of this Agreement,
LANDLORD shall have the right to retain any and all payments made by FCMC
pursuant to this Agreement and also shall have any and all other rights and
remedies available to LANDLORD under the 185 FRANKLIN LEASES to recover the185
FRANKLIN PREMISES, at law and in equity, except to the extent inconsistent with
the terms of this Agreement.


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<PAGE>

      b) FCMC and anyone claiming under FCMC remaining in possession of the 185
FRANKLIN PREMISES or any part thereof after the TERMINATION DATE shall be deemed
a tenant-at-sufferance only, at the daily rate of 150% of the rent and
additional rent due under the respective 185 Franklin Leases immediately prior
to the Termination Date (the "FINAL RENT RATE") during the first month, 200% of
the Final Rent Rate during the second month and 250% of the Final Rent Rate
thereafter; provided that, notwithstanding any of the foregoing to the contrary,
but subject to the following sentence, FCMC shall remain liable for all damages,
including without limited all direct damages, incurred by LANDLORD as a result
of such holdover. Notwithstanding the foregoing, FCMC shall not be liable for
consequential damages incurred by LANDLORD based upon any holdover by FCMC after
the SCHEDULED SURRENDER DATE unless such holdover continues for ninety (90) or
more says after the SCHEDULED SURRENDER DATE. Nothing in this Section shall be
construed to permit such holding over.

      7. Releases. Except as to such rights or claims as may be created or
otherwise preserved by this Agreement, LANDLORD and FCMC each hereby releases,
remises and forever discharges the other and its respective officers, directors,
employees, agents, parents, subsidiaries and affiliates from all debts, demands,
actions, causes of action, suits, accounts, covenants, controversies,
agreements, promises, judgments, demands, contracts, agreements, damages, claims
and liabilities whatsoever, in law or equity, in arbitration or otherwise,
whether known or unknown, suspected or unsuspected, related to, arising out of,
connected with or incidental to the 185 FRANKLIN LEASES or the 185 FRANKLIN
PREMISES. Nothing contained in this Section shall prevent LANDLORD or FCMC from
enforcing the terms of this Agreement.

      8. Notices. Any notice, request or demand ("NOTICE") permitted or required
to be given by the terms and provisions of this Agreement, or by any law or
governmental regulation, either by LANDLORD or FCMC, shall be in writing and
delivered by hand (with evidence of receipt), addressed as follows:

      a) To FCMC at No. 6 Harrison Street, Sixth Floor, New York, New York
10016, Attention General Counsel.

      b) To LANDLORD at No. 6 Harrison Street, Fifth Floor, New York, New York
10016, Attention Thomas Axon.

      Either party hereto may designate a different address for Notices to such
party by serving Notice of such change in accordance with this section.


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<PAGE>

      9. Miscellaneous.

      a) This Agreement shall be deemed to have been executed and delivered
within the State of New York, and the rights and obligations of LANDLORD and
FCMC hereunder shall be construed and enforced in accordance with, and governed
by, the laws of the State of New York s without regard to the laws governing
conflicts of laws.

      b) If any term of this Agreement or the application thereof to any person
or circumstances shall be invalid and unenforceable, the remaining provisions of
this Agreement, the application or such term to persons or circumstances other
than those as to which it is invalid or unenforceable, shall not be affected.

      c) This Agreement is binding upon and shall inure to the benefit of
LANDLORD and FCMC, their respective agents, employees, representatives,
officers, directors, divisions, subsidiaries, affiliates, assigns, heirs,
successors-in-interest and shareholders.

      d) Each party has cooperated in the drafting and preparation of this
Agreement and, therefore, in any construction to be made of this Agreement, the
same shall not be construed against either party.

      e) Any litigation relating to this Agreement shall be brought in the state
or federal courts in the State of New York and each party consents to personal
jurisdiction in such courts.

      f) In the event of litigation relating to this Agreement, the prevailing
party shall be entitled to reimbursement from the other party of its reasonable
attorneys' fees and costs.

      g) This Agreement constitutes the entire agreement of the parties with
respect to the subject matter hereof and supersedes all prior and
contemporaneous oral and written agreements and discussions, and may not be
amended, waived, discharged or terminated except by a written instrument signed
by all the parties hereto.

      h) This Agreement may be executed in as many counterparts as may be
required, and it shall not be necessary that the signature of each party, or
that the signatures of all persons required to bind any party, appear on each
counterpart. It shall be sufficient that the signature of each party, or that
the signatures of the persons required to bind any party, appear on one or more
of such counterparts. All counterparts shall collectively constitute a single
agreement.


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<PAGE>

      IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
under seal by their respective duly authorized officers as of the date first set
forth above.


----------------------
Jeffrey R. Johnson
President and Chief Executive Officer
Franklin Credit Management Corporation


----------------------
Thomas J. Axon
President
185 Franklin Street Corp.
General Partner
185 Franklin Street Development Associates LP


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