NOTE PURCHASE AGREEMENT

Exhibit 10.1

NOTE PURCHASE AGREEMENT

This Note Purchase Agreement (this "Agreement") is made as of this 7th

day of December, 2007 by and among First Montauk Financial Corp., a New Jersey

corporation (the "Company"), and AEFC FMFK Investment Corp., a Delaware

corporation (the "Purchaser").

Intending to be legally bound hereby, the parties hereto agree as follows:

ARTICLE I

Sale and Purchase of Note; Closing.

Section 1.1 Purchase of the Note. The Company has authorized the issuance of its

10% Convertible Secured Note due December 31, 2008 in the aggregate principal

amount of up to $2,000,000 in the form attached hereto as Exhibit A (the

"Note"). The Note issued hereunder will bear interest on its unpaid principal

amount at a rate of 10% per annum (except for a default rate of interest as

provided in the Note), calculated for the actual number of days the principal is

outstanding based on a 360-day year. The principal of the Note and all accrued

and unpaid interest thereon shall be payable in full on December 31, 2008. The

Note may be converted at any time on or after July 1, 2008, and from time to

time thereafter, at the option of the owner thereof (a "Holder"), into shares

(the "Conversion Shares") of the Company's common stock, no par value per share

(the "Common Stock"), in accordance with the terms thereof. The Note, Conversion

Shares and the Warrants, as defined below, are herein collectively referred to

as the "Securities".

Section 1.2 Pledge Agreement. As collateral for all of the Company's obligations

owing to the Holder under the Note and hereunder, the Company shall pledge all

of its stock in the Subsidiaries (as defined herein) to Holder pursuant to the

Pledge Agreement in the form attached hereto as Exhibit B (the "Pledge

Agreement").

Section 1.3 Warrants. In the event the Company (i) does not draw the full

$2,000,000 principal amount available under the Note, and (ii) the Note has not

been prepaid by July 1, 2008, the Company will issue to the Purchaser a warrant

to purchase four shares of Common Stock, at an exercise price of $0.35 per

share, as adjusted, for each one dollar of principal amount available but not

drawn upon under the Note, which warrant shall be in the form attached hereto as

Exhibit C (the "Contingent Warrant"). The Warrant term shall be from the date of

issuance to December 31, 2008, or December 31, 2012 in the event the Company

defaults in the payment of the Note. In the event the Company elects to prepay

its obligations under the Note, the Company will issue the Purchaser a warrant

to purchase that number of shares of Common Stock as provided for in the Note,

at an exercise price of $0.35 per share, as adjusted, which warrant shall be in

the form attached hereto as Exhibit D (the "Prepayment Warrant").

Section 1.4 Purchase and Sale of Note. Subject to the terms and conditions set

forth herein, upon the execution hereof, the Company agrees to sell, issue and

deliver to the Purchaser the Note and the Purchaser agrees to purchase such Note

for the aggregate purchase price of $1,000,000, subject to further draws by the

Company pursuant to the terms of the Note to increase the aggregate purchase

price up to $2,000,000.

Section 1.5 Closing. Subject to the satisfaction or waiver of the conditions set

forth in this Agreement, the closing of the purchase and sale of the Note (the

"Closing") shall take place at the offices of the Company, at 10:00 a.m. on

December 7, 2007, or at such other place and time and date as the parties hereto

may agree (the date of such closing is the "Closing Date").

ARTICLE II

Conditions to the Purchaser's Obligations at Closing

The obligations of the Purchaser to purchase the Note at Closing, and

to make additional advances pursuant to a Draw Notice (as defined in the Note)

are subject to the fulfillment or written waiver at or before the Closing Date

or any Funding Date (as defined in Note) of each of the conditions set forth in

this Article II.

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Section 2.1 Representations and Warranties. The representations and warranties

of the Company contained in Article IV shall be true at and as of the Closing

Date and each Funding Date with the same effect as though they had been made on

and as of such date.

Section 2.2 Performance. The Company shall have performed and complied in all

material respects with all agreements, obligations and conditions contained in

this Agreement that are required to be performed or complied with at or before

the Closing Date and each Funding Date.

Section 2.3 Shareholders' Rights Plan. At or prior to the Closing Date, the

Company shall have amended the Company's Shareholders' Rights Plan dated August

8, 2007 (the "Rights Plan"), to provide that the acquisition of any of the

Company's shares by the Purchaser as a result of (i) the exercise of the

conversion of the Note, (ii) the exercise of the Contingent Warrant or the

Prepayment Warrant by the Purchaser or (iii) the purchase of up to 3,300,308

shares of the Company's Common Stock from Eward H. Okun ("Okun"), or his

affiliates, will not constitute an Acquiring Person, as defined in the Rights

Plan.

Section 2.4 Compliance Certificate. The President of the Company shall have

delivered to the Purchaser at Closing and on each Funding Date a certificate

certifying that the conditions specified in Section 2.1, 2.2 and 2.3 have been

fulfilled.

ARTICLE III

Representations, Warranties and Further Agreements of the Purchaser

As a material inducement to the Company to enter into this Agreement

and to consummate the transactions contemplated hereby, Purchaser makes the

following representations and warranties to the Company:

Section 3.1 Restrictive Securities. The Purchaser hereby acknowledges,

understands and agrees that:

(a) the Securities have not been registered under the Securities Act of

1933, as amended (the "Securities Act"), or any state securities laws,

and no Securities may be transferred unless (a) they are subsequently

registered thereunder (including all applicable state securities laws),

(b) an exemption from the registration requirement of the Securities

Act is available or (c) they are sold pursuant to Rule 144 promulgated

under the Securities Act (or a successor rule);

(b) the certificates representing any of the Securities may bear a

restrictive legend in substantially the following form (and a

stop-transfer order may be placed against transfer of such Securities):

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS

AMENDED (THE "1933 ACT"), OR UNDER ANY APPLICABLE STATE SECURITIES LAWS. THESE

SECURITIES HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT AND NOT WITH A VIEW TO, OR

IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. THEY MAY NOT BE SOLD,

OFFERED FOR SALE, TRANSFERRED, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN

EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR PURSUANT TO AN AVAILABLE

EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT AND IN ACCORDANCE WITH APPLICABLE

STATE SECURITIES AND BLUE SKY LAW.

Section 3.2 Accredited Investor Representations.

(a) The Purchaser understands that no federal or state agency has made any

findings or determination as to the fairness of the offering of the

Note for investment, or any recommendation or endorsement of the

Securities.

(b) The Purchaser understands that there is no established market for any

of the Securities and that there is no guarantee for any such future

market.

(c) The Purchaser is acquiring the Note (and any other Securities resulting

therefrom) for its own account for investment purposes only and not

with a view to the resale or distribution thereof.

(d) The Purchaser is acquiring the Note without having relied upon any

offering literature or prospectus and the Purchaser has such knowledge

and experience in financial, business and tax matters that the

Purchaser is capable of competently evaluating the merits and risks

relating to the Purchaser's investment in the Note and making an

investment decision with respect to the Company.

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(e) The Purchaser has fully reviewed and is familiar with all of the

information in the SEC Reports, as defined below, and acknowledges that

the Company has made available at a reasonable time prior to

Purchaser's investment the opportunity to ask questions and receive

answers concerning the terms and conditions of this Agreement and to

obtain any additional information that the Company possesses or can

acquire, without unreasonable effort or expense, that is necessary to

evaluate an investment in the Company.

(f) The Purchaser is aware that there are substantial risks attendant to

the purchase of the Note.

(g) The Purchaser has adequately analyzed the risks of the purchase of the

Note and has determined that the Note is a suitable investment for the

Purchaser and that the Purchaser is able at this time, and in the

foreseeable future, to bear the economic risk of a total loss of its

investment in the Company.

(h) The Purchaser is an "accredited investor" within the meaning of Rule

501 of Regulation D of the Act as presently in effect and is purchasing

the Securities for its own account and not with a view toward public

distribution.

(i) The Purchaser understands that the Note is being offered and sold to it

in reliance upon specific exemptions from the registration requirements

of federal and state securities laws and that the Company is relying

upon the truth and accuracy of, and the Purchaser's compliance with,

the representations, warranties, agreements, acknowledgments and

understandings of the Purchaser set forth herein in order to determine

the availability of such exemptions and the eligibility of the

Purchaser to acquire the Note.

(j) The Purchaser shall use all reasonable efforts to obtain and furnish

the information required to be included in the application (the "FINRA

1017 Application") pursuant to Rule 1017 of the rules and regulations

of the Financial Industry Regulatory Authority ("FINRA").

ARTICLE IV

Representations and Warranties of the Company

As a material inducement to Purchaser to enter into this Agreement and

to consummate the transactions contemplated hereby, the Company hereby makes the

following representations and warranties regarding the Company and its

Subsidiaries (as defined herein):

Section 4.1 Organization and Standing of the Company. The Company is a duly

organized and validly existing corporation in good standing under the laws of

the State of New Jersey and has all requisite corporate power and authority for

the ownership and operation of its properties and for the carrying on of its

business as now conducted and as now proposed to be conducted and to execute and

deliver this Agreement and documents related hereto, to issue, sell and deliver

the Note and to issue and deliver the other Securities and to perform its other

obligations pursuant hereto and thereto. The Company is duly licensed or

qualified and in good standing as a foreign corporation authorized to do

business in all jurisdictions wherein the character of the property owned or

leased or the nature of the activities conducted by it makes such licensing or

qualification necessary, except where the failure to be so licensed or qualified

would not have a Material Adverse Effect on the Company. The term "Material

Adverse Effect" shall mean any change, event, circumstance or effect that is

materially adverse to the business, assets, financial condition or results of

operations of such entity that was not noted as a schedule to this Agreement.

Section 4.2 Corporate Action. This Agreement and the other agreements executed

in connection herewith have been duly authorized, executed and delivered by the

Company and constitute the legal, valid and binding obligations of the Company,

enforceable against the Company in accordance with their respective terms. The

issuance, sale and delivery of the Note and the issuance and delivery of the

warrants, and Conversion Shares upon conversion of the Note or exercise of the

warrants have been duly authorized by all required corporation action; and the

Conversion Shares have, as of the Closing, been duly reserved for issuance upon

conversion of the Note, assuming full funding under the Note, and, when so

issued, will be duly authorized, validly issued, fully paid and nonassessable

with no personal liability attaching to the ownership thereof and will be free

and clear of all liens, charges, restrictions, claims and encumbrances imposed

by or through the Company except as set forth in this Agreement.

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Section 4.3 Subsidiaries. Except as set forth on Schedule 4.3, the Company does

not own, directly or indirectly, any outstanding voting securities of or other

interests in, or control, any other corporation, partnership, joint venture or

other business entity. Schedule 4.3 sets forth, with respect to each entity

listed thereon, (i) the number of authorized shares or interests of each class

of its capital stock or equity, (ii) the number of issued and outstanding shares

or interest of each class of capital stock or equity, (iii) the number of shares

or interest of each class of its capital stock or equity which are held in

treasury. (Each entity listed on Schedule 4.3 in which the Company, directly or

indirectly owns fifty percent (50%) or more of the issued and outstanding shares

of capital stock or equity interests is referred to herein individually as a

"Subsidiary" and collectively as the "Subsidiaries" and each entity listed on

Schedule 4.3 in which the Company, directly or indirectly owns less than fifty

percent (50%) all of the issued and outstanding shares of capital stock or

equity interests is referred to herein as a "Partially Owned Subsidiary"). Each

Subsidiary is an entity duly organized, validly existing and in good standing

under the laws of the state of its organization. Each Subsidiary has the

requisite power and authority to own or lease its property and to carry on its

business as now being conducted. Each Subsidiary is legally qualified to

transact business as a foreign entity corporation in all jurisdictions where the

nature of its property and the conduct of its business requires such

qualification (all of which jurisdictions are listed on Schedule 4.1), except

where the failure to be so qualified would not reasonably be expected to have a

Material Adverse Effect. There is no pending or to the knowledge of the Company

threatened proceeding for the dissolution, liquidation, insolvency or

rehabilitation of any Subsidiary. Except as set forth on Schedule 5.3, the

Company does not have any liabilities or obligations, whether accrued, absolute,

contingent or otherwise, arising from its interest in the Partially Owned

Subsidiaries.

Section 4.4 Governmental Approvals. Except for the filing of any notice prior or

subsequent to the Closing Date that may be required under applicable state

and/or Federal securities laws (which, if required, shall be filed on a timely

basis), no authorization, consent, approval, license, exemption of or filing or

registration with any court of governmental department, commission, board,

bureau, agency or instrumentality, domestic or foreign, is or will be necessary

for, or in connection with, the execution and delivery by the Company of this

Agreement, for the offer, issue, sale, execution or delivery of the Note, or for

the performance by the Company of its obligations under this Agreement or the

agreements and instruments contemplated hereby.

Section 4.5 Compliance with Other Instruments. The Company and each Subsidiary

is in compliance in all respects with the terms and provisions of its charter,

by-laws, and other organizational documents, each as amended and/or restated to

date, and in all respects with the terms and provisions of all mortgages,

indentures, leases, agreements and other instruments by which it is bound or to

which it or any of its properties or assets are subject, except for such

noncompliance which, individually or in the aggregate, would not have a Material

Adverse Effect on the business,