FIRST MONTAUK FINANCIAL CORP
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>ex5.txt
<TEXT>

                                                        Exhibit 10.2


                       FIRST AMENDMENT TO RIGHTS AGREEMENT

      This FIRST AMENDMENT ("First Amendment") is made and entered into as of
the 7th day of December, 2007, by and between First Montauk Financial Corp., a
New Jersey corporation (the "Company"), and Continental Stock Transfer & Trust
Company, as rights agent (the "Rights Agent").

                              W I T N E S S E T H

      WHEREAS, the Company and the Rights Agent are parties to the Rights
Agreement, dated as of August 1, 2007 (the "Rights Agreement");

      WHEREAS, it is proposed that the Company enter into a Note Purchase
Agreement (the "Note Agreement") by and between the Company and AEFC FMFK
Investment Corp., a Delaware corporation ("Purchaser"), pursuant to which, among
other things, the Purchaser will purchase from the Company, and the Company will
issue to the Purchaser, the Company's 10% Convertible Secured Note due December
31, 2008 in the aggregate principal amount of up to $2,000,000 (the "Note")
which may be converted at any time on or after July 1, 2008, and from time to
time thereafter, at the option of the holder thereof into shares ("Conversion
Shares") of the Company's Common Stock in accordance with the terms thereof. In
addition, under certain circumstances, the Company may be obligated to issue to
the Purchaser (i) a warrant to purchase four shares of Common Stock at an
exercise price of $0.35 per share for each dollar of principal amount available
but not drawn upon under the Note (the "Contingent Warrant") and (ii) 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 (the "Prepayment Warrant" and together
with the Contingent Warrant, the "Warrants");

      WHEREAS, the Board of Directors of the Company has approved and adopted
the Note Purchase Agreement and the issuance of the Note, the Conversion Shares,
the Warrants and the shares of Common Stock issuable upon exercise of the
Warrants (the "Warrant Shares");

      WHEREAS, pursuant to Section 26 of the Rights Agreement, from time to time
prior to the Distribution Date, the Company may, and the Rights Agent shall, if
the Company so directs, supplement and amend the Rights Agreement without the
approval of any holders of certificates representing shares of Common Stock;

      WHEREAS, no Distribution Date has yet occurred and there is not any
Acquiring Person and, in accordance with Section 26 of the Rights Agreement, an
officer of the Company has delivered a certificate as to the compliance of this
First Amendment with Section 26 of the Rights Agreement;

      WHEREAS, the Board of Directors of the Company has determined that an
amendment to the Rights Agreement as set forth herein is necessary and desirable
in connection with the foregoing; and

      WHEREAS, capitalized terms used but not otherwise defined herein shall
have the respective meanings ascribed to such terms in the Rights Agreement.

      NOW, THEREFORE, in consideration of the premises and agreements set forth
herein and in the Rights Agreement, the parties hereto, intending to be legally
bound, agree as follows:

      Section 1. Defined Terms. Section 1 of the Rights Agreement is hereby
amended to add thereto the following definitions as follows:

       "Conversion Shares" shall mean the shares of Common Stock issuable at any
      time on or after July 1, 2008, and from time to time thereafter, at the
      option of the holder thereof upon the conversion of the Note.

      "Contingent Warrant" shall mean the warrant to purchase shares of Common
      Stock which shall be issued by the Company to the Purchaser if (i) the
      Company does not draw the full $2,000,0000 principal amount available
      under the Note, and (ii) the Note has not been prepaid by July 1, 2008.

      "Note" shall mean the 10% Convertible Secured Note due December 31, 2008
      in the aggregate principal amount of up to $2,000,000.

      "Note Purchase" shall mean the issuance by the Company to the Purchaser,
      and the purchase by the Purchaser from the Company, of the Note.
<PAGE>


      "Note Purchase Agreement" shall mean that certain Note Purchase Agreement,
      dated as of December 7, 2007, by and between the Company and the
      Purchaser, as it may be amended from time to time.

      "Purchaser" shall mean AEFC FMFK Investment Corp., a Delaware corporation.

      "Prepayment Warrant" shall mean the warrant to purchase shares of Common
      Stock which shall be issued by the Company to the Purchaser in the event
      the Company elects to prepay its obligations under the Note.

      "Warrants" shall mean the Contingent Warrant or the Prepayment Warrant.

      Warants Shares" shall mean the shares of Common Stock issuable by the
      Company upon the exercise of any of the Warrants issued to the Purchaser.

      Section 2. Amendment to Definition of Acquiring Person. The definition of
"Acquiring Person" set forth in Section 1(a) of the Rights Agreement is hereby
amended and supplemented by adding the following sentence to the end thereof:

      "Notwithstanding anything in this Agreement to the contrary, neither
      Purchaser nor any of its existing or future Affiliates or Associates shall
      be deemed to be an Acquiring Person solely by virtue of (i) the approval,
      execution or delivery of the Note Purchase Agreement, (ii) the issuance of
      the Note, the Conversion Shares, the Warrants or the Warrant Shares, (iii)
      the purchase by Purchaser or any of its existing or future Affiliates or
      Associates of all or any of the 3,300,308 shares Common Stock owned by the
      Okun Parties; (iv) the approval, execution or delivery of any agreement
      with respect to the purchase by Purchaser or any of its existing or future
      Affiliates or Associates of all or any of the 3,300,308 shares of Common
      Stock owned by the Okun Parties; (iv) the public or other announcement of
      the Note Purchase Agreement or any of the transactions contemplated
      thereby, or the purchase by Purchaser or any of its existing or future
      Affiliates or Associates of all or any of the 3,300,308 shares of Common
      Stock owned by the Okun Parties, (v) the consummation of the Note Purchase
      or (vi) the consummation of any other transaction contemplated by the Note
      Purchase Agreement or any agreement to purchase all or any of the
      3,300,308 shares Common Stock owned by the Okun Parties."


      Section 3. Termination of the Note Purchase Agreement. If for any reason
the Note Purchase Agreement is terminated, then this First Amendment shall be of
no further force and effect and the Rights Agreement shall remain exactly the
same as it existed immediately prior to the effectiveness of this First
Amendment.

      Section 4. Effectiveness. This First Amendment shall be deemed effective
as of, and immediately prior to, the execution and delivery of the Note Purchase
Agreement. Except as amended by this First Amendment, the Rights Agreement shall
remain in full force and effect and shall be otherwise unaffected by this First
Amendment.

      Section 5. Severability. If any provision of this First Amendment, or the
application of such provision to any person or circumstance, shall be held by a
court of competent jurisdiction or other authority to be invalid, illegal or
unenforceable, the remainder of the provisions of this First Amendment shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated.

      Section 6. Counterparts. This First Amendment may be executed in any
number of counterparts, and each of such counterparts shall for all purposes be
deemed an original, but all such counterparts shall together constitute but one
and the same instrument.
<PAGE>


      Section 7. Governing Law. This First Amendment shall be deemed to be a
contract made under the laws of the State of New Jersey and for all purposes
shall be governed by and construed in accordance with the laws of such state
applicable to contracts made and to be performed entirely within such state.

      Section 8. Waiver of Notice. The Company and the Rights Agent hereby waive
any notice requirement under the Rights Agreement pertaining to the matters
covered by this First Amendment.

      Section 9. Descriptive Headings. Descriptive headings of the several
sections of this First Amendment are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions of this
First Amendment.

      IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
be duly executed as of the day and year first written above.


                                    FIRST MONTAUK FINANCIAL CORP

                                           /s/ Victor K. Kurylak
                                           ---------------------------------
                                    Name:  Victor K. Kurylak
                                    Title: President and Chief Executive Officer

                                    CONTINENTAL STOCK TRANSFER & TRUST COMPANY,
                                    as Rights Agent



                                    By:    /s/ Gregory Denman
                                           -------------------------------------
                                    Name:  Gregory Denman
                                    Title: Vice President



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