EMPLOYMENT AGREEMENT


     AGREEMENT  effective  as of October 15, 1998 by and between  FIRST  MONTAUK
FINANCIAL CORP., a New Jersey corporation, with executive offices at Parkway 109
Office Center, 328 Newman Springs Road 07701-5698  (hereinafter jointly referred
to as the  "Employer") and MARK D. LOWE with an address at 43 Richard Lane, West
Long Branch, New Jersey 07764 (hereinafter referred to as the "Employee").

                              W I T N E S S E T H :

     WHEREAS,  the  Employer  desires to secure  for  itself the  benefit of the
Employee's  background,  experience,  ability  and  expertise  as  an  Insurance
Products and Sales  Coordinator  and  President of Montauk  Insurance  Services,
Inc., ("MISI") and is desirous of employing the Employee to perform the services
as set forth in this Agreement and under the terms herein provided; and,

     WHEREAS,  the  Employee is willing to provide his  background,  experience,
ability,  expertise as a Insurance Products and Sales  Coordinator,  and perform
such services and accept such  employment on the terms and  conditions set forth
in this Agreement;

     NOW, THEREFORE,  in consideration of the premises and the mutual convenants
herein set forth, the parties hereto agree as follows:

1.       EMPLOYMENT AND SCOPE OF DUTIES

     A. Employer shall employ Employee and the Employee agrees to be employed by
the  Employer on a  full-time  basis  during the  Employment  Period,  Insurance
Products and Sales  Coordinator  and  President of Montauk  Insurance  Services,
Inc., ("MISI"),  having and maintaining the requisite licenses and registrations
in order to  effectively  coordinate and facilitate and promote the proper sales
and servicing of insurance and  insurance-related  products and services through
all of the Company's licensed  insurance agents and registered  representatives,
in variable and fixed annuity products, life, health an disability insurance and
the renewals of each of these products (hereinafter  "Insurance Business").  The
Employee  shall report and be responsible  to: Herb Kurinsky,  the President and
C.E.O.;  William  Kurinsky,  Executive  Vice  President  and CFO;  and Robert I.
Rabinowitz, Managing Director. Employee shall be expected to coordinate with the
Legal & Compliance  Department on matters involving  compliance and legal issues
affecting the agents and registered  representatives  ("RR's") and the Company's
sales,   marketing  and  recruiting   departments  on  matters   involving  such
departments.  Employee shall,  except during vacation periods or absences due to
temporary illness,  devote substantially all of his business time, attention and
energies to his duties and responsibilities as described hereunder.

     B. Subject to the terms and  conditions  contained  herein,  Employee shall
also (i) provide administrative  services,  product marketing,  sales, technical
and product  support with respect to the development and retention of Agents and
RR's  and   insurance   cases;   (ii)  assist   Employer   and  its   authorized
representatives and staff in actively recruiting new, qualified Agents and RR's;
and (iii) from time to time,  perform such other  services and tasks  related to
the foregoing as may be  reasonably  necessary to the  performance  of the above
duties and responsibilities, and Employer hereby engages Employee to provide and
perform the same.

     C. The  Principal  location of the  Employee's  employment  shall be at 328
Newman  Springs  Road,  Red  Bank,  New  Jersey  07701,  although  the  Employee
understands and agrees that he may be required to travel for business reasons to
the Company's Branch office and satellite locations throughout the United States
from time to time.

     D. Employer  hereby  agrees at its  discretion to provide the personnel and
administrative  support  services to Employee  necessary  for him to perform the
Services hereunder.
<PAGE>
             


         2.       TERM

     The parties agree that this  Agreement  shall  commence on or about October
15, 1998 (the "Commencement Date") and shall terminate on the earlier of (i) the
mutual  agreement  of  Employer  and  Employee  or  (ii)  on the  one  (1)  year
anniversary from the date hereof (the "Initial  Term").  This Agreement shall be
automatically  renewable  for  two (2)  additional  one (1)  year  terms  at the
anniversary date unless terminated by either party upon thirty (30) days written
notice prior to the anniversary date, or as otherwise provided for herein.

         3.       COMPENSATION.

     (a).  For the  first  year of the  Employment  Period,  Employer  agrees to
compensate  the Employee at an annual rate equal to $75,000.  Employer shall pay
such sums to Employee in its regular  payroll cycle.  Employee shall be entitled
to an annual  increase of ten  percent  (10%) of this base salary for the second
and third  successive  year of employment upon renewal of the Employee's term of
Employment.

     (b).  Employee shall also be compensated  as a producing  Agent/broker  for
Employer.  Employee  shall receive  seventy (70%) percent  payout after clearing
costs of any commission income and sales credit generated by Employee.

     ( c).  Employee shall be paid a signing bonus of $60,000 payable over a two
(2) year period at the rate of $10,000 per quarter.  This  payment  shall be due
and payable even if  Employee's  term of  Employment is not renewed for a second
year.

     (d).  Employer also agrees to pay Employee an Incentive Bonus calculated at
one percent (1%)  percent  above the Gross  Premiums of the Current  Annual Base
Commission  Rate  ("Base  Gross"),  of all  annuity  products,  both  fixed  and
variable,  which has been  determined  by Employer and Employee to be $2,800,000
per annum. Said production  override shall be payable to Employee on a quarterly
basis.

     (e) Employer also agrees to pay Employee an Incentive  Bonus  calculated at
twenty percent (20%) percent of all agency  override and renewal  commissions on
all life,  health,  disability  and long-term  care  business  engaged in by the
registered  Agents  and RR's of the  Employer.  Said  incentive  bonus  shall be
payable to Employee within thirty days of the Employer's fiscal year end.

     (f)  Employee  shall be entitled to receive  pursuant to  Employer's  Stock
Option Plan, as amended,  an initial grant of Incentive  Stock Options of 50,000
FMFK Stock Options at an exercise price of $1.25.  Said options shall be granted
pursuant to all terms and  conditions  of the Company's  Incentive  Stock Option
Plan,  as  amended,  and  shall  vest at the rate of 33% per  year of  continued
employment  with the Employer.  All  provisions of the Amended Plan as set forth
therein shall be applicable to Employee's initial grant and any subsequent stock
option  grants.  Employee  acknowledges  receipt of a copy of the Amended  Stock
Option Plan.

     (g).  Employer  shall  pay the  cost  of  Employee's  licenses,  continuing
education requirements, and costs for E & O coverage.
<PAGE>



4.       REIMBURSEMENT OF EXPENSES.

     During the period of said  employment,  the Employer  shall  reimburse  the
Employee or pay directly on his behalf, all business, travel,  entertainment and
other ordinary and necessary  expenses  incurred directly in connection with the
performance  of  Employee's  duties and in  furtherance  of the  business of the
Employer.  Employee shall not be reimbursed for any personal expenses or for any
business  expense in excess of $1,500.00  which has not been approved in writing
in advance by a Senior  Officer of  Employer.  Employee  shall  submit  periodic
(weekly or monthly) itemized expense reports for out-of-pocket business expenses
paid by the Employee and for which reimbursement is sought from Employer.

5.       INSURANCE AND OTHER BENEFITS.

     (a).  Employee  shall be eligible to  participate  in  Employer's  medical,
health and dental  insurance  benefit  plans which are  currently  furnished  to
Senior Executives and shall pay twenty-five (25%) of costs for premiums;

     (b). Employee shall be eligible to participate in Employer's 401(k) Plan.

6.       TERMINATION OF EMPLOYMENT.

     In  addition  to  Paragraph  2, during the  Initial  Term,  the  Employee's
employment  may also be terminated  on the  occurrence of any one or more of the
following events:

     (a) The death of the Employee;

     (b) The  failure by the  Employee to  substantially  perform his duties and
responsibilities as Insurance Coordinator hereunder, owing to physical or mental
incapacity (hereinafter referred to as "disability"),  which disability shall be
as defined under the Company's  disability  insurance  policy and shall continue
for more than three (3) consecutive months.
<PAGE>

     (c)  For  "Cause",  which  shall  mean  (i)  the  failure  by the  Employee
substantially  perform his duties  hereunder,  for  reasons  other than death or
disability after written notice by Employer and a thirty (30) day period to cure
said  failure;  (ii) the  engaging by the  Employee  in a material,  intentional
breach of the Firm's Policies and Procedures or misconduct  materially injurious
to the Employer;  or (iii) the commission by the Employee of an act constituting
common law fraud or a felony or any other criminal offense.

     (d) In the event that Employee's  employment  hereunder  terminates for any
reason other than for reasons  indicated  in Paragraph  (c) i - iii, the Company
shall pay to Employee  severance  payments equal to one time the previous year's
Base Salary and  unreimbursed  business  expenses.  Employee  shall  forfeit any
unaccrued  employee's  Incentive  Bonus  in the  event  that  he has  failed  to
substantially perform his duties as described herein or is terminated for Cause.
Upon any termination of this Agreement, all of the rights, privileges and duties
of the Employee  hereunder shall cease,  except for his rights under Paragraph 3
(c) and 6(d) and his  continuing  obligations  to  Employer  under  Paragraph  7
hereunder.

7.       DISCLOSURE OF INFORMATION.

     (a) All memoranda,  notes,  records or other  documents made or compiled by
the  Employee  or made  available  to him  during  the  term  of his  employment
concerning  the  business  of the  Employer  shall be and remain the  Employer's
property and shall be delivered  by the Employee to Employer at  termination  of
Employee's  employment.  Employee shall not use for himself or others or divulge
to others, any proprietary or confidential information of the Employer, obtained
by him as a result of his employment,  unless  authorized in advance by a Senior
Officer of Employer.

     (b) Employee  hereby sells,  transfers  and assigns to Employer,  or to any
person  or  entity  designated  by the  Employer,  all of the  right,  title and
interest of Employee in and to all  inventions,  sales  approaches or materials,
software,  ideas,  training  materials,  disclosures and  improvements,  whether
patented or unpatented,  and  copyrightable  material,  made or conceived by the
Employee, solely or jointly, in whole or in part, during the Employee Term which
are not generally  known to the public or the industry or recognized as standard
practice and which (i) relate to services, trade marks or names, methods, ideas,
apparatus,  designs,  products,  processes,  procedures  or devices which may be
sold,  leased,  used or under  construction  or  development  by  Employer,  its
subsidiaries  or affiliates or any franchise  affiliated  with Employer and (ii)
arise (wholly or partly) from the effort of Employee  during his employment with
Employer  (hereinafter  collectively  referred to as an  "Invention").  Employee
shall  communicate  promptly and disclose to Employer,  in such form as Employer
requests,  all  information,  details and data pertaining to any such Invention.
Employee  hereby  irrevocably   appoints  the  Chief  Executive  Officer  and/or
Executive Vice President lawful attorney to execute and deliver, with respect to
any Invention,  such form of transfers and assignments and such other papers and
documents  as  reasonably  may be required  to permit  Employer or any person or
entity designated by Employer to file and prosecute patent  applications and, as
to copyrightable material, to obtain copyrights thereon.  Employer shall pay all
costs incident to the execution and delivery of such transfers,  assignments and
other  documents.  Any  Invention  by the  Employee  within  twelve  (12) months
following the  termination of this Agreement  shall be deemed to fall within the
provisions  of this  Section 7(b) unless  Employee  bears the burden of proof of
showing  that  the  Invention  was  first  conceived  and  made  following  such
termination.
<PAGE>

     (c) For purposes of this Section 7, the term  "proprietary  or confidential
information"  shall mean all  information  which is known only to Employee or to
Employee  and  employees,   former   employees,   consultants  or  others  in  a
confidential  relationship with Employer and relates to specific matters such as
trade  secrets,  customers,  potential  customers and vendor lists,  pricing and
credit techniques,  research and development  activities,  books and records and
private processes,  as they may exist from time to time, which Employee may have
acquired or obtained by virtue of work  heretofore or hereinafter  performed for
or on behalf of Employer or which he may acquire or may have acquired  knowledge
of during  the  performance  of said work,  and which is not known to other,  or
readily  available to others from sources other than Employee,  or is not in the
public  domain.  In the event of a breach or a threatened  breach by Employee of
the  provisions of this Section 7,  Employer  shall be entitled to an injunction
restraining  Employee from disclosing,  in whole or in part, the  aforementioned
proprietary  or  confidential  information  of Employer,  or from  rendering any
services to any person, firm,  corporation,  association or other entity to whom
such  proprietary  or  confidential  information,  in whole or in part, has been
disclosed or is threatened to be disclosed.  Nothing herein  contained  shall be
construed as prohibiting  Employer from pursuing any other remedies available to
Employer for such breach or threatened breach, including the recovery of damages
from Employee.

8.       REPRESENTATIONS OF EMPLOYEE

     Employee  represents  and  warrants  to Employer  that he is not  currently
statutorily  disqualified or restricted  from becoming  licensed as an insurance
agent or registered  with any state or NASD, or of entering into this Employment
Agreement  by any other  enforceable  agreement  between  Employee and any third
party.

9.       NOTICES.

     Any notices  required or permitted to be given under the provisions of this
Employment  Agreement  shall  be  in  writing  and  delivered  personally  or by
certified or registered mail, return receipt  requested,  postage prepaid to the
following  persons at the following  addresses,  or to such other person at such
other  address as any party may  request by notice in writing to the other party
to this Agreement:

         TO EMPLOYEE:

         MARK D. LOWE
         42 Richard Lane
         West Long Branch, New Jersey 07764
 
         TO EMPLOYER:

         FIRST MONTAUK FINANCIAL CORP.
         Parkway 109 Office Center
         328 Newman Springs Road
         Red Bank, New Jersey 07701
         Attn:  General Counsel

10.      ARBITRATION

     Any and all  disputes or  controversies  arising out of or relating to this
Agreement or breach thereof,  shall be settled by arbitration under the auspices
of the NASD, Inc. in New York City, New York by a panel of three  arbitrators in
accordance  with  the  rules  then  pertaining  to the  NASD.  The  cost of such
arbitration proceeding shall be borne equally by the parties, each of whom shall
bear its or his own attorneys fees.

11.      CONSTRUCTION.

     This  Employment  Agreement  shall be construed in accordance  with, and be
governed by, the laws of the State of New Jersey.

12.      SUCCESSOR AND ASSIGNS.

     This Employment Agreement shall be binding on the successors and assigns of
the  Employer and shall inure to the benefit and be  enforceable  by and against
its successors and assigns.  This Employment Agreement is personal in nature and
may not be assigned or  transferred  by the Employee  without the prior  written
consent of the Corporation.


<PAGE>

13.      ENTIRE AGREEMENT.

     This instrument contains the entire understanding and agreement between the
parties  relating to the subject  matter  hereof,  and neither  this  Employment
Agreement nor any provision hereof may be waived,  modified,  amended,  changed,
discharged or terminated,  except by an agreement in writing signed by the party
against  whom  enforcement  of  any  waiver,  modification,  change,  amendment,
discharge or termination is sought.

14.      COUNTERPARTS.

     This Employment  Agreement may be executed  simultaneously in counterparts,
each of which shall be deemed an original,  and all of which  counterparts shall
together constitute a single agreement.

15.      ILLEGALITY.

     In case  any one or more of the  provisions  of this  Employment  Agreement
shall be invalid,  illegal or  unenforceable in any respect,  the validity,  the
legality and enforceability of the remaining  provisions  contained herein shall
not in any way be affected or impaired thereby.

16.      CAPTIONS.

     The captions of the sections hereof are for convenience  only and shall not
control or affect the terms or provisions of this Employment Agreement.


     IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.

ATTEST:                                FIRST MONTAUK FINANCIAL CORP.

                
---------------------------            By:-----------------------------------
Secretary

                                       -------------------------------(Dated)
 
                                       MARK D. LOWE, Employee
 
ATTEST:
                                       

---------------------------             ------------------------------(Dated)
Witness