Document:

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                                                           Executed in 6 Parts
                                                           Counterpart No. (   )

                              NATIONAL EQUITY TRUST

                          LOW FIVE PORTFOLIO SERIES 38

                            REFERENCE TRUST AGREEMENT

     This Reference Trust Agreement dated April 11, 2001 among Prudential
Securities Incorporated, as Depositor and The Bank of New York, as Trustee, sets
forth certain provisions in full and incorporates other provisions by reference
to the document entitled "National Equity Trust, Trust Indenture and Agreement"
(the "Basic Agreement") dated February 2, 2000. Such provisions as are set forth
in full herein and such provisions as are incorporated by reference constitute a
single instrument (the "Indenture").

                                WITNESSETH THAT:
                                ---------------

     In consideration of the premises and of the mutual agreements herein
contained, the Depositor and the Trustee agree as follows:

                                     Part I.
                                     ------

                     STANDARD TERMS AND CONDITIONS OF TRUST

     Subject to the provisions of Part II hereof, all the provisions contained
in the Basic Agreement are herein incorporated by reference in their entirety
and shall be deemed to be a part of this instrument as fully and to the same
extent as though said provisions had been set forth in full in this instrument.

A.   Article  III,  entitled  "Administration  of  Trust,"  shall be  amended as
     follows:

     (i)  Section 3.14 Deferred Sales Charge shall be amended to add the
          following sentences at the end thereof:

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                                       -2-

                "References to Deferred Sales Charge in this Trust Indenture and
                 Agreement shall include any Creation and Development Fee
                 indicated in the prospectus for a Trust. The Creation and
                 Development Fee shall be payable on each date so designated and
                 in an amount determined as specified in the prospectus for a
                 Trust."

                                    Part II.
                                    -------

                      SPECIAL TERMS AND CONDITIONS OF TRUST

The following special terms and conditions are hereby agreed to:

A.   The Trust is denominated National Equity Trust, Low Five Portfolio Series
     38.

B.   The Units of the Trust shall be subject to a deferred sales charge.

C.   The publicly traded stocks listed in Schedule A hereto are those which,
     subject to the terms of this Indenture, have been or are to be deposited in
     Trust under this Indenture as of the date hereof.

D.   The term "Depositor" shall mean Prudential Securities Incorporated.

E.   The aggregate number of Units referred to in Sections 2.03 and 9.01 of the
     Basic Agreement is 125,000 as of the date hereof.

F.   A Unit of the Trust is hereby declared initially equal to 1/125,000th of
     the Trust.

G.   The term "First Settlement Date" shall mean April 17, 2001.

H.   The terms "Computation Day" and "Record Date" shall mean on the tenth day
     of July 2001, October 2001, January 2002, and April 2002.

I.   The term "Distribution Date" shall mean on the twenty-fifth day of July
     2001, October 2001, January 2002, and April 2002.

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                                       -3-

J.   The term "Termination Date" shall mean May 15, 2002.

K.   The Trustee's Annual Fee shall be $.90 (per 1,000 Units) for 49,999,999 and
     below units outstanding $.84 (per 1,000 Units) on the next 50,000,000
     Units, $.78 (per 1,000 Units) on the next 100,000,000 Units, and $.66 (per
     1,000 Units) on Units in excess of 200,000,000 Units. In calculating the
     Trustee's annual fee, the fee applicable to the number of units outstanding
     shall apply to all units outstanding.

L.   The Depositor's Portfolio supervisory service fee shall be $0.25 per 1,000
     Units.

               [Signatures and acknowledgments on separate pages]

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                                       -4-

The Schedule of Portfolio Securities in Part A of the prospectus included in
this Registration Statement for National Equity Trust, Low Five Portfolio Series
38 is hereby incorporated by reference herein as Schedule A hereto.EMPLOYMENT AGREEMENT

     AGREEMENT made as of the 1st day of January,  2000, by and between  Herbert
Kurinsky,  residing at 13  Waterview,  Unit 13, Long  Branch,  New Jersey  07740
(hereinafter referred to as the "Employee") and First Montauk Financial Corp., a
New Jersey  corporation with principal offices Parkway 109, Red Bank, New Jersey
07701 (hereinafter referred to as the "Company").

                              W I T N E S S E T H :

     WHEREAS,  the Company,  through its wholly owned  subsidiary  First Montauk
Securities  Corp, is engaged in the  investment  banking and general  securities
business as a registered broker-dealer; and

     WHEREAS,  the  Company  desires to employ and secure for the  Company,  the
experience, ability and services of Employee; and

     WHEREAS,  the Employee desires to continue his present  employment with the
Company,  pursuant to the terms and conditions herein set forth, superseding all
prior agreements between the Company,  its subsidiaries  and/or predecessors and
Employee;

     NOW, THEREFORE,  it is mutually agreed by and between the parties hereto as
follows:

                                    ARTICLE I

                                   EMPLOYMENT

     Subject to and upon the terms and conditions of this Agreement, the Company
hereby  employs and agrees to continue the  employment of the Employee,  and the
Employee hereby accepts such continued employment in his capacity as Chairman of
the Board and President. In this capacity,  Employee will report to the Board of
Directors.

                                   ARTICLE II

                                     DUTIES

     (A) The Employee shall, during the term of his employment with the Company,
perform such services and duties of an executive  nature in connection  with the
business, affairs and operations of the Company, and its subsidiaries, as may be
reasonably  and in good faith  assigned or delegated to him from time to time by
or under the  authority of the Board of Directors of the Company and  consistent
with the position of President.

     (B) The  Employee  agrees  to use his best  efforts  in the  promotion  and
advancement  of the Company and its welfare  and  business.  Employee  agrees to
devote his primary  professional time to the business of the Company as Employee
deems reasonably  necessary;  provided,  however,  that the Company acknowledges
that Employee shall be entitled to pursue unrelated  personal  business ventures
that do not materially conflict with the performance of Employee's duties to the
Company.

     (C)  Employee  shall be based in the Red Bank New  Jersey  area,  and shall
undertake such occasional  travel,  within or without the United States as is or
may be reasonably necessary in the interests of the Company.

                                   ARTICLE III

                                  COMPENSATION

     (A) Commencing with the commencement date hereof,  the Company shall pay to
Employee a salary at the rate of $256,218 per annum and increasing 10% per annum
on each  anniversary  hereof during the period this Agreement shall be in effect
(payable in equal  weekly  installments  or pursuant to such regular pay periods
adopted by the Company) (the "Base Salary").
<PAGE>

     (B) Employee shall be entitled to receive a bonus (the "Bonus") during each
year of this Agreement,  determined as follows: The amount to be paid as a Bonus
shall be  determined as of each June 30 based upon the prior fiscal year end and
shall  consist of a portion  of a bonus  pool which  shall be equal to ten (10%)
percent of the net pre-tax  profit of the Company as determined by the Company's
independent  auditors,  no later than 90 days following the end of the Company's
fiscal year,  without giving effect to loss carryforwards or non-cash items, and
giving  effect to and  including  revenues  received by the  Company  during the
fiscal year and which revenues may have otherwise been excluded in computing net
pre-tax profit by reason of any revenue  recognition rules otherwise utilized in
the application of generally accepted accounting  principles,  and excluding any
expense deduction attributed to such Bonus paid to William J. Kurinsky (the "Net
Pre-Tax  Profit");  provided  that,  in the event the Net Pre-Tax  Profit of the
Company for any fiscal year is less than $500,000, no bonus shall be paid by the
Company to the Employee pursuant to this  subparagraph (B). Such  determination,
for Bonus purposes  only,  shall be made in accordance  with generally  accepted
accounting principles, as modified by these resolutions.

     (C)  Employee  may receive  such other  additional  compensation  as may be
determined from time to time by the Board of Directors.  Nothing herein shall be
deemed or  construed  to  require  the  Board to award  any bonus or  additional
compensation.

     (D) Employee  shall be eligible to purchase from the Company,  at Employees
sole  discretion,  a portion of a bonus pool which shall consist of up to 20% of
all underwriters and/or placement agent warrants and/or options granted to First
Montauk Securities Corp., upon the same price, terms and conditions  afforded to
First Montauk  Securities Corp. in connection with its service as an underwriter
and/or placement agent for any and all public or private offerings of securities
on behalf of issuers.

     (E) The Company  shall  deduct from  Employee's  compensation  all federal,
state and local taxes which it may now or may hereafter be required to deduct.

     (F) Employee shall also be entitled to receive brokerage  commissions on in
accordance  with the  commission  schedule  in effect  for  other  non-affiliate
brokers employed by the Company.

                                   ARTICLE IV

                                    BENEFITS

     (A) During the term hereof,  (i) the Company  shall  provide  Employee with
health insurance  benefits and major medical  insurance;  (ii) Employee shall be
reimbursed  by the Company upon  presentation  of  appropriate  vouchers for all
business expenses  incurred by the Employee on behalf of the Company;  (iii) the
Company shall provide the Employee with an automobile suitable for his position,
equipped  with a mobile  telephone,  or at  Employee's  option,  an  appropriate
automobile  allowance,  and reimburse  reasonable  automobile expenses including
repairs, maintenance, gasoline charges, mobile phone, etc. via receipted expense
reports.

     (B) In the event the Company wishes to obtain Key Man life insurance on the
life of Employee,  Employee  agrees to cooperate  with the Company in completing
any applications  necessary to obtain such insurance and promptly submit to such
physical  examinations  and furnish such  information as any proposed  insurance
carrier may request.

     (C) For each year of the term  hereof,  Employee  shall be entitled to four
weeks paid vacation.

                                    ARTICLE V

                                 NON-DISCLOSURE

         The Employee shall not, at any time during or after the  termination of
his  employment  hereunder  except  when  acting  on  behalf  of  and  with  the
authorization  of  the  Company,   make  use  of  or  disclose  to  any  person,
corporation,  or other entity, for any purpose  whatsoever,  any trade secret or
other  confidential  information  concerning the Company's  business,  finances,
research,  services  or  products,  and  information  relating  to any client or
account  of  the  Company   (collectively   referred  to  as  the   "Proprietary
Information").   For  the  purposes  of  this   Agreement,   trade  secrets  and
confidential  information  shall mean  information  disclosed to the Employee or
known by his as a consequence of his  employment by the Company,  whether or not
pursuant to this Agreement, and not generally known in the industry,  concerning
the business,  finances,  methods,  operations,  clients,  accounts,  service or
product information of the Company. The Employee acknowledges that trade secrets
and other  items of  confidential  information,  as they may exist  from time to
time, are valuable and unique assets of the Company,  and that disclosure of any
such information would cause substantial injury to the Company. The foregoing is
intended to be  confirmatory of the common law of the state of New York relating
to trade secrets and confidential information.
<PAGE>

                                   ARTICLE VI

                              RESTRICTIVE COVENANT

     (A) In the  event  of the  voluntary  termination  of  employment  with the
Company,  except  for Good  Reason as  defined in  Article  XIX,  or  Employee's
discharge for cause,  as defined in Article VII hereof,  Employee agrees that he
will not (i) for a period of one (1) year from the date of termination, directly
or  indirectly  solicit  brokers or employees  of the Company,  or any sister or
subsidiary of the Company for employment  with any other entity,  or (ii) during
the term  and for a period  of one (1)  year  from  the date of  termination  or
discharge,  solicit  or  accept  any  corporate  finance  client  relating  to a
transaction  involving  a public  offering,  private  placement,  or merger  and
acquisition advisory services, or research project which was already pending and
in existence at the time of Employee's  termination  or discharge,  or which was
being negotiated at the time of Employee's termination or discharge.

     (B) If any court  shall hold that the  duration of  non-competition  or any
other  restriction  contained  in this  paragraph  is  unenforceable,  it is our
intention  that same shall not thereby be terminated but shall be deemed amended
to delete  therefrom  such  provision  or portion  adjudicated  to be invalid or
unenforceable  or in the  alternative  such judicially  substituted  term may be
substituted therefor.

                                   ARTICLE VII

                                      TERM

         This  Agreement  shall be for a term  commencing  on the date first set
forth above and terminating December 31, 2002, unless sooner terminated pursuant
to the terms hereof,  and renewable as provided for herein,  for one  additional
period of one year.  The  Company  agrees to notify  Employee  in writing of its
intent to  negotiate  an  extension  of this  Agreement  six months prior to the
expiration  of the  original  term  hereof.  If the  Company  fails to so notify
Employee,  or after having timely notified  Employee of its intention to extend,
fails to reach  agreement  with  Employee on the terms of such  extension,  this
agreement shall be renewable,  at the option of the Employee,  for an additional
period of one year from the  expiration  of the original  term,  except that the
Employee's base salary shall be increased 10% above the prior year, and Employee
shall be  entitled  to stock  options  equivalent  to  one-third  of the options
granted  during the  initial  term of this  agreement  on  comparable  terms and
conditions.  If the Company elects not to seek to negotiate an extension and has
so timely  notified  Employee,  then the Company  shall pay  Employee,  upon the
expiration of the original term of this Agreement,  a severance benefit equal to
the aggregate amount of Employee's then prevailing  annual Base Salary and Bonus
payable in 12 equal monthly  installments  commencing on the original expiration
date of this Agreement.

                                  ARTICLE VIII

                             DISABILITY DURING TERM

         In the event that the Employee  becomes totally  disabled so that he is
unable or prevented from performing any one or all of his usual duties hereunder
for a period of four (4) consecutive months then, and in that event, the Company
shall  continue  to  compensate  him and he shall  receive  his Base  Salary  as
provided  under Article III of this Agreement for a period of twelve (12) months
commencing from the date of such total disability.  The aforesaid obligations of
the Company shall not extend beyond the term of this  Agreement.  The obligation
of the Company to make the aforesaid  payments shall be modified and reduced and
the Company shall receive a credit for all disability  insurance  payments which
Employee may receive or to which he may become  entitled;  and provided  further
that the  payments  herein  provided  shall not  extend  beyond the term of this
Agreement.

<PAGE>

                                   ARTICLE IX

                                   TERMINATION

         The Company may terminate this Agreement:

                  (A) Upon the death of Employee during the term hereof,  except
that the Employee's legal representatives,  successors,  assigns and heirs shall
have  those  rights and  interests  as  otherwise  provided  in this  Agreement,
including the right to receive accrued but unpaid bonus compensation, if any.

                  (B) Subject to the terms of Article VIII herein,  upon written
notice from the Company to the Employee,  if Employee  becomes totally  disabled
and as a result of such total disability,  has been prevented from and unable to
perform all of his duties hereunder for a consecutive period of four (4) months.

                  (C) Upon written  notice from the Company to the Employee,  if
the Employee is convicted of a felony, or the final  adjudication by any federal
or state  judicial or regulatory  authority or any action or proceeding  arising
out of the violation of any material  securities  law, rule or regulation  where
such action by proceeding resulted in Employee being a statutorily  disqualified
person as that term is defined in Section  3(a)(39) of the Security and Exchange
Act of 1934.

                                    ARTICLE X

                         TERMINATION OF PRIOR AGREEMENTS

         This Agreement sets forth the entire agreement  between the parties and
supersedes all prior  agreements  between the parties,  whether oral or written,
without prejudice to Employee's right to all accrued  compensation  prior to the
effective date of this Agreement.

                                   ARTICLE XI

                                   ARBITRATION

                  Any  dispute  arising out of the  interpretation,  application
and/or  performance  of this  Agreement  with the sole  exception  of any claim,
breach or  violation  arising  under  Articles  V or VI hereof  shall be settled
through final and binding  arbitration  before a panel arbitrators in accordance
with the rules of the National  Association of Securities  Dealers (the "NASD").
Any judgment upon any arbitration award may be entered in any court,  federal or
state, having competent jurisdiction of the parties.

                                   ARTICLE XII

                                  SEVERABILITY

         If  any  provision  of  this  Agreement   shall  be  held  invalid  and
unenforceable,  the remainder of this  Agreement  shall remain in full force and
effect.  If any  provision  is held  invalid or  unenforceable  with  respect to
particular circumstances,  it shall remain in full force and effect in all other
circumstances.

                                  ARTICLE XIII

                                     NOTICE

         All  notices  required  to be given  under the terms of this  Agreement
shall be in  writing  and  shall be  deemed  to have  been  duly  given  only if
delivered to the addressee in person or mailed by certified mail, return receipt
requested, as follows:

        IF TO THE COMPANY:
                            First Montauk Financial Corp.
                            Parkway 109 Office Center
                            328 Newman Springs Road
                            Red Bank, New Jersey 07701

          IF TO THE EMPLOYEE:
                            Herbert Kurinsky
                            13 Waterview, Unit 13
                            Long Branch, New Jersey 07740

or to any such other  address as the party to receive the notice shall advise by
due notice given in accordance with this paragraph.
<PAGE>

                                   ARTICLE XIV

                                     BENEFIT

         This  Agreement  shall inure to, and shall be binding upon, the parties
hereto,  the successors  and assigns of the Company,  and the heirs and personal
representatives of the Employee.

                                   ARTICLE XV

                                     WAIVER

                  The waiver by either  party of any breach or  violation of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach of construction and validity.

                                   ARTICLE XVI

                                  GOVERNING LAW

                  This  Agreement has been  negotiated and executed in the State
of New Jersey, and New Jersey law shall govern its construction and validity.

                                  ARTICLE XVII

                                  JURISDICTION

         Any or all actions or  proceedings  which may be brought by the Company
or Employee under this Agreement  shall be brought before an arbitration  panel,
or if otherwise permissible under the terms of this agreement, a court, having a
situs  within the State of New  Jersey,  and  Employee  hereby  consents  to the
jurisdiction of any tribunal or local, state or federal court located within the
State of New Jersey.

                                  ARTICLE XVIII

                                ENTIRE AGREEMENT

         This  Agreement  contains  the entire  agreement  between  the  parties
hereto. No change, addition or amendment shall be made hereto, except by written
agreement signed by the parties hereto.

                                   ARTICLE XIX

                             SEVERANCE COMPENSATION

         The Company's  Board of Directors has determined that it is appropriate
to reinforce and encourage the continued  attention and dedication of members of
the  Company's  management,  including the Employee,  to their  assigned  duties
without  distraction in potentially  disturbing  circumstances  arising from the
possibility of a change in control of the Company.

         This  Article  XIX sets  forth  the  severance  compensation  which the
Company agrees it will pay to the Employee if the Employee's employment with the
Company  terminates under one of the circumstances  described herein following a
Change in Control of the Company (as defined herein).  The terms of this Article
XIX shall  supersede  any other  provision of this  Agreement  after a Change in
Control as defined  below.  (References  to Sections  refers to Sections in this
Article XIX.)

                  1.  Term.  This  Article  XIX shall  terminate,  except to the
extent that any  obligation of the Company  hereunder  remains unpaid as of such
time, upon the earliest of (i) the  termination of this Agreement  including any
renewal  period,  if a Change in Control of the Company has not occurred  within
such two-year period; (ii) the termination of the Employee's employment with the
Company based on death,  Disability (as defined in Section 3(b)), Retirement (as
defined  in  Section  3(c)) or Cause  (as  defined  in  Section  3(d)) or by the
Employee other than for Good Reason (as defined in Section 3(e));  and (iii) one
year from the date of a Change in Control of the Company if the Employee has not
terminated his employment for Good Reason as of such time.

<PAGE>

                  2. Change in Control.  No compensation  shall be payable under
this  Article XIX unless and until (a) there shall have been a Change in Control
of the  Company,  while the Employee is still an employee of the Company and (b)
the Employee's  employment by the Company  thereafter shall have been terminated
in  accordance  with  Section 3. For  purposes  of this  Agreement,  a Change in
Control of the  Company  shall be deemed to have  occurred if (I) there shall be
consummated (x) any  consolidation or merger of the Company in which the Company
is not the  continuing or surviving  corporation  or pursuant to which shares of
the  Company's  Common Stock would be converted  into cash,  securities or other
property,  other  than a merger  of the  Company  in which  the  holders  of the
Company's  Common  Stock   immediately   prior  to  the  merger  have  the  same
proportionate ownership of common stock of the surviving corporation immediately
after the merger,  or (y) any sale,  lease,  exchange or other  transfer (in one
transaction or a series of related  transactions) of all, or substantially  all,
of the assets of the Company,  or (ii) the  stockholders of the Company approved
any plan or proposal for the liquidation or dissolution of the Company, or (iii)
any  person  (as  such  term is used  in  Sections  13(d)  and  13(d)(2)  of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")),  shall become
the  beneficial  owner (within the meaning of Rule 13d-3 under the Exchange Act)
of 20% or more of the Company's  outstanding  Common  Stock,  or (iv) during any
period of two consecutive years, individuals who at the beginning of such period
constitute  the  entire  Board  of  Directors  shall  cease  for any  reason  to
constitute  a  majority  thereof  unless the  election,  or the  nomination  for
election by the Company's  stockholders,  of each new director was approved by a
vote of at least  two-thirds  of the  directors  then  still in office  who were
directors at the beginning of the period.

                  3. Termination Following Change in Control.

     (a) If a Change in Control of the  Company  shall have  occurred  while the
Employee is still an employee of the Company,  the Employee shall be entitled to
the  compensation  provided in Section 4 upon the subsequent  termination of the
Employee's  employment with the Company by the Employee or by the Company unless
such termination is as a result of (i) the Employee's death; (ii) the Employee's
Disability (as defined in Section 3(b) below);  (iii) the Employee's  Retirement
(as defined in Section  3(c)  below);  (iv) the  Employee's  termination  by the
Company  for Cause (as defined in Section  3(d)  below);  or (v) the  Employee's
decision  to  terminate  employment  other than for Good  Reason (as  defined in
Section 3(e) below).

     (b)  Disability.  If,  as a  result  of the  Employee's  incapacity  due to
physical or mental illness,  the Employee shall have been absent from his duties
with the Company on a  full-time  basis for four months and within 30 days after
written notice of  termination  is thereafter  given by the Company the Employee
shall not have returned to the full-time  performance of the Employee's  duties,
the Company may terminate this Agreement for "Disability."

     (c)  Retirement.  The term  "Retirement"  as used in this Article XIX shall
mean  termination  by the Company or the Employee of the  Employee's  employment
based on the  Employee's  having  reached age 65 or such other age as shall have
been fixed in any  arrangement  established  with the  Employee's  consent  with
respect to the Executive.

     (d) Cause.  The Company may terminate the Employee's  employment for Cause.
For purposes of this Agreement only, the Company shall have "Cause" to terminate
the Employee's employment hereunder only on the basis of fraud, misappropriation
or embezzlement on the part of the Employee.  Notwithstanding the foregoing, the
Employee shall not be deemed to have been  terminated for Cause unless and until
there shall have been  delivered  to the  Employee a copy of a  resolution  duly
adopted by the affirmative  vote of not less than  three-quarters  of the entire
membership of the Company's  Board of Directors at a meeting of the Board called
and held  for the  purpose  (after  reasonable  notice  to the  Employee  and an
opportunity for the Employee,  together with the Employee's counsel, to be heard
before  the  Board),  finding  that in the good  faith  opinion of the Board the
Employee was guilty of conduct set forth in the second  sentence of this Section
3(d) and specifying the particulars thereof in detail.
<PAGE>

     (e) Good Reason.  The Employee may terminate the Employee's  employment for
Good Reason at any time during the term of this Agreement.  For purposes of this
Agreement "Good Reason" shall mean any of the following  (without the Employee's
express written consent):

     (i) the  assignment  to the Employee by the Company of duties  inconsistent
with the  Employee's  position,  duties,  responsibilities  and status  with the
Company  immediately prior to a Change in Control of the Company, or a change in
the Employee's  titles or offices as in effect  immediately prior to a Change in
Control of the Company,  or any removal of the  Employee  from or any failure to
reelect the  Employee to any of such  position,  except in  connection  with the
termination of his employment for Disability, Retirement or Cause or as a result
of the Employee's death or by the Employee other than for Good Reason;

     (ii) a reduction by the Company in the Employee's  base salary as in effect
on the date hereof or as the same may be increased  from time to time during the
term of this Agreement or the Company's failure to increase (within 12 months of
the Employee's  last increase in base salary) the Employee's base salary after a
Change in  Control  of the  Company  in an amount  which at least  equals,  on a
percentage  basis,  the  average  percentage  increase  in base  salary  for all
officers of the Company effected in the preceding 12 months;

     (iii) any failure by the Company to continue in effect any benefit  plan or
arrangement  (including,  without  limitation,  the Company's life insurance and
medical,  dental,  accident  and  disability  plans)  in which the  Employee  is
participating  at the time of a Change in Control of the  Company  (or any other
plans providing the Employee with substantially  similar benefits)  (hereinafter
referred  to as  "Benefit  Plans"),  or the taking of any action by the  Company
which would  adversely  affect the  Employee's  participation  in or  materially
reduce the  Employee's  benefits  under any such  Benefit  Plan or  deprive  the
Employee of any material fringe benefit enjoyed by the Employee at the time of a
Change in Control of the Company;

     (iv) any failure by the Company to continue in effect any incentive plan or
arrangement   (including,   without  limitation,   bonus  and  contingent  bonus
arrangements and credits and the right to receive performance awards and similar
incentive  compensation  benefits) in which the Employee is participating at the
time of a Change in Control of the Company  (or any other plans or  arrangements
providing him with substantially  similar benefits)  (hereinafter referred to as
"Incentive  Plans")  or the  taking of any  action by the  Company  which  would
adversely  affect the  Employee's  participation  in any such  Incentive Plan or
reduce the Employee's  benefits under any such  Incentive  Plan,  expressed as a
percentage of his base salary,  by more than 10 percentage  points in any fiscal
year as compared to the immediately preceding fiscal year;

     (v)  any  failure  by the  Company  to  continue  in  effect  any  plan  or
arrangement to receive securities of the Company (including, without limitation,
the Company's  Incentive  Stock Option Plan and any other plan or arrangement to
receive and exercise stock options, stock appreciation rights,  restricted stock
or grants  thereof)  in which the  Employee  is  participating  at the time of a
Change in Control of the Company (or plans or  arrangements  providing  him with
substantially similar benefits)  (hereinafter referred to as "Securities Plans")
or the taking of any action by the  Company  which  would  adversely  affect the
Employee's  participation in or materially reduce the Employee's  benefits under
any such Securities Plan;

     (vi) a  relocation  of  the  Company's  principal  executive  offices  to a
location outside of Monmouth County, New Jersey, or the Employee's relocation to
any place other than the location at which the Employee performed the Employee's
duties prior to a Change in Control of the Company,  except for required  travel
by the Employee on the Company's business to an extent substantially  consistent
with the  Employee's  business  travel  obligations  at the time of a Change  in
Control of the Company;

     (vii) any failure by the Company to provide the Employee with the number of
paid  vacation days to which the Employee is entitled at the time of a Change in
Control of the Company;

<PAGE>

     (viii)  any  material  breach  by the  Company  of any  provision  of  this
Agreement;

     (ix) any failure by the Company to obtain the  assumption of this Agreement
by any successor or assign of the Company; or

     (x) any purported  termination  of the Employee's  employment  which is not
effected  pursuant to a Notice of  Termination  satisfying the  requirements  of
Section 3(f), and for purposes of this Agreement,  no such purported termination
shall be effective.

     (f) Notice of  Termination.  Any  termination  by the  Company  pursuant to
Section 3(b), 3(c) or 3(d) shall be communicated by a Notice of Termination. For
purposes  of this  Agreement,  a "Notice  of  Termination"  shall mean a written
notice  which shall  indicate  those  specific  termination  provisions  in this
Agreement  relied upon and which sets forth in  reasonable  detail the facts and
circumstances  claimed  to  provide a basis for  termination  of the  Employee's
employment under the provision so indicated.  For purposes of this Agreement, no
such purported termination by the Company shall be effective without such Notice
of Termination.

     (g) Date of  Termination.  "Date  of  Termination"  shall  mean (a) if this
Agreement is terminated by the Company for  Disability,  30 days after Notice of
Termination is given to the Employee  (provided that the Employee shall not have
returned to the performance of the Employee's duties on a full-time basis during
such 30-day  period) or (b) if the  Employee's  employment  is terminated by the
Company  for any  other  reason,  the date on which a Notice of  Termination  is
given;  provided that if within 30 days after any Notice of Termination is given
to the Employee by the Company the Employee  notifies the Company that a dispute
exists concerning the termination, the Date of Termination shall be the date the
dispute is finally  determined,  whether by mutual  agreement  by the parties or
upon final judgment,  order or decree of a court of competent  jurisdiction (the
time for appeal therefrom having expired and no appeal having been perfected).

                4. Severance Compensation upon Termination of Employment.

                  If the Company shall terminate the Employee's employment other
than pursuant to Section 3(b),  3(c) or 3(d) or if the Employee shall  terminate
his employment for Good Reason, then the Company shall:

     (i) pay to the  Employee as  severance  pay in a lump sum, in cash,  on the
fifth day following the Date of Termination,  an amount equal to three times the
aggregate  annual  compensation  paid to the Employee  during the calendar  year
preceding  the change in control of the  Company by the  Company  and any of its
subsidiaries subject to United States income taxes;  provided,  however, that if
the lump sum  severance  payment  under this Section 4, either alone or together
with  other  payments  which  the  Employee  has the right to  receive  from the
Company,  would constitute a "parachute  payment" (as defined in Section 280G of
the Internal  Revenue  Code of 1954,  as amended  (the  "Code")),  such lump sum
severance  payment  shall be reduced to the largest  amount as will result in no
portion of the lump sum severance  payment under this Section 4 being subject to
the excise tax imposed by Section  4999 of the Code.  The  determination  of any
reduction in the lump sum severance payment under this Section 4 pursuant to the
foregoing  proviso  shall  be  made by the  Employee  in good  faith,  and  such
determination shall be conclusive and binding on the Company; and

     (ii) within ten days  following  the Date of  Termination,  shall cause the
Employee  to  be  relieved  of  any  and  all  personal  guarantees  of  Company
obligations,  and fully pay all outstanding  loans and other  obligations of the
Company to the Executive.  If, for any reason,  the Company fails to comply with
its obligations under this subparagraph,  the Employee shall have the option, at
his sole  discretion,  to  convert up to the  principal  amount of such Notes to
shares of the  Company's  Common Stock at the rate of $.50 per share;  provided,
that the conversion of all or a portion of any outstanding loans by the Employee
shall not  relieve  the  Company of any of its  obligations  arising  under this
subparagraph  including  the  obligations  to repay  any  unconverted  loans and
relieve the Employee of any personal guarantees.
<PAGE>

                5. No  Obligation  to  Mitigate  Damages;  No Effect  on Other
                   Contractual Rights.

     (a) The Employee shall not be required to mitigate damages or the amount of
any payment  provided for under this Article XIX by seeking other  employment or
otherwise,  nor shall the amount of any payment  provided for under this Article
XIX be  reduced  by any  compensation  earned by the  Employee  as the result of
employment by another employer after the Date of Termination, or otherwise.

     (b) The  provisions  of this  Article  XIX,  and any payment  provided  for
hereunder,  shall  not  reduce  any  amounts  otherwise  payable,  or in any way
diminish the Employee's  existing rights, or rights which would accrue solely as
a result of the  passage of time,  under any  Benefit  Plan,  Incentive  Plan or
Securities Plan, employment agreement or other contract, plan or arrangement.

                6. Successor to the Company.

     (a) The Company will require any  successor  or assign  (whether  direct or
indirect,   by  purchase,   merger,   consolidation  or  otherwise)  to  all  or
substantially all of the business and/or assets of the Company,  by agreement in
form and substance  satisfactory  to the  Executive,  expressly,  absolutely and
unconditionally to assume and agree to perform this Agreement in the same manner
and to the same extent  that the  Company  would be required to perform it if no
such  succession  or assignment  had taken place.  Any failure of the Company to
obtain such  agreement  prior to the  effectiveness  of any such  succession  or
assignment  shall be a material  breach of this  Agreement and shall entitle the
Employee to terminate the Employee's employment for Good Reason. As used in this
Agreement,  "Company"  shall mean the  Company as  hereinbefore  defined and any
successor or assign to its business  and/or assets as aforesaid  which  executes
and delivers  the  agreement  provided for in this Section 6 or which  otherwise
becomes bound by all the terms and  provisions of this Agreement by operation of
law. If at any time during the term of this  Agreement  the Employee is employed
by any corporation a majority of the voting securities of which is then owned by
the  Company,  "Company"  as used in  Sections 3 and 4 hereof  shall in addition
include such  employer.  In such event,  the Company agrees that it shall pay or
shall cause such  employer to pay any amounts owed to the  Employee  pursuant to
Section 4 hereof.

     (b) This Agreement  shall inure to the benefit of and be enforceable by the
Employee's  personal  and  legal  representatives,   executors,  administrators,
successors,  heirs, distributees,  devisees and legatees. If the Employee should
die while any  amounts are still  payable to him  hereunder,  all such  amounts,
unless otherwise provided herein,  shall be paid in accordance with the terms of
this  Agreement to the  Employee's  devisee,  legatee,  or other designee or, if
there be no such designee, to the Employee's estate.

                7.  Legal  Fees and  Expenses.

     The Company  shall pay all legal fees and  expenses  which the Employee may
incur as a result of the Company's  contesting the validity,  enforceability  or
the Employee's interpretation of, or determinations under, this Article XIX.

     IN WITNESS  WHEREOF,  the parties  hereto have executed this  Agreement and
affixed their hands and seals the day and year first above written.

(Corporate Seal)                         FIRST MONTAUK FINANCIAL CORP.

                                         By:------------------------------------
                                            William Kurinsky

-------------------------------
Herbert Kurinsky (Employee)

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