Exhibit 4.1
$550,217.41 February 1, 2006
Red Bank New Jersey
PROMISSORY NOTE
FOR VALUE RECEIVED, the undersigned, FIRST MONTAUK FINANCIAL CORP., a
New Jersey corporation with an address at 109 Office Center, 328 Newman Springs
Road, Red Bank, New Jersey 07701 ("Payor) hereby promises to pay to the order of
Herbert Kurinsky, with an address at 16 Barberry Drive, Ocean, New Jersey 07712
("Payee"), the sum of Five Hundred Fifty Thousand Two Hundred Seventeen Dollars
and Forty One Cents ($550,217.41), together with interest from the date hereof
at the rate of 4.50% per annum, computed on the basis of a 360-day year and
actual days elapsed, in 48 equal monthly installments, each in the amount of
$12,500, commencing on February 1, 2006. All unpaid accrued interest and
principal shall be paid in full on January 1, 2010 (the "Maturity Date"). In the
event of a Change of Control of the Payor, as defined in that certain Separation
Agreement dated as of February 1, 2006 between Payor or Payee and to which this
Note is originally attached as an exhibit (the "Separation Agreement"), the
remaining principal and interest payments due under the Note shall become
immediately due and payable without demand from Payee.
Payment of this Note shall be made in lawful money of the United
States, in immediately available funds without deduction, counterclaim or
set-off, to the Payee at Payee's address set forth above, or such other address
as the Payee may notify Payor in writing.
At any time and from time to time, Payor may, at its option, prepay all
or part of the principal balance of this Note without penalty or premium,
provided that any partial prepayments shall be in increments of Ten Thousand
Dollars ($10,000). Any partial prepayments shall be applied by Payee first to
accrued and unpaid interest and then to the principal of this Note. Payor shall
give Payee five (5) business days' prior written notice of any prepayment.
Payor hereby waives diligence, demand, presentment, protest and notice
of any kind in connection with the delivery, acceptance, performance, default or
enforcement of the payment of this Note.
In the event of litigation with respect to this Note, Payor hereby
waives the right to trial by jury and all rights of set-off and to interpose
counterclaim and cross-claims. Payor agrees to pay all expenses of enforcement
including collection costs and attorneys' fees, expenses and disbursements.
In no contingency or event whatsoever, whether by reason of advancement
of the proceeds hereof or otherwise, shall the amount paid or agreed to be paid
to Payor for the use, forbearance or detention of the money advanced or to be
advanced hereunder exceed the highest rate permissible under any law which a
court of competent jurisdiction may deem applicable hereto.
If one or more of the following events (herein called "Event of
Default") shall occur for any reason whatsoever (and whether such occurrence
shall be voluntary or involuntary or come about or be effected by operation of
law or pursuant to or in compliance with any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
(i) default in the payment of any installment of principal on this Note
when and as the same shall become due and payable, whether at maturity or at a
date fixed for prepayment or by acceleration or otherwise;
(ii) default in the payment of any installment of interest on this
Note; or
(iii) the Payor makes an assignment for the benefit of creditors or
admits in writing its inability to pay its debts generally as they become due;
or
(iv) there occurs a Change Of Control of the Payor, as that term is
defined in the Separation Agreement; or
(v) an order, judgment or decree is entered adjudicating the Payor
bankrupt or insolvent which is not dismissed within 60 days; or
(vi) the Payor petitions or applies to any tribunal for the appointment
of a trustee or receiver of the Payor or commences any proceedings (other than
proceedings for the voluntary liquidation and dissolution of a subsidiary)
relating to the Payor under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation law of any
jurisdiction whether now or hereafter in effect; or
(vii) any petition or application declaring the Payor bankrupt or
insolvent is filed, or any such proceedings are commenced against the Payor, and
the Payor by any act indicates its approval thereof, consent or acquiescence
therein, or an order, judgment or decree is entered appointing any such trustee
or receiver, or approving the petition in any such proceedings, and such order,
judgment or decree remains unstayed and in effect for more than 60 days, then
the holder of this Note, by notice in writing to the Payor, may declare the
principal of this Note then outstanding and the interest accrued thereon if not
already due and payable, to be due and payable immediately, and upon any such
declaration, the same shall become and shall be immediately due and payable,
anything in this Note contained to the contrary notwithstanding. Upon the
occurrence of any Event of Default hereunder, Payee shall send a written notice
of such default ("Notice of Default") to Payor declaring the nature of the Event
of Default. Payor shall have five (5) business days to cure any Event of
Default, if such event of Default may be cured within such time. In the Event of
Default is not so cured, then Payor shall immediately (and in no event later
than two (2) days thereafter) pay all amounts due under this Note to Payee. Upon
the delivery by Payee of the Notice of Default to Payor, interest shall accrue
at the rate of 12% per annum until all principal and interest is paid in full
and shall be compounded monthly.
This Note shall be construed in accordance with and governed by the
laws of the State of New Jersey without regard to principles of conflicts of
law, and cannot be changed, discharged or terminated orally but only by an
instrument in writing signed by the party against whom enforcement of any
change, discharge or termination is sought.
PAYOR: FIRST MONTAUK FINANCIAL CORP.
By: /s/ Victor K. Kurylak
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Victor K. Kurylak
President & C.E.O.