UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): December 7, 2007
FIRST MONTAUK FINANCIAL CORP.
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(Exact name of registrant as specified in its charter)
COMMISSION FILE NUMBER: 0-6729
NEW JERSEY 22-1737915
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Parkway 109 Office Center
328 Newman Springs Road
Red Bank, NJ 07701
(Address and zip code of principal executive offices)
(732) 842-4700
(Registrant's telephone number, including area code
CHECK THE APPROPRIATE BOX BELOW IF THE FORM 8-K FILING IS INTENDED TO
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FOLLOWING PROVISIONS:
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement
On December 7, 2007, First Montauk Financial Corp. (the "Company" or
the "Registrant") entered into a note purchase agreement (the "Note Purchase
Agreement") with AEFC-FMFK Investment Corp. ("AEFC-IC") pursuant to which the
Company will issue to AEFC-IC a 10% Convertible Secured Note due December 31,
2008 for an aggregate principal amount up to $2,000,000 (the "Note"). The
transaction was completed on December 7, 2007 and the Company received from
AEFC-IC an initial payment of $1,000,000 under the Note. The Note Purchase
Agreement, the Note, related documents and related transactions are described
below under Item 2.03 and are incorporated by reference under this Item 1.01.
A copy of the press release issued by the Company dated December 10,
2007 announcing the execution of the Note Purchase Agreement and the
transactions contemplated thereby is attached hereto as Exhibit 99.1 and is
incorporated herein by reference.
In connection with, and concurrent with, the execution of the Note
Purchase Agreement, the Note and the related documents, the Company entered into
the First Amendment, dated as of December 7, 2007 ("First Amendment to the
Rights Agreement"), of the Rights Agreement, dated August 1, 2007, between the
Company and Continental Stock Transfer & Trust Company, as Rights Agent ("Rights
Agreement"). The Board of Directors previously adopted the Rights Agreement to
enable the Company to protect its shareholders against any acquisition in which
all shareholders of the Company are not treated equitably and do not receive
fair value of their shares of the Company's common stock ("Common Stock"). The
Rights Agreement was previously filed with the Securities and Exchange
Commission as an exhibit to Form 8-K, dated August 8, 2007. The First Amendment
to the Rights Agreement provides that AEFC-IC will not be deemed to be an
"Acquiring Person" under the Rights Agreement by reason of (i) the execution of
the Note Purchase Agreement; (ii) the issuance of the Note; (iii) the issuance
of shares of Common Stock upon the conversion of the Note into shares of common
stock of the Company ("Common Stock"); (iv) the issuance of any warrants to
AEFC-IC pursuant to the Note Purchase Agreement or any shares of Common Stock
upon exercise of such warrants; (v) the purchase by AEFC-IC of all or any of the
3,300,308 shares of Common Stock owned by Edward H. Okun or any affiliates of
Mr. Okun (collectively, the "Okun Parties"); (vi) the approval, execution or
delivery of any agreement with respect to the purchase by AEFC-IC of all or any
of the 3,300,308 shares of Common Stock owned by the Okun Parties; (vii) the
public or other announcement of the Note Purchase Agreement or any of the
transactions contemplated thereby, or the purchase by AEFC-IC of all or any of
the 3,300,308 shares of Common Stock owned by the Okun Parties; or (viii) the
consummation of the Note Purchase Agreement and any other transactions
contemplated by the Note Purchase Agreement or any agreement to purchase all or
any of the 3,300,308 shares of Common Stock owned by the Okun Parties.
The foregoing description of the First Amendment to the Rights
Agreement does not purport to be complete and is qualified in its entirety by
reference to the First Amendment to the Rights Agreement which is attached
hereto as Exhibit 10.2 and is incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation
under an Off-Balance Sheet Arrangement of a Registrant
On December 7, 2007, the Company entered into the Note Purchase
Agreement with AEFC-IC pursuant to which the Company will issue the Note to
AEFC-IC. The transaction was completed on December 7, 2007 and the Company
received from AEFC-IC an initial payment of $1,000,000 under the Note on such
date.
In conjunction with the initial funding, the Company issued to AEFC-IC
the Note of which $1,000,000 is outstanding as of December 7, 2007. The Note
will accrue interest on the unpaid principal amount at the rate of 10% per annum
which will be paid monthly in arrears on or before the 10th day of the month
following the interest accrual. The principal of the Note and all accrued and
unpaid interest thereon will be payable in full on December 31, 2008. The Note
is convertible into shares of Common Stock at $0.35 per share, as adjusted,
beginning July 1, 2008 if the Note is not prepaid prior to such date. The Note
is prepayable at any time prior to July 1, 2008 subject to an escalating
prepayment penalty based on the date of prepayment which is payable by the
Company in cash and the issuance of a warrant to purchase shares of Common Stock
at an exercise price of $0.35 per share, as adjusted (the "Prepayment Warrant").
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 AEFC-IC a warrant to purchase 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 (the "Contingent
Warrant"). The parties also executed a registration rights agreement
("Registration Rights Agreement").
The foregoing descriptions of the Note Purchase Agreement and the
related documents does not purport to be complete and is qualified in its
entirety by reference to the Note Purchase Agreement which is filed as Exhibit
10.1 attached hereto and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits
(c) Exhibits.
The following exhibits are filed herewith:
Exhibit No. Description of Document
10.1 Note Purchase Agreement dated as of December 7, 2007
by and between First Montauk Financial Corp. and
AEFC FMFK Investment Corp.
10.2 First Amendment to the Rights Agreement, dated as of
December 7, 2007, by and between First Montauk Financial
Corp. and Continental Stock Transfer & Trust Company, as
Rights Agent
99.1 Press Release dated December 10, 2007
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report on Form 8-K to be signed on its
behalf by the undersigned hereunto duly authorized.
Dated: December 13, 2007 First Montauk Financial Corp.
(Registrant)
By: /s/ Victor K. Kurylak
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Victor K. Kurylak
President and Chief Executive
Officer
EXHIBIT INDEX
Exhibit No. Description
10.1 Note Purchase Agreement dated as of December 7, 2007
by and between First Montauk Financial Corp. and
AEFC FMFK Investment Corp.
10.2 First Amendment to the Rights Agreement, dated as of
December 7, 2007, by and between First Montauk
Financial Corp. and Continental Stock Transfer &
Trust Company, as Rights Agent
99.1 Press Release dated December 10, 2007