Exhibit 10.31

SEPARATION AND CONSULTING AGREEMENT

(“Agreement”)

First Albany Companies Inc., its direct and indirect subsidiaries and affiliates
(collectively, the “Company”) and I, Steven R. Jenkins, agree as follows:

1.

Resignation of Employment, Offices, and Authorities.  I hereby resign my
employment with the Company and from all offices and administrative positions I
hold with the Company, including the offices set forth on Exhibit A to this
Agreement, effective as of November 3, 2005 (the “Effective Date”).  I will sign
the letter attached as Exhibit A to this Agreement confirming such resignations
on the same date I sign this Agreement.  I will receive my base salary through
the Effective Date.  I further agree and acknowledge that as of the Effective
Date, I will no longer have any authority to make or enter into any agreements,
commitments, or representations on behalf of the Company, and I will no longer
have any signing or other authority on the Company’s accounts, trusts, books, or
records.

2.

Separation Benefits.  In exchange for my execution of this Agreement and the
promises I made herein (and without any other obligation to do so), and provided
that I do not give the Company reason to stop or withhold such benefits under
Section 15, below, the Company will:

a.

Pay me $475,000 on or about July 1, 2006.

b.

Pay me $475, 000 on or about February 28, 2007.

c.

Pay for my continued group health insurance coverage, pursuant to Section 4980B
of the Internal Revenue Code (“COBRA”), if eligible, for a period ending on the
earlier of (i) December 31, 2006 or (ii) the date upon which I accept full-time
employment with another employer, after which date I may continue such coverage
at my own expense for the remainder of the COBRA continuation period pursuant to
applicable law.  I agree to notify the Company immediately upon your acceptance
of full-time employment with another employer.  Payment for my COBRA premiums
for January through June 2006, if owing under this paragraph, will be made to me
in a lump sum on or about July 1, 2006.  Payment for COBRA premiums for months
after June 2006, if owing under this paragraph, will be made to me on a monthly
basis.

d.

Permit the continued vesting of any Restricted Shares granted to me under the
terms of the 1999 Long-Term Incentive Plan (“1999 LTIP) or the 2001 Long-Term
Incentive Plan (“2001 LTIP”) through February 28, 2006, on which date all
unvested Restricted Shares held by me shall automatically become fully (i.e.,
100%) vested.

Except as modified in this Agreement, my rights under the Company’s 1989 Stock
Incentive Plan, the 1999 LTIP, the 2001 LTIP, 2005 Deferred Compensation Plan,
or any other Company benefit or incentive plans will remain as stated under the
terms and conditions of those plans.

3.

Release of Claims.  In exchange for the benefits provided to me under this
Agreement, I irrevocably and unconditionally forever release and discharge the
Company and its successors and assigns, and each of their current and former
employees, officers, directors, owners, shareholders, representatives,
administrators, fiduciaries, agents, insurers, and employee benefit programs
(and the trustees, administrators, fiduciaries and insurers of any such
programs) (collectively, the “Released Parties”) from all actual or potential,
known or unknown claims that I presently may have, including but not limited to
any arising out of my employment with, and separation from, the Company.  The
claims that I am releasing include, for example and without limitation, claims
under any federal, state or local common law, statute, regulation or law of any
type, including claims of employment discrimination or for breach of contract;
any claims arising under or otherwise related to any other written or oral
agreement between me and the Company (including but not limited to my offer
letter from the Company dated as of December 21, 1998, my Agreement with the
Company dated as of February 2, 1999 with attached Promissory Note, and any
amendments thereto); and claims for any other or further compensation, payments
or benefits of any kind from any Released Party.  I have not filed or caused to
be filed any lawsuit, complaint, charge, grievance or any other proceeding
against the Company with any court, agency or other tribunal and to the extent
permissible by law, I promise never to do so based on any claims released in
this section.

4.

Indemnification and Conversion Rights.  The general release set forth in Section
3, above, is not intended to, and will not operate to, waive or limit any
existing rights I may have (i) to indemnification as a former officer of the
Company under any liability insurance policy maintained by the Company; under
any charter, certificate of incorporation, by-law or resolution of the Company;
or as otherwise required by law; (ii) to convert my coverage under the Company’s
group life insurance policy to individual coverage, at my own expense; or (iii)
to roll over my 401(k) assets under the terms of the Company’s 401(k) plan.

5.

Consulting Relationship.  In further exchange for the benefits provided to me
under this Agreement, I agree to provide exclusive and full-time consulting
services to the Company from the date of this Agreement through December 31,
2005 (“Consulting Period”), in accordance with this Section 5.  I agree that the
benefits provided to me under this Agreement are adequate consideration for both
my release of claims under Section 3 and my promises under this Section 5.  I
understand and agree that this Section 5 does not constitute a hiring or
employment agreement and that during the Consulting Period, except as otherwise
provided for in this Agreement, I will not be eligible for, and I hereby waive
any claim to, wages, compensation, or any benefits provided to employees of the
Company.

a.

Consulting Services.  I shall render such financial and accounting-related
consulting services, at such time(s) and place(s), as may reasonably be
requested by the Board of Directors of First Albany Companies Inc. (the “Board”)
or its designee.  During the Consulting Period, when I am not performing
consulting services for the Company, I shall be prohibited from rendering
services to persons or entities outside the Company.  I will not be required or
expected to be on Company premises during the Consulting Period, except as may
be requested by the Board or its designee from time to time.

b.

Nature of Consulting Services.  During the Consulting Period, I agree to
continue to perform such duties and responsibilities as may be assigned to me by
the Board or its designee, including to cooperate in the effort to effect an
orderly, smooth, and efficient transition of my duties and responsibilities to
such individual(s) as the Company may direct; to fully cooperate with and act
consistent with the lawful directions of the Board and its designee; and to
refrain from making disparaging remarks to any person or entity, internal or
external, about the Company or its officers, or statements inconsistent with the
best interests of the Company and its officers.

c.

Consulting Fee.  During the Consulting Period, the Company shall pay me a
monthly fee equal to $25,000 (the “Consulting Fee”) for each full month I
provide consulting services in accordance with this Section 5.  I agree that I
will be solely responsible for any federal, state, or local employment, payroll,
income, or other withholdings or taxes due or owing in connection with the
Consulting Fee and that the Company will not withhold any such or other amounts
from the fee.  I further agree that I will be solely responsible for payment on
behalf of myself of any unemployment insurance, workers’ compensation insurance,
and/or liability insurance during the Consulting Period.  

d.

Expenses.  The Company agrees to reimburse me for reasonable and necessary
out-of-pocket business expenses incurred by me in connection with the
performance of my duties hereunder, provided that all such expenses shall
require prior written approval by the Board or its designee.

6.

No Further Benefits.  I understand and agree that the consideration provided to
me under the terms of this Agreement is in addition to anything of value to
which I am otherwise entitled.  I represent, warrant and acknowledge that the
Company owes me no wages, compensation, or payments or form of remuneration of
any kind or nature, including any salary, bonus or incentive compensation, other
than as specifically provided for in this Agreement or in a subsequent written
agreement between me and the Company, or as otherwise vested under the terms of
any Company benefit plan.  

7.

Confidential Information.  Except as required by subpoena, court order, or other
legal process, I agree to hold in strict confidence and that I will not (and
have not) at any time after first receiving a copy of this Agreement disclose,
nor use for my benefit or for the benefit of any other person or entity, any
information received from the Company which is confidential or proprietary and
(i) which has not been disclosed publicly by the Company, (ii) which is
otherwise not a matter of public knowledge, or (iii) which is a matter of public
knowledge but I know or have reason to know that such information became a
matter of public knowledge through an unauthorized disclosure.  Proprietary or
confidential information shall mean information that has been designated by the
Company as such, that the disclosure of which could be harmful to the Company,
or that the unauthorized disclosure or use of which would reduce the value of
such information to the Company.  Such information includes, without limitation,
the Company’s client lists, its trade secrets, any confidential information
about (or provided by) any client or prospective or former client of the
Company, non-public information concerning the Company’s business or financial
affairs, including its books and records, strategies, forecasts, commitments,
procedures, plans and prospects, compensation practices, financial products
developed by the Company that have not been publicly described or disclosed by
the Company, securities positions, trading strategies, or current or prospective
transactions or business of the Company and any material non-public information
about the Company, its clients or investors.

8.

Confidentiality of Agreement, Separation.  I agree to keep every term of this
Agreement confidential and will not (and have not) at any time after first
receiving a copy of this Agreement disclose the existence of this Agreement, the
fact that this agreement was being discussed or considered, or the substance or
contents of this Agreement to any person or entity other than my attorneys, tax
advisors and immediate family, or otherwise as required by subpoena, court
order, or other legal process.  I further agree that I will not make any
statement concerning my separation from the Company (or the circumstances
surrounding or leading up to my separation) to any reporter, research analyst,
or other member of the financial press or investment or financial services
communities without the prior written approval of the Company as to both the
fact and content of such statement.

9.

Disclosure of Confidential Information.  Upon service to me, or anyone acting on
my behalf, of any subpoena, court order, or other legal process requiring me to
disclose information described in Sections 7 or 8, above, I shall immediately
notify the Company of such service and of the content of any testimony or
information to be disclosed and shall cooperate fully with the Company to
lawfully resist disclosure of the information prior to actual compliance with
the request.  Beginning with the date the Company publicly discloses the
existence of this Agreement, it shall not be a violation of Sections 7 or 8,
above, for me to acknowledge that this Agreement exists and to inform others of
the existence and location of such public disclosure.

10.

Covenant Not to Solicit Company Employees or Clients.  I agree that during the
Consulting Period and for one year after the expiration of the Consulting Period
(together, the “Restricted Period”), without the prior written consent of the
Company, I will not, directly or indirectly, whether for myself or for any other
individual or entity (other than any entity related to the Company), (a) hire,
solicit, or endeavor to hire away or solicit away from the Company, or otherwise
induce or encourage to terminate their relationship with the Company, any person
whom the Company employs or otherwise engages to perform services, or has
employed or engaged to perform services within the 12-month period immediately
prior to the Effective Date, including, but not limited to, any consultant or
contractor, or (b) solicit, attempt to solicit, or assist others to solicit any
customer, client or business partner of the Company with whom I had dealings or
about whom I acquired proprietary information during my employment to invest in
or do business with any person or entity other than the Company, or otherwise
induce or encourage such customer, client or business partner to terminate their
business relationship with the Company.

11.

Covenant Not To Interfere.  I agree that during the Restricted Period I will not
(a) contact any employee of the Company with respect to any matter related to
the business of the Company, except for contact with the Company’s Board or its
designee in connection with the administration of this Agreement or the
performance of my consulting duties hereunder, (b) visit the premises of the
Company other than with the express prior written consent of the Company’s Board
or its designee, or (c) otherwise interfere with business of the Company.  I
further agree that I will not otherwise interfere with or disrupt the Company’s
relationship with any of its employees, consultants or contractors.

12.

Covenant Not to Disparage.  Except as required by subpoena, court order, or
other legal process (in which case I agree to notify the Company of such
subpoena, court order, or other legal process as early as reasonably possible),
I agree not to criticize, denigrate, or otherwise disparage the Company or any
of its directors or executive officers.  The Company agrees that its Board
(other than Art Murphy) and its Chief Executive Officer (“CEO”) will not
publicly criticize, denigrate, or otherwise disparage me.  Nothing in this
section is intended to prohibit me from responding to any disparaging remarks
made by Art Murphy.

13.

Return of Company Property; No Affiliation.  Effective immediately, I will
return to the Company all files, documents, records, and copies of the foregoing
(whether in hard or electronic form), Company-provided computer and telephone
equipment, PDAs, pagers, credit cards, keys, building passes, security passes,
access or identification cards, and any other property of the Company in my
possession or control.  I further agree that, following execution of this
Agreement, I will not hold myself out publicly or otherwise (including as a
member of any club or association) as affiliated with the Company and that I
will take all reasonable and necessary steps to notify any clubs or associations
of which I am a Company-affiliated member that I am no longer affiliated with
the Company.

14.

Cooperation.  I agree that I will assist and cooperate with the Company in
connection with the defense or prosecution of any claim that may be made against
or by the Company, or in connection with any ongoing or future investigation or
dispute or claim of any kind involving the Company, including any proceeding
before any arbitral, administrative, judicial, legislative, or other body or
agency, including testifying in any proceeding to the extent such claims,
investigations or proceedings are related to services performed or required to
be performed by me, knowledge possessed by me, or any act or omission by me.  I
further agree to perform all acts and execute and deliver any documents that may
be reasonably necessary to carry out the provisions of this Section 14.  The
Company agrees to reimburse me for any reasonable and necessary out-of-pocket
expenses I may incur in complying with this Section 14 at the request of the
Company, provided that such expenses are not incurred without the Company’s
prior written approval.

15.

Violations.  I agree that (a) if I violate any provision of Sections 7 through
13 of this Agreement or (b) if at any time after the Effective Date the Board
believes in good faith, following an investigation, that I have engaged in or
ratified conduct with respect to  the assets, books, records and accounts, the
internal accounting controls, or the financial statements of the Company or  its
subsidiaries  that (i) is fraudulent, (ii) violates federal or state securities
laws or regulations of self-regulatory organizations, (iii) departs from
generally accepted accounting principles, or (iv) is otherwise unlawful, in
addition to any other rights and remedies the Company might have (including
monetary damages), (x) all payments and benefits under Section 2 of this
Agreement will cease immediately and I will not be entitled to any further
payments or benefits of any kind from the Company, including under Section 2,
(y) payment of the Consulting Fee under Section 5 will cease immediately and my
consulting relationship with the Company will terminate immediately, and (z) the
Company shall be entitled to obtain an injunction to be issued by any court of
competent jurisdiction (notwithstanding any existing agreement or obligation to
arbitrate between or on the part of the parties) restraining me from committing
or continuing any such violation(s), without the need to post any bond or for
any other undertaking or prove the inadequacy of money damages.  I agree and
recognize that the covenants contained in Sections 7 through 13 are of the
essence of this Agreement.  Nothing in this section (or this Agreement) is
intended to limit the rights or obligations of either party under the rules of
any self-regulatory organization to which they are otherwise bound, including
with respect to the arbitration of claims.

16.

Letter of Reference.  The Company agrees to provide me with a letter of
reference in a form mutually agreeable to me and the Company.

17.

No Admission of Guilt.  This Agreement is not an admission of guilt or
wrongdoing by either me or the Company.

18.

Entire Agreement.  This Agreement constitutes the entire agreement between me
and the Company with respect to the subject matter hereof.  I affirm that, in
entering into this Agreement, I am not relying upon any oral or written promise
or statement made by anyone at any time on behalf of the Company except as
expressly set forth herein.

19.

Notice.  I agree to send all communications to the Company in writing, by
certified or overnight mail, addressed as follows (or in any other manner the
Company notifies me to use):

First Albany Companies Inc.

Attention:  Chief Executive Officer

677 Broadway
Albany, New York 12207

With a copy to:

Chair of the Audit Committee, Board of Directors

First Albany Companies Inc.

677 Broadway
Albany, New York 12207

The Company agrees to send all communications to me in writing, by certified or
overnight mail, addressed to my most recent address in the Company’s records (or
in any other manner I notify the Company to use).

20.

Modifications.  No provisions of this Agreement may be modified, waived, amended
or discharged except by a written document signed by me and a duly authorized
Company officer.

21.

Successors.  This Agreement binds my heirs, administrators, representatives,
executors, successors, and assigns, and will inure to the benefit of the Company
and the Released Parties and their respective heirs, administrators,
representatives, executors, successors, and assigns.

22.

Validity and Waiver; Severability.  The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.  A waiver of any conditions or provisions of this Agreement in a given
instance shall not be deemed a waiver of such conditions or provisions at any
other time.  If any of the provisions, terms or clauses of this Agreement are
declared illegal, unenforceable or ineffective in a legal forum, those
provisions, terms and clauses shall be deemed severable, such that all other
provisions, terms and clauses of this Agreement shall remain valid and binding
upon both parties.

23.

Choice of Law and Venue.  The validity, interpretation, construction, and
performance of this Agreement shall be governed by the internal laws of the
State of New York (excluding any that mandate the use of another jurisdiction’s
laws).

24.

Interpretation.  This Agreement shall be construed as a whole according to its
fair meaning, and shall not be construed strictly for or against me or the
Company.  Unless the context indicates otherwise, the singular or plural number
shall be deemed to include the other.  Section headings are intended solely for
convenience of reference only and shall not be a part of this Agreement for any
other purpose.

25.

Tax Withholding.  Any compensation or benefits payable under this Agreement
shall be subject to applicable federal, state and local withholding taxes and
allowances, where appropriate.  I agree and acknowledge that (i) I shall bear
sole responsibility for payment of any federal, state, or local income or other
taxes or related penalties associated with my current or future receipt of any
amounts pursuant to this Agreement, and (ii) the Company shall have no
obligation to mitigate or hold me harmless from any such tax liabilities.

26.

Authority to Sign.  Each party represents that the individual signing this
Agreement on its behalf has the authority to do so and to so legally bind the
party.  The Company represents that the execution, delivery and performance of
this Agreement by the Company has been fully and validly authorized by all
necessary corporate action.

[AGREEMENT CONTINUES ON NEXT PAGE]

27.

Review of Agreement.  I have carefully read this Agreement, fully understand
what it means, and am entering into it voluntarily.

Dated:

November 3, 2005

/S/STEVEN R. JENKINS

STEVEN R. JENKINS

Dated:

November 3, 2005

FIRST ALBANY COMPANIES INC.

/S/ ARTHUR J. ROTH

By:

Arthur J. Roth

Title:

Director and Chair, Audit Committee

November 3, 2005

Board of Directors

First Albany Companies Inc.

677 Broadway
Albany, New York 12207

To the Members of the Board of Directors:

I hereby resign from the following offices, and from any and all other offices I
hold with First Albany Companies Inc., its subsidiaries and affiliates, as of
the date hereof:

•

Vice President and Chief Financial Officer of First Albany Companies Inc.

•

Executive Managing Director, Chief Financial Officer, and Chief Operating
Officer of First Albany Capital Inc.

•

Vice President of FA Asset Management Inc.

•

Chief Financial Officer of Descap Securities

•

Vice President and Treasurer of FAC Management Corp.

Very truly yours,

/S/ Steven R. Jenkins

Steven R. Jenkins