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Exhibit 10.42

[FORM OF RESTRICTED STOCK AGREEMENT]

RESTRICTED SHARE AWARD AGREEMENT

pursuant to the

FIRST ALBANY COMPANIES INC.

1999 LONG-TERM INCENTIVE PLAN

*  *  *  *  *

Participant:

Grant Date:

Number of Restricted Shares granted:  

*  *  *  *  *

THIS AWARD AGREEMENT (this “Agreement”), dated as of the Grant Date specified
above, is entered into by and between First Albany Companies Inc., (the
“Company”), and the Participant specified above, pursuant to the First Albany
Companies Inc. 1999 Long-Term Incentive Plan as in effect and as amended from
time to time (the “Plan”); and

WHEREAS, it has been determined under the Plan that it would be in the best
interests of the Company to grant the Restricted Shares provided herein to the
Participant (i) as an inducement to commence employment with, or to remain in
the employment of, the Company (and/or one of its Subsidiaries), and (ii) as an
incentive for increased effort during such service;

NOW, THEREFORE, in consideration of the mutual covenants and premises
hereinafter set forth and for other good and valuable consideration, the parties
hereto hereby mutually covenant and agree as follows:

1.

Incorporation By Reference; Plan Document Receipt.  This Agreement is subject in
all respects to the terms and provisions of the Plan (including, without
limitation, any amendments thereto adopted at any time and from time to time and
which are expressly intended to apply to the grant of the award provided for
herein), all of which terms and provisions are made a part of and incorporated
in this Agreement as if they were expressly set forth herein.  Any capitalized
term not defined in this Agreement shall have the same meaning as is ascribed
thereto in the Plan.  The Participant hereby acknowledges receipt of a true copy
of the Plan and that the Participant has read the Plan carefully and fully
understands its content.  In the event of a conflict between the terms of this
Agreement and the terms of the Plan, the terms of the Plan shall control.

2.

Grant of Restricted Share Award.  The Company hereby grants to the Participant,
as of the Grant Date specified above, the number of Restricted Shares specified
above.  Except as otherwise provided by Section 14.2 of the Plan, the
Participant agrees and understands that nothing contained in this Agreement
provides, or is intended to provide, the Participant with any protection against
potential future dilution of the Participant’s stockholder interest in the
Company for any reason.

1.

Vesting.

3.1

The Restricted Shares subject to this grant shall become unrestricted and vested
as follows:

3.2

If the Participant’s employment with the Company and its Subsidiaries terminates
for any reason (other than due to death, Disability or Retirement) prior to the
vesting of the Restricted Shares, the Restricted Shares shall immediately be
cancelled and the Participant (and such Participant’s estate, designated
beneficiary or other legal representative) shall forfeit any rights or interests
in and with respect to any such Restricted Shares.  If the Participant’s
employment terminates due to death, Disability or Retirement, the Participant
shall become 100% vested in any such Restricted Shares as of the date of such
termination.

4.

Change of Control.  The following provisions shall apply to the Restricted
Shares granted hereunder in favor of the provisions of Article 15 of the Plan:

4.1

In the event of an Involuntary Termination Upon a Change of Control or a
Resignation for Good Reason Upon a Change of Control, 100% of any unvested
Restricted Shares subject to this grant shall immediately become fully vested
and transferable as of the Participant’s date of termination.

4.2

In the event the Participant’s employment is terminated in a manner described in
Section 15.3 of the Plan, 100% of any unvested Restricted Shares subject to this
grant shall immediately become fully vested and transferable as of the effective
date of the Change of Control.

4.3

The following terms used in this Section 4 shall have the meanings set forth
below:

•

“Involuntary Termination Upon a Change of Control” shall mean the termination of
the employment of the Participant by the Company without Cause at any time
during the one-year period beginning on the effective date of a Change of
Control.  “Involuntary Termination Upon Change of Control” shall not include any
termination of the Participant’s employment (a) for Cause; (b) as a result of
the Participant’s Disability; (c) as a result of the Participant’s death; or (d)
by the Participant for any reason.

•

“Resignation for Good Reason Upon a Change of Control” shall occur upon the
receipt by the Company of the Participant’s notice specified below, if any of
the following “Events” occur without the Participant’s prior written consent
during the one-year period beginning on the effective date of a Change of
Control: (A) The substantial reduction of (1) the Participant’s aggregate base
salary, (2) the Participant’s Incentive Pay Eligibility, or (3) the benefits for
which the Participant was eligible, in each case, in effect immediately prior to
a Change of Control; unless, however, in the case of subclause (3) only, such
reduction is due to an across-the-board reduction applicable to all senior
executives of the Company or any successor, and the benefits available to the
Participant after such across-the-board reduction are no less favorable than
those available to similarly-situated executives of the Company and such
successor; or (B) The permanent relocation of the Participant’s primary
workplace to a location more than thirty (30) miles away from the Participant’s
workplace in effect immediately prior to a Change of Control; and within sixty
(60) days after any such Event, the Participant provides written notice to the
Company describing with reasonable specificity the Event and stating his/her
intention to resign from employment due to such Event.

•

“Cause” shall mean any one or more of the following:  (i) the Participant’s
willful failure or refusal (except due to Disability or a condition reasonably
likely to be deemed a Disability with the passage of time) to perform
substantially his/her duties on behalf of the Company for a period of thirty
(30) days after receiving written notice identifying in reasonable detail the
nature of such failure or refusal; (ii) the Participant’s conviction of, entry
of a plea of guilty or nolo contendere to, or admission of guilt in connection
with a felony; (iii) disloyalty, willful misconduct or breach of fiduciary duty
by the Participant which causes material harm to the Company; or (iv) the
Participant’s willful violation of any confidentiality, developments or
non-competition agreement which causes material harm to the Company.  

•

“Disability” shall mean any physical or mental disability that renders the
Participant unable to perform his/her essential job responsibilities for a
cumulative period of 180 days in any twelve-month period, where such disability
cannot be reasonably accommodated absent undue hardship.

•

“Incentive Pay Eligibility” shall mean the aggregate amount of any cash
compensation derived from any bonus, incentive, performance, profit-sharing or
similar agreement, policy, plan or arrangement of the Company that the
Participant is eligible to receive based upon the attainment of 100% target or
quota with respect to any one year.

5.

Delivery of Restricted Shares; Forfeiture Events.

5.1

Subject to Section 8.4 of the Plan, after the lapse of the restrictions in
respect of a grant of Restricted Shares, the Participant shall be entitled to
receive unrestricted shares of Common Stock.

5.2

Unless otherwise determined by the Committee, this Restricted Share Award shall
terminate and be of no force or effect in accordance with and to the extent
provided by the terms and provisions of Section 12 of the Plan.

5.3

Intentionally left blank.

6.

Non-transferability.  Restricted Shares, and any rights and interests with
respect thereto, issued under this Agreement and the Plan shall not, prior to
vesting, be sold, exchanged, transferred, assigned or otherwise disposed of in
any way by the Participant (or any beneficiary(ies) of the Participant), other
than by testamentary disposition by the Participant or the laws of descent and
distribution.  Any such Restricted Shares, and any rights and interests with
respect thereto, shall not, prior to vesting, be pledged, encumbered or
otherwise hypothecated in any way by the Participant (or any beneficiary(ies) of
the Participant) and shall not, prior to vesting, be subject to execution,
attachment or similar legal process.  Any attempt to sell, exchange, transfer,
assign, pledge, encumber or otherwise dispose of or hypothecate in any way any
of the Restricted Shares, or the levy of any execution, attachment or similar
legal process upon the Restricted Shares, contrary to the terms and provisions
of this Agreement and/or the Plan shall be null and void and without legal force
or effect.

7.

Entire Agreement; Amendment.  This Agreement contains the entire agreement
between the parties hereto with respect to the subject matter contained herein,
and supersedes all prior agreements or prior understandings, whether written or
oral, between the parties relating to such subject matter.  This Agreement may
only be modified or amended by a writing signed by both the Company and the
Participant.

8.

Notices.  Any notice which may be required or permitted under this Agreement
shall be in writing and shall be delivered in person, or via facsimile
transmission, overnight courier service or certified mail, return receipt
requested, postage prepaid, properly addressed as follows:

8.1

If such notice is to the Company, to the attention of the Secretary of First
Albany Companies Inc., 677 Broadway, Albany, New York, 12207, or at such other
address as the Company, by notice to the Participant, shall designate in writing
from time to time.

8.2

If such notice is to the Participant, at his or her address as shown on the
Company’s records, or at such other address as the Participant, by notice to the
Company, shall designate in writing from time to time.

9.

Governing Law.  This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without reference to the principles of
conflict of laws thereof.  

10.

Compliance with Laws.  The issuance of the Restricted Shares or Common Stock
pursuant to this Agreement shall be subject to, and shall comply with, any
applicable requirements of any federal and state securities laws, rules and
regulations (including, without limitation, the provisions of the Securities Act
of 1933, the Exchange Act and the respective rules and regulations promulgated
thereunder) and any other law or regulation applicable thereto.  The Company
shall not be obligated to issue any of the Restricted Shares or Common Stock
pursuant to this Agreement if such issuance would violate any such requirements.

11.

Binding Agreement; Assignment.  This Agreement shall inure to the benefit of, be
binding upon, and be enforceable by the Company and its successors and assigns.
 The Participant shall not assign any part of this Agreement without the prior
express written consent of the Company.

12.

Counterparts.  This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original, but all of which shall constitute
one and the same instrument.

13.

Headings.  The titles and headings of the various sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed to
be a part of this Agreement.

14.

Further Assurances.  Each party hereto shall do and perform (or shall cause to
be done and performed) all such further acts and shall execute and deliver all
such other agreements, certificates, instruments and documents as any other
party hereto reasonably may request in order to carry out the intent and
accomplish the purposes of this Agreement and the Plan and the consummation of
the transactions contemplated thereunder.

15.

Severability.  The invalidity or unenforceability of any provisions of this
Agreement in any jurisdiction shall not affect the validity, legality or
enforceability of the remainder of this Agreement in such jurisdiction or the
validity, legality or enforceability of any provision of this Agreement in any
other jurisdiction, it being intended that all rights and obligations of the
parties hereunder shall be enforceable to the fullest extent permitted by law.

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
duly authorized officer, and the Participant has hereunto set his hand, all as
of the Grant Date specified above.

FIRST ALBANY COMPANIES INC.

By:

___________________________

___________________________

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