<PAGE>

                                                                    EXHIBIT 4(e)

                           FIRST ALBANY COMPANIES INC.

                           DEFERRED COMPENSATION PLAN

                                   (NON-ERISA)



                            EFFECTIVE JANUARY 1, 2002


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                                TABLE OF CONTENTS
<TABLE>
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                                                                              Page
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Article 1

      Definitions...........................................................    1


Article 2

      Eligibility, Selection, Enrollment....................................    7
      2.01   Eligibility; Selection by Committee............................    7
      2.02   Enrollment Requirements........................................    8
      2.03  Commencement of Participation...................................    8
      2.04  Subsequent Elections............................................    8
      2.05  Termination of Participation and/or Deferrals...................    8
Article 3

      Participant Deferrals, Commitments,
         Company Match, Investment Adjustments, Taxes and Vesting ..........    9
      3.01  Participant Deferrals...........................................    9
            (a)   Deferral Election.........................................    9
            (b)   Minimum Deferral..........................................    9
                  (i)   Minimum.............................................    9
                  (ii)  Short Plan Year.....................................   10
            (c)   Maximum Deferral..........................................   10
            (d)   Deferral Designations.....................................   10
                  (i)   Base Annual Salary..................................   10
                  (ii)  Bonus Amounts.......................................   10
                  (iii) Commission Payouts. ................................   10
      3.02  Annual Company Match............................................   11
      3.03  Annual Discretionary Allocation.................................   11
      3.04  Selection of Investment Benchmarks..............................   11
      3.05  Adjustment of Plan Accounts.....................................   12
      3.06  FICA and Other Taxes............................................   12
            (a)   Annual Deferral Amounts...................................   12
            (b)   Distributions.............................................   13
      [3.07 Vesting.........................................................   13
            (a)   Forfeiture of Unvested Amounts............................   13
            (b)   Vesting of Amounts........................................   13
            (c)   Vesting After Covered Termination.........................   13
            (d)   Vesting Upon Plan Termination.............................   14
</TABLE>


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<TABLE>
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            (e)   Acceleration of Vesting by Committee......................   14


Article 4

      Suspension of Deferrals...............................................   14
      4.01  Unforeseeable Financial Emergencies.............................   14
      4.02  Disability......................................................   14
      4.03  Resumption of Deferrals.........................................   14


Article 5

      Distribution of Plan Accounts.........................................   14
      5.01  Distribution Elections..........................................   14
            (a)   Initial Elections.........................................   14
            (b)   Subsequent Elections......................................   15
      5.02  Withdrawal in the Event of an Unforeseeable Financial Emergency.   15
      5.03  Distribution Restrictions.......................................   16
            (a)   Restricted Investment Benchmarks..........................   16
            (b)   Subordinated Amounts......................................   16
      5.04  Valuation of Plan Accounts Pending Distribution.................   16
      5.05  Form of Payment.................................................   16


Article 6

      Survivor Benefit......................................................   16
      6.01  Survivor Benefit................................................   17
      6.02  Payment of Survivor Benefit.....................................   17


Article 7

      Disability Benefit....................................................   17
      7.01  Disability Benefit..............................................   17


Article 8

      Beneficiary Designation...............................................   17
      8.01  Beneficiary.....................................................   17
      8.02  Beneficiary Designation; Change; Spousal Consent................   17
      8.03  Acknowledgment..................................................   18
      8.04  No Beneficiary Designation......................................   18
      8.05  Doubt as to Beneficiary.........................................   18
      8.06  Discharge of Obligations........................................   18

</TABLE>

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                                       2
<TABLE>
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Article 9

      Leave of Absence......................................................   18
      9.01  Paid Leave of Absence...........................................   18
      9.02  Unpaid Leave of Absence.........................................   18


Article 10

      Termination, Amendment or Modification................................   19
      10.01 Termination ....................................................   19
      10.02 Amendment ......................................................   19
      10.03 Effect of Payment ..............................................   19


Article 11

      Administration........................................................   20
      11.01 Committee Duties ...............................................   20
      11.02 Agents .........................................................   20
      11.03 Binding Effect of Decisions ....................................   20
      11.04 Indemnity of Committee .........................................   20
      11.05 Employer Information. ..........................................   20


Article 12

      Other Benefits and Agreements.........................................   21


Article 13

      Claims Procedures.....................................................   21
      13.01 Presentation of Claim ..........................................   21
      13.02 Notification of Decision .......................................   21
      13.03 Review of a Denied Claim .......................................   22
      13.04 Decision on Review .............................................   22
      13.05 Arbitration ....................................................   22


Article 14

      Trust.................................................................   23
      14.01 Establishment of the Trust .....................................   23
      14.02 Interrelationship of the Plan and the Trust ....................   23
      14.03 Distributions From the Trust. ..................................   23
</TABLE>


                                      3
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<TABLE>
<S>                                                                           <C>
Article 15

      Miscellaneous ........................................................   23
      15.01 Status of Plan .................................................   23
      15.02 Unsecured General Creditor .....................................   23
      15.03 Employer's Liability ...........................................   24
      15.04 Nonassignability ...............................................   24
      15.05 Not a Contract of Employment ...................................   24
      15.06 Furnishing Information .........................................   24
      15.07 Terms ..........................................................   24
      15.08 Captions .......................................................   24
      15.09 Governing Law ..................................................   24
      15.10 Notice .........................................................   25
      15.11 Successors .....................................................   25
      15.12 Spouse's Interest ..............................................   25
      15.13 Validity .......................................................   25
      15.14 Incompetent ....................................................   25
      15.15 Distribution in the Event of Taxation. .........................   25
      15.16 Insurance ......................................................   26
      15.17 Legal Fees To Enforce Rights After Change in Control. ..........   26
</TABLE>

                                       4
<PAGE>



                           FIRST ALBANY COMPANIES INC.
                           DEFERRED COMPENSATION PLAN
                                   (NON-ERISA)


                            Effective January 1, 2002


                                     PURPOSE

            The purpose of this Plan is to provide eligible Employees the
opportunity to defer receipt of a portion of their salary, bonuses and
commissions in order to defer taxes on such compensation and save for planned
events during employment, and to provide incentives, in the form of Matching
Contributions, for such Employees to remain in the employ of the Company during
periods of deferral. This Plan is not intended to provide a source of retirement
income to Employees. This Plan shall be unfunded for tax purposes and is exempt
from ERISA.

                                    Article 1

                                   Definitions

            For purposes of this Plan, unless otherwise clearly apparent from
the context, the following phrases or terms shall have the meanings indicated:

1.1     "Aggregate Vested Balance" or "Aggregate Vested Benefit" shall mean,
        with respect to the Plan Accounts of any Participant as of a given date,
        the sum of the amounts that have become vested under all of the
        Participant's Plan Accounts, as adjusted to reflect all applicable
        Investment Adjustments and all prior withdrawals and distributions, in
        accordance with Article 3 of the Plan and the provisions of the
        applicable Enrollment Forms.

1.2     "Amended Annual Election Form" shall mean the Amended Annual Election
        Form required by the Committee to be signed and submitted by a
        Participant to effect a permitted change in the elections previously
        made by the Participant under any Annual Election Form.

1.3     "Amended Distribution Election Form" shall mean the Amended Distribution
        Election Form required by the Committee to be signed and submitted by a
        Participant to effect a permitted change in the Distribution Election
        previously made by the Participant under any Distribution Election Form.

1.4     "Annual Company Match" shall mean the aggregate amount credited by the
        Company to a Participant in respect of a particular Plan Year under
        Section 3.02.

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1.5     "Annual Company Match Account" shall mean a Participant's Annual Company
        Match for a Plan Year, as adjusted to reflect all applicable Investment
        Adjustments and all prior distributions and withdrawals.

1.6     "Annual Deferral Account" shall mean a Participant's Annual Participant
        Deferral for a Plan Year, as adjusted to reflect all applicable
        Investment Adjustments and all prior distributions and withdrawals.

1.7     "Annual Deferral Agreement" shall mean the Annual Deferral Agreement
        required by the Committee to be signed and submitted by a Participant in
        connection with the Participant's deferral election with respect to a
        given Plan Year.

1.8     "Annual Discretionary Allocation" shall mean the aggregate amount
        credited by the Company to a Participant in respect of a particular Plan
        Year under Section 3.03.

1.9     "Annual Discretionary Allocation Account" shall mean a Participant's
        Annual Discretionary Allocation for a Plan Year, as adjusted to reflect
        all applicable Investment Adjustments and all prior distributions and
        withdrawals.

1.10    "Annual Election Form" shall mean the Annual Election Form required by
        the Committee to be signed and submitted by a Participant in connection
        with the Participant's deferral election with respect to a given Plan
        Year.

1.11    "Annual Participant Deferral" shall mean the aggregate amount deferred
        by a Participant in respect of a particular Plan Year under Section
        3.01.

1.12    "Base Annual Salary" shall mean the annual base salary payable to a
        Participant by an Employer in cash in respect of services rendered
        during a Plan Year, including any Elective Deductions, but excluding
        Bonus Amounts, Commission Payouts or other additional incentives or
        awards payable to the Participant.

1.13    "Beneficiary" shall mean one or more persons, trusts, estates or other
        entities, designated in accordance with Article 10, that are entitled to
        receive a Participant's Aggregate Account Balance under this Plan in the
        event of the Participant's death.

1.14    "Beneficiary Designation Form" shall mean the Beneficiary Designation
        Form or Amended Beneficiary Designation Form last signed and submitted
        by a Participant and accepted by the Committee.

1.15    "Board" shall mean the board of directors of the Company.

1.16    "Bonus Amounts" shall mean Discretionary Bonus Amounts and Guaranteed
        Bonus Amounts.

1.17    "Change in Control" shall mean the earliest to occur of the following
        events:

                                       2
<PAGE>

        (a)   The consummation of any transaction or series of transactions as a
              result of which any "Person" (as the term person is used for
              purposes of Section 13(d) or 14(d) of the Securities Exchange Act
              of 1934, as amended (the "Exchange Act")) other than an "Excluded
              Person" (as hereinafter defined) has or obtains ownership or
              control, directly or indirectly, of fifty percent (50%) or more of
              the combined voting power of all securities of the Company or any
              successor or surviving corporation of any merger, consolidation or
              reorganization involving the Company (the "Voting Securities").
              The term "Excluded Person" means any one or more of the following:
              (i) the Company or any majority-owned subsidiary of the Company,
              (ii) an employee benefit plan (or a trust forming a part thereof)
              maintained by (A) the Company or (B) any majority-owned subsidiary
              of the Company, (iii) any Person who as of the initial effective
              date of this Plan owned or controlled, directly or indirectly, ten
              percent (10%) or more of the then outstanding Voting Securities,
              or any individual, entity or group that was part of such a Person;

        (b)   A merger, consolidation or reorganization involving the Company as
              a result of which the holders of Voting Securities immediately
              before such merger, consolidation or reorganization do not
              immediately own or control, directly or indirectly, at least
              fifty percent (50%) of the Voting Securities in substantially the
              same proportion as their ownership or control of the Voting
              Securities immediately before such merger, consolidation or
              reorganization; or

        (c)   The sale or other disposition of all or substantially all of the
              assets of the Company to any Person (other than a transfer to a
              majority-owned subsidiary of the Company).

1.18    "Claimant" shall have the meaning set forth in Section 13.1.

1.19    "Code" shall mean the Internal Revenue Code of 1986, as it may be
        amended from time to time.

1.20    "Commission Payouts" shall mean the amounts payable to a Participant by
        an Employer in cash in respect of services rendered during a Plan Year
        under any commission scheme or commission draw arrangement, including
        any Elective Deductions, but excluding Bonus Amounts, stock-related
        awards and other non-monetary incentives.

1.21    "Committee" shall mean the committee described in Article 11.

1.22    "Company" shall mean First Albany Companies Inc., a New York
        corporation, and any successor to all or substantially all of its assets
        or business.

1.23    "Company Stock" shall mean the common stock, par value $.01 per share,
        of the Company.

                                       3
<PAGE>

1.24    "Covered Termination" shall mean the Participant's Termination of
        Employment within two (2) years following a Change in Control as a
        result of the Participant's resignation for good reason or a termination
        by the Participant's Employer without cause. For these purposes a
        Participant's resignation for good reason shall mean a Participant's
        resignation following (i) a diminution in the Participant's status,
        title, position or responsibilities, or an assignment to the Participant
        of duties inconsistent with the Participant's status, title or position
        other than for cause or (ii) a reduction of more than ten percent (10%)
        in the Participant's aggregate annualized compensation rate solely as a
        result of a change adopted unilaterally by the Company. A Participant's
        resignation shall not be treated as a resignation for good reason unless
        it occurs after one of the foregoing events and the Participant provides
        the Employer with written notice of the event within six (6) months of
        the occurrence of the event and within seven (7) days before the
        effective date of the Participant's resignation and the Employer shall
        not have cured such event prior to such resignation. A termination by
        the Participant's Employer without cause shall mean an involuntary
        termination of the Participant's employment by Participant's Employer
        other than a termination for cause. For this purpose, a termination for
        cause includes any termination by reason of the Participant's (i)
        willful and continued failure to perform the duties of his or her
        position after receiving notice of such failure and being given
        reasonable opportunity to cure such failure; (ii) willful misconduct
        which is demonstrably and materially injurious to the Employer; (iii)
        conviction of a felony; or (iv) material breach of applicable federal or
        state securities laws, regulations or licensing requirements or the
        applicable rules or regulations of any self-regulatory body. No act or
        failure to act on the part of a Participant shall be considered
        "willful" unless it is done or omitted to be done in bad faith or
        without reasonable belief that the action or omission was in the best
        interest of the Employer. No termination shall be considered a
        termination for cause unless it is effected by a written notice to the
        Participant stating in detail the grounds constituting cause.

1.25    "Disability" shall mean a period of disability during which a
        Participant qualifies for total permanent disability benefits under the
        Participant's Employer's long-term disability plan, or, if a Participant
        does not participate in such a plan, a period of disability during which
        the Participant would have qualified for total permanent disability
        benefits under such a plan had the Participant been a participant in
        such a plan, as determined in the sole discretion of the Committee. If
        the Participant's Employer does not sponsor such a plan, or discontinues
        to sponsor such a plan, Disability shall be determined by the Committee
        in its sole discretion.

1.26    "Disability Benefit" shall mean the benefit set forth in Article 9.

1.27    "Discretionary Bonus Amounts" shall mean such amounts that are
        determined in the sole discretion of an Employer and are payable in cash
        to a Participant in respect of services rendered during a Plan Year
        under any bonus or incentive plan or arrangement of an Employer,
        including any Elective Deductions, but excluding Commission Payouts,
        stock-related awards and other non-monetary incentives.

                                       4
<PAGE>

1.28    "Distribution Election" shall mean an election made in accordance with
        Section 5.01.

1.29    "Distribution Election Form" shall mean the Distribution Election Form
        required by the Committee to be signed and submitted by a Participant
        with respect to a Distribution Election.

1.30    "Election Form" shall mean, with respect to any Plan Account, the Annual
        Election Form or the Amended Annual Election Form last signed and
        submitted by the Participant and accepted by the Committee with respect
        to that Plan Account.

1.31    "Elective Deductions" shall mean deductions made from a Participant's
        Base Annual Salary, Bonus Amounts and Commission Payouts for amounts
        voluntarily deferred or contributed by the Participant pursuant to all
        qualified and non-qualified compensation deferral plans, including,
        without limitation, amounts not included in the Participant's gross
        income under Code Sections 125, 132(f)(4), 402(e)(3) and 402(h),
        provided, however, that all such amounts would have been payable in cash
        to the Employee had there been no such plan.

1.32    "Employee" shall mean a person who is an employee of any Employer.

1.33    "Employer" shall mean the Company and/or any of its subsidiaries (now in
        existence or hereafter formed or acquired) that have been selected by
        the Board to participate in the Plan and have adopted the Plan as a
        sponsor.

1.34    "Enrollment Forms" shall mean, for any Plan Year, the Annual Deferral
        Agreement, the Annual Election Form, the Distribution Election Form, the
        Beneficiary Designation Form, the Subordination Agreement and any other
        forms or documents which may be required of a Participant by the
        Committee, in its sole discretion.

1.35    "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
        as it may be amended from time to time.

1.36    "Guaranteed Bonus Amounts" shall mean predetermined amounts that are not
        subject to Employer discretion and are payable in cash to a Participant
        in respect of services rendered during a Plan Year under any bonus or
        incentive plan or arrangement of an Employer, including any Elective
        Deductions, but excluding Commission Payouts, stock-related awards and
        other non-monetary incentives.

1.37    "Investment Adjustment" shall mean an adjustment made to the balance of
        any Plan Account in accordance with Section 3.05 to reflect the
        performance of an Investment Benchmark pursuant to which the value of
        the Plan Account is measured.

1.38    "Investment Benchmark" shall mean a benchmark made available under the
        Plan from time to time by the Committee for purposes of valuing Plan
        Accounts.

                                       5
<PAGE>

1.39    "Key Employee" shall mean, with respect to any Plan Year, an Employee
        who has been selected to participate in the First Albany Companies, Inc.
        Deferred Compensation Plan For Key Employees for that Plan Year.

1.40    "Participant" shall mean any eligible Employee (i) who is selected to
        participate in the Plan, (ii) who elects to participate in the Plan,
        (iii) who signs the applicable Enrollment Forms (and other forms
        required by the Committee), (iv) whose signed Enrollment Forms (and
        other required forms) are accepted by the Committee, (v) who commences
        participation in the Plan, and (vi) whose participation has not
        terminated. A spouse or former spouse of a Participant shall not be
        treated as a Participant in the Plan or have an account balance under
        the Plan, even if he or she has an interest in the Participant's
        benefits under the Plan as a result of applicable law or property
        settlements resulting from legal separation or divorce.

1.41    "Plan" shall mean the First Albany Companies Inc. Deferred Compensation
        Plan (Non-ERISA), which shall be evidenced by this instrument and by
        each Enrollment Form, as they may be amended from time to time.

1.42    "Plan Accounts" shall mean the Annual Deferral Accounts, Annual Company
        Match Accounts and Annual Discretionary Allocation Accounts established
        under the Plan.

1.43    "Plan Year" shall mean the period beginning on January 1 of each year
        and ending December 31.

1.44    "Restricted Investment Benchmark" means an Investment Benchmark which is
        designated as a Restricted Investment Benchmark by the Committee at the
        time such Investment Benchmark is initially made available under the
        Plan.

1.45    "Subordination Agreement" means the New York Stock Exchange
        Subordination Agreement required by the Committee to be signed and
        submitted by a Participant in connection with the Participant's deferral
        election with respect to a given Plan Year.

1.46    "Subordinated Amount" shall mean, with respect to a Plan Year, that
        portion of a Participant's Annual Participant Deferral, Annual
        Discretionary Allocation and Annual Company Match that are subject to
        the restrictions and limitations set forth in the Subordination
        Agreement executed by the Participant in respect of such Plan Year. A
        Participant's Subordinated Amount shall not include (i) any portion of
        the Participant's Annual Participant Deferral, Annual Discretionary
        Allocation and Annual Company Match that is allocated to an Investment
        Benchmark that tracks the performance of First Albany Companies Inc.
        Common Stock or that is otherwise payable in shares of First Albany
        Companies Inc. Common Stock or (ii) any earnings credited to a
        Participant's Annual Participant Deferral Account, Annual Discretionary
        Allocation Account or Annual Company Match Account. Subordinated Amounts
        shall be determined based on the Investment Benchmark election made by a
        Participant at the time of annual enrollment." For each Participant that
        is a party to a Subordination Agreement for a given Plan Year, the
        Company shall, as soon as practicable after the end of such Plan Year,
        notify the New York Stock Exchange of the Subordinated


                                       6
<PAGE>

        Amount that was credited to the Participant's Plan Accounts in respect
        of such Plan Year.

1.47    "Survivor Benefit" shall mean the benefit set forth in Article 6.

1.48    "Termination of Employment" shall mean the severing of employment with
        all Employers, voluntarily or involuntarily, for any reason.

1.49    "Trust" shall mean the trust established in accordance with Article 14.

1.50    "Unforeseeable Financial Emergency" shall mean an unanticipated
        emergency that is caused by an event beyond the control of the
        Participant that would result in severe financial hardship to the
        Participant resulting from (i) a sudden and unexpected illness or
        accident of the Participant or a dependent of the Participant, (ii) a
        loss of the Participant's property due to casualty, or (iii) such other
        extraordinary and unforeseeable circumstances arising as a result of
        events beyond the control of the Participant, all as determined in the
        sole discretion of the Committee. In making its determination the
        Committee shall be guided by the prevailing authorities applicable under
        the Code.

1.51    "Vested Account Balance" shall mean, with respect to any Plan Account as
        of a given date, the sum of the amounts that have become vested, as
        adjusted to reflect all applicable Investment Adjustments and all prior
        withdrawals and distributions, in accordance with Article 3 of the Plan
        and the provisions of applicable Enrollment Forms.

1.52    "Years of Service" shall mean the total number of full Plan Years during
        which a Participant has been continuously employed by one or more
        Employers. Any partial Plan Year during which a Participant has been
        employed by an Employer shall not be counted.

                                    Article 2

                       Eligibility, Selection, Enrollment

        2.01 Eligibility; Selection by Committee. All Employees, other than Key
Employees, are eligible to participate in the Plan in any particular Plan Year.
For each Plan Year, the Committee shall select, in its sole discretion, the
Employees who shall be given the opportunity to make an Annual Participant
Deferral and/or receive an Annual Discretionary Allocation in respect of that
Plan Year. The Committee's selection of an Employee to make an Annual
Participant Deferral and/or receive an Annual Discretionary Allocation in
respect of a particular Plan Year will not entitle that Employee to make an
Annual Participant Deferral or receive an Annual Discretionary Allocation for
any subsequent Plan Year, unless the Employee is again selected by the Committee
to make an Annual Participant Deferral and/or receive an Annual Discretionary
Allocation for such subsequent Plan Year.

                                       7
<PAGE>

        2.02 Enrollment Requirements. As a condition to being eligible to make
an Annual Participant Deferral for any Plan Year, each selected Employee shall
complete, execute and return to the Committee each of the required Enrollment
Forms (including without limitation, the Subordination Agreement), and shall
have on file with the Committee a completed Beneficiary Designation Form, all
prior to the date specified by the Committee. In addition, the Committee shall
establish from time to time such other enrollment requirements as it determines
necessary, in its sole discretion.

        2.03 Commencement of Participation. Provided an Employee selected to
make an Annual Participant Deferral in respect of a particular Plan Year has met
all enrollment requirements set forth in this Plan and required by the
Committee, including returning all required documents to the Committee within
the specified time period, the Employee's designated deferrals shall commence as
of the date established by the Committee in its sole discretion. If an Employee
fails to meet all such requirements within the specified time period with
respect to any Plan Year, the Employee shall not be eligible to make any
deferrals for that Plan Year. In addition, an Employee's eligibility to make
deferrals for a Plan Year is expressly conditioned on the approval by the New
York Stock Exchange of the Subordination Agreement executed by the Employee in
respect of such Plan Year.

        2.04 Subsequent Elections. The Enrollment Forms submitted by a
Participant in respect of a particular Plan Year will not be effective with
respect to any subsequent Plan Year, except that the Beneficiary Designation
Form on file with the Committee will remain effective for all subsequent Plan
Years unless and until an Amended Beneficiary Designation Form is submitted. If
an Employee is selected to participate in the Plan for a subsequent Plan Year
and the required Enrollment Forms are not timely delivered for the subsequent
Plan Year, the Participant shall not be eligible to make any deferrals with
respect to such subsequent Plan Year.

        2.05 Termination of Participation and/or Deferrals. If a Participant's
Employer terminates the Participant's employment for cause (as described in
Section [1.24]), then, (i) the Participant's participation in the Plan shall
automatically terminate, (ii) the Committee shall distribute to the Participant,
at the time and in the manner described in Section 5.02, the remainder of the
Participant's Annual Participant Deferrals that were credited to the
Participant's Plan Accounts prior to the date of termination after adjustment
for all prior withdrawals, distributions and investment losses (iii) all other
amounts in any of the Participant's Plan Accounts (including without limitation,
any investment gains on Annual Participant Deferrals) shall be forfeited by the
Participant. In addition, if an Employee's eligibility to make deferrals for a
Plan Year is expressly conditioned on the approval by the New York Stock
Exchange of a Subordination Agreement executed by the Employee in respect of
such Plan Year and the New York Stock Exchange declines to issue such approval,
the Committee shall have the right, in its sole discretion, to (i) terminate any
Annual Participant Deferral and Annual Company Match in respect of such Plan
Year and (ii) immediately distribute to the Participant any Subordinated Amounts
that have already been credited to the Participant's Plan Accounts in respect of
such Plan Year. Any distribution made pursuant to this Section 2.05 may be
subject to deferred distribution pursuant to Section 5.04.

                                       8
<PAGE>
                                    Article 3

          Participant Deferrals, Commitments, Company Match, Investment
                         Adjustments, Taxes and Vesting

3.01 Participant Deferrals.

                  (a) Deferral Election. A Participant may make an election to
defer the receipt of amounts payable to the Participant in the form of Base
Annual Salary, Bonus Amounts and Commission Payouts for services rendered during
a Plan Year. The Participant's election shall be evidenced by an Annual Deferral
Agreement and Annual Election Form completed and submitted to the Committee in
accordance with such procedures and time frames as may be established by the
Committee in its sole discretion. Amounts deferred by a Participant in respect
of services rendered during a Plan Year shall be referred to collectively as an
Annual Participant Deferral and shall be credited to an Annual Deferral Account
established in the name of the Participant. A separate Annual Deferral Account
shall be established and maintained for each Annual Participant Deferral. The
Committee shall have sole discretion to determine in respect of each Plan Year:
(i) whether an Employee shall be eligible to make an Annual Participant
Deferral; (ii) the form(s) of compensation which may be the subject of any
Annual Participant Deferral; and (iii) any other terms and conditions applicable
to the Annual Participant Deferral.

                  (b) Minimum Deferral.

                           (i) Minimum. For each Plan Year the Committee may
         permit a Participant to elect to defer, as his or her Annual
         Participant Deferral, one or more of the following forms of
         compensation, payable to the Participant but not yet received during
         the Plan Year, in the following minimum amounts:

<TABLE>
<CAPTION>
                                                        Minimum
                         Deferral                       Amount
                         --------                       ------
<S>                                                     <C>
                  Base Annual Salary                    $3,000
                  Guaranteed Bonus Amounts              $3,000
                  Discretionary Bonus Amounts           $3,000
                  Commission Payouts                    $3,000
</TABLE>

         If an election is made for less than stated minimum amounts, or if no
         election is made, the amount deferred shall be zero.

                           (ii) Short Plan Year. If a Participant first becomes
         a Participant after the first day of a Plan Year, the minimum deferral
         of each of the Participant's Base Annual Salary, Bonus Amounts and
         Commission Payouts shall be an amount equal to the minimum set forth
         above, multiplied by a fraction, the

                                       9
<PAGE>
         numerator of which is the number of complete months remaining in the
         Plan Year and the denominator of which is 12.

                  (c) Maximum Deferral. For each Plan Year, the Committee may
permit a Participant to elect to defer, as his or her Annual Participant
Deferral, one or more of the following forms of compensation, payable to the
Participant but not yet received during the Plan Year, up to the following
maximum percentages:

<TABLE>
<CAPTION>
                                                         Maximum
                  Deferral                              Percentage
                  --------                              ----------
<S>                                                     <C>
                  Base Annual Salary                       50%
                  Guaranteed Bonus Amounts                 50%
                  Discretionary Bonus Amounts              50%
                  Commission Payouts                       50%
</TABLE>


                  (d) Deferral Designations.

                           (i) Base Annual Salary. A Participant may designate
         the amount of the Annual Participant Deferral to be deducted from his
         or her Base Annual Salary as either a percentage of his or her Base
         Annual Salary, a fixed dollar amount or a percentage of Base Annual
         Salary up to a fixed dollar amount. Such amount shall be withheld from
         each regularly scheduled Base Annual Salary payment in equal amounts.

                           (ii) Bonus Amounts. A Participant may designate the
         amount of the Annual Participant Deferral to be deducted from his or
         her Bonus Amounts as either a percentage or a fixed dollar amount of
         specified Bonus Amounts expected by the Participant. If a Participant
         designates the Annual Participant Deferral to be deducted from any
         Bonus Amount as a fixed dollar amount and such fixed dollar amount
         exceeds the Bonus Amount actually payable to the Participant, the
         entire amount of such Bonus Amount shall be withheld.

                           (iii) Commission Payouts. A Participant may designate
         the amount of the Annual Participant Deferral to be deducted from his
         or her Commission Payouts as either a percentage of his or her
         Commission Payouts, a fixed dollar amount or a percentage of his or her
         Commission Payouts up to a fixed dollar amount. Such amount shall be
         withheld from the Commission Payout portion of each regularly scheduled
         Commission Payout payment in equal amounts.

         3.02 Annual Company Match. A Participant may be credited with one or
more Company matches in respect of any Plan Year, expressed as a percentage of
the amount of Base Annual Salary, Bonus Amounts, Commission Payouts or any
combination of the foregoing deferred by the Participant pursuant to the
Participant's Annual Participant Deferral for the Plan

                                       10
<PAGE>
Year. Such Company matches credited to a Participant in respect of a Plan Year
shall be referred to collectively as the Annual Company Match for that Plan Year
and shall be credited to an Annual Company Match Account in the name of the
Participant. A separate Annual Company Match Account shall be established and
maintained for each Annual Company Match. The Board shall have sole discretion
to determine in respect of each Plan Year and each Participant: (i) whether any
Annual Company Match shall be made; (ii) the Participant(s) who shall be
entitled to such Annual Company Match; (iii) the amount of such Annual Company
Match; (iv) the date(s) on which any portion of such Annual Company Match shall
be credited to each Participant's Annual Company Match Account; (v) the
Investment Benchmark(s) that shall apply to such Annual Company Match; and (v)
any other terms and conditions applicable to such Annual Company Match.

         3.03 Annual Discretionary Allocation. A Participant may be credited
with one or more discretionary allocations in respect of any Plan Year,
expressed as either a flat dollar amount or as a percentage of the Participant's
Base Annual Salary, Bonus Amounts, Commission Payouts or any combination of the
foregoing. Such discretionary allocations credited to a Participant in respect
of a Plan Year shall be referred to collectively as the Annual Discretionary
Allocation for that Plan Year and shall be credited to an Annual Discretionary
Allocation Account in the name of the Participant. A separate Annual
Discretionary Allocation Account shall be established and maintained for each
Annual Discretionary Allocation. The Board shall have sole discretion to
determine in respect of each Plan Year and each Participant: (i) whether any
Annual Discretionary Allocation shall be made; (ii) the Participant(s) who shall
be entitled to such Annual Discretionary Allocation; (iii) the amount of such
Annual Discretionary Allocation; (iv) the date(s) on which any portion of such
Annual Discretionary Allocation shall be credited to each Participant's Annual
Discretionary Allocation Account; (v) the Investment Benchmark(s) that shall
apply to such Annual Discretionary Allocation; and (v) any other terms and
conditions applicable to such Annual Discretionary Allocation.

         3.04 Selection of Investment Benchmarks. In connection with a
Participant's election to make an Annual Participant Deferral in respect of a
Plan Year, the Participant shall select one or more Investment Benchmarks and
the percentage of the Participant's Annual Deferral Account, Annual Company
Match Account (if any) and Annual Discretionary Allocation Account (if any) for
such Plan Year to be adjusted to reflect the performance of each selected
Investment Benchmark; provided, however, that a Participant's ability to select
Investment Benchmarks with respect to his or her Annual Company Match Account
and/or Annual Discretionary Allocation Account is subject to, and may be limited
by, the Board's discretion under Sections 3.02 and 3.03 to designate the
Investment Benchmarks that shall apply to all or a portion of such Annual
Company Match Account and/or Annual Discretionary Allocation Account. All
selections of Investment Benchmarks shall be in multiples of 10% unless the
Committee determines that lower increments are acceptable. A Participant may
make changes in his or her selected Investment Benchmarks with respect to any
Plan Account at such times as the Committee may designate by completing and
submitting to the Committee an Amended Election Form in accordance with such
procedures and time frames as may be established from time to time at the sole
discretion of the Committee; provided, however, that in no event shall the
Committee permit a Participant to reallocate any Subordinated Amounts to an
Investment Benchmark that tracks the performance of First Albany Companies Inc.
Common Stock nor shall

                                       11
<PAGE>
the Committee permit a Participant to reallocate any portion of his Plan Account
from an Investment Benchmark that tracks the performance of First Albany
Companies Inc. Common Stock to another Investment Benchmark offered under the
Plan. The Committee, in its sole discretion, may place additional limits on a
Participant's ability to make changes with respect to certain Investment
Benchmarks.

         3.05 Adjustment of Plan Accounts. While a Participant's Plan Accounts
do not represent the Participant's ownership of, or any ownership interest in,
any particular assets, the Participant's Plan Accounts shall be adjusted in
accordance with the Investment Benchmark(s), subject to the conditions and
procedures set forth herein or established by the Committee from time to time.
Any cash earnings generated under an Investment Benchmark (such as interest and
cash dividends and distributions) shall, at the Committee's sole discretion,
either be deemed to be reinvested in that Investment Benchmark or reinvested in
one or more other Investment Benchmark(s) designated by the Committee. All
notional acquisitions and dispositions of Investment Benchmarks under a
Participant's Plan Accounts shall be deemed to occur at such times as the
Committee shall determine to be administratively feasible in its sole discretion
and the Participant's Plan Accounts shall be adjusted accordingly. In addition,
a Participant's Plan Accounts may be adjusted from time to time, in accordance
with procedures and practices established by the Committee, in its sole
discretion, to reflect any notional transactional costs and other fees and
expenses relating to the deemed investment, disposition or carrying of any
Investment Benchmark for the Participant's Plan Accounts. Adjustments made in
accordance herewith shall be referred to as Investment Adjustments.
Notwithstanding anything to the contrary, any Investment Adjustments made to any
Plan Account following a Change in Control shall be made in a manner no less
favorable to Participants than the practices and procedures employed under the
Plan, or as otherwise in effect, as of the date of the Change in Control.

         3.06 FICA and Other Taxes.

                           (a) Annual Deferral Amounts. For each Plan Year in
         which an Annual Participant Deferral is being withheld from a
         Participant, the Participant's Employer(s) shall withhold from that
         portion of the Participant's Base Annual Salary, Bonus Amounts, and/or
         Commission Payouts that is not being deferred, in a manner determined
         by the Employer(s), the Participant's share of FICA and other
         employment taxes; provided, however, that the Committee may reduce the
         Annual Participant Deferral if necessary to comply with applicable
         withholding requirements.

                           (b) Distributions. The Participant's Employer(s), or
         the trustee of the Trust, shall withhold from any payments made to a
         Participant under this Plan all federal, state and local income,
         employment and other taxes required to be withheld by the Employer(s),
         or the trustee of the Trust, in connection with such payments, in
         amounts and in a manner to be determined in the sole discretion of the
         Employer(s) and the trustee of the Trust.

         3.07 Vesting; Forfeitures.


                                       12
<PAGE>
                           (a) Forfeiture of Matching Contributions Upon
         Termination. In the event a Participant incurs a Termination of
         Employment, Disability or death prior to receiving a complete
         distribution of amounts credited to his or her Annual Company Match
         Account, all amounts remaining in such Annual Company Match Account as
         of the date of such Termination of Employment, Disability or death
         shall be forfeited by the Participant.

                           (b) Forfeiture of Unvested Participant Deferrals and
         Discretionary Allocations . As of the date of a Participant's
         Termination of Employment, Disability or death, the amounts credited to
         the Participant's Annual Deferral Account and Annual Discretionary
         Allocation Account shall be reduced by the amount that has not become
         vested in accordance with the vesting provisions set forth below and in
         the Annual Deferral Agreement and/or the document announcing an Annual
         Discretionary Allocation (if any) applicable to such Account, and such
         unvested amounts shall be forfeited by the Participant.

                           (c) Vesting of Amounts in Annual Deferral Account and
         Annual Discretionary Allocation Account. The Participant shall be
         vested in the amounts credited to his or her Annual Deferral Account in
         respect of each given Plan Year as set forth in the Annual Deferral
         Agreement pertaining to such Plan Year. The Participant shall be vested
         in the amounts credited to his or her Annual Discretionary Allocation
         Account in respect of each given Plan Year as set forth in the document
         announcing the Annual Discretionary Allocation for such Plan Year. The
         vesting terms set forth in each Annual Deferral Agreement and Annual
         Discretionary Allocation announcement shall be established by the
         Committee in its sole discretion and may vary for each Participant and
         each Plan Year. Such vesting terms may, in the Committee's discretion,
         provide for acceleration of vesting upon a Change in Control.

                           (d) Vesting After Covered Termination.
         Notwithstanding any of the foregoing, unless otherwise specifically
         provided under the terms of a particular Annual Deferral Agreement
         and/or the document announcing an Annual Discretionary Allocation (if
         any), in the event of a Participant's Covered Termination, as of the
         effective date of such Covered Termination, all amounts credited to
         each of the Participant's Plan Accounts, as adjusted for the applicable
         Investment Adjustments and all prior withdrawals and distributions,
         shall be 100% vested and non-forfeitable.

                           (e) Vesting Upon Plan Termination. In the event of a
         termination of the Plan as it relates to any Participant, all amounts
         credited to any and all Plan Accounts of such Participant as of the
         effective date of such termination shall be 100% vested and
         non-forfeitable.

                           (f) Acceleration of Vesting by Committee.
         Notwithstanding anything to the contrary contained in the Plan, any
         Annual Deferral Agreement and/or any document announcing an Annual
         Discretionary Allocation, the Committee shall have the authority,
         exercisable in its sole discretion, to accelerate the vesting of any
         amounts credited to the Annual Deferral Account or Annual Discretionary
         Allocation Account of

                                       13
<PAGE>
         any Participant and any such acceleration shall be evidenced by a
         written notice to the Participant setting forth in detail the Plan
         Account(s) and the amounts affected by the Committee's decision to
         accelerate vesting and the terms of the new vesting schedule applicable
         to such amounts.

                                    Article 4

                             Suspension of Deferrals

         4.01 Unforeseeable Financial Emergencies. If a Participant experiences
an Unforeseeable Financial Emergency, the Participant may petition the Committee
to suspend any deferrals required to be made by the Participant. The Committee
shall determine, in its sole discretion, whether to approve the Participant's
petition. If the petition for a suspension is approved, suspension shall take
effect upon the date of approval.

         4.02 Disability. From and after the date that a Participant is deemed
have suffered a Disability, any standing deferral election of the Participant
shall automatically be suspended and no further deferrals shall be made with
respect to the Participant.

         4.03 Resumption of Deferrals. If deferrals by a Participant have been
suspended during a Plan Year due to an Unforeseeable Financial Emergency or a
Disability, the Participant will not be eligible to make any further deferrals
in respect of that Plan Year. The Participant may be eligible to make deferrals
for subsequent Plan Years provided the Participant is selected to make deferrals
for such subsequent Plan Years and the Participant complies with the election
requirements under the Plan.

                                    Article 5

                          Distribution of Plan Accounts

         5.01 Distribution Elections.

                           (a) Initial Elections. The Participant shall make a
         Distribution Election at the time he or she makes an Annual Deferral
         Election with respect to a given Plan Year and/or at the time an Annual
         Discretionary Allocation (if any) is credited to the Participant's
         Annual Discretionary Allocation Account for a given Plan Year, to have
         the Vested Account Balance of the Participant's respective Plan
         Accounts for that Plan Year distributed in either

                  (i)      A single lump sum on or about April 15 of either the
                           third (3rd), fourth (4th), or fifth (5th) Plan Year
                           following the Plan Year in respect of which the
                           Annual Deferral Election was made and/or the Annual
                           Discretionary Allocation (if any) was credited; or


                                       14
<PAGE>
                  (ii)     Substantially equal annual installments commencing no
                           earlier than April 15 of the third (3rd) Plan Year
                           following the Plan Year in respect of which the
                           Annual Deferral Election was made and ending no later
                           than April 15 of the fifth (5th) Plan Year following
                           the Plan Year in respect of which the Annual Deferral
                           Election was made and/or the Annual Discretionary
                           Allocation (if any) was credited.

                           (b) Subsequent Elections. Subject to any restrictions
         that may be imposed by the Committee, a Participant may amend his or
         her Distribution Election with respect to any Plan Account by
         completing and submitting to the Committee within such time frame as
         the Committee may designate, an Amended Distribution Election Form;
         provided, however, that such Amended Election Form is submitted no
         later than April 15 of the Plan Year prior to the Plan Year in which
         distribution of the Vested Account Balance of such Plan Account was
         scheduled to be made in accordance with the Participant's original
         Distribution Election, and such Amended Election Form is approved and
         accepted by the Committee in its sole discretion. A Participant may
         amend his or her Distribution Election to change the distribution
         method from a lump sum to installments, or from installments to a lump
         sum, and/or choose a later distribution date (but in no event later
         than April 15 of the fifth (5th) Plan Year following the end of the
         Plan Year in respect of which the Annual Deferral Election was made).
         Notwithstanding a Participant's Distribution Election with respect to
         the Vested Account Balance of any Plan Account, some or all of such
         Vested Account Balance may be subject to deferred distribution pursuant
         to Section 5.03.

         5.02 Withdrawal in the Event of an Unforeseeable Financial Emergency.
Subject to Section 5.03, in the event that a Participant or (after a
Participant's death) a Participant's Beneficiary experiences an Unforeseeable
Financial Emergency, the Participant or Beneficiary may petition the Committee
to receive a partial or full payout of amounts credited to the Participant's
Plan Accounts. The Committee shall determine, in its sole discretion, whether
the requested payout shall be made, the amount of the payout and the Plan
Accounts from which the payout will be made; provided, however, that the payout
shall not exceed the lesser of the Participant's Aggregate Vested Benefit or the
amount reasonably needed to satisfy the Unforeseeable Financial Emergency. In
making any determinations under this Section 5.02, the Committee shall be guided
by the prevailing authorities under the Code. If, subject to the sole discretion
of the Committee, the petition for a payout is approved, the payout shall be
made within ninety (90) days of the date of approval.

         5.03 Distribution Restrictions.

                           (a) Restricted Investment Benchmarks. Notwithstanding
         anything to the contrary contained in this Plan or in any Enrollment
         Form, Amended Distribution Election Form or any other document, the
         Committee may impose limitations and restrictions on the payment of
         amounts allocated by a Participant to any Restricted Investment
         Benchmark(s) and may defer payment of those amounts for such time
         periods as the Committee determines, in its good faith judgment, to be
         consistent with the nature of the investment on which such Restricted
         Investment Benchmark is based. The

                                       15
<PAGE>
         Committee shall determine the amounts affected, the nature of the
         limitations and restrictions on benefit payments, and the length of
         deferral and time of payment of such amounts.

                           (b) Subordinated Amounts. Notwithstanding anything to
         the contrary contained in this Plan or in any Enrollment Form, Amended
         Distribution Election Form or any other document, distributions of
         Subordinated Amounts under the Plan shall be subject to any
         constraints, restrictions and limitations imposed under the applicable
         Subordination Agreement(s) executed by the Participant in accordance
         with Section 2.02, including without limitation, the restriction on
         distribution of such Subordinated Amounts prior to the twelve
         (12)-month anniversary of the date of allocation. For this purpose, the
         date of allocation shall be deemed to be the last day of the Plan Year
         in which a Subordinated Amount is credited to a Participant's Plan
         Accounts. Such Subordination Agreement(s) shall be incorporated into
         and become a part of the Plan.

         5.04 Valuation of Plan Accounts Pending Distribution. To the extent
that the distribution of any portion of any Plan Account is deferred, whether
pursuant to the limitations imposed under this Article 5 or for any other
reason, any amounts remaining to the credit of the Plan Account shall continue
to be adjusted by the applicable Investment Adjustments in accordance with
Article 3.

         5.05 Form of Payment. Distributions under the Plan shall be paid in
cash in a single lump sum; except, however, that the Committee may provide, in
its discretion, that any distribution attributable to the portion of a Plan
Account that is deemed invested in an Investment Benchmark that tracks that
value of Company Stock shall be paid in shares of Company Stock.

                                    Article 6

                                Survivor Benefit

         6.01 Survivor Benefit. Subject to Article 5, a Participant's
Beneficiary shall receive a Survivor Benefit equal to the Participant's
Aggregate Vested Balance, if the Participant dies before he or she has received
a complete distribution of his or her Aggregate Vested Benefit.

         6.02 Payment of Survivor Benefit. The Survivor Benefit shall be payable
to the Beneficiary indicated on the Participant's Beneficiary Designation Form
in a lump sum payment, provided, however that if the Participant's Aggregate
Vested Balance at the time of his or her death is greater than $25,000, payment
may be made, in the sole discretion of the Committee, in a lump sum or in annual
installment payments that do not exceed five (5) years in duration. Subject to
Article 5, the lump sum payment shall be made, or installment payments shall
commence, no later than ninety (90) days after the date the Committee is
provided with proof that is satisfactory to the Committee of the Participant's
death.


                                       16
<PAGE>
                                    Article 7

                               Disability Benefit

         7.01 Disability Benefit. Notwithstanding any Distribution Election
under Article 5, a Participant suffering a Disability shall receive a Disability
Benefit equal to his or her Aggregate Vested Balance. Subject to Article 5, the
Disability Benefit shall be paid in a lump sum within ninety (90) days of the
Committee's determination of Disability.

                                    Article 8

                             Beneficiary Designation

         8.01 Beneficiary. Each Participant shall have the right, at any time,
to designate his or her Beneficiary(ies) (both primary as well as contingent) to
receive any benefits payable under the Plan to a beneficiary upon the death of a
Participant. The Beneficiary designated under this Plan may be the same as or
different from the Beneficiary designation under any other plan of an Employer
in which the Participant participates.

         8.02 Beneficiary Designation; Change; Spousal Consent. A Participant
shall designate his or her Beneficiary by completing and signing a Beneficiary
Designation Form, and returning it to the Committee or its designated agent. A
Participant shall have the right to change a Beneficiary by completing, signing
and submitting to the Committee an Amended Beneficiary Designation Form in
accordance with the Committee's rules and procedures, as in effect from time to
time. If the Participant names someone other than his or her spouse as a
Beneficiary, a spousal consent, in the form designated by the Committee, must be
signed by that Participant's spouse and returned to the Committee. Upon the
acceptance by the Committee of an Amended Beneficiary Designation Form, all
Beneficiary designations previously filed shall be canceled. The Committee shall
be entitled to rely on the last Beneficiary Designation Form filed by the
Participant and accepted by the Committee prior to his or her death.

         8.03 Acknowledgment. No designation or change in designation of a
Beneficiary shall be effective until received, accepted and acknowledged in
writing by the Committee or its designated agent.

         8.04 No Beneficiary Designation. If a Participant fails to designate a
Beneficiary as provided above or, if all designated Beneficiaries predecease the
Participant or die prior to complete distribution of the Participant's Aggregate
Vested Benefit, then the Participant's designated Beneficiary shall be deemed to
be his or her surviving spouse. If the Participant has no surviving spouse, the
benefits remaining under the Plan to be paid to a Beneficiary shall be payable
to the executor or personal representative of the Participant's estate.


                                       17
<PAGE>
         8.05 Doubt as to Beneficiary. If the Committee has any doubt as to the
proper Beneficiary to receive payments pursuant to this Plan, the Committee
shall have the right, exercisable in its discretion, to cause the Participant's
Employer to withhold such payments until this matter is resolved to the
Committee's satisfaction.

         8.06 Discharge of Obligations. The payment of benefits under the Plan
to a Beneficiary shall fully and completely discharge all Employers and the
Committee from all further obligations under this Plan with respect to the
Participant, and each of the Participant's Annual Deferral Agreements shall
terminate upon such full payment of benefits.

                                    Article 9

                                Leave of Absence

         9.01 Paid Leave of Absence. If a Participant is authorized by the
Participant's Employer for any reason to take a paid leave of absence from the
employment of the Employer, the Participant shall continue to be considered
employed by the Employer and the appropriate amounts shall continue to be
withheld from the Participant's compensation pursuant to the Participant's then
current Annual Election Form.

         9.02 Unpaid Leave of Absence. If a Participant is authorized by the
Participant's Employer for any reason to take an unpaid leave of absence from
the employment of the Employer, the Participant shall continue to be considered
employed by the Employer and the Participant shall be excused from making
deferrals until the earlier of the date the leave of absence expires or the
Participant returns to a paid employment status. Upon such expiration or return,
deferrals shall resume for the remaining portion of the Plan Year in which the
expiration or return occurs, based on the deferral election, if any, made for
that Plan Year. If no election was made for that Plan Year, no deferral shall be
withheld.


                                       18
<PAGE>
                                   Article 10

                     Termination, Amendment or Modification

         10.01 Termination. Although the Employers anticipate that they will
continue the Plan for an indefinite period of time, there is no guarantee that
any Employer will continue the Plan or will not terminate the Plan at any time
in the future. Accordingly, each Employer reserves the right to discontinue its
sponsorship of the Plan and to terminate the Plan, at any time, with respect to
its participating Employees by action of its board of directors. Upon the
termination of the Plan with respect to any Employer, subject to Section 5.03,
all amounts credited to each of the Plan Accounts of each affected Participant
shall be 100% vested and shall be paid to the Participant or, in the case of the
Participant's death, to the Participant's Beneficiary, in a lump sum
notwithstanding any elections made by the Participant, and the Annual Deferral
Agreements relating to each of the Participant's Plan Accounts shall terminate
upon full payment of such Aggregate Vested Balance.

         10.02 Amendment. The Company may, at any time, amend or modify the Plan
in whole or in part with respect to any or all Employers by the actions of the
Committee; provided, however, that (i) no amendment or modification shall be
effective to decrease or restrict the value of a Participant's Aggregate Vested
Balance in existence at the time the amendment or modification is made,
calculated as if the Participant had experienced a Termination of Employment as
of the effective date of the amendment or modification and (ii) except as
specifically provided in Section 10.01, no amendment or modification shall be
made after a Change in Control which adversely affects the vesting, calculation
or payment of benefits hereunder or diminishes any other rights or protections
any Participant or Beneficiary would have had but for such amendment or
modification, unless each affected Participant or Beneficiary consents in
writing to such amendment.

         10.03 Effect of Payment. The full payment of the applicable benefit
under the provisions of the Plan shall completely discharge all obligations to a
Participant and his or her designated Beneficiaries under this Plan and each of
the Participant's Annual Deferral Agreements shall terminate.




                                       19
<PAGE>
                                   Article 11

                                 Administration

         11.01 Committee Duties. This Plan shall be administered by a Committee
which shall consist of the Board, or such committee as the Board shall appoint.
Members of the Committee who are eligible Employees may be Participants under
this Plan. The Committee shall also have the discretion and authority to (i)
make, amend, interpret, and enforce all appropriate rules and regulations for
the administration of this Plan and (ii) decide or resolve any and all questions
including interpretations of this Plan, as may arise in connection with the
Plan. Any individual serving on the Committee who is a Participant shall not
vote or act on any matter relating solely to himself or herself. When making a
determination or calculation, the Committee shall be entitled to rely on
information furnished by a Participant or the Company.

         11.02 Agents. In the administration of this Plan, the Committee may,
from time to time, employ agents and delegate to them such administrative duties
as it sees fit (including acting through a duly appointed representative) and
may from time to time consult with counsel who may be counsel to any Employer.

         11.03 Binding Effect of Decisions. The decision or action of the
Committee with respect to any question arising out of or in connection with the
administration, interpretation and application of the Plan and the rules and
regulations promulgated hereunder shall be final and conclusive and binding upon
all persons having any interest in the Plan.

         11.04 Indemnity of Committee. All Employers shall indemnify and hold
harmless the members of the Committee, and any Employee to whom duties of the
Committee may be delegated, against any and all claims, losses, damages,
expenses or liabilities arising from any action or failure to act with respect
to this Plan, except in the case of willful misconduct by the Committee or any
of its members or any such Employee.

         11.05 Employer Information. To enable the Committee to perform its
functions, each Employer shall supply full and timely information to the
Committee on all matters relating to the compensation of its Participants, the
date and circumstances of the Retirement, Disability, death or Termination of
Employment of its Participants, and such other pertinent information as the
Committee may reasonably require.




                                       20
<PAGE>
                                   Article 12

                          Other Benefits and Agreements

                  The benefits provided for a Participant and Participant's
Beneficiary under the Plan are in addition to any other benefits available to
such Participant under any other plan or program for employees of the
Participant's Employer. The Plan shall supplement and shall not supersede,
modify or amend any other such plan or program except as may otherwise be
expressly provided.

                                   Article 13

                                Claims Procedures

         13.01 Presentation of Claim. Any Participant or Beneficiary of a
deceased Participant (such Participant or Beneficiary being referred to below as
a "Claimant") may deliver to the Committee a written claim for a determination
with respect to the amounts distributable to such Claimant from the Plan. If
such a claim relates to the contents of a notice received by the Claimant, the
claim must be made within 60 days after such notice was received by the
Claimant. The claim must state with particularity the determination desired by
the Claimant. All other claims must be made within 180 days of the date on which
the event that caused the claim to arise occurred. The claim must state with
particularity the determination desired by the Claimant.

         13.02 Notification of Decision. The Committee shall consider a
Claimant's claim within a reasonable time, and shall notify the Claimant in
writing:

         (a)      that the Claimant's requested determination has been made, and
                  that the claim has been allowed in full; or

         (b)      that the Committee has reached a conclusion contrary, in whole
                  or in part, to the Claimant's requested determination, and
                  such notice must set forth in a manner calculated to be
                  understood by the Claimant:

                  (i)      the specific reason(s) for the denial of the claim,
                           or any part of it;

                  (ii)     specific reference(s) to pertinent provisions of the
                           Plan upon which such denial was based;

                  (iii)    a description of any additional material or
                           information necessary for the Claimant to perfect the
                           claim, and an explanation of why such material or
                           information is necessary; and


                                       21
<PAGE>
                  (iv)     an explanation of the claim review procedure set
                           forth in Section 13.03 below.

         13.03 Review of a Denied Claim. Within 60 days after receiving a notice
from the Committee that a claim has been denied, in whole or in part, a Claimant
(or the Claimant's duly authorized representative) may file with the Committee a
written request for a review of the denial of the claim. Thereafter, but not
later than 30 days after the review procedure began, the Claimant (or the
Claimant's duly authorized representative):

         (a)      may review pertinent documents;

         (b)      may submit written comments or other documents; and/or

         (c)      may request a hearing, which the Committee, in its sole
                  discretion, may grant.

         13.04 Decision on Review. The Committee shall render its decision on
review promptly, and not later than 60 days after the filing of a written
request for review of the denial, unless a hearing is held or other special
circumstances require additional time, in which case the Committee's decision
must be rendered within 120 days after such date. Such decision must be written
in a manner calculated to be understood by the Claimant, and it must contain:

         (a)      specific reasons for the decision;

         (b)      specific reference(s) to the pertinent Plan provisions upon
                  which the decision was based; and

         (c)      such other matters as the Committee deems relevant.

         13.05 Arbitration. A Claimant's compliance with the foregoing
provisions of this Article 13 is a mandatory prerequisite to a Claimant's right
to commence any arbitration with respect to any claim for benefits under this
Plan. Any and all claims that are not resolved to the satisfaction of a Claimant
under the above provisions of this Article 13 shall be subject to arbitration
conducted in Albany, New York before a panel of three (3) arbitrators pursuant
to rules of the National Association of Securities Dealers. Unless otherwise
provided herein each party shall bear its own costs and expenses in connection
with such arbitration and the parties shall contribute equally the arbitrator's
fees. The arbitrator's decision in any dispute shall be final and binding and
shall not be subject to appeal or judicial review.




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<PAGE>
                                   Article 14

                                      Trust

         14.01 Establishment of the Trust. The Company may establish one or more
Trusts to which the Employers may transfer such assets as the Employers
determine in their sole discretion to assist in meeting their obligations under
the Plan; provided, however, that in no event may Trust assets be used to
satisfy any obligations arising in connection with Subordinated Amounts.

         14.02 Interrelationship of the Plan and the Trust. The provisions of
the Plan and the relevant Annual Deferral Agreements shall govern the rights of
a Participant to receive distributions pursuant to the Plan. The provisions of
the Trust shall govern the rights of the Employers, Participants and the
creditors of the Employers to the assets transferred to the Trust.

         14.03 Distributions From the Trust. Each Employer's obligations under
the Plan may be satisfied with Trust assets distributed pursuant to the terms of
the Trust, and any such distribution shall reduce the Employer's obligations
under this Agreement.

                                   Article 15

                                  Miscellaneous

         15.01 Status of Plan. The Plan is intended to be an unfunded plan that
is not qualified within the meaning of Code Section 401(a) and is not intended
to be a "pension plan" or an "employee benefit plan," as defined in Sections
3(2) and 3(3) of ERISA, but is instead intended to be exempt from the coverage
of ERISA. The Plan shall be administered and interpreted to the extent possible
in a manner consistent with that intent. All Plan Accounts and all credits and
other adjustments to such Plan Accounts shall be bookkeeping entries only and
shall be utilized solely as a device for the measurement and determination of
amounts to be paid under the Plan. No Plan Accounts, credits or other
adjustments under the Plan shall be interpreted as an indication that any
benefits under the Plan are in any way funded.

         15.02 Unsecured General Creditor. Participants and their Beneficiaries,
heirs, successors and assigns shall have no legal or equitable rights, interests
or claims in any property or assets of an Employer. For purposes of the payment
of benefits under this Plan, any and all of an Employer's, assets, shall be, and
remain, the general, unpledged unrestricted assets of the Employer. An
Employer's obligation under the Plan shall be merely that of an unfunded and
unsecured promise to pay money in the future.


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<PAGE>
         15.03 Employer's Liability. An Employer's liability for the payment of
benefits shall be defined only by the Plan and the Annual Deferral Agreement, as
entered into between the Employer and a Participant. An Employer shall have no
obligation to a Participant under the Plan except as expressly provided in the
Plan and his or her Annual Deferral Agreement.

         15.04 Nonassignability. Neither a Participant nor any other person
shall have any right to commute, sell, assign, transfer, pledge, anticipate,
mortgage or otherwise encumber, transfer, hypothecate, alienate or convey in
advance of actual receipt, the amounts, if any, payable hereunder, or any part
thereof, which are, and all rights to which are expressly declared to be,
unassignable and non-transferable. No part of the amounts payable shall, prior
to actual payment, be subject to seizure, attachment, garnishment or
sequestration for the payment of any debts, judgments, alimony or separate
maintenance owed by a Participant or any other person, be transferable by
operation of law in the event of a Participant's or any other person's
bankruptcy or insolvency or be transferable to a spouse as a result of a
property settlement or otherwise.

         15.05 Not a Contract of Employment. The terms and conditions of this
Plan and the Annual Deferral Agreements under this Plan shall not be deemed to
constitute a contract of employment between any Employer and the Participant.
Such employment is hereby acknowledged to be an "at will" employment
relationship that can be terminated at any time for any reason, or no reason,
with or without cause, and with or without notice, except as otherwise provided
in a written employment agreement. Nothing in this Plan or any Annual Deferral
Agreement shall be deemed to give a Participant the right to be retained in the
service of any Employer as an Employee or to interfere with the right of any
Employer to discipline or discharge the Participant at any time.

         15.06 Furnishing Information. A Participant or his or her Beneficiary
will cooperate with the Committee by furnishing any and all information
requested by the Committee and take such other actions as may be requested in
order to facilitate the administration of the Plan and the payments of benefits
hereunder, including but not limited to taking such physical examinations as the
Committee may deem necessary.

         15.07 Terms. Whenever any words are used herein in the masculine, they
shall be construed as though they were in the feminine in all cases where they
would so apply; and whenever any words are used herein in the singular or in the
plural, they shall be construed as though they were used in the plural or the
singular, as the case may be, in all cases where they would so apply.

         15.08 Captions. The captions of the articles, sections and paragraphs
of this Plan are for convenience only and shall not control or affect the
meaning or construction of any of its provisions.

         15.09 Governing Law. The provisions of this Plan shall be construed and
interpreted according to the internal laws of the State of New York without
regard to its conflicts of laws principles.


                                       24
<PAGE>
         15.10 Notice. Any notice or filing required or permitted to be given to
the Committee under this Plan shall be sufficient if in writing and
hand-delivered, or sent by registered or certified mail, to the address below:

                                    First Albany Companies Inc.
                                    30 South Pearl Street
                                    Albany, New York  12207
                                    Attn:  General Counsel

Such notice shall be deemed given as of the date of delivery or, if delivery is
made by mail, as of the date shown on the postmark or the receipt for
registration or certification.

Any notice or filing required or permitted to be given to a Participant under
this Plan shall be sufficient if in writing and hand-delivered, or sent by mail,
to the last known address of the Participant.

         15.11 Successors. The provisions of this Plan shall bind and inure to
the benefit of the Participant's Employer and its successors and assigns and the
Participant and the Participant's designated Beneficiaries.

         15.12 Spouse's Interest. The interest in the benefits hereunder of a
spouse of a Participant who has predeceased the Participant shall automatically
pass to the Participant and shall not be transferable by such spouse in any
manner, including but not limited to such spouse's will, nor shall such interest
pass under the laws of intestate succession.

         15.13 Validity. In case any provision of this Plan shall be illegal or
invalid for any reason, said illegality or invalidity shall not affect the
remaining parts hereof, but this Plan shall be construed and enforced as if such
illegal or invalid provision had never been inserted herein.

         15.14 Incompetent. If the Committee determines in its discretion that a
benefit under this Plan is to be paid to a minor, a person declared incompetent
or to a person incapable of handling the disposition of that person's property,
the Committee may direct payment of such benefit to the guardian, legal
representative or person having the care and custody of such minor, incompetent
or incapable person. The Committee may require proof of minority, incompetence,
incapacity or guardianship, as it may deem appropriate prior to distribution of
the benefit. Any payment of a benefit shall be a payment for the account of the
Participant and the Participant's Beneficiary, as the case may be, and shall be
a complete discharge of any liability under the Plan for such payment amount.

         15.15 Distribution in the Event of Taxation. If, for any reason, all or
any portion of a Participant's benefit under this Plan becomes taxable to the
Participant prior to receipt, a Participant may petition the Committee before a
Change in Control, or the trustee of the Trust after a Change in Control, for a
distribution of that portion of his or her benefit that has become taxable. Upon
the grant of such a petition, which grant shall not be unreasonably withheld, a
Participant's Employer shall, subject to Section 5.3, distribute to the
Participant immediately available funds in an amount equal to the taxable
portion of his or her benefit (which amount

                                       25
<PAGE>
shall not exceed a Participant's unpaid Aggregate Vested Balance under the
Plan). If the petition is granted, the tax liability distribution shall be made
within 90 days of the date when the Participant's petition is granted. Such a
distribution shall affect and reduce the benefits to be paid under this Plan.

         15.16 Insurance. The Employers, on their own behalf or on behalf of the
trustee of the Trust, and, in their sole discretion, may apply for and procure
insurance on the life of the Participant, in such amounts and in such forms as
the Trust may choose. The Employers or the trustee of the Trust, as the case may
be, shall be the sole owner and beneficiary of any such insurance. The
Participant shall have no interest whatsoever in any such policy or policies,
and at the request of the Employers shall submit to medical examinations and
supply such information and execute such documents as may be required by the
insurance company or companies to whom the Employers have applied for insurance.

         15.17 Legal Fees To Enforce Rights After Change in Control. The Company
and each Employer is aware that upon the occurrence of a Change in Control, the
Board or the board of directors of the Participant's Employer (which might then
be composed of new members) or a shareholder of the Company or the Participant's
Employer, or of any successor corporation might then cause or attempt to cause
the Company or the Participant's Employer or such successor to refuse to comply
with its obligations under the Plan and might cause or attempt to cause the
Company or the Participant's Employer to institute, or may institute,
arbitration or litigation seeking to deny Participants the benefits intended
under the Plan. In these circumstances, the purpose of the Plan could be
frustrated. Accordingly, if, following a Change in Control, it should appear to
any Participant that the Company, the Participant's Employer or any successor
corporation has failed to comply with any of its obligations under the Plan or
any agreement thereunder or, if the Company, such Employer or any other person
takes any action to declare the Plan void or unenforceable or institutes any
arbitration, litigation or other legal action designed to deny, diminish or to
recover from any Participant the benefits intended to be provided, then the
Company and the Participant's Employer irrevocably authorize such Participant to
retain counsel of his or her choice at the expense of the Company and the
Employer (who shall be jointly and severally liable) to represent such
Participant in connection with the initiation or defense of any arbitration,
litigation or other legal action, whether by or against the Company, the
Participant's Employer or any director, officer, shareholder or other person
affiliated with the Company, the Participant's Employer or any successor thereto
in any jurisdiction.




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