Document:

exv10w1

Exhibit 10.1

FIRST ALBANY COMPANIES INC.

2005 DEFERRED COMPENSATION PLAN

FOR KEY EMPLOYEES

EFFECTIVE JANUARY 1, 2005

 

 

FIRST ALBANY COMPANIES INC.

2005 DEFERRED COMPENSATION PLAN

FOR KEY EMPLOYEES

Effective January 1, 2005

Purpose

          The purpose of this Plan is to provide specified benefits to a
select group of management or highly compensated Employees who contribute
materially to the continued growth, development and future business success of
First Albany Companies Inc. and its subsidiaries, if any, that sponsor this
Plan. This Plan shall be unfunded for tax purposes and for purposes of Title I
of 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.

 

 

	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:

	 	(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

2

 

	 	 	 	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 following such merger, consolidation or reorganization
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.
	 
	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

3

 

	 	 	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 (i) is unable to engage in any substantial gainful activity
by reason or any medically determinable physical or mental impairment
which can be expected to result in death or can be expected to last for
a continuous period of not less than 12 months or (ii) is, by reason of
any medically determinable physical or mental impairment which can be
expected to last for a continuous period of not less than 12 months,
receiving income replacement benefits for a period of not less than 3
months under an accident and health plan covering employees of the
Participant’s Employer, all as determined in the sole discretion of the
Committee.
	 
	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.
	 
	1.28	 	“Distribution Election” shall mean an election made in accordance with
Section 5.01.

4

 

	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.
	 
	1.39	 	“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

5

 

	 	 	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.
	 
	1.40	 	“Plan” shall mean the First Albany Companies Inc. 2005 Deferred
Compensation Plan For Key Employees, which shall be evidenced by this
instrument and by each Enrollment Form, as they may be amended from time
to time.
	 
	1.41	 	“Plan Accounts” shall mean the Annual Deferral Accounts, Annual Company
Match Accounts and Annual Discretionary Allocation Accounts established
under the Plan.
	 
	1.42	 	“Plan Year” shall mean the period beginning on January 1 of each year
and ending December 31.
	 
	1.43	 	“Reporting Person” shall mean an Employee who is subject to the
reporting requirements of Section 16(a) of the Securities Exchange Act
of 1934, as amended.
	 
	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	 	“Specified Employee” shall mean a key employee (as defined in Code
Section 416(i) without regard to paragraph (5) thereof) of the Company.
	 
	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 a Participant’s Information. 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
Amount that was credited to the Participant’s Plan Accounts in respect
of such Plan Year.
	 
	1.47	 	“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.

6

 

	1.48	 	“Survivor Benefit” shall mean the benefit set forth in Article 6.
	 
	1.49	 	“Termination of Employment” shall mean the severing of employment with
all Employers, voluntarily or involuntarily, for any reason.
	 
	1.50	 	“Trust” shall mean the trust established in accordance with Article 14.
	 
	1.51	 	“Unforeseeable Financial Emergency” shall mean a severe financial
hardship to the Participant resulting from (i) an illness or accident of
the Participant, the Participant’s spouse or a dependent (as defined in
section 152(a) of the Code) of the Participant, (ii) loss of the
Participant’s property due to casualty, or (iii) such other similar
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.
	 
	1.52	 	“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.
	 
	1.53	 	“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 Selection by Committee. Participation in the Plan shall be limited
to a select group of management or highly compensated Employees of the
Employers, as determined by the Committee in its sole discretion. From that
group, the Committee shall select, in its sole discretion, the Employees who
shall be eligible to make an Annual Participant Deferral and/or receive an
Annual Discretionary Allocation in respect of each 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.

     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) no later than
the last day of the immediately preceding Plan Year (or such earlier date as the
Committee may establish from time to time). Notwithstanding the

7

 

foregoing, (i) in the case of an Employee who first becomes eligible to
participate in the Plan during any Plan Year, such Employee shall complete,
execute and return to the Committee each of the required Enrollment Forms
(including without limitation, the Subordination Agreement) no later than 30
days following the date on which such Employee first becomes eligible to
participate in the Plan (or such earlier date as the Committee may establish
from time to time) provided that such Annual Participant Deferral shall apply
only with respect to services performed subsequent to the time such Enrollment
Forms are filed with the Committee and (ii) in the case of any performance-based
compensation (as such term is used in Section 409A of the Code) based on
services performed over a period of at least 12 months, the Enrollment Forms
with respect to such performance-based compensation must be filed no later than
6 months before the end of the performance period (or such earlier date as the
Committee may establish from time to time). In addition, each selected Employee
shall have on file with the Committee a completed Beneficiary Designation Form
prior to the date specified by the Committee, and 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. 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. 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.

     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 the Committee
determines in good faith that a Participant no longer qualifies as a member of a
select group of management or highly compensated employees, as membership in
such group is determined in accordance with Sections 201(2), 301(a)(3) and
401(a)(1) of ERISA, the Committee shall have the right, in its sole discretion,
to (i) terminate any Annual Participant Deferral, Annual Company Match and
Annual Discretionary Allocation not yet credited to the Participant’s Plan
Accounts and/or (ii) immediately distribute the Participant’s then Aggregate
Vested Balance as a Termination Benefit and terminate the Participant’s
participation in the Plan. Any Annual Company Match and/or Annual Discretionary
Allocation credited on behalf of the Participant that is not vested prior to the
date of the Committee’s determination shall be forfeited by the Participant. If
the Committee chooses to terminate the Participant’s participation in the Plan,
the Committee may, in its sole discretion, select the Participant to participate
in the Plan at such time in the future as

8

 

the Participant again becomes a member of the select group described above. 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, in a single lump sum, 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 and
distributions within ninety days of such termination, or, in the case of a
Specified Employee, 6 months after the date of such termination and (iii) all
other amounts in any of the Participant’s Plan Accounts 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 5.03.

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 a Participant 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.

9

 

	 	(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 with respect to the Plan
Year but not yet received, in the following minimum amounts:

	 	 	 	 	 
	 	 	Minimum
	           Deferral	 	Amount
	Base Annual Salary

	 	$	3,000	 
	Guaranteed Bonus Amounts

	 	$	3,000	 
	Discretionary Bonus Amounts 	 	 	 	 
	
Commission Payouts

	 	$

$	3,000

3,000	 

	 	 	 	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 numerator of
which is the number of complete months remaining in the Plan Year
and the denominator of which is 12.
	 
	 	(c)	 	Maximum Deferral. (i) 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 with respect to the Plan Year but not yet received, up
to the following maximum percentages:

	 	 	 	 	 
	 	 	Maximum
	Deferral	 	Percentage
	Base Annual Salary

	 	 	50	%
	Guaranteed Bonus Amounts

	 	 	50	%
	Discretionary Bonus Amounts

	 	 	50	%
	Commission Payouts

	 	 	50	%

	 	(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 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

10

 

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
commission Payouts up to fixed dollar amount. Such amount shall be
withheld from the Commission Payout portion of each regularly
scheduled Commission Payout payment in equal amounts.

     (e) Reporting Persons. Notwithstanding anything in this Section 3.01 to
the contrary, a Participant who is a Reporting Person shall not be permitted to
elect to defer receipt of amounts payable to such Reporting Person in the form
of Base Annual Salary or Commission Payouts, but shall continue to be permitted
to defer receipt of amounts payable in the form of Bonus Amounts, in accordance
with Paragraph (d)(ii) above.

     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 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.

     (a) Special Rule For Reporting Persons. The Annual Company Match, if
any, shall be credited to the Annual Company Match Account of a
Participant who is a Reporting Person at the same time that the amounts
giving rise to such Annual Company Match are credited to such Reporting
Person’s Annual Deferral Account.

     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

11

 

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 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.

     Notwithstanding the foregoing, in no event shall a Participant who is a
Reporting Person be permitted to elect to have an Investment Benchmark that
tracks the performance of First Albany Companies Inc. Common Stock apply to any
portion of his or her Annual Deferral Accounts.

     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

12

 

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. (a) Forfeiture of Unvested Amounts. As of the date of a
Participant’s Termination of Employment, Disability or death, the amounts
credited to each of the Participant’s Plan Accounts shall be reduced by the
amount which 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 Plan Account, and
such unvested amounts shall be forfeited by the Participant.

     (b) Vesting of Amounts. The Participant shall be vested in the amounts
credited to his or her Annual Deferral Account and Annual Company Match 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.

     (c) Vesting After Covered Termination. 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,

13

 

such Participant, as of the effective date of such Covered Termination, shall be
100% vested in all amounts credited to each of the Participant’s Plan Accounts,
as adjusted for the applicable Investment Adjustments and all prior withdrawals
and distributions.

     (d) 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.

     (e) 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 any Plan Account of 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

14

 

Account Balance of the Participant’s respective Plan Accounts for that Plan Year
distributed in either

	 	(i)	 	A single lump sum as of the first April 15 after the end of
either the third (3rd), fourth (4th), fifth (5th), sixth (6th)
seventh (7th) eighth (8th), ninth (9th) or tenth (10th) 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
	 
	 	(ii)	 	Substantially equal annual installments commencing no earlier
than the first April 15 after the end 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 the first
April 15 after the end of the tenth (10th) 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 (i) 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,
(ii) shall not take effect until 12 months after the date on which such Amended
Election Form is filed, (iii) specifies a new distribution date (or a new
initial distribution date in the case of installment distributions) that is no
less than the April 15th that is five (5) years after the original distribution
date (or the original initial distribution date in the case of installment
distributions) and (iv) 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, but not from installments to a lump sum, and may not choose a
distribution date that is later than April 15 of the tenth (10th) 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 one or more of 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 plus amounts necessary to pay taxes reasonably anticipated
as a result of the distribution. In making any determinations under this Section
5.02,

15

 

the Committee shall be guided by the prevailing authorities under the Code and
shall take into account the extent to which such Unforeseeable Financial
Emergency is or may be relieved through reimbursement or compensation by
insurance or otherwise or by liquidation of the participant’s assets (to the
extent the liquidation of such assets would not itself cause severe financial
hardship). 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 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.

16

 

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.

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

17

 

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.

     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

 

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.

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 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

19

 

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.

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

20

 

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
	 
	 	(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;

21

 

	 	(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.

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 (i) a “nonqualified
deferred compensation plan” within the meaning of Code Section 409A, (ii) a plan
that is not qualified within the meaning of Code Section 401(a) and (iii) a plan
that “is unfunded and is maintained by an employer primarily for the purpose of
providing deferred compensation for a select group of management or highly
compensated employee” within the meaning of ERISA Sections 201(2), 301(a)(3) and
401(a)(1). The Plan shall be administered and interpreted to the extent

22

 

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.

     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

23

 

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. Subject to ERISA, 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.

     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

24

 

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 5.03, distribute to the
Participant immediately available funds in an amount equal to the taxable
portion of his or her benefit (which amount 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.

25exv10w2

Exhibit 10.2

FIRST ALBANY COMPANIES INC.

1999 LONG-TERM INCENTIVE PLAN

AMENDED AND RESTATED THROUGH APRIL 27, 2004

* * * * *

     1. PURPOSE. The purpose of the 1999 Long-Term Incentive Plan (the “Plan”)
is to further and promote the interests of First Albany Companies Inc. (the
“Company”), its Subsidiaries and its shareholders by enabling the Company and
its Subsidiaries to attract, retain and motivate employees and officers or those
who will become employees or officers, and to align the interests of those
individuals and the Company’s shareholders. To do this, the Plan offers
performance-based incentive awards and equity-based opportunities providing such
employees and officers with a proprietary interest in maximizing the growth,
profitability and overall success of the Company and its Subsidiaries.

     2. DEFINITIONS. For purposes of the Plan, the following terms shall have
the meanings set forth below:

          2.1 “AWARD” means an award or grant made to a Participant under
Sections 6, 7, 8 and/or 9 of the Plan.

          2.2 “AWARD AGREEMENT” means the agreement executed by a Participant
pursuant to Sections 3.2 and 17.7 of the Plan in connection with the granting of
an Award.

          2.3 “BOARD” means the Board of Directors of the Company, as
constituted from time to time.

          2.4 “CODE” means the Internal Revenue Code of 1986, as in effect and
as amended from time to time, or any successor statute thereto, together with
any rules, regulations and interpretations promulgated thereunder or with
respect thereto.

          2.5 “COMMITTEE” means the committee of the Board established to
administer the Plan, as described in Section 3 of the Plan.

          2.6 “COMMON STOCK” means the Common Stock, par value $.01 per share,
of the Company or any security of the Company issued by the Company in
substitution or exchange therefor.

          2.7 “COMPANY” means First Albany Companies Inc., a New York
corporation, or any successor corporation to First Albany Companies Inc.

 

 

          2.8 “DISABILITY” means disability as defined in the Participant’s then
effective employment agreement, or if the participant is not then a party to an
effective employment agreement with the Company which defines disability,
“Disability” means disability as determined by the Committee in accordance with
standards and procedures similar to those under the Company’s long-term
disability plan, if any. Subject to the first sentence of this Section 2.8, at
any time that the Company does not maintain a long-term disability plan,
“Disability” shall mean any physical or mental disability which is determined to
be total and permanent by a physician selected in good faith by the Company.

          2.9 “EXCHANGE ACT” means the Securities Exchange Act of 1934, as in
effect and as amended from time to time, or any successor statute thereto,
together with any rules, regulations and interpretations promulgated thereunder
or with respect thereto.

          2.10 “FAIR MARKET VALUE” means on, or with respect to, any given
date(s), the average of the highest and lowest market prices of the Common
Stock, as reported on the NASDAQ NMS for such date(s) or, if the Common Stock
was not traded on such date(s), on the next preceding day or days on which the
Common Stock was traded. If at any time the Common Stock is not traded on such
exchange, the Fair Market Value of a share of the Common Stock shall be
determined in good faith by the Board.

          2.11 “INCENTIVE STOCK OPTION” means any stock option granted pursuant
to the provisions of Section 6 of the Plan (and the relevant Award Agreement)
that is intended to be (and is specifically designated as) an “incentive stock
option” within the meaning of Section 422 of the Code.

          2.12 “NON-QUALIFIED STOCK OPTION” means any stock option granted
pursuant to the provisions of Section 6 of the Plan (and the relevant Award
Agreement) that is not (and is specifically designated as not being) an
Incentive Stock Option.

          2.13 “PARTICIPANT” means any individual who is selected from time to
time under Section 5 to receive an Award under the Plan.

          2.14 “PERFORMANCE UNITS” means the monetary units granted under
Section 9 of the Plan and the relevant Award Agreement.

          2.15 “PLAN” means the First Albany Companies Inc. 1999 Long-Term
Incentive Plan, as set forth herein and as in effect and as amended from time to
time (together with any rules and regulations promulgated by the Committee with
respect thereto).

          2.16 “RESTRICTED SHARES” means the restricted shares of Common Stock
granted pursuant to the provisions of Section 8 of the Plan and the relevant
Award Agreement.

          2.17 “RETIREMENT” means the voluntary retirement by the Participant
from active employment with the Company and its Subsidiaries on or after the
attainment of (i) age 65, or (ii) 60, with the consent of the Board.

          2.18 “STOCK APPRECIATION RIGHT” means an Award described in Section
7.2 of the Plan and granted pursuant to the provisions of Section 7 of the Plan.

 

 

          2.19 “SUBSIDIARY(IES)” means any corporation (other than the Company)
in an unbroken chain of corporations, including and beginning with the Company,
if each of such corporations, other than the last corporation in the unbroken
chain, owns, directly or indirectly, more than fifty percent (50%) of the voting
stock in one of the other corporations in such chain.

     3. ADMINISTRATION.

          3.1 THE COMMITTEE. The Plan shall be administered by the Committee.
The Committee shall be appointed from time to time by the Board and shall be
comprised of not less than two (2) of the then members of the Board who are
Non-Employee Directors (within the meaning of SEC Rule 16b-3(b)(3)) of the
Company and Outside Directors (within the meaning of Section 162(m) of the
Code). No member of the Committee shall be eligible to receive awards under the
Plan. Consistent with the Bylaws of the Company, members of the Committee shall
serve at the pleasure of the Board and the Board, subject to the immediately
preceding sentence, may at any time and from time to time remove members from,
or add members to, the Committee.

          3.2 PLAN ADMINISTRATION AND PLAN RULES. The Committee is authorized to
construe and interpret the Plan and to promulgate, amend and rescind rules and
regulations relating to the implementation, administration and maintenance of
the Plan. Subject to the terms and conditions of the Plan, the Committee shall
make all determinations necessary or advisable for the implementation,
administration and maintenance of the Plan including, without limitation, (a)
selecting the Plan’s Participants, (b) making Awards in such amounts and form as
the Committee shall determine, (c) imposing such restrictions, terms and
conditions upon such Awards as the Committee shall deem appropriate, and (d)
correcting any technical defect(s) or technical omission(s), or reconciling any
technical inconsistency(ies), in the Plan and/or any Award Agreement. The
Committee may designate persons other than members of the Committee to carry out
the day-to-day ministerial administration of the Plan under such conditions and
limitations as it may prescribe, except that the Committee shall not delegate
its authority with regard to the selection for participation in the Plan and/or
the granting of any Awards to Participants. The Committee’s determinations under
the Plan need not be uniform and may be made selectively among Participants,
whether or not such Participants are similarly situated. Any determination,
decision or action of the Committee in connection with the construction,
interpretation, administration, implementation or maintenance of the Plan shall
be final, conclusive and binding upon all Participants and any person(s)
claiming under or through any Participants. The Company shall effect the
granting of Awards under the Plan, in accordance with the determinations made by
the Committee, by execution of written agreements and/or other instruments in
such form as is approved by the Committee. The Committee may, in its sole
discretion, delegate its authority to one or more senior executive officers for
the purpose of making Awards to Participants who are not subject to Section 16
of the Exchange Act.

          3.3 LIABILITY LIMITATION. Neither the Board nor the Committee, nor any
member of either, shall be liable for any act, omission, interpretation,
construction or determination made in good faith in connection with the Plan (or
any Award Agreement), and the members of the Board and the Committee shall be
entitled to indemnification and reimbursement by the Company in respect of any
claim, loss, damage or expense (including, without limitation, attorneys’ fees)
arising or resulting therefrom to the fullest extent permitted by law and/or
under any directors and officers liability insurance coverage which may be in
effect from time to time.

 

 

     4. TERM OF PLAN/COMMON STOCK SUBJECT TO PLAN.

          4.1 TERM. The Plan shall terminate on December 31, 2009, except with
respect to Awards then outstanding. After such date no further Awards shall be
granted under the Plan.

          4.2 COMMON STOCK. The maximum number of shares of Common Stock in
respect of which Awards may be granted or paid out under the Plan, subject to
adjustment as provided in Section 14.2 of the Plan, shall not exceed 3,600,000
shares. In the event of a change in the Common Stock of the Company that is
limited to a change in the designation thereof to “Capital Stock” or other
similar designation, or to a change in the par value thereof, or from par value
to no par value, without increase or decrease in the number of issued shares,
the shares resulting from any such change shall be deemed to be the Common Stock
for purposes of the Plan. Common Stock which may be issued under the Plan may be
either authorized and unissued shares or issued shares which have been
reacquired by the Company (in the open-market or in private transactions) and
which are being held as treasury shares. No fractional shares of Common Stock
shall be issued under the Plan.

          4.3 COMPUTATION OF AVAILABLE SHARES. For the purpose of computing the
total number of shares of Common Stock available for Awards under the Plan,
there shall be counted against the limitations set forth in Section 4.2 of the
Plan the maximum number of shares of Common Stock potentially subject to
issuance upon exercise or settlement of Awards granted under Sections 6 and 7 of
the Plan, the number of shares of Common Stock issued under grants of Restricted
Shares pursuant to Section 8 of the Plan and the maximum number of shares of
Common Stock potentially issuable under grants or payments of Performance Units
pursuant to Section 9 of the Plan, in each case determined as of the date on
which such Awards are granted. If any Awards expire unexercised or are
forfeited, surrendered, cancelled, terminated or settled in cash in lieu of
Common Stock, the shares of Common Stock which were theretofore subject (or
potentially subject) to such Awards shall again be available for Awards under
the Plan to the extent of such expiration, forfeiture, surrender, cancellation,
termination or settlement of such Awards.

     5. ELIGIBILITY. Individuals eligible for Awards under the Plan shall
consist of key employees and officers, or those who will become key employees or
officers, of the Company and/or its Subsidiaries whose performance or
contribution, in the sole discretion of the Committee, benefits or will benefit
the Company or any Subsidiary.

     6. STOCK OPTIONS.

          6.1 TERMS AND CONDITIONS. Stock options granted under the Plan shall
be in respect of Common Stock and may be in the form of Incentive Stock Options
or Non-Qualified Stock Options (sometimes referred to collectively herein as the
“Stock Option(s))”. Such Stock Options shall be subject to the terms and
conditions set forth in this Section 6 and any additional terms and conditions,
not inconsistent with the express terms and provisions of the Plan, as the
Committee shall set forth in the relevant Award Agreement.

          6.2 GRANT. Stock Options may be granted under the Plan in such form as
the Committee may from time to time approve. Stock Options may be granted alone
or in addition to other Awards under the Plan or in tandem with Stock
Appreciation Rights. Special provisions shall apply to Incentive Stock Options
granted to any employee who owns (within the meaning of Section

 

 

422(b)(6) of the Code) more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or its parent corporation or any
subsidiary of the Company, within the meaning of Sections 424(e) and (f) of the
Code (a “10% Shareholder”).

          6.3 EXERCISE PRICE. The exercise price per share of Common Stock
subject to a Stock Option shall be determined by the Committee, including,
without limitation, a determination based on a formula determined by the
Committee; provided, however, that the exercise price of an Incentive Stock
Option shall not be less than one hundred percent (100%) of the Fair Market
Value of the Common Stock on the date of the grant of such Incentive Stock
Option; provided, further, however, that, in the case of a 10% Shareholder, the
exercise price of an Incentive Stock Option shall not be less than one hundred
ten percent (110%) of the Fair Market Value of the Common Stock on the date of
grant.

          6.4 TERM. The term of each Stock Option shall be such period of time
as is fixed by the Committee; provided, however, that the term of any Incentive
Stock Option shall not exceed ten (10) years (five (5) years, in the case of a
10% Shareholder) after the date immediately preceding the date on which the
Incentive Stock Option is granted.

          6.5 METHOD OF EXERCISE. A Stock Option may be exercised, in whole or
in part, by giving written notice of exercise to the Secretary of the Company,
or the Secretary’s designee, specifying the number of shares to be purchased.
Such notice shall be accompanied by payment in full of the exercise price in
cash, by certified check, bank draft, or money order payable to the order of the
Company, by delivery of shares of Common Stock already owned by the Participant
for at least six (6) months, or, if permitted by the Committee (in its sole
discretion) and applicable law, by delivery of, alone or in conjunction with a
partial cash or instrument payment, (a) a fully-secured promissory note or
notes, or (b) some other form of payment acceptable to the Committee. Payment
instruments shall be received by the Company subject to collection. The proceeds
received by the Company upon exercise of any Stock Option may be used by the
Company for general corporate purposes. Any portion of a Stock Option that is
exercised may not be exercised again.

          6.6 EXERCISABILITY. In respect of any Stock Option granted under the
Plan, unless otherwise (a) determined by the Committee (in its sole discretion)
at any time and from time to time in respect of any such Stock Option, or (b)
provided in the Award Agreement or in the Participant’s employment agreement in
respect of any such Stock Option, such Stock Option shall become exercisable as
to the aggregate number of shares of Common Stock underlying such Stock Option,
as determined on the date of grant, as follows:

	 	–	 	25%, on the first anniversary of the date of grant of the Stock
Option, provided the Participant is then employed by the Company
and/or one of its Subsidiaries;
	 
	 	–	 	50%, on the second anniversary of the date of grant of the Stock
Option, provided the Participant is then employed by the Company
and/or one of its Subsidiaries;

 

 

	 	–	 	75%, on the third anniversary of the date of grant of the Stock
Option, provided the Participant is then employed by the Company
and/or one of its Subsidiaries;
	 
	 	–	 	100%, on the fourth anniversary of the date of grant of the Stock
Option, provided the Participant is then employed by the Company
and/or one of its Subsidiaries.

Notwithstanding anything to the contrary contained in this Section 6.6, such
Stock Option shall become one hundred percent (100%) exercisable as to the
aggregate number of shares of Common Stock underlying such Stock Option upon the
death, Disability or Retirement of the Participant.

          6.7 TANDEM GRANTS. If Non-Qualified Stock Options and Stock
Appreciation Rights are granted in tandem, as designated in the relevant Award
Agreements, the right of a Participant to exercise any such tandem Stock Option
shall terminate to the extent that the shares of Common Stock subject to such
Stock Option are used to calculate amounts or shares receivable upon the
exercise of the related tandem Stock Appreciation Right.

     7. STOCK APPRECIATION RIGHTS.

          7.1 TERMS AND CONDITIONS. The grant of Stock Appreciation Rights under
the Plan shall be subject to the terms and conditions set forth in this Section
7 and any additional terms and conditions, not inconsistent with the express
terms and provisions of the Plan, as the Committee shall set forth in the
relevant Award Agreement.

          7.2 STOCK APPRECIATION RIGHTS. A Stock Appreciation Right is an Award
granted with respect to a specified number of shares of Common Stock entitling a
Participant to receive an amount equal to the excess of the Fair Market Value of
a share of Common Stock on the date of exercise over the Fair Market Value of a
share of Common Stock on the date of grant of the Stock Appreciation Right,
multiplied by the number of shares of Common Stock with respect to which the
Stock Appreciation Right shall have been exercised.

          7.3 GRANT. A Stock Appreciation Right may be granted in addition to
any other Award under the Plan or in tandem with or independent of a
Non-Qualified Stock Option.

          7.4 DATE OF EXERCISABILITY. Unless otherwise provided in the
Participant’s employment agreement or the Award Agreement in respect of any
Stock Appreciation Right, a Stock Appreciation Right may be exercised by a
Participant, in accordance with and subject to all of the procedures established
by the Committee, in whole or in part at any time and from time to time during
its specified term. Notwithstanding the preceding sentence, in no event shall a
Stock Appreciation Right be exercisable prior to the date which is six (6)
months after the date on which the Stock Appreciation Right was granted or prior
to the exercisability of any Non-Qualified Stock Option with which it is granted
in tandem. The Committee may also provide, as set forth in the relevant Award
Agreement and without limitation, that some Stock Appreciation Rights shall be
automatically exercised and settled on one or more fixed dates specified therein
by the Committee.

 

 

           7.5 FORM OF PAYMENT. Upon exercise of a Stock Appreciation Right,
payment may be made in cash, in Restricted Shares or in shares of unrestricted
Common Stock, or in any combination thereof, as the Committee, in its sole
discretion, shall determine and provide in the relevant Award Agreement.

          7.6 TANDEM GRANT. The right of a Participant to exercise a tandem
Stock Appreciation Right shall terminate to the extent such Participant
exercises the Non-Qualified Stock Option to which such Stock Appreciation Right
is related.

     8. RESTRICTED SHARES.

          8.1 TERMS AND CONDITIONS. Grants of Restricted Shares shall be subject
to the terms and conditions set forth in this Section 8 and any additional terms
and conditions, not inconsistent with the express terms and provisions of the
Plan, as the Committee shall set forth in the relevant Award Agreement.
Restricted Shares may be granted alone or in addition to any other Awards under
the Plan. Subject to the terms of the Plan, the Committee shall determine the
number of Restricted Shares to be granted to a Participant and the Committee may
provide or impose different terms and conditions on any particular Restricted
Share grant made to any Participant. With respect to each Participant receiving
an Award of Restricted Shares, there shall be issued a stock certificate (or
certificates) in respect of such Restricted Shares. Such stock certificate(s)
shall be registered in the name of such Participant, shall be accompanied by a
stock power duly executed by such Participant, and shall bear, among other
required legends, the following legend:

“The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including,
without limitation, forfeiture events) contained in the First Albany
Companies Inc. 1999 Long-Term Incentive Plan and an Award Agreement
entered into between the registered owner hereof and First Albany
Companies Inc. Copies of such Plan and Award Agreement are on file in
the office of the Secretary of First Albany Companies Inc., 30 S.
Pearl Street, Albany, New York 12207. First Albany Companies Inc. will
furnish to the recordholder of the certificate, without charge and
upon written request at its principal place of business, a copy of
such Plan and Award Agreement. First Albany Companies Inc. reserves
the right to refuse to record the transfer of this certificate until
all such restrictions are satisfied, all such terms are complied with
and all such conditions are satisfied.”

Such stock certificate evidencing such shares shall, in the sole discretion of
the Committee, be deposited with and held in custody by the Company until the
restrictions thereon shall have lapsed and all of the terms and conditions
applicable to such grant shall have been satisfied.

          8.2 RESTRICTED SHARE GRANTS. A grant of Restricted Shares is an Award
of shares of Common Stock granted to a Participant, subject to such
restrictions, terms and conditions as the Committee deems appropriate,
including, without limitation, (a) restrictions on the sale, assignment,
transfer, hypothecation or other disposition of such shares, (b) the requirement
that the Participant deposit such shares with the Company while such shares are
subject to such restrictions, and (c) the requirement that such shares be
forfeited upon termination of employment for specified reasons

 

 

within a specified period of time or for other reasons (including, without
limitation, the failure to achieve designated performance goals).

          8.3 RESTRICTION PERIOD. In accordance with Sections 8.1 and 8.2 of the
Plan and unless otherwise determined by the Committee (in its sole discretion)
at any time and from time to time, Restricted Shares shall only become
unrestricted and vested in the Participant in accordance with such vesting
schedule relating to such Restricted Shares, if any, as the Committee may
establish in the relevant Award Agreement (the “Restriction Period”).
Notwithstanding the preceding sentence, in no event shall the Restriction Period
be less than six (6) months after the date of grant. During the Restriction
Period, such stock shall be and remain unvested and a Participant may not sell,
assign, transfer, pledge, encumber or otherwise dispose of or hypothecate such
Award. Upon satisfaction of the vesting schedule and any other applicable
restrictions, terms and conditions, the Participant shall be entitled to receive
payment of the Restricted Shares or a portion thereof, as the case may be, as
provided in Section 8.4 of the Plan.

          8.4 PAYMENT OF RESTRICTED SHARE GRANTS. After the satisfaction and/or
lapse of the restrictions, terms and conditions established by the Committee in
respect of a grant of Restricted Shares, a new certificate, without the legend
set forth in Section 8.1 of the Plan, for the number of shares of Common Stock
which are no longer subject to such restrictions, terms and conditions shall, as
soon as practicable thereafter, be delivered to the Participant.

          8.5 SHAREHOLDER RIGHTS. A Participant shall have, with respect to the
shares of Common Stock underlying a grant of Restricted Shares, all of the
rights of a shareholder of such stock (except as such rights are limited or
restricted under the Plan or in the relevant Award Agreement). Any stock
dividends paid in respect of unvested Restricted Shares shall be treated as
additional Restricted Shares and shall be subject to the same restrictions and
other terms and conditions that apply to the unvested Restricted Shares in
respect of which such stock dividends are issued.

     9. PERFORMANCE UNITS.

          9.1 TERMS AND CONDITIONS. Performance Units shall be subject to the
terms and conditions set forth in this Section 9 and any additional terms and
conditions, not inconsistent with the express provisions of the Plan, as the
Committee shall set forth in the relevant Award Agreement.

          9.2 PERFORMANCE UNIT GRANTS. A Performance Unit is an Award of units
(with each unit representing such monetary amount as is designated by the
Committee in the Award Agreement) granted to a Participant, subject to such
terms and conditions as the Committee deems appropriate, including, without
limitation, the requirement that the Participant forfeit such units (or a
portion thereof) in the event certain performance criteria or other conditions
are not met within a designated period of time.

          9.3 GRANTS. Performance Units may be granted alone or in addition to
any other Awards under the Plan. Subject to the terms of the Plan, the Committee
shall determine the number of Performance Units to be granted to a Participant
and the Committee may impose different terms and conditions on any particular
Performance Units granted to any Participant.

 

 

          9.4 PERFORMANCE GOALS AND PERFORMANCE PERIODS. Participants receiving
a grant of Performance Units shall only earn into and be entitled to payment in
respect of such Awards if the Company and/or the Participant achieves certain
performance goals (the “Performance Goals”) during and in respect of a
designated performance period (the “Performance Period”). The Performance Goals
and the Performance Period shall be established by the Committee, in its sole
discretion. The Committee shall establish Performance Goals for each Performance
Period prior to, or as soon as practicable after, the commencement of such
Performance Period. The Committee shall also establish a schedule or schedules
for Performance Units setting forth the portion of the Award which will be
earned or forfeited based on the degree of achievement, or lack thereof, of the
Performance Goals at the end of the relevant Performance Period. In setting
Performance Goals, the Committee may use, but shall not be limited to, such
measures as total shareholder return, return on equity, net earnings growth,
sales or revenue growth, cash flow, comparisons to peer companies, individual or
aggregate Participant performance or such other measure or measures of
performance as the Committee, in its sole discretion, may deem appropriate. Such
performance measures shall be defined as to their respective components and
meaning by the Committee (in its sole discretion). During any Performance
Period, the Committee shall have the authority to adjust the Performance Goals
and/or the Performance Period in such manner as the Committee, in its sole
discretion, deems appropriate at any time and from time to time.

          9.5 PAYMENT OF UNITS. With respect to each Performance Unit, the
Participant shall, if the applicable Performance Goals have been achieved, or
partially achieved, as determined by the Committee in its sole discretion, by
the Company and/or the Participant during the relevant Performance Period, be
entitled to receive payment in an amount equal to the designated value of each
Performance Unit times the number of such units so earned. Payment in settlement
of earned Performance Units shall be made as soon as practicable following the
conclusion of the respective Performance Period in cash, in unrestricted Common
Stock, or in Restricted Shares, or in any combination thereof, as the Committee
in its sole discretion, shall determine and provide in the relevant Award
Agreement.

     10. DEFERRAL ELECTIONS/TAX REIMBURSEMENTS/OTHER PROVISIONS.

          10.1 DEFERRALS. The Committee may permit a Participant to elect to
defer receipt of any payment of cash or any delivery of shares of Common Stock
that would otherwise be due to such Participant by virtue of the exercise, earn
out or settlement of any Award made under the Plan. If any such election is
permitted, the Committee shall establish rules and procedures for such
deferrals, including, without limitation, the payment or crediting of reasonable
interest on such deferred amounts credited in cash, and the payment or crediting
of dividend equivalents in respect of deferrals credited in units of Common
Stock. The Committee may also provide in the relevant Award Agreement for a tax
reimbursement cash payment to be made by the Company in favor of any Participant
in connection with the tax consequences resulting from the grant, exercise,
settlement, or earn out of any Award made under the Plan.

          10.2 PERFORMANCE-BASED AWARDS. Performance Units, performance-based
Restricted Shares, and other Awards subject to performance criteria are intended
to be “qualified performance-based compensation” within the meaning of section
162(m) of the Code and shall be paid solely on account of the attainment of one
or more preestablished, objective performance goals within the meaning of
section 162(m) and the regulations thereunder. Until otherwise determined by

 

 

the Committee, the performance goals shall be the attainment of preestablished
levels of any of net income, market price per share, earnings per share, return
on equity, return on capital employed and/or cash flow. The payout of any such
Award to a Covered Employee may be reduced, but not increased, based on the
degree of attainment of other performance criteria or otherwise at the
discretion of the Committee. For purposes of the Plan, “Covered Employee” has
the same meaning as set forth in Section 162(m) of the Code.

          10.3 MAXIMUM YEARLY AWARDS. The maximum annual Common Stock amounts in
this Section 10.3 are subject to adjustment under Section 14.2 and are subject
to the Plan maximum under Section 4.2.

     10.3.1 PERFORMANCE-BASED AWARDS. The maximum amount payable in
respect of Performance Units, performance-based Restricted Shares and
other Awards subject to performance criteria in any calendar year may
not exceed 300,000 shares of Common Stock (or the then equivalent Fair
Market Value thereof) in the case of any individual Participant.

     10.3.2 STOCK OPTIONS AND SARS. Each individual Participant may
not receive in any calendar year Awards of Options or Stock
Appreciation Rights exceeding 300,000 underlying shares of Common
Stock.

     11. DIVIDEND EQUIVALENTS. In addition to the provisions of Section 8.5 of
the Plan, Awards of Stock Options, and/or Stock Appreciation Rights, may, in the
sole discretion of the Committee and if provided for in the relevant Award
Agreement, earn dividend equivalents. In respect of any such Award which is
outstanding on a dividend record date for Common Stock, the Participant shall be
credited with an amount equal to the amount of cash or stock dividends that
would have been paid on the shares of Common Stock covered by such Award had
such covered shares been issued and outstanding on such dividend record date.
The Committee shall establish such rules and procedures governing the crediting
of such dividend equivalents, including, without limitation, the amount, the
timing, form of payment and payment contingencies and/or restrictions of such
dividend equivalents, as it deems appropriate or necessary.

     12. TERMINATION OF EMPLOYMENT.

          12.1 GENERAL. Except as is otherwise provided (a) in the relevant
Award Agreement as determined by the Committee (in its sole discretion), or (b)
in the Participant’s then effective employment agreement, if any, the following
terms and conditions shall apply as appropriate and as not inconsistent with the
terms and conditions, if any, contained in such Award Agreement and/or such
employment agreement:

          12.1.1 OPTIONS/SARS. Subject to any determination of the
Committee pursuant to Section 6.6 of the Plan, if a Participant’s
employment with the Company terminates for any reason, any then
unexercisable Stock Options and/or Stock Appreciation Rights shall be
forfeited and cancelled by the Company. Except as otherwise provided in
this Section 12.1.1, if a Participant’s employment with the Company and its
Subsidiaries terminates for any reason, such Participant’s rights, if any,
to exercise any then exercisable Stock Options and/or Stock Appreciation
Rights, if any, shall terminate ninety (90) days after

 

 

the date of such termination (but not beyond the stated term of any such
Stock Option and/or Stock Appreciation Right as determined under Sections
6.4 and 7.4) and thereafter such Stock Options or Stock Appreciation Rights
shall be forfeited and cancelled by the Company. The Committee, in its sole
discretion, may determine that any such Participant’s Stock Options and/or
Stock Appreciation Rights, if any, to the extent exercisable immediately
prior to any termination of employment (other than a termination due to
death, Retirement or Disability), may remain exercisable for an additional
specified time period after such ninety (90) day period expires (subject to
any other applicable terms and provisions of the Plan and the relevant
Award Agreement), but not beyond the stated term of any such Stock Option
and/or Stock Appreciation Right. If any termination of employment is due to
death, Retirement or Disability, a Participant (and such Participant’s
estate, designated beneficiary or other legal representative, as the case
may be and as determined by the Committee) shall have the right, to the
extent exercisable immediately prior to any such termination, to exercise
such Stock Options and/or Stock Appreciation Rights, if any, at any time
within the one (1) year period following such termination due to death,
Retirement or Disability (but not beyond the term of any such Stock Option
and/or Stock Appreciation Right as determined under Sections 6.4 and 7.4).

          12.1.2 RESTRICTED SHARES. If a Participant’s employment with the
Company and its Subsidiaries terminates for any reason (other than due to
Disability, Retirement or death) prior to the satisfaction and/or lapse of
the restrictions, terms and conditions applicable to a grant of Restricted
Shares, such 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. Notwithstanding anything to the
contrary in this Section 12, the Committee, in its sole discretion, may
determine, prior to or within ninety (90) days after the date of such
termination, that all or a portion of any such Participant’s Restricted
Shares shall not be so cancelled and forfeited. If the Participant’s
employment terminates due to death, Disability or Retirement, the
Participant shall become 100% vested in any such Participant’s restricted
Shares as of the date of any such termination.

          12.1.3 PERFORMANCE UNITS. If a Participant’s employment with the
Company and its Subsidiaries terminates for any reason (other than due to
Disability, Retirement or death) prior to the completion of any Performance
Period, any Performance Units granted in respect of such Performance Period
shall immediately be cancelled by the Company 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
Performance Units. Notwithstanding anything to the contrary in this Section
12, the Committee, in its sole discretion may determine, prior to or within
ninety (90) days after the date of any such termination, that all or a
portion of any such Participant’s Performance Units shall not be so
cancelled and forfeited upon termination of employment for any reason or
for a particular reason. If the Participant’s employment terminates due to
death, Disability or Retirement, the Participant shall be entitled to earn
into such Participant’s Performance Units in accordance with Section 9 of
the Plan; provided, however, that any such earn out (determined in good
faith by the Committee) shall be proportionately reduced based on the
number of days transpired in the relevant Performance Periods prior to such
death, Disability or Retirement over the total number of calendar days in
any such relevant Performance Period.

 

 

     13. NON-TRANSFERABILITY OF AWARDS. Unless otherwise provided in the Award
Agreement, no Award under the Plan or any Award Agreement, and no rights or
interests herein or therein, shall or may be assigned, transferred, sold,
exchanged, encumbered, pledged, or otherwise hypothecated or disposed of by a
Participant or any beneficiary(ies) of any Participant, except by testamentary
disposition by the Participant or the laws of intestate succession. No such
interest shall be subject to execution, attachment or similar legal process,
including, without limitation, seizure for the payment of the Participant’s
debts, judgements, alimony, or separate maintenance. Unless otherwise provided
in the Award Agreement, during the lifetime of a Participant, Stock Options and
Stock Appreciation Rights are exercisable only by the Participant.

     14. CHANGES IN CAPITALIZATION AND OTHER MATTERS.

          14.1 NO CORPORATE ACTION RESTRICTION. The existence of the Plan, any
Award Agreement and/or the Awards granted hereunder shall not limit, affect or
restrict in any way the right or power of the Board or the shareholders of the
Company to make or authorize (a) any adjustment, recapitalization,
reorganization or other change in the Company’s or any Subsidiary’s capital
structure or its business, (b) any merger, consolidation or change in the
ownership of the Company or any Subsidiary, (c) any issue of bonds, debentures,
capital, preferred or prior preference stocks ahead of or affecting the
Company’s or any Subsidiary’s capital stock or the rights thereof, (d) any
dissolution or liquidation of the Company or any Subsidiary, (e) any sale or
transfer of all or any part of the Company’s or any Subsidiary’s assets or
business, or (f) any other corporate act or proceeding by the Company or any
Subsidiary. No Participant, beneficiary or any other person shall have any claim
against any member of the Board or the Committee, the Company or any Subsidiary,
or any employees, officers or agents of the Company or any subsidiary, as a
result of any such action. Notwithstanding anything herein contained to the
contrary, any Award granted hereunder shall be cancelled immediately prior to
the effective time of a transaction between the Company and another party
pursuant to a written agreement whereby the consummation of the transaction is
conditioned upon the availability of “pooling of interests” accounting treatment
(within the meaning of A.P.B. No. 16 or any successor thereto); provided,
however, that the cancellation of such Awards shall be subject to the following
conditions:

     (i) the existence of the Awards would (in the opinion of the firm
of independent certified public accountants regularly engaged to audit
the Company’s financial statements) render the transaction ineligible
for pooling of interests accounting treatment;

     (ii) the cancellation of the Awards would (in the opinion of the
firm of independent certified public accountants regularly engaged to
audit the Company’s financial statements) render the transaction
eligible for pooling of interests accounting treatment;

     (iii) the transaction is, in fact, consummated; and

     (iv) the written agreement providing for the transaction provides
for each Participant to whom an Award has been granted and whose Award
must be cancelled in accordance with this provision to receive, upon
the effective date of such

 

 

transaction, property with a fair market value at least equal to the
monetary payment that would be made upon exercise of such Award.

          14.2 RECAPITALIZATION ADJUSTMENTS. In the event of any change in
capitalization affecting the Common Stock of the Company, including, without
limitation, a distribution, stock split, reverse stock split, recapitalization,
consolidation, subdivision, split-up, spin-off, split-off, combination or
exchange of shares or other form of reorganization or recapitalization, or any
other change affecting the Common Stock, the Board shall authorize and make such
proportionate adjustments, if any, as the Board deems appropriate to reflect
such change, including, without limitation, with respect to the aggregate number
of shares of the Common Stock for which Awards in respect thereof may be granted
under the Plan, the maximum number of shares of the Common Stock which may be
granted or awarded to any Participant, the number of shares of the Common Stock
covered by each outstanding Award, and the exercise price or other price per
share of Common Stock in respect of outstanding Awards. Notwithstanding the
foregoing, in the event of a stock dividend, the proportionate adjustments
described in this Section 14.2 shall occur automatically, without any Board
action being required.

          14.3 CERTAIN MERGERS.

          14.3.1 If the Company enters into or is involved in any merger,
reorganization or other business combination with any person or entity
(such merger, reorganization or other business combination to be referred
to herein as a “Merger Event”) and as a result of any such Merger Event the
Company will be or is the surviving corporation, a Participant shall be
entitled, as of the date of the execution of the agreement evidencing the
Merger Event (the “Execution Date”) and with respect to both exercisable
and unexercisable Stock Options and/or Stock Appreciation Rights (but only
to the extent not previously exercised), to receive substitute stock
options and/or stock appreciation rights in respect of the shares of the
surviving corporation on such terms and conditions, as to the number of
shares, pricing and otherwise, which shall substantially preserve the
value, rights and benefits of any affected Stock Options or Stock
Appreciation Rights granted hereunder as of the date of the consummation of
the Merger Event. Notwithstanding anything to the contrary in this Section
14.3, if any Merger Event occurs, the Company shall have the right, but not
the obligation, to pay to each affected Participant an amount in cash or
certified check equal to the excess of the Fair Market Value of the Common
Stock underlying any affected unexercised Stock Options or Stock
Appreciation Rights as of the Execution Date (whether then exercisable or
not) over the aggregate exercise price of such unexercised Stock Options
and/or Stock Appreciation Rights, as the case may be. However, the Company
shall not make any such payments where the consummation of the Merger Event
is pursuant to a written agreement between the Company and another party
conditioned upon the availability of “pooling of interests” accounting
treatment (within the meaning of A.P.B. No. 16 or any successor thereto).

          14.3.2 If, in the case of a Merger Event in which the Company
will not be, or is not, the surviving corporation, and the Company
determines not to make the cash or certified check payment described in
Section 14.3.1 of the Plan, the Company shall compel and obligate, as a
condition of the consummation of the Merger Event, the surviving or
resulting corporation and/or the other party to the Merger Event, as
necessary, or any parent, subsidiary or acquiring corporation thereof, to
grant, with respect to both exercisable and

 

 

unexercisable Stock Options and/or Stock Appreciation Rights (but only to
the extent not previously exercised), substitute stock options or stock
appreciation rights in respect of the shares of common or other capital
stock of such surviving or resulting corporation on such terms and
conditions, as to the number of shares, pricing and otherwise, which shall
substantially preserve the value, rights and benefits of any affected Stock
Options and/or Stock Appreciation Rights previously granted hereunder as of
the date of the consummation of the Merger Event.

          14.3.3 Upon receipt by any affected Participant of any such cash,
certified check, or substitute stock options or stock appreciation rights
as a result of any such Merger Event, such Participant’s affected Stock
Options and/or Stock Appreciation Rights for which such cash, certified
check or substitute awards was received shall be thereupon cancelled
without the need for obtaining the consent of any such affected
Participant.

          14.3.4 The foregoing adjustments and the manner of application of
the foregoing provisions, including, without limitation, the issuance of
any substitute stock options and/or stock appreciation rights, shall be
determined in good faith by the Committee in its sole discretion. Any such
adjustment may provide for the elimination of fractional shares.

     15. CHANGE OF CONTROL.

          15.1 ACCELERATION OF AWARDS VESTING. Anything in the Plan to the
contrary notwithstanding, if a Change of Control of the Company occurs (a) all
Stock Options and/or Stock Appreciation Rights then unexercised and outstanding
shall become fully vested and exercisable as of the date of the Change of
Control, (b) all restrictions, terms and conditions applicable to all Restricted
Shares then outstanding shall be deemed lapsed and satisfied as of the date of
the Change of Control, and (c) the Performance Period shall be deemed completed,
all Performance Goals shall be deemed attained at the highest levels and all
Performance Units shall be deemed to have been fully earned as of the date of
the Change of Control. The immediately preceding sentence shall apply to only
those Participants (i) who are employed by the Company and/or one of its
Subsidiaries as of the date of the Change of Control, or (ii) to whom Section
15.3 below is applicable.

          15.2 PAYMENT AFTER CHANGE OF CONTROL. Notwithstanding anything to the
contrary in the Plan, within thirty (30) days after a Change of Control occurs,
(a) the holder of an Award of Restricted Shares vested under Section 15.1(b)
above shall receive a new certificate for such shares without the legend set
forth in Section 8 of the Plan (and, in the case only of a Change of Control
under Section 15.4.1 of the Plan, such holder shall have the right, but not the
obligation, to elect, within ten (10) business days after the Participant has
actual or constructive knowledge of the occurrence of such Change of Control, to
require the Company to purchase such shares from the Participant at their then
Fair Market Value, (b) the holder of Performance Units shall receive payment of
the value of such grants in cash at the highest levels, and (c) in the case only
of a Change of Control under Section 15.4.1 of the Plan, the holders of any
Stock Options and/or Stock Appreciation Rights shall have the right, but not the
obligation, to elect, within ten (10) business days after the Participant has
actual or constructive knowledge of the occurrence of such Change of Control, to
require the Company to purchase such Stock Options and/or Stock Appreciation
Rights from the Participant for an aggregate amount equal to the then aggregate
Fair Market Value of the

 

 

Common Stock underlying such Awards tendered, less the aggregate exercise price
of such tendered Awards.

     15.3 TERMINATION AS A RESULT OF A CHANGE OF CONTROL. Anything in the Plan
to the contrary notwithstanding, if a Change of Control occurs and if the
Participant’s employment is terminated before such Change of Control and it is
reasonably demonstrated by the Participant that such employment termination (a)
was at the request, directly or indirectly, of a third party who has taken steps
reasonably calculated to effect the Change of Control, or (b) otherwise arose in
connection with or in anticipation of the Change of Control, then for purposes
of this Section 15, the Change of Control shall be deemed to have occurred
immediately prior to such Participant’s employment termination (for all purposes
other than those set forth in Section 15.2(c) of the Plan).

     15.4 CHANGE OF CONTROL. For the purpose of this Agreement, “Change of
Control” shall mean:

     15.4.1 The acquisition, after the effective date of the Plan, by an
individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either
(a) the shares of the Common Stock, or (b) the combined voting power of the
voting securities of the Company entitled to vote generally in the election
of directors (the “Voting Securities”); provided, however, that the
following acquisitions shall not constitute a Change of Control: (i) any
acquisition by any individual who, on the effective date of the Plan,
beneficially owned 10% or more of the Common Stock, (ii) any acquisition by
any employee benefit plan (or related trust) sponsored or maintained by the
Company or any Subsidiary, (iii) any acquisition by any underwriter in
connection with any firm commitment underwriting of securities to be issued
by the Company, or (iv) any acquisition by any corporation if, immediately
following such acquisition, more than 70% of the then outstanding shares of
common stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation (entitled to vote
generally in the election of directors), is beneficially owned, directly or
indirectly, by all or substantially all of the individuals and entities
who, immediately prior to such acquisition, were the beneficial owners of
the Common Stock and the Voting Securities in substantially the same
proportions, respectively, as their ownership, immediately prior to such
acquisition, of the Common Stock and Voting Securities; or

     15.4.2 Individuals who, as of the effective date of the Plan,
constitute the Board (the “Incumbent Board”) cease thereafter for any
reason to constitute at least a majority of the Board; provided, however,
that any individual becoming a director subsequent to the effective date of
the Plan whose election, or nomination for election by the Company’s
shareholders, was approved by at least a majority of the directors then
serving and comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of office occurs
as a result of either an actual or threatened election contest (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or
consents; or

     15.4.3 Approval by the shareholders of the Company of a
reorganization, merger or consolidation, other than a reorganization,
merger or consolidation with respect to

 

 

which all or substantially all of the individuals and entities who were the
beneficial owners, immediately prior to such reorganization, merger or
consolidation, of the Common Stock and Voting Securities beneficially own,
directly or indirectly, immediately after such reorganization, merger or
consolidation more than 70% of the then outstanding common stock and voting
securities (entitled to vote generally in the election of directors) of the
corporation resulting from such reorganization, merger or consolidation in
substantially the same proportions as their respective ownership,
immediately prior to such reorganization, merger or consolidation, of the
Common Stock and the Voting Securities; or

     15.4.4 Approval by the shareholders of the Company of (a) a complete
liquidation or substantial dissolution of the Company, or (b) the sale or
other disposition of all or substantially all of the assets of the Company,
other than to a Subsidiary, wholly-owned, directly or indirectly, by the
Company.

16. AMENDMENT, SUSPENSION AND TERMINATION.

     16.1 IN GENERAL. The Board may suspend or terminate the Plan (or any
portion thereof) at any time and may amend the Plan at any time and from time to
time in such respects as the Board may deem advisable to insure that any and all
Awards conform to or otherwise reflect any change in applicable laws or
regulations, or to permit the Company or the Participants to benefit from any
change in applicable laws or regulations, or in any other respect the Board may
deem to be in the best interests of the Company or any Subsidiary. No such
amendment, suspension or termination shall (x) materially adversely effect the
rights of any Participant under any outstanding Stock Options, Stock
Appreciation Rights, Performance Units, or Restricted Share grants, without the
consent of such Participant, or (y) make any change that would disqualify the
Plan, or any other plan of the Company or any Subsidiary intended to be so
qualified, from the benefits provided under Section 422 of the Code, or any
successor provisions thereto.

     16.2 AWARD AGREEMENT MODIFICATIONS. The Committee may (in its sole
discretion) amend or modify at any time and from time to time the terms and
provisions of any outstanding Stock Options, Stock Appreciation Rights,
Performance Units, or Restricted Share grants, in any manner to the extent that
the Committee under the Plan or any Award Agreement could have initially
determined the restrictions, terms and provisions of such Stock Options, Stock
Appreciation Rights, Performance Units, and/or Restricted Share grants,
including, without limitation, changing or accelerating (a) the date or dates as
of which such Stock Options or Stock Appreciation Rights shall become
exercisable, (b) the date or dates as of which such Restricted Share grants
shall become vested, or (c) the performance period or goals in respect of any
Performance Units. No such amendment or modification shall, however, materially
adversely affect the rights of any Participant under any such Award without the
consent of such Participant.

17. MISCELLANEOUS.

     17.1 TAX WITHHOLDING. The Company shall have the right to deduct from any
payment or settlement under the Plan, including, without limitation, the
exercise of any Stock Option or Stock Appreciation Right, or the delivery,
transfer or vesting of any Common Stock or Restricted Shares, any federal,
state, local or other taxes of any kind which the Committee, in its sole
discretion, deems necessary to be withheld to comply with the Code and/or any
other applicable law, rule or regulation. Shares of Common Stock may be used to
satisfy any such tax withholding. Such

 

 

Common Stock shall be valued based on the Fair Market Value of such stock as of
the date the tax withholding is required to be made, such date to be determined
by the Committee.

     17.2 NO RIGHT TO EMPLOYMENT. Neither the adoption of the Plan, the granting
of any Award, nor the execution of any Award Agreement, shall confer upon any
employee of the Company or any Subsidiary any right to continued employment with
the Company or any Subsidiary, as the case may be, nor shall it interfere in any
way with the right, if any, of the Company or any Subsidiary to terminate the
employment of any employee at any time for any reason.

     17.3 UNFUNDED PLAN. The Plan shall be unfunded and the Company shall not be
required to segregate any assets in connection with any Awards under the Plan.
Any liability of the Company to any person with respect to any Award under the
Plan or any Award Agreement shall be based solely upon the contractual
obligations that may be created as a result of the Plan or any such award or
agreement. No such obligation of the Company shall be deemed to be secured by
any pledge of, encumbrance on, or other interest in, any property or asset of
the Company or any Subsidiary. Nothing contained in the Plan or any Award
Agreement shall be construed as creating in respect of any Participant (or
beneficiary thereof or any other person) any equity or other interest of any
kind in any assets of the Company or any Subsidiary or creating a trust of any
kind or a fiduciary relationship of any kind between the Company, any Subsidiary
and/or any such Participant, any beneficiary thereof or any other person.

     17.4 PAYMENTS TO A TRUST. The Committee is authorized to cause to be
established a trust agreement or several trust agreements or similar
arrangements from which the Committee may make payments of amounts due or to
become due to any Participants under the Plan.

     17.5 OTHER COMPANY BENEFIT AND COMPENSATION PROGRAMS. Payments and other
benefits received by a Participant under an Award made pursuant to the Plan
shall not be deemed a part of a Participant’s compensation for purposes of the
determination of benefits under any other employee welfare or benefit plans or
arrangements, if any, provided by the Company or any Subsidiary unless expressly
provided in such other plans or arrangements, or except where the Board
expressly determines in writing that inclusion of an Award or portion of an
Award should be included to accurately reflect competitive compensation
practices or to recognize that an Award has been made in lieu of a portion of
competitive annual base salary or other cash compensation. Awards under the Plan
may be made in addition to, in combination with, or as alternatives to, grants,
awards or payments under any other plans or arrangements of the Company or its
Subsidiaries. The existence of the Plan notwithstanding, the Company or any
Subsidiary may adopt such other compensation plans or programs and additional
compensation arrangements as it deems necessary to attract, retain and motivate
employees.

     17.6 LISTING, REGISTRATION AND OTHER LEGAL COMPLIANCE. No Awards or shares
of the Common Stock shall be required to be issued or granted under the Plan
unless legal counsel for the Company shall be satisfied that such issuance or
grant will be in compliance with all applicable federal and state securities
laws and regulations and any other applicable laws or regulations. The Committee
may require, as a condition of any payment or share issuance, that certain
agreements, undertakings, representations, certificates, and/or information, as
the Committee may deem necessary or advisable, be executed or provided to the
Company to assure compliance with all such applicable laws or regulations.
Certificates for shares of the Restricted Shares and/or Common Stock

 

 

delivered under the Plan may be subject to such stock-transfer orders and such
other restrictions as the Committee may deem advisable under the rules,
regulations, or other requirements of the Securities and Exchange Commission,
any stock exchange upon which the Common Stock is then listed, and any
applicable federal or state securities law. In addition, if, at any time
specified herein (or in any Award Agreement or otherwise) for (a) the making of
any Award, or the making of any determination, (b) the issuance or other
distribution of Restricted Shares and/or Common Stock, or (c) the payment of
amounts to or through a Participant with respect to any Award, any law, rule,
regulation or other requirement of any governmental authority or agency shall
require either the Company, any Subsidiary or any Participant (or any estate,
designated beneficiary or other legal representative thereof) to take any action
in connection with any such determination, any such shares to be issued or
distributed, any such payment, or the making of any such determination, as the
case may be, shall be deferred until such required action is taken. With respect
to persons subject to Section 16 of the Exchange Act, transactions under the
Plan are intended to comply with all applicable conditions of SEC Rule 16b-3. To
the extent any provision of the Plan or any action by the administrators of the
Plan fails to so comply with such rule, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Committee.

     17.7 AWARD AGREEMENTS. Each Participant receiving an Award under the Plan
shall enter into an Award Agreement with the Company in a form specified by the
Committee. Each such Participant shall agree to the restrictions, terms and
conditions of the Award set forth therein and in the Plan.

     17.8 DESIGNATION OF BENEFICIARY. Each Participant to whom an Award has been
made under the Plan may designate a beneficiary or beneficiaries to exercise any
option or to receive any payment which under the terms of the Plan and the
relevant Award Agreement may become exercisable or payable on or after the
Participant’s death. At any time, and from time to time, any such designation
may be changed or cancelled by the Participant without the consent of any such
beneficiary. Any such designation, change or cancellation must be on a form
provided for that purpose by the Committee and shall not be effective until
received by the Committee. If no beneficiary has been designated by a deceased
Participant, or if the designated beneficiaries have predeceased the
Participant, the beneficiary shall be the Participant’s estate. If the
Participant designates more than one beneficiary, any payments under the Plan to
such beneficiaries shall be made in equal shares unless the Participant has
expressly designated otherwise, in which case the payments shall be made in the
shares designated by the Participant.

     17.9 LEAVES OF ABSENCE/TRANSFERS. The Committee shall have the power to
promulgate rules and regulations and to make determinations, as it deems
appropriate, under the Plan in respect of any leave of absence from the Company
or any Subsidiary granted to a Participant. Without limiting the generality of
the foregoing, the Committee may determine whether any such leave of absence
shall be treated as if the Participant has terminated employment with the
Company or any such Subsidiary. If a Participant transfers within the Company,
or to or from any Subsidiary, such Participant shall not be deemed to have
terminated employment as a result of such transfers.

     17.10 LOANS. Subject to applicable law, the Committee may provide, pursuant
to Plan rules, for the Company or any Subsidiary to make loans to Participants
to finance the exercise price of any Stock Options, as well as the withholding
obligation under Section 17.1 of the Plan and/or the estimated or actual taxes
payable by the Participant as a result of the exercise of such Stock Option and
the Committee may prescribe the terms and conditions of any such loan.

 

 

     17.11 GOVERNING LAW. The Plan and all actions taken thereunder 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. Any titles and
headings herein are for reference purposes only, and shall in no way limit,
define or otherwise affect the meaning, construction or interpretation of any
provisions of the Plan.

     17.12 EFFECTIVE DATE. The Plan shall be effective upon its approval by the
Board and adoption by the Company, subject to the approval of the Plan by the
Company’s shareholders in accordance with Sections 162(m) and 422 of the Code.

 

 

FOURTH AMENDMENT TO

THE FIRST ALBANY COMPANIES INC.

1999 LONG-TERM INCENTIVE PLAN

     WHEREAS, the First Albany Companies Inc. 1999 Long-Term Incentive Plan (the
“Plan”) was adopted by the Board of Directors (the “Board”) of First Albany
Companies Inc. (the “Company”) on March 26, 1999 and approved by the Company’s
shareholders on May 18, 1999;

     WHEREAS, on March 18, 2005, the Board authorized an amendment to the Plan
to increase the number of shares available for grants under the Plan to
4,200,000 shares, subject to the approval of the Company’s shareholders;

     WHEREAS, Section 16.1 of the Plan provides that the Board may amend the
Plan at any time and from time to time in such respects as the Board may deem to
be in the best interests of the Company or any subsidiary of the Company;

     NOW, THEREFORE, the Plan is, contingent upon the approval of the Company’s
shareholders, amended in the following respects:

          1. The first sentence of Section 4.2 of the Plan is amended to delete
the first sentence and insert in lieu thereof the following:

“The maximum number of shares of Common Stock in respect of which
Awards may be granted or paid out under the Plan, subject to
adjustment as provided in Section 14.2 of the Plan, shall not exceed
4,200,000 shares.”

          2. The Amendment will not be effective unless and until it is approved
by the affirmative vote of a majority of the votes cast at the Annual Meeting on
this proposal by the holders of the shares of Common Stock entitled to vote
thereat.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00170-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00170-of-00352.parquet"}]]