FIRST ALBANY COMPANIES INC
<DOCUMENT>
<TYPE>EX-10.31
<SEQUENCE>4
<FILENAME>j0205_ex10-31.htm
<TEXT>

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<TITLE>Prepared by MerrillDirect</TITLE>

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<p align=right><font size=3>EXHIBIT 10.31</font></p>

<p align=center><font size=3>PUT PROMISSORY NOTE</font></p>

<p><font size=3>&nbsp;</font></p>

<p><font size=3>$945,000December 27, 2000</font></p>

<p><font size=3>New York,
New York</font></p>

<p><font size=3>&nbsp;</font></p>

<p><font size=3>&nbsp;1. <u>Promise
to Pay Principal</u>. <b>FOR VALUE RECEIVED</b>,
MECHANICAL TECHNOLOGY INCORPORATED, a corporation organized under the laws of
the state of New York (the &quot;<b><i>Payor</i></b>&quot;), hereby unconditionally promises
to pay to the order of FIRST ALBANY COMPANIES INC., a corporation organized
under the laws of the State of New York (the &quot;<b><i>Payee</i></b>&quot;), the
principal sum of NINE HUNDRED FORTY FIVE THOUSAND DOLLARS ($945,000), or such
lesser amount as shall equal the unpaid principal amount of this Note, on
January 3, 2002.</font></p>

<p><font size=3>2. <u>Interest</u>.
The Payor hereby unconditionally promises to pay to the Payee interest on the
unpaid principal amount of this Note for the period from and including the date
of this Note to but excluding the date this Note is paid in full at the Prime
Rate (as such term is defined below) as in effect from time to time.
Notwithstanding the foregoing, the Payor hereby promises to pay to the Payee
interest on any principal or interest payable by the Payor under this Note that
shall not be paid in full when due, for the period from and including the due
date of such payment to but excluding the date the same is paid in full, at a
rate per annum equal to the lesser of (a) the Prime Rate <i>plus</i> 2% and (b) the highest interest rate
then permitted by law (the &quot;<b><i>Post-Default Rate</i></b>&quot;). Accrued interest
shall be due and payable (a) on January 3, 2002 and (b)&nbsp;upon the payment
or prepayment of any principal of this Note (but only on the principal amount
so paid or prepaid); <i>provided</i>
that any interest accruing at the Post-Default Rate shall also be payable from
time to time upon demand. Interest shall be compounded quarterly on each March
31, June 30, September 30 and December 31 (commencing with the first such date
after the date of this Note). Interest payable under this Note shall be
computed on the basis of a year of 365&nbsp;days for the actual number of days
elapsed (including the first day but excluding the last day) occurring in the
period for which payable.</font></p>

<p><font size=3>&nbsp;3. <u>Amounts
Owing</u>. The Payee shall maintain records of the amounts owing under this
Note, and such records shall, absent manifest error, be conclusive evidence of
such amounts. Prior to any sale, assignment or transfer of this Note, each
payment of principal theretofore made under this Note, together with each
reduction in the principal amount of this Note effected under Paragraph 15 of
this Note, shall be endorsed by the Payee on Annex&nbsp;A hereto (or any
continuation of said Annex).</font></p>

<p><font size=3>4. <u>Manner
of Payment</u>. All payments of principal and interest to be made by the Payor
under this Note shall be made in Dollars, in immediately available funds, by
wire transfer to an account at a commercial bank located in New York, New York
(which account shall be identified in a notice to the Payor), not later than
6:00&nbsp;p.m. New York time on the date on which such payment shall become due
(each such payment made after such time on such due date to be deemed to have
been made on the next succeeding Business Day). Except as otherwise expressly
provided in Paragrpah 15 of this Note, all amounts payable under this Note
shall be paid free and clear of, and without reduction by reason of, any
deduction, set-off or counterclaim. The Payor shall, at the time of making each
payment under this Note, specify to the Payee the amounts payable by the Payor
under this Note to which such payment is to be applied, in which case such
payment shall be so applied (and in the event that the Payor fails to so
specify, such payment shall be applied in such manner as is determined to be
appropriate by the Payee).</font></p>

<p><font size=3>5. <u>Payments
on Business Days</u>. If the due date of any payment under this Note would
otherwise fall on a day that is not a Business Day, such due date shall be
extended to the next succeeding Business Day, and interest shall be payable on
any principal so extended for the period of such extension.</font></p>

<p><font size=3>6. <u>Prepayments</u>.
At any time or from time to time, the Payor shall have the right to prepay all
or any portion of the principal amount owing under this Note, <i>provided</i> that each prepayment shall be in
a principal amount of not less than $100,000.</font></p>

<p><font size=3>7. <u>Right
of Set-Off.</u> The Payor agrees that, in addition to (and without limitation
of) any right of set-off or counterclaim the Payee may otherwise have, the
Payee shall be entitled, at its option, to offset amounts owing by the Payee to
the Payor, in Dollars or in any other currency (regardless of whether such
amounts are then due to the Payor), against any amount payable by the Payor to
the Payee under this Note that is not paid when due; <i>provided</i> that nothing contained herein shall require the
Payee to exercise any such right.</font></p>

<p><font size=3>8. <u>Representations
and Warranties</u>. The Payor hereby represents and warrants to the Payee as
follows:</font></p>

<dir><dir><dir>
<p><font size=3>(a) <u>No Breach</u>. None of the execution and delivery
of this Note, the making of the extension of credit evidenced hereby, the
consummation of the transactions herein contemplated and compliance with the
terms and provisions hereof will conflict with or result in a breach of, or
require any consent under, any applicable law or regulation, or any order,
writ, injunction or decree of any court or governmental authority or agency, or
any agreement or instrument to which the Payor is a party or by which the Payor
is bound or to which the Payor is subject, or constitute a default under, or
result in the creation of any lien under, any such agreement or instrument.</font></p>
</dir></dir></dir>

<dir><dir><dir>
<p><font size=3>(b) <u>Action; Execution and Delivery; Enforceability</u>.
The Payor has all necessary power and authority to execute, deliver and perform
its obligations under this Note, and this Note has been duly and validly
executed and delivered by the Payor and constitutes its legal, valid and
binding obligation, enforceable against the Payor in accordance with its terms.</font></p>
</dir></dir></dir>

<dir><dir><dir>
<p><font size=3>(c) <u>Approvals</u>. No authorizations, approvals or
consents of, and no filings or registrations with, any governmental or
regulatory authority or agency are necessary for the execution, delivery or
performance by the Payor of this Note or for the validity or enforceability
hereof.</font></p>
</dir></dir></dir>

<p><font size=3>9. <u>Certain
Expenses</u>. The Payor agrees to pay or reimburse the Payee for paying:
(a)&nbsp;all costs and expenses of the Payee (including, without limitation,
reasonable counsels' fees) in connection with any enforcement or collection
proceedings hereunder; and (b)&nbsp;all transfer, stamp, documentary or other
similar taxes, assessments or charges levied by any governmental or revenue
authority in respect of this Note or any other document referred to herein.</font></p>

<p><font size=3>10. <u>Default;
Remedies; Expenses</u>. If one or more of the following events (herein called
&quot;<b><i>Events of Default</i></b>&quot;)
shall occur and be continuing:</font></p>

<dir><dir><dir>
<p><font size=3>(a) the Payor shall default in the payment of any
Obligations when the same shall become due (whether at stated maturity or
otherwise); or</font></p>
</dir></dir></dir>

<dir><dir><dir>
<p><font size=3>(b) the Payor shall default in the payment when due of
any principal of or interest on any of its other Indebtedness; or any event
specified in any note, agreement, indenture or other document evidencing or
relating to any such Indebtedness shall occur if the effect of such event is to
cause, or (with the giving of any notice or the lapse of time or both) to
permit the holder or holders of such Indebtedness (or a trustee or agent on
behalf of such holder or holders) to cause, such Indebtedness to become due, or
to be prepaid in full (whether by redemption, purchase, offer to purchase or
otherwise), prior to its stated maturity; or</font></p>
</dir></dir></dir>

<dir><dir><dir>
<p><font size=3>(c) any representation, warranty or certification made
or deemed made herein or in the Pledge Agreement by the Payor shall prove to
have been false or misleading as of the time made or furnished in any material
respect; or</font></p>
</dir></dir></dir>

<dir><dir><dir>
<p><font size=3>(d) the Payor shall (i)&nbsp;apply for or consent to
the appointment of, or the taking of possession by, a receiver, custodian,
trustee, examiner or liquidator of itself or of all or a substantial part of
its property, (ii)&nbsp;make a general assignment for the benefit of its
creditors, (iii)&nbsp;commence a voluntary case under the Bankruptcy Code,
(iv)&nbsp;file a petition seeking to take advantage of any other law relating
to bankruptcy, insolvency, reorganization, liquidation, dissolution,
arrangement or winding-up, or composition or readjustment of debts,
(v)&nbsp;fail to controvert in a timely and appropriate manner, or acquiesce in
writing to, any petition filed against it in an involuntary case under the
Bankruptcy Code or (vi)&nbsp;take any corporate action for the purpose of
effecting any of the foregoing; or</font></p>
</dir></dir></dir>

<dir><dir><dir>
<p><font size=3>(e) a proceeding or case shall be commenced, without
the application or consent of the Payor, in any court of competent
jurisdiction, seeking (i)&nbsp;its reorganization, liquidation, dissolution,
arrangement or winding-up, or the composition or readjustment of its debts,
(ii)&nbsp;the appointment of a receiver, custodian, trustee, examiner,
liquidator or the like of the Payor or of all or any substantial part of its
property or (iii)&nbsp;similar relief in respect of the Payor under any law
relating to bankruptcy, insolvency, reorganization, winding-up, or composition
or adjustment of debts, and such proceeding or case shall continue undismissed,
or an order, judgment or decree approving or ordering any of the foregoing
shall be entered and continue unstayed and in effect, for a period of 45 or
more days; or an order for relief against the Payor shall be entered in an
involuntary case under the Bankruptcy Code; or</font></p>
</dir></dir></dir>

<dir><dir><dir>
<p><font size=3>(f) the liens created by the Pledge Agreement shall at
any time not constitute a valid and perfected lien on the collateral intended
to be covered thereby in favor of the Payee, free and clear of all other liens,
or the Pledge Agreement shall for whatever reason be terminated or cease to be
in full force and effect, or the enforceability thereof shall be contested by
the Payor;</font></p>
</dir></dir></dir>

<p><b><font size=3>THEREUPON</font></b>: (1)&nbsp;in the case of an Event
of Default other than one referred to in clause&nbsp;(d) or&nbsp;(e) of this
Paragraph 10, the Payee may, by notice to the Payor, declare the principal
amount then outstanding of, and the accrued interest on, this Note and all
other amounts payable by the Payor hereunder and under the Pledge Agreement to
be forthwith due and payable, whereupon such amounts shall be immediately due
and payable without presentment, demand, protest or other formalities of any
kind, all of which are hereby expressly waived by the Payor; and (2)&nbsp;in
the case of the occurrence of an Event of Default referred to in
clause&nbsp;(d) or&nbsp;(e) of this Paragraph 10, the principal amount then
outstanding of, and the accrued interest on, this Note and all other amounts
payable by the Payor hereunder and under the Pledge Agreement shall
automatically become immediately due and payable without presentment, demand,
protest or other formalities of any kind, all of which are hereby expressly
waived by the Payor.</p>

<p><font size=3>11. <u>Definitions</u>.
As used herein, the following terms shall have the following respective
meanings:</font></p>

<dir><dir><dir>
<p><font size=3>&quot;<b><i>Bankruptcy Code</i></b>&quot; shall mean the Federal Bankruptcy
Code of 1978, as amended from time to time.</font></p>
</dir></dir></dir>

<dir><dir><dir>
<p><font size=3>&quot;<b><i>Business Day</i></b>&quot; shall mean any day on which
commercial banks are not authorized or required to close in New York, New York.</font></p>
</dir></dir></dir>

<dir><dir><dir>
<p><font size=3>&quot;<b><i>Dollars</i></b>&quot; and &quot;<b><i>$</i></b>&quot; shall mean lawful money of the
United States of America.</font></p>
</dir></dir></dir>

<dir><dir><dir>
<p><font size=3>&quot;<b><i>Federal Funds Effective Rate</i></b>&quot; shall mean, for any
period, a fluctuating interest rate equal for each day during such period to
the weighted average of the rates on overnight Federal Funds transactions with
members of the Federal Reserve System arranged by Federal Funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of
the quotations for such day on such transactions received by KeyBank, from
three Federal Funds brokers of recognized standing selected by KeyBank.</font></p>
</dir></dir></dir>

<dir><dir><dir>
<p><font size=3>&quot;<b><i>Indebtedness</i></b>&quot; shall mean, for any Person: (a)
obligations created, issued or incurred by such Person for borrowed money
(whether by loan, the issuance and sale of debt securities or the sale of
property to another Person subject to an understanding or agreement, contingent
or otherwise, to repurchase such property from such Person); (b) obligations of
such Person to pay the deferred purchase or acquisition price of property or
services, other than trade accounts payable (other than for borrowed money)
arising, and accrued expenses incurred, in the ordinary course of business; (c)
Indebtedness of others secured by a lien on the property of such Person, whether
or not the respective indebtedness so secured has been assumed by such Person;
(d)&nbsp;obligations of such Person in respect of letters of credit or similar
instruments issued or accepted by banks and other financial institutions for
account of such Person; (e) capital lease obligations of such Person; and (f)
Indebtedness of others guaranteed by such Person.</font></p>
</dir></dir></dir>

<dir><dir><dir>
<p><font size=3>&quot;<b><i>KeyBank</i></b>&quot; shall mean KeyBank National Association, a
national banking association, and its successors.</font></p>
</dir></dir></dir>

<dir><dir><dir>
<p><font size=3>&quot;<b><i>Obligations</i></b>&quot; shall mean all amounts owing under
this Note (whether for principal, interest or any other amount) and all amounts
owing to the Payee under the Pledge Agreement.</font></p>
</dir></dir></dir>

<dir><dir><dir>
<p><font size=3>&quot;<b><i>Person</i></b>&quot; shall mean any individual, corporation,
company, voluntary association, partnership, limited liability company, joint
venture, trust, unincorporated organization or government (or any agency,
instrumentality or political subdivision thereof).</font></p>
</dir></dir></dir>

<dir><dir><dir>
<p><font size=3>&quot;<b><i>Pledge Agreement</i></b>&quot; shall mean the Put Pledge
Agreement dated as of the date of this Note between the Payor and the Payee, as
the same shall be amended, modified and supplemented and in effect from time to
time.</font></p>
</dir></dir></dir>

<dir><dir><dir>
<p><font size=3>&quot;<b><i>Prime Rate</i></b>&quot; shall mean, for any period, a
fluctuating interest rate per annum as shall be in effect from time to time
which rate per annum shall at all times be equal to the greater of (i) the rate
of interest established by KeyBank in Cleveland, Ohio, from time to time, as
its prime rate, whether or not publicly announced, which interest rate may or
may not be the lowest rate charged by it for commercial loans or other extensions
of credit, and (ii) the Federal Funds Effective Rate in effect from time to
time <i>plus</i> 1/2 of 1% per annum.</font></p>
</dir></dir></dir>

<p><font size=3>12. <u>Waiver</u>.</font></p>

<p><font size=3>No
failure on the part of the Payee to exercise and no delay in exercising, and no
course of dealing with respect to, any right, power or privilege under this
Note shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege under this Note preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The remedies provided herein are cumulative and not exclusive of any remedies
provided by law.</font></p>

<p><font size=3>13. <u>Notices</u>.</font></p>

<p><font size=3>All
notices and other communications in respect of this Note (including, without
limitation, any modifications of, or requests, waivers or consents under, this
Note) shall be given or made in writing (including, without limitation, by
telecopy) to the Payor or the Payee, as applicable, at the &quot;Address for
Notices&quot; specified below its name on the signature pages hereof or, as to
either the Payor or the Payee, at such other address as shall be designated by
such party in a notice to the other party. Except as otherwise provided in this
Note, all such communications shall be deemed to have been duly given when
transmitted by telecopier or personally delivered or, in the case of a mailed
notice, upon receipt, in each case given or addressed as aforesaid.</font></p>

<p><font size=3>14. <u>Amendments;
Successors; Assignments</u>. This Note may not be amended except by an
instrument in writing signed by each of the Payor and the Payee. This Note
shall be binding upon and inure to the benefit of the Payor and the Payee and
their respective successors and permitted assigns. The Payor shall not assign
any of its rights or obligations under this Note without the prior consent of
the Payee. The Payee may at any time and from time to time, without the consent
of the Payor, assign all or any portion of its rights under this Note to one or
more persons or entities, and, upon the Payee giving notice of such assignment
to the Payor specifying the interest hereunder being assigned and the person or
entity to which such interest is being assigned, each reference herein to the
Payee shall (solely in respect of the interest so assigned) constitute a
reference to such assignee (as if such assignee were named herein) rather than
the Payee. The Payee shall be entitled to have this Note subdivided, by
exchange of this Note for promissory notes of lesser denominations or
otherwise, to the extent necessary to reflect any such assignment.</font></p>

<p><font size=3>15. <u>Equity
Conversion Provisions</u>. If, at any time prior to the date on which the
outstanding principal amount of and accrued and unpaid interest on this Note is
paid in full, the Payor effects one or more Qualified Rights Offerings, or
issues additional Capital Stock in one or more Qualified Stock Offerings (each
such event, an &quot;<b><i>Equity
Event</i></b>&quot;) then, with the consent of the Payor (which consent
may be withheld by the Payor in its sole discretion), the Payee may apply all
or a portion of the outstanding principal amount of and accrued and unpaid
interest on this Note toward the purchase price of Equity Rights in such
Qualified Rights Offering or toward the purchase price of Capital Stock in such
Qualified Stock Offering (as the case may be) on and subject to the following
terms:</font></p>

<dir><dir><dir>
<p><font size=3>(a) The Payee would participate in such Equity Event
on a <i>pari passu</i> basis with the
other participants therein and on economic terms identical to the economic
terms on which such other participants are acquiring the related Equity
Interests, except that the amount that would otherwise be payable in cash by
the Payee to acquire such Equity Interests would be paid for by the Payee by
means of a reduction in the outstanding principal amount of this Note and
accrued and unpaid interest hereon.</font></p>
</dir></dir></dir>

<dir><dir><dir>
<p><font size=3>(b) Each such reduction shall be applied <i>first</i> to reduce the amount of accrued and
unpaid interest then owing on this Note and <i>then</i>
to reduce the then outstanding principal amount of this Note (in each case
determined as of the date on which such Equity Interests are issued in connection
with such Equity Event).</font></p>
</dir></dir></dir>

<p><font size=3>As used
in this Paragraph 15, the following terms shall have the following respective
meanings:</font></p>

<dir><dir><dir>
<p><font size=3>&quot;<b><i>Equity Interests</i></b>&quot; shall mean Equity Rights issued
in a Qualified Rights Offering and Capital Stock issued in a Qualified Stock
Offering.</font></p>
</dir></dir></dir>

<dir><dir><dir>
<p><font size=3>&quot;<b><i>Equity Rights</i></b>&quot; shall mean any rights to acquire any
Capital Stock.</font></p>
</dir></dir></dir>

<dir><dir><dir>
<p><font size=3>&quot;<b><i>Capital Stock</i></b>&quot; shall mean any capital stock of the
Payor.</font></p>
</dir></dir></dir>

<dir><dir><dir>
<p><font size=3>&quot;<b><i>Qualified Rights Offering</i></b>&quot; shall mean an offering
by the Payor of Equity Rights after the date hereof.</font></p>
</dir></dir></dir>

<dir><dir><dir>
<p><font size=3>&quot;<b><i>Qualified Stock Offering</i></b>&quot; shall mean an offering by
the Payor of any Capital Stock after the date hereof, <i>provided</i> that such Capital Stock is
offered in a registered public offering or private placement. </font></p>
</dir></dir></dir>

<p><font size=3>&nbsp;16.
<u>Governing Law; Submission to Jurisdiction; Venue</u>. This Note shall be
governed by, and construed in accordance with, the law of the State of New
York. The Payor hereby submits to the nonexclusive jurisdiction of the United
States District Court for the Southern District of New York and of any New York
State court sitting in New York County for the purposes of all legal
proceedings arising out of or relating to this Note or the transactions
contemplated hereby. The Payor irrevocably waives, to the fullest extent
permitted by applicable law, any objection which he may now or hereafter have
to the laying of the venue of any such proceeding brought in such a court and
any claim that any such proceeding brought in such a court has been brought in
an inconvenient forum.</font></p>

<p><font size=3>17. <u>Waiver
of Jury Trial</u>.</font></p>

<p><b><font size=3>EACH OF THE PAYOR AND THE PAYEE, BY ITS ACCEPTANCE OF THE
BENEFITS OF THIS NOTE, HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE OR THE TRANSACTIONS CONTEMPLATED
HEREBY.</font></b></p>

<p align=center><font size=3>[remainder of page intentionally blank]</font></p>

<p><font size=3>&nbsp;</font></p>

<p><font size=3>&nbsp;</font></p>

<p><b><font size=3>IN WITNESS WHEREOF</font></b>, the undersigned has
caused this Note to be duly executed and delivered as of the day and year first
above written.</p>

<p><font size=3>&nbsp;</font></p>

<dir><dir><dir><dir><dir><dir><dir><dir><dir><dir>
<p><b><font size=3>MECHANICAL TECHNOLOGY INCORPORATED</font></b></p>
</dir></dir></dir></dir></dir></dir></dir></dir></dir></dir>

<dir><dir><dir><dir><dir><dir><dir><dir><dir><dir>
<p><font size=3>&nbsp;</font></p>
</dir></dir></dir></dir></dir></dir></dir></dir></dir></dir>

<dir><dir><dir><dir><dir><dir><dir><dir><dir><dir>
<p><font size=3>By_<u>s/Cynthia A. Scheuer</u>______________________</font></p>
</dir></dir></dir></dir></dir></dir></dir></dir></dir></dir>

<dir><dir><dir><dir><dir><dir><dir><dir><dir><dir>
<p><font size=3>Name: Cynthia A. Scheuer</font></p>
</dir></dir></dir></dir></dir></dir></dir></dir></dir></dir>

<dir><dir><dir><dir><dir><dir><dir><dir><dir><dir>
<p><font size=3>Title: Vice President and Chief Financial Officer</font></p>
</dir></dir></dir></dir></dir></dir></dir></dir></dir></dir>

<dir><dir><dir><dir><dir><dir><dir><dir><dir><dir>
<p><u><font size=3>Address for Notices</font></u>:</p>
</dir></dir></dir></dir></dir></dir></dir></dir></dir></dir>

<dir><dir><dir><dir><dir><dir><dir><dir><dir><dir>
<p><font size=3>Mechanical Technology Incorporated</font></p>
</dir></dir></dir></dir></dir></dir></dir></dir></dir></dir>

<dir><dir><dir><dir><dir><dir><dir><dir><dir><dir>
<p><font size=3>30 South Pearl Street</font></p>
</dir></dir></dir></dir></dir></dir></dir></dir></dir></dir>

<dir><dir><dir><dir><dir><dir><dir><dir><dir><dir>
<p><font size=3>Albany, New York 12205</font></p>
</dir></dir></dir></dir></dir></dir></dir></dir></dir></dir>

<dir><dir><dir><dir><dir><dir><dir><dir><dir><dir>
<p><font size=3>Attention: Chief Financial Officer</font></p>
</dir></dir></dir></dir></dir></dir></dir></dir></dir></dir>

<dir><dir><dir><dir><dir><dir><dir><dir><dir><dir>
<p><font size=3>Telephone No.: (518) 433-2170 </font></p>
</dir></dir></dir></dir></dir></dir></dir></dir></dir></dir>

<dir><dir><dir><dir><dir><dir><dir><dir><dir><dir>
<p><font size=3>Telecopier No.: (518) 433-2171</font></p>
</dir></dir></dir></dir></dir></dir></dir></dir></dir></dir>

<dir><dir><dir><dir><dir><dir><dir><dir><dir><dir>
<p><font size=3>&nbsp;</font></p>
</dir></dir></dir></dir></dir></dir></dir></dir></dir></dir>

<p><font size=3>ACCEPTED
AND AGREED:</font></p>

<p><font size=3>FIRST
ALBANY COMPANIES INC.</font></p>

<p><font size=3>&nbsp;</font></p>

<p><font size=3>&nbsp;</font></p>

<p><font size=3>By_<u>s/George
M. McNamee______</u></font></p>

<p><font size=3>Name:
George M. McNamee</font></p>

<p><font size=3>Title:
Chairman and Co-Chief Executive Officer </font></p>

<p><u><font size=3>Address
for Notices</font></u></p>

<p><font size=3>First
Albany Companies Inc.</font></p>

<p><font size=3>30 South
Pearl Street</font></p>

<p><font size=3>Albany,
New York 12205</font></p>

<p><font size=3>Attention:
Chief Financial Officer</font></p>

<p><font size=3>Telephone
No.: (518) 447-8059</font></p>

<p><font size=3>Telecopier
No.: (518) 447-8068</font></p>

<p><font size=3>ANNEX A</font></p>

<p><font size=3>&nbsp;</font></p>

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<p><font size=3>Amount of
Date of Notation</font></p>

<p><u><font size=3>Payment&nbsp;&nbsp;</font></u>
<u>Payment&nbsp;&nbsp;</u> <u>Made By </u></p>

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