EMPLOYMENT AGREEMENT

     EMPLOYMENT AGREEMENT (this ?Agreement?), dated as of June 30, 2006 (the ?Effective Date?), between FIRST ALBANY COMPANIES INC., a New York corporation (the ?Company?), and BRIAN COAD (the ?Executive?).

W I T N E S S E T H:

          WHEREAS, the Company desires to employ the Executive as its Chief Financial Officer so that it will have the benefit of his ability, experience and services, and the Executive is willing to enter into an agreement to that end, upon the terms and conditions hereinafter set forth.

          NOW, THEREFORE, in consideration of good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby covenant and agree as follows:

1.

Employment

     The Company hereby agrees to employ the Executive as the Chief Financial Officer of the Company, and the Executive hereby agrees to be employed by the Company in such capacity, on and subject to the terms and conditions of this Agreement.

2.

Agreement Term

     The period of this Agreement (the ?Agreement Term?) shall commence on the Effective Date and shall expire on the second anniversary of the Effective Date. At least 90 days prior to expiration of the Agreement Term, each party hereto shall give notice to the other party of his or its intention to (i) enter into a new employment agreement at the expiration of the Agreement Term, or (ii) terminate the Agreement at the expiration of the Agreement Term. The period of the Executive?s employment hereunder shall be hereinafter referred to as the ?Employment Period.?

3.

Position, Duties and Responsibilities

     (a)      The Executive shall serve as, and with the title, office and authority of, the Chief Financial Officer of the Company. The Executive shall also hold such title, office and authority with the Company?s subsidiaries and its successors.

     (b)      The Executive shall have all the powers, authority, duties and responsibilities incident to the position and office of Chief Financial Officer of the Company set forth in the Company?s by-laws. The Executive shall report directly to the Company?s Chief Executive Officer.

     (c)      The Executive agrees to devote substantially all of his business time, efforts and skills to the performance of his duties and responsibilities under this Agreement; provided, however, that nothing in this Agreement shall preclude the Executive from devoting reasonable

periods required for (i) participating in professional, educational, philanthropic, public interest, charitable, social or community activities, (ii) serving as a member of the board of directors of other corporations, or (iii) managing his personal investments or other personal business so long as these activities, individually or in the aggregate, do not materially interfere with the discharge of the Executive?s duties hereunder.

     (d)      After the Effective Date of this Agreement and prior to August 31, 2007, the Executive shall perform his duties approximately (i) 40% of the time at the offices of the Company located in Albany, New York, and (ii) 60% of the time at the offices of the Company located in New York City, but from time to time the Executive may be required to travel to other locations in the proper conduct of his responsibilities under this Agreement. After August 31, 2007, the Chief Executive Officer may require Executive to relocate, and upon such direction the Executive shall relocate, his principal office location to the Company?s offices located in New York City, it being agreed that from time to time the Executive may be required to travel to other locations in the proper conduct of his responsibilities under this Agreement.

4.

Compensation and Benefits

     In consideration of the services rendered by the Executive during the Employment Period, the Company shall pay or provide the Executive the compensation and benefits set forth below.

     (a)      Base Salary. The Company shall pay the Executive a minimum base salary (the ?Base Salary?) equal to $200,000 per annum. The Compensation Committee of the Board (the ?Compensation Committee?) will review the Base Salary at least annually during the Employment Period with a view toward consideration of merit increases as the Compensation Committee deems appropriate. The Base Salary shall be paid in accordance with the normal payroll practices of the Company.

     (b)      Annual Bonuses. The Company shall provide the Executive with the opportunity to earn an annual bonus for each fiscal year of the Company ending during the Employment Period. The annual bonus will be based upon a target bonus amount established by the Board. The bonus objectives for Executive?s annual bonus for any particular year will be developed by the Board after good faith consultation with the Chief Executive Officer consistent with the Company?s strategic plan.