exhibit1034.htm


    
      

      

    

     

    
      	 	
              EXHIBIT
                10.34

            


    

     

    August
      6,
      2007

     

     

    FIRST
      ALBANY COMPANIES INC.

    677
      Broadway

    Albany,
      New York 12207

    Attn:
      Brian Coad, Chief Financial Officer

     

    
      	 	
              Re:

            	
              LIBOR
                RATE, UNSECURED, loan in the original principal amount of $20,000,000.00
                (the “Loan”) from KeyBank National Association (“KeyBank”) to FIRST ALBANY
                COMPANIES INC. (“Borrower”) pursuant to a Loan Agreement RE:
                $20,000,000.00 TERM LOAN by and between KeyBank and the Borrower
                (the
                “Loan Agreement”), and obligations of the Borrower under Master Lease
                Agreements dated September 25, 1996 and all outstanding schedules
                thereunder (the “Lease”) between Borrower and Key Equipment Finance Inc.
                f/k/a KeyCorp Leasing Ltd (“KEF” and collectively with KeyBank, the
                “Bank”)

            


    

     

    Dear
      Mr.
      Coad:

     

    The
      Bank
      has been informed that Borrower has entered into an agreement (the “MP
      Agreement”) to receive an equity investment from an affiliate of MatlinPatterson
      Global Opportunities Partners II (the substantive consummation of which is
      referred to herein as the “MP Transaction”). The Bank has been further informed
      that Borrower has entered into an agreement (the “DEPFA Agreement”) for the sale
      of the Municipal Capital Markets Group of its wholly owned subsidiary First
      Albany Capital Inc. (the “Subsidiary”) to DEPFA BANK plc (“DEPFA”) and the
      related purchase by DEPFA of First Albany’s municipal bond inventory (the
      substantive consummation of which is referred to herein as the “DEPFA
      Transaction” and together with the MP Transaction, collectively the
“Transactions” and individually a “Transaction”). At the request of the
      Borrower, the Bank has engaged in telephonic discussion with you and
      representatives of MatlinPatterson Global Opportunities Partners II (“MP”). This
      letter shall serve to confirm the agreement reached between the Bank and the
      Borrower with respect to the Borrower’s obligations under the Loan Agreement and
      Lease with respect to the DEPFA Transaction and MP Transaction.. All terms
      used
      herein which are not defined herein but are defined in the Loan Agreement,
      shall
      have that meaning ascribed to such term in the Loan Agreement.

     

    The
      Bank
      and the Borrower (collectively the “Parties”) do each hereby acknowledge that
      the Parties do not agree on the interpretation and/or enforcement of each of
      the
      Parties respective rights under the Loan Agreement and/or the Lease, therefore,
      the Parties acknowledge and agree that neither the Bank nor the Borrower has
      waived or is waiving any of its rights under the Loan Agreement and/or the
      Lease, except for those waivers and/or modifications as expressly set forth
      in
      sub provisions (i), (v), (vi) and/or (vii) herein.

     

    The
      Bank
      and the Borrower have agreed as follows:

     

    
      	
              
                (i)

              

            	
              Commencing
                on the date of this letter and continuing for so long as (a) the
                Borrower
                shall comply in all material respects with all of the terms of this
                letter, (b) no Event of Default, as defined in the Loan Agreement
                and/or
                the Lease, as the same are expressly modified in sub provisions (i),
                (v),
                (vi) and/or (vii) hereof (each an “EOD”), shall occur and (c) the Borrower
                shall use and take commercially reasonable efforts necessary and/or
                desirable to effectuate the intent of the Borrower to consummate/close
                the
                MP Transaction on or before November 30, 2007 (any event specified
                and/or
                arising as contemplated by provisions (a), (b) and the failure to
                satisfy
                any requirement of provision (c) of this sub provisions (i) being
                referred
                to herein as a “Waiver Termination Event”), but without limiting and/or
                affecting the termination of the Waiver upon the occurrence of a
                Waiver
                Termination Event, KeyBank and KEF waive all EODs (if any) arising
                from,
                in connection with or as a result of the MP Agreement, the MP Transaction,
                the DEPFA Agreement or DEPFA Transaction. Upon the occurrence of
                a Waiver
                Termination Event the waiver set forth in this sub provision (i)
                hereof
                (the “Waiver”) shall automatically terminate and expire without any action
                on the part of the Bank and such Waiver shall be of no force and
                effect
                following the occurrence of any Waiver Termination Event. Notwithstanding
                the forgoing and in limitation thereof, the Bank does hereby acknowledge
                that (i) upon consummation (or “closing” as defined in the DEPFA
                Agreement) of the DEPFA Transaction (the “DEPFA Closing”) and (ii) the
                provision to KeyBank and/or KEF of the remittances/payments
                required/contemplated by sub provision (ii) hereof, KeyBank and KEF
                shall
                and shall be deemed to have irrevocably waived all EODs (if any)
                arising
                from, in connection with or as a result of the DEPFA Agreement or
                DEPFA
                Transaction. Furthermore, without waiving any of the obligations
                of the
                Borrower hereunder, the Bank acknowledges, that (i) the Borrower
                is not
                guaranteeing the occurrence of the MP Closing by November 30, 2007
                and (b)
                the obligations of the Borrower as set forth in sub provision (c)
                of this
                sub provision (i) to use and take necessary and/or desirable commercially
                reasonable efforts, shall not impose upon the Borrower any duty and/or
                obligation to materially change the MP Transaction from the form
                of
                transaction contemplated as of the date of this letter and/or materially
                change the terms of the MP
                Agreement.

            


    

     

    
      	
              (ii)

            	
              Upon
                the DEPFA Closing and subject to the provisions hereof, the Borrower
                will
                (a) repay the outstanding Loan together with unpaid accrued interest
                thereon and all other obligations of the Borrower then outstanding
                under
                the Loan Agreement (collectively the “Loan Agreement Obligations”) and (b)
                pay in full and discharge all of the obligations and/or liabilities
                of the
                Borrower under the Lease, such obligations, including, but not limited
                to,
                those obligations of the Borrower and any Affiliate thereof to KEF
                (the
                “Lease Obligations”); provided however that if the DEPFA Closing should
                occur prior to consummation of the MP Transaction then (x) the Borrower
                shall only be obligated (prior to consummation of the MP Transaction)
                to
                prepay an aggregate amount of the Loan Agreement Obligations and
                the Lease
                Obligations equal to 75% of the net proceeds received by the Borrower
                in
                connection with the DEPFA Transaction (such net proceeds in any event
                to
                be net of amounts required to remain at the subsidiary level in connection
                with (i) any agreement to which none of DEPFA, MP, an Affiliate or
                person
                or entity controlled by, controlling or under common control with
                any of
                them or the Borrower (each a “Borrower Related Entity”), is a party, or
                (ii) the consent of any person or entity that is not a Borrower Related
                Entity (including, without limitation, the NYSE) or the Borrower
                and (y)
                upon the later consummation of the MP Transaction the Borrower shall
                repay
                in full all remaining amounts of the Loan Agreement Obligations and
                the
                Lease Obligations and, without affecting any obligation contained
                herein,
                until the later of (i) the closing and/or consummation of one of
                the
                Transactions and (ii) the payment in full of the Lease Obligations
                and the
                Loan Agreement Obligations, the Borrower shall pay the Loan Agreement
                Obligations and the Lease Obligations as contemplated by the Loan
                Agreement and the Lease, subject to the modifications contained herein.
                The Borrower has requested that prior to the DEPFA Closing KeyBank
                and KEF
                prepare payoff letters with respect thereto which KeyBank and KEF
                undertake to do.

            


    

     

    
      	
              (iii)

            	
              Notwithstanding
                the foregoing, in the event that the DEPFA Closing has not occurred
                on or
                before September 30, 2007 or a DEPFA Closing Termination Event, as
                hereinafter defined, has occurred on or before such date, the Borrower
                will (and hereby covenants to) use and take commercially reasonable
                efforts necessary and/or desirable to obtain a commitment in a form
                and
                from a financial institution/third party lender, both reasonably
                acceptable to the Bank (the “Acceptable Refinancing Commitment”) on or
                before October 31, 2007, in order to remit to the Bank amounts necessary
                to pay in full the Loan Agreement Obligations and the Lease Obligations
                as
                set forth in detail in the payoff letters to be delivered to the
                Borrower
                by KeyBank and KEF set forth in ¶”ii” above (the “Payoff Letters”). The
                Borrower hereby covenants, upon the closing of an Acceptable Refinancing
                Commitment, to remit to KeyBank and KEF amounts necessary to pay
                in full
                the Loan Agreement Obligations and the Lease Obligations as set forth
                in
                detail in the Payoff Letters. A “DEPFA Closing Termination Event” shall
                occur if (1) DEPFA and/or the Borrower determines not to pursue and/or
                abandons the consummation/closing of the DEPFA Transaction, or (2)
                the
                Borrower issues a statement expressly stating that the DEPFA Transaction
                will not be closed/consummated or (3) an event set forth in subsection
                (a)
                – (f) of section 12.1 of the DEPFA Agreement
                occurs.

            


    

     

    
      	
              (iv)

            	
              If
                the Borrower or any Affiliate receives the Termination Fee as contemplated
                by section 12.3 of the DEPFA Agreement or any payment and/or remittance
                in
                lieu or replacement thereof (collectively the “Termination Fee”), then by
                the close of the first Business Day immediately following the day
                the
                Termination Fee is paid/remitted, the Borrower shall remit to the
                Bank or
                cause to be remitted to the Bank an amount equal to the Termination
                Fee
                (the “2007 PrePayment”) and the Bank shall apply the 2007 PrePayment to
                reduce the principal balance of the Loan. The Borrower will (and
                hereby
                covenants to) use and take commercially reasonable efforts necessary
                and/or desirable to enforce its rights under the DEPFA Agreement
                and to
                receive the Termination Fee.

            


    

     

    
      	
              (v)

            	
              In
                the event that the Borrower is required to seek but unable to obtain
                an
                Acceptable Refinancing Commitment by October 31, 2007, then on the
                last
                day of each and every Interest Period, occurring after October 31,
                2007
                until the Maturity Date or the earlier payment in full of the Loan
                Agreement Obligations (and in lieu of scheduled payments of principal
                and
                interest otherwise required by the terms of the Loan Agreement during
                such
                period), the Borrower shall (x) make a payment equal to interest
                at the
                Interest Rate on the unpaid principal balance of the Loan Agreement
                Obligations on the last day of immediately preceding Interest Period
                AND (y) make a payment of $500,000.00 in reduction
                of the principal balance of the Loan Agreement Obligations. With
                respect
                to the Lease, the Borrower shall continue to perform thereunder in
                accordance with its terms.

            


    

     

    
      	
              (vi)

            	
              The
                Bank acknowledges and agrees that any and all payments made by the
                Borrower hereafter with respect to the Loan Agreement Obligations
                or the
                Lease Obligations shall be made without any prepayment penalty or
                breakage
                costs (and the same are hereby waived by the Bank (on its behalf
                and its
                affiliates)).

            


    

     

    
      	
              (vii)

            	
              Commencing
                on the date of this letter and continuing for so long as no Waiver
                Termination Event shall occur, KeyBank and KEF shall waive any and
                all
                EODs arising from, in connection with or as a result of the failure
                of the
                Borrower to comply with the provisions of Section 5.04 of the Loan
                Agreement.

            


    

     

    In
      all
      other respects the Loan Agreement and all other documents delivered by the
      Borrower to the Bank memorializing the Loan and documents memorializing the
      obligations of the Borrower to any Affiliates of the Bank remain in full force
      and effect.

     

    Please
      confirm the Borrower’s (i) agreement with the foregoing and (ii) agreement that
      the Bank has exercised reasonable discretion and acted in good faith and in
      a
      reasonable commercial manner during the course of the relationship between
      the
      Bank and the Borrower from the time of the commencement of the relationship
      through, and including, the date hereof, by executing this letter as provided
      below and faxing a signed copy to the undersigned at (518) 257-8539 within
      forty
      eight (48) hours following your receipt of this letter.

     

    Very
      truly yours,

     

     

    KEYBANK
      NATIONAL ASSOCIATION

     

     

    BY: 
      /s/ Peter A. Landauer

    Name:
      Peter A. Landauer

    Title:
      Vice President

     

     

    KEY
      EQUIPMENT FINANCE INC. F/K/A KEYCORP LEASING LTD.

     

     

    BY: 
      /s/ Peter A. Landauer

    Name:
      Peter A. Landauer

    Title:
      Authorized Signatory

     

     

    ACCEPTED
      AND AGREED THIS 6TH DAY OF AUGUST, 2007.

     

     

    FIRST
      ALBANY COMPANIES INC.

     

     

    By:
      /s/ C. Brian Coad

    Name:
      C.
      Brian Coad

    Title:
      Chief Financial Officer