EXCHANGE AGREEMENT

EXECUTION COPY

EXHIBIT (10.4)

EXCHANGE AGREEMENT

     This Exchange Agreement (this “ Agreement ”) is made and entered into as of April 3, 2009 by and between Albany International Corp., a Delaware corporation (the “ Company ”), and J.P. Morgan Securities Inc., a Delaware corporation (the “ Noteholder ”). The Company and the Noteholder are sometimes collectively referred to herein as the “ Parties ” and individually as a “ Party .”

     WHEREAS, the Noteholder intends to acquire $93,984,000 in aggregate principal amount of the Company’s 2.25% Convertible Senior Notes due 2026 (the “ Convertible Notes ”) from Tradewinds Global Investors, LLC, a Delaware limited liability company (the “ Investor ”);

     WHEREAS, following such acquisition, the Company has requested that the Noteholder exchange, and the Noteholder is willing to exchange, the entire principal amount of the Convertibles Notes acquired by the Noteholder for (i) an equivalent amount of the Company’s 2.25% Senior Notes due 2026 (the “ New Notes ”), in the form attached as Annex A hereto, plus (ii) the Cash Payment (as defined below) available from cash on hand at the Company (the “ Exchange ”); and

     WHEREAS, immediately following the Exchange, the Noteholder desires to sell, and the Company desires to purchase, upon the terms and subject to the conditions set forth in a Securities Purchase Agreement, dated as of the date hereof (the “ Securities Purchase Agreement ”), between the Noteholder and the Company, in the form attached as Annex B hereto, the entire principal amount of the New Notes held by the Noteholder for the purchase price per New Note set forth in the Securities Purchase Agreement (the “ Purchase Price ”), which Purchase Price will be paid from cash on hand and/or a borrowing under the Company’s $460,000,000 Five-Year Revolving Credit Facility Agreement, dated as of April 14, 2006, among the Company, the lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and J.P. Morgan Europe Limited, as London Agent, as amended from time to time.

     NOW, THEREFORE, in consideration of the mutual covenants, agreements and understandings herein contained, the Parties hereby agree as follows:

     SECTION 1. Exchange of Notes .

          1.1 The Exchange . On and subject to the terms and conditions set forth in this Agreement, on the Closing Date (as defined below), the Noteholder shall sell, assign and transfer to the Company all right, title and interest in and to, and any and all claims in respect of or arising or having arisen as a result of, $93,984,000 in aggregate principal amount of Convertible Notes acquired by the Noteholder from the Investor in exchange for (i) the issuance by the Company of an equal aggregate principal amount of the New Notes and (ii) the payment by the Company of an amount in cash equal to $7.50 per $1,000 principal amount of Convertible Notes (the “ Cash Payment ”), payable from cash on hand at the Company available for general corporate purposes.

          1.2 Closing Date . Each Party agrees that the transactions contemplated hereunder shall take place as promptly as practicable following the time at which all of the conditions contained in this Agreement have been satisfied or waived, but in any case, no later than 5:00PM (New York City time) on the date on which all of such conditions have been satisfied or waived, or at such other time as shall be mutually agreed by the Parties (the “ Closing Date ”). On the Closing Date:

               (a) the Noteholder shall deliver to the Company the Convertible Notes via book-entry delivery to the following account:

DTC Participant Name: JPMS
DTC Participant Number: 060
Account No.: 63594691
Customer Account Name: Albany International Corp.

               (b) the Company shall deliver to the Noteholder the New Notes via physical delivery.

               (c) the Company shall make the Cash Payment in respect of each $1,000 principal amount of Convertible Notes by wire transfer in immediately available funds to the following bank account:

Bank: JPMorgan Chase NYC
FAO: JPMSI
Account Number: 066906822
Further Credit: Phase 3# 63594691
ABA Number: 021 000 021
Attention: Ronald Reda

     SECTION 2. Conditions to the Obligations of the Noteholder . The obligations of the Noteholder to consummate the transactions contemplated hereby are subject to the satisfaction as of the Closing Date of the following conditions:

          2.1 Representations and Warranties . The representations and warranties contained in Section 4 hereof shall be true and correct at and as of the Closing Date as though made on the Closing Date.

          2.2 Compliance with Covenants . The Company shall have complied with all of its covenants and agreements contained herein to be performed by it on or prior to the Closing Date.

          2.3 Ancillary Agreements . The Securities Purchase Agreement shall (i) have been duly executed and delivered by the Company, (ii) be in full force and effect and (iii) not have been modified, amended or terminated as of the Closing Date. The Noteholder shall have received payment under that certain fee letter dated the date hereof between the Noteholder and the Company.

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          2.4 Prior Trade . The purchase of the Convertible Notes from the Investor shall have occurred.

     SECTION 3. Conditions to the Obligations of the Company . The obligations of the Company to consummate the transactions contemplated hereby are subject to the satisfaction as of the Closing Date of the following conditions:

          3.1 Representations and Warranties . The representations and warranties contained in Section 5 hereof shall be true and correct at and as of the Closing Date as though made on the Closing Date.

          3.2 Compliance with Covenants . The Noteholder shall have complied with all of its covenants and agreements contained herein to be performed by it on or prior to the Closing Date.

          3.3 Ancillary Agreement . The Securities Purchase Agreement shall (i) have been duly executed and delivered by the Noteholder, (ii) be in full force and effect and (iii) not have been modified, amended or terminated as of the Closing Date.

     SECTION 4. Representations and Warranties of the Company . As a material inducement to the Noteholder to enter into this Agreement, the Company hereby represents and warrants to the Noteholder that the following statements are true and correct as of the date of this Agreement.

          4.1 Organization; Requisite Authority . The Company is a corporation duly organized, validly existing and in good standing under the laws of Delaware. The Company possesses all requisite power and authority necessary to enter into this Agreement and to consummate the transactions contemplated by this Agreement, to own and operate its properties, and to conduct its business as described in the Company’s statements, reports, schedules, forms and other documents filed by the Company with the Securities and Exchange Commission (the “ SEC ”) since January 1, 2008 (the “ SEC Documents ”) and as now being conducted.

          4.2 Authorization; No Breach . The execution, delivery and performance of this Agreement have been duly authorized by the Company. This Agreement, when executed and delivered by the Company in accordance with the terms hereof, shall constitute a valid, binding and enforceable obligation of the Company. The execution of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby do not and will not (i) require the consent, approval, authorization, order, registration or qualification of, or filing with, any governmental authority or court, or body or arbitrator having jurisdiction over the Company; and (ii) constitute or result in a breach, violation or default under any material note, bond, mortgage, deed, indenture, lien, instrument, contract, agreement, lease or license, whether written or oral, express or implied, or the Company’s charter, bylaws or other organizational document, or any statute, law, ordinance, decree, order, injunction, rule, directive, judgment or regulation of any court, administrative or regulatory body, governmental authority, arbitrator, mediator or similar body having jurisdiction over the Company or cause the acceleration or termination of any obligation or right of the Company under any such document. For purposes of this Section 4.2, a “material” note, bond, mortgage, deed, indenture, lien,

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instrument, contract, agreement, lease or license shall mean any such note, bond, mortgage, deed, indenture, lien, instrument, contract, agreement, lease or license required to be filed by the Company as an exhibit to Form 10-K.

          4.3 Reports and Financial Statements . The Company has filed all reports on Form 10-K, Form 10-Q, Form 8-K and all other reports required to be filed with the SEC pursuant to the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), since January 1, 2008, and all such filings, as may have been amended, complied in all material respects with the Exchange Act and the rules and regulations promulgated thereunder as of the date filed with the SEC or amended, as the case may be. None of the SEC Documents, as of their respective dates (as amended through the date hereof), contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

          4.4 Broker’s Fees . Neither the Company nor any person acting on behalf of the Company has retained or authorized any investment banker, broker, finder or other intermediary (other than the Noteholder) to act on behalf of the Company or incurred any liability for any banker’s, broker’s or finder’s fees or commissions in connection with the transactions contemplated by this Agreement and the Purchase Agreement (other than to the extent set forth in that certain fee letter dated the date hereof between the Noteholder and the Company).

          4.5 New Notes . The New Notes have been duly and validly authorized and, when executed and delivered to and paid for by the Noteholder under this Agreement, will constitute legal, valid and binding obligations of the Company (subject, as to enforcement remedies, to applicable bankruptcy, insolvency, moratorium, reorganization or similar laws affecting creditors’ rights generally and by general equitable principles).

          4.6 Private Placement . The Company acknowledges and agrees that the New Notes have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “ Securities Act ”), and may not be offered, sold, transferred or otherwise disposed of at any time except (i) to the Company or a subsidiary thereof or (ii) pursuant to another available exemption under the Securities Act. The Company has not and will not make directly or indirectly offers or sales of the New Notes, or solicit offers to buy the New Notes, under circumstances that would require the registration of any of the New Notes under the Securities Act in connection with the transactions contemplated by this Agreement.

     SECTION 5. Representations and Warranties of the Noteholder . As a material inducement to the Company to enter into this Agreement, the Noteholder hereby represents and warrants to the Company that the following statements are true and correct as of the date of this Agreement.

          5.1 Organization; Requisite Authority . The Noteholder is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The Noteholder has full power and authority to enter into this Agreement and to consummate the transactions contemplated hereby.

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          5.2 Authorization; No Breach . The execution, delivery and performance of this Agreement have been duly authorized by the Noteholder. This Agreement, when executed and delivered by the Noteholder in accordance with the terms hereof, shall constitute a valid, binding and enforceable obligation of the Noteholder. The execution of this Agreement by the Noteholder and the consummation by the Noteholder of the transactions contemplated hereby do not and will not (i) require the consent, approval, authorization, order, registration or qualification of, or filing with, any governmental authority or court, or body or arbitrator having jurisdiction over the Noteholder; and (ii) constitute or result in a breach, violation or default under any material note, bond, mortgage, deed, indenture, lien, instrument, contract, agreement, lease or license, whether written or oral, express or implied, or the Noteholder’s charter, bylaws or other organizational document, or any statute, law, ordinance, decree, order, injunction, rule, directive, judgment or regulation of any court, administrative or regulatory body, governmental authority, arbitrator, mediator or similar body having jurisdiction over the Noteholder or cause the acceleration or termination of any obligation or right of the Noteholder under any such document.

          5.3 Ownership . The Noteholder is, or will be on the Closing Date, the sole beneficial owner of the aggregate principal amount of, and any and all accrued and unpaid interest on, the Convertible Notes acquired by it, and such Convertible Notes are or will be owned free and clear of all Encumbrances. For purposes of this Agreement, “Encumbrance” means any pledge, hypothecation, assignment, lien, restriction, charge, claim, security interest, option, preference, priority or other preferential arrangement of any kind or nature whatsoever.

          5.4 Broker’s Fees . Neither the Noteholder nor any person acting on behalf of the Noteholder has retained or authorized any investment banker, broker, finder or other intermediary to act on behalf of the Noteholder or incurred any liability for any banker’s, broker’s or finder’s fees or commissions in connection with the transactions contemplated by this Agreement and the Purchase Agreement.

          5.5 Qualified Institutional Buyer . The Noteholder is a “qualified institutional buyer,” as defined in Rule 144A under the Securities Act, purchasing the New Notes for its own account or the account of such a qualified institutional buyer. The Noteholder has not communicated with and will not communicate with any person (other than the Investor, a qualified institutional buyer, from which it intends to purchase the Convertible Notes) in connection with the transactions contemplated by this Agreement and the Securities Purchase Agreement. The Noteholder is a sophisticated institutional investor and has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the Exchange and an investment in the New Notes.

          5.6 Private Placement . The Noteholder acknowledges and agrees that the New Notes have not been and will not be registered under the Securities Act and may not be offered, sold, transferred or otherwise disposed of at any time except (i) to the Company or a subsidiary thereof or (ii) in accordance with another available exemption under the Securities Act. The Noteholder has not and will not make directly or indirectly offers or sales of the New Notes, or solicit offers to buy the New Notes, under circumstances that would require the registration of any of the New Notes under the Securities Act in connection with the transactions contemplated by this Agreement.

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          5.7 Reporting Obligations . The Noteholder has no obligation to, and will not, report the purchase of the Convertible Notes from the Investor or the Exchange in a manner that would result in contemporaneous public disclosure of the transactions contemplated by this Agreement and the Securities Purchase Agreement.

     SECTION 6. Confidentiality . The Parties shall not disclose, and shall cause their affiliates, directors, officers, employees, agents and advisors to not disclose, to any person (i) the existence of this Agreement or (ii) any of the terms, conditions or other facts with respect to this Agreement, except as required by applicable law or stock exchange or similar requirements, including without limitation any filing obligations of the Company pursuant to the Exchange Act, or as requested by any governmental or regulatory agency having jurisdiction over the Parties or their respective affiliates or to defend any claim against the Parties. The obligations of the Parties under this Section 6 shall expire one year from the date of this Agreement.

     SECTION 7. Termination .

          7.1 Conditions of Termination . This Agreement may be terminated at any time prior to the Closing Date:

               (a) by the mutual written consent of the Parties;

               (b) by the Company if there has been a material misrepresentation or a material breach of warranty by the Noteholder in the representations and warranties set forth in this Agreement;

               (c) by the Noteholder if there has been a material misrepresentation or a material breach of warranty by the Company in the representations and warranties set forth in this Agreement;

               (d) by either Party if the Securities Purchase Agreement is terminated for any reason; or

               (e) by either Party on or after 5:00PM (New York City time) on April 8, 2009.

     SECTION 8. Miscellaneous .

          8.1 Further Assurances . At or as soon as practicable following the execution of this Agreement, the Noteholder shall enter into an agreement with the Investor to purchase the $93,984,000 in aggregate principal amount of Convertible Notes it is required to deliver to the Company hereunder, it being understood and agreed that in no event shall the Noteholder be liable to the Company for any failure by the Investor to enter into such agreement or to deliver the Convertible Notes pursuant to such agreement. In case at any time after the Closing Date any further action is necessary or desirable to carry out the purposes of this Agreement or the transactions contemplated hereby, each of the Parties will take such further action (including the execution and delivery of such further instruments and documents) as any other Party may reasonably request.

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          8.2 Severability . If any provision of this Agreement shall be held invalid, illegal or unenforceable, the validity, legality and enforceability of the other provisions hereof shall not be affected thereby.

          8.3 Counterparts . This Agreement may be executed in any number of counterparts (including by facsimile transmission), each of which shall be deemed an original, but all of which together shall constitute one and the same agreement.

          8.4 Descriptive Headings; Interpretation . The headings and captions used in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

          8.5 Entire Agreement . This Agreement and the agreements and documents referred to herein contain the entire agreement and understanding between the Parties with respect to the subject matter hereof and supersede all prior agreements and understandings, whether written or oral, relating to such subject matter in any way.

          8.6 Amendment; Waiver . This Agreement may be amended, modified or supplemented but only in a writing signed by the Noteholder and the Company. No waiver of any of the provisions or conditions of this Agreement or any of the rights of a party hereto shall be effective or binding unless such waiver shall be in writing and signed by the Party claimed to have given or consented thereto.

          8.7 Expenses . Each Party will bear its own expenses in connection with the transactions contemplated hereby.

          8.8 Notices . Any notice, request, instruction or other document to be given hereunder by a party hereto shall be in writing and shall be deemed to have been given, (a) when received if given in person or by a courier or a courier service, (b) on the date of transmission if sent by facsimile transmission or (c) two business days after deposit postage prepaid with a reputable overnight courier service for delivery on the next business day:

If to the Company, addressed as follows:

Albany International Corp.
1373 Broadway
Menands, NY 12204
Attention: Charles J. Silva, Jr.
Telephone: (518) 445-2277
Facsimile: (518) 447-6575

If to the Noteholder, addressed as follows:

J.P. Morgan Securities Inc.
383 Madison Avenue, 28th Fl.
New York NY 10179
Attention: Michael R. O'Donovan, Managing Director

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Telephone: (212) 622-6609
Facsimile: (917) 464-2498

          8.9 APPLICABLE LAW; WAIVER OF JURY TRIAL. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS ENTERED INTO AND TO BE PERFORMED IN SUCH STATE. THE PARTIES HERETO AGREE TO WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE ARISING FROM OR RELATED TO THIS AGREEMENT.

          8.10 Submission to Jurisdiction . Each Party agrees that any suit, action or proceeding brought by it against the other Party arising out of or based upon this Agreement or the transactions contemplated hereby may be instituted in any state or federal court in The City of New York, New York, and waives any objection which it may now or hereafter have to the laying of venue of any such proceeding, and irrevocably submits to the non-exclusive jurisdiction of such courts in any suit, action or proceeding.

          8.11 Specific Performance. The Parties acknowledge that money damages will not be a sufficient remedy for breach of this Agreement and that the Parties hereto may obtain specific performance or other injunctive relief, without the necessity of posting a bond or security therefor.

          8.12 Assignment . The Noteholder may assign, in whole or in part, any of its obligations, rights or claims, including, without limitation, any claim or right resulting from any breach or default by the Company under this Agreement, to any of its affiliates; provided , however , that the Noteholder shall remain liable to the Company for the performance of any obligations assigned, in whole or in part, to any such affiliate.

          8.13 No Construction Against Draftsperson . The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.

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     IN WITNESS WHEREOF, the Parties hereto have executed this Exchange Agreement on the date first written above.

Signature Page
Exchange Agreement

ANNEX A

FORM OF NEW NOTE

THIS SECURITY HAS NOT BEEN AND WILL NOT BE BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED EXCEPT (I) TO THE COMPANY OR A SUBSIDIARY THEREOF OR (II) PURSUANT TO ANOTHER AVAILABLE EXEMPTION UNDER THE SECURITIES ACT. BY ITS ACQUISITION HEREOF, THE HOLDER AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY EXCEPT AS AFORESAID.

ALBANY INTERNATIONAL CORP.

2.25% Senior Notes due 2026

     Albany International Corp., a corporation duly organized and validly existing under the laws of the State of Delaware (herein called the “ Company ,” which term includes any successor corporation), for value received hereby promises to pay to the order of J.P. Morgan Securities Inc. (the “ Holder ”), or registered assigns, the principal amount of $[•] on March 15, 2026, as evidenced by this senior note.

     This Note shall bear interest at the rate of 2.25% per year from April [•], 2009, or from the most recent date to which interest had been paid or provided for to, but excluding, the next scheduled Interest Payment Date until March 15, 2013. As of March 15, 2013, this Note shall bear interest at the rate of 3.25% per year from March 15, 2013, to, but excluding, the next scheduled Interest Payment Date until the principal hereof shall have been paid or made available for payment. Interest is payable semi-annually in arrears on each March 15 and September 15, commencing September 15, 2009, to the holder of record at the close of business on the preceding March 1 and September 1 (whether or not such day is a Business Day), respectively. Interest on the Note shall be computed on the basis of a 360-day year comprised of twelve 30-day months.

     Payment of the principal of and premium, if any (including the Redemption Price, Repurchase Price or Fundamental Change Repurchase Price, as the case may be), and accrued and unpaid interest on this Note shall be paid by wire transfer in immediately available funds in accordance with the wire transfer instruction supplied by the Holder to the Company.

     Reference is made to the further provisions of this Note set forth on the reverse hereof and in the attached Annex of Terms (the “ Annex ”). Such further provisions shall for all purposes have the same effect as though fully set forth at this place. Any capitalized term used and not otherwise defined herein shall have the meaning assigned to such term in the Annex.

     This Note shall be deemed to be a contract made under the laws of the State of New York, and for all purposes shall be construed in accordance with and governed by the laws of said State (without regard to the conflicts of laws provisions thereof).

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F-1

     IN WITNESS WHEREOF, the Company has caused this Note to be duly executed.

Dated: ______________________

REVERSE OF NOTE

ALBANY INTERNATIONAL CORP.
2.25% Senior Notes due 2026

     This Note is a duly authorized issue of securities of the Company, designated as its 2.25% Senior Notes due 2026 in the principal amount of $[•] (the “ Notes ”).

     Subject to the terms and conditions set forth in the Annex, the Company will make all payments in respect of the Redemption Price, Repurchase Price, the Fundamental Change Repurchase Price, and the principal amount on the Maturity Date, as the case may be, to the Holder if it surrenders this Note to the Company to collect such payments in respect of the Note. The Company will pay in money of the United States that at the time of payment is legal tender for payment of public and private debts.

     No reference herein to the Annex and no provision of this Note or of the Annex shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, premium, if any, and accrued and unpaid interest on this Note at the place, at the respective times, at the rate and in the lawful money herein prescribed.

     In case an Event of Default, as defined in the Annex, shall have occurred and be continuing, the principal of, premium, if any, and interest on the Note may be declared, by the Holder, and upon said declaration shall become, due and payable, in the manner, with the effect and subject to the conditions provided in the Annex.