Exhibit 10(i)(iii)

                 AMENDMENT NO. 2 AND WAIVER dated as of October 1, 2002 (this
"Amendment") to the CREDIT AGREEMENT dated as of August 11, 1999 (as amended,
restated, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among ALBANY INTERNATIONAL CORP., a Delaware corporation (the
"Company"), the BORROWING SUBSIDIARIES from time to time party thereto, the
Lenders referred to therein, JPMORGAN CHASE BANK (f/k/a The Chase Manhattan
Bank), a New York banking corporation, as administrative agent for the Lenders
(in such capacity, the "Administrative Agent"), and J.P.MORGAN EUROPE, LTD.
(f/k/a Chase Manhattan International Limited), as London Agent.

        WHEREAS, the Company has informed the Administrative Agent that it
proposes to enter into the transactions specified on Schedule 10.15 hereto and,
in connection therewith, has requested that the Lenders amend and waive certain
provisions of the Credit Agreement as set forth herein; and

        WHEREAS, the Lenders are willing, on the terms and subject to the
conditions set forth herein, to so amend and waive the Credit Agreement.

        THEREFORE, in consideration of the mutual agreements herein contained
and other good and valuable consideration, the sufficiency and receipt of which
are hereby acknowledged, the parties hereto agree as set forth below.

        SECTION 1.    Defined Terms.    Capitalized terms used but not otherwise
defined herein shall have the meanings assigned to such terms in the Credit
Agreement.

        SECTION 2.    Amendment of Credit Agreement.    (a) Amendment of
Section 1.01. Section 1.01 of the Credit Agreement is hereby amended by adding
thereto, in the proper alphabetical order, the following definitions:

        "AI AG" shall mean Albany International Holding (Switzerland) AG, an
entity organized under the laws of Switzerland.

        "AI GmbH" shall mean AI (Switzerland), an entity organized under the
laws of Switzerland.

        "Realignment Transactions" shall mean the transactions specified on
Schedule 10.15 to the Second Amendment.

        "Second Amendment" shall mean Amendment No. 2 dated as of October 1,
2002 to this Agreement (as in effect prior to the date of such Amendment).

        (b)    Amendment of Article VI.    Article VI of the Credit Agreement is
hereby amended by inserting at the end thereof a new Section 6.11 as follows:

        "SECTION 6.11.    Business and Liabilities of Certain
Subsidiaries.    (a) The Company will not permit Albany International Holdings
Two, Inc. to (i) incur, assume or permit to exist any liabilities or obligations
other than ordinary course liabilities not constituting Indebtedness (other than
Indebtedness under this Agreement) incidental to its existence as a corporation,
such as taxes and administrative expenses or (ii) engage in any activity other
than (A) holding the Equity Interests in its subsidiaries, (B) holding other
assets of the Company and the Subsidiaries and (C) other activities incidental
thereto, including the licensing of patents and trademarks to the Company and
the Subsidiaries, and the licensing of intellectual property to third parties in
the ordinary course of business.

        (b) The Company will not permit AI AG or, until such time as the
Realignment Transactions are consummated, AI GmbH to engage in any activities
other than (i) engaging in any of the transactions permitted under Section 10.15
of this Agreement, (ii) holding Equity Interests in its subsidiaries,
(iii) making loans to, and borrowing funds from, the Company and the
Subsidiaries, to the extent otherwise permitted under this Agreement,
(iv) providing administrative and managerial service and

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assistance to the Subsidiaries, (v) purchasing from the Company and the
Subsidiaries and selling to third parties products manufactured by Affiliates of
AI AG, (vi) holding other assets of the Company and the Subsidiaries and
(vii) engaging in activities such as hiring a de minimus number of employees and
other persons, licensing patents and trademarks to the Company and the
Subsidiaries, licensing intellectual property to third parties in the ordinary
course of business and conducting other ordinary course business activities,
incidental to the activities in clauses (I)-(vi) of this Section 6.11(b);
provided, however, that nothing set forth in this Section 6.11(b) shall be
construed so as to permit AI AG or, until such time as the Realignment
Transactions are consummated, AI GmbH to incur, assume or permit to exist any
liabilities or obligations, other than (w) ordinary course liabilities not
constituting Indebtedness incidental to its corporate existence, such as taxes
and administrative expenses, (x) intercompany Indebtedness to the extent
permitted pursuant to the terms of this Agreement, (y) Indebtedness under this
Agreement and (z) obligations not constituting Indebtedness to the extent
reasonably necessary to be incurred in connection with the activities permitted
by clauses (I)-(v) of this Section 6.11(b)."

        (c)    Amendment of Article X.    Article X of the Credit Agreement is
hereby amended by adding at the end thereof the following new Section 10.15:

        "SECTION 10.15.    Business Realignment.    Notwithstanding any
provision of this Agreement to the contrary, the Loan Parties are expressly
permitted to consummate the Realignment Transactions; provided that (a) the Loan
Parties shall, on or prior to the final consummation of the Realignment
Transactions, have (i) executed and delivered to the Collateral Agent a
reaffirmation agreement in the form of Exhibit A to the Second Amendment or in
such other form and scope satisfactory to the Collateral Agent, reaffirming the
security interests and guarantees not required to be released in connection with
the Realignment Transactions and confirming the obligations of the Loan Parties
to provide the additional collateral and other further assurances required by
the Loan Documents, (ii) taken, or arranged for the taking of, all actions
required or reasonably requested by the Collateral Agent to satisfy the
Collateral Requirement after giving effect to the Realignment Transactions,
including the pledge of 65% of the issued and outstanding voting Equity
Interests of AI AG pursuant to a pledge agreement in the form of Exhibit B to
the Second Amendment or in such other form and scope satisfactory to the
Collateral Agent, (iii) delivered to the Administrative Agent a favorable
written opinion (addressed to the Administrative Agent and the Lenders and dated
the date upon which the Realignment Transactions are consummated) of (A) Charles
Silva, Esq., General Counsel of the Company, and (B) Homburger, Swiss counsel
for the Company, in the case of each such opinion covering such matters relating
to AI AG and AI GmbH, the Realignment Transactions, the documents executed in
connection with the Realignment Transactions and related transactions as the
Administrative Agent or the Required Lenders shall reasonably request; and such
other evidence of authority as the Collateral Agent shall have reasonably
requested, all in form and scope satisfactory to the Collateral Agent and
(iv) delivered to the Administrative Agent such other documents and certificates
as the Administrative Agent or its counsel may reasonably request relating to
the organization, existence and good standing of AI AG and AI GmbH, the
authorization of the Realignment Transactions and related transactions and any
other legal matters relating to the Loan Parties, the Loan Documents, the
Realignment Transactions and related transactions, all in form and substance
satisfactory to the Administrative Agent and its counsel, and (b) all the
Realignment Transactions shall be consummated on or prior to December 31, 2002.
The Agents are hereby directed and authorized to take such action and execute
such documents as the Company may reasonably request, at the Company's sole
expense, including the release of any Lien or the consent to any transfer of any
asset subject to any Lien, to facilitate or permit the Realignment Transactions.
It is understood that the Realignment Transactions may be modified with the
prior written consent of the Administrative Agent to eliminate or alter
particular transactions set forth on Schedule 10.15 to the Second Amendment or
to include transactions not set forth on Schedule 10.15 to the Second Amendment;
provided, that no such changes shall, in the judgment of the Collateral Agent,
taken

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together with any other changes, (i) reduce the benefit to the Lenders of the
Collateral and the Guarantees, taken as a whole, in any material respect from
that anticipated after giving effect to the Realignment Transactions as
described on Schedule 10.15 to the Second Amendment or (ii) otherwise be adverse
in any material respect to the rights or interest of the Lenders. In making any
determination referred to in the proviso to the immediately preceding sentence,
the Administrative Agent may, if it deems appropriate, but shall not be required
to, communicate any proposed modifications to the Realignment Transactions to
the Lenders prior to its consent thereto, and shall be entitled, in the absence
of any contrary communication received from any Lender within a reasonable
period of time specified in such communication to assume that such Lender agrees
that the proposed modification will satisfy the standards set forth in clauses
(I) and (ii) of this proviso."

        SECTION 3.    Waiver of Section 6.    7(g). Pursuant to Sections
10.02(a) and 10.02(b) of the Credit Agreement, effective as of the Effective
Date (as defined below), the Lenders hereby waive (a) compliance by the Company
with Section 6.07(g)(iv) of the Credit Agreement with respect, and only with
respect, to the contribution of the capital stock of certain foreign
subsidiaries of the Company described in Schedule 10.15 hereto (the "Contributed
Subsidiaries") to be made by Albany International Holdings Two, Inc. to AI AG
and AI GmbH in connection with the Transactions and (b) the application of the
principal amount of such contribution to the basket in the proviso thereunder.

        SECTION 4.    Release of Liens.    From time to time on or after the
Effective Date, as the Company shall hereafter request, the Administrative Agent
will cause the Collateral Agent to release from the Liens of the Pledge
Agreement the capital stock of such of the Contributed Subsidiaries pledged
thereunder as shall be from time to time required in order to consummate the
Realignment Transactions and the Administrative Agent shall execute an
instrument releasing any such Contributed Subsidiaries from any further
obligations under the Loan Documents.

        SECTION 5.    Representations and Warranties.    To induce the other
parties hereto to enter into this Amendment, the Company represents and warrants
to each of the Lenders and the Administrative Agent that:

        (a) This Amendment has been duly authorized, executed and delivered by
the Company, and each of this Amendment and the Credit Agreement, after giving
effect to this Amendment, constitutes the legal, valid and binding obligation of
the Company, enforceable in accordance with its terms (subject to applicable
bankruptcy, reorganization, insolvency, moratorium and similar laws affecting
the enforcement of creditors' rights generally and subject to general principles
of equity, regardless of whether considered in a proceeding in equity or at
law).

        (b) The representations and warranties contained in Article III of the
Credit Agreement, after giving effect to this Amendment, are true and correct on
and as of the date hereof, (i) except to the extent that such representations
and warranties expressly relate to an earlier date (in which case such
representations and warranties were true and correct as of such earlier date) or
(ii) with respect to matters described in Section 3.06 of the Credit Agreement,
except as disclosed in the Company's periodic reports heretofore delivered to
the Lenders pursuant to Section 5.01 of the Credit Agreement.

        (c) No Default or Event of Default has occurred and is continuing or
would result from the execution and delivery of this Amendment.

        SECTION 6.    Effectiveness.    This Amendment shall become effective on
the first date (the "Effective Date") upon which each of the following
conditions shall have been satisfied:

        (a) the Administrative Agent (or its counsel) shall have received
counterparts of this Amendment that, when taken together, bear the signatures of
the Company and the Required Lenders; and

        (b) the Administrative Agent shall have received all amounts due and
payable by the Company under the Credit Agreement on or prior to the date
hereof, including, to the extent invoiced,

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reimbursement or payment of all out-of-pocket expenses (including fees and
disbursements of Cravath, Swaine & Moore, counsel to the Administrative Agent)
required to be reimbursed or paid by the Company thereunder.

        SECTION 7.    Amendment Fee.    The Company agrees to pay to each Lender
that executes and delivers to the Administrative Agent (or its counsel) a copy
of this Amendment at or prior to 4:00 p.m., New York City time, on October 1,
2002 an amendment fee (the "Amendment Fee") in an amount of $10,000; provided
that the Company shall not have liability for any such Amendment Fee if this
Amendment does not become effective. The Amendment Fee shall be payable on
October 4, 2002 to each Lender entitled to receive such fee as determined
pursuant to this Section 7.

        SECTION 8.    Limited Effect of Amendment.    Except as expressly set
forth herein, this Amendment shall not by implication or otherwise limit,
impair, constitute a waiver of, or otherwise affect the rights and remedies of
the Lenders or the Administrative Agent under the Credit Agreement or any other
Loan Document, and shall not alter, modify, amend or in any way affect any of
the terms, conditions, obligations, covenants or agreements contained in the
Credit Agreement or any other Loan Document, all of which are ratified and
affirmed in all respects and shall continue in full force and effect. Nothing
herein shall be deemed to entitle any Loan Party to a consent to, or a waiver,
amendment, modification or other change of, any of the terms, conditions,
obligations, covenants or agreements contained in the Credit Agreement or any
other Loan Document in similar or different circumstances. This Amendment shall
apply and be effective only with respect to the provisions of the Credit
Agreement specifically referred to herein. After the date hereof, any reference
to the Credit Agreement shall mean the Credit Agreement, as modified hereby.
This Amendment shall constitute a "Loan Document" for all purposes of the Credit
Agreement and the other Loan Documents.

        SECTION 9.    Expenses.    The Company agrees to reimburse the
Administrative Agent and the Collateral Agent for its out-of-pocket expenses in
connection with this Amendment, including the reasonable fees, charges and
disbursements of Cravath, Swaine & Moore, counsel for the Administrative Agent.

        SECTION 10.    Counterparts.    This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all which counterparts together shall constitute but one and the same contract.
Delivery of an executed counterpart of a signature page of this Amendment by
facsimile transmission shall be as effective as delivery of a manually executed
counterpart hereof.

        SECTION 11.    Governing Law.    THIS AMENDMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

        SECTION 12.    Headings.    The headings of this Amendment are for
purposes of reference only and shall not limit or otherwise affect the meaning
hereof.

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        IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective authorized officers as of the day and year
first above written.

 
 
ALBANY INTERNATIONAL CORP.,
 
 
    by
 
/s/  DAVID C. MICHAELS      

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Name:    David C. Michaels
Title:    Vice President—Treasury & Tax
 
 
JPMORGAN CHASE BANK, individually and as Administrative Agent,
 
 
    by
 
/s/  KRISTIN SANDS      

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Name:    Kristin Sands
Title:    Vice President

 
 
ABN AMRO BANK N.V.
 
 
    by
 
/s/  DONALD SUTTON      

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Name:    Donald Sutton
Title:    Group Vice President & Director
 
 
 
 
    by
 
/s/  DAVID CARROLL      

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Name:    David Carroll
Title:    Assistant Vice President
 
 
BANK OF AMERICA, N.A.
 
 
 
 
    by
 
/s/  JOHN W. POCALYKO      

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Name:    John W. Pocalyko
Title:    Managing Director
 
 
BANK OF MONTREAL
 
 
 
 
    by
 
/s/  PAM SCHWARTZ      

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Name:    Pamela E. Schwartz
Title:    Vice President
 
 
THE BANK OF NEW YORK
 
 
 
 
    by
 
/s/  RUSSELL A. BURR      

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Name:    Russell A. Burr
Title:    Senior Vice President

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THE BANK OF NOVA SCOTIA
 
 
 
 
    by
 
/s/  STEPHEN LOCKHART      

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Name:    Stephen Lockhart
Title:    Authorized Signatory
 
 
BANKNORTH, N.A., formerly known as Peoples Heritage Bank, N.A. Successor by
merger to Evergreen Bank, N.A.
 
 
 
 
    by
 
/s/  ROBERT C. HERGRUETER      

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Name:    Robert C. Hergrueter
Title:
Senior Vice President
 
 
CREDIT AGRICOLE INDOSUEZ,
 
 
 
 
    by
 
/s/  PAUL A. DYTRYCH      

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Name:    Paul A. Dytrych
Title:    Vice President
          Senior Relationship Manager
 
 
 
 
    by
 
/s/  LAURENCE F. GRANT      

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Name:    Laurence F. Grant
Title:    Vice President
          Senior Relationship Manager
 
 
CREDIT LYONNAIS NEW YORK BRANCH
 
 
 
 
    by
 
/s/  SCOTT R. CHAPPELKA      

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Name:    Scott R. Chappelka
Title:    Vice President
 
 
FLEET NATIONAL BANK
 
 
 
 
    by
 
/s/  PAMELA A. OPPERMAN      

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Name:    Pamela A. Opperman
Title:    Vice President
 
 
HSBC BANK USA
 
 
 
 
    by
 
/s/  CHARLES R. KREUTER      

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Name:    Charles R. Kreuter
Title:    Vice President

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KEY BANK NATIONAL ASSOCIATION
 
 
 
 
    by
 
/s/  LAWRENCE A. MACK      

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Name:    Lawrence A. Mack
Title:    Senior Vice President
 
 
MANUFACTURERS AND TRADERS TRUST COMPANY
 
 
 
 
    by
 
/s/  CRAIG A. KEEFER      

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Name:    Craig A. Keefer
Title:    Vice President
 
 
MIZUHO CORPORATE BANK, LTD.
 
 
 
 
    by
 
/s/  RICKY SIMMONS      

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Name:    Ricky Simmons
Title:    Vice President
 
 
NORDEA BANK FINLAND PLC
 
 
 
 
    by
 
/s/  ULF FORSSTROM      

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Name:    Ulf Forsstrom
Title:    Vice President
 
 
 
 
    by
 
/s/  CHARLES J. LANSDOWN      

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Name:    Donald Sutton
Title:    Senior Vice President
 
 
SUMITOMO MITSUI BANKING CORP.
 
 
 
 
    by
 
/s/  EDWARD D. HENDERSON      

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Name:    Edward D. Henderson
Title:    Joint General Manager
 
 
SUN TRUST BANK
 
 
 
 
    by
 
/s/  LAUREN P. CARRIGAN      

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Name:    Lauren P. Carrigan
Title:    Vice President
 
 
THE TROY SAVINGS BANK
 
 
 
 
    by
 
/s/  STEPHEN R. VON SCHENK      

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Name:    Stephen R. von Schenk
Title:    Vice President & Director Commercial Lending

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UFJ BANK LIMITED
 
 
 
 
    by
 
/s/  RUSSELL BOHNER      

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Name:    Russell Bohner
Title:    Vice President
 
 
WACHOVIA BANK, N.A.
 
 
 
 
    by
 
/s/  MEG BERERIDGE      

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Name:    Meg Bereridge
Title:    Vice President

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