Exhibit 10.3


 


AMENDED AND RESTATED GUARANTY


 


This
AMENDED AND RESTATED GUARANTY (this “Guaranty”), dated as of February 18, 2014, by LYDALL THERMAL/ACOUSTICAL,
INC., a Delaware corporation (“Lydall Thermal”), LYDALL FILTRATION/SEPARATION, INC., a Connecticut
corporation (“Lydall Filtration”), and LYDALL INTERNATIONAL, INC., a Delaware corporation (“Lydall
International” and each of Lydall Thermal, Lydall Filtration, and Lydall International is sometimes individually referred
to herein as a “Guarantor”, and all three such entities are herein collectively referred to as, the “Guarantors”),
is made in favor of Bank of America, N.A., a national banking association
(“Bank of America”), on behalf of itself and as administrative agent (in such capacity, the “Agent”)
for the ratable benefit of itself, and the other lenders that are a party to the Credit Agreement (defined below) (collectively
with Bank of America, the “Lenders”).


 


WHEREAS, the Guarantors
are parties to a Guaranty (the “Original Guaranty”) dated as of June 16, 2011 made in favor of Bank of America,
N.A. (in such capacity, “BofA”) pursuant to which the Guarantors guaranteed the obligations of Lydall, Inc.
(the “Company”) to BofA under that certain Credit Agreement dated as of June 16, 2011 between the Company and
BofA (the “Original Credit Agreement”) and the other Loan Documents, as defined in the Original Credit Agreement
(the “Original Loan Documents”);


 


WHEREAS, pursuant to
that certain Assignment dated as of the date hereof by and among BofA, the Agent, the Company and the Guarantors, BofA has assigned
the Original Credit Agreement and the Original Loan Documents (including the Original Guaranty) to the Agent; and


 


WHEREAS, the Company,
the Agent, the Guarantors, and the Lenders have amended and restated the Credit Agreement and the other Original Loan Documents
and desire to amend and restate the Original Guaranty in its entirety as provided herein.


 


NOW THEREFORE, in consideration
of the premises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby amend and restate the Original Guaranty in its entirety as follows:


 


WHEREAS, LYDALL,
INC., a Delaware corporation (the “Company”), has entered into that certain Amended and Restated Credit
Agreement dated as of even date herewith (as amended, restated, supplemented or otherwise modified and in effect from time to time,
the “Credit Agreement”), by and among the Company, the Lenders, and the Agent, pursuant to which the Lenders,
subject to the terms and conditions contained therein, are to make loans or otherwise to extend credit or provide financial accommodations
to the Company;


 


WHEREAS, each Guarantor
is a subsidiary of the Company;


 


WHEREAS, each Guarantor
expects to receive substantial direct and indirect benefits from the extensions of credit to the Company by the Lenders pursuant
to the Credit Agreement (which benefits are hereby acknowledged);


 




    	1



    	 



    

 


WHEREAS, it is a condition
precedent to the Lenders’ making any loans or otherwise extending credit to the Company under the Credit Agreement that each
Guarantor shall have executed and delivered this Guaranty to the Agent; and


 


WHEREAS, each Guarantor
wishes to guaranty the Company’s obligations to the Lenders under or in respect of the Credit Agreement as provided herein.


 


NOW, THEREFORE, each
Guarantor hereby agrees with the Agent as follows:


 


1.  Definitions.   The
term “Obligations” and all other capitalized terms used herein without definition shall have the respective meanings
provided therefor in the Credit Agreement.


 


2.  Guaranty
of Payment and Performance.   Each
Guarantor hereby jointly and severally guarantees to the Agent the full and punctual payment when due (whether at stated maturity,
by required pre-payment, by acceleration or otherwise), as well as the performance, of all of the Obligations including all such
which would become due but for the operation of the automatic stay pursuant to §362(a) of the Federal Bankruptcy Code and
the operation of §§502(b) and 506(b) of the Federal Bankruptcy Code. This Guaranty is an absolute, unconditional and
continuing guaranty of the full and punctual payment and performance of all of the Obligations and not of their collectibility
only and is in no way conditioned upon any requirement that the Lenders first attempt to collect any of the Obligations from the
Company or resort to any collateral security or other means of obtaining payment. Should the Company default in the payment or
performance of any of the Obligations which default remains continuing beyond any applicable grace period, the obligations of
each Guarantor hereunder with respect to such Obligations in default shall become immediately due and payable to the Agent, without
demand or notice of any nature, all of which are expressly waived by each Guarantor. Payments by the Guarantors hereunder may
be required by the Agent on any number of occasions.


 


3.  Guarantors’
Agreement to Pay Enforcement Costs, etc.  Each
Guarantor further jointly and severally agrees, as the principal obligor and not as a guarantor only, to pay to the Agent, on
demand, all costs and expenses (including court costs and reasonable legal expenses) incurred or expended by the Agent in connection
with the Obligations, this Guaranty and the enforcement thereof, together with interest on amounts recoverable under this §3
from the time when such amounts become due until payment, whether before or after judgment, at the applicable rate of interest
for overdue principal set forth in the Credit Agreement, provided that if such interest exceeds the maximum amount permitted
to be paid under applicable law, then such interest shall be reduced to such maximum permitted amount.


 






    	2



    	 



    

 


4.  Waivers
by Guarantors; Agent’s Freedom to Act.  Each
Guarantor agrees that the Obligations will be paid and performed strictly in accordance with their respective terms, regardless
of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the
Agent with respect thereto. Each Guarantor waives promptness, diligence, presentment, demand, protest, notice of acceptance, notice
of any Obligations incurred and all other notices of any kind, all defenses which may be available by virtue of any valuation,
stay, moratorium law or other similar law now or hereafter in effect, any right to require the marshalling of assets of the Company
or any other entity or other person primarily or secondarily liable with respect to any of the Obligations, and all suretyship
defenses generally. Without limiting the generality of the foregoing, each Guarantor agrees to the provisions of any instrument
evidencing, securing or otherwise executed in connection with any Obligation and agrees that the obligations of each Guarantor
hereunder shall not be released or discharged, in whole or in part, or otherwise affected by (i) the failure of the Agent to assert
any claim or demand or to enforce any right or remedy against the Company or any other entity or other person primarily or secondarily
liable with respect to any of the Obligations; (ii) any extensions, compromise, refinancing, consolidation or renewals of any
Obligation; (iii) any change in the time, place or manner of payment of any of the Obligations or any rescissions, waivers, compromise,
refinancing, consolidation, amendments or modifications of any of the terms or provisions of the Credit Agreement, the Note, the
other Loan Documents or any other agreement evidencing, securing or otherwise executed in connection with any of the Obligations;
(iv) the addition, substitution or release of any entity or other person primarily or secondarily liable for any Obligation, (v)
the adequacy of any rights which the Agent may have against any collateral security or other means of obtaining repayment of any
of the Obligations; (vi) the impairment of any collateral securing any of the Obligations, including without limitation the failure
to perfect or preserve any rights which the Agent might have in such collateral security or the substitution, exchange, surrender,
release, loss or destruction of any such collateral security; or (vii) any other act or omission other than an express waiver,
release or discharge which might in any manner, or to any extent, vary the risk of any Guarantor or otherwise operate as a release
or discharge of any Guarantor, all of which may be done without notice to any Guarantor. To the fullest extent permitted by law,
each Guarantor hereby expressly waives any and all rights or defenses arising by reason of (A) any “one action” or
“anti-deficiency” law which would otherwise prevent the Agent from bringing any action, including any claim for a
deficiency, or exercising any other right or remedy (including any right of set-off), against any Guarantor before or after the
Agent’s commencement or completion of any foreclosure action, whether judicially, by exercise of power of sale or otherwise,
or (B) any other law which in any other way would otherwise require any election of remedies by the Agent.


 


5.  Unenforceability
of Obligations Against Company.  If
for any reason the Company has no legal existence or is under no legal obligation to discharge any of the Obligations, or if any
of the Obligations have become irrecoverable from the Company by reason of the Company’s insolvency, bankruptcy or reorganization
or by other operation of law or for any other reason, this Guaranty shall nevertheless be binding on each Guarantor, jointly and
severally, to the same extent as if such Guarantor at all times had been the principal obligor on all such Obligations. In the
event that acceleration of the time for payment of any of the Obligations is stayed upon the insolvency, bankruptcy or reorganization
of the Company, or for any other reason, all such amounts otherwise subject to acceleration under the terms of the Credit Agreement,
the Note, the other Loan Documents or any other agreement evidencing, securing or otherwise executed in connection with any
Obligation shall be immediately due and payable by the Guarantors.


 




    	3



    	 



    

 


6.  Subrogation;
Subordination.  


 


6.1.  Waiver
of Rights Against Company.  Until the final payment and performance in full of all of the Obligations and any and
all other obligations of the Company to the Agent or any affiliate of the Agent, (other than contingent indemnification obligations
for which no claim has been asserted), none of the Guarantors shall exercise any rights against the Company arising as a result
of payment by any Guarantor hereunder, by way of subrogation, reimbursement, restitution, contribution or otherwise, or prove
any claim in competition with the Agent or such affiliate in respect of any payment hereunder in any bankruptcy, insolvency or
reorganization case or proceedings of any nature; none of the Guarantors will claim any setoff, recoupment or counterclaim against
the Company in respect of any liability of such Guarantor to the Company; and each Guarantor waives any benefit of and any right
to participate in any collateral security which may be held by the Agent or any such affiliate.


 


6.2.
 Subordination.  The payment of any amounts
due with respect to any indebtedness of the Company now or hereafter owed to any Guarantor is hereby subordinated to the prior
payment in full of all of the Obligations and any and all other obligations of the Company to the Agent or any affiliate of the
Agent (other than contingent indemnification obligations for which no claim has been asserted); provided, however, that each Guarantor
shall be permitted to receive payments of any of the Borrower’s obligations and indebtedness to such Guarantor so long as
no Event of Default exists at such time. Each Guarantor agrees that, during the continuance of any Event of Default in the payment
or performance of any of the Obligations, such Guarantor will not demand, sue for or otherwise attempt to collect any such indebtedness
of the Company to such Guarantor. If, notwithstanding the foregoing sentence, during the continuance of any Event of Default,
any Guarantor shall collect, enforce or receive any amounts in respect of such indebtedness, such amounts shall be collected,
enforced and received by such Guarantor as trustee for the Agent and be paid over to the Agent on account of the Obligations without
affecting in any manner the liability of such Guarantor under the other provisions of this Guaranty.


 


6.3.  Provisions
Supplemental. The provisions of this §6 shall be supplemental to, and not in derogation of, any rights and remedies
of the Agent or any affiliate of the Agent under any separate subordination agreement which the Agent or such affiliate may at
any time and from time to time enter into with any Guarantor.


 


7.  Security;
Setoff.


 


Each Guarantor hereby
grants to the Agent, for the ratable benefit of the Lenders, a lien, security interest and a right of setoff as security for all
liabilities and obligations to the Agent, whether now existing or hereafter arising, upon and against all deposits, credits, collateral
and property, now or hereafter in the possession, custody, safekeeping or control of the Agent or any entity under the control
of the Agent, or in transit to any of them. At any time during the continuance of an Event of Default, without demand or notice,
the Agent may set off the same or any part thereof and apply the same to any liability or obligation of such Guarantor under this
Guaranty or any other Loan Document even though unmatured and regardless of the adequacy of any other collateral securing the Obligations.
ANY AND ALL RIGHTS TO REQUIRE THE AGENT TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE
OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF ANY GUARANTOR,
ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED. The Agent shall not be required to marshal any present or future security
for, or guarantees of, the Obligations or to resort to any such security or guarantee in any particular order and each Guarantor
waives, to the fullest extent that it lawfully can, (a) any right it might have to require the Agent to pursue any particular remedy
before proceeding against it and (b) any right to the benefit of, or to direct the application of the proceeds of any collateral
until the Obligations are paid in full.


 






    	4



    	 



    

 


8.  Further
Assurances. Each Guarantor agrees that it will from time to time, at the request of the Agent,
provide to the Agent such Guarantor’s most recent audited and unaudited balance sheets and related statements of income and
changes in financial condition (prepared on a consolidated basis with such Guarantor’s subsidiaries, if any) to the extent
not otherwise provided to the Agent, and such other information relating to the business and affairs of such Guarantor as the Agent
may reasonably request. 


 


Each Guarantor agrees
to do all such things and execute all such documents as the Agent may reasonably consider necessary or desirable to give full effect
to this Guaranty and to perfect and preserve the rights and powers of the Agent hereunder. Each Guarantor acknowledges and confirms
that such Guarantor has established such Guarantor’s own adequate means of obtaining from the Company on a continuing basis
all information desired by such Guarantor concerning the financial condition of the Company and that such Guarantor will look to
the Company and not to the Agent in order for such Guarantor to keep adequately informed of changes in the Company’s financial
condition.


 


9.  Termination;
Reinstatement.  This Guaranty shall remain in full
force and effect until the Agent is given written notice from each Guarantor of such Guarantor’s intention to discontinue
this Guaranty, notwithstanding any intermediate or temporary payment or settlement of the whole or any part of the Obligations.
No such notice shall be effective unless received and acknowledged by an officer of the Agent at the address of the Agent for
notices set forth in §10.02 of the Credit Agreement. No such notice shall affect any rights of the Agent or of any affiliate
of the Agent hereunder, including without limitation the rights set forth in §§4 and 6 hereof, with respect to any Obligations
incurred or accrued prior to the receipt of such notice or any Obligations incurred or accrued pursuant to any contract or commitment
in existence prior to such receipt, and all checks, drafts, notes, instruments (negotiable or otherwise) and writings made by
or for the account of the Company and drawn on the Agent or any of its agents purporting to be dated on or before the date of
receipt of such notice, although presented to and paid or accepted by the Agent after that date, shall form part of the Obligations.
This Guaranty shall continue to be effective or be reinstated, notwithstanding any such notice, if at any time any payment made
or value received with respect to any Obligation is rescinded or must otherwise be returned by the Agent upon the insolvency,
bankruptcy or reorganization of the Company, or otherwise, all as though such payment had not been made or value received.


 




    	5



    	 



    

 


10.  Successors
and Assigns.  This Guaranty shall be binding upon each
Guarantor and each Guarantor’s successors and assigns, and shall inure to the benefit of, and be enforceable by, the Agent
and its successors and transferees and assigns permitted pursuant to the Credit Agreement. Without limiting the generality of
the foregoing sentence, the Agent may assign or otherwise transfer the Credit Agreement, the Note, the other Loan Documents or
any other agreement or note held by it evidencing, securing, or otherwise executed in connection with, the Obligations, or sell
participations in any interest therein, to any other entity or other person all in accordance with the provisions of the Credit
Agreement, and such other entity or other person shall thereupon become vested, to the extent set forth in the agreement evidencing
such assignment, transfer or participation, with all the rights in respect thereof granted to the Agent herein.


 


11.  Amendments
and Waivers.  No amendment or waiver of any provision
of this Guaranty nor consent to any departure by any Guarantor therefrom shall be effective unless the same shall be in writing
and signed by the Agent; provided, that no amendment hereto shall be effective without the writing and signature of the Guarantors
and the Agent. No failure on the part of the Agent to exercise, and no delay in exercising, any right hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right.


 


12.  Notices.
Any notice required or permitted by this Agreement shall be in writing
and shall be given: (a) by personal delivery, (b) by certified mail, return receipt requested, or (c) by nationally recognized
overnight courier (e.g., Federal Express), or (d) by electronic facsimile transmission (with confirmation of successful transmission)
or by electronic mail (provided, however, that if a notice is given by facsimile or electronic mail, a copy of such notice shall
also be delivered by one of the other delivery methods set forth in clauses (a), (b) and (c) above), in each case addressed to
such party at its address indicated below:


 





		(a)	if to any Guarantor,



 


Lydall Thermal/Acoustical,
Inc.


Lydall Filtration/Separation,
Inc.


and Lydall
International, Inc.


c/o Lydall,
Inc.


One Colonial
Road


Manchester,
CT 06042


Attention:
General Counsel


Telephone:
(860) 327-0230


Telecopier:
(860) 646-8847


Email: cmdaniel@lydall.com


 


with a copy to:


 


Murtha Cullina
LLP


CityPlace
I


185 Asylum
Street


Hartford,
CT 06103


Attn: Frank
J. Saccomandi, III Esq.


Telephone:
(860) 240-6043


Telecopier: (860) 240-6150


Email: FSaccomandi@murthalaw.com



 




    	6



    	 



    

  


		(b)	if to the Agent,



 


Bank of America, N.A.


CityPlace I


185 Asylum Street


Hartford, CT 06103


Attn: Christopher T. Phelan, Senior Vice President


Telephone: (860) 952-7492


Telecopier: (860) 952-7515


Email: christopher.phelan@baml.com


 


with a copy to:


 


Shipman & Goodwin LLP


One Constitution Plaza


Hartford, CT 06103-1919


Attn:James C. Schulwolf, Esq.


Telephone: (860) 251-5949


Telecopier: (860) 251-5211


Email: jschulwolf@goodwin.com


 


or to any other address
as the parties hereto may designate by ten (10) days advance written notice to the other parties. Notices and other communications
delivered by personal delivery or nationally recognized overnight courier service, mailed by certified or registered mail, shall
be deemed to have been given when received; notices and other communications sent by electronic facsimile or electronic mail shall
be deemed to have been given when sent (except that, if not received during normal business hours of the recipient, shall be deemed
to have been given at the opening of business on the next business day for such recipient after such receipt).


 


13.  Governing
Law; Consent to Jurisdiction.


 


THIS GUARANTY IS
INTENDED TO TAKE EFFECT AND SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CONNECTICUT. Each
Guarantor agrees that any suit for the enforcement of this Guaranty may be brought in the courts of the State of Connecticut or
any federal court sitting therein and consents to the nonexclusive jurisdiction of such court and to the service of process in
any such suit being made upon such Guarantor by certified or registered mail at the address specified by reference in §12
hereof. Each Guarantor hereby waives any objection that it may now or hereafter have to the venue of any such suit or any such
court or that such suit was brought in an inconvenient forum.


 


14.  Waiver
of Jury Trial.  EACH GUARANTOR AND THE AGENT MUTUALLY HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS GUARANTY OR ANY OTHER DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. Except as prohibited
by law, each Guarantor hereby waives any right which it may have to claim or recover in any litigation referred to in the preceding
sentence any special, exemplary, punitive or consequential damages or any damages other than, or in addition to, actual damages.
Each Guarantor (i) certifies that neither the Agent nor any representative, agent or attorney of the Agent has represented, expressly
or otherwise, that the Agent would not, in the event of litigation, seek to enforce the foregoing waivers and (ii) acknowledges
that, in entering into the Credit Agreement and the other Loan Documents to which the Agent is a party, the Agent is relying upon,
among other things, the waivers and certifications contained in this §14.



 




    	7



    	 



    




 


15.  Prejudgment
Remedy Waiver; Other Waivers. EACH GUARANTOR HEREBY
REPRESENTS, WARRANTS AND ACKNOWLEDGES THAT THE FINANCING EVIDENCED HEREBY IS A COMMERCIAL TRANSACTION WITHIN THE MEANING OF CHAPTER
903a OF THE CONNECTICUT GENERAL STATUTES, AS AMENDED. EACH GUARANTOR HEREBY WAIVES ITS RIGHT TO NOTICE AND PRIOR COURT HEARING
OR COURT ORDER UNDER CONNECTICUT GENERAL STATUTES SECTIONS 52-278a ET. SEQ. AS AMENDED OR UNDER ANY OTHER STATE
OR FEDERAL LAW WITH RESPECT TO ANY AND ALL PREJUDGMENT REMEDIES THE AGENT MAY EMPLOY TO ENFORCE ITS RIGHTS AND REMEDIES HEREUNDER
AND UNDER THE OTHER LOAN DOCUMENTS. MORE SPECIFICALLY, EACH GUARANTOR ACKNOWLEDGES THAT UPON THE OCCURRENCE AND DURING THE CONTINUANCE
OF AN EVENT OF DEFAULT THE AGENT’S ATTORNEY MAY, PURSUANT TO, AND IN ACCORDANCE WITH, CONN. GEN. STAT. §52-278f, ISSUE
A WRIT FOR A PREJUDGMENT REMEDY WITHOUT SECURING A COURT ORDER PROVIDED THE COMPLAINT SHALL SET FORTH A COPY OF THIS WAIVER. EACH
GUARANTOR ACKNOWLEDGES AND RESERVES ITS RIGHT TO NOTICE AND A HEARING SUBSEQUENT TO THE ISSUANCE OF A WRIT FOR PREJUDGMENT REMEDY
AS AFORESAID AND THE AGENT ACKNOWLEDGES EACH GUARANTOR’S RIGHT TO SAID HEARING SUBSEQUENT TO THE ISSUANCE OF SAID WRIT.
EACH GUARANTOR FURTHER WAIVES ITS RIGHTS TO REQUEST THAT THE AGENT POST A BOND, WITH OR WITHOUT SURETY, TO PROTECT SUCH GUARANTOR
AGAINST DAMAGES THAT MAY BE CAUSED BY ANY PREJUDGMENT REMEDY SOUGHT OR OBTAINED BY THE AGENT.


 


16.  Miscellaneous.
This Guaranty constitutes the entire agreement of the Guarantors with
respect to the matters set forth herein. The rights and remedies herein provided are cumulative and not exclusive of any remedies
provided by law or any other agreement, and this Guaranty shall be in addition to any other guaranty of or collateral security
for any of the Obligations. The invalidity or unenforceability of any one or more sections of this Guaranty shall not affect the
validity or enforceability of its remaining provisions. Captions are for the ease of reference only and shall not affect the meaning
of the relevant provisions. The meanings of all defined terms used in this Guaranty shall be equally applicable to the singular
and plural forms of the terms defined.


 


[Signature page follows]


 




    	8



    	 



    

 


IN WITNESS WHEREOF,
each Guarantor has caused this Guaranty to be executed and delivered as of the date first above written.


 


	 	LYDALL THERMAL/ACOUSTICAL, INC.
	 	 	 
	 	By:	/S/  Dale G. Barnhart
	 	 	Name:  Dale G. Barnhart
	 	 	Title:    President
	 	 	 
	 	LYDALL filtration/separation, INC.
	 	 	 
	 	By:	/S/  Dale G. Barnhart
	 	 	Name:  Dale G. Barnhart
	 	 	Title:    President
	 	 	 
	 	LYDALL INTERNATIONAL, INC.
	 	 	 
	 	By:	/S/  Dale G. Barnhart
	 	 	Name:  Dale G. Barnhart
	 		Title:    President


 


[Signature Page to Amended and Restated Guaranty]


 




    	 



    	 



    

 


Acknowledged and Agreed to by:


 


	BANK OF AMERICA, N.A., as Administrative Agent	 
	 	 	 
	By:	/S/  Christopher T. Phelan	 
	Name:	Christopher T. Phelan	 
	Title:	Senior Vice President 	 


 


[Signature Page to Amended and Restated Guaranty]