EMPLOYMENT AGREEMENT

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     THIS AGREEMENT is made and entered into as of the 1st day of March, 2000,

by and between LYDALL, INC., a Delaware corporation (the "Company"), and James

P. Carolan (the "Executive").



                              W I T N E S S E T H

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     WHEREAS, the Company and the Executive (the "Parties") have agreed to enter

into this agreement (the "Agreement) relating to the employment of the Executive

by the Company and/or one of its subsidiaries;



     NOW, THEREFORE, in consideration of the premises and mutual covenants

contained herein and for other good and valuable consideration, the Parties,

intending to be legally bound, agree as follows:



     1. Term of Employment; Termination of Prior Agreement.

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        (a) The Company and/or one of its subsidiaries agrees to continue to

employ the Executive, and the Executive agrees to remain in the employment of

the Company and/or one of its subsidiaries, in accordance with the terms and

provisions of this Agreement.



        (b) The Employment Period under this Agreement shall be the period

commencing as of the date of this Agreement and ending on the date of

termination of the Executive's employment pursuant to Section 5, 6 or 7 below,

whichever is applicable.



        (c) Immediately upon the commencement of the Executive's employment

pursuant to the terms of this Agreement, that certain Agreement by and between

the Executive and the Company dated as of February 1, 1999 shall terminate and

shall be of no further force or effect.



     2. Duties. It is the intention of the Parties that during the term of the

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Executive's employment under this Agreement, the Executive will serve as

Executive Vice President of the Company and/or Division President of a

subsidiary of the Company or in such other senior management position as the

Company shall determine. During the Employment Period, the Executive will devote

his full business time and attention and best

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                                      -2-



efforts to the affairs of the Company and its subsidiaries and his duties as

Executive Vice President of the Company and/or Division President of a

subsidiary of the Company. The Executive will have such duties as are

appropriate to his position as Executive Vice President of the Company and/or

Division President of a subsidiary of the Company, and will have such authority

as required to enable the Executive to perform these duties. Consistent with the

foregoing, the Executive shall comply with all reasonable instructions of the

Board of Directors of the Company (the "Board").



     3. Compensation and Benefits.

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     3.1 Salary. During the Employment Period, the Company will pay the

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Executive a base salary at an initial annual rate of Three Hundred Fifteen

Thousand Dollars ($315,000). The Company may, in its sole and absolute

discretion, increase the Executive's base salary in light of the Executive's

performance, inflation, changes in the cost of living and other factors deemed

relevant by the Company. The Executive's base salary may not be decreased during

the term of this Agreement. The Chief Executive Officer of the Company shall

meet with the Executive annually to review the Executive's performance,

objectives and compensation, including salary, bonus and stock options, and the

Chief Executive Officer shall then meet with the Compensation and Stock Option

Committee of the Board (the "Compensation Committee") to discuss the same. If

the Compensation Committee determines that any adjustments thereto are

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