EMPLOYMENT AGREEMENT

THIS AGREEMENT is made and entered into by and between LYDALL, INC., a Delaware corporation (the Company), and Bill W. Franks, Jr. (the Executive).

WITNESSETH

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.

1.1 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.

1.2 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 Executives employment pursuant to Section 5, 6 or 7 below, whichever is applicable.

1.3 Immediately upon the commencement of the Executives employment pursuant to the terms of this Agreement, that certain Agreement by and between the Executive and the Company dated as of March 1, 2000 shall terminate and shall be of no further force or effect, except that the Indemnification Agreement dated March 1, 2000 shall remain in full force and effect.

2. Duties. It is the intention of the Parties that during the term of the Executives employment under this Agreement, the Executive will serve as President, Lydall Transport, Ltd. 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 efforts to the affairs of the Company and its subsidiaries and his duties. The Executive will have such duties as are appropriate to his position, 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) or a committee thereof.

3. Compensation and Benefits.

3.1 Salary. During the Employment Period, the Company will pay the Executive a base salary at an initial annual rate of Two Hundred Fifty Eight thousand, Hundred Dollars ($258,000). The Company may, in its sole and absolute discretion, increase the Executives base salary in light of the Executives performance, inflation, changes in the cost of living and other factors deemed relevant by the Company. The Executives base salary may not be decreased during the term of this Agreement, other than in connection with an across-the-board decrease affecting substantially all members of senior management of the Company on substantially the same proportional basis. The Chief Executive Officer of the Company shall meet with the Executive annually to review the Executives performance, objectives and compensation, including salary and bonus compensation, and the Chief Executive Officer shall then meet with the Compensation Committee of the Board to discuss the same. If the Compensation Committee determines that any adjustments thereto are appropriate, such committee shall make a recommendation to the full Board and the Board shall make such adjustments, if any, as the Board deems appropriate and consistent with this Agreement. The Executives base salary will be paid in accordance with the standard practices for other members of senior management of the Company.

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