Document:

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                                                                   Exhibit 10.17

                               SEVERANCE AGREEMENT
                               -------------------

     THIS AGREEMENT is made this 1st day of May 2000 by and between LYDALL, INC.
(the "Company") and Thomas P. Smith (the "Employee").

     WHEREAS, the Employee has been offered employment as Vice President -
Controller of the Company, reporting to the Company's Executive Vice President -
Finance and Administration, Chief Financial Officer, until or unless terminated;
and

     WHEREAS, the Employee desires to accept the offer of employment upon
receipt of certain promises of severance in the event of a change of control of
the Company;

     NOW THEREFORE, the Company and Employee, in consideration of the mutual
promises set forth below, agree as follows:

1. If the Employee is terminated by the Company other than for "Cause" (as
defined in Section 2) and such termination of employment occurs within 12 months
following a "Change of Control" of the Company (as defined in Section 2), the
Employee shall be entitled to the following:

          a. The Company shall pay to the Employee his base salary earned
     through the date of such termination of employment, and any other
     compensation and benefits to the extent actually earned by the Employee
     under any benefit plan or program of the Company as of the date of such
     termination of employment; such base salary, compensation and benefits to
     be paid at the normal time for payment of such base salary, compensation
     and benefits.

          b. The Company shall reimburse the Employee for any business expenses
     incurred prior to termination, in accordance with the Company's business
     expense reimbursement policy.

          c. The Company shall pay to the Employee as a severance benefit an
     amount equal to two (2) times the sum of (i) his annual rate of base salary
     immediately preceding his termination of employment, and (ii) the average
     of his three highest annual bonuses paid under the Company's annual
     incentive bonus plan for any of the five calendar years preceding his
     termination of employment (or, if the Employee

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     was not eligible for a bonus for at least three calendar years in such
     five-year period, then the average of such bonuses for all of the calendar
     years in such five-year period for which the Employee was eligible). Such
     severance benefit shall be paid in a lump sum within 30 days after the date
     of such termination of employment.

          d. The Company shall pay to the Employee as a bonus for the year of
     termination of his employment an amount equal to a portion (determined as
     provided in the next sentence) of the Employee's maximum bonus opportunity
     under the Company's annual incentive bonus plan for the calendar year of
     termination of the Employee's employment or, if none, such portion of the
     bonus awarded to the Employee under the Company's annual incentive bonus
     plan for the calendar year immediately preceding the calendar year of the
     termination of his employment. Such portion shall be determined by dividing
     the number of days of the Employee's employment during such calendar year
     up to his termination of employment by 365 (366 if a leap year). Such
     payment shall be made in a lump sum within 30 days after the date of such
     termination of employment, and the Employee shall have no right to any
     further bonuses under said plan.

          e. During the period of 24 months beginning on the date of the
     Employee's termination of employment, the Employee (and, if applicable, the
     Employee's spouse and dependent children) shall remain covered by the
     medical, dental, life insurance, and, if reasonably commercially available
     through nationally reputable insurance carriers, long-term disability plans
     of the Company that covered the Employee immediately prior to his
     termination of employment as if the Employee had remained in employment for
     such period; provided, however, that the coverage under any such plan is
     conditioned on the timely payment by the Employee (or his spouse or
     dependent children) of the portion of the premium for such coverage that
     actively employed Employees with the Company generally are required to pay
     for such coverage. In the event that the Employee's participation in any
     such plan is barred, the Company shall arrange to provide the Employee
     (and, if applicable, his spouse and dependent children) with substantially
     similar benefits (but, in the case of long-term disability benefits, only
     if reasonably commercially available).

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          f. The Company shall supplement the benefits payable in respect of the
     Employee under the Company's Pension Plan (and any successor plans
     thereto)(collectively, the "Pension Plans") by paying the difference
     between (i) the benefits that the Employee would have been entitled to
     receive under the Pension Plans if he had been credited with two additional
     years of service (but no additional years of age) for purposes of the
     benefit accrual formula under the Pension Plans as of the date of
     termination of the Employee's employment and (ii) the benefits that the
     Employee is entitled to receive under the Pension Plans determined without
     regard to this subsection (f). Such benefits shall be payable in the same
     form and at the same time as the benefits under the respective Pension
     Plans.

          g. Each stock option granted by the Company to the Employee and
     outstanding immediately prior to termination of his employment shall be
     fully vested and immediately exercisable and may be exercised by the
     Employee (or, following his death, by the person or entity to which such
     option passes) at any time prior to the expiration date of the applicable
     option (determined without regard to any earlier termination of the option
     that would otherwise occur by reason of termination of his employment).

          h. The Company will pay the Employee a car allowance of $500 per month
     for 24 months following termination of the Employee's employment to replace
     the Company-leased automobile. The leased automobile must be returned to
     the Company by the Employee on the date of termination of the Employee's
     employment.

          i. The Company will provide the Employee with out-placement services
     selected by the Employee, at the Company's expense not to exceed $10,000.

          j. The Company shall promptly pay all reasonable attorneys' fees and
     related expenses incurred by the Employee in seeking to obtain or enforce
     any right or benefit under this Agreement or to defend against any claim or
     assertion in connection with this Agreement, but only to the extent the
     Employee substantially prevails.

2.   Definitions
     -----------

          a. Change of Control. For the purposes of this

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     Agreement, a "Change of Control" shall be deemed to have occurred if (a)
     any person or persons acting together which would constitute a "group" for
     purposes of Section 13(d) of the Securities Exchange Act of 1934, as
     amended (the "Exchange Act"), (other than the Company or any subsidiary of
     the Company) shall beneficially own (as defined in Rule 13d-3 of the
     Exchange Act), directly or indirectly, at least 25% of the total voting
     power of all classes of capital stock of the Company entitled to vote
     generally in the election of the Board; (b) Current Directors (as herein
     defined) shall cease for any reason to constitute at least a majority of
     the members of the Board (for this purpose, a "Current Director" shall mean
     any member of the Board as of the date hereof and any successor of a
     Current Director whose election, or nomination for election by the
     Company's shareholders, was approved by at least a majority of the Current
     Directors then on the Board); (c) the shareholders of the Company approve
     (i) a plan of complete liquidation of the Company or (ii) an agreement
     providing for the merger or consolidation of the Company other than a
     merger or consolidation in which (x) the holders of the common stock of the
     Company immediately prior to the consolidation or merger have, directly or
     indirectly, at least a majority of the common stock of the continuing or
     surviving corporation immediately after such consolidation or merger or (y)
     the Board immediately prior to the merger or consolidation would,
     immediately after the merger or consolidation, constitute a majority of the
     Board of Directors of the continuing or surviving corporation; or (d) the
     shareholders of the Company approve an agreement (or agreements) providing
     for the sale or other disposition (in one transaction or a series of
     transactions) of all or substantially all of the assets of the Company.

          b. Cause. The word "cause", as used in this Agreement, shall mean (i)
     conviction of a crime involving moral turpitude, or (ii) material and
     unexcused breach by Executive of his obligations under this Agreement,
     which results in material harm to the Company and which is not cured within
     the period set forth below; provided, however, that a termination shall not
     be for "cause" hereunder unless, such conviction or breach is detailed in a
     written notice of intent to terminate by the Board, providing for sixty
     (60) days from receipt by Executive to cure the breach prior to termination
     of Executive; except that such notice would not be required if, in the
     Chairman, President and Chief Executive Officer's discretion, the Company
     would be immediately harmed.

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3.   Golden Parachute Excise Tax.
     ---------------------------

          a. In the event that any payment or benefit received or to be received
     by the Employee pursuant to this Agreement or any other plan, program or
     arrangement of the Company or any of its affiliates would constitute an
     "excess parachute payment" within the meaning of Section 280G of the
     Internal Revenue Code of 1986, as amended (the "Code"), then the payments
     under this Agreement shall be reduced (by the minimum possible amounts)
     until no amount payable to the Employee under this Agreement constitutes an
     "excess parachute payment" within the meaning of Section 280G of the Code;
     provided, however, that no such reduction shall be made if the net
     after-tax payment (after taking into account Federal, state, local or other
     income and excise taxes) to which the Employee would otherwise be entitled
     without such reduction would be greater than the net after-tax payment
     (after taking into account Federal, state, local or other income and excise
     taxes) to the Employee resulting from the receipt of such payments with
     such reduction. If, as a result of subsequent events or conditions
     (including a subsequent payment or absence of a subsequent payment under
     this Agreement or other plan, program or arrangement of the Company or any
     of its affiliates), it is determined that payments under this Agreement
     have been reduced by more than the minimum amount required to prevent any
     payments from constituting an "excess parachute payment," then an
     additional payment shall be promptly made to the Employee in an amount
     equal to the additional amount that can be paid without causing any payment
     to constitute an excess parachute payment.

          b. All determinations required to be made under this Section 3 shall
     be made by a nationally recognized independent accounting firm mutually
     agreeable to the Company and the Employee (the "Accounting Firm") which
     shall provide detailed supporting calculations to the Company and the
     Employee as requested by the Company or the Employee. All fees and expenses
     of the Accounting Firm shall be borne solely by the Company and shall be
     paid by the Company upon demand of the Employee as incurred or billed by
     the Accounting Firm. All determinations made by the Accounting Firm
     pursuant to this Section 3 shall be final and binding upon the Company and
     the Employee.

          c. To the extent any payment or benefit is to be

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     reduced pursuant to this Section 3, the severance payment described in
     Section 1(c) will first be reduced, then the bonus described in Section
     1(d), and then the supplemental pension benefits described in Section 1(f),
     in each case only to the extent necessary.

4.   Entitlement to Other Benefits.
     -----------------------------

     Except as otherwise provided in this Agreement, this Agreement shall not be
     construed as limiting in any way any rights or benefits that the Employee
     or his spouse, dependents or beneficiaries may have pursuant to any other
     plan or program of the Company.

5.   General Provisions.
     ------------------

5.1  No Duty to Seek Employment. The Employee shall not be under any duty or
     --------------------------
     obligation to seek or accept other employment following termination of
     employment, and no amount, payment or benefits due to the Employee
     hereunder shall be reduced or suspended if the Employee accepts subsequent
     employment, except as expressly set forth herein.

5.2  Deductions and Withholding. All amounts payable or which become payable
     --------------------------
     under any provision of this Agreement shall be subject to any deductions
     authorized by the Employee and any deductions and withholdings required by
     law.

5.3  Notices. All notices, demands, requests, consents, approvals or other
     -------
     communications (collectively "Notices") required or permitted to be given
     hereunder or which are given with respect to this Agreement shall be in
     writing and may be personally served or may be faxed or deposited in the
     United States mail, postage prepaid, addressed as follows:

     To the Company:   Lydall, Inc.
                       P.O. Box 151
                       One Colonial Road
                       Manchester, CT 06045-0151
                       Attn: Executive Vice President -
                         Finance and Administration
                         Chief Financial Officer

     To the Employee:  Thomas P. Smith
                       84 Stony Corners Road
                       Avon, CT 06001

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     or such other address as such party shall have specified most recently by
     written notice. Notice mailed as provided herein shall be deemed given on
     the fifth business day following the date so mailed or on the date of
     actual receipt, whichever is earlier.

5.4  No Disparagement. The Employee shall not during the period of his
     ----------------
     employment with the Company, nor during the two-year period beginning on
     the date of termination of his employment for any reason, disparage the
     Company or any of its subsidiaries or affiliates or any of their
     shareholders, directors, officers, employees or agents. The Employee agrees
     that the terms of this Section 5.4 shall survive the term of this Agreement
     and the termination of the Employee's employment.

5.5  Proprietary Information and Inventions. The Lydall Employee Agreement
     --------------------------------------
     previously executed by the Employee and attached hereto as Exhibit A is
     incorporated by reference in this Agreement, and the Employee agrees to
     continue to be bound thereby.

5.6  Covenant to Notify Management. The Employee agrees to abide by the ethics
     -----------------------------
     policies of the Company as well as the Company's other rules, regulations,
     policies and procedures. The Employee agrees to comply in full with all
     governmental laws and regulations as well as ethics codes applicable. In
     the event that the Employee is aware or suspects the Company, or any of its
     officers or agents, of violating any such laws, ethics, codes, rules,
     regulations, policies or procedures, the Employee agrees to bring all such
     actual and suspected violations to the attention of the Board of Directors
     of the Company immediately so that the matter may be properly investigated
     and appropriate action taken. The Employee understands that the Employee is
     precluded from filing a complaint with any governmental agency or court
     having jurisdiction over wrongful conduct unless the Employee has first
     notified the Board of Directors of the Company of the facts and permits it
     to investigate and correct the concerns.

5.7  Amendments and Waivers. No provision of this Agreement may be modified,
     ----------------------
     waived or discharged unless such waiver, modification or discharge is
     agreed to in writing signed by the Employee and the Company. No waiver by
     either Party hereto at any time of any breach by the other Party hereto of,
     or compliance with, any condition or provision of this

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     Agreement to be performed by such other Party shall be deemed a waiver of
     similar or dissimilar provisions or conditions at the same or at any prior
     or subsequent time.

5.8  Beneficial Interests. This Agreement shall inure to the benefit of and be
     --------------------
     enforceable by a) the Company's successors and assigns and b) the
     Employee's personal and legal representatives, executors, administrators,
     successors, heirs, distributees, devisees and legatees. If the Employee
     shall die while any amounts are still payable to him hereunder, all such
     amounts, unless otherwise provided herein, shall be paid in accordance with
     the terms of this Agreement to the Employee's devisee, legatee, or other
     designee or, if there be no such designee, to the Employee's estate.

5.9  Successors. The Company will require any successors (whether direct or
     ----------
     indirect, by purchase, merger, consolidation or otherwise) to all or
     substantially all of the business and/or assets of the Company to assume
     and agree to perform this Agreement in the same manner and to the same
     extent that the Company would be required to perform.

5.10 Assignment. This Agreement and the rights, duties, and obligations
     ----------
     hereunder may not be assigned or delegated by any Party without the prior
     written consent of the other Party and any attempted assignment or
     delegation without such prior written consent shall be void and be of no
     effect. Notwithstanding the foregoing provisions of this Section 5.10, the
     Company may assign or delegate its rights, duties and obligations hereunder
     to any affiliate or to any person or entity which succeeds to all or
     substantially all of the business of the Company or one of its subsidiaries
     through merger, consolation, reorganization, or other business combination
     or by acquisition of all or substantially all of the assets of the Company
     or one of its subsidiaries.

5.11 Choice of Law. This Agreement shall be governed by and construed in
     -------------
     accordance with the laws of the State of Connecticut.

5.12 Statute of Limitations. The Employee and the Company hereby agree that
     ----------------------
     there shall be a one year statute of limitations for the filing of any
     requests for arbitration or any lawsuit relating to this Agreement or the
     terms or conditions of Employee's employment by the Company. If such a
     claim is filed more than one year subsequent to the Employee's last day

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     of employment it shall be precluded by this provision, regardless of
     whether or not the claim has accrued at that time.

5.13 Right to Injunctive and Equitable Relief. The Employee's obligations under
     ----------------------------------------
     Sections 5.4 and 5.5 are of a special and unique character, which gives
     them a peculiar value. The Company cannot be reasonably or adequately
     compensated for damages in an action at law in the event the Employee
     breaches such obligations. Therefore, the Employee expressly agrees that
     the Company shall be entitled to injunctive and other equitable relief
     without bond or other security in the event of such breach in addition to
     any other rights or remedies which the Company may possess or be entitled
     to pursue. Furthermore, the obligations of the Employee and the rights and
     remedies of the Company under this Agreement are cumulative and in addition
     to, and not in lieu of, any obligations, rights, or remedies as created by
     applicable law.

5.14 Severability or Partial Invalidity. The invalidity or unenforceability of
     ----------------------------------
     any provisions of this Agreement shall not affect the validity or
     enforceability of any other provision of this Agreement, which shall remain
     in full force and effect.

5.15 Entire Agreement. This Agreement, along with the Lydall Employee Agreement
     ----------------
     (Exhibit A) by and between the Employee and the Company, constitutes the
     entire agreement of the Parties and supersedes all prior written or oral
     and all contemporaneous oral agreements, understandings, and negotiations
     between the Parties with respect to the subject matter hereof. This
     Agreement may not be changed orally and may only be modified in writing
     signed by both Parties. The Parties further intend that this Agreement,
     along with the Lydall Employee Agreement, constitutes the complete and
     exclusive statement of their terms and that no extrinsic evidence may be
     introduced in any judicial proceeding involving such agreements.

5.16 Counterparts. This Agreement may be executed in any number of counterparts,
     ------------
     each of which when so executed shall be deemed an original but all of which
     together shall constitute one and the same instrument.

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
duly authorized officer and the Employee has hereunto set his hand as of the day
and year first above written.

                           LYDALL,INC.

                           By:
                              ------------------------------------  ------------
                              Walter A. Ruschmeyer                  Date
                              Executive Vice President -
                              Finance and Administration
                              Chief Financial Officer

                              ------------------------------------  ------------
                              Thomas P. Smith                       Date
                              84 Stony Corners Road
                              Avon, CT 06001

                                       10<PAGE>

                                                                   Exhibit 10.18

                               SEVERANCE AGREEMENT
                               -------------------

     THIS AGREEMENT is made this 1st day of April 2000 by and between
LYDALL, INC. (the "Company") and Richard H. Kopp (the "Employee").

     WHEREAS, the Employee has been offered employment as Chief Information
Officer of the Company, reporting to the Company's Chief Executive Officer,
until or unless terminated; and

     WHEREAS, the Employee desires to accept the offer of employment upon
receipt of certain promises of severance in the event of a change of control of
the Company;

     NOW THEREFORE, the Company and Employee, in consideration of the mutual
promises set forth below, agree as follows:

1. If the Employee is terminated by the Company other than for "Cause" (as
defined in Section 2) and such termination of employment occurs within 12 months
following a "Change of Control" of the Company (as defined in Section 2), the
Employee shall be entitled to the following:

          a. The Company shall pay to the Employee his base salary earned
     through the date of such termination of employment; and any other
     compensation and benefits to the extent actually earned by the Employee
     under any benefit plan or program of the Company as of the date of such
     termination of employment, such base salary, compensation and benefits to
     be paid at the normal time for payment of such base salary, compensation
     and benefits.

          b. The Company shall reimburse the Employee for any business expenses
     incurred prior to termination, in accordance with the Company's business
     expense reimbursement policy.

          c. The Company shall pay to the Employee as a severance benefit an
     amount equal to two (2) times the sum of (i) his annual rate of base salary
     immediately preceding his termination of employment, and (ii) the average
     of his three highest annual bonuses paid under the Company's annual
     incentive bonus plan for any of the five calendar years preceding his
     termination of employment (or, if the Employee was not eligible for a bonus
     for at least three calendar years

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     in such five-year period, then the average of such bonuses for all of the
     calendar years in such five-year period for which the Employee was
     eligible). Such severance benefit shall be paid in a lump sum within 30
     days after the date of such termination of employment.

          d. The Company shall pay to the Employee as a bonus for the year of
     termination of his employment an amount equal to a portion (determined as
     provided in the next sentence) of the Employee's maximum bonus opportunity
     under the Company's annual incentive bonus plan for the calendar year of
     termination of the Employee's employment or, if none, such portion of the
     bonus awarded to the Employee under the Company's annual incentive bonus
     plan for the calendar year immediately preceding the calendar year of the
     termination of his employment. Such portion shall be determined by dividing
     the number of days of the Employee's employment during such calendar year
     up to his termination of employment by 365 (366 if a leap year). Such
     payment shall be made in a lump sum within 30 days after the date of such
     termination of employment, and the Employee shall have no right to any
     further bonuses under said plan.

          e. During the period of 24 months beginning on the date of the
     Employee's termination of employment, the Employee (and, if applicable, the
     Employee's spouse and dependent children) shall remain covered by the
     medical, dental, life insurance, and, if reasonably commercially available
     through nationally reputable insurance carriers, long-term disability plans
     of the Company that covered the Employee immediately prior to his
     termination of employment as if the Employee had remained in employment for
     such period; provided, however, that the coverage under any such plan is
     conditioned on the timely payment by the Employee (or his spouse or
     dependent children) of the portion of the premium for such coverage that
     actively employed Employees with the Company generally are required to pay
     for such coverage. In the event that the Employee's participation in any
     such plan is barred, the Company shall arrange to provide the Employee
     (and, if applicable, his spouse and dependent children) with substantially
     similar benefits (but, in the case of long-term disability benefits, only
     if reasonably commercially available).

          f. The Company shall supplement the benefits payable in respect of the
     Employee under the Company's Pension Plan (and

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     any successor plans thereto) (collectively, the "Pension Plans") by paying
     the difference between (i) the benefits that the Employee would have been
     entitled to receive under the Pension Plans if he had been credited with
     two additional years of service (but no additional years of age) for
     purposes of the benefit accrual formula under the Pension Plans as of the
     date of termination of the Employee's employment and (ii) the benefits that
     the Employee is entitled to receive under the Pension Plans determined
     without regard to this subsection (f). Such benefits shall be payable in
     the same form and at the same time as the benefits under the respective
     Pension Plans.

          g. Each stock option granted by the Company to the Employee and
     outstanding immediately prior to termination of his employment shall be
     fully vested and immediately exercisable and may be exercised by the
     Employee (or, following his death, by the person or entity to which such
     option passes) at any time prior to the expiration date of the applicable
     option (determined without regard to any earlier termination of the option
     that would otherwise occur by reason of termination of his employment).

          h. The Company will pay the Employee a car allowance of $500 per month
     for 24 months following termination of the Employee's employment to replace
     the Company-leased automobile. The leased automobile must be returned to
     the Company by the Employee on the date of termination of the Employee's
     employment.

          i. The Company will provide the Employee with out-placement services
     selected by the Employee, at the Company's expense not to exceed $10,000.

          j. The Company shall promptly pay all reasonable attorneys' fees and
     related expenses incurred by the Employee in seeking to obtain or enforce
     any right or benefit under this Agreement or to defend against any claim or
     assertion in connection with this Agreement, but only to the extent the
     Employee substantially prevails.

2.   Definitions
     -----------

          a. Change of Control. For the purposes of this Agreement, a "Change of
     Control" shall be deemed to have occurred if (a) any person or persons
     acting together which

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     would constitute a "group" for purposes of Section 13(d) of the Securities
     Exchange Act of 1934, as amended (the "Exchange Act"), (other than the
     Company or any subsidiary of the Company) shall beneficially own (as
     defined in Rule 13d-3 of the Exchange Act), directly or indirectly, at
     least 25% of the total voting power of all classes of capital stock of the
     Company entitled to vote generally in the election of the Board; (b)
     Current Directors (as herein defined) shall cease for any reason to
     constitute at least a majority of the members of the Board (for this
     purpose, a "Current Director" shall mean any member of the Board as of the
     date hereof and any successor of a Current Director whose election, or
     nomination for election by the Company's shareholders, was approved by at
     least a majority of the Current Directors then on the Board); (c) the
     shareholders of the Company approve (i) a plan of complete liquidation of
     the Company or (ii) an agreement providing for the merger or consolidation
     of the Company other than a merger or consolidation in which (x) the
     holders of the common stock of the Company immediately prior to the
     consolidation or merger have, directly or indirectly, at least a majority
     of the common stock of the continuing or surviving corporation immediately
     after such consolidation or merger or (y) the Board immediately prior to
     the merger or consolidation would, immediately after the merger or
     consolidation, constitute a majority of the Board of Directors of the
     continuing or surviving corporation; or (d) the shareholders of the Company
     approve an agreement (or agreements) providing for the sale or other
     disposition (in one transaction or a series of transactions) of all or
     substantially all of the assets of the Company.

          b. Cause. The word "cause", as used in this Agreement, shall mean (i)
     conviction of a crime involving moral turpitude, or (ii) material and
     unexcused breach by Executive of his obligations under this Agreement,
     which results in material harm to the Company and which is not cured within
     the period set forth below; provided, however, that a termination shall not
     be for "cause" hereunder unless, such conviction or breach is detailed in a
     written notice of intent to terminate by the Board, providing for sixty
     (60) days from receipt by Executive to cure the breach prior to termination
     of Executive; except that such notice would not be required if, in the
     Chairman, President and Chief Executive Officer's discretion, the Company
     would be immediately harmed.

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3.   Golden Parachute Excise Tax.
     ---------------------------

          a. In the event that any payment or benefit received or to be received
     by the Employee pursuant to this Agreement or any other plan, program or
     arrangement of the Company or any of its affiliates would constitute an
     "excess parachute payment" within the meaning of Section 280G of the
     Internal Revenue Code of 1986, as amended (the "Code"), then the payments
     under this Agreement shall be reduced (by the minimum possible amounts)
     until no amount payable to the Employee under this Agreement constitutes an
     "excess parachute payment" within the meaning of Section 280G of the Code;
     provided, however, that no such reduction shall be made if the net
     after-tax payment (after taking into account Federal, state, local or other
     income and excise taxes) to which the Employee would otherwise be entitled
     without such reduction would be greater than the net after-tax payment
     (after taking into account Federal, state, local or other income and excise
     taxes) to the Employee resulting from the receipt of such payments with
     such reduction. If, as a result of subsequent events or conditions
     (including a subsequent payment or absence of a subsequent payment under
     this Agreement or other plan, program or arrangement of the Company or any
     of its affiliates), it is determined that payments under this Agreement
     have been reduced by more than the minimum amount required to prevent any
     payments from constituting an "excess parachute payment," then an
     additional payment shall be promptly made to the Employee in an amount
     equal to the additional amount that can be paid without causing any payment
     to constitute an excess parachute payment.

          b. All determinations required to be made under this Section 3 shall
     be made by a nationally recognized independent accounting firm mutually
     agreeable to the Company and the Employee (the "Accounting Firm") which
     shall provide detailed supporting calculations to the Company and the
     Employee as requested by the Company or the Employee. All fees and expenses
     of the Accounting Firm shall be borne solely by the Company and shall be
     paid by the Company upon demand of the Employee as incurred or billed by
     the Accounting Firm. All determinations made by the Accounting Firm
     pursuant to this Section 3 shall be final and binding upon the Company and
     the Employee.

          c. To the extent any payment or benefit is to be reduced pursuant to
     this Section 3, the severance payment

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     described in Section 1(c) will first be reduced, then the bonus described
     in Section 1(d), and then the supplemental pension benefits described in
     Section 1(f), in each case only to the extent necessary.

4.   Entitlement to Other Benefits.
     -----------------------------

     Except as otherwise provided in this Agreement, this Agreement shall not be
     construed as limiting in any way any rights or benefits that the Employee
     or his spouse, dependents or beneficiaries may have pursuant to any other
     plan or program of the Company.

5.   General Provisions.
     ------------------

5.1  No Duty to Seek Employment. The Employee shall not be under any duty or
     --------------------------
     obligation to seek or accept other employment following termination of
     employment, and no amount, payment or benefits due to the Employee
     hereunder shall be reduced or suspended if the Employee accepts subsequent
     employment, except as expressly set forth herein.

5.2  Deductions and Withholding. All amounts payable or which become payable
     --------------------------
     under any provision of this Agreement shall be subject to any deductions
     authorized by the Employee and any deductions and withholdings required by
     law.

5.3  Notices. All notices, demands, requests, consents, approvals or other
     -------
     communications (collectively "Notices") required or permitted to be given
     hereunder or which are given with respect to this Agreement shall be in
     writing and may be personally served or may be faxed or deposited in the
     United States mail, postage prepaid, addressed as follows:

     To the Company:   Lydall, Inc.
                       P.O. Box 151
                       One Colonial Road
                       Manchester, CT 06045-0151
                       Attn: Chief Executive Officer

     To the Employee:  Richard H. Kopp
                       759 Avery Street
                       South Windsor, CT 06074

                                       6
<PAGE>

     or such other address as such party shall have specified most recently by
     written notice. Notice mailed as provided herein shall be deemed given on
     the fifth business day following the date so mailed or on the date of
     actual receipt, whichever is earlier.

5.4  No Disparagement. The Employee shall not during the period of his
     ----------------
     employment with the Company, nor during the two-year period beginning on
     the date of termination of his employment for any reason, disparage the
     Company or any of its subsidiaries or affiliates or any of their
     shareholders, directors, officers, employees or agents. The Employee agrees
     that the terms of this Section 5.4 shall survive the term of this Agreement
     and the termination of the Employee's employment.

5.5  Proprietary Information and Inventions. The Lydall Employee Agreement
     --------------------------------------
     previously executed by the Employee and attached hereto as Exhibit A is
     incorporated by reference in this Agreement, and the Employee agrees to
     continue to be bound thereby.

5.6  Covenant to Notify Management. The Employee agrees to abide by the ethics
     -----------------------------
     policies of the Company as well as the Company's other rules, regulations,
     policies and procedures. The Employee agrees to comply in full with all
     governmental laws and regulations as well as ethics codes applicable. In
     the event that the Employee is aware or suspects the Company, or any of its
     officers or agents, of violating any such laws, ethics, codes, rules,
     regulations, policies or procedures, the Employee agrees to bring all such
     actual and suspected violations to the attention of the Board of Directors
     of the Company immediately so that the matter may be properly investigated
     and appropriate action taken. The Employee understands that the Employee is
     precluded from filing a complaint with any governmental agency or court
     having jurisdiction over wrongful conduct unless the Employee has first
     notified the Board of Directors of the Company of the facts and permits it
     to investigate and correct the concerns.

5.7  Amendments and Waivers. No provision of this Agreement may be modified,
     ----------------------
     waived or discharged unless such waiver, modification or discharge is
     agreed to in writing signed by the Employee and the Company. No waiver by
     either Party hereto at any time of any breach by the other Party hereto of,
     or compliance with, any condition or provision of this

                                       7
<PAGE>

     Agreement to be performed by such other Party shall be deemed a waiver of
     similar or dissimilar provisions or conditions at the same or at any prior
     or subsequent time.

5.8  Beneficial Interests. This Agreement shall inure to the benefit of and be
     --------------------
     enforceable by a) the Company's successors and assigns and b) the
     Employee's personal and legal representatives, executors, administrators,
     successors, heirs, distributees, devisees and legatees. If the Employee
     shall die while any amounts are still payable to him hereunder, all such
     amounts, unless otherwise provided herein, shall be paid in accordance with
     the terms of this Agreement to the Employee's devisee, legatee, or other
     designee or, if there be no such designee, to the Employee's estate.

5.9  Successors. The Company will require any successors (whether direct or
     ----------
     indirect, by purchase, merger, consolidation or otherwise) to all or
     substantially all of the business and/or assets of the Company to assume
     and agree to perform this Agreement in the same manner and to the same
     extent that the Company would be required to perform.

5.10 Assignment. This Agreement and the rights, duties, and obligations
     ----------
     hereunder may not be assigned or delegated by any Party without the prior
     written consent of the other Party and any attempted assignment or
     delegation without such prior written consent shall be void and be of no
     effect. Notwithstanding the foregoing provisions of this Section 5.10, the
     Company may assign or delegate its rights, duties and obligations hereunder
     to any affiliate or to any person or entity which succeeds to all or
     substantially all of the business of the Company or one of its subsidiaries
     through merger, consolation, reorganization, or other business combination
     or by acquisition of all or substantially all of the assets of the Company
     or one of its subsidiaries.

5.11 Choice of Law.  This Agreement shall be governed by and construed in
     -------------
     accordance with the laws of the State of Connecticut.

5.12 Statute of Limitations. The Employee and the Company hereby agree that
     ----------------------
     there shall be a one year statute of limitations for the filing of any
     requests for arbitration or any lawsuit relating to this Agreement or the
     terms or conditions of Employee's employment by the Company. If such a
     claim is filed more than one year subsequent to the Employee's last day

                                       8
<PAGE>

     of employment it shall be precluded by this provision, regardless of
     whether or not the claim has accrued at that time.

5.13 Right to Injunctive and Equitable Relief. The Employee's obligations under
     ----------------------------------------
     Sections 5.4 and 5.5 are of a special and unique character, which gives
     them a peculiar value. The Company cannot be reasonably or adequately
     compensated for damages in an action at law in the event the Employee
     breaches such obligations. Therefore, the Employee expressly agrees that
     the Company shall be entitled to injunctive and other equitable relief
     without bond or other security in the event of such breach in addition to
     any other rights or remedies which the Company may possess or be entitled
     to pursue. Furthermore, the obligations of the Employee and the rights and
     remedies of the Company under this Agreement are cumulative and in addition
     to, and not in lieu of, any obligations, rights, or remedies as created by
     applicable law.

5.14 Severability or Partial Invalidity. The invalidity or unenforceability of
     ----------------------------------
     any provisions of this Agreement shall not affect the validity or
     enforceability of any other provision of this Agreement, which shall remain
     in full force and effect.

5.15 Entire Agreement. This Agreement, along with the Lydall Employee Agreement
     ----------------
     (Exhibit A) by and between the Employee and the Company, constitutes the
     entire agreement of the Parties and supersedes all prior written or oral
     and all contemporaneous oral agreements, understandings, and negotiations
     between the Parties with respect to the subject matter hereof. This
     Agreement may not be changed orally and may only be modified in writing
     signed by both Parties. The Parties further intend that this Agreement,
     along with the Lydall Employee Agreement, constitutes the complete and
     exclusive statement of their terms and that no extrinsic evidence may be
     introduced in any judicial proceeding involving such agreements.

5.16 Counterparts. This Agreement may be executed in any number of counterparts,
     ------------
     each of which when so executed shall be deemed an original but all of which
     together shall constitute one and the same instrument.

                                       9
<PAGE>

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
duly authorized officer and the Employee has hereunto set his hand as of the day
and year first above written.

                           LYDALL,INC.

                           By:
                              --------------------------------- ----------------
                                 Christopher R. Skomorowski     Date
                                 President and Chief
                                 Executive Officer

                              --------------------------------- ----------------
                                 Richard H. Kopp                Date
                                 759 Avery Street
                                 South Windsor, CT  06074

                                       10

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