THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

Lydall, Inc. (LDL)

3/16/2006 Proxy Information

The Company has entered into an agreement with Mr. Franks dated March 1, 2000, as amended on August 1, 2000. This agreement provides for benefits, among other things, in the event of the termination of Mr. Franks by the Company other than for “cause” (as defined in the agreement) or termination of employment by Mr. Franks for “good reason” (as defined in the agreement). If a termination is without “cause” or for “good reason,” and does not occur within 12 months following a “Change of Control” of the Company, the termination benefits would include: (i) a severance benefit equal to the sum of his annual base salary and the average of the three annual incentive bonuses earned in the three years preceding termination, paid over 12 months; (ii) continued coverage under the Company’s medical, dental and life insurance plans for up to 12 months, subject to any required employee contributions; and (iii) outplacement services not to exceed $10,000. If a termination without “cause” or for “good reason” occurs within 12 months following a “Change of Control” of the Company, the termination benefits would include for Mr. Franks: (i) a severance benefit equal to two times the sum of his annual base salary rate, and the average of his three highest annual bonuses earned for any of the five calendar years preceding his termination of employment, payable in a lump sum; (ii) a pro-rata portion of his maximum bonus opportunity for the year of termination of employment; (iii) continued coverage under the Company’s medical, dental, life insurance and (if reasonably commercially available) long-term disability plans for up to 24 months, subject to any required employee contributions; (iv) supplemental benefits to the Company’s tax-qualified pension plan as if he had two additional years of service; (v) vesting in stock options and restricted stock; and (vi) certain other benefits. The employment agreement defines a “Change of Control” of the Company as: (a) beneficial ownership by a third party of at least 25 percent of total voting power of all classes of stock of the Company; (b) the election to the Board of a majority of Directors who were not approved by a majority of current Directors; (c) a stockholder approved liquidation of the Company, or merger or consolidation of the Company; or (d) a sale or disposition of all or substantially all of the assets of the Company.

The Company has also entered into severance agreements with Messrs. Smith and Longe dated January 21, 2005 and October 4, 2004, respectively. The agreements generally provide for severance benefits in the event that Mr. Smith or Mr. Longe is terminated. If the termination is within 12 months following a “Change of Control,” and not for “cause,” as defined in the agreement, Mr. Smith will receive a severance benefit equal to two times the sum of his annual base salary rate and the average of his three highest annual bonuses earned for any of the five calendar years preceding his termination of employment, payable in a lump sum. Mr. Longe will receive a severance benefit equal to the sum of his annual base salary rate and the average of his three highest annual bonuses earned for any of the five calendar years preceding his termination of employment, payable in a lump sum.

In addition, each will receive (i) a pro-rata portion of his yearly bonus, payable in a lump sum; (ii) coverage for 12 months under the Company’s medical and dental plans; (iii) supplemental benefits under the Company’s Pension Plan; (iv) a car allowance for 12 months; and (v) outplacement services not to exceed $10,000. The agreements define a “Change of Control” of the Company as: (a) beneficial ownership by a third party of at least 25 percent of total voting power of all classes of stock of the Company; (b) the election to the Board of a majority of Directors who were not approved by a majority of current Directors; (c) a stockholder approved liquidation of the Company, or merger or consolidation of the Company; or (d) a sale or disposition of all or substantially all of the assets of the Company. Mr. Smith and Mr. Longe would each receive the following benefits if termination is not within 12 months of a Change of Control under the agreement: (i) severance equal to his annual base salary paid over 12 months; (ii) the average of his annual bonuses for the three years preceding his termination; (iii) health coverage for 12 months under COBRA (with the Company paying the same percentage as it paid for actively employed senior executives) or until he commences full-time employment with an employer who offers health insurance benefits, whichever is earlier, and (iv) outplacement services not to exceed $10,000.

In the event Messrs. Franks, Smith or Longe becomes terminated due to a total and permanent disability, the Company will pay an amount equal to one times the individual’s annual base salary less amounts received under the Company’s disability program to the disabled individual. In addition, the individual will receive (i) bonus for the year of termination and the subsequent year; and (ii) health coverage for 12 months under COBRA (with the Company paying the same percentage as it paid for actively employed senior executives) and (iii) life insurance (with the Company paying the same percentage as it paid for actively employed senior executives). In the event Messrs. Franks, Smith or Longe dies, the Company will provide to the deceased employee’s estate, in addition to his base salary through termination date, (i) health coverage for his dependents for 12 months under COBRA; and (ii) a pro-rata bonus for the year of death, if a bonus would have been earned for the year of death.

The Company has sent a Letter of Understanding dated July 26, 2005 to Mr. Ploquin regarding his employment, which provides that in the event of a termination, other than for gross misconduct, he will receive compensation equal to 12 months of gross remuneration including bonus and six months’ compensation in exchange for a non-competition obligation, as required by law. In the event that Mr. Ploquin becomes disabled or deceased while an employee, in addition to his base salary through termination date, he will receive a pro-rata bonus for the year of termination in accordance with the current Bonus Program. In addition, the Company has purchased supplemental unemployment insurance covering Mr. Ploquin at a cost of $3,463.

Pursuant to an employment agreement between the Company and Mr. Skomorowski, within 30 days after Mr. Skomorowski’s termination from the Company on September 17, 2005, he received a severance benefit equal to two times the sum of his annual base salary and the average of his annual incentive bonuses earned in the three years preceding termination, payable in a lump sum in the amount of $960,403. He also began receiving (i) continued coverage under the Company’s medical and dental plans, and continued life insurance and long-term disability insurance (to the extent available), for 18 months (with the Company paying the same percentage as it paid for actively employed senior executives); (ii) supplemental benefits to the Company’s tax-qualified pension plan as if he had 18 additional months of service; (iii) outplacement services not to exceed $20,000; (iv) a $500 per month car allowance for two years; and (v) a potential tax gross-up, for payments, distributions or benefits subject to excise tax, if any.

8/23/2005 8K Information

Mr. Skomorowski was Executive Vice President and Chief Operating Officer of Lydall, Inc. from July 2003 until mid-September 2005. Prior to becoming Chief Operating Officer, he served as President and Chief Executive Officer from December 1998. He has held a variety of management positions in both finance and marketing since joining Lydall, Inc. in 1979.

3/22/2005 Proxy Information

No related party transactions or special relationships reported for this company. Director relationships marked "Outside Related" at this firm will most often be former executives of the company. Additional information regarding these relationships will be added during our regular updates.

3/12/2004 Proxy Information

During 2003, Director Roger M. Widmann received $120,000 in cash compensation for his services as Chairman of the Board.

During 2003, Cahill Gordon & Reindel LLP, of which Director W. Leslie Duffy is a partner, was engaged by the Company to perform a minor amount of services.

Elliott F. Whitely is a former employee of Lydall.

3/26/2003 Proxy Information

During 2002, Cahill Gordon & Reindel, of which Director W. Leslie Duffy is a partner, was engaged by the Company as special counsel for limited matters. The fees paid to Cahill Gordon & Reindel in 2002 totaled $1,653.

During 2002, Director Roger M. Widmann received $120,000 in cash compensation for his services as Chairman of the Board.