Offer Letter for Randall B. Gonzales dated January 5, 2018

January 5, 2018

Randall B. Gonzales

[REDACTED]

[REDACTED]

Dear Randy:

I am pleased to extend an invitation to you to join Lydall, Inc. as Executive Vice President and Chief Financial Officer. Your starting date will be on a mutually agreed upon date subject to the details noted below, and is contingent upon successful fulfillment of all pre-employment requirements as outlined below. Chad A. McDaniel, Senior Vice President, General Counsel and Chief Administrative Officer, will assist you in all of the pre-employment procedures that may be required. As discussed, the particulars are as follows:

Your base annual rate of compensation is $390,000 and will be paid on a bi-weekly basis. You will be eligible to participate in the Company Annual Incentive Performance (AIP) program at sixty (60%) percent of your actual paid base salary, in accordance with Plan Provisions. For the 2018 performance period, you will eligible to receive an amount equivalent to full year incentive compensation, without regard to any pro-rating due to your start date. You will receive a written description of the program with related targets during your orientation.

Each year, you’ll be eligible to receive equity awards comparable to and at levels consistent with other members of the senior leadership team. Additionally, the Compensation Committee of the Board of Directors will grant to you the following equity awards: (a) a long-term incentive stock award estimated at a value of $390,000, split equally between shares of performance-based restricted stock and non-qualified stock options; and (b) a time-based restricted stock award covering that number of shares of the Company’s common stock equal to $400,000, vesting in three equal annual installments starting on the first anniversary of the date of grant.

The equity awards will be effective on or soon after your start date, provided there is no blackout period at that time; otherwise they will be granted at the close of market on the first full trading day after any blackout period has been lifted following your start date.

You have indicated your intention to provide your current employer with your notice of resignation on Monday, January 15, 2018 with your last day being on Friday, March 9, 2018. By doing so, it is your belief that (a) you will remain eligible to receive your 2017 annual cash incentive payment of a minimum of $125,000 (“Minimum 2017 Bonus Amount”); and (b) the following number of shares subject to stock option awards will vest on their respective vesting dates: (i) 2,211 options vesting on March 2, 2018; (i) 1,627 options vesting on March 6, 2018; (i) 2,594 options vesting on March 7, 2018 (collectively, the “March 2018 Options”).

If, upon giving your notice of resignation on January 15^th, your current employer does not allow you to receive your Minimum 2017 Bonus and/or allow the March 2018 Options to vest in full, then your start date will be on or before Monday, January 29, 2018. In consideration of the advance of your start date, Lydall will agree to provide you with the following additional compensation arrangements: (a) a cash sign-on bonus equal to the difference between the Minimum 2017 Bonus Amount and the actual amount you receive up to a maximum amount of $100,000 (such amount to be paid 60 days after your start date); and (b) a time-based restricted stock award covering that number of shares of the Company’s common stock equal to an additional $300,000, vesting in three equal annual installments starting on the first anniversary of the date of grant.

The Company will provide reimbursement in your first paycheck for documented COBRA premiums paid by you to bridge the Lydall health coverage waiting period.

Attached is an Agreement that outlines the terms of your severance arrangements.

You are eligible for a comprehensive benefit package that includes medical, dental, disability, life, 401(k), and stock purchase plans. The applicable waiting periods and vesting schedules are outlined in the Benefits Handbook which will be provided to you during your orientation. A Summary of Benefits has been provided for your review. As a senior executive officer, you are also eligible for the following benefits (subject to reasonable underwriting requirements and reasonable premium costs):

You will be eligible for four (4) weeks paid vacation per year, prorated for 2018. You will continue at that level until you are eligible for additional weeks according to the Vacation Policy. All other provisions of the Vacation Policy apply.

You will be provided with a $1,150 monthly car allowance, as outlined in the Company Policy. A company gas card will also be provided for your use.

We look forward to the contributions that you will bring to Lydall. Please feel free to contact me or Chad if you have any questions.

Sincerely,

Dale G. Barnhart

President and Chief Executive Officer

Randall B. Gonzales    Date