Exhibit 10.2

 

      Lydall, Inc.    Telephone 860 646-1233       One Colonial Road   
Facsimile 860 646-4917       P.O. Box 151    Facsimile 860 646-8847      
Manchester, CT 06045-0151    www.lydall.com

November 3, 2009

VIA HAND DELIVERY AND REGULAR MAIL

Mr. Thomas P. Smith

xxxx

xxxx

 

  Re: Resignation of Employment and Retention as Consultant

Dear Tom:

I wanted to confirm the arrangements concerning the resignation of your
positions as Vice President, Chief Financial Officer and Treasurer of Lydall,
Inc. (the “Company”), the termination of your employment with the Company, and
your retention as a consultant by the Company on a short-term basis.

Contemporaneous with the signing of this Letter Agreement, you have signed and
delivered to the Company a letter of resignation effecting the resignation of
your positions with the Company and the termination of your employment by the
Company as of the close of business on November 3, 2009. The signed resignation
letter is attached as Exhibit A.

Upon your execution and delivery of a general release of all claims in favor of
the Company in the form attached hereto as Exhibit B (the “Release”), and
assuming the Release is not revoked by you and becomes binding and effective,
and subject to the performance by you of your obligations hereunder and under
any other agreements between you and the Company that impose continuing duties
after termination of your employment, you will receive severance benefits (the
“Severance Benefits”) equivalent to those specified in paragraphs 8(a) through
(e) of your Employment Agreement dated January 10, 2007 (the “Employment
Agreement”),except that the payments equivalent to those described in paragraph
8(c) shall be paid in equal installments over twelve (12) months at the times
that salary payments are normally made by the Company.

Your Employment Agreement shall terminate effective as of the close of business
on November 3, 2009 in all respects except that each of the following shall
continue in full force and effect: (i) the provisions of Sections 12, 13.4, 13.5
and 13.6 of the Employment Agreement; (ii) the Employee Agreement (dated
March 31, 2000) that is Attachment A to the Employment Agreement; and (iii) the
Indemnification Agreement (dated January 1, 2007) that is Attachment C to the
Employment Agreement.

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In addition to the provision of the Severance Benefits to you, the Company will
implement the following arrangements with respect to your outstanding and
unvested equity awards of Company stock or options to purchase Company stock:

 

  •  

The vesting with respect to all of your issued and unvested stock option awards
and time-based restricted stock awards shall be accelerated and are fully vested
as of November 3, 2009. Your performance stock award will expire upon
termination of your employment.

 

  •  

With respect to all of your currently outstanding stock options granted under
the Lydall, Inc.1992 Stock Incentive Compensation Plan, the term for exercise
shall be as required under the provisions of Section 10(e)(ii).

 

  •  

With respect to all of your currently outstanding stock options under the
Amended and Restated Lydall 2003 Stock Incentive Compensation Plan, the term for
exercise shall be modified to provide that the options will continue to be
exercisable throughout the entire, original ten-year terms stipulated in the
option agreements, notwithstanding the termination of your employment on
November 3, 2009 (absent such a modification, per the terms of the plan, your
ISO’s would have expired 90 days after the termination of your employment and
your NQ’s would have expired 1 year after the termination of your employment).
The effect of this modification to your ISO’s is that such ISO’s will become
NQ’s.

The table attached hereto as Schedule 1 sets forth in detail the vesting and
exercise terms for each of your outstanding stock option, restricted stock and
performance stock awards. Except as expressly modified herein, all of your
equity awards remain subject to the terms and conditions of the incentive
compensation plans under which they were issued.

In addition, the Company will: (i) pay you your 2009 bonus award pro rated
through November 3, 2009, subject to the terms and conditions of the Company’s
2009 Annual Incentive Performance Program, at the same time as other Company
employees are paid their 2009 bonus awards; and (ii) provide to you the
continued use of the Company-leased vehicle that you are currently using on the
same terms and conditions as currently provided through the end of the current
lease term, at which time you would return possession of the vehicle to the
designated representative of the Company in good working order.

You and the Company have agreed to enter into a short-term consulting
arrangement pursuant to the terms of that certain Consulting Agreement that is
attached hereto as Exhibit C. The Consulting Agreement shall be effective as of
November 4, 2009.

 

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Please indicate your agreement to the foregoing by signing where indicated
below.

 

Sincerely, /s/ Dale Barnhart Dale Barnhart President and CEO

 

AGREED AND ACKNOWLEDGED /s/ Thomas P. Smith Thomas P. Smith Dated: November 3,
2009

 

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SCHEDULE 1

Thomas P. Smith

Lydall, Inc. Stock Options/Awards-Summary Table

Post-Termination Treatment (November 3, 2009)**

 

Grant Type

   Grant Date    Grant Price    Shares
Granted    Shares
Vested    Shares
Exercised    Shares
Subject to
Accelerated
Vesting    Expiration
Date

1992 Stock Incentive Compensation Plan

                    

NQ

   12/12/2001    $ 9.85    663    663    0    0    12/11/2011

ISO

   05/10/2000    $ 9.75    4,000    4,000    0    0    02/03/2010

ISO

   12/12/2000    $ 9.88    12,500    12,500    0    0    02/03/2010

ISO

   12/12/2001    $ 9.85    24,337    24,337    0    0    02/03/2010

2003 Stock Incentive Compensation Plan

                    

NQ

   10/22/2003    $ 11.46    2,646    2,646    0    0    10/21/2013

NQ

   12/08/2004    $ 11.08    10,000    10,000    0    0    12/07/2014

ISO

   10/22/2003    $ 11.46    3,354    3,354    0    0    10/21/2013

ISO

   12/07/2005    $ 7.65    10,000    7,500    0    2,500    12/06/2015

ISO

   12/07/2006    $ 10.87    3,000    1,500    0    1,500    12/06/2016

ISO

   12/03/2007    $ 9.70    3,500    875    0    2,625    12/02/2017

ISO

   12/09/2008    $ 4.64    3,000    0    0    3,000    12/08/2018

RSA

   12/07/2006      N/A    3,500    1,750    1,750    *1,750    N/A

RSA

   12/03/2007      N/A    3,000    750    750    *2,250    N/A

RSA

   12/09/2008      N/A    3,000    0    0    *3,000    N/A

PSA

   01/12/2009      N/A    4,000    0    0    0    11/03/2009                    
  

Total Accelerated Shares

                  16,625                          

 

* Does not account for tax withholding.

** Subject to Approval by Lydall Compensation Committee

 

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EXHIBIT A

November 3, 2009

Mr. Dale Barnhart

Lydall, Inc.

One Colonial Road

P.O. Box 151

Manchester, CT 06045-0151

 

  Re: Resignation as Officer

Dear Dale:

Effective close of business on November 3, 2009, I hereby resign my positions as
Vice President, Chief Financial Officer and Treasurer of Lydall, Inc. and any
and all positions I may hold with subsidiaries of Lydall. Effective close of
business on November 3, 2009, I hereby resign as an employee of Lydall, Inc.

 

Sincerely yours, /s/ Thomas P. Smith Thomas P. Smith

 

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EXHIBIT B

TERMINATION, VOLUNTARY RELEASE AND WAIVER OF RIGHTS

AGREEMENT

I, Thomas P. Smith, unqualifiedly accept and agree to the relinquishment of my
title, responsibilities and obligations as an employee of Lydall, Inc. (“the
Company”), and concurrently and unconditionally agree to sever my relationship
as an employee of the Company, in consideration for the voluntary payment to me
by the Company of the separation benefits set forth in the Letter Agreement
dated November 3, 2009 by and between me and the Company (the “Employment
Agreement”), which is made a part hereof.

1. In exchange for this consideration, which I understand that the Company is
not otherwise obligated to provide to me, I voluntarily agree to waive and
forego any and all claims, rights, interests, covenants, contracts, warranties,
promises, undertakings, actions, suits, causes of action, obligations, debts,
attorneys’ fees or other expenses, accounts, judgments, fines, fees, losses and
liabilities, of any kind, nature or description, in law, equity or otherwise
(collectively, “Claims”) that I may have against the Company and to release the
Company and their respective affiliates, subsidiaries, officers, directors,
employees, representatives, agents, successors and assigns (hereinafter
collectively referred to as “Releasees”) from any obligations any of them may
owe to me, accepting the aforestated consideration as full settlement of any
monies or obligations owed to me by Releasees that may have arisen at any time
prior to the date of my execution of this Termination, Voluntary Release and
Waiver of Rights Agreement (the “Agreement”), except as specifically provided
below in the following paragraph number 2.

2. I do not waive, nor has the Company asked me to waive, any rights arising
exclusively under the Fair Labor Standards Act, except as such waiver may
henceforth be made in a manner provided by law. I do not waive, nor has the
Company asked me to waive, any vested benefits that I may have or that I may
have derived from the course of my employment with the Company. I understand
that such vested benefits will be subject to and administered in accordance with
the established and usual terms governing same. I do not waive any rights which
may in the future, after the execution of this Agreement, arise exclusively from
a substantial breach by the Company of a material obligation of the Company
expressly undertaken in consideration of my entering into this Agreement. I do
not waive any rights I have to indemnification under the Indemnification
Agreement dated January 10, 2007 and pursuant to applicable statutes, the
Certificate of Incorporation and Bylaws of the Company, its affiliates or
subsidiaries.

3. Except as set forth in paragraph 2, I do fully, irrevocably and forever
waive, relinquish and agree to forego any and all Claims whatsoever, whether
known or unknown, that I may have or may hereafter have against the Releasees or
any of them arising out of or by reason of any cause, matter or thing whatsoever
from the beginning of the world to the date hereof, including without limitation
any and all matters relating to my employment with the Company and the cessation
thereof and all matters arising under

 

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Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000 et seq., the
Americans with Disabilities Act of 1990, 42 U.S.C. § 12101 et seq., the Family
and Medical Leave Act of 1993, 29 U.S.C. § 2601 et seq., the Age Discrimination
in Employment Act of 1967, 29 U.S.C. § 621 et seq., the Employee Retirement
Income Security Act of 1974, 29 U.S.C. § 1001 et seq., all as amended, or under
any other laws, ordinances, Employee orders, regulations or administrative or
judicial case law arising under the statutory or common laws of the United
States, the State of Connecticut or any other applicable county or municipal
ordinance.

4. As a material inducement to the Company to enter into this Agreement, I, the
undersigned, recognize that I may have been privy to certain confidential,
proprietary and trade secret information of the Company which, if known to third
parties, could be used in a manner that would reduce the value of the Company
for its shareholders. In order to reduce the risk of that happening, I, the
undersigned, agree that for a period of two (2) years after termination of
employment, I, the undersigned, will not, directly or indirectly, assist, or be
part of or have any involvement in, any effort to acquire control of the Company
through the acquisition of its stock or substantially all of its assets, without
the prior consent of the Board of Directors of the Company. This provision shall
not prevent the undersigned from owning up to not more than one percent (1%) of
the outstanding publicly traded stock of any company.

5. I further acknowledge pursuant to the Older Worker’s Benefit Protection Act
(29 U.S.C. § 626(f)), I expressly agree that the following statements are true:

a. The payment of the consideration described in Section 8 of the Severance
Agreement is in addition to the standard employee benefits and anything else of
value which the Company owes me in connection with my employment with the
Company or the separation of employment.

b. I have twenty-one days from the date of receipt to consider and sign this
agreement. If I choose to sign this Agreement before the end of the twenty-one
day period, that decision is completely voluntary and has not been forced on me
by the Company.

c. I will have seven (7) days after signing the Agreement in which to revoke it,
and the Agreement will not become effective or enforceable until the end of
those seven (7) days.

d. I am now being advised in writing to consult an attorney before signing this
Agreement.

I acknowledge that I have been given sufficient time to freely consult with an
attorney or counselor of my own choosing and that I knowingly and voluntarily
execute this Agreement, after bargaining over the terms hereof, with knowledge
of the consequences made clear, and with the genuine intent to release claims
without threats, duress, or coercion on the part of the Company. I do so
understanding and acknowledging the significance of such waiver.

 

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6. Further, in view of the above-referenced consideration voluntarily provided
to me by the Company, after due deliberation, I agree to waive any right to
further litigation or claim against any or all of the Releasees except as
specifically provided in paragraph number 2 above. I hereby agree to indemnify
and hold harmless the Releasees and their respective agents or representatives
from and against any and all losses, costs, damages or expenses, including,
without limitation, attorneys fees incurred by said parties, or any of them,
arising out of any breach of this Agreement by me or by any person acting on my
behalf, or the fact that any representation made herein by the undersigned was
false when made.

7. As a material inducement to the Company to enter into this Agreement, I, the
undersigned, understand and agree that if I should fail to comply with the
conditions hereof or to carry out the agreement set forth herein, all amounts
previously paid under this Agreement shall be immediately forfeited to the
Company and that the right or claim to further payments and/or benefits
hereunder would likewise be forfeited.

8. As a further material inducement to the Company to enter into this Agreement,
the undersigned provides as follows:

First. I represent that I have not filed any complaints or charges against the
Company, or any of the Releasees relating to the relinquishment of my former
titles and responsibilities at the Company or the terms of my employment with
the Company and that if any agency or court assumes jurisdiction of any
complaint or charge against the Company or any of the Releasees on behalf of me
concerning my employment with the Company, I understand and agrees that I have,
by my knowing and willing execution of this Agreement waived my rights to any
form of recovery or relief against the Company, or any of the Releasees,
including but not limited to, attorney’s fees. Provided, however, that this
provision shall not preclude the undersigned from pursuing appropriate legal
relief against the Company for redress of a substantial breach of a material
obligation of the Company expressly undertaken in consideration of my entering
into this Agreement.

Second. I acknowledge and understand that the consideration for this release
shall not be in any way construed as an admission by the Company or any of the
Releasees of any improper acts or any improper employment decisions, and that
the Company, specifically disclaims any liability on the part of itself, the
Releasees, and their respective agents, employees, representatives, successors
or assigns in this regard.

Third. I acknowledge and agree that this Agreement shall be binding upon me,
upon the Company, and upon our respective administrators, representatives,
Employees, successors, heirs and assigns and shall inure to the benefit of said
parties and each of them.

 

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Fourth. I represent, understand and agree that this Agreement and the Letter
Agreement dated November 3, 2009 (including all attachments thereto and
documents referred to therein) set forth the entire agreement between the
parties hereto, and fully supersedes any and all prior agreements or
understandings between the parties.

Fifth. Modification. This Agreement may not be altered or changed except by an
agreement in writing that has been properly executed by the party against whom
any waiver, change, modification or discharge is sought.

Sixth. Severability. All provisions and terms of this Agreement are severable.
The invalidity or unenforceability of any particular provision(s) or term(s) of
this Agreement shall not affect the validity or enforceability of the other
provisions and such other provisions shall be enforceable in law or equity in
all respects as if such particular invalid or unenforceable provision(s) or
term(s) were omitted. Notwithstanding the foregoing, the language of all parts
of this Agreement shall, in all cases, be construed as a whole, according to its
fair meaning, and not strictly for or against any of the parties.

Seventh. No Disparagement. Unless otherwise required by a court of competent
jurisdiction or pursuant to any recognized subpoena power, I agree and promise
that I will not make any oral or written statements or reveal any information to
any person, company, or agency which is disparaging or damaging to the
reputation or business of the Company, its subsidiaries, directors, officers or
affiliates, or which would interfere in any way with the business relations
between the Company or any of its subsidiaries or affiliates and any of their
customers, suppliers or vendors whether present or in the future. The Company
understands and agrees that in consideration for the covenants, terms and
conditions herein, it shall cause its directors and executive officers to not
make any false, disparaging or derogatory statements to any third party or
entity, including any media outlet, in public or private, regarding you.

Eighth. Confidentiality. Except as may be required by applicable law, including
securities law, or by court order, the Company and the undersigned agree to
refrain from disclosing to third parties and to keep strictly confidential all
details of this Agreement and any and all information relating to its
negotiation, except as necessary to each party’s accountants or attorneys.

Ninth. Termination of Agreement. Notwithstanding anything to the contrary in
this Agreement, this Agreement may be terminated by the Company and all further
payment obligations of the Company will cease, if: (a) the undersigned is
terminated for “Cause” prior to the undersigned’s separation date; or (b) facts
are discovered after the undersigned’s separation date that would have supported
a termination for “Cause” had such facts been discovered prior to the
undersigned’s separation date.

 

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AFFIRMATION OF RELEASOR

I, Thomas P. Smith, warrant that I am competent to execute this Termination,
Voluntary Release and Waiver of Rights Agreement and that I accept full
responsibility thereof.

I, Thomas P. Smith, warrant that I have had the opportunity to consult with an
attorney of my choosing with respect to this matter and the consequences of my
executing this Termination, Voluntary Release and Waiver of Rights Agreement.

I, Thomas P. Smith, have read this Termination, Voluntary Release and Waiver of
Rights Agreement carefully and I fully understand its terms. I execute this
document voluntarily with full and complete knowledge of its significance.

 

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Executed this 3rd day of November, 2009, at Manchester, CT.

 

      NAME: Thomas P. Smith STATE OF Connecticut    )       )    SS: Thomas P.
Smith COUNTY OF Hartford    )   

Subscribed and sworn to before me, a Notary Public in and for said County and
State, this 3rd day of November, 2009, under the pains and penalties of perjury.

Donna G. Tracy, Notary Public

My Commission Expires:

County of Residence: Tolland

 

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EXHIBIT C

CONSULTING AGREEMENT

This Agreement is made this 4rd day of November 2009, by and between Lydall,
Inc. (“Lydall”) and Thomas P. Smith (“Consultant”).

WHEREAS, Lydall desires to retain the personal services of Thomas P. Smith of
Avon, Connecticut (“Consultant”) as a consultant; and

WHEREAS, Lydall’s business exists and competes upon a nationwide and worldwide
basis, and the degree of product and price competition in the markets in which
Lydall is engaged is high; and

WHEREAS, In the course of Consultant’s association with Lydall, Consultant has
received, developed, or otherwise acquired or been exposed to, and will receive,
develop or otherwise acquire or be exposed to, information of a secret and
confidential nature relating to Lydall’s business, disclosure or use of which in
any manner adverse to Lydall’s interest would result in immediate and
irreparable harm to Lydall’s competitive position; and

WHEREAS, The noncompetition and confidential information provisions of this
Consulting Agreement are entered into at the time of and as a part of this
Agreement, and are ancillary to the other promises and undertakings of the
parties contained herein. Such ancillary noncompetition and confidential
information provisions are reasonable and necessary to protect Lydall’s secret
and confidential information, and to prevent Consultant or any entity with which
Consultant may be or become associated from gaining or exploiting an unfair
economic or competitive advantage over Lydall.

NOW, THEREFORE, in consideration of their mutual promises set forth below, the
adequacy of which is hereby acknowledged, Lydall and Consultant agree as
follows:

1. Consultant shall serve as a Consultant to Lydall during the Agreement Period
(as defined below). As such, Consultant will report to and perform such duties
as may be assigned by the Chief Financial Officer of Lydall or designee, which
will be determined by mutual agreement between the Chief Financial Officer and
the Consultant. Consultant and the Chief Financial Officer shall agree on the
number of hours to be worked by Consultant.

(a) Consultant will be provided with a work space, telephone, computer
equipment, and other materials and supplies at Lydall’s Corporate Headquarters
and will visit Lydall’s facilities as required.

(b) Nothing in this Agreement shall be construed to accord Consultant any status
as an employee of Lydall. The relationship established shall be solely that of
an independent contractor relationship, and shall in no way be construed as an
employer/employee relationship.

 

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2. Agreement Period. The Agreement Period shall extend from November 4, 2009
through December 31, 2009. This Agreement may be renewed upon agreement of the
parties.

3. Compensation. In consideration for the obligations assumed by Consultant
under this Agreement, Lydall shall pay to Consultant a sum of $115 per hour
worked during the Agreement period, payable bi-weekly. In addition, Lydall shall
reimburse Consultant for documented, reasonable expenses actually incurred and
approved in advance by Lydall; within thirty (30) days of submission. During the
Agreement Period, Lydall agrees to compensate Consultant for at least 20 hours
per week and Consultant agrees to be available and provide services up to a
maximum of 40 hours per week. Lydall reserves the right to offset against
compensation any amounts owed to Lydall by Consultant.

4. Other employment. Consultant, during the period of his retention as a
Consultant to Lydall, may actively seek employment or other consulting
relationships so long as such professional relationships are not incompatible
with Consultant’s ability to serve Lydall as a Consultant.

5. Confidential Information of Third Parties. Consultant agrees not to use or
disclose to Lydall any confidential information belonging to third parties.

6. Confidential Information of Lydall,

(a) Consultant understands, acknowledges, and agrees that the terms and
conditions of that certain “Lydall Employee Agreement” dated March 31, 2000
between Consultant and Lydall continue to govern and apply with respect to
Constant’s activities and services under this Agreement.

(b) During the Agreement Period, Consultant agrees that he will not become or
seek to become principal, agent, officer, director, or employee of, a sales
representative, dealer, distributor, or franchisee for, or a consultant to, or
be engaged or serve in any similar capacity for any business which is a supplier
or competitor of Lydall within Lydall’s worldwide market.

(c) In the event of any breach or threatened breach of any of the provisions of
this paragraph, Lydall shall be entitled, in addition to any other remedy
available at law or in equity, to the enforcement of this Agreement or any
affected portion hereof by injunctive relief, and shall further be entitled to
the recovery of its damages.

 

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7. Entire Agreement. This written Agreement, together with the agreements and
documents referenced herein, embodies the whole understanding between the
parties hereto with respect to the consultancy of the Consultant.

8. Modification. This Agreement may not be changed orally, but only by an
agreement in writing signed by the party against whom any waiver, change,
modification or discharge is sought.

9. Assignment. This Agreement is personal to Consultant and may not be assigned
by him. This Agreement will be binding on successors or heirs of both parties.

10. Waiver. The waiver by any party of a breach of any provision of this
Agreement shall not operate as, or be construed as, a waiver of any subsequent
breach.

11. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the law of Connecticut, and jurisdiction for dispute under this
Agreement shall reside in the courts of Connecticut.

12. Severability. All provisions and terms of this Agreement are severable. The
invalidity or the unenforceability of any particular provision(s) or term(s) of
this Agreement shall not affect the validity or enforceability of the other
provisions or terms of the Agreement, and the Agreement shall be construed and
enforceable in law or equity in all respects as if such particular invalid or
unenforceable provision(s) or term(s) were omitted.

13. Termination. This Agreement may be terminated by either party for material
breach by the other party upon thirty (30) days’ notice.

14. Liability. In the event of litigation relating to this Agreement, if a court
of competent jurisdiction determines in a final, nonappealable order that a
party has breached this Agreement, then such party shall be liable and pay to
the non-breaching party the reasonable legal fees such non-breaching party has
incurred in connection with such litigation, including any appeal therefrom.

15. Indemnification. The Company acknowledges and agrees that the terms and
conditions of that certain Indemnification Agreement dated January 10, 2007 by
and between Consultant and the Company shall continue to govern and apply to
Consultant’s provision of services under this Agreement during the Agreement
Period.

16. Compliance. Consultant acknowledges review of Lydall’s Code of Conduct and
Business Ethics and agrees to comply with its provisions. Consultant will
conduct business according to all applicable laws and regulations, including but
not limited to antitrust and corrupt business practices laws. Consultant will
indemnify and hold Lydall harmless from and against any fines, penalties, or
other damages arising from any violation by Consultant of any such laws or
regulations. Lydall shall have the right to audit Consultant’s records, upon
advance written notice to confirm such compliance.

 

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IN WITNESS WHEREOF, the parties have hereto set their hands as of the date first
above written.

 

LYDALL, INC.     By:   /s/ Dale G. Barnhart       /s/ Thomas P. Smith   Dale G.
Barnhart       Thomas P. Smith   President and Chief Executive Officer
Consultant      

 

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