On June 22, 2009, the Board of Directors of Lydall, Inc. (the "Company") authorized and declared a dividend distribution (the "Distribution") of one Right for each outstanding share of common stock, par value $0.10 per share (the "Common Stock"), of the Company. The distribution is payable to holders of record on July 6, 2009 (the "Record Date"). Each Right entitles the registered holder to purchase from the Company, under certain circumstances, one one-thousandth of a share of Series A Junior Participating Preferred Stock, par value $1.00 per share (the "Preferred Stock") of the Company, at a price of $20.00 per one one-thousandth of a share (the "Purchase Price"), subject to adjustment. The description and terms of the Rights are set forth in a Rights Agreement (the "Rights Agreement") dated June 23, 2009 between the Company and American Stock Transfer & Trust Company, LLC, as Rights Agent (the "Rights Agent").

Distribution Date; Transfer of Rights

Until the earlier to occur of (i) the close of business on the tenth calendar day following the first date of public announcement (the "Shares Acquisition Date") (or, if the tenth calendar day after the Share Acquisition Date occurs before the Record Date, the close of business on the Record Date) that a person or group of affiliated or associated persons (an "Acquiring Person") acquired, or obtained the right to acquire, beneficial ownership of Common Stock or other voting securities ("Voting Stock") that have 15% or more of the voting power of the outstanding shares of Voting Stock or (ii) the close of business on the tenth calendar day (or such later date as may be determined by action of the Board of Directors prior to the time any person or group of affiliated persons becomes an Acquiring Person) following the commencement or announcement of an intention to commence a tender offer or exchange offer, the consummation of which would result in such person or group acquiring, or obtaining the right to acquire, beneficial ownership of Voting Stock having 15% or more of the voting power of the outstanding shares of Voting Stock (the earlier of such dates being called the "Distribution Date"), the Rights will be evidenced, with respect to any of the Company's Common Stock certificates outstanding as of the Record Date, by such Common Stock certificates. The Rights Agreement provides that, until the Distribution Date, the Rights will be transferred with and only with the Company's Common Stock. Until the Distribution Date (or earlier redemption or expiration of the Rights), new Common Stock certificates issued after the Record Date upon transfer or new issuance of the Company's Common Stock will contain a notation incorporating the Rights Agreement by reference and the surrender for transfer of any of the Company's Common Stock certificates outstanding as of the Record Date will also constitute the transfer of the Rights associated with the Common Stock represented by such certificate. As soon as practicable following the Distribution Date, separate certificates evidencing the Rights ("Right Certificates") will be mailed to holders of record of the Company's Common Stock as of the close of business on the Distribution Date and such separate Right Certificates alone will evidence the Rights.

The Rights are not exercisable until the Distribution Date. The Rights will expire at the close of business on June 22, 2012, unless earlier redeemed or exchanged by the Company as described below.

Exercise of Rights for Common Stock of the Company

In the event that a Person becomes an Acquiring Person, each holder of a Right will thereafter have the right to receive, upon exercise, Common Stock (or, in certain circumstances, cash, property or other securities of the Company) having a value equal to two times the Purchase Price of the Right. Notwithstanding any of the foregoing, following the occurrence of the event set forth in this paragraph, all Rights that are, or (under certain circumstances specified in the Rights Agreement) were, beneficially owned by any Acquiring Person will be null and void.

Exercise of Rights for Shares of the Acquiring Company

In the event that, at any time following the Shares Acquisition Date, (i) the Company is acquired in a merger or other business combination transaction, or
(ii) 50% or more of the Company's assets or earning power is sold or transferred, each holder of a Right (except Rights which previously have been voided as set forth above) shall thereafter have the right to receive, upon exercise, common stock of the acquiring company having a value equal to two times the Purchase Price of the Right.

Adjustments to Purchase Price

The Purchase Price payable, and the number of shares of Preferred Stock (or Common Stock or other securities, as the case may be) issuable, upon exercise of the Rights are subject to adjustment from time to time to prevent dilution
(i) in the event

With certain exceptions, no adjustment in the Purchase Price will be required until the earlier of (i) three years from the date of the event giving rise to such adjustment and (ii) the time at which cumulative adjustments require an adjustment of at least 1% in such Purchase Price. No fractional shares will be issued (other than fractional shares which are integral multiples of one one-thousandth of a share of Preferred Stock) and, in lieu thereof, an adjustment in cash will be made based on the market price of the Preferred Stock on the last trading date prior to the date of exercise.

Redemption and Exchange of Rights

At any time prior to 5:00 P.M. New York City time on the tenth calendar day following the Shares Acquisition Date, the Company may redeem the Rights in whole, but not in part, at a price of $.001 per Right (the "Redemption Price"). Promptly upon the action of the Board of Directors of the Company electing to redeem the Rights, the Company shall make announcement thereof, and upon such action, the right to exercise the Rights will terminate and the only right of the holders of Rights will be to receive the Redemption Price.

At any time after the occurrence of the event set forth under the heading . . .

The information set forth in Item 1.01 "Entry into a Material Definitive Agreement" of this Form 8-K is incorporated herein by reference.

On June 23, 2009, the Company issued a press release announcing the execution of the Shareholder Rights Agreement. A copy of the press release is furnished as Exhibit 99.1.

(d) Exhibits

Exhibit
Number       Description of Exhibit
4.1          Rights Agreement, dated as of June 23, 2009, between Lydall, Inc. and
             American Stock Transfer & Trust Company, LLC, as Rights Agent, and
             which includes Exhibit A, Certificate of Designation, Exhibit B, Form
             of Right Certficate and Exhibit C, Summary of Rights to Purchase
             Preferred Stock, filed as Exhibit 1 to the Company's Form 8-A filed
             with the Securities and Exchange Commission on June 25, 2009, and
             incorporated herein by reference.

99.1         Press Release issued by the Company announcing the Shareholders Rights
             Agreement, dated June 23, 2009.