Document:

Ex104_XeriumTechnologies2013-2015ExecutiveLong-TermIncentivePlanandAwardAgreement

Exhibit 10.4

XERIUM TECHNOLOGIES, INC.
2013-2015 LONG TERM INCENTIVE PLAN
This Xerium Technologies, Inc. 2013-2015 Executive Long Term Incentive Plan (the “Executive LTIP”) contains rules supplemental to those set forth in the Xerium Technologies, Inc. 2010 Equity Incentive Plan (the “EIP”).  The Executive LTIP provides for the grant of incentive award opportunities (each, an “Award”) under and subject to the terms of the EIP, which is incorporated herein by reference.  In the event of any inconsistency between the Executive LTIP and applicable provisions of the EIP, the EIP shall control.  Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the EIP.
1.Administration; Eligibility.  The Executive LTIP shall be administered by the Committee as described in the EIP.  The Committee may in its discretion consult with outside advisors or internal Company resources for purposes of making any determinations in connection with its administration of the Program.  Eligibility to participate in the Executive LTIP shall be limited to executive officers who are selected by the Committee to participate in the Executive LTIP from among those individuals who are eligible to participate in the EIP.  Each selected individual who signs and returns an agreement (Award Agreement) in substantially the form of Exhibit A shall be a participant (“Participant”) in this Executive LTIP.  Participation in any Award shall not entitle a Participant to share in any future Awards or in any other future awards of the Company or its subsidiaries.
2.    Determination of Number of Shares.  The number of shares of Common Stock covered by an Award (the “LTIP Shares”) shall be as determined by the Committee and set forth in Schedule 1 to the Award Agreement.
3.    Determination of Time-Based Versus Performance-Based LTIP Shares.  Participants will receive fifty percent (50%) of their LTIP Shares in the form of time-based Restricted Stock Units as described in Section 4 below (“Time-Based RSUs”) and have the remainder of their LTIP Shares (fifty percent (50%)) credited to them as performance-based stock units (“Performance Stock Units”) as described in Section 5 below, to be earned and vested subject to satisfaction of certain performance conditions.  The performance period is the three-year period comprising a three year period beginning on the date of each Participant’s grant and ending on the third (3rd) anniversary of such grant date.
4.    General Terms of Time-Based RSUs.  Any LTIP Shares that are to be conveyed in the form of Time-Based RSUs will be granted as of the date set forth in Schedule 1 to the Award Agreement.  The Award Agreement provides that the RSUs shall vest on the third (3rd) anniversary of such grant date and settle in shares of Common Stock as soon as administratively possible after the third (3rd) anniversary of such grant date, but in all events before the 15th day of the third month following December 31 following the third (3rd) anniversary of such grant date.
5.    General Terms of Performance Stock Units.  The determination of the number of shares of Common Stock to be delivered at the end of the three-year performance period with respect to the Performance Stock Units (the “Performance Shares”) shall be made in accordance with the provisions of the Award Agreement.  The Award Agreement provides that the Performance Stock Units will vest based on achievement of Common Stock price thresholds.  Vested Performance Shares will be delivered in shares of Common Stock as soon as administratively possible after the third (3rd) anniversary of such grant date, but in all events before the 15th day of the third month following December 31 following the third (3rd) anniversary of such grant date.

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6.    Forfeiture Upon Termination of Employment.  Except as provided in the Award Agreement with respect to a Change of Control, death or Disability or a termination of employment by the Company without Cause or by the Participant with Good Reason (as “Disability”, “Cause” and “Good Reason” are defined in the Award Agreement), notwithstanding vesting under Section 4 or Section 5, no Time-Based RSUs or Performance Shares shall be payable to or in respect of a Participant unless the Participant is employed by the Company or a subsidiary on the third (3rd) anniversary of such grant date.
7.    Tax Withholding.  The minimum tax withholding amount with respect to any payments being made in Common Stock may be satisfied by means of share withholding at the time the Award is settled as provided in the Award Agreement.
8.    Intent to be Exempt from Section 162(m).  The portion of the Award paid in Time-Based RSUs is not intended to qualify for the performance-based compensation exception under Section 162(m) of the Code.  The portion of the Award paid in Performance Shares is intended to qualify for the performance-based compensation exception under Section 162(m) of the Code.
9.    Nature of Awards.  Awards hereunder are intended as Stock Unit Awards pursuant to the EIP.  The Executive LTIP is unfunded.
10.    Availability of Stock.  If, when Time-Based RSUs or Performance Shares become payable, the number of shares of Common Stock needed exceeds the number of shares then available under the EIP, or exceeds any limit established by the Board on the number of shares delivered in the same fiscal year, the Company will pay out the value of any share that was not delivered in cash on the date otherwise scheduled for delivery of shares and determine its value by using the per-share closing price of the Common Stock on the date immediately preceding the date the shares would have been delivered had there been a sufficient number available.  Any substitution of cash for shares in such event shall be applied pro rata to all Participants entitled to a distribution by reason of the same event.
11.    Clawback.  If a Participant receives an Award payout under the Executive LTIP based on financial statements that are subsequently required to be restated in a way that would decrease the number of Shares to which the Participant was entitled, the Participant will refund to the Company the difference between what the Participant received and what the Participant should have received; provided that (i) the value of any difference to be refunded will be determined net of withholding and (ii) no refund will be required for Shares delivered more than three years prior to the date on which the Company is required to prepare the applicable restatement. The value of any difference to be refunded will be determined in a manner consistent with regulations the Securities and Exchange Commission may adopt pursuant to Section 945 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
12.    Amendment.  The Committee may amend the Executive LTIP at any time and from time to time, and may terminate the Executive LTIP, in each case subject only to such limitations, if any, as the EIP may impose.
13.    409A.  This Executive LTIP and the Time-Based RSUs and Performance Stock Units granted thereunder shall be construed and administered consistent with the intent that they at all times be in compliance with or exempt from the requirements of Section 409A of the Code and the regulations promulgated thereunder.

Exhibit A
XERIUM TECHNOLOGIES, INC.
LTIP SHARE AGREEMENT
(2013-2015 Executive LTIP)
Pursuant to the terms of the Xerium Technologies, Inc. Long Term Incentive Plan effective for fiscal years 2013 through 2015 (the “2013-2015 Executive LTIP”) and the Xerium Technologies, Inc. 2010 Equity Incentive Plan (the “Plan”), Xerium Technologies, Inc. (the “Company”) hereby grants to (the “Employee”) the LTIP Shares described below.
1.    The LTIP Share Award.  The LTIP Share Award is subject to the terms and conditions of this LTIP Share Agreement, the 2013-2015 Executive LTIP and the Plan.  The Company hereby grants LTIP Shares to the Employee, the number of LTIP Shares specified on Schedule 1, as of the date specified on Schedule 1, subject to the terms and conditions of this Agreement and the Plan (the “Award”).  An Award shall be paid hereunder, only to the extent that the Employee has a nonforfeitable right to such portion of the Award, as provided in this Agreement.  The Employee’s rights to the LTIP Shares are subject to the restrictions described in this Agreement and the Plan in addition to such other restrictions, if any, as may be imposed by law.
2.    Definitions.  The following definitions will apply for purposes of this Agreement.  Capitalized terms not defined in the Agreement are used as defined in the Plan.
(a)    “Agreement” means this LTIP Share Agreement granted by the Company and agreed to by the Employee.
(b)    “Cause” has the meaning ascribed to it in the written employment agreement between the Company and the Employee (as in effect on the date hereof).  
(c)    “Change of Control” shall mean any of the following which takes place after the Grant Date: (i) any Person or “group,” within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the “Act”), other than the Company or any of its subsidiaries  or any trustee or  other  fiduciary holding securities  under an employee benefit plan of the Company or one of its subsidiaries, becomes a beneficial owner, directly or indirectly, in one or a series of transactions, of securities representing fifty percent (50%) or more of the total number of votes that may be cast for the election of directors of the Company; (ii) any merger or consolidation involving the Company or any sale or other disposition of all or substantially all of the assets of the Company, or any combination of the foregoing, occurs and the beneficial owners of the Company’s voting securities outstanding immediately prior to such consolidation, merger, sale or other disposition do not, immediately following the consummation of such consolidation, merger, sale or other disposition, hold beneficial ownership, directly or indirectly, of securities representing fifty percent (50%) or more of the total number of votes that may be cast for election of directors of the surviving or resulting corporation in the case of any merger or consolidation or of the acquiring Person or Persons in the case of any sale or other disposition; or (iii) within twelve (12) months after a tender offer or exchange offer for voting securities of the Company (other than by the Company or any of its subsidiaries), individuals who are Continuing Directors shall cease to constitute a majority of the Board.  For the purpose of this definition, the term “beneficial owner” (and correlative terms, including “beneficial ownership”) shall have the meaning set forth in Rule 13d-3 under the Act. provided in each such case such event is also a “change in control event” within the meaning of Treas. Reg. § 1.409A-3(i)(5)(1) (or similar applicable regulation under Section 409A of the Code).
(d)    “Change of Control Termination” means a termination of the Employee’s employment with the Company or a member of the Company Group that occurs within three (3) months prior to a Change of Control as a result of (x) termination by a member of the Company Group without Cause or (y) a Good Reason Termination.
(e)    “Common Stock” means the common stock of the Company, $0.01 par value.
(f)    “Company Group” means the Company together with its Affiliates.
(g)    “Disability” has the meaning ascribed to it in the written employment agreement between the Company and the Employee (as in effect on the date hereof).  
(h)    “Fair Market Value” means, on the applicable date, or if the applicable date is not a date on which the NYSE is open the next preceding date on which the NYSE was open, the last sale price with respect to such Common Stock reported on the NYSE or, if on any such date such Common Stock is not quoted by NYSE, the average of the closing bid and asked prices with respect to such Common Stock, as furnished by a professional market maker making a market in such Common Stock selected by the Committee in good faith; or, if no such market maker is available, the fair market value of such Common Stock as of such day as determined in good faith by the Committee.
(i)    “Good Reason Termination” shall mean a termination of employment by the Employee with “Good Reason,” as such term is defined in the written employment agreement between the Company and the Employee (as in effect on the date hereof), where the Employee provides notice of the Good Reason event within 90 days of its occurrence and provides the Company at least 30 days to cure such matter.  
(j)    “Grant Date” means the date specified on Schedule 1.
(k)    “NYSE” means the New York Stock Exchange.
(l)    “Person” means any individual, partnership, limited liability company, corporation, association, trust, joint venture, unincorporated organization, or other entity or group, and “Affiliated Person” means, with respect to any Person, any other Person that directly or indirectly controls or is controlled by or is under common control with such Person.
(m)    “Pro Rata Portion” shall mean the product of (x) a fraction, the numerator of which is, as of the time of measurement, the number of months (rounded down to the nearest whole number) occurring since January 1, 2013 and the denominator of which is 36 and (y) 100% of the LTIP Shares not previously Vested.
(n)    “Vested” means that portion of the Award to which the Employee has a nonforfeitable right.
3.    Vesting.  Subject to Sections 5 and 6 below:
(a)    Time-Based RSUs shall become Vested on the third (3rd) anniversary of the Grant Date.
(b)    Performance Shares shall become Vested in a percentage amount(s) on the date(s) that the closing trading price of Common Stock on the New York Stock Exchange (or such other exchange on which Common Stock may be traded) equals or exceeds specified threshold amounts for thirty (30) consecutive trading days.  The threshold closing trading price amounts and the corresponding percentage amount(s) of Performance Shares that shall become Vested when the closing trading price equals or exceeds such specified threshold amounts shall be specified by the Compensation Committee and delivered to the Employee in a separate writing. 
(c)    Notwithstanding subsections (a) and (b), except as provided in Sections 5 and 6, all LTIP Shares shall be forfeited if Employee’s employment terminates for any reason whatsoever before the third (3rd) anniversary of the Grant Date.
4.    Payment of Award.  Subject to Sections 5 and 6 below, as soon as practicable after the third (3rd) anniversary of the Grant Date, and in all events before the 15th day of the third month following December 31 following the third (3rd) anniversary of the Grant Date, the Company shall issue to the Employee that number of shares of Common Stock as equals that number of LTIP Shares which have become Vested.
5.    Change of Control.  In the event of a Change of Control, then all Time-Based RSUs and Performance Shares shall become fully and immediately Vested and if Employee incurred a Change of Control Termination all Time-Based RSUs and Performance Shares otherwise forfeited upon such termination shall become fully and immediately Vested, and shall be distributed in shares and to the extent practicable shall be distributed immediately preceding the effective time of the Change of Control transaction with respect to LTIP Shares that become Vested in connection with a Change of Control.
6.    Termination of Employment.
(a)    Resignation or Termination by the Company.  If the Employee ceases to be employed by the Company Group as a result of resignation, dismissal or any other reason, then the portion of the Award that has not previously Vested shall be forfeited automatically; provided that in the event of a termination of Employee’s employment by a member of the Company Group without Cause, as a result of death or Disability or a Good Reason Termination, a portion of the LTIP Shares (both Time-Based RSUs and Performance Shares) equal to the Pro Rata Portion of the LTIP Shares as of the time of termination shall Vest immediately prior to such termination and be distributed as soon as practicable thereafter, and in all events before the 15th day of the third month following the end of the calendar year in which such LTIP Shares became Vested. 
(b)    Meaning of termination of employment.  If the Company or a member of the Company Group provides Employee a written notice of termination of employment but the termination of employment is not effective for a period of more than thirty (30) days due to applicable law or contractual arrangements between a member of the Company Group and the Employee, for the purposes of this Award, including without limitation Section 6(a) hereof, the Employee’s employment shall be deemed terminated and the Employee shall be deemed ceased to be employed by the Company Group on the date that is thirty (30) days from the date of such notice instead of the actual date of termination.
7.    Dividends.  No dividend equivalents shall be paid on LTIP Shares (either Time-Based RSUs or Performance Shares).  
8.    Clawback.  If a Employee receives an Award payout under the Executive LTIP based on financial statements that are subsequently required to be restated in a way that would decrease the number of Shares to which the Employee was entitled, the Employee will refund to the Company the difference between what the Employee received and what the Employee should have received; provided that (i) the value of any difference to be refunded will be determined net of withholding and (ii) no refund will be required for Shares delivered more than three years prior to the date on which the Company is required to prepare the applicable restatement. The value of any difference to be refunded will be determined in a manner consistent with regulations the Securities and Exchange Commission may adopt pursuant to Section 945 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
9.    Miscellaneous.
(a)    Adjustments Based on Certain Changes in the Common Stock.  In the event of any stock split, reverse stock split, stock dividend, recapitalization or similar change affecting the Common Stock, the Award shall be equitably adjusted.
(b)    No Voting Rights.  The Award shall not be interpreted to bestow upon the Employee any equity interest or ownership in the Company or any Affiliate prior to the date that Common Stock is distributed in settlement of an LTIP Award, and then only with respect to the shares of Common Stock issued on such Date.
(c)    No Assignment.  No right or benefit or payment under the Plan shall be subject to assignment or other transfer nor shall it be liable or subject in any manner to attachment, garnishment or execution.
(d)    Withholding.  The Employee is responsible for payment of any taxes required by law to be withheld by the Company with respect to an Award.  To facilitate that payment, the Company will, to the extent permitted by law, retain from the number of shares of Common Stock issued to the Employee in settlement of an LTIP Award that number of shares necessary for payment of the minimum tax withholding amount, valued at their Fair Market Value on the business day most immediately preceding the date of retention.  To the extent the Company’s withholding obligation cannot be satisfied by means of share withholding, the Company may, to the extent permitted by law, deduct any such tax obligations from any payment of any kind due to the Employee.
(e)    Employment Rights.  This Agreement shall not create any right of the Employee to continued employment with the Company or its Affiliates or limit the right of Company or its Affiliates to terminate the Employee’s employment at any time and shall not create any right of the Employee to employment with the Company or any of its Affiliates.  Except to the extent required by applicable law that cannot be waived, the loss of the Award shall not constitute an element of damages in the event of termination of the Employee’s employment even if the termination is determined to be in violation of an obligation of the Company or its Affiliates to the Employee by contract or otherwise.
(f)    Unfunded Status.  The obligations of the Company hereunder shall be contractual only.  The Employee shall rely solely on the unsecured promise of the Company and nothing herein shall be construed to give the Employee or any other person or persons any right, title, interest or claim in or to any specific asset, fund, reserve, account or property of any kind whatsoever owned by the Company or any Affiliate.
(g)    Severability.  Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction will not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.  In the event that any provision hereof would, under applicable law, be invalid or unenforceable in any respect, such provision will be construed by modifying or limiting it so as to be valid and enforceable to the maximum extent compatible with, and possible under, applicable law.
(h)    Governing Law.  This Agreement and all actions arising in whole or in part under or in connection herewith, will be governed by and construed in accordance with the domestic substantive laws of the State   of Delaware, without giving effect to any choice or conflict of law provision or rule that would cause the application of the laws of any other jurisdiction.
(i)    Conflicts. To the extent there are any conflicts between provisions this Agreement and any applicable employment agreement entered into between Employee and the Company or its subsidiaries, the provisions of such employment agreement shall govern and nothing in this Agreement shall in any way amend, supersede or otherwise change any provisions or rights contained in such employment agreement.
(j)    409A.  The Award shall be construed and administered consistent with the intent that it be at all times in compliance with, or exempt from, the requirements of Section 409A of the Internal Revenue Code and the regulations thereunder.
(k)    Section 162(m).  The Award shall be construed and administered consistent with the intent that it qualify to the maximum extent possible as qualifying performance-based compensation within the meaning of Section 162(m) of the Internal Revenue Code and the regulations thereunder.
(l)    Amendment.  This Agreement may be amended only by mutual written agreement of the parties. 
10.    Grant Conditional.  The Award granted hereunder is granted conditional upon the approval of the shareholders of the Company of an amendment to the Plan to provide for a re-load of the amount of shares permitted to be granted under the Plan that would permit the granting of the Award hereunder and all similar awards granted to senior management of the Company contemporaneously with such Award.   In the event such amendment does not receive such shareholder approval, the Award granted hereunder shall be void and this Agreement shall immediately and without further action terminate and be of no further force and effect.

IN WITNESS WHEREOF, Xerium Technologies, Inc. has executed this LTIP Share Agreement as of the date first written above.
Xerium Technologies, Inc.
By:         
Name:      Harold Bevis 
Title:      President and CEO
Acknowledged and agreed:
Employee
By:         
Name:    

Schedule 1
Grant Date:             March 11, 2013
Number of LTIP Shares:     _____________
Allocation of LTIP Shares Granted:

	
		
	Number of Time-Based RSUs
	Number of Performance Shares

	_____________________
	______________________

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Exhibit 10.5

EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into in North Carolina by and between Xerium Technologies, Inc. (the “Company”), a Delaware corporation with its principal place of business in Raleigh, North Carolina and Michael Bly (the “Executive”), effective as of the 15th day of March, 2013 (the “Effective Date”).
WHEREAS, subject to the terms and conditions hereinafter set forth, the Company wishes to employ the Executive in the position of Executive Vice President of Global Human Resources and the Executive wishes to accept such employment;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual promises, terms, provisions and conditions set forth in this Agreement, the parties hereby agree:
1.Employment.  Subject to the terms and conditions set forth in this Agreement, the Company hereby offers and the Executive hereby accepts employment.
2.    Term.  The employment of the Executive by the Company hereunder shall be for the period commencing on the Effective Date and expiring on the date of the termination of such employment in accordance with Section 5 hereof.  For all purposes of this Agreement, references to (a) the “Termination Date” shall mean the date the Executive’s employment hereunder shall terminate pursuant to said Section 5, and (b) references to the “term” of the Executive’s employment hereunder shall mean the period commencing on the Effective Date and ending on the Termination Date.  Following the Termination Date, unless specifically otherwise agreed between the Executive and any applicable party, the Executive shall cease to hold any position (whether as an officer, director, manager, employee, trustee, fiduciary or otherwise) with the Company or any of its Subsidiaries or Affiliates.
3.    Capacity and Performance; Work Location.
(a)    During the term of the Executive’s employment hereunder, the Executive shall serve the Company as its Executive Vice President of Global Human Resources.  In addition, and without further compensation, the Executive may serve as a director and/or officer of one or more of the Company’s Subsidiaries, if so elected or appointed from time to time.
(b)    During the term of the Executive’s employment hereunder, the Executive shall be employed by the Company on a full-time basis and shall perform such duties and responsibilities on behalf of the Company and its Subsidiaries as may be designated from time to time by the Chief Executive Officer or the Board of Directors of the Company (the “Board”).
(c)    During the term of the Executive’s employment hereunder, the Executive shall devote his full business time to the advancement of the business and interests of the Company and its Subsidiaries and to the discharge of his duties and responsibilities hereunder.  The Executive shall not engage in any other business activity or serve in any industry, trade, professional, governmental or academic position during the term of this Agreement, except as may be expressly approved in advance by the Chief Executive Officer in writing.

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(d)    During the term of Executive’s employment hereunder, in the event Executive does not choose to relocate to the Raleigh, North Carolina area, Executive’s primary business location shall be his home office in Virginia, provided, however, travel to the Company’s and its Subsidiaries’ manufacturing plants and office locations shall be required as necessary to fulfill Executive’s employment duties hereunder.
4.    Compensation and Benefits.  During the term of the Executive’s employment hereunder as compensation for all services performed by the Executive:
(a)    Base Salary.  The Company shall pay the Executive a base salary at the rate of Two Hundred Fifty Thousand Dollars ($250,000.00) per year, payable in accordance with the payroll practices of the Company for its executives and subject to increase from time to time by the Board, in its sole discretion. Such base salary, as from time to time adjusted, is hereafter referred to as the “Base Salary.”
(b)    Annual Bonus Plan.  The Executive shall be entitled to participate in any and all annual bonus plans (the “Annual Bonus Plans”) from time to time in effect for senior executives of the Company generally.  The terms of each Annual Bonus Plan and Executive’s participation therein, including the form of payment, shall be determined by the compensation committee of the Board (or, if there is no such committee, by the Board); provided, however, that the Executive shall be entitled to participate in such plans at a target opportunity equal to fifty percent (50%) of his Base Salary (pro-rated in 2013 based on employment commencement date) provided that the Executive is employed by the Company on the payment date with any awards thereunder payable only to the extent earned pursuant to the terms of the applicable Annual Bonus Plan and subject to adjustment in accordance with the terms of the applicable Annual Bonus Plan.  Notwithstanding the foregoing, no award under the Annual Bonus Plans may be granted if the compensation committee determines that in order for such award to qualify as performance-based for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), the Plan must be submitted to and approved, or resubmitted to and approved, by the stockholders of the Company in accordance with the requirements of Section 162(m) of the Code, unless such grant is made contingent upon such approval.  The compensation committee of the Board (or, if there is no such committee, the Board) may alter, modify, add to or delete any Annual Bonus Plan at any time as it, in its sole judgment determines to be appropriate.
(c)    Long Term Incentive.  The Executive shall be entitled to participate in any awards granted under any Long Term Incentive Program (the “LTIP”) or similar equity participation plans from time to time in effect for senior executives of the Company generally.  For 2013, it is anticipated that Executive’s participation in the LTIP shall provide for a grant of Restricted Stock Units with a value on the date of grant not to exceed $125,000, fifty percent (50%) of which shall have time-based vesting with a three year cliff and fifty percent (50%) of which shall have stock price based performance vesting requirements; all of which terms will be determined by the compensation committee of the Board (or, if there is no such committee, by the Board), which may alter, modify, add to or delete any LTIP at any time as it, in its sold judgment, determines to be appropriate.  A grant of awards under any LTIP or other equity participation plan will be made to 

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the Executive at the same time and on the same terms as awards are made to other participants in such plan and will be subject to all the terms and conditions of such plan.  
(d)    Other Incentive Plans.  The Executive shall be entitled to participate in any and all cash, equity, bonus and other incentive plans not otherwise described herein from time to time in effect for senior executives of the Company generally. The terms of each such plan and the Executive’s participation therein shall be determined by the compensation committee of the Board (or, if there is no such committee, by the Board).  The compensation committee of the Board (or, if there is no such committee, the Board) may alter, modify, add to or delete any such plan at any time as it, in its sole judgment, determines to be appropriate.
(e)    Vacations.  The Executive shall be entitled to an annual vacation of four (4) weeks, with reasonable advance notice and subject to the reasonable business needs of the Company. Vacation shall otherwise be governed by the policies of the Company, as in effect from time to time.
(f)    Other Benefits.  Subject to any contribution therefor generally required of executives of the Company, the Executive shall be entitled to participate in any and all employee benefit plans from time to time in effect for executives of the Company generally, except to the extent such plans are in a category of benefit specifically otherwise provided to the Executive under this Agreement (e.g., severance pay).  Such participation shall be subject to the terms of the applicable plan documents and generally applicable Company policies.  The Board may alter, modify, add to or delete employee benefit plans at any time as it, in its sole judgment, determines to be appropriate.
(g)    Certain Perquisites.  The Company shall provide the Executive while he continues to be employed by the Company with: (i) participation in the Company’s standard executive automobile program pursuant to which he would receive a current amount of six hundred dollars ($600.00) per month as an automobile allowance; and (ii) eligibility for reimbursement of up to five hundred dollars ($500.00) per month in country club monthly dues, to be paid to the Executive monthly through an expense report reimbursement.
(h)    Business Expenses.  The Company shall pay or reimburse the Executive for all reasonable and necessary business expenses incurred or paid by the Executive in the performance of his duties and responsibilities hereunder (including, without limitation, (1) mileage at the applicable Internal Revenue Service rate for any business-related automobile travel and (2) hotel and other reasonable travel expenses for Executive’s trips to the Company’s Raleigh, North Carolina headquarters), subject to any maximum annual limit or other restrictions on such expenses set by the Board and to such reasonable substantiation and documentation as may be specified by the Company from time to time.  In the case of any reimbursement to which the Executive is entitled pursuant to this Section 4(h) that would constitute deferred compensation subject to Section 409A of the Code, the following additional rules shall apply: (i) the reimbursable expense must have been incurred, except as otherwise expressly provided in this Agreement, during the term of this Agreement; (ii) the amount of expenses eligible for reimbursement during any calendar year will not affect the amount of expenses eligible for reimbursement in any other calendar year; (iii) the reimbursement shall be made not later than December 31 of the calendar year following the calendar year in which the expense was incurred; and (iv) the Executive’s entitlement to reimbursement shall not be subject to liquidation or exchange for another benefit.

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(i)    Sign-On Award.  The Executive shall be entitled to a one-time signing bonus in the amount of fifty thousand dollars ($50,000.00) which shall be paid on the Effective Date.
(j)    Relocation Expenses.  In the event Executive chooses to relocate to the Raleigh, North Carolina area, the Company shall provide the Executive with the Company’s standard relocation benefits package to relocate to the Raleigh, North Carolina area, a copy of which has been provided to Executive.
(k)    Payments/Actions by Company.  Wherever it is provided in this Agreement that payment of any form of compensation or any other action shall be made by the Company, such payment or action may be made by any Subsidiary or Affiliate of the Company.
5.    Termination of Employment.  The Executive’s employment hereunder shall terminate under the following circumstances:
(a)    Death.  In the event of the Executive’s death during the term of Executive’s employment hereunder, the Executive’s employment shall immediately and automatically terminate.
(b)    Disability.  The Company may terminate the Executive’s employment hereunder, upon notice to the Executive, in the event that the Executive becomes disabled during his employment hereunder.  For this purpose, disability means that the Executive (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Company.  If any question shall arise as to whether during any period the Executive is disabled within the meaning of this Section 5(b), the Executive, at the request of the Company, shall submit to a medical examination by a physician selected by the Company to determine whether the Executive is so disabled and such determination shall for the purposes of this Agreement be conclusive of the issue.  If such question shall arise and the Executive shall fail to submit to such medical examination, the Company’s determination of the issue shall be binding on the Executive.
(c)    By the Company for Cause.  The Company may terminate the Executive’s employment hereunder for Cause at any time upon notice to the Executive setting forth the nature of such Cause.  The following shall constitute Cause for termination: (i) the Executive’s conviction of or plea of nolo contendere to a felony or other crime involving moral turpitude; (ii) the Executive’s fraud, theft or embezzlement committed with respect to the Company or its Subsidiaries; (iii) material breach by the Executive of any of the provisions of Sections 8, 9 or 10 hereof that  causes  demonstrable harm to  the Company or any of its Subsidiaries; or (iv) the Executive’s willful and continued failure to perform his material duties to the Company and its Subsidiaries; provided, however, that the Company may terminate Executive’s employment hereunder for “Cause” within the meaning of this clause (iv) only after the Company has provided written notice to the Executive 

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of the failure and the Executive shall not have remedied such failure within ten (10) business days following the effectiveness of such notice.
(d)    By the Company Other than for Cause.  The Company may terminate the Executive’s employment, hereunder other than for Cause at any time upon notice to the Executive.
(e)    By the Executive Other than for Good Reason.  The Executive may terminate his employment hereunder other than for Good Reason (as defined in Section 5(f) below) at any time upon the provision of sixty (60) days written notice to the Company.  In the event of termination of the Executive pursuant to this Section 5(e), the Board may elect to waive the period of notice or any portion thereof.
(f)    By the Executive for Good Reason.  The Executive may terminate his employment hereunder for Good Reason upon written notice to the Company setting forth in reasonable detail the nature of such Good Reason; provided, that such written notice must be delivered to the Company within ninety (90) days of the initial existence of the condition or circumstance constituting or giving rise to the purported Good Reason.  A termination by the Executive hereunder shall not be treated as a termination for Good Reason if the Company remedies the condition or circumstance constituting or giving rise to the purported Good Reason within thirty (30) days of the receipt of the Executive’s notice, or if actual termination occurs more than two years following the initial existence of such condition or circumstance.  The following shall constitute Good Reason for purposes of this subsection (f): a requirement, following the Executive’s relocation of his principal residence to a location within reasonable commuting distance of the Company’s offices in Raleigh, North Carolina, that the Executive relocate more than fifty (50) miles from his then-current principal residence, it being understood that the Executive may be required to travel frequently and that prolonged periods spent away from Executive’s principal residence shall not constitute Good Reason.
6.    Compensation upon Termination.
(a)    Death.  In the event of a termination of the Executive’s employment hereunder by reason of death as contemplated by Section 5(a), the Company shall pay in a lump sum within thirty (30) days of such termination to the Executive’s designated beneficiary or, if no beneficiary has been designated by the Executive, to his estate, the Base Salary earned but not paid through the Termination Date.
(b)    Disability.  In the event of any termination of the Executive’s employment hereunder by reason of disability as contemplated by Section 5(b), the Company shall pay to the Executive his Base Salary earned but not paid through the date of the notice required by Section 5(b) and, in addition, shall, subject to any employee contribution applicable to the Executive on the Termination Date, continue to contribute to the premium cost of the Executive’s participation in the Company’s group medical and dental plans for eighteen (18) months (or such longer period as may be provided under the employee benefit plans of the Company), but only if the Executive does not have access at reasonable cost to substantially equivalent benefits through another employer, and provided that the Executive is entitled to continue such participation under applicable law and plan terms.  

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(c)    By the Company for Cause.  In the event of any termination of the Executive’s employment hereunder by the Company for Cause as contemplated by Section 5(c), the Company shall have no further obligations to the Executive under this Agreement other than payment of Base Salary through the Termination Date and except as specifically provided in Section 6(g).
(d)    By the Company Other than for Cause or by the Executive for Good Reason.  
(i)    Not Close in Time to a Change of Control.  In the event of any termination of the Executive’s employment hereunder by the Company pursuant to Section 5(d) or by the Executive pursuant to Section 5(f), which occurs after the Executive has completed at least three (3) months of employment with the Company and which termination does not occur within three (3) months prior to or within two (2) years following a Change of Control, the Company (A) shall continue to pay the Executive the Base Salary at the rate in effect on the Termination Date for eighteen (18) months, and (B) subject to any employee contribution applicable to the Executive on the Termination Date, shall continue to contribute to the premium cost of the Executive’s participation in the Company’s group medical and dental plans for eighteen (18) months (or such longer period as may be provided under the employee benefit plans of the Company), but only if the Executive does not have access at reasonable cost to substantially equivalent benefits through another employer, and provided that the Executive is entitled to continue such participation under applicable law and plan terms.
(ii)    Close in Time to a Change of Control.  In the event of any termination of the Executive’s employment hereunder by the Company pursuant to Section 5(d) or by the Executive pursuant to Section 5(f), which occurs after the Executive has completed at least three (3) months of employment with the Company and which termination occurs within three (3) months prior to or within two (2) years following a Change of Control, the Company (A) shall continue to pay the Executive the Base Salary at the rate in effect on the Termination Date for two (2) years, and (B) subject to any employee contribution applicable to the Executive on the Termination Date, shall continue to contribute to the premium cost of the Executive’s participation in the Company’s group medical and dental plans for two (2) years (or such longer period as may be provided under the employee benefit plans of the Company), but only if the Executive  does  not  have  access  at  reasonable  cost to  substantially equivalent benefits through another employer, and provided that the Executive is entitled to continue such participation under applicable law and plan terms.
(iii)    Conditions.  Any obligation of the Company to the Executive under Sections 6(b) and 6(d) hereof is conditioned upon (A) the Executive’s signing a release of claims in such form as the Company may require (the “Employee Release”) and (B) the Executive’s continued full performance of his continuing obligations hereunder, including those under Sections 8, 9 and 10.  The Employee Release shall be provided to the Executive within seven (7) days following the Termination Date and the Executive must execute it within the time period specified in the Employee Release which shall not be longer than forty-five (45) days.  The Employee Release shall not be effective until any applicable revocation period has expired.  Base Salary to which the Executive is entitled under Sections 6(b) and 6(d) hereof shall be payable in accordance with the normal payroll practices of the Company in effect on the Termination Date and will begin at the Company’s next regular payroll period which is at least five (5) business days following the effective 

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date of the Employee Release, but shall be retroactive to next business day following the Termination Date, provided, however, that in all cases, such payments shall commence within ninety (90) days following the Executive’s separation from service, and further provided that if the ninety (90) day period begins in one taxable year for the Executive and ends in the subsequent taxable year for the Executive, then the payments shall not commence until the subsequent taxable year pursuant to the guidance provided in IRS Notice 2010-80. 
(e)    By the Executive Other than for Good Reason.  If the Executive shall terminate his employment pursuant to Section 5(e), the Company shall continue to pay the Executive his Base Salary through the Termination Date (it being understood that if, in accordance with Section 5(e), the Board elects to waive the period of notice, or any portion thereof, the payment of Base Salary under this Section 6(e) shall continue through the notice period or any portion thereof so waived).
(f)    Delay in Payment Commencement on Account of Internal Revenue Code Section 409A.  If the Executive is, at the time of separation from service, a “specified employee” (as hereinafter defined), any and all amounts payable in connection with such separation from service that constitute deferred compensation subject to Section 409A of the Code, as determined by the Company in its sole discretion, and that would (but for this sentence) be payable within six (6) months following such separation from service, shall not be paid until the date which is six (6) months and one (1) day after the date of such separation from service or, if earlier, the Executive’s date of death.  In this regard, any payments that otherwise would have been made during such six (6) month period shall be paid to the Executive in a lump sum on the first date on which they may be paid, together with interest credited at the short-term applicable federal rate, compounded daily.  For purposes of this subsection (f), “specified employee” means an individual determined by the Company to be a specified employee as defined in subsection (a)(2)(B)(i) of Section 409A of the Code.  The Company may, but need not, elect in writing, subject to the applicable limitations under Section 409 A of the Code, any of the special elective rules prescribed in Section 1.409A-l(i) of the Treasury Regulations for purposes of determining “specified employee” status.  Any such written election shall be deemed part of this Agreement.
(g)    Post-Termination Obligations Generally.  Except for (i) any right expressly set forth in this Section 6, (ii) any vested benefits under any employee benefit plan referred to in Section 4(f) which specifically is designed to provide benefits following termination of employment (such as any such plan providing benefits upon disability or retirement) (but subject to all of the terms, if any, of each such other benefit plan as to how such vested benefits will be treated following termination of employment) and (iii) any rights expressly set forth in any other written agreement to which Executive and any of the Company or any of its Subsidiaries or Affiliates shall become parties from time to time after the date hereof, neither the Company nor any of its Subsidiaries or Affiliates shall have any further obligations to the Executive, in connection with his employment or the termination thereof, following expiration of the term of the  Executive’s employment hereunder.  Satisfaction by the Company and other applicable Persons of such rights and benefits shall constitute full settlement of any claim that the Executive may have on account of any termination of employment hereunder against the Company, any of its Subsidiaries or Affiliates and all of their respective past and present officers, directors, stockholders, members, managers, 

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partners, controlling Persons,  employees, agents, representatives, successors and assigns and all other others connected with any of them, both individually and in their official capacities.
7.    Limitation.
(a)    In the event that it is determined that any payment or benefit provided by the Company or any of its Subsidiaries to or for the benefit of the Executive, either under this Agreement or otherwise, and regardless of under what plan or arrangement it was made, would, absent the application of this Section 7, be subject to excise tax (the “Excise Tax”) imposed by Section 4999 of the Code, or any successor provision (“Section 4999”), the Company will reduce such payments and/or benefits to the extent, but only to the extent, necessary so that no portion of the remaining payments and/or benefits will be subject to the Excise Tax. The Company shall have discretion in determining which, if any, of several payments and/or benefits (if more than one) are to be reduced.
(b)    Determinations as to the amount of any cutback required under this Section 7 will be made by the Company’s tax accountant unless the Executive has reasonable objections to the use of that firm, in which case the determinations will be made by a comparable firm chosen jointly by the Company and the Executive (the firm making the determinations to be referred to as the “Firm”). The determinations of the Firm will be binding upon the Company and the Executive except as the determinations are established in resolution (including by settlement) of a controversy with the Internal Revenue Service to have been incorrect.  All fees and expenses of the Firm will be paid by the Company.
8.    Restricted Activities.  The Executive agrees that some restrictions on his activities during and after his employment are necessary to protect the goodwill, Confidential Information and other legitimate interests of the Company and its Subsidiaries:
(a)    While the Executive is employed by the Company and for eighteen (18) months after his employment terminates (or two (2) years if the Executive is terminated in accordance with Section 6(d)(ii) above) (the “Non-Competition Period”) the Executive shall not, whether as owner, partner, investor, consultant, agent, employee, co-venturer or otherwise, compete with the Company or any of its Subsidiaries: (i) anywhere throughout the world; (ii) in North America; (iii) in South America; (iv) in Europe; (v) in Asia; (vi) in Australia; (vii) in the United States; (viii) in those states of the United States in which the Company or any of its Subsidiaries sells Products or conducts business activities.  Specifically, but without limiting the foregoing, the Executive agrees that during the Non-Competition Period, he shall not: (A) undertake any planning for any business competitive with the Company or any of its Subsidiaries; or (B) engage in any manner in any activity that is competitive with the business of the Company or any of its Subsidiaries.  For the purposes of this Section 8, the Executive’s undertaking shall encompass all items, products and services that may be used in substitution for Products.
(b)    The Executive agrees that, during his employment with the Company, he will not undertake any outside activity, whether or not competitive with the business of the Company or its Subsidiaries that could reasonably give rise to a conflict of interest or otherwise interfere with his duties and obligations to the Company or any of its Subsidiaries.

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(c)    The Executive further agrees that while he is employed by the Company and during the Non-Competition Period, the Executive will not, (i) hire or attempt to hire any employee of the Company or any of its Subsidiaries, (ii) hire or attempt to hire any independent contractor providing services to the Company or any of its Subsidiaries, (iii) assist in hiring or any attempt to hire anyone identified in clauses (i) or (ii) of this sentence by any other Person, (iv) encourage any employee or independent contractor of the Company or any of its Subsidiaries to terminate his or her relationship with the Company or any of its Subsidiaries, or (v) solicit or encourage any customer or vendor of the Company or any of its Subsidiaries to terminate or diminish its relationship with any of them, or, in the case of a customer, to conduct with any Person any competing business or activity.  For purposes of the Executive’s obligations hereunder during that portion of the Non-Competition Period that follows the Termination Date, employee, independent contractor, customer or vendor of the Company or any of its Subsidiaries shall mean any Person who was such at any time during the six (6) months immediately preceding the Termination Date.
(d)    In the event that the eighteen (18) month or two (2) year period stated above is held unenforceable by a court of competent jurisdiction due to its length, then the period shall be twelve (12) months.
9.    Confidential Information.
(a)    The Executive acknowledges that the Company and its Subsidiaries continually develop Confidential Information, that the Executive may develop Confidential Information for the Company or its Subsidiaries during his employment with the Company, and that the Executive may learn of Confidential Information during the course of such employment.  The Executive will comply with the policies and procedures of the Company and its Subsidiaries for protecting Confidential Information and shall never use or disclose to any Person (except as required by applicable law or for the proper performance of his duties and responsibilities to the Company and its Subsidiaries), any Confidential Information obtained by the Executive incident to his employment or other association with the Company or any of its Subsidiaries.  The Executive understands that this restriction shall continue to apply after his employment terminates, regardless of the reason for such termination. 
(b)    All documents, records, tapes and other media of every kind and description relating to the business, present or otherwise, of the Company or its Subsidiaries and any copies, in whole or in part, thereof (the “Documents”), whether or not prepared by the Executive, shall be the sole and exclusive property of the Company and its Subsidiaries.  The Executive shall safeguard all Documents and shall surrender to the Company at the time his employment terminates, or at such earlier time or times as the Board or its designee may specify, all Documents then in the Executive’s possession or control.
10.    Assignment of Rights to Intellectual Property.  The Executive shall promptly and fully disclose all Intellectual Property to the Company.  The Executive hereby assigns and agrees to assign to the Company (or as otherwise directed by the Company) the Executive’s full right, title and interest in and to all Intellectual Property.  The Executive agrees to execute any and all applications for domestic and foreign patents, copyrights or other proprietary rights and to do such other acts (including without limitation the execution and delivery of instruments of further 

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assurance or confirmation) requested by the Company to assign the Intellectual Property to the Company and to permit the Company to enforce any patents, copyrights or other proprietary rights to the Intellectual Property.  The Executive will not charge the Company for time spent in complying with these obligations.  All copyrightable works that the Executive creates shall be considered “work made for hire” and shall, upon creation, be owned exclusively by the Company.
11.    Notification Requirement.  Until the conclusion of the Non-Competition Period, the Executive shall give notice to the Company of each new business activity that he plans to undertake at least thirty (30) days prior to beginning any such activity.  Such notice shall state the name and address of the Person for whom such activity is undertaken and the nature of the Executive’s business relationship(s) and position(s) with such Person.  The Executive shall provide the Company with such other pertinent information concerning such business activity as the Company may reasonably request in order to determine the Executive’s continued compliance with his obligations under Sections 8, 9 and 10 hereof.
12.    Enforcement of Covenants.  The Executive acknowledges that he has carefully read and considered all the terms and conditions of this Agreement, including the restraints imposed upon him pursuant to Sections 8, 9 and 10 hereof.  The Executive agrees that said restraints are necessary for the reasonable and proper protection of the Company and its Subsidiaries and that each and every one of the restraints is reasonable in respect to subject matter, length of time and geographic area.  The Executive further acknowledges that, were he to breach any of the covenants contained in Sections 8, 9 and 10 hereof, the damage to the Company would be irreparable.  The Executive therefore agrees that the Company, in addition to any other remedies available to it, shall be entitled to preliminary and permanent injunctive relief against any breach or threatened breach by the Executive of any of said covenants, without having to post bond.  The parties further agree that, in the event that any provision of Sections 8, 9 and 10 hereof shall be determined by any court of competent jurisdiction to be unenforceable by reason of its being extended over too great a time, too large a geographic area or too great a range of activities, such provision may be “blue penciled” or written by the court to the extent necessary to render it enforceable to the maximum extent permitted by law.
13.    Conflicting Agreements.  The Executive hereby represents and warrants that the execution of this Agreement and the performance of his obligations hereunder will not breach or be in conflict with any other agreement to which the Executive is a party or is bound and that the Executive is not now subject to any covenants against competition or similar covenants or any court order or other legal obligation that would affect the performance of his obligations hereunder.  The Executive will not disclose to or use on behalf of the Company any proprietary information of a third party without such party’s consent.
14.    Definitions.  Words or phrases which are initially capitalized or are within quotation marks shall have the meanings provided in this Section 14 and as provided elsewhere herein. For purposes of this Agreement, the following definitions apply:
(a)    “Affiliate” means, with respect to the Company or any other specified Person, any other Person directly or indirectly controlling, controlled by or under common control with the 

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Company or such other specified Person, where control may be by management authority, equity interest or other means.
(b)    “Change of Control” shall mean any of the following which takes place after the Effective Date: (i) any Person or “group,” within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the “Act”), other than the Company or any of its Subsidiaries  or any trustee or  other  fiduciary holding securities  under an employee benefit plan of the Company or one of its Subsidiaries, becomes a beneficial owner, directly or indirectly, in one or a series of transactions, of securities representing fifty percent (50%) or more of the total number of votes that may be cast for the election of directors of the Company; (ii) any merger or consolidation involving the Company or any sale or other disposition of all or substantially all of the assets of the Company, or any combination of the foregoing, occurs and the beneficial owners of the Company’s voting securities outstanding immediately prior to such consolidation, merger, sale or other disposition do not, immediately following the consummation of such consolidation, merger, sale or other disposition, hold beneficial ownership, directly or indirectly, of securities representing fifty percent (50%) or more of the total number of votes that may be cast for election of directors of the surviving or resulting corporation in the case of any merger or consolidation or of the acquiring Person or Persons in the case of any sale or other disposition; or (iii) within twelve (12) months after a tender offer or exchange offer for voting securities of the Company (other than by the Company or any of its Subsidiaries), individuals who are Continuing Directors shall cease to constitute a majority of the Board.  For the purpose of this definition, the term “beneficial owner” (and correlative terms, including “beneficial ownership”) shall have the meaning set forth in Rule 13d-3 under the Act.
(c)    “Confidential Information” means any and all information of the Company and its Subsidiaries that is not generally known by others with whom they compete or do business, or with whom they plan to compete or do business and any and all information which, if disclosed by the Company or its Subsidiaries, would assist in competition against them.  Confidential Information includes without limitation such information relating to (i) the development, research, testing, manufacturing, marketing and financial activities of the Company and its Subsidiaries, (ii) the Products, (iii) the costs, sources of supply, financial performance and strategic plans of the Company and its Subsidiaries, (iv) the identity and special needs of the customers of the Company and its Subsidiaries and (v) the people and organizations with whom the Company and its Subsidiaries have business relationships and those relationships.  Confidential Information also includes any information that the Company or any of its Subsidiaries have received, or may receive hereafter, from others which was received by the Company or any of its Subsidiaries with any understanding, express or implied, that the information would not be disclosed.
(d)    “Continuing Director” means, with respect to any event referred to in the definition of “Change of Control,” each individual who was a director of the Company immediately prior to the event in question and each individual whose election as a director by the Board or whose nomination for election by the stockholders of the Company was approved by a vote of two-thirds of the directors then still in office who were directors immediately prior to such event or whose election or nomination was previously so approved.

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(e)    “Intellectual Property” means inventions, discoveries, developments, methods, processes, compositions, works, concepts and ideas (whether or not patentable or copyrightable or constituting trade secrets) conceived, made, created, developed or reduced to practice by the Executive (whether alone or with others and whether or not during normal business hours or on or off the premises of the Company or any of its Subsidiaries) during the Executive’s employment with the Company or any of its Subsidiaries (including prior to the Effective Date if applicable) that relate to either the Products or any prospective activity of the Company or any of its Subsidiaries or that make use of Confidential Information or any of the equipment or facilities of the Company or any of its Subsidiaries.
(f)    “Person” means an individual, a corporation, a limited liability company, an association, a partnership, an estate, a trust and any other entity or organization.
(g)    “Products” mean all products planned, researched, developed, tested, manufactured, sold, licensed, leased or otherwise distributed or put into use by the Company or any of its Subsidiaries, together with all services provided or planned by the Company or any of its Subsidiaries, during the Executive’s employment with the Company or any of its Subsidiaries (including prior to the Effective Date if applicable).
(h)    “Subsidiary” shall mean any Person of which the Company (or other specified Person) shall, directly or indirectly, own beneficially or control the voting of at least a majority of the outstanding capital stock (or other shares of beneficial interest) entitled to vote generally or at least a majority of the partnership, membership, joint venture or similar interests, or in which the Company (or other specified Person) or a Subsidiary thereof shall be a general partner or joint venturer without limited liability.
(i)    All references in this Agreement to termination of employment, separation from service, retirement and similar or correlative terms, when used in a context that bears upon the vesting, payment or timing of payment of any amounts or benefits that constitute or could constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Code, shall be construed to require a “separation from service” (as that term is defined in Section 1.409A-1(h) of the Treasury Regulations) from the Company and from all other corporations and trades or businesses, if any, that would be treated as a single “service recipient” with the Company under Section 1.409A-l(h)(3) of the Treasury Regulations.  Each installment payment required under this Agreement shall be considered a separate payment for purposes of Section 409A.  The Company may, but need not, elect in writing, subject to the applicable limitations under Section 409A of the Code, any of the special elective rules prescribed in Section 1.409A-1(h) of the Treasury Regulations for purposes of determining whether a “separation from service” has occurred.  Any such written election shall be deemed part of this Agreement.
15.    Survival.  The provisions of this Agreement shall survive following the Termination Date if so provided herein or desirable to accomplish the purposes of other surviving provisions, including without limitation the provisions of Sections 6, 7, 8, 9, 10, 11 and 14 through 26.
16.    Withholding.  All payments made by the Company under this Agreement shall be reduced by any tax or other amounts required to be withheld by the Company under applicable law.

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17.    Assignment.  The Executive may not make any assignment of this Agreement or any interest herein, by operation of law or otherwise, without the prior written consent of the Company.  This Agreement shall inure to the benefit of and be binding upon the Company and the Executive, their respective successors, executors, administrators, heirs and permitted assigns.
18.    Severability.  If any portion or provision of this Agreement shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.
19.    Waiver.  No waiver of any provision hereof shall be effective unless made in writing and signed by the waiving party.  The failure of either party to require the performance of any term or obligation of this Agreement, or the waiver by either party of any breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach.
20.    Notices.  Any and all notices, requests, demands and other communications provided for by this Agreement shall be in writing and shall be effective when delivered in person, when delivered by courier at the Executive’s last known address on the books of the Company, or five (5) business days following deposit in the United States mail, postage prepaid, registered or certified, and addressed to the Executive at his last known address on the books of the Company or, in the case of the Company, at its principal place of business, attention of the Chairman of the Board or to such other address as either party may specify by notice to the other actually received.
21.    Entire Agreement.  This Agreement and the other plans and documents specifically referred to herein constitute the entire agreement between the parties regarding the subject matter of this Agreement and such other plans and documents and supersede all prior communications, agreements and understandings, written or oral, with respect to such subject matter.
22.    Amendment.  This Agreement may be amended or modified only by a written instrument signed by the Executive and by an expressly authorized representative of the Company.
23.    Headings.  The headings and captions in this Agreement are for convenience only and in no way define or describe the scope or content of any provision of this Agreement.
24.    Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be an original and all of which together shall constitute one and the same instrument.
25.    Governing Law.  This is a North Carolina contract and shall be construed and enforced under and be governed in all respects by the laws of the State of North Carolina, without regard to the conflict of laws principles thereof.
26.    Consideration. The parties expressly waive any defense either may now or hereafter have as to the lack of inadequacy of consideration for this Agreement.

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IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument by the Executive, and by the Company, through its duly authorized representative, as the date first above written.
THE EXECUTIVE:    XERIUM TECHNOLOGIES, INC.

/s/ Michael Bly_______________    By: /s/ Harold C. Bevis            
Michael Bly        Harold C. Bevis
President and Chief Executive Officer

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