Document:

FORM OF 2005 EQUITY INCENTIVE PLAN

 Exhibit 10.7 
  
 XERIUM TECHNOLOGIES, INC. 
  
 2005 EQUITY INCENTIVE PLAN 
  

	1.	Purpose; Term. 

  
 This Xerium Technologies, Inc. 2005 Equity Incentive Plan (the “Plan”) provides for the grant of incentive awards consisting of or based on the
Common Stock of the Company. The purpose of the Plan is to attract and retain key employees, directors and consultants of the Company and its Affiliates, to provide an incentive for them to achieve performance goals, and to enable them to
participate in the growth of the Company by granting Awards with respect to the Company’s Common Stock. No Awards may be granted under the Plan after
                             , 2015, but Awards granted prior to that date may continue in
accordance with their terms. Certain capitalized terms used herein are defined in Section 3 below. 
  

	2.	Administration. 

  
 The Plan shall be administered by the Committee. Except to the extent action by the Committee is required under Section 162(m) of the Code in the case of
Awards intended to qualify for exemption thereunder, the Board may in any instance perform any of the functions of the Committee hereunder. The Committee shall select the Participants to receive Awards and shall determine the terms and conditions of
the Awards. The Committee shall have authority to adopt, alter and repeal such administrative rules, guidelines and practices governing the operation of the Plan as it shall from time to time consider advisable, and to interpret the provisions of
the Plan. The Committee’s decisions shall be final and binding. The Committee may delegate (i) to one or more of its members such of its duties, powers and responsibilities as it may determine; (ii) to one or more officers of the Company the
power to grant rights or options to the extent permitted by Section 157(c) of the Delaware General Corporation Law; (iii) to one or more officers of the Company the authority to allocate other Awards among such persons (other than officers of the
Company) eligible to receive Awards under the Plan as such delegated officer or officers determine consistent with such delegation; provided, that with respect to any delegation described in this clause (iii) the Committee (or a properly
delegated member or members of such Committee) shall have authorized the issuance of a specified number of shares of Stock under such Awards and shall have specified the consideration, if any, to be paid therefor; and (iv) to such employees or other
persons as it determines such ministerial tasks as it deems appropriate. In the event of any delegation described in the preceding sentence, references herein to the Committee shall include the person or persons so delegated to the extent of such
delegation. 
  

	3.	Certain Definitions. 

  
 “Affiliate” means any business entity in which the Company owns directly or indirectly 50% or more of the total voting power or has a
significant financial interest as determined by the Committee. 
  

 “Award” means any Option, SAR, Restricted Stock, Unrestricted Stock or Stock Unit Award granted
under the Plan. 
  
 “Board” means the Board of Directors
of the Company. 
  
 “Code” means the Internal Revenue
Code of 1986, as amended from time to time, or any successor law. 
  
 “Committee” means one or more committees each comprised of not less than two members of the Board appointed by the Board to administer the Plan or a specified portion thereof. Unless otherwise determined by the Board, if a
Committee is authorized to grant Awards to a Reporting Person or a Covered Employee, each member shall be a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act or an “outside director” within the
meaning of Section 162(m) of the Code, respectively. 
  
 “Common Stock” or “Stock” means the Common Stock, $0.01 par value, of the Company. 
  
 “Company” means Xerium Technologies, Inc., a Delaware corporation. 
  
 “Covered Employee” means a “covered employee” within the meaning of Section 162(m) of the Code.

  
 “Designated Beneficiary” means the beneficiary
designated by a Participant, in a manner determined by the Committee, to receive amounts due or exercise rights of the Participant in the event of the Participant’s death. In the absence of an effective designation by a Participant,
“Designated Beneficiary” means the Participant’s estate. 
  
 “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, or any successor law. 
  
 “Fair Market Value” means, with respect to Common Stock or any other property, the fair market value of such property as determined by the
Committee in good faith or in the manner established by the Committee from time to time. 
  
 “Participant” means a person selected by the Committee to receive an Award under the Plan. 
  
 “Reporting Person” means a person subject to Section 16 of the Exchange Act. 
  

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	4.	Eligibility. 

  
 All key employees, all directors and all consultants of the Company or of any Affiliate whom the Committee considers to be capable of contributing to the
successful performance of the Company are eligible to be Participants in the Plan. Incentive Stock Options may be granted only to employees of the Company or of any parent or subsidiary corporation of the Company, as those terms are used in Section
424 of the Code. 
  

	5.	Stock Available for Awards. 

  
 (a) Amount. Subject to adjustment under subsection (b), no more than 2,500,000 shares of Common Stock in the aggregate may be delivered
under or in satisfaction of Awards. The number of shares of Common Stock delivered under or in satisfaction of Awards shall, for purposes of the immediately preceding sentence, be determined net of shares of Common Stock withheld by the Company in
satisfaction of tax withholding requirements with respect to the Award. For the avoidance of doubt, the termination, cancellation or expiration of an Award or any portion thereof without the delivery of shares of Common Stock, or the satisfaction of
an Award or any portion thereof by the delivery of cash or other property other than shares of Common Stock, shall not be treated as the delivery of shares of Common Stock for purposes of this subsection (a). Common Stock issued under awards granted
by another company (“other company awards”) and assumed by the Company in connection with a merger, consolidation, stock purchase or similar transaction, or issued by the Company under awards substituted for other company awards in
connection with a merger, consolidation, stock purchase or similar transaction, shall not reduce the shares available for Awards under the Plan; provided, that the maximum number of shares that may be issued pursuant to ISOs (as defined
below) shall be determined in a manner consistent with Section 422 of the Code and the rules thereunder. Shares issued under the Plan may consist of authorized but unissued shares or treasury shares. 
  
 (b) Adjustment. In the event that the Committee determines that
any stock dividend, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, exchange of shares or other transaction affects the Common Stock such that an adjustment is required or
appropriate to preserve the benefits intended to be provided by the Plan, then the Committee (subject in the case of ISOs, or in the case of Awards intended to qualify for exemption under Section 162(m) of the Code, to any limitation required under
the Code) shall make such adjustment as it determines to be equitable to any or all of (i) the number and kind of shares in respect of which Awards may be made under the Plan, (ii) the number and kind of shares subject to outstanding Awards and
(iii) the exercise price with respect to any of the foregoing; provided, that the number of shares subject to any Award shall always be a whole number. 
  

(c) Limit on Individual Grants. The maximum number of shares of Common Stock subject to Options and Stock Appreciation Rights that may be
granted to any Participant in the aggregate in any calendar year shall not exceed, in each case, 500,000, and the maximum number of shares of Common Stock that may be granted as Stock Awards pursuant to Section 8 

  

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to any Participant in the aggregate in any calendar year shall not exceed 500,000, subject in each case to adjustment under subsection (b). 
  

	6.	Stock Options. 

  
 (a) Grant of Options. Subject to the provisions of the Plan, the Committee may grant both (i) options (“Options”) to purchase
shares of Common Stock that are intended to comply with the requirements of Section 422 of the Code and the rules thereunder (“ISOs”) and (ii) Options that are not intended to comply with such requirements (“NSOs”). The Committee
shall determine the number of shares subject to each Option and the exercise price therefor, which shall not be less than 100% of the Fair Market Value of the Common Stock on the date of grant. 
  
 (b) Terms and Conditions. Each Option shall be exercisable at
such times and subject to such terms and conditions as the Committee may specify in the applicable grant or thereafter. The Committee may impose such conditions with respect to the exercise of Options, including conditions relating to applicable
federal or state securities laws, as it considers necessary or advisable. 
  
 (c) Payment. No shares shall be delivered pursuant to any exercise of an Option until payment in full of the exercise price therefor is received by the Company. Such payment may be made in whole or in
part in cash or, to the extent legally permissible and permitted by the Committee at or after the grant of the Option, by delivery of a note or other commitment satisfactory to the Committee; shares of Common Stock that have been owned by the
optionee for at least six months (or such other period as the Committee may determine), valued at their Fair Market Value on the date of delivery; such other lawful consideration, including a payment commitment of a financial or brokerage
institution, as the Committee may determine; or any combination of the foregoing permitted forms of payment. 
  

	7.	Stock Appreciation Rights. 

  
 (a) Grant of SARs. Subject to the provisions of the Plan, on or after the date of an initial public offering of the Common Stock pursuant to
an effective registration statement under the Exchange Act, the Committee may grant rights to receive any excess in value of shares of Common Stock over the exercise price (“Stock Appreciation Rights” or “SARs”). The Committee
shall determine at the time of grant or thereafter whether SARs are settled in cash, Common Stock or other securities of the Company, Awards or other property, and may define the manner of determining the excess in value of the shares of Common
Stock. 
  
 (b) Exercise Price. The Committee shall
fix the exercise price of each SAR, which shall not be less than 100% of the Fair Market Value of the Common Stock at the date of grant. 
  

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	8.	Stock Awards. 

  
 (a) Restricted or Unrestricted Stock Awards. The Committee may grant shares of Common Stock subject to forfeiture (“Restricted
Stock”) and determine the duration of the period (the “Restricted Period”) during which, and the conditions under which, the shares may be forfeited to the Company and the other terms and conditions of such Awards. Shares of
Restricted Stock may not be sold, assigned, transferred, pledged or otherwise encumbered, except as permitted by the Committee, during the Restricted Period. Shares of Restricted Stock shall be evidenced in such manner as the Committee may
determine. Any certificates issued in respect of shares of Restricted Stock shall be registered in the name of the Participant and unless otherwise determined by the Committee, deposited by the Participant, together with a stock power endorsed in
blank, with the Company. At the expiration of the Restricted Period, the Company shall deliver such certificates to the Participant or if the Participant has died, to the Participant’s Designated Beneficiary. The Committee also may make Awards
of shares of Common Stock that are not subject to restrictions or forfeiture, on such terms and conditions as the Committee may determine from time to time (“Unrestricted Stock”). Shares of Restricted Stock or Unrestricted Stock may be
issued for such consideration, if any, as the Committee may determine consistent with applicable law. 
  
 (b) Stock Unit Awards. The Committee may grant Awards (“Stock Unit Awards”) consisting of units representing shares of Common
Stock. Each Stock Unit Award shall represent the unfunded and unsecured commitment of the Company to deliver to the Participant at a specified future date or dates one or more shares of Common Stock (including, if so provided with respect to the
Award, shares of Restricted Stock), subject to the satisfaction of any vesting or other terms and conditions established with respect to the Award as the Committee may determine. No Participant or Designated Beneficiary holding a Stock Unit Award
shall be treated as a stockholder with respect to the shares of Common Stock subject to the Award unless and until such shares are actually delivered under the Award. Stock Unit Awards may not be sold, assigned, transferred, pledged or otherwise
encumbered except as permitted by the Committee. 
  
 (c)
Performance Goals. The Committee may establish performance goals on which the granting of Restricted Stock, Unrestricted Stock, or Stock Unit Awards, or the vesting of Restricted Stock or Stock Unit Awards, will be subject. Such
performance goals may be based on such corporate or other business criteria as the Committee may determine. The Committee shall determine whether any performance goals so established have been achieved, and if so to what extent, and its
determination shall be binding on all persons. 
  

	9.	General Provisions Applicable to Awards. 

  
 (a) Documentation. Each Award shall be evidenced by a writing delivered to the Participant or agreement executed by the Participant
specifying the terms and conditions thereof and containing such other terms and conditions not inconsistent with the provisions of the Plan as the Committee considers necessary or advisable to achieve the purposes of the Plan or to comply with
applicable tax and regulatory laws and accounting principles. 
  

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 (b) Application of Code Section 409A. Notwithstanding anything in this Plan to the
contrary, any grant of an Award shall satisfy the requirements of Code §409A, to the extent applicable. 
  
 (c) Committee Discretion. Awards may be made alone or in combination with other Awards, including Awards of other types. The terms of
Awards of the same type need not be identical, and the Committee need not treat Participants uniformly (subject to the requirements of applicable law). Except as otherwise provided by the Plan or a particular Award, any determination with respect to
an Award may be made by the Committee at the time of grant or at any time thereafter. 
  
 (d) Dividends and Cash Awards. In the discretion of the Committee, any Award under the Plan may provide the Participant with (i) dividends or dividend equivalents payable (in cash or in the form
of Awards under the Plan) currently or deferred with or without interest and (ii) cash payments in lieu of or in addition to an Award. 
  
 (e) Termination of Service Unless the Committee expressly provides otherwise, the following rules shall apply in connection with the
cessation of a Participant’s employment or other service relationship with the Company and its Affiliates. Immediately upon the cessation of the Participant’s employment or other service relationship with the Company and its Affiliates an
Award requiring exercise will cease to be exercisable and all Awards to the extent not already fully vested will be forfeited, except that: 
  
 (i) All Stock Options and SARs held by a Participant immediately prior to his or her death, to the extent then exercisable, will remain
exercisable by such Participant’s executor or administrator or the person or persons to whom the Stock Option or SAR is transferred by will or the applicable laws of descent and distribution, in each case for the lesser of (i) the one year
period ending with the first anniversary of the Participant’s death or (ii) the period ending on the latest date on which such Stock Option or SAR could have been exercised without regard to this subsection (e), and shall thereupon terminate;
and 
  
 (ii) all Stock Options and SARs held by
the Participant immediately prior to the cessation of the Participant’s employment or other service relationship for reasons other than death and except as provided in (iii) below, to the extent then exercisable, will remain exercisable for the
lesser of (1) a period of three months or (2) the period ending on the latest date on which such Stock Option or SAR could have been exercised without regard to this subsection (e), and shall thereupon terminate. 
  
 (iii) Unless the Committee expressly provides otherwise, a
Participant’s “employment or other service relationship with the Company and its Affiliates” will be deemed to have ceased, in the case of an employee Participant, upon termination of the Participant’s employment with the Company
and its Affiliates (whether or not the Participant continues in the service of the Company or its Affiliates in some capacity other than that of an employee of the Company or its Affiliates), and in the case of any 

  

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other Participant, when the service relationship in respect of which the Award was granted terminates (whether or not the Participant continues in the
service of the Company or its Affiliates in some other capacity). 
  
 (f) Change in Control. In the event of (i) a change of control of the Company (as defined by the Committee) or other consolidation, merger, acquisition of shares or similar transaction or series of related transactions
(whether or not constituting a change of control) in which the Company is not the surviving corporation or which results in the acquisition of all or substantially all of the Company’s then outstanding common stock by a single person or entity
or by a group of persons and/or entities acting in concert, or (ii) a sale or transfer of all or substantially all the Company’s assets, or (iii) a dissolution or liquidation of the Company (any of (i), (ii) or (iii) being herein referred to as
a “Covered Transaction”), the Committee in its discretion may, with respect to any Award, at the time the Award is made or at any time thereafter, take one or more of the following actions: (A) provide for the acceleration of any time
period relating to the exercise or payment of the Award, (B) provide for payment to the Participant of cash or other property with a Fair Market Value equal to the amount that would have been received (net of any exercise price) upon the exercise or
payment of the Award had the Award been exercised or paid immediately prior to the covered transaction, (C) adjust the terms of the Award in a manner determined by the Committee to reflect the covered transaction, (D) cause the Award to be assumed,
or new rights substituted therefor, by another entity, or (E) make such other provision as the Committee may consider equitable to Participants and in the best interests of the Company; provided, that in the absence of any such action by the
Committee or an expressly applicable provision in the Award document, immediately prior to the covered transaction (1) each Option and SAR shall cease to be exercisable and shall terminate, (2) each Restricted Stock Award and Stock Unit Award shall
terminate to the extent such Award is unvested, and (3) each Stock Unit Award, to the extent vested, shall be converted into the right to receive, with respect to each unit (representing a share of Common Stock) subject to such Award, the same
per-share consideration (or other cash or property, of equivalent Fair Market Value at the time of payment, as determined by the Committee or its successor in connection with the payment or delivery of such cash or property) as would have been
retained or received by a holder of one share of Common Stock in the covered transaction. The Committee may require that any amounts delivered, exchanged or otherwise paid in respect of Restricted Stock or Stock Unit Awards in connection with a
covered transaction be placed in escrow or otherwise made subject to such restrictions as the Committee deems appropriate to carry out the intent of the Plan. 
  

(g) Transferability. No Award may be transferred other than by will or the laws of descent and distribution and may be exercised, during
the life of the Participant, only by the Participant, except that, as to Awards other than ISOs, the Committee may permit certain transfers to the Participant’s family members or to certain entities controlled by the Participant or his or her
family members. 
  
 (h) Withholding Taxes.
The Participant shall pay to the Company, or make provision satisfactory to the Committee for payment of, any taxes or social insurance contributions required by law to be withheld in respect of Awards under the Plan no later than the date of the
event creating the tax liability. The Company and its Affiliates may, to the extent permitted by 

  

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law, deduct any such tax (or social insurance) obligations from any payment of any kind due to the Participant hereunder or otherwise. In the
Committee’s discretion, the minimum tax (or social insurance) obligations required by law to be withheld in respect of Awards may be paid in whole or in part in shares of Common Stock, including shares retained from the Award creating the
obligation, valued at their Fair Market Value on the date of retention or delivery. 
  
 (i) Amendment of Award. The Committee may amend, modify, or terminate any outstanding Award, including substituting therefor another Award of the same or a different type, changing the date of
exercise or realization and converting an Incentive Stock Option to a Nonstatutory Stock Option. Any such action shall require the Participant’s consent unless the Committee determines that the action, taking into account any related action,
would not materially and adversely affect the Participant.  
  
 (j) Foreign Nationals. The Committee may take any action consistent with the terms of the Plan, either before or after an Award has been granted, which the Committee deems necessary or advisable to comply with
government laws or regulatory requirements of any foreign jurisdiction, including but not limited to modifying or amending the terms and conditions governing any Awards, establishing sub-plans under the Plan, or adopting such procedures as the
Committee may determine to be appropriate in response to differences in laws, rules, regulations or customs of such foreign jurisdictions with respect to tax, securities, currency, employment, accounting or other matters. 
  

	10.	Miscellaneous. 

  
 (a) No Right To Employment. No person shall have any claim or right to be granted an Award. Neither the adoption, maintenance, nor
operation of the Plan nor any Award hereunder shall constitute a contract of employment or confer upon any employee, director or consultant of the Company or of any Affiliate any right with respect to the continuance of his/her employment by or
other service with the Company or any such Affiliate nor shall it or they be construed as affecting the rights of the Company (or Affiliate) to terminate the service of any person at any time or otherwise change the terms of such service, including,
without limitation, the right to promote, demote or otherwise re-assign any employee or other service provider from one position to another within the Company or any Affiliate. 
  
 (b) No Rights As Stockholder. Subject to the provisions of the applicable Award, no Participant or
Designated Beneficiary shall have any rights as a stockholder with respect to any shares of Common Stock to be issued under the Plan until he or she becomes the holder thereof. A Participant to whom Restricted Stock or Unrestricted Stock is awarded
shall be considered a stockholder of the Company at the time of the Award except as otherwise provided in the applicable Award. 
  
 (c) Effective Date. The Plan shall be effective on the date it is approved by the stockholders. 
  

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 (d) Amendment of Plan. The Board may amend, suspend, or terminate the Plan or any
portion thereof at any time, subject to such stockholder approval as the Board determines to be necessary or advisable. Further, under all circumstances, the Committee may make non-substantive administrative changes to the Plan as to conform with or
take advantage of governmental requirements, statutes or regulations. 
  
 (e) Governing Law. The provisions of the Plan shall be governed by and interpreted in accordance with the laws of the State of Delaware. 
  

 -9-FORM OF SENIOR EXECUTIVE ANNUAL INCENTIVE PLAN

 Exhibit 10.8 
  
 XERIUM TECHNOLOGIES, INC. 
 SENIOR EXECUTIVE ANNUAL INCENTIVE PLAN 
  
 The following sets forth the terms and conditions of the Xerium Technologies, Inc. Senior Executive Annual Incentive Plan (the “Plan”) for specified executive officers and other senior employees of
Xerium Technologies, Inc. (the “Company”) and its Subsidiaries (as defined below). 
  

	1.	Purpose 

  
 The purpose of this Plan is to advance the interests of the Company by enhancing the ability of the Company and its Subsidiaries to attract and retain
management and employees who are in a position to make significant contributions to the success of the Company and its Subsidiaries and to reward such individuals for their contributions. 
  

	2.	Defined Terms 

  
 In this Plan, the following terms have the following meanings: 
  

(a) “Actual Operating Cash” means, for a fiscal year, (i) net cash provided by operating activities of the Company and its
Subsidiaries determined on a consolidated basis plus (ii) Consolidated Transaction Costs, as such term is defined in the Credit Agreement as in effect on the Effective Date, but only to the extent such amounts reduce net cash provided by
operating activities for such year, minus (iii) gross capital expenditures of the Company and its Subsidiaries for such year other than capital expenditures relating to restructuring; plus (iv) cash restructuring costs incurred by the
Company and its Subsidiaries for such year; plus (v) net cash proceeds from disposals of property and equipment received by the Company and its Subsidiaries for such year; plus (vi) interest payments of the Company and its
Subsidiaries for such years plus (vii) income tax payments of the Company and its Subsidiaries for such year plus or minus (viii) such other amounts as the Committee shall determine no later than 90 days after the commencement of the
applicable fiscal year (or such earlier time as is required to qualify the Awards as performance-based under Code Section 162(m)), in order to make the calculations of Actual Operating Cash appropriately consistent with the calculations used by the
Committee in determining the amount of Target Operating Cash for such year. For avoidance of doubt, Actual Operating Cash shall be determined without regard to Awards granted under this Plan and the Company’s Executive Annual Incentive Plan and
Incentive Compensation Plan for a fiscal year, but shall be reduced by the amount of Awards paid under this Plan during such fiscal year or for any awards paid in respect the Company’s Executive Annual Incentive Plan and Incentive Compensation
Plan during such fiscal year. The Committee shall calculate the amount of Actual Operating Cash in a manner which is consistent with the audited financial statements of the Company for the applicable fiscal year, including without limitation the
consolidated statement of cash flows. 
  
 (b) “Adjusted
EBITDA” means, for a fiscal year, Adjusted EBITDA as such term is defined in the Credit Agreement as in effect on the Effective Date, provided, however, 

  

 
that the Committee may, for any fiscal year, further adjust the computation of Adjusted EBITDA no later than 90 days after the commencement of the applicable
fiscal year in order to make such computation consistent with the terms of the Credit Agreement, as it may be amended from time to time, or any substituted credit facility, or to take into account such other financial criteria as the Committee may
determine. For avoidance of doubt, Awards paid with respect to this plan and awards paid under the Executive Annual Incentive Plan and the Incentive Compensation Plan shall reduce Adjusted EBITDA for such fiscal year. 
  
 (c) “Affiliate” 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. 
  
 (d) “Award” means, for a given fiscal year, as to each Participant, an award of cash under this Plan with respect to such year.

  
 (e) “Applicable Law” means all applicable
provisions of law, domestic or foreign, (including, without limitation, the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), together with all regulations promulgated
thereunder) and Stock Exchange Rules. 
  
 (f)
“Board” means the board of directors of the Company or any committee thereof designated by the full board of directors of the Company, in each case as constituted from time to time. 
  
 (g) “Business Day” means a day on which the NYSE is open
for trading. 
  
 (h) “Code” means the Internal
Revenue Code of 1986, as amended from time to time. 
  
 (i)
“Committee” means the compensation committee of the Board, as such committee is from time to time constituted and which, for purposes of meeting certain requirements of Section 162(m) of Code and any regulations promulgated
thereunder, may be deemed to be any subcommittee of the Committee to which the Committee has delegated its duties and authority under this Plan consisting solely of at least two “outside directors,” as defined under Section 162(m) of the
Code and the regulations promulgated thereunder. 
  
 (j)
“Company” means Xerium Technologies, Inc. and its successors. 
  
 (k) “Credit Agreement” means the Credit and Guaranty Agreement, dated as of
                         , 2005, entered into by and among the Company, certain subsidiaries of the Company,
Citigroup Global Markets, Inc., CIBC World Markets Corp. and other agents and banks party thereto. 
  
 (o) “Effective Date” means the closing date of the Company’s initial public offering of common stock of the Company, $0.01 par
value, as described in the Company’s Registration Statement on Form S-1 relating thereto, as declared effective by the Securities and Exchange Commission, including any amendment or amendments thereto. 
  

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 (p) “NYSE” means the New York Stock Exchange. 
  
 (q) “Participant” means each executive officer and other
senior employee of the Company or any of its Subsidiaries selected by the Committee from time to time to participate in this Plan. 
  
 (r) “Person” means any individual, partnership, limited liability company, corporation, association, trust, joint venture, unincorporated
organization, or other entity or group. 
  
 (s)
“Plan” means this Xerium Technologies, Inc. Senior Executive Annual Incentive Plan, as an “employee benefit plan” (within the meaning of the Exchange Act), as amended from time to time. 
  
 (t) “Specified Percentage” means, with respect to a
Participant, a percentage determined by the Committee, in its sole discretion, not later than 90 days after the commencement of the fiscal year to which it relates. 
  
 (u) “Stock Exchange Rules” means the applicable rules of the NYSE, or any other principal stock exchange or
market upon which the shares of common stock are listed for trading. 
  
 (v) “Subsidiary” means any Person of which the Company at the time (i) owns, directly or indirectly, at least a majority of the outstanding capital stock (or other shares of beneficial interest) entitled to vote generally
or (ii) controls, directly or indirectly, the board of directors or managers (or equivalent governing body) of such Person. 
  
 (w) “Target Adjusted EBITDA” means, for a fiscal year, a target dollar amount, established by the Committee, of Adjusted EBITDA for such
year. 
  
 (x) “Target Operating Cash” means, for
a fiscal year, a target dollar amount, established by the Committee, of Actual Operating Cash to be generated by the Company and its Subsidiaries on a consolidated basis for such year. 
  

	3.	Administration and Amendment 

  
 3.1. Administration. The Plan shall be administered by the Committee. The Committee shall have the authority to: (a) determine the Participants in
the Plan for any fiscal year, (b) determine the amount of Actual Operating Cash and Target Operating Cash for any fiscal year; (c) determine the amount of the Adjusted EBITDA and Target Adjusted EBITDA for any fiscal year, (d) determine, modify or
waive the terms and conditions of each Award; and (e) interpret the Plan and any terms and conditions associated with any Award granted under the Plan and to decide any questions and settle all controversies and disputes that may arise in connection
with the Plan or any Award granted under the Plan. In the case of any Award intended to be eligible for the performance-based compensation exception under Section 162(m) of the Code, the Committee will exercise its discretion consistent with
qualifying Awards for that exception. Determinations of the Committee made under the Plan shall be conclusive and shall bind all parties. 
  

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 3.2. Amendment. The Committee may amend, suspend or discontinue the Plan at any time or times,
subject to Applicable Law and the receipt of any required regulatory approvals and, where required by Applicable Law (whether pursuant to Stock Exchange Rules or in order to cause the Awards payable under this Plan to be fully deductible by the
Company and its Subsidiaries pursuant to Section 162(m) of the Code or otherwise), subject to approval by the stockholders of the Company. No such amendment shall adversely affect the rights of any Participant as to any Award previously granted
under the Plan without the consent of the Participant who was granted such Award. 
  

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	4.	Establishment of Target and Grant of Awards 

  
 4.1. Establishment of Target Adjusted EBITDA and Target Operating Cash. The Committee shall establish the amount of the Target Adjusted EBITDA and
Target Operating Cash for any fiscal year not later than 90 days after the commencement of such year (provided that for 2005, such amounts shall instead be established prior to the Effective Date) (or such earlier time as is required to qualify
Awards as performance-based under Code Section 162(m)); provided, however, that the amount so established by the Committee may be adjusted by the Committee after the initial determination of the amount to reflect any significant change
of circumstance, including without limitation, the acquisition or disposition of any business by the Company or any of its Subsidiaries. The amount of the Target Operating Cash and Target Adjusted EBITDA for any fiscal year shall be determined by
the Committee at the same time and in the same manner as under the Executive Annual Incentive Plan and the Incentive Compensation Plan. 
  
 4.2. Grant of Awards. If Adjusted EBITDA equals Target Adjusted EBITDA in respect of a fiscal year, each Participant shall receive an Award equal
to a Specified Percentage of such Participant’s base salary for such fiscal year, subject to the provisions of Section 4.3. If Adjusted EBITDA equals 110% percent of Target Adjusted EBITDA in respect of a fiscal year, each Participant shall
receive an Award of 200% of such Participant’s Specified Percentage for such fiscal year, subject to the provisions of Section 4.3. In the event Adjusted EBITDA is greater than Target Adjusted EBITDA but less than 110% of Target Adjusted
EBITDA, each Participant shall receive an Award equal to the Specified Percentage of base salary paid plus an additional percentage of the Specified Percentage equal to 10 times the percentage (including fractions thereof) by which Adjusted
EBITDA exceeds Target Adjusted EBITDA (subject to the 200% maximum), subject to the provisions of Section 4.3. By way of example, if Adjusted EBITDA is equal to 105% of Target Adjusted EBITDA and the Participant’s Specified Percentage is 75%,
the Award shall be 150% of the Specified Percentage (i.e., 112.5% of the Participant’s base salary). 
  
 4.3. Adjustment of Awards; Operating Cash and Target Adjusted EBITDA Hurdles. 
  
 4.3.1. Hurdles. Notwithstanding the provisions of Section 4.2, Awards shall be payable under the Plan
in respect of a fiscal year only if (1) Actual Operating Cash exceeds the Target Operating Cash, and (2) Adjusted EBITDA, before reduction for payments under the Plan, the Executive Annual Incentive Plan of the Company (the “Executive
Plan”) and the Incentive Compensation Plan of the Company (the “Incentive Plan”), exceeds Target Adjusted EBITDA. In no event shall payments under the Plan, the Executive Plan or the Incentive Plan cause Adjusted EBITDA to be less
than Target Adjusted EBITDA. 
  
 4.3.2.
Adjustments. As used herein, “Base Amount,” with respect to a fiscal year, means the sum of (i) Awards under the Plan at a level equal to the Specified Percentage of the base salary of all Plan participants for such fiscal
year (“Base Award”), plus (ii) awards under the Executive Plan at a level equal to the Specified Percentage (with respect to the participants in the Executive Plan, as defined in the Executive Plan) of all of the participants in such plan
for such fiscal year (“Executive Base Award”), plus 

  

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(iii) awards under the Incentive Plan to all participants with respect to which Performance Targets (as defined in the Incentive Plan) are satisfied for a
fiscal year, but determined without regard to the level of Adjusted EBITDA and Actual Operating Cash for such year (each an “Unadjusted Incentive Award”). If the requirements of the first sentence of Section 4.3.1 are satisfied and the
excess (such excess, the “Bonus Pool”) of (x) Adjusted EBITDA, before reduction for payments under the Plan, the Executive Plan and the Incentive Plan over (y) Target Adjusted EBITDA is less than the Base Amount, each of the Awards under
the Plan for the applicable fiscal year shall equal the applicable Base Award for such year multiplied by a ratio, the numerator of which is the Bonus Pool and the denominator of which is the Base Amount. If the requirements of the first sentence of
Section 4.3.1 are satisfied for a fiscal year and the Bonus Pool for such fiscal year is equal to or greater than the Base Amount, the Unadjusted Incentive Awards will be paid in accordance with the Incentive Plan and each of the Awards under this
Plan and the awards under the Executive Plan for the applicable fiscal year shall equal (1) the applicable Base Award or Executive Base Award, plus (2) a pro rata portion, based on the relative Base Awards and Executive Base Awards under the Plan
and the Executive Plan respectively, of an additional amount such that actual Adjusted EBITDA represents a percentage of Target Adjusted EBITDA equal to (x) a ratio, the numerator of which is the percentage of the applicable Base Award or Executive
Base Award represented by the Award (or award under the Executive Plan) as finally determined, minus 100%, and the denominator of which is 10, plus (y) 100%, provided that no Award shall exceed 200% of the applicable Base Award (and no award under
the Executive Plan shall exceed 200% of the applicable Executive Base Award). Reductions of Awards hereunder shall not be carried over into subsequent fiscal years. 
  
 4.4. Application of 162(m). This Section 4.4 applies to any Award intended to qualify as performance-based for
purposes of Code Section 162(m). In the case of any Award to which this Section 4.4 applies, the Plan and such Award will be construed to the maximum extent permitted by law in a manner consistent with qualifying the Award for such exception. No
Award to which this Section 4.4 applies may be granted if the Committee determines that in order for such Award to qualify as performance-based for purposes of Code Section 162(m), 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 Code Section 162(m), unless such grant is made contingent upon such approval. The maximum per Participant Award under the Plan for any fiscal year shall not exceed
$2,500,000. 
  
 4.5. No Right to Participate. Nothing in
the Plan shall be deemed to create any obligation on the part of the Committee to select any executive officer or senior employee as a Participant, nor confer upon any Participant in the Plan the right to remain a Participant in the Plan on the same
terms or conditions, or at all, for any subsequent fiscal year. 
  

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	5.	Payment of Awards 

  
 Payment of any Award under the Plan with respect to a fiscal year shall be made on or before March 15 of the fiscal year following the fiscal year with
respect to which the Award is made. 
  

	6.	Operation of the Plan 

  
 6.1. Compliance with Applicable Law. As a condition of participating in the Plan, each Participant agrees to comply with all Applicable Laws and
agrees to furnish to the Company all information and undertakings as may be required to permit compliance by the Company with Applicable Law. 
  
 6.2. Withholding. The Company may withhold from the payment of each Participant’s Award all taxes and other assessments, if any, required by
Applicable Law to be withheld. 
  

	7.	Merger or Combination. 

  
 If (a) the Company merges into or combines with any other entity and, immediately following such merger or combination, any Person or group of Persons
acting in concert holds 50% or more of the voting power of the entity surviving such merger or combination (other than any Person or group of Persons which held 50% or more of the Company’s voting power immediately prior to such merger or
combination or any Affiliate of any such Person or member of such group); (b) any Person or group of Persons acting in concert acquires 50% or more of the Company’s voting power; or (c) the Company sells all or substantially all of its assets
or business for cash or for securities of another Person or group of Persons (other than to any Person or group of Persons which held 50% or more of the Company’s total voting power immediately prior to such sale or to any Affiliate of any such
Person or any member of such group), then, unless the Committee provides for the continuation or assumption of some or all unpaid Awards or for the grant of new awards in substitution therefor (which need not be payable in cash) by the surviving
entity or acquiror, in each case on such terms and subject to such conditions as the Committee may determine, with respect to any Award that is not so assumed or continued (i) the then current fiscal year shall be deemed to end on the last day which
is the last day of a fiscal quarter occurring on or prior to the effective date of the merger, combination or sale (or if the Committee in its sole discretion determines that it can make a reasonable determination of Adjusted EBITDA and Actual
Operating Cash through such effective date, the current fiscal year shall be deemed to end on such effective date); (ii) the Target Adjusted EBITDA and Target Operating Cash shall be prorated for the number of days in such shortened fiscal year; and
(iii) the amount of the prorated Awards for such shortened fiscal year shall be determined and the Company shall pay, within twelve months following the effective date of such transaction, such prorated Award to each Participant in respect of such
shortened fiscal year. 
  

	8.	Termination of Employment 

  
 8.1. Resignation or Termination by the Company. If a Participant ceases to be employed by the Company or any of its Subsidiaries prior to the end
of any fiscal year as a result of resignation, dismissal or any other reason, such Participant shall cease to be a 

  

 -7- 

 
Participant in the Plan on the date employment ceases and shall not receive any Award under the Plan in respect of such fiscal year. 
  
 8.2. Rights upon Termination Pursuant to Agreement. The Company may
provide rights to a Participant in respect of such Participant’s Awards upon termination of such Participant’s employment that differ from those set forth in Section 8.1 pursuant to an agreement with such Participant. Except to the extent
otherwise addressed in any such agreement, the provisions of this Plan, including Section 8.1, shall control. 
  

	9.	Rights of Participants 

  
 9.1. No Right to Continue as Officer or Employee. Neither the adoption of the Plan nor the selection of any Participant as a Participant shall
confer any right to continue as an officer or employee of the Company or any of its Subsidiaries, or affect in any way the right of the Company or any of its Subsidiaries to terminate such Participant’s employment at any time. Neither any
period of notice, nor any payment in lieu thereof, upon termination of employment shall be considered as extending the period of employment for the purposes of the Plan. 
  
 9.2. No Trust or Fiduciary Relationship. Nothing contained herein shall be deemed to create a trust of any kind or
any fiduciary relationship between the Company and any Participant or be construed as requiring the Company or any Subsidiary or Affiliate of the Company to establish a trust or otherwise to set aside assets to fund the payment of Awards hereunder.
A Participant’s right to receive payment from the Company in respect of any Award shall be no greater than the right of any unsecured general creditor of the Company. 
  
 9.3. No Assignment by Participants. The interest of any Participant under the Plan or in any Award shall not be
transferable or alienable by such Participant either by pledge, assignment or in any other manner, except that in the event of a Participant’s death following the completion of a fiscal year but prior to the payment of an Award with respect to
such fiscal year it shall inure to the benefit of and be binding upon the Participant’s estate (or beneficiary if one has been designated to the Company in writing prior to such death). 
  

	10.	Miscellaneous 

  
 10.1. Severability. Any term or provision of this Plan 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, it is the intent of the Company that 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. 
  
 10.2. Governing Law. This Plan
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. 
  

 -8- 

	11.	Effective Date of Plan and Term of Plan 

  
 11.1. Effective Date. The Plan shall take effect on the Effective Date, subject to its prior approval by the Company’s shareholders. For
avoidance of doubt, this Plan shall apply with respect to the full fiscal year in which the Effective Date occurs. 
  
 11.2. Term. No Awards shall be made under the Plan in respect of any fiscal year commencing after the tenth anniversary of the Effective Date.

  

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