UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549

 
SCHEDULE 13D/A
Under the Securities Exchange Act of 1934
(Amendment No. 2)

 

 
Xerium Technologies, Inc.
(Name of Issuer)
 
Common Stock, $0.001 par value per share
(Title of class of securities)
 
98416J118
(CUSIP number)
 
Marc Saiontz
American Securities LLC
299 Park Ave, 34th Floor
New York, NY 10016
(212) 476-8000
Copy to:
Michael Lubowitz, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
(212) 310-8000
 
(Name, address and telephone number of person authorized to receive notices and communications)
 
March 26, 2015
(Date of event which requires filing of this statement)

 
If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box [ ].
 






 
 
 
 
 
CUSIP No. 8416J118
13D/A
Page 2


1
NAME OF REPORTING PERSONS
 
AS INVESTORS, LLC (See Item 2)
 
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a)  x
(b)  o
3
SEC USE ONLY
 
4
SOURCE OF FUNDS (See Instructions)
N/A
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
 
   o
6
CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
7
SOLE VOTING POWER
0 (See Item 5)
8
SHARED VOTING POWER
2,164,338  (See Item 5)
9
SOLE DISPOSITIVE POWER
0 (See Item 5)
10
SHARED DISPOSITIVE POWER
2,164,338  (See Item 5)
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,164,338  (See Item 5)
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions)
 
   o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.87% (See Item 5)
14
TYPE OF REPORTING PERSON (See Instructions)
OO

 
 


 
 
 
 
 
CUSIP No. 8416J118
13D/A
Page 3

 
1
NAME OF REPORTING PERSONS
 
AMERICAN SECURITIES PARTNERS V, L.P. (See Item 2)
 
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a)  x
(b)  o
3
SEC USE ONLY
 
4
SOURCE OF FUNDS (See Instructions)
N/A
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
 
   o
6
CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
7
SOLE VOTING POWER
0 (See Item 5)
8
SHARED VOTING POWER
2,164,338 (See Item 5)
9
SOLE DISPOSITIVE POWER
0 (See Item 5)
10
SHARED DISPOSITIVE POWER
2,164,338 (See Item 5)
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,164,338 (See Item 5)
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions)
 
 o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.87% (See Item 5)
14
TYPE OF REPORTING PERSON (See Instructions)
PN

 



 
 
 
 
 
CUSIP No. 8416J118
13D/A
Page 4

 
1
NAME OF REPORTING PERSONS
 
AMERICAN SECURITIES PARTNERS V(B), L.P. (See Item 2)
 
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a)  x
(b)  o
3
SEC USE ONLY
 
4
SOURCE OF FUNDS (See Instructions)
N/A
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
 
   o
6
CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
7
SOLE VOTING POWER
0 (See Item 5)
8
SHARED VOTING POWER
2,164,338  (See Item 5)
9
SOLE DISPOSITIVE POWER
0 (See Item 5)
10
SHARED DISPOSITIVE POWER
2,164,338  (See Item 5)
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,164,338  (See Item 5)
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions)
 
   o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.87% (See Item 5)
14
TYPE OF REPORTING PERSON (See Instructions)
PN
 
 


 
 
 
 
 
CUSIP No. 8416J118
13D/A
Page 5


1
NAME OF REPORTING PERSONS
 
AMERICAN SECURITIES PARTNERS V(C), L.P. (See Item 2)
 
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a)  x
(b)  o
3
SEC USE ONLY
 
4
SOURCE OF FUNDS (See Instructions)
N/A
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
 
   o
6
CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
7
SOLE VOTING POWER
0 (See Item 5)
8
SHARED VOTING POWER
2,164,338  (See Item 5)
9
SOLE DISPOSITIVE POWER
0 (See Item 5)
10
SHARED DISPOSITIVE POWER
2,164,338  (See Item 5)
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,164,338  (See Item 5)
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions)
 
   o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.87% (See Item 5)
14
TYPE OF REPORTING PERSON (See Instructions)
PN
 
 
 

 
 
 
 
 
CUSIP No. 8416J118
13D/A
Page 6


 
1
NAME OF REPORTING PERSONS
 
AMERICAN SECURITIES ASSOCIATES V, LLC (See Item 2)
 
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a)  x
(b)  o
3
SEC USE ONLY
 
4
SOURCE OF FUNDS (See Instructions)
N/A
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
 
   o
6
CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
7
SOLE VOTING POWER
0 (See Item 5)
8
SHARED VOTING POWER
2,164,338  (See Item 5)
9
SOLE DISPOSITIVE POWER
0 (See Item 5)
10
SHARED DISPOSITIVE POWER
2,164,338  (See Item 5)
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,164,338 (See Item 5)
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions)
 
   o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.87% (See Item 5)
14
TYPE OF REPORTING PERSON (See Instructions)
OO
 

 

 
 
 
 
 
CUSIP No. 8416J118
13D/A
Page 7



1
NAME OF REPORTING PERSONS
 
AMERICAN SECURITIES LLC  (See Item 2)
 
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a)  x
(b)  o
3
SEC USE ONLY
 
4
SOURCE OF FUNDS (See Instructions)
N/A
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
 
   o
6
CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
7
SOLE VOTING POWER
0 (See Item 5)
8
SHARED VOTING POWER
2,177,267 (See Item 5)
9
SOLE DISPOSITIVE POWER
0 (See Item 5)
10
SHARED DISPOSITIVE POWER
2,177,267 (See Item 5)
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,177,267 (See Item 5)
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions)
 
   o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.96% (See Item 5)
14
TYPE OF REPORTING PERSON (See Instructions)
IA
 
 
 
 
 
 

 
This Amendment No. 2 (“Amendment No. 2”) amends the Schedule 13D initially filed with the Securities and Exchange Commission (“SEC”) on May 25, 2010, as amended (the “Schedule 13D”), and is filed by and on behalf of (i) AS Investors, LLC (“AS Investors”), (ii) American Securities Partners V, L.P., a Delaware limited partnership (“ASP V”), (iii) American Securities Partners V(B), L.P., a Delaware limited partnership (“ASP V(B)”), (iv) American Securities Partners V(C), L.P., a Delaware limited partnership (“ASP V(C)” and, with ASP V and ASP V(B), the “Sponsors”, the owners of membership interests in AS Investors), (v) American Securities Associates V, LLC (“GP”), the general partner of each Sponsor; and (vi) American Securities LLC, which provides investment advisory services to each Sponsor and GP (the “Advisor”) (each a “Reporting Person” and collectively the “Reporting Persons”), with respect to the common stock, par value $0.001 per share (the “Common Stock”), of Xerium Technologies, Inc. (“Xerium” or the “Issuer”).  Unless otherwise indicated, all capitalized terms used and not defined herein have the respective meanings assigned to them in the Schedule 13D.
 
Item 4.                    Purpose of Transaction
 
Item 4 is supplemented as follows:

The Advisor, on behalf of the Reporting Persons, provided a letter to Xerium, dated May 4, 2015 (the “Letter”), indicating an interest in pursuing a merger transaction with Xerium in order for the Reporting Persons to acquire all of the shares of Common Stock not already beneficially owned by the Reporting Persons (the “Transaction”).  Confidential Treatment has been requested with respect to certain portions of the Letter.  The Letter is not a legally binding offer or agreement of the Reporting Persons and neither the Reporting Persons nor Xerium have entered into any legally binding agreement with respect to the Transaction (other than the NDA (as described in Item 6 of this Amendment No. 2)).  The information set forth under Item 6 of this Amendment No. 2 is incorporated herein by reference.

Xerium responded to the Letter and indicated to the Advisor that it was not willing to proceed negotiating a transaction based on the terms set forth in the Letter.  As a result, the Reporting Persons have determined not to pursue the Transaction.  The Reporting Persons continue to reserve all of its rights with respect to Common Stock, including, without limitation, determining to sell, transfer or otherwise dispose of the Common Stock in private or public transactions or, subject to the terms of the NDA, purchasing or acquiring additional shares of Common Stock in private or public transactions.


Item 5.
Interest in Securities of the Issuer
 
Item 5 is supplemented as follows:
 
(a) and (b) The responses of the Reporting Persons to rows (7) through (13) of the cover pages of this Amendment No. 2 are incorporated herein by reference as of June 12, 2015. As of June 12, 2015, AS Investors was the direct record owner of, and had the power to vote and to dispose or direct the disposition of 2,164,338 shares of Common Stock, representing approximately 13.87% of the outstanding shares of Common Stock, based on 15,593,708 shares of Common Stock outstanding as of May 8, 2015, as reported in Xerium’s Quarterly Report on Form 10-Q filed with the SEC on May 11, 2015.  As a result of their relationship to AS Investors, ASP V, ASP V(B), ASP V(C), GP, and Advisor may also be deemed to be beneficial owners of Xerium.  Additionally, as of June 12, 2015, Advisor directly owns 12,929 shares of Common Stock.  Accordingly, as of June 12, 2015, Advisor may be deemed to be the beneficial owner of an aggregate of 2,177,267 shares of Common Stock, representing 13.96% of the outstanding shares of Common Stock.
 
(c) No transactions with respect to shares of Common Stock were effected during the past 60 days by any of the Reporting Persons or by any of the Scheduled Persons.

(d) Not applicable.

(e) Not applicable.

Item 6.
Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer
 
Item 6 is supplemented as follows:
 
The information set forth under Item 4 of this Amendment No. 2 is incorporated herein by reference.
 
 
 
 
8
 
 
 
 
In connection with the Reporting Persons’ consideration of the Transaction, and prior to the delivery of the Letter by the Advisor, the Advisor and Xerium entered into a Confidentiality Agreement, dated March 26, 2015 (the “NDA”), and Xerium agreed in the NDA to provide the Advisor and its representatives with certain confidential and proprietary information of Xerium.  The Advisor agreed in the NDA that it would not acquire or propose to acquire any of the Xerium’s voting securities by way of acquisition, tender or exchange offer, merger, other business combination, or any other extraordinary transaction (including any recapitalization, restructuring, liquidation or dissolution) or effect or participate in the solicitation of proxies, consents to vote any voting securities of Xerium or seek to include any proposal or nomination in Xerium’s proxy statement, in each case whether acting alone or in concert with other parties for a period ending on the earliest of (i) March 26, 2016, (ii) the date of the consummation of the Transaction, (iii) the date on which a tender or exchange offer is made for the securities of Xerium in connection with the consummation of the Transaction, (iv) the date on which a person or “group” (within the meaning of Section 13(d) of the Securities Exchange Act of 1934 (the “Act”) commences a proxy solicitation in which the person or “group” would, if successful, elect or acquire the ability to elect a majority of Xerium’s Board, (v) the date on which a person or “group” (within the meaning of Section 13(d) under the Act) acquires beneficial ownership (within the meaning of Rule 13d-3 promulgated pursuant to the Act) representing 20% or more of the voting power of the outstanding securities of Xerium, or (vi) the date on which Xerium files for bankruptcy or reorganizes in connection with a bankruptcy or insolvency proceeding.  The NDA further provides that the restrictions described above shall not affect any rights that the Reporting Persons have under the Director Nomination Agreement, dated May 25, 2010, between Xerium and AS Investors, and shall not preclude the Reporting Persons in any way from exercising any rights that it may have with respect to the shares of Common Stock it holds, including, without limitation, the disposition of such shares and the voting of such shares in its sole discretion, including with respect to the election of the members of Xerium’s Board of Directors or on any other matters coming before the shareholders of Xerium.
 
Item 7.                    Material to Be Filed as Exhibits
 
1.  
Confidentiality Agreement, dated March 26, 2015, by and among American Securities LLC and Xerium Technologies, Inc.
 
2.  
Letter to Xerium Technologies, Inc., dated May 4, 2015, by American Securities LLC.  Confidential Treatment has been requested for certain portions of this document.  The omitted portions of this document have been filed separately with the Securities and Exchange Commission.
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
9
 

SIGNATURE
 
After reasonable inquiry and to the best of my knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct.  Pursuant to Rule 13d-1(k)(1), each of the undersigned agrees that this statement is filed on behalf of each of us.
 
 
 
AS INVESTORS, LLC
     
 
By  /s/ Marc Saiontz                                        
 
Name:
Marc Saiontz
 
Title:
Vice President
 
Date:
June 12, 2015
     
 
AMERICAN SECURITIES PARTNERS V, L.P.
By:  American Securities Associates V, LLC, its general partner
     
 
By:   /s/ Michael G. Fisch                                 
 
Name:
Michael G. Fisch
 
Title:
Managing Member
 
Date:
June 12, 2015
 
 
AMERICAN SECURITIES PARTNERS V(B), L.P.
By:  American Securities Associates V, LLC, its general partner
     
 
By:   /s/ Michael G. Fisch                                 
 
Name:
Michael G. Fisch
 
Title:
Managing Member
 
Date:
June 12, 2015
 
 
AMERICAN SECURITIES PARTNERS V(C), L.P.
By:  American Securities Associates V, LLC, its general partner
     
 
By:   /s/ Michael G. Fisch                                 
 
Name:
Michael G. Fisch
 
Title:
Managing Member
 
Date:
June 12, 2015
     
 
AMERICAN SECURITIES ASSOCIATES V, LLC
     
 
By:   /s/ Michael G. Fisch                                 
 
Name:
Michael G. Fisch
 
Title:
Managing Member
 
Date:
June 12, 2015
     
 
AMERICAN SECURITIES LLC
     
 
By:   /s/ Michael G. Fisch                                 
 
Name:
Michael G. Fisch
 
Title:
President and Chief Executive Officer
 
Date:
June 12, 2015
 
 
 
 
 
10


Exhibit 1
Xerium Technologies, Inc.
14101 Capital Boulevard
Youngsville, North Carolina 27596


March 26, 2015

American Securities LLC
299 Park Avenue, 34th Floor
New York, NY 10171
Attention: Marc Saiontz

CONFIDENTIALITY AGREEMENT

Confidentiality Agreement, dated as of the date set forth above (this “Agreement”), between American Securities LLC (the “Receiving Party”) and Xerium Technologies, Inc. and its subsidiaries (collectively, the “Company”).  The Company and the Receiving Party are collectively referred to herein as the “Parties”.

1. In connection with the Parties’ consideration of a possible sale, business combination or other transaction involving the Company and the Receiving Party (the “Transaction”), the Company is prepared to provide to the Receiving Party certain confidential and proprietary information.  All information, data, reports, analyses, compilations, studies, projections, forecasts, records and other materials, regardless of the medium or form of communication and whether prepared before, on or after the date of this Agreement and whether furnished on or after March 16, 2015, that are disclosed or provided by or on behalf of the Company or its Representatives (as defined below) to the Receiving Party or its Representatives in connection with the Transaction (including any and all notes, analyses, compilations, reports, studies, interpretations, memoranda or other documents (regardless of the form thereof) prepared by or on behalf of the Receiving Party or its Representatives and containing, reflecting or based directly or indirectly upon, in whole or in part any such information) is collectively referred to herein as “Evaluation Material.”  As used in this Agreement, “Representatives” means a Party’s affiliates and such Party’s and its affiliates’ directors, officers, members, employees, partners, agents, advisors (including attorneys, accountants, financial advisors and consultants), financing sources and representatives.  The term “person” as used in this Agreement shall be broadly interpreted to include, without limitation, the media and any individual, fund, corporation, company, partnership, limited liability company or other entity or group.  The term “affiliate” as used in this Agreement means as to any person, any other person that, directly or indirectly, is in control of, is controlled by, or is under common control with, such person or that owns more than 50% of the voting stock of such person.  For the avoidance of doubt, the Company and its subsidiaries will not be deemed an affiliate of the Receiving Party for the purposes of this Agreement.
 
2. To maintain the confidentiality of the Evaluation Material, the Receiving Party agrees that the Receiving Party and each of its Representatives with access to such Evaluation Material through the Receiving Party or on its behalf shall:  (a) not use any such Evaluation Material or notes, summaries, analyses, or other material derived in whole or in part therefrom (collectively, “Notes”), except to determine whether the Parties wish to enter into a Transaction and the terms thereof and in the negotiation and
 
 
 
 
 
 
 
consummation of any Transaction; (b) not disclose any such Evaluation Material or Notes, other than to the Receiving Party’s Representatives who have a need to know the information contained therein for the purpose of evaluating, negotiating or consummating a potential Transaction; provided, that the Receiving Party shall inform such Representatives of the confidential nature of the Evaluation Material; provided, further, that the Receiving Party shall obtain written consent from the Company before disclosing Evaluation Material or Notes to such Representatives that are potential debt financing sources; provided, further, that the Receiving Party agrees to be responsible for any breach of the terms of this Agreement applicable to its Representatives by any of its Representatives; and (c) not disclose that the Evaluation Material has been made available to the Receiving Party and its Representatives, that the Receiving Party or its Representatives have inspected any Evaluation Material, or that the Parties may be considering a Transaction or have had, are having or propose to have any discussions with respect thereto (which information described in this clause (c) shall constitute “Evaluation Material” hereunder). The Receiving Party shall, and shall direct its Representatives to, safeguard the Evaluation Material and Notes in the same manner and with the same level of care that the Receiving Party or such Representatives use in safeguarding and/or handling confidential and proprietary information of a similar nature in their respective possessions.
 
3. The Receiving Party agrees that all of its communications regarding the Company, the Evaluation Material or a possible Transaction and all of its requests for additional information concerning the Company, in each case with the Company in connection with the Transaction, will be submitted or directed solely to Merrill Lynch, Pierce, Fenner & Smith Incorporated, the Company’s financial advisor (“BofA Merrill Lynch” or the “Financial Advisor”).
 
4. The Receiving Party agrees not to discuss with or offer to any third party (other than an affiliate of the Receiving Party or a limited partner in funds managed by the Receiving Party) an equity participation in a possible Transaction or any other form of joint acquisition by the Receiving Party and such third party without the prior written consent of the Company. The Receiving Party also agrees that it will not, and it will direct its Representatives acting on its behalf not to, directly or indirectly, collude, conspire, or enter into any agreements with any other prospective purchaser of the Company with respect to (a) whether or not the Receiving Party or such other prospective purchaser will make a bid or offer for the Company or (b) the price that the Receiving Party or such other purchaser may bid or offer for the Company.  The Receiving Party hereby acknowledges and agrees that, without the prior written consent of the Company, no person (other than an affiliate of the Receiving Party or a limited partner in funds managed by the Receiving Party) who is a potential source of equity capital shall be considered a Representative for any purpose hereunder.  The Receiving Party further agrees that neither the Receiving Party nor any of its Representatives on the Receiving Party’s behalf will, without the prior written consent of the Company, directly or indirectly, enter into any agreement, arrangement or understanding with any other person
 
 
 
2
 
 
 
that has or would have the effect of requiring such person to provide the Receiving Party with financing or other potential sources of capital on an exclusive basis in connection with the Transaction.  In addition, the Receiving Party agrees not to discourage financial institutions from being the source of financing for other bidders or potential bidders for the Transaction.
 
5. Evaluation Material will remain the property of the Company at all times.  Disclosure of Evaluation Material under this Agreement will not be construed as, directly or by implication, (a) granting any license under United States or foreign patent, patent application or copyright, or any other intellectual property rights, (b) creating any agency or partnership relationship between the Parties, or (c) granting the right to use the Company’s name, trade names, trademarks, service marks, logos or designs for any purpose, without the Company’s prior written permission.  The Company may elect at any time to terminate further access by the Receiving Party to its Evaluation Material; provided the foregoing shall not affect any rights the Receiving Party has to receive information as a shareholder of the Company.  The Parties agree that upon the written request of the Company, the Receiving Party shall (and shall direct its Representatives to) promptly return to the Company or, at the sole election of the Receiving Party or its Representatives, destroy all Evaluation Material and Notes (including all copies thereof), and the Receiving Party shall, upon written request, confirm in writing to the Company that all such material has been returned or destroyed in compliance with this Agreement.  No such termination will affect the Receiving Party’s obligations hereunder or those of its Representatives, all of which obligations shall continue in effect for the term hereof.  Notwithstanding the foregoing, the Receiving Party and its Representatives may retain copies of Evaluation Material in accordance with internal document retention policies and procedures for IT, legal, regulatory or compliance purposes.
 
6. Notwithstanding anything herein to the contrary, “Evaluation Material” shall not include any such information that (a) becomes generally available to the public other than as a result of a disclosure by the Receiving Party or its Representatives in violation of this Agreement, (b) was known to the Receiving Party or its Representatives (prior to its disclosure hereunder) on a non-confidential basis from a source other than the Company or its Representatives when such source, to the knowledge of the Receiving Party or such Representatives, is not bound by any contractual, legal or fiduciary obligation of confidentiality to the Company with respect to any of such information, (c) becomes available to the Receiving Party or its Representatives on a non-confidential basis from a source other than the Company or its Representatives when such source, to the knowledge of the Receiving Party or such Representatives, is not bound by any contractual, legal or fiduciary obligation of confidentiality to the Company with respect to any of such information or (d) was independently developed by the Receiving Party or its Representatives without use of or reference to Evaluation Material.
 
7. If the Receiving Party or its Representatives are required by law, regulation, or legal or administrative process (by oral questions, interrogatories, requests for information, subpoena, civil investigative demand, or similar legal process) to
 
 
 
3
 
 
 
disclose any Evaluation Material or Notes, it is agreed that the Receiving Party will, to the extent legally permitted, provide the Company with prompt written notice of such requirement(s) so that the Company may seek, at its sole expense, an appropriate protective order or waive compliance with the provisions of this Agreement, and the Receiving Party will reasonably cooperate with the Company’s efforts to obtain any such protective order.  If, failing the entry of a protective order or the receipt of a waiver hereunder, the Receiving Party or its Representatives are, on the advice of counsel, legally compelled to disclose Evaluation Material or Notes, the Receiving Party or its Representatives may disclose only that portion of such Evaluation Material or Notes as, on the advice of counsel, is legally required; provided, that the Receiving Party agrees to use commercially reasonable efforts to obtain assurance that confidential treatment will be afforded to such Evaluation Material or Notes; provided, further that the Receiving Party shall, to the extent legally permitted and reasonably practicable, promptly notify the Company of the Receiving Party’s determination to make such disclosure and the scope and contents of such disclosure.  Notwithstanding the foregoing, the Receiving Party and its Representatives may disclose Evaluation Material and Notes without compliance with the notice and other obligations of this paragraph to the extent required in connection with an inquiry by a regulatory authority, self-regulatory authority, stock exchange or bank examiner not targeting the Company, the Evaluation Material or the Transaction (or targeting the Company, the Evaluation Material or the Transaction to the extent providing such notice is not legally permitted).
 
8. For a period of eighteen (18) months from the date hereof, each of the Receiving Party and the Company agrees that such Party will not, directly or indirectly, solicit for employment or hire any officer, director or other senior management-level employee of the other Party, in each case who such Party first had contacts with or first learned about (other than solely as a result of receiving a roster of employees of the other Party) in connection with its evaluation of the Transaction, except that such Party shall not be precluded from (a) engaging in general solicitations of employment, including through professional search firms or public advertisements (not directed in any way towards the solicitation of the officers, directors or employees described above) with respect to employment opportunities, or hiring any person who responds thereto, or (b) soliciting or hiring any such persons whose employment was terminated by the other Party.
 
9. The Receiving Party understands and agrees that during the Restricted Period (as defined below), the Receiving Party will not (a) effect or seek, offer or propose (whether publicly or otherwise) to effect, or cause or participate in or in any way assist any other person to effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in, (i) any acquisition of any voting securities (or beneficial ownership thereof or direct or indirect interests therein, including without limitation derivatives related thereto) of the Company, (ii) any tender or exchange offer, merger or other business combination involving the Company or its voting securities, (iii) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction
 
 
 
4
 
 
 
with respect to the Company or of its voting securities or (iv) any solicitation of proxies, consents to vote any voting securities of the Company or other agreements or arrangements with respect to any voting securities of the Company or seek to include any proposal or nomination in the Company’s proxy statement; (b) form, join or in any way participate in a group with respect to any of the activities set forth in clause (a) of this sentence; (c) otherwise act, alone or in concert with others, to seek to control or direct the management, the Board or policies of the Company; (d) except as required by law, regulation, stock exchange rule, or legal or administrative order, requirement or decree take any action which would reasonably be expected to require the Company to make a public announcement regarding any of the types of matters set forth in (a) above; or (e) enter into discussions, negotiations, agreements or arrangements with any third party (other than its Representatives) with respect to any of the foregoing.  Notwithstanding the foregoing, if the Company is or hereafter becomes bound by a confidentiality or similar agreement with any other person relating to a possible transaction that does not contain a “standstill” provision or that contains a “standstill” provision that is more favorable to such other person than the terms of this Section 9, then the Company shall promptly notify the Receiving Party of such terms and this Section 9 shall be deemed to be modified to incorporate all such more favorable terms, without any further action by the parties hereto.  Notwithstanding the foregoing, this paragraph shall not (x) restrict negotiations with the Company with respect to a possible transaction as contemplated by this Agreement, (y) affect any rights the Receiving Party has under the Director Nomination Agreement with the Company, dated as of May 25, 2010, or (z) preclude the Receiving Party in any way from exercising any rights it may have with respect to the shares that it holds, including, without limitation, the disposition of such shares and the voting such shares in its sole discretion, including with respect to the election of the members of the board of directors of the Company or on any other matters coming before the shareholders of the Company.  The “Restricted Period” means the period commencing on the date first written above and ending upon the earliest to occur of the following:  (i) one (1) year from the date hereof; (ii) the date on which the Company enters into a definitive agreement with respect to, or publicly announces that it plans to enter into, a Combination Transaction (as defined below), or the Company redeems any rights under, or modifies or agrees to modify, or provides waivers or agrees to effect a waiver under, a shareholder rights plan to facilitate any Combination Transaction; (iii) the date on which a tender or exchange offer which if consummated would constitute a Combination Transaction is made for securities of the Company, (iv) the date on which a person or “group” (within the meaning of Section 13(d) under the Securities Exchange Act of 1934 (“Exchange Act”)) commences a proxy solicitation in which the person or “group” would, if successful, elect or acquire the ability to elect a majority of the Board of Directors of the Company, (v) the date on which a person or “group” (within the meaning of Section 13(d) under the Exchange Act) acquires beneficial ownership (within the meaning of Rule 13d-3 promulgated pursuant to the Exchange Act) representing 20% or more of the voting power of the outstanding securities of the Company, or (vi) the date on which the Company files for bankruptcy or reorganizes in connection with a bankruptcy or insolvency proceeding.  A “Combination Transaction” shall mean a
 
 
 
5
 
 
 
transaction in which (A) a person or “group” (within the meaning of Section 13(d) under the Exchange Act) acquires, directly or indirectly, securities representing 20% or more of the voting power of the outstanding securities of the Company or properties or assets constituting 20% or more of the consolidated assets of the Company and its subsidiaries or (B) in any case not covered by (A), (x) the Company issues securities representing 20% or more of its total voting power, including in the case of (A) and (B) by way of a merger or other business combination with the Company or any of its subsidiaries or (y) the Company engages in a merger or other business combination such that the holders of voting securities of the Company immediately prior to the transaction do not own more than 80% of the voting power of securities of the resulting entity.
 
10. The Company retains the right to determine, in its sole discretion, what information, properties and personnel it wishes to make available to the Receiving Party in connection with the Transaction. The Receiving Party understands and agrees that neither the Company nor any of its Representatives makes any representations or warranties, express or implied, concerning the completeness or accuracy of any of the Evaluation Material, except pursuant to representations and warranties that may be made in a definitive agreement for a Transaction if, when and as executed and subject to such limitations and restrictions as may be specified therein.  The Receiving Party also agrees that neither the Company nor any of its Representatives shall assume any responsibility or have any liability to the Receiving Party or its Representatives resulting from the selection or use of the Evaluation Material or for any errors therein or omissions therefrom.  The Parties further agree that, notwithstanding anything else in this Agreement to the contrary, the Company will not be under any legal obligation of any kind whatsoever to provide any Evaluation Material; provided the foregoing shall not affect any rights the Receiving Party has to receive information as a shareholder of the Company.
 
11. The Parties agree that no contract or agreement providing for any Transaction shall be deemed to exist between the Parties unless and until the Parties execute and deliver a final definitive agreement relating thereto (a “Transaction Agreement”), and the Receiving Party hereby waives, in advance, any claims (including, without limitation, breach of contract) in connection with any Transaction unless and until the Parties shall have executed and delivered a Transaction Agreement; provided the foregoing shall not affect any rights the Receiving Party as a shareholder of the Company.  The Parties also agree that unless and until the Parties shall have executed and delivered a Transaction Agreement, neither Party will be under any legal obligation of any kind whatsoever with respect to a Transaction by virtue of this Agreement except for the matters specifically agreed to herein.  The Parties further acknowledge and agree that (a) the Company shall be free to conduct the process for any Transaction as it in its sole discretion shall determine (including, without limitation, negotiating with any of the prospective buyers and entering into a Transaction Agreement without prior notice to the Receiving Party or to any other person), (b) any procedures relating to any Transaction may be changed at any time without notice to the Receiving Party or any other person,
 
 
 
6
 
 
 
and (c) the Company reserves the right, in its sole discretion, to reject any and all proposals made by the Receiving Party or its Representatives with regard to a Transaction, and to terminate discussions and negotiations at any time.
 
12. The Receiving Party understands and agrees that money damages would not be a sufficient remedy for any breach of this Agreement by the Receiving Party or its Representatives and that the Company shall be entitled to seek specific performance and injunctive or other equitable relief as a remedy for any such breach, and the Receiving Party further agrees to waive any requirement for the security or posting of any bond in connection with such remedy. Such remedy shall not be deemed to be the exclusive remedy for breach of this Agreement, but shall be in addition to all other remedies available at law or equity to the Company.
 
13. Each party hereby acknowledges that it is aware, and that it will advise its respective Representatives who are informed as to the matters which are the subject of this Agreement, that the United States securities laws prohibit any person who has received from an issuer material, non-public information from purchasing or selling securities of such issuer or from communicating such information to any other person under circumstances in which it is reasonably foreseeable that such other person is likely to purchase or sell such securities.
 
14. This Agreement constitutes the entire agreement between the Parties with regard to the subject matter hereof.  No modification, amendment or waiver will be binding without the written consent of the other party hereto.  This Agreement is not assignable by any party without the consent of the other party.  This Agreement inures to the benefit of and be binding upon the respective successors and permitted assigns of the Parties hereto.
15.This Agreement constitutes notice to the Receiving Party that the Company has engaged Latham & Watkins LLP (“L&W”) as its legal counsel in connection with a potential Transaction, and the Receiving Party hereby (a) consents to the continued representation of the Company by L&W in connection with a potential Transaction notwithstanding the fact that L&W may have represented, and may currently or in the future represent, the Receiving Party and/or any of its Representatives and (b) waives any actual or alleged conflict that may arise from its representation of the Company in connection with a potential Transaction; provided that the foregoing shall not include any waiver of privilege or confidentiality owed by L&W to the Receiving Party or its Representatives arising from any such separate representation.
16. It is understood and agreed that no failure or delay by the Company or its subsidiaries or affiliates in exercising any right, power, or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, all of which shall remain in full force and effect.
 
 
 
 
7
 
 
 
 
17. This Agreement is for the benefit of the Company, and shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made and to be performed entirely within the State of New York, without regard to the conflict of law provisions thereof.  The Receiving Party hereby irrevocably and unconditionally consents to submit to the exclusive jurisdiction of the courts of the State of New York and of the United States of America located in the State of New York for any actions, suits or proceedings arising out of or relating to this Agreement and the transactions contemplated hereby (and the Receiving Party agrees not to commence any action, suit or proceeding relating thereto except in such courts, and further agrees that service of any process, summons, notice or document by U.S. registered mail to the Receiving Party’s address set forth above shall be effective service of process for any action, suit or proceeding brought against the Receiving Party in any such court).  The Receiving Party hereby irrevocably and unconditionally waives any objection which it may now or hereafter have to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in the courts of the State of New York or the United States of America located in the State of New York, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.
 
18. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement or any counterpart may be executed and delivered by facsimile copies, each of which shall be deemed to be an original.
 
19. Notwithstanding any other provision of this Agreement, neither the term “Representative” nor the term “affiliate”, when used with respect to the Receiving Party, shall include any of Receiving Party’s affiliates or any of Receiving Party’s affiliates’ operating or portfolio companies or affiliated investment funds that do not receive Evaluation Material or the Notes from or on behalf of the Receiving Party.  The Company acknowledges that the Receiving Party’s or its affiliates’ directors, officers or employees may serve as directors of portfolio companies of investment funds managed by the Receiving Party, and the Company agrees that such portfolio companies will not be deemed to have received Evaluation Material or Notes solely because any such individual serves on the board of such portfolio company; provided, that (i) such individual has not provided such portfolio company or any other director, officer, employee or other representative of such portfolio company with Evaluation Material or the Notes and (ii) such portfolio company does not act at the direction of or with encouragement from the Receiving Party or its Representatives with respect to any matters contemplated hereby.
 
20. The Company hereby acknowledges that affiliated funds managed by the Receiving Party currently invest in the Company and that the Receiving Party, its affiliates and its Representatives (i) may now or in the future evaluate, invest in or do business with competitors or potential competitors of the Company and its affiliates and
 
 
 
8
 
 
 
(ii) may invest in or have general knowledge with respect to the industry in which the Company operates and the topics covered within the Evaluation Material.  Neither the execution of this Agreement nor the receipt of Evaluation Material shall in any way restrict or preclude such activities or use of information absent a specific breach of the provisions contained herein.
 
21. For the avoidance of doubt, in the event there is any conflict or inconsistency between this Agreement and the terms and conditions of any electronic dataroom now or hereafter applicable to the Receiving Party or its Representatives, the terms and conditions of this Agreement shall govern and constitute the terms and conditions with respect to the access of Information by the Receiving Party or its Representatives in any electronic dataroom.
 
22. This Agreement and all obligations hereunder shall terminate eighteen (18) months from the date hereof (except for those provisions hereof carrying a shorter term, which obligations shall terminate on such earlier date herein indicated).
 
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9
 


ACKNOWLEDGED AND AGREED AS OF THE DATE FIRST SET FORTH ABOVE.

 
 
XERIUM TECHNOLOGIES, INC.    AMERICAN SECURITIES LLC   
       
               
               
By:     /s/   Clifford E. Pietrafitta   By:     /s/  Randy Merkelson   
  Name:  Clifford E. Pietrafitta     Name:  Randy Merkelson   
  Title:  CFO      Title:  Associate General Counsel   
 

 
                                                                           


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10


Exhibit 2
 
THE REPORTING PERSONS HAVE REQUESTED AN ORDER FROM THE SECURITIES AND EXCHANGE COMMISSION (THE “COMMISSION”) PURSUANT TO RULE 24B−2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, GRANTING CONFIDENTIAL TREATMENT TO SELECTED PORTIONS. ACCORDINGLY, THE CONFIDENTIAL PORTIONS HAVE BEEN OMITTED FROM THIS EXHIBIT, AND HAVE BEEN FILED SEPARATELY WITH THE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS EXHIBIT WITH “*****”.
 


May 4th, 2015

Xerium Technologies, Inc.
c/o Bank of America Merrill Lynch
14101 Capital Blvd
Youngsville, NC 27596
 

Attention:  Chris Shoemaker 
  Ben Garey 
                      
Dear Sirs:

Thank you for the opportunity to consider a potential transaction with Xerium Technologies, Inc. (“Xerium” or the “Company”).  Based on our longstanding relationship with the Company, continued dialogue with management, and knowledge of the industry, we are enthusiastic about the investment opportunity and would like to indicate our interest in further discussions.

As evidenced by our existing investment, we believe that Xerium fits well within the profile of companies in which American Securities seeks to invest: those with leading, defensible market positions, those operating within industries with stable underlying demand, and those with proven management teams committed to investing in and building their businesses.  Moreover, we believe that our philosophy of partnering with existing management teams, investing with the long-term perspective that our 25-year fund affords, supporting the pursuit of operational excellence and profitable growth, and capitalizing companies conservatively is extremely well-suited to maintaining the Company’s leadership position and to making the investments to continue its profitable growth. Since our initial investment, we have been impressed by management’s success in restructuring and repositioning Xerium for continued growth. Based on our history with the Company, we believe that we are well-positioned to complete our due diligence efficiently and to be a value-added partner post-close.

As you know, American Securities is a private investment firm managing more than $15 billion in committed equity capital.  We are currently investing our sixth fund, which has over $3.6 billion of committed equity, and have already raised our seventh fund with $5.0 billion of committed equity.  As actively engaged investors who work with management on strategic decisions, we aspire to build world-class companies by partnering with and providing resources to support existing management teams.  We have been investing third party capital since 1994 and our consistent track record reflects our commitment to our portfolio companies post-closing and our strong partnership with the men and women who manage our investments.  There is, of course, a great deal more information on our website at www.american-securities.com.

In addition to providing partnership capital, we offer considerable resources to help our portfolio companies achieve their strategic objectives.  Our Resources Group consists of full-time functional experts who are ready to assist management teams in the areas of strategy and market penetration, operational efficiencies, pricing optimization, human capital management, and information technology systems.  Post-closing, the Resources Group professionals are available to assist our management teams in developing and executing their strategies (solely upon their request and at no cost).
 

299 Park Avenue, 34th Floor | New York, New York 10171 | T (212) 476-8000 | F (212) 697-5524
www.american-securities.com
 
 
 


 
We are pleased to submit this non-binding indication of interest, the key elements of which are:

1.  
Valuation – A newly formed affiliate of American Securities proposes to purchase 100% of the fully diluted shares of the Company’s common stock (excluding those shares currently owned by American Securities and its affiliated funds) based on a per-share valuation of *****. This valuation assumes that (i) our due diligence confirms the historical financials and provides comfort with the financial projections of the Company, (ii) the business is delivered with a level of working capital sufficient to support the ongoing operations of the Company, and (iii) the Company is free of debt and all liabilities other than current operating liabilities at closing.

2.  
Financing – We capitalize our companies conservatively to provide them with financial flexibility to pursue growth opportunities and to weather market cycles.  This allows management the ability to focus on growing the business rather than managing the balance sheet and allows them to invest as necessary through all market cycles.  In addition, deploying less leverage allows greater certainty for obtaining financing and speed to close.  The equity component will be provided by funds managed on a discretionary basis by American Securities.

3.  
Management – We have been impressed with the Company’s success under the leadership of its current senior managers and believe the management team is of critical value to the Company.  As such, it is important to us that the management team be equity partners with us in the transaction.  Therefore, we would offer the management team the opportunity to invest in the transaction on the same economic terms as American Securities.  American Securities also offers key managers the opportunity to participate in performance-based equity programs that provide the managers with significant participation in value creation.  We have found that this helps align the interests of American Securities and the management and fosters a team environment.

4.  
Due Diligence and Timing – Our proposal requires completion of a full due diligence review of the Company, including, but not limited to, meetings with management as well as in-depth operational, financial, sales, marketing, legal, regulatory, labor, insurance, benefits, and tax reviews.  There are no unusual corporate, shareholder, or regulatory approvals that would impede our ability to rapidly close a transaction.  Closing of the transaction would be subject to the negotiation and execution of a mutually satisfactory definitive purchase agreement, containing such representations and warranties and other terms as are customary in transactions of this type.

5.  
Confidentiality – Our identity, our proposed purchase price, and the other contents of this indication of interest are strictly confidential and are not to be disclosed to anyone outside the Company, including any other potential purchasers.

6.  
Binding Effect – This letter does not constitute an offer to consummate the transaction described herein and the parties hereto have no legal rights or obligations relating to the proposed transaction.


As stated above, this letter is not a binding offer or agreement by American Securities. Any agreement relating to a potential transaction shall be subject to the completion of satisfactory due diligence as described above and the negotiation and execution of an agreement in definitive form and satisfaction of the conditions set forth therein. As such, our legal counsel has advised us that this letter does not constitute a disclosable event for the Company.

299 Park Avenue, 34th Floor | New York, New York 10171 | T (212) 476-8000 | F (212) 697-5524
www.american-securities.com
THE REPORTING PERSONS HAVE REQUESTED AN ORDER FROM THE SECURITIES AND EXCHANGE COMMISSION (THE “COMMISSION”) PURSUANT TO RULE 24B−2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, GRANTING CONFIDENTIAL TREATMENT TO SELECTED PORTIONS. ACCORDINGLY, THE CONFIDENTIAL PORTIONS HAVE BEEN OMITTED FROM THIS EXHIBIT, AND HAVE BEEN FILED SEPARATELY WITH THE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS EXHIBIT WITH “*****”.
 
 
 


Thank you again for the opportunity to consider a transaction with Xerium.  If you would like any additional information regarding our proposal, please contact Marc Saiontz (212-476-8082, msaiontz@american-securities.com), or Mark Lovett (212-476-8060, mlovett@american-securities.com) at American Securities. We look forward to continuing to work with you.


Very truly yours,


American Securities LLC
 
 
       
Marc Saiontz
Managing Director
  
Mark Lovett
Vice President
  
 
 


 
 
                                                                             
                                           


 
 
 
 
 
 
 
 
 
 
 
 
299 Park Avenue, 34th Floor | New York, New York 10171 | T (212) 476-8000 | F (212) 697-5524
www.american-securities.com
 
THE REPORTING PERSONS HAVE REQUESTED AN ORDER FROM THE SECURITIES AND EXCHANGE COMMISSION (THE
“COMMISSION”) PURSUANT TO RULE 24B−2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, GRANTING CONFIDENTIAL TREATMENT TO SELECTED PORTIONS. ACCORDINGLY, THE CONFIDENTIAL PORTIONS HAVE BEEN OMITTED FROM THIS EXHIBIT, AND HAVE BEEN FILED SEPARATELY WITH THE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS EXHIBIT WITH “*****”.

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