XRM Xerium Technologies New (delisted)

DESCRIPTION OF EXCHANGE NOTES

You can find the definitions of certain terms used in this description under the subheading “— Certain Definitions.” In this description, the word “ Xerium ” refers only to Xerium Technologies, Inc. and not to any of its subsidiaries.

Xerium issued the old notes under an indenture dated as of August 9, 2016 (the “ Indenture ”), among itself, the Guarantors and U.S. Bank National Association, as trustee and collateral agent, in a private transaction that was not subject to the registration requirements of the Securities Act. The exchange notes will be issued under the Indenture and will be identical in all material respects to the old notes, except that the exchange notes will have been registered under the Securities Act and will not bear legends restricting their transfer, and will be free of any obligation regarding registration, including the payment of additional interest upon failure to file or have declared effective an exchange offer registration statement or to consummate an exchange offer by certain dates. Unless specifically stated to the contrary, references to the term “Notes” in the following description applies equally to the old notes and the exchange notes. The old notes and the exchange notes will be treated as a single class for all purposes under the Indenture, including, without limitation, amendments, waivers, redemptions and offers to purchase. The terms of the Notes will include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (the “ Trust Indenture Act ”). The Collateral Documents and the Intercreditor Agreement referred to below under the caption “—Security” define the terms of the agreements that secure the Notes and the Note Guarantees.

The following description is a summary of the material provisions of the Indenture, the Collateral Documents and the Intercreditor Agreement. It does not restate those agreements in their entirety. We urge you to read the Indenture, the Collateral Documents and the Intercreditor Agreement because they, and not this description, define your rights as holders of the Notes. Copies of the Indenture, the Collateral Documents and the Intercreditor Agreement are available as set forth below under “—Additional Information.” Certain defined terms used in this description but not defined below under “— Certain Definitions” have the meanings assigned to them in the Indenture.

The registered holder of a note will be treated as the owner of it for all purposes. Only registered holders will have rights under the Indenture.

Brief Description of the Notes and the Note Guarantees

The Notes

The Notes:

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The Note Guarantees

The Notes are guaranteed by each of the Guarantors. The Note Guarantee of each Guarantor:

Substantially all of the operations of Xerium are conducted through its Subsidiaries. Not all of Xerium’s Subsidiaries guarantee the Notes, and, as described under “— Note Guarantees,” Note Guarantees may be released under certain circumstances. In addition, future Subsidiaries of Xerium may not be required to guarantee the Notes. Claims of creditors of such non-guarantor Subsidiaries, including trade creditors and creditors holding Indebtedness or Note Guarantees issued by such non-guarantor Subsidiaries, and claims of holders of Preferred Stock of such non-guarantor Subsidiaries, generally will have priority with respect to the assets and earnings of such non-guarantor Subsidiaries over the claims of the creditors of Xerium, including holders of Notes. Accordingly, the Notes will be structurally subordinated to creditors (including trade creditors) and holders of Preferred Stock, if any, of such non-guarantor Subsidiaries.

Our non-guarantor Subsidiaries accounted for $249.1 million, or 70%, of our net sales for the twelve months ended September 30, 2016. These non-guarantor Subsidiaries had total assets of $417.2 million, or 73%, of our total assets as of September 30, 2016. Although the Indenture limits the incurrence of Indebtedness and the issuance of Preferred Stock by certain Subsidiaries of Xerium, such limitation is subject to a number of significant qualifications. Moreover, the Indenture does not impose any limitation on the incurrence by such Subsidiaries of liabilities that are not considered Indebtedness under the Indenture. See “— Certain Covenants — Incurrence of Indebtedness and Issuance of Preferred Stock.”

Principal, Maturity and Interest

Xerium issued $480.0 million in aggregate principal amount of the old notes on August 9, 2016. Xerium may issue additional Notes under the Indenture from time to time after this offering. Any issuance of additional Notes is subject to all of the covenants in the Indenture, including the covenants described below under the captions “—Certain Covenants — Incurrence of Indebtedness and Issuance of Preferred Stock” and “—Liens.” The Notes and any additional Notes subsequently issued under the Indenture will be treated as a single class for all purposes under the Indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase. However, if any additional Notes are not fungible with the Notes for federal income tax purposes, they will have a different CUSIP number or numbers and will be represented by one or more different Global Notes (as defined under “—Book Entry, Delivery and Form”). Any additional Notes issued after this offering will be secured by the Collateral, equally and ratably, with the Notes. As a result, the issuance of additional Notes will have the effect of diluting the security interest of the Collateral for the then outstanding Notes. Unless the context otherwise requires, for all purposes of the Indenture and this “Description of Exchange Notes,” references to “Notes” include any additional Notes actually issued. Xerium will issue Notes in denominations of $2,000 and integral multiples of $1,000 in excess of $2,000. The Notes will mature on August 15, 2021.

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Interest on the Notes accrues at the rate of 9.500% per annum and will be payable semi-annually in arrears on February 15 and August 15, commencing on February 15, 2017. Xerium will make each interest payment to the holders of record on the immediately preceding February 1 and August 1.

Interest on the Notes accrues from the Issue Date or, if interest has already been paid, from the date from which it was most recently paid. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.

If an interest payment date falls on a day that is not a Business Day, the interest payment to be made on such interest payment date will be made on the next succeeding Business Day with the same force and effect as if made on such interest payment date, and no additional interest will accrue solely as a result of such delayed payment.

Methods of Receiving Payments on the Notes

If a holder of Notes has given wire transfer instructions to Xerium, Xerium will pay all principal, interest and premium, if any, on that holder’s Notes in accordance with those instructions. All other payments on the Notes will be made at the office or agency of the paying agent and registrar within the City and State of New York unless Xerium elects to make interest payments by check mailed to the holders at their address set forth in the register of holders.

Paying Agent and Registrar for the Notes

The trustee acts as paying agent and registrar for the Notes. Xerium may change the paying agent or registrar without prior notice to the holders of the Notes, and Xerium or any of its Subsidiaries may act as paying agent or registrar.

Transfer and Exchange

A holder may transfer or exchange Notes in accordance with the provisions of the Indenture. The registrar and the trustee may require a holder, among other things, to furnish appropriate endorsements and transfer documents in connection with a transfer of Notes. Holders will be required to pay all taxes due on transfer. Xerium will not be required to transfer or exchange any note selected for redemption. Also, Xerium will not be required to transfer or exchange any note for a period of 15 days before a selection of Notes to be redeemed.

Note Guarantees

Not all of Xerium’s Subsidiaries guarantee the Notes. All of the direct and indirect wholly-owned Domestic Subsidiaries of Xerium existing as of the Issue Date guarantee the Notes. The obligations of each Guarantor under its Note Guarantee are limited as necessary to prevent that Note Guarantee from constituting a fraudulent conveyance under applicable law. This provision may not, however, be effective to protect a Note Guarantee from being voided under fraudulent transfer law, or may reduce the applicable Guarantor’s obligation to an amount that effectively makes its Note Guarantee worthless. If a Note Guarantee was rendered voidable, it could be subordinated by a court to all other indebtedness (including guarantees and other contingent liabilities) of the Guarantor, and, depending on the amount of such indebtedness, a Guarantor’s liability on its Note Guarantee could be reduced to zero. See “Risk Factors — Risks Relating to the Notes — Federal and state fraudulent transfer laws may permit a court to void the exchange notes, the guarantees and the liens granted in respect thereof, subordinate claims in respect of the exchange notes and the guarantees and require noteholders to return payments received, and, if that occurs, you may not receive any payments on the exchange notes.”

Any Guarantor that makes a payment under its Note Guarantee will be entitled upon payment in full of all guaranteed obligations under the Indenture to a contribution from each other Guarantor in an amount equal to such other Guarantor’s pro rata portion of such payment based on the respective net assets of all the Guarantors at the time of such payment determined in accordance with GAAP.

Security

General

Pursuant to one or more Collateral Documents made by Xerium and the Guarantors in favor of the collateral agent for the benefit of the Notes Secured Parties, the Notes, the Note Guarantees and all other Obligations under the other Indenture Documents are secured by a Lien on substantially all of the assets of Xerium and the Guarantors, including a pledge of the Capital Stock of each Subsidiary owned directly by Xerium or a Guarantor.

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“ ABL Priority Collateral ” means all Collateral consisting of the following (including for the avoidance of doubt, any such assets that, but for the application of Section 552 of the Bankruptcy Code (or any similar provision of any foreign Bankruptcy Law) would be ABL Priority Collateral):

“ Notes Priority Collateral ” means all Collateral (including for the avoidance of doubt, any such assets that, but for the application of Section 552 of the Bankruptcy Code (or any similar provision of any foreign Bankruptcy Law) would be Notes Priority Collateral) other than ABL Priority Collateral.

Notwithstanding the foregoing, the Collateral does not include (collectively, the “ Excluded Assets ”):

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provided , that notwithstanding anything to the contrary, to the extent that Xerium or a Guarantor grants a Lien on any asset or right described in clause (1) through (8) or (10) above to secure any Obligations under the ABL Credit Agreement or any other Credit Facility or any other ABL Obligations or any Obligations under any Pari Passu Payment Lien Documents or any other Pari Passu Payment Lien Obligations, such asset or right shall not constitute an “Excluded Asset.”

So long as no Event of Default has occurred and is continuing, subject to certain terms and conditions, Xerium and the Guarantors will be entitled to receive all cash dividends, interest and other payments made upon or with respect to the Collateral and to exercise any voting and other consensual rights pertaining to the Collateral.

Upon the occurrence and during the continuance of an Event of Default, subject to terms of the Intercreditor Agreement (as defined below):

Subject to terms of the Intercreditor Agreement, the collateral agent acting at the direction of the trustee will determine the circumstances and manner in which the Collateral will be disposed of, including, but not limited to, the determination of whether to release all or any portion of the Collateral from the Liens created by the Collateral Documents and whether to foreclose on the Collateral following an Event of Default that has occurred and is continuing.

All of the Liens created by the Indenture and the Collateral Documents to secure the Obligations of Xerium and the Guarantors under the Notes and the Note Guarantees will be immediately and automatically released upon:

In addition, the collateral agent will immediately and automatically release from the Lien created by the Collateral Documents:

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provided that, notwithstanding any other provision of the Indenture or the Collateral Documents, Liens securing all or substantially all of the Collateral may be released only pursuant to the terms of the previous paragraph.

The collateral agent’s ability to foreclose on the Collateral may be subject to lack of perfection, the consent of third parties, prior liens and practical problems associated with the realization of the collateral agent’s Lien on the Collateral.

Certain security interests in the Collateral may not be in place on the issue date of the exchange notes or may not be perfected on the issue date of the exchange notes. For example, some of the instruments and other documents, such as Mortgages and account control agreements, required to perfect a security interest may not be delivered and/or, if applicable, recorded on or prior to such date. To the extent any such security interest is not perfected by such date, Xerium and the Guarantors will use their commercially reasonable efforts to perform all acts and things that may be required, including obtaining any required consents from third parties, to have all security interests in the Collateral duly created and enforceable and perfected, to the extent required by the Collateral Documents, promptly following the issue date of the exchange notes (but within 120 days following the Issue Date). Xerium and the Guarantors will not be required to: (a) cause the collateral agent to have “control” with respect to (i) any deposit account that is exclusively a payroll account, zero balance employee benefit account or other employee wage and benefit payment account that Xerium or any Guarantor may hold in trust for the benefit of an unaffiliated third party, (ii) any deposit account used exclusively for payment of payroll taxes or tax accounts, including, without limitation, sales tax accounts, (iii) escrow accounts, (iv) fiduciary or trust accounts, (v) zero-balance accounts or (vi) an individual deposit account or securities account that has an average monthly balance of less than $1,500,000; or (b) perfect a security interest in (i) commercial tort claims that do not exceed $1,000,000 individually or (ii) letter of credit rights that do not exceed $1,000,000 individually. Notwithstanding anything to the contrary in the immediately preceding sentence, Xerium and the Guarantors will be required, in the case of clause (a) of the preceding sentence, to cause the collateral agent to have “control” with respect to such accounts to the extent that (and at such time as) the ABL Agent has “control” with respect to such accounts and, in the case of clause (b) of the preceding sentence, to perfect security interests in any commercial tort claims or letter of credit rights to the extent that (and at such time as) a security interest securing any ABL Obligations is perfected, in each case, subject to the terms of the Intercreditor Agreement.

No appraisals of any Collateral have been prepared in connection with this offering of Notes. The value of the Collateral at any time will depend on market and other economic conditions, including the availability of suitable buyers for the Collateral. In the event of a foreclosure, liquidation, bankruptcy or similar proceeding, no assurance can be given that the proceeds from any sale or liquidation of the Collateral will be sufficient to pay Xerium’s Obligations under the Notes or the Guarantors’ Obligations under the Note Guarantees, in full or at all. See “Risk Factors—Risks Related to the Notes—The value of the collateral may not be sufficient to satisfy all the obligations secured by such collateral. As a result, holders of the exchange notes may not receive full payment on their exchange notes following an event of default.”

If the proceeds of any of the Collateral were not sufficient to repay all amounts due on the Notes, the holders of the Notes (to the extent not repaid from the proceeds of the sale of the Collateral) would have only an unsecured claim against the remaining assets of Xerium and the Guarantors.

Intercreditor Agreement

In connection with the issuance of the old notes, the collateral agent entered into an intercreditor agreement (the “Intercreditor Agreement”), on behalf of itself and the other PPE Secured Parties (including the holders of the Notes), with the ABL Agent, on behalf of itself and the other ABL Secured Parties, which agreement was acknowledged by Xerium and the Guarantors (the Guarantors, together with Xerium, are referred to hereinafter as the “ Credit Parties ”). The Intercreditor Agreement defines the relative rights and related matters of the ABL Secured Parties and the PPE Secured Parties with respect to the Collateral. The Intercreditor Agreement applies to the exchange notes. The following description is a summary of the principal terms that are contained in the Intercreditor Agreement, rather than a complete and definitive description of all of the terms of the Intercreditor Agreement.

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Lien Priorities

Lien Priority

(a) Notwithstanding (i) the date, time, method, manner or order of grant, attachment or perfection (including any defect or deficiency or alleged defect or deficiency in any of the foregoing) of any Liens granted to the ABL Secured Parties in respect of all or any portion of the Collateral or of any Liens granted to the PPE Secured Parties in respect of all or any portion of the Collateral and regardless of how any such Lien was acquired (whether by grant, statute, operation of law, subrogation or otherwise), (ii) the order or time of filing or recordation of any document or instrument for perfecting the Liens in favor of the ABL Agent or the collateral agent (or ABL Secured Parties or PPE Secured Parties) in any Collateral, (iii) any provision of the UCC, Bankruptcy Laws or any other applicable law, or of the ABL Documents or the PPE Documents (including the Indenture Documents), (iv) whether the ABL Agent or the collateral agent, in each case, either directly or through agents, holds possession of, or has control over, all or any part of the Collateral, (v) the date on which the ABL Obligations or the PPE Obligations (including the Notes Obligations) are advanced or made available to the Credit Parties, (vi) the fact that any such Liens in favor of the ABL Agent or the ABL Lenders or the collateral agent or the other PPE Secured Parties securing any of the ABL Obligations or PPE Obligations, respectively, are (x) subordinated to any Lien securing any obligation of any Credit Party other than the PPE Obligations or the ABL Obligations, respectively, or (y) otherwise subordinated, voided, avoided, invalidated or lapsed, or (vii) any other circumstance of any kind or nature whatsoever, the ABL Agent, on behalf of itself and the ABL Secured Parties, and the collateral agent, on behalf of itself and the PPE Secured Parties, agree that:

(b) Notwithstanding any failure by any ABL Secured Party or PPE Secured Party to perfect its security interests in the Collateral or any avoidance, invalidation, priming or subordination by any third party or court of competent jurisdiction of the security interests in the Collateral granted to the ABL Secured Parties or the PPE Secured Parties, the priority and rights as between the ABL Secured Parties and the PPE Secured Parties with respect to the Collateral shall be as set forth in the Intercreditor Agreement.

(c) Each Agent, for and on behalf of itself and the Secured Parties that such Agent represents, acknowledges and agrees that the other Agent, for the benefit of itself and the Secured Parties that the other Agent represents, has been, or may be, granted Liens upon all of the Collateral in which such Agent has been granted Liens and such Agent, for and on behalf of itself and the Secured Parties that such Agent represents, consents thereto. The subordination of Liens by each Agent in favor of the other Agent as set forth in the Intercreditor Agreement shall not be deemed to subordinate such Agent’s Liens to the Liens of any other Person, nor shall such subordination be affected by the subordination of such Liens to any Lien of any other Person.

(d) The Intercreditor Agreement shall not restrict any of the ABL Agent and the other ABL Secured Parties’ rights and remedies (including without limitation, the rights and remedies of J.P. Morgan Europe Limited, as European Collateral Agent and European Administrative Agent under the ABL Documents (in such capacities, together with any successors and assigns, referred to herein as the “ European Agents ”)) with respect to the assets of any Foreign Subsidiary of Xerium for so long as any such assets do not constitute Collateral that secures the Notes or any Note Guarantee. In recognition of the foregoing, each Agent will acknowledge and agree that, notwithstanding any provision thereof, for purposes of the Intercreditor Agreement (i) the term “Collateral” shall not include the assets or property of any Foreign Subsidiary of Xerium that is a borrower or guarantor under (or in respect of) the ABL Credit Agreement, (ii) no Foreign Subsidiary of Xerium is a guarantor under (or in respect of) the Indenture unless it shall have executed a supplemental indenture to the Indenture pursuant to which it shall have become a Guarantor thereunder, (iii) no such Foreign Subsidiary constitutes a “Credit Party” under the Intercreditor Agreement unless it shall have executed a supplemental indenture to the Indenture pursuant to which it shall have become a Guarantor thereunder and (iv) until such time, if any, as any of the assets of a Foreign Subsidiary of Xerium also constitutes Collateral that secures the Notes or any Note Guarantee, the ABL Agent and the other ABL Secured Parties (including, for the avoidance of doubt, the European Agents) shall be free to deal with the assets and properties of any such Foreign Subsidiary (including the exercise of any remedies with respect thereto) and retain and/or apply proceeds thereof without regard to any of the provisions or restrictions set forth in the Intercreditor Agreement.

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Waiver of Right to Contest Liens

Each Agent, for and on behalf of itself and the Secured Parties that such Agent represents, agrees that such Agent and the Secured Parties that such Agent represents shall not (and will waive any right to) take any action to contest or challenge (or assist or support any other Person in contesting or challenging), directly or indirectly, whether or not in any proceeding (including in any Insolvency Proceeding), the validity, priority, enforceability or perfection of the Secured Obligations of the other Agent and the Secured Parties that the other Agent represents or the Liens of the other Agent and the Secured Parties that the other Agent represents in respect of any of the Collateral or the provisions of the Intercreditor Agreement. Each Agent, for itself and on behalf of the Secured Parties that such Agent represents, further agrees that neither such Agent nor the Secured Parties that such Agent represents will take any action that would interfere with any Exercise of Secured Creditor Remedies undertaken by the other Agent or any Secured Party that the other Agent represents under the Credit Documents that evidences or governs the Secured Obligations of the other Agent and the Secured Parties that the other Agent represents with respect to the Priority Collateral that secures such Secured Obligations. Each Agent, for itself and on behalf of the Secured Parties that such Agent represents, waives any and all rights such Agent or the Secured Parties that such Agent represents may have as a junior lien creditor or otherwise to contest, protest, object to, or interfere with the manner in which the other Agent or any Secured Party that the other Agent represents seeks to enforce its Liens in any Priority Collateral that secures the Secured Obligations of the other Agent and the Secured Parties. The foregoing shall not be construed to prohibit either Agent from enforcing the provisions of the Intercreditor Agreement or otherwise acting in accordance with the Intercreditor Agreement.

Remedies Standstill

(a) The collateral agent, on behalf of itself and the PPE Secured Parties, agrees that, from the date of the Intercreditor Agreement until the earlier of (i) the date which is 270 days after the ABL Agent’s receipt of an Enforcement Notice from the collateral agent (the “ PPE Enforcement Date ”), or (ii) the date upon which the Discharge of ABL Obligations shall have occurred, neither the collateral agent nor any PPE Secured Party will Exercise Any Secured Creditor Remedies with respect to any of the ABL Priority Collateral without the written consent of the ABL Agent, and will not take, receive or accept any proceeds of ABL Priority Collateral, it being understood and agreed that the temporary deposit of proceeds of ABL Priority Collateral in a deposit account controlled by the collateral agent shall not constitute a breach of the Intercreditor Agreement so long as such proceeds are promptly (but in no event later than five Business Days after receipt) remitted to the ABL Agent. From and after the date upon which the Discharge of ABL Obligations shall have occurred (or prior thereto upon the occurrence of the PPE Enforcement Date), the collateral agent or any PPE Secured Party may Exercise Any Secured Creditor Remedies under the PPE Documents or applicable law as to any ABL Priority Collateral; provided , however , that any Exercise of Secured Creditor Remedies with respect to any Collateral by the collateral agent or the PPE Secured Parties is at all times subject to the provisions of the Intercreditor Agreement; provided further , that the collateral agent shall not Exercise Any Secured Parties’ Remedies against the ABL Priority Collateral after the PPE Enforcement Date and prior to Discharge of ABL Obligations (A) at any time the ABL Agent or the ABL Secured Parties have commenced and are diligently pursuing an Exercise of Secured Creditor Remedies against a material portion of the ABL Priority Collateral, (B) at any time that any Credit Party is then a debtor under or with respect to (or otherwise subject to) any Insolvency Proceeding, or (C) if the “Event of Default” under the PPE Documents is waived in accordance with the terms of the PPE Documents.

(b) The ABL Agent, on behalf of itself and the ABL Secured Parties, agrees that, from the date of the Intercreditor Agreement until the earlier of (i) the date which is 180 days after the collateral agent’s receipt of an Enforcement Notice from the ABL Agent (the “ ABL Enforcement Date ”), or (ii) the date upon which the Discharge of PPE Obligations shall have occurred, neither the ABL Agent nor any ABL Secured Party will Exercise Any Secured Creditor Remedies with respect to the Notes Priority Collateral without the written consent of the collateral agent, and will not take, receive or accept any proceeds of the Notes Priority Collateral, it being understood and agreed that the temporary deposit of proceeds of Notes Priority Collateral in a deposit account controlled by the ABL Agent shall not constitute a breach of the Intercreditor Agreement so long as such proceeds are remitted to the collateral agent in accordance with “—Actions of the Parties—Tracing of and Priorities in Proceeds” or paragraph (a) of “—Application of Proceeds— Application of Proceeds” below. From and after the date upon which the Discharge of PPE Obligations shall have occurred (or prior thereto upon the occurrence of the ABL Enforcement Date), the ABL Agent or any ABL Secured Party may Exercise Any Secured Creditor Remedies under the ABL Documents or applicable law as to any Notes Priority Collateral; provided , however , that any Exercise of Secured Creditor Remedies with respect to any Collateral by the ABL Agent or the ABL Secured Parties is at all times subject to the provisions of the Intercreditor Agreement; provided further , that the ABL Agent shall not Exercise Any Secured Parties’ Remedies with respect to the Notes Priority Collateral after the ABL Enforcement Date and prior to the Discharge of PPE Obligations (A) at any time the collateral agent or the PPE Secured Parties have commenced and are diligently pursuing an Exercise of Secured Creditor Remedies against any material portion of the Notes Priority Collateral, (B) at any time that any Credit Party is then a debtor under or with respect to (or otherwise subject to) any Insolvency Proceeding or (C) if the “Event of Default” under the ABL Credit Agreement is waived in accordance with the terms of the ABL Credit Agreement.

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(c) Notwithstanding the provisions of paragraph (a) or (b) of this “—Remedies Standstill” or any other provision of the Intercreditor Agreement, nothing contained in the Intercreditor Agreement shall be construed to prevent any Agent or any Secured Party from (i) filing a claim or statement of interest with respect to the ABL Obligations or PPE Obligations owed to it in any Insolvency Proceeding commenced by or against any Credit Party, (ii) taking any action (not adverse to the priority status of the Liens of the other Agent or other Secured Parties on the Collateral in which such other Agent or other Secured Party has a priority Lien or the rights of the other Agent or any of the other Secured Parties to Exercise Any Secured Creditor Remedies in respect thereof) in order to create, perfect, preserve or protect (but not enforce) its Lien on any Collateral, (iii) filing any necessary or responsive pleadings in opposition to any motion, adversary proceeding or other pleading filed by any Person objecting to or otherwise seeking disallowance of the claim or Lien of such Agent or Secured Party or (iv) voting on any plan of reorganization or file any proof of claim in any Insolvency Proceeding of any Credit Party, in each case (i) through (iv) above to the extent not inconsistent with the express terms of the Intercreditor Agreement.

Exercise of Rights

(a) No Other Restrictions . Except as expressly set forth in the Intercreditor Agreement, each PPE Secured Party and each ABL Secured Party shall have any and all rights and remedies it may have as a creditor under applicable law, including the right to the Exercise of Secured Creditor Remedies; provided , however , that the Exercise of Secured Creditor Remedies with respect to the Collateral shall be subject to the Lien Priority and to the provisions of the Intercreditor Agreement. The ABL Agent may enforce the provisions of the ABL Documents, the collateral agent may enforce the provisions of the PPE Documents and each may Exercise Any Secured Creditor Remedies, all in such order and in such manner as each may determine in the exercise of its sole discretion, consistent with the terms of the Intercreditor Agreement and mandatory provisions of applicable law; provided , however , that each of the ABL Agent and the collateral agent agrees to provide to the other (x) an Enforcement Notice prior to the commencement of an Exercise of Any Secured Creditor Remedies and (y) copies of any notices that it is required under applicable law to deliver to any Credit Party; provided further , however , that the ABL Agent’s failure to provide the Enforcement Notice (other than in connection with “—Actions of the Parties—Inspection and Access Rights”) or any such copies to the collateral agent shall not impair any of the ABL Agent’s rights under the Intercreditor Agreement or under any of the ABL Documents and the collateral agent’s failure to provide the Enforcement Notice or any such copies to the ABL Agent shall not impair any of the collateral agent’s rights under the Intercreditor Agreement or under any of the PPE Documents. Each of the collateral agent, each PPE Secured Party, the ABL Agent and each ABL Secured Party agrees that it will not institute any suit or other proceeding or assert in any suit, Insolvency Proceeding or other proceeding any claim, in the case of the collateral agent and each PPE Secured Party, against either the ABL Agent or any other ABL Secured Party, and in the case of the ABL Agent and each other ABL Secured Party, against either the collateral agent or any other PPE Secured Party, seeking damages from, or other relief by way of specific performance, instructions or otherwise, with respect to, any action taken or omitted to be taken by such Person with respect to the Collateral which is consistent with the terms of the Intercreditor Agreement, and no such Agent shall be liable for any such action taken or omitted to be taken.

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(a) It is the anticipation of the Agents that, until the date upon which the Discharge of ABL Obligations shall have occurred, no PPE Secured Party shall acquire or hold any Lien on any assets of any Credit Party securing any PPE Obligation which assets are not also subject to the Lien of the ABL Agent under the ABL Documents. If any PPE Secured Party shall acquire or hold any Lien on any assets of any Credit Party securing any PPE Obligation which assets are not also subject to the Lien of the ABL Agent under the ABL Documents, then the collateral agent (or the relevant PPE Secured Party) shall, without the need for any further consent of any other PPE Secured Party or Credit Party and notwithstanding anything to the contrary in any other PPE Document, be deemed to also hold and have held such Lien as agent or bailee for the benefit of the ABL Agent as security for the ABL Obligations (subject to the Lien Priority and other terms of the Intercreditor Agreement) and shall promptly notify the ABL Agent in writing of the existence of such Lien upon becoming aware thereof.

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(b) It is the anticipation of the Agents, that until the date upon which the Discharge of PPE Obligations shall have occurred, no ABL Secured Party shall acquire or hold any Lien on any assets of any Credit Party (other than a Foreign Subsidiary of Xerium) securing any ABL Obligation which assets are not also subject to the Lien of the collateral agent under the PPE Documents. If any ABL Secured Party shall acquire or hold any Lien on any assets of any Credit Party (other than a Foreign Subsidiary of Xerium) securing any ABL Obligation which assets are not also subject to the Lien of the collateral agent under the PPE Documents, then the ABL Agent (or the relevant ABL Secured Party) shall, without the need for any further consent of any other ABL Secured Party, Xerium or any Guarantor and notwithstanding anything to the contrary in any other ABL Document be deemed to also hold and have held such Lien as agent or bailee for the benefit of the collateral agent as security for the PPE Obligations (subject to the Lien Priority and other terms of the Intercreditor Agreement) and shall promptly notify the collateral agent in writing of the existence of such Lien upon becoming aware thereof.

Waiver of Marshalling

(a) Until the Discharge of ABL Obligations, the collateral agent, on behalf of itself and the PPE Secured Parties, agrees not to assert and waives, to the fullest extent permitted by law, any right to demand, request, plead or otherwise assert or otherwise claim the benefit of, any marshalling, appraisal, valuation or other similar right that may otherwise be available under applicable law with respect to the ABL Priority Collateral or any other similar rights a junior secured creditor may have under applicable law.

(b) Until the Discharge of PPE Obligations, the ABL Agent, on behalf of itself and the ABL Secured Parties, agrees not to assert and waives, to the fullest extent permitted by law, any right to demand, request, plead or otherwise assert or otherwise claim the benefit of, any marshalling, appraisal, valuation or other similar right that may otherwise be available under applicable law with respect to the Notes Priority Collateral or any other similar rights a junior secured creditor may have under applicable law.

Actions of the Parties

Certain Actions Permitted

The collateral agent and the ABL Agent may make such demands or file such claims in respect of the PPE Obligations or the ABL Obligations, as applicable, as are necessary to prevent the waiver or bar of such claims under applicable statutes of limitations or other statutes, court orders, or rules of procedure at any time. Nothing in the Intercreditor Agreement shall prohibit the receipt by the collateral agent or any PPE Secured Party of the required payments of interest, principal and other amounts owed in respect of the PPE Obligations so long as such receipt is not the direct or indirect result of the Exercise of any Secured Creditor Remedies by the collateral agent or any PPE Secured Party with respect to any of the ABL Priority Collateral or enforcement in contravention of the Intercreditor Agreement of any Lien held by any of them. Nothing in the Intercreditor Agreement shall prohibit the receipt by the ABL Agent or any ABL Secured Party of the required payments of interest, principal and other amounts owed in respect of the ABL Obligations so long as such receipt is not the direct or indirect result of the Exercise of any Secured Creditor Remedies by the ABL Agent or any ABL Secured Party with respect to any of the Notes Priority Collateral or enforcement in contravention of the Intercreditor Agreement of any Lien held by any of them. None of the collateral agent, PPE Secured Parties, ABL Agent or ABL Secured Parties shall take any other action in connection with the PPE Obligations or the ABL Obligations in contravention of the terms of the Intercreditor Agreement (including if for any reason such party is deemed an unsecured or undersecured creditor with respect to such PPE Obligations or ABL Obligations, as applicable).

Agent for Perfection

The ABL Agent, for and on behalf of itself and each ABL Secured Party, and the collateral agent, for and on behalf of itself and each PPE Secured Party, as applicable, each agree to hold all Collateral in their respective possession, custody, or control (including as defined in Sections 9-104, 9-105, 9-106, 9-107 and 8-106 of the UCC) (or in the possession, custody, or control of agents or bailees for either) as gratuitous bailee for the other solely for the purpose of perfecting the security interest granted to each in such Collateral, subject to the terms and conditions of this “—Agent for Perfection.” Solely with respect to any Control Collateral under the control (within the meaning of Section 9-104 of the UCC) of the ABL Agent or the collateral agent, the ABL Agent and the collateral agent, respectively, agrees to also hold control over such Control Collateral as gratuitous agent for the PPE Secured Parties and the ABL Secured Parties, subject to the terms and conditions of this “—Agent for Perfection.” None of the ABL Agent, the ABL Secured Parties, the collateral agent, or the PPE Secured Parties, as applicable, shall have any obligation whatsoever to the others to assure that the Collateral is genuine or owned by Xerium, any Guarantor, or any other Person or to preserve rights or benefits of any Person. The duties or responsibilities of the ABL Agent and the collateral agent under this “—Agent for Perfection” are and shall be limited solely to holding or maintaining control of the Control Collateral as gratuitous bailee for the other Agent for purposes of perfecting the Lien held by the collateral agent or the ABL Agent, as applicable. The ABL Agent is not and shall not be deemed to be a fiduciary of any kind for the PPE Secured Parties or any other Person. Without limiting the generality of the foregoing, except as expressly provided in the Intercreditor Agreement, the ABL Secured Parties shall not be obligated to see to the application of any proceeds of the Notes Priority Collateral deposited into any deposit account or be answerable in any way for the misapplication thereof. The collateral agent is not and shall not be deemed to be a fiduciary of any kind for the ABL Secured Parties, or any other Person. Without limiting the generality of the foregoing, except as expressly provided in the Intercreditor Agreement, the PPE Secured Parties shall not be obligated to see to the application of any proceeds of the ABL Priority Collateral deposited into any deposit account or be answerable in any way for the misapplication thereof.

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Sharing of Information and Access

(a) In the event that the ABL Agent shall, in the exercise of its rights under the ABL Collateral Documents or otherwise, receive possession or control of any books and records of any Credit Party which contain information identifying or pertaining to the Notes Priority Collateral, the ABL Agent shall, upon request from the collateral agent and as promptly as practicable thereafter, either make available to the collateral agent such books and records for inspection and duplication or provide to the collateral agent copies thereof. In the event that the collateral agent shall, in the exercise of its rights under the Collateral Documents or otherwise, receive possession or control of any books and records of any Credit Party which contain information identifying or pertaining to any of the ABL Priority Collateral, the collateral agent shall, upon request from the ABL Agent and as promptly as practicable thereafter, either make available to the ABL Agent such books and records for inspection and duplication or provide the ABL Agent copies thereof.

(b) Each Agent upon the written request of the other Agent shall, upon prior written notice to Xerium, provide such Agent with copies of Credit Documents, other than any fee letters and all amendments thereto, provided that the failure to provide such Credit Documents or Amendments shall impose no liability on any Agent.

Insurance

Proceeds of Collateral include insurance proceeds and, therefore, the Lien Priority shall govern the ultimate disposition of casualty insurance proceeds. The ABL Agent and the collateral agent shall each be named as additional insured or loss payee, as applicable, with respect to all insurance policies relating to the Collateral in the manner required in the PPE Documents or the ABL Credit Agreement, as applicable. The ABL Agent shall have the sole and exclusive right, as against the collateral agent, to adjust settlement of insurance claims in the event of any covered loss, theft or destruction of any of the ABL Priority Collateral. The collateral agent shall have the sole and exclusive right, as against the ABL Agent, to adjust settlement of insurance claims in the event of any covered loss, theft or destruction of any of the Notes Priority Collateral. If any insurance claim includes both ABL Priority Collateral and Notes Priority Collateral, the insurer will not settle such claim separately with respect to ABL Priority Collateral and Notes Priority Collateral, and if the Agents are unable after negotiating in good faith to agree on the settlement for such claim, either Agent may apply to a court of competent jurisdiction to make a determination as to the settlement of such claim, and the court’s determination shall be binding upon the Agents. All proceeds of such insurance shall be remitted to the ABL Agent or the collateral agent, as the case may be, subject, in each case, to the terms of their respective Credit Documents, and each of the collateral agent and ABL Agent shall cooperate (if necessary) in a reasonable manner in effecting the payment of insurance proceeds in accordance with “—Application of Proceeds—Application of Proceeds.”

No Additional Rights for the Credit Parties under the Intercreditor Agreement

Except as provided in “—Inspection and Access Rights” below, if any ABL Secured Party or PPE Secured Party shall enforce its rights or remedies in violation of the terms of the Intercreditor Agreement, the Credit Parties shall not be entitled to use such violation as a defense to any action by any ABL Secured Party or PPE Secured Party, nor to assert such violation as a counterclaim or basis for set off or recoupment against any ABL Secured Party or PPE Secured Party.

Inspection and Access Rights

(a) Without limiting any rights the ABL Agent or any other ABL Secured Party may otherwise have under applicable law or by agreement, in the event of any liquidation of the ABL Priority Collateral (or any other Exercise of Any Secured Creditor Remedies by the ABL Agent) and whether or not the collateral agent or any other PPE Secured Party has commenced and is continuing to Exercise Any Secured Creditor Remedies of the collateral agent with respect to the Notes Priority Collateral or otherwise, the ABL Agent or any other Person (including any Credit Party) acting with the consent, or on behalf, of the ABL Agent, shall have the right (a) during the Use Period during normal business hours on any Business Day, to access ABL Priority Collateral that (i) is stored or located in or on, (ii) has become an accession with respect to (within the meaning of Section 9- 335 of the Uniform Commercial Code), or (iii) has been commingled with (within the meaning of Section 9-336 of the Uniform Commercial Code) Notes Priority Collateral, and (b) during the Use Period, shall have the irrevocable right to use the Notes Priority Collateral (including, without limitation, equipment, intellectual property and general intangibles) on a rent-free, royalty-free basis, each of the foregoing solely for the limited purposes of assembling, inspecting, copying or downloading information stored on, taking actions to perfect its Lien on, completing a production run of inventory involving, taking possession of, moving, preparing and advertising for sale, selling (by public auction, private sale or a “store closing”, “going out of business” or similar sale, whether in bulk, in lots or to customers in the ordinary course of business or otherwise and which sale may include augmented inventory of the same type sold in any Credit Party’s business), storing or otherwise dealing with the ABL Priority Collateral, in each case without notice to, the involvement of or interference by any PPE Secured Party (and whether or not the collateral agent or any PPE Secured Party has commenced and is continuing to Exercise any Secured Creditor Remedies) or liability to any PPE Secured Party; provided , however , that the expiration of the Use Period shall be without prejudice to the sale or other disposition of the ABL Priority Collateral in accordance with the Intercreditor Agreement and applicable law. In the event that any ABL Secured Party has commenced and is continuing the Exercise of Any Secured Creditor Remedies with respect to any ABL Priority Collateral or any other sale or liquidation of the ABL Priority Collateral has been commenced by a Credit Party (with the consent of the ABL Agent), the collateral agent may not sell, assign or otherwise transfer the related Notes Priority Collateral prior to the expiration of the Use Period, unless the purchaser, assignee or transferee thereof agrees in writing to be bound by the provisions of this “—Inspection and Access Rights.”

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(b) The ABL Agent and the ABL Secured Parties shall not be obligated to pay any amounts to the collateral agent or the PPE Secured Parties (or any person claiming by, through or under the PPE Secured Parties, including any purchaser of the Notes Priority Collateral) or to the Credit Parties, for or in respect of the use by the ABL Agent and the ABL Secured Parties of the Notes Priority Collateral and none of the ABL Agent or the ABL Secured Parties shall be obligated to secure, protect, insure or repair any such Notes Priority Collateral (other than for damages caused by the ABL Agent, the ABL Secured Parties or their respective employees, agents and representatives (other than as a result from ordinary wear and tear of such Notes Priority Collateral)). The ABL Agent and the ABL Secured Parties shall not have any liability to the collateral agent or the PPE Secured Parties (or any person claiming by, through or under the collateral agent or the PPE Secured Parties, including any purchaser of the Notes Priority Collateral) as a result of any condition (including environmental condition, claim or liability) on or with respect to the Notes Priority Collateral other than those arising from the gross negligence or willful misconduct of the ABL Agent, the ABL Secured Parties or their respective employees, agents and representatives, and the ABL Agent and the ABL Secured Parties shall have no duty or liability to maintain the Notes Priority Collateral in a condition or manner (taking into account ordinary wear and tear of such Notes Priority Collateral) better than that in which it was maintained prior to the use thereof by the ABL Agent and the ABL Secured Parties.

(c) The ABL Secured Parties shall (i) use the Notes Priority Collateral in accordance with applicable law, (ii) insure or cause to be insured for damage to property and liability to persons, including property and liability insurance for the benefit of the PPE Secured Parties, and (iii) reimburse the PPE Secured Parties for any injury or damage to Persons or property (ordinary wear-and-tear excepted) caused by the acts or omissions of Persons under their control arising from the gross negligence or willful misconduct of any such Person; provided , however , that the ABL Secured Parties will not be liable for any diminution in the value of the Notes Priority Collateral caused by the absence of the ABL Priority Collateral therefrom or from the use of the Notes Priority Collateral.

(d) The collateral agent and the PPE Secured Parties shall use commercially reasonable efforts to not hinder or obstruct the ABL Agent and the ABL Secured Parties from exercising the rights described in paragraph (a) of this “—Inspection and Access Rights.”

(e) Subject to the terms hereof, the collateral agent may advertise and conduct public auctions or private sales of the Notes Priority Collateral without notice (except as required by applicable law or the Intercreditor Agreement) to any ABL Secured Party, the involvement of or interference by any ABL Secured Party or liability to any ABL Secured Party as long as, in the case of an actual sale, the respective purchaser assumes and agrees in writing to the obligations of the collateral agent and the PPE Secured Parties under this “—Inspection and Access Rights.”

(f) In furtherance of the foregoing in this “—Inspection and Access Rights”, the collateral agent, in its capacity as a secured party (or as a purchaser, assignee or transferee, as applicable), and to the extent of its interest therein, grants to the ABL Agent a nonexclusive, irrevocable, royalty-free, worldwide license to use, license or sublicense any and all intellectual property now owned or hereafter acquired by the Credit Parties (except to the extent such grant is prohibited by any rule of law, statute or regulation), included as part of the Notes Priority Collateral (and including in such license access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof) as is or may be necessary or advisable in the ABL Agent’s reasonable judgment for the ABL Agent to process, ship, produce, store, supply, lease, complete, sell, liquidate or otherwise deal with the ABL Priority Collateral, or to collect or otherwise realize upon any account receivable (as defined in the ABL Credit Agreement) comprising ABL Priority Collateral, in each case solely in connection with any Exercise of Secured Creditor Remedies or by a Credit Party with the consent of the ABL Agent; provided that (i) any such license shall terminate upon the sale of the applicable ABL Priority Collateral and shall not extend or transfer to the purchaser of such ABL Priority Collateral, (ii) the ABL Agent’s use of such intellectual property shall be reasonable and lawful, and (iii) any such license is granted on an “AS IS” basis, without any representation or warranty whatsoever. The collateral agent (i) acknowledges and consents to the grant to the ABL Agent by the Credit Parties of the license referred to in the US Pledge and Security Agreement (as defined in the ABL Credit Agreement) and (ii) agrees that its Liens in the Notes Priority Collateral shall be subject in all respects to such license. Furthermore, the collateral agent agrees that, in connection with any Exercise of Secured Creditor Remedies conducted by the collateral agent or by a Credit Party with the consent of the collateral agent in respect of Notes Priority Collateral, (x) any notice required to be given by the collateral agent in connection with such Exercise of Secured Creditor Remedies shall contain an acknowledgement of the existence of such license and (y) the collateral agent shall provide written notice to any purchaser, assignee or transferee pursuant to an Exercise of Secured Creditor Remedies that the applicable assets are subject to such license.

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Tracing of and Priorities in Proceeds

The ABL Agent, for itself and on behalf of the ABL Secured Parties, and the collateral agent, for itself and on behalf of the PPE Secured Parties, further agree that prior to an issuance of any notice of Exercise of Any Secured Creditor Remedies by such Secured Party (unless a bankruptcy or insolvency Event of Default then exists), any proceeds of Collateral, whether or not deposited in Accounts under control agreements, which are used by any Credit Party to acquire other property which is Collateral shall not (solely as between the Agents and the Secured Parties) be treated as proceeds of Collateral for purposes of determining the relative priorities in the Collateral which was so acquired. Notwithstanding anything to the contrary contained in the Intercreditor Agreement or any PPE Document, unless and until the Discharge of the ABL Obligations, the ABL Agent will be permitted to deem all collections and payments deposited in any ABL Deposit and Securities Account (for the avoidance of doubt other than a PPE Priority Account) to be proceeds of ABL Priority Collateral and the collateral agent and the other PPE Secured Parties each will consent to the application of such funds to the ABL Obligations, and no such funds credited to such account shall be subject to disgorgement or be deemed to be held in trust by the ABL Agent for the benefit of the collateral agent and other Credit Parties; provided that with respect to any such funds that are identifiable proceeds of Notes Priority Collateral credited to any such account (i) which funds the ABL Agent has received a Credit Party PPE Proceeds Notice prior to the application of such funds by the ABL Agent to the ABL Obligations and a subsequent credit extension under the ABL Credit Agreement, or (ii) the ABL Agent has received a PPE Cash Proceeds Notice prior to the application of such funds by the ABL Agent to the ABL Obligations and a subsequent credit extension under the ABL Credit Agreement, the ABL Agent shall turn over any misdirected proceeds of the Notes Priority Collateral to the collateral agent.

Purchase Right

(a) If (i) after the occurrence and during the continuation of an Event of Default, the ABL Agent shall sell, lease, license or dispose of all or substantially all of the ABL Priority Collateral by private or public sale, (ii) an Insolvency Proceeding with respect to Xerium shall have occurred or shall have been commenced, or (iii) the ABL Obligations under the ABL Credit Agreement shall have been accelerated (including as a result of any automatic acceleration), (each such event described in clauses (i) through (iii) above, a “ Purchase Option Event ”), the PPE Secured Parties shall have the opportunity to purchase (at par and without premium) all (but not less than all) of the ABL Obligations pursuant to this “—Purchase Right;” provided , that such option shall expire if the applicable PPE Secured Parties fail to deliver a written notice (a “ Purchase Notice ”) to the ABL Agent with a copy to Xerium within ten (10) Business Days following the first date the collateral agent obtains actual knowledge of the occurrence of the earliest Purchase Option Event, which Purchase Notice shall (A) be signed by the applicable PPE Secured Parties committing to such purchase (the “ Purchasing Creditors ”) and indicate the percentage of the ABL Obligations to be purchased by each Purchasing Creditor (which aggregate commitments must add up to 100% of the ABL Obligations) and (B) state that (1) it is a Purchase Notice delivered pursuant to this “—Purchase Right” and (2) the offer contained therein is irrevocable. Upon receipt of such Purchase Notice by the ABL Agent, the Purchasing Creditors shall have from the date of delivery thereof to and including the date that is ten (10) Business Days after the Purchase Notice was received by the ABL Agent to purchase all (but not less than all) of the ABL Obligations pursuant to this “—Purchase Right” (the date of such purchase, the “ Purchase Date ”).

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(b) On the Purchase Date, the ABL Agent and the ABL Secured Parties shall, subject to any required approval of any governmental authority and any limitation in the ABL Credit Agreement, in each case then in effect, if any, sell to the Purchasing Creditors all (but not less than all) of the ABL Obligations. On such Purchase Date, the Purchasing Creditors shall (i) pay to the ABL Agent, for the benefit of the ABL Secured Parties, as directed by the ABL Agent, in immediately available funds the full amount (at par and without premium) of all ABL Obligations then outstanding, including all accrued and unpaid interest and fees thereon, all in the amounts specified by the ABL Agent and determined in accordance with the applicable ABL Documents, (ii) furnish such amount of cash collateral in immediately available funds as the ABL Agent determines is reasonably necessary to secure ABL Secured Parties in connection with any (x) indemnification obligations of the Credit Parties under the ABL Documents (other than on account of indemnification obligations for unknown claims), (y) ABL Cash Management Obligations and ABL Bank Product Obligations, or (z) issued and outstanding letters of credit issued under the ABL Credit Agreement but, with respect to this clause (z), not in any event in an amount greater than 105% of the aggregate undrawn amount of all such outstanding letters of credit (and in the case of clauses (x), (y) and (z) above, any excess of such cash collateral for such indemnification obligations, ABL Cash Management Obligations, ABL Bank Product Obligations or letters of credit remaining at such time when there are no longer any such indemnification obligations, ABL Cash Management Obligations, ABL Bank Product Obligations or letters of credit outstanding and there are no unreimbursed amounts then owing in respect of such indemnification obligations, ABL Cash Management Obligations, ABL Bank Product Obligations or drawings under such letters of credit shall be promptly paid over to the collateral agent) and (iii) agree to reimburse the ABL Secured Parties for any loss, cost, damage or expense (A) resulting from the granting of provisional credit for any checks, wire or ACH transfers that are reversed or not final or other payments provisionally credited to the ABL Obligations under the ABL Credit Agreement and as to which the ABL Agent and ABL Secured Parties have not yet received final payment as of the Purchase Date, or (B) for any indemnification obligations (other than on account of indemnification obligations for unknown claims as of the Purchase Date), ABL Cash Management Obligations, ABL Bank Product Obligations or letters of credit, to the extent that the cash collateral delivered pursuant to clauses (x), (y) and (z), above, are insufficient to pay such ABL Obligations in full, and (iv) assume the remaining commitments (if any) of the ABL Secured Parties to extend credit under the ABL Credit Agreement. Such purchase price shall be remitted by wire transfer in immediately available funds to such bank account of the ABL Agent (for the benefit of the ABL Secured Parties) as the ABL Agent shall have specified in writing to the collateral agent. Interest and fees shall be calculated to but excluding the Purchase Date if the amounts so paid by the applicable PPE Secured Parties to the bank account designated by the ABL Agent are received in such bank account prior to 1:00 p.m., New York time, and interest shall be calculated to and including such Purchase Date if the amounts so paid by the applicable PPE Secured Parties to the bank account designated by the ABL Agent are received in such bank account after 1:00 p.m., New York time.

(c) Any purchase pursuant to the purchase option set forth in this “—Purchase Right” shall, except as provided below, be expressly made without representation or warranty of any kind by the ABL Agent or the other ABL Secured Parties as to the ABL Obligations, the collateral or otherwise, and without recourse to the ABL Agent and the other ABL Secured Parties as to the ABL Obligations, the collateral or otherwise, except that the ABL Agent and each of the ABL Secured Parties, as to itself only, shall represent and warrant only (i) the principal amount of the ABL Obligations being sold by it, (ii) that such Person has not created any Lien on any ABL Obligations being sold by it, (iii) that such Person has the right to assign the ABL Obligations being assigned by it and its assignment agreement has been duly authorized and delivered, and (iv) such other representations, if any, as are set forth in the Assignment and Assumption (as defined in, and in the form annexed to, the ABL Credit Agreement as in effect on the date of the Intercreditor Agreement).

(d) Upon notice to the Credit Parties by the collateral agent that the purchase of ABL Obligations pursuant to this “—Purchase Right” has been consummated by delivery of the purchase price to the ABL Agent, the Credit Parties shall treat the applicable PPE Secured Parties as holders of the ABL Obligations and the collateral agent shall be deemed appointed to act in such capacity as the “agent” or “administrative agent” (or analogous capacity) (the “ Replacement Agent ”) under the ABL Documents, for all purposes under the Intercreditor Agreement and under each ABL Document (it being agreed that the ABL Agent shall have no obligation to act as such replacement “agent” or “administrative agent” (or analogous capacity)). In connection with any purchase of ABL Obligations pursuant to this “—Purchase Right,” each ABL Lender and the ABL Agent will agree to enter into and deliver to the applicable PPE Secured Parties on the Purchase Date, as a condition to closing, an assignment agreement customarily used by the ABL Agent in connection with the ABL Credit Agreement and the ABL Agent and each other ABL Lender shall deliver all possessory collateral (if any), together with any necessary endorsements and other documents (including any applicable stock powers or bond powers), then in its possession or in the possession of its agent or bailee, or turn over control as to any pledged collateral, deposit accounts or securities accounts of which it or its agent or bailee then has control, as the case may be, to the Replacement Agent, and deliver the loan register and participant register, if applicable and all other records pertaining to the ABL Obligations to the Replacement Agent and otherwise take such actions as may be reasonably appropriate to effect an orderly transition to the Replacement Agent. Upon the consummation of the purchase of the ABL Obligations pursuant to this “—Purchase Right,” the ABL Agent (and all other agents under the ABL Credit Agreement) shall be deemed to have resigned as an “agent” or “administrative agent” for the ABL Secured Parties under the ABL Documents; provided that the ABL Agent (and all other agents under the ABL Credit Agreement) shall be entitled to all of the rights and benefits of a former “agent” or “administrative agent” under the ABL Credit Agreement.

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(e) Notwithstanding the foregoing purchase of the ABL Obligations by the Purchasing Creditors, the ABL Secured Parties shall retain those contingent indemnification obligations and other obligations owing or to be owing to them under the ABL Documents which by their express terms would survive any repayment of the ABL Obligations pursuant to this “—Purchase Right.”

Payments Over

(a) So long as the Discharge of PPE Obligations has not occurred, any Notes Priority Collateral or proceeds thereof not constituting ABL Priority Collateral received by the ABL Agent or any other ABL Secured Party in connection with the Exercise of Any Secured Creditor Remedies (including set off) relating to the Notes Priority Collateral in contravention of the Intercreditor Agreement (it being understood that the application of proceeds from any ABL Deposit and Securities Account prior to the delivery of a PPE Cash Proceeds Notice or Credit Party PPE Proceeds Notice shall not be deemed in contravention of the Intercreditor Agreement) shall be segregated and held in trust and forthwith paid over to the collateral agent for the benefit of the PPE Secured Parties in the same form as received, with any necessary endorsements or as a court of competent jurisdiction may otherwise direct. The collateral agent is authorized to make any such endorsements as agent for the ABL Agent or any such other ABL Secured Parties. This authorization is coupled with an interest and is irrevocable until such time as the Intercreditor Agreement is terminated in accordance with its terms.

(b) So long as the Discharge of ABL Obligations has not occurred, any ABL Priority Collateral or proceeds thereof not constituting Notes Priority Collateral received by the collateral agent or any PPE Secured Parties in connection with the Exercise of Any Secured Creditor (including set off) relating to the ABL Priority Collateral in contravention of the Intercreditor Agreement shall be segregated and held in trust and forthwith paid over to the ABL Agent for the benefit of the ABL Secured Parties in the same form as received, with any necessary endorsements or as a court of competent jurisdiction may otherwise direct. The ABL Agent is authorized to make any such endorsements as agent for the collateral agent or any such PPE Secured Parties. This authorization is coupled with an interest and is irrevocable until such time as the Intercreditor Agreement is terminated in accordance with its terms.

Application of Proceeds

Application of Proceeds

(a) Revolving Nature of ABL Obligations . The collateral agent, for and on behalf of itself and the PPE Secured Parties, expressly acknowledges and agrees that (i) the ABL Credit Agreement includes a revolving commitment, that in the ordinary course of business the ABL Agent and the ABL Lenders will apply payments and make advances thereunder, and that no application of any Collateral or the release of any Lien by the ABL Agent upon any portion of the Collateral in connection with a permitted disposition by the Credit Parties under the ABL Credit Agreement shall constitute the Exercise of Secured Creditor Remedies under the Intercreditor Agreement; (ii) the amount of the ABL Obligations that may be outstanding at any time or from time to time may be increased or reduced and subsequently reborrowed, and that the terms of the ABL Obligations may be modified, amended and restated, extended or amended from time to time, and that the aggregate amount of the ABL Obligations may be increased, replaced or refinanced, in each event, without notice to or consent by the PPE Secured Parties and without affecting the provisions of the Intercreditor Agreement; and (iii) all Collateral received by the ABL Agent may be applied, reversed, reapplied, credited, or reborrowed, in whole or in part, to the ABL Obligations at any time; provided, however, that from and after the date on which the ABL Agent (or any ABL Secured Party) or the ABL Agent receives written notice from the collateral agent that the collateral agent (or any PPE Secured Party) has commenced the Exercise of Any Secured Creditor Remedies, all amounts received by the ABL Agent or any ABL Lender shall be applied as specified in this “—Application of Proceeds—Application of Proceeds.” The Lien Priority shall not be altered or otherwise affected by any such amendment, modification, supplement, extension, repayment, reborrowing, increase, replacement, renewal, restatement or refinancing of either the ABL Obligations or the PPE Obligations, or any portion thereof.

Notwithstanding anything to the contrary contained in the Intercreditor Agreement, any PPE Document or any ABL Document, each Credit Party and the collateral agent, for itself and on behalf of the PPE Secured Parties, agrees that (i) only Notes Priority Collateral or proceeds of the Notes Priority Collateral shall be deposited in the PPE Priority Accounts and (ii) prior to the receipt of a PPE Cash Proceeds Notice, the ABL Secured Parties will be permitted to treat all cash, cash equivalents, money, collections and payments deposited in any ABL Deposit and Securities Account or otherwise received by any ABL Secured Parties as ABL Priority Collateral, and no such amounts credited to any such ABL Deposit and Securities Account or received by any ABL Secured Parties or applied to the ABL Obligations shall be subject to disgorgement or deemed to be held in trust for the benefit of the PPE Secured Parties (and all claims of the collateral agent or any other PPE Secured Party to such amounts will be waived).

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(b) Application of proceeds of ABL Priority Collateral . The ABL Agent and the collateral agent agree that all ABL Priority Collateral and all proceeds thereof, received by either of them in connection with any Exercise of Secured Creditor Remedies with respect to the ABL Priority Collateral shall be applied,

first, to the payment of costs and expenses of the ABL Agent in connection with such Exercise of Secured Creditor Remedies,

second, to the payment or discharge or cash collateralization of the ABL Obligations in accordance with the ABL Documents until the Discharge of ABL Obligations shall have occurred,

third, to the payment of the PPE Obligations in accordance with the PPE Documents until the Discharge of PPE Obligations shall have occurred, and

fourth, the balance, if any, to the Credit Parties or as a court of competent jurisdiction may direct.

(c) Application of proceeds of Notes Priority Collateral . The ABL Agent and the collateral agent agree that all Notes Priority Collateral and all other proceeds thereof, received by either of them in connection with any Exercise of Secured Creditor Remedies with respect to the Notes Priority Collateral shall be applied,

first, to the payment of costs and expenses of the collateral agent in connection with such Exercise of Secured Creditor Remedies,

second, to the payment of the PPE Obligations in accordance with the PPE Documents until the Discharge of PPE Obligations shall have occurred,

third, to the payment, discharge or cash collateralization of the ABL Obligations in accordance with the ABL Documents; and

fourth, the balance, if any, to the Credit Parties or as a court of competent jurisdiction may direct.

(d) Limited Obligation or Liability . In exercising remedies, whether as a secured creditor or otherwise, the ABL Agent shall have no obligation or liability to the collateral agent or to any PPE Secured Party, and the collateral agent shall have no obligation or liability to the ABL Agent or any ABL Secured Party, regarding the adequacy of any proceeds or for any action or omission, except solely for an action or omission that breaches the express obligations undertaken by each Agent under the terms of the Intercreditor Agreement. Notwithstanding anything to the contrary in the Intercreditor Agreement, none of the Agents waives any claim that it may have against a Secured Party on the grounds that any sale, transfer or other disposition by the Secured Party was not commercially reasonable in every respect as required by the Uniform Commercial Code.

(e) Turnover of Collateral After Discharge . Upon the Discharge of ABL Obligations, the ABL Agent shall deliver to the collateral agent or shall execute such documents as the collateral agent may reasonably request (at the expense of Xerium) to enable the collateral agent to have control over any Control Collateral still in the ABL Agent’s possession, custody, or control in the same form as received with any necessary endorsements (in each case, subject to the reinstatement provisions of “—Intercreditor Acknowledgements and Waivers— Reinstatement and Continuation of Agreement”), or as a court of competent jurisdiction may otherwise direct. Upon the Discharge of PPE Obligations, the collateral agent shall deliver to the ABL Agent or shall execute such documents as the ABL Agent may reasonably request (at the expense of the Credit Parties) to enable the ABL Agent to have control over any Control Collateral still in the collateral agent’s possession, custody or control in the same form as received with any necessary endorsements (in each case, subject to the reinstatement provisions of “—Intercreditor Acknowledgements and Waivers— Reinstatement and Continuation of Agreement”), or as a court of competent jurisdiction may otherwise direct.

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Specific Performance

Each of the ABL Agent and the collateral agent is authorized to demand specific performance of the Intercreditor Agreement, whether or not Xerium or any Guarantor shall have complied with any of the provisions of any of the Credit Documents, at any time when the other Agent shall have failed to comply with any of the provisions of the Intercreditor Agreement applicable to it. Each of the ABL Agent, for and on behalf of itself and the ABL Secured Parties, and the collateral agent, for and on behalf of itself and the PPE Secured Parties, irrevocably waives any defense based on the adequacy of a remedy at law that might be asserted as a bar to such remedy of specific performance.

Intercreditor Acknowledgements and Waivers

Notice of Acceptance and Other Waivers

(a) All ABL Obligations at any time made or incurred by Xerium or any Guarantor shall be deemed to have been made or incurred in reliance upon the Intercreditor Agreement, and the collateral agent, on behalf of itself and the PPE Secured Parties, waives notice of acceptance, or proof of reliance by the ABL Agent or any ABL Secured Party of the Intercreditor Agreement, and notice of the existence, increase, renewal, extension, accrual, creation, or non-payment of all or any part of the ABL Obligations. All PPE Obligations at any time made or incurred by Xerium or any Guarantor shall be deemed to have been made or incurred in reliance upon the Intercreditor Agreement, and the ABL Agent, on behalf of itself and the ABL Secured Parties, waives notice of acceptance, or proof of reliance, by the collateral agent or any PPE Secured Party of the Intercreditor Agreement, and notice of the existence, increase, renewal, extension, accrual, creation, or nonpayment of all or any part of the PPE Obligations.

(b) None of the ABL Agent, any ABL Secured Party, or any of their respective Affiliates, directors, officers, employees, or agents shall be liable for failure to demand, collect, or realize upon any of the Collateral or any proceeds, or for any delay in doing so, or shall be under any obligation to sell or otherwise dispose of any Collateral or proceeds thereof or to take any other action whatsoever with regard to the Collateral or any part or proceeds thereof, except as specifically provided in the Intercreditor Agreement. If the ABL Agent or any ABL Secured Party honors (or fails to honor) a request by the Credit Parties for an extension of credit pursuant to the ABL Credit Agreement, any of the other ABL Documents, ABL Bank Product Documents or ABL Cash Management Documents, whether the ABL Agent or any ABL Secured Party has knowledge that the honoring of (or failure to honor) any such request would constitute a default under the terms of the PPE Documents or an act, condition, or event that, with the giving of notice or the passage of time, or both, would constitute such a default, or if the ABL Agent or any ABL Secured Party otherwise should exercise any of its contractual rights or remedies under any ABL Documents (subject to the express terms and conditions of the Intercreditor Agreement), neither the ABL Agent nor any ABL Secured Party shall have any liability whatsoever to the collateral agent or any PPE Secured Party as a result of such action, omission, or exercise (so long as any such exercise does not breach the express terms and provisions of the Intercreditor Agreement). The ABL Agent and the ABL Secured Parties shall be entitled to manage and supervise their loans and extensions of credit under the ABL Credit Agreement and any of the other ABL Documents, ABL Bank Product Documents or ABL Cash Management Documents, as they may, in their sole discretion, deem appropriate, and may manage their loans and extensions of credit without regard to any rights or interests that the collateral agent or any of the PPE Secured Parties have in the Collateral, except as otherwise expressly set forth in the Intercreditor Agreement. The collateral agent, on behalf of itself and the PPE Secured Parties, agrees that neither the ABL Agent nor any ABL Secured Party shall incur any liability as a result of a sale, lease, license, application, or other disposition of all or any portion of the Collateral or proceeds thereof, pursuant to the ABL Documents, so long as such disposition is conducted in accordance with mandatory provisions of applicable law and does not breach the provisions of the Intercreditor Agreement.

(c) None of the collateral agent, any PPE Secured Party or any of their respective Affiliates, directors, officers, employees, or agents shall be liable for failure to demand, collect, or realize upon any of the Collateral or any proceeds, or for any delay in doing so, or shall be under any obligation to sell or otherwise dispose of any Collateral or proceeds thereof or to take any other action whatsoever with regard to the Collateral or any part or proceeds thereof, except as specifically provided in the Intercreditor Agreement. If the collateral agent or any PPE Secured Party honors (or fails to honor) a request by Xerium for an extension of credit pursuant to any of the PPE Documents, whether the collateral agent or any PPE Secured Party has knowledge that the honoring of (or failure to honor) any such request would constitute a default under the terms of the ABL Credit Agreement or any other ABL Document or an act, condition, or event that, with the giving of notice or the passage of time, or both, would constitute such a default, or if the collateral agent or any PPE Secured Party otherwise should exercise any of its contractual rights or remedies under the PPE Documents (subject to the express terms and conditions of the Intercreditor Agreement), neither the collateral agent nor any PPE Secured Party shall have any liability whatsoever to the ABL Agent or any ABL Secured Party as a result of such action, omission, or exercise (so long as any such exercise does not breach the express terms and provisions of the Intercreditor Agreement). The collateral agent and the PPE Secured Parties shall be entitled to manage and supervise their loans and extensions of credit under the PPE Documents, as they may, in their sole discretion, deem appropriate, and may manage their loans and extensions of credit without regard to any rights or interests that the ABL Agent or any ABL Secured Party has in the Collateral, except as otherwise expressly set forth in the Intercreditor Agreement. The ABL Agent, on behalf of itself and the ABL Secured Parties, agrees that none of the collateral agent or the PPE Secured Parties shall incur any liability as a result of a sale, lease, license, application, or other disposition of the Collateral or any part or proceeds thereof, pursuant to the PPE Documents, so long as such disposition is conducted in accordance with mandatory provisions of applicable law and does not breach the provisions of the Intercreditor Agreement.

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Reinstatement and Continuation of Agreement

(a) If the ABL Agent or any ABL Secured Party is required in any Insolvency Proceeding or otherwise to turn over or otherwise pay to the estate of any Credit Party, any Guarantor, or any other Person any payment made in satisfaction of all or any portion of the ABL Obligations (an “ ABL Recovery ”), then the ABL Obligations shall be reinstated to the extent of such ABL Recovery. If the Intercreditor Agreement shall have been terminated prior to such ABL Recovery, the Intercreditor Agreement shall be reinstated in full force and effect in the event of such ABL Recovery, and such prior termination shall not diminish, release, discharge, impair, or otherwise affect the obligations of the Agents and the other Secured Parties from such date of reinstatement. All rights, interests, agreements, and obligations of the ABL Agent, the collateral agent, the ABL Secured Parties, and the PPE Secured Parties under the Intercreditor Agreement shall remain in full force and effect and shall continue irrespective of the commencement of, or any discharge, confirmation, conversion, or dismissal of, any Insolvency Proceeding by or against any Credit Party or any Guarantor or any other circumstance which otherwise might constitute a defense available to, or a discharge of any Credit Party or any Guarantor in respect of the ABL Obligations or the PPE Obligations. No priority or right of the ABL Agent or any ABL Secured Party shall at any time be prejudiced or impaired in any way by any act or failure to act on the part of any Credit Party or any Guarantor or by the noncompliance by any Person with the terms, provisions, or covenants of any of the ABL Documents, regardless of any knowledge thereof which the ABL Agent or any ABL Secured Party may have.

(b) If the collateral agent or any PPE Secured Party is required in any Insolvency Proceeding or otherwise to turn over or otherwise pay to the estate of Xerium, any Guarantor, or any other Person any payment made in satisfaction of all or any portion of the PPE Obligations (a “ PPE Recovery ”), then the PPE Obligations shall be reinstated to the extent of such PPE Recovery. If the Intercreditor Agreement shall have been terminated prior to such PPE Recovery, the Intercreditor Agreement shall be reinstated in full force and effect in the event of such PPE Recovery, and such prior termination shall not diminish, release, discharge, impair, or otherwise affect the obligations of the Agents and the other Secured Parties from such date of reinstatement. All rights, interests, agreements, and obligations of the ABL Agent, the collateral agent, the ABL Secured Parties, and the PPE Secured Parties under the Intercreditor Agreement shall remain in full force and effect and shall continue irrespective of the commencement of, or any discharge, confirmation, conversion, or dismissal of, any Insolvency Proceeding by or against Xerium or any Guarantor or any other circumstance which otherwise might constitute a defense available to, or a discharge of Xerium or any Guarantor in respect of the ABL Obligations or the PPE Obligations. No priority or right of the collateral agent or any PPE Secured Party shall at any time be prejudiced or impaired in any way by any act or failure to act on the part of Xerium or any Guarantor or by the noncompliance by any Person with the terms, provisions, or covenants of any of the PPE Documents, regardless of any knowledge thereof which the collateral agent or any PPE Secured Party may have.

Insolvency Proceedings

DIP Financing

(a) If any Credit Party or any Guarantor shall be subject to any Insolvency Proceeding at any time prior to the Discharge of ABL Obligations, and if the ABL Agent or the ABL Secured Parties shall seek to provide any Credit Party or any Guarantor with, or consent to a third party providing, any financing under Section 364 of the Bankruptcy Code or consent to any order for the use of cash collateral constituting ABL Priority Collateral (“ ABL Cash Collateral ”) under Section 363 of the Bankruptcy Code (or any similar provision of any foreign Bankruptcy Laws or under a court order in respect of measures granted with similar effect under any foreign Bankruptcy Laws) (each, an “ ABL Secured Party DIP Financing ”), with such ABL Secured Party DIP Financing to be secured by all or any portion of the Collateral (including ABL Cash Collateral and assets that, but for the application of Section 552 of the Bankruptcy Code (or any similar provision of any foreign Bankruptcy Laws) would be Collateral), then the collateral agent, on behalf of itself and the PPE Secured Parties, agrees that it (i) will raise no objection and will not support any objection to such ABL Secured Party DIP Financing or use of ABL Cash Collateral or to the Liens securing the same on the grounds of a failure to provide “adequate protection” for the Liens of the collateral agent securing the PPE Obligations or on any other grounds; (ii) will not request any adequate protection as a result of such ABL Secured Party DIP Financing or use of ABL Cash Collateral; and (iii) will not propose any DIP Financing secured by a Lien on any ABL Priority Collateral senior to or on parity with the Liens of the ABL Agent on such ABL Priority Collateral so long as (x) the collateral agent retains its Lien on the Collateral to secure the PPE Obligations (in each case, including proceeds thereof arising after the commencement of the case under any Bankruptcy Laws) and, as to the Notes Priority Collateral only, such Lien has the same priority as existed prior to the commencement of the case under the subject Bankruptcy Laws and any Lien on the Notes Priority Collateral securing such ABL Secured Party DIP Financing or ABL Cash Collateral is junior and subordinate to the Lien of the collateral agent on the Notes Priority Collateral, (y) all Liens on ABL Priority Collateral securing any such ABL Secured Party DIP Financing or ABL Cash Collateral shall be senior to or on a parity with the Liens of the ABL Agent and the ABL Secured Parties securing the ABL Obligations on ABL Priority Collateral, and (z) the foregoing provisions of this paragraph (a) shall not prevent the collateral agent and the PPE Secured Parties from objecting to any provision in any ABL Secured Party DIP Financing or ABL Cash Collateral relating to any provision or content of a plan of reorganization or other plan of similar effect under any Bankruptcy Laws.

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(b) If Xerium or any Guarantor shall be subject to any Insolvency Proceeding at any time prior to the Discharge of PPE Obligations, and if the collateral agent or the PPE Secured Parties shall seek to provide Xerium or any Guarantor with, or shall consent to a third party providing, any financing under Section 364 of the Bankruptcy Code or consent to any order for the use of cash collateral constituting Notes Priority Collateral (“ PPE Cash Collateral ”) under Section 363 of the Bankruptcy Code (or any similar provision of any foreign Bankruptcy Laws or under a court order in respect of measures granted with similar effect under any foreign Bankruptcy Laws) (each, a “ PPE Secured Party DIP Financing ”), with such PPE Secured Party DIP Financing to be secured by all or any portion of the Collateral (including PPE Cash Collateral and assets that, but for the application of Section 552 of the Bankruptcy Code (or any similar provision of any foreign Bankruptcy Laws) would be Collateral), then the ABL Agent, on behalf of itself and the ABL Secured Parties, agrees that it (i) will raise no objection and will not support any objection to such PPE Secured Party DIP Financing or use of PPE Cash Collateral or to the Liens securing the same on the grounds of a failure to provide “adequate protection” for the Liens of the ABL Agent securing the ABL Obligations or on any other grounds; (ii) will not request any adequate protection as a result of such PPE Secured Party DIP Financing or use of PPE Cash Collateral; and (iii) will not propose any PPE Secured Party DIP Financing secured by a Lien senior to or on parity with the Lien of the collateral agent on the Notes Priority Collateral so long as (x) the ABL Agent retains its Lien on the Collateral to secure the ABL Obligations (in each case, including proceeds thereof arising after the commencement of the case under any Bankruptcy Law) and, as to the ABL Priority Collateral only, such Lien has the same priority as existed prior to the commencement of the case under the subject Bankruptcy Laws and any Lien on ABL Priority Collateral securing such PPE Secured Party DIP Financing or PPE Cash Collateral is junior and subordinate to the Lien of the ABL Agent on the ABL Priority Collateral, (y) all Liens on Notes Priority Collateral securing any such PPE Secured Party DIP Financing or PPE Cash Collateral shall be senior to or on a parity with the Liens of the collateral agent and the PPE Secured Parties securing the PPE Obligations on Notes Priority Collateral, and (z) the foregoing provisions of this paragraph (b) shall not prevent the ABL Agent and the ABL Secured Parties from objecting to any provision in any PPE Secured Party DIP Financing or PPE Cash Collateral relating to any provision or content of a plan of reorganization or other plan of similar effect under any Bankruptcy Laws.

(c) All Liens granted to the ABL Agent or the collateral agent in any Insolvency Proceeding, whether as adequate protection or otherwise, are intended by the Agents to be and shall be deemed to be subject to the Lien Priority and the other terms and conditions of the Intercreditor Agreement. For clarity, the collateral agent and the PPE Secured Parties shall not seek to “prime” the Lien of the ABL Agent and the ABL Secured Parties on the ABL Priority Collateral or request, seek or receive a Lien on the ABL Priority Collateral pursuant to Section 364(d) or 363(c)(4) of the Bankruptcy Code on the ABL Priority Collateral. For clarity, the ABL Agent and the ABL Secured Parties shall not seek to “prime” the Lien of the collateral agent and the PPE Secured Parties on the Notes Priority Collateral or request, seek or receive a Lien on the Notes Priority Collateral pursuant to Section 364(d) or 363(c)(4) of the Bankruptcy Code on the Notes Priority Collateral.

Relief From Stay

Until the Discharge of ABL Obligations has occurred, the collateral agent, on behalf of itself and the PPE Secured Parties, will agree not to seek relief from the automatic stay or any other stay in any Insolvency Proceeding in respect of any portion of the ABL Priority Collateral without the ABL Agent’s express written consent. Until the Discharge of PPE Obligations has occurred, the ABL Agent, on behalf of itself and the ABL Secured Parties, will agree not to seek relief from the automatic stay or any other stay in any Insolvency Proceeding in respect of any portion of the Notes Priority Collateral without the collateral agent’s express written consent. In addition, neither the collateral agent nor the ABL Agent shall seek any relief from the automatic stay with respect to any Collateral without providing three (3) days’ prior written notice to the other, unless such period is agreed by both the ABL Agent and the collateral agent to be modified or unless the ABL Agent or the collateral agent, as applicable, makes a good faith determination that either (A) the ABL Priority Collateral or the Notes Priority Collateral, as applicable, will decline speedily in value or (B) the failure to take any action will have a reasonable likelihood of endangering the ABL Agent’s or the collateral agent’s ability to realize upon its Collateral.

No Contest; Adequate Protection

(a) The collateral agent, on behalf of itself and the PPE Secured Parties, agrees that, prior to the Discharge of ABL Obligations, none of them shall seek or accept any form of adequate protection under any or all of §361, §362, §363 or §364 of the Bankruptcy Code with respect to the ABL Priority Collateral, except as set forth in this “—No Contest; Adequate Protection” or as may otherwise be consented to in writing by the ABL Agent in its sole and absolute discretion. The collateral agent, on behalf of itself and the PPE Secured Parties, agrees that, prior to the Discharge of ABL Obligations, subject to paragraph (c) of this “—No Contest; Adequate Protection,” none of them shall contest (or support any other Person contesting) (i) any request by the ABL Agent or any ABL Secured Party for adequate protection of its interest in the Collateral (unless in contravention paragraph (b) of “—DIP Financing”), (ii) any proposed provision of DIP Financing by the ABL Agent and the ABL Secured Parties (or any other Person proposing to provide DIP Financing with the consent of the ABL Agent) (unless in contravention of paragraph (a) of “—DIP Financing”) or (iii) any objection by the ABL Agent or any ABL Secured Party to any motion, relief, action, or proceeding based on a claim by the ABL Agent or any ABL Secured Party that its interests in the Collateral (unless in contravention of paragraph (b) of “—DIP Financing”) are not adequately protected (or any other similar request under any law applicable to an Insolvency Proceeding), so long as any Liens granted to the ABL Agent as adequate protection of its interests are subject to the Intercreditor Agreement.

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(b) The ABL Agent, on behalf of itself and the ABL Secured Parties, agrees that, prior to the Discharge of PPE Obligations, none of them shall seek or accept any form of adequate protection under any or all of §361, §362, §363 or §364 of the Bankruptcy Code with respect to the Notes Priority Collateral, except as set forth in this “—No Contest; Adequate Protection” or as may otherwise be consented to in writing by the collateral agent in its sole and absolute discretion. The ABL Agent, on behalf of itself and the ABL Secured Parties, agrees that, prior to the Discharge of PPE Obligations, subject to subparagraph (c)(iii) of “—No Contest; Adequate Protection” below none of them shall contest (or support any other Person contesting) (i) any request by the collateral agent or any PPE Secured Party for adequate protection of its interest in the Collateral (unless in contravention of paragraph (a) of “—DIP Financing”), (ii) any proposed provision of DIP Financing by the collateral agent and the PPE Secured Parties (or any other Person proposing to provide DIP Financing with the consent of the collateral agent) (unless in contravention of paragraph (b) of “—DIP Financing”) or (iii) any objection by the collateral agent or any PPE Secured Party to any motion, relief, action or proceeding based on a claim by the collateral agent or any PPE Secured Party that its interests in the Collateral (unless in contravention of paragraph (a) of “—DIP Financing”) are not adequately protected (or any other similar request under any law applicable to an Insolvency Proceeding), so long as any Liens granted to the collateral agent as adequate protection of its interests are subject to the Intercreditor Agreement.

(d) Except as otherwise expressly set forth in paragraph (a) of “—DIP Financing” or in connection with the Exercise of Secured Creditor Remedies with respect to the ABL Priority Collateral, nothing in the Intercreditor Agreement shall limit the rights of the collateral agent or the PPE Secured Parties from seeking adequate protection with respect to their rights in the Notes Priority Collateral in any Insolvency Proceeding, other than adequate protection in the form of cash payments except from proceeds of Notes Priority Collateral. Except as otherwise expressly set forth in paragraph (b) of “—DIP Financing” or in connection with the Exercise of Secured Creditor Remedies with respect to the Notes Priority Collateral, nothing in the Intercreditor Agreement shall limit the rights of the ABL Agent or the ABL Secured Parties from seeking adequate protection with respect to their rights in the ABL Priority Collateral in any Insolvency Proceeding, other than adequate protection in the form of cash payments, except proceeds of ABL Priority Collateral.

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Asset Sales

The collateral agent agrees, on behalf of itself and the PPE Secured Parties, that it will not oppose and shall be deemed to have consented to any sale consented to by the ABL Agent of any ABL Priority Collateral pursuant to Section 363(f) of the Bankruptcy Code (or any similar provision under the law applicable to any Insolvency Proceeding or under a court order in respect of measures granted with similar effect under any foreign Bankruptcy Laws) so long as the collateral agent, for the benefit of the PPE Secured Parties, shall retain a Lien on the proceeds of such sale (to the extent such proceeds are not applied to the ABL Obligations in accordance with paragraph (b) of “—Application of Proceeds—Application of Proceeds”). The ABL Agent agrees, on behalf of itself and the ABL Secured Parties, that it will not oppose and shall be deemed to have consented to any sale consented to by the collateral agent of any Notes Priority Collateral pursuant to Section 363(f) of the Bankruptcy Code (or any similar provision under the law applicable to any Insolvency Proceeding or under a court order in respect of measures granted with similar effect under any foreign Bankruptcy Laws) so long as (i) any such sale is made in accordance with “—Actions of the Parties—Inspection and Access Rights” above and (ii) the ABL Agent, for the benefit of the ABL Secured Parties, shall retain a Lien on the proceeds of such sale (to the extent such proceeds are not applied to the PPE Obligations in accordance with paragraph (c) of “—Application of Proceeds—Application of Proceeds”). If such sale of Collateral includes both ABL Priority Collateral and Notes Priority Collateral and the Agents are unable after negotiating in good faith to agree on the allocation of the purchase price between the ABL Priority Collateral and Notes Priority Collateral, either Agent may apply to the court in such Insolvency Proceeding to make a determination of such allocation, and the court’s determination shall be binding upon the Agents.

Enforceability

The provisions of the Intercreditor Agreement are intended to be and shall be enforceable under Section 510(a) of the Bankruptcy Code.

Rights of Subrogation

The collateral agent, for and on behalf of itself and the PPE Secured Parties, agrees that no payment to the ABL Agent or any ABL Secured Party pursuant to the provisions of the Intercreditor Agreement shall entitle the collateral agent or any PPE Secured Party to exercise any rights of subrogation in respect thereof until the Discharge of ABL Obligations shall have occurred. Following the Discharge of ABL Obligations, the ABL Agent agrees to execute such documents, agreements, and instruments as the collateral agent or any PPE Secured Party may reasonably request to evidence the transfer by subrogation to any such Person of an interest in the ABL Obligations resulting from payments to the ABL Agent by such Person, so long as all costs and expenses (including all reasonable legal fees and disbursements) incurred in connection therewith by the ABL Agent are paid by such Person upon request for payment thereof. The ABL Agent, for and on behalf of itself and the ABL Secured Parties, agrees that no payment to the collateral agent or any PPE Secured Party pursuant to the provisions of the Intercreditor Agreement shall entitle the ABL Agent or any ABL Secured Party to exercise any rights of subrogation in respect thereof until the Discharge of PPE Obligations shall have occurred. Following the Discharge of PPE Obligations, the collateral agent agrees to execute such documents, agreements, and instruments as the ABL Agent or any ABL Secured Party may reasonably request to evidence the transfer by subrogation to any such Person of an interest in the PPE Obligations resulting from payments to the collateral agent by such Person, so long as all costs and expenses (including all reasonable legal fees and disbursements) incurred in connection therewith by the collateral agent are paid by such Person upon request for payment thereof.

Further Assurances

The Agents will, at their own expense and at any time and from time to time, promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable, or that either Agent may reasonably request, in order to protect any right or interest granted or purported to be granted by the Intercreditor Agreement or to enable the ABL Agent or the collateral agent to exercise and enforce its rights and remedies under the Intercreditor Agreement; provided, however, that neither Agent shall be required to pay over any payment or distribution, execute any instruments or documents, or take any other action referred to in this “—Further Assurances,” to the extent that such action would contravene any law, order or other legal requirement or any of the terms or provisions of the Intercreditor Agreement, and in the event of a controversy or dispute, such Agent may interplead any payment or distribution in any court of competent jurisdiction, without further responsibility in respect of such payment or distribution under this “—Further Assurances.”

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Pari Passu Payment Lien Obligations

If Xerium or any Guarantor incurs any Pari Passu Indebtedness, the agent, trustee or other representative of the holders of such Pari Passu Payment Lien Obligations shall enter into a supplement to the Intercreditor Agreement and an Accession Agreement, and thereafter the relationship between the holders of the Notes and holders of the Pari Passu Payment Lien Obligations will be governed by the Collateral Documents as described below.

The Collateral Documents provide for the priorities and other relative rights among the holders of the Notes and the holders of the Pari Passu Indebtedness, including, among other things, that:

The Collateral Documents contain procedures with respect to the coordination of instructions from the holders of the Notes and holders of the Pari Passu Indebtedness with respect to the Liens in the Collateral. The collateral agent shall (subject to its rights and protections under the Indenture Documents, including its right to seek satisfactory indemnity or security) act in relation to the Collateral in accordance with the direction of the majority in aggregate principal amount of the then outstanding Indenture Obligations and Pari Passu Payment Lien Obligations, if any (the “ Instructing Group ”); provided, however, that any Notes held by Xerium or an Affiliate of Xerium and any Pari Passu Indebtedness held by Xerium or an Affiliate of Xerium shall be deemed not to be outstanding for purposes of determining the Instructing Group, except that in determining whether the collateral agent shall be protected in relying upon such direction, only those Notes and Pari Passu Indebtedness that the collateral agent actually knows to be so held shall be so disregarded.

The Collateral Documents also provide that, as between the holders of the Notes and the holders of Pari Passu Indebtedness, only the Instructing Group shall have the right to direct the collateral agent in conducting foreclosures and in taking other actions with respect to the Collateral, and the authorized agents, trustees or other representatives of other Indebtedness shall not have any right to take any actions with respect to the Collateral. The Instructing Group will have the sole right to instruct the collateral agent to act or refrain from acting with respect to the Collateral, and the collateral agent shall not follow any instructions with respect to such Collateral from any other Person. No authorized representative of any Indebtedness (other than the Instructing Group) will instruct the collateral agent to commence any judicial or non-judicial foreclosure proceedings with respect to, seek to have a trustee, receiver, liquidator or similar official appointed for or over, attempt any action to take possession of, exercise any right, remedy or power with respect to, or otherwise take any action to enforce its interests in or realize upon, or take any other action available to it in respect of, the Collateral.

Optional Redemption

Except as otherwise described in the next three paragraphs below, the Notes will not be redeemable at Xerium’s option prior to August 15, 2018. Xerium is not, however, prohibited from acquiring the Notes by means other than a redemption, whether pursuant to a tender offer, open market purchase or otherwise, so long as the acquisition does not violate the terms of the Indenture.

At any time prior to August 15, 2018, Xerium may on any one or more occasions redeem up to 35% of the aggregate principal amount of Notes issued under the Indenture at a redemption price of 109.500% of the principal amount, plus accrued and unpaid interest to the redemption date (subject to the rights of holders of Notes on the relevant record date to receive interest on the relevant interest payment date), with the net cash proceeds of a sale of Capital Stock (other than Disqualified Stock or any Preferred Stock) of Xerium; provided that:

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At any time prior to August 15, 2018, Xerium may on any one or more occasions redeem all or a part of the Notes, upon not less than 30 nor more than 60 days’ notice to holders (with a copy to the trustee), at a redemption price equal to 100% of the principal amount of the Notes redeemed, plus the Applicable Premium as of, plus accrued and unpaid interest to the date of redemption, subject to the rights of holders of Notes on the relevant record date to receive interest on the relevant interest payment date.

On or after August 15, 2018, Xerium may redeem all or a part of the Notes upon not less than 30 nor more than 60 days’ notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest on the Notes redeemed, to the applicable redemption date, if redeemed during the twelve-month period beginning on August 15 of the years indicated below, subject to the rights of holders of Notes on the relevant record date to receive interest on the relevant interest payment date:

Unless Xerium defaults in the payment of the redemption price, interest will cease to accrue on the Notes or portions thereof called for redemption on the applicable redemption date.

Mandatory Redemption

Xerium is not required to make mandatory redemption or sinking fund payments with respect to the Notes or to repurchase the Notes at the option of the holders. However, under certain circumstances, Xerium may be required to offer to purchase Notes as described under “— Repurchase at the Option of Holders.”

Selection and Notice

If less than all of the Notes are to be redeemed at any time, the trustee will select Notes for redemption on a pro rata basis to the extent practicable, by lot or such other method as the trustee shall deem fair and appropriate, unless otherwise required by law or applicable stock exchange or depositary requirements.

No Notes of $2,000 or less can be redeemed in part. Notices of redemption will be mailed (with a copy to the trustee) by first class mail at least 30 but not more than 60 days before the redemption date to each holder of Notes to be redeemed at its registered address, except that redemption notices may be mailed more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the Notes or a satisfaction and discharge of the Indenture.

If any Note is to be redeemed in part only, the notice of redemption that relates to that Note will state the portion of the principal amount of that Note that is to be redeemed. A new Note in principal amount equal to the unredeemed portion of the original note will be issued in the name of the holder of Notes upon cancellation of the original note. Notes called for redemption become due on the date fixed for redemption. On and after the redemption date, interest ceases to accrue on Notes or portions of Notes called for redemption.

Any redemption may, at Xerium’s discretion, be subject to one or more conditions precedent, including, but not limited to, completion of an offering of Capital Stock, other offering or other corporate transaction or event. In addition, if such redemption or notice is subject to satisfaction of one or more conditions precedent, such notice shall state that, in Xerium’s discretion, the redemption date may be delayed until such time as any or all such conditions shall be satisfied, or such redemption may not occur and such notice may be rescinded in the event that any or all such conditions shall not have been satisfied by the redemption date, or by the redemption date so delayed. If any such condition precedent has not been satisfied, Xerium shall provide written notice to the trustee and each holder of the Notes in the same manner in which the notice of redemption was given prior to noon New York City time one Business Day prior to the redemption date. Upon receipt of such notice, the notice of redemption shall be rescinded or delayed as provided in such notice.

Repurchase at the Option of Holders

Change of Control Triggering Event

If a Change of Control Triggering Event occurs, each holder of Notes will have the right to require Xerium to repurchase all or any part (equal to $2,000 or an integral multiple of $1,000 in excess thereof) of that holder’s Notes pursuant to an offer on the terms set forth in the Indenture (the “ Change of Control Offer ”). In the Change of Control Offer, Xerium will offer a payment in cash (the “ Change of Control Payment ”) equal to 101% of the aggregate principal amount of Notes repurchased plus accrued and unpaid interest on the Notes repurchased to the date of purchase, subject to the rights of holders of Notes on the relevant record date to receive interest due on the relevant interest payment date. Within 30 days following any Change of Control Triggering Event, Xerium will mail a notice to each holder describing the transaction or transactions and identifying the ratings decline that together constitute the Change of Control Triggering Event and offering to repurchase Notes on the date specified in the notice (the “ Change of Control Payment Date ”), which date will be no earlier than 30 days and no later than 60 days from the date such notice is mailed, pursuant to the procedures required by the Indenture and described in such notice. Xerium will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control Triggering Event. To the extent that the provisions of any securities laws or regulations conflict with the Change of Control provisions of the Indenture, Xerium will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Change of Control provisions of the Indenture by virtue of such compliance.

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On the Change of Control Payment Date, Xerium will, to the extent lawful:

The paying agent will promptly mail to each holder of Notes properly tendered the Change of Control Payment for such Notes, and the trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each such new Note will be in a principal amount of $2,000 or an integral multiple of $1,000 in excess thereof. Xerium will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. The provisions described above that require Xerium to make a Change of Control Offer following a Change of Control Triggering Event will be applicable whether or not any other provisions of the Indenture are applicable. Except as described above with respect to a Change of Control Triggering Event, the Indenture does not contain provisions that permit the holders of the Notes to require that Xerium repurchase or redeem the Notes in the event of a takeover, recapitalization or similar transaction.

Xerium will not be required to make a Change of Control Offer upon a Change of Control Triggering Event if (1) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by Xerium and purchases all Notes properly tendered and not withdrawn under the Change of Control Offer, or (2) notice of redemption has been given for all of the outstanding Notes pursuant to the Indenture as described above under the caption “— Optional Redemption,” unless and until there is a default in payment of the applicable redemption price.

Xerium’s ability to repurchase Notes pursuant to a Change of Control Offer may be restricted by the terms of any Credit Facility, and may be prohibited or otherwise limited by the terms of any then existing borrowing arrangements and Xerium’s financial resources. The exercise by the holders of Notes of their right to require Xerium to repurchase the Notes upon a Change of Control Offer could cause a default under these other agreements, even if the Change of Control Triggering Event itself does not, due to the financial effect of such repurchases on Xerium or otherwise. The ABL Credit Agreement provides that certain change of control events with respect to Xerium would constitute an event of default thereunder, entitling the lenders, among other things, to accelerate the maturity of all senior debt outstanding thereunder. Any future credit agreements or other agreements relating to senior debt to which Xerium becomes a party may contain similar restrictions and provisions. In addition, Xerium’s ability to pay cash to holders of Notes following the occurrence of a Change of Control Triggering Event may be limited by its then existing financial resources. There can be no assurance that sufficient funds will be available when necessary to make any required purchases.

Notwithstanding anything to the contrary herein, a Change of Control Offer may be made in advance of a Change of Control Triggering Event, conditional upon such Change of Control Triggering Event, if a definitive agreement is in place for the Change of Control at the time of making of the Change of Control Offer.

In the event that holders of not less than 90% in aggregate principal amount of the then outstanding Notes accept a Change of Control Offer and Xerium (or any third party making such Change of Control Offer in lieu of Xerium as described above) purchase all of the Notes held by such holders, Xerium will have the right, upon not less than 30 nor more than 60 days’ prior notice, given not more than 30 days following the purchase pursuant to the Change of Control Offer described above, to redeem all of the Notes that remain outstanding following such purchase at a redemption price equal to the Change of Control Payment plus accrued and unpaid interest on the Notes that remain outstanding, to the date of redemption, subject to the rights of holders of the Notes on the relevant regular record date to receive interest due on the relevant interest payment date that is on or prior to the applicable redemption date.

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The definition of Change of Control includes a phrase relating to the direct or indirect sale, lease, transfer, conveyance or other disposition of “all or substantially all” of the properties or assets of Xerium and its Subsidiaries taken as a whole. Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a holder of Notes to require Xerium to repurchase its Notes as a result of a sale, lease, transfer, conveyance or other disposition of less than all of the assets of Xerium and its Subsidiaries taken as a whole to another Person or group may be uncertain.

Asset Sales

Xerium will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:

Within 365 days after the receipt of any Net Proceeds from an Asset Sale, Xerium (or the applicable Restricted Subsidiary, as the case may be) may apply such Net Proceeds:

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provided that in the case of clauses (2), (3) and (4) above, a legally binding commitment shall be treated as a permitted application of the Net Proceeds from the date of such commitment so long as Xerium or such other Restricted Subsidiary applies such Net Proceeds within 180 days of entering into such commitment (an “Acceptable Commitment” ); provided, further , that if any Acceptable Commitment is cancelled or terminated for any reason more than 365 days after the receipt of such Net Proceeds, then such Net Proceeds shall constitute Excess Proceeds.

Pending the final application of any Net Proceeds, Xerium or a Restricted Subsidiary may temporarily reduce revolving credit borrowings (under the Credit Facilities or otherwise) or otherwise invest the Net Proceeds in any manner that is not otherwise prohibited by the Indenture.

Any Net Proceeds from Asset Sales that are not applied or invested as provided in the second paragraph of this covenant will constitute “Excess Proceeds.” When the aggregate amount of Excess Proceeds exceeds $15.0 million, within 30 days thereof, Xerium will make an Asset Sale Offer to all holders of Notes and all holders of Pari Passu Indebtedness evidenced or governed by Pari Passu Payment Lien Documents containing provisions similar to those set forth in the Indenture with respect to mandatory prepayments and offers to purchase or redeem with the proceeds of sales of assets to purchase the maximum principal amount of Notes and such Pari Passu Indebtedness that may be purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer will be equal to 100% of the principal amount plus accrued and unpaid interest to the date of purchase, and will be payable in cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer, Xerium may use those Excess Proceeds for any purpose not otherwise prohibited by the Indenture. If the aggregate principal amount of Notes and such Pari Passu Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the trustee will select the Notes, and Xerium (or the applicable agent for such Pari Passu Indebtedness will select) such Pari Passu Indebtedness to be purchased on a pro rata basis. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds will be reset at zero.

Xerium will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with each repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the Asset Sale provisions of the Indenture, Xerium will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Asset Sale provisions of the Indenture by virtue of such compliance.

Excess Cash Flow

If Xerium and its Restricted Subsidiaries have Excess Cash Flow for any fiscal year commencing with the fiscal year ending December 31, 2017, Xerium will be required to make an offer (an “Excess Cash Flow Offer”) to all holders of Notes to purchase the maximum principal amount of Notes that may be purchased with 75% of such Excess Cash Flow for such fiscal year (the “ Excess Cash Flow Offer Amount ”); provided that for the fiscal year ending December 31, 2017, Excess Cash Flow will be calculated for the five consecutive fiscal quarters ended December 31, 2017. The offer price for such Excess Cash Flow Offer shall be an amount in cash equal to 101.5% of the principal amount thereof, plus accrued and unpaid interest on the Notes repurchased to the date of purchase, subject to the rights of holders of Notes on the relevant record date to receive interest due on the relevant interest payment date, in accordance with the procedures set forth in the Indenture.

Within 95 days after the end of any fiscal year for which an Excess Cash Flow Offer is required to be made, the Issuer will send a notice (or otherwise transmit in accordance with DTC’s applicable policies and procedures) to each Holder of Notes and the Trustee describing the Excess Cash Flow Offer and offering to purchase the Notes on the date specified in the notice (which shall be a Business Day not earlier than 30 days nor later than 60 days from the date the notice is sent). The notice will comply with the notice requirements under the Indenture for an optional repurchase of Notes. To the extent that the aggregate amount of Notes tendered pursuant to an Excess Cash Flow Offer is less than the Excess Cash Flow Offer Amount, the Issuer and its Restricted Subsidiaries may use any remaining Excess Cash Flow Offer Amount for any purpose not otherwise prohibited by the Indenture. If the aggregate principal amount of Notes surrendered by holders thereof exceeds the Excess Cash Flow Offer Amount, Notes to be purchased shall be selected on a pro rata basis based upon principal balance.

With respect to each Excess Cash Flow Offer, Xerium shall be entitled to reduce the applicable Excess Cash Flow Offer Amount with respect thereto by an amount equal to the sum of (x) the aggregate repurchase price paid for any Notes theretofore repurchased by Xerium in the open market or pursuant to tender offers (and cancelled by Xerium) and (y) the aggregate redemption price paid for any Notes theretofore redeemed pursuant to one or more optional redemptions (other than (1) repurchases made pursuant to any Change of Control Offers, Asset Sale Offers, Excess Cash Flow Offers or required to be made pursuant to clause (D)(iii) of the definition of the term “Excess Cash Flow” or (2) any redemptions described in the second paragraph under “—Optional Redemption” above), in each case, during the period with respect to which such Excess Cash Flow was being computed.

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Notwithstanding the foregoing provisions of this covenant, Xerium will not be required (but may elect to do so) to make an Excess Cash Flow Offer in accordance with this covenant unless the Excess Cash Flow Offer Amount with respect to the applicable period in respect of which such Excess Cash Flow Offer is to be made exceeds $1.0 million (with lesser amounts being carried forward for purposes of determining whether the $1.0 million threshold has been met for any future period). Upon completion of each Excess Cash Flow Offer, the Excess Cash Flow Offer Amount will be reset at zero.

Xerium will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with each repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the Asset Sale provisions of the Indenture, Xerium will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Asset Sale provisions of the Indenture by virtue of such compliance.

To the extent that, in connection with the preparation of Xerium’s financial statements or otherwise, it is determined that there was an error in good faith in the calculation by Xerium of the Excess Cash Flow that resulted in less than the full Excess Cash Flow Offer Amount being used in an Excess Cash Flow Offer, no such shortfall will result in a Default or Event of Default; provided that within 30 calendar days of Xerium’s confirmation of the error, Xerium initiates an additional Excess Cash Flow Offer of such additional amount.

If Xerium fails to meet certain conditions, the Credit Agreement may prohibit Xerium from purchasing any Notes, subject to certain exceptions. Any future credit agreements or other agreement to which Xerium becomes a party may contain similar or other restrictions. In the event Xerium must make an Excess Cash Flow Offer at a time when Xerium is prohibited from purchasing Notes, Xerium could seek the consent from the lenders under the Credit Agreement to the purchase of Notes or could attempt to refinance the borrowings that contain the prohibition. If Xerium does not obtain a consent or repay the borrowings, Xerium will remain prohibited from purchasing Notes. In that case, the failure of Xerium to purchase tendered Notes would constitute an Event of Default under the Indenture which would, in turn, constitute a default under the Credit Agreement.

Certain Covenants

Restricted Payments

Xerium will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly:

(all such payments and other actions set forth in these clauses (a) through (d) above being collectively referred to as “ Restricted Payments ”), unless, at the time of and after giving effect to such Restricted Payment:

The preceding provisions will not prohibit ( provided that with respect to clauses (5), (7), (9), (10) and (12) below, no Default has occurred and is continuing or would be caused thereby):

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The amount of all Restricted Payments (other than cash) will be the Fair Market Value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by Xerium or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. If the Fair Market Value of any assets or securities that are required to be valued by this covenant exceeds $25.0 million, the Board of Directors’ determination of Fair Market Value must be based upon an opinion or appraisal issued by an accounting, appraisal or investment banking firm of national standing in the United States.

Incurrence of Indebtedness and Issuance of Preferred Stock

Xerium will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “ incur ”) any Indebtedness (including Acquired Debt), and Xerium will not issue any Disqualified Stock and will not permit any of its Restricted Subsidiaries to issue any shares of Preferred Stock; provided, however , that Xerium may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock and any Restricted Subsidiary may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock or Preferred Stock if the Fixed Charge Coverage Ratio for Xerium’s most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such Preferred Stock is issued, as the case may be, would have been at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the Preferred Stock had been issued, as the case may be, at the beginning of such four fiscal quarter reference period; provided that Restricted Subsidiaries that are not Guarantors may not incur Indebtedness or issue Disqualified Stock or Preferred Stock pursuant to the Fixed Charge Coverage Ratio test under this paragraph, if after giving pro forma effect to such incurrence or issuance (including a pro forma application of the net proceeds therefrom), Indebtedness or Disqualified Stock or Preferred Stock of Restricted Subsidiaries that are not Guarantors would be outstanding pursuant to the Fixed Charge Coverage Ratio test under this paragraph in an aggregate amount of more than the greater of (x) $20.0 million and (y) 3.50% of Total Assets.

The first paragraph of this covenant will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “ Permitted Debt ”):

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Neither Xerium nor any Guarantor will incur any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of Xerium or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes or Note Guarantees on substantially identical terms; provided, however , that no Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of Xerium or any Guarantor solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis.

For purposes of determining compliance with this “Incurrence of Indebtedness and Issuance of Preferred Stock” covenant, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (18) above, or is entitled to be incurred pursuant to the first paragraph of this covenant, Xerium will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this covenant. Indebtedness under Credit Facilities outstanding on the date on which Notes are first issued and authenticated under the Indenture will initially be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of the definition of Permitted Debt. Indebtedness permitted by this covenant need not be permitted solely by reference to one provision permitting such Indebtedness but may be permitted in part by one such provision and in part by one or more other provisions of this covenant permitting such Indebtedness. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of Preferred Stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock or Preferred Stock in the form of additional shares of the same class of Disqualified Stock or Preferred Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock or Preferred Stock for purposes of this covenant; provided , in each such case, that the amount of any such accrual, accretion or payment is included in Fixed Charges of Xerium as accrued.

For purposes of determining compliance with any U.S. dollar-denominated or euro-denominated restriction on the incurrence of Indebtedness, the U.S. dollar-equivalent or euro-denominated, as the case may be, principal amount of Indebtedness denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred, in the case of term Indebtedness, or first committed, in the case of revolving credit Indebtedness; provided that if such Indebtedness is incurred to refinance other Indebtedness denominated in a foreign currency, and such refinancing would cause the applicable U.S. dollar-denominated or euro-denominated, as the case may be, restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such U.S. dollar-denominated or euro-denominated, as the case may be, restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced. Notwithstanding any other provision of the Indenture, the maximum amount of Indebtedness that Xerium or any Restricted Subsidiary may incur pursuant to this covenant shall not be or be deemed to be exceeded as a result of fluctuations in exchange rates or currency values.

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The amount of any Indebtedness outstanding as of any date will be:

Liens

Xerium will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Lien of any kind on any asset now owned or hereafter acquired, except Permitted Liens.

Limitation on Sale and Leaseback Transactions

Xerium will not, and will not permit any of its Restricted Subsidiaries to, enter into any sale and leaseback transaction; provided that Xerium or any Restricted Subsidiary may enter into a sale and leaseback transaction if:

Dividend and Other Payment Restrictions Affecting Subsidiaries

Xerium will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to:

However, the preceding restrictions will not apply to encumbrances or restrictions existing under or by reason of:

Merger, Consolidation or Sale of Assets

Xerium will not, directly or indirectly: (1) consolidate or merge with or into another Person (whether or not Xerium is the surviving corporation); or (2) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of Xerium and its Restricted Subsidiaries taken as a whole, in one or more related transactions, to another Person, unless:

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In addition, Xerium will not, directly or indirectly, lease all or substantially all of the properties and assets of it and its Restricted Subsidiaries taken as a whole, in one or more related transactions, to any other Person.

This “Merger, Consolidation or Sale of Assets” covenant will not apply:

Subject to certain limitations described in the Indenture governing release of a Note Guarantee upon the sale, disposition or transfer of a Guarantor, no Guarantor will, and Xerium will not permit any Guarantor to, consolidate or merge with or into or wind up into (whether or not such Guarantor is the surviving Person), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets, in one or more related transactions, to any Person unless:

Subject to certain limitations described in the Indenture, the Successor Person will succeed to, and be substituted for, such Guarantor under the Indenture and such Guarantor’s Note Guarantee. Notwithstanding the foregoing, any Guarantor may (1) merge, amalgamate or consolidate with or into, wind up into or transfer all or part of its properties and assets to another Guarantor or Xerium, (2) merge with an Affiliate of Xerium solely for the purpose of reincorporating the Guarantor in the United States, any state thereof, the District of Columbia or any territory thereof, (3) convert into a corporation, partnership, limited partnership, limited liability corporation or trust organized or existing under the laws of the jurisdiction of organization of such Guarantor or (4) liquidate or dissolve or change its legal form if Xerium determines in good faith that such action is in the best interests of Xerium.

Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition of the phrase under applicable law. Accordingly, in certain circumstances there may be a degree of uncertainty as to whether a particular transaction would involve “all or substantially all” of the properties or assets of a Person.

Transactions with Affiliates

Xerium will not, and will not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of Xerium (each, an “ Affiliate Transaction ”), involving aggregate consideration in excess of $5.0 million, unless:

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Business Activities

Xerium will not, and will not permit any of its Restricted Subsidiaries to, engage in any business other than Permitted Businesses, except to such extent as would not be material to Xerium and its Restricted Subsidiaries taken as a whole.

Note Guarantees

If Xerium or any of its Restricted Subsidiaries acquires or creates a Domestic Subsidiary that is a Wholly Owned Subsidiary after the Issue Date, then that newly acquired or created Domestic Subsidiary (other than a Securitization Subsidiary or an Immaterial Subsidiary) will become a Guarantor and (i) execute a supplemental Indenture and joinder agreements or similar agreements with respect to the applicable Collateral Documents necessary in order to grant to the collateral agent for the benefit of the holders of the Notes a security interest, subject to the Intercreditor Agreement and Permitted Liens, in substantially all of the assets (other than Excluded Assets) of such Domestic Subsidiary; (ii) take such actions necessary to perfect such security interest as may be required by the Collateral Documents (including the filing of a UCC financing statement), as and when required thereby; (iii) cause the delivery to the collateral agent of the certificates, if any, representing all of the Equity Interests of such Domestic Subsidiary, together with undated stock powers or other appropriate instruments of transfer executed and delivered in blank by a duly authorized officer of the holder(s) of such Equity Interests; and (iv) deliver an opinion of counsel reasonably satisfactory to the trustee and collateral agent that such supplemental indenture and any other documents required to be delivered, in each case, have been duly authorized, executed and delivered by such Domestic Subsidiary and constitute legally valid and binding and enforceable obligations of such Domestic Subsidiary and regarding the perfection of such Liens in the Collateral and Equity Interests of such Domestic Subsidiary as provided for in the Indenture or the Collateral Documents (in form and substance substantially consistent with the form of opinion of counsel delivered on the Issue Date (subject to customary qualifications, exceptions and assumptions)) within 20 Business Days of the date on which it was acquired or created. Xerium may designate any Restricted Subsidiary as a Guarantor at any time.

The Note Guarantee of a Guarantor will automatically and unconditionally be released:

Limitation on Issuances of Guarantees of Indebtedness

Xerium will not permit any of its Domestic Subsidiaries, directly or indirectly, to guarantee or pledge any assets to secure the payment of any other Indebtedness of Xerium (except Permitted Liens) unless such Domestic Subsidiary simultaneously executes and delivers a supplemental indenture providing for the guarantee of the payment of the Notes by such Domestic Subsidiary, which guarantee will be senior to or pari passu with such Domestic Subsidiary’s guarantee of or pledge to secure such other Indebtedness.

Designation of Restricted and Unrestricted Subsidiaries

The Board of Directors of Xerium may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if that designation would not cause a Default. If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate Fair Market Value of all outstanding Investments owned by Xerium and its Restricted Subsidiaries in the Subsidiary designated as Unrestricted will be deemed to be an Investment made as of the time of the designation and will reduce the amount available for Restricted Payments under the covenant described above under the caption “— Restricted Payments” or under one or more clauses of the definition of Permitted Investments, as determined by Xerium. That designation will only be permitted if the Investment would be permitted at that time and if the Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. Any designation of a Restricted Subsidiary of Xerium as an Unrestricted Subsidiary will be evidenced to the trustee by filing with the trustee a certified copy of a resolution of the Board of Directors giving effect to such designation and an officer’s certificate certifying that such designation complied with the preceding conditions and was permitted by the covenant described above under the caption “— Restricted Payments.”

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If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it will thereafter cease to be an Unrestricted Subsidiary for purposes of the Indenture and any Indebtedness of such Subsidiary will be deemed to be incurred by a Restricted Subsidiary of Xerium as of such date and, if such Indebtedness is not permitted to be incurred as of such date under the covenant described under the caption “— Incurrence of Indebtedness and Issuance of Preferred Stock,” Xerium will be in default of such covenant. The Board of Directors of Xerium may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary of Xerium; provided that such designation will be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of Xerium of any outstanding Indebtedness of such Unrestricted Subsidiary, and such designation will only be permitted if (1) such Indebtedness is permitted under the covenant described under the caption “— Incurrence of Indebtedness and Issuance of Preferred Stock,” calculated on a pro forma basis as if such designation had occurred at the beginning of the four fiscal quarter reference period; and (2) no Default or Event of Default would be in existence following such designation.

Real Estate Mortgages and Filings

With respect to any Material Real Estate Asset or any Real Estate Asset owned, leased or subleased on the Issue Date becomes a Material Real Estate Asset and such interest has not otherwise been made subject to the Lien of the Collateral Documents in favor of the collateral agent, for the benefit of the Notes Secured Parties, Xerium or the applicable Guarantor, as the case may be, shall use its commercially reasonable efforts to, within 120 days of the latest of (x) the Issue Date, (y) the date of the acquisition, leasing or subleasing thereof or (z) the date on which such Real Estate Asset became a Material Real Estate Asset, deliver to the collateral agent:

With respect to any Leasehold Property that is Material Real Estate Asset or any Leasehold Property leased or subleased on the Issue Date that becomes a Material Real Estate Asset and such interest has not otherwise been made subject to the Lien of the Collateral Documents in favor of the collateral agent, for the benefit of the Notes Secured Parties, Xerium or the applicable Guarantor, as the case may be, shall use its commercially reasonable efforts to, within 120 days of the latest of (x) the Issue Date, (y) the date of the leasing or subleasing thereof or (z) the date on which such Leasehold Property became a Material Real Estate Asset, cause a Landlord Personal Property Collateral Access Agreement and a Landlord Consent and Estoppel to be executed by the applicable landlord and delivered to the collateral agent.

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Further Assurances

Xerium and the Guarantors, at their sole cost and expense and subject to the Intercreditor Agreement, will execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register, as applicable, any and all such further acts, deeds, conveyances, security agreements, account control agreements, assignments, financing statements and continuations thereof, termination statements, notices of assignment, transfers, certificates, assurances and other instruments (including, without limitation, landlord-lender agreements, bailee letters and appraisals in respect of any real property), consents, authorizations, approvals and orders, and shall take all further action, as may be required pursuant to the Collateral Documents from time to time in order to:

Upon the exercise by the trustee, the collateral agent or any holder of the Notes of any power, right, privilege or remedy under the Indenture or any of the Collateral Documents which requires any consent, approval, recording, qualification or authorization of any governmental authority, Xerium and the Guarantors will execute and deliver all applications, certifications, instruments and other documents and papers that may be required pursuant to the Collateral Documents from Xerium or any Guarantor for such governmental consent, approval, recording, qualification or authorization.

Payments for Consent

Xerium will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any holder of Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the Indenture or the Notes unless such consideration is offered to be paid and is paid to all holders of the Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement.

Reports

Whether or not required by the rules and regulations of the SEC, so long as any Notes are outstanding, Xerium will make available to the holders of Notes, to any Beneficial Owner of the Notes, prospective investors, securities analysts and market makers in the Notes and the trustee (which requirement may be satisfied by filing with the SEC for public availability or posting on Xerium’s website if the SEC will not accept such filings), within the time periods specified in the SEC’s rules and regulations:

All such reports will be prepared in all material respects in accordance with all of the rules and regulations applicable to such reports. Each annual report on Form 10-K will include a report on Xerium’s consolidated financial statements by Xerium’s certified independent accountants.

If Xerium has designated any of its Subsidiaries as Unrestricted Subsidiaries, then the quarterly and annual financial information required by the preceding paragraphs will be accompanied by a reasonably detailed presentation, either on the face of the financial statements or in the notes thereto, and in Management’s Discussion and Analysis of Financial Condition and Results of Operations, of the financial condition and results of operations of Xerium and its Restricted Subsidiaries separate from the consolidated financial condition and results of operations of the Unrestricted Subsidiaries of Xerium, or Xerium will make such presentation available to the holders of the Notes and the trustee by posting such information to its website.

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Within 10 Business Days after the dates that the reports described in clause (a) above are required to be delivered, Xerium shall participate in quarterly conference calls to discuss operating results and related matters, which conference calls shall be open to all holders of Notes, Beneficial Owners of the Notes, prospective investors, securities analysts and market makers in the Notes to discuss such financial information. Xerium will make available the details regarding such conference calls to the trustee, the holders of the Notes, the Beneficial Owners of the Notes, prospective investors, securities analysts and market makers in the Notes by posting such information on Xerium’s website.

In addition, Xerium agrees that, for so long as any Notes remain outstanding, if at any time it is not required to file with the SEC the reports required by the preceding paragraphs, it will furnish to the holders of Notes and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. Xerium will be deemed to have provided such information to the holders, securities analysts and prospective investors if it has filed reports containing such information with the SEC via the EDGAR filing system and such reports are publicly available.

To the extent any such information is not so filed or furnished, as applicable, within the time periods specified above and such information is subsequently filed or furnished, as applicable, Xerium shall be deemed to have satisfied its obligations with respect thereto at such time and any default with respect thereto shall be deemed to have been cured; provided that such cure shall not otherwise affect the rights of holders of the Notes if holders of at least 25% in principal amount of the then total outstanding Notes have declared the principal, premium, if any, interest and any other monetary obligations on all the then outstanding Notes to be due and payable immediately and such declaration shall not have been rescinded or cancelled prior to such cure.

Events of Default and Remedies

Each of the following is an “ Event of Default ”:

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In the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to Xerium, any Restricted Subsidiary of Xerium that is a Significant Subsidiary or any group of Restricted Subsidiaries of Xerium that, taken together, would constitute a Significant Subsidiary, all outstanding Notes will become due and payable immediately without further action or notice. If any other Event of Default occurs and is continuing, the trustee or the holders of at least 25% in aggregate principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately.

Subject to certain limitations, holders of a majority in aggregate principal amount of the then outstanding Notes may direct the trustee in its exercise of any trust or power. The trustee may withhold from holders of the Notes notice of any continuing Default or Event of Default if it determines that withholding notice is in their interest, except a Default or Event of Default relating to the payment of principal, interest or premium.

Subject to the provisions of the Indenture relating to the duties of the trustee and the collateral agent, in case an Event of Default occurs and is continuing, neither the trustee nor the collateral agent will be under any obligation to exercise any of the rights or powers under the Indenture Documents at the request or direction of any holders of Notes unless such holders have offered to the trustee indemnity or security satisfactory to it against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium or interest when due, no holder of a note may pursue any remedy with respect to the Indenture or the Notes unless:

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The holders of a majority in aggregate principal amount of the then outstanding Notes by notice to the trustee may, on behalf of the holders of all of the Notes, rescind an acceleration or waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest or premium, if any, on, or the principal of, the Notes.

Xerium is required to deliver annually to the trustee a statement regarding compliance with the Indenture and the Collateral Documents. Furthermore, Xerium is required to cause the delivery of an annual perfection opinion to the collateral agent. Upon becoming aware of any Default or Event of Default, Xerium is required to deliver to the trustee a statement specifying such Default or Event of Default and the status thereof.

No Personal Liability of Directors, Officers, Employees and Stockholders

No director, officer, employee, incorporator or stockholder of Xerium or any Guarantor, as such, will have any liability for any obligations of Xerium or the Guarantors under the Notes, the Note Guarantees, the Indenture, the Collateral Documents, the Intercreditor Agreement, or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each holder of Notes by accepting a note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. The waiver and release may not be effective to waive or release liabilities under the federal securities laws.

Legal Defeasance and Covenant Defeasance

Xerium may at any time, at its option, elect to have all of its obligations discharged with respect to the outstanding Notes and all obligations of the Guarantors discharged with respect to their Note Guarantees (“ Legal Defeasance ”) except for:

In addition, Xerium may, at its option and at any time, elect to have the obligations of Xerium released with respect to certain covenants (including its obligation to make Change of Control Offers, Asset Sale Offers and Excess Cash Flow Offers) that are described in the Indenture (“ Covenant Defeasance ”) and all obligations of the Guarantors discharged with respect to their Note Guarantees and thereafter any omission to comply with those covenants will not constitute a Default or Event of Default with respect to the Notes. In the event Covenant Defeasance occurs, certain events (not including non-payment, bankruptcy, receivership, rehabilitation and insolvency events) described under “— Events of Default and Remedies” will no longer constitute an Event of Default with respect to the Notes.

In order to exercise either Legal Defeasance or Covenant Defeasance:

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The Collateral will be released from the Lien securing the Notes as provided under “—Security—General” upon a Legal Defeasance or Covenant Defeasance in accordance with the provisions described above.

Amendment, Supplement and Waiver

Except as provided in the next three succeeding paragraphs, the Indenture, the Notes, the Note Guarantees, the Collateral Documents and with the consent of the ABL Agent, the Intercreditor Agreement may be amended or supplemented with the consent of the holders of at least a majority in aggregate principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes), and any existing Default or Event of Default or compliance with any provision of the Indenture or the Notes may be waived with the consent of the holders of a majority in aggregate principal amount of the then outstanding Notes (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes).

Without the consent of each holder of Notes affected, an amendment, supplement or waiver may not (with respect to any Notes held by a non-consenting holder):

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In addition, any amendment to or waiver of, the provisions of the Indenture relating to the Collateral or the Collateral Documents that has the effect of releasing all or substantially all of the Collateral from the Liens securing the Notes and the Note Guarantees will require the consent of the holders of at least 66-2/3% in aggregate principal amount of the Notes then outstanding.

Notwithstanding the preceding, without the consent of any holder of Notes, Xerium, the trustee and the collateral agent, as applicable, may amend or supplement the Indenture Documents:

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Satisfaction and Discharge

The Indenture will be discharged and will cease to be of further effect as to all Notes issued thereunder and all obligations of the Guarantors discharged with respect to their Note Guarantees, when either:

The Collateral will be released from the Lien securing the Notes as provided under “—Security—General” upon a satisfaction and discharge in accordance with the provisions described above.

Concerning the Trustee

If the trustee or collateral agent becomes a creditor of Xerium, the Indenture limits the right of the trustee or collateral agent, as the case may be, to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The trustee and the collateral agent will be permitted to engage in other transactions; however, if either the trustee or collateral agent, as the case may be, acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee or collateral agent, as the case may be (if the Indenture has been qualified under the Trust Indenture Act), or resign.

The holders of a majority in aggregate principal amount of the then outstanding Notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the trustee or collateral agent, as the case may be, subject to certain exceptions. The Indenture provides that in case an Event of Default occurs and is continuing, each of the trustee and the collateral agent, as the case may be, will be required, in the exercise of its power, to use the degree of care of a prudent man in the conduct of his own affairs. Neither the trustee nor collateral agent, as the case may be, will be under any obligation to exercise any of its rights or powers under the Indenture Documents at the request of any holder of Notes, unless such holder has offered to the trustee or collateral agent, as the case may be, security and indemnity satisfactory to it against any loss, liability or expense.

The trustee and the collateral agent shall have no responsibility for monitoring Xerium’s or the Guarantors’ compliance with any of their covenants under the Indenture or Collateral Documents, nor shall the trustee or collateral agent be responsible for the existence, genuineness, or value of the Collateral under the Indenture or the Collateral Documents or for the validity, priority or enforceability of liens on such Collateral, whether impaired by operation of law or by reason of any action or omission to act on its part.

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Governing Law

The Indenture, the Notes, the Note Guarantees, the Pledge and Security Agreement and the Intercreditor Agreement provide that they will be governed by, and construed in accordance with, the laws of the State of New York.

Additional Information

Anyone who receives this prospectus may obtain a copy of the Indenture, the Collateral Documents and the Intercreditor Agreement without charge by writing to Xerium Technologies Inc., 14101 Capital Boulevard, Youngsville, North Carolina 27596, Attention: Investor Relations.

Book Entry, Delivery and Form

Except as set forth below, the exchange notes will be issued in registered, global form in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof (collectively, the “ Global Notes ” and each individually, a “ Global Note ”). The Global Notes will be deposited upon issuance with the trustee as custodian for The Depository Trust Company (“ DTC ”) and registered in the name of DTC or its nominee, in each case for credit to an account of a direct or indirect participant in DTC as described below.

Except as set forth below, the Global Notes may be transferred, in whole and not in part, only to another nominee of DTC or to a successor of DTC or its nominee. Beneficial interests in the Global Notes may not be exchanged for Notes in certificated form except in limited circumstances described below. See “— Exchange of Global Notes for Certificated Notes.” In addition, transfers of beneficial interests in the Global Notes will be subject to the applicable rules and procedures of DTC and its direct or indirect participants (including, if applicable, those of Euroclear and Clearstream), which may change from time to time.

Except as described below, owners of an interest in the Global Notes will not have Notes registered in their names, will not receive physical delivery of Notes in certificated form and will not be considered the registered owners or “holders” thereof under the Indenture for any purpose.

Depository Procedures

The following description of the operations and procedures of DTC, Euroclear and Clearstream is provided solely as a matter of convenience. These operations and procedures are solely within the control of the respective settlement systems and are subject to changes by them. Xerium takes no responsibility for these operations and procedures and urges investors to contact the system or their participants directly to discuss these matters.

DTC has advised Xerium that DTC is a limited-purpose trust company created to hold securities for its participating organizations (collectively, the “ Participants ”) and to facilitate the clearance and settlement of transactions in those securities between Participants through electronic book-entry changes in accounts of its Participants. The Participants include securities brokers and dealers (including the initial purchasers), banks, trust companies, clearing corporations and certain other organizations. Access to DTC’s system is also available to other entities such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Participant, either directly or indirectly (collectively, the “ Indirect Participants ”). Persons who are not Participants may beneficially own securities held by or on behalf of DTC only through the Participants or the Indirect Participants. The ownership interests in, and transfers of ownership interests in, each security held by or on behalf of DTC are recorded on the records of the Participants and Indirect Participants.

DTC has also advised Xerium that, pursuant to procedures established by it:

All interests in a Global Note, including those held through Euroclear or Clearstream, may be subject to the procedures and requirements of DTC. Those interests held through Euroclear or Clearstream may also be subject to the procedures and requirements of such systems.

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The laws of some states require that certain Persons take physical delivery in definitive form of securities that they own. Consequently, the ability to transfer beneficial interests in a Global Note to such Persons will be limited to that extent. Because DTC can act only on behalf of Participants, which in turn act on behalf of Indirect Participants, the ability of a Person having beneficial interests in a Global Note to pledge such interests to Persons that do not participate in the DTC system, or otherwise take actions in respect of such interests, may be affected by the lack of a physical certificate evidencing such interests.

Except as described below, owners of interests in the Global Notes will not have Notes registered in their names, will not receive physical delivery of Notes in certificated form and will not be considered the registered owners or “Holders” thereof under the Indenture for any purpose.

Payments in respect of the principal of, and interest and premium, if any, on a Global Note registered in the name of DTC or its nominee will be payable to DTC in its capacity as the registered holder under the Indenture. Under the terms of the Indenture, Xerium and the trustee will treat the Persons in whose names the Notes, including the Global Notes, are registered as the owners thereof for the purpose of receiving payments and for all other purposes. Consequently, neither Xerium, the trustee nor any agent of Xerium or the trustee has or will have any responsibility or liability for:

DTC has advised Xerium that its current practice, upon receipt of any payment in respect of securities such as the Notes (including principal and interest), is to credit the accounts of the relevant Participants with the payment on the payment date unless DTC has reason to believe it will not receive payment on such payment date. Each relevant Participant is credited with an amount proportionate to its beneficial ownership of an interest in the principal amount of the relevant security as shown on the records of DTC. Payments by the Participants and the Indirect Participants to the beneficial owners of Notes will be governed by standing instructions and customary practices and will be the responsibility of the Participants or the Indirect Participants and will not be the responsibility of DTC, the trustee or Xerium. Neither Xerium nor the trustee will be liable for any delay by DTC or any of its Participants in identifying the beneficial owners of the Notes, and Xerium and the trustee may conclusively rely on and will be protected in relying on instructions from DTC or its nominee for all purposes.

Transfers between the Participants will be effected in accordance with DTC’s procedures, and will be settled in same-day funds, and transfers between participants in Euroclear and Clearstream will be effected in accordance with their respective rules and operating procedures.

Cross-market transfers between the Participants, on the one hand, and Euroclear or Clearstream participants, on the other hand, will be effected through DTC in accordance with DTC’s rules on behalf of Euroclear or Clearstream, as the case may be, by its respective depositary; however, such cross-market transactions will require delivery of instructions to Euroclear or Clearstream, as the case may be, by the counterparty in such system in accordance with the rules and procedures and within the established deadlines (Brussels time) of such system. Euroclear or Clearstream, as the case may be, will, if the transaction meets its settlement requirements, deliver instructions to its respective depositary to take action to effect final settlement on its behalf by delivering or receiving interests in the relevant Global Note in DTC, and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Euroclear participants and Clearstream participants may not deliver instructions directly to the depositories for Euroclear or Clearstream.

DTC has advised Xerium that it will take any action permitted to be taken by a holder of Notes only at the direction of one or more Participants to whose account DTC has credited the interests in the Global Notes and only in respect of such portion of the aggregate principal amount of the Notes as to which such Participant or Participants has or have given such direction. However, if there is an Event of Default under the Notes, DTC reserves the right to exchange the Global Notes for Notes in certificated form, and to distribute such Notes to its Participants.

Although DTC, Euroclear and Clearstream have agreed to the foregoing procedures to facilitate transfers of interests in the Global Notes among participants in DTC, Euroclear and Clearstream, they are under no obligation to perform or to continue to perform such procedures, and may discontinue such procedures at any time. Neither Xerium nor the trustee nor any of their respective agents will have any responsibility for the performance by DTC, Euroclear or Clearstream or their respective participants or indirect participants of their respective obligations under the rules and procedures governing their operations.

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Exchange of Global Notes for Certificated Notes

A Global Note is exchangeable for definitive Notes in registered certificated form (“ Certificated Notes ”) in minimum denominations of $2,000 and in integral multiples of $1,000 in excess thereof, if:

In addition, beneficial interests in a Global Note may be exchanged for Certificated Notes upon prior written notice given to the trustee by or on behalf of DTC in accordance with the Indenture. In all cases, Certificated Notes delivered in exchange for any Global Note or beneficial interests in Global Notes will be registered in the names, and issued in any approved denominations, requested by or on behalf of the depositary (in accordance with its customary procedures).

Same Day Settlement and Payment

Xerium will make payments in respect of the Notes represented by the Global Notes (including principal, premium, if any, and interest) by wire transfer of immediately available funds to the accounts specified by the Global Note holder. Xerium will make all payments of principal, interest and premium, if any, with respect to Certificated Notes by wire transfer of immediately available funds to the accounts specified by the holders thereof or, if no such account is specified, by mailing a check to each such holder’s registered address. The Notes represented by the Global Notes are expected to trade in DTC’s Same-Day Funds Settlement System, and any permitted secondary market trading activity in such Notes will, therefore, be required by DTC to be settled in immediately available funds. Xerium expects that secondary trading in any Certificated Notes will also be settled in immediately available funds.

Because of time zone differences, the securities account of a Euroclear or Clearstream participant purchasing an interest in a Global Note from a Participant in DTC will be credited, and any such crediting will be reported to the relevant Euroclear or Clearstream participant, during the securities settlement processing day (which must be a Business Day for Euroclear and Clearstream) immediately following the settlement date of DTC. DTC has advised Xerium that cash received in Euroclear or Clearstream as a result of sales of interests in a Global Note by or through a Euroclear or Clearstream participant to a Participant in DTC will be received with value on the settlement date of DTC but will be available in the relevant Euroclear or Clearstream cash account only as of the Business Day for Euroclear or Clearstream following DTC’s settlement date.

Certain Definitions

Set forth below are certain defined terms used in the Indenture. Reference is made to the Indenture for a full disclosure of all defined terms used therein, as well as any other capitalized terms used herein for which no definition is provided.

“ ABL Bank Product Documents ” mean the agreements or other documents evidencing or governing ABL Bank Product Obligations.

“ ABL Cash Management Documents ” means the agreements or other documents evidencing or governing ABL Cash Management Obligations.

“ ABL Collateral Documents ” means all “Collateral Documents” or any similar terms as defined in the ABL Credit Agreement, and all other security agreements, mortgages, deeds of trust, account control agreements, customs brokers agreements, collateral access agreements, and other collateral documents executed and delivered in connection with the ABL Credit Agreement, in each case as the same may be amended, amended and restated, supplemented, restated or otherwise modified from time to time.

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“ ABL Credit Agreement ” means the Revolving Credit and Guaranty Agreement, dated November 3, 2015 (as amended, restated, supplemented or otherwise modified through the date hereof), among Xerium, Xerium Canada Inc., Huyck.Wangner Germany GmbH, Robec Walzen GmbH and Stowe Woodward Aktiengesellschaft, as borrowers, the other borrowers party thereto, the various banks and other financial institutions from time to time party thereto (the “ ABL Lenders” ), and JPMorgan Chase Bank, N.A., as administrative agent and as collateral agent and J.P. Morgan Europe Limited, as European administrative agent and as European collateral agent (in such capacities, the “ ABL Agent ”) as the same may be amended, amended and restated, supplemented, restated or otherwise modified from time to time.

“ ABL Deposit and Securities Accounts ” means all deposit accounts, securities accounts, collection accounts and lockbox accounts (and all related lockboxes) of the Credit Parties (other than the PPE Priority Accounts).

“ ABL Documents ” means the ABL Credit Agreement, any guaranty in respect thereof, any ABL Collateral Document and any other ancillary agreement, instruments, documents, notes and certificates, from time to time executed by or on behalf of any Credit Party or any of its respective Subsidiaries or Affiliates, and delivered to the ABL Agent or any other ABL Secured Party, in connection with any of the foregoing, in each case as the same may be amended, amended and restated, supplemented, restated, replaced or otherwise modified from time to time.

“ ABL Obligations ” means any and all ABL Bank Product Obligations, ABL Cash Management Obligations and obligations of every nature of each Credit Party from time to time owed to the ABL Secured Parties, or any of them, under, in connection with, or evidenced or secured by any ABL Document, including, without limitation, all “Obligations” or similar term as defined in the ABL Credit Agreement and whether for principal, interest, reimbursement of amounts drawn under letters of credit, fees, expenses, indemnification or otherwise, and all other amounts owing or due under the terms of any ABL Document, ABL Bank Product Document and ABL Cash Management Document (including Post-Petition Interest), as amended, restated, amended and restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time. For clarity, the term “ABL Obligations” shall include, without limitation, all obligations on account of any ABL Secured Party DIP Financing provided by any ABL Secured Party to any of the Credit Parties.

“ ABL Secured Parties ” means, collectively, the ABL Agent, the ABL Lenders, the other secured parties under the ABL Credit Agreement, the counterparties to Hedging Obligations described in clause (8) of the definition of the term Permitted Debt which are ABL Lenders (or Affiliates thereof) or at the time of the incurrence thereof were ABL Lenders (or Affiliates thereof) (such Hedging Obligations are referred to herein as “ ABL Bank Product Obligations ”), and the providers of cash management services described in clause (14)(b) of the definition of Permitted Debt which are ABL Lenders (or Affiliates thereof) or at the time of such cash management services were provided were ABL Lenders (or Affiliates thereof) (the Obligations in respect of such cash management services are referred to herein as “ ABL Cash Management Obligations ”).

“ Accession Agreement ” means an accession agreement, if any, to the Collateral Documents, in substantially the form provided therein, entered into by Xerium, the Guarantors, the agent, trustee or other representative for the holders of any Pari Passu Indebtedness and the collateral agent.

“ Acquired Debt ” means, with respect to any specified Person:

“ Affiliate ” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control ,” as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms “controlling,” “controlled by” and “under common control with” have correlative meanings.

“ Agent(s) ” means individually the ABL Agent or the collateral agent and collectively means both the ABL Agent and the collateral agent.

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“ Applicable Premium ” means, with respect to any Note on any redemption date, the greater of:

“ Asset Sale Proceeds Pledged Account ” mean an account, if any, held at, and subject to the sole dominion and control of, the collateral agent in which solely the proceeds from any disposition of Notes Priority Collateral is held pending reinvestment pursuant to the PPE Documents. For clarity, the amounts on deposit in such Asset Sale Proceeds Pledged Account shall constitute Collateral and Notes Priority Collateral.

“ Asset Sale ” means:

Notwithstanding the preceding, none of the following items will be deemed to be an Asset Sale:

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“ Asset Sale Offer ” has the meaning assigned to that term in the Indenture governing the Notes.

“ Attributable Debt ” in respect of a sale and leaseback transaction means, at the time of determination, the present value of the obligation of the lessee for net rental payments during the remaining term of the lease included in such sale and leaseback transaction including any period for which such lease has been extended or may, at the option of the lessor, be extended. Such present value shall be calculated using a discount rate equal to the rate of interest implicit in such transaction, determined in accordance with GAAP; provided, however , that if such sale and leaseback transaction results in a Capital Lease Obligation, the amount of Indebtedness represented thereby will be determined in accordance with the definition of “Capital Lease Obligation.”

“ Bankruptcy Code ” means Title 11 of the United States Code, as now or hereafter in effect or any successor thereto.

“ Bankruptcy Law ” means the Bankruptcy Code and all other insolvency, bankruptcy, receivership, liquidation, conservatorship, assignment for the benefit of creditors, moratorium, rearrangement, reorganization, or similar legal requirements of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

“ Beneficial Owner ” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the Exchange Act), such “person” will be deemed to have beneficial ownership of all securities that such “person” has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only after the passage of time. The terms “Beneficially Owns” and “Beneficially Owned’ have a corresponding meaning.

“ Board of Directors ” means:

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“ Business Day ” means each day which is not a Legal Holiday.

“ Capital Lease Obligation ” means, at the time any determination is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet prepared in accordance with GAAP.

“ Capital Stock ” means:

“ Cash Equivalents ” means:

“ Change of Control ” means the occurrence of any of the following:

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“ Change of Control Triggering Event ” means (i) a Change of Control has occurred and (ii) the notes are downgraded by either S&P or Moody’s on any date during the period commencing 60 days prior to the consummation of such Change of Control and ending 60 days following consummation of such Change of Control.

“ Collateral ” has the meaning assigned to it in the Collateral Documents; it being understood and agreed, however that, for purposes of the Intercreditor Agreement (including, without limitation, Articles 2 and 4 thereof), (i) the term “Collateral” shall not include the assets or property of any foreign subsidiary of Xerium that is a borrower or guarantor under (or in respect of) the ABL Credit Agreement unless such foreign subsidiary is a Guarantor, (ii) any such foreign subsidiary shall not be considered a Credit Party under the Intercreditor Agreement, (iii) as of the Issue Date, no foreign subsidiary of Xerium is a Guarantor and (iv) the ABL Agent and the other ABL Secured Parties shall be free to deal with the assets and properties of any such foreign subsidiary (including the exercise of any remedies with respect thereto) and retain and/or apply proceeds thereof without regard to any of the provisions or restrictions set forth in the Intercreditor Agreement.

“ Collateral Documents ” means the Pledge and Security Agreement, Mortgages, the Landlord Consent and Estoppels, if any, the Landlord Personal Property Collateral Access Agreements, if any, collateral assignments, control agreements and related agreements executed and delivered by Xerium or Guarantor (including financing statements under the UCC of the relevant states), if any, each as amended, supplemented, restated, renewed, replaced or otherwise modified from time to time, to secure any Indenture Obligations and any Pari Passu Payment Lien Obligations or under which rights or remedies with respect to any such Lien are governed.

“ Consolidated EBITDA ” means, with respect to any specified Person for any period, the Consolidated Net Income of such Person for such period plus, without duplication:

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in each case, on a consolidated basis for such Person and its Restricted Subsidiaries and determined in accordance with GAAP.

Notwithstanding the preceding, the provision for taxes based on the income or profits of, and the depreciation and amortization and other non-cash expenses of, a Restricted Subsidiary of Xerium will be added to Consolidated Net Income to compute Consolidated EBITDA of Xerium only to the extent that a corresponding amount would be permitted at the date of determination to be dividended or distributed, directly or indirectly, to Xerium by such Restricted Subsidiary without prior governmental approval (that has not been obtained), and without direct or indirect restriction pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Restricted Subsidiary or its stockholders.

“ Consolidated Net Income ” means, with respect to any specified Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that:

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“ Consolidated Working Capital’’ means, with respect to any Person, at any date of determination, the excess of (a) the sum of all amounts (other than cash and cash equivalents) that would, in conformity with GAAP, be set forth opposite the caption “total current assets” (or any like caption) on a consolidated balance sheet of such Person and its Restricted Subsidiaries at such date over (b) the sum of all amounts that would, in conformity with GAAP, be set forth opposite the caption “total current liabilities” (or any like caption) on a consolidated balance sheet of such Person and its Restricted Subsidiaries on such date other than the current portion of any long-term Indebtedness.

“ Control Collateral ” means any Collateral consisting of any certificated security (as defined in Section 8-102 of the UCC), investment property, deposit account, instruments and any other Collateral as to which a Lien may be perfected through possession or control by the secured party, or any agent therefor.

“ Credit Documents ” means, collectively, the ABL Documents, the ABL Bank Product Documents, the ABL Cash Management Documents and the PPE Documents.

“ Credit Facilities ” means one or more debt facilities, indentures or other arrangements (including the ABL Credit Agreement) designated by Xerium, in each case with one or more banks, other lenders or other financial institutions or investors providing for revolving credit loans, term loans, notes, receivables financings (including without limitation through the sale of receivables to such institutions or to special purpose entities formed to borrow from such institutions against such receivables or the creation of any Liens in respect of such receivables in favor of such institutions), letters of credit or other Indebtedness, in each case, including all agreements, instruments and documents executed and delivered pursuant to or in connection with any of the foregoing, including but not limited to any notes and letters of credit issued pursuant thereto and any guarantee and collateral agreement, patent and trademark security agreement, mortgages or letter of credit applications and other guarantees, pledge agreements, security agreements and collateral documents, in each case as the same may be amended, supplemented, waived or otherwise modified from time to time, or refunded, refinanced, restructured, replaced, renewed, repaid, increased or extended from time to time (whether in whole or in part, whether with the original banks, lenders or institutions or other banks, lenders or institutions or otherwise, and whether provided under any original Credit Facility or one or more other credit agreements, indentures, financing agreements or other Credit Facilities or otherwise). Without limiting the generality of the foregoing, the term “Credit Facility” shall include any agreement (i) changing the maturity of any Indebtedness incurred thereunder or contemplated thereby, (ii) adding Subsidiaries as additional borrowers or guarantors thereunder, (iii) increasing the amount of Indebtedness incurred thereunder or available to be borrowed thereunder or (iv) otherwise altering the terms and conditions thereof.

“ Credit Party PPE Proceeds Notice ” means a written notice delivered by a Credit Party to the ABL Agent stating that certain identifiable cash proceeds which may be deposited in an ABL Deposit and Securities Account constitute Notes Priority Collateral and reasonably identifying the amount of such proceeds and specifying the origin thereof.

“ Default ” means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default.

“ Designated Non-cash Consideration” means the non-cash consideration received by Xerium or one of its Restricted Subsidiaries in connection with an Asset Sale that is so designated as Designated Non-cash Consideration pursuant to an officer’s certificate executed by the Chief Financial Officer, Controller or Treasurer of Xerium setting forth the basis of such valuation, less the amount of cash or Cash Equivalents received in connection with a subsequent sale of such Designated Non-cash Consideration.

“ DIP Financing ” means any ABL Secured Party DIP Financing or any PPE Secured Party DIP Financing, as applicable.

“ Discharge of ABL Obligations ” means (a)(i) the payment in full in cash of all outstanding ABL Obligations (excluding (w) contingent indemnity obligations with respect to then unknown claims, (x) contingent indemnification obligations with respect to known claims (which are provided for in clause (ii) below), (y) LC Obligations (as defined below) (which are provided for in clause (iii) below), and (z) obligations with respect to ABL Bank Product Obligations and ABL Cash Management Obligations (which are provided for in clause (iv) below)), (ii) with respect to contingent indemnification obligations with respect to known or anticipated claims, provisions of cash collateral in an amount reasonably determined by the ABL Agent, (iii) with respect to amounts available to be drawn under outstanding letters of credit issued under the ABL Credit Agreement (or indemnities or other undertakings issued pursuant thereto in respect of outstanding letters of credit) (collectively, the “ LC Obligations ”), the cancellation of such letters of credit or the delivery or provision of cash collateral in respect thereof in compliance with the terms of the ABL Credit Agreement (which shall not exceed an amount equal to 105% of the aggregate undrawn amount of such letters of credit) and (iv) with respect to ABL Bank Product Obligations and ABL Cash Management Obligations (or indemnities or other undertakings issued pursuant thereto in respect of outstanding ABL Bank Product Obligations and ABL Cash Management Obligations), the termination thereof and payment in full in cash of all ABL Obligations (other than contingent indemnity obligations with respect to then unknown claims) with respect thereto or the delivery or provision of cash collateral in an amount reasonably determined by the ABL Agent, and (b) the termination of all commitments to extend credit under the ABL Documents, the ABL Bank Product Documents and the ABL Cash Management Documents.

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“ Discharge of PPE Obligations ” means the payment in full in cash of all outstanding PPE Obligations (other than contingent indemnity obligations with respect to then unknown claims).

“ Disqualified Stock ” means, with respect to any Person, any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case, at the option of the holder of the Capital Stock), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder of the Capital Stock, in whole or in part, on or prior to the date that is 91 days after the date on which the Notes mature. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock have the right to require Xerium to repurchase such Capital Stock upon the occurrence of a Change of Control or an Asset Sale will not constitute Disqualified Stock if the terms of such Capital Stock provide that Xerium may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with the covenant described above under the caption “— Certain Covenants — Restricted Payments.” The amount of Disqualified Stock deemed to be outstanding at any time for purposes of the Indenture will be the maximum amount that Xerium and its Restricted Subsidiaries may become obligated to pay upon the maturity of, or pursuant to any mandatory redemption provisions of, such Disqualified Stock, exclusive of accrued dividends.

“ Domestic Subsidiary ” means any Restricted Subsidiary of Xerium that is not a Foreign Subsidiary.