THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

Xerium Technologies, Inc. (XRM)

4/26/2006 Proxy Information

The Corporate Reorganization

Prior to the closing of the Company’s initial public offering on May 19, 2005, the Company was an indirect, wholly owned subsidiary of Xerium S.A., a Luxembourg company. In connection with the offering, the business was reorganized so that the Company became the owner, directly or indirectly, of all of the equity interests of all of the operating subsidiaries and related holding companies of the corporate group, excluding Xerium S.A. and its two subsidiaries, Xerium 2 S.A. and Xerium 3 S.A., both of which were Luxembourg companies. Prior to the recapitalization and the offering described below, Xerium 3 S.A. held 100% of the Company’s capital stock.

Recapitalization and the Offering

Prior to the closing of the initial public offering, the Company effected a 31,013,482-for-1 stock split of its common stock. Its directors and members of senior management who owned common stock of Xerium S.A. or options to purchase common stock of Xerium S.A. transferred those equity interests in Xerium S.A. to the Company in exchange for an aggregate of 1,842,546 shares of common stock issued by the Company pursuant to exchange and redemption agreements between the Company and such individuals, as described under “—Proceeds from the Offering.” The Company then used such shares of Xerium S.A. common stock, along with additional shares of Xerium S.A. common stock reserved for issuance under Xerium S.A. equity incentive programs and held by one of the Company’s subsidiaries but not allocated to employees, to redeem 2,125,663 shares of its common stock from Xerium 3 S.A. (the Company’s direct parent prior to the offering). After the completion of these transactions, immediately prior to the offering, Xerium 3 S.A. held 28,887,819 shares of the Company’s common stock, which represented approximately 94.0% of its common stock, and the Company’s directors and members of senior management held the remaining 6.0%.

Pursuant to the exchange and redemption agreements, the Company used approximately $4.6 million of the proceeds it received from the offering to purchase an aggregate of 404,505 shares of common stock from certain of its directors and members of senior management at a price per share equal to the price per share of common stock in the offering less the underwriting discount. See “—Proceeds from the Offering.”

Proceeds from the Offering

In connection with the recapitalization and the offering, and pursuant to the exchange and redemption agreements, the Company’s directors and executive officers who owned equity interests in the Company prior to the offering and the entities that beneficially owned more than 5% of the Company’s voting securities prior to the offering received the following net cash proceeds from the Company’s redemption of shares of common stock using proceeds it received from the offering: (See page 22 of proxy for table).

Furthermore, the Company used approximately $8.5 million of the proceeds from the offering to make a distribution to Xerium 3 S.A., declared immediately prior to the offering, to reimburse Xerium S.A., and its subsidiaries Xerium 2 S.A. and Xerium S.A. for certain Luxembourg tax and other pre-closing liabilities and to fund certain expenses in connection with the offering expected to be incurred by Xerium S.A., Xerium 2 S.A. and Xerium 3 S.A. following the consummation of the offering.

Certain Other Transactions with Management

During the second quarter of 2005, prior to the completion of the offering, Michael J. Stick was awarded 606 restricted shares of Xerium S.A. common stock from Xerium Inc. for no consideration. Immediately prior to and in connection with the offering, Mr. Stick’s shares were exchanged for fully vested shares of the Company’s common stock as described under “—Proceeds from the Offering.”

In connection with the completion the offering, the following executive officers received the cash transaction bonuses set forth below for completing the offering: (See page 23 of proxy for table).

Also in connection with the offering and the adoption of the Company’s new management incentive plans, and in consideration of the fact that members of the Company’s senior management would no longer participate in the previously existing cash management incentive compensation plans, the Company made special one-time payments in the aggregate amount of approximately $4.2 million to certain members of senior management in the second quarter of 2005, including the following amounts which were paid to the Company’s executive officers: Individual -------------------------------------------------------------------------------- Amount -------------------------------------------------------------------------------- Thomas Gutierrez $ 2,294,445 Michael O’Donnell $ 563,000 Miguel QuiĖonez $ 313,000 Josef Mayer $ 340,000 Douglas Milner $ 350,000 Shareholder Loans Certain shareholders of Xerium S.A. granted approximately Euro 31.4 million in non-interest bearing loans to Xerium S.A. in December 1999 in connection with the acquisition of the business from Invensys Plc., which represented approximately $39.6 million based on exchange rates in effect as of May 19, 2005. Certain of the Company’s executive officers held an aggregate of approximately Euro 0.9 million of such loans, or approximately $1.1 million based on exchange rates in effect as of May 19, 2005, which were repaid with cash on hand upon the closing of the offering. The remaining approximately Euro 30.5 million of such non-interest bearing loans, representing approximately $38.5 million based on exchange rates in effect as of May 19, 2005, were repaid by Xerium S.A. prior to the completion of the offering with an obligation of Xerium S.A. to deliver shares of the Company’s common stock that it indirectly owned through its ownership interest in Xerium 3 S.A. The following table lists the executive officers and the entities that beneficially owned more than 5% of Xerium S.A. common stock prior to the offering who held a portion of such loans, the amount outstanding as of the offering and, where applicable, the number of shares of common stock delivered in respect of such loans: (See page 24 of proxy for table).

Registration Rights Agreement

Effective upon the completion of the offering, the Company entered into a registration rights agreement with certain of its equity investors that contains the following registration rights:

• Apax Europe IV GP Co Ltd has four demand registration rights for long-form registrations and the other equity investors party to the registration rights agreement, collectively, have an unlimited number of registration rights for short-form registrations relating to the Company’s common stock that they hold, subject to certain ownership requirements and to the requirement that the securities, including any piggyback securities, covered by each demand registration have an aggregate public offering price of at least $20 million in the case of long-form registrations and at least $10 million in the case of short-form registrations.

• The equity investors party to the registration rights agreement have the right to include in the Company’s future public offerings of securities the shares of the Company’s common stock held by each of them.

If the equity investors party to the registration rights agreement exercise their demand registration rights, the Company will file a registration statement or prospectus and undertake an offering in the United States. The registration rights are transferable, subject to certain restrictions.

The Company has agreed to pay all costs and expenses in connection with each long-form registration and three short-form registrations, except underwriting discounts and commissions applicable to the securities sold, and to indemnify the equity investors party to the registration rights agreement against certain liabilities, including liabilities under the Securities Act.