AMENDMENT NO. 2, dated as of December 22, 2006 (this " Amendment ") to the Credit and Guaranty Agreement, dated as of May 18, 2005 (the " Credit Agreement ") as modified by Amendment No. 1 on February 8, 2006, by and among Xerium Technologies, Inc. (" Xerium "), a Delaware corporation, XTI LLC (" XT

EXHIBIT 10.1

AMENDMENT NO. 2, dated as of December 22, 2006 (this " Amendment ") to the Credit and Guaranty Agreement, dated as of May 18, 2005 (the " Credit Agreement ") as modified by Amendment No. 1 on February 8, 2006, by and among Xerium Technologies, Inc. (" Xerium "), a Delaware corporation, XTI LLC (" XTI "), a Delaware limited liability company, Xerium Italia S.p.A. (" Italia SpA "), an Italian società per azioni, Stowe-Woodward/Mount Hope Inc. (" Stowe-Woodward "), a New Brunswick (Canada) corporation, Weavexx Corporation (" Weavexx "), a New Brunswick (Canada) corporation, Huyck Austria GmbH (" Huyck Austria "), an Austrian limited liability company, and Xerium Germany Holding GmbH (" Germany Holdings "), a German limited liability company (each of Xerium, XTI, Italia SpA, Stowe-Woodward, Weavexx, Huyck Austria and Germany Holdings, individually, a " Borrower " and, collectively, the " Borrowers "), certain Subsidiaries of the Borrowers, as Guarantors, the Banks party hereto from time to time, Citigroup Global Markets, Inc. and CIBC World Markets plc, as Joint Lead Arrangers and Lead Bookrunners, Citigroup Global Markets, Inc. and CIBC World Markets plc, as Syndication Agents, Citicorp North America, Inc., as Administrative Agent (together with its permitted successors, in such capacity, " Administrative Agent ") and Citicorp North America, Inc., as Collateral Agent.

W I T N E S S E T H :

WHEREAS, Xerium has requested certain amendments to the Credit Agreement and the Banks and the Administrative Agent are willing, on the terms and subject to the conditions set forth below, to amend certain provisions of the Credit Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in consideration of the agreements herein, the parties hereto agree as follows:

ARTICLE I

AMENDMENTS

SECTION 1.1. Definitions; References . Unless otherwise specifically defined herein, each term used herein which is defined in the Credit Agreement shall have the meaning assigned to such term in the Credit Agreement.

SECTION 1.2. Effectiveness . The Credit Parties, the Banks and the Administrative Agent agree that the following amendments to the Credit Agreement in this Article I shall become effective, unless otherwise provided, on the Second Amendment Effective Date (as defined below).

SECTION 1.3. Amendments to Section 1.1 . Section 1.1 of the Credit Agreement is hereby amended by:

(a) inserting the following definitions in appropriate alphabetical order in Section 1.1:

• " Amendment No. 2 " means Amendment No. 2, dated as of December 22, 2006 to the Agreement.

  " Brazil Expansion Capex " is defined in Section 6.8(d) of the Agreement.

(b) Deleting the definition of " Applicable Margin " in its entirety and replacing it with the following:

• " Applicable Margin " means (a) with respect to Xerium B Term Loans, 2.50% and (b) with respect to the other B Term Loans and Revolving Loans, 2.50%: provided , further , that on any date on or after the one year anniversary of the Closing Date, with respect to any Revolving Loans, the Applicable Margin shall be determined by reference to the Leverage Ratio set forth in the grid below as of the end of the most recently ended Fiscal Quarter for which the financial statements required by Section 5.1(b) (or Section 5.1(c), if such Fiscal Quarter is the last Fiscal Quarter of a Fiscal Year) have been delivered in accordance therewith and such change in the Applicable Margin shall take effect on the first day immediately following the delivery of the aforementioned financial statements; provided , further , that no change in the Applicable Margin shall be effective until after the Administrative Agent receives such financial statements and a certificate of an Authorized Officer calculating such Leverage Ratio in reasonable detail and no Default or Event of Default has occurred and is continuing (except that the Applicable Margin for all outstanding Loans shall be 2.50% during the continuation of a Default or Event of Default); provided , further , that if the Indebtedness incurred under this Agreement is rated lower than B1 by Moody’s or lower than B+ by S&P, then the Applicable Margin with respect to all B Term Loans shall be increased by 0.25% and the Applicable Margin with respect to Revolving Loans set forth in the grid below shall be increased in each case by 0.25% , and provided , further , that if the Indebtedness incurred under this Agreement is later rated B1 or higher by Moody’s and B+ or higher by S&P, then the Applicable Margin with respect to all B Term Loans shall be decreased by 0.25% and the Applicable Margin with respect to Revolving Loans shall be decreased in each case by 0.25%.

• (c) deleting in its entirety the definition of " Press Felt Expansion Capex ."

  (d) inserting the following at the end of the definition of " Excess Cash ":

  " excluding the amount of dividends applied to newly-issued or treasury shares of Common Stock pursuant to a dividend reinvestment plan"

(e) deleting the phrase "Press Felt Expansion Capex" in clause (iii) from the definition of " Pre-Dividend Free Cash Flow " and inserting in its place the phrase "Brazil Expansion Capex."

SECTION 1.4. Amendment to Section 2.2(a)(i) . Section 2.2(a)(i) is hereby amended by deleting the proviso therein in its entirety and inserting in its place the following:

• "and provided , further , that for a period of at least 30 consecutive days during each Fiscal Year, commencing with the Fiscal Year ended December 31, 2005, the outstanding principal amount of Tranche 1 Revolving Loans (other than the aggregate amount available for drawing under all Letters of Credit then outstanding) shall be no more than $20,000,000.

SECTION 1.5. Amendment to Section 2.14(e) . Section 2.14(e) is hereby amended by deleting the proviso therein in its entirety and inserting in its place the following:

• " provided , that with respect to payments made in Fiscal Year 2007 and after, in the event that Xerium makes dividend payments (excluding the amount of dividends applied to newly-issued or treasury shares of Common Stock pursuant to a dividend reinvestment plan) in excess of 65% of its Pre-Dividend Free Cash Flow each Borrower shall, no later than ninety days after the end of such Fiscal Year, prepay the Loans and/or the Revolving Commitments shall be permanently reduced as set forth in Section 2.15(b) in an aggregate amount equal to 75% of such Excess Cash."

SECTION 1.6. Amendment to Section 6.5(b) . Section 6.5(b) is hereby amended by deleting it in its entirety and inserting in its place the following:

• "(b) so long as no Default or Event of Default has occurred and is continuing, (i) during the period commencing on the Closing Date through but not including December 31, 2006, Xerium may declare and pay dividends to the holders of Common Stock quarterly on each Dividend Payment Date (commencing as of the Dividend Payment Date which occurs in the first full Fiscal Quarter after the Closing Date) in an aggregate amount not to exceed $10 million per Fiscal Quarter, (ii) for the Dividend Payment Dates that fall on March 15, 2007, June 15, 2007, September 15, 2007 and December 15, 2007 (collectively, the " 2007 Dividend Payment Dates "), Xerium may declare and pay dividends to the holders of Common Stock quarterly on each 2007 Dividend Payment Date in an amount not to exceed 11.25% of Xerium’s Pre-Dividend Free Cash Flow for the four Fiscal Quarters ended immediately prior to the payment of such dividends and for which a Compliance Certificate has been delivered and (iii) during the period commencing on December 31, 2007 and thereafter, Xerium may declare and pay dividends to the holders of Common Stock quarterly on each Dividend Payment Date (commencing as of the Dividend Payment Date which occurs in the first full Fiscal Quarter after December 31, 2007) in an amount not to exceed one quarter of

  75% of Xerium's Pre-Dividend Free Cash Flow for the four Fiscal Quarters ended immediately prior to the payment of such dividends and for which a Compliance Certificate has been delivered; provided that any amount of dividends applied to newly-issued or treasury shares of Common Stock of Xerium pursuant to a dividend reinvestment plan shall not be treated as dividends paid and declared for the purposes of clauses (ii) and (iii) of this Section 6.5(b); and"

SECTION 1.7. Amendment to Section 6.8(a) . Section 6.8 of the Credit Agreement is hereby amended by deleting clause (a) in its entirety and inserting in its place the following:

• "(a) Interest Coverage Ratio . Xerium shall not permit the Interest Coverage Ratio for any period of four consecutive Fiscal Quarters ending with any Fiscal Quarter set forth below to be less than the ratio set forth below opposite such Fiscal Quarter:

SECTION 1.8. Amendment to Section 6.8(b) . Section 6.8 of the Credit Agreement is hereby amended by deleting clause (b) in its entirety and inserting in its place the following:

• "(b) Leverage Ratio . Xerium shall not permit the Leverage Ratio for any period of four consecutive Fiscal Quarters ending with any Fiscal Quarter set forth below to be greater than the ratio set forth below opposite such Fiscal Quarter:

SECTION 1.9. Amendment to Section 6.8(d) . Section 6.8(d) of the Credit Agreement is hereby amended by deleting the proviso therein in its entirety and inserting in its place the following:

• " provided , however , notwithstanding this Section 6.8(d), Xerium and its Subsidiaries shall be permitted to make or incur Consolidated Capital Expenditures (such capital expenditures permitted by this proviso, being referred to herein as " Brazil Expansion Capex "), (1) in Fiscal Year 2006 in an aggregate amount for Xerium and its Subsidiaries of $4,600,000 in excess of the corresponding amount set forth above opposite such Fiscal Year, and (2) in Fiscal Year 2007 in an aggregate amount for Xerium and its Subsidiaries of $8,200,000 in excess of the corresponding amount set forth above opposite such Fiscal Year, and (3) in Fiscal Year 2008 in an aggregate amount for Xerium and its Subsidiaries of $3,800,000 in excess of the corresponding amount set forth above opposite such Fiscal Year, in each case solely to expand production capacity in Brazil."

ARTICLE II

FEES

SECTION 2.1. Fees . Xerium agrees to pay to each Bank executing and delivering (by telecopy or otherwise) this Amendment, on or before 5:00 P.M., New York time, December 22, 2006 an amendment fee equal to 0.25% (the " Amendment Fee ") of the outstanding principal amount of all Loans and Commitments of such Bank. Such fee shall be fully earned and nonrefundable on the Second Amendment Effective Date. Xerium shall pay the Amendment Fee to the Administrative Agent on the Second Amendment Effective Date for the benefit of such consenting Banks.

ARTICLE III

CONSENT AND REAFFIRMATION

SECTION 3.1. Consent and Agreement . Each Credit Party hereby expressly (i) acknowledges receipt of a copy of this Amendment, (ii) ratifies and affirms its obligations under the Credit Documents (including guarantees, security agreements and pledge agreements) executed and delivered by such Credit Party, and (iii) acknowledges, renews and extends its continued liability under all such Credit Documents and agrees such Credit Documents remain in full force and effect, including with respect to the obligations of the Borrowers as modified by this Amendment.

ARTICLE IV

CONDITIONS PRECEDENT

SECTION 4.1. Conditions Precedent to Second Amendment Effective Date . This Amendment and the amendments contained herein shall be and become