XERIUM TECHNOLOGIES, INC. PERFORMANCE AWARD PROGRAM

Exhibit 10.2

XERIUM TECHNOLOGIES, INC.

PERFORMANCE AWARD PROGRAM

This Xerium Technologies, Inc. Performance Award Program (the “Program”) contains rules supplemental to those set forth in the Xerium Technologies, Inc. 2005 Equity Incentive Plan (the “EIP”). The Program provides for the grant of the incentive award opportunities (each, an “Award”) under and subject to the terms of the EIP, which is incorporated herein by reference. In the event of any inconsistency between the Program and applicable provisions of the EIP, the EIP shall control. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the EIP.

1. Administration; Eligibility; Features of Awards. The Program shall be administered by the Committee as described in the EIP. The Committee may in its discretion consult with outside advisors or internal Company resources for purposes of making any determinations in connection with its administration of the Program. Eligibility to participate in the Program shall be limited to individuals who are selected in accordance with the terms of the EIP to participate in the Program from among those individuals who are eligible to participate in the EIP (each, a “Participant”). Participation in any Award shall not entitle a Participant to share in any future Awards or in any other future awards of the Company or its subsidiaries. Each Award shall entitle the holder, subject to satisfaction of the performance conditions under the Award (and, to the extent the Award is intended to qualify for the performance-based compensation exception under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), to the further limitations of the EIP with respect thereto), to a benefit determined under Section 2 below and Exhibit A (the “Total Benefit Amount”) that shall be payable as follows, subject to tax withholding as described in Section 5 below: (1) up to fifty (50%) of the Total Benefit Amount may be paid in cash as the Committee may decide in its sole discretion any time before payouts under the Program are made; and (2) the balance of the Total Benefit Amount shall be payable in the form of Restricted Stock Units (“RSUs”). The number of RSUs deliverable in respect of all or part of an Award shall be determined as described in Section 4 below.

2. Determination of Total Benefit Amount. The Committee may determine that a portion of each Participant’s Total Benefit Amount under an Award for any calendar year or portion thereof (a “performance year”) shall be earned solely by the Participant’s remaining continuously employed by the Company or a subsidiary through the date Awards are paid under the Program for the performance year (the “Time-Based Portion”) as indicated on Exhibit B hereto. The determination of the remainder of each Participant’s Total Benefit Amount under an Award for the performance year (the “Performance-Based Portion”) shall be made in accordance with the provisions of Exhibit A applicable to such Participant for such performance year. (The Performance-Based Portion of the Total Benefit Amount is referred to in Exhibit A as the Performance-Based Benefit Amount”). All payouts under the Program, whether Time-Based or Performance-Based, are conditioned on the Company’s being in compliance with the financial covenants contained in Section 6.8(a) (Interest Coverage Ratio Covenant), (b) (Leverage Ratio Covenant) and (c) (Fixed Charge Coverage Ratio Covenant) (collectively the “Financial Covenants”) of the Credit and Guaranty Agreement dated as of May 19, 2005,

entered into by and among the Company, certain subsidiaries of the Company, Citigroup Global Markets, Inc., CIB World Markets Corp. and other agents and banks party thereto, as amended and in effect on May 30, 2008 (the “Credit Agreement”) at the end of each of the four fiscal quarters in the performance year. A breach of any of these Financial Covenants for any quarter will result in no payouts under the Program for the performance year, except as the Committee may otherwise expressly determine in its discretion.

3. Terms of RSUs. The RSUs payable under any Award shall be granted substantially in the form of the Restricted Stock Units Agreement attached as Exhibit C hereto (the “Restricted Stock Units Agreement”), which provides that the RSUs shall be fully vested at grant and payable 90 days thereafter.

4. Determination of Number of RSUs Payable. The number of RSUs payable under any Award shall be the quotient determined by dividing (x) by (y), where (x) is that portion of the Total Benefit Amount, if any, payable in RSUs and (y) is the greater of (1) three dollars ($3.00) and (2) the average of the per-share closing prices of the Stock (adjusted as appropriate to reflect any stock splits, stock dividends or similar events) for the last twenty (20) trading days of the performance year, rounded down to the nearest whole number.

5. Latest Payment Date; Tax Withholding. All payments, if any, under an Award shall be made not later than by March 31 of the calendar year following the performance year. The minimum tax withholding amount with respect to any payments being made in cash shall be withheld from such payments. The minimum tax withholding amount with respect to any payments being made in RSUs shall be satisfied by means of share withholding at the time the RSUs are settled as provided in the Restricted Stock Units Agreement.

6. Intent to be Exempt from Section 162(m). Awards for the 2009 performance year are not intended to qualify for the performance-based compensation exception under Section 162(m) of the Code. In the case of any Award for a subsequent performance year that is intended to so qualify, (i) the Exhibit A performance goals with respect to such Award shall be established by the Committee not later than ninety (90) days after the commencement of the performance year (or by such earlier date as is required by Section 1.162-27(e)(2)(i) of the Treasury Regulations), (ii) the Exhibit A performance goals, as so established, shall be consistent with the eligible performance measures, if any, approved by the shareholders of the Company for use in respect of performance awards under the EIP and shall be objectively determinable in compliance with Section 1.162-27(e)(2) of the Treasury Regulations, and (iii) no portion of the Award shall be paid unless and until the Committee has certified (as required by Section 1.162-27(e)(5) of the Treasury Regulations) that the performance goals have been achieved (or, if the performance goals are expressed in terms that admit of varying payout levels for different levels of performance, have been achieved at a level sufficient to support the payment).

7. Nature of Awards. Awards hereunder are intended to qualify as Stock Unit Awards under the EIP, with any cash portion payable pursuant to Section 9(d) of the EIP. The Program is unfunded and any cash payments by the Company hereunder shall be made from the general assets of the Company.

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8. Termination of Employment. The Performance-Based Portion of an Award shall not be payable to or in respect of a Participant, except as the Committee shall otherwise expressly determine, unless the Participant is employed by the Company or a subsidiary on December 31 of the performance year. The Time-Based Portion of an Award shall not be payable to or in respect of a Participant, except as the Committee shall otherwise expressly determine, unless the Participant is employed by the Company or a subsidiary on the date Awards are paid for the performance year.

9. Availability of Stock. If, when Awards become payable in respect of any performance year, the number of shares of Stock needed to grant any RSUs under the Awards exceeds the number of shares then available under the EIP, the RSUs shall be granted conditionally so that the grant takes effect when the shareholders approve an increase in the number of shares available under the EIP. If the shareholders do not approve such an increase so that all or part of the conditional RSUs are not granted, the Company will pay out the value of any conditional RSUs that were not granted in cash and determine their value by reversing the calculation under Section 4 above used to determine the number of such RSUs.

10. Treatment of Awards Upon a Change in Control. If (a) the Company merges into or combines with any other entity and, immediately following such merger or combination, any Person or group of Persons acting in concert holds 50% or more of the voting power of the entity surviving such merger or combination (other than any Person or group of Persons which held 50% or more of the Company’s voting power immediately prior to such merger or combination or any Affiliated Person of any such Person or member of such group); (b) any Person or group of Persons acting in concert acquires 50% or more of the Company’s voting power; or (c) the Company sells all or substantially all of its assets or business for cash or for securities of another Person or group of Persons (other than to any Person or group of Persons which held 50% or more of the Company’s total voting power immediately prior to such sale or to any Affiliated Person of any such Person or any member of such group), then, unless the Committee provides for the continuation or assumption of Awards or for the grant of new awards in substitution therefor (which substitute awards, if any, may be payable in cash or other property or a combination thereof) by the surviving entity or acquiror, in each case on such terms and subject to such conditions as the Committee may determine, with respect to each Award not so assumed or continued:

(a) In the event such transaction occurs on or after the close of the performance year with respect to the Award, the Committee shall determine, acting in its sole and reasonable discretion, prior to the occurrence of the transaction, the extent to which the applicable performance metrics specified in Exhibit A have been satisfied. If financial statements or other relevant data are not available prior to the time of such determination, the Committee shall make such determination based upon the financial information and data then available to the Company.

(b) In the event such transaction occurs prior to the close of the performance year with respect to the Award, the applicable performance metrics specified in Exhibit A shall be determined as follows: (i) the performance year shall be deemed to end on the effective date of such transaction; and (ii) the extent to which the applicable performance metrics specified in Exhibit A for the shortened performance year described in clause (i) above have been achieved shall be determined by the Committee acting in its sole

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and reasonable discretion based upon the financial information available to the Company (it being understood that the Committee may, to the extent it deems necessary, extrapolate performance through the effective date of the transaction based upon available data); (iii) the performance determined pursuant to clause (ii) shall then be adjusted by multiplying it by fraction, the numerator of which is the number of days in the shortened performance year and the denominator of which is 365, and the performance as so adjusted shall be the basis for determining the Total Benefit Amount with respect to the Award, subject to proration in accordance with Section 10(c) below.

(c) If subsection (b) above applies, the Total Benefit Amount initially determined under subsection (b) with respect to an Award shall be prorated by multiplying such initially determined amount by a fraction, the numerator of which is the number of days in the shortened performance year and the denominator of which is 365.

For purposes of this Section 10, “Person” means any individual, partnership, limited liability company, corporation, association, trust, joint venture, unincorporated organization, or other entity or group, and “Affiliated Person” means, with respect to any Person, any other Person that directly or indirectly controls or is controlled by or is under common control with such Person.

11. Amendment. The Committee may amend the Program at any time and from time to time, and may terminate the Program, in each case subject only to such limitations, if any, as the EIP may impose.

12. 409A. This Program and the Awards granted thereunder shall be construed and administered consistent with the intent that they at all times be in compliance with or exempt from the requirements of Section 409A of the Code and the regulations promulgated thereunder.

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XERIUM TECHNOLOGIES, INC.

PERFORMANCE AWARD PROGRAM

Exhibit A (applicable to 2009 performance year)

There are five different types of Awards under the Performance-Based Portion of the Program for 2009 performance year:

The North America Division Awards, South America Division Awards, Europe Division Awards and Asia Division Awards are referred to herein collectively as “Division Awards” and each as a “Division Award”. The North America Division, South America Division, Europe Division and Asia Division are referred to herein collectively as “Divisions” and each as a “Division”.

Participants in the Program selected by the Committee shall receive the types of Awards in the amounts determined by the Committee.

Corporate Awards are described in Section 1 below, and Division Awards are described in Section 2 below.

Except as otherwise expressly provided herein, all accounting terms not otherwise defined herein shall have the meanings assigned to them in conformity with U.S. generally accepted accounting principles.

Section 1 - Corporate Awards

Two measures of performance are relevant in determining the Performance-Based Benefit Amount, if any, under a Corporate Award: (i) the Corporate Cash Metric and (ii) the Corporate EBITDA Metric.

The “Corporate Cash Metric” means, for Xerium Technologies, Inc., on a consolidated basis, net cash provided by operating activities for the year ended December 31, 2009 minus capital expenditures (as reflected on the cash flow statement) for the year ended December 31, 2009 plus interest expense (excluding the amortization of debt expense and net of interest income) for the year ended December 31, 2009 plus the reduction (where a reduction is expressed as a positive number and an increase is expressed as a negative number) in Trapped Cash for Xerium Technologies, Inc., on a consolidated basis, from December 31, 2008 to December 31, 2009. “Trapped Cash” means accounts receivable (if any) outstanding at December 31, 2008 or December 31, 2009, as the case may be, in excess of the accounts receivable that would cause the quotient determined by dividing accounts receivable on such date by the ratio

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of net sales for the year then ended to 365 to be in excess of 50 plus inventory (if any) at December 31, 2008 or December 31, 2009, as the case may be, in excess of one-sixth of cost of goods sold for the year then ended plus accounts payable (if any) outstanding at December 31, 2008 or December 31, 2009, as the case may be, less than the amount of the accounts payable that would cause the quotient determined by dividing accounts payable on such date by the ratio of cost of goods sold for the year then ended to 365 to be less than 48. For the avoidance of doubt, for this purpose, the term “accounts payable” shall exclude wages payable. The Committee shall have sole discretion to determine the calculation of the amount of the Corporate Cash Metric.

Weighting: The amount of the target award under the Corporate Award that is based upon the Corporate Cash Metric is 25% of the total Corporate Award for the Participant. “X” below refers to the target award for the Participant under the Corporate Award that is based upon the Corporate Cash Metric.

The Target Corporate Cash Metric (referred to below as “Y”) shall be established by the Committee upon the granting of Corporate Awards and communicated to Participants receiving a Corporate Award; provided, however, that the amount so established by the Committee may be adjusted by the Committee after the initial determination of the amount to reflect any significant change of circumstance, including without limitation, the acquisition or disposition of any business by Xerium Technologies, Inc. or any of its subsidiaries.

Subject to Section 1(iii), the Performance-Based Benefit Amount payable with respect to a Corporate Award based upon the portion measured against the Corporate Cash Metric shall be determined as follows:

Corporate Cash Metric below .95Y: no payment under the Corporate Cash Metric component

Corporate Cash Metric at .95Y: bonus = .5 X

Corporate Cash Metric at Y: bonus = X

Corporate Cash Metric at 1.8Y or above: bonus = 2.5X

The amount payable between the levels of Corporate Cash Metric identified above shall be determined on the basis of straight line interpolation between points.

The “Corporate EBITDA Metric” means “Adjusted EBITDA,” as such term is defined in the first sentence of the definition of such term in the Credit and Guaranty Agreement (the “Credit Agreement”), dated as of May 19, 2005, entered into by and among the Company, certain subsidiaries of the Company, Citigroup Global Markets, Inc., CIBC World Markets Corp. and other agents and banks party thereto, as amended and in effect on May 30, 2008, for Xerium Technologies, Inc. for the year ended December 31, 2009. The Committee shall have sole discretion to determine the calculation of the amount of the Corporate EBITDA Metric.

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Weighting: The amount of the target award under the Corporate Award that is based upon the Corporate EBITDA Metric is 75% of the total Corporate Award for the Participant. “X” below refers to the target award for the Participant under the Corporate Award that is based upon the Corporate EBITDA Metric.

The Target Corporate EBITDA Metric (referred to below as “Y”) shall be established by the Committee upon the granting of Corporate Awards and communicated to Participants receiving a Corporate Award; provided, however, that the amount so established by the Committee may be adjusted by the Committee after the initial determination of the amount to reflect any significant change of circumstance, including without limitation, the acquisition or disposition of any business by the Company or any of its subsidiaries.

Subject to Section 1(iii), the Performance-Based Benefit Amount payable with respect to a Corporate Award based upon the portion measured against the Corporate EBITDA Metric shall be determined as follows:

Corporate EBITDA Metric below .75Y: no payment under the Corporate EBITDA Metric component

Corporate EBITDA at .75Y: bonus = .05X

Corporate EBITDA at Y: bonus = X

Corporate EBITDA at 1.42Y or above: bonus = 2.5X

The amount payable between the levels of Corporate EBITDA Metric identified above shall be determined on the basis of straight line interpolation between points.

iii. Performance-Based Benefit Amount payable with respect to a Corporate Award shall be the sum of the amounts determined pursuant to Section 1(i) and Section 1(ii) above; provided, however, if the such amount exceeds two (2) times the sum of (a) the target award for the Participant under the Corporate Award that is based upon the Corporate Cash Metric and (b) the target award for the Participant under the Corporate Award that is based upon the Corporate EBITDA Metric (such sum with respect to a Participant, the “Corporate Target”) then the Performance-Based Benefit Amount payable with respect to a Corporate Award for such Participant shall be reduced to two (2) times the Corporate Target.

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Section 2 - Division Awards

The description of Division Awards below applies to the Division Awards of each of the four Divisions.

Two measures of performance are relevant in determining the Performance-Based Benefit Amount, if any, under a Division Award: (i) the Division Cash Metric and (ii) the Division EBITDA Metric.

The “Division Cash Metric” means net cash provided by operating activities for the year ended December 31, 2009 minus capital expenditures for the year ended December 31, 2009 plus interest expense (excluding the amortization of debt expense and net of interest income) for the year ended December 31, 2009 plus the reduction (where a reduction is expressed as a positive number and an increase is expressed as a negative number) in Trapped Cash (as defined in Section 1(i) above) for the particular Division from December 31, 2008 to December 31, 2009, in each case as required to be presented in the internal financial management reports (commonly referred to as “GRs”) of the Company for the particular Division. The Committee shall have sole discretion to determine the calculation of the amount of the Division Cash Metric.

Weighting: The amount of the target award under the Division Award that is based upon the Division Cash Metric is 25% of the total Division Award for the Participant. “X” below refers to the target award for the Participant under the Division Award that is based upon the Division Cash Metric.

The Target Division Cash Metric (referred to below as “Y”) shall be established by the Committee upon the granting of Division Awards and communicated to Participants receiving a Division Award for the particular Division; provided, however, that the amount so established by the Committee may be adjusted by the Committee after the initial determination of the amount to reflect any significant change of circumstance, including without limitation, the acquisition or disposition of any business by the particular Division.

Subject to Section 2(iii), the Performance-Based Benefit Amount payable with respect to a Division Award (other than an Asia Division Award) based upon the portion measured against the Division Cash Metric shall be determined as follows:

Division Cash Metric below .95Y: no payment under the Division Cash Metric component

Division Cash Metric at .95Y: bonus = .5X

Division Cash Metric at Y: bonus = X

Division Cash Metric at 1.81Y or above: bonus = 2.5X

The amount payable between the levels of Division Cash Metric identified above shall be determined on the basis of straight line interpolation between points.

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Subject to Section 2(iii), the Performance-Based Benefit Amount payable with respect to an Asia Division Award based upon the portion measured against the Division Cash Metric shall be determined as follows:

Division Cash Metric below .95Y: no payment under the Division Cash Metric component

Division Cash Metric at .95Y: bonus = .5X

Division Cash Metric at Y: bonus = X

Division Cash Metric at 8.25Y or above: bonus = 2.5X

The amount payable between the levels of Division Cash Metric identified above shall be determined on the basis of straight line interpolation between points.

The “Division EBITDA Metric” means “Adjusted EBITDA” for the particular Division for the year ended December 31, 2009 as required to be presented in the internal financial management reports (commonly referred to as “GRs”) of the Company in accordance with the guidelines for such reports in effect on June 30, 2009 and consistent with the definition of Adjusted EBITDA as set forth in the first sentence of the definition of such term in the Credit Agreement. The Committee shall have sole discretion to determine the calculation of the amount of the Division EBITDA Metric.

Weighting: The amount of the target award under the Division Award that is based upon the Division EBITDA Metric is 75% of the total Division Award for the Participant. “X” below refers to the target award for the Participant under the Division Award that is based upon the Division EBITDA Metric.

The Target Division EBITDA Metric (referred to below as “Y”) shall be established by the Committee upon the granting of Division Awards and communicated to Participants receiving a Division Award for the particular Division; provided, however, that the amount so established by the Committee may be adjusted by the Committee after the initial determination of the amount to reflect any significant change of circumstance, including without limitation, the acquisition or disposition of any business by the particular Division.

Subject to Section 2(iii), the Performance-Based Benefit Amount payable with respect to a Division Award (other than an Asia Division Award) based upon the portion measured against the Division EBITDA Metric shall be determined as follows:

Division EBITDA Metric below .75Y: no payment under the Division EBITDA Metric component

Division EBITDA at .75Y: bonus = .05X

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Division EBITDA at Y: bonus = X

Division EBITDA Metric at 1.38Y or above: bonus = 2.5X

The amount payable between the levels of Division EBITDA Metric identified above shall be determined on the basis of straight line interpolation between points.

Subject to Section 2(iii), the Performance-Based Benefit Amount payable with respect to an Asia Division Award based upon the portion measured against the Division EBITDA Metric shall be determined as follows:

Division EBITDA Metric below .75Y: no payment under the Division EBITDA Metric component

Division EBITDA at .75Y: bonus = .05X

Division EBITDA at Y: bonus = X

Division EBITDA Metric at 3.25Y or above: bonus = 2.5X

The amount payable between the levels of Division EBITDA Metric identified above shall be determined on the basis of straight line interpolation between points.

iii. Performance-Based Benefit Amount payable with respect to a Division Award shall be the sum of the amounts determined pursuant to Section 2(i) and Section 2(ii) above; provided, however, if the such amount exceeds two (2) times the sum of (a) the target award for the Participant under the Division Award that is based upon the Division Cash Metric and (b) the target award for the Participant under the Division Award that is based upon the Division EBITDA Metric (such sum with respect to a Participant, the “Division Target”) then the Performance-Based Benefit Amount payable with respect to a Division Award for such Participant shall be reduced to two (2) times the Division Target.

Section 3 - Performance-Based Benefit Amount

The Performance-Based Benefit Amount for a Participant shall be the sum of the Performance-Based Benefit Amount payable with respect to any Corporate Award for such Participant (as determined in accordance with Section 1(iii)) and the Performance-Based Benefit Amount payable with respect to any Division Award for such Participant (as determined in accordance with Section 2(iii)).

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XERIUM TECHNOLOGIES, INC.

PERFORMANCE AWARD PROGRAM

Exhibit B (applicable to 2009 performance year)

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XERIUM TECHNOLOGIES, INC.

PERFORMANCE AWARD PROGRAM

Exhibit C (applicable to 2009 performance year)

[Form of Restricted Stock Units Agreement (2009 MIC)]

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