10 Commandments for the Avoidance of Contractual Risks

1. No unlimited risks (unless fully insured).

2. No risks jeopardizing the existence of the company (pooled risk potential >10 % of the sales of the re­spective OU).

3. No risks that are not coped with by our own resources and which can be controlled (no liability for acts performed by third parties).

4. No contract without clear determination of force majeure.

5. No infringements of the law by the company.

6. No country risk without insurance cover (except OECD states).

7. No currency risk without hedging.

8. Insurance cover wherever it is reasonably possible.

9. No unclear determinations of scopes/interfaces, warranties, terms and conditions of sale.

10. Residual risks resulting from the contractual language have to be assessed and must not exceed 10% of the contract value in the worst case.

The Group Divisions supplement these 10 commandments according to their specific business condi­tions and lay them down in the GDDs.

_VOITH

Annex 6

10 Commandments for the Avoidance of Technical Risks

1. Selection of the best employees for Risk Management / Project Management.

2. Compliance with existing procedures and directives, report deviations immediately if they are unavoid­able or unintended.

3. Installation of a feedback and learning system.

4. Definition and limitation of all liabilities for each project.

5. Do not accumulate any risks of any kind.

6. Insurance cover for significant loss risks - and, in particular, for such with low probability.

7. Set up contingency plans (technical and commercial) as compensation for risks.

8. Analyze and check risks regularly, do not ignore warning signs.

9. Follow analytical procedures if a risk crops up.

10. Important decisions must be made by at least two competent persons.

The Group Divisions supplement these 10 commandments according to their specific business condi­tions and lay them down in the GDDs.

Annex 7

Avoidance of Exchange Rate Risks with Quotations/Orders in Foreign Currencies

1. Basic rule:

OUs quote and sell in local currency provided that the currency is freely convertible (Voith companies in Brazil sell in US $ or €). Exchange rate hedging of sales is per­formed by the seller to third parties if the selling price and costs are in different currencies.

2. Need for Rules

1. Quotations

• Quotation up to approx. 1 million € quotation value:

The calculated exchange rate is established by the local financial department (possibly lump sum with possibility of correction when there are significant exchange rate changes).

• Quotations for major projects up to 5 million €:

The calculated exchange rate is individually agreed upon for the quotation with the local financial department.

• Quotations for major projects greater than 5 million €:

The calculated exchange rate is individually agreed upon for the quotation with VOFZ-Front Office.

Logic for estimating the rate of exchange:

Current exchange rate plus/minus hedging costs up to the expected payment receipt deadlines.

In all quotations, include an exchange rate clause that permits a price adjustment in the event of exchange rate fluctuations between the date of submission of the quota­tion and the date of placement of the order.

The OUs/GD consortium management companies must establish instruments that provide information at any time about the current status of currency risks/opportunities during the quotation phase on the basis of the current spot rate.

In the event of major deviations, but not later than by the reaching of a total risk of, altogether, 10 % of the foreign currency quotations put out, VOFZ-Front Office must be informed without delay.

2. Orders

On order placement, exchange rate risks must always be hedged. Iit is recommended - particularly for major projects - to consult VOFZ-Front Office to optimize the hedging costs.

_VOITH

KONZERN-RICHTLINIE Nr. 03/01 GROUP DIRECTIVE

Vr6025 HJ 2011-05-05

Annex 8

Particularly Risky Areas of Activity

Risk Catalog - Principles

Certain areas of activity or products are generally regarded as particularly risky and are therefore excepted from the insurance cover taken out by Voith and can be insured either not at all or only on terms that are not economically acceptable. This applies irrespective of whether services were rendered, products produced or trade with these products took place in these areas. These particularly risky areas of activity with regard to the insurance cover existing at Voith are, above all:

• Air and space technology

• Nuclear risks

• Asbestos and silicates

• Pharmaceuticals and chemistry

Activities in these areas must be always agreed upon in advance with VOHA and VZ-Vrj. The same applies to activities in new business fields.

The usual general rules for limiting liability for bodily injury and damage to property as well as pecuniary losses are not sufficient to hedge the risks arising from these fields of activity in accordance with the guidelines of Risk Management. Therefore, in addition to the agreement of the liability limits and exclusions in accordance with the perti­nent Group Directives, the following principles must be observed if companies are active in these areas or want to be active in future:

• If it is possible to take out special insurance cover, the liability must be limited according to the coverage made available and this liability limitation, if required, must be hedged by an exemption of claims of third parties by the party to the agreement,

• If no hedging is possible within the framework of insurance cover, a complete, comprehensive exclusion of liability must be effectively agreed upon by way of an exemption of claims of third parties by the party to the agreement.

This must take place prior to conclusion of the agreement or the take-up of corresponding services/supplies in close agreement with VZ-Vrj and VOHA.

_VOITH

KONZERN-RICHTLINIE Nr. 03/01 GROUP DIRECTIVE

Vr 6025 HJ

2011-05-05

Rules for Services and Supplies to Nuclear Power Plants

VZ-Vrj has developed special sample clauses for exemption agreements in connection with supplies and/or services to nuclear power plants for diverse legal systems. These can be called up on the Voith Intranet at the Voith Law Group site. If agreements are concluded on the basis of other legal systems, a corresponding clause must be worked out and agreed to become effective on a case-by-case basis in agreement with VZ-Vrj.

Should it not be possible to reach an agreement with the respective party to the agreement in accordance with this Group Directive, the transaction concerned must only be carried out with the express approval of the Board of Management of Voith GmbH.

_VOITH

KONZERN-RICHTLINIE Nr. 03/01 GROUP DIRECTIVE

Vr6025 HJ

2011-05-05

Annex 9

..Performance Risk Watch List" for performance risks

Reporting rhythm: - Monthly

- Negative report is required

Risk Group/ Single Risk	Cause of Risk	Max. Risk Potential	Probability of Occurrence	Amount that is covered by		Amount that is covered in the last SE forecast of the current year	Amount that is covered in the last SE forecast of the following year	Reserve in the balance sheet at 30th Sept. of the previous year	CR Report
				Calc. Risk Provisions	Insurance
		€ in thousands	%	€ in thousands	€ in thousands	€ in thousands	€ in thousands	€ in thousands

_VOITH

KONZERN-RICHTLINIE Nr. 03/01 GROUP DIRECTIVE

Vr6025 HJ

2011-05-05

Annex 10

Annnex to the Minutes of the Board Meeting on

of the company

The company may have risks endangering its existence in the following areas:

Please mark with a cross

o

Economic cycle

Political / legal background (especially country risks)

Location risks Disruption to operation

*

LU

Competition / market

Product life cycle

J*

Q. 3

Group control risks	Reporting
	Corporate image
	Business strategy
	Group coordination
Financial risks	Liquidity
	Currency
	Interest
	Financial investments / trade investments
	Taxes
	Equity
	Investments
Infrastruktur­risiken	IT / data protection
	Communication / information
	Integrity
	Illegal acts
	Environment
	Health / safety
	Personnel
Contractual risks	Contractual liability including third-party liability
	Liquidated damages
	Penalties for nonfulfilment of contract
	Order financing
	Surety / guarantees / payment security
	Price costing
Technical risks	Technology strategy
	Technology change
	R&D / product development
	Design
	Patents
	Quality
	Product liability
	Capacities
	Purchasing
	Lead times
	Customer satisfaction
	Opportunity costs
	Intra-Group cooperation

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* For definitions see Group Directive 03/01

Copy of this sheet to the CFO of the Group Division

(Negative report required)