# EDGAR Filing Document

**Accession Number:** 0001091587
**File Stem:** 0001104659-23-024840
**Filing Date:** 2023-2
**Character Count:** 840455
**Document Hash:** e868fc49be420c16495ce90dae548838
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001104659-23-024840.hdr.sgml**: 20230224

**ACCESSION NUMBER**: 0001104659-23-024840

**CONFORMED SUBMISSION TYPE**: 20-F

**PUBLIC DOCUMENT COUNT**: 158

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230224

**DATE AS OF CHANGE**: 20230223

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** ABB LTD
- **CENTRAL INDEX KEY:** 0001091587
- **STANDARD INDUSTRIAL CLASSIFICATION:** SWITCHGEAR & SWITCHBOARD APPARATUS [3613]
- **IRS NUMBER:** 000000000
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 20-F
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-16429
- **FILM NUMBER:** 23661247

**BUSINESS ADDRESS:**
- **STREET 1:** PO BOX 8131
- **STREET 2:** CH 8050
- **CITY:** ZURICH SWITZERLAND
- **STATE:** V8
- **ZIP:** 999999999

# **UNITED STATES**
**SECURITIES AND EXCHANGE COMMISSION**

Washington, D.C. 20549

# **FORM 20-F**

☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2022
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
OR
☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report _______________

Commission file number: 001-16429

# **ABB Ltd**

(Exact name of registrant as specified in its charter)

**Switzerland**

(Jurisdiction of incorporation or organization)

**Affolternstrasse 44**

**CH-8050, Zurich, Switzerland**

(Address of principal executive offices)

**Richard A. Brown**

**Affolternstrasse 44**

**CH-8050, Zurich, Switzerland**

Telephone: + 41-43-317-7111

Facsimile: +41-43-317-4343

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| --- | --- | --- |
| American Depositary Shares, each representing one Registered Share Registered Shares, par value CHF 0.12 | ABB | New York Stock Exchange |
|  | N/A | New York Stock Exchange * |

Securities registered or to be registered pursuant to Section 12(g) of the Act: None.

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None.

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report: 1,865,693,331 Registered Shares

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ☐ No ☑

Note - Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of "large accelerated filer," "accelerated filer," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☑ Accelerated filer ☐ Non-accelerated filer ☐ Emerging growth company ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

† The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ☑ International Financial Reporting Standards as issued by the International Accounting Standards Board ☐ Other ☐

If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

Item 17 ☐ Item 18 ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

* Listed on the New York Stock Exchange Act for trading or quotation purposes, but only in connection with the registration of American Depositary Shares pursuant to the requirements of the Securities and Exchange Commission.

# TABLE OF CONTENTS

|  | Page |
| --- | --- |
| PART I | 4 |
| Item 1. Identity of Directors, Senior Management and Advisers | 4 |
| Item 2. Offer Statistics and Expected Timetable | 4 |
| Item 3. Key Information | 4 |
| Item 3A. [Reserved] | 15 |
| Item 4. Information on the Company | 15 |
| Item 4A. Unresolved Staff Comments | 35 |
| Item 5. Operating and Financial Review and Prospects | 36 |
| Item 6. Directors, Senior Management and Employees | 79 |
| Item 7. Major Shareholders and Related Party Transactions | 137 |
| Item 8. Financial Information | 138 |
| Item 9. The Offer and Listing | 139 |
| Item 10. Additional Information | 140 |
| Item 11. Quantitative and Qualitative Disclosures About Market Risk | 149 |
| Item 12. Description of Securities Other than Equity Securities | 151 |
| PART II | 152 |
| Item 13. Defaults, Dividend Arrearages and Delinquencies | 152 |
| Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds | 152 |
| Item 15. Controls and Procedures | 152 |
| Item 16. [Reserved] | 153 |
| Item 16A. Audit Committee Financial Expert | 153 |
| Item 16B. Code of Ethics | 153 |
| Item 16C. Principal Accountant Fees and Services | 153 |
| Item 16D. Exemptions from the Listing Standards for Audit Committees | 154 |
| Item 16E. Purchase of Equity Securities by Issuer and Affiliated Purchasers | 154 |
| Item 16F. Change in Registrant's Certifying Accountant | 154 |
| Item 16G. Corporate Governance | 155 |
| Item 16H. Mine Safety Disclosure | 155 |
| Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 155 |
| PART III | 156 |
| Item 17. Financial Statements | 156 |
| Item 18. Financial Statements | 156 |
| Item 19. Exhibits | 157 |

(i)

# Introduction

ABB Ltd is a corporation organized under the laws of Switzerland. In this Annual Report on Form 20-F (Annual Report), 'the ABB Group,' 'the Group,' 'ABB,' the 'Company,' 'we,' 'our' and 'us' refer to ABB Ltd and its consolidated subsidiaries (unless the context otherwise requires). We also use these terms to refer to ABB Asea Brown Boveri Ltd and its subsidiaries prior to the establishment of ABB Ltd as the holding company for the entire ABB Group in 1999, as described in this Annual Report under 'Item 4. Information on the Company-Introduction-History of the ABB Group'. Our American Depositary Shares (each representing one registered share of ABB Ltd) are referred to as 'ADSs'. The registered shares of ABB Ltd are referred to as 'shares'. Our principal corporate offices are located at Affolternstrasse 44, CH-8050 Zurich, Switzerland, telephone number +41-43-317-7111. Our internet address is www.abb.com or global.abb. The information contained on or accessible from our Web site is not incorporated into this annual report, and you should not consider it to be a part of this annual report.

# Financial and other information

The Consolidated Financial Statements of ABB Ltd, including the Notes thereto, as of December 31, 2022 and 2021, and for each of the years in the three-year period ended December 31, 2022, (our Consolidated Financial Statements) have been prepared in accordance with United States generally accepted accounting principles (U.S. GAAP).

In this Annual Report: (i) 'S,' 'U.S. dollar' and 'USD' refer to the lawful currency of the United States of America; (ii) 'CHF' and 'Swiss franc' refer to the lawful currency of Switzerland; (iii) 'EUR' and 'euro' refer to the lawful currency of the participating member states of the European Economic and Monetary Union (Eurozone); (iv) 'SEK' and 'Swedish krona' refer to the lawful currency of Sweden; (v) 'Chinese renminbi' and 'CNY' refer to the lawful currency of the People's Republic of China; and (vi) 'INR' and 'Indian Rupee' refer to the lawful currency of India.

Except as otherwise stated, all monetary amounts in this Annual Report are presented in U.S. dollars. Where specifically indicated, amounts in Swiss francs have been translated into U.S. dollars. These translations are provided for convenience only, and they are not representations that the Swiss franc could be converted into U.S. dollars at the rate indicated. The twelve o'clock buying rate in the City of New York for cable transfers as certified for customs purposes by the Federal Reserve Bank of New York for Swiss francs on December 30, 2022, was $1.00 = CHF 0.9241. The twelve o'clock buying rate for Swiss francs on February 17, 2023, was $1.00 = CHF 0.9266.

# Cautionary Note Regarding Forward-Looking Statements

This Annual Report includes forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act). These forward-looking statements can be identified by the use of forward-looking terminology, including the terms 'believes,' 'estimates,' 'anticipates,' 'expects,' 'intends,' 'may,' 'will,' or 'should' or, in each case, their negative, or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this Annual Report and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, dispositions, strategies and the countries and industries in which we operate.

1

These forward looking statements include, but are not limited to, statements about our financial condition and performance, operating results, liquidity and our ability to fund our business operations and initiatives, the impact of the COVID-19 pandemic on our business, capital expenditure and debt service obligations, plans regarding our capital structure, ability to take advantage of market opportunities and drive growth, our products and service offerings and their anticipated performance and impact across various industries and consumer segments, anticipated benefits to the shareholders, planned divestments, acquisitions and integration, and related synergies and other benefits, investment and risk management strategies, volatility in the credit markets, oil prices, foreign currency exchange rates and other market conditions, trends and opportunities, industry trends and expectations, changing consumer behavior and demands, our ability to respond to changing business and economic conditions, our comparative advantages, our commitments and contingencies, availability of raw materials, and other plans, goals, strategies, priorities and initiatives related to our business, including our brand management initiative, the implementation of ABB Way, and cost-saving measures, as well as, the following:

- statements in "Item 3. Key Information-Risk Factors",
- statements in "Item 5. Operating and Financial Review and Prospects" regarding our management objectives, including our outlook, as well as trends in results, prices, volumes, operations, margins and overall market trends,
- statements in "Item 8. Financial Information-Legal Proceedings" regarding the outcome of certain legal and compliance matters, and
- statements in "Item 8. Financial Information-Dividends and Dividend Policy" regarding our policy on future dividend payments.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the countries and industries in which we operate, may differ materially from those described in or suggested by the forward-looking statements contained in this Annual Report. In addition, even if our results of operations, financial condition and liquidity, and the development of the countries and industries in which we operate, are consistent with the forward-looking statements contained in this Annual Report, those results or developments may not be indicative of results or developments in subsequent periods. Important factors that could cause actual results to differ materially from our expectations are contained in cautionary statements in this Annual Report and include, without limitation, the following:

#### **Business, economic and industry risks**

- Our business is exposed to risks associated with the volatile global economic environment and political conditions.
- Our business is exposed to risks associated with the COVID-19 pandemic.
- Our operations in emerging markets expose us to risks associated with conditions in those markets.
- We may encounter difficulty in managing our business due to the global nature of our operations.
- We operate in very competitive and rapidly changing markets and could be adversely affected if we fail to keep pace with technological changes.
- Industry consolidation could result in more powerful competitors and fewer customers.

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- Increases in costs or limitation of supplies of raw materials may adversely affect our financial performance.
- Our multi-national operations expose us to the risk of fluctuations in currency exchange rates.
- The uncertainties relating to the United Kingdom's new relationship with the European Union and its potential impact on the relationship between Switzerland and the European Union, may have a negative effect on cross-border trade and our business.

# Operational risks

- Increased information technology (IT) security threats and more sophisticated cyber-attacks could pose a risk to our systems, networks, products, solutions and services.
- Our business strategy includes making strategic divestitures. There can be no assurance that any divestitures will provide business benefit.
- Anticipated benefits of historical, existing and potential future mergers, acquisitions, joint ventures or strategic alliances may not be realized.
- There is no guarantee that our ongoing efforts to reduce costs will be successful.
- Illegal behavior by any of our employees or agents could have a material adverse impact on our consolidated operating results, cash flows, and financial position as well as on our reputation and our ability to do business.
- We may be the subject of product liability claims.
- Undertaking long-term, technically complex projects or projects that are dependent upon factors not wholly within our control could adversely affect our profitability and future prospects.
- If we are unable to obtain performance and other guarantees from financial institutions, we may be prevented from bidding on, or obtaining, some contracts, or our costs with respect to such contracts could be higher.
- Our hedging activities may not protect us against the consequences of significant fluctuations in exchange rates, interest rates, inflation or commodity prices on our earnings and cash flows.
- Failure to meet ESG expectations or standards or achieve our ESG goals could adversely affect our business, results of operations, and financial condition.

# Legal and regulatory risks

- An inability to protect our intellectual property rights or actual or alleged infringement of a third party's intellectual property rights could adversely affect our business.
- Failure to comply with evolving data privacy and data protection laws and regulations or to otherwise protect personal data, may adversely impact our business and financial results.
- Examinations by tax authorities and changes in tax regulations could result in lower earnings and cash flows.
- We are subject to environmental laws and regulations in the countries in which we operate. We incur costs to comply with such regulations, and our ongoing operations may expose us to environmental liabilities.
- We could be affected by future laws or regulations enacted to address climate change concerns as well as the physical effects of climate change.

3

## General risk factors

- If we are unable to attract and retain qualified management and personnel then our business may be adversely affected.
- Our business subjects us to considerable potential exposure to litigation and legal claims and could be materially adversely affected if we incur legal liability.

We urge you to read the other important factors set forth under sections of this Annual Report entitled "Item 3. Key Information-Risk Factors," "Item 4. Information on the Company" and "Item 5. Operating and Financial Review and Prospects" for a more complete discussion of the important factors that could affect our future performance and the countries and industries in which we operate. In light of these risks, uncertainties and assumptions, the forward-looking circumstances described in this Annual Report and the assumptions underlying them may not occur.

Except as required by law or applicable stock exchange rules or regulations, we undertake no obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by the cautionary statements referred to above and contained elsewhere in this Annual Report.

## PART I

### Item 1. Identity of Directors, Senior Management and Advisers

Not applicable

### Item 2. Offer Statistics and Expected Timetable

Not applicable

### Item 3. Key Information

## Risk factors

You should carefully consider all of the information set forth in this Annual Report and the following description of risks and uncertainties that exist or that we currently believe may exist. Our business, financial condition or results of operations could be adversely affected by any of these risks. Additional risks of which we are unaware or that we currently deem immaterial may also impair our business operations. This Annual Report also contains forward-looking statements that involve risks and uncertainties. Our results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those described below and elsewhere in this Annual Report. See "Cautionary Note Regarding Forward-Looking Statements".

## Business, economic and industry risks

**Our business is exposed to risks associated with the volatile global economic environment and political conditions.**

Adverse changes in economic or political conditions, particularly in locations where our customers or operations are located, as well as concerns about global trade and global supply chain, global health crises,

4

developments in energy prices, inflation, labor market challenges and terrorist activities, could have a material adverse effect on our business, financial condition, results of operations and liquidity and may adversely impact the demand for our products and services. These and other factors may prevent our customers and suppliers from obtaining the financing required to pursue their business activities as planned. Financial and other reasons may force them to modify, delay or cancel orders or plans to purchase or supply our products or services. In addition, if our customers do not generate sufficient revenue, or fail to timely obtain access to the capital markets, they may not be able to pay, or may delay payment of, the amounts they owe us. Customers with liquidity issues have delayed payments of amounts they owe us and this has led and may lead to additional bad debt expense for us, which may adversely affect our results of operations and cash flows. We are also subject to the risk that the counterparties to our credit agreements and hedging transactions may go bankrupt if they suffer catastrophic demand on their liquidity that prevents them from fulfilling their contractual obligations to us.

Our business environment is influenced also by numerous other economic or political uncertainties which may affect the global economy and the international capital markets. In periods of slow economic growth or decline, our customers are more likely to buy less of our products and services, and as a result we are more likely to experience decreased revenues. Our businesses are affected by the level of investments and demand in the markets that we serve, principally utilities, industry and transport & infrastructure. At various times during the last several years, we also have experienced, and may experience in the future, gross margin declines in certain businesses, reflecting the effect of factors such as competitive pricing pressures, inventory write-downs, charges associated with the cancellation of planned expansion and increases in component and manufacturing costs resulting from higher labor and material costs borne by our manufacturers and suppliers that, as a result of competitive pricing pressures or other factors, we are unable to pass on to our customers. Economic downturns also may lead to restructuring actions and associated expenses. Uncertainty about future economic conditions makes it difficult for us to forecast operating results and to make decisions about future investments.

In addition, we are subject to the risks that our business operations in or with certain countries may be adversely affected by trade tariffs, trade or economic sanctions or other restrictions imposed on these countries, including sanctions against Russia relating to the war in Ukraine, contributing to our decision to exit the Russian market, and the trade tensions in recent years with China. These could lead to increased costs for us or for our customers or limit our ability to do business in or with certain countries. In addition, actual or potential investors that object to certain of these business operations may adversely affect the price of our shares by disposing or deciding not to purchase our shares. These countries may from time to time include countries that are identified by the United States as state sponsors of terrorism. If any countries where or with whom we do business are subject to such sanctions or restrictions, our business, consolidated operating results, financial condition and the trading price of our shares may be adversely affected. In 2022, our total revenues from business with countries identified by the U.S. government as state sponsors of terrorism represented significantly less than 1 percent of our total revenues. Based on the amount of revenues and other relevant quantitative and qualitative factors, we have determined that our business in 2022 with countries identified by the U.S. government as state sponsors of terrorism was not material.

#### **Our business is exposed to risks associated with the COVID-19 pandemic.**

The novel coronavirus (COVID-19) pandemic has had, and continues to have, significant impacts on the global economy including on demand for products, operational predictability, the movement of people and products across borders, supply chains (including the supply of semiconductors) and the cost of capital. Given the global nature of our business, COVID-19 has had an adverse impact on our revenues and operating margins in all of our businesses and is expected to continue to have an impact at least in the short term. Our Robotics business in China has been particularly impacted. The ultimate extent to which the pandemic impacts our business, liquidity, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including future mutations of the COVID-19 virus and any resulting impact on the effectiveness of vaccines, the duration and extent of the pandemic and waves of infection, any new travel restrictions and social distancing orders imposed, as well as future business closures and business disruptions that may be caused by actions taken to contain, treat and prevent the disease. If we or our customers experience prolonged shutdowns or other business disruptions, our business, liquidity, results of operations and financial condition may be materially

5

adversely affected and our ability to access the capital markets may be limited.

#### **Our operations in emerging markets expose us to risks associated with conditions in those markets.**

A significant amount of our operations is conducted in the emerging markets in South America, Asia, and the Middle East and Africa. In 2022, approximately 40 percent of our consolidated revenues were generated from these emerging markets. Operations in emerging markets can present risks that are not encountered in countries with well-established economic and political systems, including:

- economic instability, which could make it difficult for us to anticipate future business conditions in these markets, cause delays in the placement of orders for projects that we have been awarded and subject us to volatile geographic markets,
- political or social instability, which could make our customers less willing to make cross-border investments in such regions and could complicate our dealings with governments regarding permits or other regulatory matters, local businesses and workforces,
- boycotts and embargoes that may be imposed by the international community on countries in which we do business or where we seek to do business could adversely affect the ability of our operations in those countries to obtain the materials necessary to fulfill contracts and our ability to pursue business or establish operations in those countries,
- foreign state takeovers of our and our customers' facilities,
- significant fluctuations in interest rates and currency exchange rates,
- the imposition of unexpected taxes or other payments on our revenues in these markets,
- our inability to obtain financing and/or insurance coverage from export credit agencies, and
- exchange controls and other restrictions by foreign governments.

Additionally, political and social instability resulting from increased violence in certain countries in which we do business has raised concerns about the safety of our personnel. These concerns may hinder our ability to send personnel abroad and to hire and retain local personnel. Such concerns may require us to increase security for personnel traveling to and working in affected countries or to restrict or wind-down operations in such countries, which may negatively impact us and result in higher costs and inefficiencies.

Consequently, our exposure to the conditions in or affecting emerging markets may adversely affect our business, financial condition, results of operations and liquidity.

#### **We may encounter difficulty in managing our business due to the global nature of our operations.**

We operate in approximately 100 countries around the world and, as of December 31, 2022, employed about 105,000 people, of which approximately 47 percent were located in the Europe region, approximately 28 percent in the Asia, Middle East and Africa region and approximately 25 percent in the Americas region. To manage our day-to-day operations, we must deal with cultural and language barriers and assimilate different business practices. Due to our global nature, we deal with a range of legal and regulatory systems some of which are less developed and less well-enforced than others. The laws and regulations to which we are subject can change rapidly and in unexpected directions. Currency and other local regulatory limitations related to the transfer of funds exist in a number of countries where we operate, including: China, India, South Africa and Turkey. All of this may impact our ability to protect our contractual, intellectual property and other legal rights. In addition, we are required to create compensation programs, employment policies and other administrative programs that comply with the laws of multiple countries. We also must communicate, monitor and uphold group-wide standards and directives across our global network, including in relation to our suppliers, subcontractors and other relevant stakeholders. Our failure to manage successfully our geographically diverse operations could impair our ability to react quickly to changing business and market conditions and to enforce compliance with group-wide standards and procedures.

6

# **We operate in very competitive and rapidly changing markets and could be adversely affected if we fail to keep pace with technological changes.**

We operate in very competitive and rapidly changing markets where we regularly need to innovate and develop products, systems, services and solutions that address the business challenges and needs of our customers. The nature of these challenges varies across the geographic markets and product areas that we serve. The markets for our products and services are characterized by changing regulatory requirements, developing ESG expectations and evolving industry standards, which may require us to modify our products and systems. The continual development of advanced technologies for new products and product enhancements is an important way in which we remain competitive and maintain acceptable pricing levels. If we fail to keep pace with technological changes in the industrial sectors that we serve, we may experience lower revenues, price erosion and lower margins.

Our primary competitors are sophisticated companies with significant resources that may develop products and services that are superior to our products and services or may adapt more quickly than we do to new technologies, industry changes or evolving customer requirements. We are also facing increased competition from low cost competitors in emerging markets, which may give rise to increased pressure to reduce our prices. Our failure to anticipate or respond quickly to technological developments or customer requirements could adversely affect our business, results of operations, financial condition and liquidity.

# **Industry consolidation could result in more powerful competitors and fewer customers.**

Competitors in the industries in which we operate are consolidating. In particular, the automation industry is undergoing consolidation that is reducing the number but increasing the size of companies that compete with us. As our competitors consolidate, they likely will increase their market share, gain economies of scale that enhance their ability to compete with us and/or acquire additional products and technologies that could displace our product offerings.

Our customer base also is undergoing consolidation. Consolidation within our customers' industries (such as the marine and cruise industry, automotive, aluminum, steel, pulp and paper and pharmaceutical industries and the oil and gas industry) could affect our customers and their relationships with us. If one of our competitors' customers acquires any of our customers, we may lose that business. Additionally, as our customers become larger and more concentrated, they could exert pricing pressure on all suppliers, including us. If we were to lose market share or customers or face pricing pressure due to consolidation of our customers, our results of operations and financial condition could be adversely affected.

# **Increases in costs or limitation of supplies of raw materials may adversely affect our financial performance.**

We purchase large amounts of commodity-based raw materials, including steel, copper, aluminum and oil. Prevailing prices for such commodities are subject to fluctuations due to changes in supply and demand and a variety of additional factors beyond our control, such as global political and economic conditions. Historically, prices for some of these raw materials have been volatile and unpredictable, and such volatility is expected to continue. Therefore, commodity price changes may result in unexpected increases in raw material costs, and we may be unable to increase our prices to offset these increased costs without suffering reduced volumes, revenues or operating income. We do not fully hedge against changes in commodity prices and our hedging procedures may not work as planned.

We depend on third parties to supply raw materials and other components and may not be able to obtain sufficient quantities of these materials and components, which could limit our ability to manufacture products on a timely basis and could harm our profitability. For some raw materials and components, we rely on a single supplier or a small number of suppliers. If one of these suppliers were unable to provide us with a raw material or component we need, our ability to manufacture some of our products could be adversely affected if we are unable to find a sufficient alternative supply channel in a reasonable period of time, on commercially reasonable terms, or at all.

7

In 2022, global supply chain constraints caused us to experience some delays in supplier deliveries and product shortages for various categories such as semiconductors and certain other raw materials as well as constraints in the transportation of inbound supplies. Although we were able to mitigate some disruptions, we have experienced some delays in delivering to certain of our customers and cannot assure you that our mitigation efforts will be sufficient to overcome these supply chain constraints if they continue or worsen in 2023.

If our suppliers are unable to deliver sufficient quantities of materials on a timely basis, the manufacture and sale of our products may be disrupted, we may be required to assume liability under our agreements with customers and our sales and profitability could be materially adversely affected.

#### **Our multi-national operations expose us to the risk of fluctuations in currency exchange rates.**

Currency exchange rate fluctuations have had, and could continue to have, a material impact on our operating results, the comparability of our results between periods, the value of assets or liabilities as recorded on our Consolidated Balance Sheet and the price of our securities. Volatility in exchange rates makes it harder to predict exchange rates and perform accurate financial planning. Changes in exchange rates can unpredictably and adversely affect our consolidated operating results and could result in exchange losses.

**Currency Translation Risk.** The results of operations and financial position of most of our non-U.S. companies are initially recorded in the currency of the country in which each such company resides, which we call 'local currency'. That financial information is then translated into U.S. dollars at the applicable exchange rates for inclusion in our Consolidated Financial Statements. The exchange rates between local currencies and the U.S. dollar can fluctuate substantially, which could have a significant translation effect on our reported consolidated results of operations and financial position.

Increases and decreases in the value of the U.S. dollar versus local currencies will affect the reported value of our local currency assets, liabilities, revenues and expenses in our Consolidated Financial Statements, even if the value of these items has not changed in local currency terms. These translations could significantly and adversely affect our results of operations and financial position from period to period.

**Currency Transaction Risk.** Currency risk exposure also affects our operations when our sales are denominated in currencies that are different from those in which our manufacturing or sourcing costs are incurred. In this case, if, after the parties agree on a price, the value of the currency in which the price is to be paid were to weaken relative to the currency in which we incur manufacturing or sourcing costs, there would be a negative impact on the profit margin for any such transaction. This transaction risk may exist regardless of whether there is also a currency translation risk as described above.

Currency exchange rate fluctuations in those currencies in which we incur our principal manufacturing expenses or sourcing costs may adversely affect our ability to compete with companies whose costs are incurred in other currencies. If our principal expense currencies appreciate in value against such other currencies, our competitive position may be weakened.

#### **The uncertainties relating to the United Kingdom's new relationship with the European Union and its potential impact on the relationship between Switzerland and the European Union, may have a negative effect on cross-border trade and our business.**

The United Kingdom has withdrawn from the European Union and has negotiated the terms of such departure (the UK-EU Trade and Cooperation Agreement or TCA), which was ratified and entered into full force on May 1, 2021. Because the agreement merely sets forth a framework in many respects and will require complex additional bilateral negotiations between the United Kingdom and the European Union as both parties continue to work on the rules for implementation, significant political and economic uncertainty remains and this has had and may continue to have a material effect on cross-border trade with the United Kingdom and with the European Union. Lack of clarity about future United Kingdom laws and regulations, potentially divergent national laws, the possibility of increased regulatory complexities, or future developments in the European Union could depress economic activity, reduce demand for our products and

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services, restrict our access to capital, and diminish or eliminate barrier-free access between the United Kingdom and other European Union member states or among the European economic area overall. Furthermore, the TCA may influence discussions on open trade and political matters between Switzerland and the European Union. Any of these factors could have an adverse effect on our business, financial condition and results of operations.

## Operational risks

### **Increased information technology (IT) security threats and more sophisticated cyber-attacks could pose a risk to our systems, networks, products, solutions and services.**

We have observed a global increase in IT security threats and more sophisticated cyber-attacks, which pose a risk to the security of systems and networks and the confidentiality, availability and integrity of data stored and transmitted on those systems and networks. Although we have experienced occasional cybersecurity incidents, none have had a material effect on our business operations. Since we may in the future experience cyber-attacks against our systems, networks, products, solutions and services, we expect that we will continue to incur substantial costs to help mitigate this risk. Similarly, we have observed a continued increase in attacks generally against industrial control systems as well as against our customers and the systems we supply to them, which pose a risk to the security of those systems and networks. Future attacks could potentially lead to the compromising of confidential information, disruption of our business, improper use or downtime of our systems and networks or those we supplied to our customers, manipulation, corruption, inaccessibility and destruction of data, defective products or services, production downtimes and supply shortages. Such attacks may also expose us to loss of business, claims or regulatory action. Any such impact in turn could adversely affect our reputation, competitiveness and results of operations. Our insurance coverage may not be adequate to cover all the costs related to cyber security attacks or disruptions resulting from such events. Due to the nature of these security threats, the nature and scope of the impact of any future incident cannot be predicted.

### **Our business strategy includes making strategic divestitures. There can be no assurance that any divestitures will provide business benefit.**

Our strategy includes divesting certain businesses. The divestiture of an existing business could reduce our future profits and operating cash flows and make our financial results more volatile. We may also retain certain obligations or grant indemnities in connection with a divestment. We may not find suitable purchasers for our non-core businesses and may continue to pay operating costs associated with these businesses. Failed attempts to divest non-core businesses may distract management's attention from other business activities, erode employee morale and customers' confidence, and harm our business. A divestiture could also cause a decline in the price of our shares and increased reliance on other elements of our core business operations. Whether we realize the anticipated benefits of a divestment, including the divestment of the Power Grids business, of the Turbocharging business and of the Mechanical Power Transmission business, depends on whether we successfully manage the related risks. If we do not successfully manage the risks associated with a divestiture, our business, financial condition, and results of operations could be adversely affected.

### **Anticipated benefits of historical, existing and potential future mergers, acquisitions, joint ventures or strategic alliances may not be realized.**

As part of our overall strategy, we may, from time to time, acquire businesses or interests in businesses, including noncontrolling interests, or form joint ventures or create strategic alliances. Whether we realize the anticipated benefits, including operating synergies and cost savings, from these transactions, depends, in part, upon the integration between the businesses involved, the performance and development of the underlying products, capabilities or technologies, our correct assessment of assumed liabilities and the management of the operations in question. Accordingly, our financial results could be adversely affected by unanticipated performance and liability issues, transaction-related charges, amortization related to intangibles, charges for impairment of long-term assets and partner performance.

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**There is no guarantee that our ongoing efforts to reduce costs will be successful.**

We seek continued cost savings through operational excellence and supply chain management. Lowering our cost base is important for our business and future competitiveness. However, there is no guarantee that we will achieve this goal. If we are unsuccessful and the shortfall is significant, there could be an adverse effect on our business, financial condition, and results of operations.

**Illegal behavior by any of our employees or agents could have a material adverse impact on our consolidated operating results, cash flows, and financial position as well as on our reputation and our ability to do business.**

Certain of our employees or agents have taken, and may in the future take, actions that violate or are alleged to violate the U.S. Foreign Corrupt Practices Act of 1977 (FCPA), legislation promulgated pursuant to the 1997 Organisation for Economic Co-operation and Development (OECD) Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, applicable antitrust laws, other applicable laws or regulations or our Code of Conduct. For more information regarding investigations of past actions taken by certain of our employees, see "Item 8. Financial Information-Legal Proceedings". Such actions have resulted, and in the future could result, in governmental investigations, enforcement actions, civil and criminal penalties, including monetary penalties and other sanctions, and civil litigation. It is possible that any governmental investigation or enforcement action arising from such matters could conclude that a violation of applicable law has occurred, and the consequences of any such investigation or enforcement action may have a material adverse impact on our consolidated operating results, cash flows and financial position. In addition, such actions, whether actual or alleged, could damage our reputation and ability to do business.

Further, detecting, investigating and resolving such actions could be expensive and could consume significant time and attention of our senior management. While we are committed to conducting business in a legal and ethical manner, our internal control systems at times have not been, and in the future may not be, completely effective to prevent and detect such improper activities by our employees and agents. We are subject to certain ongoing investigations by governmental agencies.

**We may be the subject of product liability claims.**

We may be required to pay for losses or injuries purportedly caused by the design, manufacture or operation of our products and systems. Additionally, we may be subject to product liability claims for the improper installation of products and systems designed and manufactured by others.

Product liability claims brought against us may be based in tort or in contract, and typically involve claims seeking compensation for personal injury or property damage. Claims brought by commercial businesses are often made also for financial losses arising from interruption to operations. Depending on the nature and application of many of the products we manufacture, a defect or alleged defect in one of these products could have serious consequences. For example:

- If the products produced by our electricity-related businesses are defective, there is a risk of fire, explosions and power surges, and significant damage to electricity generating, transmission and distribution facilities as well as electrical shock causing injury or death.
- If the products produced by our automation-related businesses are defective, our customers could suffer significant damage to facilities and equipment that rely on these products and systems to properly monitor and control their manufacturing processes. Additionally, people could be exposed to electrical shock and/or other harm causing injury or death.
- If any of our products contain hazardous substances, then there is a risk that such products or substances could cause injury or death.
- If any of our protective products were to fail to function properly, there is a risk that such failure could cause injury or death.

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If we were to incur a very large product liability claim, our insurance protection might not be adequate or sufficient to cover such a claim in terms of paying any awards or settlements, and/or paying for our defense costs. Further, some claims may be outside the scope of our insurance coverage. If a litigant were successful against us, a lack or insufficiency of insurance coverage could result in an adverse effect on our business, financial condition, results of operations and liquidity. Additionally, a well-publicized actual or perceived issue relating to us or our products could adversely affect our market reputation, which could result in a decline in demand for our products and reduce the trading price of our shares. Furthermore, if we were required or we otherwise determined to make a product recall, the costs could be significant.

**Undertaking long-term, technically complex projects or projects that are dependent upon factors not wholly within our control could adversely affect our profitability and future prospects.**

We derive a portion of our revenues from long-term, fixed price and turnkey projects and from other technically complex projects that can take many months, or even years, to complete. Such contracts typically involve substantial risks, including the possibility that we may underbid and consequently have no means of recouping the actual costs incurred, and the assumption of a large portion of the risks associated with completing related projects, including the warranty obligations. Some projects involve technological risks, including in cases where we are required to modify our existing products and systems to satisfy the technical requirements of a project, integrate our products and systems into the existing infrastructure and systems at the installation site, or undertake ancillary activities such as civil works at the installation site. Our revenue, cost and gross profit realized on such contracts can vary, sometimes substantially, from our original projections for numerous reasons, including:

- unanticipated issues with the scope of supply, including modification or integration of supplied products and systems that may require us to incur incremental expenses to remedy such issues,
- the quality and efficacy of our products and services cannot be tested and proven in all situations and environments and may lead to premature failure or unplanned degradation of products,
- changes in the cost of components, materials or labor,
- difficulties in obtaining required governmental permits or approvals,
- delays caused by customers, force majeure or local weather and geological conditions, including the ongoing COVID-19 pandemic and natural disasters,
- shortages of construction equipment,
- changes in law or government policy,
- supply bottlenecks, especially of key components,
- suppliers', subcontractors' or consortium partners' failure to perform or delay in performance,
- diversion of management focus due to responding to unforeseen issues, and
- loss of follow-on work.

These risks are exacerbated if a project is delayed because the circumstances upon which we originally bid and quoted a price may have changed in a manner that increases our costs or other liabilities relating to the project. In addition, we sometimes bear the risk of delays caused by unexpected conditions or events. Our project contracts often subject us to penalties or damages if we cannot complete a project in accordance with the contract schedule. In certain cases, we may be required to pay back to a customer all or a portion of the contract price as well as potential damages (which may significantly exceed the contract price), if we fail to meet contractual obligations.

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**If we are unable to obtain performance and other guarantees from financial institutions, we may be prevented from bidding on, or obtaining, some contracts, or our costs with respect to such contracts could be higher.**

In the normal course of our business and in accordance with industry practice, we provide a number of guarantees including bid bonds, advance payment bonds or guarantees, performance bonds or guarantees and warranty bonds or guarantees, which guarantee our own performance. These guarantees may include guarantees that a project will be completed on time or that a project or particular equipment will achieve other defined performance criteria. If we fail to satisfy any defined criteria, we may be required to make payments in cash or in kind. Performance guarantees frequently are requested in relation to large projects.

Some customers require that performance guarantees be issued by a financial institution. In considering whether to issue a guarantee on our behalf, financial institutions consider our credit ratings. If, in the future, we cannot obtain such a guarantee from a financial institution on commercially reasonable terms or at all, we could be prevented from bidding on, or obtaining, some contracts, or our costs with respect to such contracts could be higher, which would reduce the profitability of the contracts. If we cannot obtain guarantees on commercially reasonable terms or at all from financial institutions in the future, there could be a material impact on our business, financial condition, results of operations or liquidity.

**Our hedging activities may not protect us against the consequences of significant fluctuations in exchange rates, interest rates, inflation or commodity prices on our earnings and cash flows.**

Our policy is to hedge material currency exposures by entering into offsetting transactions with third-party financial institutions. Given the effective horizons of our risk management activities and the anticipatory nature of the exposures intended to be hedged, there can be no assurance that our currency hedging activities will fully offset the adverse financial impact resulting from unfavorable movements in foreign exchange rates. In addition, the timing of the accounting for recognition of gains and losses related to a hedging instrument may not coincide with the timing of gains and losses related to the underlying economic exposures.

As a resource-intensive operation, we are exposed to a variety of market and asset risks, including the effects of changes in inflation, commodity prices and interest rates. We monitor and manage these exposures as an integral part of our overall risk management program, which recognizes the unpredictability of markets and seeks to reduce the potentially adverse effects on our business. As part of our effort to manage these exposures, we may enter into commodity price and interest rate hedging arrangements. Nevertheless, changes in commodity prices and interest rates cannot always be predicted or hedged.

If we are unable to successfully manage the risk of changes in exchange rates, interest rates, inflation or commodity prices or if our hedging counterparties are unable to perform their obligations under our hedging agreements with them, then changes in these rates and prices could have an adverse effect on our financial condition and results of operations.

**Failure to meet ESG expectations or standards or achieve our ESG goals could adversely affect our business, results of operations, and financial condition**

There has been an increased focus from regulators and stakeholders on environmental, social and governance (ESG) matters. These include greenhouse gas emissions and climate-related risks; diversity, equity, and inclusion; responsible sourcing; human rights and social responsibility; and corporate governance. We have established certain ESG goals, commitments and targets. Our ability to accomplish them presents numerous operational, regulatory, financial, legal, and other challenges, several of which are outside of our control. Our failure to achieve our ESG goals, commitments and targets or comply with emerging ESG regulations could adversely affect our business, results of operations, and financial condition. Any such failure could harm our reputation, adversely impact our ability to attract and retain customers and talent and expose us to increased scrutiny from the investment community and enforcement authorities.

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## Legal and regulatory risks

### **An inability to protect our intellectual property rights or actual or alleged infringement of a third party's intellectual property rights could adversely affect our business.**

Our intellectual property rights are fundamental to all of our businesses. We generate, maintain, utilize and enforce a substantial portfolio of trademarks, trade dress, patents and other intellectual property rights globally. Intellectual property protection is subject to applicable laws in various local jurisdictions where interpretations and protections vary or can be unpredictable and costly to enforce. We use our intellectual property rights to protect the goodwill of our products, promote our product recognition, protect our proprietary technology and development activities, enhance our competitiveness and otherwise support our business goals and objectives. However, there can be no assurance that the steps we take to obtain, maintain and protect our intellectual property rights will be adequate. Our intellectual property rights may fail to provide us with significant competitive advantages, particularly in foreign jurisdictions that do not have, or do not enforce, strong intellectual property rights. The weakening of protection of our trademarks, trade dress, patents and other intellectual property rights could adversely affect our business. In addition, there exist risks around actual or alleged infringement of third-party intellectual property rights, which could - even with mitigation processes in place - lead to claims against us that require significant resources to resolve. We also may engage in legal action to protect our own intellectual property rights, and enforcing our rights may require considerable time, money and oversight, and existing laws in the various countries in which we provide services or solutions may offer only limited protection.

### **Failure to comply with evolving data privacy and data protection laws and regulations or to otherwise protect personal data, may adversely impact our business and financial results.**

We are subject to many rapidly evolving privacy and data protection laws and regulations around the world including the General Data Protection Regulation (GDPR) in Europe and the Personal Information Protection Law in China as well as the California Data Privacy Act and the California Privacy Rights Act (effective in January 2023) in the United States. This requires us to operate in a complex environment where there are significant constraints on how we can process personal data across our business. The GDPR, which became effective in May 2018, has established stringent data protection requirements for companies doing business in or handling personal data of individuals in the European Union. The GDPR imposes obligations on data controllers and processors including the requirement to maintain a record of their data processing and to implement policies and procedures as part of their mandated privacy governance framework. Breaches of the GDPR or other applicable data privacy laws could result in substantial fines, which in some cases could be up to four percent of our worldwide revenue. In addition, a breach of the GDPR or other data privacy or data protection laws or regulations could result in regulatory investigations, reputational damage, orders to cease/change our use of data, enforcement notices, as well as potential civil claims including class action type litigation. We have invested, and continue to invest, human and technology resources in our data privacy and data protection compliance efforts. There can be no assurance that any such actions will be sufficient to prevent cybersecurity breaches, disruptions, unauthorized release of sensitive information or corruption of data. Despite such actions, there is a risk that we may be subject to fines and penalties, litigation and reputational harm if we fail to properly process or protect the data or privacy of third parties or comply with the GDPR or other applicable data privacy and data protection regimes.

### **Examinations by tax authorities and changes in tax regulations could result in lower earnings and cash flows.**

We operate in approximately 100 countries and therefore are subject to different tax regulations. Changes in tax laws, including those addressing tax avoidance and profit sharing, could result in a higher tax expense and higher tax payments. Furthermore, this could materially impact our tax-related receivables and liabilities as well as deferred income tax assets and liabilities. In addition, the uncertainty of the tax environment in some regions could limit our ability to enforce our rights. As a globally operating organization, we conduct business in countries subject to complex tax rules, which may be interpreted in different ways. Future interpretations or developments of tax regimes may affect our tax liabilities, returns on investments and

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business operations. We are regularly examined by tax authorities in various jurisdictions. An adverse decision by a tax authority could cause a material adverse effect on our business, financial condition and results of operations.

**We are subject to environmental laws and regulations in the countries in which we operate. We incur costs to comply with such regulations, and our ongoing operations may expose us to environmental liabilities.**

Our operations are subject to U.S., European and other laws and regulations governing the discharge of materials into the environment or otherwise relating to environmental protection. Our manufacturing facilities use and produce paint residues, solvents, metals, oils and related residues. We use petroleum-based insulation in transformers and chloroparaffins as a flame retardant. We have manufactured and sold, and we are using in some of our factories, certain types of transformers and capacitors containing polychlorinated biphenyls (PCBs). These are considered to be hazardous substances in many jurisdictions in which we operate. We may be subject to substantial liabilities for environmental contamination arising from the use of such substances. All of our manufacturing operations are subject to ongoing compliance costs in respect of environmental matters and the associated capital expenditure requirements.

In addition, we may be subject to significant fines and penalties if we do not comply with environmental laws and regulations, including those referred to above. Some environmental laws provide for joint and several or strict liability for remediation of releases of hazardous substances, which could result in us incurring a liability for environmental damage without regard to our negligence or fault. Such laws and regulations could expose us to liability arising out of the conduct of operations or conditions caused by others, or for our acts which were in compliance with all applicable laws at the time the acts were performed. Additionally, we may be subject to claims alleging personal injury or property damage as a result of alleged exposure to hazardous substances. Changes in the environmental laws and regulations, or claims for damages to persons, property, natural resources or the environment, could result in substantial costs and liabilities to us.

**We could be affected by future laws or regulations enacted to address climate change concerns as well as the physical effects of climate change.**

Existing or pending laws and regulations intended to address climate change concerns could affect us in the future. We have incurred, and may need to incur additional costs to comply with these laws and regulations and any non-compliance could adversely affect our reputation and result in significant fines. We could also be affected indirectly by increased prices for goods or services provided to us by companies that are directly affected by these laws and regulations and pass their increased costs through to their customers. At this time, we cannot estimate what impact such costs may have on our business, results of operations or financial condition. We could also be affected by the physical consequences of climate change itself, although we cannot estimate what impact those consequences might have on our business or operations. Any such changes could also impact our ability to achieve our 2030 Sustainability targets as well as the related costs and resources necessary to do so.

## General risk factors

**If we are unable to attract and retain qualified management and personnel then our business may be adversely affected.**

Our success depends in part on our continued ability to hire, assimilate and retain highly qualified personnel, particularly our senior management team and key employees. Competition for highly qualified management and technical personnel remains intense in the industries and regions in which we operate. If we are unable to attract and retain members of our senior management team and key employees, including in connection with our ongoing organizational transformation, this could have an adverse effect on our business.

**Our business subjects us to considerable potential exposure to litigation and legal claims and could**

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**be materially adversely affected if we incur legal liability.**

We are subject to, and may become a party to, a variety of litigation or other claims. Our business is subject to the risk of claims involving current and former employees, customers, partners, subcontractors, suppliers, competitors, shareholders, government regulatory agencies or others through private actions, class actions, whistleblower claims, administrative proceedings, regulatory actions or other proceedings. Our acquisition activities have in the past and may in the future be subject to litigation or other claims. While we maintain insurance for certain potential liabilities, such insurance does not cover all types and amounts of potential liabilities and is subject to various exclusions as well as caps on amounts recoverable.

**Item 3A. [Reserved]**

**Item 4. Information on the Company**

## Introduction

### About ABB

ABB is a technology leader in electrification and automation, enabling a more sustainable and resource-efficient future. The company's solutions connect engineering know-how and software to optimize how things are manufactured, moved, powered and operated. Building on more than 130 years of excellence, ABB's approximately 105,000 employees are committed to driving innovations that accelerate industrial transformation.

We operate in over 100 countries across three regions: Europe, the Americas, and Asia, Middle East and Africa, and generate revenues in numerous currencies. We are headquartered in Zurich, Switzerland and we govern our company through our four Business Areas: Electrification, Motion, Process Automation, and Robotics & Discrete Automation. For a breakdown of our consolidated revenues (i) by Business Area, (ii) by geographic region, and (iii) by product type, see 'Item 5. Operating and Financial Review and Prospects-Analysis of results of operations-Revenues' and 'Note 23 - Operating segment and geographic data' to our Consolidated Financial Statements. Until June 30, 2020, we also operated the Power Grids business, which is reported as discontinued operations in the Consolidated Financial Statements (see 'Discontinued operations' section below). On July 1, 2020, we completed the divestment of 80.1 percent of the Power Grids business to Hitachi Ltd (Hitachi). We retained a 19.9 percent ownership interest through our investment in Hitachi Energy Ltd (Hitachi Energy), which beneficially owns or controls all the subsidiaries of the Power Grids business, until December 2022 when we sold the remaining investment in Hitachi Energy to Hitachi.

Our principal corporate offices are located at Affolternstrasse 44, CH 8050 Zurich, Switzerland, telephone number +41 43 317 7111. Our agent for U.S. federal securities law purposes is ABB Holdings Inc., located at 305 Gregson Drive, Cary, North Carolina 27511. Our internet address is www.abb.com or global.abb. The information contained on or accessible from our Web site is not incorporated into this annual report, and you should not consider it to be a part of this annual report. The United States Securities and Exchange Commission (SEC) maintains a website at www.sec.gov which contains in electronic form each of the reports and other information that we have filed electronically with the SEC.

### History of the ABB Group

The ABB Group was formed in 1988 through a merger between Asea AB and BBC Brown Boveri AG. Initially founded in 1883, Asea AB was a major participant in the introduction of electricity into Swedish homes and businesses and in the development of Sweden's railway network. In the 1940s and 1950s, Asea AB expanded into the power, mining and steel industries. Brown Boveri and Cie. (later renamed BBC Brown Boveri AG) was formed in Switzerland in 1891 and initially specialized in power generation and turbines. In the early to mid-1900s, it expanded its operations throughout Europe and broadened its business operations to include a wide range of electrical engineering activities.

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In January 1988, Asea AB and BBC Brown Boveri AG each contributed almost all of their businesses to the newly formed ABB Asea Brown Boveri Ltd, of which they each owned 50 percent. In 1996, Asea AB was renamed ABB AB and BBC Brown Boveri AG was renamed ABB AG. In February 1999, the ABB Group announced a group reconfiguration designed to establish a single parent holding company and a single class of shares. ABB Ltd was incorporated on March 5, 1999, under the laws of Switzerland. In June 1999, ABB Ltd became the holding company for the entire ABB Group. This was accomplished by having ABB Ltd issue shares to the shareholders of ABB AG and ABB AB, the two companies that formerly owned the ABB Group. The ABB Ltd shares were exchanged for the shares of those two companies, which, as a result of the share exchange and certain related transactions, became wholly-owned subsidiaries of ABB Ltd.

As described above, on July 1, 2020, we divested 80.1 percent of our ownership in the Power Grids business to Hitachi, and in December 2022, Hitachi purchased the remaining 19.9 percent of Hitachi Energy.

ABB Ltd shares are currently listed on the SIX Swiss Exchange, the NASDAQ OMX Stockholm Exchange and the New York Stock Exchange (in the form of American Depositary Shares).

## **ABB today**

As a global technology leader in electrification and automation enabling sustainability and resource efficiency, our offering is relevant for the global transition towards low-carbon energy, increased energy efficiency, and the transition to more adaptive manufacturing and automation, putting us right in the center of long-term secular trends.

### **The ABB Purpose**

ABB's purpose is to enable a more sustainable and resource-efficient future with our technology leadership in electrification and automation.

### **Our core competencies**

Our leadership in resource efficiency is based on our core competencies, each of which constitutes a barrier to entry: decades-long domain expertise, cutting-edge technology and innovation as well as the ability to scale operations and distribution.

With its long history, ABB not only invented or pioneered many power and automation technologies but has retained technology and market leadership in many of these areas. Being present in various vertical markets for decades with close long-term relationships with customers and channel partners has resulted in our unique deep domain expertise, enabling a thorough understanding of customers' needs and operations.

We continuously evolve our offering to remain a relevant and trusted partner to our customers. Our annual non-order related research and development spending in 2022 amounted to approximately 4 percent of revenues. We focus our research and development expenditures on key areas of innovation and have spent approximately $7.8 billion since the beginning of 2016, focusing on developing best-in-class products and services in the fields of electrification and automation with the goal of helping our customers to create resource-efficient value.

All our four Business Areas are market leaders in their respective areas being in either the number 1 or 2 position. Our global reach along with our extensive local presence assists us in scaling innovations to achieve stronger returns, which supports higher absolute investments for future growth. Active globally, our revenues are well-balanced across regions with customers served directly and through a strong channel partner network.

### **The ABB Way**

The ABB Way is the glue that unites our Group and comprises a select number of common processes covering our business model, our people and culture, the ABB brand and our governance framework. It facilitates accountability, transparency and speed in ABB.

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In our operating model, the Divisions represent the highest level of operating decisions. They are closest to their respective markets and customer needs. Each Division progresses through the strategic mandates and priorities of stability and profitability before growth. In order to deploy full focus on organic and acquired growth to the extent of consolidating the market, the business' structure should be robust and profitability should be at least in line with industry peers.

Each Division has full accountability for its results and carries the responsibility for business development, and research and development for leading technology to secure a number 1 or 2 market position. During 2022, we completed the implementation of the decentralized way of working at ABB within all our Divisions. Our focus area in 2023 will be to increasingly shift our focus to profitable growth, and further increase the number of our Divisions with this mandate. Strong performance management is key in a decentralized business model. We apply a monthly scorecard system for the Divisions and Business Areas, based on a standardized set of Key Performance Indicators, to support full transparency of operational performance. It is accompanied by a mandatory target to make annual productivity improvements of at least 3 percent each year.

The corporate functions focus on necessary strategic, financial and governance activities, with a lean headcount of approximately 900 employees.

#### **Enhanced growth profile**

Over the past several years, we have taken significant organic and inorganic actions to align our business portfolio to more attractive growth markets, increasing our focus on discrete industries, as well as transport and infrastructure, that offer better growth opportunities. Additionally, we have increased the proportion of sales stemming from short-cycle businesses, meaning a reduced proportion from project-related activities, which we believe should reduce the risk and volatility in our earnings. This ongoing shift towards better quality of revenues is now an integral part of governance and business execution.

The responsibility for growth has been fully transferred to the Divisions, as they are closest to customers. This includes both organic and acquired growth. The Divisions have the best insights into current and future customer needs and are accountable for building their respective business accordingly. With more Divisions transitioning over time from stability and profitability to growth, we expect to see a gradual strengthening of our growth profile.

Finally, environmental, social and governance (ESG) drivers are accelerating and translating into increased demand for our electrification and automation offering. The demand for electricity is growing twice as fast as other energy sources, resulting in approximately 50 percent higher average annual investments into distribution networks over the next 10 years (source: IEA World Energy Outlook 2021, Announced Pledges Scenario). The share of low-carbon sources in the global energy mix is expected to increase to 50 percent by 2050 from only 20 percent today (source: IEA World Energy Outlook 2021, Announced Pledges Scenario). The need to improve energy efficiency has never been more relevant, from both the perspective of sustainable operations and reducing operating costs in a high energy cost environment. Today approximately 45 percent of the world's electricity is converted into motion by electric motors yet only approximately 20 percent of the world's electric motors are optimized through the control of drives. Lastly, the global number of working age people (25 to 64 years) per retiree (65 years or over) is expected to fall by about 20 percent over the next 10 years (source: United Nations World Population Prospects 2019), supporting demand for robotics and automation solutions. We believe ABB's offering is well positioned to address these trends.

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## Businesses

### Our markets

ABB is a technology leader in electrification and automation with a comprehensive and increasingly digitalized offering of electrification, motion and automation solutions. Our exposure to customers is geographically balanced while catering to multiple end-markets and segments. We believe our customer offering is well positioned to benefit from secular growth drivers, including urbanization, labor shortage, shift to electrification, automation and robotization, as well as other data and digitalization trends.

We are focused on creating superior customer value through our comprehensive, modular offering, combining traditional products and services with software-enabled products and systems as well as digital services and software that we sell both separately and combined as scalable solutions. Our advanced software is a key differentiation of our digital offering and about 60 percent of our approximately 7,500 employees in research and development are active in software development.

The majority of our businesses are market leaders within their respective segments. We believe market leadership is critical, as it provides the opportunity for price leadership, which in turn supports profitability, enabling us to invest further in research and development to sustain our technological leadership. For a discussion of the geographic distribution of our total revenues, see 'Item 5. Operating and Financial Review and Prospects-Analysis of results of operations-Revenues.'

#### Industry market

Approximately half of our revenues are derived from customers within the industrial segment where we serve production facilities and factories all around the world, from process industries such as oil and gas, pulp and paper as well as mining, to discrete industries including automotive, food and beverage and consumer electronics. Demand for our electrification and automation offerings with embedded digital solutions increased as the energy crisis and tight labor markets served as a prominent reminder to companies of the importance of energy efficiency and flexibility in automated production. This has accelerated customer demand for the digital services and solutions we offer.

In discrete industries, demand from end-markets such as food and beverage, machine builders and general industry grew strongly in 2022 as did the automotive segment due to broadly accelerating investments in the EV segment. As supply chain constraints eased in the latter part of 2022, we saw a normalization of customers' order patterns following a period of pre-buying due to extended delivery lead times.

Later-cycle process industries improved across nearly all customer segments. We saw an increase in gas-related demand during the second half of the year. Early signs of headwind were noted in energy intensive industries such as metals as a result of higher energy prices.

#### Transport & infrastructure market

Approximately one-third of our customers operate in the transport & infrastructure market. Our expertise provides efficient, reliable and sustainable solutions for these customers, with a focus on energy efficiency and reduced operating costs.

In transport & infrastructure, there was a very strong order development across data centers and the e-mobility business. The buildings segment improved in both the residential and non-residential segments, although softness in residential building in China was noted, as well as general weakness in residential-related demand towards the second half of the year. In the marine segment there were positive developments for the cruise ship sector as well as general marine and ports demand.

#### Utilities market

We deliver solutions mainly for distribution utilities and renewables customers, while continuing to service conventional power generation customers with our control and automation solutions.

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During 2022, the renewables markets continued to see strong growth. Business levels in the conventional power generation market remained stable. Demand from electrical distribution utilities remained strong, with ongoing investments to increase grid reliability and resilience due to increased integration of renewables.

We serve industry, transport & infrastructure and utilities through our operating Divisions which are included in our Business Areas. Developments in these Business Areas are discussed in more detail below. Revenue figures presented in this Businesses section are before intersegment eliminations.

## Electrification Business Area

### Overview

Electrification provides leading electrical distribution and management technologies, solutions and services to electrify the world in a safe, smart and sustainable way. The portfolio includes medium- and low-voltage electrical components, switchgear, digital devices, enclosures, breakers, power conversion products and charging solutions for electric vehicles, among others. With our products, solutions and services, we collaborate with customers to improve power delivery and security, enhance energy management, efficiency and operational reliability, as we seek to achieve a low carbon society.

The Electrification Business Area delivers products through a global network of channel partners and end customers. Approximately half of the Business Area's revenue is derived from distributors and approximately a quarter is derived from direct sales to end-users. The remaining revenues are generated from original equipment manufacturers (OEMs), engineering, procurement, construction (EPC) contracting companies, system integrators, utilities and panel builders. The proportion of direct compared to channel partner sales varies by segment, product technology and geographic markets.

The Electrification Business Area had approximately 52,300 employees as of December 31, 2022, and generated $14.1 billion of revenues in 2022.

### Customers

The Electrification Business Area serves a wide range of customer segments, including residential, commercial and industrial buildings, utilities, oil and gas, chemicals, data centers, e-mobility, renewables, food and beverage, transport and infrastructure, among others. From some of the world's tallest buildings to the busiest airports, the Business Area's products and solutions cover a wide range of applications and business segments.

### Products and Services

The Electrification Business Area's products and services are delivered through seven operating Divisions.

The Distribution Solutions Division helps utility, industry and transport & infrastructure customers improve power quality and control, reduce outage time and enhance operational reliability and efficiency. The Division offers products, solutions and services that largely serve the power distribution sector, often providing the requisite medium-voltage link between high-voltage transmission systems and low-voltage users. With ABB AbilityTM enabled digital solutions at its core, the offering includes low-voltage switchgear (up to 1 kilovolt) and medium-voltage equipment (1 to 66 kilovolts), indoor and outdoor circuit breakers, reclosers, fuses, contactors, relays, instrument transformers, sensors, motor control centers, as well as a wide range of air- and gas-insulated switchgear. The Division also produces indoor and outdoor modular systems and other segment-specific solutions to facilitate efficient and reliable distribution, protection and control of power, adding value through design, engineering and project management.

The Smart Power Division helps protect, control, and connect people, plants, and systems with a portfolio of low-voltage products and systems. The product offering includes, molded-case and air-circuit breakers, safety products including sensors, switches, contactors, relays, and power protection solutions such as uninterruptible power supply (UPS) solutions, status transfer switches and power distribution units.

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The Smart Buildings Division enables optimization of energy efficiency, safety, security and comfort for any building type, through new installations or retrofit solutions. The Division offers integrated digital technologies for HVAC, lighting, shutters, and security, in addition to energy distribution solutions including DIN rail products, enclosures and emergency lighting through to industrial plugs and sockets and conventional wiring accessories, accommodating for single family homes, multiple dwellings, commercial buildings, infrastructure and industrial applications. The Division's highly innovative technologies and digital solutions serve rising global demand among real estate developers, owners, and investors for smart building technologies that optimize energy distribution and building automation. The scalable solutions aim to deliver significant sustainable and financial benefits, meeting social and environmental demands, while being able to address even the most complex of customers' carbon reduction strategies.

The Installation Products Division helps manage the connection, protection and distribution of electrical power. The Division's products are engineered to provide ease of installation and perform in demanding and harsh conditions, helping to ensure safety and continuous operation for our customers and people around the world. The Commercial Essentials product segment includes electrical junction boxes, commercial fittings, strut and cable tray metal framing systems for commercial and residential construction. The Premier Industrial product segment includes multiple product lines, such as Ty-Rap® cable ties, T&B Liquidtight Systems® protection products, PVC coated and nylon conduit systems, power connection and grounding systems, and cable protection systems of conduits and fittings for harsh and industrial applications. The Division also manufactures solutions for medium-voltage applications used in utility and industrial applications under its marquee brands including ElastimoldTM reclosers and switchgear, capacitor switches, current limiting fuses, the High Tech ValiantTM full-range current limiting fuse for fire mitigation, faulted current indicators and distribution connectors, cable accessories and apparatus with products for overhead and underground distribution. Manufacturing includes made-to-stock and custom-made solutions.

The Power Conversion Division designs, develops and manufactures end-to-end solutions to power and safeguard life's everyday moments. The Division supports customers in rapidly changing, disruptive industries where power reliability, efficiency, and quality matter most, and customers rely on the Division to solve their most difficult power challenges. Customers include businesses in telecom/5G, networking, data centers, and industrial applications such as EV charging, robotics, laser, test & measurement, and utilities. The Division is powering the technology behind today's connected world, helping to enable industrial advancement with the realization of 5G and to advance data center power architectures as the cloud becomes more business-critical than ever before.

The E-mobility Division is contributing to a zero-emission mobility future with smart, reliable and emission-free electric vehicle charging solutions including market leading charging hardware, ABB AbilityTM enabled digital services and energy and fleet management solutions. ABB E-mobility offers a leading portfolio of EV charging solutions from smart chargers for the home to high-power chargers for the highway stations of the future, solutions for the electrification of fleets and opportunity charging for electric buses and trucks.

The Service Division partners with our customers to address their energy challenges for today and tomorrow. Our team of world-class engineers collaborate globally across ABB's Electrification portfolio to service customers in utilities, transportation, infrastructure and industry, assisting to maintain uninterrupted power supply, maximizing energy efficiency while lowering cost and carbon emissions. We bring greater reliability, predictability and sustainability to their operations, and through our digital service portfolio, we drive new levels of optimization, responsiveness and connectivity.

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## Sales and Marketing

Sales and marketing is generally conducted within the Divisions in Electrification. This enables the Divisions to manage their respective end-to-end activities and create demand across all channels, products and solutions. They increase focus and speed for our customers to drive faster growth. Where necessary, the Divisions work together on joint services, such as the management of accounts, channels, and segment-sales, engaging in a range of promotional activities, both internal and external.

## Competition

The Electrification Business Area's principal competitors vary by product group and include Chint, Eaton, Hubbell, Legrand, LS Electric, Panasonic, Schneider Electric, Siemens and Vertiv.

## Capital Expenditures

The Electrification Business Area's capital expenditures for property, plant and equipment totaled $385 million in 2022, compared to $345 million in 2021. Investments in 2022 were higher than in 2021 driven by capacity expansion for e-mobility products and some investments which were previously delayed in 2021 and 2020 due to the COVID-19 pandemic. Investments in 2022 principally related to real estate investments, capacity expansion, as well as equipment replacement and upgrades. Geographically, in 2022, Europe represented 55 percent of the capital expenditures, followed by the Americas (33 percent) and Asia, Middle East and Africa (12 percent).

## Motion Business Area

### Overview

The Motion Business Area provides pioneering technology, products, solutions and related services to industrial customers to increase energy efficiency, improve safety and reliability, and maintain precise control over processes. The portfolio includes motors, generators and drives for a wide range of applications in all industrial sectors.

The Motion Business Area designs, manufactures and sells drives, motors, generators and traction converters. Building on long-standing experience in electric powertrains, the Business Area combines domain expertise and technology to deliver the optimum solution for a wide range of applications for a comprehensive range of industrial segments. In addition, the Business Area, along with its channel partners, has an industry-leading global service presence.

The Motion Business Area had approximately 21,100 employees as of December 31, 2022, and generated $6.7 billion of revenues in 2022.

### Customers

The Motion Business Area serves a wide range of customers in different industrial segments such as pulp and paper, oil and gas, metals and mining, food and beverage, HVAC, water and wastewater, transportation, power generation, marine and offshore.

### Products and Services

At December 31, 2022, the Motion Business Area's products and services are delivered through seven operating Divisions. The Business Area divested its Mechanical Power Transmission Division on November 1, 2021, which designed, manufactured and sold various mechanical power transmission products sold under the Dodge® brand.

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The Drive Products Division serves the industries and infrastructure segments with world-class drives and programmable logic controllers (PLC). With its products, global scale and local presence, the Division helps customers to improve energy efficiency, productivity and safety.

The System Drives Division supplies high-power, high-performance drives, drive systems and packages for industrial process and large infrastructure applications. The Division offers global support to help customers, partners and equipment manufacturers with asset reliability, performance improvement and energy efficiency in mission critical applications.

The Service Division serves customers worldwide and aims to help customers by maximizing uptime, extending life cycle and enhancing the performance and energy efficiency of their electrical motion solutions. The Division is leading the way in digitalization by securely connecting motors and drives to help customers prevent expensive downtime while also optimizing operations profitably, safely and reliably.

The Traction Division is a recognized leader in traction technologies that drive innovation in rail, bus and other modes of electric transportation. A comprehensive range of high performance propulsion, auxiliary and energy storage solutions help improve energy efficiency and contributes to making transportation more sustainable.

The IEC Low Voltage Motors Division is a global market leader that provides a full range of energy efficient low voltage motors, including ultra-efficient motors such as synchronous reluctance motors (SynRM) to help customers reduce power bills and cut emissions. Through a global footprint, application expertise and with rugged designs, the Division's products support customers with IEC low-voltage motor solutions that improve reliability and productivity in the most demanding applications.

The Large Motors and Generators Division offers a comprehensive product portfolio of large AC motors and generators. The Division's robust, reliable and highly efficient offerings power critical infrastructure and transportation across all major industries and applications often in remote and demanding locations.

The NEMA Motors Division is a marketer, designer and manufacturer that offers Baldor-Reliance® industrial electric motors, primarily in North America. The Division focuses on quality, reliability and efficiency to provide a comprehensive offering of NEMA motors in the market across most industrial segments and applications.

## Sales and Marketing

Sales are made both through direct sales forces and through channel partners, such as distributors and wholesalers, as well as installers, OEMs and system integrators. The proportion of direct sales to end users compared to channel partner sales varies among the different industries, products and geographic markets.

## Competition

The principal competitors of the Motion Business Area include Schneider, Siemens, Toshiba, WEG Industries, SEW EURODRIVE and Danfoss.

## Capital Expenditures

Capital expenditures in the Motion Business Area for property, plant and equipment totaled $150 million in 2022, compared to $230 million in 2021, which included the purchase of a formerly leased property in China. Principal expenditures in 2022 related to real estate investments, capacity expansion, equipment replacement and upgrades across various countries including Finland, the United States, China and India. Geographically, in 2022, Europe represented 60 percent of the capital expenditures, followed by the Americas (28 percent) and Asia, Middle East and Africa (12 percent).

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# Process Automation Business Area

## Overview

The Process Automation Business Area offers customers in process, hybrid and maritime industries a broad range of integrated automation, electrical, motion and digital systems, solutions and related services that are designed to optimize productivity, energy efficiency, sustainability and safety of industrial processes and operations, based on the Business Area's deep domain knowledge and expertise of each end market.

The Business Area's offering can be grouped into two categories, with approximately half of the offering related to solutions for new and brownfield projects and half related to service, mainly for installed own products. In some cases, the Business Area integrates offerings from the Electrification, Motion and Robotics & Discrete Automation Business Areas into its integrated systems. The Business Area's offerings are sold primarily through its direct sales force with a smaller share through partners and distributors.

The Business Area had approximately 20,100 employees as of December 31, 2022, and generated revenues of $6.0 billion in 2022.

## Customers

The Process Automation Business Area's end customers include companies across process, hybrid and maritime industries. These industries include oil, gas, chemicals and plastics, mining and minerals, metals, pulp and paper, pharmaceuticals, food and beverage, power generation, marine and ports.

## Products and Services

The offering of the Process Automation Business Area includes an extensive portfolio of products, solutions, digital applications and services for the control of the simplest to the most complex and critical of processes and infrastructure. These systems can link various process and information flows, allowing customers to manage and control their entire business process based on real-time information. The Business Area's control platform includes ABB AbilityTM Distributed Control System (DCS), System 800xA®, which is also an electrical control system, a safety system and a collaboration enabler with the capacity to improve engineering efficiency, operator performance and asset utilization. Other control solutions include Symphony® Plus (designed to address the open automation platform needs of the Hydropower and Water industry segments) and our Freelance DCS solution. Components for basic automation solutions, process controllers, I/O modules, panels, and Human Machine Interfaces (HMI), are available through the Compact Product Suite offering. The product portfolio is complemented by a suite of ABB AbilityTM Advanced Digital Services and by ABB Care, a subscription-based lifecycle management program that provides services to maintain and continually advance and enhance ABB's distributed control systems and optimize customers' lifecycle costs. The ABB AbilityTM Genix Industrial Analytics and Artificial Intelligence Suite unlocks greater value by contextualizing and integrating data from IT, engineering, and operations systems to provide deep, meaningful and actionable insights. The portfolio is complemented by a range of industry-specific products in each Division.

As of December 31, 2022, the Process Automation Business Area's products and services are delivered through four operating Divisions. The Business Area spun off its Turbocharging Division in October 2022, which manufactured and serviced turbochargers for diesel and gas engines for marine- and land-based power generation.

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The Energy Industries Division enables safe, smart, and sustainable projects and operations for businesses across the oil and gas, chemicals, life sciences, power generation and water sectors. It is committed to driving more sustainable use of our planet's resources through innovative solutions that enable energy efficient and low carbon operations across traditional industries and support the development of new and renewable energy models. The Division serves the energy market with leading integrated solutions that automate, digitalize and electrify operations across industries. The Division's goal is to help customers adapt and succeed in the rapidly changing global energy transition. Harnessing data, machine learning and artificial intelligence (AI), the Division brings over 50 years of domain expertise delivering solutions designed to improve energy, process and production efficiency, as well as reduce risk, operational cost and capital cost, while minimizing waste for all customers, from project start-up and throughout the entire plant lifecycle.

The Process Industries Division serves the mining, minerals processing, metals, aluminum, cement, pulp and paper, battery manufacturing, and food and beverage, as well as their associated service industries. The Division brings deep industry domain expertise coupled with the ability to integrate both automation and electrical systems, increase productivity and reduce overall capital and operating costs for customers. For mining, metals and cement customers, solutions include specialized products and services, as well as total production systems. The Division designs, plans, engineers, supplies, erects and commissions integrated electrical and motion systems, including electric equipment, drives, motors, high power rectifiers and equipment for automation and supervisory control within a variety of areas including mineral handling, mining operations, aluminum smelting, hot and cold steel applications and cement production. The offering for the pulp and paper industries includes control systems, quality control systems, drive systems, on-line sensors, actuators and field instruments. Digitalization solutions, including collaborative operations and augmented reality, help improve plant and enterprise productivity, and reduce maintenance and energy costs.

The Marine & Ports Division serves the shipping industry through its extensive portfolio of integrated marine systems and solutions that improve the flexibility, reliability and energy efficiency of vessels. By coupling power, propulsion, automation, marine software and services that ensure maximum vessel uptime, we are well positioned to help improve the profitability and sustainability of our customers' business throughout the entire lifecycle of a fleet. With ABB AbilityTM Marine software solutions and ABB AbilityTM Collaborative Operations Centers around the world, shipowners and operators can run their fleets at lower fuel and maintenance costs, while improving crew, passenger and cargo safety as well as overall productivity of their operations. Further, the Division delivers automation, electrical systems and digital solutions for container and bulk cargo handling, from ship to gate. These solutions help terminal operators meet the challenge of larger ships, taller cranes and bigger volumes per call, and make terminal operations safer, greener and more productive.

The portfolio of the Measurement & Analytics Division consists of analyzers (measuring compositions of gases and liquids), instrumentation (measuring the typical process variables of temperature, pressure, flow, and level) as well as specialized measurements for specific industries. With this offering the Division serves virtually all process, hybrid and marine industries, the largest among them being the oil, gas and chemical value chain, water and power generation industries. The Division also provides advanced digital solutions to help customers improve productivity, safety and environmental sustainability.

## Sales and Marketing

The Process Automation Business Area's sales are primarily made through its direct sales force as well as third-party channel partners, such as distributors, system integrators and OEMs. The majority of revenues are derived through the Business Area's own direct sales channels.

## Competition

The Process Automation Business Area's principal competitors vary by industry or product group. Competitors include: Emerson, Honeywell, Schneider Electric, Siemens, Siemens Energy, Yokogawa, Endress + Hauser, Kongsberg and Valmet.

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## Capital Expenditures

The Process Automation Business Area's capital expenditures for property, plant and equipment totaled $100 million in 2022, compared to $85 million in 2021. Principal investments in 2022 primarily related to purchases of land and building, mainly in the Energy Industries Division. Geographically, in 2022, Europe represented 76 percent of the capital expenditures, followed by Asia, Middle East and Africa (13 percent) and the Americas (11 percent).

## Robotics & Discrete Automation Business Area

### Overview

The Robotics & Discrete Automation Business Area provides robotics, and machine and factory automation including products, software, solutions and services. Revenues are generated both from direct sales to end users as well as from indirect sales mainly through system integrators and machine builders.

The Robotics & Discrete Automation Business Area had approximately 10,700 employees as of December 31, 2022, and generated $3.2 billion of revenues in 2022.

### Customers

Robotics & Discrete Automation serves a wide range of customers. The main customers are active in industries such as automotive, machine building, metalworking, electronics, food and beverage and logistics. They include end-users such as manufacturers, system integrators and machine builders.

### Products and Services

The Robotics & Discrete Automation Business Area's products and services are delivered through two operating Divisions.

The Robotics Division offers a wide range of products, solutions and services including robots, autonomous mobile robots, robotics application cells and smart systems, field services, spare parts, digital services, engineering and operations software. This offering provides customers with increased productivity, quality, flexibility and simplicity for operations, e.g. to meet the challenge of making smaller lots of a larger number of specific products in shorter cycles for today's dynamic global markets and coping with increasing uncertainty. Robots are also used in activities or environments which may be hazardous to employee health and safety, such as repetitive or strenuous lifting, dusty, hot or cold rooms, or painting booths and can help customers address labor shortages. Robotics solutions are used in a wide range of segments from automotive OEMs, automotive suppliers, electronics, general industry, consumer goods, food and beverage, and warehouse/logistics center automation. They are increasingly deployed in service applications for life sciences care, restaurants and retail. Typical robotic applications include welding, material handling, machine tending, machining, painting, picking, packing, palletizing and assembly.

The Machine Automation Division offers integrated automation solutions based on programmable logical controllers, industrial PCs, servo motion, industrial transport systems and machine vision. It also provides software for engineering and optimization. The range of solutions are mainly used by machine builders for various types of series machines, e.g. for plastics, metals, printing and packaging.

### Sales and Marketing

Sales are made both through direct sales as well as through third-party channel partners, such as system integrators and machine builders. The proportion of direct sales compared to channel partner sales varies among the different industries, product technologies and geographic markets.

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## Competition

Competitors of the Robotics & Discrete Automation Business Area vary by offering and include companies such as Fanuc, Kuka, Yaskawa, Epson, Dürr, Stäubli, Universal Robots, Rockwell Automation, Siemens, Mitsubishi Electric and Beckhoff.

## Capital Expenditures

The Robotics & Discrete Automation Business Area's capital expenditures for property, plant and equipment totaled $86 million in 2022, compared to $96 million in 2021. Principal investments in 2022 were primarily related to a new Robotics factory in Shanghai, China, and selective investments mainly in production facilities in the Robotics Division in Sweden and in the Machine Automation Division in Austria. In 2022, Europe represented 66 percent of capital expenditures, followed by Asia, Middle East and Africa (28 percent) and the Americas (6 percent).

## Corporate and Other

Corporate and Other includes core headquarter functions, real estate activities, Corporate Treasury Operations, Global Business Services (GBS), the investment in Hitachi Energy (until December 2022) and other minor business activities. Certain strategic investments managed by ABB Technology Ventures are also included in Corporate. The remaining activities of certain EPC projects which we are completing and are in a wind-down phase are reported as non-core businesses within Corporate and Other. In addition, the historical business activities of certain divested businesses are presented in Corporate and Other. These include the high-voltage cables business, steel structures and certain EPC contracts relating to the oil and gas industry.

Corporate headquarters and stewardship activities include the operations of our corporate headquarters in Zurich, Switzerland, as well as limited corporate-related activities in certain countries. These activities cover staff functions with group-wide responsibilities, such as accounting and financial reporting, corporate finance and corporate treasury, taxes, financial planning and analysis, internal audit, legal and integrity, compliance, risk management and insurance, corporate communications, information systems and investor relations.

GBS operates shared service centers globally through a network of four hubs and consists of both expert and transactional services in the areas of human resources, finance and information services. GBS also staffs and maintains front offices in most countries. The costs in GBS are incurred primarily for the benefit of the Business Areas, which are charged for their use of such services and the related number of employees are allocated to the Business Areas. GBS also provides services to third parties under transitional service agreements in relation to certain divested businesses, the largest of which are Hitachi Energy (the former Power Grids business) and Accelleron (the former Turbocharging Division).

A significant portion of the costs for GBS and other shared corporate overhead costs are charged to the operating businesses. Up to the divestment of the Power Grids business on July 1, 2020, overhead and other management costs, including GBS costs, which would have been allocated or charged to our Power Grids business, and which were not directly attributable to this business, have not been allocated to the discontinued operation and are included in Corporate and Other as 'stranded costs'.

Corporate and Other had approximately 1,000 employees at December 31, 2022, of which approximately 100 pertain to our non-core businesses.

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## Discontinued operations

In July 2020, we divested 80.1 percent of our Power Grids business to Hitachi Ltd. As a result, the Power Grids business is reported as discontinued operations in the Consolidated Financial Statements for all years presented. See 'Note 3 - Discontinued operations' to our Consolidated Financial Statements.

### Power Grids business

The former Power Grids business of ABB delivered products, systems, software and service solutions across the power value chain for utility, industry and transport & infrastructure customers.

The Power Grids business operated worldwide with a globally diversified manufacturing, engineering, and research and development footprint. Direct sales accounted for the majority of total revenues generated by the business while external channel partners such as EPCs, wholesalers, distributors and OEMs accounted for the rest.

### Products and Services

The Grid Automation operation supplied substation automation products, systems and services. It also provided Supervisory Control and Data Acquisition (SCADA) systems for transmission and distribution networks as well as a range of wireless, fiber optic and powerline carrier-based telecommunication technologies for mission-critical applications and also offered grid-edge and microgrid solutions. Its enterprise software portfolio provided solutions for managing and optimizing assets, operations, logistics, financials and HR, reducing operating costs and improving productivity for customers.

The Grid Integration operation was a leading provider of integration and transmission solutions such as High Voltage Direct Current (HVDC). Another key part of the portfolio was the Flexible Alternating Current Transmission Systems (FACTS) business, which comprised Static Var Compensation (SVC) and static compensator (STATCOM) technologies to address stability and power quality issues. The Grid Integration operation's portfolio also included a range of high-power semiconductors, a core technology for power electronics deployed in HVDC, FACTS and rail applications. The Grid Integration operation also provided transmission and distribution substations and associated lifecycle services. These substations are used in utility and non-utility applications including rail, data centers and various industries. Battery energy storage solutions and shore-to-ship power supply were also part of the customer offering.

The High Voltage products operation was a provider of high voltage switchgear up to 1200 kV AC and 1100 kV DC with a portfolio spanning air-insulated, gas-insulated and hybrid technologies. It also manufactured generator circuit breakers, a key product for integrating large power plants into the grid. The portfolio also included a broad range of capacitors and filters that facilitate power quality, instrument transformers and other substation components.

The Transformers operation supplied transformers that are an integral component found across the power value chain, enabling the reliable, efficient and safe conversion of voltage levels. The product range included dry- and liquid-distribution transformers, traction transformers for rail applications and special application transformers plus related components, for example, insulation kits, bushings and other transformer accessories.

The Power Grids business also had an extensive portfolio of service offerings across the value chain. The portfolio included spare parts, condition monitoring and maintenance services, on- and off-site repairs as well as retrofits and upgrades. Advanced software-based monitoring and advisory services further enhanced the portfolio.

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## Capital expenditures

Total capital expenditures for property, plant and equipment and intangible assets (excluding intangibles acquired through business combinations) amounted to $762 million, $820 million and $694 million in 2022, 2021 and 2020, respectively. In 2022 and 2021, capital expenditures were 6 percent and 8 percent lower, respectively, than depreciation and amortization. Excluding acquisition-related amortization, capital expenditures were 30 percent higher in 2022 and 28 percent higher in 2021, respectively, than depreciation and amortization.

Capital expenditures in 2022 primarily focused in mature markets, reflecting the geographic distribution of our existing production facilities. Capital expenditures in Europe and North America in 2022 were driven primarily by upgrades and maintenance of existing production facilities, mainly in the U.S., Germany, Italy, Finland, Netherlands, and Switzerland. In Asia, Middle East and Africa, capital expenditures were made primarily to increase production capacity by investing in new or expanded facilities, the highest of which were in China and India. The share of emerging markets capital expenditures as a percentage of total capital expenditures in 2022 and 2021 was 24 percent and 33 percent, respectively.

At December 31, 2022, construction in progress for property, plant and equipment was $586 million, mainly in the U.S., Germany, Switzerland, Finland, Austria, China and Sweden, while at December 31, 2021, construction in progress for property, plant and equipment was $522 million, mainly in the U.S., Switzerland, Germany, Sweden, Italy, China and India.

Our capital expenditures relate primarily to property, plant and equipment and are funded primarily through cash flows from operating activities. For 2023, we estimate the expenditures for property, plant and equipment will be higher than our annual depreciation and amortization charge, excluding acquisition-related amortization.

## Supplies and raw materials

We purchase a variety of supplies and products which contain raw materials for use in our production and project execution processes. The primary materials used in our products, by weight, are copper, aluminum, steel, mineral oil and various plastics. We also purchase a wide variety of fabricated products, electronic components and systems. We operate a worldwide supply chain management network with employees dedicated to this function in our Business Areas, Divisions and in key countries. Our supply chain operations consists of a number of teams, each focusing on different product categories. These category teams are tasked with taking advantage of opportunities to leverage the scale of ABB on a global, Business Area and/or Division level, as appropriate, to optimize the efficiency of our supply networks in a sustainable manner.

Our supply chain management organization's activities and objectives include:

- pool and leverage procurement of materials and services,
- provide transparency of ABB's global spending through a comprehensive performance and reporting system linked to our enterprise resource planning (ERP) systems,
- strengthen ABB's supply chain network by implementing an effective product category management structure and extensive competency-based training, and
- monitor and develop our supply base to ensure sustainability, both in terms of materials and processes used.

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We buy many categories of products which contain steel, copper, aluminum, crude oil and other commodities. Continuing global economic growth in many emerging economies, coupled with the volatility in foreign currency exchange rates, has led to significant fluctuations in these raw material costs over the last few years. While we expect global commodity prices to remain highly volatile, we expect to offset some market volatility through the use of long-term contracts and global sourcing.

We seek to mitigate the majority of our exposure to commodity price risk by entering into derivative contracts. For example, we manage copper, silver and aluminum price risk using principally swap contracts based on prices for these commodities quoted on leading exchanges. ABB's hedging policy is designed to safeguard margins by minimizing price volatility and providing a stable cost base during order execution. In addition to using derivatives to reduce our exposure to fluctuations in raw materials prices, in some cases we can reduce this risk by incorporating changes in raw materials prices into the prices of our end products (through price escalation clauses).

Overall, during 2022, supply chain management personnel in our businesses, and in the countries in which we operate, along with the category teams, continued to focus on value chain optimization efforts in all areas, while maintaining and improving quality and delivery performance. Responding to the challenges of overall global supply chain constraints, each Business Area quickly implemented a task force to mitigate supply chain shortages. The Business Areas experienced some delays in supplier deliveries and product shortages for various categories such as semiconductors and other raw materials as well as constraints in the transportation of inbound supplies. However, we responded to these challenges and took mitigating actions such as building up buffer stocks, approving new suppliers, changing supplier splits, combined with daily, weekly and monthly task force project follow ups. We have, to a large extent, been able to mitigate most disruptions, maintain a competitive service level and support our business growth, while maintaining delivery schedules to our customers.

Through our Sustainable Supply Base Management (SSBM) approach, we assess ESG risks, compliance and the performance of our suppliers in these areas to make sure they meet our expectations. These expectations are detailed in the ABB Supplier Code of Conduct and the ABB Code of Conduct.

We manage our obligations in relation to conflict minerals through our Conflict Minerals policy and processes that we aim to continually improve and tailor to our value chain. We continue to work with our suppliers and customers to enable us to comply with the SEC's rules and disclosure obligations relating to conflict minerals. Further information on ABB's Conflict Minerals policy and supplier requirements can be found under 'Material Compliance' at global.abb/group/en/about/supplying/material-compliance

## Patents and trademarks

While we are not materially dependent on any one of our intellectual properties, as a technology-driven company, we believe that intellectual property rights are crucial to protect the assets of our business. We continue to file new patent applications to protect our new inventions. As of December 31, 2022, we have a portfolio of approximately 25,000 pending patent applications and granted patents, of which approximately 5,500 are pending applications. This portfolio includes approximately 3,500 utility models and design rights, of which approximately 200 are pending applications. In 2022, we filed close to 500 priority patents, utility model and design applications, each covering a unique invention or unique angle on an invention. Additionally, we filed approximately 1,850 secondary patents, utility model and design applications, each extending the coverage of a previously filed priority application.

Based on our existing intellectual property strategy, we believe that we have adequate control over our core technologies. The 'ABB' trademarks and logo are protected in all of the countries in which we operate. We proactively assert our intellectual property rights to safeguard the reputation associated with the ABB technology and brand. While these intellectual property rights are fundamental to all of our businesses, there is no dependency of the business on any single patent, utility model or design application.

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## Sustainability activities

Sustainability is key to our purpose which is to enable a more sustainable and resource-efficient future with our technology leadership in electrification and automation. We believe that sustainable development means progress towards a healthier and more prosperous world today and for future generations. This means balancing the needs of society, the environment and the economy. To achieve this, we act and embed this approach to business across our value chain, including our own operations, our suppliers, our customers and the communities we serve. We strive to always be an exemplary corporate citizen wherever we operate.

Our 2030 sustainability strategy consists of four pillars:

**Enabling a low-carbon society** by helping to reduce carbon emissions through our technologies which target sectors that account for three quarters of global energy consumption. Our ambition is to support our customers in avoiding emissions. As we intend to have our targets validated against the Science Based Targets initiative's new Net-Zero Standard, we are no longer focusing on a limited number of cases linked to the 100 megatons emissions avoidance but rather on our complete portfolio of offerings. Our 2030 commitments for emissions in our own operations and supply chain are:

- achieve carbon neutrality across our own operations and reduce CO2e (CO2 equivalent) emissions in own operations by at least 80 percent compared to baseline year 2019, and
- work with our main tier-one suppliers (suppliers covering 70 percent of our annual procurement spend) to achieve a 50 percent reduction in their CO2e emissions by 2030.

**Preserving resources** by embedding circularity across our value chain. Our solutions reduce waste, provide increased recyclability and foster reusability. Our 2030 commitments are:

- ensure that at least 80 percent of ABB products and solutions are covered by our circularity approach, and
- send zero waste from our own operations to landfills, wherever this is compatible with local conditions and regulations.

**Promoting social progress** by taking care of our employees and promoting progress around the world. We create safe, fair and inclusive working environments and support community building. Our 2030 commitments:

- pursue the ambition that no harm is caused to our people and contractors - we aim for a yearly reduction in lost time from incidents,
- double the number of women in senior management roles to 25 percent, within our comprehensive diversity and inclusion framework,
- targeting a top-tier employee engagement score in our industry, and
- provide impactful support for community-building initiatives.

**Creating a culture of integrity and transparency along the extended value chain by:**

- always adhering to the ABB Code of Conduct, which forms the basis for interactions with projects and counterparties,
- successfully implementing a global framework for assessing and mitigating all third-party risks through risk-based due diligence and life-cycle monitoring,

30

- successfully implementing a global integrity program underpinned by accountability for integrity and an adaptive risk management strategy gained from insights through targeted learnings, transparent reporting and monitoring,
- incorporating sustainability targets into our senior management incentives, and
- ensuring that at least 80 percent of supply spend in focus countries is covered by our Sustainable Supply Base Management program, which includes environmental, social and governance performance.

Reflecting the importance of sustainability as a strategic topic, ABB's Board of Directors oversees our sustainability strategy, targets and our annual sustainability report. The Governance and Nomination Committee of the Board of Directors is responsible for overseeing "corporate social responsibility" (including health, safety and environment as well as sustainability), while the Compensation Committee ensures that ABB remuneration policies are linked to the achievement of its sustainability targets.

In 2022, we continued our efforts to work towards our 2030 sustainability targets. We see a further improvement in the share of green electricity we use from 51 percent in 2021 (53 percent adjusting for the divestment of the Mechanical Power Transmission division) to 81 percent in 2022. The amount of waste sent to landfill has decreased from 12.6 thousand tons in 2021 (12.3 thousand tons adjusting for the divestment of the Mechanical Power Transmission division) to 11.6 thousand tons in 2022. Globally, operations at 75 percent of our sites and offices are covered by externally certified environmental management systems. A total of 3 environmental incidents were reported in 2022, none of which had a material environmental impact.

In 2022, we recorded zero work-related fatalities and our lost time incident frequency rate slightly increased from 0.142 per 200,000 hours worked in 2021 to 0.143 in 2022. The number of women in senior management positions increased from 16.3 percent in 2021 to 17.8 percent in 2022.

Our employee engagement score increased from 74 (out of 100) in 2021 to 76 in 2022, while the response rate increased from 78 percent to 82 percent. We continued to provide impactful support for community-building initiatives across all regions.

During 2022, we introduced a new procedure for the management of third parties. This was rolled out across ABB to cover all sales channels, suppliers and customers, among others. The enhanced process will strengthen our conduct of risk-based due diligence, our oversight of interactions with third parties and the performance of the third parties themselves. At the end of 2022, 22 percent of high-risk supply spend in focus countries was covered by our Sustainable Supply Base Management program. We believe we are on track for our medium-term target of 80 percent of our high-risk supply spend in focus countries by 2025.

In 2022, all Executive Committee members had at least two sustainability-related goals (e.g., CO2e emission reduction, safety, female leadership) in their individual component of the Annual Incentive Plan (AIP).

## Regulation

Our operations are subject to numerous governmental laws and regulations including those governing antitrust and competition, corruption, the environment, securities transactions and disclosures, import and export of products, currency conversions and repatriation, taxation of foreign earnings and earnings of expatriate personnel and use of local employees and suppliers.

As a reporting company under Section 12 of the Exchange Act, we are subject to the FCPA's anti-bribery provisions with respect to our conduct around the world.

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Our operations are also subject to the 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. The convention obliges signatories to adopt national legislation that makes it a crime to bribe foreign public officials. Those countries which have adopted implementing legislation and have ratified the convention include the U.S., several European nations and certain other countries in which we have significant operations.

We conduct business in certain countries known to experience governmental corruption. While we are committed to conducting business in a legal and ethical manner, our employees or agents have taken, and in the future may take, actions that violate the U.S. FCPA, legislation promulgated pursuant to the 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, antitrust laws or other laws or regulations. These actions have resulted and could result in monetary or other penalties against us and could damage our reputation and, therefore, our ability to do business. For more information, see 'Item 8. Financial Information-Legal Proceedings'.

The U.S. Iran Threat Reduction and Syria Human Rights Act of 2012 requires U.S. listed companies to disclose information relating to certain transactions with Iran. In 2018, certain non-U.S. subsidiaries of ABB, in accordance with applicable laws, provided electrical equipment, automation systems and on-site services to OEMs, distributors, panel builders, EPC contracting companies and other customers for Iranian business. ABB discontinued its Iranian business on November 4, 2018. As previously disclosed, ABB is completing minor work on a long-term contract which is being performed in line with applicable sanctions. The revenues attributable to this work in 2022 amounted to approximately $0.2 million.

## Organizational structure

ABB Ltd is the ultimate parent company of the ABB Group. It is the sole shareholder of ABB Asea Brown Boveri Ltd which directly or indirectly owns the other companies in the ABB Group. The table below both sets forth, as of December 31, 2022, the name, place of incorporation and ownership interest of the significant direct and indirect subsidiaries of ABB Ltd, Switzerland. ABB's operational group structure is described above in the 'Businesses' section of Item 4.

| Name | Location | Country | Group Interest % |
| --- | --- | --- | --- |
| ABB Australia Pty Limited | Moorebank | Australia | 100.00 |
| ABB Group Holdings Pty. Ltd. | Moorebank | Australia | 100.00 |
| ABB Group Investment Management Pty. Ltd. | Moorebank | Australia | 100.00 |
| ABB AG | Wiener Neudorf | Austria | 100.00 |
| B&R Holding GmbH | Eggelsberg | Austria | 100.00 |
| B&R Industrial Automation GmbH | Eggelsberg | Austria | 100.00 |
| ABB N.V. | Zaventem | Belgium | 100.00 |
| ABB Automacao LTDA | Sorocaba | Brazil | 100.00 |
| ABB Eletrificacao LTDA | Sorocaba | Brazil | 100.00 |
| ABB Bulgaria EOOD | Sofia | Bulgaria | 100.00 |
| ABB Electrification Canada ULC | Edmonton | Canada | 100.00 |
| ABB Inc. | Saint-Laurent | Canada | 100.00 |
| ABB S.A. | Santiago | Chile | 100.00 |
| ABB (China) Investment Limited | Beijing | China | 100.00 |
| ABB (China) Ltd. | Beijing | China | 100.00 |
| ABB Beijing Drive Systems Co. Ltd. | Beijing | China | 90.00 |

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| Name | Location | Country | Group Interest % |
| --- | --- | --- | --- |
| ABB Beijing Switchgear Limited | Beijing | China | 60.00 |
| ABB Electrical Machines Ltd. | Shanghai | China | 100.00 |
| ABB Engineering (Shanghai) Ltd. | Shanghai | China | 100.00 |
| ABB LV Installation Materials Co. Ltd. Beijing | Beijing | China | 85.70 |
| ABB Shanghai Free Trade Zone Industrial Co., Ltd. | Shanghai | China | 100.00 |
| ABB Shanghai Motors Co. Ltd. | Shanghai | China | 75.00 |
| ABB Xiamen Low Voltage Equipment Co. Ltd. | Xiamen | China | 100.00 |
| ABB Xiamen Switchgear Co. Ltd. | Xiamen | China | 66.52 |
| ABB Xinhui Low Voltage Switchgear Co. Ltd. | Xinhui | China | 90.00 |
| ABB s.r.o. | Prague | Czech Republic | 100.00 |
| ABB A/S | Skovlunde | Denmark | 100.00 |
| ABB for Electrical Industries (ABB ARAB) S.A.E. | Cairo | Egypt | 100.00 |
| Asea Brown Boveri S.A.E. | Cairo | Egypt | 100.00 |
| ABB AS | Jüri | Estonia | 100.00 |
| ABB Oy | Helsinki | Finland | 100.00 |
| ABB France | Cergy Pontoise | France | 99.84 |
| ABB SAS | Cergy Pontoise | France | 100.00 |
| ABB AG | Mannheim | Germany | 100.00 |
| ABB Beteiligungs- und Verwaltungsgesellschaft mbH | Mannheim | Germany | 100.00 |
| ABB Stotz-Kontakt GmbH | Heidelberg | Germany | 100.00 |
| ABB Striebel & John GmbH | Sasbach | Germany | 100.00 |
| B + R Industrie-Elektronik GmbH | Bad Homburg | Germany | 100.00 |
| Busch-Jaeger Elektro GmbH | Lüdenscheid | Germany | 100.00 |
| ABB Engineering Trading and Service Ltd. | Budapest | Hungary | 100.00 |
| ABB Global Business Services and Contracting India Private Limited | Bangalore | India | 100.00 |
| ABB Global Industries and Services Private Limited | Bangalore | India | 100.00 |
| ABB India Limited | Bangalore | India | 75.00 |
| ABB E-mobility S.p.A. | Milan | Italy | 91.56 |
| ABB S.p.A. | Milan | Italy | 100.00 |
| ABB K.K. | Tokyo | Japan | 100.00 |
| ABB Ltd. | Seoul | Korea, Republic of | 100.00 |
| ABB Electrical Control Systems S. de R.L. de C.V. | Monterrey | Mexico | 100.00 |
| ABB Mexico S.A. de C.V. | San Luis Potosi | Mexico | 100.00 |
| Asea Brown Boveri S.A. de C.V. | San Luis Potosi | Mexico | 100.00 |
| ABB B.V. | Rotterdam | Netherlands | 100.00 |
| ABB E-mobility B.V. | Delft | Netherlands | 91.56 |
| ABB Finance B.V. | Rotterdam | Netherlands | 100.00 |
| ABB Holdings B.V. | Rotterdam | Netherlands | 100.00 |
| ABB AS | Fornebu | Norway | 100.00 |
| ABB Electrification Norway AS | Skien | Norway | 100.00 |
| ABB Holding AS | Fornebu | Norway | 100.00 |
| ABB Business Services Sp. z o.o. | Warsaw | Poland | 99.94 |

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| Name | Location | Country | Group Interest % |
| --- | --- | --- | --- |
| ABB Industrial Solutions (Klodzko) Sp. z o.o. | Klodzko | Poland | 99.94 |
| ABB Sp. z o.o. | Warsaw | Poland | 99.94 |
| Industrial C&S of P.R. LLC | San Juan | Puerto Rico | 100.00 |
| ABB Electrical Industries Co. Ltd. | Riyadh | Saudi Arabia | 65.00 |
| ABB Pte. Ltd. | Singapore | Singapore | 100.00 |
| ABB Holdings (Pty) Ltd. | Modderfontein | South Africa | 100.00 |
| ABB Investments (Pty) Ltd | Modderfontein | South Africa | 51.00 |
| ABB South Africa (Pty) Ltd. | Modderfontein | South Africa | 74.91 |
| Asea Brown Boveri S.A. | Madrid | Spain | 100.00 |
| ABB AB | Västerås | Sweden | 100.00 |
| ABB Electrification Sweden AB | Västerås | Sweden | 100.00 |
| ABB Norden Holding AB | Västerås | Sweden | 100.00 |
| ABB Asea Brown Boveri Ltd | Zurich | Switzerland | 100.00 |
| ABB Canada EL Holding GmbH | Zurich | Switzerland | 100.00 |
| ABB Capital AG | Zurich | Switzerland | 100.00 |
| ABB E-mobility Holding Ltd | Baden | Switzerland | 91.56 |
| ABB Information Systems Ltd. | Zurich | Switzerland | 100.00 |
| ABB Management Services Ltd. | Zurich | Switzerland | 100.00 |
| ABB Schweiz AG | Baden | Switzerland | 100.00 |
| ABB Ltd. | Taipei | Taiwan (Chinese Taipei) | 100.00 |
| ABB Elektrik Sanayi A.S. | Istanbul | Turkiye | 99.99 |
| ABB Industries (L.L.C.) | Dubai | United Arab Emirates | 49.00 (1) |
| ABB Holdings Limited | Warrington | United Kingdom | 100.00 |
| ABB Limited | Warrington | United Kingdom | 100.00 |
| ABB E-mobility Inc. | Wilmington, DE | United States | 91.56 |
| ABB Finance (USA) Inc. | Wilmington, DE | United States | 100.00 |
| ABB Holdings Inc. | Cary, NC | United States | 100.00 |
| ABB Inc. | Cary, NC | United States | 100.00 |
| ABB Installation Products Inc. | Memphis, TN | United States | 100.00 |
| ABB Motors and Mechanical Inc. | Fort Smith, AR | United States | 100.00 |
| ABB Treasury Center (USA), Inc. | Wilmington, DE | United States | 100.00 |
| Edison Holding Corporation | Wilmington, DE | United States | 100.00 |
| Industrial Connections & Solutions LLC | Cary, NC | United States | 100.00 |

(1) Company consolidated as ABB exercises full management control.

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## Description of property

As of December 31, 2022, we occupy real estate in around 100 countries throughout the world. The facilities consist mainly of manufacturing plants, office buildings, research centers and warehouses. A substantial portion of our production and development facilities is situated in China, the U.S., Germany, Finland, Sweden, Italy, Canada, India, Poland and Mexico. We also own or lease other properties, including office buildings, warehouses, research and development facilities and sales offices in many countries. We own substantially all of the machinery and equipment used in our manufacturing operations.

From time to time, we have a surplus of space arising from acquisitions, production efficiencies and/or restructuring of operations. Normally, we seek to sell such surplus space which may involve leasing property to third parties for an interim period. As a result of the divestment of the Power Grids business to Hitachi Ltd in 2020, certain property, plant and equipment previously owned by ABB which related to the Power Grids business, was sold as part of the divestment. In addition, certain property, plant and equipment relating to the former Power Grids business continues to be owned by ABB and is leased to Hitachi Energy Ltd.

The net book value of our property, plant and equipment at December 31, 2022, was $3,911 million, of which machinery and equipment represented $1,305 million, land and buildings represented $2,020 million and construction in progress represented $586 million. We believe that our current facilities are in good condition and are adequate to meet the requirements of our present and foreseeable future operations.

### Item 4A. Unresolved Staff Comments

None

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## Item 5. Operating and Financial Review and Prospects

The discussion in Item 5 below provides a comparative analysis between 2022 and 2021. See 'Item 5. Operating and Financial Review and Prospects' in our Annual Report on Form 20-F for the year ended December 31, 2021, for a comparative discussion and analysis between 2021 and 2020.

### Management overview

In 2022, we managed to navigate high customer activity in a complex macroeconomic environment marked by inflation, a strained value chain, an energy crisis, the war in Ukraine with the related economic sanctions on Russia as well as the lingering impacts of the COVID-19 pandemic. During the year, we also worked to fully implement the ABB Way operating model within our Divisions. Our new and more efficient ways of working combined with a strong market situation led to increased operational results. In the wake of the COVID-19 pandemic, ongoing supply chain, logistics and labor challenges emerged, but we were able to avoid major business disruptions with our more agile organization. Our strong price management processes proved effective as we quickly responded to rising input costs and were able to more than offset the higher costs of inflation through price increases during the year.

Active portfolio management continues to be part of our performance culture. On the back of systematic portfolio reviews we ascertain whether, ultimately, ABB is the best owner of the different businesses. We continued to make strong progress in aligning our business portfolio with our purpose, and fully focus on the areas of electrification and automation. We completed the spin-off of the Turbocharging Division in October 2022 and sold the remaining 19.9 percent interest in Hitachi Energy to Hitachi in December. The net cash received from the sale further strengthened our balance sheet, giving us additional flexibility in our capital allocation decisions. Looking forward, after the end of the year, we also reached an agreement in January 2023 to sell our Power Conversion Division to AcBel Polytech Inc. The transaction is subject to regulatory approvals and is expected to be completed in the second half of 2023.

At the same time, we remain committed to our strategy to separately list our E-mobility business subject to constructive market conditions. In the meantime, we received gross proceeds of approximately CHF 200 million ($216 million) through a private placement of new shares in ABB E-mobility in November 2022. After the end of the year, we obtained an additional amount of funding through the private placement, increasing the total gross proceeds by an additional CHF 325 million ($351 million) in February 2023. We remain a committed partner to ABB E-mobility with a shareholding of 81 percent as of February 2023.

In addition, our active portfolio management process is driving decisions within the Divisions to improve or exit areas of underperformance and support improved performance ambitions. During 2022 we accelerated the pace of strategic partnerships as well as bolt-on acquisitions driven by the Divisions. The Motion Business Area announced their first two acquisitions in more than a decade, with a combined value of approximately $125 million. Both the planned acquisition of the Siemens low voltage NEMA motor business (closing in 2023) and the PowerTech Converter acquisition will help the respective Divisions to further strengthen their leading market positions. We have also made minority investments led by our Divisions. Both the InCharge Energy, Inc (In-Charge) and Numocity Technologies Private Ltd (Numocity) majority acquisitions made earlier this year are good examples that minority investments can later also become acquisition targets. As part of our future strategy, we continue to aim to complete five or more bolt-on acquisitions each year.

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## Business progress

During 2022, demand for ABB's offering was robust, driven by strong demand across all regions and most customer segments, leading to positive developments in both volumes and pricing, the latter of which was largely driven by our quick response to rising input costs which we were able to pass on to our customers. Orders increased in all Business Areas with higher demand in all regions with the Americas seeing the highest growth, while growth in Asia, Middle East, and Africa was lower, driven mainly by lower growth rates in China versus prior year. Overall demand increased for the short-cycle flow business and the systems-driven offerings as well as in service.

While our orders increased 7 percent (13 percent in local currencies) in 2022, revenue growth was lower at 2 percent (9 percent in local currencies). Supply chain constraints and imbalances in the overall supply chain limited our ability to convert orders into actual deliveries resulting in an increase of our order backlog of 20 percent to $19.9 billion at the end of the year.

Group profitability showed strong improvement during 2022 with segment profit (Operational EBITA) improving in all Business Areas but reflecting approximately 10 percent of negative currency translation impacts compared to 2021. The result was driven by strong pricing execution, increased volumes and improved internal efficiency. Active price management and productivity gains were able to offset increasing raw material costs and general cost inflation emphasized by the tight supply situation over the year.

Cash flows from operating activities was $1.3 billion in 2022, a decrease of 61 percent compared to 2021. The profitability improvement was more than offset by the impact of a buildup of working capital, especially inventories, required to support our record high backlog and the impact of higher pay-out of employee bonuses due to the strong financial performance in 2021, as well as significant cash outflows relating to the exit of a non-core business, the payment for the settlement related to regulatory penalties for the Kusile project as well as ongoing restructuring and business transformation costs.

We continued to make organic growth investments in a disciplined manner, prioritizing research and development while reducing administrative costs. Total non-order related research and development was $1.2 billion in 2022, or 4 percent of revenues.

## Capital allocation

Our capital allocation priorities are unchanged:

- funding organic growth, research and development, and capital expenditures at attractive returns,
- paying a rising, sustainable dividend per share over time,
- investing in value-creating acquisitions, and
- returning additional cash to shareholders.

We expect that our strong cash generation, on the back of the ABB Way operating model, will enhance our flexibility to invest in both organic growth and bolt-on acquisitions, while providing attractive returns to shareholders.

At the 2023 Annual General Meeting (AGM), the Board of Directors is proposing a dividend of 0.84 Swiss francs per share. During the year we reached our goal of returning $7.8 billion of the cash proceeds from the Power Grids divestment to shareholders. Under the various share buyback programs we have now purchased in excess of our goal with $2.8 billion of shares purchased in 2022 in addition to the $5.5 billion purchased through the end of 2021.

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## Sustainability strategy 2030

With our 2030 sustainability strategy, we are actively contributing to a more sustainable world, leading by example in our own operations and partnering with customers and suppliers to enable a low-carbon society, preserve resources and promote social progress. Our sustainability focus is part of ABB's commitment to responsible business practices, which are at the center of our comprehensive governance framework, based on integrity and transparency.

Amongst other focus areas in 2022, we announced a new emissions target for our supply chain. We aim to work with our main tier-one suppliers to achieve a 50 percent reduction in their CO$_{2}$e emissions by 2030. The target is focused on suppliers covering 70 percent of ABB's annual procurement expenditure. The new target is expected to make an important contribution to our goal of enabling a low carbon society as, in many cases, our suppliers have a bigger footprint than our company. For a detailed discussion of our sustainability strategy 2030 and our progress in 2022, see 'Item 4. Information on the Company-Sustainability activities'.

## Critical accounting policies and estimates

### General

We prepare our Consolidated Financial Statements in accordance with U.S. GAAP and present these in U.S. dollars unless otherwise stated.

The preparation of our financial statements requires us to make assumptions and estimates that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosure of contingent assets and liabilities. We evaluate our estimates on an ongoing basis (see 'Note 2 - Significant accounting policies' to our Consolidated Financial Statements for a listing of our most significant accounting estimates). Where appropriate, we base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from our estimates and assumptions.

We deem an accounting policy to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made and if different estimates that reasonably could have been used, or if changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact our Consolidated Financial Statements. We also deem an accounting policy to be critical when the application of such policy is essential to our ongoing operations. We believe the following critical accounting policies require us to make subjective judgments, often as a result of the need to make estimates regarding matters that are inherently uncertain and material to our Consolidated Financial Statements. These policies should be considered when reading our Consolidated Financial Statements.

### Revenue recognition

A customer contract exists if collectability under the contract is considered probable, the contract has commercial substance, contains payment terms, the rights and commitments of both parties, and has been approved. By analyzing the type, terms and conditions of each contract or arrangement with a customer, we determine which revenue recognition method applies.

We recognize revenues when control of goods or services is transferred to customers in an amount that reflects the consideration we expect to be entitled to in exchange for these goods or services. Control is transferred when the customer has the ability to direct the use and obtain the benefits from the goods or services.

38

The percentage-of-completion method of accounting is generally used when recognizing revenue on an over time basis and involves the use of assumptions and projections, principally relating to future material, labor, subcontractor and project-related overhead costs as well as estimates of the amount of variable consideration to which we expect to be entitled. As a consequence, there is a risk that total contract costs or the amount of variable consideration will, respectively, either exceed or be lower than those we originally estimated (based on all information reasonably available to us) and the margin will decrease or the contract may become unprofitable. This risk increases if the duration of a contract increases because there is a higher probability that the circumstances upon which we originally developed our estimates will change, resulting in increased costs that we may not recover. Factors that could cause costs to increase include:

- unanticipated technical problems with equipment supplied or developed by us which may require us to incur additional costs to remedy,
- changes in the cost of components, materials or labor,
- difficulties in obtaining required governmental permits or approvals,
- project modifications creating unanticipated costs,
- suppliers' or subcontractors' failure to perform, and
- delays caused by unexpected conditions or events.

Changes in our initial assumptions, which we review on a regular basis between balance sheet dates, may result in revisions to estimated costs, current earnings and anticipated earnings. We recognize these changes in the period in which the changes in estimates are determined. By recognizing changes in estimates cumulatively, recorded revenue and costs to date reflect the current estimates of the stage of completion of each project. Additionally, losses on such contracts are recognized in the period when they are identified and are based upon the anticipated excess of contract costs over the related contract revenues.

## Pension and other postretirement benefits

As more fully described in "Note 17 - Employee benefits" to our Consolidated Financial Statements, we have a number of defined benefit pension and other postretirement plans and recognize an asset for a plan's overfunded status or a liability for a plan's underfunded status in our Consolidated Balance Sheets. We measure such a plan's assets and obligations that determine its funded status as of the end of the year.

Significant differences between assumptions and actual experience, or significant changes in assumptions, may materially affect the pension obligations. The effects of actual results differing from assumptions and the changing of assumptions are included in net actuarial loss within "Accumulated other comprehensive loss".

We recognize actuarial gains and losses gradually over time. Any cumulative unrecognized actuarial gain or loss that exceeds 10 percent of the greater of the present value of the projected benefit obligation (PBO) and the fair value of plan assets is recognized in earnings over the expected average remaining working lives of the employees participating in the plan, or the expected average remaining lifetime of the inactive plan participants if the plan is comprised of all or almost all inactive participants. Otherwise, the actuarial gain or loss is not recognized in the Consolidated Income Statements.

We use actuarial valuations to determine our pension and postretirement benefit costs and credits. The amounts calculated depend on a variety of key assumptions, including discount rates, mortality rates and expected return on plan assets. Under U.S. GAAP, we are required to consider current market conditions in making these assumptions. In particular, the discount rates are reviewed annually based on changes in long-term, highly-rated corporate bond yields. Decreases in the discount rates result in an increase in the PBO and in pension costs. Conversely, an increase in the discount rates results in a decrease in the PBO and in pension costs. The mortality assumptions are reviewed annually by management. Decreases in mortality rates result in an increase in the PBO and in pension costs. Conversely, an increase in mortality rates results in a decrease in the PBO and in pension costs.

39

Holding all other assumptions constant, a 0.25 percentage-point decrease in the discount rate would have increased the PBO related to our defined benefit pension plans by $144 million while a 0.25 percentage-point increase in the discount rate would have decreased the PBO related to our defined benefit pension plans by $140 million.

The expected return on plan assets is reviewed regularly and considered for adjustment annually based upon the target asset allocations and represents the long-term return expected to be achieved. Decreases in the expected return on plan assets result in an increase to pension costs. Holding all other assumptions constant, an increase or decrease of 0.25 percentage points in the expected long-term rate of asset return would have decreased or increased, respectively, the net periodic benefit cost in 2022 by $20 million.

The funded status, which can increase or decrease based on the performance of the financial markets or changes in our assumptions, does not represent a mandatory short-term cash obligation. Instead, the funded status of a defined benefit pension plan is the difference between the PBO and the fair value of the plan assets. Our defined benefit pension plans were overfunded by $326 million and $27 million at December 31, 2022 and 2021, respectively. Our other postretirement plans were underfunded by $50 million and $71 million at December 31, 2022 and 2021, respectively.

## Income taxes

In preparing our Consolidated Financial Statements, we are required to estimate income taxes in each of the jurisdictions in which we operate. Tax expense from continuing operations is reconciled from the weighted-average global tax rate (rather than from the Swiss domestic statutory tax rate). As the parent company of the ABB Group, ABB Ltd, is domiciled in Switzerland, income which has been generated in jurisdictions outside of Switzerland (hereafter 'foreign jurisdictions') and has already been subject to corporate income tax in those foreign jurisdictions is, to a large extent, tax exempt in Switzerland. Therefore, generally no or only limited Swiss income tax has to be provided for on the repatriated earnings of foreign subsidiaries. There is no requirement in Switzerland for a parent company of a group to file a tax return of the group determining domestic and foreign pre-tax income and as our consolidated income from continuing operations is predominantly earned outside of Switzerland, corporate income tax in foreign jurisdictions largely determines our global weighted-average tax rate.

We account for deferred taxes by using the asset and liability method. Under this method, we determine deferred tax assets and liabilities based on temporary differences between the financial reporting and the tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. We recognize a deferred tax asset when it is more likely than not that the asset will be realized. We regularly review our deferred tax assets for recoverability and establish a valuation allowance based upon historical losses, projected future taxable income and the expected timing of the reversals of existing temporary differences. To the extent we increase or decrease this allowance in a period, we recognize the change in the allowance within 'Income tax expense' in the Consolidated Income Statements unless the change relates to discontinued operations, in which case the change is recorded in 'Income from discontinued operations, net of tax'. Unforeseen changes in tax rates and tax laws, as well as differences in the projected taxable income as compared to the actual taxable income, may affect these estimates.

Certain countries levy withholding taxes, dividend distribution taxes or additional corporate income taxes (hereafter 'withholding taxes') on dividend distributions. Such taxes cannot always be fully reclaimed by the shareholder, although they have to be declared and withheld by the subsidiary. Switzerland has concluded double taxation treaties with many countries in which we operate. These treaties either eliminate or reduce such withholding taxes on dividend distributions. It is our policy to distribute retained earnings of subsidiaries, insofar as such earnings are not permanently reinvested or no other reasons exist that would prevent the subsidiary from distributing them. No deferred tax liability is set up if retained earnings are considered as indefinitely reinvested and used for financing current operations as well as business growth through working capital and capital expenditure in those countries.

40

We operate in numerous tax jurisdictions and, as a result, are regularly subject to audit by tax authorities, including for transfer pricing. We provide for tax contingencies whenever it is deemed more likely than not that a tax asset has been impaired or a tax liability has been incurred for events such as tax claims or changes in tax laws. Contingency provisions are recorded based on the technical merits of our filing position, considering the applicable tax laws and OECD guidelines and are based on our evaluations of the facts and circumstances as of the end of each reporting period. Changes in the facts and circumstances could result in a material change to the tax accruals. Although we believe that our tax estimates are reasonable and that appropriate tax reserves have been made, the final determination of tax audits and any related litigation could be different than that which is reflected in our income tax provisions and accruals.

An estimated loss from a tax contingency must be accrued as a charge to income if it is more likely than not that a tax asset has been impaired or a tax liability has been incurred and the amount of the loss can be reasonably estimated. We apply a two-step approach to recognize and measure uncertainty in income taxes. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50 percent likely of being realized upon ultimate settlement. The required amount of provisions for contingencies of any type may change in the future due to new developments.

## Goodwill and intangible assets

We review goodwill for impairment annually as of October 1, or more frequently if events or circumstances indicate the carrying value may not be recoverable. We use either a qualitative or quantitative assessment method for each reporting unit.

As each of our Divisions have full ownership and accountability for their respective strategies, performance and resources, we have determined our reporting units to be at the Division level, which is one level below our operating segments of Electrification, Motion, Process Automation and Robotics & Discrete Automation.

When performing the qualitative assessment, we first determine, for a reporting unit, factors which would affect the fair value of the reporting unit including: (i) macroeconomic conditions related to the business, (ii) industry and market trends, and (iii) the overall future financial performance and future opportunities in the markets in which the business operates. We then consider how these factors would impact the most recent quantitative analysis of the reporting unit's fair value. Key assumptions in determining the fair value of the reporting unit include the projected level of business operations, the reporting unit's weighted-average cost of capital, the income tax rate and the terminal growth rate.

During 2022, we added one new Division by creating a standalone Division from components of two existing Divisions resulting in twenty-one reporting units in total for the Group at October 1, 2022. Subsequently ABB completed the spin-off of the Turbocharging Division in October 2022. For each change in reporting unit which arose during 2022, an interim quantitative impairment test was conducted before and after the change. In both the 'before' and 'after' tests, it was concluded that the fair value of the reporting units exceeded the carrying value by a significant amount.

During 2021, we added three new Divisions by splitting two existing ones into multiple standalone Divisions and announced (in July 2021) the divestment of the Mechanical Power Transmission Division, resulting in twenty reporting units in total for the Group at October 1, 2021. For each change in reporting unit which arose during 2021, an interim quantitative impairment test was conducted before and after the change. In both the 'before' and 'after' tests, it was concluded that the fair value of the reporting units exceeded the carrying value by a significant amount.

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In 2020, prior to the adoption of the new “ABB Way” operating model on July 1, 2020, goodwill was generally assessed at the level of ABB’s operating segments (one level above the Division, with the exception of Process Automation where the reporting units were the same as the Divisions) while after the change, goodwill impairment was assessed at the Division level. Although the new operating model resulted only in an allocation of goodwill within the operating segments and did not change the segment level goodwill, an interim quantitative impairment test was conducted before and after the July 1 change. As a result of the interim quantitative impairment test, a goodwill impairment charge of $290 million was recorded in 2020 to reduce the carrying value of the Machine Automation reporting unit to its implied fair value. For more information, please refer to “Note 11 - Goodwill and intangible assets” to ABB’s Consolidated Financial Statements.

At October 1, 2022 and 2021, we performed qualitative assessments and determined that it was not more likely than not that the fair value for each of these reporting units was below the carrying value. As a result, we concluded that it was not necessary to perform the quantitative impairment test.

Intangible assets are reviewed for recoverability upon the occurrence of certain triggering events (such as a decision to divest a business or projected losses of an entity) or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. We record impairment charges other than impairments of goodwill in “Other income (expense), net” in our Consolidated Income Statements, unless they relate to a discontinued operation, in which case the charges are recorded in “Income from discontinued operations, net of tax”.

## New accounting pronouncements

For a description of accounting changes and recent accounting pronouncements, including the expected dates of adoption and estimated effects, if any, on our Consolidated Financial Statements, see “Note 2 - Significant accounting policies” to our Consolidated Financial Statements.

## Research and development

Each year, we invest significantly in research and development. Our research and development focuses on developing and commercializing the technologies, products and solutions of our businesses that are of strategic importance to our future growth. In 2022, we invested $1,166 million, or approximately 4 percent of our 2022 consolidated revenues, on research and development activities in our continuing operations. We also had expenditures of approximately $48 million on order-related development activities. These are customer- and project-specific development efforts that we undertake to develop or adapt equipment and systems to the unique needs of our customers in connection with specific orders or projects.

In addition to continuous product development, and order-related engineering work, we develop platforms for technology applications in our businesses in our research and development laboratories, which operate on a global basis. Through active management of our investment in research and development, we seek to maintain a balance between short-term and long-term research and development programs and optimize our return on investment. We protect these results by holding patents, copyrights and other appropriate intellectual property protection.

To complement our business-focused product development, our businesses invest together in collaborative research activities covering topics such as artificial intelligence, software, sensors, control and optimization, mechatronics and robotics, power electronics, communication technologies, material and manufacturing, electrodynamics and electrical switching technologies. This results in advancing the state-of-the-art technologies used in our products and in common technology platforms that can be applied across multiple product lines.

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Universities are incubators of future technology, and one task of our research and development teams is to transform university research into industry-ready technology platforms. We collaborate with multiple universities and research institutions to build research networks and foster new technologies. We believe these collaborations shorten the amount of time required to turn basic ideas into viable products, and they additionally help us to recruit and train new personnel. We have built numerous university strategic relationships with a number of leading institutions in various countries around the world.

We are also leveraging our ecosystem to enhance our innovation efforts and gain speed with strategic partners with complementary competencies. In addition, we invest and collaborate with start-ups worldwide via our corporate venture arm ABB Technology Ventures and our start-up collaboration arm SynerLeap.

The result of our investment in research and development is that ABB is widely recognized for its world-class technology.

## Acquisitions and divestments

### Acquisitions

During 2022 and 2021, ABB paid $195 million and $212 million to purchase five and two businesses, respectively.

The principal acquisition in 2022 was InCharge Energy, Inc. (In-Charge), where we increased our ownership to a 60 percent controlling interest, expanding the market presence of the E-mobility Division within our Electrification operating segment, particularly in the North American market. In-Charge is headquartered in Santa Monica, United States, and is a provider of turn-key commercial electric vehicle charging hardware and software solutions. See 'Note 4 - Acquisitions, divestments and equity-accounted companies' to our Consolidated Financial Statements.

The principal acquisition in 2021 was ASTI Mobile Robotics Group SL (ASTI). ASTI is headquartered in Burgos, Spain.

There were no significant acquisitions in 2020.

### Divestments and spin-offs

#### Spin-off of the Turbocharging Division

In September 2022, the shareholders approved the spin-off of the Company's Turbocharging Division into an independent, publicly traded company, Accelleron Industries AG (Accelleron), which was completed through the distribution of common stock of Accelleron to the stockholders of ABB on October 3, 2022. As a result of the spin-off of this Division, the Company distributed net assets of $272 million, net of amounts attributable to noncontrolling interests of $12 million, which was reflected as a reduction in Retained earnings. In addition, total accumulated comprehensive income of $95 million, including the cumulative translation adjustment, was reclassified to Retained earnings. Cash and cash equivalents distributed with Accelleron was $172 million. Prior to being spin-off, the Turbocharging Division was part of our Process Automation Business Area. See 'Note 4 - Acquisitions, divestments and equity-accounted companies' to our Consolidated Financial Statements.

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## **Divestment of Mechanical Power Transmission Division**

In November 2021, we completed the sale of our Mechanical Power Transmission Division (Dodge) to RBC Bearings Inc. for cash proceeds of $2,862 million, net of transaction costs and cash disposed and recognizing a net gain on sale of $2,195 million. Prior to its disposal, the Dodge business was part of our Motion Business Area. See 'Note 4 - Acquisitions, divestments and equity-accounted companies' to our Consolidated Financial Statements.

## **Divestment of Power Grids**

On July 1, 2020, we completed the divestment of 80.1 percent of our former Power Grids business (Hitachi Energy) to Hitachi. As this divestment represented a strategic shift that would have a major effect on our operations and financial results, the results of operations for this business are presented as discontinued operations and the assets and liabilities are reflected as held for sale for all periods presented. For more information on the divestment of the Power Grids business see 'Note 3 - Discontinued operations' to our Consolidated Financial Statements.

Hitachi held a call option which required ABB to sell the remaining 19.9 percent interest in Hitachi Energy at a price consistent with what was paid by Hitachi to acquire the initial 80.1 percent or at fair value, if higher. In September 2022, we agreed with Hitachi that we would sell our remaining investment in Hitachi Energy and concurrently settle certain outstanding contractual obligations relating to the initial sale of the business, including certain indemnification guarantees (see Note 15 - Commitments and contingencies). The transaction was completed in December 2022, and we received proceeds of $1,552 million. See 'Note 4 - Acquisitions, divestments and equity-accounted companies' to our Consolidated Financial Statements.

## **Exchange rates**

We report our financial results in U.S. dollars. Due to our global operations, a significant amount of our revenues, expenses, assets and liabilities are denominated in other currencies. As a consequence, movements in exchange rates between currencies may affect: (i) our profitability, (ii) the comparability of our results between periods and (iii) the reported carrying value of our assets and liabilities.

We translate non-USD denominated results of operations, assets and liabilities to USD in our Consolidated Financial Statements. Balance sheet items are translated to USD using year-end currency exchange rates. Income statement and cash flow items are translated to USD using the relevant monthly average currency exchange rate.

Increases and decreases in the value of the USD against other currencies will affect the reported results of operations in our Consolidated Income Statements and the value of certain of our assets and liabilities in our Consolidated Balance Sheets, even if our results of operations or the value of those assets and liabilities have not changed in their original currency. As foreign exchange rates impact our reported results of operations and the reported value of our assets and liabilities, changes in foreign exchange rates could significantly affect the comparability of our reported results of operations between periods and result in significant changes to the reported value of our assets, liabilities and stockholders' equity.

While we operate globally and report our financial results in USD, exchange rate movements between the USD and the EUR, the CNY and the CHF are of particular importance to us due to (i) the location of our significant operations and (ii) our corporate headquarters being in Switzerland.

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The exchange rates between the USD and the EUR, the USD and the CHF and the USD and the CNY at December 31, 2022, 2021 and 2020, were as follows:

| Exchange rates into $ | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| EUR 1.00 | 1.07 | 1.13 | 1.23 |
| CHF 1.00 | 1.08 | 1.10 | 1.14 |
| CNY 1.00 | 0.14 | 0.16 | 0.15 |

The average exchange rates between the USD and the EUR, the USD and the CHF and the USD and the CNY for the years ended December 31, 2022, 2021 and 2020, were as follows:

| Exchange rates into $ | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| EUR 1.00 | 1.05 | 1.18 | 1.14 |
| CHF 1.00 | 1.05 | 1.09 | 1.07 |
| CNY 1.00 | 0.15 | 0.16 | 0.14 |

When we incur expenses that are not denominated in the same currency as the related revenues, foreign exchange rate fluctuations could affect our profitability. To mitigate the impact of exchange rate movements on our profitability, it is our policy to enter into forward foreign exchange contracts to manage the foreign exchange transaction risk of our operations.

In 2022, approximately 75 percent of our consolidated revenues were reported in currencies other than the USD. The following percentages of consolidated revenues were reported in the following currencies:

- Euro, approximately 22 percent,
and
- Chinese renminbi, approximately 16 percent.

In 2022, approximately 72 percent of our cost of sales and selling, general and administrative expenses were reported in currencies other than the USD. The following percentages of consolidated cost of sales and selling, general and administrative expenses were reported in the following currencies:

- Euro, approximately 19 percent, and
- Chinese renminbi, approximately 13 percent.

We also incur expenses other than cost of sales and selling, general and administrative expenses in various currencies.

The results of operations and financial position of our subsidiaries outside of the U.S. are generally accounted for in the currencies of the countries in which those subsidiaries are located. We refer to these currencies as "local currencies". Local currency financial information is then translated into USD at applicable exchange rates for inclusion in our Consolidated Financial Statements.

The discussion of our results of operations below provides certain information with respect to orders, revenues, income from operations and other measures as reported in USD (as well as in local currencies). We measure period-to-period variations in local currency results by using a constant foreign exchange rate for all periods under comparison. Differences in our results of operations in local currencies as compared to our results of operations in USD are caused exclusively by changes in currency exchange rates.

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While we consider our results of operations as measured in local currencies to be a significant indicator of business performance, local currency information should not be relied upon to the exclusion of U.S. GAAP financial measures. Instead, local currencies reflect an additional measure of comparability and provide a means of viewing aspects of our operations that, when viewed together with the U.S. GAAP results, provide a more complete understanding of factors and trends affecting the business. As local currency information is not standardized, it may not be possible to compare our local currency information to other companies' financial measures that have the same or a similar title. We encourage investors to review our financial statements and publicly filed reports in their entirety and not to rely on any single financial measure.

## Orders

Our policy is to book and report an order when a binding contractual agreement has been concluded with a customer covering, at a minimum, the price and scope of products or services to be supplied, the delivery schedule and the payment terms. The reported value of an order corresponds to the undiscounted value of revenues that we expect to recognize following delivery of the goods or services subject to the order, less any trade discounts and excluding any value added or sales tax. The value of orders received during a given period of time represents the sum of the value of all orders received during the period, adjusted to reflect the aggregate value of any changes to the value of orders received during the period and orders existing at the beginning of the period. These adjustments, which may in the aggregate increase or decrease the orders reported during the period, may include changes in the estimated order price up to the date of contractual performance, changes in the scope of products or services ordered and cancellations of orders. The undiscounted value of future revenues we expect to generate from our orders at any point in time is represented by our order backlog.

The level of orders fluctuates from year to year. Portions of our business involve orders for long-term projects that can take months or years to complete and many larger orders result in revenues in periods after the order is booked. Consequently, the level of orders generally cannot be used to accurately predict future revenues or operating performance. Orders that have been placed can often be cancelled, delayed or modified by the customer. These actions can reduce or delay any future revenues from the order or may result in the elimination of the order.

## Performance measures

We evaluate the performance of our operating segments based on orders received, revenues and Operational EBITA.

Operational EBITA represents income from operations excluding:

- amortization expense on intangibles arising upon acquisitions (acquisition-related amortization),
- restructuring, related and implementation costs,
- changes in the amount recorded for obligations related to divested businesses occurring after the divestment date (changes in obligations related to divested businesses),
- changes in estimates relating to opening balance sheets of acquired businesses (changes in pre-acquisition estimates),
- gains and losses from sale of businesses (including fair value adjustment on assets and liabilities held for sale),
- acquisition- and divestment-related expenses and integration costs,

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- other income/expense relating to the Power Grids joint venture,
- certain other non-operational items, as well as
- foreign exchange/commodity timing differences in income from operations consisting of:
  (a) unrealized gains and losses on derivatives (foreign exchange, commodities, embedded derivatives), (b) realized gains and losses on derivatives where the underlying hedged transaction has not yet been realized, and (c) unrealized foreign exchange movements on receivables/payables (and related assets/liabilities).

Certain other non-operational items generally includes: certain regulatory, compliance and legal costs, certain asset write downs/impairments (including impairment of goodwill) and certain other fair value changes, as well as other items which are determined by management on a case-by-case basis.

See "Note 23 - Operating segment and geographic data" to our Consolidated Financial Statements for a reconciliation of the total Operational EBITA to income from continuing operations before taxes.

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## Analysis of results of operations

Our consolidated results from operations were as follows:

### Income Statement Data:

| ($ in millions, except per share data in $) | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Revenues | 29,446 | 28,945 | 26,134 |
| Cost of sales | (19,736) | (19,478) | (18,256) |
| Gross profit | 9,710 | 9,467 | 7,878 |
| Selling, general and administrative expenses | (5,132) | (5,162) | (4,895) |
| Non-order related research and development expenses | (1,166) | (1,219) | (1,127) |
| Impairment of goodwill | - | - | (311) |
| Other income (expense), net | (75) | 2,632 | 48 |
| Income from operations | 3,337 | 5,718 | 1,593 |
| Interest and dividend income | 72 | 51 | 51 |
| Interest and other finance expense | (130) | (148) | (240) |
| Losses from extinguishment of debt | - | - | (162) |
| Non-operational pension (cost) credit | 115 | 166 | (401) |
| Income tax expense | (757) | (1,057) | (496) |
| Income from continuing operations, net of tax | 2,637 | 4,730 | 345 |
| Income (loss) from discontinued operations, net of tax | (43) | (80) | 4,860 |
| Net income | 2,594 | 4,650 | 5,205 |
| Net income attributable to noncontrolling interests and redeemable noncontrolling interests | (119) | (104) | (59) |
| Net income attributable to ABB | 2,475 | 4,546 | 5,146 |
| Amounts attributable to ABB shareholders: |  |  |  |
| Income from continuing operations, net of tax | 2,517 | 4,625 | 294 |
| Income (loss) from discontinued operations, net of tax | (42) | (79) | 4,852 |
| Net income | 2,475 | 4,546 | 5,146 |
| Basic earnings per share attributable to ABB shareholders: |  |  |  |
| Income from continuing operations, net of tax | 1.33 | 2.31 | 0.14 |
| Income (loss) from discontinued operations, net of tax | (0.02) | (0.04) | 2.30 |
| Net income | 1.30 | 2.27 | 2.44 |
| Diluted earnings per share attributable to ABB shareholders: |  |  |  |
| Income from continuing operations, net of tax | 1.32 | 2.29 | 0.14 |
| Income (loss) from discontinued operations, net of tax | (0.02) | (0.04) | 2.29 |
| Net income | 1.30 | 2.25 | 2.43 |

A more detailed discussion of the orders, revenues, income from operations and Operational EBITA for our Business Areas follows in the sections of 'Business analysis' below for Electrification, Motion, Process Automation, Robotics & Discrete Automation and Corporate and Other. Orders and revenues of our businesses include intersegment transactions which are eliminated in the 'Corporate and Other' line in the tables below.

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## Orders

| ($ in millions) | 2022 | 2021 | 2020 | % Change |  |
| --- | --- | --- | --- | --- | --- |
|  |  |  |  | 2022 | 2021 |
| Electrification | 15,901 | 14,381 | 11,884 | 11% | 21% |
| Motion | 7,896 | 7,616 | 6,574 | 4% | 16% |
| Process Automation | 6,825 | 6,779 | 6,144 | 1% | 10% |
| Robotics & Discrete Automation | 4,116 | 3,844 | 2,868 | 7% | 34% |
| Total Business Areas | 34,738 | 32,620 | 27,470 | 6% | 19% |
| Corporate and Other |  |  |  |  |  |
| Non-core and divested businesses | 46 | (10) | (31) | n.a. | n.a. |
| Intersegment eliminations and other | (796) | (742) | (927) | n.a. | n.a. |
| Total | 33,988 | 31,868 | 26,512 | 7% | 20% |

In 2022, total orders increased 7 percent compared to 2021 (13 percent in local currencies). All Business Areas contributed to the order growth driven by both higher business volumes and price increases, reflecting strong demand across most regions and most customer segments, as well as the impact of successfully passing on rising input costs to end customers. Orders were higher for product and project businesses as well as for service businesses. In addition to strong underlying market demand, orders were also supported by customers placing orders early to secure deliveries in an environment with a generally tight supply chain, especially earlier in the year. As supply chain constraints eased over the year, customer order patterns tended to normalize. Growth rates were highest in the Electrification and Robotics & Discrete Automation Business Areas. Both the Process Automation and Motion Business Areas contributed modest growth, with the former impacted by the spin-off of the Turbocharging Division in October 2022 and the latter impacted by the divestment of the Mechanical Power Transmission business sold in November 2021 which together had a combined negative impact on consolidated order growth of approximately 3 percent. For additional information about individual Business Area order performance, refer to the relevant sections of 'Business analysis' below.

We determine the geographic distribution of our orders based on the location of the ultimate destination of the products' end use, if known, or the location of the customer. The geographic distribution of our consolidated orders was as follows:

| ($ in millions) | 2022 | 2021 | 2020 | % Change |  |
| --- | --- | --- | --- | --- | --- |
|  |  |  |  | 2022 | 2021 |
| Europe | 11,778 | 11,857 | 9,618 | (1)% | 23% |
| The Americas | 11,825 | 9,940 | 7,956 | 19% | 25% |
| of which: United States | 8,920 | 7,453 | 5,971 | 20% | 25% |
| Asia, Middle East and Africa | 10,385 | 10,071 | 8,938 | 3% | 13% |
| of which: China | 5,087 | 5,036 | 4,121 | 1% | 22% |
| Total | 33,988 | 31,868 | 26,512 | 7% | 20% |

In 2022, orders increased 19 percent in the Americas (20 percent in local currencies), with orders growing in the U.S., Canada, Brazil and Mexico. In Europe, orders decreased 1 percent (increased 13 percent in local currencies) with the Motion and Robotics & Discrete Automation Business Areas reporting order growth. Orders were higher in France, Switzerland, Italy and the United Kingdom while they declined in Germany, Sweden and Finland. In Asia, Middle East and Africa, orders increased 3 percent (9 percent in local currencies) with orders increasing in China, India, Singapore, South Korea and Saudi Arabia while they decreased in Australia.

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## Order backlog

| December 31, ($ in millions) | 2022 | 2021 | 2020 | % Change |  |
| --- | --- | --- | --- | --- | --- |
|  |  |  |  | 2022 | 2021 |
| Electrification | 6,933 | 5,458 | 4,358 | 27% | 25% |
| Motion | 4,726 | 3,749 | 3,320 | 26% | 13% |
| Process Automation | 6,229 | 6,079 | 5,805 | 2% | 5% |
| Robotics & Discrete Automation | 2,679 | 1,919 | 1,403 | 40% | 37% |
| Total Business Areas | 20,567 | 17,205 | 14,886 | 20% | 16% |
| Corporate and Other |  |  |  |  |  |
| Non-core and divested businesses | 23 | 114 | 139 | (80)% | (18)% |
| Intersegment eliminations | (723) | (712) | (722) | n.a. | n.a. |
| Total | 19,867 | 16,607 | 14,303 | 20% | 16% |

At December 31, 2022, consolidated order backlog was 20 percent higher (26 percent in local currencies) compared to December 31, 2021. Order backlog increased significantly in most Business Areas with the Process Automation Business Area having only modest growth. The order backlog in the Motion Business Area was driven by order growth in both the short- and long-cycle businesses in most Divisions. Order backlog increased across all Divisions in the Electrification Business Area reflecting the very high order levels with the strongest growth in the E-mobility and Distribution Solutions Divisions. The order backlog in the Process Automation Business Area was supported by a strong order increase in most Divisions except the Marine & Ports Division, which was negatively impacted by an order reversal due to a customer bankruptcy in Germany. The low order backlog growth in the Process Automation Business Area also reflects the spin-off of the Turbocharging Division. The increase in the order backlog in the Robotics & Discrete Automation Business Area was driven by strong growth in both Divisions (Machine Automation and Robotics).

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## Revenues

| ($ in millions) | 2022 | 2021 | 2020 | % Change |  |
| --- | --- | --- | --- | --- | --- |
|  |  |  |  | 2022 | 2021 |
| Electrification | 14,105 | 13,187 | 11,924 | 7% | 11% |
| Motion | 6,745 | 6,925 | 6,409 | (3)% | 8% |
| Process Automation | 6,044 | 6,259 | 5,792 | (3)% | 8% |
| Robotics & Discrete Automation | 3,181 | 3,297 | 2,907 | (4)% | 13% |
| Total Business Areas | 30,075 | 29,668 | 27,032 | 1% | 10% |
| Corporate and Other |  |  |  |  |  |
| Non-core and divested businesses | 135 | 11 | (6) | n.a. | n.a. |
| Intersegment eliminations and other | (764) | (734) | (892) | n.a. | n.a. |
| Total | 29,446 | 28,945 | 26,134 | 2% | 11% |

In 2022, revenues increased by 2 percent (9 percent in local currencies). During the first half of the year, revenues were hampered as component constraints slowed production and hindered customer deliveries. However, the supply chain challenges progressively eased, triggering higher revenue growth rates in the latter part of the year. All Business Areas benefited from increased volumes and price increases as we were able to pass on the impacts of higher cost inputs to the end customers. Growth rates were highest in the Electrification Business Area. In local currencies, the Motion Business Area achieved a single-digit growth rate despite the adverse impact from the divestment of the Mechanical Power Transmission Division in November 2021. The Process Automation Business Area saw moderate growth in local currencies despite the spin-off of the Turbocharging Division in October 2022. Revenues in the Robotics & Discrete Automation Business Area increased in local currencies, with revenues benefiting in the second half of the year from an easing of component constraints. For additional analysis of revenues for each of the Business Areas, refer to the relevant sections of 'Business analysis' below.

We determine the geographic distribution of our revenues based on the location of the ultimate destination of the products' end use, if known, or the location of the customer. The geographic distribution of our consolidated revenues was as follows:

| ($ in millions) | 2022 | 2021 | 2020 | % Change |  |
| --- | --- | --- | --- | --- | --- |
|  |  |  |  | 2022 | 2021 |
| Europe | 10,286 | 10,529 | 9,764 | (2)% | 8% |
| The Americas | 9,572 | 8,686 | 7,949 | 10% | 9% |
| of which: United States | 7,021 | 6,397 | 6,027 | 10% | 6% |
| Asia, Middle East and Africa | 9,588 | 9,730 | 8,421 | (1)% | 16% |
| of which: China | 4,696 | 4,932 | 4,098 | (5)% | 20% |
| Total | 29,446 | 28,945 | 26,134 | 2% | 11% |

In 2022, the increase in revenues was driven by the Americas region, where revenues increased 10 percent (11 percent in local currencies) and were higher across all Business Areas except the Motion Business Area. Revenues increased in the U.S., Canada, Brazil, Mexico, Argentina and Peru. In Europe, revenues decreased 2 percent (increased 12 percent in local currencies) and were higher across all Business Areas except the Motion Business Area, which was flat. Sales were higher in Finland, the United Kingdom and France while revenues were lower in Sweden, Switzerland and Norway. Germany and Italy reported stable sales. In Asia, Middle East and Africa revenues decreased 1 percent (increased 5 percent in local currencies) and revenues grew in the Electrification Business Area while the Process Automation and Robotics & Discrete Automation Business Areas reported a decrease with the Motion Business Area being stable. Revenues increased in India and Singapore while they decreased in China, Saudi Arabia, Australia, Japan and South Korea.

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## Cost of sales

Cost of sales consists primarily of labor, raw materials and component costs but also includes indirect production costs, expenses for warranties, contract and project charges, as well as order-related development expenses incurred in connection with projects for which corresponding revenues have been recognized.

In 2022, costs of sales increased 1 percent (8 percent in local currencies) to $19,736 million. Cost of sales as a percentage of revenues decreased to 67.0 percent from 67.3 percent in 2021, increasing the gross margin, primarily driven by price increases and certain cost savings actions taken to mitigate higher inflation in labor, commodity prices and freight costs. It is partly offset by a negative impact due to portfolio changes. In 2022, gross margin percentages were higher in the Electrification, Process Automation and Motion Business Areas. The gross margin percentages in the Robotics & Discrete Automation Business Areas were lower in 2022 compared to 2021 due to the impact of higher inflation and lower volume due to general supply chain constraints.

## Selling, general and administrative expenses

The components of selling, general and administrative expenses were as follows:

| ($ in millions) | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Selling expenses | 3,248 | 3,281 | 3,087 |
| General and administrative expenses | 1,884 | 1,881 | 1,808 |
| Total | 5,132 | 5,162 | 4,895 |

In 2022, general and administrative expenses were flat (increased 8 percent in local currencies) compared to 2021. The local currency increase principally represents an impact from inflation. As a percentage of revenues, general and administrative expenses slightly decreased to 6.4 percent from 6.5 percent in 2021 mainly due to strong revenue growth compared to more modest cost increases. General and administrative expenses in 2022 continue to include the ongoing costs required to deliver services to Hitachi Energy Ltd and Accelleron (commencing in October 2022) under transition service agreements for which we are compensated and have recorded $162 million in Other income (expense), net, during 2022 compared to $173 million in 2021.

In 2022, selling expenses decreased 1 percent (increased 6 percent in local currencies) compared to 2021 and was higher in local currencies across all Business Areas. Spending levels increased as pandemic-related restrictions were gradually relaxed and sales activities increased to keep pace with the strong growth in underlying demand. Selling expenses as a percentage of orders received decreased from 10.3 percent in 2021 to 9.6 percent in 2022 mainly due to strong order growth.

## Non-order related research and development expenses

In 2022, non-order related research and development expenses decreased 4 percent (increase 4 percent in local currencies) compared to 2021. In 2022, non-order related research and development expenses as a percentage of revenues remained similar to prior year levels (4.0 percent in 2022 compared to 4.2 percent in 2021) as we continued investing in research and development in line with revenues growth.

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## Other income (expense), net

| ($ in millions) | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Income from provision of services under transition services agreements | 221 | 173 | 91 |
| Net gain from sale of property, plant and equipment | 84 | 38 | 37 |
| Gain (loss) from change in fair value of investments in equity securities | 52 | 108 | 73 |
| Brand income from Hitachi Energy | 57 | 89 | 60 |
| Favorable resolution of an uncertain purchase price adjustment | 15 | 6 | 36 |
| Fair value adjustment on assets and liabilities held for sale | - | - | (33) |
| Net gain (loss) from sale of businesses & equity-accounted investments (1) | 36 | 2,193 | (2) |
| Asset impairments | (55) | (33) | (35) |
| Income (loss) from equity-accounted companies | (102) | (100) | (66) |
| Restructuring and restructuring-related expenses (2) | (227) | (48) | (87) |
| Regulatory penalties in connection with Kusile project | (313) | - | - |
| Other income (expense) | 157 | 206 | (26) |
| Total | (75) | 2,632 | 48 |

(1) Includes gain on sale of the remaining 19.9 percent investment in Hitachi Energy Ltd.

(2) Excluding asset impairments

In 2022, Other income (expense), net, was a loss of $75 million compared to a gain of $2,632 million in 2021. In 2022, we recorded costs of $313 million associated with regulatory penalties assessed in connection with the Kusile project and higher restructuring and restructuring-related expenses which included $195 million in connection with the exit of the full train retrofit business primarily for contract settlement costs. In 2022, we recorded a gain of $43 million relating to the sale of the remaining 19.9 percent of Hitachi Energy to Hitachi. In 2021, we recorded gains of $2,193 million in Other income (expense), net for net gains from sales of businesses. This was primarily due to the divestment of the Dodge business. In 2022 compared to 2021, we recorded lower gains for net fair value increases in various equity investments, the most significant of which in 2022 related to InCharge Energy, Inc and in 2021 related to CMR Surgical Ltd.

## Income from operations

| ($ in millions) | 2022 | 2021 | 2020 | % Change |  |
| --- | --- | --- | --- | --- | --- |
|  |  |  |  | 2022 | 2021 |
| Electrification | 2,159 | 1,841 | 1,335 | 17% | 38% |
| Motion | 1,092 | 3,276 | 989 | (67)% | 231% |
| Process Automation | 663 | 713 | 344 | (7)% | 107% |
| Robotics & Discrete Automation | 247 | 269 | (163) | (8)% | n.a. |
| Total Business Areas | 4,161 | 6,099 | 2,505 | (32)% | 143% |
| Corporate and Other | (823) | (385) | (927) | n.a. | n.a. |
| Intersegment elimination | (1) | 4 | 15 | n.a. | n.a. |
| Total | 3,337 | 5,718 | 1,593 | (42)% | 259% |

In 2022 and 2021, changes in income from operations were a result of the factors discussed above and in 'Business analysis' below.

## Financial income and expenses

Financial income and expenses include 'Interest and dividend income', 'Interest and other finance expense' and 'Losses from extinguishment of debt'.

53

'Interest and other finance expense' includes interest expense on our debt, the amortization of upfront transaction costs associated with long-term debt and committed credit facilities, commitment fees on credit facilities, foreign exchange gains and losses on financial items and gains and losses on marketable securities. In addition, interest accrued relating to uncertain tax positions is included within interest expense. 'Interest and other finance expense' excludes interest expense which has been allocated to discontinued operations.

| ($ in millions) | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Interest and dividend income | 72 | 51 | 51 |
| Interest and other finance expense | (130) | (148) | (240) |
| Losses from extinguishment of debt | - | - | (162) |

In 2022, increases in market interest rates resulted in both higher interest income on cash deposits and higher interest expense on floating rate debt. Interest expense was lower primarily due to net reversals of interest expense in connection with income tax related contingencies. This was partially offset by the effect of higher rates of interest on floating rate debt as well as higher amounts of outstanding commercial paper.

## Non-operational pension (cost) credit

A non-operational pension credit of $115 million was recorded in 2022 compared to a $166 million credit in 2021. Compared to 2021, the 2022 non-operational pension credit has decreased due to lower expected returns on plan assets and higher interest costs on the benefit obligations (see 'Note 17 - Employee benefits' to our Consolidated Financial Statements).

## Income tax expense

| ($ in millions) | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Income from continuing operations before taxes | 3,394 | 5,787 | 841 |
| Income tax expense | (757) | (1,057) | (496) |
| Effective tax rate for the year | 22.3% | 18.3% | 59.0% |

In 2022, the effective tax rate increased to 22.3 percent from 18.3 percent in 2021. The effective tax rate in 2022 was approximately 2 percentage points higher due to the non-deductible regulatory penalties in connection with the Kusile project and 3 percentage points due to not benefiting losses in entities having a participation exemption. The effective tax rate in 2022 also reflects a benefit of approximately 6 percentage points due to changes in assessment of recoverability of deferred tax assets. In 2021, the tax impacts related to the sale of the Dodge business reduced the effective tax rate by approximately 5 percentage points. We also realized certain benefits from internal reorganizations in anticipation of this divestment which reduced the effective tax rate by a further 4 percentage points.

See 'Note 16 - Income taxes' to our Consolidated Financial Statements for additional information.

## Income from continuing operations, net of tax

As a result of the factors discussed above, compared to 2021, Income from continuing operations, net of tax, decreased by $2,093 million to $2,637 million in 2022.

54

## Income from discontinued operations, net of tax

Income (loss) from discontinued operations, net of tax, in 2022, 2021 and 2020 was as follows:

| ($ in millions) | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Total revenues | - | - | 4,008 |
| Total cost of sales | - | - | (3,058) |
| Gross profit | - | - | 950 |
| Expenses | (38) | (18) | (808) |
| Change to net gain recognized on sale of the Power Grids business | (10) | (65) | 5,141 |
| Income (loss) from operations | (48) | (83) | 5,282 |
| Net interest income (expense) and other finance expense | - | 2 | (5) |
| Non-operational pension (cost) credit | - | - | (94) |
| Income (loss) from discontinued operations before taxes | (48) | (81) | 5,182 |
| Income tax | 5 | 1 | (322) |
| Income (loss) from discontinued operations, net of tax | (43) | (80) | 4,860 |

On July 1, 2020, we completed the divestment of 80.1 percent of our former Power Grids business to Hitachi. As a result of the sale, substantially all Power Grids related assets and liabilities have been sold. As this divestment represented a strategic shift that would have a major effect on our operations and financial results, the results of operations for this business have been presented as discontinued operations for all periods presented. In addition, we also have retained obligations (primarily for environmental and taxes) related to other businesses disposed or otherwise exited that qualified as discontinued operations. Changes to these retained obligations are also included in Income (loss) from discontinued operations, net of tax.

In 2020, as a result of the sale of the Power Grids business, we recognized a net gain for the sale of the entire Power Grids business which is included in Income from discontinued operations, net of tax. Certain amounts included in the net gain are estimated or otherwise subject to change in value and, as a result, we have recorded additional adjustments in 2022 and 2021, primarily due to the impacts of the final purchase price settlement agreed with Hitachi and net foreign currency losses on certain obligations. We may record additional adjustments in future periods to the gain which are not expected to have a material impact on the Consolidated Financial Statements.

For additional information on the divestment and discontinued operations, see 'Note 3 - Discontinued operations' to our Consolidated Financial Statements.

## Net income attributable to ABB

As a result of the factors discussed above, compared to 2021, Net income attributable to ABB decreased by $2,071 million to $2,475 million in 2022.

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## Earnings per share attributable to ABB shareholders

| (in $) | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Basic earnings per share attributable to ABB shareholders: |  |  |  |
| Income from continuing operations, net of tax | 1.33 | 2.31 | 0.14 |
| Income (loss) from discontinued operations, net of tax | (0.02) | (0.04) | 2.30 |
| Net income | 1.30 | 2.27 | 2.44 |
| Diluted earnings per share attributable to ABB shareholders: |  |  |  |
| Income from continuing operations, net of tax | 1.32 | 2.29 | 0.14 |
| Income (loss) from discontinued operations, net of tax | (0.02) | (0.04) | 2.29 |
| Net income | 1.30 | 2.25 | 2.43 |

Basic earnings per share is calculated by dividing income by the weighted-average number of shares outstanding during the year. Diluted earnings per share is calculated by dividing income by the weighted-average number of shares outstanding during the year, assuming that all potentially dilutive securities were exercised, if dilutive. Potentially dilutive securities comprise: outstanding written call options and outstanding options and shares granted subject to certain conditions under our share-based payment arrangements. See 'Note 20 - Earnings per share' to our Consolidated Financial Statements.

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## Business analysis

### Electrification Business Area

The financial results of our Electrification Business Area were as follows:

![img-0.jpeg](img-0.jpeg)

| ($ in millions) | 2022 | 2021 | 2020 | % Change |  |
| --- | --- | --- | --- | --- | --- |
|  |  |  |  | 2022 | 2021 |
| Orders | 15,901 | 14,381 | 11,884 | 11% | 21% |
| Order backlog at December 31, | 6,933 | 5,458 | 4,358 | 27% | 25% |
| Revenues | 14,105 | 13,187 | 11,924 | 7% | 11% |
| Income from operations | 2,159 | 1,841 | 1,335 | 17% | 38% |
| Operational EBITA | 2,328 | 2,121 | 1,681 | 10% | 26% |

#### Orders

Approximately two-thirds of the Business Area's orders are for products with short delivery times; these orders are usually recorded and delivered within a three-month period and thus are generally considered as short-cycle. The remainder is comprised of smaller project orders that require longer lead times, as well as larger solutions requiring engineering and installation. Approximately half of the Business Area's orders are received via third-party distributors. As a consequence, end-customer market data is based partially on management estimates.

In 2022, orders increased 11 percent (17 percent in local currencies) as demand improved across all key end-user segments. Demand in the buildings segment, the Electrification Business Area's largest end-user segment, was robust, with strong growth particularly in the non-residential building sector. Solid growth in the residential building sector in the first half of the year was partly offset by a slowdown in the second half of 2022, particularly in certain European markets. Substantial growth continues in the e-mobility segment along with strong growth in data centers, food and beverage, infrastructure and renewables. Demand from the oil and gas segment increased significantly during the year, while growth in the utilities and rail segments was solid even if geographically uneven.

57

The geographic distribution of orders for our Electrification Business Area was as follows:

| ($ in millions) | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Europe | 4,973 | 5,022 | 4,149 |
| The Americas | 6,776 | 5,199 | 4,033 |
| of which: United States | 5,273 | 3,891 | 3,065 |
| Asia, Middle East and Africa | 4,152 | 4,160 | 3,702 |
| of which: China | 2,028 | 2,141 | 1,819 |
| Total | 15,901 | 14,381 | 11,884 |

In 2022, orders in local currencies increased in all regions. The pandemic-related challenges improved compared to 2021 in most geographies. Orders in the Americas increased 30 percent (31 percent in local currencies), with demand strengthening across all key markets, led by increases in the U.S. and Brazil. Orders in Europe decreased 1 percent, reflecting the weakening of many European currencies against the U.S. dollar, but increased 13 percent in local currencies, with growth across the region including in key markets such as Italy and Germany. Orders in Asia, Middle East and Africa were on the same level as in 2021, but increased 6 percent in local currencies, with strong order growth in India throughout the year offsetting a slowdown in China. Orders in China were lower in most end-user segments mainly as business activity was hampered by pandemic-related measures, but also reflected a challenging comparable due to strong order performance in 2021.

#### Order backlog

In 2022, order backlog increased 27 percent (33 percent in local currencies). Order backlog benefited from strong order intake, but was also impacted by execution challenges caused by material shortages, transportation constraints as well as pandemic-related production pressures in some local markets.

#### Revenues

In 2022, revenues increased 7 percent (14 percent in local currencies). Revenues in local currencies increased in all Divisions reflecting the strong demand across regions and end-user segments, however growth was still hampered by component shortages, logistics challenges and a tight labor market. Pricing actions taken to mitigate increasing material, labor and transportation costs contributed strongly to the higher revenue level and accounted for around three quarters of the revenue growth in 2022. The revenue growth was led by the E-mobility Division, mirroring the very high demand in this segment. There was also strong double-digit revenue growth in local currencies in the Power Conversion Division as well as in the Installation Products and Smart Power Divisions.

The geographic distribution of revenues for our Electrification Business Area was as follows:

| ($ in millions) | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Europe | 4,544 | 4,628 | 4,190 |
| The Americas | 5,372 | 4,503 | 4,093 |
| of which: United States | 3,940 | 3,322 | 3,115 |
| Asia, Middle East and Africa | 4,189 | 4,056 | 3,641 |
| of which: China | 2,004 | 2,110 | 1,858 |
| Total | 14,105 | 13,187 | 11,924 |

In 2022, revenues in the Americas increased 19 percent (20 percent in local currencies) with widespread regional growth. Revenues increased 3 percent (10 percent in local currencies) in Asia, Middle East and Africa, supported by strong growth in India, while revenues in China were lower than the previous year. Revenues in Europe decreased 2 percent, impacted by weakening currencies in many European countries versus the U.S. dollar, while revenues in the region grew 13 percent in local currencies.

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## Income from operations

In 2022, income from operations increased 17 percent (28 percent in local currencies), supported by higher volumes as well as strong price management, which helped offset the adverse impact from cost inflation in raw materials, freight and labor. Benefits of savings realized from ongoing restructuring and cost savings programs also positively influenced income from operations. Restructuring-related expenses and implementation costs in our operating Divisions were lower in 2022 than in 2021, mainly due to the substantial completion of the integration of GEIS, which we acquired in 2018. Also contributing to the higher income from operations in 2022 compared to 2021 were higher gains from net fair value increases in various equity investments, the most significant being InCharge Energy, Inc., as well as lower GEIS integration costs. These positive effects were partially dampened by widespread inflationary cost pressures in 2022, as well as higher personnel expenses driven by a ramp-up of manufacturing capacity to meet higher demand. Changes in foreign currencies, including the impacts from FX/commodity timing differences summarized in the table below, negatively impacted income from operations by approximately 6 percent.

### Operational EBITA

The reconciliation of Income from operations to Operational EBITA for the Electrification Business Area was as follows:

| ($ in millions) | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Income from operations | 2,159 | 1,841 | 1,335 |
| Acquisition-related amortization | 116 | 117 | 115 |
| Restructuring, related and implementation costs | 28 | 66 | 145 |
| Changes in obligations related to divested businesses | 1 | - | 15 |
| Changes in pre-acquisition estimates | 11 | (6) | 11 |
| Gains and losses from sale of businesses | (1) | 13 | 4 |
| Fair value adjustment on assets and liabilities held for sale | - | - | 33 |
| Favorable resolution of an uncertain purchase price adjustment | - | (5) | (36) |
| Acquisition- and divestment-related expenses and integration costs | 40 | 70 | 71 |
| Changes in fair value of investments in equity securities | (57) | (15) | - |
| Certain other non-operational items | 33 | 15 | 9 |
| FX/commodity timing differences in income from operations | (2) | 25 | (21) |
| Operational EBITA | 2,328 | 2,121 | 1,681 |

In 2022, Operational EBITA increased 10 percent (20 percent excluding the impact from changes in foreign currency exchange rates) compared to 2021, primarily due to the reasons described under 'Income from operations', excluding the explanations related to the reconciling items in the table above.

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## Motion Business Area

The financial results of our Motion Business Area were as follows:

![img-0.jpeg](img-0.jpeg)

| ($ in millions) | 2022 | 2021 | 2020 | % Change |  |
| --- | --- | --- | --- | --- | --- |
|  |  |  |  | 2022 | 2021 |
| Orders | 7,896 | 7,616 | 6,574 | 4% | 16% |
| Order backlog at December 31, | 4,726 | 3,749 | 3,320 | 26% | 13% |
| Revenues | 6,745 | 6,925 | 6,409 | (3)% | 8% |
| Income from operations | 1,092 | 3,276 | 989 | (67)% | 231% |
| Operational EBITA | 1,163 | 1,183 | 1,075 | (2)% | 10% |

### Orders

In 2022, orders increased 4 percent (11 percent in local currencies) compared to 2021. Strong market activity as well as effective price management offset negative impacts from both exchange rates and the divestment in November 2021 of the Mechanical Power Transmission Division which negatively impacted the growth rate by approximately 9 percent. The Business Area recorded strong double-digit order growth in local currencies across all Divisions and in key customer segments and benefited from strong order growth in the buildings segment (heating, ventilation, air conditioning and refrigeration) as well as in rail, with solid demand recovery and high year-on-year growth in the chemical, and oil and gas segments. Other segments supporting strong order development include metals, pulp and paper, marine and other segments such as power generation (including wind), food and beverage, and mining. The market shift towards carbon reduction, energy efficiency and digitalization continued to support business growth.

The geographic distribution of orders for our Motion Business Area was as follows:

| ($ in millions) | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Europe | 2,710 | 2,617 | 2,219 |
| The Americas | 2,583 | 2,677 | 2,276 |
| of which: United States | 2,128 | 2,200 | 1,897 |
| Asia, Middle East and Africa | 2,603 | 2,322 | 2,079 |
| of which: China | 1,314 | 1,232 | 1,077 |
| Total | 7,896 | 7,616 | 6,574 |

60

In 2022, orders increased 4 percent (18 percent in local currencies) in Europe as orders increased across the region particularly in Turkey, Italy, Sweden, Germany, France and Poland. In Asia, Middle East and Africa, orders increased 12 percent (18 percent in local currencies) driven by growth in India, China and Australia. In the Americas, orders decreased 4 percent (2 percent in local currencies) reflecting the impact of the divestment of the Mechanical Power Transmission Division, which operated principally in the United States.

### Order backlog

Order backlog in 2022 increased 26 percent (33 percent in local currencies) compared to 2021 reaching $4.7 billion. Order backlog increased across all Divisions and was driven mainly by the large orders received in the long-cycle business. Additionally, supply chain constraints impacted customer deliveries, particularly in the short-cycle business, further adding to the order backlog.

### Revenues

In 2022, revenues declined 3 percent (up 5 percent in local currencies) compared to 2021, negatively impacted by approximately 9 percent by the divestment of the Mechanical Power Transmission Division in November 2021. The growth in the other Divisions was supported by strong demand and solid price management particularly in the products business.

The geographic distribution of revenues for our Motion Business Area was as follows:

| ($ in millions) | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Europe | 2,271 | 2,258 | 2,196 |
| The Americas | 2,208 | 2,396 | 2,225 |
| of which: United States | 1,823 | 1,974 | 1,867 |
| Asia, Middle East and Africa | 2,266 | 2,271 | 1,988 |
| of which: China | 1,245 | 1,256 | 1,040 |
| Total | 6,745 | 6,925 | 6,409 |

In 2022, revenues in Europe increased 1 percent (16 percent in local currencies) compared to 2021. Revenue increases in local currencies were driven by Turkey, Germany, the United Kingdom, Finland and Italy while sales volumes declined in Poland, Switzerland and Austria. In Asia, Middle East and Africa revenues were flat (up 6 percent in local currencies) as revenue growth in India and China was partly offset by declines in Australia and Japan. In the Americas, revenues decreased 8 percent (7 percent in local currencies) impacted by the divestment of the Mechanical Power Transmission Division, which was partially offset by growth in the U.S., particularly in the book-and-bill business in the NEMA Motors Division.

### Income from operations

In 2022, income from operations declined 67 percent compared to 2021 as the previous year included a gain of $2,195 million on the sale of the Mechanical Power Transmission Division. Excluding this gain, income from operations increased 1 percent as higher volume in 2022 offset the impact of the divestment. The higher revenues reflected strong demand and active price management during 2022 which more than offset increasing commodities and freight expenses and other cost inflation. Profitability was also supported by continued cost discipline, focus on operational performance and a positive divisional mix. Changes in foreign currencies, including the impacts from FX/commodity timing differences summarized in the table below, negatively impacted income from operations by approximately 4 percent.

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## Operational EBITA

The reconciliation of Income from operations to Operational EBITA for the Motion Business Area was as follows:

| ($ in millions) | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Income from operations | 1,092 | 3,276 | 989 |
| Acquisition-related amortization | 31 | 43 | 52 |
| Restructuring, related and implementation costs | 16 | 22 | 44 |
| Gains and losses from sale of businesses | 8 | (2,196) | - |
| Acquisition- and divestment-related expenses and integration costs | 15 | 26 | - |
| Certain other non-operational items | - | 1 | 17 |
| FX/commodity timing differences in income from operations | 1 | 11 | (27) |
| Operational EBITA | 1,163 | 1,183 | 1,075 |

In 2022, Operational EBITA decreased 2 percent (increased 6 percent excluding the impact from changes in foreign currency exchange rates) compared to 2021, primarily due to the reasons described under 'Income from operations', excluding the explanations related to the reconciling items in the table above.

## Process Automation Business Area

The financial results of our Process Automation Business Area were as follows:

![img-1.jpeg](img-1.jpeg)

| ($ in millions) | 2022 | 2021 | 2020 | % Change |  |
| --- | --- | --- | --- | --- | --- |
|  |  |  |  | 2022 | 2021 |
| Orders | 6,825 | 6,779 | 6,144 | 1% | 10% |
| Order backlog at December 31, | 6,229 | 6,079 | 5,805 | 2% | 5% |
| Revenues | 6,044 | 6,259 | 5,792 | (3)% | 8% |
| Income from operations | 663 | 713 | 344 | (7)% | 107% |
| Operational EBITA | 848 | 801 | 451 | 6% | 78% |

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## Orders

In 2022, orders increased 1 percent (8 percent in local currencies) compared to 2021. Order growth was impacted approximately 3 percent due to the spin-off of the Turbocharging Division. Orders grew in all Divisions and were especially strong in the Measurement & Analytics and Process Industries Divisions. Strong demand was seen for the product, systems and service businesses and supported by most customer segments. Demand was particularly strong in sectors such as chemicals and refining, with positive developments also recorded in the areas of mining, metals, and oil and gas, including the liquefied natural gas sector. Customer activities increased in power generation, pulp and paper, and ports segments, whereas demand in marine was lower. Customer interest was high in the hydrogen segment, which remains a small but growing part of the business.

The geographic distribution of orders for our Process Automation Business Area was as follows:

| ($ in millions) | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Europe | 2,361 | 2,614 | 2,365 |
| The Americas | 1,994 | 1,645 | 1,360 |
| of which: United States | 1,201 | 1,047 | 770 |
| Asia, Middle East and Africa | 2,470 | 2,520 | 2,419 |
| of which: China | 748 | 821 | 590 |
| Total | 6,825 | 6,779 | 6,144 |

Orders in Europe decreased 10 percent (increased 2 percent in local currencies). In local currencies and excluding the impact of the spin-off of the Turbocharging Division, orders increased in Poland, Norway, the Netherlands and the United Kingdom while orders decreased in Russia where the ABB Group is winding down remaining business activities and Germany where a customer bankruptcy resulted in an order reversal of approximately $170 million. Orders in Asia, Middle East and Africa decreased 2 percent (increased 5 percent in local currencies). Higher orders in India, South Korea, Singapore and Saudi Arabia were partly offset by lower order volumes in China and Australia both of which had a higher order intake in 2021. In the Americas, orders increased 21 percent (23 percent in local currencies) supported by strong demand in the U.S., Canada, Argentina and Brazil.

## Order backlog

In 2022, order backlog increased 2 percent (8 percent in local currencies) compared to 2021. Order backlog increased in all Divisions due to strong order intake during 2022.

## Revenues

In 2022, revenues decreased 3 percent (increased 4 percent in local currencies) compared to 2021 due to foreign currency translation and the impact from the spin-off of the Turbocharging Division business. Revenues increased in all Divisions, reflecting strong execution of the order backlog in the long-cycle businesses and strong underlying demand that was partially held back by challenges from supply chain constraints which hampered customer deliveries.

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The geographic distribution of revenues for our Process Automation Business Area was as follows:

| ($ in millions) | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Europe | 2,266 | 2,439 | 2,395 |
| The Americas | 1,569 | 1,439 | 1,329 |
| of which: United States | 943 | 836 | 808 |
| Asia, Middle East and Africa | 2,209 | 2,381 | 2,068 |
| of which: China | 668 | 742 | 629 |
| Total | 6,044 | 6,259 | 5,792 |

In 2022, revenues were 7 percent lower (1 percent in local currencies) in Asia, Middle East and Africa, 9 percent higher (11 percent in local currencies) in the Americas and 7 percent lower (5 percent higher in local currencies) in Europe compared to 2021. In Asia, Middle East and Africa, revenues were higher in India and Australia but declined in China, Singapore and South Korea. In the Americas, revenue growth was driven by the U.S. and Argentina while revenues in Brazil were steady. Growth in Europe was reported in key markets including Italy, Germany, France, Norway and the United Kingdom.

#### Income from operations

In 2022, income from operations decreased 7 percent compared to 2021 driven largely by unfavorable foreign currency exchange changes and the impact of the spin-off of the Turbocharging Division. Excluding these impacts, all Divisions reported higher operating income. In local currencies, income growth was driven by higher revenue volumes, operational improvements in project execution, a favorable business mix and discipline in cost controls. The impact from inflation on costs was offset by pricing actions taken to secure gross margin levels, mainly in the short-cycle business. Changes in foreign currencies, including the effect from changes in the FX/commodity timing differences summarized in the table below, negatively impacted income from operations by approximately 10 percent.

#### Operational EBITA

The reconciliation of Income from operations to Operational EBITA for the Process Automation Business Area was as follows:

| ($ in millions) | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Income from operations | 663 | 713 | 344 |
| Acquisition-related amortization | 4 | 5 | 4 |
| Restructuring, related and implementation costs | 29 | 48 | 125 |
| Gains and losses from sale of businesses | - | (13) | - |
| Acquisition- and divestment-related expenses and integration costs | 134 | 35 | 2 |
| Certain other non-operational items | - | 1 | 1 |
| FX/commodity timing differences in income from operations | 18 | 12 | (25) |
| Operational EBITA | 848 | 801 | 451 |

In 2022, Operational EBITA increased 6 percent (15 percent excluding the impact from changes in foreign currency exchange rates) compared to 2021, primarily due to the reasons described under 'Income from operations', excluding the explanations related to the reconciling items in the table above.

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## Robotics & Discrete Automation Business Area

The financial results of our Robotics & Discrete Automation Business Area were as follows:

![img-2.jpeg](img-2.jpeg)

| ($ in millions) | 2022 | 2021 | 2020 | % Change |  |
| --- | --- | --- | --- | --- | --- |
|  |  |  |  | 2022 | 2021 |
| Orders | 4,116 | 3,844 | 2,868 | 7% | 34% |
| Order backlog at December 31, | 2,679 | 1,919 | 1,403 | 40% | 37% |
| Revenues | 3,181 | 3,297 | 2,907 | (4)% | 13% |
| Income (loss) from operations | 247 | 269 | (163) | (8)% | n.a. |
| Operational EBITA | 340 | 355 | 237 | (4)% | 50% |

### Orders

In 2022, orders increased 7 percent (16 percent in local currencies). Both the Robotics and the Machine Automation Divisions contributed to the robust order growth driven by positive developments in both volumes and pricing, reflecting strong demand across all regions and most of the customer segments. In the automotive sector, demand was particularly driven by EV investments. Strength was also noted in the automotive-related sectors, general industry, machine builders and electronics market sectors. In addition to strong underlying market demand, the order intake was also supported by customers placing orders early in an effort to secure deliveries in an environment with a generally tight supply chain, especially earlier in the year. As supply chain constraints progressively eased over the year, customer order patterns tended to normalize.

The geographic distribution of orders for our Robotics & Discrete Automation Business Area was as follows:

| ($ in millions) | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Europe | 2,043 | 1,978 | 1,424 |
| The Americas | 609 | 530 | 388 |
| of which: United States | 404 | 371 | 277 |
| Asia, Middle East and Africa | 1,464 | 1,336 | 1,056 |
| of which: China | 1,151 | 976 | 781 |
| Total | 4,116 | 3,844 | 2,868 |

65

In 2022, orders increased in all regions. Orders in Europe increased 3 percent (16 percent in local currencies) driven by increased demand, mainly in Germany. Orders in the Americas increased 15 percent (15 percent in local currencies) compared to 2021, driven by strong order intake in the U.S. in the Robotics Division. Orders in Asia, Middle East and Africa increased 10 percent (15 percent in local currencies) with strong demand in the Robotics Division in China.

### Order backlog

In 2022, order backlog increased 40 percent (49 percent in local currencies) compared to 2021. Order backlog increased in both Divisions. The order backlog benefited from strong order intake, despite our selectivity of orders in the automotive EV segment and also reflected customer deliveries being hampered by material shortages, transportation constraints as well as pandemic-related production pressures in some local markets.

### Revenues

In 2022, revenues decreased 4 percent (increased 5 percent in local currencies) compared to 2021. Revenues increased in both Divisions due to higher volumes from book-and-bill business and price increases to compensate for higher input expenses. However, growth in the first half of the year was hindered by component shortages (primarily related to semiconductors) and logistic challenges. Additionally, the COVID-19 related shutdown of the robotics factory in Shanghai, China, in April, with the subsequent gradual ramp up of production during May, had a significant impact on customer deliveries in the second quarter. Service revenues also increased, driven by strong demand from all industry segments.

The geographic distribution of revenues for our Robotics & Discrete Automation Business Area was as follows:

| ($ in millions) | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Europe | 1,498 | 1,582 | 1,481 |
| The Americas | 525 | 441 | 389 |
| of which: United States | 374 | 309 | 273 |
| Asia, Middle East and Africa | 1,158 | 1,274 | 1,037 |
| of which: China | 898 | 950 | 719 |
| Total | 3,181 | 3,297 | 2,907 |

Revenues from Asia, Middle East and Africa decreased 9 percent (decreased 4 percent in local currencies) compared to 2021 due to the impact from the factory shutdown in Shanghai, China, described above. Revenues in Europe decreased 5 percent (increased 8 percent in local currencies) with Austria, Italy and the Czech Republic performing strongly while revenues declined in the United Kingdom. In the Americas, revenues increased 19 percent (increased 19 percent in local currencies) due to strong demand in both Divisions in the U.S. and in the Robotics Division in Brazil, following the recovery from the lower levels in 2021.

### Income (loss) from operations

In 2022, the Business Area recorded income from operations of $247 million compared to $269 million in 2021, with both Divisions contributing to the higher income level. The operational performance in 2022 reflected improved sales volumes, price increases, a favorable change in the revenue mix, and the benefit of cost reduction measures taken in the second half of 2022. These positive drivers were partially offset by widespread inflationary cost pressures in 2022 as well as under absorption of fixed costs due to volumes being hampered by component shortages, particularly in the first half of the year. Changes in foreign currencies, including the impacts from FX/commodity timing differences summarized in the table below, negatively impacted income from operations by approximately 14 percent.

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## Operational EBITA

The reconciliation of Income (loss) from operations to Operational EBITA for the Robotics & Discrete Automation Business Area was as follows:

| ($ in millions) | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Income (loss) from operations | 247 | 269 | (163) |
| Acquisition-related amortization | 78 | 83 | 78 |
| Restructuring, related and implementation costs | 11 | 7 | 26 |
| Changes in pre-acquisition estimates | (1) | - | - |
| Favorable resolution of an uncertain purchase price adjustment | (15) | - | - |
| Acquisition- and divestment-related expenses and integration costs | 6 | 1 | - |
| Impairment of goodwill | - | - | 290 |
| Certain other non-operational items | 8 | - | 5 |
| FX/commodity timing differences in income from operations | 6 | (5) | 1 |
| Operational EBITA | 340 | 355 | 237 |

In 2022, Operational EBITA decreased 4 percent (increased 8 percent excluding the impact from changes in foreign currency exchange rates) compared to 2021, primarily due to the reasons described under 'Income (loss) from operations', excluding the explanations related to the reconciling items in the table above.

## Corporate and Other

Net loss from operations for Corporate and Other was as follows:

| ($ in millions) | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Corporate headquarters and stewardship | (430) | (399) | (334) |
| Regulatory penalty in connection with Kusile project | (313) | - | - |
| Loss from equity-accounted companies | (101) | (102) | (68) |
| Other corporate costs | (25) | (29) | (65) |
| Corporate brand income from Hitachi Energy | 57 | 89 | 60 |
| Net gain (loss) from sale of businesses (1) | 43 | (3) | 2 |
| Corporate real estate | 66 | 41 | 54 |
| Restructuring costs in Corporate | - | (5) | (46) |
| Fair value adjustment on equity securities | (4) | 94 | 71 |
| OS implementation costs | - | - | (24) |
| Digital program costs | - | - | (45) |
| Corporate research and development | - | - | (49) |
| Costs for divestment of Power Grids | - | - | (86) |
| Stranded corporate costs | - | - | (40) |
| Divested businesses and other non-core activities | (117) | (67) | (342) |
| Total Corporate and Other | (824) | (381) | (912) |

(1) Includes gain on sale of the remaining 19.9 percent investment in Hitachi Energy Ltd.

In 2022, the net loss from operations within Corporate and Other increased by $443 million to $824 million compared to 2021. This increase was driven by costs associated with regulatory penalties assessed in connection with the Kusile project, restructuring expenses in connection with the exit of the full train retrofit business and lower gains for fair value adjustments on equity investments. Partly offsetting these negative impacts was the reversal of a provision that we had previously recorded related to one of our divested businesses and the gain in December 2022 from the sale of the remaining 19.9 percent of Hitachi Energy to Hitachi.

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## Corporate

In 2022, Corporate headquarters and stewardship costs increased by $31 million, mainly due to higher external consulting costs as part of the implementation of the ABB Way operating model. Excluding this, Corporate headquarters and stewardship costs were lower, supported by lower costs especially in the corporate legal function.

During 2022, we did not have any significant revaluations of equity investments while in 2021 we recognized gains of $94 million for investments in our corporate equity ventures portfolio.

Corporate brand income results from the granting of use of the ABB Brand to Hitachi Energy, the fair value of which was initially determined on the date of the divestment of the former Power Grids business in 2020. A portion of the proceeds received for the sale was allocated to the fair value of the granting of the use of the brand and is being amortized over the expected period of benefit received by Hitachi Energy.

Corporate real estate primarily includes income and expenses from property rentals and gains from the sale of real estate properties. In 2022, income from operations in corporate real estate included gains from the sale of real estate properties of approximately $73 million compared to $22 million in 2021.

Other corporate costs consists of operational costs of our Corporate Treasury Operations and other minor items including changes of the elimination related to internal profit of inventory.

## Other - Divested businesses and other non-core activities

The results of operations for certain divested businesses and other non-core activities are presented in Corporate and Other. Divested businesses include the high-voltage cables business, steel structures business and the oil & gas EPC business. Other continuing non-core activities include the execution and wind-down of certain legacy EPC and other contracts.

In 2022 and 2021, the amounts represent charges and losses relating to divested businesses and the winding down of the remaining EPC projects. In 2022, we recorded a restructuring expense of $195 million in connection with the exit of the full train retrofit business primarily for contract settlement costs. This was offset in part by the reversal of a provision of $61 million that we had previously recorded related to one of our divested businesses based on a settlement proposal issued by the ruling court. In 2021, we recorded losses of $67 million which were mostly related to the full train retrofit business but also related to legacy EPC projects and the divested oil & gas EPC business.

At December 31, 2022, our remaining non-core activities primarily include the completion of the remaining EPC contracts for substations and oil & gas.

## Liquidity and capital resources

### Principal sources of funding

We meet our liquidity needs principally using cash from operations, proceeds from the issuance of debt instruments (bonds and commercial paper), and short-term bank borrowings. In 2022, we also received significant funds from the sale of our remaining investment in Hitachi Energy which was sold in December 2022.

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Our net debt/cash is shown in the table below:

| December 31, ($ in millions) | 2022 | 2021 |
| --- | --- | --- |
| Short-term debt and current maturities of long-term debt | 2,535 | 1,384 |
| Long-term debt | 5,143 | 4,177 |
| Cash and equivalents | (4,156) | (4,159) |
| Restricted cash - current | (18) | (30) |
| Marketable securities and short-term investments | (725) | (1,170) |
| Restricted cash - non-current | - | (300) |
| Net debt (cash) (defined as the sum of the above lines) | 2,779 | (98) |

During 2022, cash generation from operating activities was lower than in 2021 while we increased our total cash payments to shareholders in the form of dividends and purchases of treasury stock. These factors were the primary contributors to the change in net debt as presented in the table above.

During 2022, we changed from a net cash position of $98 million at December 31, 2021, to a net debt position of $2,779 million at December 31, 2022. The effect of the exchange rate movements reduced net debt by approximately $30 million. In 2022, we received net proceeds of $1,552 million for the sale of our remaining investment in Hitachi Energy. We generated cash flows from operating activities during 2022 of $1,287 million and sold treasury stock in relation to our employee share plans for $394 million. We also issued shares in our subsidiary ABB E-Mobility to third parties in private placements for $216 million. These items were more than offset by amounts for purchases of treasury shares of $3,553 million, including $2,891 million relating to the announced buybacks of our shares, as well as $1,698 million for the payment of the dividend to our shareholders. We made net purchases of property, plant and equipment and intangible assets of $635 million and made payments of dividends to noncontrolling shareholders totaling $99 million. See 'Financial position', 'Investing activities' and 'Financing activities' for further details.

Our Corporate Treasury Operations is responsible for providing a range of treasury management services to our group companies, including investing cash in excess of current business requirements. At December 31, 2022 and 2021, the proportion of our aggregate 'Cash and equivalents' (including restricted cash) and 'Marketable securities and short-term investments' managed by our Corporate Treasury Operations amounted to approximately 51 percent and 44 percent, respectively.

Our investment strategy for cash (in excess of current business requirements) has generally been to invest in short-term time deposits with maturities of less than 3 months, supplemented at times by investments in money market funds, and in some cases, government securities. We actively monitor credit risk in our investment and derivative portfolios. Credit risk exposures are controlled in accordance with policies approved by our senior management to identify, measure, monitor and control credit risks. We have minimum rating requirements for our counterparts and closely monitor developments in the credit markets making appropriate changes to our investment policy as deemed necessary. In addition to minimum rating criteria, we have strict investment parameters and specific approved instruments as well as restrictions on the types of investments we make. These parameters are closely monitored on an ongoing basis and amended as we consider necessary.

Our cash is held in various currencies around the world. Approximately 41 percent of our cash and equivalents held at December 31, 2022, was in U.S. dollars, while the most significant foreign currencies in which cash and equivalents was held was euros (21 percent) and Indian rupees (10 percent).

We believe the ongoing cash flows generated from our business, supplemented, when necessary, through access to the capital markets (including short-term commercial paper) and our credit facilities are sufficient to support business operations, capital expenditures, business acquisitions, the payment of dividends to shareholders and contributions to pension plans. Consequently, we believe that our ability to obtain funding from these sources will continue to provide the cash flows necessary to satisfy our working capital and capital expenditure requirements, as well as meet our debt repayments and other financial commitments for the next 12 months. See 'Contractual obligations and commitments'.

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Due to the nature of our operations, including the timing of annual incentive payments to employees, our cash flow from operations generally tends to be weaker in the first half of the year than in the second half of the year.

## Debt and interest rates

Total outstanding debt was as follows:

| December 31, ($ in millions) | 2022 | 2021 |
| --- | --- | --- |
| Short-term debt and current maturities of long-term debt | 2,535 | 1,384 |
| Long-term debt: |  |  |
| Bonds | 4,944 | 3,984 |
| Other long-term debt | 199 | 193 |
| Total debt | 7,678 | 5,561 |

The increase in short-term debt in 2022 was due primarily to the increase in commercial paper outstanding offset partially by a reduction in Current maturities of long-term debt.

At December 31, 2022, Long-term debt was $966 million higher compared to the end of 2021 due to the issuance of five new instruments which remain classified as Long-term debt at December 31, 2022 (EUR 700 million 0.625% Instruments due 2024, EUR 500 million floating rate Instruments due 2024, CHF 150 million 2.1% Bonds due 2025, CHF 425 million 0.75% Bonds due 2027 and CHF 150 million 2.375% Bonds due 2030) offset partially by the reclassification to current of the EUR 700 million 0.625% Instruments, due 2023. The increase in interest rates also resulted in a reduction in our long-term debt of approximately $200 million due to the application of fair value hedge accounting on certain outstanding instruments.

Our debt has been obtained in a range of currencies and maturities and with various interest rate terms. For certain of our debt obligations, we use derivatives to manage the fixed interest rate exposure. For example, we use interest rate swaps and cross-currency interest rate swaps to effectively convert fixed rate debt into floating rate liabilities. After considering the effects of interest rate swaps and cross-currency interest rate swaps, at December 31, 2022, the effective average interest rate on our floating rate long-term debt (including current maturities) of $3,459 million and our fixed rate long-term debt (including current maturities) of $2,771 million was 2.8 percent and 2.2 percent, respectively. This compares with an effective rate of 0.3 percent for floating rate long-term debt of $3,598 million and 3.1 percent for fixed rate long-term debt of $1,885 million at December 31, 2021.

For a discussion of our use of derivatives to modify the interest characteristics of certain of our individual bond issuances, see 'Note 12 - Debt' to our Consolidated Financial Statements.

## Credit facility

In December 2019, we replaced our previous multicurrency revolving credit facility with a new $2 billion multicurrency revolving credit facility, maturing in 2024. In 2021 we exercised our option to further extend the maturity to 2026. No amount was drawn under the facility at December 31, 2022 and 2021. The facility is available for general corporate purposes and contains cross-default clauses whereby an event of default would occur if we were to default on indebtedness, as defined in the facility, at or above a specified threshold.

The credit facility does not contain financial covenants that would restrict our ability to pay dividends or raise additional funds in the capital markets. For further details of the credit facility, see 'Note 12 - Debt' to our Consolidated Financial Statements.

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## Commercial paper

At December 31, 2022, we had two commercial paper programs in place:

- a $2 billion commercial paper program for the private placement of U.S. dollar denominated commercial paper in the United States, and
- a $2 billion Euro-commercial paper program for the issuance of commercial paper in a variety of currencies.

At December 31, 2022 and 2021, there was no amount outstanding under the $2 billion program in the United States.

At December 31, 2022, $1,383 million was outstanding under the $2 billion Euro-commercial paper program. There was no amount outstanding at December 31, 2021.

## European program for the issuance of debt

The European program for the issuance of debt allows the issuance of up to the equivalent of $8 billion in certain debt instruments. The terms of the program do not obligate any third party to extend credit to us and the terms and possibility of issuing any debt under the program are determined with respect to, and as of the date of issuance of, each debt instrument. At December 31, 2022, five bonds (principal amount of EUR 700 million, due in 2023, principal amount of EUR 700 million, due in 2024, principal amount of EUR 500 million, due in 2024, principal amount of EUR 750 million, due in 2024, and principal amount of EUR 800 million, due in 2030) having a combined carrying amount of $3,444 million were outstanding under the program. The carrying amount of the three bonds outstanding under the program at December 31, 2021, was $2,522 million.

## Credit ratings

Credit ratings are assessments by the rating agencies of the credit risk associated with ABB and are based on information provided by us or other sources that the rating agencies consider reliable. Higher ratings generally result in lower borrowing costs and increased access to capital markets. Our ratings are of "investment grade" which is defined as Baa3 (or above) from Moody's and BBB- (or above) from Standard & Poor's.

At December 31, 2022 and 2021, our long-term debt was rated A3 by Moody's and currently with a Stable outlook. At December 31, 2022 and 2021, our long-term debt was rated A- by Standard & Poor's and currently with a Stable outlook.

## Limitations on transfers of funds

Currency and other local regulatory limitations related to the transfer of funds exist in a number of countries where we operate or otherwise have bank deposits, including: China, Egypt, India, Malaysia, the Russian Federation, South Africa, South Korea, Taiwan (Chinese Taipei), Thailand, Turkey and Vietnam. Funds, other than regular dividends, fees or loan repayments, cannot be readily transferred offshore from these countries and are therefore deposited and used for working capital needs in those countries. In addition, there are certain countries where, for tax reasons, it is not considered optimal to transfer the cash offshore. As a consequence, these funds are not available within our Corporate Treasury Operations to meet short-term cash obligations outside the relevant country. The above described funds are reported as cash in our Consolidated Balance Sheets, but we do not consider these funds immediately available for the repayment of debt outside the respective countries where the cash is situated, including those described above. At December 31, 2022 and 2021, the balance of "Cash and equivalents" and "Marketable securities and other short-term investments" under such limitations (either regulatory or sub-optimal from a tax perspective) totaled approximately $1,381 million and $2,074 million, respectively.

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During 2022, we continued to direct our subsidiaries in countries with restrictions to place such cash with our core banks or investment grade banks, in order to minimize credit risk on such cash positions. We continue to closely monitor the situation to ensure bank counterparty risks are minimized.

## Financial position

### Balance sheets

| December 31, ($ in millions) | 2022 | 2021 | % Change |
| --- | --- | --- | --- |
| Current assets |  |  |  |
| Cash and equivalents | 4,156 | 4,159 | 0% |
| Restricted cash | 18 | 30 | (40)% |
| Marketable securities and short-term investments | 725 | 1,170 | (38)% |
| Receivables, net | 6,858 | 6,551 | 5% |
| Contract assets | 954 | 990 | (4)% |
| Inventories, net | 6,028 | 4,880 | 24% |
| Prepaid expenses | 230 | 206 | 12% |
| Other current assets | 505 | 573 | (12)% |
| Current assets held for sale and in discontinued operations | 96 | 136 | (29)% |
| Total current assets | 19,570 | 18,695 | 5% |

For a discussion on Cash and equivalents, see sections 'Liquidity and Capital Resources-Principal sources of funding' and 'Cash flows' for further details.

Marketable securities and short-term investments decreased in 2022. The change primarily reflects lower amounts placed in bank time deposits and a reduction in amounts placed in money market funds classified as equity securities (see 'Note 5 - Cash and equivalents, marketable securities and short-term investments' to our Consolidated Financial Statements).

Receivables, net, increased 5 percent (12 percent in local currencies) reflecting the higher revenues (due to both higher business volumes and higher prices) at the end of 2022 compared to 2021. Receivables also decreased 3 percent due to the spin-off of the Turbocharging Division.

Contract assets decreased 4 percent (increased 2 percent in local currencies). Contract assets decreased 2 percent due to the spin-off of the Turbocharging Division with the remaining local currency increase of 4 percent reflecting higher levels of business activity at the end of 2022 compared to 2021.

Inventories, net, increased 24 percent (32 percent in local currencies) and were significantly higher in all inventory categories. A portion of this increase reflects higher business activities at the end of 2022 compared to 2021 as well as higher inventories in order to fulfil the higher order backlog. We also had a significant build-up in the amount of raw materials as well as cost increases for materials. Supply chain challenges and shortages in the availability of some items have created the need for our businesses to stockpile certain key components. These challenges have also resulted in some delays in completing and delivering finished goods. The impact of the spin-off of the Turbocharging Division was a reduction of Inventories, net, of 3 percent.

Current assets held for sale and in discontinued operations decreased to $96 million from $136 million. These amounts primarily relate to working capital for certain contracts relating to the former Power Grids business which remain with ABB and are being executed over time for the direct benefit of Hitachi Energy. For the details of the assets of the Power Grids business see 'Note 3 - Discontinued operations' to our Consolidated Financial Statements.

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| December 31, ($ in millions) | 2022 | 2021 | % Change |
| --- | --- | --- | --- |
| Current liabilities |  |  |  |
| Accounts payable, trade | 4,904 | 4,921 | 0% |
| Contract liabilities | 2,216 | 1,894 | 17% |
| Short-term debt and current maturities of long-term debt | 2,535 | 1,384 | 83% |
| Current operating leases | 220 | 230 | (4)% |
| Provisions for warranties | 1,028 | 1,005 | 2% |
| Other provisions | 1,171 | 1,386 | (16)% |
| Other current liabilities | 4,323 | 4,367 | (1)% |
| Current liabilities held for sale and in discontinued operations | 132 | 381 | (65)% |
| Total current liabilities | 16,529 | 15,568 | 6% |

Accounts payable, trade, remained flat (increase 6 percent in local currencies) while the spin-off of the Turbocharging Division reduced the balance by 2 percent. The local currency increase reflects higher inventory purchases but the increase was muted as payment terms with suppliers have become somewhat less favorable in a constrained supply chain environment.

Contract liabilities increased 17 percent (increased 24 percent in local currency) reflecting higher levels of business activity at the end of 2022 compared to 2021. The spin-off of the Turbocharging Division reduced the amount by 1 percent.

The increase in short-term debt and current maturities of long-term debt in 2022 was due to an increase of commercial paper borrowings under the Euro-commercial paper program and the reclassification to current of the EUR 700 million 0.625% Instruments, due 2023, offset partially by the repayment at maturity of the USD 1,250 million 2.875% Notes, due 2022.

Current operating leases includes the portion of the operating lease liabilities that are due to be paid in the next 12 months. For a summary of operating lease liabilities, see 'Note 14 - Leases' to our Consolidated Financial Statements.

Provisions for warranties increased 2 percent (7 percent in local currencies). The spin-off of the Turbocharging Division reduced the amount by 2 percent. The local currency increase reflects the higher provisioning in 2022 on increased revenues as well as increases in expected costs for certain newer product lines. For details on the change in the Provisions for warranties, see 'Note 15 - Commitments and contingencies' to our Consolidated Financial Statements.

Current liabilities held for sale and in discontinued operations decreased to $132 million from $381 million. The decrease included the settlement of $136 million for certain indemnification guarantees which were provided in connection with the original sale of the Power Grids business to Hitachi. The remaining amounts primarily relate to certain working capital balances of the former Power Grids business as described above.

| December 31, ($ in millions) | 2022 | 2021 | % Change |
| --- | --- | --- | --- |
| Non-current assets |  |  |  |
| Restricted cash, non-current | - | 300 | (100)% |
| Property, plant and equipment, net | 3,911 | 4,045 | (3)% |
| Operating lease right-of-use assets | 841 | 895 | (6)% |
| Investments in equity-accounted companies | 130 | 1,670 | (92)% |
| Prepaid pension and other employee benefits | 916 | 892 | 3% |
| Intangible assets, net | 1,406 | 1,561 | (10)% |
| Goodwill | 10,511 | 10,482 | 0% |
| Deferred taxes | 1,396 | 1,177 | 19% |
| Other non-current assets | 467 | 543 | (14)% |
| Total non-current assets | 19,578 | 21,565 | (9)% |

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The non-current Restricted cash at December 31, 2021, related to certain amounts received on the initial sale of the Power Grids business in 2020 which were placed in escrow, pending resolution of certain of our contractual obligations to Hitachi. See 'Note 3 - Discontinued operations' to our Consolidated Financial Statements. In connection with the sale of the remaining ownership in Hitachi Energy to Hitachi in December 2022, the restrictions on the bank account where this cash was deposited were removed.

In 2022, Property, plant and equipment, net, decreased 3 percent (increased 2 percent in local currencies). The spin-off of the Turbocharging Division reduced this balance by 4 percent.

In 2022, Goodwill remained flat (increased 2 percent in local currencies). The local currency increase primarily reflects the purchase of In-Charge.

Intangible assets, net, decreased 10 percent (8 percent in local currencies). Acquisitions of businesses, primarily In-Charge, increased Intangible assets, net, by 5 percent. For additional information on goodwill and intangible assets see 'Note 11 - Goodwill and intangible assets' to our Consolidated Financial Statements.

The balance for Investment in equity-accounted companies at December 31, 2021, primarily represented our remaining 19.9 percent interest in the Hitachi Energy joint venture. We sold this remaining interest in December 2022. For additional information on investments in equity-accounted companies see 'Note 4 - Acquisitions, divestments and equity-accounted companies' to our Consolidated Financial Statements.

Prepaid pension and other employee benefits increased 3 percent (6 percent in local currencies). The spin-off of the Turbocharging Division reduced this balance by 10 percent. For additional information on Pension and employee benefits see 'Note 17 - Employee benefits' to our Consolidated Financial Statements.

In 2022, Deferred taxes increased 19 percent (26 percent in local currencies). For details on deferred tax assets see 'Note 16 - Income taxes' to our Consolidated Financial Statements.

| December 31, ($ in millions) | 2022 | 2021 | % Change |
| --- | --- | --- | --- |
| Non-current liabilities |  |  |  |
| Long-term debt | 5,143 | 4,177 | 23% |
| Non-current operating leases | 651 | 689 | (6)% |
| Pension and other employee benefits | 719 | 1,025 | (30)% |
| Deferred taxes | 729 | 685 | 6% |
| Other non-current liabilities | 2,085 | 2,116 | (1)% |
| Non-current liabilities held for sale and in discontinued operations | 20 | 43 | (53)% |
| Total non-current liabilities | 9,347 | 8,735 | 7% |

Long-term debt increased 23 percent. The balance at December 31, 2022, includes five instruments newly issued in 2022: i) EUR 700 million 0.625% Instruments due 2024, ii) EUR 500 million floating rate Instruments due 2024, iii) CHF 150 million 2.1% Bonds due 2025, iv) CHF 425 million 0.75% Bonds due 2027 and v) CHF 150 million 2.375% Bonds due 2030. This was partially offset by the reclassification to current of the EUR 700 million 0.625% Instruments, due 2023, as well as a reduction of 5 percent in reported amounts due to fair value hedge accounting adjustments. Foreign currency movements also reduced the balance by 3 percent over the year. For additional information on Long-term debt, see 'Liquidity and Capital Resources-Debt and interest rates' as well as 'Note 12 - Debt' to our Consolidated Financial Statements.

Non-current operating leases includes the portion of the operating lease liabilities that are due to be paid in more than 12 months.

Pension and employee benefits decreased 30 percent (26 percent in local currencies). For additional information on Pension and employee benefits see 'Note 17 - Employee benefits' to our Consolidated Financial Statements.

For a breakdown of Other non-current liabilities, see 'Note 13 - Other provisions, other current liabilities and other non-current liabilities' to our Consolidated Financial Statements.

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Non-current liabilities held for sale and in discontinued operations relate to the sale in 2020 of the Power Grids business. For the details of the liabilities of the Power Grids business see 'Note 3 - Discontinued operations' to our Consolidated Financial Statements.

## Cash flows

The Consolidated Statements of Cash Flows are shown on a continuing operations basis, with the effects of discontinued operations shown in aggregate for each major cash flow activity and also include the impact from changes in restricted cash.

The Consolidated Statements of Cash Flows can be summarized as follows:

| ($ in millions) | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Net cash provided by operating activities | 1,287 | 3,330 | 1,693 |
| Net cash provided by investing activities | 981 | 2,307 | 6,760 |
| Net cash used in financing activities | (2,394) | (4,968) | (8,175) |
| Effects of exchange rate changes on cash and equivalents | (189) | (81) | 79 |
| Net change in cash and equivalents and restricted cash | (315) | 588 | 357 |

## Operating activities

| ($ in millions) | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Net income | 2,594 | 4,650 | 5,205 |
| Loss (income) from discontinued operations, net of tax | 43 | 80 | (4,860) |
| Depreciation and amortization | 814 | 893 | 915 |
| Total adjustments to reconcile net income to net cash provided by operating activities (excluding depreciation and amortization) | (434) | (2,593) | 263 |
| Total changes in operating assets and liabilities | (1,683) | 308 | 352 |
| Net cash provided by operating activities - continuing operations | 1,334 | 3,338 | 1,875 |
| Net cash used in operating activities - discontinued operations | (47) | (8) | (182) |

Cash flows from operating activities in continuing operations in 2022 provided net cash of $1,334 million, a decrease of 60 percent compared to 2021 of which 7 percent was due to movements in exchange rates. In addition, in 2022, we had lower cash effective net income (i.e. net income from continuing operations adjusted for depreciation, amortization and other non-cash items) partially due to costs associated with business transformation activities, higher costs relating to business restructuring and costs for the spin-off of the Turbocharging Division and other business portfolio transactions. In 2022, this reduction was also impacted by payments of approximately $315 million in relation to regulatory penalties for the Kusile project.

In 2022, an increase in both business volumes and inflation-driven cost and price changes resulted in growth in our working capital. Changes in operating assets and liabilities reflected a high buildup of inventory with a less favorable timing of inventory payments, an increase in amounts receivable from customers as well as the timing of payments for accrued liabilities, including higher employee bonuses paid in 2022 compared to 2021. Cash paid for income taxes decreased to $1,188 million from $1,292 million, reflecting the higher current income taxes in 2021, including tax impacts from the sales of businesses. In 2022 and 2021, there were no significant cash flows from operating activities of discontinued operations.

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## Investing activities

| ($ in millions) | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Purchases of investments | (321) | (1,528) | (5,933) |
| Purchases of property, plant and equipment and intangible assets | (762) | (820) | (694) |
| Acquisition of businesses (net of cash acquired) and increases in cost- and equity-accounted companies | (288) | (241) | (121) |
| Proceeds from sales of investments | 697 | 2,272 | 4,341 |
| Proceeds from maturity of investments | 73 | 81 | 11 |
| Proceeds from sales of property, plant and equipment | 127 | 93 | 114 |
| Proceeds from sales of businesses (net of transaction costs and cash disposed) and cost- and equity-accounted companies | 1,541 | 2,958 | (136) |
| Net cash from settlement of foreign currency derivatives | (166) | (121) | 138 |
| Changes in loans receivable, net | 320 | (19) | (3) |
| Other investing activities | (14) | (4) | 11 |
| Net cash provided by (used in) investing activities - continuing operations | 1,207 | 2,671 | (2,272) |
| Net cash provided by (used in) investing activities - discontinued operations | (226) | (364) | 9,032 |

Net cash provided by investing activities for continuing operations in 2022 was $1,207 million compared to $2,671 million during 2021, a decrease of $1,464 million. In 2022, we received net proceeds in connection with the sale of our remaining equity-method investment in Hitachi Energy of $1,552 million. In addition, included in Changes in loans receivable, net, are funds collected from a subsidiary of Accelleron in October 2022, related to a short-term intercompany loan granted in anticipation of the Turbocharging Division spin-off. In 2021, we received proceeds of $2,958 million in connection with sales of businesses, primarily from the sale of the Dodge business.

The following presents purchases of property, plant and equipment and intangible assets by significant asset category:

| ($ in millions) | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Construction in progress | 540 | 479 | 493 |
| Purchase of machinery and equipment | 127 | 150 | 134 |
| Purchase of land and buildings | 26 | 158 | 17 |
| Purchase of intangible assets | 69 | 33 | 50 |
| Purchases of property, plant and equipment and intangible assets | 762 | 820 | 694 |

Cash expenditures for acquisitions of businesses in 2022 primarily reflects the amount paid to acquire In-Charge while the amount in 2021 primarily reflects the acquisition of ASTI.

Cash flows used in investing activities for discontinued operations includes amounts relating to the original sale of the Power Grids business to Hitachi. We sold this business in 2020 and reported net cash proceeds of $9,168 million in that year. Certain amounts related to the purchase price were subject to adjustment, including the final settlement for working capital balances as well as other payments which were contractually due to be transferred to Hitachi in periods after the initial sale. In 2022 and 2021, these uncertain elements of the purchase price, including the original indemnification guarantees, were finalized and we made payments related to the purchase price and certain other obligations totaling $227 million and $364 million, respectively.

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## Financing activities

| ($ in millions) | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Net changes in debt with maturities of 90 days or less | 1,366 | (83) | (587) |
| Increase in debt | 3,849 | 1,400 | 343 |
| Repayment of debt | (2,703) | (1,538) | (3,459) |
| Delivery of shares | 394 | 826 | 412 |
| Purchase of treasury stock | (3,553) | (3,708) | (3,048) |
| Dividends paid | (1,698) | (1,726) | (1,736) |
| Cash associated with the spin-off of the Turbocharging Division | (172) | - | - |
| Dividends paid to noncontrolling shareholders | (99) | (98) | (82) |
| Proceeds from issuance of subsidiary shares | 216 | - | - |
| Other financing activities | 6 | (41) | (49) |
| Net cash used in financing activities - continuing operations | (2,394) | (4,968) | (8,206) |
| Net cash provided by financing activities - discontinued operations | - | - | 31 |

Our financing cash flow activities primarily include debt transactions (both from the issuance of debt securities and borrowings directly from banks), share transactions (including share transactions in consolidated subsidiaries) and payments of distributions to controlling and noncontrolling shareholders. In 2022, we also distributed cash as part of the spin-off of the Turbocharging Division.

In 2022, the net inflow for debt with maturities of 90 days or less related to net borrowings of amounts outstanding under the Euro-commercial paper program and various local country borrowings.

In 2022, “Increase in debt” primarily represents initial borrowings for terms longer than 90 days under the Euro-commercial paper program of $1,425 million and borrowings under the following six long-term debt transactions (total cashflow amount at date of borrowings of $2,390 million):

- CHF 275 million 0% Bonds due 2023
- EUR 700 million 0.625% Instruments due 2024
- EUR 500 million floating rate Instruments due 2024
- CHF 150 million 2.1% Bonds due 2025
- CHF 425 million 0.75% Bonds due 2027
- CHF 150 million 2.375% Bonds due 2030

In 2022, “Repayment of debt” includes the repayment at maturity of the USD 1,250 million Notes and repayments of $1,345 million under the Euro-commercial paper program for borrowings having terms longer than 90 days.

“Delivery of shares” in 2022 primarily reflects cash received from the exercise of options in connection with our Management Incentive Plan (resulting in a delivery of 16 million shares). All shares were delivered out of Treasury stock.

“Proceeds from issuance of subsidiary shares” in 2022 relates to the sale of shares by ABB E-mobility Holdings Ltd through a private placement of $216 million.

In 2022, “Purchase of treasury stock” reflects $2,891 million of cash payments to purchase 91 million of our own shares in connection with the announced share buyback programs. It also reflects $662 million paid to purchase 20 million shares on the open market during the year.

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'Cash associated with the spin-off of the Turbocharging Division' represents the amount of cash and cash equivalents which were directly owned by the entities in the spin-off of the Turbocharging Division at the date of the spin-off.

## Contractual obligations and commitments

The contractual obligations presented in the table below represent our estimates of future payments under fixed contractual obligations and commitments. These amounts may differ from those reported in our Consolidated Balance Sheet at December 31, 2022. Changes in our business needs, cancellation provisions and changes in interest rates, as well as actions by third parties and other factors, may cause these estimates to change. Therefore, our actual payments in future periods may vary from those presented below. The table below summarizes certain of our cash requirements for known contractual obligations and principal and interest payments under our debt instruments and purchase obligations at December 31, 2022, and the timing thereof. For details of future operating and finance lease payments, see 'Note 14 - Leases' to our Consolidated Financial Statements.

| At December 31, 2022 ($ in millions) | Current | Non-current | Total |
| --- | --- | --- | --- |
| Long-term debt obligations | 1,058 | 5,235 | 6,293 |
| Interest payments related to long-term debt obligations | 70 | 629 | 699 |
| Purchase obligations | 3,519 | 949 | 4,468 |
| Total | 4,647 | 6,813 | 11,460 |

In the table above, the 'Long-term debt obligations' reflect the cash amounts to be repaid upon maturity of those debt obligations. The cash obligations above will differ from Long-term debt due to the impacts of fair value hedge accounting adjustments and premiums or discounts on certain debt.

We have determined the interest payments related to long-term debt obligations by reference to the payments due under the terms of our debt obligations at the time such obligations were incurred. However, we use interest rate swaps to modify the interest characteristics of certain of our debt obligations. The net effect of these swaps may increase or decrease the actual amount of our cash interest payment obligations, which may differ from those stated in the above table. For further details on our debt obligations and the related hedges, see 'Note 12 - Debt' to our Consolidated Financial Statements.

Purchase obligations are defined as agreements to purchase goods and services that are enforceable and legally binding, that specify all significant terms, including the quantities to be purchased, price provisions and the approximate timing of the transactions. Purchase obligations includes procurement contracts for raw materials, sub-contracted work, supplies and services. Purchase obligations include amounts recorded as well as amounts that are not recorded in the Consolidated Balance Sheets.

## Off-balance sheet arrangements

### Commercial commitments

We disclose the maximum potential exposure of certain guarantees, as well as possible recourse provisions that may allow us to recover from third parties amounts paid out under such guarantees. The maximum potential exposure does not allow any discounting of our assessment of actual exposure under the guarantees. The information below reflects our maximum potential exposure under the guarantees, which is higher than our assessment of the expected exposure.

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## Guarantees

The following table provides quantitative data regarding our third-party guarantees. The maximum potential payments represent a worst-case scenario, and do not reflect our expected outcomes.

| December 31, ($ in millions) | Maximum potential payments (1) |  |
| --- | --- | --- |
|  | 2022 | 2021 |
| Performance guarantees | 4,300 | 4,540 |
| Financial guarantees | 96 | 52 |
| Indemnification guarantees (2) | - | 136 |
| Total | 4,396 | 4,728 |

(1) Maximum potential payments include amounts in both continuing and discontinued operations.

(2) Certain indemnifications provided to Hitachi in connection with the divestment of Power Grids were without limit.

The carrying amount of liabilities recorded in the Consolidated Balance Sheets reflects our best estimate of future payments, which we may incur as part of fulfilling our guarantee obligations. In respect of the above guarantees, the carrying amounts of liabilities at December 31, 2022 and 2021, amounted to $1 million and $156 million, respectively, the majority of which in 2021 is included in discontinued operations.

In addition, in the normal course of bidding for and executing certain projects, we have entered into standby letters of credit, bid/performance bonds and surety bonds (collectively 'performance bonds') with various financial institutions. Customers can draw on such performance bonds in the event that we do not fulfill our contractual obligations. We would then have an obligation to reimburse the financial institution for amounts paid under the performance bonds. At December 31, 2022 and 2021, the total outstanding performance bonds aggregated to $2.9 billion and $3.6 billion, respectively; of each of these amounts, $0.1 billion relates to discontinued operations. There have been no significant amounts reimbursed to financial institutions under these types of arrangements in 2022 and 2021.

For additional descriptions of our performance, financial and indemnification guarantees see 'Note 15 - Commitments and contingencies' to our Consolidated Financial Statements.

## Item 6. Directors, Senior Management and Employees

### Summary of corporate governance approach

#### Corporate governance - general principles

ABB is committed to the highest international standards of corporate governance and this is reinforced in its structure, processes and rules as outlined in this report. In line with this, ABB complies with the general principles as set forth in the Swiss Code of Best Practice for Corporate Governance, as well as those of the capital markets where its shares are listed and traded. In addition to the provisions of the Swiss Code of Obligations, ABB's key principles and rules on corporate governance are laid down in ABB's Articles of Incorporation, the ABB Ltd Board Governance Rules (which include the governance rules of ABB's Board committees and the ABB Ltd Related Party Transaction Policy, which was prepared based on the Swiss Code of Best Practice for Corporate Governance and the independence criteria set forth in the corporate governance rules of the New York Stock Exchange), and the ABB Code of Conduct. These documents are available on ABB's website at https://new.abb.com/about/corporate-governance. It is the duty of ABB's Board of Directors (the Board) to review and amend or propose amendments to those documents from time to time to reflect the most recent developments and practices, as well as to ensure compliance with applicable laws and regulations. Shareholders and other interested parties may communicate with the Chairman of the Board or the independent directors by writing to ABB Ltd (Attn: Chairman of the Board/independent directors), at Affolternstrasse 44, CH-8050 Zurich, Switzerland.

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Swiss corporate law has been revised, effective as of January 1, 2023. The main objectives of the revision are to strengthen shareholder rights, improve corporate governance and modernize corporate law in general. Swiss corporations are required to amend their articles of incorporation for compliance with the new law by the end of 2024 at the latest. ABB will propose the necessary changes to its Articles of Incorporation for approval by shareholders at its Annual General Meeting in March 2023. These changes will impact certain of the provisions referred to in this report.

## Compensation governance and Board and EC compensation

Information about ABB's compensation governance as well as Board and Executive Committee (EC) compensation and shareholdings is provided in the in the section titled 'Compensation' below.

## Board of Directors

### Board and Board committees (2022 - 2023 Board term)

|  | Board of Directors |  |
| --- | --- | --- |
| Chairman: Peter R. Voser | Gunnar Brock | Jennifer Xin-Zhe Li |
| Vice-Chairman: Jacob Wallenberg | David Constable | Geraldine Matchett |
|  | Frederico Fleury Curado | David Meline |
|  | Lars Förberg | Satish Pai |

| Finance, Audit and Compliance Committee | Governance and Nomination Committee | Compensation Committee |
| --- | --- | --- |
| David Meline (chairman) | Peter R. Voser (chairman) | Frederico Fleury Curado (chairman) |
| Gunnar Brock | Lars Förberg | David Constable |
| Geraldine Matchett | Jennifer Xin-Zhe Li | Jennifer Xin-Zhe Li |
| Satish Pai | Jacob Wallenberg |  |

## Board governance

### The Board

The Board defines the ultimate direction of the business of ABB and issues the necessary instructions. It determines the organization of the ABB Group and appoints, removes and supervises the persons entrusted with the executive management and representation of ABB. The internal organizational structure and the definition of the areas of responsibility of the Board, as well as the information and control instruments vis-à-vis the Executive Committee are set forth in the ABB Ltd Board Governance Rules (available at https://new.abb.com/about/corporate-governance).

The Board takes decisions as a whole, supported by its three committees: the Finance, Audit and Compliance Committee (FACC), the Governance and Nomination Committee (GNC), and the Compensation Committee (CC). These committees assist the Board in its tasks and report regularly to the Board. The Board and its committees meet regularly throughout the year.

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The directors and officers of a Swiss corporation are bound, as specified in the Swiss Code of Obligations, to perform their duties with all due care, to safeguard the interests of the corporation in good faith and to extend equal treatment to shareholders in like circumstances. Prior to proposing new candidates for election to the Board, checks are performed to ensure that they are independent and that there are no conflicts of interest.

The Swiss Code of Obligations does not specify what standard of due care is required of the directors of a corporate board. However, it is generally held by Swiss legal scholars and jurisprudence that the directors must have the requisite capability and skills to fulfill their function, and must devote the necessary time to the discharge of their duties. Moreover, the directors must exercise all due care that a prudent and diligent director would have taken in like circumstances. Finally, the directors are required to take actions in the best interests of the corporation and may not take any actions that may be harmful to the corporation.

Although the Swiss Code of Obligations does not discuss specifically conflicts of interest for board members, the ABB Ltd Board Governance Rules (available at https://new.abb.com/about/corporate-governance) state that Board members shall avoid entering into any situation in which their personal or financial interests may conflict with the interests of ABB.

#### **Chairman of the Board**

The Chairman is elected by the shareholders to represent their interests in creating sustainable value through effective governance. In addition, the Chairman (1) takes provisional decisions on behalf of the Board on urgent matters where a regular Board decision cannot be obtained, (2) calls for Board meetings and sets the related agendas, (3) interacts with the CEO and other EC members on a more frequent basis outside of Board meetings and (4) represents the Board internally and in the public sphere.

#### **Vice-Chairman of the Board**

The Vice-Chairman is elected by the Board and handles the responsibilities of the Chairman to the extent the Chairman is unable to do so or would have a conflict of interest in doing so. He also acts as counselor/advisor to the Chairman on any matters that are Company or Board relevant and as appropriate or as the Chairman may require and with a particular focus on strategic aspects related to the Company and its business in general. In addition, the Vice-Chairman takes such other actions as may be decided by the Board or requested by the Chairman.

#### **Finance, Audit and Compliance Committee**

The FACC is responsible for overseeing (1) the integrity of ABB's financial statements, (2) ABB's compliance with legal, tax and regulatory requirements, (3) the external auditors' qualifications and independence, (4) the performance and role of ABB's internal audit function and the performance of the external auditors, (5) ABB's capital structure, funding requirements and financial and risk policies, and (6) ABB's implementation and maintenance of an integrity program and internal controls designed to mitigate integrity risk.

The FACC must comprise three or more independent directors who have a thorough understanding of finance and accounting. The Chairman of the Board and, upon invitation by the committee's chairman, the CEO or other members of the Executive Committee may participate in the committee meetings, provided that any potential conflict of interest is avoided and confidentiality of the discussions is maintained. In addition, the chief integrity officer, the head of internal audit and the external auditors participate in the meetings as appropriate. The Board has determined that each member of the FACC is an audit committee financial expert as such term is defined in Form 20-F.

#### **Governance and Nomination Committee**

The GNC is responsible for (1) overseeing corporate governance practices within ABB, (2) overseeing corporate social responsibility (including health, safety and environment as well as sustainability), (3) nominating candidates for the Board, the role of the CEO and other positions on the Executive Committee, and (4) succession planning and employment matters relating to the Board and the Executive Committee. The GNC is also responsible for maintaining an orientation program for new Board members and an ongoing education program for existing Board members.

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The GNC must comprise three or more independent directors. Upon invitation by the committee's chairman, the CEO or other members of the Executive Committee may participate in the committee meetings, provided that any potential conflict of interest is avoided and confidentiality of the discussions is maintained.

#### **Compensation Committee**

The CC is responsible for compensation matters relating to the Board and the Executive Committee.

The CC must comprise three or more directors who are elected by the shareholders. The Chairman of the Board and, upon invitation by the committee's chairman, the CEO or other members of the Executive Committee may participate in the committee meetings, provided that any potential conflict of interest is avoided and confidentiality of the discussions is maintained.

### **Board membership**

#### **Board composition**

In proposing individuals to be elected to the Board, the Board seeks to align the composition and skills of the Board with the Company's strategic needs, business portfolio, geographic reach and culture. The Board strives for diversity in all aspects including gender, nationalities, geographic/regional experience and business experience. In addition, the average tenure of the members of the Board should be well-balanced. The Board also considers the number of other mandates of each Board member to ensure that he/she will have sufficient time to dedicate to his/her role as an ABB Board member.

#### **Elections and term of office**

The members of the Board of Directors and the Chairman of the Board as well as the members of the Compensation Committee are elected by the shareholders at the general meeting of shareholders for a term of office extending until completion of the next ordinary general meeting of shareholders. Members whose terms of office have expired shall be immediately eligible for re-election. ABB's Articles of Incorporation (available at https://new.abb.com/about/corporate-governance) do not provide for the retirement of directors based on their age. However, an age limit for members of the Board is set forth in the ABB Ltd Board Governance Rules (available at https://new.abb.com/about/corporate-governance), although waivers are possible and subject to Board discretion. If the office of the Chairman of the Board of Directors or any position on the Compensation Committee becomes vacant during a Board term, the Board of Directors may appoint (shall appoint in the case of the Chairman of the Board) another individual from among its members to that position for the remainder of that term. The Board of Directors shall consist of no less than 7 and no more than 13 members.

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## Members of the Board (2022-2023 Board term)

| Board Member | Board Experience |  | Corporate Officer Experience |  | Other Business Experience |  |  |  | Global Experience | Country of Origin / Nationality | Gender | Non-Executive | Independent |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | ABB Board Tenure (years) | Other Public Board Experience | CEO | CFO | Operations | Risk Management | Sustainability | Digital / Technology |  |  |  |  |  |
| Peter R. Voser | 8 | ● | ● | ● | ● | ● | ● | ● | ● | CH | M | Yes | Yes |
| Jacob Wallenberg | 24 | ● | ● |  | ● | ● | ● | ● | ● | SE | M | Yes | Yes |
| Gunnar Brock | 5 | ● | ● |  | ● | ● | ● |  | ● | SE | M | Yes | Yes |
| David Constable | 8 | ● | ● |  | ● | ● | ● |  | ● | CA, US | M | Yes | Yes |
| Frederico Fleury Curado | 7 | ● | ● |  | ● | ● | ● | ● | ● | BR, PT | M | Yes | Yes |
| Lars Förberg | 6 | ● | ● |  |  | ● | ● |  | ● | SE, CH | M | Yes | Yes |
| Jennifer Xin-Zhe Li | 5 | ● |  | ● | ● | ● | ● | ● | ● | CN, CA | F | Yes | Yes |
| Geraldine Matchett | 5 |  | ● | ● |  | ● | ● |  | ● | CH, UK, FR | F | Yes | Yes |
| David Meline | 7 | ● |  | ● |  | ● |  |  | ● | US, CH | M | Yes | Yes |
| Satish Pai | 7 | ● | ● |  | ● | ● | ● | ● | ● | IN | M | Yes | Yes |

Peter R. Voser has been a member and Chairman of ABB's Board of Directors since April 2015. He was also ABB's Chief Executive Officer from April 2019 to February 2020. He is a member of the board of directors of IBM Corporation (U.S.). He is also a member of the board of directors of Temasek Holdings (Private) Limited (Singapore) as well as chairman of the board of PSA International Pte Ltd (Singapore), one of its subsidiaries. In addition, he is the chairman of the board of trustees of the St. Gallen Foundation for International Studies. He was previously the chief executive officer of Royal Dutch Shell plc (The Netherlands). Mr. Voser was born in 1958 and is a Swiss citizen.

Jacob Wallenberg has been a member of ABB's Board of Directors since June 1999 and Vice-Chairman since April 2015. He is the chairman of the board of Investor AB (Sweden). He is vice-chairman of the boards of Telefonaktiebolaget LM Ericsson, FAM AB and Patricia Industries (all Sweden). He is also a member of the board of directors of the Knut and Alice Wallenberg Foundation as well as a member of the nomination committee of SAS AB (both Sweden). Through June 2022, he was a member of the board of directors of Nasdaq, Inc. (U.S.). Mr. Wallenberg was born in 1956 and is a Swedish citizen.

Gunnar Brock has been a member of ABB's Board of Directors since March 2018. He is chairman of the boards of directors of Neptunia Invest AB and Stena AB (both Sweden) and a member of the boards of directors of Investor AB and Patricia Industries (both Sweden). Through July 2022, he was the chairman of the board of directors of Mölnlycke Health Care AB (Sweden). He was formerly president and chief executive officer of Atlas Copco AB (Sweden). Mr. Brock was born in 1950 and is a Swedish citizen.

David Constable has been a member of ABB's Board of Directors since April 2015. He is the chairman of the board of directors and chief executive officer of Fluor Corporation (U.S.). He was formerly the chief executive officer and president as well as a member of the board of directors of Sasol Limited (South Africa). He joined Sasol after more than 29 years with Fluor Corporation (U.S.). Mr. Constable was born in 1961 and is a Canadian and U.S. citizen.

Frederico Fleury Curado has been a member of ABB's Board of Directors since April 2016. He is a member of the boards of directors of Ultrapar S.A. (Brazil), Transocean Ltd. (Switzerland) and LATAM Airlines Group S.A. (Chile). He was formerly the chief executive officer of Ultrapar S.A. and Embraer S.A. (both Brazil). Mr. Curado was born in 1961 and is a Brazilian and Portuguese citizen.

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Lars Förberg has been a member of ABB's Board of Directors since April 2017. He is co-founder and managing partner of Cevian Capital. Mr. Förberg was born in 1965 and is a Swedish and Swiss citizen.

Jennifer Xin-Zhe Li has been a member of ABB's Board of Directors since March 2018. She is a member of the boards of directors of SAP SE (Germany), Kone Oy (Finland) and Full Truck Alliance Co. Ltd. (Cayman Islands/P.R.C.). Through August 2022, she was a member of the board of directors of Flex Ltd (Singapore/U.S.). Ms. Li is a founder and general partner of Changcheng Investment Partners (P.R.C.), a private investment fund. From 2008 to 2018, she served as chief financial officer of Baidu Inc. (P.R.C.) and chief executive officer of Baidu Capital (P.R.C.). Prior to that, Ms. Li spent 14 years with General Motors, holding various senior finance positions, including chief financial officer of GM China and corporate controller for GMAC North American Operations. Ms. Li was born in 1967 and is a Canadian citizen.

Geraldine Matchett has been a member of ABB's Board of Directors since March 2018. She is the co-chief executive officer, the chief financial officer and a member of the managing board of Royal DSM N.V. (The Netherlands). She was previously the chief financial officer of SGS Ltd (Switzerland). Prior to joining SGS she worked as an auditor at Deloitte Ltd (Switzerland) and KPMG LLP (U.K.). Ms. Matchett was born in 1972 and is a Swiss, British and French citizen.

David Meline has been a member of ABB's Board of Directors since April 2016. From 2011 through 2022, he held chief financial officer roles at Moderna Inc. (U.S.), Amgen Inc. (U.S.) and the 3M Company (U.S.). From 2008 through 2011 he was the corporate controller and chief accounting officer of the 3M Company (U.S.). Prior to joining 3M, Mr. Meline worked for more than 20 years for General Motors Company (U.S.). Mr. Meline was born in 1957 and is a U.S. and Swiss citizen.

Satish Pai has been a member of ABB's Board of Directors since April 2016. He is the managing director and a member of the board of directors of Hindalco Industries Ltd. (India). He joined Hindalco in 2013 after 28 years with Schlumberger Limited (U.S.). Mr. Pai was born in 1961 and is an Indian citizen.

As of December 31, 2022, none of the Board members held any official functions or political posts. Further information on ABB's Board members can be found on ABB's website under the ABB Board of Directors link (available at https://new.abb.com/about/corporate-governance).

## Board meetings and attendance

The Board and its committees have regularly scheduled meetings throughout the year. These meetings are supplemented by additional meetings (either in person or by conference call), as necessary. Board meetings are convened by the Chairman or upon request by any other Board member or the CEO. Documentation covering the various items of the agenda for each Board meeting is sent out in advance to each Board member in order to allow each member time to study the covered matters prior to the meetings. Each Board meeting has a private session without management or others being present. Decisions made at the Board meetings are recorded in written minutes of the meetings. Some decisions are also taken by circular resolution.

The table below shows the number of meetings held during 2022 by the Board and its committees, their average duration, as well as the attendance of the individual Board members. The Board meetings shown include a strategic retreat attended by the members of the Board and the EC.

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# **2022 Board and Board Committee Meetings**

| Meetings and attendance | Pre annual general meeting 2022 |  |  |  |  | Post annual general meeting 2022 |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | Board |  | FACC | GNC | CC | Board |  | FACC | GNC | CC |
|  | Mtg. | Conf. Call |  |  |  | Mtg. | Conf. Call |  |  |  |
| Average duration (hours) | 7.5 | 1.5 | 2 | 1.25 | 1.25 | 8.25 | 1.5 | 3 | 1 | 1.25 |
| Number of meetings | 1 | 1 | 2 | 2 | 2 | 4 | 2 | 5 | 4 | 5 |
| Meetings attended: |  |  |  |  |  |  |  |  |  |  |
| Peter R. Voser | 1 | 1 |  | 2 |  | 4 | 2 |  | 4 |  |
| Jacob Wallenberg | 1 | 1 |  | 2 |  | 4 | 2 |  | 3 |  |
| Gunnar Brock | 1 | 1 | 2 |  |  | 4 | 2 | 5 |  |  |
| David Constable |  | 1 |  |  | 2 | 4 | 1 |  |  | 5 |
| Frederico Fleury Curado | 1 | 1 |  |  | 2 | 4 | 2 |  |  | 5 |
| Lars Förberg | 1 | 1 |  | 2 |  | 4 | 2 |  | 4 |  |
| Jennifer Xin-Zhe Li | 1 | 1 |  | 2 | 2 | 4 | 1 |  | 4 | 5 |
| Geraldine Matchett |  | 1 | 1 |  |  | 4 | 2 | 5 |  |  |
| David Meline | 1 | 1 | 2 |  |  | 4 | 2 | 5 |  |  |
| Satish Pai | 1 | 1 | 2 |  |  | 4 | 2 | 5 |  |  |

# **Mandates of Board members outside the ABB Group**

No member of the Board may hold more than ten additional mandates, of which no more than four may be in listed companies. Certain types of mandates, such as those in our subsidiaries, those in the same group of companies and those in non-profit and charitable institutions, are not subject to those limits. Additional details can be found in Article 38 of ABB's Articles of Incorporation (available at https://new.abb.com/about/corporate-governance).

# **Business relationships between ABB and its Board members**

This section describes important business relationships between ABB and its Board members, or companies and organizations represented by them.

Fluor Corporation (Fluor) is an important customer of ABB. ABB sells primarily electrical switchgears, control systems and electrical solutions through its Electrification and Process Automation Business Areas to Fluor. David Constable is the chairman of the board of directors and CEO of Fluor.

After reviewing the level of business with Fluor, the Board has determined that ABB's business relationship with Fluor is not unusual in its nature or conditions and does not constitute a material business relationship. As a result, the Board concluded that all members of the Board are independent.

These determinations were made in accordance with ABB Ltd's Related Party Transaction Policy, which was prepared based on the Swiss Code of Best Practice for Corporate Governance and the independence criteria set forth in the corporate governance rules of the New York Stock Exchange. This policy is contained in the ABB Ltd Board Governance Rules (available at https://new.abb.com/about/corporate-governance).

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## Information and control systems of the Board vis-à-vis the Executive Committee

### Information from the Executive Committee

In accordance with the ABB Board Governance Rules (available at https://new.abb.com/about/corporate-governance), the CEO reports regularly to the Board about ABB's overall business and when circumstances require on any extraordinary events that may arise. This includes:

- Reports on financial results (including profit and loss, balance sheet and cash flows);
- Changes in key members of management;
- Information that may affect the supervisory or monitoring function of the Board (including on matters of strategy and compliance); and
- Significant developments in legal matters.

At each Board meeting, Board members are briefed by the Chairman, CEO, CFO and other EC members on ABB's business performance and on material developments affecting ABB. Outside of Board meetings, Board members generally channel any requests for information through the Chairman. Board members also obtain information through offsite retreats with the Executive Committee and visits to ABB sites. In addition, Board members obtain information through the Board committees in which they participate and which are also attended by relevant EC members and management representatives from human resources, finance, legal and the business.

### Internal Audit

ABB has an Internal Audit team that provides independent objective assurance and other services to help ensure that ABB operates in accordance with applicable laws as well as internal policies and procedures. Internal Audit reports to the FACC and to the CFO. The FACC reviews and approves the internal audit plan, and material changes to the plan. Investigations of potential fraud and inappropriate business conduct are an integral part of the internal audit process. Depending on circumstances, Internal Audit may act together with ABB's Integrity Investigations and Monitoring department, which is part of ABB's integrity function. Internal Audit reports on a regular basis its main observations and recommendations to the relevant members of the EC and to the FACC as appropriate.

### Risk Management

ABB has an enterprise risk management program (ERM) in place which takes into account ABB's size and complexity. ERM provides the EC and the Board with a comprehensive and holistic view of the risks facing the business. ERM involves managing the acceptance of risk to achieve the objectives of the business. The ERM process is typically cyclical in nature, conveying the idea of continuous refinement of the risk management approach in a dynamic business environment. Furthermore, ABB runs a mitigation process for the identified risks that is key to the success of this process. ERM assessments are both top down and bottom up. They cover strategic, financial, and operational risks, both current and long term. Key risks identified and managed in 2022 were those related to the war in Ukraine, to continued constraints in global supply chains and to the planned initial public offering in Switzerland of ABB's electric-vehicle charging business. ERM results are reported to the FACC and the entire Board. This information becomes part of the overall strategic and risk discussions by the Board to help create value for stakeholders.

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## Information to the Board and the Finance, Audit and Compliance Committee

### Supervisory and control instruments vis-à-vis the auditors

Our auditors, KPMG, attend each meeting of the FACC and each meeting includes a private session between the auditors and the FACC without management being present. In 2022, the FACC had 7 meetings (either in person or via telephone call). On at least an annual basis, the FACC reviews and discusses with the external auditors all significant relationships that the auditors have with the Company that could impair their independence. The FACC reviews the auditor engagement letter and the audit plan including discussion of scope, staffing, locations and general audit approach. The FACC also reviews and evaluates the auditors' judgment on the quality and appropriateness of the Company's accounting principles as applied in the financial reporting. In addition, the FACC approves in advance any non-audit services to be performed by the auditors.

At least annually, the FACC obtains and reviews a report by the auditors that includes discussion on:

- The Company's internal control procedures;
- Material issues, if any, raised by the most recent internal quality control review;
- Critical accounting policies and practices of the Company;
- All alternative accounting treatments of financial information that were discussed between the auditors and management as well as the related ramifications; and
- Material communications between the auditors and management such as any management letter or schedule of audit differences.

Taking into account the opinions of management the FACC evaluates the qualifications, independence and performance of the auditors. The FACC reports the material elements of its supervision of the auditors to the Board and on an annual basis recommends to the Board the auditors to be proposed for election at the shareholders meeting.

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## Executive Committee

### Composition of the Executive Committee (at December 31, 2022)

| Björn Rosengren Chief Executive Officer |  |
| --- | --- |
| CORPORATE OFFICERS | BUSINESS AREA PRESIDENTS |
| Timo Ihamuotila Chief Financial Officer | Morten Wierod Electrification |
| Carolina Granat Chief Human Resources Officer | Peter Terwiesch Process Automation |
| Andrea Antonelli General Counsel | Tarak Mehta Motion |
| Karin Lepasoon Chief Communications and Sustainability Officer | Sami Atiya Robotics & Discrete Automation |

### Executive Committee responsibilities and organization

The Board has delegated the executive management of ABB to the CEO. The CEO and, under his direction, the other members of the Executive Committee are responsible for ABB's overall business and affairs and day-to-day management. The CEO reports to the Board regularly, and whenever extraordinary circumstances so require, on the course of ABB's business and financial performance and on all organizational and personnel matters, transactions and other issues material to the Group. Each member of the Executive Committee is appointed and discharged by the Board.

### Members of the Executive Committee (at December 31, 2022):

Björn Rosengren was appointed Chief Executive Officer and member of the Executive Committee effective March 2020. He is a member of the board of directors of the World Childhood Foundation (Sweden). Before joining ABB, he was the president and chief executive officer of Sandvik AB (Sweden) since 2015. Prior to that, Mr. Rosengren was the chief executive officer of Wärtsilä Corporation (Finland) from 2011 to 2015. He held a variety of management roles at Atlas Copco AB (Sweden) from 1998 to 2011. Mr. Rosengren was born in 1959 and is a Swedish citizen.

Timo Ihamuotila was appointed Chief Financial Officer and member of the Executive Committee effective April 2017. He is a member of the board of directors of SoftwareONE Holding AG and Hitachi Energy Ltd (both Switzerland). From 2009 to 2016, Mr. Ihamuotila was chief financial officer and an executive vice president of the Nokia Corporation (Finland). From 1999 to 2009, he held various senior roles with Nokia. Mr. Ihamuotila was born in 1966 and is a Finnish citizen.

Carolina Granat was appointed Chief Human Resources Officer and member of the Executive Committee effective January 2021. She joined ABB in 2020 as Head of People Development. Prior to that, she was globally responsible for human resources at the machining solutions business area of Sandvik AB (Sweden). Ms. Granat was born in 1972 and is a Swedish citizen.

Andrea Antonelli was appointed General Counsel and member of the Executive Committee effective March 2022. From 2020 to 2022 he was General Counsel of both ABB's Electrification and Robotics & Discrete Automation Business Areas. Prior to joining ABB, Mr. Antonelli was at the Tetra Pak Group, where he held various positions as regional general counsel for different regions as well as vice president legal affairs of global commercial operations. He has also worked for General Electric and Fluor Corporation, as well as in private practice at DLA Piper London offices. Mr. Antonelli was born in 1974 and is an Italian citizen.

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Karin Lepasoon was appointed Chief Communications and Sustainability Officer and member of the Executive Committee effective October 2022. She joined ABB from Vattenfall, where she served as head of group communications and public & regulatory affairs and member of the company's group executive management team. Prior to that, Ms. Lepasoon also served as head of global marketing and communications at SEB, director of sustainability, communications and HR at Nordic Capital, head of strategy and chief of staff at Skanska, and held various other roles in the area of communications. Ms. Lepasoon was born in 1968 and is a Swedish citizen.

Morten Wierod was appointed President of the Electrification Business Area effective April 2022 and has been a member of the Executive Committee since April 2019, when he was appointed President of the Motion Business Area. From 2015 until April 2019, he was the Managing Director of the drives business unit in the Robotics and Motion division. During 2011 to 2015, Mr. Wierod was the Managing Director of the control products business unit in the Low Voltage Products division. Between 1998 to 2011, he held various management roles with ABB. Mr. Wierod was born in 1972 and is a Norwegian citizen.

Peter Terwiesch was appointed President of the Process Automation Business Area and member of the Executive Committee effective January 2015 (Process Automation known as Industrial Automation from 2017 until 2020). He is a member of the board of directors of Hilti AG (Liechtenstein). From 2011 to 2014, Mr. Terwiesch was Head of ABB's Central Europe region. He was ABB's Chief Technology Officer from 2005 to 2011. From 1994 to 2005, he held several positions with ABB. Mr. Terwiesch was born in 1966 and is a German and Swiss citizen.

Tarak Mehta was appointed President of the Motion Business Area effective April 2022 and has been a member of the Executive Committee since October 2010. He is a member of the board of directors of Prysmian S.p.A. (Italy). He was President of the Electrification Business Area since April 2019 and President of the Electrification Products division from 2016 to 2019. From October 2010 through December 2015, he was President of the Low Voltage Products division. From 2007 to 2010, he was Head of ABB's transformers business. Between 1998 and 2006, he held several management positions with ABB. Mr. Mehta was born in 1966 and is a U.S. and Swiss citizen.

Sami Atiya was appointed President of the Robotics & Discrete Automation Business Area effective April 2019 and has been a member of the Executive Committee since June 2016. He is a member of the board of directors of SGS SA (Switzerland). He had previously been President of the Robotics and Motion division since January 2017. From June to December 2016 he was President of the Discrete Automation and Motion division. Prior to joining ABB, Mr. Atiya held senior roles at Siemens in Germany from 1997 to 2015, including as chief executive officer of the mobility and logistics division in the infrastructure and cities sector from 2011. Mr. Atiya was born in 1964 and is a German citizen.

Further information about the members of the Executive Committee can be found on ABB's website under the Executive Committee link (available at https://new.abb.com/about/corporate-governance).

## **Mandates of EC members outside the ABB Group**

No member of the EC may hold more than five additional mandates, of which no more than one may be in a listed company. Certain types of mandates, such as those in our subsidiaries, those in the same group of companies and those in non-profit and charitable institutions, are not subject to those limits. Additional details can be found in Article 38 of ABB's Articles of Incorporation (available at https://new.abb.com/about/corporate-governance).

## **Business relationships between ABB and its EC members**

This section describes important business relationships between ABB and its EC members, or companies and organizations represented by them.

Until December 28, 2022, ABB had a minority stake in Hitachi Energy Ltd (Hitachi Energy), the holding company of ABB's former power grids business. Hitachi Energy is both an important supplier to and customer of ABB. Timo Ihamuotila is a director of Hitachi Energy.

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After reviewing the level of business with Hitachi Energy, the Board has determined that ABB's business relationship with Hitachi Energy is not unusual in its nature or conditions.

These determinations were made in accordance with ABB Ltd's Related Party Transaction Policy, which was prepared based on the Swiss Code of Best Practice for Corporate Governance and the independence criteria set forth in the corporate governance rules of the New York Stock Exchange. This policy is contained in the ABB Ltd Board Governance Rules (available at https://new.abb.com/about/corporate-governance).

## Shares

### Share capital of ABB

At December 31, 2022, ABB's ordinary share capital (including treasury shares) as registered with the commercial register amounted to CHF 235,769,409.00, divided into 1,964,745,075 fully paid registered shares with a par value of CHF 0.12 per share.

ABB Ltd's shares are listed on the SIX Swiss Exchange, the NASDAQ OMX Stockholm Exchange and the New York Stock Exchange (where its shares are traded in the form of American depositary shares (ADS) - each ADS representing one registered ABB share). At December 31, 2022, ABB Ltd had a market capitalization based on outstanding shares (total number of outstanding shares: 1,865,003,331) of approximately CHF 52 billion ($57 billion, SEK 590 billion). The only consolidated subsidiary in the ABB Group with listed shares is ABB India Limited, Bangalore, India, which is listed on the BSE Ltd. (Bombay Stock Exchange) and the National Stock Exchange of India. At December 31, 2022, ABB Ltd, Switzerland, directly or indirectly owned 75 percent of ABB India Limited, Bangalore, India, which at that time had a market capitalization of approximately INR 569 billion.

### Stock exchange listings (at December 31, 2022)

| Stock exchange | Security | Ticker symbol | ISIN code |
| --- | --- | --- | --- |
| SIX Swiss Exchange | ABB Ltd, Zurich, share | ABBN | CH0012221716 |
| SIX Swiss Exchange | ABB Ltd, Zurich, share buyback (second trading line) | ABBNE | CH0357679619 |
| NASDAQ OMX Stockholm Exchange | ABB Ltd, Zurich, share | ABB | CH0012221716 |
| New York Stock Exchange | ABB Ltd, Zurich, ADS | ABB | US0003752047 |
| BSE Ltd. (Bombay Stock Exchange) | ABB India Limited, Bangalore, share | ABB (1) | INE117A01022 |
| National Stock Exchange of India | ABB India Limited, Bangalore, share | ABB | INE117A01022 |

(1) Also called Scrip ID.

### Share repurchases and cancellation

At ABB's Annual General Meeting 2022, shareholders approved the proposal to cancel 88,403,189 shares repurchased under ABB's 2020/21 and 2021/22 share buyback programs. These shares were cancelled in June 2022, resulting in a reduced total number of issued ABB Ltd shares of 1,964,745,075. 15,283,500 shares repurchased under ABB's 2021/22 share buyback program are remaining for cancellation.

In April 2022, ABB launched a follow-up share buyback program of up to $3 billion. The main purpose of this program was to complete the return of $7.8 billion cash proceeds from the Power Grids divestment to shareholders. Under that share buyback program, ABB repurchased a total of 59,956,000 shares as per December 31, 2022, and a total of 64,615,000 shares as per February 15, 2023.

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ABB intends to use the capital band, which it will propose at the Annual General Meeting 2023 to its shareholders for introduction (see 'Authorized share capital' below), for cancellation of shares repurchased under the share buyback programs 2021/22 and 2022/23.

Further information on ABB's share buyback programs can be found at https://global.abb/group/en/investors/investor-and-shareholder-resources/share-buybacks.

In addition, ABB repurchased a total of 20,000,000 shares as per December 31, 2022, primarily for use in connection with employee share programs. Further information can be found at https://www.abb.com/investorrelations.

## Changes to the ordinary share capital

Except for the share cancellations described above and in ABB's Annual Report 2021 on Form 20-F, there were no other changes to ABB's ordinary share capital during 2022, 2021 and 2020.

## Convertible bonds and options

ABB does not have any bonds outstanding that are convertible into ABB shares. For information about options on shares issued by ABB, please refer to 'Note 19 - Stockholders' equity' to ABB's Consolidated Financial Statements.

## Contingent share capital

At December 31, 2022, ABB's share capital may be increased by an amount not to exceed CHF 24,000,000 through the issuance of up to 200,000,000 fully paid registered shares with a par value of CHF 0.12 per share through the exercise of conversion rights and/or warrants granted in connection with the issuance on national or international capital markets of newly or already issued bonds or other financial market instruments. If this contingent share capital were fully issued this would increase the existing share capital by approximately 10.2 percent. The contingent share capital has not changed during the last three years.

At December 31, 2022, ABB's share capital may be increased by an amount not to exceed CHF 1,200,000 through the issuance of up to 10,000,000 fully paid registered shares with a par value of CHF 0.12 per share through the exercise of warrant rights granted to its shareholders. If this contingent share capital were fully issued this would increase the existing share capital by approximately 0.5 percent. This contingent share capital has not changed during the last three years. The Board may grant warrant rights not taken up by shareholders for other purposes in the interest of ABB.

The pre-emptive rights of the shareholders are excluded in connection with the issuance of convertible or warrant-bearing bonds or other financial market instruments or the grant of warrant rights. The then current owners of conversion rights and/or warrants will be entitled to subscribe for new shares. The conditions of the conversion rights and/or warrants will be determined by the Board.

The acquisition of shares through the exercise of warrants and each subsequent transfer of the shares will be subject to the restrictions of ABB's Articles of Incorporation (see 'Limitations on transferability of shares and nominee registration' in the Shareholders section below) (available at https://new.abb.com/about/corporate-governance).

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In connection with the issuance of convertible or warrant-bearing bonds or other financial market instruments, the Board is authorized to restrict or deny the advance subscription rights of shareholders if such bonds or other financial market instruments are for the purpose of financing or refinancing the acquisition of an enterprise, parts of an enterprise, participations or new investments or an issuance on national or international capital markets. If the Board denies advance subscription rights, the convertible or warrant-bearing bonds or other financial market instruments will be issued at the relevant market conditions and the new shares will be issued pursuant to the relevant market conditions taking into account the share price and/or other comparable instruments having a market price. Conversion rights may be exercised during a maximum ten-year period, and warrants may be exercised during a maximum seven-year period, in each case from the date of the respective issuance. The advance subscription rights of the shareholders may be granted indirectly.

At December 31, 2022, ABB's share capital may be increased by an amount not to exceed CHF 11,284,656 through the issuance of up to 94,038,800 fully paid shares with a par value of CHF 0.12 per share to employees. If this contingent share capital were fully issued this would increase the existing share capital by approximately 4.8 percent. This contingent share capital has not changed during the last three years. The pre-emptive and advance subscription rights of ABB's shareholders are excluded. The shares or rights to subscribe for shares will be issued to employees pursuant to one or more regulations to be issued by the Board, taking into account performance, functions, level of responsibility and profitability criteria. ABB may issue shares or subscription rights to employees at a price lower than that quoted on a stock exchange. The acquisition of shares within the context of employee share ownership and each subsequent transfer of the shares will be subject to the restrictions of ABB's Articles of Incorporation (see 'Limitations on transferability of shares and nominee registration' in the Shareholders section below).

### **Authorized share capital**

At December 31, 2022, ABB had an authorized share capital in the amount of up to CHF 24,000,000 through the issuance of up to 200,000,000 fully paid registered shares with a par value of CHF 0.12 each, which is valid through March 25, 2023. If the authorized share capital were fully issued, this would increase the existing share capital by approximately 10.2 percent. Aside from renewal at the 2021 AGM, the authorized share capital has not changed during the last three years. The Board is authorized to determine the date of issue of new shares, the issue price, the type of payment, the conditions for the exercise of pre-emptive rights and the beginning date for dividend entitlement. In this regard, the Board may issue new shares by means of a firm underwriting through a banking institution, a syndicate or another third party with a subsequent offer of these shares to the shareholders. The Board may permit pre-emptive rights that have not been exercised by shareholders to expire or it may place these rights and/or shares as to which pre-emptive rights have been granted but not exercised at market conditions or use them for other purposes in the interest of the Company. Furthermore, the Board is authorized to restrict or deny the pre-emptive rights of shareholders and allocate such rights to third parties if the shares are used (1) for the acquisition of an enterprise, parts of an enterprise, or participations, or for new investments, or in case of a share placement, for the financing or refinancing of such transactions; or (2) for the purpose of broadening the shareholder constituency in connection with a listing of shares on domestic or foreign stock exchanges. The subscription and the acquisition of the new shares, as well as each subsequent transfer of the shares, will be subject to the restrictions of ABB's Articles of Incorporation (available at https://new.abb.com/about/corporate-governance).

In line with the revised provisions of the Swiss Code of Obligations effective since January 1, 2023, ABB will propose to the Annual General Meeting 2023 to replace the then expiring authorized share capital with a capital band ranging from CHF 212,192,469 (lower limit) to CHF 259,346,349 (upper limit), i.e. from 90 percent to 110 percent of the share capital currently entered in the commercial register. Within this capital band, the Board of Directors shall be authorized to increase or reduce the share capital once or several times until March 23, 2028, or until an earlier expiry of the capital band. ABB intends to use the capital band for cancellation of shares repurchased under the share buyback programs 2021/22 and 2022/23 (see 'Share repurchases and cancellation' above).

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## Shareholders

### Shareholder structure

At December 31, 2022, the total number of shareholders directly registered with ABB Ltd was approximately 90,000 and another 549,000 shareholders held shares indirectly through nominees. In total, as of that date, ABB had approximately 639,000 shareholders.

### Significant shareholders

Under the Swiss Financial Market Infrastructure Act, shareholders and groups of shareholders acting in concert who directly or indirectly acquire or sell shares of a listed Swiss corporation or rights based thereon and thereby reach, exceed or fall below the thresholds of 3 percent, 5 percent, 10 percent, 15 percent, 20 percent, 25 percent, 331⁄3 percent, 50 percent or 662⁄3 percent of the voting rights of the corporation must notify the corporation and the SIX Swiss Exchange of such holdings. Based on the disclosure notifications made to ABB and the SIX Swiss Exchange, the following shareholders hold or control voting rights of 3 percent or more of ABB Ltd's issued shares. Except where indicated otherwise, the shareholdings described below are based on the notices provided to ABB and the SIX Swiss Exchange and do not reflect any subsequent changes in shareholdings and share capital and votes.

Investor AB, Sweden, disclosed to ABB and the SIX Swiss Exchange that as per November 9, 2015, it owned 232,165,142 ABB Ltd shares and controlled 10.03 percent of the voting rights in ABB Ltd. In its latest quarterly financial report, Investor AB, Sweden, disclosed that as per December 31, 2022, it owned 265,385,142 ABB Ltd shares and controlled 13.5 percent of the voting rights in ABB Ltd. The number of shares held by Investor AB does not include shares held by Mr. Jacob Wallenberg, the chairman of Investor AB and a director of ABB, in his individual capacity.

BlackRock, Inc., U.S.A., disclosed to ABB and the SIX Swiss Exchange that as per November 16, 2022, it owned 80,226,133 ABB Ltd shares and controlled 4.97 percent of the voting rights in ABB Ltd.

Cevian Capital II GP Limited, Jersey, disclosed to ABB and the SIX Swiss Exchange that as per July 30, 2020, it owned 107,344,554 ABB Ltd shares and controlled 4.95 percent of the voting rights in ABB Ltd.

The Capital Group Companies, Inc., USA, disclosed to ABB and the SIX Swiss Exchange that as per July 1, 2022, it owned 69,725,960 ABB Ltd shares and controlled 4.02 percent of the voting rights in ABB Ltd.

At December 31, 2022, to the best of ABB's knowledge, no other shareholder held 3 percent or more of ABB's total share capital and voting rights as registered in the commercial register on that date.

ABB Ltd has no cross shareholdings in excess of 5 percent of capital, or voting rights with any other company.

Announcements related to disclosure notifications made by shareholders during 2022 can be found via the search facility on the platform of the Disclosure Office of the SIX Swiss Exchange: https://www.ser-ag.com/en/resources/notifications-market-participants/significant-shareholders.html#/

Under ABB's Articles of Incorporation (available at https://new.abb.com/about/corporate-governance), each registered share represents one vote. Significant shareholders do not have different voting rights. To our knowledge, we are not directly or indirectly owned or controlled by any government or by any other corporation or person.

### Shareholders' rights

Shareholders have the right to receive dividends, to vote and to execute such other rights as granted under Swiss law and the Articles of Incorporation (available at https://new.abb.com/about/corporate-governance).

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#### **Right to vote**

ABB has one class of shares and each registered share carries one vote at the general meeting. Voting rights may be exercised only after a shareholder has been registered in the share register of ABB as a shareholder with the right to vote, or with Euroclear Sweden AB (Euroclear), which maintains a subregister of the share register of ABB.

A shareholder may be represented at the Annual General Meeting by its legal representative, by another shareholder with the right to vote or by the independent proxy elected by the shareholders (unabhängiger Stimmrechtsvertreter). If the Company does not have an independent proxy, the Board of Directors shall appoint the independent proxy for the next General Meeting of Shareholders. All shares held by one shareholder may be represented by one representative only.

For practical reasons shareholders must be registered in the share register no later than 6 business days before the general meeting in order to be entitled to vote. Except for the cases described under 'Limitations on transferability of shares and nominee registration' below, there are no voting rights restrictions limiting ABB's shareholders' rights.

#### **Annual General Meeting/Extraordinary General Meeting/COVID-19**

ABB's top priority is protecting the health of its shareholders and employees. Therefore, due to the extraordinary circumstances and in accordance with applicable Swiss COVID-19 legislation, shareholders were not able to attend ABB's Annual General Meeting 2022 in person, but could exercise their shareholder rights via the independent proxy only. In addition, ABB offered shareholders the opportunity to address questions on agenda items to the Board of Directors in writing ahead of the meeting. Thanks to the improved COVID-19 situation, ABB was able to hold an Extraordinary General Meeting in September 2022 with shareholders present in person.

#### **Shareholders' dividend rights**

The unconsolidated statutory financial statements of ABB Ltd are prepared in accordance with Swiss law. Based on these financial statements, dividends may be paid only if ABB Ltd has sufficient distributable profits from previous years or sufficient free reserves to allow the distribution of a dividend. Swiss law requires that ABB Ltd retain at least 5 percent of its annual net profits as legal reserves until these reserves amount to at least 20 percent of ABB Ltd's share capital. Any net profits remaining in excess of those reserves are at the disposal of the shareholders' meeting.

Under Swiss law, ABB Ltd may only pay out a dividend if it has been proposed by a shareholder or the Board of Directors and approved at a general meeting of shareholders, and the auditors confirm that the dividend conforms to statutory law and ABB's Articles of Incorporation. In practice, the shareholders' meeting usually approves dividends as proposed by the Board of Directors.

Dividends are usually due and payable no earlier than 2 trading days after the shareholders' resolution and the ex-date for dividends is normally 2 trading days after the shareholders' resolution approving the dividend. Dividends are paid out to the holders that are registered on the record date. Euroclear administers the payment of those shares registered with it. Under Swiss law, dividends not collected within 5 years after the due date accrue to ABB Ltd and are allocated to its other reserves. As ABB Ltd pays cash dividends, if any, in Swiss francs (subject to the exception for certain shareholders in Sweden described below), exchange rate fluctuations will affect the U.S. dollar amounts received by holders of ADSs upon conversion of those cash dividends by Citibank, N.A., the depository, in accordance with the Amended and Restated Deposit Agreement dated May 7, 2001.

For shareholders who are residents of Sweden, ABB has established a dividend access facility (for up to 600,004,716 shares). With respect to any annual dividend payment for which this facility is made available, shareholders who register with Euroclear may elect to receive the dividend from ABB Norden Holding AB in Swedish krona (in an amount equivalent to the dividend paid in Swiss francs) without deduction of Swiss withholding tax. For further information on the dividend access facility, see ABB's Articles of Incorporation.

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#### **Limitations on transferability of shares and nominee registration**

ABB may decline a registration with voting rights if a shareholder does not declare that it has acquired the shares in its own name and for its own account. If the shareholder refuses to make such declaration, it will be registered as a shareholder without voting rights. A person failing to expressly declare in its registration/application that it holds the shares for its own account (a nominee), will be entered in the share register with voting rights, provided that such nominee has entered into an agreement with ABB concerning its status, and further provided that the nominee is subject to recognized bank or financial market supervision. In special cases, the Board may grant exemptions. There were no exemptions granted in 2022. The limitation on the transferability of shares may be removed by an amendment of ABB's Articles of Incorporation by a shareholders' resolution requiring two-thirds of the votes represented at the meeting.

#### **No restriction on trading of shares**

No restrictions are imposed on the transferability of ABB shares. The registration of shareholders in the ABB share register, Euroclear and the ADS register kept by Citibank does not affect transferability of ABB shares or ADSs. Registered ABB shareholders or ADR holders may therefore purchase or sell their ABB shares or ADRs at any time, including before a General Meeting regardless of the record date. The record date serves only to determine the right to vote at a General Meeting.

#### **Duty to make a public tender offer**

ABB's Articles of Incorporation do not contain any provisions raising the threshold (opting up) or waiving the duty (opting out) to make a public tender offer pursuant to Article 135 of the Swiss Act on Financial Market Infrastructures and Market Conduct in Securities and Derivatives Trading.

### **Other governance information**

#### **ABB Group organizational structure**

ABB Ltd, Switzerland, is the ultimate parent company of the ABB Group. It is the sole shareholder of ABB Asea Brown Boveri Ltd which directly or indirectly owns the other companies in the ABB Group. 'Item 4. Information on the Company-Organizational structure' sets forth, as of December 31, 2022, the name, place of incorporation and ownership interest of the significant direct and indirect subsidiaries of ABB Ltd. In addition, ABB Ltd also owned 19.9 percent of Hitachi Energy Ltd until December 28, 2022. ABB's operational group structure is described in ABB's Financial Report 2022.

#### **Management contracts**

There are no management contracts between ABB and companies or natural persons not belonging to the ABB Group.

#### **Change of control clauses**

Board members, Executive Committee members, and other members of senior management do not receive any special benefits in the event of a change of control. However, the conditional grants under the Long-Term Incentive Plan (LTIP) and the Management Incentive Plan (MIP) may be subject to accelerated vesting in the event of a change of control. From 2021, the rules for the LTIP have been amended to no longer provide for accelerated vesting upon a change in control. No further grants are made under the MIP.

#### **Employee participation programs**

In order to align its employees' interests with the business goals and financial results of the Company, ABB operates a number of incentive plans, linked to ABB's shares, such as the Employee Share Acquisition Plan, the MIP and the LTIP. For a more detailed description of these incentive plans, please refer to 'Note 18 - Share-based payment arrangements' to ABB's Consolidated Financial Statements.

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## General blackout periods for trading ABB securities

During the 30 days prior to the day of publication of the ABB Group's quarterly financial results, as well as on such day, the members of the Board of Directors and the Executive Committee as well as certain employees of ABB, as specified in ABB's internal policies, are prohibited from trading in ABB Ltd securities and any related financial instruments.

## Governance differences from NYSE Standards

According to the New York Stock Exchange's corporate governance standards (the Standards), ABB is required to disclose significant ways in which its corporate governance practices differ from the Standards. ABB has reviewed the Standards and concluded that its corporate governance practices are generally consistent with the Standards, with the following significant exceptions:

- Swiss law requires that the external auditors be elected by the shareholders at the Annual General Meeting rather than by the audit committee or the board of directors.
- The Standards require that all equity compensation plans and material revisions thereto be approved by the shareholders. Consistent with Swiss law such matters are decided by our Board. However, the shareholders decide about the creation of new share capital that can be used in connection with equity compensation plans.
- Swiss law requires that the members of the compensation committee are elected by the shareholders rather than appointed by our Board.
- Swiss law requires shareholders to approve the maximum aggregate Board compensation and the maximum aggregate Executive Committee compensation.

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## Compensation

### Compensation at a glance

#### Board compensation

##### Compensation for the 2022-2023 term of office

The aggregate Board compensation for the 2022-2023 term of office (CHF 4,380,000) was within the maximum amount (CHF 4,400,000) approved at the 2022 Annual General Meeting (AGM).

| Compensation Exhibit 1: Board compensation (in CHF) for the 2022-2023 term of office |  |
| --- | --- |
| Aggregate compensation | 4,380,000 |
| Approved compensation amount | 4,400,000 |

##### Shareholding of Board members

All Board members held ABB shares at December 31, 2022, worth at least 300 percent of their 2022 Board compensation.

##### Compensation Exhibit 2: Board members shareholding (at December 31, 2022) in % of 2022 total compensation *

![BBOX]0.1254,0.4079,0.1599,0.4248[/BBOX]abb20221231p99i0

* Based on share price of CHF 32.48, the 2022 Long-Term Incentive Plan (LTIP) reference price, and shares held at December 31, 2022.

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## EC compensation

### Compensation structure as from 2022

| Compensation Exhibit 3: EC compensation structure as from 2022 |  |  |  |  |
| --- | --- | --- | --- | --- |
|  | Fixed compensation - base salary and benefits | Variable compensation - short-term incentive (AIP) | Variable compensation - long-term incentive (LTIP) | Wealth at risk/ Share ownership |
| Purpose and link to strategy | Facilitates attraction and retention of talented EC members; base salary compensates for the role and relevant experience; benefits protect against risks | Rewards annual Company, Business Area, functional and individual performance. Aligned with the Company's Annual Performance Plan | Rewards Company performance over a three-year period and encourages creation of long-term, sustainable value for shareholders. Aligned with the Company's Long-term Performance Plan | Aligns individual's personal wealth at risk directly to the ABB share price, and EC members' interests with those of shareholders in order to maintain focus on ABB's long-term success |
| Operation | Salary in cash, benefits in kind, and pension contribution | Annual awards, payable in cash after a one-year performance period | Annual grants in shares which may vest after three years, and are subject to performance conditions | Individuals are required to hold ABB shares |
| Opportunity level (as % of base salary) | Based on scope of responsibilities, personal experience and skillset | Minimum 0% Target 100% Maximum 150% | CEO Minimum 0% Target 150% Maximum 200% | CEO 500% of annual salary (net of taxes) |
|  |  |  | Other EC members* Minimum 0% Target 150% Maximum 200% | Other EC members 400% of annual salary (net of taxes) |
|  |  |  | * EC members with legacy employment contracts have a Target LTIP grant of 100 percent, and Max LTIP opportunity of 200 percent. The higher LTIP opportunity for the newer EC members is largely offset by lower fixed benefit costs. |  |
| Performance indicators | Changes to base salary take into account individual performance, future potential, broadening of responsibilities, and external benchmarking | CEO and Corporate Officers abb20221231p100i2 20% ■Group financial results ■Individual results | All EC members abb20221231p100i4 ■Average EPS ■Relative TSR ■Sustainability* | Exposure to ABB share price |
|  |  |  | * New for 2022 |  |
|  |  | Business Area Presidents abb20221231p100i6 20% ■Group financial results ■Business Area financial results ■Individual results |  |  |

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## Total EC compensation for 2022

The aggregate EC compensation for 2022 (CHF 36,035,073) was within the maximum amount approved at the 2021 AGM (CHF 40,000,000).

| Compensation Exhibit 4: EC compensation (in CHF) for 2022 |  |
| --- | --- |
| Effective aggregate compensation | 36,035,073 |
| Approved aggregate compensation | 40,000,000 |

The larger portion of the CEO's 2022 total compensation was delivered via variable compensation (56 percent represented by short-term incentive and long-term incentive). For the other EC members, on an aggregate level, variable compensation represented 51 percent of their 2022 compensation. The following chart shows the composition of the 2022 total compensation for the EC members as of December 31, 2022.

Compensation Exhibit 5: 2022 total compensation mix for the CEO and other EC members on aggregate level in CHF*

abb20221231p101i1

* Sum of percentage figures may differ from 100 percent due to rounding with one decimal.

## Realized variable compensation in 2022

Realized variable compensation considers the AIP award and the LTIP award at the end of their respective performance cycles, reflecting actual AIP payment and LTIP vesting, based on achievement of the respective plan performance measures.

The outcome of the 2022 AIP was above the target for most of the current EC members (118.3 percent on average), and the LTIP that vested in 2022 (2019 LTIP) exceeded the target level, with a final vesting level of 121.0 percent of target.

Compensation Exhibit 6: 2022 AIP outcome compared to target

![img-0.jpeg](img-0.jpeg)

Target AIP award corresponds to 100% of base salary.

* individual outcomes range from 67 to 150 percent

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**Compensation Exhibit 7: 2019 LTIP outcome compared to target**

![img-1.jpeg](img-1.jpeg)

### Realized total compensation in 2022

Considering the stated variable components above, the realized total compensation in 2022 was above the target total compensation for all EC members, driven by strong performance in 2022.

**Compensation Exhibit 8: Realized total compensation in 2022 compared to target total compensation**

![img-2.jpeg](img-2.jpeg)

Further details related to the realized compensation of each EC member and each compensation component are specified in Compensation Exhibit 44.

### Shareholding of EC members

EC members may not sell their shares (except to meet tax and social security costs) until they achieve the required shareholding level.

Four out of nine EC members have already met and exceeded their share ownership requirement. Two other members are close to achieving their requirement, while three members have been appointed to the EC in the last two years.

When considering the number of granted, but unvested, ABB shares of current EC members as per December 31, 2022, it is expected that most will meet or exceed their share ownership requirement in 2023, after vesting of the 2020 LTIP grant.

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Compensation Exhibit 9: EC shareholding compared to share ownership guideline*

![img-3.jpeg](img-3.jpeg)

* Based on share price of CHF 32.48, the 2022 LTIP reference price, and shares held at December 31, 2022. Future allocation of granted, but unvested, shares is based on target achievement level and relevant plan specific settlement: default settlement of the final 2020 LTIP, 2021 LTIP and 2022 LTIP awards is 100 percent in shares. Default settlement of replacement shares is 65 percent in shares (recipient may elect to receive 100 percent of the vested award in shares). The value of shares is compared against the annual base salary net of taxes, at December 31, 2022.

## Compensation governance

The Compensation Report is prepared in accordance with the Ordinance against Excessive Remuneration in Listed Stock Corporations, the Directive on Information relating to Corporate Governance of the SIX Exchange Regulation, the rules of the stock markets of Sweden and the United States, where ABB shares are also listed, and the principles of the Swiss Code of Best Practice for Corporate Governance of economiesuisse.

### ABB's Articles of Incorporation

ABB's Articles of Incorporation, approved by its shareholders, contain provisions on compensation which govern and outline the principles of compensation relating to our Board of Directors and Executive Committee. They can be found on ABB's Corporate Governance website new.abb.com/about/corporate-governance and are summarized below:

- **Compensation Committee** (Articles 28 to 31): The Compensation Committee (CC) is composed of a minimum of three members of the Board and are elected individually by the shareholders at the Annual General Meeting for a period of one year. It supports the Board in establishing and reviewing the compensation strategy, principles and programs, in preparing the proposals to the AGM on compensation matters and in determining the compensation of the Board and of the EC. The responsibilities of the CC are defined in more detail in the Board Regulations and Corporate Governance guidelines, which are also available on ABB's Corporate Governance website.

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- **Compensation principles** (Article 33): Compensation of the members of the Board consists of fixed compensation only, which is delivered in cash and shares (with an option to elect for shares only). Compensation of the members of the EC consists of fixed and variable compensation. Variable compensation may comprise short-term and long-term elements. Compensation may be paid in cash, shares or other benefits.
- **"Say-on-pay" vote** (Article 34): Shareholders approve the maximum aggregate amount of compensation of the Board for the following Board term and of the EC for the following financial year.
- **Supplementary amount for new EC members** (Article 35): If the maximum approved aggregate compensation amount is not sufficient to also cover the compensation of newly promoted/hired EC members, up to 30 percent of the last maximum approved aggregate amount shall be available as a supplementary amount to cover the compensation of such new EC members.
- **Loans** (Article 37): Loans may not be granted to members of the Board or of the EC.

## Authority levels in compensation matters

The CC acts in an advisory capacity while the Board retains the decision authority on compensation matters, except for the maximum aggregate compensation amounts of the Board and of the EC, which are subject to the approval of shareholders at the AGM. The authority levels of the different bodies on compensation matters are detailed in Compensation Exhibit 10. Shareholders also have a consultative vote on the prior year's Compensation Report at the AGM and a binding vote on the maximum aggregate amount of compensation of the Board for the following Board term and of the EC for the following financial year.

| Compensation Exhibit 10: Authority levels in compensation matters |  |  |  |  |
| --- | --- | --- | --- | --- |
|  | CEO | CC | Board | AGM |
| Compensation policy including incentive plans | ● | ● | ● |  |
| Maximum aggregate compensation amount for the EC |  | ● | ● | ● |
| CEO compensation |  | ● | ● |  |
| Individual compensation of other EC members | ● | ● | ● |  |
| Performance target setting and assessment of the CEO |  | ● | ● |  |
| Performance target setting and assessment of other EC members | ● | ● | ● |  |
| Shareholding requirements for CEO and other EC members |  | ● | ● |  |
| Maximum aggregate compensation amount for the Board |  | ● | ● | ● |
| Individual compensation of Board members |  | ● | ● |  |
| Compensation Report |  | ● | ● | Consultative vote |

● Proposal ● Recommendation ● Approval

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## Activities of the CC in 2022

The CC meets as often as business requires but at least four times a year. In 2022, the CC held seven meetings and performed the activities described in Compensation Exhibit 11. The CEO, the Chief Human Resources Officer (CHRO) and the Head of Performance and Reward also attend all or part of the CC meetings in an advisory capacity. The Chairman of the CC may decide to invite other executives upon consultation with the CEO, as appropriate. Executives do not attend the meetings or the parts of the meetings in which their own compensation and/or performance are being discussed. Details on meeting attendance of the individual CC members (number of meetings held during 2022, their average duration, as well as the attendance of the individual members) are provided in the section 'Board of Directors - Meetings and attendance' of 'Item 6. Directors, Senior Management and Employees'.

### Compensation Exhibit 11: CC activities during 2022

| Strategy |
| --- |
| Review of the Short-Term Incentive plan (Annual Incentive Plan / AIP) |
| Continued monitoring of link between sustainability and compensation |
| EC Compensation |
| Review of compensation benchmarking for EC members (bi-annual activity) |
| Review of recommendations on individual compensation for EC members |
| Review of the share ownership of EC members |
| Review and approval of compensation for new and departing EC members |
| Performance - relating to past performance cycle |
| Assessment of AIP awards for 2022 |
| Assessment of achievement of performance targets for LTIP awards vesting in 2022 |
| Performance - relating to forthcoming performance cycle |
| Setting of AIP design, measures and targets for 2022 |
| Consideration of forecast AIP outcomes for 2022 |
| Consideration of preliminary AIP measures and targets for 2023 |
| Setting of performance targets for LTIP grants in 2022 |
| Consideration of forecast achievement against performance targets for unvested LTIP grants |
| Compliance |
| Review of CC annual plan |
| Review of feedback from Stakeholder Engagement meetings |
| Regulatory and market updates |
| Review of the Compensation Report for publication |
| Preparation of maximum aggregate compensation for the Board to be submitted for AGM vote |
| Preparation of maximum aggregate compensation for the EC to be submitted for AGM vote |

The Chairman of the CC reports to the full Board after each CC meeting. The minutes of the CC meetings are available to the members of the Board.

The CC retains independent, external advisors for compensation matters. In 2022 PricewaterhouseCoopers (PwC) was mandated to provide consulting services related to executive compensation matters. In addition to its CC advisory role, PwC also provides human resources, tax and advisory services to ABB.

## Sustainability related considerations in ABB's compensation

There are several sustainability related considerations that play an important role in our compensation philosophy, of which one is to foster the link between the sustainability performance measures under our sustainability strategy and the variable compensation for our EC and senior management.

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## Impact of sustainability performance on variable compensation

One of the main subjects of the CC's recent decisions was to reinforce the link of ABB's sustainability strategy - and its associated ambitious targets for 2030 - to ABB's key variable compensation programs AIP and LTIP. These decisions resulted in a suite of changes which we believe keep ABB in line with leading compensation market practices and reinforce our commitment towards sustainability and long-term value creation.

With regard to the AIP, ABB recently enlarged the mandatory inclusion of sustainability performance measures in the individual component of the relevant AIP for its executives and further employees in the organization. All EC members have two or three sustainability goals (out of maximum of three) in the individual component of their AIP. While all EC members had an environment target in 2022, Business Area Presidents had a safety target, the CFO a governance target and other Corporate Officers a social target.

In regard to the LTIP granted to ABB's senior management, including the EC, a sustainability measure with a weighting of 20 percent forms part of the performance measures.

- For the 2022 LTIP, the sustainability measure is the Company's scope 1 and 2 greenhouse gas (GHG) emissions reduction at the end of the three-year performance period (2022-2024), compared to the 2019 baseline.
- The 2022 sustainability measure has also been applied to the 2023 LTIP, namely scope 1 and 2 GHG emissions reduction at the end of the three-year performance period (2023-2025), compared to the 2019 baseline.
- Details of the long-term GHG emissions reduction targets can be found in ABB's Item 4. Information on the Company-Sustainability activities.

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## Employee remuneration

ABB applies a holistic total remuneration approach, generally consisting of fixed base salary, variable performance-linked pay, pension contributions and benefits. The key programs of ABB's compensation structure and their strategic links to our employee value proposition and sustainability strategy are summarized in the Compensation Exhibit 12 below.

| Compensation Exhibit 12: Compensation structure for employees |  |  |
| --- | --- | --- |
| Program | Operation and purpose | Link to ABB's employee value proposition and sustainability strategy |
| Base Salary | Offered to all employees, compensating for the role and relevant experience of the employee while changes to base salary take into account individual performance, future potential and external benchmarking. | Facilitating attraction and retention of employees. |
| Short-Term Incentive | Offered to ca. 80 percent of ABB's workforce, rewarding annual performance. | Helping to establish strong alignment with the Company's Annual Performance Plan, which may include financial and/or sustainability targets. |
| Annual Incentive Plan (AIP) | Offered to ca. 45 percent of ABB's workforce (employees outside of the Sales & Marketing functions and Production areas). | Rewarding participants, where appropriate, for the achievement of financial and sustainability targets at Group and business level, and other organizational and individual goals. |
| Production Plans | Offered to ca. 25 percent of ABB's workforce (employees of Production areas). | Rewarding participants for the achievement of productivity and other operational targets at local business level. |
| Sales Incentive Plans | Offered to ca. 10 percent of ABB's workforce (employees of the Sales & Marketing functions). | Rewarding participants for the achievement of financial targets at a local business and individual level. |
| Long-Term Incentive | Offered to ca. 800 executives and senior leaders of ABB. | Encouraging the creation of long-term, sustainable value for shareholders, and delivery of long-term strategic goals. |
| Long-Term Incentive Plan (LTIP) with performance conditions | Offered to ca. 100 executives, who significantly impact ABB's performance and long-term success of the business. After completion of a three-year plan period and subject to the achievement of the plan specific performance measures, the award is earned and delivered. | Aligning with the Company's Long-Term Performance Plan, and facilitating retention of senior executives. |
| Restricted Shares without performance conditions | Offered to ca. 700 senior leaders and key talent who influence ABB's performance and long-term success of the business. After completion of a three-year plan period, the award is earned and delivered. | Facilitating retention of senior managers. Supports aligning employees' interests with the interests of external shareholders and maintaining focus on the long-term success of the Company. |
| Employee Share Acquisition Plan | Offered to ca. 100,000 employees in over 60 countries, providing the opportunity to purchase shares in ABB one year after the start of a plan, at a price which will be fixed at the beginning of each annual plan cycle, and become ABB shareholders. | Supports aligning employees' interests with the interests of external shareholders and maintaining focus on the long-term success of the Company. |
| Benefits (selection) | Offered to all employees by country, subject to the relevant local market practice. | Protecting against risks, and help facilitating the attraction and retention of employees. |
| Risk Benefits | These generally include retirement, insurance and healthcare plans. | Providing support for the employees and their dependents in case of retirement, disability or death. |
| Parental Leave | A global and gender-neutral program, offered to all employees, on the birth or adoption of a new child, which sets out a minimum standard on paid parental leave that supports all family types. The primary caregivers receive 12 weeks of paid leave and the secondary caregivers 4 weeks. | Aligning with the ABB value of 'Care'. |
| Employee Assistance | A global program, offered to all employees. The program supports the employee's emotional, practical and physical wellbeing by offering paid counseling on emotional health, family concerns and workplace concerns. | Aligning with the ABB value of 'Care'. |
| Car or Transportation Allowance | Offered to selected employees based on business need or market practice, with any car provision being progressively migrated to e-vehicles or transportation allowances which can be used to contribute to public transport, cycle or other transport needs. | Addressing changed needs related to mobility by providing greater flexibility to opt for more environmentally friendly solutions. |

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## Board compensation policy

The compensation policy for the members of the Board is designed to attract and retain experienced people to the Board of Directors. Compensation takes into account the responsibilities, time and effort required to fulfill their roles on the Board and its Committees, and it is generally positioned at levels similar to other Swiss listed companies of comparable size and complexity.

### Compensation structure

A fixed fee is payable for the Chairman, Vice-Chairman and members of the Board, and additional fees are payable for chairing or membership of a Board Committee, except for the Chairman and Vice-Chairman. Board members are paid for their service over an annual Board term that starts with their election at the AGM. Payment of fees is made in semi-annual installments in arrears.

Each fee is delivered in cash and shares. Board members are required to take 50 percent of their compensation in shares, but they may elect to receive all their fees in shares. The number of shares delivered is calculated prior to each semi-annual payment by dividing the monetary amount to which the Board members are entitled by the average closing price of the ABB share over a predefined 30-day period. The shares are subject to a three-year restriction period during which they cannot be sold, transferred or pledged. Any restricted shares are unblocked when the Board member leaves the Board.

## Implementation of Board compensation policy

### Board fees by role

As mentioned above, the levels and mix of Board members' compensation are regularly compared against the compensation of non-executive Board members from a cross-section of publicly traded companies in Switzerland that are part of the Swiss Market Index (i.e., Adecco, Alcon, Geberit, Givaudan, Holcim, Lonza, Richemont, SGS, Sika, Swisscom, Swiss Life, Zurich Insurance). Such a review was last undertaken in 2020, and there was no adjustment made to Board fees for the term of office from the 2022 AGM to the 2023 AGM, as set out in Compensation Exhibit 13. There has been no change to the individual Board fees since 2015.

| Compensation Exhibit 13: Board fees (in CHF) for the current term of office |  |
| --- | --- |
| Chairman of the Board (1) | 1,200,000 |
| Vice-Chairman of the Board (1) | 450,000 |
| Member of the Board | 290,000 |
| Additional committee fees: |  |
| Chairman of FACC (2) | 110,000 |
| Chairman of CC or GNC (2) | 60,000 |
| Member of FACC (2) | 40,000 |
| Member of CC or GNC (2) | 30,000 |

(1) The Chairman and the Vice-Chairman do not receive any additional committee fees.

(2) CC: Compensation Committee.

FACC: Finance, Audit and Compliance Committee.

GNC: Governance and Nomination Committee.

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## Total Board compensation

The compensation paid to the Board members for the calendar year 2022 and for the term of office from the 2022 AGM to the 2023 AGM are disclosed in Compensation Exhibit 14 below and in Compensation Exhibits 35 and 36, respectively, in the section 'Compensation tables and share ownership tables'.

At the 2022 AGM, the shareholders approved a maximum aggregate compensation amount of CHF 4.4 million for the 2022-2023 Board term. This amount equals the approved amount for the previous Board term, as the compensation per Board member remained unchanged. The Board compensation to be paid for the 2022-2023 Board term is CHF 4.38 million and is therefore within the amount approved by the shareholders.

| Compensation Exhibit 14: Board compensation (in CHF) |  |  |
| --- | --- | --- |
| Board of Directors | Board term |  |
|  | 2022-2023 | 2021-2022 |
| Number of members | 10 | 10 |
| Total compensation | 4,380,000 | 4,380,000 |
| Maximum aggregate compensation amount approved at previous AGM | 4,400,000 | 4,400,000 |

## Compensation of former Board members

In 2022, no payment was made to any former Board member.

## Compensation for services rendered

In 2022, ABB did not pay any fees or compensation to the members of the Board for services rendered to ABB other than those disclosed in this report.

## Shareholding of Board members

The members of the Board collectively owned less than 1 percent of ABB's total shares outstanding at December 31, 2022.

Compensation Exhibit 37 in the section 'Compensation tables and share ownership tables' shows the number of ABB shares held by each Board member at December 31, 2022, and 2021. Except as described in this Compensation Exhibit, no member of the Board and no person closely linked to a member of the Board held any shares of ABB or options in ABB shares.

Shares delivered to Board members as part of their compensation are blocked for a period of three years.

Compensation Exhibit 2 in the section 'Compensation at a glance' shows the wealth at risk for each Board member, comparing the value of shares held at December 31, 2022, with the total compensation for the 2022-2023 term of office. At December 31, 2022, all Board members held ABB shares worth at least 300 percent of their 2022 total ABB Board compensation.

## Executive Committee compensation policy

The EC compensation policy reflects ABB's commitment to attract, motivate and retain people with the talent necessary to strengthen its position as a leading global technology company.

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## Compensation structure

The compensation structure is designed to be competitive, based on performance, and to encourage executives to deliver outstanding results and create sustainable shareholder value without taking excessive risks. The EC compensation framework therefore balances fixed and variable compensation. Variable compensation is provided through short-term and long-term incentives based on strategic, financial and sustainability related targets, recognizing Group, Business Area and Corporate Function performance as well as individual performance.

This structure is linked to our strategy and is illustrated in Compensation Exhibit 3 in the section 'Compensation at a glance'.

A significant portion of total compensation depends on variable pay components, which require the achievement of challenging performance targets, in alignment with ABB Annual and Long-Term Performance Plans.

The target AIP award is defined as a percentage of base salary, currently 100 percent for all EC members. There is no award under the AIP if performance is below threshold on all financial and individual performance measures. When performance exceeds targets, the maximum award is capped at 150 percent of the targeted amount.

The target LTIP grant size is defined as a percentage of base salary, currently 150 percent for the CEO and 100 to 150 percent for all other EC members. There will be no award under the LTIP if performance is below threshold for all applicable measures. When performance exceeds targets, the maximum award is capped at 200 percent of the conditional grant.

From 2022, the policy for the mix of fixed and variable target compensation elements for new EC members has been adjusted to provide a greater emphasis on variable pay. This is achieved by increasing the target LTIP grant size from 100 percent to 150 percent of base salary, while reducing the level of pension contributions and other benefits. The reduction of pension contributions and other benefits substantially offsets the increase of the LTIP component, and represents a shift from guaranteed pay elements to pay at risk. Fixed compensation for new EC members represents 40 percent of their target total compensation, in comparison to 50 percent for long-standing EC members. Compensation Exhibit 15 below illustrates the policy change for new EC entrants (excluding the CEO), applying an entry level salary of CHF 700,000 and an incumbent age of 50 years to reflect the pension benefits.

Compensation Exhibit 15: Policy for mix of target compensation for EC members (excluding CEO) appointed prior to and after 2022\*

![img-4.jpeg](img-4.jpeg)

\* Note that, by exception, the new mix of target compensation has not been applied to the newly appointed Chief Communications and Sustainability Officer.

## Competitive positioning of compensation

The Board considers competitive market data when setting the compensation policy for the EC. It is also one of several factors in positioning the target compensation for individual EC members which include:

- individual profile of the EC member in terms of experience and skills;

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- market value of the role (compensation benchmarking).

EC compensation benchmark reviews are performed every other year. The CC conducted a comprehensive compensation benchmarking review in 2022, based on the three peer groups, similar to those which were used in 2020.

While each of these peer groups match the size, scope and complexity of ABB, and exclude companies from the financial services sector, the use of a specific peer group depends on the nature of the role and the source of relevance. For example, a stronger emphasis is placed on the Global Industry peer group for operational roles and in compensation design, and on the Pan-European Market peer group for functional roles. In all cases, the other two peer groups are used to stress test the findings of the primary peer group (see the summary in Compensation Exhibit 16 below).

| Compensation Exhibit 16: Peer groups for EC compensation benchmarking |  |  |  |
| --- | --- | --- | --- |
| Peer Group | Composition | Companies | Rationale |
| Global Industry | A tailored group of 16 global industry peer companies, matching the scale and complexity of ABB | AB SKF, Alstom, Airbus, Atlas Copco, Denso, Eaton, Emerson Electric, Honeywell, Mitsubishi Electric, Mitsubishi Heavy Industries, Schneider Electric, Schindler, Siemens, Thermo Fisher Scientific, Toshiba, Traton | Focus for Business Area roles and benchmarking compensation design |
| Pan-European Market | A panel of 50 cross-industry European companies, matching the scale and complexity of ABB | See footnote (1) | Focus for Corporate roles; continuity and stability of data points |
| Swiss Market | A panel of 16 Swiss headquartered companies, matching the scale and complexity of ABB | Adecco, Geberit, Givaudan, Glencore, Kuehne & Nagel, Holcim, Nestle, Novartis, Richemont, Roche, Schindler, SGS, Sika, STMicroelectronics, Swatch, Swisscom | Swiss location of headquarters |

(1) AB InBev, Adidas, Air Liquide, Associated British Foods, AstraZeneca, BAE Systems, Bayer, Bouygues, British American Tobacco, Compass Group, Continental, CRH, Danone, Endesa, EssilorLuxottica, Fresenius, Fresenius Medical Care, GlaxoSmithKline, HeidelbergCement, Heineken, Henkel, Hennes &amp; Mauritz, Holcim, Iberdrola, Imperial Brands, Industria de Diseno Textil, Jeronimo Martins SGPS, Kuehne &amp; Nagel, Linde, L'Oreal, Michelin, National Grid, Naturgy Energy Group, Nokia, Novartis, Novo Nordisk, OMV, Philips, Rio Tinto, Safran, Saint Gobain, Sanofi, SAP, Schneider Electric, Telefonaktiebolaget LM Ericsson, Thales, Umicore, Veolia Environment, Vinci and Vodafone.

It is the intention to position target compensation for individual EC members between the median and upper quartile of the relevant peer group(s) considering the other factors referenced above (e.g., the EC member's skills, experience, performance, potential).

The comparison of ABB to its compensation benchmarking peer groups shown in Compensation Exhibit 17 below is based on the latest review in 2022. This data shows that ABB is typically positioned at the median of key comparator indicators (market capitalization, revenues, and number of employees) against the Global Industry and Pan-European Market peer groups, and at the upper quartile of the Swiss Market peer group.

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| Compensation Exhibit 17: Comparison of ABB to compensation benchmarking peer groups (1) |  |  |  |
| --- | --- | --- | --- |
|  | Market capitalization (2)(3)(4) | Revenues (2)(4)(5) | Number of employees (5)(6) |
| ABB | 58.8 | 27.5 | 104,400 |
| Global Industry |  |  |  |
| Upper Quartile | 78.5 | 36.3 | 133,924 |
| Median | 49.0 | 31.1 | 98,118 |
| Lower Quartile | 16.6 | 17.0 | 77,017 |
| Pan-European Market |  |  |  |
| Upper Quartile | 75.4 | 40.0 | 124,435 |
| Median | 32.6 | 27.9 | 89,012 |
| Lower Quartile | 20.2 | 22.7 | 62,660 |
| Swiss Market |  |  |  |
| Upper Quartile | 65.1 | 38.2 | 85,017 |
| Median | 32.0 | 16.4 | 58,635 |
| Lower Quartile | 20.1 | 9.1 | 30,348 |

(1) Data for market capitalization, revenues and number of employees are sourced from Thomson Reuters.

(2) Market capitalization and revenues are in CHF millions.

(3) Market capitalization is averaged over a period of three months (June 20, 2022, until September 20, 2022).

(4) All currencies have been converted to CHF, where needed, applying full-year average currency exchange rates based on the period from July 1, 2021, to June 30, 2022.

(5) Revenues and number of employees as per last financial year prior to October 2022.

(6) Number of employees in full-time equivalent (FTE) unless FTE information was not available, then in total number of employees.

## Compensation elements

Compensation Exhibit 3 in the section 'Compensation at a glance' sets out the purpose and link to strategy, the operation, the opportunity level and the performance measures. In addition, this section provides further details for each compensation element.

### Fixed compensation - base salary and benefits

#### Purpose and link to strategy

Facilitate the attraction and retention of talented EC members; base salary compensates for the role and relevant experience; benefits protect against risks.

Base salary is paid in cash. Benefits consist primarily of retirement, insurance and healthcare plans that are designed to provide a reasonable level of support for the employees and their dependents in case of retirement, disability or death.

#### Opportunity levels

Base salary is set with reference to the scope of responsibilities, personal experience and skills, and competitive market data.

Benefit plans are set in line with the local competitive and legal environment and are, at a minimum, in accordance with the legal requirements of the respective country.

#### Performance measures and weighting

Base salary is adjusted considering the factors set out under opportunity levels above, the executive's performance as well as their future potential.

### Variable compensation - Annual Incentive Plan (AIP)

#### Purpose and link to strategy

The AIP is designed to reward EC members for the Group's results, the results of their Business Area or Corporate Function and their individual performance over a time horizon of one year, and is aligned with the Annual Performance Plan approved by the Board.

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## Opportunity levels

The AIP opportunity levels for the EC are 100 percent of base salary at target with a maximum opportunity of 150 percent.

## Performance measures and weighting

The AIP structure is designed to incentivize operational delivery and underpin our performance culture. As such, it is focused on key priorities, with a maximum of five measures.

- A common Group financial measure with a 20 to 25 percent weighting.
- Up to three Group or Business Area financial measures, with a 55 to 60 percent weighting.
- An individual measure with a 20 percent weighting. This individual component is informed by two or three goals which may include a combination of quantitative and qualitative goals.
  - From 2022, at least two of these goals relate to sustainability.
  - The final outcome against this individual measure is a discretionary judgment based on the combined performance against all individual goals.

A summary of the composition and total weighting of the measures for all EC members is set out in Compensation Exhibit 18.

| Compensation Exhibit 18: Composition and weighting of AIP measures for EC members |  |  |
| --- | --- | --- |
|  | CEO and Corporate Officers (1) | Business Area Presidents |
| Common Group financial measure | 25% | 20% |
| Other Group financial measures | Up to three measures 55% | n.a. |
| Business Area financial measures | n.a. | Up to three measures 60% |
| Individual measure | Includes up to three goals (minimum two sustainability related) 20% | Includes up to three goals (minimum two sustainability related) 20% |
| Total | 100% | 100% |

(1) Corporate Officers include Chief Financial Officer, Chief Human Resources Officer, General Counsel and Chief Communications and Sustainability Officer.

## Other design features

For each performance measure, a target will be set corresponding to the expected level of performance that will generate a target (100 percent) award. For each measure except the individual measure, a minimum level of performance, below which there is no award (threshold) and a maximum level of performance, above which the award is capped at 150 percent of the target (maximum), will also be defined.

The payment schedule for financial AIP measures is calculated mathematically as summarized in the following Compensation Exhibit 19. For Group and Business Area financial measures, the award percentage achievements between threshold and target, as well as between target and maximum are determined by linear interpolations between these award points.

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| Compensation Exhibit 19: Payment schedule for the AIP of EC members |  |  |  |  |
| --- | --- | --- | --- | --- |
| Level of performance | Below threshold | Threshold | Target | Maximum |
| Award achievement per financial measure | 0% | >0% | 100% | 150% |

The outcomes of the financial AIP measures are subject to appropriate discretionary upward or downward adjustments by the CC for non-operational items and other adjustment principles agreed with the Board, if and to the extent the CC considers this appropriate.

In addition, the CC/Board have discretionary authority to adjust the results and/or the AIP award. This specifically includes a downwards adjustment based on safety performance, including fatalities.

### Variable compensation - Long-Term Incentive Plan (LTIP)

#### Purpose and link to strategy

Rewards the achievement of predefined performance targets over a three-year period. Encourages the creation of long-term, sustainable shareholder value creation and is aligned with the Company's Long-Term Performance Plan approved by the Board.

#### Opportunity levels

For the CEO, the LTIP opportunity levels are 150 percent of base salary at target, with a maximum opportunity of 300 percent of base salary.

As per the policy change announced in last year's report, the target and maximum opportunity levels for EC members newly appointed from 2022 are 150 percent and 300 percent of base salary, respectively. This is designed to provide an increased focus on variable, performance related compensation and is mostly offset by a reduction in costs related to pension and other benefits.

The LTIP opportunity levels for EC members appointed prior to 2022 are 100 percent of base salary at target, with a maximum opportunity of 200 percent of base salary. This has also been applied, by exception, to the newly appointed Chief Communications and Sustainability Officer in line with external market data, reflecting the scope of the role.

The previously existing discretionary option to increase or decrease individual target grants under the LTIP for EC members, except the CEO, has been discontinued as from 2022, except for the option to make no grants in certain circumstances.

#### Performance measures and weighting

The LTIP has, from 2022, three performance measures:

#### Earnings Per Share (EPS)

- Achievement against this measure is determined by ABB's average EPS over a three-year period. The average EPS result is calculated from the sum of the EPS for each of the three relevant years, divided by three.
- EPS is defined as "Diluted earnings per share attributable to ABB shareholders, calculated using Income from continuing operations, net of tax, unless the Board elects to calculate using Net income for a particular year".
- Appropriate threshold (zero), target (100 percent) and maximum (200 percent) award points are reviewed by the CC on an annual basis.
- Performance target and award points are set using the Company's Long-term Performance Plan and are calibrated with an independent "outside-in" view, taking into account the growth expectations, risk profile, investment levels and profitability levels that are typical for the industry.

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- Adjustments to the outcome of the EPS achievement level may be considered for items which are not part of, or the result of, the normal course of business operation and/or which were not considered, either by way of inclusion or exclusion, for the target-setting of a specific LTIP launch. Only the net impact of such adjustments over the vesting period of the respective LTIP grant will be considered.

# Total Shareholder Return (TSR)

- Achievement against this measure is determined by ABB's relative TSR performance against a defined peer group.
- The constituents of the peer group and the appropriate threshold (zero), target (100 percent) and maximum (200 percent) award points are reviewed by the CC on an annual basis.
- The TSR calculations are made for the reference period beginning in the year of the conditional grant of the shares and ending three years later. The evaluation is performed by an independent third party.
- For grants from 2022, the award curve for the TSR measure has been adjusted to become more challenging. The threshold point for awards, above which vesting starts, has been moved from the 25th percentile to the 50th percentile (P50) of the TSR peer group, i.e., there is no vesting for performance below P50.
- Vesting for P50 achievement remains at 100 percent of target, and vesting for a 75th percentile (P75) achievement level remains at 200 percent of target (capped). There is a linear vesting for an achievement between P50 and P75 (100 to 200 percent of target).

# Sustainability

- The Board determines on an annual basis the LTIP specific sustainability measure(s), as well as related target(s) and award points, to incentivize material progress towards our 2030 sustainability strategy commitments.
- Appropriate threshold (zero), target (100 percent) and maximum (200 percent) award points are reviewed and approved by the CC on an annual basis.
- Adjustments to the outcome of the sustainability achievement may be considered for items which are not part of, or the result of the normal course of business operation and/or which were not considered, either by way of inclusion or exclusion, for the target-setting of a specific LTIP launch. Only the net impact of such adjustments over the vesting period of the respective LTIP grant will be considered.

The relative weighting of measures for the LTIP is as follows:

- EPS measure: 50 percent
- TSR measure: 30 percent
- Sustainability measure: 20 percent

# Other design features

The number of shares to be granted is determined by dividing the grant value by the average share price over the period of 20 trading days prior, and 20 trading days after, the date of publication of ABB's full year financial results. Settlement of the LTIP is three years after grant, subject to achievement of performance conditions, defined prior to grant.

The actual settlement of shares awarded will vary between zero and 200 percent of the shares conditionally granted, according to achievement against the performance measures stated above.

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The vesting schedule for the LTIP is shown in the following Compensation Exhibit 20. The award percentage achievements between threshold and target, as well as between target and maximum, are determined by linear interpolations between these award points.

| Compensation Exhibit 20: Vesting schedule for the LTIP of EC members* |  |  |  |  |
| --- | --- | --- | --- | --- |
| Level of performance | Below threshold | Threshold | Target | Maximum |
| Award achievement per measure | 0% | >0% | 100% | 200% |

* For the TSR measure, the threshold point equals the target point.

The CC has the discretion to adjust the formulaic LTIP vesting outcome, to reflect the overall performance of ABB over the performance period.

Default settlement of the final LTIP award is 100 percent in shares, and beginning with grants made conditionally in 2020, an automatic sell-to-cover is in place for employees who are subject to withholding taxes.

LTIP shares are subject to malus and clawback rules, which include illegal activities, any financial misstatement and reputational damage that have a material impact on ABB Ltd or one of its subsidiaries. This means that the Board may decide not to award any unsettled or unvested incentive compensation (malus), or may seek to recover long-term incentive compensation that has been settled in the past (clawback). Clawback applies for a period of up to five years following the originally scheduled plan specific vesting date.

The CC also has the ability to suspend the delivery of awards if it is likely that the Board will determine that the malus or clawback provisions may potentially apply (e.g., if the employee is subject to an external investigation).

For LTIP grants from 2021, there is no automatic accelerated vesting of awards in the event of a change of control.

For LTIP grants from 2022, participants are entitled to receive a cash amount (a 'dividend equivalent payment') on each vested award share that is equal to the total dividends per share paid by the Company on the ABB Ltd share between the grant date and the delivery date of the vested award. This is offset by reducing other benefits by a similar level over the life of the share grant.

#### **Total wealth at risk / Share ownership**

##### **Purpose and link to strategy**

To align EC members' personal wealth directly with the interests of shareholders in order to maintain focus on the long-term success of the Company.

##### **Share ownership program**

EC members are required to retain all shares vested from the Company's LTIP and any other share-based compensation until their share ownership requirement is met. In circumstances where there is a withholding tax obligation, the number of shares received will be considered to be the number of shares vested minus the shares sold under the default sell-to-cover facility.

The share ownership requirement is equivalent to a multiple of the EC member's annual base salary, net of taxes (see Compensation Exhibit 3 in the section 'Compensation at a glance'). These share ownership requirements are aligned with market practice and result in a wealth at risk for each EC member which is aligned with shareholder interests.

Only vested shares owned by an EC member and their spouse count for the comparison of the actual share ownership against the share ownership requirement.

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The CC reviews the status of EC share ownership on an annual basis. It also reviews the required shareholding amounts annually, based on salary and expected share price developments.

#### Notice period, severance provisions and non-competition clauses

Employment contracts for EC members include a notice period of 12 months, during which they are entitled to their annual base salary, short-term incentive and benefits. In accordance with Swiss law and ABB's Articles of Incorporation, the contracts for the EC members do not allow for any severance payment.

Non-compete agreements have been entered into with the CEO and all other EC members for a period of 12 months after their employment. Compensation for such agreements, if any, may not exceed the EC member's last total annual cash remuneration (comprising of base salary, short-term incentive and benefits).

### Implementation of EC compensation policy

#### Overview

EC members received total compensation of CHF 36.0 million in 2022, compared with CHF 39.2 million in 2021, as summarized in Compensation Exhibit 21 below and presented in detail in Compensation Exhibits 38 and 39.

At the 2021 AGM, the shareholders approved a maximum aggregate compensation amount of CHF 40 million for the EC for the year 2022. The EC total compensation for 2022 amounted to CHF 36.0 million and is therefore within the approved amount (see Compensation Exhibit 21).

| Compensation Exhibit 21: Total compensation of EC members (monetary values in CHF) (1) |  |  |
| --- | --- | --- |
|  | Calendar year |  |
|  | 2022 | 2021 |
| Number of active EC members | 9 | 9 |
| Base salaries | 8,341,720 | 8,713,406 |
| Pension benefits | 4,334,281 | 4,795,259 |
| Other benefits | 4,894,480 | 4,819,803 |
| Total fixed compensation | 17,570,481 | 18,328,468 |
| Short-term incentives | 9,879,882 | 12,144,280 |
| Long-term incentives (fair value at grant) | 8,584,710 | 8,684,298 |
| Total variable compensation | 18,464,592 | 20,828,578 |
| Total compensation | 36,035,073 | 39,157,046 |
| Maximum aggregate compensation approved at AGM | 40,000,000 | 39,500,000 |

(1) For an overview of compensation by individual and component, please refer to Compensation Exhibits 38 and 39 in the section 'Compensation tables and share ownership tables' below. An overview of 2022 realized compensation by individual is provided in Compensation Exhibit 44 in the same section.

The total compensation for the EC in 2022 decreased by 8.0 percent compared to 2021. This mainly reflects the impact of the lower 2022 AIP awards compared to 2021. The overall lower pension benefits for 2022 compared to 2021 are informed by the application of our new compensation structure for new EC members where pension benefits and other benefits have been lowered and replaced by an increased LTIP grant size level, to provide higher emphasis on performance instead of guaranteed compensation.

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## Compensation mix

The ratio of fixed to variable components in any given year depends on the performance of the Company and individual EC members against predefined performance targets.

Compensation Exhibit 5 in the section 'Compensation at a glance' shows the composition of the 2022 total annual compensation for the CEO and for other current EC members on an aggregate level, specifying the split of its five compensation components.

In 2022, the variable compensation of the CEO was 56 percent of his total annual compensation (previous year: 61 percent). For the other EC members, the variable compensation was 51 percent on average (previous year: 54 percent). The reductions in 2022 from the prior year reflect the lower variable pay awards.

Note that compensation paid in 2022 for former EC members is not included in Compensation Exhibit 5. This can be found in Compensation Exhibit 38.

## Compensation elements - 2022 highlights

### Base salary

The salaries of the EC members have been reviewed as part of the regular compensation review. As a result, the Board and the CC decided to increase the salaries of five of the nine EC members in place in March 2022. The base salary of Björn Rosengren was increased by 5.0 percent to CHF 1,785,000, Timo Ihamuotila by 2.1 percent to CHF 990,000, Carolina Granat by 3.6 percent to CHF 725,000, Peter Terwiesch by 3.8 percent to CHF 830,000 and Morten Wierod by 12.5 percent to CHF 900,000. These salary changes were made to reward exceptional performance of these EC members, ensure their total compensation opportunity does not fall behind their relevant target market position, and in the case of Morten Wierod, to reflect a broadening of responsibilities.

Considering that the other four EC members in place in March 2022 had no salary adjustments, this corresponded to a 3.25 percent increase on annual base salaries for the EC members post March 2022.

### Annual Incentive Plan (AIP) - design

Under the AIP, all members of the EC had a common Group measure, with a 20 to 25 percent weighting. In 2022, this was Group Operational EBITA margin, applied to create a greater focus on profitability.

In addition to the common Group measure, the CEO and the Corporate Officers shared the same Group measures, including Revenues, Free Cash Flow and Productivity growth, with a total weighting of 55 percent.

For Business Area Presidents, up to three measures were tailored to business imperatives, with a total weighting of 60 percent. While all Business Area Presidents shared one measure (Operational EBITA margin, with 25 to 30 percent), the second and third measure varied, including Productivity growth, Revenues, Operational Free Cash Flow, Order Gross Margin and Operational revenues gross profit productivity growth, for the remaining 25 to 30 percent.

Compensation Exhibit 22 below shows the composition and weighting of the financial measures applied in 2022 for all EC members under their AIP, specified by their roles. Definitions of the financial measures applied for all EC members are set out in the Compensation Exhibit 23.

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# **Compensation Exhibit 22: Composition and weighting of 2022 AIP measures for EC members**

|  | Focus of measure | CEO and Corporate Officers (1) | President Electrification | President Motion | President Process Automation | President Robotics & Discrete Automation |
| --- | --- | --- | --- | --- | --- | --- |
| Common Group financial measure | Bottom line earnings | Op EBITA margin 25% | Op EBITA margin 20% | Op EBITA margin 20% | Op EBITA margin 20% | Op EBITA margin 20% |
| Other Group financial measures | Top line output | Revenues 25% |  |  |  |  |
|  | Cash generation | Free Cash Flow 20% |  |  |  |  |
|  | Bottom line output | Productivity growth 10% |  |  |  |  |
| Business Area financial measures | Bottom line earnings |  | Op EBITA margin 30% | Op EBITA margin 25% | Op EBITA margin 30% | Op EBITA margin 30% |
|  | Cash generation |  | Op Free Cash Flow 20% |  |  |  |
|  | Top line input |  |  | Revenues 25% |  | Revenues 20% |
|  | Bottom line profit |  |  |  | Order Gross Margin 20% |  |
|  | Bottom line output |  |  |  | Operational revenues gross profit productivity growth 10% |  |
|  | Bottom line output |  | Productivity growth 10% | Productivity growth 10% |  | Productivity growth 10% |
| Individual measure | CO 2 emissions, Female leaders, Cost discipline, Safety, Strategy implementation, Internal controls | Function-specific 20% |  |  |  |  |
|  | CO 2 emissions, Safety, Female graduate recruitment, M&A, Digital revenue growth, Strategy implementation |  | Business-specific 20% | Business-specific 20% | Business-specific 20% | Business-specific 20% |
| Total |  | 100% | 100% | 100% | 100% | 100% |

(1) Corporate Officers include Chief Financial Officer, Chief Human Resources Officer, General Counsel and Chief Communications and Sustainability Officer

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# **Compensation Exhibit 23: Definition of quantitative measures, applied in 2022**

| Measure | Description |
| --- | --- |
| Operational EBITA margin (%) | Operational EBITA, which is Operational earnings before interest, tax and acquisition-related amortization, as a percentage of Operational revenues, which is total revenues adjusted for foreign exchange/commodity timing differences in total revenues |
| Revenues | Amount of consolidated revenues recognized during the year in accordance with USGAAP |
| Free Cash Flow (FCF) | Free Cash Flow is calculated as net cash provided by operating activities adjusted for: (i) purchases of property, plant and equipment and intangible assets, and (ii) proceeds from sales of property, plant and equipment |
| Productivity growth (%) | Productivity is calculated as 12-month rolling revenues over the average number of total workforce in the last three months. Growth is the change of productivity over the same period a year earlier, represented as a percentage change |
| Operational Free Cash Flow (OFCF) | Cash flows from operating activities excluding cash paid for interest and taxes and including (i) purchases of property, plant and equipment and intangible assets, and (ii) proceeds from sales of property, plant and equipment |
| Order Gross Margin (%) | Gross profit on orders (calculated by deducting total costs to complete the order from the total revenue value of the order) divided by the total revenue values of the order as calculated in the final contract offering to the customer |
| Operational revenues gross profit productivity growth (%) | Operational revenues gross profit productivity is calculated as the 12-month rolling operational revenues gross profit divided by the average number of total workforce in the last three months. Where operational revenues gross profit is calculated as gross profit (as defined under USGAAP) adjusted for the following non-operational items to the extent that they are included within the USGAAP gross profit amount: (i) foreign exchange/commodity timing differences, (ii) acquisition-related amortization, (iii) restructuring, related and implementation costs, (iv) changes in obligations related to divested businesses, (v) changes in pre-acquisition estimates, (vi) acquisition- and divestment-related expenses and integration costs, (vii) other income/expense relating to the Power Grids joint venture and (viii) certain other non-operational items. Growth is the change in productivity over the same period a year earlier, represented as a percentage change |

All EC members also had an individual measure with a 20 percent weighting. This individual component was informed by up to three goals, which included a combination of quantitative and qualitative goals. From 2022, at least two of these goals relate to sustainability, e.g., GHG emissions, safety or female leader targets. The final outcome against the individual measure was based on a discretionary judgment of the combined performance against all three goals.

- In 2022, all EC members had a common environmental goal - namely the reduction of GHG emissions. For the CEO and the Corporate Officers, this related to Group level and for Business Area Presidents to their respective Business Areas.
- For the CEO and Corporate Officers, the other goals were linked to the level of Female leaders, Cost discipline, Safety, Strategy implementation, or Internal controls.
- Business Area Presidents continued to have a safety goal. Their other goals related to Female graduate recruitment, M&A, Digital revenue growth, or Strategy implementation.

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Outcomes were subject to appropriate adjustments for some non-operational items and other adjustment principles agreed with the Board.

#### **2022 Annual Incentive Plan - achievements**

The average award for the current EC members under the AIP for 2022 was 118.3 percent (out of a maximum 150 percent), compared to 143.4 percent in 2021. The 2022 AIP outcomes were net of the application of adjustments for some non-operational items, aligned with adjustment principles agreed with the Board. These led to adjustments of awards for three EC members, ranging from a five percent decrease to a 15 percent increase of awards.

##### **Common Group measure**

Achievement against the 2022 Group Operational EBITA margin measure, which applied to all EC members, with a weighting of 20 percent for the Business Areas Presidents and 25 percent for the CEO and Corporate Officers, was 150 percent (2021: 150 percent). Therefore the weighted achievement related to the common Group measure was 30.0 percent for the Business Area Presidents, and 37.5 percent for the CEO and the Corporate Officers.

##### **Other Group measures**

The outcome related to the other three Group measures, applied to the CEO and Corporate Officers, was at 95.5 percent. Achievement against the Group Revenue target, with a 25 percent weighting, was 150 percent (2021: n.a.). Achievement against the Free Cash Flow target, with a weighting of 20 percent, was zero percent (2021: 150 percent). Achievement against the Productivity growth target, with a weighting of 10 percent, was 150 percent (2021: 150 percent). Therefore the compound achievement related to these three Group measures was 52.5 percent.

##### **Business Area measures**

Up to three quantitative business measures were applied to the Business Area Presidents, with weightings from 10 to 30 percent, and the outcomes ranged from zero to 150 percent of target (2021: 119 to 150 percent).

Achievement against the Operational EBITA margin measure ranged from zero to 150 percent for all Business Areas (2021: 119 to 150 percent), Revenues 49.1 to 150 percent for the two Business Areas applicable (2021: n.a.), Operational Free Cash Flow 40.5 percent (2021: 150 percent), Order Gross Margin 150 percent (2021: n.a.), Productivity growth zero to 150 percent for three Business Areas applicable (2021: 150 percent) and Operational revenues gross profit productivity growth 150 percent (2021: n.a.). Therefore the compound weighted achievement related to these Business Area measures ranged from 12.4 to 90.0 percent (2021: 80.8 to 90.0 percent).

##### **Individual measure**

The assessed achievement of the goals informing the outcome of the individual component for EC members, with a weighting of 20 percent, inclusive of the achievement of the sustainability goals (Safety, Female leader and emissions targets), ranged from 100 to 150 percent (2021: 100 to 150 percent).

These outcomes are summarized in Compensation Exhibit 24.

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# ---**Compensation Exhibit 24: 2022 AIP outcomes for the CEO and the Corporate Officers (rounded)**

![document icon]() abb20221231p122i1

# **2022 AIP outcomes for the Business Area Presidents (rounded)**

![document icon]() abb20221231p122i0

# ---**Overall outcomes**

The overall average award under the 2022 AIP for the entire current EC was 118.3 percent of target (2021: 143.4 percent) with a range from 67.4 percent (lowest achievement) to 150 percent of target (highest achievement). This compared to a range of 140.0 to 145.0 percent in 2021.

Compensation Exhibit 25 below provides information related to the overall actual 2022 AIP outcomes, in comparison to the target 2022 AIP for all current EC members.

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**Compensation Exhibit 25: Overview of targeted and realized 2022 AIP values**

|  | Common Group measure |  |  | Other Group measures |  |  | Business Area measures |  |  | Individual measure |  |  | Total AIP outcome percentage (in % of target) | Target AIP award (in CHF) | Actual AIP award (in CHF) (1) |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | Achievement | Weighting | Outcome | Achievement | Weighting | Outcome | Achievement | Weighting | Outcome | Achievement | Weighting | Outcome |  |  |  |
| Björn Rosengren | 150.0% | 25.0% | 37.5% | 95.5% | 55.0% | 52.5% | n.a. | n.a. | n.a. | 150.0% | 20.0% | 30.0% | 120.0% | 1,785,000 | 2,142,000 |
| Timo Ihamuotila | 150.0% | 25.0% | 37.5% | 95.5% | 55.0% | 52.5% | n.a. | n.a. | n.a. | 150.0% | 20.0% | 30.0% | 120.0% | 990,000 | 1,188,000 |
| Carolina Granat | 150.0% | 25.0% | 37.5% | 95.5% | 55.0% | 52.5% | n.a. | n.a. | n.a. | 150.0% | 20.0% | 30.0% | 120.0% | 725,000 | 870,000 |
| Andrea Antonelli (2) | 150.0% | 25.0% | 37.5% | 95.5% | 55.0% | 52.5% | n.a. | n.a. | n.a. | 125.0% | 20.0% | 25.0% | 115.0% | 583,334 | 670,833 |
| Karin Lepasoon (3) | 150.0% | 25.0% | 37.5% | 95.5% | 55.0% | 52.5% | n.a. | n.a. | n.a. | 100.0% | 20.0% | 20.0% | 110.0% | 150,000 | 165,000 |
| Sami Atiya | 150.0% | 20.0% | 30.0% | n.a. | n.a. | n.a. | 20.6% | 60.0% | 12.4% | 125.0% | 20.0% | 25.0% | 67.4% | 800,000 | 539,200 |
| Tarak Mehta | 150.0% | 20.0% | 30.0% | n.a. | n.a. | n.a. | 139.7% | 60.0% | 83.8% | 150.0% | 20.0% | 30.0% | 143.8% | 930,000 | 1,337,340 |
| Peter Terwiesch | 150.0% | 20.0% | 30.0% | n.a. | n.a. | n.a. | 150.0% | 60.0% | 90.0% | 150.0% | 20.0% | 30.0% | 150.0% | 830,000 | 1,245,000 |
| Morten Wierod | 150.0% | 20.0% | 30.0% | n.a. | n.a. | n.a. | 106.0% | 60.0% | 63.6% | 125.0% | 20.0% | 25.0% | 118.6% | 900,000 | 1,067,400 |
| Total |  |  |  |  |  |  |  |  |  |  |  |  |  | 7,693,334 | 9,224,773 |

(1) EC member as of March 1, 2022. Target and Actual AIP awarded are prorated for the time employed in year 2022.

(2) EC member as of October 1, 2022. Target and Actual AIP awarded are prorated for the time employed in year 2022.

(3) Represents accrued AIP award for the year 2022, which will be paid in 2023, after the publication of ABB's financial results.

## Long-Term Incentive (LTIP)

### 2022 LTIP grants

The estimated value at grant of the share-based grants to EC members under the 2022 LTIP was CHF 8.6 million, compared with CHF 8.7 million in 2021.

The reference price for the 2022 LTIP grant which was used to determine the number of shares granted to participants was CHF 32.48.

The 2022 LTIP is based on three performance measures: ABB's EPS, ABB's TSR and a sustainability measure.

Targets and award points under the EPS measure are considered as commercially sensitive information and will only be disclosed retrospectively after the end of the relevant LTIP performance period.

As in the previous year, ABB made the achievement of the EPS threshold point more challenging by further decreasing the range between the EPS target and award points (range reduced from plus/minus 14 percent of target for 2021 LTIP to plus/minus 11 percent of target for the 2022 LTIP) to reflect the perceived EPS volatility during the performance period.

The peer companies approved by the Board to determine ABB's relative TSR performance for the 2022 LTIP were: 3M, Danaher, Eaton, Emerson Electric, General Electric, Honeywell Intl., Holcim, Legrand, Mitsubishi Electric, Raytheon Technologies, Rockwell, Rolls Royce, Schneider Electric, Siemens and Yokogawa. These were selected as they are comparable in their size, scope and complexity to ABB and compete in markets that are key to ABB. They also provide an appropriate and very challenging set of peers, and influenced the vesting point setting accordingly.

For 2022, the sustainability measure was the Company's scope 1 and 2 GHG emissions reduction at the end of the three-year performance period (2022-2024), compared to the 2019 baseline, which was defined without the divested Power Grids business. The approved sustainability target and award points for the 2022 LTIP are illustrated in Compensation Exhibit 26 below.

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# **Compensation Exhibit 26: Sustainability target and award points for the 2022 LTIP**

| Measure | Weighting | Threshold | Target | Maximum |
| --- | --- | --- | --- | --- |
| ABB scope 1&2 CO 2 equivalent emissions reduction compared to 2019 baseline | 20% | 60% | 70% | 80% |

Below threshold point: no award;

At target point: 100 percent award;

At or above maximum point: capped at 200 percent award;

Linear interpolations between award points.

The 2022 LTIP target and award points are illustrated in Compensation Exhibit 27.

# **Compensation Exhibit 27: 2022 LTIP target and award points**

| Measure | Weighting | Threshold | Target | Maximum |
| --- | --- | --- | --- | --- |
| Average EPS | 50% | Target point -11% | Disclosed after performance period | Target point +11% |
| Relative TSR | 30% | 50th percentile |  | 75th percentile |
| Reduction of scope 1&2 CO 2 equivalent emissions compared to 2019 baseline | 20% | 60.0% | 70.0% | 80.0% |

Below threshold point: no award;

At target point: 100 percent award;

At or above maximum point: capped at 200 percent award;

Linear interpolations between award points;

The average EPS target is not prospectively disclosed for reasons of commercial sensitivity.

# **2023 LTIP grants**

The sustainability measure applied to the 2022 LTIP will also be applied in 2023, namely the scope 1 and 2 GHG emissions reduction at the end of the three-year performance period (2023-2025), compared to the 2019 baseline. Details of the long-term GHG emissions reduction targets can be found in ABB's Item 4. Information on the Company-Sustainability activities.

The targets and award points have been structured to reflect ABB's progress to date, its long-term ambitions, and that as the targets get higher, the overall stretch to achieve them is even more challenging.

- The threshold value of 75.0 percent emissions reduction versus the 2019 baseline is significantly above the mid-term target of 70 percent proposed at the 2023 AGM.
- The target value of 77.5 percent is in line with ABB's long-term forecast for 2025.
- The maximum value of 80.0 percent is in line with our 2030 Sustainability Strategy target. If it is achieved in 2025, it would mean we have delivered our target five years ahead of our commitment.

# **Compensation Exhibit 28: Sustainability target and award points for the 2023 LTIP**

| Measure | Weighting | Threshold | Target | Maximum |
| --- | --- | --- | --- | --- |
| ABB scope 1&2 CO 2 equivalent emissions reduction compared to 2019 baseline | 20% | 75.0% | 77.5% | 80.0% |

Below threshold point: no award;

At target point: 100 percent award;

At or above maximum point: capped at 200 percent award;

Linear interpolations between award points.

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## 2019 LTIP - achievements

The final number of shares vesting under the 2019 LTIP grant in 2022 was determined based on the achievement level against the predefined TSR and EPS targets.

The relative ranking of ABB's TSR measure against the predefined peer group of companies for the 2019 LTIP sat on the 86$^{th}$ percentile, which led to a vesting level of 200.0 percent (previous year: 114.8 percent) out of a potential of 200 percent.

The three-year average EPS amounted to USD 0.86, which led to a vesting level of 42.0 percent (previous year: zero percent) out of a potential 200 percent, net of adjustments for items considered outside the normal course of business operation and/or which were not considered in the target setting of the 2019 LTIP. On this occasion, adjustments were made for the impact of divestments, M&A related integration costs and restructuring costs.

In line with our commitment to retrospectively disclose the EPS performance targets for vested LTIP awards, the three target and award points (threshold, target and maximum) and the actual achievement for the adjusted 2019 EPS performance measure are shown in Compensation Exhibit 29 below.

The average weighted achievement level of the two performance measures under the 2019 LTIP was 121.0 percent (out of a maximum 200 percent), as specified in Compensation Exhibit 29.

| Compensation Exhibit 29: Target and award points and achievement levels of 2019 LTIP performance measures |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- |
| Measure | Weighting | Threshold | Target | Maximum | Actual |
| Relative TSR | 50% | 25 th percentile | 50 th percentile | 75 th percentile | 86 th percentile |
| Achievement level |  | 0% | 100% | 200% | 200.0% |
| Average EPS (USD) | 50% | 0.75 | 1.00 | 1.25 | 0.86 |
| Achievement level |  | 0% | 100% | 200% | 42.0% |
| Award as percentage of target (capped at 200%) |  |  |  |  | 121.0% |

## Overview of disclosed and realized 2019 LTIP value

The following table compares the previously disclosed 'fair value' of the grant to each EC member and the actual value of the grant at the time of vesting. The following Compensation Exhibit 30 shows such comparison for the 2019 LTIP, that vested in 2022.

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# **Compensation Exhibit 30: Realized value of 2019 LTIP grant for current EC members**

|  | Grant date | Number of shares granted related to the TSR measure (1) | Shares granted related to the EPS measure (2) | Total number of shares granted | Disclosed grant fair value (CHF) (3) | Vesting date | Vesting percentage | Number of vested shares | Realized value (CHF) (4) |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Björn Rosengren | n.a. |  |  |  |  | n.a. |  |  |  |
| Timo Ihamuotila | May 16, 2019 | 24,536 | 24,535 | 49,071 | 836,661 | May 16, 2022 | 121.0% | 59,377 | 1,680,963 |
| Carolina Granat | n.a. |  |  |  |  | n.a. |  |  |  |
| Andrea Antonelli | n.a. |  |  |  |  | n.a. |  |  |  |
| Karin Lepasoon | n.a. |  |  |  |  | n.a. |  |  |  |
| Sami Atiya | May 16, 2019 | 24,794 | 24,793 | 49,587 | 845,459 | May 16, 2022 | 121.0% | 60,002 | 1,698,657 |
| Tarak Mehta | May 16, 2019 | 22,211 | 22,211 | 44,422 | 757,396 | May 16, 2022 | 121.0% | 53,751 | 1,521,691 |
| Peter Terwiesch | May 16, 2019 | 20,662 | 20,661 | 41,323 | 704,559 | May 16, 2022 | 121.0% | 50,002 | 1,415,557 |
| Morten Wierod | May 16, 2019 | 18,079 | 18,079 | 36,158 | 616,494 | May 16, 2022 | 121.0% | 43,752 | 1,238,619 |
| Total |  |  |  |  | 3,760,569 |  |  |  | 7,555,487 |

(1) Actual achievement level of the TSR measure was 200.0 percent.

(2) Actual achievement level of the EPS measure was 42.0 percent.

(3) Valued at CHF 17.05, the grant fair value of the ABB share on the day of grant.

(4) Valued at CHF 28.31, the closing price of the ABB share on the day of vesting.

The values presented are gross and before payment of any applicable taxes owing by the recipient. This indicates the average gross realized LTIP value was 200.9 percent of the disclosed grant fair value.

# **LTIP vesting outcomes in the last five years**

The historical LTIP vesting outcomes for the prior five years are shown in Compensation Exhibit 31 below. Over the last five years vesting has averaged at 84.9 percent of target and 49.3 percent of the maximum award.

# **Compensation Exhibit 31: LTIP historical actual vesting percentages $^{(1)}$**

![BBOX]0.1176,0.4655,0.2176,0.4816[/BBOX]abb20221231p126i0

(1) According to plan-specific relative weighting of relevant performance measures.

# **Realized total compensation - 2022**

We disclose the realized total compensation for each EC member. Realized compensation relates to the AIP award and the LTIP award at the end of their respective performance cycles, reflecting actual payment and settlement, based on achievements of the plan specific performance measures.

124

Such transparency on realized compensation is designed to aid stakeholder's understanding of ABB's link between pay and performance.

The following Compensation Exhibit 32 sets out a high-level comparison of realized and target total compensation for each EC member. A detailed summary table is given in Compensation Exhibit 44 in the section 'Compensation tables and share ownership tables'.

![img-0.jpeg](img-0.jpeg)

## Other compensation - 2022

Members of the EC are eligible to participate in the Employee Share Acquisition Plan (ESAP), a savings plan based on stock options, which is open to employees around the world. Five members of the EC participated in the 19th annual ESAP launch of the plan in 2022. EC members who participated will, upon vesting, each be entitled to acquire up to 360 ABB shares at CHF 27.99 per share, the market share price at the start of the 2022 launch.

For a more detailed description of the ESAP, please refer to 'Note 18 - Share-based payment arrangements' in our Consolidated Financial Statements.

In 2022, ABB did not pay any fees or compensation to the members of the EC for services rendered to ABB other than those disclosed in this report. Except as disclosed in the section 'Executive Committee - Business relationships between ABB and its EC members' in 'Item 6. Directors, Senior Management and Employees', the Company did not pay any additional fees or compensation in 2022 to persons closely linked to a member of the EC for services rendered to ABB.

## Shareholding of EC members

Four out of nine EC members have exceeded their share ownership requirement. Two further members are close to achieving their requirement, while three members have been newly appointed to the EC in the last two years. The individual shareholding in comparison to the relevant ownership requirement is shown in Compensation Exhibit 9 in the section 'Compensation at a glance'.

125

The EC members collectively owned less than 1 percent of ABB's total shares outstanding at December 31, 2022.

At December 31, 2022, EC members held ABB shares and conditional rights to receive shares, as shown in Compensation Exhibit 42 in the section 'Compensation tables and share ownership tables' below. Their holdings at December 31, 2021, are shown in Compensation Exhibit 43 in the same section.

As previously communicated, as from 2020, grants under the Management Incentive Plan (MIP), a stock option plan without performance conditions, have been discontinued, and no further grants were made. Any MIP instruments held by EC members were awarded prior to their appointment as EC members. For a more detailed description of MIP, please refer to 'Note 18 - Share-based payment arrangements' in our Consolidated Financial Statements.

Except as described in Compensation Exhibits 42 and 43, no member of the EC and no person closely linked to a member of the EC held any shares of ABB or options on ABB shares at December 31, 2022, and 2021.

### **Accelleron equity restoration**

In October 2022, ABB shareholders received a dividend in kind in Accelleron shares at the spin-off date. Granted but unvested, Performance Share Units (PSU) and Restricted Share Units (RSU) held by ABB employees at the time of the spin-off date, including members and former members of the EC, were not entitled to receive the dividend in kind distribution.

As contemplated by the terms of the LTIP rules, to ensure equal treatment of PSU and RSU holders relative to ABB shareholders, ABB increased the previously granted number of shares by 3.7 percent to reflect the impact of the Accelleron spin-off, to ensure that ABB employees including EC members are not disadvantaged by the spin-off relative to ABB shareholders.

The total value related to the additional shares granted for the EC was CHF 0.9 million. The amount was equivalent to the estimated reduction in value of the ABB share as a result of the dividend in kind related to the spin-off and as such are not considered by the CC to be additional compensation.

## **Changes applicable to EC members**

### **Terms of appointment for new EC members**

The new General Counsel & Company Secretary, Andrea Antonelli, was appointed to the EC effective from March 1, 2022, with an annual base salary of CHF 700,000, a target short-term incentive of 100 percent of annual base salary and a target long-term incentive of 150 percent of annual base salary. Andrea Antonelli is eligible for standard EC benefits as per the policy announced in last year's report.

The new Chief Communications & Sustainability Officer (CCSO), Karin Lepasoon, was appointed to the EC effective from October 1, 2022, with an annual base salary of CHF 600,000, a target short-term and target long-term incentive of 100 percent of annual base salary respectively. Karin Lepasoon is eligible for standard EC benefits as per the policy announced in last year's report and received standard relocation benefits.

### **Terms of departure for EC members**

The previous General Counsel & Company Secretary, Maria Varsellona, resigned from ABB and departed on March 31, 2022. She received compensation and benefits up to the point of her departure. This includes a contractually agreed pro-rata short-term incentive payment of CHF 181,985 for the period January 1 to March 31, 2022. All her unvested LTIP share grants and the unvested second tranche of her replacement share grant were forfeited.

126

The previous CCSO, Theodor Swedjemark, resigned from ABB and stepped down from the EC as per October 31, 2022. He will depart from ABB on February 28, 2023. He is entitled to receive compensation and benefits up to the point of his departure. This includes a contractually agreed short-term incentive payment of CHF 473,124 for 2022 and a pro-rata short-term incentive payment of CHF 78,854 for the period January 1 to February 28, 2023. All his unvested LTIP share grants were forfeited.

## Compensation of former EC members

In 2022, certain former EC members received contractual compensation for the period after leaving the EC, as shown in Compensation Exhibit 38, footnote (5).

## Votes on compensation at the 2023 AGM

As illustrated in Compensation Exhibit 33, the Board's proposals to shareholders at the 2023 AGM will relate to Board compensation for the 2023-2024 term of office and EC compensation for the calendar year 2024. There will also be a non-binding consultative vote on the Compensation Report 2022.

Compensation Exhibit 33: Shareholders will have three separate votes on compensation at the 2023 AGM

![document icon]() abb20221231p129i0

The voting results at ABB's past AGM in 2022 were as follows:

- Maximum aggregate Board compensation for the 2022-2023 term of office - 99.08 percent
- Maximum aggregate EC compensation for 2023 - 92.32 percent
- Consultative vote on the Compensation Report 2021 - 91.32 percent

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In determining the proposed maximum aggregate EC compensation for 2024, the Board takes into consideration the criteria illustrated in Compensation Exhibit 34. Given the variable nature of a major portion of the compensation components, the proposed maximum aggregate EC compensation will almost normally be higher than the actual compensation paid or awarded, as it must cover the potential maximum value of each component of compensation.

The decrease in maximum aggregate EC compensation for 2024 compared to 2023 is mainly influenced by the potential vesting related costs from the 2021 LTIP award, as well as the lower compensation levels applied to new EC members compared to plan.

Compensation Exhibit 34: Overview of key factors affecting the determination of maximum aggregate EC compensation

![document icon]() abb20221231p130i0

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## Compensation tables and share ownership tables

| Compensation Exhibit 35: Board compensation in 2022 and 2021 |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Name | Paid in 2022 |  |  |  |  | Paid in 2021 |  |  |  |  |
|  | November Board term 2022-2023 |  | May Board term 2021-2022 |  | Total compensation paid in 2022 (1) | November Board term 2021-2022 |  | May Board term 2020-2021 |  | Total compensation paid in 2021 (1) |
|  | Settled in cash (1) | Settled in shares - number of shares received (2) | Settled in cash (1) | Settled in shares - number of shares received (2) |  | Settled in cash (1) | Settled in shares - number of shares received (2) | Settled in cash (1) | Settled in shares - number of shares received (2) |  |
|  | CHF |  | CHF |  | CHF |  | CHF |  | CHF |  |
| Peter Voser, Chairman (4) | - | 21,565 | - | 18,296 | 1,200,000 | - | 17,209 | - | 20,089 | 1,200,000 |
| Jacob Wallenberg (5) | 112,500 | 3,257 | 112,500 | 2,763 | 450,000 | 112,500 | 2,599 | 112,500 | 3,033 | 450,000 |
| Matti Alahuhta (6) | - | - | - | - | - | - | - | - | 3,615 | 160,000 |
| Gunnar Brock (7) | 82,500 | 2,388 | 82,500 | 2,026 | 330,000 | 82,500 | 1,906 | - | 4,542 | 330,000 |
| David Constable (8) | 80,000 | 2,316 | 80,000 | 1,964 | 320,000 | 80,000 | 1,848 | 87,500 | 2,359 | 335,000 |
| Frederico Curado (9) | - | 4,799 | - | 4,075 | 350,000 | - | 3,829 | - | 4,090 | 335,000 |
| Lars Förberg (10) | - | 5,736 | - | 4,870 | 320,000 | - | 4,577 | - | 5,347 | 320,000 |
| Jennifer Xin-Zhe Li (11) | 87,500 | 2,338 | 87,500 | 1,986 | 350,000 | 87,500 | 1,866 | 80,000 | 1,993 | 335,000 |
| Geraldine Matchett (12) | 82,500 | 3,121 | 82,500 | 2,647 | 330,000 | 82,500 | 2,490 | 82,500 | 2,906 | 330,000 |
| David Meline (13) | 100,000 | 2,895 | 100,000 | 2,456 | 400,000 | 100,000 | 2,310 | 100,000 | 2,696 | 400,000 |
| Satish Pai (14) | - | 4,523 | 82,500 | 1,872 | 330,000 | 82,500 | 1,759 | 82,500 | 2,055 | 330,000 |
| Total | 545,000 | 52,938 | 627,500 | 42,955 | 4,380,000 | 627,500 | 40,393 | 545,000 | 52,725 | 4,525,000 |

(1) Represents gross amounts paid, prior to deductions for social security, withholding tax etc.

(2) Number of shares per Board member is calculated based on net amount due after deductions for social security, withholding tax etc.

(3) In addition to the Board remuneration stated in the above table, in 2022 and 2021 the Company paid CHF 248,489 and CHF 231,287, respectively, in related mandatory social security payments.

(4) Chairman of the ABB Ltd Board for the 2020-2021, 2021-2022 and 2022-2023 board terms and Chairman of the Governance and Nomination Committee for the 2021-2022 and 2022-2023 board terms; is receiving 100 percent of his compensation in the form of ABB shares.

(5) Vice-Chairman of the ABB Ltd Board for the 2020-2021, 2021-2022 and 2022-2023 board terms; Chairman of the Governance and Nomination Committee for the 2020-2021 board term and member of that committee for the 2021-2022 and 2022-2023 board terms; is receiving 50 percent of his compensation in the form of ABB shares.

(6) Member of the Governance and Nomination Committee for the 2020-2021 board term; received 100 percent of his compensation in the form of ABB shares for the 2020-2021 board term. Did not stand for election in 2021.

(7) Member of the Finance, Audit and Compliance Committee for the 2020-2021, 2021-2022 and 2022-2023 board terms; received 100 percent of his compensation in the form of ABB shares for the 2020-2021 board term and is receiving 50 percent of his compensation in the form of ABB shares for the 2021-2022 and 2022-2023 board terms.

(8) Chairman of the Compensation Committee for the 2020-2021 board term and member of that committee for the 2021-2022 and 2022-2023 board terms; is receiving 50 percent of his compensation in the form of ABB shares.

(9) Member of the Compensation Committee for the 2020-2021 board term and Chairman of that committee for the 2021-2022 and 2022-2023 board terms; is receiving 100 percent of his compensation in the form of ABB shares.

(10) Member of the Governance and Nomination Committee for the 2020-2021, 2021-2022 and 2022-2023 board terms; is receiving 100 percent of his compensation in the form of ABB shares.

(11) Member of the Compensation Committee for the 2020-2021, 2021-2022 and 2022-2023 board terms and member of the Governance and Nomination Committee for the 2021-2022 and 2022-2023 board terms; is receiving 50 percent of her compensation in the form of ABB shares.

(12) Member of the Finance, Audit and Compliance Committee for the 2020-2021, 2021-2022 and 2022-2023 board terms; is receiving 50 percent of her compensation in the form of ABB shares.

(13) Chairman of the Finance, Audit and Compliance Committee for the 2020-2021, 2021-2022 and 2022-2023 board terms; is receiving 50 percent of his compensation in the form of ABB shares.

(14) Member of the Finance, Audit and Compliance Committee for the 2020-2021, 2021-2022 and 2022-2023 board terms; received 50 percent of his compensation in the form of ABB shares for the 2020-2021 and 2021-2022 board terms and is receiving 100 percent of his compensation in the form of ABB shares for the 2022-2023 board term.

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# **Compensation Exhibit 36: Board compensation for the Board terms 2022-2023 and 2021-2022**

| Name | Specific Board roles | Board term 2022-2023 | Board term 2021-2022 |
| --- | --- | --- | --- |
|  |  | CHF | CHF |
| Peter Voser | Chairman of the Board and Chairman GNC for 2021-2022 and 2022-2023 terms | 1,200,000 | 1,200,000 |
| Jacob Wallenberg | Vice-Chairman of the Board and Member GNC for 2021-2022 and 2022-2023 terms | 450,000 | 450,000 |
| Gunnar Brock | Member FACC for 2021-2022 and 2022-2023 terms | 330,000 | 330,000 |
| David Constable | Member CC for 2021-2022 and 2022-2023 terms | 320,000 | 320,000 |
| Frederico Curado | Chairman CC for 2021-2022 and 2022-2023 terms | 350,000 | 350,000 |
| Lars Förberg | Member GNC for 2021-2022 and 2022-2023 terms | 320,000 | 320,000 |
| Jennifer Xin-Zhe Li | Member CC and Member GNC for 2021-2022 and 2022-2023 terms | 350,000 | 350,000 |
| Geraldine Matchett | Member FACC for 2021-2022 and 2022-2023 terms | 330,000 | 330,000 |
| David Meline | Chairman FACC for 2021-2022 and 2022-2023 terms | 400,000 | 400,000 |
| Satish Pai | Member FACC for 2021-2022 and 2022-2023 terms | 330,000 | 330,000 |
| Total |  | 4,380,000 | 4,380,000 |

Key:

CC: Compensation Committee

FACC: Finance, Audit and Compliance Committee

GNC: Governance and Nomination Committee

# **Compensation Exhibit 37: Board ownership of ABB shares**

| Name | Total number of shares held |  |
| --- | --- | --- |
|  | December 31, 2022 | December 31, 2021 |
| Peter Voser (1) | 231,807 | 191,946 |
| Jacob Wallenberg | 245,898 | 239,878 |
| Gunnar Brock | 37,813 | 33,399 |
| David Constable | 42,465 | 38,185 |
| Frederico Curado | 49,175 | 40,301 |
| Lars Förberg | 70,522 | 59,916 |
| Jennifer Xin-Zhe Li | 41,904 | 37,580 |
| Geraldine Matchett | 30,964 | 25,196 |
| David Meline (2) | 43,131 | 37,780 |
| Satish Pai | 34,827 | 28,432 |
| Total | 828,506 | 732,613 |

(1) Includes 2,000 shares held by the spouse.

(2) Includes 3,150 shares held by the spouse.

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# **Compensation Exhibit 38: EC compensation in 2022**

| Name | Cash Compensation |  |  |  |  | Estimated value of share-based grants under the LTIP in 2022 (4) | 2022 Total compensation (incl. conditional share-based grants) (5) |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | Base salary | Short-term incentive (1) | Pension benefits | Other benefits (2) | 2022 Total cash-based compensation (3) |  |  |  |  |
|  | CHF | CHF | CHF | CHF | CHF |  |  | CHF | CHF |
| Björn Rosengren | 1,770,840 | 2,142,000 | 762,478 | 988,084 | 5,663,402 | 2,411,254 | 8,074,656 |  |  |
| Timo Ihamuotila | 986,672 | 1,188,000 | 527,648 | 720,953 | 3,423,273 | 891,570 | 4,314,843 |  |  |
| Carolina Granat | 720,843 | 870,000 | 427,903 | 352,848 | 2,371,594 | 652,920 | 3,024,514 |  |  |
| Andrea Antonelli (EC member as of March 1, 2022) | 583,334 | 670,833 | 198,164 | 245,754 | 1,698,085 | 945,595 | 2,643,680 |  |  |
| Karin Lepasoon (EC member as of October 1, 2022) | 150,000 | 165,000 | 62,360 | 38,987 | 416,347 | 540,336 | 956,683 |  |  |
| Sami Atiya | 800,009 | 539,200 | 487,247 | 599,994 | 2,426,450 | 747,485 | 3,173,935 |  |  |
| Tarak Mehta | 930,009 | 1,337,340 | 513,481 | 604,563 | 3,385,393 | 837,546 | 4,222,939 |  |  |
| Peter Terwiesch | 825,001 | 1,245,000 | 485,152 | 536,952 | 3,092,105 | 747,485 | 3,839,590 |  |  |
| Morten Wierod | 875,006 | 1,067,400 | 471,432 | 523,912 | 2,937,750 | 810,519 | 3,748,269 |  |  |
| Total Executive Committee members at December 31, 2022 | 7,641,714 | 9,224,773 | 3,935,865 | 4,612,047 | 25,414,399 | 8,584,710 | 33,999,109 |  |  |
| Maria Varsellona (EC member until March 31, 2022) | 200,002 | 181,985 | 114,896 | 79,223 | 576,106 | - | 576,106 |  |  |
| Theodor Swedjemark (EC member until October 31, 2022) | 500,004 | 473,124 | 283,520 | 203,210 | 1,459,858 | - | 1,459,858 |  |  |
| Total departing Executive Committee members | 700,006 | 655,109 | 398,416 | 282,433 | 2,035,964 | - | 2,035,964 |  |  |
| Total | 8,341,720 | 9,879,882 | 4,334,281 | 4,894,480 | 27,450,363 | 8,584,710 | 36,035,073 |  |  |

(1) Represents accrued short-term variable compensation for the year 2022, which will be paid in 2023, after the publication of ABB's financial results. Short-term variable compensation is linked to the targets and goals defined in each EC member's Annual Incentive Plan. Upon full achievement of these targets and goals, the short-term variable compensation of the EC members represents 100 percent of their respective base salary. Maria Varsellona received a short-term variable compensation payment in March 2022 related to her termination period, in accordance with the contractual obligations of ABB.
(2) Other benefits mainly comprise payments related to social security, health insurance, children's education, transportation, tax advice and compensation for foregone dividends on replacement share grants and certain other items.
(3) Prepared on an accrual basis.
(4) The estimated value of the share-based LTIP grants is based on the price of ABB shares on the grant date. On the day of vesting (April 25, 2025), the value of the share-based awards granted under the LTIP may vary from the above amounts due to changes in ABB's share price and the outcome of the performance factors.
(5) Payments totaling CHF 1,324,301 were made in 2022 on behalf of certain other former EC members, representing social security premium payments due on the 2019 LTIP vesting and tax advisory services for the period when they have been active EC members.

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# **Compensation Exhibit 39: EC compensation in 2021**

| Name | Cash Compensation |  |  |  |  | Estimated value of share-based grants under the LTIP in 2021 (4) | Estimated value of replacement share-based grant in 2021 | 2021 Total compensation (incl. conditional share-based grants) (5) |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | Base salary | Short-term incentive (1) | Pension benefits | Other benefits (2) | 2021 Total cash-based compensation (3) |  |  |  |  |  |  |
|  | CHF | CHF | CHF | CHF | CHF |  |  |  | CHF | CHF | CHF |
| Björn Rosengren | 1,700,012 | 2,465,000 | 744,770 | 807,000 | 5,716,782 | 2,530,828 | - | 8,247,610 |  |  |  |
| Timo Ihamuotila | 966,675 | 1,358,000 | 518,063 | 570,546 | 3,413,284 | 962,708 | - | 4,375,992 |  |  |  |
| Carolina Granat (EC member as of January 1, 2021) | 700,000 | 980,000 | 417,382 | 399,334 | 2,496,716 | 694,744 | - | 3,191,460 |  |  |  |
| Maria Varsellona | 800,009 | 1,160,000 | 455,000 | 511,824 | 2,926,833 | 793,997 | - | 3,720,830 |  |  |  |
| Theodor Swedjemark | 500,004 | 725,000 | 274,535 | 263,567 | 1,763,106 | 397,012 | - | 2,160,118 |  |  |  |
| Sami Atiya | 800,009 | 1,160,000 | 482,662 | 481,598 | 2,924,269 | 793,997 | - | 3,718,266 |  |  |  |
| Tarak Mehta | 925,008 | 1,348,500 | 507,646 | 476,481 | 3,257,635 | 923,018 | - | 4,180,653 |  |  |  |
| Peter Terwiesch | 800,009 | 1,160,000 | 473,441 | 422,542 | 2,855,992 | 793,997 | - | 3,649,989 |  |  |  |
| Morten Wierod | 791,676 | 1,126,400 | 443,506 | 362,112 | 2,723,694 | 793,997 | - | 3,517,691 |  |  |  |
| Total current Executive Committee members at December 31, 2021 | 7,983,402 | 11,482,900 | 4,317,005 | 4,295,004 | 28,078,311 | 8,684,298 | - | 36,762,609 |  |  |  |
| Sylvia Hill (EC member until December 31, 2020) | 730,004 | 661,380 | 478,254 | 524,799 | 2,394,437 | - | - | 2,394,437 |  |  |  |
| Total departing Executive Committee members (6) | 730,004 | 661,380 | 478,254 | 524,799 | 2,394,437 | - | - | 2,394,437 |  |  |  |
| Total | 8,713,406 | 12,144,280 | 4,795,259 | 4,819,803 | 30,472,748 | 8,684,298 | - | 39,157,046 |  |  |  |

(1) Represents accrued short-term variable compensation for the year 2021, which was paid in 2022, after the publication of ABB's financial results. Short-term variable compensation is linked to the targets and goals defined in each EC member's Annual Incentive Plan. Upon full achievement of these targets and goals, the short-term variable compensation of the EC members represents 100 percent of their respective base salary. Sylvia Hill received a short-term variable compensation payment in December 2021 related to her termination period, in accordance with the contractual obligations of ABB.
(2) Other benefits mainly comprise payments related to social security, health insurance, children's education, transportation, tax advice and compensation for foregone dividends on replacement share grants and certain other items.
(3) Prepared on an accrual basis.
(4) The estimated value of the share-based LTIP grants was based on the price of ABB shares on the grant date, adjusted for expected foregone dividends during the vesting period. On the day of vesting (April 26, 2024), the value of the share-based awards granted under the LTIP may vary from the above amounts due to changes in ABB's share price and the outcome of the performance factors.
(5) Payments totaling CHF 296,004 were made in 2021 on behalf of certain other former EC members, representing social security premium payments due on the 2018 LTIP vesting and tax advisory services for the period when they have been active EC members.
(6) Ulrich Spiesshofer received non-compete payments for the period January 1, 2021, to April 30, 2021, and a vesting of the 2018 LTIP, with related social security payments, totaling CHF 1,726,896.

132

# **Compensation Exhibit 40: LTIP grants in 2022**

| Name | Reference number of shares under the EPS performance factor of the 2022 launch of the LTIP (1)(2) | Total estimated value of share-based grants under the EPS performance factor of the 2022 launch of the LTIP (1)(2) | Reference number of shares under the TSR performance factor of the 2022 launch of the LTIP (1)(2) | Total estimated value of share-based grants under the TSR performance factor of the 2022 launch of the LTIP (1)(2) | Reference number of shares under the sustainability performance factor of the 2022 launch of the LTIP (1)(2) | Total estimated value of share-based grants under the sustainability performance factor of the 2022 launch of the LTIP (1)(2) | Total number of shares granted under the 2022 launch of the LTIP (1)(2) | Total estimated value of share-based grants under the LTIP in 2022 (1)(2) |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  | CHF |  | CHF |  | CHF |  | CHF |
| Björn Rosengren (3) | 42,743 | 1,205,627 | 25,646 | 723,353 | 17,098 | 482,274 | 85,487 | 2,411,254 |
| Timo Ihamuotila | 15,804 | 445,770 | 9,482 | 267,462 | 6,323 | 178,338 | 31,609 | 891,570 |
| Carolina Granat | 11,574 | 326,460 | 6,944 | 195,858 | 4,630 | 130,602 | 23,148 | 652,920 |
| Andrea Antonelli (EC member as of March 1, 2022) | 16,762 | 472,797 | 10,057 | 283,667 | 6,706 | 189,131 | 33,525 | 945,595 |
| Karin Lepasson (EC member as of October 1, 2022) (3) | 9,578 | 270,153 | 5,747 | 162,075 | 3,832 | 108,108 | 19,157 | 540,336 |
| Sami Atiya | 13,250 | 373,728 | 7,950 | 224,231 | 5,301 | 149,526 | 26,501 | 747,485 |
| Tarak Mehta (3) | 14,847 | 418,773 | 8,908 | 251,258 | 5,939 | 167,515 | 29,694 | 837,546 |
| Peter Terwiesch (1) | 13,250 | 373,728 | 7,950 | 224,231 | 5,301 | 149,526 | 26,501 | 747,485 |
| Morten Wierod (3) | 14,368 | 405,259 | 8,620 | 243,156 | 5,748 | 162,104 | 28,736 | 810,519 |
| Total Executive Committee members at December 31, 2022 | 152,176 | 4,292,295 | 91,304 | 2,575,291 | 60,878 | 1,717,124 | 304,358 | 8,584,710 |

(1) Vesting date April 25, 2025.

(2) The reference number of shares of the EPS, TSR and sustainability performance factors are valued using the fair value of the ABB shares on the grant date.

(3) Default settlement of the final LTIP award is 100 percent in shares, with an automatic sell-to-cover in place for employees who are subject to withholding taxes. The plan foresees a maximum award of 200 percent of the number of reference shares granted based on the achievement against the predefined average EPS, relative TSR and sustainability performance targets. Participants are also entitled to receive a dividend equivalent payment at the time of vesting for each awarded share.

(4) The initial granted number of shares has been increased by 3.7 percent to reflect the impact of the Accelleron spin-off.

(5) In addition to the above awards, five members of the EC participated in the 18th launch of the ESAP in 2022, which will allow them to save over a 12-month period and, in November 2023, use their savings to acquire ABB shares under the ESAP. Each EC member who participated in ESAP will, upon vesting, be entitled to acquire up to 360 ABB shares at an exercise price of CHF 27.99 per share.

# **Compensation Exhibit 41: LTIP grants in 2021**

| Name | Reference number of shares under the EPS performance factor of the 2021 launch of the LTIP (1) | Total estimated value of share-based grants under the EPS performance factor of the 2021 launch of the LTIP (1)(2) | Reference number of shares under the TSR performance factor of the 2021 launch of the LTIP (1) | Total estimated value of share-based grants under the TSR performance factor of the 2021 launch of the LTIP (1)(2) | Total number of shares granted under the 2021 launch of the LTIP (1)(2) | Total estimated value of share-based grants under the LTIP in 2021 (1)(2) |
| --- | --- | --- | --- | --- | --- | --- |
|  |  | CHF |  | CHF |  | CHF |
| Björn Rosengren | 47,950 | 1,265,401 | 47,951 | 1,265,427 | 95,901 | 2,530,828 |
| Timo Ihamuotila (4) | 18,240 | 481,354 | 18,240 | 481,354 | 36,480 | 962,708 |
| Carolina Granat (EC member as of January 1, 2021) | 13,163 | 347,372 | 13,163 | 347,372 | 26,326 | 694,744 |
| Maria Varsellona | 15,043 | 396,985 | 15,044 | 397,012 | 30,087 | 793,997 |
| Theodor Swedjemark (4) | 7,522 | 198,506 | 7,522 | 198,506 | 15,044 | 397,012 |
| Sami Atiya | 15,043 | 396,985 | 15,044 | 397,012 | 30,087 | 793,997 |
| Tarak Mehta (4) | 17,488 | 461,509 | 17,488 | 461,509 | 34,976 | 923,018 |
| Peter Terwiesch (4) | 15,043 | 396,985 | 15,044 | 397,012 | 30,087 | 793,997 |
| Morten Wierod (4) | 15,043 | 396,985 | 15,044 | 397,012 | 30,087 | 793,997 |
| Total Executive Committee members at December 31, 2021 | 164,535 | 4,342,082 | 164,540 | 4,342,216 | 329,075 | 8,684,298 |

(1) Vesting date April 26, 2024.

(2) The reference number of shares of the EPS and TSR performance factors are valued using the fair value of the ABB shares on the grant date adjusted for expected foregone dividends during the vesting period.

(3) Default settlement of the final LTIP award is 100 percent in shares, with an automatic sell-to-cover in place for employees who are subject to withholding taxes. The plan foresees a maximum award of 200 percent of the number of reference shares granted based on the achievement against the predefined average EPS and relative TSR targets.

(4) In addition to the above awards, five members of the EC participated in the 18th launch of the ESAP in 2021, which allowed them to save over a 12-month period and, in November 2022, use their savings to acquire ABB shares under the ESAP. Each EC member who participated in ESAP was entitled to acquire up to 330 ABB shares at an exercise price of CHF 30.32 per share.

133

# **Compensation Exhibit 42: EC shareholding overview at December 31, 2022**

| Name | Total number of shares held at December 31, 2022 | Unvested at December 31, 2022 |  |  |  |
| --- | --- | --- | --- | --- | --- |
|  |  | Reference number of shares deliverable under the 2020 performance factors (EPS and TSR) of the LTIP (1)(2) (vesting 2023) | Reference number of shares deliverable under the 2021 performance factors (EPS and TSR) of the LTIP (1)(2) (vesting 2024) | Reference number of shares deliverable under the 2022 performance factors (EPS, TSR, Sustainability) of the LTIP (1)(2) (vesting 2025) | Replacement share grant for foregone benefits from former employer (3)(4) (vesting 2023) |
| Björn Rosengren | 94,597 | 136,589 | 99,450 | 85,487 | 19,604 |
| Timo Ihamuotila | 189,034 | 50,887 | 37,830 | 31,609 | - |
| Carolina Granat (4) | 5,200 | - | 27,301 | 23,148 | - |
| Andrea Antonelli (EC member as of March 1, 2022) | - | - | 7,021 | 33,525 | - |
| Karin Lepasoon (EC member as of October 1, 2022) | - | - | - | 19,157 | - |
| Sami Atiya | 90,473 | 42,852 | 31,201 | 26,501 | - |
| Tarak Mehta | 152,993 | 48,209 | 36,271 | 29,694 | - |
| Peter Terwiesch | 132,940 | 42,852 | 31,201 | 26,501 | - |
| Morten Wierod | 64,777 | 40,174 | 31,201 | 28,736 | - |
| Total Executive Committee members at December 31, 2022 | 730,014 | 361,563 | 301,476 | 304,358 | 19,604 |

(1) The final 2020 LTIP, 2021 LTIP and 2022 LTIP awards will be settled 100 percent in shares, with an automatic sell-to-cover in place for employees who are subject to withholding law.

(2) Initial number of shares granted have been increased by 3.7 percent to reflect the impact of the spin-off of the Accelleron business.

(3) It is expected that the replacement share grants will be settled 65 percent in shares and 35 percent in cash. However, the participant has the possibility to elect to receive 100 percent of the vested award in shares.

(4) This includes 1,200 shares held by the spouse.

134

# Compensation Exhibit 43: EC shareholding overview at December 31, 2021

| Name | Total number of shares held at December 31, 2021 | Vested at December 31, 2021 | Unvested at December 31, 2021 |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  | Number of vested options held under the MIP | Number of unvested options held under the MIP | Reference number of shares deliverable under the 2019 performance factors (EPS and TSR) of the LTIP (1) | Reference number of shares deliverable under the 2020 performance factors (EPS and TSR) of the LTIP (1) | Reference number of shares deliverable under the 2021 performance factors (EPS and TSR) of the LTIP (1) | Replacement share grant for foregone benefits from former employer (2) | Replacement share grant for foregone benefits from former employer (2) |
|  |  |  |  |  | (vesting 2022) | (vesting 2023) | (vesting 2024) | (vesting 2022) | (vesting 2023) |
| Björn Rosengren | 10,000 | - | - | - | 131,715 | 95,901 | 130,150 | 18,904 |  |
| Timo Ihamuotila | 150,440 | - | - | 49,071 | 49,071 | 36,480 | - | - |  |
| Carolina Granat (EC member as of January 1, 2021) (3) | 1,200 | - | - | - | - | 26,326 | - | - |  |
| Maria Varsellona (4) | 26,006 | - | - | - | - | - | - | - |  |
| Theodor Swedjemark (5) | 1,360 | - | 148,750 | - | 6,209 | 15,044 | - | - |  |
| Sami Atiya | 51,472 | - | - | 49,587 | 41,323 | 30,087 | - | - |  |
| Tarak Mehta | 118,056 | - | - | 44,422 | 46,488 | 34,976 | - | - |  |
| Peter Terwiesch | 100,440 | - | - | 41,323 | 41,323 | 30,087 | - | - |  |
| Morten Wierod (6) | 21,025 | - | - | 36,158 | 38,740 | 30,087 | - | - |  |
| Total Executive Committee members at December 31, 2021 | 479,999 | - | 148,750 | 220,561 | 354,869 | 298,988 | 130,150 | 18,904 |  |

(1) The final 2019 LTIP award will be settled 65 percent in shares and 35 percent in cash. This applies to both performance factors (EPS and TSR). However, the participants have the possibility to elect to receive 100 percent of the vested award in shares. The final 2020 LTIP and 2021 LTIP awards will be settled 100 percent in shares, with an automatic sell-to-cover in place for employees who are subject to withholding taxes.

(2) It is expected that the replacement share grant will be settled 65 percent in shares and 35 percent in cash. However, the participant has the possibility to elect to receive 100 percent of the vested award in shares.

(3) This includes shares held by the spouse.

(4) Unvested share grants were forfeited as a result of the resignation provided and removed from the shareholding overview.

(5) In addition, his spouse holds unvested shares and options granted in connection with her role in the Company.

(6) The disclosed total number of shares held at December 31, 2021, was adjusted to reflect the correct year-end 2021 balance.

135

# **Compensation Exhibit 44: Targeted and realized EC total compensation in 2022**

| Target compensation (in CHF) | Base salary | Pension benefits | Other benefits (1) | Target short-term incentive (2) | Grant fair value of 2019 LTIP (3) | Grant fair value of 2020 replacement share grant (4) | Target total variable compensation | Target total compensation |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Björn Rosengren | 1,770,840 | 762,478 | 963,201 | 1,785,000 | n.a. | 2,902,345 | 1,785,000 | 8,183,864 |
| Timo Ihamuotila | 986,672 | 527,648 | 707,152 | 990,000 | 836,661 | n.a. | 1,826,661 | 4,048,133 |
| Carolina Granat | 720,843 | 427,903 | 342,742 | 725,000 | n.a. | n.a. | 725,000 | 2,216,488 |
| Andrea Antonelli (EC member as of March 1, 2022) | 583,334 | 198,164 | 239,655 | 583,334 | n.a. | n.a. | 583,334 | 1,604,487 |
| Karin Lepasson (EC member as of October 1, 2022) | 150,000 | 62,360 | 37,942 | 150,000 | n.a. | n.a. | 150,000 | 400,302 |
| Sami Atiya | 800,009 | 487,247 | 618,172 | 800,000 | 845,459 | n.a. | 1,645,459 | 3,550,887 |
| Tarak Mehta | 930,009 | 513,481 | 576,171 | 930,000 | 757,396 | n.a. | 1,687,396 | 3,707,057 |
| Peter Terwiesch | 825,001 | 485,152 | 508,027 | 830,000 | 704,559 | n.a. | 1,534,559 | 3,352,739 |
| Morten Wierod | 875,006 | 471,432 | 512,244 | 900,000 | 616,494 | n.a. | 1,516,494 | 3,375,176 |
| Total | 7,641,714 | 3,935,865 | 4,505,306 | 7,693,334 | 3,760,569 | 2,902,345 | 11,453,903 | 30,439,133 |

| Realized compensation (in CHF) | Base salary | Pension benefits | Other benefits (1)(2) | Short-term incentive 2022 (3) | Realized value of 2019 LTIP (3) | Realized value of 2020 replacement share grant (4) | Total variable compensation | Total compensation |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Björn Rosengren | 1,770,840 | 762,478 | 988,084 | 2,142,000 | n.a. | 4,183,021 | 2,142,000 | 9,846,423 |
| Timo Ihamuotila | 986,672 | 527,648 | 720,953 | 1,188,000 | 1,680,963 | n.a. | 2,868,963 | 5,104,236 |
| Carolina Granat | 720,843 | 427,903 | 352,848 | 870,000 | n.a. | n.a. | 870,000 | 2,371,594 |
| Andrea Antonelli (EC member as of March 1, 2022) | 583,334 | 198,164 | 245,754 | 670,833 | n.a. | n.a. | 670,833 | 1,698,085 |
| Karin Lepasson (EC member as of October 1, 2022) | 150,000 | 62,360 | 38,987 | 165,000 | n.a. | n.a. | 165,000 | 416,347 |
| Sami Atiya | 800,009 | 487,247 | 599,994 | 539,200 | 1,698,657 | n.a. | 2,237,857 | 4,125,107 |
| Tarak Mehta | 930,009 | 513,481 | 604,563 | 1,337,340 | 1,521,691 | n.a. | 2,859,031 | 4,907,084 |
| Peter Terwiesch | 825,001 | 485,152 | 536,952 | 1,245,000 | 1,415,557 | n.a. | 2,660,557 | 4,507,662 |
| Morten Wierod | 875,006 | 471,432 | 523,912 | 1,067,400 | 1,238,619 | n.a. | 2,306,019 | 4,176,369 |
| Total | 7,641,714 | 3,935,865 | 4,612,047 | 9,224,773 | 7,555,487 | 4,183,021 | 16,780,260 | 37,152,907 |

| Realized achievement level | Base salary | Pension benefits | Other benefits (1) | Short-term incentive (2) | Realized value of 2019 LTIP in % (3) | Realized value of 2020 replacement share grant in % (4) | Total variable compensation | Total compensation |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Björn Rosengren | 100.0% | 100.0% | 102.6% | 120.0% | n.a. | 144.1% | 120.0% | 120.3% |
| Timo Ihamuotila | 100.0% | 100.0% | 102.0% | 120.0% | 200.9% | n.a. | 157.1% | 126.1% |
| Carolina Granat | 100.0% | 100.0% | 102.9% | 120.0% | n.a. | n.a. | 120.0% | 107.0% |
| Andrea Antonelli (EC member as of March 1, 2022) | 100.0% | 100.0% | 102.5% | 115.0% | n.a. | n.a. | 115.0% | 105.8% |
| Karin Lepasson (EC member as of October 1, 2022) | 100.0% | 100.0% | 102.8% | 110.0% | n.a. | n.a. | 110.0% | 104.0% |
| Sami Atiya | 100.0% | 100.0% | 97.1% | 67.4% | 200.9% | n.a. | 136.0% | 116.2% |
| Tarak Mehta | 100.0% | 100.0% | 104.9% | 143.8% | 200.9% | n.a. | 169.4% | 132.4% |
| Peter Terwiesch | 100.0% | 100.0% | 105.7% | 150.0% | 200.9% | n.a. | 173.4% | 134.4% |
| Morten Wierod | 100.0% | 100.0% | 102.3% | 118.6% | 200.9% | n.a. | 152.1% | 123.7% |
| Average | 100.0% | 100.0% | 102.5% | 118.3% | 200.9% | 144.1% | 139.2% | 118.9% |

(1) Other benefits comprise payments related to social security, health insurance, children's education, transportation, tax advice and certain other items.

(2) Target short-term incentive corresponds to 100 percent of the latest applicable annual base salary.

(3) Represents the 2019 LTIP grant date fair value as per May 16, 2019, as disclosed in our 2019 Annual Report.

(4) Represents the 2020 grant fair value related to the first tranche (out of two tranches) of the replacement share grant, as disclosed in our 2020 Annual Report.

(5) Differences between realized and target values due to higher social security payments related to AIP awards above target values.

(6) Represents accrued STI for the year 2022, which will be paid in 2023, after the publication of ABB's financial results. STI is linked to the targets and goals defined in each EC member's Annual Incentive Plan.

(7) Valued at CHF 28.31, the closing price of the ABB share on the day of vesting.

(8) Valued at CHF 32.14, the closing price of the ABB share on the day of vesting.

136

## Employees

A breakdown of our employees by geographic region is as follows:

| December 31, | 2022 | 2021 | 2020 |
| --- | --- | --- | --- |
| Europe | 49,700 | 50,000 | 49,200 |
| The Americas | 26,400 | 25,600 | 27,600 |
| Asia, Middle East and Africa | 29,000 | 28,800 | 28,800 |
| Total | 105,100 | 104,400 | 105,600 |

The proportion of our employees that are represented by labor unions or are subject to collective bargaining agreements varies based on the labor practices of each country in which we operate.

### Item 7. Major Shareholders and Related Party Transactions

## Major shareholders

At December 31, 2022, we had approximately 639,000 shareholders. Approximately 404,000 were U.S. holders, of which approximately 430 were record holders. Based on the share register, U.S. holders (including holders of ADSs) held approximately 11 percent of the total share capital and voting rights as registered in the Commercial Register on that date.

For information on major shareholders see “Item 6. Directors, Senior Management and Employees-Shareholders-Significant shareholders”.

## Related party transactions

### Affiliates and associates

In the normal course of our business, we purchase products from, sell products to and engage in other transactions with entities in which we hold an equity interest. The amounts involved in these transactions are not material to ABB Ltd. Prior to its sale in December 2022 our most significant equity method investment was in Hitachi Energy Ltd (see “Note 4 - Acquisitions, divestments and equity-accounted companies” for details). Also, in the normal course of our business, we engage in transactions with businesses that we have divested. We believe that the terms of the transactions we conduct with these companies are negotiated on an arm’s length basis.

### Key management personnel

For information on important business relationships between ABB and its Board and EC members, or companies and organizations represented by them, see “Item 6. Directors, Senior Management and Employees” sections entitled “Board of Directors-Business Relationships between ABB and its Board members” and “Executive Committee-Business Relationships between ABB and its EC members”.

137

## Item 8. Financial Information

### Consolidated Statements and other financial information

See 'Item 18. Financial Statements'.

### Legal proceedings

#### Regulatory

As a result of an internal investigation, ABB self-reported to the Securities and Exchange Commission (SEC) and the Department of Justice (DoJ) in the United States as well as to the Serious Fraud Office (SFO) in the United Kingdom concerning certain of our past dealings with Unacil and its subsidiaries, including alleged improper payments made by these entities to third parties. In May 2020, the SFO closed its investigation, which it originally announced in February 2017, as the case did not meet the relevant test for prosecution and in December 2022 this matter was closed without action by the DOJ as part of the Kusile settlement.

Based on findings during an internal investigation, ABB self-reported to the SEC and the DoJ, in the United States, to the Special Investigating Unit (SIU) and the National Prosecuting Authority (NPA) in South Africa as well as to various authorities in other countries potential suspect payments and other compliance concerns in connection with some of our dealings with Eskom and related persons. Many of those parties have expressed an interest in, or commenced an investigation into, these matters and we are cooperating fully with them. ABB paid $104 million to Eskom in December 2020 as part of a full and final settlement with Eskom and the SIU relating to improper payments and other compliance issues associated with the Controls and Instrumentation Contract, and its Variation Orders for Units 1 and 2 at Kusile. We made a provision of approximately $325 million, which was recorded in Other income (expense), net, during the third quarter of 2022. In December 2022, ABB settled with the SEC and DoJ as well as the authorities in South Africa and Switzerland. The matter is still pending with the authorities in Germany, but we do not believe that we will need to record any additional provisions for this matter.

#### General

In addition, we are aware of proceedings, or the threat of proceedings, against us and others in respect of private claims by customers and other third parties with regard to certain actual or alleged anticompetitive practices. Also, we are subject to other claims and legal proceedings, as well as investigations carried out by various law enforcement authorities. With respect to the above-mentioned claims, regulatory matters, and any related proceedings, we will bear the related costs including costs necessary to resolve them.

#### Liabilities recognized

At December 31, 2022 and 2021, we had aggregate liabilities of $86 million and $104 million, respectively, included in 'Other provisions' and 'Other non-current liabilities', for the above regulatory, compliance and legal contingencies, and none of the individual liabilities recognized was significant. As it is not possible to make an informed judgment on, or reasonably predict, the outcome of certain matters and as it is not possible, based on information currently available to management, to estimate the maximum potential liability on other matters, there could be adverse outcomes beyond the amounts accrued.

### Dividends and dividend policy

Payment of dividends is subject to general business conditions, ABB's current and expected financial condition and performance and other relevant factors including growth opportunities. ABB's current dividend policy is to pay a rising, sustainable annual dividend per share over time.

138

## Exhibit 1.1

![exhibit01x1p1i0](exhibit01x1p1i0.jpg)

#### Exhibit 1.1

ABB LTD, ZURICH

#### —
MARCH 24, 2022

#### Articles of Incorporation

#### of ABB Ltd, Zurich
This is a translation of the original German version.

In case of any discrepancy, the German version shall prevail.

ARTICLES OF INCORPORATION

#### —
SECTION 1:

#### Name, Place of Incorporation,

#### Purpose and Duration

#### Name, Place of

#### Incorporation
ARTICLE 1

Under the name

ABB Ltd

ABB AG

ABB SA

there exists a corporation with its place of incorporation in Zurich.

#### Purpose
ARTICLE 2

1. The purpose of the Company is to hold interests in business enterprises,

particularly in enterprises active in the areas of industry, trade and services.

2. The Company may acquire, encumber, exploit or sell real estate and intellectual

property rights in Switzerland and abroad and may also finance other

companies.

3. The Company may engage in all types of transactions and may take all

measures that appear appropriate to promote, or that are related to, the

purpose of the Company.

4. In pursuing its purpose, the Company shall strive for long-term sustainable

value creation.

#### Duration
ARTICLE 3

The duration of the Company shall be unlimited.

#### —
SECTION 2:

#### Share Capital
ARTICLE 4

The share capital of the Company is CHF 235 769 409.00 and is divided into

1 964 745 075 fully paid registered shares. Each share has a par value of

CHF 0.12.

Upon resolution of the General Meeting of Shareholders, registered shares may

be converted into bearer shares and bearer shares may be converted into

registered shares.

#### Contingent

#### Share Capital
ARTICLE 4

BIS

The share capital may be increased in an amount not to exceed CHF 25 200 000

through the issuance of up to 210 000 000 fully paid registered shares with a

par value of CHF 0.12 per share,

a)

up to the amount of CHF 24 000 000 through the exercise of conversion

rights and/or warrants granted in connection with the issuance on national

or international capital markets of newly or already issued bonds or other

financial market instruments by the Company or one of its group

companies, and

b)

up to the amount of CHF 1 200 000 through the exercise of warrant rights

granted to the shareholders by the Company or one of its group

companies. The Board of Directors may grant warrant rights not taken up

by shareholders for other purposes in the interest of the Company.

The pre-emptive rights of the shareholders shall be excluded in connection with

the issuance of convertible or warrant-bearing bonds or other financial market

instruments or the grant of warrant rights. The then current owners of

conversion rights and/or warrants shall be entitled to subscribe for the new

shares. The conditions of the conversion rights and/or warrants shall be

determined by the Board of Directors.

The acquisition of shares through the exercise of conversion rights and/ or

warrants and each subsequent transfer of the shares shall be subject to the

restrictions of Art. 5 of these Articles of Incorporation.

In connection with the issuance by the Company or one of its group companies

of convertible or warrant-bearing bonds or other financial market instruments,

the Board of Directors shall be authorized to restrict or deny the advance

subscription rights of shareholders if such issuances are for the purpose of

financing or refinancing the acquisition of an enterprise, parts of an enterprise,

participations or new investments or the issuance on national or international

capital markets.

ARTICLES OF INCORPORATION

If advance subscription rights are denied by the Board of Directors, the

following shall apply: the convertible or warrant-bearing bonds or other

financial market instruments shall be issued at the relevant market conditions

and the new shares shall be issued pursuant to the relevant market conditions

taking into account the share price and/or other comparable instruments

having a market price. Conversion rights may be exercised during a maximum

10-year period, and warrants may be exercised during a maximum 7-year

period, in each case from the date of the respective issuance. The advance

subscription rights of the shareholders may be granted indirectly.

The share capital may be increased in an amount not to exceed CHF 11 284 656

through the issuance of up to 94 038 800 fully paid registered shares with a par

value of CHF 0.12 per share by the issuance of new shares to employees of the

Company and group companies. The pre-emptive and advance subscription

rights of the shareholders of the Company shall thereby be excluded. The

shares or rights to subscribe for shares shall be issued to employees pursuant to

one or more regulations to be issued by the Board of Directors, taking into

account performance, functions, levels of responsibility and profitability criteria.

Shares or subscription rights may be issued to employees at a price lower than

that quoted on the stock exchange.

The acquisition of shares within the context of employee share ownership and

each subsequent transfer of the shares shall be subject to the restrictions of Art.

5 of these Articles of Incorporation.

#### Authorized

#### Share Capital
ARTICLE 4

TER

The Board of Directors shall be authorized to increase the share capital in an

amount not to exceed CHF 24 000 000 through the issuance of up to

200 000 000 fully paid registered shares with a par value of CHF 0.12 per share

by not later than March 25, 2023. Increases in partial amounts shall be

permitted.

The subscription and acquisition of the new shares, as well as each subsequent

transfer of the shares, shall be subject to the restrictions of Art. 5 of these

Articles of Incorporation.

The Board of Directors shall determine the date of issue of new shares, the issue

price, the type of payment, the conditions for the exercise of pre-emptive rights,

and the beginning date for dividend entitlement. In this regard, the Board of

Directors may issue new shares by means of a firm underwriting through a

banking institution, a syndicate or another third party with a subsequent offer

of these shares to the shareholders. The Board of Directors may permit pre-

emptive rights that have not been exercised to expire or it may place these

rights and/or shares as to which pre-emptive rights have been granted but not

exercised, at

market conditions or use them for other purposes in the interest of the

Company.

The Board of Directors is further authorized to restrict or deny the pre-emptive

rights of shareholders and allocate such rights to third parties if the shares are

to be used:

a)

for the acquisition of an enterprise, parts of an enterprise, or participations,

or for new investments, or, in case of a share placement, for the financing

or refinancing of such transactions; or

b)

for the purpose of broadening the shareholder constituency in connection

with a listing of shares on domestic or foreign stock exchanges.

#### Share Register

#### and Restrictions

#### on Registration,

#### Nominees
ARTICLE 5

The Company shall maintain a share register listing the surname and first name

(in the case of legal entities, the company name) and address of the holders and

usufructuaries of the registered shares.

Acquirers of registered shares shall be registered upon request in the share

register as shareholders with the right to vote, provided that they expressly

declare that they acquired the registered shares in their own name and for their

own account.

If persons fail to expressly declare in their registration applications that they

hold the shares for their own account (the "Nominees"), the Board of Directors

shall enter such persons in the share register with the right to vote, provided

that the Nominee has entered into an agreement with the Board of Directors

concerning his status and is subject to a recognized bank or financial market

supervision.

After hearing the registered shareholder or Nominee, the Board of Directors

may cancel registrations in the share register, retroactive to the date of

registration, if such registrations were made based on incorrect information. The

relevant shareholder or Nominee shall be informed immediately as to the

cancellation.

The Board of Directors shall regulate the details and issue the instructions

necessary for compliance with the preceding provisions. In special cases, it may

grant exemptions from the rule concerning Nominees. The Board of Directors

may delegate its duties.

Notwithstanding paras. 2–4 of this article, acquirers of registered shares may be

registered in the share register with Euroclear Sweden AB ("Euroclear") in

accordance with Swedish law.

ARTICLES OF INCORPORATION

#### Share Certificates

#### and

#### Intermediated

#### Securities
ARTICLE 6

The Company may issue its registered shares in the form of single certificates,

global certificates and uncertificated securities. Under the conditions set forth

by statutory law, the Company may convert its registered shares from one form

into another form at any time and without the approval of the shareholders. The

Company shall bear the cost of any such conversion.

If registered shares are issued in the form of single certificates or global

certificates, they shall bear the signatures of two members of the Board of

Directors. These signatures may be facsimile signatures.

The shareholder has no right to demand a conversion of the form of the

registered shares. Each shareholder may, however, at any time request a written

confirmation from the Company of the registered shares held by such

shareholder, as reflected in the share register.

Intermediated securities based on registered shares of the Company cannot be

transferred by way of assignment. A security interest in any such intermediated

securities also cannot be granted by way of assignment.

Uncertificated registered shares registered with Euroclear may be pledged in

accordance with Swedish law.

#### Exercise of Rights
ARTICLE 7

The Company shall only accept one representative per share.

The right to vote and rights relating thereto under a registered share may be

exercised vis-à-vis the Company only by a shareholder, usufructuary or

Nominee registered in the share register with the right to vote.

#### Dividend

#### Access Facility
ARTICLE 8

The Company has established a dividend access facility under which

shareholders who are resident in Sweden have the option to be registered with

Euroclear as holders of a total of up to 600 004 716 registered shares of the

Company, with suspended dividend entitlement. The claim to dividends against

the Company on such registered shares shall be suspended as long as such

registered shares are registered with Euroclear. In lieu thereof, on each such

registered share, an amount equivalent to the dividend resolved on a registered

share of the Company shall be paid in Swedish krona by ABB Norden Holding

AB based on the dividend entitlement on a preference share.

In deciding on the appropriation of dividends, the General Meeting of

Shareholders shall take into account that the Company will pay dividends only

on shares that do not participate in the dividend access facility.

#### —
SECTION 3:

#### Corporate Bodies
A. General Meeting of

Shareholders

#### Competence
ARTICLE 9

The General Meeting of Shareholders is the supreme body of the Company.

#### Ordinary

#### General

#### Meetings
ARTICLE 10

The Ordinary General Meeting of Shareholders shall be held each year within six

months after the close of the fiscal year of the Company; the business report, the

compensation report and the Auditors' reports shall be made available for

inspection by the shareholders at the place of incorporation of the Company by no

later than twenty days prior to the meeting. Each shareholder is entitled to request

immediate delivery of a copy of these documents. Shareholders will be notified of

this in writing.

#### Extraordinary

#### General Meetings
ARTICLE 11

Extraordinary General Meetings of Shareholders shall be held when deemed

necessary by the Board of Directors or the Auditors.

Furthermore, Extraordinary General Meetings of Shareholders shall be convened

upon resolution of a General Meeting of Shareholders or if this is requested by

one or more shareholders who represent an aggregate of at least one-tenth of

the share capital and who submit a petition signed by such shareholder(s),

specifying the items for the agenda and the proposals.

#### Notice of

#### General

#### Meetings
ARTICLE 12

Notice of General Meetings of Shareholders shall be given by the Board of

Directors or, if necessary, by the Auditors, by no later than twenty days prior to

the meeting date. Notice of the meeting shall be given by way of an

announcement appearing once in the official publication organ of the

Company. Shareholders may also be informed by ordinary mail. Liquidators and

representatives of bondholders shall also be entitled to call a General Meeting

of Shareholders.

The notice of a meeting shall state the items on the agenda and the proposals

of the Board of Directors and of the shareholders who demanded that a General

Meeting of Shareholders be held or that an item be included on the agenda

and, in case of elections, the names of the nominated candidates.

ARTICLES OF INCORPORATION

#### Agenda
ARTICLE 13

One or more shareholders whose combined shareholdings represent an

aggregate par value of at least CHF 48 000 may demand that an item be

included on the agenda of a General Meeting of Shareholders. Such inclusion

must be requested in writing at least forty days prior to the meeting and shall

specify the agenda items and proposals of such shareholder(s).

No resolutions may be passed at a General Meeting of Shareholders concerning

agenda items for which proper notice was not given. This provision shall not

apply, however, to proposals made during a General Meeting of Shareholders

to convene an Extraordinary General Meeting of Shareholders or to initiate a

special audit.

No previous notification shall be required for proposals concerning items

included on the agenda and for debates as to which no vote is taken.

#### Presiding

#### Officer, Minutes,

#### Vote Counters
ARTICLE 14

The General Meeting of Shareholders shall be held at the place of incorporation

of the Company, unless the Board of Directors decides otherwise. The Chairman

of the Board or, in his absence, a Vice-Chairman or any other Member

appointed by the Board, shall take the chair.

The presiding officer shall appoint the secretary and the vote counters. The

minutes shall be signed by the presiding officer and the secretary.

The presiding officer shall have all powers and authority necessary to ensure the

orderly and undisturbed conduct of the General Meeting of Shareholders.

#### Proxies
ARTICLE 15

The Board of Directors shall issue procedural rules regarding participation in

and representation at the General Meeting of Shareholders.

A shareholder may be represented only by the independent proxy

("Unabhängiger Stimmrechtsvertreter"), his legal representative or, by means of

a written proxy, another shareholder with the right to vote. All shares held by

one shareholder may be represented by only one representative.

The General Meeting of Shareholders shall elect the independent proxy for a

term of office extending until completion of the next Ordinary General Meeting

of Shareholders. Re-election is possible.

If the Company does not have an independent proxy, the Board of Directors

shall appoint the independent proxy for the next General Meeting of

Shareholders.

#### Voting Rights
ARTICLE 16

Subject to Art. 5 para. 2 of these Articles of Incorporation, each share shall grant the

right to one vote.

#### Resolutions,

#### Elections
ARTICLE 17

Unless otherwise required by law, the General Meeting of Shareholders shall

pass resolutions and decide elections upon an absolute majority of the votes

represented.

Resolutions and elections shall be decided by a show of hands, unless a secret

ballot is resolved by the General Meeting of Shareholders or is ordered by the

presiding officer. The presiding officer may also arrange for resolutions and

elections to be carried out by electronic means. Resolutions and elections

carried out by electronic means are deemed to have the same effect as secret

ballots.

The presiding officer may at any time order that an election or resolution be

repeated if, in his view, the results of the vote are in doubt. In this case, the

preceding election or resolution shall be deemed to have not occurred.

If the first ballot fails to result in an election and more than one candidate is

standing for election, the presiding officer shall order a second ballot in which a

relative majority shall be decisive.

#### Specific Powers

#### of the General

#### Meeting
ARTICLE 18

The following powers shall be vested exclusively in the General Meeting of

Shareholders:

a)

adoption and amendment of the Articles of Incorporation;

b)

election of the members of the Board of Directors, the Chairman of the Board of

Directors, the members of the Compensation Committee, the Auditors and the

independent proxy;

c)

approval of the annual management report and consolidated financial

statements;

d)

approval of the annual financial statements and decision on the allocation of

profits shown on the balance sheet, in particular with regard to dividends;

e)

approval of the compensation of the Board of Directors and of the Executive

Committee pursuant to Article 34 of these Articles of Incorporation;

f)

granting discharge to the members of the Board of Directors and the persons

entrusted with management;

g)

passing resolutions as to all matters reserved to the authority of the General

Meeting by law or under these Articles of Incorporation or that are submitted to

the General Meeting by the Board of Directors, subject to Art. 716a Swiss Code

of Obligations.

ARTICLES OF INCORPORATION

#### Special

#### Quorum
ARTICLE 19

The approval of at least two-thirds of the votes represented shall be required for

resolutions of the General Meeting of Shareholders with respect to:

a)

a modification of the purpose of the Company;

b)

the creation of shares with increased voting powers;

c)

restrictions on the transfer of registered shares and the removal of such

restrictions;

d)

restrictions on the exercise of the right to vote and the removal of such

restrictions;

e)

an authorized or conditional increase in share capital;

f)

an increase in share capital through the conversion of capital surplus, through

an in-kind contribution or in exchange for an acquisition of property, and a

grant of special benefits;

g)

the restriction or denial of pre-emptive rights;

h)

a transfer of the place of incorporation of the Company;

i)

the dissolution of the Company.

B. Board of Directors

#### Number

#### of Directors
ARTICLE 20

The Board of Directors shall consist of no fewer than 7 and no more than 13

members.

#### Election, Term

#### of Office
ARTICLE 21

The members of the Board of Directors and the Chairman of the Board of

Directors shall be individually elected by the General Meeting of Shareholders

for a term of office extending until completion of the next Ordinary General

Meeting of Shareholders.

Members whose terms of office have expired shall be immediately eligible for

re-election.

If the office of the Chairman of the Board of Directors is vacant, the Board of

Directors shall appoint a new Chairman from among its members for a term of

office extending until completion of the next Ordinary General Meeting of

Shareholders.

#### Organization

#### of the Board,

#### Reimbursement

#### of Expenses
ARTICLE 22

Except for the election of the Chairman of the Board of Directors and the

members of the Compensation Committee by the General Meeting of

Shareholders, the Board of Directors shall constitute itself. It may elect from

among its members one or several Vice-Chairmen. It shall appoint a secretary

who need not be a member of the Board.

The members of the Board of Directors shall be entitled to the reimbursement

of all expenses incurred in the interests of the Company.

#### Convening of

#### Meetings
ARTICLE 23

The Chairman shall convene meetings of the Board of Directors if and when the

need arises or whenever a member or the chief executive officer so requests in

writing.

#### Resolutions
ARTICLE 24

In order to pass resolutions, at least a majority of the members of the Board of

Directors must be present. No attendance quorum shall be required for

resolutions of the Board of Directors providing for the confirmation of capital

increases or for the amendment of the Articles of Incorporation in connection

therewith.

Resolutions of the Board of Directors shall be adopted upon a majority of the

votes cast. In the event of a tie, the Chairman shall have the casting vote.

Resolutions may be passed by way of circulation (in writing), provided that no

member requests oral deliberation.

#### Specific Powers

#### of the Board
ARTICLE 25

The Board of Directors has, in particular, the following nondelegable and

inalienable duties:

a)

the ultimate direction of the business of the Company and the issuance of

the necessary instructions;

b)

the determination of the organization of the Company;

c)

the administration of accounting, financial control and financial planning;

d)

the appointment and removal of the persons entrusted with management

and representation of the Company;

e)

the ultimate supervision of the persons entrusted with management of the

Company, specifically in view of their compliance with law, these Articles of

Incorporation, the regulations and directives;

f)

the preparation of the business report, the compensation report and the

General Meetings of Shareholders as well as the implementation of the

resolutions adopted by the General Meetings of Shareholders;

g)

the adoption of resolutions concerning an increase in share capital to the

extent that such power is vested in the Board of Directors (Art. 651 para. 4

Swiss Code of Obligations) and of resolutions concerning the confirmation

of capital increases and corresponding amendments to the Articles of

Incorporation, as well as making the required report on the capital increase;

h)

the notification of the court if liabilities exceed assets.

In addition, the Board of Directors may pass resolutions with respect to all

matters that are not reserved to the authority of the General Meeting of

Shareholders by law or under these Articles of Incorporation.

ARTICLES OF INCORPORATION

#### Delegation

#### of Powers
ARTICLE 26

Subject to Art. 25 of these Articles of Incorporation, the Board of Directors may

delegate management of the Company in whole or in part to individual directors or

to third persons pursuant to regulations governing the internal organization.

#### Signature

#### Power
ARTICLE 27

The due and valid representation of the Company by members of the Board of

Directors or other persons shall be set forth in regulations governing the internal

organization.

C. Compensation Committee

#### Number

#### of Members
ARTICLE 28

The Compensation Committee shall consist of no fewer than three members of the

Board of Directors.

#### Election, Term

#### of Office
ARTICLE 29

The members of the Compensation Committee shall be individually elected by

the General Meeting of Shareholders for a term of office extending until

completion of the next Ordinary General Meeting of Shareholders.

Members whose terms of office have expired shall be immediately eligible for

re-election.

If there are vacancies on the Compensation Committee, the Board of Directors

may appoint substitute members from among its members for a term of office

extending until completion of the next Ordinary General Meeting of

Shareholders.

#### Organization

#### of the

#### Compensation

#### Committee
ARTICLE 30

The Compensation Committee shall constitute itself. The Board of Directors

shall elect the chairman of the Compensation Committee.

The Board of Directors shall issue regulations establishing the organization and

decision-making process of the Compensation Committee.

#### Powers
ARTICLE 31

The Compensation Committee shall support the Board of Directors in

establishing and reviewing the compensation strategy and guidelines as well as

in preparing the proposals to the General Meeting of Shareholders regarding

the compensation of the Board of Directors and of the Executive Committee,

and may submit proposals to the Board of Directors in other compensation-

related issues.

The Board of Directors shall determine in regulations for which positions of the

Board of Directors and of the Executive Committee the Compensation

Committee shall submit proposals for the performance metrics, target values

and the compensation to the Board of Directors, and for which positions it shall

itself determine, in accordance with the Articles of Incorporation and the

compensation guidelines established by the Board of Directors, the

performance metrics, target values and the compensation.

The Board of Directors may delegate further tasks to the Compensation

Committee that shall be determined in regulations.

D. Auditors

#### Term, Powers

#### and Duties
ARTICLE 32

The Auditors, which shall be elected by the General Meeting of Shareholders each

year, shall have the powers and duties vested in them by law.

ARTICLES OF INCORPORATION

#### —
SECTION 4:

#### Compensation of the Members

#### of the Board of Directors and of

#### the Executive Committee

#### General

#### Compensation

#### Principles
ARTICLE 33

Compensation of the members of the Board of Directors consists of fixed

compensation. Total compensation shall take into account position and level of

responsibility of the recipient.

Compensation of the members of the Executive Committee consists of fixed

and variable compensation elements. Fixed compensation comprises the base

salary and other compensation elements. Variable compensation may comprise

short-term and long-term variable compensation elements. Total compensation

shall take into account position and level of responsibility of the recipient.

Short-term variable compensation elements shall be governed by performance

metrics that take into account the performance of the Company, the group or

parts thereof, targets in relation to the market, other companies or comparable

benchmarks and/or individual targets, and achievement of which is generally

measured during a one-year period. Depending on achieved performance, the

compensation may amount to a multiplier of target level.

Long-term variable compensation elements shall be governed by performance

metrics that take into account strategic and/or financial objectives, achievement

of which is generally measured during a perennial period, as well as retention

elements. Depending on achieved performance, the compensation may amount

to a multiplier of target level.

The Board of Directors or, to the extent delegated to it, the Compensation

Committee shall determine the performance metrics and target levels of the

short- and long-term variable compensation elements, as well as their

achievement.

Compensation may be paid in the form of cash, shares, or in the form of other

types of benefits; for the Executive Committee, compensation may in addition

be paid in the form of share-based instruments or units. The Board of Directors

or, to the extent delegated to it, the Compensation Committee shall determine

grant, vesting, exercise and forfeiture

conditions. In particular, they may provide for continuation, acceleration or

removal of vesting and exercise conditions, for payment or grant of

compensation based upon assumed target achievement, or for forfeiture, in

each case in the event of pre-determined events such as a change-of-control or

termination of an employment or mandate agreement. The Company may

procure the required shares through purchases in the market or by using

contingent share capital.

Compensation may be paid by the Company or companies controlled by it.

#### Approval of

#### Compensation by

#### the General

#### Meeting of

#### Shareholders
ARTICLE 34

The General Meeting of Shareholders shall approve the proposals of the Board

of Directors in relation to the maximum aggregate amounts of

a)

compensation of the Board of Directors for the next term of office;

b)

compensation of the Executive Committee for the following financial year.

The Board of Directors may submit for approval by the General Meeting of

Shareholders deviating or additional proposals relating to the same or different

periods.

In the event the General Meeting of Shareholders does not approve a proposal

of the Board of Directors, the Board of Directors shall determine, taking into

account all relevant factors, the respective (maximum) aggregate amount or

(maximum) partial amounts, and submit the amount(s) so determined for

approval by a General Meeting of Shareholders.

Compensation may be paid out prior to approval by the General Meeting of

Shareholders subject to subsequent approval.

#### Supplementary

#### Amount for

#### Changes to the

#### Executive

#### Committee
ARTICLE 35

If the maximum aggregate amount of compensation already approved by the

General Meeting of Shareholders is not sufficient to also cover the compensation of

one or more persons who become members of the Executive Committee or are

being promoted within the Executive Committee after the General Meeting of

Shareholders has approved the compensation of the Executive Committee for the

relevant period, then the Company or companies controlled by it shall be

authorized to pay such members a supplementary amount during the

compensation period(s) already approved. The supplementary amount per

compensation period shall not exceed 30% of the maximum aggregate amount of

compensation of the Executive Committee last approved.

ARTICLES OF INCORPORATION

#### —
SECTION 5:

#### Agreements with Members of

#### the Board of Directors and the

#### Executive Committee, Credits

#### Agreements with

#### Members of the

#### Board of

#### Directors and the

#### Executive

#### Committee
ARTICLE 36

The Company or companies controlled by it may enter into agreements for a

fixed term or for an indefinite term with members of the Board of Directors

relating to their compensation. Duration and termination shall comply with the

term of office and the law.

The Company or companies controlled by it may enter into employment

agreements for a fixed term or for an indefinite term with members of the

Executive Committee. Employment agreements for a fixed term may have a

maximum duration of one year. Renewal is possible. Employment agreements

for an indefinite term may have a termination notice period of maximum twelve

months.

The Company or companies controlled by it may enter into non-compete

agreements with members of the Executive Committee for the time after

termination of employment. Their duration shall not exceed one year, and

consideration paid for such non-compete undertaking shall not exceed the last

total annual compensation of such member of the Executive Committee.

#### Credits
ARTICLE 37

Credits may not be granted to a member of the Board of Directors or of the

Executive Committee.

#### —
SECTION 6:

#### Mandates Outside the Group

#### Mandates

#### Outside the

#### Group
ARTICLE 38

No member of the Board of Directors may hold more than ten additional

mandates, of which no more than four may be in listed companies.

No member of the Executive Committee may hold more than five mandates, of

which no more than one may be in a listed company.

The following mandates shall not be subject to the limitations set forth in paras.

1 and 2 of this Article:

a)

mandates in companies which are controlled by the Company or which

control the Company;

b)

mandates held at the request of the Company or companies controlled by

it. No member of the Board of Directors or of the Executive Committee shall

hold more than ten such mandates; and

c)

mandates in associations, charitable organizations, foundations, trusts,

employee welfare foundations, educational institutions, nonprofit

institutions and other similar organizations. No member of the Board of

Directors or of the Executive Committee shall hold more than twenty -five

such mandates.

Mandates shall mean mandates in the supreme governing body of a legal entity

which is required to be registered in the commercial register or a comparable

foreign register. Mandates in different legal entities that are under joint control

or same beneficial ownership are deemed one mandate.

ARTICLES OF INCORPORATION

#### —
SECTION 7:

#### Annual Financial Statements,

#### Consolidated Financial

#### Statements and Profit Allocation

#### Fiscal Year,

#### Business Report
ARTICLE 39

The fiscal year shall close as of December 31 of each year, closing for the first

time on December 31, 1999.

For each fiscal year, the Board of Directors shall prepare a business report

including the annual financial statements (consisting of the profit and loss

statements, balance sheet, cash flow statements and notes to the financial

statements), the annual management report and consolidated financial

statements.

#### Allocation of

#### Profit Shown on

#### the Balance

#### Sheet, Reserves
ARTICLE 40

The profit shown on the balance sheet shall be allocated by the General

Meeting of Shareholders within the limits set by applicable law. The Board of

Directors shall submit its proposals to the General Meeting of Shareholders.

Further reserves may be taken in addition to the reserves required by law.

Dividends that have not been collected within five years after their expiry date

shall pass to the Company and be allocated to the general reserves.

#### —
SECTION 8:

#### Announcements,

#### Communications

#### Announcements,

#### Communications
ARTICLE 41

The official publication organ of the Company shall be the Swiss Official Gazette

of Commerce.

To the extent that personal notification is not mandated by law, all

communications to the shareholders shall be deemed valid if published in the

Swiss Official Gazette of Commerce. Written communications by the Company

to its shareholders shall be sent by ordinary mail to the last address of the

shareholder or authorized recipient entered in the share register.

![exhibit01x1p21i0](exhibit01x1p21i0.jpg)

## Exhibit 2.4

#### Exhibit 2.4

#### DESCRIPTION OF SECURITIES
This exhibit summarizes the material provisions of ABB Ltd's (the "Company" or "ABB") Articles of

Incorporation and the Swiss Code of Obligations relating to the shares of ABB Ltd, and ABB Ltd's

Amended and Restated Deposit Agreement dated May 7, 2001 (the "Deposit Agreement"). The

description is only a summary and is qualified in its entirety by ABB Ltd's Articles of Incorporation,

ABB Ltd's filings with the commercial register of the Canton of Zurich (Switzerland) and Swiss statutory

law.

#### Registration and Business Purpose
ABB Ltd was registered as a corporation (*Aktiengesellschaft*) in the commercial register of the

Canton of Zurich (Switzerland) on March 5, 1999, under the name of "New ABB Ltd" and its name was

subsequently changed to "ABB Ltd".

#### Our Shares
ABB Ltd's shares are registered shares (*Namenaktien*) with a par value of CHF 0.12 each. ABB's

ordinary share capital (including treasury shares) as registered with the Commercial Register amounts to

CHF 235,769,409.00, divided into 1,964,745,075 fully paid registered shares with a par value of CHF 0.12

per share.

The shares are fully paid and non-assessable. The shares rank pari passu in all respects with

each other, including in respect of entitlements to dividends, to a share of the liquidation proceeds in the

case of a liquidation of ABB Ltd, to advance subscription rights and to pre-emptive rights.

Each share carries one vote in ABB Ltd's general shareholders' meeting. Voting rights may be

exercised only after a shareholder has been recorded in ABB Ltd's share register (*Aktienbuch*) as a

shareholder with voting rights, or with Euroclear Sweden AB in Sweden, which maintains a subregister of

ABB Ltd's share register. Euroclear Sweden AB is an authorized central securities depository under the

Swedish Act on Registration of Financial Instruments and carries out, among other things, the duties of

registrar for Swedish companies listed on the NASDAQ OMX Stockholm Exchange. Registration with

voting rights is subject to the restrictions described in "Transfer of Shares".

The shares are not issued in certificated form and are held in collective custody at SIX SIS AG.

Shareholders do not have the right to request printing and delivery of share certificates (*aufgehobener* 

*Titeldruck*), but may at any time request ABB Ltd to issue a confirmation of the number of registered

shares held.

#### Right to vote
A shareholder may be represented at the Annual General Meeting by its legal representative, by

another shareholder with the right to vote or by the independent proxy elected by the shareholders

(*unabhängiger Stimmrechtsvertreter*). If the Company does not have an independent proxy, the Board of

Directors shall appoint the independent proxy for the next General Meeting of Shareholders. All shares

held by one shareholder may be represented by one representative only.

For practical reasons shareholders must be registered in the share register no later than 6

business days before the general meeting in order to be entitled to vote. Except for the cases described

under "Limitations on transferability of shares and nominee registration" below, there are no voting rights

restrictions limiting ABB's shareholders' rights.

There is no provision in ABB Ltd's Articles of Incorporation requiring a quorum for the holding of

shareholders' meetings.

Resolutions and elections usually require the approval of an "absolute majority" of the shares

represented at a shareholders' meeting (i.e. a majority of the shares represented at the shareholders'

meeting with abstentions having the effect of votes against the resolution). If the first ballot fails to result in

an election and more than one candidate is standing for election, the presiding officer will order a second

ballot in which a relative majority (i.e. a majority of the votes) shall be decisive.

A resolution passed with a qualified majority (at least two thirds) of the shares represented at a

shareholders' meeting is required for:

• a modification of the purpose of ABB Ltd,

• the creation of shares with increased voting powers,

• restrictions on the transfer of registered shares and the removal of those restrictions,

• restrictions on the exercise of the right to vote and the removal of those restrictions,

• an authorized or conditional increase in share capital,

• an increase in share capital through the conversion of capital surplus, through an in-kind

contribution or in exchange for an acquisition of property, and the grant of special benefits,

• the restriction or denial of pre-emptive rights,

• a transfer of ABB Ltd's place of incorporation, and

• ABB Ltd's dissolution.

#### Shareholders' dividend rights
The unconsolidated statutory financial statements of ABB Ltd are prepared in accordance with

Swiss law. Based on these financial statements, dividends may be paid only if ABB Ltd has sufficient

distributable profits from previous years or sufficient free reserves to allow the distribution of a dividend.

Swiss law requires that ABB Ltd retain at least 5 percent of its annual net profits as legal reserves until

these reserves amount to at least 20 percent of ABB Ltd's share capital. Any net profits remaining in

excess of those reserves are at the disposal of the shareholders' meeting.

Under Swiss law, ABB Ltd may only pay out a dividend if it has been proposed by a shareholder

or the Board of Directors and approved at a general meeting of shareholders, and the auditors confirm

that the dividend conforms to statutory law and ABB's Articles of Incorporation. In practice, the

shareholders' meeting usually approves dividends as proposed by the Board of Directors.

Dividends are usually due and payable no earlier than two trading days after the shareholders'

resolution and the ex

-

date for dividends is normally two trading days after the shareholders' resolution

approving the dividend. Dividends are paid out to the holders that are registered on the record date.

Euroclear administers the payment of those shares registered with it. Under Swiss law, dividends not

collected within five years after the due date accrue to ABB Ltd and are allocated to its other reserves. As

ABB Ltd pays cash dividends, if any, in Swiss francs (subject to the exception for certain shareholders in

Sweden described below), exchange rate fluctuations will affect the U.S. dollar amounts received by

holders of ADSs upon conversion of those cash dividends by Citibank, N.A., the depositary, in accordance

with the Deposit Agreement.

For shareholders who are residents of Sweden, ABB has established a dividend access facility

(for up to 600,004,716 shares). With respect to any annual dividend payment for which this facility is made

available, shareholders who register with Euroclear may elect to receive the dividend from ABB Norden

Holding AB in Swedish krona (in an amount equivalent to the dividend paid in Swiss francs) without

deduction of Swiss withholding tax. For further information on the dividend access facility, see ABB's

Articles of Incorporation.

#### Transfer of Shares
The transfer of shares is effected by corresponding entry in the books of a bank or depository

institution. An acquirer of shares must file a share registration form in order to be registered in ABB Ltd's

share register as a shareholder with voting rights. Failing such registration, the acquirer will not be able to

participate in or vote at shareholders' meetings, but will be entitled to dividends, pre-emptive and

advanced subscription rights, and liquidation proceeds.

An acquirer of shares will be recorded in ABB Ltd's share register with voting rights upon

disclosure of its name and address. However, ABB Ltd may decline a registration with voting rights if the

shareholder does not declare that it has acquired the shares in its own name and for its own account. If

the shareholder refuses to make such declaration, it will be registered as a shareholder without voting

rights. A person failing to declare in its registration application that it holds shares for its own account (a

nominee), will be entered in the share register with voting rights, provided that such nominee has entered

into an agreement with ABB concerning its status, and further provided that the nominee is subject to

recognized bank or financial market supervision.

After having given the registered shareholder or nominee the right to be heard, the Board of

Directors may cancel registrations in the share register retroactively to the date of registration if such

registrations were made on the basis of incorrect information. The relevant shareholder or nominee will be

informed promptly as to the cancellation. The Board of Directors will oversee the details and issue the

instructions necessary for compliance with the preceding regulations. In special cases, it may grant

exemptions from the rule concerning nominees.

Acquirers of registered shares who have chosen to have their shares registered in the share

register with Euroclear Sweden AB are not requested to file a share registration form or declare that they

have acquired the shares in their own name and for their own account in order to be registered as a

shareholder with voting rights. However, in order to be entitled to vote at a shareholders' meeting those

acquirers need to be entered in the Euroclear Sweden AB share register in their own name no later than

six business days prior to the shareholders' meeting. Holders of such shares are also able to attend

shareholders' meetings. Uncertificated shares registered with Euroclear Sweden AB may be pledged in

accordance with Swedish law.

Except as described in this subsection, neither the Swiss Code of Obligations nor ABB Ltd's

Articles of Incorporation limit any right to own ABB Ltd's shares, or any rights of non-resident or foreign

shareholders to exercise voting rights of ABB Ltd's shares.

#### Pre-emptive Rights
Shareholders of a Swiss corporation have certain pre-emptive rights to subscribe for new shares

issued in connection with capital increases in proportion to the nominal amount of their shares held. A

resolution adopted at a shareholders' meeting with a supermajority of two-thirds of the shares represented

may, however, repeal, limit or suspend (or authorize the board of directors to repeal, limit or suspend)

pre-emptive rights for cause. Cause includes an acquisition of a business or a part thereof, an acquisition

of a participation in a company or the grant of shares to employees. In addition, based on Article 4bis

para. 1 and para. 4 of ABB Ltd's Articles of Incorporation, pre-emptive rights of the shareholders are

excluded in connection with the issuance of convertible or warrant-bearing bonds or other financial market

instruments, shares to employees of ABB issued out of ABB Ltd's contingent share capital or the grant of

warrant rights to shareholders, or may be restricted or denied by the Board of Directors of ABB Ltd under

certain circumstances as set forth in Article 4ter of ABB Ltd's Articles of Incorporation.

#### Advance Subscription Rights
Shareholders of a Swiss corporation may have an advance subscription right with respect to

bonds and other instruments issued in connection with options or conversion rights for shares if such

option or conversion rights are based on the corporation's conditional capital. However, the shareholders'

meeting can, with a supermajority of two-thirds of the shares represented at the meeting, exclude or

restrict (or authorize the board of directors to exclude or restrict) such advance subscription rights for

cause.

#### Repurchase of Shares
Swiss law limits a corporation's ability to repurchase or hold its own shares. ABB Ltd and its

subsidiaries may only repurchase shares if ABB Ltd has sufficient freely distributable reserves to pay the

purchase price, and the aggregate nominal value of such shares does not exceed 10 percent of ABB Ltd's

total share capital. Furthermore, ABB Ltd must create a special reserve on its balance sheet in the amount

of the purchase price of the acquired shares. Such shares held by ABB Ltd or its subsidiaries do not carry

any rights to vote at shareholders' meetings, but are entitled to the economic benefits applicable to the

shares generally and are considered to be "outstanding" under Swiss law.

#### Notices
Written communication by ABB Ltd to its shareholders will be sent by ordinary mail to the last

address of the shareholder or authorized recipient entered in the share register. To the extent that

personal notification is not mandated by law, all communications to the shareholders are validly made by

publication in the Swiss Official Gazette of Commerce (*Schweizerisches Handelsamtsblatt*). To the extent

required by the listing rules of the SIX Swiss Exchange, the NASDAQ OMX Stockholm Exchange, or the

New York Stock Exchange, notices will be published in accordance with the rules of those exchanges. All

such shareholder notices will also be published on ABB's website.

#### Duration, Liquidation and Merger
The duration of ABB Ltd as a legal entity is unlimited. It may be dissolved at any time by a

shareholders' resolution which must be approved by a supermajority of two-thirds of the shares

represented at the general meeting of shareholders (this supermajority requirement applies in the event of

a dissolution by way of liquidation or a merger where ABB Ltd is not the surviving entity). Dissolution by

court order is possible if it becomes bankrupt or if holders of at least 10 percent of its share capital

registered in the commercial register can establish cause for dissolution.

Under Swiss law, any surplus arising out of a liquidation of a corporation (after the settlement of

all claims of all creditors) is distributed to the shareholders in proportion to the paid-up par value of shares

held, but this surplus is subject to Swiss withholding tax of 35 percent.

#### Disclosure of Major Shareholders
Under the Swiss Financial Market Infrastructure Act, shareholders and groups of shareholders

acting in concert who directly or indirectly acquire or sell shares of a listed Swiss corporation or rights

based thereon and thereby reach, exceed or fall below the thresholds of 3 percent, 5 percent, 10 percent,

15 percent, 20 percent, 25 percent, 33

/

percent, 50 percent or 66

/

percent of the voting rights of the

corporation must notify the corporation and the exchange(s) in Switzerland on which such shares are

listed of such holdings in writing within four trading days, whether or not the voting rights can be

exercised. Following receipt of such a notification, the corporation must inform the public within two

trading days.

An additional disclosure requirement exists under the Swiss Code of Obligations, according to

which ABB Ltd must disclose individual shareholders and groups of shareholders acting in concert and

their shareholdings if they hold more than 5 percent of all voting rights and ABB Ltd knows or has reason

to know of such major shareholders. Such disclosures must be made once a year in the notes to the

financial statements as published in its annual report.

#### Mandatory Offering Rules
Under the Swiss Financial Market Infrastructure Act, shareholders and groups of shareholders

acting in concert who acquire more than 33

/

percent of the voting rights (whether exercisable or not) of a

listed Swiss company have to submit a takeover bid to all remaining shareholders unless the articles of

incorporation of the company provide for an alteration of this obligation. ABB Ltd's Articles of Incorporation

do not provide for any alterations of the acquiror's obligations under the Swiss Financial Market

Infrastructure Act. The mandatory offer obligation may be waived under certain circumstances, for

example if another shareholder owns a higher percentage of voting rights than the acquiror. A waiver from

the mandatory bid rules may be granted by the Swiss Takeover Board. If no waiver is granted, the

mandatory takeover bid must be made pursuant to the procedural rules set forth in the Swiss Financial

Market Infrastructure Act and the implementing ordinances.

Other than the rules discussed in this section and in the section above entitled "—Duration,

Liquidation and Merger" and as disclosed from time to time in our Annual Report on Form 20-F with

respect to Shareholders' Meetings (which reflect mandatory provisions of Swiss law), no provision of

ABB Ltd's Articles of Incorporation would operate only with respect to a merger, acquisition or corporate

restructuring of ABB (or any of its subsidiaries) and have the effect of delaying, deferring or preventing a

change in control of ABB.

#### Cancellation of Remaining Equity Securities
Under Swiss law, any offeror who has made a tender offer for the shares of a Swiss target

company and who, as a result of such offer, holds more than 98 percent of the voting rights of the target

company, may petition the court to cancel the remaining equity securities. The corresponding petition

must be filed against the target company within three months after the lapse of the offer period. The

remaining shareholders may join in the proceedings. If the court orders cancellation of the remaining

equity securities, the target company will reissue the equity securities and deliver such securities to the

offeror against performance of the offer for the benefit of the holders of the cancelled equity securities.

#### Revision of Swiss Corporate Law
Swiss corporate law has been revised, effective as of January 1, 2023. The main objectives of the

revision are to strengthen shareholder rights, improve corporate governance and modernize corporate law

in general. Swiss corporations are required to amend their articles of incorporation for compliance with the

new law by the end of 2024 at the latest. ABB will propose the necessary changes to its Articles of

Incorporation for approval by shareholders at its Annual General Meeting in March 2023. These changes

will impact certain of the above referred provisions.

#### American Depositary Shares
*American Depositary Shares* 

The Company's American Depositary Shares (each representing one registered share of ABB

Ltd) are referred to as "ADSs". Citibank, N.A. is the depositary bank (the "Depositary") of the Company's

ADS program and its principal executive office is 388 Greenwich Street, New York, New York 10013.

*Voting the Deposited Securities* 

Holders generally have the right under the Deposit Agreement to instruct the Depositary to vote

the number of deposited shares represented by their ADSs. At the Company's request, the Depositary will

distribute to holders as of a specified record date a notice of meeting or solicitation of consent or proxies

together with information explaining how to instruct the Depositary to exercise the voting rights of the

shares represented by ADSs. Upon the timely receipt of voting instructions from a holder of ADSs as of

the specified record date in the manner specified by the Depositary, the Depositary must endeavor,

insofar as practicable and permitted under applicable law and the provisions of the Articles of

Incorporation of the Company and the provisions of the shares, to vote, or cause Citibank, N.A. – Zurich

(the "Custodian") to vote, the shares represented by such holder's ADSs in accordance with such

instructions.

If the Depositary timely receives voting instructions from a holder that fail to specify the manner in

which the Depositary is to vote the shares represented by such holder's ADSs, the Depositary will deem

such holder (unless otherwise specified in the notice distributed to holders) to have instructed the

Depositary to vote in favor of the proposals of the Board of Directors in respect of the items set forth on

the agenda for the relevant meeting. Shares represented by ADSs for which no timely voting instructions

are received by the Depositary from the holder will not be voted. Notwithstanding the foregoing, if the

Depositary receives a request from the Company less than 30 days but at least 10 days prior to a meeting

or proxy or consent solicitation, the Depositary, subject to certain conditions, must distribute to holders as

of the specified record date an information statement which describes for such holders the matters to be

voted on at such meeting. Under these circumstances, the Depositary will not be responsible for the

inability of any holder to exercise its right to vote.

*Distributions of Cash* 

Whenever the Depositary receives confirmation from the Custodian of receipt of any cash

dividend or other cash distribution on any shares, or receives proceeds from the sale of any shares or of

any entitlements held in respect of shares under the terms of the Deposit Agreement, the Depositary will

arrange for the funds to be converted into U.S. dollars and for the distribution of the U.S. dollars to holders

entitled thereof as of a specified record date in proportion to the number of ADSs held as of such record

date. The distribution of cash will be made net of the fees, expenses, taxes and governmental charges

payable by holders under the terms of the Deposit Agreement. The Depositary must distribute only such

amount, however, as can be distributed without attributing to any holder a fraction of one cent, and any

balance not so distributable must be held by the Depositary (without liability for interest thereon) and must

be added to and become part of the next sum received by the Depositary for distribution to holders of

ADSs then outstanding at the time of the next distribution. Alternatively, the funds that the Depositary

holds must be escheated as unclaimed property in accordance with applicable law.

*Distributions of Shares* 

If any distribution upon any deposited shares consists of a dividend in, or free distribution of,

shares, the Company must cause such shares to be deposited with the Custodian and registered, as the

case may be, in the name of the Depositary, the Custodian or their respective nominees. Upon receipt of

confirmation of such deposit from the Custodian, the Depositary must, subject to and in accordance with

the Deposit Agreement, distribute to the holders as of a specified record date in proportion to the number

of ADSs held as of such date, additional ADSs, which represent in aggregate the number of shares

received as such dividend, or free distribution, subject to the terms of the Deposit Agreement. If additional

ADSs are not so distributed, each ADS issued and outstanding after the specified record date must, to the

extent permissible by law, also represent the additional integral number of shares distributed upon the

shares represented thereby.

The distribution of shares or the modification of the ADS-to-share ratio upon a distribution of

shares will be made net of fees, expenses, taxes and governmental charges payable by holders under the

terms of the Deposit Agreement. Only whole new ADSs will be distributed. Fractional entitlements will be

sold and the proceeds of such sale will be distributed as in the case of a cash distribution.

*Elective Distributions in Cash or Shares* 

Whenever the Company intends to distribute a dividend payable at the election of the holders

either in cash or in additional shares, the Company must give prior notice thereof to the Depositary and

will indicate whether the Company wishes the elective distribution to be made available to holders of

ADSs. In such case, the Company will assist the Depositary in determining whether such distribution is

lawful and reasonably practicable and the means by which such elective distribution can be made

available. The Depositary will make the election available to the holders only if it is reasonably practicable

and the Company has provided all documentation contemplated in the Deposit Agreement. In such case,

the Depositary will establish procedures to enable the holders to elect to receive either cash or additional

ADSs, in each case as described in the Deposit Agreement.

*Distribution of Rights to Purchase Additional Shares* 

Whenever the Company intends to distribute to holders rights to subscribe for additional shares,

the Company must promptly give notice thereof to the Depositary stating whether or not it wishes such

rights to be made available to holders of ADSs. Upon the timely receipt of the Company's notice indicating

that the Company wishes such rights to be made available to holders of ADSs, the Depositary must

consult with the Company to determine, and the Company must assist the Depositary in its determination,

whether it is lawful and reasonably practicable to make such rights available to the holders and the means

of making such rights available to the holders. The Depositary will establish procedures to distribute rights

to purchase additional ADSs to holders to exercise such rights if it is lawful and reasonably practicable to

make the rights available to holders of ADSs, and if the Company provides all of the documentation

contemplated in the Deposit Agreement (such as opinions to address the lawfulness of the transaction).

Holders may have to pay fees, expenses, taxes and other governmental charges to subscribe for the new

ADSs upon the exercise of the holders' rights. The Depositary is not obligated to establish procedures to

facilitate the distribution and exercise by holders of rights to purchase shares other than in the form of

ADSs. The Depositary will not distribute rights to a holder if the Company does not timely request that the

rights be distributed to the holder or the Company requests that the rights not be distributed to the holder;

or if the Company fails to deliver satisfactory documents to the Depositary, or it is not reasonably

practicable to distribute the rights. The Depositary will sell the rights that are not exercised or not

distributed if such sale is lawful and reasonably practicable. The proceeds of such sale will be distributed

to holders as in the case of a cash distribution. If the Depositary is unable to sell the rights, it will allow the

rights to lapse.

*Notices and Reports* 

The Depositary will, at the expense of the Company, make available a copy of any notices,

reports or communications issued by the Company and delivered to the Depositary for inspection by the

holders of the receipts evidencing the ADSs representing such shares governed by such provisions at the

Depositary's principal office, at the office of the Custodian and at any other designated transfer office.

*Changes Affecting Deposited Securities* 

The shares held on deposit for holders' ADSs may change from time to time. For

example, there may be a change in nominal or par value, split-up, cancellation, consolidation or any other

reclassification of such shares or a recapitalization, reorganization, merger, consolidation or sale of assets

of the Company. If any such change were to occur, the holders' ADSs would, to the extent permitted by

law, represent the right to receive the property received or exchanged in respect of the shares held on

deposit. The Depositary may in such circumstances deliver new ADSs to the holders, amend the Deposit

Agreement, the receipts, and the applicable registration statement(s) on Form F-6, call for the exchange

of the holders' existing ADSs for new ADSs and take any other actions that are appropriate to reflect as to

the ADSs the change affecting the shares. If the Depositary may not lawfully distribute such property to

the holders, the Depositary may sell such property and distribute the net proceeds to the holders as in the

case of a cash distribution.

*Amendment or Termination of Deposit Agreement* 

The Company may agree with the Depositary to modify the Deposit Agreement without the prior

written consent of the holders or beneficial owners. The Company will give holders 30 days' prior notice of

any modifications that would materially prejudice any of their substantial rights under the Deposit

Agreement. The Company does not consider to be materially prejudicial to the holders' substantial rights

any modifications or supplements that are reasonably necessary for the ADSs to be registered under the

Securities Act of 1933, as amended (the "Securities Act") or to be eligible for book-entry settlement, in

each case, without imposing or increasing the fees and charges holders are required to pay. In addition,

the Company may not be able to provide the holders with prior notice of any modifications or supplements

that are required to accommodate compliance with applicable provisions of law. Holders will be bound by

modifications to the Deposit Agreement if they continue to hold ADSs after the modifications to the

Deposit Agreement become effective. The Deposit Agreement cannot be amended to prevent a holder

from withdrawing the shares represented by its ADSs (except as permitted by law). The Company has the

right to direct the Depositary to terminate the Deposit Agreement. Similarly, the Depositary may in certain

circumstances on its own initiative terminate the Deposit Agreement. In either case, the Depositary must

give notice to the holders at least 30 days before termination. Until termination, the holders' rights under

the Deposit Agreement will be unaffected.

After termination, the Depositary will continue to collect dividends and other distributions

received (but will not distribute any such property until holders request the cancellation of their ADSs) and

may sell the securities held on deposit. After the sale, the Depositary will hold the proceeds from such

sale and any other funds then held for the holders of ADSs in a non-interest bearing account. At that point,

the Depositary will have no further obligations to holders other than to account for the funds then held for

the holders of ADSs still outstanding (after deduction of applicable fees, taxes and expenses).

*Inspection of Books and Records* 

The Depositary (or any bank or trust company appointed by the Depository in accordance with the

Deposit Agreement, the "registrar") must keep books for the registration of issuances and transfers of

receipts, which at all reasonable times must be open for inspection by the Company and by the holders of

such receipts, provided that such inspection must not be, to the registrar's knowledge, for the purpose of

communicating with holders of such receipts in the interest of a business or object other than the business

of the Company or other than a matter related to the Deposit Agreement or the receipts. The registrar may

close the transfer books with respect to the receipts, at any time or from time to time, when deemed

necessary or advisable by it in good faith in connection with the performance of its duties under the

Deposit Agreement, or at the reasonable written request of the Company subject, in all cases, to the terms

of the Deposit Agreement.

*Transfer, Combination and Split Up of Receipts* 

Holders will be entitled to transfer, combine or split up receipts and the shares evidenced thereby.

For transfers of receipts, holders will have to surrender the receipt to be transferred to the Depositary and

also must:

• ensure that the surrendered receipt is properly endorsed or otherwise in proper form for

transfer;

• provide such proof of identity and genuineness of signatures as the Depositary deems

appropriate;

• provide any transfer stamps required by the State of New York or the United States; and

• pay all applicable fees, charges, expenses, taxes and other government charges payable by

holders pursuant to the terms of the Deposit Agreement, upon the transfer of receipts.

To have receipts either combined or split up, holders must surrender the receipts in question to

the Depositary with a request to have them combined or split up, and must pay all applicable fees,

charges and expenses payable by receipt holders, pursuant to the terms of the Deposit Agreement, upon

a combination or split up of receipts.

*Withdrawal of Shares Upon Cancellation of ADSs* 

Holders are entitled to present ADSs to the Depositary for cancellation and then receive the

corresponding number of underlying shares at the Custodian's offices. A holder's ability to withdraw the

shares held in respect of the ADSs may be limited by Swiss law considerations applicable at the time of

withdrawal. In order to withdraw the shares represented by ADSs, a holder will be required to pay to the

Depositary the fees for cancellation of ADSs and any charges and taxes payable upon the transfer of the

shares. Holders assume the risk for delivery of all funds and securities upon withdrawal. Once canceled,

the ADSs will not have any rights under the Deposit Agreement.

The Depositary may ask a holder to provide proof of identity and genuineness of any signature

and such other documents as the Depositary may deem appropriate before it will cancel ADSs. The

withdrawal of the shares represented by the ADSs may be delayed until the Depositary receives

satisfactory evidence of compliance with all applicable laws and regulations. The Depositary will only

accept ADSs for cancellation that represent a whole number of securities on deposit.

A holder will have the right to withdraw the securities represented by ADSs at any time except as

a result of:

• temporary delays that may arise because (i) the transfer books for the shares or ADSs are

closed, or (ii) shares are immobilized on account of a shareholders' meeting or a payment of

dividends;

• obligations to pay fees, taxes and similar charges; and/or

• restrictions imposed because of laws or regulations applicable to ADSs or the withdrawal of

securities on deposit.

*Limitation on Liability* 

The Deposit Agreement limits the Company's obligations and the Depositary's obligations to

holders. Specifically:

• The Company and the Depositary are obligated only to take the actions specifically stated in

the Deposit Agreement without negligence or bad faith.

• The Depositary disclaims any liability for any failure to carry out voting instructions, for any

manner in which a vote is cast or for the effect of any vote, provided it acts in good faith and in

accordance with the terms of the Deposit Agreement.

• The Depositary disclaims any liability for any failure to determine the lawfulness or practicality

of any action, for the content of any document forwarded to holders on the Company's behalf

or for the accuracy of any translation of such a document, for the investment risks associated

with investing in shares, for the validity or worth of the shares, for any tax consequences that

result from the ownership of ADSs, for the credit-worthiness of any third party, for allowing

any rights to lapse under the terms of the Deposit Agreement, for the timeliness of any of the

Company's notices or for its failure to give notice.

• The Company and the Depositary will not be obligated to perform any act that is inconsistent

with the terms of the Deposit Agreement.

• The Company and the Depositary disclaim any liability if the Company or the Depositary are

prevented or forbidden from or subject to any civil or criminal penalty or restraint on account

of, or delayed in, doing or performing any act or thing required by the terms of the Deposit

Agreement, by reason of any provision, present or future of any law or regulation of the United

States, Switzerland, or any other country, or by reason of present or future provision of any

provision of the Company's Articles of Incorporation, or any provision of or governing the

securities on deposit, or by reason of any act of God or war or other circumstances beyond

the Company's control.

• The Company and the Depositary disclaim any liability by reason of any exercise of, or failure

to exercise, any discretion provided for in the Deposit Agreement or in the Company's Articles

of Incorporation or in any provisions of or governing the securities on deposit.

• The Company and the Depositary further disclaim any liability for any action or inaction in

reliance on the advice or information received from legal counsel, accountants, any person

presenting shares for deposit, any holder of ADSs or authorized representatives thereof, or

any other person believed by either of us in good faith to be competent to give such advice or

information.

• The Company and the Depositary also disclaim liability for the inability by a holder to benefit

from any distribution, offering, right or other benefit that is made available to holders of shares

but is not, under the terms of the Deposit Agreement, made available to holders of ADSs.

• The Company and the Depositary may rely without any liability upon any written notice,

request or other document believed to be genuine and to have been signed or presented by

the proper parties.

• The Company and the Depositary also disclaim liability for any consequential or punitive

damages for any breach of the terms of the Deposit Agreement.

• No disclaimer of any Securities Act liability is intended by any provision of the Deposit

Agreement.

## Exhibit 4.7

Exhibit 4.7

exhibit04x7p1i0

CLIFFORD CHANCE LLP

EXECUTION VERSION

# AMENDMENT AND RESTATEMENT AGREEMENT

DATED 16 FEBRUARY 2023

BETWEEN

ABB LTD

CERTAIN SUBSIDIARIES OF ABB LTD
AS ORIGINAL BORROWERS

THE MANDATED LEAD ARRANGERS

THE ORIGINAL LENDERS

CITIBANK EUROPE PLC, UK BRANCH
AS FACILITY AGENT
AND EURO SWINGLINE AGENT

AND

CITIBANK, N.A
AS DOLLAR SWINGLINE AGENT

RELATING TO THE $2,000,000,000
MULTICURRENCY REVOLVING CREDIT
AGREEMENT
DATED 16 DECEMBER 2019

10250237317-v15

70-41048667

# CONTENTS

| Clause | Page |
| --- | --- |
| 1. Definitions and Interpretation | 1 |
| 2. Representations | 2 |
| 3. Restatement | 2 |
| 4. Continuity and Further Assurance | 2 |
| 5. Costs and Expenses | 3 |
| 6. Miscellaneous | 3 |
| 7. Governing Law | 3 |
| Schedule 1 The Obligors | 4 |
| Schedule 2 Conditions Precedent | 5 |
| Schedule 3 Amended and Restated Facility Agreement | 7 |

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70-41048667

THIS AGREEMENT is dated 16 February 2023 and made between:

(1) ABB LTD, a company incorporated in Switzerland whose registered office is at Affolternstrasse 44, CH-8050 Zurich, Switzerland ("ABB" or the "Guarantor");
(2) THE SUBSIDIARIES OF ABB listed in Schedule 1 as original borrowers (the "Original Borrowers");
(3) THE MANDATED LEAD ARRANGERS (as defined in the Amended and Restated Facility Agreement);
(4) THE ORIGINAL LENDERS (as defined in the Amended and Restated Facility Agreement);
(5) CITIBANK EUROPE PLC, UK BRANCH in its capacity as facility agent (the "Facility Agent");
(6) CITIBANK, N.A. in its capacity as dollar swingline agent (the "Dollar Swingline Agent"); and
(7) CITIBANK EUROPE PLC, UK BRANCH in its capacity as euro swingline agent (the "Euro Swingline Agent").

IT IS AGREED as follows:

# 1. DEFINITIONS AND INTERPRETATION

# 1.1 Definitions

In this Agreement:

"Amended and Restated Facility Agreement" means the Original Facility Agreement, as amended and restated by this Agreement.

"Effective Date" means the date on which the Facility Agent confirms to the Original Lenders and ABB that it has received each of the documents and other evidence listed in Schedule 2 (Conditions Precedent) in a form and substance satisfactory to the Facility Agent.

"Guarantee Obligations" means the guarantee and indemnity obligations of the Guarantor contained in the Original Facility Agreement.

"Original Facility Agreement" means the $2,000,000,000 multicurrency revolving credit agreement dated 16 December 2019 between, among others, ABB, the Original Borrowers, the Agents, the Mandated Lead Arrangers and the Original Lenders as amended and/or supplemented from time to time prior to the date of this Agreement.

# 1.2 Incorporation of defined terms

(a) Unless a contrary indication appears, a term defined in the Original Facility Agreement has the same meaning in this Agreement.

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70-41048667

(b) The principles of construction set out in the Original Facility Agreement shall have effect as if set out in this Agreement.

# 1.3 Clauses

In this Agreement any reference to a "Clause" or a "Schedule" is, unless the context otherwise requires, a reference to a Clause in or a Schedule to this Agreement.

# 1.4 Third party rights

A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement.

# 1.5 Designation

In accordance with the Original Facility Agreement, each of ABB and the Facility Agent designates this Agreement as a Finance Document.

# 2. REPRESENTATIONS

Each of the representations set out in clause 19.16 (Repetition) of the Original Facility Agreement are deemed to be made by each Obligor (as applicable) (by reference to the facts and circumstances then existing) on:

(a) the date of this Agreement; and
(b) the Effective Date,

and references to "the Finance Documents" in each of the representations referred to above should be construed as references to this Agreement and to the Original Facility Agreement and on the Effective Date, to the Amended and Restated Facility Agreement.

# 3. RESTATEMENT

With effect from the Effective Date the Original Facility Agreement shall be amended and restated so that it shall be read and construed for all purposes as set out in Schedule 3 (Amended and Restated Facility Agreement).

# 4. CONTINUITY AND FURTHER ASSURANCE

# 4.1 Continuing obligations

The provisions of the Original Facility Agreement and the other Finance Documents (including for the avoidance of doubts any Extension Request) shall, save as amended by this Agreement, continue in full force and effect.

# 4.2 Confirmation of Guarantee Obligations

For the avoidance of doubt, the Guarantor confirms for the benefit of the Finance Parties that all Guarantee Obligations owed by it under the Amended and Restated

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Facility Agreement shall (a) remain in full force and effect notwithstanding the amendments referred to in Clause 3 (Restatement) and (b) extend to any new obligations assumed by any Obligor under the Finance Documents as a result of this Agreement (including, but not limited to, under the Amended and Restated Facility Agreement).

# 4.3 Further assurance

Each Obligor, shall, at the request of the Facility Agent and at such Obligor's own expense, do all such acts and things necessary or desirable to give effect to the amendments effected or to be effected pursuant to this Agreement.

# 5. COSTS AND EXPENSES

# 5.1 Transaction expenses

ABB shall promptly on demand pay the Facility Agent the amount of all costs and expenses (including legal fees) reasonably and directly incurred by the Facility Agent in connection with the negotiation, preparation, printing and execution of this Agreement and any other documents referred to in this Agreement.

# 6. MISCELLANEOUS

# 6.1 Incorporation of terms

The provisions of clause 31 (Notices), clause 33 (Partial invalidity), clause 34 (Remedies and waivers) and clause 39 (Enforcement) of the Amended and Restated Facility Agreement shall be incorporated into this Agreement as if set out in full in this Agreement and as if references in those clauses to "this Agreement" or "the Finance Documents" are references to this Agreement.

# 6.2 Counterparts

This Agreement may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of this Agreement.

# 7. GOVERNING LAW

This Agreement and any non-contractual obligations arising out of or in connection with it are governed by English law.

This Agreement has been entered into on the date stated at the beginning of this Agreement.

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# **SCHEDULE 1**
**THE OBLIGORS**

**Names of Original Borrowers**

ABB Finance B.V.
ABB Treasury Center (USA), Inc.

**Jurisdiction of incorporation**

Netherlands
Delaware, United States of America

**Name of Guarantor**

ABB Ltd

**Jurisdiction of incorporation**

Switzerland

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# **SCHEDULE 2**
**CONDITIONS PRECEDENT**

# **1. Corporate Documents**

(a) A copy of the constitutional documents of each Obligor (being, in the case of ABB Finance B.V., a copy of the articles of association (*statuten*) and deed of incorporation (*oprichtingsakte*), as well as an extract (*uittreksel*) from the Dutch Commercial Register (*Handelsregister*)) or a certificate of an authorised signatory of each relevant Obligor certifying that the constitutional documents previously delivered to the Facility Agent for the purposes of the Original Facility Agreement have not been amended and remain in full force and effect.

(b) A copy of a resolution of the board of directors of each Obligor (if applicable) or, in the case of ABB Finance B.V., a copy of a resolution of the board of managing directors (*directie*) or, in the case of ABB, a copy of an excerpt of the minutes of, or a circular resolution of, a meeting of the board of directors of ABB:

(i) approving the terms of, and the transactions contemplated by, this Agreement and the execution of this Agreement;

(ii) authorising a specified person or persons to execute this Agreement on its behalf;

(iii) (other than in relation to ABB) authorising a specified person or persons, on its behalf, to sign and/or despatch all documents and notices (including, if relevant, any Utilisation Requests) to be signed and/or despatched by it under or in connection with this Agreement; and

(iv) in the case of ABB Finance B.V., confirming that no works council (*ondernemingsraad*) or central or European works council (*centrale of Europese ondernemingsraad*) has been installed with jurisdiction (and the authority to render advice) in respect of ABB Finance B.V. and/or the transactions contemplated by this Agreement, that no action has been taken for the installation of such works council and no request for such a works council to be installed has been made and that such works council is otherwise not required to be installed pursuant to the Works Council Act (*Wet op de ondernemingsraden*).

(c) A specimen of the signature of each person authorised by the resolution referred to in paragraph (b) above.

(d) A copy of a good standing certificate (including verification of tax status) with respect to ABB Treasury Center (USA), Inc., issued as of a recent date by the Secretary of State or other appropriate official of its jurisdiction of incorporation.

(e) A certificate of an authorised signatory of the relevant Obligor certifying without personal liability that each copy document relating to it specified in

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paragraphs 1(a) to 1(d) (as relevant) of this Schedule 2 is correct, complete and in full force and effect as at a date no earlier than the date of this Agreement.

# 2. Legal Opinions

(a) A legal opinion of Clifford Chance LLP, legal advisers to the Mandated Lead Arrangers and the Agents in England, substantially in the form distributed to the Original Lenders prior to signing this Agreement.
(b) A legal opinion of Clifford Chance LLP, Amsterdam, legal advisers to the Mandated Lead Arranger and the Agents in the Netherlands in the form approved by the Facility Agent.
(c) A legal opinion of Freshfields Bruckhaus Deringer US LLP, United States legal advisers to ABB Treasury Center (USA), Inc. in the form approved by the Facility Agent.
(d) A legal opinion of Niederer Kraft Frey Ltd, legal advisers to the Mandated Lead Arrangers and the Agents in Switzerland in the form approved by the Facility Agent.

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# SCHEDULE 3
AMENDED AND RESTATED FACILITY AGREEMENT

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CLIFFORD CHANCE LLP

EXECUTION VERSION

ABB LTD

CERTAIN SUBSIDIARIES OF ABB LTD AS
BORROWERS

WITH

THE MANDATED LEAD ARRANGERS

WITH

CITIBANK EUROPE PLC, UK BRANCH AS
FACILITY AGENT
AND EURO SWINGLINE AGENT

AND

CITIBANK, N.A
AS DOLLAR SWINGLINE AGENT

$2,000,000,000
MULTICURRENCY REVOLVING CREDIT
AGREEMENT

DATED 16 DECEMBER 2019
AS AMENDED AND RESTATED
ON 16 FEBRUARY 2023

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# CONTENTS

| Clause | Page |
| --- | --- |
| 1. Definitions and Interpretation | 2 |
| 2. The Facility | 28 |
| 3. Purpose | 33 |
| 4. Conditions of Utilisation | 33 |
| 5. Utilisation | 35 |
| 6. Optional Currencies | 37 |
| 7. Repayment | 39 |
| 8. Prepayment and Cancellation | 40 |
| 9. Interest | 46 |
| 10. Interest Periods | 48 |
| 11. Changes to the Calculation of Interest | 48 |
| 12. Fees | 50 |
| 13. Tax Gross Up and Indemnities | 52 |
| 14. Increased Costs | 58 |
| 15. Other Indemnities | 61 |
| 16. Mitigation by the Lenders | 62 |
| 17. Costs and Expenses | 63 |
| 18. Guarantee and Indemnity | 63 |
| 19. Representations | 67 |
| 20. Information Undertakings | 70 |
| 21. General Undertakings | 73 |
| 22. Events of Default | 76 |
| 23. Changes to the Lenders | 80 |
| 24. Confidentiality of Funding Rates | 86 |
| 25. Changes to the Obligors | 87 |
| 26. Role of the Agents and the Mandated Lead Arrangers | 89 |
| 27. Conduct of Business by the Finance Parties | 99 |
| 28. Sharing among the Lenders | 100 |
| 29. Payment Mechanics | 102 |
| 30. Set-Off | 106 |
| 31. Notices | 106 |
| 32. Calculation and Certificates | 109 |
| 33. Partial Invalidity | 110 |
| 34. Remedies and Waivers | 110 |

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35. Amendments and Waivers ... 110
36. Bail-in ... 114
37. Counterparts ... 116
38. Governing Law ... 117
39. Enforcement ... 117
Schedule 1 ... 118
Part I The Original Lenders ... 118
Part II The Dollar Swingline Lenders ... 119
Part III The Euro Swingline Lenders ... 120
Part IV The Original Obligors ... 121
Schedule 2 Conditions Precedent ... 122
Part I Conditions Precedent ... 122
Part II Additional Borrower Conditions Precedent ... 124
Schedule 3 Utilisation Request ... 126
Schedule 4 Form of Transfer Certificate ... 127
Schedule 5 Timetables ... 129
Schedule 6 Form of Borrower Accession Letter ... 131
Schedule 7 Form of Resignation Letter ... 132
Schedule 8 Material Subsidiaries ... 133
Schedule 9 Form of Increase Confirmation ... 134
Schedule 10 Reference Rate Terms ... 136
Part I A Dollars - Term Rate Advances ... 136
Part I B Dollars - Compounded Rate Advances ... 140
Part II Sterling ... 144
Part III Swiss Francs ... 147
Part IV Euro ... 151
Schedule 11 Daily Non-Cumulative Compounded RFR Rate ... 153
Schedule 12 Cumulative Compounded RFR Rate ... 155

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**THIS AGREEMENT** is dated 16 December 2019 ("the date of this Agreement"), as amended and restated pursuant to an amendment and restatement agreement dated 16 February 2023 and made

**BETWEEN:**

(1) **ABB LTD**, a company incorporated in Switzerland whose registered office is at Affolternstrasse 44, CH-8050 Zurich, Switzerland ("**ABB**" or the "**Guarantor**");

(2) **THE SUBSIDIARIES OF ABB** listed in Part IV of Schedule 1 (*The Original Obligors*) as original borrowers (the "**Original Borrowers**");

(3) **CITIGROUP GLOBAL MARKETS LIMITED, BANK OF AMERICA EUROPE DESIGNATED ACTIVITY COMPANY, BARCLAYS BANK PLC, BNP PARIBAS (SUISSE) SA, CA INDOSUEZ (SWITZERLAND) SA, CREDIT SUISSE (SWITZERLAND) LTD., DEUTSCHE BANK LUXEMBOURG S.A., GOLDMAN SACHS BANK USA, HSBC BANK PLC, ING BANK N.V., AMSTERDAM, LANCY/GENEVA BRANCH, J.P. MORGAN SECURITIES PLC, NORDEA BANK ABP, FILIAL I SVERIGE, BANCO SANTANDER, S.A., STANDARD CHARTERED BANK, SKANDINAVISKA ENSKILDA BANKEN AB (PUBL), SOCIÉTÉ GÉNÉRALE S.A. FRANKFURT BRANCH, UBS SWITZERLAND AG, UNICREDIT BANK AG, CHINA CONSTRUCTION BANK CORPORATION, BEIJING, SWISS BRANCH ZURICH** in their respective capacities as mandated lead arrangers (the "**Mandated Lead Arrangers**");

(4) **THE FINANCIAL INSTITUTIONS** listed in Part I to Part III of Schedule 1 (*The Original Lenders*) in their respective capacities as original lenders (the "**Original Lenders**");

(5) **CITIBANK EUROPE PLC, UK BRANCH** in its capacity as facility agent (the "**Facility Agent**");

(6) **CITIBANK, N.A.** in its capacity as dollar swingline agent (the "**Dollar Swingline Agent**"); and

(7) **CITIBANK EUROPE PLC, UK BRANCH** in its capacity as euro swingline agent (the "**Euro Swingline Agent**").

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IT IS AGREED as follows:

# SECTION 1
INTERPRETATION

# 1. DEFINITIONS AND INTERPRETATION

# 1.1 Definitions

In this Agreement:

"Acquisition" means the acquisition by any Group Company of any person not already being a Group Company and which, upon completion of the acquisition, becomes a Group Company.

"Additional Borrower" means any wholly owned Subsidiary of ABB that has become an Additional Borrower in accordance with Clause 25.2 (Additional Borrowers).

"Additional Business Day" means any day specified as such in the applicable Reference Rate Terms.

"Advance" means an advance made or to be made under the Facility (including, unless the context otherwise requires, a Swingline Advance) or the principal amount outstanding for the time being of that advance.

"Affiliate" means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company.

"Agents" means the Dollar Swingline Agent, the Euro Swingline Agent and the Facility Agent, and "Agent" means, as the context may require, any of them.

"Agreed Jurisdiction" means any of the United States of America, Switzerland, any country that is, at the time the notice requesting the additional Borrower is submitted, a member of the European Union (other than Cyprus, Estonia, Latvia, Lithuania, Slovakia and Slovenia) and any other country approved by all the Lenders.

"Amendment and Restatement Agreement" means the amendment and restatement agreement dated 16 February 2023 between, among others, ABB and the Facility Agent.

"Authorisation" means an authorisation, consent, approval, resolution, licence, exemption, filing or registration.

"Availability Period" means the period from the date of this Agreement up to and including the date falling one week before the Termination Date.

"Available Commitment" means a Lender's Commitment minus:

(a) the Base Currency Amount of its participation in any outstanding Advances (including any Separate Advances); and

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(b) in relation to any proposed Utilisation, the Base Currency Amount of its participation in any Advances that are due to be made on or before the proposed Utilisation Date,

other than, in either case, that Lender's participation in any Advances that are due to be repaid or prepaid on or before the proposed Utilisation Date.

"Available Dollar Swingline Commitment" means a Dollar Swingline Lender's Dollar Swingline Commitment minus:

(a) the Base Currency Amount of its participation in any outstanding Dollar Swingline Advances; and
(b) in relation to any proposed Utilisation by way of a Dollar Swingline Advance, the Base Currency Amount of its participation in any Dollar Swingline Advances that are due to be made on or before the proposed Utilisation Date,

other than, in either case, that Dollar Swingline Lender's participation in any Dollar Swingline Advances that are due to be repaid or prepaid on or before the proposed Utilisation Date.

"Available Dollar Swingline Facility" means the aggregate for the time being of each Dollar Swingline Lender's Available Dollar Swingline Commitment.

"Available Euro Swingline Commitment" means a Euro Swingline Lender's Euro Swingline Commitment minus:

(a) the Base Currency Amount of its participation in any outstanding Euro Swingline Advances; and
(b) in relation to any proposed Utilisation by way of a Euro Swingline Advance, the Base Currency Amount of its participation in any Euro Swingline Advances that are due to be made on or before the proposed Utilisation Date,

other than, in either case, that Euro Swingline Lender's participation in any Euro Swingline Advances that are due to be repaid or prepaid on or before the proposed Utilisation Date.

"Available Euro Swingline Facility" means the aggregate for the time being of each Euro Swingline Lender's Available Euro Swingline Commitment.

"Available Facility" means the aggregate for the time being of each Lender's Available Commitment.

"Base Currency" means Dollars.

"Base Currency Amount" means, in relation to an Advance, the amount specified in the Utilisation Request delivered by the relevant Borrower for that Advance (or, if the amount requested is not denominated in the Base Currency, that amount converted into the Base Currency at the Facility Agent's Spot Rate of Exchange on the date which is 3 Business Days before the Utilisation Date or, if later, on the date the Facility Agent

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receives the Utilisation Request) adjusted to reflect any repayment or prepayment of the Advance.

"Baseline CAS" means, in relation to a Compounded Rate Advance in a Compounded Rate Currency, any rate which is either:

(a) specified as such in the applicable Reference Rate Terms; or

(b) determined by the relevant Agent (acting on the instructions of all the Lenders) (or by any other Finance Party which agrees to determine that rate in place of that Agent) in accordance with the methodology specified in the applicable Reference Rate Terms.

"Basic €STR" means, in relation to any day during an Interest Period for a Euro Swingline Advance, €STR for the first day of that Interest Period and if that rate is less than zero, Basic €STR shall be deemed to be zero.

"Borrower Accession Letter" means a letter substantially in the form set out in Schedule 6 (Form of Borrower Accession Letter).

"Borrowers" means each Original Borrower and each Additional Borrower, provided that it has not been released from its rights and obligations under this Agreement in accordance with Clause 25.3 (Resignation of a Borrower).

"Break Costs" means the amount (if any) specified as such in the applicable Reference Rate Terms.

"Business Day" means:

(a) in relation to a Dollar Swingline Advance a day (other than a Saturday or a Sunday) on which banks are open for general business in New York;

(b) in relation to any Advance (not being a Dollar Swingline Advance) a day (other than a Saturday or Sunday) on which banks are open for general business in London, and:

(i) (in relation to any date for payment or purchase of a currency other than Euro) the principal financial centre of the country of that currency;

(ii) (in relation to any date for payment or purchase of Euro) any TARGET Day; or

(iii) (in relation to:

(A) the fixing of an interest rate in relation to a Term Rate Advance;

(B) any date for payment or purchase of an amount relating to a Compounded Rate Advance; or

(C) the determination of the first day or the last day of an Interest Period for a Compounded Rate Advance, or otherwise in relation to the determination of the length of such an Interest Period),

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which is an Additional Business Day relating to that Advance or Unpaid Sum;
and

(c) for all other purposes, a day (other than a Saturday or Sunday) on which banks are open for general business in London.

"Capital Markets Issuer" means a Group Company whose primary functions within the Group are: (i) the issuance of bonds, commercial paper and/or other debt instruments; and/or (ii) supporting the intra-Group funding arrangements and treasury operations of the Group.

"Central Bank Rate" has the meaning given to that term in the applicable Reference Rate Terms.

"Central Bank Rate Adjustment" has the meaning given to that term in the applicable Reference Rate Terms.

"Clean-Up Period" means, in relation to an Acquisition, the period commencing on the date such Acquisition completes and ending on the date falling 180 days later.

"Code" means the US Internal Revenue Code of 1986.

"Commitment" means:

(a) in relation to an Original Lender, the amount in the Base Currency set opposite its name under the heading "Commitment" in Part I of Schedule 1 (The Original Lenders) and the amount of any other Commitment transferred to it under this Agreement or assumed by it in accordance with Clause 2.2 (Increase of Commitments); and
(b) in relation to any other Lender, the amount of any Commitment transferred to it under this Agreement or assumed by it in accordance with Clause 2.2 (Increase of Commitments),

to the extent not cancelled, reduced or transferred by it under this Agreement.

"Compounded Rate Advance" means any Advance (not being a Swingline Advance) or, if applicable, Unpaid Sum which is not a Term Rate Advance.

"Compounded Rate Currency" means any currency which is not a Term Rate Currency.

"Compounded Rate Interest Payment" means the aggregate amount of interest that:

(a) is, or is scheduled to become, payable under any Finance Document; and
(b) relates to a Compounded Rate Advance.

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"Compounded Reference Rate" means, in relation to any RFR Banking Day during the Interest Period of a Compounded Rate Advance, the percentage rate per annum which is the aggregate of:

(a) the Daily Non-Cumulative Compounded RFR Rate for that RFR Banking Day; and
(b) the applicable Baseline CAS or Fallback CAS (if any).

"Compounding Methodology Supplement" means, in relation to the Daily Non-Cumulative Compounded RFR Rate or the Cumulative Compounded RFR Rate, a document which:

(a) is agreed in writing by ABB, each Agent (in its own capacity) and each Agent (acting on the instructions of the Majority Lenders);
(b) specifies a calculation methodology for that rate; and
(c) has been made available to ABB and each Finance Party.

"Cumulative Compounded RFR Rate" means, in relation to an Interest Period for a Compounded Rate Advance, the percentage rate per annum determined by the relevant Agent (or by any other Finance Party which agrees to determine that rate in place of that Agent) in accordance with the methodology set out in Schedule 12 (Cumulative Compounded RFR Rate) or in any relevant Compounding Methodology Supplement.

"Daily Non-Cumulative Compounded RFR Rate" means, in relation to any RFR Banking Day during an Interest Period for a Compounded Rate Advance, the percentage rate per annum determined by the relevant Agent (or by any other Finance Party which agrees to determine that rate in place of that Agent) in accordance with the methodology set out in Schedule 11 (Daily Non-Cumulative Compounded RFR Rate) or in any relevant Compounding Methodology Supplement.

"Daily Rate" means the rate specified as such in the applicable Reference Rate Terms. "Default" means an Event of Default or any event or circumstance specified in Clause 22 (Events of Default) which (with the expiry of a grace period or the giving of any notice specified in Clause 22 (Events of Default)) would be an Event of Default.

"Defaulting Lender" means any Lender:

(a) which has failed to make its participation in an Advance available or has notified the Facility Agent that it will not make its participation in an Advance available by the Utilisation Date of that Advance in accordance with Clause 5.4 (Lenders' participation);
(b) which has otherwise rescinded or repudiated a Finance Document; or
(c) with respect to which an Insolvency Event has occurred and is continuing, unless, in the case of paragraph (a) above:

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(i) its failure to pay is caused by:
(A) administrative or technical error; or
(B) a Disruption Event,
and payment is made within 3 Business Days of its due date; or
(ii) the Lender is disputing in good faith whether it is contractually obliged to make the payment in question.

"Disruption Event" means either or both of:

(a) a material disruption to those payment or communications systems or to those financial markets which are, in each case, required to operate in order for payments to be made in connection with the Facility (or otherwise in order for the transactions contemplated by the Finance Documents to be carried out) which disruption is not caused by, and is beyond the control of, any of the Parties; or
(b) the occurrence of any other event which results in a disruption (of a technical or systems-related nature) to the treasury or payments operations of a Party preventing that, or any other Party:
(i) from performing its payment obligations under the Finance Documents; or
(ii) from communicating with other Parties in accordance with the terms of the Finance Documents,
and which (in either such case) is not caused by, and is beyond the control of, the Party whose operations are disrupted.

"Dollar Swingline Advance" means any advance made or to be made under the Dollar Swingline Facility pursuant to a Utilisation Request under Clause 5.5 (Delivery of a Utilisation Request for a Swingline Advance).

"Dollar Swingline Commitment" means:

(a) in relation to an Original Lender which is a Dollar Swingline Lender, the amount set opposite its name under the heading "Dollar Swingline Commitment" in Part II of Schedule 1 (The Dollar Swingline Lenders) and the amount of any other Dollar Swingline Commitment transferred to it under this Agreement or assumed by it in accordance with Clause 2.2 (Increase of Commitments); and
(b) in relation to any other Dollar Swingline Lender, the amount of any Dollar Swingline Commitment transferred to it under this Agreement or assumed by it in accordance with Clause 2.2 (Increase of Commitments),

to the extent not cancelled, reduced or transferred by it under this Agreement.

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"Dollar Swingline Facility" means the dollar swingline facility forming part of the Facility as described in paragraph (a) of Clause 2.1 (The Facility).

"Dollar Swingline Lender" means:

(a) any Original Lender whose name is set out in Part II of Schedule 1 (The Dollar Swingline Lenders); and

(b) any bank which has become a Party as a Lender in accordance with Clause 2.2 (Increase of Commitments) or Clause 23 (Changes to the Lenders) and to whom a Dollar Swingline Commitment has been transferred or by whom a Dollar Swingline Commitment has been assumed,

which in each case has not ceased to have a Dollar Swingline Commitment.

"Dollar Swingline Rate" means, at any time, the higher of:

(a) the Prime Rate; and

(b) the Federal Funds Effective Rate plus 0.50 per cent. per annum.

"Dutch Borrower" means ABB Finance B.V. and any Additional Borrower which is incorporated or established in The Netherlands.

"Economic Sanctions Laws" means economic or trade sanctions laws and regulations as announced and adopted by the Sanctions Authorities (including, but not limited to, the Iran Sanctions Act, as amended by the Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010, and by any further amendments thereto (the Iran Sanctions Act)).

"Environmental Law" means any applicable law in any jurisdiction in which any Group Company conducts business which relates to the pollution or protection of the environment or harm to or the protection of human health or the health of animals or plants.

"ERISA" means the Employee Retirement Income Security Act of 1974 of the United States of America and the regulations promulgated and the rulings issued thereunder.

"€STR" means, in relation to any day the applicable Screen Rate for that day.

"EURIBOR" means, in relation to any Advance (other than a Euro Swingline Advance) in Euro, the Primary Term Rate specified in the Reference Rate Terms for Euro.

"Euro Swingline Advance" means any advance made or to be made under the Euro Swingline Facility pursuant to a Utilisation Request under Clause 5.5 (Delivery of a Utilisation Request for a Swingline Advance).

"Euro Swingline Commitment" means:

(a) in relation to an Original Lender which is a Euro Swingline Lender, the amount (in the Base Currency) set opposite its name under the heading "Euro Swingline Commitment" in Part III of Schedule 1 (The Euro Swingline Lenders) and the

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amount of any other Euro Swingline Commitment transferred to it under this Agreement or assumed by it in accordance with Clause 2.2 (Increase of Commitments); and

(b) in relation to any other Euro Swingline Lender, the amount of any Euro Swingline Commitment transferred to it under this Agreement or assumed by it in accordance with Clause 2.2 (Increase of Commitments),

to the extent not cancelled, reduced or transferred by it under this Agreement.

"Euro Swingline Facility" means the euro swingline facility forming part of the Facility as described in paragraph (b) of Clause 2.1 (The Facility).

"Euro Swingline Lender" means:

(a) any Original Lender whose name is set out in Part III of Schedule 1 (The Euro Swingline Lenders); and
(b) any bank which has become Party as a Lender in accordance with Clause 2.2 (Increase of Commitments) or Clause 23 (Changes to the Lenders) and to whom a Euro Swingline Commitment has been transferred or by whom a Euro Swingline Commitment has been assumed,

which in each case has not ceased to have a Euro Swingline Commitment.

"Euro Swingline Rate" means the percentage rate per annum which is the aggregate of:

(a) the Margin; and
(b) Basic €STR.

"Event of Default" means any event or circumstance specified as such in Clause 22 (Events of Default).

"Existing Credit Facility" means the US$2,000,000,000 multicurrency revolving credit facility made available pursuant to a multicurrency revolving facility agreement dated 23 May 2014, as amended on 13 June 2014 and as amended and restated from time to time.

"Existing Lender" has the meaning given to that term in Clause 23.1 (Assignments and transfers by the Lenders).

"Extension Request" means a First Extension Request or a Second Extension Request. "Facility" means the loan facility made available under this Agreement as described in Clause 2.1 (The Facility) incorporating a dollar swingline facility and a euro swingline facility.

"Facility Agent's Spot Rate of Exchange" means:

(a) the Facility Agent's spot rate of exchange; or

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(b) (if the Facility Agent does not have an available spot rate of exchange) any other publicly available spot rate of exchange selected by the Facility Agent (acting reasonably and in consultation with ABB),

for the purchase of the relevant currency with the Base Currency in the London foreign exchange market at or about 11:00 a.m. on a particular day.

"Facility Office" means the office or offices notified by a Lender to the Facility Agent on or before the date it becomes a Lender (or, following that date, by not less than 5 Business Days' notice) as the office or offices through which it will perform its obligations under this Agreement.

"Fallback CAS" means, in relation to any Advance in a Term Rate Currency which becomes a "Compounded Rate Advance" for its then current Interest Period pursuant to a Reference Rate Supplement, any rate which is either:

(a) specified as such in the applicable Reference Rate Terms; or
(b) determined by the relevant Agent (acting on the instructions of all the Lenders) (or by any other Finance Party which agrees to determine that rate in place of that Agent) in accordance with the methodology specified in the applicable Reference Rate Terms.

"Fallback Interest Period" means, in relation to a Term Rate Advance, the period specified as such in the applicable Reference Rate Terms.

"FATCA" means:

(a) sections 1471 to 1474 of the Code or any associated regulations;
(b) any treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of any law or regulation referred to in paragraph (a) above; or
(c) any agreement pursuant to the implementation of any treaty, law or regulation referred to in paragraphs (a) or (b) above with the US Internal Revenue Service, the US government or any governmental or taxation authority in any other jurisdiction.

"FATCA Application Date" means:

(a) in relation to a "withholdable payment" described in section 1473(1)(A)(i) of the Code (which relates to payments of interest and certain other payments from sources within the US), 1 July 2014; or
(b) in relation to a "passthru payment" described in section 1471(d)(7) of the Code not falling within paragraph (a) above, the first date from which such payment may become subject to a deduction or withholding required by FATCA.

"FATCA Deduction" means a deduction or withholding from a payment under a Finance Document required by FATCA.

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"FATCA Exempt Party" means a Party that is entitled to receive payments free from any FATCA Deduction.

"Federal Funds Effective Rate" means, in relation to any day, the rate per annum equal to

(a) the weighted average of the rates on overnight Federal funds transactions with members of the US Federal Reserve System arranged by Federal funds brokers, as published for that day (or, if that day is not a New York Business Day, for the immediately preceding New York Business Day) by the Federal Reserve Bank of New York; or

(b) if a rate is not so published for any day which is a New York Business Day, the average of the quotations for that day on such transactions received by the Dollar Swingline Agent from three Federal funds brokers of recognised standing selected by the Dollar Swingline Agent,

and if that rate is less than zero, Federal Funds Effective Rate shall be deemed to be zero.

"Fee Letter" means:

(a) the fees letter dated on or around the date of this Agreement from the Original Lenders to ABB, the fees letter dated on or around the date of this Agreement from the Mandated Lead Arrangers to ABB, the agency fees letter dated on or around the date of this Agreement from the Facility Agent to ABB and the swingline agency fees letters dated on or around the date of this Agreement from the Dollar Swingline Agent and the Euro Swingline Agent respectively to ABB setting out the fees referred to in Clause 12 (Fees); and

(b) any other agreement setting out fees payable to a Lender referred to in paragraph (f) of Clause 2.2 (Increase of Commitments).

"Finance Document" means this Agreement, the Amendment and Restatement Agreement, any Fee Letter, any Extension Request, any Borrower Accession Letter, any Resignation Letter, any Reference Rate Supplement, any Compounding Methodology Supplement and any other document designated as such in writing by the Facility Agent and ABB.

"Finance Party" means any of the Agents, the Mandated Lead Arrangers and the Lenders.

"First Extension Request" has the meaning given to it in Clause 2.3 (Extension Option).

"Funding Rate" means any rate notified by a Lender to the Facility Agent pursuant to paragraph (a)(ii) of Clause 11.1 (Market disruption).

"GAAP" means, in relation to a company, generally accepted accounting principles in its jurisdiction of incorporation, US GAAP or IFRS, as applied by ABB in its consolidated financial statements.

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"Group" means ABB and its Subsidiaries and "Group Company" means any one of them.

"Historic Primary Term Rate" means, in relation to any Term Rate Advance made in Dollars, the most recent applicable Primary Term Rate for a period equal in length to the Interest Period of that Advance and which is as of a day which is no more than three Additional Business Days before the Quotation Day.

"Holding Company" means, in relation to a company or corporation, any other company or corporation in respect of which it is a Subsidiary.

"IFRS" means international accounting standards as issued by the International Accounting Standards Board.

"Impaired Agent" means an Agent at any time when:

(a) it has failed to make (or has notified a Party that it will not make) a payment required to be made by it under the Finance Documents by the due date for payment;
(b) it otherwise rescinds or repudiates a Finance Document;
(c) (if it is also a Lender) it is a Defaulting Lender under paragraph (a) or (b) of the definition of "Defaulting Lender"; or
(d) an Insolvency Event has occurred and is continuing with respect to it;

unless, in the case of paragraph (a) above:

(i) its failure to pay is caused by:
(A) administrative or technical error; or
(B) a Disruption Event; and
payment is made within 3 Business Days of its due date; or
(ii) the relevant Agent is disputing in good faith whether it is contractually obliged to make the payment in question.

"Increase Confirmation" means a confirmation substantially in the form set out in Schedule 9 (Form of Increase Confirmation).

"Increase Lender" has the meaning given to that term in Clause 2.2 (Increase of Commitments).

"Indebtedness" means, in relation to a person, its obligations (whether present or future, actual or contingent, as principal or surety) for the payment or repayment of money (whether in respect of interest, principal or otherwise) incurred in respect of:

(a) moneys borrowed;
(b) any bond, note, loan stock, debenture or similar instrument;

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(c) any acceptance credit, bill discounting, note purchase, factoring or documentary credit facility (or dematerialised equivalent);
(d) any lease required under GAAP as at the date hereof to be treated as a finance lease;
(e) receivables sold or discounted (other than any receivables to the extent that they are sold on a non-recourse basis);
(f) any guarantee, bond, stand-by letter of credit or other similar instrument issued in connection with the performance of payment obligations;
(g) any interest rate or currency swap agreement or any other hedging or derivatives instrument or agreement (and, when calculating the value of such agreement(s) or instrument(s), only the marked to market value (or, if any actual amount is due as a result of the termination or close-out of such agreement(s) or instrument(s), that amount) shall be taken into account);
(h) any arrangement entered into primarily as a method of raising finance pursuant to which any asset sold or otherwise disposed of by that person is or may be leased to or re-acquired by a Group Company (whether following the exercise of an option or otherwise); or
(i) any guarantee, indemnity or similar insurance against financial loss given in respect of the obligation of any person falling within any of paragraphs (a) to (h) above.

"Information Package" means the documents concerning the Group prepared by ABB in relation to the Facility and posted on the Debtdomain site titled "ABB Ltd - Dec 2019" up to and including the date of this Agreement.

"Insolvency Event" in relation to a Finance Party means that the Finance Party:

(a) is dissolved (other than pursuant to a consolidation, amalgamation or merger); (b) is insolvent and under an insolvency, bankruptcy or governmental proceeding or process:
(i) that is not directly or indirectly undertaken for the purpose of restructuring, consolidating, amalgamating, merging, rehabilitating or reorganising that Finance Party to enable that Finance Party to continue its business; and
(ii) that is not dismissed, discharged, stayed or restrained in each case within 30 days of its institution or presentation;
(c) (except where such action is directly or indirectly undertaken for the purpose of restructuring, consolidating, amalgamating, merging, rehabilitating or reorganising that Finance Party to enable it to continue its business) institutes or has instituted against it, by a regulator, supervisor or any similar official with primary insolvency, rehabilitative or regulatory jurisdiction over it in the jurisdiction of its incorporation or organisation or the jurisdiction of its head or

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home office, a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors' rights, or a petition is presented for its winding-up or liquidation by it or such regulator, supervisor or similar official and such proceeding or petition is not dismissed, discharged, stayed or restrained in each case within 30 days of its institution or presentation;

(d) (except where such action is directly or indirectly undertaken for the purpose of restructuring, consolidating, amalgamating, merging, rehabilitating or reorganising that Finance Party to enable it to continue its business) has a resolution passed for its winding-up, official management or liquidation;

(e) (except where such action is directly or indirectly undertaken for the purpose of restructuring, consolidating, amalgamating, merging, rehabilitating or reorganising that Finance Party to enable it to continue its business) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets;

(f) causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in paragraphs (a) to (e) above; or

(g) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts.

"Interest Period" means, in relation to an Advance, each period determined in accordance with Clause 10 (Interest Periods) and, in relation to an Unpaid Sum, each period determined in accordance with Clause 9.5 (Default interest).

"Interpolated Screen Rate" means, in relation to a Screen Rate for any Term Rate Advance not in Dollars, the rate (rounded to the same number of decimal places as the two relevant Screen Rates) which results from interpolating on a linear basis between:

(a) the applicable Screen Rate for the longest period (for which that Screen Rate is available) which is less than the Interest Period of that Advance); and

(b) the applicable Screen Rate for the shortest period (for which that Screen Rate is available) which exceeds the Interest Period of that Advance,

each as of the Quotation Time for the currency of that Advance.

"Lender" means:

(a) any Original Lender; and

(b) any bank which has become a Party as a Lender in accordance with Clause 2.2 (Increase of Commitments) or Clause 23 (Changes to the Lenders),

which in each case has not ceased to be a Party in accordance with the terms of this Agreement.

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"**Lookback Period**" means the number of days specified as such in the applicable Reference Rate Terms.

"**Majority Lenders**" means a Lender or Lenders:

(a) whose Commitments aggregate more than 662⁄3 per cent. of the Total Commitments; or

(b) if the Total Commitments have been reduced to zero, whose Commitments aggregate more than 662⁄3 per cent. of the Total Commitments immediately before the reduction.

"**Margin**" means, at any time in relation to an Advance (other than a Dollar Swingline Advance), 0.175 per cent. per annum.

"**Market Disruption Rate**" means the rate (if any) specified as such in the applicable Reference Rate Terms.

"**Material Adverse Effect**" means a material adverse effect on the ability of the Obligors (taken as a whole) to perform their payment obligations under the Finance Documents.

"**Material Subsidiary**" shall mean:

(a) as at the date of this Agreement, each Borrower and any Subsidiary of ABB that is listed in Schedule 8 (*Material Subsidiaries*); and

(b) at any time thereafter,

(i) each Borrower; and

(ii) any Subsidiary of ABB, that:

(A) is the holding company of a country (not a region) and that, together with its Subsidiaries, has combined third party revenues or third party assets in excess of 5 per cent. of the consolidated revenues or consolidated total assets of the Group;

(B) on a non-consolidated (legal entity) basis has third party revenues or third party assets in excess of 10 per cent. of the consolidated revenues or consolidated total assets of the Group;
or

(C) has any notes, bonds, debenture stock, loan stock or other securities outstanding to non-Group third parties and in respect of which a guarantee, keep-well agreement or other credit support has been provided by ABB,

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provided always that:

(1) the term "revenues" shall exclude any revenues attributable to activities classified as discontinued operations in the consolidated financial statements of the Group and the term "assets" shall exclude any assets classified as held-for-sale or as discontinued operations in the consolidated financial statements of the Group;

(2) all revenue and asset figures shall be prepared in accordance with generally accepted accounting principles used in preparation of the consolidated financial statements of the Group;

(3) "third party revenues" shall exclude any revenues not included in total revenues in the consolidated income statement of the Group;

(4) "third party assets" shall exclude any assets that are not included in total assets in the consolidated balance sheet of the Group; and

(5) all revenue and asset figures shall be for the most recently completed financial year of ABB.

"Month" means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month, except that:

(a) (subject to paragraph (c) below) if the numerically corresponding day is not a Business Day, that period shall end on the next Business Day in that calendar month in which that period is to end if there is one, or if there is not, on the immediately preceding Business Day;

(b) if there is no numerically corresponding day in the calendar month in which that period is to end, that period shall end on the last Business Day in that calendar month; and

(c) if an Interest Period begins on the last Business Day of a calendar month, that Interest Period shall end on the last Business Day in the calendar month in which that Interest Period is to end, subject to adjustment in accordance with the rules specified as Business Day Conventions in the applicable Reference Rate Terms.

The above rules will only apply to the last Month of any period.

"New Lender" has the meaning given to that term in Clause 23.1 (Assignments and transfers by the Lenders).

"Obligors" means the Borrowers and the Guarantor.

"Optional Currency" means a currency (other than the Base Currency) which complies with the conditions set out in Clause 4.3 (Conditions relating to Optional Currencies).

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"Original Financial Statements" means:

(a) in relation to ABB, the audited consolidated financial statements of the Group for the financial year ended 31 December 2018;

(b) in relation to each Original Borrower, its financial statements for its financial year ended 31 December 2018 (audited if available); and

(c) in relation to any Additional Borrower, its financial statements delivered pursuant to Part II of Schedule 2 (Additional Borrower Conditions Precedent) (audited if available).

"Original Obligors" means the Original Borrowers and the Guarantor.

"Outstandings" means the aggregate of the Base Currency Amount from time to time of each of the Advances.

"Participating Member State" means any member state of the European Union that has the Euro as its lawful currency in accordance with legislation of the European Union relating to Economic and Monetary Union.

"Party" means a party to this Agreement and includes its successors in title, permitted assigns and permitted transferees.

"Primary Term Rate" means the rate specified as such in the applicable Reference Rate Terms.

"Prime Rate" means, in respect of any Dollar Swingline Advance, for any day, the rate of interest per annum announced from time to time by the Dollar Swingline Agent to be its prime rate in effect at its principal office in New York City and if that rate is less than zero, Prime Rate shall be deemed to be zero.

"Project Company" means any Subsidiary of ABB:

(a) which is a single purpose company whose primary purpose is to invest in, lend to or carry out a specific project or portfolio of projects; and

(b) none of whose liabilities to repay Project Finance Indebtedness are the subject of security or a guarantee, indemnity or any similar form of assurance, undertaking or support by any Group Company save to the extent described in the definition of Project Finance Indebtedness.

"Project Finance Indebtedness" means:

(a) any Indebtedness of a Project Company incurred to finance the project constituted by the assets and business of such Project Company or any Indebtedness of such Project Company incurred to refinance any such aforementioned Indebtedness; and

(b) where neither the persons to whom such Indebtedness is owed (whether or not a Group Company) nor any other person shall have any recourse whatsoever to any Group Company (other than such Project Company) for the repayment or

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payment of any sum relating to such Indebtedness other than recourse directly or indirectly to any Group Company under any form of assurance or undertaking, which recourse (1) is limited to the enforcement of any share pledge granted by a Group Company over its shares in such Project Company or the enforcement of any security granted over a shareholder loan between a Group Company and such Project Company and/or (2) is limited to a claim for damages for breach of an obligation (not being a payment obligation) of the person against whom that recourse is available and/or (3) entitles the creditor for that Indebtedness or the relevant Project Company, upon default by the Project Company (or in other circumstances specified in the documentation relating to the project) to require a payment to be made (whether to or for the benefit of that creditor, the Project Company or another person), **provided that**, in the case of (3), where that payment is capable of being for an amount which is material either alone or as a percentage of the Indebtedness financing that project, such recourse is capable of being called on only during the period on or prior to practical completion of the project or of that portion of that project being financed by that Indebtedness; or

(c) which the Majority Lenders shall have agreed to treat as Project Finance Indebtedness for the purposes of this Agreement.

**'Published Rate'** means:

(a) the Primary Term Rate for any Quoted Tenor; or

**'Published Rate Replacement Event'** means, in relation to a Published Rate:

(a) the methodology, formula or other means of determining that Published Rate has, in the opinion of the Majority Lenders and ABB, materially changed; or

(i)

(A) the administrator of that Published Rate or its supervisor publicly announces that such administrator is insolvent; or

(B) information is published in any order, decree, notice, petition or filing, however described, or filed with a court, tribunal, exchange, regulatory authority or similar administrative, regulatory or judicial body which reasonably confirms that the administrator of that Published Rate is insolvent,

**provided that**, in each case, at that time, there is no successor administrator to continue to provide that Published Rate;

(ii) the administrator of that Published Rate publicly announces that it has ceased or will cease, to provide that Published Rate permanently or indefinitely and, at that time, there is no successor administrator to continue to provide that Published Rate;

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(iii) the supervisor of the administrator of that Published Rate publicly announces that such Published Rate has been or will be permanently or indefinitely discontinued;

(iv) the administrator of that Published Rate or its supervisor announces that that Screen Rate may no longer be used; or

(v) in the case of the Primary Term Rate for any Quoted Tenor for Euro, the supervisor of the administrator of that Primary Term Rate makes a public announcement or publishes information stating that that Primary Term Rate for that Quoted Tenor is no longer, or as of a specified future date will no longer be, representative of the underlying market or economic reality that it is intended to measure and that representativeness will not be restored (as determined by such supervisor); or

(c) the administrator of that Published Rate (or the administrator of an interest rate which is a constituent element of that Published Rate) determines that that Published Rate should be calculated in accordance with its reduced submissions or other contingency or fallback policies or arrangements and either:

(i) the circumstance(s) or event(s) leading to such determination are not (in the opinion of the Majority Lenders and ABB) temporary; or

(ii) that Published Rate is calculated in accordance with any such policy or arrangement for a period no less than the period specified as the "Published Rate Contingency Period" in the Reference Rate Terms relating to that Published Rate; or

(d) in the opinion of the Majority Lenders and ABB, that Published Rate is otherwise no longer appropriate for the purposes of calculating interest under this Agreement.

"Qualifying Bank" means

(a) any bank as defined in the Swiss Federal Code for Banks and Savings Banks dated 8 November 1934 (Bundesgesetz über die Banken und Sparkassen); or

(b) a person or entity which effectively conducts banking activities with its own infrastructure and staff as its principal business purpose and which has a banking license in full force and effect issued in accordance with the banking laws in force in its jurisdiction of incorporation, or if acting through a branch, issued in accordance with the banking laws in the jurisdiction of such branch.

"Qualifying Lender" has the meaning given to such term in Clause 13.1 (Definitions).

"Quotation Day" means the day specified as such in the applicable Reference Rate Terms.

"Quotation Time" means the relevant time (if any) specified as such in the applicable Reference Rate Terms.

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"Quoted Tenor" means, in relation to a Primary Term Rate, any period for which that rate is customarily displayed on the relevant page or screen of an information service.

"Reference Rate Supplement" means, in relation to any currency, a document which:

(a) is agreed in writing by ABB, each Agent (in its own capacity) and each Agent (acting on the instructions of the Majority Lenders or, in the case of any Reference Rate Supplement which has the effect of a reduction in the Margin, all the Lenders);
(b) specifies for that currency the relevant terms which are expressed in this Agreement to be determined by reference to Reference Rate Terms;
(c) specifies whether that currency is a Compounded Rate Currency or a Term Rate Currency; and
(d) has been made available to ABB and each Finance Party.

"Reference Rate Terms" means, in relation to:

(a) a currency;
(b) a Utilisation or an Unpaid Sum in that currency;
(c) an Interest Period for that Utilisation or Unpaid Sum (or other period for the accrual of commission or fees in a currency); or
(d) any term of this Agreement relating to the determination of a rate of interest in relation to such a Utilisation or Unpaid Sum,

the terms set out for that currency, and (where such terms are set out for different categories of Utilisation, Unpaid Sum or accrual of commission or fees in that currency) for the category of that Utilisation, Unpaid Sum or accrual, in Schedule 10 (Reference Rate Terms) or in any Reference Rate Supplement.

"Relevant Market" means the market specified as such in the applicable Reference Rate Terms.

"Relevant Nominating Body" means any applicable central bank, regulator or other supervisory authority or a group of them, or any working group or committee sponsored or chaired by, or constituted at the request of, any of them or the Financial Stability Board.

"Replacement Reference Rate" means a reference rate which is:

(a) formally designated, nominated or recommended as the replacement for a Published Rate by:
(i) the administrator of that Published Rate (provided that the market or economic reality that such benchmark rate measures is the same as that measured by that Published Rate); or

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(ii) any Relevant Nominating Body,

and if replacements have, at the relevant time, been formally designated, nominated or recommended under both paragraphs, the "Replacement Reference Rate" will be the replacement under paragraph (ii) above;

(b) in the opinion of the Majority Lenders and ABB, generally accepted in the international or any relevant domestic syndicated loan markets as the appropriate successor to a Published Rate; or

(c) in the opinion of the Majority Lenders and ABB, an appropriate successor to a Published Rate.

"Reporting Day" means the day (if any) specified as such in the applicable Reference Rate Terms.

"Reporting Time" means the relevant time (if any) specified as such in the applicable Reference Rate Terms.

"Reservations" means any general principles of law which are set out as qualifications as to matters of law in any legal opinion delivered to the Facility Agent under Schedule 2 (Conditions Precedent).

"Resignation Letter" means a letter substantially in the form set out in Schedule 7 (Form of Resignation Letter).

"Restricted Party" means:

(a) a person that is a target of Economic Sanctions Laws; or

(b) a person, other than an individual, located in or incorporated under the laws of a country or territory that is the target of country-wide or territory-wide Economic Sanctions Laws that prohibit doing business in or with that country or territory.

"Revolving Facility Affiliate" means, in respect of a Lender that is a Swingline Lender, an Affiliate of that Swingline Lender that is itself a Lender.

"RFR" means the rate specified as such in the applicable Reference Rate Terms.

"RFR Banking Day" means any day specified as such in the applicable Reference Rate Terms.

"Rollover Advance" means one or more Advances (other than Swingline Advances):

(a) made or to be made on the same day that a maturing Advance is due to be repaid;

(b) the aggregate amount of which is equal to or less than the amount of the maturing Advance;

(c) in the same currency as the maturing Advance (unless it arose as a result of the operation of Clause 6.2 (Unavailability of a currency)); and

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(d) made or to be made to a Borrower for the purpose of refinancing a maturing Advance made to such Borrower.

"Sanctions Authorities" means the Office of Foreign Assets Control of the U.S. Department of the Treasury (OFAC), the U.S. Department of State, the European Union, Switzerland, the United Kingdom, and the United Nations.

"Screen Rate" means:

(a) in respect of a Term Reference Rate, the rate specified in the applicable Reference Rate Terms; and
(b) in relation to €STR, the euro short-term rate administered by the European Central Bank (or any other person which takes over the administration of that rate) displayed (before any correction, recalculation or republication by the administrator) on page EUROSTR= of the Thomson Reuters screen (or any replacement Thomson Reuters page which displays that rate).

If such page or service ceases to be available, the Facility Agent may specify another page or service displaying the relevant rate after consultation with ABB and the Lenders.

"Second Extension Request" has the meaning given to it in Clause 2.3 (Extension Option).

"Securitisations" means any local or global securitisation programme from time to time established (including as of the date of this Agreement) by any Group Company, each as may be modified, supplemented, renewed, substituted, varied or amended.

"Security" means any mortgage, charge, assignment by way of security, pledge, hypothecation, lien and any other security interest of any kind whatsoever.

"Separate Advances" has the meaning given to that term in Clause 7.1 (Repayment of Advances).

"Specified Time" means a time determined in accordance with Schedule 5 (Timetables).

"Subsidiary" means a subsidiary within the meaning of section 1159 of the Companies Act 2006.

"Swingline Advance" means a Dollar Swingline Advance or a Euro Swingline Advance.

"Swingline Affiliate" means, in respect of a Lender, an Affiliate of that Lender that is a Swingline Lender.

"Swingline Agents" means the Dollar Swingline Agent and the Euro Swingline Agent and "Swingline Agent" means either of them.

"Swingline Commitment" means, in respect of a Swingline Lender, its Dollar Swingline Commitment or its Euro Swingline Commitment.

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"Swingline Lender" means a Dollar Swingline Lender or a Euro Swingline Lender.

"TARGET Day" means any day on which TARGET2 is open for the settlement of payments in Euro.

"TARGET2" means the Trans-European Automated Real-time Gross Settlement Express Transfer payment system which utilises a single shared platform and which was launched on 19 November 2007.

"Tax" means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same).

"Term Rate Advance" means any Advance (not being a Swingline Advance) or, if applicable, Unpaid Sum in a Term Rate Currency to the extent that it is not, or has not become a "Compounded Rate Advance" for its then current Interest Period pursuant to the applicable Reference Rate Terms.

"Term Rate Currency" means:

- (a) Dollars and Euro; and
- (b) any currency specified as such in a Reference Rate Supplement relating to that currency,

to the extent, in any case, not specified otherwise in a subsequent Reference Rate Supplement.

"Term Reference Rate" means, in relation to a Term Rate Advance, the applicable Primary Term Rate as of the Quotation Time for a period equal in length to the Interest Period of that Advance.

"Term Reference Rate CAS" means, in relation to a Term Rate Advance, any rate which is either:

- (a) specified as such in the applicable Reference Rate Terms; or
- (b) determined by the relevant Agent (acting on the instructions of all the Lenders) (or by any other Finance Party which agrees to determine that rate in place of that Agent) in accordance with the methodology specified in the applicable Reference Rate Terms.

"Termination Date" means, subject to Clause 2.3 (Extension Option), the fifth anniversary of the date of this Agreement.

"Total Commitments" means the aggregate Commitments of the Lenders, being $2,000,000,000 at the date of this Agreement.

"Total Outstandings" means the aggregate from time to time of the Outstandings.

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"Total Swingline Facility Amount" means the higher of (a) the aggregate of the Dollar Swingline Commitments and (b) the aggregate of the Euro Swingline Commitments, being $750,000,000 as at the date of this Agreement.

"Transfer Certificate" means a certificate substantially in the form set out in Schedule 4 (Form of Transfer Certificate) or any other form agreed between the Facility Agent and ABB.

"Transfer Date" means, in relation to a transfer, the later of:

- (a) the proposed Transfer Date specified in the Transfer Certificate; and
- (b) the date on which the Facility Agent executes the Transfer Certificate.

"Unpaid Sum" means any sum due and payable but unpaid by a Borrower under the Finance Documents.

"US GAAP" means generally accepted accounting principles in the United States of America.

"US Tax Obligor" means:

- (a) a Borrower which is resident for tax purposes in the United States of America; or
- (b) an Obligor some or all of whose payments under the Finance Documents are from sources within the United States for US federal income tax purposes.

"Utilisation" means a utilisation of the Facility.

"Utilisation Date" means the date of a Utilisation, being the date on which an Advance is to be made.

"Utilisation Request" means a notice substantially in the form set out in Schedule 3 (Utilisation Request).

"VAT" means value added tax as provided for in the Value Added Tax Act 1994 and any other tax of a similar nature.

1.2 Construction

- (a) Any reference in this Agreement to:
  - (i) "assets" includes, except in the definition of Material Subsidiary, present and future properties, revenues and rights of every description;
  - (ii) "bank" means a bank entity that is licensed to provide banking services in accordance with applicable regulations in its jurisdiction of incorporation;
  - (iii) the "European interbank market" means the interbank market for Euro operating in Participating Member States;

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- (iv) a '**Finance Document**' or any other agreement or instrument is a reference to that Finance Document or other agreement or instrument as amended, novated, supplemented, extended, replaced or restated;
- (v) a '**person**' includes any individual, firm, company, corporation, government, state or agency of a state or any association, trust, joint venture, consortium or partnership (whether or not having separate legal personality);
- (vi) a '**regulation**' includes any regulation, rule, official directive, request or guideline (whether or not having the force of law but, if not having the force of law, the compliance with which is customary) of any governmental, intergovernmental or supranational body, agency, department or of any regulatory, self-regulatory or other authority or organisation;
- (vii) a '**financial year**' in relation to ABB, means a period in respect of which it is required to produce annual audited financial statements;
- (viii) except where the context otherwise requires, words in the singular include the plural and in the plural include the singular;
- (ix) a provision of law is a reference to that provision as amended or re-enacted; and
- (x) unless a contrary indication appears, a time of day is a reference to London time.(b) The determination of the extent to which a rate is '**for a period equal in length**' to an Interest Period shall disregard any inconsistency arising from the last day of that Interest Period being determined pursuant to the terms of this Agreement.(c) Where there is a reference in this Agreement to any amount, limit or threshold specified in Dollars, in ascertaining whether or not that amount, limit or threshold has been attained, broken or achieved, as the case may be, a non-Dollar amount shall, unless the context otherwise requires or the contrary is indicated, be counted on the basis of the equivalent in Dollars of that amount using the Facility Agent's Spot Rate of Exchange.(d) Section, Clause and Schedule headings are for ease of reference only.(e) Unless a contrary indication appears, a term used in any other Finance Document or in any notice given under or in connection with any Finance Document has the same meaning in that Finance Document or notice as in this Agreement.(f) A Default is '**continuing**' if it has not been remedied or waived.(g) For the avoidance of doubt, where any person is party to this Agreement in more than one capacity, reference to that person in one capacity shall not (except where the context otherwise requires) include reference to it in any other capacity.

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- (h) A reference in this Agreement to a page or screen of an information service displaying a rate shall include:
  - (i) any replacement page of that information service which displays that rate; and
  - (ii) the appropriate page of such other information service which displays that rate from time to time in place of that information service,and, if such page or service ceases to be available, shall include any other page or service displaying that rate specified by the Agent after consultation with ABB.
- (i) A reference in this Agreement to a Central Bank Rate shall include any successor rate to, or replacement rate for, that rate.
- (j) Any Reference Rate Supplement relating to a currency overrides anything relating to that currency in:
  - (i) Schedule 10 (*Reference Rate Terms*); or
  - (ii) any earlier Reference Rate Supplement.
- (k) A Compounding Methodology Supplement relating to the Daily Non-Cumulative Compounded RFR Rate or the Cumulative Compounded RFR Rate overrides anything relating to that rate in:
  - (i) Schedule 11 (*Daily Non-Cumulative Compounded RFR Rate*) or Schedule 12 (*Cumulative Compounded RFR Rate*), as the case may be; or
  - (ii) any earlier Compounding Methodology Supplement.
- (l) References to a Commitment of Citibank, N.A./Citibank, N.A., London Branch (together the '**Citi Entities**') in relation to the Facility shall be construed as a reference to the aggregate Commitment of Citibank, N.A., Citibank, N.A. and London Branch in relation to the Facility (as allocated between the Citi Entities in such proportions and such amounts as each Citi Entity notifies to the Facility Agent from time to time).
- (m) References to a Commitment of Bank of America Europe Designated Activity Company/Bank of America N.A./Bank of America N.A., London Branch (together the '**BofA Entities**') in relation to the Facility shall be construed as a reference to the aggregate Commitment of Bank of America Europe Designated Activity Company, Bank of America N.A., and Bank of America N.A., London Branch in relation to the Facility (as allocated between the BofA Entities in such proportions and such amounts as each BofA Entity notifies to the Facility Agent from time to time).

### 1.3 Dutch Terms

In this Agreement, where it relates to a Dutch entity, a reference to:

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(a) a necessary action to authorise where applicable, includes without limitation:
(i) any action required to comply with the Dutch Works Councils Act (Wet op de ondernemingsraden); and
(ii) obtaining an unconditional positive advice (advies) from the competent works council(s);
(b) a winding-up, administration or dissolution includes a Dutch entity being:
(i) declared bankrupt (failliet verklaard);
(ii) dissolved (ontbonden);
(c) a moratorium includes surséance van betaling and granted a moratorium includes surséance verleend;
(d) a liquidator or a trustee in bankruptcy includes a curator;
(e) an administrator includes a bewindvoerder; and
(f) a(n) (administrative) receiver does not include a curator or bewindvoerder.

# 1.4 Currency Symbols and Definitions

"$" and "Dollars" denote the lawful currency of the United States of America, "£" and "Sterling" denote the lawful currency of the United Kingdom, "€", "EUR" and "Euro" denote the single currency of the Participating Member States and "CHF" and "Swiss francs" denote the lawful currency of Switzerland.

# 1.5 Third Party Rights

A person who is not a Party has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Agreement.

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# SECTION 2 THE
FACILITY

# 2. THE FACILITY

# 2.1 The Facility

Subject to the terms of this Agreement, the Lenders make available to the Borrowers, a multicurrency revolving credit facility (the "Facility") in a maximum aggregate amount of $2,000,000,000, including within it the following sub-facilities:

(a) a Dollar revolving swingline facility (the "Dollar Swingline Facility") in a maximum aggregate amount equal to the aggregate Dollar Swingline Commitments; and
(b) a Euro revolving swingline facility (the "Euro Swingline Facility") in a maximum Base Currency Amount equal to the aggregate Euro Swingline Commitments.

Each Swingline Commitment of each Lender that is a Swingline Lender forms part of the Commitment of that Lender. Each Swingline Commitment of each Swingline Lender that is a Swingline Affiliate of another Lender forms part of that other Lender's Commitment. For the avoidance of doubt each Lender and its Swingline Affiliate shall be treated as having a single participation in the Facility and a single vote.

# 2.2 Increase of Commitments

(a) ABB may by giving prior notice to the Facility Agent by no later than the date falling 90 Business Days after the effective date of a cancellation of the Available Commitments and/or any Swingline Commitments of (i) a Defaulting Lender (or its Revolving Facility Affiliate or Swingline Affiliate) in accordance with paragraph (f) of Clause 8.7 (Right of replacement or repayment and cancellation in relation to a single Lender), (ii) any Lender in accordance with Clause 8.1 (Lender Illegality) or (iii) any Lender that has refused an Extension Request and has not been replaced in accordance with Clause 8.7 (Right of replacement or repayment and cancellation in relation to a single Lender), request that the Total Commitments or the relevant Swingline Commitments be increased (and the Total Commitments or the relevant Swingline Commitments shall be so increased) in an aggregate amount in the Base Currency of up to the amount of the Available Commitments, the relevant Swingline Commitments or the Commitments so cancelled as follows:

(i) the increased Commitments and/or the relevant Swingline Commitments will be assumed by one or more Lenders or other banks (each an "Increase Lender") (none of which may be a member of the Group) selected by ABB and each of which confirms its willingness to assume and does assume all the obligations of a Lender corresponding to that part of the increased Commitments and/or the relevant Swingline Commitments which it is to assume, as if it had been an Original Lender;

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(ii) each of the Obligors and any Increase Lender shall assume obligations towards one another and/or acquire rights against one another as the Obligors and the Increase Lender would have assumed and/or acquired had the Increase Lender been an Original Lender;
(iii) each Increase Lender shall become a Party as a "Lender" and any Increase Lender and each of the other Finance Parties shall assume obligations towards one another and acquire rights against one another as that Increase Lender and those Finance Parties would have assumed and/or acquired had the Increase Lender been an Original Lender;
(iv) the Commitments and Swingline Commitments of the other Lenders shall continue in full force and effect; and
(v) any increase in the Total Commitments and/or the relevant Swingline Commitments shall take effect on the date specified by ABB in the notice referred to above or any later date on which the conditions set out in paragraph (b) below are satisfied.

No Lender shall have any obligation to act as an Increase Lender unless it indicates that it is willing to do so in accordance with sub-paragraph (i).

(b) An increase in the Total Commitments and/or any Swingline Commitments will only be effective on:

(i) the execution by the Facility Agent of an Increase Confirmation from the relevant Increase Lender; and
(ii) in relation to an Increase Lender which is not a Lender immediately prior to the relevant increase the performance by the Facility Agent of all necessary "know your customer" or other similar checks under all applicable laws and regulations in relation to the assumption of the increased Commitments and/or Swingline Commitments by that Increase Lender, the completion of which the Facility Agent shall promptly notify to ABB and the Increase Lender.

(c) No Swingline Commitment of a Lender may exceed the Commitment of that Lender or its Revolving Facility Affiliate pursuant to the operation of this Clause 2.2. Accordingly where the Swingline Commitments are to be increased pursuant to this Clause to replace Swingline Commitments of a Swingline Lender that have been cancelled pursuant to paragraph (f) of Clause 8.7 (Right of replacement or repayment and cancellation in relation to a single Lender) or Clause 8.1 (Lender Illegality) without a commensurate cancellation of the Commitments of that Swingline Lender's Revolving Facility Affiliate being required at the time of such cancellation, that Revolving Facility Affiliate shall (to the extent of its Commitments at the time of the increase in Swingline Commitments) be required to transfer its Commitments to the relevant Increase Lender (or its Affiliate) on the terms provided for in Clause 35.6 (Replacement of a Defaulting Lender) to the extent necessary to ensure that the Commitments of the Increase Lender (or its Affiliate) are at least equal to each of the Swingline Commitments assumed by that Increase Lender.

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(d) Each Increase Lender, by executing the Increase Confirmation, confirms (for the avoidance of doubt) that the Facility Agent has authority to execute on its behalf any amendment or waiver that has been approved by or on behalf of the requisite Lender or Lenders in accordance with this Agreement on or prior to the date on which the increase becomes effective.

(e) Unless the Facility Agent otherwise agrees or the increased Commitment and/or Swingline Commitment is assumed by an existing Lender, ABB shall, on the date upon which the increase takes effect, promptly on demand pay the Facility Agent the amount of all costs and expenses (including legal fees) reasonably incurred by it in connection with any increase in Commitments and/or Swingline Commitments under this Clause 2.2.

(f) ABB may pay to the Increase Lender a fee in the amount and at the times agreed between ABB and the Increase Lender in a letter between ABB and the Increase Lender setting out that fee.

(g) Clause 23.4 (Limitation of responsibility of Existing Lenders) shall apply mutatis mutandis in this Clause 2.2 in relation to an Increase Lender as if references in that Clause to:

(i) an "Existing Lender" were references to all the Lenders immediately prior to the relevant increase;

(ii) the "New Lender" were references to that "Increase Lender"; and

(iii) a "re-transfer" and "re-assignment" were references to respectively a "transfer" and "assignment".

(h) The Increase Lender shall, on the date upon which the increase takes effect, pay to the Facility Agent (for its own account) a fee of $2,000.

# 2.3 Extension Option

(a) ABB may request that the Termination Date be extended subject to the terms of this Clause 2.3:

(i) by giving written notice to the Facility Agent not less than 45 days and not more than 90 days before the date which is 12 Months after the date of this Agreement (the "First Extension Request") requesting that the Termination Date shall be the date which is 72 Months after the date of this Agreement (the "First Extension Termination Date"); and/or

(ii) by giving written notice to the Facility Agent not less than 45 days and not more than 90 days before the date which is 24 Months after the date of this Agreement (the "Second Extension Request") requesting that the Termination Date shall be the date which is 84 Months after the date of this Agreement.

(b) The Facility Agent shall promptly notify each Lender of any Extension Request (including, in the case of a Second Extension Request, any Lender that refused a First Extension Request).

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(c) Each Lender (including, in the case of a Second Extension Request, any Lender that refused a First Extension Request) shall notify the Facility Agent of its decision (which shall be in its sole discretion) in respect of whether or not to agree to an Extension Request not later than 20 days before the date which is:

(i) in respect of a First Extension Request, the date which is 12 Months after the date of this Agreement (and, if any Lender has not notified the Facility Agent of its acceptance of the First Extension Request on or before such date, it shall be deemed to have refused such First Extension Request); or
(ii) in respect of a Second Extension Request, the date which is 24 Months after the date of this Agreement (and, if any Lender has not notified the Facility Agent of its acceptance of the Second Extension Request on or before such date, it shall be deemed to have refused such Second Extension Request),

and the Facility Agent shall notify ABB of whether or not each Lender has agreed to the relevant Extension Request promptly, and in any case no later than 5 Business Days after (A) receipt by it of a notification from a Lender as to whether or not it has agreed to the relevant Extension Request and/or (B) the deemed refusal of a Lender to an Extension Request (as applicable).

(d) With effect from the date on which ABB receives notification from the Facility Agent pursuant to paragraph (c) above, the Termination Date shall be extended in relation to the Commitments and/or Swingline Commitments of those Lender(s) who have agreed to the relevant Extension Request.

(e) If a Lender agrees to an Extension Request, the agreement of such Lender shall be deemed to include the agreement of its Revolving Facility Affiliate and its Swingline Affiliate.

(f) If a Lender refuses an Extension Request and ABB exercises its right to either:

(i) replace such refusing Lender pursuant to Clause 8.7 (Right of replacement or repayment and cancellation in relation to a single Lender); or
(ii) increase the Total Commitments following the cancellation of such refusing Lender's Commitments and/or Swingline Commitments, in an amount equal to the Commitments and/or Swingline Commitments so cancelled, pursuant to Clause 2.2 (Increase of Commitments),

the relevant New Lender or Increase Lender (as applicable) shall be deemed to have consented to the Extension Request that was the subject of the refusal.

### 2.4 Finance Parties' rights and obligations

(a) The obligations of each Finance Party under the Finance Documents are several. Failure by a Finance Party to perform its obligations under the Finance Documents does not affect the obligations of any other Party under the Finance

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Documents. No Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents.

(b) The rights of each Finance Party under or in connection with the Finance Documents are separate and independent rights and any debt arising under the Finance Documents to a Finance Party from any of the Obligors is a separate and independent debt in respect of which a Finance Party shall be entitled to enforce its rights in accordance with paragraph (c) below. The rights of each Finance Party include any debt owing to that Finance Party under the Finance Documents and, for the avoidance of doubt, any part of an Advance or any other amount owed by an Obligor which relates to a Finance Party's participation in the Facility or its role under a Finance Document (including any such amount payable to the Agent on its behalf) is a debt owing to that Finance Party by that Obligor.

(c) A Finance Party may, except as specifically provided in the Finance Documents, separately enforce its rights under or in connection with the Finance Documents. 2.5

# Facility Offices

(a) Subject to paragraph (b) below, a Lender may (i) change its Facility Office for the purpose of this Agreement and/or (ii) nominate a different Facility Office for the purposes of making a particular Advance or particular type of Advance to any Borrower, in which event such Facility Office shall for the purposes of this Agreement be its Facility Office for that Advance or that type of Advance but not otherwise.

(b) If a Lender changes its Facility Office or nominates a different Facility Office, (i) that Lender will notify the Facility Agent and ABB promptly (and, in any event, within 5 Business Days) of such change or, as the case may be, nomination, and until it does so, the Facility Agent and ABB will be entitled to assume that no such change has taken place and (ii) if the country of such Facility Office is not subject to the Financial Action Task Force any such change or, as the case may be, nomination shall be subject to the prior written consent of the Facility Agent.

# 2.6 Borrowers' right and obligations hereunder

(a) Each Borrower by its execution of this Agreement or a Borrower Accession Letter irrevocably appoints ABB to act on its behalf as its agent in relation to the Finance Documents (in this capacity, the "Borrowers' Agent") and irrevocably authorises (i) ABB on its behalf to supply all information concerning itself contemplated by this Agreement to the Finance Parties and to give all notices and instructions (including Utilisation Requests), to execute on its behalf any Borrower Accession Letter and to make such agreements capable of being given or made by any Borrower notwithstanding that they may affect such Borrower, without further reference to or the consent of such Borrower and (ii) each Finance Party to give any notice, demand or other communication to such Borrower pursuant to the Finance Documents to ABB on its behalf, and in each case such Borrower shall be bound thereby as though such Borrower

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itself had given such notices and instructions (including, without limitation, any Utilisation Requests) or executed or made such agreements or received any such notice, demand or other communication.

(b) Every act, omission, agreement, undertaking, settlement, waiver, notice or other communication given or made by the Borrowers' Agent or given to the Borrowers' Agent under this Agreement, or in connection with this Agreement (whether or not known to any other Borrower and whether occurring before or after such a Borrower became a Borrower under this Agreement) shall be binding for all purposes on all Borrowers as if the Borrowers had expressly made, given or concurred with the same. In the event of any conflict between any notices or other communications of the Borrowers' Agent and any Borrower, those of the Borrowers' Agent shall prevail.

(c) The Borrowers' Agent may resign its appointment hereunder by giving not less than ten Business Days' prior written notice to that effect to the Facility Agent, provided that no such resignation shall be effective until a successor consents in writing to the Facility Agent to be appointed.

# 3. PURPOSE

# 3.1 Purpose

Each Borrower shall apply all amounts borrowed by it under the Facility for the general corporate purposes of the Group, provided that no Swingline Advance shall be used to refinance another Swingline Advance.

# 3.2 Monitoring

No Finance Party is bound to monitor or verify the application of any amount borrowed pursuant to this Agreement.

# 4. CONDITIONS OF UTILISATION

# 4.1 Initial conditions precedent

(a) No Utilisation Request may be served unless the Facility Agent has received all of the documents and other evidence listed in Part I of Schedule 2 (Conditions Precedent) in form and substance reasonably satisfactory to the Facility Agent.

(b) The Facility Agent shall notify ABB and the Lenders promptly upon the conditions set out in paragraph (a) of this Clause 4.1 being satisfied.

(c) Other than to the extent that the Majority Lenders notify the Facility Agent in writing to the contrary before the Facility Agent gives the notification described in paragraph (b) above, the Lenders authorise (but do not require) the Facility Agent to give that notification. The Facility Agent shall not be liable for any damages, costs or losses whatsoever as a result of giving any such notification.

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#### 4.2 Further conditions precedent

(a) The Lenders will only be obliged to comply with Clause 5.4 (Lenders' participation) and Clause 5.8 (Swingline Lenders' participation) if on the date of the Utilisation Request and on the proposed Utilisation Date (in each case other than in the case of a Rollover Advance):

(i) no Default is continuing or would result from the proposed Advance;

(ii) the representations to be made by ABB pursuant to Clause 19.16 (Repetition) are true in all respects; and

(iii) such proposed Utilisation Date is not within 30 days of ABB providing notice to the Facility Agent in accordance with paragraph (a) of Clause 8.3 (Mandatory Prepayment on Change of Control).

(b) An Advance will not be made if it would result in the Base Currency Amount of all Advances exceeding the Total Commitments.

#### 4.3 Conditions relating to Optional Currencies

A currency will constitute an Optional Currency in relation to an Advance if it is Sterling or Euro, or it is readily available in the amount required and freely convertible into the Base Currency in the wholesale market for that currency on the Quotation Day and the Utilisation Date for that Advance and there are Reference Rate Terms agreed for that currency provided that there may not at any time be Advances outstanding denominated in more than 5 Optional Currencies.

#### 4.4 Maximum number of Advances

(a) No Borrower may deliver a Utilisation Request if as a result of the proposed Utilisation more than 10 Advances would be outstanding.

(b) Any Advance made by a single Lender under Clause 6.2 (Unavailability of a currency) shall not be taken into account in this Clause 4.4.

(c) Any Separate Advance shall not be taken into account in this Clause 4.4.

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# SECTION 3
UTILISATION

# 5. UTILISATION

# 5.1 Delivery of a Utilisation Request

A Borrower may utilise the Facility (other than for the purpose of drawing Swingline Advances, which may be drawn in accordance with Clause 5.5 (Delivery of a Utilisation Request for a Swingline Advance)) by delivery to the Facility Agent of a duly completed Utilisation Request not later than the Specified Time.

# 5.2 Completion of a Utilisation Request

(a) Each Utilisation Request delivered to the Facility Agent pursuant to Clause 5.1 (Delivery of a Utilisation Request) is irrevocable and will not be regarded as having been duly completed unless:

(i) the proposed Utilisation Date is a Business Day within the Availability Period;
(ii) the currency and amount of the Utilisation comply with Clause 5.3 (Currency and amount); and
(iii) the proposed Interest Period complies with Clause 10 (Interest Periods).

(b) Only one Advance may be requested in each Utilisation Request delivered to the Facility Agent pursuant to Clause 5.1 (Delivery of a Utilisation Request).

# 5.3 Currency and amount

(a) The currency specified in a Utilisation Request delivered to the Facility Agent pursuant to Clause 5.1 (Delivery of a Utilisation Request) must, in the case of any Advance (not being a Swingline Advance), be the Base Currency or an Optional Currency.
(b) The amount of the proposed Advance must be:

(i) if the currency selected is the Base Currency, a minimum of $50,000,000 and an integral multiple of $10,000,000; or
(ii) if the currency selected is Euro, a minimum of Euro 50,000,000 and an integral multiple of Euro10,000,000; or
(iii) if the currency selected is Sterling, a minimum amount of £25,000,000 and an integral multiple of £5,000,000; or
(iv) if the currency selected is an Optional Currency (other than Euro or Sterling), in such minimum amount and multiple as the Facility Agent and ABB may agree,

or, in any case, the amount of the Available Facility.

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#### 5.4 Lenders' participation

- (a) If the conditions set out in this Agreement have been met, and subject to Clause 7.1 (*Repayment of Advances*), each Lender shall make its participation in each Advance available by the Utilisation Date through its Facility Office.
- (b) Subject to Clause 6.2 (*Unavailability of a currency*), the amount of each Lender's participation in each Advance (not being a Swingline Advance) will be equal to the proportion borne by its Available Commitment to the Available Facility immediately prior to making the Advance.
- (c) The Facility Agent shall determine the Base Currency Amount of each Advance which is to be made in an Optional Currency and shall notify each Lender of the amount, currency and the Base Currency Amount of each Advance, the amount of its participation in that Advance and (if different) the amount of that participation to be made available in cash, in each case by the Specified Time.

#### 5.5 Delivery of a Utilisation Request for a Swingline Advance

The Borrowers may utilise the Dollar Swingline Facility or the Euro Swingline Facility by delivery to the relevant Swingline Agent (with a copy to the Facility Agent) of a duly completed Utilisation Request not later than the Specified Time.

#### 5.6 Completion of a Utilisation Request for a Swingline Advance

- (a) Each Utilisation Request delivered pursuant to Clause 5.5 (*Delivery of a Utilisation Request for a Swingline Advance*) is irrevocable and will not be regarded as having been duly completed unless:
  - (i) it specifies whether the Swingline Advance is to be a Dollar Swingline Advance or a Euro Swingline Advance;
  - (ii) the proposed Utilisation Date is a Business Day within the Availability Period;
  - (iii) the currency and amount of the Utilisation comply with Clause 5.7 (*Currency and amount*); and
  - (iv) the proposed Interest Period complies with Clause 10 (*Interest Periods*).
- (b) Only one Swingline Advance may be requested in each Utilisation Request delivered pursuant to Clause 5.5 (*Delivery of a Utilisation Request for a Swingline Advance*).

#### 5.7 Currency and amount

- (a) The currency specified in a Utilisation Request delivered pursuant to Clause 5.5 (*Delivery of a Utilisation Request for a Swingline Advance*) must be Dollars (in the case of a Dollar Swingline Advance) or Euro (in the case of a Euro Swingline Advance).
- (b) The amount of the proposed Swingline Advance must be:

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(i) in the case of a Dollar Swingline Advance, a minimum of $50,000,000 and an integral multiple of $10,000,000 or, if less, the Available Dollar Swingline Facility; or

(ii) in the case of a Euro Swingline Advance, a minimum of Euro 50,000,000 and an integral multiple of Euro 10,000,000 or, if less, the Available Euro Swingline Facility; or

(c) The amount of a proposed Dollar Swingline Advance or, as the case may be, the Base Currency Amount of a proposed Euro Swingline Advance must not, when aggregated with the Base Currency Amount of all outstanding Swingline Advances outstanding on the proposed Utilisation Date, exceed the Total Swingline Facility Amount.

# 5.8 Swingline Lenders' participation

(a) If the conditions set out in this Agreement have been met, each Dollar Swingline Lender (in the case of a Dollar Swingline Advance) or Euro Swingline Lender (in the case of a Euro Swingline Advance) shall, on the relevant Utilisation Date, make its participation in each Dollar Swingline Advance or Euro Swingline Advance (as applicable) available through its Facility Office.

(b) The amount of each Swingline Lender's participation in each Dollar Swingline Advance or Euro Swingline Advance will be equal to the proportion borne by its Available Dollar Swingline Commitment or, as the case may be, Available Euro Swingline Commitment to the Available Dollar Swingline Facility or, as the case may be, Available Euro Swingline Facility immediately prior to making the Dollar Swingline Advance or Euro Swingline Advance.

(c) The relevant Swingline Agent shall notify each relevant Swingline Lender of the amount, currency and the Base Currency Amount of each Swingline Advance at the Specified Time.

# 6. OPTIONAL CURRENCIES

# 6.1 Selection of currency

The relevant Borrower shall select the currency of an Advance in a Utilisation Request. 6.2

# Unavailability of a currency

If before the Specified Time on any Quotation Day:

(a) the Facility Agent has received notice from a Lender that the Optional Currency (other than Euro or Sterling) requested is not readily available to it in the amount required; or

(b) a Lender notifies the Facility Agent that compliance with its obligation to participate in an Advance in the proposed Optional Currency (other than Euro or Sterling) would contravene a law or regulation applicable to it,

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the Facility Agent will give notice to the relevant Borrower to that effect by the Specified Time on that day. In this event, any Lender that gives notice pursuant to this Clause 6.2 will be required to participate in the Advance in the Base Currency (in an amount equal to that Lender's proportion of the Base Currency Amount or, in respect of a Rollover Advance, an amount equal to that Lender's proportion of the Base Currency Amount of the maturing Advance that is due to be repaid) and its participation will be treated as a separate Advance denominated in the Base Currency during that Interest Period.

### 6.3 Notification

The Facility Agent shall notify the Lenders and the relevant Borrower of Optional Currency amounts (and the applicable Facility Agent's Spot Rate of Exchange) promptly after they are ascertained.

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# SECTION 4
REPAYMENT, PREPAYMENT AND CANCELLATION

# 7. REPAYMENT

# 7.1 Repayment of Advances

(a) Each Borrower shall repay each Advance made to it on the last day of its Interest Period.
(b) All Advances must be repaid in full on the Termination Date.
(c) At any time when a Lender becomes a Defaulting Lender, the maturity date of each of the participations of that Lender (and, if that Defaulting Lender is the Revolving Facility Affiliate of a Swingline Lender, of that Swingline Lender) in the Advances then outstanding will be automatically extended to the Termination Date and will be treated as separate Advances (the "Separate Advances") denominated in the currency in which the relevant participations are outstanding.
(d) A Borrower to whom a Separate Advance is outstanding may prepay that Advance by giving 5 Business Days' prior notice to the Facility Agent. The Facility Agent will forward a copy of a prepayment notice received in accordance with this paragraph (d) to the relevant Lender concerned as soon as practicable on receipt.
(e) Interest in respect of a Separate Advance will accrue for successive Interest Periods selected by the Borrower by the time and date specified by the Facility Agent (acting reasonably) and will be payable by that Borrower to the relevant Lender on the last day of each Interest Period in respect of that Advance. Notwithstanding Clause 9.3 (Calculation of interest - Swingline Advance), the rate of interest in respect of any Swingline Advance that becomes a Separate Advance in accordance with this Clause 7.1 shall be calculated in accordance with Clause 9.1 (Calculation of interest - Term Rate Advance) and Clause 9.2 (Calculation of interest - Compounded Rate Advance) (as applicable) with effect from the end of the Interest Period during which such Swingline Advance becomes a Separate Advance.
(f) The terms of this Agreement relating to the Facility generally shall continue to apply to Separate Advances other than to the extent inconsistent with paragraphs (c) to (e) above, in which case those paragraphs shall prevail in respect of any Separate Advance.
(g) If one or more Advances are to be made available to a Borrower:

(i) on the same day that a maturing Advance is due to be repaid by that Borrower;
(ii) in the same currency as the maturing Advance (unless the currency of the maturing Advance was determined pursuant to the operation of Clause 6.2 (Unavailability of a currency)); and

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(iii) in whole or in part for the purpose of refinancing the maturing Advance; the aggregate amount of the new Advance shall be treated as if applied in or towards repayment of the maturing Advance so that:

(A) if the amount of the maturing Advance exceeds the aggregate amount of the new Advance:

(1) the relevant Borrower will only be required to pay an amount in cash in the relevant currency equal to that excess; and

(2) each Lender's participation (if any) in the new Advance shall be treated as having been made available and applied by the Borrower in or towards repayment of that Lender's participation (if any) in the maturing Advance and that Lender will not be required to make its participation in the new Advance available in cash; and

(B) if the amount of the maturing Advance is equal to or less than the aggregate amount of the new Advance:

(1) the relevant Borrower will not be required to make any payment in cash; and

(2) each Lender will be required to make its participation in the new Advance available in cash only to the extent that its participation (if any) in the new Advance exceeds that Lender's participation (if any) in the maturing Advance and the remainder of that Lender's participation in the new Advance shall be treated as having been made available and applied by the Borrower in or towards repayment of that Lender's participation in the maturing Advance.

# 8. PREPAYMENT AND CANCELLATION

# 8.1 Lender Illegality

If it becomes unlawful in any jurisdiction for a Lender to perform any of its obligations as contemplated by this Agreement or to fund or maintain its participation in any Advance:

(a) that Lender shall promptly notify the Facility Agent upon becoming aware of that event;

(b) unless the repayment referred to in paragraph (c) below avoids such unlawfulness, upon the Facility Agent notifying ABB, the Commitment and/or the relevant Swingline Commitment of that Lender and/or its Revolving Facility Affiliate or its Swingline Affiliate will be immediately cancelled; and

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(c) each Borrower shall, to the extent necessary to avoid such unlawfulness, repay that Lender's and/or its Revolving Facility Affiliate's or its Swingline Affiliate's participation in the Advances made to it on the last day of the Interest Period for each Advance occurring after the Facility Agent has notified ABB or, if earlier, the date specified by the Lender in the notice delivered to the Facility Agent (being no earlier than 5 Business Days after receipt of such notice or, if earlier, the last day of any applicable grace period permitted by law).

# 8.2 Borrower Illegality

If it is or becomes unlawful for a Borrower to perform any of its obligations under the Finance Documents, save where such obligations are not, or could reasonably be considered not to be, material to the interests of the Lenders under the Finance Documents, that Borrower shall within 15 Business Days of being served with notice by the Facility Agent so to do, repay all Advances owing by it, together with accrued interest and all other amounts owing by it under the Finance Documents.

# 8.3 Mandatory Prepayment on Change of Control

If any person (whether alone or together with any associated person) becomes the beneficial owner of shares in the issued share capital of ABB carrying the right to more than 50 per cent. of the votes exercisable at a general meeting of ABB:

(a) ABB shall promptly notify the Facility Agent upon becoming aware of that event; and
(b) if within 15 days following such notification to the Facility Agent any Lender so requests (by delivering a notice to ABB through the Facility Agent), each Borrower shall, no later than 15 days following such request, prepay that Lender's portion of all outstanding Advances, together with accrued interest thereon and all other amounts owing to such Lender hereunder and cancel that Lender's Commitments and/or Swingline Commitments.

For the purposes of this Clause 8.3, "associated person" means, in relation to any person, a person who is (i) "acting in concert" (as defined in the City Code on Takeovers and Mergers) with that person or (ii) a "connected person" (as defined in section 839 of the Income and Corporation Taxes Act 1988) of that person.

# 8.4 Mandatory Prepayment on Sanctions Misrepresentation or Anti-Bribery and Corruption Misrepresentation

(a) Upon ABB becoming aware of a Sanctions Misrepresentation or an Anti-Bribery and Corruption Misrepresentation:
(i) ABB shall promptly notify the Facility Agent, which shall promptly notify each Lender; and
(ii) if within 15 Business Days following such notification to the Facility Agent any Lender so requests (by delivering a notice to ABB through the Facility Agent), each Borrower shall within 15 Business Days of any such request (or earlier to the extent required by applicable law or regulation) prepay that Lender's portion of all outstanding Advances,

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together with accrued interest thereon and all other amounts owing to such Lender hereunder, and cancel that Lender's Commitments and/or Swingline Commitments.

(b) For the purpose of this Clause 8.4:

(i) a "Sanctions Misrepresentation" means any statement or representation made or deemed (by virtue of Clause 19.16 (Repetition)) to have been made by any Obligor pursuant to Clause 19.14 (Sanctions) being or proving to have been incorrect or misleading when made or deemed to have been made; and

(ii) an "Anti-Bribery and Corruption Misrepresentation" means any statement or representation made or deemed (by virtue of Clause 19.16 (Repetition)) to have been made by any Obligor pursuant to Clause 19.15 (Anti-corruption and anti-bribery laws and regulations) being or proving to have been incorrect or misleading when made or deemed to have been made.

8.5 Voluntary cancellation

ABB may, if it gives the Facility Agent not less than 5 Business Days' (or such shorter period as the Majority Lenders may agree) prior notice, cancel the whole or any part (being a minimum amount of $25,000,000 and an integral multiple of $10,000,000) of the Available Facility, the Available Dollar Swingline Facility or the Available Euro Swingline Facility. Any cancellation under this Clause 8.5 shall reduce rateably the Commitments of the Lenders or the relevant Swingline Commitments of the relevant Swingline Lenders.

8.6 Voluntary Prepayment

(a) Subject to paragraph (b) and (c) below, a Borrower may prepay the whole or any part of an Advance made to it (but if in part, being an amount that reduces the Base Currency Amount of the Advance by a minimum amount of $25,000,000 and rounded as the Facility Agent may reasonably require) provided that:

(i) in the case of any Advance other than a Swingline Advance, it gives the Facility Agent not less than 5 Business Days' prior notice; and

(ii) in the case of any Swingline Advance it gives the Facility Agent not less than 1 Business Day's prior notice.

(b) Subject to paragraph (c) below, a Borrower shall not make more than six prepayments in respect of Compounded Rate Advances under this Clause 8.6 in any calendar year.

(c) A Borrower may make more prepayments than permitted under paragraph (b) above in any calendar year provided that such Borrower shall pay a fee for each additional prepayment to be paid at the time of each such prepayment in the amount of $2,000 or such lower amount as agreed between ABB and the Agent from time to time and as documented in a side letter.

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8.7 Right of replacement or repayment and cancellation in relation to a single Lender

(a) If:

(i) any sum payable to any Lender by ABB or a Borrower is required to be increased under paragraph (c) of Clause 13.2 (Tax gross-up);

(ii) any Lender claims indemnification from ABB or a Borrower under Clause 13.3 (Tax indemnity) or Clause 14.1 (Increased costs); or

(iii) any Lender refuses (or is deemed to have refused) its consent to an Extension Request,

then ABB may:

(A) in the case of paragraphs (i) and (ii) above, whilst the circumstance giving rise to the requirement for that increase or indemnification continues; and

(B) in the case of paragraph (iii) above, at any time after the refusal (or deemed refusal) of the relevant Extension Request (but in the case of a refusal (or deemed refusal) of a First Extension Request not from the date, if any, that such Lender agrees to a Second Extension Request),

give the Facility Agent notice of cancellation of the Commitment and/or any Swingline Commitment of that Lender and/or of its Revolving Facility Affiliate or its Swingline Affiliate and its intention to procure the repayment of the participation in the Advances of that Lender and/or of its Revolving Facility Affiliate or its Swingline Affiliate or give the Facility Agent notice of its intention to replace that Lender and/or its Revolving Facility Affiliate or its Swingline Affiliate in accordance with paragraph (d) below.

(b) On receipt of a notice of cancellation referred to in paragraph (a) above, the Commitment and/or the relevant Swingline Commitment of the relevant Lender and/or its Revolving Facility Affiliate or its Swingline Affiliate shall immediately be reduced to zero.

(c) On the last day of each Interest Period in respect of an Advance which ends after ABB has given notice of cancellation under paragraph (a) above (or, if earlier, the date specified by ABB in that notice), each Borrower to whom an Advance is outstanding shall repay that Lender's participation in that Advance.

(d) ABB may, in the circumstances set out in paragraph (a) above, on 5 Business Days' prior notice to the Facility Agent and that Lender replace that Lender (and any Revolving Facility Affiliate or Swingline Affiliate of that Lender) by requiring such Lender and/or its Revolving Facility Affiliate or Swingline Affiliate to (and, to the extent permitted by law, that Lender or Revolving Facility Affiliate or Swingline Affiliate shall) transfer pursuant to Clause 23 (Changes to the Lenders) all (and, save as provided for in this paragraph, not part only) of its rights and obligations under this Agreement to a Lender or other

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bank selected by ABB which confirms its willingness to assume and does assume all the obligations of the transferring Lender in accordance with Clause 23 (*Changes to the Lenders*) for a purchase price in cash payable at the time of the transfer equal to the outstanding principal amount of such Lender's or Revolving Facility Affiliate's or Swingline Affiliate's participation in the outstanding Advances and all accrued interest (to the extent that the Facility Agent has not given a notification under Clause 23.10 (*Pro rata interest settlement*)), Break Costs and other amounts payable in relation thereto under the Finance Documents. Where a Lender to be replaced pursuant to this paragraph is a Swingline Lender that is the Swingline Affiliate of another Lender, the rights and obligations required to be transferred pursuant to this Clause by that other Lender in its capacity as the Revolving Facility Affiliate of that Swingline Lender may, at the option of ABB, be limited to those necessary for the Commitments of the replacement Lender (or its Affiliate) to be at least equal to each of the Swingline Commitments to be transferred to such replacement Lender pursuant to this Clause.

- (e) The replacement of any Lender pursuant to paragraph (d) above shall be subject to the following conditions:
  - (i) ABB shall have no right to replace an Agent;
  - (ii) no Agent nor any Lender shall have any obligation to find a replacement Lender;
  - (iii) in no event shall any Lender replaced under paragraph (d) above be required to pay or surrender any of the fees received by such Lender pursuant to the Finance Documents; and
  - (iv) the Lender shall only be obliged to transfer its rights and obligations pursuant to paragraph (d) above once it is satisfied (acting reasonably) that it has complied with all necessary 'know your customer' or other similar checks under all applicable laws and regulations in relation to that transfer.
- (f)
  - (i) If any Lender becomes a Defaulting Lender, ABB may, at any time whilst that Lender continues to be a Defaulting Lender, give the Facility Agent 5 Business Days' notice of cancellation of the Available Commitment, Available Dollar Swingline Commitment or Available Euro Swingline Commitment of that Lender and/or its Revolving Facility Affiliate or Swingline Affiliate.
  - (ii) On the notice referred to in paragraph (i) above becoming effective, the Available Commitment, Available Dollar Swingline Commitment or Available Euro Swingline Commitment (as applicable) of the relevant Lender and/or its Revolving Facility Affiliate or Swingline Affiliate shall immediately be reduced to zero.

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(iii) The Facility Agent shall as soon as practicable after receipt of a notice referred to in paragraph (i) above, notify all the Lenders.

### 8.8 Restrictions

- (a) Any notice of cancellation or prepayment given by any Party under this Clause 8 shall be irrevocable and, unless a contrary indication appears in this Agreement, shall specify the date or dates upon which the relevant cancellation or prepayment is to be made and the amount of that cancellation or prepayment.
- (b) Any prepayment under this Agreement shall be made together with accrued interest on the amount prepaid and, subject to any Break Costs, without premium or penalty.
- (c) Unless a contrary indication appears in this Agreement, any part of the Facility which is prepaid may be reborrowed in accordance with the terms of this Agreement. Any part of the Facility that is repaid may be reborrowed.
- (d) No Borrower shall repay or prepay all or any part of the Advances or cancel all or any part of the Commitments or any Swingline Commitment except at the times and in the manner expressly provided for in this Agreement.
- (e) Subject to Clause 2.2 (*Increase of Commitments*), no amount of the Total Commitments or any Swingline Commitment cancelled under this Agreement may be subsequently reinstated.
- (f) If the Facility Agent receives a notice under this Clause 8 it shall promptly forward a copy of that notice to ABB and the affected Borrower or the affected Lender, as appropriate.
- (g) Any cancellation of a Swingline Commitment of a Swingline Lender shall reduce the relevant Swingline Commitment accordingly but shall not otherwise cancel or reduce the Commitment of the relevant Lender in respect of the Facility (or of any Revolving Facility Affiliate of the relevant Swingline Lender) unless and to the extent otherwise provided for in this Agreement.
- (h) Any cancellation of the Commitment of a Lender that is a Swingline Lender or a Revolving Facility Affiliate of a Swingline Lender shall not cancel or reduce any Swingline Commitment of that Lender or its Swingline Affiliate unless a Swingline Commitment of that Lender or its Swingline Affiliate would exceed the Commitment of that Lender immediately following such reduction, in which case the relevant Swingline Commitment of that Lender or its Swingline Affiliate shall be reduced by such amount as is necessary to ensure that, after the relevant cancellation, each such Swingline Commitment does not exceed the Commitment of that Lender.

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# SECTION 5
COSTS OF UTILISATION

# 9. INTEREST

# 9.1 Calculation of interest - Term Rate Advance

The rate of interest on each Term Rate Advance for an Interest Period is the percentage rate per annum which is the aggregate of the applicable:

(a) Margin;
(b) Term Reference Rate; and
(c) Term Reference Rate CAS (if any).

# 9.2 Calculation of interest - Compounded Rate Advance

(a) The rate of interest on each Compounded Rate Advance for any day during an Interest Period is the percentage rate per annum which is the aggregate of the applicable:

(i) Margin; and
(ii) Compounded Reference Rate for that day.

(b) If any day during an Interest Period for a Compounded Rate Advance is not an RFR Banking Day, the rate of interest on that Compounded Rate Advance for that day will be the rate applicable to the immediately preceding RFR Banking Day.

# 9.3 Calculation of interest - Swingline Advance

The rate of interest on each Swingline Advance for each Interest Period shall accrue from day to day and is (in the case of any Dollar Swingline Advance) the Dollar Swingline Rate or (in the case of any Euro Swingline Advance) the Euro Swingline Rate.

# 9.4 Payment of interest

Each Borrower shall pay accrued interest on each Advance made to it on the last day of each Interest Period.

# 9.5 Default interest

(a) If an Obligor fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue on the overdue amount from the due date up to the date of actual payment (both before and after judgment) at a rate 1.00 per cent. higher than the rate which would have been payable if the overdue amount had, during the period of non-payment, constituted an Advance (not being a Swingline Advance) in the currency of the overdue amount for successive Interest Periods, each of a duration selected by the Facility Agent

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(acting reasonably). Any interest accruing under this Clause 9.5 shall be immediately payable by the relevant Obligor on demand by the Facility Agent.

(b) Default interest (if unpaid) arising on an overdue amount will be compounded with the overdue amount at the end of each Interest Period applicable to that overdue amount but will remain immediately due and payable.

# 9.6 Notification of rates of interest

(a) The applicable Agent shall promptly notify the Lenders, ABB and the relevant Borrowers of the determination of a rate of interest under this Agreement.

(b) The applicable Agent shall promptly upon a Compounded Rate Interest Payment being determinable notify:

(i) the relevant Borrower and ABB of that Compounded Rate Interest Payment;
(ii) each relevant Lender of the proportion of that Compounded Rate Interest Payment which relates to that Lender's participation in the relevant Compounded Rate Advance; and
(iii) the relevant Lenders, ABB and the relevant Borrower of each applicable rate of interest relating to the determination of that Compounded Rate Interest Payment.

(c) This Clause 9.6 shall not require any Agent to make any notification to any Party on a day which is not a Business Day.

# 9.7 Minimum Interest

(a) When entering into this Agreement, the Parties have assumed that the interest payable hereunder is not and will not become subject to Swiss withholding tax. Therefore, if a Tax Deduction is required by law to be made in one of the circumstances set out in paragraph (d) of Clause 13.2 (Tax gross-up) and if paragraph (c) of Clause 13.2 (Tax gross-up) should be unenforceable in respect of a Borrower incorporated in Switzerland or, if different, resident in Switzerland for tax purposes, each Borrower acknowledges and agrees that:

(i) the applicable interest rate in relation to that interest payment shall be:
(A) the interest rate which would have applied to that interest payment in the absence of this paragraph (a), divided by
(B) one (1) minus the rate at which the relevant Tax Deduction is required to be made (where the rate at which the relevant Tax Deduction is required to be made is for this purpose expressed as a fraction of (1) rather than as percentage);
(ii) the Borrower shall: (i) pay the relevant interest at the adjusted rate in accordance with paragraph (a)(i) above and (ii) make the Tax Deduction on the interest so recalculated.

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(b) To the extent that paragraph (a) above applies, each Borrower shall provide to the Lenders the documents required by law or each applicable double taxation treaty for the Lenders to prepare claims for the refund of any Swiss withholding tax so deducted.

(c) In this Clause, a reference to a "Tax Deduction" has the same meaning given to the term in Clause 13.1 (Definitions).

# 10. INTEREST PERIODS

(a) The relevant Borrower may select an Interest Period for an Advance in the Utilisation Request.

(b) Subject to this Clause 10, a Borrower may select an Interest Period of:

(i) in relation to any Advance (other than a Swingline Advance), a period specified in the applicable Reference Rate Terms or such shorter period ending on the Termination Date or any other period agreed between the relevant Borrower (or ABB on its behalf) and the Facility Agent (acting on the instructions of all the Lenders); or

(ii) in relation to any Swingline Advance, a period not exceeding five Business Days.

(c) An Interest Period for an Advance shall not extend beyond the Termination Date.

(d) Each Advance has one Interest Period only.

(e) Any rules specified as "Business Day Conventions" in the applicable Reference Rate Terms for a Utilisation or Unpaid Sum shall apply to each Interest Period for that Utilisation or Unpaid Sum.

# 11. CHANGES TO THE CALCULATION OF INTEREST

# 11.1 Market disruption

(a) If a Market Disruption Event occurs in relation to an Advance (other than a Dollar Swingline Advance) for any Interest Period, then the rate of interest on each Lender's share of that Advance for the Interest Period shall be the percentage rate per annum which is the sum of:

(i) the Margin; and

(ii) the weighted average of rates notified to the Facility Agent, ABB and the relevant Borrower by each Lender in a certificate (which sets out the details of the computation of the relevant rate and shall be prima facie non-binding evidence of the same) as soon as practicable and in any event before interest is due to be paid in respect of that Interest Period, to be that which expresses as a percentage rate per annum the cost to that Lender of funding its participation in that Advance from whatever source it may reasonably select.

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(b) In this Agreement "Market Disruption Event" means:

(i) in relation to a Term Rate Advance in Euro:

(A) at the relevant Quotation Time for the fixing of the relevant Screen Rate on the relevant Quotation Day for that Advance, the relevant Screen Rate is not available and it is not possible to calculate an Interpolated Screen Rate for that Advance; or

(B) before close of business in London on the Quotation Day for the relevant Interest Period, the Facility Agent receives notification(s) from a Lender or Lenders (whose participation(s) in an Advance exceed 50 per cent. of that Advance) that the cost to it/them of funding its/their participation(s) in that Advance from the wholesale market for Euro would be in excess of the applicable Screen Rate;

(ii) in relation to a Term Rate Advance in Dollars and a Compounded Rate Advance, before the Reporting Time for that Advance the Agent receives notification(s) from a Lender or Lenders (whose participation(s) in an Advance exceed 50 per cent. of that Advance) that the cost to it/them of funding its/their participation(s) in that Advance from the wholesale market for the relevant currency would be in excess of the applicable Market Disruption Rate; and

(iii) in relation to a Euro Swingline Advance, on the relevant Utilisation Date, the relevant Screen Rate is not available to determine the Euro Swingline Rate.

11.2 Alternative basis of interest or funding

(a) If a Market Disruption Event occurs and the Facility Agent or ABB so requires, the Facility Agent and ABB shall enter into negotiations (for a period of not more than thirty days) with a view to agreeing a substitute basis for determining the rate of interest.

(b) Any alternative basis agreed pursuant to paragraph (a) above shall, with the prior consent of the Majority Lenders and ABB, be binding on all Parties.

(c) If Clause 11.1 applies but any Lender does not notify a rate to the Facility Agent by the time stated in paragraph (a)(ii) of Clause 11.1 for the relevant Advance, the rate of interest shall be calculated on the basis of the rates notified by the remaining Lenders.

11.3 Break Costs

(a) If an amount is specified as Break Costs in the relevant Reference Rate Terms for an Advance or Unpaid Sum, the relevant Borrower shall, within three Business Days of demand by a Finance Party, pay to that Finance Party its Break Costs attributable to all or any part of an Advance or Unpaid Sum being paid by that Borrower on a day other than the last day of an Interest Period for that Advance or Unpaid Sum.

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(b) Each Lender shall, as soon as reasonably practicable after a demand by the Facility Agent, provide to ABB and the relevant Borrower a certificate (which shall constitute prima facie non-binding evidence of the matters to which it refers) addressed to the Facility Agent, ABB and the relevant Borrower confirming the amount of its Break Costs for any Interest Period in which they accrue and setting out the manner of computing such Break Costs.

# 12. FEES

# 12.1 Commitment Fee

(a) ABB shall pay to the Facility Agent (for the account of each Lender) a commitment fee in the Base Currency computed at 35 per cent. of the applicable Margin from time to time on that Lender's Available Commitment.
(b) The accrued commitment fee is payable on the last day of each successive period of three Months commencing from the date of this Agreement and on the last day of the Availability Period and, if a Lender's Commitment is cancelled in full, on the date such cancellation becomes effective in respect of the amount accrued in respect of that Lender's Available Commitment immediately before such cancellation.
(c) No commitment fee is payable to the Facility Agent (for the account of a Lender) on any Available Commitment of that Lender for any day on which that Lender is a Defaulting Lender.

# 12.2 Utilisation Fee

(a) ABB shall pay to the Facility Agent (for the account of the Lenders pro rata to their Commitments) a utilisation fee in respect of the Total Outstandings computed at the rate of:

(i) 0.075 per cent. per annum for each day that the amount of the Total Outstandings is less than or equal to 33.33 per cent. of the Total Commitments as at the date of this Agreement;
(ii) 0.15 per cent. per annum for each day that the amount of the Total Outstandings is greater than 33.33 per cent. of the Total Commitments but less than or equal to 66.66 per cent. of the Total Commitments as at the date of this Agreement; and
(iii) 0.30 per cent. per annum for each day that the amount of the Total Outstandings is greater than 66.66 per cent. of the Total Commitments as at the date of this Agreement.

(b) The accrued utilisation fee is payable on the last day of each successive period of three Months commencing from the date of this Agreement and on the Termination Date.

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# 12.3 **Participation Fee**

ABB shall pay to the Facility Agent (for the account of the Original Lenders) a participation fee in the amount and at the time agreed in a Fee Letter.

# 12.4 **Arrangement Fee**

ABB shall pay to the Facility Agent (for the account of the Mandated Lead Arrangers) an arrangement fee in the amount and at the time agreed in a Fee Letter.

# 12.5 **Agency Fee**

ABB shall pay to each Agent (for its own account) an agency fee in the amount and at the times agreed in a Fee Letter.

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# SECTION 6
ADDITIONAL PAYMENT OBLIGATIONS

# 13. TAX GROSS UP AND INDEMNITIES

# 13.1 Definitions

(a) In this Agreement:

"Initial Borrower Jurisdiction" means any of The Netherlands, the United States of America or Switzerland.

"Protected Party" means a Finance Party which is or will be, for or on account of Tax, subject to any liability or required to make any payment in relation to a sum received or receivable (or any sum deemed for the purposes of Tax to be received or receivable) under a Finance Document.

"Qualifying Lender" means:

(i) in respect of a payment by a Borrower incorporated in Switzerland, a Lender which is a Qualifying Bank;
(ii) in respect of a payment by a Borrower incorporated in the United States of America, a Lender which is:

(A) created or organised under the laws of the United States of America or of any state (including the District of Columbia) thereof; or
(B) resident in a jurisdiction having and eligible for the benefit of a double taxation agreement with the United States of America which makes provision for full exemption from tax imposed by the United States of America on interest and which does not carry on a business in the United States of America through a permanent establishment with which that Lender's participation in the Facility is effectively connected; or
(C) entitled to receive payments under the Finance Documents without deduction or withholding of any United States federal income taxes,

and which has complied with any procedural requirements within its control necessary to receive such payment without the imposition of United States withholding tax; and

(iii) in respect of a payment by a Borrower incorporated in any jurisdiction except the United States of America or Switzerland, any Lender.

"Tax Credit" means a credit against, relief or remission for, or repayment of any Tax.

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'**Tax Deduction**' means a deduction or withholding for or on account of Tax from a payment under a Finance Document, other than a FATCA Deduction.

'**Tax Payment**' means an increased payment made by ABB or a Borrower to a Finance Party under Clause 9.7 (*Minimum Interest*), Clause 13.2 (*Tax gross-up*) or a payment made by ABB or a Borrower under Clause 13.3 (*Tax indemnity*).

(b) In this Clause 13 a reference to '**determines**' or '**determined**' means, save where expressly stated to the contrary, a determination made in the absolute discretion of the person making the determination acting in good faith.

### 13.2 **Tax gross-up**

- (a) ABB and each Borrower shall make all payments to be made by it without any Tax Deduction, unless a Tax Deduction is required by law.
- (b) ABB, a Borrower or a Lender shall promptly upon becoming aware that ABB or a Borrower (as the case may be) must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the Facility Agent accordingly. If the Facility Agent receives such notification from a Lender it shall notify ABB and the relevant Borrower.
- (c) If a Tax Deduction is required by law to be made by ABB or a Borrower in one of the circumstances set out in paragraph (d) below, the amount of the payment due from ABB or that Borrower shall be increased to an amount which (after making any Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required.
- (d) The circumstances referred to in paragraph (c) above are where a person entitled to the payment:
  - (i) is an Agent;
  - (ii) is a Qualifying Lender; or
  - (iii) was a Qualifying Lender at the time it became a Lender but has ceased to be a Qualifying Lender to the extent that this altered status results from any change after the date of this Agreement in (or in the interpretation, administration, or application of) any law or double taxation agreement or any published practice or published concession of any relevant taxing authority.
- (e) If ABB or a Borrower is required to make a Tax Deduction, it shall make that Tax Deduction and any payment required in connection with that Tax Deduction within the time allowed and in the minimum amount required by law.
- (f) Within 30 days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, ABB or the relevant Borrower (as the case may be) shall deliver to the Facility Agent for the Finance Party entitled to the payment evidence reasonably satisfactory to that Finance Party that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority.

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(g) Each Finance Party, ABB and the Borrowers shall co-operate in completing any procedural formalities necessary for ABB or a Borrower to make a payment to which the Finance Party is entitled without a Tax Deduction or with a reduced Tax Deduction. Each Finance Party shall on the reasonable written request of ABB or a Borrower complete and deliver to ABB or that Borrower all documentation reasonably required by ABB or that Borrower in order to enable it to make such payments without a Tax Deduction or with a reduced Tax Deduction (so long as the completion or delivery of such documentation would not materially prejudice the legal or commercial position of the relevant Finance Party).

### 13.3 Tax indemnity

- (a) ABB shall (within three Business Days of written demand by the Facility Agent) pay to a Protected Party an amount equal to the loss, liability or cost which that Protected Party determines will be or has been (directly or indirectly) suffered for or on account of Tax by that Protected Party.
- (b) Paragraph (a) above shall not apply with respect to any Tax assessed on a Finance Party:
  - (i)
    - (A) under the law of the jurisdiction in which that Finance Party is incorporated or, if different, the jurisdiction (or jurisdictions) in which that Finance Party is treated as resident for tax purposes;
    - (B) under the law of the jurisdiction in which that Finance Party's Facility Office is located in respect of amounts received or receivable in that jurisdiction; or
    - (C) arising by reason of the making of an Advance to a Borrower in an Initial Borrower Jurisdiction under the law of such jurisdiction, except to the extent arising by reason of a change in law or in any regulation occurring after the date of this Agreement, **provided that** this paragraph (b)(i)(C) shall not apply to any Tax assessed or imposed on an Agent,  
      
      if that Tax is imposed on or calculated by reference to the net income received or receivable (but not any sum deemed to be received or receivable) by that Finance Party;
  - (ii) which is compensated for by Clause 9.7 (*Minimum Interest*) or Clause 13.2 (*Tax gross up*) (or would have been so compensated but for an exception to those Clauses); or
  - (iii) which relates to a FATCA Deduction required to be made by a Party.
- (c) A Protected Party making, or intending to make a claim pursuant to paragraph (a) above shall promptly notify the Facility Agent of the event which will give, or has given, rise to the claim, following which the Facility Agent shall notify ABB.

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(d) A Protected Party shall, on receiving a payment from ABB under this Clause 13.3, notify the Facility Agent.

# 13.4 Tax Credit

If ABB or a Borrower makes a Tax Payment and the relevant Finance Party determines that:

- (a) a Tax Credit is attributable to that Tax Payment; and
- (b) that Finance Party has obtained, utilised and retained that Tax Credit,

the Finance Party shall pay an amount to ABB (or as the case may be) that Borrower which that Finance Party determines, acting in good faith, will leave that Finance Party (after that payment) in the same after-Tax position as it would have been in had the Tax Payment not been made by ABB or that Borrower (as the case may be). The relevant Finance Party shall endeavour, acting in good faith, to obtain, utilise and retain the Tax Credit save that it shall not be obliged to disclose any information relating to its tax or other affairs or any computations in respect thereof.

# 13.5 Lender Status Confirmation

- (a) Each Original Lender herewith confirms and represents that it is a Qualifying Bank and each Lender which becomes a Party after the date of this Agreement shall confirm and represent in the documentation which it executes on becoming a Party as a Lender that it is a Qualifying Bank.
- (b) Each New Lender that becomes a Lender after the date of this Agreement shall indicate in the documentation which it executes on becoming a Party as a Lender, and for the benefit of the Facility Agent and without liability to any Obligor, whether or not it is a Qualifying Lender.
- (c) If a New Lender fails to indicate its status in accordance with this Clause 13.5 then such New Lender shall be treated for the purposes of this Agreement (including by each Obligor) as if it were not a Qualifying Lender until such time as it notifies the Facility Agent to the contrary (and the Facility Agent, upon receipt of such notification, shall inform ABB). For the avoidance of doubt the documentation which a Lender executes on becoming a Party as a Lender shall not be invalidated by any failure of a Lender to comply with this Clause 13.5.

# 13.6 Qualifying Lenders

Any Lender which ceases, for any reason, to be a Qualifying Lender shall promptly notify ABB and the relevant Borrower(s) of its change of status.

# 13.7 Stamp taxes

ABB shall pay and, within 3 Business Days of demand, indemnify each Finance Party against any cost, loss or liability such Finance Party incurs in relation to all stamp duty, registration and other similar Taxes payable in respect of any Finance Document, but not in respect of any assignment or transfer pursuant to Clause 23 (Changes to the Lenders).

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### 13.8 Value added tax

(a) All consideration payable under a Finance Document by ABB or the Borrowers to a Finance Party shall be deemed to be exclusive of any VAT. If VAT is chargeable on any supply made by any Finance Party to any Party in connection with a Finance Document, that Party shall pay to the Finance Party (in addition to and at the same time as paying the consideration) an amount equal to the amount of the VAT.

(b) Where a Finance Document requires ABB or the Borrowers to reimburse a Finance Party for any costs or expenses, ABB or the Borrowers (as the case may be) shall also at the same time pay and indemnify that Finance Party against all VAT directly incurred by that Finance Party in respect of the costs or expenses save to the extent that such Finance Party reasonably determines that it is entitled to repayment or credit in respect of the VAT.

### 13.9 FATCA Information

(a) Subject to paragraph (c) below, each Party shall, within ten Business Days of a reasonable request by another Party:

(i) confirm to that other Party whether it is:
(A) a FATCA Exempt Party; or
(B) not a FATCA Exempt Party;

(ii) supply to that other Party such forms, documentation and other information relating to its status under FATCA as that other Party reasonably requests for the purposes of that other Party's compliance with FATCA.

(b) If a Party confirms to another Party pursuant to paragraph (a)(i) above that it is a FATCA Exempt Party and it subsequently becomes aware that it is not or has ceased to be a FATCA Exempt Party, that Party shall notify that other Party reasonably promptly.

(c) Paragraph (a) above shall not oblige any Finance Party to do anything which would or might in its reasonable opinion constitute a breach of:

(i) any law or regulation;
(ii) any fiduciary duty; or
(iii) any duty of confidentiality.

(d) If a Party fails to confirm whether or not it is a FATCA Exempt Party or to supply forms, documentation or other information requested in accordance with paragraph (a)(i) or (a)(ii) above (including, for the avoidance of doubt, where paragraph (c) above applies), then such Party shall be treated for the purposes of the Finance Documents (and payments under them) as if it is not a FATCA

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Exempt Party until such time as the Party in question provides the requested confirmation, forms, documentation or other information.

(e) If a Borrower is a US Tax Obligor or the Facility Agent reasonably believes that its obligations under FATCA or any other applicable law or regulation require it, each Lender shall, within ten Business Days of:
(i) where an Original Borrower is a US Tax Obligor and the relevant Lender is an Original Lender, the date of this Agreement;
(ii) where a Borrower is a US Tax Obligor on a date on which any other Lender becomes a Party as a Lender, that date;
(iii) the date a new US Tax Obligor accedes as a Borrower; or
(iv) where a Borrower is not a US Tax Obligor, the date of a request from the Facility Agent,

supply to the Facility Agent:

(1) a withholding certificate on Form W-8, Form W-9 or any other relevant form; or
(2) any withholding statement or other document, authorisation or waiver as the Facility Agent may require to certify or establish the status of such Lender under FATCA or that other law or regulation.
(f) The Facility Agent shall provide any withholding certificate, withholding statement, document, authorisation or waiver it receives from a Lender pursuant to paragraph (e) above to the relevant Borrower.
(g) If any withholding certificate, withholding statement, document, authorisation or waiver provided to the Facility Agent by a Lender pursuant to paragraph (e) above is or becomes materially inaccurate or incomplete, that Lender shall promptly update it and provide such updated withholding certificate, withholding statement, document, authorisation or waiver to the Facility Agent unless it is unlawful for the Lender to do so (in which case the Lender shall promptly notify the Facility Agent). The Facility Agent shall provide any such updated withholding certificate, withholding statement, document, authorisation or waiver to the relevant Borrower.
(h) The Facility Agent may rely on any withholding certificate, withholding statement, document, authorisation or waiver it receives from a Lender pursuant to paragraph (e) or (g) above without further verification. The Facility Agent shall not be liable for any action taken by it under or in connection with paragraphs (e), (f) or (g) above.

### 13.10 FATCA Deduction

(a) Each Party may make any FATCA Deduction it is required to make by FATCA, and any payment required in connection with that FATCA Deduction, and no

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Party shall be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction.

(b) Each Party shall promptly, upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction), notify the Party to whom it is making the payment and, in addition, shall notify ABB, the Facility Agent and the other Finance Parties.

# 14. INCREASED COSTS

# 14.1 Increased costs

(a) Subject to Clause 14.3 (Exceptions) ABB shall, within 3 Business Days of a demand by the Facility Agent, pay for the account of a Finance Party the amount of any Increased Costs incurred by that Finance Party or any of its Affiliates as a result of (i) the introduction of or any change in (or in the interpretation or application of) any law or regulation or (ii) compliance with any law or regulation made after the date of this Agreement.

(b) In this Agreement "Increased Costs" means:

(i) a reduction in the rate of return from the Facility or on a Finance Party's (or its Affiliate's) overall capital;

(ii) an additional or increased cost; or

(iii) a reduction of any amount due and payable under any Finance Document,

which is incurred or suffered by a Finance Party or any of its Affiliates to the extent that it is attributable to that Finance Party having entered into its Commitment or funding or performing its obligations under any Finance Document.

# 14.2 Increased cost claims

(a) A Finance Party intending to make a claim pursuant to Clause 14.1 (Increased costs) shall promptly notify the Facility Agent of the event giving rise to the claim, following which the Facility Agent shall promptly notify ABB.

(b) Each Finance Party shall, as soon as practicable after a demand by the Facility Agent provide a certificate confirming the amount of its Increased Costs with (subject to any rights or duties of confidentiality the relevant Finance Party has in respect of such information) full supporting details (which certificate shall constitute prima facie non-binding evidence of the matters to which it relates).

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### 14.3 Exceptions

(a) Clause 14.1 (*Increased costs*) does not apply to the extent any Increased Cost is:

(i) attributable to a Tax Deduction required by law to be made by ABB or a Borrower

(ii) compensated for by Clause 13.3 (*Tax indemnity*) (or would have been compensated for under Clause 13.3 (*Tax indemnity*) but was not so compensated solely because one of the exclusions in paragraph (b) of Clause 13.3 (*Tax indemnity*) applied);

(iii) not payable as provided in Clause 23.2 (*Conditions of assignment or transfer*);

(iv) attributable to the breach by the relevant Finance Party or its Affiliates of any law or regulation;

(v) not notified to ABB within 3 months of being incurred;

(vi) attributable to the implementation or application of or compliance with the "International Convergence of Capital Measurement and Capital Standards, a Revised Framework" published by the Basel Committee on Banking Supervision in June 2004 in the form existing on the date of this Agreement ("**Basel II**") or Basel III or CRD IV in the form existing on the date of this Agreement or any other law or regulation which implements Basel II or Basel III or CRD IV in the form existing on the date of this Agreement (whether such implementation, application or compliance is by a government, regulator, Finance Party or any of its Affiliates); or

(vii) attributable to a FATCA Deduction required to be made by a Party.

(b) In this Clause 14.3:

(i) a reference to a "**Tax Deduction**" has the same meaning given to the term in Clause 13.1 (*Definitions*); and

(ii) "**Basel III**" means:

(A) the agreements on capital requirements, a leverage ratio and liquidity standards contained in "Basel III: A global regulatory framework for more resilient banks and banking systems", "Basel III: International framework for liquidity risk measurement, standards and monitoring" and "Guidance for national authorities operating the countercyclical capital buffer" published by the Basel Committee on Banking Supervision in December 2010, each as amended, supplemented or restated as at the date of this Agreement;

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(B) the rules for global systemically important banks contained in "Global systemically important banks: assessment methodology and the additional loss absorbency requirement - Rules text" published by the Basel Committee on Banking Supervision in November 2011, as amended, supplemented or restated as at the date of this Agreement; and

(C) any further guidance or standards published by the Basel Committee on Banking Supervision relating to "Basel III" as at the date of this Agreement.

(iii) "CRD IV" means EU CRD IV and UK CRD IV.

(iv) "EU CRD IV" means:

(A) Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms; and

(B) Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC.

(v) "UK CRD IV" means:

(A) Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms as it forms part of domestic law of the United Kingdom by virtue of the European Union (Withdrawal) Act 2018 (the "Withdrawal Act");

(B) the law of the United Kingdom or any part of it, which immediately before IP completion day (as defined in the European Union (Withdrawal Agreement) Act 2020) implemented Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC and its implementing measures; and

(C) direct EU legislation (as defined in the Withdrawal Act), which immediately before IP completion day (as defined in the European Union (Withdrawal Agreement) Act 2020) implemented EU CRD IV as it forms part of domestic law of the United Kingdom by virtue of the Withdrawal Act.

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# 15. OTHER INDEMNITIES

# 15.1 Currency indemnity

(a) If any sum due from ABB or a Borrower under the Finance Documents (a "Sum"), or any order, judgment or award given or made in relation to a Sum, has to be converted from the currency (the "First Currency") in which that Sum is payable into another currency (the "Second Currency") for the purpose of:
(i) making or filing a claim or proof against ABB or any of the Borrowers;
(ii) obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,

ABB or that Borrower (as the case may be) shall as an independent obligation, within 3 Business Days of demand, indemnify each Finance Party to whom that Sum is due against any cost, loss or liability arising out of or as a result of the conversion including any discrepancy between (A) the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (B) the rate or rates of exchange available to that person at the time of its receipt of that Sum.

(b) ABB and each Borrower waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency or currency unit other than that in which it is expressed to be payable.

# 15.2 Other indemnities

ABB shall indemnify each Lender upon presentation of duly documented evidence thereof against any cost, loss or liability directly incurred by that Lender as a result of:

(a) the occurrence of any Event of Default (but excluding any costs of enforcement save as provided in Clause 17.3 (Enforcement costs));
(b) a failure by ABB or a Borrower to pay any amount due under a Finance Document on its due date, including without limitation, any cost, loss or liability arising as a result of Clause 28 (Sharing among the Lenders);
(c) funding, or making arrangements to fund, its participation in an Advance requested by a Borrower in a Utilisation Request but not made by reason of the operation of any one or more of the provisions of this Agreement (other than by reason of default, negligence or wilful misconduct by that Lender alone); or
(d) an Advance (or part of an Advance) not being prepaid in accordance with a notice of prepayment given by a Borrower.

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### 15.3 Indemnity to the Facility Agent

ABB shall promptly indemnify the Facility Agent, upon presentation of duly documented evidence thereof, against any reasonable cost, loss or liability properly and directly incurred by the Facility Agent (acting reasonably) as a result of:

- (a) investigating any event which it reasonably believes is a Default; or
- (b) entering into or performing any foreign exchange contract for the purposes of Clause 6 (Optional Currencies); or
- (c) acting or relying on any notice, request or instruction which it reasonably believes (after due enquiry) to be genuine, correct and appropriately authorised.

## 16. MITIGATION BY THE LENDERS

### 16.1 Mitigation

- (a) Each Finance Party shall, in consultation with ABB, take all reasonable steps to mitigate any circumstances which arise and which would result in any amount becoming payable under or pursuant to, or cancelled pursuant to, any of Clause 8.1 (Lender Illegality), Clause 13 (Tax Gross Up and Indemnities) or Clause 14.1 (Increased costs) or which would result in any increased amount being payable under this Agreement by reason of a change in the reserve requirements imposed by the European Central Bank after the date of this Agreement including (but not limited to) transferring its rights and obligations under the Finance Documents to another Affiliate or Facility Office (in each case in accordance with the terms hereof) and, in such circumstances a Lender will, at the request of ABB but subject to ABB indemnifying it for the costs of so doing, transfer its rights and obligations under the Finance Documents to another Lender.
- (b) Paragraph (a) above does not in any way limit the obligations of the Obligors under the Finance Documents.

### 16.2 Limitation of liability

- (a) ABB shall indemnify each Finance Party, upon presentation of duly documented evidence thereof, for all costs and expenses reasonably and directly incurred by that Finance Party as a result of steps taken by it under Clause 16.1 (Mitigation).
- (b) A Finance Party is not obliged to take any steps under Clause 16.1 (Mitigation) (other than a transfer of its rights and obligations to another Lender where ABB indemnifies it for the cost of so doing) if, in the opinion of that Finance Party (acting reasonably), to do so could reasonably be expected to be prejudicial to it.

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## 17. COSTS AND EXPENSES

### 17.1 Transaction expenses

ABB shall, within 10 Business Days of demand, pay (subject to presentation of duly documented evidence thereof) the Agents the amount of all costs and expenses (including legal fees) reasonably and directly incurred by any of them in connection with the negotiation, preparation, printing, execution and syndication of:

- (a) this Agreement and any other documents referred to in this Agreement; and
- (b) any other Finance Documents executed after the date of this Agreement.

### 17.2 Amendment costs

If (a) ABB requests an amendment, waiver or consent or (b) an amendment is required pursuant to Clause 29.10 (Change of currency), ABB shall, within 3 Business Days of demand, reimburse the Facility Agent, upon presentation of duly documented evidence thereof, for the amount of all costs and expenses (including legal fees) reasonably and directly incurred by the Facility Agent and which have previously been agreed with ABB in responding to, evaluating, negotiating or complying with that request or requirement.

### 17.3 Enforcement costs

ABB shall, within 3 Business Days of demand, pay to each Finance Party the amount of all costs and expenses (including legal fees) directly incurred by that Finance Party at any time after the service of a notice by the Facility Agent under Clause 22.10 (Acceleration) in connection with the enforcement of, or the preservation of any rights under, any Finance Document.

## 18. GUARANTEE AND INDEMNITY

### 18.1 Guarantee and indemnity

The Guarantor irrevocably and unconditionally:

- (a) guarantees to each Finance Party punctual performance by each Borrower of all that Borrower's obligations under the Finance Documents;
- (b) undertakes with each Finance Party that whenever a Borrower does not pay any amount when due under or in connection with any Finance Document, the Guarantor shall immediately on demand pay that amount as if it was the principal obligor; and
- (c) agrees with each Finance Party that if any obligation guaranteed by it is or becomes unenforceable, invalid or illegal, it will, as an independent and primary obligation, indemnify that Finance Party immediately on demand against any cost, loss or liability it incurs as a result of a Borrower not paying any amount which would, but for such unenforceability, invalidity or illegality, have been payable by it under any Finance Document on the date when it would have been due. The amount payable by the Guarantor under this indemnity will not exceed

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the amount it would have had to pay under this Clause 18 if the amount claimed had been recoverable on the basis of a guarantee.

#### 18.2 **Continuing guarantee**

This guarantee is a continuing guarantee and will extend to the ultimate balance of sums payable by any Borrower under the Finance Documents, regardless of any intermediate payment or discharge in whole or in part.

#### 18.3 **Reinstatement**

If any discharge, release or arrangement (whether in respect of the obligations of any Borrower or any security for those obligations or otherwise) is made by a Finance Party in whole or in part on the basis of any payment, security or other disposition which is avoided or must be restored in insolvency, liquidation, administration or otherwise, without limitation, then the liability of the Guarantor under this Clause 18 will continue or be reinstated as if the discharge, release or arrangement had not occurred.

#### 18.4 **Waiver of defences**

The obligations of the Guarantor under this Clause 18 will not be affected by any act, omission, matter or thing which, but for this Clause, would reduce, release or prejudice any of its obligations under this Clause 18 (without limitation and whether or not known to it or any Finance Party) including:

- (a) any time, waiver or consent granted to, or composition with, any Borrower or other person;
- (b) the release of any Borrower or any other person under the terms of any composition or arrangement with any creditor of any member of the Group;
- (c) the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, any Borrower or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security;
- (d) any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of a Borrower or any other person;
- (e) any amendment, novation, supplement, extension, restatement (however fundamental and whether or not more onerous) or replacement of any Finance Document or any other document or security including without limitation any change in the purpose of, any extension of or any increase in any facility or the addition of any new facility under any Finance Document or other document or security;
- (f) any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document or any other document or security; or
- (g) any insolvency or similar proceedings.

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### 18.5 Immediate recourse

The Guarantor waives any right it may have of first requiring any Finance Party (or any trustee or agent on its behalf) to proceed against or enforce any other rights or security or claim payment from any person before claiming from the Guarantor under this Clause 18. This waiver applies irrespective of any law or any provision of a Finance Document to the contrary.

### 18.6 Appropriations

Until all amounts which may be or become payable by the Borrowers under or in connection with the Finance Documents have been irrevocably paid in full, each Finance Party (or any trustee or agent on its behalf) may:

- (a) refrain from applying or enforcing any other moneys, security or rights held or received by that Finance Party (or any trustee or agent on its behalf) in respect of those amounts, or apply and enforce the same in such manner and order as it sees fit (whether against those amounts or otherwise) and the Guarantor shall not be entitled to the benefit of the same; and
- (b) hold in an interest-bearing suspense account any moneys received from the Guarantor or on account of the Guarantor's liability under this Clause.

### 18.7 Deferral of Guarantor's rights

Until all amounts which may be or become payable by the Borrowers under or in connection with the Finance Documents have been irrevocably paid in full or the Facility Agent otherwise directs, the Guarantor will not exercise any rights which it may have by reason of performance by it of its obligations under the Finance Documents or by reason of any amount being payable, or liability arising, under this Clause 18:

- (a) to be indemnified by a Borrower;
- (b) to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Finance Parties under the Finance Documents or of any other guarantee or security taken pursuant to, or in connection with, the Finance Documents by any Finance Party;
- (c) to bring legal or other proceedings for an order requiring any Borrower to make any payment, or perform any obligation, in respect of which it has given a guarantee, undertaking or indemnity under Clause 18.1 (Guarantee and indemnity);
- (d) to exercise any right of set-off against any Borrower; and/or
- (e) to claim or prove as a creditor of any Borrower in competition with any Finance Party.

If the Guarantor receives any benefit, payment or distribution in relation to such rights it shall hold that benefit, payment or distribution to the extent necessary to enable all amounts which may be or become payable to the Finance Parties by the Borrowers

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under or in connection with the Finance Documents to be repaid in full on trust for the Finance Parties and shall promptly pay or transfer the same to the Facility Agent or as the Facility Agent may direct for application in accordance with Clause 29 (*Payment Mechanics*).

#### 18.8 **Additional security**

This guarantee is in addition to and is not in any way prejudiced by any other guarantee or security now or subsequently held by any Finance Party.

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# **SECTION 7**
**REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT**

# **19. REPRESENTATIONS**

ABB (in respect of itself and, where specified, each Group Company or each Material Subsidiary) and each Borrower (in respect of itself) makes the representations and warranties set out in this Clause 19 to each Finance Party on the date of this Agreement.

# **19.1 Status**

- (a) It is a corporation, duly incorporated and validly existing under the law of its jurisdiction of incorporation.
- (b) It and each Group Company has the power to own its assets and carry on its business as it is being conducted.

# **19.2 Binding obligations**

The obligations expressed to be assumed by it in each Finance Document are, subject to the Reservations, legal, valid, binding and enforceable obligations.

# **19.3 Non-conflict with other obligations**

The entry into and performance by it of, and the transactions contemplated by, the Finance Documents to which it is a party do not conflict with:

- (a) any law or regulation applicable to it;
- (b) its constitutional documents; or
- (c) any agreement or instrument binding upon it or any Group Company or any of their assets,

and, in the case of paragraph (c) on any repetition after the date of this Agreement, in a manner that could reasonably be expected to have a Material Adverse Effect.

# **19.4 Power and authority**

It has the power to enter into, perform and deliver, and has taken all necessary action to authorise its entry into, performance and delivery of, the Finance Documents to which it is a party and the transactions contemplated by those Finance Documents.

# **19.5 Validity and admissibility in evidence**

All Authorisations required by ABB and each Borrower (including, in the case of any Dutch Borrower, and if applicable, any works council advice):

- (a) to enable it lawfully to enter into, exercise its rights and comply with its obligations in the Finance Documents to which it is a party; and
- (b) to make the Finance Documents to which it is a party admissible in evidence in its jurisdiction of incorporation,

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have been obtained or effected and are in full force and effect.

19.6 Insolvency

Neither it nor any Material Subsidiary has taken any action nor (so far it is aware, having made all due enquiry) have any steps been taken or legal proceedings been started against it for winding-up, dissolution or re-organisation, the enforcement of any Security over its assets or for the appointment of a receiver, administrative receiver, or administrator, trustee or similar officer of it or any of its assets.

19.7 No default

(a) No Default is continuing.

(b) No other event or circumstance is outstanding which constitutes a default under any other agreement or instrument which is binding on a Group Company or to which their assets are subject which has had or could reasonably be expected to have a Material Adverse Effect.

19.8 No misleading information

(a) Any factual information contained in any document forming part of the Information Package was true and accurate in all material respects as at the date of the relevant document.

(b) Nothing has occurred or been omitted from the Information Package and no information has been given or withheld that results in the information contained in the Information Package being untrue or misleading in any material respect as at the date of the relevant document.

19.9 Financial statements

(a) The Original Financial Statements were prepared in accordance with GAAP consistently applied.

(b) The Original Financial Statements fairly present in all material respects the consolidated financial condition and operations of the Group or the financial condition and operations of the relevant Original Obligor in respect of the relevant financial year.

(c) Each of the latest audited consolidated financial statements required to be delivered under paragraph (b) of Clause 20.1 (Financial statements) fairly presents in all material respects the financial position of the Group as at the date to which they were prepared and for the period then ended.

(d) Each of the latest set of unaudited consolidated financial statements required to be delivered under paragraph (c) of Clause 20.1 (Financial statements) fairly presents in all material respects the financial condition of the Group as at the date to which they were prepared and for the period then ended.

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**19.10 No Material Adverse Effect**

Since the date of the most recent annual audited accounts of the Group, no event or events have occurred which have had a Material Adverse Effect.

**19.11 Pari passu ranking**

Its payment obligations under the Finance Documents rank at least *pari passu* with the claims of all its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally.

**19.12 No proceedings pending or threatened**

No litigation, arbitration or administrative proceedings of or before any court, arbitral body or agency which could reasonably be expected to have a Material Adverse Effect have (to the best of its knowledge and belief) been started or threatened against any Group Company.

**19.13 Environmental Compliance**

Each Group Company has complied in all respects with all Environmental Law save to the extent that non-compliance could not reasonably be expected to have a Material Adverse Effect.

**19.14 Sanctions**

- (a) No Obligor is and, to the knowledge of the Obligors, none of their respective directors or executive officers are, a Restricted Party.
- (b) Each Obligor has instituted and maintains, and will continue to maintain, policies and procedures reasonably designed to promote and achieve compliance with Economic Sanctions Laws.

**19.15 Anti-corruption and anti-bribery laws and regulations**

No Obligor nor, to the best of the knowledge of the Obligors, none of their respective directors or executive officers, in connection with this Facility and/or the proceeds arising hereunder, engages in any activity or conduct which would cause any Lender to be in breach of any applicable anti-bribery or anti-corruption law or regulation. Each Obligor has instituted and maintains, and will continue to maintain, policies and procedures reasonably designed to promote and achieve compliance with applicable anti-corruption laws.

**19.16 Repetition**

- (a) The representations and warranties in Clause 19.1 (*Status*) to Clause 19.4 (*Power and authority*), Clause 19.14 (*Sanctions*) and Clause 19.15 (*Anti-*

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corruption and anti-bribery laws and regulations) are deemed to be made by each Obligor by reference to the facts and circumstances then existing:

(i) in the case of Clause 19.1 (Status) to Clause 19.4 (Power and authority), on the date of each Utilisation Request and the first day of each Interest Period; and

(ii) in the case of Clause 19.14 (Sanctions) and Clause 19.15 (Anti-corruption and anti-bribery laws and regulations), on the date of each Utilisation Request.

# 20. INFORMATION UNDERTAKINGS

The undertakings in this Clause 20 remain in force from the date of this Agreement for so long as any amount is outstanding under the Finance Documents or any Commitment is in force.

# 20.1 Financial statements

(a) ABB and each Borrower shall supply to the Facility Agent (in sufficient copies for all the Lenders, if the Facility Agent so requests) as soon as the same become available, but in any event within 120 days after the end of each of its financial years (in the case of ABB) and within 150 days (in the case of each Borrower), its statutory audited unconsolidated annual financial statements for that financial year (if prepared by such Borrower).

(b) ABB shall supply to the Facility Agent (in sufficient copies for all the Lenders, if the Facility Agent so requests) as soon as the same become available, but in any event before the date falling 120 days after the end of each of its financial years, its audited consolidated annual financial statements.

(c) ABB shall supply to the Facility Agent (in sufficient copies for all the Lenders, if the Facility Agent so requests) as soon as the same become available, but in any event within 45 days after the end of each quarter of each of its financial years (except the fourth quarter) its unaudited consolidated financial statements for that quarter and the year-to-date period then ended.

# 20.2 Requirements as to financial statements

Each Borrower shall procure that each set of financial statements delivered by it pursuant to Clause 20.1 (Financial statements) is prepared using GAAP.

# 20.3 Information: miscellaneous

ABB shall supply to the Facility Agent (in sufficient copies for all the Lenders, if the Facility Agent so requests):

(a) all documents dispatched by it to its shareholders (or any class of them) or its creditors generally at the same time as they are dispatched;

(b) promptly upon becoming aware of them, the details of any litigation, arbitration or administrative proceedings which are commenced against one or more Group

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Companies and which could reasonably be expected to have a Material Adverse Effect;
and

(c) promptly, such further information regarding the financial condition, business and operations of any Obligor or any other Material Subsidiary as any Finance Party (acting through the Facility Agent) may reasonably request.

20.4 Notification of default

ABB and each Borrower shall notify the Facility Agent of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence.

20.5 Material Subsidiaries

ABB shall supply to the Facility Agent, with each set of financial statements delivered by it pursuant to paragraph (b) of Clause 20.1 (Financial statements), either:

(a) a complete and up to date list of Material Subsidiaries at that time; or
(b) written confirmation that the list of Material Subsidiaries contained in Schedule 8 (Material Subsidiaries) is complete and up to date at that time.

20.6 Use of Websites

(a) Any Obligor may satisfy its obligation under this Agreement to deliver any information in relation to those Lenders (the "Website Lenders") who accept this method of communication by posting this information onto an electronic website designated by ABB and the Facility Agent (the "Designated Website")
if:
(i) the Facility Agent expressly agrees (after consultation with each of the Lenders) that it will accept communication of the information by this method;
(ii) both ABB and the Facility Agent are aware of the address of and any relevant password specifications for the Designated Website; and
(iii) the information is in a format previously agreed between ABB and the Facility Agent.

If any Lender (a "Paper Form Lender") does not agree to the delivery of information electronically then the Facility Agent shall notify ABB accordingly and ABB shall supply the information to the Facility Agent (in sufficient copies for each Paper Form Lender) in paper form. In any event ABB shall supply the Facility Agent with at least one copy in paper form of any information required to be provided by it.

(b) The Facility Agent shall supply each Website Lender with the address of and any relevant password specifications for the Designated Website following designation of that website by ABB and the Facility Agent. The Facility Agent shall notify each Website Lender when any document is posted to the Designated Website.

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(c) ABB shall promptly upon becoming aware of its occurrence notify the Facility Agent if:

(i) the Designated Website cannot be accessed due to technical failure;
(ii) the password specifications for the Designated Website change;
(iii) any new information which is required to be provided under this Agreement is posted onto the Designated Website;
(iv) any existing information which has been provided under this Agreement and posted onto the Designated Website is amended; or
(v) ABB becomes aware that the Designated Website or any information posted onto the Designated Website is or has been infected by any electronic virus or similar software.

If ABB notifies the Facility Agent under paragraph (c)(i) or paragraph (c)(v) above, all information to be provided by ABB under this Agreement after the date of that notice shall be supplied in paper form unless and until the Facility Agent and each Website Lender is satisfied that the circumstances giving rise to the notification are no longer continuing.

(d) Any Website Lender may request, through the Facility Agent, one paper copy of any information required to be provided under this Agreement which is posted onto the Designated Website. ABB shall comply with any such request within ten Business Days.

# 20.7 "Know your customer" checks

(a) If:

(i) the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;
(ii) any change in the status of an Obligor or the composition of the shareholders of an Obligor after the date of this Agreement; or
(iii) a proposed assignment or transfer by a Lender of any of its rights and/or obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer,

obliges any Agent or any Lender (or, in the case of paragraph (iii) above, any prospective new Lender) to comply with "know your customer" or similar identification procedures in circumstances where the necessary information is not already available to it, each Obligor shall promptly upon the request of that Agent or any Lender supply, or procure the supply of (to the extent that the relevant information is not already available to the applicable Agent or Lender), such documentation and other evidence as is reasonably requested by that Agent (for itself or on behalf of any Lender) or any Lender (for itself or, in the case of the event described in paragraph (iii) above, on behalf of any prospective new

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Lender) in order for the applicable Agent, such Lender or, in the case of the event described in paragraph (iii) above, any prospective new Lender to carry out and be satisfied with the results of all necessary "know your customer" or other checks in relation to any relevant person pursuant to the transactions contemplated in the Finance Documents.

(b) Each Lender shall promptly upon the request of any Agent supply, or procure the supply of, such documentation and other evidence as is reasonably requested by that Agent (for itself) in order for that Agent to carry out and be satisfied with the results of all necessary "know your customer" or other checks on Lenders or prospective new Lenders pursuant to the transactions contemplated in the Finance Documents.

(c) ABB shall, by not less than 10 Business Days' prior written notice to the Facility Agent, notify the Facility Agent (which shall promptly notify the Lenders) of its intention to request that one of its Subsidiaries becomes an Additional Borrower pursuant to Clause 25 (Changes to the Obligors).

(d) Following the giving of any notice pursuant to paragraph (c) above, if the accession of such Additional Borrower obliges any Agent or any Lender to comply with "know your customer" or similar identification procedures in circumstances where the necessary information is not already available to it, ABB shall promptly upon the request of that Agent or any Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested by that Agent (for itself or on behalf of any Lender) or any Lender (for itself or on behalf of any prospective new Lender) in order for that Agent or such Lender or any prospective new Lender to carry out and be satisfied with the results of all necessary "know your customer" or other checks in relation to any relevant person pursuant to the accession of such Subsidiary to this Agreement as an Additional Borrower.

# 21. GENERAL UNDERTAKINGS

The undertakings in this Clause 21 remain in force from the date of this Agreement for so long as any amount is outstanding under the Finance Documents or any Commitment is in force.

# 21.1 Authorisations

Each Obligor shall promptly obtain, comply with and do all that is necessary to maintain in full force and effect any Authorisation (including, in the case of any Dutch Borrower, any applicable works council advice) required under any law or regulation of its jurisdiction of incorporation to enable it to perform its obligations under the Finance Documents and to ensure the legality, validity and subject to the Reservations enforceability or admissibility in evidence in its jurisdiction of incorporation of any Finance Document.

# 21.2 Compliance with laws

Each Obligor shall comply in all respects with all laws (including, without limitation, Environmental Law, ERISA and the Dutch Financial Supervision Act (Wet op het

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*financieel toezicht)* to which it may be subject, if failure so to comply would have a Material Adverse Effect.

### 21.3 Negative pledge

- (a) Neither ABB nor any Borrower shall (and ABB shall procure that no other Group Company will) create or permit to subsist any Security over any of its assets.
- (b) Paragraph (a) above does not apply to:
  - (i) any Security over any bank account in favour of the bank with which such account is held, in each case granted by any Group Company in the ordinary course of its banking arrangements for the purpose of netting debit and credit balances;
  - (ii) any Security arising by operation of law;
  - (iii) any Security contained in a contract for sale or supply entered into in the ordinary course of trading, where such Security is granted to such seller or, as the case may be, supplier and is limited in recourse to the asset sold or, as the case may be, supplied;
  - (iv) any Security over or affecting any asset acquired by a Group Company after the date of this Agreement if:
    - (A) the Security was not created in contemplation of the acquisition of that asset by a Group Company; and
    - (B) the principal amount secured has not been increased in contemplation of, or since the acquisition of that asset by a Group Company;
  - (v) any Security over or affecting any asset of a Group Company after the date of this Agreement, where the Security is created prior to the date on which that Company becomes a Group Company, if:
    - (A) the Security was not created in contemplation of the acquisition of that company; and
    - (B) the principal amount secured has not increased in contemplation of or since the acquisition of that company;
  - (vi) any Security provided by one Group Company (not being ABB) to another Group Company;
  - (vii) any Security created in respect of the Securitisations **provided that** the amounts so secured do not at any time exceed USD 1,500,000,000 (or its equivalent in another currency or currencies);
  - (viii) any Security over the assets of a Project Company, any shareholder loan made to a Project Company or the shares in a Project Company where

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such Security was created for the purpose of securing Indebtedness incurred to acquire and/or develop the assets of such Project Company and where such Indebtedness constitutes Project Finance Indebtedness of such Project Company;

(ix) any Security securing Indebtedness incurred by a Group Company to refinance Indebtedness secured by Security of the type referred to in paragraphs (iv) or (v) above where such first-mentioned Security is over the same asset and is of the same type as such second-mentioned Security and the conditions referred to in paragraph (iv) or, as the case may be, (v) above continue to be satisfied, mutatis mutandis; and

(x) any Security not falling within any of paragraphs (i) to (ix) above inclusive in respect of assets having an aggregate value not exceeding 10 per cent. of the aggregate value of the gross assets of the Group (as set out in ABB's most recently published annual audited consolidated financial statements).

#### 21.4 Claims Pari Passu

ABB shall ensure that at all times the claims of the Finance Parties against each Obligor under the Finance Documents rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors except for obligations mandatorily preferred by law applying to companies generally.

#### 21.5 Merger

No Obligor shall enter into any amalgamation, demerger, merger or corporate reconstruction save where the Facility Agent is satisfied, acting reasonably, that the relevant Obligor's obligations under the Finance Documents will continue to be the legal, valid, binding and (subject to the Reservations) enforceable obligations of the surviving entity.

#### 21.6 Insurance

Each Obligor shall (and ABB shall ensure that each Group Company will) maintain insurances on and in relation to its business and assets with reputable underwriters or insurance companies against those risks and to the extent as is usual for companies carrying on the same or substantially similar business in the relevant jurisdiction and taking into account the availability of insurance generally.

#### 21.7 Restriction on Subsidiary Debt

ABB shall ensure that the aggregate amount of Total Gross Debt other than:

- (a) Project Finance Indebtedness;
- (b) Indebtedness owed by one Group Company to another Group Company;
- (c) amounts borrowed by a finance company which is a Group Company and which are on-lent, and remain on-lent, to an Obligor;

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(d) amounts borrowed by a Group Company from a bank to which cash-collateral (in a substantially equivalent amount) has been granted by a Group Company in respect of the relevant Group Company's obligation to repay such amounts;

(e) Indebtedness relating to any leases that are not required to be treated as finance leases under US GAAP as at the date hereof;

(f) any amounts borrowed by a Group Company which constitute Total Gross Debt to the extent such amounts are borrowed for the purposes of refinancing other borrowings constituting Total Gross Debt so long as amounts so borrowed are promptly applied in such manner; and

(g) Indebtedness in respect of bonds, commercial paper and/or other debt instruments issued by Group Companies that are Capital Markets Issuers,

of Group Companies which are not Obligors shall not exceed the greater of: (i) $2,500,000,000; and (ii) 7.5 per cent. of the total assets of the Group (as reflected in the most recent audited consolidated annual financial statements delivered by ABB under paragraph (b) of Clause 20.1 (Financial statements)).

In this Clause 21.7 "Total Gross Debt" means the aggregate of short-term debt (including current maturities of long-term debt) and long-term debt as reflected in the most recent unaudited quarterly consolidated financial statements or audited consolidated annual financial statements delivered by ABB under paragraph (b) or (c) of Clause 20.1 (Financial statements).

21.8 Change of business

ABB shall procure that no substantial change is made to the business of the Group which would result in the general nature of the business of the Group, taken as a whole, being other than the business of power and/or automation technologies, and/or digital industries.

21.9 Economic Sanctions

No Borrower shall lend, invest, contribute or otherwise make available the proceeds of any Advance in a manner that would violate the Economic Sanctions Laws.

22. EVENTS OF DEFAULT

Each of the events or circumstances set out in Clauses 22.1 (Non-payment) to 22.9 (Cessation of business) inclusive is an Event of Default.

22.1 Non-payment

Any sum due from an Obligor or the Obligors under this Agreement is not paid at the time, at the place at, and in the currency in which, it is expressed to be payable unless payment is made within 3 Business Days of its due date and the failure to pay is due solely to administrative error or technical delays in the transmission of funds.

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## 22.2 Other obligations

An Obligor does not comply with any provision of the Finance Documents (other than those referred to in Clause 22.1 (Non-payment)) and, if the failure to comply is capable of remedy, it is not remedied within 30 days of the Facility Agent giving notice to ABB of the failure to comply.

## 22.3 Misrepresentation

Any representation or statement made or deemed (by virtue of Clause 19.16 (Repetition)) to be made by ABB or any Borrower in this Agreement (other than a representation or statement made or deemed to be made pursuant to Clause 19.14 (Sanctions) or Clause 19.15 (Anti-corruption and anti-bribery laws and regulations)) is or proves to have been incorrect or misleading in any respect when made or deemed to be made and, where the circumstances making such representation or statement incorrect or misleading are capable of being altered so that such representation or statement is correct, such circumstances are not so altered within 30 days of the Facility Agent giving notice to ABB of such representation or statement being incorrect.

## 22.4 Cross default

(a) Any Indebtedness of all or any of the Group Companies is not paid when due nor within any originally applicable grace period.

(b) Any Indebtedness of all or any of the Group Companies has (i) become capable of being declared and is declared to be or (ii) otherwise becomes due and payable, in any case, prior to its specified maturity as a result of a default or an event of default (however described).

(c) Any commitment for any Indebtedness of all or any of the Group Companies is cancelled or suspended by a creditor of all or any of the Group Companies as a result of a default or an event of default (however described).

(d) Any creditor of all or any of the Group Companies becomes entitled to declare any Indebtedness of all or any of the Group Companies due and payable prior to its specified maturity as a result of a default or an event of default (however described).

(e) No Event of Default will occur under this Clause 22.4 if (1) the Indebtedness falling within paragraphs (a) to (d) is Project Finance Indebtedness, intra-Group Indebtedness or Indebtedness under a Finance Document or (2) the aggregate amount of Indebtedness or commitment for Indebtedness falling within paragraphs (a) to (d) (excluding any described in (1) above) above is less than $100,000,000.

## 22.5 Insolvency

(a) Any Obligor or any Material Subsidiary is unable or admits in writing an inability to pay its debts as they fall due, suspends making payments on any of its debts or, by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors with a view to rescheduling any of its indebtedness.

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(b) A moratorium is declared in respect of any indebtedness of any Obligor or any Material Subsidiary.

# 22.6 Insolvency proceedings

Any corporate action, legal proceedings or other procedure or step is taken in relation to:

- (a) the suspension of payments, a moratorium of any indebtedness, dissolution or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) of any Obligor or any Material Subsidiary other than a solvent liquidation or reorganisation of any Material Subsidiary (other than a Borrower) or to the extent permitted by Clause 21.5 (Merger);
- (b) a composition, assignment or arrangement with any creditor of any Obligor or any Material Subsidiary (other than on a solvent basis to the extent permitted by Clause 21.5 (Merger));
- (c) the appointment of a liquidator (other than in respect of (i) a winding up petition which is frivolous or vexatious and which is, in any event, discharged within 30 days of its presentation or (ii) a solvent liquidation of any Material Subsidiary (other than a Borrower) or (iii) to the extent permitted by Clause 21.5 (Merger)), receiver, administrator, trustee in bankruptcy, administrative receiver, compulsory manager or other similar officer in respect of any Obligor or any Material Subsidiary or any of its assets (having an aggregate value of at least $100,000,000); or
- (d) enforcement of any Security over any assets (having an aggregate value of at least $100,000,000) of any Material Subsidiary or Obligor by reason of a default or event of default (howsoever described) occurring under the relevant agreement relating to the Indebtedness secured by such Security,

or any analogous procedure or step is taken in any jurisdiction.

# 22.7 Repudiation

An Obligor repudiates a Finance Document or evidences in writing an intention to repudiate a Finance Document.

# 22.8 Unlawfulness

Subject to Clause 8.2 (Borrower Illegality), it is or becomes unlawful for an Obligor to perform any of its material obligations under the Finance Documents.

# 22.9 Cessation of business

The Group, taken as a whole, ceases or threatens to cease to do business.

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## 22.10 Acceleration

On and at any time after the occurrence of an Event of Default which is continuing the Facility Agent may, and shall if so directed by the Majority Lenders, by notice to ABB: (a) cancel the Total Commitments whereupon they shall immediately be cancelled; (b) declare that all or part of the Advances, together with accrued interest, and all other amounts accrued under the Finance Documents be immediately due and payable, whereupon they shall become immediately due and payable; and/or
(c) declare that all or part of the Advances be payable on demand, whereupon they shall immediately become payable on demand by the Facility Agent on the instructions of the Majority Lenders.

## 22.11 Clean-Up Period

Notwithstanding any other provision of any Finance Document, if during a Clean-Up Period any event or circumstance exists which but for this Clause 22.11 would constitute a Default, such event or circumstance will not constitute a Default (including for the purposes of Clause 4.2 (Further conditions precedent)) during such Clean-Up Period if:

- (a) it relates exclusively to, or arises solely as a result of matters relating to the person(s) acquired pursuant to the relevant Acquisition (or to any Subsidiary(ies) of such person(s)) or to any obligations to procure or ensure in relation to such person(s) (or in relation to any Subsidiary(ies) of such person(s));
- (b) it is capable of remedy and reasonable steps are promptly taken to remedy it;
- (c) the circumstances giving rise to it (other than the Acquisition itself) have not been procured by any Obligor; and
- (d) it is not reasonably likely to have a Material Adverse Effect.

If such event or circumstance is continuing on or after the expiry of such Clean-Up Period then, with effect from such date, there shall be an Event of Default or, as the case may be, Default notwithstanding the above (and without prejudice to the rights and remedies of the Finance Parties).

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# SECTION 8
CHANGES TO PARTIES

# 23. CHANGES TO THE LENDERS

# 23.1 Assignments and transfers by the Lenders

Subject to this Clause 23, a Lender (the "Existing Lender") may:

(a) assign any of its rights; or
(b) transfer by novation any of its rights and obligations,
to another Qualifying Bank (the "New Lender").

# 23.2 Conditions of assignment or transfer

(a) The consent of ABB is required for an assignment or transfer by a Lender, unless the assignment or transfer is to another Lender or an Affiliate of a Lender that is a Qualifying Bank or unless an Event of Default has occurred and is continuing.
(b) The consent of ABB to an assignment or transfer must not be unreasonably withheld or delayed. ABB will be deemed to have given its consent 10 Business Days after the Lender has requested it unless consent is expressly refused by ABB within that time.
(c) An assignment or transfer shall be in respect of a Commitment or a Swingline Commitment of at least $10,000,000 or, if less, the whole of the Commitment or Swingline Commitment of the relevant assignor or transferor (provided that any such assignment or transfer shall be in respect of a Commitment or Swingline Commitment at least equal to €50,000 (calculated at the then prevailing exchange rate)).
(d) An assignment or transfer by a Swingline Lender of any of its Swingline Commitments shall only be made if there is a simultaneous assignment or transfer of an equal amount of its Commitment (or the Commitment of its Revolving Facility Affiliate). This paragraph shall not apply to a transfer of any Swingline Commitment to a Lender or an Affiliate of a Lender provided that no Swingline Commitment of a Lender may exceed the Commitment of that Lender or its Revolving Facility Affiliate.
(e) An assignment or transfer by a Lender which is a Swingline Lender or the Revolving Facility Affiliate of a Swingline Lender of any of its Commitment shall only be effective if after such assignment or transfer, the Commitment of that Lender is at least equal to each of the Swingline Commitments of that Lender or its Swingline Affiliate.
(f) An assignment will only be effective on: (i) receipt by the Facility Agent of written confirmation from the New Lender (in form and substance satisfactory to the Facility Agent) that the New Lender will assume the same obligations to the other Finance Parties and the Obligors as it would have been under if it had

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been an Original Lender; and (ii) performance by the Facility Agent of all necessary "know your customer" or other similar checks under all applicable laws and regulations in relation to such assignment to a New Lender, the completion of which the Facility Agent shall promptly notify to the Existing Lender and the New Lender.

(g) A transfer will only be effective if the procedure set out in Clause 23.5 (Procedure for transfer) is complied with.

(h) If:

(i) a Lender assigns or transfers any of its rights or obligations under the Finance Documents or changes its Facility Office; and

(ii) as a result of circumstances existing at the date the assignment, transfer or change occurs, an Obligor would be obliged, or at such date it is reasonably foreseeable that an Obligor would be obliged, to make a payment to the New Lender or Lender acting through its new Facility Office under Clause 9.7 (Minimum Interest), Clause 13 (Tax Gross Up and Indemnities) or Clause 14.1 (Increased costs),

then the New Lender or Lender acting through its new Facility Office is only entitled to receive payment under those Clauses to the same extent as the Existing Lender or Lender acting through its previous Facility Office would have been if the assignment, transfer or change had not occurred.

(i) Each New Lender, by executing the relevant documentation pursuant to which it becomes a Party as a Lender, confirms, for the avoidance of doubt:

(i) that the Facility Agent has authority to execute on its behalf any amendment or waiver that has been approved by or on behalf of the requisite Lender or Lenders in accordance with this Agreement on or prior to the date on which the transfer or assignment becomes effective in accordance with this Agreement and that it is bound by that decision to the same extent as the Existing Lender would have been had it remained a Lender; and

(ii) that it agrees to and is bound by any extension to the Termination Date in respect of the Commitments being transferred to which the Existing Lender has given its consent in accordance with Clause 2.3 (Extension Option).

### 23.3 Assignment or transfer fee

The New Lender shall, on the date upon which an assignment or transfer takes effect, pay to the Facility Agent (for its own account) a fee of $3,000.

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### 23.4 Limitation of responsibility of Existing Lenders

(a) Unless expressly agreed to the contrary, an Existing Lender makes no representation or warranty and assumes no responsibility to a New Lender for:

(i) the legality, validity, effectiveness, adequacy or enforceability of the Finance Documents or any other documents;

(ii) the financial condition of ABB or any Borrower;

(iii) the performance and observance by ABB or any Borrower of its obligations under the Finance Documents or any other documents; or

(iv) the accuracy of any statements (whether written or oral) made in or in connection with any Finance Document or any other document,

and any representations or warranties implied by law are excluded.

(b) Each New Lender confirms to the Existing Lender and the other Finance Parties that it:

(i) has made (and shall continue to make) its own independent investigation and assessment of the financial condition and affairs of ABB and each Borrower and its related entities in connection with its participation in this Agreement and has not relied exclusively on any information provided to it by the Existing Lender in connection with any Finance Document; and

(ii) will continue to make its own independent appraisal of the creditworthiness of ABB and each Borrower and its related entities whilst any amount is or may be outstanding under the Finance Documents or any Commitment is in force.

(c) Nothing in any Finance Document obliges an Existing Lender to:

(i) accept a re-transfer or re-assignment from a New Lender of any of the rights and obligations assigned or transferred under this Clause 23; or

(ii) support any losses directly or indirectly incurred by the New Lender by reason of the non-performance by ABB or any Borrower of its obligations under the Finance Documents or otherwise.

### 23.5 Procedure for transfer

(a) Subject to the conditions set out in Clause 23.2 (Conditions of assignment or transfer) a transfer is effected in accordance with paragraph (b) below when the Facility Agent executes an otherwise duly completed Transfer Certificate delivered to it by the Existing Lender and the New Lender. The Facility Agent shall, as soon as reasonably practicable after receipt by it of a duly completed Transfer Certificate appearing on its face to comply with the terms of this Agreement and delivered in accordance with the terms of this Agreement, execute that Transfer Certificate.

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(b) The Facility Agent shall only be obliged to execute a Transfer Certificate delivered to it by the Existing Lender and the New Lender upon its completion of all "know your customer" or other checks relating to any person that it is required to carry out in relation to the transfer to such New Lender.

(c) Subject to Clause 23.10 (Pro rata interest settlement), on the Transfer Date:

(i) to the extent that in the Transfer Certificate the Existing Lender seeks to transfer by novation its rights and obligations under the Finance Documents each of ABB, the Borrowers and the Existing Lender shall be released from further obligations towards one another under the Finance Documents and their respective rights against one another shall be cancelled (being the "Discharged Rights and Obligations");

(ii) each of ABB, the Borrowers and the New Lender shall assume obligations towards one another and/or acquire rights against one another which differ from the Discharged Rights and Obligations only insofar as ABB, that Borrower and the New Lender have assumed and/or acquired the same in place of ABB, that Borrower and the Existing Lender;

(iii) the Agents, the Mandated Lead Arrangers, the New Lender and other Lenders shall acquire the same rights and assume the same obligations between themselves as they would have acquired and assumed had the New Lender been an Original Lender with the rights and/or obligations acquired or assumed by it as a result of the transfer and to that extent the Agents, the Mandated Lead Arrangers and the Existing Lender shall each be released from further obligations to each other under this Agreement; and

(iv) the New Lender shall become a Party as a "Lender".

# 23.6 Disclosure of information

(a) Any Finance Party may disclose to:

(i) any of its officers, directors, employees, professional advisers (including external legal counsel), auditors and Affiliates (provided they are made aware of the confidential nature of the relevant information and that it may be price-sensitive); and

(ii) any other person to whom, and to the extent that, information is required to be disclosed by any court or tribunal of competent jurisdiction or any governmental or regulatory authority or similar body, or pursuant to any applicable law or regulation,

any information about ABB, any Borrower, the Group and the Finance Documents as that Finance Party shall consider appropriate.

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(b) Any Lender may disclose to any other person:

(i) to (or through) whom that Lender assigns or transfers (or may potentially assign or transfer) all or any of its rights and obligations under this Agreement; or

(ii) with (or through) whom that Lender enters into (or may potentially enter into) any sub-participation in relation to, or any other transaction under which payments are to be made by reference to, this Agreement or any Obligor,

any information about ABB, any Borrower, the Group and the Finance Documents as that Lender shall consider appropriate, provided that in relation to paragraphs (b)(i) and (b)(ii) above only, the person to whom the information is to be given has entered into a confidentiality undertaking unless such person is any central bank or supranational bank in which case no confidentiality undertaking will be required.

Notwithstanding any of the provisions of the Finance Documents, the Obligors and the Finance Parties hereby agree that each Party and each employee, representative or other agent of each Party may disclose to any and all persons, without limitation of any kind, the "tax structure" and "tax treatment" (in each case within the meaning of the U.S. Treasury Regulation Section 1.6011-4) of the Facility and any materials of any kind (including opinions or other tax analyses) that are provided to any of the foregoing relating to such tax structure and tax treatment.

23.7 Copy of Transfer Certificate and Increase Confirmation to ABB

The Facility Agent shall, as soon as reasonably practicable after it has executed a Transfer Certificate or an Increase Confirmation, send to ABB a copy of that Transfer Certificate or Increase Confirmation.

23.8 Security over Lenders' rights

In addition to the other rights provided to Lenders under this Clause 23, each Lender may without consulting with or obtaining consent from any Obligor, at any time charge, assign or otherwise create Security in or over (whether by way of collateral or otherwise) all or any of its rights under any Finance Document to secure obligations of that Lender to a federal reserve or central bank except that no such charge, assignment or Security shall:

(a) release a Lender from any of its obligations under the Finance Documents or substitute the beneficiary of the relevant charge, assignment or other Security for the Lender as a party to any of the Finance Documents;

(b) require any payments to be made by an Obligor other than or in excess of, or grant to any person any more extensive rights than, those required to be made or granted to the relevant Lender under the Finance Documents; or

(c) upon any enforcement of such charge, assignment or Security, result in any assignment or transfer of any such rights under the Finance Documents which is in breach of the transfer and assignment limitations set out in this Agreement.

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### 23.9 Exposure Transfers

Other than an assignment or transfer permitted pursuant to Clause 23.2 (Conditions of assignment or transfer), no Lender shall enter into any arrangement with another person under which such Lender substantially transfers its exposure under this Agreement to that other person, unless under such arrangement and at all times while such arrangement is in effect:

- (a) the relationship between that Lender and that other person is that of a debtor and creditor (including in the bankruptcy or similar event of that Lender or any Borrower);
- (b) the other person will have no proprietary interest in the benefit of this Agreement or in any monies received by that Lender under or in relation to this Agreement, and
- (c) the other person will under no circumstances: (i) be subrogated to, or substituted in respect of, that Lender's claims under this Agreement; and (ii) have otherwise any contractual relationship with, or rights against, any Obligor under, or in relation to, this Agreement.

### 23.10 Pro rata interest settlement

(a) In respect of any transfer pursuant to Clause 23.5 (Procedure for transfer),

provided that the Transfer Date is not on the last day of an Interest Period:

(i) any interest or fees in respect of the relevant participation which are expressed to accrue by reference to the lapse of time shall continue to accrue in favour of the Existing Lender up to but excluding the Transfer Date ("Accrued Amounts") and shall become due and payable to the Existing Lender (without further interest accruing on them) on the last day of the current Interest Period (or, if the Interest Period is longer than six Months, on the next of the dates which falls at six Monthly intervals after the first day of that Interest Period); and

(ii) the rights assigned or transferred by the Existing Lender will not include the right to the Accrued Amounts, so that, for the avoidance of doubt:

(A) when the Accrued Amounts become payable, those Accrued Amounts will be payable to the Existing Lender; and

(B) the amount payable to the New Lender on that date will be the amount which would, but for the application of this Clause 23.10, have been payable to it on that date, but after deduction of the Accrued Amounts.

(b) In this Clause 23.10 references to "Interest Period" shall be construed to include a reference to any other period for accrual of fees.

(c) An Existing Lender which retains the right to the Accrued Amounts pursuant to this Clause 23.10 but which does not have a Commitment shall be deemed not to be a Lender for the purposes of ascertaining whether the agreement of any

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specified group of Lenders has been obtained to approve any request for a consent, waiver, amendment or other vote of Lenders under the Finance Documents.

# 24. CONFIDENTIALITY OF FUNDING RATES

# 24.1 Confidentiality and disclosure

(a) The Facility Agent and each Obligor agree to keep each Funding Rate confidential and not to disclose it to anyone, save to the extent permitted by paragraphs (b) and (c) below.

(b) The Facility Agent may disclose:

(i) any Funding Rate to ABB and the relevant Borrower pursuant to Clause 9.6 (Notification of rates of interest); and

(ii) any Funding Rate to any person appointed by it to provide administration services in respect of one or more of the Finance Documents to the extent necessary to enable such service provider to provide those services if the service provider to whom that information is to be given has entered into a confidentiality agreement substantially in the form of the LMA Master Confidentiality Undertaking for Use With Administration/Settlement Service Providers or such other form of confidentiality undertaking agreed between the Facility Agent and the relevant Lender.

(c) The Facility Agent may disclose any Funding Rate, and each Obligor may disclose any Funding Rate, to:

(i) any of its Affiliates and any of its or their officers, directors, employees, professional advisers, auditors, partners and Representatives if any person to whom that Funding Rate is to be given pursuant to this paragraph (i) is informed in writing of its confidential nature and that it may be price-sensitive information except that there shall be no such requirement to so inform if the recipient is subject to professional obligations to maintain the confidentiality of that Funding Rate or is otherwise bound by requirements of confidentiality in relation to it;

(ii) any person to whom information is required or requested to be disclosed by any court of competent jurisdiction or any governmental, banking, taxation or other regulatory authority or similar body, the rules of any relevant stock exchange or pursuant to any applicable law or regulation if the person to whom that Funding Rate is to be given is informed in writing of its confidential nature and that it may be price-sensitive information except that there shall be no requirement to so inform if, in the opinion of the Facility Agent or the relevant Obligor, as the case may be, it is not practicable to do so in the circumstances;

(iii) any person to whom information is required to be disclosed in connection with, and for the purposes of, any litigation, arbitration,

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administrative or other investigations, proceedings or disputes if the person to whom that Funding Rate is to be given is informed in writing of its confidential nature and that it may be price-sensitive information except that there shall be no requirement to so inform if, in the opinion of the Facility Agent or the relevant Obligor, as the case may be, it is not practicable to do so in the circumstances; and

(iv) any person with the consent of the relevant Lender.

# 24.2 Other obligations

(a) The Facility Agent and each Obligor acknowledge that each Funding Rate is or may be price-sensitive information and that its use may be regulated or prohibited by applicable legislation including securities law relating to insider dealing and market abuse and the Facility Agent and each Obligor undertake not to use any Funding Rate for any unlawful purpose.

(b) The Facility Agent and each Obligor agree (to the extent permitted by law and regulation) to inform the relevant Lender:

(i) of the circumstances of any disclosure made pursuant to paragraph (c)(ii) of Clause 24.1 (Confidentiality and disclosure) above except where such disclosure is made to any of the persons referred to in that paragraph during the ordinary course of its supervisory or regulatory function; and

(ii) upon becoming aware that any information has been disclosed in breach of this Clause 24.

# 25. CHANGES TO THE OBLIGORS

# 25.1 Assignments and transfer by Obligors

Neither ABB nor any Borrower may assign any of its rights or transfer any of its rights or obligations under the Finance Documents.

# 25.2 Additional Borrowers

(a) Subject to compliance with paragraphs (c) and (d) of Clause 20.7 ("Know your customer" checks), ABB may request by written notice that any of its wholly owned Subsidiaries becomes an Additional Borrower. That Subsidiary shall become an Additional Borrower if:

(i) that Subsidiary is incorporated in an Agreed Jurisdiction or all the Lenders approve the addition of that Subsidiary;

(ii) ABB delivers to the Facility Agent a duly completed and executed Borrower Accession Letter;

(iii) ABB confirms that no Default is continuing or would occur as a result of that Subsidiary becoming an Additional Borrower; and

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(iv) the Facility Agent has received all of the documents and other evidence listed in Part II of Schedule 2 (Conditions Precedent) in relation to that Additional Borrower, each in form and substance reasonably satisfactory to the Facility Agent.

(b) The Facility Agent shall notify ABB and the Lenders promptly upon receiving (in form and substance reasonably satisfactory to it) all the documents and other evidence listed in Part II of Schedule 2 (Conditions Precedent).

(c) Other than to the extent that the Majority Lenders notify the Facility Agent in writing to the contrary before the Facility Agent gives the notification described in paragraph (b) above, the Lenders authorise (but do not require) the Facility Agent to give that notification. The Facility Agent shall not be liable for any damages, costs or losses whatsoever as a result of giving any such notification.

(d) Delivery of a Borrower Accession Letter constitutes confirmation by the relevant Subsidiary that the representations and warranties in Clause 19.5 (Validity and admissibility in evidence) and the representations and warranties deemed to be repeated pursuant to Clause 19.16 (Repetition) are true and correct in relation to it as at the date of delivery as if made by reference to the facts and circumstances then existing.

# 25.3 Resignation of a Borrower

(a) ABB may request that a Borrower ceases to be a Borrower by delivering to the Facility Agent a Resignation Letter.

(b) The Facility Agent shall accept a Resignation Letter and notify ABB and the Lenders of its acceptance if:

(i) no Default would result from the acceptance of the Resignation Letter (and ABB has confirmed this to be the case); and

(ii) the relevant Borrower is under no actual or contingent obligations under any Finance Documents,

whereupon that company shall cease to be a Borrower and shall have no further rights or obligations under the Finance Documents.

# 25.4 Repetition of Representation

Delivery of a Borrower Accession Letter constitutes confirmation by the relevant Subsidiary that the representations and warranties in Clause 19.5 (Validity and admissibility in evidence) and the representations and warranties deemed to be repeated pursuant to Clause 19.16 (Repetition) are true and correct in relation to it as at the date of delivery as if made by reference to the facts and circumstances then existing.

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# **SECTION 9**
**THE FINANCE PARTIES**

# **26. ROLE OF THE AGENTS AND THE MANDATED LEAD ARRANGERS**

# **26.1 Appointment of the Agents**

- (a) Each of the Mandated Lead Arrangers and the Lenders appoints each Agent to act as its agent under and in connection with the Finance Documents.
- (b) Each of the Mandated Lead Arrangers and the Lenders authorises each Agent to exercise the rights, powers, authorities and discretions specifically given to such Agent under or in connection with the Finance Documents together with any other incidental rights, powers, authorities and discretions.
- (c) The Facility Agent and the Euro Swingline Agent shall, unless ABB agrees otherwise, act out of an office in London.
- (d) The Dollar Swingline Agent shall, unless ABB agrees otherwise, act out of an office in New York.

# **26.2 Instructions**

- (a) An Agent shall:
  - (i) unless a contrary indication appears in a Finance Document, exercise or refrain from exercising any right, power, authority or discretion vested in it as Agent in accordance with any instructions given to it by:
    - (A) all Lenders if the relevant Finance Document stipulates the matter is an all Lender decision; and
    - (B) in all other cases, the Majority Lenders; and
  - (ii) not be liable for any act (or omission) if it acts (or refrains from acting) in accordance with paragraph (i) above.
- (b) An Agent shall be entitled to request instructions, or clarification of any instruction, from the Majority Lenders (or, if the relevant Finance Document stipulates the matter is a decision for any other Lender or group of Lenders, from that Lender or group of Lenders) as to whether, and in what manner, it should exercise or refrain from exercising any right, power, authority or discretion. An Agent may refrain from acting unless and until it receives any such instructions or clarification that it has requested.
- (c) Save in the case of decisions stipulated to be a matter for any other Lender or group of Lenders under the relevant Finance Document and unless a contrary indication appears in a Finance Document, any instructions given to an Agent by the Majority Lenders shall override any conflicting instructions given by any other Parties and will be binding on all Finance Parties.

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(d) An Agent may refrain from acting in accordance with any instructions of any Lender or group of Lenders until it has received any indemnification and/or security that it may in its discretion require (which may be greater in extent than that contained in the Finance Documents and which may include payment in advance) for any cost, loss or liability which it may incur in complying with those instructions.

(e) In the absence of instructions, an Agent may act (or refrain from acting) as it considers to be in the best interest of the Lenders.

(f) An Agent is not authorised to act on behalf of a Lender (without first obtaining that Lender's consent) in any legal or arbitration proceedings relating to any Finance Document.

### 26.3 Duties of the Agents

(a) Subject to paragraph (b) below, each Agent shall promptly forward to a Party the original or a copy of any document which is delivered to that Agent for that Party by any other Party.

(b) Without prejudice to Clause 23.7 (Copy of Transfer Certificate and Increase Confirmation to ABB), paragraph (a) above shall not apply to any Transfer Certificate or Increase Confirmation.

(c) Except where a Finance Document specifically provides otherwise, an Agent is not obliged to review or check the adequacy, accuracy or completeness of any document it forwards to another Party.

(d) If the Facility Agent receives notice from a Party referring to this Agreement, describing a Default and stating that the circumstance described is a Default, it shall promptly notify the Lenders.

(e) If an Agent is aware of the non-payment of any principal, interest, commitment fee or other fee payable to a Finance Party (other than an Agent or a Mandated Lead Arranger) under this Agreement it shall promptly notify the other Finance Parties.

(f) The Facility Agent shall promptly notify:

(i) the Lenders of any Default arising under Clause 22.1 (Non-payment); and

(ii) each Swingline Agent of:

(A) any assignments or transfers by a Lender pursuant to Clause 23 (Changes to the Lenders); and

(B) any changes to the Obligors pursuant to Clause 25 (Changes to the Obligors).

(g) The Facility Agent shall provide to ABB within 5 Business Days of a request by ABB (made no more frequently than once per calendar month), a list (which

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may be in electronic form) setting out the names of the Lenders as at the date such list is provided and their respective Commitments and Swingline Commitments, and the name of the credit contact at each Lender with access to the Debtdomain site in respect of the Facility.

(h) Each Agent's duties under the Finance Documents are solely mechanical and administrative in nature.

(i) Each Agent shall have only those duties, obligations and responsibilities expressly specified in the Finance Documents to which it is expressed to be a party (and no others shall be implied).

#### 26.4 Role of the Mandated Lead Arrangers

Except as specifically provided in the Finance Documents, the Mandated Lead Arrangers have no obligations of any kind to any other Party under or in connection with any Finance Document.

#### 26.5 No fiduciary duties

(a) Nothing in any Finance Document constitutes an Agent or a Mandated Lead Arranger as a trustee or fiduciary of any other person.

(b) No Agent nor any Mandated Lead Arranger shall be bound to account to any Lender for any sum or the profit element of any sum received by it for its own account.

#### 26.6 Business with the Group

Each Agent and each Mandated Lead Arranger may accept deposits from, lend money to and generally engage in any kind of banking or other business with any of the Group Companies.

#### 26.7 Rights and discretions of the Agents

(a) Each Agent may

(i) rely on any representation, communication, notice or document believed by it to be genuine, correct and appropriately authorised;

(ii) rely on any statement made by a director, authorised signatory or employee of any person regarding any matters which may reasonably be assumed to be within his knowledge or within his power to verify;

(iii) assume that:

(A) any instructions received by it from the Majority Lenders, any Lenders or any group of Lenders are duly given in accordance with the terms of the Finance Documents; and

(B) unless it has received notice of revocation, that those instructions have not been revoked; and

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(iv) rely on a certificate from any person:

(A) as to any matter of fact or circumstance which might reasonably be expected to be within the knowledge of that person; or

(B) to the effect that such person approves of any particular dealing, transaction, step, action or thing,

as sufficient evidence that that is the case and, in the case of paragraph (A) above, may assume the truth and accuracy of that certificate.

(b) Each Agent may assume (unless it has received notice to the contrary in its capacity as agent for the Lenders) that:

(i) no Default has occurred (unless it has actual knowledge of a Default arising under Clause 22.1 (*Non-payment*));

(ii) any right, power, authority or discretion vested in any Party or any group of Lenders has not been exercised; and

(iii) any notice or request made by ABB (other than a Utilisation Request) is made on behalf of and with the consent and knowledge of all the Obligors.

(c) Each Agent may engage and pay for the advice or services of any lawyers, accountants, tax advisers, surveyors or other professional advisers or experts.

(d) Without prejudice to the generality of paragraph (c) above or paragraph (e) below, each Agent may at any time engage and pay for the services of any lawyers to act as independent counsel to the Agent (and so separate from any lawyers instructed by the Lenders) if the Agent in its reasonable opinion deems this to be necessary.

(e) Each Agent may rely on the advice or services of any lawyers, accountants, tax advisers, surveyors or other professional advisers or experts (whether obtained by the Agent or by any other Party) and shall not be liable for any damages, costs or losses to any person, any diminution in value or any liability whatsoever arising as a result of its so relying.

(f) The Facility Agent may disclose the identity of a Defaulting Lender to the other Finance Parties and ABB and shall disclose the same upon the written request of ABB or the Majority Lenders.

(g) Each Agent may act in relation to the Finance Documents through its officers, employees and agents.

(h) Unless a Finance Document expressly provides otherwise each Agent may disclose to any other Party any information it reasonably believes it has received as agent under this Agreement.

(i) Notwithstanding any other provision of any Finance Document to the contrary, no Agent or Mandated Lead Arranger is obliged to do or omit to do anything if

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it would or might in its reasonable opinion constitute a breach of law or regulation or a breach of a fiduciary duty or duty of confidentiality.

(j) Notwithstanding any provision of any Finance Document to the contrary, no Agent is obliged to expend or risk its own funds or otherwise incur any financial liability in the performance of its duties, obligations or responsibilities or the exercise of any right, power, authority or discretion if it has grounds for believing the repayment of such funds or adequate indemnity against, or security for, such risk or liability is not reasonably assured to it.

#### **26.8 Responsibility for documentation**

No Agent nor any Mandated Lead Arranger is responsible or liable for:

- (a) the adequacy, accuracy or completeness of any information (whether oral or written) supplied by an Agent, a Mandated Lead Arranger, ABB, any Borrower or any other person in or in connection with any Finance Document or the Information Package or the transactions contemplated in the Finance Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document;
- (b) the legality, validity, effectiveness, adequacy or enforceability of any Finance Document or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document; or
- (c) any determination as to whether any information provided or to be provided to any Finance Party is non-public information the use of which may be regulated or prohibited by applicable law or regulation relating to insider dealing or otherwise.

#### **26.9 No duty to monitor**

An Agent shall not be bound to enquire:

- (a) whether or not any Default has occurred;
- (b) as to the performance, default or any breach by any Party of its obligations under any Finance Document; or
- (c) whether any other event specified in any Finance Document has occurred.

#### **26.10 Exclusion of liability**

- (a) Without limiting paragraph (b) below (and without prejudice to any other provision of any Finance Document excluding or limiting the liability of an Agent), no Agent will be liable for:
  - (i) any damages, costs or losses to any person, any diminution in value, or any liability whatsoever arising as a result of taking or not taking any

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action under or in connection with any Finance Document, unless directly caused by its negligence, wilful default or wilful misconduct;

- (ii) exercising, or not exercising, any right, power, authority or discretion given to it by, or in connection with, any Finance Document or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with, any Finance Document, other than by reason of its negligence, wilful default or wilful misconduct; or
- (iii) without prejudice to the generality of paragraphs (i) and (ii) above, any damages, costs or losses to any person, any diminution in value or any liability whatsoever (but not including any claim based on the fraud of the Agent) arising as a result of any act, event or circumstance not reasonably within its control, including (in each case and without limitation) such damages, costs, losses, diminution in value or liability arising as a result of: nationalisation, expropriation or other governmental actions; any regulation, currency restriction, devaluation or fluctuation; market conditions affecting the execution or settlement of transactions or the value of assets (including any Disruption Event); breakdown, failure or malfunction of any third party transport, telecommunications, computer services or systems; natural disasters or acts of God; war, terrorism, insurrection or revolution; or strikes or industrial action.
(b) No Party may take any proceedings against any officer, employee or agent of an Agent in respect of any claim it might have against such Agent or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Finance Document and any officer, employee or agent of such Agent may rely on this Clause.
(c) No Agent will (absent negligence, wilful default or wilful misconduct directly giving rise to such liability) be liable for any delay (or any related consequences) in crediting an account with an amount required under the Finance Documents to be paid by such Agent if that Agent has taken all necessary steps as soon as reasonably practicable to comply with the regulations or operating procedures of any recognised clearing or settlement system used by such Agent for that purpose.
(d) Nothing in this Agreement shall oblige the Facility Agent or any Mandated Lead Arranger to carry out:
- (i) any 'know your customer' or other checks in relation to any person; or
- (ii) or any check on the extent to which any transaction contemplated by this Agreement might be unlawful for any Lender or for any Affiliate of any Lender, on behalf of any Lender and each Lender confirms to the Facility Agent and the Mandated Lead Arrangers that it is solely responsible for any such checks it is

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required to carry out and that it may not rely on any statement in relation to such checks made by the Facility Agent or the Mandated Lead Arrangers.

(e) Without prejudice to any provision of any Finance Document excluding or limiting an Agent's liability, any liability of an Agent arising under or in connection with any Finance Document shall be limited to the amount of actual loss which has been suffered (as determined by reference to the date of default of the Agent or, if later, the date on which the loss arises as a result of such default) but without reference to any special conditions or circumstances known to the Agent at any time which increase the amount of that loss. In no event shall an Agent be liable for any loss of profits, goodwill, reputation, business opportunity or anticipated saving, or for special, punitive, indirect or consequential damages, whether or not the Agent has been advised of the possibility of such loss or damages.

#### 26.11 Lenders' indemnity to the Agents

The Lenders shall (in proportion to their Commitments or, if the Total Commitments are then zero, to their Commitments immediately prior to their reduction to zero) severally indemnify each Agent, within three Business Days of demand, against any cost, loss or liability incurred by such Agent (otherwise than by reason of such Agent's negligence or wilful misconduct) in acting as Agent under the Finance Documents (unless such Agent has been reimbursed by ABB or the Borrowers pursuant to a Finance Document).

#### 26.12 Resignation of an Agent

- (a) An Agent may resign and appoint one of its Affiliates as successor by giving notice to the Lenders and ABB **provided that** such successor shall act (to the extent relevant) out of an office in the following locations (each a '**Required Location**'):
  - (i) in the case of the Facility Agent, London or, subject to the consent of ABB (acting reasonably), a location within a Participating Member State;
  - (ii) in the case of the Dollar Swingline Agent, New York or, subject to the consent of ABB (acting reasonably), another location within the United States; and
  - (iii) in the case of the Euro Swingline Agent, London or, subject to the consent of ABB (acting reasonably), a location within a Participating Member State.
- (b) Alternatively an Agent may resign by giving notice to the Lenders and ABB, in which case the Majority Lenders may appoint a successor Agent which will act out of an office in the relevant Required Location.
- (c) If the Majority Lenders have not appointed a successor Agent in accordance with paragraph (b) above within 30 days after notice of resignation was given, the resigning Agent may appoint a successor Agent which will act out of an office in the relevant Required Location.

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- (d) A successor Agent may only be appointed with the prior consent of ABB (such consent not to be unreasonably withheld or delayed).
- (e) The retiring Agent shall, at its own cost, make available to the successor Agent such documents and records and provide such assistance as the successor Agent may reasonably request for the purposes of performing its functions as Agent under the Finance Documents.
- (f) Such Agent's resignation notice shall only take effect upon the appointment of a successor as contemplated in paragraphs (b) and (c) above.
- (g) Upon the appointment of a successor, the retiring Agent shall be discharged from any further obligation in respect of the Finance Documents (other than its obligations under paragraph (e) above) but shall remain entitled to the benefit of Clause 15.3 (*Indemnity to the Facility Agent*) and this Clause 26 (and any agency fees for the account of the retiring Agent shall cease to accrue from (and shall be payable on) that date). Its successor and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party.
- (h) The Facility Agent shall resign in accordance with paragraph (b) above (and, to the extent applicable, shall use reasonable endeavours to appoint a successor Agent pursuant to paragraph (c) above) if on or after the date which is three months before the earliest FATCA Application Date relating to any payment to the Facility Agent under the Finance Documents, either:
  - (i) the Facility Agent fails to respond to a request under Clause 13.9 (*FATCA Information*) and ABB or a Lender reasonably believes that the Facility Agent will not be (or will have ceased to be) a FATCA Exempt Party on or after that FATCA Application Date;
  - (ii) the information supplied by the Facility Agent pursuant to Clause 13.9 (*FATCA Information*) indicates that the Facility Agent will not be (or will have ceased to be) a FATCA Exempt Party on or after that FATCA Application Date; or
  - (iii) the Facility Agent notifies ABB and the Lenders that the Facility Agent will not be (or will have ceased to be) a FATCA Exempt Party on or after that FATCA Application Date;

and (in each case) ABB or a Lender reasonably believes that a Party will be required to make a FATCA Deduction that would not be required if the Facility Agent were a FATCA Exempt Party, and that Lender, by notice to the Facility Agent, requires it to resign.

### 26.13 Replacement of an Agent

(a) After consultation with ABB, the Majority Lenders may, by giving 30 days' notice to an Agent (or, at any time an Agent is an Impaired Agent, by giving any shorter notice determined by the Majority Lenders) replace that Agent by appointing a successor Agent acting out of an office in the relevant Required

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Location. A successor Agent may only be appointed with the prior consent of ABB (such consent not to be unreasonably withheld or delayed).

(b) The retiring Agent shall (at its own cost if it is an Impaired Agent and otherwise at the expense of the Lenders) make available to the successor Agent such documents and records and provides such assistance as the successor Agent may reasonably request for the purposes of performing its functions as Agent under the Finance Documents.

(c) The appointment of a successor Agent shall take effect on the date specified in the notice from the Majority Lenders to the retiring Agent. As from that date, the retiring Agent shall be discharged from any further obligation in respect of the Finance Documents but shall remain entitled to the benefit of this Clause 26 (and any agency fees for the account of the retiring Agent shall cease to accrue from (and shall be payable on) that date).

(d) Any successor Agent and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party.

#### 26.14 Confidentiality

(a) In acting as agent for the Finance Parties, each Agent shall be regarded as acting through its agency division which shall be treated as a separate entity from any other of its divisions or departments.

(b) If information is received by another division or department of an Agent, it may be treated as confidential to that division or department and such Agent shall not be deemed to have notice of it.

(c) Notwithstanding any other provision of any Finance Document to the contrary, no Agent or Mandated Lead Arranger is obliged to disclose to any other person (i) any confidential information or (ii) any other information if the disclosure would or might in its reasonable opinion constitute a breach of any law or a breach of a fiduciary duty.

#### 26.15 Relationship with the Lenders

(a) Subject to Clause 23.10 (*Pro rata interest settlement*), each Agent may treat the person shown in its records as Lender at the opening of business (in the place of the relevant Agent's principal office as notified to the Finance Parties from time to time) as the Lender acting through its Facility Office:

(i) entitled to or liable for any payment due under any Finance Document on that day; and

(ii) entitled to receive and act upon any notice, request, document or communication or make any decision or determination under any Finance Document made or delivered on that day,

unless it has received not less than 5 Business Days' prior notice from that Lender to the contrary in accordance with the terms of this Agreement.

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(b) Any Lender may by notice to the Facility Agent, appoint a person to receive on its behalf all notices, communications, information and documents to be made or despatched to that Lender under the Finance Documents. Such notice shall contain the address, fax number and (where communication by electronic mail or other electronic means is permitted under paragraph (b) of Clause 31.1 (*Communications in writing*)) electronic mail address and/or any other information required to enable the transmission of information by that means (and, in each case, the department or officer, if any, for whose attention communication is to be made) and be treated as a notification of a substitute address, fax number, electronic mail address (or such other information), department and officer by that Lender for the purposes of Clause 31.2 (*Addresses*) and paragraph (b) of Clause 31.1 (*Communications in writing*) and each Agent shall be entitled to treat such person as the person entitled to receive all such notices, communications, information and documents as though that person were that Lender.

#### 26.16 **Credit appraisal by the Lenders**

Without affecting the responsibility of each Obligor for information supplied by it or on its behalf in connection with any Finance Document, each Lender confirms to each Agent and each Mandated Lead Arranger that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with any Finance Document including but not limited to:

- (a) the financial condition, status and nature of each Group Company;
- (b) the legality, validity, effectiveness, adequacy or enforceability of any Finance Document and any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document;
- (c) whether that Lender has recourse, and the nature and extent of that recourse, against any Party or any of its respective assets under or in connection with any Finance Document, the transactions contemplated by the Finance Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document; and
- (d) the adequacy, accuracy or completeness of the Information Package and any other information provided by an Agent, any other Party or by any other person under or in connection with any Finance Document, a Mandated Lead Arranger the transactions contemplated by any Finance Document or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document.

#### 26.17 **Deduction from amounts payable by an Agent**

If any Party owes an amount to an Agent under the Finance Documents, the relevant Agent may, after giving notice to that Party, deduct an amount not exceeding that amount from any payment to that Party which such Agent would otherwise be obliged to make under the Finance Documents and apply the amount deducted in or towards

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satisfaction of the amount owed. For the purposes of the Finance Documents that Party shall be regarded as having received any amount so deducted.

**26.18 Amounts paid in error**

(a) If the Agent pays an amount to another Party and the Agent notifies that Party that such payment was an Erroneous Payment then the Party to whom that amount was paid by the Agent shall on demand refund the same to the Agent together with (unless otherwise agreed by the Agent in its sole discretion) interest on that amount from the date of payment to the date of receipt by the Agent, calculated by the Agent to reflect its cost of funds.

(b) Neither:

(i) the obligations of any Party to the Agent; nor

(ii) the remedies of the Agent,

(whether arising under this Clause 26.18 or otherwise) which relate to an Erroneous Payment will be affected by any act, omission, matter or thing (including, without limitation, any obligation pursuant to which an Erroneous Payment is made) which, but for this paragraph (b), would reduce, release or prejudice any such obligation or remedy (whether or not known by the Agent or any other Party).

(c) All payments to be made by a Party to the Agent (whether made pursuant to this Clause 26.18 or otherwise) which relate to an Erroneous Payment shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim.

(d) In this Agreement, "Erroneous Payment" means a payment of an amount by the Agent to another Party which the Agent determines (in its sole discretion) was made in error.

**27. CONDUCT OF BUSINESS BY THE FINANCE PARTIES**

No provision of this Agreement will:

(a) interfere with the right of any Finance Party to arrange its affairs (tax or otherwise) in whatever manner it thinks fit;

(b) oblige any Finance Party to investigate or claim any credit, relief, remission or repayment available to it or the extent, order and manner of any claim; or

(c) oblige any Finance Party to disclose any information relating to its affairs (tax or otherwise) or any computations in respect of Tax.

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## 28. SHARING AMONG THE LENDERS

### 28.1 Payments to Lenders

If a Lender (a "Recovering Lender") receives or recovers any amount from ABB or a Borrower other than in accordance with Clause 29 (Payment Mechanics) (a "Recovered Amount") and applies that amount to a payment due under the Finance Documents then:

- (a) the Recovering Lender shall, within 3 Business Days, notify details of the receipt or recovery to the Facility Agent;
- (b) the Facility Agent shall determine whether the receipt or recovery is in excess of the amount the Recovering Lender would have been paid had the receipt or recovery been received or made by the Facility Agent and distributed in accordance with Clause 29 (Payment Mechanics), without taking account of any Tax which would be imposed on the Facility Agent in relation to the receipt, recovery or distribution; and
- (c) the Recovering Lender shall, within three Business Days of demand by the Facility Agent, pay to the Facility Agent an amount (the "Sharing Payment") equal to such receipt or recovery less any amount which the Facility Agent determines may be retained by the Recovering Lender as its share of any payment to be made, in accordance with Clause 29.6 (Partial payments).

### 28.2 Redistribution of payments

The Facility Agent shall treat the Sharing Payment as if it had been paid by ABB or the relevant Borrower (as the case may be) and distribute it between the Finance Parties (other than the Recovering Lender) (the "Sharing Finance Parties") in accordance with Clause 29.6 (Partial payments) towards the obligations of that Obligor to the Sharing Finance Parties.

### 28.3 Recovering Lender's rights

On a distribution by the Facility Agent under Clause 28.2 (Redistribution of payments) of a payment received by a Recovering Finance Party from an Obligor, as between the relevant Obligor and the Recovering Finance Party, an amount of the Recovered Amount equal to the Sharing Payment will be treated as not having been paid by that Obligor.

### 28.4 Reversal of redistribution

If any part of the Sharing Payment received or recovered by a Recovering Lender becomes repayable and is repaid by that Recovering Lender, then:

- (a) each Sharing Finance Party shall, upon request of the Facility Agent, pay to the Facility Agent for the account of that Recovering Lender an amount equal to its share of the Sharing Payment (together with an amount as is necessary to reimburse that Recovering Lender for its proportion of any interest on the Sharing Payment which that Recovering Lender is required to pay) (the "Redistributed Amount"); and

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(b) as between the relevant Obligor and each relevant Sharing Finance Party, an amount equal to the relevant Redistributed Amount will be treated as not having been paid by that Obligor.

28.5 Exceptions

(a) This Clause 28 shall not apply to the extent that the Recovering Lender would not, after making any payment pursuant to this Clause, have a valid and enforceable claim against ABB or the relevant Borrower (as the case may be).

(b) A Recovering Lender is not obliged to share with any other Finance Party any amount which the Recovering Lender has received or recovered as a result of taking legal or arbitration proceedings, if:

(i) it notified the other Lenders of the legal or arbitration proceedings; and

(ii) the other Lender had an opportunity to participate in those legal or arbitration proceedings but did not do so as soon as reasonably practicable having received notice or did not take separate legal or arbitration proceedings.

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# **SECTION 10**
**ADMINISTRATION**

# **29. PAYMENT MECHANICS**

# **29.1 Payments to the Agents**

(a) For the purpose of this Clause 29 a reference to the "**Relevant Agent**" means:
(i) in relation to payments under the Dollar Swingline Facility, the Dollar Swingline Agent;
(ii) in relation to payments under the Euro Swingline Facility, the Euro Swingline Agent; and
(iii) for all other payments, the Facility Agent.
(b) On each date on which a Borrower or a Lender is required to make a payment under a Finance Document, such Borrower or, as the case may be, such Lender shall make the same available to the Relevant Agent (unless a contrary indication appears in a Finance Document) for value on the due date at the time and in such funds specified by the Relevant Agent as being customary at the time for settlement of transactions in the relevant currency in the place of payment.
(c) Payment shall be made to such account in the principal financial centre of the country of that currency (or, in relation to Euro, in a principal financial centre in a Participating Member State or London) with such bank as the Relevant Agent specifies.

# **29.2 Distributions by the Agents**

Each payment received by an Agent under the Finance Documents for another Party shall, subject to Clause 29.3 (*Distributions to the Obligors*) and Clause 29.4 (*Clawback and pre-funding*) be made available by such Agent as soon as practicable after receipt to the Party entitled to receive payment in accordance with this Agreement (in the case of a Lender, for the account of its Facility Office), to such account as that Party may notify to the relevant Agent by not less than 5 Business Days' notice with a bank in the principal financial centre of the country of that currency (or, in relation to Euro, in the principal financial centre of a Participating Member State or London).

# **29.3 Distributions to the Obligors**

An Agent may (with the consent of ABB or the relevant Borrower (as the case may be) or in accordance with Clause 30 (*Set-Off*)) apply any amount received by it for ABB or that Borrower in or towards payment (on the date and in the currency and funds of receipt) of any amount due from ABB or that Borrower (as the case may be) under the Finance Documents or in or towards purchase of any amount of any currency to be so applied.

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## 29.4 Clawback and pre-funding

- (a) Where a sum is to be paid to an Agent under the Finance Documents for another Party, such Agent is not obliged to pay that sum to that other Party (or to enter into or perform any related exchange contract) until it has been able to establish to its absolute satisfaction that it has actually received that sum (and such Agent shall make such due enquiry as a diligent agent would make in so establishing).
- (b) If an Agent pays an amount to another Party and it proves to be the case that such Agent had not actually received that amount, then the Party to whom that amount (or the proceeds of any related exchange contract) was paid by such Agent shall on demand refund the same to such Agent together with interest on that amount from the date of payment to the date of receipt by such Agent, calculated by such Agent to reflect its cost of funds.
- (c) If an Agent has notified the Lenders that it is willing to make available amounts for the account of a Borrower before receiving funds from the Lenders then if and to the extent that an Agent does so but it proves to be the case that it does not then receive funds from a Lender in respect of a sum which it paid to a Borrower:
  - (i) the Agent shall notify ABB of that Lender's identity, and the Borrower to whom that sum was made available shall on demand refund it to the Agent; and
  - (ii) the Lender by whom those funds should have been made available shall on demand pay to the Agent the amount (as certified by the Agent) which will indemnify the Agent against any funding cost incurred by it as a result of paying out that sum before receiving those funds from that Lender.
- (d) In the event that a Lender fails to make its participation in an Advance available to the Relevant Agent (as defined in Clause 29.1 (*Payments to the Agents*)) in accordance with the terms of this Agreement, such Lender hereby indemnifies the Relevant Agent on demand against all costs, losses and expenses that the Relevant Agent may incur as a result of such failure (including, without limitation, where the Relevant Agent, at its sole option, makes arrangements to make available to the relevant Borrower an amount equal to said participation).
- (e) For the purposes of paragraph (d) of this Clause 29.4, if a Lender makes its participation available to the Relevant Agent after 3.00 p.m. (London time) or, in the case of a Dollar Swingline Advance, 3.00 p.m. (New York time) on the due date, such participation shall be deemed to have been made available on the Business Day immediately succeeding the said due date.

## 29.5 Impaired Agents

(i) If, at any time, an Agent becomes an Impaired Agent, an Obligor or a Lender which is required to make a payment under the Finance

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Documents to that Agent in accordance with Clause 29.1 (Payments to the Agents) may (or shall, in the case of a payment by a Lender if paragraph (ii) below applies) instead pay that amount direct to the required recipient or (except where paragraph (ii) below applies) pay that amount to an interest-bearing account held with an Acceptable Bank in relation to which no Insolvency Event has occurred and is continuing, in the name of the Obligor or the Lender making the payment and designated as a trust account for the benefit of the Party or Parties beneficially entitled to that payment under the Finance Documents. In each case such payments must be made on the due date for payment under the Finance Documents.

(ii) This paragraph (ii) applies in relation to a payment by a Lender if ABB has notified that Lender in writing on or before the date falling 3 Business Day prior to the date for payment (or 1 Business Day prior to the date for payment in respect of any Swingline Advance), that the relevant Agent is an Impaired Agent and that this paragraph (ii) applies to such payment.

(b) All interest accrued on the amount standing to the credit of the trust account shall be for the benefit of the beneficiaries of that trust account pro rata to their respective entitlements.

(c) A Party which has made a payment in accordance with this Clause 29.5 shall be discharged of the relevant payment obligation under the Finance Documents and shall not take any credit risk with respect to the amounts standing to the credit of the trust account.

(d) Promptly upon the appointment of a successor Agent in accordance with Clause 26.12 (Resignation of an Agent) or 26.13 (Replacement of an Agent), each Party which has made a payment to a trust account in accordance with this Clause 29.5 shall give all requisite instructions to the bank with whom the trust account is held to transfer the amount (together with any accrued interest) to the successor Agent for distribution in accordance with Clause 29.2 (Distributions by the Agents).

(e) In this Clause 29.5 "Acceptable Bank" means a bank which has a rating for its long-term unsecured and non credit-enhanced debt obligations of A- or higher by Standard & Poor's Rating Services or A3 or higher by Moody's Investor Services Limited.

(f) Each Agent shall notify ABB, the other Agents and the Lenders promptly after becoming an Impaired Agent.

## 29.6 Partial payments

(a) If an Agent receives a payment that is insufficient to discharge all the amounts then due and payable by ABB or the Borrowers under the Finance Documents,

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such Agent shall apply that payment towards the obligations of the Obligors under the Finance Documents in the following order:

(i) first, in or towards payment pro rata of any unpaid fees, costs and expenses of the Agents under the Finance Documents;

(ii) secondly, in or towards payment pro rata of any accrued interest or commission due but unpaid under this Agreement;

(iii) thirdly, in or towards payment pro rata of any principal due but unpaid under this Agreement; and

(iv) fourthly, in or towards payment pro rata of any other sum due but unpaid under the Finance Documents.

(b) The Facility Agent shall, if so directed by the Majority Lenders, vary the order set out in paragraphs (a)(ii) to (iv) above.

(c) Paragraphs (a) and (b) above will override any appropriation made by ABB or any Borrower.

29.7 No set-off by Obligors

All payments to be made by ABB or the Borrowers under the Finance Documents shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim.

29.8 Business Days

(a) Any payment which is due to be made on a day that is not a Business Day shall be made on the next Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not).

(b) During any extension of the due date for payment of any principal or an Unpaid Sum under this Agreement interest is payable on the principal at the rate payable on the original due date.

29.9 Currency of account

(a) Subject to paragraphs (b) to (e) below, the Base Currency is the currency of account and payment for any sum due from ABB or the Borrowers under any Finance Document.

(b) A repayment of an Advance or Unpaid Sum or a part of an Advance or Unpaid Sum shall be made in the currency in which that Advance or Unpaid Sum is denominated on its due date.

(c) Each payment of interest shall be made in the currency in which the sum in respect of which the interest is payable was denominated when that interest accrued.

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(d) Each payment in respect of costs, expenses or Taxes shall be made in the currency in which the costs, expenses or Taxes are incurred.

(e) Any amount expressed to be payable in a currency other than the Base Currency shall be paid in that other currency.

# 29.10 Change of currency

(a) Unless otherwise prohibited by law, if more than one currency or currency unit are at the same time recognised by the central bank of any country as the lawful currency of that country, then:

(i) any reference in the Finance Documents to, and any obligations arising under the Finance Documents in, the currency of that country shall be translated into, or paid in, the currency or currency unit of that country designated by the Facility Agent (after consultation with ABB); and

(ii) any translation from one currency or currency unit to another shall be at the official rate of exchange recognised by the central bank for the conversion of that currency or currency unit into the other, rounded up or down by the Facility Agent (acting reasonably).

(b) If a change in any currency of a country occurs, this Agreement will, to the extent the Facility Agent (acting reasonably and after consultation with ABB) specifies to be necessary, be amended to comply with any generally accepted conventions and market practice in the Relevant Market and otherwise to reflect the change in currency.

# 30. SET-OFF

Without prejudice to the rights at law of each Finance Party, while an Event of Default is continuing, a Finance Party may set off any matured obligation due from ABB or the Borrowers under the Finance Documents (to the extent beneficially owned by that Finance Party) against any matured obligation owed by that Finance Party to ABB or the Borrowers, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Finance Party may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.

# 31. NOTICES

# 31.1 Communications in writing

(a) Any communication to be made under or in connection with the Finance Documents shall be made in writing and, unless otherwise stated, may be made by fax or letter.

(b) With the consent of the relevant Lender, the Agents may serve notices and other information on a Lender by way of electronic mail.

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### 31.2 Addresses

(a) The address, electronic mail address (if any) and fax number (if any) (and the department or officer, if any, for whose attention the communication is to be made) of each Party for any communication or document to be made or delivered under or in connection with the Finance Documents is:

- (i) in the case of the Original Obligors, that identified in Part IV (*The Original Obligors*) of Schedule 1, with a copy to ABB;
- (ii) in the case of ABB, that identified in Part IV (*The Original Obligors*) of Schedule 1;
- (iii) in the case of an Additional Borrower, that identified in the Borrower Accession Letter relating to that Additional Borrower, with a copy to ABB;
- (iv) in the case of each Lender, that notified in writing to the Facility Agent on or prior to the date on which it becomes a Party; and
- (v) in the case of an Agent, that identified in paragraph (b) below,

or any substitute address, electronic mail address, fax number or department or officer as the Party may notify to the Facility Agent (or the Facility Agent may notify to the other Parties, if a change is made by the Facility Agent) by not less than 5 Business Days' notice.

(b)

(i) the Facility Agent:

Citibank Europe plc, UK Branch
EMEA Loans Agency
5th Floor Citigroup Centre
Mail drop CGC2 05-65
25 Canada Square
London E14 5LB
United Kingdom

Electronic mail addresses: karen.hall@citi.com/alasdair.garnham@citi.com

(ii) the Dollar Swingline Agent:

Citibank, N.A.
Global Loans
1615 Brett Road, Ops III
New Castle, DE 19720
GLAgentOfficeOps@citi.com

Fax: +1 212 994 0961

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(iii) the Euro Swingline Agent:

Citibank Europe plc, UK Branch
EMEA Loans Agency
5th Floor Citigroup Centre
Mail drop CGC2 05-65
25 Canada Square
London E14 5LB
United Kingdom

Electronic mail addresses: karen.hall@citi.com / alasdair.garnham@citi.com

31.3 Delivery

(a) Any communication or document made or delivered by one person to another under or in connection with the Finance Documents will only be effective:
(i) if by way of fax, when received in legible form; or
(ii) if by way of letter, when it has been left at the relevant address or 5 (in the case of domestic mail) or 10 (in the case of air mail) Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that address; or
(iii) if by way of electronic mail, when received.

and, if a particular department or officer is specified as part of its address details provided under Clause 31.2 (Addresses), if addressed to that department or officer, provided that if receipt is on a day that is not a working day in the country of receipt or is at a time outside normal business hours, such communication shall be effective on the next succeeding working day.

(b) Any communication or document to be made or delivered to an Agent will be effective only when actually received by such Agent and then only if it is expressly marked for the attention of the department or officer identified in Clause 31.2 (Addresses) (or any substitute department or officer as the relevant Agent shall specify for this purpose).
(c) All notices from or to an Obligor shall be sent through the Facility Agent.

31.4 Notification of address and fax number

Promptly upon changing its address or fax number, each Agent shall notify the other Parties.

31.5 Electronic communication

(a) Any communication to be made between any two Parties under or in connection with the Finance Documents may be made by electronic mail or other electronic means to the extent that those two Parties agree that, unless and until notified to

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the contrary, this is to be an accepted form of communication and if those two Parties:

(i) notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and

(ii) notify each other of any change to their address or any other such information supplied by them by not less than five Business Days' notice.

(b) Any electronic communication made between those two Parties will be effective only when actually received during a Business Day in readable form and in the case of any electronic communication made by a Party to an Agent only if it is addressed in such a manner as such Agent shall specify for this purpose.

(c) Any electronic communication which becomes effective, in accordance with paragraph (b) above, after 5.00 p.m. in the place of receipt shall be deemed only to become effective on the following Business Day.

(d) Any reference in a Finance Document to a communication being sent or received shall be construed to include that communication being made available in accordance with this Clause 31.5.

### 31.6 Communication when an Agent is an Impaired Agent

If an Agent is an Impaired Agent the Parties may, instead of communicating with each other through that Agent, communicate with each other directly and (while that Agent is an Impaired Agent) all the provisions of the Finance Documents which require communications to be made or notices to be given to or by that Agent shall be varied so that communications may be made and notices given to or by the relevant Parties directly. This provision shall not operate after a replacement Agent has been appointed.

### 31.7 English language

(a) Any notice given under or in connection with any Finance Document must be in English.

(b) All other documents provided under or in connection with any Finance Document must be:

(i) in English; or

(ii) if not in English, and if so required by the Facility Agent, accompanied by a certified English translation.

## 32. CALCULATION AND CERTIFICATES

### 32.1 Accounts

In any litigation or arbitration proceedings arising out of or in connection with a Finance Document, the entries made in the accounts maintained by a Finance Party are *prima facie* evidence of the matters to which they relate.

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32.2 Certificates and Determinations

Except where otherwise indicated, any certification or determination by a Finance Party of a rate or amount under any Finance Document is, in the absence of manifest error, conclusive evidence of the matters to which it relates.

32.3 Day count convention

Any interest, commission or fee accruing under a Finance Document will accrue from day to day and is calculated on the basis of the actual number of days elapsed and a year of 360 days or, in any case where the practice in the Relevant Market differs, in accordance with that market practice.

33. PARTIAL INVALIDITY

If, at any time, any provision of the Finance Documents is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.

34. REMEDIES AND WAIVERS

No failure to exercise, nor any delay in exercising, on the part of any Finance Party, any right or remedy under the Finance Documents shall operate as a waiver, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in this Agreement are cumulative and not exclusive of any rights or remedies provided by law.

35. AMENDMENTS AND WAIVERS

35.1 Required consents

(a) Subject to Clause 35.2 (Exceptions) any term of the Finance Documents may be amended or waived only with the consent of the Majority Lenders and ABB and any such amendment or waiver will be binding on all Parties.

(b) The Facility Agent may effect (and is hereby so authorised by each Finance Party), on behalf of any Finance Party, any amendment or waiver permitted by this Clause.

35.2 All Lender matters

Subject to Clause 35.7 (Changes to the reference rates) an amendment or waiver of any term of any Finance Document that has the effect of changing or which relates to:

(a) the definition of "Majority Lenders" in Clause 1.1 (Definitions);

(b) an extension to the date of payment of any amount under the Finance Documents;

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(c) a reduction in the Margin or the amount of any payment of principal, interest, fees or commission payable;
(d) an increase in any Commitment or Swingline Commitment other than an increase made in accordance with Clause 2.2 (Increase of Commitments);
(e) any change to the Obligors other than in accordance with Clause 25 (Changes to the Obligors);
(f) any provision which expressly requires the consent of all the Lenders;
(g) Clause 2.4 (Finance Parties' rights and obligations), Clause 4.2 (Further conditions precedent), Clause 5.1 (delivery of a Utilisation Request), Clause 8.1 (Lender Illegality), Clause 8.3 (Mandatory Prepayment on Change of Control), Clause 8.4 (Mandatory Prepayment on Sanctions Misrepresentation or Anti-Bribery and Corruption Misrepresentation), Clause 23 (Changes to the Lenders), Clause 25 (Changes to the Obligors), Clause 28 (Sharing among the Lenders), this Clause 35, Clause 38 (Governing Law) or Clause 39 (Enforcement);
(h) the nature or scope of the guarantee and indemnity granted under Clause 18 (Guarantee and Indemnity),
shall not be made without the prior consent of all the Lenders.

### 35.3 Other exceptions

An amendment or waiver which relates to the rights or obligations of any Agent or any Mandated Lead Arranger (each in their capacity as such) may not be effected without the consent of such Agent, such Mandated Lead Arranger.

### 35.4 Restricted Lenders

Clause 8.4 (Mandatory Prepayment on Sanctions Misrepresentation) and/or Clause 19.14 (Sanctions) and/or Clause 21.9 (Economic Sanctions) (together, the "Sanctions Provisions") shall only apply or, as applicable, be given to the extent that it would not result in (i) any violation of, conflict with or liability under EU Regulation (EC) 2271/96 or (ii) a violation or conflict with section 7 foreign trade rules (AWV) (Außenwirtschaftsverordnung) (in connection with section 4 paragraph 1 a no. 3 foreign trade law (AWG) (Außenwirtschaftsgesetz)) or a similar anti-boycott statute. In connection with any amendment, waiver, determination or direction relating to any part of a Sanctions Provision of which a Lender does not have the benefit (and where the Lender has notified the Facility Agent to this effect), the Commitments of that Lender will be excluded for the purpose of determining whether the consent of the Majority Lenders has been obtained or whether the determination or direction by the Majority Lenders has been made.

### 35.5 Disenfranchisement of Defaulting Lenders

(a) For so long as a Defaulting Lender has any Commitment, in ascertaining the Majority Lenders or whether any given percentage (including, for the avoidance of doubt, unanimity) of the Total Commitments has been obtained to approve

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any request for a consent, waiver, amendment or other vote under the Finance Documents:

(i) that Defaulting Lender's Commitments will be reduced by the amount of its Available Commitments; and
(ii) that Defaulting Lender's Commitments will be ignored if that Defaulting Lender fails to respond to a request for a waiver or amendment within the time period specified by ABB and (unless it is an Impaired Agent) the Facility Agent.

(b) For the purposes of this Clause 35.5, the Facility Agent may assume that the following Lenders are Defaulting Lenders:

(i) any Lender which has notified the Facility Agent that it has become a Defaulting Lender (and each Lender shall notify the Facility Agent and ABB promptly after becoming a Defaulting Lender);
(ii) any Lender in relation to which it is aware that any of the events or circumstances referred to in paragraphs (a), (b) or (c) of the definition of "Defaulting Lender" has occurred,

unless it has received notice to the contrary from the Lender concerned (together with any supporting evidence reasonably requested by the Facility Agent) or the Facility Agent is otherwise aware that the Lender has ceased to be a Defaulting Lender.

# 35.6 Replacement of a Defaulting Lender

(a) ABB may, at any time a Lender has become and continues to be a Defaulting Lender, by giving 5 Business Days' prior written notice to the Facility Agent and such Lender:

(i) replace such Lender and any Revolving Facility Affiliate or Swingline Affiliate of that Lender by requiring such Lender and any such Revolving Facility Affiliate or Swingline Affiliate to (and to the extent permitted by law that Lender or Revolving Facility Affiliate or Swingline Affiliate shall) transfer pursuant to Clause 23 (Changes to the Lenders) all (and, save to the extent provided for in this Clause, not part only) of its rights and obligations under this Agreement (including in respect of any Separate Advances); or
(ii) require such Lender and/or its Revolving Facility Affiliate or Swingline Affiliate to (and to the extent permitted by law such Lender or Revolving Facility Affiliate of Swingline Affiliate shall) transfer pursuant to Clause 23 (Changes to the Lenders) all (and, save to the extent provided for in this Clause, not part only) of the undrawn Commitment and/or Swingline Commitment of such Lender and/or its Revolving Facility Affiliate or Swingline Affiliate,

to a Lender or other bank (a "Replacement Lender") selected by ABB, and which confirms its willingness to assume and does assume all the obligations or

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all the relevant obligations of the transferring Lender, Revolving Facility Affiliate or Swingline Affiliate (including the assumption of participations or unfunded participations (as the case may be) of the transferor on the same basis as the transferor) for a purchase price in cash payable at the time of transfer equal to the outstanding principal amount of such Lender's or Revolving Facility Affiliate's or Swingline Affiliate's participation in the outstanding Advances and all accrued interest (to the extent that the Facility Agent has not given a notification under Clause 23.10 (Pro rata interest settlement), Break Costs and other amounts payable in relation thereto under the Finance Documents. Where a Lender to be replaced pursuant to this paragraph is a Swingline Lender that is the Swingline Affiliate of another Lender, the rights and obligations required to be transferred pursuant to this Clause by that other Lender in its capacity as the Revolving Facility Affiliate of that Swingline Lender may, at the option of ABB, be limited to those necessary for the Commitments of the replacement Lender (or its Affiliate) to be at least equal to each of the Swingline Commitments to be transferred to such replacement Lender pursuant to this Clause.

(b) Any transfer of rights and obligations of a Lender pursuant to this Clause shall be subject to the following conditions:

(i) ABB shall have no right to replace an Agent;

(ii) no Agent nor the Defaulting Lender nor any other Finance Party shall have any obligation to find a Replacement Lender;

(iii) the transfer must take place no later than 20 days after the notice referred to in paragraph (a) above; and

(iv) in no event shall the Defaulting Lender be required to pay or surrender to the Replacement Lender any of the fees received by the Defaulting Lender pursuant to the Finance Documents.

# 35.7 Changes to the reference rates

(a) Subject to Clause 35.3 (Other exceptions), if a Published Rate Replacement Event has occurred in relation to any Published Rate for a currency which can be selected for an Advance, any amendment or waiver which relates to:

(i) providing for the use of a Replacement Reference Rate in relation to that currency in place of that Published Rate; and

(ii)

(A) aligning any provision of any Finance Document to the use of that Replacement Reference Rate;

(B) enabling that Replacement Reference Rate to be used for the calculation of interest under this Agreement (including, without limitation, any consequential changes required to enable that Replacement Reference Rate to be used for the purposes of this Agreement);

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(C) implementing market conventions applicable to that Replacement Reference Rate;
(D) providing for appropriate fallback (and market disruption) provisions for that Replacement Reference Rate; or
(E) adjusting the pricing to reduce or eliminate, to the extent reasonably practicable, any transfer of economic value from one Party to another as a result of the application of that Replacement Reference Rate (and if any adjustment or method for calculating any adjustment has been formally designated, nominated or recommended by the Relevant Nominating Body, the adjustment shall be determined on the basis of that designation, nomination or recommendation),

may be made with the consent of the Facility Agent (acting on the instructions of the Majority Lenders) and ABB.

(b) If any Lender fails to respond to a request for an amendment or waiver described in paragraph (a) above within ten (10) Business Days (or such longer time period in relation to any request which ABB and the Facility Agent may agree) of that request being made:

(i) its Commitments shall not be included for the purpose of calculating the Total Commitments under the Facility when ascertaining whether any relevant percentage of Total Commitments has been obtained to approve that request; and
(ii) its status as a Lender shall be disregarded for the purpose of ascertaining whether the agreement of any specified group of Lenders has been obtained to approve that request.

# 36. BAIL-IN

# 36.1 Contractual recognition of bail-in

Notwithstanding any other term of any Finance Document or any other agreement, arrangement or understanding between the Parties, each Party acknowledges and accepts that any liability of any Party to any other Party under or in connection with the Finance Documents may be subject to Bail-In Action by the relevant Resolution Authority and acknowledges and accepts to be bound by the effect of:

(a) any Bail-In Action in relation to any such liability, including (without limitation):

(i) a reduction, in full or in part, in the principal amount, or outstanding amount due (including any accrued but unpaid interest) in respect of any such liability;
(ii) a conversion of all, or part of, any such liability into shares or other instruments of ownership that may be issued to, or conferred on, it; and

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(iii) a cancellation of any such liability; and
(b) a variation of any term of any Finance Document to the extent necessary to give effect to any Bail-In Action in relation to any such liability.

# 36.2 Bail-In definitions

In this Clause 36:

"Article 55 BRRD" means Article 55 of Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms.

"Bail-In Action" means the exercise of any Write-down and Conversion Powers.

"Bail-In Legislation" means:

(a) in relation to an EEA Member Country which has implemented, or which at any time implements, Article 55 BRRD, the relevant implementing law or regulation as described in the EU Bail-In Legislation Schedule from time to time;
(b) in relation to the United Kingdom, the UK Bail-In Legislation; and
(c) in relation to any state other than such an EEA Member Country and the United Kingdom, any analogous law or regulation from time to time which requires contractual recognition of any Write-down and Conversion Powers contained in that law or regulation.

"EEA Member Country" means any member state of the European Union, Iceland, Liechtenstein and Norway.

"EU Bail-In Legislation Schedule" means the document described as such and published by the Loan Market Association (or any successor person) from time to time.

"Resolution Authority" means any body which has authority to exercise any Write-down and Conversion Powers.

"UK Bail-In Legislation" means Part I of the United Kingdom Banking Act 2009 and any other law or regulation applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (otherwise than through liquidation, administration or other insolvency proceedings).

"Write-down and Conversion Powers" means:

(a) in relation to any Bail-In Legislation described in the EU Bail-In Legislation Schedule from time to time, the powers described as such in relation to that Bail-In Legislation in the EU Bail-In Legislation Schedule;
(b) in relation to the UK Bail-In Legislation, any powers under that UK Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or affiliate of a bank, investment

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firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that UK Bail-In Legislation that are related to or ancillary to any of those powers;
and

(c) in relation to any other applicable Bail-In Legislation:
(i) any powers under that Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers; and
(ii) any similar or analogous powers under that Bail-In Legislation.

# 37. COUNTERPARTS

Each Finance Document may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of the Finance Document.

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# **SECTION 11**
**GOVERNING LAW AND ENFORCEMENT**

# **38. GOVERNING LAW**

This Agreement and any non-contractual obligations arising out of or in connection with it are governed by English law.

# **39. ENFORCEMENT**

# **39.1 Jurisdiction**

(a) The courts of England sitting in London have exclusive jurisdiction to decide any dispute arising out of or in connection with this Agreement (including a dispute relating to the existence, validity or termination of this Agreement or any non-contractual obligations arising out of or in connection with this Agreement) (a "**Dispute**").

(b) The Parties agree that the courts of England sitting in London are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary.

(c) This Clause 39 is for the benefit of the Finance Parties only. As a result, no Finance Party shall be prevented from taking proceedings relating to a Dispute ("**Proceedings**") in any other courts with jurisdiction.

(d) If ABB Finance B.V. is represented by an attorney or attorneys in connection with the signing and/or execution and/or delivery of this Agreement or any agreement or document referred to herein or made pursuant hereto and the relevant power or powers of attorney is or are expressed to be governed by the laws of a particular jurisdiction, it is hereby expressly acknowledged and accepted by the other parties hereto that such laws shall govern the existence and extent of such attorney's or attorneys' authority and the effects of the exercise thereof.

(e) ABB and each Borrower incorporated in a jurisdiction other than England and Wales agree that the documents which start any Proceedings in England and any other documents required to be served in relation to those Proceedings may be served on ABB Limited, at Daresbury Park, Daresbury, Warrington WA4 4BT, Cheshire, United Kingdom or, if different, its registered office, with a copy to ABB. If the appointment of the person mentioned in this paragraph (e) ceases to be effective, ABB and each Borrower shall immediately appoint another person in England to accept service of process on its behalf in England. If ABB or any Borrower fails to do so (and such failure continues for a period of not less than fourteen days), the Facility Agent shall be entitled to appoint such a person by notice to ABB or the relevant Borrower (as the case may be). Nothing contained herein shall restrict the right to serve process in any other manner allowed by law.

**THIS AGREEMENT** has been entered into on the date stated at the beginning of this Agreement.

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# SCHEDULE 1

## PART I

### THE ORIGINAL LENDERS

| Name | Commitment ($) |
| --- | --- |
| Citibank, N.A., London Branch | 105,694,444.50 |
| Bank of America Europe Designated Activity Company | 105,694,444.50 |
| Barclays Bank PLC | 105,694,444.50 |
| BNP Paribas (Suisse) SA | 105,694,444.50 |
| CA Indosuez (Switzerland) SA | 105,694,444.50 |
| Credit Suisse (Switzerland) Ltd. | 105,694,444.50 |
| Deutsche Bank Luxembourg S.A. | 105,694,444.50 |
| Goldman Sachs Bank USA | 105,694,444.50 |
| HSBC Bank plc | 105,694,444.50 |
| ING Bank N.V., Amsterdam, Lancy/Geneva Branch | 105,694,444.50 |
| JPMorgan Chase Bank, N.A., London Branch | 105,694,444.50 |
| Nordea Bank Abp, filial i Sverige | 105,694,444.50 |
| Banco Santander, S.A. | 105,694,444.50 |
| Standard Chartered Bank | 105,694,444.50 |
| Skandinaviska Enskilda Banken AB (publ) | 105,694,444.50 |
| Société Générale S.A. Frankfurt Branch | 105,694,444.50 |
| UBS Switzerland AG | 105,694,444.00 |
| UniCredit Bank AG | 105,694,444.00 |
| China Construction Bank Corporation, Beijing, Swiss Branch Zurich | 97,500,000.00 |
| Total | 2,000,000,000 |

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## Exhibit 8.1

Exhibit 8.1

# ABB Ltd, Consolidated subsidiaries (excluding dormant subsidiaries) as per December 31, 2022

| Country | Name | ABB Interest % |
| --- | --- | --- |
| Algeria | ABB Algeria SpA Asea Brown Boveri | 99.94 |
| Algeria | ABB Algerie Produits SpA | 69.46 |
| Angola | Asea Brown Boveri Electrica SGPS (Angola) Limitada | 100.00 |
| Argentina | ABB S.A. | 100.00 |
| Argentina | Lineage Power (Argentina) S.R.L. | 100.00 |
| Australia | ABB Australia Pty Limited | 100.00 |
| Australia | ABB Group Holdings Pty. Ltd. | 100.00 |
| Australia | ABB Group Investment Management Pty. Ltd. | 100.00 |
| Australia | ABB Industrial Solutions (Australia) Pty Ltd | 100.00 |
| Austria | ABB AG | 100.00 |
| Austria | ASKI Industrie Elektronik Ges.m.b.H | 100.00 |
| Austria | B&R Holding GmbH | 100.00 |
| Austria | B&R Industrial Automation GmbH | 100.00 |
| Bahrain | ABB ELECTRICAL & AUTOMATION W.L.L | 49.00 |
| Bangladesh | ABB Limited | 100.00 |
| Belgium | ABB Industrial Solutions (Belgium) BV | 100.00 |
| Belgium | ABB Installation Products European Centre S.A. | 100.00 |
| Belgium | ABB N.V. | 100.00 |
| Belgium | ABB Robotics Solutions NV | 100.00 |
| Belgium | EEVEE BV | 46.70 |
| Belgium | Enervalis NV | 91.56 |
| Botswana | ABB (Pty) Ltd. | 100.00 |
| Brazil | ABB AUTOMACAO LTDA | 100.00 |
| Brazil | ABB ELETRIFICACAO LTDA | 100.00 |
| Brazil | B&R Automação Industrial Ltda. | 100.00 |
| Bulgaria | ABB Bulgaria EOOD | 100.00 |
| Cameroon | Asea Brown Boveri S.A. | 99.99 |
| Canada | ABB Electrification Canada ULC (Alberta) | 100.00 |
| Canada | ABB E-MOBILITY INC. | 91.56 |
| Canada | ABB Inc. | 100.00 |
| Canada | ABB Industrial Solutions (Canada) Inc. | 100.00 |
| Canada | B&R Industrial Automation Inc. | 100.00 |
| Canada | InCharge Energy Canada Inc. (Quebec) | 54.94 |
| Chile | ABB S.A. | 100.00 |
| China | ABB (China) Investment Limited | 100.00 |
| China | ABB (China) Ltd. | 100.00 |
| China | ABB Bailey Beijing Engineering Co. Ltd. | 51.00 |
| China | ABB Beijing Drive Systems Co. Ltd. | 90.00 |
| China | ABB Beijing Switchgear Limited | 60.00 |
| China | ABB Chargedot Shanghai New Energy Technology Co., Ltd | 73.25 |
| China | ABB Electrical Equipment (Xiamen) Co., Ltd. | 100.00 |
| China | ABB Electrical Machines Ltd. | 100.00 |
| China | ABB Electrical Products (Shanghai) Co., Ltd. | 100.00 |
| China | ABB E-mobility Technology Shenzhen Co., Ltd | 91.56 |
| China | ABB Engineering (Shanghai) Ltd. | 100.00 |
| China | ABB Hangzhou Winmation Automation Company Limited | 100.00 |

| Country | Name | ABB Interest % |
| --- | --- | --- |
| China | ABB LV Installation Materials Co. Ltd. Beijing | 85.70 |
| China | ABB Power Electronics (Shanghai) Co., Ltd. | 100.00 |
| China | ABB Robotics (Zhuhai) Ltd | 100.00 |
| China | ABB Shanghai Free Trade Zone Industrial Co., Ltd. | 100.00 |
| China | ABB Shanghai Motors Co. Ltd. | 75.00 |
| China | ABB Tianjin Switchgear Co., Ltd. | 60.00 |
| China | ABB Xiamen Corporation Management Service Co., Ltd. | 100.00 |
| China | ABB Xiamen Low Voltage Equipment Co. Ltd. | 100.00 |
| China | ABB Xiamen Smart Technology Co., Ltd. | 100.00 |
| China | ABB Xiamen Switchgear Co. Ltd. | 66.52 |
| China | ABB Xinhui Low Voltage Switchgear Co. Ltd. | 90.00 |
| China | B&R Industrial Automation (China) Co., Ltd. | 100.00 |
| China | Jinan ABB SRI Rail Transit Equipment Technology Co., Ltd. | 70.00 |
| China | Lineage Power China Co. Ltd. | 100.00 |
| China | Pinghu Zhuangbest Technology Development Co., Ltd. | 73.25 |
| China | Shanghai Zhuangbest Technology Development Co., Ltd. | 73.25 |
| China | Shantou Winride Switchgear Co., Ltd. | 70.00 |
| China | Yangzhou SAC Switchgear Co., Ltd | 55.00 |
| China | Zhejiang Chargedot New Energy Technology Co., Ltd. | 73.25 |
| Colombia | ABB Colombia Ltda | 100.00 |
| Congo, Democratic Republic of the | ABB SARL | 100.00 |
| Cote d'Ivoire | ABB Technology SA | 99.97 |
| Croatia | ABB Ltd. | 100.00 |
| Czech Republic | ABB s.r.o. | 100.00 |
| Czech Republic | B+R automatizace, spol. s.r.o. | 100.00 |
| Denmark | ABB A/S | 100.00 |
| Denmark | B&R Industrial Automation A/S | 100.00 |
| Ecuador | ABB Ecuador S.A. | 96.87 |
| Egypt | ABB Construction (ABACON) S.A.E. | 100.00 |
| Egypt | ABB for Electrical Industries (ABB ARAB) S.A.E. | 100.00 |
| Egypt | ABB For Feeding Industries SAE | 100.00 |
| Egypt | ABB Turbochargers S.A.E. | 100.00 |
| Egypt | Asea Brown Boveri S.A.E. | 100.00 |
| El Salvador | ABB S.A. de CV | 100.00 |
| Estonia | ABB AS | 100.00 |
| Finland | ABB Oy | 100.00 |
| France | ABB E-mobility SAS | 91.56 |
| France | ABB France | 99.84 |
| France | ABB SAS | 100.00 |
| France | B+R Automation Industrielle SARL | 100.00 |
| France | Kaufel S.A. | 100.00 |
| Germany | ABB AG | 100.00 |
| Germany | ABB Ausbildungszentrum Berlin gGmbH | 100.00 |
| Germany | ABB Beteiligungs- und Verwaltungsgesellschaft mbH | 100.00 |
| Germany | ABB eMobility Digital Venture GmbH | 91.56 |
| Germany | ABB E-mobility GmbH | 91.56 |
| Germany | ABB Kaufel GmbH | 100.00 |
| Germany | ABB Logistics Center Europe GmbH | 100.00 |
| Germany | ABB Power Electronics (Germany) GmbH | 100.00 |

| Country | Name | ABB Interest % |
| --- | --- | --- |
| Germany | ABB Stotz-Kontakt GmbH | 100.00 |
| Germany | ABB Striebel & John GmbH | 100.00 |
| Germany | ABB Traction Converter GmbH | 100.00 |
| Germany | ABB Wirtschaftsbetriebe GmbH | 100.00 |
| Germany | Asti Mobile Robotics GmbH | 100.00 |
| Germany | B + R Industrie-Elektronik GmbH | 100.00 |
| Germany | Busch-Jaeger Elektro GmbH | 100.00 |
| Ghana | ABB Power & Automation Limited | 100.00 |
| Greece | Asea Brown Boveri Industrial, Technical & Commercial Company of Imports - Exports S.A. | 100.00 |
| Hong Kong Special Administrative Region of China | ABB (Hong Kong) Ltd. | 100.00 |
| Hungary | ABB Engineering Trading and Service Ltd. | 100.00 |
| Hungary | ABB Installációs Készülékek Kft. | 100.00 |
| India | ABB GLOBAL BUSINESS SERVICES AND CONTRACTING INDIA PRIVATE LIMITED | 100.00 |
| India | ABB Global Industries and Services Private Limited | 100.00 |
| India | ABB India Limited | 75.00 |
| India | B&R Industrial Automation Pvt. Ltd. | 100.00 |
| India | Cherokee India Pvt. Ltd. | 99.95 |
| India | Numocity Technologies Private Limited | 65.92 |
| India | Powertel India Pvt. Ltd. | 99.98 |
| Indonesia | PT ABB Sakti Industri | 60.00 |
| Iran, Islamic Republic of | ABB (P.J.S.C.) | 100.00 |
| Ireland | ABB Limited | 100.00 |
| Ireland | Cylon Controls Limited | 100.00 |
| Israel | ABB Technologies Ltd. | 100.00 |
| Italy | ABB E-mobility S.p.A. | 91.56 |
| Italy | ABB S.p.A. | 100.00 |
| Italy | B & R Automazione Industriale S.r.l. | 100.00 |
| Japan | ABB Bailey Japan Limited | 51.00 |
| Japan | ABB K.K. | 100.00 |
| Japan | B&R K.K. | 100.00 |
| Jordan | ABB Limited/Jordan LLC. | 100.00 |
| Kazakhstan | ABB LLP. | 100.00 |
| Kenya | ABB Limited | 100.00 |
| Korea, Republic of | ABB Ltd. | 100.00 |
| Korea, Republic of | B&R Industrial Automation Co., Ltd. | 100.00 |
| Kuwait | ABB for Electrical Solutions and Technologies K.S.C.C. | 49.00 |
| Latvia | ABB SIA | 100.00 |
| Lithuania | ABB UAB | 100.00 |
| Luxembourg | Lineage Power (Luxembourg) S.A.R.L. | 100.00 |
| Malaysia | ABB Malaysia Sdn Bhd. | 100.00 |
| Mauritius | Asea Brown Boveri Ltd. | 100.00 |
| Mexico | ABB Electrical Control Systems S. de R.L. de C.V. | 100.00 |
| Mexico | ABB Installation Products Monterrey, S. de R.L. de C.V. | 100.00 |
| Mexico | ABB Lineage Power Mexico, S. de R.L. de C.V. | 100.00 |
| Mexico | ABB Mexico S.A. de C.V. | 100.00 |
| Mexico | ABB NEMA Motors S.A. de C.V. | 100.00 |

| Country | Name | ABB Interest % |
| --- | --- | --- |
| Mexico | Asea Brown Boveri S.A. de C.V. | 100.00 |
| Mexico | Lineage Power Matamoros, S.A. de C.V. | 100.00 |
| Morocco | ABB S.A. | 99.99 |
| Mozambique | ABB Limitada | 100.00 |
| Namibia | ABB (Namibia) (Pty) Ltd. | 100.00 |
| Namibia | ABB LAFRENZE PROPERTY (PROPERTY) LIMITED | 100.00 |
| Netherlands | ABB B.V. | 100.00 |
| Netherlands | ABB Capital B.V. | 100.00 |
| Netherlands | ABB E-mobility B.V. | 91.56 |
| Netherlands | ABB Finance B.V. | 100.00 |
| Netherlands | ABB Holdings B.V. | 100.00 |
| Netherlands | B&R Industriële Automatisering B.V. | 100.00 |
| Netherlands | Codian Robotics B.V. | 100.00 |
| New Zealand | ABB Limited | 100.00 |
| Nigeria | ABBNG Limited | 60.00 |
| Norway | ABB AS | 100.00 |
| Norway | ABB Electrification Norway AS | 100.00 |
| Norway | ABB E-mobility AS | 91.56 |
| Norway | ABB Holding AS | 100.00 |
| Oman | ABB LLC, | 65.00 |
| Pakistan | ABB Power & Automation (Private) Limited | 99.99 |
| Panama | ABB Centroamérica y El Caribe, S.A. | 100.00 |
| Panama | ABB Panama Sales, S.A. | 100.00 |
| Peru | ABB S.A. | 100.00 |
| Philippines | ABB, Inc. | 100.00 |
| Poland | ABB Business Services Sp. z o.o. | 99.94 |
| Poland | ABB E-mobility Sp. z o.o. | 91.56 |
| Poland | ABB Industrial Solutions (Klodzko) Sp. z o.o. | 99.94 |
| Poland | ABB INDUSTRIAL SOLUTIONS (LODZ) S.A. W LIKWIDACJI | 99.94 |
| Poland | ABB Sp. z o.o. | 99.94 |
| Poland | B&R Automatyka Przemysłowa Sp.z.o.o. | 100.00 |
| Portugal | ASEA BROWN BOVERI Portugal, Unipessoal Lda | 100.00 |
| Puerto Rico | ABB Installation Products Caribe LLC | 100.00 |
| Puerto Rico | Industrial C&S of P.R. LLC | 100.00 |
| Qatar | ABB E-mobility QFZ LLC | 91.56 |
| Qatar | ABB LLC | 49.00 |
| Qatar | ABB Oryx Motors and Generators Service LLC | 49.00 |
| Romania | ABB Asea Brown Boveri SRL | 100.00 |
| Russian Federation | ABB Electrical Equipment Ltd. | 100.00 |
| Russian Federation | ABB Ltd. | 100.00 |
| Russian Federation | ABB Operations Center Ltd. | 100.00 |
| Russian Federation | B+R Industrial Automation, OOO | 100.00 |
| Saudi Arabia | ABB Electrical Industries Co. Ltd. | 65.00 |
| Saudi Arabia | Thomas & Betts Saudi Arabia Limited Liability Co. | 100.00 |
| Senegal | ABB Technologies S.A. | 99.99 |
| Serbia | ABB d.o.o. | 100.00 |
| Singapore | ABB E-MOBILITY PTE. LTD. | 91.56 |
| Singapore | ABB Power Electronics (Singapore) Pte. Ltd. | 100.00 |
| Singapore | ABB Pte. Ltd. | 100.00 |
| Singapore | B&R Industrial Automation Pte. Ltd. | 100.00 |

| Country | Name | ABB Interest % |
| --- | --- | --- |
| Slovakia | ABB, s.r.o. | 100.00 |
| Slovenia | ABB Inzeniring d.o.o. | 100.00 |
| South Africa | ABB Holdings (Pty) Ltd. | 100.00 |
| South Africa | ABB Investments (Pty) Ltd | 51.00 |
| South Africa | ABB South Africa (Pty) Ltd. | 74.91 |
| South Africa | Industrial Connections of SA Pty. Ltd. | 74.91 |
| Spain | ABB E-mobility SL | 91.56 |
| Spain | Asea Brown Boveri S.A. | 100.00 |
| Spain | B&R Industrial Automation Iberica S.L.U. | 100.00 |
| Sweden | ABB AB | 100.00 |
| Sweden | ABB Electrification Sweden AB | 100.00 |
| Sweden | ABB E-mobility AB | 91.56 |
| Sweden | ABB Norden Holding AB | 100.00 |
| Sweden | B&R Industrial Automation AB | 100.00 |
| Sweden | SynerLeap powered by ABB AB | 100.00 |
| Switzerland | ABB Asea Brown Boveri Ltd | 100.00 |
| Switzerland | ABB Canada EL Holding GmbH | 100.00 |
| Switzerland | ABB Capital AG | 100.00 |
| Switzerland | ABB E-mobility AG | 91.56 |
| Switzerland | ABB E-mobility Holding Ltd | 91.56 |
| Switzerland | ABB Equity Limited | 100.00 |
| Switzerland | ABB Information Systems Ltd. | 100.00 |
| Switzerland | ABB Management Services Ltd. | 100.00 |
| Switzerland | ABB Reinsurance AG | 100.00 |
| Switzerland | ABB Schweiz AG | 100.00 |
| Switzerland | ABB Verwaltungs AG | 100.00 |
| Switzerland | B&R Industrie-Automation AG | 100.00 |
| Taiwan (Chinese Taipei) | ABB Ltd. | 100.00 |
| Tanzania, United Republic of | ABB Limited | 100.00 |
| Thailand | ABB Automation (Thailand) Co., Ltd. | 100.00 |
| Thailand | ABB AUTOMATION HOLDINGS (THAILAND) CO., LTD. | 100.00 |
| Thailand | ABB Electrification (Thailand) Co., Ltd. | 100.00 |
| Thailand | ABB ELECTRIFICATION HOLDINGS (THAILAND) CO., LTD. | 100.00 |
| Thailand | RMI Automation Co., Ltd. | 100.00 |
| Thailand | Smart Power Technology Co., Ltd. | 100.00 |
| Tunisia | ABB Maghreb Services S.A. | 99.93 |
| Turkiye | ABB Elektrik Sanayi A.S. | 99.99 |
| Turkiye | BR Endüstriyel Otomasyon Sanayi ve Ticaret Limited Sirketi | 100.00 |
| Uganda | ABB Ltd. | 100.00 |
| Ukraine | ABB Ltd. | 100.00 |
| United Arab Emirates | ABB FZ-LLC | 100.00 |
| United Arab Emirates | ABB Global Marketing FZ LLC | 100.00 |
| United Arab Emirates | ABB Industries (L.L.C.) | 49.00 |
| United Arab Emirates | ABB Industries FZ | 100.00 |
| United Arab Emirates | ABB Transmission & Distribution Limited LLC | 49.00 |
| United Kingdom | ABB Cable Management Products Ltd | 100.00 |
| United Kingdom | ABB E-mobility UK Limited | 91.56 |
| United Kingdom | ABB Holdings Limited | 100.00 |
| United Kingdom | ABB Installation Products Limited | 100.00 |
| United Kingdom | ABB Limited | 100.00 |

| Country | Name | ABB Interest % |
| --- | --- | --- |
| United Kingdom | B & R Industrial Automation Ltd. | 100.00 |
| United Kingdom | EUSERV CO. LIMITED | 100.00 |
| United Kingdom | IMV Invertomatic Victron UK Limited | 100.00 |
| United Kingdom | W.J. Furse & Co. Ltd. | 100.00 |
| United States | ABB E-mobility Inc. (Delaware) | 91.56 |
| United States | ABB Finance (USA) Inc. (Delaware) | 100.00 |
| United States | ABB Holdings Inc. (Delaware) | 100.00 |
| United States | ABB Inc. (Delaware) | 100.00 |
| United States | ABB Installation Products Inc. (Tennessee) | 100.00 |
| United States | ABB Installation Products International LLC. (Delaware) | 100.00 |
| United States | ABB Motors and Mechanical Inc. (Missouri) | 100.00 |
| United States | ABB Power Electronics Inc. (Nevada) | 100.00 |
| United States | ABB Treasury Center (USA), Inc. (Delaware) | 100.00 |
| United States | B&R Industrial Automation Corp. (Georgia) | 100.00 |
| United States | Codian Robotics of the Americas (Michigan) | 100.00 |
| United States | Combustion Engineering Inc. (Delaware) | 100.00 |
| United States | Cylon Energy Inc. (New Hampshire) | 100.00 |
| United States | Edison Holding Corporation (Delaware) | 100.00 |
| United States | Great Pond Village, LLC (Connecticut) | 55.00 |
| United States | InCharge Energy, Inc. (Delaware) | 54.94 |
| United States | Industrial Connections & Solutions LLC (Delaware) | 100.00 |
| United States | Jordan Acquisition Group (Pennsylvania) | 100.00 |
| United States | Lineage Overseas LLC (Delaware) | 100.00 |
| United States | Lineage Power Holdings, Inc. (Delaware) | 100.00 |
| United States | Verdi Holding Corporation (Delaware) | 100.00 |
| United States | Winfield Business Park, LLC (Connecticut) | 50.00 |
| Viet Nam | ABB AUTOMATION AND ELECTRIFICATION (VIETNAM) COMPANY LIMITED | 100.00 |
| Zambia | ABB Ltd. | 100.00 |
| Zimbabwe | ABB (Private) Ltd. | 100.00 |

## Exhibit 12.1

#### Exhibit 12.1

#### CERTIFICATION
I, Björn Rosengren, certify that:

1. I have reviewed this Annual Report on Form 20-F of ABB Ltd;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit

to state a material fact necessary to make the statements made, in light of the circumstances under

which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this

report, fairly present in all material respects the financial condition, results of operations and cash

flows of the Company as of, and for, the periods presented in this report;

4. The Company's other certifying officer and I are responsible for establishing and maintaining

disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and

internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))

for the Company and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and

procedures to be designed under our supervision, to ensure that material information relating

to the Company, including its consolidated subsidiaries, is made known to us by others within

those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over

financial reporting to be designed under our supervision, to provide reasonable assurance

regarding the reliability of financial reporting and the preparation of financial statements for

external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the Company's disclosure controls and procedures and

presented in this report our conclusions about the effectiveness of the disclosure controls

and procedures, as of the end of the period covered by this report based on such evaluation;

and

d. Disclosed in this report any change in the Company's internal control over financial reporting

that occurred during the period covered by the annual report that has materially affected, or

is reasonably likely to materially affect, the Company's internal control over financial

reporting; and

5. The Company's other certifying officer and I have disclosed, based on our most recent evaluation of

internal control over financial reporting, to the Company's auditors and the audit committee of the

Company's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal

control over financial reporting which are reasonably likely to adversely affect the Company's

ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have

a significant role in the Company's internal control over financial reporting.

Dated: February 23, 2023

By:

/s/ B

JÖRN

R

OSENGREN

Björn Rosengren

*Chief Executive Officer* 

*(principal executive officer)*

## Exhibit 12.2

#### Exhibit 12.2

#### CERTIFICATION
I, Timo Ihamuotila, certify that:

1. I have reviewed this Annual Report on Form 20-F of ABB Ltd;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit

to state a material fact necessary to make the statements made, in light of the circumstances under

which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this

report, fairly present in all material respects the financial condition, results of operations and cash

flows of the Company as of, and for, the periods presented in this report;

4. The Company's other certifying officer and I are responsible for establishing and maintaining

disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and

internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))

for the Company and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and

procedures to be designed under our supervision, to ensure that material information relating

to the Company, including its consolidated subsidiaries, is made known to us by others within

those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over

financial reporting to be designed under our supervision, to provide reasonable assurance

regarding the reliability of financial reporting and the preparation of financial statements for

external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the Company's disclosure controls and procedures and

presented in this report our conclusions about the effectiveness of the disclosure controls

and procedures, as of the end of the period covered by this report based on such evaluation;

and

d. Disclosed in this report any change in the Company's internal control over financial reporting

that occurred during the period covered by the annual report that has materially affected, or

is reasonably likely to materially affect, the Company's internal control over financial

reporting; and

5. The Company's other certifying officer and I have disclosed, based on our most recent evaluation of

internal control over financial reporting, to the Company's auditors and the audit committee of the

Company's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal

control over financial reporting which are reasonably likely to adversely affect the Company's

ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have

a significant role in the Company's internal control over financial reporting.

Dated: February 23, 2023

By:

/s/ T

IMO

I

HAMUOTILA

Timo Ihamuotila

*Chief Financial Officer* 

*(principal financial officer)*

## Exhibit 13.1

#### Exhibit 13.1

#### CERTIFICATION OF CHIEF EXECUTIVE OFFICER OF ABB LTD, PURSUANT TO

#### 18 U.S.C. SECTION 1350,

#### AS ADOPTED PURSUANT TO

#### SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 20-F for the fiscal year ended December 31, 2022 of

ABB Ltd (the "Company") as filed with the U.S. Securities and Exchange Commission (the "Commission") on

the date hereof (the "Report") and pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the

Sarbanes-Oxley Act of 2002, I, Björn Rosengren, Chief Executive Officer of the Company, certify, that, to my

knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the

Securities Exchange Act of 1934, as amended; and

(2) the information contained in the Report fairly presents, in all material respects, the

financial condition and results of operations of the Company.

Dated: February 23, 2023

By:

/s/ B

JÖRN

R

OSENGREN

Björn Rosengren

*Chief Executive Officer* 

*(principal executive officer)*

## Exhibit 13.2

#### Exhibit 13.2

#### CERTIFICATION OF CHIEF FINANCIAL OFFICER OF ABB LTD, PURSUANT TO

#### 18 U.S.C. SECTION 1350,

#### AS ADOPTED PURSUANT TO

#### SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 20-F for the fiscal year ended December 31, 2022 of

ABB Ltd (the "Company") as filed with the U.S. Securities and Exchange Commission (the "Commission") on

the date hereof (the "Report") and pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the

Sarbanes-Oxley Act of 2002, I, Timo Ihamuotila, Chief Financial Officer of the Company, certify, that, to my

knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the

Securities Exchange Act of 1934, as amended; and

(2) the information contained in the Report fairly presents, in all material respects, the

financial condition and results of operations of the Company.

Dated: February 23, 2023

By:

/s/ T

IMO

I

HAMUOTILA

Timo Ihamuotila

*Chief Financial Officer* 

*(principal financial officer)*

## Exhibit 15.1

#### Exhibit 15.1

#### Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the registration statements (Nos. 333-237353, 333-

190180, 333-181583, 333-179472, 333-171971, 333-129271) on Form S-8 of ABB Ltd and registration

statements (Nos. 333-223907-01 and 333-223907) on Form F-3 of ABB Ltd and ABB Finance (USA) Inc. of

our reports dated February 23, 2023, with respect to the consolidated financial statements of ABB Ltd and the

effectiveness of internal control over financial reporting.

/s/ KPMG AG

Zurich, Switzerland

February 23, 2023

## Exhibit 17.1

#### Exhibit 17.1

#### List of Subsidiary Issuers and Guarantors of U.S Registered Securities

#### Security

#### Company Name

#### Issuer

#### Guarantor
3.8% USD Notes, due 2028:

ABB Finance (USA) Inc.

X

ABB Ltd

X

4.375% USD Notes, due 2042:

ABB Finance (USA) Inc.

X

ABB Ltd

X