20-F

As filed with the Securities and Exchange Commission on April 19, 2006

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 20-F

o	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
	OR
x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2005 OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	OR
o	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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)

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

Title of each class	Name of each exchange on which registered
American Depositary Shares, each representing one Registered Share	New York Stock Exchange
Registered Shares, par value CHF 2.50	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:  2,076,941,497 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 x       No o

If this 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 o       No x

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 x       No o

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.

Large accelerated filer x             Accelerated filer o             Non-accelerated filer o

Indicate by check mark which financial statement item the registrant has elected to follow.  tem 17 o       tem 18 x

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 o        No x

*Listed on the New York Stock Exchange not 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. Officer Statistics and Expected Timetable		4
Item 3. Key Information		4
Item 4. Information on the Company		18
Item 5. Operating and Financial Review and Prospects		39
Item 6. Directors, Senior Management and Employees		100
Item 7. Major Shareholders and Related Party Transactions		112
Item 8. Financial Information		116
Item 9. The Offer and Listing		119
Item 10. Additional Information		124
Item 11. Quantitative and Qualitative Disclosures About Market Risk		139
Item 12. Description of Securities Other than Equity Securities		141
PART II		142
Item 13. Defaults, Dividend Arrearages and Delinquencies		142
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds		142
Item 15. Controls and Procedures		142
Item 16A. Audit Committee Financial Expert		144
Item 16B. Code of Ethics		144
Item 16C. Principal Accountant Fees and Services		144
Item 16D. Exemptions from the Listing Standards for Audit Committees.		145
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers.		145
PART III		146
Item 17. Financial Statements		146
Item 18. Financial Statements		146
Item 19. Exhibits		147

i

INTRODUCTION

ABB Ltd is a corporation organized under the laws of Switzerland. In this report, “the ABB Group,” “ABB,” “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 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.

FINANCIAL AND OTHER INFORMATION

ABB Ltd has prepared its statutory unconsolidated financial statements in accordance with the Swiss Federal Code of Obligations. The consolidated financial statements of ABB Ltd, including the notes thereto, as of December 31, 2005, 2004 and 2003 and for the years then ended (our “Consolidated Financial Statements”) have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”).

In this report:  (i) “$,” “U.S. dollars” and “USD” refer to the lawful currency of the United States of America; (ii) “CHF” and “Swiss francs” refer to the lawful currency of Switzerland; (iii) “€” and “euro” refer to the lawful currency of the participating member states of the European Union (the “EU”); (iv) “SEK” and “Swedish krona” refer to the lawful currency of Sweden; (v) “£,” “sterling,” “pounds sterling” and “GBP” refer to the lawful currency of the United Kingdom; (vi) “Norwegian krone” refers to the lawful currency of Norway; (vii) “Chinese renminbi” refers to the lawful currency of the People’s Republic of China; and (ix) “Brazilian Real” or “R$” refers to the lawful currency of the Federative Republic of Brazil.

Except as otherwise stated, all monetary amounts in this 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. These translations have been made using the noon buying rate in the City of New York for cable transfers as certified for customs purposes by the Federal Reserve Bank of New York as of December 30, 2005, unless otherwise indicated. The noon buying rate for Swiss francs on December 30, 2005 was $1.00 = CHF 1.3148. The noon buying rate for Swiss francs on April 18, 2006 was $1.00 = CHF 1.2759.

FORWARD-LOOKING STATEMENTS

This report includes forward-looking statements. 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 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 industry in which we operate.

These forward-looking statements include, but are not limited to the following:

·statements in “Item 3. Key Information—Dividends and Dividend Policy” regarding our policy on future dividend payments;

1

·statements in “Item 5. Operating and Financial Review and Prospects” and “Item 8. Financial Information—Legal Proceedings” regarding the expected outcome of our proposed pre-packaged plan of reorganization under Chapter 11 of the U.S. Bankruptcy Code for our Lummus subsidiary and the outcome of certain compliance matters under investigation;

·statements in “Item 3. Key Information—Risk Factors,” “Item 4. Information on the Company” and “Item 5. Operating and Financial Review and Prospects” regarding our management objectives and the timing of intended disposals and capital expenditures; and

·statements in “Item 5. Operating and Financial Review and Prospects” regarding our management objectives, including our mid term outlook, as well as trends in results, prices, volumes, operations, margins and overall market trends.

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 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 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 report and include, without limitation, the following:

·We are subject to ongoing litigation and potentially substantial liabilities arising out of asbestos claims.

·If we are not able to comply with the covenants contained in our $2 billion credit facility, our financial position may be adversely affected.

·Our ability to bid for large contracts depends on our ability to obtain performance guarantees from financial institutions.

·We have retained performance guarantees related to our divested power generation business.

·Undertaking long-term fixed price projects exposes our businesses to risk of loss should our actual costs exceed our estimated or budgeted costs.

·Our international operations expose us to the risk of fluctuations in currency exchange rates.

·Our hedging activities may not protect us against the consequences of significant fluctuations in exchange rates on our earnings and cash flows.

·We operate in very competitive 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.

·Our business is affected by the global economic and political climate.

·We have retained liability for environmental remediation costs relating to businesses that we sold in 2000, and we could be required to make payments in respect of these retained liabilities in excess of established reserves.

2

·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 may be the subject of product liability claims.

·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.

·Our reputation and our ability to do business may be impaired by corrupt behavior by any of our employees or agents or those of our subsidiaries.

·Increases in the costs of our raw materials may adversely affect our financial performance.

·If we are unable to successfully address the significant deficiencies in our internal control over financial reporting, our ability to report our financial results on a timely and accurate basis may be adversely affected. As a result, investors could lose confidence in our financial reporting, which may harm our business and the trading price of our stock.

We urge you to read the sections of this 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 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 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 report.

3

PART I

Item 1.Identity of Directors, Senior Management and Advisers

Not applicable

Item 2.Officer Statistics and Expected Timetable

Not applicable

Item 3.Key Information

SELECTED FINANCIAL DATA

The following table presents our selected financial and operating information at the dates and for each of the periods indicated. You should read the following information together with the information contained in “Item 5. Operating and Financial Review and Prospects,” as well as our Consolidated Financial Statements and the notes thereto, included elsewhere in this report.

Our selected financial data are presented in the following tables in accordance with U.S. GAAP and have been derived from our published consolidated financial statements. Our consolidated financial statements as of and for each of the years ended December 31, 2005, 2004, 2003, 2002 and 2001 were audited by Ernst & Young AG, except for the 2001 consolidated financial statements of ABB Holdings Inc., a wholly owned subsidiary, the 2004, 2003, 2002 and 2001 financial statements of Jorf Lasfar Energy Company, a corporation in which we have a 50 percent interest, the 2002 and 2001 consolidated financial statements of Swedish Export Credit Corporation, in which we had a 35 percent interest at December 31, 2002, and the 2001 financial statements of Scandinavian Reinsurance Company Limited, a then wholly owned subsidiary, which were audited by other independent auditors.

The Consolidated Financial Statements at December 31, 2003, 2002 and 2001 and for each of the years ended December 31, 2002 and 2001, have not been audited after the reclassifications of certain businesses between continuing operations and discontinued operations.

4

INCOME STATEMENT DATA:

	Year ended December 31,
	2005			2004			2003			2002			2001
	(in millions, except per share data)
Revenues	$	22,442		$	20,610		$	20,332		$	19,402		$	19,902
Cost of sales	(16,830		)	(15,681		)	(15,856		)	(15,053		)	(15,111		)
Gross profit	5,612			4,929			4,476			4,349			4,791
Selling, general and administrative expenses(1)	(3,922		)	(3,822		)	(3,950		)	(4,118		)	(4,270		)
Other income (expense), net(2)	52			(61		)	(239		)	(80		)	(158		)
Earnings before interest and taxes	1,742			1,046			287			151			363
Interest and dividend income	157			151			142			184			351
Interest and other finance expense	(403		)	(360		)	(544		)	(289		)	(526		)
Income (loss) from continuing operations before taxes, minority interest and cumulative effect of accounting changes	1,496			837			(115		)	46			188
Provision for taxes	(482		)	(331		)	(233		)	(79		)	(76		)
Minority interest	(131		)	(102		)	(67		)	(111		)	(68		)
Income (loss) from continuing operations before cumulative effect of accounting changes	883			404			(415		)	(144		)	44
Loss from discontinued operations, net of tax(3)	(143		)	(439		)	(364		)	(675		)	(724		)
Income (loss) before cumulative effect of accounting changes	740			(35		)	(779		)	(819		)	(680		)
Cumulative effect of accounting changes, net of tax(4)	(5		)	—			—			—			(63		)
Net income (loss)	$	735		$	(35	)	$	(779	)	$	(819	)	$	(743	)
Basic earnings (loss) per share from continuing operations before cumulative effect of accounting changes(5)	$	0.44		$	0.20		$	(0.34	)	$	(0.13	)	$	0.04
Loss from discontinued operations, net	(0.08		)	(0.22		)	(0.30		)	(0.61		)	(0.64		)
Cumulative effect of accounting changes	—			—			—			—			(0.06		)
Basic earnings (loss) per share	$	0.36		$	(0.02	)	$	(0.64	)	$	(0.74	)	$	(0.66	)
Diluted earnings (loss) per share from continuing operations before cumulative effect of accounting changes(5)	$	0.43		$	0.20		$	(0.34	)	$	(0.28	)	$	0.04
Loss from discontinued operations, net	(0.07		)	(0.22		)	(0.30		)	(0.58		)	(0.64		)
Cumulative effect of accounting changes	—			—			—			—			(0.06		)
Diluted earnings (loss) per share	$	0.36		$	(0.02	)	$	(0.64	)	$	(0.86	))	$	(0.66	)
Weighted average number of shares outstanding:
Basic	2,029			2,028			1,220			1,113			1,132
Diluted	2,138			2,029			1,220			1,166			1,132

5

BALANCE SHEET DATA:

	At December 31,
	2005		2004		2003		2002		2001
	(U.S. dollars in millions)
Cash and equivalents	$	3,226	$	3,676	$	4,783	$	2,532	$	2,469
Marketable securities and short-term investments	368		524		473		589		1,236
Total assets	22,276		24,677		30,401		29,522		32,313
Long-term debt	3,933		4,717		6,064		5,153		4,899
Total debt(6)	4,102		5,343		7,700		7,728		9,619
Capital stock and additional paid-in capital	3,121		3,083		3,067		2,027		2,028
Total stockholders’ equity	$	3,483	$	2,824	$	2,917	$	931	$	1,938

CASH FLOW DATA:

	Year ended December 31,
	2005			2004			2003			2002			2001
	(U.S dollars in millions)
Net cash provided by (used in) operating activities	$	1,012		$	902		$	(152	)	$	—		$	1,983
Net cash provided by (used in) investing activities	(316		)	354			754			2,651			(1,218		)
Net cash provided by (used in) financing activities	$	(896	)	$	(2,745	)	$	1,582		$	(2,793	)	$	677

OTHER FINANCIAL AND OPERATING DATA:

	Year ended December 31,
	2005		2004		2003		2002		2001
	(U.S dollars in millions)
Purchases of property, plant and equipment	$	456	$	543	$	547	$	598	$	761
Depreciation and amortization(1)	597		633		585		610		786
Research and development	679		690		635		572		602
Order-related development(7)	$	735	$	727	$	886	$	719	$	824

(1)Includes goodwill amortization of $161 million in 2001. In accordance with the adoption of Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, after January 1, 2002, goodwill is no longer amortized but is charged to operations when specified tests indicate that the goodwill is impaired.

(2)During 2005, 2004, 2003, 2002, and 2001, we incurred restructuring charges and related asset write-downs of $53 million, $165 million, $341 million, $255 million, and $226 million, respectively, relating to a number of restructuring initiatives throughout the world. The restructuring costs incurred in 2002 and 2001 were accrued in the respective periods pursuant to the requirements of EITF 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). The restructuring costs incurred in 2005, 2004 and 2003 were accrued pursuant to the requirements of Statement of Financial Accounting Standards No. 146, Accounting for Costs Associated with Exit or Disposal Activities.

(3)Loss from discontinued operations, net of tax includes costs related to the Company’s potential asbestos obligation of the Company’s U.S. subsidiary Combustion Engineering Inc., of approximately $133 million, $262 million, and $142 million in 2005, 2004 and respectively. In 2004 and 2003, we recorded net losses of $70 million and $44 million, respectively, and in 2002 we recorded net income of $14 million relating to the upstream part of our Oil, Gas and Petrochemicals businesses. The sale of this business was completed in July 2004. For additional information, see “Item 5. Operating and Financial Review and Prospects” and Note 17 to the Consolidated Financial Statements.
Prior to 2001, we estimated certain reserves for unpaid claims and expenses in our Reinsurance business, which we sold in April 2004, by calculating the present value of funds required to pay losses at future dates. As of 2001, the timing and amount of future claims payments had become more uncertain. Therefore, the discounted value could no longer be reliably estimated.

6

Consequently, we showed the expected future claims at full face value, resulting in a net charge of $295 million in income (loss) from discontinued operations, net of tax in the 2001 Consolidated Income Statement.

(4)We accounted for the adoption of Interpretation 47 of Financial Accounting Standards No. 143, Accounting for Asset Retirement Obligations (FIN 47) as a change in accounting principle in 2005. Based on our outstanding obligations we recognized the cumulative effect of the accounting change in 2005 in the Consolidated Income Statement.We accounted for the adoption of Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS 133), as a change in accounting principle. Based on our outstanding derivatives at January 1, 2001, we recognized the cumulative effect of the accounting change as a loss in the Consolidated Income Statement.

(5)The number of shares and earnings per share data in the Consolidated Financial Statements have been presented as if ABB Ltd shares had been issued for all periods presented and as if the four-for-one split of ABB Ltd shares in May 2001 had occurred as of the earliest period presented. Basic earnings (loss) per share is calculated by dividing income (loss) by the weighted-average number of shares outstanding during the year. Diluted earnings (loss) per share is calculated by dividing income (loss) 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, if dilutive; the securities issued under the Company’s employee incentive plans, if dilutive; and shares issuable in relation to outstanding convertible bonds, if dilutive; and outstanding written put options, for which net share settlement at average market price of our stock was assumed, if dilutive (see Notes 2, 14, 21 and 23 to the Consolidated Financial Statements).

(6)Total debt, also referred to as total borrowings, is equal to the sum of short-term borrowings and long-term borrowings.

(7)Order-related development activities 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. Order-related development amounts are initially recorded in inventories as part of the work in progress of a contract and then are reflected in cost of sales at the time revenue is recognized in accordance with our accounting policies.

7

DIVIDENDS AND DIVIDEND POLICY

Payment of dividends is subject to general business conditions, the ABB Group’s current and expected financial condition and performance and other relevant factors including growth opportunities.

Dividends may be paid only if ABB Ltd has sufficient distributable profits from previous fiscal years or sufficient free reserves to allow the distribution of a dividend. In addition, at least 5 percent of ABB Ltd’s annual net profits must be retained and booked as legal reserves, unless these reserves already amount to 20 percent of ABB Ltd’s share capital. As a holding company, ABB Ltd’s main sources of income are dividend, interest and debt payments from its subsidiaries. At December 31, 2005, of the CHF 9,017 million of stockholders’ equity recorded in the unconsolidated statutory financial statements of ABB Ltd prepared in accordance with Swiss law, CHF 5,192 million was attributable to the share capital, CHF 1,808 million was attributable to legal reserves, CHF 410 million was attributable to reserves for treasury, CHF 1,535 million was attributable to other reserves and CHF 72 million was available for distribution.

ABB Ltd may only pay out a dividend if it has been proposed by a shareholder or the board of directors of ABB Ltd and approved at a general meeting of shareholders, and the statutory auditors confirm that the dividend conforms to statutory law and the articles of incorporation of ABB Ltd. In practice, the shareholders’ meeting usually approves dividends as proposed by the board of directors, if the board of directors’ proposal is confirmed by the statutory auditors.

Dividends are usually due and payable no earlier than three trading days after the shareholders’ resolution. Dividends not collected within five years after the due date accrue to ABB Ltd and are allocated to its other reserves. For information about the deduction of withholding taxes from dividend payments, see “Item 10. Additional Information—Taxation.”

We have established a dividend access facility for shareholders who are resident in Sweden under which these shareholders may register with VPC AB (Sweden) (“VPC”), as holder of up to 600,004,716 shares, and receive dividends in Swedish kronor equivalent to the dividend paid in Swiss francs without deduction of Swiss withholding tax. For further information, see “Item 10. Additional Information—Taxation.”

Because ABB Ltd pays cash dividends, if any, in Swiss francs (subject to the exception for certain shareholders in Sweden described above), 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 Amended and Restated Deposit Agreement dated May 7, 2001.

ABB Ltd did not pay any dividends with respect to the years ended December 31, 2001 through December 31, 2004. With respect to the year ended December 31, 2005 ABB Ltd’s board of directors has proposed a CHF 0.12 per share dividend which is subject to approval by its shareholders at the May 2006 Annual General Meeting.

8

RISK FACTORS

You should carefully consider all of the information set forth in this report and the following description of risks and uncertainties 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 “Forward-Looking Statements.”

We are subject to ongoing litigation and potentially substantial liabilities arising out of asbestos claims.

Companies in the ABB group are subject to thousands of lawsuits brought by plaintiffs seeking compensation for personal injuries allegedly resulting from exposure to asbestos. In the United States, our Combustion Engineering subsidiary has been a co-defendant in a large number of these lawsuits, and a smaller number of claims have been brought against two other subsidiaries, ABB Lummus Global Inc. (Lummus) (which is part of our Oil, Gas and Petrochemicals business and was formerly a subsidiary of Combustion Engineering) and Basic Incorporated (Basic) (which was a subsidiary of Combustion Engineering and of Asea Brown Boveri Inc. (Asea Brown Boveri) and is now a subsidiary of ABB Holdings Inc. (Holdings) following the merger in December 2004 of Asea Brown Boveri into Holdings).

Since early 2003, we and our subsidiaries have been seeking to resolve our asbestos-related personal injury liabilities principally through a proposed plan of reorganization under Chapter 11 of the U.S. Bankruptcy Code for Combustion Engineering. In March 2005, following a decision by the U.S. Court of Appeals for the Third Circuit that reversed the lower courts’ approval of the original plan, we reached agreement on terms for a modified plan of reorganization for Combustion Engineering (the Modified CE Plan). On December 19, 2005, the U.S. Bankruptcy Court entered an Order confirming the Modified CE Plan, and recommending that the U.S. District Court affirm the U.S. Bankruptcy Court’s Order. The U.S. District Court entered an order affirming the Modified CE Plan on March 1, 2006. As of March 31, 2006, the Modified CE Plan was no longer subject to appeal.

We and various other interested parties are now working to reach agreement on the terms of a separate plan of reorganization under Chapter 11 of the U.S. Bankruptcy Code for Lummus (the Lummus Plan) and the form and substance of the operative documents and related Bankruptcy Court motions and other pleadings. We cannot be certain when those negotiations will be concluded or whether or on what terms the parties will resolve outstanding issues. The Lummus Plan will become effective only if the requisite percentage of each class of creditors vote in favor of the plan. The Lummus Plan will be subject to the approval of the Bankruptcy and District Courts, as well as to further judicial review if appeals are made. We cannot be certain whether the courts will approve the plan, nor can we predict whether the plan will receive the needed creditor votes.

Neither the Modified CE Plan nor the proposed Lummus Plan address Basic, and we expect that Basic’s asbestos-related liabilities will have to be resolved through its own bankruptcy or similar U.S. state court liquidation proceeding, or through the tort system.

We cannot be certain of the duration of the asbestos-related litigation process, its outcome or its eventual cost to us. We do not know whether the Lummus Plan or any other plan of reorganization for Lummus will ultimately be confirmed or whether asbestos-related liabilities of any other ABB group entities would be resolved by any such plan. If for any reason a Chapter 11 plan relating to Lummus is not eventually confirmed, we expect that Lummus’ asbestos-related liabilities will have to be resolved through the tort system.

9

On the effective date of the Modified CE Plan, the Bankruptcy Court will issue an injunction, referred to as a channeling injunction, pursuant to which all asbestos-related personal injury claims against ABB Ltd and certain entities in the ABB group (including Combustion Engineering) arising out of Combustion Engineering’s business operations will be settled or otherwise satisfied from the proceeds of a trust established for such purposes. We expect that a similar trust will be established, and a similar injunction issued, if the Lummus Plan becomes effective. ABB group entities not included in the protection offered by the channeling injunction entered pursuant to the Modified CE Plan or, if it becomes effective, the Lummus Plan could be required to resolve in the tort system, or otherwise, current and future asbestos-related personal injury claims that are asserted against such entities.

All of these factors make the ultimate outcome of our efforts to resolve the asbestos-related personal injury claims against Lummus and our other subsidiaries uncertain, and, moreover, could cause our obligations to make payments in respect of asbestos-related personal injury claims, indemnity payments and related defense costs to significantly exceed our estimates. In addition, developments regarding any plan of reorganization, recent claims experience and other developments may require us to revise our estimates of our future asbestos-related liabilities and costs. Any expenses incurred or increases to our asbestos reserves as a result of a delay or abandonment of any plan of reorganization for Lummus, revised liability estimates, adverse jury verdicts or court decisions or other negative developments involving resolution of our asbestos-related liabilities, whether through the bankruptcy courts, liquidation proceedings or the tort system, may cause the value or trading prices of our securities to decrease significantly. These negative developments could also cause our credit ratings to be downgraded, restrict our access to the capital markets or otherwise have a material adverse effect on our financial condition, results of operations, cash flows and liquidity.

If we are not able to comply with the covenants contained in our new $2 billion credit facility, our financial position may be adversely affected.

We are party to a five-year $2 billion credit facility that became available in July 2005. It contains certain financial covenants in respect of minimum interest coverage and maximum net leverage. Since, in April 2006, our corporate credit rating reached certain defined levels, the minimum interest coverage covenant will no longer be applicable. If we are unable to comply with the covenants in the credit facility, we may be required to renegotiate the facility with our lenders or to replace it in order not to default under it. If this were to occur, we may not be able to renegotiate or replace the facility on terms that are acceptable to us, if at all. See “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Credit Facilities.”

Our ability to bid for large contracts depends on our ability to obtain performance guarantees from financial institutions.

In the normal course of our business and in accordance with industry practice, we provide performance guarantees on large projects, including long-term operation and maintenance contracts, which guarantee our own performance. These guarantees may include guarantees that a project will be completed or that a project or particular equipment will achieve defined performance criteria. If we fail to attain the defined criteria, we must make payments in cash or in kind. Performance guarantees frequently are requested in relation to bids for large projects, both in our core power and automation businesses and in our Oil, Gas and Petrochemicals business.

Some customers require that performance guarantees be issued by a financial institution in the form of a letter of credit, surety bond or other financial guarantee. In considering whether to issue a guarantee on our behalf, financial institutions consider our credit ratings. Our credit rating and financial position have not prevented us from obtaining such guarantees from financial institutions, but they can make and have made the process more difficult and expensive. If, in the future, we cannot obtain such a guarantee from a financial institution on reasonable terms, we could be prevented from bidding on or obtaining some

10

contracts or our costs with respect to such contracts would be higher, which would reduce the profitability of the contracts. If we cannot obtain guarantees on commercially reasonable terms from financial institutions in the future, there could be a material impact on our business, financial condition, results of operations or liquidity.

We have retained performance guarantees related to our divested power generation business.

We have retained performance guarantees related to the power generation business that we contributed to the former ABB ALSTOM POWER joint venture. The guarantees primarily consist of performance guarantees, advance payment guarantees, product warranty guarantees and other miscellaneous guarantees under certain contracts such as indemnification for personal injuries and property damages, taxes and compliance with labor laws, environmental laws and patents. The guarantees are related to projects that are expected to be completed by 2015 but in some cases the guarantees have no definite expiration. ALSTOM and its subsidiaries have primary responsibility for performing the obligations that are the subject of the guarantees. In connection with the sale to ALSTOM of our interest in the joint venture in May 2000, ALSTOM (the parent company) and ALSTOM POWER (the former joint venture entity) have undertaken jointly and severally to fully indemnify us and hold us harmless against any claims arising under these guarantees. Due to the nature of product warranty guarantees and certain other guarantees, we are unable to develop an estimate of the maximum potential amount of future payments for these guarantees. Our best estimate of the total maximum potential exposure under all quantifiable guarantees we issued on behalf of our former power generation business was approximately $756 million as of December 31, 2005. This maximum potential exposure, as required by Financial Accounting Standards Board Interpretation No. 45 (FIN 45), is based on the original guarantee or contract amount and does not reflect our assessment of actual exposure under the guarantees.

As of December 31, 2005, no losses have been recognized in connection with the guarantees relating to the divested power generation business. We have not concluded that a loss is probable under these guarantees and, therefore, we have not recorded a provision as of December 31, 2005. However, if we are required to fund payments under these guarantees following a failure of the divested power generation business to perform its obligations, and if ALSTOM does not to fulfill its undertaking to indemnify us, we could incur material losses. See “Item 5. Operating and Financial Review and Prospects—Off Balance Sheet Arrangements—Guarantees.”

Undertaking long-term fixed price projects exposes our businesses to risk of loss should our actual costs exceed our estimated or budgeted costs.

We derive a portion of our revenues from long-term, fixed price or turnkey projects that are awarded on a competitive basis and can take many months, or even years, to complete. Such contracts involve substantial risks, including the possibility that we may underbid and the fact that we typically assume substantially all of the risks associated with completing the project and the post-completion warranty obligations. We also assume the project’s technical risk, meaning that we must tailor our products and systems to satisfy the technical requirements of a project even though, at the time we are awarded the project, we may not have previously produced such a product or system. The revenue, cost and gross profit realized on such contracts can vary, sometimes substantially, from our original projections because of changes in conditions, including but not limited to:

·unanticipated technical problems with the equipment being supplied or developed by us which may require that incur incremental expenses to remedy the problem;

·changes in the cost of components, materials or labor;

·difficulties in obtaining required governmental permits or approvals;

·project modifications creating unanticipated costs;

11

·delays caused by local weather conditions; and

·suppliers’ or subcontractors’ failure to perform.

These risks are exacerbated if the duration of the project is extended because there is an increased risk that the circumstances upon which we originally bid and developed a price will change in a manner that increases our costs. In addition, we sometimes bear the risk of delays caused by unexpected conditions or events. The contracts for our long-term, fixed-price projects often make us subject to penalties if we cannot complete portions of the project in accordance with agreed-upon time limits.

Historically, we have incurred, in certain cases, significant losses as a result of performing long-term projects on a fixed-price or turnkey basis. For example, in 2003 the operating income of the downstream part of our Oil, Gas and Petrochemicals business was adversely affected by cost overruns amounting to $399 million, primarily relating to four large, long-term, fixed-price projects which had been contracted prior to 2002. In 2004 and 2005, no significant losses were reported from such long-term projects. In view of the potential for losses from such contracts, we have been seeking to reduce our involvement with new long-term, fixed-price contracts and have instead been pursuing contracts with a cost-reimbursement element. However, because we still do enter into new contracts on a fixed price basis and continue to have substantial obligations under long-term, fixed-price contracts, we still face the risk of significant losses on these types of contracts.

In connection with long-term projects, we routinely undertake substantial customer- and project-specific development efforts to develop or adapt equipment and systems to the unique needs of our customers in connection with specific orders or projects. We had expenditures of $735 million, $727 million, and $886 million, or approximately 3.3 percent, 3.5 percent and 4.4 percent of annual consolidated revenues, in 2005, 2004 and 2003, respectively, on such order-related development activities. Order-related development amounts are initially recorded in inventories as part of the work in progress of a contract and then are reflected in cost of sales at the time revenue is recognized in accordance with our accounting policies. If our revenues on these projects are insufficient to cover the related costs, we are required under U.S. GAAP to accelerate the write off of the associated order-related development expenditures. Additionally, to the extent that order-related development expenditures in a specific project exceed expectations, the profit margin on that project will be adversely affected.

We may expend significant resources, both in management time as well as money, on bidding for projects that we are not awarded.

Our international operations expose us to the risk of fluctuations in currency exchange rates.

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. 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, which we call “local currency,” of the country in which the respective company resides. 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 fluctuate substantially, which has 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 costs 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.

12

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 costs are incurred. In this case, if after the parties agree on a price, the value of the currency in which the purchase price is to be paid were to weaken relative to the currency in which we incur manufacturing costs, there would be a negative impact on the profit margin for any such transaction. This transaction risk may exist regardless of whether or not there is also a translation risk as described above.

Currency exchange rate fluctuations in those currencies in which we incur our principal manufacturing expenses 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 competitiveness may be weakened.

Our hedging activities may not protect us against the consequences of significant fluctuations in exchange rates on our earnings and cash flows.

Our policy is to hedge material net currency exposures by entering into offsetting transactions with third party financial institutions. Given our policy, and 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.

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

We operate in very competitive environments in several specific respects, including product performance, developing integrated systems and applications that address the business challenges faced by our customers, pricing, new product introduction time and customer service. The relative importance of these factors differs across the geographic markets and product areas that we serve. The markets for our products and services are characterized by evolving industry standards (particularly for our automation technology products and systems), rapidly changing technology (in both our power and automation businesses) and increased competition as a result of deregulation (particularly for our power technology products and systems). For example, for a number of years power transmission and distribution providers throughout the world have been undergoing substantial deregulation and privatization. This has increased their need for timely product and service innovations that increase efficiency and allow them to compete in a deregulated environment. Additionally, the continual development of advanced technologies for new products and product enhancements is an important way in which we maintain acceptable pricing levels. If we fail to keep pace with technological changes in the industrial sectors that we serve, we may experience price erosion and lower margins.

The principal competitors for our automation technology products and services include Emerson Electric Co., Honeywell International, Inc., Invensys plc, Schneider Electric S.A. and Siemens AG. We primarily compete with Areva S.A., Schneider Electric SA and Siemens AG in sales of our power technology products and systems to our utilities customers. The principal competitors with our Oil, Gas and Petrochemicals business include Bechtel Group, Inc., UOP LLC, Fluor Corporation, Halliburton Company and Technip-Coflexip S.A. All of our 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. 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.

13

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

Competitors of all of our business divisions 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, the automotive, aluminum, steel, pulp and paper, 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 its business. Additionally, as our customers become larger and more concentrated, they could exert pricing pressure on all suppliers, including ABB. For example, in an industry such as power transmission, which historically has consisted of large and concentrated customers such as utilities, price competition can be a factor in determining which products and services will be selected by a customer.

Our business is affected by the global economic and political climate.

Adverse changes in economic conditions or the political climate could have a material adverse effect on our business, financial condition, results of operations and liquidity. The business environment is influenced by numerous political uncertainties, which will continue to affect the global economy and the international capital markets. In periods of slow economic growth or decline, our customers are more likely to decrease expenditures on the types of products and systems we supply and we are more likely to experience decreased revenues as a result. Our Power Technologies division is affected by the level of investments by utilities, and our Automation Technologies division is affected by conditions in a broad range of industries, including the automotive, pharmaceutical, pulp and paper, metals and minerals and manufacturing and consumer industries. Our Oil, Gas and Petrochemicals business is affected by conditions in the oil, gas and petrochemicals industry, including the level of market growth in low hydrocarbon cost regions and high economic growth regions.

In addition, we are subject to the risks that our business operations in or with certain countries, including those identified as state sponsors of terrorism, may be adversely effected by trade or economic sanctions or other restrictions imposed on these countries and that actual or potential investors that object to these business operations may adversely effect the price of our shares by disposing of or deciding not to purchase our shares.

We have retained liability for environmental remediation costs relating to businesses that we sold in 2000, and we could be required to make payments in respect of these retained liabilities in excess of established reserves.

We have retained liability for environmental remediation costs at two sites in the United States that were operated by our nuclear technology business, which we sold in April 2000 to British Nuclear Fuels plc (“BNFL”). We have retained all environmental liabilities associated with our Combustion Engineering subsidiary’s Windsor, Connecticut facility and a portion of the liabilities associated with our ABB C-E Nuclear Power, Inc. subsidiary’s Hematite, Missouri facility. The primary environmental liabilities associated with these sites relate to the costs of remediating radiological and chemical contamination upon decommissioning the facilities. Based on information that BNFL has made publicly available, we believe remediation may take until 2013 at the Hematite site and until 2010 at the Windsor site. At the Windsor site, we believe that a significant portion of such remediation costs will be the responsibility of the U.S. government pursuant to U.S. federal law, although the exact amount of such responsibility cannot reasonably be estimated. In connection with the sale of the nuclear business in April 2000, we established a reserve of $300 million in respect of estimated remediation costs related to these facilities. Expenditures

14

charged to the remediation reserve were $9 million, $10 million and $6 million during 2005, 2004 and 2003, respectively. It is possible that we could be required to make expenditures in excess of the reserve, in a range of amounts that cannot reasonably be estimated. See “Item 5. Operating and Financial Review and Prospects—Environmental Liabilities.”

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, PVC resin to manufacture PVC cable and chloroparafine as a flame retardant. We use inorganic lead as a counterweight in robots that we produce. 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 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 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. If the claimant runs a commercial business, claims are often made also for financial losses arising from interruption of operations consequential to property damage. Based 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 our power technology products and systems are defective, there is a substantial risk of fires, explosions and power surges and significant damage to electricity generating, transmission and distribution facilities.

·If our automation technology products and systems are defective, our customers could suffer significant damage to facilities that rely on these products and systems to properly monitor and control their manufacturing processes.

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

15

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 problem could adversely affect our market reputation which could result in a decline in demand for our products.

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

An increasing amount of our operations are conducted in the emerging markets of Latin America, Asia, the Middle East and Africa. In 2005, approximately 35 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 markets;

·political or social instability, which makes our customers less willing to make investments in such regions and complicates 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 operate, which 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;

·significant fluctuations in interest rates and currency exchange rates;

·the imposition of unexpected taxes or other payments on our revenues in these markets; and

·the introduction of exchange controls and other restrictions by foreign governments.

In addition, the legal and regulatory systems of most emerging market countries are less developed and less well-enforced than in industrialized countries. Therefore, our ability to protect our contractual and other legal rights in these countries could be limited. 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, 2005, employed approximately 103,500 people. As of December 31, 2005, approximately 56 percent of our employees were located in Europe, approximately 18 percent in the Americas, approximately 18 percent in Asia and approximately 8 percent in the Middle East and Africa. In order to manage our day-to-day operations, we must overcome cultural and language barriers and assimilate different business practices. 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 and monitor group-wide standards and directives across our global network. Our failure to successfully manage 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.

16

Our reputation and our ability to do business may be impaired by corrupt behavior by any of our employees or agents or those of our subsidiaries.

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 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions or other applicable anti-corruption laws or regulations. 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 and civil and criminal penalties, including monetary penalties or other sanctions.  It is possible that any governmental investigation or enforcement action arising from these 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 effect on our business and results of operations.  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 and our subsidiaries are committed to conducting business in a legal and ethical manner, our internal control systems have not been, and in the future may not be, completely effective to prevent and detect such improper activities by our employees and agents.

Increases in the costs of our 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 in response to changes in supply and demand and a variety of additional factors beyond our control, such as global political and economic conditions. Historically, prices received 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, which could limit our ability to manufacture products on a timely basis and could harm our profitability. We rely on a single supplier or a small number of suppliers to provide us with some raw materials and components. 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 until were able to establish a new supply arrangement could be adversely affected. We may be unable to find a sufficient alternative supply channel in a reasonable time period or on commercially reasonable terms, if at all. 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 and our sales and profitability could be materially adversely affected.

If we are unable to successfully address the significant deficiencies in our internal control over financial reporting, our ability to report our financial results on a timely and accurate basis may be adversely affected. As a result, investors could lose confidence in our financial reporting, which may harm our business and the trading price of our stock.

We are required to include in this Annual Report on Form 20-F a report by our management regarding the effectiveness of our internal control over financial reporting. The report includes, among other things, an assessment of the effectiveness of our internal control over financial reporting as of the

17

end of our fiscal year. This assessment must include disclosure of any material weaknesses in our internal control over financial reporting identified by management.

As disclosed in our Annual Report on Form 20-F for the financial year ended December 31, 2004, as amended, as of December 31, 2004 our internal control over financial reporting was not effective due to our identification of material weaknesses in our internal control. In response to those material weaknesses, and in preparation for our compliance with Section 404 of the Sarbanes-Oxley Act of 2002 (Section 404), we implemented several corrective actions. As a result, as more fully described in Item 15 of this Annual Report on Form 20-F, we believe our internal control over financial reporting was effective as of December 31, 2005. However, in connection with our continuing implementation of Section 404, we have identified and are in the process of remediating certain significant deficiencies in our internal controls and procedures.

In the event that deficiencies that have been or might be identified are not remediated within the required period, we may again determine that we have a material weakness in internal control over financial reporting and, consequently, that our internal control over financial reporting is not effective to ensure that material information relating to ABB Ltd and its subsidiaries is made known to our management, including our Chief Executive Officer and Chief Financial Officer, particularly during the period when our periodic reports are being prepared or to provide reasonable assurance that our financial statements are fairly presented in conformity with the accounting principles generally accepted in the United States. We are required to comply with the requirements of Section 404 of the Sarbanes-Oxley Act as of December 31, 2006.

If we were unable to conclude that our internal control over financial reporting is effective in any future period (or if our auditors disagree with us or are unable to express an opinion on the effectiveness of our internal controls), we could lose investor confidence in the accuracy and completeness of our financial reports, which may have an adverse effect on our stock price.

Item 4.Information on the Company

INTRODUCTION

We are a global provider of power and automation technologies that enable utility and industry customers to improve performance while lowering environmental impact. We serve electric, gas and water utilities, as well as industrial and commercial customers, with a broad range of products, systems and services for power transmission, distribution and power plant automation. We also deliver automation systems for measurement, control, motion, protection and plant optimization across a full range of industries. We apply our expertise to develop creative ways of integrating our products and systems with our customers’ business processes to enhance their productivity and efficiency.

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 & 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.

18

In January 1988, Asea AB and BBC Brown Boveri AG each contributed almost all of their businesses to 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 publicly traded 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, and are no longer publicly traded. ABB Ltd shares are currently traded on the SWX Swiss Exchange (virt-x), the Stockholm Exchange, and the New York Stock Exchange (in the form of American Depositary Shares).

Organizational Structure

We manage our business based on a divisional structure. As of December 31, 2005, our core businesses comprised two divisions: Power Technologies and Automation Technologies. These, in turn, were subdivided into a total of five business areas, two in our Power Technologies division and three in our Automation Technologies division. In September 2005, we announced that we would change our organizational structure by replacing the two core divisions by their respective business areas, creating a five-division structure with effect from January 1, 2006.

In addition, certain of our operations that are not integral to our focus on power and automation technologies and that we are considering for sale, winding down or otherwise exiting are classified in our Non-core activities division. Our Corporate/Other division comprises headquarters and stewardship, corporate research and development and other activities.

The businesses discussed below and the results of operations for our operating divisions in this report are presented under the organizational structure that existed as of December 31, 2005.

The following table sets forth the amount and percentage of ABB Ltd. revenues derived from each of our business divisions for the fiscal years ended December 31, 2005, 2004 and 2003, based on our then existing organizational structure:

	Revenues Year ended December 31,									Percentage of Revenues Year ended December 31,
	2005			2004			2003			2005		2004		2003
	(U.S dollars in millions)									(%)
Power Technologies	$	9,784		$	8,675		$	7,524			42		41		35
Automation Technologies	12,161			11,000			9,602				52		51		45
Non-Core Activities	1,421			1,691			4,321				6		8		20
Subtotal	23,366			21,366			21,447				100		100		100
Corporate/Other and Eliminations	(924		)	(756		)	(1,115		)
Consolidated Revenues	$	22,442		$	20,610		$	20,332

For a breakdown of our consolidated revenues derived from each geographic region in which we operate, see “Item 5. Operating and Financial Review and Prospects—Analysis of Results of Operations—Revenues.”

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 501 Merritt 7, Norwalk, Connecticut 06851.

19

BUSINESS DIVISIONS

Power Technologies Division

Overview

Our Power Technologies division serves electric, gas and water utilities, as well as industrial and commercial customers, with a broad range of products, systems and services for power generation, transmission and distribution. Key technologies include high- and medium-voltage switchgear, high-voltage power converters, advanced cables for underground and undersea power transmission, electrical transformers, and products and systems to automate and control power plants, electrical and other utility networks. The division had approximately 41,000 employees and 149 manufacturing plants as of December 31, 2005 and generated $9.8 billion of revenues in 2005. Our Power Technologies division is organized in two business areas: Power Technology Products and Power Technology Systems.

Power Industry Background

The portions of an electricity grid that operate at highest voltages are “transmission” systems, while those that operate at lower voltages are “distribution” systems. Transmission systems link power generation sources to distribution systems. Distribution networks then branch out over shorter distances to carry electricity from the transmission system to end users. These electricity networks incorporate sophisticated devices to control and monitor operations and to prevent damage from failures or stresses.

Electricity is transformed at different stages in the delivery process between the source and the ultimate end user. For example, electrical power is often generated in large power plants at 10 to 20 kilovolts. Because this voltage is too low to be transmitted efficiently, transformers are used to increase the voltage of electricity (up to 1,100 kilovolts) for long-distance transmission. This reduces losses and increases the amount of power that can be carried per line.

Transformers are also used to decrease the voltage at the local end for distribution to end users, such as residential, commercial or industrial consumers. An electric utility distribution system comprises distribution substations and networks, both overhead and underground. Some large industrial and commercial facilities receive electricity at higher voltage levels from the transmission or distribution network, while most industrial, commercial and residential users receive electricity from distribution network feeders at lower voltages.

There is a global trend toward deregulation and privatization of the power industry, which is creating a more competitive environment for our customers. This trend is evident in the United States, parts of Latin America and Western Europe, particularly in the United Kingdom and the Nordic countries. It is accelerating elsewhere in Europe and is developing in other regions. The creation of a free market for electricity requires our customers to become more cost- efficient and reliable to compete as a lowest-cost provider among power suppliers. Grid operators must be able to deliver power to customers that are hundreds or thousands of miles away within a few minutes. As more disturbance-sensitive loads (such as computers and telecommunications systems) have been added to networks, demand for reliable, high-quality electricity is increasing. Power suppliers can achieve this efficiency and reliability in a number of ways, including the following:

·Replacing and modernizing assets and investing in information technology-based control and monitoring equipment and communications networks to control and supervise power networks based on instantaneous access to information.

·Upgrading current technologies and introducing new technologies to improve network reliability, increase network power rating and enhance the control of power flow through existing transmission and distribution assets.

20

Business Areas

As of January 1, 2005, the Power Technologies division simplified its structure from five into two business areas, organized around products and systems, in order to further improve efficiency and cost competitiveness. The Power Technology Products business area incorporates ABB’s manufacturing network for power technologies, such as switchgear, breakers, transformers and cables. The Power Technology Systems business area offers systems for power transmission, distribution grids and power plants. The following table sets forth the approximate proportion of the Power Technologies division’s revenue generated in 2005 by each of the business areas in the division:

	Year ended December 31
	2005			2004			2003
Power Technology Products		63	%		62	%		59	%
Power Technology Systems		37	%		38	%		41	%

Power Technology Products

Our Power Technologies Products business area, which includes our medium-voltage products, high-voltage products and transformers businesses, develops, manufactures and sells a wide range of products, such as high- and medium-voltage switchgear, breakers for all current and voltage levels, power and distribution transformers and cables, apparatus and sensors. Our Power Technology Products business area sells primarily to utilities, distributors, wholesalers, installers and original equipment manufacturers in the utilities and power generation industries.

This business area designs and manufactures power transformers (72.5 to 800 kilovolts) for utility, transportation and industrial customers, as well as transformer components such as bushings and tap changers. The business area also produces insulation material. Transformers are typically used for power transmission and distribution systems, such as in large substations. Generator transformers are used in power generation when it is necessary to increase power voltage from a power plant for long-distance transmission. Industrial transformers are mainly delivered to the steel and aluminum industry, which need their own high-voltage transformers and substations on-site to service their heavy electricity requirements. Finally, the business area produces traction transformers used in electric locomotives. Customers in the components business come both from the transformer and electrical motor industry. The business area also provides a wide range of transformer service and retrofit solutions for utilities and industry customers.

The business area also manufactures distribution transformers for use in industrial facilities, commercial buildings and utility distribution networks to step down electrical voltage to the levels needed by end users. The business area manufactures and sells a full range of power distribution transformers (up to 72.5 kilovolts), including oil-type, dry-type and special application distribution transformers. Although oil-type transformers are more commonly used, demand for dry-type transformers is growing because they minimize fire hazards and have applications in high-density office buildings, windmills, offshore drilling platforms, naval vessels and high-volume industrial plants.

This business area develops products and systems that reduce outage times and improve power quality and control, which are key to improving operational efficiency of both utility and industrial customers. It supplies switching equipment both directly to end users and through distributors and original equipment manufacturers (OEMs). Its products provide connections between higher voltage substations and lower voltage uses. It produces a comprehensive line of medium-voltage equipment (1 to 50 kilovolts), including products such as indoor and outdoor switch disconnectors, breakers, reclosers, fuses, contactors, instrument transformers and sensors as well as air- and gas-insulated switchgear, motor control centers, and ring main units for primary and secondary distribution. It also produces indoor and outdoor modular systems, compact substations and power distribution centers. In addition, a significant portion of its products are sold through external channel partners such as OEMs.

21

This business area provides power utilities with electricity transmission equipment that allows them to operate more efficiently and with lower environmental impact, both of which are significant business concerns in the market in which our customers operate. The business area manufactures the principal components of power transmission systems (50 to 800 kilovolts), including air- and gas-insulated switchgear, cables, capacitors, high-voltage circuit breakers, grounding switches and instrument transformers. This business area is also responsible for the entire ABB portfolio of low, medium and high voltage capacitors and surge arresters. Its products and components also include circuit breaker drives and cable accessories. Some of the business area’s products are integrated into the offering of the Power Technology Systems business area or are sold through external channel partners such as engineering, procurement and construction firms.

Power Technology Systems

Our Power Technology Systems business area offers turnkey systems and services for power transmission and distribution grids, and for power plants incorporating both internally manufactured components, as well as those manufactured by third parties. This business area provides power technology systems that are essential to grid reliability, including flexible alternating current transmission systems (FACTS), high-voltage direct current (HVDC) systems and network management systems, and utility communications. In power generation, our Power Technology Systems business area also provides instrumentation, control and the entire electrical balance of power plants which improve performance and energy efficiency. Power Technology Systems’ primary customers include utilities, industries and channel partners.

We are a leader in HVDC technology. HVDC transmission is an advanced technology for transporting electricity over long distances. It reduces power losses, increases system stability and provides a more controllable flow than high-voltage alternating current. An HVDC transmission system typically includes converters, which change alternating current to direct current and then back to alternating current when it reaches the terminal point, and transmission lines, either above or below ground. Advances in converter and cable technology have enabled us to introduce a system called HVDC LightÔ. Converter stations for HVDC LightÔ are approximately one-fifth the size of conventional HVDC technology for the same rated power. HVDC LightÔ extends the range of applications for underground or submarine high-voltage direct current. Typical applications include interconnection of separate networks that operate on different frequencies or provide variational power quality, such as wind parks. The system can also be used as a substitute for local power generation in remote areas, islands or oil platforms.

We also provide FACTS to enhance power grid stability, improve power quality and thus increase transmission capability. FACTS devices include series compensators, static VAR compensators (SVCs) and SVC LightÔ (based on the same unique technology as HVDC LightÔ).

HVDC, HVDC LightÔ, FACTS, and SVC LightÔ systems rely on advanced power semiconductor components. Our in-house power semiconductor unit enables us to develop and manufacture tailor-made components to maximize the performance of these systems. This business area supplies power semiconductor devices to other ABB businesses and to external customers in the power transmission and distribution, drives, and transportation markets.

The Power Technology Systems business area also supplies substations to interconnect electricity grids operating on different voltage levels, to sectionalize portions of the grid and to protect the electrical system against damage from outside sources such as lightning and overload. By sectionalizing the grid, power can be rerouted from portions of the transmission system that are experiencing problems to sections that are functioning properly, thereby enhancing the overall reliability of the power supply. This business area delivers complete air and gas insulated substations for power transmission. Substations are also necessary in a power distribution network to sectionalize and reduce the voltage of the main power lines and cables

22

to the lower voltages required for efficient distribution and consumption. For power distribution, this business area sells traditional custom-engineered substations as well as compact, modular substations, which require less space than a conventional substation and thus are particularly well suited for urban settings. It also offers prefabricated secondary substations that can be installed more quickly than traditional substations, and which transform electricity to consumer-level voltages.

This business area offers services and support for management of existing power transmission and distribution assets, including both ABB products and those manufactured by third parties. In addition, it offers asset management services including technical consulting (system diagnostics, network analysis, planning and optimization), commercial consulting (cost reduction programs, investment strategies, reengineering of business processes) and execution (maintenance strategies, logistics).

In the area of power plant automation, the Power Technology Systems business area offers complete system integration of instrumentation, control and electrical (ICE) equipment for the power generation market. The services offered by the business area include combustion management, plant performance optimization, condition monitoring and asset management.

For water plants, the business area offers system integration for all ICE applications in water systems, including automation services for water treatment plants, distribution systems, waste water collection systems and wastewater treatment. The business area offers turnkey pumping stations and control systems for water leakage management, lift-station monitoring and optimization of plant performance.

The Power Technology Systems business area offers high-end supervisory control and data acquisition (SCADA) systems to power and gas customers. SCADA systems are used to monitor and control energy transmission, distribution and power generation management systems. They are also used to operate market systems for power networks by tracking energy costs, end-user consumption and retail and wholesale prices, among other things. In addition, this business area offers customer care systems and asset management systems for electrical networks, district heating networks and gas networks. These allow utilities to optimize their business by improving the performance of their installed network equipment to meet changing customer requirements and new market conditions.

This business area also provides system integration for substations used in power generation, transmission and distribution. Its offering includes small electrical SCADA systems, wide area protection systems, feeder automation systems and power system monitoring, which provides real-time information that enables utilities to make informed system-related decisions.

The business area provides wireless and fixed communication systems for power, water and gas utilities, including both operational and corporate communication networks. It offers fiber optics, microwave radio and power line applications for data networking and broadband network management, as well as teleprotection and substation communication networks and voice switching management systems.

The Power Technology Systems business area offers a range of services aimed at reducing the in-house operational and maintenance requirements of utility customers. It offers service contracts for spare parts management, support agreements, software and hardware upgrades and retrofits, service consulting, asset management and training. Power Technology Systems also undertakes analyses of the design of new transmission and distribution systems as well as optimization that take into account technical, economic and environmental considerations.

Customers

The Power Technologies division’s principal customers are electric, gas and water utilities, owners and operators of power transmission systems, utilities that own or operate networks and owners and operators of power generating plants. Other customers include gas transmission companies, local distribution companies and multi-utilities, which are involved in the transmission or distribution of more than one

23

commodity. The division also serves industrial and commercial customers, such as operators of large commercial buildings and heavy industrial plants.

Geographic Markets

The following table sets forth the proportion of Power Technologies division’s revenues derived from each geographic region (based on the location of the customer, which may be different from the ultimate destination of the products’ end use) in which the ABB Group operates:

	Year ended December 31,
	2005			2004			2003
Europe		37	%		39	%		39	%
Americas		22	%		22	%		24	%
Asia		28	%		25	%		24	%
Middle East and Africa		13	%		14	%		13	%
Total		100	%		100	%		100	%

Sales and Marketing

The Power Technologies division sells its products individually through its Power Technology Products business area and as parts of larger systems through its Power Technology Systems business areas. Most product sales are made through the division’s own direct sales force, which is enhanced by industrial representatives and agents where appropriate. Direct sales account for a majority of the division’s total product sales, and sales through external channel partners, such as wholesalers, distributors and OEMs, account for the remainder. Sales of systems are handled primarily by the division’s specialized sales engineering teams, although these divisions use system integrators and other third-party sellers from time to time.

Competition

On a global basis, the Power Technologies division’s principal competitors are Siemens and Areva. In the distribution transformers market, the division also competes with companies such as Cooper Cameron and Howard Industries. In the medium voltage market, Schneider is also a principal competitor. In the utility automation area, the division’s principal competitors are Areva, Emerson, GE, Invensys and Siemens.

Research and Development

Research and development expenses that were not order-related for the Power Technologies division amounted to approximately $190 million for 2005. The division’s research and development activities in 2005 primarily related to streamlining product portfolios in all business areas. The aim is to increase product standardization and thus improve the efficiency of our design, supply, manufacturing, sales and distribution functions. Related research has focused on technologies that enable faster production cycles, mainly in the areas of new materials and design. In the Power Technology Systems business area, research continued to focus on the standardization of controls and protection systems, with the goal of reducing costs in the production of substation automation systems, power plant controls and SCADA systems. In addition, order-related research and development expenses for the Power Technologies division amounted to $141 million during 2005 with a 55 percent share in the Power Technology Systems business area.

24

Capital Expenditures

The Power Technologies division’s capital expenditures for property, plant and equipment were $147 million in 2005, compared to $137 million and $120 million in 2004 and 2003, respectively. Principal investments in 2005 included investments to replace existing equipment, particularly in Sweden, China, Germany and the United States, mainly in the Power Technology Products business area. Geographically, in 2005, Europe accounted for 58 percent of our capital expenditures, followed by 23 percent in Asia, 14 percent in the Americas and 5 percent in Middle East and Africa.

Automation Technologies Division

Overview

The Automation Technologies division provides products, systems, software and services for the automation and optimization of industrial and commercial processes. Key technologies include measurement and control, instrumentation, process analysis, drives and motors, power electronics, robots and low- voltage products. This division had approximately 150 manufacturing, software and application centers and 57,000 employees as of December 31, 2005 and generated $12.2 billion of revenues in 2005.

We are a recognized market leader in our core automation products and systems, with particular strength in process automation systems (including supervisory control and data acquisition, or SCADA, systems), quality control systems, advanced robotics, process instrumentation (including analytical measurement devices), electrical machines and alternating current, or AC, drives.

The Automation Technologies division offers its products, both as separately sold devices and as part of a total automation system, through one product-based business area and two primarily system and service-based business areas, as discussed below. Our technologies are marketed both through direct sales personnel and third-party channels as discussed below. The division focuses on developing synergies and efficiencies among its business areas, such as common marketing, software re-use and streamlined geographic sales and service networks.

Automation Industry Background

Our customers use automation technologies primarily to improve product quality, productivity and consistency in industrial and manufacturing applications. The automation market can be divided into three sectors:

·Process automation refers to control systems applied in processes where the main objective is continuous production, such as oil and gas, power, chemicals, minerals and pulp and paper. Product lines for this market include instrumentation, analytical measurement and control products and systems, as well as motors and drives. This division offers complete process automation systems that incorporate medium and low- voltage switchgear, synchronized drive systems, instrument and control and advanced diagnostic packages. Its products also include software to optimize manufacturing and business processes, to increase productivity, and to reduce energy consumption.

·Factory automation refers to discrete operations which manufacture individual items used mainly within the automotive, packaging and consumer goods industries. Product lines for this market include robots and robot cells, which include standardized and tailored systems for discrete applications such as painting, picking, packing, palletizing, welding and assembly. This division provides a comprehensive set of systems using these technologies, including application-specific software and configuration tools.

·Building automation comprises product lines and applications particularly targeted at the building industry. Product lines for this market include a wide range of low-voltage products for control of climate, lighting and security, as well as software for optimal management of the energy cost of buildings.

25

The Automation Technologies division manufactures products and systems relating to all three sectors, primarily focusing on process automation products and systems, as well as robotics technologies for factory automation. The division provides to its customers the full range of ABB’s products on a stand-alone basis, or as part of systems involving conceptual design, detailed engineering, project management, installation and commissioning, as well as after-sales services and system optimization during the full life span of the system.

In December 2003, this division commercially released the latest version of its Industrial IT process automation platform, called System 800xA. This system extends the capability of traditional process control systems, introducing advanced functions such as batch management, asset optimization and field device integration which “plug in” to a common user environment. The same user interface may also be used to manage components of existing multiple ABB control systems that have been installed in the market over the past approximately 20 years. In this way, System 800xA gives customers a way to migrate to new functions one step at a time, rather than having to make a large-scale capital investment to replace their entire control system. By creating a common user interface that can be used to manage multiple systems, the System 800xA also reduces the research and development investment needed to achieve a “one size fits all” solution across our large installed systems base.

Our customers are increasingly under pressure to deliver their products more quickly to their customers and to respond rapidly to changing customer preferences. At the same time, constant price pressure requires them to find ways to decrease production costs. Furthermore, as the quality of products becomes more equalized among our customers’ competitors, our customers increasingly focus on design and branding to distinguish their products from those of their competitors. This change in focus means that much of the manufacturing and production activities are outsourced to sub-suppliers, which may manufacture products for a number of different companies in a given industry. The consolidation in the manufacturing role enables the sub-suppliers to provide products at a lower cost and presents further opportunities for ABB to provide flexible solutions for automation. Another growing practice among our customers is the outsourcing of non-core tasks such as maintenance and facilities management services. The division has sought to capitalize on this trend by providing an increasing number of service arrangements covering overall plant maintenance and asset optimization.

Business Areas

Our Automation Technologies division is organized in three business areas. The distribution of revenues of the Automation Technologies division by business area was approximately as follows:

	Year ended December 31,
	2005			2004			2003
Automation Products		47	%		47	%		46	%
Process Automation		40	%		41	%		40	%
Manufacturing Automation		13	%		12	%		14	%

Automation Products

The Automation Products business area manufactures low-voltage circuit breakers, switches and control products to protect people, installations and electronic equipment from electrical overloads. It also manufactures instrumentation products to measure and control the flow of fluids.

This business area makes line protection products, wiring accessories and enclosures and cable systems that are primarily used for control and protection in building installations. It also produces European Installation Bus/Powernet systems, which integrate and automate a building’s electrical installations, ventilation, security and data communication networks.

26

The process instrumentation products manufactured by this business area interact with the division’s Open Control System products and include products for the measurement of process variables such as pressure, temperature, volume and flow. The increasing sophistication of many process automation systems often requires thousands of measurement points for such variables. These instrumentation products are sold separately or in combination with control systems. The various analytical measurement devices produced by this business area form an important part of instrumentation and control systems. These devices measure chemical characteristics while process instrumentation products measure physical characteristics.

This business area also develops low-voltage and medium-voltage AC drive products and systems for industrial, commercial and residential applications. Drives provide motion and torque while adding control and efficiency to equipment such as fans, pumps, compressors, conveyors, kilns, centrifuges, mixers, hoists, cranes, extruders, printing machinery and textile machines. Our drives are used in the building automation, marine, power, transportation and manufacturing industries, among others.

The Automation Products business area also produces a range of power electronics products. It produces static excitation and synchronizing systems that provide stability for power stations, as well as high power rectifiers that convert AC power to DC power for very high-amperage applications such as furnaces in zinc plants and aluminum and magnesium smelters. The business area also manufactures frequency converters that use state-of-the-art semiconductor technology to convert electrical power into the type and frequency required by individual customers.

In addition, this business area supplies a comprehensive range of electrical motors and generators, including high-efficiency motors that conform to leading environmental and efficiency standards. Efficiency is an important criterion for selection by customers, because electric motors account for nearly two-thirds of the electricity consumed by industrial plants. This business area manufactures synchronous motors for the most demanding applications and a full range of low and high-voltage induction motors.

Process Automation

The Process Automation business area offers integrated process control and information management systems and  industry-specific application knowledge for a variety of industries, primarily pulp and paper, minerals and mining, chemicals and pharmaceuticals, oil and gas, power and the marine industry.

Our control systems are used in such applications as batch management, asset optimization, energy management and safety control. They are the hubs that link instrumentation, devices and systems for control and supervision of an industrial process and enable customers to integrate their production systems with their enterprise, resource and planning systems, thereby providing a link to their ordering, billing and shipping processes. This link allows customers to manage their entire manufacturing and business process based on real-time access to plant information. Additionally, it allows customers to employ information received from instrumentation and measurement products to increase production efficiency, optimize their assets and reduce environmental waste.

The business area emphasizes Open Control Systems, including batch control systems, supervisory control and data acquisition systems, and, to a lesser extent, programmable logic controls (PLCs) and remote terminal units (RTUs).

Batch control systems control the production of a variety of products in shorter runs, such as certain pharmaceuticals and food and beverage products. Supervisory control and data acquisition systems are used to collect and manage data over wide areas or long distances such as those involved in operating electric power networks.

The business area’s product offerings for the pulp and paper industries include quality control systems for pulp and paper mills, control systems, drive systems, on-line sensors, actuators and field instruments.

27

On-line sensors measure product properties, such as weight, thickness, color, brightness, moisture content and additive content. Actuators allow the customer to make automatic adjustments during the production process to improve the quality and consistency of the product. Field instruments measure properties of the process, such as flow rate, chemical content and temperature.

We offer our customers in the metals and minerals industries specialized products and services, as well as total production systems. We design, plan, engineer, supply, erect and commission electric equipment, drives, motors and equipment for automation and supervisory control within a variety of areas including mining, mineral handling, aluminum smelting, hot and cold steel applications and cement production.

In the oil and gas sector, we provide onshore, offshore and subsea production technology, gas gathering and processing, refining, transportation and distribution applications. In the pharmaceuticals and fine chemicals areas, the business area provides software and solutions for applications including manufacturing, packaging, quality control and compliance with regulatory agencies.

In the marine field, we provide global shipbuilders with power and automation technologies for luxury cruise liners, ferries, tankers, offshore oil rigs and special purpose vessels. We design, engineer, build, supply and commission electrical systems and software for marine power generation, power distribution and diesel electric propulsion, as well as turbochargers to improve efficiency for diesel and gasoline engines.

We also offer full-service contracts across all of our customer segments, in which we take over in-house maintenance activities for customers and apply strategies to reduce overall maintenance costs and helps optimize these investments. Demand for our process automation services is increasing as our customers seek to increase productivity by improving the performance of existing assets.

Manufacturing Automation

The Manufacturing Automation business area develops and manufactures industrial robots and related equipment for the automotive industry and other manufacturing industries. This business area designs, installs and commissions automation systems for customers in the automotive industry and their sub-suppliers, incorporating software developed by its engineers into its range of products, as well as those manufactured by the Power Technologies division. The products and systems are used in such areas as press shop, body shop, paint shop, power train assembly, trim and final assembly.

In addition to serving the automotive industry, this business area provides complete production automation systems for industry segments ranging from metal and glass fabrication to telecommunications. Manufacturers use our flexible automation and advanced robotics products for applications involving multiple tasks such as welding, material handling, painting, picking, packing and palletizing. For example, we provide painting systems for mobile phones, as well as robot cells to produce base stations for telecom companies. This business area incorporates software developed by its engineers into its automation products and the power products manufactured by the Power Technologies division to maximize energy efficiency and provide a secure power supply for manufacturing lines. Our services include design and project management, engineering, installation, training and life-cycle care of the complete production line.

Customers

The Automation Technologies division’s end customers are primarily companies in the chemical, pharmaceutical, automotive, marine, turbocharging, metals, minerals, mining, cement, paper, oil and gas, food and beverage, printing and building industries. In each of these industries, we sell both through direct sales forces as well as through third-party channels, such as distributors, wholesalers, installers, system integrators and OEMs.

28

Geographic Markets

The following table sets forth the proportion of Automation Technologies division’s revenues derived from each geographic region (based on the location of the customer which may be different from the ultimate destination of our products’ end use).

	Year ended December 31,
	2005			2004			2003
Europe		58	%		60	%		61	%
Americas		17	%		15	%		18	%
Asia		20	%		19	%		16	%
Middle East and Africa		5	%		6	%		5	%
Total		100	%		100	%		100	%

The ultimate destination of our products’ end use is relevant for the Automation Technologies division as some global distributors and wholesalers in Europe sell our products in Asia, the Americas and Middle East and Africa. We estimate that approximately 10 percent of the total division revenues are subsequently distributed or resold, and we believe the end users are distributed evenly between the ultimate destinations of Asia, the Americas and the MEA.

Sales and Marketing

In each of the Automation Technologies division’s business areas, sales are made both through direct sales forces as well as through third-party channel partners, such as distributors, wholesalers, installers and OEMs. The proportion of direct sales compared to channel partner sales varies among the different industries, product technologies and geographic markets. For the division as a whole, the majority of the products are sold through channel partners, with the remainder sold through the division’s own direct sales channels.

Competition

The Automation Technologies division’s principal competitors vary by product line but include Alstom, Emerson, Fanuc, General Electric, Honeywell, Invensys, Metso Automation, Rockwell Automation, Schneider, Siemens, Voith AG, Aspen Technologies, and Yokogawa Electric Corporation.

Research and Development

Research and development expenses that were not order-related for the Automation Technologies division amounted to approximately $380 million for 2005. In addition, order related research and development expenses for the Automation Technologies division amounted approximately to $160 million during 2005 with around 28 percent share coming from the Automation Products business area and approximately equal share of the remaining amount coming from the other two business areas.

An important focus of the division’s research programs is the group-wide commitment to Industrial IT. The Automation Technologies division is responsible for the development of the Industrial IT platform architecture and the base Industrial IT control products and systems. As a result, the division’s research is heavily focused on intelligent, “information enabled” products and devices that may be integrated easily into existing platformsto provide better access to real-time information across the business enterprise. Another focus of the division’s R&D is on increasingly intelligent connected devices that enable both new functions, e.g., for diagnosis and maintenance, as well as easy integration into systems and industry solutions. Customer values and competitive differentiation targeted with this R&D include increases in safety, reliability, lower operating and maintenance costs, as well as reductions in environmental impact.

29

Capital Expenditures

The Automation Technologies division’s capital expenditures for property, plant and equipment were $199 million in 2005, compared to $186 million and $154 million in 2004 and in 2003, respectively. Principal investments in 2005 were primarily related to ordinary course purchases of machinery and equipment mainly in Germany, Finland, Italy and China. Geographically, in 2005, Europe accounted for 74 percent of the capital expenditure, followed by 17 percent in Asia, 8 percent in the Americas and 1 percent in the Middle East and Africa.

Non-Core Activities

These activities at December 31, 2005 constituted primarily the Oil, Gas and Petrochemicals, Building Systems, Equity Ventures and the remaining parts of our Structured Finance businesses and other Non-core activities. Non-core activities generated revenues in 2005 of approximately $1.4 billion, and had approximately 4,000 employees at December 31, 2005.

The following is a description of our principal businesses in the Non-core activities division.

Oil, Gas and Petrochemicals

Our Oil, Gas and Petrochemicals business is principally a fullservice engineering company that serves the onshore downstream oil, gas and petrochemicals markets. The downstream markets typically relate to the processing and transportation of hydrocarbon raw materials in and through refineries, petrochemicals and chemical plants and pipelines. In addition to offering engineering, procurement and construction (or EPC) project expertise to engineering and project management services, this business area also licenses process technologies to the gas processing, refining, petrochemical and polymer industries. This business area has particular expertise in process technologies for ethylene, propylene and heavy oil refining  through ABB Lummus Global, which is a part of the Oil, Gas and Petrochemical business. Ethylene and propylene are used as raw materials in a wide variety of plastics. Heavy oil refining processes are increasingly important in converting poor quality crude oils and tar sands to high valued transport fuels. In July 2004, we divested substantially all of our Oil, Gas and Petrochemicals business operating in the upstream oil, gas and petrochemicals markets. We refer to this divested portion as the Upstream Oil, Gas and Petrochemicals business.

Building Systems

Our Building Systems business designs, builds and maintains installations for industrial, infrastructure and commercial facilities. Actions to close down Building Systems operations in the United States and Egypt were continued in 2005 and the portion of this business in Luxembourg was sold.

Equity Ventures

Our Equity Ventures business area focused its activities on investments in and the operation of independent power projects that would provide business opportunities for our former power generation division or that would develop opportunities to sell our equipment and systems. During 2005, we completed the sale of our investments in Brazil. At December 31, 2005, this business area managed investments in Colombia, India, Morocco, Ivory Coast and South Africa.

Structured Finance

Our Structured Finance business area provided financing, including export, trade and project financing, and asset-based leasing and lending. We sold a significant part of this business area in 2002 and we continued the sale of the remaining parts of this business area which consists of certain lease and loan

30

portfolios, ownership interests in infrastructure projects and other financial assets. In 2005, we completed the sale of our Leasing portfolio business in Finland.

Our Other Non-core activities consist of some minor businesses and activities that are being considered for sale or winding down.

Corporate/Other

Our Corporate/Other division comprises headquarters and stewardship activities, research and development activities and other activities. The Corporate/Other division had approximately 1,500 employees at December 31, 2005.

Headquarters and stewardship activities include the operations of our corporate headquarters in Zurich, Switzerland, as well as corresponding local holding companies in certain countries. These activities cover staff functions with group-wide responsibilities, such as group accounting and consolidation, finance and controlling, audit, tax, financial advisory, legal affairs, risk management and insurance, communications, investor relations and human resources.

Group Research and Development consists of two Group R&D laboratories: Power Technologies and Automation Technologies. Each laboratory collaborates with universities and other external partners to support our divisions in developing cross-divisional technology platforms and focusing on core areas of power, automation and emerging technologies. The Global R&D laboratories have operations in nine countries: the United States, Sweden, Switzerland, Finland, Poland, China, Germany, Norway and India.

Other activities include our Real Estate business and Group Treasury Operations. Effective January 1, 2006, our Real Estate business, which principally manages the use of our real estate assets and facilities, was reclassified from our Corporate/Other division to our Non-core activities division. Group Treasury Operations act as a cost center for internal treasury activities.

DISCONTINUED OPERATIONS

Overview

The following businesses and costs are included in our Consolidated Financial Statements as discontinued operations:

·Provisions and other expenses incurred in connection with asbestos-related claims. The status of our potential asbestos obligation is described in “Item 5. Operating and Financial Review and Prospects—Asbestos Liabilities,” as well as in Note 17 to the Consolidated Financial Statements.

·Our Upstream Oil, Gas and Petrochemicals business, whose sale was completed in July 2004. See Note 3 to the Consolidated Financial Statements. The upstream oil and gas business is a global producer of equipment and services for oil and gas exploration and production. The remaining portions of our Oil, Gas and Petrochemicals business primarily consists of a full service engineering company which, in addition to having expertise in engineering, procurement and construction projects, also licenses process technologies in the refining, chemical, petrochemical and polymer fields. This business does not meet the accounting criteria required to be classified in discontinued operations and is now reported in continuing operations within Non-core activities.

31

·Our Power Lines business, including operations in Nigeria, which were sold in January 2005, Italy, which were sold in February 2005, and Germany, which were sold in July 2005. The remaining Power Lines businesses in Brazil, Mexico, Venezuela and South Africa have been reclassified to discontinued operations during 2005.

·Most of our Structured Finance business, the majority of which was sold in 2002, with the remaining significant portion (the Lease portfolio business in Finland) sold in November 2005

·Our Foundry and Control Valves businesses, which were part of our Automation Technologies division, were sold in 2005.

·Our Reinsurance business, which was sold in April 2004.

·Our Wind Energy business in Greece and Germany, of which we sold in December 2003. During 2005, we determined that we no longer met the criteria to classify the remaining Wind Energy business in discontinued operations, therefore the results of operations of the Wind Energy business were reclassified to continuing operations for all periods presented.

·Other minor operations that were sold.

·Legal, professional and other fees related to the above disposals.

CAPITAL EXPENDITURES

Total capital expenditures for property, plant and equipment including intangible assets amounted to $456 million, $543 million and $547 million in 2005, 2004 and 2003, respectively. The major capital expenditures during 2005 were investments in machinery and equipment in Germany, China, Sweden, Italy and Finland. Total divestitures of property, plant and equipment amounted to $81 million, $113 million and $153 million in 2005, 2004 and 2003, respectively. A significant portion of our divestitures in 2005 relate to real estate properties, primarily from The Netherlands, Sweden, Switzerland and France. Construction in progress for property, plant and equipment as of December 31, 2005 was $132 million, mainly from Germany, Sweden, the United States, Spain and China. We intend to finance our expenditures for construction in progress internally. In 2006, we intend to invest in capital expenditures of an amount which is approximately equal to our expected annual depreciation and amortization charge. We anticipate increased investments in the Asian emerging markets and a reduction in capital spending in Europe.

SUPPLIES AND RAW MATERIALS

We purchase a variety of raw materials for use in our production and project execution processes. The main materials used in our products, by weight, are steel, copper, aluminum, mineral oil and various plastics. We also purchase a variety of fabricated products and electronic components.

We operate a worldwide supply chain management network with employees dedicated to this function in business units and key countries. The supply chain management network leverages the scale of the ABB Group to optimize the efficiency of our supply networks. Our eBusiness activities have expanded in recent years, to include procurement for materials and services in many of our production facilities. We made improvements in our collaboration with supplier partners through initiatives such as ASCC, our supplier portal, and eSMART, our business intelligence system.

The price of raw materials is volatile, and may vary, perhaps substantially, from year to year. For many commodities we purchase, including steel, copper and aluminum products and products derived from crude oil, continuing global economic growth, sustained high demand from China and other emerging economies and volatility in foreign exchange rates (particularly the U.S. dollar and the euro) led to significant increases in raw material costs and volatility for several commodities since 2003. While some

32

increases will be offset through use of multi-year contracts and, in the case of copper and aluminum, through hedging, we expect prices for some commodities—in particular copper—to rise in 2006 versus 2005.

Our costs for most of our electronic components, subassemblies and fabricated products remained stable or decreased slightly in 2005 compared to 2004. Booming global demand for lead-free components may lead to periodic shortages of replacement components as manufacturers of these products shift their attention to the manufacture of new, lead-free components.

We hedge our exposure to commodity risk arising from changes in prices of raw materials. We manage copper and aluminum price risk using swap and forward contracts based on London Metal Exchange prices for these commodities. Our hedging policy is designed to minimize price volatility and create a stable cost base for the ABB Group. Hedging has the effect of minimizing the unfavorable impact of price increases in commodities, but it also limits the favorable impact of decreasing prices. In most cases, the gains and losses derived from our commodity hedging transactions are deferred and reflected in the cost of goods sold when the underlying physical transaction takes place. In addition to using hedging 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 products.

RESEARCH AND DEVELOPMENT

Each year, we invest significantly in research and development. Our research and development area focuses on developing and commercializing the core technologies of our businesses that are of strategic importance to our future growth. In 2005, 2004 and 2003, we invested $679 million, $690 million, and $635 million, respectively, or approximately 3.0 percent, 3.3 percent, and 3.1 percent of annual consolidated revenues, respectively, on research and development activities. We also had expenditures of $735 million, $727 million, and $886 million, respectively, or approximately 3.3 percent, 3.5 percent and 4.4 percent, respectively, of annual consolidated revenues in 2005, 2004 and 2003, 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. Order-related development amounts are initially recorded in inventories as part of the work in progress of a contract and then are reflected in cost of sales at the time revenue is recognized in accordance with our accounting policies.

In addition to continuous product development, and order-related engineering work, we develop future technology platforms for technology applications in our automation and power businesses in our Group research and development labs, 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.

Our research and development strategy focuses on three objectives:

·To monitor and develop emerging technologies and create a pioneering, sustainable technology base for the company;

·To develop technology platforms that enable efficient product design for our power and automation customers; and

·To create the next generation of power and automation products and systems that we believe will be the engines of profitable growth.

Universities are the incubators of future technology, and a central task of our research and development team is to transform university research into industry-ready technology platforms. We collaborate with a number of universities and research institutions to build research networks and foster

33

new technologies. We believe these collaborations shorten the amount of time required to turn basic ideas into viable products, and they additionally help us recruit and train new personnel. We have built more than 50 university partnerships in the U.S., Europe and Asia, including long-term, strategic relationships with institutions such as Stanford University, the Massachusetts Institute of Technology, Carnegie Mellon University, Cambridge University and Imperial College London. Our collaborative projects include research on materials, sensors, micro-engineered mechanical systems, robotics, controls, manufacturing, software, distributed power and communication.

Common platforms for power and automation technologies are developed around advanced materials, efficient manufacturing, information technology and data communication, as well as sensor and actuator technology. Common applications of basic power and automation technologies can also be found in power electronics, electrical insulation, and control and optimization. Our power technologies, including our insulation technologies, current interruption and limitation devices, power electronics, flow control and power protection processes, apply as much to large, reliable, blackout-free transmission systems as they do to everyday household needs. Our automation technologies, including our control and optimization processes, software technologies, power electronics, sensors and microelectronics, mechatronics and wireless communication processes, are designed to improve efficiency in plants and factories around the world—including our own.

Group research and development is carried out in two global laboratories for power and automation technologies, combining research units in the U.S., Europe and Asia. The cultural diversity and closeness to our customers and the world’s best universities creates a breeding ground for success. We continue to expand our research and development activities in India, Singapore and China, reflecting its growth strategy in Asia. Our corporate research center in Bangalore, India was launched in early 2002. As a focal point for software research, it develops platforms for both automation and power technologies. In China—our fastest-growing market—research and development activity is focused on power transmission and distribution, manufacturing and robotics. It is centered in new facilities in Beijing and Shanghai, where our researchers are in close contact with Chinese universities and customers.

Our researchers have been recognized in recent years for contributions in areas like HCI (human-computer interface), safeguarding power transmission systems, faster and more efficient automation systems, improved electrical insulation and industrial applications of nanotechnology and wireless technology.

Our current research programs focus on:

·Power device technology;

·Power transmission and distribution applications;

·Power electronics;

·Mechatronics and robotics applications;

·Control and optimization processes;

·Automation networks and devices;

·Software architecture and processes;

·Advanced materials; and

·Manufacturing technologies.

34

PATENTS AND TRADEMARKS

We believe that intellectual property has become as important as tangible assets for a technology group such as ABB. Over the past ten years, we have almost doubled our total number of first patent filings, and we intend to continue our aggressive approach to seeking patent protection. Currently, we have nearly 14,000 patent applications and registrations, of which approximately 7,000 are pending applications. In 2005, we filed patent applications for more than 470 new inventions. 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 aggressively defend the reputation associated with the ABB brand.

ENVIRONMENTAL ACTIVITIES

Environmental management is one of our highest business priorities. We address environmental issues in all our business operations. Our goal is to improve our social and environmental performance continuously, and improve the quality of life in the communities and countries where we operate.

Our social and environmental efforts include:

·joining initiatives that foster economic, environmental, social and educational development;

·making positive contributions in the communities where we operate so they will welcome us and consider ABB an attractive employer and a good investment;

·offering our customers eco-efficient products that save energy and are safe to use, that optimize the use of natural resources, minimize waste and reduce environmental impact over their complete life cycles;

·sharing our latest technologies with emerging markets by, for example, helping customers in developing countries implement environmentally sound processes and technologies and providing environmental awareness training;

·ensuring that our operations and processes comply with applicable environmental standards and legislation. Specifically, every operating unit must implement an environmental management system that continuously improves its environmental performance;

·ensuring that our social and environmental policies are communicated and implemented;

·working towards achieving best practices in occupational health and safety, and ensuring the health and safety of our employees, contractors and others involved in or affected by our activities; and

·favoring suppliers that have sustainability policies and systems similar to our own.

To continuously improve the environmental performance of our own operations, we are implementing environmental management systems according to the ISO 14001 standard on all our sites. We have implemented the ISO 14001 in 97 percent of our manufacturing facilities and service workshops (approximately 380 sites) and our environmental management program now includes operations in approximately 50 countries. We also require every operating unit within the ABB Group to implement an environmental management system that aims continuously to improve its environmental performance. We are now implementing an adapted environmental management system in our non-manufacturing organizations.

We have introduced the concept of Environmental Product Declarations to communicate the environmental performance of our core products. These describe the salient environmental aspects and impacts of a product line, viewed over its complete life cycle. Declarations are based on Life Cycle Assessment studies, created according to the international standard ISO/TR 14025. To date, approximately

35

55 declarations have been produced for major product lines, 12 of which have been externally certified by agencies such as Det Norske Veritas (DNV) of Norway and the RINA Management System Certification Society in Italy.

We have expanded the scope of our environmental reporting in recent years. In 2005, a total of 78 percent of our employees are covered by confirmed data gathered through ABB’s formal environmental reporting system that is verified by an independent verification body. The parts of our business that are not yet covered by our reporting system, mainly sales offices in countries where we do not perform manufacturing,  have very limited environmental exposure. A total of 18 accidents were reported in 2005, none of which had a material environmental impact.

For social performance, a total of 93 percent of employees are covered by confirmed data gathered through ABB’s formal social reporting system that is verified by an independent verification body. The parts of our business that are not yet covered by our reporting system, mainly sales offices in countries where we do not perform manufacturing, have very limited social exposure.

One of our corporate objectives is to phase out the use of the hazardous substances that are recorded on our list of “restricted” substances. Priorities for replacement are set by each business using criteria such as the environmental aspects of alternatives, the risk of the substance escaping into the environment, how hazardous the substance is, whether we can use the substance under strict control and whether there are any technically acceptable alternatives.

We have retained liability for environmental remediation costs at two sites in the United States that were operated by our former nuclear business, which we have sold to BNFL. The primary environmental liabilities associated with these sites relate to the costs of remediating radiological contamination upon decommissioning the facilities. For further information, see “Item 5. Operating and Financial Review and Prospects—Environmental Liabilities.”

REGULATION

Our operations are subject to numerous governmental laws and regulations including those governing antitrust and competition, 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 U.S. Securities Exchange Act of 1934, we are subject to the U.S. Foreign Corrupt Practices Act’s antibribery provisions with respect to our conduct around the world.

Our operations are also subject to the 1997 Organization of Economic Cooperation and Development Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, as implemented by the 34 signatory countries. The convention obliges signatories to adopt national legislation that makes it a crime to bribe foreign public officials. As of December 31, 2005, those countries which have adopted implementing legislation and have ratified the convention include the United States, Switzerland and several European nations 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 either the U.S. Foreign Corrupt Practices Act, legislation promulgated pursuant to the 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions or other laws or regulations. These actions 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.”

36

SIGNIFICANT SUBSIDIARIES

ABB Ltd, Zurich, Switzerland is the ultimate parent company of the ABB Group, which is comprised of around 500 subsidiaries (excluding dormant companies) worldwide. Besides ABB Ltd, the only other listed company in the ABB Group is ABB Ltd, India, which is listed on the exchanges in India at Mumbai (BSE and NSE), Ahmadabad, New Delhi and Kolkata.

The following table sets forth, as of March 31, 2006, the name, country of incorporation and ownership interest of ABB Ltd of its significant subsidiaries:

Company Name / Location	Country	ABB Interest
		(%)
ABB S.A., Buenos Aires	Argentina		100.00
ABB Australia Pty Limited, Sydney	Australia		100.00
ABB AG, Vienna	Austria		100.00
ABB Ltda., Osasco	Brazil		100.00
ABB Bulgaria EOOD, Sofia	Bulgaria		100.00
ABB Inc., St. Laurent, Quebec	Canada		100.00
ABB (China) Ltd., Beijing	China		100.00
Asea Brown Boveri Ltda., Bogotá	Colombia		99.99
ABB Technology SA, Abidjan	Cote d’Ivoire		99.00
ABB Ltd., Zagreb	Croatia		100.00
ABB s.r.o., Prague	Czech Republic		100.00
ABB A/S, Skovlunde	Denmark		100.00
Asea Brown Boveri S.A., Quito	Ecuador		96.87
Asea Brown Boveri S.A.E., Cairo	Egypt		100.00
ABB AS, Tallinn	Estonia		100.00
ABB Oy, Helsinki	Finland		100.00
ABB S.A., Rueil-Malmaison	France		100.00
ABB AG, Mannheim	Germany		100.00
ABB Automation GmbH, Mannheim	Germany		100.00
ABB Automation Products GmbH, Ladenburg	Germany		100.00
ABB Berteiligungs-und Verwaltungsges. mbH, Mannheim	Germany		100.00
ABB Gebäudetechnik AG, Mannheim	Germany		100.00
Asea Brown Boveri S.A., Metamorphossis Attica	Greece		100.00
ABB (Hong Kong) Ltd., Hong Kong	Hong Kong		100.00
ABB Engineering Trading and Service Ltd., Budapest	Hungary		100.00
ABB Limited, Bangalore	India		52.11
ABB Ltd, Dublin	Ireland		100.00
ABB Technologies Ltd., Tirat Carmel	Israel		99.99
ABB S.p.A., Milan	Italy		100.00
ABB SACE S.p.A., Sesto S. Giovanni (MI)	Italy		100.00
ABB K.K., Tokyo	Japan		100.00
ABB Ltd., Seoul	Korea, Republic of		100.00
ABB Holdings Sdn. Bhd., Subang Jaya	Malaysia		100.00
Asea Brown Boveri S.A. de C.V., Tlalnepantla	Mexico		100.00
ABB BV, Rotterdam	Netherlands		100.00
ABB Holdings BV, Amsterdam	Netherlands		100.00
Luwoco Lummus Worldwide Contracting (Netherlands) B.V., The Hague	Netherlands		100.00
ABB Limited, Auckland	New Zealand		100.00
ABB Holding AS, Billingstad	Norway		100.00

37

Asea Brown Boveri S.A., Lima	Peru	88.12
Asea Brown Boveri Inc., Paranaque, Metro Manila	Philippines	100.00
ABB Sp. zo.o., Warsaw	Poland	96.04
ABB S.G.P.S, S.A., Amadora	Portugal	100.00
Asea Brown Boveri Ltd., Moscow	Russian Federation	100.00
ABB Contracting Company Ltd., Riyadh	Saudi Arabia	65.00
ABB Holdings Pte. Ltd., Singapore	Singapore	100.00
ABB Holdings (Pty) Ltd., Sunninghill	South Africa	80.00
Asea Brown Boveri S.A., Madrid	Spain	100.00
ABB AB, Västerås	Sweden	100.00
ABB Norden Holding AB, Stockholm	Sweden	100.00
ABB Asea Brown Boveri Ltd, Zurich	Switzerland	100.00
ABB Schweiz AG, Baden	Switzerland	100.00
ABB LIMITED, Bangkok	Thailand	100.00
ABB Holding A.S., Istanbul	Turkey	99.95
ABB Ltd., Kiev	Ukraine	100.00
ABB Industries (L.L.C), Dubai	United Arab Emirates	49.00
ABB Holdings Ltd., Warrington	United Kingdom	100.00
ABB Ltd., Warrington	United Kingdom	100.00
ABB Holdings Inc., Norwalk, CT	United States	100.00
ABB Inc., Norwalk, CT	United States	100.00
ABB Lummus Global Inc., Bloomfield, NJ	United States	100.00
Asea Brown Boveri S.A., Caracas	Venezuela	100.00
ABB (Private) Ltd., Harare	Zimbabwe	100.00

DESCRIPTION OF PROPERTY

As of December 31, 2005, the ABB Group occupied manufacturing, production and development facilities in approximately 100 countries throughout the world with over 18 million square meters of land and over 7 million square meters of building space. The facilities consist mainly of manufacturing plants, office buildings, research centers and warehouses. A substantial portion of our production and development facilities are situated in Germany, Sweden, the United States, Switzerland, China, Finland, and Italy. We also own or lease other properties, including office buildings, warehouses, research and development facilities and sales offices in many countries. We own approximately 50 percent of the buildings and approximately 80 percent of the land on which our facilities are located and lease the remainder.

We own essentially 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 or, to a lesser extent, lease it to third parties.

It is our general policy to maintain facilities and equipment at quality levels assuring continuous production at good efficiency and safety standards. The net book value of our property, plant and equipment as of December 31, 2005 was $2,565 million, of which machinery and equipment represented $1,165 million and land and buildings represented $1,268 million and construction in progress of $132 million. We believe that our current facilities are in good condition and are adequate to meet the requirements of our present and foreseeable future industrial operations.

38

Item 4A.Unresolved Staff Comments

ABB received a comment letter from the Staff of the Office of Global Security Risk in the Division of Corporation Finance of the SEC on April 28, 2005. The comments from the Staff were issued with respect to its review of the Company’s Form 20-F for the year ended December 31, 2003. In addition to other matters, the Staff’s April 28, 2005 letter included comments relating to the Company’s Iranian subsidiaries. ABB received additional comment letters from the Staff on September 27, 2005 and March 22, 2006. These comment letters did not comment on the disclosure contained in any of ABB’s Form 20-Fs, but merely requested that ABB provide specified information to the SEC on a supplemental basis.

The Company responded to the Staff’s comments in letters dated June 24, 2005, October 18, 2005 and December 20, 2005, and April 18, 2006, respectively. As of the date of the filing of this Form 20-F, the Staff continues to review the Company’s responses and, therefore, the comments remain unresolved.

Item 5.Operating and Financial Review and Prospects

You should read the following discussion of our financial condition and results of operations in conjunction with our Consolidated Financial Statements and the related notes and other financial information contained elsewhere in this annual report. This discussion contains forward-looking statements that involve risks and uncertainties, including those discussed in “Item 3. Key Information—Risk Factors.”  See “Forward-looking statements” at the beginning of this annual report

MANAGEMENT OVERVIEW

We entered a new phase of development in 2005. After successfully completing our turnaround in 2004, we have moved into a phase of profitable organic growth, and are now progressing confidently towards new mid-term business targets.

We have benefited from our leadership in markets where demand for our core power and automation technologies is buoyant, and also from the operational improvements we continue to make in our businesses. Our strategy has been to focus on our existing core businesses. Our focus on business execution, cost and risk management and organic growth has led to improvements in operating performance with stronger financial results. This has enabled our Board of Directors to recommend the payment of a dividend of CHF 0.12 per share to our shareholders.

We set four key goals for 2005 related to improving operational performance, lowering our corporate costs, enhanced compliance and resolving asbestos-related liabilities.

Improving operational performance:

We returned to a full-year profit in 2005 for the first time in five years and have laid the groundwork for further profitable growth. Orders and revenues were both higher in 2005 as compared to 2004 with significant increases from North and South America, the Middle East and Asia. Full year earnings before interest and taxes (EBIT) rose to $1.7 billion, while the EBIT margin was 7.8 percent. Income from continuing operations before taxes and minority interest and cumulative effect of accounting change increased to approximately $1.5 billion in 2005 from $837 million in 2004 and a loss of $115 million in 2003. Additionally, net income reached $735 million in 2005 compared to a loss of $35 million the previous year. We also significantly reduced our gross debt, unfunded pension liabilities and securitization. Net cash from our operating activities exceeded $1 billion.

Lowering our corporate costs:

We also continued to streamline our operational costs around the world in 2005. Corporate costs at group headquarters and other offices were reduced substantially more than our target during 2005. This cost reduction is ongoing as part of our One Simple ABB program. The objective of One Simple ABB is to

39

achieve sustainable cost savings and decrease workload by reducing complexity across ABB, for example the elimination of duplication of certain processes and systems. One Simple ABB will increase our flexibility and aims at creating a more common infrastructure to enable further business growth in an enhanced controlled environment.

Enhancing compliance:

During the past few years, we have discovered several instances in which ABB employees have failed to comply with our policies and applicable laws. One of our highest priorities is improving the compliance culture and control mechanisms within our entire organization so similar situations can be avoided in the future. There are still areas for improvement to ensure we align behavior to rules. At ABB, we have a zero tolerance policy of non-compliance and respond to any breaches. Despite this, we still had certain cases in 2005 which were uncovered in internal compliance reviews and voluntarily disclosed to the respective authorities. We are also continuing our work to comply with the requirements of Section 404 of the Sarbanes-Oxley Act, which is effective for us in 2006.

Resolving asbestos-related liabilities:

We continued to make progress in 2005 towards resolving all asbestos claims relating to our U.S. subsidiary Combustion Engineering (CE). On March 1, 2006, a U.S. District Court judge issued an order affirming the modified Plan of Reorganization for CE. As no appeals were lodged within the 30-day appeals period that ended on March 31, 2006, the CE Plan became final. The CE Plan confirmation will allow us to make the CE Plan effective during the second quarter of 2006, remove a significant amount of uncertainty and allow us to focus more intently on our operations.

Mid Term Business Outlook

We will continue to focus on our core strengths—power and automation products, systems, solutions and services that increase grid reliability and industrial productivity, and make significant energy savings. The trading environment for ABB in 2006 is not expected to vary significantly from that seen in 2005. Demand for power transmission and distribution infrastructure is expected to continue growing in Asia, the Middle East and the Americas. Equipment replacement and improved network efficiency and reliability are forecast to be the drivers of higher demand in Europe and North America. We believe the U.S. Energy Bill and European Union regional interconnection projects will have a positive impact on our business, mainly in 2007 and beyond. Automation-related industrial investments are expected to continue in most sectors, notably metals and minerals, marine and oil and gas. If oil prices remain at current levels, we expect further investments to expand both production and refining activities, as well as the power infrastructure and marine shipping needed to support that expansion. Overall, automation-related demand growth is expected to be strongest in Asia and the Americas in 2006, with more modest growth in Europe.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

General

We prepare our Consolidated Financial Statements in accordance with generally accepted accounting principles in the United States (U.S. GAAP).

The preparation of our financial statements requires us to make estimates and judgments 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, including, but not limited to, those related to: costs expected to be incurred to complete projects; costs of product guarantees and warranties; provisions for bad debts; recoverability of inventories, investments, fixed assets, goodwill and other intangible assets; income tax related costs and accruals; provisions for restructuring; gross profit margins on long-term contracts; pensions and other postretirement benefit assumptions; and contingencies and

40

litigation. 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 these estimates under different assumptions or conditions.

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 reflect significant estimates and assumptions that we use in preparing our Consolidated Financial Statements. These policies should be considered in reviewing our Consolidated Financial Statements.

Revenues and cost of sales recognition

We recognize revenues from the sale of manufactured products when persuasive evidence of an arrangement exists, the price is fixed and determinable, collectibility is reasonably assured and upon transfer of title, including the risks and rewards of ownership, to the customer. When multiple elements, such as products and services, are contained in a single arrangement or in a series of related arrangements with the same customer, we allocate revenue to each element based on its relative fair value, provided that such element meets the criteria for treatment as a separate unit of accounting. The allocation of the sales price between delivered elements and undelivered elements might affect the amount of revenue recorded in certain periods, but would not change the total revenue recognized on the contract. Revenues from short-term or non-customer specific contracts to deliver products or services are recognized upon completion of required services to the customer. Revenues from contracts that contain customer acceptance provisions are deferred until customer acceptance occurs, or we have demonstrated the customer specified objective criteria or the contractual acceptance period has lapsed. As a result, judgment in the selection of revenue recognition methods must be made at inception of the arrangement.

These revenue recognition methods require the collectibility of the revenues recognized to be reasonably assured. When recording the respective accounts receivable, allowances are calculated to estimate those receivables that will not be collected. These reserves assume a level of default based on historical information, as well as knowledge about specific invoices and customers. The risk remains that a greater number of defaults will occur than originally estimated. As such, the amount of revenues recognized might exceed that which will be collected, resulting in a deterioration of earnings in the future. This risk is likely to increase during periods of significant negative industry or economic trends.

Revenues under long-term contracts are recognized using the percentage-of-completion method of accounting. We principally use the cost-to-cost or delivery events methods to measure progress towards completion on contracts. We determine the method to be used by type of contract based on our experience and judgment as to which method best measures actual progress towards completion.

The percentage-of-completion method of accounting involves the use of assumptions and projections, principally relating to future material, labor, construction and overhead costs. As a consequence, there is a risk that total contract costs will exceed those we originally estimated. This risk increases if the duration of a contract increases or if the project is a fixed price turnkey project, because there is a higher probability that the circumstances upon which we originally developed 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 that we incur additional costs to remedy;

·changes in the cost of components, materials or labor;

41

·difficulties in obtaining required governmental permits or approvals;

·project modifications creating unanticipated costs;

·suppliers’ or subcontractors’ failure to perform;

·penalties incurred as a result of not completing portions of the project in accordance with agreed upon time limits; 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 estimate are determined. By recognizing changes in estimates cumulatively, recorded revenue and costs to date reflect the current estimates of the stage of completion. Additionally, losses on long-term 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.

We accrue anticipated costs for warranties when we recognize the revenue on the related contracts. Warranty costs include calculated costs arising from imperfections in design, material and workmanship and performance guarantees on our products. Although we generally make assessments on an overall, statistical basis, we make individual assessments on contracts with risks resulting from order-specific conditions or guarantees. There is a risk that actual warranty costs may exceed the amounts provided for, which would result in a deterioration of earnings in the future when these actual costs are determined.

Revenues under cost-reimbursement contracts are recognized as costs are incurred. Shipping and handling costs are recorded as a component of cost of sales.

Accounting for discontinued operations

Our strategy is to focus on power and automation technologies for utility and industry customers. In accordance with our strategy, we have sold and plan to sell certain businesses that are not part of our core power and automation technologies businesses. Statement of Financial Accounting Standards No. 144 (SFAS 144), Accounting for the Impairment or Disposal of Long-Lived Assets, broadened the presentation of discontinued operations to include disposal transactions involving less than an entire reporting segment, when certain criteria are met. The purpose of SFAS 144 is to allow historically comparable data to be available to investors without the distortions created by divestments or the closure or abandonment of businesses, thereby improving the predictive value of financial statements. SFAS 144 requires the revenues and associated costs, net of taxes, of certain divestments and abandonments, to be classified as discontinued operations, net of taxes, below income from continuing operations in our Consolidated Income Statements and requires the related assets and liabilities to be classified as assets or liabilities held for sale and in discontinued operations in our Consolidated Balance Sheets.

In order to classify a business as a discontinued operation, SFAS 144 requires that certain criteria be met. In certain cases, significant interpretation is required to determine the appropriate classification. Changes in plans regarding the sale of a business may change our interpretation as to whether a business should be classified as a discontinued operation. Any such reclassification may have a material impact on our income from continuing operations and the individual components thereof.

In the Consolidated Statements of Cash Flows, we have included the businesses classified as discontinued operations together with continuing operations in the individual line items within cash from operating, investing and financing activities, as permitted by U.S. GAAP.

For a description of our discontinued operations, see the section below entitled “Discontinued operations” and Note 3 to our Consolidated Financial Statements.

42

Goodwill and other intangible assets

We review goodwill for impairment annually on October 1 and additionally whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable in accordance with Statement of Financial Accounting Standards No. 142 (SFAS 142), Goodwill and Other Intangible Assets. SFAS 142 requires that a two-step impairment test be performed on goodwill. In the first step, we compare the fair value of each reporting unit to its carrying value. Our reporting units are one level below the reportable segments identified in Note 25 to our Consolidated Financial Statements. We use a discounted cash flow model to determine the fair value of reporting units. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not impaired and no further testing is performed. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then we must perform the second step to determine the implied fair value of the reporting unit’s goodwill and compare it to the carrying value of the reporting unit’s goodwill. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, then we record an impairment loss equal to the difference.

The discounted cash flow model is dependent on a number of factors including estimates of future cash flows, appropriate discount rates and other variables, and requires that we make significant estimates and judgments involving variables such as sales volumes, sales prices, sales growth, production and operating costs, capital expenditures, market conditions and other economic factors. We base our fair value estimates on assumptions we believe to be reasonable, but which are unpredictable and inherently uncertain. Actual future results may differ from those estimates. Additionally, we also consider our market capitalization on the date we perform the analysis.

We review intangible assets in accordance with SFAS 144, and accordingly test for impairment upon the occurrence of certain triggering events, such as a decision to divest a business or projected losses of an entity.

We record any related impairment charge in other income (expense), net, in our Consolidated Income Statement, unless it is related to a discontinued operation, in which case the charge is recorded in loss from discontinued operations, net of tax.

Pension and postretirement benefits

As more fully described in Note 20 to our Consolidated Financial Statements, we operate pension plans that cover a large portion of our employees. 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 and expected return on plan assets. We are required to consider current market conditions, including changes in interest rates, in selecting these assumptions. The discount rates are reviewed regularly and considered for adjustment annually based on changes in long-term, highly rated corporate bond yields. Decreases in the discount rates result in an increase in the projected benefit obligation and to pension costs.

Under U.S. GAAP, we accumulate and amortize over future periods actual results that differ from the assumptions used. Therefore, actual results generally affect our recognized expense and recorded liabilities for pension and other postretirement benefit obligations in future periods.

The “unfunded” balance, which can increase or decrease based on the performance of the financial markets or changes in our assumptions regarding rates, does not represent a mandatory short-term cash obligation. Instead, the unfunded balance of a pension plan is the difference between the projected obligation to employees (PBO) and the fair value of the plan assets. While we comply with appropriate statutory funding requirements, as of December 31, 2005, the unfunded balance of our pension plans was $839 million. In accordance with Statement of Financial Accounting Standards No. 87 (SFAS 87),

43

Employers’ Accounting for Pensions, we have recorded on the Consolidated Balance Sheet a net liability of $7 million in relation to this unfunded benefit balance. The difference is primarily due to an unrecognized actuarial loss of $819 million, which is amortized using the “minimum corridor” approach as defined by SFAS 87.

The expected return on plan assets is reviewed regularly and considered for adjustment annually based on current and expected 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. An increase or decrease of 0.5 percent in the expected long-term rate of asset return would have decreased or increased, respectively, the net periodic benefit cost in 2005 by approximately $36 million.

Holding all other assumptions constant, a 100 basis point decrease in the discount rate would have increased the PBO by $957 million, while a 100 basis point increase in the discount rate would have decreased the PBO by $829 million.

The determinations of pension expense and pension funding are based on a variety of rules and regulations. Changes in these rules and regulations could impact the calculation of pension plan liabilities and the valuation of pension plan assets. They may also result in higher pension costs, additional financial statement disclosure and accelerate and increase the need to fund our pension plans. There are currently a number of legislative proposal being considered that, if enacted, would change the current rules. Most of these proposals would accelerate the pension funding as compared to funding under the existing rules.

We have multiple non-pension postretirement benefit plans. Our health care plans are generally contributory with participants’ contributions adjusted annually. For purposes of estimating our health care costs, we have assumed health care cost increases per annum to be 10.38 percent for 2006, then gradually declining to 6.02 percent per annum in 2013, and to remain at that level thereafter.

Taxes

In preparing our Consolidated Financial Statements, we are required to estimate income taxes in each of the jurisdictions in which we operate. 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. The differences 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 probable 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 provision for taxes in the Consolidated Income Statements unless the change relates to discontinued operations, in which case the change is recorded in loss 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.

We operate in numerous tax jurisdictions and, as a result, are regularly subject to audit by tax authorities. ABB provides for tax contingencies, including potential tax audits, on the basis of the technical merits of the contingency, including applicable tax law, OECD guidelines and our best estimates of the facts and circumstances. 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.

Accounting for tax contingencies requires that an estimated loss from a contingency be accrued as a charge to income if it is probable that an asset has been impaired or a liability has been incurred, and the

44

amount of the loss can be reasonably estimated. The required amount of provision for contingencies of any type may change in the future due to new developments.

Consolidation

We evaluate our investments in operating companies, ventures and other types of investments for purposes of determining whether consolidation or the cost or equity method of accounting is appropriate. This determination is based upon our ability to retain and exercise control through our decision-making powers and our ability to exercise significant influence over the entity, as well as our ownership interests in the entity.

Material changes in our ability to retain control and exercise significant influence over an entity could change the accounting method between consolidation or the cost or equity methods, which could have a material impact on our Consolidated Financial Statements.

Additionally, pursuant to Financial Accounting Standards Board Interpretation No. 46 (FIN 46) Consolidation of Variable Interest Entities—an interpretation of ARB No. 51 and revised Interpretation No. 46 (FIN 46(R)), we consolidate our interest in variable interest entities (VIEs) when we are considered the primary beneficiary. For those VIEs where we are not the primary beneficiary, we apply our existing consolidation policies in accordance with U.S. GAAP.

In determining the primary beneficiary of a VIE, we are required to make projections of expected losses and expected residual returns to be generated by that VIE. The projected expected losses and expected residual returns are critical to the identification of the primary beneficiary. These projections require us to use assumptions, including assumptions regarding the probability of cash flows. Expected losses and expected residual returns materially different from those projected could identify another entity as the primary beneficiary. A change in the contractual arrangements or ownership between the parties involved in the VIE could have an impact on our determination of the primary beneficiary, which in turn could have a material impact on our Consolidated Financial Statements.

Contingencies

As more fully described in the Note 17 to our Consolidated Financial Statements, we are subject to proceedings, lawsuits and other claims and inquiries related to asbestos, environmental, labor, product, and regulatory and other matters. We are required to assess the likelihood of any adverse judgments or outcomes to these matters, as well as potential ranges of probable losses. A determination of the amount of provision required, if any, for these contingencies is made after analysis of each individual issue, often with assistance from both internal and external legal counsel and technical experts. The required amount of a provision for a contingency of any type may change in the future due to new developments in the particular matter, including changes in approach to its resolution.

Restructuring

Certain restructuring provisions include estimates pertaining to employee termination costs and the settlements of contractual obligations resulting from our actions. The actual costs may differ from these estimates due to subsequent developments such as voluntary retirement of employees and other business developments. Restructuring costs are recorded in the Consolidated Income Statements depending on the nature of the charges. Employee termination costs are generally recorded in cost of sales or selling, general and administrative expenses, depending on the function of the employee. Asset impairments and sublease shortfall costs are recorded in other income (expense), net, in the Consolidated Income Statements.

45

NEW ACCOUNTING PRONOUNCEMENTS

In November 2004, the Financial Accounting Standards Board issued Statement No.151 (SFAS 151), Inventory Costs—an amendment of ARB No. 43, Chapter 4. SFAS 151 amends Accounting Research Bulletin 43, Chapter 4: Inventory Pricing, to clarify that abnormal amounts of idle facility expense, freight, handling costs, and wasted materials (spoilage) should be recognized as current-period charges. In addition, this statement requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. We implemented SFAS 151 in the first quarter of 2006 and do not expect the adoption to have a material impact on our financial position or results of operations.

In December 2004, the Financial Accounting Standards Board issued Statement No. 123R (SFAS 123R), Share-Based Payment, which replaces SFAS 123 and APB Opinion No. 25 (APB 25), Accounting for Stock Issued to Employees and requires that we measure compensation cost for all share-based payments at fair value. On April 14, 2005, the SEC announced the adoption of a new rule that amends the compliance dates for SFAS 123R. As a result of this announcement, we adopted SFAS 123R as of January 1, 2006. We will recognize share-based employee compensation cost from January 1, 2006, as if the fair-value based accounting method had been used to account for all employee awards granted, modified, or settled after the effective date and for any awards that were not fully vested as of the effective date. Based on currently existing share-based compensation plans, we do not expect the adoption of SFAS 123R to have a material impact on our financial position or results of operations.

In March 2005, the Financial Accounting Standards Board issued Interpretation No. 47 (FIN 47), Accounting for Conditional Asset Retirement Obligations—an interpretation of FASB Statement No. 143. FIN 47 clarifies that the term “conditional asset retirement obligation” as used in Financial Accounting Standards Board Statement No. 143, Accounting for Asset Retirement Obligations, refers to a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within our control. The obligation to perform the asset retirement activity is unconditional even though uncertainty exists about the timing and/or method of settlement. Thus, the timing and/or method of settlement may be conditional on a future event. Accordingly, we are required to recognize a liability for the fair value of a conditional asset retirement obligation when the fair value of the liability can be reasonably estimated. The fair value of a liability for the conditional asset retirement obligation is recognized when incurred—generally upon acquisition, construction, or development and/or through the normal operation of the asset. We implemented FIN 47 in the fourth quarter of 2005 and presented the change as a cumulative effect of an accounting change of $5 million, net of tax.

At the June 15–16, 2005, Emerging Issues Task Force (EITF) meeting, the EITF reached a consensus on Issue No. 05-5 (EITF 05-5), Accounting for Early Retirement or Post employment Programs with Specific Features (such as Terms Specified in Altersteilzeit Early Retirement Arrangements), that the Financial Accounting Standards Board ratified on June 29, 2005. Altersteilzeit is a term that describes an early retirement program designed to create an incentive for employees, within a certain age group, to leave their employers before the legal retirement age. The issue addresses how to account for salary and bonus components as well as potential subsidies earned from governmental entities. EITF 05-5 is effective from the first quarter of 2006. The impact of implementation will not have an impact on our financial statements as we had been calculating the liability consistent with the requirements of EITF 05-5.

46

RESTRUCTURING EXPENSES

On June 30, 2005, we announced our decision to consolidate our global transformer business in our Power Technology division, including closing certain plants and employment reductions, as a result of overcapacity, increasing raw material costs and a regional shift in demand experienced by the transformer business. We expect to complete the consolidation program by the end of 2008 and estimate the program will result in approximately $240 million of total charges.

During 2005, we recorded a charge related to the transformer consolidation program of $123 million; $105 million was recorded in cost of sales, $3 million in selling, general and administrative expenses and $15 million in other income (expense) net. This charge consisted of $58 million related to employee severance costs, $24 million related to inventory and long-lived asset impairments and $41 million of estimated contract settlement costs and loss order costs.

Liabilities associated with these charges are expected to be settled primarily by the end of 2006 and consist of the following:

	Employee severance costs				Contractual settlement/loss order costs				Total
	(U.S. dollars in millions)
Charges		$	58			$	41		$	99
Cash paid		(7		)		(10		)	(17		)
Liability at December 31, 2005		$	51			$	31		$	82

We will continue to assess other potential losses and costs we might incur in relation to the transformer business consolidation program. These future costs are not yet accruable; however, we expect that additional costs will be incurred throughout the duration of the transformer business consolidation program.

In addition to the transformer business consolidation described above, we continue to restructure individual facilities and factories programs to increase efficiencies by reducing headcount and streamlining operations. At December 31, 2005, liabilities related to these other programs consist of $23 million for workforce reductions and $35 million for lease termination and other exit costs. These liabilities will be paid over approximately eleven years as lease shortfall payments are made.

We expect that we will continue to expend cash and incur restructuring expenses. As mentioned above, we expect that we will pay in 2006 a significant portion of our total restructuring liabilities at December 31, 2005. We also expect to incur restructuring expenses in an amount equal to approximately 0.5 to 0.7 percent of our revenues in each year as part of our routine assessment of our business practices and strategy. These expenses will be recorded in cost of sales, selling, general and administrative expenses and other income (expense), net, in the Consolidated Income Statements according to the nature of the expenses, except for restructuring expenses incurred by businesses classified in discontinued operations, which will be recorded in income (loss) from discontinued operations. We expect to fund our cash expenditures under our restructuring programs through cash generated from our continuing operations. The benefits of these restructuring programs are expected to be realized through reductions in selling, general and administrative expenses and cost of sales in the subsequent years. These benefits, however, may be offset by increases in cost of sales, selling, general and administrative expenses and other income (expense), net, due to various other factors, which cannot be predicted in advance.

47

ACQUISITIONS, INVESTMENTS AND DIVESTITURES

Acquisitions and investments

During 2005, 2004, and 2003, we invested $27 million, $24 million and $55 million, respectively, in new businesses, joint ventures or affiliated companies.

Divestitures of businesses, joint ventures and affiliated companies

In 2005, 2004 and 2003, we received (paid) cash, net of cash disposed, from sales of businesses, joint ventures and affiliated companies of $(97) million, $1,182 million and $543 million, respectively. In relation to these transactions, we recognized gains in 2005, 2004 and 2003, respectively, within other income (expense), net, of $20 million, $52 million and $43 million. We also recognized losses related to the sale of operations in 2005, 2004, and 2003 within loss from discontinued operations, net of tax, of $16 million, $63 million and $38 million, respectively.

Divestitures in 2005

In November 2005, we completed the sale of our remaining Structured Finance business by divesting our Lease portfolio business in Finland. At the time of sale, the Lease portfolio business held lease and loan financial receivables of approximately $300 million and was the last remaining major entity of our Structured Finance business. In 2005, we recorded a loss of $28 million in loss from discontinued operations, principally related to the loss on sale of the business.

In 2005, we sold our Control Valves business, which was part of our Automation Technologies division in Japan. The Control Valves business had revenues of $26 million, $31 million and $28 million and net income of $15 million, $3 million and $2 million recorded in discontinued operations in 2005, 2004 and 2003, respectively. The net income recorded in 2005 includes $14 million related to the gain on sale of our Control Valves business.

In 2005, we completed the sale of our Foundry business. The Foundry business had revenues of $41 million, $41 million and $45 million and net losses of $1 million, $17 million and $0 million recorded in discontinued operations in 2005, 2004 and 2003, respectively.

In 2005, we completed the sale of our Power Lines businesses in Nigeria, Italy and Germany. These businesses had revenues of $27 million, $117 million and $187 million and net losses recorded in discontinued operations of $12 million, $75 million and $10 million in 2005, 2004, and 2003, respectively. We currently plan to sell our remaining Power Lines businesses in Brazil, Mexico, Venezuela and South Africa. These businesses had revenues of $102 million, $79 million and $70 million in 2005, 2004 and 2003, respectively. These businesses reported net income of $3 million in each of 2005 and 2004, and a net loss of $4 million in 2003, recorded in loss from discontinued operations.

In 2005, we also sold our equity interest in the Termobahia power project in Brazil for $46 million, and recorded a loss in other income (expense), net, of $4 million in 2005 related to this investment.

Divestitures in 2004

In 2004, we sold our Upstream Oil, Gas and Petrochemicals business for an initial purchase price of $925 million. Net cash proceeds from the sale were approximately $800 million, reflecting the initial sales price of $925 million adjusted for unfunded pension liabilities and changes in net working capital. The Upstream Oil, Gas and Petrochemicals business had revenues of $855 million and $1,499 million and net losses of $70 million and $44 million in 2004 and 2003, respectively.

In 2004, we completed the sale of our Reinsurance business, receiving gross cash proceeds of $415 million and net cash proceeds of approximately $280 million. The Reinsurance business recorded losses

48

totaling $41 million and $97 million in loss from discontinued operations, and revenues of $139 million and $782 million in 2004 and 2003, respectively. The 2003 net loss of $97 million includes a $154 million impairment charge and an allocation of interest of $15 million in accordance with EITF 87-24, offset by income from operations of $72 million.

We sold the portion of our Building Systems business operating in Switzerland in 2004 for gross cash proceeds of approximately $39 million, but retained a 10 percent ownership interest. We recognized in 2004 a net gain on disposal of $12 million, before tax, in other income (expense), net.

In 2004, we sold our MDCV (Mitsubishi-Dainichi Continuous Vulcanization) Cable Business. This business had revenues of $74 million and net losses of $24 million in 2003.

In addition, in 2004, we sold our entire 15.7 percent equity interest in IXYS Corporation for approximately $42 million and recorded a gain, before tax, of $20 million in other income (expense), net.

In 2004, we also sold a business in Sweden, formerly part of our Automation Technologies division, for $11 million, and recorded a gain on disposal of $7 million, before tax, in other income (expense), net.

Divestitures in 2003

In December 2003, as part of the divestment of our Structured Finance business, we sold ABB Export Bank. We received cash proceeds of approximately $50 million from the sale and recorded a loss on disposal of $12 million, in discontinued operations, net of tax.

In December 2003, we sold a part of our Wind Energy business in Germany for proceeds of approximately $35 million. The Wind Energy business had revenues $16 million and net losses of $42 million in 2003. During 2005, we determined the Wind Energy business no longer met the criteria required to classify the remaining business in discontinued operations. Therefore, as of the fourth quarter of 2005, the results of operations of the Wind Energy business were reclassified to continuing operations for all periods presented.

In August 2003, as part of the continued divestment of our Building Systems business, we sold the portions of our Building Systems business operating in Sweden, Norway, Denmark, Finland, Russia and the Baltic states for consideration of $213 million. We recorded a gain on disposal of approximately $124 million, before tax, in other income (expense), net. Additionally, throughout 2003, we sold portions of our Building Systems business operating in a number of other countries, including Belgium, the Netherlands, Austria, Hungary and the United Kingdom, for aggregate proceeds of $21 million, recording a loss on disposal of approximately $41 million, before tax, in other income (expense), net.

In June 2003, we sold our entire 35 percent interest in the Swedish Export Credit Corporation to the government of Sweden for net proceeds of approximately $149 million, and recorded a loss on disposal of approximately $80 million, before tax, included in other income (expense), net.

Also in June 2003, we sold our interests in certain equity investments in Australia for cash proceeds of approximately $90 million, and recorded in 2003 a gain on disposal of approximately $28 million, before tax, in other income (expense), net.

In March 2003, we sold our aircraft leasing business for approximately $90 million. This business consisted of a portfolio of loans and leases related to commuter aircraft and helicopters used primarily in Northern Europe. We provided significant financial support to the entity formed by the buyer for the acquisition. Following the introduction of FIN 46 in 2003, we determined that this entity should be treated as a VIE and, as a result of the financial support we provided, that we are the primary beneficiary of this entity. Accordingly, we have consolidated this entity in our Consolidated Financial Statements.

49

Other divestitures

During 2005, 2004 and 2003, we sold several operating units and investments, excluding the divestments disclosed above, for total proceeds of $24 million, $39 million and $31 million, respectively, and recognized net gains on disposal of $21 million, $13 million and $12 million, respectively, which are included in other income (expense), net. Revenues and net income from these businesses and investments were not significant in 2005, 2004 and 2003.

EXCHANGE RATES

We report our financial results in U.S. dollars. A significant amount of our revenues, expenses, assets and liabilities are denominated in other currencies due to our global operations. As a consequence, movements in exchange rates between currencies may affect:

·our profitability;

·the comparability of our results between periods; and

·the carrying value of our assets and liabilities.

We must translate non-U.S. dollar denominated results of operations, assets and liabilities to U.S. dollars in our Consolidated Financial Statements. Balance sheet items are translated to U.S. dollars using year-end currency exchange rates. Income statement and cash flow items are translated to U.S. dollars using the average currency exchange rate over the relevant period. As a consequence, increases and decreases in the value of the U.S. dollar against other currencies will affect our reported results of operations in our Consolidated Income Statement and the value of certain of our assets and liabilities in our Consolidated Balance Sheet, even if our results of operations or the value of those assets and liabilities have not changed in their original currency. Because of the impact foreign exchange rates have on 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 shareholders’ equity, as has been the case during the period from 2003 through 2005.

While we operate globally and report our financial results in U.S. dollars, because of the location of our significant operations and because our headquarters are in Switzerland, exchange rate movements between the U.S. dollar and both the euro (EUR) and the Swiss franc (CHF) are of particular importance to us.

The exchange rates between the U.S. dollar and the EUR and the U.S. dollar and the CHF as of December 31, 2005, 2004, and 2003, are as follows.

	At December 31,
Exchange rates into U.S. dollars	2005		2004		2003
EUR 1.00	$	1.18	$	1.37	$	1.26
CHF 1.00	$	0.76	$	0.88	$	0.81

The average exchange rates between the U.S. dollar and the EUR and the U.S. dollar and the CHF for the years ended December 31, 2005, 2004 and 2003, are as follows.

	Year ended December 31,
Exchange rates into U.S. dollars	2005		2004		2003
EUR 1.00	$	1.25	$	1.25	$	1.13
CHF 1.00	$	0.81	$	0.81	$	0.75

50

When we incur expenses that are not denominated in the same currency as the related revenues, foreign exchange rate fluctuations could adversely 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 risk of our operations.

In 2005, approximately 86 percent of our consolidated revenues were reported in currencies other than U.S. dollars. Of that amount, the following percentages were reported in the following currencies:

·Euro, approximately 40 percent,

·Chinese renminbi, approximately 8 percent,

·Swedish krona, approximately 7 percent,

·Swiss franc, approximately 5 percent and

·Pound sterling, approximately 4 percent.

In 2005, approximately 85 percent of our consolidated cost of sales and selling, general and administrative expenses were reported in currencies other than U.S. dollars. Of that amount, the following percentages were reported in the following currencies:

·Euro, approximately 40 percent,

·Chinese renminbi, approximately 7 percent,

·Swedish krona, approximately 7 percent,

·Swiss franc, approximately 5 percent and

·Pound sterling, approximately 4 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 many of our non-U.S. subsidiaries are reported in the currencies of the countries in which those subsidiaries reside. We call these currencies “local currencies.” Local currency financial information is then translated into U.S. dollars 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, earnings before interest and taxes and other measures as reported in local currencies (as well as in U.S. dollars). 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 U.S. dollars are caused exclusively by changes in currency exchange rates.

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 and our reconciliations, provide a more complete understanding of factors and trends affecting the business. Because 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 name. We strongly encourage investors to review our financial statements and publicly-filed reports in their entirety, and not to rely on any single financial measure.

51

ORDERS

We book and report an order when a binding contractual agreement has been concluded with the 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, cancellations of orders, returns of delivered goods, and the recognition of income relating to the order.

The undiscounted value of revenues we expect to generate from our orders at any point in time is represented by our order backlog. Approximately 10 percent of the value of the orders we booked in 2005 were “large orders,” which we define as orders from third parties involving at least $15 million of products or services. Of the total value of orders in our Power Technologies and Automation Technologies divisions in 2005, approximately 12 percent and 7 percent, respectively, represented large orders. Within our Non-core activities division, large orders represented 26 percent of total orders in 2005, as large orders accounted for 39 percent of the value of orders received by the Oil, Gas and Petrochemicals business.

The level of orders fluctuates from year to year. Arrangements included in any particular order can be complex and unique to that order. Portions of our business involve orders for long-term projects that can take months or years to complete and many large orders result in revenues in periods after the order is booked. However, the level of large orders, and orders generally, cannot be used to accurately predict future revenues or operating performance. Orders that have been placed can 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 divisions based on orders received, revenues, earnings before interest and taxes (EBIT), EBIT as a percentage of revenues (EBIT margin) and net cash provided by (used in) operating activities. The orders, revenues and EBIT of our divisions include interdivisional transactions. In 2005, approximately 96 percent of our core divisions’ orders and revenues were from third-party customers. EBIT is the amount resulting from the subtraction of our cost of sales, selling, general and administrative expenses and other income (expense), net, from our revenues. Net cash provided by (used in) operating activities represents the cash provided by or used in a business before cash inflows and outflows from investing and financing activities, and, as relates to our divisions, includes interdivisional transactions.

52

ANALYSIS OF RESULTS OF OPERATIONS

Our results from operations were as follows:

	Year ended December 31,
	2005			2004			2003
	(U.S. dollars in millions, except per share data)
Orders	$	23,581		$	21,586		$	19,603
Order backlog(1)	12,054			12,332			11,269
Revenues	22,442			20,610			20,332
Cost of sales	16,830			15,681			15,856
Gross profit	5,612			4,929			4,476
Selling, general and administrative expenses	3,922			3,822			3,950
EBIT	1,742			1,046			287
Net interest and other finance expense	(246		)	(209		)	(402		)
Provision for taxes	(482		)	(331		)	(233		)
Minority interest	(131		)	(102		)	(67		)
Income (loss) from continuing operations before cumulative effect of accounting change	883			404			(415		)
Loss from discontinued operations, net of tax	(143		)	(439		)	(364		)
Cumulative effect of accounting change, net of tax	(5		)	—			—
Net income (loss)	$	735		$	(35	)	$	(779	)
Basic earnings (loss) per share:
Income (loss) from continuing operations before cumulative effect of accounting change	$	0.44		$	0.20		$	(0.34	)
Net income (loss)	$	0.36		$	(0.02	)	$	(0.64	)
Diluted earnings (loss) per share:
Income (loss) from continuing operations before cumulative effect of accounting change	$	0.43		$	0.20		$	(0.34	)
Net income (loss)	$	0.36		$	(0.02	)	$	(0.64	)

(1)as of December 31

A more detailed discussion of the orders, revenues, cost of sales, selling, general and administrative expenses and EBIT for our individual divisions and other businesses follows in the sections below entitled “Power Technologies,” “Automation Technologies,” “Non-core activities” and “Discontinued operations.”

Orders

	Year ended December 31,
	2005			2004			2003
	(U.S. dollars in millions)
Power Technologies	$	10,714		$	9,304		$	7,622
Automation Technologies	12,675			11,301			9,665
Core divisions	23,389			20,605			17,287
Non-core activities
Oil, Gas and Petrochemicals	698			1,216			1,156
Equity Ventures	2			7			26
Structured Finance	5			3			31
Building Systems	347			388			1,616
Other Non-core activities	59			79			515
Total Non-core activities	1,111			1,693			3,344
Corporate/Other and inter-division eliminations	(919		)	(712		)	(1,028		)
Total	$	23,581		$	21,586		$	19,603

53

In 2005, orders increased by $1,995 million, or 9 percent (8 percent in local currencies), to $23,581 million.

Orders received by our core divisions increased by 14 percent in 2005 (13 percent in local currencies), with orders received by our Power Technologies and Automation Technologies divisions increasing 15 percent and 12 percent (14 percent and 11 percent in local currencies), respectively. Orders received by our Non-core activities division decreased by 34 percent (35 percent in local currencies) in 2005, mainly due to changes in the bidding policy of our Oil, Gas and Petrochemicals business to reduce the number of projects performed under long-term fixed price contracts and to increase the number of projects performed under contracts providing for the reimbursement of expenses as incurred.

In 2004, orders increased by $1,983 million, or 10 percent (decreased by 2 percent in local currencies), to $21,586 million from $19,603 million in 2003. Orders received by our Non-core activities division decreased by 49 percent (55 percent in local currencies) in 2004 as compared to 2003.

We determine the geographic distribution of our orders based on the location of the customer, which may be different from the ultimate destination of the products’ end use. The geographic distribution of our consolidated orders in 2005, 2004 and 2003 was approximately as follows:

	Year ended December 31,
	2005		2004		2003
	(U.S. dollars in millions)
Europe	$	10,933	$	11,006	$	10,999
Americas	4,443		3,743		3,180
Asia	5,773		4,980		3,460
Middle East and Africa	2,432		1,857		1,964
Total	$	23,581	$	21,586	$	19,603

Orders in 2005 from Europe remained consistent in both reporting and local currencies as compared to 2004, as modest growth in western Europe offset a decrease in eastern Europe, caused mainly by a reduction in large projects. Orders from the Americas grew 19 percent (15 percent in local currencies), driven by strong demand for power infrastructure and automation products in South America. Growth in orders from the Americas was also supported by demand in North America, specifically in the U.S. for power systems and equipment. Asian orders increased 16 percent (14 percent in local currencies), reflecting investments in power and industry infrastructure predominantly in India. Orders from the MEA rose 31 percent (30 percent in local currencies), primarily as a result of several large orders for power infrastructure projects.

Orders from Europe remained consistent (declined 8 percent in local currencies) in 2004 as compared to 2003. Changes in our orders from Europe were primarily the result of the divestments in our Building Systems business in certain countries and a change in bidding policy for new contracts in the Oil, Gas and Petrochemicals business. Orders from the Americas increased 18 percent (15 percent in local currencies) in 2004, driven largely by orders from the automotive industry.

Asian orders increased 44 percent (37 percent in local currencies) in 2004, principally resulting from an increase in orders from China and economic growth and infrastructure development in India following the Indian government’s economic liberalization initiatives. In 2004, orders from the MEA declined by 5 percent (13 percent in local currencies) as compared to 2003, which included several large orders received by our Power Technology Systems business area.

54

Order backlog

	Year ended December 31,
	2005			2004			2003
	(U.S. dollars in millions)
Power Technologies	$	7,058		$	6,858		$	6,009
Automation Technologies	4,395			4,305			3,812
Core divisions	11,453			11,163			9,821
Non-core activities
Oil, Gas and Petrochemicals	774			1,251			1,264
Equity Ventures	—			—			—
Structured Finance	—			—			2
Building Systems	151			255			554
Other Non-core activities	4			27			42
Total Non-core activities	929			1,533			1,862
Corporate/Other and inter-division eliminations	(328		)	(364		)	(414		)
Total	$	12,054		$	12,332		$	11,269

Order backlog in 2005 decreased by $278 million, or 2 percent (increased 7 percent in local currencies), to $12,054 million. Order backlog in our core divisions increased by 3 percent (12 percent in local currencies) which was more than offset by a 39 percent decline (33 percent in local currencies) in the order backlog in our Non-core activities division mainly due to lower orders in our Oil, Gas and Petrochemicals business.

In 2004, order backlog increased by $1,063 million, or 9 percent (3 percent in local currencies), to $12,332 million as an increase in order backlog in our core divisions exceeded an 18 percent decline (23 percent in local currencies) in order backlog in our Non-core activities division.

Revenues

	Year ended December 31,
	2005			2004			2003
	(U.S. dollars in millions)
Power Technologies	$	9,784		$	8,675		$	7,524
Automation Technologies	12,161			11,000			9,602
Core divisions	21,945			19,675			17,126
Non-core activities
Oil, Gas and Petrochemicals	933			1,079			1,895
Equity Ventures	2			7			26
Structured Finance	5			4			31
Building Systems	421			508			1,829
Other Non-core activities	60			93			540
Total Non-core activities	1,421			1,691			4,321
Corporate/Other and inter-division eliminations	(924		)	(756		)	(1,115		)
Total	$	22,442		$	20,610		$	20,332

Revenues increased by $1,832 million, or 9 percent (8 percent in local currencies), to $22,442 million in 2005 from $20,610 million in 2004. This increase reflects a higher level of execution of orders from order backlog and new orders received during 2005 in both our core divisions. Although both divisions increased revenues by more than 10 percent in 2005 as compared to 2004, this increase was partly offset by a reduction of revenues in our Non-core activities division of $270 million, or 16 percent, mainly due to

55

reductions in our Oil, Gas and Petrochemicals business following changes in its bidding policy for new projects and the closure of our Building Systems business in certain countries.

In 2004, revenues increased by $278 million, or 1 percent (decreased by 6 percent in local currencies), to $20,610 million from $20,332 million in 2003. The relatively flat revenue growth in 2004 was due to a decrease of 61 percent (64 percent in local currencies) in revenues generated by our Non-core activities division that substantially offset revenue increases of 15 percent and 15 percent (8 percent and 6 percent in local currencies) in our Power Technologies and Automation Technologies divisions, respectively.

Revenues from services increased 12 percent to $3,705 million in 2005 from $3,301 million in 2004 reflecting an increased focus on services by both of our core divisions. Expressed as a percentage of total revenues, service revenues represented 17 percent of total revenues in 2005 relative to 16 percent in 2004. During 2004, service revenues increased by $306 million or 10 percent from $2,995 million in 2003. Service revenues represented 15 percent of total revenues during 2003.

We determine the geographic distribution of our revenues based on the location of the customer, which may be different from the ultimate destination of the products’ end use. The geographic distribution of our consolidated revenues in 2005, 2004 and 2003 was approximately as follows:

	Year ended December 31,
	2005		2004		2003
	(U.S. dollars in millions)
Europe	$	11,139	$	10,750	$	10,950
Americas	4,231		3,557		3,844
Asia	5,127		4,261		3,519
Middle East and Africa	1,945		2,042		2,019
Total	$	22,442	$	20,610	$	20,332

Revenues in Europe increased by 4 percent (3 percent in local currencies) in 2005 after a decline of 2 percent (10 percent in local currencies) in 2004 as compared to 2003. The increased revenues from our core divisions more than offset a reduction in revenues from our Non-core activities division during 2005 whereas, during 2004, the reductions associated with divestments in our Building Systems business in certain countries resulted in an overall reduction in revenues. Revenues from the Americas increased 19 percent in 2005 (15 percent in local currencies) as compared to a 7 percent decline (9 percent in local currencies) in 2004. The increase in 2005 was primarily the result of revenue growth from execution of large projects in Mexico, Canada, Brazil and the United States, while lower order intake was the main reason for the decrease in 2004. Revenues from Asia increased 20 percent and 21 percent (19 percent and 16 percent in local currencies) in 2005 and 2004, respectively, as a result of market growth in China, India, Australia and Korea. Revenues from the MEA decreased 5 percent in 2005 relative to 2004, following lower orders received during 2004. Revenues in the MEA remained at a similar level in 2004 relative to 2003 in our reporting currency, while decreasing 4 percent in local currencies, mainly due to lower revenues in Saudi Arabia and Angola, where significantly higher revenues were recorded in 2003 from the execution of large projects which did not recur thereafter.

Cost of sales

Cost of sales increased by $1,149 million, or 7 percent (6 percent in local currencies), to $16,830 million in 2005 after a decrease in 2004 of $175 million, or 1 percent (8 percent in local currencies), to $15,681 million.

Cost of sales consists primarily of labor, raw materials and related components. Cost of sales also includes provisions for warranty claims, contract losses and project penalties, employee severance expenses as well as order-related development expenses incurred in connection with projects for which we have

56

recognized corresponding revenues. Order-related development expenses are recorded in cost of sales, and amounted to $735 million, $727 million and $886 million in 2005, 2004 and 2003, respectively. Order-related development expenses are initially recorded in inventories as work-in-progress, and are reflected in cost of sales at the time revenue is recognized.

The gross profit margins on a consolidated basis and for each core division and our Non-core activities division, calculated as gross profit divided by revenues, were as follows:

	Year ended December 31,
	2005		2004		2003
Power Technologies	21.0	%	20.4	%	22.1	%
Automation Technologies	30.2	%	29.4	%	29.0	%
Non-core activities	8.7	%	5.7	%	8.6	%
Consolidated	25.0	%	23.9	%	22.0	%

The gross profit margins in our core divisions significantly increased during 2005 as a result of cost reduction activities, operational and productivity improvements and savings from supply chain management, and were partly offset by expenses relating to a program implemented in 2005 to consolidate our transformer business within our Power Technologies division and increases in raw material prices, particularly steel, copper, aluminum and transformer oil. Improvements in project execution within our Oil, Gas and Petrochemicals business, in our Non-core activities division, also contributed to the overall increase in the gross profit margin.

The consolidated gross profit margin improved in 2004 as compared to 2003, principally due to an improvement in the gross profit margin of our Oil, Gas and Petrochemicals business from negative 9.5 percent in 2003 to positive 9.9 percent in 2004 following a $1,103 million reduction in cost of sales related to the culmination of long-term fixed price contracts.

Selling, general and administrative expenses

Selling, general and administrative expenses increased by $100 million, or 3 percent (2 percent in local currencies), to $3,922 million in 2005 from $3,822 million in 2004. In 2004, selling, general and administrative expenses decreased by $128 million, or 3 percent (10 percent in local currencies), from $3,950 million in 2003.

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

	Year ended December 31,
	2005			2004			2003
	(U.S. dollars in millions)
Selling expenses	$	2,103		$	1,897		$	1,827
General and administrative expenses	1,819			1,925			2,123
Total selling, general and administrative expenses	$	3,922		$	3,822		$	3,950
Total selling, general and administrative expenses as a percentage of revenues	17.5		%	18.5		%	19.4		%

Selling, general and administrative expenses as a percentage of revenues remained relatively consistent in our Power Technologies and Non-core activities divisions in 2005 after decreasing in 2004 as compared to 2003. Selling, general and administrative expenses as a percentage of revenues decreased in our Automation Technologies division in each of the past two years relative to 2003.

Selling expenses increased 11 percent and 4 percent (increased 10 percent and decreased 4 percent in local currencies) in 2005 and 2004, respectively. Selling expenses increased in each of our Power Technologies and Automation Technologies divisions by 20 percent and 6 percent (18 percent and 6

57

percent in local currencies), respectively, reflecting an increase in the sales force deployed in emerging and growth markets (which has resulted in higher orders received from these markets). Selling expenses remained at relatively constant levels in our Non-core activities division during 2005 and 2004, after decreasing more than $100 million from 2003 due to business divestments and closures of certain non-core businesses.

General and administrative expenses decreased by 6 percent and 9 percent (6 percent and 16 percent in local currencies) in 2005 and 2004, respectively. In 2005, an increase in general and administrative expenses of 7 percent and 12 percent (6 percent and 11 percent in local currencies) in our Power Technologies and Automation Technologies divisions, respectively, due to increased revenue volumes, was more than offset by a reduction in expenses in our Non-core activities and Corporate/Other divisions driven by a lower level of business activity and lower corporate costs. General and administrative expenses decreased in 2004 relative to 2003, as a result of sales and closures of certain businesses in our Non-core activities division, partially offset by increases of 2 percent and 14 percent (decrease of 6 percent and increase of 4 percent in local currencies) in our Power Technologies and Automation Technologies divisions, respectively.

General and administrative expenses include non-order related research and development, which decreased 2 percent and increased 9 percent in 2005 and 2004, respectively. Research and development costs not related to a specific order or project were $679 million, $690 million and $635 million in 2005, 2004 and 2003, respectively.

Other income (expense), net

Other income (expense), net, typically consists of restructuring expenses, gains or losses from the sale of businesses, gains or losses from the sale or disposal of property, plant and equipment, asset write-downs, our share of income or loss from equity accounted companies, principally from our Equity Ventures business, and license income.

	Year ended December 31,
	2005			2004			2003
	(U.S. dollars in millions)
Restructuring expenses	$	(53	)	$	(165	)	$	(341	)
Capital gains, net	62			83			24
Asset write-downs	(58		)	(93		)	(35		)
Income from licenses, equity
accounted companies and other	101			114			113
Total	$	52		$	(61	)	$	(239	)

Restructuring expenses recorded during 2005 under other income (expense), net, included $24 million in our Automation Technologies division, primarily related to factory closing and streamlining operations in Europe, and $16 million within our Corporate/Other division, primarily in the Americas in our Real Estate business. In addition, our Power Technologies division recorded restructuring expenses of $11 million, primarily in Europe. We implemented major restructuring programs in previous periods focusing on increased productivity and streamlining of operations, particularly in our Non-core activities division with a view to prepare the businesses in that division for divestment. Restructuring expenses recorded during 2004 and 2003 were primarily from the execution of these programs.

58

Capital gains, net, in 2005 included $45 million on the sale of land and buildings primarily in Europe and $18 million on the sale of shares and participations in our Equity Ventures business and other transactions. Capital gains, net, in 2004 included gains of $33 million on the sale of land and buildings, $20 million on the sale of our shares of IXYS Corporation and lesser amounts from a number of smaller transactions. Capital gains, net, in 2003 included gains of $83 million from the sale of businesses in our Building Systems business, $28 million from the sale of equity investments in Australia, $26 million from the sale of land and buildings and lesser amounts from a number of smaller transactions, partly offset by an $80 million loss on the sale of our equity interest in the Swedish Export Credit Corporation.

Asset write-downs in 2005 included the impairment of long-lived assets of $36 million, primarily in Europe, and $22 million related to write-downs of certain of our investments, primarily in our Equity Ventures business. Asset write-downs in 2004 included charges of $93 million in respect of goodwill, an e-business investment, property and equipment and notes receivable in our Power Technologies division. Asset write-downs in 2003 related to software, several equity investments and certain long-lived assets.

License income was $9 million, $24 million and $25 million in 2005, 2004 and 2003, respectively, primarily reflecting income from liquid crystal display licenses. The reduction in 2005 reflects the completion of the period of certain agreements.

Income from equity accounted companies was $109 million, $87 million and $96 million in 2005, 2004 and 2003, respectively. Income from equity accounted companies includes income of $62 million, $68 million and $62 million in 2005, 2004 and 2003, respectively, from our investment in Jorf Lasfar Energy Company S.C.A., which operates a power plant in Morocco, and income of $23 million in 2005 from our investment in a power project in Neyveli, India, which was primarily responsible for the higher level of income during 2005.

Earnings before interest and taxes

Our EBIT for the years ended December 31, 2005, 2004 and 2003 was as follows:

	Year ended December 31,
	2005			2004			2003
	(U.S. dollars in millions)
Power Technologies	$	789		$	608		$	592
Automation Technologies	1,312			1,023			735
Core divisions	2,101			1,631			1,327
Non-core activities
Oil, Gas and Petrochemicals	48			(4		)	(296		)
Equity Ventures	69			69			76
Structured Finance	—			(14		)	(68		)
Building Systems	(37		)	(70		)	(104		)
Other Non-core activities	(46		)	(43		)	(128		)
Total Non-core activities	34			(62		)	(520		)
Corporate/Other	(393		)	(523		)	(520		)
Total	$	1,742		$	1,046		$	287

EBIT increased by $696 million, or 67 percent (66 percent in local currencies), to $1,742 million in 2005 and by $759 million, or 264 percent (238 percent in local currencies), to $1,046 million in 2004.

59

The EBIT margins for our core divisions and on a consolidated basis for the years ended December 31, 2005, 2004 and 2003, are as follows:

	Year ended December 31,
	2005		2004		2003
Power Technologies	8.1	%	7.0	%	7.9	%
Automation Technologies	10.8	%	9.3	%	7.7	%
Core divisions	9.6	%	8.3	%	7.7	%
Total	7.8	%	5.1	%	1.4	%

Net interest and other finance expense

Net interest and other finance expense consists of interest and dividend income offset by interest and other finance expense. Interest and other finance expense includes interest expense on our borrowings, securitization costs, amortization of upfront costs associated with our credit facility and debt securities, commitment fees on our bank facility, gains (losses) on marketable securities, expenses relating to the accretion to par of our 4.625% $968 million convertible bonds and, in 2004 and 2003, expenses relating to the change in fair value of the embedded derivative that was in these bonds.

	Year ended December 31,
	2005			2004			2003
	(U.S. dollars in millions)
Interest and dividend income	$	157		$	151		$	142
Interest and other finance expense	(403		)	(360		)	(544		)
Net interest and other finance expense	$	(246	)	$	(209	)	$	(402	)

Interest and dividend income increased slightly in 2005 as compared to 2004 due to an increase in interest rates partially offset by a reduction in the average balance of cash and marketable securities. In 2004, interest and dividend income increased as compared to 2003, due to higher average balances of cash and marketable securities and higher average market interest rates.

Interest and other finance expense increased in 2005 to $403 million as compared to $360 million in 2004. Debt maturities and debt repurchases during 2005 resulted in a lower average level of debt in 2005 than in 2004 which, together with the interest rate swaps that we entered into in 2005 to effectively convert the interest obligations on our 6.5% 650 million euro bonds and our 3.75% 500 million Swiss franc bonds from fixed to floating, resulted in a lower total interest expense on borrowings in 2005 than in 2004, despite an increase in market interest rates during 2005. Interest and other finance expense in 2005 also includes an $18 million expense related to our securitization programs, a loss on repurchase of our bonds of $19 million, a write-off of $12 million of unamortized costs on our $1 billion credit facility that we replaced prior to expiry and a $31 million expense relating to the accretion to par of our 4.625% $968 million convertible bonds.

Interest and other finance expense in 2004 included a $43 million non-cash gain on available for sale marketable securities contributed to our German pension funds, $20 million expense relating to our group securitization programs and a $52 million expense relating to the change in fair value of the embedded derivative and the amortization of the related discount on issuance from our 4.625% $968 million convertible bonds.

Interest and other finance expense decreased in 2004 as compared to 2003 due to lower average debt levels in the period, partially offset by higher average interest rates on our borrowings. The debt repaid in 2004 was largely debt that had been swapped into floating interest rates. Consequently, fixed rate debt, with higher average interest rates than our floating rate debt during 2004, represented an increased proportion of our total debt balance as compared to 2003.

60

In 2003, interest and other finance expense included a $40 million loss on the sale of our shares in the China National Petrochemical Corporation (Sinopec), a $36 million impairment charge for available-for-sale marketable securities in Germany, a $21 million expense relating to our securitization programs and a $84 million expense relating to the change in fair value of the embedded derivative and the amortization of the related discount on issuance from our 4.625% $968 million convertible bonds.

Provision for taxes

	Year ended December 31,
	2005			2004			2003
	(U.S. dollars in millions)
Income (loss) from continuing operations, before taxes and minority interest and cumulative effect of accounting change	$	1,496		$	837		$	(115	)
Provision for taxes	$	(482	)	$	(331	)	$	(233	)
Effective tax rate for the year	32.2		%	39.5		%	(202.6		)%

The provision for taxes in 2005 was $482 million, representing an effective tax rate for the year of 32.2 percent. The provision for taxes in 2005 includes an expense of approximately $60 million relating to items that are deducted for accounting purposes but not for the computation of taxable income, such as interest expense, state and local taxes on productive activities, disallowed meals and entertainment expenses and other similar items.

The provision for taxes in 2004 was $331 million, representing an effective tax rate for the year of 39.5 percent. The provision for taxes in 2004 includes an expense relating to a valuation allowance of $115 million, predominantly relating to our operations in Canada and France, a benefit of approximately $45 million from the losses of a post-divestment reorganization and a benefit of approximately $39 million relating to the resolution of certain prior year tax matters.

In 2003, the loss from continuing operations before taxes and minority interest and cumulative effect of accounting change of $115 million includes an $84 million expense relating to the change in fair value of the embedded derivative and the amortization of the related discount on issuance from our 4.625% $968 million convertible bonds. Furthermore, the provision for taxes includes the release of an approximately $38 million tax provision related to a favorable tax case ruling and an expense of approximately $16 million related to a tax claim filed in Central Europe. In addition, the provision for taxes includes a valuation allowance of approximately $258 million and $9 million of deferred tax assets as a result of the determination that it was more likely than not that such deferred tax assets would no longer be realized within our Oil, Gas and Petrochemicals business and certain countries within Central Europe respectively. The effective tax rate in 2003 applicable to income from continuing operations excluding the tax effect of these items would have been 38.7 percent.

Income (loss) from continuing operations before cumulative effect of accounting change

Income from continuing operations before cumulative effect of accounting change increased by $479 million to $883 million in 2005 as compared to $404 million in 2004, primarily reflecting increased EBIT partly offset by an increase in net interest and other finance expenses and provision for taxes in 2005.

Income (loss) from continuing operations before cumulative effect of accounting change increased by $819 million to an income of $404 million in 2004 as compared to a loss of $415 million in 2003. The increase reflects improved EBIT and reduced net interest and other finance expense in 2004.

61

Loss from discontinued operations, net of tax

The loss from discontinued operations, net of tax, as well as a detailed discussion of the results of our discontinued operations, follows in the section below entitled “Discontinued operations.”

Net income (loss)

As a result of the factors discussed above, net income improved by $770 million to a net income of $735 million in 2005, from a net loss of $35 million in 2004. The net loss in 2004 decreased by $744 million, to a net loss of $35 million in 2004, from a net loss of $779 million in 2003.

Earnings (loss) per share

	Year ended December 31,
	2005			2004			2003
	(U.S. dollars)
Income (loss) from continuing operations before cumulative effect of accounting change
Basic	$	0.44		$	0.20		$	(0.34	)
Diluted	$	0.43		$	0.20		$	(0.34	)
Loss from discontinued operations, net
Basic	$	(0.08	)	$	(0.22	)	$	(0.30	)
Diluted	$	(0.07	)	$	(0.22	)	$	(0.30	)
Net income (loss)
Basic	$	0.36		$	(0.02	)	$	(0.64	)
Diluted	$	0.36		$	(0.02	)	$	(0.64	)

Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted-average number of shares outstanding during the year. Diluted earnings (loss) per share is calculated by dividing net income (loss) by the weighted-average number of shares outstanding during the year, assuming that all potentially dilutive securities were exercised, if dilutive. Potentially dilutive securities include outstanding written call options, outstanding options granted under our employee incentive plans and shares issuable in relation to outstanding convertible bonds.

Basic earnings per share was $0.36 in 2005 as compared to a loss per share of $0.02 in 2004. Basic loss per share was $0.02 in 2004 as compared to $0.64 in 2003.

Power Technologies

The financial results of our Power Technologies division were as follows:

	Year ended December 31,
	2005		2004		2003
	(U.S. dollars in millions)
Orders	$	10,714	$	9,304	$	7,622
Order backlog	7,058		6,858		6,009
Revenues	9,784		8,675		7,524
Cost of sales	7,726		6,904		5,862
Selling, general and administrative expenses	1,247		1,100		1,022
EBIT	$	789	$	608	$	592

62

Orders

Orders increased by $1,410 million, or 15 percent (14 percent in local currencies), to $10,714 million in 2005. The order increase reflected growth in both business areas, led by Power Technology Products. Both large and base orders improved in 2005. The biggest individual project received in 2005 was a $220 million order to deliver substations to the Gulf Grid project, which will link the electricity grids of six states located in the Persian Gulf. Orders in 2004 included an order of approximately $390 million relating to the Three Gorges project in China.

Orders from other divisions were $517 million in 2005 as compared to $499 million in 2004, representing 5 percent of division orders in both periods. Orders from other divisions were $499 million in 2004 as compared to $432 million in 2003, representing 5 percent and 6 percent of division orders, respectively.

The geographic distribution of orders in 2005, 2004 and 2003 for our Power Technologies division was approximately as follows:

	Year ended December 31,
	2005			2004			2003
Europe		36	%		38	%		40	%
Americas		22	%		21	%		22	%
Asia		26	%		29	%		21	%
Middle East and Africa		16	%		12	%		17	%
Total		100	%		100	%		100	%

Order growth in 2005 was very strong in the MEA, reflecting a high demand for large system projects in the region. Order growth was also strong in Asia, as demand increased in many countries, particularly in India, resulting in a slight increase in the overall volume of orders from this region relative to 2004, which included the Three Gorges project in China. Orders increased in the Americas driven mainly by orders from Brazil, Canada, the United States and Puerto Rico, and reflected increases in large orders, partly offset by lower system orders in Mexico. Growth in Europe, which continued to be the largest regional source of orders but decreased as a percentage of division revenues, was led by our Power Technology Products business area, particularly in orders from central and eastern Europe.

Order growth in 2004 was led by growth in Asia, particularly in China where orders almost doubled, resulting in Asia becoming the second largest regional source of orders for our Power Technologies division. Orders also grew in Europe in 2004, which is the division’s largest regional source of orders. Orders in North America increased significantly, while orders from South America decreased slightly. Orders from the MEA decreased primarily due to a lower level of large orders in 2004 than in 2003.

Order backlog

Order backlog increased by $200 million, or 3 percent (12 percent in local currencies), to $7,058 million as of December 31, 2005 from $6,858 million as of December 31, 2004.

Order backlog increased by $849 million, or 14 percent (7 percent in local currencies), to $6,858 million as of December 31, 2004 from $6,009 million as of December 31, 2003.

63

Revenues

The distribution of revenues of our Power Technologies division by business area was approximately as follows:

	Year ended December 31,
	2005			2004			2003
Power Technology Products		63	%		62	%		59	%
Power Technology Systems		37	%		38	%		41	%

Revenues increased by $1,109 million, or 13 percent (11percent in local currencies), to $9,784 million in 2005 from $8,675 million in 2004. Revenues in our Power Technology Products business area increased by 12 percent (11 percent in local currencies), reflecting revenue increases in all three of its businesses. Revenues in our Power Technology Systems business area in 2005 increased 9 percent over the previous year (8 percent in local currencies) following execution of its order backlog.

Revenues increased by $1,151 million, or 15 percent (8 percent in local currencies), to $8,675 million in 2004 from $7,524 million in 2003, principally reflecting 21 percent (13 percent in local currencies) revenue growth in our Power Technology Products business area, and a 5 percent increase (2 percent decrease in local currencies) in our Power Technology Systems business area.

The geographic distribution of revenues in 2005, 2004 and 2003 for our Power Technologies division was approximately as follows:

	Year ended December 31,
	2005			2004			2003
Europe		37	%		39	%		39	%
Americas		22	%		22	%		24	%
Asia		28	%		25	%		24	%
Middle East and Africa		13	%		14	%		13	%
Total		100	%		100	%		100	%

Regionally, revenue growth in 2005 was led by Asia, reflecting higher revenues from China and India. Revenues increased in the Americas, particularly in Mexico, Canada, Brazil and Venezuela, as well as in Europe, led by Norway and the Netherlands. In the MEA, a revenue increase in our Power Technology Systems business area was offset in part by lower revenues in our Power Technology Products business area.

Regionally, revenues in 2004 were higher in Europe, Asia and the MEA. Asian revenues reflected modest growth in China, as revenues from our Power Technology Systems business area declined.

Cost of sales

Cost of sales increased by $822 million, or 12 percent (10 percent in local currencies), to $7,726 million in 2005 from $6,904 million in 2004, mainly due to a program implemented in 2005 to consolidate our transformer business in our Power Technology Products business area. However, as a percentage of revenues, cost of sales were lower. As a result, the gross profit margin for our Power Technologies division increased from 20.4 percent in 2004 to 21.0 percent in 2005. The gross profit margin increase was primarily led by the medium-voltage products business in our Power Technology Products business area, reflecting higher factory loading, operational and productivity improvements and supply chain savings.

64

Cost of sales increased by $1,042 million, or 18 percent (11 percent in local currencies), to $6,904 million in 2004 from $5,862 million in 2003. As a result, the gross profit margin for our Power Technologies division decreased from 22.1 percent in 2003 to 20.4 percent in 2004, reflecting higher input prices of raw materials, particularly steel, copper, aluminum and transformer oil, that principally impacted the transformers business, low capacity utilization of our Power Technology Systems business area and project-related hedging costs incurred following the discontinuation of certain cash flow hedges under SFAS 133, offset in part by savings in supply chain management and productivity improvements.

Selling, general and administrative expenses

Selling, general and administrative expenses increased by $147 million, or 13 percent (12 percent in local currencies), to $1,247 million in 2005 from $1,100 million in 2004. Expressed as a percentage of revenues, selling, general and administrative expenses remained at 12.7 percent in 2005 and 2004, reflecting higher sales costs, offset by proportionately lower general and administrative expenses.

Selling, general and administrative expenses increased by $78 million, or 8 percent (flat in local currencies), to $1,100 million in 2004 from $1,022 million in 2003. Expressed as a percentage of revenues, selling, general and administrative expenses decreased to 12.7 percent in 2004 from 13.6 percent in 2003, reflecting productivity gains from improved sales and administrative processes and implementation of our restructuring programs.

Earnings before interest and taxes

EBIT for our Power Technologies division grew $181 million, or 30 percent (28 percent in local currencies), to $789 million in 2005. EBIT margin for the division was 8.1 percent in 2005, as compared to 7.0 percent in 2004. Operational and productivity improvements, which included benefits from restructuring programs implemented prior to 2005, contributed to the increase. In addition, EBIT and EBIT margin benefited from higher revenues and, consequently, improved factory loading in our Power Technology Products business area and higher capacity utilization in our Power Technology Systems business area. EBIT in 2005 includes total charges of $123 million related to the transformer consolidation program in our Power Technology Products business area, a $14 million provision in our Power Technology Systems business area to cover estimated regulatory expenses, and a net capital gain of $9 million relating to the sale of a property in Italy by our Power Technology Products business area.

EBIT for our Power Technologies division grew $16 million, or 3 percent (lower by 2 percent in local currencies), to $608 million in 2004. EBIT margin for the division was 7.0 percent in 2004 as compared to 7.9 percent in 2003. The decrease in EBIT margin in 2004 principally reflects an increase in raw materials costs, especially for steel, copper, aluminum and transformer oil, a $26 million (of which approximately $20 million was included in other income (expense), net) write-down of notes receivable, $14 million in project-related hedging costs incurred following the discontinuation of certain cash flow hedges under SFAS 133 and continued low capacity utilization and lower margin turnkey projects, including in certain instances cost overruns, in parts of our Power Technology Systems business area. These decreases were partially offset by productivity-driven margin improvements in the medium-voltage products business within our Power Technology Products business area.

65

Automation Technologies

The financial results of our Automation Technologies division were as follows:

Automation Technologies

	Year ended December 31,
	2005	2004	2003
	(U.S. dollars in millions)
Orders	12,675	11,301	9,665
Order backlog	4,395	4,305	3,812
Revenues	12,161	11,000	9,602
Cost of sales	8,486	7,765	6,817
Selling, general and administrative expenses	2,355	2,170	1,913
EBIT	1,312	1,023	735

Orders

Orders increased by $1,374 million, or 12 percent (11 percent in local currencies), from $11,301 million in 2004 to $12,675 million in 2005. Orders received by our Automation Products business area increased by 12 percent (11 percent in local currencies) in 2005, led by an increase in orders from process industries. Orders received by our Process Automation business area grew by 16 percent (14 percent in local currencies) in 2005, with growth in all end user markets except the pulp and paper markets. Orders received by our Manufacturing Automation business area decreased by 3 percent (4 percent in local currencies), primarily due to the non-recurrence of large orders in the automotive industry. Orders from other divisions were $419 million in 2005, as compared to $355 million in 2004, representing 3 percent of the division orders in both years.

The geographic distribution of orders in 2005, 2004 and 2003 for our Automation Technologies division was approximately as follows:

	Year ended December 31,
	2005			2004			2003
Europe		55	%		59	%		61	%
Americas		17	%		16	%		15	%
Asia		23	%		19	%		18	%
Middle East and Africa		5	%		6	%		6	%
Total		100	%		100	%		100	%

The ultimate destination of our products’ end use is relevant for our Automation Technologies division, as some of our customers in Europe distribute or resell our products to end users in Asia, the Americas and the MEA. We estimate that approximately 10 percent of the total division orders are subsequently distributed or resold, and we believe the end users are distributed evenly between the ultimate destinations of Asia, the Americas and the MEA.

In 2005, orders from Asia continued to increase more quickly than in any other region. Orders from the Americas also grew, driven by increases in Automation Products in all industries, as well as in Process Automation, primarily from the oil and gas and metals industries. European orders grew modestly in 2005, as increases in orders from western Europe, which accounted for more than 90 percent of European orders, were partially offset by a reduction in large oil and gas orders from eastern Europe. Orders from the MEA decreased 4 percent as an increase in orders from the minerals industry was more than offset by a decline in large orders due to the timing of order flow from the oil and gas industry.

66

Orders increased by $1,636 million, or 17 percent (8 percent in local currencies), from $9,665 million in 2003 to $11,301 million in 2004. Orders received by our Automation Products business area increased by 21 percent (13 percent in local currencies) in 2004, led by an increase in orders from industrial and building installations customers. Orders received by our Process Automation business area grew by 13 percent (5 percent in local currencies) in 2004, as growth in orders from the mining, cement, metals, marine and oil and gas industries exceeded declining orders from the chemicals, pharmaceuticals and pulp and paper markets. Orders received by our Manufacturing Automation business area increased by 16 percent (8 percent in local currencies), primarily driven by orders for automotive systems in North America and China. Orders from other divisions were $355 million in 2004, as compared to $344 million in 2003 representing 3 percent and 4 percent of the division orders, respectively.

In 2004, orders from Asia increased more quickly than in any other region. Orders from the Americas also grew, driven by a large order from a customer in the U.S. automotive sector. European orders grew in 2004, as increases in orders from western Europe more than offset a reduction in orders from eastern Europe following the receipt of a large order in Poland during 2003. Orders from the MEA increased moderately in 2004 relative to 2003.

Order backlog

Order backlog increased by $90 million, or 2 percent (13 percent in local currencies), to $4,395 million as of December 31, 2005 from $4,305 million as of December 31, 2004.

Order backlog increased by $493 million, or 13 percent (5 percent in local currencies), to $4,305 million as of December 31, 2004 from $3,812 million as of December 31, 2003, principally as a result of increased order intake during 2004.

Revenues

The distribution of revenues of our Automation Technologies division by business area was approximately as follows:

	Year ended December 31,
	2005			2004			2003
Automation Products		47	%		47	%		46	%
Process Automation		40	%		41	%		40	%
Manufacturing Automation		13	%		12	%		14	%

Revenues increased by $1,161 million, or 11 percent (9 percent in local currencies), to $12,161 million in 2005 from $11,000 million in 2004. Revenues from our Automation Products business area grew 10 percent (9 percent in local currencies), primarily as a result of increased order intake. Revenues from our Process Automation business area increased by 8 percent (6 percent in local currencies), reflecting growth in the marine and minerals business, principally from the turbochargers and process industries. Revenues from our Manufacturing Automation business area grew 23 percent (22 percent in local currencies), with increases in both the products and systems businesses. Revenues from other divisions were $400 million in 2005 as compared to $391 million in 2004 representing 3 percent and 4 percent respectively of the division revenues.

Revenues increased by $1,398 million, or 15 percent (6 percent in local currencies), to $11,000 million in 2004 from $9,602 million in 2003, principally due to 17 percent (9 percent in local currencies) revenue growth in our Automation Products business area. Revenues in 2004 from our Process Automation business area increased by 16 percent (7 percent in local currencies), as growth in the oil and gas, minerals, turbocharging and control products businesses was moderated by declines in the pulp and paper and marine businesses. Our Manufacturing Automation business area, which accounted for 12 percent of

67

Automation Technologies’ 2004 revenues, decreased 2 percent (10 percent in local currencies) as a result of a weak backlog of system orders.

The geographic distribution of revenues in 2005, 2004 and 2003 for our Automation Technologies division was approximately as follows:

	Year ended December 31,
	2005			2004			2003
Europe		58	%		60	%		61	%
Americas		17	%		15	%		18	%
Asia		20	%		19	%		16	%
Middle East and Africa		5	%		6	%		5	%
Total		100	%		100	%		100	%

We estimate that approximately 10 percent of the total division revenues are subsequently distributed or resold, and we believe the end users are distributed evenly between the ultimate destinations of Asia, the Americas and the MEA.

In 2005, revenues from the Americas grew significantly, reflecting the receipt of several large orders in 2004. Revenues in 2005 also increased strongly in Asia, which continued to be the second largest source of revenues for our Automation Technologies division. European revenues in 2005 grew with increases in both western and eastern Europe, as Europe remained the division’s largest source of revenues. Revenues from the MEA declined in 2005.

Revenues generated in Asia grew significantly in 2004, as sales growth led by China and India caused Asia to become Automation Technologies’ second largest regional source of revenues. Revenues increased in Europe, which remained the largest source of revenues. Revenues from the Americas fell slightly in 2004, due to lower orders in 2003, principally from the automotive industry. Revenues from the MEA in 2004 increased following the receipt of several large orders in 2003.

Cost of sales

Cost of sales increased $721 million, or 9 percent (8 percent in local currencies), to $8,486 million in 2005 from $7,765 million in 2004. The gross profit margin for our Automation Technologies division increased to 30.2 percent in 2005 from 29.4 percent in 2004, as cost migration initiatives and productivity gains more than offset increased costs for raw materials, particularly steel and copper.

Cost of sales increased $948 million, or 14 percent (6 percent in local currencies), to $7,765 million in 2004 from $6,817 million in 2003. The gross profit margin for our Automation Technologies division increased to 29.4 percent in 2004, from 29.0 percent in 2003, following cost reduction and productivity gains from the restructuring programs and operational excellence initiatives, offset in part by increased costs for raw materials, particularly steel, copper and oil.

Selling, general and administrative expenses

Selling, general and administrative expenses increased by $185 million, or 9 percent (8 percent in local currencies), to $2,355 million in 2005 from $2,170 million in 2004. Expressed as a percentage of revenues, selling, general and administrative expenses decreased slightly to 19.4 percent in 2005 from 19.7 percent in 2004, as savings in general and administrative expenses due to cost reduction and other initiatives were offset by an increase in the sales forces deployed in emerging and growth markets.

Selling, general and administrative expenses increased by $257 million, or 13 percent (4 percent in local currencies), to $2,170 million in 2004 from $1,913 million in 2003. Expressed as a percentage of revenues, selling, general and administrative expenses decreased to 19.7 percent in 2004 from 19.9 percent

68

in 2003, reflecting savings in the general and administrative expenses primarily from previously implemented restructuring programs.

Earnings before interest and taxes

EBIT for our Automation Technologies division grew $289 million, or 28 percent (27 percent in local currencies), from $1,023 million in 2004 to $1,312 million in 2005. EBIT margin for the division increased to 10.8 percent in 2005 from 9.3 percent in 2004. EBIT margin increased in our Automation Products and Process Automation business areas. EBIT margin decreased in our Manufacturing Automation business area due to lower margin realized on large orders.

EBIT for our Automation Technologies division grew $288 million, or 39 percent (30 percent in local currencies), to $1,023 million in 2004. EBIT margin for the division increased to 9.3 percent in 2004 from 7.7 percent in 2003, reflecting an increase in the EBIT margin for all business areas due to productivity improvements, benefits from operational excellence initiatives and a decrease in restructuring costs from $139 million in 2003 to $72 million in 2004.

Non-core activities

Orders

Orders received by our Non-core activities division for the years ended December 31, 2005, 2004 and 2003, were as follows:

	Year ended December 31,
	2005		2004		2003
	(U.S. dollars in millions)
Oil, Gas and Petrochemicals	$	698	$	1,216	$	1,156
Equity Ventures	2		7		26
Structured Finance	5		3		31
Building Systems	347		388		1,616
Other Non-core activities	59		79		515
Total Non-core activities	$	1,111	$	1,693	$	3,344

Orders received in our Non-core activities division declined by 34 percent and 49 percent in 2005 and 2004, respectively. The reduction in orders during 2005 was mainly due to changes in the bidding policy of our Oil, Gas and Petrochemicals business. Divestments in our Building Systems business and the reduction of activities in the Other Non-core activities business primarily contributed to the decrease in orders received during 2004 as compared to 2003.

In 2005, 33 percent of the orders for our Oil, Gas and Petrochemicals business originated from Europe, with the remaining orders equally distributed among the other regions. Large orders in our Oil, Gas and Petrochemicals business decreased by 67 percent, while base orders increased by 9 percent in 2005 as compared to 2004. Within the Building Systems business, 96 percent of the orders in 2005 were received by our German business.

In 2004, orders for our Oil, Gas and Petrochemicals business increased mainly through an increase in base orders. Large orders in 2004, which decreased 2 percent from 2003, included projects in Sweden, Russia, China, Poland and the Middle East. Orders increased in all regions during 2004 as compared to 2003. More than 60 percent of the orders in 2004 originated from Europe, with approximately 8 percent originating from the Americas and the remainder originating in equal proportions from Asia and the MEA.

69

Within our Building Systems business, 91 percent of the orders in 2004 were received by our German business and 6 percent were received by the Swiss business, which we sold in February 2004.

Order backlog

Order backlog in our Non-core activities division was as follows:

	Year ended December 31,
	2005		2004		2003
	(U.S. dollars in millions)
Oil, Gas and Petrochemicals	$	774	$	1,251	$	1,264
Equity Ventures	—		—		—
Structured Finance	—		—		2
Building Systems	151		255		554
Other Non-core activities	4		27		42
Total Non-core activities	$	929	$	1,533	$	1,862

Revenues

Revenues from our Non-core activities division were as follows:

	Year ended December 31,
	2005		2004		2003
	(U.S. dollars in millions)
Oil, Gas and Petrochemicals	$	933	$	1,079	$	1,895
Equity Ventures	2		7		26
Structured Finance	5		4		31
Building Systems	421		508		1,829
Other Non-core activities	60		93		540
Total Non-core activities	$	1,421	$	1,691	$	4,321

Revenues in our Non-core activities division decreased by 16 percent and 61 percent in 2005 and 2004, respectively.

Revenues in our Oil, Gas and Petrochemicals business decreased 14 percent and 43 percent in 2005 and 2004, respectively, primarily as a result of the lower orders in the EPC business following the change in bidding policy in 2005 in this business. Building Systems revenues decreased by 17 percent and 72 percent in 2005 and 2004, respectively, primarily as a result of divestments. 89 percent and 80 percent of all Building Systems revenues were generated in Germany, in 2005 and 2004, respectively. Our Building Systems business in the United States accounted for 7 percent and 10 percent of revenues in 2005 and 2004, respectively.

Substantially all of our Structured Finance business has been divested and the reported revenues represent transactions relating to the remaining lease portfolios.

Our Equity Ventures business primarily includes our investments in equity accounted companies, the results of which are recorded in other income (expense), net.

Other Non-core activities revenues were generated principally by our Distributed Energy operations in Europe. In 2005, Other Non-core activities revenues decreased by $33 million, or 35 percent, due to the ongoing divestment and related closing processes in our customer service workshop and distributed energy businesses.

70

Earnings before interest and taxes

EBIT for our Non-core activities division was as follows:

	Year ended December 31,
	2005			2004			2003
	(U.S. dollars in millions)
Oil, Gas and Petrochemicals	$	48		$	(4	)	$	(296	)
Equity Ventures	69			69			76
Structured Finance	—			(14		)	(68		)
Building Systems	(37		)	(70		)	(104		)
Other Non-core activities	(46		)	(43		)	(128		)
Total Non-core activities	$	34		$	(62	)	$	(520	)

EBIT for the Oil, Gas and Petrochemicals business increased in 2005 as compared to 2004, largely due to improved order intake quality, improvements in project execution in the EPC business and increased profitability in its technology business. EBIT in the Oil, Gas and Petrochemicals business in 2004 improved relative to 2003, reflecting better project execution capabilities as well as a significant reduction in project-related write-offs in 2004. EBIT in 2005 and 2004 was also affected by stronger performance following the winding down of unprofitable long-term, fixed price EPC projects and increased revenue related to the licensing of process technologies, partially offset by higher operating costs by the floating production systems business.

EBIT losses for the Building Systems business decreased by $33 million in 2005 as compared to 2004, primarily due to project execution improvements in the United States, partially offset by losses in Denmark related to an arbitration ruling. In 2004, EBIT losses decreased by $34 million relative to 2003, primarily due to operational improvements and a reduction in restructuring expenses, partially offset by losses in the United States and the loss of income from the profitable Nordic and Swiss businesses sold in the third quarter of 2003 and February 2004, respectively.

EBIT for the Equity Ventures business was $69 million in both 2005 and 2004. Increased earnings during 2005 from our investment in a power project in Neyveli, India, in 2005 were offset by a loss on the sale of our investment in the Termobahia power project in Brazil and a reduction of the value of our investment in a power plant in Columbia. EBIT generated by the Equity Ventures business decreased by $7 million in 2004 as compared to 2003. EBIT in 2003 also included a $28 million gain on the sale of investments in Australia.

EBIT losses for our Structured Finance business decreased by $14 million in 2005 as compared to 2004, partially due to the termination of certain leases in Switzerland and decreased losses on divested companies in 2004. In 2004, EBIT losses decreased by $54 million as compared to 2003, primarily due to $67 million of losses associated with the divestment of the Swedish Export Credit Corporation in 2003.

EBIT losses for our Other Non-core activities increased by $3 million in 2005 as compared to 2004, partly due to a provision of $8 million related to a retained liability of a business previously sold, partially offset by lower restructuring costs in 2005. EBIT for these activities improved by $85 million in 2004 as compared to 2003, due to the dissolution of the group processes business, which represented $0 million and $42 million of the losses in 2004 and 2003, respectively.

71

Corporate/Other

Our Corporate/Other division comprises headquarters and stewardship, research and development and other activities. EBIT for our Corporate/Other division was as follows:

	Year ended December 31,
	2005			2004			2003
	(U.S. dollars in millions)
Headquarters and stewardship	$	(304	)	$	(438	)	$	(363	)
Research and Development	(90		)	(91		)	(92		)
Other	1			6			(65		)
Total Corporate/Other	$	(393	)	$	(523	)	$	(520	)

Headquarters and stewardship operating costs decreased by $134 million in 2005 after increasing $75 million in 2004 as compared to 2003. The reduction in 2005 was due to specific efforts to reduce corporate costs. These cost savings were partly offset by additional costs related to the global implementation of internal controls over financial reporting as required by the Sarbanes-Oxley Act of 2002.

Other (including Real Estate and Group Treasury Operations) generated a small gain in 2005, mainly due to the sale of certain real estate properties in Switzerland, Sweden and Spain, partly offset by provisions made for costs related to vacant real estate properties in the United States and write-downs in the value of certain other real estate properties. The improvement in 2004 occurred in both Real Estate and Group Treasury Operations, due to reduced restructuring expenses and a reduction in the level of general and administrative expenses.

Discontinued operations

The loss from discontinued operations, net of tax is as set forth below.

	Year ended December 31,
	2005			2004			2003
	(U.S. dollars in millions)
Asbestos	$	(133	)	$	(262	)	$	(142	)
Upstream Oil, Gas and Petrochemicals	1			(70		)	(44		)
Reinsurance	—			(41		)	(97		)
Structured Finance	(28		)	36			(26		)
Power Lines	(9		)	(72		)	(14		)
Others	26			(30		)	(41		)
Loss from discontinued operations, net of tax	$	(143	)	$	(439	)	$	(364	)

Tax expense, net, in discontinued operations was a benefit of $8 million in 2005 and an expense of $21 million and $54 million in 2004 and 2003, respectively.

In addition to the businesses already classified in discontinued operations, we may from time to time dispose of or close businesses that are not integral to our core divisions. If such a business meets the criteria of SFAS 144, we will reflect the results of operations from the business as discontinued operations in our Consolidated Income Statement and as assets and liabilities held for sale and in discontinued operations in our Consolidated Balance Sheet. We will reclassify the prior years’ presentation to reflect any disposals or closures on a comparable basis.

Asbestos

An overview of our asbestos-related obligations is included separately in “Contingencies and retained liabilities” below, as well as in Note 17 of the Consolidated Financial Statements.

72

Upstream Oil, Gas and Petrochemicals business

In 2004, we sold our Upstream Oil, Gas and Petrochemicals business for net cash proceeds of approximately $800 million, reflecting an initial sales price of $925 million adjusted for unfunded pension liabilities and changes in net working capital. The Upstream Oil, Gas and Petrochemicals business had revenues of $855 million and $1,499 million in 2004 and 2003, respectively, and net losses of $70 million and $44 million in 2004 and 2003, respectively.

Reinsurance

In 2004, we completed the sale of our Reinsurance business for gross cash proceeds of $415 million and net cash proceeds of approximately $280 million. The Reinsurance business had revenues of $139 million and $782 million and losses of $41 million and $97 million in loss from discontinued operations in 2004 and 2003, respectively. The 2003 net loss of $97 million includes a $154 million impairment charge and an allocation of interest of $15 million in accordance with EITF 87-24, offset by income from operations of $72 million.

Structured Finance

In 2002, we completed the sale of most of our Structured Finance business to General Electric Capital Corporation (GE) for approximately $2.0 billion. Pursuant to the sale and purchase agreement, we provided cash collateralized letters of credit to GE as security for certain performance-related obligations retained by us, which amounted to $15 million as of December 31, 2005.

As a continuation of the divestment of our Structured Finance business, we completed the sale of ABB Export Bank in December 2003 for approximately $50 million. ABB Export Bank had revenues of $9 million and a net loss of $9 million in 2003.

In November 2005, we completed the sale of our remaining Structured Finance business by divesting the Lease portfolio business in Finland. At the time of sale, this business had lease and loan financial receivables of approximately $300 million, and was the last remaining major entity of our Structured Finance business. In 2005, we recorded a loss of $28 million in loss from discontinued operations, principally related to the loss on sale of this business.

Power Lines

During 2004, we reclassified the Power Lines businesses in Nigeria, Italy and Germany to discontinued operations. The sale of these businesses, which were part of our Power Technologies division, was completed in 2005. These reclassified businesses had revenues of $27 million, $117 million and $187 million and net losses recorded in discontinued operations of $12 million, $75 million and $10 million for the years ended December 31, 2005, 2004, and 2003, respectively.

We currently plan to sell our remaining Power Lines businesses in Brazil, Mexico, Venezuela and South Africa. These businesses had revenues of $102 million, $79 million and $70 million in 2005, 2004 and 2003, respectively. They also reported net income of $3 million in each of 2005 and 2004, and a net loss of $4 million in 2003, recorded in loss from discontinued operations.

Others

In 2005, income from other sold businesses of $26 million primarily resulted from a gain on the sale of our Control Valves business in Japan, and an adjustment of provisions recorded in previous years for the divestment of other businesses. The losses reported from other sold businesses of $30 million and $41 million in 2004 and 2003, respectively, primarily relate to the divestments of our Foundry business and our MDCV Cable business.

73

LIQUIDITY AND CAPITAL RESOURCES

Principal sources of funding

In 2005, 2004 and 2003, we met our liquidity needs using cash from operations, bank borrowings, the proceeds from the issuance of debt and equity securities, divestment proceeds, and, although to a lesser extent in 2005, the sales of receivables under our securitization programs. In 2003, we completed a number of steps to strengthen our Consolidated Balance Sheet and to improve our liquidity, including:

·the issuance of convertible unsubordinated bonds of an aggregate principal amount of CHF 1,000 million, due 2010 (equivalent to approximately $722 million at the date of issuance), and straight bonds of 650 million euro (equivalent to approximately $769 million at the date of issuance), see “Bonds and notes;”

·a rights issue providing net proceeds of approximately $2.5 billion, see “Rights issue;”

·a $1 billion unsecured revolving credit facility that provided a further potential source of funds, see “Credit facilities;” and

·the sale of 80 million treasury shares providing net proceeds of approximately $156 million.

These actions in 2003 provided a stronger financial base for our core operations, and deleveraged our balance sheet by reducing our gearing (defined as total debt divided by the sum of total debt and the stockholders’ equity including minority interest) to 71 percent as of December 31, 2003 (see “Financial Position”).

During 2005 and 2004, our financial position was further strengthened by cash flow from operating activities of $1,012 and $902 million, respectively, and, in 2004, by the proceeds from sales of businesses (net of cash disposed) of $1,182 million. While in 2004 we used the cash to repay maturing debt and to repurchase debt, the strengthening of our financial position, together with cash generated from our operations, enabled us in 2005 to reduce the level of our securitization programs (see “Securitization Programs”), to repurchase debt (see “Bond repurchases”) and to make discretionary pension contributions. The debt reductions are reflected in the reduction in gearing from 71 percent as of December 31, 2003 to 63 percent as of December 31, 2004 and to 52 percent as of December 31, 2005 (see “Financial Position”).

We believe that our ability to obtain funding from the sources described above will continue to provide the cash flows necessary to satisfy our working capital and capital expenditure requirements, as well as to meet our debt repayments and other financial commitments for the next twelve months. Due to the nature of our operations, 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.

Rights issue

On November 20, 2003, our shareholders approved the issuance of 840,006,602 new shares pursuant to a fully underwritten rights issue. For each share that they owned, holders of existing shares were allocated one right to purchase the offered shares. For every 10 rights, holders of existing shares were entitled to purchase seven offered shares. The banks agreed to underwrite 840,006,602 shares at an issue price of CHF 4.00 per share, representing a discount of approximately 50 percent to the share price at the time and providing for net proceeds of $2,487 million. The rights issue was completed on December 12, 2003 when the cash was received.

74

Interest rates

We have obtained financing in a range of currencies and maturities and on various interest rate terms. We use derivatives to reduce the interest rate and/or foreign exchange exposures arising on our debt. For example, to reduce our exposure to interest rates, we use interest rate swaps to effectively convert fixed rate borrowings into floating rate liabilities and we use cross-currency swaps to effectively convert foreign currency denominated bonds into U.S. dollar liabilities.

During 2005, we entered into interest rate swaps to hedge our interest obligations on the 6.5% 650 million euro bonds, due 2011, and the 3.75% 500 million Swiss franc bonds, due 2009 (see “Bonds and notes”) and to reduce the proportion of fixed rate to floating rate debt. After considering the impact of these interest rate swaps, the 6.5% 650 million euro bonds effectively became floating rate euro obligations, while the 3.75% 500 million Swiss franc bonds effectively became floating rate Swiss franc obligations.

As of December 31, 2005, after considering the effects of interest rate swaps, the effective average interest rate on our floating rate long-term borrowings (including current maturities) of $2,002 million and our fixed rate long-term borrowings (including current maturities) of $278 million was 7.0 percent and 5.4 percent, respectively. This compares with an effective rate of 6.0 percent for floating rate long-term borrowings and 5.5 percent for fixed-rate long-term borrowings as of December 31, 2004. These figures exclude the interest on our convertible bonds, which bore interest at an effective rate of 4.1 percent as of December 31, 2005 and 2004. A discussion of our use of derivatives to modify the characteristics of our long-term borrowings is contained in Note 14 to our Consolidated Financial Statements.

Bond repurchases

During 2005, we repurchased debt securities with a total face value of $307 million, primarily a portion of our 3.75% 500 million Swiss franc bonds, due 2009, and recognized a loss on extinguishment of debt of $19 million on the repurchases.

During 2004, through open market repurchases, we repurchased a portion of our public bonds with a total equivalent face value of $513 million. These repurchases resulted in a gain on extinguishments of debt of approximately $6 million. In addition, in July 2004, we announced tender offers to repurchase all of the outstanding 5.375% 300 million euro bonds, due 2005, and 5.125% 475 million euro bonds, due 2006, being approximately 275 million euro and approximately 368 million euro, respectively. In conjunction with the tender offers, we convened bondholders’ meetings to amend the terms of these bonds, to allow us to call and redeem those bonds that were not tendered under the respective tender offer. In September 2004, bonds validly tendered and accepted under the tender offers were settled and we exercised our option to redeem early the remaining outstanding 2005 and 2006 bonds that were not tendered. The open market repurchases, combined with the tender offers and calls, resulted in a decrease in total borrowings during 2004 of $1,330 million.

Bonds and notes

In 2005 and 2004, we did not issue any bonds. In 2003, we completed two note issuances, including the issuance of bonds convertible into our shares, as sources of funding.

75

Details of our outstanding bonds are as follows:

	At December 31, 2005					At December 31, 2004
	Nominal		Carrying			Nominal		Carrying
	outstanding		value(1)			outstanding		value(1)
	(in millions)					(in millions)
Public bonds:
4.625% USD Convertible Bonds, due 2007	USD	968		$	921	USD	968		$	890
3.5% CHF Convertible Bonds, due 2010	CHF	1,000		759		CHF	1,000		885
9.5% EUR Instruments, due 2008	EUR	500		614		EUR	500		728
10% GBP Instruments, due 2009	GBP	200		353		GBP	200		382
3.75% CHF Bonds, due 2009	CHF	108		81		CHF	500		442
6.5% EUR Instruments, due 2011	EUR	650		764		EUR	650		887
0.5% JPY Instruments, due 2005		—		—		JPY	17,425		171
Private placements				181					433
Total Outstanding Bonds				$	3,673				$	4,818

(1)USD carrying value is net of bond discounts and adjustments for fair value hedge accounting, where appropriate.

In September 2003, we issued 3.5% CHF Convertible Bonds, due 2010, of an aggregate principal amount of CHF 1,000 million (approximately $722 million at the date of issuance). This transaction lengthened the maturity profile of our debt, thereby reducing our dependence on short-term funding. We used the proceeds, net of expenses and fees, to reduce our drawing under our then-current credit facility. The convertible bonds pay interest annually in arrears at a fixed annual rate of 3.5 percent. The conversion price is subject to adjustment provisions to protect against dilution or change in control. As a result of the rights issue discussed above, the conversion price and conversion ratio of the bonds were adjusted to 9.53 Swiss francs and 524.65897 shares, respectively, effective December 12, 2003, representing 104,931,794 shares if the bonds are fully converted.

The bonds are convertible at the option of the bondholder at any time from October 21, 2003 up to and including the tenth business day prior to September 10, 2010. We may at any time on or after September 10, 2007 redeem the outstanding bonds at par plus accrued interest if, for a certain number of days during a specified period of time, the official closing price of our registered shares on the relevant exchange has been at least 150 percent of the conversion price. In addition, at any time prior to maturity, we can redeem the outstanding bonds at par plus accrued interest, if at least 85 percent in aggregate of the principal amount of bonds originally issued have been redeemed, converted or purchased and cancelled. We have the option to redeem the bonds when due in cash, registered shares or any combination thereof.

In November 2003, we issued 6.5% EUR Instruments, due 2011, in an aggregate principal amount of 650 million euro (approximately $769 million at the time of issuance). These bonds pay interest semi-annually in arrears at a fixed annual rate of 6.5 percent. In the event of a change of control of ABB, the terms of the bonds require us to offer to repurchase the bonds at 101 percent of the principal amount thereof, plus any accrued interest.

The 4.625% USD Convertible Bonds, due 2007, pay interest semi-annually in arrears at a fixed annual rate of 4.625 percent. The conversion price is subject to adjustment provisions to protect against dilution or change in control. As a result of the rights issue, the conversion price of the bonds was adjusted, effective November 21, 2003, to 14.64 Swiss francs (converted into U.S. dollars at the fixed exchange rate of 1.6216 Swiss francs per U.S. dollar). As a result of the amendment to the bonds in May 2004, described below, the conversion price of the bonds was amended to $9.03, representing 107,198,228 shares if the bonds are fully converted.

The 4.625% USD Convertible Bonds, due 2007, are convertible at the option of the bondholder at any time from June 26, 2002 up to and including May 2, 2007. We may, at any time on or after May 16, 2005,

76

redeem the outstanding bonds at par plus accrued interest if (1) for a certain number of days during a specified period of time, the official closing price of our American Depositary Shares on the New York Stock Exchange exceeds 170 percent of the conversion price or (2) at least 85 percent in aggregate principal amount of bonds originally issued have been exchanged, redeemed or purchased and cancelled. We have the option to redeem the bonds when due, in cash, American Depositary Shares or any combination thereof.

Prior to May 2004, a component of the 4.625% USD Convertible Bonds, due 2007, had to be accounted for as an embedded derivative, as the shares to be issued upon conversion were denominated in Swiss francs, while the bonds are denominated in U.S. dollars. A portion of the issuance proceeds was deemed to relate to the value of the derivative on issuance and subsequent changes in value of the derivative were recorded through earnings and as an adjustment to the carrying value of the bonds. The allocation of a portion of the proceeds to the derivative created a discount on issuance that was being amortized to earnings over the life of the bonds. On May 28, 2004, bondholders voted in favor of our proposed amendment to the terms of the bonds whereby, if the bonds are converted, we will deliver U.S. dollar-denominated American Depositary Shares rather than Swiss franc-denominated ordinary shares. The conversion price was set at $9.03. As a result of the amendment, it was no longer appropriate to account for a portion of the bonds as a derivative. Consequently, on May 28, 2004, the value of the derivative was fixed and the amount previously accounted for separately as an embedded derivative was considered to be a component of the carrying value of the bonds at that date. This carrying value is being accreted to the $968 million par value of the bonds as an expense in interest and other finance expense over the remaining life of the bonds. The amortization of the discount on the bonds will be between $7 million and $9 million per quarter until the bonds mature in May 2007.

The 10% GBP Instruments, due 2009, and the 9.5% EUR Instruments, due 2008, contain certain clauses linking the interest paid on the bonds to the credit rating assigned to the bonds. If the rating assigned to these bonds by both Moody’s and Standard & Poor’s remains at or above Baa3 and BBB-, respectively, then the interest rate on the bonds remains at the level at issuance, that is 10 percent and 9.5 percent, for the sterling-denominated and euro-denominated bonds, respectively. However, as the rating assigned by Moody’s decreased below Baa3 in October 2002, the annual interest rate on the bonds increased by 1.5 percent per annum to 11.5 percent and 11 percent for the sterling-denominated and euro-denominated bonds, respectively. If, after this rating decrease, the rating assigned by both Moody’s and Standard & Poor’s returns to a level at or above Baa3 and BBB-, respectively, then the interest rates on the bonds return to their original levels. The increase in interest costs resulting from the downgrade of our long-term credit rating in October 2002 is effective for interest periods beginning after the payment of the coupon accruing at the date of the downgrade. The total impact on 2005, 2004 and 2003 was an increase in interest expense of approximately $15 million, $15 million and $13 million, respectively. Future years will also be affected if our credit ratings do not return to at least both Baa3 and BBB- from Moody’s and Standard & Poor’s, respectively.

A cross-currency swap has been used to modify the characteristics of the sterling-denominated bonds and an interest rate swap has been used to modify the euro-denominated bonds. After considering the impact of the cross-currency and interest rate swaps, the sterling-denominated bonds effectively became floating rate U.S. dollar obligations, while the euro-denominated bonds became floating rate euro obligations. In both cases, the floating rate resets every three months. See Note 14 to our Consolidated Financial Statements.

Substantially all of our publicly traded bonds contain cross-default clauses which would allow the bondholders to demand repayment if we were to default on certain borrowings at or above a specified threshold amount. Furthermore, all such bonds constitute unsecured and unsubordinated obligations of us and rank pari passu with our other debt obligations.

77

Commercial paper

In November 2005, we signed a new commercial paper program allowing us to issue short-term commercial paper in either Swedish krona or euro, up to a maximum equivalent nominal amount of 5 billion Swedish krona (equivalent to approximately $628 million). The signing of this program broadens our funding base and allows us access to an additional source of short-term liquidity to which our access was restricted after the reduction in our credit rating to below investment grade in October 2002.

Credit facilities

On July 4, 2005, we signed a new five-year, $2 billion multicurrency revolving credit facility and cancelled the three-year $1 billion credit facility that was due to expire in November 2006. As a result of canceling the $1 billion facility prior to expiry, we recorded, in July 2005, a charge of $12 million in interest and other finance expense to write off unamortized costs related to this facility.

The new $2 billion facility contains financial covenants in respect of minimum interest coverage and maximum net leverage. We are required to meet these covenants on a semi-annual basis, at June and December. Since, in April 2006, our corporate credit rating reached certain defined levels, the minimum interest coverage covenant will no longer be applicable. As of December 31, 2005, we were in compliance with these covenants and no amount was drawn under the facility. The facility 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 $2 billion facility replaced an unsecured syndicated $1 billion three-year revolving credit facility that we had entered in November 2003, as part of our capital strengthening program. As of December 31, 2004 and 2003, nothing was outstanding under that facility.

Securitization programs

In addition to the aforementioned primary sources of liquidity and capital resources, we also sell certain trade receivables to VIEs, unrelated to us, in revolving-period securitization programs. During 2005, we ­re-assessed our need for these securitization programs, terminating one program and reducing the size of the other program. As of December 31, 2005, the remaining securitization program is with a VIE that is not required to be consolidated in accordance with FIN46(R).

For further discussion of our securitization programs, see the section entitled “Off-balance sheet arrangements” below and Notes 2 and 8 to our Consolidated Financial Statements.

Credit ratings

Credit ratings are assessments by the rating agencies of the credit risk associated with our company and are based on information provided by us or other sources that the rating agencies consider reliable. Lower ratings generally result in higher borrowing costs and reduced access to capital markets.

As of December 31, 2005 and 2004, our long-term company ratings were Ba2 and BB+ (our long-term unsecured debt was rated Ba2 and BB-) from Moody’s and Standard & Poor’s, respectively. On April 3, 2006, Standard & Poor’s raised our long-term company rating to BBB- from BB+ and our long-term unsecured debt from BB- to BB+. On April 12, 2006, Moody’s raised our long-term debt rating from Ba2 to Baa3 with positive outlook and withdrew the corporate family rating (that relates only to non-investment grade companies). Baa3 (or above) and BBB- (or above) from Moody’s and Standard & Poor’s, respectively, represent “investment grade” ratings.

An “investment grade” is represented by Baa3 (or above) and BBB- (or above) from Moody’s and Standard & Poor’s, respectively. As a result of Standard & Poor’s raising our rating in April 2006, our long-term company rating from Standard& Poor’s is that of an “investment grade” company. A rating below investment grade is reflected in generally higher interest costs on borrowings. However, in 2005, we

78

achieved terms on our $2 billion credit facility that are similar to those of a company with an “investment grade” rating.

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, including: Brazil, China, Egypt, India, Malaysia, Russia, Saudi Arabia, South Africa, South Korea, Taiwan, Thailand, Turkey and Venezuela. Funds, other than regular dividends, fees or loan repayments, cannot be transferred offshore from these countries and are therefore deposited and used for working capital needs locally. As a consequence, these funds are not available within our Group Treasury Operations to meet short-term cash obligations outside the relevant country. These funds are reported as cash on our Consolidated Balance Sheet, 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. As of December 31, 2005 and 2004, the balance of cash, marketable securities and other short-term investments under such limitations totaled approximately $900 million and $750 million, respectively.

FINANCIAL POSITION

Balance sheet

During 2005 and 2004, divestments and discontinuations of certain businesses were recorded as discontinued operations pursuant to SFAS 144, as discussed in detail under the section above entitled “Application of critical accounting policies—Accounting for discontinued operations.” Accordingly, the balance sheet data for all periods presented have been restated to present the financial position and results of operations of the businesses meeting the criteria of SFAS 144 as assets and liabilities held for sale and in discontinued operations.

Current assets

	As of December 31,
	2005			2004
	(U.S. dollars in millions)
Cash and equivalents		$	3,226		$	3,676
Marketable securities and short-term investments		368			524
Receivables, net		6,515			6,284
Inventories, net		3,074			3,178
Prepaid expenses		251			334
Deferred taxes		473			670
Other current assets		189			449
Assets held for sale and in discontinued operations		52			600
Total current assets		$	14,148		$	15,715

79

Our total current assets as of December 31, 2005, decreased by 10 percent, as compared to total current assets as of December 31, 2004. See “Cash flows” for a detailed discussion on changes in cash and equivalents.

As of December 31, 2005 and 2004, we had cash and equivalents and marketable securities and short-term investments totaling $3,594 million and $4,200, respectively. Approximately $1,960 million and $2,435 million as of December 31, 2005 and 2004, respectively, was invested by our Group Treasury Operations (GTO), and was denominated primarily in U.S. dollars and euros. Further amounts, totaling approximately $900 million and $750 million, as of December 31, 2005 and 2004, respectively, were deposited locally in countries where currency or other local regulatory limitations exist, as described above under “Liquidity and capital resources—Limitations on transfers of funds.” Balances not remitted to GTO are primarily denominated in the currency of the respective country holding the balance.

We invest surplus cash available in time deposits and marketable securities with varied maturities based on defined investment guidelines and the liquidity requirements of the business. Investments which have maturities of three months or less at the time of acquisition are classified as part of cash equivalents, and those that have maturities of more than three months at the time of acquisition are classified as part of marketable securities and short term investments. The balance of marketable securities and short-term investments will fluctuate depending on the timing of these investments.

Receivables, net, as at the end of 2005 increased from the end of 2004, primarily as a result of the wind down of securitization programs during the year.

Inventories, net, decreased by 3 percent reflecting a decrease in order volume in our Building Systems and Oil, Gas and Petrochemicals businesses.

Current liabilities

	As of December 31,
	2005		2004
	(U.S. dollars in millions)
Accounts payable, trade	$	3,321	$	4,256
Accounts payable, other	1,172		1,424
Short-term debt and current maturities of long-term debt	169		626
Advances from customers	1,005		929
Deferred taxes	187		200
Provisions and other	3,769		3,666
Accrued expenses	1,909		1,624
Liabilities held for sale and in discontinued operations	74		734
Total current liabilities	$	11,606	$	13,459

Total current liabilities at the end of 2005 decreased by 14 percent as compared to current liabilities as of December 31, 2004.

Total accounts payable as of December 31, 2005, decreased as compared to December 31, 2004, primarily due to decreases in all divisions. In addition, approximately $400 million of the decrease was related to the appreciation of the U.S. dollar relative to the local currencies.

Our short-term debt was lower at the end of 2005 relative to 2004, reflecting payments made during 2005 and the fact that we have no bond maturities in 2006 (see “Liquidity and capital resources”).

Provisions and other increased in 2005, primarily as a result of higher business volume and an increase due to the mark-to-market revaluation of shares reserved to cover a portion of our asbestos liabilities.

80

Non-current assets

	At December 31,
	2005		2004
	(U.S. dollars in millions)
Financing receivables	$	645	$	889
Property, plant and equipment, net	2,565		2,964
Goodwill	2,479		2,602
Other intangible assets, net	349		492
Prepaid pension and other employee benefits	605		549
Investments in equity method companies	618		596
Deferred taxes	628		504
Other non-current assets	239		366
Total non-current assets	$	8,128	$	8,962

Financing receivables as of December 31, 2005, which includes receivables from leases and loans receivable, decreased as compared to December 31, 2004, due to lease sales and currency impacts.

The decrease in the value of property, plant and equipment, net, between December 31, 2005, and December 31, 2004, mainly reflects the change in the value of the U.S. dollar against local currencies. The major capital expenditures during 2005 were investments in machinery and equipment in Germany, Italy, Finland and India offset primarily by depreciation.

During 2005, goodwill decreased principally due to the change in the value of the U.S. dollar against local currencies.

The reduction in other intangible assets, net, mainly reflects amortization on capitalized software and other intangible assets.

Non-current liabilities

	At December 31,
	2005	2004
	(U.S. dollars in millions)
Long-term debt	$3,933	$4,717
Pension and other employee benefits	1,233	1,551
Deferred taxes	692	750
Other liabilities	988	1,082
Total non-current liabilities	$6,846	$8,100

During 2005, long-term debt was significantly reduced through the repayment of maturing bonds, repurchases of debt securities with a total face value of $307 million and a favorable foreign exchange impact. Our gearing ratio, excluding borrowings in discontinued operations, was 52 percent as of December 31, 2005, as compared to 63 percent as of December 31, 2004, reflecting the reduction of our total debt and the impact of net income during 2005.

The reduction in the value of pension and other employee benefits during 2005 was mainly due to discretionary pension contributions.

Other liabilities includes non-current deposit liabilities of $309 million and $314 million, deferred income of $120 million and $143 million, non-current derivative liabilities of $63 million and $53 million and other non current liabilities of $241 million and $306 million as of December 31, 2005 and 2004, respectively. Other liabilities also includes provisions for the estimated environmental remediation costs

81

related to our former Nuclear Technology business (see “Environmental Liabilities” below and Notes 17 and 19 to our Consolidated Financial Statements) of $255 million and $266 million as of December 31, 2005 and 2004, respectively.

Cash flows

In the Consolidated Statements of Cash Flows, the effects of the discontinued operations are not segregated, as permitted by Statement of Financial Accounting Standards No. 95 (SFAS 95), Statement of Cash Flows. The Consolidated Statements of Cash Flows can be summarized as follows:

	Year ended December 31,
	2005			2004			2003
	(U.S. dollars in millions)
Cash flows provided by (used in) operating activities	$	1,012		$	902		$	(152	)
Cash flows provided by (used in) investing activities	(316		)	354			754
Cash flows provided by (used in) financing activities	(896		)	(2,745		)	1,582
Effects of exchange rate changes	(259		)	74			150
Adjustment for the net change in cash and equivalents in assets held for sale and in discontinued operations	9			308			(80		)
Net change in cash and equivalents—continuing operations	$	(450	)	$	(1,107	)	$	2,254

Cash flows provided by (used in) operating activities

Operating assets and liabilities include marketable securities held for trading purposes, trade receivables, inventories, trade payables and other assets and liabilities. Debt and equity securities that are purchased and held principally for the purpose of sale in the near term are classified as trading securities. Cash flows from marketable securities classified as available-for-sale are reflected in investing activities. Cash flows from discontinued operations are included in the table below in the respective divisions in which these businesses were formerly classified.

In 2005, as compared to 2004, cash from operations from our Power Technologies division increased, primarily influenced by higher advances from customers and higher earnings. Over the same period, cash from operations provided by our Automation Technologies division decreased, mainly due to the discontinuation of securitization and discretionary pension contributions. Cash used in our Non-core activities division was higher as compared to 2004 primarily, caused by the Oil, Gas and Petrochemicals business using customer advances on several large projects. Cash used in our Corporate/Other division was lower in 2005 as compared to 2004, influenced primarily by cash inflows from derivatives in the treasury area and also a positive cash impact from securitization. There were also lower asbestos related cash payments in 2005. Cash inflows from operating activities improved by $110 million over 2004.

During 2004, cash flows provided by operating activities improved as compared to 2003, primarily because less cash was used in our Non-core activities and Corporate/Other divisions. In 2003, losses from Building Systems and Other Non-core activities primarily contributed to cash outflows in our Non-core activities division, and the cash used in our Corporate/Other division included $388 million in asbestos related cash payments. Our Automation Technologies division also contributed to the improvement in cash provided by operating activities from 2003 to 2004 through higher earnings and working capital improvements while cash provided by operating activities from our Power Technologies division decreased in the same period due to the timing of large projects and the related customer payments. The net cash provided by operating activities during 2004 was $902 million, which was a $1,054 million improvement as compared to the cash used of $152 million in 2003.

82

Cash flows provided by (used in) investing activities

	Year ended December 31,
	2005			2004			2003
	(U.S. dollars in millions)
Acquisitions, investments, divestitures, net	$	(124	)	$	1,158		$	488
Asset purchases, net of disposals	(339		)	(420		)	(392		)
Other investing activities	147			(384		)	658
Cash flows provided by (used in) investing activities	$	(316	)	$	354		$	754

Investing activities include: accounts receivable from leases and third party loans (financing receivables); net investments in marketable securities that are not held for trading purposes; asset purchases, net of disposals; and acquisitions of, investments in and divestitures of businesses. Net cash used in investing activities was $316 million during 2005, a change of $670 million from cash provided by investing activities of $354 million during 2004.

In 2005, we had a cash outflow from acquisitions, investments and divestitures, net, primarily due to the cash sold with our Leasing portfolio business in Finland and cash payments in connection with settlements related to our Upstream Oil, Gas and Petrochemicals business. Significant divestitures during 2004 were the sale of our Upstream Oil, Gas and Petrochemicals business ($800 million), the sale of our Reinsurance business ($280 million) and the sale of our entire interest in IXYS Corporation ($42 million).

During 2003, we received cash proceeds of $149 million from the sale of our 35 percent stake in Swedish Export Credit Corporation and $90 million from the sale of our investments in two Equity Ventures projects in Australia. Cash proceeds of approximately $213 million were received through the sale of our Building Systems businesses in Sweden, Norway, Denmark, Finland and Russia. In addition, the sale of the ABB Export Bank for approximately $50 million, and the sale of part of our Wind Energy business in our Non-core activities division, were completed during the fourth quarter of 2003. As a result of these divestitures and net cash outflows of $24 million for certain smaller investments and disposals, net cash inflows from purchases of, investments in and divestitures of businesses was $488 million during 2003.

The net cash outflows from the purchase and sale of property, plant and equipment was lower in 2005 as compared to 2004, reflecting lower investment in 2005. Major capital expenditures on investment in machinery and equipment during 2005 occurred in Germany, Italy, Finland and India. Cash outflow for capital investment in property, plant and equipment was only slightly higher in 2004 as compared to 2003. Major capital expenditures on investment in machinery and equipment during 2004 occurred in Germany, Italy, Finland and Sweden. In 2004, proceeds of $123 million were received on the sale of property, plant and equipment as compared to $155 million in 2003. Significant asset sales during 2004 included the sale of real estate properties in Switzerland, Germany and Italy.

During 2005, net cash provided by other investing activities was $147 million, which included lease sales and the release of restricted cash. During 2004, we contributed $549 million of available-for-sale debt securities to certain of our pension plans in Germany. A significant portion of these securities was purchased during 2004, which significantly increased net cash used in other investing activities.

Cash provided by other investing activities was $658 million in 2003. The cash provided by other investing activities largely resulted from cash proceeds of $390 million from the sale of financing receivables related to our Structured Finance business and net cash proceeds of $268 million from the sale of marketable securities that were not held for trading purposes, primarily relating to the Reinsurance business which we sold in April 2004 and the sale of our shares in the China National Petrochemical Corporation (Sinopec Corp.) for $80 million.

83

Cash flows provided by (used in) financing activities

	Year ended December 31,
	2005			2004			2003
	(U.S. dollars in millions)
Change in borrowings	$	(832	)	$	(2,752	)	$	(1,016	)
Capital and treasury stock transactions	35			(36		)	2,675
Other financing activities	(99		)	43			(77		)
Cash flows provided by (used in) financing activities	$	(896	)	$	(2,745	)	$	1,582

Our financing activities primarily include borrowings, both from the issuance of debt securities and directly from banks, and capital and treasury stock transactions.

Significant cash outflow from financing activities during 2005 included the repayment of maturing bonds and the repurchase of bonds. The cash inflow for the capital and treasury stock transactions primarily represented the capital increase resulting from our employee share acquisition program.

Cash outflows from financing activities during 2004 included the repayment of maturing bonds, open market repurchases of public bonds, tender offers for certain of our bonds and calls of those bonds not tendered. The cash outflow for the capital and treasury stock transactions represented payments made in 2004 in respect of certain tax and other liabilities incurred in connection with the rights issue carried out during the fourth quarter of 2003.

During 2003, as part of our strategy to lengthen our debt maturity profile, we replaced maturing short-term borrowings with long-term borrowings. Cash outflows in connection with borrowings reflected the repayment of short-term (including current portion of long-term) borrowings as they became due, partially offset by cash inflows from the proceeds of the 1,000 million Swiss francs convertible bonds and 650 million euro bonds issued in September and November 2003, respectively. The net proceeds of the rights issuance of $2.5 billion, completed in December 2003, and the proceeds from the sale of treasury shares during the first quarter of 2003 for $156 million contributed to the overall net cash inflow of $2,675 million during 2003.

DISCLOSURES ABOUT CONTRACTUAL OBLIGATIONS AND COMMITMENTS

The contractual obligations presented in the table below represent our estimates of future payments under fixed contractual obligations and commitments. The amounts in the table may differ from those reported on our Consolidated Balance Sheet as of December 31, 2005. Changes in our business needs, cancellation provisions and interest rates, as well as actions by third parties and other factors, may cause these estimates to change. Because these estimates are necessarily subjective, our actual payments in future periods are likely to vary from those presented in the table. The following table summarizes certain of our contractual obligations and principal and interest payments under our debt instruments and leases as of December 31, 2005:

Payments due by period	Total		Less than 1 year			1-3 years		3-5 years		After 5 years
	(U.S. dollars in millions)
Long-term debt obligations	$	3,960		$	27	$	1,792	$	1,235	$	906
Interest payments related to long-term debt obligations	1,098			250		474		196		178
Operating lease obligations	1,683			319		488		367		509
Purchase obligations	2,908			2,044		412		224		228
Total	$	9,649		$	2,640	$	3,166	$	2,022	$	1,821

84

We have determined our obligations in respect of our long-term debt obligations and 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 characteristics of certain of our debt obligations. The net effect of these swaps may be to increase or decrease the stated amount of our cash interest payment obligations included in the above table. For further details on our debt obligations and the related hedges, please refer to Note 14 of our Consolidated Financial Statements.

OFF-BALANCE SHEET ARRANGEMENTS

Commercial commitments

Certain guarantees issued or modified after December 31, 2002 are accounted for in accordance with Financial Accounting Standards Board Interpretation No. 45 (FIN 45), Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others. Upon issuance of certain guarantees, a liability, equal to the fair value of the guarantee, is recorded.

FIN 45 requires that 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” as defined by FIN 45 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.

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 results.

	At December 31,
	2005						2004
	Maximum potential payments			Carrying amount of liabilities			Maximum potential payments			Carrying amount of liabilities
	(U.S. dollars in millions)
Third-party performance guarantees		$	1,197		$	1		$	1,525		$	2
Financial guarantees		209			—			253			1
Indemnification guarantees		150			13			198			16
Total		$	1,556		$	14		$	1,976		$	19

Guarantees related to third-party performance

Performance guarantees represent obligations where we guarantee the performance of a third party’s product or service according to the terms of a contract. Such guarantees may include guarantees that a project will be completed within a specified time. If the third party does not fulfill the obligation, we will compensate the guaranteed party in cash or in kind. Performance guarantees include surety bonds, advance payment guarantees and performance standby letters of credit.

85

We retained obligations for guarantees related to the Power Generation business contributed in 1999 to the former ABB ALSTOM POWER NV joint venture. The guarantees primarily consist of performance guarantees, advance payment guarantees and other miscellaneous guarantees under certain contracts such as indemnification for personal injuries and property damages, taxes, and compliance with labor laws, environmental laws and patents. The guarantees are related to projects that are expected to be completed by 2015, but in some cases the guarantees have no definite expiration. In 2000, we sold our interest in the ABB ALSTOM POWER NV joint venture to ALSTOM SA (ALSTOM). As a result, ALSTOM and its subsidiaries have primary responsibility for performing the obligations that are the subject of the guarantees. Further, ALSTOM, the parent company, and ALSTOM POWER NV, formerly ABB ALSTOM POWER NV, have undertaken jointly and severally to fully indemnify and hold us harmless against any claims arising under such guarantees. Our best estimate of the total maximum potential exposure of quantifiable guarantees issued by us on behalf of the Power Generation business is approximately $756 million and $875 million as of December 31, 2005 and 2004, respectively. We have not experienced any losses related to guarantees issued on behalf of the Power Generation business.

We have retained obligations for guarantees related to the Upstream Oil, Gas and Petrochemicals business sold in July 2004. The guarantees primarily consist of third-party performance guarantees, advance payment guarantees and other miscellaneous guarantees. The guarantees have maturity dates ranging from one to five years. The maximum amount payable under the guarantees was approximately $440 million and $650 million as of December 31, 2005 and 2004, respectively. We have the ability to recover potential payments under these guarantees through certain backstop guarantees. The maximum potential recovery under these backstop guarantees as of December 31, 2005 was approximately $108 million.

Guarantees relating to financial obligations

Financial guarantees represent irrevocable assurances that we will make payment to a beneficiary in the event that a third party fails to fulfill its financial obligations and the beneficiary under the guarantee incurs a loss due to that failure.

As of December 31, 2005 and 2004, we had $209 million and $253 million, respectively, of financial guarantees outstanding. Of those amounts, $95 million and $123 million, respectively, were issued on behalf of companies in which we currently have or formerly had an equity interest. The guarantees have original maturity dates ranging from one to thirteen years.

Guarantees relating to indemnification

We have indemnified certain purchasers of divested businesses for potential claims arising from the operations of the divested businesses. To the extent the maximum loss related to such indemnifications could not be calculated, no amounts have been included under maximum potential payments in the table above. Indemnifications for which maximum losses could not be calculated include indemnifications for legal claims.

We delivered to the purchasers of the Upstream Oil, Gas and Petrochemicals business and Reinsurance business guarantees related to assets and liabilities divested in 2004. The maximum liability as of December 31, 2005 and 2004, of approximately $150 million and $198 million, respectively, relating to the Upstream Oil, Gas and Petrochemicals and Reinsurance businesses will reduce over time, pursuant to the respective sales agreements. The fair value of these guarantees is not material.

86

Other commitments

We have granted lines of credit and have committed to provide additional capital for certain equity accounted companies. As of December 31, 2005, the total unused lines of credit amounted to $74 million and capital commitment guarantees amounted to $25 million.

Securitization programs

In addition to the primary sources of liquidity and capital resources described in the section entitled “Liquidity and Capital Resources,” we have sold certain trade receivables to VIEs, unrelated to us, in revolving-period securitization programs. During 2005, we re-assessed our need for these securitization programs, terminating one program and reducing the size of the other program. As of December 31, 2005, the remaining securitization program is with a VIE that is not required to be consolidated in accordance with FIN46(R).

Solely for the purpose of credit enhancement from the perspective of the purchasing entity, we retain an interest in the sold receivables. Pursuant to the requirements of the revolving-period securitization, we effectively bear the risk of potential delinquency or default associated with trade receivables sold or interests retained. Retained interests included in other receivables as of December 31, 2005 and 2004 amounted to $195 million and $373 million, respectively. The decrease in the retained interest during 2005 of $178 million was mainly due to the termination of one program and the reduction in size of the other. In the normal course of servicing the assets sold, we evaluate potential collection losses and delinquencies and update the estimated fair value of our retained interest. Pursuant to the terms of the securitization program, receivables more than 90 days overdue are considered delinquent. Ultimately, if the customer defaults, we will be responsible for the uncollected amount up to the amount of our retained interest. The fair value of the retained interests as of December 31, 2005 and 2004, was approximately $185 million and $349 million, respectively.

The net cash received from (paid to) VIEs during 2005, 2004 and 2003 was $(404) million, $130 million and $(119) million, respectively, as follows:

	Year ended December 31,
	2005			2004			2003
	(U.S. dollars in millions)
Gross trade receivables sold to VIEs ($505)(1)	$	4,925		$	5,846		$	5,661
Collections made on behalf of and paid to VIEs ($(696))(1)	(5,489		)	(5,713		)	(5,883		)
Purchaser, liquidity and program fees ($(2))(1)	(18		)	(20		)	(21		)
Decrease in retained interests ($117)(1)	178			17			124
Net cash received from (paid to) VIEs ($(76))(1)	$	(404	)	$	130		$	(119	)

(1)Related to assets held for sale and in discontinued operations in 2003. Amounts related to assets held for sale and in discontinued operations were not significant in 2005 and 2004.

The decrease in gross receivables sold in 2005 as compared to 2004, is due primarily to the closure of one securitization program and a reduction in size of the other program. The increase in gross receivables sold in 2004, as compared to 2003, is due primarily to an increase in the programs’ size, a change in the definition of receivables eligible to be sold in one program and the addition of new sellers to one of the programs during 2004.

We pay purchaser, liquidity and program fees on our securitization programs. Purchaser and program fees are based on the amount of funding that we receive, while liquidity fees are based on the programs’ size. These costs of $18 million, $20 million and $21 million in 2005, 2004 and 2003, respectively, are included in interest and other finance expense.

87

As of December 31, 2005 and 2004, of the gross trade receivables sold, the total trade receivables for which cash has not been collected at those dates amounted to $388 million and $1,083 million, respectively. Of these amounts, $41 million and $54 million as of December 31, 2005 and 2004, respectively, was more than 90 days past due.

In addition, we transfer receivables outside of the above described securitization programs. These transfers were sales, made without recourse, directly to banks and/or sales pursuant to factoring or similar type arrangements. Total sold receivables included in these transactions during 2005 and 2004 were approximately $530 million and $902 million, respectively, of which, sales of $0 million and $159 million, respectively, related to assets held for sale and in discontinued operations. During 2005 and 2004, the related costs, including the associated gains and losses, were $5 million and $10 million, respectively, of which, costs of $0 million and $1 million, respectively, related to assets held for sale and in discontinued operations. The reduction in the amount of receivables transferred outside of the securitization programs in 2005 as compared to 2004 was mainly the result of our decision to reduce the volume of securitization activities.

For a further discussion of our securitization programs, see Notes 2 and 8 to our Consolidated Financial Statements.

Pension and other post-retirement obligations

During 2005, we made a non-cash contribution of $262 million of available-for-sale debt securities to certain of our pension plans in Germany and cash contributions of $296million to other pension plans and $27 million to other benefit plans.

As of December 31, 2005 and 2004, our pension liabilities exceeded plan assets by $839 million and $1,451 million, respectively. Our other postretirement plan liabilities exceeded plan assets by $270 million and $369 million as of December 31, 2005 and 2004, respectively. This underfunding is not a short-term obligation for us as the settlement of the pension liability will take place as the covered employees draw benefits from the plans in the future. We anticipate contributing a total of $160 million and $30 million to our pension plans and our postretirement benefit plans, respectively, in 2006 to meet minimum statutory requirements. We may make additional discretionary pension contributions during 2006.

Variable interests

We are a party to certain off-balance sheet arrangements including variable interests in unconsolidated entities. See Note 8 to the Consolidated Financial Statements for additional information on variable interests.

ENVIRONMENTAL LIABILITIES

All of our operations, but particularly our manufacturing operations, are subject to comprehensive environmental laws and regulations. Violations of these laws could result in fines, injunctions (including orders to cease the violating operations) or other penalties (including orders to improve the condition of the environment in the affected area or to pay for such improvements). In addition, environmental permits are required for our manufacturing facilities (for example, with respect to air emissions and wastewater discharges). In most countries in which we operate, environmental permits must be renewed on a regular basis and we must submit reports to environmental authorities. These permits may be revoked, renewed or modified by the issuing authorities at their discretion and in compliance with applicable laws. We have implemented formal environmental management systems at nearly all of our manufacturing sites in accordance with the international environmental management standard ISO 14001, and we believe that we are in substantial compliance with environmental laws, regulations and permit requirements in the various

88

jurisdictions in which we operate, except for such instances of non-compliance that, in the aggregate, are not reasonably likely to be material.

In a number of jurisdictions, including the United States, we may be liable for environmental contamination at our present or former facilities, or at other sites where wastes generated from our present or former facilities were disposed. In the United States, the Environmental Protection Agency and various state agencies are responsible for regulating environmental matters. These agencies have identified certain of our current and former U.S. based companies as potentially responsible parties in respect to a number of such sites under the Comprehensive Environmental Response Compensation and Liability Act (CERCLA), the Resource Conservation and Recovery Act and other federal and state environmental laws. As a potentially responsible party, we may be liable for a share of the costs associated with cleaning up these sites. As of December 31, 2005, there were approximately 25 sites, at which our companies have, or may be potentially responsible for, environmental clean up costs. These 25 sites include several of our current or former facilities where we have undertaken voluntary corrective actions. The clean up of these sites involves primarily soil and groundwater contamination. We do not believe that our aggregate liability in connection with these sites will have a material adverse impact on our consolidated financial position, results of operations and cash flows.

Generally, our liability with regard to any specific site will depend on the number of potentially responsible parties, their relative contributions of hazardous substances or wastes to the site and their financial resources, as well as on the nature and extent of the contamination. Nevertheless, such laws commonly impose strict liability jointly and severally on the parties involved, so that any one party may be liable for the entire cost of cleaning up a contaminated site.

We retained liabilities for certain specific environmental remediation costs at two sites in the U.S. that were operated by our Nuclear Technology business, which was sold to British Nuclear Fuels PLC (BNFL) in April 2000. Pursuant to the sale agreement with BNFL, we have retained all of the environmental liabilities associated with our Combustion Engineering subsidiary’s Windsor, Connecticut facility and agreed to reimburse BNFL for a share of the costs that BNFL incurs for environmental liabilities associated with its ABB C-E Nuclear Power Inc. subsidiary’s Hematite, Missouri facility. The primary environmental liabilities associated with these sites relate to the costs of remediating radiological and chemical contamination at these facilities. Such costs are not incurred until a facility is taken out of use and generally are incurred over a number of years. Although it is difficult to predict with accuracy the amount of time it may take to remediate radiological and chemical contamination at the Hematite site, based on information that BNFL has made publicly available, we believe that it may take until 2013 to remediate the Hematite site. With respect to the Windsor site, we believe the remediation may take until 2010.

Under the terms of the sale agreement, BNFL must perform the Hematite remediation in a cost efficient manner and pursue recovery of remediation costs from other potentially responsible parties as conditions for obtaining cost sharing contributions from us. Westinghouse Electric Company LLC, the BNFL subsidiary that owns the Hematite site (Westinghouse) has brought legal action against former owner/operators of the Hematite site and the U.S. Government under the CERCLA to recover past and future remediation costs. The defendants are contesting Westinghouse’s claims. If Westinghouse’s CERCLA cost recovery action is unsuccessful, the cost to us may increase in the future. This risk is included in the high end of the estimated contingent liability set forth below.

At the Windsor site, a significant portion of the contamination is related to activities that were formerly conducted by or for the U.S. government. We believe that a significant portion of the remediation costs will be covered by the U.S. government under the government’s Formerly Utilized Sites Remedial Action Program.

We have established a reserve of $300 million in loss from discontinued operations in 2000 for our estimated share of the remediation costs for these facilities. As of December 31, 2005, we have recorded in

89

other liabilities a reserve of $255 million, net of payments from inception of $43 million, and a reversal of $2 million to loss from discontinued operations in 2005 reflecting realized cost savings. As of December 31, 2005 we estimated the total contingent liability for our share of the remediation costs for these facilities in a range of loss from $220 million to $402 million. Expenditures charged to the remediation reserve were $9 million, $10 million and $6 million during 2005, 2004 and 2003, respectively. We do not expect the majority of the remaining costs to be paid in cash during 2006.

Estimates of the future costs of environmental compliance and liabilities are imprecise due to numerous uncertainties. Such costs are affected by the enactment of new laws and regulations, the development and application of new technologies, the identification of new sites for which we may have remediation responsibility and the apportionment of remediation costs among, and the financial viability of, responsible parties. In particular, the ultimate result of Westinghouse’s cost recovery action regarding the Hematite site or the exact amount of the responsibility of the United States government for the Windsor site cannot be precisely estimated. It is possible that final resolution of environmental matters may require us to make expenditures in excess of our expectations, over an extended period of time and in a range of amounts that cannot be reasonably estimated. Although final resolution of such matters could have a material effect on our Consolidated Income Statement in a particular reporting period, we believe that these expenditures will not have a material adverse impact on our Consolidated Financial Statements.

ASBESTOS LIABILITIES

Summary

Our Combustion Engineering subsidiary has been a co-defendant in a large number of lawsuits claiming damage for personal injury resulting from exposure to asbestos. A smaller number of claims have also been brought against our ABB Lummus Global Inc. subsidiary (Lummus) as well as against other affiliated companies. In October 2002, taking into consideration the growing number and cost of asbestos-related claims, Combustion Engineering and we determined that Combustion Engineering’s asbestos-related liability should be resolved through a comprehensive settlement that included a plan of reorganization for Combustion Engineering under Chapter 11 of the U.S. Bankruptcy Code.

In November 2002, Combustion Engineering and the representatives of various asbestos claimants entered into a Master Settlement Agreement to settle approximately 154,000 asbestos-related personal injury claims that were then pending against Combustion Engineering. Under that agreement Combustion Engineering established and funded a trust (the CE Settlement Trust) to provide for partial payment of those claims.

In January 2003, Combustion Engineering reached agreement with various creditors (including representatives of the asbestos claimants who participated in the Master Settlement Agreement and a representative of future claimants) on the terms of a proposed “Pre-Packaged Plan of Reorganization for Combustion Engineering” under Chapter 11 of the U.S. Bankruptcy Code (as amended through June 4, 2003, the “Initial CE Plan”). The Initial CE Plan provided for the issuance of a “channeling injunction” under which asbestos-related personal injury claims related to the operations of Combustion Engineering, Lummus and Basic Incorporated (Basic), another subsidiary of ABB Ltd that is a former subsidiary of Combustion Engineering, could only be brought against a future trust (separate from the CE Settlement Trust established under the Master Settlement Agreement) to be established and funded by Combustion Engineering, ABB Ltd and other ABB group companies (the Asbestos PI Trust). This channeling injunction was intended to free Combustion Engineering, ABB Ltd and its affiliates, as well as certain former direct or indirect owners, joint venture partners and affiliates of Combustion Engineering, including ALSTOM and ALSTOM POWER NV, from further liability for such claims.

The Initial CE Plan was filed with the U.S. Bankruptcy Court on February 17, 2003 and confirmed by the District Court on August 8, 2003. On December 2, 2004, however, the Court of Appeals for the Third

90

Circuit reversed the District Court’s confirmation order. The Court of Appeals remanded the Initial CE Plan to the District Court among other things for a determination of whether, in light of the pre-petition payments made by Combustion Engineering to the CE Settlement Trust under the Master Settlement Agreement and the fact that claimants who received partial payments of their claims under the Master Settlement Agreement participated in the approval of the Initial CE Plan, the treatment of asbestos-related personal injury claims against Combustion Engineering under the Initial CE Plan was consistent with the requirements of the U.S. Bankruptcy Code. The Court of Appeals also held that asbestos claims against Lummus and Basic that are not related to Combustion Engineering’s operations could not be “channeled” to the Asbestos PI Trust as proposed under the Initial CE Plan.

In March 2005, following extensive discussions with certain representatives of various parties, including the Creditors Committee, the Future Claimants Representative appointed in the Combustion Engineering case (the CE FCR) and Certain Cancer Claimants (the CCC) who had opposed the Initial CE Plan, the parties reached an agreement in principle (the Agreement in Principle) for modifying the Initial CE Plan with a view to bringing it into conformity with the Court of Appeals’ decision and for providing a mechanism for resolving finally Lummus’ potential asbestos liability. The main terms of the Agreement in Principle provide for ABB group and certain of our subsidiaries to make an additional contribution of $204 million to the Asbestos PI Trust not later than two years from the effective date of the Initial CE Plan, as modified as contemplated by the Agreement in Principle, but payment of this additional contribution may be accelerated in whole or in part if Lummus or Lummus assets are sold in the interim; the payment by ABB group of the legal fees of the CCC in the amount of $ 8 million; and the filing of a separate Chapter 11 case and a prepackaged plan of reorganization for Lummus (the Lummus Plan). The Agreement in Principle contemplates that the “Modified CE Plan” and the Lummus Plan will become effective concurrently.

One of the holdings of the Court of Appeals was that asbestos-related personal injury claims against Basic that are not related to Combustion Engineering’s operations could not be “channeled” to the Asbestos PI Trust. The Modified CE Plan and Lummus Plan do not address claims against Basic. Basic’s asbestos-related personal injury liabilities will have to be resolved through its own bankruptcy or similar U.S. state court liquidation proceeding, or through the tort system.

Following the Agreement in Principle, the parties negotiated the terms and language of the Lummus Plan and the modifications to the Initial CE Plan. These negotiations lasted for approximately five (5) months, and on August 19, 2005, an amended version of the Initial CE Plan (the Modified CE Plan) was filed with the U.S. Bankruptcy Court. The Modified CE Plan was filed with the support of all of the original proponents of the Initial CE Plan, as well as the CCC. Shortly thereafter, the Modified CE Plan and the Lummus Plan were mailed to all their respective impaired creditors for voting.

In late September 2005, voting concluded on the Modified CE Plan and the Lummus Plan, and both plans were approved overwhelmingly by the voting creditors. On September 28, 2005, the U.S. Bankruptcy Court held a Confirmation Hearing on the Modified CE Plan. While several insurers filed objections to the Modified CE Plan, all such objections were resolved or withdrawn prior to the conclusion of the hearing. On December 19, 2005, the U.S. Bankruptcy Court entered an Order confirming the Modified CE Plan, and recommending that the U.S. District Court affirm the U.S. Bankruptcy Court’s Order. The U.S. District Court entered an order affirming the Modified CE Plan on March 1, 2006. As of March 31, 2006, the Modified CE Plan was no longer subject to appeal.

On the effective date of the Modified CE Plan, the Bankruptcy Court will issue an injunction, referred to as a channeling injunction, pursuant to which all asbestos-related personal injury claims against ABB Ltd and certain entities in the ABB group (including Combustion Engineering) arising out of Combustion Engineering’s business operations will be settled or otherwise satisfied from the proceeds of a trust established for such purposes. We expect that a similar trust will be established, and a similar injunction

91

issued, if the Lummus Plan becomes effective. ABB group entities not included in the protection offered by the channeling injunction entered pursuant to the Modified CE Plan or, if it becomes effective, the Lummus Plan could be required to resolve in the tort system, or otherwise, current and future asbestos-related personal injury claims that are asserted against such entities. Such events would be subject to numerous uncertainties, risk and expense.

Background

When we sold our 50 percent interest in the former ABB ALSTOM POWER NV joint venture to ALSTOM in May 2000, we retained ownership of Combustion Engineering, a subsidiary that had conducted part of our former power generation business and that now owns commercial real estate that we lease to ABB Inc. and third parties.

From 1989 through February 17, 2003 (the date that Combustion Engineering filed for Chapter 11 as described below), approximately 438,000 asbestos-related claims were filed against Combustion Engineering. On February 17, 2003, there were approximately 164,000 asbestos-related personal injury claims pending against Combustion Engineering. Of these claims, approximately 155,000 were claims by asbestos claimants who participated in the Master Settlement Agreement.

From 1990 through February 17, 2003, Lummus was named as a defendant in approximately 13,000 asbestos-related personal injury claims, of which approximately 11,000 claims were pending on February 17, 2003.

Other entities of ABB Ltd have sometimes been named as defendants in asbestos-related claims. As of December 31, 2005 and 2004, there were approximately 16,400 asbestos-related claims pending against entities of ABB Ltd other than Combustion Engineering and Lummus. These claims, which include approximately 4,300 claims against Basic, are unrelated to Combustion Engineering and Lummus and will not be resolved in the Combustion Engineering bankruptcy case or the contemplated prepackaged bankruptcy case for Lummus. We generally seek dismissals from claims where there is no apparent linkage between the plaintiffs and any entity of ABB Group. To date, resolving claims against our entities other than Combustion Engineering, and Lummus has not had a material impact on our consolidated financial position, results of operations or cash flows.

Negotiations with representatives of asbestos claimants and pre-packaged Chapter 11 filing

In October 2002, Combustion Engineering and we determined that it was likely that the expected asbestos-related personal injury liabilities of Combustion Engineering would exceed the value of its assets of approximately $800 million if its historical settlement patterns continued into the future. At that time, Combustion Engineering and we determined to resolve the asbestos-related personal injury liability of Combustion Engineering and its affiliates by reorganizing Combustion Engineering under Chapter 11, the principal business reorganization chapter of the U.S. Bankruptcy Code. Combustion Engineering and we determined to structure the Chapter 11 reorganization as a “pre-packaged plan,” in which Combustion Engineering would solicit votes from asbestos claimants to approve the plan before the Chapter 11 case was filed with the Bankruptcy Court.

Beginning in October 2002, Combustion Engineering and we conducted extensive negotiations with representatives of certain asbestos claimants with respect to a pre-packaged plan. On November 22, 2002, Combustion Engineering and the asbestos claimants’ representatives entered into a Master Settlement Agreement for settling open asbestos-related personal injury claims that had been filed against Combustion Engineering prior to November 2002. Combustion Engineering also agreed, pursuant to the Master Settlement Agreement, to form and fund the CE Settlement Trust to administer and pay apportion of the value of asbestos-related personal injury claims settled under the Master Settlement Agreement. Under the terms of the Master Settlement Agreement, eligible claimants who met all criteria to qualify for

92

payment were entitled to receive a percentage of the value of their claim from the CE Settlement Trust and retain a claim against Combustion Engineering for the unpaid balance (the stub claim). The Master Settlement Agreement divides claims into three categories based on the status of the claim at November 14, 2002, the status of the documentation relating to the claim and whether or not the documentation establishes a valid claim eligible for settlement and payment by Combustion Engineering. The Master Settlement Agreement was supplemented in January 2003 to clarify the rights of certain claimants whose right to participate in a particular payment category was disputed. The Master Settlement Agreement, as supplemented, settles the value and provides for the partial payment of approximately 155,000 asbestos-related personal injury claims that had been lodged against Combustion Engineering.

The Master Settlement Agreement, as supplemented, provided that the CE Settlement Trust was to be funded by:

·cash contributions from Combustion Engineering in the amount of $5 million;

·cash contributions from ABB Inc., a subsidiary of ABB Ltd, in the amount of $30 million;

·a promissory note from Combustion Engineering in the principal amount of approximately $101 million (guaranteed by Asea Brown Boveri), now merged into Holdings; and

·an assignment by Combustion Engineering of the $311 million unpaid balance of principal and interest due to Combustion Engineering from Asea Brown Boveri, now merged into Holdings, under a loan agreement dated May 12, 2000 (guaranteed by ABB Ltd).

Approximately 155,000 eligible claimants have entered into the Master Settlement Agreement or adoption agreements with Combustion Engineering and the CE Settlement Trust and have received partial payment on their claims.

Pre-packaged plan of reorganization

On January 17, 2003, we announced that Combustion Engineering and we had reached an agreement with representatives of asbestos claimants on the terms of the Initial CE Plan.

As proposed, the Initial CE Plan provided for the creation of the Asbestos PI Trust, an independent trust separate and distinct from the CE Settlement Trust, to address “Asbestos PI Trust Claims,” which are present and future asbestos-related personal injury claims (including the stub claims of claimants who previously settled pursuant to the Master Settlement Agreement) that arise directly or indirectly from any act, omission, products, or operations of Combustion Engineering or Lummus or Basic. The Initial CE Plan provided that, if it were to become effective, a channeling injunction would be issued under Section 105 of the U.S. Bankruptcy Code pursuant to which the Asbestos PI Trust Claims against ABB Ltd and certain of its affiliates (including Combustion Engineering, Lummus and Basic) would be channeled to the Asbestos PI Trust. The effect of the channeling injunction contemplated by the Initial CE Plan would be that the sole recourse of a holder of an Asbestos PI Trust Claim would be to the Asbestos PI Trust and such holder would be barred from asserting such a claim against ABB Ltd and the affiliates covered by the injunction (including Combustion Engineering and, under the Initial CE Plan, Lummus and Basic).

93

As proposed, the Initial CE Plan provided that on its effective date, the Asbestos PI Trust would be funded with the following:

·a $20 million 5 percent term note (the CE Convertible Note) with a maximum term of ten years from the effective date of the Initial CE Plan, to be issued by Combustion Engineering and secured by its Windsor, Connecticut, real estate and real estate leases (under certain specified contingencies, the Asbestos PI Trust may have the right to convert the term note into ownership of 80 percent of the voting securities of the reorganized Combustion Engineering);

·the excess cash, which represents the excess cash held by Combustion Engineering on the effective date of the Initial CE Plan (the Excess CE Cash);

·a non-interest bearing promissory note (the ABB Promissory Note) to be issued by ABB Inc. and ABB Ltd, and guaranteed by certain ABB Ltd subsidiaries, in an aggregate amount of up to $350 million payable in installments (including two $25 million payments contingent upon ABB Ltd generating an earning before interest and taxes margin of 12 percent in 2007 and 2008);

·a non-interest bearing promissory note to be issued on behalf of Lummus in the amount of $28 million payable in relatively equal annual installments over 12 years;

·a non-interest bearing promissory note to be issued on behalf of Basic (the Basic Note) in the aggregate amount of $10 million payable in relatively equal annual installments over 12 years;

·30,298,913 shares of ABB Ltd (the CE Settlement Shares), which had a fair value of $293 million, $170 million and $154 million as of December 31, 2005, 2004 and 2003, respectively; and

·an assignment by Combustion Engineering, Lummus, and Basic to the Asbestos PI Trust of any proceeds under certain insurance policies. As of December 31, 2005, aggregate unexhausted product liability limits under such policies were approximately $200 million for Combustion Engineering, approximately $43 million for Lummus and approximately $28 million for Basic although amounts ultimately recovered by the Asbestos PI Trust under these policies may be substantially different from the policy limits. In addition, Combustion Engineering would assign to the Asbestos PI Trust scheduled payments under certain of its insurance settlement agreements ($66 million as of December 31, 2005). (The proceeds and payments to be assigned are together referred to as “Certain Insurance Amounts.”)

In addition, the Initial CE Plan provided that if Lummus is sold within 18 months after the CE Plan’s effective date, ABB Inc. would contribute $5 million to the CE Settlement Trust and $5 million to the Asbestos PI Trust.

Upon the effective date under the Initial CE Plan, ABB Inc. would indemnify the Combustion Engineering estate against up to $5 million of liability on account of certain contingent claims held by certain indemnified insurers. Further, on the effective date, Asea Brown Boveri (now merged into Holdings) would provide for the benefit of Combustion Engineering a nuclear and environmental indemnity with regard to obligations arising out of Combustion Engineering’s Windsor, Connecticut, site. The two indemnities described in this paragraph are referred to as the “Related Indemnities.”

Judicial review process

The solicitation of votes to approve the Initial CE Plan began on January 19, 2003. Combustion Engineering filed for Chapter 11 in the U.S. Bankruptcy Court in Delaware on, February 17, 2003, based on the terms previously negotiated in connection with the Initial CE Plan.

On July 10, 2003 the Bankruptcy Court issued an Order recommending to the U.S. District Court, among other things, that the Initial CE Plan be confirmed.

94

Following the issuance of the Bankruptcy Court’s Order a number of interested parties, including a small number of asbestos claimants and certain insurance companies which historically have provided insurance coverage to Combustion Engineering, Lummus and Basic filed appeals based on various objections to the Initial CE Plan. The District Court held a hearing on July 31, 2003, with respect to the appeals and entered an order on August 8, 2003 confirming the Initial CE Plan.

Various parties appealed the District Court’s confirmation order to the United States Court of Appeals for the Third Circuit. The Court of Appeals held a hearing with respect to the appeals of the confirmation order of the District Court on June 23, 2004 and issued its decision on December 2, 2004 (the Third Circuit Decision).

The Third Circuit Decision reversed the District Court’s confirmation of the Initial CE Plan. The Third Circuit Decision focused on three issues raised by the appealing parties in respect to the terms of the Initial CE Plan: (i) whether the Bankruptcy Court had “related to” jurisdiction over the claims against the non-debtors, Lummus and Basic, that do not arise from any products or operations of Combustion Engineering (the non-derivative claims); (ii) whether the non-debtors, Lummus and Basic, could avail themselves of the protection of the channeling injunction by invoking Section 105 of the Bankruptcy Code and contributing assets to the Asbestos PI Trust; and (iii) whether the two-trust structure and use of stub claims in the voting process comply with the Bankruptcy Code. The Court of Appeals held that there were insufficient factual findings to support “related-to” jurisdiction and that Section 105 of the Bankruptcy Code could not be employed to extend the channeling injunction to the non-derivative claims against non-debtors Lummus and Basic. With regard to the two-trust structure, the Court of Appeals remanded the Initial CE Plan to the District Court to determine whether creditors received fair treatment in light of the pre-petition payments made to the CE Settlement Trust participants and the use of stub claims in the voting process. Among other things, the Court of Appeals instructed the lower courts to consider whether payments under the CE Settlement Trust constituted voidable preferences that were inconsistent with the fair distribution scheme of the Bankruptcy Code.

Notwithstanding the Third Circuit Decision, the Master Settlement Agreement, which settles the amount of and provides for partial payment on approximately 155,000 asbestos-related personal injury claims, remained effective. Early in the Combustion Engineering bankruptcy case, however, an asbestos claimant commenced an action against the trustee of the CE Settlement Trust and individuals who had received distributions from such trust, asserting that further distributions by the CE Settlement Trust should be enjoined because the transaction that created the CE Settlement Trust was a voidable preference. The Bankruptcy Court ruled that it would not dismiss that action for lack of standing. On October 22, 2004, the trustee of the CE Settlement Trust moved to dismiss the complaint in that action. This matter is pending and no decision has been rendered by the Court. The Modified CE Plan contemplates that on its effective date the complaint would be dismissed.

Following the Third Circuit Decision, the lower courts assumed jurisdiction over further confirmation proceedings in respect of the Initial CE Plan. On January 27, 2005, the Bankruptcy Court authorized the CE FCR and the Creditors Committee to file any available bankruptcy-related and similar claims against third parties, including preference claims against certain claimants that did not participate in the CE Settlement Trust, and any potential bankruptcy-related claims against us. We also entered into a tolling agreement to extend the time period within which bankruptcy-related claims against us could be brought. The Modified CE Plan contemplates that all such actions by the trustee agent and us will be dismissed on the effective date of that Plan.

Since February 17, 2003, a stay and preliminary injunction have barred the commencement and prosecution of certain asbestos-related claims against Combustion Engineering, Lummus, Basic, certain other entities of ABB group and certain other parties, including parties indemnified by us. The barred claims include, among others, claims arising from asbestos exposure caused by Combustion Engineering,

95

Lummus or Basic and claims alleging fraudulent conveyance, successor liability and veil piercing. We do not know the number or nature of claims that would now be pending against the protected entities if those legal measures had not been in place.

The Modified CE Plan

In March 2005, following extensive discussions with the CE FCR, the Creditors Committee and representatives of the CCC, Combustion Engineering and we reached the Agreement in Principle on certain overall modifications to the Initial CE Plan to bring it into conformity with the Third Circuit Decision and to provide a mechanism for resolving finally Lummus’ potential asbestos liability.

The Modified CE Plan, which implements the Agreement in Principle, includes the following material changes to the Initial CE Plan:

·Additional Contribution—We will make an additional contribution of $204 million (the ABB Additional Contribution) to the Asbestos PI Trust from the proceeds received from any sale of Lummus in whole or in part, but in no event later than two years from the effective date of the Modified CE Plan regardless of any sale of all or a portion of Lummus;

·ABB Promissory Note—The terms of the original ABB Promissory Note have been changed to, among other things, modify the payment schedule and the percentages for EBIT Margin Events that give rise to contingent payments;

·Guarantees—Guarantees by certain subsidiaries of ABB Ltd of the ABB Promissory Note have been extended for all continuing, modified, and additional contributions of Combustion Engineering, ABB Ltd or their respective affiliates under the Modified CE Plan;

·Lummus Effective Date—The Effective Date of the Modified CE Plan is conditioned upon the occurrence of the Lummus Effective Date, but this condition becomes inoperative if Lummus fails to file its own chapter 11 case within 15 days after the Confirmation Order in respect to the Modified CE Plan becomes final;

·Asbestos PI Trust Distributions—Certain changes have been made to the Asbestos PI Trust documents that modify the Asbestos PI Trust Distribution Procedures under the Modified CE Plan;

·Settlement of Preference Claims—The CE Settlement Trust and claimants who received payments from the CE Settlement Trust will receive a release of any preference claims, fraudulent transfer claims, and other similar claims that Combustion Engineering, the CE FCR or creditors of Combustion Engineering may have against them; and

·Elimination of Lummus and Basic—The Modified CE Plan no longer addresses the direct asbestos related liabilities of Lummus and Basic and eliminates any assignment of insurance rights by Lummus and Basic other than their rights to coverage under Combustion Engineering’s insurance policies.

As part of these changes, we have paid approximately $8 million of approved legal fees of the CCC.

The Modified CE Plan contemplates a channeling injunction substantially similar to the channeling injunction contemplated by the Initial CE Plan. If the ABB entities fail to perform any of their financial obligations under the Modified CE Plan, the channeling injunction will terminate and the affected asbestos-related personal injury claims could be pursued against the ABB entities.

The Lummus Plan

The negotiations that determined the proposed terms of the Lummus Plan were conducted with an individual appointed by Lummus to represent the interests of its future asbestos claimants (the Lummus

96

FCR). These negotiations were held in parallel with the negotiations on the Modified CE Plan over approximately five months.

The material terms of the Lummus Plan are as follows:

·Lummus Note—Lummus will execute a note in the principal amount of $33 million (the Lummus Note) payable to the Trust created under the Lummus Plan (the Lummus Asbestos PI Trust). The Lummus Note will bear interest at 6 percent per annum and be secured by 51 percent of the capital stock of Lummus;

·Insurance Recoveries—The Lummus Asbestos PI Trust will also be entitled to be paid the first $7.5 million in aggregate recoveries from Lummus insurers, with the first $5 million guaranteed by Lummus; and

·Channeling Injunction—The Lummus Plan provides for the issuance of a channeling injunction pursuant to Sections 524(g) and 105 of the Bankruptcy Code pursuant to which all asbestos claims against Lummus shall be channeled to the Lummus Asbestos PI Trust.

The Solicitation and Voting Process

In late August 2005, Combustion Engineering distributed informational materials and ballots to claimants who were eligible to vote on the Modified CE Plan or to persons who had been authorized by eligible claimants to cast ballots on their behalf. On August 31, 2005, Lummus set out informational materials and ballots on the Lummus Plan to all affected Lummus creditors for voting.

Separate voting on the Modified CE Plan and Lummus Plan began on about September 1, 2005 and concluded on September 19, 2005. The Modified CE Plan was approved by an overwhelming majority of the votes cast in respect to the Modified CE Plan and the Lummus Plan was approved by an overwhelming majority of those who voted on the Lummus Plan.

Confirmation of the Modified CE Plan

The Bankruptcy Court held a Confirmation Hearing on the Modified CE Plan on September 28, 2005. Several objections to confirmation of the Modified CE Plan had been filed by insurance carriers and others but all such objections were resolved or otherwise withdrawn at or prior to the hearing. As a consequence, there were no objections to confirmation of the Modified CE Plan before the court.

On December 19, 2005 the Bankruptcy Court issued an Order, and accompanying Opinion, confirming the Modified CE Plan and recommending that the U.S. District Court affirm the Bankruptcy Court’s Order. The U.S. District Court entered an order affirming the Modified CE Plan on March 1, 2006. As of March 31, 2006, the Modified CE Plan was no longer subject to appeal. We expect the Modified CE Plan to become effective in the second fiscal quarter of 2006.

The Modified CE Plan contemplates that Lummus would file its own Chapter 11 case within 15 days from the date that the confirmation of the Modified CE Plan becomes a final order. Although Lummus is under no obligation to file such a case or to file at any particular time, we expect Lummus will file its own Chapter 11 case.

We do not know whether any plan or reorganization for Lummus will be ultimately confirmed. If for any reason a Chapter 11 plan relating to Lummus is not eventually confirmed, we expect that Lummus’ asbestos-related liabilities will have to be resolved through the tort system, or otherwise.

Entities of ABB group that are not included in the protection offered by the channeling injunctions entered pursuant to the Modified CE Plan or the Lummus Plan (if Lummus files its own Chapter 11 case)

97

will continue to resolve current and future asbestos-related claims that are asserted against them in the tort system, or otherwise.

If U.S. federal legislation addressing asbestos personal injury claims is passed, which is speculative at this time, such legislation may affect the amount that will be required to resolve the asbestos-related claims against entities of ABB group.

The expected impact on our consolidated financial statements when the Modified CE Plan becomes effective include:

·The CE Settlement Shares will be contributed to the Asbestos PI Trust, and will result in a reduction of provisions and other with an offset to capital stock and additional paid-in capital in the amount of the fair value of the shares at the date of contribution.

·Upon the effective date, we will reclassify from provisions and other to current and non-current liabilities amounts related to the ABB Promissory Note and the ABB Additional Contribution, both of which will be discounted at our incremental borrowing rate, and the CE Convertible Note. The discount adjustment will be included in our results from discontinued operations along with the mark-to-market adjustment related to the CE Settlement Shares through the effective date and other estimated costs related to finalizing the Modified CE Plan. Future accretion of interest will be recorded in interest and other finance expense in our consolidated financial statements.

·In addition, our subsidiary Combustion Engineering Inc. will adjust its accounts to eliminate its remaining recorded asbestos liability and its insurance receivable assets including cash received from insurance carriers under settlement agreements subsequent to the petition date. Subsequent to the effective date and after settlement of Combustion Engineering’s obligations under the Plan, the remaining cash in its Plan Reserve account will be paid to the Asbestos PI Trust.

All of these expected impacts are based on our current expectations of the provisions of the Modified CE Plan when made effective. Should additional circumstances or events arise the actual impact on our consolidated financial statements may differ from our expectations.

Effect on our financial position

Expenses.   We recorded expenses related to asbestos of $133 million, $262 million and $142 million in loss from discontinued operations, net of tax, and $0 million, $1 million and $3 million in income from continuing operations, net of tax, in 2005, 2004 and 2003, respectively. Loss from discontinued operations, net of tax, in 2005 includes $123 million resulting from the mark-to-market adjustment relating to the CE Settlement Shares and other costs of $11 million. Loss from discontinued operations, net of tax, in 2004 reflects a charge of $232 million taken in connection with the agreement we reached in March 2005 on the basic terms of the Modified CE Plan, $17 million resulting from the mark-to-market adjustment relating to the CE Settlement Shares, a credit of $6 million resulting from adjustment of the provision for the estimated liability of Basic and other costs of $19 million. Loss from discontinued operations, net of tax, in 2003 includes a charge of $68 million, net of tax, resulting from the mark-to-market adjustment relating to the CE Settlement Shares, a provision of $41 million, representing the then present value of the first two $25 million payments under the ABB Promissory Note, which were previously considered contingent, as well as $33 million of other costs.

Cash Payments.   Cash payments, before insurance recoveries, related to Combustion Engineering’s asbestos-related claims were $19 million (including $3 million contributed to the CE Settlement Trust, described above), $56 million (including $49 million contributed to the CE Settlement Trust) and $391 million (including $365 million contributed to the CE Settlement Trust), in 2005, 2004 and 2003, respectively. Administration and defense costs were $17 million, $10 million and $36 million in 2005, 2004 and 2003, respectively.

98

Cash payments related to asbestos-related claims against Lummus aggregated approximately $3 million through December 31, 2005, of which approximately $1 million was paid in 2003 and the remainder in prior years. Administration and defense costs were $4 million, $0 million and $2 million in 2005, 2004 and 2003, respectively.

The aggregate cash payments to resolve asbestos-related claims against Basic and other entities of ABB Ltd were approximately $4 million as of December 31, 2005, of which $3 million related to Basic.

Provisions.   As of December 31, 2005, 2004 and 2003, we recorded total provisions on a consolidated basis of $1,128 million, $1,023 million and $815 million in respect of asbestos-related claims and defense costs related to Combustion Engineering, Lummus and Basic. Based upon the expected implementation of the Modified CE Plan and the Lummus Plan, we recorded provisions of $1,080 million and $43 million, respectively, as of December 31, 2005, in accrued liabilities and other. If the Modified CE Plan and Lummus Plan become effective, certain amounts will be reclassified as of the effective date to other long-term liabilities based on the timing of the future cash payments to the Asbestos PI Trust or any similar trust created under the Lummus Plan and to Stockholders’ Equity for the amounts related to the CE Settlement Shares. Future earnings will be affected by mark-to-market adjustments relating to the CE Settlement Shares through the Effective Date, as well as contingent payments when they become probable of payment. The provisions as of December 31, 2003 were based on our obligations under the initial CE Plan and assumed that the initial CE Plan would be confirmed and become effective as proposed.

With respect to Basic, we have established a provision of $4 million relating to its asbestos-related personal injury liabilities based on analysis of historical claims statistics and related settlement costs and a projection of such claims activity over the next several years.

We believe that it is probable that the full amount of the relevant provisions will be required to settle the respective asbestos-related liabilities of Combustion Engineering and Lummus in accordance with the Modified CE Plan and the proposed Lummus Plan, and those of Basic. We may incur liability greater than the existing provisions, whether in connection with modified plans of bankruptcy or otherwise, but we do not believe that the amount of any such incremental liability can be reasonably estimated or that there is a better estimate of these liabilities than the amounts that are provided for.

Our provisions in respect of asbestos-related claims include, as stated above, amounts for each of Combustion Engineering, Lummus and Basic. The assets of Combustion Engineering include amounts receivable of approximately $208 million, $221 million and $232 million as of December 31, 2005, 2004 and 2003, respectively, for probable insurance recoveries, which were established with respect to asbestos-related claims. We have not established a provision for claims against entities other than Combustion Engineering, Lummus and Basic as amounts are immaterial.

In the event the Modified CE Plan or Lummus Plan (if Lummus files its own Chapter 11 case) do not become effective, the ultimate cost for the resolution of asbestos-related personal injury claims against Combustion Engineering and Lummus may be significantly higher and could have a material adverse impact on our consolidated financial position, results of operations and cash flows.

99

Item 6.Directors, Senior Management and Employees

BOARD OF DIRECTORS

Our board of directors oversees the management and determines the corporate strategy of ABB. It determines the organization of the ABB Group and appoints, removes and supervises the persons entrusted with the management and representation of ABB. The regulations of our board of directors set forth the organizational structure and responsibilities of the directors, including the responsibilities of the executive committee of the board. We have been granted an exception by the Federal Office of Justice of Switzerland (Bundesamt für Justiz) to the rule that a majority of the members of the board of directors of ABB must be citizens of Switzerland with residence in Switzerland according to Article 708 para 1 of the Swiss Code of Obligations.

Our articles of incorporation stipulate that the board of directors must consist of not fewer than seven and no more than 13 members at any time. Swiss law and our articles of incorporation also provide that each director must be a shareholder of ABB Ltd. Directors are elected for terms of one year by the shareholders in a shareholders’ meeting. Members of the board of directors whose terms of office have expired are immediately eligible for re-election. Our articles of incorporation do not provide for the retirement or non-retirement of directors under an age-limit requirement. Our internal regulations provide that a director shall resign at the annual general meeting of shareholders taking place in the year of their 70th birthday.

The board of directors appoints its Chairman and one or more Vice Chairmen, as well as the members of our senior management. At present, the position of Vice Chairman is vacant.

The following table sets forth the names and the years of birth of our directors and their current positions with ABB.

Name	Born	Current Position
Jürgen Dormann	1940	Chairman of the Board
Roger Agnelli	1959	Director
Louis R. Hughes	1949	Director
Hans Ulrich Märki	1946	Director
Michel de Rosen	1951	Director
Michael Treschow	1943	Director
Bernd W. Voss	1939	Director
Jacob Wallenberg	1956	Director

ABB Ltd became the ultimate holding company of the ABB Group on June 28, 1999. The biographies of Messrs. Dormann and Wallenberg also note the years of service they provided to ABB Asea Brown Boveri Ltd, the former parent company of the ABB Group.

Jürgen Dormann has been the Chairman of ABB’s board of directors since November 2001 and served as ABB’s President and Chief Executive Officer from September 5, 2002 until December 31, 2004. He has been a member of ABB’s board of directors since June 28, 1999. From 1998 to 1999, he served as a member of the board of directors of ABB Asea Brown Boveri Ltd. He is the vice-chairman of the board of directors of sanofi aventis (France) and of Adecco (Switzerland, as of November 22, 2005). He was a member of the board of directors of Adecco (Switzerland, from January 1, 2005 to November 21, 2005). He is a member of the board of directors of IBM (U.S., as of February 22, 2005) and BG Group (U.K., as from June 1, 2005). Mr. Dormann is a German citizen.

Roger Agnelli was elected to ABB’s board of directors at the annual general meeting of shareholders on March 12, 2002. He is the President and Chief Executive Officer of Companhia Vale do Rio Doce

100

(Brazil). He is also a member of the board of directors of Duke Energy (U.S.) and Suzano Petroquimica (Brazil, as of April 20, 2005). Mr. Agnelli is a Brazilian citizen.

Louis R. Hughes was elected to ABB’s board of directors at the annual general meeting of shareholders on May 16, 2003. Mr. Hughes is the chairman of the board of directors of Maxager Technology and Chief Executive Officer of GBS Laboratories (both U.S.). He is also a member of the boards of directors of AkzoNobel (The Netherlands, as from April 2006), MTU (Germany, as of January 2006), Sulzer (Switzerland) and Electrolux (Sweden, as of April 20, 2005). He was also a member of the board of directors of BT Group (U.K, through March 2006). He is an Executive Advisor to Windpoint (U.S.). Mr. Hughes was the president and chief operating officer of Lockheed Martin Corp. in 2000 and was an executive vice president of General Motors from 1992 to 2000. He was also the acting chief executive officer of Wavecrest Laboratories from 2002 to 2003. Mr. Hughes is a United States citizen. As announced on October 28, 2004, Louis R. Hughes took a temporary leave of absence until July 2005 from ABB’s board of directors to serve the United States government as chief of staff of the Afghanistan Reconstruction Group.

Hans Ulrich Märkiwas elected to ABB’s board of directors at the annual general meeting of shareholders on March 12, 2002. He is chairman of IBM Europe, Middle East and Africa (France) and a member of the board of directors of Mettler-Toledo International and Menuhin Festival Gstaad AG (both Switzerland). Mr. Märki is a Swiss citizen.

Michel de Rosenwas elected to ABB’s board of directors at the annual general meeting of shareholders on March 12, 2002. He is the chairman, president and chief executive officer of ViroPharma (U.S.). He is a member of the boards of directors of Ursinus College and Pennsylvania Biotech (both U.S.). He is also a member of the advisory boards of Paul Capital Partners Royalty Fund and the Global Business Coalition on HIV/AIDS (both U.S.).  Mr. de Rosen is a French citizen.

Michael Treschowwas elected to ABB’s board of directors at the annual general meeting of shareholders on May 16, 2003. He is the chairman of the boards of directors of Ericsson, Electrolux and the Confederation of Swedish Enterprise (all Sweden). From 1997 to 2002, he was the president and chief executive officer of Electrolux (Sweden). Prior to 1997, he was the president and chief executive officer of Atlas Copco. Mr. Treschow is a Swedish citizen.

Bernd W. Vosswas elected to ABB’s board of directors at the annual general meeting of shareholders on March 12, 2002. He is a member of the supervisory board of Dresdner Bank (Germany). He is also a member of the boards of directors of Allianz Leben, Continental, Quelle, Hapag-Lloyd, Wacker Chemie and Osram (all Germany). Mr. Voss is a German citizen.

Jacob Wallenberghas been a member of ABB’s board of directors since June 28, 1999. From March 1999 to June 1999, he served as a member of the board of directors of ABB Asea Brown Boveri Ltd. He is the chairman of the board of directors of Investor AB (Sweden). He is vice-chairman of SEB Skandinaviska Enskilda Banken, Atlas Copco and SAS (all Sweden). He is also a member of the boards of directors of the Knut and Alice Wallenberg, W Capital Management AB, and the Nobel Foundation (all Sweden). Mr. Wallenberg is a Swedish citizen.

SENIOR MANAGEMENT

Our board of directors has delegated the executive management of ABB to the chief executive officer and the other members of the executive committee. The chief executive officer, and under his direction the other members of the executive committee, are responsible for our overall business and affairs and day-to-day management. The chief executive officer reports to the board regularly, and whenever extraordinary circumstances so require, on the course of our business and financial performance and on all organizational and personnel matters, transactions and other issues relevant to the group.

101

Upon proposal by the nomination and compensation committee, the executive committee is appointed and discharged by the board.

The following table sets forth the name and year of birth of each member of the executive committee as of December 31, 2005, the position of each member as of such date, and the date each member was appointed to such position.

Name	Born	Position as of December 31, 2005	Year of Appointment
Fred Kindle	1959	President and Chief Executive Officer	2005
Michel Demaré	1956	Chief Financial Officer	2005
Dinesh C. Paliwal	1957	Head of Automation Technologies Division	2003
Peter Smits	1951	Head of Power Technologies Division	2003
Ulrich Spiesshofer	1964	Head of Corporate Development	2005
Gary Steel	1952	Head of Human Resources	2003

Fred Kindlehas been our Chief Executive Officer since January 2005, after joining ABB on September 1, 2004. Mr. Kindle is a member of the board of directors of VZ Holding Ltd. (Switzerland). Before joining ABB he was the chief executive officer of Sulzer (Switzerland). Mr. Kindle was with the Sulzer Group since 1992. In 2001, he became chief executive officer of Sulzer and from 2003 to 2004 he was also a member of Sulzer’s board of directors. Mr. Kindle has dual Liechtenstein and Swiss citizenship.

Michel Demaréjoined ABB as Chief Financial Officer on January 1, 2005. From 2002 until 2004 Mr. Demaré was vice president and chief financial officer of Baxter Europe. From 1984 until 2002 he held various positions within Dow Chemical (U.S.). Mr. Demaré is a Belgian citizen.

Dinesh C. Paliwalwas the Head of our Automation Technologies division from January 2003 through December 2005. From April 2002 to January 2003, he was our Executive Vice President responsible for our Industries Division. Between January 1, 2001 and March 2002, he was our Executive Vice President responsible for our Process Industries division. From 1990 to 2001, he held various positions with ABB. Mr. Paliwal has dual Indian and U.S citizenship.

Peter Smitswas the Head of our Power Technologies division from January 2003 through December 2005. From 2001 to January 2003, he was Executive Vice President responsible for the Power Technology Products division. From 1980 to 2001, he held various positions with ABB. Mr. Smits is a German citizen.

Ulrich Spiesshoferwas appointed our Head of Corporate Development in November 2005. From 2002 until he joined ABB, he was Senior Partner, Global Head of Operations Practice at Roland Berger AG. Prior to 2002 he held various positions with A.T. Kearney International AG and its affiliates. Mr. Spiesshofer is a German citizen.

Gary Steelwas appointed our Head of Human Resources in January 2003. In 2002, he was the Human Resources Director, Group Finance at Shell. Between 1976 and 2002, he held several human resources and employee relations positions at Shell. Mr. Steel is a British citizen.

As of January 1, 2006, the composition of the executive committee changed as follows:  Peter Smits left the executive committee, Dinesh Paliwal remained on the executive committee and became head of Global Markets and Technology, Bernhard Jucker, Samir Brikho, Tom Sjökvist, Veli-Matti Reinikkala, and Anders Jonsson joined the executive committee.

102

The following table sets forth the names and the years of birth of the individuals who became members of the executive committee on January 1, 2006, their positions with us and the dates of their initial appointment to those positions.

Name	Born	Current Position	Year of Appointment
Bernhard Jucker	1954	Responsible for Power Products Division	2006
Samir Brikho	1958	Responsible for Power Systems Division	2006
Tom Sjökvist	1947	Responsible for Automation Products Division	2006
Veli-Matti Reinikkala	1957	Responsible for Process Automation Division	2006
Anders Jonsson	1950	Responsible for Robotics Division	2006

Bernhard Juckerwas appointed executive committee member responsible for our Power Products Division in January 2006. From 2003 to 2005 he was ABB’s country manager for Germany. From 1980 to 2003 he held various positions in ABB. Mr. Jucker is a Swiss citizen.

Samir Brikhowas appointed executive committee member responsible for our Power Systems Division in January 2006. From 2003 to 2005 he was the CEO of ABB Lummus Global. From 1999 to 2003 he held various roles in Alstom and from 1983 to 1999 he held various positions in ABB. Mr. Brikho is a Swedish citizen.

Tom Sjökvistwas appointed executive committee member responsible for our Automation Products Division in January 2006. From 2003 to 2005 he was the head of our Automation Products business area. From 1972 to 2003 he held several positions with ABB. Mr. Sjökvist is a Swedish citizen.

Veli-Matti Reinikkalawas appointed executive committee member responsible for our Process Automation Division in January 2006. In 2005 he was the head of our Process Automation business area. From 1993 to 2005 he held several positions with ABB. Mr. Reinikkala is a Finnish citizen.

Anders Jonssonwas appointed executive committee member responsible for our Robotics Division in January 2006. In 2005 he was the head of our Automation Technologies Division in China. From 1976 to 2004 he held a range of positions with ABB. Mr. Jonsson is a Swedish citizen.

CORPORATE GOVERNANCE

We are committed to the highest international standards of corporate governance, and we support 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 ABB shares are listed:  the SWX Swiss Exchange, the Stockholm Exchange, and the New York Stock Exchange (where our shares are traded in the form of ADSs).

As ABB Ltd is organized in Switzerland, we are subject to the Swiss Code of Obligations. In addition, our principles and rules on corporate governance are laid down in our articles of incorporation, our board regulations, our standards for corporate governance, the charters of our board committees, the board membership guidelines, several internal directives (such as the directive on insider information) and the code on business ethics. It is the duty of our board of directors 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.

In November 2003, the SEC approved changes to the New York Stock Exchange’s listing standards related to the corporate governance practices of listed companies. Under these rules, listed foreign private issuers, such as ABB, must disclose any significant ways in which their corporate governance practices differ from those followed by U.S. domestic companies under the New York Stock Exchange listing standards. This disclosure can be found on our web site under www.abb.com/about.

103

Duties of Directors and Officers

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.

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 skill 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 may not take any actions that may be harmful to the corporation.

Exercise of Powers

Directors as well as other persons authorized to act on behalf of a Swiss corporation may perform all legal acts on behalf of the corporation which the business purpose as set forth in the articles of incorporation of the corporation, may entail. Pursuant to court practice, such directors and officers can take any action that is not explicitly excluded by the business purpose of the corporation. In so doing, however, the directors and officers must still pursue the duty of due care and the duty of loyalty described above and must extend equal treatment to the corporation’s shareholders in like circumstances. Our articles of incorporation do not contain provisions concerning a director’s power, in the absence of an independent quorum, to vote on the compensation to themselves or any members of their body.

Conflicts of Interest

Swiss law does not have a general provision on conflicts of interest and our articles of incorporation do not limit our directors’ power to vote on a proposal, arrangement or contract in which the director or officer is materially interested. However, the Swiss Code of Obligations requires directors and officers to safeguard the interests of the corporation and, in this connection, imposes a duty of care and loyalty on directors and officers. This rule is generally understood and so recommended by the Swiss Code of Best Practice for Corporate Governance as disqualifying directors and officers from participating in decisions, other than in the shareholders’ meeting, that directly affect them.

Confidentiality

Confidential information obtained by directors and officers of a Swiss corporation acting in such capacity must be kept confidential during and after their term of office.

Sanctions

If directors and officers transact business on behalf of the corporation with bona fide third parties in violation of their statutory duties, the transaction is nevertheless valid as long as it is not explicitly excluded by the corporation’s business purpose as set forth in its articles of incorporation. Directors and officers acting in violation of their statutory duties—whether transacting business with bona fide third parties or performing any other acts on behalf of the company—may, however, become liable to the corporation, its shareholders and its creditors for damages. The liability is joint and several, but the courts may apportion the liability among the directors and officers in accordance with their degree of culpability.

In addition, Swiss law contains a provision under which payments made to a shareholder or a director or any person(s) associated therewith other than at arm’s length must be repaid to the company if the shareholder or director or any person associated therewith was acting in bad faith.

104

If the board of directors has lawfully delegated the power to carry out day-to-day management to a different corporate body, e.g., the executive committee, it is not liable for the acts of the members of that different corporate body. Instead, the directors can only be held liable for their failure to properly select, instruct and supervise the members of that different corporate body.

Board Practices

Board meetings are convened by the chairman or upon request by a director or the chief executive officer. During 2005, seven board meetings were held. Written 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 the member time to study the covered matters prior to the meetings. Decisions made at the board meetings are recorded in written minutes of the meetings. Our board membership guidelines require that the board of directors be comprised of a substantial majority of independent directors. All board members are non-executive directors and are all currently independent, with the exception of Jürgen Dormann. This determination has been made in accordance with the Swiss Code of Best Practice and the independence criteria set forth in the corporate governance rules of the New York Stock Exchange. Mr. Dormann held also the position of president and chief executive officer from September 5, 2002 until December 31, 2004 in addition to his ongoing role as chairman.

Our board of directors has appointed from among its members two board committees, the finance and audit committee and the nomination and compensation committee. The duties and objectives of the board committees are set forth in charters issued or approved by the board of directors. These committees assist the board in its tasks and report regularly to the board.

The finance and audit committee oversees the financial reporting processes and accounting practices, evaluates the independence, objectivity and effectiveness of external and internal auditors, reviews audit results, monitors compliance with the laws and regulations governing the preparation of our financial statements and assesses the processes relating to our risk management and internal control systems. The finance and audit committee is required to be composed of three or more independent directors who have a thorough understanding of finance and accounting. The chief financial officer and, as determined by the committee’s chairman for matters related to their respective functions, the head of internal audit, as well as the external auditors may participate in the finance and audit committee meetings. Mr. Voss is the chairman of the finance and audit committee, and Messrs. Agnelli (until July 2005), Hughes (from July 2005) and Wallenberg are members. The committee met eight times in 2005.

The nomination and compensation committee determines the selection of candidates for the board of directors and its committees, plans for the succession of directors and ensures that newly elected directors receive the appropriate introduction and orientation and that all directors receive adequate continuing education and training to fulfill their obligations. The nomination and compensation committee proposes the remuneration of the members of the executive committee. The nomination and compensation committee is required to be composed of three or more independent directors. Upon invitation by the committee’s chairman, the chief executive officer 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. Mr. Märki is the chairman of the nomination and compensation committee, and Messrs. Agnelli (from July 2005), de Rosen and Wallenberg (until July 2005) are members. The committee met five times in 2005.

105

COMPENSATION

Board of Directors

The compensation levels of the board of directors in 2005 was as follows:

·Chairman:  CHF 1,500,000 (approximately $1,140,858 at December 31, 2005);

·Member:  CHF 250,000 (approximately $190,143 at December 31, 2005);

·Committee chairman:  CHF 50,000 (approximately $38,029 at December 31, 2005); and

·Committee member:  CHF 20,000 (approximately $15,211 at December 31, 2005).

These amounts were paid to the directors in semi-annual installments in 2005, in June and November.

Board members receive at least 50 percent (and may elect to receive a higher ratio) of their net compensation (i.e., after deduction of social security costs and withholding tax, where applicable), in ABB shares, which they are entitled to receive at a discount of 10 percent of the average share trading price during a 30-day reference period. During the term of board membership, the ABB shares are kept in a blocked account and may be disposed of only after the respective person has left the board of directors. The gross compensation paid to board members in shares and cash with respect to 2005 amounted to CHF 3,338,333 ($2,539,042 at December 31, 2005).

Our current board members received the following compensation (denominated in Swiss Francs) with respect to 2005 (the calculation of the number of shares and the cash amount varies depending on whether the person is subject to taxation at source):

	Board Member Compensation		Committee Member  Compensation		Total Annual Compensation (gross)		Amount received in cash (net)		Number of shares received
Jürgen Dormann		1,500,000		—		1,500,000		476,418		63,479
Roger Agnelli		250,000		20,000		270,000		—		25,022
Louis R. Hughes(1)		158,333		10,000		168,333		58,364		7,246
Hans Ulrich Märki		250,000		50,000		300,000		—		38,129
Michel de Rosen		250,000		20,000		270,000		93,903		12,511
Michael Treschow		250,000		—		250,000		86,907		11,579
Bernd W. Voss		250,000		50,000		300,000		—		28,074
Jacob Wallenberg		250,000		30,000		280,000		97,401		13,029
Total		3,158,333		180,000		3,338,333		812,993		199,069

(1)Louis R. Hughes received reduced compensation in October 2005 for the first semester as he was on a temporary leave of absence for a portion of that semester (see above).

With the exception of Jürgen Dormann for the period during which he served as both chairman of the board and chief executive officer, board members do not receive pension benefits and are not eligible to participate in any of our incentive programs.

No payments were made to former board members in 2005.

Executive Committee

Members of the executive committee receive annual base compensation. They are further eligible for annual bonus compensation, determined in accordance with the principles explained below.

In addition to receiving annual base and bonus compensation, members of the executive committee may participate in the newly created employee share acquisition plan and performance incentive share

106

plan. Some members of the executive committee have participated in the earlier launches of our management incentive plan (MIP). Executive committee members receive customary additional benefits such as a company car and health insurance compensation and contributions to children education in some cases (see table below).

The table below shows the gross payments (i.e. compensation before deduction of employee social insurance and pension contributions) that were made to the members of the executive committee with respect to 2005, as well as the employer’s part of the ordinary pension contributions. All members of the executive committee are insured under the ABB Pension Fund, the ABB Supplementary Insurance Plan and the Tödi Foundation (the governing documents for each of these are available under www.abbvorsorge.ch), with the exception of Dinesh Paliwal, who is insured under the U.S. pension plan. Members of the executive committee based in Switzerland who are between the ages of 45 and 60 also participated in the equalization plan, a defined benefits plan capped under Swiss law, within the Tödi Foundation which was established in 2005. The table in the Share Ownership section below shows the numbers of conditionally granted shares (and therefore the maximum number of shares that may be granted) under the 2005 launch of the performance incentive plan. The exact number of shares to be received will be determined in March 2008 under the terms of the plan (see “Performance Incentive Plan”). In addition to the figures provided in the table below, Michael Demaré, Ulrich Spiesshofer and Peter Smits, but none of the other members of the executive committee as of December 31, 2005, participated in the second launch of the employee share acquisition plan (see details of the plan further below) with the maximum annual savings amount of CHF 9,000 ($6,845 at December 31, 2005).

	Currency		Salary	Bonus(1)	Additional compensation		Total annual compensation(6)		Employer’s pension contributions		Costs of company car		Costs of health insurance		Costs of children education
Fred Kindle		CHF	1,300,000	1,881,750		—		3,181,750		412,062		36,900		7,348		—
Dinesh Paliwal(2)		USD	732,333	677,105		—		1,409,438		511,906		24,000		24,045		122,596
Peter Smits		CHF	878,340	773,520		—		1,651,860		954,844		32,239		7,852		—
Gary Steel		CHF	697,508	629,300		—		1,326,808		888,726		33,187		8,020		70,434
Michel Demaré(3)		CHF	750,000	704,250		1,000,000		2,454,250		552,437		28,023		6,855		38,660
Ulrich Spiesshofer(4)		CHF	108,334	104,558		—		212,892		23,839		5,400		1,266		—
Total(5)		CHF	4,698,921	4,985,362		1,000,000		10,684,283		3,506,267		167,365		63,017		270,596

(1)The table above provides compensation amounts with respect to 2005 on an accrual basis. Bonuses with respect to 2005 were paid in 2006.

(2)As Dinesh Paliwal has a U.S. employment contract, he received his salary in U.S. dollars. His pension contributions are based on the U.S. pension plan.

(3)The additional compensation was for share options forfeited when Michel Demaréleft his previous employment to join ABB.

(4)Ulrich Spiesshofer joined ABB on November 1, 2005, and therefore received a pro-rata share of his salary for 2005.

(5)For the purpose of calculating the total, the U.S. dollar amounts relating to Dinesh Paliwal have been converted into Swiss francs using the noon buying rate for Swiss francs on December 30, 2005 ($1.00 = CHF 1.3148).

(6)Excluding Employer’s pension contributions, costs of the company car, costs of health insurance, contributions to childrens’ education and the number of shares conditionally granted under the 2005 launch of the Performance Incentive Plan.

Bonus determination

ABB has implemented a bonus structure that we believe aligns the performance expectations of ABB senior managers with the interests of ABB shareholders.

Executive committee members, heads of group functions, business area managers and country managers receive targets and are measured at least 60 percent on ABB Group results.

107

Resulting bonuses are paid in March of the following year after full-year results are announced. The CEO has a maximum bonus opportunity of 150 percent of his base salary and all other executive committee members have a maximum bonus opportunity of 100 percent of their base salary.

Employee participation programs

In order to align its employees’ interests with the business goals and financial results of the company, we operate a number of participation programs, linked to ABB’s shares, which are described below.

Employee share acquisition plan

To incentivize employees, we have an employee share acquisition plan (ESAP Plan). The ESAP Plan is an employee stock option plan with a savings feature. Employees save over a twelve-month savings period, by way of monthly salary deductions. The maximum monthly savings amount is the lower of 10 percent of gross monthly salary or the local currency equivalent of 750 Swiss francs. At the end of the savings period, employees choose whether to exercise their stock options using their savings plus interest to buy ABB Ltd shares (American Depositary Shares (ADS) in the case of employees in the United States - each ADS representing one registered share of the Company) at the exercise price set at the grant date, or have their savings returned with interest. The savings are accumulated in a bank account held by a third party trustee on behalf of the participants and earn interest.

The maximum number of shares that each employee can purchase has been determined based on the exercise price and the aggregate savings for the twelve-month period, increased by 10 percent to allow for currency fluctuations. If, at the exercise date, the balance of savings plus interest exceeds the maximum amount of cash the employee must pay to fully exercise their stock options, the excess funds will be returned to the employee. If the balance of savings and interest is insufficient to permit the employee to fully exercise their stock options, the employee has the choice but not the obligation, to make an additional payment so that the employee may fully exercise their stock options.

If an employee ceases to be employed by us, the accumulated savings as of the date of cessation of employment will be returned to the employee and the employee’s right to exercise their stock options will be forfeited. Employees can withdraw from the ESAP Plan at any time during the savings period and will be entitled to a refund of their accumulated savings.

The exercise price per share and ADS of 10.30 Swiss francs and $7.88, for the 2005 grant, were determined using the closing price of the ABB Ltd share on SWX Swiss Exchange (virt-x) and ADS on the New York Stock Exchange on the grant date of November 8, 2005. See Note 21 to the Consolidated Financial Statements for additional information regarding the ESAP Plan.

Management Incentive Plan

We have a management incentive plan under which key employees received warrants and warrant appreciation rights for no consideration over the course of nine grants from 1998 to 2006. The warrants are exercisable for shares at a predetermined price, not less than the fair market value as of the date of grant. Participants may also sell the warrants rather than exercise the right to purchase shares. Equivalent warrants are listed on the SWX Swiss Exchange (virt-x), which facilitates valuation and transferability of warrants granted under the management incentive plan.

108

Each warrant appreciation right entitles the holder to an amount in cash equal to the market price of one equivalent warrant on the SWX Swiss Exchange (virt-x) on the date of exercise of the warrant appreciation right. Warrant appreciation rights are not transferable. Participants may exercise or sell warrants or exercise warrant appreciation rights only during the 30 days immediately following publication of our interim or annual results. No exercise or sale is permitted until after the vesting period, which is three years from date of grant, although vesting restrictions can be waived in certain circumstances such as death or disability. All warrants and warrant appreciation rights expire six years from the date of grant.

As of March 31, 2006, 86,714,250 warrants were outstanding, representing the rights to acquire 19,219,224 of our shares (representing less than 1 percent of our total outstanding shares), including rights of the current members of our executive committee to acquire an aggregate of 527,100 shares. Also on that date, the warrant appreciation rights outstanding represented rights to receive the cash equivalent to the market price of 134,813,250 warrants, including rights of the current members of our executive committee to receive the cash equivalent to the market price of 5,806,250 warrants. Our obligations under the management incentive plan are covered by contingent share capital. See Note 21 to the Consolidated Financial Statements for additional information regarding the management incentive plan.

As of March 31, 2006, 36,017,500 warrants representing the rights to purchase 9,079,874 shares (representing less than 1 percent of our total outstanding shares) were exercisable and 53,776,250 warrant appreciation rights were exercisable.

The following table sets forth the number of warrants outstanding under the management incentive plan as of March 31, 2006.

Grant	Warrants Outstanding		Exercise Ratio (Warrants: Shares)		Number of Shares Underlying Warrants			Exercise Price (CHF)		Expiration Date
June 2000	19,630,000	(1)		1:0.2521		4,948,648	(1)		42.05	June 2006
December 2001	16,387,500	(1)		1:0.2521		4,131,226	(1)		13.49	December 2007
December 2003	24,241,750			1:0.2000		4,848,350			7.00	December 2009
December 2004	14,325,000			1:0.2000		2,865,000			7.50	December 2010
February 2006	12,130,000			1:0.2000		2,426,000			15.30	February 2012

(1)All of the warrants from the June 2000 and December 2001 grants, representing the rights to purchase an aggregate of 9,079,874 shares, are currently exercisable.

The following table sets forth the number of warrant appreciation rights outstanding under the management incentive plan as of March 31, 2006.

Grant	Warrant Appreciation Rights Outstanding(1)			Expiration Date
June 2000		30,335,000	(2)	June 2006
December 2001		23,441,250	(2)	December 2007
December 2003		18,337,000		December 2009
December 2004		28,527,500		December 2010
February 2006		34,172,500		February 2012

(1)With respect to each grant, the warrant appreciation right represents a future right to receive the cash equivalent of the market price of a warrant issued on the same grant date.

(2)All of the warrant appreciation rights from the June 2000 and December 2001 grants are currently exercisable.

Performance incentive share plan

ABB has a performance incentive share plan (Performance Plan) for members of its executive committee (EC Members). The Performance Plan involves annual conditional grants of ABB’s stock. The number of shares conditionally granted is dependent upon the base salary of the EC Member. The actual

109

number of shares that each participant will receive free of charge at a future date is dependent on (1) the performance of ABB Ltd shares during a defined period (Evaluation Period) compared to those of a selected peer group of publicly-listed multinational companies and (2) the term of service of the respective EC Member in that capacity during the Evaluation Period. The actual number of shares received after the Evaluation Period cannot exceed 100 percent of the conditional grant.

Our performance compared to our peers over the Evaluation Period will be measured as the sum, in percentage terms, of the average percentage price development of the ABB Ltd share price over the Evaluation Period and an average annual dividend yield percentage (ABB’s Performance).

In order for shares to vest, ABB’s Performance over the Evaluation Period must be positive and equal to or better than half of the defined peers. The actual number of shares to be delivered will depend on ABB’s ranking in comparison with the defined peers. The full amount of the conditional grant will vest when ABB’s Performance is better than three-quarters of the defined peers.

If during the vesting period, an EC Member gives notice of resignation or, under certain circumstances, is given notice of termination, then the right to shares is forfeited. In the event of death or disability during the vesting period, the conditional grant size for that participant is reduced pro rata based on the remaining vesting period. If, during the vesting period, a Performance Plan participant ceases to be an EC Member for reasons other than described above, the conditional grant size is reduced pro rata based on the portion of the vesting period remaining when the participant ceases to be an EC Member, unless otherwise determined by ABB’s Nomination and Compensation Committee. In respect of a Performance Plan grant for which the vesting period has not expired, the Nomination and Compensation Committee can invite a new EC Member to receive a conditional grant, adjusted to reflect the shorter service period.

Presented below is a summary of the 2005 launch of the Performance Plan.

		Total numbers of shares		Reference price
Launch year	Evaluation Period	conditionally granted		(Swiss francs)(1)
2005	March 15, 2005, to March 15, 2008		1,044,456		7.15

(1)For the purpose of comparison with the peers, the reference price is calculated as the average of the closing prices of the ABB Ltd share on SWX Swiss Exchange (virt-x) over the 20 trading days preceding March 15 of the respective launch year.

The shares that were conditionally granted under the 2004 launch of the Performance Incentive Plan vested in March 2006. Each executive committee member received 100% of his conditionally granted shares.

See Note 21 to the Consolidated Financial Statements for additional information regarding the Performance Incentive Share Plan.

Compensation to former members of the executive committee

In 2005, we did not make any payments to former members of the executive committee.

Employment Contracts

None of our board members or executive committee members benefits from a “golden parachute” clause which would become effective upon a change of control. Employment contracts normally contain notice periods of 12 months for executive committee members, during which they are entitled to salaries and bonuses. No director has a contract with us providing for further benefits upon termination of his board membership, other than pursuant to applicable employment agreements in case of simultaneous termination of their employment.

110

Additional fees and remuneration

Other than as disclosed herein, none of the members of our board of directors, our executive committee, or persons closely linked to any of them received any additional fees and remunerations for services rendered to us. A closely linked person includes a spouse, children below the age of eighteen, legal or natural person acting as a fiduciary and legal entities controlled by a member of the board of directors or the executive committee.

Loans and guarantees granted to the board of directors or executive committee.

We have not granted any loans or guarantees to our board members or members of our executive committee in 2005.

SHARE OWNERSHIP

Under our management incentive plan, certain members of the executive committee have received in 2000 and 2003 warrants and warrant appreciation rights that remain outstanding. For details of the various warrant launches please see “Item 6. Directors, Senior Management and Employees—Management Incentive Plan.”

As of March 31, 2006 the members of the board of directors and executive committee as at December 31, 2005, held the following numbers of shares (or ADSs representing such shares), warrants and warrant appreciation rights:

				Number of Warrants and Warrant Appreciation Rights Granted under the Management Incentive Plan
	Number of Shares	Number of Shares granted(4)		Launch Year 2000		Launch Year 2003
Jürgen Dormann	737,276		—		—		1,000,000
Roger Agnelli	123,265		—		—		—
Louis R. Hughes	51,750		—		—		—
Hans Ulrich Märki	278,628		—		—		—
Michel de Rosen	81,354		—		—		—
Michael Treschow	63,477		—		—		—
Bernd W. Voss	121,343		—		—		—
Jacob Wallenberg	137,046		—		—		—
Fred Kindle	132,980		272,728		—		—
Dinesh Paliwal(1)	222,379		174,960		250,000		1,000,000
Peter Smits	165,712		184,616		250,000		1,000,000
Gary Steel	90,623		146,854		—		1,000,000
Michel Demaré(2)	59,501		157,343		—		—
Ulrich Spiesshofer(3)	15,870		107,955		—		—
Total	2,281,204		1,044,456		500,000		4,000,000

(1)Shares held jointly with his spouse.

(2)Includes 500 shares held jointly with spouse.

(3)Ulrich Spiesshofer joined ABB during the evaluation period and therefore received a pro-rata conditional grant of shares under the 2005 launch of the Performance Incentive Plan.

(4)All such shares were granted conditionally under the 2005 launch of the Performance Plan. The shares will only vest if certain targets are met.

The members of our board of directors and executive committee as at December 31, 2005 owned less than 1 percent of our total shares outstanding as of March 31, 2006.

111

Other than as stated in the table above, no person closely linked to any member of the executive committee holds any shares of ABB or options in ABB shares. A closely linked person includes a spouse, children below the age of eighteen, a legal or natural person acting as a fiduciary and legal entities controlled by a member of the board of directors or the executive committee.

Share amounts provided in this section do not include the shares beneficially owned by Investor AB, of which Mr. Wallenberg is chairman. See “Item 7. Major Shareholders and Related Party Transactions—Major Shareholders.”

EMPLOYEES

A breakdown of our employees by geographic region for the years ended December 31, 2005, 2004 and 2003, is as follows:

	At December 31,
Region	2005	2004	2003
Europe	58,500	60,200	70,500
The Americas	18,500	16,300	19,000
Asia	18,400	16,500	15,700
Middle East and Africa	8,100	9,500	11,300
Total	103,500	102,500	116,500

The proportion of our employees that are represented by labor unions or are the subject of collective bargaining agreements varies based on the labor practices of each country in which we operate. We estimate that approximately 62 percent of all ABB Group employees are covered by collective bargaining agreements. We believe that our employee relations are good.

Item 7.Major Shareholders and Related Party Transactions

MAJOR SHAREHOLDERS

To the best of our knowledge, as of March 31, 2006, the following person held 5 percent or more of our total current issued share capital:

Name	Number of Shares Owned	Total Percentage of Share Capital
Investor AB(1)(2)	166,330,142		8.0	%

(1)Mr. Jacob Wallenberg, a member of our board of directors, is the chairman of Investor AB. The number of shares indicated above does not include the shares owned by Mr. Wallenberg as an individual and earned as compensation for services as a member of our board of directors. See “Item 6. Directors, Senior Management and Employees—Compensation.”

(2)According to a Schedule 13D filed with the SEC on November 22, 2002, Investor AB first acquired in excess of 5 percent of our total share capital on November 4, 2002, when it had beneficial ownership of 120,255,178 of our registered shares, which at that time constituted 10.8 percent of our total share capital. On March 8, 2005, Investor AB amended its Schedule 13D, stating that it had beneficial ownership of 187,374,142 registered shares, a reduction in its holdings after accounting for the 7-for-10 rights offering in connection with our 2003 share capital increase. Based on information from our share register, Investor AB subsequently further reduced its holdings to 166,330,142 shares.

112

On April 14, 2005, pursuant to the rules of the Federal Act on Stock Exchanges and Securities Trading (the “Swiss Stock Exchange Act”), FMR Corp. and certain of its affiliates announced that, as of April 7, 2005, it held a total of 103,744,180 of our registered shares, which at that time constituted 5.01 percent of our total share capital. On August 18, 2005, pursuant to the rules of the Swiss Stock Exchange Act, these shareholders announced that as of August 12, 2005, they owned less than five percent of our registered shares.

On March 19, 2003, pursuant to the rules of the Swiss Stock Exchange Act, the Capital Group International, Inc. and certain of its affiliates announced that, as of March 11, 2003, it held a total of 64,043,388 of our registered shares, which at that time constituted 5.33 percent of our total share capital. On July 30, 2003, Capital Group International, Inc. reported pursuant to the rules of the Swiss Stock Exchange Act that as of July 22, 2003, it held a total of 59,978,124 of our registered shares, which at the time constituted less than 5 percent of our total share capital.  On December 1, 2003, Capital Group International, Inc. and certain of its affiliates filed a Schedule 13D with the SEC, stating that as of November 21, 2003, these shareholders beneficially owned 84,099,190 of our registered shares, which at the time constituted 6.8 percent of our total share capital. On February 13, 2004, these shareholders amended their Schedule 13D, stating that as of December 31, 2003, Capital Group International, Inc. and certain of its affiliates held 133,888,830 of our registered shares, which at the time constituted 6.5 percent of our total share capital. On April 30, 2004, pursuant to the rules of the Swiss Stock Exchange Act, these shareholders announced that as of April 23, 2004, they owned less than five percent of our registered shares. On February 14, 2005, Capital Group International, Inc. and certain of its affiliates amended their Schedule 13D, stating that at December 31, 2004, these shareholders beneficially owned 184,350 registered shares, which at the time constituted less than 1 percent of our total share capital.

Under our articles of incorporation, each registered share represents one vote. Major 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.

Under the Swiss Stock Exchange Act, shareholders and groups of shareholders acting in concert who reach, exceed or fall below the thresholds of 5 percent, 10 percent, 20 percent, 331¤3 percent, 50 percent or 662¤3 percent of the voting rights of a Swiss listed 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 Federal Code of Obligations, according to which we must disclose individual shareholders and groups of shareholders and their shareholdings if they hold more than 5 percent of all voting rights and we know or have 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 our annual report.

At March 31, 2006, we had approximately 291,000 shareholders. Approximately 36,000 were U.S. holders, of which approximately 700 were record holders. Based on the share register, U.S. holders (including holders of ADSs) held approximately 11 percent of the total number of shares issued, including treasury shares, at that date.

RELATED PARTY TRANSACTIONS

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. Also, in the normal course of our business, we engage in transactions with

113

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 bases.

We have participations in joint ventures and affiliated entities, which are accounted for using the equity method. Many of these entities have been established to perform specific functions, such as constructing, operating and maintaining a power plant. In addition to our investments, we may provide products to specific projects, may act as a contractor of such projects or may operate the finished products. We may also grant lines of credit to these entities or for specific projects and guarantee their obligations, as discussed under the section entitled “Off-balance sheet arrangements” above. These joint ventures, affiliated companies or project-specific entities generally receive revenues either from the sale of the final product or from selling the output generated by the product. The revenue usually is defined by a long-term contract with the end user of the output.

Our risk with respect to these entities is substantially limited to the carrying value of the companies on our Consolidated Balance Sheets. The carrying value at December 31, 2005 and 2004, of the entities that we account for using the equity method, or equity accounted investees, was $618 million and $596 million, respectively.

Our 2005 and 2004 Consolidated Financial Statements include the following aggregate amounts related to transactions with equity accounted investees and other related parties, including related party transactions, that are recorded in loss from discontinued operations, net of tax, and assets and liabilities held for sale and in discontinued operations:

	Year ended December 31,
	2005			2004
	(U.S. dollars in millions)
Revenues		$	63		$	57
Receivables		17			11
Other current assets		2			13
Financing receivables (non-current)		53			45
Current liabilities		—			2
Short-term debt and non-current liabilities		$	2		$	22

In November 2005, ABB sold its Finnish lease portfolio business to Skandinaviska Enskilda Banken AB (publ) (SEB). Also in November 2005, ABB entered into a new 5 billion Swedish krona commercial paper program pursuant to which SEB is an arranger and dealer. Jacob Wallenberg, a member of our board of directors, is the Vice-Chairman of SEB.

On July 4, 2005, ABB entered into a new unsecured syndicated $2 billion five-year revolving credit facility, which became available in July 2005. Each of SEB and Dresdner Bank AG has committed to $120 million out of the $2 billion total. Jacob Wallenberg, a member of our board of directors, is the Vice-Chairman of SEB and Bernd W. Voss, a member of our board of directors, is a member of the Supervisory Board of Dresdner Bank AG. This replaced the unsecured syndicated $1 billion three year revolving credit facility which we entered into on November 17, 2003 and which became available in December 2003 after the fulfillment of certain conditions including the repayment and cancellation of the former $1.5 billion facility which had been entered into in December 2002. Each of SEB and Dresdner Bank Luxembourg S.A. had committed to lend amounts under the November 2003 and the December 2002 credit facilities.

We consider our relationships with SEB and Dresdner Bank AG to be among our primary banking relationships. In addition to participating in the credit facilities described above, each of these banks has from time to time provided commercial banking, lending, investment banking and financial advisory services to us and our affiliates in the ordinary course of business. They have received customary fees

114

and/or commissions for such services. We expect to continue to conduct transactions with them in the future on an arm’s length basis.

In June 2003, we entered into a 10 year global framework agreement with International Business Machines Corporation (IBM) to outsource our information systems infrastructure services to IBM. This global framework agreement forms the basis for country agreements entered into with IBM in 15 countries (as of December 31, 2005) in Europe (including our headquarters) and North America, representing approximately 90% of our information systems infrastructure. The agreement involved the transfer to IBM of 800 of our employees, in addition to the 380 employees transferred under pilot programs prior to 2003. Our total expenditure in respect of the agreement is expected to amount to approximately $1.7 billion over 10 years, based on the current level of usage of the services. While the agreement was negotiated and transacted at arm’s length with IBM, it should be noted that Jürgen Dormann, our chairman (who at the time also served as our president and chief executive officer), was a member of the board of directors of IBM until April 29, 2003, and was again appointed a member of IBM’s board of directors as of February 22, 2005. Hans Ulrich Märki, a member of our board of directors, is chairman of IBM Europe, Middle East and Africa.

During 2005, we were party to several contracts with Companhia Vale do Rio Doce (CVRD), a Brazilian company with operations in mining, logistics (railways and ports) and power generation, and its subsidiaries including contracts for engineering services and the supply of electrical equipment for generation and distribution of power. The largest contract was for the supply of electrical equipment with a value of approximately $6.4 million. There are also various purchase orders for spare parts and machinery in general. The total value of such contracts and purchase orders is approximately $21.7 million. Roger Agnelli, a member of our board of directors, is president and chief executive officer of CVRD. The exchange rate used to convert Brazilian Reals into U.S. dollars was R$2.14 to US$1.00.

From time to time we are a supplier to Duke Energy. In 2005, we supplied products, systems, and services for both capital improvements and operation and maintenance projects. We received orders in 2005 from Duke Energy of $23.8 million in our automation and power businesses. In addition, in 2005 we were awarded an $8.1 million turnkey system by Ameristeel for installation on Duke Energy’s system. In 2004, we supplied turnkey installation support for both capital improvements and operation and maintenance projects. We recognized revenues in 2004 from Duke Energy of $10 million, with a turnkey circuit breaker replacement order representing $3 million of that total. Roger Agnelli, a member of our board of directors, is a member of the board of directors of Duke Energy.

In February 2004, we completed the sale of Etavis AG, our Building Systems business located in Switzerland, but retained a 10 percent ownership interest. In connection with this transaction, Etavis AG and our wholly owned subsidiary ABB Switzerland Ltd entered into a loan agreement, pursuant to which we have extended a loan in the amount of CHF 1,858,974 to Etavis AG. This loan bears an interest at an annual rate of 3.5 percent. The largest amount of this loan outstanding during the period covered by this report was CHF 1,976,789 (or $1,503,490 as of December 31, 2005). As of March 31, 2006, the outstanding amount of this loan was CHF 1,976,789. Additionally, under the terms of the sale agreement, ABB Switzerland Ltd and our other affiliates in Switzerland were obligated to continue using Etavis AG as their preferred installations service provider until September 2005. In addition, we agreed to use our best efforts to grant Etavis AG “most-favored nation” treatment for our new building technology products in Switzerland until March 2006. As per March 31, 2006 there are, besides our loan and our 10% share, no further contractual overlaps with Etavis.

There are no cross-shareholdings in excess of 5 percent of the share capital or the voting rights between ABB and another company.

115

Item 8.Financial Information

CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

See “Item 18. Financial Statements” for a list of financial statements contained in this report.

LEGAL PROCEEDINGS

We are involved in legal proceedings from time to time incidental to the ordinary conduct of our business. These proceedings principally involve matters relating to warranties, personal injury, damage to property, environmental liabilities and intellectual property rights.

ABB Barranquilla Inc. (ABB Barranquilla), a subsidiary of our ABB Equity Ventures Inc. (ABB Equity Ventures) subsidiary, is an equity investor in Termobarranquilla S.A., Empresa de Servicios Publicos (TEBSA), which owns a Colombian independent power generation project known as Termobarranquilla. One of the other shareholders of TEBSA is Corporación Electrica de la Costa Atlántica (CORELCA), a government-owned Colombian electric utility. CORELCA also purchases the electricity produced from the Termobarranquilla project. In addition to our equity investment, our former power generation business was EPC contractor for Termobarranquilla. The project was awarded to us and another company, as joint bidders, after a competitive bidding process in 1994. The co-bidder manages the operation and maintenance of the facility. We entered into certain side agreements with the co-bidder for a sharing and reallocation of a portion of the amounts paid to us and to the co-bidder under the EPC contracts and the operation and maintenance contract. These side agreements were not disclosed at the time they were entered into to TEBSA or CORELCA. They also were not disclosed to the lenders who provided financing to TEBSA for the project, including U.S. Overseas Private Investment Corporation and U.S. Export Import Bank, at the time of the closing of such financing, as required pursuant to the lending documents.

On June 28, 2002, ABB Barranquilla, ABB Equity Ventures, the co-bidder, TEBSA and CORELCA settled all claims and potential claims by TEBSA and CORELCA arising out of the entry into or performance of the side agreements. CORELCA and TEBSA released and discharged ABB and its affiliates from any claims that TEBSA and CORELCA had, may have or may thereafter claim to have, arising on or before June 28, 2002 (the effective date of the settlement) and whether or not previously asserted, which in any way may arise out of or relate to the entry into or the performance of any of the side agreements. As consideration, we terminated the side agreements, paid $13 million to CORELCA, and reimbursed CORELCA for its legal expenses. We also agreed to indemnify (i) TEBSA for any and all penalties, fines and interest, if any, incurred by TEBSA arising out of or in connection with the entry into or performance of the side agreements and (ii) CORELCA for liabilities, costs or expenses related to certain taxes payable by CORELCA as a result of the settlement. On June 28, 2002, TEBSA’s project lenders consented to the terms of the settlement and waived all defaults under the project lending documents arising out of the entry into or performance of the side agreements. As consideration for the lenders’ consent and waiver, ABB Switzerland Holding Ltd. and the co-bidder agreed to indemnify the project lenders from and against (i) any investigation, litigation or proceeding related to the entry into or performance of the side agreements and (ii) any other exposure as a consequence of, or which might be asserted against any of the project lenders by virtue of, the failure of ABB or the co-bidder to disclose the side agreements. The indemnification obligation is joint but not several and is limited to the credit exposure of the project lenders. On December 31, 2005, the outstanding balance owed by TEBSA to the project lenders was approximately $120 million.

On February 3, 2003, ABB Ltd, ABB Holdings Inc. and ABB Equity Ventures entered into a compliance agreement with U.S. Export-Import Bank. The compliance agreement, among other things, requires us to adopt and maintain additional compliance procedures and allow U.S. Export-Import Bank to audit our compliance.

116

In response to information provided by our employees, during 2002 and 2003 we undertook an investigation of potentially improper business conduct within our Oil, Gas and Petrochemical division. In such internal investigations, we uncovered a limited number of improper payments by some of our employees and agents in the upstream business in Africa, Central Asia, and South America, which we have voluntarily disclosed to the DoJ and the SEC. The payments, which violated our internal policies on business ethics, were made in order to obtain from local officials confidential information and commercial advantages, including with respect to contracts on which we were bidding. For further information on the sale of the upstream part of the Oil, Gas and Petrochemicals business, see “Item 5. Operating and Financial Review and Prospects—Acquisitions, Investments and Divestitures—Divestitures of businesses, joint ventures and affiliated companies—Divestitures in 2004” and “Item 10. Additional Information—Material Contracts—Sale Agreement for Part of the Oil, Gas and Petrochemicals Business.”

Subsequently, ABB Vetco Gray Inc. and ABB Vetco Gray UK Ltd., two of our subsidiaries that were sold as part of the Oil, Gas and Petrochemicals upstream business in July 2004, pleaded guilty on July 6, 2004, to two counts of conduct in violation of the FCPA, relating to the payment of bribes to officials of NAPIMS, a Nigerian government agency that evaluates and approves potential bidders for contract work on oil exploration projects in Nigeria, including bidders seeking subcontracts with foreign oil and gas companies. According to the stipulated statement of facts, the two former subsidiaries paid more than $1 million in exchange for obtaining confidential bid information and favorable recommendations from Nigerian government agencies in connection with seven oil and gas construction contracts in Nigeria from which the companies expected to realize profits of almost $12 million. As part of the plea agreement, we paid a criminal fine of $10.5 million to the DoJ.

In a separate, but related, action, the SEC filed a complaint against us. The complaint alleges violations of anti-bribery, books and records, and internal control provisions of the FCPA, arising from alleged payments in Nigeria, Kazakhstan and Angola. ABB Ltd has agreed to a civil settlement that includes (i) the hiring of an independent consultant to review our policies and procedures as they relate to compliance with the books and records, internal accounting controls and anti-bribery provisions of the FCPA, (ii) the disgorgement of profits and pre-judgment interest of $5.9 million, and (iii) a civil penalty payment of $10.5 million, which is to be deemed satisfied by payment of the criminal fine to the DoJ discussed above.

In May 2004, we announced that we had undertaken an internal investigation which uncovered that certain of our employees—together with employees of other companies active in the gas insulated switchgear business—were involved in anti-competitive practices. We have reported promptly such practices to the appropriate authorities including the European Commission. We have received an amnesty decision from the European Commission and are cooperating with it in the investigation that it has launched.

In June 2004, we disclosed to the SEC and the Italian authorities the preliminary results of our inquiry conducted with the assistance of outside counsel and forensic accountants. Those results showed that from the first quarter of 1998 through the first quarter of 2004, the PT-MV BAU overstated its earnings before interest and taxes (operating income) and net income through the early recognition of certain revenue from incomplete projects, improper capitalization of costs on certain projects, unrecorded liabilities and borrowings, and other improper journal entries. As a result, the financial statements and certain financial data set forth in our Consolidated Financial Statements as of December 31, 2003 and 2002 and for each of the years in the three year period ended December 31, 2004 were restated in September 2004. The inquiry also uncovered improper payments to an employee of an Italian power generation company. The investigation by the Italian authorities is ongoing and we are not currently in a position to predict the outcome.

117

On April 19, 2005, we announced that we had made a voluntary disclosure to the DoJ and the SEC of certain suspect payments made by employees of ABB network management, a specialized U.S.-based business unit. The suspect payments became apparent during an internal investigation following the dismissal of two managers from the company in mid-2004. The payments were made to intermediaries in Latin America and in the Middle East in connection with the company’s business, which is control software for utility customers. If any these payments result in enforcement action, we could be subject to civil and criminal penalties. We are continuing our investigation and compliance review of this business.

On October 27, 2005, the United Nations Independent Inquiry Committee issued its final report on the United Nations Oil-for-Food Program. This report alleges that certain ABB subsidiaries made illicit payments to the Iraqi government under contracts for humanitarian goods. We are cooperating on a voluntary basis with the SEC in its ongoing investigation of the matters raised in the report.

On February 8, 2006, we announced that we had disclosed to the DoJ and the SEC suspect payments made by employees of company subsidiaries in a number of countries including a country in the Middle East. These payments were discovered by us as a result of our internal compliance reviews. The payments may be in violation of the FCPA or other applicable laws. If we are found to have violated any of these laws, we could be liable for penalties and other costs and the violations could otherwise negatively impact our business. We are cooperating on these issues with the relevant authorities and are continuing our internal investigations and compliance reviews.

On March 21, 2006, we issued a statement that several of our units are being investigated by Brazilian authorities, who are pursuing antitrust allegations against several international power companies in the country. We have been granted a conditional leniency and are cooperating with the Brazilian authorities.

There can be no assurance that any investigation by us or any governmental authority of these matters will not conclude that violations of applicable laws have occurred or that the results of these investigations will not result in civil or criminal penalties, including monetary penalties or other sanctions, or otherwise have a material adverse effect on our business and results of operations.

For a description of our involvement in asbestos litigation, see “Item 3. Key Information—Risk Factors—We are subject to ongoing litigation and potentially substantial liabilities arising out of asbestos claims” and “Item 5. Operating and Financial Review and Prospects—Asbestos Liabilities.”

DIVIDENDS AND DIVIDEND POLICY

See “Item 3. Key Information—Dividends and Dividend Policy.”

SIGNIFICANT CHANGES

Except as otherwise described in this report, there has been no significant change in our financial position since December 31, 2005.

118

Item 9.The Offer and Listing

MARKETS

The shares of ABB Ltd are principally traded on virt-x (under the symbol “ABBN”) and on the Stockholm Exchange (under the symbol “ABB”). ADSs of ABB Ltd have been traded on the New York Stock Exchange under the symbol “ABB” since April 6, 2001. ABB Ltd’s ADSs are issued under the Amended and Restated Deposit Agreement, dated May 7, 2001, with Citibank, N.A. as depositary. Each ADS represents one share.

TRADING HISTORY

No suspension in the trading of our shares occurred in the years ended December 31, 2003, 2004 and 2005.

The table below sets forth, for the periods indicated, the reported high and low closing sale prices for the shares on virt-x and the Stockholm Exchange and for the ADSs on the New York Stock Exchange. All share prices have been adjusted to reflect the share capital increase completed in December 2003.

	virt—x(1)		Stockholm Exchange		New York Stock Exchange
	High	Low	High	Low	High		Low
	(CHF)		(SEK)		($)
Annual highs and lows
2001	35.20	7.93	208.66	52.77	18.95	(2)	6.49	(2)
2002	14.52	1.29	91.44	8.30	11.11		1.14
2003	6.66	2.02	39.88	12.81	6.24		1.95
2004	8.18	6.20	48.00	36.10	6.70		4.93
2005	12.95	6.48	77.75	38.00	9.79		5.42
Quarterly highs and lows
2004            First Quarter	8.01	6.26	46.70	36.10	6.44		5.08
Second Quarter	8.18	6.51	48.00	38.90	6.34		5.10
Third Quarter	7.75	6.20	45.40	37.20	6.20		4.93
Fourth Quarter	8.00	6.20	46.70	36.10	6.70		5.43
2005            First Quarter	7.64	6.48	44.70	38.00	6.52		5.42
Second Quarter	8.98	7.22	54.75	42.70	7.01		6.10
Third Quarter	9.53	8.20	57.50	49.80	7.70		6.25
Fourth Quarter	12.95	8.93	77.75	55.00	9.79		6.96
2006            First Quarter	16.50	13.10	99.25	77.00	12.63		10.19
Monthly highs and lows
2005            October	9.86	8.93	60.75	55.00	7.79		6.96
November	11.60	9.81	71.00	61.25	8.80		7.66
December	12.95	11.80	77.75	72.25	9.79		9.06
2006            January	14.30	13.10	86.25	77.00	11.18		10.19
February	16.50	13.85	99.25	82.25	12.52		10.47
March	16.50	15.10	98.00	91.50	12.63		11.63

(1)Until June 25, 2001, the shares were traded on the SWX Swiss Exchange.

(2)From April 6, 2001.

119

THE SWX SWISS EXCHANGE AND VIRT-X

ABB Ltd’s shares are listed on the main board of the SWX Swiss Exchange and are included in the Swiss Market Index, a capitalization-weighted index of a maximum of 30 shares of large Swiss corporations currently traded on virt-x. ABB Ltd is subject to the regulations and listing rules of the SWX Swiss Exchange.

The SWX Swiss Exchange was founded in 1993 as the successor to the local stock exchanges of Zurich, Basel and Geneva. Trading in foreign equities and derivatives began in December 1995. In August 1996, the SWX Swiss Exchange introduced full electronic trading in Swiss equities, derivatives and bonds. The aggregate value of trading activity of Swiss shares, investment funds, warrants, and bonds as well as other non-Swiss shares, warrants and bonds on the SWX Swiss Exchange and on virt-x was in excess of CHF 927 billion in 2005. As of December 31, 2005, the equity securities of 400 corporations, including 108 foreign corporations, were listed and traded on the SWX Swiss Exchange.

virt-x Exchange Limited (virt-x) was founded in 2001 as the first comprehensive cross-border platform for trading major European blue chips. By supporting all parts of the investment cycle from pre-trade price discovery, through to trading, confirmation, post trade management and into clearing and settlement, virt-x offers its members and participants a seamless, modular service to meet their European equity market requirements. Since its launch, virt-x has focused on genuine consultation with market participants and with its London presence is well placed to play an active part in shaping new developments in European securities trading. virt-x is a wholly-owned subsidiary of the SWX Swiss Exchange.

All trading in the stocks included in the Swiss Market Index, including ABB, was transferred to virt-x on June 25, 2001. The trading of these stocks is conducted in Swiss francs. virt-x uses the SWX Swiss Exchange trading platform and network under a facilities management agreement. Most of the systems operation and development capability is outsourced to the SWX Swiss Exchange in Switzerland.

Trading begins each business day at 9:00 a.m. (CET) and continues until 5:30 p.m. (CET). At 5:20 p.m. (CET) the exchange moves into “Closing Auction” status. The closing auction stops at 5:30 p.m. (CET). Orders can be placed up to 10:00 p.m. (CET) and again from 6:00 a.m. (CET) onwards.

Members register incoming orders from their customers in their trading system. These orders are forwarded to the relevant trader and checked, or fed directly into the trading system by the trader. From here they are submitted to the central exchange system of virt-x, which acknowledges receipt of the order, assigns a time stamp to it and verifies its formal correctness.

Market information (last paid price, volume, timestamp, current best bid and ask orders) are also transmitted in real time to data vendors (such as Reuters, Bloomberg and Telekurs). In the fully automated exchange system in use at virt-x, buy and sell orders are matched according to clearly defined matching rules.

Regardless of their size or origin, incoming orders are executed in the order of price (first priority) and time received (second priority).

Transactions take place through the automatic matching of orders. Each valid order of at least one share is entered and listed according to its price. In general, orders placed at the best price (known as “market orders”) are executed first followed by orders placed with a price limit (known as “limit orders”). If several orders are listed at the same price, they are executed in the order of the time they were entered.

Any transaction executed under the rules of virt-x must be reported. Order book executions are automatically and immediately reported by the trading system. There are separate provisions for the delayed reporting of certain qualifying trades. Individual elements of portfolio trades must be reported within one hour, while block trades and enlarged risk trades must be reported when the business is substantially (80 percent) completed, or by 5:30 p.m. (CET) on the day of trade, unless the trade is agreed

120

after 4:30 p.m. (CET), in which case the trade must be reported by 5:30 p.m. (CET) the following business day. Block trades and enlarged risk trades are subject to minimum trade size criteria. All other transactions must be reported within three minutes, except when the transaction is conducted in a SWX Swiss Exchange listed security, in which case the trade must be reported within 30 minutes.

virt-x provides fully integrated trading, clearing and settlement. virt-x has a Central Counterparty (CCP) with two interlinked CCPs: LCH.Clearnet and SIS x-clear. The central counterparty permits risk management, maintenance of anonymity from trade to settlement and optional netting. For settlement of virt-x trades, members may choose their preferred settlement venue from three core CSDs: Crest, SIS and Euroclear. These are supported by online links between the systems in real-time, giving members real-time inter-CSD settlement at largely domestic rates. Settlement is supported by a single set of rules and directives, ensuring uniform settlement procedures and a single settlement cycle (T+3) regardless of a security’s domicile.

The traded prices of all securities are constantly monitored. As soon as the difference between two successive trade prices is greater than a specific predefined value, a brief trading suspension, called “stop trading,” is automatically triggered. The triggering parameters and length of a stop trading differ according to the security.

THE SWEDISH SECURITIES MARKET

ABB Ltd’s shares are listed on the A-list (consisting of the largest companies in Sweden) on the Stockholm Stock Exchange and are included in the OMX S30 Index, which mirrors the total price changes in the 30 most traded shares on the Stockholm Stock Exchange. ABB Ltd is subject to the regulations and listing rules of the Stockholm Stock Exchange.

Trading System

Trading on the Stockholm Stock Exchange is conducted on behalf of clients by banks and brokers. While banks and brokers are permitted to act as principal in trading both on and off the Stockholm Stock Exchange, they generally engage in transactions as agents. There are no mandatory market maker or specialist systems on the Stockholm Stock Exchange.

Each trading day on the Stockholm Stock Exchange begins with an open morning call and ends with an open closing call. At 8:45 a.m. (CET) an open call procedure begins for all shares simultaneously, preceding the commencement of trading at 9:00 a.m. (CET), when the first share is assigned its opening price, and then becomes subject to continuous trading. After approximately 8 minutes, at 9:08 a.m. (CET), the opening prices for all the shares have been established and trading continues at prices based on market demand until 5:20 p.m. (CET) when the closing call is initiated. The closing call ends at 5:30 p.m. (CET), which is the Stockholm Stock Exchange’s closing time. Buy and sell orders are registered on the Stockholm Automated Exchange System, or SAXESS, a computerized order-matching system, in round lots, typically of 100 shares, and odd lots are matched separately at the last price for round lots.

The Stockholm Stock Exchange is a fully electronic marketplace. Trading on the SAXESS comprises all Swedish stocks traded on the Stockholm Stock Exchange and all trades executed in SAXESS are settled electronically in the account-based security system operated by VPC. Member firms of the Stockholm Stock Exchange are able to operate from an optional geographic location via advanced data communications. The brokers’ representatives are able to trade via network stations that have been developed by the OMX or via their own electronic data processing systems which are linked to SAXESS.

In addition to official trading on the Stockholm Stock Exchange, there is also trading off the Stockholm Stock Exchange during and after official trading hours. Trades in excess of 20 round lots can be effected off the Stockholm Stock Exchange if the transaction price lies within the spread then appearing on

121

SAXESS. Trades in excess of 250 round lots, however, may be effected off the Stockholm Stock Exchange without regard to that spread. Trades after official trading hours off the Stockholm Stock Exchange that relate to 250 round lots or less must normally be effected at a transaction price that lies within the spread appearing on SAXESS at the time of the closing, or at a price that otherwise reflects the market situation at that time. Trading on the Stockholm Stock Exchange tends to involve a higher percentage of retail clients, while trading off the Stockholm Stock Exchange, whether through intermediaries or directly, often involves larger Swedish institutions, banks arbitraging between the Swedish market and foreign markets and foreign buyers and sellers purchasing shares from or selling shares to Swedish institutions.

The Stockholm Stock Exchange is an authorized stock exchange in accordance with the Swedish Stock Exchange and Clearing Operations Act (lag 1992:543 om börs-och clearingverksamhet) and is subject to regulation by the Swedish Financial Supervisory Authority. The Swedish Stock Exchange and Clearing Operations Act provides for the regulation and supervision of the Swedish securities markets and market participants and the Swedish Financial Supervisory Authority implements this regulation and supervision.

The regulatory system governing trading on and off the Stockholm Stock Exchange is intended to achieve transparency and equality of treatment. All trades on the Stockholm Stock Exchange are made through SAXESS to the Stockholm Stock Exchange, which records information as to the banks and the brokers involved, the issuer, the number of shares and the price and the time of the transaction. Each bank or broker is required to maintain records indicating trades carried out as agent or, in the case of banks, as principal. All trades off the Stockholm Stock Exchange by or through members of the Stockholm Stock Exchange must also be reported to the Stockholm Stock Exchange within 5 minutes, unless they are effected after 5:30 p.m. (CET). Trades after 5:30 p.m. (CET) must be reported no later than 15 minutes prior to the opening of the next trading day. All trading information reported on the Stockholm Stock Exchange is publicly available. The Stockholm Stock Exchange also maintains a Market Surveillance Unit that reviews trading during the day on a “real time” basis, as described below.

Under the Act on Reporting Obligations for Certain Holdings of Financial Instruments (lag 2000:1087 om anmälningsskyldighet för vissa innehav av finansiella instrument), certain natural persons may have an obligation to report their shareholdings and changes in shareholdings to the Swedish Financial Supervisory Authority. The persons covered by this obligation are persons who through their position or mandate normally obtain non-public information which can be presumed to affect the price of the listed securities (so called “insider information”), such as members of the board of directors of the listed Swedish company in question, the CEO or deputy CEO. The Swedish Financial Supervisory Authority keeps an insider register containing such reported information, which is publicly available.

The Swedish Act on Market Abuse (lag (2005:377) om straff för marknadsmissbruk vid handel med finansiella instrument) provides sanctions against insider trading. The insider trading rules are policed by the Swedish Financial Supervisory Authority and the Market Surveillance Unit of the Stockholm Stock Exchange reviews trading data for indications of unusual market activity or trading behavior.

The Market Surveillance Unit also continually examines information disseminated by listed companies. Accordingly, information such as earnings reports, acquisition and other investment plans and changes in ownership structure, is reviewed on a daily basis. When the Market Surveillance Unit becomes aware of non-public price sensitive information, it monitors trading in the shares concerned to ensure that if unusual trading activity develops which evidences that persons may be trading on that information, the information is made public as soon as possible.

Certain types of agreements in connection with financial instruments trading, such as fictitious transactions or transactions aiming to withdraw financial instruments from public trading, if entered into with the intention of improperly influencing the market price of these instruments, constitutes a criminal offense under the Swedish Act on Market Abuse. Similarly, other measures taken with a view to improperly influencing the market price constitute a criminal offense. Market manipulation may also

122

constitute fraud or swindlery under Swedish law. However, as previously described, trading data is recorded as to all securities and derivative transactions relating to listed securities and data related to trading activity is subject to supervisory review by the Swedish Financial Supervisory Authority. This provides an enforcement mechanism for reducing market manipulation. The Swedish Financial Supervisory Authority may cause the operating license of a bank or broker to be revoked if the bank or broker has engaged in improper conduct. Improper conduct could include behavior constituting market manipulation.

Registration Process

The shares of ABB are registered in the account-based security system of VPC, and the register of shareholders of ABB is kept by VPC. VPC is an authorized central securities depository under the Swedish Act on Registration of Financial Instruments (lag 1998:1479 om kontoföring av finansiella instrument) and carries out, among other things, the duties of registrar for Swedish companies listed on the Stockholm Stock Exchange.

The VPC keeps a paperless share registration system. Share certificates in ABB are not issued. Title to shares is ensured only through registration with VPC.

In accordance with Swedish law and practice and the regulations of VPC:

·Only one person is normally registered as the holder of a share. Joint holders are not usually recorded on the VPC register. Shareholders may be entered on the register in the name of the beneficial owner or in the name of the person designated as nominee for the beneficial owner. In the latter case, a note is made in the register to the effect that the nominee is holding the share(s) in such capacity. There is also a separate register maintained by VPC for the recording of persons who have other interests in respect of shares, such as the interest of a pledgee.

·Where the registered holder is a nominee, the nominee receives, for the account of the beneficial owner, dividends and, on capital increases, shares as well as rights in respect of shares such as in relation to a rights issue or a bonus issue. Dividends are remitted in a single payment to the nominee. That nominee is then responsible for the distribution of these dividends to the beneficial owner. A similar procedure is used for share issues.

·Specific authority to act as a nominee must be given by VPC.

·A nominee is required to file a report with VPC with regard to any holding on behalf of a single beneficial owner in excess of 500 shares in one company. A list containing this information must be open to public inspection. Such a list must reveal the name of the beneficial owner but need not reveal the name of the nominee in whose name the shares have been registered. The beneficial owner would need to reveal its name if it wishes to vote at a shareholders’ meeting, since a holder must re-register nominee-held shares in the name of such beneficial holder no later than ten calendar days prior to the shareholders’ meeting (the record day).

·The rights attaching to shares that are eligible for dividends, rights issues or bonus issues, accrue to those persons whose names are recorded in the register of shareholders on a particular day (the record day). Dividends are paid to an account designated by the shareholder or, in the absence of an account, sent to the shareholder at the address registered with VPC.

123

Item 10.Additional Information

DESCRIPTION OF SHARE CAPITAL AND ARTICLES OF INCORPORATION

This section summarizes the material provisions of ABB Ltd’s articles of incorporation and the Swiss Federal Code of Obligations relating to the shares of ABB Ltd. The description is only a summary and is qualified in its entirety by ABB Ltd’s articles of incorporation, a copy of which has been filed as Exhibit 1.1 to this report, the commercial registry 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”. Its commercial registry number is CH-020.3.021.615-2.

ABB Ltd’s purpose, as set forth in Article 2 of its articles of incorporation, is to hold interests in business enterprises, particularly in enterprises active in the areas of industry, trade and services. It may acquire, encumber, exploit or sell real estate and intellectual property rights in Switzerland and abroad and may also finance other companies. It may engage in all types of transactions and may take all measures that appear appropriate to promote, or that are related to, its purpose.

Our Shares

ABB Ltd’s shares are registered shares (Namenaktien) with a par value of CHF 2.50 each. 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, and to preemptive 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 VPC in Sweden, which maintains a subregister of ABB Ltd’s share register. 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 SIS SegaInterSettle 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.

Capital Structure

Issued Shares:

As of December 31, 2002, the issued share capital of ABB Ltd (including treasury shares), as registered in the commercial register, was CHF 3,000,023,580 divided into 1,200,009,432 fully paid registered shares, with a par value of CHF 2.50 per share.

The Ordinary Capital Increase

On November 20, 2003, the extraordinary general meeting of shareholders resolved to increase our share capital by CHF 2,100,016,505 by issuing 840,006,602 new shares. Shareholders who did not wish to exercise their rights to subscribe for new shares could sell them. 99.4 percent of the rights were exercised. The shares related to unexercised rights were sold in the market. ABB’s resulting share capital of CHF 5,100,040,085, divided into 2,040,016,034 shares, was registered in the commercial register on December 9, 2003.

124

The Creation of the CE Settlement Shares

In December 2003, ABB issued 30,298,913 shares (the CE Settlement Shares) out of its authorized capital for purposes of fulfilling ABB’s obligations under the pre-packaged plan of reorganization of Combustion Engineering. In accordance with its then-current articles of incorporation, the pre-emptive rights of shareholders were excluded and allocated to an ABB subsidiary that had subscribed for the CE Settlement Shares. The resulting share capital of CHF 5,175,787,367.50 divided into 2,070,314,947 shares was registered in the commercial register on December 15, 2003. ABB intends to hold the CE Settlement Shares, whether direct or indirectly, until they are contributed to the Asbestos PI Trust as part of a transaction pursuant to which the plan of reorganization of Combustion Engineering will become effective.

ESAP Shares

In November 2005, ABB issued 6,626,550 shares to certain of its employees who elected to receive them in connection with the company’s Employee Share Acquisition Plan (see “Item 6. Directors, Senior Management and Employees—Compensation.”). The resulting share capital, CHF 5,192,353,742.50 divided into 2,076,941,497 shares, was registered in the commercial register on December 13, 2005.

The following table sets forth the changes in the issued share capital of ABB Ltd since December 31, 2002:

Year	Transaction	Change of no. in shares	Change in share capital	Total no. of shares	Total share capital	Nominal value
			(CHF)		(CHF)	(CHF)
November 2003	Capital increase	840,006,602	2,100,016,505	2,040,016,034	5,100,040,085		2.50
December 2003	Capital increase	30,298,913	75,747,282.50	2,070,314,947	5,175,787,367.50		2.50
November 2005	Capital Increase	6,626,550	16,566,375	2,076,941,497	5,192,353,742.50		2.50

As of December 31, 2005 and March 31, 2006, the issued share capital of ABB Ltd (including treasury shares), as registered in the commercial register, was CHF 5,192,353,742.50 divided into 2,076,941,497 fully paid registered shares, with a par value of CHF 2.50 per share. As of December 31, 2005 and March 31, 2006, no shares were issued but not fully paid. The terms and other factors affecting our outstanding equity-linked securities are described in the section above entitled “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Bonds and Notes.”

Contingent Share Capital

ABB Ltd’s share capital may be increased in an amount not to exceed CHF 550,000,000 through the issuance of fully paid shares with an aggregate par value of (a) up to the amount of CHF 525,000,000 (equivalent to 210,000,000 shares with a par value of CHF 2.50 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 by ABB Ltd or one of its group companies and (b) up to the amount of CHF 25,000,000 (equivalent to 10,000,000 shares with a par value of CHF 2.50 per share) through the exercise of warrant rights granted to its shareholders by ABB Ltd or by one of its subsidiaries. ABB Ltd’s board of directors may grant warrant rights not taken up by shareholders for other purposes in the interest of ABB Ltd.

The preemptive 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 the shares. The conditions of the conversion rights and/or warrants will be determined by the board of directors of ABB Ltd.

125

The acquisition of shares through the exercise of conversion rights and/or warrants and each subsequent transfer of the shares will be subject to the transfer restrictions of ABB Ltd’s articles of incorporation. See “—Transfer of Shares.”

In connection with the issuance of convertible or warrant-bearing bonds or other financial market instruments, the board of directors 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 of directors 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.

ABB Ltd’s share capital may be increased by an amount not to exceed CHF 183,433,625 through the issuance of up to 73,373,450 fully paid new shares to employees of ABB Ltd and its group companies. The preemptive and advance subscription rights of ABB Ltd’s shareholders are excluded. The shares or rights to subscribe for shares will be issued to employees pursuant to one or more resolutions to be issued by the board of directors, taking into account performance, functions, levels of responsibility and profitability criteria. ABB Ltd may issue shares or subscription rights 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 will be subject to the transfer restrictions of ABB Ltd’s articles of incorporation. See “—Transfer of Shares.”

Authorized Share Capital

From time to time, ABB's shareholders may authorize the board of directors to increase ABB's share capital up to an agreed amount not exceeding half of ABB Ltd's share capital as registered in the commercial register and within an agreed period not exceeding two years. The last such authorization of share capital expired in May 2005.

Transfer of Shares

The transfer of shares is effected by corresponding entry in the books of a bank or depository institution following an assignment in writing by the selling shareholder and notification of such assignment to ABB Ltd by the bank or depository institution. The transfer of shares also requires that the purchaser file a share registration form in order to be registered in ABB Ltd’s share register (Aktienbuch) as a shareholder with voting rights. Failing such registration, the purchaser will not be able to participate in or vote at shareholders’ meetings, but will be entitled to dividends and liquidation proceeds. Shares and associated pecuniary rights may only be pledged to the depository institution that administers the book entries of those shares for the account of the shareholder.

A purchaser 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. If persons fail to expressly declare in their registration application that they hold the shares for their own accounts (“nominees”), the board of directors may still 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 further provided 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 retroactive to the date of registration if such registrations

126

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.

Acquirors of registered shares who have chosen to have their shares registered in the share register with VPC do not have to present any written assignment from the selling shareholder nor may they be 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 acquirors need to be entered in the VPC share register in their own name no later than ten calendar days prior to the shareholders’ meeting. Uncertificated shares registered with VPC may be pledged in accordance with Swedish law.

Except as described in this subsection, neither the Swiss Code of Obligations nor our articles of association limit any right to own our shares, or any rights of non-resident or foreign shareholders to exercise voting rights of our shares.

Shareholders’ Meetings

Under Swiss law, the annual general meeting of shareholders must be held within six months after the end of ABB Ltd’s fiscal year. Annual general meetings of shareholders are convened by the board of directors, liquidators or representatives of bondholders or, if necessary, by the statutory auditors. The board of directors is further required to convene an extraordinary general meeting of shareholders if so resolved by the shareholders in a general meeting of shareholders or if so requested by one or more shareholders holding in aggregate at least 10 percent of ABB Ltd’s nominal share capital. A general meeting of shareholders is convened by publishing a notice in the Swiss Official Gazette of Commerce (Schweizerisches Handelsamtsblatt) at least 20 days prior to the meeting date. Holders of VPC-registered shares are able to attend shareholders’ meetings in respect of such shares. Notices of shareholders’ meetings are published in at least three national Swedish daily newspapers, as well as on ABB Ltd’s Internet website. Such notices contain information as to procedures to be followed by shareholders in order to participate and exercise voting rights at the shareholders’ meetings.

One or more shareholders whose combined holdings represent an aggregate par value of at least CHF 1,000,000 may request in writing 40 calendar days prior to a general meeting of shareholders that specific items and proposals be included on the agenda and voted on at the next general meeting of shareholders.

The following powers are vested exclusively in the general meeting of the shareholders:

·adoption and amendment of the articles of incorporation;

·election of members of the board of directors, the auditors, the group auditors and the special auditors referred to below;

·approval of the annual report and the consolidated financial statements;

·approval of the annual financial statements and decision on the allocation of profits shown on the balance sheet, in particular with regard to dividends;

·granting discharge to the members of the board of directors and the persons entrusted with management; and

·passing resolutions as to all matters reserved to the authority of the shareholders’ meeting by law or under the articles of incorporation or that are submitted to the shareholders’ meeting by the board of directors to the extent permitted by law.

There is no provision in ABB Ltd’s articles of incorporation requiring a quorum for the holding of shareholders’ meetings.

127

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 preemptive rights;

·a transfer of ABB Ltd’s place of incorporation; and

·ABB Ltd’s dissolution without liquidation.

In addition, the introduction or abolition of any provision in the articles of incorporation providing for a qualified majority must be resolved in accordance with such qualified majority voting requirements.

At shareholders’ meetings, shareholders can be represented by proxy, but only by their legal representative, another shareholder with the right to vote, a corporate body (Organvertreter), an independent proxy (unabhängiger Stimmrechtsvertreter) or a depository institution (Depotvertreter). All shares held by one shareholder may be represented by only one representative. Votes are taken on a show of hands unless a secret ballot is required by the general meeting of shareholders or the presiding officer. The presiding officer may arrange for resolutions and elections to be carried out by electronic means. As a result, resolutions and elections carried out by electronic means will be deemed to have the same effect as secret ballots. The presiding officer may at any time order that a resolution or election decided by a show of hands be repeated through a secret ballot if, in his view, the results of the vote are in doubt. In this case, the preceding decision by a show of hands shall be deemed to have not occurred.

Only shareholders registered in ABB Ltd’s share register with the right to vote are entitled to participate at shareholders’ meetings. See “—Transfer of Shares.” For practical reasons, shareholders must be registered in the share register with the right to vote no later than ten calendar days prior to a shareholders’ meeting in order to be entitled to participate and vote at such shareholders’ meeting.

Holders of VPC-registered shares are provided with financial and other information on ABB Ltd in the Swedish language in accordance with regulatory requirements and market practice. For shares that are registered in the VPC system in the name of a nominee, such information is to be provided by the nominee.

Net Profits and Dividends

Swiss law requires that ABB Ltd retain at least 5 percent of its annual net profits as legal reservesfor so long as these reserves amount to less than 20 percent of ABB Ltd’s nominal 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 pay dividends only if it has sufficient distributable profits from previous fiscal years, or if its reserves are sufficient to allow distribution of a dividend. In either event, dividends may be paid out only after approval at the shareholders’ meeting. The board of directors may

128

propose that a dividend be paid out, but cannot itself set the dividend. The statutory auditors must confirm that the dividend proposal of the board of directors conforms with statutory law. In practice, the shareholders’ meeting usually approves the dividend proposal of the board of directors.

Dividends are usually due and payable after the shareholders’ resolution relating to the allocation of profits has been passed by the shareholders’ meeting. Under Swiss law, the statute of limitations to claim payment of an approved dividend is five years. Dividends not collected within five years after their due date accrue to ABB Ltd and will be allocated to ABB Ltd’s other reserves.

Payment of dividends on VPC-registered shares is administered by VPC and paid out to the holder that is registered with VPC on the record date. Through the dividend access facility, shareholders with tax residence in Sweden will be entitled to receive, through the VPC system, a dividend in Swedish kronor equivalent to the dividend paid in Swiss francs without deduction of Swiss withholding tax. For further information, see “—Taxation.”

Preemptive Rights

Shareholders of a Swiss corporation have certain preemptive 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) preemptive 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 the articles of incorporation of ABB Ltd, preemptive 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 or may be restricted or denied by the board of directors of ABB Ltd under certain circumstances. See “—Capital Structure—Contingent Share Capital.”

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. See “—Capital Structure—Contingent Share Capital.”

Borrowing Power

Neither Swiss law nor ABB Ltd’s articles of incorporation restrict in any way ABB Ltd’s power to borrow and raise funds. The decision to borrow funds is taken by or under the direction of the board of directors or the executive committee, and no shareholders’ resolution is required. The articles of incorporation of ABB Ltd do not contain provisions concerning borrowing powers exercisable by its directors or how such borrowings could be varied.

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 par value of such shares does not exceed 10 percent of ABB Ltd’s nominal 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.

129

ABB Ltd sold 80 million treasury shares in the first quarter of 2003. In connection with the capital increase in December 2003, ABB Ltd or its subsidiaries exercised its rights in respect of 6,830,312 treasury shares and received 4,781,217 shares at the offer price of CHF 4 per share. In December 2003, ABB Ltd issued 30,298,913 shares to a subsidiary for delivery to the Asbestos PI Trust on the effective date of the plan of reorganization of its U.S. subsidiary, Combustion Engineering, Inc. These shares are considered to be held as treasury shares until used in connection with the Combustion Engineering plan.

ABB Ltd may make additional repurchases of shares for treasury from time to time in the future. Treasury shares are available for issuance to satisfy obligations under the management incentive plan and for other corporate purposes. Excluding the CE Settlement Shares discussed above, as of December 31, 2005, ABB Ltd, directly and indirectly through its subsidiaries, held 11,531,106 shares, with a book value of USD 136 million and a par value of CHF 28,827,765 as of such date. Excluding the CE Settlement Shares discussed above, as of March 31, 2006, ABB Ltd, directly and indirectly through its subsidiaries, its subsidiaries held 11,012,805 shares, with a book value of approximately CHF 130 million and a par value of CHF 27,532,013 as of such date.

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).

Notices required under the Listing Rules of the SWX Swiss Exchange will be published in two Swiss newspapers in German and French. ABB Ltd or the SWX Swiss Exchange may also disseminate the relevant information on the online exchange information systems. Notices required under the listing rules of the Stockholm Exchange will be published in three national daily Swedish newspapers, as well as on ABB Ltd’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 (1) an absolute majority of the shares represented at the general meeting of shareholders in the event it is to be dissolved by way of liquidation or (2) a supermajority of two-thirds of the shares represented at the general meeting of shareholders in other events (e.g., in a merger where it 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 (see “—Taxation”).

Disclosure of Major Shareholders

Under the Swiss Stock Exchange Act, shareholders and groups of shareholders acting in concert who directly or indirectly acquire or sell shares of a listed Swiss corporation and thereby reach, exceed or fall below the thresholds of 5 percent, 10 percent, 20 percent, 331¤3 percent, 50 percent or 662¤3 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.

130

An additional disclosure requirement exists under the Swiss Federal 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. For a list of our major shareholders, see “Item 7. Major Shareholders and Related Party Transactions—Major Shareholders.”

Mandatory Offering Rules

Under the Swiss Stock Exchange Act, shareholders and groups of shareholders acting in concert who acquire more than 331¤3 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 bidder’s obligations under the Swiss Stock Exchange 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 or the Swiss Federal Banking Commission. If no waiver is granted, the mandatory takeover bid must be made pursuant to the procedural rules set forth in the Swiss Stock Exchange Act and the implementing ordinances.

Other than the rules discussed in this section and in the section above entitled “—Duration, Liquidation and Merger” (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 our 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.

Directors and Officers

For further information regarding the material provisions of ABB Ltd’s articles of incorporation and the Swiss Federal Code of Obligations regarding directors and officers, see “Item 6. Directors, Senior Management and Employees—Corporate Governance—Duties of Directors and Officers.”

Auditors

The auditors are subject to confirmation by the shareholders at the annual general meeting on an annual basis. Ernst & Young AG, with its registered head office at Bleicherweg 21, CH-8002 Zurich, Switzerland, has been the independent auditor of ABB Ltd and the ABB Group for the years ended December 31, 2003, 2004 and 2005.

OBT AG, with its registered office at Hardturmstrasse 120, CH-8005 Zurich, Switzerland, has been the special auditor to issue special review reports required in connection with capital increases (if any) for the years ended December 31, 2003, 2004 and 2005. The special auditors are subject to confirmation by the shareholders at the annual general meeting on an annual basis.

131

Ernst & Young AG assumed the existing auditing mandate as auditor of the ABB Group in 1994. The head auditor responsible for the mandate, Mr. Charles Barone, began serving in this function in May 2003.

Ernst & Young AG periodically reads the approved minutes of meetings of our board of directors. Ernst & Young AG is present at the finance and audit committee meetings where audit planning is discussed and the results of our internal audit department’s audit procedures are presented. Ernst & Young AG also periodically meets with the finance and audit committee to discuss the results of its audit procedures.

See “Item 16C. Principal Accountant Fees and Services” for information regarding the fees paid to Ernst & Young AG.

MATERIAL CONTRACTS

The following descriptions of the material provisions of the referenced agreements do not purport to be complete and are subject to, and qualified in their entirety by reference to, the agreements which have been filed as exhibits to this report.

Revolving Credit Facility

On July 4, 2005, we entered into a $2 billion revolving credit facility. For a description of the facility, see “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Credit Facilities” and Note 14 to the Consolidated Financial Statements. See also Exhibit 4.3 to this report.

Medium Term Note Program

One of our subsidiaries, ABB International Finance Limited, has established a medium term note program (“MTN Program”) under which it is authorized to issue up to $5,250 million in certain debt instruments. The terms of the MTN Program do not obligate any third party to extend credit to us, and the terms and availability of financings under the MTN Program are determined with respect to, and at the date of issuance of, each debt instrument. As a result, we may be unable to access capital through the MTN Program on terms favorable to us, if at all. As at December 31, 2005, the aggregate amount outstanding under the MTN Program was approximately $1.8 billion from seven separate issuances of debt instruments. See Exhibits 2.3, 2.4, 2.5, 2.6 and 2.7 to this report.

Sale Agreement for Structured Finance Business

Pursuant to an agreement dated September 4, 2002 between ABB Financial Services B.V., General Electric Capital Corporation (GE Capital) and ABB Ltd, as amended and restated by an agreement dated November 29, 2002, we sold most of our structured finance business, including our project finance, export and trade finance and leasing and similar businesses. The cash consideration for the sale was approximately $2,000 million.

The agreement with GE Capital contains customary warranties, covenants and indemnities in addition to those described herein. We agreed to indemnify GE Capital with respect to certain intra-group guarantees granted by ABB entities for the benefit of certain businesses sold to GE Capital, and this indemnity is supported by letters of credit provided by one or more banks. As of December 31, 2004, the aggregate outstanding value of these letters of credit totaled approximately $63 million.

With respect to certain specified receivables sold in the transaction, GE Capital agreed to make payments to us if the amount recovered by GE Capital in respect of those receivables exceeded the recovery amount projected by GE Capital. All such payments have been made as of December 31, 2004. In addition, certain other designated assets were acquired by GE Capital with the understanding that third-party purchasers would be sought for such assets. We have repurchased certain of these assets for an

132

aggregate consideration of approximately $28 million. Letters of credit supporting our obligations to repurchase certain assets have expired without any amounts thereunder having been drawn.

See Exhibits 4.4 and 4.5 to this report and Note 3 to our Consolidated Financial Statements.

ALSTOM Settlement

Pursuant to a Share Purchase and Settlement Agreement, dated as of March 31, 2000, among ABB Ltd, ALSTOM and ABB ALSTOM POWER, as amended by the Amendment to Share Purchase and Settlement Agreement, dated as of May 11, 2000 (which we refer to collectively as the Settlement Agreement), ALSTOM purchased our 50 percent interest in the joint venture ABB ALSTOM POWER for a cash payment of €1.25 billion. The Settlement Agreement provided for the termination of various joint venture agreements, the execution of various releases, the settlement of certain disputed items in relation to the joint venture, the unwinding of various financial arrangements between ABB ALSTOM POWER and the ABB Group, the prospective transfer to the joint venture of various assets and liabilities required to have been transferred to the joint venture under the original joint venture agreements, the transfer to us of certain subsidiaries of the joint venture, various payments among members of the ALSTOM group and the ABB Group in connection with the foregoing transactions (separate from the purchase price mentioned above), indemnification and the execution of various ancillary documents. The transaction was consummated on May 11, 2000. See Exhibit 4.1 to this report.

Sale Agreement for Nuclear Business

On December 21, 1999, our subsidiary, ABB Handels-Und Verwaltungs AG, entered into an agreement to sell our nuclear business to BNFL for $485 million. Under the agreement, we have undertaken not to compete with the divested business during a seven-year period ending April 28, 2007. We have agreed to indemnify BNFL against, among other things, certain environmental and other liabilities arising from specific sites operated by the nuclear business and certain tax liabilities of the nuclear business. These potential liabilities are described in “Item 3. Key Information—Risk Factors” and “Item 5. Operating and Financial Review and Prospects—Environmental Liabilities.” The transaction was consummated on April 28, 2000. See Exhibit 4.2 to this report.

Sale Agreement for Part of the Oil, Gas and Petrochemicals Business

On January 16, 2004 we announced that our subsidiary, ABB Handels-Und Verwaltungs AG, had entered into an agreement to sell the upstream part of our Oil, Gas and Petrochemicals business to Laradew Limited, a new company formed by a private equity consortium consisting of Candover Partners, JP Morgan Partners and 3i Group. The sale includes our U.S.-based Vetco Gray unit and our Norway-based Offshore Systems business. In July 2004, the Company completed the sale of the Upstream business for an initial purchase price of $925 million. Net cash proceeds from the sale were approximately $800 million, reflecting the initial purchase price adjusted for unfunded pension liabilities and changes in net working capital. On February 9, 2005, the purchasers and we entered into a Settlement Agreement and Amendment finalizing the sales price. As part of the sale, we have agreed, among other things, to terminate certain securitization programs and operational leases, to indemnify the purchaser against certain pre-existing environmental and tax liabilities, to reimburse the purchaser against financial losses that may be incurred on certain ongoing projects of the business. See Exhibits 4.6 and 4.7 to this report.

Sale Agreement for the Sale of the Global Reinsurance and Insurance Businesses

On December 8, 2003, our subsidiary ABB Holding AG (which in December 2003 was merged into ABB Asea Brown Boveri Ltd) entered into an agreement to sell the global reinsurance and insurance businesses which we have operated through the Sirius group of companies to a subsidiary of White

133

Mountains Insurance Group (WMI) for an initial purchase consideration of SEK 3.22 billion (approximately $425 million). The transaction closed in April 2004. As part of the sale we have undertaken to indemnify WMI, among other things, for potential losses in excess of reserves established in the 2003 financial accounts relating to the future final settlement of certain disputes as well as potential losses arising from certain guarantees issued by the Sirius business. See Exhibits 4.8 and 4.9 to this report.

EXCHANGE CONTROLS

Other than in connection with government sanctions imposed on Cote d’Ivoire, Iraq, Liberia, Myanmar, Yugoslavia, Zimbabwe and persons and organizations with connection to Osama bin Laden, the “al Qaeda” group or the Taliban, there are currently no laws, decrees or regulations in Switzerland that restrict the export or import of capital, including, but not limited to, Swiss foreign exchange controls on payment of dividends, interest or liquidation proceeds, if any, to non-Swiss resident holders of shares. In addition, there are no limitations imposed by Swiss law or our articles of incorporation on the rights of non-Swiss residents or non-Swiss citizens to hold or vote our shares.

TAXATION

The following is a summary of the material Swiss and United States federal income tax consequences of the purchase, ownership and disposition of our shares or ADSs.

Swiss Taxation

Withholding Tax on Dividends and Distributions

Dividends paid and similar cash or in-kind distributions that we make to a holder of shares or ADSs (including dividends on liquidation proceeds and stock dividends) are subject to a Swiss federal withholding tax at a rate of 35 percent. We must withhold the tax from the gross distribution and pay it to the Swiss Federal Tax Administration.

Obtaining a Refund of Swiss Withholding Tax for U.S. Residents

The Convention Between the United States of America and the Swiss Confederation for the Avoidance of Double Taxation with Respect to Taxes on Income, which entered into force on December 19, 1997 and which we will refer to in the following discussion as the Treaty, allows U.S. resident individuals or U.S. corporations to seek a refund of the Swiss withholding tax paid on dividends in respect of our shares or ADSs. U.S. resident individuals and U.S. corporations holding less than 10 percent of the voting rights in respect of our shares or ADSs are entitled to seek a refund of withholding tax to the extent the tax withheld exceeds 15 percent of the gross dividend. U.S. corporations holding 10 percent or more of the voting rights of our shares or ADSs are entitled to seek a refund of withholding tax to the extent the tax withheld exceeds 5 percent of the gross dividend.

Claims for refunds must be filed with the Swiss Federal Tax Administration, Eigerstrasse 65, 3003 Bern, Switzerland. The form used for obtaining a refund is Swiss Tax Form 82 (82C for companies; 82E for other entities; 82I for individuals). This form may be obtained from any Swiss Consulate General in the United States or from the Swiss Federal Tax Administration at the address above. The form must be filled out in triplicate with each copy duly completed and signed before a notary public in the United States. The form must be accompanied by evidence of the deduction of withholding tax withheld at the source.

Stamp Duties upon Transfer of Securities

The sale of shares or ADSs, whether by Swiss resident or non-resident holders, may be subject to a Swiss securities transfer stamp duty of up to 0.15 percent calculated on the sale proceeds if it occurs

134

through or with a Swiss bank or other Swiss securities dealer as defined in the Swiss Federal Stamp Tax Act. In addition to the stamp duty, the sale of shares or ADSs by or through a member of the SWX Swiss Exchange may be subject to a stock exchange levy.

United States Taxes

The following is a summary of the material U.S. federal income tax consequences of the ownership of shares or ADSs. This summary does not purport to address all of the tax considerations that may be relevant to a decision to purchase, own or dispose of shares or ADSs. This summary assumes that holders hold shares or ADSs as capital assets. This summary does not address tax considerations applicable to holders that may be subject to special tax rules, such as dealers or traders in securities or currencies, partnerships owning shares or ADSs, tax-exempt entities, banks, insurance companies, holders that own (or are deemed to own) at least 10 percent or more (by voting power or value) of the stock of ABB, investors whose functional currency is not the U.S. dollar, and persons that will hold shares or ADSs as part of a position in a straddle or as part of a hedging or conversion transaction for U.S. tax purposes. This discussion does not address aspects of U.S. taxation other than U.S. federal income taxation, nor does it address state, local or foreign tax consequences of an investment in shares or ADSs.

This summary is based (1) on the Internal Revenue Code of 1986, as amended, U.S. Treasury Regulations and judicial and administrative interpretations thereof, in each case as in effect and available on the date of this registration statement and (2) in part, on representations of the depositary and the assumption that each obligation in the deposit agreement and any related agreement will be performed in accordance with its terms. The U.S. tax laws and the interpretation thereof are subject to change, which change could apply retroactively and could affect the tax consequences described below.

For purposes of this summary, a U.S. holder is a beneficial owner of shares or ADSs that, for U.S. federal income tax purposes, is:

·a citizen or resident of the United States;

·a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States or any state, including the District of Columbia;

·an estate if its income is subject to U.S. federal income taxation regardless of its source; or

·a trust if such trust validly has elected to be treated as a U.S. person for U.S. federal income tax purposes or if (1) a U.S. court can exercise primary supervision over its administration and (2) one or more U.S. persons have the authority to control all of its substantial decisions.

If a partnership (including any entity treated as a partnership for United States federal income tax purposes) is a beneficial owner of shares or ADSs the treatment of a partner in the partnership will generally depend on the status of the partner and the activities of the partnership. If you are a partner in a partnership that holds shares or ADSs you should consult your tax advisor.

A non-U.S. holder is a beneficial owner of shares or ADSs that is not a U.S. holder.

Each prospective purchaser should consult the purchaser’s tax advisor with respect to the U.S. federal, state, local and foreign tax consequences of acquiring, owning or disposing of shares or ADSs.

Ownership of ADSs in General

For U.S. federal income tax purposes, a holder of ADSs generally will be treated as the owner of the shares represented by the ADSs.

135

The U.S. Treasury Department has expressed concern that depositaries for American depositary receipts, or other intermediaries between the holders of shares of an issuer and the issuer, may be taking actions that are inconsistent with the claiming of U.S. foreign tax credits by U.S. holders of those receipts or shares. Accordingly, the analysis regarding the availability of a U.S. foreign tax credit for Swiss taxes and sourcing rules described below could be affected by future actions that may be taken by the U.S. Treasury Department.

Distributions

Subject to the discussion below under “—Passive Foreign Investment Company Considerations,” if you are a U.S. holder, for U.S. federal income tax purposes, the gross amount of any distribution (other than certain distributions, if any, of shares distributed to all shareholders of ABB, including holders of ADSs) made to you with respect to shares or ADSs, including the amount of any Swiss taxes withheld from the distribution, will constitute dividends to the extent of ABB’s current and accumulated earnings and profits (as determined under U.S. federal income tax principles). Subject to the discussion below under “—Passive Foreign Investment Company Considerations,” non-corporate U.S. Holders generally will be taxed on such distributions at the lower rates applicable to long-term capital gains (i.e., gains from the sale of capital assets held for more than one year) with respect to taxable years beginning on or before December 31, 2008. These dividends will not be eligible for the dividends received deduction generally allowed to corporate U.S. holders. Subject to the discussion below under “—Passive Foreign Investment Company Considerations,” if distributions with respect to shares or ADSs exceed ABB’s current and accumulated earnings and profits as determined under U.S. federal income tax principles, the excess would be treated first as a tax-free return of capital to the extent of your adjusted tax basis in the shares or ADSs. Any amount in excess of the amount of the dividend and the return of capital would be treated as capital gain. ABB does not maintain calculations of its earnings and profits under U.S. federal income tax principles.

If you are a U.S. holder, dividends paid in Swiss francs, including the amount of any Swiss taxes withheld from the dividends, will be included in your gross income in an amount equal to the U.S. dollar value of the Swiss francs calculated by reference to the spot exchange rate in effect on the day the dividends are includible in income. In the case of ADSs, dividends generally are includible in income on the date they are received by the depositary, regardless of whether the payment is in fact converted into U.S. dollars at that time. If dividends paid in Swiss francs are converted into U.S. dollars on the day they are includible in income, you generally should not be required to recognize foreign currency gain or loss with respect to the conversion, if you are a U.S. holder. However, any gains or losses resulting from the conversion of Swiss francs between the time of the receipt of dividends paid in Swiss francs and the time the Swiss francs are converted into U.S. dollars will be treated as ordinary income or loss to you, as the case may be, if you are a U.S. holder. The amount of any distribution of property other than cash will be the fair market value of the property on the date of distribution.

If you are a U.S. holder, you will have a basis in any Swiss francs received as a refund of Swiss withholding taxes equal to a U.S. dollar amount calculated by reference to the exchange rate in effect on the date of receipt of the dividend on which the tax was withheld. (See “—Swiss Taxation—Obtaining a Refund of Swiss Withholding Tax for U.S. Residents” above.)

If you are a U.S. holder, dividends received by you with respect to shares or ADSs will be treated as foreign source income, which may be relevant in calculating your foreign tax credit limitation. Subject to certain conditions and limitations, Swiss tax withheld on dividends may be deducted from your taxable income or credited against your United States federal income tax liability. However, to the extent that you are a U.S. holder and would be entitled to a refund of Swiss withholding taxes pursuant to the U.S.—Switzerland tax treaty, you may not be eligible for a United States foreign tax credit with respect to the amount of such withholding taxes which may be refunded, even if you fail to claim the refund. See “—Swiss

136

Taxation—Obtaining a Refund of Swiss Withholding Tax for U.S. Residents.” The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. For this purpose, dividends distributed by ABB generally will constitute passive income, or, in the case of certain U.S. holders, financial services income. The rules relating to the determination of the U.S. foreign tax credit are complex, and, if you are a U.S. holder, you should consult your tax advisor to determine whether and to what extent you would be entitled to this credit.

Subject to the discussion below under “—Backup Withholding and Information Reporting,” if you are a non-U.S. holder of shares or ADSs, you generally will not be subject to U.S. federal income or withholding tax on dividends received on shares or ADSs, unless the dividends are effectively connected with the conduct by you of a trade or business in the United States, or the dividends are attributable to a permanent establishment or fixed base that is maintained in the United States if that is required by an applicable income tax treaty as a condition for subjecting a non-U.S. holder to U.S. taxation on a net income basis. In such cases, you will be taxed in the same manner as a U.S. holder. Moreover, if you are a corporate non-U.S. holder, you may be subject, under certain circumstances, to an additional branch profits tax on any effectively connected dividends at a 30 percent rate, or at a lower rate if you are eligible for the benefits of an income tax treaty that provides for a lower rate.

Sale or Exchange of Shares or ADSs

Subject to the discussion below under “—Passive Foreign Investment Company Considerations,” if you are a U.S. holder that holds shares or ADSs as capital assets, you generally will recognize capital gain or loss for U.S. federal income tax purposes upon a sale or exchange of your shares or ADSs in an amount equal to the difference between your adjusted tax basis in the shares or ADSs and the amount realized on their disposition. If you are a noncorporate U.S. holder, the maximum marginal U.S. federal income tax rate applicable to the gain will be lower than the maximum marginal U.S. federal income tax rate applicable to ordinary income (other than certain dividends) if your holding period for the shares or ADSs exceeds one year (i.e., long-term capital gains). If you are a U.S. holder, the gain or loss, if any, recognized by you generally will be treated as U.S. source income or loss, as the case may be, for U.S. foreign tax credit purposes. Certain limitations exist on the deductibility of capital losses for U.S. federal income tax purposes.

If you are a U.S. holder and you receive any foreign currency on the sale of shares or ADSs, you may recognize U.S. source ordinary income or loss as a result of currency fluctuations between the date of the sale of the shares or ADS, as the case may be, and the date the sales proceeds are converted into U.S. dollars.

Subject to the discussion below under “—Backup Withholding and Information Reporting,” if you are a non-U.S. holder of shares or ADSs, you generally will not be subject to U.S. federal income or withholding tax on gain realized on the sale or exchange of your shares or ADSs unless (1) the gain is effectively connected with the conduct by you of a trade or business in the United States, or the gain is attributable to a permanent establishment or fixed base that is maintained in the United States if that is required by an applicable income tax treaty as a condition for subjecting a non-U.S. holder to U.S. taxation on a net income basis, or (2) if you are an individual non-U.S. holder, you are present in the United States for 183 days or more in the taxable year of the sale or exchange and certain other conditions are met. Moreover, if you are a corporate non-U.S. holder, you may be subject, under certain circumstances, to an additional branch profits tax on any effectively connected gains at a 30 percent rate, or at a lower rate if you are eligible for the benefits of an income tax treaty that provides for a lower rate.

137

Passive Foreign Investment Company Considerations

A non-U.S. corporation will be classified as a “passive foreign investment company,” or a PFIC, for United States federal income tax purposes in any taxable year in which, after applying certain look-through rules, either

·at least 75 percent of its gross income is “passive income”; or

·at least 50 percent, on average, of the gross value of its assets is attributable to assets that produce “passive income” or are held for the production of passive income.

Passive income for this purpose generally includes dividends, interest, certain royalties, certain rents and gains from commodities and securities transactions.

Based on certain estimates of its gross income and gross assets and the nature of its business, ABB believes that it will not be classified as a PFIC for the taxable year ending December 31, 2005. ABB’s status in future years will depend on its assets and activities in those years. ABB has no reason to believe that its assets or activities will change in a manner that would cause it to be classified as a PFIC. If ABB were a PFIC, and you are a U.S. holder, you generally would be subject to imputed interest charges and other disadvantageous tax treatment with respect to any gain from the sale or exchange of, and certain distributions with respect to, your shares or ADSs, including the denial of the taxation of certain dividends at the lower rates applicable to long-term capital gains (as discussed above in “—Distributions”).

If ABB were a PFIC, you may be able to make a variety of elections which might alleviate certain of the tax consequences referred to above. However, it is expected that the conditions necessary for making such elections will not be present in the case of shares or ADSs. You should consult your own tax advisor regarding the tax consequences that would arise if ABB were treated as a PFIC.

Backup Withholding and Information Reporting

U.S. backup withholding tax and information reporting requirements generally apply to certain payments to certain noncorporate holders of stock. Information reporting generally will apply to payments of dividends on, and to proceeds from the sale or redemption of, shares or ADSs made within the United States to a holder of shares or ADSs (other than an exempt recipient, including a corporation, a payee that is a non-U.S. holder that provides an appropriate certification, and certain other persons).

A payor will be required to withhold backup withholding tax from any payments of dividends on, or the proceeds from the sale or redemption of, shares or ADSs within the United States to you, unless you are an exempt recipient, if you fail to furnish your correct taxpayer identification number or otherwise fail to establish an exception from backup withholding tax requirements or otherwise fail to establish an exception from backup withholding. The amount of any backup withholding from a payment to you will be allowed as a credit against your U.S. federal income tax liability and may entitle you to a refund, provided that the required information is furnished to the U.S. Internal Revenue Service. The backup withholding tax rate is 28 percent for years 2004 through 2010.

In the case of payments made within the United States to a foreign simple trust, foreign grantor trust, or foreign partnership (other than payments to a foreign simple trust, foreign grantor trust, or foreign partnership that qualifies as a withholding foreign trust or withholding foreign partnership within the meaning of the applicable U.S. Treasury Regulations and payments to a foreign simple trust, foreign grantor trust, or foreign partnership that are effectively connected with the conduct of a trade or business in the United States), the beneficiaries of the foreign simple trust, the persons treated as the owners of the foreign grantor trust or the partners of the foreign partnership, as the case may be, will be required to provide the certification discussed above in order to establish an exemption from backup withholding tax and information reporting requirements. Moreover, if you are a non-U.S. holder, a payor may rely on a

138

certification provided by you only if the payor does not have actual knowledge or a reason to know that any information or certification stated in the certificate is incorrect.

THE ABOVE SUMMARIES ARE NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL TAX CONSEQUENCES RELATING TO THE OWNERSHIP OF SHARES OR ADSs. PROSPECTIVE PURCHASERS OF SHARES OR ADSs SHOULD CONSULT THEIR TAX ADVISORS CONCERNING THE TAX CONSEQUENCES OF THEIR PARTICULAR SITUATIONS.

DOCUMENTS ON DISPLAY

We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended. In accordance with these requirements, we file reports and other information with the SEC. These materials, including this report and the exhibits thereto, may be inspected and copied at prescribed rates at the Commission’s public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Further information on the operation of the public reference room may be obtained by calling the Commission at 1-800-SEC-0330. The Commission also maintains a web site at http://www.sec.gov that contains reports and other information regarding registrants that file electronically with the Commission. Our annual reports and some of the other information we submit to the Commission may be accessed through this web site. In addition, material that we file can be inspected at the offices of the New York Stock Exchange at 20 Broad Street, New York, New York 10005.

Item 11.Quantitative and Qualitative Disclosures About Market Risk

Market Risk Disclosure

The continuously evolving financial markets and the dynamic business environment expose us to changes in foreign exchange, interest rate and other market price risks. We have developed and implemented comprehensive policies, procedures, and controls to identify, mitigate, and monitor financial risk on a firm-wide basis. To efficiently aggregate and manage financial risk that could impact our financial performance, we operate a Group Treasury function. Our Group Treasury function provides an efficient source of liquidity, financing, risk management, and other global financial services to our group companies. The Group does not permit proprietary trading activities. The market risk management activities are focused on mitigating material financial risks resulting from our global operating and financing activities.

The Group Treasury function maintains risk management control systems to monitor foreign exchange and interest rate risks and exposures arising from our underlying business, as well as the associated hedge positions. Such exposures are governed by written policies. Financial risks are monitored using a number of analytical techniques including market value and sensitivity analysis. The following quantitative analyses are based on sensitivity analysis tests, which assume parallel shifts of interest rate yield curves, foreign exchange rates, equity prices and commodity prices, as applicable.

Currency Fluctuations and Foreign Exchange Risk

It is our policy to identify and manage all transactional foreign exchange exposures to minimize risk. With the exception of certain financing subsidiaries, and to the extent certain operating subsidiaries are domiciled in high inflation environments, the functional currency of each of our companies is considered to be its local currency. Our policies require our subsidiaries to hedge all contracted foreign exchange exposures, as well as a portion of their forecast exposures, against their local currency. These transactions are undertaken mainly with our Group Treasury function.

We have foreign exchange transaction exposures related to our global operating and financing activities in currencies other than the functional currency in which our entities operate. Specifically, we are exposed to foreign exchange risk related to future earnings, assets or liabilities denominated in foreign currencies. The most significant currency exposures relate to operations in Sweden, Switzerland and

139

Germany. In addition, the Group is exposed to currency risk associated with translating our functional currency financial statements into our reporting currency, which is the U.S. dollar.

Our operating companies are responsible for identifying their foreign currency exposures and entering into intercompany hedge contracts with the Group Treasury function, where legally possible, or external transactions to hedge this risk. The intercompany transactions have the effect of transferring the operating companies’ currency risk to the Group Treasury function, but create no additional market risk to our consolidated results. The Group Treasury function then manages this risk by entering into offsetting transactions with third party financial institutions. According to our policy, material net currency exposures are hedged. Exposures are primarily hedged with forward foreign exchange contracts. The majority of the foreign exchange hedge instruments have, on average, a maturity of less than twelve months. The Group Treasury function also hedges currency risks associated with their financing of other ABB companies. For certain non-U.S. dollar denominated borrowings, we use cross currency swaps to hedge the currency risk and effectively convert the borrowings into U.S. dollar obligations. These swap contracts have maturity dates that exactly match the associated borrowings.

As of December 31, 2005 and December 31, 2004, the net fair value of financial instruments with exposure to foreign currency rate movements was $1,001 million and $1,158 million, respectively. The potential loss in fair value of such financial instruments from a hypothetical 10% move in foreign exchange rates against our position would be approximately $91 million and $67 million for December 31, 2005 and December 21, 2004, respectively. The analysis reflects the aggregate adverse foreign exchange impact associated with transaction exposures, as well as translation exposures where appropriate. Our sensitivity analysis assumes a simultaneous shift in exchange rates against our positions exposed to foreign exchange risk and as such assumes an unlikely adverse case scenario. Exchange rates rarely move in the same direction. Therefore, the assumption of a simultaneous shift may overstate the impact of changing rates on assets and liabilities denominated in foreign currencies. The underlying trade-related transaction exposures of the industrial companies are not included in the quantitative analysis. This represents a material limitation of the quantitative risk analysis. If these underlying transaction exposures were included, they would tend to have an offsetting effect on the potential loss in fair value detailed above.

Interest Rate Risk

We are exposed to interest rate risk due to our financing, investing, and liquidity management activities. Our operating companies primarily invest excess cash with and receive funding from our Group Treasury function on an arm’s length basis. It is our policy that the primary third-party funding and investing activities, as well as the monitoring and management of the resulting interest rate risk, are the responsibility of the Group Treasury function. The Group Treasury function adjusts the duration of the overall funding portfolio through derivative instruments in order to better match underlying assets and liabilities, as well as minimize the cost of capital. As of December 31, 2005 and December 31, 2004, the net fair value of interest rate instruments was $(2,085) million and $(1,582) million, respectively. The potential loss in fair value for such financial instruments from a hypothetical 100 basis point parallel shift in interest rates against ABB’s position (or a multiple of 100 basis points where 100 basis points is less than 10% of the applicable interest rate) would be approximately $86 million and $164 million for December 31, 2005 and December 31, 2004, respectively.

Leases are not included as part of the sensitivity analysis. This represents a limitation of the analysis. While sensitivity analysis includes the interest rate sensitivity of the funding of the lease portfolio, a corresponding change in the lease portfolio was not considered in the sensitivity model.

140

Equity Risk

Certain ABB entities have equity investments that expose the Group to equity price risk. As of December 31, 2005 and 2004, the net fair value of equity risk sensitive instruments was $165 million and $107 million, respectively. The potential loss in fair value of such financial instruments from a hypothetical 10% move in equity prices against our position would be approximately $17 million and $11 million, respectively.

Commodity Risk

We enter into commodity derivatives to hedge certain of our raw material exposures. The calculated potential loss in fair value for such commodity hedging derivatives from a hypothetical 10% move in commodity prices was not material as of December 31, 2005 and 2004.

Item 12.Description of Securities Other than Equity Securities

Not applicable.

141

PART II

Item 13.Defaults, Dividend Arrearages and Delinquencies

Not applicable.

Item 14.Material Modifications to the Rights of Security Holders and Use of Proceeds

Not applicable.

Item 15.Controls and Procedures

(a)Evaluation of disclosure controls and procedures.

We maintain controls and procedures designed to provide reasonable assurance that the information required to be disclosed in our filings under the Securities Exchange Act of 1934 (the Exchange Act) is recorded, processed, summarized and reported on a timely basis. Our Chief Executive Officer, Fred Kindle, and Chief Financial Officer, Michel Demaré, with the participation of key corporate senior management and management of key corporate functions, performed an evaluation of our disclosure controls and procedures as of December 31, 2005. Based on that evaluation, management, including the Chief Executive Officer and Chief Financial Officer, has concluded that, as of December 31, 2005, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in reports that we file or submit under the Exchange Act has been recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information has been accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

We reported in our Annual Report on Form 20-F for the financial year ended December 31, 2004, the following matters, which were considered material weaknesses in our internal controls over financial reporting as of December 31, 2004: (1) identified internal control deficiencies and financial statement adjustments in the Italian business unit of our Power Technologies division that required us to restate prior period financial statements; and (2) a series of identified significant deficiencies in our financial reporting process, including deficiencies identified in prior years that were not yet remediated, that were, in the aggregate, evidence of a material weakness in our financial statement reporting process.

In response to the material weaknesses identified as of December 31, 2004, and in preparation for our compliance with Section 404 of the Sarbanes-Oxley Act of 2002, we implemented the following corrective actions to remediate these material weaknesses:

·We instituted in the Italian business unit of our Power Technologies division a number of corrective actions including, but not limited to, adding certain accounting personnel that have more experience in financial accounting and reporting than the personnel previously performing these functions; enhancing the information technology management systems, implementing additional monitoring controls at our corporate headquarters with respect to the Italian unit’s financial reporting, and educating the Italian unit’s employees as to the importance of compliance with policies and procedures and the significance of a system of sound internal controls.

·In response to the material weakness related to the previously identified significant deficiencies we have instituted a number of corrective actions including, but not limited to, upgrading financial systems, implementing additional detailed monitoring and review controls at our corporate headquarters with respect to subsidiary financial reporting, developing, documenting and implementing comprehensive accounting and financial reporting processes, performing independent internal reviews of key account reconciliations and documenting information

142

technology-related controls, as well as continued documentation of internal controls, as part of the implementation of Section 404 of the Sarbanes-Oxley Act.

·We have implemented a global Ethics & Compliance policy, which includes a strict zero-tolerance stance on misconduct and a whistleblowing process with appropriate follow-up from our investigation group. In addition, all employees must sign an ethics letter wherein they confirm compliance with conflict of interest rules, insider trading rules, political contribution rules and corporate policies. Since 2005, on a quarterly basis, finance managers in each country have been required to sign a certification as to the quality of the financial reporting information and disclosure of significant events in their respective areas of responsibility.

We believe that these efforts have addressed the previously reported material weaknesses that affected or could have affected our internal controls over financial reporting during the year ended December 31, 2005. Following the implementation of these measures, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that, as of December 31, 2005, the material weaknesses identified as of December 31, 2004, had been remediated and that our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. While we concluded that our disclosure controls and procedures were effective as of December 31, 2005, in connection with the implementation of Section 404 of the Sarbanes-Oxley Act, we have identified and are in the process of remediating a number of significant deficiencies in our controls and procedures.

In order to address the significant deficiencies identified, we performed additional procedures during the preparation of our 2005 consolidated financial statements to compensate for the potential effect of such matters on our reporting. In the event that deficiencies that have been or might be identified are not remediated within the required period, such deficiencies could result in a conclusion that we have a material weakness in internal control. We are required to comply with the requirements of Section 404 of the Sarbanes-Oxley Act as of December 31, 2006. We have and are continuing to devote substantial resources to achieve our objective of having effective internal controls over financial reporting to achieve Section 404 compliance.

In 2005, in accordance with our 2004 civil settlement with the SEC, we appointed an independent consultant to review our policies and procedures as they relate to compliance with the books and records, internal accounting controls and anti-bribery provisions of the Foreign Corrupt Practices Act. The consultant is expected to submit a report in 2006 documenting findings and making recommendations (the “Report”) to our Board of Directors. Within ninety days after receiving the Report, we are required to adopt the recommendations contained in the Report, except in certain limited circumstances.

(b)Changes in internal control.

Except as discussed above, there has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act) that occurred during the period covered by this report, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

In addition, we will continue to evaluate the effectiveness of our disclosure controls and procedures and may make such changes from time to time as we consider appropriate.

143

Item 16A.Audit Committee Financial Expert

Our board of directors has determined that Bernd W. Voss, who serves on our audit committee, is independent, as that term is defined in the listing standards promulgated by the New York Stock Exchange, and is an audit committee financial expert.

Item 16B.Code of Ethics

Our chief executive officer, chief financial officer, principal accounting officer and persons performing similar functions are bound to adhere to our code on business ethics, which applies to all employees of all companies in the ABB Group. Our code of business ethics is accessible on our web site at www.abb.com/about.

Item 16C.Principal Accountant Fees and Services

Audit Fees

Fees for audit services provided by Ernst & Young totaled approximately $32 million and $30 million in 2005 and 2004, respectively. Audit fees include the standard audit work performed each fiscal year necessary to allow the auditor to issue an opinion on our consolidated financial statements and to issue an opinion on the local statutory financial statements of ABB Ltd and its subsidiaries. Audit fees also include services that can be provided only by the group auditor such as assistance with the application of new accounting policies, pre-issuance reviews of quarterly financial results and comfort letters delivered to underwriters in connection with debt and equity offerings. Included in 2005 audit fees are approximately $3 million related to the 2004 audit, which fees were not agreed until after the Company had filed its Annual Report on Form 20-F with the SEC on May 27, 2005. Included in 2004 audit fees is $6 million related to the 2003 audit, which fees were not agreed until after the Company had filed its Annual Report on Form 20-F dated April 9, 2004 and also fees associated with the Company’s filing of its Annual Report on Form 20-F/A (Amendment No. 1) dated September 24, 2004.

Audit-Related Fees

Fees for audit-related services provided by Ernst & Young totaled approximately $1 million and $5 million in 2005 and 2004, consisting primarily of accounting consultations and audits in connection with divestments, audits of pension and benefit plans and accounting advisory services.

Tax Fees

Fees for tax services provided by Ernst & Young totaled approximately $2 million and $3 million in 2005 and 2004, respectively, representing tax compliance fees as well as tax advice and planning fees.

All Other Fees

Fees for other services provided not included in the above three categories by Ernst & Young totaled approximately $0.3 million and $0.3 million in 2005 and 2004, respectively.

Pre-Approval Procedures and Policies

In accordance with the requirements of the U.S. Sarbanes-Oxley Act of 2002 and rules issued by the SEC, we utilize a procedure for the review and pre-approval of any services performed by Ernst & Young. The procedure requires that all proposed engagements of Ernst & Young for audit and permitted non-audit services are submitted to the Finance & Audit Committee for approval prior to the beginning of any such services. In accordance with this policy, all services performed by and fees paid to Ernst & Young in 2004 and 2005, as discussed above in this Item 16C, were approved by the Finance & Audit Committee.

144

Other Matters

Our auditor, Ernst & Young AG has informed the Finance & Audit Committee of our Board of Directors that certain non-audit services performed for us by affiliates of Ernst & Young AG in several countries have raised questions regarding Ernst & Young’s independence in the performance of audit services. Ernst & Young AG has disclosed that, during 2005, its affiliate in Zimbabwe provided statutory bookkeeping services. Additionally, during 2004 or a prior year: its affiliate in Hong Kong received funds from an ABB subsidiary in Switzerland to be used to make tax payments of de minimis amounts on behalf of certain expatriate employees of one of our subsidiaries in Hong Kong and Ernst &Young’s affiliate paid such funds to the tax authorities; its affiliate in Sri Lanka provided certain payroll services for our employees in one of our subsidiaries in Sri Lanka; its affiliates in Singapore provided company secretary services; its affiliate in Poland provided expatriate related services to one of our subsidiaries; and the aggregate compensation paid for the above services was an immaterial amount and have represented that such activities did not impair the independence of Ernst & Young’s audits. Such services are generally not permitted under applicable auditor independence rules and have been discontinued. Ernst & Young AG and the Finance & Audit Committee have discussed these circumstances and Ernst & Young AG and the Finance & Audit Committee have concluded that Ernst & Young AG’s independence with respect to ABB has not been compromised by the provision of such services.

Item 16D.Exemptions from the Listing Standards for Audit Committees.

None.

Item 16E.Purchases of Equity Securities by the Issuer and Affiliated Purchasers.

The table below sets forth the information with respect to purchases made by or on behalf of ABB Ltd or any “affiliated purchaser”, as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934, of ABB Ltd shares for the year ended December 31, 2005.

Period		Total Number of Shares Purchased(1)		Average  Price Paid  per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
					(CHF)
January	1/1/05-1/31/05		—		—		N/A		N/A
February	2/1/05-2/28/05		—		—
March	3/1/05-3/31/05		—		—
April	4/1/05-4/30/05		—		—
May	5/1/05-5/31/05		—		—
June	6/1/05-6/30/05		118,646		8.62
July	7/1/05-7/31/05		—		—
August	8/1/05-8/31/05		—		—
September	9/1/05-9/30/05		—		—
October	10/1/05-10/31/05		—		—
November	11/1/05-11/30/05		—		—
December	12/1/05-12/31/05		—		—
Total			118,646		8.62		N/A		N/A

(1)The total number of shares purchased were purchased through open-market transactions. These purchases were made in respect of our obligation to deliver shares as compensation to our directors.

145

PART III

Item 17.   Financial Statements

We have elected to provide financial statements and the related information pursuant to Item 18.

Item 18.   Financial Statements

See pages F-1 to F-65 and pages S-1 to S-2, which are incorporated herein by reference.

(a)Reports of Independent Registered Public Accounting Firms.

(b)Consolidated Income Statements for the years ended December 31, 2005, 2004 and 2003.

(c)Consolidated Balance Sheets as of December 31, 2005 and 2004.

(d)Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2004 and 2003.

(e)Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2005, 2004 and 2003.

(f)Notes to Consolidated Financial Statements.

(g)Report of Independent Registered Public Accounting Firm on Financial Statement Schedule.

(h)Schedule II—Valuation and Qualifying Accounts.

146

Item 19.   Exhibits

1.1	Articles of Incorporation of ABB Ltd as amended to date. Incorporated by reference to Exhibit 1.1 to the Annual Report on Form 20-F filed by ABB Ltd on April 9, 2004.
2.1	Form of Amended and Restated Deposit Agreement, by and among ABB Ltd, Citibank, N.A., as Depositary, and the holders and beneficial owners from time to time of the American Depositary Shares issued thereunder (including as an exhibit the form of American Depositary Receipt). Incorporated by reference to Exhibit (a)(i) to Post-Effective Amendment No. 1 on Form F-6 (File No. 333-13346) filed by ABB Ltd on May 7, 2001.
2.2	Form of American Depositary Receipt (included in Exhibit 2.1).
2.3	EMTN Amended and Restated Fiscal Agency Agreement, dated December 8, 2005 between ABB International Finance Limited, Fortis Banque Luxembourg S.A. and Banque Meespierson BGL S.A.
2.4	EMTN Amended and Restated Dealership Agreement, dated December 8, 2005, between ABB International Finance Limited, ABB Ltd and Morgan Stanley & Co. International Limited.
2.5	EMTN Deed of Covenant, dated March 10, 1993, by ABB International Finance N.V. Incorporated by reference to Exhibit 2.4 to the Annual Report on Form 20-F filed by ABB Ltd on June 27, 2002.
2.6	EMTN Deed of Covenant, dated March 10, 1993, by ABB Finance Inc. Incorporated by reference to Exhibit 2.5 to the Annual Report on Form 20-F filed by ABB Ltd on June 27, 2002.
2.7	EMTN Deed of Covenant, dated March 10, 1993, by ABB Capital B.V. Incorporated by reference to Exhibit 2.6 to the Annual Report on Form 20-F filed by ABB Ltd on June 27, 2002.
	The total amount of long-term debt securities of ABB Ltd authorized under any other instrument does not exceed 10 percent of the total assets of the ABB Group on a consolidated basis. ABB Ltd hereby agrees to furnish to the Commission, upon its request, a copy of any instrument defining the rights of holders of long-term debt of ABB Ltd or of its subsidiaries for which consolidated or unconsolidated financial statements are required to be filed.
4.1	Share Purchase and Settlement Agreement dated as of March 31, 2000 among ABB Ltd, ALSTOM and ABB ALSTOM POWER N.V., as amended. Incorporated by reference to Exhibit 4.1 to the Annual Report on Form 20-F filed by ABB Ltd on June 27, 2002.
4.2	Purchase Agreement, dated as of December 21, 1999, between ABB Handels-Und Verwaltungs AG, as Seller, and British Nuclear Fuels plc, as Purchaser, as amended. Incorporated by reference to Exhibit 4.2 to the Annual Report on Form 20-F filed by ABB Ltd on June 27, 2002.
4.3	$2,000,000,000 Multicurrency Revolving Credit Agreement, dated as of July 4, 2005, between ABB Ltd, certain subsidiaries of ABB Ltd as borrowers and guarantors, Barclays Capital, Bayerische Hypo-und Vereinsbank AG, BNP Paribas, Citigroup Global Markets Limited, Commerzbank Aktiengesellschaft, Credit Suisse, Deutsche Bank AG, Dresdner Kleinwort Wasserstein, Handelsbanken Capital Markets, Svenska Handelsbanken AB (publ), HSBC Bank plc, Nordea Bank (AB) and SEB Merchant Banking, Skandinaviska Enskilda Banken, AB (publ), as mandated lead arrangers, Credit Suisse, as facility agent, dollar swingline agent and euro swingline agent, and SEB Merchant Banking, Skandinaviska Enskilda Banken, AB (publ), as SEK swingline agent.
4.4	Sale and Purchase Agreement, dated 4 September 2002, between ABB Financial Services B.V., General Electric Capital Corporation and ABB Ltd. Incorporated by reference to Exhibit 4.5 to the Annual Report on Form 20-F filed by ABB on June 30, 2003.

147

4.5	Amendment Agreement, dated 29 November 2002, between ABB Financial Services B.V., General Electric Capital Corporation and ABB Ltd. Incorporated by reference to Exhibit 4.6 to the Annual Report on Form 20-F filed by ABB on June 30, 2003.
4.6	Stock and Asset Purchase Agreement, dated January 16, 2004, between ABB Handels-und Verwaltungs AG and Laradew Limited. Incorporated by reference to Exhibit 4.6 to the Annual Report on Form 20-F filed by ABB on April 9, 2004.
4.7	Settlement Agreement and Amendment, dated as of February 9, 2005, between ABB Handels-und Verwaltungs AG and Vetco Limited (formerly known as Laradew Limited), relating to the Stock and Asset Purchase Agreement dated as of January 16, 2004, between Handels-und Verwaltungs AG and Laradew Limited. Incorporated by reference to Exhibit 4.8 to the Annual Report on Form 20-F filed by ABB on May 27, 2005.
4.8	Purchase Agreement, dated as of December 8, 2003, between ABB Holding AG, Zurich, and Lagrummet December NR 919 AB (under change of name to “Fund American Holdings AB”). Incorporated by reference to Exhibit 4.7 to the Annual Report on Form 20-F filed by ABB on April 9, 2004.
4.9	Amendment and Acknowledgement, dated April 14, 2004, to the Purchase Agreement, dated as of December 8, 2003, between ABB Holding AG, Zurich, and Lagrummet December NR 919 AB (under change of name to “Fund American Holdings AB”). Incorporated by reference to Exhibit 4.10 to the Annual Report on Form 20-F filed by ABB on May 27, 2005.
4.10	Employment Agreement of Dinesh Paliwal, dated as of February 21, 2003. Incorporated by reference to Exhibit 4.9 to the Annual Report on Form 20-F filed by ABB on June 30, 2003.
4.11	Employment Agreement of Peter Smits, dated November 1, 2001. Incorporated by reference to Exhibit 4.10 to the Annual Report on Form 20-F filed by ABB on June 30, 2003.
4.12	Employment Agreement of Gary Steel, dated August 27, 2002. Incorporated by reference to Exhibit 4.11 to the Annual Report on Form 20-F filed by ABB on June 30, 2003.
4.13	Employment Agreement of Fred Kindle, dated February 21, 2004. Incorporated by reference to Exhibit 4.16 to the Annual Report on Form 20-F filed by ABB on May 27, 2005.
4.14	Employment Agreement of Michel Demaré, dated October 28, 2004. Incorporated by reference to Exhibit 4.17 to the Annual Report on Form 20-F filed by ABB on May 27, 2005.
4.15	Employment Agreement of Ulrich Spiesshofer, dated September 5, 2005.
8.1	Subsidiaries of ABB Ltd as of March 31, 2006.
12.1	Certification of the chief executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
12.2	Certification of the chief financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
13.1	Certification by the 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.*
13.2	Certification by the 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.*
15.1	Consent of Independent Accountants
15.2	Consent of Independent Registered Public Accounting Firm

*This document is being furnished in accordance with SEC Release Nos. 33-8212 and 34-74551.

148

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this report on its behalf.

ABB LTD
By:	/s/ MICHEL DEMARÉ
	Name:	Michel Demaré
	Title:	Executive Vice President and Chief Financial Officer
By:	/s/ RICHARD A. BROWN
	Name:	Richard A. Brown
	Title:	Group Vice President and Assistant General Counsel

Date:  April 19, 2006

149

ABB Ltd
Index to Consolidated Financial Statements and Schedules

Consolidated Financial Statements:
Reports of Independent Registered Public Accounting Firms	F-2
Consolidated Income Statements for the years ended December 31, 2005, 2004 and 2003	F-4
Consolidated Balance Sheets as of December 31, 2005 and 2004	F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2004 and 2003	F-6
Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2005, 2004 and 2003	F-7
Notes to the Consolidated Financial Statements	F-8
Financial Statement Schedule:
Report of Independent Registered Public Accounting Firm	S-1
Schedule II—Valuation and Qualifying Accounts	S-2

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Management Committee
and Stockholders of Jorf Lasfar
Energy Company S.C.A.
B.P. 99 Side Bouzid
El Jadida

We have audited the accompanying balance sheets of Jorf Lasfar Energy Company S.C.A. (the “Company”) as of December 31, 2004 and 2003 and the related statements of income, of stockholders’ equity and of cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Jorf Lasfar Energy Company S.C.A at December 31, 2004 and 2003 and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/ PRICE WATERHOUSE

Casablanca, Morocco,
February 11, 2005

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of ABB Ltd:

We have audited the accompanying consolidated balance sheets of ABB Ltd as of December 31, 2005 and 2004, and the related consolidated income statements, statements of cash flows and statements of changes in stockholders’ equity for each of the three years in the period ended December 31, 2005. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the 2004 and 2003 financial statements of Jorf Lasfar Energy Company, a corporation in which the Company has a 50% interest, (the Company’s equity in Jorf Lasfar Energy Company’s net income is stated at $63 million in 2004 and $60 million in 2003). Those statements were audited by other auditors whose report has been furnished to us. Our opinion, insofar as it relates to amounts included for Jorf Lasfar Energy Company, is based solely on the report of the other auditors.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits and the report of other auditors provide a reasonable basis for our opinion.

In our opinion, based on our audits and the report of other auditors, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of ABB Ltd at December 31, 2005 and 2004, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2005, in conformity with U.S. generally accepted accounting principles.

As discussed in Note 2 to the consolidated financial statements, in 2005 the Company changed its method of accounting for conditional asset retirement obligations.

/s/ ERNST & YOUNG AG

Zurich, Switzerland
March 3, 2006

F-3

ABB Ltd
Consolidated Income Statements
for the years ended December 31, 2005, 2004 and 2003

	Year ended December 31,
	2005			2004			2003
	(U.S. dollars in millions, except per share data)
Sales of products	$	18,737		$	17,309		$	17,337
Sales of services	3,705			3,301			2,995
Total revenues	22,442			20,610			20,332
Cost of products	(14,263		)	(13,365		)	(13,651		)
Cost of services	(2,567		)	(2,316		)	(2,205		)
Total cost of sales	(16,830		)	(15,681		)	(15,856		)
Gross profit	5,612			4,929			4,476
Selling, general and administrative expenses	(3,922		)	(3,822		)	(3,950		)
Other income (expense), net	52			(61		)	(239		)
Earnings before interest and taxes	1,742			1,046			287
Interest and dividend income	157			151			142
Interest and other finance expense	(403		)	(360		)	(544		)
Income (loss) from continuing operations before taxes and minority interest and cumulative effect of accounting change	1,496			837			(115		)
Provision for taxes	(482		)	(331		)	(233		)
Minority interest	(131		)	(102		)	(67		)
Income (loss) from continuing operations before cumulative effect of accounting change	883			404			(415		)
Loss from discontinued operations, net of tax	(143		)	(439		)	(364		)
Income (loss) before cumulative effect of accounting change	740			(35		)	(779		)
Cumulative effect of accounting change, net of tax	(5		)	—			—
Net income (loss)	$	735		$	(35	)	$	(779	)
Basic earnings (loss) per share: Income (loss) from continuing operations before cumulative effect of accounting change	$	0.44		$	0.20		$	(0.34	)
Loss from discontinued operations, net of tax	(0.08		)	(0.22		)	(0.30		)
Cumulative effect of accounting change, net of tax	—			—			—
Net income (loss)	$	0.36		$	(0.02	)	$	(0.64	)
Diluted earnings (loss) per share: Income (loss) from continuing operations before cumulative effect of accounting change	$	0.43		$	0.20		$	(0.34	)
Loss from discontinued operations, net of tax	(0.07		)	(0.22		)	(0.30		)
Cumulative effect of accounting change, net of tax	—			—			—
Net income (loss)	$	0.36		$	(0.02	)	$	(0.64	)

See accompanying notes to the Consolidated Financial Statements.

F-4

ABB Ltd
Consolidated Balance Sheets
at December 31, 2005 and 2004

	December 31,
	2005			2004
	(U.S. dollars in millions, except share data)
Cash and equivalents	$	3,226		$	3,676
Marketable securities and short-term investments	368			524
Receivables, net	6,515			6,284
Inventories, net	3,074			3,178
Prepaid expenses	251			334
Deferred taxes	473			670
Other current assets	189			449
Assets held for sale and in discontinued operations	52			600
Total current assets	14,148			15,715
Financing receivables	645			889
Property, plant and equipment, net	2,565			2,964
Goodwill	2,479			2,602
Other intangible assets, net	349			492
Prepaid pension and other employee benefits	605			549
Investments in equity method companies	618			596
Deferred taxes	628			504
Other non-current assets	239			366
Total assets	$	22,276		$	24,677
Accounts payable, trade	$	3,321		$	4,256
Accounts payable, other	1,172			1,424
Short-term debt and current maturities of long-term debt	169			626
Advances from customers	1,005			929
Deferred taxes	187			200
Provisions and other	3,769			3,666
Accrued expenses	1,909			1,624
Liabilities held for sale and in discontinued operations	74			734
Total current liabilities	11,606			13,459
Long-term debt	3,933			4,717
Pension and other employee benefits	1,233			1,551
Deferred taxes	692			750
Other liabilities	988			1,082
Total liabilities	18,452			21,559
Minority interest	341			294
Stockholders’ equity:
Capital stock and additional paid-in capital	3,121			3,083
Retained earnings	2,460			1,725
Accumulated other comprehensive loss	(1,962		)	(1,846		)
Less: Treasury stock, at cost (11,531,106 and 11,611,529 shares at December 31, 2005 and 2004)	(136		)	(138		)
Total stockholders’ equity	3,483			2,824
Total liabilities and stockholders’ equity	$	22,276		$	24,677

See accompanying notes to the Consolidated Financial Statements.

F-5

ABB Ltd
Consolidated Statements of Cash Flows
for the years ended December 31, 2005, 2004 and 2003

	Year ended December 31,
	2005			2004			2003
	(U.S. dollars in millions)
Operating activities
Net income (loss)	$	735		$	(35	)	$	(779	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	597			633			585
Provisions	496			92			(728		)
Pension and postretirement benefits	(62		)	55			21
Deferred taxes	38			3			47
Net gain from sale of property, plant and equipment	(44		)	(36		)	(26		)
Income from equity accounted companies	(109		)	(87		)	(96		)
Minority interest	131			102			67
Loss on sale of discontinued operations	16			63			38
Other	103			152			440
Changes in operating assets and liabilities:
Marketable securities (trading)	1			43			13
Trade receivables	(892		)	(160		)	85
Inventories	(328		)	(74		)	238
Trade payables	26			(63		)	(381		)
Other assets and liabilities, net	304			214			324
Net cash provided by (used in) operating activities	1,012			902			(152		)
Investing activities
Changes in financing receivables	229			176			390
Purchases of marketable securities and short-term investments (other than trading)	(1,915		)	(2,877		)	(2,781		)
Purchases of property, plant and equipment and intangible assets	(456		)	(543		)	(547		)
Acquisitions of businesses (net of cash acquired)	(27		)	(24		)	(55		)
Proceeds from sales of marketable securities and short-term investments (other than trading)	1,833			2,317			3,049
Proceeds from sales of property, plant and equipment	117			123			155
Proceeds from sales of businesses (net of cash disposed)	(97		)	1,182			543
Net cash provided by (used in) investing activities	(316		)	354			754
Financing activities:
Net changes in borrowings with maturities of 90 days or less	(9		)	(104		)	(99		)
Increases in borrowings.	155			265			1,976
Repayment of borrowings	(978		)	(2,913		)	(2,893		)
Capital and treasury stock transactions	35			(36		)	2,675
Other	(99		)	43			(77		)
Net cash provided by (used in) financing activities	(896		)	(2,745		)	1,582
Effects of exchange rate changes on cash and equivalents	(259		)	74			150
Adjustment for the net change in cash and equivalents in assets held for sale and in discontinued operations	9			308			(80		)
Net change in cash and equivalents—continuing operations	(450		)	(1,107		)	2,254
Cash and equivalents beginning of period	3,676			4,783			2,529
Cash and equivalents end of period	$	3,226		$	3,676		$	4,783
Interest paid	$	332		$	382		$	438
Taxes paid	$	325		$	379		$	238

See accompanying notes to the Consolidated Financial Statements.

F-6

ABB Ltd
Consolidated Statements of Changes in Stockholders’ Equity
For the years ended December 31, 2005, 2004 and 2003

		Accumulated other comprehensive loss
Capital			Unrealized		Unrealized	Total
stock and		Foreign	gain (loss)	Minimum	gain (loss)	accumulated
additional		currency	on available-	pension	of cash	other		Total
paid-in	Retained	translation	for-sale	liability	flow hedge	comprehensive	Treasury	stockholders’
capital	earnings	adjustment	securities	adjustment	derivatives	loss	stock	equity

Balance at January 1, 2003	$	2,027		$	2,539		$	(1,735	)	$	(38	)	$	(156	)	$	44		$	(1,885	)	$	(1,750	)	$	931
Comprehensive loss:
Net loss				(779		)																			(779		)
Foreign currency translation adjustments							25												25						25
Accumulated foreign currency translation adjustments allocated to divestments of businesses							(37		)										(37		)				(37		)
Effect of change in fair value of available-for-sale securities (net of tax, of $18)										65									65						65
Minimum pension liability adjustments (net of tax, of $5)													19						19						19
Change in derivatives qualifying as cash flow hedges (net of tax, of $13)																41			41						41
Total comprehensive loss																									(666		)
Sale of treasury stock	(1,456		)																			1,612			156
Capital stock issued in connection with rights offering	2,487																								$	2,487
Call options	9																								9
Balance at December 31, 2003	$	3,067		$	1,760		$	(1,747	)	$	27		$	(137	)	$	85		$	(1,772	)	$	(138	)	$	2,917
Comprehensive loss:
Net loss				(35		)																			(35		)
Foreign currency translation adjustments							19												19						19
Accumulated foreign currency translation adjustments allocated to divestments of businesses							20												20						20
Effect of change in fair value of available-for-sale securities (net of tax, of $6)										(15		)							(15		)				(15		)
Minimum pension liability adjustments (net of tax, of $37)													(69		)				(69		)				(69		)
Change in derivatives qualifying as cash flow hedges (net of tax, of $16)																(29		)	(29		)				(29		)
Total comprehensive loss																									(109		)
Call options	8																								8
Other	8																								8
Balance at December 31, 2004	$	3,083		$	1,725		$	(1,708	)	$	12		$	(206	)	$	56		$	(1,846	)	$	(138	)	$	2,824
Comprehensive income:
Net income				735																					735
Foreign currency translation adjustments							(52		)										(52		)				(52		)
Accumulated foreign currency translation adjustments allocated to divestments of businesses							4												4						4
Effect of change in fair value of available-for-sale securities (net of tax, of $2)										(11		)							(11		)				(11		)
Minimum pension liability adjustments (net of tax, of $(18))													(8		)				(8		)				(8		)
Change in derivatives qualifying as cash flow hedges (net of tax, of $24)																(49		)	(49		)				(49		)
Total comprehensive income																									619
Employee plan issuances	39																								39
Treasury share transactions	(1		)																			2			1
Balance at December 31, 2005	$	3,121		$	2,460		$	(1,756	)	$	1		$	(214	)	$	7		$	(1,962	)	$	(136	)	$	3,483

See accompanying Notes to the Consolidated Financial Statements.

F-7

Note 1   The company

ABB Ltd and its subsidiaries (collectively, the “Company”) is a leading global company in power and automation technologies that enable utility and industry customers to improve performance while lowering environmental impact. The Company works with customers to engineer and install networks, facilities and plants with particular emphasis on enhancing efficiency and productivity for customers that source, transform, transmit and distribute energy.

Note 2   Significant accounting policies

The following is a summary of significant accounting policies followed in the preparation of these Consolidated Financial Statements.

Basis of presentation

The Consolidated Financial Statements are prepared in accordance with United States generally accepted accounting principles and are presented in United States dollars ($) unless otherwise stated. Par value of capital stock is denominated in Swiss francs.

Scope of consolidation

The Consolidated Financial Statements include the accounts of ABB Ltd and companies which are directly or indirectly controlled. Additionally, the Company consolidates variable interest entities (VIEs) for which it is deemed to be the primary beneficiary. Intercompany accounts and transactions have been eliminated. Investments in joint ventures and affiliated companies in which ABB has the ability to exercise significant influence over operating and financial policies (generally through direct or indirect ownership of 20% to 50% of the voting rights), are recorded in the Consolidated Financial Statements using the equity method of accounting.

Reclassifications

Amounts reported for prior years in the Consolidated Financial Statements and Notes have been reclassified to conform to the current year’s presentation, primarily as a result of the application of Statement of Financial Accounting Standards No. 144 Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS 144), in reflecting assets and liabilities held for sale and in discontinued operations. During 2005, the Company reclassified prior years’ cash flows from financing related derivatives from cash flows provided by (used in) operating activities to cash flows provided by (used in) financing activities to conform to the current year’s presentation.

Operating cycle

A portion of the Company’s operating cycle, including long-term construction activities, exceeds one year. For classification of current assets and liabilities related to these types of construction activities, the Company elected to use the duration of the contracts as its operating cycle.

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make assumptions and estimates that directly affect the amounts reported in the Consolidated Financial Statements. Significant estimates for which changes in the near term are considered reasonably possible and that may have a material impact on the financial statements are addressed in these notes to the Consolidated Financial Statements.

F-8

Cash and equivalents

Cash and equivalents include highly liquid investments with maturities of three months or less at the date of acquisition.

Marketable securities and short-term investments

Debt and equity securities are classified as either trading or available-for-sale at the time of purchase and are carried at fair value. Debt and equity securities that are purchased and held principally for the purpose of sale in the near term are classified as trading securities and unrealized gains and losses thereon are included in the determination of earnings. Unrealized gains and losses on available-for-sale securities are excluded from the determination of earnings and are instead recognized in the accumulated other comprehensive loss component of stockholders’ equity, net of tax (accumulated other comprehensive loss) until realized. Realized gains and losses on available-for-sale securities are computed based upon the historical cost of these securities applied using the specific identification method. Declines in fair values of available-for-sale securities that are other-than-temporary are included in the determination of earnings.

The Company analyzes its available-for-sale securities for impairment during each reporting period to evaluate whether an event or change in circumstances has occurred in that period that may have a significant adverse effect on the fair value of the investment. The Company records an impairment charge through current period earnings and adjusts the cost basis for such other-than-temporary declines in fair value when the fair value is not anticipated to recover above cost within a three-month period after the measurement date unless there are mitigating factors that indicate an impairment charge through earnings may not be required. If an impairment charge is recorded, subsequent recoveries in fair value are not reflected in earnings until sale of the security.

Accounts receivable and allowance for doubtful accounts

Accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in existing accounts receivable. The Company determines the allowance based on historical write-off experience and customer economic data. The Company reviews the allowance for doubtful accounts regularly and past due balances are reviewed individually for collectibility. Account balances are charged off against the allowance when the Company believes that the receivable will not be recovered.

Concentrations of credit risk

The Company sells a broad range of products, systems and services to a wide range of industrial and commercial customers throughout the world. Concentrations of credit risk with respect to trade receivables are limited, as the Company’s customer base is comprised of a large number of individual customers. Ongoing credit evaluations of customers’ financial positions are performed and, generally, no collateral is required. The Company maintains reserves for potential credit losses and such losses, in the aggregate, are in line with the Company’s expectations.

It is the Company’s policy to invest cash in deposits with banks throughout the world with certain minimum credit ratings and in high quality, low risk, liquid investments. The Company actively manages its credit risk by routinely reviewing the creditworthiness of the banks and the investments held, as well as maintaining such investments in deposits or liquid investments. The Company has not incurred significant credit losses related to such investments.

The Company’s exposure to credit risk on derivative financial instruments is the risk that a counterparty will fail to meet its obligations. To reduce this risk, the Company has credit policies that require the establishment and periodic review of credit limits for individual counterparties. In addition, the Company has entered into close-out netting agreements with most counterparties. Close-out netting

F-9

agreements provide for the termination, valuation and net settlement of some or all outstanding transactions between two counterparties on the occurrence of one or more pre-defined trigger events.

Revenue recognition

The Company recognizes revenues when persuasive evidence of an arrangement exists, the price is fixed or determinable, collectibility is reasonably assured and upon transfer of title, including the risks and rewards of ownership to the customer, or upon the rendering of services.

Revenues under long-term contracts are recognized using the percentage-of-completion method of accounting. The Company principally uses the cost-to-cost or delivery events methods to measure progress towards completion on contracts. Management determines the method to be used by type of contract based on its judgment as to which method best measures actual progress towards completion. Revenues under cost-reimbursement contracts are recognized as costs are incurred.

Revenues from service transactions are recognized as services are performed. Service revenues reflect revenues earned from the Company’s activities involved in providing customer services primarily subsequent to the sale and delivery of a product or complete system; such revenues consist principally of maintenance-type contracts.

When multiple elements such as products and services are contained in a single arrangement or in related arrangements with the same customer, the Company allocates revenues to each element based on its relative fair value, provided that such element meets the criteria for treatment as a separate unit of accounting. Revenues from contracts that contain customer acceptance provisions are deferred until customer acceptance occurs, or the Company has demonstrated the customer-specified objective criteria, or the contractual acceptance period has lapsed.

Product-related expenses and contract loss provisions

Anticipated costs for warranties are recorded when revenues are recognized. Losses on product and maintenance-type 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. Shipping and handling costs are recorded as a component of cost of sales.

Securitization of receivables

The Company accounts for the securitization of trade receivables in accordance with Statement of Financial Accounting Standards No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities (SFAS 140). SFAS 140 requires an entity to recognize the financial and servicing assets it controls and the liabilities it has incurred and to derecognize financial assets when control has been surrendered, as evaluated in accordance with the criteria provided in SFAS 140.

The Company accounts for the transfer of its receivables to variable interest entities as a sale of those receivables to the extent that consideration other than beneficial interests in the transferred accounts receivable is received. The Company does not recognize the transfer as a sale unless the receivables have been put presumptively beyond the reach of the Company and its creditors, even in bankruptcy or other receivership. In addition, the variable interest entities must obtain the right to pledge or exchange the transferred receivables, and the Company cannot retain the ability or obligation to repurchase or redeem the transferred receivables.

At the time the receivables are sold, the balances are removed from trade receivables and a retained interest or deferred purchase price component is recorded in other receivables. Retained interests are recorded in a manner similar to trading securities at fair value as allowed under SFAS 140, and cash inflows from reductions of retained interests are recorded as operating cash flows. Costs associated with the sale of receivables are included in the determination of earnings.

F-10

The Company, in its normal course of business, sells receivables outside its securitization programs without recourse (see Note 8). Sales or transfers that do not meet the requirements of SFAS 140 are accounted for as secured borrowings.

Inventories

Inventories are stated at the lower of cost (determined using either the first-in, first-out or the weighted-average cost method) or market. Inventoried costs relating to percentage-of-completion contracts are stated at actual production costs, including overhead incurred to date, reduced by amounts recognized in cost of sales. For inventory relating to long-term contracts, inventoried costs include amounts relating to contracts with long production cycles, a portion of which is not expected to be realized within one year.

Impairment of long-lived assets and accounting for discontinued operations

Long-lived assets that are “held and used” are assessed for impairment when events or circumstances indicate the carrying amount of the asset may not be recoverable. If the asset’s net carrying value exceeds the asset’s net undiscounted cash flows expected to be generated over its remaining useful life including net proceeds expected from disposition of the asset, if any, the carrying amount of the asset is reduced to its estimated fair value, pursuant to the measurement criteria of SFAS 144. In the Consolidated Statements of Cash Flows, the amounts related to businesses with assets and liabilities held for sale and in discontinued operations are not segregated, as permitted by Statement of Financial Accounting Standards No. 95, Statement of Cash Flows.

In accordance with SFAS 144, the Company includes in assets and liabilities held for sale and in discontinued operations the assets and liabilities that meet certain criteria with respect to the Company’s plans for their sale or abandonment. Depreciation and amortization cease when the asset meets the criteria to be classified as held for sale. If (1) a planned or completed disposal involves a component (disposal group) of the Company whose operations and cash flows can be distinguished operationally and for financial reporting purposes; (2) such operations and cash flows will be (or have been) eliminated from the Company’s ongoing operations; and (3) the Company will not have any significant continuing involvement in the disposal group, then the disposal group’s results of operations are presented as discontinued operations for all periods. Results from discontinued operations are recognized in the period in which they occur. Long-lived assets (or groups of assets and related liabilities) classified as held for sale, are measured at the lower of carrying amount or fair value less cost to sell. Assets and liabilities related to sold operations that are retained are recorded in continuing assets and liabilities; future adjustments of such balances are recorded through discontinued operations in the Consolidated Income Statements.

In addition to the interest expense contained within businesses classified as discontinued operations, a portion of the Company’s interest expense is reclassified from interest and other finance expense, net to loss from discontinued operations, net of tax, in accordance with Emerging Issues Task Force No. 87-24 Allocation of Interest to Discontinued Operations, (EITF 87-24). Such amounts were $0 million, $20 million and $33 million in 2005, 2004 and 2003, respectively.

Goodwill and other intangible assets

In accordance with Statement of Financial Accounting Standards No.142, Goodwill and Other Intangible Assets (SFAS 142), goodwill is tested for impairment annually and also upon the occurrence of a triggering event requiring the re-assessment of a business’ carrying value of its goodwill. The Company performs its annual impairment assessment on October 1. A fair value approach is used to identify potential goodwill impairment and, when necessary, measure the amount of impairment. The Company uses a discounted cash flow model to determine the fair value of reporting units, unless there is a readily determinable fair market value.

F-11

The cost of acquired intangible assets is amortized on a straight-line basis over their estimated useful lives, typically ranging from 3 to 10 years. Intangible assets are tested for impairment upon the occurrence of certain triggering events.

Capitalized software costs

Capitalized costs of software for internal use are accounted for in accordance with Statement of Position 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use, and are amortized on a straight-line basis over the estimated useful life of the software, typically ranging from 3 to 5 years. Capitalized costs of a software product to be sold are accounted for in accordance with Statement of Financial Accounting Standards No. 86, Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed, and are carried at the lower of unamortized cost or net realizable value until the product is available for general release to customers, at which time capitalization ceases and costs are amortized on a straight-line basis over the estimated life of the product. The Company expenses costs incurred prior to technological feasibility, and thereafter capitalizes costs incurred in developing or obtaining software for internal use and for software products to be sold.

Property, plant and equipment

Property, plant and equipment is stated at cost, less accumulated depreciation, and is depreciated using the straight-line method over the estimated useful lives of the assets as follows:

Factory and office buildings: 30 to 40 years
Other facilities: 15 years
Machinery and equipment: 3 to 15 years
Furniture and office equipment: generally 3 to 8 years

Derivative financial instruments and hedging activities

The Company uses derivative financial instruments to manage interest rate and currency exposures, and to a lesser extent commodity exposures, arising from its global operating, financing and investing activities. The Company’s policies require that its industrial entities hedge their exposure from firm commitments denominated in foreign currencies, as well as at least fifty percent of the anticipated foreign currency denominated sales volume of standard products over the next twelve months.

The Company accounts for its derivative financial instruments in accordance with Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities, as subsequently amended (SFAS 133). SFAS 133 requires the Company to recognize all derivatives, other than certain derivatives indexed to the Company’s own stock, on the Consolidated Balance Sheets at fair value. Derivatives that are not designated as hedges must be adjusted to fair value through earnings. If the derivatives are designated as a hedge, depending on the nature of the hedge, changes in the fair value of the derivatives will either be offset against the change in fair value of the hedged item through earnings or recognized in accumulated other comprehensive loss until the hedged item is recognized in earnings. The ineffective portion of a derivative’s change in fair value is immediately recognized in earnings consistent with the classification of the hedged item.

Forward foreign exchange contracts are the primary instrument used to manage foreign exchange risk. Where forward foreign exchange contracts are designated as cash flow hedges under SFAS 133, changes in their fair value are recorded in accumulated other comprehensive loss until the hedged item is recognized in earnings. The Company also enters into forward foreign exchange contracts that serve as economic hedges of existing assets and liabilities. These are not designated as accounting hedges under SFAS 133 and, consequently, changes in their fair value are reported in earnings where they offset the translation gain or loss on the foreign currency denominated asset or liability.

F-12

To reduce its interest rate and currency exposure arising from its borrowing activities, the Company uses interest rate and currency swaps. Where interest rate swaps are designated as fair value hedges, the changes in fair value of the swaps are recognized in earnings, as are the changes in the fair value of the underlying liabilities. Where such interest rate swaps do not qualify for the short cut method as defined under SFAS 133, any ineffectiveness is included in earnings.

All other swaps, futures, options and forwards that are designated as effective hedges of specific assets, liabilities or committed or forecasted transactions are recognized in earnings consistent with the effects of the hedged transactions.

If an underlying hedged transaction is terminated early, the hedging derivative financial instrument is treated as if terminated simultaneously, with any gain or loss on termination of the derivative immediately recognized in earnings. Where derivative financial instruments have been designated as hedges of forecasted transactions, and such forecasted transactions become probable of not occurring, hedge accounting ceases and any derivative gain or loss previously included in accumulated other comprehensive loss is reclassified into earnings.

Certain commercial contracts may grant rights to the Company or other counterparties, or contain other provisions considered to be derivatives under SFAS 133. Such embedded derivatives are assessed at inception of the contract and depending on their characteristics accounted for as separate derivative instruments pursuant to SFAS 133.

Sale-leasebacks

The Company periodically enters into transactions accounted for as sale-leasebacks, in which fixed assets, generally real estate and/or equipment, are sold to a third party and then leased for use by the Company. Under certain circumstances, the necessary criteria to recognize a sale of the assets may not occur, and the transaction is reflected as a financing transaction, with the proceeds received from the transaction reflected as a borrowing or as a deposit liability. When the necessary criteria have been met to recognize a sale, gains or losses on the sale of the assets are generally deferred and amortized over the term of the transaction, except in certain limited instances when a portion of the gain or loss may be recognized. The lease of the assets is accounted for as either an operating lease or a capital lease depending upon its specific terms, as required by Statement of Financial Accounting Standards No. 13, Accounting for Leases.

Translation of foreign currencies and foreign exchange transactions

The functional currency for most of the Company’s operations is the applicable local currency. The translation from the applicable functional currencies into the Company’s reporting currency is performed for balance sheet accounts using exchange rates in effect at the balance sheet date, and for income statement accounts using average rates of exchange prevailing during the year. The resulting translation adjustments are excluded from the determination of earnings and are recognized in accumulated other comprehensive loss until the entity is sold, substantially liquidated or evaluated for impairment in anticipation of disposal.

Foreign currency exchange gains and losses, such as those resulting from foreign currency denominated receivables or payables, are included in the determination of earnings, except as they relate to intra-Company loans that are equity-like in nature with no reasonable expectation of repayment, which are recognized in accumulated other comprehensive loss.

In highly inflationary countries, monetary balance sheet positions in local currencies are converted into U.S. dollars at the year-end rate. Non-monetary assets are remeasured using historical U.S. dollar rates. Sales and expenses are converted at the exchange rates prevailing upon the date of the transaction.

F-13

All translation gains and losses resulting from the restatement of balance sheet positions are included in the determination of earnings.

Taxes

The Company uses the asset and liability method to account for deferred taxes. Under this method, deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and the tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. For financial statement purposes, the Company records a deferred tax asset when it determines that it is probable that the deduction will be sustained based upon the deduction’s technical merit. Deferred tax assets are reduced by a valuation allowance to reflect the amount that is more likely than not to be realized.

Generally, deferred taxes are not provided on the unremitted earnings of subsidiaries to the extent it is expected that these earnings are permanently reinvested. Such earnings may become taxable upon the sale or liquidation of these subsidiaries or upon the remittance of dividends. Deferred taxes are provided in situations where the Company’s subsidiaries plan to make future dividend distributions.

The Company operates in numerous tax jurisdictions and, as a result, is regularly subject to audit by tax authorities. The Company provides for tax contingencies on the basis of their technical merits, including relative tax law and OECD guidelines, as well as on items relating to potential audits by tax authorities based upon its best estimate of the facts and circumstances as of each reporting period. Changes in the facts and circumstances could result in a material change to the tax accruals. The Company provides for contingencies whenever it is deemed probable 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.

Research and development

Research and development expense was $679 million, $690 million and $635 million in 2005, 2004 and 2003, respectively. These costs are included in selling, general and administrative expenses.

Earnings per share

Basic earnings (loss) per share is calculated by dividing income (loss) by the weighted-average number of shares outstanding during the period. Diluted earnings (loss) per share is calculated by dividing income (loss) by the weighted-average number of shares outstanding during the period, assuming that all potentially dilutive securities were exercised, if dilutive. Potentially dilutive securities comprise: outstanding written call options; outstanding options granted under the Company’s employee incentive plans; and shares issuable in relation to outstanding convertible bonds. See further discussion related to earnings per share in Note 23 and further discussion of the potentially dilutive securities in Notes 14 and 21.

Stock-based compensation

The Company has certain employee incentive plans under which it offers stock-based securities to employees. The plans are described more fully in Note 21. The Company accounts for such stock-based securities using the intrinsic value method of APB Opinion No. 25 Accounting for Stock Issued to Employees (APB 25), as permitted by Statement of Financial Accounting Standards No. 123 Accounting for Stock Based Compensation (SFAS 123). Warrants granted under the Company’s management incentive plan and options granted under the Company’s employee share acquisition plan were issued with exercise prices greater than or equal to the market prices of the stock on the dates of grant. Accordingly, the Company recorded no compensation expense related to these securities, except in circumstances when a participant ceased to be employed by a consolidated subsidiary, such as after a divestment by the Company. The

F-14

following table illustrates the effect on net income (loss) and on income (loss) per share (see Note 23) if the Company had applied the fair value recognition provisions of SFAS 123 to stock-based employee compensation. Fair value of these securities offered to employees was determined on the date of grant by using a dynamic proprietary option-pricing model (see Note 21).

	Year ended December 31,
	2005			2004			2003
Net income (loss), as reported	$	735		$	(35	)	$	(779	)
Add: Stock-based employee compensation expense included in reported net income (loss), net of related tax effects	31			3			1
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects	(39		)	(11		)	(12		)
Pro forma net income (loss)	$	727		$	(43	)	$	(790	)
Income (loss) per share:
Basic—as reported	$	0.36		$	(0.02	)	$	(0.64	)
Basic—pro forma	$	0.36		$	(0.02	)	$	(0.65	)
Diluted—as reported	$	0.36		$	(0.02	)	$	(0.64	)
Diluted—pro forma	$	0.35		$	(0.02	)	$	(0.65	)

New accounting pronouncements

In November 2004, the Financial Accounting Standards Board issued Statement No.151, Inventory Costs—an amendment of ARB No. 43, Chapter 4 (SFAS 151). SFAS 151 amends Accounting Research Bulletin 43, Chapter 4: Inventory Pricing, to clarify that abnormal amounts of idle facility expense, freight, handling costs, and wasted materials (spoilage) should be recognized as current-period charges. In addition, this statement requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. The Company implemented SFAS 151 in the first quarter of 2006, and does not expect the adoption of SFAS 151 to have a material impact on the Company’s financial position or results of operations.

In December 2004, the Financial Accounting Standards Board issued Statement No.123(R) Share-Based Payment (SFAS 123R), which replaces SFAS 123 and APB 25 and requires the Company to measure compensation cost for all share-based payments at fair value. On April 14, 2005, the U.S. Securities and Exchange Commission (SEC) announced the adoption of a new rule that amends the implementation dates for SFAS 123R. As a result of this announcement, the Company adopted SFAS 123R as of January 1, 2006. The Company will recognize share-based employee compensation cost from January 1, 2006, as if the fair value based accounting method had been used to account for all employee awards granted, modified, or settled after the effective date and for any awards that were not fully vested as of the effective date. Based on currently existing share-based compensation plans, the Company does not expect the adoption of SFAS 123R to have a material impact on its financial position or results of operations.

In March 2005, the Financial Accounting Standards Board issued Interpretation No. 47 Accounting for Conditional Asset Retirement Obligations—an interpretation of FASB Statement No. 143 (FIN 47). FIN 47 clarifies that the term conditional asset retirement obligation as used in Financial Accounting Standards Board Statement No. 143, Accounting for Asset Retirement Obligations, refers to a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the Company. Accordingly, pursuant to FIN 47 the Company was required to recognize a liability for the fair value of a conditional asset retirement obligation when the fair value of the liability could be reasonably estimated. The Company implemented FIN 47 in the fourth quarter of 2005 and presented the change as a cumulative effect of an accounting change of $5 million, net of tax in the Consolidated Income Statement.

F-15

At the June 15—16, 2005, Emerging Issues Task Force (EITF) meeting, the EITF reached a consensus on Issue No. 05-5 Accounting for Early Retirement or Postemployment Programs with Specific Features (Such As Terms Specified in Altersteilzeit Early Retirement Arrangements) (EITF 05-5), that the Financial Accounting Standards Board ratified on June 29, 2005. Altersteilzeit is a term which describes an early retirement program designed to create an incentive for employees, within a certain age group, to leave their employers before the legal retirement age. The issue addresses how to account for salary and bonus components as well as potential subsidies earned from governmental entities. EITF 05-5 is effective for the Company beginning with the first quarter of 2006. The impact of implementation will not have a financial statement impact as the Company had been calculating the liability consistent with the requirements of EITF 05-5.

Note 3Held for sale and discontinued operations

The Company’s financial statements for all periods presented were significantly impacted by activities relating to the divestitures of a number of our businesses. The following planned or completed disposals met the SFAS 144 criteria for held for sale and/or discontinued operations in the reporting periods.

Structured Finance

In 2002, the Company completed the sale of most of its Structured Finance business to General Electric Capital Corporation (GE) for approximately $2.0 billion. Pursuant to the sale and purchase agreement, the Company provided GE with cash collateralized letters of credit as security for certain performance-related obligations retained by the Company, which amount to $15 million at December 31, 2005.

As a continuation of the Company’s divestment of its Structured Finance business, the Company completed the sale of ABB Export Bank in December 2003 for approximately $50 million. ABB Export Bank had revenues of $9 million and a net loss of $9 million in 2003.

In November 2005, the Company completed the sale of its remaining Structured Finance business and divested the Lease portfolio business in Finland. With lease and loan financial receivables of approximately $300 million, the Lease portfolio business was the last remaining major entity of the Structured Finance business. In 2005, the Company recorded a loss of $28 million in loss from discontinued operations, net of tax, principally related to the loss on sale of the business.

Upstream Oil, Gas and Petrochemicals business

In 2004, the Company sold its Upstream Oil, Gas and Petrochemicals business for an initial purchase price of $925 million. Net cash proceeds from the sale were approximately $800 million, reflecting the initial sales price adjusted for unfunded pension liabilities and changes in net working capital. The Upstream Oil, Gas and Petrochemicals business had revenues of $855 million and $1,499 million in 2004 and 2003, respectively, and net losses of $70 million and $44 million in 2004 and 2003, respectively.

Wind Energy business

In 2003, the Company sold a part of its Wind Energy business in Germany for proceeds of approximately $35 million. The Wind Energy business had revenues of $0 million and $16 million and net losses of $25 million and $42 million in 2004 and 2003, respectively. During the fourth quarter of 2005, the Company determined it no longer met the criteria required to classify the remaining Wind Energy business in discontinued operations. Therefore, as of the fourth quarter of 2005, the results of operations of the Wind Energy business were reclassified to continuing operations for all periods presented.

F-16

Reinsurance business

In 2004, the Company completed the sale of its Reinsurance business, receiving gross cash proceeds of $415 million and net cash proceeds of approximately $280 million. The Company recorded revenues of $139 million and $782 million and losses totaling $41 million and $97 million in loss from discontinued operations, in 2004 and 2003, respectively, related to the Reinsurance business. The 2003 net loss of $97 million includes a $154 million impairment charge and an allocation of interest of $15 million in accordance with EITF 87-24, offset by income from operations of approximately $72 million.

Power Lines business

During 2004, the Company reclassified part of its Power Lines business, part of the Power Technologies division, to discontinued operations. The businesses that were reclassified are the Power Lines businesses in Nigeria, Italy and Germany whose sales were completed in 2005. These reclassified businesses had revenues of $27 million, $117 million and $187 million and net losses recorded in discontinued operations of $12 million, $75 million and $10 million for the years ended December 31, 2005, 2004, and 2003, respectively.

During the fourth quarter of 2005, the Company reclassified the remaining Power Lines businesses in Brazil, Mexico, Venezuela and South Africa to discontinued operations, on the basis of management’s plan to sell the remaining Power Lines businesses. The remaining Power Lines businesses had revenues of $102 million, $79 million and $70 million for the years ended December 31, 2005, 2004 and 2003, respectively. Net income reported for 2005 and 2004 was $3 million and $3 million, respectively, whereas for 2003 these businesses had a net loss of $4 million recorded in loss from discontinued operations.

Foundry business

During 2004, the Company reclassified its Foundry business, part of the Automation Technologies division, to discontinued operations. In 2005, the Company completed the sale of its Foundry business. The Foundry business had revenues of $41 million, $41 million and $45 million and net losses of $1 million, $17 million and $0 million in 2005, 2004 and 2003, respectively.

Control Valves

In 2005, the Company sold its Control Valves business in Japan which was part of the Automation Technologies division. The Control Valves business had revenues of $26 million, $31 million and $28 million and net income of $15 million, $3 million and $2 million in 2005, 2004 and 2003, respectively. The net income recorded in 2005 includes $14 million related to the gain on sale of the Control Valves business.

Other

In addition, the Company has also reflected other minor operations as held for sale and in discontinued operations, as appropriate.

Loss from discontinued operations, net of tax, also includes costs related to the Company’s potential asbestos obligations of approximately $133 million, $262 million and $142 million in 2005, 2004, and 2003, respectively (see Note 17).

F-17

Operating results of the discontinued businesses are summarized as follows:

	Year ended December 31,
	2005			2004			2003
Revenues	$	200		$	1,276		$	2,735
Costs and expenses, finance loss	(333		)	(1,656		)	(3,002		)
Operating loss before taxes	(133		)	(380		)	(267		)
Tax benefit (expense)	6			4			(59		)
Operating loss from discontinued operations	(127		)	(376		)	(326		)
Loss from dispositions	(16		)	(63		)	(38		)
Loss from discontinued operations, net of tax	$	(143	)	$	(439	)	$	(364	)

The major components of assets and liabilities held for sale and in discontinued operations in our Consolidated Balance Sheet are summarized as follows:

	December 31,
	2005			2004
Cash and equivalents, marketable securities and short-term investments		$	—	$	9
Receivables, net		20		106
Inventories, net		23		43
Prepaid expenses and other current assets		—		17
Financing receivables, non-current		—		345
Property, plant and equipment, net		8		69
Other non current assets		1		11
Assets held for sale and in discontinued operations		$	52	$	600
Accounts payable		$	19	$	79
Short-term borrowings and accrued liabilities		33		149
Long-term borrowings		—		203
Pensions and other employee benefits		22		82
Other liabilities, non-current		—		221
Liabilities held for sale and in discontinued operations		$	74	$	734

Note 4   Business combinations and other divestments

Acquisitions and investments

During 2005, 2004, and 2003, the Company invested $27 million, $24 million and $55 million, in 22, 24 and 24 new businesses, joint ventures or affiliated companies, respectively. The aggregate excess of the purchase price over the fair value of the net assets acquired of new businesses totaled $6 million, $15 million and $2 million, in 2005, 2004 and 2003, respectively, and has been recorded as goodwill. The Company has not presented the pro forma results of operations of the acquired businesses as the results are not material to the Company’s consolidated financial statements.

Other divestitures

In addition to the sold businesses described under discontinued operations, the Company periodically divests businesses and investments not considered by management to be aligned with its focus on Power Technologies and Automation Technologies as described in Note 25 and which do not meet the requirements of SFAS 144. The results of operations of these divested businesses are included in the Company’s Consolidated Income Statements in the respective line items of income from continuing operations, through the date of disposition.

F-18

Divestment of Building Systems businesses

In 2002, the Company decided to dispose of its Building Systems businesses. The disposal of the Building Systems businesses contemplated that the Company would retain an involvement in the disposed operations through a combination of technology license agreements, supplier relationships, retention of certain orders and participation on the Board of Directors of some of the disposed of companies. As a result of these factors, the Company concluded that classification of the Building Systems businesses as discontinued operations in accordance with SFAS 144 was not appropriate.

During 2005, 2004 and 2003, the Company disposed of numerous Building Systems businesses and recorded gains on disposal of $1 million, $12 million and $83 million, respectively, which are included in other income (expense), net. Proceeds received from the divestment of the Building Systems businesses were $0 million, $39 million and $234 million in 2005, 2004 and 2003, respectively.

Other divestitures

In 2003, the Company sold its interests in certain equity investees in Australia for approximately $90 million, resulting in a gain on disposal of $28 million recorded in other income (expense), net. In 2003, the Company also sold its entire 35 percent interest in Swedish Export Credit Corporation to the Government of Sweden for 1,240 million Swedish krona ($159 million), resulting in net proceeds of approximately $149 million and a loss on disposal of $80 million recorded in other income (expense), net.

In 2004, the Company sold a business in Sweden, formerly part of the automation technologies division, for $11 million, resulting in a gain on disposal of $7 million recorded in other income (expense), net. In 2004, the Company also sold its entire 15.7 percent interest in IXYS Corporation for approximately $42 million and recorded a gain on disposal of $20 million in other income (expense), net.

During 2005, 2004 and 2003, the Company sold several operating units and investments, excluding the divestments disclosed above, for total proceeds of $24 million, $39 million and $31 million, respectively, and recognized net gains on disposal of $20 million, $13 million and $12 million, respectively, which are included in other income (expense), net. Revenues and net income from these businesses and investments were not significant in 2005, 2004 and 2003.

Note 5   Marketable securities and short-term investments

Marketable securities and short-term investments consist of the following:

	December 31,
	2005		2004
Available-for-sale securities	$	276	$	263
Time deposits	39		247
Securities serving as hedges of the Company’s management incentive plan (see Note 21)	53		14
Total	$	368	$	524

To hedge its exposure to fluctuations in fair value of the Company’s warrant appreciation rights (WARs) issued under the Company’s management incentive plan, the Company purchases cash-settled call options, which entitle the Company to receive amounts equivalent to its obligations under the outstanding WARs. In accordance with Emerging Issues Task Force No. 00-19 Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock, (EITF 00-19), the cash-settled call options have been recorded as assets measured at fair value, with subsequent changes in fair value recorded through earnings as an offset to the compensation expense recorded in connection with the WARs.

F-19

Available-for-sale securities classified as marketable securities consist of the following:

	December 31,
	2005					2004
	Cost		Fair value			Cost		Fair value
Equity securities	$	80		$	84	$	55		$	63
Debt securities:
U.S. government obligations	64			63		99			99
European government obligations	—			—		3			3
Corporate	98			96		59			59
Other	34			33		33			39
Total debt securities	196			192		194			200
Total	$	276		$	276	$	249		$	263

At December 31, 2005 and 2004, unrealized gains and losses on available-for-sale securities were not significant.

At December 31, 2005, contractual maturities of the above available-for-sale debt securities consist of the following:

	Cost		Fair value
Less than one year	$	—		$	—
One to five years	116			113
Six to ten years	52			51
Due after ten years	28			28
Total	$	196		$	192

Gross realized gains on available-for-sale securities were $18 million, $117 million and $8 million in 2005, 2004 and 2003, respectively. Gross realized losses on available-for-sale securities were $34 million, $5 million and $2 million in 2005, 2004 and 2003, respectively. Additionally, in 2003, the Company recorded an impairment charge of $36 million, in interest and other finance expense, related to available-for-sale securities. In 2003, the Company also realized and recorded, in interest and other finance expense, a loss of $40 million on the sale of available-for-sale securities in a strategic investment.

Gross unrealized losses of those available for sale securities that have been in a continuous unrealized loss position were not significant at December 31, 2005 and 2004.

At December 31, 2005 and 2004, the Company pledged $91 million and $51 million, respectively, of marketable securities as collateral for issued letters of credit and other security arrangements.

Note 6   Financial instruments

Cash flow hedges

The Company enters into forward foreign exchange contracts to manage the foreign exchange risk of its operations. To a lesser extent, the Company also uses commodity contracts to manage its commodity risks. Where such instruments are designated and qualify as cash flow hedges, the changes in their fair value are recorded in accumulated other comprehensive loss, until the hedged item is recognized in earnings. At such time, the respective amount in accumulated other comprehensive loss is released to earnings and is shown in either revenues or cost of sales consistent with the classification of the earnings impact of the underlying transaction being hedged.

The amount of derivative financial instrument net gains or losses reclassified from accumulated other comprehensive loss to earnings was a net gain of $27 million, $31 million and $58 million in 2005, 2004 and 2003, respectively. The $31 million in 2004 excludes the $14 million loss described below. It is anticipated that during 2006, the amount included in accumulated other comprehensive loss at December 31, 2005, that will be reclassified to earnings is not significant. Derivative financial instrument gains and losses reclassified to earnings offset the losses and gains on the items being hedged.

F-20

While the Company’s cash flow hedges are primarily hedges of exposures over the next twelve months, the amount included in accumulated other comprehensive loss at December 31, 2005, includes hedges of certain exposures maturing up to 2009.

During 2004, the Company reclassified losses of $14 million from accumulated other comprehensive loss to earnings as a result of the discontinuance of certain cash flow hedges as it became probable that the original forecasted transactions related to these hedges would not occur within the forecasted time period.

Fair value hedges

To reduce its interest rate and foreign currency exposures arising primarily from its borrowing activities, the Company uses interest rate and cross-currency swaps. Where such instruments are designated as fair value hedges, the changes in fair value of these instruments, as well as the changes in fair value of the underlying liabilities, are recorded as offsetting gains and losses in the determination of earnings. The hedge ineffectiveness in 2005, 2004 and 2003, resulted in a loss of $16 million and gains of $11 million and $11 million, respectively.

Disclosure about fair values of financial instruments

The Company uses the following methods and assumptions in estimating fair values for financial instruments:

Cash and equivalents, receivables, accounts payable, short-term debt and current maturities of long-term debt:   The carrying amounts approximate the fair values as the items are short-term in nature.

Marketable securities and short-term investments:   Fair values of marketable securities are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments. The carrying amounts of short-term investments approximate the fair values.

Financing receivables and loans (non-current portion):   Fair values are determined using a discounted cash flow methodology based upon loan rates of similar instruments. The carrying values and estimated fair values of long-term loans granted at December 31, 2005, were $201 million and $201 million, respectively, and at December 31, 2004, were $276 million and $276 million, respectively.

Long-term debt (non-current portion):   Fair values of public bond issues are based on quoted market prices. The fair values of other debt are based on the present value of future cash flows discounted at estimated borrowing rates for similar debt instruments, or in the case of private placement bond or note issuances, using the relevant borrowing rates derived from interest rate swap curves. The carrying values and estimated fair values of long-term borrowings at December 31, 2005, were $3,933 million and $4,710 million, respectively, and at December 31, 2004, were $4,717 million and $5,223 million, respectively.

Derivative financial instruments:   Fair values are the amounts by which the contracts could be settled. These fair values are estimated by using a discounted cash flow methodology based on available market data, option pricing models or by obtaining quotes from brokers. At December 31, 2005 and 2004, the carrying values equal fair values. Current derivative assets are recorded in other current assets, and non-current derivative assets are recorded in other non-current assets. Current derivative liabilities are recorded in provisions and other, and non-current derivative liabilities are recorded in other liabilities. The fair values are:

	December 31,
	2005		2004
Derivative assets, current	$	156	$	369
Derivative assets, non-current	162		251
Total	$	318	$	620
Derivative liabilities, current	$	138	$	324
Derivative liabilities, non-current	63		53
Total	$	201	$	377

F-21

Note 7Receivables, net

Receivables, net consist of the following:

	December 31,
	2005			2004
Trade receivables	$	4,548		$	3,993
Other receivables	967			1,264
Allowance for doubtful accounts	(279		)	(309		)
	5,236			4,948
Unbilled receivables, net:
Costs and estimated profits in excess of billings	2,227			2,257
Advance payments received	(948		)	(921		)
	1,279			1,336
Total	$	6,515		$	6,284

Trade receivables include contractual retention amounts billed to customers of $115 million and $124 million at December 31, 2005 and 2004, respectively. Management expects the majority of related contracts will be completed and substantially all of the billed amounts retained by the customer will be collected within one year of the respective balance sheet date. Other receivables consist of value added tax, claims, employee and customer related advances, the current portion of direct finance and sales-type leases and other non-trade receivables, including the retained interests on sold receivables under the Company’s securitization programs.

Costs and estimated profits in excess of billings represent sales earned and recognized under the percentage-of-completion method. Amounts are expected to be collected within one year of the respective balance sheet date.

Note 8Securitization and variable interest entities

Securitization

During 2005 and 2004, the Company sold trade receivables to VIEs, unrelated to the Company, in revolving-period securitization programs. During 2005, the Company re-assessed its need for these securitization programs, terminating one program and reducing the size of the other program. At December 31, 2005, the remaining securitization program is with a VIE that is not required to be consolidated in accordance with Financial Accounting Standards Board Interpretation No. 46 (revised) Consolidation of Variable Interest Entities: FIN 46(R).

The Company retains servicing responsibility relating to the sold receivables. Solely for the purpose of credit enhancement from the perspective of the purchasing entity, the Company retains an interest in the sold receivables (retained interests). These retained interests are initially measured at estimated fair values, which the Company believes approximate historical carrying values, and are subsequently measured based on a periodic evaluation of collections and delinquencies.

F-22

Given the short-term, lower-risk nature of the assets securitized, market movements in interest rates would not significantly impact the carrying value of the Company’s retained interests. Similarly, while an adverse movement in foreign currency rates could have an impact on the carrying value of these retained interests, as the retained interests are denominated in the original currencies underlying the sold receivables, the impact on earnings has historically not been significant due to the short-term nature of the receivables and economic hedges in place relating to foreign currency movement risk.

The Company routinely evaluates its portfolio of trade receivables for risk of non-collection and records an allowance for doubtful debts to reflect the carrying value of its trade receivables at estimated net realizable value. Pursuant to the requirements of the revolving-period securitization program through which the Company securitizes certain of its trade receivables, the Company effectively bears the risk of potential delinquency or default associated with trade receivables sold or interests retained. At December 31, 2005 and 2004, the fair value of the retained interests was approximately $185 million and $349 million, respectively.

In accordance with SFAS 140, the Company has not recorded a servicing asset or liability as management believes it is not practicable to estimate this value given that verifiable data as to the fair value of the compensation and/or cost related to servicing the types of the assets sold is not readily obtainable nor reliably estimable in the geographic market in which the entities selling receivables operate.

During 2005, 2004 and 2003, the following cash flows were received from and paid to VIEs:

	December 31,
	2005			2004			2003
Gross trade receivables sold to VIEs ($505)*	$	4,925		$	5,846		$	5,661
Collections made on behalf of and paid to VIEs ($(696))*	(5,489		)	(5,713		)	(5,883		)
Purchaser, liquidity and program fees ($(2))*	(18		)	(20		)	(21		)
Decrease in retained interests ($117)*	178			17			124
Net cash received from (paid to) VIEs during the year ($(76))*	$	(404	)	$	130		$	(119	)

*Related to assets held for sale and in discontinued operations for 2003. Amounts related to assets held for sale and in discontinued operations were not significant in 2005 or 2004.

Net cash settlements on the remaining program take place twice per month.

The Company records a loss on sale at the time of sale of the receivables and subsequently records purchaser, liquidity and program fees. The total cost of $18 million, $20 million and $21 million in 2005, 2004 and 2003, respectively, related to the securitization of trade receivables, is included in interest and other finance expense.

The following table reconciles total gross receivables to the amounts in the Consolidated Balance Sheet after the effects of securitization at December 31, 2005 and 2004:

	December 31,
	2005			2004
Total trade receivables	$	4,952		$	5,132
Portion derecognized	(193		)	(710		)
Retained interests included in other receivables	(195		)	(373		)
Trade receivables	4,564			4,049
Less: Trade receivables included in assets held for sale and in discontinued operations	(16		)	(56		)
Trade receivables—continuing operations	$	4,548		$	3,993

F-23

At December 31, 2005 and 2004, of the gross trade receivables sold, the total trade receivables for which cash has not been collected at those dates amounted to $388 million and $1,083 million, respectively. At December 31, 2005 and 2004, an amount of $41 million and $54 million, respectively, was more than 90 days past due which is considered delinquent pursuant to the terms of the programs.

In addition, the Company transfers receivables outside of the above described securitization programs. These transfers were sales, made without recourse, directly to banks and/or sales pursuant to factoring or similar type arrangements. Total sold receivables included in these transactions during 2005 and 2004 were approximately $530 million and $902 million, respectively, of which sales of $0 million and $159 million in 2005 and 2004, respectively, related to assets held for sale and in discontinued operations. During 2005 and 2004, the related costs, including the associated gains and losses, were $5 million and $10 million, respectively, of which costs of $0 million and $1 million in 2005 and 2004, respectively, related to assets held for sale and in discontinued operations.

Variable interest entities

The following VIE is consolidated, as the Company is the primary beneficiary as defined by FIN 46(R).

In March 2003, the Company sold its aircraft-leasing portfolio in Sweden to a third party. Subsequent to divestment, the Company continued its involvement in this business by providing significant financial support in the form of mezzanine and subordinated financing of approximately $90 million to the VIE formed by the buyer upon acquisition, exclusively for the purpose of servicing the aircraft leasing portfolio. As the primary beneficiary of the VIE, the Company retained approximately $55 million of assets and acquired approximately $9 million of third party long-term borrowings provided to the VIE at December 31, 2005. All of the VIE’s assets serve as collateral for the senior debt provided by third parties. The Company has no ownership interest and there is no recourse to the general credit of the Company.

The following VIEs are not consolidated, as the Company is not the primary beneficiary as defined by FIN 46(R).

The Company maintains a combined equity and financing interest of approximately $85 million in two VIEs, that are accounted for using the equity method of accounting, and were established as consortiums to develop power plants in various countries. The Company’s involvement with these VIEs began between 1995 and 2000 at the dates of inception of the VIEs. The purpose of the VIEs is to contract the engineering, procurement, commissioning and financing of the power plants. At and for the year ended December 31, 2005, these VIEs have combined total assets of approximately $783 million and reported combined total revenues and earnings before interest and taxes of $136 million and $5 million, respectively. The exposure to loss as a result of involvement with the VIEs is limited to the Company’s combined equity and financing interests.

F-24

Note 9   Inventories, net

Inventories, net, including inventories related to long-term contracts, consist of the following:

	December 31,
	2005			2004
Commercial inventories, net:
Raw materials	$	1,186		$	1,246
Work in process	1,258			1,205
Finished goods	449			394
	2,893			2,845
Contract inventories, net:
Inventoried costs	540			637
Advance payments received related to contracts	(359		)	(304		)
	181			333
Total	$	3,074		$	3,178

Note 10Financing receivables, net

Financing receivables consist of the following:

	December 31,
	2005		2004
Loans receivable	$	201	$	276
Pledged financial assets	309		314
Finance leases	22		79
Other	113		220
Total	$	645	$	889

Loans receivable primarily represent financing arrangements provided to customers related to products manufactured by the Company.

The Company entered into tax-advantaged leasing transactions with U.S. investors prior to 1999. The prepaid rents relating to these transactions are reflected as pledged financial assets, with an offsetting non-current deposit liability, which is included in other liabilities (see Note 19). Net gains on these transactions are being recognized over the lease terms.

Note 11   Property, plant and equipment, net

Property, plant and equipment, net consist of the following:

	December 31,
	2005			2004
Land and buildings	$	2,298		$	2,662
Machinery and equipment	4,383			4,911
Construction in progress	132			122
	6,813			7,695
Accumulated depreciation	(4,248		)	(4,731		)
Total	$	2,565		$	2,964

In 2005, 2004 and 2003, depreciation expense was $413 million, $429 million and $428 million, respectively.

F-25

Note 12   Goodwill and other intangible assets

The changes in the carrying amount of goodwill for the year ended December 31, 2005, are as follows:

	Automation				Power				Non-core				Corporate/
	Technologies				Technologies				activities				Other				Total
Balance at January 1, 2005		$	1,795			$	561			$	225			$	21		$	2,602
Goodwill acquired during the year		6				—				—				—			6
Other		—				(3		)		(2		)		—			(5		)
Foreign currency translation		(93		)		(11		)		(19		)		(1		)	(124		)
Balance at December 31, 2005		$	1,708			$	547			$	204			$	20		$	2,479

The changes in the carrying amount of goodwill for the year ended December 31, 2004, are as follows:

	Automation				Power				Non-core				Corporate/
	Technologies				Technologies				activities				Other				Total
Balance at January 1, 2004		$	1,816			$	439			$	201			$	72		$	2,528
Goodwill acquired during the year		15				—				—				—			15
Goodwill written off related to sale of businesses		(3		)		(2		)		(4		)		(12		)	(21		)
Other		—				(4		)		10				—			6
Reallocations		(86		)		116				9				(39		)	—
Foreign currency translation		53				12				9				—			74
Balance at December 31, 2004		$	1,795			$	561			$	225			$	21		$	2,602

The reallocations during 2004 were principally due to the reorganization of the Substation Automation business from the Automation Technologies division to the Power Technologies division. The goodwill reallocated for the Substation Automation business was $107 million and was calculated on the basis of relative fair value. During 2004, the Company also reallocated goodwill from Corporate/Other to the Automation Technologies and Power Technologies division as the expected benefit of such goodwill resides in these divisions. At December 31, 2005 and 2004, the $204 million and $225 million of goodwill, respectively, in Non-core activities principally related to the Company’s remaining Oil, Gas and Petrochemicals business.

Other intangible assets consist of the following:

	December 31,
	2005										2004
	Gross carrying			Accumulated				Net carrying			Gross carrying			Accumulated				Net carrying
	amount			amortization				amount			amount			amortization				amount
Capitalized software for internal use		$	495		$	(404	)		$	91		$	580		$	(450	)		$	130
Capitalized software for sale		208			(110		)		98			237			(87		)		150
Other intangible assets		549			(389		)		160			595			(383		)		212
Total		$	1,252		$	(903	)		$	349		$	1,412		$	(920	)		$	492

Amortization expense of capitalized software for internal use for 2005 and 2004, recorded in selling, general and administrative expenses, amounted to $62 million and $111 million, respectively. Amortization expense of capitalized software for sale for 2005 and 2004, recorded in cost of sales, amounted to $45 million and $42 million, respectively. Amortization expense of other intangible assets for 2005 and 2004, recorded in other income (expense), net amounted to $53 million and $59 million, respectively.

F-26

The Company recorded impairment charges to intangible assets of $4 million, $3 million and $11 million, in 2005, 2004 and 2003, respectively. These charges are included in other income (expense), net, in the Consolidated Income Statement.

Other intangible assets primarily include intangibles created through acquisitions, such as trademarks and patents.

Amortization expense of other intangible assets is estimated to be as follows:

2006	$	113
2007	$	97
2008	$	79
2009	$	19
2010	$	8
Thereafter	$	31
Total	$	347

At December 31, 2005 and 2004, the Company maintained $2 million and $11 million, respectively, related to intangible pension assets not subject to amortization (see Note 20).

For the years ended December 31, 2005 and 2004, the Company capitalized intangible assets of $55 million ($30 million, $17 million and $8 million of software for internal use, software for sale and other intangible assets, respectively) and $75 million ($29 million, $36 million and $10 million of software for internal use, software for sale and other intangible assets, respectively), respectively. For items capitalized in 2005 and 2004, amortization expense is calculated using an estimated useful life of 4 years for capitalized software and 5 years for other intangible assets.

Note 13Investments in equity method accounted companies

The Company recorded earnings of $109 million, $87 million and $96 million in 2005, 2004 and 2003, respectively, in other income (expense), net, representing the Company’s share of the pre-tax earnings of investees accounted for under the equity method of accounting. The principal company accounted for using the equity method of accounting is: Jorf Lasfar Energy Company S.C.A. (JLEC), a power plant based in Morocco, of which the Company owns 50 percent.

							The Company’s share of the pre-tax earnings
	Investment balance						of equity-accounted investees
	2005			2004			2005				2004				2003
JLEC		$	364		$	356		$	62			$	68			$	62
Other		254			240			47				19				34
Total		$	618		$	596		$	109			$	87			$	96
Less: Current income tax expense								(16		)		(8		)		(7		)
The Company’s share of earnings of equity-accounted investees								$	93			$	79			$	89

F-27

The following table represents selected financial information for JLEC and not the Company’s share in this equity accounted company.

	2005		2004		2003
Total current assets	$	264	$	296	$	273
Total non-current assets	$	1,037	$	1,147	$	1,162
Total current liabilities	$	241	$	254	$	310
Total non-current liabilities	$	441	$	572	$	612
Total shareholders’ equity	$	619	$	617	$	513
Revenues	$	509	$	462	$	369
Income before taxes	$	127	$	133	$	122
Net income	$	112	$	125	$	120

As security for repayment by JLEC of certain of its loans, the Company, JLEC and the other 50 percent shareholder in JLEC have entered into various pledge agreements with several banks and other secured parties. The Company has pledged all of its shares, claims, rights and interest in JLEC in accordance with the pledge agreements. Such security shall continue in effect until the repayment in full of all outstanding principal and interest and other fees, which is scheduled to occur in February 2013.

The Company has entered into other similar pledge agreements for certain other equity accounted for companies. The Company has also granted lines of credit and has committed to provide guarantees for certain equity accounted companies. At December 31, 2005, the total unused lines of credit amounted to $74 million and ABB has issued $25 million of capital commitment guarantees on behalf of equity accounted companies.

The Company’s 2005 Consolidated Financial Statements include the following aggregate amounts related to transactions with equity accounted companies:

	2005			2004
Revenues		$	63		$	57
Receivables		$	17		$	11
Other current assets		$	2		$	13
Financing receivables, non-current		$	53		$	45
Current liabilities		$	—		$	2
Short-term debt and non-current liabilities		$	2		$	22

Note   14 Debt

The Company’s total debt at December 31, 2005 and 2004, amounted to $4,102 million and $5,343 million, respectively.

Short-term debt

The Company’s short-term debt consists of the following:

	December 31,
	2005		2004
Short-term debt (weighted-average interest rate of 6.5% and 6.5%)	$	142	$	186
Current portion of long-term debt (weighted-average interest rate of 3.9% and 3.9%)	27		440
Total	$	169	$	626

F-28

Short-term debt primarily represents short-term loans from various banks.

On July 4, 2005, the Company signed a new five-year, $2 billion multicurrency revolving credit facility and canceled the three-year $1 billion credit facility that was due to expire in November 2006. As a result of canceling the $1 billion facility prior to expiry, the Company recorded in July 2005, a charge of $12 million in interest and other finance expense to write off unamortized costs related to this facility.

The new $2 billion facility contains financial covenants in respect of minimum interest coverage and maximum net leverage. The Company is required to meet these covenants on a semi-annual basis, at June and December. At December 31, 2005, the Company was in compliance with these covenants. If the Company’s corporate credit rating reaches certain defined levels, the minimum interest coverage covenant will no longer be required.

No amount was drawn under either facility at December 31, 2005 and 2004. The interest costs of borrowings under the new facility are LIBOR, STIBOR or EURIBOR (depending on the currency of the drawings) plus a margin of 0.25 percent to 0.70 percent, depending on the Company’s corporate debt rating. The commitment fees paid on the unused portion of the facility amount to 35 percent per annum of the applicable margin, and are therefore also dependent upon the corporate credit rating of the Company. A utilization fee is payable when borrowings are greater than one-third of the facility and the level of these fees is linked to the level of the amounts outstanding.

The facility contains cross-default clauses whereby an event of default would occur if the Company were to default on indebtedness, as defined in the facility, at or above a specified threshold.

Long-term debt

The Company utilizes a variety of derivative products to modify the characteristics of its long-term debt. The Company uses interest rate swaps to effectively convert certain fixed-rate long-term debt into floating rate obligations. For certain non-U.S. dollar denominated debt, the Company utilizes cross-currency swaps to effectively convert the debt into an U.S. dollar obligation. As required by SFAS 133, debt designated as being hedged by fair value hedges is stated at its fair value.

The following table summarizes the Company’s long-term debt considering the effect of interest rate and currency swaps. Consequently, a fixed rate debt subject to a fixed-to-floating interest rate swap is included as a floating rate debt in the table below:

	December 31, 2005									December 31, 2004
				Nominal			Effective						Nominal			Effective
	Balance			rate			rate			Balance			rate			rate
Floating rate	$	2,002			8.5	%		7.0	%	$	1,772			8.7	%		6.0	%
Fixed rate	278				3.4	%		5.4	%	1,610				5.1	%		5.5	%
Convertible bonds	1,680				4.1	%		4.1	%	1,775				4.1	%		4.1	%
	3,960									5,157
Current portion of long-term debt	(27		)		3.9	%		3.9	%	(440		)		3.9	%		1.5	%
Total	$	3,933								$	4,717

F-29

At December 31, 2005, maturities of long-term debt were as follows:

Due in 2006	$	27
Due in 2007	936
Due in 2008	856
Due in 2009	473
Due in 2010	762
Thereafter	906
Total	$	3,960

Bond repurchases

During 2005, the Company repurchased debt securities with a total face value of $307 million, primarily a portion of the Company’s 3.75% 500 million Swiss franc bonds, due 2009, and recognized a loss on extinguishment of debt of $19 million on the repurchases.

During 2004, through open market repurchases, the Company repurchased a portion of its public bonds with a total equivalent face value of $513 million. These open market repurchases resulted in a gain on extinguishments of debt of approximately $6 million. In addition, in July 2004, the Company announced tender offers to repurchase all of the outstanding 5.375% 300 million euro bonds, due 2005, and 5.125% 475 million eurobonds, due 2006, being approximately 275 million euro and approximately 368 million euro, respectively. In conjunction with the tender offers, the bonds were amended to allow the Company to call and redeem those bonds that were not tendered under the respective tender offer. In September 2004, bonds validly tendered and accepted under the tender offers were settled and the Company exercised its option to redeem early the remaining outstanding 2005 and 2006 bonds that were not tendered. The open market repurchases, combined with the tender offers and calls, resulted in a decrease in total borrowings during 2004 of $1,330 million.

Bond issuances

The Company did not issue any bonds during 2005 or 2004.

Details of the Company’s outstanding bonds are as follows:

		December 31, 2005						December 31, 2004
		Nominal outstanding		Carrying value(1)				Nominal outstanding		Carrying value(1)
		(in millions)						(in millions)
Public bonds:
4.625% USD Convertible Bonds, due 2007	USD		968		$	921	USD		968		$	890
3.5% CHF Convertible Bonds, due 2010	CHF		1,000		759		CHF		1,000		885
9.5% EUR Instruments, due 2008	EUR		500		614		EUR		500		728
10% GBP Instruments, due 2009	GBP		200		353		GBP		200		382
3.75% CHF Bonds, due 2009	CHF		108		81		CHF		500		442
6.5% EUR Instruments, due 2011	EUR		650		764		EUR		650		887
0.5% JPY Instruments, due 2005			—		—		JPY		17,425		171
Private placements					181						433
Total Outstanding Bonds					$	3,673					$	4,818

(1)USD carrying value is net of bond discounts and includes adjustments for fair value hedge accounting, where appropriate.

F-30

The 6.5% EUR Instruments pay interest semi-annually in arrears at a fixed annual rate of 6.5 percent. In the event of a change of control of the Company, the terms of these bonds require the Company to offer to repurchase the bonds at 101 percent of the principal amount thereof, plus any accrued interest.

During 2005, the Company entered into interest rate swaps to hedge its interest obligations on the 6.5% EUR Instruments, due 2011, and the 3.75% CHF bonds due 2009. After considering the impact of these interest rate swaps, the 6.5% EUR Instruments effectively became a floating rate euro obligation, while the 3.75% CHF Bonds effectively became a floating rate Swiss franc obligation. Consequently, these bonds are included as floating rate debt at December 31, 2005, in the table of long-term debt above but as fixed rate debt at December 31, 2004.

The CHF Convertible Bonds pay interest annually in arrears at a fixed annual rate of 3.5 percent. The conversion price is subject to adjustment provisions to protect against dilution or change in control. Each 5,000 Swiss francs of principal amount of bonds is convertible into 524.65897 fully paid shares of the Company at a conversion price of 9.53 Swiss francs, representing a total of 104,931,794 shares if the bonds were fully converted.

The bonds are convertible at the option of the bondholder at any time from October 21, 2003, up to and including the tenth business day prior to September 10, 2010. The Company may at any time on or after September 10, 2007, redeem the outstanding bonds at par plus accrued interest if, for a certain number of days during a specified period of time, the official closing price of the Company’s ordinary shares on the relevant exchange has been at least 150 percent of the conversion price. In addition, at any time prior to maturity, the Company can redeem the outstanding bonds at par plus accrued interest, if at least 85 percent in aggregate of the principal amount of bonds originally issued have been redeemed, converted or purchased and cancelled. The Company has the option to redeem the bonds when due in cash, ordinary shares or any combination thereof.

The USD Convertible Bonds due 2007 pay interest semi-annually in arrears at a fixed annual rate of 4.625 percent. The conversion price is subject to adjustment provisions to protect against dilution or change in control. As a result of an amendment to the bonds in May 2004, described below, the conversion price of the bonds was amended from 14.64 Swiss francs (converted into U.S. dollars at the fixed exchange rate of 1.6216 Swiss francs per U.S. dollar) to $9.03, representing a total of 107,198,228 shares if the bonds were fully converted.

These USD Convertible Bonds are convertible at the option of the bondholder at any time from June 26, 2002, up to and including May 2, 2007. The Company may, at any time on or after May 16, 2005, redeem the outstanding bonds at par plus accrued interest if (1) for a certain number of days during a specified period of time, the official closing price of the Company’s American Depositary Shares on the New York Stock Exchange exceeds 170 percent of the conversion price, or (2) at least 85 percent in aggregate principal amount of bonds originally issued have been exchanged, redeemed or purchased and cancelled. The Company has the option to redeem the bonds when due, in cash, American Depositary Shares or any combination thereof.

Prior to May 2004, a component of these convertible bonds had to be accounted for as an embedded derivative as the shares to be issued upon conversion were denominated in Swiss francs, while the bonds are denominated in U.S. dollars. A portion of the issuance proceeds was deemed to relate to the value of the derivative on issuance and subsequent changes in value of the derivative were recorded through earnings and as an adjustment to the carrying value of the bonds. The allocation of a portion of the proceeds to the derivative created a discount on issuance, which was being amortized to earnings over the life of the bonds. On May 28, 2004, bondholders voted in favor of the Company’s proposed amendment to the terms of the bonds whereby, if the bonds are converted, the Company will deliver U.S. dollar-denominated American Depositary Shares rather than Swiss franc-denominated ordinary shares. The conversion price was set at $9.03. As a result of the amendment, the Company was no longer required to

F-31

account for a portion of the bonds as a derivative. Consequently, on May 28, 2004, the value of the derivative was fixed and the amount previously accounted for separately as an embedded derivative was considered to be a component of the carrying value of the bonds at that date. This carrying value is being accreted to the $968 million par value of the bonds as an expense in interest and other finance expense over the remaining life of the bonds.

During 2004, the Company recorded an expense of $16 million from the increase in fair value of the derivative from January 1, 2004, up to the date of the bond amendment, related among other factors, to the increase in the Company’s share price since December 31, 2003. When added to the accretion of the discount on the bonds for 2004 of $36 million, this resulted in aggregate expense of $52 million in 2004, reflected in interest and other finance expense. In 2003, an increase in fair value of the embedded derivative, combined with the accretion of the discount on issuance of the bonds, resulted in a charge to interest and other finance expense of $84 million.

The 10% GBP Instruments and the 9.5% EUR Instruments contain certain clauses linking the interest paid on the bonds to the credit rating assigned to the bonds. If the rating assigned to these bonds by both Moody’s and Standard & Poor’s remains at or above Baa3 and BBB-, respectively, then the interest rate on the bonds remains at the level at issuance, that is 10 percent and 9.5 percent for the sterling and euro bonds, respectively. However, as the rating assigned by either Moody’s or Standard & Poor’s decreased below Baa3 or BBB-, respectively, in October 2002, the annual interest rate on the bonds increased by 1.5 percent per annum to 11.5 percent and 11 percent for the sterling and euro bonds, respectively. If after this rating decrease, the rating assigned by both Moody’s and Standard & Poor’s returns to a level at or above Baa3 and BBB-, respectively, then the interest rates on the bonds return to the interest level at issuance.

In line with the Company’s policy of reducing its interest and currency exposure, a cross-currency swap has been used to modify the characteristics of the 200 million pounds sterling bonds and an interest rate swap has been used to modify the 500 million euro bonds. After considering the impact of the cross-currency and interest rate swaps, the 200 million pounds sterling bonds effectively became a floating rate U.S. dollar obligation, while the 500 million euro bonds became a floating rate euro obligation. Accordingly, both the 200 million pounds sterling bonds and the 500 million euro bonds are included as “floating rate” in the table of long-term debt above.

Substantially all of the Company’s publicly traded bonds contain cross-default clauses which would allow the bondholders to demand repayment if the Company were to default on any borrowing at or above a specified threshold. Furthermore, all such bonds constitute unsecured and unsubordinated obligations of the Company and rank pari passu with other debt obligations.

In addition to the bonds described above, included in long-term debt at December 31, 2005 and 2004, are lease obligations, bank borrowings of subsidiaries, and other long-term debt.

F-32

Note 15   Provisions and other

Provisions and other consists of the following:

	December 31,
	2005		2004
Asbestos and related costs (see Note 17)	$	1,128	$	1,023
Contract related reserves	647		456
Provisions for warranties and contract penalties	783		739
Derivatives	138		324
Employee benefit costs	83		77
Taxes payable	369		368
Other	621		679
Total	$	3,769	$	3,666

Note 16   Leases

Lease obligations

The Company’s lease obligations primarily relate to real estate and office equipment. In the normal course of business, management expects most leases to be renewed or replaced by other leases. Minimum rent expense was $359 million, $371 million and $392 million in 2005, 2004 and 2003, respectively. Sub-lease income received on leased assets by the Company was $39 million, $33 million and $18 million in 2005, 2004 and 2003, respectively.

At December 31, 2005, future net minimum lease payments for operating leases having initial or remaining non-cancelable lease terms in excess of one year consist of the following:

2006	$	319
2007	263
2008	225
2009	190
2010	177
Thereafter	509
	1,683
Sublease income	(148		)
Total	$	1,535

Note 17   Commitments and contingencies

Contingencies—general

The Company is subject to various legal proceedings, including environmental and other claims that have arisen in the ordinary course of business that have not been finally resolved. It is not possible at this time for the Company to predict with any certainty the outcome of such litigation and claims. However, except as stated below, management is of the opinion, based upon information presently available and on advice of external counsel and other advisors, that while any such liability could have a material adverse impact on the Company’s net cash flows, it is unlikely that any such liability, to the extent not provided for through insurance or otherwise, would have a material adverse effect on the Company’s financial position or results of operations.

F-33

Asbestos Liability

Summary

The Company’s Combustion Engineering subsidiary has been a co-defendant in a large number of lawsuits claiming damage for personal injury resulting from exposure to asbestos. A smaller number of claims have also been brought against the Company’s ABB Lummus Global Inc. subsidiary (“Lummus”) as well as against other affiliates of the Company. In October 2002, taking into consideration the growing number and cost of asbestos-related claims, Combustion Engineering and the Company determined that Combustion Engineering’s asbestos-related liability should be resolved through a comprehensive settlement that included a plan of reorganization for Combustion Engineering under Chapter 11 of the U.S. Bankruptcy Code.

In November 2002, Combustion Engineering and the representatives of various asbestos claimants entered into a Master Settlement Agreement to settle approximately 154,000 asbestos-related personal injury claims that were then pending against Combustion Engineering. Under that agreement Combustion Engineering established and funded a trust (the “CE Settlement Trust”) to provide for partial payment of those claims.

In January 2003, Combustion Engineering reached agreement with various creditors (including representatives of the asbestos claimants who participated in the Master Settlement Agreement and a representative of future claimants) on the terms of a proposed “Pre-Packaged Plan of Reorganization for Combustion Engineering” under Chapter 11 of the U.S. Bankruptcy Code (as amended through June 4, 2003, the “Initial CE Plan”). The Initial CE Plan provided for the issuance of a “channeling injunction” under which asbestos-related personal injury claims related to the operations of Combustion Engineering, Lummus and Basic Incorporated (“Basic”), another subsidiary of the Company that is a former subsidiary of Combustion Engineering, could only be brought against a future trust (separate from the CE Settlement Trust established under the Master Settlement Agreement) to be established and funded by Combustion Engineering, ABB Ltd and other entities of the Company (the “Asbestos PI Trust”). This channeling injunction was intended to free Combustion Engineering, ABB Ltd and its affiliates, as well as certain former direct or indirect owners, joint venture partners and affiliates of Combustion Engineering, including ALSTOM and ALSTOM POWER NV, from further liability for such claims.

The Initial CE Plan was filed with the U.S. Bankruptcy Court on February 17, 2003 and confirmed by the District Court on August 8, 2003. On December 2, 2004, however, the Court of Appeals for the Third Circuit reversed the District Court’s confirmation order. The Court of Appeals remanded the Initial CE Plan to the District Court among other things for a determination of whether, in light of the pre-petition payments made by Combustion Engineering to the CE Settlement Trust under the Master Settlement Agreement and the fact that claimants who received partial payments of their claims under the Master Settlement Agreement participated in the approval of the Initial CE Plan, the treatment of asbestos-related personal injury claims against Combustion Engineering under the Initial CE Plan was consistent with the requirements of the U.S. Bankruptcy Code. The Court of Appeals also held that asbestos claims against Lummus and Basic that are not related to Combustion Engineering’s operations could not be “channeled” to the Asbestos PI Trust as proposed under the Initial CE Plan.

In March 2005, following extensive discussions with certain representatives of various parties, including the Creditors Committee, the Future Claimants Representative appointed in the Combustion Engineering case (the “CE FCR”) and Certain Cancer Claimants (the “CCC”) who had opposed the Initial CE Plan, the parties reached an agreement in principle (the “Agreement in Principle”) for modifying the Initial CE Plan with a view to bringing it into conformity with the Court of Appeals’ decision and for providing a mechanism for resolving finally Lummus’ potential asbestos liability. The main terms of the Agreement in Principle provide for the Company and certain of its subsidiaries to make an additional contribution of $204 million to the Asbestos PI Trust not later than two years from the effective date of the

F-34

Initial CE Plan, as modified as contemplated by the Agreement in Principle, but payment of this additional contribution may be accelerated in whole or in part if Lummus or Lummus assets are sold in the interim; the payment by the Company of the legal fees of the CCC in the amount of $ 8 million; and the filing of a separate Chapter 11 case and a prepackaged plan of reorganization for Lummus (the “Lummus Plan”). The Agreement in Principle contemplates that the “Modified CE Plan” and the Lummus Plan will become effective concurrently.

One of the holdings of the Court of Appeals was that asbestos-related personal injury claims against Basic that are not related to Combustion Engineering’s operations could not be “channeled” to the Asbestos PI Trust. The Modified CE Plan and Lummus Plan do not address claims against Basic. Basic’s asbestos-related personal injury liabilities will have to be resolved through its own bankruptcy or similar U.S. state court liquidation proceeding, or through the tort system.

Following the Agreement in Principle, the parties negotiated the terms and language of the Lummus Plan and the modifications to the Initial CE Plan. These negotiations lasted for approximately five (5) months, and on August 19, 2005, an amended version of the Initial CE Plan (the “Modified CE Plan”) was filed with the U.S. Bankruptcy Court. The Modified CE Plan was filed with the support of all of the original proponents of the Initial CE Plan, as well as the CCC. Shortly thereafter, the Modified CE Plan and the Lummus Plan were mailed to all their respective impaired creditors for voting.

In late September 2005, voting concluded on the Modified CE Plan and the Lummus Plan, and both plans were approved overwhelmingly by the voting creditors. On September 28, 2005, the U.S. Bankruptcy Court held a Confirmation Hearing on the Modified CE Plan. While several insurers filed objections to the Modified CE Plan, all such objections were resolved or withdrawn prior to the conclusion of the hearing. On December 19, 2005, the U.S. Bankruptcy Court entered an Order confirming the Modified CE Plan, and recommending that the U.S. District Court affirm the U.S. Bankruptcy Court’s Order. The U.S. District Court entered an order affirming The Modified CE Plan on March 1, 2006. From the date the order was entered, there is a 30-day appeals period. If no appeals are lodged within the appeals period, the Plan will be final.

Background

When the Company sold its 50 percent interest in the former ABB ALSTOM POWER NV joint venture to ALSTOM in May 2000, it retained ownership of Combustion Engineering, a subsidiary that had conducted part of its former power generation business and that now owns commercial real estate that it leases to ABB Inc. and third parties.

From 1989 through February 17, 2003 (the date that Combustion Engineering filed for Chapter 11 as described below), approximately 438,000 asbestos-related claims were filed against Combustion Engineering. On February 17, 2003 there were approximately 164,000 asbestos-related personal injury claims pending against Combustion Engineering. Of these claims, approximately 155,000 were claims by asbestos claimants who participated in the Master Settlement Agreement.

From 1990 through February 17, 2003, Lummus was named as a defendant in approximately 13,000 asbestos-related personal injury claims, of which approximately 11,000 claims were pending on February 17, 2003.

Other entities of the Company have sometimes been named as defendants in asbestos-related claims. At December 31, 2005 and 2004, there were approximately 16,400 asbestos-related claims pending against entities of the Company other than Combustion Engineering and Lummus. These claims, which include approximately 4,300 claims against Basic, are unrelated to Combustion Engineering and Lummus and will not be resolved in the Combustion Engineering bankruptcy case or the contemplated prepackaged bankruptcy case for Lummus. The Company generally seeks dismissals from claims where there is no

F-35

apparent linkage between the plaintiffs and any entity of the Company. To date, resolving claims against the Company’s entities other than Combustion Engineering, and Lummus has not had a material impact on the Company’s consolidated financial position, results of operations or cash flows.

Negotiations with representatives of asbestos claimants and pre-packaged Chapter 11 filing

In October 2002, Combustion Engineering and the Company determined that it was likely that the expected asbestos-related personal injury liabilities of Combustion Engineering would exceed the value of its assets of approximately $800 million if its historical settlement patterns continued into the future. At that time, Combustion Engineering and the Company determined to resolve the asbestos-related personal injury liability of Combustion Engineering and its affiliates by reorganizing Combustion Engineering under Chapter 11, the principal business reorganization chapter of the U.S. Bankruptcy Code. Combustion Engineering and the Company determined to structure the Chapter 11 reorganization as a “pre-packaged plan,” in which Combustion Engineering would solicit votes from asbestos claimants to approve the plan before the Chapter 11 case was filed with the Bankruptcy Court.

Beginning in October 2002, Combustion Engineering and the Company conducted extensive negotiations with representatives of certain asbestos claimants with respect to a pre-packaged plan. On November 22, 2002, Combustion Engineering and the asbestos claimants’ representatives entered into a Master Settlement Agreement for settling open asbestos-related personal injury claims that had been filed against Combustion Engineering prior to November 2002. Combustion Engineering also agreed, pursuant to the Master Settlement Agreement, to form and fund the CE Settlement Trust to administer and pay a portion of the value of asbestos-related personal injury claims settled under the Master Settlement Agreement. Under the terms of the Master Settlement Agreement, eligible claimants who met all criteria to qualify for payment were entitled to receive a percentage of the value of their claim from the CE Settlement Trust and retain a claim against Combustion Engineering for the unpaid balance (the “stub claim”). The Master Settlement Agreement divides claims into three categories based on the status of the claim at November 14, 2002, the status of the documentation relating to the claim and whether or not the documentation establishes a valid claim eligible for settlement and payment by Combustion Engineering. The Master Settlement Agreement was supplemented in January 2003 to clarify the rights of certain claimants whose right to participate in a particular payment category was disputed. The Master Settlement Agreement, as supplemented, settles the value and provides for the partial payment of approximately 155,000 asbestos-related personal injury claims that had been lodged against Combustion Engineering.

The Master Settlement Agreement, as supplemented, provided that the CE Settlement Trust was to be funded by:

·cash contributions from Combustion Engineering in the amount of $5 million;

·cash contributions from ABB Inc., a subsidiary of ABB Ltd, in the amount of $30 million;

·a promissory note from Combustion Engineering in the principal amount of approximately $101 million (guaranteed by Asea Brown Boveri, now merged into Holdings); and

·an assignment by Combustion Engineering of the $311 million unpaid balance of principal and interest due to Combustion Engineering from Asea Brown Boveri, now merged into Holdings, under a loan agreement dated May 12, 2000 (guaranteed by ABB Ltd).

Approximately 155,000 eligible claimants have entered into the Master Settlement Agreement or adoption agreements with Combustion Engineering and the CE Settlement Trust and have received partial payment on their claims.

F-36

Pre-packaged plan of reorganization

On January 17, 2003, the Company announced that Combustion Engineering and the Company had reached an agreement with representatives of asbestos claimants on the terms of the Initial CE Plan.

As proposed, the Initial CE Plan provided for the creation of the Asbestos PI Trust, an independent trust separate and distinct from the CE Settlement Trust, to address “Asbestos PI Trust Claims,” which are present and future asbestos-related personal injury claims (including the stub claims of claimants who previously settled pursuant to the Master Settlement Agreement) that arise directly or indirectly from any act, omission, products, or operations of Combustion Engineering or Lummus or Basic. The Initial CE Plan provided that, if it were to become effective, a channeling injunction would be issued under Section 105 of the U.S. Bankruptcy Code pursuant to which the Asbestos PI Trust Claims against ABB Ltd and certain of its affiliates (including Combustion Engineering, Lummus and Basic) would be channeled to the Asbestos PI Trust. The effect of the channeling injunction contemplated by the Initial CE Plan would be that the sole recourse of a holder of an Asbestos PI Trust Claim would be to the Asbestos PI Trust and such holder would be barred from asserting such a claim against ABB Ltd and the affiliates covered by the injunction (including Combustion Engineering and, under the Initial CE Plan, Lummus and Basic).

As proposed, the Initial CE Plan provided that on its effective date, the Asbestos PI Trust would be funded with the following:

·a $20 million 5 percent term note (the “CE Convertible Note”) with a maximum term of ten years from the effective date of the Initial CE Plan, to be issued by Combustion Engineering and secured by its Windsor, Connecticut, real estate and real estate leases (under certain specified contingencies, the Asbestos PI Trust may have the right to convert the term note into ownership of 80 percent of the voting securities of the reorganized Combustion Engineering);

·excess cash held by Combustion Engineering on the effective date of the Initial CE Plan (the “Excess CE Cash”);

·a non-interest bearing promissory note (the “ABB Promissory Note”) to be issued by ABB Inc. and ABB Ltd, and guaranteed by certain ABB Ltd subsidiaries, in an aggregate amount of up to $350 million payable in installments (including two $25 million payments contingent upon ABB Ltd generating an earning before interest and taxes margin of 12 percent in 2007 and 2008);

·a non-interest bearing promissory note to be issued on behalf of Lummus (the “Lummus Note”) in the amount of $28 million payable in relatively equal annual installments over 12 years;

·a non-interest bearing promissory note to be issued on behalf of Basic (the “Basic Note”) in the aggregate amount of $10 million payable in relatively equal annual installments over 12 years;

·30,298,913 shares of ABB Ltd (the “CE Settlement Shares”), which had a fair value of $293 million, $170 million and $154 million at December 31, 2005, 2004 and 2003, respectively; and

·an assignment by Combustion Engineering, Lummus, and Basic to the Asbestos PI Trust of any proceeds under certain insurance policies. As of December 31, 2005, aggregate unexhausted product liability limits under such policies were approximately $200 million for Combustion Engineering, approximately $43 million for Lummus and approximately $28 million for Basic although amounts ultimately recovered by the Asbestos PI Trust under these policies may be substantially different from the policy limits. In addition, Combustion Engineering would assign to the Asbestos PI Trust scheduled payments under certain of its insurance settlement agreements ($66 million at December 31, 2005). (The proceeds and payments to be assigned are together referred to as “Certain Insurance Amounts”.)

F-37

In addition, the Initial CE Plan provided that if Lummus is sold within 18 months after the CE Plan’s effective date, ABB Inc. would contribute $5 million to the CE Settlement Trust and $5 million to the Asbestos PI Trust.

Upon the effective date under the Initial CE Plan, ABB Inc. would indemnify the Combustion Engineering estate against up to $5 million of liability on account of certain contingent claims held by certain indemnified insurers. Further, on the effective date, Asea Brown Boveri (now merged into Holdings) would provide for the benefit of Combustion Engineering a nuclear and environmental indemnity with regard to obligations arising out of Combustion Engineering’s Windsor, Connecticut, site. The two indemnities described in this paragraph are referred to as the “Related Indemnities”.

Judicial review process

The solicitation of votes to approve the Initial CE Plan began on January 19, 2003. Combustion Engineering filed for Chapter 11 in the U.S. Bankruptcy Court in Delaware on February 17, 2003, based on the terms previously negotiated in connection with the Initial CE Plan.

On July 10, 2003 the Bankruptcy Court issued an Order recommending to the U.S. District Court, among other things, that the Initial CE Plan be confirmed.

Following the issuance of the Bankruptcy Court’s Order a number of interested parties, including a small number of asbestos claimants and certain insurance companies which historically have provided insurance coverage to Combustion Engineering, Lummus and Basic filed appeals based on various objections to the Initial CE Plan. The District Court held a hearing on July 31, 2003, with respect to the appeals and entered an order on August 8, 2003 confirming the Initial CE Plan.

Various parties appealed the District Court’s confirmation order to the United States Court of Appeals for the Third Circuit. The Court of Appeals held a hearing with respect to the appeals of the confirmation order of the District Court on June 23, 2004 and issued its decision on December 2, 2004 (the “Third Circuit Decision”).

The Third Circuit Decision reversed the District Court’s confirmation of the Initial CE Plan. The Third Circuit Decision focused on three issues raised by the appealing parties in respect to the terms of the Initial CE Plan: (i) whether the Bankruptcy Court had “related to” jurisdiction over the claims against the non-debtors, Lummus and Basic, that do not arise from any products or operations of Combustion Engineering (the “non-derivative claims”); (ii) whether the non-debtors, Lummus and Basic, could avail themselves of the protection of the channeling injunction by invoking Section 105 of the Bankruptcy Code and contributing assets to the Asbestos PI Trust; and (iii) whether the two-trust structure and use of stub claims in the voting process comply with the Bankruptcy Code. The Court of Appeals held that there were insufficient factual findings to support “related-to” jurisdiction and that Section 105 of the Bankruptcy Code could not be employed to extend the channeling injunction to the non-derivative claims against non-debtors Lummus and Basic. With regard to the two-trust structure, the Court of Appeals remanded the Initial CE Plan to the District Court to determine whether creditors received fair treatment in light of the pre-petition payments made to the CE Settlement Trust participants and the use of stub claims in the voting process. Among other things, the Court of Appeals instructed the lower courts to consider whether payments under the CE Settlement Trust constituted voidable preferences that were inconsistent with the fair distribution scheme of the Bankruptcy Code.

Notwithstanding the Third Circuit Decision, the Master Settlement Agreement, which settles the amount of and provides for partial payment on approximately 155,000 asbestos-related personal injury claims, remained effective. Early in the Combustion Engineering bankruptcy case, however, an asbestos claimant commenced an action against the trustee of the CE Settlement Trust and individuals who had received distributions from such trust, asserting that further distributions by the CE Settlement Trust

F-38

should be enjoined because the transaction that created the CE Settlement Trust was a voidable preference. The Bankruptcy Court ruled that it would not dismiss that action for lack of standing. On October 22, 2004, the trustee of the CE Settlement Trust moved to dismiss the complaint in that action. This matter is pending and no decision has been rendered by the Court. The Modified CE Plan contemplates that on its effective date the complaint would be dismissed.

Following the Third Circuit Decision, the lower courts assumed jurisdiction over further confirmation proceedings in respect of the Initial CE Plan. On January 27, 2005, the Bankruptcy Court authorized the CE FCR and the Creditors Committee to file any available bankruptcy-related and similar claims against third parties, including preference claims against certain claimants that did not participate in the CE Settlement Trust, and any potential bankruptcy-related claims against the Company. The Company also entered into a tolling agreement to extend the time period within which bankruptcy-related claims against it could be brought. The Modified CE Plan contemplates that all such actions by the trustee agent and the Company will be dismissed on the effective date of that Plan.

Since February 17, 2003, a stay and preliminary injunction have barred the commencement and prosecution of certain asbestos-related claims against Combustion Engineering, Lummus, Basic, certain other entities of the Company and certain other parties, including parties indemnified by the Company. The barred claims include, among others, claims arising from asbestos exposure caused by Combustion Engineering, Lummus or Basic and claims alleging fraudulent conveyance, successor liability and veil piercing. The Company does not know the number or nature of claims that would now be pending against the protected entities if those legal measures had not been in place.

The Modified CE Plan

In March 2005, following extensive discussions with the CE FCR, the Creditors Committee and representatives of the CCC, Combustion Engineering and the Company reached the Agreement in Principle on certain overall modifications to the Initial CE Plan to bring it into conformity with the Third Circuit Decision and to provide a mechanism for resolving finally Lummus’ potential asbestos liability.

The Modified CE Plan, which implements the Agreement in Principle, includes the following material changes to the Initial CE Plan:

·Additional Contribution—The Company will make an additional contribution of $204 million (the “ABB Additional Contribution”) to the Asbestos PI Trust from the proceeds received from any sale of Lummus in whole or in part, but in no event later than two years from the effective date of the Modified CE Plan regardless of any sale of all or a portion of Lummus;

·ABB Promissory Note—The terms of the original ABB Promissory Note have been changed to, among other things, modify the payment schedule and the percentages for EBIT Margin Events that give rise to contingent payments;

·Guarantees—Guarantees by certain subsidiaries of the Company of the ABB Promissory Note have been extended for all continuing, modified, and additional contributions of Combustion Engineering, the Company or their respective affiliates under the Modified CE Plan;

·Lummus Effective Date—The Effective Date of the Modified CE Plan is conditioned upon the occurrence of the Lummus Effective Date, but this condition becomes inoperative if Lummus fails to file its own chapter 11 case within 15 days after the Confirmation Order in respect to the Modified CE Plan becomes final;

·Asbestos PI Trust Distributions—Certain changes have been made to the Asbestos PI Trust documents that modify the Asbestos PI Trust Distribution Procedures under the Modified CE Plan;

F-39

·Settlement of Preference Claims—The CE Settlement Trust and claimants who received payments from the CE Settlement Trust will receive a release of any preference claims, fraudulent transfer claims, and other similar claims that Combustion Engineering, the CE FCR or creditors of Combustion Engineering may have against them;

·Elimination of Lummus and Basic—The Modified CE Plan no longer addresses the direct asbestos related liabilities of Lummus and Basic and eliminates any assignment of insurance rights by Lummus and Basic other than their rights to coverage under Combustion Engineering’s insurance policies.

As part of these changes, the Company has paid approximately $8 million of approved legal fees of the CCC.

The Modified CE Plan contemplates a channeling injunction substantially similar to the channeling injunction contemplated by the Initial CE Plan. If the ABB entities fail to perform any of their financial obligations under the Modified CE Plan, the channeling injunction will terminate and the affected asbestos-related personal injury claims could be pursued against the ABB entities.

The Lummus Plan

The negotiations that determined the proposed terms of the Lummus Plan were conducted with an individual appointed by Lummus to represent the interests of its future asbestos claimants (the “Lummus FCR”). These negotiations were held in parallel with the negotiations on the Modified CE Plan over approximately five months.

The material terms of the Lummus Plan are as follows:

·Lummus Note—Lummus will execute a note in the principal amount of $33 million (the “Lummus Note”) payable to the Trust created under the Lummus Plan (the “Lummus Asbestos PI Trust”). The Lummus Note will bear interest at 6% per annum and be secured by 51% of the capital stock of Lummus.

·Insurance Recoveries—The Lummus Asbestos PI Trust will also be entitled to be paid the first $7.5 million in aggregate recoveries from Lummus insurers, with the first $5 million guaranteed by Lummus; and

·Channeling Injunction—The Lummus Plan provides for the issuance of a channeling injunction pursuant to Sections 524(g) and 105 of the Bankruptcy Code pursuant to which all asbestos claims against Lummus shall be channeled to the Lummus Asbestos PI Trust.

The Solicitation and Voting Process

In late August 2005, Combustion Engineering distributed informational materials and ballots to claimants who were eligible to vote on the Modified CE Plan or to persons who had been authorized by eligible claimants to cast ballots on their behalf. On August 31, 2005, Lummus set out informational materials and ballots on the Lummus Plan to all affected Lummus creditors for voting.

Separate voting on the Modified CE Plan and Lummus Plan began on about September 1, 2005 and concluded on September 19, 2005. The Modified CE Plan was approved by an overwhelming majority of the votes cast in respect to the Modified CE Plan and the Lummus Plan was approved by an overwhelming majority of those who voted on the Lummus Plan.

F-40

Confirmation of the Modified CE Plan

The Bankruptcy Court held a Confirmation Hearing on the Modified CE Plan on September 28, 2005. Several objections to confirmation of the Modified CE Plan had been filed by insurance carriers and others but all such objections were resolved or otherwise withdrawn at or prior to the hearing. As a consequence, there were no objections to confirmation of the Modified CE Plan before the court.

On December 19, 2005 the Bankruptcy Court issued an Order, and accompanying Opinion, confirming the Modified CE Plan and recommending that the U.S. District Court affirm the Bankruptcy Court’s Order. The U.S. District Court entered an order affirming the Modified CE Plan on March 1, 2006. From the date the order was entered, there is a 30-day appeals period. If no appeals are lodged within the appeals period, the Plan will be final.

The Modified CE Plan contemplates that Lummus would file its own Chapter 11 case within 15 days from the date that the confirmation of the Modified CE Plan becomes a final order. However, Lummus is under no obligation to file such a case or to file at any particular time.

We do not know whether any plan or reorganization for Combustion Engineering or Lummus will be ultimately confirmed. If for any reason a Chapter 11 plan relating to Combustion Engineering is not eventually confirmed, Combustion Engineering could be required to enter a Chapter 7 proceeding. If for any reason a Chapter 11 plan relating to Lummus is not eventually confirmed, we expect that Lummus’ asbestos-related liabilities will have to be resolved through the tort system, or otherwise.

Entities of the Company that are not included in the protection offered by the channeling injunctions entered pursuant to the Modified CE Plan or the Lummus Plan (if Lummus files its own Chapter 11 case) will continue to resolve current and future asbestos-related claims that are asserted against them in the tort system, or otherwise.

If U.S. federal legislation addressing asbestos personal injury claims is passed, which is speculative at this time, such legislation may affect the amount that will be required to resolve the asbestos-related claims against entities of the Company.

Effect on the Company’s financial position

Expenses.   The Company recorded expenses related to asbestos of $133 million, $262 million and $142 million in loss from discontinued operations, net of tax, and $0 million, $1 million and $3 million in income from continuing operations, net of tax, for 2005, 2004 and 2003, respectively. Loss from discontinued operations, net of tax, for 2005 includes $123 million resulting from the mark-to-market adjustment relating to the CE Settlement Shares and other costs of $11 million. Loss from discontinued operations, net of tax, for 2004 reflects a charge of $232 million taken in connection with the agreement the Company reached in March 2005 on the basic terms of the Modified CE Plan, $17 million resulting from the mark-to-market adjustment relating to the CE Settlement Shares, a credit of $6 million resulting from adjustment of the provision for the estimated liability of Basic and other costs of $19 million. Loss from discontinued operations, net of tax, for 2003 includes a charge of $68 million, net of tax, resulting from the mark-to-market adjustment relating to the CE Settlement Shares, a provision of $41 million, representing the then present value of the first two $25 million payments under the ABB Promissory Note, which were previously considered contingent, as well as $33 million of other costs.

Cash Payments.   Cash payments, before insurance recoveries, related to Combustion Engineering’s asbestos-related claims were $19 million (including $3 million contributed to the CE Settlement Trust, described above), $56 million (including $49 million contributed to the CE Settlement Trust) and $391 million (including $365 million contributed to the CE Settlement Trust), in 2005, 2004 and 2003, respectively. Administration and defense costs were $17 million, $10 million and $36 million in 2005, 2004 and 2003, respectively.

F-41

Cash payments related to asbestos-related claims against Lummus aggregated approximately $3 million through December 31, 2005, of which approximately $1 million was paid in 2003 and the remainder in prior years. Administration and defense costs were $4 million, $0 million and $2 million in 2005, 2004 and 2003, respectively.

The aggregate cash payments to resolve asbestos-related claims against Basic and other entities of the Company were approximately $4 million as of December 31, 2005, of which $3 million related to Basic.

Provisions.   At December 31, 2005, 2004 and 2003, the Company recorded total provisions on a consolidated basis of $1,128 million, $1,023 million and $815 million in respect of asbestos-related claims and defense costs related to Combustion Engineering, Lummus and Basic. Based upon the expected implementation of the Modified CE Plan and the Lummus Plan, the Company recorded provisions of $1,080 million and $43 million, respectively, at December 31, 2005, in accrued liabilities and other. If the Modified CE Plan and Lummus Plan become effective, certain amounts will be reclassified as of the effective date to other long-term liabilities based on the timing of the future cash payments to the Asbestos PI Trust or any similar trust created under the Lummus Plan and to Stockholders’ Equity for the amounts related to the CE Settlement Shares. Future earnings will be affected by mark-to-market adjustments relating to the CE Settlement Shares through the Effective Date, as well as contingent payments when they become probable of payment. The provisions at December 31, 2003 were based on the Company’s obligations under the initial CE Plan and assumed that the initial CE Plan would be confirmed and become effective as proposed.

With respect to Basic, we have established a provision of $4 million relating to its asbestos-related personal injury liabilities based on analysis of historical claims statistics and related settlement costs and a projection of such claims activity over the next several years.

Management believes that it is probable that the full amount of the relevant provisions will be required to settle the respective asbestos-related liabilities of Combustion Engineering and Lummus in accordance with the Modified CE Plan and the proposed Lummus Plan, and those of Basic. The Company may incur liability greater than the existing provisions, whether in connection with modified plans of bankruptcy or otherwise, but management does not believe that the amount of any such incremental liability can be reasonably estimated or that there is a better estimate of these liabilities than the amounts that are provided for.

The Company’s provisions in respect of asbestos-related claims include, as stated above, amounts for each of Combustion Engineering, Lummus and Basic. The assets of Combustion Engineering include amounts receivable of approximately $208 million, $221 million and $232 million at December 31, 2005, 2004 and 2003, respectively, for probable insurance recoveries, which were established with respect to asbestos-related claims. The Company has not established a provision for claims against entities other than Combustion Engineering, Lummus and Basic as amounts are immaterial.

In the event the Modified CE Plan or Lummus Plan (if Lummus files its own Chapter 11 case) do not become effective, the ultimate cost for the resolution of asbestos-related personal injury claims against Combustion Engineering and Lummus may be significantly higher and could have a material adverse impact on the Company’s consolidated financial position, results of operations and cash flows.

Contingencies—environmental

The Company is a participant in several legal and regulatory actions, which result from various U.S. and other environmental protection legislation, as well as agreements with third parties. While the Company cannot estimate the impact of future legislation, provisions are recorded when it is probable that losses will result from these actions and the amounts of losses can be reasonably estimated. Estimated losses for environmental remediation obligations are not discounted to their present value. In respect to

F-42

these matters, the Company may be able to recover a portion of the costs from insurers or other third parties. Receivables are recorded when it is probable that recoveries will be collected.

Contingencies related to former Nuclear Technology business

The Company retained liabilities for certain specific environmental remediation costs at two sites in the U.S. that were operated by its Nuclear Technology business, which was sold to British Nuclear Fuels PLC (BNFL) in April 2000. Pursuant to the sale agreement with BNFL, the Company has retained all of the environmental liabilities associated with its Combustion Engineering subsidiary’s Windsor, Connecticut facility and agreed to reimburse BNFL for a share of the costs that BNFL incurs for environmental liabilities associated with its ABB C-E Nuclear Power Inc. subsidiary’s Hematite, Missouri facility. The primary environmental liabilities associated with these sites relate to the costs of remediating radiological and chemical contamination at these facilities. Such costs are not incurred until a facility is taken out of use and generally are incurred over a number of years. Although it is difficult to predict with accuracy the amount of time it may take to remediate radiological and chemical contamination at the Hematite site, based on information that BNFL has made publicly available, the Company believes that it may take until 2013 to remediate the Hematite site. With respect to the Windsor site, the Company believes the remediation may take until 2010.

Under the terms of the sale agreement, BNFL must perform the Hematite remediation in a cost efficient manner and pursue recovery of remediation costs from other potentially responsible parties as conditions for obtaining cost sharing contributions from the Company. Westinghouse Electric Company LLC, the BNFL subsidiary that owns the Hematite site (Westinghouse) has brought legal action against former owner/operators of the Hematite site and the U.S. Government under the Comprehensive Environmental Response Compensation and Liability Act (CERCLA) to recover past and future remediation costs. The defendants are contesting Westinghouse’s claims. If Westinghouse’s CERCLA cost recovery action is unsuccessful, the cost to the Company may increase in the future. This risk is included in the high end of the estimated contingent liability set forth below.

At the Windsor site, a significant portion of the contamination is related to activities that were formerly conducted by or for the U.S. government. The Company believes that a significant portion of the remediation costs will be covered by the U.S. government under the government’s Formerly Utilized Sites Remedial Action Program.

The Company established a reserve of $300 million in loss from discontinued operations in 2000 for its estimated share of the remediation costs for these facilities. The Company, as of December 31, 2005, has recorded in other liabilities a reserve of $255 million, net of payments from inception of $43 million, and a reversal of $2 million to loss from discontinued operations in 2005 reflecting realized cost savings. At December 31, 2005 the Company estimated the total contingent liability for its share of the remediation costs for these facilities in a range of loss from $220 million to $402 million. Expenditures charged to the remediation reserve were $9 million, $10 million and $6 million during 2005, 2004 and 2003, respectively. The Company does not expect the majority of the remaining costs to be paid in cash during 2006.

Contingencies—Regulatory and Compliance

Disclosures of suspect payments to the SEC and the United States Department of Justice

In April 2005 the Company voluntarily disclosed to the United States Department of Justice (DoJ) and the SEC certain suspect payments in its network management unit in the United States. Subsequently, the Company made additional voluntary disclosures to the DoJ and the SEC regarding suspect payments made by Company subsidiaries in a number of countries, including a country in the Middle East. These payments were discovered by ABB as a result of the Company’s internal compliance reviews. The payments may be in violation of the Foreign Corrupt Practices Act (FCPA) or other applicable laws. The consequences for ABB could include penalties, other costs and business-related impacts. ABB is

F-43

cooperating on these issues with the relevant authorities, and is continuing its internal investigations and compliance reviews.

Earnings overstatement in an Italian subsidiary

In September 2004, the Company restated its financial statements for all prior periods as a result of earnings overstatements by a business unit of the Company’s Power Technologies division in Italy. The restatement followed an internal investigation by the Company which showed that the business unit had overstated earnings before interest and taxes and net income as well as that certain employees had participated in arranging improper payments to an employee of an Italian power generation company in order to obtain a contract. The Company has reported this matter to the Italian Public Prosecutor’s Office, which is conducting its own investigation, as well as to the SEC. The Company cannot be certain as to the outcome of the Italian Public Prosecutor’s Office investigation or as to the position of the SEC.

Gas Insulated Switchgear business

In May 2004, the Company announced that it had undertaken an internal investigation which uncovered that certain of its employees together with employees of other companies active in the gas insulated switchgear business were involved in anti-competitive practices. The Company has reported promptly such practices to the appropriate authorities including the European Commission. The Company has received conditional amnesty from the European Commission and is cooperating with it and the other national competition authorities involved in the respective investigations.

Vetco Gray

ABB Vetco Gray Inc. and ABB Vetco Gray UK Ltd., two of the Company’s subsidiaries that were sold in 2004 as part of the Upstream business, pleaded guilty in July 2004 to violation of the FCPA and paid an aggregate fine to the DoJ totaling $10.5 million. In addition, in July 2004, in a related action the Company agreed with the SEC to resolve civil charges relating to the FCPA, including the payment of $5.9 million to disgorge allegedly unlawful profits earned by the two subsidiaries and to retain an independent consultant to review the Company’s FCPA compliance policies and procedures.

Guarantees—general

Certain guarantees issued or modified after December 31, 2002 are accounted for in accordance with Financial Accounting Standards Board Interpretation No. 45 Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (FIN 45). Upon issuance or modification of certain guarantees, a liability, equal to the fair value of the guarantee, is recorded.

The following table provides quantitative data regarding the Company’s third-party guarantees. The maximum potential payments represent a “worst-case scenario,” and do not reflect the Company’s expected results.

The carrying amount of liabilities recorded in the Consolidated Balance Sheets reflects the Company’s best estimate of future payments it may incur as part of fulfilling its guarantee obligations.

	2005						2004
December 31,	Maximum potential payments			Carrying amount of liabilities			Maximum potential payments			Carrying amount of liabilities
Third-party performance guarantees		$	1,197		$	1		$	1,525		$	2
Financial guarantees		209			—			253			1
Indemnification guarantees		150			13			198			16
Total		$	1,556		$	14		$	1,976		$	19

F-44

Guarantees—third-party performance

Performance guarantees represent obligations where the Company guarantees the performance of a third party’s product or service according to the terms of a contract. Such guarantees may include guarantees that a project will be completed within a specified time. If the third party does not fulfill the obligation, the Company will compensate the guaranteed party in cash or in kind. Performance guarantees include surety bonds, advance payment guarantees, and performance standby letters of credit.

The Company retained obligations for guarantees related to the Power Generation business contributed in mid-1999 to the former ABB ALSTOM POWER NV joint venture. The guarantees primarily consist of performance guarantees, advance payment guarantees and other miscellaneous guarantees under certain contracts such as indemnification for personal injuries and property damages, taxes, and compliance with labor laws, environmental laws and patents. The guarantees are related to projects which are expected to be completed by 2015 but in some cases have no definite expiration. In May 2000, the Company sold its interest in the ABB ALSTOM POWER NV joint venture to ALSTOM SA (ALSTOM). As a result, ALSTOM and its subsidiaries have primary responsibility for performing the obligations that are the subject of the guarantees. Further, ALSTOM, the parent company, and ALSTOM POWER NV, formerly ABB ALSTOM POWER NV, have undertaken jointly and severally to fully indemnify and hold harmless the Company against any claims arising under such guarantees. Management’s best estimate of the total maximum potential exposure of quantifiable guarantees issued by the Company on behalf of its former Power Generation business is approximately $756 million and $875 million at December 31, 2005 and 2004, respectively. The Company has not experienced any losses related to guarantees issued on behalf of the former Power Generation business.

The Company retained obligations for guarantees related to the Upstream business sold in July 2004. The guarantees primarily consist of third-party performance guarantees, advance payment guarantees and other miscellaneous guarantees. The guarantees have maturity dates ranging from one to five years. The maximum amount payable under the guarantees is approximately $440 million and $650 million at December 31, 2005 and 2004, respectively. The Company has the ability to recover potential payments under these guarantees through certain backstop guarantees. The maximum potential recovery under these backstop guarantees is approximately $108 million and $146 million at December 31, 2005 and 2004, respectively.

Guarantees—financial

Financial guarantees represent irrevocable assurances that the Company will make payment to a beneficiary in the event that a third party fails to fulfill its financial obligations and the beneficiary under the guarantee incurs a loss due to that failure.

At December 31, 2005 and 2004, the Company had $209 million and $253 million, respectively, of financial guarantees outstanding. Of those amounts, $95 million and $123 million, respectively, were issued on behalf of companies in which the Company currently has or formerly had an equity interest. The guarantees have original maturity dates ranging from one to thirteen years.

Guarantees—indemnification

The Company has indemnified certain purchasers of divested businesses for potential claims arising from the operations of the divested businesses. To the extent the maximum loss related to such indemnifications could not be calculated, no amounts have been included under maximum potential payments in the table above. Indemnifications for which maximum losses could not be calculated include indemnifications for legal claims.

F-45

The Company delivered to the purchasers of the Upstream business and Reinsurance business guarantees related to assets and liabilities divested in 2004. The maximum liability at December 31, 2005 and 2004, of approximately $150 million and $198 million, respectively, relating to the Upstream and Reinsurance businesses will reduce over time, pursuant to the respective sales agreements.

Product and order related contingencies

The Company calculates its provision for product warranties based on historical claims experience and specific review of certain contracts. The provision for warranties and contract penalties in Note 15 includes penalties resulting from delays in contract fulfillment, which is not included in the amounts below.

Reconciliation of the provision for warranties, including guarantees of product performance is as follows:

	December 31,
	2005			2004
Balance at the beginning of year	$	677		$	513
Claims paid in cash or in kind	(119		)	(72		)
Net increase to provision for changes in estimates, warranties issued and warranties expired	237			178
Exchange rate differences	(65		)	58
Balance at the end of year	$	730		$	677

IBM Outsourcing Agreement

In 2003, the Company entered into a 10-year global framework agreement with International Business Machines Corporation (IBM) to outsource the Company’s information systems infrastructure services to IBM. The global framework agreement includes an obligation for IBM to lease new personal computers and other IT equipment to the Company as older equipment is retired. The Company accounts for these items as capital leases or operating leases based on the terms of the leases.

Further, pursuant to the global framework agreement, IBM will receive monthly payments from the Company’s subsidiaries in the respective countries related to information systems infrastructure services. Expected annual costs during the 10-year term of the global framework agreement approximate $230 million based on the current level of usage of the services.

Related party transactions

The IBM global framework agreement, referred to above, was negotiated between IBM and the Company. However, it should be noted that Jürgen Dormann, the Company’s Chairman, is a member of the Board of Directors of IBM, and Hans-Ulrich Märki, a director on the Company’s Board of Directors, is Chairman of IBM Europe/Middle East/Africa.

The Company maintains banking relationships with Skandinaviska Enskilda Banken AB (publ) (SEB) and Dresdner Bank AG. Specifically, both SEB and Dresdner Bank AG, each have a commitment to ABB of $120 million under our $2 billion multicurrency revolving credit facility of which no amounts were drawn at December 31, 2005. In addition, SEB is an arranger and dealer of the Company’s 5 billion Swedish krona commercial paper program, signed in November 2005. Jacob Wallenberg, a member of the Company’s Board of Directors, is the vice-chairman of SEB. Bernd W. Voss, a member of the Company’s Board of Directors, is a member of the supervisory board of Dresdner Bank AG. In addition, during 2005, the Company sold its Finnish Lease portfolio business to SEB.

F-46

Note 18   Taxes

Provision for taxes consists of the following:

	Year ended December 31,
	2005			2004			2003
Current taxes on income	$	445		$	332		$	215
Deferred taxes	37			(1		)	18
Tax expense from continuing operations	482			331			233
Tax (benefit) expense from discontinued operations	(8		)	21			54

The weighted-average tax rate is the tax rate that results from applying each subsidiary’s statutory income tax rate to the income from continuing operations before taxes and minority interest. The Company operates in countries that have differing tax laws and rates. Consequently, the consolidated weighted-average effective rate will vary from year to year according to the source of earnings or losses by country.

	Year ended December 31,
	2005			2004			2003
Reconciliation of taxes:
Income (loss) from continuing operations before taxes and minority interest and cumulative effect of accounting change	$	1,496		$	837		$	(115	)
Weighted-average tax rate	34.2		%	38.9		%	12.2		%
Taxes at weighted-average tax rate	512			326			(14		)
Items taxed at rates other than the weighted-average tax rate	(39		)	(36		)	15
Changes in valuation allowance	(19		)	115			276
Changes in tax laws and enacted tax rates	(22		)	3			4
Other, net	50			(77		)	(48		)
Tax expense from continuing operations	$	482		$	331		$	233
Effective tax rate for the year	32.2		%	39.5		%	(202.6		)%

In 2003, items taxed at rates other than the weighted-average tax rate included the tax effect of an $84 million expense comprising the change in fair value of the embedded derivative contained in the Company’s $968 million convertible bonds combined with the continued amortization of the discount on issuance of these bonds (see Note 14), partially offset by earnings recognized in relation to certain of the Company’s equity accounted investments.

The reconciliation of taxes for 2005, 2004 and 2003 included changes in the valuation allowance recorded in certain jurisdictions in respect of deferred tax assets that were recognized for net operating losses incurred in those jurisdictions. The change in valuation allowance was required as the Company determined it was more likely than not that such deferred tax assets would either be realized or no longer be realized. In 2005, the change in valuation allowance is predominately related to the Company’s operations in certain countries including the United States. In 2004, the change in valuation allowance is predominately related to the Company’s operations in certain countries including Canada and France. In 2003, the change in valuation allowance included an allowance of approximately $258 million and $9 million on deferred tax assets as a result of the Company’s determination that it was more likely than not that such deferred tax assets would no longer be realized within the Company’s remaining Oil, Gas and Petrochemicals business and certain countries within Central Europe respectively.

In 2005, the reconciling item “Other, net” included an expense of approximately $60 million relating to items that are deducted for accounting purposes, but are not included in the computation of taxable

F-47

income such as interest expense, state and local taxes on productive activities, disallowed meals and entertainment expenses and other similar items.

In 2004 and 2003, the reconciling item “Other, net” included a benefit of approximately $39 million and approximately $56 million, respectively, relating to the favorable resolution of certain prior year tax matters, including the release of a $38 million tax provision related to a tax case ruled in favor of the Company in 2003. Furthermore, 2004 included the one-time benefit of approximately $45 million from the losses of a post divestment reorganization and 2003 included the expense of approximately $16 million related to a tax claim filed in Central Europe. Additionally, in 2003, “Other, net” included $5 million, related to expenses that are no longer deductible under the Italian tax law as a result of the overstatement within the Company’s Power Technologies division in Italy (see Note 17).

In 2003, the loss from continuing operations before taxes and minority interest and cumulative effect of accounting change of $115 million included an $84 million expense comprising the change in fair value of the embedded derivative contained in the Company’s $968 million convertible bonds combined with the continued amortization of the discount on issuance of these bonds. Furthermore, the tax expense from continuing operations included the release of a $38 million tax provision related to a tax case ruled in favor of the Company, offset by expense of approximately $16 million related to a tax claim filed in Central Europe. In addition, the tax expense from continuing operations included a valuation allowance of approximately $258 million and $9 million on deferred tax assets as a result of the determination that it was more likely than not that such deferred tax assets would no longer be realized within the Company’s remaining Oil, Gas and Petrochemicals business and certain countries within Central Europe respectively. The effective tax rate applicable to income from continuing operations excluding the tax effect of these items would be 38.7 percent.

Deferred income tax assets and liabilities consist of the following:

	December 31,
	2005			2004
Deferred tax liabilities:
Financing receivables	$	—		$	(33	)
Property, plant and equipment	(165		)	(290		)
Pension and other accrued liabilities	(572		)	(479		)
Other	(142		)	(148		)
Total deferred tax liability	(879		)	(950		)
Deferred tax assets:
Investments and other	28			36
Property, plant and equipment	53			77
Pension and other accrued liabilities	1,057			833
Unused tax losses and credits	1,575			1,694
Other	341			551
Total deferred tax asset	3,054			3,191
Valuation allowance	(1,953		)	(2,017		)
Deferred tax asset, net of valuation allowance	1,101			1,174
Net deferred tax asset	$	222		$	224

Certain entities have deferred tax assets related to net operating loss carry-forwards and other items. Because recognition of these assets is uncertain, valuation allowances of $1,953 million and $2,017 million have been established at December 31, 2005 and 2004, respectively.

At December 31, 2005, net operating loss carry-forwards of $4,182 million and tax credits of $128 million are available to reduce future taxes of certain subsidiaries, of which $2,106 million loss

F-48

carry-forwards and $108 million tax credits expire in varying amounts through 2025 and the remainder does not expire. These carry-forwards are predominantly related to the Company’s U.S. and German operations.

The Company operates in numerous tax jurisdictions and, as a result, is regularly subject to audit by tax authorities. The Company provides for tax contingencies on the basis of their technical merits, including relative tax law and OECD guidelines, as well as on items relating to potential audits by tax authorities based upon its best estimate of the facts and circumstances as of each reporting period. Changes in the facts and circumstances could result in a material change to the tax accruals. The Company provides for contingencies whenever it is deemed probable 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. A significant part of the tax contingency provisions that have been accrued relate to pending court cases in Northern Europe relating to certain sale and leaseback transactions, as well as contingencies arising related to our interpretation of tax law and OECD guidelines.

Note 19   Other liabilities

Other liabilities consist of the following:

	December 31,
	2005		2004
Nuclear technology environmental provisions (see Note 17)	$	255	$	266
Non-current deposit liabilities (see Note 10)	309		314
Deferred income	120		143
Non current derivative liabilities	63		53
Other liabilities non-current	241		306
Total	$	988	$	1,082

Note 20   Employee benefits

The Company operates pension plans, including defined benefit, defined contribution and termination indemnity plans, in accordance with local regulations and practices. These plans cover a large portion of the Company’s employees and provide benefits to employees in the event of death, disability, retirement or termination of employment. Certain of these plans are multi-employer plans. The Company also operates other postretirement benefit plans in some countries.

Some of these plans require employees to make contributions and enable employees to earn matching or other contributions from the Company. The funding policies of the Company’s plans are consistent with the local government and tax requirements. The Company has several pension plans that are not required to be funded pursuant to local government and tax requirements.

The Company uses a December 31 measurement date for its plans.

F-49

Obligations and funded status

The following tables set forth the change in benefit obligations, the change in plan assets and the funded status recognized in the Consolidated Financial Statements at December 31, 2005 and 2004, for the Company’s benefit plans:

	Pension benefits						Other benefits
	2005			2004			2005			2004
Benefit obligation at the beginning of year	$	8,713		$	7,721		$	369		$	397
Service cost	189			190			3			3
Interest cost	364			375			18			23
Contributions from plan participants	39			46			10			10
Benefit payments	(511		)	(523		)	(37		)	(39		)
Benefit obligations of businesses acquired	—			38			—			—
Benefit obligations of businesses disposed	(20		)	(118		)	—			—
Actuarial (gain) loss	330			366			11			(23		)
Plan amendments and other	—			(14		)	(104		)	(3		)
Exchange rate differences	(1,093		)	632			—			1
Benefit obligation at the end of year	8,011			8,713			270			369
Fair value of plan assets at the beginning of year	7,262			6,041			—			—
Actual return on plan assets	758			476			—			—
Contributions from employer	558			753			27			29
Contributions from plan participants	39			46			10			10
Benefit payments	(511		)	(523		)	(37		)	(39		)
Plan assets of businesses acquired	—			34			—			—
Plan assets of businesses disposed	(1		)	(92		)	—			—
Plan amendments and other	—			(8		)	—			—
Exchange rate differences	(933		)	535			—			—
Fair value of plan assets at the end of year	7,172			7,262			—			—
Unfunded amount	839			1,451			270			369
Unrecognized transition liability	—			—			(8		)	(11		)
Unrecognized actuarial loss	(819		)	(1,019		)	(144		)	(141		)
Unrecognized prior service cost	(13		)	(22		)	113			16
Net amount recognized	$	7		$	410		$	231		$	233

The following amounts have been recognized in the Company’s Consolidated Balance Sheet at December 31, 2005 and 2004:

	Pension benefits						Other benefits
	2005			2004			2005		2004
Prepaid pension cost	$	(605	)	$	(536	)	$	—	$	—
Accrued pension cost	919			1,272			231		233
Intangible assets	(2		)	(11		)	—		—
Accumulated other comprehensive loss	(305		)	(315		)	—		—
Net amount recognized	$	7		$	410		$	231	$	233

Included in the $1,233 million and $1,551 million of pension and other benefits in the Consolidated Balance Sheet at December 31, 2005 and 2004, respectively, are $83 million and $46 million of long-term employee-related obligations not accounted for under Statement of Financial Accounting Standards No. 87, Employers’ Accounting for Pensions (SFAS 87) or Statement of Financial Accounting Standards No. 106 Employers’ Accounting for Postretirement Benefits Other Than Pensions (SFAS 106). Additionally,

F-50

provisions and other (see Note 15), contains an accrual of $83 million and $77 million at December 31, 2005 and 2004, respectively, for short-term employee benefits that do not meet the criteria of SFAS 87 or SFAS 106.

The pension and other employee benefits liability reported in the Consolidated Balance Sheets includes $307 million and $326 million at December 31, 2005 and 2004, respectively, to record a minimum pension liability. Accumulated other comprehensive loss includes $214 million and $206 million of minimum pension liability at December 31, 2005 and 2004, respectively.

The accumulated benefit obligation (ABO) for all defined benefit pension plans was $7,603 million and $8,228 million at December 31, 2005 and 2004, respectively.

The projected benefit obligation (PBO) and fair value of plan assets for pension plans with projected benefit obligations in excess of plan assets were:

	December 31,
	2005								2004
	PBO		Assets		Difference				PBO		Assets		Difference
PBO exceeds assets	$	5,161	$	4,116		$	1,045		$	8,294	$	6,810		$	1,484
Assets exceed PBO	2,850		3,056			(206		)	419		452			(33		)
Total	$	8,011	$	7,172		$	839		$	8,713	$	7,262		$	1,451

The accumulated benefit obligation and fair value of plan assets for pension plans with accumulated benefit obligations in excess of plan assets were:

	December 31,
	2005								2004
	ABO		Assets		Difference				ABO		Assets		Difference
ABO exceeds assets	$	1,708	$	930		$	778		$	5,008	$	3,910		$	1,098
Assets exceed ABO	5,895		6,242			(347		)	3,220		3,352			(132		)
Total	$	7,603	$	7,172		$	431		$	8,228	$	7,262		$	966

Components of net periodic benefit cost

For the years ended December 31, 2005, 2004 and 2003, net periodic benefit cost consists of the following:

	Pension benefits						Other benefits
	2005		2004		2003		2005		2004		2003
Service cost	$189		$190		$204		$3		$3		$3
Interest cost	364		375		369		18		23		26
Expected return on plan assets	(357	)	(330	)	(325	)	—		—		—
Amortization transition liability	—		5		1		—		2		6
Amortization prior service cost	4		4		9		(4	)	(2	)	—
Amortization of net actuarial loss	46		37		45		7		9		9
Other	2		4		8		1		2		—
Net periodic benefit cost	$248		$285		$311		$25		$37		$44

F-51

Assumptions

The following weighted-average assumptions were used to determine benefit obligations at December 31, 2005 and 2004:

	Pension benefits						Other benefits
	2005			2004			2005			2004
Discount rate		4.29	%		4.60	%		5.50	%		5.75	%
Rate of compensation increase		2.41	%		2.23	%		—			—

The discount rate assumption is derived from rates of high quality fixed income investments of appropriate durations for the respective plans.

The following weighted-average assumptions were used to determine net periodic benefit cost for years ended December 31, 2005, 2004 and 2003:

	Pension benefits						Other benefits
	2005		2004		2003		2005		2004		2003
Discount rate	4.60	%	4.97	%	5.10	%	5.75	%	6.25	%	6.74	%
Expected long-term return on plan assets	5.45	%	5.57	%	6.06	%	—		—		—
Rate of compensation increase	2.23	%	2.28	%	3.07	%	—		—		—

The expected long-term rate of return on assets assumption is derived from the current and projected asset allocation, the current and projected types of investments in each asset category and the long-term historical returns for each investment type.

The Company maintains non-pension postretirement benefit plans, which are generally contributory with participants’ contributions adjusted annually.

	2005		2004
Health care cost trend rate assumed for next year	10.38	%	11.76	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)	6.02	%	6.24	%
Year that the rate reaches the ultimate trend rate	2013		2013

Assumed health care cost trends have a significant effect on the amounts reported for the health care plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects at December 31, 2005:

	1-percentage-			1-percentage-
	point increase			point decrease
Effect on total of service and interest cost		$	1		$	(1	)
Effect on postretirement benefit obligation		$	19		$	(16	)

As of July 1, 2004, the Company adopted Financial Accounting Standards Board Staff Position (FSP) No. FAS 106-2, Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (which superseded FAS FSP No. 106-1). The effects of these provisions resulted in a reduction of $24 million in 2004 in ABO with an offset to unrecognized net actuarial loss in other benefits. The U.S. government will begin making the subsidy payments for employers in 2006.

During 2005, the Company amended the retiree medical health benefits in the United States to eliminate its subsidy on post-65 retiree medical and prescription drug coverage effective January 1, 2007 for certain retiree groups and effective January 1, 2006 for a union plan. For accounting purposes the amendments were effective September 1, 2005 and November 1, 2005, respectively. These amendments

F-52

reduced the accumulated postretirement benefit obligation by $101 million and net periodic benefit costs for 2005 by $5 million.

Plan assets

The Company’s pension plan weighted-average asset allocations at December 31, 2005 and 2004, and approximate long-term target allocation is as follows:

							Long term
	Plan assets						target
	2005			2004			allocation
Asset category:
Equity securities		34	%		33	%		20%–40	%
Debt securities		54	%		54	%		50%–70	%
Real estate		7	%		9	%		0%–15	%
Other		5	%		4	%		0%–15	%
Total		100	%		100	%

The pension plan assets for each individual plan are invested in accordance with statutory regulations, pension plan rules, and decisions of the pension fund trustees. The investment allocation strategy is expected to remain consistent with historical averages.

ABB constantly reviews the asset allocation in light of the duration of its pension liabilities and analysis trends and events that may affect assets values in order to initiate appropriate measures at an early stage.

At December 31, 2005 and 2004, the plan assets included approximately 800,000 of the Company’s capital stock with a total value of $8 million and $5 million respectively.

Contributions

During 2005, the Company made a non-cash contribution of $262 million of available-for-sale debt securities to certain of the Company’s pension plans in Germany and cash contributions of $296 million to other pension plans and $27 million to other benefit plans.

The Company expects to contribute approximately $160 million to its pension plans and $30 million to its other postretirement benefit plans in 2006 to meet minimum statutory requirements. The Company may make additional discretionary pension contributions during 2006.

The Company also maintains several defined contribution plans. The expense for these plans was $101 million, $71 million and $86 million in 2005, 2004 and 2003, respectively. The Company also contributed $61 million, $74 million and $80 million to multi-employer plans in 2005, 2004 and 2003, respectively.

F-53

Estimated future benefit payments

The expected future cash flows to be paid by the Company in respect of pension and other postretirement benefit plans at December 31, 2005 is as follows:

			Other postretirement benefits
	Pension		Benefit			Medicare
	benefits		payments			subsidies
2006	$	466		$	31		$	(2	)
2007	469			24			(1		)
2008	469			23			(1		)
2009	482			23			(1		)
2010	485			23			(1		)
Years 2011–2015	$	2,390		119			$	(8	)

Additionally, the Medicare subsidies column represents payments estimated to be received from the U.S. government as part of the Medicare Prescription Drug, Improvement and Modernization Act of 2003.

Note 21   Employee incentive plans

Management incentive plan

The Company maintains a management incentive plan (MIP Plan) under which it offers stock warrants and warrant appreciation rights (WARs) to key employees for no consideration.

Warrants granted under the MIP Plan allow participants to purchase shares of the Company at predetermined prices. Participants may sell the warrants rather than exercise the right to purchase shares. Equivalent warrants are listed on the SWX Swiss Exchange, which facilitates valuation and transferability of warrants granted under this plan. If the participant elects to sell the warrant on the market rather than exercise the right to purchase shares, the warrant may then be held by a non-employee of the Company. Each WAR gives the participant the right to receive, in cash, the market price of a warrant on the date of exercise of the WAR. The WARs are non-transferable.

Participants may exercise or sell warrants and exercise WARs after the vesting period, which is three years from the date of grant. Vesting restrictions can be waived in certain circumstances such as death or disability. All warrants and WARs expire six years from the date of grant. As the primary trading market for shares of ABB Ltd is the SWX Swiss Exchange (virt-x), the exercise prices of warrants and the trading prices of equivalent warrants listed on the SWX Swiss Exchange are denominated in Swiss francs. Accordingly, exercise prices are presented below in Swiss francs. Fair values are presented in U.S. dollars based upon exchange rates in effect as of the applicable period.

Warrants

The Company accounts for the warrants using the intrinsic value method of APB 25 as permitted by SFAS 123. All warrants were issued with exercise prices greater than the market prices of the stock on the dates of grant. Accordingly, the Company recorded no compensation expense related to the warrants, except in circumstances when a participant ceased to be employed by a consolidated subsidiary, such as after a divestment by the Company. In accordance with Financial Accounting Standards Board Interpretation No. 44, Accounting for Certain Transactions Involving Stock Compensation, the Company recorded compensation expense based on the fair value of warrants retained by participants on the date their employment ceased, with an offset to additional paid in capital. The impact of such expense was not material.

F-54

Presented below is a summary of warrant activity for the years shown:

	Number of warrants		Number of shares(1)		Weighted- average exercise price (Swiss francs)(2)
Outstanding at January 1, 2003	68,391,060		23,197,199			26.77
Granted(3)	27,254,250		5,450,850			7.00
Forfeited	(1,435,000	)	(361,758	)		19.66
Outstanding at December 31, 2003	94,210,310		28,286,291			23.05
Granted(4)	14,475,000		2,895,000			7.50
Forfeited	(3,000,000	)	(661,864	)		9.94
Expired	(10,538,000	)	(8,612,664	)		22.17
Outstanding at December 31, 2004	95,147,310		21,906,763			21.74
Forfeited	(1,200,000	)	(240,000	)		7.06
Expired	(19,213,060	)	(4,843,539	)		32.01
Outstanding at December 31, 2005	74,734,250		16,823,224			18.99
Exercisable at December 31, 2003	49,381,060		18,404,851			30.11
Exercisable at December 31, 2004	55,230,560		13,923,413			30.08
Exercisable at December 31, 2005	36,017,500		9,079,874			29.06

(1)All warrants granted prior to 1999 require the exercise of 100 warrants for 81.73 shares of ABB Ltd. Warrants granted in 1999, 2000 and 2001 require the exercise of 100 warrants for 25.21 shares of ABB Ltd. No warrants were granted in 2002. Warrants granted in 2003 and 2004 required the exercise of five warrants for one share of ABB Ltd. Information presented reflects the number of shares of ABB Ltd that warrant holders can receive upon exercise.

(2)Information presented reflects the exercise price per share of ABB Ltd.

(3)The aggregate fair value at date of grant of warrants issued in 2003 was $12 million, assuming a zero percent dividend yield, expected volatility of 44 percent, risk-free interest rate of 2.41 percent, and an expected life of six years.

(4)The aggregate fair value at date of grant of warrants issued in 2004 was $4 million, assuming dividend yield of 1.53 percent, expected volatility of 29 percent, risk-free interest rate of 1.98 percent, and an expected life of six years.

Of the outstanding warrants at December 31, 2005, 2004 and 2003, 9.9 million, 7.3 million and 6.6 million warrants, respectively, have been sold on the market by participants, representing 2.5 million, 1.8 million and 3.1 million shares, respectively.

F-55

Presented below is a summary of warrants outstanding at December 31, 2005.

			Weighted-
Range of exercice prices	Number of	Number of	average
(in Swiss francs)(1)	warrants	shares(2)	remaining life
42.05	19,630,000	4,948,648		0.4 years
13.49	16,387,500	4,131,226		1.9 years
7.00	24,391,750	4,878,350		3.9 years
7.50	14,325,000	2,865,000		4.9 years
7.00–42.05	74,734,250	16,823,224		2.8 years

(1)Information presented reflects the exercise price per share of ABB Ltd.

(2)Information presented reflects the number of shares of ABB Ltd that warrant holders can receive upon exercise of warrants.

In February 2006, the Company granted 12,130,000 warrants to employees for no consideration under its MIP Plan. The warrants give the right to purchase 2,426,000 shares of ABB Ltd and have a strike price of 15.30 Swiss francs, vest over three years and have a life of six years.

WARs

As each WAR gives the holder the right to receive cash equal to the market price of a warrant on date of exercise, the Company is required by APB 25 to record a liability based upon the fair value of outstanding WARs at each period end, amortized on a straight-line basis over the three-year vesting period. In selling, general and administrative expenses, the Company recorded expense of $31 million for 2005, income of $4 million for 2004 and expense of $1 million for 2003, as a result of changes in the fair value of the outstanding WARs and the vested portion. To hedge its exposure to fluctuations in the fair value of outstanding WARs, the Company purchased cash-settled call options, which entitle the Company to receive amounts equivalent to its obligations under the outstanding WARs. In accordance with EITF 00-19 the cash-settled call options have been recorded as assets measured at fair value (see Note 5), with subsequent changes in fair value recorded through earnings as an offset to the compensation expense recorded in connection with the WARs. In the fourth quarter of 2005, the Company changed the income statement classification of the cash-settled call options and, as a result, reclassified expense of $15 million and $9 million for 2004 and 2003, respectively, from interest and other finance expense to selling general and administrative expenses. In 2005, the Company recognized income of $26 million in selling, general and administrative expenses related to the cash-settled call options.

The aggregate fair value of outstanding WARs was $53 million and $14 million at December 31, 2005 and 2004, respectively. The fair value of WARs was determined based upon the trading price of equivalent warrants listed on the SWX Swiss Exchange.

F-56

Presented below is a summary of WAR activity for the years shown.

	Number of WARs
	outstanding
Outstanding at January 1, 2003		98,294,240
Granted		21,287,000
Exercised		(2,052,500	)
Forfeited		(1,850,000	)
Outstanding at December 31, 2003		115,678,740
Granted		30,490,000
Exercised		(3,481,220	)
Forfeited		(2,600,000	)
Expired		(7,895,000	)
Outstanding at December 31, 2004		132,192,520
Exercised		(7,100,000	)
Forfeited		(2,050,000	)
Expired		(17,045,520	)
Outstanding at December 31, 2005		105,997,000

At December 31, 2005 and 2004, 58,107,500 and 81,590,520 of the WARs were exercisable, respectively. No WARs were granted in 2005. The aggregate fair value at date of grant of WARs granted in 2004 and 2003 was $8 million and $9 million, respectively.

In February 2006, the Company granted 34,172,500 WARs to employees for no consideration under its MIP Plan. Each WAR gives the participant the right to receive, in cash, the market price of a warrant on the date of exercise of the WAR. The WARs vest over three years and have a life of six years.

Employee share acquisition plan

To incentivize employees, the Company has an employee share acquisition plan (ESAP Plan). The ESAP Plan is an employee stock option plan with a savings feature. Employees save over a twelve-month savings period, by way of monthly salary deductions. The maximum monthly savings amount is the lower of 10 percent of gross monthly salary or the local currency equivalent of 750 Swiss francs. At the end of the savings period, employees choose whether to exercise their stock options using their savings plus interest to buy ABB Ltd shares (American Depositary Shares (ADS) in the case of employees in the United States - each ADS representing one registered share of the Company) at the exercise price set at the grant date, or have their savings returned with interest. The savings are accumulated in a bank account held by a third party trustee on behalf of the participants and earn interest.

The maximum number of shares that each employee can purchase has been determined based on the exercise price and the aggregate savings for the twelve-month period, increased by 10 percent to allow for currency fluctuations. If, at the exercise date, the balance of savings plus interest exceeds the maximum amount of cash the employee must pay to fully exercise their stock options, the excess funds will be returned to the employee. If the balance of savings and interest is insufficient to permit the employee to fully exercise their stock options, the employee has the choice but not the obligation, to make an additional payment so that the employee may fully exercise their stock options.

If an employee ceases to be employed by the Company, the accumulated savings as of the date of cessation of employment will be returned to the employee and the employee’s right to exercise their stock options will be forfeited. Employees can withdraw from the ESAP Plan at any time during the savings period and will be entitled to a refund of their accumulated savings.

Presented below is a summary of the ESAP Plan.

F-57

	Number of
	stock options(1)
Outstanding at January 1, 2004		—
Granted (2004 grant)(2)		7,548,360
Forfeited (2004 grant)		(2,620	)
Outstanding at December 31, 2004		7,545,740
Forfeited (2004 grant)		(333,440	)
Not exercised—savings returned plus interest (2004 grant)		(585,750	)
Exercised (2004 grant)		(6,626,550	)
Granted (2005 grant)(3)		6,222,890
Forfeited (2005 grant)		(2,290	)
Outstanding at December 31, 2005		6,220,600

(1)Includes shares represented by ADS.

(2)The aggregate fair value at date of grant was $5 million, assuming a zero percent dividend yield, expected volatility of 28 percent, a risk-free interest rate of 0.97 percent and a life of one year from date of grant.

(3)The aggregate fair value at date of grant was $5 million, assuming a dividend yield of 0.97 percent, expected volatility of 27 percent, a risk-free rate of 1.40 percent and a life of one year from date of grant.

The exercise price per share and ADS of 6.95 Swiss francs and $5.90, respectively, for the 2004 grant, and 10.30 Swiss francs and $7.88, respectively for the 2005 grant, were determined using the closing price of the ABB Ltd share on SWX Swiss Exchange (virt-x) and ADS on the New York Stock Exchange on the respective grant dates of November 9, 2004 and November 8, 2005.

The Company accounts for awards under the ESAP Plan using the intrinsic value method of APB 25. The awards were issued with an exercise price equal to the market price of the stock on grant date. Accordingly, the intrinsic value as of grant date was zero and the Company has recorded no compensation expense related to the ESAP Plan.

Performance incentive share plan

The Company has a Performance incentive share plan (Performance Plan) for members of its Executive Committee (EC Members). The Performance Plan involves annual conditional grants of the Company’s stock. The number of shares conditionally granted is dependent upon the base salary of the EC Member. The actual number of shares that each participant will receive free of charge at a future date is dependent on (1) the performance of ABB Ltd shares during a defined period (Evaluation Period) compared to those of a selected peer group of publicly-listed multinational companies and (2) the term of service of the respective EC Member in that capacity during the Evaluation Period. The actual number of shares received after the Evaluation Period cannot exceed 100 percent of the conditional grant.

The performance of the Company compared to its peers over the Evaluation Period will be measured as the sum, in percentage terms, of the average percentage price development of the ABB Ltd share price over the Evaluation Period and an average annual dividend yield percentage (the Company’s Performance).

In order for shares to vest, the Company’s Performance over the Evaluation Period must be positive and equal to or better than half of the defined peers. The actual number of shares to be delivered will be dependent on the Company’s ranking in comparison with the defined peers. The full amount of the conditional grant will vest when the Company’s Performance is better than three-quarters of the defined peers.

F-58

If during the vesting period, an EC Member gives notice of resignation or, under certain circumstances, is given notice of termination, then the right to shares is forfeited. In the event of death or disability during the vesting period, the conditional grant size for that participant is reduced pro rata based on the remaining vesting period. If, during the vesting period, a Performance Plan participant ceases to be an EC Member for reasons other than described above, the conditional grant size is reduced pro rata based on the portion of the vesting period remaining when the participant ceases to be an EC Member, unless otherwise determined by the Company’s Nomination and Compensation Committee. In respect of a Performance Plan grant for which the vesting period has not expired, the Nomination and Compensation Committee can invite a new EC Member to receive a conditional grant, adjusted to reflect the shorter service period.

In 2004, 443,430 shares were conditionally granted to EC Members. In January 2005, and December 2005, a further 59,001 and 15,870 shares, respectively, were conditionally granted under the 2004 launch to new EC Members, resulting in a total conditional grant under the 2004 launch of 518,301 shares.

In December 2005, 1,044,456 shares were conditionally granted to EC Members under the 2005 launch of the Performance Plan.

Presented below is a summary of the Performance Plan.

		Total numbers of shares			Reference price
Launch year	Evaluation Period	conditionally granted			(Swiss francs)(1)
2004	March 15, 2004, to March 15, 2006		518,301	(2)		7.68
2005	March 15, 2005, to March 15, 2008		1,044,456			7.15

(1)For the purpose of comparison with the peers, the reference price is calculated as the average of the closing prices of the ABB Ltd share on SWX Swiss Exchange (virt-x) over the 20 trading days preceding March 15 of the respective launch year.

(2)Includes shares conditionally granted in 2005 under the 2004 launch of the Performance Plan.

The Company accounts for awards under the Performance Plan using the intrinsic value method of APB 25. As the shares that vest are awarded free of charge, the intrinsic value of the award is equivalent to the market price of the stock. Since the actual number of shares that participants will ultimately receive is not determinable until after the end of the Evaluation Period, the Performance Plan is deemed to be a variable plan in accordance with APB 25. Up to January 1, 2006, the date of adoption of SFAS 123R, changes in the fair value of the Company’s stock and the number of shares anticipated to vest result in a change in the intrinsic value and amount of the awards and a corresponding change to compensation expense over the vesting period. The amount of compensation expense recorded in selling, general and administrative expenses for 2005 was $4 million while the amount for 2004 was insignificant.

The aggregate fair value of the 2005 and 2004 launches at their grant dates was approximately $9 million and $3 million, respectively, assuming vesting of the maximum award in March 2008 and March 2006, respectively.

Note 22   Stockholders’ equity

In March 2003, the Company sold 80 million treasury shares in two transactions for approximately $156 million.

At the Company’s annual general meeting held on May 16, 2003, the Company’s shareholders approved amendments to its articles of incorporation providing for an increase in authorized share capital and an increase in contingent share capital. The amendments included the creation of 250 million Swiss francs in authorized share capital (expiring May 2005), replacing the 100 million Swiss francs in authorized

F-59

share capital that expired in June 2001. This entitled the Company’s Board of Directors to issue up to 100 million new ABB Ltd shares, including approximately 30 million CE Settlement Shares (see Note 17). The amendments also included an increase of contingent capital from 200 million Swiss francs to 750 million Swiss francs, allowing the issuance of up to a further 300 million new ABB Ltd shares which may be used primarily for the exercise of conversion rights granted in connection with issuance of bonds and other financial market instruments and for the issuance of new shares to employees.

In October 2003, the Company announced a three-component capital-strengthening program, comprised of a share capital increase, a credit facility agreement and a bond issuance. As part of this program, in November 2003, an extraordinary shareholders’ meeting resolved to increase the Company’s share capital by approximately 840 million shares through a rights issue. In December 2003, the Company completed the 7-for-10 rights offering for the 840 million new registered shares at an offer price of 4 Swiss francs per share resulting in a net increase of capital stock and additional paid in capital of approximately $2.5 billion.

In December 2003, the Company issued 30,298,913 CE Settlement Shares out of its authorized capital for purposes of fulfilling the Company’s obligations under a pre-packaged plan of reorganization under Chapter 11 of the U.S. Bankruptcy Code of Combustion Engineering. In accordance with its then current articles of incorporation, the pre-emptive rights of the shareholders were excluded and allocated to a Company subsidiary, which subscribed for these shares and holds them until they will be contributed to the Asbestos PI Trust or any similar trust, once a plan of reorganization of Combustion Engineering is declared effective.

In November 2005, the Company issued 6,626,550 shares from contingent capital stock for the purposes of fulfilling the Company’s obligations under the ESAP Plan (see Note 21).

At December 31, 2005, the Company had 2,370,314,947 authorized shares. Of these, 2,076,941,497 shares are registered and issued, including 30,298,913 CE Settlement Shares that are reserved for use in connection with a plan of reorganization of Combustion Engineering. As these  shares are presently held by one of the Company’s subsidiaries and carry no participation rights, these shares are not treated as outstanding for the purposes of the Company’s Consolidated Financial Statements. The CE Settlement Shares will only become outstanding and carry participation rights once a plan of reorganization for Combustion Engineering becomes effective and the shares have been contributed to the Asbestos PI Trust or any similar trust created under such a plan. Should a plan ultimately not become effective, the CE Settlement Shares reserved for such use would be cancelled by the Company.

At December 31, 2005, the Company had outstanding obligations to deliver approximately 50 million shares at exercise prices ranging from 7.00 to 42.05 Swiss francs for securities issued under employee incentive plans and call options sold to a bank at fair value during 2001, 2003 and 2004. These financial instruments expire in periods ranging from June 2006 to December 2010 and were recorded as equity instruments in accordance with EITF 00-19. Also, at December 31, 2005, the Company had obligations to deliver approximately 107 million shares at a conversion price of $9.03 as a result of the issuance of convertible bonds in May 2002 and to deliver approximately 105 million shares at a conversion price of 9.53 Swiss francs as a result of the issuance of convertible bonds in September 2003. In addition, at December 31, 2005, the Company had outstanding contingent obligations to deliver up to a maximum of 1.6 million shares free of charge to EC Members under the 2004 and 2005 launches of the Performance Plan.

Dividends are payable to the Company’s stockholders based on the requirements of Swiss law, ABB Ltd’s Articles of Incorporation and stockholders’ equity as reflected in the unconsolidated financial statements of ABB Ltd prepared in compliance with Swiss law. At December 31, 2005, of the 9,017 million Swiss francs stockholders’ equity reflected in such unconsolidated financial statements, 5,192 million Swiss francs is share capital, 2,219 million Swiss francs is restricted, 1,235 million Swiss francs is unrestricted and 371 million Swiss francs is available for distribution.

F-60

Basic earnings (loss) per share is calculated by dividing income (loss) by the weighted-average number of shares outstanding during the year. Diluted earnings (loss) per share is calculated by dividing income (loss) 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; outstanding options granted under the Company’s employee incentive plans; and shares issuable in relation to outstanding convertible bonds. In 2005, 2004 and 2003, outstanding securities representing a maximum of 133 million, 265 million and 271 million shares, respectively, were excluded from the calculation of diluted earnings (loss) per share as their inclusion would have been antidilutive.

	Year ended December 31,
	2005			2004			2003
Basic earnings (loss) per share:
Income (loss) from continuing operations before cumulative effect of accounting change	$	883		$	404		$	(415	)
Loss from discontinued operations, net of tax	(143		)	(439		)	(364		)
Cumulative effect of accounting change, net of tax	(5		)	—			—
Net income (loss)	$	735		$	(35	)	$	(779	)
Weighted-average number of shares outstanding (in millions)	2,029			2,028			1,220
Basic earnings (loss) per share:
Income (loss) from continuing operations before cumulative effect of accounting change	$	0.44		$	0.20		$	(0.34	)
Loss from discontinued operations, net of tax	(0.08		)	(0.22		)	(0.30		)
Cumulative effect of accounting change, net of tax	—			—			—
Net income (loss)	$	0.36		$	(0.02	)	$	(0.64	)

	Year ended December 31,
	2005			2004			2003
Diluted earnings (loss) per share:
Income (loss) from continuing operations before cumulative effect of accounting change	$	883		$	404		$	(415	)
Effect of dilution:
Interest on convertible bonds, net of tax	26			—			—
Income (loss) from continuing operations before cumulative effect of accounting change, adjusted	909			404			(415		)
Loss from discontinued operations, net of tax	(143		)	(439		)	(364		)
Cumulative effect of accounting change, net of tax	(5		)	—			—
Net income (loss), adjusted	$	761		$	(35	)	$	(779	)
Weighted-average number of shares outstanding (in millions)	2,029			2,028			1,220
Effect of dilutive securities:
Call options	4			1			—
Convertible bonds	105			—			—
Diluted weighted-average number of shares outstanding (in millions)	2,138			2,029			1,220
Diluted earnings (loss) per share:
Income (loss) from continuing operations before cumulative effect of accounting change	$	0.43		$	0.20		$	(0.34	)
Loss from discontinued operations, net of tax	(0.07		)	(0.22		)	(0.30		)
Cumulative effect of accounting change, net of tax	—			—			—
Net income (loss), adjusted	$	0.36		$	(0.02	)	$	(0.64	)

Note 24   Transformer business and other restructuring charges

On June 30, 2005, the Company announced its decision to consolidate its global transformer business in the Power Technology division, including closing certain plants and employment reductions, as a result

F-61

of overcapacity, increasing raw material costs and a regional shift in demand experienced by the transformer business. This consolidation program is expected to be completed by the end of 2008 and will result in approximately $240 million of total charges.

During 2005, the Company recorded a charge of $123 million; $105 million was recorded in cost of sales, $3 million in selling, general and administrative expenses and $15 million in other income (expense) net. This charge consisted of $58 million related to employee severance costs, $24 million related to inventory and long-lived asset impairments and $41 million of estimated contract settlement costs and loss order costs.

Liabilities associated with these charges are expected to be settled primarily by the end of 2006 and consist of the following:

					Contractual
	Employee				settlement/(loss)
	severance costs				order costs				Total
	(U.S. dollars in millions)
Charges		$	58			$	41		$	99
Cash paid		(7		)		(10		)	(17		)
Liability at December 31, 2005		$	51			$	31		$	82

The Company will continue to assess other potential losses and costs it might incur in relation to the transformer business consolidation program. These future costs are not yet accruable; however, the Company expects that additional costs will be incurred throughout the duration of the transformer business consolidation program.

In addition to the transformer business consolidation described above, the Company continues to restructure individual facilities and factories programs to increase efficiencies by reducing headcount and streamlining operations. At December 31, 2005, liabilities related to these other programs consist of $23 million for workforce reductions and $35 million for lease termination and other exit costs. These liabilities will be paid over approximately eleven years as lease shortfall payments are made.

Note 25   Segment and geographic data

Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information (SFAS 131), establishes standards for reporting information about operating segments. The following information is provided in accordance with the requirements of SFAS 131 and is consistent with how business results are reviewed by management.

For the years ended December 31, 2005, 2004 and 2003, the Company maintained two business divisions, Power Technologies and Automation Technologies. The remaining operations of the Company are grouped in Non-core activities. Effective January 1, 2005, the Company’s remaining New Ventures business area, previously reported separately within Non-core activities was reclassified into Other Non-core activities. All periods presented have been restated to reflect the organizational structure of the Company.

·The Power Technologies division produces transformers, switchgear, breakers, capacitors, cables and other products and technologies for high- and medium-voltage applications. It serves electric, gas, and water utilities as well as industrial and commercial customers, with a broad range of products, systems and services for power transmission, distribution and power plant automation. The division’s principal customers are electric, gas and water utilities, owners and operators of power transmission and generating systems and operators of large commercial buildings and heavy industrial plants.

·The Automation Technologies division provides products, systems, software and services for the automation and optimization of industrial and commercial processes. Key technologies include

F-62

measurement and control, instrumentation, process analysis, drives and motors, turbochargers, power electronics, robots, and low voltage products. These technologies are sold to customers of the automotive, cement, chemical, distribution, electronics, food and beverage, life sciences, marine, metals, mining, paper, petroleum, printing and telecommunications industries with application-specific power and automation technology.

·Non-core activities include the following:

·The Company’s remaining Oil, Gas and Petrochemicals business, consisting of a full service engineering company which, in addition to having expertise in engineering, procurement and construction projects, also licenses process technologies in the refining, chemical, petrochemical and polymer fields;

·The Company’s remaining Equity Ventures business, consisting primarily of the Company’s investment in Jorf Lasfar Energy Company S.C.A. (JLEC);

·The Company’s remaining Structured Finance business;

·The Company’s remaining Building Systems business which designs, builds and maintains complete installations for industrial, infrastructure and commercial facilities; and

·The Company’s Customer Service and Logistic Systems business areas.

·Corporate/Other includes Headquarters, Central Research and Development, Real Estate and Group Treasury Operations.

The Company evaluates performance of its segments based on earnings before interest and taxes, which excludes interest and dividend income, interest and other finance expense, provision for taxes, minority interest, and loss from discontinued operations, net of tax. In accordance with SFAS 131, the Company presents division revenues, depreciation and amortization, earnings before interest and taxes, total assets and capital expenditures, all of which have been restated to reflect the changes to the Company’s internal structure, including the effect of inter-division transactions. The Company accounts for inter-division sales and transfers as if the sales and transfers were to third parties, at current market prices. Earnings (loss) before interest and taxes on inter-divisional sales for products not yet delivered to third-party customers is eliminated in the division for the years ended December 31, 2005 and 2004. In 2003, the Company eliminated such earnings (loss) before interest and taxes in the Inter-division line in the table below.

The following tables summarize information for each segment:

							Earnings (loss)
				Depreciation			before interest				Total			Capital
2005	Revenues			and amortization			and taxes				assets(1)			expenditures(2)
Power Technologies	$	9,784			$	199		$	789			$	6,338		$	159
Automation Technologies	12,161				295			1,312				7,929			220
Non-core activities:
Oil, Gas and Petrochemicals	933				12			48				1,182			—
Equity Ventures	2				4			69				625			—
Structured Finance	5				1			—				53			—
Building Systems	421				2			(37		)		211			2
Other Non-core activities	60				3			(46		)		80			5
Total Non-core activities	1,421				22			34				2,151			7
Corporate/Other	733				81			(393		)		5,858			70
Inter-division elimination	(1,657		)		—			—				—			—
Consolidated	$	22,442			$	597		$	1,742			$	22,276		$	456

F-63

							Earnings (loss)
				Depreciation			before interest				Total			Capital
2004	Revenues			and amortization			and taxes				assets (1)			expenditures (2)
Power Technologies	$	8,675			$	213		$	608			$	6,142		$	163
Automation Technologies	11,000				293			1,023				8,222			243
Non-core activities:
Oil, Gas and Petrochemicals	1,079				26			(4		)		1,460			54
Equity Ventures	7				6			69				640			10
Structured Finance	4				1			(14		)		764			—
Building Systems	508				3			(70		)		270			1
Other Non-core activities	93				7			(43		)		124			14
Total Non-core activities	1,691				43			(62		)		3,258			79
Corporate/Other	887				84			(523		)		7,055			58
Inter-division elimination	(1,643		)		—			—				—			—
Consolidated	$	20,610			$	633		$	1,046			$	24,677		$	543

2003	Revenues			Depreciation and amortization			Earnings (loss) before interest and taxes				Capital expenditures(2)
Power Technologies	$	7,524			$	187		$	592			$	134
Automation Technologies	9,602				253			735				225
Non-core activities:
Oil, Gas and Petrochemicals	1,895				—			(296		)		57
Equity Ventures	26				5			76				56
Structured Finance	31				3			(68		)		1
Building Systems	1,829				9			(104		)		5
Other Non-core activities	540				59			(128		)		12
Total Non-core activities	4,321				76			(520		)		131
Corporate/Other	905				69			(497		)		57
Inter-division elimination	(2,020		)		—			(23		)		—
Consolidated	$	20,332			$	585		$	287			$	547

(1)In 2004 and 2003, the Company evaluated its segments financial position based on net operating assets. In 2005, the Company reviewed segment performance based on total assets. It is not practicable for the Company to present total asset information based on the segment structure indicated above for 2003.

(2)Capital expenditures reflect purchases of property, plant and equipment and intangible assets.

Geographic information

	Revenues Year ended December 31,						Long-lived assets at December 31,
	2005		2004		2003		2005		2004
Europe	$	11,139	$	10,750	$	10,950	$	1,902	$	2,295
The Americas	4,231		3,557		3,844		237		264
Asia	5,127		4,261		3,519		317		283
Middle East and Africa	1,945		2,042		2,019		109		122
	$	22,442	$	20,610	$	20,332	$	2,565	$	2,964

Revenues have been reflected in the regions based on the location of the customer. The United States generated approximately 11 percent, 11 percent and 12 percent of the Company’s total revenues in 2005, 2004 and 2003 respectively. Germany generated approximately 10 percent, 11 percent and 11 percent of

F-64

the Company’s total revenues in 2005, 2004 and 2003 respectively. More than 95 percent of the Company’s total revenues were generated outside Switzerland in 2005, 2004 and 2003. Long-lived assets represent property, plant and equipment, net, and are shown by location of the assets. Switzerland and Germany represented approximately 22 percent and 15 percent, respectively, of the Company’s long-lived assets at both December 31, 2005 and 2004, respectively.

The Company does not segregate revenues derived from transactions with external customers for each type or group of products and services. Accordingly, it is not practicable for the Company to present revenues from external customers by product and service type.

Management estimates that approximately 62 percent of the Company’s employees are subject to collective bargaining agreements in various countries. These agreements are subject to various regulatory requirements and are renegotiated on a regular basis in the normal course of business.

2006 Realignment

On September 6, 2005, the Company announced a realignment of our business divisions and a change in the composition of our Executive Committee, which was effective beginning January 1, 2006. The realignment was made to strengthen the Company’s focus on customer relationships and growth. Effective January 1, 2006, the Company will operate five reporting segments that are grouped on the basis of similar product, market and operating factors:

·Power Products Division, which designs and manufactures power transformers for utility, transportation and industrial customers, as well as transformer components.

·Power Systems Division, which undertakes turnkey contracts to install and upgrade transmission and distribution systems incorporating components manufactured by both ABB and by third parties.

·Automation Products Division manufactures low-voltage circuit breakers, drives and motors, switches and control products to protect people, installations and electronic equipment from electrical overloads, as well as instrumentation products to measure and control the flow of fluids.

·Process Automation which develops integrated process control and information management systems and turbochargers for a variety of industries, primarily pulp and paper, minerals and mining, chemicals and pharmaceuticals, oil and gas, and the marine industry.

·Robotics Division which develops and manufactures industrial robots and related equipment for the automotive and other manufacturing industries.

The Company will report segment information based on the realigned divisions starting in the first quarter of 2006.

F-65

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of ABB Ltd:

We have audited the consolidated financial statements of ABB Ltd as of December 31, 2005 and 2004, and for each of the three years in the period ended December 31, 2005, and have issued our report thereon dated March 3, 2006 (included elsewhere in this Annual Report on Form 20-F). Our audits also included the financial statement schedules listed in Item 18 (h) of this Annual Report on Form 20-F. This financial statement schedule is the responsibility of the Company’s management. Our responsibility is to express an opinion on this financial statement schedule based on our audits. We did not audit the 2004 and 2003 financial statements of Jorf Lasfar Energy Company, a corporation in which the Company has a 50% interest (the Company’s equity in Jorf Lasfar Energy Company’s net income is stated at $63 million in 2004 and $60 million in 2003). Those statements were audited by other auditors whose report has been furnished to us. Our opinion, insofar as it relates to amounts included for Jorf Lasfar Energy Company, is based solely on the report of the other auditors.

In our opinion, based on our audits and the report of other auditors, the financial statement schedule referred to above, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

/s/ Ernst & Young AG

Zurich, Switzerland

March 3, 2006

S-1

Schedule II—Valuation and Qualifying Accounts

Description	Balance at the beginning of year		Additions		Deductions		Balance at the end of year
	(U.S dollars in millions)
Accounts Receivable—allowance for doubtful accounts:
Year ending December 31,
2005		309		108		138		279
2004		264		136		91		309
2003		253		110		99		264

S-2

EX-2.3

EXHIBIT 2.3

	LIMITED LIABILITY PARTNERSHIP
EXECUTION COPY

ABB INTERNATIONAL FINANCE LIMITED

as issuer

PROGRAMME FOR THE ISSUANCE OF DEBT INSTRUMENTS

AMENDED AND RESTATED FISCAL AGENCY
AGREEMENT

8 December 2005

CONTENTS

SECTION		Page
1.	Interpretation	1
2.	Appointment Of The Paying Agents And The Registrars	5
3.	The Instruments	5
4.	Issuance Of Instruments	8
5.	Replacement Instruments	12
6.	Payments To The Fiscal Agent Or The Registrar	13
7.	Payments To Holders Of Bearer Instruments	15
8.	Payments To Holders Of Registered Instruments	17
9.	Miscellaneous Duties Of The Fiscal Agent And The Paying Agents	17
10.	Early Redemption	22
11.	Miscellaneous Duties Of The Registrars	22
12.	Commissions, Fees And Expenses	25
13.	Terms Of Appointment	25
14.	Changes In Agents	26
15.	Substitution	29
16.	Further Issuers	30
17.	Notices	32
18.	Law And Jurisdiction	33
19.	Modification	34
20.	Counterparts	34
21.	Contracts (Rights Of Third Parties) Act 1999	34
Form Of Temporary Global Instrument (Bearer)		35
Form Of Permanent Global Instrument		48
Form Of Definitive Instrument (“ISMA” Format)		55
Form Of Registered Instrument		63
Provisions For Meetings Of Holders Of Instruments		67
Form Of Deed Of Assumption		76
Regulations Concerning Transfers Of Registered Instruments And Exchanges Of Bearer Instruments For Registered InstrumentS		82
The Specified Offices Of The Paying Agents And The Registrars		84

THIS AMENDED AND RESTATED FISCAL AGENCY AGREEMENT is made on 8 December 2005 and replaces the Amended and Restated Fiscal Agency Agreement dated 24 November 2004 as supplemented.

BETWEEN:

(1)ABB INTERNATIONAL FINANCE LIMITED (“AIFLTD”) (the “Issuer”, which expression shall, where the context so permits, include any Further Issuer as defined in Clause 16.1 hereof);

(2)FORTIS BANQUE LUXEMBOURG S.A. in its capacities as fiscal agent (the “Fiscal Agent”, which expression shall include any successor to Fortis Banque Luxembourg S.A. in its capacity as such) and principal registrar (the “Principal Registrar”, which expression shall include any successor to Fortis Banque Luxembourg S.A. in its capacity as such); and

(3)BANQUE MEESPIERSON BGL S.A. in its capacity as Swiss paying agent for the purposes of article 26 of the Listing Rules of the SWX Swiss Exchange (together with the Fiscal Agent, the “Paying Agents”, which expression shall include any substitute or additional paying agents appointed in accordance herewith).

WHEREAS:

(A)The Issuer established a programme (the “Programme”) for the issuance of debt instruments (the “Instruments”) having any maturity up to thirty years, subject to compliance with all legal and/or regulatory requirements and in connection with which they have entered into an amended and restated dealership agreement dated 8 December 2005 (the “Dealership Agreement”) and made between the Issuer, ABB Ltd and Morgan Stanley & Co. International Limited (the “Dealer”, which expression shall include any substitute or additional dealers appointed in accordance with the Dealership Agreement).  In respect of bearer Instruments issued in temporary global or permanent global form, the Issuer has executed and delivered a deed of covenant dated 10 March 1993 (the “Deed of Covenant”).

(B)Instruments may be issued on a listed or unlisted basis.  The Issuer has made an application to the SWX Swiss Exchange (the “SWX”) for approval of the Programme, under which, upon approval (and subsequent annual approvals of updates of the Programme), Instruments can be issued and listed on SWX for a period of twelve months.

(C)The parties hereto wish to record certain arrangements which they have made in relation to the Instruments to be issued under the Programme.

IT IS AGREED as follows:

1.INTERPRETATION

1.1In this Agreement, any reference to:

“Authorised Amount” shall have the meaning ascribed in the Dealership Agreement;

1

“Banking Day” is to a day (other than Saturdays and Sundays) on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) in the place where the specified office of the Fiscal Agent or, as the case may be, the Registrar is located;

a “Clause” is, unless the context indicates otherwise, to a Clause in a Section hereof;

“Clearstream, Luxembourg” means Clearstream Banking, société anonyme;

a “Condition” is to the terms and conditions of the Instruments as appearing in the Information Memorandum or, in relation to any Tranche or Series of Instruments, such terms and conditions as the same may be amended or supplemented or replaced as described in the relevant Pricing Supplement or Pricing Supplements and any reference to a numbered “Condition” is to the correspondingly numbered provision thereof and “terms and conditions” should be construed accordingly;

a “Coupon” is to an interest coupon and where the context permits, a Talon, in each case appertaining to a Definitive Instrument;

“Euroclear” is to Euroclear Bank S.A./N.V., as operator of the Euroclear System;

“Event of Default” is to any of the circumstances or events set out in Condition 7 (as the same may be modified by the relevant Pricing Supplement in relation to any Tranche of Instruments);

the “Exchange Act” is to the United States Securities Exchange Act of 1934;

the “Exchange Date” means the date which is 40 days after the completion of the distribution of the Instruments comprising the relevant Tranche, as specified in the relevant Pricing Supplement;

“Information Memorandum” means the information memorandum the preparation of which has been procured by the Issuer in order to obtain approval by SWX of the Programme as a “domestic issuance programme” according to the Additional Rules for the Listing of Bonds of SWX, together with any information incorporated therein by reference, as the same may be amended, supplemented, updated and/or substituted from time to time and any further information memorandum prepared in connection with the listing of such Instruments on any other stock exchange (as such further information memorandum may be amended, supplemented, updated and/or substituted from time to time);

“Instalment Instrument” means an Instrument the principal amount of which is repayable by instalments;

“issue date” means, in relation to any Tranche of Instruments, the date of issue of such Instruments;

“local time” in relation to any payment is to the time in the city or town in which the relevant bank or the relevant branch or office thereof is located and any reference to “local banking days” in relation thereto is to days (other than Saturdays and Sundays)

2

on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) in such city or town;

“Luxembourg Banking Day” is to a day (other than Saturdays and Sundays) on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) in Luxembourg;

“outstanding” means, in relation to the Instruments of the Issuer, all the Instruments of the Issuer and any coupons relating thereto other than:

(i)those which have been redeemed in full or purchased and cancelled pursuant to Condition 6;

(ii)those in respect of which the date for redemption in full (including, but not limited to, the due date for payment of the final instalment in respect of an Instalment Instrument) has occurred and the redemption moneys therefor (including all interest accrued thereon to such date for redemption) have been duly paid to the Fiscal Agent or (in the case of Registered Instruments) the Registrar in the manner provided for in this Fiscal Agency Agreement (and, where appropriate, notice to that effect has been given in accordance with Condition 14) and remain available for payment in accordance with the Conditions;

(iii)any Bearer Instrument which has been exchanged for a Registered Instrument;

(iv)those which have become void under Condition 10 or Condition 9A.06;

(v)(for the purpose only of ascertaining the amount outstanding and without prejudice to their status for any other purpose) those Instruments which are alleged to have been lost, stolen or destroyed and in respect of which replacement Instruments have been issued pursuant to Condition 12;

(vi)those Instruments which have been mutilated or defaced and which have been surrendered or cancelled and in respect of which replacement Instruments have been issued pursuant to Condition 12;

(vii)any Temporary Global Instrument to the extent that it has been exchanged for Definitive Instruments, Registered Instruments or a Permanent Global Instrument; and

(viii)any Permanent Global Instrument to the extent that it has been exchanged for Definitive Instruments.

Provided that for the purposes of the Fifth Schedule those Instruments which are beneficially held by, or are held on behalf of, the Issuer or any affiliated company of the Issuer or ABB Ltd or any subsidiary of ABB Ltd and not cancelled shall (unless and until ceasing to be so held) be deemed not to remain outstanding;

“principal amount outstanding” means, on any date, the principal amount of that Instrument on its date of issue (i) less, in respect of any Instrument any amount of

3

principal in respect of that Instrument that has become due and payable and either has been paid to the relevant holder or in respect of which the Relevant Date (as defined in Condition 8) shall have occurred, and (ii) less, in respect of any partly paid Instrument, any amount that shall not have been paid up in full;

“Registrar” is to the Principal Registrar as specified in the relevant Pricing Supplement relating to Registered Instruments;

“Regulations” is to the regulations concerning the transfer of Registered Instruments or for the exchange of Bearer Instruments for Registered Instruments as may from time to time be promulgated by the Issuer.  The initial such regulations are set out in the Seventh Schedule;

“Relevant Dealer” means, in respect of any Tranche of Instruments, the institution specified as such in the relevant Pricing Supplement or, if there is only one Dealer in respect of such Tranche of Instruments, such Dealer;

“Zurich Banking Day” is to a day (other than Saturdays and Sundays) on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) in Zurich;

the “specified office” of any Paying Agent or any Registrar is to the office specified against its name in the Eighth Schedule or such other office in the same city or town as such Paying Agent or, as the case may be, such Registrar may specify by notice to the Issuer and the other parties hereto in accordance with Clause 14.7;

a “Schedule” is, unless the context indicates otherwise, to a Schedule hereto;

a “Section” is, unless the context indicates otherwise, to a Section hereof;

the “Securities Act” is to the United States Securities Act of 1933;

a “Talon” is to a talon exchangeable for further Coupons; and

a “Tranche” is to an issue of Instruments which are identical in all respects (save that they may be denominated in different amounts and may comprise Instruments in bearer form and Instruments in registered form), which are intended to be issued on the same closing date.

1.2Terms used, but not defined, herein shall have the meanings ascribed to them as set out in the terms and conditions of the relevant Instruments.

1.3Section and Schedule headings are for ease of reference only and shall not affect the construction or interpretation of this Agreement.

1.4In this Agreement, any reference to payments of principal, redemption amount or interest includes any additional amounts payable in relation thereto under Condition 8.

4

2.APPOINTMENT OF THE PAYING AGENTS AND THE REGISTRARS

2.1The Issuer appoints each of the Paying Agents and each of the Registrars at their respective specified offices as its agent in relation to the Instruments for the purposes specified in this Agreement and on the terms and conditions applicable thereto and all matters incidental thereto.  Except where the context otherwise requires references to the Paying Agents and the Registrars are to them acting solely through such respective specified offices.  The obligations of the Paying Agents and the Registrars hereunder are several and not joint.

2.2Each of the Paying Agents and each of the Registrars accepts its appointment as agent of each Issuer in relation to the Instruments and shall perform all matters expressed to be performed by it in, and otherwise comply with, the terms and conditions applicable thereto and the provisions of this Agreement and, in connection therewith, shall take all such action as may be incidental thereto.

3.THE INSTRUMENTS

3.1Instruments may be issued in series (each a “Series”) and each Series may comprise one or more Tranches of Instruments.  Each Tranche will be the subject of a pricing supplement (each a “Pricing Supplement”) prepared by or on behalf of the Issuer or, as the case may be, the relevant Dealer, attached to or incorporated by reference into each Instrument of such Tranche and in the case of a Tranche in relation to which application shall be made for listing on the SWX, lodged with the SWX.

3.2Instruments may be issued in bearer form or in registered form, as specified in the relevant Pricing Supplement.

3.3The holders of interests in Instruments listed on SWX shall not have the right to request the printing and delivery of definitive instruments. If the Fiscal Agent deems (i) the printing of definitive instruments and coupons to be necessary or useful or (ii) the presentation of definitive instruments and coupons to be required by Swiss or foreign laws in connection with the enforcement of the rights of the holders, the Fiscal Agent will provide for such printing. The Issuer hereby irrevocably authorises the Fiscal Agent to provide for such printing on its behalf. The definitive instruments will be printed and issued to the holders free of charge in exchange for their interests in the respective global instrument.

Instruments in bearer form (“Bearer Instruments”) will initially be represented by a temporary global instrument, without interest coupons (a “Temporary Global Instrument”), in bearer form which shall be exchangeable in accordance with its terms on and from the Exchange Date applicable to the Instruments represented by such Temporary Global Instrument and upon due certification as described therein, for a permanent global instrument (a “Permanent Global Instrument”) representing such Bearer Instruments or, if so specified in the relevant Pricing Supplement, for definitive instruments (“Definitive Instruments”).  In the case of a Series comprising both Bearer Instruments and Instruments in registered form (“Registered Instruments”) the Temporary Global Instrument may be exchanged for Registered Instruments in

5

accordance with its terms only on and from the Exchange Date applicable to the Instruments represented by such Temporary Global Instrument and upon due certification as described therein.  Each Permanent Global Instrument will only be exchangeable in accordance with its terms for Definitive Instruments and/or (in the case of a Series comprising both Bearer Instruments and Registered Instruments) Registered Instruments.

3.4Each Temporary Global Instrument shall:

(a)be printed, lithographed or typewritten in substantially the form (duly completed) set out in the First Schedule but with such modifications, amendments and additions as the Fiscal Agent, the relevant Dealer and the Issuer shall have agreed to be necessary;

(b)have attached thereto or incorporated by reference therein the terms and conditions applicable thereto;

(c)be executed manually by two directors (or, as the case may be) managing directors of, or by a duly authorised attorney on behalf of, the Issuer and shall be authenticated manually by or on behalf of the Fiscal Agent; and

(d)bear a unique serial number.

3.5Each Permanent Global Instrument shall:

(a)be printed, lithographed or typewritten in substantially the form (duly completed) set out in the Second Schedule but with such modifications, amendments and additions as the Fiscal Agent, the relevant Dealer and the Issuer shall have agreed to be necessary;

(b)have attached thereto or incorporated by reference therein the terms and conditions applicable thereto;

(c)be executed manually by two directors (or, as the case may be) managing directors of, or by a duly authorised attorney on behalf of, the Issuer and shall be authenticated manually by or on behalf of the Fiscal Agent; and

(d)bear a unique serial number.

3.6Each Definitive Instrument shall:

(a)be in substantially the form (duly completed) set out in the Third Schedule but with such modifications, amendments and additions as the Fiscal Agent, the relevant Dealer and the Issuer shall have agreed to be necessary;

(b)unless the contrary is specified in the relevant Pricing Supplement, be in the format from time to time specified by the International Securities Markets Association or any successor body thereto;

(c)have a unique serial number printed thereon;

6

(d)if so specified in the relevant Pricing Supplement, have attached thereto at the time of its initial delivery Coupons;

(e)if so specified in the relevant Pricing Supplement, have attached thereto at the time of its initial delivery a Talon;

(f)have endorsed thereon, attached thereto or incorporated by reference therein the terms and conditions applicable thereto;

(g)be executed manually or in facsimile by two directors (or, as the case may be) managing directors of the Issuer and authenticated manually by or on behalf of the Fiscal Agent;

(h)be printed in accordance with the requirements of any clearing system by which such Instruments are intended to be accepted; and

(i)be printed in accordance with the requirements of any stock exchange on which such Instruments may be listed.

3.7Each Registered Instrument shall:

(a)be printed, lithographed or typewritten in substantially the form (duly completed) set out in the Fourth Schedule but with such modifications, amendments and additions as the Registrar, the relevant Dealer and the Issuer shall have agreed to be necessary;

(b)have endorsed thereon, attached thereto or incorporated by reference therein the terms and conditions applicable thereto; and

(c)be executed manually by two directors (or, as the case may be) managing directors of, or by a duly authorised attorney on behalf of the Issuer or shall be executed in facsimile by two directors (or, as the case may be) managing directors of the Issuer and, in any case, shall be authenticated manually by or on behalf of the Registrar.

3.8The Issuer may adopt and use the signature of any person who at the date of signing a Temporary Global Instrument, Permanent Global Instrument or Registered Instrument is an authorised signatory for such purpose of the Issuer notwithstanding that such person may for any reason (including death) have ceased to be such an authorised signatory at the time of the creation and issue of the relevant Tranche or the issue and delivery of the relevant Instruments.

3.9Any facsimile signature affixed to an Instrument may be that of a person who is at the time of the creation and issue of the relevant Tranche an authorised signatory for such purpose of the Issuer notwithstanding that such person may for any reason (including death) have ceased to be such an authorised signatory at the time at which the relevant Instrument may be delivered.

3.10Execution in facsimile of any Instruments and any photostatic copying or other duplication of master Global Instruments (in unauthenticated form, but executed

7

manually on behalf of the Issuer as stated above) shall be binding upon the Issuer in the same manner as if such Instruments were signed manually by such signatories.

3.11In regard to Instruments listed or to be listed on SWX, the global instruments and definitive instruments representing such Instruments shall comply with the regulations of SWX that may be applicable from time to time.

4.ISSUANCE OF INSTRUMENTS

4.1Upon the conclusion of any agreement between the Issuer and any Dealer(s) for the sale by the Issuer and the purchase by such Dealer(s) of any Instruments the Issuer shall, as soon as practicable but in any event not later than 3.00 p.m. (Luxembourg time) four Luxembourg Banking Days, prior to the proposed issue date therefor:

(a)confirm by tested telex or tested fax, to the Fiscal Agent or, if such Instruments are to be Registered Instruments, the Registrar (copied to the Fiscal Agent) all such information as the Fiscal Agent or, as the case may be, the Registrar may reasonably require to carry out its functions under this Agreement and in particular, if a Temporary Global Instrument or Registered Instruments from the stock provided for in Clause 4.2 is/are to be used, such details as are necessary to enable it to complete such Temporary Global Instrument or Registered Instruments, the settlement and payment procedures applicable to the relevant Tranche of Instruments and the account of the Issuer to which payment should be made;

(b)deliver a duly executed copy of the Pricing Supplement in relation to the relevant Tranche to the Fiscal Agent or, as the case may be, the Registrar (copied to the Fiscal Agent); and

(c)unless a Temporary Global Instrument or a Registered Instrument from the stock provided for in Clause 4.2 is to be used and the Issuer shall have provided such document to the Fiscal Agent or, as the case may be, the Registrar pursuant to Clause 4.2, ensure that there is delivered to the Fiscal Agent a Temporary Global Instrument (in unauthenticated form but executed on behalf of the Issuer and otherwise complete) or, as the case may be, to the Registrar Registered Instruments (in unauthenticated form and with the names of the registered holders left blank but executed on behalf of the Issuer and otherwise complete) in relation to the relevant Tranche.

4.2The Issuer may, at its option, deliver from time to time to the Fiscal Agent a stock of pro forma Temporary Global Instruments and Permanent Global Instruments (in unauthenticated form but executed on behalf of the Issuer) and/or, to the Registrar, a stock of pro forma Registered Instruments (in unauthenticated form but executed on behalf of the Issuer).  Any such stock of Instruments shall be held in safe custody by the Fiscal Agent or, as the case may be, the Registrar upon trust for the Issuer for use only in accordance with the written instructions of the Issuer.  The Fiscal Agent or, as the case may be, the Registrar shall return the stock of Instruments to the Issuer forthwith upon written request by the Issuer.

8

4.3The Fiscal Agent or, as the case may be, the Registrar shall, on behalf of the Issuer, where the relevant Instruments are to be listed on SWX, deliver a copy of the Pricing Supplement in relation to the relevant Tranche to the Listing Agent as soon as practicable but in any event not later than 2.00 p.m. (local time) two Zurich Banking Days prior to the proposed issue date therefor.

4.4The provisions of this Clause 4.4 shall apply to each Tranche of Instruments unless otherwise agreed between the Issuer, the Relevant Dealer and the Fiscal Agent or (in the case of Registered Instruments) the Registrar.  On or before 10.00 a.m. (local time) two Banking Days prior to the issue date in relation to each Tranche, the Fiscal Agent or, as the case may be, the Registrar shall authenticate and deliver to the relevant depositary for Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system the relevant Temporary Global Instrument or, as the case may be, Registered Instruments together with instructions to Euroclear or Clearstream, Luxembourg or such other clearing system to credit the Instruments represented by such Temporary Global Instrument or the Registered Instruments to such securities account(s) on a delivery against payment basis (or on such other basis as shall have been agreed between the Issuer and the Relevant Dealer and notified to the Fiscal Agent) as shall have been notified to the Fiscal Agent by the Issuer.

The Fiscal Agent shall give instructions to Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system to credit Instruments represented by a Temporary Global Instrument or, as the case may be, Registered Instruments registered in the name of the relevant depositary, to the Fiscal Agent’s distribution account.  Unless otherwise agreed in respect of any Tranche of Instruments by the Issuer and the Relevant Dealer and notified to the Fiscal Agent each Instrument which is so credited to the Fiscal Agent’s distribution account with Euroclear or Clearstream, Luxembourg or such other clearing system following the delivery of a Temporary Global Instrument or Registered Instrument to the relevant depositary shall be held to the order of the Issuer pending delivery to the relevant Dealer(s) on a delivery against payment basis in accordance with the normal procedures of Euroclear or Clearstream, Luxembourg or such other clearing system, as the case may be.  The Fiscal Agent shall on the issue date in respect of the relevant Tranche and against receipt of funds from the relevant Dealer(s) transfer (with same value date) the proceeds of issue to the Issuer to the account notified in accordance with Clause 4.1 above.

4.5If the Fiscal Agent or, as the case may be, the Registrar should pay an amount (an “advance”) to the Issuer in the belief that a payment has been or will be received from a Dealer and if such payment is not received by the Fiscal Agent or, as the case may be, the Registrar on the date that the Fiscal Agent or, as the case may be, the Registrar pays the Issuer, the Issuer shall forthwith repay the advance (unless prior to such repayment the payment is received from the Dealer) and shall pay interest on such amount which shall accrue (as well after as before judgment) on the basis of a year of 360 days (365 days (or 366 days, in the case of a leap year) in the case of an advance paid in sterling) and the actual number of days elapsed from the date of payment of such advance until the earlier of (i) repayment of the advance or (ii) receipt by the

9

Fiscal Agent or, as the case may be, the Registrar of the payment from the Dealer, and at the rate per annum which is the aggregate of one per cent. per annum and the rate per annum specified by the Fiscal Agent or, as the case may be, the Registrar as reflecting its cost of funds for the time being in relation to the unpaid amount.

4.6Unless a Permanent Global Instrument from the stock provided for in Clause 4.2 is to be used and the Issuer has provided such document to the Fiscal Agent pursuant to Clause 4.2, the Issuer shall, in relation to each Tranche of Bearer Instruments, ensure that there is delivered to the Fiscal Agent not less than four Luxembourg Banking Days before the Exchange Date for the relevant Temporary Global Instrument, the Permanent Global Instrument (in unauthenticated form but executed by the Issuer and otherwise complete) in relation thereto or, as the case may be, the Definitive Instruments or Registered Instruments (in unauthenticated form but executed by the Issuer and otherwise complete) in relation thereto.  If, in the case of a Series comprising both Bearer Instruments and Registered Instruments, the Temporary Global Instrument is exchangeable for Definitive Instruments and/or Registered Instruments, (unless a Registered Instrument from the stock provided for in Clause 4.2 is to be used and the Issuer shall have provided such document to the Registrar pursuant to Clause 4.2) the Issuer shall ensure that there is delivered to the Registrar, sufficient Registered Instruments to enable the Registrar to effect exchanges of interests in the Temporary Global Instrument for Registered Instruments in accordance with the terms of the Temporary Global Instrument.  The Fiscal Agent or, as the case may be, the Registrar, shall authenticate and deliver such Permanent Global Instrument or, as the case may be, Definitive Instruments and/or Registered Instruments in accordance with the terms hereof and of the relevant Temporary Global Instrument.

4.7The Issuer shall, in relation to each Tranche of Bearer Instruments which is represented by a Permanent Global Instrument in relation to which an exchange notice has been given in accordance with the terms of such Permanent Global Instrument, ensure that there is delivered to the Fiscal Agent not less than ten Luxembourg Banking Days before the day on which the relevant notice period expires the Definitive Instruments (in unauthenticated form but executed by the Issuer and otherwise complete) in relation thereto.  If, in the case of a Series comprising both Bearer Instruments and Registered Instruments, the Permanent Global Instrument is exchangeable for Definitive Instruments and/or Registered Instruments, (unless a Registered Instrument from the stock provided for in Clause 4.2 is to be used and the Issuer shall have provided such document to the Registrar pursuant to Clause 4.2) the Issuer shall ensure that there is delivered to the Registrar, sufficient Registered Instruments to enable the Registrar to effect exchanges of interests in the Permanent Global Instrument for Registered Instruments in accordance with the terms of the Permanent Global Instrument.  The Fiscal Agent or, as the case may be, the Registrar, shall authenticate and deliver such Definitive Instruments and/or Registered Instruments in accordance with the terms hereof and of the relevant Permanent Global Instrument.

10

4.8Where any Definitive Instruments with Coupons attached are to be delivered in exchange (not earlier than the Exchange Date) for a Temporary Global Instrument or a Permanent Global Instrument, the Fiscal Agent shall ensure that such Definitive Instruments shall have attached thereto only such Coupons as shall ensure that neither loss nor gain of interest shall accrue to the bearer thereof.

4.9The Fiscal Agent or, as the case may be, the Registrar shall hold in safe custody and in trust for the account of, and to the order of, the Issuer all unauthenticated Temporary Global Instruments, Permanent Global Instruments, Definitive Instruments or, as the case may be, Registered Instruments delivered to it in accordance with this Section 4, Section 5 or Section 11 and shall ensure that the same are authenticated and delivered only in accordance with the terms hereof and, if applicable, the relevant Temporary Global Instrument or Permanent Global Instrument.

4.10The Fiscal Agent and the Registrar are authorised by the Issuer to authenticate such Temporary Global Instruments, Permanent Global Instruments, Definitive Instruments or, as the case may be, Registered Instruments as may be required to be authenticated hereunder by the signature of any of their respective officers or any other person duly authorised for the purpose by the Fiscal Agent or, as the case may be, the Registrar.

4.11On each occasion on which a portion of a Temporary Global Instrument or a Permanent Global Instrument is exchanged for a portion of a Permanent Global Instrument or, as the case may be, for Definitive Instruments and/or Registered Instruments, the Fiscal Agent shall note or procure that there is noted on the Schedule to, or in the absence of a Schedule, on the face of, the Temporary Global Instrument or, as the case may be, Permanent Global Instrument the aggregate principal amount thereof so exchanged and the remaining principal amount of the Temporary Global Instrument or, as the case may be, Permanent Global Instrument (which shall be the previous principal amount thereof less (or, in the case of a Permanent Global Instrument in respect of an exchange of a portion of a Temporary Global Instrument for a Permanent Global Instrument, plus) the aggregate principal amount so exchanged) and shall procure the signature of such notation on its behalf.  The Fiscal Agent shall forthwith cancel or procure the cancellation of each Temporary Global Instrument or, as the case may be, Permanent Global Instrument against surrender of which it has made full exchange for a Permanent Global Instrument or Definitive Instruments and/or Registered Instruments.

4.12The Issuer shall, in relation to each series of Definitive Instruments to which a Talon is attached upon the initial delivery thereof, on each occasion on which a Talon becomes exchangeable for further Coupons, not less than five Luxembourg Banking Days before the date on which the final Coupon comprised in any Coupon sheet (which includes a Talon) matures (“Talon Exchange Date”), ensure that there is delivered to the Fiscal Agent such number of Coupon sheets as may be required in order to enable the Paying Agent to fulfil their obligation under Clause 4.13 hereof.

4.13The Paying Agent shall on or after the Talon Exchange Date in respect of such Talon deliver a Coupon sheet against the presentation and surrender of such Talon provided

11

that if any Talon is presented and surrendered for exchange to any Paying Agent and the Replacement Agent (as defined in Clause 5.1) has delivered a replacement therefor the Paying Agent shall forthwith notify the Fiscal Agent which shall immediately inform the Issuer of such presentation and surrender and the Paying Agent shall not exchange against the same unless and until it is so instructed in writing by the Fiscal Agent.  The Paying Agent which makes an exchange as set out in this Clause 4.13 shall cancel each Talon surrendered to it and in respect of which a Coupon sheet shall have been delivered and shall (if such Paying Agent is not the Fiscal Agent) forthwith deliver the cancelled Talon to the Fiscal Agent.

4.14The Issuer undertakes to notify the Fiscal Agent of any changes in the identity of the Dealers and the Fiscal Agent agrees to notify the other Paying Agents and Registrars thereof as soon as reasonably practicable thereafter.

5.REPLACEMENT INSTRUMENTS

5.1The Fiscal Agent or, as the case may be, the Registrar (in such capacity “Replacement Agent”) shall in accordance with the instructions of the Issuer and the terms and conditions (subject to the provisions of Clause 5.2 below) authenticate and deliver a Temporary Global Instrument, Permanent Global Instrument, Definitive Instrument, Coupon or, as the case may be, Registered Instrument as a replacement for any of the same which has been mutilated or defaced or which has or has been alleged to have been destroyed, stolen or lost provided that no Temporary Global Instrument, Permanent Global Instrument, Definitive Instrument, Coupon or Registered Instrument shall be delivered as a replacement for any of the same which has been mutilated or defaced otherwise than against surrender of the same and any replacement Definitive Instrument shall have the same number of Coupons and, if applicable, a Talon as are attached to the mutilated or defaced Definitive Instrument so replaced.

5.2The Replacement Agent shall not issue any replacement Temporary Global Instrument, Permanent Global Instrument, Definitive Instrument, Coupon or, as the case may be, Registered Instrument unless the claimant shall have:

(i)paid such costs as may be incurred; and

(ii)furnished (in the case of destroyed, lost or stolen Instruments) such evidence, security, indemnity and otherwise as the Issuer may require.

5.3Each replacement Temporary Global Instrument, Permanent Global Instrument, Definitive Instrument, Coupon or Registered Instrument delivered hereunder shall bear a unique serial number.

5.4The Replacement Agent shall cancel each mutilated or defaced Temporary Global Instrument, Permanent Global Instrument, Definitive Instrument, Coupon or Registered Instrument surrendered to it and in respect of which a replacement has been delivered.

5.5The Replacement Agent shall forthwith notify the Issuer, and (in the case of Bearer Instruments) the other Paying Agents of the delivery by it in accordance herewith of

12

any replacement Temporary Global Instrument, Permanent Global Instrument, Definitive Instrument, Coupon or Registered Instrument, specifying the serial number thereof and the serial number (if any and if known) of the Instrument which it replaces and confirming (if such be the case) that the Instrument which it replaces has been cancelled.

5.6The Issuer shall ensure that the Replacement Agent has available to it supplies of such Temporary Global Instruments, Permanent Global Instruments, Definitive Instruments, Coupons and Registered Instruments, as the case may be, as shall be necessary to effect the delivery of replacement Instruments under this Section 5.

5.7Each of the Fiscal Agent, the Registrar and the Replacement Agent undertake to notify the Issuer if its holds insufficient Instruments or Coupons to fulfil its respective obligations under Section 4 and this Section 5.

5.8Unless the Issuer instructs otherwise, the Replacement Agent shall destroy each mutilated or defaced Temporary Global Instrument, Permanent Global Instrument, Definitive Instrument, Coupon or Registered Instrument surrendered to and cancelled by it and in respect of which a replacement has been delivered and shall as soon as possible but not later than three months after such destruction furnish the Issuer with a certificate as to such destruction and specifying the serial numbers of the Temporary Global Instrument, Permanent Global Instrument, Definitive Instruments and Registered Instruments in numerical sequence and the total number by maturity date of Coupons (and distinguishing any Talon in respect thereof) so destroyed.

6.PAYMENTS TO THE FISCAL AGENT OR THE REGISTRAR

6.1In order to provide for the payment of interest and principal or, as the case may be, any other redemption amount payable in respect of the Instruments of each Series as the same shall become due and payable the Issuer shall pay to the Fiscal Agent or, as the case may be, the Registrar on or before the date on which such payment becomes due an amount equal to the amount of principal, redemption amount or, as the case may be, interest then becoming due in respect of such Instruments.

6.2Each amount payable by the Issuer under Clause 6.1 shall be paid unconditionally by credit transfer in the currency in which the Instruments of the relevant Series are denominated or, if different, payable and in immediately available, freely transferable funds not later than 10.00 a.m. (local time) on the relevant day to such account with such bank as the Fiscal Agent or, as the case may be, the Registrar may by notice to the Issuer have specified for the purpose.  If the due date for payment in respect of any Instruments is not, in respect of such Instruments, a Relevant Financial Centre Day (as defined in Condition 9B.02 of the terms and conditions of the relevant Instruments) then payment will be made on the next following Relevant Financial Centre Day (or, in the case of Instruments denominated or, if different, payable in Euro on the next following day which is a TARGET Business Day (as defined in Condition 5B.04 of the terms and conditions of the Instruments).  The Fiscal Agent or, as the case may be, the Registrar shall give not less than 14 nor more than 21 days’ notice to the Issuer of the due date for, and amount of, each payment in respect of the Instruments.  The Issuer

13

shall, before 10.00 a.m. (local time) at least two Luxembourg Banking Days before the due date of each payment by it under Clause 6.1, confirm to the Fiscal Agent or, as the case may be, the Registrar by tested telex or tested fax that it has given irrevocable instructions for the transfer of the relevant funds to the Fiscal Agent or, as the case may be, the Registrar and the name and the account of the bank through which such payment is being made.

6.3The Fiscal Agent and each Registrar shall be entitled to deal with each amount paid to it hereunder in the same manner as other amounts paid to it as a banker by its customers Provided that:

(a)it shall not against the Issuer exercise any lien, right of set-off or similar claim in respect thereof; and

(b)it shall not be liable to any person for interest thereon.

6.4All moneys paid to the Fiscal Agent by the Issuer in respect of any Instrument shall be held by the Fiscal Agent from the moment when such moneys are received until the time of actual payment thereof, upon trust to apply the same in accordance with Section 7, and the Fiscal Agent shall not be obliged to repay any such amount unless or until claims against the Issuer in respect of the relevant Instruments are prescribed or the relevant payment becomes void or ceases in accordance with the terms and conditions, in which event it shall forthwith repay to the Issuer such portion of such amount as relates to such payment by paying the same by credit transfer to such account with such bank as the Issuer may by notice to the Fiscal Agent have specified for the purpose.

6.5(a)The Fiscal Agent or, as the case may be, the Registrar shall forthwith notify the Paying Agents and the Issuer by telex or fax or cable if, by 10.00 a.m. (local time) on the due date for any payment to it under Clause 6.1, it has not received confirmation that the Issuer has given irrevocable instructions for payment to be made as referred to in Clause 6.2.

(b)The Fiscal Agent or, as the case may be, the Registrar shall forthwith (and in any event within one Relevant Financial Centre Day in respect of the relevant Instruments) notify the Issuer if it has not received from the Issuer in the manner provided herein full payment on the due date of any amount with respect to the Instruments.

(c)If the Fiscal Agent or, as the case may be, the Registrar has not received the full amount payable by the due date but receives such amount later it shall:

(i)forthwith so notify the other Paying Agents; and

(ii)forthwith give notice to the holders of the Instruments in accordance with Condition 14 that it has received such full amount.

6.6All moneys paid to the Registrar by the Issuer in respect of any Instrument shall be held by the Registrar from the moment when such moneys are received until the time

14

of actual payment thereof, upon trust to  apply the same in accordance with Section 8, and the Registrar shall not be obliged to repay any such amount unless or until the claims against the Issuer in respect of the relevant Registered Instruments are prescribed or the relevant payment becomes void or ceases in accordance with the terms and conditions, in which event it shall forthwith repay to the Issuer such portion of such amount as relates to such claims in respect of the relevant Registered Instruments by paying the same by credit transfer to such account with such bank as the Issuer may by notice to the Registrar have specified for the purpose.

7.PAYMENTS TO HOLDERS OF BEARER INSTRUMENTS

7.1Each Paying Agent shall make payments of interest, principal or, as the case may be, redemption amount in respect of Bearer Instruments in accordance with the terms and conditions applicable thereto (and, in the case of a Temporary Global Instrument or a Permanent Global Instrument, the terms thereof) Provided that:

(a)if any Temporary Global Instrument, Permanent Global Instrument, Definitive Instrument or Coupon is presented or surrendered for payment to any Paying Agent and such Paying Agent has delivered a replacement therefor or has been notified that the same has been replaced, such Paying Agent shall forthwith notify the Fiscal Agent (which shall immediately notify the Issuer) of such presentation or surrender and shall not make payment against the same until it is so instructed in writing by the Issuer and has received the amount to be so paid;

(b)if any Temporary Global Instrument or Permanent Global Instrument is presented or surrendered for payment to any Paying Agent other than the Fiscal Agent, such Paying Agent shall (without prejudice to Clause 7.3) forthwith notify the Fiscal Agent of that fact;

(c)unless and until the full amount of any payment has been transferred to the Fiscal Agent, none of the Paying Agents shall be bound to make payments on behalf of the Issuer in respect of the Instruments;

(d)in the absence of contrary notification from the Fiscal Agent on the due date for any payment in respect of the Instruments of any Series, the Paying Agents shall assume that the Fiscal Agent has received the full amount so due in respect of such Instruments and shall be entitled:

(i)to pay maturing Instruments and Coupons in accordance with the terms and conditions; and

(ii)to claim any amounts so paid by it from the Fiscal Agent;

(e)each Paying Agent shall (in the case of the Temporary Global Instrument or Permanent Global Instrument, in accordance with the directions of the Fiscal Agent) cancel or procure the cancellation of each Temporary Global Instrument, Permanent Global Instrument, Definitive Instrument (in the case of early redemption, together with such unmatured Coupons or unexchanged

15

Talons as are attached to or are surrendered with it at the time of such redemption), or, as the case may be, Coupon against surrender of which it has made full payment and shall (if such Paying Agent is not the Fiscal Agent) forthwith deliver or procure the delivery of each Temporary Global Instrument, Permanent Global Instrument, Definitive Instrument (together with as aforesaid) or Coupon so cancelled by it to the Fiscal Agent together with all relevant details; and

(f)in the case of payment of interest, principal or, as the case may be, redemption amount against presentation of a Temporary Global Instrument or a Permanent Global Instrument or in the case of payment of an instalment in respect of an Instalment Instrument against presentation of a Definitive Instrument, the relevant Paying Agent shall (in the case of the Temporary Global Instrument or Permanent Global Instrument, in accordance with the directions of the Fiscal Agent) note or procure that there is noted on the Schedule thereto, or in the absence of a Schedule, on the face thereof, the amount of such payment and, in the case of payment of principal or redemption amount, the remaining principal amount of the relevant Instrument (which shall be the previous principal amount less the amount of principal or, as the case may be, the principal amount in respect of which redemption amount has then been paid) and shall procure the signature of such notation on its behalf.

7.2None of the Paying Agents shall exercise any lien, right of set-off or similar claim against any person to whom it makes any payment under Clause 7.1 in respect thereof, nor shall any commission or expense be charged by it to any such person in respect thereof.

7.3If a Paying Agent other than the Fiscal Agent makes any payment in accordance with Clause 7.1:

(a)it shall notify the Fiscal Agent of the amount so paid by it, the serial number of the Temporary Global Instrument, Permanent Global Instrument, Definitive Instrument or Coupon against presentation or surrender of which payment of interest, principal or redemption amount was made and the number of Coupons by maturity against which payment of interest was made; and

(b)the Fiscal Agent shall on demand promptly reimburse such Paying Agent for the amount so properly paid by it by payment out of the funds received by it under Clause 6.1 of an amount equal to the amount so paid by it by paying the same by credit transfer to such account with such bank as such Paying Agent may by notice to the Fiscal Agent have specified for the purpose.

7.4If the Fiscal Agent makes any payment in accordance with Clause 7.1 out of its own funds, it shall be entitled to appropriate for its own account out of the funds received by it under Clause 6.1 an amount equal to the amount so paid by it.

16

7.5If at any time and for any reason a Paying Agent makes a partial payment in respect of any Temporary Global Instrument, Permanent Global Instrument, Definitive Instrument or Coupon surrendered for payment to it, such Paying Agent shall endorse thereon a statement indicating the amount and date of such payment.

8.PAYMENTS TO HOLDERS OF REGISTERED INSTRUMENTS

8.1The Registrar shall make payments of interest, principal or, as the case may be, redemption amount in respect of Registered Instruments in accordance with the terms and conditions applicable thereto Provided that unless and until the full amount of any payment has been transferred to the Registrar, the Registrar shall not be bound to make payments on behalf of the Instruments.

8.2The Registrar shall not exercise any lien, right of set-off or similar claim against any person to whom it makes any payment under Clause 8.1 in respect thereof, nor shall any commission or expense be charged by it to any such person in respect thereof.

8.3If a Registrar makes any payment in accordance with Clause 8.1 out of its own funds, it shall be entitled to appropriate for its own account out of the funds received by it under Clause 6.1 an amount equal to the amount so paid by it.

8.4If at any time and for any reason a Registrar makes a partial payment in respect of any Registered Instrument surrendered for payment to it, such Registrar shall endorse thereon a statement indicating the amount and date of such payment.

9.MISCELLANEOUS DUTIES OF THE FISCAL AGENT AND THE PAYING AGENTS

Cancellation, destruction and records

9.1The Fiscal Agent shall:

(a)maintain a complete record of all Temporary Global Instruments, Permanent Global Instruments, Definitive Instruments and Coupons delivered hereunder and of their redemption, payment, exchange, cancellation, mutilation, defacement, alleged destruction, theft or loss or replacement provided that no record need be maintained of the serial numbers of Coupons save insofar as that a record shall be maintained of the serial numbers of unmatured Coupons missing at the time of redemption or other cancellation of the relevant Definitive Instruments and of any subsequent payments against such Coupons and shall send forthwith to the other Paying Agents a list of any unmatured Coupons and/or unexchanged Talons missing upon redemption of the relevant Definitive Instrument;

(b)maintain a record of all certifications received by it in accordance with the provisions of any Temporary Global Instrument;

(c)upon request by the Issuer, inform the Issuer of the spot rate of exchange quoted by it for the purchase of the currency in which the relevant Instruments are denominated against payment of United States dollars (or such

17

other currency specified by the Issuer) on the date on which the Relevant Agreement (as defined in the Dealership Agreement) in respect of such Instruments was made;

(d)in relation to each series of Instruments the terms and conditions applicable to which provide that the rate of interest or redemption amount or any calculation applicable thereto shall be determined by the Fiscal Agent, determine such rate of interest or redemption amount or make such calculation from time to time on the basis therein and take all such actions as may to it seem reasonably incidental thereto including, without limitation, the notification of all rates and amounts so determined and the maintenance of all appropriate records; and

(e)make such records available for inspection at all reasonable times by the Issuer and the other Paying Agents.

9.2The Paying Agents shall make available to the Fiscal Agent such information as may reasonably be required for the maintenance of the records referred to in Clause 9.1.

9.3In relation to any Instruments purchased by the Issuer or any of its affiliated companies, the Issuer may deliver to the Fiscal Agent Definitive Instruments and unmatured Coupons appertaining thereto for cancellation or, as the case may be, may procure the delivery to the Fiscal Agent of a Temporary Global Instrument or a Permanent Global Instrument with instructions to cancel a specified aggregate principal amount of Instruments represented thereby (which instructions shall be accompanied by evidence satisfactory to the Fiscal Agent that the Issuer is entitled to give such instructions) whereupon the Fiscal Agent shall cancel such Definitive Instruments and Coupons or, as the case may be, note or procure that there is noted on the Schedule to, or in the absence of a Schedule, on the face of, such Temporary Global Instrument or Permanent Global Instrument the aggregate principal amount of Instruments so to be cancelled and the remaining principal amount thereof (which shall be the previous principal amount thereof less the aggregate principal amount of the Instruments so cancelled) and shall procure the signature of such notation on its behalf.

9.4As soon as possible (and in any event within three months) after each interest or other payment date in relation to any Series of Bearer Instruments, after each date on which Instruments are cancelled in accordance with Clause 9.3, and after each date on which the Instruments fall due for redemption, the Fiscal Agent shall notify the Issuer and the other Paying Agents (on the basis of the information available to it) of:

(i)the aggregate principal amount paid on, and the serial numbers of all Instruments redeemed, surrendered and cancelled and the serial numbers of any Definitive Instruments which have not yet been surrendered for payment;

(ii)for each date for the payment of interest, the total number of Coupons paid and the aggregate amount paid thereon;

18

(iii)the aggregate principal amount and serial numbers of Instruments purchased and cancelled; and

(iv)the total number by maturity date of unmatured Coupons missing from Instruments redeemed or purchased and surrendered and the serial numbers of the Instruments to which such missing unmatured Coupons appertained.

9.5The Fiscal Agent shall (unless the Issuer otherwise requests) destroy each Temporary Global Instrument, Permanent Global Instrument, Definitive Instrument and Coupon delivered to or cancelled by it in accordance with Clauses 4.11, 4.13, paragraph (d) of Clause 7.1, Clause 9.14, Clause 11.13 or (where there is no principal amount remaining of such Temporary Global Instrument or Permanent Global Instrument) delivered to and cancelled by it in accordance with Clause 9.3, in which case it shall as soon as possible (and in any event within 3 months of such destruction) furnish the Issuer with a certificate as to such destruction and specifying the serial numbers of the Temporary Global Instrument, Permanent Global Instrument, Definitive Instruments in numerical sequence and the total number by maturity date of Coupons (distinguishing Talons) so destroyed.

Meetings of Holders of Instruments

9.6Each Paying Agent shall, at the request of the holder of any Bearer Instrument issue voting certificates and block voting instructions in a form and manner which comply with the provisions of the Fifth Schedule (except that it shall not be required to issue the same less than forty-eight hours before the time fixed for any meeting therein provided for) and will perform the other functions specified in the Fifth Schedule.  The provisions contained in the Fifth Schedule will have full effect in the like manner as if they had been expressly incorporated herein in full.  Each Paying Agent shall keep a full record of voting certificates and block voting instructions issued by it and will give to the Issuer not less than twenty-four hours before the time appointed for any meeting or adjourned meeting full particulars of all voting certificates and block voting instructions issued by it in respect of such meeting or adjourned meeting.

Documents and Forms

9.7The Issuer shall provide to the Fiscal Agent for distribution among the Paying Agents:

(a)specimen Instruments;

(b)sufficient copies of all documents required to be available for issue or inspection as provided in the Information Memorandum or, in relation to any Instruments, the terms and conditions or Pricing Supplement in respect of such Instruments; and

(c)in the event that the provisions of such Condition become relevant in relation to any Instruments, the certificate contemplated under the Condition headed “Early Redemption for Taxation Reasons”.

19

9.8Each Paying Agent shall make available for examination or use during normal business hours at its specified office such documents as may be specified as so available at the specified office of such agent in the Information Memorandum or, in relation to any Instruments, the terms and conditions or Pricing Supplement in respect of such Instruments, or as may be required by any stock exchange on which the Instruments may be listed and, without prejudice to the generality of the foregoing, the Fiscal Agent and the Paying Agent with its specified offices in Luxembourg and Zurich respectively, shall make available for examination or use during normal business hours at its specified office copies of the Information Memorandum and each Pricing Supplement and all other documents listed in paragraph 8 of the General Information Section of the Information Memorandum and, in the event that the provisions of such Condition become relevant, the certificate contemplated in the Condition headed “Early Redemption for Taxation Reasons”.

Notifications

9.9The Fiscal Agent shall make all necessary notifications (including the submission of documents or reports where required) to and with the Bank of England and the Ministry of Finance in Japan in connection with Instruments denominated in Pounds Sterling and Yen respectively and other similar notifications (including the submission of documents or reports where required) as may be required in respect of any other Instruments.  Within one week after the end of each calendar month, the Fiscal Agent shall notify the Bank of England of the principal amount of each Tranche of Instruments denominated in Sterling (i) outstanding as at the end of the relevant calendar month and (ii) issued and redeemed since the previous such notification (or since the date of this Fiscal Agency Agreement, as the case may be).  Such notification shall be made even if no such Instruments were outstanding as at such time or issued or redeemed during such calendar month.  Such notification shall be consistent with the requirements from time to time of the Bank of England.  Within fifteen days after the end of each calendar month, the Fiscal Agent shall submit a report in Japanese to the Ministry of Finance in Japan in respect of each Tranche of Instruments denominated in Yen issued during the relevant calendar month.  Such report shall be submitted even if no such Instruments were issued during such calendar month.  Such report shall be consistent with the requirements from time to time of the Ministry of Finance of Japan.

9.10The Fiscal Agent agrees with the Issuer that, to the extent that it is notified by each relevant Dealer that the distribution of the Instruments of any Tranche is complete it will notify the Issuer and the relevant Dealers of the completion of distribution of the Instruments of any Tranche which are sold to or through more than one Dealer as contemplated in Schedule 1 to the Dealership Agreement.

Notices

9.11Forthwith upon receipt by the Fiscal Agent of any notice or other communication from or on behalf of the holder of any Instrument in relation to any Instrument, the Fiscal Agent shall forward a copy of the notice or communication to the Issuer.  Each of the

20

Paying Agents agrees to notify the Fiscal Agent forthwith in the event that it receives any such notice or communication.

9.12The Fiscal Agent shall, upon and in accordance with the instructions of the Issuer but not otherwise promptly arrange for the publication of any notices required to be given to the holders of Bearer Instruments in accordance with the terms and conditions of the relevant Instruments or required to comply with the requirements of any stock exchange on which the relevant Instruments may be listed and shall supply a copy thereof to each other Paying Agent.

Indemnity

9.13Each of the Paying Agents shall severally indemnify the Issuer and each of them against any direct loss, liability, cost, claims, action, demand or expense incurred by the Issuer as a result of or arising out of or in relation to or in connection with any breach by such Paying Agent, or any person acting on its behalf, of the terms of this Agreement, or as a result of its wilful misconduct, negligence or bad faith or that of its agents, officers or employees.  The Issuer and each of them shall remain entitled to the benefit and each of the Paying Agents shall be subject to the provisions of this Clause 9.13 notwithstanding the provisions of Clause 14.5.

Exchange of Bearer Instruments for Registered Instruments

9.14In relation to any Series comprising Bearer and Registered Instruments, the Fiscal Agent shall receive requests to effect exchanges of Bearer Instruments for Registered Instruments together with the relevant Bearer Instruments, inform the Registrar (specifying (i) the aggregate principal amount of such Bearer Instruments, (ii) the name(s) and address(es) to be entered on the Register as the holder(s) of the Registered Instrument(s) and (iii) the denomination(s) of the Registered Instrument(s)) and assist in the issue of the Registered Instrument(s) in accordance with the terms and conditions applicable thereto and in accordance with the Regulations.  The Fiscal Agent shall, on the exchange date (as defined in Condition 2.06) applicable to such exchange of Bearer Instruments for Registered Instruments, cancel such Bearer Instruments.

10.EARLY REDEMPTION

10.1If the Issuer intends (other than consequent upon an Event of Default) to redeem all or any of the Instruments prior to their stated maturity date it shall not less than 15 days prior to the latest date for the publication of the notice of redemption required to be given to the holders of any Instruments, give notice of such intention to the Fiscal Agent or, in the case of Registered Instruments, the Registrar (copied to the Fiscal Agent) stating the date on which such Instruments are to be redeemed.

10.2In respect of any Instruments to which Condition 6.06 applies or which carries any other right of redemption at the option of the holders of such Instruments, the Issuer will provide the Paying Agents or, in the case of Registered Instruments, the Registrar with copies of the form of the current redemption notice and the Paying Agents or, as

21

the case may be, the Registrar will make available forms of the current redemption notice to holders of Instruments upon request during usual business hours at their respective specified offices.  Upon receipt of any Instrument deposited in the exercise of such option, the Paying Agent or, in the case of Registered Instruments, the Registrar with which such Instrument is deposited shall hold such Instrument (together with, in the case of a Definitive Instrument, any Coupons relating to it deposited with it) on behalf of the depositing holder of such Instrument (but shall not, save as provided below, release it) until the due date for redemption of the relevant Instrument consequent upon the exercise of such option, when, subject as provided below, it shall present such Instrument (and any such Coupons) to itself for payment in accordance with the terms and conditions of the relevant Instruments and shall pay such moneys in accordance with the directions of the holder of the Instrument contained in the relevant redemption notice.  If, prior to such due date for its redemption, such Instrument becomes immediately due and payable by reason of an Event of Default or if upon due presentation payment of such redemption moneys is improperly withheld or refused, the Paying Agent concerned or, as the case may be, the Registrar shall without prejudice to the exercise of such option mail such Instrument (together with any such Coupons) by uninsured post to, and at the risk of, the holder of the relevant Instrument at such address as may have been given by such holder in the relevant redemption notice.

10.3At the end of any applicable period for the exercise of such option or, as the case may be, not later than 7 days after the latest date for the exercise of such option in relation to a particular date, in relation to Bearer Instruments each Paying Agent shall promptly notify the Fiscal Agent of the principal amount of the Instruments in respect of which such option has been exercised with it together with their serial numbers and the Fiscal Agent shall promptly notify such details to the Issuer.

10.4At the end of any applicable period for the exercise of such option or, as the case may be, not later than 7 days after the latest date for the exercise of such option in relation to a particular date, in relation to Registered Instruments, the Registrar shall promptly notify the Issuer of the principal amount of the Instruments in respect of which such option has been exercised together with their serial numbers.

11.MISCELLANEOUS DUTIES OF THE REGISTRARS

Cancellation and Records

11.1Each Registrar shall maintain in relation to each Series of Registered Instruments in relation to which it is appointed as registrar a register (each a “Register”), which shall be kept in accordance with the terms and conditions applicable to such Series of Registered Instruments and the Regulations.  Each Register shall show the aggregate principal amount and date of issue of each Tranche comprising the relevant Series of Registered Instruments, the names and addresses of the initial holders thereof and the dates of all transfers to, and the names and addresses of, all subsequent holders thereof.  The Registrar shall further, in relation to each Series of Registered Instruments the terms and conditions applicable to which provide that the rate of

22

interest or redemption amount or any calculation applicable thereto shall be determined by such Registrar, determine such rate of interest or redemption amount or make such calculation from time to time on the basis therein provided and take all such action as may to it seem reasonably incidental thereto including, without limitation, the notification of all rates and amounts so determined and the maintenance of all appropriate records.  The Registrar shall make each Register and all such records available for inspection at all reasonable times by the Issuer.

11.2The Registrar shall by the issue of new Registered Instruments, the cancellation of old Registered Instruments and the making of entries in the relevant Register give effect to transfers of Registered Instruments in accordance with the terms and conditions applicable thereto and in accordance with the Regulations.

11.3In relation to any Instruments purchased by the Issuer or any of its affiliated companies, the Issuer may from time to time deliver to the Registrar such Registered Instruments of which it is the holder for cancellation, whereupon such Registrar shall cancel the same and shall make the corresponding entries in the relevant Register.

11.4As soon as possible (and in any event within three months) after each date on which Registered Instruments are cancelled in accordance with Clause 11.3 or fall due for redemption, the Registrar shall notify the Issuer of:

(i)the aggregate principal amount paid on, and the serial numbers of all Registered Instruments redeemed, surrendered and cancelled and the serial numbers of any Registered Instruments (and the names and addresses of the holders thereof) which have not yet been surrendered for payment; and

(ii)the aggregate principal amount and serial numbers of Registered Instruments purchased and cancelled.

11.5The Issuer shall ensure that each Registrar has available to it supplies of such Registered Instruments as shall be necessary in connection with the transfer of Registered Instruments under this Section 11.

11.6The Registrar shall, upon and in accordance with the instructions of the Issuer but not otherwise, promptly arrange for the despatch of any notices required to be given to the holders of Registered Instruments in accordance with the terms and conditions of the relevant Instruments or required to comply with the requirements of any stock exchange on which the relevant Instruments may be listed.

Meetings of Holders of Instruments

11.7The Registrar shall, at the request of the holder of any Registered Instrument, issue voting certificates and block voting instructions in a form and manner which comply with the provisions of the Fifth Schedule (except that it shall not be required to issue the same less than forty-eight hours before the time fixed for any meeting therein provided for) and shall make available at the request of the holder of any Registered Instrument, forms of proxy in a form and manner which comply with the provisions of the Fifth Schedule and will comply with the other functions specified in the Fifth

23

Schedule.  The provisions contained in the Fifth Schedule will have full effect in the like manner as if they had been expressly incorporated herein in full.  The Registrar shall keep a full record of voting certificates and block voting instructions issued by it and will give to the Issuer not less than twenty-four hours before the time appointed for any meeting or adjourned meeting, full particulars of all voting certificates and block voting instructions issued by it in respect of such meeting or adjourned meeting.

Documents and Forms

11.8The Issuer shall provide to the Registrar:

(a)specimen Instruments;

(b)sufficient copies of all documents required to be available for issue or inspection as provided in the Information Memorandum or, in relation to any Instruments, the terms and conditions or Pricing Supplement in respect of such Instruments; and

(c)in the event that the provisions of such Condition become relevant in relation to any Instruments, the certificate contemplated under the Condition “Early Redemption for Taxation Reasons”.

11.9The Registrar shall make available for examination or use during normal business hours at its specified office such documents as may be specified as so available at the specified office of such agent in the Information Memorandum or, in relation to any Instruments, the terms and conditions or Pricing Supplement in respect of such Instruments or as may be required by any stock exchange on which the Instruments may be listed and, without prejudice to the generality of the foregoing, shall make available for examination or use during normal business hours at its specified office copies of the Information Memorandum and each Pricing Supplement and all other documents listed in paragraph 8 of the General Information Section of the Information Memorandum and, in the event that the provisions of such Condition become relevant, the certificate contemplated in the Condition headed “Early Redemption for Taxation Reasons”.

Provision of Information

11.10The Registrar shall provide the Fiscal Agent with all such information as the Fiscal Agent may reasonably require in order to perform the obligations set out in Clause 9.9 hereof.

Indemnity

11.11The Registrar shall severally indemnify the Issuer and each of them against any direct loss, liability, cost, claims, action, demand or expense incurred by such Issuer as a result of or arising out of or in relation to or in connection with any breach by the Registrar, or any person acting on its behalf, of the terms of this Agreement, or as a result of its wilful misconduct, negligence or bad faith or that of its agents, officers or employees.  The Issuer and each of them shall remain entitled to the benefit and the

24

Registrar shall be subject to the provisions of this Clause 11.11 notwithstanding the provisions of Clause 14.5.

11.12Forthwith upon receipt by the Registrar of any notice or other communication from or on behalf of the holder of any Instrument in relation to any Instrument, the Registrar shall forward a copy of the notice or communication to the Issuer.

Exchanges of Bearer Instruments for Registered Instruments

11.13In relation to any Series comprising Bearer and Registered Instruments, by the receipt of requests for exchanges of Bearer Instruments for Registered Instruments together with the relevant Bearer Instruments (or notifications from the Fiscal Agent of receipt thereof by the Fiscal Agent), the issue of Registered Instruments and the making of entries in the Register, give effect to exchanges of Bearer Instruments for Registered Instruments in accordance with the terms and conditions applicable thereto and in accordance with the Regulations.

The Registrar shall forthwith upon the receipt of a request for the exchange of Bearer Instruments for Registered Instruments notify the Fiscal Agent thereof (specifying (i) the serial numbers of the Bearer Instruments, (ii) the aggregate principal amount of Instruments involved, and (iii) the exchange date (as defined in Condition 2.06) applicable thereto) and shall on the exchange date cancel the relevant Bearer Instruments and forward the same to the Fiscal Agent.  The Registrar shall notify the Issuer promptly of the exchange of Bearer Instruments for Registered Instruments, specifying the serial numbers of the Bearer Instruments and of the Registered Instruments issued in exchange therefor, the aggregate principal amount involved and the applicable exchange date.

12.COMMISSIONS, FEES AND EXPENSES

12.1The Fiscal Agent and the Issuer shall separately agree from time to time as to the amount of any commissions, fees and expense reimbursements to which the Fiscal Agent, the Paying Agents and the Registrars will be entitled hereunder, and any and all such agreements shall be binding on all of the parties hereto.

12.2The Issuer shall pay all stamp and other similar taxes and duties, if any, which may be payable on the execution of this Agreement, on the creation and issue of the Instruments issued by it and the related Coupons and the delivery of the Instruments pursuant to the Dealership Agreement.

13.TERMS OF APPOINTMENT

13.1Each of the Paying Agents and the Registrars may, in connection with its services hereunder:

(a)(in the case of Bearer Instruments) except as ordered by a court of competent jurisdiction or as required by law and notwithstanding any notice to the contrary or any writing thereon, treat the bearer of any Instrument as the absolute owner thereof and make payments thereon accordingly;

25

(b)refer any question relating to the ownership of any Instrument or Coupon or, without prejudice to Clause 5.2(ii), the adequacy or sufficiency of any evidence supplied in connection with the replacement of any Instrument or Coupon to the Issuer for determination by the Issuer and rely upon any determination so made; and

(c)after approval by the Issuer such approval not to be unreasonably withheld, engage and pay for the advice or services of any leading firm of lawyers, or other leading experts, with recognised expertise in the relevant field whose advice or services may to it seem necessary and rely upon any advice so obtained.  Any request for the Issuer’s approval of any such firm or expert must be answered by the Issuer within a reasonable time following such request, failing which such approval shall be assumed to have been given.

13.2None of the Paying Agents or the Registrars shall have any obligations towards or relationship of agency or trust for or with any holder of the Instruments or Coupons (except as provided in Clauses 6.4 and 6.6 hereof) and shall be responsible only for performance of the duties and obligations expressly imposed upon them herein.

13.3Each Paying Agent and Registrar and their officers, directors and employees may become the holder of, or acquire any interest in, any Instruments or Coupons with the same rights that it or they would have if it were not such agent or agents hereunder, and may engage or be interested in any transaction with the Issuer and may act on, or as depositary, trustee or agent for, any committee or body of holders of Instruments or Coupons or other obligations of the Issuer as freely as if it were not such agent or agents hereunder.

13.4The Issuer shall indemnify each Paying Agent and each Registrar against any direct loss, liability, claim, action, demand, reasonable cost or expense which it may properly incur or which may be made against it arising out of or in connection with its appointment or the exercise of its powers and performance of its duties hereunder in respect of Instruments issued by the Issuer, except such as may result from its wilful misconduct, negligence or bad faith or that of its agents, officers or employees.  The foregoing indemnity shall not apply to any expenses of any Paying Agent or Registrar provided for pursuant to Clause 12.1.

14.CHANGES IN AGENTS

14.1Any Paying Agent or Registrar may resign its appointment as the agent of the Issuer in relation to the Instruments of the Issuer upon the expiration of not less than ninety days’ prior written notice to that effect by such Paying Agent or, as the case may be, the Registrar to the Issuer (with a copy, if necessary, to the Fiscal Agent) Provided that:

(a)any such notice which would otherwise expire within fifteen days before or after the maturity date of any Series of Instruments or any interest or other payment date in relation to any Series of Instruments shall be deemed, in

26

relation to such Series only, to expire on the fifteenth day following such maturity date or, as the case may be, such interest or other payment date; and

(b)in the case of (i) the Fiscal Agent, (ii) the only remaining Paying Agent or Registrar with its specified office in continental Europe (but outside the United Kingdom), (iii) so long as any Instruments are listed on the SWX and/or any other stock exchange, the Paying Agent or the Registrar with its specified office in Zurich and Luxembourg respectively, and/or in such other place as may be required by such other stock exchange, (iv) the Registrar in respect of any Series of Instruments then outstanding, (v) in the circumstances described in Condition 9A.04, the Paying Agent with its specified office in New York City, or (vi) a Paying Agent in a member state of the European Union that will not be obliged to withhold or deduct tax pursuant to the European Council Directive 2003/48/EC or any other Directive implementing the conclusions of the ECOFIN council meeting of 26-27 November 2000;

such resignation shall not be effective until a successor thereto (which in the case of the Fiscal Agent and the Registrar shall be a bank or trust company of good standing and authorised to exercise corporate trust powers) has been appointed by the relevant Issuer as the agent of such Issuer in relation to the Instruments of such Issuer and notice of such appointment has been given in accordance with the terms and conditions, Provided that such successor, in the case of (ii), shall have its specified office in continental Europe (but outside the United Kingdom and, in the case of (iii), shall which must be a bank or a securities dealer that is subject to supervision by the Swiss Federal Banking Commission and have its specified office in Switzerland and/or in such other place as may be required by SWX.

14.2The Issuer may revoke its appointment of any Paying Agent or Registrar as its agent in relation to the Instruments by not less than thirty days’ notice to that effect to such Paying Agent or, as the case may be, such Registrar provided, however, that, in the case of

(i) the Fiscal Agent, (ii) the only remaining Paying Agent or Registrar with its specified office in continental Europe (but outside the United Kingdom), (iii) so long as any Instruments are listed on the SWX and/or any other stock exchange, the Paying Agent or Registrar with its specified office in Switzerland and/or in such other place as may be required by such other stock exchange, (iv) the Registrar in respect of any Series of Instruments then outstanding or (v) in the circumstances described in Condition 9A.04, the Paying Agent with its specified office in New York City, or (vi) a Paying Agent in a member state of the European Union that will not be obliged to withhold or deduct tax pursuant to the European Council Directive 2003/48/EC or any other Directive implementing the conclusions of the ECOFIN council meeting of 26-27 November 2000;

such revocation shall not be effective until a successor thereto (which in the case of the Fiscal Agent and the Registrar shall be a bank or trust company of good standing and

27

authorised to exercise corporate trust powers) has been appointed by the Issuer as the agent of the Issuer in relation to the Instruments of the Issuer and notice of such appointment has been given in accordance with the terms and conditions, Provided that such successor, in the case of (ii), shall have its specified office in continental Europe (but outside the United Kingdom) and, in the case of (iii), which must be a bank or a securities dealer that is subject to supervision by the Swiss Federal Banking commission and have its specified office in Switzerland and/or in such other place as may be required by SWX.

14.3The appointment of any Paying Agent or Registrar as the agent of the Issuer in relation to the Instruments shall terminate forthwith if any of the following events or circumstances shall occur or arise, namely: such Paying Agent or, as the case may be, Registrar becomes incapable of acting; such Paying Agent or, as the case may be, Registrar is adjudged bankrupt or insolvent; such Paying Agent or, as the case may be, Registrar files a voluntary petition in bankruptcy or makes an assignment for the benefit of its creditors or consents to the appointment of a receiver, administrator or other similar official of all or any substantial part of its property or admits in writing its inability to pay or meet its debts as they mature or suspends payment thereof; a resolution is passed or an order is made for the winding-up or dissolution of such Paying Agent or, as the case may be, Registrar; a receiver, administrator or other similar official of such Paying Agent or, as the case may be, Registrar or of all or any substantial part of its property is appointed; an order of any court is entered approving any petition filed by or against such Paying Agent or, as the case may be, Registrar under the provisions of any applicable bankruptcy or insolvency law; or any public officer takes charge or control of such Paying Agent or, as the case may be, Registrar or of its property or affairs for the purpose of rehabilitation, conservation or liquidation.

14.4The Issuer may (and shall where necessary to comply with the terms and conditions applicable to any Instruments) appoint substitute or additional agents in relation to the Instruments and shall forthwith notify the other parties hereto thereof, whereupon the parties hereto and such substitute or additional agents shall thereafter have the same rights and obligations among them as would have been the case had they then entered into an agreement in the form mutatis mutandis of this Agreement.

14.5Upon any resignation or revocation becoming effective under this Section 14, the relevant Paying Agent or, as the case may be, Registrar shall:

(a)be released and discharged from its obligations under this Agreement (save that it shall remain entitled to the benefit of and subject to and bound by the provisions of Clause 9.13, 11.11, Clause 12.2, Clause 13 and this Clause 14);

(b)repay to the Issuer such part of any fee paid to it as referred to in Clause 12.1 as may be agreed between the relevant Paying Agent or, as the case may be, the Registrar and the Issuer;

28

(c)in the case of the Fiscal Agent, deliver to the Issuer and to  the successor Fiscal Agent a copy, certified as true and up-to-date by an officer of the Fiscal Agent, of the records maintained by it in accordance with Clause 9;

(d)in the case of a Registrar, deliver to the Issuer and to the successor Registrar a copy, certified as true and up-to-date by an officer of such Registrar, of each of the Registers and other records maintained by it in accordance with Clause 11; and

(e)forthwith transfer all moneys and papers (including any unissued Temporary Global Instruments, Permanent Global Instruments, Definitive Instruments, Coupons or, as the case may be, Registered Instruments held by it hereunder) to its successor in that capacity and, upon appropriate notice, provide reasonable assistance to such successor for the discharge by it of its duties and responsibilities hereunder.

14.6Any corporation into which any Paying Agent or Registrar may be merged or converted, any corporation with which any Paying Agent or Registrar may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which any Paying Agent or Registrar shall be a party, shall, to the extent permitted by applicable law (and provided, (i) in the case of the Fiscal Agent or any Registrar that such corporation shall be a bank or trust company of good standing and authorised to execute corporate trust powers (ii) in regard to the Paying Agent with a specified office in Switzerland the resulting corporation shall be a bank or a securities dealer that is subject to supervision by the Swiss Federal Banking Commission), be the successor to such Paying Agent or, as the case may be, Registrar as agent of the Issuer in relation to the Instruments without any further formality, whereupon the parties hereto and such successor agent shall thereafter have the same rights and obligations among them as would have been the case had they then entered into an agreement in the form mutatis mutandis of this Agreement.  Notice of any such merger, conversion or consolidation shall forthwith be given by such successor to the Issuer and the other parties hereto.

14.7If any Paying Agent or Registrar decides to change its specified office (which may only be effected within the same city) it shall give notice to the Issuer (with a copy, if necessary, to the Fiscal Agent) of the address of the new specified office stating the date on which such change is to take effect, which date shall be not less than thirty days after the date of such notice.  The relevant Paying Agent or Registrar shall at its own expense not less than fourteen days prior to the date on which such change is to take effect (unless the appointment of the relevant Paying Agent or Registrar is to terminate pursuant to any of the foregoing provisions of this Section 14 on or prior to the date of such change) publish or cause to be published notice thereof in accordance with the terms and conditions.

15.SUBSTITUTION

15.1As provided in Condition 15 of the terms and conditions of the relevant Instruments, the Issuer may be replaced, and ABB Ltd or any direct or indirect subsidiary of ABB

29

Ltd may be substituted for the Issuer, as principal debtor in respect of the Instruments without the consent of the Holders of the Instruments or Coupons.  If the Issuer shall determine that ABB Ltd or any such subsidiary shall become the principal debtor (in such capacity, the “Substituted Debtor”), the Issuer shall give not less than 30 nor more than 45 days’ notice, in accordance with Condition 14, to the Holders of the Instruments of such event and, immediately on the expiry of such notice, the Substituted Debtor shall enter into a Deed of Assumption, substantially in the form set out in the Sixth Schedule hereto, and become the principal debtor in respect of the Instruments in place of the Issuer and the Holders of the Instruments shall thereupon cease to have any rights or claims whatsoever against the Issuer.  However, no such substitution shall take effect (i) if the Substituted Debtor is any other subsidiary of ABB Ltd, until such Substituted Debtor shall have entered into a keep-well agreement with ABB Ltd substantially in the form of the Keep-Well Agreement (as defined in the terms and conditions of the relevant Instruments), (ii) until such Substituted Debtor shall have executed a deed of covenant substantially in the form of the Deed of Covenant (as defined in the terms and conditions of the relevant Instruments), (iii) in any case, until the Substituted Debtor shall have provided to the Fiscal Agent and (if applicable) the Registrar such documents as may be necessary to make the Deed of Assumption, the relevant Instruments, the Fiscal Agency Agreement, such deed of covenant and any such keep-well agreement the legal, valid and binding obligations of, as appropriate, the Substituted Debtor and ABB Ltd together with legal opinions either unqualified or subject only to normal, usual or appropriate qualifications and assumptions to the effect that the Instruments, the Fiscal Agency Agreement, the Deed of Assumption, such deed of covenant and any such keep-well agreement are legal, valid and binding obligations of, as appropriate, the Substituted Debtor and ABB Ltd; (iv) the Substituted Debtor shall have obtained all necessary governmental and regulatory approvals and consents, if any, in connection with the substitution and (v) the Substituted Debtor shall have appointed the process agent appointed by the Issuer in Condition 19.03 of the terms and conditions of the relevant Instruments as its agent in England to receive service of process on its behalf in relation to any legal action or proceedings arising out of or in connection with the relevant Instruments.  Upon any such substitution, the Instruments and Coupons will, if necessary, be deemed to be modified in all appropriate respects.

15.2The terms and conditions of the relevant Instruments shall, following any substitution effected in accordance with this Clause, apply to the Substituted Debtor, amended as set out in the Schedule to the Deed of Assumption.

16.FURTHER ISSUERS

16.1Each of the Paying Agents and Registrars hereby agrees to act as the agent (in the capacity in which it was appointed hereunder) of (i) any Substituted Debtor as defined in (and where such substitution shall have taken effect as provided in) Condition 15 of the terms and conditions of the relevant Instruments or (ii) any New Issuer (as that expression is defined in Clause 10.2 of the Dealership Agreement) which shall have become party to the Dealership Agreement and which shall have (a) executed an agreement, in form and substance satisfactory to the Fiscal Agent, whereby such New

30

Issuer agrees to be bound by the provisions of this Agreement and (b) provided to the Fiscal Agent such documents as may be necessary to make this Agreement its legal, valid and binding obligations (any such Substituted Debtor or New Issuer as described in (i) or (ii) above is herein referred to as a “Further Issuer”).

16.2Each of the Paying Agents and the Registrars hereby agrees that any Issuer in its capacity as such, shall be released from its obligations, undertakings and covenants under this Agreement upon such Issuer ceasing to be an Issuer pursuant to and in accordance with Clause 10.1 of the Dealership Agreement provided always that such release shall not affect any rights, liabilities or obligations accrued or incurred under this Agreement prior to the date upon which such release takes effect.

31

17.NOTICES

All communications hereunder shall be in writing and shall be delivered to or telexed to or sent by facsimile (confirmed by letter sent by express airmail) to the following addresses:

(a)if to AIFLTD, to it at:

Address:Suite 3, Weighbridge House

The Pollet, St. Peter Port

Guernsey GY1 1WL

Channel Islands

Fax:+44 1481 729 016

Attention:Business Administration

with a copy to:

AddressABB Group Treasury Operations

Affolternstrasse 44

CH-8050 Zurich

Switzerland

Fax:+41 43 317 7474

Attention:Business Operations

(b)if to the Fiscal Agent at:

Address:Fortis Banque Luxembourg S.A.

50, Avenue J.F. Kennedy

L 2951 Luxembourg

Telex:3401 BGL lu

Fax:+352 4242 2887

Attention:Fiscal and Paying Agency Department

(or in the case of a Fiscal Agent not originally a party hereto, specified by notice to the other parties hereto at or about the time of its appointment as the agent of the Issuer in relation to the Instruments).

(c)if to the Swiss Paying Agent at:

Address:Banque MeesPierson BGL S.A.

57 Rennweg

CH-8023 Zurich

Switzerland

Telex:BGL Zürich 813003 BGL CH

Fax:+41 12119908

32

All communications relating to this Agreement between the Issuer and any of the Paying Agents or between the Paying Agents themselves shall be made through the Fiscal Agent;

(d)if to a Registrar to it at the address, fax or telex number specified against its name in the Eighth Schedule (or, in the case of a Registrar not originally a party hereto, specified by notice to the other parties hereto at or about the time of its appointment as the agent of the Issuer in relation to the Instruments) for the attention of the person or department therein specified (or as aforesaid)

or, in any case, to such other address, telex number or fax number or for the attention of such other person or department as the addressee has by prior notice to the sender specified for the purpose.

Any notice sent by letter shall take effect at the time of delivery and any notice sent by telex shall take effect at the time of despatch provided that the correct answerback is received and any notice sent by facsimile transmission shall take effect upon receipt thereof.  Where a notice is copied to another address such notice shall take effect at the time when the first of the notice or the copy takes effect.

18.LAW AND JURISDICTION

18.1This Agreement is governed by, and shall be construed in accordance with, English law.

18.2The Issuer hereby agrees for the exclusive benefit of each of the Paying Agents and the Registrars that the courts of England are to have jurisdiction to settle any disputes which may arise out of or in connection with this Agreement and that accordingly any suit, action or proceedings (together referred to as “Proceedings”) arising out of or in connection with this Agreement may be brought in such courts.  Nothing contained in this Clause shall limit any right to take Proceedings against the Issuer in any other court of competent jurisdiction, nor shall the taking of Proceedings in one or more jurisdictions preclude the taking of Proceedings in any other jurisdiction, whether concurrently or not.

18.3The Issuer hereby appoints ABB Limited of Daresbury Park, Daresbury, Warrington WA4 4BT, Cheshire to accept service of any Proceedings on its behalf in England.  If for any reason such process agent ceases to act as such or no longer has an address in England, the Issuer agrees to appoint a substitute process agent and notify the Fiscal Agent of such appointment and if the Issuer fails to make any such appointment within twenty-one days, the Fiscal Agent shall be entitled to appoint such a person by notice to the Issuer.

18.4Nothing contained herein shall affect the right to serve process in any other manner permitted by law.

33

19.MODIFICATION

This Agreement may be amended by the Issuer and the Fiscal Agent, without the consent of the other Paying Agents or the Registrars or the Holder of any Instrument or Coupon, for the purposes of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained herein, or in any manner which the Issuer and the Fiscal Agent may deem necessary or desirable and which shall not be inconsistent with the Instruments or Coupons and which will not, in the opinion of the Issuer and the Fiscal Agent, be materially prejudicial to the interests of the Holders of the Instruments, the Coupons or the Paying Agents or the Registrars.

20.COUNTERPARTS

This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when so executed shall constitute one and the same binding agreement between the parties.

21.Contracts (Rights Of Third Parties) Act 1999

A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Agreement.

AS WITNESS the hands of the duly authorised representatives of the parties hereto the day and year first before written.

34

THE FIRST SCHEDULE

Form Of Temporary Global Instrument (Bearer)

Series Number: [          ] Serial Number: [          ]

THE SECURITIES REPRESENTED BY THIS TEMPORARY GLOBAL INSTRUMENT HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT IN CERTAIN TRANSACTIONS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.  TERMS USED IN THIS PARAGRAPH HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.

ABB INTERNATIONAL FINANCE LIMITED

(incorporated with limited liability in Guernsey)

35

TEMPORARY GLOBAL INSTRUMENT

representing

[Aggregate principal amount of Tranche]

[Number of Instruments]

[Title of Instruments]

[Swiss Security Number]

[ISIN]

[Common Code]

This Temporary Global Instrument is issued in respect of an issue of [description of Instruments including aggregate principal amount of Tranche] (the “Instruments”) by [                    ] (the “Issuer”).

The Issuer for value received promises, all in accordance with the terms and conditions [attached hereto/set out in the information memorandum prepared by the Issuer and dated 8 December 2005 and the pricing supplement prepared in relation to the Instruments (the “Pricing Supplement”)] to pay to the bearer upon presentation and, if appropriate, surrender hereof on [maturity date] [by [   ] [equal] successive [semi-annual/quarterly/other] instalments on the dates specified in the Pricing Supplement](1) or on such earlier date as the same may become payable in accordance therewith the principal amount of [aggregate principal amount of Tranche] (as reduced from time to time in accordance with such terms and conditions) or such lesser amount as is equal to the outstanding principal amount of the Instruments represented by this Temporary Global Instrument or such other redemption amount as may be specified therein [and to pay in arrear on the dates specified therein interest on the principal amount hereof from time to time at the rate or rates specified therein], all subject to and in accordance with such terms and conditions.

Except as specified herein, the bearer of this Temporary Global Instrument is entitled to the benefit of the terms and conditions referred to above and of the same obligations on the part of the Issuer as if such bearer were the bearer of the Instruments represented hereby except that the bearer of this Temporary Global Instrument shall not prior to the Exchange Date (defined below) be entitled to receive payment of [the principal of or] interest on the Instruments except to the extent that, upon due presentation and surrender of this Temporary Global Instrument for exchange, delivery of the Permanent Global Instrument, or as the case may be Definitive Instruments or Registered Instruments is improperly withheld or refused, and all payments under and to the bearer of this Temporary Global Instrument shall be valid and effective to satisfy and discharge the corresponding liabilities of the Issuer in respect of the Instruments.

This Temporary Global Instrument is exchangeable in whole or in part for a permanent global instrument (the “Permanent Global Instrument”) representing the Instruments and in substantially the form (subject to completion) set out in the Second Schedule to an amended and restated fiscal agency agreement dated 8 December 2005 (as further supplemented, amended or replaced, the “Fiscal Agency Agreement”) and made between the Issuer Fortis

(1)   Insert only where Instruments are Instalment Instruments.

36

Banque Luxembourg S.A. in its capacity as fiscal agent (the “Fiscal Agent”, which expression shall include any successor to Fortis Banque Luxembourg S.A. in its capacity as such), Fortis Banque Luxembourg S.A. as principal registrar and certain other financial institutions named therein or, if so specified in the Pricing Supplement, for definitive instruments (“Definitive Instruments”) in substantially the form (subject to completion) set out in the Third Schedule to the Fiscal Agency Agreement [or for registered instruments (“Registered Instruments”) in substantially the form (subject to completion) set out in the Fourth Schedule to the Fiscal Agency Agreement].  An exchange for a Permanent Global Instrument or Definitive Instruments will be made only on or after the date (the “Exchange Date”) which is 40 days after the later of the date of issue of this Temporary Global Instrument and the completion (as notified to the Fiscal Agent by the Issuer) of the distribution of the Instruments represented by this Temporary Global Instrument and upon presentation or, as the case may be, surrender of this Temporary Global Instrument to the Fiscal Agent at its specified office in relation to the Instruments and upon and to the extent only of delivery to the Fiscal Agent of a certificate or certificates issued by Euroclear Bank, S.A./N.V., as operator of the Euroclear System (the “Euroclear System”) or Clearstream, société anonyme, Luxembourg (“Clearstream Luxembourg”), or by any other relevant clearing system and dated not earlier than the Exchange Date in substantially the form set out in Annex I hereto or, as the case may be, in the form that is customarily issued in such circumstances by such other clearing system.  [An exchange for Registered Instruments will be made at any time upon presentation or, as the case may be, surrender of this Temporary Global Instrument to the Fiscal Agent at its specified office.](2)  [Any Registered Instruments shall be made available in exchange in accordance with the terms and conditions applicable to the Instruments represented hereby and the Fiscal Agency Agreement (which shall apply as if the bearer of this Temporary Global Instrument were the bearer of the Instruments represented hereby).](3)  Payments of interest otherwise falling due before the Exchange Date will be made only upon presentation of the Temporary Global Instrument to the Fiscal Agent at its specified office in relation to the Instruments and upon and to the extent only of delivery to the Fiscal Agent of a certificate or certificates issued by the Euroclear System or Clearstream, Luxembourg or by any other relevant clearing system and dated not earlier than the relevant interest payment date in substantially the form set out in Annex II hereto or, as the case may be, in the form that is customarily issued in such circumstances by such other clearing system.

In the event that (i) this Temporary Global Instrument is not duly exchanged, whether in whole or in part, for a Permanent Global Instrument or, as the case may be, Definitive Instruments [or Registered Instruments](4) by 6.00 p.m. (London time) on the thirtieth day after the time at which the preconditions to such exchange are first satisfied or (ii) any Instrument represented hereby becomes immediately redeemable following the occurrence of an Event of

(2)   Insert only in the case of a Series comprising both Bearer and Registered Instruments if the relevant Pricing Supplement specifies that Bearer Instruments are exchangeable for Registered Instruments.

(3)   Insert only in the case of a Series comprising both Bearer and Registered Instruments if the relevant Pricing Supplement specifies that Bearer Instruments are exchangeable for Registered Instruments.

(4)   Insert only where the maturity of the Instruments is more than one year.

37

Default in relation thereto and is not duly redeemed (and the funds required for such redemption are not available to the Fiscal Agent for the purposes of effecting such redemption and remain available for such purpose) by 6.00 p.m. (London time) on the thirtieth day after the time at which such Instruments become immediately redeemable, then this Temporary Global Instrument will become void and the bearer will have no further rights hereunder (but without prejudice to the rights which such bearer or any other person having an interest in this Temporary Global Instrument immediately prior to it becoming void may have under a deed of covenant dated 10 March 1993 and executed by the Issuer in respect of the Instruments).

[On any occasion on which a payment of interest is made in respect of this Temporary Global Instrument, the Issuer shall procure that the Paying Agent to which such Temporary Global Instrument is presented notes the same on the Schedule hereto.]

On any occasion on which a payment of principal or redemption amount is made in respect of this Temporary Global Instrument or on which this Temporary Global Instrument is exchanged in whole or in part as aforesaid or on which Instruments represented by this Temporary Global Instrument are to be cancelled, the Issuer shall cause the Paying Agent to which such Temporary Global Instrument is presented to procure that (i) the aggregate principal amount of the Instruments in respect of which such payment is made (or, in the case of a partial payment, the corresponding part thereof) or which are delivered in definitive [or registered] form or which are exchanged for a permanent global instrument or which are to be cancelled and (ii) the remaining principal amount of this Temporary Global Instrument (which shall be the previous principal amount hereof less the amount referred to at (i) above) are noted on the Schedule hereto, whereupon the principal amount of this Temporary Global Instrument shall for all purposes be as most recently so noted.

The holders of interests in Instruments listed on SWX do not have the right to request the printing and delivery of definitive instruments. If the Fiscal Agent deems (i) the printing of definitive instruments and coupons to be necessary or useful or (ii) the presentation of definitive instruments and coupons to be required by Swiss or foreign laws in connection with the enforcement of the rights of the holders, the Fiscal Agent will provide for such printing. The Issuer has irrevocably authorised the Fiscal Agent to provide for such printing on its behalf. The definitive instruments will be printed and issued to the holders free of charge in exchange for their interests in the respective Global Instrument.  This Temporary Global Instrument is governed by, and shall be construed in accordance with, English law.

This Temporary Global Instrument shall not be valid for any purpose until authenticated for and on behalf of Fortis Banque Luxembourg S.A., Luxembourg, as fiscal agent.

AS WITNESS the manual signature of two duly authorised officers on behalf of the Issuer.

[                         ]		[                          ]
By:	[manual signature]	By:	[manual signature]
	(duly authorised)	(duly authorised)

38

ISSUED in [        ] as of [        ] [     ]

AUTHENTICATED for and on behalf of

FORTIS BANQUE LUXEMBOURG S.A.

as fiscal agent

By:	[manual signature]
	(duly authorised)

[ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.](5)

(5)   Insert only where the maturity of the Instruments is more than one year.

39

THE SCHEDULE

Payments, Delivery of Definitive Instruments or Registered Instruments,
Exchange for Permanent Global Instrument and
Cancellation of Instruments

Date of
payment,
delivery or
cancellation Amount of 
interest then
paid Amount of
principal or,
as the case
may be,
redemption
amount then
paid Aggregate
principal
amount of
Definitive or
Registered
Instruments
then
delivered Aggregate
principal
amount of
this
Temporary
Global
Instrument
then
exchanged
for the
Permanent
Global
Instrument Aggregate
principal
amount of
Instruments
then
cancelled Remaining
principal
amount of
this
Temporary
Global
Instrument Authorised
signature of
the Fiscal
Agent and/or
the Registrar

40

ANNEX I

[Form of certificate to be given in relation to exchanges of this Temporary Global Instrument for a Permanent Global Instrument or Definitive Instruments.  This Certificate is not required for Registered Instruments:]

[Name of Issuer]

[Aggregate principal amount and title of Instruments]

(the “Securities”)

This is to certify that, based solely on certifications we have received in writing, by tested telex or by electronic transmission from member organisations appearing in our records as persons being entitled to a portion of the principal amount set forth below (our “Member Organisations”) substantially to the effect set forth in the Fiscal Agency Agreement as of the date hereof, [   ] principal amount of the above-captioned Securities (i) is owned by persons that are not citizens or residents of the United States, domestic partnerships, domestic corporations, estates the income of which is subject to United States Federal income taxation regardless of its source or trusts (a) that are subject to the primary supervision of a court within the United States and with respect to which one or more United States persons have the authority to control all substantial decisions or (b) that have a valid election in effect under applicable U.S. Treasury regulations to be treated as a United States person (“United States persons”), (ii) is owned by United States persons that (a) are foreign branches of United States financial institutions (as defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(iv) (“financial institutions”)) purchasing for their own account or for resale, or (b) acquired the Securities through and are holding through on the date hereof foreign branches of United States financial institutions (and in either case (a) or (b), each such United States financial institution has agreed, on its own behalf or through its agent, that we may advise the Issuer or the Issuer’s agent that it will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder), or (iii) is owned by United States or foreign financial institutions for purposes of resale during the restricted period (as defined in U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)), and to the further effect that United States or foreign financial institutions described in Clause (iii) above (whether or not also described in Clause (i) or (ii)) have certified that they have not acquired the Securities for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions.

This is also to certify with respect to [              ] principal amount of the above-captioned Securities, except as set forth below, we have received in writing, by tested telex or by electronic transmission, from our Member Organisations entitled to a portion of such principal amount, certifications with respect to such portion, substantially to the effect set forth in the Fiscal Agency Agreement.

As used herein, “United States” means the United States of America (including the States and the District of Columbia); and its “possessions” include Puerto Rico, the

41

U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands.

We further certify (i) that we are not making available herewith for exchange (or, if relevant, exercise of any rights or collection of any interest) any portion of the temporary global security excepted in such certifications and (ii) that as of the date hereof we have not received any notification from any of our Member Organisations to the effect that the statements made by such Member Organisations with respect to any portion of the part submitted herewith for exchange (or, if relevant, exercise of any rights or collection of any interest) are no longer true and cannot be relied upon as at the date hereof.

We understand that this certification is required in connection [with certain tax laws and, if applicable,] certain securities laws of the United States.  In connection therewith, if administrative or legal proceedings are commenced or threatened in connection with which this certification is or would be relevant, we irrevocably authorise you to produce this certification to any interested party in such proceedings.

Date:[         ](6)

[Euroclear Bank S.A./N.V., as operator of the Euroclear System/Clearstream Banking, société anonyme, Luxembourg]

By:[authorised signature]

(6)   To be dated not earlier than the Exchange Date.

42

ANNEX II

[Form of certificate to be given in relation to payments of interest falling due before the Exchange Date:]

[Name of Issuer]

[Aggregate principal amount and title of Instruments]

(the “Securities”)

This is to certify that, based solely on certifications we have received in writing, by tested telex or by electronic transmission from member organisations appearing in our records as persons being entitled to a portion of the principal amount set forth below (our “Member Organisations”) substantially to the effect set forth in the Fiscal Agency Agreement as of the date hereof, [    ] principal amount of the above-captioned Securities (i) is owned by persons that are not citizens or residents of the United States, domestic partnerships, domestic corporations, estates or trust the income of which is subject to United States Federal income taxation regardless of its source or trusts (a) that are subject to the primary supervision of a court within the United States and with respect to which one or more United States persons have the authority to control all substantial decisions or (b) that have a valid election in effect under applicable U.S. Treasury regulations to be treated as a United States person (“United States persons”), (ii) is owned by United States persons that (a) are foreign branches of United States financial institutions (as defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(iv) (“financial institutions”)) purchasing for their own account or for resale, or (b) acquired the Securities through and are holding through on the date hereof foreign branches of United States financial institutions (and in either case (a) or (b), each such United States financial institution has agreed, on its own behalf or through its agent, that we may advise the Issuer or the Issuer’s agent that it will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder), or (iii) is owned by United States or foreign financial institutions for purposes of resale during the restricted period (as defined in U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)), and to the further effect that United States or foreign financial institutions described in Clause (iii) above (whether or not also described in Clause (i) or (ii)) have certified that they have not acquired the Securities for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions.

This is also to certify with respect to such principal amount of Securities set forth above that, except as set forth below, we have received in writing, by tested telex or by electronic transmission, from our Member Organisations entitled to a portion of such principal amount, certifications with respect to such portion, substantially to the effect set forth in the Fiscal Agency Agreement.

43

As used herein, “United States” means the United States of America (including the States and the District of Columbia); and its “possessions” include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands.We further certify (i) that we are not making available herewith for exchange (or, if relevant, exercise of any rights or collection of any interest) any portion of the temporary global security excepted in such certifications and (ii) that as of the date hereof we have not received any notification from any of our Member Organisations to the effect that the statements made by such Member Organisations with respect to any portion of the part submitted herewith for exchange (or, if relevant, exercise of any rights or collection of any interest) are no longer true and cannot be relied upon as at the date hereof.

We understand that this certification is required in connection with certain tax laws and, if applicable, certain securities laws of the United States.  In connection therewith, if administrative or legal proceedings are commenced or threatened in connection with which this certification is or would be relevant, we irrevocably authorise you to produce this certification to any interested party in such proceedings.

Date:[             ](7)

[Euroclear Bank S.A./N.V., as operator of the Euroclear System/Clearstream Banking, société anonyme, Luxembourg]

By:[authorised signature]

(7)   To be dated not earlier than the relevant interest payment date.

44

ANNEX III

[Form of account-holder’s certification referred to in the preceding certificates:]

[Note: This certificate is not required for Registered Instruments]

[Name of Issuer]

[Aggregate principal amount and title of Instruments]

(the “Securities”)

This is to certify that as of the date hereof, and except as set forth below, the above-captioned Securities held by you for our account (i) are owned by persons that are not citizens or residents of the United States, domestic partnerships, domestic corporations, estates or trust the income of which is subject to the United States Federal income taxation regardless of its source or trusts (a) that are subject to the primary supervision of a court within the United States and the control of one or more United States persons as described in section 7701(a)(30) of the Code or (b) that have a valid election in effect under applicable U.S. Treasury regulations to be treated as a United States person (“United States persons”), (ii) are owned by United States person(s) that (a) are foreign branches of a United States financial institution (as defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(v)) (“financial institutions”) purchasing for their own account or for resale, or (b) acquired above-captioned the Securities through and are holding through on the date hereof foreign branches of United States financial institutions (and in either case (a) or (b), each such United States financial institution hereby agrees, on its own behalf or through its agent, that you may advise the Issuer or the Issuer’s agent that it will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder), or (iii) are owned by United States or foreign financial institution(s) for purposes of resale during the restricted period (as defined in U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)), and in addition if the owner of the above-captioned Securities is a United States or foreign financial institution described in clause (iii) above (whether or not also described in clause (i) or (ii)) this is further to certify that such financial institution has not acquired the above-captioned Securities for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions.

This is also to certify that, except as set further below, the above-captioned Securities are beneficially owned by (a) non-U.S. person(s) or (b) U.S. persons resident outside the United States who purchased the Securities in transactions outside the United States in accordance with Regulation S under the U.S. Securities Act of 1933, as amended the (“Act”).  As used in this paragraph the terms “U.S. person” and “United States” have the meanings given to them by Regulation S under the Act.

As used herein, “United States” means the United States of America (including the States and the District of Columbia); and its “possessions” include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands.

45

We undertake to advise you promptly by tested telex on or prior to the date on which you intend to submit your certification relating to the Securities held by you for our account in accordance with your operating procedures if any applicable statement herein is not correct on such date, and in the absence of any such notification it may be assumed that this certification applies as of such date.

This certification excepts and does not relate to [             ] of such interest in the above Securities in respect of which we are not able to certify and as to which we understand exchange and delivery of definitive Securities (or, if relevant, exercise of any rights or collection of any interest) cannot be made until we do so certify.

We understand that this certification is required in connection with certain securities laws of the United States.  In connection therewith, if administrative or legal proceedings are commenced or threatened in connection with which this certification is or would be relevant, we irrevocably authorise you to produce this certification to any interested party in such proceedings.

Date:[               ](8)

(8)   To be dated not earlier than fifteen days before the Exchange Date or, as the case may be, the relevant interest payment date.

46

[Account-holder] as or as agent for the beneficial owner of the Instruments.

By:[authorised signature]

47

THE SECOND SCHEDULE

Form Of Permanent Global Instrument

Series Number: [          ] Serial Number: [          ]

THE SECURITIES REPRESENTED BY THIS PERMANENT GLOBAL INSTRUMENT HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT IN CERTAIN TRANSACTIONS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.  TERMS USED IN THIS PARAGRAPH HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.

ABB INTERNATIONAL FINANCE LIMITED

(incorporated with limited liability in Guernsey)

48

PERMANENT GLOBAL INSTRUMENT

representing up to

[Aggregate principal amount of Tranche]

[Number of Instruments]

[Title of Instruments]

[Swiss Security Number]

[ISIN]

[Common Code]

This Permanent Global Instrument is issued in respect of an issue of [description of Instruments including aggregate principal amount of Tranche] (the “Instruments”) by [                    ] (the “Issuer”).

The Issuer for value received promises, all in accordance with the terms and conditions [attached hereto/set out in the information memorandum prepared by the Issuer and dated 8 December 2005 and the pricing supplement prepared in relation to the Instruments (“Pricing Supplement”)], to pay to the bearer upon presentation and, if appropriate, surrender hereof on [maturity date] [by [   ] [equal] successive [semi-annual/quarterly/other] instalments on the dates specified in the Pricing Supplement](9) or on such earlier date as the same may become payable in accordance therewith the principal amount of [aggregate principal amount of Tranche] (as reduced from time to time in accordance with such terms and conditions) or such lesser amount as is equal to the outstanding principal amount of the Instruments represented by this Permanent Global Instrument or such other redemption amount as may be specified therein [and to pay in arrear on the dates specified therein interest on the principal amount hereof from time to time at the rate or rates specified therein], all subject to and in accordance with such terms and conditions.

The bearer of this Permanent Global Instrument is entitled to the benefit of the terms and conditions referred to above and the same obligations on the part of the Issuer as if such bearer were the bearer of the Instruments represented hereby, and all payments under and to the bearer of this Permanent Global Instrument shall be valid and effective to satisfy and discharge the corresponding liabilities of the Issuer in respect of the Instruments.

This Permanent Global Instrument will be exchangeable for definitive Instruments (“Definitive Instruments”) in substantially the form (subject to completion) set out in the Third Schedule to an amended and restated fiscal agency agreement dated 8 December 2005 (as further supplemented, amended or replaced, the “Fiscal Agency Agreement”) and made between the Issuer, Fortis Banque Luxembourg S.A. in its capacity as fiscal agent (the “Fiscal Agent”, which expression shall include any successor to Fortis Banque Luxembourg S.A. in its capacity as such), Fortis Banque Luxembourg S.A. as principal registrar and certain other financial institutions [or for registered instruments (“Registered Instruments”) in substantially the form (subject to completion) set out in the Fourth Schedule to the Fiscal Agency Agreement or for a combination of Definitive Instruments and Registered

(9)   Insert only where Instruments are Instalment Instruments.

49

Instruments](10) (a) if Euroclear Bank S.A./N.V., as operator of the Euroclear System (the “Euroclear System”) or Clearstream Banking, société anonyme, Luxembourg (“Clearstream, Luxembourg”) or any other relevant clearing system is closed for business for a continuous period of 14 days (other than by reason of legal holidays) or announces an intention permanently to cease business; (b) if any of the Instruments represented hereby becomes due and payable following an Event of Default (as defined in Condition 7) of the terms and conditions referred to above; or (c) at the option of the bearer hereof acting on behalf of the relevant beneficial owners of the interests in this Permanent Global Instrument and at the expense of such beneficial owners, and, in each case, upon the request of the bearer hereof on behalf of the relevant beneficial owners of the interests in this Permanent Global Instrument and at the expense of such beneficial owners.  In order to make such request, the bearer hereof must, not less than forty-five days before the date upon which the delivery of such Definitive Instruments [and/or Registered Instruments] is required, deposit this Permanent Global Instrument with the Fiscal Agent at its specified office with the form of exchange notice endorsed hereon duly completed.  On an exchange of the whole of this Permanent Global Instrument, this Permanent Global Instrument shall be surrendered to the Fiscal Agent.  [Any Registered Instruments shall be made available in exchange in accordance with the terms and conditions applicable to the Instruments represented hereby and the Fiscal Agency Agreement (which shall apply as if the bearer of this Permanent Global Instrument were the bearer of the Instruments represented hereby).]¹⁰  Any Definitive Instruments will be made available for collection by the persons entitled thereto at the specified office of the Fiscal Agent.  If default is made by the Issuer in the required delivery of such Definitive Instruments [and/or, as the case may be, Registered Instruments]¹⁰ and such default is continuing at 6.00 p.m. (London time) on the thirtieth day after the day on which the relevant notice period expires, then this Permanent Global Instrument will become void and the bearer will have no further rights hereunder (but without prejudice to the rights which such bearer or any other person(s) having an interest in this Permanent Global Instrument immediately prior to it becoming void may have under a deed of covenant dated 10 March 1993 and executed by the Issuer in respect of the Instruments).

[On any occasion on which a payment of interest is made in respect of this Permanent Global Instrument, the Issuer shall procure that the Paying Agent to which this Permanent Global Instrument is presented notes the same on the Schedule hereto].

On any occasion on which a payment of principal or redemption amount is made in respect of this Permanent Global Instrument or on which this Permanent Global Instrument is exchanged as aforesaid or on which any Instruments represented by this Permanent Global Instrument are to be cancelled, the Issuer shall cause the Paying Agent to which this Permanent Global Instrument is presented to procure that (i) the aggregate principal amount of the Instruments in respect of which such payment is made (or, in the case of a partial payment, the corresponding part thereof) or which are delivered in definitive [or registered form]¹⁰ or which are to be cancelled and (ii) the remaining principal amount of this Permanent Global Instrument (which shall be the previous principal amount hereof less the amount referred to at

(10) Insert only in the case of a Series comprising both Bearer and Registered Instruments if the relevant Pricing Supplement specifies that Bearer Instruments are exchangeable for Registered Instruments.

50

(i) above) are noted on the Schedule hereto, whereupon the principal amount of this Permanent Global Instrument shall for all purposes be as most recently so noted.

Insofar as the Temporary Global Instrument by which the Instruments were initially represented has been exchanged in part only for this Permanent Global Instrument and is then to be further exchanged as to the remaining principal amount or part thereof for this Permanent Global Instrument, then upon presentation of this Permanent Global Instrument to the Fiscal Agent at its specified office in relation to the Instruments and to the extent that the aggregate principal amount of such Temporary Global Instrument is then reduced by reason of such further exchange, the Issuer shall cause the Fiscal Agent to procure that (i) the aggregate principal amount of the Instruments in respect of which such further exchange is then made and (ii) the new principal amount of this Permanent Global Instrument (which shall be the previous principal amount hereof plus the amount referred to at (i) above) are noted on the Schedule hereto, whereupon the principal amount of this Permanent Global Instrument shall for all purposes be as most recently noted.

The holders of interests in Instruments listed on SWX do not have the right to request the printing and delivery of definitive instruments. If the Fiscal Agent deems (i) the printing of definitive instruments and coupons to be necessary or useful or (ii) the presentation of definitive instruments and coupons to be required by Swiss or foreign laws in connection with the enforcement of the rights of the holders, the Fiscal Agent will provide for such printing. The Issuer has irrevocably authorised the Fiscal Agent to provide for such printing on its behalf. The definitive instruments will be printed and issued to the holders free of charge in exchange for their interests in the respective global instrument.

This Permanent Global Instrument is governed by, and shall be construed in accordance with, English law.

This Permanent Global Instrument shall not be valid for any purpose until authenticated for and on behalf of Fortis Banque Luxembourg S.A., as fiscal agent.

51

AS WITNESS the manual signature of two duly authorised officers on behalf of the Issuer.

[                         ]		[                          ]
By:	[manual signature]	By:	[manual signature]
	(duly authorised)	(duly authorised)

ISSUED in [         ] on [         ] [   ]

AUTHENTICATED for and on behalf of

FORTIS BANQUE LUXEMBOURG S.A.

as fiscal agent

By:[manual signature]

(duly authorised)

[ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.](11)

(11) Insert only where the maturity of the Instruments is more than one year

52

THE SCHEDULE

Payments, Delivery of Definitive or Registered Instruments, Further Exchanges of the
Temporary Global Instrument and Cancellation of Instruments

Date of
payment,
delivery,
further
exchange
of
Temporary
Global
Instrument
or
cancellation Amount of
interest
then paid Amount of
principal
or, as the
case may
be,
redemption
amount
then paid Aggregate
principal
amount of
exchanges
for
Definitive
Instruments
or
Registered
Instruments
then
delivered Aggregate
principal
amount of
Instruments
then
cancelled Aggregate
principal
amount of
exchanges
for further
exchanges of
Temporary
Global
Instrument Current
principal
amount of
this
Permanent
Global
Instrument Authorised
signature of
the Fiscal
Agent
and/or the
Registrar

53

EXCHANGE NOTICE

                              , being the bearer of this Permanent Global Instrument at the time of its deposit with the Fiscal Agent at its specified office for the purposes of the Instruments, hereby exercises the option set out above to have this Permanent Global Instrument exchanged in whole or in part for Instruments in [definitive/registered form/[    ] in aggregate principal amount of Instruments in definitive form and [   ] in aggregate principal amount of Instruments in registered form]* and directs that such Instruments in definitive form be made available for collection by it from the Fiscal Agent’s specified office and that such Instruments in registered form be made available in accordance with the terms and conditions applicable to the Instruments represented hereby and the Fiscal Agency Agreement.

By:
	(duly authorised)

*Delete and complete, as appropriate

54

THE THIRD SCHEDULE

Form Of Definitive Instrument (“Isma” Format)

[On the face of the Instrument:]

[<9999999+AAXXXXXXXXX9+XX+999999>]

[Denomination]

THIS INSTRUMENT HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT IN CERTAIN TRANSACTIONS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.  TERMS USED IN THIS PARAGRAPH HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.

ABB INTERNATIONAL FINANCE LIMITED

(incorporated with limited liability in Guernsey)

55

[Aggregate principal amount of Tranche]

[Title of Instruments]

[Swiss Security Number]

[ISIN]

[Common Code]

[                                ] (the “Issuer”) for value received promises, all in accordance with the terms and conditions [endorsed hereon/attached hereto] [and the pricing supplement referred to therein and prepared in relation to the Instruments (the “Pricing Supplement”)] to pay to the bearer upon presentation and, if appropriate, surrender hereof on [maturity date] [by [    ] [equal] successive [semi-annual/quarterly/other] instalments on the dates specified in the Pricing Supplement](12) or on such earlier date as the same may become payable in accordance therewith the principal amount of:

[denomination in words and numerals]

or such other redemption amount as may be specified therein [and to pay in arrear on the dates specified therein interest on such principal amount at the rate or rates specified therein, all subject to and in accordance with such terms and conditions].

[This [title of Instrument] shall not/Neither this [title of Instrument] nor any of the interest coupons appertaining hereto shall] be valid for any purpose until this [title of Instrument] has been authenticated for and on behalf of Fortis Banque Luxembourg S.A., as fiscal agent.

This [title of Instrument] is governed by, and shall be construed in accordance with, English law.

AS WITNESS the facsimile signature of two duly authorised officers on behalf of the Issuer.

[                         ]		[                          ]
By:	[facsimile signature]	By:	[facsimile signature]
	(duly authorised)	(duly authorised)

ISSUED in [        ] as of [        ] [   ]

(12) Insert only where Instruments are Instalment Instruments.

56

AUTHENTICATED for and on behalf of

FORTIS BANQUE LUXEMBOURG S.A.,

as fiscal agent

without recourse, warranty or liability

By:[manual signature]

(duly authorised)

[ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.](13)

(13) Insert only where the maturity of the Instruments is more than one year.

57

[On the reverse of the Instruments:]

TERMS AND CONDITIONS

[As contemplated in the Information Memorandum and as amended by the relevant Pricing Supplement]

[At the foot of the Terms and Conditions:]

FISCAL AGENT

Fortis Banque Luxembourg S.A.,

50, Avenue J.F. Kennedy

L2951 Luxembourg

SWISS PAYING AGENT

Banque MeesPierson BGL S.A.

57 Rennweg

CH-8023 Zurich

Switzerland

58

Forms of Coupons

[On the front of Coupon:]

[Attached to the Instruments (interest-bearing, fixed rate and having Coupons):]

[Issuer]

[Amount and title of Instruments]

Coupon for [     ] due on [          ]

Such amount is payable (subject to the terms and conditions [endorsed on/attached to the [title of Instrument] to which this Coupon appertains [and the pricing supplement referred to therein], which shall be binding on the holder of this Coupon whether or not it is for the time being attached to such [title of Instrument]) against surrender of this Coupon at the specified office of the Fiscal Agent or any of the Paying Agents set out on the reverse hereof (or any other or further fiscal or paying agents and/or specified offices from time to time designated for the purpose by notice duly given in accordance with such terms and conditions).

[The attention of Couponholders is drawn to condition 9A.06 of the terms and conditions.  The Instrument to which this Coupon appertains may in certain circumstances specified in such terms and conditions, fall due for redemption before the due date in relation to this Coupon.  In such event, the Paying Agent to which such Instrument is presented for redemption may determine, in accordance with the aforesaid condition 9A.06 that this Coupon is to become void.]

[ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.] (14)

[<99+9999999+AAXXXXXXXXX9+XX+999999>]

(14)Insert only where the maturity of the Instruments is more than one year.

59

[Attached to the Instrument (interest-bearing, floating rate and having Coupons):]

[Issuer]

[Amount and title of Instruments]

Coupon for the amount of interest due on [          ]

Such amount is payable (subject to the terms and conditions [endorsed on/attached to] the [title of Instrument] to which this Coupon appertains [and the pricing supplement referred to therein], which shall be binding on the holder of this Coupon whether or not it is for the time being attached to such [title of Instrument]) against surrender of this Coupon at the specified office of the Fiscal Agent or any of the Paying Agents set out on the reverse hereof (or any other or further fiscal or paying agents and/or specified offices from time to time designated for the purpose by notice duly given in accordance with such terms and conditions).

The Instrument to which this Coupon appertains may, in certain circumstances specified in such terms and conditions, fall due for redemption before the due date in relation to this Coupon.  In such event, this Coupon will become void and no payment will be made in respect hereof.

[ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.] (15)

[<99+9999999+AAXXXXXXXXX9+XX+999999>]

(15)Insert only where the maturity of the Instruments is more than one year.

60

[On the reverse of each Coupon:]

FISCAL	Fortis Banque Luxembourg S.A.,
AGENT:	50, Avenue J.F. Kennedy
	L2951 Luxembourg
SWISS PAYING	Banque MeesPierson BGL S.A.
AGENT:	57 Rennweg
	CH-8023 Zurich
	Switzerland

61

Form of Talon

No..............

[                           ]

[Amount and title of Instruments]

Talon for further Coupons

[ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.] (16)

After all the Coupons appertaining to the Instrument to which this Talon appertains have matured, further Coupons [(including, where appropriate, a Talon for further Coupons)] will be issued at the specified office of the Fiscal Agent or any of the Paying Agents set out in the reverse hereof (or any other or further paying agents and/or specified offices from time to time designated by notice duly given in accordance with the terms and conditions [endorsed on/attached to] the [title of Instrument] to which this Talon appertains [and the pricing supplement referred to therein] (which shall be binding on the holder of this Talon whether or not it is for the time being attached to such [title of Instrument])) upon production and surrender of this Talon upon and subject to such terms and conditions.  The initial Paying Agents and their specified offices are set out on the reverse hereof.

Under the said terms and conditions, such Instrument may, in certain circumstances, fall due for redemption before the original due date for exchange of this Talon and in any such event this Talon shall become void and no exchange shall be made in respect hereof.

[Issuer]

(16)Insert only where the maturity of the Instruments is more than one year.

62

THE FOURTH SCHEDULE

FORM OF REGISTERED INSTRUMENT

ISIN Number: [       ]Series Number: [       ]Serial Number: [       ]

THIS INSTRUMENT HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT IN CERTAIN TRANSACTIONS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.  TERMS USED IN THIS PARAGRAPH HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.

[ABB INTERNATIONAL FINANCE LIMITED

(incorporated with limited liability in Guernsey)]

63

[                              ] (the “Issuer”) for value received promises, all in accordance with the terms and conditions [endorsed hereon/attached hereto] [and the pricing supplement referred to therein and prepared in relation to the Instruments (“Pricing Supplement”)], to pay to

of

(being the person registered in the register referred to below or, if more than one person is so registered, the first-named of such persons) on [maturity date] [by [   ] [equal] successive [semi-annual/quarterly/other] instalments on the dates specified in the Pricing Supplement](17) or on such earlier date as the same may become payable in accordance therewith the principal sum of                                                                                      [(, in the case of payment on such earlier date, as reduced in accordance with such terms and conditions)] or such other redemption amount as may be specified therein [and to pay in arrear on the dates specified therein interest on such principal amount [(as reduced in accordance with such terms and conditions)] (17) at the rate or rates specified therein], all subject to and in accordance with such terms and conditions.

The statements set forth in the legend, if any, set forth above are an integral part of the terms of this Instrument and by acceptance hereof each holder of this Instrument agrees to be subject to and bound by the terms and provisions set forth in such legend, if any.

This Instrument is evidence of entitlement only.  Title to the Instrument passes only on due registration in the Register maintained by [                              ] (18) , as registrar, and only the duly registered holder or if more than one person is so registered, the first-named of such persons is entitled to payment in respect of this Instrument.

This Instrument is governed by, and shall be construed in accordance with, English law.

This Instrument shall not be valid for any purpose until this Instrument has been authenticated for and on behalf of [                                               ] (19), as registrar.

AS WITNESS the facsimile or manual signatures of two duly authorised officers of the Issuer.

[                              ][                            ]

By:	[manual/facsimile signature]	By:	[manual/facsimile signature]
	(duly authorised)		(duly authorised)

(17)Insert only where Instruments are Instalment Instruments.

(18)Insert name of the relevant Registrar.

64

ISSUED in [             ] as of [            ] [ ]

AUTHENTICATED for and on behalf of

[                                      ]

as registrar without recourse, warranty or liability

By:[manual signature]

(duly authorised)

65

FORM OF TRANSFER

FOR VALUE RECEIVED                                      , being the registered holder of this [title of Instrument], hereby transfers to                                                                                                                                           of                                                                ,                                                        in principal amount of this [title of Instrument] and irrevocably requests and authorises [                                ] (19), in its capacity as registrar in relation to the [title of Instruments] (or any successor to [           ] (19), in its capacity as such) to effect the relevant transfer by means of appropriate entries in the register kept by it.

Dated:

By:	[manual signature]	[By:	[manual signature]
	(duly authorised)		(duly authorised)

Notes:

The name of the person by or on whose behalf this form of transfer is signed must correspond with the name of the registered holder as it appears on the face of this Instrument.

(i)A representative of such registered holder should state the capacity in which he signs (e.g. executor).

(ii)The signature of the person effecting a transfer shall conform to any list of duly authorised specimen signatures supplied by the registered holder or be certified by a recognised bank, notary public or in such other manner as the Registrar may require.

(iii)Any transfer of [title of Instruments] shall be in an amount equal to the minimum denomination as may be specified in the relevant Pricing Supplement or an integral multiple thereof.

(19)Insert name of the relevant Registrar.

66

THE FIFTH SCHEDULE

PROVISIONS FOR MEETINGS OF HOLDERS OF INSTRUMENTS

1.(A)As used in this Schedule, the following expressions shall have the following meanings unless the context otherwise requires:

(1)“voting certificate” shall mean a certificate in the English language issued by any Paying Agent or, as the case may be, any Registrar and dated, in which it is stated:

(a)that on the date thereof outstanding Bearer Instruments of any Series (not being Bearer Instruments in respect of which a block voting instruction has been issued and is outstanding in respect of the meeting specified in such voting certificate or any adjournment thereof) bearing specified serial numbers have been deposited to the order of such Paying Agent and that no such Bearer Instruments will be released until the first to occur of:

(i)the conclusion of the meeting specified in such certificate or any adjournment thereof; and

(ii)the surrender of the certificate to such Paying Agent; or

(b)that on the date thereof Registered Instruments of any Series (not being Registered Instruments in respect of which a block voting instruction has been issued and is outstanding in respect of the meeting specified in such voting certificate or any adjournment thereof) are registered in the books and records maintained by the Registrar in the names of specified registered holders; and

(c)that until the release of the Bearer Instruments represented thereby the bearer thereof is entitled to attend and vote at such meeting or any adjournment thereof in respect of the Instruments represented by such certificate; and

(2)“block voting instruction” shall mean a document in the English language issued by any Paying Agent or, as the case may be, any Registrar and dated, in which:

(a)it is certified that outstanding Bearer Instruments of any Series (not being Bearer Instruments in respect of which a voting certificate has been issued and is outstanding in respect of the meeting specified in such block voting instruction or any adjournment thereof) have been deposited to the order of such Paying Agent and that no such Bearer Instruments will be released until the first to occur of:

(i)the conclusion of the meeting specified in such document or any adjournment thereof; and

67

(ii)the surrender, not less than 48 hours before the time for which such meeting or adjournment thereof is convened, of the receipt for each such deposited Bearer Instrument which has been deposited to the order of such Paying Agent, coupled with notice thereof being given by such Paying Agent to the Issuer; or

(b)It is certified that Registered Instruments of any Series (not being Registered Instruments in respect of which a voting certificate has been issued and is outstanding in respect of the meeting specified in such block voting instruction and any adjournment thereof) are registered in the books and records maintained by the Registrar in the names of specified registered holders;

(c)It is certified that each depositor of such Instruments or registered holder thereof or a duly authorised agent on his or its behalf has instructed the Paying Agent or, as the case may be, the Registrar that the vote(s) attributable to his or its Instruments so deposited or registered should be cast in a particular way in relation to the resolution or resolutions to be put to such meeting or any adjournment thereof and that all such instructions are, during the period of 48 hours prior to the time for which such meeting or adjourned meeting is convened, neither revocable nor subject to amendment;

(d)the total number, principal amount outstanding, the serial numbers and series numbers of the Instruments so deposited or registered are listed, distinguishing with regard to each such resolution between those in respect of which instructions have been given as aforesaid that the votes attributable thereto should be cast in favour of the resolution and those in respect of which instructions have been so given that the votes attributable thereto should be cast against the resolution; and

(e)any person named in such document (hereinafter called a “proxy”) is authorised and instructed by the Paying Agent or, as the case may be, the Registrar to cast the votes attributable to the Instruments so listed in accordance with the instructions referred to in (c) and (d) above as set out in such document.

(B)A registered holder of a Registered Instrument may by an instrument in writing in the form for the time being available from the specified office of the Registrar in the English language (hereinafter called a “form of proxy”) signed by the holder or its duly appointed attorney or, in the case of a corporation, executed under its seal or signed on its behalf by its duly appointed attorney or a duly authorised officer of the corporation, appoint any person (hereinafter also called a “proxy”) to attend and act on his or its behalf in connection with any meeting or proposed meeting of the holders of Instruments.

68

(C)Voting certificates, block voting instructions and forms of proxy shall be valid for so long as the relevant Instruments have not been released or, in the case of Registered Instruments, are duly registered in the name(s) of the registered holder(s) certified in the relevant voting certificate or block voting instruction or, in the case of a form of proxy, in the name of the appointor but not otherwise and notwithstanding any other provision of this Schedule and during the validity thereof the holder of any such voting certificate or, as the case may be, the proxy shall, for all purposes in connection with any meeting of holders of Instruments, be deemed to be the holder of the Instruments of the relevant Series to which such voting certificate, block voting instructions or form of proxy relates and, in the case of Bearer Instruments, the Paying Agent to the order of whom such Instruments have been deposited and, in the case of Registered Instruments, the registered holder(s) shall nevertheless be deemed for such purposes not to be the holder of those Instruments.

2.The Issuer at any time may, and upon a request in writing by holders of Instruments holding not less than one-tenth of the principal amount outstanding of the Instruments of any particular Series for the time being outstanding at any time after such Instruments shall have become repayable owing to an event of default under the Conditions applicable to such Instruments shall, convene a meeting of the holders of Instruments of such Series.  Whenever the Issuer wishes or is obliged to convene any such meeting it shall forthwith give notice in writing to the Fiscal Agent of the day, time and place thereof and of the nature of the business to be transacted thereat.  Every such meeting or adjournment thereof shall be held at such time and place as the Fiscal Agent may approve.

3.At least twenty-one days’ notice (exclusive of the day on which the notice is given and of the day on which the meeting is held) specifying the day, time and place of meeting shall be given to the holders of the Instruments of the relevant Series.  A copy of the notice shall be given to the Issuer unless the meeting shall be convened by the Issuer and a copy shall be given to the Fiscal Agent and, in the case of Registered Instruments, the Registrar.  Such notice shall be given in the manner provided in the Conditions and shall specify the general nature of the business to be transacted at the meeting thereby convened but (except in the case of an Extraordinary Resolution) it shall not be necessary to specify in such notice the form of any resolution to be proposed and shall include, inter alia, statements to the effect:

(a)that Bearer Instruments of the relevant Series may be deposited with (or to the order of) any Paying Agent for the purpose of obtaining voting certificates or appointing proxies until 48 hours before the time fixed for the meeting but not thereafter;

(b)that (without prejudice to the provisions of paragraph 1(B)) registered holders of Registered Instruments may obtain voting certificates or appoint proxies not later than (except in the case of a form of proxy) 48 hours before the time fixed for the meeting but not thereafter.

69

4.A person (who may, but need not, be the holder of an Instrument of the relevant Series) nominated in writing by the Fiscal Agent shall be entitled to take the chair at every meeting but if no such nomination is made or if at any meeting the person nominated shall not be present within fifteen minutes after the time appointed for the holding of such meeting the holders of Instruments present may appoint another such person to be chairman and failing such choice the Issuer may appoint the chairman.  The chairman of a reconvened meeting need not be the same person who was chairman of the original meeting.

5.At any such meeting any two or more persons present in person holding Instruments of the relevant Series or voting certificates or being proxies and holding or representing in the aggregate at least one-third in principal amount outstanding of the Instruments of the relevant Series for the time being outstanding shall form a quorum for the transaction of business Provided that at any meeting at which an Extraordinary Resolution is to be proposed for the purpose of effecting any of the modifications specified in the proviso to paragraph 18 hereof the quorum for such meeting shall be any two or more persons present in person holding Instruments of the relevant Series or voting certificates or being proxies and holding or representing in the aggregate at least 75 per cent. in principal amount outstanding of the Instruments of the relevant Series for the time being outstanding and no business (other than the choosing of a chairman) shall be transacted at any meeting unless the requisite quorum be present at the commencement of business.

6.If within 15 minutes from the time appointed for any such meeting a quorum is not present the meeting shall, if convened upon the requisition of holders of Instruments, be dissolved.  In any other case it shall stand adjourned for such period, not being less than fourteen days nor more than forty-two days, as may be decided by the chairman.  At such adjourned meeting two or more persons present in person holding Instruments of the relevant Series or voting certificates or being proxies (whatever the principal amount outstanding of the Instruments of the relevant Series so held or represented by them) shall form a quorum and shall have the power to pass any resolution and to decide upon all matters which could properly have been dealt with at the original meeting had a quorum been present at such meeting Provided that at any adjourned meeting at which an Extraordinary Resolution is to be proposed for the purpose of effecting any of the modifications specified in the proviso to paragraph 18 hereof the quorum for such meeting shall be two or more persons present holding Instruments of the relevant Series or voting certificates or being proxies and holding or representing in the aggregate at least 25 per cent. in principal amount outstanding of the Instruments of the relevant Series for the time being outstanding.

7.The chairman may with the consent of (and shall if directed by) any meeting adjourn the same from time to time and from place to place but no business shall be transacted at any adjourned meeting except business which might lawfully have been transacted at the meeting from which the adjournment took place.

8.At least ten days’ notice (exclusive of the day on which the notice is given and the day on which the meeting is held) of any meeting adjourned through want of a quorum

70

shall be given in the same manner as of an original meeting and such notice shall state the quorum required at such adjourned meeting.  Subject as aforesaid, it shall not be necessary to give any notice of an adjourned meeting.

9.Every question submitted to a meeting shall be decided in the first instance by a show of hands and in case of equality of votes the chairman shall both on a show of hands and on a poll have a casting vote in addition to the vote or votes (if any) to which he may be entitled as a holder of an Instrument or voting certificate or being a proxy.

10.At any meeting, unless a poll is (before or on the declaration of the result of the show of hands) demanded by the chairman or the Issuer or by one or more persons holding one or more Instruments of the relevant Series or voting certificates or being proxies and holding or representing in the aggregate not less than 2 per cent. of the principal amount outstanding of the Instruments of the relevant Series for the time being outstanding, a declaration by the chairman that a resolution has been carried or carried by a particular majority or lost or not carried by any particular majority shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against such resolution.

11.If at any meeting a poll is so demanded, it shall be taken in such manner and (subject as hereinafter provided) either at once or after such an adjournment as the chairman directs and the result of such poll shall be deemed to be the resolution of the meeting at which the poll was demanded as at the date of the taking of the poll.  The demand for a poll shall not prevent the continuance of the meeting for the transaction of any business other than the question on which the poll has been demanded.

12.Any poll demanded at any meeting on the election of a chairman or on any question of adjournment shall be taken at the meeting without adjournment.

13.The Fiscal Agent, the Issuer and, in the case of Registered Instruments, the Registrar (through their respective representatives) and their respective advisers shall be entitled to attend and speak at any meeting of the holders of Instruments.  No person shall be entitled to attend (except as provided above) or to vote at any meeting of the holders of Instruments or to join with others in requesting the convening of such a meeting unless he is the holder of an Instrument or a voting certificate or is a proxy.

14.Subject as provided in paragraph 9 above, at any such meeting (a) on a show of hands every person who is present (being an individual) in person or (being a corporation) by a duly authorised representative and (i) who is a holder of Instruments, and in the case of Bearer Instruments, produces such Instruments or (ii) who produces a voting certificate or (iii) is a proxy shall have one vote and (b) on a poll every person who is so present shall have one vote in respect of each [            ] (20) principal amount outstanding of Instruments of the relevant Series so produced or represented by the voting certificate so produced or in respect of which he is a proxy.  Without prejudice

(20)The currency and amount of the smallest denomination of Instruments available in relation to the particular Series shall be deemed to be inserted here.

71

to the obligations of the proxies named in any block voting instruction or form of proxy, any person entitled to more than one vote need not use all his votes or cast all the votes to which he is entitled in the same way.

15.A proxy named in any block voting instruction or form of proxy need not be a holder of an Instrument.

16.Each block voting instruction and each form of proxy, together (if so required by the Issuer) with proof satisfactory to the Issuer of its due execution, shall be deposited at such place as the Issuer shall designate not less than 24 hours before the time appointed for holding the meeting or adjourned meeting at which the proxy named in the block voting instruction or form of proxy proposes to vote and in default the block voting instruction or form of proxy shall not be treated as valid unless the chairman of the meeting decides otherwise before such meeting or adjourned meeting proceeds to business.  A certified copy of each such block voting instruction and form of proxy and satisfactory proof as aforesaid (if applicable) shall, be deposited with the Issuer at such place as aforesaid before the commencement of the meeting or adjourned meeting but the Issuer shall not thereby be obliged to investigate or be concerned with the validity of, or the authority of the proxy named in, any such block voting instruction or form of proxy.

17.Without prejudice to paragraph 1, any vote given in accordance with the terms of a block voting instruction or form of proxy shall be valid notwithstanding the previous revocation or amendment of the block voting instruction or form of proxy or of any of the Instrument holders’ instructions pursuant to which it was executed, provided that no intimation in writing of such revocation or amendment shall have been received by the Issuer or by the chairman of the meeting, in each case not less than 24 hours before the commencement of the meeting or adjourned meeting at which the block voting instruction or form of proxy is used.

18.A meeting of the holders of Instruments shall, in respect of the Instruments of the relevant Series and subject to the provisions contained in the Conditions, in addition to the powers hereinbefore given, but without prejudice to any powers conferred on other persons by these presents, have the following powers exercisable by Extraordinary Resolution only namely:

(a)power with the approval of the Issuer to sanction any modification, abrogation, variation or compromise of, or arrangement in respect of, the rights of the holders of Instruments and/or Coupons in respect of the Instruments of the relevant Series, against the Issuer, whether such rights shall arise under the Instruments of that Series, the Deed of Covenant executed by the Issuer or otherwise;

(b)power to assent to any modification to the provisions contained herein or of the Instruments or Coupons of the relevant Series which shall be proposed by the Issuer;

72

(c)power to sanction any proposal by the Issuer for the exchange or substitution for the Instruments of the relevant Series of, or the conversion of those Instruments into, shares, stock, bonds, debentures, debenture stock or other obligations or securities of the Issuer or any other body corporate formed or to be formed otherwise than in accordance with any provisions of the Conditions applicable to the Instruments of the relevant Series;

(d)power to assent to any modification of the provisions contained in the Instruments or the Coupons of the relevant Series, the Conditions thereof, this Schedule, the Fiscal Agency Agreement or the Deed of Covenant executed by the Issuer which shall be proposed by the Issuer;

(e)power to waive or authorise any breach or proposed breach by the Issuer of its obligations under the Conditions applicable to the Instruments of the relevant Series or any act or omission which might otherwise constitute an event of default under the Conditions applicable to the Instruments of the relevant Series;

(f)power to authorise the Fiscal Agent, the Registrar or any other person to concur in and execute and do all such deeds, instruments, acts and things as may be necessary to carry out and give effect to any Extraordinary Resolution;

(g)power to give any authority, direction or sanction which under the Conditions applicable to the Instruments of the relevant Series is required to be given by Extraordinary Resolution;

(h)power to appoint any persons (whether holders of Instruments or not) as a committee or committees to represent the interests of the holders of Instruments in respect of the Instruments of the relevant Series and to confer upon such committee or committees any powers or discretions which such holders of Instruments could themselves exercise by Extraordinary Resolution; and

(i)power to approve other security as contemplated by Condition 4.01.

Provided that the special quorum provisions contained in the provisos to paragraphs 5 and 6 shall apply in relation to any Extraordinary Resolution for the purpose of making modification of the provisions contained in the Instruments or the Coupons of any Series or the Conditions applicable thereto which:

(i)varies the date of maturity or any date of redemption of any of the Instruments of the relevant Series or any date for payment of any principal or interest in respect thereof; or

(ii)reduces or cancels the principal amount of the Instruments of the relevant Series or any amount payable thereon, varies any provision regarding the calculation of the rate of interest or any other amount payable thereon or

73

varies the rate of discount, rate of amortisation or any other rate of return applicable thereto; or

(iii)modifies the provisions contained in this Schedule concerning the quorum required at any meeting of holders of Instruments in respect of the Instruments of the relevant Series or any adjournment thereof or concerning the majority required to pass an Extraordinary Resolution; or

(iv)varies the currency in which any payment (or other obligation) in respect of the Instruments of the relevant Series is to be made; or

(v)amends this proviso in any manner.

19.An Extraordinary Resolution passed at a meeting of the holders of Instruments in respect of the Instruments of the relevant Series duly convened and held in accordance with these presents shall be binding upon all the holders of Instruments of the relevant Series, whether present or not present at such meeting, and upon all the holders of all Coupons in respect of Instruments of the relevant Series and each of the holders of Instruments and Coupons shall, in respect of the Instruments of that Series, be bound to give effect thereto accordingly.  The passing of any such resolution shall be conclusive evidence that the circumstances of such resolution justify the passing thereof.

20.The expression “Extraordinary Resolution” when used in these presents means a resolution passed at a meeting of the holders of Instruments in respect of the Instruments of the relevant Series duly convened and held in accordance with the provisions contained herein by a majority consisting of not less than three-fourths of the votes cast thereon.

21.Minutes of all resolutions and proceedings at every such meeting as aforesaid shall be made and duly entered in books to be from time to time provided for that purpose by the Issuer and any such minutes as aforesaid, if purporting to be signed by the chairman of the meeting at which such resolutions were passed or proceedings transacted or by the chairman of the next succeeding meeting of the holders of Instruments in respect of the Instruments of the relevant Series, shall be conclusive evidence of the matters therein contained and, until the contrary is proved, every such meeting in respect of the proceedings of which minutes have been made and signed as aforesaid shall be deemed to have been duly convened and held and all resolutions passed or proceedings transacted thereat to have been duly passed and transacted.

22.So long as the relevant Instruments are represented by a global instrument, for the purposes of this Schedule the holder of the global instrument shall be deemed to be two persons holding or representing such principal amount of Instruments as are, at the relevant time, represented by such global instrument.

23.Any Instruments which have been purchased or are held by (or on behalf of) the Issuer or any affiliate of the Issuer or ABB Ltd or any subsidiary of ABB Ltd but which have

74

not been cancelled shall, unless or until resold, be deemed not to be outstanding for the purposes of this Schedule.

75

THE SIXTH SCHEDULE

FORM OF DEED OF ASSUMPTION

This Deed of Assumption is made on [        ], [   ] between [          ] (the “Issuer”), a company incorporated under the laws of [          ] whose registered/principal office is situated at [          ] and [          ] (the “Substituted Debtor”) a company incorporated in [          ] whose registered/principal office is situated at [          ].

WHEREAS:

(A)The Issuer has issued [insert aggregate principal amount and title of the Instruments] (the “Instruments”, each holder of such Instruments being an “Instrumentholder”) [and any interest coupons attached to such Instruments (the “Coupons”, each holder of such Coupons being a “Couponholder”)] pursuant to a Fiscal Agency Agreement dated 10 March 1993 and amended and restated on 8 December 2005 (the “Fiscal Agency Agreement”) between Fortis Banque Luxembourg S.A., (the “Fiscal Agent”), the Issuer, the other companies named therein as issuers and the paying agents and registrars named therein.

(B)The Issuer proposes, pursuant to Condition 15 of the Terms and Conditions of the Instruments (the “Conditions”) to substitute the Substituted Debtor as principal debtor in respect of the Instruments.

NOW THIS DEED WITNESSETH AS FOLLOWS:

1.The Substituted Debtor hereby agrees that, with effect from and including the effective date hereof, it shall be the “Issuer” for all purposes in respect of the Instruments and the Coupons and accordingly it shall assume all the obligations and liabilities and shall be entitled to all the rights and benefits on the part of the Issuer contained therein.

2.The Substituted Debtor hereby acknowledges and agrees that, with effect from and including the effective date hereof:

(a)the Issuer is released from all its liabilities, in its capacity as issuer of the Instruments, in respect of the Instruments; and

(b)the Conditions are amended in accordance with the Schedule hereto.

3.The Substituted Debtor and the Issuer hereby jointly and severally agree that the existing [Temporary Global Instrument, Permanent Global Instrument, Registered Instrument(s) or, as the case may be, Definitive Instruments] shall continue in full force and effect on the understanding that, with effect from and including the effective date hereof:

(a)all references to “[Name of Issuer]” shall be read and construed as references to the Substituted Debtor; and

76

(b)the Conditions shall be amended as set out in the Schedule hereto, together with any other consequential amendments which may be appropriate in order to preserve the rights of the Instrumentholders and (if any) Couponholders.

4.(A)The Substituted Debtor and the Issuer hereby acknowledge and covenant that the benefit of the undertakings and the covenants binding upon them contained in this Deed of Assumption shall be for the benefit of each and every Instrumentholder and (if any) Couponholder whether or not such Instrumentholder or Couponholder was an initial subscriber of such Instrument and each Instrumentholder and (if any) Couponholder shall be entitled severally to enforce the said obligations against the Substituted Debtor.

(B)This Deed of Assumption shall be deposited with and held by the Fiscal Agent and the Substituted Debtor, and the Issuer and the Substituted Debtor hereby acknowledge the right of every Instrumentholder and Couponholder to production of this Deed of Assumption and upon request and payment of the expenses incurred in connection therewith, the production of a copy hereof certified by the Fiscal Agent to be a true and complete copy.

5.The illegality, invalidity or unenforceability of any provision of this Deed of Assumption under the law of any jurisdiction shall not affect its legality, validity or enforceability under the law of any other jurisdiction nor the legality, validity or enforceability of any other provision.

6.This Deed of Assumption may only be amended in the same way as the other Conditions of the Instruments are capable of amendment pursuant to the Fifth Schedule of the Fiscal Agency Agreement.

7.(A)This Deed of Assumption shall be governed by and construed in accordance with the laws of England.

(B)The Courts of England are to have jurisdiction to settle any disputes which may arise out of or in connection with this Deed of Assumption and accordingly any legal action or proceedings arising out of or in connection with this Deed of Assumption (“Proceedings”) may be brought in such courts.  Each of the Substituted Debtor and the Issuer irrevocably submits to the jurisdiction of such courts and waives any objection to Proceedings in such courts whether on the ground of venue or on the ground that the Proceedings have been brought in an inconvenient forum.  These submissions are for the benefit of each of the Instrumentholders and the Couponholders and shall not limit the right of any of them to take Proceedings in any other court of competent jurisdiction nor shall the taking of Proceedings in any one or more jurisdictions preclude the taking of Proceedings in any other jurisdiction (whether concurrently or not).

(C)Each of the Substituted Debtor and the Issuer irrevocably appoints ABB Limited at its registered office (presently at Daresbury Park, Daresbury,

77

Warrington WA4 4BT, Cheshire) as its authorised agent for service of process in England in respect of any Proceedings.  If for any reason such agent shall cease to be such agent for service of process or shall no longer have a registered office in England, the Substituted Debtor and the Issuer shall appoint another agent for service of process in England within twenty-one days and if the Issuer and/or the Substituted Debtor fails to make any such appointment within twenty-one days, the Fiscal Agent shall be entitled to appoint such a person by notice to the Issuer and/or the Substituted Debtor.

IN WITNESS whereof this Deed has been executed by and on behalf of the parties hereto as of the day and year first above written.

EXECUTED as a deed under Seal by	)
[the Substituted Debtor]	)
acting by [          ] and [          ]	)
in the presence of:	)

Witness:

Name:

Address:

Occupation:

Witness:

Name:

Address:

Occupation:

78

EXECUTED as a deed under Seal by	)
[the Issuer]	)
acting by [          ] and [          ]	)
in the presence of:	)

Witness:

Name:

Address:

Occupation:

Witness:

Name:

Address:

Occupation:

79

THE SCHEDULE

Post-Substitution Amendments to the Conditions

of the Instruments of the relevant Series

1.Following any substitution pursuant to Condition 15, the Conditions of the Instruments of the relevant Series shall apply as if all references to the “Issuer” therein were to the Substituted Debtor.

2.In the event that ABB Ltd shall become the Substituted Debtor the Conditions shall apply with the following further amendments:

(i)Conditions 4.02, 4.03 and Condition 7.01(v) shall not apply to such Instruments;

(i)the words “... its obligation set out in Condition 4.02 ...” to “... performance or observance of any of its other...” in lines 1 to 5 of Condition 7.01(ii) shall be deleted and replaced by the word “any”;

(ii)Condition 15 shall not apply to such Instruments and, in respect of such Instruments, shall be deemed to be replaced with the following:

“the Issuer may be replaced, and any direct or indirect subsidiary of the Issuer may be substituted for the Issuer, as principal debtor in respect of the Instruments, without the consent of the Holders of the Instruments or Coupons.  If the Issuer shall determine that any such subsidiary shall become the principal debtor (in such capacity, the “Substituted Debtor”), the Issuer shall give not less than 30 nor more than 45 days’ notice, in accordance with Condition 14, to the Holders of the Instruments of such event and, immediately on the expiry of such notice, the Substituted Debtor shall enter into a Deed of Assumption, the form of which is set out in the Sixth Schedule to the Fiscal Agency Agreement and become the principal debtor in respect of the Instruments in place of the Issuer and the Holders of the Instruments shall thereupon cease to have any rights or claims whatsoever against the Issuer.  However, no such substitution shall take effect (i) until such Substituted Debtor shall have entered into a keep-well agreement with ABB Ltd substantially in the form of other keep-well agreements entered into by ABB Ltd with certain of its direct or indirect subsidiaries, (ii) until such Substituted Debtor shall have executed a deed of covenant substantially in the form of the Deed of Covenant, (iii) in any case, until the Substituted Debtor shall have provided such documents as may be necessary to make the Deed of Assumption, the  Instruments, the Fiscal Agency Agreement, such deed of covenant and such keep-well agreement the legal, valid and binding

80

obligations of, as appropriate, the Substituted Debtor and ABB Ltd together with legal opinions, either unqualified or subject only to normal, usual or appropriate qualifications and assumptions to the effect that the Deed of Assumption, the Instruments, the Fiscal Agency Agreement, such deed of covenant and such keep-well agreement are legal, valid and binding obligations of, as appropriate, ABB Ltd and the Substituted Debtor, (iv) the Substituted Debtor shall have obtained all necessary governmental and regulatory approvals and consents, if any, for the substitution, and (v) the Substituted Debtor shall have appointed the process agent appointed by the Issuer in Condition 18.3 as its agent in England to receive service of process on its behalf in relation to any legal action or proceedings arising out of or in connection with the Instruments and the Coupons.  Upon any such substitution, the Instruments and Coupons will, if necessary, be deemed to be modified in all appropriate respects.”

81

THE SEVENTH SCHEDULE

Regulations Concerning Transfers Of Registered Instruments And Exchanges Of Bearer Instruments For Registered InstrumentS

1.Each Registered Instrument shall be in a principal amount equal to the minimum denomination specified in the relevant Pricing Supplement or an integral multiple thereof.

2.The Registered Instruments are transferable in a principal amount equal to the minimum denomination specified in the relevant Pricing Supplement or an integral multiple thereof by execution of the form of transfer endorsed under the hand of the transferor or of a duly appointed attorney on its behalf or, where the transferor is a corporation, under its seal or signed on its behalf by its duly appointed attorney or a duly authorised officer or officers of the corporation.  In this Schedule “transferor” shall where the context permits or requires include joint transferors and be construed accordingly.

3.The Registered Instrument to be transferred must be delivered for registration to the specified office of the Registrar accompanied by such other evidence (including legal opinions) as the Registrar may reasonably require to prove the title of the transferor or his right to transfer the Registered Instrument and his identity and, if the form of transfer is executed by some other person on his behalf or in the case of the execution of a form of transfer on behalf of a corporation by an officer or officers or an attorney, the authority of that person or those persons to do so.  The signature of the person effecting a transfer of a Registered Instrument shall conform to any list of duly authorised specimen signatures supplied by the registered holder or be certified by a recognised bank, notary public or in such other manner as the Registrar may require.

4.The executors or administrators of a deceased holder of a Registered Instrument (not being one of several joint holders) and in the case of the death of one or more of joint holders the survivor or survivors of such joint holders shall be the only persons recognised by the Issuer as having any title to such Registered Instruments.

5.Any person becoming entitled to Registered Instruments in consequence of the death or bankruptcy of the holder of such Registered Instruments may, upon producing such evidence that he holds the position in respect of which he proposes to act under this paragraph or of his title as the Issuer shall require (including legal opinions), be registered himself as the holder of such Registered Instruments or, subject to the preceding paragraphs as to transfer, may transfer such Registered Instruments.  The Issuer and the Registrar may retain any amount payable upon the Registered Instruments to which any person is so entitled until such person shall be so registered or shall duly transfer the Registered Instruments.

6.Unless otherwise requested by him and agreed by the Issuer, the holder of Registered Instruments or the holder of Bearer Instruments, the subject of a request for an exchange for Registered Instruments shall be entitled to receive only one Registered

82

Instrument in respect of his holding or in respect of the Bearer Instruments, the subject of a particular request for an exchange.

7.The joint holders of a Registered Instrument shall be entitled to one Registered Instrument only in respect of their joint holding which shall, except where they otherwise direct, be delivered to the joint holder whose name appears first in the Register in respect of the joint holding.

8.Where there is more than one transferee (to hold other than as joint holders), separate forms of transfer (obtainable from the specified office of the Registrar) must be completed in respect of each new holding.

9.Where a holder of a Registered Instrument has transferred part only of his holding comprised therein there shall be delivered to him a Registered Instrument in respect of the balance of such holding.

10.The Issuer, the Registrar and the Fiscal Agent shall, save in the case of the issue of replacement Registered Instruments, make no charge to the holders for the registration of any holding of Registered Instruments or any transfer of Registered Instruments or in respect of any exchange of Bearer Instruments for Registered Instruments or for the issue of any Registered Instruments or for the delivery of Registered Instruments at the specified office of the Registrar.

11.Subject always to the terms and conditions applicable to the Instruments of the relevant Series, the Registrar will within three Relevant Banking Days of the transfer date or the exchange date applicable to a transfer of Registered Instruments or an exchange of Bearer Instruments for Registered Instruments make available at its specified office a new Registered Instrument in respect of the Registered Instrument transferred or in respect of Bearer Instruments the subject of a request for an exchange for Registered Instruments.  In the case of a transfer of part only of a Registered Instrument, a new Registered Instrument in respect of the balance of the Registered Instrument transferred will be so delivered to the transferor.

83

THE EIGHTH SCHEDULE

THE SPECIFIED OFFICES OF THE PAYING AGENTS AND THE REGISTRARS

The Fiscal Agent and Principal Registrar:

Fortis Banque Luxembourg S.A.,

50, Avenue J.F. Kennedy

L2951 Luxembourg

Telex:3401 BGL lu

Fax:+352 4242 2887

The other Paying Agent:

Banque MeesPierson BGL S.A.

57 Rennweg

CH-8023 Zurich

Switzerland

Telex:BGL Zürich 813003 BGL CH

Fax:+41 12119908

84

SIGNATURES

ABB INTERNATIONAL FINANCE LIMITED

By: /s/ ALEX HALL By: /s/ BRIAN VAN REIJN

FORTIS BANQUE LUXEMBOURG S.A.

as Fiscal Agent and

Principal Registrar

By: /s/ ROBERT GENOT By: /s/ JEAN-MARIE MOES

BANQUE MEESPIERSON BGL S.A.

as Paying Agent

By: /s/ CH. SCHENK By: /s/ R. AUGUSTIN

85

EX-2.4

Exhibit 2.4

LIMITED LIABILITY PARTNERSHIP

EXECUTION COPY

ABB INTERNATIONAL FINANCE LIMITED

as issuer

PROGRAMME FOR THE ISSUANCE OF DEBT INSTRUMENTS

AMENDED AND RESTATED DEALERSHIP AGREEMENT

8 December 2005

CONTENTS

Clause			Page
1.	Definitions		1
2.	Issuance Of Instruments		4
3.	Representations, Warranties And Undertakings By The Issuer And ABB Ltd		7
4.	Undertakings By The Dealers		16
5.	Indemnity		17
6.	Costs And Expenses		19
7.	Notices And Communications		20
8.	Changes In Dealers		21
9.	Increase In Authorised Amount		21
10.	Change In Issuers		22
11.	Law And Jurisdiction		23
12.	Modification And Amendment		23
13.	Counterparts		23
14.	Contracts (Rights Of Third Parties) Act 1999		23
SCHEDULE 1		SELLING RESTRICTIONS	24
SCHEDULE 2		CONDITIONS PRECEDENT	2
SCHEDULE 3		DEALER ACCESSION LETTER	30
SCHEDULE 4		SPECIMEN FORM OF RECORD OF RELEVANT AGREEMENT APPROPRIATE WHERE A GROUP OF DEALERS ARE JOINTLY AND SEVERALLY AGREEING TO SUBSCRIBE FOR THE RELEVANT INSTRUMENTS	32
SCHEDULE 5		NOTICE OF INCREASE OF AUTHORISED AMOUNT	34
SCHEDULE 6		UNDERTAKING FROM NEW ISSUER	35
SCHEDULE 7		NOTICE DETAILS	36

THIS AMENDED AND RESTATED DEALERSHIP AGREEMENT is made on 8 December 2005 and replaces the Amended and Restated Dealership Agreement dated 24 November 2004.

BETWEEN

(1)ABB INTERNATIONAL FINANCE LIMITED (“AIFLTD”) (the “Issuer” which expression shall include any New Issuer (as defined in Clause 10.2) which has become a party to this Agreement as an Issuer and shall exclude any entity which shall have ceased to be a party to this Agreement as an Issuer);

(2)ABB LTD; and

(3)MORGAN STANLEY & CO. INTERNATIONAL LIMITED (the “Dealer”, which expression shall include any institution(s) appointed as a dealer in accordance with Clause 8.1(b), together with the Dealer, the “Dealers” and, save as specified herein, excludes any institution(s) whose appointment as a Dealer has been terminated in accordance with Clause 8.1(a)) provided that where any such institution has been appointed as Dealer in relation to a particular Tranche (as defined below) of Instruments, the expression “Dealer” or “Dealers” shall only mean or include such institution in relation to such Tranche).

WHEREAS

(A)The Issuer established a programme (the “Programme”) for the issuance of debt instruments (the “Instruments”, which expression shall refer only to those debt instruments issued under the Programme), in connection with which Programme they entered into a dealership agreement dated 10 March 1993, as amended and restated on 24 November 2004 (the “Original Dealership Agreement”), the Fiscal Agency Agreement and executed and delivered the Deed of Covenant.

(B)ABB Ltd has given certain undertakings to the Issuer pursuant to a keep-well agreement effective as of 31 March 2000 (the “Keep-Well Agreement”), which expressions shall include, where the context so admits, any keep-well agreement between ABB Ltd and a New Issuer.  The Keep-Well Agreement is not a guarantee by ABB Ltd of the Instruments.

(C)Instruments may be issued on a listed or unlisted basis.  The Issuer has made an application to SWX Swiss Exchange (“SWX”) for the approval of the Programme.  For a period of twelve months following such approval Instruments issued under the Programme can be submitted for listing on SWX.

(D)The parties hereto wish to record the arrangements agreed between them in relation to the sale by the Issuer and the purchase by Dealers from time to time of Instruments.

IT IS AGREED as follows:

1.DEFINITIONS

1.1For the purposes of this Agreement:

1

“this Agreement” includes any amendment or supplement hereto (including any supplemental agreement executed pursuant to Clause 8.1(b) and any undertaking executed pursuant to Clause 10.2(i)) and the expressions ‘herein’ and ‘hereto’ shall be construed accordingly;

“Annual Report” means the most recently published publicly available audited financial statements of the Issuer or, as the case may be, ABB Ltd, whether consolidated or non-consolidated (including the report of the auditors thereon);

“Authorised Amount” means the amount of United States Dollars (“U.S.$”) 5,250,000,000 or such other amount as may have been authorised pursuant to Clause 9 hereof;

a “Condition” means the terms and conditions of the Instruments as appearing in the Information Memorandum or, in relation to any Tranche or Series of Instruments, such terms and conditions as the same may be amended or supplemented or replaced as described in the relevant Pricing Supplement or Pricing Supplements and any reference to a numbered “Condition” is to the correspondingly numbered provision thereof; and “Terms and Conditions” should be construed accordingly;

“Constitutive Documents” means the constitutional documents of the Issuer or ABB Ltd, being (in the case of AIFLTD) its memorandum and articles of association and, in the case of ABB Ltd, the extract from the Swiss Commercial Register (“Handelsregister”) and its articles of incorporation;

“Deed of Covenant” means the deed of covenant dated 10 March 1993 and executed by the Issuer, as the same may be amended or supplemented from time to time and includes, where the context so admits, any deed of covenant executed by a New Issuer and “Deed of Covenant” means in relation to any Issuer, the Deed of Covenant executed and delivered by it;

“Fiscal Agent” means Fortis Banque Luxembourg S.A. in its capacity as fiscal agent, which expression shall include any successor(s) thereto;

“Fiscal Agency Agreement” means the fiscal agency agreement dated 10 March 1993 made between the Issuer, the Fiscal Agent, the Paying Agents and the Registrars, as amended and restated on 8 December 2005 and as further amended or supplemented from time to time;

“FSMA” means the Financial Services and Markets Act 2000;

“Information Memorandum” means the information memorandum dated 8 December 2005 prepared in connection with the application for Instruments to be approved by SWX, together with any information incorporated therein by reference, as the same may be amended, supplemented, updated and/or substituted from time to time and any further information memorandum prepared in connection with the admission to the listing, trading and/or quotation of the Instruments on any other listing authority, stock exchanges and/or quotation system on which any Instruments may from time to time be admitted to listing, trading and/or quotation (as such further information

2

memorandum may be amended, supplemented, updated and/or substituted from time to time);

“Listing Agent” means Homburger in its capacity as listing agent, which expression shall include any successor(s) thereto;

“London business day” means a day on which commercial banks are open for business in London (including dealings in foreign exchange and foreign currency deposits);

“Paying Agents” means Banque MeesPierson BGL S.A. in its capacity as paying agent, which expression shall include the Fiscal Agent and any substitute or additional paying agents appointed in accordance with the Fiscal Agency Agreement;

“Pricing Supplement” means a pricing supplement prepared in relation to the relevant Tranche on the basis of the form in the Information Memorandum;

“Relevant Agreement” means an agreement (oral or in writing) between the Issuer, ABB Ltd and any Dealer(s) for the sale by the Issuer and the purchase as principal by such Dealer(s) (or on such other basis as may be agreed between the Issuer, ABB Ltd  and the relevant Dealer(s) at the relevant time) of any Instruments;

“Relevant Dealer” means, in relation to a Relevant Agreement which is made between the Issuer, ABB Ltd and more than one Dealer, the institution specified as such in the Pricing Supplement and/or such Relevant Agreement; and, in relation to a Relevant Agreement which is made between the Issuer, ABB Ltd and a single Dealer, such Dealer;

“Registrars” means Fortis Banque Luxembourg S.A. and “Registrar” means, in relation to any Series of Instruments in registered form, the Principal Registrar as specified in the relevant Pricing Supplement;

“Series” means a Tranche of Instruments or Tranches of Instruments which are identical except that the issue date, the first payment of interest and, if so specified in the relevant Pricing Supplement, the denomination thereof may be different (and save that a Series may comprise Instruments in bearer form and Instruments in registered form);

a “subsidiary” of the Issuer or ABB Ltd means a company the financial statements of which are, in accordance with applicable law and generally accepted accounting principles, consolidated with those of the Issuer or, as the case may be, ABB Ltd;

“Stabilising Manager” means, in relation to any Tranche of Instruments, the Dealer specified as the Stabilising Manager in the Pricing Supplement relating to such Tranche;

“Tranche” means Instruments, the terms of which are identical (whether as to currency, interest, maturity or otherwise), which are the subject of the same Pricing

3

Supplement and which have the same issue date (save that a Tranche may comprise Instruments in bearer form and Instruments in registered form); and

“Transparency Directive” means a European Union Directive implementing the European Commission’s proposal for a Directive of the European Parliament and of the Council on the harmonisation of transparency requirements with regard to information about issues whose securities are admitted to trading on a regulated market in the European Union (2003/0045 (COD)).

1.2The Original Dealership Agreement shall be amended and restated on the terms of this Agreement.  Any Instruments issued on or after the date of this Agreement shall be issued pursuant to this Agreement.  This does not affect any Instruments issued prior to the date of this Agreement.  Subject to such amendment and restatement, the Original Dealership Agreement shall continue in full force and effect.

2.ISSUANCE OF INSTRUMENTS

2.1The Issuer, ABB Ltd and the Dealer(s) agrees that any Instruments which may from time to time be agreed between the Issuer, ABB Ltd and any Dealer(s) to be issued by the Issuer and purchased by such Dealer(s) shall be issued and purchased on the basis of, and in reliance upon, the representations and warranties, undertakings and indemnities made or given or provided to be made or given in this Agreement or in writing in any Relevant Agreement or in writing in any other agreement between the Issuer, ABB Ltd and the Dealer(s) in respect of the relevant Instruments.  Unless otherwise agreed, neither the Issuer nor any Dealer is or shall be under any obligation to sell or, as the case may be, purchase any Instruments.

2.2Upon the conclusion of any Relevant Agreement and subject as provided in Clause 2.3:

(a)the Relevant Dealer shall promptly confirm the terms of the Relevant Agreement to the Issuer (with a copy to the Fiscal Agent or, if the Relevant Agreement relates to the sale of Instruments in registered form, the Registrar) in writing (by letter, telex or fax);

(b)the Issuer shall promptly confirm, as appropriate, such terms to the Fiscal Agent or, as the case may be, the Registrar in writing, and the Relevant Dealer or, if such Dealer so agrees with the Issuer, the Issuer will prepare a Pricing Supplement in relation to the relevant Instruments for approval (such approval not to be unreasonably withheld or delayed) by the Issuer or, as the case may be, the Relevant Dealer and for execution on behalf of the Issuer and the relevant Dealer(s);

(c)the Issuer shall on the agreed date of issue of the relevant Instruments procure the issue of such Instruments in the relevant form (subject to amendment and completion) scheduled to the Fiscal Agency Agreement and shall procure their delivery to or to the order of the relevant Dealer(s);

4

(d)the Dealer(s) shall for value on the agreed date of issue of the relevant Instruments procure the payment of the net subscription moneys therefor (namely the agreed issue or sale price thereof plus any accrued interest and less any agreed commissions, concessions or other agreed deductibles) to or to the order of the Issuer by credit transfer to such account as may have been specified by or on behalf of the Issuer to the Relevant Dealer for the purpose; and

(e)where a single Dealer has agreed with the Issuer to subscribe a particular tranche pursuant to this Clause 2, if requested by the Relevant Dealer in relation to such Tranche the Issuer, ABB Ltd and the Relevant Dealer shall enter into a subscription agreement based on the form set out in Schedule 4 to this Agreement or such other form as may be agreed between the Issuer, ABB Ltd and the Relevant Dealer.

2.3The obligations of the Dealer(s) under Clause 2.2(d) are conditional upon:

(a)the agreement by the Issuer and the Relevant Dealer to the terms of the relevant Pricing Supplement;

(b)the execution of the relevant Pricing Supplement by or on behalf of the Issuer and the relevant Dealer(s) and the delivery of a copy thereof to each party;

(c)the delivery to or to the order of the Dealer(s) of the temporary global instrument representing the relevant Instruments and/or, as the case may be, the relevant Instruments in registered form to be held to the order of the Issuer pending receipt by the Issuer of the net subscription moneys payable to it in respect of the relevant Instruments;

(d)there having been, in the opinion of the Relevant Dealer acting in good faith, since the date of the Relevant Agreement, no adverse change in the financial condition of the Issuer or of ABB Ltd and its subsidiaries taken as a whole that is material in the context of issuance under the Programme nor, since the date of the Relevant Agreement, any change in the rating accorded by an internationally recognised rating agency to any security of the Issuer or ABB Ltd nor a change which has a material adverse effect on the financial condition of the Issuer or of ABB Ltd and its subsidiaries taken as a whole;

(e)the truth and correctness in all material respects of the representations and warranties on the part of the Issuer and ABB Ltd contained herein or in writing in any Relevant Agreement or in writing in any other agreement between the Issuer, ABB Ltd and the relevant Dealer(s) in respect of the relevant Instruments and there having been no event rendering untrue or incorrect in any material respect any of such representations or warranties as though they had been made and given on the date of the Relevant Agreement and on the agreed date of issue of the relevant Instruments, with reference in each case to the facts and circumstances then subsisting;

5

(f)neither the Issuer nor ABB Ltd being in material breach of any of its undertakings set out herein or in writing in any Relevant Agreement or in writing in any other agreement between the Issuer, ABB Ltd and the relevant Dealer(s) in respect of the relevant Instruments;

(g)there having been, since the date of the Relevant Agreement and in the opinion of the Relevant Dealer acting in good faith, no such change in national or international financial, political or economic conditions or currency exchange rates or exchange controls as would, in its view, be likely to prejudice materially the placement, offering, distribution or sale of the relevant Instruments (whether in the primary market or in respect of dealings in the secondary market);

(h)the Dealers acting in good faith being satisfied that all authorisations, consents, approvals, filings and registrations, if any, required by any jurisdiction to which the Issuer or ABB Ltd is subject or in the country of origin of the currency or currencies in which the relevant Instruments are denominated or payable or required because of the term or other characteristics of the relevant Instruments, having been obtained and being in full force and effect or having been effected and, where relevant, certified translations thereof into English having been supplied to the Relevant Dealer; and

(i)(in the case of Instruments which are to be listed on SWX and/or which are to be listed on such other stock exchange as may have been agreed between the Issuer, ABB Ltd and the relevant Dealer(s)) SWX having approved the Programme.

2.4The Relevant Dealer, on behalf of itself only, or, as the case may be, the other Dealer(s) party to the Relevant Agreement in question may, in its absolute discretion, waive any of the conditions set out in Clause 2.3 in writing to the Issuer in so far only as they relate to an issue of Instruments by the Issuer to such Dealer(s) and any condition so waived shall be deemed to have been satisfied as regards such Dealer(s) alone.  If any of the conditions set out in Clause 2.3 are not satisfied or, as the case may be, waived by the Relevant Dealer on or before the issue date of any relevant Tranche, the Relevant Dealer shall, subject as mentioned below, be entitled to terminate the Relevant Agreement and, in that event, the parties to such Relevant Agreement shall be released and discharged from their respective obligations thereunder (except for any rights or liabilities which may have arisen pursuant to Clauses 3, 4, 5 or 6 of this Agreement).

2.5If the Relevant Dealer, in connection with the distribution of any Tranche of Instruments, offers Instruments in excess of the aggregate principal amount to be issued or effects transactions with a view to stabilising or maintaining the market price of the Instruments at levels other than those which might otherwise prevail in the open market, it shall not in doing so be deemed to act as agent of the Issuer but rather as principal.  The Issuer will not as a result of any action taken by such Dealer, under

6

this Clause be obliged to issue Instruments in excess of the aggregate amount of Instruments agreed to be issued, nor shall the Issuer be liable for any loss, or entitled to any profit, arising from any excess offers or stabilisation.

2.6The Dealer specified as the Stabilising Manager in the Pricing Supplement relating to any Tranche of Instruments (or any duly appointed person acting for such Stabilising Manager) may over-allot or effect transactions with a view to supporting the market price of the Instruments of the Series of which such Tranche forms part at a level higher than that which might otherwise prevail.  However, there is no obligation on the Stabilising Manager (or any agent of the Stabilising Manager) to do this.  Such stabilising, if commenced, may be discontinued at any time.  Such stabilising shall be conducted in accordance with all applicable laws and rules.  Any loss or profit sustained as a consequence of any such over-allotment or stabilising shall, as against the Issuer, be for the account of the Stabilising Manager.

3.REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS BY THE ISSUER AND ABB LTD

3.1The following representations and warranties shall be made or given by the Issuer and ABB Ltd, as appropriate, on the date hereof, on each date on which the Information Memorandum is amended, supplemented, updated and/or substituted and, in respect of each Tranche of Instruments agreed as contemplated herein to be issued and purchased, on the issue date and on the date on which the Relevant Agreement is made (it being understood that any representations and warranties made with respect to a Tranche of Instruments on their issue date and on the date the Relevant Agreement relating thereto is made shall be applicable only to the Instruments to be issued and sold on such issue date or pursuant to such Relevant Agreement, as the case may be, and that the representations and warranties made by the Issuer at any such date are made only by the Issuer which issues such Instruments or executes such Relevant Agreement), in each case, with reference to the facts and circumstances then subsisting:

(a)each of the Issuer and ABB Ltd is duly incorporated and validly existing under the laws of its jurisdiction of incorporation, with full power and authority to conduct their respective businesses as described in the Information Memorandum;

(b)

(i)the Issuer is and was empowered to enter into and comply with all provisions of this Agreement, the Fiscal Agency Agreement, the Deed of Covenant, the Keep-Well Agreement and the Relevant Agreement, to issue and sell the relevant Instruments (in relation to each Tranche of Instruments agreed as contemplated herein to be issued by the Issuer and purchased by the relevant Dealer(s)) and to undertake and to perform the obligations expressed to be assumed by it herein and therein;

(ii)ABB Ltd is and was empowered to enter into and comply with all provisions of this Agreement and the Relevant Agreement and to

7

undertake and to perform the obligations expressed to be assumed by it herein and therein;

(c)

(i)this Agreement, the Fiscal Agency Agreement, the Deed of Covenant and the Keep-Well Agreement have been duly authorised, executed and delivered by the Issuer and constitute valid and legally binding obligations of the Issuer in accordance with their respective terms and (in relation to each Tranche of Instruments agreed as contemplated herein to be issued and purchased) the Relevant Agreement in respect of such Instruments constitutes valid and legally binding obligations of the Issuer in accordance with its terms;

(ii)this Agreement and the Relevant Agreement, when duly executed, in respect of such Instruments each constitute valid and legally binding obligations of ABB Ltd in accordance with its terms;

(d)(in relation to each Tranche of Instruments agreed as contemplated herein to be issued and purchased) the Instruments have been duly authorised by the Issuer and, when duly executed, authenticated and delivered in accordance with the Fiscal Agency Agreement will constitute valid and legally binding obligations of the Issuer in accordance with their terms;

(e)ABB Ltd is and was at the date of execution of the Keep-Well Agreement with the Issuer, empowered to enter into and comply with all the provisions of the Keep-Well Agreement and the Keep-Well Agreement constitutes a valid and legally binding obligation of ABB Ltd in accordance with its terms;

(f)(in relation to each Tranche of Instruments agreed as contemplated herein to be issued and purchased), the obligations of the Issuer in respect of the Instruments of the relevant Series will, subject to Condition 4.01 headed “Negative Pledge”, constitute unsecured and unsubordinated obligations and shall at all times rank pari passu in right of payment and without any preference among themselves.  The payment obligations of the Issuer under the Instruments of the relevant Series shall (subject to Condition 4.01) at all times rank at least equally with all other present and future unsecured and unsubordinated obligations of the Issuer other than any obligations preferred by law;

(g)all necessary actions, authorisations, conditions and things required to be taken, given, fulfilled and done by the Issuer and/or ABB Ltd, as the case may be, (including any necessary registrations and consents) have been or, in relation to each Tranche of Instruments agreed as contemplated herein to be issued and purchased, will, on the date of issue of the relevant Instruments, have been taken, given, fulfilled and done in connection with:

8

(i)the issue of the Information Memorandum and the distribution of the Information Memorandum and the relevant Pricing Supplement in accordance with the provisions set out in Schedule 1 hereto;

(ii)the execution and delivery by the Issuer of, and the compliance by the Issuer with the provisions of, this Agreement, the Fiscal Agency Agreement and the Deed of Covenant;

(iii)the execution and delivery by ABB Ltd of, and the compliance by ABB Ltd with the provisions of, this Agreement;

(iv)in relation to each Tranche of Instruments of the Issuer agreed as contemplated herein to be issued and purchased, the entry into of, and the compliance with the provisions of, the Relevant Agreement, the creation and issue of the relevant Instruments and the offering of the relevant Instruments in accordance with the terms of this Agreement and the Fiscal Agency Agreement;

(v)the execution and delivery of, and the compliance with the provisions of, the Keep-Well Agreement by the Issuer and ABB Ltd;

(vi)the carrying out of the various procedures and the performance of all other acts contemplated by the Relevant Agreement, this Agreement, the Fiscal Agency Agreement, the Deed of Covenant and the Keep-Well Agreement;

and will be in full force and effect;

(h)the matters referred to in paragraph (g) above do not and will not conflict with or result in a breach of any existing provisions of the laws or regulations of the country or state of incorporation of the Issuer, ABB Ltd or their respective Constitutive Documents nor of any agreement or other instrument or restriction whether statutory, contractual or otherwise, to which either of the Issuer or ABB Ltd is party or by which it or any of its assets is bound;

(i)the financial statements and other financial information contained in the Annual Report of the Issuer and incorporated by reference in the Information Memorandum present fairly the financial position (consolidated where relevant) of the Issuer and, where relevant, its subsidiaries as of the dates of such statements or information and the results of operations and the changes in financial position (consolidated where relevant) of the Issuer and, where relevant, its subsidiaries for the periods they cover or to which they relate and such financial statements and information have been prepared in accordance with any relevant statutory requirements and with generally accepted accounting principles in the United States or in its jurisdiction of incorporation applied on a consistent basis throughout the periods involved (unless and to the extent otherwise stated therein);

9

(j)the consolidated financial statements of ABB Ltd and its subsidiaries contained in the Annual Report of ABB Ltd and incorporated by reference in the Information Memorandum were in conformity with accounting principles generally accepted in the United States and with Swiss law, such consolidated financial statements present fairly the consolidated financial position of ABB Ltd and its subsidiaries as at the dates of such statements and the results of their operations and the changes in their financial position for the periods they cover or to which they relate;

(k)the capitalisation tables and other financial information and statistical data relating to the Issuer and ABB Ltd in the Information Memorandum present fairly the information shown therein and have been compiled on a basis consistent with that of the relevant financial statements and other financial information contained in the Annual Report of the Issuer or, as the case may be, ABB Ltd; the auditors who reported upon the audited financial statements and other financial information included in the Annual Report of the Issuer or, as the case may be, ABB Ltd are appropriately qualified in the country in which the Issuer or, as the case may be, ABB Ltd is incorporated and are independent of the Issuer or, as the case may be, ABB Ltd;

(l)the information contained in the Information Memorandum is true and accurate in all material respects and not misleading and to the best of its knowledge and belief there are no other facts the omission of which would make any statement therein misleading in any material respect and all reasonable enquiries have been made to verify the accuracy of such information and the opinions and intentions expressed therein are honestly held and, in relation to each Tranche of Instruments agreed as contemplated herein to be issued and purchased, the Information Memorandum together with the relevant Pricing Supplement contains all the information which is material in the context of the issue of such Instruments;

(m)save as otherwise disclosed in the Information Memorandum, neither the Issuer nor ABB Ltd and its subsidiaries taken as a whole is involved in any litigation or arbitration proceedings which would be expected to have a material adverse effect on the business of the ABB Group taken as a whole in the context of the Programme nor, so far as the Issuer or ABB Ltd is aware, is any such litigation or arbitration pending or threatened;

(n)since the last day of the period in respect of which the Annual Report of the Issuer or ABB Ltd has been prepared, there has, save as may be disclosed in the Information Memorandum, to the best of the knowledge and belief of the Issuer and ABB Ltd, been no material adverse change in the financial condition (consolidated where relevant) of the Issuer or of ABB Ltd and its subsidiaries taken as a whole nor a change which has a material adverse effect on the financial condition of the Issuer or of ABB Ltd and its subsidiaries taken as a whole;

10

(o)(in relation to any Tranche of Instruments agreed as contemplated herein to be issued and purchased), as of the issue date of the relevant Instruments, the aggregate principal amount outstanding (as defined in the Fiscal Agency Agreement) (expressed in United States dollars) of Instruments issued under the Programme will not exceed the Authorised Amount and for this purpose (i) Instruments denominated in a currency other than United States dollars shall be converted into United States dollars using the spot rate of exchange for the purchase of the relevant currency against payment of United States dollars being quoted by the Fiscal Agent on the date on which the Relevant Agreement in respect of the relevant Instruments was made or such other rate as the Issuer and the Dealers may agree, (ii) any Instruments which provide for an amount less than the principal amount thereof to be due and payable upon redemption following an event of default in respect of such Instruments shall have a principal amount equal to their nominal amount and (iii) the currency in which any Instruments are payable, if different from the currency of their denomination, shall be disregarded;

(p)(in relation to any Tranche of Instruments agreed as contemplated herein to be issued and purchased) no event exists which, had such Instruments been issued, would (or with the giving of notice, or the lapse of time, or both, would) constitute an “Event of Default” as defined in the Terms and Conditions of the relevant Instruments; and

(q)(in relation to each Tranche of Instruments agreed as contemplated herein to be issued and purchased) neither the Issuer nor any of its affiliates (as defined in Rule 405 under the United States Securities Act of 1933 as amended (the “Securities Act”) nor any person (other than any Dealer or any person acting on its behalf as to whom the Issuer makes no representation) acting on behalf of the Issuer or any of its affiliates has engaged or will engage in any directed selling efforts (as defined in Regulation S under the Securities Act) with respect to such Instruments, and the Issuer, any affiliate of the Issuer and all persons (other than any Dealer or any person acting on its behalf as to whom the Issuer makes no representation) acting on its or their behalf with respect to such Instruments have complied and will comply with the offering restrictions requirements of Regulation S under the Securities Act with respect thereto and neither the Issuer nor any person (other than any Dealer or any person acting on its behalf as to whom the Issuer makes no representation) acting on its behalf has engaged or will engage, in any form of general solicitation or general advertising (as those terms are used in Rule 502(c) under the Securities Act) in connection with any offer or sale of Instruments in the United States.

3.2The Issuer and ABB Ltd undertake to and agree with the Dealer(s) and each of them, in respect of each Tranche of Instruments agreed as contemplated herein to be issued and purchased, that it shall:

11

(a)unless the same is capable of remedy and is forthwith remedied, forthwith notify the Relevant Dealer of anything which, prior to payment of the net subscription moneys being made to the Issuer on the agreed date of issue of the relevant Instruments, has or may have rendered or will or may render untrue or incorrect in any material respect any of the representations and warranties made by or on behalf of the Issuer and/or ABB Ltd in respect thereof as if they had been made or given on the date of the Relevant Agreement and on the agreed date of issue of the relevant Instruments;

(b)in relation to each Tranche of Instruments agreed by the Issuer, ABB Ltd and the relevant Dealer(s) to be listed on SWX and/or on any other listing authority, stock exchanges and/or quotation system as may have been agreed between the Issuer, ABB Ltd and the relevant Dealer(s), cause the Listing Agent to procure the listing of the relevant Instruments on SWX and/or on such other listing authority, stock exchanges and/or quotation system and to maintain the same until none of such Instruments is outstanding provided, however, that if it should be impracticable or unduly burdensome to maintain such admission to listing, trading and/or quotation, each of the Issuer and ABB Ltd shall use its reasonable endeavours to procure and maintain as aforesaid an admission to listing, trading and/or a quotation for the relevant Instruments on such other listing authority stock exchanges and/or quotation systems as it and the relevant Dealer(s) decide;

(c)not and will cause its respective affiliates (as defined in Regulation 501(b) of Regulation D under the Securities Act) not to sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in the Securities Act) in a manner which would require the registration of the Instruments issued by the Issuer under the Securities Act;

(d)procure, in relation to any Tranche of Instruments which is to be listed on SWX and/or any other listing authority, stock exchanges and/or quotation system, if required, that the relevant Pricing Supplement is lodged with SWX and/or with such other listing authority, stock exchanges and/or quotation system by the time required by SWX or such other listing authority, stock exchanges and/or quotation system;

(e)in accordance with the terms thereof, cause the Fiscal Agent to ensure that any Instrument in temporary global or, as the case may be, permanent global form is exchanged for Instrument(s) in permanent global or, as the case may be, definitive and/or (in the case of a Series comprising Instruments in bearer and registered form and if so specified in the relevant Pricing Supplement) registered form and any talon issued in respect of any Instrument in definitive form is exchanged in accordance with the Terms and Conditions of the relevant Instruments for further coupons;

(f)in relation to any Instruments in respect of which any Dealer is appointed as the agent of the Issuer for the purposes of calculating any rate or amount of

12

interest or other redemption amount applicable to such Instruments, indemnify such Dealer in its capacity as such agent in the same manner as set out in Clause 13.4 of the Fiscal Agency Agreement, mutatis mutandis; and

(g)in respect of any Tranche of Instruments which must be redeemed before the first anniversary of the date of its issue, the Issuer will issue such Instruments only if the following conditions apply (or the Instruments can otherwise be issued without contravention of section 19 of the FSMA):

(i)Selling restrictions: each Relevant Dealer represents, warrants and agrees in the terms set out in sub-clause (b) of the United Kingdom selling restriction in Schedule 1 (Selling Restrictions - United Kingdom); and

(ii)Minimum denomination: the redemption value of each such Instrument is not less than £100,000 (or an amount of equivalent value denominated wholly or partly in a currency other than sterling), and no part of any Instrument may be transferred unless the redemption value of that part is not less than £100,000 (or such an equivalent amount).

3.3The Issuer and ABB Ltd undertake to and agree with the Dealer(s) it shall:

(a)

(i)in the case of the Issuer, comply (and for this purpose shall ensure that all necessary action is taken and all necessary conditions are fulfilled) with all applicable laws, regulations, policies and guidelines (as amended from time to time) of any governmental and regulatory authorities or central bank relevant in the context of the issue of any Instruments and the performance of and compliance with its obligations thereunder, under this Agreement, the Fiscal Agency Agreement, the Keep-Well Agreement and the Deed of Covenant, and shall submit (or procure the submission on its behalf of) such reports or information and shall make (or procure that there is made on its behalf) such registrations and filings as may from time to time be required for compliance with such laws, regulations, policies and guidelines and shall procure that Instruments shall have such maturities and denominations as may from time to time be required for compliance with all applicable laws, regulations, policies and guidelines;

(ii)in the case of ABB Ltd, comply (and for this purpose shall ensure that all necessary action is taken and all necessary conditions are fulfilled) with all applicable laws, regulations, policies and guidelines (as amended from time to time) of any governmental and regulatory authorities or central bank relevant in the context of the issue of any Instruments and the performance of and compliance with its obligations thereunder, under this Agreement and the Keep-Well Agreement, and shall submit (or procure the submission on its behalf of) such reports or

13

information and shall make (or procure that there is made on its behalf) such registrations and filings as may from time to time be required for compliance with such laws, regulations, policies and guidelines and shall procure that Instruments shall have such maturities and denominations as may from time to time be required for compliance with all applicable laws, regulations, policies and guidelines;

(b)in connection with the proposed issuance of Instruments, notify any Dealer promptly upon request by such Dealer of the aggregate principal amount of Instruments of the Issuer then outstanding (expressed in United States dollars) under the Programme and for this purpose sub-paragraphs (i) to (iii) of Clause 3.1(o) shall apply;

(c)in connection with the proposed issuance of Instruments, from time to time deliver to each Dealer a certified copy of any document which amends or supersedes any of its Constitutive Documents and a certified copy of any resolution of its board of directors or, as the case may be, managing directors or other governing body which amends or supersedes the resolution in respect of the Issuer or ABB Ltd, as the case may be, referred to in the Information Memorandum;

(d)deliver to each Dealer a copy of each document lodged by or on behalf of the Issuer or ABB Ltd, as the case may be, in relation to the Programme or any Instruments with SWX or with such other listing authority, stock exchanges and/or quotation system on which Instruments shall then be admitted to listing, trading and/or quotation (other than Pricing Supplements) as soon as practicable after it has been lodged and a copy of each document made available for inspection at the offices of any Paying Agent (as detailed in the Information Memorandum) as soon as the same shall have become so available;

(e)without prejudice to paragraph (d) above, as soon as the same become publicly available, deliver to each Dealer a copy of its Annual Report and in the case of ABB Ltd, a copy of its Annual Report and interim financial reports;

(f)supply (or procure the supply) to each Dealer addressed to all Dealers (whether or not (in the case of sub-paragraphs (ii) or (iii) below) any such Dealer is participating in the relevant issuance of Instruments) legal opinions as set out in Schedule 2 to this Agreement, comfort letters or agreed upon procedures letters on the following bases:

(i)(unless, in any case, a legal opinion in respect of ABB Ltd or, as the case may be, the Issuer addressed to all the Dealers shall have been provided during the period of twelve months ended on such anniversary) legal opinions in respect of the Issuer or, as the case may be, ABB Ltd on each anniversary of the date on which such legal opinions were

14

signed and delivered in connection with the original establishment of the Programme, and, on each date which falls twelve calendar months after the provision of the last legal opinion in respect of ABB Ltd or, as the case may be, the Issuer;

(ii)a legal opinion in respect of ABB Ltd, upon the issuance by the Issuer of any Instruments agreed as contemplated herein to be issued and purchased;

(iii)(unless otherwise stated in the Relevant Agreement) an auditors’ comfort letter or agreed upon procedures letter in respect of ABB Ltd and the Issuer and a legal opinion in respect of the Issuer (from suitable lawyers qualified in English law) upon the issuance by the Issuer of Instruments agreed as contemplated herein to be sold and purchased in transactions in which it is customary under then existing market practice to provide updated auditors’ agreed upon procedures letters or legal opinions in light of, inter alia, the size of the transaction, the nature of the distribution or changes in the financial position of the Issuer or ABB Ltd and its subsidiaries taken as a whole;

(iv)a legal opinion in respect of, as relevant, the Issuer and/or ABB Ltd from suitable lawyers qualified in English or, as relevant Swiss, law if requested by any Dealer in relation to any material change or proposed material change to any of this Agreement, the Fiscal Agency Agreement or the Deed of Covenant or the Keep-Well Agreement, or any change or proposed change in applicable law or regulation relating to the issuance of Instruments affecting in any material respect the Issuer or ABB Ltd, this Agreement, the Fiscal Agency Agreement or the Deed of Covenant or the Keep-Well Agreement;

(g)so long as any Instrument remains outstanding, the Issuer will not modify, amend or terminate the Keep-Well Agreement where such modification, amendment or termination would have an adverse effect upon any holder of any Instrument or Coupon, nor will the Issuer waive, or fail to take all reasonable steps to ensure that ABB Ltd complies with its obligations under the Keep-Well Agreement (except where such waiver or failure would not have an adverse effect upon any holder of any Instrument or Coupon);

(h)in the case of the Issuer, not consent to any amendment to the Fiscal Agency Agreement which may materially adversely affect the interests of any Dealer or any holder of any Instrument or Coupon;

(i)in the case of the Issuer, without prejudice to the provisions of paragraphs (g) and (h) above, give to each Dealer at least fifteen days’ prior notice in writing of any proposed amendment to the Fiscal Agency Agreement, the Deed of Covenant and the Keep-Well Agreement (whether or not adversely affecting the interests of any Dealer or any holder of any Instrument or Coupon);

15

(j)from time to time deliver to each Dealer a certificate as to the names and signatures of those persons who are authorised to act on behalf of the Issuer, or, as the case may be, ABB Ltd in relation to the Programme; and

(k)prepare or procure the preparation of an amendment or supplement to the Information Memorandum or publish a new information memorandum as may from time to time be required to be prepared by law or by the requirements of any relevant listing authority, stock exchanges and/or quotation system or, without prejudice to the generality of the foregoing, if, while Instruments are offered under the Programme, there shall occur any adverse change in the financial condition of the Issuer or ABB Ltd and its subsidiaries taken as a whole that is material in the context of issuance under the Programme (in the case of ABB Ltd and its subsidiaries taken as a whole, being a change which might reasonably be expected to affect the decision of a person considering whether to provide finance to the Issuer in reliance on the existence of the relevant Keep-Well Agreement), which is not reflected in the Information Memorandum.

3.4The rights and remedies conferred upon any Dealer (or other indemnified person) under this Clause shall continue in full force and effect notwithstanding the completion of the arrangements set out herein for the issue, sale and purchase of the relevant Instruments and regardless of any investigation made by such Dealer (or other indemnified person).

4.UNDERTAKINGS BY THE DEALERS

4.1Each Dealer undertakes to the Issuer and ABB Ltd that in relation to each Tranche of Instruments agreed as contemplated herein to be sold and purchased:

(a)it will comply with the provisions set out in Schedule 1 hereto it being agreed that, subject to compliance by the Issuer with its obligations under paragraphs (b), (c), (d) and (e) of Clause 3.2 and paragraphs (a) and (k) of Clause 3.3 and not being in breach of any of the representations and warranties on its part contained in paragraphs (a) to (e), (g), (h), (l), (o) and (q) of Clause 3.1, the Issuer shall not have any responsibility in respect of the legality of any Dealer offering and selling Instruments in any jurisdiction or in respect of the Instruments qualifying for sale in any jurisdiction;

(b)in relation to each Tranche of Instruments agreed as contemplated herein to be sold and purchased it will make no public announcement (except for an initial announcement on Reuters in the form typically appearing on Reuters) with regard to the Issuer or ABB Ltd or the issue or sale of the Instruments without the written consent of the Issuer, which consent shall not be unreasonably withheld or delayed;

(c)it will make no representation and supply no information regarding the Issuer, ABB Ltd or any of their respective subsidiaries or the Instruments in connection with the issue or sale of the Instruments other than the form

16

(including the terms and conditions) of the Instruments, the Fiscal Agency Agreement, the Deed of Covenant and the Keep-Well Agreement and other than any information contained in or extracted from any public information (including for the avoidance of doubt, the Information Memorandum) or as is approved in writing for such purpose by the Issuer, without the written consent of the Issuer, which consent shall not be unreasonably withheld or delayed; and

(d)it will certify forthwith to the Issuer the date on which it has completed its distribution of each Tranche of Instruments.

4.2The obligations of the Dealers hereunder are several.  In addition each of the Dealers agrees that Morgan Stanley & Co. International Limited has only acted in an administrative capacity to facilitate the establishment and/or maintenance of the Programme and has no responsibility to it for (a) the adequacy, accuracy, completeness or reasonableness of any representation, warranty, undertaking, agreement, statement or information in the Information Memorandum, any Pricing Supplement, this Agreement or any information provided in connection with the Programme or (b) the nature and suitability to it of all legal, tax and accounting matters and all documentation in connection with the Programme or any Tranche.

5.INDEMNITY

5.1The Issuer and ABB Ltd undertake to and agree with the Dealers and each of them that if such Dealer or any of its officers, directors or employees and each person by whom it is controlled for the purposes of the Securities Act (each a “Relevant Party”) incurs any direct claim, demand, action, liability, damages and loss and any reasonable cost or expense (including, without limitation, reasonable legal fees and any applicable value added tax) (a “Loss”) as a result or arising out of or in relation to or in connection with any breach (or any allegation by a person other than any Dealer or any officer, director or employee or controlling person of any Dealer of any breach) of the representations and warranties made by it herein or in writing in any Relevant Agreement or in writing in any other agreement between the Issuer, ABB Ltd and the relevant Dealer(s) in respect of any Instruments agreed to be sold and purchased hereunder or any breach or alleged breach of any of the undertakings given by it herein or in writing in any Relevant Agreement or in writing in any other agreement between the Issuer, ABB Ltd and the relevant Dealer(s) in respect of any Instruments agreed to be sold and purchased hereunder the Issuer or, as the case may be, ABB Ltd shall pay to such Dealer an amount equal to such Loss.  No Dealer shall have any duty or obligation, whether as fiduciary for any Relevant Party or otherwise, to recover any such payment for such Relevant Party or to account to such Relevant Party for any amounts paid to such Dealer under this Clause 5.1.

5.2If any action, proceeding, claim or demand shall be brought or asserted against any Dealer (or any of its officers, directors or employees or any person by whom it is controlled for the purposes of the Securities Act) in respect of which indemnity may be sought from the Issuer or, as the case may be, ABB Ltd as herein provided, such

17

Dealer shall promptly notify the Issuer or, as the case may be, ABB Ltd in writing thereof.

5.3The Issuer or, as the case may be, ABB Ltd shall have the option to assume the defence thereof with legal advisers in each relevant jurisdiction reasonably satisfactory to the relevant Dealer (who shall not without the prior written consent of such Dealer also be legal advisers to the Issuer or, as the case may be, ABB Ltd).  If the Issuer or, as the case may be, ABB Ltd so assumes the defence and retains such legal advisers, such Dealer shall bear the fees and expenses of any additional legal advisers retained by it in any relevant jurisdiction.  If the Issuer or, as the case may be, ABB Ltd does not elect to assume the defence or fails to employ legal advisers in any relevant jurisdiction reasonably satisfactory to such Dealer to represent such Dealer within a reasonable time after notice of commencement of the action, it will reimburse such Dealer for the reasonable fees and expenses of any legal advisers retained by such Dealer.  After timely notice from the Issuer or, as the case may be, ABB Ltd of its election so to assume the defence thereof, the Issuer or, as the case may be, ABB Ltd will not be liable to such Dealer under this Clause 5.3 for any legal expenses subsequently incurred by such Dealer in connection with the defence thereof other than the reasonable costs of investigation.  The Issuer or, as the case may be, ABB Ltd shall not be liable to indemnify any Dealer for any settlement of any such action effected without the written consent of the Issuer or, as the case may be, ABB Ltd which consent shall not be unreasonably withheld or delayed.

5.4The rights and remedies conferred upon any Dealer (or other indemnified person) under this Clause shall continue in full force and effect notwithstanding the completion of the arrangements set out herein for the issue, sale and purchase of the relevant Instruments and regardless of any investigation made by such Dealer (or other indemnified person).

5.5Each Dealer undertakes with the Issuer and ABB Ltd that if the Issuer and/or ABB Ltd or any of their respective officers, directors or employees and each person by whom either of the Issuer or ABB Ltd is controlled incurs any direct claim, demand, action, liability, damages and loss and any reasonable cost or expense (including, without limitation, reasonable legal fees and any applicable value added tax) (a “Loss”) as a result or arising out of, or in relation to, or in connection with any breach (or any allegation by a person other than the Issuer, ABB Ltd, any officer, director, employee or controlling person of the Issuer or ABB Ltd of any breach) of any of the warranties, undertakings and agreements made by it herein or in any Relevant Agreement or in writing in any other agreement in respect of any Instruments whether arising before or after the completion of the subscription and issue of the relevant Instruments then such Dealer shall pay to the Issuer or, as the case may be, ABB Ltd an amount equal to such Loss.  The provisions of Clauses 5.3 and 5.4 with respect to the conduct and settlement of actions shall apply mutatis mutandis to this indemnity.

18

6.COSTS AND EXPENSES

6.1The Issuer is, failing which ABB Ltd is, responsible for payment of the proper costs, charges and expenses (and any applicable value added tax):

(a)incurred by it or of any legal, accountancy and other professional advisers retained and instructed by it in connection with the establishment of the Programme, the preparation of the Information Memorandum, the preparation, production and delivery of this Agreement, the Fiscal Agency Agreement, the Deed of Covenant and any other document connected with the Programme or the performance of and compliance by it with any of its obligations or without prejudice to Clause 5.5, the exercise of its rights under this Agreement, the Fiscal Agency Agreement, the Deed of Covenant or the Keep-Well Agreement;

(b)of any legal, accountancy or other professional advisers retained and instructed by it in respect of any Instruments issued by it and any document prepared in connection therewith;

(c)of and incidental to the setting, proofing, printing and distribution of the Information Memorandum and any Pricing Supplements provided that where such costs, charges and expenses are incurred by (a) person(s) other than the Issuer or ABB Ltd, the prior written approval of the Issuer and/or ABB Ltd to the incurrence of such costs, charges and expenses shall have been obtained;

(d)of and incidental to the setting, proofing, printing, checking and initial delivery of any Instruments (whether in global or definitive bearer form or in registered form) including inspection and authentication provided that where such costs, charges and expenses are incurred by (a) person(s) other than the Issuer or ABB Ltd, the prior written approval of the Issuer and/or ABB Ltd to the incurrence of such costs, charges and expenses shall have been obtained;

(e)incurred at any time in connection with the listing of Instruments on SWX or on such other listing authority, stock exchanges and/or quotation system on which any Instruments may from time to time be admitted to listing, trading and/or quotation and the maintenance of any such admission to listing, trading and/or quotation provided that where such costs, charges and expenses are incurred by (a) person(s) other than the Issuer or ABB Ltd, the prior written approval of the Issuer and/or ABB Ltd to the incurrence of such costs, charges and expenses shall have been obtained; and

(f)of any advertising agreed upon between the Issuer, ABB Ltd or any of them and the Dealers or any of them.

6.2As between the Issuer, ABB Ltd and the Dealer(s), the Issuer is, failing which ABB Ltd is, responsible for the payment of the proper costs, charges and expenses (and any applicable value added tax):

19

(a)incurred by ABB Ltd or of any legal, accountancy and other professional advisers retained and instructed by ABB Ltd in connection with the establishment of the Programme, the preparation of the Information Memorandum, the preparation, production and delivery of this Agreement, the Fiscal Agency Agreement, the Deed of Covenant and any other document connected with the Programme or the performance of and compliance by it with any of its obligations under the Keep-Well Agreement; and

(b)of any legal, accountancy or other professional advisers retained and instructed by it in respect of any Instruments issued by such Issuer and any document prepared in connection therewith;

6.3The Issuer, failing which ABB Ltd, shall be responsible for the payment of all stamp, registration and other taxes and duties (including any interest and penalties thereon or in connection therewith) which may be payable upon or in connection with the execution and delivery of this Agreement and the Fiscal Agency Agreement, the Deed of Covenant executed by the Issuer and/or ABB Ltd, as the case may be, and the issue or initial sale or delivery by the Issuer of Instruments of the Issuer and the execution and delivery by it and/or ABB Ltd, as the case may be, of each Pricing Supplement and any other document to which the Issuer and/or ABB Ltd, as the case may be, is/are party entered into in connection with the Programme or any Instruments of the Issuer and shall indemnify each Dealer against any direct claim, demand, action, loss, liability and damages and any reasonable cost or expense (including, without limitation, reasonable legal fees and any applicable value added tax) which it may incur as a result or arising out of or in relation to any failure to pay or delay in paying any of the same.

7.NOTICES AND COMMUNICATIONS

7.1All notices and communications hereunder shall be made in writing (by letter (first class mail, in the case of inland post and airmail, in the case of cross border post), telex or fax) and shall be sent to the addressee at the address, telex number or fax number specified against its name in Schedule 7 to this Agreement (or, in the case of a Dealer not originally party hereto, specified by notice to the Issuer, ABB Ltd and the other Dealers at or about the time of its appointment as a Dealer) and for the attention of the person or department therein specified (or as aforesaid) or, in any case, to such other address, telex number or fax number and for the attention of such other person or department as the addressee has by prior notice to the sender specified for the purpose.

7.2Whenever a notice or other communication shall be given as aforesaid by telex or fax it shall be deemed received (subject, in the case of telex, to a confirmed answer back being received at the end of the transmission and, in the case of fax, to confirmation being received at the end of the transmission) on the day of dispatch provided that if the time of despatch is after 3.00 p.m. (local time of the recipient) on any day which is a business day (in the place of the recipient) or any time on a day which is not a business day (in the place of the recipient), it shall be deemed to have been received on

20

the next business day (in the place of the recipient) and whenever a notice or other communication is sent by post as aforesaid it shall be deemed received three days (in the case of inland post) or seven days (in the case of cross border post) after being posted in a properly prepaid envelope and whenever a notice or other communication is delivered by hand, it shall be deemed received upon actual delivery.

8.CHANGES IN DEALERS

8.1The Issuer and/or ABB Ltd may:

(a)by ten days’ notice in writing to any Dealer, terminate the right of such Dealer to remain a Dealer under this Agreement (but without prejudice to any rights, liabilities, duties or obligations accrued or incurred on or before the effective date of termination and in particular the validity of any existing agreement for the sale and purchase of any Instruments); and/or

(b)nominate any reputable institution, which may include the Issuer and/or ABB Ltd, as a new Dealer hereunder either generally in respect of the Programme or in relation to a particular Tranche of Instruments, in which event upon the execution by such institution of a supplemental agreement in the terms set out in Schedule 3 to this Agreement or in terms acceptable to the other parties hereto such institution shall, subject as provided below, become a party hereto with all the authority, rights, powers, duties and obligations of a Dealer hereunder either generally in respect of the Programme or in relation to a particular Tranche of Instruments provided always that an institution which has become a Dealer in relation to a particular Tranche of Instruments shall not be entitled to the benefit of the undertakings of the Issuer and ABB Ltd contained in Clause 3.3 and Clause 5.1, except for those contained in paragraphs (a), (f)(ii) and (iii), (g), (h), (i) and (k) of Clause 3.3 and the provisions of Clauses 8, 9 and 10 shall not apply to any such Dealer.

8.2Any Dealer may, by ten days’ written notice to the Issuer and ABB Ltd, resign as a Dealer under this Agreement (but without prejudice to any rights, liabilities, duties or obligations accrued or incurred on or before the effective date of resignation and in particular the validity of any existing agreement for the sale and purchase of any Instruments).

8.3The Issuer or ABB Ltd will notify the Dealers and the Fiscal Agent of any change in the identity of the Dealers appointed generally in respect of the Programme as soon as reasonably practicable thereafter.

9.INCREASE IN AUTHORISED AMOUNT

9.1The Issuer and/or ABB Ltd may, subject to the provisions of Clause 9.2 below, from time to time, by giving at least twenty days’ notice by letter in substantially the form set out in Schedule 5 to this Agreement to the Dealer, (with a copy to the Paying Agents and the Registrars), inform the Dealer that the Authorised Amount be increased and, the Dealer will be deemed to have given its consent to the increase in the

21

Authorised Amount, whereupon all references in this Agreement shall be to the increased Authorised Amount.

9.2No increase shall be effective unless and until (i) the Dealer shall have received (a) certified true copies (and, if applicable, English translations) of the resolution of the board of directors or, as the case may be, board of managing directors or other governing body of the Issuer and ABB Ltd authorising the increase in the Authorised Amount, (b) the documents and confirmations described in paragraphs 4 and 10 of Schedule 2 to this Agreement and (c) confirmation of the approval of the Programme in respect of Instruments up to the new Authorised Amount on SWX and any amendment or supplement to the Information Memorandum prepared in connection therewith and (ii) the Issuer and ABB Ltd shall have complied with all legal and regulatory requirements, if any, necessary for the issuance of Instruments up to the new Authorised Amount and shall have provided to the Dealer such evidence of compliance the Dealer may reasonably require.

10.CHANGE IN ISSUERS

10.1The Issuer may, provided that at such time it is not party to a Relevant Agreement in respect of which the related Instruments have not as yet been issued, from time to time by 10 days’ written notice to the Dealer cease, subject to the following provisions of this Clause, to be an Issuer in respect of the Programme.

If, upon the expiry of such notice period, the Issuer does not have outstanding any Instruments then, with effect from the date of the expiry of such notice period such Issuer shall cease to be a party to this Agreement as Issuer, but without prejudice to any rights, liabilities or obligations accrued or incurred under this Agreement on or prior to such date.

If, upon the expiry of such notice period, the Issuer does have outstanding any Instruments, then such Issuer shall not cease to be a party to this Agreement unless and until ABB Ltd or a direct or indirect subsidiary of ABB Ltd shall have been substituted for and become principal debtor in respect of such Instruments or Coupons pursuant to Condition 15 of the Terms and Conditions of such Instruments, in which event such Issuer shall cease to be party to this Agreement on the date upon which such substitution shall take effect, but without prejudice to any rights, liabilities and obligations accrued or incurred under this Agreement on or prior to such date.

10.2The Issuer may request that ABB Ltd or a direct or indirect subsidiary of ABB Ltd (the “New Issuer”) should become an Issuer in respect of the Programme and accordingly should be party to this Agreement.  If such a request is made, upon the delivery to the Dealer of (i) the undertaking of the New Issuer to be bound by the provisions of this Agreement substantially in the form as set out in Schedule 6 hereto and (ii) a copy of an agreement duly executed by the New Issuer whereby the New Issuer agrees to be bound by the Fiscal Agency Agreement, the New Issuer shall become a party to this Agreement as if originally named herein as an Issuer.

22

11.LAW AND JURISDICTION

11.1This Agreement and each Relevant Agreement is governed by, and shall be construed in accordance with, English law.

11.2The Issuer and ABB Ltd hereby agree for the exclusive benefit of the Dealer(s) that the courts of England are to have jurisdiction to settle any disputes which may arise out of or in connection with this Agreement and any Relevant Agreement and that accordingly any suit, action or proceedings (together referred to as “Proceedings”) arising out of or in connection with this Agreement and any Relevant Agreement may be brought in such courts.  Nothing contained in this Clause shall limit any right to take Proceedings against the Issuer or ABB Ltd in any other court of competent jurisdiction, nor shall the taking of Proceedings in one or more jurisdictions preclude the taking of Proceedings in any other jurisdiction, whether concurrently or not.

11.3The Issuer and ABB Ltd hereby appoints ABB Limited of Daresbury Park, Daresbury, Warrington WA4 4BT, Cheshire to accept service of any Proceedings on its behalf in England.  If for any reason such process agent ceases to act as such or no longer has an address in England, the Issuer and ABB Ltd agrees to appoint a substitute process agent and notify the Dealer(s) of such appointment and if the Issuer or ABB Ltd, as the case may be, fails to make any such appointment within twenty-one days, any Dealer shall be entitled to appoint such a person by notice to the Issuer or ABB Ltd, as the case may be.

11.4Nothing contained herein shall affect the right to serve process in any other manner permitted by law.

12.MODIFICATION AND AMENDMENT

No modification or amendment of this Agreement shall be valid unless it is in writing and signed by or on behalf of each of the parties hereto.

13.COUNTERPARTS

This Agreement may be executed in any number of counterparts, each of which shall be deemed an original.  Any party may enter into this Agreement by signing any such counterpart.

14.CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999

A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Agreement.

AS WITNESS the hands of the duly authorised representatives of the parties hereto the day and year first before written.

23

SCHEDULE 1

SELLING RESTRICTIONS

United States of America:  Each Dealer understands that the Instruments have not been and will not be registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in accordance with Regulation S under the Securities Act or pursuant to an exemption from the registration requirements of the Securities Act.  Each Dealer represents that it has offered and sold Instruments, and will offer and sell Instruments (i) as part of their distribution at any time and (ii) otherwise until 40 days after the completion of the distribution of Instruments of the relevant Tranche, as determined and certified to the relevant Issuer by such Dealer (or, in the case of a sale of a Tranche of Instruments to or through such Dealer and one or more other Dealers, by each of such Dealers) only in accordance with Rule 903 of Regulation S under the Securities Act.  Accordingly, each Dealer further represents and agrees that neither it, its affiliates nor any person, acting on its behalf have engaged or will engage in any directed selling efforts with respect to Instruments, and that it and they have complied and will comply with the offering restrictions requirement of Regulation S.  Each Dealer agrees that, at or prior to confirmation of sale of Instruments, it will have sent to each distributor, dealer or person receiving a selling concession, fee or other remuneration that purchases Instruments from it during the distribution compliance period a confirmation or notice to substantially the following effect:

“The Instruments covered hereby have not been registered under the U.S. Securities Act of 1933 (the “Securities Act”) and may not be offered and sold within the United States or to, or for the account or benefit of, U.S. persons (i) as part of their distribution at any time or (ii) otherwise until forty days after the later of the commencement of the offering and the issue date of the Instruments of the relevant Tranche, except in either case in accordance with Regulation S under the Securities Act.  Terms used above have the meanings given to them by Regulation S.”

Terms used in the above paragraph have the meanings given to them by Regulation S.

Each Dealer represents and agrees that it has not entered and will not enter into any written agreement with any person with respect to any sub-underwriting, selling group or other similar arrangement relating to the distribution or delivery of Instruments except with its affiliates or with the prior written consent of the relevant Issuer.

In addition, each Dealer represents and agrees that:

(i)except to the extent permitted under U.S. Treas. Reg. § 1.163-5(c)(2)(i)(D) (the “D Rules”), (x) it has not offered or sold, and during the restricted period will not offer or sell, Instruments in bearer form to a person who is within the United States or its possessions or to a United States person, and (y) such Dealer has not delivered and will not deliver within the United States or its possessions definitive Instruments in bearer form that are sold during the restricted period;

24

(ii)it has and throughout the restricted period will have in effect procedures reasonably designed to ensure that its employees or agents who are directly engaged in selling Instruments in bearer form are aware that such Instruments may not be offered or sold during the restricted period to a person who is within the United States or its possessions or to a United States person, except as permitted by the D Rules;

(iii)if such Dealer is a United States person, it represents that it is acquiring the Instruments in bearer form for purposes of resale in connection with their original issuance and, if such Dealer retains Instruments in bearer form for its own account, it will only do so in accordance with the requirements of U.S. Treas. Reg. § 1.163-5(c)(2)(i)(D)(6);

(iv)with respect to each affiliate (if any) that acquires from such Dealer Instruments in bearer form for the purposes of offering or selling such Instruments during the restricted period, such Dealer either (A) hereby represents and agrees on behalf of such affiliate (if any) to the effect set forth in sub-paragraphs (i), (ii) and (iii) of this paragraph or (B) agrees that it will obtain from such affiliate (if any) for the benefit of the relevant Issuer the representations and agreements contained in sub-paragraphs (i), (ii) and (iii) of this paragraph; and

(v)it will obtain from any distributor (within the meaning of U.S. Treas. Reg. § 1.163-5(c)(2)(i)(D)(4)(ii)) that purchases any Instruments in bearer form from such Dealer pursuant to a written contract with it (except a distributor that is one of its affiliates or is another Dealer), for the benefit of the Issuer and each other Dealer, the representations contained in, and such distributor’s agreement to comply with, the provisions of sub- paragraphs (i), (ii), (iii) and (iv) of this paragraph insofar as they relate to the D Rules, as if such distributor were a Dealer hereunder.

Terms used in the above paragraphs have the meanings given to them by the United States Internal Revenue Code of 1986 and Regulations thereunder, including the D Rules.

Each issuance of index-, commodity- or currency-linked Instruments shall be subject to additional U.S. selling restrictions as the relevant Dealer or Dealers shall agree as a term of the issuance and purchase of such Instruments.  Each Dealer agrees that it shall offer, sell and deliver such Instruments only in compliance with such additional U.S. selling restrictions.

The United Kingdom

Each Dealer further represents and agrees, that:

(a)in relation to any Instruments which have a maturity of less than one year, (i) it is a person whose ordinary activities involve it in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of its business and (ii) it has not offered or sold and will not offer or sell any Instruments other than to persons whose ordinary activities involve them in acquiring, holding, managing or

25

disposing of investments (as principal or as agent) for the purposes of their businesses or who it is reasonable to expect will acquire, hold, manage or dispose of investments (as principal or agent) for the purposes of their businesses where the issue of the Instruments would otherwise constitute a contravention of Section 19 of the FSMA by the Issuer;

(b)it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of any Instruments in circumstances in which Section 21(1) of the FSMA does not apply to the Issuer or ABB Ltd.;  and

(c)it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to any Instruments in, from or otherwise involving the United Kingdom.

Japan

Each Dealer understands that the Instruments have not been and will not be registered under the Securities and Exchange Law of Japan and, accordingly, undertakes that it will not offer or sell any Instruments directly or indirectly, in Japan or to, or for the benefit of, any Japanese Person or to others for re-offering or re-sale, directly or indirectly, in Japan or to any Japanese Person except under circumstances which will result in compliance with all applicable laws, regulations and guidelines promulgated by the relevant Japanese governmental and regulatory authorities and in effect at the relevant time.  For the purposes of this paragraph, “Japanese Person” shall mean any person resident in Japan, including any corporation or other entity organised under the laws of Japan.

European Economic Area

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”), each Dealer represents and agrees, that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the “Relevant Implementation Date”) it has not made and will not make an offer of Instruments to the public in that Relevant Member State except that it may, with effect from and including the Relevant Implementation Date, make an offer of Instruments to the public in that Relevant Member State:

(a)in (or in Germany, where the offer starts within) the period beginning on the date of publication of a prospectus in relation to those Instruments which has been approved by the competent authority in that Relevant Member State  or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive and ending on the date which is 12 months after the date of such publication;

(b)at any time to legal entities which are authorised or regulated to operate in the financial markets or, if not so authorised or regulated, whose corporate purpose is solely to invest in securities;

26

(c)at any time to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts; or

(d)at any time in any other circumstances which do not require the publication by the Issuer of a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an “offer of Instruments to the public” in relation to any Instruments in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Instruments to be offered so as to enable an investor to decide to purchase or subscribe the Instruments, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression Prospectus Directive means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

General:  Each Dealer acknowledges that no action has been or will be taken by the Issuer or any Dealer that would, or is intended to, permit a public offer of the Instruments in any country or jurisdiction where any such action for that purpose is required.  Accordingly, each Dealer undertakes that it will observe all applicable laws and regulations in each country or jurisdiction in or from which it may acquire, offer, sell or deliver Instruments or have in its possession or distribute any offering material, information memorandum, offering circular, prospectus, form of application, advertisement or other document or information.

Each Dealer further agrees that it will not directly or indirectly offer, sell or deliver any Instruments or distribute or publish the Information Memorandum or any other offering material in or from any country or jurisdiction except under circumstances that will, in its reasonable belief, result in compliance with any applicable laws and regulations, including in respect of the jurisdictions set out above, and all offers and sales of Instruments by it will be made on the foregoing terms.

27

SCHEDULE 2

CONDITIONS PRECEDENT

1.A certified true copy (and, if applicable, English translation) of the Constitutive Documents of the Issuer and ABB Ltd.

2.Certified true copies (and, if applicable, English translations) of all relevant resolutions of its board of directors or, as the case may be, board of managing directors or other governing body of the Issuer (including any New Issuer) authorising the issuance of Instruments in an aggregate principal amount of up to the Authorised Amount applicable to the Issuer and the execution, delivery and performance by the Issuer of the Dealership Agreement, the Fiscal Agency Agreement, the Deed of Covenant and the Instruments.

3.In relation to the Issuer and ABB Ltd, a list of the names and titles and specimen signatures of the persons authorised:

(a)to sign on behalf of the Issuer or ABB Ltd, as the case may be, the above-mentioned documents;

(b)to sign on behalf of the Issuer or ABB Ltd, as the case may be, all notices and other documents to be delivered pursuant thereto or in connection therewith; and

(c)to take any other action on behalf of the Issuer or ABB Ltd, as the case may be,  in relation to the Programme.

4.Any necessary governmental, tax, exchange control or other approvals or consents.

5.The Dealership Agreement, duly executed.

6.The Fiscal Agency Agreement, duly executed or a conformed copy thereof.

7.In respect of the Issuer, the Deed of Covenant duly executed or a conformed copy thereof.

8.A certified copy of the relevant duly executed Keep-Well Agreement.

9.The Information Memorandum and confirmation of the approval of the Programme by SWX and the issuance of Instruments by the Issuer.

10.Legal opinions from suitable lawyers qualified in English law and internal Counsel of ABB Ltd, (in the case of the Issuer) from the legal advisers to the Issuer in Guernsey, currently Ozannes, (in the case of any New Issuer (as defined in Clause 10.2)) from reputable and suitably qualified legal advisers in the jurisdiction of incorporation and, if different, tax residence of such New Issuer.  Each legal opinion referred to above (other than in respect of any New Issuer) to be delivered pursuant to Clause 3.3(f) of the Dealership Agreement.

28

11.Confirmation of the ratings for the Programme obtained from applicable rating agency(ies).

12.In relation to the Issuer and ABB Ltd, a letter from ABB Limited agreeing to act as process agent for the Issuer and ABB Ltd, as the case may be, in relation to the Dealership Agreement, the Fiscal Agency Agreement, the Deed of Covenant and the Instruments.

29

SCHEDULE 3

DEALER ACCESSION LETTER

[Date]

[New Dealer[s]]

[Address]

Dear Sirs,

ABB INTERNATIONAL FINANCE LIMITED

(the “Issuer”)

Programme for the Issuance of Debt Instruments

We refer to the Dealership Agreement dated 10 March 1993 and amended and restated on 8 December 2005 entered into in respect of the above Programme for the Issuance of Debt Instruments (such agreement, as modified or amended from time to time, the “Dealership Agreement”) between ourselves, ABB Ltd and the Dealers from time to time party thereto, and have pleasure in inviting [each of] you to become a Dealer upon the terms of the Dealership Agreement [in respect of and for the purpose of [specify Tranche of Instruments]](1), a copy of which has been supplied to you by us.  We are enclosing copies of the conditions precedent as set out in Schedule 2 to the Dealership Agreement and copies of the most recent comfort letters and opinions delivered pursuant to paragraph (f) of Clause 3.3 of the Dealership Agreement.  Please return to us a copy of this letter signed by an authorised signatory [on your behalf/on behalf of each of you] whereupon [each of] you will become a Dealer for the purposes of the Dealership Agreement with, [subject as hereinafter provided,] all the authority, rights, powers, duties and obligations of a Dealer under the Dealership Agreement [in respect of and for the purpose of [specify Tranche of Instruments] and provided always that [each of] you shall not be entitled to the benefit of our undertakings contained in Clause 3.3 of the Dealership Agreement except for those contained in paragraphs (a), (f)(ii) and (iii), (g), (h), (i) and (k) thereof and the provisions of Clauses 8, 9 and 10 of the Dealership Agreement shall not apply to [any of] you].(1)

This letter is governed by, and shall be construed in accordance with, English law.

Yours faithfully,

ABB International Finance Limited

By:

By:

By:

ABB Ltd

By:

(1)Applies only where the incoming Dealer is being appointed in respect of a particular Tranche of Instruments

30

CONFIRMATION

We hereby accept the appointment as a Dealer and accept all of the duties and obligations under, and terms and conditions of, the Dealership Agreement upon the terms of this letter [in respect of and for the purpose of [specify Tranche of Instruments]].

We confirm that we are in receipt of all the documents referred to in the second sentence of your letter and have found them to be satisfactory.

For the purposes of the Dealership Agreement our communications details are as set out below.

[NEW DEALER]

By:

Date:

Address:	[           ]
Telex:	[           ]
Facsimile:	[           ]
Attention:	[           ]

[NEW DEALER]

By:

Date:

Address:	[           ]
Telex:	[           ]
Facsimile:	[           ]
Attention:	[           ]

[(1)Copies to:

(i)all existing Dealers who have been appointed in respect of the Programme generally; and

(ii)the Fiscal Agent.]

(1)Applies only where the incoming Dealer is being appointed in respect of the Programme generally

31

SCHEDULE 4

SPECIMEN FORM OF RECORD OF RELEVANT AGREEMENT APPROPRIATE WHERE A GROUP OF

DEALERS ARE JOINTLY AND SEVERALLY AGREEING TO SUBSCRIBE FOR THE RELEVANT

INSTRUMENTS

[Letterhead of the Issuer]

[Date]

Form of Record of Relevant Agreement

[              ]

(the “Relevant Dealer”)

[             ]

(together, with the Relevant Dealer, the “Dealers”)

Dear Sirs

ABB INTERNATIONAL FINANCE LIMITED

 (the “Issuer”)

Programme for the Issuance of Debt Instruments

Issue of

[Aggregate principal amount and title of Instruments to be issued (the “Instruments”)]

We, [ABB International Finance Limited] (the “Issuer”) and ABB Ltd, refer to the dealership agreement (the “Dealership Agreement”) dated 10 March 1993 and amended and restated on 8 December 2005 and made between ourselves as Issuer, ABB Ltd and the Dealer named therein and entered into with respect to the Programme for the issuance of debt instruments, described in an information memorandum dated 8 December 2005.  [The Instruments are the subject of an invitation telex dated [        ].]

We write in order to record the agreement between us as follows:

(a)our agreement recorded in this letter is a Relevant Agreement as defined in the Dealership Agreement and is subject to the Dealership Agreement (save as modified in relation to the Instruments as provided herein) and the Pricing Supplement which has been prepared in respect of such Instruments;

(b)we will, in accordance with the Fiscal Agency Agreement dated 10 March 1993 and amended and restated on 8 December 2005 and as further amended or supplemented from time to time, issue the Instruments (represented by an appropriate temporary global instrument) on [           ]* (or such later date, being not later than [        ]*, as may be agreed between us and the Relevant Dealer on your behalf) (the “closing date”);

32

(c)you jointly and severally undertake that you will subscribe for the Instruments on the closing date at their [issue price]* as specified in the invitation telex [plus (if the closing date has been subject to postponement) accrued interest on their principal amount]* (the “Issue Price”) and, on the closing date, pay the net subscription moneys for the Instruments being the Issue Price [(less the commissions, concessions and other matters agreed to be deducted pursuant to paragraph (d) below)] by credit transfer in the currency in which the Instruments are denominated for same day/immediate value to [set out full details of the Issuer’s receiving bank account].

(d)[specify agreement with respect to commissions, concessions, costs and expenses and other such matters stating whether such items may be deducted from the Issue Price payable on the closing date;]

(e)[[          ] agrees to act as [insert details of any calculation agency or similar function which [          ] has agreed to undertake] and we confirm that the provisions of Clause 3.2(f) of the Dealership Agreement will apply to such appointment].**

Please signify your confirmation that the foregoing correctly records the agreement between us by counter-signing and returning the enclosed copy of this letter together with evidence of the authority of the person signing on your behalf.

This letter agreement is governed by, and shall be construed in accordance with, English law.

Yours faithfully

[ABB INTERNATIONAL FINANCE LIMITED]

By:	By:
ABB LTD
By:	By:
Confirmed

[list the Relevant Dealer and Dealers in

the agreed order]

By:

•delete or complete as appropriate

••only to be considered in relation to Tranches where a Dealer has agreed to undertake any calculation agency or similar function

33

SCHEDULE 5

NOTICE OF INCREASE OF AUTHORISED AMOUNT

To:[list all current Dealer(s) appointed in respect of the Programme generally]

Dear Sirs,

ABB INTERNATIONAL FINANCE LIMITED

(the “Issuer”)

Programme for the Issuance of up to U.S.$5,250,000,000 Debt Instruments

We refer to the Dealership Agreement dated 10 March 1993 and amended and restated on 8 December 2005 entered into in respect of the above Programme for the Issuance of Debt Instruments (such agreement, as modified or amended from time to time, the “Dealership Agreement”), between ourselves as Issuer, ABB Ltd and the Dealers from time to time party thereto.  Terms used in the Dealership Agreement shall have the same meanings in this letter.

Pursuant to Clause 9.1 of the Dealership Agreement, we hereby inform each of the addressees listed above that the Authorised Amount be increased from [          ] to [          ] with effect from [date] or such later date upon which the requirements of Clause 9.2 of the Dealership Agreement shall be fulfilled, subject always to the provisions of Clause 9.2 of the Dealership Agreement.

From the date upon which the increase in the Authorised Amount becomes effective, all references in the Dealership Agreement to the Authorised Amount shall be to the new increased amount as specified herein.

This letter is governed by, and shall be construed in accordance with, the laws of England.

Yours faithfully,

ABB International Finance Limited

By:

34

SCHEDULE 6

UNDERTAKING FROM NEW ISSUER

To:[list all current Dealer(s) appointed in respect of the Programme generally]

Dear Sirs,

ABB INTERNATIONAL FINANCE LIMITED

(the “Issuer”)

Programme for the Issuance of up to U.S.$5,250,000,000 Debt Instruments

We refer to the Dealership Agreement dated 10 March 1993 and amended and restated on 8 December 2005 entered into in respect of the above Programme for the Issuance of Debt Instruments (such agreement, as modified or amended from time to time, the “Dealership Agreement”), between the Issuer, ABB Ltd and the Dealers from time to time party thereto.  Terms used in the Dealership Agreement shall have the same meanings in this letter.

We desire to become an Issuer in respect of the Programme and accordingly a party to the Dealership Agreement.

We hereby undertake, with effect from [          ], to each of the Dealers to be bound by and to represent, warrant, undertake, perform and comply with all the provisions of the Dealership Agreement in all respects as if we had been originally named a party thereto as Issuer but on the basis that [specify any amendments, supplements or modifications which are necessary to the provisions of the Dealership Agreement in its application to the New Issuer].

This letter is governed by, and shall be construed in accordance with, the laws of England.

Yours faithfully,

ABB International Finance Limited

By:

35

SCHEDULE 7

NOTICE DETAILS

ABB INTERNATIONAL FINANCE LIMITED

Address:	Suite 3
	Weighbridge House
	The Pollet
	St. Peter Port
	Guernsey
	GY1 IWL
	Channel Islands
Fax:	+44 1481 729 016
Attention:	Business Administration
copy to:
Address:	ABB Group Treasury Operations
	Affolternstrasse 44
	CH 8050 Zurich
	Switzerland
Fax:	+41 43 317 7474
Attention:	Business Operations
ABB LTD
Address:	Affolternstrasse 44
	8050 Zurich
	Switzerland
Fax:	+41 43 317 7992
Attention:	Legal Department
MORGAN STANLEY & CO. INTERNATIONAL LIMITED
Address:	25 Cabot Square
	Canary Wharf
	London E14 4QA
Telex:	8812564
Fax:	+44 20 7677 7733
Attention:	Debt Capital Markets - Head of Transaction Management Group

36

SIGNATURES

The Issuer
ABB INTERNATIONAL FINANCE LIMITED
By:	/s/ ALEX HALL	By:	/s/ BRIAN VAN REIJN
ABB Ltd
ABB LTD
By:	/s/ MICHEL DEMARÉ	By:	/s/ ALFRED STORCK
The Dealer
MORGAN STANLEY & CO. INTERNATIONAL LIMITED
By:	/s/ JAMES WALTER

37

EX-4.3

EXHIBIT 4.3

	LIMITED LIABILITY PARTNERSHIP
	CONFORMED COPY

ABB LTD

CERTAIN SUBSIDIARIES OF ABB LTD

AS BORROWERS AND GUARANTORS

WITH

BARCLAYS CAPITAL

BAYERISCHE HYPO-UND VEREINSBANK AG

BNP PARIBAS

CITIGROUP GLOBAL MARKETS LIMITED

COMMERZBANK AKTIENGESELLSCHAFT

CREDIT SUISSE

DEUTSCHE BANK AG

DRESDNER KLEINWORT WASSERSTEIN (acting through DRESDNER BANK AG

NIEDERLASSUNG LUXEMBURG)

HANDELSBANKEN CAPITAL MARKETS, SVENSKA HANDELSBANKEN AB (publ)

HSBC BANK PLC

NORDEA BANK AB (publ)

and

SEB MERCHANT BANKING, SKANDINAVISKA ENSKILDA BANKEN, AB (PUBL)

AS MANDATED LEAD ARRANGERS

with

CREDIT SUISSE

AS FACILITY AGENT, DOLLAR SWINGLINE AGENT AND EURO SWINGLINE AGENT

and

SEB MERCHANT BANKING, SKANDINAVISKA ENSKILDA BANKEN, AB (PUBL)

AS SEK SWINGLINE AGENT

$2,000,000,000

MULTICURRENCY REVOLVING CREDIT AGREEMENT

DATED 4 JULY 2005

CONTENTS
Clause		Page
1.	Definitions And Interpretation	1
2.	The Facility	21
3.	Purpose	22
4.	Conditions Of Utilisation	23
5.	Utilisation	24
6.	Optional Currencies	27
7.	Repayment	28
8.	Prepayment And Cancellation	28
9.	Interest	31
10.	Interest Periods	32
11.	Changes To The Calculation Of Interest	33
12.	Fees	34
13.	Tax Gross Up And Indemnities	36
14.	Increased Costs	40
15.	Other Indemnities	41
16.	Mitigation By The Lenders	42
17.	Costs And Expenses	43
18.	Guarantee And Indemnity	44
19.	Representations	48
20.	Information Undertakings	51
21.	Financial Covenants	54
22.	General Undertakings	57
23.	Events Of Default	60
24.	Changes To The Lenders	64
25.	Changes To The Obligors	68
26.	Role Of The Agents And The Mandated Lead Arrangers	71
27.	Conduct Of Business By The Finance Parties	76
28.	Sharing Among The Lenders	76
29.	Payment Mechanics	79
30.	Set-Off	82
31.	Notices	82

32.	Calculations And Certificates	85
33.	Partial Invalidity	85
34.	Remedies And Waivers	85
35.	Amendments And Waivers	86
36.	Counterparts	86
37.	Governing Law	87
38.	Enforcement	87
Schedule 1		88
	Part I The Original Lenders	88
	Part II The Dollar Swingline Lenders	90
	Part III The Euro Swingline Lenders	92
	Part IV The SEK Swingline Lenders	93
	Part V The Original Obligors	94
Schedule 2 CONDITIONS PRECEDENT		96
	Part I Conditions Precedent	96
	Part II Additional Obligor Conditions Precedent	98
Schedule 3 UTILISATION REQUEST		100
Schedule 4 THE MARGIN		101
Schedule 5 FORM OF TRANSFER CERTIFICATE		102
Schedule 6 TIMETABLES		104
Schedule 7 FORM OF ACCESSION LETTER		106
Schedule 8 FORM OF RESIGNATION LETTER		107
Schedule 9 MANDATORY COST		108
Schedule 10 MATERIAL SUBSIDIARIES		110
Schedule 11 FORM OF COVENANT COMPLIANCE CERTIFICATE		111

THIS AGREEMENT is dated 4 July 2005 and made between:

(1)ABB LTD, a company incorporated in Switzerland whose registered office is at Affolternstrasse 44, CH-8050 Zurich, Switzerland (“ABB”);

(2)THE SUBSIDIARIES OF ABB listed in Part V of Schedule 1 (The Original Obligors) as original borrowers (the “Original Borrowers”);

(3)ABB AND THE SUBSIDIARIES OF ABB listed in Part V of Schedule 1 (The Original Obligors) as original guarantors (the “Original Guarantors”);

(4)BARCLAYS CAPITAL, BAYERISCHE HYPO-UND VEREINSBANK AG, BNP PARIBAS, CITIGROUP GLOBAL MARKETS LIMITED, COMMERZBANK AKTIENGESELLSCHAFT, CREDIT SUISSE, DEUTSCHE BANK AG, DRESDNER KLEINWORT WASSERSTEIN (acting through DRESDNER BANK AG, NIEDERLASSUNG LUXEMBURG), HANDELSBANKEN CAPITAL MARKETS, SVENSKA HANDELSBANKEN AB (publ), HSBC BANK PLC, NORDEA BANK AB (publ) and SEB MERCHANT BANKING, SKANDINAVISKA ENSKILDA BANKEN, AB (PUBL) as mandated lead arrangers (the “Mandated Lead Arrangers”);

(5)THE FINANCIAL INSTITUTIONS listed in Schedule 1 (The Original Lenders) in their respective capacities as original lenders (the “Original Lenders”);

(6)CREDIT SUISSE in its capacity as facility agent (the “Facility Agent”);

(7)CREDIT SUISSE, CAYMAN ISLANDS BRANCH in its capacity as dollar swingline agent (the “Dollar Swingline Agent”);

(8)CREDIT SUISSE in its capacity as euro swingline agent (the “Euro Swingline Agent”); and

(9)SEB MERCHANT BANKING, SKANDINAVISKA ENSKILDA BANKEN, AB (PUBL) in its capacity as SEK swingline agent (the “SEK Swingline Agent”).

IT IS AGREED as follows:

SECTION 1

INTERPRETATION

1.DEFINITIONS AND INTERPRETATION

1.1Definitions

In this Agreement:

“Accession Letter” means a Borrower Accession Letter or a Guarantor Accession Letter.

1

“Additional Borrower” means any wholly owned Subsidiary of ABB that has become an Additional Borrower in accordance with Clause 25.2 (Additional Borrowers).

“Additional Guarantor” means any wholly owned Subsidiary of ABB that has become an Additional Guarantor in accordance with Clause 25.4 (Additional Guarantors).

“Additional Obligor” means an Additional Borrower or Additional Guarantor.

“Advance” means any Revolving Advance and, unless the context otherwise requires, a Swingline 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, the SEK 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, Guernsey, any country that is, at the date of this Agreement, a member of the European Union and any other country approved by all the Lenders.

“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; and

(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,

2

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.

“Available SEK Swingline Commitment” means a SEK Swingline Lender’s SEK Swingline Commitment minus:

(a)the Base Currency Amount of its participation in any outstanding SEK Swingline Advances; and

(b)in relation to any proposed Utilisation by way of a SEK Swingline Advance, the Base Currency Amount of its participation in any SEK Swingline Advances that are due to be made on or before the proposed Utilisation Date,

other than, in either case, that SEK Swingline Lender’s participation in any SEK Swingline Advances that are due to be repaid or prepaid on or before the proposed Utilisation Date.

“Available SEK Swingline Facility” means the aggregate for the time being of each SEK Swingline Lender’s Available SEK Swingline 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

3 Business Days before the Utilisation Date or, if later, on the date the Facility Agent receives the Utilisation Request) adjusted to reflect any repayment or prepayment of the Advance.

“Borrower Accession Letter” means a letter substantially in the form set out in Schedule 7 (Form of 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) by which:

(a)the interest (excluding the Margin), which a Lender should have received for the period from the date of receipt of all or any part of its participation in an Advance or Unpaid Sum to the last day of the current Interest Period in respect of that Advance or Unpaid Sum, had the principal amount or Unpaid Sum received been paid on the last day of that Interest Period;

exceeds:

(b)the amount which that Lender would be able to obtain by placing an amount equal to the principal amount or Unpaid Sum received by it on deposit with a leading bank in the Relevant Interbank Market for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period.

“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 a SEK Swingline Advance a day (other than a Saturday or a Sunday) on which banks are open for general business in Stockholm;

(c)in relation to any Advance (not being a Dollar Swingline Advance or a SEK 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; or

(ii)(in relation to any date for payment or purchase of Euro) any TARGET Day; and

(d)for all other purposes, a day (other than a Saturday or Sunday) on which banks are open for general business in London.

“Commitment” means:

4

(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; and

(b)in relation to any other Lender, the amount of any Commitment transferred to it under this Agreement,

to the extent not cancelled, reduced or transferred by it under this Agreement.

“Covenant Compliance Certificate” means a certificate substantially in the form set out in Schedule 11 (Form of Covenant Compliance Certificate).

“Credit Rating” means the corporate rating or, if publicly available, the specific bank loan rating in respect of the Facility.

“Default” means an Event of Default or any event or circumstance specified in Clause 23 (Events of Default) which (with the expiry of a grace period or the giving of any notice specified in Clause 23 (Events of Default)) would be an Event of Default.

“Disposal” means a sale, transfer or other disposal (including by way of lease or loan) by a person of all or part of its assets, whether by one transaction or a series of transactions and whether at the same time or over a period of time.

“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; and

(b)in relation to any other Dollar Swingline Lender, the amount of any Dollar Swingline Commitment transferred to it under this Agreement,

to the extent not cancelled, reduced or transferred by it under this Agreement.

“Dollar Swingline Facility” means the dollar swingline facility forming part of the Facility as described in paragraph (a)(i) 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

5

(b)any bank which has become a Party as a Lender in accordance with Clause 24 (Changes to the Lenders) and to whom a Dollar Swingline Commitment has been transferred,

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 Capital B.V. and any Additional Borrower which is incorporated or established in The Netherlands.

“Dutch Civil Code” means the Dutch Civil Code (Burgerlijk Wetboek).

“Dutch Obligor” means each Obligor incorporated or established in the Netherlands.

“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.

“EURIBOR” means, in relation to any Advance (other than a Euro Swingline Advance) in Euro:

(a)the applicable Screen Rate; or

(b)(if no Screen Rate is available for the period of that Advance) the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Facility Agent at its request quoted by the Reference Banks to leading banks in the European interbank market,

as of the Specified Time on the Quotation Day for the offering of deposits in Euro for a period comparable to the Interest Period of the relevant Advance.

“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 amount of any other Euro Swingline Commitment transferred to it under this Agreement; and

6

(b)in relation to any other Euro Swingline Lender, the amount of any Euro Swingline Commitment transferred to it under this Agreement,

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 (a)(ii) 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 24 (Changes to the Lenders) and to whom a Euro Swingline Commitment has been transferred,

which in each case has not ceased to have a Euro Swingline Commitment.

“Euro Swingline Rate” means, at any time, the aggregate of:

(a)the arithmetic mean of the rates per annum (rounded upwards to four decimal places) as supplied to the Euro Swingline Agent at its request quoted by each Reference Bank to lending banks in the European Interbank market as of 11.00 a.m. Brussels time on the Utilisation Date for that Euro Swingline Advance for the offering of deposits in Euro for a period comparable to the Interest Period for the relevant Euro Swingline Loan and for settlement on that day;

(b)the Margin; and

(c)the Mandatory Cost (if any).

“Event of Default” means any event or circumstance specified as such in Clause 23 (Events of Default).

“Exemption Regulation” means the Dutch exemption regulation dated 26 June 2002 (Vrijstellingsregeling Wtk 1992) (as amended from time to time) as promulgated in connection with the WTK.

“Existing Credit Facility” means the US$1,000,000,000 revolving credit facility made available pursuant to a multicurrency revolving facilities agreement dated 17 November 2003, as amended from time to time.

“Existing Lender” has the meaning given to that term in Clause 24.1 (Assignments and Transfers by the Lenders).

“Facility” means the loan facility made available under this Agreement as described in paragraph (a) of Clause 2.1 (The Facility) incorporating an optional dollar swingline facility, an optional euro swingline facility and an optional SEK swingline facility.

7

“Facility Agent’s Spot Rate of Exchange” means the Facility Agent’s Spot Rate of Exchange 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:

(a)in relation to a Lender (other than in such Lender’s capacity as a Dollar Swingline Lender, a Euro Swingline Lender or a SEK Swingline Lender), the office identified as such opposite such Lender’s name in Part I of Schedule 1 (The Original Lenders) (or, in the case of a transferee, at the end of the Transfer Certificate to which it is a party as transferee) or such other office as it may from time to time select;

(b)in relation to a Dollar Swingline Lender, its office in the United States of America in the same time zone as New York City identified as such opposite such Dollar Swingline Lender’s name in Part II of Schedule 1 (The Dollar Swingline Lenders) (or in the case of a transferee, at the end of the Transfer Certificate to which it is a party as transferee), or such other office in the United States of America in the same time zone as New York City as it may from time to time select;

(c)in relation to a Euro Swingline Lender, its office identified as such opposite such Euro Swingline Lender’s name in Part III of Schedule 1 (The Euro Swingline Lenders) (or in the case of a transferee, at the end of the Transfer Certificate to which it is a party as transferee) or such other office as it may from time to time select; and

(d)in relation to a SEK Swingline Lender, its office identified as such opposite such SEK Swingline Lender’s name in Part IV of Schedule 1 (The SEK Swingline Lenders) (or in the case of a transferee, at the end of the Transfer Certificate to which it is a party as transferee) or such other office as it may from time to time select.

“Federal Funds Effective Rate” shall mean, for any day, the weighted average of the rates on overnight federal funds transactions with members of the United States Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for the day for such transactions received by the applicable Agent from three federal funds brokers of recognised standing selected by it.

“Fee Letter” means the fees letter dated on or around the date of this Agreement from the Mandated Lead Arrangers to ABB, the agency fees letter from the Facility Agent to ABB and the swingline agency fees letter dated on or around the date of this Agreement from the SEK Swingline Agent to ABB setting out the fees referred to in Clause 12 (Fees).

8

“Finance Document” means this Agreement, any Fee Letter, any Accession Letter, any Resignation Letter, 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.

“GAAP” means, in relation to a company, generally accepted accounting principles in its jurisdiction of incorporation or the U.S.

“Group” means ABB and its Subsidiaries and “Group Company” means any one of them.

“Guarantors” means each of the Original Guarantors and each Additional Guarantor, provided that such company has not been released from its rights and obligations hereunder in accordance with Clause 25.6 (Resignation of a Guarantor).

“Guarantor Accession Letter” means a letter substantially in the form set out in Schedule 7 (Form of Accession Letter).

“Holding Company” means, in relation to a company or corporation, any other company or corporation in respect of which it is a Subsidiary.

“IBOR” means, as appropriate, LIBOR, STIBOR, or EURIBOR.

“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;

(c)any acceptance credit, bill discounting, note purchase, factoring or documentary credit facility (or dematerialised equivalent);

(d)any lease required under GAAP 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;

(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

9

(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 (g) above.

“Information Memorandum” means the document concerning the Group prepared by ABB in relation to the Facility and distributed to selected banks prior to the date of this Agreement.

“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 9.3 (Default interest).

“Investment Grade Rating” means the Credit Rating of ABB is either:

(a)BBB- (or higher) and Baa3 (or higher) from both S&P and Moody’s; or

(b)either BBB (or higher) from S&P or Baa2 (or higher) from Moody’s.

“Lender” means:

(a)any Original Lender; and

(b)any bank which has become a Party as a Lender in accordance with Clause 24 (Changes to the Lenders),

which in each case has not ceased to be a Party in accordance with the terms of this Agreement.

“LIBOR” means, in relation to any Advance (other than an Advance in Euro or a Swingline Advance):

(a)the applicable Screen Rate; or

(b)(if no Screen Rate is available for the currency or period of that Advance) the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Facility Agent at its request quoted by the Reference Banks to leading banks in the London interbank market,

as of the Specified Time on the Quotation Day for the offering of deposits in the currency of that Advance and for a period comparable to the Interest Period for that Advance.

“Majority Lenders” means a Lender or Lenders:

(a)whose share in the outstanding Advances then aggregate more than 66^2/3 % of the aggregate of all the outstanding Advances;

(b)if there is no Advance then outstanding, whose Commitments aggregate more than 66^2/3 % of the Total Commitments; or

10

(c)if there is no Advance then outstanding and the Total Commitments have been reduced to zero, whose Commitments aggregate more than 66^2/3 % of the Total Commitments immediately before the reduction.

“Mandatory Cost” means the percentage rate per annum calculated by the Facility Agent in accordance with Schedule 9 (Mandatory Cost).

“Margin” means, at any time in relation to an Advance (other than a Dollar Swingline Advance) the rate per annum computed in accordance with the table set out in Schedule 4 (The Margin) provided that:

(a)on any day that ABB has Credit Ratings from S&P and Moody’s which are divergent from each other, the applicable rate per annum for such day shall be the average of the rates applicable to the two Credit Ratings;

(b)on any day that only one of S&P or Moody’s assigns a Credit Rating to ABB, the applicable rate per annum for such day shall be the rate per annum for that Credit Rating; and

(c)on any day that neither S&P nor Moody’s assigns a Credit Rating to ABB or if an Event of Default has occurred that is continuing, the applicable rate for such day shall be 70 basis points per annum.

“Material Adverse Effect” means a material adverse effect on the ability of the Obligors (taken as a whole) to (i) perform their payment obligations under the Finance Documents or (ii) comply with their financial covenant obligations under this Agreement.

“Material Subsidiary” shall mean:

(a)as at the date of this Agreement, each Borrower and any Subsidiary of ABB that is listed in Schedule 10 (Material Subsidiaries); and

(b)at any time thereafter, each Borrower and any Subsidiary of ABB that:

(i)is the holding company of a country (and not a region) that, together with its Subsidiaries, has combined third-party revenues or assets (from non-affiliated parties), prepared in accordance with accounting principles generally accepted in the United States, in excess of 5 per cent. of the consolidated revenues or consolidated total assets of the Group for the most recently completed fiscal year;

(ii)on a non-consolidated basis, has combined third-party revenues or assets (from non-affiliated third parties), prepared in accordance with accounting principles generally accepted in the United States, in excess of 10 per cent. of the consolidated revenues or consolidated total assets of the Group for the most recently completed fiscal year; or

(iii)has any notes, bonds, debenture stock, loan stock or other securities outstanding to non-affiliated third parties in respect of which a

11

guarantee, keep-well agreement or other credit support has been provided by ABB,

provided always that for purposes of this definition the term “revenues” and “assets” shall exclude any revenues or, as the case may be, assets attributable to activities classified by ABB as non-core or as discontinued operations.

“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.

The above rules will only apply to the last Month of any period.

“Moody’s” means Moody’s Investor Services, Inc., or any successor thereto.

“New Lender” has the meaning given to that term in Clause 24.1 (Assignment and transfers by the Lenders).

“Obligors” means the Borrowers and the Guarantors.

“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).

“Original Obligors” means the Original Borrowers and the Original Guarantors.

“Original Financial Statements” means:

(a)in relation to ABB, the audited consolidated financial statements of the Group for the financial year ended 31 December 2004;

(b)in relation to each Original Obligor (other than ABB), its audited financial statements for its financial year ended 31 December 2004; and

(c)in relation to any Additional Obligor, its audited financial statements delivered pursuant to Part II of Schedule 2 (Additional Obligor Conditions Precedent).

“Outstandings” means the aggregate of the Base Currency Amount from time to time of each of the Advances.

12

“Participating Member State” means any member state of the European Communities that adopts or has adopted the Euro as its lawful currency in accordance with legislation of the European Union relating to European Monetary Union.

“Party” means a party to this Agreement and includes its successors in title, permitted assigns and permitted transferees.

“PMP” means a professional market party (professionele marktpartij) within the meaning of the Exemption Regulation.

“Policy Guidelines” means the 2005 Dutch Central Bank’s Policy Guidelines (issued in relation to the Exemption Regulation) dated 29 December 2004 (Beleidsregel 2005 kernbegrippen markttoetreding en handhaving Wtk 1992) as amended from time to time.

“Prime Rate” means, in respect of any Dollar Swingline Advance, for any day, the rate of interest per annum determined 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 notified to the relevant Borrower.

“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 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

13

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.

“Qualifying Lender” has the meaning given to such term in Clause 13.1 (Definitions).

“Qualifying Subsidiary” means any Subsidiary of ABB that is incorporated in an Agreed Jurisdiction.

“Quotation Day” means, in relation to any period for which an interest rate is to be determined (other than in respect of a Swingline Advance):

(a)(if the currency is Sterling) the first day of that period;

(b)(if the currency is Euro) two TARGET Days before the first day of that period; or

(c)(for any other currency) two Business Days (which for these purposes only shall mean a day on which banks are open for general business in London) before the first day of that period,

unless market practice differs in the Relevant Interbank Market for a currency, in which case the Quotation Day for that currency will be determined by the Facility Agent in accordance with market practice in the Relevant Interbank Market (and if quotations would normally be given by leading banks in the Relevant Interbank Market on more than one day, the Quotation Day will be the last of those days).

“Reference Banks” means, other than in relation to STIBOR, the principal London offices of Citibank, N.A., Credit Suisse, Barclays Bank PLC and HSBC Bank plc and, in relation to STIBOR, the principal London offices of Nordea Bank AB (publ), Skandinaviska Enskilda Banken AB and Svenska Handesbanken AB, or such other banks as may be appointed by the Facility Agent in consultation with ABB.

“Relevant Interbank Market” means in relation to Euro, the European interbank market and, in relation to any other currency, the London interbank market.

“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 8 (Form of Resignation Letter).

14

“Revolving Advance” means an advance made or to be made under the Facility (including, unless the context otherwise requires, any Dollar Swingline Advance, Euro Swingline Advance or SEK Swingline Advance) or the principal amount outstanding for the time being of that advance.

“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 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

(d)made or to be made to a Borrower for the purpose of refinancing a maturing Advance made to such Borrower.

“S&P” means Standard & Poor’s Ratings Group, a division of The McGraw-Hill Companies or any successor thereto.

“Screen Rate” means:

(a)in relation to LIBOR, the British Bankers Association Interest Settlement Rate for the relevant currency and period;

(b)in relation to EURIBOR, the percentage rate per annum determined by the Banking Federation of the European Union for the relevant period; and

(c)in relation to STIBOR, the percentage rate per annum for the relevant period,

displayed on the appropriate page of the Telerate screen. If the agreed page is replaced or service ceases to be available, the Facility Agent may specify another page or service displaying the appropriate rate after consultation with ABB and the Lenders.

“Securitisations” means:

(a)the securitisation programme established by various Group Companies and Toedi Limited and currently including Credit Suisse, New York Branch as Programme Administrator, such programme being initially established on 19 December 2000;

(b)the securitisation programme established by various Group Companies and arranged by Citibank, N.A. (as operating agent) such programme being initially established on or around 17 December 1999;

(c)any other 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.

15

“Security” means any mortgage, charge, assignment by way of security, pledge, hypothecation, lien and any other security interest of any kind whatsoever.

“SEK Swingline Advance” means any advance made or to be made under the SEK Swingline Facility pursuant to a Utilisation Request under Clause 5.5 (Delivery of a Utilisation Request for a Swingline Advance).

“SEK Swingline Commitment” means:

(a)in relation to an Original Lender which is a SEK Swingline Lender, the amount (in the Base Currency) set opposite its name under the heading “SEK Swingline Commitment” in Part IV of Schedule 1 (The SEK Swingline Lenders) and the amount of any other SEK Swingline Commitment transferred to it under this Agreement; and

(b)in relation to any other SEK Swingline Lender, the amount of any SEK Swingline Commitment transferred to it under this Agreement,

to the extent not cancelled, reduced or transferred by it under this Agreement.

“SEK Swingline Facility” means the SEK swingline facility forming part of the Facility as described in paragraph (a)(iii) of Clause 2.1 (The Facility).

“SEK Swingline Lender” means:

(a)any Original Lender whose name is set out in Part IV of Schedule 1 (The SEK Swingline Lenders); and

(b)any bank which has become a Party as a Lender in accordance with Clause 24 (Changes to the Lenders) and to whom a SEK Swingline Commitment has been transferred,

which in each case has not ceased to have a SEK Swingline Commitment.

“SEK Swingline Rate” means, at any time the aggregate of the applicable:

(a)Margin per annum; and

(b)the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the SEK Swingline Agent at its request by the Reference Banks to leading banks in the European interbank market as of 11.00 a.m. Stockholm time on the Utilisation Date for that SEK Swingline Loan for the offering of deposits in SEK for a period comparable to the Interest Period for the relevant SEK Swingline Loan and for settlement on that day; and

(c)the Mandatory Cost (if any).

“Specified Time” means a time determined in accordance with Schedule 6 (Timetables).

16

“STIBOR” means in relation to any Advance in SEK:

(a)the applicable Screen Rate; or

(b)(if no Screen Rate is available for the relevant currency or the period of that Advance), the arithmetic mean (rounded upward to four decimal places) of the rates, as supplied to the Facility Agent at its request, quoted by the Reference Banks to leading banks in the Stockholm interbank market,

as of the Specified Time on the Quotation Day for the offering of deposits in Swedish Krona for a period comparable to the Interest Period for that Advance.

“Subsidiary” means a subsidiary within the meaning of section 736 of the Companies Act 1985.

“Swingline Advance” means a Dollar Swingline Advance, a Euro Swingline Advance or a SEK Swingline Advance.

“Swingline Agents” means the Dollar Swingline Agent, the Euro Swingline Agent and the SEK Swingline Agent, and “Swingline Agent” means any of them.

“Swingline Lender” means a Dollar Swingline Lender, a Euro Swingline Lender or a SEK Swingline Lender.

“Swingline Rate” means the Dollar Swingline Rate, the Euro Swingline Rate or the SEK Swingline Rate as the context may require.

“TARGET” means Trans-European Automated Real-time Gross Settlement Express Transfer payment system.

“TARGET Day” means any day on which TARGET is open for the settlement of payments in Euro.

“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).

“Taxes Act” means the Income and Corporation Taxes Act 1988.

“Termination Date” means 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.

“Total Swingline Facility Amount” means the higher of (a) the aggregate Dollar Swingline Commitments, (b) the aggregate Euro Swingline Commitments and (c) the aggregate SEK Swingline Commitments, being $750,000,000 as at the date of this Agreement.

17

“Transfer Certificate” means a certificate substantially in the form set out in Schedule 5 (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.

“Trigger Date” means the date on which ABB obtains an Investment Grade Rating.

“Unpaid Sum” means any sum due and payable but unpaid by a Borrower under the Finance Documents.

“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.

“Verifiable PMP” means a PMP whose status as such may be determined on the basis of:

(a)its entry in Dutch public register (including on-line registers available on the internet) as referred to in Clauses 1.e.1 through 1.e.5 of the Exemption Regulation; or

(b)a public register published by a regulator of a country as referred to in Clause 1.e.11 of the Exemption Regulation exercising prudential supervision over the PMP to the extent generally accessible via the internet.

“WTK” means the Dutch Act on the Supervision of Credit Institutions 1992 (Wet toezicht kredietwezen 1992) (as amended from time to time).

1.2Construction

(a)Any reference in this Agreement to:

(i)“assets” includes present and future properties, revenues and rights of every description;

(ii)“Barclays Capital” is a reference to Barclays Capital, the investment banking division of Barclays Bank PLC;

(iii)the “European interbank market” means the interbank market for Euro operating in Participating Member States;

18

(iv)a “Finance Document” or any other agreement or instrument is a reference to that Finance Document or other agreement or instrument as amended or novated;

(v)a “person” includes any person, firm, company, corporation, government, state or agency of a state or any association, trust or partnership (whether or not having separate legal personality) or two or more of the foregoing;

(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 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)a provision of law is a reference to that provision as amended or re-enacted; and

(ix)unless a contrary indication appears, a time of day is a reference to London time.

(b)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.

(c)Section, Clause and Schedule headings are for ease of reference only.

(d)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.

(e)A Default is “continuing” if it has not been remedied or waived.

(f)For the avoidance of doubt, if Moody’s or S&P place a Credit Rating on credit watch, that shall not (regardless of outlook) constitute a change in such Credit Rating or be deemed to be no Credit Rating.

1.3Dutch Terms

In this Agreement, where it relates to a Dutch entity, a reference to:

(a)a necessary action to authorise where applicable, includes without limitation:

19

(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 trustee in bankruptcy includes a curator;

(e)an administrator includes a bewindvoerder;

(f)a(n) (administrative) receiver does not include a curator or bewindvoerder; and

(g)an attachment includes a beslag.

1.4Currency 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, “Euro” denotes the single currency unit of the European Union as constituted by the Treaty of Rome (as amended) and “SEK” denotes the lawful currency of Sweden.

1.5Third Party Rights

A person who is not a Party has no right under the Contract (Rights of Third Parties) Act 1999 to enforce any term of this Agreement.

20

SECTION 2

THE FACILITY

2.THE FACILITY

2.1The Facility

(a)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:

(i)a Dollar revolving swingline facility (the “Dollar Swingline Facility”) in a maximum aggregate amount equal to the aggregate Dollar Swingline Commitments;

(ii)a Euro revolving swingline facility (the “Euro Swingline Facility”) in a maximum Base Currency Amount equal to the aggregate Euro Swingline Commitments; and

(iii)a SEK revolving swingline facility (the “SEK Swingline Facility”) in a maximum Base Currency Amount equal to the aggregate SEK Swingline Commitments.

(b)A Borrower shall only be entitled to utilise the Facility for so long as it is a Qualifying Subsidiary.

2.2Lenders’ rights and obligations

(a)The obligations of each Lender under the Finance Documents are several. Failure by a Lender to perform its obligations under the Finance Documents does not affect the obligations of any other Party under the Finance Documents. No Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents.

(b)The rights of each Lender under or in connection with the Finance Documents are separate and independent rights and any debt arising under the Finance Documents to a Lender from any of the Obligors shall be a separate and independent debt.

(c)A Finance Party may, except as otherwise stated in the Finance Documents, separately enforce its rights under the Finance Documents.

2.3Facility 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.

21

(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.

2.4Obligors’ right and obligations hereunder

(a)Each Obligor (other than ABB) by its execution of this Agreement or an Accession Letter irrevocably appoints ABB to act on its behalf as its agent in relation to the Finance Documents (in this capacity, the “Obligors’ 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, in the case of a Borrower, Utilisation Requests), to execute on its behalf any Accession Letter and to make such agreements capable of being given or made by any Obligor notwithstanding that they may affect such Obligor, without further reference to or the consent of such Obligor and (ii) each Finance Party to give any notice, demand or other communication to such Obligor pursuant to the Finance Documents to ABB on its behalf, and in each case such Obligor shall be bound thereby as though such Obligor 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 Obligors’ Agent or given to the Obligors’ Agent under this Agreement, or in connection with this Agreement (whether or not known to any other Obligor and whether occurring before or after such other Obligor became an Obligor under this Agreement) shall be binding for all purposes on all other Obligors as if the other Obligors had expressly made, given or concurred with the same. In the event of any conflict between any notices or other communications of the Obligors’ Agent and any other Obligor, those of the Obligors’ Agent shall prevail.

(c)An Obligors’ 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

3.1Purpose

The Borrowers shall apply all amounts borrowed by it under the Facility for the general corporate purposes of the Group, including, without limitation, back-stop

22

financing for commercial paper facilities of the Group, provided that no Swingline Advance shall be used to refinance another Swingline Advance.

3.2Monitoring

No Finance Party is bound to monitor or verify the application of any amount borrowed pursuant to this Agreement.

4.CONDITIONS OF UTILISATION

4.1Initial 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.

4.2Further 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 19.15 (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.

4.3Conditions relating to Optional Currencies

A currency will constitute an Optional Currency in relation to an Advance if it is SEK or Euro, or it is readily available in the amount required and freely convertible into the Base Currency in the Relevant Interbank Market on the Quotation Day and the Utilisation Date for that Advance provided that there may not at any time be Advances outstanding denominated in more than 5 Optional Currencies.

4.4Maximum 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.

23

SECTION 3

UTILISATION

5.UTILISATION

5.1Delivery 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.

5.2Completion 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).

5.3Currency 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 Revolving 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 Euro50,000,000 and an integral multiple of Euro10,000,000; or

(iii)if the currency selected is SEK, a minimum amount of SEK25,000,000 and an integral multiple of SEK5,000,000; or

(iv)if the currency selected is an Optional Currency (other than SEK or Euro), in such minimum amount and multiple as the Facility Agent and ABB may agree,

or, in any case, the amount of the Available Facility.

24

5.4Lenders’ participation

(a)Subject to the other terms of this Agreement, each Lender shall, on the relevant Utilisation Date, make its participation in each Advance available through its Facility Office.

(b)Subject to Clause 6.2 (Unavailability of a currency), the amount of each Lender’s participation in each Revolving 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 notify each relevant Lender of the amount, currency and the Base Currency Amount of each Advance at the Specified Time.

5.5Delivery of a Utilisation Request for a Swingline Advance

The Borrowers may utilise the Dollar Swingline Facility, the Euro Swingline Facility or the SEK 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.

5.6Completion 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, a Euro Swingline Advance or a SEK 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).

5.7Currency 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) or SEK (in the case of a SEK Swingline Advance).

(b)The amount of the proposed Swingline Advance must be:

(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;

25

(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

(iii)in the case of a SEK Swingline Advance, a minimum of SEK25,000,000 and an integral multiple of SEK5,000,000 or, if less, the Available SEK Swingline Facility.

(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 or, as the case may be, the Base Currency Amount of a proposed SEK Swingline Advance must not, when aggregated with the Base Currency Amount of all outstanding Swingline Advances, exceed the Total Swingline Facility Amount and the Base Currency Amount of a proposed SEK Swingline Advance must not, when aggregated with the Base Currency Amount of all outstanding SEK Swingline Advances, exceed $200,000,000.

5.8Swingline 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), Euro Swingline Lender (in the case of a Euro Swingline Advance) or SEK Swingline Lender (in the case of a SEK Swingline Advance) shall, on the relevant Utilisation Date, make its participation in each Dollar Swingline Advance (or Euro Swingline Advance or SEK Swingline Advance as applicable) available through its Facility Office.

(b)The amount of each Swingline Lender’s participation in each Dollar Swingline Advance, Euro Swingline Advance or SEK 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 or, as the case may be, Available SEK Swingline Commitment to the Available Dollar Swingline Facility or, as the case may be, Available Euro Swingline Facility or as the case may be, Available SEK Swingline Facility immediately prior to making the Dollar Swingline Advance (or Euro Swingline Advance or SEK Swingline Advance, as applicable).

(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.

5.9Automatic Revolving Advance

(a)In the event that a Borrower does not repay a Swingline Advance made to it in full on the last day of its Interest Period, on the Business Day falling 3 Business Days prior to such day, that Borrower shall be deemed to have served a Utilisation Request for a Revolving Advance (not being a Swingline Advance) to be made on such day in the amount and currency of such Swingline Advance and with an Interest Period of 1 week and such Revolving Advance shall be made on such day in accordance with Clause 5.4 (Lenders’

26

participation) and the proceeds thereof applied in repayment of the said Swingline Advance.

(b)Paragraph (a) of Clause 4.2 (Further conditions precedent) shall not apply to any Revolving Advance to which this Clause 5.9 refers.

6.OPTIONAL CURRENCIES

6.1Selection of currency

The relevant Borrower shall select the currency of an Advance in a Utilisation Request.

6.2Unavailability 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, Sterling or SEK) 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 a Revolving Advance in the proposed Optional Currency (other than Euro, Sterling or SEK) would contravene a law or regulation applicable to it,

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 Revolving 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 Revolving Advance that is due to be repaid) and its participation will be treated as a separate Revolving Advance denominated in the Base Currency during that Interest Period.

6.3Notification

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.

27

SECTION 4

REPAYMENT, PREPAYMENT AND CANCELLATION

7.REPAYMENT

7.1Repayment of Revolving Advances

(a)Each Borrower shall repay each Revolving Advance made to it on the last day of its Interest Period.

(b)All Advances must be repaid in full on the Termination Date.

8.PREPAYMENT AND CANCELLATION

8.1Lender 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 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 of that Lender will be immediately cancelled; and

(c)each Borrower shall, to the extent necessary to avoid such unlawfulness, repay that Lender’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).

8.2Borrower 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, together with accrued interest and all other amounts owing by it under the Finance Documents.

8.3Mandatory 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% 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

28

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.

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 Corporate Taxes Act 1988) of that person.

8.4Voluntary 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, the Available Euro Swingline Facility or the Available SEK Swingline Facility. Any cancellation under this Clause 8.4 shall reduce rateably the Commitments, the Dollar Swingline Commitments, the Euro Swingline Commitments or, as the case may be, the SEK Swingline Commitments.

8.5Voluntary Prepayment

A Borrower may, if it gives the Facility Agent not less than 5 Business Days’ (in the case of any Advance other than a Swingline Advance) or 1 Business Day’s (in the case of any Swingline Advance) (or in either case such shorter period as the Majority Lenders may agree) prior notice, 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).

8.6Right of repayment and cancellation in relation to a single Lender

(a)If:

(i)any sum payable to any Lender by ABB or an Obligor is required to be increased under paragraph (c) of Clause 13.2 (Tax gross-up); or

(ii)any Lender claims indemnification from ABB or a Borrower under Clause 13.3 (Tax indemnity) or Clause 14.1 (Increased costs),

then ABB may, whilst the circumstance giving rise to the requirement or indemnification continues, give the Facility Agent notice of cancellation of the Commitment of that Lender and its intention to procure the repayment of that Lender’s participation in the Advances.

(b)On receipt of a notice referred to in paragraph (a) above, the Commitment of that Lender 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 under paragraph (a) above (or, if earlier, the date

29

specified by ABB in that notice), each Borrower to whom an Advance is outstanding shall repay that Lender’s participation in that Advance.

8.7Restrictions

(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.

(d)No Borrower shall repay or prepay all or any part of the Advances or cancel all or any part of the Commitments except at the times and in the manner expressly provided for in this Agreement.

(e)No amount of the Total Commitments 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.

30

SECTION 5

COSTS OF UTILISATION

9.INTEREST

9.1Calculation of interest

(a)The rate of interest on each Advance (other than a Swingline Advance) for each Interest Period is the percentage rate per annum which is the aggregate of the applicable:

(i)Margin;

(ii)IBOR; and

(iii)Mandatory Cost (if any).

(b)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 or (in the case of any SEK Swingline Advance) the SEK Swingline Rate.

9.2Payment of interest

Each Borrower shall pay accrued interest on each Advance made to it on the last day of each Interest Period (and, if the Interest Period is longer than six Months, on the dates falling at six monthly intervals after the first day of the Interest Period).

9.3Default 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 (acting reasonably). Any interest accruing under this Clause 9.3 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.

9.4Notification of rates of interest

The applicable Agent shall promptly notify the Lenders, ABB and the relevant Borrowers of the determination of a rate of interest under this Agreement.

9.5Minimum Interest

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

31

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:

(a)the interest rates set out in and which are calculated in accordance with Clause 9.1 shall constitute minimum interest rates, which, if Swiss withholding tax should apply, shall be adjusted to ensure that any payment of interest due by a Borrower shall be increased to an amount which (after making any deduction of Swiss withholding tax) results in a payment to the Lender of an amount equal to the payment which would have been due had no deduction of Swiss withholding tax been required. For this purpose, the Swiss withholding tax shall be calculated on the full grossed-up interest amount; and

(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.

10.INTEREST PERIODS

(a)The relevant Borrower may select an Interest Period for an Advance in the Utilisation Request on 3 Business Days’ written notice to the Facility Agent from the relevant Borrower.

(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), 1, 2, 3 or 6 Months or any other period of less than 1 Month to end on the Termination Date or any other period agreed between the relevant Borrower and the Facility Agent (acting on the instructions of all the Lenders); or

(ii)in relation to any Swingline Advance, a period not exceeding 5 Business Days.

(c)An Interest Period for an Advance shall not extend beyond the Termination Date.

(d)Each Revolving Advance has one Interest Period only.

11.CHANGES TO THE CALCULATION OF INTEREST

11.1Absence of quotations

Subject to Clause 11.2 (Market disruption), if the applicable IBOR or if applicable, the Euro Swingline Rate or the SEK Swingline Rate is to be determined by reference to the Reference Banks but a Reference Bank does not supply a quotation by the Specified Time on the Quotation Day, the applicable IBOR or the Euro Swingline Rate or the

32

SEK Swingline Rate shall be determined on the basis of the quotations of the remaining Reference Banks.

11.2Market 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 rate per annum which is the sum of:

(i)the Margin;

(ii)the rate notified to the Facility Agent, ABB and the relevant Borrower by that 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; and

(iii)the Mandatory Cost, if any, applicable to that Lender’s participation in the Advance.

(b)In this Agreement “Market Disruption Event” means:

(i)in relation to an Advance (not being a Swingline Advance):

(A)at or about noon on the Quotation Day for the relevant Interest Period the Screen Rate is not available and none or only one of the Reference Banks supplies a rate to the Facility Agent to determine the applicable IBOR for the relevant currency and period; or

(B)before close of business in London on the Quotation Day for the relevant Interest Period, the Facility Agent receives notifications from a Lender or Lenders (whose participations in an Advance exceed 50 per cent. of that Advance) that the cost to it or them of obtaining matching deposits in the Relevant Interbank Market would be in excess of the applicable IBOR; or

(ii)in relation to a Euro Swingline Advance or a SEK Swingline Advance, on the relevant Utilisation Date, none or only one of the Reference Banks supplies a rate to the Facility Agent to determine the Euro Swingline Rate or the SEK Swingline Rate, as the case may be.

11.3Alternative 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.

33

(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.

11.4Break Costs

(a)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.

(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

12.1Commitment 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. per annum 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 amount of that Lender’s Available Commitment immediately before the cancellation became effective.

12.2Utilisation 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)0.05 per cent. per annum for each day that the Total Outstandings are in an amount which is greater than 33¹/₃ per cent. but is less than or equal to 66²/₃ per cent. of the Total Commitments; or

(ii)0.10 per cent. per annum for each day that the Total Outstandings are in an amount greater than 66²/₃ per cent. of the Total Commitments.

(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.

12.3Arrangement Fee

ABB shall pay to the Mandated Lead Arrangers the fees in the amounts and at the times agreed in a Fee Letter.

34

12.4Agency 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.

35

SECTION 6

ADDITIONAL PAYMENT OBLIGATIONS

13.TAX GROSS UP AND INDEMNITIES

13.1Definitions

(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 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; or

(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.

36

“Tax Deduction” means a deduction or withholding for or on account of Tax from a payment under a Finance Document.

“Tax Payment” means an increased payment made by ABB or an Obligor to a Finance Party under Clause 9.5 (Minimum Interest), Clause 13.2 (Tax gross-up) or a payment made by ABB or an Obligor 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.

13.2Tax gross-up

(a)ABB and each Obligor shall make all payments to be made by it without any Tax Deduction, unless a Tax Deduction is required by law.

(b)ABB, an Obligor or a Lender shall promptly upon becoming aware that ABB or an Obligor (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 Obligor.

(c)If a Tax Deduction is required by law to be made by ABB or an Obligor in one of the circumstances set out in paragraph (d) below, the amount of the payment due from ABB or that Obligor 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 the Agent or a Mandated Lead Arranger (on its own behalf);

(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 an Obligor 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 Obligor (as the case

37

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.

(g)Each Finance Party, ABB and the Obligors shall co-operate in completing any procedural formalities necessary for ABB or an Obligor 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 an Obligor complete and deliver to ABB or that Obligor all documentation reasonably required by ABB or that Obligor 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).

13.3Tax indemnity

(a)ABB or the Obligors 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)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;

(ii)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

(iii)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)(iii) 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 (including any sum deemed to be received or receivable) by that Finance Party; or

(iv)which is compensated for by Clause 9.5 (Minimum Interest) or Clause 13.2 (Tax Gross Up) (or would have been so compensated but for an exception to those Clauses).

38

(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.

(d)A Protected Party shall, on receiving a payment from ABB or an Obligor under this Clause 13.3, notify the Facility Agent.

13.4Tax Credit

If ABB or an Obligor 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 Obligor 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 Obligor (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.

13.5Qualifying Lenders

Any Lender which ceases, for any reason, to be a Qualifying Lender shall promptly notify ABB and the relevant Obligor(s) of its change of status.

13.6Stamp taxes

The Borrowers 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 24 (Changes to the Lenders).

13.7Value added tax

(a)All consideration payable under a Finance Document by ABB or the Obligors 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 Obligors to reimburse a Finance Party for any costs or expenses, ABB or the Obligors (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 that Finance Party is entitled to repayment or credit in respect of the VAT.

39

14.INCREASED COSTS

14.1Increased costs

(a)Subject to Clause 14.3 (Exceptions) ABB or the Borrowers 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.

14.2Increased 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).

14.3Exceptions

(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 an Obligor;

(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 24.2 (Conditions of Assignment or Transfer);

40

(iv)compensated for by the payment of the Mandatory Cost;

(v)attributable to the breach by the relevant Finance Party or its Affiliates of any law or regulation; or

(vi)not notified to ABB within 3 months of being incurred.

(b)In this Clause 14.3, a reference to a “Tax Deduction” has the same meaning given to the term in Clause 13.1 (Definitions).

15.OTHER INDEMNITIES

15.1Currency indemnity

(a)If any sum due from ABB or an Obligor 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 Obligors;

(ii)obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,

ABB or that Obligor (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 Obligor 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.

15.2Other indemnities

ABB or the Obligors 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 an Obligor 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

41

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.

15.3Indemnity to the Facility Agent

ABB or the Borrowers 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

16.1Mitigation

(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 (Increased costs) or which would result in any increased amount being payable under this Agreement by reason of a change in the Mandatory Cost or 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.

16.2Limitation of liability

(a)ABB or the Borrowers 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

42

Lender where ABB or a Borrower 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.

17.COSTS AND EXPENSES

17.1Transaction expenses

ABB or the Borrowers shall promptly on demand pay, upon presentation of duly documented evidence thereof, the Agents and the Mandated Lead Arrangers 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.

17.2Amendment costs

If (a) ABB requests an amendment, waiver or consent or (b) an amendment is required pursuant to Clause 29.9 (Change of currency), ABB or the Borrowers 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.

17.3Enforcement costs

ABB or the Borrowers 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 23.11 (Acceleration) in connection with the enforcement of, or the preservation of any rights under, any Finance Document.

17.4FSA and ECB costs

(a)This Clause 17.4 applies if, whether now or in the future, either:

(i)a requirement to pay fees is imposed by the Financial Services Authority under the Fees Rules; or

(ii)a reserve requirement is imposed by the European Central Bank;

which, in either case, is applied to any Lender (and would be applied generally to banks or financial institutions of a similar nature to that Lender) as a consequence of its entering into and/or performing its obligations under this Agreement and/or assuming or maintaining its Commitment under this Agreement and/or making one or more Advances under this Agreement. If, as a result, that Lender’s effective return on its overall capital is reduced, ABB and the Borrowers agree to reimburse that Lender for the amount claimed.

43

(b)In the event that paragraph (a) above applies, each Lender may submit a certificate setting out a calculation of the amount claimed by it (and in the case of an amount claimed as a result of a reserve requirement being imposed by the European Central Bank, certifying that such amount has been reasonably determined) to the Facility Agent within the period (the “Certification Period”) of 10 Business Days after the end of each Relevant Period. The Facility Agent will notify ABB of the amount claimed by that Lender within 5 Business Days after the end of the relevant Certification Period and ABB or the Borrowers shall (absent manifest error in the relevant notice) reimburse that Lender for the amount claimed within 3 Business Days after the date of such notification.

(c)In this Clause 17.4, a “Relevant Period” is, as appropriate:

(i)the period beginning on the date of this Agreement and ending on the 31 December 2005; and

(ii)each subsequent period of six months starting on 31 December 2005 and ending on the Termination Date,

and “Fees Rules” means, as appropriate, either:

(i)the rules on periodic fees contained in the FSA Supervision Manual; or

(ii)such other law or regulations as may be in force from time to time relating to the payment of fees for the acceptance of deposits.

18.GUARANTEE AND INDEMNITY

18.1Guarantee and indemnity

Subject to the provisos and confirmations contained in Clause 18.9 (Confirmations and Restrictions), each Guarantor irrevocably and unconditionally jointly and severally:

(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, that Guarantor shall immediately on demand pay that amount as if it was the principal obligor; and

(c)indemnifies each Finance Party immediately on demand against any cost, loss or liability suffered by that Finance Party if any obligation guaranteed by it is or becomes unenforceable, invalid or illegal. The amount of the cost, loss or liability shall be equal to the amount which that Finance Party would otherwise have been entitled to recover.

44

18.2Continuing guarantee

This guarantee is a continuing guarantee and will extend to the ultimate balance of sums payable by any Obligor under the Finance Documents, regardless of any intermediate payment or discharge in whole or in part.

18.3Reinstatement

If any payment by an Obligor or any discharge given by a Finance Party (whether in respect of the obligations of any Obligor or any security for those obligations or otherwise) is avoided or reduced as a result of insolvency or any similar event:

(a)the liability of each Obligor shall continue as if the payment, discharge, avoidance or reduction had not occurred; and

(b)each Finance Party shall be entitled to recover the value or amount of that security or payment from each Obligor, as if the payment, discharge, avoidance or reduction had not occurred.

18.4Waiver of defences

The obligations of each Guarantor under this Clause 18 will not be affected by an 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 Obligor or other person;

(b)the release of any other Obligor 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 Obligor 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 an Obligor or any other person;

(e)any amendment (however fundamental) or replacement of a Finance Document or any 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.

18.5Immediate recourse

Each 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

45

security or claim payment from any person before claiming from that Guarantor under this Clause 18. This waiver applies irrespective of any law or any provision of a Finance Document to the contrary.

18.6Appropriations

Until all amounts which may be or become payable by the Obligors 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 no Guarantor shall be entitled to the benefit of the same; and

(b)hold in an interest-bearing suspense account any moneys received from any Guarantor or on account of any Guarantor’s liability under this Clause.

18.7Deferral of Guarantors’ rights

Until all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full or the Facility Agent otherwise directs, no Guarantor will exercise any rights which it may have by reason of performance by it of its obligations under the Finance Documents:

(a)to be indemnified by an Obligor;

(b)to claim any contribution from any other guarantor of any Obligor’s obligations under the Finance Documents; and/or

(c)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.

18.8Additional 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.

18.9Confirmations and Restrictions

(a)Any term or provision of this Clause  or any other term in this Agreement or any Finance Document notwithstanding, the maximum aggregate amount of the obligations for which any Guarantor which is incorporated in any state of the United States of America (a “US Guarantor”) shall be liable shall not exceed the maximum amount for which such US Guarantor can be liable without rendering this Agreement or any other Finance Document, as it relates to the US Guarantor, subject to avoidance under applicable law relating to fraudulent conveyance or fraudulent transfer (including section 548 of the Bankruptcy Code of the United States or any applicable provisions of comparable state law) (collectively “Fraudulent Transfer Laws”), in each

46

case after giving effect (a) to all other liabilities of the US Guarantor, contingent or otherwise, that are relevant under such Fraudulent Transfer Laws (specifically excluding, however, any liabilities of the Guarantor in respect of intercompany indebtedness to any Borrower to the extent that such indebtedness would be discharged in an amount equal to the amount paid by the US Guarantor hereunder) and (b) to the value as assets of the US Guarantor (as determined under the applicable provisions of such Fraudulent Transfer Laws) of any rights to subrogation, contribution, reimbursement, indemnity or similar rights held by such US Guarantor pursuant to (i) applicable law or (ii) any other agreement providing for an equitable allocation among the US Guarantor and other Subsidiaries or affiliates of any Borrower of obligations arising under this Agreement or any guarantees of the obligations by such parties.

(b)The obligations and liabilities of each Guarantor (excluding ABB) which is incorporated in Switzerland shall in respect of all present and future conditional and unconditional claims of the Finance Parties against any member of the Group other than that Guarantor and its wholly owned Subsidiaries arising from time to time out of the Finance Documents only be deemed to be undertaken or incurred to the extent and in the maximum amount of that Guarantor’s free reserves available for distribution (being the positive difference between the assets of that Guarantor and the aggregate of all liabilities, the amount of the registered share capital and the mandatory reserves at any given time, all these amounts to be established in accordance with Swiss law), taking into account the deduction of Swiss withholding tax at the rate of 35% (or such other rate in force from time to time), subject to any applicable double taxation treaty, levied on any such reserves made available for distribution.

47

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 other Obligor (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.

19.1Status

(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.

19.2Binding obligations

The obligations expressed to be assumed by it in each Finance Document are, subject to the Reservations, legal, valid, binding and enforceable obligations.

19.3Non-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 and will 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.

19.4Power 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.

19.5Validity and admissibility in evidence

All Authorisations required by ABB and each other Obligor (including, in the case of any Dutch Obligor, 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,

have been obtained or effected and are in full force and effect.

48

19.6Insolvency

Neither it nor any Material Subsidiary (excluding to the extent relevant Combustion Engineering Inc. and ABB Lummus Global Inc.) 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.

19.7No 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.

19.8No misleading information

(a)Any factual information contained in the Information Memorandum was true and accurate in all material respects as at the date of the Information Memorandum.

(b)Nothing has occurred or been omitted from the Information Memorandum and no information has been given or withheld that results in the information contained in the Information Memorandum being untrue or misleading in any material respect as at the date of the Information Memorandum.

19.9Financial 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 during 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 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.

19.10No 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.

49

19.11Pari 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.

19.12No 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 save in relation to asbestos liabilities relating to the business of Combustion Engineering Inc. and ABB Lummus Global Inc.

19.13Environmental 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.

19.14Dutch Borrower Regulatory Compliance

Each Dutch Borrower represents, warrants and agrees that it has the appropriate exemptive reliefs available pursuant to the Exemption Regulation and that it complies with article 4 of the Exemption Regulation including in particular that:

(a)on the date of this Agreement each Dutch Borrower has verified, to the extent reasonably possible, that each Original Lender qualifies as a PMP in accordance with the Policy Guidelines; and

(b)if on the date on which a New Lender becomes a party to this Agreement, it is a requirement of Dutch law that it is a PMP and that each Dutch Borrower must verify its PMP status in accordance with the Policy Guidelines, on such date each Dutch Borrower has verified that such New Lender qualifies as a PMP in accordance with the Policy Guidelines.

Each Lender represents and warrants to each Obligor on the date of this Agreement that it is a PMP and each New Lender to whom a Lender assigns or transfers any or all of its rights under this Agreement (if on the date such assignment or transfer becomes effective it is a requirement under Dutch law that such New Lender is a PMP) will be deemed to have represented and warranted to each Obligor that on such date it is a PMP.

19.15Repetition

The representations and warranties in Clause 19.1 (Status) to Clause 19.4 (Power and Authority), paragraphs (c) and (d) of Clause 19.9 (Financial Statements) and Clause 19.10 (No Material Adverse Effect) are deemed to be made by each Obligor by reference to the facts and circumstances then existing on the date of each Utilisation Request and the first day of each Interest Period provided that, after the Trigger Date has occurred, the representation and warranty in Clause 19.10 (No Material Adverse Effect) shall not be repeated.

50

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.

20.1Financial statements

(a)ABB and each other Obligor shall supply to the Facility Agent in sufficient copies for all the Lenders, 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 other Obligor), its statutory audited unconsolidated annual financial statements for that financial year.

(b)ABB shall supply to the Facility Agent in sufficient copies for all the Lenders, 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, 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 consolidated financial statements for that quarter.

20.2Requirements 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.

20.3Covenant Compliance Certificate

(a)ABB shall supply to the Facility Agent, semi-annually with each set of audited consolidated financial statements and the relevant set of unaudited consolidated financial statements delivered pursuant to Clause 20.1 (Financial Statements), a Covenant Compliance Certificate setting out (in reasonable detail) computations as to compliance with Clause 21.2 (Financial Condition) as at the date as at which those financial statements were drawn up provided that, at any time on and following the occurrence of the Trigger Date, a Covenant Compliance Certificate will not be required to be delivered in respect of the Financial Covenant set out in paragraph (a) of Clause 21.2 (Financial Condition).

(b)Each Covenant Compliance Certificate shall be signed by two officers of ABB without personal liability.

(c)Each Covenant Compliance Certificate shall be prepared to exclude the effect of changes in US GAAP or the application thereof effective after 30 June 2005.

20.4Information: miscellaneous

ABB shall supply to the Facility Agent (in sufficient copies for all the Lenders, if the Facility Agent so requests):

51

(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 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 Material Subsidiary as any Finance Party (acting through the Facility Agent) may reasonably request.

20.5Notification of default

ABB and each Obligor 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.

20.6Material 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 10 (Material Subsidiaries) is complete and up to date at that time.

20.7Use 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 the Borrower 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

52

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.

(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 the Borrower 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.

20.8“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

53

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 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 Obligor 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 Obligor 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 Obligor

21.FINANCIAL COVENANTS

21.1Financial definitions

In this Clause:

“Asbestos Trust” means the trusts established or to be established for the benefit of present and future claimants in the proceedings relating to Combustion Engineering Inc. and ABB Lummus Global Inc. under Chapter 11 of the US Bankruptcy Code.

“Consolidated Profits before Interest and Tax” means, in respect of any Relevant Period, the earnings before interest and taxes, as reflected in the ABB’s consolidated income statement.

54

“EBITDA” means, for any Relevant Period, Consolidated Profits before Interest and Tax before any amount attributable to the impairment, write-off or amortisation of any intangible assets and impairment, write-off or depreciation of tangible assets adjusted to disregard any impact of gains or losses arising by reason of disposals (such as the sale of businesses, long term assets and equity investments and including the abandonment/liquidation of businesses) occurring after 30 June 2005.

“Marketable Securities and Short-Term Investments” means:

(a)securities issued or unconditionally guaranteed by the government of the United States, Canada, Switzerland, Japan or a member of the European Union or by any agency of such a government having an equivalent credit rating;

(b)commercial paper for which a recognised trading market exists and having a rating of at least A-2 from Standard and Poor’s or at least P-2 from Moody’s or, if unrated, whose issuer has an equivalent rating in respect of its long term debt obligations;

(c)certificates of deposit or bankers’ acceptance issued by, or term deposits made with, any bank or financial institution maturing within one year of being acquired or placed and having a short term unsecured debt rating of at least A-1 from Standard and Poor’s or at least P-1 from Moody’s or (if such investments become accessible no later than three months after the date of acquisition or placement) of at least A-2 from Standard and Poor’s or P-2 from Moody’s;

(d)investments in money-market funds rated at least A-2 from Standard and Poor’s or P-2 from Moody’s or equivalent fund rating;

(e)corporate debt securities listed on a recognized stock exchange and issued by entities rated at least A / A-2; and

(f)any other debt security approved by the Majority Lenders,

(in each case to the extent not reflected as cash and equivalents in ABB’s consolidated balance sheet).

“Net Debt” on a Relevant Date means Total Gross Debt minus Relevant Cash Equivalents.

“Relevant Cash Equivalents” means, as of the last day of the Relevant Period, the aggregate of cash and equivalents (as reflected in ABB’s consolidated balance sheet) and Marketable Securities and Short-Term Investments minus the amount of any such items on such date that:

(a)are designated for application in respect of the Group’s obligations in respect of management incentive, pension and similar arrangements;

55

(b)are designated for application in respect of the Group’s insurance or reinsurance arrangements; or

(c)are subject to a Security Interest in favour of non-Group members (other than a Security Interest arising pursuant to netting, set-off or consolidation or combination of accounts arising pursuant to banking arrangements entered into in the ordinary course of business).

“Relevant Date” means 30 June and 31 December in each financial year of ABB.

“Relevant Period” means each period of twelve months ending on a Relevant Date.

“Total Gross Debt” means the aggregate of short-term borrowings and current maturities on long-term borrowings and long-term borrowings in each case as reflected in ABB’s consolidated balance sheet as of the last day of the Relevant Period plus:

(a)the obligation of members of the Group to make cash payments to the Asbestos Trusts; and

(b)(without double-counting) the aggregate net proceeds of any Securitisation on the last day of the Relevant Period.

“Total Gross Interest” means, in respect of any Relevant Period, the interest expense for financial liabilities and costs of the Securitisations of the Group as reflected in ABB’s consolidated income statement (excluding items considered as other finance expense, such as, but not limited to, any fees, taxes or commissions, foreign exchange gains or losses, gains or losses on marketable securities, gains or losses on derivatives and charges or credits in relation to management incentive plans).

21.2Financial Condition

ABB shall ensure that:

(a)until the occurrence of the Trigger Date, the ratio of EBITDA to Total Gross Interest for each Relevant Period ending on each 30 June and 31 December in any financial year of ABB shall not be less than 3.50:1; and

(b)the ratio of Net Debt to EBITDA for each Relevant Period ending on each 30 June and 31 December in any financial year of ABB shall not be more than 3.00:1.

All calculations will exclude the impact of changes in US GAAP or the application thereof after 30 June 2005.

In relation to the ratio of Net Debt to EBITDA referred to in paragraph (b), if any company or business is sold or acquired by the Group during a Relevant Period, the EBITDA attributable to that company or business shall be (if sold) deducted from EBITDA or (if acquired) added to EBITDA for the Relevant Period, in each case on a pro forma basis assuming the relevant acquisition or disposal to have been made at the start of such Relevant Period, unless ABB (acting reasonably and in good faith)

56

considers such addition or deduction to be immaterial in the context of the relevant calculation.

22.GENERAL UNDERTAKINGS

The undertakings in this Clause 22 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.

22.1Authorisations

Each Obligor shall promptly:

(a)obtain, comply with and do all that is necessary to maintain in full force and effect; and

(b)supply certified copies to the Facility Agent of,

any Authorisation (including, in the case of any Dutch Obligor, 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.

22.2Compliance with laws

Each Obligor shall comply in all respects with all laws (including, without limitation, Environmental Law and ERISA) to which it may be subject, if failure so to comply would have a Material Adverse Effect.

22.3Negative pledge

(a)Neither ABB nor any Obligor 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:

57

(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 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% of the aggregate value of the gross assets of the Group (as set out in ABB’s most recent published annual audited consolidated financial statements).

22.4Disposals

Any Group Company may enter into a Disposal provided that:

58

(a)a Disposal of any asset, company or business that is a core asset or undertaking of the Group (each a “Core Undertaking”) or of any asset of a Core Undertaking shall be made on arm’s length terms; and

(b)upon a Disposal of any asset, company or business (Core Undertaking or otherwise) that generates aggregate net proceeds of more than $500,000,000, two authorised signatories of ABB shall provide a certificate to the Facility Agent confirming projected compliance with Clause 21.2 (Financial Condition) to the end of the then-current Relevant Period (on a pro forma basis assuming the relevant Disposal to have been made at the start of such Relevant Period) provided that projections made for the purposes of such certificate shall be based on assumptions which are, in the reasonable opinion of ABB, fair and reasonable as at the date they were supplied.

22.5Claims 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.

22.6Merger

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 Obligor’s legal, valid, binding and (subject to the Reservations) enforceable obligations.

22.7Acquisitions

Subject to Clause 22.10 (Change of business), any Group Company may acquire any company, business or undertaking or form or enter into any joint venture, partnership, consortium or other like arrangement (a “Joint Venture”) provided that where the aggregate consideration for the acquisition of an undertaking (or, in the case of a Joint Venture, investment by Group Companies) exceeds $500,000,000, two authorised signatories of ABB shall provide a certificate to the Facility Agent confirming projected compliance with Clause 21.2 (Financial Condition) to the end of the then-current Relevant Period (on a pro forma basis assuming the relevant acquisition or investment to have been made at the start of such Relevant Period) provided further that projections made for the purposes of such certificate shall be based on assumptions which are, in the reasonable opinion of ABB, fair and reasonable as at the date they were supplied.

22.8Insurance

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.

59

22.9Restriction on Subsidiary Indebtedness

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;

(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 ABB Credit OY Leases as at the date of this Agreement;

(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;

(g)Indebtedness in respect of bonds and commercial paper issued by members of the Group that are capital markets issuers; and

(h)amounts owed to Combustion Engineering Inc., ABB Lummus Global Inc or any trust established in connection with their Chapter 11 filings or any other Chapter 11 filing or proceedings relating thereto,

of Group Companies which are not Obligors shall not at any time after the date of this Agreement exceed $1,000,000,000.

22.10Change of business

ABB shall procure that no change is made to the businesses of the Group which would result in the core businesses of the Group, taken as a whole, being other than the businesses of power and automation technology.

22.11Financial Guarantees

ABB shall ensure that the maximum potential payments in respect of financial guarantees (as provided for or otherwise noted in the consolidated financial statements of ABB and which at 31 December 2004 represented maximum potential payments of $253,000,000) shall not exceed $500,000,000 at any time.

23.EVENTS OF DEFAULT

Each of the events or circumstances set out in Clauses 23.1 (Non-payment) to 23.10 (Cessation of Business) inclusive is an Event of Default.

23.1Non-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

60

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.

23.2Financial Covenants

Any requirement of Clause 21.2 (Financial Condition) is not satisfied.

23.3Other obligations

An Obligor does not comply with any provision of the Finance Documents (other than those referred to in Clause 23.1 (Non-payment) and Clause 21.2 (Financial Condition)) 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.

23.4Misrepresentation

Any representation or statement made or deemed (by virtue of Clause 19.15 (Repetition)) to be made by ABB or any other Obligor in this Agreement 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 provided that no Event of Default shall occur under this Clause 23.4 by reason of the representation set out in paragraphs (a) or (b) of Clause 19.14 (Dutch Obligor Regulatory Compliance) being untrue (but without prejudice to the rights of the Finance Parties under this Agreement other than under this Clause 23.4 or under applicable law and without prejudice to any other Event of Default which may occur by reason of any representation set out in paragraphs (a) or (b) of Clause 19.14 (Dutch Obligor Regulatory Compliance) being untrue in any material respect or otherwise by reason of a Lender not being a PMP).

23.5Cross 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).

61

(e)No Event of Default will occur under this Clause 23.5 if (1) the Indebtedness falling within paragraphs (a) to (d) is Project Finance Indebtedness or intra-Group Indebtedness 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 $50,000,000.

(f)No Event of Default will occur under this Clause 23.5 where the applicable default or relevant circumstances described in paragraphs (a) to (d) above arise as a result of or in connection with any bankruptcy filing under Chapter 11 of the US Bankruptcy Code in respect of ABB Lummus Inc. or Combustion Engineering Inc. or any other related bankruptcy filing under Chapter 11 of the US Bankruptcy Code, or any proceedings relating to any such filing.

23.6Insolvency

(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.

(b)A moratorium is declared in respect of any indebtedness of any Obligor or any Material Subsidiary.

(c)This Clause 23.6 shall not apply to Combustion Engineering Inc. or ABB Lummus Global Inc.

23.7Insolvency 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);

(b)a composition, assignment or arrangement with any creditor of any Obligor or any Material Subsidiary;

(c)the appointment of a liquidator (other than (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) in respect of a solvent liquidation of any Material Subsidiary (other than an Obligor)), receiver, administrator, 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 $50,000,000); or

62

(d)enforcement of any Security over any assets (having an aggregate value of at least $50,000,000) 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 provided that this Clause 23.7 shall not apply to Combustion Engineering Inc. or ABB Lummus Global Inc.

23.8Repudiation

ABB or an Obligor repudiates a Finance Document or evidences in writing an intention to repudiate a Finance Document.

23.9Unlawfulness

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.

23.10Cessation of business

The Group, taken as a whole, ceases or threatens to cease to do business.

23.11Acceleration

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.

63

SECTION 8

CHANGES TO PARTIES

24.CHANGES TO THE LENDERS

24.1Assignments and transfers by the Lenders

Subject to this Clause 24, 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 bank (the “New Lender”).

24.2Conditions 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 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)The consent of ABB to an assignment or transfer must not be withheld solely because the assignment or transfer may result in an increase to the Mandatory Cost.

(d)An assignment or transfer shall be in respect of a Commitment of at least $10,000,000 or, if less, the whole of the Commitment of the relevant assignor or transferor.

(e)An assignment or transfer by a Lender which is also a Swingline Lender of:

(i)its Dollar Swingline Commitment, its Euro Swingline Commitment or its SEK Swingline Commitment shall only be made if there is a simultaneous assignment or transfer of an equal amount of its Commitment; or

(ii)its Commitment shall only be effective if either (i) after such assignment or transfer the aggregate of such Lender’s Dollar Swingline Commitment, Euro Swingline Commitment and SEK Swingline Commitment does not exceed its Commitment or (ii) it simultaneously assigns or transfers an aggregate amount of its Dollar Swingline Commitment, Euro Swingline Commitment and SEK Swingline Commitment equal to the amount of its Commitment to be assigned or transferred.

64

(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 was an Original Lender; and (ii) performance by the Facility Agent of all “know your customer” or other checks relating to any person that it is required to carry out 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 24.5 (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 9.5 (Minimum Interest), Clause 13 (Tax gross-up and indemnities) or Clause 14 (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)For so long as it is a requirement under Dutch law at the time of an assignment or transfer by way of novation that the New Lender qualifies as a PMP, a Lender may only assign or transfer by way of novation all or any of its rights, benefits and obligations hereunder to a New Lender if and to the extent that such new Lender qualifies as a PMP.

(j)For so long as it is a requirement of Dutch law that each Lender is a PMP and that the Dutch Borrower must verify the PMP status of a New Lender, a proposed New Lender which is not a Verifiable PMP shall provide the Dutch Borrower, through the Facility Agent, with information in respect of itself reasonably requested by the Dutch Borrower with a view to enabling the Dutch Borrower to verify its PMP status at least ten Business Days prior to the proposed Transfer Date or the proposed date of assignment in relation to any assignment or transfer pursuant to which it would become a New Lender hereunder.

65

24.3Assignment 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 $1,500.

24.4Limitation 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 Obligor;

(iii)the performance and observance by ABB or any Obligor 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 Obligor 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 Obligor 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 from a New Lender of any of the rights and obligations assigned or transferred under this Clause 24; or

(ii)support any losses directly or indirectly incurred by the New Lender by reason of the non-performance by ABB or any Obligor of its obligations under the Finance Documents or otherwise.

24.5         Procedure for transfer

(a)Subject to the conditions set out in Clause 24.2 (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

66

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.

(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)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 Obligors 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 Obligors 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 Obligor and the New Lender have assumed and/or acquired the same in place of ABB, that Obligor 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”.

24.6         Disclosure of information

Any Lender may disclose to any of its Affiliates and any other person:

(a)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;

(b)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; or

67

(c)to whom, and to the extent that, information is required to be disclosed by any applicable law or regulation,

any information about ABB, any Obligor, the Group and the Finance Documents as that Lender shall consider appropriate if, in relation to paragraphs (a) and (b) above, 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.

25.CHANGES TO THE OBLIGORS

25.1Assignments and transfer by Obligors

Neither ABB nor any Obligor may assign any of its rights or transfer any of its rights or obligations under the Finance Documents.

25.2Additional Borrowers

(a)Subject to compliance with paragraphs (c) and (d) of Clause 20.8 (“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

(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)Delivery of a Borrower Accession Letter constitutes confirmation by the relevant Subsidiary that the representations and warranties in Clause 19.5

68

(Validity and admissibility in evidence) and the representations and warranties deemed to be repeated pursuant to Clause 19.15 (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.

25.3Resignation 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.

25.4Additional Guarantors

(a)Subject to compliance with the provisions of paragraphs (c) and (d) of Clause 20.8 (“Know Your Customer” Checks), ABB may request that any of its wholly owned Subsidiaries become an Additional Guarantor.  That Subsidiary shall become an Additional Guarantor 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 Accession Letter;

(iii)ABB confirms that no Default is continuing or would occur as a result of that Subsidiary becoming an Additional Guarantor; and

(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 Guarantor, each in form and substance reasonably satisfactory to the Facility Agent.

(b)If legal counsel in the jurisdiction of incorporation of the relevant Subsidiary so advise, ABB and the Lenders shall enter into negotiations with a view to agreeing such amendments to Clause 18 (Guarantee and Indemnity) as may be necessary to enable the Subsidiary to become an Additional Guarantor without contravening any applicable laws.

(c)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).

69

25.5Repetition of Representation

Delivery of an 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 19.15 (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.

25.6Resignation of a Guarantor

(a)ABB may request that a Guarantor ceases to be a Guarantor 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 is the case); and

(ii)in the case of an Original Guarantor, all the Lenders have consented to ABB’s request.

70

SECTION 9

THE FINANCE PARTIES

26.ROLE OF THE AGENTS AND THE MANDATED LEAD ARRANGERS

26.1Appointment 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.

(e)The SEK Swingline Agent shall, unless ABB agrees otherwise, act out of an office in Stockholm.

26.2Duties of the Agents

(a)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)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.

(c)The Facility Agent shall promptly notify:

(i)the Lenders of any Default arising under Clause 23.1 (Non-payment); and

(ii)each Swingline Agent of:

(A)any assignments or transfers by a Lender pursuant to Clause 24 (Changes to the Lenders); and

(B)any changes to the Obligors pursuant to Clause 25 (Changes to Obligors).

(d)Each Agent’s duties under the Finance Documents are solely mechanical and administrative in nature.

26.3Role 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.

71

26.4No fiduciary duties

(a)Nothing in this Agreement constitutes an Agent or a Mandated Lead Arranger as a trustee or fiduciary of any other person.

(b)No Agent nor either 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.

26.5Business 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.

26.6Rights and discretions of the Agents

(a)Each Agent may rely on:

(i)any representation, notice or document believed by it to be genuine, correct and appropriately authorised; and

(ii)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.

(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 23.1 (Non-payment)); and

(ii)any right, power, authority or discretion vested in any Party or the Majority Lenders has not been exercised.

(c)Each Agent may engage, pay for and rely on the advice or services of any lawyers, accountants, surveyors or other experts.

(d)Each Agent may act in relation to the Finance Documents through its personnel and agents.

26.7Majority Lenders’ instructions

(a)Unless a contrary indication appears in a Finance Document, each Agent shall (a) act in accordance with any instructions given to it by the Majority Lenders (or, if so instructed by the Majority Lenders, refrain from acting or exercising any right, power, authority or discretion vested in it as Agent) and (b) not be liable for any act (or omission) if it acts (or refrains from taking any action) in accordance with such an instruction of the Majority Lenders.

(b)Unless a contrary indication appears in a Finance Document, any instructions given by the Majority Lenders will be binding on all the Finance Parties.

72

(c)Each Agent may refrain from acting in accordance with the instructions of the Majority Lenders (or, if appropriate, the Lenders) until it has received such security as it may require for any cost, loss or liability (together with any associated VAT) which it may incur in complying with the instructions.

(d)In the absence of instructions from the Majority Lenders, (or, if appropriate, the Lenders) each Agent may act (or refrain from taking action) as it considers to be in the best interest of the Lenders.

(e)No Agent is 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.

26.8         Responsibility for documentation

No Agent nor either Mandated Lead Arranger:

(a)is responsible for the adequacy, accuracy and/or completeness of any information (whether oral or written) supplied by an Agent, a Mandated Lead Arranger, ABB, any Obligor or any other person given in or in connection with any Finance Document or the Information Memorandum; or

(b)is responsible for 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 or in connection with any Finance Document.

26.9Exclusion of liability

(a)Without limiting paragraph (b) below, no Agent will be liable for any action taken by it under or in connection with any Finance Document, unless directly caused by its negligence, wilful default or wilful misconduct.

(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 any “know your customer” or other checks in relation to any person on behalf of any Lender and each Lender confirms to the Facility Agent and the Mandated Lead Arrangers that it is solely

73

responsible for any such checks it is 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.

26.10Lenders’ 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 Obligors pursuant to a Finance Document).

26.11Resignation 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 out of an office in (the “Required Location”):

(i)in the case of the Facility Agent, London;

(ii)in the case of the Dollar Swingline Agent, New York;

(iii)in the case of the Euro Swingline Agent, London; and

(iv)in the case of the SEK Swingline Agent, Stockholm.

(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 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 Required Location.

(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 but shall remain entitled to the benefit of this Clause 26.  Its successor and each of the

74

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)After consultation with ABB, the Majority Lenders may, by notice to an Agent, require it to resign in accordance with paragraph (b) above.  In this event, such Agent shall resign in accordance with paragraph (b) above.

26.12Confidentiality

(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, neither Agent nor either 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.

26.13Relationship with the Lenders

(a)Each Agent may treat each Lender as a Lender, entitled to payments under this Agreement and acting through its Facility Office 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.

(b)Each Lender shall supply each Agent with any information required by such Agent in order to calculate the Mandatory Cost.

26.14Credit 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

75

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 and/or completeness of the Information Memorandum 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 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.

26.15Reference Banks

If a Reference Bank (or, if a Reference Bank is not a Lender, the Lender of which it is an Affiliate) ceases to be a Lender, the Facility Agent shall (in consultation with ABB) appoint another Lender or an Affiliate of a Lender to replace that Reference Bank.

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.

28.SHARING AMONG THE LENDERS

28.1Payments to Lenders

If a Lender (a “Recovering Lender”) receives or recovers any amount from ABB or an Obligor other than in accordance with Clause 29 (Payment mechanics) 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

76

determines may be retained by the Recovering Lender as its share of any payment to be made, in accordance with Clause 29.5 (Partial payments).

28.2Redistribution of payments

The Facility Agent shall treat the Sharing Payment as if it had been paid by ABB or the relevant Obligor (as the case may be) and distribute it between the Finance Parties (other than the Recovering Lender) in accordance with Clause 29.5 (Partial payments).

28.3Recovering Lender’s rights

(a)On a distribution by the Facility Agent under Clause 28.2 (Redistribution of payments), the Recovering Lender will be subrogated to the rights of the Finance Parties which have shared in the redistribution.

(b)If and to the extent that the Recovering Lender is not able to rely on its rights under paragraph (a) above, ABB or the relevant Obligor (as the case may be) shall be liable to the Recovering Lender for a debt equal to the Sharing Payment which is immediately due and payable.

28.4Reversal 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 Lender which has received a share of the relevant Sharing Payment pursuant to Clause 28.2 (Redistribution of payments) 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); and

(b)that Recovering Lender’s rights of subrogation in respect of any reimbursement shall be cancelled and ABB or the relevant Obligor (as the case may be) will be liable to the reimbursing Lender for the amount so reimbursed.

28.5Exceptions

(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 Obligor (as the case may be).

(b)A Recovering Lender is not obliged to share with any other Lender 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

77

practicable having received notice or did not take separate legal or arbitration proceedings.

78

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;

(iii)in relation to payments under the SEK Swingline Facility, the SEK Swingline Agent; and

(iv)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.

29.2Distributions by the Facility Agent

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) 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 Facility 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).

29.3Distributions to the Obligors

An Agent may (with the consent of ABB or the relevant Obligor (as the case may be) or in accordance with Clause 30 (Set-off)) apply any amount received by it for ABB or that Obligor in or towards payment (on the date and in the currency and funds of receipt) of any amount due from ABB or that Obligor (as the case may be) under the Finance Documents or in or towards purchase of any amount of any currency to be so applied.

79

29.4Clawback

(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)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).

(d)For the purposes of paragraph (c) of this Clause 29.4, if a Lender makes its participation available to the Relevant Agent after 3.00 p.m. (London 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.

29.5Partial payments

(a)If an Agent receives a payment that is insufficient to discharge all the amounts then due and payable by ABB or the Obligors under the Finance Documents, 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.

80

(c)Paragraphs (a) and (b) above will override any appropriation made by ABB or any Obligor.

29.6No set-off by Obligors

All payments to be made by ABB or the Obligors under the Finance Documents shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim.

29.7Business 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.

29.8Currency 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 Obligors 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.

(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.

29.9Change 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

81

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 Interbank 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 Obligors 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 Obligors, 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

31.1Communications 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.

31.2Addresses

(a)The address and fax number (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 V (The Original Obligors) of Schedule 1, with a copy to ABB and ABB Capital B.V., Zurich Branch;

(ii)in the case of ABB, that identified in Part V (The Original Obligors) of Schedule 1;

(iii)in the case of an Additional Obligors, that identified in the Borrower Accession Letter relating to that Additional Obligors, with a copy to ABB and ABB Capital B.V., Zurich Branch;

(iv)in the case of ABB Capital B.V., Zurich Branch, that identified in paragraph (b) below;

82

(v)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

(vi)in the case of an Agent, that identified in paragraph (b) below,

or any substitute 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:
	Credit Suisse
	1 Cabot Square
	Canary Wharf
	London E14 4QJ
	Attn:	Loans Agency / Paul Ronchi, Agency department
	Tel:	020 7888 8361 8362
	Fax:	020 7458 8204 / 020 7888 8398
(ii)	the Dollar Swingline Agent:
	Credit Suisse, Cayman Islands Branch
	Eleven Madison Avenue
	New York, NY 10010-3629
	USA
	Attn:		Karl Studer
	Tel:		00 212 325 9163
	Fax:		00 212 325 8326
	E-mail:		karl.studer@csfb.com
(iii)	the Euro Swingline Agent
	Credit Suisse
	1 Cabot Square
	Canary Wharf
	London E14 4QJ
	Attn:	Loans Agency
	Tel:	020 7888 8361 8362
	Fax:	020 7458 8204 / 020 7888 8398

83

(iv)	the SEK Swingline Agent
	Seb Merchant Banking, Skandinaviska Enskilda Banken, Ab (Publ)
	Rissneleden
	110106 40
	Stockholm
	Sweden
	Attn: SEB Merchant Banking, Structured Finance Operations
	Tel: +46 8 763 8166
	Fax: +46 8 6110384
(v)	ABB Capital B.V., Zurich Branch
	Affolternstrasse 44
	PO Box 8131
	CH-8050
	Switzerland
	Attn:	Head of GTO
	Fax:	+41 43 317 7474
	Copy:	Legal Department
	Fax:	+41 43 317 7992

31.3Delivery

(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.

84

31.4Notification of address and fax number

Promptly upon receipt of notification of an address, fax number or change of address or fax number pursuant to Clause 31.2 (Addresses) or changing its own address or fax number, the Facility Agent shall notify the other Parties.

31.5English 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.CALCULATIONS AND CERTIFICATES

32.1Accounts

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.

32.2Certificates 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.

32.3Day 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 Interbank 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

85

provided in this Agreement are cumulative and not exclusive of any rights or remedies provided by law.

35.AMENDMENTS AND WAIVERS

35.1Required 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.

35.2Exceptions

(a)An amendment or waiver that has the effect of changing or which relates to:

(i)the definition of “Majority Lenders” in Clause 1.1 (Definitions);

(ii)an extension to the date of payment of any amount under the Finance Documents;

(iii)a reduction in the Margin or the amount of any payment of principal, interest, fees or commission payable;

(iv)an increase in any Commitment;

(v)any provision which expressly requires the consent of all the Lenders;

(vi)Clause 2.2 (Lenders’ rights and obligations), Clause 4.2 (Further conditions precedent), Clause 24 (Changes to the Lenders), Clause 25 (Changes to the Obligors), Clause 28 (Sharing among the Lenders) or this Clause 35; or

(vii)any change to the Obligors other than in accordance with Clause 25 (Changes to the Obligors),

shall not be made without the prior consent of all the Lenders.

(b)An amendment or waiver which relates to the rights or obligations of any Agent or either Mandated Lead Arranger may not be effected without the consent of such Agent or such Mandated Lead Arranger.

36.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.

86

SECTION 11

GOVERNING LAW AND ENFORCEMENT

37.GOVERNING LAW

This Agreement is governed by English law.

38.ENFORCEMENT

(a)The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement (including a dispute regarding the existence, validity or termination of this Agreement) (a “Dispute”).

(b)The Parties agree that the courts of England are the most appropriate  and convenient courts to settle Disputes and accordingly no Party will argue to the contrary.

(c)This Clause 38 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 Capital 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 Obligor 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 sub-clause (e) ceases to be effective, ABB and each Obligor shall immediately appoint another person in England to accept service of process on its behalf in England.  If ABB or any Obligor 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 Obligor (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.

87

SCHEDULE 1

Part I
The Original Lenders

Name	Facility Office	Commitment ($)
Barclays Bank PLC	5 The North Colonnade Canary Wharf London E14 4BB	120,000,000
BNP Paribas	37 Place Du Marche Saint Honore 75 001 Paris	120,000,000
Citibank, N.A.	Citigroup Centre 25 Canada Square Canary Wharf London E14 5HQ	120,000,000
Commerzbank Aktiengesellschaft, Großkundencenter Region Mitte	Neue Mainzer Landstrasse 33-35 60311 Frankfurt am Main	120,000,000
Credit Suisse	1 Cabot Square Canary Wharf London E14 4QJ	120,000,000
Deutsche Bank Luxembourg S.A.	2, boulevard Konrad Adenauer L-1115 Luxembourg	120,000,000
Dresdner Bank AG, Niederlassung Luxemburg	26, rue du Marché-aux-Herbes L-2097 Luxembourg	120,000,000
HSBC Bank plc	8 Canada Square Canary Wharf London E14 5HQ	120,000,000
HVB Banque Luxembourg Société Anonyme	4, rue Alphonse Weicker L-2721 Luxembourg-Kirchberg	120,000,000
Nordea Bank AB (publ)	International Loan Services, H 352 SE-105 71 Stockholm Sweden	120,000,000
Skandinaviska Enskilda Banken AB (publ)	Rissneleden 110 106 40 Stockholm Sweden	120,000,000
Svenska Handelsbanken AB (publ)	Blasieholmstorg 11 SE-10670 Stockholm Sweden	120,000,000

88

ABN AMRO Bank N.V., Niederlassung Deutschland	Theodor-Heuss-Allee 80 D-60486 Frankfurt Germany	72,500,000
Banco Bilbao Vizcaya Argentaria S.A.	108 Cannon Street London EC4N 6EU	72,500,000
Bank of America, N.A.	5 Canada Square London E14 5AQ	72,500,000
DnB Nor Bank ASA	DnB NOR Bank ASA, KKD Stranden 21, 0021 Oslo	72,500,000
ING Luxembourg S.A.	52 route d’Esch L-2965 Luxembourg	72,500,000
KBC Bank NV Dublin Branch	KBC Bank NV Dublin Branch Sandwith Street Dublin 2	72,500,000
UBS Limited	1, Finsbury Avenue, London EC2M 2PP	72,500,000
Banca Intesa SpA	London Branch, 90 Queen St, London, EC4N 1SA	52,500,000
Total		2,000,000,000

89

Part II
The Dollar Swingline Lenders

Name	Facility Office	Dollar Swingline Commitment ($)
Barclays Bank PLC	200 Cedar Knolls Road,Whippany, New Jersey, 07981,U.S.A	55,500,000
BNP Paribas	French American Banking Corporation PO Box 7589 FDR station, NY 10150	55,500,000
Citibank, N.A.	399 Park Ave 16th floor, NY, NY 10043	55,500,000
Credit Suisse, Cayman Islands Branch	One Madison Avenue New York, NY 10010	55,500,000
Deutsche Bank Luxembourg S.A. c/o Deutsche Bank AG New York	90 Hudson Street New Jersey NJ 07302	55,500,000
Dresdner Bank AG, Niederlassung Luxemburg c/o Dresdner Bank AG New York Branch	1301 Avenue of the Americas, 10th Floor New York, NY 10019	55,500,000
HSBC Bank plc	One HSBC Centre 26th Floor, Buffalo NY 14203	55,500,000
HVB Banque Luxembourg Société Anonyme (acting through HVB New York Branch)	150 East 42nd Street New York, NY 10017	55,500,000
Nordea Bank AB (publ)	Nordea Bank Finland PLC, New York Branch 437 Madison Avenue New York, NY 10022	50,000,000
Skandinaviska Enskilda Banken AB (publ)	245 Park Avenue, 42nd Floor New York, NY 10167	50,000,000
Svenska Handelsbanken, New York Branch	875 Third Avenue NY 10022-7218 New York	50,000,000

90

ABN AMRO Bank N.V.	540 West Madison Street, Suite 2621 Chicago Illinois 60661	26,000,000
Banco Bilbao Vizcaya Argentaria S.A.	1345 Avenue of the Americas 45th Floor, New York N.Y. 10105	26,000,000
Bank of America, N.A.	Bank of America Corporate Centre 101 N. Tryon Street15th Floor Charlotte NC 28255	26,000,000
DnB Nor Bank ASA	200 Park Avenue - 31st Floor New York, NY 10166	26,000,000
KBC Bank NV New York Branch	125 West 55th Street New York NY 10019	26,000,000
UBS Loan Finance LLC	677 Washington Blvd. Stamford, CT 06901 USA	26,000,000
Total		750,000,000

91

Part III
The Euro Swingline Lenders

Name	Facility Office	Euro Swingline Commitment ($)
Barclays Bank PLC	London branch	55,500,000
BNP Paribas	Paris branch	55,500,000
Citibank, N.A.	London branch	55,500,000
Credit Suisse	London branch	55,500,000
Deutsche Bank Luxembourg S.A.	Luxembourg branch	55,500,000
Dresdner Bank AG, Niederlassung Luxemburg	Luxembourg branch	55,500,000
HSBC Bank plc	London branch	55,500,000
HVB Banque Luxembourg Société Anonyme	Luxembourg branch	55,500,000
Nordea Bank AB (publ)	Stockholm branch	50,000,000
Skandinaviska Enskilda Banken AB (publ)	Stockholm branch	50,000,000
Svenska Handelsbanken AB (publ)	Stockholm branch	50,000,000
ABN AMRO Bank N.V., Niederlassung Deutschland	Frankfurt branch	26,000,000
Banco Bilbao Vizcaya Argentaria S.A.	London branch	26,000,000
Bank of America, N.A.	London branch	26,000,000
DnB Nor Bank ASA	Oslo branch	26,000,000
KBC Bank NV Dublin Branch	Dublin branch	26,000,000
UBS Limited	London branch	26,000,000
Total		750,000,000

92

Part IV
The SEK Swingline Lenders

Name	Facility Office	SEK Swingline Commitment ($)
Skandinaviska Enskilda Banken AB (publ)	Rissneleden 110 106 40 Stockholm Sweden	70,000,000
Nordea Bank AB (publ)	International Loan Services, H 352 SE-105 71 Stockholm Sweden	65,000,000
Svenska Handelsbanken AB (publ)	Blasieholmstorg 11 SE-10670 Stockholm Sweden	65,000,000
Total		200,000,000

93

Part V
The Original Obligors

Name of Original Borrower	Address			Jurisdiction of incorporation
ABB Capital B.V.	Burgemeester Haspelslaan 65, 5/F PO Box 74690 Amstelveen NL-1181 NB Netherlands			Netherlands
	Attention:		Managing Director
	Fax:		+ 31 20 445 9844
	Copy: Legal Department
	Fax: + 41 43 317 7992
ABB Asea Brown Boveri Ltd	Affolternstrasse 44 CH-8050 Zurich Switzerland			Switzerland
	Attention:	Deputy CFO
	Fax:	+41 43 317 3929
	Copy: Legal Department
	Fax: +41 43 317 7992

Name of Original Guarantor	Address			Jurisdiction of incorporation
ABB Capital B.V.	Burgemeester Haspelslaan 65, 5/F PO Box 74690 Amstelveen NL-1181 NB Netherlands			Netherlands
	Attention:		Managing Director
	Fax:		+ 31 20 445 9844
	Copy: Legal Department
	Fax: + 41 43 317 7992
ABB Asea Brown Boveri Ltd	Affolternstrasse 44 CH-8050 Zurich Switzerland			Switzerland
	Attention:	Deputy CFO
	Fax:	+41 43 317 3929
	Copy: Legal Department
	Fax: + 41 43 317 7992

94

ABB Ltd	Affolternstrasse 44 CH-8050 Zurich Switzerland		Switzerland
	Attention:	Deputy CFO
	Fax:	+41 43 317 3929
	Copy: Legal Department
	Fax: +41 43 317 7992

95

SCHEDULE 2
CONDITIONS PRECEDENT

Part I
Conditions Precedent

1.Corporate Documents

(a)A copy of the constitutional documents of each Obligor.

(b)A copy of a resolution of the board of directors of each Obligor (if applicable) or, in the case of ABB Capital 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 the board of directors of ABB:

(i)approving the terms of, and the transactions contemplated by, the Finance Documents to which it is a party and resolving that it execute the Finance Documents to which it is a party;

(ii)(other than in relation to ABB) authorising a specified person or persons to execute the Finance Documents to which it is a party on its behalf; and

(iii)authorising a specified person or persons, on its behalf, to sign and/or despatch all documents and notices (including, if relevant, any Utilisation Request) to be signed and/or despatched by it under or in connection with the Finance Documents to which it is a party.

(c)A copy of a shareholders resolutions of ABB Capital B.V.

(d)A copy of a shareholders resolution of ABB Asea Brown Boveri Ltd.

(e)A specimen of the signature of each person authorised by the resolution referred to in paragraph (b) above.

(f)A certificate of each Obligor (signed without personal liability by an authorised signatory of each Obligor) confirming that borrowing or guaranteeing, as appropriate, the Total Commitments would not cause any borrowing, guaranteeing or similar limit binding on that relevant Obligor to be exceeded.

(g)A certificate of an authorised signatory of the relevant Obligor, certifying without personal liability that each copy document relating to it specified in paragraph 1 (a) - (f) 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.

96

2.Legal opinions

(a)A legal opinion of Clifford Chance Limited Liability Partnership, 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 Limited Liability Partnership, 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 Baer & Karrer, legal advisers to the Mandated Lead Arrangers and the Agents in Switzerland in the form approved by the Facility Agent.

3.Other documents and evidence

(a)Evidence that the process agent referred to in paragraph (e) of Clause 38 (Service of process) has accepted its appointment.

(b)Repayment and cancellation in full of the Existing Credit Facility.

(c)The Original Financial Statements of each Obligor.

(d)Evidence that the fees, costs and expenses then due from ABB pursuant to Clause 12 (Fees) and Clause 17 (Costs and expenses) have been paid or will be paid by the first Utilisation Date.

97

Part II
Additional Obligor Conditions Precedent

1.An Accession Letter, duly executed by the Additional Obligor and ABB.

2.A copy of the constitutional documents of the Additional Obligor.

3.A copy of a resolution of the board of directors, or other suitable authority, of the Additional Obligor:

(a)approving the terms of, and the transactions contemplated by, the Accession Letter and the Finance Documents and resolving that it execute the Accession Letter;

(b)authorising a specified person or persons to execute the Accession Letter on its behalf; and

(c)authorising a specified person or persons, on its behalf, to sign and/or despatch all other documents and notices (including any Utilisation Request) to be signed and/or despatched by it under or in connection with the Finance Documents.

4.If required under applicable law, a copy of a resolution of the Additional Obligor as Guarantor stating that the shareholders resolve and approve the entering into, and the terms and conditions of, this Agreement, in particular, in relation to any Additional Obligor incorporated in Switzerland that is acceding as a Guarantor, the guarantee to be provided by such Additional Obligor as Guarantor for the purpose of securing the prompt and complete satisfaction of all present and future conditional and unconditional claims of the Finance Parties against any member of the Group other than such Additional Obligor as Guarantor and its wholly owned subsidiaries arising from time to time out of the Finance Documents.

5.A specimen of the signature of each person authorised by the resolution referred to in paragraph 3 above.

6.A certificate of the Additional Obligor (signed by two duly authorised signatories) confirming that borrowing or guaranteeing (as the case may be) the Total Commitments would not cause any borrowing, guaranteeing or similar limit binding on it to be exceeded.

7.A certificate of an authorised signatory of the Additional Obligor certifying that each copy document listed in this Schedule 2 is correct, complete and in full force and effect as at a date no earlier than the date of the Accession Letter.

8.A copy of any other Authorisation or other document, opinion or assurance which the Facility Agent reasonably considers to be necessary in connection with the entry into and performance of the transactions contemplated by the Accession Letter or for the validity and enforceability of any Finance Document.

98

9.If available, the latest audited financial statements of the Additional Obligor.

10.A legal opinion of Clifford Chance Limited Liability Partnership, legal advisers to the Mandated Lead Arrangers and the Facility Agent in England.

11.If the Additional Obligor is incorporated in a jurisdiction other than England and Wales, a legal opinion of the legal advisers to the Mandated Lead Arrangers and the Facility Agent in the jurisdiction in which the Additional Obligor is incorporated.

12.If the proposed Additional Obligor is incorporated in a jurisdiction other than England and Wales, evidence that the process agent specified in paragraph (e) of Clause 38 (Service of process), if not an Obligor, has accepted its appointment in relation to the proposed Additional Obligor.

99

SCHEDULE 3
UTILISATION REQUEST

From:	[Name of Borrower]
To:	[Agent]
Copied to:	[Facility Agent]*
	Dated:	[•]

Dear Sirs

ABB Ltd - $2,000,000,000 Credit Agreement

dated [•] (the “Credit Agreement”)

1.Words and expressions defined in the Credit Agreement have the same meaning when used herein.

2.We wish to borrow a [Revolving Advance/Dollar Swingline Advance/Euro Swingline Advance/SEK Swingline Advance] on the following terms:

Proposed Utilisation Date:	[•] (or, if that is not a Business Day, the next Business Day)
Currency of Advance:	[•]
Amount:	[•]
Interest Period:	[•]

3.We confirm that each condition specified in Clause 4.2 (Further conditions precedent) is satisfied on the date of this Utilisation Request.

4.The proceeds of this Advance should be credited to [account].

5.This Utilisation Request is irrevocable.

Yours faithfully

authorised signatory for

[Name of Borrower]

100

SCHEDULE 4

THE MARGIN

	Credit Rating
	BBB+/Baa1 or higher	BBB/Baa2	BBB-/Baa3	BB+/Ba1	BB/Ba2 or lower
Margin (basis points per annum)	25	30	40	55	70

101

SCHEDULE 5

FORM OF TRANSFER CERTIFICATE

To:	[•] as Facility Agent
From:	[The Existing Lender] (the “Existing Lender”) and [The New Lender] (the “New Lender”)
	Dated:

ABB Ltd - $2,000,000,000 Credit Agreement

dated [•] (the “Credit Agreement”)

1.Words and expressions defined in the Credit Agreement have the same meaning when used herein.

2.We refer to Clause 24.5 (Procedure for transfer) of the Credit Agreement:

(a)The Existing Lender and the New Lender agree to the Existing Lender and the New Lender transferring by novation all or part of the Existing Lender’s Commitment, rights and obligations referred to in the Schedule in accordance with Clause 24.5 (Procedure for transfer).

(b)The proposed Transfer Date is [•].

(c)The Facility Office and address, fax number and attention details for notices of the New Lender for the purposes of Clause 31.2 (Addresses) are set out in the Schedule.

3.The New Lender expressly acknowledges the limitations on the Existing Lender’s obligations set out in paragraph (c) of Clause 24.4 (Limitation of responsibility of Existing Lenders).

4.The New Lender confirms on the Transfer Date that it is a PMP.(1)

5.This Transfer Certificate is governed by English law.

(1)   Only to be included if it is a requirement under Dutch law at the time of such assignment or transfer that the New Lender qualifies as a PMP.

102

THE SCHEDULE

Commitment/rights and obligations to be transferred

[insert relevant details]

[Facility Office address, fax number and attention details for notices and account details for payments,]

[Existing Lender]	[New Lender]
By:	By:

This Transfer Certificate is accepted by the Facility Agent and the Transfer Date is confirmed as [•].

[Facility Agent]

By:

103

SCHEDULE 6
TIMETABLES

	Advances in Euro	Advances in Dollars	Advances in SEK	Advances in other currencies
Delivery of a duly completed Utilisation Request (Clause 5.1 (Delivery of a Utilisation Request)	10 a.m. London time, 3 Business Days prior to the proposed Utilisation Date	11 a.m. London time, 3 Business Days prior to the proposed Utilisation Date	11 a.m. London time, 3 Business Days prior to the proposed Utilisation Date	11 a.m. London time, 3 Business Days prior to the proposed Utilisation Date
Facility Agent determines (in relation to a Utilisation) the Base Currency Amount of the Advance, if required under Clause 5.4 (Lenders’ participation)	11 a.m. London time, 3 Business Days prior to the proposed Utilisation Date	N/A	11 a.m. London time, 3 Business Day prior to the proposed Utilisation Date	11 a.m. London time, 3 Business Days prior to the proposed Utilisation Date
Facility Agent notifies the Lenders of the Advance in accordance with Clause 5.4 (Lenders’ participation)	Promptly upon receipt from the relevant Borrower	Promptly upon receipt from the relevant Borrower	Promptly upon receipt from the relevant Borrower	Promptly upon receipt from the relevant Borrower
Delivery of a duly completed Utilisation Request (Clause 5.5 (Delivery of a Utilisation Request for a Swingline Advance))	9.30 a.m. London time on the proposed Utilisation Date	11 a.m. New York time on the proposed Utilisation Date	10.00 a.m. Stockholm time on the proposed Utilisation Date	N/A

104

	Advances in Euro	Advances in Dollars	Advances in SEK	Advances in other currencies
Swingline Agent notifies each Swingline Lender of the amount, currency and the Base Currency Amount of each Swingline Advance (paragraph (c) of Clause 5.8 (Swingline Lenders’ Participation))	Promptly upon receipt from the relevant Borrower	Promptly upon receipt from the relevant Borrower	Promptly upon receipt from the relevant Borrower	N/A
Facility Agent receives a notification from a Lender under Clause 6.2 (Unavailability of a currency)	N/A	N/A	N/A	Quotation Day as of 9 a.m. London time
Facility Agent gives notice in accordance with Clause 6.2 (Unavailability of a currency)	N/A	N/A	N/A	Upon receipt of notification from the Lenders
LIBOR or EURIBOR or STIBOR is fixed	Quotation Day as of 11.00 a.m. Brussels time	Quotation Day as of 11.00 a.m. London time	Quotation Day as of 11.00 a.m. Stockholm time	Quotation Day as of 11. 00 a.m. London time

105

SCHEDULE 7

FORM OF ACCESSION LETTER

To:	Credit Suisse as Facility Agent
From: [Subsidiary] and ABB Ltd
Dated: [•]

Dear Sirs

ABB Ltd - $2,000,000,000 Revolving Credit Agreement dated [•]

(the “Agreement”)

1.We refer to the Agreement. This is an Accession Letter. Terms defined in the Agreement have the same meaning in this Accession Letter unless given a different meaning in this Accession Letter.

2.[Subsidiary] agrees to become an [Additional Borrower]/[Additional Guarantor] and to be bound by the terms of the Agreement as an [Additional Borrower]/[Additional Guarantor] pursuant to [Clause 25.2 (Additional Borrowers)]/[Clause 25.4 (Additional Guarantors)] of the Agreement.

3.[Subsidiary] is a company duly incorporated under the laws of [name of relevant jurisdiction].

4.[Subsidiary] is a wholly owned Subsidiary of ABB Ltd.

5.[Subsidiary’s] administrative details are as follows:

Address:

Fax No:

Attention:

6.This Accession Letter is governed by English law.

[This Guarantor Accession Letter is entered into by deed].

ABB Ltd	[Subsidiary]
By:	By:

106

SCHEDULE 8

FORM OF RESIGNATION LETTER

To:	Credit Suisse as Facility Agent
From:	[resigning Obligor] and ABB Ltd
	Dated: [•]

Dear Sirs

ABB Ltd - $2,000,000,000 Revolving Credit Agreement dated [•]

(the “Agreement”)

1.We refer to the Agreement. This is a Resignation Letter. Terms defined in the Agreement have the same meaning in this Resignation Letter unless given a different meaning in this Resignation Letter.

2.Pursuant to [Clause 25.3 (Resignation of a Borrower)]/[Clause 25.6 (Resignation of a Guarantor)], we request that [resigning Obligor] be released from its obligations as a [Borrower]/[Guarantor] under the Agreement.

3.We confirm that:

(a)no Default would result from the acceptance of this request; and

(b)[resigning Obligor] is under no actual or contingent liability under the Agreement.

4.This Resignation Letter is governed by English law.

ABB Ltd	[Subsidiary]
By:	By:

107

SCHEDULE 9

MANDATORY COST

The Mandatory Cost is an addition to the interest rate on an Advance denominated in Sterling to compensate the Lenders for the cost attributable to such Advance resulting from the imposition from time to time under or pursuant to the Bank of England Act 1998 (the “BoE Act”) of a requirement to place non-interest-bearing or Special Deposits (whether interest bearing or not) with the Bank of England calculated by reference to liabilities used to fund the Advance.

The Mandatory Cost shall be the rate determined by the Facility Agent to be equal to the arithmetic mean (rounded upward, if necessary, to 4 decimal places) of the respective rates notified by each Reference Bank to the Facility Agent as the rate resulting from the application (as appropriate) of the following formulae:

XL + S(L - D)

100 - (X + S)

where on the day of application of a formula:

Xis the percentage of Eligible Liabilities (in excess of any stated minimum) by reference to which that Reference Bank is required under or pursuant to the BoE Act to maintain cash ratio deposits with the Bank of England;

Lis LIBOR applicable to the relevant Advance;

Sis the level of interest bearing Special Deposits, expressed as a percentage of Eligible Liabilities, which that Reference Bank is required to maintain by the Bank of England (or other United Kingdom governmental authorities or agencies); and

Dis the percentage rate per annum payable by the Bank of England to that Reference Bank on Special Deposits.

(X, L, S and D shall be expressed in the formula as numbers and not as percentages, e.g. if X = 0.15% and L = 7%, XL will be calculated as 0.15 x 7 and not as 0.15% x 7%. A negative result obtained from subtracting D from L shall be counted as zero.)

If any Reference Bank fails to notify any such rate to the Facility Agent, the Mandatory Cost shall be determined on the basis of the rate(s) notified to the Facility Agent by the remaining Reference Bank(s).

The Mandatory Cost attributable to an Advance or other sum for any period shall be calculated at or about 11.00 a.m. on the first day of that period for the duration of that period.

The determination of the Mandatory Cost in relation to any period shall, in the absence of manifest error, be conclusive and binding on the Parties.

108

If there is any change in circumstance (including the imposition of alternative or additional requirements) which in the reasonable opinion of the Facility Agent renders or will render the above formula (or any element of the formula, or any defined term used in the formula) inappropriate or inapplicable, the Facility Agent (following consultation with ABB and the Majority Lenders) shall be entitled to vary the same by giving notice to the Parties. Any such variation shall, in the absence of manifest error, be conclusive and binding on the Parties and shall apply from the date specified in such notice.

For the purposes of this Schedule, “Eligible Liabilities” and “Special Deposits” have the meanings given to those terms under or pursuant to the BoE Act or by the Bank of England (as may be appropriate), on the day of the application of the formula.

109

SCHEDULE 10

MATERIAL SUBSIDIARIES

Company Name	Jurisdiction	ABB Interest (%)
ABB Finance B.V.	Netherlands	100
ABB Capital B.V.	Netherlands	100
ABB International Finance Limited	Guernsey	100
ABB Holdings Inc.	United States	100
ABB AG	Germany	100
ABB AB	Sweden	100
ABB S.p.A.	Italy	100
ABB Schweiz AG	Switzerland	100
ABB (China) Ltd	China	100
ABB Inc.	United States	100

110

SCHEDULE 11

FORM OF COVENANT COMPLIANCE CERTIFICATE

To:	Credit Suisse as Facility Agent
From:	ABB Ltd
	Dated:

Dear Sirs

ABB Ltd $2,000,000,000 Multicurrency Revolving Credit Agreement dated [•] (the “Agreement”)

We refer to the Agreement. This is a Covenant Compliance Certificate delivered with the consolidated accounts of ABB dated [30 June, 31 December] [200 ] (the “Reference Date”). Terms defined in the Agreement have the same meaning when used in this Covenant Compliance Certificate unless given a different meaning.

We confirm that:

(a)EBITDA: Total Gross Interest

In respect of the Relevant Period ending on the Reference Date:

(i)EBITDA was [•].

(ii)Total Gross Interest was [•].

Therefore the ratio of EBITDA to Total Gross Interest in respect of such period was [•] : [•] and the covenant contained in paragraph (a) of Clause 21.2 (Financial Condition) [has/has not] been complied with.(2)

(b)Net Debt : EBITDA

(i)Net Debt was [•].

(ii)EBITDA was [•].

Therefore the ratio of Net Debt : EBITDA in respect of such period was [•]:[•] and the covenant contained in paragraph (b) of Clause 21.2 (Financial Condition) [has/has not] been complied with.

Officer of ABB Ltd	Officer of ABB Ltd
(without personal liability)	(without personal liability)

(2)   Not required after Trigger Date.

111

SIGNATURES

The Original Borrowers
ABB CAPITAL B.V.
By:	BRIAN VAN REIJN	JOHN KRUM
ABB ASEA BROWN BOVERI LTD
By:	URS ARNOLD	ALEX HALL
The Original Guarantors
ABB LTD
By:	MICHEL DEMARÉ	ALFRED STORCK
ABB CAPITAL B.V.
By:	BRIAN VAN REIJN	JOHN KRUM
ABB ASEA BROWN BOVERI LTD
By:	URS ARNOLD	ALEX HALL

112

The Mandated Lead Arrangers
BARCLAYS CAPITAL
By:	MELISSA BACANI (under power of attorney)
BAYERISCHE HYPO-UND VEREINSBANK AG
By:	MELISSA BACANI (under power of attorney)
BNP PARIBAS
By:	MELISSA BACANI (under power of attorney)
CITIGROUP GLOBAL MARKETS LIMITED
By:	MELISSA BACANI (under power of attorney)
COMMERZBANK AKTIENGESELLSCHAFT
By:	MELISSA BACANI (under power of attorney)
CREDIT SUISSE
By:	MELISSA BACANI (under power of attorney)
DEUTSCHE BANK AG
By:	MELISSA BACANI (under power of attorney)
DRESDNER KLEINWORT WASSERSTEIN (acting through DRESDNER BANK AG,
NIEDERLASSUNG LUXEMBURG)
By:	MELISSA BACANI (under power of attorney)

113

HANDELSBANKEN CAPITAL MARKETS, SVENSKA HANDELSBANKEN AB (publ)
By:	MELISSA BACANI (under power of attorney)
HSBC BANK PLC
By:	MELISSA BACANI (under power of attorney)
NORDEA BANK AB (publ)
By:	MELISSA BACANI (under power of attorney)
SEB MERCHANT BANKING, SKANDINAVISKA ENSKILDA BANKEN, AB (PUBL)
By:	MELISSA BACANI (under power of attorney)

114

The Lenders
For the purpose of the Dutch Banking Act, each Lender expressly confirms the representations given by it in Clause 19.14 (Dutch Obligor Regulatory Compliance).
BARCLAYS BANK PLC
(as Revolving Bank, Dollar Swingline Bank and Euro Swingline Bank)
By:			MELISSA BACANI (under power of attorney)
BNP PARIBAS
(as Revolving Bank, Dollar Swingline Bank and Euro Swingline Bank)
By:			MELISSA BACANI (under power of attorney)
CITIBANK, N.A.
(as Revolving Bank, Dollar Swingline Bank and Euro Swingline Bank)
By:			MELISSA BACANI (under power of attorney)
COMMERZBANK AKTIENGESELLSCHAFT, GROßKUNDENCENTER REGION MITTE
(as Revolving Bank)
By:		MELISSA BACANI (under power of attorney)
CREDIT SUISSE
(as Revolving Bank and Euro Swingline Bank)
By:	MELISSA BACANI (under power of attorney)

115

CREDIT SUISSE, CAYMAN ISLANDS BRANCH
(as Dollar Swingline Bank)
By:	MELISSA BACANI (under power of attorney)
DEUTSCHE BANK LUXEMBOURG S.A.
(as Revolving Bank, Dollar Swingline Bank and Euro Swingline Bank)
By:	MELISSA BACANI (under power of attorney)
DRESDNER BANK AG, NIEDERLASSUNG LUXEMBURG
(as Revolving Bank, Dollar Swingline Bank and Euro Swingline Bank)
By:	MELISSA BACANI (under power of attorney)
HSBC BANK PLC
(as Revolving Bank, Dollar Swingline Bank and Euro Swingline Bank)
By:	MELISSA BACANI (under power of attorney)
HVB BANQUE LUXEMBOURG SOCIÉTÉ ANONYME
(as Revolving Bank and Euro Swingline Bank)
and
HVB BANQUE LUXEMBOURG SOCIÉTÉ ANONYME (ACTING THROUGH HVB NEW YORK BRANCH)
(as Dollar Swingline Bank)
By:	MELISSA BACANI (under power of attorney)

116

NORDEA BANK AB (PUBL)
(as Revolving Bank, Dollar Swingline Bank, Euro Swingline Bank and SEK Swingline Bank)
By:	MELISSA BACANI (under power of attorney)
SKANDINAVISKA ENSKILDA BANKEN AB (PUBL)
(as Revolving Bank, Dollar Swingline Bank, Euro Swingline Bank and SEK Swingline Bank)
By:	MELISSA BACANI (under power of attorney)
SVENSKA HANDELSBANKEN AB (PUBL)
(as Revolving Bank, Dollar Swingline Bank, Euro Swingline Bank and SEK Swingline Bank)
By:	MELISSA BACANI (under power of attorney)
ABN AMRO BANK N.V., NIEDERLASSUNG DEUTSCHLAND
(as Revolving Bank and Euro Swingline Bank)
and
ABN AMRO BANK N.V.
(as Dollar Swingline Bank)
By:	MELISSA BACANI (under power of attorney)
BANCO BILBAO VIZCAYA ARGENTARIA S.A.
(as Revolving Bank, Dollar Swingline Bank and Euro Swingline Bank)
By:	MELISSA BACANI (under power of attorney)

117

BANK OF AMERICA, N.A.
(as Revolving Bank, Dollar Swingline Bank and Euro Swingline Bank)
By:	MELISSA BACANI (under power of attorney)
DNB NOR BANK ASA
(as Revolving Bank, Dollar Swingline Bank and Euro Swingline Bank)
By:	MELISSA BACANI (under power of attorney)
ING LUXEMBOURG S.A.
(as Revolving Bank)
By:	MELISSA BACANI (under power of attorney)
KBC BANK NV DUBLIN BRANCH
(as Revolving Bank and Euro Swingline Bank)
By:	MELISSA BACANI (under power of attorney)
KBC BANK NV NEW YORK BRANCH
(as Dollar Swingline Bank)
By:	MELISSA BACANI (under power of attorney)

118

UBS LIMITED
(as Revolving Bank and Euro Swingline Bank)
By:	MELISSA BACANI (under power of attorney)
UBS LOAN FINANCE LLC
(as Dollar Swingline Bank)
By:	MELISSA BACANI (under power of attorney)
BANCA INTESA SPA.
(as Revolving Bank)
By:	MELISSA BACANI (under power of attorney)

119

The Facility Agent
CREDIT SUISSE
By:	MELISSA BACANI (under power of attorney)
The Dollar Swingline Agent
CREDIT SUISSE, CAYMAN ISLANDS BRANCH
By:	MELISSA BACANI (under power of attorney)
The Euro Swingline Agent
CREDIT SUISSE
By:	MELISSA BACANI (under power of attorney)
The SEK Swingline Agent
SEB MERCHANT BANKING, SKANDINAVISKA ENSKILDA BANKEN, AB (PUBL)
By:	MELISSA BACANI (under power of attorney)

120

EX-4.15

Exhibit 4.15

[Letterhead of ABB]

Mr. Ulrich Spiesshofer
Rebwiesstr. 17A
8702 Zollikon

Dear Mr. Spiesshofer,

This is to confirm the terms and conditions of your employment with ABB Ltd, Zürich (the “Company”). You will start your employment with the Company on November 1, 2005 as the Head of Corporate Development of the ABB Group as well as member of the Executive Committee of the ABB Group.

1.Base Salary. Your base salary will be specified for each year by the Nomination and Compensation Committee of the ABB Group and communicated to you in writing. The base salary is normally revised every year. For 2005 and 2006 it shall amount to CHF 650,000 gross p.a. and the next revision date is March 1, 2007.

The base salary includes a representation allowance of CHF 24’000 p.a. The base salary and representation allowances are paid in 12 equal monthly instalments.

2.Incentive Plan. In addition to the base salary, an incentive plan is part of your remuneration package. The maximum bonus opportunity amounts to 100% of the base salary mentioned under item 1 above. For the period of service from November 1, 2005 to December 31, 2006, 50% of the base salary for the period shall be guaranteed as a minimum bonus.

The incentive plan is revised annually and the incentive plan parameters may be different from one year to another. The applicable incentive for a given year will be specified by the Nomination and Compensation Committee and communicated to you in writing.

3.Performance Share Plan. You are eligible to participate in the Performance Share Plan the Company has for members of the Executive Committee in accordance with the applicable terms and to the extent to be determined by the Nominations and Compensation Committee.

4.Health Insurance. As regards health insurance, you are entitled to a private patient insurance (detailed information about this plan is provided separately). The Company will pay the insurance premiums. Family members are not covered by this health insurance plan.

5.Pension and Related Benefits. Your retirement pension, disability pension, widow’s pension, child/orphan pension and related benefits are subject to the Company’s and its pension funds’ applicable regulations or to such other separate agreement as you and the Company may have entered into or may in the future enter into.

6.Vacation. You are entitled to a vacation of 30 working days per year. Non-used vacation days of the last 5 years are paid out in cash at the end of employment or when entering retirement. Such payment will be calculated including the base salary valid at the date of discontinuation and the average incentive for the two calendar years preceding the year during which termination occurs.

7.School fees – International Schools. If and to the extend your children are eligible under the Company’s Corporate Program for International Schools, the fees for their school will be covered by the Company.

8.Company Car. You are entitled to the use of a Company car according to the Company’s Car Program as from time to time issued and applicable.

9.Termination of Employment. Each party may terminate the present employment relationship with effect at the end of any calendar month by giving 12 months prior written notice.

Under termination of the employment relationship, the Company may elect to release you forthwith from fulfilling your employment obligations. Such release will, however, not affect salary payments payable to you during the 12-months notice period.

In case your employment relationship would be terminated by the Company and if, after expiry of the 12 month notice period, you would not have taken up employment with a third party or commenced an independent, regularly remunerated professional activity, either of which yielding an annual compensation of at least 70% of your last annual compensation with the Company, the Company will continue to pay to you, for a period not exceeding 12 months, a monthly compensation in amounts equal to your total monthly salary during your employment relationship with the Company.

2

Remuneration for the 12 months notice period, as well as for the additional conditional period as described above, will, in addition to the base salary, include an incentive corresponding to the average incentive (or pro-rata average incentive if applicable) for the two years preceding the year during which notice of termination is given.

Retirement in accordance with the applicable regulations or separate agreement (if any) will interrupt any notice period and constitute termination of your employment relationship with the Company without further notice; accordingly, any salary, incentive or other benefits claims relating to the period after the date of such termination, will be fully substituted by the retirement benefits due pursuant to the said regulations or agreement.

10.Non-Competition. You have agreed, and by counter-signing the present Letter-Agreement confirm your agreement, that you shall not, during a period of 1 (one) year after the term of your employment relationship with the Company, operate on your own account, work for or otherwise be directly or indirectly engaged in a business competing with the business activities of the ABB Group. In view of item 8 above, no separate compensation will be due by the Company as consideration for your observance of this non-competition commitment.

11.Employment Regulations. The general Employment Regulations, the Travel and Expense Regulations and Car Leasing Regulations, as from time to time issued and applicable for the Company’s employees are an integral part of your employment conditions and supplement as to matters not specifically addressed in this Letter-Agreement.

12.Title and Membership in the Executive Committee; Other Assignments. It is understood and agreed that the title “Head of Corporate Development” as well as your membership in the Group Executive Committee are essential parts of your employment relationship with the Company and may not be changed or terminated without notice and without monetary or other compensation by the Company’s Board of Directors. Within such employment relationship, the Board Committee may, however, assign to you areas of responsibility which differ from those currently assigned, always provided that such other assignments do not constitute a substantial alteration in the scope or dignity of your work.

13.Place of Work. For the term of employment the primary place of work will be located in Switzerland. If the Company decided to move their global headquarters outside of Switzerland and, thereby, the primary place of work would also move out of Switzerland, it is at your discretion to prematurely terminate your employment with the Company. In this event, the Company

3

would incur the same compensation consequences as specified for premature termination in item 9 above.

14.Supplementary Documents. In addition you receive the following documents, whose modification is subject to special rules:

•Regulations of the ABB Pension Fund

•Regulations concerning the ABB Supplementary Insurance Plan

•Regulations of the “Tödi Foundation”

•Regulations of the Health Insurance Aquilana

•Regulations on Delayed Sickness Benefits Insurance

•Applicable Law and Jurisdiction. This Letter-Agreement shall be subject to Swiss law and the parties hereby submit to the exclusive jurisdiction of the Swiss courts. The venue shall be Zurich, Switzerland.

Please confirm your understanding and acceptance of the above terms and conditions by signing and returning to us a copy of this Letter-Agreement.

Zurich, 5th September, 2005

ABB Ltd

/s/ Fred Kindle	/s/ Gary Steel
Fred Kindle	Gary Steel
Chief Executive Officer	Member of the Executive Committee
	Head of Human Resources
Accepted:	/s/ Ulrich Spiesshofer
Date:	9 September 2005

4

EX-8.1

Exhibit 8.1

20F Company List Reporting period = 2006_03A

Country	Name	Group Interest %
ALGERIA	ABB Power Technologies SpA, Hydra	100.00
ALGERIA	SARPI - Société Algérienne pour la réalisation de projets industriels, Alger	50.00
ANGOLA	ABB Electrica SGPS, Lda., Luanda	100.00
ARGENTINA	ABB S.A., Buenos Aires	100.00
ARGENTINA	ABB Tubío S.A., San Luis	100.00
ARUBA (NL)	ABB Import & Export Services Ltd., Oranjestad/Aruba (NA)	100.00
AUSTRALIA	ABB Australia Pty Limited, Sydney	100.00
AUSTRALIA	Babcock Australia Pty Limited, Sydney, NSW	100.00
AUSTRALIA	ABB Group Investment Management Pty. Ltd., Sydney	100.00
AUSTRALIA	ABB Group Holdings Pty. Ltd., Sydney	100.00
AUSTRALIA	ABB Group Investment LLP, Sydney	100.00
AUSTRIA	ABB AG, Vienna	100.00
BAHRAIN	ABB Technologies W.L.L., Bahrain	100.00
BELGIUM	ABB N.V., Zaventem	100.00
BELGIUM	ABB ACH, Zaventem	66.20
BELGIUM	Asea Brown Boveri Europe Ltd., Brussels	100.00
BELGIUM	Asea Brown Boveri Jumet S.A., Jumet	100.00
BELGIUM	THV GTI-ABB, Zaventem	63.40
BOLIVIA	Asea Brown Boveri Ltda., La Paz	100.00
BOTSWANA	ABB (Pty) Ltd., Gaborone	100.00
BRAZIL	ABB Ltda., Osasco	100.00
BRAZIL	Consorcio Lummus Andromeda, Osasco	50.00
BRAZIL	ABB Lummus Global Ltda., Osasco	100.00
BULGARIA	ABB Bulgaria EOOD, Sofia	100.00
BULGARIA	ABB Avangard AD, Sevlievo	99.81
CAMEROON	Asea Brown Boveri S.A., Douala	100.00
CANADA	ABB Inc., St. Laurent, Quebec	100.00
CANADA	ABB Bomem Inc., Quebec	100.00
CANADA	Combustion Engineering Technology Investment Corp., St.Laurent, Quebec	100.00

CANADA	ABB International Projects Inc., St.Laurent, QC	100.00
CHILE	Asea Brown Boveri S.A., Santiago	100.00
CHILE	CMS, San Francisco de Mostazal	70.00
CHINA	ABB (China) Ltd., Beijing	100.00
CHINA	ABB Engineering (Shanghai) Ltd., Shanghai	100.00
CHINA	ABB Bailey Beijing Controls Co. Ltd., Beijing	51.00
CHINA	ABB Chongqing Transformer Company Ltd., Chongqing City	62.20
CHINA	ABB DATONG Traction Transformers Co., Ltd, Shanxi	50.00
CHINA	ABB Distribution Transformer (Hefei) Limited, Anhui	100.00
CHINA	ABB Xiamen Switchgear Co. Ltd., Xiamen	64.30
CHINA	ABB Electrical Machines Ltd., Shanghai	100.00
CHINA	ABB (China) Engineering Co. Ltd. Xiamen	100.00
CHINA	ABB Huadian High Voltage Switchgear (Xiamen) Company Ltd., Xiamen	51.00
CHINA	ABB Holding Ltd., Hong Kong	100.00
CHINA	ABB Beijing Drive Systems Co. Ltd., Beijing	90.00
CHINA	ABB LV Installation Materials Co. Ltd., Beijing	85.70
CHINA	ABB Xinhui Low Voltage Switchgear Co. Ltd., Xinhui (Guangdong)	80.00
CHINA	ABB Xiamen Low Voltage Equipment Co. Ltd., Xiamen	100.00
CHINA	ABB Lummus Global China Co. Ltd., Shanghai	100.00
CHINA	ABB Shanghai Motors Co. Ltd., Shanghai	75.00
CHINA	ABB Service Ltd., Hong Kong	100.00
CHINA	ABB Shanghai Transformer Co. Ltd., Shanghai	51.00
CHINA	ABB High Voltage Switchgear Co. Ltd., Beijing	60.00
CHINA	ABB Hefei Transformer Co. Ltd., Hefei	100.00

CHINA	ABB Jiangjin Turbo Systems Company Limited, Chongqing	61.00
CHINA	ABB Xi’an Power Capacitor Company Limited, Xi’an	51.00
CHINA	ABB Transmission & Distribuition Automation Equipment (Xiamen Co. Ltd., Fujian)	100.00
CHINA	ABB Xiamen Electrical Controlgear Co. Ltd., Fujian Province	80.00
CHINA	ABB Xi’an Power Rectifiers Company Ltd., Xi’an	62.00
CHINA	ABB Zhongshan Transformer Company Ltd., Zhongshan City	51.00
COLOMBIA	Asea Brown Boveri Ltda., Bogotá	99.99
COTE D’IVOIRE	ABB Technology SA, Abidjan	99.00
CROATIA	ABB Ltd., Zagreb	100.00
CYPRUS	ABB Lummus Global Cyprus LTD., Nicosia	100.00
CZECH REPUBLIC	ABB s.r.o., Prague	100.00
CZECH REPUBLIC	ABB Lummus Global s.r.o., Brno	100.00
DENMARK	ABB A/S, Skovlunde	100.00
ECUADOR	Asea Brown Boveri S.A., Quito	96.87
EGYPT	Asea Brown Boveri S.A.E., Cairo	100.00
EGYPT	ABB Arab Contractors for Construction, Heliopolis	99.75
EGYPT	ABB Arab S.A.E., Cairo	80.00
EGYPT	ABB Automation, Industries and Petrochemical - AIPC - S.A.E., Heliopolis	100.00
EGYPT	ABB Group Process Center S.A.E., Cairo	100.00
EGYPT	ABB High Voltage Co. S.A.E., Heliopolis/Cairo	100.00
EGYPT	ABB Metals & Plastics Manufact. Co. SAE, 10th of Ramadan City	80.00
EGYPT	ABB Petroleum Technology, Cairo	100.00
EGYPT	ABB SUSA Egypt LLC, Maadi	100.00
EGYPT	ABB Turbochargers S.A.E., Suez	100.00
EGYPT	ABB Transformers S.A.E., El-Nozha El-Gedida	65.00
EL SALVADOR	ABB S.A. de CV, San Salvador	100.00

ESTONIA	ABB AS, Tallinn	100.00
FINLAND	ABB Oy, Helsinki	100.00
FINLAND	ABB Sähkörinne Kiinteistö Oy, Helsinki	100.00
FRANCE	ABB S.A., Rueil-Malmaison	100.00
FRANCE	ABB Business Services, Rueil-Malmaison	100.00
FRANCE	Cogelub, Persan	51.00
FRANCE	L’Ebenoid, Villeurbanne	100.00
FRANCE	ABB Entrelec SAS, Villeurbanne	100.00
FRANCE	Soulé Protection Surtensions, Villeurbanne	98.94
FRANCE	ABB Lummus Global SarL., Rueil-Malmaison	100.00
FRANCE	ABB MC, St Ouen l’Aumone	100.00
FRANCE	ABB Process Industrie, Aix les Bains	100.00
FRANCE	Striebel & John France S.A.R.L., Wesserling	51.00
GERMANY	ABB Automatisierungsanlagen Cottbus GmbH, Cottbus	100.00
GERMANY	ABB Airport Technologies GmbH, Mannheim	100.00
GERMANY	ABB AG, Mannheim	100.00
GERMANY	ABB Automation Products GmbH, Ladenburg	100.00
GERMANY	ABB Stotz-Kontakt/Striebel & John Vertriebs-GmbH, Sasbach	75.50
GERMANY	ABB Automation GmbH, Mannheim	100.00
GERMANY	ABB Automation Beteiligungs GmbH, Mannheim	100.00
GERMANY	ABB Beteiligungs-Management GmbH, Mannheim	100.00
GERMANY	Busch-Jaeger Elektro GmbH, Mannheim/Lüdenscheid	100.00
GERMANY	ABB Bauprojektmanagement GmbH, Mannheim	100.00
GERMANY	ABB Beteiligungs- und Verwaltungsges. mbH, Mannheim	100.00
GERMANY	ABB Engineering and Consulting GmbH, Wiesbaden	100.00
GERMANY	Elektroinstallation Annaberg GmbH, Annaberg-Buchholz	100.00

GERMANY	ABB Grundbesitz GmbH, Mannheim	100.00
GERMANY	ABB Grundbesitz Berlin GmbH & Co. Objekte Berlin OHG, Berlin	100.00
GERMANY	ABB Gebäudetechnik AG, Mannheim	100.00
GERMANY	H&B Grundstücksverwaltungs GmbH, Mannheim	100.00
GERMANY	Hartmann & Braun GmbH & Co. KG, Eschborn	100.00
GERMANY	JLEC Power Ventures GmbH, Mannheim	100.00
GERMANY	Komposit-Risikoberatungs- und Versicherungsvermittlungs-GmbH, Heidelberg	100.00
GERMANY	ABB Logistics Center Europe GmbH, Menden	100.00
GERMANY	ABB Lummus Global GmbH, Wiesbaden	100.00
GERMANY	ABB New Ventures GmbH, Essen	100.00
GERMANY	ABB Patent GmbH, Mannheim	100.00
GERMANY	Pucaro Elektro-Isolierstoffe GmbH, Roigheim	100.00
GERMANY	ABB Service GmbH Bobingen, Bobingen	100.00
GERMANY	ABB Stotz-Kontakt GmbH, Heidelberg	100.00
GERMANY	Striebel & John GmbH & Co. KG, Sasbach-Obersasbach	51.00
GERMANY	Striebel Vermögensverwaltungs-GmbH, Sasbach-Obersasbach	51.00
GERMANY	ABB Training Center GmbH, Mannheim	100.00
GERMANY	ABB Technologie GmbH, Mannheim	100.00
GERMANY	ABB Wirtschaftsbetriebe GmbH, Mannheim	100.00
GREECE	Asea Brown Boveri S.A., Metamorphossis Attica	100.00
GREECE	Wind Park of Rhodes SA, Rhodes	90.00
GUATEMALA	ABB Turbocharger Servicios, S.A., Amatitlan	100.00
HONG KONG	ABB (Hong Kong) Ltd., Hong Kong	100.00
HONG KONG	ABB Asia Pacific Ltd., Hong Kong	100.00
HONG KONG	ABB Asia Pacific Services Ltd., Hong Kong	100.00

HONG KONG	Industrial and Building Systems (H.K.) Limited, Hong Kong	100.00
HONG KONG	ABB Turbo Systems (Hong Kong) Limited	100.00
HUNGARY	ABB Engineering Trading and Service Ltd., Budapest	100.00
INDIA	ABB Limited, Bangalore	52.11
INDIA	ABB Corporate Research Limited, Bangalore	100.00
INDIA	ABB Holdings (South Asia) Ltd., Bangalore	100.00
INDONESIA	PT ABB Bailey, Jakarta	100.00
INDONESIA	PT ABB Installation Materials, Jakarta	100.00
INDONESIA	PT ABB Sakti Industri, Jakarta	51.00
INDONESIA	PT ABB Transmission and Distribution, Jakarta	60.00
IRAN, ISLAMIC REPUBLIC OF	ABB (P.J.S.C.), Teheran	100.00
IRELAND	ABB Ltd, Dublin	100.00
IRELAND	ABB Holdings Ireland Ltd., Dublin	100.00
IRELAND	Rialto Cables & Plastics Ltd., Dublin	100.00
IRELAND	Wessel Industries Holdings Ltd., Dublin	100.00
ISRAEL	ABB Technologies Ltd., Tirat Carmel	99.99
ITALY	ABB S.p.A., Milan	100.00
ITALY	ABB Power Technologies S.p.A., Milano	100.00
ITALY	ABB SACE S.p.A., Sesto S. Giovanni (MI)	100.00
ITALY	ABB Environment Service Srl., Milan	100.00
ITALY	ABB Corporate Administration & Properties S.p.A., Milan	100.00
ITALY	Consorzio Snamprogetti - ABB LG Chemicals, Milan	50.00
ITALY	ABB Estense Service S.p.A., Ferrara	80.00
ITALY	PR.ENER.CA Ceresio S.r.l., Milan	100.00
ITALY	Consorzio Safe Energy, Sesto San Giovanni (MI)	96.18
ITALY	ABB Process Solutions & Services SPA, Milan	100.00
ITALY	Telecogen s.r.l., Bussolengo	100.00
ITALY	ABB Energy Automation S.p.A., Milan	100.00

ITALY	ABB Group Service Center srl., Milano	100.00
JAPAN	ABB K.K., Tokyo	100.00
JORDAN	ABB Ltd. Jordan, Amman	100.00
JORDAN	ABB Near East Trading Ltd., Amman	95.00
KAZAKHSTAN	ABB Ltd., Almaty	100.00
KAZAKHSTAN	Energoinvestproekt JV LLP, Almaty	96.40
KAZAKHSTAN	CJSC Energia Kazakh Scientific Research Institute of Energy, Almaty	89.24
KENYA	Asea Brown Boveri Ltd., Nairobi	100.00
KOREA, REPUBLIC OF	ABB Ltd., Seoul	100.00
KUWAIT	ABB Engg. Technologies Co. (KSCC), Safat	49.00
LATVIA	ABB SIA, Riga	100.00
LEBANON	ABB Electrical Co. S.A.L., Beirut	67.00
LITHUANIA	ABB UAB, Vilnius	100.00
LUXEMBOURG	ABB S.A., Leudelange	100.00
MALAYSIA	ABB Holdings Sdn. Bhd., Subang Jaya	100.00
MALAYSIA	ABB Industrial and Building Syst. Sdn. Bhd., Subang Jaya	100.00
MALAYSIA	Komposit Asia Pacific Limited, Labuan	100.00
MALAYSIA	ABB Malaysia Sdn Bhd, Subang Jaya	100.00
MALAYSIA	ABB Manufacturing Sdn. Bhd., Subang Jaya	49.00
MALAYSIA	ABB Transmission and Distribution Sdn. Bhd., Subang Jaya	66.00
MALI	Asea Brown Boveri Mali, Bamako	100.00
MALTA	ABB Lummus Malta Limited, Floriana	100.00
MAURITIUS	Asea Brown Boveri Ltd., Port Louis	51.00
MAURITIUS	ABB International Holdings Ltd., Port Louis	100.00
MAURITIUS	ABB Lummus Crest Mauritius, Port Louis	100.00
MEXICO	Asea Brown Boveri S.A. de C.V., Tlalnepantla	100.00
MEXICO	Entrelec SA de CV, Nuevo Leon	100.00
MEXICO	ABB Mexico S.A. de C.V., Tlalnepantla	100.00
MOROCCO	Asea Brown Boveri S.A., Casablanca	100.00
MOZAMBIQUE	ABB Tecnel Limitada, Maputo	60.00
NAMIBIA	Asea Brown Boveri (Pty) Ltd., Windhoek	100.00

NETHERLANDS	ABB BV, Rotterdam	100.00
NETHERLANDS	ABB Holdings BV, Amsterdam	100.00
NETHERLANDS	ABB Capital, B.V., Amsterdam	100.00
NETHERLANDS	ABB Equity BV, Amsterdam	100.00
NETHERLANDS	ABB Equity Ventures B.V., Amsterdam	100.00
NETHERLANDS	ABB Finance B.V., Amsterdam	100.00
NETHERLANDS	ABB Power Investment (India) B.V., Amsterdam	100.00
NETHERLANDS	ABB Lummus Global B.V., The Hague	100.00
NETHERLANDS	ABB Lummus Global Technology B.V., The Hague	100.00
NETHERLANDS	ABB Lummus Heat Transfer B.V., The Hague	100.00
NETHERLANDS	Novolen Technology Holdings, C.V., The Hague	82.00
NETHERLANDS	ABB Oil & Gas Europe B.V., The Hague	100.00
NETHERLANDS	ABB New Ventures B.V., Amstelveen	100.00
NETHERLANDS	ABB Equity Ventures Projects B.V., Amsterdam	100.00
NETHERLANDS	ABB Payment Services B.V., Amstelveen	100.00
NETHERLANDS	Vetco Overseas N.V., Curacao	100.00
NETHERLANDS	Luwoco Lummus Worldwide Contracting (Netherlands) B.V., The Hague	100.00
NEW ZEALAND	ABB Limited, Auckland	100.00
NEW ZEALAND	ABB Maintenance Services Limited, Auckland	100.00
NIGERIA	ABBNG Limited, Abuja	60.00
NIGERIA	Vetco Gray Nigeria Limited, Port Harcourt	65.00
NORWAY	ABB Holding AS, Billingstad	100.00
NORWAY	ABB ATMA Robotics, Bryne (non legal entity)	100.00
NORWAY	Bergerveien 12 ANS, Oslo	100.00
NORWAY	Engrossenteret Eiendom AS, Billingstad	100.00
NORWAY	Nordisk Eiendomsforvaltning AS, Billingstad	100.00
NORWAY	ABB ATPA Turbo, Olso (non legal entity)	100.00
NORWAY	ABB Telexp AS, Bergen	100.00
OMAN	ABB LLC, Al Hamriya	65.00

PAKISTAN	ABB (Pvt) Ltd., Lahore	100.00
PANAMA	ABB S.A., Panama	100.00
PAPUA NEW GUINEA	ABB James Watt (PNG) Limited, Regents Park, NSW	100.00
PERU	Asea Brown Boveri S.A., Lima	88.12
PHILIPPINES	Asea Brown Boveri Inc., Paranaque, Metro Manila	100.00
POLAND	ABB Sp. zo.o., Warsaw	96.04
POLAND	Entrelec Polzka Sp. zo.o., Leborska	100.00
POLAND	ABB Instal Sp. zo.o., Wroclaw	100.00
POLAND	ABB Zamech Gazpetro Sp. zo.o., Elblag	100.00
POLAND	ABB Zamech Marine Sp. zo.o., Elblag	100.00
PORTUGAL	ABB S.G.P.S, S.A., Amadora	100.00
PORTUGAL	ABB Stotz Kontakt Eléctrica, Unipessoal, Lda., Porto	100.00
PORTUGAL	ABB (Asea Brown Boveri) S.A., Amadora	100.00
PORTUGAL	SMM - Sociedade de Montagens Metalomecanicas S.A., Amadora	100.00
PORTUGAL	SMM-UM-Sociedade de Montagens Metalomecanicas SA, Amadora	100.00
QATAR	ABB Qatar LLC., Doha	49.00
ROMANIA	ABB SRL, Bucharest	100.00
RUSSIAN FEDERATION	Asea Brown Boveri Ltd., Moscow	100.00
RUSSIAN FEDERATION	ABB Communications and Information Systems Ltd., Moscow	100.00
RUSSIAN FEDERATION	ABB Electroengineering Ltd., Moscow	100.00
RUSSIAN FEDERATION	ABB Energosvyaz LLC, Moscow	100.00
RUSSIAN FEDERATION	ABB Industrial and Building Systems Ltd., Moscow	100.00
RUSSIAN FEDERATION	ABB Moskabel Ltd., Moscow	100.00
RUSSIAN FEDERATION	000 ABB Lummus Global, Moscow	100.00
RUSSIAN FEDERATION	ABB Automation LLC, Moscow	76.20
SAUDI ARABIA	ABB Contracting Company Ltd., Riyadh	65.00
SAUDI ARABIA	ABB Electrical Industries Ltd., Riyadh	65.00
SAUDI ARABIA	ABB Automation Co. Ltd., Riyadh	65.00
SAUDI ARABIA	Lummus Alireza Ltd. Co., Saudi Arabia	51.00

SAUDI ARABIA	Saudi SAE Technical Construction Co. Ltd., Riyadh	100.00
SAUDI ARABIA	ABB Service Co. Ltd., Al Khobar	65.00
SENEGAL	ABB Technologies S.A., Dakar	100.00
SERBIA AND MONTENEGRO	ABB d.o.o., Belgrade	100.00
SINGAPORE	ABB Agencies Pte. Ltd., Singapore	100.00
SINGAPORE	ABB Holdings Pte. Ltd., Singapore	100.00
SINGAPORE	ABB Industry Pte. Ltd., Singapore	100.00
SINGAPORE	ABB Lummus Global Pte. Ltd., Singapore	100.00
SINGAPORE	ABB Support Pte. Ltd., Singapore	100.00
SINGAPORE	ABB Treasury Center (Asia Pacific) Pte. Ltd., Singapore	100.00
SLOVAKIA	ABB, s.r.o., Bratislava	100.00
SLOVENIA	ABB D.o.o., Ljubljana	100.00
SOUTH AFRICA	ABB Holdings (Pty) Ltd., Sunninghill	80.00
SOUTH AFRICA	Desta Power Matla (Pty) Ltd., Pretoria	29.98
SOUTH AFRICA	Nelspruit Airport Operating Company (Pty) Ltd., Nelspruit	90.00
SOUTH AFRICA	Primkop Airport Management (Pty) Ltd., Nelspruit	90.00
SOUTH AFRICA	ABB Powertech Transformers (Pty) Ltd., Pretoria	40.00
SOUTH AFRICA	ABB South Africa (Pty) Ltd., Sunninghill	80.00
SPAIN	Asea Brown Boveri S.A., Madrid	100.00
SPAIN	ABB Stotz Kontakt, S.A., Getafe	100.00
SWEDEN	ABB Participation AB, Västerås	100.00
SWEDEN	ABB AB, Västerås	100.00
SWEDEN	ABB Construction AB, Västerås	100.00
SWEDEN	Romania Invest AB, Västerås	100.00
SWEDEN	AB Cythere 61, Västerås	100.00
SWEDEN	AB Cythere 63, Västerås	100.00
SWEDEN	AB Electro-Invest, Västerås	100.00
SWEDEN	ABB Industriunderhåll AB, Degerfors	51.00
SWEDEN	ABB Fastighet AB, Västerås	100.00
SWEDEN	ABB Virkestorkar AB, Skellefteå	100.00
SWEDEN	ABB Norden Holding AB, Stockholm	100.00

SWEDEN	ABB Automation Technologies AB, Västerås	100.00
SWEDEN	ABB Power Technologies AB, Ludvika	100.00
SWEDEN	Gladsheim Aviation Finance AB, Stockholm	0.00
SWEDEN	Tre Kronor Investment AB, Västerås	100.00
SWEDEN	ABB Financial Services AB, Sollentuna	100.00
SWITZERLAND	ABB Ltd, Zurich	100.00
SWITZERLAND	ABB Asea Brown Boveri Ltd, Zurich	100.00
SWITZERLAND	ABB Management Services Ltd., Zurich	100.00
SWITZERLAND	ABB Automation Technologies Management Ltd., Zurich	100.00
SWITZERLAND	ABB Dicoesa, Belfaux	100.00
SWITZERLAND	ABB Energy Engineering AG, Zurich	100.00
SWITZERLAND	ABB MEA Participation Ltd., Zurich	100.00
SWITZERLAND	ABB Information Systems Ltd., Zurich	100.00
SWITZERLAND	ABB Handels- und Verwaltungs AG, Zurich	100.00
SWITZERLAND	ABB Intra AG, Zurich	100.00
SWITZERLAND	ABB Immobilien AG, Baden	100.00
SWITZERLAND	ABB International Services AG, Zurich	100.00
SWITZERLAND	ABB Schweiz AG, Baden	100.00
SWITZERLAND	ABB International Marketing Ltd., Zurich	100.00
SWITZERLAND	ABB Power Technologies Management Ltd., Zurich	100.00
SWITZERLAND	ABB Research Ltd., Zurich	100.00
SWITZERLAND	ABB Sécheron S.A., Satigny	99.97
SWITZERLAND	ABB Technology Ltd., Zurich	100.00
SWITZERLAND	ABB Turbo-Systems Holding Ltd., Baden	100.00
SWITZERLAND	ABB Turbo-Systems AG, Baden	100.00
TAIWAN, PROVINCE OF CHINA	ABB Ltd., Taipei	100.00
TANZANIA, UNITED REPUBLIC	Asea Brown Boveri Ltd., Dar Es Salaam	100.00
TANZANIA, UNITED REPUBLIC	ABB Tanelec Ltd., Arusha	70.00
THAILAND	ABB LIMITED, Bangkok	100.00

THAILAND	Asea Brown Boveri Holding Ltd., Bangkok	100.00
THAILAND	ABB Bailey Limited, Bangkok	98.00
THAILAND	Kent Meters (Thailand) Ltd., Bangkok	100.00
TUNISIA	L’Ebenoid Production, Tunisie	100.00
TUNISIA	ABB Maghreb Services S.A., Tunis	100.00
TURKEY	ABB Holding A.S., Istanbul	99.95
TURKEY	ABB Barmek Elektrik Sanayi Ve Ticaret, Ankara	49.98
TURKEY	ABB Elektrik Sanayi A.S., Istanbul	99.94
UGANDA	ABB Ltd., Kampala	100.00
UKRAINE	ABB Ltd., Kiev	100.00
UNITED ARAB EMIRATES	ABB Automation L.L.C., Abu Dhabi	49.00
UNITED ARAB EMIRATES	ABB Transmission & Distribution Ltd., Abu Dhabi	49.00
UNITED ARAB EMIRATES	ABB Industries (L.L.C), Dubai	49.00
UNITED KINGDOM	ABB Ltd., Warrington	100.00
UNITED KINGDOM	ABB Credit Ltd., London	100.00
UNITED KINGDOM	ABB Equity Limited, Guernsey	100.00
UNITED KINGDOM	ABB ESAP Limited, Guernsey	100.00
UNITED KINGDOM	ABB Equity Ventures (Jersey) Ltd., Jersey	100.00
UNITED KINGDOM	ABB Holdings Ltd., Warrington	100.00
UNITED KINGDOM	ABB International Finance Limited, Guernsey	100.00
UNITED KINGDOM	ABB Insurance Limited, Guernsey	100.00
UNITED KINGDOM	ABB Investments Ltd., Warrington	100.00
UNITED KINGDOM	ABB Lummus Crest Ltd., Surrey	100.00
UNITED KINGDOM	Lighting for Staffordshire Holdings Ltd., Staffordshire	60.00
UNITED KINGDOM	Lighting for Staffordshire Ltd., Staffordshire	60.00
UNITED KINGDOM	ABB Lutech Resources Ltd., Surrey	100.00
UNITED KINGDOM	ABB Service Limited, Warrington	100.00
UNITED KINGDOM	ABB Transinvest Limited, Guernsey	100.00
UNITED KINGDOM	ABB Combined Heat and Power Ltd., Warrington	100.00
UNITED STATES	ABB Inc., Norwalk, CT	100.00
UNITED STATES	ABB Barranquilla Inc., Princeton, NJ	100.00

UNITED STATES	ABB Capital (USA) LLC, Delaware	100.00
UNITED STATES	Combustion Engineering Inc., Norwalk, CT	100.00
UNITED STATES	Connecticut Valley Claims, CT	100.00
UNITED STATES	DLI Engineering Corp., Bainbridge Island	100.00
UNITED STATES	ABB Susa/Dillingham, North Brunswick	55.00
UNITED STATES	ABB Holdings Inc., Norwalk, CT	100.00
UNITED STATES	ABB Investments LLC, Norwalk, CT	100.00
UNITED STATES	Brown & Root/ABB SUSA, North Brunswick	51.00
UNITED STATES	KOMPOSIT AMERICAS Risk Management, Consultancy & Insurance Brokerage Serv. California	100.00
UNITED STATES	Lummus Catalyst Company, Bloomfield, NJ	100.00
UNITED STATES	ABB Lummus Global International Corp., Texas	100.00
UNITED STATES	ABB Lummus Global Overseas Corporation, Bloomfield, NJ	100.00
UNITED STATES	Joint Venture ABB Lummus Snamprogetti USA, Houston, TX	50.00
UNITED STATES	ABB Lummus Global Inc., Bloomfield, NJ	100.00
UNITED STATES	ABB Susa Inc., North Brunswick, NJ	100.00
UNITED STATES	Camelot IS-2 International, Inc. D/B/A Skyva International, Wickliffe	99.97
UNITED STATES	ABB Susa International Inc., North Brunswick, NJ	100.00
UNITED STATES	ABB Treasury Center USA Inc., Norwalk, CT	100.00
UNITED STATES	Winfield Business Park, LLC, Norwalk, CT	50.00
URUGUAY	ABB CL Logistic S.A., Montevideo	100.00
UZBEKISTAN	ABB CHTZ Closed Joint Stock Company, Chirchik	68.00
VENEZUELA	Asea Brown Boveri S.A., Caracas	100.00
VIET NAM	ABB Ltd., Hanoi	100.00
ZAMBIA	ABB Ltd., Lusaka	100.00
ZIMBABWE	ABB (Private) Ltd., Harare	100.00

EX-12.1

Exhibit 12.1

CERTIFICATIONS

I, Fred Kindle, 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)) 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)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

(c)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.

Date:  April 19, 2006

/s/ FRED KINDLE

Fred Kindle

Chief Executive Officer

EX-12.2

Exhibit 12.2

CERTIFICATIONS

I, Michel Demaré, 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)) 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)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

(c)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.

Date:  April 19, 2006

/s/ MICHEL DEMARÉ

Michel Demaré

Chief Financial Officer

EX-13.1

Exhibit13.1

SECTION 906 CERTIFICATION

In connection with the Annual Report on Form 20-F for the fiscal year ended December 31, 2005 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, Fred Kindle, Chief Executive Officer of the Company, certify, that:

(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.

By:	/s/ FRED KINDLE
Name:		Fred Kindle
Title:		Chief Executive Officer

Date: April 19, 2006

The foregoing certification is being furnished solely pursuant to 18 U.S.C. §  1350 and is not deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liability of that section. The foregoing certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to ABB Ltd and will be retained by ABB Ltd and furnished to the Securities and Exchange Commission or its staff upon request.

EX-13.2

Exhibit 13.2

SECTION 906 CERTIFICATION

In connection with the Annual Report on Form 20-F for the fiscal year ended December 31, 2005 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, Michel Demaré, Chief Financial Officer of the Company, certify, that:

(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.

By:	/s/ MICHEL DEMARÉ
	Name:	Michel Demaré
	Title:	Chief Financial Officer

Date: April 19, 2006

The foregoing certification is being furnished solely pursuant to 18 U.S.C. §  1350 and is not deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liability of that section. The foregoing certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to ABB Ltd and will be retained by ABB Ltd and furnished to the Securities and Exchange Commission or its staff upon request.

EX-15.1

Exhibit 15.1

Consent of Independent Accountants

We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-129271) of ABB Ltd pertaining to the ABB Employee Share Acquisition Plan - US Share Acquisition Sub-Plan of our report dated February 11, 2005, with respect to the financial statements of Jorf Lasfar Energy Company S.C.A. included in the Annual Report (Form 20-F) of ABB Ltd for the year ended December 31, 2005.

/S/ Price Waterhouse

Casablanca, Morocco

April 17, 2006

EX-15.2

Exhibit 15.2

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-129271) of ABB Ltd pertaining to the ABB Employee Share Acquisition Plan - US Share Acquisition Sub-Plan of our reports dated March 3, 2006, with respect to the consolidated financial statements and schedule of ABB Ltd included in its Annual Report (Form 20-F) for the year ended December 31, 2005.

/S/ Ernst & Young AG

Zurich, Switzerland

April 18, 2006