WABCO Holdings Inc. (Form: 8-K, Received: 07/20/2007 13:55:42)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): July 20, 2007 (July 16, 2007)

WABCO HOLDINGS INC.

(Exact name of registrant as specified in its charter)

Delaware

1-33332

20-8481962

(State or other jurisdiction

of incorporation)

(Commission File Number)

(I.R.S. Employer

Identification No.)


One Centennial Avenue, P.O. Box 6820, Piscataway, NJ		08855-6820
(Address of principal executive offices)		(zip code)

Registrant’s telephone number, including area code: 32-2-663-9-800

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)

Item 1.01

Entry into Material Definitive Agreements

On July 16, 2007, WABCO Holdings Inc. (“WABCO”) entered into definitive agreements with American Standard Companies Inc. (“ASD”) that, among other things, set forth the terms and conditions of the separation of WABCO from ASD and provide a framework for the relationship between WABCO and ASD following the separation. These agreements govern the relationship between WABCO and ASD subsequent to the completion of the separation and provide for the allocation between WABCO and ASD of assets, liabilities and obligations attributable to periods prior to the separation. In addition to the Separation and Distribution Agreement, which contains many of the key provisions related to the spin-off of WABCO and the distribution of WABCO’s common shares to ASD’s shareholders, the parties also entered into, on July 16, 2007, a Tax Sharing Agreement, a Transition Services Agreement, an Employee Matters Agreement and an Indemnification and Cooperation Agreement. A summary of certain important features of the material agreements, which are referenced below, can be found in the section entitled “Certain Relationships and Related Party Transactions” in WABCO’s Information Statement (the “Information Statement”), which is attached as Exhibit 99.1 to this Form 8-K, and is incorporated herein by reference.

Separation and Distribution Agreement

On July 16, 2007, WABCO entered into a Separation and Distribution Agreement with ASD that sets forth WABCO’s agreements with ASD regarding principal transactions necessary to separate WABCO from ASD. This agreement also sets forth the other agreements that govern certain aspects of WABCO’s relationship with ASD after the completion of the separation from ASD and provides for the allocation of certain assets to be transferred, liabilities to be assumed and contracts to be assigned to WABCO and ASD as part of the separation. The description of the Separation and Distribution Agreement set forth under this Item 1.01 is qualified in its entirety by reference to the complete terms and conditions of the Separation and Distribution Agreement filed as Exhibit 2.1 hereto.

Tax Sharing Agreement

On July 16, 2007, WABCO entered into a Tax Sharing Agreement with ASD that governs the parties’ respective rights, responsibilities and obligations after the distribution with respect to taxes, including ordinary course of business taxes and taxes, if any, incurred as a result of any failure of the distribution of all of the common shares of WABCO to qualify as a tax-free distribution for U.S. federal income tax purposes within the meaning of Section 355 of the Internal Revenue Code of 1986, as amended. The description of the Tax Sharing Agreement set forth under this Item 1.01 is qualified in its entirety by reference to the complete terms and conditions of the Tax Sharing Agreement filed as Exhibit 10.1 hereto.

Transition Services Agreement

On July 16, 2007, WABCO entered into a Transition Services Agreement with ASD that governs the orderly transition of WABCO becoming an independent company. Under the Transition Services Agreement, ASD has agreed to provide WABCO with various services, including services relating to human resources, payroll, treasury and risk management,

environmental technology, tax compliance, telecommunications services and information technology services. The cost of each transition service will generally be on the same payment terms and calculated using the same cost allocation methodologies for the particular service as those associated with the costs on WABCO’s historical financial statements. The description of the Transition Services Agreement set forth under this Item 1.01 is qualified in its entirety by reference to the complete terms and conditions of the Transition Services Agreement filed as Exhibit 10.2 hereto.

Employee Matters Agreement

On July 16, 2007, WABCO entered into an Employee Matters Agreement with ASD that allocates liabilities and responsibilities relating to employee compensation and benefit plans and programs and other related matters in connection with the separation, including the treatment of outstanding incentive awards and certain retirement and welfare benefit obligations, both in and outside of the United States. The description of the Employee Matters Agreement set forth under this Item 1.01 is qualified in its entirety by reference to the complete terms and conditions of the Employee Matters Agreement filed as Exhibit 10.3 hereto.

Indemnification and Cooperation Agreement

On July 16, 2007, WABCO and certain of its subsidiaries entered into an Indemnification and Cooperation Agreement with ASD and certain of its subsidiaries. Pursuant to this agreement, American Standard Europe BVBA, a subsidiary of WABCO, has agreed to be responsible for and to indemnify ASD and its subsidiaries (including certain subsidiaries formerly engaged in the Bath and Kitchen business) and their respective affiliates against any fines related to the European Commission’s investigation, as outlined in a Statement of Objections received by American Standard on March 28, 2007, into possible infringement of European Union competition regulations. The description of the Indemnification and Cooperation Agreement set forth under this Item 1.01 is qualified in its entirety by reference to the complete terms and conditions of the Indemnification and Cooperation Agreement filed as Exhibit 10.4 hereto.

Item 8.01

Other Events.

On July 12, 2007, ASD announced that on July 11, 2007, its Board of Directors had approved the distribution to its shareholders of all of its common shares of WABCO, its wholly owned subsidiary. To effect the distribution, ASD will distribute one WABCO common share for every three ASD common shares outstanding as of the close of business on July 19, 2007 (the “Record Date”). Fractional shares of WABCO will not be distributed and any ASD shareholder entitled to receive a fractional share will instead receive a cash payment. The distribution is expected to occur after the close of business on July 31, 2007 to ASD shareholders of record as of the close of business on the Record Date.

The Information Statement of WABCO, dated July 19, 2007, which describes for shareholders the details of the distribution and provides information as to the business and management of WABCO, is attached as Exhibit 99.1 to this Form 8-K and is incorporated by reference into this item. The Information Statement will be mailed to ASD shareholders shortly after the Record Date.

ITEM 9.01

Financial Statements and Exhibits.

(d)	Exhibits

The following exhibits are filed or furnished as part of this report to the extent described in Items 1.01 and 8.01.


2.1		Separation and Distribution Agreement, dated as of July 16, 2007, by and between American Standard Companies Inc. and WABCO Holdings Inc.

10.1		Tax Sharing Agreement, dated as of July 16, 2007, by and among American Standard Companies Inc. and certain of its subsidiaries and WABCO Holdings Inc. and certain of its subsidiaries.

10.2		Transition Services Agreement, dated July 16, 2007, by and between American Standard Companies Inc. and WABCO Holdings Inc.

10.3		Employee Matters Agreement, dated July 16, 2007, by and between American Standard Companies Inc. and WABCO Holdings Inc.

10.4		Indemnification and Cooperation Agreement, dated as of July 16, 2007, by and among American Standard Companies Inc. and certain of its subsidiaries and WABCO Holdings Inc. and certain of its subsidiaries.

99.1		Information Statement of WABCO Holdings Inc., dated July 19, 2007.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


Date: July 20, 2007	WABCO HOLDINGS INC.

	By:	/s/ Ulrich Michel
	Name:	Ulrich Michel
	Title:	Chief Financial Officer

Exhibit 2.1

SEPARATION AND DISTRIBUTION AGREEMENT

by and between

AMERICAN STANDARD COMPANIES INC.

and

WABCO HOLDINGS INC.

Dated as of July 16, 2007

TABLE OF CONTENTS


		Page
ARTICLE I DEFINITIONS AND INTERPRETATION		2
Section 1.1.	General	2
Section 1.2.	References; Interpretation	19
Section 1.3.	Effective Time	19
Section 1.4.	Other Matters	19
ARTICLE II THE SEPARATION		20
Section 2.1.	General	20
Section 2.2.	Transfer of Assets	20
Section 2.3.	Assumption and Satisfaction of Liabilities	20
Section 2.4.	Intercompany Accounts	21
Section 2.5.	Bank Accounts; Cash Balances	21
Section 2.6.	Limitation of Liability	22
Section 2.7.	Transfers Not Effected On or Prior to the Effective Time; Transfers Deemed Effective as of the Effective Time	23
Section 2.8.	Conveyancing and Assumption Instruments	25
Section 2.9.	Shared Contracts	25
Section 2.10.	Further Assurances	26
Section 2.11.	Novation of Liabilities; Consents	27
Section 2.12.	Guarantees and Letters of Credit	27
Section 2.13.	Disclaimer of Representations and Warranties	29
ARTICLE III CERTAIN ACTIONS PRIOR TO THE DISTRIBUTION		30
Section 3.1.	ASD Reorganization	30
Section 3.2.	Certificate of Incorporation; Bylaws; Rights Plan	30
Section 3.3.	Directors	30
Section 3.4.	Resignations	30
Section 3.5.	Ancillary Agreements	30
ARTICLE IV THE DISTRIBUTION		30
Section 4.1.	Stock Dividend to ASD; Distribution	30
Section 4.2.	Fractional Shares	31
Section 4.3.	Actions in Connection with the Distribution	31
Section 4.4.	Sole Discretion of ASD	32
Section 4.5.	Conditions to Distribution	32
ARTICLE V CERTAIN COVENANTS		34
Section 5.1.	No Solicit	34
Section 5.2.	Legal Names and Other Parties’ Trademark	34
Section 5.3.	Auditors and Audits; Annual and Quarterly Financial Statements and Accounting	35
Section 5.4.	No Restrictions on Corporate Opportunities	37
ARTICLE VI RELEASES AND INDEMNIFICATION		38
Section 6.1.	Release of Pre-Distribution Claims	38
Section 6.2.	Indemnification by ASD	40
Section 6.3.	Indemnification by WABCO	40

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Section 6.4.	Procedures for Indemnification	40
Section 6.5.	Indemnification Payments	42
Section 6.6.	Additional Matters; Survival of Indemnities	42
ARTICLE VII CONFIDENTIALITY; ACCESS TO INFORMATION		43
Section 7.1.	Provision of Corporate Records	43
Section 7.2.	Access to Information	43
Section 7.3.	Witness Services	44
Section 7.4.	Confidentiality	44
Section 7.5.	Privileged Matters	45
Section 7.6.	Ownership of Information	47
Section 7.7.	Other Agreements	47
ARTICLE VIII DISPUTE RESOLUTION		47
Section 8.1.	Negotiation	47
Section 8.2.	Arbitration	48
Section 8.3.	Selection of Arbitrator(s)	48
Section 8.4.	Arbitration Procedures	49
Section 8.5.	Discovery	49
Section 8.6.	Confidentiality of Proceedings	49
Section 8.7.	Pre-Hearing Procedure and Disposition	50
Section 8.8.	Continuity of Service and Performance	50
Section 8.9.	Awards	50
Section 8.10.	Costs	50
Section 8.11.	Adherence to Time Limits	50
Section 8.12.	Limitation on Actions	51
ARTICLE IX INSURANCE		51
Section 9.1.	Policies and Allocation of Related Rights and Obligations	51
Section 9.2.	Third Party Shared Policies	51
Section 9.3.	Administration of Third Party Shared Policies; Other Matters	52
Section 9.4.	Agreement for Waiver of Conflict and Shared Defense	54
Section 9.5.	Cooperation	54
Section 9.6.	Miscellaneous	54
ARTICLE X PROVISIONS RELATING TO B&K SALE		54
Section 10.1.	B&K Sale	54
Section 10.2.	Certain Parameters	54
Section 10.3.	B&K Sale Proceeds	54
ARTICLE XI MISCELLANEOUS		55
Section 11.1.	Complete Agreement; Construction	55
Section 11.2.	Ancillary Agreements	55
Section 11.3.	Counterparts	55
Section 11.4.	Survival of Agreements	55
Section 11.5.	Expenses	55
Section 11.6.	Notices	56
Section 11.7.	Waivers	56
Section 11.8.	Amendments	56
Section 11.9.	Assignment	57
Section 11.10.	Termination, Etc.	57

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Section 11.11.	Payment Terms	57
Section 11.12.	No Circumvention	57
Section 11.13.	Subsidiaries	58
Section 11.14.	Third Party Beneficiaries	58
Section 11.15.	Title and Headings	58
Section 11.16.	Exhibits and Schedules	58
Section 11.17.	Closing	58
Section 11.18.	Governing Law	58
Section 11.19.	Consent to Jurisdiction	58
Section 11.20.	Specific Performance	59
Section 11.21.	Waiver of Jury Trial	59
Section 11.22.	Severability	59
Section 11.23.	Construction	59
Section 11.24.	Authorization	59

EXHIBITS

Exhibit A – Employee Matters Agreement

Exhibit B – Indemnification and Cooperation Agreement

Exhibit C – Tax Sharing Agreement

Exhibit D – Transition Services Agreement

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INDEX OF DEFINED TERMS


Term		Page
2007 Internal Control Audit and Management Assessments		9
Action		2
Affiliate		2
Agent		2
Agreement		1, 2
Agreement Disputes		2, 48
Amended Financial Reports		2, 37
Ancillary Agreements		2
ASD		1, 2
ASD Accounts		2, 22
ASD Common Stock		3
ASD Disclosure		3
ASD Employee		3
ASD Group		3
ASD Indemnitees		3
Assets		3
Audited Party		4, 37
B&K Business		4
B&K Sale		5, 55
B&K Sale Agreement		5, 55
B&K Sale Proceeds		5, 56
Business		5
Business Day		5
Business Entity		5
Claims Administration		5
Code		1, 5
Commission		5
Confidential Business Information		5
Confidential Information		5
Confidential Operational Information		5
Consents		6
Contract		6
control		2
Conveyancing and Assumption Instruments		6
corporate opportunities		39
CPR		6, 49
Dispute Notice		6, 49
Distribution		6
Distribution Date		6
Distribution Disclosure Documents		6
Effective Time		7
Employee Matters Agreement		7
Exchange Act		7

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Form 10		7
Form 10-K		7
Governmental Approvals		7
Governmental Entity		7
Group		7
Guaranty Release		7, 29
HVAC Business		7
Indebtedness		7
Indemnifiable Loss		7
Indemnifiable Losses		7
Indemnifying Party		8, 42
Indemnitee		8, 41
Indemnity and Cooperation Agreement		8
Information		8
Information Statement		8
Insurance Administration		8
Insurance Proceeds		8
Insured Claims		9
Intellectual Property		9
Intercompany Accounts		9
Internal Contributions		9
Internal Control Audit and Management Assessments		37
Internal Distributions		9
Law		9
Liabilities		9
Liable Party		10, 28
linked		22
New York Courts		10, 60
NYSE		10
Other Parties’ Auditors		10, 37
Other Party		10, 28
Other Party Marks		10, 35
Parties		1
Party		1, 10
Person		10
Plan		10
Policies		10
Pre-Separation Disclosure		10
Prime Rate		10
Record Date		11
Records		11
Remainco Assets		11
Remainco Balance Sheet		12
Remainco Business		12
Remainco Liabilities		12
Reorganization		1, 14

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Reorganization Documents		14
Rules		14, 49
Securities Act		14
Security Interest		14
Separation		1, 14
Shared Contracts		14
Shared Contractual Liabilities		14
Software		14
Subsidiary		15
Tax		15
Tax Return		15
Tax SharingAgreement		15
Third Party Claim		15, 42
Third Party Shared Policies		15
Trademarks		15
Transfer		15, 21
Transition Services Agreement		15
VCS Assets		15
VCS Business		16
VCS Contracts		16
VCS Liabilities		17
WABCO		1, 19
WABCO Accounts		19, 22
WABCO Balance Sheet		19
WABCO Common Stock		1, 19
WABCO Disclosure		19
WABCO Employee		19
WABCO Group		19
WABCO Indemnitees		20
Wholly Owned Subsidiary		20

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SEPARATION AND DISTRIBUTION AGREEMENT

THIS SEPARATION AND DISTRIBUTION AGREEMENT (this “ Agreement ”), is entered into as of July 16, 2007, by and between American Standard Companies Inc., a Delaware corporation (“ ASD ”), and WABCO Holdings Inc., a Delaware corporation ( WABCO ”) (each a “ Party ” and together, the “ Parties ”).

R E C I T A L S:

WHEREAS, ASD, acting through its direct and indirect Subsidiaries, currently conducts a number of businesses, including (i) the VCS Business, (ii) the HVAC Business and (iii) the B&K Business;

WHEREAS, the Board of Directors of ASD has determined that it is appropriate, desirable and in the best interests of ASD and its stockholders to separate ASD into three separate companies: (i) one comprising the VCS Business, which shall be owned and conducted, directly or indirectly, by WABCO, all of the common stock of which is intended to be distributed to ASD shareholders, (ii) one comprising the HVAC Business, which shall continue to be owned and conducted, directly or indirectly, by ASD and (iii) one comprising the B&K Business, which ASD currently intends to sell to one or more third parties;

WHEREAS, in order to effect such separation, the Board of Directors of ASD has determined that it is appropriate, desirable and in the best interests of ASD and its stockholders: (i) for ASD and its Subsdiaries to enter into a series of transactions whereby ASD and its Subsidiaries will be reorganized such that (A) ASD and/or one or more other members of the ASD Group will own all of the Remainco Assets and assume (or retain) all of the Remainco Liabilities, and (B) WABCO and/or one or more other members of the WABCO Group will own all of the VCS Assets and assume (or retain) all of the VCS Liabilities (the transactions referred to in clauses (A) and (B) being referred to herein as the “ Reorganization ”); and thereafter (ii) for ASD to distribute to the holders of ASD Common Stock on such record date as may be established by the Board of Directors of ASD on a pro rata basis (in each case without consideration being paid by such stockholders) all of the issued and outstanding shares of common stock, par value $0.01 per share, of WABCO (the “ WABCO Common Stock ”) (such transactions, as may be amended or modified from time to time in accordance with the terms and subject to the conditions of this Agreement, the “ Separation ”);

WHEREAS, ASD and WABCO have determined that it is necessary and desirable, on or prior to the Effective Time, to allocate, transfer or assign to the WABCO Group the VCS Assets and VCS Liabilities, and to allocate, transfer or assign to the ASD Group the Remainco Assets and Remainco Liabilities;

WHEREAS, the Parties intend that the Internal Contributions, the Internal Distributions and the Distribution generally will qualify as tax-free for U.S. federal income tax purposes under Sections 368(a)(1)(D) and 355 of the Internal Revenue Code of 1986, as amended (the “ Code ”), and that this Agreement is intended to be, and is hereby adopted as, a plan of reorganization under Section 368 of the Code;

WHEREAS, the Parties intend in this Agreement to set forth the principal arrangements between them with respect to the Separation and Distribution and that certain other agreements will govern certain other matters following the Effective Time.

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements, provisions and covenants contained in this Agreement, the Parties hereby agree as follows:

ARTICLE I

DEFINITIONS AND INTERPRETATION

Section 1.1. General . As used in this Agreement, the following capitalized terms shall have the following meanings:

(1) “ Action ” shall mean any demand, action, claim, charge, suit, countersuit, arbitration, inquiry, subpoena, proceeding or investigation by or before any Governmental Entity or any arbitration or mediation tribunal.

(2) “ Affiliate ” shall mean, when used with respect to a specified Person, a Person that directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such specified Person. For the purposes of this definition and Section 1.1(92) , “ control ”, when used with respect to any specified Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or other interests, by Contract or otherwise. After the Distribution, ASD and WABCO shall not be deemed to be under common control for purposes hereof due solely to the fact that ASD and WABCO have common stockholders.

(3) “ Agent ” shall mean The Bank of New York.

(4) “ Agreement ” shall have the meaning set forth in the preamble hereof.

(5) “ Agreement Disputes ” shall have the meaning set forth in Section 8.1 .

(6) “ Amended Financial Reports ” shall have the meaning set forth in Section 5.3(b) .

(7) “ Ancillary Agreements ” shall mean all of the written Contracts, instruments, assignments or other arrangements (other than this Agreement or the B&K Sale Agreement (and other documents contemplated thereby)) entered into in connection with the transactions contemplated hereby, including the Conveyancing and Assumption Instruments, the Tax Sharing Agreement, the Transition Services Agreement, the Employee Matters Agreement and the Indemnity and Cooperation Agreement.

(8) “ ASD ” shall have the meaning set forth in the preamble hereof.

(9) “ ASD Accounts ” shall have the meaning set forth in Section 2.5(a) .

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(10) “ ASD Common Stock ” shall mean the issued and outstanding shares of common stock, par value $0.01 per share, of ASD.

(11) “ ASD Disclosure ” shall mean any form, statement, schedule or other material (other than the Distribution Disclosure Documents) filed with or furnished to

(A) the Commission,

(B) any other Governmental Entity, or

on or after the Effective Time by or on behalf of any member of the ASD Group in connection with the registration, sale or distribution of securities or disclosure related thereto (including periodic disclosure obligations).

(12) “ ASD Employee ” shall have the meaning set forth in the Employee Matters Agreement.

(13) “ ASD Group ” shall mean (i) ASD and each of its Affiliates immediately following the Effective Time and (ii) each Person that is or becomes an Affiliate of ASD at or after the Effective Time, in each case, other than the members of the WABCO Group.

(14) “ ASD Indemnitees ” shall mean each member of the ASD Group and each of their Affiliates, and each of their respective directors, officers, employees and agents and each of the heirs, executors, successors and assigns of any of the foregoing, except the WABCO Indemnitees.

(15) “ Assets ” shall mean assets, properties, claims and rights (including goodwill), wherever located (including in the possession of vendors or other third parties or elsewhere), of every kind, character and description, whether real, personal or mixed, tangible, intangible or contingent, in each case whether or not recorded or reflected or required to be recorded or reflected on the Records or financial statements of any Person, including the following:

(i) all accounting and other legal and business books, records, ledgers and files, whether printed, electronic or written;

(ii) all computers and other electronic data processing and communications equipment, fixtures, machinery, equipment, furniture, office equipment, automobiles, trucks and other transportation equipment, special and general tools, test devices, prototypes and models and other tangible personal property;

(iii) all inventories of products, goods, materials, parts, raw materials and supplies;

(iv) all interests in real property of whatever nature, including easements, whether as owner, mortgagee or holder of a Security Interest in real property, lessor, sublessor, lessee, sublessee or otherwise;

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(v) all interests in any capital stock or other equity interests of any Subsidiary or any other Person, all bonds, notes, debentures or other securities issued by any Subsidiary or any other Person, all loans, advances or other extensions of credit or capital contributions to any Subsidiary or any other Person and all other investments in securities of any Person;

(vi) all Contracts and any rights or claims (whether accrued or contingent) arising under any Contracts;

(vii) all deposits, letters of credit and performance and surety bonds;

(viii) all written (including in electronic form) technical information, data, specifications, research and development information, engineering drawings and specifications, operating and maintenance manuals, and materials and analyses prepared by consultants and other third parties;

(ix) all Intellectual Property;

(x) all Software;

(xi) all cost information, sales and pricing data, customer prospect lists, supplier records, customer and supplier lists, customer and vendor data, correspondence and lists, product data and literature, artwork, design, development and business process files and data, vendor and customer drawings, specifications, quality records and reports and other books, records, studies, surveys, reports, plans and documents;

(xii) all prepaid expenses, trade accounts and other accounts and notes receivables;

(xiii) all rights under Contracts, all claims or rights against any Person, whether sounding in tort, contract or otherwise, whether accrued or contingent;

(xiv) all rights under insurance policies and all rights in the nature of insurance, indemnification or contribution;

(xv) all licenses, permits, approvals and authorizations which have been issued by any Governmental Entity;

(xvi) all cash or cash equivalents, bank accounts, brokerage accounts, lock boxes and other deposit arrangements; and

(xvii) all interest rate, currency, commodity or other swap, collar, cap or other hedging or similar Contracts or arrangements.

(16) “ Audited Party ” shall have the meaning set forth in Section 5.3(a) .

(17) “ B&K Business ” means the business and operations of the Bath and Kitchen segment of ASD as described in the

Form 10-K.

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(18) “ B&K Sale ” shall have the meaning set forth in Section 10.1 .

(19) “ B&K Sale Agreement ” shall have the meaning set forth in Section 10.2 .

(20) “ B&K Sale Proceeds ” shall have the meaning set forth in Section 10.3 .

(21) “ Business ” shall mean the VCS Business or the Remainco Business, as applicable.

(22) “ Business Day ” means any day that is not a Saturday, a Sunday or any other day on which banks are required or authorized by Law to be closed in New York, New York or Brussels, Belgium.

(23) “ Business Entity ” shall mean any corporation, partnership, trust, limited liability company or other incorporated or unincorporated organization or other entity which may legally hold title to Assets.

(24) “ Claims Administration ” shall mean the administration of claims made under the Third Party Shared Policies, including the reporting of claims to the unaffiliated, third-party insurance carriers that issued the Third Party Shared Policies, management and defense of such claims, negotiating the resolution of such claims, and providing for appropriate releases upon settlement of such claims.

(25) “ Code ” shall have the meaning set forth in the recitals hereto.

(26) “ Commission ” shall mean the United States Securities and Exchange Commission or any successor agency thereto.

(27) “ Confidential Information ” shall mean business, operations or other information, data or material concerning a Party and/or its Affiliates which, prior to or following the Effective Time, has been disclosed by a Party or its Affiliates to the other Party or its Affiliates, in written, oral (including by recording), electronic, or visual form to, or otherwise has come into the possession of, the other, including pursuant to the access provisions of Section 7.1 or Section 7.2 or any other provision of this Agreement or any Ancillary Agreement (except to the extent that such information can be shown to have been (i) in the public domain through no action of such Party or its Affiliates or (ii) lawfully acquired from other sources by such Party or its Affiliates to which it was furnished; provided , however , in the case of clause (ii) that, to the furnished Party’s knowledge, such sources did not provide such information in breach of any confidentiality or fiduciary obligations).

(28) “ Consents ” shall mean any consents, waivers or approvals from, or notification requirements to, any Person other than a Governmental Entity.

(29) “ Contract ” shall mean any contract, obligation, indenture, agreement, lease, purchase order, commitment, permit, license, note, bond, mortgage, arrangement or undertaking (whether written or oral and whether express or implied) that is legally binding on any Person or any part of its property under applicable Law, but excluding this Agreement and any Ancillary Agreement save as otherwise expressly provided in this Agreement or any Ancillary Agreement.

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(30) “ Continuing Arrangements ” shall mean those arrangements set forth on Schedule 1.1(30) and such other commercial arrangements between the Parties or their Affiliates that are intended to survive and continue following the Effective Time.

(31) “ Contribution ” shall mean the contribution by ASD of all of the outstanding stock of WABCO Group Inc. and WABCO Group International Inc. to WABCO in exchange for WABCO Common Stock.

(32) “ Conveyancing and Assumption Instruments ” shall mean, collectively, the various Contracts and other documents entered into and to be entered into to effect the transfer of Assets and the assumption of Liabilities in the manner contemplated by this Agreement or otherwise relating to, arising out of or resulting from the transactions contemplated by this Agreement (other than the Ancillary Agreements), each of which shall be in such form and dated as of such date as the Parties shall reasonably agree.

(33) “ CPR ” shall have the meaning set forth in Section 8.3 .

(34) “ Dispute Notice ” shall have the meaning set forth in Section 8.1(a) .

(35) “ Distribution ” shall mean the distribution by ASD of all of the issued and outstanding shares of WABCO Common Stock to holders of record of shares of ASD Common Stock as of the Record Date on the basis of one share of WABCO Common Stock (which includes a related preferred stock purchase right) for every three issued and outstanding shares of ASD Common Stock.

(36) “ Distribution Date ” shall mean July 31, 2007, or such later date as shall be determined by the Board of Directors of ASD to be the date on which the Distribution shall occur.

(37) “ Distribution Disclosure Documents ” shall mean the Form 10 and all exhibits thereto (including the Information Statement), the current report on Form 8-K attaching the final form of Information Statement and the registration statement on Form S-8 related to securities to be offered under WABCO’s employee benefit plans, in each case as filed by WABCO with the Commission in connection with the Distribution.

(38) “ Effective Time ” shall mean 11:59 p.m., New York City, New York time, on July 31, 2007.

(39) “ Employee Matters Agreement ” shall mean the Employee Matters Agreement by and between ASD and WABCO, dated as of the date hereof and substantially in the form attached as Exhibit A hereto.

(40) “ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time that reference is made thereto.

(41) “ Form 10 ” shall mean the registration statement on Form 10 filed by WABCO with the Commission in connection with the Distribution and all amendments thereto.

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(42) “ Form 10-K ” shall mean the Annual Report on Form 10-K for the fiscal year ended December 31, 2006 filed by ASD and all amendments thereto.

(43) “ Governmental Approvals ” shall mean any notices or reports to be submitted to, or other filings to be made with, or any consents, registrations, approvals, permits or authorizations to be obtained from, any Governmental Entity.

(44) “ Governmental Entity ” shall mean any nation or government, any state, municipality or other political subdivision thereof and any entity, body, agency, commission, department, board, bureau or court, whether domestic, foreign or multinational, exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any official thereof.

(45) “ Group ” shall mean either the WABCO Group or the ASD Group.

(46) “ Guaranty Release ” shall have the meaning set forth in Section 2.12(b) .

(47) “ HVAC Business ” means the business and operations of the Air Conditioning Systems and Services Segment of ASD as described in the Form 10-K.

(48) “ Indebtedness ” shall mean (i) any indebtedness for borrowed money or the deferred purchase price of property as evidenced by a note, bonds or other instruments, (ii) obligations as lessee under capital leases, (iii) obligations secured by any mortgage, pledge, security interest, encumbrance, lien or charge of any kind existing on any asset owned or held by any Person, whether or not such Person has assumed or become liable for the obligations secured thereby, (iv) any obligation under any interest rate swap agreement, (v) accounts payable, (vi) reimbursement obligations with respect to surety and performance bonds or letters of credit, and (vii) obligations under direct or indirect guarantees of (including obligations, contingent or otherwise, to assure a creditor against loss in respect of) indebtedness or obligations of the kinds referred to in clauses (i), (ii), (iii), (iv), (v) and (vi) above.

(49) “ Indemnifiable Loss ” and “ Indemnifiable Losses ” shall mean any and all damages, losses, deficiencies, Liabilities, obligations, penalties, judgments, settlements, claims, payments, fines, interest, costs and expenses (including costs and expenses provided for in Section 11.5(c) and the costs and expenses of any and all Actions and demands, assessments, judgments, settlements and compromises relating thereto and the reasonable costs and expenses of attorneys’, accountants’, consultants’ and other professionals’ fees and expenses incurred in the investigation or defense thereof or the enforcement of rights hereunder), excluding special, consequential, indirect or punitive damages (other than special, consequential, indirect and/or punitive damages awarded to any third party against an indemnified party).

(50) “ Indemnifying Party ” shall have the meaning set forth in Section 6.4(b) .

(51) “ Indemnitee ” shall have the meaning set forth in Section 6.4(b) .

(52) “ Indemnity and Cooperation Agreement ” shall mean the Indemnity and Cooperation Agreement by and between ASD and WABCO, dated as of the date hereof and substantially in the form attached as Exhibit B hereto.

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(53) “ Information ” shall mean information, whether or not patentable or copyrightable, in written, oral, electronic or other tangible or intangible forms, stored in any medium, including studies, reports, records, books, contracts, instruments, surveys, discoveries, ideas, concepts, know-how, techniques, designs, specifications, drawings, blueprints, diagrams, models, prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes, computer programs or other software, marketing plans, customer names, communications by or to attorneys (including attorney-client privileged communications), memos and other materials prepared by attorneys or under their direction (including attorney work product), communications and materials otherwise related to or made or prepared in connection with or in preparation for any legal proceeding, and other technical, financial, employee or business information or data.

(54) “ Information Statement ” shall mean the Information Statement attached as an exhibit to the Form 10 sent to the holders of shares of ASD Common Stock in connection with the Distribution, including any amendment or supplement thereto.

(55) “ Insurance Administration ” shall mean, with respect to each Third Party Shared Policy: (i) the accounting for premiums, retrospectively-rated premiums, defense costs, indemnity payments, deductibles and retentions, as appropriate, under the terms and conditions of such Third Party Shared Policy; (ii) the reporting to the relevant unaffiliated, third-party insurer that issues such Third Party Shared Policy of any losses or claims which may be covered by such Third Party Shared Policy; and (iii) the distribution of Insurance Proceeds related to such Third Party Shared Policy, subject to the terms of ARTICLE IX .

(56) “ Insurance Proceeds ” shall mean those monies (i) received by an insured from an unaffiliated third-party insurer under any Third Party Shared Policy, or (ii) paid by such third-party insurer on behalf of an insured under any Third Party Shared Policy, in either case net of any applicable premium adjustment, retrospectively-rated premium, deductible, retention, or cost of reserve paid or held by or for the benefit of such insured.

(57) “ Insured Claims ” shall mean those Liabilities that, individually or in the aggregate, are covered within the terms and conditions of any of the Third Party Shared Policies, whether or not subject to deductibles, co-insurance, uncollectibility or retrospectively-rated premium adjustments.

(58) “ Intellectual Property ” shall mean all intellectual property and industrial property rights of any kind or nature, including all United States and foreign (i) patents, patent applications, patent disclosures, and all related continuations, continuations-in-part, divisionals, reissues, re-examinations, substitutions and extensions thereof, (ii) Trademarks, (iii) copyrights and copyrightable subject matter, whether statutory or common law, registered or unregistered and published or unpublished, (iv) rights of publicity, (v) moral rights and rights of attribution and integrity, (vi) rights in Software, (vii) trade secrets and all other confidential and proprietary information, know-how, inventions, improvements, processes, formulae, models and methodologies, (viii) rights to personal information, (ix) telephone numbers and internet protocol addresses, (x) applications and registrations for the foregoing, and (xi) rights and remedies against past, present, and future infringement, misappropriation, or other violation of the foregoing.

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(59) “ Intercompany Accounts ” shall mean any receivable, payable or loan between any member of the ASD Group, on the one hand, and any member of the WABCO Group, on the other hand that is reflected in the Records of the relevant members of the ASD Group and the WABCO Group, except for any such receivable, payable or loan that arises pursuant to this Agreement or any Ancillary Agreement or Continuing Arrangement.

(60) “ Internal Contributions ” shall mean each of (i) the contribution by A&G Bermuda L.P. of its assets relating to the VCS Business to Beta Bermuda L.P., (ii) the contribution by Trane Brazil of its assets relating to the VCS Business to Beta Brazil, (iii) the contribution by American Standard International Inc. of all of the equity of its subsidiaries engaged in the VCS Business to Beta (ASII) Spinco and (iv) the contribution by American Standard Inc. of all of the equity of its subsidiaries engaged in the VCS Business to Beta (ASI) Spinco.

(61) “ Internal Control Audit and Management Assessments ” shall have the meaning set forth in Section 5.3(a) .

(62) “ Internal Distributions ” shall mean each of (i) the distribution of all of the equity of Beta Bermuda L.P. and Beta LLC by A&G Bermuda L.P. to American Standard Europe Holdings Inc. and American Standard International L.L.C., (ii) the distribution of all of the equity of Beta Brazil by Wabco Canada L.P. to Wabco Holding Co. ULC, (iii) the distribution of all of the equity of Beta (ASII) Spinco by American Standard International Inc. to ASD and (iv) the distribution of all of the equity of Beta (ASI) Spinco by American Standard Inc. to ASD.

(63) “ Law ” shall mean any United States or non-United States federal, national, supranational, state, provincial, local or similar statute, law, ordinance, regulation, rule, code, order, requirement or rule of law (including common law).

(64) “ Liabilities ” shall mean any and all debts, liabilities, and obligations, whether accrued or fixed, known or unknown, absolute or contingent, matured or unmatured, reserved or unreserved, or determined or determinable of any kind or nature whatsoever, including those arising under any Law or Action, whether asserted or unasserted, or order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Entity, and those arising under any Contract or any fines, damages or equitable relief which may be imposed in connection with any of the foregoing and including all costs and expenses related thereto.

(65) “ Liable Party ” shall have the meaning set forth in Section 2.11(b) .

(66) “ New York Courts ” shall have the meaning set forth in Section 11.19 .

(67) “ NYSE ” shall mean the New York Stock Exchange.

(68) “ Other Parties’ Auditors ” shall have the meaning set forth in Section 5.3(a)(2) .

(69) “ Other Party ” shall have the meaning set forth in Section 2.11(a) .

(70) “ Other Party Marks ” shall have the meaning set forth in Section 5.2(a) .

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(71) “ Party ” shall have the meaning set forth in the preamble hereof.

(72) “ Person ” shall mean any natural person, firm, individual, corporation, business trust, joint venture, association, company, limited liability company, partnership or other organization or entity, whether incorporated or unincorporated, or any Governmental Entity.

(73) “ Plan ” shall have the meaning set forth in the Employee Matters Agreement.

(74) “ Policies ” shall mean insurance policies and insurance Contracts of any kind (other than life and benefits policies or Contracts), including primary, excess and umbrella policies, comprehensive general liability policies, director and officer liability, fiduciary liability, automobile, aircraft, property and casualty, business interruption, workers’ compensation and employee dishonesty insurance policies, bonds and self-insurance and captive insurance company arrangements, together with the rights, benefits and privileges thereunder.

(75) “ Pre-Separation Disclosure ” shall mean any form, statement, schedule or other material (other than the Distribution Disclosure Documents) filed with or furnished to

(A) the Commission,

(B) any other Governmental Entity, or

prior to the Effective Time by ASD, WABCO, or any of their respective Affiliates, in connection with the registration, sale, or distribution of securities or disclosure related thereto (including periodic disclosure obligations).

(76) “ Prime Rate ” shall mean the rate per annum publicly announced by JPMorgan Chase Bank (or successor thereto) from time to time as its prime rate in effect at its principal office in New York City. For purposes of this Agreement, any change in the Prime Rate shall be effective on the date such change in the Prime Rate is publicly announced as effective.

(77) “ Record Date ” shall mean the date to be determined by the Board of Directors of ASD as the record date for the Distribution.

(78) “ Records ” shall mean any Contracts, documents, books, records or files.

(79) “ Remainco Assets ” shall mean:

(i) the ownership interests (to the extent held by ASD, WABCO or any of their respective Affiliates immediately prior to the Effective Time) in each member of the ASD Group;

(ii) all Contracts to which ASD, WABCO or any of their Affiliates is a party or by which they or any of their respective Affiliates or any of their respective Assets are bound and any rights or claims (whether accrued or contingent) of ASD, WABCO, or any of their respective Affiliates arising thereunder, other than VCS Contracts;

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(iii) all Assets owned, leased or held by ASD, WABCO, or any of their respective Affiliates immediately prior to the Effective Time (other than VCS Assets), including inventory, accounts receivable, goodwill, and all Assets reflected on the Remainco Balance Sheet, or the accounting records supporting such balance sheet and any Assets acquired by or for the Remainco Business subsequent to the date of such balance sheet which, had they been so acquired on or before such date and owned as of such date, would have been reflected on such balance sheet if prepared on a consistent basis, subject to any disposition of such Assets subsequent to the date of such balance sheet;

(iv) subject to ARTICLE IX , any rights of any member of the ASD Group under any Third Party Shared Policies to the extent related to the Remainco Business;

(v) the Assets listed or described on Schedule 1.1(79)(v) and any and all Assets that are expressly contemplated by this Agreement or any Ancillary Agreement or the Reorganization Documents as Assets to be retained by, or assigned or transferred to, any member of the ASD Group;

(vi) all ASD Accounts, and, subject to the provisions of Section 2.5 , all cash, cash equivalents, and securities on deposit in such accounts immediately prior to the Effective Time; and

(vii) any collateral securing any Remainco Liability immediately prior to the Effective Time.

Notwithstanding the foregoing, the Remainco Assets shall not in any event include the Assets listed or described on Schedule 1.1(79)(vii) .

(80) “ Remainco Balance Sheet ” shall mean the unaudited pro forma balance sheet of the HVAC Business and B&K Business (after giving effect to the Distribution) as of March 31, 2007, as set forth on Schedule 1.1(80) ; provided, that to the extent any Assets or Liabilities are Transferred by any Party or any member of its Group to ASD or any member of the ASD Group or vice versa in connection with the Separation and prior to the Distribution Date, such assets and/or liabilities shall be deemed to be included or excluded from the Remainco Balance Sheet, as the case may be.

(81) “ Remainco Business ” shall mean:

(i) the B&K Business;

(ii) the HVAC Business;

(iii) any other business, operations, or assets where such business was conducted through the use of the Remainco Assets prior to the Effective Time;

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(iv) the businesses and operations of Business Entities acquired or established by or for any member of the ASD Group after the Effective Time; and

(v) all other businesses and operations (whether or not such business or operations are or have been terminated, divested or discontinued);

provided , however , the Remainco Business shall not include any business, operation, or asset expressly included in the VCS Business pursuant to this Agreement.

(82) “ Remainco Liabilities ” shall mean:

(i) the Liabilities listed or described on Schedule 1.1(82)(i) and any and all Liabilities that are expressly contemplated by this Agreement or any Ancillary Agreement as Liabilities to be retained, assumed or retired by any member of the ASD Group;

(ii) any and all Liabilities of ASD, WABCO, or any of their respective Affiliates, to the extent relating to, arising out of or resulting from:

(A) the operation or conduct of the Remainco Business, as conducted at any time prior to, on or after the Effective Time (including any Liability to the extent relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative of ASD, WABCO, or any of their respective Affiliates (whether or not such act or failure to act is or was within such Person’s authority) with respect to the Remainco Business);

(B) the operation or conduct of any business conducted by any member of the ASD Group at any time after the Effective Time (including any Liability to the extent relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative of ASD or any of its Affiliates after the Effective Time (whether or not such act or failure to act is or was within such Person’s authority) with respect to the Remainco Business); or

(iii) any and all Liabilities to the extent relating to, arising out of or resulting from any terminated, discontinued or divested Business Entity, business, real property, Asset or operation formerly owned or managed by, or associated with, any member of the ASD Group or any of the Remainco Businesses (other than those Business Entities described on Schedule 1.1(82)(iii) ;

(iv) any and all Liabilities (including under applicable federal and state securities Laws) relating to, arising out of or resulting from:

(A) a misstatement or omission contained in the sections of the Distribution Disclosure Documents described in Schedule 1.1(82)(iv)(A) hereto;

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(B) any Pre-Separation Disclosure, but only to the extent such Liabilities arise out of, or result from, matters related to the Remainco Business; and

(v) any and all Liabilities, including those Liabilities relating to, arising out of or resulting from any Indebtedness of any member of the ASD Group (whether incurred prior to, on or after the Effective Time);

(vi) any and all Liabilities to the extent relating to, arising out of or resulting from any Action relating to the Remainco Business or Remainco Assets;

(vii) any and all Liabilities of the guarantor under the guarantees and obligations of the obligor under letters of credit listed or described on Schedule 1.1(82)(vii) ;

(viii) all Liabilities reflected as Liabilities or obligations on the Remainco Balance Sheet or on the accounting records supporting such balance sheet, and all Liabilities arising or assumed after the date of such balance sheet which, had they arisen or been assumed on or before such date and been retained as of such date, would have been reflected on such balance sheet if prepared on a consistent basis, subject to any discharge of such Liabilities subsequent to the date of the Remainco Balance Sheet; and

(ix) any and all obligations of an insured Person under each Third Party Shared Policy to the extent related to or arising out of the Remainco Business.

Notwithstanding the foregoing, the Remainco Liabilities shall not in any event include any Liabilities (including Liabilities under VCS Contracts and VCS Liabilities) that are expressly contemplated by this Agreement or any Ancillary Agreement (or the schedules hereto or thereto) as Liabilities to be retained or assumed by any member of the WABCO Group, including any Liabilities set forth on Schedule 1.1(82)(ix) , or for which any member of the WABCO Group is liable pursuant to this Agreement or such Ancillary Agreement.

FOR THE AVOIDANCE OF DOUBT, NO LIABILITY SHALL BE A REMAINCO LIABILITY SOLELY AS A RESULT OF ASD OR ANY OTHER MEMBER OF THE ASD GROUP BEING NAMED AS PARTY TO, OR IN, ANY ACTION.

(83) “ Reorganization ” shall have the meaning set forth in the recitals hereto.

(84) “ Reorganization Documents ” shall have the meaning set forth in Section 3.1 .

(85) “ Rules ” shall have the meaning set forth in Section 8.2 .

(86) “ Securities Act ” shall mean the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time that reference is made thereto.

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(87) “ Security Interest ” shall mean any mortgage, security interest, pledge, lien, charge, claim, option, right to acquire, voting or other restriction, right-of-way, condition, easement, encroachment, restriction on transfer, or other encumbrance of any nature whatsoever, excluding restrictions on transfer under securities Laws.

(88) “ Separation ” shall have the meaning set forth in the recitals hereto.

(89) “ Shared Contracts ” means Contracts entered into prior to the Effective Time which are between or among a member of the ASD Group and/or a member of the WABCO Group and one or more third parties that benefit both (i) the VCS Businesses and (ii) the Remainco Business.

(90) “ Shared Contractual Liabilities ” means Liabilities in respect of Shared Contracts.

(91) “ Software ” shall mean all computer programs (whether in source code, object code, or other form), algorithms, databases, compilations and data, and technology supporting the foregoing, and all documentation, including flowcharts and other logic and design diagrams, technical, functional and other specifications, and user manuals and training materials related to any of the foregoing.

(92) “ S ubsidiar y ” shall mean with respect to any Person (i) a corporation, fifty percent (50%) or more of the voting capital stock of which is, as of the time in question, directly or indirectly owned by such Person and (ii) any other limited liability company, partnership, joint venture, association, joint stock company, trust, unincorporated organization or other entity in which such Person, directly or indirectly, owns fifty percent (50%) or more of the equity economic interest thereof or has the power to elect or direct the election of fifty percent (50%) or more of the members of the governing body of such entity or otherwise has control over such entity (e.g., as the managing partner of a partnership).

(93) “ Tax ” shall have the meaning set forth in the Tax Sharing Agreement.

(94) “ Tax Sharing Agreement ” shall mean the Tax Sharing Agreement by and between ASD, WABCO, and certain members of the ASD Group and the WABCO Group, dated as of the date hereof, and substantially in the form attached as Exhibit C hereto.

(95) “ Tax Return ” shall have the meaning set forth in the Tax Sharing Agreement.

(96) “ Third Party Claim ” shall have the meaning set forth in Section 6.4(b) .

(97) “ Third Party Shared Policies ” shall mean all Policies, whether or not in force at the Effective Time, issued by unaffiliated third-party insurers to ASD, WABCO, or any of their respective Affiliates, which cover risks that relate to both the Remainco Business and the VCS Business.

(98) “ Trademarks ” shall mean all United States and foreign trademarks, service marks, corporate names, trade names, domain names, logos, slogans, designs, trade dress and other similar designations of source or origin, whether registered or unregistered, together with the goodwill symbolized by any of the foregoing.

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(99) “ Transfer ” shall have the meaning set forth in Section 2.2(a) .

(100) “ Transition Services Agreement ” shall mean the Transition Services Agreement by and between ASD and WABCO, dated as of the date hereof, and substantially in the form attached as Exhibit D hereto.

(101) “ VCS Assets ” shall mean:

(i) the ownership interests (to the extent held by ASD, WABCO or any of their respective Affiliates immediately prior to the Effective Time) in each member of the WABCO Group;

(ii) all VCS Contracts, any rights or claims (whether accrued or contingent) of ASD, WABCO, or any of their respective Affiliates, arising thereunder;

(iii) all Assets owned, leased or held by ASD, WABCO, or any of their respective Affiliates immediately prior to the Effective Time that, in ASD’s reasonable determination, are used exclusively in the VCS Business, including inventory, accounts receivable, goodwill, and all Assets reflected on the WABCO Balance Sheet, or the accounting records supporting such balance sheet and any Assets acquired by or for the VCS Business subsequent to the date of such balance sheet which, had they been so acquired on or before such date and owned as of such date, would have been reflected on such balance sheet if prepared on a consistent basis, subject to any disposition of such Assets subsequent to the date of such balance sheet;

(iv) subject to ARTICLE IX, any rights of any member of the WABCO Group under any Third Party Shared Policies to the extent related to the VCS Business;

(v) the Assets listed or described on Schedule 1.1(101)(v) and any and all Assets that are expressly contemplated by this Agreement, any Ancillary Agreement or the Reorganization Documents as Assets to be retained by, or assigned or transferred to, any member of the WABCO Group; and

(vi) all WABCO Accounts, and, subject to the provisions of Section 2.5 , all cash, cash equivalents, and securities on deposit in such accounts immediately prior to the Effective Time, after giving effect to any withdrawal by, or other distribution of cash to, ASD which may occur on or prior to the Effective Time.

Notwithstanding the foregoing, the VCS Assets shall not in any event include:

(A) the Assets listed or described on Schedule 1.1(101)(vi)(A) ; or

(B) any Remainco Assets or other Assets that are expressly contemplated by any Ancillary Agreement as Assets to be retained by, transferred or assigned to, any member of the ASD Group.

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(102) “ VCS Business ” shall mean:

(i) the business and operations of the Vehicle Control Systems segment of ASD as described in the Form 10;

(ii) any other business, operations, or assets where such business was conducted exclusively through the use of the VCS Assets prior to the Effective Time, and

(iii) the businesses and operations of Business Entities acquired or established by or for any member of the WABCO Group after the Effective Time.

(103) “ VCS Contracts ” shall mean the following Contracts to which ASD or any of its Affiliates is a party or by which it or any of its Affiliates or any of their respective Assets is bound, except for any such Contract or part thereof that is expressly contemplated not to be transferred or assigned by any member of the ASD Group to WABCO pursuant to any provision of this Agreement or any Ancillary Agreement:

(i) any Contract entered into in the name of, or expressly on behalf of, any division, business unit or member of the WABCO Group;

(ii) any Contract that relates exclusively to the VCS Business;

(iii) any Contract representing capital or operating equipment lease obligations of facilities or equipment exclusively used by any member of the WABCO Group;

(iv) any Contract or part thereof that is otherwise expressly contemplated pursuant to this Agreement or any of the Ancillary Agreements or Reorganization Documents to be retained by, transferred or assigned to, any member of the WABCO Group;

(v) the Contracts listed or described on Schedule 1.1(103)(v) .

(104) “ VCS Liabilities ” shall mean:

(i) the Liabilities listed or described on Schedule 1.1(104)(i) and any and all Liabilities that are expressly contemplated by this Agreement or any Ancillary Agreement as Liabilities to be retained, assumed or retired by any member of the WABCO Group;

(ii) any and all Liabilities of ASD, WABCO, or any of their respective Affiliates, to the extent relating to, arising out of or resulting from:

(A) the operation or conduct of the VCS Business, as conducted at any time prior to, on or after the Effective Time (including any Liability relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative of ASD, WABCO, or any of their respective Affiliates (whether or not such act or failure to act is or was within such Person’s authority));

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(B) the operation or conduct of any business conducted by any member of the WABCO Group at any time after the Effective Time (including any Liability relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative of WABCO or any of its Affiliates after the Effective Time (whether or not such act or failure to act is or was within such Person’s authority)); or

(iii) any and all Liabilities to the extent relating to, arising out of or resulting from any terminated, discontinued or divested Business Entity, business, real property, Asset or operation formerly owned or managed by, or associated with any member of the WABCO Group or any of the VCS Businesses (including those Business Entities listed and described on Schedule 1.1(104)(iii) );

(iv) any and all Liabilities (including under applicable federal and state securities Laws) relating to, arising out of or resulting from:

(A) the Distribution Disclosure Documents (including the Form 10 and the Information Statement), except to the extent specifically enumerated as a Remainco Liability on Schedule 1.1(82)(iv)(A) ;

(B) any Pre-Separation Disclosure, but only to the extent such Liabilities arise out of or result from matters related to the VCS Business; and

(v) any and all Liabilities, including those Liabilities listed on Schedule 1.1(104)(v) , relating to, arising out of or resulting from any Indebtedness of any member of the WABCO Group (whether incurred prior to, on or after the Effective Time);

(vi) any and all Liabilities relating to, resulting from, or arising out of any Action listed or described on Schedule 1.1(104)(vi) ;

(vii) any and all Liabilities of the guarantor under the guarantees and obligations of the obligor under letters of credit listed or described on Schedule 1.1(104)(vii) ;

(viii) all Liabilities reflected as Liabilities or obligations on the WABCO Balance Sheet or on the accounting records supporting such balance sheet, and all Liabilities arising or assumed after the date of such balance sheet which, had they arisen or been assumed on or before such date and been retained as of such date, would have been reflected on such balance sheet if prepared on a consistent basis, subject to any discharge of such Liabilities subsequent to the date of the WABCO Balance Sheet;

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(ix) any and all obligations of an insured Person under each Third Party Shared Policy to the extent related to or arising out of the VCS Business; and

(x) any and all Liabilities of any Business Entity that, following the Distribution, will be owned, directly or indirectly, by WABCO, except for those Liabilities assumed or retained by a member of the ASD Group pursuant to the Reorganization Documents.

Notwithstanding the foregoing, the VCS Liabilities shall in any event not include any Liabilities that are expressly contemplated by this Agreement or any Ancillary Agreement (or the schedules hereto or thereto) as Liabilities to be retained or assumed by any member of the ASD Group, including any Liabilities set forth on Schedule 1.1(104)(x) , or for which any member of the ASD Group is liable pursuant to this Agreement or such Ancillary Agreement.

FOR THE AVOIDANCE OF DOUBT, NO LIABILITY SHALL BE A VCS LIABILITY SOLELY AS A RESULT OF WABCO OR ANY OTHER MEMBER OF THE WABCO GROUP BEING NAMED AS PARTY TO, OR IN, ANY ACTION.

(105) “ WABCO ” shall have the meaning set forth in the preamble hereto.

(106) “ WABCO Accounts ” shall have the meaning set forth in Section 2.5(a) .

(107) “ WABCO Balance Sheet ” shall mean the unaudited balance sheet of the VCS Business, as of March 31, 2007, that is included in the Information Statement; provided, that to the extent any Assets or Liabilities are Transferred by any Party or any member of its Group to WABCO or any member of the WABCO Group or vice versa in connection with the Separation and prior to the Distribution Date, such assets and/or liabilities shall be deemed to be included or excluded from the WABCO Balance Sheet, as the case may be.

(108) “ WABCO Common Stock ” shall have the meaning set forth in the recitals hereto.

(109) “ WABCO Disclosure ” shall mean any form, statement, schedule or other material (other than the Distribution Disclosure Documents) filed with or furnished to

(A) the Commission,

(B) any other Governmental Entity, or

on or after the Effective Time by or on behalf of any member of the WABCO Group in connection with the registration, sale, or distribution of securities or disclosure related thereto (including periodic disclosure obligations).

(110) “ WABCO Employee ” shall have the meaning set forth in the Employee Matters Agreement.

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(111) “ WABCO Group ” shall mean WABCO and each Person identified on Schedule 1.1(111) , and each Person that is or becomes an Affiliate of WABCO at or after the Effective Time.

(112) “ WABCO Indemnitees ” shall mean each member of the WABCO Group and each of their Affiliates, and their respective directors, officers, employees and agents and each of the heirs, executors, successors and assigns of any of the foregoing.

(113) “ Wholly Owned S ubsidiar y ” shall mean, with respect to any Person, any Subsidiary of such Person if all of the common stock or other similar equity ownership interests (but not including non-voting preferred stock) in such Subsidiary (other than any director’s qualifying shares or investments by foreign nationals mandated by applicable Law) is owned directly or indirectly by such Person.

Section 1.2. References; Interpretation . References in this Agreement to any gender include references to all genders, and references to the singular include references to the plural and vice versa. Any action to be taken by the Board of Directors of a Party may be taken by a committee of the Board of Directors of such Party if properly delegated by the Board of Directors of a Party to such committee. Unless the context otherwise requires:

(i) the words “include”, “includes” and “including” when used in this Agreement shall be deemed to be followed by the phrase “without limitation”;

(ii) references in this Agreement to Articles, Sections, Annexes, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Annexes, Exhibits and Schedules to, this Agreement;

(iii) the words “hereof”, “hereby” and “herein” and words of similar meaning when used in this Agreement refer to this Agreement in its entirety and not to any particular Article, Section or provision of this Agreement; and

(iv) references in this Agreement to any time shall be to New York City, New York time unless otherwise expressly provided herein.

Section 1.3. Effective Time . This Agreement shall be effective as of the Effective Time.

Section 1.4. Other Matters . The Ancillary Agreements will govern ASD’s and WABCO’s respective rights, responsibilities and obligations after the Distribution with respect to the matters set forth in such Ancillary Agreement, except as expressly set forth in this Agreement or any other Ancillary Agreement.

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ARTICLE II

THE SEPARATION

Section 2.1. General . Subject to the terms and conditions of this Agreement, including Section 4.4, the Parties shall use, and shall cause their respective Affiliates to use, their respective commercially reasonable efforts to consummate the transactions contemplated hereby, a portion of which have already been implemented prior to the date hereof. It is the intent of the Parties that prior to consummation of the Distribution, ASD, WABCO and their respective Subsidiaries shall be reorganized, to the extent necessary, such that immediately following the consummation of such reorganization, subject to Section 2.7, (i) all of ASD’s and its Subsidiaries’ right, title and interest in and to the VCS Assets will be owned or held by a member or members of the WABCO Group, the VCS Business will be conducted by the members of the WABCO Group and the VCS Liabilities will be assumed directly or indirectly by (or retained by) a member of the WABCO Group; and (ii) all of ASD’s and its Subsidiaries’ right, title and interest in and to the Remainco Assets will be owned or held by a member or members of the ASD Group, the Remainco Business will be conducted by the members of the ASD Group and the Remainco Liabilities will be assumed directly or indirectly by (or retained by) a member of the ASD Group.

Section 2.2. Transfer of Assets .

(a) On or prior to the Effective Time and to the extent not already completed:

(i) ASD shall and hereby does, on behalf of itself and the other members of the ASD Group, as applicable, transfer, contribute, assign, distribute, and convey, or cause to be transferred, contributed, assigned, distributed and conveyed (“ Transfer “), to WABCO or another member of the WABCO Group all of ASD’s and the other members’ of the ASD Group’s right, title and interest in and to the VCS Assets; and

(ii) WABCO shall and hereby does, on behalf of itself and the other members of the WABCO Group, as applicable, Transfer to ASD or another member of the ASD Group all of WABCO’s and the other members’ of the WABCO Group’s right, title and interest in and to the Remainco Assets.

(b) Unless otherwise agreed to by the Parties, each of ASD and WABCO, as applicable, shall be entitled to designate the Business Entity within such Party’s respective Group to which any Assets are to be transferred pursuant to Section 2.2(a) or Section 2.7 .

Section 2.3. Assumption and Satisfaction of Liabilities . Except as otherwise specifically set forth in this Agreement or any Ancillary Agreement, from and after the Effective Time, (a) ASD shall, or shall cause another member of the ASD Group to, accept, assume (or, as applicable, retain) and perform, discharge and fulfill, in accordance with their respective terms, all of the Remainco Liabilities and (b) WABCO shall, or shall cause another member of the WABCO Group to, accept, assume (or, as applicable, retain) and perform, discharge and fulfill, in accordance with their respective terms, all the VCS Liabilities, in each case regardless of (i) when or where such Liabilities arose or arise, (ii) where or against whom such Liabilities are

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asserted or determined, (iii) whether arising from or alleged to arise from negligence, gross negligence, recklessness, violation of law, willful misconduct, bad faith, fraud or misrepresentation by any member of the ASD Group or the WABCO Group, as the case may be, or any of their past or present respective directors, officers, employees, or agents, (iv) which entity is named in any action associated with any Liability and (v) whether the facts on which they are based occurred prior to, on or after the date hereof.

Section 2.4. Intercompany Accounts .

(a) Each Intercompany Account (other than receivables, payables and loans otherwise specifically provided for under or created by this Agreement or any Ancillary Agreement or Continuing Arrangements) which exists and is reflected immediately prior to the Effective Time in any general ledger account or other Records of ASD, WABCO or any of their respective Affiliates, shall be satisfied and/or settled by the relevant members of the ASD Group and the WABCO Group no later than the Effective Time by (i) forgiveness by the relevant obligee, (ii) one or a related series of distributions of and/or contributions to capital, (iii) payment by the relevant obligor to the relevant obligee, or (iv) dividends or a combination of the foregoing, in each case as determined by ASD.

(b) If an Intercompany Account is not satisfied or settled as described in Section 2.4(a) for any reason, such Intercompany Account shall continue to be outstanding after the Effective Time (unless previously satisfied in accordance with its terms) and thereafter (i) shall be an obligation of the relevant Party (or the relevant member of such Party’s Group), each responsible for fulfilling its (or a member of such Party’s Group’s) obligations in accordance with the terms and conditions applicable to such obligation, and (ii) shall be for each relevant Party (or the relevant member of such Party’s Group) an obligation to a third-party and shall no longer be an Intercompany Account.

Section 2.5. Bank Accounts; Cash Balances .

(a) The Parties agree to take, or cause the respective members of their respective Groups to take, at the Effective Time (or such earlier time as the Parties may agree), all actions necessary to amend all Contracts governing each bank and brokerage account owned by WABCO or any other member of the WABCO Group (the “ WABCO Accounts ”), including all WABCO Accounts listed or described on Schedule 2.5(a) , so that such WABCO Accounts, if currently linked (whether by automatic withdrawal, automatic deposit, or any other authorization to transfer funds from or to, hereinafter “ linked ”) to any bank or brokerage account owned by ASD or any other member of the ASD Group (the “ ASD Accounts ”), including all ASD Accounts listed or described on Schedule 2.5(b) , are de-linked from the ASD Accounts. From and after the Effective Time, no ASD Employee shall have any authority to access or control any WABCO Account, except as provided for through the Transition Services Agreement.

(b) The Parties agree to take, or cause the respective members of their respective Groups to take, at the Effective Time (or such earlier time as the Parties may agree), all actions necessary to amend all Contracts governing the ASD Accounts so that such ASD Accounts, if currently linked to a WABCO Account, are de-linked from the WABCO Accounts. From and after the Effective Time, no WABCO Employee shall have any authority to access or control any ASD Account, except as provided for through the Transition Services Agreement.

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(c) It is intended that, following consummation of the actions contemplated by sections (a) and (b) above, there will continue to be in place a centralized cash management system pursuant to which the WABCO Accounts will be managed centrally and funds collected will be transferred into one or more centralized accounts maintained by WABCO.

(d) It is intended that, following consummation of the actions contemplated by sections (a) and (c) above, there will continue to be in place a centralized cash management system pursuant to which the ASD Accounts will be managed centrally and funds collected will be transferred into one or more centralized accounts maintained by ASD.

(e) With respect to any outstanding checks issued by ASD, WABCO, or any of their respective Subsidiaries prior to the Effective Time, such outstanding checks shall be honored following the Effective Time by the entity or Group owning the account on which the check is drawn.

(f) As between the two Parties (and the members of their respective Groups) all payments and reimbursements received after the Effective Time by either Party (or member of its Group) that relate to a Business, Asset or Liability of the other Party (or member of its Group), shall be held by such Party in trust for the use and benefit of the Party entitled thereto and, promptly upon receipt by such Party of any such payment or reimbursement, such Party shall pay over, or shall cause the applicable member of its Group to pay over to the other Party the amount of such payment or reimbursement without right of set-off.

(g) The Parties agree that, prior to the Effective Time, ASD or any other member of the ASD Group may withdraw any and all cash or cash equivalents from the WABCO Accounts for the benefit of ASD or any other member of the ASD Group.

Section 2.6. Limitation of Liability .

(a) Except as otherwise expressly provided in this Agreement, no Party or any member of such Party’s Group shall have any Liability to any other Party or any member of each other Party’s Group in the event that any Information exchanged or provided pursuant to this Agreement (but excluding any such information included in the Distribution Disclosure Documents, Liability for which will be governed by Section 2.3) which is an estimate or forecast, or which is based on an estimate or forecast, is found to be inaccurate.

(b) Except as provided in Section 2.4 , Section 2.12 or as set forth in subsection (c) below, no Party or any member of such Party’s Group shall have any Liability to any other Party or any member of such other Party’s Group based upon, arising out of or resulting from any Contract, arrangement, course of dealing or understanding existing on or prior to the Effective Time (other than as expressly set forth in this Agreement, any Ancillary Agreement or any Continuing Arrangements or any Contract entered into in connection herewith or in order to consummate the transactions contemplated hereby or thereby), and each Party hereby terminates, and shall cause all members in its Group to terminate, any and all Contracts, arrangements, course of dealings or understandings between it or any members in its Group and

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the other Party, or any members of its Group, effective as of the Effective Time (other than this Agreement, any Ancillary Agreement or any Continuing Arrangements or any Contract entered into in connection herewith or in order to consummate the transactions contemplated hereby or thereby), unless such Contract, arrangement, course of dealing or understanding is set forth in any Ancillary Agreement or Continuing Arrangement, and any such Liability, whether or not in writing, which is not reflected in any Ancillary Agreement or Continuing Arrangement, is hereby irrevocably cancelled, released and waived effective as of the Effective Time. No such terminated Contract, arrangement, course of dealing or understanding (including any provision thereof which purports to survive termination) shall be of any further force or effect after the Effective Time.

(c) The provisions of Section 2.6(b) shall not apply to any of the following Contracts, arrangements, course of dealings or understandings (or to any of the provisions thereof):

(i) any Contracts to which any Person other than the Parties and their respective Affiliates is a Party (it being understood that to the extent that the rights and obligations of the Parties and the members of their respective Groups under any such Contracts constitute Remainco Assets or VCS Assets, Remainco Liabilities, or VCS Liabilities, such Contracts shall be assigned or retained pursuant to ARTICLE II ); and

(ii) any Contracts, agreements, arrangements, commitments or understandings to which any non-Wholly Owned Subsidiary or non-Wholly Owned Affiliate of ASD or WABCO is a Party.

Section 2.7. Transfers Not Effected On or Prior to the Effective Time; Transfers Deemed Effective as of the Effective Time .

(a) To the extent that any Transfers or assumptions contemplated by this ARTICLE II shall not have been consummated on or prior to the Effective Time, the Parties shall cooperate to effect such Transfers or assumptions as promptly following the Effective Time as shall be practicable. Nothing herein shall be deemed to require the Transfer of any Assets or the assumption of any Liabilities which by their terms or operation of Law cannot be Transferred or assumed; provided , however , that the Parties shall, and shall cause the respective members of their Groups to, cooperate and use commercially reasonable efforts to seek to obtain any necessary Consents or Governmental Approvals for the Transfer of all Assets and assumption of all Liabilities contemplated to be Transferred or assumed pursuant to this ARTICLE II . In the event that any such Transfer or assumption of Assets or Liabilities has not been consummated from and after the Effective Time (i) the Party (or relevant member in its Group) retaining such Asset shall thereafter hold (or shall cause such member in its Group to hold) such Asset for the use and benefit of the Party (or relevant member in its Group) entitled thereto (at the expense of the Person entitled thereto) and (ii) the Party intended to assume such Liability shall, or shall cause the applicable member of its Group to, pay or reimburse the Party (or the relevant member of its Group) retaining such Liability for all amounts paid or incurred in connection with the retention of such Liability. In addition, the Party retaining such Asset or Liability (or relevant member of its Group) shall (or shall cause such member in its Group to) treat, insofar as reasonably possible and to the extent permitted by applicable Law, such Asset or Liability in the

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ordinary course of business in accordance with past practice and take such other actions as may be reasonably requested by the Party to which such Asset or Liability is to be transferred or assumed in order to place such Party, insofar as reasonably possible, in the same position as if such Asset or Liability had been transferred or assumed as contemplated hereby and so that all the benefits and burdens relating to such Asset or Liability, including possession, use, risk of loss, potential for gain, and dominion, control and command over such Asset or Liability, are to inure from and after the Effective Time to the relevant member of the ASD Group or the WABCO Group, as the case may be, entitled to the receipt of such Asset or Liability. In furtherance of the foregoing, the Parties agree that, as of the Effective Time, each Party shall be deemed to have acquired complete and sole beneficial ownership over all of the Assets, together with all rights, powers and privileges incident thereto, and shall be deemed to have assumed in accordance with the terms of this Agreement all of the Liabilities, and all duties, obligations and responsibilities incident thereto, which such Party is entitled to acquire or required to assume pursuant to the terms of this Agreement.

(b) If and when the Consents, Governmental Approvals and/or conditions, the absence or non-satisfaction of which caused the deferral of transfer of any Asset or assumption of any Liability pursuant to Section 2.7(a) , are obtained or satisfied, the transfer, assignment or novation of the applicable Asset or Liability shall be effected in accordance with and subject to the terms of this Agreement and/or the applicable Ancillary Agreement as promptly as practicable after the receipt of such Consents, Governmental Approvals and/or absence or satisfaction of conditions.

(c) The Party (or relevant member of its Group) retaining any Asset or Liability due to the deferral of the transfer or assignment of such Asset or the deferral of the assumption of such Liability pursuant to Section 2.7(a) shall (i) not be obligated, in connection with the foregoing, to expend any money unless the necessary funds are advanced, or agreed in advance to be reimbursed by the Party (or relevant member of its Group) entitled to such Asset, other than reasonable attorneys’ fees and recording or similar fees, all of which shall be promptly reimbursed by the Party entitled to such Asset (or relevant member of its Group) and (ii) be indemnified for all Indemnifiable Losses arising out of any actions (or omissions to act) of such retaining Party taken at the direction of the other Party (or relevant member of its Group) in connection with and relating to such retained Asset or Liability, as the case may be.

(d) Until the earlier of (i) receipt of audit opinions with respect to each Party’s financial statements for the year ended December 31, 2008 or (ii) the two year anniversary of this Agreement, if either Party determines that it (or any member of its Group) owns any Asset that was allocated by the terms of this Agreement to be Transferred to the other Party at the Effective Time or that is agreed by such Party and the other Party in their good faith judgment to be an Asset that more properly belongs to the other Party or an Asset that such other Party or Subsidiary was intended to have the right to continue to use, then the Party owning such Asset shall as applicable (i) Transfer any such Asset to the Party (or relevant member of its Group) identified as the appropriate transferee and following such Transfer, such Asset shall be a VCS Asset or Remainco Asset, as the case may be, or (ii) grant such mutually agreeable rights with respect to such Asset to permit such continued use, subject to, and consistent with this Agreement, including with respect to assumption of associated Liabilities. In connection with such transfer, contribution, assignment, distribution or conveyance, the receiving party shall assume all Liabilities related to such asset.

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(e) After the Effective Time, each Party (or any member of its Group) may receive mail, telegrams, packages and other communications properly belonging to the other Party (or any member of its Group). Accordingly, at all times after the Effective Time, each Party authorizes the other Party (or any member of its Group) to receive and open all mail, telegrams, packages and other communications received by such Party (or any member of its Group) and not unambiguously intended for such first Party, any member of such first Party’s Group or any of their respective officers, directors, employees or other agents, and to the extent that they do not relate to the business of the receiving Party, the receiving party shall promptly deliver such mail, telegrams, packages or other communications (or, in case the same relate to both businesses, copies thereof) to the other Party as provided for in Section 11.6 . The provisions of this Section 2.7(e) are not intended to, and shall not, be deemed to constitute an authorization by any Party (or any member of its Group) to permit the other to accept service of process on its (or its members’) behalf and no Party (or any member of its Group) is or shall be deemed to be the agent of the other Party (or any member of its Group) for service of process purposes.

Section 2.8. Conveyancing and Assumption Instruments . In connection with, and in furtherance of, the Transfers of Assets and the acceptance and assumptions of Liabilities contemplated by this Agreement, the Parties shall execute or cause to be executed, on or prior to the Effective Time, or after the Effective Time with respect to Section 2.7, by the appropriate entities, the Conveyancing and Assumption Instruments necessary to evidence the valid and effective assumption by the applicable Party (or any member of its Group) of its assumed Liabilities, and the valid Transfer to the applicable Party (or any member of its Group) of all right, title and interest in and to its accepted Assets, including the transfer of real property with quit claim deeds, as may be appropriate.

Section 2.9. Shared Contracts With respect to Shared Contractual Liabilities pursuant to, under or relating to a given Shared Contract, such Shared Contractual Liabilities shall be allocated, unless otherwise allocated pursuant to this Agreement or an Ancillary Agreement, between the Parties as follows:

(i) first, if a Liability is incurred exclusively in respect of a benefit received by one Party or its Group, the Party or Group receiving such benefit shall be responsible for such Liability.

(ii) second, if a Liability cannot be exclusively allocated to one Party or its Group under clause (i) above, such Liability shall be allocated among both Parties and their respective Groups based on the relative proportions of total benefit received (over the term of the Shared Contract, measured as of the date of allocation) under the relevant Shared Contract. Notwithstanding the foregoing, each Party and its Group shall be responsible for any or all Liabilities arising out of or resulting from such Party’s or Group’s breach of the relevant Shared Contract.

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(b) If ASD or any member of the ASD Group, on the one hand, or WABCO or any member of the WABCO Group, on the other hand, receives any benefit or payment under any Shared Contract which was intended for the other Party or its Group, ASD, on the one hand, or WABCO, on the other hand, will use its respective commercially reasonable efforts, or will cause any member of its Group to use its commercially reasonable efforts, to deliver, transfer or otherwise afford such benefit or payment to the other Party.

(c) Notwithstanding anything to the contrary herein, the Parties have determined that it is advisable that certain Shared Contracts, or portions thereof, will be separated or assigned to a member of the ASD Group or WABCO Group, as applicable. The Parties shall use their commercially reasonable efforts to separate the Shared Contracts which are identified on Schedule 2.9(c)(i) into separate Contracts between the appropriate third party and either WABCO or a member of the WABCO Group or ASD or a member of the ASD Group. ASD or a member of the ASD Group will use commercially reasonable efforts to assign the rights and obligations, but only to the extent relating to the VCS Business, under the Shared Contracts which are identified on Schedule 2.9(c)(ii) to WABCO or a member of the WABCO Group. The Parties agree to cooperate and provide reasonable assistance prior to the Effective Time and for a period of six (6) months following the Effective Time (with no obligation on the part of either Party to pay any costs or fees with respect to such assistance) in effecting the separation or assignment of such Shared Contracts as described above.

Section 2.10. Further Assurances.

(a) In addition to and without limiting the actions specifically provided for elsewhere in this Agreement, including Section 2.7 , each of the Parties shall cooperate with each other and use (and will cause the relevant member of its Group to use) commercially reasonable efforts, prior to, on and after the Effective Time, to take, or to cause to be taken, all actions, and to do, or to cause to be done, all things reasonably necessary on its part under applicable Law or contractual obligations to consummate and make effective the transactions contemplated by this Agreement and the Ancillary Agreements.

(b) Without limiting the foregoing, each Party shall cooperate with the other Party, from and after the Effective Time, to execute and deliver, or use commercially reasonable efforts to cause to be executed and delivered, all instruments, including instruments of conveyance, assignment and transfer, and to make all filings with, and to obtain all Consents and/or Governmental Approvals, and to take all such other actions as such Party may reasonably be requested to take by any other Party from time to time, consistent with the terms of this Agreement and the Ancillary Agreements, in order to effectuate the provisions and purposes of this Agreement and the Ancillary Agreements and the Transfers of the applicable Assets and the assignment and assumption of the applicable Liabilities and the other transactions contemplated hereby and thereby. Without limiting the foregoing, each Party will, at the reasonable request, of the other Party, take such other actions as may be reasonably necessary to vest in such other Party good and marketable title to the Assets allocated to such Party under this Agreement or any of the Ancillary Agreements, free and clear of any Security Interest, if and to the extent it is practicable to do so.

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Section 2.11. Novation of Liabilities; Consents .

(a) Each Party, at the request of the other Party, shall use commercially reasonable efforts to obtain, or to cause to be obtained, any Consent, release, substitution or amendment required to novate or assign all obligations under Contracts, licenses and other obligations or Liabilities for which a member of such Party’s Group and a member of the other Party’s Group are jointly or severally liable and that do not constitute Liabilities of such other Party as provided in this Agreement (such other Party, the “ Other Party ”), or to obtain in writing the unconditional release of all parties to such arrangements (other than any member of the Group who assumed or retained such Liability as set forth in this Agreement), so that, in any such case, the members of the applicable Group will be solely responsible for such Liabilities; provided , however , that no Party shall be obligated to pay any consideration therefor to any third party from whom any such Consent, substitution or amendment is requested (unless such Party is fully reimbursed by the requesting Party).

(b) If the Parties are unable to obtain, or to cause to be obtained, any such required Consent, release, substitution or amendment, the Other Party or a member of such Other Party’s Group shall continue to be bound by such Contract, license or other obligation that does not constitute a Liability of such Other Party and, unless not permitted by Law or the terms thereof, as agent or subcontractor for such Party, the Party or member of such Party’s Group who assumed or retained such Liability as set forth in this Agreement (the “ Liable Party ”) shall, or shall cause a member of its Group to, pay, perform and discharge fully all the obligations or other Liabilities of such Other Party or member of such Other Party’s Group thereunder from and after the Effective Time; provided , however , that the Other Party shall not be obligated to extend, renew or otherwise cause such Contract, license or other obligation to remain in effect beyond the term in effect as of the Effective Time. The Liable Party shall indemnify each Other Party and the members of such Other Party’s Group and hold each of them harmless against any and all Liabilities arising in connection therewith; provided , that the Liable Party shall have no obligation to indemnify the Other Party or any member of such Other Party’s Group with respect to any matter to the extent that such Other Party has engaged in any knowing violation of Law or fraud in connection therewith. The Other Party shall, without further consideration, promptly pay and remit, or cause to be promptly paid or remitted, to the Liable Party or to another member of the Liable Party’s Group, all money, rights and other consideration received by it or any member of its Group in respect of such performance by the Liable Party (unless any such consideration is an Asset of such Other Party pursuant to this Agreement). If and when any such Consent, release, substitution or amendment shall be obtained or such agreement, lease, license or other rights or obligations shall otherwise become assignable or able to be novated, the Other Party shall promptly assign, or cause to be assigned, all rights, obligations and other Liabilities thereunder of any member of such Other Party’s Group to the Liable Party or to another member of the Liable Party’s Group without payment of any further consideration and the Liable Party, or another member of such Liable Party’s Group, without the payment of any further consideration, shall assume such rights and obligations and other Liabilities.

Section 2.12. Guarantees and Letters of Credit .

(a) ASD shall (with the commercially reasonable cooperation of WABCO and the other members of the WABCO Group) use its commercially reasonable efforts, if so

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requested by WABCO, to have any member of the WABCO Group removed as guarantor of, or obligor for, any Remainco Liability, including with respect to those guarantees and obligations listed or described on Schedule 2.12(a) , to the extent that they relate to Remainco Liabilities.

(b) WABCO shall (with the commercially reasonable cooperation of ASD and the other members of the ASD Group) use its commercially reasonable efforts, if so requested by ASD, to have any member of the ASD Group removed as guarantor of, or obligor for, any VCS Liability, including with respect to those guarantees listed or described on Schedule 2.12(b) , to the extent that they relate to the VCS Liabilities (each of the releases referred to in paragraphs (a) and (b) of this subsection, a “ Guaranty Release “).

(c) If ASD or WABCO is unable to obtain, or to cause to be obtained, any removal of any guarantee or other obligation as set forth in clauses (a) and (b) of this Section 2.12 , (i) the relevant beneficiary shall indemnify and hold harmless the guarantor or obligor for any Indemnifiable Loss arising from or relating thereto (in accordance with the provisions of Article VI ) and shall or shall cause one of its Subsidiaries, as agent or subcontractor for such guarantor or obligor to pay, perform and discharge fully all the obligations or other Liabilities of such guarantor or obligor thereunder, (ii) the relevant beneficiary shall pay to the guarantor or obligor a fee payable at the end of each calendar quarter based on a rate of 0.65% per annum on the average outstanding amount of the obligation underlying such guarantee or obligation during such quarter and (iii) each of ASD and WABCO shall not renew or extend the term of, increase its obligations under, or transfer to a third party, any loan, guarantee, lease, contract or other obligation for which the other Party is or may be liable unless all obligations of such other Party and the other members of such Party’s Group with respect thereto are thereupon terminated by documentation reasonably satisfactory in form and substance to such other Party; provided, however, with respect to leases, in the event a Guaranty Release is not obtained and such first Party wishes to extend the term of such guaranteed lease then such first Party shall have the option of extending the term if it provides such security as is reasonably satisfactory to the guarantor under such guaranteed lease.

(d) ASD and WABCO shall cooperate and WABCO shall use commercially reasonable efforts to replace all letters of credit issued by ASD or other members of the ASD Group on behalf of or in favor of any member of the WABCO Group or the VCS Business (the “ASD LCs”) as promptly as practicable with letters of credit from WABCO or a member of the WABCO Group as of the Effective Time. With respect to any ASD LCs that remain outstanding after the Effective Time, WABCO shall (i) indemnify and hold harmless ASD Indemnitees for any damages arising from or relating to such letters of credit, including, without limitation, any fees in connection with the issuance and maintenance thereof, (ii) pay to ASD a fee payable at the end of each calendar quarter based on a rate of 0.65% per annum on the average outstanding balance during such quarter of any outstanding ASD LCs and (iii) without the prior written consent of ASD, WABCO shall not, and shall not permit any member of the WABCO Group to, enter into, renew or extend the term of, increase its obligations under, or transfer to a third party, any loan, lease, Contract or other obligation in connection with which ASD or any member of the ASD Group has issued any letters of credit which remain outstanding. The parties hereto agree that neither ASD nor any member of the ASD Group will have any obligation to renew any letters of credit issued on behalf of or in favor of any member of the WABCO Group or the VCS Business after the expiration of any such letter of credit.

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Section 2.13. Disclaimer of Representations and Warranties . EACH OF ASD (ON BEHALF OF ITSELF AND EACH OTHER MEMBER OF THE ASD GROUP), AND WABCO (ON BEHALF OF ITSELF AND EACH OTHER MEMBER OF THE WABCO GROUP) UNDERSTANDS AND AGREES THAT, EXCEPT AS EXPRESSLY SET FORTH HEREIN OR IN ANY ANCILLARY AGREEMENT, NO PARTY TO THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT CONTEMPLATED HEREBY OR THEREBY, IS REPRESENTING OR WARRANTING IN ANY WAY AS TO THE ASSETS, BUSINESSES OR LIABILITIES CONTRIBUTED, TRANSFERRED, DISTRIBUTED, OR ASSUMED AS CONTEMPLATED HEREBY OR THEREBY, AS TO ANY CONSENTS OR GOVERNMENTAL APPROVALS REQUIRED IN CONNECTION HEREWITH OR THEREWITH, AS TO THE VALUE OR FREEDOM FROM ANY SECURITY INTERESTS OF, OR ANY OTHER MATTER CONCERNING, ANY ASSETS OF SUCH PARTY, OR AS TO THE ABSENCE OF ANY DEFENSES OR RIGHT OF SETOFF OR FREEDOM FROM COUNTERCLAIM WITH RESPECT TO ANY ACTION OR OTHER ASSET, INCLUDING ACCOUNTS RECEIVABLE, OF ANY PARTY, OR AS TO THE LEGAL SUFFICIENCY OF ANY CONTRIBUTION, DISTRIBUTION, ASSIGNMENT, DOCUMENT, CERTIFICATE OR INSTRUMENT DELIVERED HEREUNDER TO CONVEY TITLE TO ANY ASSET OR THING OF VALUE UPON THE EXECUTION, DELIVERY AND FILING HEREOF OR THEREOF. EXCEPT AS MAY EXPRESSLY BE SET FORTH HEREIN OR IN ANY ANCILLARY AGREEMENT, ALL ASSETS ARE BEING TRANSFERRED ON AN “AS IS,” “WHERE IS” BASIS (AND, IN THE CASE OF ANY REAL PROPERTY, BY MEANS OF A QUITCLAIM OR SIMILAR FORM OF DEED OR CONVEYANCE WITHOUT WARRANTY) AND THE RESPECTIVE TRANSFEREES SHALL BEAR ALL ECONOMIC AND LEGAL RISKS THAT (I) ANY CONVEYANCE SHALL PROVE TO BE INSUFFICIENT TO VEST IN THE TRANSFEREE GOOD TITLE, FREE AND CLEAR OF ANY SECURITY INTEREST, AND (II) ANY NECESSARY CONSENTS OR GOVERNMENTAL APPROVALS ARE NOT OBTAINED OR THAT ANY REQUIREMENTS OF LAWS, CONTRACTS, OR JUDGMENTS ARE NOT COMPLIED WITH. ALL WARRANTIES OF HABITABILITY, MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR PURPOSE, AND ALL OTHER WARRANTIES ARISING UNDER THE UNIFORM COMMERCIAL CODE (OR SIMILAR FOREIGN LAWS), ARE HEREBY DISCLAIMED.

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ARTICLE III

CERTAIN ACTIONS PRIOR TO THE DISTRIBUTION

Section 3.1. ASD Reorganization . The Parties agree to take, or cause the members of their respective Groups to take, prior to the Distribution, all actions necessary, subject to the terms of this Agreement, to effectuate the Reorganization (such documentation necessary to effect the Reorganization, the “ Reorganization Documents ”) as set forth on Schedule 3.1 , and as updated from time to time.

Section 3.2. Certificate of Incorporation; Bylaws; Rights Plan . On or prior to the Effective Time, all necessary actions shall be taken to adopt the form of amended and restated certificate of incorporation and amended and restated by-laws and the form of Rights Agreement filed by WABCO with the Commission as exhibits to the Form 10.

Section 3.3. Directors . On or prior to the Effective Time, ASD shall take all necessary action to cause the Board of Directors of WABCO to consist of the individuals identified in the Form 10 (including the Information Statement) at the time declared effective as directors of WABCO.

Section 3.4. Resignations .

(a) Subject to Section 3.4(b) , on or prior to the Effective Time, (i) ASD shall cause all its employees and any employees of its Affiliates who will not become a WABCO Employee immediately following the Effective Time to resign, effective as of the Effective Time, from all positions as officers or directors of any member of the WABCO Group in which they serve, and (ii) WABCO shall cause all WABCO Employees to resign, effective as of the Effective Time, from all positions as officers or directors of any member of the ASD Group in which they serve.

(b) No Person shall be required by any Party to resign from any position or office with another Party if such Person is disclosed in the Information Statement as the Person who is to hold such position or office following the Distribution.

Section 3.5. Ancillary Agreements . On or prior to the Effective Time, ASD and WABCO shall enter into, and/or (where applicable) shall cause a member or members of their respective Groups to enter into, the Ancillary Agreements.

ARTICLE IV

THE DISTRIBUTION

Section 4.1. Stock Dividend to ASD; Distribution . Prior to the Distribution Date, WABCO shall issue to ASD as a stock dividend such number of shares of WABCO Common Stock (or ASD and WABCO shall take or cause to be taken such other appropriate actions to ensure that ASD has the requisite number of shares of WABCO Common Stock) as may be requested by ASD after consultation with WABCO in order to effect the Distribution, which shares as of the date of issuance shall represent (together with such shares previously held by

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ASD) all of the issued and outstanding shares of WABCO Common Stock. Subject to conditions and other terms in this ARTICLE IV , ASD will cause the Agent on the Distribution Date to distribute all of the outstanding shares of WABCO Common Stock then owned by ASD to holders of ASD Common Stock on the Record Date, and to credit the appropriate class and number of such shares of WABCO Common Stock to book entry accounts for each such holder or designated transferee or transferees of such holder of WABCO Common Stock. For stockholders of ASD who own ASD Common Stock through a broker or other nominee, their shares of WABCO Common Stock will be credited to their respective accounts by such broker or nominee. Subject to conditions and other terms in this ARTICLE IV , each holder of ASD Common Stock on the Record Date (or such holder’s designated transferee or transferees) will be entitled to receive in the Distribution one (1) share of WABCO Common Stock (which includes a related preferred stock purchase right) for every three (3) shares of ASD Common Stock held by such stockholder. No action by any such stockholder shall be necessary for such stockholder (or such stockholder’s designated transferee or transferees) to receive the applicable number of shares of WABCO Common Stock (and, if applicable, cash in lieu of any fractional shares) such stockholder is entitled to in the Distribution.

Section 4.2. Fractional Shares . ASD stockholders who, after aggregating the number of shares of WABCO Common Stock (or fractions thereof) to which such stockholder would be entitled on the Record Date, would be entitled to receive a fraction of a share of WABCO Common Stock in the Distribution, will receive cash in lieu of fractional shares. Fractional shares of WABCO Common Stock will not be distributed in the Distribution nor credited to book-entry accounts. The Agent shall, as soon as practicable after the Distribution Date (a) determine the number of whole shares and fractional shares of WABCO Common Stock allocable to each other holder of record or beneficial owner of ASD Common Stock as of close of business on the Record Date, (b) aggregate all such fractional shares into whole shares and sell the whole shares obtained thereby in open market transactions at then prevailing trading prices on behalf of holders who would otherwise be entitled to fractional share interests, and (c) distribute to each such holder, or for the benefit of each such beneficial owner, such holder’s or owner’s ratable share of the net proceeds of such sale, based upon the average gross selling price per share of WABCO Common Stock after making appropriate deductions for any amount required to be withheld for United States federal income tax purposes. WABCO shall bear the cost of brokerage fees and transfer taxes incurred in connection with these sales of fractional shares, which such sales shall occur as soon after the Distribution Date as practicable and as determined by the Agent. None of ASD, WABCO or the applicable Agent will guarantee any minimum sale price for the fractional shares of WABCO Common Stock. Neither ASD nor WABCO will pay any interest on the proceeds from the sale of fractional shares. The Agent will have the sole discretion to select the broker-dealers through which to sell the aggregated fractional shares and to determine when, how and at what price to sell such shares. Neither the Agent nor the selected broker-dealers will be Affiliates of ASD or WABCO.

Section 4.3. Actions in Connection with the Distribution .

(a) WABCO shall file such amendments and supplements to the Form 10 as ASD may reasonably request, and such amendments as may be necessary in order to cause the same to become and remain effective as required by Law, including filing such amendments and supplements to the Form 10 and Information Statement as may be required by the Commission

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or federal, state or foreign securities Laws. ASD shall mail to the holders of ASD Common Stock, at such time on or prior to the Distribution Date as ASD shall determine, the Information Statement included in the Form 10, as well as any other information concerning WABCO, WABCO’s business, operations and management, the Separation and such other matters as ASD shall reasonably determine are necessary and as may be required by Law.

(b) WABCO shall also prepare, file with the Commission and cause to become effective any registration statements or amendments thereof required to effect the establishment of, or amendments to, any employee benefit and other plans necessary or appropriate in connection with the transactions contemplated by this Agreement, or any of the Ancillary Agreements, including any transactions related to financings or other credit facilities. Promptly after receiving a request from ASD, WABCO shall prepare and, in accordance with applicable Law, file with the Commission any such documentation that ASD determines is necessary or desirable to effectuate the Distribution, and ASD and WABCO shall each use commercially reasonable efforts to obtain all necessary approvals from the Commission with respect thereto as soon as practicable.

(c) Promptly after receiving a request from ASD, WABCO shall prepare and file, and shall use commercially reasonable efforts to have approved and made effective, an application for the original listing on the NYSE of the WABCO Common Stock to be distributed in the Distribution, subject to official notice of distribution.

(d) Nothing in this Section 4.3 shall be deemed, by itself, to create a Liability of ASD for any portion of the Form 10.

Section 4.4. Sole Discretion of ASD . ASD shall, in its sole and absolute discretion, determine the Distribution Date and all terms of the Distribution, including the form, structure and terms of any transactions to effect the Distribution and the timing of and conditions to the consummation thereof. In addition, ASD may, in accordance with Section 11.10 , at any time prior to the Distribution Date and from time to time until the completion of the Distribution decide to abandon the Distribution or modify or change the terms of the Distribution, including by accelerating or delaying the timing of the consummation of all or part of the Distribution. None of WABCO, any other member of the WABCO Group, any WABCO Employee or any Third-Party shall have any right or claim to require the consummation of the Separation or the Distribution, each of which shall be effected at the sole discretion of the Board of Directors of ASD.

Section 4.5. Conditions to Distribution . Subject to Section 4.4 , the following are conditions to the consummation of the Distribution. The conditions are for the sole benefit of ASD and shall not give rise to or create any duty on the part of ASD or the Board of Directors of ASD to waive or not waive any such condition.

(a) The Form 10 shall have been declared effective by the Commission, with no stop order in effect with respect thereto;

(b) The WABCO Common Stock to be delivered in the Distribution shall have been approved for listing on the NYSE, subject to official notice of distribution;

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(c) ASD shall have obtained a private letter ruling from the Internal Revenue Service in form and substance satisfactory to ASD (in its sole discretion), and such ruling shall remain in effect as of the Distribution Date, to the effect, among other things, that (i) the Internal Contributions followed by the Internal Distributions generally will qualify as tax-free for U.S. federal income tax purposes under Sections 368(a)(1)(D) and 355 of the Code; (ii) the Contribution followed by the Distribution generally will qualify as tax-free for U.S. federal income tax purposes under Sections 368(a)(1)(D) and 355 of the Code, (iii) no gain or loss will be recognized by ASD on the Contribution, (iv) no gain or loss will be recognized by WABCO on the Contribution, (v) no gain or loss will be recognized by (and no amount will otherwise be included in the income of) the shareholders of ASD upon their receipt of WABCO common stock pursuant to the Distribution; and (vi) no gain or loss will be recognized by ASD pursuant to the Distribution;

(d) ASD shall have obtained an opinion from Skadden, Arps, Slate, Meagher & Flom LLP, its tax counsel, in form and substance satisfactory to ASD (in its sole discretion), substantially to the effect that the Distribution, as well as the Internal Distributions, will qualify as tax-free for Federal income tax purposes under Sections 368(a)(1)(D) and 355 of the Code;

(e) All permits, registrations and consents required under the securities or blue sky Laws of states or other political subdivisions of the United States or of other foreign jurisdictions in connection with the Distribution shall have been obtained and be in full force and effect; and

(f) No order, injunction or decree issued by any Governmental Entity of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Distribution or any of the transactions related thereto, including the Transfer of Assets and assumption of Liabilities pursuant to Article II hereof, shall be in effect.

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ARTICLE V

CERTAIN COVENANTS

Section 5.1. No Solicit . None of ASD or WABCO or any member of their respective Groups will from the Effective Time through and including the two year anniversary of the Effective Time, without the prior written consent of the other applicable Party, either directly or indirectly, on their own behalf or in the service or on behalf of others, solicit, aid, induce or encourage (i) in the case of ASD or any other member of the ASD Group, any employee at the level of grade 11 or higher, and in the case of WABCO or any other member of the WABCO Group, any employee at the level of grade 11 or higher and those employees listed on Schedule 5.1 or (ii) any employee working at a facility or location at which employees of the other Party or member of the other Party’s Group also work to leave his or her employment; provided , however , that nothing in this Section 5.1 shall be deemed to prohibit, any general solicitation for employment through advertisements and search firms not specifically directed at employees of such other applicable Party; provided , further , that the applicable Party has not encouraged or advised such firm to approach any such employee.

Section 5.2. Legal Names and Other Parties’ Trademark .

(a) Except as otherwise specifically provided in any Ancillary Agreement, as soon as reasonably practicable after the Distribution Date, but in any event within six (6) months thereafter, each Party shall cease (and shall cause all of the other members of its Group to cease): (i) making any use of any names or Trademarks that include (A) any of the Trademarks of the other Party or such other Party’s Affiliates (including, in the case of WABCO, “ASD” or “American Standard Companies Inc.” or any other name or Trademark containing the words “American Standard”, and in the case of ASD, “WBC” or “WABCO Holdings Inc.” or any other name or Trademark containing the words “WABCO”) and (B) any names or Trademarks related thereto including any names or Trademarks confusingly similar thereto or dilutive thereof (with respect to each Party, such Trademarks of the other Party or any of such other Party’s Affiliates, the “ Other Party Marks ”), and (ii) holding themselves out as having any affiliation with the other Party or such other Party’s Affiliates; provided , however , that the foregoing shall not prohibit any Party or any member of a Party’s Group from (1) making factual reference that it was formerly affiliated with ASD, (2) making use of any Other Party Mark in a manner that would constitute “fair use” under applicable Law if any unaffiliated third party made such use or would otherwise be legally permissible for any unaffiliated third party without the consent of the Party owning such Other Party Mark, and (3) making references in internal historical and tax records. In furtherance of the foregoing, as soon as practicable, but in no event later than six (6) months following the Distribution Date, each Party shall (and cause all of the other members of its Group to) remove, strike over or otherwise obliterate all Other Party Marks from all of such Party’s and its Affiliates’ assets and other materials, including any vehicles, business cards, schedules, stationery, packaging materials, displays, signs, promotional materials, manuals, forms, websites, email, computer software and other materials and systems; provided , however , that WABCO shall promptly after the Distribution Date post a disclaimer in a form and manner reasonably acceptable to ASD on the “www.wabco-auto.com” website informing its customers that as of the Effective Time and thereafter WABCO, and not ASD, is responsible for the operation of the VCS Business, including such website and any applicable services. Any use by any Party or

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any of such Party’s Affiliates of any of the Other Party Marks as permitted in this Section 5.2 is subject to their compliance with all quality control standards and related requirements and guidelines in effect for the Other Party Marks as of the Effective Time. The Parties shall (and shall cause the other members of its Group to) not use the Other Party Marks as permitted in this Section 5.2 in a manner that is reasonably likely to reflect negatively on such names or marks, or on the other Party or its Affiliates.

(b) Notwithstanding the foregoing requirements of Section 5.2(a) , if any Party or any member of such Party’s Group used commercially reasonable efforts to comply with Section 5.2(a) but is unable, due to regulatory or other circumstance beyond its control, to effect a legal name change in compliance with applicable Law such that an Other Party Mark remains in such Party’s or its Group member’s legal name, then such Party or its relevant Group member will not be deemed to be in breach hereof as long as it continues to use commercially reasonable efforts to effectuate such name change and does effectuate such name change within twelve (12) months after the Distribution Date, and, in such circumstances, such Party or Group member may continue to include in its assets and other materials references to the Other Party Mark that is in such Party’s or Group member’s legal name which includes references to “WABCO” or “American Standard” as applicable, but only to the extent necessary to identify such Party or Group member and only until such Party’s or Group member’s legal name can be changed to remove and eliminate such references.

(c) Notwithstanding the foregoing requirements of Section 5.2(a) , WABCO shall not be required to change any name including the words “American Standard” in any third-party contract or license, or in property records with respect to real or personal property, if an effort to change the name is commercially unreasonable; provided , however , that (i) WABCO on a prospective basis from and after the Distribution Date shall change the name in any new or amended third-party contract or license or property record and (ii) WABCO shall not advertise or make public any continued use of the “American Standard” name permitted by this Section 5.2(c) .

Section 5.3. Auditors and Audits; Annual and Quarterly Financial Statements and Accounting .

(a) Each Party agrees that during the period ending on March 31, 2009 with respect to paragraph (1) below and March 31, 2008 with respect to paragraph (2) (and with the consent of the other applicable Party, which consent shall not be unreasonably withheld or delayed, during any period of time after March 31, 2008 reasonably requested by such requesting Party so long as there is a reasonable business purpose for such request) and in any event solely with respect to the preparation and audit of each of the Party’s financial statements for any of the years ended December 31, 2007, 2006 and 2005, the printing, filing and public dissemination of such financial statements, the audit of each Party’s internal control over financial reporting related to such financial statements and such Party’s management’s assessment thereof, and each Party’s management’s assessment of such Party’s disclosure controls and procedures related to such financial statements:

(1) Annual Financial Statements . Each Party shall provide to the other Party on a timely basis all information reasonably required to meet its schedule for the preparation, printing,

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filing, and public dissemination of its annual financial statements and for management’s assessment of the effectiveness of its disclosure controls and procedures and its internal control over financial reporting in accordance with Items 307 and 308, respectively, of Regulation S-K and, to the extent applicable to such Party, its auditor’s audit of its internal control over financial reporting and management’s assessment thereof in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 and the Commission’s and Public Company Accounting Oversight Board’s rules and auditing standards thereunder (such assessments and audit being referred to as the “ Internal Control Audit and Management Assessments ”). Without limiting the generality of the foregoing, each Party will provide all required financial and other Information with respect to itself and its Subsidiaries to its auditors in a sufficient and reasonable time and in sufficient detail to permit its auditors to take all steps and perform all reviews necessary to provide sufficient assistance to each other Party’s auditors with respect to information to be included or contained in such other Party’s annual financial statements and to permit such other Party’s auditors and management to complete the Internal Control Audit and Management Assessments, to the extent applicable to such Party.

(2) Access to Personnel and Records . Each audited Party shall authorize, and use its commercially reasonable efforts to cause, its respective auditors to make available to the other Party’s auditors (each such other Party’s auditors, collectively, the “ Other Parties’ Auditors ”) both the personnel who performed or are performing the annual audits of such audited party (each such Party with respect to its own audit, the “ Audited Party ”) and work papers related to the annual audits of such Audited Party, in all cases within a reasonable time prior to such Audited Party’s auditors’ opinion date, so that the Other Parties’ Auditors are able to perform the procedures they consider necessary to take responsibility for the work of the Audited Party’s auditors as it relates to their auditors’ report on such other Party’s financial statements, all within sufficient time to enable such other Party to meet its timetable for the printing, filing and public dissemination of its annual financial statements. Each Party shall make available to the Other Parties’ Auditors and management its personnel and Records in a reasonable time prior to the Other Parties’ Auditors’ opinion date and other Parties’ management’s assessment date so that the Other Parties’ Auditors and other Parties’ management are able to perform the procedures they consider necessary to conduct the 2007 Internal Control Audit and Management Assessments.

(b) Amended Financial Reports . In the event a Party restates any of its financial statements that includes such Party’s audited or unaudited financial statements with respect to any balance sheet date or period of operation between January 1, 2002 and December 31, 2007, such Party will deliver to the other Party a substantially final draft, as soon as the same is prepared, of any report to be filed by such first Party with the Commission that includes such restated audited or unaudited financial statements (the “ Amended Financial Reports ”); provided , however , that such first Party may continue to revise its Amended Financial Report prior to its filing thereof with the Commission, which changes will be delivered to the other Party as soon as reasonably practicable; provided , further , however , that such first Party’s financial personnel will actively consult with the other Party’s financial personnel regarding any changes which such first Party may consider making to its Amended Financial Report and related disclosures prior to the anticipated filing of such report with the Commission, with particular focus on any changes which would have an effect upon the other Party’s financial statements or related disclosures. Each Party will reasonably cooperate with, and permit and make any necessary employees available to, the other Party, in connection with the other Party’s preparation of any Amended Financial Reports.

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(c) Financials; Outside Auditors . If any Party or member of its respective Group is required, pursuant to Rule 3-09 of Regulation S-X or otherwise, to include in its Exchange Act filings audited financial statements or other information of the other Party or member of the other Party’s Group, the other Party shall use its commercially reasonable efforts (i) to provide such audited financial statements or other information, and (ii) to cause its outside auditors to consent to the inclusion of such audited financial statements or other information in the Party’s Exchange Act filings.

(d) Third Party Agreements . Nothing in this Section 5.3 shall require any Party to violate any agreement with any third party regarding the confidentiality of confidential and proprietary information relating to that third party or its business; provided , however , that in the event that a Party is required under this Section 5.3 to disclose any such information, such Party shall use commercially reasonable efforts to seek to obtain such third party’s consent to the disclosure of such information.

Section 5.4. No Restrictions on Corporate Opportunities .

(a) In the event that ASD or any other member of the ASD Group, or any director or officer of ASD or any other member of the ASD Group, acquires knowledge of a potential transaction or matter that may be a corporate opportunity for both ASD or any other member of the ASD Group and WABCO or any other member of the WABCO Group, neither ASD nor any other member of the ASD Group, nor any director or officer of ASD or any other member of the ASD Group, shall have any duty to communicate or present such corporate opportunity to WABCO or any other member of the WABCO Group and shall not be liable to WABCO or any other member of the WABCO Group or to WABCO’s stockholders for breach of any fiduciary duty as a stockholder of WABCO or an officer or director thereof by reason of the fact that ASD or any other member of the ASD Group pursues or acquires such corporate opportunity for itself, directs such corporate opportunity to another person or entity, or does not present such corporate opportunity to WABCO or any other member of the WABCO Group.

(b) In the event that WABCO or any other member of the WABCO Group, or any director or officer of WABCO or any other member of the WABCO Group, acquires knowledge of a potential transaction or matter that may be a corporate opportunity for both ASD or any other member of the ASD Group and WABCO or any other member of the WABCO Group, neither WABCO nor any other member of the WABCO Group, nor any director or officer of WABCO or any other member of the WABCO Group, shall have any duty to communicate or present such corporate opportunity to ASD or any other member of the ASD Group and shall not be liable to ASD or any other member of the ASD Group or to ASD’s stockholders for breach of any fiduciary duty as a stockholder of ASD or an officer or director thereof by reason of the fact that WABCO or any other member of the WABCO Group pursues or acquires such corporate opportunity for itself, directs such corporate opportunity to another person or entity, or does not present such corporate opportunity to ASD or any other member of the ASD Group.

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(c) For the avoidance of doubt, to the extent that any person who is a director or officer of ASD or any other member of the ASD Group is also a director or officer of WABCO or any other member of the WABCO Group, such person shall have no duty to communicate or present any corporate opportunity of which he or she acquires knowledge to WABCO or any other member of the WABCO Group and shall not be liable to WABCO or any other member of the WABCO Group or to WABCO’s stockholders for breach of any fiduciary duty as an officer or director of WABCO by reason of the fact that ASD or any other member of the ASD Group pursues or acquires such corporate opportunity, directs such corporate opportunity to another person or entity, or does not present such corporate opportunity to WABCO or any other member of the WABCO Group.

(d) For the purposes of this Section 5.4 , “ corporate opportunities ” of WABCO or any other member of the WABCO Group shall include, but not be limited to, business opportunities that WABCO or any other member of the WABCO Group are financially able to undertake, that are, by their nature, in a line of business of WABCO or any other member of the WABCO Group, including the VCS Business, are of practical advantage to them and are ones in which WABCO or any other member of the WABCO Group have an interest or a reasonable expectancy, and in which, by embracing the opportunities, the self-interest of ASD or any other member of the ASD Group or any of their officers or directors will be brought into conflict with that of WABCO or any other member of the WABCO Group, and “ corporate opportunities ” of ASD or any other member of the ASD Group shall include, but not be limited to, business opportunities that ASD or any other member of the ASD Group are financially able to undertake, that are, by their nature, in a line of business of ASD or any other member of the ASD Group, including the Remainco Business, are of practical advantage to them and are ones in which ASD or any other member of the ASD Group have an interest or a reasonable expectancy, and in which, by embracing the opportunities, the self-interest of WABCO or any other member of the WABCO Group or any of their officers or directors will be brought into conflict with that of ASD or any other member of the ASD Group.

ARTICLE VI

RELEASES AND INDEMNIFICATION

Section 6.1. Release of Pre-Distribution Claims .

(a) Except (i) as provided in Section 6.1(b) , (ii) as may be otherwise provided in any Ancillary Agreement and (iii) for any matter for which any Party is entitled to indemnification or contribution pursuant to this ARTICLE VI , each Party, for itself and each member of its respective Group, their respective Affiliates and all Persons who at any time prior to the Effective Time were directors, officers, agents or employees of any member of their respective Group (in each case, in their respective capacities as such), in each case, together with their respective heirs, executors, administrators, successors and assigns, do hereby remise, release and forever discharge the other Party and the other members of such other Parties’ Group, their respective Affiliates and all Persons who at any time prior to the Effective Time were shareholders, directors, officers, agents or employees of any member of such other Parties (in each case, in their respective capacities as such), in each case, together with their respective heirs, executors, administrators, successors and assigns, from any and all Liabilities whatsoever,

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whether at Law or in equity (including any right of contribution), whether arising under any Contract, by operation of Law or otherwise, including for fraud, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the Effective Time, including in connection with all activities to implement the Distribution, the Separation and any of the other transactions contemplated hereunder and under any of the Ancillary Agreements.

(b) Nothing contained in Section 6.1(a) shall impair or otherwise affect any right of any Party, and as applicable, a member of the Party’s Group to enforce this Agreement, any Ancillary Agreement or any agreements, arrangements, commitments or understandings unrelated to the Separation and Distribution and explicitly contemplated in this Agreement or any Ancillary Agreement to continue in effect after the Effective Time. In addition, nothing contained in Section 6.1(a) shall release any person from:

(i) any Liability assumed, transferred by, or assigned or allocated to, a Party or a member of such Party’s Group pursuant to or contemplated by this Agreement or any Ancillary Agreement including (A) with respect to ASD, any Remainco Liability and (B) with respect to WABCO, any VCS Liability;

(ii) any Liability provided in or resulting from any other Contract or understanding that is entered into after the Effective Time between one Party (and/or a member of such Party’s Group), on the one hand, and the other Party (and/or a member of such Party’s Group), on the other hand;

(iii) any Liability that the Parties may have with respect to indemnification or contribution pursuant to this Agreement or otherwise for claims brought against the Parties by a third-party, which Liability shall be governed by the provisions of this ARTICLE VI and, if applicable, the appropriate provisions of the Ancillary Agreements;

(iv) any Liability with respect to any Continuing Arrangements.

In addition, nothing contained in Section 6.1(a) shall release ASD from indemnifying any director, officer or employee of WABCO who was a director, officer or employee of ASD or any of its Affiliates on or prior to the Effective Time, to the extent such director, officer or employee is or becomes a named defendant in any Action with respect to which he or she was entitled to such indemnification pursuant to obligations existing prior to the Effective Time, it being understood that if the underlying obligation giving rise to such Action is a VCS Liability, WABCO shall indemnify ASD for such Liability (including ASD’s costs to indemnify the director, officer or employee) in accordance with the provisions set forth in this ARTICLE VI .

(c) Each Party shall not, and shall not permit any member of its Group to, make any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or indemnification, against any other Party or any member of any other Party’s Group, or any other Person released pursuant to Section 6.1(a) , with respect to any and all Liabilities released pursuant to Section 6.1(a) .

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(d) It is the intent of each Party, by virtue of the provisions of this Section 6.1 , to provide for a full and complete release and discharge of all Liabilities existing or arising from all acts and events occurring or failing to occur or alleged to have occurred or to have failed to occur and all conditions existing or alleged to have existed on or before the Effective Time, whether known or unknown, between one Party (and/or a member of such Party’s Group) and the other Party (and/or a member of such other Party’s or parties’ Group) (including any contractual agreements or arrangements existing or alleged to exist between or among any such members on or before the Effective Time), except as specifically set forth in Section 6.1(a) and 6.1(b) .

(e) If any Person associated with a Party (including any director, officer or employee of a Party) initiates an Action with respect to claims released by this Section 6.1 , the Party with which such Person is associated shall indemnify the other Party against such Action in accordance with the provisions set forth in this ARTICLE VI .

(f) At any time, at the request of any other Party, each Party shall cause each member of its respective Group and to the extent practicable each other Person on whose behalf it released Liabilities pursuant to this Section 6.1 to execute and deliver releases reflecting the provisions hereof.

Section 6.2. Indemnification by ASD . Except as otherwise specifically set forth in any provision of this Agreement or any Ancillary Agreement or as set forth in Schedule 6.2, following the Effective Time, ASD shall indemnify, defend and hold harmless the WABCO Indemnitees from and against any and all Indemnifiable Losses arising out of, by reason of or otherwise in connection with (i) the Remainco Liabilities or (ii) any breach by any member of the ASD Group of any provision of this Agreement or any Ancillary Agreement, unless such Ancillary Agreement expressly provides for separate indemnification therein, in which case any such indemnification claims shall be made thereunder.

Section 6.3. Indemnification by WABCO . Except as otherwise specifically set forth in any provision of this Agreement or of any Ancillary Agreement, WABCO shall indemnify, defend and hold harmless the ASD Indemnitees from and against any and all Indemnifiable Losses arising out of, by reason of or otherwise in connection with (i) the VCS Liabilities or (ii) any breach by WABCO or any member of the WABCO Group of any provision of this Agreement or any Ancillary Agreement, unless such Ancillary Agreement expressly provides for separate indemnification therein, in which case any such indemnification claims shall be made thereunder; provided , however , that a claim for indemnification of any Indemnifiable Matter (as such term is defined in the Indemnification and Cooperation Agreement) may be made against WABCO hereunder but only after any such claim has not been satisfied pursuant to the provisions of the Indemnification and Cooperation Agreement and may include all Indemnifiable Losses in respect thereto, including attorney’s fees incurred in connection with ASD’s enforcement of its rights hereunder.

Section 6.4. Procedures for Indemnification .

(a) An Indemnitee shall give the Indemnifying Party notice of any matter that an Indemnitee has determined has given or could give rise to a right of indemnification under this Agreement (other than a Third Party Claim which shall be governed by Section 6.4(b) ), within ten (10) Business Days of such determination, stating the amount of the Loss claimed, if known, and method of computation thereof, and containing a reference to the provisions of this Agreement in respect of which such right of indemnification is claimed by such Indemnitee or arises; provided , however , that the failure to provide such notice shall not release the Indemnifying Party from any of its obligations except and solely to the extent the Indemnifying

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Party shall have been materially prejudiced as a result of such failure (except that the Indemnifying Party or Parties shall not be liable for any expenses incurred during the period in which the Indemnitee failed to give such notice).

(b) Third Party Claims . If a claim or demand is made against an ASD Indemnitee or a WABCO Indemnitee (each, an “ Indemnitee ”) by any Person who is not a party to this Agreement or an Affiliate of a Party (a “ Third Party Claim ”) as to which such Indemnitee is or may be entitled to indemnification pursuant to this Agreement, such Indemnitee shall notify the Party which is or may be required pursuant to this ARTICLE VI or pursuant to any Ancillary Agreement to make such indemnification (the “ Indemnifying Party ”) in writing, and in reasonable detail, of the Third Party Claim promptly (and in any event within ten (10) Business Days) after receipt by such Indemnitee of written notice of the Third Party Claim; provided , however , that the failure to provide notice of any such Third Party Claim pursuant to this sentence shall not release the Indemnifying Party from any of its obligations except and solely to the extent the Indemnifying Party shall have been materially prejudiced as a result of such failure (except that the Indemnifying Party or Parties shall not be liable for any expenses incurred during the period in which the Indemnitee failed to give such notice). Thereafter, the Indemnitee shall deliver to the Indemnifying Party, promptly (and in any event within ten (10) Business Days) after the Indemnitee’s receipt thereof, copies of all notices and documents (including court papers) received by the Indemnitee relating to the Third Party Claim.

(c) Other than in the case of a Liability being managed by a Party in accordance with any Ancillary Agreement, an Indemnifying Party shall be entitled (but shall not be required) to assume, control the defense of, and settle any Third Party Claim, at such Indemnifying Party’s own cost and expense and by such Indemnifying Party’s own counsel, that is reasonably acceptable to the applicable Indemnitees, if it gives notice of its intention to do so to the applicable Indemnitees within thirty (30) days of the receipt of such notice from such Indemnitees. After notice from an Indemnifying Party to an Indemnitee of its election to assume the defense of a Third Party Claim, such Indemnitee shall have the right to employ separate counsel and to participate in (but not control) the defense, compromise, or settlement thereof, at its own expense and, in any event, shall cooperate with the Indemnifying Party in such defense and make available to the Indemnifying Party all witnesses, pertinent Information, materials and information in such Indemnitee’s possession or under such Indemnitee’s control relating thereto as are reasonably required by the Indemnifying Party. In the event of a conflict of interest between the Indemnifying Party and the applicable Indemnitee(s), or in the event that any Third Party Claim seeks equitable relief which would restrict or limit the future conduct of the Indemnitee’s business or operations, such Indemnitee(s) shall be entitled to retain, at the Indemnifying Party’s Expense, separate counsel as required by the applicable rules of professional conduct and to participate in (but not control) the defense, compromise, or settlement of that portion of the Third Party Claim that seeks equitable relief with respect to the Indemnitee(s).

(d) If an Indemnifying Party elects not to assume responsibility for defending a Third Party Claim, or fails to notify an Indemnitee of its election as provided in Section 6.4(c) , such Indemnitee may defend such Third Party Claim at the cost and expense of the Indemnifying Party. If the Indemnitee is conducting the defense against any such Third Party Claim, the Indemnifying Party shall cooperate with the Indemnitee in such defense and make available to

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the Indemnitee all witnesses, pertinent Information, material and information in such Indemnifying Party’s possession or under such Indemnifying Party’s control relating thereto as are reasonably required by the Indemnitee.

(e) Unless the Indemnifying Party has failed to assume the defense of the Third Party Claim in accordance with the terms of this Agreement, no Indemnitee may settle or compromise any Third Party Claim without the consent of the Indemnifying Party, which consent shall not be unreasonably withheld or delayed. If an Indemnifying Party has failed to assume the defense of the Third Party Claim within the time period specified in clause (c) above, it shall not be a defense to any obligation to pay any amount in respect of such Third Party Claim that the Indemnifying Party was not consulted in the defense thereof, that such Indemnifying Party’s views or opinions as to the conduct of such defense were not accepted or adopted, that such Indemnifying Party does not approve of the quality or manner of the defense thereof or that such Third Party Claim was incurred by reason of a settlement rather than by a judgment or other determination of liability.

(f) In the case of a Third Party Claim, no Indemnifying Party shall consent to entry of any judgment or enter into any settlement of the Third Party Claim without the consent (not to be unreasonably withheld) of the Indemnitee if the effect thereof is to permit any injunction, declaratory judgment, other order or other nonmonetary relief to be entered, directly or indirectly, against any Indemnitee.

(g) Except as otherwise provided in Section 11.20 , absent fraud or willful misconduct by an Indemnifying Party, the indemnification provisions of this ARTICLE VI shall be the sole and exclusive remedy of an Indemnitee for any monetary or compensatory damages or losses resulting from any breach of this Agreement (including with respect to monetary or compensatory damages or losses arising out of or relating to, as the case may be, any VCS Liability or Remainco Liability), and each Indemnitee expressly waives and relinquishes any and all rights, claims or remedies such Person may have with respect to the foregoing other than under this ARTICLE VI against any Indemnifying Party.

(h) Notwithstanding the foregoing, to the extent any Ancillary Agreement or Schedule 6.2 provides procedures for indemnification that differ from the provisions set forth in this Section 6.4, the terms of the Ancillary Agreement or Schedule 6.2 will govern.

(i) Any Indemnitee that has made a claim for indemnification pursuant to this section 6.4 shall use commercially reasonable efforts to mitigate any Indemnifiable Losses in respect thereof.

Section 6.5. Indemnification Payments . Indemnification required by this ARTICLE VI shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or an Indemnifiable Loss or Liability incurred.

Section 6.6. Additional Matters; Survival of Indemnities .

(a) The indemnity and contribution agreements contained in this ARTICLE VI shall remain operative and in full force and effect, regardless of (i) any investigation made by or on behalf of any Indemnitee; and (ii) the knowledge by the Indemnitee of Liabilities for which it might be entitled to indemnification or contribution hereunder.

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(b) The rights and obligations of each Party and their respective Indemnitees under this ARTICLE VI shall survive the sale or other transfer by any Party or its Affiliates of any Assets or businesses or the assignment by it of any and all Liabilities.

ARTICLE VII

CONFIDENTIALITY; ACCESS TO INFORMATION

Section 7.1. Provision of Corporate Records . Other than in circumstances in which indemnification is sought pursuant to ARTICLE VI (in which event the provisions of such Article will govern) and without limiting the applicable provisions of ARTICLE VI , and subject to appropriate restrictions for classified, privileged or Confidential Information:

(a) After the Effective Time, upon the prior written request by WABCO for specific and identified Information which relates to (x) WABCO or the conduct of the VCS Business, as the case may be, up to the Effective Time, or (y) any Ancillary Agreement to which ASD and WABCO are parties, ASD shall provide, as soon as reasonably practicable following the receipt of such request, appropriate copies of such Information (or the originals thereof if the Party making the request has a reasonable need for such originals) in the possession or control of ASD or any of its Affiliates, but only to the extent such items so relate and are not already in the possession or control of the requesting Party.

(b) After the Effective Time, upon the prior written request by ASD for specific and identified Information which relates to (x) ASD or the conduct of the Remainco Business up to the Effective Time, or (y) any Ancillary Agreement to which WABCO and ASD are parties, WABCO shall provide, as soon as reasonably practicable following the receipt of such request, appropriate copies of such Information (or the originals thereof if the Party making the request has a reasonable need for such originals) in the possession or control of WABCO or any of its Affiliates, but only to the extent such items so relate and are not already in the possession or control of the requesting Party.

Section 7.2. Access to Information . Other than in circumstances in which indemnification is sought pursuant to ARTICLE VI (in which event the provisions of such Article will govern) and without limiting the applicable provisions of ARTICLE VI , from and after the Effective Time, each of ASD and WABCO shall afford to the other and its authorized accountants, counsel and other designated representatives reasonable access during normal business hours, subject to appropriate restrictions for classified, privileged or confidential information and to the requirements of any applicable state and/or federal regulation such as a Code of Conduct or Standard of Conduct, to the personnel, properties, and Information of such Party and its Subsidiaries insofar as such access is reasonably required by the other Party, and only for the duration such access is required, and relates to (x) such other Party or the conduct of its business prior to the Effective Time or (y) any Ancillary Agreement to which each of the Party requesting such access and the Party requested to grant such access are Parties. Nothing in this Section 7.2 shall require any Party to violate any agreement with any third party regarding

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the confidentiality of confidential and proprietary information relating to that third party or its business; provided , however , that in the event that a Party is required to disclose any such information, such Party shall use commercially reasonable efforts to seek to obtain such third party Consent to the disclosure of such information. Each of ASD and WABCO shall inform their respective officers, employees, agents, consultants, advisors, authorized accountants, counsel and other designated representatives who have or have access to the other Party’s Confidential Information of their obligation to hold such information confidential to the same extent as is applicable to the Parties.

Section 7.3. Witness Services . At all times from and after the Effective Time, each of ASD and WABCO shall use its commercially reasonable efforts to make available to the other, upon reasonable written request, its and its Subsidiaries’ officers, directors, employees and agents as witnesses to the extent that (i) such Persons may reasonably be required to testify in connection with the prosecution or defense of any Action in which the requesting Party may from time to time be involved (except for claims, demands or Actions between members of each Group) and (ii) there is no conflict in the Action between the requesting Party and the other Party except for the time and effort required in connection with the services of the officers, directors and employees and agents of the other Party.

Section 7.4. Confidentiality .

(a) Notwithstanding any termination of this Agreement, for a period of five (5) years from the Effective Time the Parties shall hold, and shall cause each of their respective Subsidiaries to hold, and shall each cause their respective officers, employees, agents, consultants and advisors to hold, in strict confidence, and not to disclose or release or use, for any ongoing or future commercial purpose, without the prior written consent of the other Party, any and all Confidential Information concerning any other Party; provided , that the Parties may disclose, or may permit disclosure of, Confidential Information (i) to their respective auditors, attorneys, financial advisors, bankers and other appropriate consultants and advisors who have a need to know such information for auditing and other non-commercial purposes and are informed of their obligation to hold such information confidential to the same extent as is applicable to the Parties and in respect of whose failure to comply with such obligations, the applicable Party will be responsible, (ii) if the Parties or any of their respective Subsidiaries are required or compelled to disclose any such Confidential Information by judicial or administrative process or by other requirements of Law or stock exchange rule, or (iii) as necessary in order to permit a Party to prepare and disclose its financial statements, or other required disclosures; provided , further , that each Party (and members of its Group as necessary) may use, or may permit use of, Confidential Information of the other Party in connection with such first Party performing its obligations, or exercising its rights, under this Agreement or any Ancillary Agreement. Notwithstanding the foregoing, in the event that any demand or request for disclosure of Confidential Information is made pursuant to clause (ii) above, each Party, as applicable, shall promptly notify the other of the existence of such request or demand and shall provide the other a reasonable opportunity to seek an appropriate protective order or other remedy, which such Parties will cooperate in obtaining. In the event that such appropriate protective order or other remedy is not obtained, the Party whose Confidential Information is required to be disclosed shall or shall cause the other applicable Party or Parties to furnish, or cause to be furnished, only that portion of the Confidential Information that is legally required to be disclosed and shall take commercially reasonable steps to ensure that confidential treatment is accorded such information.

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(b) Notwithstanding anything to the contrary set forth herein, (i) the Parties shall be deemed to have satisfied their obligations hereunder with respect to Confidential Information if they exercise the same degree of care (but no less than a reasonable degree of care) as they take to preserve confidentiality for their own similar information and (ii) confidentiality obligations provided for in any agreement between each Party or its Subsidiaries and their respective employees shall remain in full force and effect. Notwithstanding anything to the contrary set forth herein, Confidential Information of any Party in the possession of and used by any other Party as of the Effective Time may continue to be used by such Party in possession of the Confidential Information in and only in the operation of the VCS Business or the Remainco Business, as the case may be; provided , such Confidential Information may be used only so long as the Confidential Information is maintained in confidence and not disclosed in violation of Section 7.4(a) . Such continued right to use may not be transferred (directly or indirectly) to any third party without the prior written consent of the applicable Party, except pursuant to Section 11.9 .

(c) Each Party acknowledges that it and the other members of its Group may have in their possession confidential or proprietary information of third parties that was received under confidentiality or non-disclosure agreements with such third party prior to the Effective Time. Such Party will hold, and will cause the other members of its Group and their respective representatives to hold, in strict confidence the confidential and proprietary information of third parties to which they or any other member of their respective Groups has access, in accordance with the terms of any agreements entered into prior to the Effective Time between one or more members of the such Party’s Group (whether acting through, on behalf of, or in connection with, the separated Businesses) and such third parties.

(d) Upon the written request of a Party, the other Party shall promptly, (i) deliver to such requesting Party all original Confidential Information (whether written or electronic) concerning such requesting Party and/or its Subsidiaries, and (ii) if specifically requested by such requesting Party, destroy any copies of such Confidential Information (including any extracts there from). Upon the written request of such requesting Party, the other Party shall cause one of its duly authorized officers to certify in writing to such requesting Party that the requirements of the preceding sentence have been satisfied in full.

Section 7.5. Privileged Matters .

(a) Pre-Separation Services . The Parties recognize that legal and other professional services that have been and will be provided prior to the Effective Time have been and will be rendered for the collective benefit of each of the members of the ASD Group and the WABCO Group, and that each of the members of the ASD Group and the WABCO Group should be deemed to be the client with respect to such pre-separation services for the purposes of asserting all privileges which may be asserted under applicable Law.

(b) Post-Separation Services . The Parties recognize that legal and other professional services will be provided following the Effective Time which will be rendered

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solely for the benefit of ASD or WABCO or their successors or assigns, as the case may be. With respect to such post-separation services, the Parties agree as follows:

(i) ASD shall be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged information which relates solely to the Remainco Business, whether or not the privileged information is in the possession of or under the control of ASD or WABCO. ASD shall also be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged information that relates solely to the subject matter of any claims constituting Remainco Liabilities, now pending or which may be asserted in the future, in any lawsuits or other proceedings initiated against or by ASD, whether or not the privileged information is in the possession of or under the control of ASD or WABCO or their successors or assigns; and

(ii) WABCO shall be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged information which relates solely to the VCS Business, whether or not the privileged information is in the possession of or under the control of ASD or WABCO or their successors or assigns. WABCO shall also be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged information that relates solely to the subject matter of any claims constituting VCS Liabilities, now pending or which may be asserted in the future, in any lawsuits or other proceedings initiated against or by WABCO, whether or not the privileged information is in the possession of or under the control of ASD or WABCO or their successors or assigns.

(c) The Parties agree that they shall have a shared privilege, with equal right to assert or waive, subject to the restrictions in this Section 7.5 , with respect to all privileges not allocated pursuant to the terms of Section 7.5(b) . All privileges relating to any claims, proceedings, litigation, disputes, or other matters which involve both ASD and WABCO in respect of which both Parties retain any responsibility or Liability under this Agreement, shall be subject to a shared privilege among them.

(d) No Party may waive any privilege which could be asserted under any applicable Law, and in which any other Party has a shared privilege, without the consent of the other Party, which shall not be unreasonably withheld or delayed or as provided in subsections (e) or (f) below. Consent shall be in writing, or shall be deemed to be granted unless written objection is made within twenty (20) days after notice upon the other Party requesting such consent.

(e) In the event of any litigation or dispute between or among any of the Parties, or any members of their respective Groups, either such Party may waive a privilege in which the other Party or member of such Group has a shared privilege, without obtaining the consent of the other Party; provided , that such waiver of a shared privilege shall be effective only as to the use of information with respect to the litigation or dispute between the relevant Parties and/or the applicable members of their respective Groups, and shall not operate as a waiver of the shared privilege with respect to third parties.

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(f) If a dispute arises between or among the Parties or their respective Subsidiaries regarding whether a privilege should be waived to protect or advance the interest of any Party, each Party agrees that it shall negotiate in good faith, shall endeavor to minimize any prejudice to the rights of the other Parties, and shall not unreasonably withhold consent to any request for waiver by another Party. Each Party specifically agrees that it will not withhold consent to waiver for any purpose except to protect its own legitimate interests.

(g) Upon receipt by any Party or by any Subsidiary thereof of any subpoena, discovery or other request which arguably calls for the production or disclosure of information subject to a shared privilege or as to which another Party has the sole right hereunder to assert a privilege, or if any Party obtains knowledge that any of its or any of its Subsidiaries’ current or former directors, officers, agents or employees have received any subpoena, discovery or other requests which arguably calls for the production or disclosure of such privileged information, such Party shall promptly notify the other Party or Parties of the existence of the request and shall provide the other Party or Parties a reasonable opportunity to review the information and to assert any rights it or they may have under this Section 7.5 or otherwise to prevent the production or disclosure of such privileged information.

(h) The transfer of all Information pursuant to this Agreement is made in reliance on the agreement of ASD and WABCO as set forth in Section 7.4 and Section 7.5 , to maintain the confidentiality of privileged information and to assert and maintain all applicable privileges. The access to information being granted pursuant to Section 7.1 and Section 7.2 hereof, the agreement to provide witnesses and individuals pursuant to Section 7.3 hereof, the furnishing of notices and documents and other cooperative efforts contemplated by Section 7.5 hereof, and the transfer of privileged information between and among the Parties and their respective Subsidiaries pursuant to this Agreement shall not be deemed a waiver of any privilege that has been or may be asserted under this Agreement or otherwise.

Section 7.6. Ownership of Information . Any information owned by one Party or any of its Subsidiaries that is provided to a requesting Party pursuant to this ARTICLE VII shall be deemed to remain the property of the providing Party. Unless specifically set forth herein, nothing contained in this Agreement shall be construed as granting or conferring rights of license or otherwise in any such information.

Section 7.7. Other Agreements . The rights and obligations granted under this ARTICLE VII are subject to any specific limitations, qualifications or additional provisions on the sharing, exchange or confidential treatment of information, or privileged matter with respect thereto, set forth in any Ancillary Agreement.

ARTICLE XIII

DISPUTE RESOLUTION

Section 8.1. Negotiation .

(a) In the event of a controversy, dispute or claim arising out of, in connection with, or in relation to the interpretation, performance, nonperformance, validity, termination or

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breach of this Agreement or otherwise arising out of, or in any way related to this Agreement or the transactions contemplated hereby, including any claim based on contract, tort, statute or constitution (but excluding any controversy, dispute or claim arising out of any Contract relating to the use or lease of real property if any third party is a necessary party to such controversy, dispute or claim) (collectively, “ Agreement Disputes ”), the general counsel or chief legal officer (as appropriate) of the relevant Parties (or such other executive officer designated by the relevant Party) shall negotiate for a reasonable period of time to settle such Agreement Dispute; provided , that (i) such reasonable period shall not, unless otherwise agreed by the relevant Parties in writing, exceed forty-five (45) days from the time of receipt by a Party of written notice of such Agreement Dispute (“ Dispute Notice ”) and (ii) the relevant employees from both Parties with knowledge and interest in the dispute shall first have tried to resolve the differences between the Parties. Within thirty (30) days of receipt of the Dispute Notice, the receiving Party shall submit to the other Party a written response. The Dispute Notice and the response shall each include a statement of the Party’s position, a general summary of the arguments supporting that position, the name and title of the executive who will represent the party and any other person(s) who will attend settlement meetings.

(b) In the event of any Agreement Dispute with respect to which a Dispute Notice has been delivered in accordance with this Section 8.1 , and if arbitration proceedings are initiated pursuant to Section 8.2 within 180 days following receipt of the Dispute Notice, (i) the relevant Parties shall not assert the defenses of statute of limitations and laches with respect to the period beginning after the date of receipt of the Dispute Notice, and (ii) any contractual time period or deadline under this Agreement or any Ancillary Agreement to which such Agreement Dispute relates occurring after the Dispute Notice is received shall not be deemed to have passed until such Agreement Dispute has been resolved. Nothing said or disclosed, nor any document produced, in the course of any negotiations, conferences and discussions in connection with efforts to settle an Agreement Dispute that is not otherwise independently discoverable shall be offered or received as evidence or used for impeachment or for any other purpose in any arbitration, but shall be considered as to have been disclosed for settlement purposes.

Section 8.2. Arbitration . If the Agreement Dispute has not been resolved for any reason after thirty (30) days have elapsed from the receipt by a Party of a Dispute Notice, such Agreement Dispute shall be exclusively and finally determined, at the request of any relevant Party, by arbitration conducted where the Parties agree it would be most convenient, and in the absence of agreement in New York City, before and in accordance with the CPR Rules for Non-Administered Arbitration then currently in effect, except as modified herein (the “ Rules ”).

Section 8.3. Selection of Arbitrator(s) . In the event that any Party’s claim or counterclaims equals or exceed $2 million, exclusive of interest or attorneys’ fees, the Agreement Dispute shall be heard and determined by three (3) arbitrators; otherwise, the Agreement Dispute shall be heard and determined by one (1) arbitrator. In the event that one arbitrator shall hear the Agreement Dispute, the Parties shall attempt to agree upon a qualified individual to serve as arbitrator. If the Parties are unable to agree on an arbitrator within 30 days of the receipt by respondent of a copy of the demand for arbitration, then the arbitrator shall be selected and appointed by the International Institute for Conflict Prevention & Resolution (“ CPR ”) in accordance with the listing and ranking method in the Rules, and in any such procedure, each party shall be given a limited number of strikes, excluding strikes for cause. In the event that

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three arbitrators shall hear the Agreement Dispute, and if there are only two Parties to the arbitration, each Party shall appoint its arbitrator within twenty (20) days of receipt by respondent of a copy of the demand for arbitration. The two party-appointed arbitrators shall have twenty (20) days from the appointment of the second arbitrator to agree on a third arbitrator who shall chair the arbitral tribunal. Any arbitrator not timely appointed by the Parties shall be appointed by the CPR in accordance with the listing and ranking method in the Rules, and in any such procedure, each party shall be given a limited number of strikes, excluding strikes for cause. If any appointed arbitrator declines, resigns, becomes incapacitated, or otherwise refuses or fails to serve or to continue to serve as an arbitrator, the Party or arbitrators entitled to appoint such arbitrator shall promptly appoint a successor. In the event that an arbitrator is objected to, CPR shall decide whether such objection is valid and whether the challenged arbitrator shall be removed. Any controversy concerning the jurisdiction of the arbitrator(s), whether an Agreement Dispute is arbitrable, whether arbitration has been waived, whether an assignee of this Agreement is bound to arbitrate, or as to the interpretation of enforceability of this ARTICLE VIII shall be determined by the arbitrator(s).

Section 8.4. Arbitration Procedures . The arbitrator(s) shall attempt to resolve the disputed based on pleadings, sworn statements and other written materials without the need for live hearings. In the event the arbitrator(s) determine that oral argument is beneficial to the arbitrator(s) understanding of the issues, oral argument may be conducted. In the event the arbitrator(s) determine that live hearings are necessary for the proper resolution of the dispute, a hearing shall be conducted. Any oral argument to be conducted shall be held no later than 150 days following appointment of the arbitrator(s). Any hearing to be conducted shall be held no later than 180 days following appointment of the arbitrator(s).

Section 8.5. Discovery . The arbitrator(s), consistent with the expedited nature of arbitration, shall permit discovery only if there is clear and convincing evidence that discovery is necessary. If the arbitrator(s) so determine, they may permit limited document discovery and no more than three depositions per party of no more than 8 hours each. Notwithstanding the foregoing, each Party will, upon the written request of the other Party, promptly provide the other with copies of documents on which the producing Party may rely in support of a claim or defense or which are relevant to the issues raised in the Agreement Dispute. All discovery, if any, shall be completed within 90 days following the appointment of the arbitrator(s). Adherence to formal rules of evidence shall not be required and the arbitrator(s) shall consider any evidence and testimony that the arbitrator(s) determine to be relevant, in accordance with the Rules and procedures that the arbitrator(s) determine to be appropriate. In resolving any Agreement Dispute, the Parties intend that the arbitrator(s) shall apply the substantive Laws of the State of New York, without regard to any choice of law principles thereof that would mandate the application of the laws of another jurisdiction. The Parties intend that the provisions to arbitrate set forth herein be valid, enforceable and irrevocable, and any award rendered by the arbitrator(s) shall be final and binding on the Parties. The Parties agree to comply and cause the members of their applicable Group to comply with any award made in any such arbitration proceedings and agree to enforcement of or entry of judgment upon such award, in any court of competent jurisdiction.

Section 8.6. Confidentiality of Proceedings . Without limiting the provisions of the Rules, unless otherwise agreed in writing by or among the relevant Parties or permitted by this

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Agreement, the relevant Parties shall keep, and shall cause the members of their applicable Group to keep, confidential all matters relating to the arbitration or the award. All negotiations, conferences and discussions pursuant to this ARTICLE VIII shall be treated as compromise and settlement negotiations; provided, that such matters may be disclosed (i) to the extent reasonably necessary in any proceeding brought to enforce this agreement to arbitrate or any arbitral award or for entry of a judgment upon the award and (ii) to the extent otherwise required by Law or regulatory authority.

Section 8.7. Pre-Hearing Procedure and Disposition . Nothing contained herein is intended to or shall be construed to prevent any Party, from applying to any court of competent jurisdiction for interim measures or other provisional relief in connection with the subject matter of any Agreement Disputes, including to compel a party to arbitrate any Agreement Dispute or to require witnesses to obey subpoenas issued by the arbitrator(s). Without prejudice to such provisional remedies as may be available under the jurisdiction of a court, the arbitral tribunal shall have full authority to grant provisional remedies and to direct the parties to request that any court modify or vacate any temporary or preliminary relief issued by such court, and to award damages for the failure of any party to respect the arbitral tribunal’s orders to that effect. The Parties agree to accept and honor any orders relating to interim or provisional remedies that are issued by the arbitrator(s) and agree that any such interim order or remedy may be enforced, as necessary, in any court of competent jurisdiction.

Section 8.8. Continuity of Service and Performance . During the course of dispute resolution pursuant to the provisions of this ARTICLE VIII , the Parties will continue to provide all other services and honor all other commitments under this Agreement and each Ancillary Agreement with respect to all matters not subject to such dispute resolution.

Section 8.9. Awards . The arbitrator(s) shall make an award and issue a reasoned opinion in writing setting forth the basis for such award within 30 days following the submission of all written materials in support of and in opposition to any claim, or if there is a hearing, within 30 days of such hearing. The arbitrator(s) shall be entitled, if appropriate, to award any remedy in such proceedings that is permitted under this Agreement and applicable law, including monetary damages, specific performance and other forms of legal and equitable relief. The Parties hereby waive any claim to exemplary, punitive, multiple or similar damages in excess of compensatory damages, attorneys’ fees, costs and expenses of arbitration, except as may be expressly required by statute or as necessary to indemnify a Party for a Third Party Claim and the arbitrator(s) are not empowered to and shall not award such damages. Any final award must provide that the party against whom an award is issued shall comply with the order within a specified period of time, not to exceed 30 days.

Section 8.10. Costs . If any Party attempts, unsuccessfully, to prevent an Arbitration Dispute from being arbitrated such Party shall reimburse the prevailing party for all costs incurred in compelling arbitration. Except as otherwise may be provided in any Ancillary Agreement, the costs of arbitration pursuant to this Article VIII shall be borne by the non-prevailing Party as determined by the arbitrator.

Section 8.11. Adherence to Time Limits . In accepting appointment, an arbitrator shall commit that his or her schedule permits him or her to devote the reasonably necessary time and

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attention to the arbitration proceedings and to resolving the Agreement Dispute within the time periods set by this Agreement and by the Rules. Any time limits set out in this ARTICLE VIII or in the Rules may be modified upon written agreement of the parties and the arbitrator(s) or by order of the arbitrator(s) for good cause shown. Any failure of the arbitrator(s) to comply with such time limits or to render a final award within the time specified shall not impair the validity of the award or cause the award to be void or voidable, nor shall it be a basis for challenge of the validity or enforceability of the award or of the arbitration proceedings.

Section 8.12. Limitation on Actions . Notwithstanding anything to the contrary in this Agreement, (a) no Action shall be commenced (including the dispute resolution procedures set forth in this Article VIII) by an Indemnitee against an Indemnifying Party or any of their respective Affiliates more than 12 months after the Indemnitee acquires, or reasonably should have acquired, knowledge of the facts giving rise to its right to indemnification under Article VI (it being understood that if no such Action is commenced within such 12-month period, the Indemnifying Party shall be discharged from liability for such claim); and (b) no Action shall be commenced (including the dispute resolution procedures set forth in this Article VIII) by a Party against the other Party asserting any claim arising from breach of any obligation of such other Party under this Agreement more than 12 months after such first Party acquires, or reasonably should have acquired, knowledge of such breach, provided, however, regardless of such first Party’s knowledge of the facts giving rise to its claim based on a breach of this Agreement, no Action shall be commenced by such first Party against the other Party more than 36 months after the occurrence of the initial event giving rise to such claim for such breach (it being understood that if no such Action is commenced within such 12-month or 36-month periods, as applicable, the breaching Party shall be discharged from liability for such breach).

ARTICLE IX

INSURANCE

Section 9.1. Policies and Allocation of Related Rights and Obligations . WABCO acknowledges and agrees on its own behalf, and on behalf of each other member of the WABCO Group, that (i) neither WABCO nor any other member of the WABCO Group has any rights to or under any Third Party Shared Policy, except as expressly provided in this ARTICLE IX and (ii) nothing in this ARTICLE IX shall be deemed to constitute (or to reflect) an assignment of any rights to or under any Third Party Shared Policy. Notwithstanding anything to the contrary herein, all rights to or under insurance policies of any type or description in respect of any and all asbestos-related Liabilities shall be addressed in accordance with Schedule 6.2.

Section 9.2. Third Party Shared Policies .

(a) With respect to Third Party Shared Policies of workers’ compensation, automobile liability, general/product liability, excess/umbrella liability, directors & officers, crime or fiduciary liability for claims that arise out of insured events with an occurrence date prior to the Effective Time, to the extent reasonably possible, ASD will, or will cause the applicable insurance companies or members of the ASD Group that are insured thereunder to (i) continue to provide WABCO and any other member of the WABCO Group with access to and coverage under the applicable Third Party Shared Policies, and (ii) reasonably cooperate with WABCO and take commercially reasonable actions as may be necessary or advisable to assist WABCO in submitting such claims under the applicable Third Party Shared Policies; provided , that WABCO

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shall be responsible for any and all deductibles, self-insured retentions, retrospective premiums, claim-handling charges, co-payments or any other charge or fee legally due and owing relating to such claims and neither ASD nor the insurance company or member of the ASD Group shall be required to maintain such Third Party Shared Policies beyond their current terms. For the avoidance of doubt, if an occurrence date is after the Effective Time, then no payment for any damages, costs of defense, or other sums with respect to such claim shall be available to WABCO under such Third Party Shared Policies.

(b) With respect to all Third Party Shared Policies, WABCO agrees and covenants (on behalf of itself and each other member of the WABCO Group, and each other Affiliate of WABCO) not to make any claim or assert any rights against ASD and any other member of the ASD Group, or the unaffiliated third-party insurers of such Third Party Shared Policies, except as expressly provided under this Section 9.2.

Section 9.3. Administration of Third Party Shared Policies; Other Matters .

(a) Administration . With respect to all Third Party Shared Policies, from and after the Effective Time, ASD or a member of the ASD Group shall be responsible for the Insurance Administration and Claims Administration of such Third Party Shared Policies; provided , that the retention of such administrative responsibilities by ASD or a member of the ASD Group is in no way intended to limit, inhibit or preclude any right to insurance coverage for any Insured Claim of a named insured under such Third Party Shared Policies as contemplated by the terms of this Agreement; provided further , that the retention of such administrative responsibilities by ASD or a member of the ASD Group shall not relieve the Person submitting any Insured Claim of the primary responsibility for reporting such Insured Claim accurately, completely and in a timely manner, or of such Person’s authority to settle any such Insured Claim within any period permitted or required by the relevant Third Party Shared Policy. At its discretion, and in accordance with the terms of the Third Party Shared Policies, ASD may discharge its administrative responsibilities with respect to such Third Party Shared Policies by contracting for the provision of administrative services to any unaffiliated Person, including, after the Effective Time, WABCO or any of its Affiliates. ASD will use its commericially reasonable efforts to notify the appropriate member of the WABCO Group of such discharge. WABCO shall reimburse ASD for any costs incurred by ASD related to Insurance Administration and Claims Administration to the extent such costs (which include defense, out-of-pocket expenses, and direct and indirect costs of employees or agents of ASD providing the administrative services) are (i) not covered under the Third Party Shared Policies and (ii) related to VCS Liabilities. ASD or any member of the ASD Group shall not settle any Insured Claim of WABCO or any member of WABCO Group under the Third Party Shared Policies without first obtaining the approval of WABCO or such member of WABCO Group. Such approval shall not be unreasonably withheld, delayed or conditioned.

(b) Exceeding Policy Limits . Where VCS Liabilities are specifically covered under a Third Party Shared Policy for periods prior to the Effective Time, or where such Third Party Shared Policy covers claims made after the Effective Time with respect to an occurrence prior to the Effective Time, then from and after the Effective Time, WABCO may claim

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coverage for Insured Claims under such Third Party Shared Policy as and to the extent that such insurance is available up to the full extent of the applicable limits of liability of such Third Party Shared Policy (and may receive any Insurance Proceeds with respect thereto as contemplated by Section 9.3(d) ), subject to the terms of this Section 9.3 . It is expressly understood that so long as ASD is an Affiliate of WABCO prior to the Effective Time, ASD may claim such coverage on behalf of WABCO, provided that ASD will use its commercially reasonable efforts to notify WABCO of such claim.

(c) Claims Not Reimbursed . Except as set forth in this Section 9.3 , ASD and WABCO shall not be liable to one another (nor shall any member of the ASD Group be liable to any member of the WABCO Group) for claims, or portions of claims, not reimbursed by insurers under any Third Party Shared Policy for any reason not within the control of ASD or WABCO, including coinsurance provisions, deductibles, quota share deductibles, self-insured retentions, bankruptcy or insolvency of any insurance carrier(s), Third Party Shared Policy limitations or restrictions, any coverage disputes, any failure to timely file a claim by ASD or WABCO (or any of the members of their respective Groups), or any defect in such claim or its processing. The liability of ASD and WABCO to one another for such claims is expressly limited to the amount of Insurance Proceeds received with respect to such claims and allocated to the respective Parties in accordance with Section 9.4(e). It is expressly understood that the foregoing provisions in this Section 9.3(c) shall not limit any Party’s liability to any other Party for indemnification pursuant to ARTICLE VI .

(d) Allocation of Insurance Proceeds . Insurance Proceeds received with respect to claims, costs and expenses under the Third Party Shared Policies shall be paid to or on behalf of the insured under the relevant Third Party Shared Policy, which insured shall thereafter administer the Third Party Shared Policies by paying the Insurance Proceeds, as appropriate, to ASD with respect to Remainco Liabilities and WABCO with respect to VCS Liabilities. In the event that the aggregate limits on any Third Party Shared Policies are exceeded by the aggregate of outstanding Insured Claims by the Parties or members of their respective Groups, the Parties agree to allocate the Insurance Proceeds received thereunder based upon their respective percentage of the total of their bona fide claims which were covered under such Third Party Shared Policy, and any Party who has received Insurance Proceeds in excess of such Party’s respective percentage of Insurance Proceeds shall pay to the other Party the appropriate amount so that each Party will have received its respective percentage of Insurance Proceeds pursuant hereto. Each of the Parties agrees to use commercially reasonable efforts to maximize available coverage under those Third Party Shared Policies applicable to it, and to take all commercially reasonable steps to recover from all other responsible parties in respect of an Insured Claim to the extent coverage limits under a Third Party Shared Policy have been exceeded or would be exceeded as a result of such Insured Claim.

(e) Allocation of Deductibles . In the event that the Parties or members of their respective Groups have bona fide claims under any Third Party Shared Policy arising from the same occurrence and for which a deductible is payable, the Parties agree that the aggregate amount of the deductible paid shall be borne by the Parties in the same proportion which the Insurance Proceeds received by each such Party bears to the total Insurance Proceeds received under the applicable Third Party Shared Policy pursuant to Section 9.3(d) , and any Party who has paid more than such allocable share of the deductible shall be entitled to receive from the other Party an appropriate amount so that each Party has borne its allocable share of the deductible pursuant hereto.

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Section 9.4. Agreement for Waiver of Conflict and Shared Defense . In the event that Insured Claims of more than one of the Parties exist relating to the same occurrence, the Parties shall jointly defend and waive any conflict of interest necessary to the conduct of the joint defense. Nothing in this ARTICLE IX shall be construed to limit or otherwise alter in any way the obligations of the Parties, including those created by this Agreement, by operation of Law or otherwise.

Section 9.5. Cooperation . The Parties agree to use (and cause the members in their respective Groups to use) their commercially reasonable efforts to cooperate with respect to the various insurance matters contemplated by this ARTICLE IX .

Section 9.6. Miscellaneous . Nothing in this Agreement shall be deemed to restrict WABCO or ASD, or any members of their respective Groups, from acquiring at its own expense any insurance Policy in respect of any Liabilities or covering any period. Except as otherwise provided in this Agreement, from and after the Effective Time, WABCO and ASD shall be responsible for obtaining and maintaining their respective insurance programs for their risk of loss and such insurance arrangements shall be separate programs apart from each other and each will be responsible for its own deductibles and retentions for such insurance programs. WABCO acknowledges and agrees on its own behalf, and on behalf of each member of the WABCO Group, that ASD has provided to WABCO prior to the Effective Time all information necessary for WABCO or the appropriate member of the WABCO Group to obtain such insurance policies and insurance programs necessary to cover any and all risk of loss related to the VCS Business.

ARTICLE X

PROVISIONS RELATING TO B&K SALE

Section 10.1. B&K Sale . The Parties hereto understand and acknowledge that ASD is conducting a process and exploring the possible sale of the B&K Business to one or more third parties whether by sale of stock, asset (direct or indirect) or merger, and whether the global B&K Business is sold to one or more third parties or whether the B&K Business is sold separately in regions to one or more third parties (a “ B&K Sale ”).

Section 10.2. Certain Parameters . The terms and provisions of any agreements that relate to a B&K Sale (each, a “ B&K Sale Agreement ”) may include provisions (including representations and warranties, covenants and indemnification) that could have an effect on WABCO following the Distribution and WABCO shall have no right to object to, and ASD shall be permitted to enter into any B&K Sale Agreement, containing such provisions. ASD will provide to WABCO, within ten (10) days after the execution of a B&K Sale Agreement, a copy of such agreement. ASD shall have the sole right to control the B&K Sale process and negotiate the terms of a B&K Sale.

Section 10.3. B&K Sale Proceeds . The cash proceeds from a B&K Sale received by ASD and/or any of its Subsidiaries at the closing of a B&K Sale (including any cash held by any

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of ASD Subsidiaries that are engaged in the B&K Business, collectively, the “ B&K Sale Proceeds “) shall be solely the right of ASD. Neither WABCO, nor any member of the WABCO Group or any other Person (other than ASD and the members of the ASD Group) shall have any rights to or other interest in the B&K Sale Proceeds.

ARTICLE XI

MISCELLANEOUS

Section 11.1. Complete Agreement; Construction . This Agreement, including the Exhibits and Schedules, and the Ancillary Agreements shall constitute the entire agreement between the Parties with respect to the subject matter hereof and shall supersede all previous negotiations, commitments and writings with respect to such subject matter. In the event of any conflict between the terms and conditions of the body of this Agreement and the terms and conditions of any Schedule, the terms and conditions of such Schedule shall control. In the event of any conflict between the terms and conditions of this Agreement and the terms and conditions of any Ancillary Agreement, the terms and conditions of such Ancillary Agreement shall control.

Section 11.2. Ancillary Agreements . This Agreement is not intended to address, and should not be interpreted to address, the matters specifically and expressly covered by the Ancillary Agreements.

Section 11.3. Counterparts . This Agreement may be executed in more than one counterparts, all of which shall be considered one and the same agreement, and, except as otherwise expressly provided in Section 1.3 , shall become effective when one or more such counterparts have been signed by each of the Parties and delivered to the other Parties. Execution of this Agreement or any other documents pursuant to this Agreement by facsimile or other electronic copy of a signature shall be deemed to be, and shall have the same effect as, executed by an original signature.

Section 11.4. Survival of Agreements . Except as otherwise contemplated by this Agreement or any Ancillary Agreement, all covenants and agreements of the Parties contained in this Agreement and each Ancillary Agreement shall survive the Effective Time and remain in full force and effect in accordance with their applicable terms.

Section 11.5. Expenses .

(a) Except as otherwise expressly provided (i) in this Agreement (including paragraphs (b) and (c) of this Section 11.5 ) or (ii) the Ancillary Agreements, the Parties agree that all out-of-pocket fees and expenses (including the costs to obtain Consents) incurred and directly related to the transactions contemplated hereby, including any Liability incurred following the Separation as a result of the consummation of the Separation, shall be borne and paid by the Person incurring such cost or Liability.

(b) Each of ASD and WABCO shall be responsible for payment of its respective outside advisors for all work performed, whether in connection with the Separation or otherwise, prior to, on or after the Effective Time, provided , however , that ASD shall pay all fees earned, and all costs and expenses incurred, prior to the Effective Time directly related to the Separation by the entities listed or described on Schedule 11.5(b) and payable to such entities.

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(c) With respect to any expenses incurred pursuant to a request for further assurances granted under Section 2.10, the Parties agree that any and all fees and expenses incurred by either Party shall be borne and paid by the requesting Party; it being understood that no Party shall be obliged to incur any third-party accounting, consulting, advisor, banking or legal fees, costs or expenses, and the requesting Party shall not be obligated to pay such fees, costs or expenses, unless such fee, cost or expense shall have had the prior written approval of the requesting Party. Notwithstanding the foregoing, each Party shall be responsible for paying its own internal fees, costs and expenses (e.g., salaries of personnel). With respect to any fees, costs and expenses incurred by either Party in satisfying its obligations under Section 5.3, the requesting Party shall be responsible for the other Party’s fees, costs and expenses.

Section 11.6. Notices . All notices, requests, claims, demands and other communications under this Agreement and, to the extent applicable and unless otherwise provided therein, under each of the Ancillary Agreements, as between the Parties, shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt unless the day of receipt is not a Business Day, in which case it shall be deemed to have been duly given or made on the next Business Day) by delivery in person, by overnight courier service, by facsimile with receipt confirmed (followed by delivery of an original via overnight courier service) or by registered or certified mail (postage prepaid, return receipt requested) to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 11.6 ):

If to ASD:

American Standard Companies Inc.

1 Centennial Avenue

Piscataway, NJ 08855

U.S.A.

Attn: Mary Beth Gustafsson, General Counsel

Facsimile: +1 732.980.3377

If to WABCO:

c/o WABCO Europe BVBA

Chaussée de Wavre, 1789 Box 15

1160 Brussels

Belgium

Attn: General Counsel

Facsimile: +32 2 663 98 89

With a Copy to:

McDermott Will & Emery LLP

227 W. Monroe Street

Chicago, IL 60606

U.S.A.

Attn: Neal J. White

Facsimile: +1 312.984.7700

Section 11.7. Waivers . The failure of any Party to require strict performance by any other Party of any provision in this Agreement will not waive or diminish that Party’s right to demand strict performance thereafter of that or any other provision hereof.

Section 11.8. Amendments . Subject to the terms of Section 11.10 , this Agreement may not be modified or amended except by an agreement in writing signed by each of the Parties.

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Section 11.9. Assignment . The provisions of this Agreement and the obligations and rights hereunder shall be binding upon, inure to the benefit of and be enforceable by (and against) the Parties and their respective successors and permitted transferees and assigns. Notwithstanding the foregoing, this Agreement shall not be assignable, in whole or in part, by any Party without the prior written consent of the other Party, and any attempt to assign any rights or obligations arising under this Agreement without such consent shall be null and void; provided, that (i) a Party may assign this Agreement in connection with a merger transaction in which such Party is not the surviving entity or the sale by such Party of all or substantially all of its Assets, and upon the effectiveness of such assignment the assigning Party shall be released from all of its obligations under this Agreement if the surviving entity of such merger or the transferee of such Assets shall agree in writing, in form and substance reasonably satisfactory to the other Party, to be bound by the terms of this Agreement as if named as a “Party” hereto and (ii) ASD may assign all or a portion of its rights hereunder to indemnification to one or more buyers of the B&K Business.

Section 11.10. Termination, Etc. Notwithstanding anything to the contrary herein, this Agreement (including ARTICLE VI (Indemnification) hereof) may be terminated and the Distribution may be amended, modified or abandoned at any time prior to the Effective Time by and in the sole discretion of ASD without the approval of WABCO or the stockholders of ASD. In the event of such termination, no Party shall have any Liability to any other Party or any other Person. After the Effective Time, this Agreement may not be terminated except by an agreement in writing signed by each of the Parties.

Section 11.11. Payment Terms .

(a) Except as expressly provided to the contrary in this Agreement or in any Ancillary Agreement, any amount to be paid or reimbursed by any Party (and/or a member of such Party’s Group), on the one hand, to any other Party (and/or a member of such Party’s Group), on the other hand, under this Agreement shall be paid or reimbursed hereunder within five (5) Business Days after presentation of an invoice or a written demand therefor and setting forth, or accompanied by, reasonable documentation or other reasonable explanation supporting such amount.

(b) Except as expressly provided to the contrary in this Agreement or in any Ancillary Agreement, any amount not paid when due pursuant to this Agreement shall bear interest at a rate per annum equal to the then effective Prime Rate plus 2% (or the maximum legal rate, whichever is lower), calculated for the actual number of days elapsed, accrued from the date on which such payment was due up to the date of the actual receipt of payment.

Section 11.12. No Circumvention . The Parties agree not to directly or indirectly take any actions, act in concert with any Person who takes an action, or cause or allow any member of any such Party’s Group to take any actions (including the failure to take a reasonable action) such that the resulting effect is to materially undermine the effectiveness of any of the provisions of this Agreement or any Ancillary Agreement (including adversely affecting the rights or ability of any Party to successfully pursue indemnification, contribution or payment pursuant to ARTICLE VI ).

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Section 11.13. Subsidiaries . Each of the Parties shall cause (or with respect to an Affiliate that is not a Subsidiary, shall use commercially reasonable efforts to cause) to be performed all actions, agreements and obligations set forth herein to be performed by any Subsidiary or Affiliate of such Party or by any entity that becomes a Subsidiary or Affiliate of such Party on and after the Effective Time.

Section 11.14. Third Party Beneficiaries . Except as provided in ARTICLE VI relating to Indemnitees and for the release under Section 6.1 of any Person provided therein and except as specifically provided in any Ancillary Agreement, this Agreement is solely for the benefit of the Parties and should not be deemed to confer upon third parties any remedy, claim, liability, reimbursement, cause of action or other right in excess of those existing without reference to this Agreement.

Section 11.15. Title and Headings . Titles and headings to Sections and Articles are inserted for the convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

Section 11.16. Exhibits and Schedules . The Exhibits and Schedules attached hereto are incorporated herein by reference and shall be construed with and as an integral part of this Agreement to the same extent as if the same had been set forth verbatim herein.

Section 11.17. Closing . The closing and consummation of the transactions contemplated by this Agreement to occur prior to or at the Distribution shall take place at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square, New York, New York.

Section 11.18. Governing Law . This Agreement shall be governed by and construed in accordance with the internal Laws, and not the Laws governing conflicts of Laws (other than Sections 5-1401 and 5-1402 of the New York General Obligations Law), of the State of New York.

Section 11.19. Consent to Jurisdiction . Subject to the provisions of ARTICLE VIII , each of the Parties irrevocably submits to the exclusive jurisdiction of (a) the Supreme Court of the State of New York, New York County, and (b) the United States District Court for the Southern District of New York (the “ New York Courts ”), for the purposes of any suit, action or other proceeding to compel arbitration or for provisional relief in aid of arbitration in accordance with ARTICLE VIII or for provisional relief to prevent irreparable harm, and to the non-exclusive jurisdiction of the New York Courts for the enforcement of any award issued thereunder. Each of the Parties further agrees that service of any process, summons, notice or document by United States registered mail to such Party’s respective address set forth in Section 11.6 shall be effective service of process for any action, suit or proceeding in the New York Courts with respect to any matters to which it has submitted to jurisdiction in this Section 11.19 . Each of the Parties irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in the New York Courts, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

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Section 11.20. Specific Performance . The Parties agree that irreparable damage would occur in the event that the provisions of this Agreement were not performed in accordance with their specific terms. Accordingly, it is hereby agreed that the Parties shall be entitled to (i) an injunction or injunctions to enforce specifically the terms and provisions hereof in any arbitration in accordance with ARTICLE VIII , (ii) provisional or temporary injunctive relief in accordance therewith in any New York Court, and (iii) enforcement of any such award of an arbitral tribunal or a New York Court in any court of the United States, or any other any court or tribunal sitting in any state of the United States or in any foreign country that has jurisdiction, this being in addition to any other remedy or relief to which they may be entitled.

Section 11.21. Waiver of Jury Trial . SUBJECT TO ARTICLE VIII AND SECTIONS 11.19 AND 11.20 HEREIN, EACH OF THE PARTIES HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY COURT PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF AND PERMITTED UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH OF THE PARTIES HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.21 .

Section 11.22. Severability . In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby, and the Parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions, the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

Section 11.23. Construction . The Parties have participated jointly in the negotiation and drafting of this Agreement. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instrument to be drafted.

Section 11.24. Authorization . Each of the Parties hereby represents and warrants that it has the power and authority to execute, deliver and perform this Agreement, that this Agreement has been duly authorized by all necessary corporate action on the part of such Party, that this Agreement constitutes a legal, valid and binding obligation of each such Party enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and general equity principles.

[Signature Page Follows]

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IN WITNESS WHEREOF, the Parties have caused this Separation and Distribution Agreement to be duly executed as of the day and year first above written.


AMERICAN STANDARD COMPANIES INC.

By		/s/ G. P ETER D’A LOIA
Name:		G. Peter D’Aloia
Title:		Senior Vice President and Chief Financial Officer

WABCO HOLDINGS INC.

By		/s/ U LRICH M ICHEL
Name:		Ulrich Michel
Title:		Chief Financial Officer

[Signature Page to Separation and Distribution Agreement]

Exhibit 10.1

TAX SHARING AGREEMENT

This Tax Sharing Agreement (this “ Agreement ”) is entered into as of July 16, 2007 among American Standard Companies Inc., a Delaware corporation (“ ASD ”), WABCO Holdings Inc, a Delaware corporation and wholly-owned subsidiary of ASD (“ WABCO ”), Trane L.P., a Bermuda LP treated as a corporation for U.S. federal income tax purposes (“ TBLP ”), American Standard Europe L.P., a Bermuda limited partnership treated as a corporation for U.S. federal income tax purposes (“ WLP ”), Ideal Standard Wabco Trane Indústria E Comércio Ltda., a Brazilian limited company treated as a disregarded entity for U.S. federal income tax purposes (“ Trane Brazil ”), and WABCO do Brasil Industria e Comercio de Freios Ltda., a Brazilian company treated as a corporation for U.S. federal income tax purposes (“ WABCO Brazil ” and, together with ASD, WABCO, TBLP, WLP and Trane Brazil, the “ Parties ”). Capitalized terms used in this Agreement and not otherwise defined herein shall have the meanings ascribed to such terms in the Separation and Distribution Agreement, dated as of July 16, 2007, between ASD and WABCO (the “ Distribution Agreement ”).

RECITALS

WHEREAS, ASD is the common parent corporation of an affiliated group of corporations within the meaning of Section 1504(a) of the Internal Revenue Code of 1986, as amended (the “ Code ”), that has filed consolidated federal income tax returns.

WHEREAS, WABCO is a newly-formed, wholly-owned subsidiary of ASD.

WHEREAS, ASD will effect the restructuring transactions described in the Distribution Agreement for the purpose of aggregating the VCS Business in the WABCO Group prior to the Distribution (collectively, the “ Reorganization ”).

WHEREAS, on the Distribution Date, ASD will distribute all of the issued and outstanding shares of WABCO Common Stock on a pro rata basis to holders of ASD Common Stock (the “ Distribution ”).

WHEREAS, the Parties intend that the Distribution will qualify as a non-taxable transaction under Section 355 of the Code, after which none of WABCO or its Subsidiaries will be a member of the ASD Group for federal income tax purposes.

WHEREAS, the Parties desire to set forth their rights and obligations with respect to Taxes (as defined herein) due for periods before and after the Distribution Date.

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

ARTICLE I. DEFINITIONS

1.01 GENERAL. As used in this Agreement, the following terms shall have the following meanings:

“ Affiliate ” shall have the meaning set forth in the Distribution Agreement.

“ Agreement ” shall have the meaning set forth in the Preamble to this Agreement.

“ ASD ” shall have the meaning set forth in the Preamble to this Agreement.

“ ASD Common Stock ” shall have the meaning set forth in the Distribution Agreement.

“ ASD Filed Tax Return ” shall have the meaning set forth in Section 2.01(a).

“ ASD Group ” shall have the meaning set forth in the Distribution Agreement.

“ ASD Taxes ” shall have the meaning set forth in Section 2.03(a).

“ B&K Business ” shall have the meaning set forth in the Distribution Agreement.

“ B&K Foreign Tax Liability ” shall have the meaning set forth in Section 2.03(a).

“ Benefit Item ” shall have the meaning set forth in Schedule 2.03(d).

“ Business Day ” shall have the meaning set forth in the Distribution Agreement.

“ Claim ” shall have the meaning set forth in Section 4.02.

“ Code ” shall have the meaning set forth in the Recitals.

“ Dispute ” shall have the meaning set forth in Section 8.01.

“ Distribution ” shall have the meaning set forth in the Recitals.

“ Distribution Agreement ” shall have the meaning set forth in the Preamble to this Agreement.

“ Distribution Date ” shall have the meaning set forth in the Distribution Agreement.

“ External Distribution Tax Liability ” shall have the meaning set forth in Section 2.03(a).

“ Final Determination ” shall mean a determination within the meaning of Section 1313 of the Code or any similar provision of state or local Tax law.

“ Foreign Taxes ” shall mean all Taxes imposed by a Taxing Authority of any jurisdiction outside of the United States.

“ Governmental Entity ” shall have the meaning set forth in the Distribution Agreement.

“ Indemnifiable Losses ” shall have the meaning set forth in the Distribution Agreement.

“ Indemnified Party ” shall have the meaning set forth in Section 4.02.

“ Indemnifying Party ” shall have the meaning set forth in Section 4.02.

“ Parties ” shall have the meaning set forth in the Preamble to this Agreement.

“ Person ” shall have the meaning set forth in the Distribution Agreement.

“ Post-Distribution Period ” shall mean any taxable year or other taxable period beginning after the Distribution Date and, in the case of any taxable year or other taxable period that begins before and ends after the Distribution Date, that part of the taxable year or other taxable period that begins at the beginning of the day after the Distribution Date.

“ Pre-Distribution Period ” shall mean any taxable year or other taxable period that ends on or before the Distribution Date and, in the case of any taxable year or other taxable period that begins before and ends after the Distribution Date, that part of the taxable year or other taxable period through the close of the Distribution Date.

“ Preliminary Tax Advisor ” shall have the meaning set forth in Section 8.01.

“ Prime Rate ” shall have the meaning set forth in the Distribution Agreement.

“ Prohibited Acts ” shall have the meaning set forth in Section 3.02.

“ Proposed Acquisition Transaction ” means a transaction or series of related transactions (or any agreement, understanding, arrangement or substantial negotiations, within the meaning of Section 355(e) of the Code and the Treasury Regulations promulgated thereunder, to enter into a transaction or series of related transactions), as a result of which WABCO (or any successor thereto) would merge or consolidate with any other Person or as a result of which any Person or any group of Persons would (directly or indirectly) acquire, or have the right to acquire (through an option or otherwise) from WABCO (or any successor thereto) and/or one or more holders of WABCO common stock, respectively, any amount of stock of WABCO, that would, when combined with any other changes in ownership of the stock of WABCO pertinent for purposes of Section 355(e) of the Code and the Treasury Regulations promulgated thereunder, comprise more than thirty-five percent (35%) of the value of all outstanding stock of WABCO as of the date of such transaction, or in the case of a series of transactions, the date of the last transaction of such series; provided , however , that the foregoing shall not include an acquisition (other than involving a public offering) with respect to which there were no agreement, understanding, arrangement or substantial negotiations, within the meaning of Section 355(e) of the Code and the Treasury Regulations promulgated thereunder, regarding the acquisition or a similar acquisition at any time during the two year period ending on the date of the Distribution. For purposes of determining whether a transaction constitutes an indirect acquisition for purposes of the first sentence of this definition, any recapitalization resulting in a shift of voting power or any redemption of shares of stock (including any redemption of WABCO equity pursuant to the exception in Section 3.02(iii)) shall be treated as an indirect acquisition of stock by the non-exchanging

shareholders. This definition and the application thereof is intended to monitor compliance with Section 355(e) of the Code and the Treasury Regulations promulgated thereunder and shall be interpreted accordingly by the Parties in good faith.

“ Remainco Business ” shall have the meaning set forth in the Distribution Agreement.

“ Reorganization ” shall have the meaning set forth in the Recitals.

“ Restructuring Tax Liability ” shall have the meaning set forth in Section 2.03(a).

“ Ruling ” shall have the meaning set forth in Section 2.01(b).

“ Ruling Request ” shall mean the request for rulings submitted by ASD to the Internal Revenue Service on March 15, 2007, including the exhibits attached thereto, and all related supplements.

“ Subsidiary ” shall have the meaning set forth in the Distribution Agreement.

“ Tax ” or “ Taxes ” shall mean (i) all taxes, charges, fees, duties, levies, imposts, rates or other assessments or governmental charges of any kind imposed by any federal, state, local or foreign Governmental Entity, including, without limitation, income, gross receipts, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, custom duties, property, sales, use, license, capital stock, transfer, franchise, registration, payroll, withholding, social security, unemployment, disability, value added, alternative or add-on minimum or other taxes, whether disputed or not, and including any interest, penalties, charges or additions attributable thereto, (ii) liability for the payment of any amount of the type described in clause (i) above arising as a result of being (or having been) a member of any group or being (or having been) included or required to be included in any Tax Return related thereto, and (iii) liability for the payment of any amount of the type described in clauses (i) or (ii) above as a result of any express or implied obligation to indemnify or otherwise assume or succeed to the liability of any other Person.

“ Tax Advisor ” shall have the meaning set forth in Section 8.01.

“ Tax Benefit ” shall mean the reduction in Tax liability of the Indemnified Party arising in connection with any Claim determined, without duplication, as the sum of (i) the product of any deduction available to the Indemnified Party (whether or not currently used or usable) and the actual combined income tax rate of the Indemnified Party in the year the Claim arose, (ii) the amount of any refund and (iii) the amount of reduction in Taxes for any credit utilized in the year the Claim arose.

“ Tax Certificates ” shall mean certificates of officers of ASD and WABCO, dated as of July 31, 2007, provided to Skadden, Arps, Slate, Meagher & Flom LLP in connection with the Tax Opinion.

“ Tax Contest ” shall have the meaning set forth in Section 5.01.

“ Tax Cost ” shall mean the increase in Tax liability of the Indemnified Party arising in connection with any Claim determined as the product of any income or gain resulting from the payment of such Claim by the Indemnifying Party and the actual combined income tax rate of the Indemnified Party in the year the indemnification payment is accrued by the Indemnified Party.

“ Tax Information Packages ” shall mean any information required in order to prepare and file any ASD Filed Tax Return.

“ Taxing Authority ” shall mean any Governmental Entity having jurisdiction over the assessment, determination, collection or imposition of any Tax.

“ Tax Materials ” shall have the meaning set forth in Section 3.01(a).

“ Tax Opinion ” shall mean the written opinion of Skadden, Arps, Slate, Meagher & Flom LLP, dated as of July 31, 2007, regarding certain U.S. federal income tax consequences of certain transactions executed as part of the Reorganization and the Distribution.

“ Tax Return ” shall mean any return, report, certificate, form or similar statement or document (including any related supporting information or schedule attached thereto and any information return, amended tax return, claim for refund or declaration of estimated tax) required to be supplied to, or filed with, a Governmental Entity, or any bill for or notice related to ad valorem or other similar Taxes received from a Governmental Entity, in each case, in connection with the determination, assessment or collection of any Tax or the administration of any laws, regulations or administrative requirements relating to any Tax.

“ TBLP ” shall have the meaning set forth in the Preamble to this Agreement.

“ Trane Brazil ” shall have the meaning set forth in the Preamble to this Agreement.

“ Trane Brazil Contribution ” shall mean Trane Brazil’s contribution of its assets relating to the VCS Business to WABCO Brazil as part of the Reorganization.

“ VCS Assets ” shall have the meaning set forth in the Distribution Agreement.

“ VCS Business ” shall have the meaning set forth in the Distribution Agreement.

“ VCS Tax Liability ” shall have the meaning set forth in Section 2.03(a).

“ WABCO ” shall have the meaning set forth in the Preamble to this Agreement.

“ WABCO Brazil ” shall have the meaning set forth in the Preamble to this Agreement.

“ WABCO Brazil Restructuring Tax Liability ” shall have the meaning set forth in Section 2.03(b).

“ WABCO Common Stock ” shall have the meaning set forth in the Distribution Agreement.

“ WABCO Filed Tax Return ” shall have the meaning set forth in Section 2.01(b).

“ WABCO Group ” shall have the meaning set forth in the Distribution Agreement.

“ WABCO Taxes ” shall have the meaning set forth in Section 2.03(b).

“ WLP ” shall have the meaning set forth in the Preamble to this Agreement.

“ WLP Contribution ” shall mean WLP’s contribution of its assets relating to the Trane and B&K Businesses to TBLP as part of the Restructuring.

“ WLP Restructuring Tax Liability ” shall have the meaning set forth in Section 2.03(b).

1.02 INTERPRETATION. For all purposes of this Agreement: (i) the terms defined in this Agreement include the plural as well as the singular; (ii) all references in this Agreement to “Preamble”, “Recitals”, “Articles”, “Sections” and other subdivisions are to the designated Preamble, Recitals, Articles, Sections and other subdivisions of the body of this Agreement; (iii) pronouns of either gender or neuter include, as appropriate, the other pronoun forms; (iv) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision; (v) “or” is not exclusive; (vi) “including” shall be deemed to be followed by “but not limited to”; and (vii) any definition of or reference to any statute shall be construed as referring also to any rules and regulations promulgated thereunder.

ARTICLE II. TAX RETURNS AND TAX PAYMENTS

2.01 OBLIGATIONS TO FILE TAX RETURNS.

(a) The ASD Group shall have the sole and exclusive responsibility for the preparation and filing of each Tax Return filed after the Distribution Date that includes any member of the ASD Group or any assets or operations of the Remainco Business other than Tax Returns listed on Schedule 2.01(a) (each, an “ ASD Filed Tax Return ”); provided , however , that (x) WABCO shall prepare and deliver to ASD in a manner consistent with past practices pro forma Tax Returns and Tax Information Packages with respect to each member of the WABCO Group or portion of the VCS Business included in, or reflected on, an ASD Filed Tax Return no later than ninety (90) days before the due date for the filing of the relevant Tax Return, (y) ASD shall provide to WABCO no later than thirty (30) days in advance of the due date for the filing thereof, and WABCO shall have a reasonable opportunity to review and comment on, any such ASD Filed Tax Return (or the relevant portion thereof) to the extent that WABCO is responsible for any portion of the Taxes reported on such ASD Filed Tax Return, and (z) in the case of any ASD Filed Tax Return that includes any member of the WABCO Group or the VCS Business only for the portion of the relevant taxable period that ends on the Distribution Date, taxable income, assets or other attributes of the VCS Business shall be allocated by ASD to the portion of such taxable period that ends on the Distribution Date based on an actual or hypothetical closing of the books at the close of the Distribution Date performed by ASD. Each member of the WABCO Group hereby irrevocably authorizes and designates ASD as its agent, coordinator and administrator for the purpose of taking any and all actions necessary or incidental to the filing of any such ASD Filed Tax Returns and, except as otherwise provided herein, for the purpose of making payments to, or collecting refunds from, any Governmental Entity in respect of an ASD Filed Tax Return. Except as otherwise provided herein, ASD shall have the exclusive right to file, prosecute,

compromise or settle any claim for, or refund of, Taxes in respect of an ASD Filed Tax Return for which ASD bears responsibility hereunder and to determine whether any refunds of Taxes to which the ASD Group may be entitled shall be received by way of refund or credit against the Tax liability of the ASD Group. For purposes of this Section, validly filed extensions of time to file tax returns should be treated as extending the date such returns are required to be filed.

(b) The WABCO Group shall have the sole and exclusive responsibility for the preparation and filing of (A) each Tax Return that is required to be filed after the Distribution Date that includes any member of the WABCO Group or any assets or operations of the VCS Business that is not an ASD Filed Tax Return and (B) Tax Returns listed on Schedule 2.01(a) (each, a “ WABCO Filed Tax Return ”); provided , however , that, except as otherwise required by law, (1) all WABCO Filed Tax Returns shall be prepared on a basis that is consistent with the Tax Opinion and the private letter ruling received by ASD on July 10, 2007 (the “ Ruling ”) with respect to the Reorganization transactions addressed therein and the Distribution and consistent with past practices of ASD, (2) WABCO shall provide to ASD no later than thirty (30) days in advance of the due date for the filing thereof, and ASD shall have a reasonable opportunity to review and comment on, any such WABCO Filed Tax Return (or the relevant portion thereof) to the extent that ASD is responsible for any portion of the Taxes reported on such WABCO Filed Tax Return and (3) in the case of any WABCO Filed Tax Return that includes any member of the WABCO Group or the VCS Business only for the portion of the relevant taxable period that begins after the Distribution Date, taxable income, assets or other attributes of the VCS Business shall be allocated by ASD to the portion of such taxable period that begins after the Distribution Date based on an actual or hypothetical closing of the books at the close of the Distribution Date. For purposes of this Section, validly filed extensions of time to file tax returns should be treated as extending the date such returns are required to be filed.

2.02 OBLIGATION TO REMIT TAXES. Subject to Section 2.01 and subject always to the ultimate division of responsibility for Taxes set out in Section 2.03, the ASD Group and the WABCO Group shall each remit or cause to be remitted to the applicable Governmental Entity in a timely manner any Taxes due in respect of any Tax Return that such Party is required to file (or, in the case of a Tax for which no Tax Return is required to be filed, which is otherwise payable by such Party or a member of such Party’s group (the ASD Group or the WABCO Group) to any Governmental Entity). In the case of any ASD Filed Tax Return or WABCO Filed Tax Return, for which the Party not required to file such Tax Return is obligated under this Agreement to pay all or a portion of the Taxes reported as due on such Tax Return, the Party filing such Tax Return shall notify the other Party, in writing, of its obligation to pay such Taxes and the Party receiving such notice shall pay such amount to the Party filing such Tax Return in accordance with the notice and payment provisions contained in ARTICLE IV.

2.03 TAX SHARING OBLIGATIONS AND PRIOR AGREEMENTS.

(a) ASD and the members of the ASD Group shall be responsible for the payment of (and shall be entitled to any refund of, whether received in cash or applied against future Tax obligations) all Taxes attributable to any member of the ASD Group or the Remainco Businesses for any Pre-Distribution Period or Post-Distribution Period other than (i) Taxes arising as a result of (A) the Distribution, except to the extent such Taxes arise as a result of any breach of any covenant or any other obligation contained in the Tax Materials or this Agreement by ASD or any member of the ASD Group or

any shareholder of ASD (the “ External Distribution Tax Liability ”), or (B) the Reorganization or any transaction associated therewith as described in the Ruling or the Distribution Agreement and paid after the Distribution except to the extent such Taxes arise as a result of any action undertaken by ASD, any member of the ASD Group or any shareholder of ASD after the Distribution (the “ Restructuring Tax Liability ”), (ii) claims for indemnification made by one or more buyers of the B&K Business, or any assignee of such claims, with respect to Foreign Taxes resulting from (Y) any audit, examination, investigation, or other proceeding by any Governmental Entity in respect of Taxes or Tax matters of the B&K Business, or (Z) any underpayment of Taxes identified by a buyer of the B&K Business relating to Taxes or Tax Returns of the B&K Business, each with respect to periods prior to the earlier of (I) the date of sale of the B&K Business, or if the B&K Business is not sold to a single buyer, the date the buyer making the indemnification claim purchased a portion of the B&K Business to which such claim relates, or (II) December 31, 2007 (the “ B&K Foreign Tax Liability ”) and (iii) Taxes imposed with respect to the ownership of the VCS Assets or the operation of the VCS Business by any member of the ASD Group (the “ VCS Tax Liability ”) (collectively, the “ ASD Taxes ”).

(b) WABCO and the members of the WABCO Group shall be responsible for the payment of (and shall be entitled to any refund of, whether received in cash or applied against future Tax obligations) (i) all Taxes attributable to any member of the WABCO Group, the ownership of any VCS Asset or the operation of the VCS Business for any Pre-Distribution Period or Post-Distribution Period, (ii) the External Distribution Tax Liability, (iii) the Restructuring Tax Liability, (iv) the B&K Foreign Tax Liability, and (v) the VCS Tax Liability (collectively, the “ WABCO Taxes ”), provided , however , that the portion of the Restructuring Tax Liability incurred by TBLP and its Subsidiaries (the “ WLP Restructuring Tax Liability ”) shall be assumed by WLP in connection with the WLP Contribution; provided further , that the portion of the Restructuring Tax Liability incurred or assumed by Trane Brazil and its Subsidiaries attributable to Canadian and Brazilian Taxes (the “ WABCO Brazil Restructuring Tax Liability ”) shall be assumed by WABCO Brazil in connection with the Trane Brazil Contribution.

(c) If, prior to the Distribution, a deposit were made with respect to any Tax for which WABCO, WLP or WABCO Brazil is responsible under this Agreement, such deposit shall be assigned to such responsible Party and such Party shall only be liable for the amount of such Tax ultimately due in excess of the applicable deposit. Refunds of such deposits shall be remitted to, and any credits with respect to Taxes attributable to such deposits shall be for the benefit of, WABCO or the WABCO subsidiary responsible for the Tax with respect to which the deposit was made.

(d) Notwithstanding anything else to the contrary contained herein or in any other Transaction Agreement, the Parties agree to allocate the Benefit Items set forth on Schedule 2.03(d) in accordance therewith.

(e) Except as set forth in this Agreement and in consideration of the mutual indemnities and other obligations of this Agreement, any and all prior Tax sharing or allocation agreements or practices between any member of the ASD Group and any member of the WABCO Group shall be terminated with respect to the WABCO Group as of the Distribution Date, and no member of the WABCO Group shall have any continuing rights or obligations thereunder. Notwithstanding the prior sentence, the Indemnity and Guaranty Agreement entered into among Ideal Standard Do Brasil Indústria E Comércio De Materiais Sanitários Ltda, Wabco Do Brasil Indústria E Comércio De Freios Ltda, and Ideal Standard Wabco Trane Indústria E Comércio Ltda, dated July 13, 2007, shall not be terminated as of the Distribution Date and the parties shall continue to be bound by such agreement.

2.04 AMENDED RETURNS.

(a) WABCO shall not, and shall not permit any member of the WABCO Group, to file any amended Tax Return that includes any member of the ASD Group or any of the assets or operations of the Remainco Businesses without the consent of ASD, not to be unreasonably withheld. ASD shall provide a response to a request for such consent from WABCO within seven (7) Business Days following the receipt of such request. Receipt of consent by WABCO or a member of the WABCO Group from ASD under the provisions of this Section 2.04(a) shall not limit or modify WABCO’s continuing indemnification obligation under Section 4.01(b).

(b) ASD shall not, and shall not permit any member of the ASD Group, to file any amended Tax Return that includes any member of the WABCO Group or any of the assets or operations of the VCS Business without the consent of WABCO, not to be unreasonably withheld. WABCO shall provide a response to a request for such consent from ASD within seven (7) Business Days following the receipt of such request. Receipt of consent by ASD or a member of the ASD Group from WABCO under the provisions of this Section 2.04(b) shall not limit or modify ASD’s continuing indemnification obligation under Section 4.01(a).

ARTICLE III. REPRESENTATIONS AND COVENANTS

3.01 COMPLIANCE WITH THE RULING AND TAX OPINION.

(a) ASD (on behalf of itself and all other members of the ASD Group) hereby represents and warrants that (i) it has examined (A) the Ruling, (B) the Tax Opinion, (C) the Ruling Request, (D) the Tax Certificates and (E) any other materials delivered or deliverable in connection with the issuance of the Ruling and the rendering of the Tax Opinion (collectively, the “ Tax Materials ”) and (ii) the facts presented and representations made therein, to the extent descriptive of or otherwise relating to ASD or any member of the ASD Group or the Remainco Businesses, were, at the time presented or represented and from such time until and including the Distribution Date true, correct and complete in all material respects. ASD (on behalf of itself and all other members of the ASD Group) hereby confirms and agrees to comply with any and all covenants and agreements in the Tax Materials applicable to ASD or any member of the ASD Group or the Remainco Businesses.

(b) WABCO (on behalf of itself and all other members of the WABCO Group) hereby represents and warrants that (i) it has examined the Tax Materials and (ii) the facts presented and representations made therein, to the extent descriptive of or otherwise relating to WABCO or any member of the WABCO Group or the VCS Business, were at the time presented or represented and from such time until and including the Distribution Date true, correct and complete in all respects. WABCO (on behalf of itself and all other members of the WABCO Group) hereby confirms and agrees to comply with any and all covenants and agreements in the Tax Materials applicable to WABCO or any member of the WABCO Group or the VCS Business.

3.02 OPINION REQUIREMENT FOR MAJOR TRANSACTIONS. WABCO (on behalf of itself and all other members of the WABCO Group) hereby covenants and agrees that no member of the WABCO Group will take or permit to be taken within two (2) years of the Distribution the following

actions: (i) any Proposed Acquisition Transaction or approval of any Proposed Acquisition Transaction for any purpose; (ii) the issuance of any WABCO equity or rights to acquire any WABCO equity (other than (A) any such issuance qualifying under Treas. Reg. § 1.355-7(d)(8) in connection with the performance of services, or (B) any issuances which, in the aggregate, would not result in a Proposed Acquisition Transaction); (iii) redemptions or repurchases of any WABCO equity (except to the extent consistent with the requirements of Rev. Proc. 96-30 and statements made with respect thereto in the Ruling Request and the Ruling); (iv) recapitalizations or other dispositions of, or modifications to the terms of, any WABCO equity; (v) any liquidation, merger or consolidation involving WABCO (including, for purposes of clarification, the conversion of WABCO into a limited liability company); (vi) any sale of all or substantially all of WABCO’s assets in a single transaction or series of related transactions; (vii) the disposition or discontinuance of the operation of any active trade or business assets except in the ordinary course of business; or (viii) actions or positions inconsistent with any representation or covenant of WABCO or any member of the WABCO Group contained in Section 3.01(b) or Section 6.02 of this Agreement and no member of the WABCO Group will take or permit to be taken any action at any time that could jeopardize, directly or indirectly, any of the conclusions contained in the Ruling or the Tax Opinion (collectively, the “ Prohibited Acts ”). Notwithstanding the foregoing, WABCO or a member of the WABCO Group may take any of the Prohibited Acts if WABCO obtains (1) the written consent of ASD, not to be unreasonably withheld, or (2) (a) an unqualified opinion of a nationally recognized law firm, in form and substance reasonably satisfactory to ASD, that the taking of such action will not adversely affect, directly or indirectly, any of the conclusions contained in the Ruling or the Tax Opinion, or (b) a supplemental ruling from the Internal Revenue Service that the taking of such action will not adversely affect, directly or indirectly, any of the conclusions contained in the Ruling, provided , however , that no request for a supplemental ruling shall be made prior to obtaining ASD’s consent, not to be unreasonably withheld, and that ASD shall have the right to participate in the preparation of all material correspondence, calls, meetings and similar events related to obtaining such supplemental ruling. ASD shall provide a response to a request for consent from WABCO under the provisions of this Section 3.02 within seven (7) Business Days following the receipt of such request. Receipt of consent by WABCO or a member of the WABCO Group from ASD under the provisions of this Section 3.02 shall not limit or modify WABCO’s continuing indemnification obligation under Section 4.01(b).

3.03 AMERICAN STANDARD COVENANTS. Notwithstanding anything else to the contrary contained in this Agreement or any other agreement, ASD (on behalf of itself and all other members of the ASD Group) hereby confirms and agrees that neither ASD nor any member of the ASD Group will take or permit to be taken any action at any time that would likely jeopardize, directly or indirectly, any of the conclusions contained in the Ruling or the Tax Opinion.

ARTICLE IV. INDEMNITY OBLIGATIONS AND PAYMENTS

4.01 INDEMNITY OBLIGATIONS.

(a) ASD shall indemnify and hold harmless WABCO from and against, and will reimburse WABCO for (i) all ASD Taxes and (ii) all Taxes and Indemnifiable Losses arising out of, based upon or relating or attributable to any breach of any representation, covenant or obligation of any member of the ASD Group under this Agreement.

(b) Notwithstanding whether any action is permitted or consented to hereunder and notwithstanding anything else to the contrary contained herein, the WABCO Group shall indemnify and hold harmless ASD from and against, and will reimburse ASD for (i) all WABCO Taxes and (ii) all Taxes and Indemnifiable Losses arising out of, based upon or relating or attributable to any breach of or inaccuracy in any representation, covenant or obligation of any member of the WABCO Group under this Agreement.

(c) WLP shall indemnify and hold harmless TBLP and its Subsidiaries from and against, and will reimburse TBLP and its Subsidiaries for (i) the WLP Restructuring Tax Liability and (ii) all Taxes and Indemnifiable Losses arising out of, based upon or relating or attributable to any breach of any representation, covenant or obligation of WLP under this Agreement.

(d) WABCO Brazil shall indemnify and hold harmless Trane Brazil and its Subsidiaries from and against, and will reimburse Trane Brazil and its Subsidiaries for (i) the WABCO Brazil Restructuring Tax Liability and (ii) all Taxes and Indemnifiable Losses arising out of, based upon or relating or attributable to any breach of any representation, covenant or obligation of WABCO Brazil under this Agreement.

4.02 NOTICE. A Party making a claim for indemnification under this Agreement (the “ Indemnified Party ”) shall provide the Party from whom such indemnification is sought (the “ Indemnifying Party ”) with written notice of such claim describing such claim in reasonable detail and accompanied by reasonable documentation supporting such claim (the “ Claim ”) no later than twenty (20) Business Days after the Indemnified Party (i) files a Tax Return reporting Taxes due which are subject to reimbursement or (ii) receives written notice with respect to Taxes that may be subject to indemnification under this Agreement, provided , however , that in the event that timely notice is not provided, the Indemnifying Party shall be relieved of its obligation to indemnify the Indemnified Party only to the extent that such delay results in actual increased costs or actual prejudice.

4.03 TIMING OF PAYMENTS. The Indemnifying Party shall pay the amount of any Claim to the Indemnified Party within ten (10) Business Days of receipt of the Claim, provided that , if such Claim is still subject to the outcome of any Tax Contest, then payment shall not be due until ten (10) Business Days after such Claim either is resolved through a Final Determination, or prior to a Final Determination, if the Indemnified Party and the Indemnifying Party agree on the indemnification obligation under this Agreement with respect to such Claim. All indemnification payments due under this Agreement shall be made by wire transfer of immediately available funds to a bank account of the Indemnified Party. Late payments shall be subject to interest at a rate per annum equal to the then effective Prime Rate plus 2% (or the maximum legal rate, whichever is lower), calculated for the actual number of days elapsed, accrued from the date on which such payment was due up to the date of the actual receipt of payment.

4.04 TREATMENT OF PAYMENTS. The Parties agree that any payment made among the Parties pursuant to this Agreement shall be treated, to the extent permitted by law, for all Tax purposes as a non-taxable payment made immediately prior to the Distribution.

4.05 PAYMENTS NET OF INSURANCE PROCEEDS, TAX COSTS AND BENEFITS. The amount due with respect to any Claim by an Indemnified Party under this Agreement shall be determined net of the amount of related insurance proceeds, Tax Benefit and Tax Cost to the Indemnified Party.

ARTICLE V. TAX CONTESTS

5.01 NOTICE. The Indemnified Party shall promptly notify the Indemnifying Party in writing upon receipt by the Indemnified Party or any member of its group of a written communication from any Governmental Entity with respect to any pending or threatened audit, claim, dispute, suit, action, proposed assessment or other proceeding (a “ Tax Contest ”) concerning any Taxes for which the Indemnifying Party may be liable under this Agreement.

5.02 CONTROL OF CONTESTS BY ASD. Subject to the limitations in any agreement relating to the sale or other disposition of all or any portion of the B&K Business, ASD shall have the sole responsibility and control over the handling of any Tax Contest, including the exclusive right to communicate with agents of the Governmental Entity and to control, resolve, settle or agree to any deficiency, claim or adjustment proposed, asserted or assessed in connection with or as a result of any such Tax Contest, involving any ASD Filed Tax Return , but excluding Tax Contests involving the B&K Foreign Tax Liability and the Tax Contests listed on Schedule 5.02; provided , however , that ASD shall not resolve, settle or agree to any deficiency, claim or adjustment proposed, asserted or assessed in connection with or as a result of any such Tax Contest that affects the liability of WABCO or a member of the WABCO Group under this Agreement without the consent of WABCO, not to be unreasonably withheld. WABCO shall provide a response to a request for such consent from ASD within seven (7) Business Days following the receipt of such request. Subject to ASD’s rights under this Section 5.02, upon request by WABCO, WLP or WABCO Brazil, such requesting party shall, at its own expense, be allowed to participate in the handling of any such Tax Contest with respect to any item that may affect the liability of WABCO (or any member of the WABCO Group), WLP or WABCO Brazil, as the case may be, under this Agreement, provided , however , that such rights shall be limited to the extent that ASD’s right to control or otherwise participate in the relevant Tax Contest are limited pursuant to any agreement for a sale or other disposition of all or any portion of the B&K Business.

5.03 CONTROL OF CONTESTS BY WABCO. WABCO shall have the full responsibility and control over the handling of any Tax Contest, including the exclusive right to communicate with agents of the Governmental Entity and to control, resolve, settle or agree to any deficiency, claim or

adjustment proposed, asserted or assessed in connection with or as a result of any such Tax Contest, involving any WABCO Filed Tax Return, the B&K Foreign Tax Liability and the Tax Contests listed on Schedule 5.02; provided , however , that WABCO’s right to control or otherwise participate in a Tax Contest involving a WABCO Filed Tax Return, a Tax Contest listed on Schedule 5.02 or the B&K Foreign Tax Liability shall be limited to the extent that ASD’s right to control or otherwise participate in the relevant Tax Contest are limited pursuant to any agreement relating to the sale or other disposition of all or any portion of the B&K Business; provided , further , that WABCO shall not resolve, settle or agree to any deficiency, claim or adjustment proposed, asserted or assessed in connection with or as a result of any such Tax Contest that affects the liability of ASD or a member of the ASD Group under this Agreement without the consent of ASD, not to be unreasonably withheld. ASD shall provide a response to a request for such consent from WABCO within seven (7) Business Days following the receipt of such request. Subject to WABCO’s rights under this Section 5.03 and subject to any limitations in any agreement relating to the sale or other disposition of all or any portion of the B&K Business, upon request by ASD, ASD shall, at its own expense, be allowed to participate in the handling of any such Tax Contest with respect to any item that may affect the liability of ASD or any member of the ASD Group, as the case may be, under this Agreement.

ARTICLE VI. COOPERATION

6.01 GENERAL. Each Party shall fully cooperate, and shall cause all members of such Party’s group (the ASD Group or the WABCO Group) to fully cooperate, with the other Parties in connection with the preparation and filing of any Tax Return or the conduct of any Tax Contest (including, where appropriate or necessary, providing a power of attorney) concerning any issues or any other matter contemplated under this Agreement. Each Party shall make its employees and facilities available on a mutually convenient basis to facilitate such cooperation.

6.02 CONSISTENT TREATMENT. Unless and until there has been a Final Determination to the contrary, each Party agrees not to take any position on any Tax Return, in connection with any Tax Contest or otherwise that is inconsistent with (a) the allocation of Taxes and Benefit Items between the ASD Group and the WABCO Group as set forth in this Agreement, (b) the Ruling, (c) the Tax Opinion, or (d) the Tax treatment of any transaction included in the Reorganization agreed upon by the parties.

ARTICLE VII. RETENTION OF RECORDS; ACCESS

7.01 For so long as the contents thereof may become material in the administration of any matter under applicable Tax law, but in any event until the later of (i) the expiration of any applicable statutes of limitation and (ii) seven years after the Distribution Date, the Parties shall (a) retain records, documents, accounting data and other information (including computer data) necessary for the preparation and filing of all Tax Returns in respect of Taxes of any member of either the ASD Group or

the WABCO Group for any Pre-Distribution Period or any Post-Distribution Period or for any Tax Contests relating to such Tax Returns, and (b) give to the other Parties reasonable access to such records, documents, accounting data and other information (including computer data) and to its personnel (insuring their cooperation) and premises, for the purpose of the review or audit of such Tax Returns to the extent relevant to an obligation or liability of a Party under this Agreement or for purposes of the preparation or filing of any such Tax Return, the conduct of any Tax Contest or any other matter reasonably and in good faith related to the Tax affairs of the requesting Party. At any time after the Distribution Date that the ASD Group proposes to destroy such material or information, it shall first notify the WABCO Group in writing and the WABCO Group shall be entitled to receive such materials or information proposed to be destroyed. At any time after the Distribution Date that the WABCO Group proposes to destroy such material or information, it shall first notify the ASD Group in writing and the ASD Group shall be entitled to receive such materials or information proposed to be destroyed.

ARTICLE VIII. DISPUTE RESOLUTION

8.01 In the event of any disagreement arising under this Agreement, including any dispute in connection with a claim by a third party (a “ Dispute ”), the Parties shall promptly notify the chief financial officer of each of ASD and WABCO (each, a “ CFO ” and, together, the “ CFOs ”) of such Dispute, who together shall attempt in good faith to resolve such Dispute. If such Dispute is not resolved within seven (7) Business Days following the date on which the CFOs receive notification, the Parties to such Dispute shall each separately retain an independent, nationally recognized law or accounting firm (each, a “ Preliminary Tax Advisor ” and, together, the “ Preliminary Tax Advisors ”), which Preliminary Tax Advisors shall jointly retain a third independent, nationally recognized law or accounting firm which must be located in New York, New York (the “ Tax Advisor ”) on behalf of the Parties to the Dispute to act as an arbitrator in order to resolve the Dispute. The Tax Advisor’s determination as to any Dispute shall be made in accordance with the terms of this Agreement and shall be final and binding on the Parties and not subject to collateral attack for any reason (other than manifest error). All fees and expenses of the Preliminary Tax Advisor shall be borne by the Party that engaged such advisor and all of the fees and expenses of the Tax Advisor shall be shared equally by each of the Parties to the Dispute.

ARTICLE IX. MISCELLANEOUS PROVISIONS

9.01 GOVERNING LAW. This Agreement and the legal relations between the Parties hereto shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflict of laws rules thereof to the extent such rules would require the application of the law of another jurisdiction.

9.02 APPLICATION TO PRESENT AND FUTURE SUBSIDIARIES. This Agreement is being entered into by ASD and WABCO on behalf of themselves and the members of their respective

groups (the ASD Group and the WABCO Group). This Agreement shall constitute a direct obligation of each such entity and shall be deemed to have been readopted and affirmed on behalf of any entity that becomes a Subsidiary of ASD or WABCO in the future.

9.03 FURTHER ASSURANCES. Subject to the provisions hereof, the Parties hereto shall make, execute, acknowledge and deliver such other instruments and documents, and take all such other actions, as may be reasonably required in order to effectuate the purposes of this Agreement and to consummate the transactions contemplated hereby.

9.04 SURVIVAL. Notwithstanding any other provision of this Agreement to the contrary, all representations, covenants and obligations contained in this Agreement shall survive until the expiration of the applicable statute of limitations with respect to any such matter (including extensions thereof).

9.05 DISTRIBUTION AGREEMENT. To the extent not inconsistent with any specific term of this Agreement, the provisions of the Distribution Agreement shall apply in relevant part to this Agreement, including 11.1 Complete Agreement; Construction, 11.6 Notices, 11.7 Waivers, 11.8 Amendments, 11.9 Assignment, 11.10 Termination, Etc., 11.14 Third-Party Beneficiaries, 11.15 Title and Headings, 11.16 Exhibits and Schedules, 11.19 Consent to Jurisdiction, 11.20 Specific Performance, 11.21 Waiver of Jury Trial, 11.22 Severability and 11.24 Authorization.

* * *

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.


AMERICAN STANDARD COMPANIES INC.

By:		/s/ G. P ETER D’A LOIA
Name:		G. Peter D’Aloia
Title:		Senior Vice President and Chief Financial Officer

WABCO HOLDINGS INC.

By:		/s/ U LRICH M ICHEL
Name:		Ulrich Michel
Title:		Chief Financial Officer

TRANE L.P.

By:		/s/ G. P ETER D’A LOIA
Name:		G. Peter D’Aloia for American Standard International Inc., the managing member of Trane Holdings LLC, acting as general partner of Trane L.P.

AMERICAN STANDARD EUROPE L.P.

By:		/s/ G. P ETER D’A LOIA
Name:		G. Peter D’Aloia for American Standard International Inc., managing member of American Standard Europe Holdings LLC, general partner of American Standard Europe L.P.

IDEAL STANDARD WABCO TRANE INDÚSTRIA E COMÉRCIO LTDA.

By:		/s/ P EDRO L AURENTINO M ARCON
Name:		Pedro Laurentino Marcon
Title:		Officer

WABCO DO BRASIL INDUSTRIA E COMERCIO DE FREIOS LTDA.

By:		/s/ M ANOEL L UIZ S IMÕES G ARNEIRO
Name:		Manoel Luiz Simões Garneiro
Title:		Officer

Exhibit 10.2

TRANSITION SERVICES AGREEMENT

This Transition Services Agreement (the “Services Agreement”) is made as of this 16 ^th day of July , 2007 by and between American Standard Companies Inc., a Delaware corporation (“ ASD ”), and WABCO Holdings Inc., a Delaware corporation (“ WABCO ”). ASD and WABCO have entered into a Separation and Distribution Agreement dated as of July 16, 2007 (as amended from time to time, the “ Separation Agreement ”), which sets forth, among other things, the terms of the separation of the VCS Business from ASD, which shall occur in a series of transactions. Prior to the Effective Time, the VCS Business received certain services from and provided certain services to ASD and certain of its Subsidiaries and Affiliates. Each of the ASD and WABCO desires that these services continue to be provided after the Effective Time upon the terms and conditions set forth in this Services Agreement.

In consideration of the mutual covenants and agreements contained in this Agreement, the Parties hereto hereby agree as follows:

ARTICLE 1

DEFINITIONS

1.1 Definitions Incorporated . All capitalized terms not otherwise defined in this Services Agreement have the meaning ascribed to them in the Separation Agreement.

1.2 Additional Definitions . Unless the context otherwise requires, the following terms, and their singular or plural, used in this Services Agreement shall have the meanings set forth below:

(a) “ ASD ” shall have the meaning set forth in the preamble to this Services Agreement.

(b) “ ASD Entities ” means, collectively, ASD and its Affiliates that are listed as Providers on Schedule A or Recipients on Schedule B (and which shall not include any WABCO Entities).

(d) “ Confidential Information ” shall have the meaning set forth in Section 8.1 of this Services Agreement.

(e) “ Force Majeure ” shall have the meaning set forth in Section 6.1 of this Agreement.

(f) “ Initial Term ” shall have the meaning set forth in Section 4.1.

(g) “ Losses ” shall mean any and all damages, losses, deficiencies, liabilities, obligations, penalties, judgments, settlements, claims, payments, fines, interest, costs and expenses (including internal costs and the costs and expenses of any and all actions and demands, assessments, judgments, settlements and compromises relating thereto and the reasonable costs and expenses of attorneys’, accountants’, consultants’ and other professionals’ fees and expenses incurred in the investigation or defense thereof or the enforcement of rights hereunder).

(h) “ Party ” means each of the entities set forth on the signature pages to this Services Agreement.

(i) “ Person ” means an individual, partnership, corporation, trust, unincorporated association, or other entity or association.

(j) “ Prime Rate ” shall mean the rate per annum publicly announced by JPMorgan Chase Bank (or successor thereto) from time to time as its prime rate in effect at its principal office in New York City. For purposes of this Agreement, any change in the Prime Rate shall be effective on the date such change in the Prime Rate is publicly announced as effective.

(k) “ Provider ” shall mean the person identified on Schedule A or B to this Services Agreement providing the services set forth therein.

(l) “ Recipient ” shall mean the person identified on Schedule A or B to this Services Agreement receiving the services set forth therein.

(m) “ Renewal Term ” shall have the meaning set forth in Section 4.1 of this Agreement.

(n) “ Sales and Service Tax ” shall have the meaning set forth in Section 3.4(a).

(o) “ Term ” shall mean the Initial Term and the Renewal Term, if any, or, with respect to a particular service provided for hereunder, such shorter period as may be applicable pursuant to the terms of this Services Agreement or the exercise of a Party’s right of early termination as provided for herein.

(p) “ WABCO ” shall have the meaning set forth in the preamble to this Services Agreement.

(q) “ WABCO Entities ” means, collectively, WABCO and its Affiliates that are listed as Recipients on Schedule A or as Providers on Schedule B (and which shall not include any ASD Entities).

(r) “ WABCO Provided Services ” shall have the meaning set forth in Section 2.2 of this Services Agreement.

Other terms are used as defined elsewhere herein.

ARTICLE 2

SERVICES PROVIDED

2.1 ASD Provided Services . Pursuant to the terms of this Services Agreement, the ASD Entities agree to provide, or cause to be provided, to the WABCO Entities, commencing on the date immediately following the Effective Time, the services described in Schedule A to this Services Agreement (the “ ASD Provided Services ”).

2.2 WABCO Provided Services . Pursuant to the terms of this Services Agreement, the WABCO Entities agree to provide, or cause to be provided, to the ASD Entities, commencing on the date immediately following the Effective Time, the services described in Schedule B to this Services Agreement (the “ WABCO Provided Services ”).

2.3 Other Services . If, after the execution of this Services Agreement and prior to the two month anniversary of the Effective Time, the Parties determine that a service provided by or to the VCS Business as conducted by ASD prior to the Effective Time was inadvertently omitted from the Schedules to this Services Agreement, then the Parties shall negotiate in good faith to attempt to agree to the terms and conditions upon which such services would be added to this Services Agreement, it being agreed that the charges for such services should be determined on a basis consistent with the methodology for determining the initial prices provided for herein ( i.e. , sufficient to cover a Provider’s reasonable estimate of its actual costs and, if applicable, consistent with the prices such Provider would charge to an Affiliate), in each case without taking into account any profit margin or projected savings from increased efficiency. Upon the Parties’ agreement on the fees and other specific terms and conditions applicable to such services, the Parties shall update this Services Agreement through the substitution of the relevant Schedule, or additions or supplements to the relevant Schedule, which substitutions, additions or supplements shall describe the service and the related fees and other specific terms and conditions applicable thereto.

ARTICLE 3

COMPENSATION

3.1 Compensation for ASD Provided Services . Subject to Section 3.5, the compensation for the ASD Provided Services for the duration of the Term shall be as described for each individual service provided to the WABCO Entities as set forth on Schedule A. For the avoidance of doubt, the ASD Provided Services shall commence on the date immediately following the Effective Time.

3.2 Compensation for WABCO Provided Services . Subject to Section 3.5, the compensation for the WABCO Provided Services for the duration of the Term shall be as described for each individual service provided by the WABCO Entities set forth on Schedule B. For the avoidance of doubt, the WABCO Provided Services shall commence on the date immediately following the Effective Time.

3.3 Allocation of Certain Expenses .

(a) Each Provider shall bear the costs and expenses of obtaining any and all consents from third parties which may be necessary in connection with such Provider’s performance of its obligations hereunder, including, with respect to the obligations of the WABCO Entities acting in their capacity as Providers, the costs of obtaining the consent to the assignment of all leases of equipment and licenses of software which may be necessary to provide the services contemplated hereby.

(b) In addition to the payment of all compensation provided under Section 3.1 or Section 3.2, as applicable, Recipient shall reimburse Provider for all reasonable out-of-pocket costs and expenses incurred by Provider or its Affiliates in connection with providing the applicable services hereunder (including all travel-related expenses) to the extent that such costs and expenses are not reflected in the compensation for such services on Schedule A or Schedule B, as applicable; provided, however, any such expenses exceeding $1000 per month (other than routine business travel and related expenses) shall require advance approval of Recipient. Any travel-related expenses incurred by Provider in performing the applicable services hereunder shall be incurred and charged to Recipient in accordance with Provider’s then applicable business travel policies.

(c) In the event that Recipient terminates any individual service as contemplated by Section 4.2 earlier than the expiration of the Initial Term or the Renewal Term, if applicable, Recipient shall reimburse Provider for any and all costs and expenses incurred by Provider or any of its subsidiaries as a result of such early termination by Recipient, including incremental early termination fees and other costs incurred in order to terminate or reduce the level of services provided by third parties under Contracts with Recipient or any of its subsidiaries, which services are affected by such early termination, such reimbursement to be due and payable within five business days following Recipient’s receipt of any invoice from Provider with respect to such costs and expenses.

3.4 Taxes .

(a) In addition to the compensation payable to Provider determined exclusive of the taxes payable by Recipient under this Section 3.4, Recipient will pay and be liable for all sales, service, value added, lease, use, transfer, consumption or similar taxes levied and measured by: (i) the cost of services provided to Recipient under this Agreement or (ii) Provider’s cost in acquiring property or services used or consumed by Provider in providing Services under this Agreement (the “ Sales and Service Taxes ”). Such taxes will be payable by Recipient to Provider in accordance with Section 3 or as otherwise mutually agreed in writing by the parties and under the terms of the applicable law which govern the relevant Sales and Service Tax. Recipient’s obligation to pay Sales and Service Taxes under this Section 3.4 shall be subject to the receipt of (i) a computation of the Sales and Service Taxes payable under this Section 3.4 identifying the nature and amount of the goods or services on which the Sales and Service Tax is assessed and the applicable rate and (ii) a valid and customary invoice (or other document) under the terms of applicable law for each Sales and Service Tax. If Recipient complies with the terms of this Section 3.4 regarding the payment of Sales and Service Taxes, it shall not be liable for any interest, penalties or other charges attributable to Provider’s improper filing relating to Sales and Service Taxes or late payment or failure to remit Sales and Service Taxes to the relevant taxing authority.

(b) Each of Provider and Recipient shall pay and be responsible for their own personal property taxes and taxes based on their own income or profits or assets.

(c) Payments for services or other amounts under this Agreement shall be made net of withholding taxes, provided however , that if Provider reasonably believes that a reduced rate of withholding applies or Provider is exempt from withholding, Recipient shall only be required to apply such reduced rate of withholding or not withhold if Provider provides Recipient with evidence reasonably satisfactory to Recipient that a reduced rate of or no withholding is required, including rulings or certificates from, or other correspondence with taxing authorities and tax opinions rendered by qualified persons, to the extent reasonably requested by Recipient. Recipient shall promptly remit any amounts withheld to the appropriate taxing authority and in the event that Recipient receives a refund of any amounts previously withheld from payments to Provider and remitted, Recipient shall surrender such refund to Provider.

(d) Each of Provider and Recipient shall promptly notify the other party of any deficiency claim or similar notice by a taxing authority with respect to Sales and Service Taxes payable under this Service Agreement, and of any pending tax audit or other proceeding relating to Sales and Service Taxes or withholding with respect to this Service Agreement, and shall afford such party all reasonable opportunity to participate in any such audit or proceeding affecting its interests.

3.5 Price Adjustments .

(a) The Parties shall review the Providers’ respective costs of providing services hereunder as of September 30, 2007, and each two-month anniversary thereafter. If it is determined in connection with any such review that a Provider’s cost of providing services hereunder (taken individually) exceeds by at least five percent (5%) the charge for such service(s) because of a significant increase in usage by the Recipient or other circumstances beyond the reasonable control of the Provider (including, without limitation, events of Force Majeure), then, upon request of such Provider, such Provider and its Recipient shall negotiate in good faith to determine an appropriate adjustment to the then-current prices for such services on a basis consistent with the methodology for determining the initial prices provided for herein (as described in Section 2.3).

(b) If the Parties determine (which determination shall be made in good faith) that the initial prices set forth on the Schedules hereto are not consistent with the methodology for determining the initial prices as described in Section 3.5(a), then the Parties shall negotiate in good faith to adjust such charges in a manner that is consistent with such methodology.

3.6 Terms of Payment; Dispute Resolution; Audits .

(a) Provider shall invoice the Recipient for the Services provided by Section 3.1 or Section 3.2, as applicable, monthly in advance on the first calendar day of each month of the term following the date hereof (or the first business day following each such date). Provider

shall also provide invoices to Recipient monthly in arrears for amounts, such as Sales and Service Taxes and out-of-pocket or other expenses, that are payable in addition to the flat fee for service that was paid in advance pursuant to the first sentence of this Section 3.6. Payment shall be made by Recipients within 30 days after receipt of an invoice and other required documentation. No Recipient shall withhold any payments to its Provider under this Services Agreement (other than any required withholding for taxes) and such payments shall be made without any other set-off or deduction, notwithstanding any dispute that may be pending between them, whether under this Services Agreement or otherwise (any required adjustment being made on subsequent invoices). Subject to the provisions of Section 3.6(c), amounts not paid on or before the date required to be paid hereunder shall accrue interest at a rate per annum equal to the then effective Prime Rate plus 2% (the “ Default Interest Rate ”) (or the maximum legal rate whichever is lower), calculated for the actual number of days elapsed, accrued from the date such payment was due hereunder until the date of the actual receipt of payment.

(b) All amounts due for services rendered pursuant to this Services Agreement shall be billed and paid in the currency in which the rate for such service is quoted, as stated herein or as shown on the Schedules hereto.

(c) If there is a dispute between any Recipient and any Provider regarding the amounts shown as billed to such Recipient on any invoice, such Provider shall furnish to such Recipient reasonable documentation to substantiate the amounts billed including, but not limited to, listings of the dates, times and amounts of the services in question where applicable and practicable. Upon delivery of such documentation, such Recipient and such Provider shall cooperate and use their best efforts to resolve such dispute among themselves. If such disputing parties are unable to resolve their dispute within thirty (30) calendar days of the initiation of such procedure, and such Recipient believes in good faith and with a reasonable basis that the amounts shown as billed to such Recipient are inaccurate or are otherwise not in accordance with the terms of this Services Agreement, then such Recipient shall have the right, at its own expense, to have any disputed invoice(s) audited as provided in Section 3.6(d).

(d) Any audit pursuant to Section 3.6(c) shall be limited solely to the purpose of verifying the amounts in dispute and shall be made by an independent certified public accounting firm selected and paid for by the Recipient initiating such audit and reasonably satisfactory to the Provider being audited (such accounting firm, the “ Independent Accountants ”). Any such audit shall be reasonably conducted by the Independent Accountants during the normal business hours of the Provider being audited. Such Provider shall reasonably cooperate with the Independent Accountants and shall make available to the Independent Accountants all applicable cost and other data may be reasonably necessary for the sole purpose of verifying the amounts in dispute. The Independent Accountants shall not disclose any of the underlying data and information to said Recipient or to any other Person (except may be required by law) and, prior to any such audit the Independent Accountants shall, if requested by the Provider being audited, enter into a confidentiality agreement reasonably acceptable to such Provider.

ARTICLE 4

TERM AND TERMINATION

4.1 Term . Except as expressly provided otherwise in this Services Agreement, or with respect to specific services as indicated on the Schedules hereto, the term of this Services Agreement shall be for an initial period of six (6) months commencing at 12:01 a.m. on the date immediately following the date hereof and ending on the six (6) month anniversary of the Effective Time (the “ Initial Term ”). Effective between the respective Provider and Recipient, the Initial Term may be extended for an additional period of six (6) months, or such other period set forth on Schedule A or Schedule B (the “ Renewal Term ”), at the request of a Recipient by written notice from such Recipient to its Provider, with copies to ASD and WABCO; any such notice shall be made not less than two months prior to the end of the Initial Term. The obligation of any Recipient to make a payment for services previously rendered shall not be affected by the expiration of the Initial Term or Renewal Term and shall continue until full payment is made.

4.2 Termination of Individual Services . Effective between the respective Provider and Recipient, a Recipient may terminate at any time during the Initial Term or Renewal Term any individual service provided under this Services Agreement on a service-by-service basis (and/or location-by-location basis where individual service is provided to multiple locations of a Recipient) upon written notice to the Provider identifying the particular service (or location) to be terminated and the effective date of termination, which date shall not be less than 30 days after receipt of such notice unless the Provider otherwise agrees. The termination of any individual Services pursuant to this Section 4.2 shall not affect this Services Agreement with respect to the Services not terminated under this Section 4.2. In addition, effective between the respective Provider and Recipient, a Provider may terminate at any time during the Initial Term or Renewal Term any individual service provided under this Services Agreement upon written notice to the Recipient identifying the particular service to be terminated and the effective date of termination if the employee that was providing the applicable service is no longer employed by the Provider (and there is no other employee employed by Provider at the time that could reasonably provide such service).

4.3 Termination of Agreement . This Services Agreement shall terminate on the earliest to occur of (a) the latest date on which any service is to be provided as indicated on Schedule A and Schedule B, (b) the date on which the provision of all services has terminated or been canceled pursuant to Section 4.2 and (c) the date on which this Agreement is terminated pursuant to Section 4.4.

4.4 Breach of Agreement . If either Party shall materially breach any of its obligations under this Services Agreement, including, but not limited to, any failure to perform any services or to make payments when due, and said Party does not cure such breach within 30 days after receiving written notice thereof from the non-breaching Party, the non-breaching Party may terminate this Services Agreement, including the provision of services pursuant hereto, immediately by providing written notice of termination. The failure of a Party to exercise its rights hereunder with respect to a breach by the other Party shall not be construed as a waiver of such rights nor prevent such Party from subsequently asserting such rights with regard to the same or similar defaults. In the event of a termination of this Services Agreement, Provider shall

be entitled to all outstanding amounts due from Recipient for the provision of Services rendered prior to the date of termination. This Section 4.4, Article VII, Article VIII and Article IX shall survive any termination of this Agreement.

ARTICLE 5

CERTAIN COVENANTS

5.1 Reasonable Care . Each Provider shall perform the services that it is required to provide to its respective Recipient(s) under this Services Agreement with reasonable skill and care and shall use at least that degree of skill and care that it would exercise in similar circumstances in carrying out its own business. Each Provider shall take necessary measures to protect the respective Recipient’s data that is processed by such Provider from destruction, deletion or unauthorized change and allow its recovery in events of Force Majeure; provided , however , that a Provider shall be deemed to have satisfied this obligation if the measures taken to protect and recover Recipient’s data are reasonably equivalent to what it uses in carrying out its own business.

5.2 Cooperation . It is understood that it will require significant efforts of all Parties to implement this Services Agreement and ensure performance hereunder at the agreed upon level (subject to all the terms and conditions of this Services Agreement). The Parties will cooperate (acting in good faith and using reasonable commercial efforts) to effect a smooth and orderly transition of the services provided hereunder from the Providers to the respective Recipients including, without limitation, the separation of the VCS Business from the businesses retained by ASD and its Affiliates; provided , however , that this Section 5.2 shall not require any Party hereto to incur any out-of-pocket expenses unless and except expressly provided otherwise herein or in the Separation Agreement.

5.3 Points of Contact . Each Provider and Recipient has named a point of contact as set forth on Schedules A and B. Such points of contact shall be responsible for the implementation of this Services Agreement between the respective Provider and its Recipient, including resolution of any issues which may arise during the performance hereunder on a day to-day basis.

5.4 Personnel . Each Provider, in providing the services, as it deems necessary or appropriate in its sole discretion, may (a) use the personnel of the Provider or its Affiliates (it being understood that such personnel can perform the services on behalf of the Provider on a full-time or part-time basis, as determined by Provider or its Affiliates) and (b) employ the services or third parties to the extent such third party services are routinely utilized to provide similar services to other businesses of the Provider or are reasonably necessary for the efficient performance of any such services. In performing the services, employees and representatives of Provider shall be under the direction, control and supervision of Provider (and not the Recipient) and the Provider shall have the sole right to exercise all authority with respect to the employment (including termination of employment), assignment and compensation of such employees and representatives (it being understood that Recipient has no right hereunder to require that Provider perform the services hereunder with specifically identified employees and that the assignment of employees to perform such services shall be determined in the sole discretion of Provider).

In addition, Provider shall not be required to provide any service to the extent the provision of such service requires Provider to hire any additional employees or maintain the employment of any specific employee.

5.5 Further Assurances . From time to time after the date hereof, without further consideration, each Party shall use reasonable efforts to take, or cause to be taken, all appropriate action, do or cause to be done all things reasonably necessary, proper or advisable under applicable laws, and execute and deliver such documents as may be required or appropriate to carry out the provisions of this Services Agreement and to consummate, perform and make effective the transactions contemplated hereby.

5.6 Migration Projects . Each Provider will provide the respective Recipient with reasonable support necessary to transition or migrate the services to Recipient or any third party or parties chosen by the Recipient, which may include consulting and training and providing reasonable access to data and other information and to Provider’s employees; provided , however , that such activities shall not unduly burden or interfere with Provider’s business and operations.

5.7 Certain Disbursements/Receipts . The Parties hereto contemplate that, from time to time on or after the Effective Time, ASD-related entities and/or WABCO-related entities (any such party, the “ Paying Party ”), as a convenience to another WABCO-related entity or ASD-related entity, as the case may be (the “ Responsible Party ”), in connection with the transactions contemplated by this Services Agreement or the Separation Agreement, may make certain payments that are properly the responsibility of the Responsible Party (whether pursuant to the Separation Agreement or this Services Agreement or otherwise (any such payment made, a “ Disbursement ”). Similarly, from time to time on or after the Effective Time, ASD-related entities and/or WABCO-related entities (any such party, the “ Receiving Party ”) may receive from third parties certain payments to which another WABCO-related entity or ASD-related entity, as the case may be, is entitled (any such Party, the “Other Party”, and any such payment received, a “Receipt”). Accordingly, with respect to Disbursements and Receipts, the Parties hereto agree as follows.

(a) Disbursements.

(i) A Paying Party may request reimbursement for Disbursements made by check within seven (7) business days after notice of such Disbursement has been given to the Responsible Party in writing and with mutually acceptable supporting documentation.

(ii) In case of a Disbursement by wire, if notice in writing and with mutually acceptable supporting documentation has been given by 2 p.m. of the Responsible Party’s local time at least one business day prior to the payment of such Disbursement, the Responsible Party shall reimburse the Paying Party for the amount of such payment (in the local currency equivalent paid by the Paying Party) on the date the Disbursement is made by the Paying Party. If notice as provided above has not been given prior to the payment of such Disbursement, the Responsible Party shall reimburse the Paying Party for the amount of such payment (in the local currency equivalent paid by the Paying Party) within three (3) business day after receipt by the Responsible Party of such notice from the Paying Party.

(b) Receipts . A Receiving Party shall remit Receipts to the Other Party (in the same currency as such payment is received) within three (3) business days of receipt thereof.

(c) Certain Exceptions . Notwithstanding anything to the contrary set forth above, if, with respect to any particular transaction(s), it is impossible or impracticable under the circumstances to comply with the procedures set forth in subsections (a) and of this Section 5.7 (including the time periods specified therein), the parties will cooperate to find a mutually agreeable alternative that will achieve substantially similar economic results from the point of view of the Paying Party or the Other Party, as the case may be; i.e. , an alternative pursuant to which the Paying Party will not incur any material interest expense or the Other Party will not be deprived of any material interest income; provided , however , that if a Receiving Party cannot comply with the procedures set forth in subsection (b) of this Section because it does not become aware of a Receipt on behalf of the other Party in time (e.g. because of the commingling of funds in an account), such Receiving Party shall remit such Receipt (without interest thereon) to the other Party within 24 hours after it becomes aware of such Receipt.

(d) Interest Rate . The rate for any interest income or expense that is paid or payable pursuant to Section 5.7(c) shall be at a rate per annum equal to the then effective Prime Rate plus 2%.

ARTICLE 6

FORCE MAJEURE

6.1 Force Majeure . No Provider (or any Person acting on its behalf) shall bear any responsibility or liability for any losses arising out of any delay, inability to perform or interruption of its performance of obligations under this Services Agreement due to any acts or omissions of its respective Recipient or for events beyond its reasonable control (hereinafter referred to as “ Force Majeure ”) including, without limitation, acts of God, act of governmental authority, act of the public enemy or due to war, riot, flood, civil commotion, insurrection, labor difficulty, severe or adverse weather conditions, lack of or shortage of electrical power, malfunctions of equipment or software programs or any other cause beyond the reasonable control of the Party whose performance is affected by the Force Majeure event. In such event, the obligations hereunder of the Provider in providing such service, and the obligations of the Recipient to pay for any such service, shall be postponed for such time as its performance is suspended or delayed on account thereof.

ARTICLE 7

INDEMNITY

7.1 Indemnity .

(a) The liability of Provider with respect to this Services Agreement or in connection with the performance, delivery or provision of any Service provided under this Services Agreement shall be limited to the Losses of Recipient arising from Provider’s willful misconduct or gross negligence; provided that in no event shall the liability exceed the fees previously paid to Provider by Recipient in respect of the Service from which such liability flows.

(b) Recipient hereby agrees to indemnify Provider and its Affiliates from any and all Losses resulting from a demand, claim, lawsuit, action or proceeding relating to Provider’s conduct in connection with the provision of Services to Recipient under this Services Agreement, except to the extent such Losses arise out of the willful misconduct or gross negligence of Provider or any of its employees, agents, officers and directors. Provider hereby agrees to indemnify Recipient and its Affiliates from any and all Losses resulting from a demand, claim, lawsuit, action or proceeding relating to Provider’s willful misconduct or gross negligence in connection with the provision of Services to Recipient under this Services Agreement. The Persons entitled to indemnification pursuant to the foregoing shall be third party beneficiaries of the rights to indemnification described in this Section 7.1(b).

(c) Notwithstanding the foregoing, no Party shall be liable for any special, consequential, indirect or punitive damages (other than special, consequential, indirect and/or punitive damages awarded to any third party against an indemnified party) with respect to its performance or nonperformance hereunder, or the provision of or failure to provide any Service hereunder, whether such damages or other relief are sought based on breach of contract, negligence, strict liability or any other legal or equitable relief.

ARTICLE 8

CONFIDENTIALITY

8.1 With respect to any information disclosed by one Party to another Party for the purpose of this Services Agreement or otherwise accessible to such other Party during the performance hereunder (“ Confidential Information ”), the receiving Party agrees that it will use the same skill and care as set forth in Section 5.1 to prevent the disclosure or accessibility to others of the disclosing Party’s Confidential Information and will use such Confidential Information only for the purpose of this Services Agreement. The receiving Party shall limit dissemination of and access to the other’s Confidential Information to only such of its employees or agents (including, in the case of the Provider, any third party engaged to provide the services hereunder) or consultants who have a need to know for the purpose of this Services Agreement.

8.2 Specifically excluded from the foregoing obligation is any and all information that:

(a) is already known to the receiving Party at the time of disclosure or thereafter is independently developed by the receiving Party without breach of this Services Agreement;

(b) is already in the public domain at the time of disclosure, or thereafter becomes publicly known other than as the result of a breach by the receiving Party of its obligations under this Services Agreement;

(d) is furnished by the disclosing Party to a third party without a similar restriction on its rights; or

(e) upon advice of counsel, must be produced by the receiving Party as a matter of law; provided , however , that in such case the receiving Party shall promptly notify the disclosing Party and, insofar as is permissible and reasonably practicable without placing the disclosing Party under penalty of law gave it an opportunity to appear and to object to such production before producing the requested information.

ARTICLE 9

MISCELLANEOUS

9.1 Dispute Resolution; Continuation of Services Pending Outcome of Dispute . In the event of any dispute between the Parties or between Providers and Recipients, such disputing Parties shall first attempt to resolve such disputes by negotiating in fairness and good faith. If, after a reasonable period of time, the Parties have been unable to resolve such dispute, the Parties shall follow the dispute resolution procedures set forth in Article VIII of the Separation Agreement, which Article is incorporated herein by reference as if stated herein in its entirety. Notwithstanding the existence of any dispute between the Parties, no Provider shall discontinue the supply of any service provided for herein, unless so provided in an arbitral determination that the respective Recipient is in default of obligation under this Services Agreement.

9.2 Notices . Any notice provided or permitted to be given to a Party under this Services Agreement must be in writing, and may be served by depositing same in the mail, addressed to the Person to be notified, postage prepaid, and registered or certified, with a return receipt requested. Notice given by registered or certified mail shall be deemed given and effective on the date of delivery as shown on the return receipt. Notice may be served in any other manner including telex, telecopy or telegram but shall be deemed given and effective as of the time of actual delivery thereof to the addressees. For purposes of the giving of notice, Recipients and Providers shall be notified at the addresses listed on the Schedules hereto, lessees and lessors shall be notified at the addresses of their respective leased premises and ASD and WABCO shall be notified at the addresses listed below:

If to ASD:

c/o American Standard Companies Inc.

1 Centennial Avenue

Piscataway, NJ 08855

U.S.A.

Attn: Mary Beth Gustafsson, General Counsel

Facsimile: + 1 732.980.3377

If to WABCO:

c/o WABCO Europe BVBA

Chaussée de Wavre, 1789 Box 15

1160 Brussels

Belgium

Attn: General Counsel

Facsimile: + 32 2 663 98 89

With a copy to:

McDermott Will & Emery LLP

227 W. Monroe Street

Chicago, IL 60606

U.S.A

Attn: Neal J. White

Facsimile: +1 312.984.7700

Any Party may change its respective address for notice by the giving of notice of such change in the manner provided above.

9.3 Entire Agreement . Except for those matters provided for in the Separation Agreement or the other agreements contemplated therein, this Services Agreement sets forth the entire agreement of the Parties with respect to its subject matter. This Services Agreement shall not be modified or amended except by written instrument executed by each Party provided ,

however , that a modification or amendment affecting only the relationship between a certain Provider and its Recipient does not require signature by the other Parties. The Schedules to this Services Agreement shall be deemed incorporated in this Services Agreement and shall form a part of it.

9.4 Waiver . The failure of a Party to insist upon strict performance of any provision of this Services Agreement shall not constitute a waiver of, or estoppel against, asserting the right to require such performance in the future, nor shall a waiver or estoppel in any one instance constitute a waiver or estoppel with respect to a later breach of a similar nature or otherwise.

9.5 Severability . If any of the terms and conditions of this Services Agreement are held by any court of competent jurisdiction to contravene, or to be invalid under, the laws of any political body having jurisdiction over the subject matter of this Services Agreement, such contravention or invalidity shall not invalidate the entire Services Agreement. Instead, this Services Agreement shall be construed as if it did not contain the particular provision or provisions held to be invalid, and equitable adjustment shall be made and necessary provisions added so as to give effect to the intention of the Parties as expressed in this Services Agreement at the time of the execution of this Services Agreement and of any amendments to this Services Agreement.

9.6 Construction . This Services Agreement shall be construed and enforced in accordance with and governed by the laws of the State of New York, without reference to its conflicts of law rules or principles. The headings in this Services Agreement are not to be considered part of this Services Agreement and are inserted for convenience, identification and reference only and are not intended to interpret, define, or limit the scope, extent, or intent of this Services Agreement or any provision of this Services Agreement. Whenever the context requires, the gender of all words used in this Services Agreement shall include the masculine, feminine and neuter, and the number of all words shall include the singular and the plural.

9.7 Counterpart Execution . This Services Agreement may be executed in counterparts with the same effect as if all of the Parties had signed the same document. Such counterparts shall be construed together and shall constitute one and the same instrument, notwithstanding that all of the Parties are not signatories to the original or the same instrument, or that signature pages from different counterparts are combined. The signature of any Party to one counterpart shall be deemed to be a signature to and may be appended to any other counterpart.

9.8 Successors and Assigns .

(a) This Services Agreement shall inure to the benefit of and shall be binding upon the Parties, their respective legal representatives, successors, and permitted assignees, and all Persons claiming by, through, or under right of any of the aforesaid Persons. This Services Agreement may not be assigned by any Party without the prior written consent of the other Parties; provided , however , that no consent shall be required in the case of assignment by a ASD Entity to a direct or indirect Subsidiary of ASD or by a WABCO Entity to a direct or indirect Subsidiary of WABCO, and provided further that no such assignment shall relieve any Party of any of its obligations hereunder. Notwithstanding the foregoing, a Party may assign this

Services Agreement in connection with a merger transaction in which such Party is not the surviving entity or the sale by such Party of all or substantially all of its Assets, and upon the effectiveness of such assignment the assigning Party shall be released from all of its obligations under this Agreement if the surviving entity of such merger or the transferee of such Assets shall agree in writing, in form and substance reasonably satisfactory to the other Party, to be bound by the terms of this Agreement as if named as a “Party” hereto.

(b) At the request of any Provider or Recipient that is a Party hereto, any other Provider or Recipient that is receiving benefits or has obligations hereunder and is not a signatory hereto shall execute and deliver to the other Parties a counterpart hereof. The failure of any Person that is receiving benefits or has obligations hereunder to execute a counterpart hereof shall not affect the enforceability of this Services Agreement against such Person or against any other Party hereto.

9.9 No Third Party Rights . The provisions of this Service Agreement are intended to bind the Parties to each other and are not intended and do not create rights in any other person, including any employee of the VCS Business or ASD, and no Person is intended to be or is a third party beneficiary of any of the provisions of this Services Agreement.

9.10 Authorization . Each of the Parties hereby represents and warrants that it has the power and authority to execute, deliver and perform this Agreement, that this Agreement has been duly authorized by all necessary corporate action on the part of such Party, that this Agreement constitutes a legal, valid and binding obligation of each such Party enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and general equity principles.

[SIGNATURE PAGES FOLLOW]

WITNESS WHEREOF, the duly authorized officers or representatives of the parties hereto have duly executed this Services Agreement as of the date first written above.


AMERICAN STANDARD COMPANIES INC.

By:		/s/ G. P ETER D’A LOIA
		Name: G. Peter D’Aloia
		Title: Senior Vice President and Chief Financial Officer


WABCO HOLDINGS INC.

By:		/s/ U LRICH M ICHEL
		Name: Ulrich Michel
		Title: Chief Financial Officer

Exhibit 10.3

EMPLOYEE MATTERS AGREEMENT

BY AND BETWEEN AMERICAN STANDARD COMPANIES, INC. AND

WABCO HOLDINGS INC.

EMPLOYEE MATTERS AGREEMENT

This EMPLOYEE MATTERS AGREEMENT (this “Agreement”), dated as of July 16, 2007 is by and between American Standard Companies Inc., a Delaware corporation (“ASD”), and WABCO Holdings Inc., a Delaware corporation (“WABCO”) (each a Party, and together the “Parties”).

WHEREAS, the Board of Directors of ASD has determined that it is in the best interests of ASD and its shareholders for ASD to distribute to the holders of ASD Common Stock on such record date as may be established by the Board of Directors of ASD on a pro rata basis all of the issued and outstanding shares of common stock, par value $0.01 per share, of WABCO (the “WABCO Common Stock”) (such transaction, the “Distribution”);

WHEREAS, in furtherance of the foregoing, ASD and WABCO have entered into a Separation and Distribution Agreement, dated as of July 16, 2007 (the “Separation Agreement”), and other specific agreements that will govern certain matters relating to the Separation (as defined in the Separation Agreement) and the Distribution and the relationship of ASD, WABCO, and their respective Affiliates following the Distribution;

WHEREAS, ASD and WABCO have entered into a Transition Services Agreement, dated as of July 16, 2007 (the “Transition Agreement”) that will govern the provision of transition services and matters relating to transition of inter-company services and the relationship of ASD, WABCO and their respective affiliates following Separation; and

WHEREAS, ASD and WABCO desire to enter into this Agreement to provide for the allocation of assets, liabilities, and responsibilities with respect to certain matters relating to employees (including employee compensation and benefit plans and programs) between them.

NOW, THEREFORE, the parties, intending to be legally bound, agree as follows:

ARTICLE I

DEFINITIONS

Capitalized terms used but not defined herein shall have the meaning ascribed to them in the Separation Agreement. For purposes of this Agreement the following terms shall have the following meanings:

1.1 “Agreement” means this Employee Matters Agreement.

1.2 “Ancillary Benefits” means company contributions to the American Standard Companies Inc. Employee Stock Ownership Plan, active medical, life and dental benefits, and accruals for retiree life and medical benefits all to the extent applicable.

1.3 “ASD Defined Benefit Retirement Plans” means The American Standard Pension Plan and the American Standard Merged Hourly Pension Plan.

1.4 “ASD Defined Contribution Plans” means the American Standard Companies Inc. Employee Stock Ownership Plan and the Savings Plan of American Standard Inc. and Participating Subsidiary Companies.

1.5 “ASD Employee” means any individual who, as of the Effective Time, is either actively employed by or then on a leave of absence from ASD or an ASD Group member (including maternity, paternity, family, sick, short-term or long-term disability leave, qualified military service under the Uniformed Services Employment and Reemployment Rights Act of 1994, and leave under the Family Medical Leave Act and other approved leaves), but does not include any ASD Transferee or any WABCO Employee. Notwithstanding the foregoing, WABCO Employees who are on long term disability benefits at the Effective Time (“WABCO LTD Employees”) shall be considered ASD Employees unless and until either (a) their employment is terminated by ASD or (b) they return to work or are able to return to work, at which time they shall become WABCO Employees.

1.6 “ASD Equity-Based Plans” means the American Standard Companies Inc. 2002 Omnibus Incentive Plan, as amended and the American Standard Companies Inc. Stock Incentive Plan, each as amended from time to time.

1.7 “ASD Transferees” means individuals who, immediately prior to the Effective Time, performed services for WABCO or a WABCO Group member as employees of ASD or an ASD Group member (other than WABCO or a WABCO Group member) and who will become employees of WABCO or a WABCO Group member as of the Effective Time or other individuals who are transferring to WABCO or a WABCO Group member from ASD or an ASD Group member as of the Effective Time.

1.8 “COBRA” means the continuation coverage requirements for “group health plans” under Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and as codified in Code Section 4980B and ERISA Sections 601 through 608.

1.9 “Code” means the Internal Revenue Code of 1986, as amended, or any successor federal income tax law. Reference to a specific Code provision also includes any proposed, temporary, or final regulation in force under that provision.

1.10 “Disposition Year” means the ASD fiscal year during which the Distribution occurs.

1.11 “Effective Time” shall mean 11:59 p.m., New York City, New York time, on July 31, 2007.

1.12 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended. Reference to a specific provision of ERISA also includes any proposed, temporary, or final regulation in force under that provision.

1.13 “Health and Welfare Plans,” when immediately preceded by “ASD,” means the health and welfare plans established and sponsored by ASD or an ASD Group member (other than WABCO or a WABCO Group member), and when immediately preceded by “WABCO,” means the health and welfare plans sponsored and maintained by WABCO or a WABCO Group member before or after the Effective Time.

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1.14 “HIPAA” means the health insurance portability and accountability requirements for “group health plans” under the Health Insurance Portability and Accountability Act of 1996, as amended.

1.15 “Incentive Stock Option” means an option which qualifies as an incentive stock option under the provisions of Section 422 of the Code.

1.16 “Individual Agreement” means an individual contract or agreement (whether written or unwritten) entered into between ASD, an ASD Group member, WABCO, or a WABCO Group member and a ASD Employee, ASD Transferee or WABCO Employee that establishes the right of such individual to special compensation or benefits, including, but not limited to, any supplemental pension benefit, deferred compensation, severance, hiring bonus, loan, guaranteed payment, or disability benefit.

1.17 “Option,” when immediately preceded by “ASD,” means an option (either nonqualified or incentive) to purchase shares of ASD Common Stock pursuant to an ASD Equity-Based Plan and, when immediately preceded by “WABCO,” means an option to purchase shares of WABCO Common Stock, which option is granted pursuant to the WABCO Long Term Incentive Plan as part of the adjustment to ASD Options as set forth in Section 5.2.

1.18 “Participating Company” means (a) ASD, (b) any Person (other than an individual) that ASD has approved for participation in, and which is participating in, a Plan and (c) any Person (other than an individual) which, by the terms of such a Plan, participates in such Plan.

1.19 “Plan,” when immediately preceded by “ASD,” means any plan, policy, program, payroll practice, on-going arrangement, contract, trust, insurance policy or other agreement or funding vehicle (including a Health and Welfare Plan) for which the eligible classes of participants include employees or former employees of ASD or an ASD Group member (which may include employees of WABCO Group members prior to the Effective Time), and when immediately preceded by “WABCO,” means any plan, policy, program, payroll practice, on-going arrangement, contract, trust, insurance policy or other agreement or funding vehicle (including a Health and Welfare Plan) for which the eligible classes of participants are limited to employees or former employees (and their eligible dependants) of WABCO or a WABCO Group member, but no other ASD Group member.

1.20 “Restricted Stock Unit,” when immediately preceded by “ASD,” means a unit granted by ASD pursuant to an ASD Equity-Based Plan representing a general unsecured promise by ASD to deliver a share of ASD Common Stock (or an amount in cash equal to the value thereof) and when immediately preceded by “WABCO,” means a unit granted by WABCO representing a general unsecured promise by WABCO to deliver a share of WABCO Common Stock, which unit is granted pursuant to the WABCO Long Term Incentive Plan as part of the adjustment to ASD Restricted Stock Units as set forth in Section 5.2.

1.21 “WABCO Employee” means any individual who, as of the Effective Time, is either actively employed by or then on a short-term leave of absence from WABCO or a WABCO Group

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member (including maternity, paternity, family, sick, short-term disability leave, qualified military service under the Uniformed Services Employment and Reemployment Rights Act of 1994, and leave under the Family Medical Leave Act and other approved leaves), but shall not include WABCO LTD Employees, unless such employees return to work with WABCO.

1.22 “WABCO 401(k) Plan” means the tax-qualified 401(k) defined contribution savings plan to be established by WABCO or a WABCO Group member prior to the Effective Time.

1.23 “WABCO Long Term Incentive Plan” means the WABCO Holdings Inc. Omnibus Incentive Plan adopted or to be adopted by WABCO.

ARTICLE II

GENERAL PRINCIPLES

2.1 Assumption and Retention of Liabilities . ASD and WABCO intend that employment-related Liabilities associated with employees of the WABCO business are to be assumed by WABCO or a WABCO Group member and that employment-related Liabilities associated with former employees of the WABCO business (whether such individuals were employed by a WABCO Group member or otherwise) are also to be assumed by WABCO, except as specifically set forth herein. As of the Effective Time, WABCO or another member of the WABCO Group shall assume and agree to pay, perform, fulfill, and discharge, except as expressly provided in this Agreement, (i) all Liabilities arising under or related to WABCO Plans, (ii) all employment or service-related Liabilities with respect to (A) all WABCO Employees (and their dependents and beneficiaries), (B) all former employees of WABCO or a WABCO Group member (and their dependents and beneficiaries) and (C) any individual who is, or was, an independent contractor, temporary employee, temporary service worker, consultant, freelancer, agency employee, leased employee, on-call worker, incidental worker, or nonpayroll worker or in any other employment or similar relationship primarily connected to WABCO or a WABCO Group member, (iii) all employment or service-related Liabilities with respect to all ASD Transferees and (iv) any Liabilities expressly transferred to WABCO or a WABCO Group member under this Agreement. Notwithstanding the foregoing, Liabilities described in part (B) of clause (ii) of the preceding sentence shall not be assumed by WABCO to the extent that any individual described in such clause is actively employed by an ASD Group member as of the Effective Time and is not an ASD Transferee. To the extent that any employment and service-related Liabilities exist with respect to former ASD Employees whose last employment with an ASD Group member was primarily connected to the VCS Business and which are not otherwise specifically dealt with herein, the parties shall cooperate to effect the transfer to, and assumption of, such Liabilities by WABCO.

2.2 WABCO Participation in the ASD Plans . Except as set forth in Section 4.1 of this Agreement, effective as of the Effective Time, WABCO and each WABCO Group member shall cease to be Participating Companies in any ASD Plan, and ASD and WABCO shall take all necessary action before the Effective Time to effectuate such cessation as a Participating Company.

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2.3 Sponsorship of the WABCO Plans . Effective no later than immediately prior to the Effective Time, ASD and WABCO shall take such actions (if any) as are required to cause WABCO or a WABCO Group member to assume, sponsorship of, and all liabilities with respect to, each WABCO Plan.

2.4 Terms of Participation by WABCO Employees in WABCO Plans . ASD and WABCO shall adopt, or cause to be adopted, all reasonable and necessary amendments and procedures to prevent WABCO Employees and former employees from receiving duplicative benefits from the ASD Plans and the WABCO Plans. With respect to WABCO Employees and ASD Transferees, each WABCO Plan shall provide that for purposes of determining eligibility to participate, vesting, and entitlement to benefits (but not for accrual of pension benefits under any defined benefit pension plan), service prior to the Effective Time with ASD or an ASD Group member shall be treated as service with WABCO or the applicable WABCO Group member. Such service also shall apply for purposes of satisfying any waiting periods, evidence of insurability requirements, or the application of any preexisting condition limitations under any WABCO Plan. Each WABCO Plan shall, to the extent practicable, waive pre-existing condition limitations with respect to WABCO Employees and ASD Transferees.

2.5 Approval of Plan . Prior to the Effective Time, ASD shall cause WABCO to adopt the WABCO Long Term Incentive Plan.

2.6 Employment of ASD Transferees . Except for purposes of the Options and Restricted Stock Units described in Section 5.2 and subject to the last sentence of Section 3.1(b), as of the Effective Time, all ASD Transferees shall terminate their employment with ASD or an ASD Group member and shall commence to be employees of WABCO or a WABCO Group member (as determined by WABCO), provided, however, that such termination shall not be treated as a separation of service for purposes of any plan or agreement (or any benefit thereunder) which is subject to the provisions of Section 409A of the Code.

2.7 Delivery of Shares; Registration Statement . From and after the Effective Time, WABCO shall have sole responsibility for delivery of shares of WABCO Common Stock in satisfaction of any obligations to deliver such shares under the ASD Plans (including delivery to ASD Employees and former ASD Employees) and shall do so without compensation from any ASD Group member. WABCO shall cause a registration statement on Form S-8 (or other appropriate form) to be filed with respect to such delivery prior to the Effective Time and shall cause such registration to remain in effect for so long as there may be an obligation to deliver WABCO shares under such ASD Plans. ASD shall use commercially reasonable efforts to assist WABCO in completing such registration. WABCO and ASD shall cooperate to establish a procedure whereby the other party shall be promptly informed of the obligation to deliver shares to a current or former WABCO Employee or an ASD Employee, as the case may be.

2.8 Labor Relations . To the extent required by applicable law or any agreement with a labor union, works council or similar employee organization, WABCO shall provide notice, engage in consultation and take any similar action which may be required on its part in connection with the Distribution and shall fully indemnify each ASD Group member against any Liabilities arising from its failure to comply with such requirements.

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ARTICLE III

DEFINED CONTRIBUTION, DEFINED BENEFIT AND NON-QUALIFIED DEFERRED COMPENSATION PLANS

3.1

401(k) Plan .

(a)

Establishment of Plan and Trust . ASD and WABCO shall adopt or cause to be adopted the WABCO 401(k) Plan and any trust agreements or other plan documents reasonably necessary and shall cause trustees to be appointed for such plan. Such actions shall be completed prior to the Effective Time.

(b)

Assumption of Liabilities and Transfer of Assets . In accordance with applicable law, ASD and WABCO shall cause, in the manner described herein, the accounts under the ASD Defined Contribution Plans of each WABCO Employee and former WABCO Employee and each ASD Transferee to be transferred to the WABCO 401(k) Plan as soon as practicable after the Effective Time. As soon as practicable after the Effective Time: (i) ASD shall cause the accounts (including any outstanding loan balances) of each WABCO Employee, former WABCO employee and ASD Transferee in the ASD Defined Contribution Plans to be transferred to the WABCO 401(k) Plan and its related trust; (ii) WABCO (or any successor WABCO Group member) and the WABCO 401(k) Plan shall assume and be solely responsible for all liabilities under the WABCO 401(k) Plan relating to the accounts that are so transferred as of the time of such transfer; and (iii) WABCO shall cause such transferred accounts to be accepted by the WABCO 401(k) Plan and its related trust and shall cause the WABCO 401(k) Plan to satisfy all protected benefit requirements under the Code and applicable law with respect to the transferred accounts. In determining whether a WABCO Employee is vested in his or her account under the WABCO 401(k) Plan, the WABCO 401(k) Plan shall credit each WABCO Employee and ASD Transferee with all the individual’s service credited under the ASD Defined Contribution Plans. Participants in the ASD Defined Contribution Plans will not be treated as having experienced a termination of service for purposes of such plans as a result of the Distribution or the occurrence of the Effective Time.

3.2

Other United States Retirement and Non-Qualified Deferred Compensation Plans .

(a)

Following the Effective Time, ASD (or the appropriate ASD Group member) shall retain all Liabilities with respect to each ASD Defined Benefit Plan which is a tax-qualified pension plan under the Internal Revenue Code of the United States. All WABCO Employees and ASD Transferees who are participants in the American Standard Pension Plan as of the Effective Time and who terminate their employment with all ASD Group members as a result of the Distribution shall be fully vested in their account balances in that plan.

(b)

Following the Effective Time, ASD shall retain sponsorship of and all Liabilities with respect to each ASD Plan covering United States taxpayers which is a

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non-qualified pension, savings or deferred compensation plan. A list of such plans is set forth on Schedule 3.2b. For purposes of determining when a distribution is required from the ASD Plans described in this Section 3.2(b), WABCO Employees who were participants in such plans will be treated as not having experienced a separation from service until such employees have separated from service from all WABCO Group members.

(c)

ASD shall provide WABCO with a list of the WABCO Employees and ASD Transferees who are participants in the plans described in this Section 3.2 and WABCO shall, from and after the Effective Time, provide ASD with notice of the separations from service of any such individual.

3.3 Non-U.S. Retirement Plans . Notwithstanding anything to the contrary herein, following the Effective Time, ASD (or the appropriate ASD Group member) shall retain sponsorship of the WABCO Equipment of Canada Hourly Employee Pension Plan, including retaining all Liabilities and plan assets thereto. With respect to any ASD Plan covering non-U.S. WABCO Employees and which is a defined benefit or defined contribution retirement or pension plan, WABCO shall cause each such WABCO Employee to become covered by a corresponding WABCO Plan which is a defined benefit or defined contribution retirement or pension plan, effective as of the Effective Time or as soon as practicable thereafter and shall, to the extent such coverage does not commence until following the Effective Time, indemnify ASD for any continued participation by such employee in the corresponding ASD Plan. ASD will reasonably cooperate with WABCO in complying with the immediately preceding sentence. With respect to any WABCO Plan, which is a retirement or pension plan covering non-U.S. ASD Employees, ASD shall cause each such ASD Employee to become covered by a corresponding ASD Plan which is a defined benefit or defined contribution retirement or pension plan, effective as of the Effective Time or as soon as practicable thereafter and shall, to the extent such coverage does not commence until following the Effective Time, indemnify WABCO for any continued participation by such employee in the corresponding WABCO Plan. WABCO will reasonably cooperate with ASD in complying with the immediately preceding sentence. The parties have set forth on Schedule 3.3a a listing of those non-U.S. ASD retirement or pension plans in which WABCO Employees are known to participate and have set forth on Schedule 3.3b a listing of those non-U.S. WABCO retirement or pension plans in which ASD Employees are known to participate. Schedules 3.3a and 3.3b may be updated by mutual written consent of ASD and WABCO at any time up to 60 days after the Effective Time.

ARTICLE IV

HEALTH AND WELFARE PLANS

4.1 Transitional Services under Health and Welfare Plans; Cessation of Participation in ASD Plans . For the period commencing upon the Effective Time through December 31, 2007 (or such earlier date as the parties may mutually agree), ASD shall permit WABCO Employees and ASD Transferees to continue to participate in the ASD United States Plans in which such employees participated immediately prior to the Effective Time and which are Health and Welfare Plans which provide group health, life, dental, accidental death & dismemberment, health care reimbursements, dependent care assistance and disability benefits. The terms and conditions of such continued participation shall be governed by the Transition Services Agreement and the terms of the applicable ASD Plans. For the avoidance of doubt, WABCO Employees and ASD Transferees who do not participate in an ASD Plan which is a Health and Welfare Plan in the United States will cease to be active participants in all ASD Plans (including those which are

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Health and Welfare Plans) as of the Effective Time, except as set forth below. The date upon which a WABCO Employee or ASD Transferee ceases to participate in the United States ASD Health and Welfare Plans is hereinafter referred to as the “Benefits Transition Date.” With respect to any ASD Plan outside the United States covering WABCO Employees and which is a Health and Welfare Plan, WABCO shall cause each such WABCO Employee to become covered by a corresponding WABCO Plan which is a Health and Welfare Plan, effective as of the Effective Time or as soon as practicable thereafter and shall, to the extent such coverage does not commence until following the Effective Time, indemnify ASD for any continued participation by such employee in the corresponding ASD Plan. ASD will reasonably cooperate with WABCO in complying with the immediately preceding sentence. With respect to any WABCO Plan, which is a Health and Welfare Plan covering ASD Employees, ASD shall cause each such ASD Employee to become covered by a corresponding ASD Plan which is a Health and Welfare Plan, effective as of the Effective Time or as soon as practicable thereafter and shall, to the extent such coverage does not commence until following the Effective Time, indemnify WABCO for any continued participation by such employee in the corresponding WABCO Plan. WABCO will reasonably cooperate with ASD in complying with the immediately preceding sentence. The parties have set forth on Schedule 4.1a a listing of those non-U.S. ASD Health and Welfare Plans in which WABCO Employees are known to participate and have set forth on Schedule 4.1b a listing of those non-U.S. WABCO Health and Welfare Plans where ASD Employees are known to participate. Schedules 4.1a and 4.1b may be updated by mutual written consent of ASD and WABCO at any time up to 60 days after the Effective Time.

4.2

Allocation of Health and Welfare Plan Liabilities .

(a)

Without limiting the obligations of WABCO under the Transition Services Agreement, all Liabilities relating to, arising out of, or resulting from health and welfare coverage or claims incurred by or on behalf of WABCO Employees, ASD Transferees, or their covered dependents (other than Liabilities relating to health and welfare coverage or claims incurred under the WABCO Health and Welfare Plans, if such WABCO Employees or ASD Transferees participate in the WABCO Health and Welfare Plans on or before the Benefits Transition Date) under the ASD Health and Welfare Plans on or before the Benefits Transition Date shall remain Liabilities of ASD, and all Liabilities relating to health and welfare coverage or claims incurred by or on behalf of WABCO Employees, ASD Transferees, or their covered dependents after the Benefits Transition Date shall be Liabilities of WABCO under the corresponding WABCO Health and Welfare Plans. A claim or Liability (i) for medical and dental benefits shall be deemed to be incurred upon the rendering of health services giving rise to the obligation to pay such benefits; (ii) for life insurance and accidental death and dismemberment insurance benefits shall be deemed to be incurred upon the occurrence of the event giving rise to the entitlement to such benefits; and (iii) for disability benefits shall be deemed to be incurred on the date an individual is deemed to be disabled, as defined under the applicable plan.

(b)

Without limiting the obligations of WABCO under the Transition Services Agreement, ASD shall be responsible for all Liabilities under the applicable ASD Health and Welfare Plans that relate to, arise out of, or result from any hospitalization of a WABCO Employee, former employee, ASD Transferee or his

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or her covered dependent which begins on or before the Benefits Transition Date under a ASD Health and Welfare Plan and continues after the Benefits Transition Date until such hospitalization or treatment for such condition is concluded or coverage is discontinued subject to applicable plan rules and limitations.

4.3 Health and Welfare Plan Transitional Coverage Rules . WABCO shall cause WABCO Employees, ASD Transferees and their covered dependents who participate in ASD Health and Welfare Plans immediately before the Benefits Transition Date to be automatically eligible for enrollment on the day following the Benefits Transition Date in WABCO Health and Welfare Plans corresponding to the ASD Health and Welfare Plans in which the WABCO Employee, ASD Transferee, and his or her covered dependents, if any, participated immediately before the Benefits Transition Date. The transfer of employment from ASD or an ASD Group member to WABCO or a WABCO Group member as of the Effective Time shall not be required to be treated as a “status change” with respect to any WABCO Employee or ASD Transferee under the ASD Health and Welfare Plans or the WABCO Health and Welfare Plans.

4.4 Retiree Welfare Benefits . Each WABCO Employee and ASD Transferee shall be deemed to have terminated employment with all ASD Group members as of the Effective Time for purposes of each U.S. ASD Health and Welfare Plan which provides post-termination welfare benefits (other than for purposes of COBRA coverage, which is governed by the provisions of Section 4.7 hereof). ASD or the applicable ASD Group member shall retain all Liabilities with respect to such plans, other than Liabilities under those plans set forth on Schedule 4.4 which are provided to former WABCO Employees in the United States pursuant to a collective bargaining agreement, which Liabilities shall be assumed and performed by WABCO as of the Effective Time and with respect to which WABCO will fully indemnify each ASD Group member. To the extent that current WABCO Employees have, as of the Effective Time, attained age 55 with 10 years of service credit under the ASD retiree medical plan, such employees may, at the time of retirement from all WABCO Group members, elect coverage under either (1) the ASD retiree medical plan or (2) a retiree medical plan of the applicable WABCO Group member, in each case as may be in effect at the time and as may be amended or terminated in accordance with its terms from time to time. The WABCO Employee will, upon such election, forfeit his or her entitlement to the coverage that was not elected. WABCO Employees who retire between the Effective Time and the Benefits Transition Date and who elect coverage under the WABCO retiree medical plan, shall be provided coverage under the ASD retiree medical plan until their Benefits Transition Date. WABCO Employees who, as of the Effective Time, have achieved age 55 with 10 years of service credit under the ASD welfare plan shall be entitled to retiree life insurance coverage from ASD provided that they retiree from WABCO no later than December 31, 2008, which is the end of the transition period during which ASD is continuing to offer retiree life insurance coverage to its non-union employees. Notwithstanding anything to the contrary herein, following the Effective Time, ASD (or the appropriate ASD Group member) shall retain sponsorship of retiree health, life insurance and other welfare benefits for WABCO retirees in Canada, including retention of all Liabilities and assets or policies associated therewith.

4.5 Workers’ Compensation Liabilities . Except as provided below, all workers’ compensation Liabilities relating to, arising out of, or resulting from any claim by ASD Transferees or WABCO Employees that result from an accident or from an occupational disease which is incurred or becomes manifest, as the case may be, on or before the Effective Time and while such individual was employed by ASD or an ASD Group member shall be retained by ASD, provided that WABCO shall reimburse ASD or the applicable ASD Group member for any deductibles or co-payments paid in respect of such Liabilities, to the extent attributable to such

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Liabilities. WABCO and each WABCO Group member shall be solely responsible for all workers’ compensation Liabilities relating to, arising out of, or resulting from any claim incurred for a compensable injury sustained by a WABCO Employee or ASD Transferee that results from an accident or from an occupational disease which is incurred or becomes manifest, as the case may be, after the Effective Time. For purposes of this Agreement, an injury shall be deemed to be sustained upon the occurrence of the event giving rise to eligibility for workers’ compensation benefits or, in the case of an occupational disease, at such time as the occupational disease is diagnosed by a qualified medical professional. ASD, each ASD Group member, WABCO and each WABCO Group member shall cooperate with respect to any notification to appropriate governmental agencies of the disposition and the issuance of new, or the transfer of existing, workers’ compensation insurance policies and claims handling contracts.

4.6 Payroll Taxes and Reporting . ASD and WABCO shall, to the extent practicable, (i) treat WABCO (or a WABCO Group member designated by WABCO) as a “successor employer” and ASD (or the appropriate ASD Group member) as a “predecessor,” within the meaning of Sections 3121(a)(1) and 3306(b)(1) of the Code, with respect to WABCO Employees and ASD Transferees for purposes of taxes imposed under the United States Federal Unemployment Tax Act or the United States Federal Insurance Contributions Act, and (ii) cooperate with each other to avoid, to the extent possible, the filing of the more than one IRS Form W-2 with respect to each WABCO Employee and ASD Transferee for the Disposition Year. Without limiting in any manner the obligations and Liabilities of the parties under the Tax Sharing Agreement, ASD, each ASD Group member, WABCO and each WABCO Group member shall each bear its responsibility for payroll tax obligations and for the proper reporting to the appropriate governmental authorities of compensation earned by their respective employees after the Effective Time, including compensation related to the exercise of Options or the vesting or exercise of other equity awards.

4.7 COBRA and HIPAA Compliance . ASD shall be responsible for administering compliance with the health care continuation requirements of COBRA, the certificate of creditable coverage requirements of HIPAA, and the corresponding provisions of the ASD Health and Welfare Plans with respect to WABCO Employees and ASD Transferees and their covered dependents who incur a COBRA qualifying event or loss of coverage under the ASD Health and Welfare Plans at any time on or before the Benefits Transition Date. Subject to the provisions of the Transition Service Agreement, effective immediately after the Benefits Transition Date, WABCO shall be responsible for administering compliance with the health care continuation requirements of COBRA, the certificate of creditable coverage requirements of HIPAA, and the corresponding provisions of the WABCO Health and Welfare Plans with respect to WABCO Employees, ASD Transferees and their covered dependents who incur a COBRA qualifying event or loss of coverage under the WABCO Health and Welfare Plans at any time after the Benefits Transition Date.

4.8 Vacation and Paid Time Off . As of the Effective Time, the applicable WABCO Group Member shall credit each WABCO Employee and ASD Transferee with the unused vacation days and personal and sickness days that such individual has accrued immediately prior to the Effective Time in accordance with the vacation and personnel policies applicable to such employee immediately prior to the Effective Time.

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4.9 WABCO LTD Employees . WABCO shall hire or cause a WABCO Group member to hire each WABCO LTD Employee if such individual is able to return to work within the time period prescribed under the applicable leave policy governing such employee at the time the disability commenced and shall indemnify each ASD Group member against any Liability with respect to a failure by WABCO or a WABCO Group member to hire such employee. To the extent that a WABCO Employee in the United States is on short-term disability leave as of the Effective Time and subsequently becomes entitled to long-term disability benefits as a result of such disability (without having returned to work), such long-term disability benefits will be provided under the applicable ASD Plan. On or about one year after the Effective Time, ASD shall calculate the net present value of the Ancillary Benefits provided to the WABCO LTD Employees in accordance with the assumptions used under FAS106 to determine the costs of said benefits, whereupon WABCO shall pay such amount to ASD.

ARTICLE V

INCENTIVE COMPENSATION, EQUITY COMPENSATION AND OTHER BENEFITS

5.1

ASD Cash-Based Incentive Plans .

(a)

ASD Annual Bonus Plans . As of the Effective Time, WABCO shall assume all Liabilities with respect to the participation of each WABCO Employee and ASD Transferee who is then participating in any cash-based annual bonus or incentive compensation plan of an ASD Group member. The Management Development and Compensation Committee of the WABCO Board of Directors (or its designee) shall have the discretion to make equitable adjustments to the performance metrics, goals and payments under such plans to reflect the Distribution.

(b)

ASD Long-Term Incentive Plans . As of the Effective Time, WABCO shall assume all Liabilities with respect to the participation of each WABCO Employee and ASD Transferee who is then participating in any cash-based long-term incentive compensation plan of an ASD Group member. The Management Development and Compensation Committee of the WABCO Board of Directors (or its designee) shall have the discretion to make equitable adjustments to the performance metrics, goals and payments under such plans to reflect the Distribution.

5.2 Awards under the ASD Equity-Based Plan or Otherwise . ASD and WABCO shall use their commercially reasonable efforts to take all actions necessary or appropriate so that each outstanding ASD Option and ASD Restricted Stock Unit outstanding immediately prior to the Effective Time shall be adjusted as set forth in this Section 5.2.

(a)

ASD Options.

(i)

2007 Grants and Incentive Stock Options Held By WABCO Employees and ASD Transferees . Each ASD Option issued under an ASD Equity-Based Plan that is (1) held by a WABCO Employee or an ASD Transferee, (2) outstanding immediately prior to the Effective Time and (3) either an Incentive Stock Option or any ASD Option granted during 2007 will be

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converted, as of the Effective Time, solely into a WABCO Option. The number of shares of WABCO Common Stock subject to the converted option will be equal to the number of shares of ASD Common Stock subject to the ASD Option immediately prior to the Effective Time, multiplied by a fraction, the numerator of which is the fair market value of a share of ASD Common Stock immediately prior to the Effective Time (based on the closing price of the ASD Common Stock immediately prior to the Effective Time, trading regular way, hereinafter, the “ASD Closing Price”) and the denominator of which is the fair market value of a share of WABCO Common Stock immediately following the Effective Time (based on the opening trading prices of WABCO immediately following the Effective Time, hereinafter, the “Opening WABCO Stock Price”), with the result being rounded down to the nearest whole share. The fraction described in the preceding sentence is referred to hereinafter as the “WABCO Concentrated Method Fraction”. The per share exercise price of the converted WABCO Option will be equal to the per share exercise price of the original ASD Option divided by the WABCO Concentrated Method Fraction, with the result being rounded up to the nearest whole cent.

(ii)

Other Incentive Stock Options . Each ASD Option issued under an ASD Equity-Based Plan that is (1) held by an individual who is not a WABCO Employee or ASD Transferee, (2) outstanding immediately prior to the Effective Time and (3) an Incentive Stock Option will be converted, as of the Effective Time, solely into an adjusted ASD Option. The number of shares of ASD Common Stock subject to the adjusted ASD Option will be equal to the number of shares of ASD Common Stock subject to the option immediately prior to the Effective Time multiplied by a fraction, the numerator of which is the fair market value of a share of ASD Common Stock immediately prior to the Effective Time (based on the closing price of ASD Common Stock immediately prior to the Effective Time, trading regular way) and the denominator of which is the fair market value of ASD Common Stock immediately following the Effective Time (based on the opening trading prices of the ASD Common Stock on the first trading day immediately following the Effective Time, hereinafter, the “Opening ASD Stock Price”), with the result being rounded down to the nearest whole share. The fraction described in the preceding sentence is referred to hereinafter as the “ASD Concentrated Method Fraction”. The per share exercise price of the adjusted ASD Option will be equal to the per share exercise price of the original ASD Option divided by the ASD Concentrated Method Fraction, with the result being rounded up to the nearest whole cent.

(iii)

2007 Options Grants Held By Individuals Other Than WABCO Employees or ASD Transferees and all Pre-2007 Option Grants which are not Incentive Stock Options . Each ASD Option that is not described in clause (i) or (ii) hereof and which is outstanding immediately prior to the Effective Time will be converted into two separate options, an adjusted ASD Option

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and a WABCO Option. The number of shares of stock subject to each of the adjusted ASD Options will be equal to the number of shares of ASD Common Stock subject to the ASD Option immediately prior to the Effective Time. The number of shares of stock subject to the WABCO Option will be equal to the number of shares of WABCO Common Stock the option holder would have received had the option to acquire the Company’s common stock been fully exercised immediately prior to the Effective Time, rounded down to the nearest whole share. The per share exercise price of the adjusted ASD Option shall be equal to the product of (1) the per share exercise price of the ASD Option immediately prior to the Effective Time multiplied by (2) a fraction, the numerator of which shall be the Opening ASD Stock Price and the denominator of which shall be the sum of (i) the Opening ASD Stock Price and (ii) the quotient determined by dividing the Opening WABCO Stock Price by the WABCO Distribution Ratio (as defined below), which product shall be rounded up to the nearest whole cent. The per share exercise price of the WABCO Option shall be equal to the product of (1) the per share exercise price of the ASD Option immediately prior to the Effective Time multiplied by (2) a fraction, the numerator of which shall be the Opening WABCO Stock Price and the denominator of which shall be the sum of (i) the Opening ASD Stock Price and (ii) the quotient determined by dividing the Opening WABCO Stock Price by the WABCO Distribution Ratio, which product shall be rounded up to the nearest whole cent. For purposes of this paragraph (b), “WABCO Distribution Ratio” shall mean the amount determined by dividing (x) the number one (1) by (y) the number of shares of WABCO Common Stock distributed in respect of each share of ASD Common Stock in the Distribution.

(iv)

Option Terms . Each adjusted ASD Option issued shall be subject to the same terms and conditions regarding term, vesting, and other provisions regarding exercise as set forth in the original ASD Option, except as set forth below. Each WABCO Option issued pursuant to this Section 5.2(a) shall be subject to the same terms and conditions regarding term, vesting, and other provisions regarding exercise as set forth in the related ASD Option before the Effective Time, except as set forth below. Notwithstanding the foregoing, ASD will take such action as is necessary to ensure that with respect to Adjusted ASD Options that are held by WABCO Employees as of or following the Effective Time, such individuals will not incur a termination of employment as a result of the Separation for purposes of the Adjusted ASD Options. WABCO will take such action as is necessary to ensure that with respect to the WABCO Option grants that are held by ASD Employees as of or following the Effective Time, such individuals will not incur a termination of employment as a result of the Separation (or such subsequent transfer of employment) for purposes of the WABCO Options. For purposes of the vesting and termination provisions of the Adjusted AD Options and the WABCO Options, continued service with an ASD Group member or a WABCO Group Member shall be considered to be continued service for purposes of such option.

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(b)

Restricted Stock Units.

(i)

Restricted Stock Units held by WABCO Employees and ASD Transferees . Each Restricted Stock Unit based upon ASD common stock that is outstanding and held by a WABCO Employee or an ASD Transferee immediately prior to the Effective Time will be converted into a WABCO Restricted Stock Unit. The number of shares of WABCO Common Stock subject to the WABCO Restricted Stock Unit will be equal to the number of shares of ASD Common Stock subject to the ASD Restricted Stock Unit immediately prior to the Effective Time multiplied by a fraction, the numerator of which is the ASD Closing Price and the denominator of which is the Opening WABCO Stock Price.

(ii)

Other Restricted Stock Units . Each other ASD Restricted Stock Unit will be converted into an adjusted ASD Restricted Stock Unit. The number of shares of ASD Common Stock subject to the adjusted ASD Restricted Stock Unit will be equal to the number of shares of ASD Common Stock subject to the ASD Restricted Stock Unit immediately prior to the Effective Time multiplied by a fraction, the numerator of which is the ASD Closing Price and the denominator of which is the ASD Opening Price.

(iii)

Restricted Stock Unit Terms . WABCO Restricted Stock Units and adjusted ASD Restricted Stock Units shall remain subject to their existing vesting schedule and other terms and conditions so long as the holder thereof shall have remained (or, in accordance herewith, is deemed to have remained) in employment with a member of the ASD Group or a member of the WABCO Group, as the case may be.

(c)

Change in Control Provisions . The ASD and WABCO Options and Restricted Stock Units shall have the change in control provisions set forth on Annex I hereto.

(d)

Taxes . All adjustments described in this Section 5.2 shall be done in a manner which complies with the requirements of Section 409A and Section 424 of the Code, to the extent applicable.

(e)

Partial Interests in Shares . To the extent that any adjustment in stock options or stock appreciation rights described in this Section 5.2 results in any fractional interest in shares, such fractional interest shall be rounded down to the nearest whole share. No fractional interests in shares or stock appreciation rights shall be payable in cash or otherwise.

(f)

Administration . Each of ASD and WABCO shall establish an appropriate administration system in order to handle exercises and delivery of shares in an orderly manner and provide reasonable levels of service for equity award holders.

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5.3 Individual Agreements . As of the Effective Time, WABCO shall, or shall cause a WABCO Group member to assume, and shall thereafter perform, each Individual Agreement with an ASD Transferee. A list of such Individual Agreements is provided on Schedule 5.3.

5.4 ASD Employee Stock Purchase Plan . ASD shall take such action as is necessary or appropriate to cause WABCO Employees and ASD Transferees to receive a refund in cash of all amounts contributed during the offering period in progress under the ASD Employee Stock Purchase Plan as soon as practicable following the Effective Time.

5.5 Confidentiality and Proprietary Information . No provision of the Separation Agreement or this Agreement shall be deemed to release any individual for any violation of any agreement or policy pertaining to confidential or proprietary information of ASD or any of its Affiliates or of WABCO or any of its Affiliates, respectively, or otherwise relieve any individual of his or her obligations under any such agreements or policies.

ARTICLE VI

GENERAL AND ADMINISTRATIVE

6.1 Sharing of Participant Information . To the maximum extent permitted under applicable law, ASD and WABCO shall share, ASD shall cause each applicable ASD Group member to share, and WABCO shall cause each applicable WABCO Group member to share, with each other and their respective agents and vendors all participant information reasonably necessary for the efficient and accurate administration of each of the ASD Plans and the WABCO Plans. ASD and WABCO and their respective authorized agents shall, subject to applicable laws on confidentiality, be given reasonable and timely access to, and may make copies of, all information relating to the subjects of this Agreement in the custody of the other party, to the extent necessary for such administration. Until the Effective Time, all participant information shall be provided in the manner and medium applicable to Participating Companies in the ASD Plans generally, and thereafter until the time at which the Parties subsequently determine, all participant information shall be provided in a manner and medium that are compatible with the data processing systems of ASD as in effect as of the Effective Time, unless otherwise agreed to by ASD and WABCO.

6.2 Non-Termination of Employment; No Third Party Beneficiaries . Except as expressly provided in this Agreement or as set forth in Schedule 6.2, no provision of this Agreement or the Separation Agreement shall be construed to create any right, or accelerate entitlement, to any compensation or benefit whatsoever on the part of any future, present, or former employee of ASD, an ASD Group member, WABCO, or a WABCO Group member under any ASD Plan or WABCO Plan or otherwise. Except as expressly provided in this Agreement, nothing in this Agreement shall preclude WABCO or any WABCO Group member, at any time after the Effective Time, from amending, merging, modifying, terminating, eliminating, reducing, or otherwise altering in any respect any WABCO Plan, any benefit under any WABCO Plan or any trust, insurance policy or funding vehicle related to any WABCO Plan; and (iii) except as expressly provided in this Agreement, nothing in this Agreement shall preclude ASD or any ASD Group member, at any time after the Effective Time, from amending, merging, modifying, terminating, eliminating, reducing, or otherwise altering in any respect any ASD Plan, any benefit under any ASD Plan or any trust, insurance policy or funding vehicle related to any ASD Plan.

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6.3 Audit Rights with Respect to Information Provided . Each of ASD and WABCO, and their duly authorized representatives, shall have the right to conduct audits with respect to all information provided to it by the other party. The parties shall cooperate to determine the procedures and guidelines for conducting audits under this Section 6.3, which shall require reasonable advance notice by the auditing party. The auditing party shall have the right to make copies of any records at its expense, subject to applicable law. The parties agree that time will be of the essence in the conduct and completion of such audits.

6.4 Fiduciary Matters . ASD and WABCO each acknowledge that actions required to be taken pursuant to this Agreement may be subject to fiduciary duties or standards of conduct under ERISA or other applicable law, and no party shall be deemed to be in violation of this Agreement if it fails to comply with any provisions hereof based upon its good faith determination (as supported by advice from counsel experienced in such matters) that to do so would violate such a fiduciary duty or standard. Each party shall be responsible for taking such actions as are deemed necessary and appropriate to comply with its own fiduciary responsibilities and shall fully release and indemnify the other party for any Liabilities caused by the failure to satisfy any such responsibility.

6.5 Consent of Third Parties . If any provision of this Agreement is dependent on the consent of any third party (such as a vendor or governmental entity) and such consent is withheld, ASD and WABCO shall use commercially reasonable efforts to implement the applicable provisions of this Agreement to the full extent practicable. If any provision of this Agreement cannot be implemented due to the failure of such third party to consent, ASD and WABCO shall negotiate in good faith to implement the provision in a mutually satisfactory manner. The phrase “commercially reasonable efforts” as used herein shall not be construed to require the incurrence of any non-routine or unreasonable expense or liability or the waiver of any right.

6.6 Taxation . Obligations and Liabilities with respect to tax deductions with respect to equity and other compensation and benefits provided in this Agreement shall be governed by Schedule 2.03(d) of the Tax Sharing Agreement between ASD and WABCO. WABCO and ASD shall cooperate to comply with applicable law governing tax reporting and withholding with respect to compensation paid pursuant to the plans and agreements referenced herein.

ARTICLE VII

MISCELLANEOUS

7.1 Complete Agreement; Construction . This Agreement, including the Schedules and the Annex, shall constitute the entire agreement between the Parties with respect to the subject matter hereof and shall supersede all previous negotiations, commitments and writings with respect to such subject matter.

7.2 Counterparts . This Agreement may be executed in more than one counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more such counterparts have been signed by each of the Parties and delivered to the other Parties. Execution of this Agreement or any other documents pursuant to this Agreement by facsimile or other electronic copy of a signature shall be deemed to be, and shall have the same effect as, executed by an original signature.

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7.3 Survival of Agreements . Except as otherwise contemplated by this Agreement or any covenants and agreements of the Parties contained in this Agreement shall survive the Effective Time and remain in full force and effect in accordance with their applicable terms.

7.4 Notices . All notices, requests, claims, demands and other communications under this Agreement as between the Parties, shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt unless the day of receipt is not a Business Day, in which case it shall be deemed to have been duly given or made on the next Business Day) by delivery in person, by overnight courier service, by facsimile with receipt confirmed (followed by delivery of an original via overnight courier service) or by registered or certified mail (postage prepaid, return receipt requested) to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 7.4):

To ASD:

American Standard Companies Inc.

1 Centennial Avenue

Piscataway, NJ 08855

U.S.A.

Attn: Mary Beth Gustafsson, General Counsel

Facsimile: (732) 980 - 3377

To WABCO:

c/o

WABCO Europe BVBA

Chaussée de Wavre, 1789 Box 15

1160 Brussels

Belgium

Attn: General Counsel

Facsimile: + 32 2 663 98 89

With a copy to:

McDermott Will & Emery LLP

227 W. Monroe Street

Chicago, IL 60606

U.S.A.

Attn: Neal J. White

Facsimile: (312) 984 - 7700

7.5 Waivers . The failure of any Party to require strict performance by any other Party of any provision in this Agreement will not waive or diminish that Party’s right to demand strict performance thereafter of that or any other provision hereof.

7.6 Assignment . The provisions of this Agreement and the obligations and rights hereunder shall be binding upon, inure to the benefit of and be enforceable by (and against) the Parties and their respective successors and permitted transferees and assigns. Notwithstanding the foregoing, this Agreement shall not be assignable, in whole or in part, by any Party without the prior written consent of the other Party, and any attempt to assign any rights or obligations arising under this Agreement without such consent shall be null and void.

7.7 Amendments . Subject to the terms of Section 7.8, this Agreement may not be modified or amended except by an agreement in writing signed by each of the Parties.

7.8 Termination, Etc . Notwithstanding anything to the contrary herein, this Agreement may be amended, modified or terminated at any time prior to the Effective Time by and in the sole

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discretion of ASD without the approval of WABCO or the stockholders of ASD. In the event of a termination, no Party shall have any Liability to any other Party or any other Person. After the Effective Time, this Agreement may not be terminated except by an agreement in writing signed by each of the Parties.

7.9 No Circumvention . The Parties agree not to directly or indirectly take any actions, act in concert with any Person who takes an action, or cause or allow any member of any such Party’s Group to take any actions (including the failure to take a reasonable action) such that the resulting effect is to materially undermine the effectiveness of any of the provisions of this Agreement or any Ancillary Agreement.

7.10 Subsidiaries . Each of the Parties shall cause to be performed all actions, agreements and obligations set forth herein to be performed by any Subsidiary or Affiliate of such Party or by any entity that becomes a Subsidiary or Affiliate of such Party on and after the date hereof.

7.11 Third Party Beneficiaries . This Agreement is solely for the benefit of the Parties and should not be deemed to confer upon third parties any remedy, claim, liability, reimbursement, cause of action or other right in excess of those existing without reference to this Agreement.

7.12 Title and Headings . Titles and headings to Sections and Articles are inserted for the convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

7.13 Schedules . The Schedules attached hereto are incorporated herein by reference and shall be construed with and as an integral part of this Agreement to the same extent as if the same had been set forth verbatim herein.

7.14 Governing Law . This Agreement shall be governed by and construed in accordance with the internal Laws, and not the Laws governing conflicts of Laws (other than Sections 5-1401 and 5-1402 of the New York General Obligations Law), of the State of New York.

7.15 Consent to Jurisdiction . Subject to the provisions of Article VIII of the Separation Agreement, each of the Parties irrevocably submits to the exclusive jurisdiction of the United States District Court for the Southern District of New York (the “ New York Court “), for the purposes of any suit, action or other proceeding to compel arbitration or for provisional relief in aid of arbitration in accordance with Article VIII of the Separation Agreement or for provisional relief to prevent irreparable harm, and to the non-exclusive jurisdiction of the New York Court for the enforcement of any award issued thereunder. Each of the Parties further agrees that service of any process, summons, notice or document by United States registered mail to such Party’s respective address set forth in 7.4 shall be effective service of process for any action, suit or proceeding in the New York Courts with respect to any matters to which it has submitted to jurisdiction in this 7.15. Each of the Parties irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in the New York Court, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

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7.16 Specific Performance . The Parties agree that irreparable damage would occur in the event that the provisions of this Agreement were not performed in accordance with their specific terms. Accordingly, it is hereby agreed that the Parties shall be entitled to (i) an injunction or injunctions to enforce specifically the terms and provisions hereof in any arbitration in accordance with Article VIII of the Separation Agreement, (ii) provisional or temporary injunctive relief in accordance therewith in the New York Court, and (iii) enforcement of any such award of an arbitral tribunal or the New York Court in any court of the United States, or any other any court or tribunal sitting in any state of the United States or in any foreign country that has jurisdiction, this being in addition to any other remedy or relief to which they may be entitled.

7.17 Dispute Resolution . The resolution of any dispute between the Parties with respect to this Agreement shall be governed by the provisions of the Separation Agreement with respect to the resolution of disputes, including, without limitation, the provisions of Article VIII of the Separation Agreement.

7.18 Severability . In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby, and the Parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions, the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

7.19 Construction . The Parties have participated jointly in the negotiation and drafting of this Agreement. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instrument to be drafted.

7.20 Authorization . Each of the Parties hereby represents and warrants that it has the power and authority to execute, deliver and perform this Agreement, that this Agreement has been duly authorized by all necessary corporate action on the part of such Party, that this Agreement constitutes a legal, valid and binding obligation of each such Party enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and general equity principles.

[Signature Page Follows]

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IN WITNESS WHEREOF, the Parties have caused this Employee Matters Agreement to be duly executed as of the day and year first above written.


AMERICAN STANDARD COMPANIES INC.

By		/s/ G. P ETER D’A LOIA
Name:		G. Peter D’Aloia
Title:		Senior Vice President and Chief Financial Officer

WABCO HOLDINGS INC.

By		/s/ U LRICH M ICHEL
Name:		Ulrich Michel
Title:		Chief Financial Officer

ANNEX I

CHANGE IN CONTROL PROVISIONS APPLICABLE TO ADJUSTED EQUITY AWARDS FOLLOWING DISTRIBUTION


	WABCO change in control	ASD change in control
WABCO Options and Restricted Stock Units held by WABCO employees	WABCO Options and WABCO RSUs accelerate if not assumed/replaced WABCO Options and WABCO RSUs also accelerate upon qualifying termination from WABCO following change in control	WABCO Options and WABCO RSUs will continue in effect following ASD change in control, which will not affect WABCO awards Subsequent termination of employment of WABCO employee will not accelerate vesting of WABCO Options and WABCO RSUs awards

ASD Options and Restricted Stock Units held by WABCO employees	ASD Options and ASD RSUs will continue in effect following WABCO change in control, which will not affect ASD awards ASD Options and ASD RSUs will accelerate upon qualifying termination from WABCO following change in control	ASD Options and ASD RSUs accelerate if not assumed/replaced Subsequent termination of employment of WABCO employee will not accelerate vesting of ASD Options and ASD RSUs

WABCO Options and Restricted Stock Units held by ASD employees	WABCO Options and WABCO RSUs accelerate if not assumed/replaced Subsequent termination of employment will not accelerate vesting of WABCO Options and WABCO RSUs	WABCO Options and WABCO RSUs will continue in effect following ASD change in control, which will not affect WABCO awards WABCO Options and WABCO RSUs will accelerate upon qualifying termination from ASD following change in control

ASD Options and Restricted Stock Units held by ASD employees	ASD Options and ASD RSUs will continue in effect following WABCO change in control, which will not affect ASD awards Subsequent termination of employment of ASD employee will not accelerate vesting of ASD Options and ASD RSUs	ASD Options and ASD RSUs accelerate if not assumed/replaced ASD Options and ASD RSUs also accelerate upon qualifying termination from ASD following change in control

*	The applicable change in control definitions will be (i) in the case of ASD, the change in control definition set forth in the applicable ASD Equity-Based Plan and (ii) in the case of WABCO, the definition set forth in the WABCO Long-Term Incentive Plan.

Exhibit 10.4

INDEMNIFICATION AND COOPERATION AGREEMENT

This INDEMNIFICATION AND COOPERATION AGREEMENT (this “ Agreement ”) is made and entered into as of July 16, 2007 by and among American Standard Companies Inc. (“ ASD ”), Ideal Standard, France SAS (“ IS France ”), Ideal Standard GmbH & Co. OHG (“ IS Belgium ”), WABCO Austria GesmbH (“ WABCO Austria ”), Ideal Standard GmbH (Germany) (“ IS Germany ”), Ideal Standard Italia s.r.l. (Italy) (“ IS Italy ”), Ideal Standard Nederland BV (“ Venlo ”), WABCO Holdings Inc. (“ WABCO ”) and American Standard Europe BVBA ( “ ASE ” or the “ Indemnitor ”). Each of the foregoing parties is individually referred to herein as a “ Party ” and collectively as the “ Parties .” Certain capitalized terms used herein are defined in Section 1.1. Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in the Distribution Agreement (defined below).

RECITALS

WHEREAS, the Board of Directors of ASD has determined that it is appropriate, desirable and in the best interests of ASD and its shareholders to separate ASD into three separate companies: (i) one comprising the VCS Business, which shall be owned and conducted, directly or indirectly, by WABCO, all of the common stock of which is intended to be distributed to ASD shareholders, (ii) one comprising the HVAC Business, which shall continue to be owned and conducted, directly or indirectly, by ASD and (iii) one comprising the B&K Business, which ASD currently intends to sell to one or more third parties;

WHEREAS, as part of the foregoing, ASD and WABCO have entered into the Separation and Distribution Agreement, dated as of July 16, 2007 (the “ Distribution Agreement ”), which provides, among other things, for the pro-rata distribution by ASD of all of its shares in WABCO Common Stock to the holders of ASD Common Stock, and the execution and delivery of certain other agreements in order to facilitate and provide for the foregoing, including without limitation, the Tax Sharing Agreement, the Employee Matters Agreement, the Transition Services Agreement and this Agreement;

WHEREAS, on March 28, 2007, the Charged Parties, along with a number of other companies not affiliated with ASD or WABCO, received a Statement of Objections from the European Commission (the “ Statement of Objections ”) alleging infringements of European Union competition rules by certain bathroom fixture and fittings companies, including the Charged Parties;

WHEREAS, the Parties acknowledge and agree that the Indemnifiable Matters relate to the B&K Business that is conducted by a division of ASD which is intended to be sold and, upon completion of such sale, will no longer be owned by ASD, WABCO or any of their Affiliates;

WHEREAS, given the standard practice of the European Commission, it is anticipated that each Charged Party will be held jointly and severally liable for any fines or other

judgments that may be rendered against or imposed on any of the other Charged Parties in connection with the Bathroom Fittings and Fixtures Proceedings;

WHEREAS, the alleged wrongdoings, as outlined in the Statement of Objections, are alleged to have occurred between May 5, 1988 and November 9, 2004, and while it is expected that a fine will be imposed in the Bathroom Fixtures and Fittings Proceedings, the exposure relating thereto is a contingent liability the amount of which is uncertain as of the date hereof;

WHEREAS, this Agreement constitutes an integral part of the overall allocation of Assets and Liabilities in the Separation (including the determination by ASD not to transfer any Indebtedness to WABCO or ASE (other than Indebtedness incurred by WABCO in connection with the Distribution) and to indemnify WABCO and its Affiliates, including ASE, against the Remainco Liabilities (which include, among other things, significant asbestos liabilities which are attributable, in part, to historical operations of the WABCO Group)) and the determination by ASD to proceed with the Separation on the basis of this overall allocation;

WHEREAS, the Parties acknowledge that WABCO or ASE will receive substantial benefits from the Separation and the transactions contemplated by the Distribution Agreement and Ancillary Agreements, and in consideration thereof, WABCO and ASE have agreed to enter this Agreement to provide for the indemnification, cooperation and other obligations specified herein including the obligation of ASE to be responsible for the indemnification obligations specified herein;

WHEREAS, the Parties desire to set forth the agreements, understandings and procedures pursuant to which ASE shall indemnify, defend and hold harmless the Indemnitees against the Indemnifiable Losses relating to the Indemnifiable Matters;

WHEREAS, the Parties have also concluded that it is in their common interests with respect to the Indemnifiable Matters to cooperate with one another and to provide access to documents, information, and analyses, with respect to the Indemnifiable Matters; and

WHEREAS, the Parties recognize and acknowledge that any unauthorized disclosure or dissemination of any documents or information exchanged between the Parties would be detrimental to them and to the conduct of any potential claims.

NOW, THEREFORE, in consideration of the recitals and of the respective agreements and covenants contained herein, and intending to be legally bound hereby, the Parties hereto agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Certain Definitions . For purposes of this Agreement, the following terms shall have the meanings specified:

(a) “ Accepted and Confirmed Bank Guarantee ” shall have the meaning specified in Section 4.1(b)(ii).

(b) “ Appeal Deadline Date ” means the date specified in the Initial Decision or as required under applicable Laws of the European Union in respect of the Bathroom Fittings and Fixtures Proceedings pursuant to which the Charged Parties are required to submit an appeal to the Initial Decision rendered against such Charged Party.

(d) “ ASD Charged Parties ” means ASD and any other member of the ASD Group (other than any WABCO Charged Party or B&K Charged Party) that is or becomes a named party in the Bathroom Fittings and Fixtures Proceedings from and after the Effective Time.

(e) “ ASD Election Notice ” shall have the meaning specified in Section 2.2(c).

(f) “ ASD Non-Appeal Notice ” shall have the meaning specified in Section 2.2(c).

(g) “ ASE ” shall have the meaning specified in the Preamble to this Agreement.

(h) “ ASE Election Notice ” shall have the meaning specified in Section 2.2(c).

(i) “ ASE Non-Appeal Notice ” shall have the meaning specified in Section 2.2(c).

(j) “ Bathroom Fittings and Fixtures Proceedings ” means the proceedings initiated by the Commission of the European Communities contemplated by that certain Statement of Objections, dated March 26, 2007, relating to case COMP/E-1/39.092, as the same may be amended, supplemented or superseded by a new Statement of Objections, including any appeals relating thereto.

(k) “ B&K Buyer Parties ” means those Persons that acquire all or any portion of the B&K Business pursuant to a B&K Sale.

(l) “ B&K Charged Parties ” means, collectively, Venlo, IS France, IS Belgium, IS Germany and IS Italy and any member of the ASD Group that is sold to a B&K Buyer Party and is or becomes a named party in the Bathroom Fittings and Fixtures Proceedings from and after the Effective Time.

(m) “ B&K Sale Agreement ” shall have the meaning specified in Section 4.5.

(n) “ Change in Control ” means, and shall be deemed to have occurred if, on or after the Effective Time, (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than a trustee or other fiduciary holding securities under an employee benefit plan of WABCO or any of its Subsidiaries acting in such capacity, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of WABCO or ASE, as applicable, representing more than 35% of the total voting power represented by WABCO’s or ASE’s, as applicable, then outstanding Voting Securities, (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the board of directors of WABCO or ASE, as applicable, and any new director whose election by the board of directors of WABCO or ASE, as applicable, or nomination for election by WABCO’s or ASE’s, stockholders as applicable, was approved by a vote of at least two thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, (iii) the stockholders of WABCO or ASE, as applicable, approve a merger or consolidation of WABCO or ASE, as applicable, with any other corporation other than a merger or consolidation that would result in the Voting Securities of WABCO or ASE, as applicable, outstanding

immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least 65% of the total voting power represented by the Voting Securities of WABCO or ASE, as applicable, or such surviving entity outstanding immediately after such merger or consolidation, (iv) the stockholders of WABCO or ASE, as applicable, approve a plan of complete liquidation of WABCO or ASE, as applicable, or an agreement for the sale or disposition by WABCO or ASE, as applicable, of (in one transaction or a series of related transactions) all or substantially all of their respective assets, or (v) WABCO or ASE, as applicable, shall file or have filed against it, and such filing shall not be dismissed, any bankruptcy, insolvency or dissolution proceedings, or a trustee, administrator or creditors committee shall be appointed to manage or supervise the affairs of WABCO or ASE, as applicable,

(o) “ Charged Party ” means any ASD Charged Party, B&K Charged Party or WABCO Charged Party.

(p) “ Common Interest Materials ” shall have the meaning specified in Section 3.4(b).

(q) “ Defense Agreement ” shall have the meaning specified in Section 3.3.

(r) “ Defense Costs ” shall mean fees, costs and expenses incurred on or after the Effective Time by a Party in connection with the defense of any Indemnifiable Matter, including, without limitation, legal, consultant, expert, economists, witness, accounting and other professional fees and expenses, but excluding, for the avoidance of doubt, the payment of any amounts to Governmental Entities in connection with any such Indemnifiable Matter.

(s) “ Dispute ” shall have the meaning specified in Section 5.1.

(t) “ Distribution Agreement ” shall have the meaning specified in the Recitals to this Agreement.

(u) “ Escrow Account ” shall have the meaning specified in Section 4.1(b).

(v) “ Escrow Agreement ” shall have the meaning specified in Section 4.1(b).

(w) “ Escrowed Amount ” shall have the meaning specified in Section 4.1(b).

(x) “ Indemnifiable Loss ” and “ Indemnifiable Losses ” shall mean any and all fines, penalties, judgments, obligations, interest and amounts paid in settlement, in each case arising solely out of the Indemnifiable Matters and that are imposed on any Indemnitee (whether directly or indirectly, through contract, operation of law or otherwise, or through theories of successor or transferee liability, de facto merger or similar indirect theory of liability), including, without limitation, the Initial Decision Amount (as may be modified pursuant to any appeal judgment(s)) and the amount of any interest that will accrue on the Initial Decision Amount and will be due and owing to the European Commission between the Payment Due Date and the date on which the fine and any accrued interest thereon have been paid in full following the rendering of a final resolution of the Bathroom Fittings and Fixtures Proceedings (including the final judgment concluding the appeal process initiated by the Charged Parties in connection with the Bathroom Fittings and Fixtures Proceedings), in each case determined in accordance with the Initial Decision and the applicable rules in force in the European Union.

(y) “ Indemnifiable Matters ” shall mean (i) the Bathroom Fittings and Fixtures Proceedings, and (ii) following a B&K Sale, any indemnification claims that may be brought against any member of the ASD Group (and their respective Affiliates and their respective directors, officers, employees and agents, in each case, together with their respective heirs, executors, administrators, successors and assigns) by any B&K Buyer Party or any of their respective Affiliates (including any B&K Charged Party) or their Representatives solely in connection with the Bathroom Fittings and Fixtures Proceedings. For the avoidance of doubt, third party Actions that have arisen or may arise prior to or after the Effective Time that relate to or arise out of the subject matter of the Bathroom Fittings and Fixtures Proceedings (including, without limitation, shareholder lawsuits but excluding the Bathroom Fittings and Fixtures Proceedings themselves and excluding any indemnification claims brought by a B&K Buyer Party or any of their respective Affiliates (including any B&K Charged Party) or Representatives), are not Indemnifiable Matters under this Agreement. The Distribution Agreement (rather than this Agreement) addresses, allocates responsibility and indemnification obligations for, and shall exclusively control, with respect to such third party Actions.

(z) “ Indemnitees ” shall mean the ASD Charged Parties and the B&K Charged Parties and their respective Affiliates (other than any member of the WABCO Group or a WABCO Charged Party) and their respective directors, officers, employees and agents, in each case, together with their respective heirs, executors, administrators, successors and assigns, and, if applicable, the B&K Buyer Parties and other assignees following any assignment by ASD in accordance with Section 6.3 hereof.

(aa) “ Indemnitee Representative ” shall have the meaning specified in Section 6.17.

(bb) “ Indemnitor ” shall have the meaning set forth in the Preamble to this Agreement.

(cc) “ Indemnitor Representative ” shall have the meaning specified in Section 6.16.

(dd) “ Initial Decision ” shall mean the initial decision rendered by the European Commission in the Bathroom Fittings and Fixtures Proceedings in which the Initial Decision Amount is imposed.

(ee) “ Initial Decision Amount ” shall mean the aggregate amount of the fines (or other amounts, if any) imposed by the European Commission on all Charged Parties on the Initial Decision Date as reflected in the Initial Decision.

(ff) “ Initial Decision Date ” shall mean the first date upon which the European Commission imposes a fine on any Charged Party and/or any of the other Indemnitees or Indemnitors or any other member of the ASD Group or WABCO Group in the Bathroom Fittings and Fixtures Proceedings.

(gg) “ IS Belgium ” shall have the meaning specified in the Preamble to this Agreement.

(hh) “ IS France ” shall have the meaning specified in the Preamble to this Agreement.

(ii) “ IS Germany ” shall have the meaning specified in the Preamble to this Agreement.

(jj) “ IS Italy ” shall have the meaning specified in the Preamble to this Agreement.

(kk) “ New York Courts ” shall have the meaning specified in Section 6.6.

(ll) “ Non-Appeal Notice ” shall mean either an ASE Non-Appeal Notice or an ASD Non-Appeal Notice, as applicable.

(mm) “ Party ” shall have the meaning specified in the Preamble to this Agreement.

(nn) “ Payment Due Date ” means the date specified in the Initial Decision or as required under the rules in force in the European Union in respect of the Bathroom Fittings and Fixtures Proceedings pursuant to which the Charged Parties are required to make payment of the Initial Decision Amount.

(oo) “ Privilege ” shall have the meaning specified in Section 3.3(a).

(pp) “ Privileged Information ” shall have the meaning specified in Section 3.3(a).

(qq) “ Release Date ” shall have the meaning specified in Section 4.2.

(rr) “ Representative ” shall mean any Affiliates, directors, officers, members, partners, employees, accountants, agents, counsel and other professional advisors of any of the Parties to this Agreement.

(ss) “ Statement of Objections ” shall have the meaning specified in the Recitals to this Agreement.

(tt) “ Venlo ” shall have the meaning specified in the Preamble to this Agreement.

(uu) “ Voting Securities ” means any securities of WABCO or ASE, as applicable, that vote generally in the election of directors of WABCO or ASE, respectively.

(vv) “ WABCO ” shall have the meaning specified in the Preamble to this Agreement.

(ww) “ WABCO Austria ” shall have the meaning specified in the Preamble to this Agreement.

(xx) “ WABCO Charged Parties ” means ASE, WABCO Austria and any other member of the WABCO Group that is or becomes a named party in the Bathroom Fittings and Fixtures Proceedings from and after the Effective Time.

ARTICLE II

INDEMNIFICATION

Section 2.1 Indemnification; Release .

(a) The Indemnitor shall indemnify and hold harmless the Indemnitees from and against, and shall reimburse the Indemnitees with respect to, any and all Indemnifiable Losses, whether arising prior to or following the Effective Time and whether or not arising out of any acts or omissions by any Indemnitee occurring prior to or following the Effective Time. For the avoidance of doubt, Indemnifiable Losses shall not include Defense Costs.

(b) WABCO and the WABCO Charged Parties hereby remise, release and forever discharge the Indemnitees from any and all Liabilities whatsoever, whether at law or in equity (including any right of contribution), whether arising under any contract, by operation of law or otherwise (or any theories of successor or transferee liability or de facto merger or similar indirect theory of liability), including for fraud or willful misconduct, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the date of this Agreement, in each case relating to any of the Indemnifiable Matters. WABCO and the WABCO Charged Parties hereby unconditionally and irrevocably agree, on behalf of themselves and any of their Affiliates, that they shall not initiate, pursue or cause or be initiated or pursued, directly or indirectly, any judicial proceeding or Action seeking a judgment, holding or declaration that this Agreement or any of the indemnification or release obligations of WABCO and the WABCO Charged Parties provided hereunder is, was or would be illegal, invalid or unenforceable in accordance with its terms, and WABCO and the WABCO Charged Parties unconditionally and irrevocably agree that they shall not raise or assert any defense to this effect in any such proceeding or Action. WABCO and the WABCO Charged Parties acknowledge that they will receive substantial direct and indirect benefits from the transactions contemplated by the Distribution Agreement and the Ancillary Agreements (including, without limitation, the assumption by ASD of the Remainco Liabilities) and that the waiver, release and agreements set forth in this Section 2.1(b) are knowingly made in contemplation of such benefits and after the advice of counsel.

Section 2.2 Bathroom Fittings and Fixtures Proceedings .

(a) ASE shall have the right and the duty to control the defense of the Bathroom Fittings and Fixtures Proceedings (on behalf of itself, the other WABCO Charged Parties and the B&K Charged Parties); provided, however, from and after the time a B&K Sale is consummated, upon the prior written consent of ASD, the B&K Buyer Parties (on behalf of themselves and the B&K Charged Parties) shall have the right to observe and participate in the defense of the Bathroom Fittings and Fixtures Proceedings, the specific scope of such observation and participation to be determined by mutual agreement of ASD and ASE in good faith, it being understood that, without ASE’s prior written consent, such observation and participation shall in no event constitute active control in the defense, including, without limitation, affirmative rights to determine whether to appeal the Initial Decision or take other actions contemplated by this Section 2.2 (on behalf of the WABCO Charged Parties or B&K Charged Parties). ASD shall have the right and the duty to control the defense of the Bathroom Fittings and Fixtures Proceedings on behalf of itself and the ASD Charged Parties.

(b) ASD shall be entitled to select and engage counsel on behalf of itself and the ASD Charged Parties in respect of their defense and involvement in the Bathroom Fittings and Fixtures Proceedings. The Indemnitor Representative shall be entitled to select counsel on behalf of the WABCO Charged Parties and B&K Charged Parties in respect of their involvement and defense in the Bathroom Fittings and Fixtures Proceedings; it being acknowledged that the Indemnitor Representative shall provide prior notice to ASD and the B&K Charged Parties of the selection of any such counsel other than counsel retained by the WABCO Charged Parties and B&K Charged Parties at the Effective Time and it is further acknowledged that to the extent the Indemnitor Representative (on behalf of the WABCO Charged Parties and B&K Charged Parties) choose not to retain either Baker & McKenzie or McDermott Will & Emery, ASD shall be entitled to retain either such law firm and WABCO and ASE shall not object (and shall provide a waiver of privilege to the extent requested to do so by ASD) in any way to ASD retaining such counsel on its own behalf in connection with any matter, including the Bathroom Fittings and Fixtures Proceedings. From and after the time a B&K Sale is consummated, upon the prior written consent of ASD, the B&K Buyer Parties (on behalf of themselves and the B&K Charged Parties) shall be entitled to select counsel on behalf of the B&K Charged Parties in respect of their observation of and participation in the Bathroom Fittings and Fixtures Proceedings to the limited extent contemplated by Section 2.2(a); it being understood that the Defense Costs associated with such counsel shall be the responsibility of the B&K Charged Parties as further provided in Section 2.2(e) hereof.

(c) Once an Initial Decision is rendered in the Bathroom Fittings and Fixtures Proceedings, and to the extent that the Charged Parties have standing under applicable Law to appeal the Initial Decision, (i) ASD (on behalf of the ASD Charged Parties) shall have the right, in its sole discretion and without the consent of any other Party, to appeal the Initial Decision with respect to the decision rendered against any ASD Charged Party, (ii) ASE (on behalf of the WABCO Charged Parties and the B&K Charged Parties) shall have the right, in its sole discretion and without the consent of any other Party, to appeal the Initial Decision with respect to the decision rendered against any WABCO Charged Party or any B&K Charged Party, (iii) the WABCO Charged Parties and the B&K Charged Parties may not decide to forego an appeal to the Initial Decision with respect to the decision rendered against any WABCO Charged Party or any B&K Charged Party if the failure to appeal the Initial Decision would, in any way (as determined in good faith by ASD) prejudice ASD’s appeal of the Initial Decision with respect to the decision rendered against any ASD Charged Party; it being understood that if the Indemnitor Representative provides written notice to ASD no later than twenty Business Days prior to the Appeal Deadline Date that it does not wish to appeal the Initial Decision with respect to the decision rendered against any WABCO Charged Party or any B&K Charged Party (an “ ASE Non-Appeal Notice ”), ASD shall have the right, if it has determined in good faith that such non-appeal would, in any way prejudice ASD’s appeal of the Initial Decision with respect to the decision rendered against any ASD Charged Party, to cause the WABCO Charged Parties and the B&K Charged Parties to appeal the Initial Decision with respect to the decision rendered against the WABCO Charged Parties and the B&K Charged Parties by delivering a written notice within ten Business Days after its receipt of the ASE Non-Appeal Notice to the Indemnitor Representative and the B&K Charged Parties of its election to exercise such right (the “ ASD Election Notice ”), and upon delivery of the ASD Election Notice the provisions of Section 4.7 shall become applicable, (iv) ASD (on behalf of the ASD Charged Parties) may not decide to forego an

appeal to the Initial Decision with respect to the decision rendered against any ASD Charged Party if the failure to appeal the Initial Decision would, in any way (as determined in good faith by ASE) prejudice ASE’s appeal of the Initial Decision (on behalf of the WABCO Charged Parties and B&K Charged Parties) with respect to the decision rendered against any WABCO Charged Party or B&K Charged Party; it being understood that if ASD provides written notice to the Indemnitor Representative no later than twenty Business Days prior to the Appeal Deadline Date that it does not wish to appeal the Initial Decision with respect to the decision rendered against any ASD Charged Party (an “ ASD Non-Appeal Notice ”), the Indemnitor Representative shall have the right, if it has determined in good faith that such non-appeal would, in any way prejudice ASE’s appeal of the Initial Decision with respect to the decision rendered against any WABCO Charged Party or B&K Charged Party, to cause the ASD Charged Parties to appeal the Initial Decision with respect to the decision rendered against the ASD Charged Parties by delivering a written notice within ten Business Days after its receipt of the ASD Non-Appeal Notice to ASD of its election to exercise such right (the “ ASE Election Notice ”), and upon delivery of the ASE Election Notice the provisions of Section 4.8 shall become applicable and (v) except in connection with an appeal initiated by ASE (or ASD, in the case of an ASD Election Notice), as applicable, on behalf of the B&K Charged Parties, the B&K Charged Parties shall not have the right to otherwise appeal the Initial Decision with respect to the decision rendered against any B&K Charged Party, unless the B&K Charged Parties agree to indemnify the ASD Charged Parties and the WABCO Charged Parties for any fines imposed on the B&K Charged Parties in the Bathroom Fittings and Fixtures Proceedings with such indemnification to be provided pursuant to an agreement that is mutually acceptable to ASD and ASE. Upon prior written notice delivered by ASE (or ASD, in the case of an ASD Election Notice), as applicable, the B&K Charged Parties agree to be a party to any appeal of the Initial Decision initiated by ASE (or ASD, in the case of an ASD Election Notice), as applicable, on behalf of the WABCO Charged Parties and B&K Charged Parties.

(d) Each of ASD (on behalf of the ASD Charged Parties) and ASE (on behalf of the WABCO Charged Parties and B&K Charged Parties) will give the other Party prompt notice of any intent to appeal the Initial Decision with respect to the decision rendered against such Charged Parties; provided, that any Non-Appeal Notice must be delivered in accordance with Section 2.2(c). Any written submissions and responses, or the provision of any information or documents to Governmental Entities, in each case, with respect to the Bathroom Fittings and Fixtures Proceedings, including the contents of any submissions in the appeals process, if applicable, shall be prepared by ASD (with respect to any such matters submitted on behalf of any ASD Charged Party) and ASE (with respect to any such matters submitted on behalf of any WABCO Charged Party or any B&K Charged Party); provided, that if ASD delivers an ASD Election Notice, the contents of any such submissions on behalf of any WABCO Charged Party or any B&K Charged Party shall be prepared at the direction of ASD (which may include preparation by counsel to the WABCO Charged Parties and B&K Charged Parties existing as of the Effective Time or at the time of any such submission) and with consultation with the Indemnitor Representative; provided, further, however, if ASE delivers an ASE Election Notice, the contents of any such submissions on behalf of any ASD Charged Party shall be prepared at the direction of ASE (which may include preparation by counsel to the ASD Charged Parties existing as of the Effective Time or at the

time of any such submission) and with consultation with ASD. The Parties shall, and shall cause their Affiliates to, promptly inform the other of any communication from any Governmental Entity relating to the Bathroom Fixtures and Fittings Proceedings and shall promptly furnish the other with copies of any such written notices or other communications. In the event that any Party or its Affiliates receives a request for information or other documentary material from any such Governmental Entity relating to the Bathroom Fixtures and Fittings Proceedings, ASD or ASE, as the case may be, shall endeavor in good faith to make, or cause to be made, as soon as reasonably practicable and after consultation with the other Party, an appropriate response in compliance with such request and to provide the other Parties (and their counsel), upon request, advance drafts of all filings or submissions in connection therewith. ASD or ASE, as applicable, shall provide the other with a reasonable opportunity in light of the circumstances to review and comment on such filings or submissions (including any memorandum of law, pleadings and briefs) and shall consider in good faith modifications or comments to such filings or submissions that are requested by the other. ASD and ASE shall each offer the other the opportunity to jointly participate in any scheduled hearings or other meetings with Governmental Entities with respect to the Bathroom Fittings and Fixtures Proceedings, except in the unusual circumstance where it is impractical (given the timing and circumstances) to do so, provided that in such case, the Party participating in such informal meeting or discussions shall promptly provide notice to the other Parties of the content and substance of any such meetings or discussions. For the avoidance of doubt, the Parties acknowledge that the information and documents referred to in this Section 2.2(d) shall be subject to Sections 3.3, 3.4 and 4.6 of this Agreement.

(e) In connection with the Bathroom Fittings and Fixtures Proceedings, (i) ASD shall be responsible for the Defense Costs of the ASD Charged Parties incurred prior to the delivery of an ASE Election Notice, if any, or if no ASE Election Notice is delivered, at all times from and after the Effective Time, and (ii) ASE shall be responsible for the Defense Costs of the WABCO Charged Parties and the B&K Charged Parties incurred prior to the delivery of an ASD Election Notice, if any, or if no ASD Election Notice is delivered, at all times from and after the Effective Time; provided, however, if the B&K Charged Parties engage counsel on their own behalf to the limited extent permitted by Section 2.2(a), the B&K Buyer Parties and/or B&K Charged Parties, as applicable, shall be responsible for the Defense Costs associated with the B&K Charged Parties’ limited involvement in the Bathroom Fittings and Fixtures Proceedings. If and only if ASD delivers an ASD Election Notice in accordance with Section 2.2(c), then from and after the delivery of such ASD Election Notice, ASD shall be responsible for the Defense Costs of the WABCO Charged Parties and the B&K Charged Parties incurred at the direction of ASD. If and only if ASE delivers an ASE Election Notice in accordance with Section 2.2(c), then from and after the delivery of such ASE Election Notice, ASE shall be responsible for the Defense Costs of the ASD Charged Parties incurred at the direction of ASE.

(f) Notwithstanding anything to the contrary contained in this Agreement, the rights and obligations of the Parties with respect to the settlement of the Bathroom Fixtures and Fittings Proceedings shall be governed exclusively by this Section 2.2(f). No Charged Party may consent to the entry of any judgment or enter into any settlement with respect to the Bathroom Fittings and Fixtures Proceedings, whether prior to the Initial Decision Date or at any time thereafter without the consent of ASD and ASE;

provided, that, ASE may enter into any settlement with respect to the Bathroom Fittings and Fixtures Proceedings if (x) the settlement relates solely to the liability of the WABCO Charged Parties and B&K Charged Parties and (y) ASD has determined in good faith that such settlement would not in any way prejudice (i) ASD’s defense of any outstanding charges in the Bathroom Fixtures and Fittings Proceedings against any ASD Charged Party or (ii) any ASD Charged Party’s right to indemnification under this Agreement. ASE shall notify ASD in writing of any settlement into which ASE proposes to enter, and within seven (7) calendar days of its receipt of such notice ASD shall notify ASE of its determination as to whether the conditions in clauses in (y)(i) and (y)(ii) of the preceding sentence have been met.

(g) Following the consummation of a B&K Sale, if ASD shall receive notice or otherwise learn of the assertion of any indemnification claim that may be brought against ASD or any of its Affiliates or their respective Representatives by the B&K Buyer Parties or any of their Affiliates (including, following a B&K Sale, any B&K Charged Party) or their Representatives that relate to the Bathroom Fittings and Fixtures Proceedings and as to which ASD is or may be entitled to indemnification pursuant to this Agreement, ASD shall notify the Indemnitor Representative in writing, and in reasonable detail, of such claim promptly (and in any event within five (5) Business Days) after receipt by ASD of written notice of, or upon becoming aware of, such claim; provided , however , that the failure to provide notice of any such claim pursuant to this sentence shall not release the Indemnitor from any of its obligations hereunder except and solely to the extent the Indemnitor shall have been materially prejudiced as a result of such failure. Thereafter, ASD shall deliver to the Indemnitor Representative, promptly (and in any event within five (5) Business Days) after ASD’s receipt thereof, copies of all notices and documents received by ASD relating to such claim.

ARTICLE III

COOPERATION AND OTHER MATTERS

Section 3.1 Cooperation . Each Party to this Agreement, through and with the involvement of its respective counsel to the extent contemplated by Section 2.2(a), shall in good faith cooperate, engage in communications and share and exchange documents, information, and analyses in connection with, and in order to respond to, the Indemnifiable Matters. Such cooperation shall include, without limitation, (i) the provision to the other Parties to this Agreement of records and information which are necessary to the defense or appeal of such Indemnifiable Matters and which are reasonably requested by any other Party and making employees (and, to the extent reasonably feasible, former employees) available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder, regardless of whether any conflict of interest exists between or among any Parties hereto with respect to any Indemnifiable Matter and (ii) consultation regarding the defense of the Indemnifiable Matters. For the avoidance of doubt, the Parties acknowledge that the information and documents referred to in this Section 3.1 shall be subject to Sections 3.3, 3.4 and 4.6 of this Agreement.

Section 3.2 Witness Services . Subject to Section 4.6, each of the Parties shall use their respective reasonable efforts to make available to the other Parties, upon reasonable written request, their and their Affiliates officers, directors, employees and agents as witnesses to the extent that such individuals may reasonably be required to testify or otherwise cooperate in connection with the defense of the Indemnifiable Matters (including any appeals relating thereto).

Section 3.3 Privileged Information .

(a) Each Party hereto agrees to maintain, preserve and assert all privileges, including privileges arising under or relating to the attorney-client relationship (which shall include the attorney-client and work product privileges), not heretofore waived, that relate, directly or indirectly, to the Indemnifiable Matters (each a “ Privilege ”). Each Party hereto acknowledges and agrees that any costs associated with asserting any Privilege shall be borne by the Party requesting that such Privilege be asserted. Each Party agrees that it shall not waive any Privilege that could be asserted under applicable Law without the prior written consent of ASD (in the case of a waiver by any member of the WABCO Group, or following a B&K Sale, any waiver by a B&K Charged Party) or ASE (in the case of a waiver by an ASD Charged Party or any waiver by a B&K Charged Party). The rights and obligations created by this Section 3.3 shall apply to all information relating to the Indemnifiable Matters as to which, but for the Distribution, either Party would have been entitled to assert or did assert the protection of a Privilege (“ Privileged Information ”), including (i) any and all information generated prior to the Effective Time but which, after the Effective Time, is in the possession of either Party and (ii) all information generated, received or arising after the Effective Time that refers to or relates to Privileged Information generated, received or arising prior to the Effective Time. In connection with the Bathroom Fittings and Fixtures Proceedings, the respective counsel of the Parties hereto shall enter into a customary and mutually agreeable joint defense agreement containing provisions consistent with this Article III (the “ Defense Agreement ”). If, at any time from and after the consummation of a B&K Sale, a B&K Charged Party elects to engage its own counsel in respect of the B&K Charged Parties involvement in the Bathroom Fittings and Fixtures Proceedings in accordance with Section 2.2(b) of this Agreement, such Charged Party shall ensure that its counsel shall execute a joinder to the Defense Agreement pursuant to which such counsel will agree to be bound by the rights and restrictions imposed on the other counsel party to the Defense Agreement as of the date hereof.

(b) Upon receipt by any Party of any subpoena, discovery or other request that may call for the production or disclosure of Privileged Information or if any Party obtains knowledge that any current or former employee of such Party has received any subpoena, discovery or other request that may call for the production or disclosure of Privileged Information of the other Parties, such Party shall notify promptly the other Parties of the existence of the request and shall provide the other Parties a reasonable opportunity to review the information and to assert any rights it may have under this Section 3.3 or otherwise to prevent the production or disclosure of Privileged Information. The Parties hereto agree that they will not produce or disclose any information or document over which they reasonably believe another Party has any claim of Privilege under this Section 3.3 unless (i) the Party who may claim a Privilege has provided its written consent to such production or disclosure (which consent shall not be unreasonably withheld) or (ii) a court of competent jurisdiction has issued a ruling that the information is not entitled to protection under any applicable Privilege.

(c) ASD’s (on behalf of the members of the ASD Group) transfer of books and records and other information to the members of the WABCO Group, and ASD’s agreement to permit WABCO and ASE to possess Privileged Information existing or generated prior to the Effective Time, are made in reliance on WABCO’s agreement, as set forth in Distribution Agreement, to maintain the confidentiality of Privileged Information and to assert and maintain all applicable

Privileges. The access to information being granted pursuant to this Agreement and the Distribution Agreement, the agreement to provide witnesses and individuals pursuant to Section 3.2 of this Agreement and the transfer of Privileged Information to WABCO and ASE pursuant to this Agreement and the Distribution Agreement shall not be deemed a waiver of any Privilege that has been or may be asserted under this Section 3.3 or otherwise. Nothing in this Agreement or the Distribution Agreement shall operate to reduce, minimize or condition the rights granted to ASD in, or the obligations imposed upon WABCO by, this Section 3.3.

Section 3.4 Common Interest . (a) The Parties hereto and their respective counsel believe that (i) there is a mutuality of interest with respect to the Indemnifiable Matters and (ii) communications between or among the Parties’ counsel and communications involving the Parties in the presence of such counsel regarding Indemnifiable Matters have been and will continue to be essential to the provision of legal advice regarding Indemnifiable Matters and the continued effective representation of the Parties in connection with Indemnifiable Matters. Accordingly, it is the intention and understanding of the each of the Parties, on behalf of itself and its respective counsel and other Representatives, that any communications among the Parties or their counsel regarding Indemnifiable Matters are confidential and protected from disclosure to any third party by the attorney-client, common interest and work-product privileges, whether or not so identified or marked. The protection from disclosure includes, but is not limited to, disclosure in litigation relating to Indemnifiable Matters. Notwithstanding anything to the contrary herein, nothing shall prevent the disclosure of the existence of this Agreement or the terms hereof.

(b) “ Common Interest Materials ” shall include, without limitation, all work and communications preparatory to the identification of and related to the defense of the Indemnifiable Matters. In order to accomplish the objectives of this Agreement, the Parties agree that the following shall be deemed to be Common Interest Materials and shall be covered by this Agreement: (i) all work product and communications relating to the Indemnifiable Matters or this Agreement, (ii) all communications and information relating to the Indemnifiable Matters or this Agreement made or given by, between, or among the Parties hereto or their respective counsel and disclosed by one Party or its counsel to any other Party or its counsel, (iii) memoranda of law and all analyses and materials related to Indemnifiable Matters, (iv) all agreements, contracts and other memoranda, including preparatory materials, drafts and all oral and written communications pertaining to Indemnifiable Matters, and (v) any documents or information that would otherwise be protected by any applicable privilege or work product protection from disclosure to third parties other than the Parties hereto. For the avoidance of doubt, Common Interest Materials shall not include this Agreement or any information relating the Indemnifiable Matters or to a Party which is or becomes publicly available other than through a breach of this Agreement by the disclosing Party.

(c) No Common Interest Materials received by a Party, or its counsel, from another Party, or its counsel, shall be disclosed to any third party without prior consent of the Party that has supplied the materials pursuant to this Agreement (which consent shall not be unreasonably withheld). Notwithstanding the foregoing and any other restriction or limitation contained herein, in the event of any dispute between or among the Parties, each Party may disclose Common Interest Material in or in connection with any proceeding resulting from such dispute to the extent reasonably necessary, but shall use its reasonable best efforts to obtain a

confidentiality stipulation with respect to the Common Interest Materials. In addition, if Common Interest Materials are required by applicable Law to be disclosed in connection with any Action or otherwise, or are requested to be disclosed to any Governmental Entity, any Party may disclose such materials (to the extent lawful to do so) if (i) before doing so it uses its reasonable best efforts in consultation with the relevant other Parties (or their counsel) to obtain a confidentiality stipulation with respect to such disclosure and (ii) if such efforts are not successful, it limits the scope of any disclosures to only that portion of the Common Interest Materials which it believes in good faith, after consultation with outside counsel, that it is required to furnish under applicable Law or in order to appropriately conduct such Action or the defense thereof, as the case may be.

(d) The Parties agree that if any attempt is made by any third party to secure or obtain Common Interest Materials, the other Parties shall be promptly notified and shall be given copies of any writings or documents, including subpoenas, summonses and the like, which relate to the attempt by the third party to obtain the information and such other Parties shall be given a reasonable opportunity to oppose the production of such requested Common Interest Material.

(e) The Parties agree that the Common Interest Materials created or produced by any other Party to this Agreement shall only be used in connection with the Indemnifiable Matters to which they relate. Except as otherwise expressly set forth herein, a Party may not use any Common Interest Material that are created or produced by any other Party in connection with any other matter or proceeding without the express prior written consent of the Party that created or produced such material. However, nothing in this Agreement shall prevent any Party from using Common Interest Materials that it created or produced in any other subsequent proceeding or matter. The Common Interest Materials shall remain the property of the producing Party and, following the conclusion of any Action, shall be returned to such Party upon twenty (20) days’ written notice.

(f) Each Party acknowledges that, as a result of this Agreement, legal counsel for each of the other Parties may have access to confidential information of such Party in the form of Common Interest Materials. Each Party hereby acknowledges and agrees that nothing in this Agreement and no sharing of information with such legal counsel pursuant to the terms of this Agreement shall be deemed to create an attorney-client relationship between any attorney and anyone other than the client of that attorney. Each Party hereby represents and agrees that it will not seek to disqualify counsel for any other Party from continuing to represent such other Party in any subsequent proceedings, whether or not that other Party’s interests become adverse to it, on the basis of access to information obtained hereunder.

(g) Each of the Parties hereto agrees, on behalf of itself and its respective counsel and other Representatives, that to the extent the Parties, their counsel and other Representatives of the Parties have already been in communication with one another about Indemnifiable Matters, their communications and work-product are subject to Section 3.4.

ARTICLE IV

COVENANTS

Section 4.1 Payment; Timing; Escrow .

(a) Payment . The Parties acknowledge and agree that the Indemnitors shall be responsible for and shall pay, on behalf of the Indemnitees, any and all Indemnifiable Losses imposed on any of the Indemnitees in connection with the Indemnifiable Matters and the Indemnitees shall in no event be required to make any such payment and then seek indemnification hereunder; provided, however, if ASD or any of the other Indemnitees makes any such payment for any reason whatsoever, nothing herein shall limit its rights to seek indemnification from the Indemnitors in accordance with Section 2.1 hereof, except to the extent provided in Section 4.7(c), if applicable.

(b) Escrow . Following the Initial Decision Date and at least thirty (30) calendar days prior to the Payment Due Date (the “ Funding Date ”), ASE shall deposit the Initial Decision Amount (the “Escrowed Amount”) by wire transfer in immediately available cash into an escrow account (the “ Escrow Account ”) with a third party banking institution which is mutually acceptable to ASD and WABCO to be governed by an escrow agreement entered into among WABCO, ASE, the other WABCO Charged Parties, ASD and the escrow agent (the “ Escrow Agreement ”) in substance and form reasonably acceptable to ASD and WABCO, which Escrow Agreement shall contain customary terms and conditions and shall reflect the agreed upon mechanics set forth in this Section 4.1. Following the deposit of the Escrowed Amount into the Escrow Account, seven Business Days prior to the Payment Due Date (or such earlier date as ASD and WABCO may mutually agree):

(i) if, in accordance with Section 2.2, neither ASE (on behalf of the WABCO Charged Parties or B&K Charged Parties) nor ASD (on behalf of the ASD Charged Parties) appeal the Initial Decision by the Appeal Deadline Date, the Escrowed Amount will be released (pursuant to a written instruction that ASD is required to deliver to the escrow agent in accordance with the Escrow Agreement) to the European Commission in the manner specified in the Initial Decision or otherwise provided by applicable Law; or

(ii) if, in accordance with Section 2.2, ASE (on behalf of the WABCO Charged Parties or B&K Charged Parties) or ASD (on behalf of the ASD Charged Parties) appeal the Initial Decision by the Appeal Deadline Date with respect to the decision rendered against any such Charged Party, the Escrowed Amount will be released seven Business Days prior to the Payment Due Date (pursuant to a written instruction that ASD is required to deliver to the escrow agent in accordance with the Escrow Agreement) to the European Commission in the manner specified in the Initial Decision or otherwise provided by applicable Law; provided, however, in lieu of the foregoing, if, at least nine Business Days prior to the Payment Due Date, ASE provides or causes to be provided (x) a bank guarantee that is accepted by the European Commission which guarantees the Initial Decision Amount and the amount of any interest that will accrue on the Initial Decision Amount and will be due and owing to the European Commission between the Payment Due Date and the date on which the fine

and any accrued interest thereon have been paid in full following the rendering of a final resolution of the Bathroom Fittings and Fixtures Proceedings (including the final judgment concluding the appeal process initiated by the Charged Parties in connection with the Bathroom Fittings and Fixtures Proceedings), in each case determined in accordance with the Initial Decision and the applicable rules in force in the European Union (with copies of such bank guarantee being simultaneously provided to ASD and the escrow agent) and (y) such other evidence, to ASD’s reasonable satisfaction, that the European Commission has accepted the bank guarantee in the form and amount provided by ASE, the Escrowed Amount shall be released if ASD determines, in its good faith discretion, that clause (x) and (y) above have been satisfied (such guarantee being referred to herein as an “ Accepted and Confirmed Bank Guarantee ”), pursuant to a written instruction delivered by ASD to the escrow agent in accordance with the Escrow Agreement, by wire transfer of immediately available funds to an account designated by ASE. For the avoidance of doubt, from and after the time ASE provides or causes to be provided an Accepted an Confirmed Bank Guarantee in accordance with this Agreement (whether through an Early Payment or pursuant to this Section 4.1(b)(ii)), according to the standard practice of the European Commission, ASE shall have the right, with the consent of ASD, to replace such bank guarantee, in whole or in part, with a provisional payment in the manner specified by the Initial Decision or as otherwise agreed by the European Commission and ASD.

(c) Interest . Any interest that accrues on the Escrowed Amount between the date such funds are deposited into the Escrow Account and the date such funds are released from the Escrow Account pursuant to any of subclauses (i) or (ii) above shall be delivered to ASE, after deduction for any fees and expenses of the escrow agent and its reasonable expenses of outside advisors, at the time such Escrowed Amount is so released.

(d) Early Payment . Notwithstanding anything to the contrary contained in this Section 4.1, if (i) with the prior written consent of ASD, ASE (on behalf of the WABCO Charged Parties and the B&K Charged Parties) pays or causes to be paid the Initial Decision Amount in cash to the European Commission prior to the Funding Date or (ii) WABCO (on behalf of the WABCO Charged Parties and the B&K Charged Parties) provides or causes to be provided prior to the Funding Date an Accepted an Confirmed Bank Guarantee (each, an “ Early Payment ”), ASE shall no longer have any obligation to deposit any funds into the Escrow Account on the Funding Date or thereafter.

Section 4.2 Letter of Credit . From and after the date hereof until the date (the “ Release Date ”) the Indemnitor pays the Escrowed Amount in cash to the Escrow Account in accordance with Section 4.1 (or the date an Early Payment is made) if a Change of Control of WABCO or ASE, as applicable, should occur, then, upon the demand of ASD, ASE (or any such successor) shall be required to post a letter of credit or similar security obligation reasonably acceptable to ASD in respect of the Indemnifiable Losses under this Agreement in an amount equal to $880,000,000 USD (which amount shall be converted to EURO at the time such letter of credit or similar security obligation is required to be posted, based on the prevailing exchange rate at the close of business on the second Business Day immediately prior to such time such letter of credit or similar security obligation is required to be posted) or, if an Initial Decision has been rendered, such other amount as may be specified in the Initial Decision; provided, however, in

the event of a Change of Control of WABCO or ASE, as applicable, with ASD’s prior written consent (which may be withheld in its sole and absolute discretion) in lieu of ASE posting such letter of credit or similar security obligation, the Person acquiring WABCO or ASE, as applicable, may provide to ASD and the other Indemnitees a full, unconditional and irrevocable guarantee of the Indemnitor’s obligations hereunder. In the event of a Change of Control of WABCO or ASE, as applicable, such letter of credit, similar security obligation or guarantee, as applicable, shall be posted or delivered at or prior to the consummation of such Change of Control. For the avoidance of doubt, the posting of such a letter of credit, similar security obligation or guarantee, as applicable, shall in no event relieve the Indemnitors (or its successors) with respect to any Indemnifiable Losses under this Agreement, and shall not result in a cap on the Indemnitor’s (or any of its successors) Indemnifiable Losses with respect thereto. The letter of credit or similar security obligation shall provide that, without any further action on the part of the Indemnitor, funds thereunder shall be released to ASD (or, at the direction of ASD, to the applicable Indemnitee) upon such time as ASD provides a written instruction to the applicable bank or other issuer of such letter of credit, that any such Indemnitee is entitled to be reimbursed for Indemnifiable Losses under this Agreement. Upon such payment in full to the Indemnitees, the letter of credit shall be terminated.

Section 4.3 Public Announcements . No Party hereto shall issue any press release or make any similar public announcement or communication concerning any information relating to any Indemnifiable Matter, without the prior written consent of ASD (in the case of a public statement by any member of the WABCO Group or, following a B&K Sale, a statement by any B&K Charged Party) or WABCO (in the case of a public statement by any member of the ASD Group), in each case such consent not to be unreasonably withheld. Notwithstanding the foregoing, either ASD or WABCO may make or cause to be made any such press release or similar public announcement or communication as such Party may deem necessary or appropriate, including in order to comply with the requirements of any applicable Laws or the rules and regulations of each stock exchange upon which the securities of ASD or WABCO, as applicable, are listed; provided , that to the extent in the good faith judgment of ASD or WABCO it is reasonably practicable to do so, ASD or WABCO, as applicable, (x) will provide the other with a reasonable opportunity in light of the circumstances to review the intended communication and (y) consider in good faith modifications to the intended communication that are requested by the other. For the avoidance of doubt, the Parties acknowledge that, without the written consent of any Party, this Agreement may be filed as an exhibit to any periodic or current report filed by ASD or WABCO from and after the date hereof.

Section 4.4 Access to Information and Confidentiality . The Parties acknowledge that Sections 7.2 and 7.4 of the Distribution Agreement are hereby incorporated by reference but solely as they relate to the Indemnifiable Matters.

Section 4.5 B&K Buyer Parties Cooperation . ASD shall in good faith seek to include a provision in any definitive sale agreement relating to a B&K Sale (the “ B&K Sale Agreement ”) whereby WABCO would be a third party beneficiary of the obligations of the B&K Buyer Parties (i) to cooperate with WABCO and ASE in connection with the Bathroom Fittings and Fixtures Proceedings and (ii) to acknowledge that ASE will have authority and control over the investigation, prosecution, defense and appeal of the Bathroom Fittings and Fixtures Proceedings on behalf of the B&K Charged Parties. Notwithstanding the foregoing, the parties

acknowledge and agree that, as of the Effective Time, no agreement relating to a B&K Sale will have been finalized with any B&K Buyer Parties and that, as a result, neither ASD nor any B&K Charged Party can ensure that any of the provisions set forth in the first sentence hereof will be included in the B&K Sale Agreement. Therefore, WABCO and ASE acknowledge that ASD shall have no liability hereunder if any such definitive B&K Sale Agreement does not include such provisions for the benefit of WABCO and ASE.

Section 4.6 ASD Cooperation . Nothing in this Agreement shall be deemed to impose any obligation on ASD to cooperate with WABCO or any of the WABCO Charged Parties and/or any of the B&K Charged Parties (or B&K Buyer Parties) with respect to the production of any documentation or information not subject to Section 3.3. that would, in the good faith judgment of ASD, prejudice in any respect any substantive, procedural or jurisdictional defenses that ASD may assert with respect to the Bathroom Fittings and Fixtures Proceedings. This Section 4.6 shall also apply in respect of the cooperation referred to in Section 3.2. For the avoidance of doubt , this Section 4.6 shall not affect ASD’s obligation to cooperate to the extent that in the reasonable judgment of ASE, ASD’s cooperation is required to assist ASE with its substantive defense.

Section 4.7 ASD Election Notice . Notwithstanding anything to the contrary contained in this Agreement, in the event that ASE delivers an ASE Non-Appeal Notice and ASD responds by delivering an ASD Election Notice, in each case in accordance with Section 2.2, then:

(a) if the Escrowed Funds were released to the European Commission in accordance with Section 4.1(b)(ii) and the Initial Decision Amount is reduced on appeal following the rendering of a final resolution of the Bathroom Fittings and Fixtures Proceedings (including the final judgment concluding the appeal process initiated by, or at the direction of, ASD in connection with the Bathroom Fittings and Fixtures Proceedings) then ASD shall have the right to, and the WABCO Charged Parties and B&K Charged Parties acknowledge that ASD shall be entitled to, the amount of such reduction, plus accrued interest on such reduction amount determined in accordance with the applicable rules in force in the European Union, which such amount shall be distributed to ASD when refunded by the European Commission;

(b) if, in lieu of the Escrowed Funds being released to the European Commission in accordance with Section 4.1(b)(ii), ASE provided, or caused to be provided, a bank guarantee to the European Commission covering the Initial Decision Amount plus interest as required pursuant to Section 4.1(b)(ii) and the Initial Decision Amount is reduced on appeal following the rendering of a final resolution of the Bathroom Fittings and Fixtures Proceedings (including the final judgment concluding the appeal process initiated by, or at the direction of, ASD in connection with the Bathroom Fittings and Fixtures Proceedings) then the Indemnitor is hereby obligated to pay, or cause to be paid, to ASD a cash amount equal to the amount of such reduction; and the amount of the fine, as so reduced, plus accrued interest shall be paid by ASE (or its designees (including bank guarantor as may be provided in the relevant bank guarantee)) to the European Commission in accordance with applicable rules in force in the European Union; and

(c) if the Initial Decision Amount is increased on appeal following the rendering of a final resolution of the Bathroom Fittings and Fixtures Proceedings (including the final judgment concluding the appeal process initiated by, or at the direction of, ASD in connection with the Bathroom Fittings and Fixtures Proceedings) then ASD hereby agrees to indemnify and hold harmless the WABCO Charged Parties and the B&K Charged Parties from and against, and shall reimburse and be responsible for the payment to the European

Commission of, any such increased amount; it being understood that ASD is only responsible for the amount by which the fine was increased over the Initial Decision Amount and the Indemnitor remains responsible for, and indemnify the Indemnitees in accordance with Section 2.2 with respect to, the payment of the Initial Decision Amount plus accrued interest.

Section 4.8 ASE Election Notice . Notwithstanding anything to the contrary contained in this Agreement, in the event that ASD delivers an ASD Non-Appeal Notice and ASE responds by delivering an ASE Election Notice, in each case in accordance with Section 2.2, then:

(a) if the Escrowed Funds were released to the European Commission in accordance with Section 4.1(b)(ii) and the Initial Decision Amount is reduced on appeal following the rendering of a final resolution of the Bathroom Fittings and Fixtures Proceedings (including the final judgment concluding the appeal process initiated by, or at the direction of ASE in connection with the Bathroom Fittings and Fixtures Proceedings) then ASE shall have the right to, and the ASD Charged Parties and B&K Charged Parties acknowledge that ASE shall be entitled to, the amount of such reduction, plus accrued interest on such reduction amount determined in accordance with the applicable rules in force in the European Union, which such amount shall be distributed to ASE when refunded by the European Commission;

(b) if, in lieu of the Escrowed Funds being released to the European Commission in accordance with Section 4.1(b)(ii), ASE provided, or caused to be provided, a bank guarantee to the European Commission covering the Initial Decision Amount plus interest as required pursuant to Section 4.1(b)(ii) and the Initial Decision Amount is reduced on appeal following the rendering of a final resolution of the Bathroom Fittings and Fixtures Proceedings (including the final judgment concluding the appeal process initiated by or at the direction of ASE in connection with the Bathroom Fittings and Fixtures Proceedings) then the Indemnitor shall have no obligation to pay, or cause to be paid, to ASD the amount of such reduction; and the amount of the fine, as so reduced, plus accrued interest shall be paid by ASE (or its designees (including bank guarantor as may be provided in the relevant bank guarantee)) to the European Commission in accordance with applicable rules in force in the European Union; and

(c) if the Initial Decision Amount is increased on appeal following the rendering of a final resolution of the Bathroom Fittings and Fixtures Proceedings (including the final judgment concluding the appeal process initiated by, or at the direction of ASE in connection with the Bathroom Fittings and Fixtures Proceedings) then the Indemnitor hereby agrees to indemnify and hold harmless the Indemnitees from and against, and shall reimburse and be responsible for the payment to the European Commission of, any such increased amount in addition to the Initial Decision Amount in accordance with Section 2.2 with respect to, the payment of the Initial Decision Amount plus accrued interest.

Section 4.9 Limitation on ASE Fundamental Changes . From and after the Effective Time until the earlier of (x) the Release Date or (y) the date a letter of credit or similar security obligation is posted in accordance with Section 4.2 in connection with a Change of Control of WABCO or ASE, as applicable, ASE agrees not to and WABCO agrees to cause ASE not to, directly or indirectly, sell, lease, transfer or otherwise dispose (in one transaction or series of related transactions), including any disposition by means of a merger, consolidation or similar transaction or any transfer to any Affiliate or other member of the WABCO Group, any shares of capital stock of a material Subsidiary, or a material amount of its assets, properties or divisions or other assets outside the ordinary course of business, in each case, other than to the extent ASD shall provide its prior written consent to such sale, disposition or other transfer.

ARTICLE V

DISPUTE RESOLUTION

Section 5.1 Negotiation . The Parties shall make a good faith attempt to resolve any dispute arising in connection with the Agreement (a “Dispute”) through negotiation. Within 10 days after notice of a Dispute is given by either ASD (on behalf of any Indemnitee) to ASE (on behalf of WABCO or any other WABCO Charged Party), or vice versa, ASD and the Indemnitor Representative shall select one or more representatives who are the general counsel or other senior executive officer of such disputing Party and such representatives shall meet and make a good faith attempt to resolve such Dispute and shall continue to negotiate in good faith in an effort to resolve such Dispute without the necessity of any formal proceedings.

Section 5.2 Arbitration . If such representatives fail to resolve the Dispute within the 10 day period, unless otherwise mutually agreed by ASD and ASE, ASD or ASE shall have the right to submit such Dispute to final and binding arbitration. It is the intent of the Parties that any such arbitration be structured in such a way as to result in a resolution of such Dispute as promptly as practicable in accordance herewith. The arbitration panel shall consist of 3 members, one selected by ASD, one selected by ASE and the third to be mutually agreed upon by ASD and ASE. The Party instituting the arbitration proceeding shall provide notice to the other Parties describing in reasonable detail the nature of the Dispute, the claims of the disputing Party and the requested relief. Within 15 days of receipt of a demand for arbitration, the other Party shall furnish the disputing Party with a written statement answering the claims, in reasonable detail, of the disputing Party. All Parties will provide all reasonable cooperation to the other Party and the arbitration panel in conducting the arbitration proceeding. The prevailing Party in any arbitration shall be entitled to expense reimbursement, including costs of attorneys’ and other professional fees, incurred in connection with the arbitration. In connection with any Dispute, the arbitration panel shall be obligated to apply solely principles of Law. Any arbitration shall be conducted pursuant to the Rules. The decision of the arbitration panel shall be final and non-appealable and may be enforced in any court of competent jurisdiction.

Section 5.3 Discovery . With respect to discovery in an arbitration proceeding, the arbitration panel must allow each Party to make discovery requests for documents of the other Parties where the information sought is reasonably calculated to lead to discovery of admissible evidence, and each Party agrees to respond to such discovery request within a reasonable time.

Section 5.4 Awards . The arbitration panel shall be instructed to use best efforts to complete all arbitration hearings within 2 weeks from the date of the arbitrator’s appointment and render a decision within 1 month from such date. The arbitration panel shall be entitled, if appropriate, to award any remedy in such proceedings that is permitted under this Agreement and applicable Law, including monetary damages, specific performance and other forms of legal and equitable relief. The Parties hereby waive any claim to exemplary, punitive, multiple or similar damages in excess of compensatory damages, attorneys’ fees, costs and expenses of arbitration, except as may be expressly required by statute or as necessary to indemnify a Party for a Third Party Claim and the arbitration panel is not empowered to and shall not award such damages. Any final award must provide that the Party against whom an award is issued shall comply with the order within a specified period of time, not to exceed 10 days.

Section 5.5 Pre-Hearing Procedure and Disposition . Nothing contained herein is intended to or shall be construed to prevent any Party, from applying to any court of competent jurisdiction for interim measures or other provisional relief in connection with the subject matter of any Dispute, including to compel a Party to arbitrate any Dispute or to require witnesses to obey subpoenas issued by the arbitrator(s). Without prejudice to such provisional remedies as may be available under the jurisdiction of a court, the arbitral tribunal shall have full authority to grant provisional remedies and to direct the Parties to request that any court modify or vacate any temporary or preliminary relief issued by such court, and to award damages for the failure of any Party to respect the arbitral tribunal’s orders to that effect. The Parties agree to accept and honor any orders relating to interim or provisional remedies that are issued by the arbitrator(s) and agree that any such interim order or remedy may be enforced, as necessary, in any court of competent jurisdiction.

ARTICLE VI

MISCELLANEOUS

Section 6.1 Authorization; Enforceability . Each of the Parties hereto represents and warrants that: (i) the execution, delivery and performance of this Agreement and the transactions contemplated by this Agreement (1) are within the corporate or other legal authority of such Party, (2) have been duly authorized by all necessary corporate or other proceedings by such Party and (3) do not and will not conflict with or result in any breach or contravention of any applicable Law or any Contract or of the certificate of incorporation, bylaws, or any similar organizational documents of such Party; and (ii) the execution and delivery of this Agreement will result in a valid and legally binding obligation of such Party enforceable against it in accordance with the terms and provisions hereof.

Section 6.2 Notices . All notices, requests, claims, demands and other communications under this Agreement as between the Parties, shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt unless the day of receipt is not a Business Day or the time of receipt in such Business Day is after 6:00 p.m. (addressee’s local time), in which case it shall be deemed to have been duly given or made at 9:00 a.m. (addressee’s local time) on the next Business Day) by delivery in person, by overnight courier service, by facsimile with receipt confirmed (followed by delivery of an original via overnight courier service) or by registered or certified mail (postage prepaid, return receipt requested) to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 6.2):

If to ASD or any other ASD Charged Party, to:

American Standard Companies Inc.

One Centennial Avenue

P.O. Box 6820

Piscataway, NJ 08855-6820

Attn: Mary Beth Gustafsson, Esq.

Facsimile: 732-980-6057

With a copy to:

Skadden, Arps, Slate, Meagher & Flom LLP

Four Times Square

New York, New York 10036

Attn: Eileen T. Nugent

Thomas W. Greenberg

Facsimile: 212-735-2000

If to WABCO or a WABCO Charged Party, to:

c/o WABCO Europe BVBA

Chaussée de Wavre, 1789 Box 15

1160 Brussels

Belgium

Attn: General Counsel

Facsimile: +32 2 663 98 89

With a copy to:

McDermott Will & Emery LLP

227 W. Monroe Street

Chicago, IL 60606

Attn: Neal J. White

Facsimile: 312-984-7700

Following a B&K Sale, if to a B&K Charged Party, to the B&K Buyer Parties at the address specified in notice provisions in the agreement relating to such B&K Sale.

Section 6.3 Successors and Assigns; Additional WABCO Parties .

(a) This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns. Neither this Agreement, nor any rights, interests or obligations hereunder, may be directly or indirectly assigned, delegated, sublicensed or transferred by WABCO or any of the WABCO Charged Parties, in whole or in part, to any other Person without the prior written consent of ASD. ASD shall have the right, without the prior consent of any other Party hereto, at any time, to assign all or a portion of its rights to indemnification under this Agreement to any B&K Buyer Party. In addition, ASD may assign all or any portion of its rights hereunder to any of its Affiliates or in connection with a collateral assignment for the benefit of its lenders. Promptly following any such assignment

permitted pursuant to the prior two sentences, ASD shall provide written notice to the Indemnitor Representative and the other Parties of such assignment. WABCO and ASE may assign all or any portion of its rights hereunder to any of its Affiliates or in connection with a collateral assignment for the benefit of its lenders. Nothing in any such assignment relieves WABCO or ASE of their obligations to ASD or any other Indemnitee.

(b) If, at any time following the Effective Time, any member of the WABCO Group (other than WABCO, ASE and WABCO Austria) becomes a named party in the Bathroom Fittings and Fixtures Proceedings (such newly named party, an “ Additional WABCO Party ” and collectively, the “ Additional WABCO Parties ”), WABCO shall cause the Additional WABCO Parties to execute and deliver one or more joinder agreements to this Agreement reasonably acceptable to ASD to the effect that such Additional WABCO Parties are parties hereto, that such Additional WABCO Parties agree to be bound by the obligations of the WABCO Charged Parties herein.

Section 6.4 Amendment, Modification and Waiver . This Agreement may not be amended, modified or waived except by an instrument or instruments in writing signed and delivered on behalf of each of the Parties hereto.

Section 6.5 Governing Law . This Agreement shall be governed by and construed in accordance with the internal Laws, and not the Laws governing conflicts of Laws (other than Sections 5-1401 and 5-1402 of the New York General Obligations Law), of the State of New York.

Section 6.6 Consent to Jurisdiction . Each of the Parties irrevocably submits to the exclusive jurisdiction of (a) the Supreme Court of the State of New York, New York County, and (b) the United States District Court for the Southern District of New York (the “ New York Courts ”), for the purposes of any suit, action or other proceeding to compel arbitration or for provisional relief in aid of arbitration in accordance with this Agreement or for provisional relief to prevent irreparable harm, and to the non-exclusive jurisdiction of the New York Courts for the enforcement of any award issued thereunder. Each of the Parties further agrees that service of any process, summons, notice or document by United States registered mail to such Party’s respective address set forth in Section 6.2 shall be effective service of process for any action, suit or proceeding in the New York Courts with respect to any matters to which it has submitted to jurisdiction in this Section 6.6. Each of the Parties irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in the New York Courts, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

Section 6.7 Specific Performance . The Parties to this Agreement acknowledge and agree that the Indemnitees would suffer irreparable damage in the event that WABCO or the WABCO Charged Parties fail to perform any of their obligations under the Agreement in accordance with the specific

terms of the Agreement or otherwise breaches any such obligations or any of the provisions of this Agreement were not performed in accordance with their specific terms and that remedies at law would be inadequate to protect the Indemnitees against any actual or threatened breach of this Agreement by WABCO or the WABCO Charged Parties. Accordingly, notwithstanding anything to the contrary contained in the Agreement, and without prejudice to any other rights and remedies otherwise available to the Indemnitees, WABCO and the WABCO Charged Parties agree to the granting of equitable relief in the Indemnitees favor, including injunctive relief to prevent or cure breaches of this Agreement by WABCO and the WABCO Charged Parties and specific performance requiring WABCO and the WABCO Charged Parties to perform their obligations under this Agreement, in each case in an arbitration proceeding (without first complying with the negotiation provisions described above) or in court without proof of actual damages. ASE shall reimburse the Indemnitees for reasonable legal fees and other costs incurred to enforce this Agreement.

Section 6.8 Further Assurances . WABCO hereby agrees to, and to cause ASE to, execute and deliver, for the benefit of the Indemnitees (including any assignee of any Indemnitee permitted under this Agreement), such documents as may be reasonably requested by ASD (on behalf of the Indemnitees), evidencing ASE’s agreement that the indemnification obligations set forth in this Agreement inure to the benefit of and are enforceable by the Indemnitees and their permitted assigns.

Section 6.9 Construction . Unless otherwise stated, references to Articles and Sections are references to Articles and Sections of this Agreement.

Section 6.10 Third Parties . Nothing in this Agreement, express or implied, is intended to or shall confer upon any Person other than the Parties hereto any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement; provided, however, that the Indemnitees, to the extent not a Party hereto, and the B&K Buyer Parties or other assignees permitted under Section 6.3 shall, from and after any assignment of indemnification rights by ASD, be third party beneficiaries to enforce the rights to indemnification from ASE under this Agreement.

Section 6.11 Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement.

Section 6.12 Severability . In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect or incapable of being enforced by any rule of Law or public policy, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby and will nevertheless remain in full force and effect, and the Parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions, the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

Section 6.13 Entire Agreement . This Agreement, the Distribution Agreement, the Defense Agreement, and the other Ancillary Agreements and any Annexes, Exhibits and Schedules attached hereto and thereto, shall constitute the entire agreement among the Parties

with respect to the subject matter hereof and shall supersede all previous negotiations, commitments and writings, both written and verbal, among the Parties or any of them with respect to the subject matter hereof and thereof. Notwithstanding anything to the contrary contained in the Distribution Agreement, the provisions of the Agreement, and the Defense Agreement shall exclusively govern and control all the respective rights, responsibilities and obligations of the Parties after the Effective Time with respect to the Indemnifiable Matters. Except as set forth in the preceding sentence, nothing in the Agreement shall modify or limit the rights and remedies of ASD or WABCO under the Distribution Agreement or any of the Ancillary Agreements (other than this Agreement) relating to, arising out of or resulting from any breach by ASD or WABCO of the Distribution Agreement or any of the Ancillary Agreements (other than this Agreement). In the event of any conflict between the terms and conditions of this Agreement and the terms and conditions of the Distribution Agreement or any Ancillary Agreement, the terms and conditions of this Agreement shall control with respect to the Indemnifiable Matters.

Section 6.14 No Circumvention . The Parties agree not to directly or indirectly take any actions, act in concert with any Person who takes an action, or cause or allow any of such Parties’ Affiliates to take any actions (including the failure to take a reasonable action) such that the resulting effect is to undermine the effectiveness of any of the provisions of this Agreement (including, without limitation, adversely affecting the rights or ability of Indemnitees to successfully pursue indemnification or payment pursuant to this Agreement).

Section 6.15 Survival . The rights and obligations of WABCO and the WABCO Charged Parties and the Indemnitees under the Agreement shall survive the sale or other transfer by any such Party of any assets or businesses or the assignment by it of any Liabilities or the sale by any Indemnitee or WABCO and the WABCO Charged Parties of the capital stock or other equity interests of any Subsidiary to any Person, including, in each case, any Change of Control of such Party.

Section 6.16 Appointment of Indemnitor Representative .

(a) Each of the WABCO Charged Parties (other than ASE) (“ Other WABCO Charged Parties ”) hereby authorizes, directs and appoints ASE (the “ Indemnitor Representative ”), to act as the sole and exclusive agent, attorney-in-fact and representative of such affiliated Other WABCO Charged Parties, with full power of substitution with respect to all matters under this Agreement, including determining, giving and receiving notices and process hereunder, contesting and settling any and all claims for indemnification pursuant to this Agreement or resolving any other disputes hereunder. Any actions taken, exercises of rights, power or authority and any decision or determination made by the Indemnitor Representative consistent therewith, shall be absolutely and irrevocably binding on each of the WABCO Charged Parties as if such WABCO Charged Parties personally had taken such action, exercised such rights, power or authority or made such decision or determination in such Other WABCO Charged Party’s individual capacity. Notwithstanding anything to the contrary contained in this Agreement, any action required to be taken by any Other WABCO Charged Parties hereunder or any action which such Other WABCO Charged Party, at its election, has the right to take hereunder, shall be taken only by the Indemnitor Representative and no Other WABCO Charged Party acting on its own shall be entitled to take any such action. All deliveries, including any notices

hereunder, to be made by any Indemnitee to any Other WABCO Charged Party hereunder shall be made exclusively to the Indemnitor Representative on behalf of the Other WABCO Charged Parties, and any delivery so made to the Indemnitor Representative shall constitute full performance of the obligations hereunder of the Indemnitee to the WABCO Charged Parties. The Indemnitee shall not be liable for allocation of particular deliveries among the WABCO Charged Parties.

(b) Notwithstanding any notice received by any Indemnitee to the contrary (except any notice of the appointment of a successor Indemnitor Representative approved by the Indemnitee) and absent bad faith or willful misconduct, each Indemnitee (i) shall be fully protected in relying upon and shall be entitled to rely upon, shall have no liability to any WABCO Charged Party with respect to, actions, decisions and determinations of the Indemnitor Representative and (ii) shall be entitled to assume that all actions, decisions and determinations of the Indemnitor Representative are fully authorized by each of the Other WABCO Charged Parties.

(c) The Indemnitor Representative shall not be liable to any Other WABCO Charged Party, Indemnitee or any such Person’s respective Affiliates for any decisions made or actions taken by the Indemnitor Representative. Each of the Other WABCO Charged Parties agree, to indemnify its respective Indemnitor Representative from and against any damages that the Indemnitor Representative may incur as a result of acting as the Indemnitor Representative hereunder or in connection with the performance of any of its duties hereunder to the fullest extent permitted by applicable Law, except to the extent that such damages are caused by actions taken by, or omitted to be taken by, the Indemnitor Representative in bad faith.

Section 6.17 Appointment of Indemnitee Representative .

(a) Each of the Indemnitees hereby authorizes, directs and appoints ASD (the “ Indemnitee Representative ”), to act as the sole and exclusive agent, attorney-in-fact and representative of the affiliated Indemnitees, with full power of substitution with respect to all matters under this Agreement, including determining, giving and receiving notices and process hereunder, contesting and settling any and all claims for indemnification pursuant to this Agreement or resolving any other disputes hereunder. Any actions taken, exercises of rights, power or authority and any decision or determination made by the Indemnitee Representative consistent therewith, shall be absolutely and irrevocably binding on each of the Indemnitees as if such Indemnitee personally had taken such action, exercised such rights, power or authority or made such decision or determination in such Indemnitee’s individual capacity. Notwithstanding anything to the contrary contained in this Agreement, any action required to be taken by any Indemnitee hereunder or any action which such Indemnitee, at its election, has the right to take hereunder, shall be taken only by the Indemnitee Representative and no Indemnitee acting on its own shall be entitled to take any such action. All deliveries, including any notices hereunder, to be made by any Indemnitor to any Indemnitee hereunder shall be made exclusively to the Indemnitee Representative on behalf of the Indemnitees, and any delivery so made to the Indemnitee Representative shall constitute full performance of the obligations hereunder of the Indemnitor to the Indemnitees. The Indemnitor shall not be liable for allocation of particular deliveries among the Indemnitees.

(b) Notwithstanding any notice received by any Indemnitors to the contrary (except any notice of the appointment of a successor Indemnitee Representative) and absent bad faith or

willful misconduct, each Indemnitor (i) shall be fully protected in relying upon and shall be entitled to rely upon, shall have no liability to any Indemnitee with respect to, actions, decisions and determinations of the Indemnitee Representative and (ii) shall be entitled to assume that all actions, decisions and determinations of the Indemnitee Representative are fully authorized by each of the Indemnitees.

(c) The Indemnitee Representative shall not be liable to any Indemnitee, Indemnitor or any such Person’s respective Affiliates for any decisions made or actions taken by the Indemnitee Representative. Each of the Indemnitees agree, to indemnify its respective Indemnitee Representative from and against any damages that the Indemnitee Representative may incur as a result of acting as the Indemnitee Representative hereunder or in connection with the performance of any of its duties hereunder to the fullest extent permitted by applicable Law, except to the extent that such damages are caused by actions taken by, or omitted to be taken by, the Indemnitee Representative in bad faith.

[REMAINDER OF PAGE INTENTIONALLY BLANK]

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their duly authorized officers as of the day and year first above written.


AMERICAN STANDARD COMPANIES INC.

By:		/s/ G. P ETER D’A LOIA
		Name: G. Peter D’Aloia
		Title: Senior Vice President and Chief Financial Officer

WABCO HOLDINGS INC.

By:		/s/ U LRICH M ICHEL
		Name: Ulrich Michel
		Title: Chief Financial Officer

AMERICAN STANDARD EUROPE BVBA

By:		/s/ G. P ETER D’A LOIA
		Name: G. Peter D’Aloia
		Title: By Power of Attorney

IDEAL STANDARD FRANCE SAS

By:		/s/ G. P ETER D’A LOIA
		Name: G. Peter D’Aloia
		Title: By Power of Attorney

IDEAL STANDARD GMBH & CO OHG

By:		/s/ G. P ETER D’A LOIA
		Name: G. Peter D’Aloia
		Title: By Power of Attorney


WABCO AUSTRIA GESMBH

By:		/s/ G. P ETER D’A LOIA
		Name: G. Peter D’Aloia
		Title: By Power of Attorney

IDEAL STANDARD GMBH

By:		/s/ G. P ETER D’A LOIA
		Name: G. Peter D’Aloia
		Title: By Power of Attorney

IDEAL STANDARD ITALIA S.R.L.

By:		/s/ G. P ETER D’A LOIA
		Name: G. Peter D’Aloia
		Title: By Power of Attorney

IDEAL STANDARD NEDERLAND BV

By:		/s/ G. P ETER D’A LOIA
		Name: G. Peter D’Aloia
		Title: By Power of Attorney

Exhibit 99.1

LOGO

July 19, 2007

Dear American Standard Companies Inc. Shareholder:

I am pleased to inform you that on July 11, 2007, the Board of Directors of American Standard Companies Inc. approved the distribution of all of the shares of common stock of WABCO Holdings Inc., a wholly owned subsidiary of American Standard, to American Standard shareholders. WABCO holds all of the assets and liabilities associated with American Standard’s Vehicle Control Systems business.

This distribution will be made pursuant to a plan announced by American Standard on February 1, 2007, to separate its three principal operating businesses by spinning off its Vehicle Control Systems business and selling its Bath and Kitchen business, with the Air Conditioning Systems and Services business remaining with American Standard. Upon the distribution of WABCO shares, American Standard shareholders will own 100% of the common stock of WABCO. American Standard’s Board of Directors believes that the spinoff of the Vehicle Control Systems business and sale of the Bath and Kitchen business is the best way to enhance the value of American Standard’s businesses for the benefit of American Standard shareholders.

The distribution of WABCO common stock will occur on July 31, 2007 by way of a pro rata dividend to American Standard shareholders. Each American Standard shareholder will be entitled to receive one share of WABCO common stock (and a related preferred stock purchase right) for every three shares of American Standard common stock held by such shareholder at the close of business on July 19, 2007, the record date of the distribution. The dividend will be issued in book-entry form only, which means that no physical stock certificates will be issued. No fractional shares of WABCO common stock will be issued. If you would otherwise have been entitled to a fractional share of WABCO common stock in the distribution, you will receive the net cash value of such fractional share instead.

Shareholder approval of the distribution is not required, and you are not required to take any action to receive your WABCO common stock.

Following the distribution, you will own shares in both American Standard and WABCO. We have applied to have WABCO’s common stock listed on the New York Stock Exchange under the symbol “WBC.” American Standard’s common stock will continue to trade on the New York Stock Exchange under the symbol “ASD.” American Standard expects that, at an appropriate time following the completion of the separation plan, it will change its name to Trane and obtain a new ticker symbol to more appropriately reflect its continuing operations in the Air Conditioning Systems and Services business.

The enclosed information statement, which is being mailed to all American Standard shareholders, describes the distribution in detail and contains important information about WABCO. We urge you to read the information statement carefully.

I want to thank you for your continued support of American Standard and we look forward to your support of WABCO in the future.

Sincerely,

LOGO

Frederic M. Poses

Chairman of the Board and Chief Executive Officer

LOGO

July 19, 2007

Dear WABCO Holdings Inc. Shareholder:

It is our pleasure to welcome you as a shareholder of our company, WABCO Holdings Inc. Founded in the U.S. in 1869 as Westinghouse Air Brake Company (WABCO), the Vehicle Control Systems business was acquired by American Standard in 1968.

Today, we are one of the world’s leading providers of technologically advanced braking, stability, suspension and transmission control systems. Our products include a variety of control systems that improve vehicle safety and reduce overall vehicle operating costs for the world’s leading commercial truck, trailer and bus manufacturers as well as select passenger car manufacturers. We have a strong track record of technological leadership and introduced some of the industry’s most important innovations for commercial vehicles, including anti-lock braking systems (ABS), electronically controlled air suspension (ECAS) systems, automated manual transmission controls and electronic stability control (ESC) systems.

We begin life as an independent public company in a strong competitive position, as a result of a number of factors, including: our expertise to support the development of advanced technology applications; strong, longstanding customer relationships; a global footprint; and a demonstrated ability to maintain high margins through business cycles. Our objective is to deliver consistent and profitable growth by employing four key strategies: technology innovation, geographic expansion, aftermarket growth and opportunistic automotive applications of our products and systems. Underlying all of these strategies is our “Passion for Innovation,” our drive to exceed customer expectations, to raise standards, and to enhance further our reputation for quality and reliability.

Our new Board of Directors will be led by Jim Hardymon serving as our non-executive chairman. He is a former chairman and CEO of Textron who has served on 10 corporate boards and as chairman of four NYSE-traded companies.

We have applied to have our common stock listed on the New York Stock Exchange under the symbol “WBC” in connection with the distribution of our company’s common stock by American Standard.

We invite you to learn more about WABCO by reviewing the enclosed information statement. We look forward to our future as an independent, publicly traded company and to your support as a holder of WABCO common stock.

Sincerely,

LOGO

Jacques Esculier

Chief Executive Officer

LOGO

Information Statement

Distribution of

Common Stock of

WABCO Holdings Inc.

AMERICAN STANDARD COMPANIES INC.

to American Standard Companies Inc. Shareholders

This information statement is being furnished in connection with the distribution by American Standard Companies Inc. to its shareholders of all of its shares of common stock of WABCO Holdings Inc., a wholly owned subsidiary of American Standard that will hold the assets and liabilities associated with American Standard’s Vehicle Control Systems business and certain other liabilities as described in this information statement. To implement the distribution, American Standard will distribute all of its shares of WABCO common stock on a pro rata basis to the holders of American Standard common stock. Each of you, as a holder of American Standard common stock, will receive one share of WABCO common stock (and a related preferred stock purchase right) for every three shares of American Standard common stock that you held at the close of business on July 19, 2007, the record date for the distribution. The distribution will be effective as of July 31, 2007. Immediately after the distribution is completed, WABCO will be an independent public company.

No vote of American Standard shareholders is required in connection with this distribution. We are not asking you for a proxy and you are requested not to send us a proxy. American Standard shareholders will not be required to pay any consideration for the shares of our common stock they receive in the distribution, and they will not be required to surrender or exchange shares of their American Standard common stock or take any other action in connection with the distribution.

All of the outstanding shares of our common stock are currently owned by American Standard. We have applied to list our common stock under the ticker symbol “WBC” on the New York Stock Exchange. A limited market, commonly known as a “when-issued” trading market, for our common stock began on July 17, 2007 and will continue up to and including through the distribution date, and we anticipate that “regular-way” or normal trading of our common stock will begin on the first trading day following the distribution date.

In reviewing this information statement, you should carefully consider the matters described under the caption “Risk Factors” beginning on page 15 of this information statement.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of any of the securities of WABCO Holdings Inc. or determined whether this information statement is truthful or complete. Any representation to the contrary is a criminal offense.

This information statement does not constitute an offer to sell or the solicitation of an offer to buy any securities.

The date of this information statement is July 19, 2007.

This information statement was first mailed to American Standard shareholders on or about July 23, 2007.

TABLE OF CONTENTS


SUMMARY		1
RISK FACTORS		15
FORWARD-LOOKING STATEMENTS		25
THE SEPARATION		26
DIVIDEND AND SHARE REPURCHASE POLICY		34
CAPITALIZATION		35
SELECTED FINANCIAL DATA		36
UNAUDITED PRO FORMA FINANCIAL STATEMENTS		38
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		45
BUSINESS		62
MANAGEMENT		71
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT		98
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS		100
DESCRIPTION OF CAPITAL STOCK		106
DESCRIPTION OF MATERIAL INDEBTEDNESS		114
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE		F-1

SUMMARY

This summary highlights selected information from this information statement relating to our company, our separation from American Standard and the distribution of our common stock by American Standard to its shareholders. For a more complete understanding of our business and the separation and distribution, you should carefully read the entire information statement.

Except as otherwise indicated or unless the context otherwise requires, the information included in this information statement, including the combined financial statements of the WABCO businesses of American Standard, which are comprised of the assets and liabilities used in managing and operating the Vehicle Control Systems business of American Standard, assumes the completion of all the transactions referred to in this information statement in connection with the separation and distribution. Except as otherwise indicated or unless the context otherwise requires, “WABCO,” “WABCO Holdings Inc.,” “we,” “us,” “our” and “our company” refer to WABCO Holdings Inc. and its combined subsidiaries and “American Standard Companies Inc.” and “American Standard” refer to American Standard Companies Inc. and its combined subsidiaries. Except as otherwise indicated or unless the context otherwise requires, “share,” “stock” and “common stock” refer to the common stock, par value $.01, of WABCO Holdings Inc., and “shareholder” and “stockholder” refer to holders of common stock, par value $.01, of WABCO Holdings Inc.

Our Company

WABCO is a leading provider of electronic and electromechanical products for commercial vehicle and passenger car markets. WABCO’s largest-selling products are pneumatic anti-lock braking systems (ABS), electronic braking systems (EBS), automated manual transmission systems, air disk brakes and a large array of conventional mechanical products such as actuators, air compressors and air control valves for heavy- and medium-sized trucks, trailers and buses. Based on internal estimates, WABCO’s products are included in approximately two out of three commercial vehicles with advanced vehicle control systems and offered in sophisticated, niche applications in cars and sport utility vehicles (SUVs). In 2006, WABCO had $2.015 billion in sales and $137.8 million of net income.

WABCO sells its products globally and primarily to four groups of customers: truck and bus manufacturers (OEMs), trailer OEMs, aftermarket distributors of replacement parts and services, and car manufacturers. WABCO has a strong portfolio of electronically controlled products and systems. The electronics content in commercial vehicles has been increasing steadily with each successive platform introduction, as OEMs strive to improve safety and performance through additional functionalities, to meet evolving regulatory safety standards. WABCO has demonstrated sales growth over the past 5 years of an approximately 16% compound annual growth rate (CAGR), or an approximately 8% CAGR excluding the impact of currency exchange rates (using a 1.25 Euro/dollar reference rate), which exceeds industry truck builds in its largest markets.

Our Strengths

WABCO has a strong competitive position attributable to a number of factors, including:

•

Systems expertise with in-depth technical knowledge and capabilities to support the development of advanced technology applications.

•

Over 800 employees dedicated to developing new products, components and systems as well as supporting and enhancing current applications.

•

Strong relationships with customers who often collaborate with WABCO to design their next generation platforms and applications. Given the importance of technological leadership, vehicle life-cycle expertise, and reputation for quality and reliability, WABCO’s customer relationships are longstanding and experience minimal churn.

•

A global footprint, with Europe representing 74% of revenues and the remainder coming primarily from the Americas and Asia. WABCO also has a global supply chain organization and an integrated global sourcing and manufacturing strategy with over 40% of its manufacturing workforce located in low cost countries.

•

A demonstrated ability to maintain high margins and growth through business cycles due to the high technological content and sophistication of its products, its stable and growing aftermarket demand, and growth driven by continually improving safety and regulatory standards.

Our Strategy

WABCO seeks to deliver consistent and profitable growth by employing four key strategies: technology innovation, geographic expansion, aftermarket growth and opportunistic automotive applications of our products and systems.

WABCO continues to drive growth by utilizing its industry-leading expertise in developing electronically controlled systems, including braking, transmission automation, air suspension and air management systems. This involves expanding its product portfolio by introducing new offerings and functionality, and by improving the penetration of recently launched products, systems and services. Examples of technologies first introduced by WABCO for commercial vehicles include: anti-lock braking systems (ABS), electronically controlled air suspension (ECAS) systems, automated manual transmission controls, and electronic stability control (ESC) systems.

WABCO continues to expand in high growth markets in Eastern Europe, China and India. In Eastern Europe, WABCO has been manufacturing products since 2001. The market in Eastern Europe has been experiencing rapid growth and WABCO has established relationships with local customers. WABCO has operated in China since 1996 and is the leading provider of ABS systems in the country, with a strong brand and established relationships. WABCO currently participates in India through a joint venture with TVS Group (Sundaram-Clayton Ltd.), which sells primarily conventional products.

WABCO uses joint venture partners globally to expand and enhance our access to customers. In North America, WABCO markets ABS and other vehicle control products through its 50 percent-owned joint venture with Arvin Meritor Automotive Inc. (Meritor WABCO). Also in North America, WABCO partners with Cummins Engine Co. in a 70 percent-owned joint venture (WABCO Compressor Manufacturing Co.) focused on production of WABCO-designed compressors. In China, WABCO owns 70 percent of a joint venture with Mingshui Automotive Fitting Factory (MAFF) that provides conventional mechanical products to the local market. In Japan, WABCO owns 90 percent of a joint venture with Sanwa-Seiki that distributes WABCO’s products in the local market. In India, WABCO has a minority equity investment in a joint venture with TVS Group (39%) (Sundaram-Clayton Ltd.). Finally, in South Africa, WABCO has a 49 percent ownership joint venture with Sturrock & Robson Ltd (WABCO SA), a distributor of braking systems products.

The aftermarket accounts for approximately 22% of WABCO’s sales and is a key area of growth as the increasing number of trucks in use that have WABCO’s products (many of which are proprietary) drives demand for replacement parts and services, generating recurring revenues at relatively stable margins.

WABCO sells electronic air suspension systems and vacuum pumps for select applications in passenger cars. Electronic air suspension systems are a feature used primarily in SUVs and passenger vehicles and represent a market that is growing at attractive rates.

The Separation

Overview

On February 1, 2007, American Standard, an $11.2 billion global manufacturer, announced its intention to pursue a plan to separate its three principal operating businesses by spinning off its Vehicle Control Systems business and selling its Bath and Kitchen business, with the Air Conditioning Systems and Services business remaining with American Standard. We expect the distribution of WABCO common stock to occur on July 31, 2007 by way of a pro rata dividend to American Standard shareholders. The distribution of WABCO common stock is not conditioned on the sale of the Bath and Kitchen business.

In connection with our separation from American Standard, we entered into a Separation and Distribution Agreement and several other agreements with American Standard to effect the separation and distribution and provide a framework for our relationships with American Standard after the separation. These agreements will govern the relationships between us and American Standard subsequent to the completion of the separation plan and provide for the allocation between us and American Standard of American Standard’s assets, liabilities and obligations (including employee benefits and tax-related assets and liabilities) attributable to periods prior to, at and after our separation from American Standard. See “Certain Relationships and Related Party Transactions.”

American Standard’s Board believes that the separation of its three principal operating businesses is the best way to enhance the value of American Standard’s businesses, which the American Standard Board believes have not been fully recognized by the investment community. The separation plan should allow WABCO and American Standard to maintain a sharper focus on their core business and growth opportunities, as well as increase market recognition, improve capital flexibility and increase our ability to attract, retain and motivate qualified personnel. See “The Separation—Reasons for the Separation.”

The distribution of our common stock as described in this information statement is subject to the satisfaction or waiver of certain conditions. See “The Separation—Conditions to the Distribution.”

We are a newly formed holding company that will, prior to the distribution, hold the assets and liabilities of American Standard’s Vehicle Control Systems business as a result of an internal reorganization implemented by American Standard. WABCO Holdings Inc. will be headquartered in Brussels, Belgium, with executive offices in Piscataway, New Jersey. Our general telephone number is +32-2-663-9854. We maintain an Internet site at www.wabco-auto.com. Our website and the information contained on that site, or connected to that site, are not incorporated by reference into this information statement.

Questions and Answers about WABCO Holdings Inc. and the Separation

Why is the separation of WABCO structured as a distribution?

American Standard believes that a tax-free distribution of shares of WABCO is a tax-efficient way to separate American Standard’s businesses in a manner that will create benefits and value for us and American Standard and long-term value for American Standard shareholders.

How will the separation of WABCO work?

The separation will be accomplished through a series of transactions in which (1) the equity interests of the entities that hold assets and liabilities of American Standard’s Vehicle Control Systems business will be transferred to WABCO, (2) other assets and liabilities will be assigned to or assumed by WABCO and (3) the common stock of WABCO will then be distributed by American Standard to its shareholders on a pro rata basis.

When will the distribution occur?

We expect that American Standard will distribute the shares of WABCO common stock on July 31, 2007 to holders of record of American Standard common stock on July 19, 2007, the record date.

What do shareholders need to do to participate in the distribution?

Nothing, but we urge you to read this entire document carefully. Shareholders who hold American Standard common stock as of the record date will not be required to take any action to receive WABCO common stock in the distribution. No shareholder approval of the distribution is required or sought. We are not asking you for a proxy and you are requested not to send us a proxy. You will not be required to make any payment, surrender or exchange your shares of American Standard common stock or take any other action to receive your shares of our common stock. If you own American Standard common stock as of the close of business on the record date, American Standard, with the assistance of The Bank of New York, the distribution agent, will electronically issue shares of our common stock to you or to your brokerage firm on your behalf by way of direct registration in book-entry form. The Bank of New York will mail you a book-entry account statement that reflects your shares of WABCO common stock, or your bank or brokerage firm will credit your account for the shares. If you sell shares of American Standard common stock in the “regular-way” market up to and including through the distribution date, you will be selling your right to receive shares of WABCO common stock in the distribution. Following the distribution, shareholders whose shares are held in book-entry form may request that their shares of WABCO common stock held in book-entry form be transferred to a brokerage or other account at any time, without charge.

Can American Standard decide to cancel the distribution of the common stock even if all the conditions have been met?

Yes. The distribution is subject to the satisfaction or waiver of certain conditions. See “The Separation—Conditions to the Distribution.” American Standard, in its sole discretion, may amend, modify or abandon the distribution at any time prior to the distribution date.

Does WABCO plan to pay dividends?

WABCO expects to pay dividends, but only if and to the extent declared by our Board of Directors and permitted by applicable law. All decisions regarding the declaration and payment of dividends will be at the sole discretion of our Board and will be evaluated from time to time in light of our financial condition, earnings, capital requirements of our business, covenants associated with certain debt obligations, legal requirements, regulatory constraints, industry practice and other factors that our Board of Directors deems relevant. See “Dividend and Share Repurchase Policy.”

Will WABCO undertake a share repurchase program?

WABCO expects to undertake share repurchases to return value to shareholders. However, such a program will be undertaken only if, and to the extent, authorized by our Board of Directors. All decisions regarding share repurchases will be at the sole discretion of our Board and will be evaluated from time to time in light of our financial condition, earnings, capital requirements of our business, covenants associated with certain debt obligations, legal requirements (including compliance with the IRS private letter ruling), regulatory constraints, industry practice and other factors that our Board of Directors deems relevant. See “Dividend and Share Repurchase Policy.”

Will WABCO have any debt?

It is expected that we will be prudently and conservatively capitalized, with a minimal level of debt. We expect to draw on as needed our new primary bank facility of $800 million to fund potential repurchases of our shares and to meet short-term requirements. Additionally, the facility may be used to pay a fine or provide a bank guarantee that will be required pursuant to a decision relating to the European Commission investigation matter, as further described under the heading “Business—Legal Proceedings—The European Commission Investigation.” We are also in the process of establishing a credit facility in the amount of $20 million for our China operations, which will be drawn upon in local currency and used for general corporate purposes. The credit facility relating to our China operations is expected to be available and drawn upon prior to the separation.

For additional information relating to our planned financing arrangements, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” and “Description of Material Indebtedness.”

What will the separation costs be?

The separation costs are currently estimated at $57.5-$61.5 million, which will be made up of the following items: (i) $8.7 million of fair value in connection with stock options and restricted stock units that will be issued to certain WABCO employees, the CEO and the Board of Directors at the distribution date (which amount includes a $6 million founders’ grant consisting of stock options and restricted stock units for certain WABCO employees, $2.2 million in a combination of a founder’s grant and an initial equity award grant consisting of stock options and restricted stock units for the CEO, and $0.5 million in restricted stock units to the Board of Directors), (ii) $6 million relating to a loss pursuant to the early redemption provisions

of the long-term Euro denominated bond purchase agreement based on current market interest rates (the bonds were redeemed on April 30, 2007), (iii) $37.8 million associated with incremental tax costs in connection with the legal reorganization of American Standard prior to and in connection with the WABCO separation, (iv) $2-$4 million of costs relating to IT infrastructure and (v) $3-$5 million of other separation related costs, which would include employee retention and relocation, insurance costs, new branding costs, and other similar costs. This is our best estimate for the separation costs and the actual costs may differ from this estimate.

Of the $57.5-$61.5 million of separation costs, approximately $8.7 million would not have to be funded with cash as the item relates to equity instruments (combination of stock options and restricted stock units). The cost of $6 million associated with the early redemption of the bonds will be paid out of American Standard operating cash flow prior to the distribution. The remaining costs expected to be incurred will be paid out of our operating cash flow at the time payments become due. Of the $57.5-$61.5 million of anticipated separation costs, approximately $37.8 million is related to incremental tax costs. In connection with these incremental taxes, it is expected that WABCO will incur a charge to the income statement of $8.5 million. Transaction related costs for legal, accounting, and advisory services will be the responsibility of American Standard and have not been included in the estimate above.

What are the U.S. federal income tax consequences of the distribution to American Standard shareholders?

Assuming the distribution qualifies as tax-free under Section 355 and related provisions of the Internal Revenue Code of 1986, as amended (the “Code”), for U.S. federal income tax purposes, no gain or loss will be recognized by you, and no amount will be included in your income, upon the receipt of shares of our common stock pursuant to the distribution. You generally will recognize gain or loss with respect to any cash received in lieu of a fractional share of our common stock. On July 10, 2007, American Standard received a private letter ruling from the Internal Revenue Service (the “IRS”) substantially to the effect that the distribution qualifies as tax free for U.S. federal income tax purposes under Section 355 of the Code, as amended. The distribution is also conditioned upon the receipt by American Standard of an opinion of Skadden, Arps, Slate, Meagher & Flom LLP, tax counsel to American Standard, substantially to the effect that the distribution will qualify as tax-free to American Standard shareholders under Section 355 of the Code. See “The Separation—Material U.S. Federal Income Tax Consequences of the Distribution.”

How will I determine the tax basis I will have in the WABCO shares I receive in the distribution?

Shortly after the distribution is completed, American Standard will provide U.S. taxpayers with information to enable them to compute their tax bases in both American Standard and WABCO shares and other information they will need to report their receipt of WABCO common stock on their 2007 U.S. federal income tax returns as a

tax-free transaction. Generally, your aggregate tax basis in the stock you hold in American Standard and WABCO shares received in the distribution (including any fractional share interest in WABCO common stock for which cash is received) will equal your tax basis in your American Standard common stock immediately before the distribution, allocated between the American Standard common stock and WABCO common stock (including any fractional share interest of WABCO common stock for which cash is received) in proportion to their relative fair market values on the date of the distribution.

You should consult your tax advisor about the particular consequences of the distribution to you, including the application of state, local and foreign tax laws.

What will the relationships between American Standard and WABCO be following the separation?

In connection with the separation, we entered into a Separation and Distribution Agreement and several other agreements with American Standard to effect the separation and provide a framework for our relationships with American Standard after the separation. These agreements govern the relationships between us and American Standard subsequent to the completion of the separation plan and provide for the allocation between us and American Standard of American Standard’s assets, liabilities and obligations (including employee benefits and tax-related assets and liabilities) attributable to periods prior to, at and after our separation from American Standard. See “Certain Relationships and Related Party Transactions.”

Will I receive physical certificates representing shares of WABCO common stock following the separation?

No. Following the separation, neither American Standard nor WABCO will be issuing physical certificates representing shares of WABCO common stock. Instead, American Standard, with the assistance of The Bank of New York, the distribution agent, will electronically issue shares of our common stock to you or to your bank or brokerage firm on your behalf by way of direct registration in book-entry form.

The Bank of New York will mail you a book-entry account statement that reflects your shares of WABCO common stock, or your bank or brokerage firm will credit your account for the shares. A benefit of issuing stock electronically in book-entry form is that there will be none of the physical handling and safekeeping responsibilities that are inherent in owning physical stock certificates.

What if I want to sell my American Standard common stock or my WABCO common stock?

You should consult with your financial advisors, such as your stockbroker, bank or tax advisor. Neither American Standard nor WABCO makes any recommendations on the purchase, retention or sale of shares of American Standard common stock or the WABCO common stock to be distributed.

If you decide to sell any shares before the distribution, you should make sure your stockbroker, bank or other nominee understands whether you want to sell your American Standard common stock or the WABCO common stock you will receive in the distribution or both.

Where will I be able to trade shares of WABCO common stock?

We have applied to list our common stock on the New York Stock Exchange, or NYSE, under the symbol “WBC.” Trading in shares of our common stock began on a “when-issued” basis on July 17, 2007 will continue up to and including through the distribution date and that “regular-way” trading in shares of our common stock will begin on the first trading day following the distribution date. During “when-issued” trading, you may purchase or sell our common stock up to and including through the distribution date, but your transaction will not settle until after the distribution date. We cannot predict the trading prices for our common stock before, on or after the distribution date. See “The Separation—Market for Common Stock” and “The Separation—Trading Between the Record Date and the Distribution Date” for a description of the terms “regular-way,” “ex-distribution” and “when-issued.”

Will the number of American Standard shares I own change as a result of the distribution?

No. The number of shares of American Standard common stock you own will not change as a result of the distribution.

What will happen to the listing of American Standard common stock?

Nothing. Immediately after the distribution of WABCO common stock, American Standard common stock will continue to be traded on the NYSE under the symbol “ASD.” American Standard expects that, at an appropriate time following the completion of the separation plan, it will change its name to Trane and obtain a new ticker symbol

to more appropriately reflect its continuing operations in the Air Conditioning Systems and Services business.

Will the distribution affect the market price of my American Standard shares?

Yes. As a result of the distribution, we expect the trading price of shares of American Standard common stock immediately following the distribution to be lower than immediately prior to the distribution because the trading price will no longer reflect the value of the Vehicle Control Systems business. Furthermore, until the market has fully analyzed the value of American Standard without the Vehicle Control Systems business, the price of American Standard shares may fluctuate significantly. In addition, although American Standard believes that over time following the separation, the common stock of it and WABCO should have a higher aggregate market value, on a fully distributed basis and assuming the same market conditions, than if American Standard were to remain under its current configuration, there can be no assurance, and thus the combined trading prices of American Standard common stock and WABCO common stock after the distribution may be equal to or less than the trading price of shares of American Standard common stock before the distribution.

Are there risks to owning WABCO common stock?

Yes. Our business is subject to both general and specific risks relating to our business, our relationship with American Standard and our being a separate publicly traded company. Our business is also subject to risks relating to the separation. These risks are described in the “Risk Factors” section of this information statement beginning on page 16. We encourage you to read that section carefully.

Where can American Standard shareholders get more information?

Before the separation, if you have any questions relating to the separation, you should contact:

American Standard Companies Inc.

Investor Relations

One Centennial Avenue

P.O. Box 6820

Piscataway, New Jersey 08855

(732) 980-6000

www.americanstandard.com

After the separation, if you have any questions relating to our common stock, you should contact:

WABCO Holdings Inc.

Investor Relations

Chaussée de Wavre 1789

1160 Brussels, Belgium

+32-2-663-9854

www.wabco-auto.com

After the separation, if you have any questions relating to the distribution of our shares, you should contact:

The Bank of New York

Shareholder Relations

P.O. Box 11258

New York, NY 10286-1258

1-800-524-4458

www.stockbny.com

Summary of the Separation

The following is a summary of the material terms of the separation and other related transactions. See “The Separation” for a more detailed description of the matters described below.

Distributing company

American Standard Companies Inc. After the distribution, American Standard will not own any shares of our common stock.

Distributed company

WABCO Holdings Inc., a Delaware corporation and a wholly owned subsidiary of American Standard, was formed to hold all of the assets and liabilities of American Standard’s Vehicle Control Systems business. After the distribution, WABCO will be an independent public company.

Distribution ratio

Each holder of American Standard common stock will receive one share of our common stock (and a related preferred stock purchase right) for every three shares of American Standard common stock held on July 19, 2007, the record date. Cash will be distributed in lieu of fractional shares, as described below.

Distributed securities

All of the shares of WABCO common stock owned by American Standard, which will be 100% of our common stock outstanding immediately prior to the distribution. Based on the approximately 204 million shares of American Standard common stock outstanding on July 10, 2007 and applying the distribution ratio of one share of WABCO common stock for every three shares of American Standard common stock, approximately 68 million shares of our common stock will be distributed to American Standard shareholders who hold American Standard common stock as of the record date. The number of shares that American Standard will distribute to its shareholders will be reduced to the extent that cash payments are to be made in lieu of the issuance of fractional shares of our common stock, as described below.

On July 13, 2007 our Board of Directors adopted a shareholder rights plan. The shareholder rights plan is designed to protect our shareholders from coercive or otherwise unfair takeover tactics. You will receive one preferred stock purchase right for every share of WABCO common stock you receive in the distribution. Unless the context otherwise requires, references herein to our common stock include the related preferred stock purchase rights. See “Description of Capital Stock—Rights Plan.”

Fractional shares

American Standard will not distribute any fractional shares of our common stock to its shareholders. Instead, the distribution agent will aggregate fractional shares into whole shares, sell the whole shares in the open market at prevailing market prices and distribute the aggregate net cash proceeds of the sales pro rata to each holder who otherwise would have been entitled to receive a fractional share in the distribution. Recipients of cash in lieu of fractional shares will not be entitled to any interest on the amounts of payment made in lieu of fractional shares. The receipt of cash in lieu of fractional shares generally will be taxable to the recipient shareholders as described in “The Separation—Material U.S. Federal Income Tax Consequences of the Distribution.”

Record date

The record date for the distribution is the close of business on July 19, 2007.

Distribution date

The distribution date is July 31, 2007.

Distribution

On the distribution date, American Standard, with the assistance of The Bank of New York, the distribution agent, will electronically issue shares of our common stock to you or to your bank or brokerage firm on your behalf by way of direct registration in book-entry form. You will not be required to make any payment, surrender or exchange your shares of American Standard common stock or take any other action to receive your shares of our common stock. If you sell shares of American Standard common stock in the “regular-way” market up to and including through the distribution date, you will be selling your right to receive shares of WABCO common stock in the distribution. Registered shareholders will receive additional information from the distribution agent shortly after the distribution date. Following the distribution, shareholders whose shares are held in book-entry form may request that their shares of WABCO common stock be transferred to a brokerage or other account at any time, without charge. Beneficial shareholders that hold shares through a brokerage firm will receive additional information from their brokerage firms shortly after the distribution date.

Conditions to the distribution

The distribution of our common stock is subject to the satisfaction or, if permissible under the Separation and Distribution Agreement, waiver by American Standard of the following conditions, among other conditions described in this information statement:

•

the Securities and Exchange Commission (“SEC”) shall have declared effective our registration statement on Form 10, of which this information statement is a part, under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and no stop order relating to the registration statement is in effect;

•

all permits, registrations and consents required under the securities or blue sky laws of states or other political subdivisions of the United States or of other foreign jurisdictions in connection with the distribution shall have been received;

•

American Standard has received a private letter ruling from the IRS and an opinion of Skadden, Arps, Slate, Meagher & Flom LLP substantially to the effect that the distribution qualifies as tax-free for U.S. federal income tax purposes under Section 355 of the Code;

•

the listing of our common stock on the NYSE shall have been approved, subject to official notice of issuance; and

•

no order, injunction or decree issued by any court of competent jurisdiction or other legal restraint or prohibition preventing consummation of the distribution or any of the transactions related thereto, including the transfers of assets and liabilities contemplated by the Separation and Distribution Agreement, shall be in effect.

The fulfillment of these conditions does not create any obligation on American Standard’s part to effect the distribution, and American Standard, in its sole discretion, may amend, modify or abandon the distribution at any time prior to the distribution date.

Stock exchange listing

We have applied to list our shares of common stock on the NYSE under the ticker symbol “WBC.” On July 17, 2007, trading of shares of our common stock began on a “when-issued” basis and will continue up to and including through the distribution date. See “The Separation—Trading Between the Record Date and Distribution Date.”

Transfer agent

The Bank of New York

Shareholder Relations

P.O. Box 11258

New York, NY 10286-1258

1-800-524-4458

www.stockbny.com

Indebtedness

At the time of distribution, WABCO is expected to have a minimal level of debt.

Risks relating to ownership of our common stock and the distribution

Our business is subject to both general and specific risks and uncertainties relating to our business, our relationship with American Standard and our being a separate publicly traded company. Our business is also subject to risks relating to the separation. You should read carefully “Risk Factors,” beginning on page 16 in this information statement.

Tax considerations

Assuming the distribution qualifies as tax-free for U.S. federal income tax purposes under Section 355 of the Code, no gain or loss will be recognized by a shareholder, and no amount will be included in the income of a shareholder, upon the receipt of shares of our common stock pursuant to the distribution. However, a shareholder will generally recognize gain or loss with respect to any cash received in lieu of a fractional share of our common stock as described in “The Separation—Material U.S. Federal Income Tax Consequences of the Distribution.”

Certain Agreements with American Standard

In connection with the distribution, we entered into a Separation and Distribution Agreement and several other agreements with American Standard to effect the separation and distribution and provide a framework for our relationships with American Standard after the separation. These agreements govern the relationships between us and American Standard subsequent to the completion of the separation plan and provide for the allocation between us and American Standard of American Standard’s assets, liabilities and obligations (including employee benefits and tax-related assets and liabilities) attributable to periods prior to, at and after our separation from American Standard. For a discussion of these arrangements, see “Certain Relationships and Related Party Transactions.”

Summary Financial and Other Data and Summary Pro Forma Financial Information

Set forth below are summary financial and other data for each of the three fiscal years in the period ended December 31, 2006 and the three months ended March 31, 2007 and 2006. Except with respect to pro forma shares and per share amounts, the combined consolidated balance sheet data as of December 31, 2006 and 2005 and the combined consolidated statement of operations data for each of the three fiscal years in the period ended December 31, 2006 have been derived from our audited financial statements included elsewhere in this information statement. The combined consolidated balance sheet data as of March 31, 2007 and the combined consolidated statement of operations data for the three months ended March 31, 2007 and 2006, have been derived from our unaudited combined condensed financial statements included elsewhere in this information statement. The financial statements reflect transactions with American Standard and its affiliates on the basis determined by American Standard. You should read the information presented below in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes included elsewhere in this information statement.

The historical financial data includes all costs of WABCO’s business. For all periods presented, these costs include the allocation of certain corporate expenses from American Standard. We believe that these allocations were made on a reasonable basis. Although the financial statements may not necessarily reflect WABCO’s results of operations, financial position and cash flows in the future, management believes the differences between amounts presented and what its results of operations, financial position and cash flows would have been had WABCO been a standalone company during the periods presented would not be material.


	Three Months Ended March 31,						Fiscal Years Ended December 31,
(dollars in millions)	2007			2006			2006			2005			2004
Combined Consolidated Statement of Operations Data:
Sales	$	558.8		$	479.9		$	2,015.2		$	1,831.0		$	1,723.8
Costs, expenses other (income)/expense:
Cost of sales		406.1			341.3			1,463.5			1,312.5			1,252.4
Selling and administrative expenses		68.7			63.3			255.0			233.5			212.7
Product engineering		21.3			17.9			72.2			73.5			66.2
Equity in net (income) of unconsolidated joint ventures		(4.8	)		(7.1	)		(23.3	)		(24.5	)		(20.2	)
Other expense, net		4.1			2.1			10.8			5.4			0.1
Net interest expense/(income)—related party		0.4			0.5			6.2			(6.0	)		(5.4	)
Interest expense		2.0			0.5			5.1			3.9			3.4

		497.8			418.5			1,789.5			1,598.3			1,509.2

Income before income taxes		61.0			61.4			225.7			232.7			214.6
Income taxes		20.9			20.8			87.9			87.4			23.2

Net income	$	40.1		$	40.6		$	137.8		$	145.3		$	191.4


(in millions, except per share amounts)	2007			2006			2006			2005			2004
Pro forma net income per common share
Basic	$	0.60		$	0.61		$	2.05		$	2.17		$	2.85
Diluted	$	0.58		$	0.59		$	2.00		$	2.11		$	2.77
Pro forma common shares outstanding (a)
Basic		67.1			67.1			67.1			67.1			67.1
Diluted		69.0			69.0			69.0			69.0			69.0


	As of March 31,		As of December 31,
(dollars in millions)	2007		2006		2005
Combined Consolidated Balance Sheet Data (at end of period):
Cash	$	31.6	$	34.8	$	39.9
Total Assets	$	1,348.3	$	1,276.9	$	1,095.4
Long-term debt	$	65.9	$	57.3	$	37.2
Total Owners’ Net Investment	$	310.2	$	315.2	$	310.8

(a)

The pro forma number of common shares outstanding for basic and diluted earnings per share was determined by applying the distribution ratio of one share of WABCO common stock for every three shares of American Standard common stock outstanding and including the effect of dilutive American Standard common stock equivalents as of March 31, 2007. As of March 31, 2007, there were no outstanding common stock equivalents that were excluded from the diluted pro forma net income per common share calculation.

The following table sets forth pro forma financial information for the three months ended March 31, 2007, which has been derived from our historical financial statements as of such dates and for such period, and giving pro forma effect to the distribution, as if these transactions occurred as of January 1, 2006 for the pro forma statement of operations data for the three months ended March 31, 2007 and as of March 31, 2007 for the pro forma balance sheet data as of March 31, 2007. The table also sets forth pro forma financial information for the year ended December 31, 2006, which has been derived from our historical financial statements for such period, after giving pro forma effect to the distribution, as if these transactions occurred as of January 1, 2006 for the pro forma statement of operations data for the year ended December 31, 2006.

The pro forma adjustments are based upon available information and assumptions that we believe are reasonable. Please see the notes to the unaudited pro forma financial statements included elsewhere in this information statement for a discussion of how the adjustments are presented in the pro forma financial statements. The summary pro forma financial information is for illustrative and informational purposes only and is not intended to represent, or be indicative of, what our financial position and results of operations would have been had the separation and distribution and related transactions occurred on the dates indicated. The summary pro forma financial information also should not be considered representative of our future results of operations or financial position.


	Three Months Ended March 31, 2007		Fiscal Year Ended December 31, 2006
Pro Forma Condensed Combined Consolidated Statement of Operations Data (dollars in millions)
Net sales	$	558.8	$	2,015.2
Income before income taxes	$	63.2	$	237.6
Net income	$	41.6	$	145.4

(in millions, except per share amounts)	2007		2006
Pro forma net income per common share
Basic	$	0.62	$	2.17
Diluted	$	0.60	$	2.11
Pro forma common shares outstanding (a)
Basic		67.1		67.1
Diluted		69.0		69.0


	As of March 31, 2007
Pro Forma Condensed Combined Consolidated Balance Sheet Data (dollars in millions)
Cash	$	31.6
Total assets	$	1,498.7
Long-term debt	$	25.9
Total Owners’ Net Investment	$	471.1

(a)

RISK FACTORS

You should carefully consider each of the following risk factors and all of the other information set forth in this information statement. The risk factors generally have been separated into three groups: (i) risks relating to our business, (ii) risks relating to the separation and (iii) risks relating to our common stock. Based on the information currently known to us, we believe that the following information identifies the most significant risk factors affecting our company in each of these categories of risks. In addition, past financial performance may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results or trends in future periods.

If any of the following risks and uncertainties develops into actual events, these events could have a material adverse effect on our business, financial condition or results of operations. In such case, the trading price of our common stock could decline.

Risks Relating to Our Business

Our sales could decline due to macro-economic factors, cyclicality of the industry, regulatory changes and other factors outside of our control.

Changes in economic conditions, cyclical downturns in our industry, regulatory changes impacting the purchasing patterns of commercial vehicles, and changes in the local economies of the countries or regions in which we sell our products, such as changes in consumer confidence, increases in interest rates and increases in unemployment, could affect demand for our products, which could negatively affect our business and results of operations.

Demand for new trucks and buses in the markets in which we operate has a significant impact on our sales. In the last few years, heavy truck and bus production has increased in our largest market (Western Europe). In 2006, Western Europe accounted for approximately 42% of our total sales, and North America accounted for approximately 11% of our total sales. Adverse economic conditions in our markets, particularly in Western Europe, and other factors may cause our customers to reduce truck and bus production, which could have an adverse effect on our results of operations and financial condition. Demand in our North American market is estimated to decline by approximately 40% for Class 8 heavy duty commercial vehicles in 2007 due primarily to higher 2006 production and sales of such vehicles in advance of changes in engine emissions regulations in the United States which took effect in 2007. We anticipate that the impact of this expected downturn in North America will be offset by growth in content and increased production in other parts of the world. Further, our performance is influenced by the number of “miles driven” by users of commercial vehicles. As commercial truck and bus fleets continue to be used for longer periods of time, sales to OEM customers could soften as purchases of new vehicles for fleets are delayed.

Our exposure to exchange rate fluctuations on cross border transactions and the translation of local currency results into U.S. dollars could negatively impact our results of operations.

We conduct business through subsidiaries in many different countries, and fluctuations in currency exchange rates have a significant impact on the reported results of our operations, which are presented in U.S. dollars. In 2006, approximately 89% of our combined sales occurred outside of the United States. A significant and growing portion of our products are manufactured in lower-cost locations and sold in various countries. Cross border transactions, both with external parties and intercompany relationships, result in increased exposure to foreign exchange effects. Accordingly, significant changes in the exchange rates of the Euro, U.S. dollar and other applicable currencies could cause fluctuations in the reported results of our operations that could negatively affect our results of operations. Additionally, our results of operations are translated into U.S. dollars for reporting purposes. The strengthening or weakening of the U.S. dollar could result in favorable or unfavorable translation effects as the results of foreign locations are translated into U.S. dollars. We do not hedge any of our foreign exchange exposures. Foreign currency exchange effects in 2006 reduced our net income by approximately $2 million.

We are subject to general risks associated with our foreign operations.

In addition to the currency exchange risks inherent in operating in many different foreign countries, there are other risks inherent in our international operations.

The risks related to our foreign operations that we more often face in the normal course of business include:

•

Changes in non-U.S. tax law, increases in non-U.S. tax rates and the amount of non-U.S. earnings relative to total combined earnings could change and impact our combined tax rate;

•

Foreign earnings may be subject to withholding requirements or the imposition of tariffs, price or exchange controls, or other restrictions, including restrictions on repatriation of earnings;

•

General economic and political conditions in countries where we operate may have an adverse effect on our operations in those countries; and

•

We may have difficulty complying with a variety of foreign laws and regulations, some of which may conflict with United States law, and the uncertainty created by this legal environment could limit our ability to effectively enforce our rights in certain markets.

The ability to manage these risks could be difficult and may limit our operations and make the manufacture and distribution of our products internationally more difficult, which could negatively affect our business and results of operations.

If we are unable to obtain component parts or obtain them at reasonable price levels, our ability to maintain existing sales margins may be affected.

We purchase a broad range of materials and components throughout the world in connection with our manufacturing activities. Major items include electronic components and parts containing aluminum, steel, copper, zinc, rubber and plastics. The cost of components and parts, and the raw materials used therein, represents a significant portion of our total costs. Price increases of the underlying commodities may adversely affect our results of operations. Although we currently maintain alternative sources for components and parts, our business is subject to the risk of price fluctuations and periodic delays in the delivery of certain raw materials. The sudden inability of a supplier to deliver components or to do so at reasonable prices could have a temporary adverse effect on our production of certain products or the cost at which we can produce those products. Any change in the supply or price of raw materials could materially adversely affect our future business and results of operations.

If we are not able to maintain good relations with our employees, we could suffer work stoppages that could negatively affect our business and results of operations.

Employees located in our sites in Europe, Asia and South America are subject to collective bargaining, with internal company agreements or external agreements at the region or country level. These employees’ right to strike is typically protected by law and union membership is confidential information which does not have to be provided to the employer. Our U.S. facilities are non-union. We have maintained good relationships with our employees around the world and historically have experienced very few strikes. Any disputes with our employee base could result in work stoppages or labor protests, which could disrupt our operations. Any such labor disputes could negatively affect our business and results of operations. As described under the heading “Business—Employees,” effective July 2, 2007, WABCO received notice of a “collective dispute” at its Wroclaw, Poland facility. On July 19, 2007, the management of WABCO’s Polish subsidiary and Solidarity reached an agreement which ended the “collective dispute” process and established a new framework with respect to wages and operational improvements meant to increase quality and productivity at the Polish facility.

We are dependent on key customers.

We rely on several key customers. For fiscal 2006, our top ten customers accounted for 56% of our sales, and our top three customers, accounted for approximately 15%, 9% and 8%, respectively, of our sales. This includes sales to our 50%-owned Meritor WABCO joint venture in North America. Many of our customers place orders for products on an as-needed basis and operate in cyclical industries and, as a result, their order levels

have varied from period to period in the past and may vary significantly in the future. Such customer orders are dependent upon their markets and customers and may be subject to delays or cancellations. As a result of dependence on our key customers, we could experience a material adverse effect on our business and results of operations if any of the following were to occur:

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the loss of any key customer, in whole or in part;

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a declining market in which customers reduce orders or demand reduced prices; or

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a strike or work stoppage at a key customer facility, which could affect both their suppliers and customers.

If there are changes in the environmental or other regulations that affect one or more of our current or future products, it could have a negative impact on our business and results of operations.

We are currently subject to various environmental and other regulations in the U.S. and internationally. A risk of environmental liability is inherent in our current and former manufacturing activities. Under certain environmental laws, we could be held jointly and severally responsible for the remediation of any hazardous substance contamination at our past and present facilities and at third party waste disposal sites and could also be held liable for damages to natural resources and any consequences arising out of human exposure to such substances or other environmental damage. While we have a number of proactive programs underway to minimize the impact of the production and use of our products on the environment and believe that we are in substantial compliance with environmental laws and regulations, we cannot predict whether there will be changes in the environmental regulations affecting our products.

Any changes in the environmental and other regulations which affect our current or future products could have a negative impact on our business if we are unable to adjust our product offering to comply with such regulatory changes. In addition, it is possible that we will incur increased costs as a result of complying with environmental regulations, which could have a material adverse effect on our business, results of operations and financial condition.

We may be subject to product liability and warranty and recall claims, which may increase the costs of doing business and adversely affect our business, financial condition and results of operations.

We are subject to a risk of product liability or warranty claims if our products actually or allegedly fail to perform as expected or the use of our products results, or is alleged to result, in bodily injury and/or property damage. While we maintain reasonable limits of insurance coverage to appropriately respond to such exposures, large product liability claims, if made, could exceed our insurance coverage limits and insurance may not continue to be available on commercially acceptable terms, if at all. We cannot assure you that we will not incur significant costs to defend these claims or that we will not experience any product liability losses in the future. In addition, if any of our designed products are or are alleged to be defective, we have been required to participate in recalls and exchanges of such products in the past and we may be in the future. In the past five years, our warranty expense has fluctuated between approximately 1.1% and 2.6% of sales on an annual basis. Individual quarters were above or below the annual averages. The future cost associated with providing product warranties and/or bearing the cost of repair or replacement of our products could exceed our historical experience and have a material adverse effect on our business, financial condition and results of operations.

We are required to plan our capacity well in advance of production and our success depends on having available capacity and effectively using it.

We principally compete for new business at the beginning of the development of our customers’ new products. Our customers’ new product development generally begins significantly prior to the marketing and production of their new products and our supply of our products generally lasts for the life of our customers’ products. Nevertheless, our customers may move business to other suppliers or request price reductions during

the life cycle of a product. The long development and sales cycle of our new products, combined with the specialized nature of many of our facilities and the resulting difficulty in shifting work from one facility to another, could result in variances in capacity utilization. In order to meet our customers’ requirements, we may be required to supply our customers regardless of cost and consequently we may suffer an adverse impact on our operating profit margins and results of operations.

We must continue to make technological advances, or we may not be able to successfully compete in our industry.

We operate in an industry in which technological advancements are necessary to remain competitive. Accordingly, we devote substantial resources to improve already technologically complex products and to remain a leader in technological innovation. However, if we fail to continue to make technological improvements or our competitors develop technologically superior products, it could have an adverse effect on our operating results or financial condition.

We may be unable to secure and maintain access to debt markets on acceptable terms.

We have in place a bank credit facility that will be available to provide financing at separation, as further described in “Description of Material Indebtedness.” The ongoing cost of this facility or its renewal will be impacted by our financial performance as well as by market conditions. Adverse changes in these factors could increase our borrowing cost or limit our financial flexibility, which could impact our ability to maintain or grow our business.

Risks Relating to the Separation

We have no operating history as a separate public company and our historical and pro forma financial information is not necessarily representative of the results we would have achieved as a separate publicly traded company and may not be a reliable indicator of our future results.

The historical and pro forma financial information included in this information statement does not necessarily reflect the financial condition, results of operations or cash flows that we would have achieved as a separate publicly traded company during the periods presented or those that we will achieve in the future primarily as a result of the following factors:

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Prior to our separation, our business was operated by American Standard as part of its broader corporate organization, rather than as an independent company. American Standard or one of its affiliates performed various corporate functions for us, including, but not limited to, tax administration, certain governance functions (including compliance with the Sarbanes-Oxley Act of 2002 and internal audit) and external reporting, and human resource administration. Our historical and pro forma financial results reflect allocations of corporate expenses from American Standard for these and similar functions. These allocations may be more or less than the comparable expenses we believe we would have incurred had we operated as a separate publicly traded company.

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Other significant changes may occur in our cost structure, management, financing and business operations as a result of our operating as a company separate from American Standard.

We may be unable to make, on a timely or cost-effective basis, the changes necessary to operate as an independent company, and we may experience increased costs after the separation or as a result of the separation.

Following the completion of our separation, American Standard will be contractually obligated to provide to us only those services specified in the Transition Services Agreement and the other agreements we entered into with American Standard in preparation for the separation. The Transition Services Agreement’s expiration date

will be 6 months from the date of our separation, unless otherwise extended as permitted in the Transition Services Agreement. We may be unable to replace in a timely manner or on comparable terms the services or other benefits that American Standard previously provided to us that are not specified in the Transition Services Agreement or the other agreements. Also, upon the expiration of the Transition Services Agreement or other agreements, many of the services that are covered in such agreements will be provided internally or by unaffiliated third parties, and we expect that in some instances, we will incur higher costs to obtain such services than we incurred under the terms of such agreements. In addition, if American Standard does not continue to perform effectively the transition services and the other services that are called for under the Transition Services Agreement and other agreements, we may not be able to operate our business effectively and our profitability may decline. Furthermore, after the expiration of the Transition Services Agreement and the other agreements, we may be unable to replace in a timely manner or on comparable terms the services specified in such agreements.

We may have received better terms from unaffiliated third parties than the terms we received in our agreements with American Standard.

The agreements related to our separation from American Standard, including the Separation and Distribution Agreement, Tax Sharing Agreement, Transition Services Agreement, Employee Matters Agreement, Indemnification and Cooperation Agreement and the other agreements, were negotiated in the context of our separation from American Standard while we were still part of American Standard and, accordingly, may not reflect terms that would have resulted from arm’s-length negotiations among unaffiliated third parties. The terms of the agreements we negotiated in the context of our separation related to, among other things, allocation of assets, liabilities, rights, indemnifications and other obligations between American Standard and us. See “Certain Relationships and Related Party Transactions.”

We will be responsible for certain of American Standard’s contingent and other corporate liabilities.

Under the Indemnification and Cooperation Agreement, the Separation and Distribution Agreement and the Tax Sharing Agreement, we have assumed and will be responsible for certain contingent liabilities related to American Standard’s business (including certain associated costs and expenses, whether arising prior to, at or after the distribution) and we may be required to indemnify American Standard for these liabilities. Among the contingent liabilities against which we will indemnify American Standard and certain of its subsidiaries and affiliates are liabilities associated with an investigation into alleged infringement of European Union competition regulations, certain non-U.S. tax liabilities and certain U.S. and non-U.S. environmental liabilities associated with certain non-WABCO American Standard entities.

See “We will indemnify American Standard and certain of its subsidiaries and affiliates against any fines associated with an investigation into alleged infringement of European Union competition regulations” and “Certain Relationships and Related Party Transactions—Agreements with American Standard” for a further discussion of these liabilities.

We will indemnify American Standard and certain of its subsidiaries and affiliates against any fines associated with an investigation into alleged infringement of European Union competition regulations.

As part of a multi-company investigation, American Standard and certain of its European subsidiaries engaged in the Bath and Kitchen business have been charged by the European Commission for infringements of European Union competition rules relating to the distribution of bathroom fixtures and fittings in a number of European countries. Pursuant to the Indemnification and Cooperation Agreement, WABCO and certain of our subsidiaries will be responsible for, and will indemnify American Standard and its subsidiaries (including certain subsidiaries formerly engaged in the Bath and Kitchen business) and their respective affiliates against any fines related to this investigation. See “Business—Legal Proceedings” for additional discussion of the procedural history, response, hearing and appeals process related to the European Commission investigation.

We expect that the European Commission’s investigation will result in the imposition of a fine, however we are unable to reasonably estimate the loss or range of loss that may result from this matter. If the Commission’s new fining guidelines, which are described in more detail in "Management’s Discussion and Analysis of Financial Condition and Results of Operations—Commitments and Contingencies," were applied to the matter, the fine would be significant primarily due to the breadth of the allegations and alleged duration of the infringement. The European Commission regulations provide for a maximum fine equal to 10% of the parent company’s ( i.e ., American Standard’s) worldwide revenue attributable to all of its products for the fiscal year prior to the year in which the fine is imposed. If the maximum fine were levied in 2007, the total liability would be approximately $1.1 billion based on American Standard’s worldwide revenue in 2006 subject to a probable reduction for leniency of at least 20% provided the leniency applicant fulfills all conditions set forth in the Commission’s leniency notice. Further, the effect, if any, of the spinoff of WABCO from American Standard and the sale of its Bath and Kitchen business on the calculation of such 10% liability cap is unclear. In any event, the fine imposed by the Commission could be material to WABCO’s operating results and cash flows for the year in which the liability would be recognized or the fine paid. See “Notes to Quarterly Financial Statements—Note 4. Warranties, Guarantees, Commitments and Contingencies—Contingencies—Litigation” for a more complete description of the European Union investigation, including a detailed description as to why we are unable to reasonably estimate a loss or range of loss at this time.

The ownership by our executive officers and some of our directors of shares of common stock, options, or other equity awards of American Standard may create, or may create the appearance of, conflicts of interest. Because of their current or former positions with American Standard, certain of our executive officers, and some of our non-employee director nominees, own shares of American Standard common stock, options to purchase shares of American Standard common stock or other equity awards. The individual holdings of common stock, options to purchase common stock of American Standard or WABCO or other equity awards, may be significant for some of these persons compared to these persons’ total assets. Even though our Board of Directors will consist of a majority of directors who are independent from American Standard, and our executive officers who are currently employees of American Standard will cease to be employees of American Standard upon the separation, ownership by our directors and officers, after our separation, of common stock or options to purchase common stock of American Standard, or any other equity awards, creates, or, may create the appearance of, conflicts of interest when these directors and officers are faced with decisions that could have different implications for American Standard than the decisions have for us.

If the distribution, together with certain related transactions, were to fail to qualify as tax-free for U.S. federal income tax purposes under Section 355 of the Code, then our shareholders, we or American Standard may be required to pay U.S. federal income taxes.

The distribution is conditioned upon American Standard’s receipt of a private letter ruling from the IRS substantially to the effect that the distribution qualifies as tax-free for U.S. federal income tax purposes under Section 355 of the Code. American Standard received this private letter ruling on July 10, 2007. This ruling is based on, among other things, certain assumptions as well as on the accuracy of certain factual representations and statements that we and American Standard made to the IRS. In rendering its ruling, the IRS also relied on certain covenants that we and American Standard entered into, including the adherence by American Standard and us to certain restrictions on our future actions. If any of the representations or statements that we or American Standard made are, or become, inaccurate or incomplete, or if we or American Standard breach any of our covenants, the distribution might not qualify as tax-free for U.S. federal income tax purposes under Section 355 of the Code. Furthermore, the IRS will not rule on whether the distribution satisfies certain requirements necessary to obtain tax-free treatment under Section 355 of the Code. Rather, the private letter ruling is based upon representations by American Standard that these conditions have been satisfied, and any inaccuracy in the representations could prevent American Standard from relying on the ruling.

The distribution is also conditioned on the receipt by American Standard of an opinion of Skadden, Arps, Slate, Meagher & Flom LLP, tax counsel to American Standard, substantially to the effect that the distribution will qualify as tax-free to American Standard, WABCO and American Standard shareholders under Section 355 and related provisions of the Code. The opinion will rely on the IRS private letter ruling as to matters covered by the ruling. The opinion will be based on, among other things, certain assumptions and representations as to factual matters made by American Standard and us which, if incorrect or inaccurate in any material respect, would jeopardize the conclusions reached by counsel in its opinion. The opinion will not be binding on the IRS or the courts, and the IRS or the courts may not agree with this opinion.

Notwithstanding receipt by American Standard of the private letter ruling and opinion of counsel, the IRS could successfully assert that the distribution should be treated as a taxable transaction. If the distribution fails to qualify for tax-free treatment, then American Standard would recognize gain in an amount equal to the excess of (i) the fair market value of the our common stock distributed to the American Standard shareholders over (ii) American Standard’s tax basis in such common stock. Under the terms of the Tax Sharing Agreement, in the event the distribution were to fail to qualify as a tax-free reorganization and such failure was not the result of actions taken after the distribution by American Standard or any of its subsidiaries or shareholders, we would be responsible for all taxes imposed on American Standard as a result thereof. In addition, each American Standard shareholder who received our common stock in the distribution generally would be treated as having received a taxable distribution in an amount equal to the fair market value of our common stock received (including any fractional share sold on behalf of the shareholder), which would be taxable as a dividend to the extent of the shareholder’s ratable share of American Standard’s current and accumulated earnings and profits (as increased to reflect any current income including any gain recognized by American Standard on the taxable distribution). The balance, if any, of the distribution would be treated as a nontaxable return of capital to the extent of the American Standard shareholder’s tax basis in its American Standard stock, with any remaining amount being taxed as capital gain.

WABCO and American Standard might not be able to engage in desirable strategic transactions and equity issuances following the distribution.

WABCO’s and American Standard’s ability to engage in significant stock transactions could be limited or restricted after the distribution in order to preserve the tax-free nature of the distribution to American Standard. Even if the distribution otherwise qualifies as tax-free for U.S. federal income tax purposes under Section 355 of the Code, it would be taxable to American Standard (but not to American Standard shareholders) under Section 355(e) of the Code if the distribution were deemed to be part of a plan (or series of related transactions) pursuant to which one or more persons acquired directly or indirectly stock representing a 50% or greater interest, by vote or value, in the stock of either American Standard or WABCO. Current U.S. federal income tax law creates a presumption that the distribution would be taxable to American Standard, but not to its shareholders, if either WABCO or American Standard were to engage in, or enter into an agreement to engage in, a transaction that would result in a 50% or greater change, by vote or value, in WABCO’s or American Standard’s stock ownership during the four-year period that begins two years before the date of the distribution, unless it is established that the transaction is not pursuant to a plan or series of transactions related to the distribution. Treasury regulations currently in effect generally provide that whether an acquisition transaction and a distribution are part of a plan is determined based on all of the facts and circumstances, including, but not limited to, specific factors described in the Treasury regulations. In addition, the Treasury regulations provide several “safe harbors” for acquisition transactions that are not considered to be part of a plan. These rules may prevent WABCO and American Standard from entering into transactions which might be advantageous to their respective shareholders, such as issuing equity securities to satisfy financing needs or acquiring businesses or assets with equity securities. Thus, even if the distribution were to qualify as tax-free for U.S. federal income tax purposes under Section 355 of the Code, if acquisitions of American Standard stock or WABCO stock after the distribution were to cause Section 355(e) of the Code to apply, American Standard would recognize taxable gain as described above, but the distribution would be tax-free to each American Standard shareholder (except for cash received in lieu of a fractional share of WABCO common stock).

The Tax Sharing Agreement includes covenants that WABCO shall not take actions that could cause the distribution to fail to qualify as a tax-free transaction, including, in certain cases, redeeming equity securities, selling or otherwise disposing of a substantial portion of its assets or acquiring businesses or assets with equity securities (or entering into negotiations or agreements with respect to such transactions), in each case, for a period of 24 months from the day after the distribution. WABCO, however, may undertake any such action if it first obtains the consent of ASD or an opinion of counsel or a private letter ruling that such action will not adversely affect any conclusion in the private letter ruling or opinion of counsel issued in connection with the distribution. Moreover, the Tax Sharing Agreement generally provides that we will be responsible for any taxes imposed on American Standard or WABCO as a result of the failure of the distribution to qualify as tax-free for U.S. federal income tax purposes under Section 355 of the Code unless such failure is attributable to certain post-distribution actions taken by American Standard (including its subsidiaries) or its shareholders. See “The Separation—Material U.S. Federal Income Tax Consequences of the Distribution” and “Certain Relationships and Related Party Transactions—Agreements with American Standard—Tax Sharing Agreement.”

Risks Relating to Our Common Stock

There is no existing market for our common stock and a trading market that will provide you with adequate liquidity may not develop for our common stock. In addition, once our common stock begins trading, the market price of our shares may fluctuate widely.

On July 17, 2007, trading of shares of our common stock began on a “when-issued” basis and will continue up to and including through the distribution date. However, there can be no assurance that an active trading market for our common stock will develop as a result of the distribution or be sustained in the future.

We cannot predict the prices at which our common stock may trade after the distribution. The market price of our common stock may fluctuate widely, depending upon many factors, some of which may be beyond our control, including:

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our business profile and market capitalization may not fit the investment objectives of American Standard shareholders, especially shareholders who hold American Standard stock based on American Standard’s inclusion in the Standard & Poor’s 500 Index, as our common stock may not be included in the Standard & Poor’s 500 Index, and as a result, American Standard shareholders may sell our shares after the distribution;

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a shift in our investor base;

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our quarterly or annual earnings, or those of other companies in our industry;

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actual or anticipated fluctuations in our operating results due to the cyclicality of our business and other factors related to our business;

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changes in accounting standards, policies, guidance, interpretations or principles;

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announcements by us or our competitors of significant acquisitions or dispositions;

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the failure of securities analysts to cover our common stock after the distribution;

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changes in earnings estimates by securities analysts or our ability to meet those estimates;

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the operating and stock price performance of other comparable companies;

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overall market fluctuations; and

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general economic conditions.

Stock markets in general have experienced volatility that has often been unrelated to the operating performance of a particular company. These broad market fluctuations may adversely affect the trading price of our common stock.

Investors may have difficulty accurately valuing our common stock.

Investors often value companies based on the stock prices and results of operations of other comparable companies. Currently, no public vehicle control systems company exists that is directly comparable to our size, scale and product offerings. As such, investors may find it difficult to accurately value our common stock, which may cause our common stock price to trade below its true value.

Substantial sales of common stock may occur in connection with this distribution, which could cause our stock price to decline.

The shares of our common stock that American Standard distributes to its shareholders generally may be sold immediately in the public market. Although we have no actual knowledge of any plan or intention on the part of any 5% or greater shareholder to sell our common stock following the separation, it is possible that some American Standard shareholders, including possibly some of our large shareholders, will sell our common stock received in the distribution for reasons such as that our business profile or market capitalization as an independent company does not fit their investment objectives. Moreover, index funds tied to the Standard & Poor’s 500 Index, the Russell 1000 Index and other indices hold shares of American Standard common stock. To the extent our common stock is not included in these indices after the distribution, certain of these index funds will likely be required to sell the shares of our common stock that they receive in the distribution. The sales of significant amounts of our common stock or the perception in the market that this will occur may result in the lowering of the market price of our common stock.

Your percentage ownership in WABCO may be diluted in the future.

Your percentage ownership in WABCO may be diluted in the future because of equity awards that have already been granted and that we expect will be granted to our directors and officers in the future. Prior to the separation and record date for the distribution, we expect American Standard will approve an Omnibus Incentive Plan, which will provide for the grant of equity-based awards, including restricted stock, restricted stock units, stock options, stock appreciation rights, phantom equity awards and other equity-based awards to our directors, officers and other employees. In the future, we may issue additional equity securities, subject to limitations imposed by the Tax Sharing Agreement, in order to fund working capital needs, capital expenditures and product development, or to make acquisitions and other investments, which may dilute your ownership interest.

Our shareholder rights plan and provisions in our amended and restated certificate of incorporation and amended and restated by-laws, and of Delaware law may prevent or delay an acquisition of our company, which could decrease the trading price of our common stock.

Our amended and restated certificate of incorporation, amended and restated by-laws and Delaware law contain provisions that are intended to deter coercive takeover practices and inadequate takeover bids by making such practices or bids unacceptably expensive to the raider and to encourage prospective acquirors to negotiate with our Board of Directors rather than to attempt a hostile takeover. These provisions include, among others:

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a Board of Directors that is divided into three classes with staggered terms;

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elimination of the right of our shareholders to act by written consent;

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rules regarding how shareholders may present proposals or nominate directors for election at shareholder meetings;

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the right of our Board to issue preferred stock without shareholder approval; and

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limitations on the right of shareholders to remove directors.

Delaware law also imposes some restrictions on mergers and other business combinations between us and any holder of 15% or more of our outstanding common stock. For more information, see “Description of Capital Stock—Anti-takeover Effects of Our Amended and Restated Certificate of Incorporation and Amended and Restated By-laws and Delaware Law.”

On July 13, 2007, our Board adopted a shareholder rights plan, which provides, among other things, that when specified events occur, our shareholders will be entitled to purchase from us a newly created series of junior preferred stock. The preferred stock purchase rights are triggered by the earlier to occur of (i) ten business days (or a later date determined by our Board of Directors before the rights are separated from our common stock) after the public announcement that a person or group has become an “acquiring person” by acquiring beneficial ownership of 15% or more of our outstanding common stock or (ii) ten business days (or a later date determined by our Board before the rights are separated from our common stock) after a person or group begins a tender or exchange offer that, if completed, would result in that person or group becoming an acquiring person. The issuance of preferred stock pursuant to the shareholder rights plan would cause substantial dilution to a person or group that attempts to acquire us on terms not approved by our Board of Directors. For a more detailed description of our rights plan, please see “Description of Capital Stock—Rights Plan.”

We believe these provisions protect our shareholders from coercive or otherwise unfair takeover tactics by requiring potential acquirors to negotiate with our Board and by providing our Board with more time to assess any acquisition proposal. These provisions are not intended to make our company immune from takeovers. However, these provisions apply even if the offer may be considered beneficial by some shareholders and could delay or prevent an acquisition that our Board determines is not in the best interests of our company and our shareholders.

We cannot assure you that we will pay any dividends or repurchase shares.

While we currently expect to return value to our shareholders in the form of dividends, there can be no assurance that we will have sufficient surplus under Delaware law to pay any dividends. If we do not pay dividends, the price of our common stock that you receive in the distribution must appreciate for you to receive a gain on your investment in WABCO. This appreciation may not occur. Additionally, while we expect to return value to shareholders in the form of share repurchases, our ability to repurchase shares will be limited by available cash and surplus. Moreover, all decisions regarding the declaration and payment of dividends and share repurchases will be at the sole discretion of our Board and will be evaluated from time to time in light of our financial condition, earnings, capital requirements of our business, covenants associated with certain debt obligations, legal requirements, regulatory constraints, industry practice and other factors that our Board deems relevant.

FORWARD-LOOKING STATEMENTS

Forward-looking statements in our public filings or other public statements are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or other public statements. These forward-looking statements were based on various facts and were derived utilizing numerous important assumptions and other important factors, and changes in such facts, assumptions or factors could cause actual results to differ materially from those in the forward-looking statements. Forward-looking statements include the information concerning our future financial performance, business strategy, projected plans and objectives. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “strategies,” “prospects,” “intends,” “projects,” “estimates,” “plans,” “may increase,” “may fluctuate,” and similar expression or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward looking in nature and not historical facts. You should understand that the following important factors could affect our future results and could cause actual results to differ materially from those expressed in such forward-looking statements:

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adverse developments in general business, economic and political conditions or any outbreak or escalation of hostilities on a national, regional or international basis;

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changes in international or U.S. economic conditions, such as inflation, interest rate fluctuations, foreign exchange rate fluctuations or recessions in our markets;

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unpredictable difficulties or delays in the development of new product technology;

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pricing changes to our supplies or products or those of our competitors, and other competitive pressures on pricing and sales;

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competition in our existing and future lines of business and the financial resources of competitors;

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our failure to comply with regulations and any changes in regulations;

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our failure to complete potential future acquisitions or to realize benefits from completed acquisitions;

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our ability to access debt markets on a favorable basis;

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our inability to implement our growth plan;

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the loss of any of our senior management;

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difficulties in obtaining or retaining the management and other human resource competencies that we need to achieve our business objectives;

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labor relations;

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risks inherent in operating in foreign countries, including exposure to local economic conditions, government regulation, currency restrictions and other restraints, changes in tax laws, expropriation, political instability and diminished ability to legally enforce our contractual rights;

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our inability to operate effectively as a stand-alone, publicly traded company;

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the actual costs of separation may be higher than expected;

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the actual level of commercial vehicle production in our end-markets; and

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periodic changes to contingent liabilities, including those associated with litigation matters, government investigations, environmental matters and tax matters.

Other factors not identified above, including the risk factors described in the “Risk Factors” section of this information statement, may also cause actual results to differ materially from those projected by our forward-looking statements. Most of these factors are difficult to anticipate and are generally beyond our control.

You should consider the areas of risk described above, as well as those set forth under the heading “Risk Factors” above, in connection with considering any forward-looking statements that may be made by us generally. Except for our ongoing obligations to disclose material information under the federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events unless we are required to do so by law.

THE SEPARATION

General

On February 1, 2007, American Standard announced its intention to pursue a plan to separate its three principal operating businesses by spinning off its Vehicle Control Systems business and selling its Bath and Kitchen business, with the Air Conditioning Systems and Services business remaining with American Standard.

In furtherance of this plan, on July 11, 2007, the American Standard Board approved the distribution of all of the shares of our common stock held by American Standard to holders of American Standard common stock. In the distribution of the shares of our common stock, each holder of American Standard common stock will receive on July 31, 2007, the distribution date, one share of our common stock (and a related preferred stock purchase right) for every three shares of American Standard common stock held at the close of business on the record date (excluding fractional shares), as described below. Following the distribution, American Standard shareholders will own 100% of our common stock.

You will not be required to make any payment, surrender or exchange your shares of American Standard common stock or take any other action to receive your shares of our common stock.

Furthermore, the distribution of our common stock as described in this information statement is subject to the satisfaction or waiver of certain conditions. For a more detailed description of these conditions, see “—Conditions to the Distribution.”

Reasons for the Separation

American Standard believes that separating our business from American Standard is in the best interests of American Standard and its shareholders. The separation will provide the separated companies with certain opportunities and benefits that will enhance shareholder value. The following are some of the potential opportunities and benefits:

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Greater Strategic Focus: WABCO’s business has little in common with American Standard’s other businesses in terms of customers, suppliers, technologies, manufacturing processes and distribution. The separation will allow each company to focus on its core business and growth opportunities, and it will provide management with increased flexibility to design and implement corporate policies and strategies based on the business characteristics of the particular company and the industry in which it operates.

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Increased Market Recognition: Following separation, the investment community, including existing and prospective shareholders, rating agencies, analysts and other market participants, will be better able to evaluate the merits of each company and value their performance and potential. Although there can be no assurance, American Standard believes that over time following the separation this better understanding of the separated companies should lead to a higher aggregate market value, on a fully distributed basis and assuming the same market conditions, than if WABCO were to remain a part of American Standard.

•

Improved Capital Flexibility and Access to Capital Markets: Historically, each company’s capital requirements have been satisfied as part of the wider corporate capital budgeting policies of American Standard. The proposed separation will eliminate internal competition for capital among businesses in different industries. Each company will have its own capital structure designed to meet its risk characteristics, investment needs and appropriate leverage requirements at any point in time, and WABCO’s new capital structure is expected to facilitate internal and external expansion (including the potential use of WABCO’s publicly traded stock as acquisition currency) that will be important to remain competitive in its industry. As an independent public company, WABCO will be able to directly access capital markets.

•

Increased Ability to Attract, Retain and Motivate Employees: The separation will permit the creation of WABCO equity securities, the value of which are expected to reflect more closely the efforts and performance of WABCO’s management. Such equity securities should enable WABCO to provide

incentive compensation arrangements for its key employees that are directly related to the market performance of WABCO’s common stock, which should improve the ability of WABCO to attract, retain and motivate qualified personnel.

Neither we nor American Standard can assure you that, following the separation, any of these opportunities or benefits will be realized.

Formation of a Holding Company Prior to the Distribution

In connection with and prior to the distribution, American Standard organized WABCO Holdings Inc. as a Delaware corporation for the purpose of transferring to WABCO all of the assets and liabilities, including any entities holding assets and liabilities, associated with American Standard’s Vehicle Control Systems business.

The Number of Shares You Will Receive

For every three shares of American Standard common stock that you owned at the close of business on July 19, 2007, the record date, you will receive one share of our common stock on the distribution date. American Standard will not distribute any fractional shares of our common stock to its shareholders. Instead, the transfer agent will aggregate fractional shares into whole shares, sell the whole shares in the open market at prevailing market prices and distribute the aggregate net cash proceeds of the sales pro rata (based on the fractional share such holder would otherwise be entitled to receive) to each holder who otherwise would have been entitled to receive a fractional share in the distribution. The transfer agent, in its sole discretion, without any influence by American Standard or us, will determine when, how, through which broker-dealer and at what price to sell the whole shares. Any broker-dealer used by the transfer agent will not be an affiliate of either American Standard or us. Recipients of cash in lieu of fractional shares will not be entitled to any interest on the amounts of payment made in lieu of fractional shares.

When and How You Will Receive the Dividend

American Standard will distribute the shares of our common stock on July 31, 2007, the distribution date. The Bank of New York, which currently serves as the transfer agent and registrar for American Standard’s common stock, will serve as transfer agent and registrar for our common stock and as distribution agent in connection with the distribution.

If you own American Standard common stock as of the close of business on the record date, the shares of WABCO common stock that you are entitled to receive in the distribution will be issued electronically, as of the distribution date, to you or to your bank or brokerage firm on your behalf by way of direct registration in book-entry form. Registration in book-entry form refers to a method of recording stock ownership when no physical share certificates are issued to shareholders, as is the case in this distribution. If you sell shares of American Standard common stock in the “regular-way” market up to and including through the distribution date, you will be selling your right to receive shares of WABCO common stock in the distribution.

Commencing on or shortly after the distribution date, if you hold physical stock certificates that represent your shares of American Standard common stock and you are the registered holder of the American Standard shares represented by those certificates, the distribution agent will mail to you an account statement that indicates the number of shares of our common stock that have been registered in book-entry form in your name. You should keep your physical stock certificates; you need not send your physical stock certificates to us or The Bank of New York. If you have any questions concerning the mechanics of having shares of our common stock registered in book-entry form, we encourage you to contact The Bank of New York at the address set forth on page 9 of this information statement.

Most American Standard shareholders hold their shares of American Standard common stock through a bank or brokerage firm. In such cases, the bank or brokerage firm would be said to hold the stock in “street name” and ownership would be recorded on the bank or brokerage firm’s books. If you hold your American

Standard common stock through a bank or brokerage firm, your bank or brokerage firm will credit your account for the shares of our common stock that you are entitled to receive in the distribution. If you have any questions concerning the mechanics of having shares of our common stock held in “street name,” we encourage you to contact your bank or brokerage firm.

The Bank of New York, as distribution agent, will not deliver any fractional shares of our common stock in connection with the distribution. Instead, The Bank of New York will aggregate all fractional shares and sell them on behalf of the holders who otherwise would be entitled to receive fractional shares. The aggregate net cash proceeds of these sales, which generally will be taxable for U.S. federal income tax purposes, will be distributed pro rata (based on the fractional share such holder would otherwise be entitled to receive) to each holder who otherwise would have been entitled to receive a fractional share in the distribution. See “Material U.S. Federal Income Tax Consequences of the Distribution” below for an explanation of the tax consequences of the distribution. If you physically hold American Standard common stock certificates and are the registered holder, you will receive a check from the distribution agent in an amount equal to your pro rata share of the aggregate net cash proceeds of the sales. We estimate that it will take approximately two weeks from the distribution date for the distribution agent to complete the distributions of the aggregate net cash proceeds. If you hold your American Standard stock through a bank or brokerage firm, your bank or brokerage firm will receive on your behalf your pro rata share of the aggregate net cash proceeds of the sales and will electronically credit your account for your share of such proceeds.

Results of the Separation

After our separation from American Standard, we will be a separate publicly traded company. Based on the number of registered holders of American Standard common stock on July 10, 2007, we expect to have, immediately following the distribution, approximately 715 holders of record (which includes a significant number of shares that are beneficially owned by individuals or entities and registered in the name of The Depository Trust Company) and approximately 68 million shares of our common stock outstanding. The actual number of shares to be distributed will be determined on the record date and will reflect any exercise of American Standard options, repurchase of shares and issuance of shares to American Standard employee benefit plans between the date the American Standard Board declares the dividend for the distribution and the record date for the distribution. Additionally, the number of shares to be distributed will be reduced to the extent that cash payments are to be made in lieu of the issuance of fractional shares of our common stock.

For a more detailed description of these agreements, see “Certain Relationships and Related Party Transactions.”

The distribution will not affect the number of outstanding shares of American Standard common stock or any rights of American Standard shareholders.

April 30, 2007), (iii) $37.8 million associated with incremental tax costs in connection with the legal reorganization of American Standard prior to and in connection with the WABCO separation, (iv) $2-$4 million of costs relating to IT infrastructure and (v) $3-$5 million of other separation related costs, which would include employee retention and relocation, insurance costs, new branding costs, and other similar costs. This is our best estimate for the separation costs and the actual costs may differ from this estimate.

Of the $57.5-$61.5 million of separation costs, approximately $8.7 million would not have to be funded with cash as the item relates to equity instruments (combination of stock options and restricted stock units). The cost of $6 million associated with the early redemption of the bonds will be paid out of American Standard operating cash flow prior to the distribution. The remaining costs expected to be incurred will be paid out of our operating cash flow at the time payments become due. Of the $57.5-$61.5 million of anticipated separation costs, approximately $37.8 million is related to incremental tax costs. In connection with these incremental taxes, it is expected that WABCO will incur a charge to the income statement of approximately $8.5 million. Transaction related costs for legal, accounting, and advisory services will be the responsibility of American Standard and have not been included in the estimate above.

Material U.S. Federal Income Tax Consequences of the Distribution

The following is a summary of material U.S. federal income tax consequences of the distribution. This summary is based on the Code, Treasury regulations promulgated thereunder and on judicial and administrative interpretations of the Code, all as in effect on the date of this information statement, and is subject to changes in these or other governing authorities, any of which may have a retroactive effect. This summary assumes that the distribution will be consummated in accordance with the Separation and Distribution Agreement and as described in this information statement. This summary does not purport to be a complete description of all federal income tax consequences of the distribution nor does it address the effects of any state, local or foreign tax laws or U.S. tax laws other than those relating to income taxes on the distribution. The tax treatment of an American Standard shareholder may vary depending upon that shareholder’s particular situation, and certain shareholders (including, but not limited to, insurance companies, tax-exempt organizations, financial institutions, broker-dealers, partners in partnerships that hold stock in American Standard, pass-through entities, traders in securities who elect to apply a mark-to-market method of accounting, shareholders who hold their American Standard stock as part of a “hedge,” “straddle,” “conversion,” or “constructive sale transaction,” individuals who received American Standard common stock upon the exercise of employee stock options or otherwise as compensation and non-U.S. shareholders) may be subject to special rules not discussed below. The summary assumes that the American Standard shareholders hold their American Standard common stock as capital assets within the meaning of Section 1221 of the Code.

Each shareholder is urged to consult its tax advisor as to the specific tax consequences of the distribution to that shareholder, including the effect of any state, local or foreign tax laws or U.S. tax laws other than those relating to income taxes and of changes in applicable tax laws.

The distribution is conditioned upon American Standard’s receipt of a private letter ruling from the IRS substantially to the effect that the distribution qualifies as tax-free for U.S. federal income tax purposes under Section 355 of the Code. American Standard received this private letter ruling on July 10, 2007. This ruling is based on, among other things, certain assumptions as well as on the accuracy of certain factual representations and statements that we and American Standard made to the IRS. In rendering the ruling, the IRS also relied on certain covenants that we and American Standard entered into, including the adherence by American Standard and us to certain restrictions on our future actions. Although a private letter ruling from the IRS is generally binding on the IRS, if any of the representations or statements that we or American Standard made are, or become, inaccurate or incomplete, or if we or American Standard breach any of our covenants, the distribution might not qualify as tax-free for U.S. federal income tax purposes under Section 355 of the Code. This distribution is also conditioned upon the receipt by American Standard of an opinion of Skadden, Arps, Slate, Meagher & Flom LLP, tax counsel to American Standard, substantially to the effect that distribution will qualify as tax-free to American Standard shareholders under Section 355 and related provisions of the Code.

The Distribution

Assuming that the distribution qualifies as tax-free for U.S. federal income tax purposes under Section 355 of the Code, the following describes material U.S. federal income tax consequences to us, American Standard and American Standard shareholders:

•

neither we nor American Standard will recognize any gain or loss upon the distribution of WABCO common stock and no amount will be includable in our income or that of American Standard as a result of the distribution other than taxable income or gain arising out of internal restructurings undertaken in connection with the separation and with respect to any “excess loss account” or “intercompany transaction” required to be taken into account by American Standard under Treasury regulations relating to combined federal income tax returns;

•

an American Standard shareholder will not recognize income, gain, or loss as a result of the receipt of our common stock pursuant to the distribution, except with respect to any cash received in lieu of fractional shares of our common stock;

•

an American Standard shareholder’s tax basis in such shareholder’s American Standard common stock and in our common stock received in the distribution (including any fractional share interest in our common stock for which cash is received) will equal such shareholder’s tax basis in its American Standard common stock immediately before the distribution, allocated between the American Standard common stock and our common stock (including any fractional share interest of our common stock for which cash is received) in proportion to their relative fair market values on the date of the distribution;

•

an American Standard shareholder’s holding period for our common stock received in the distribution (including any fractional share interest of our common stock for which cash is received) will include the holding period for that shareholder’s American Standard common stock; and

•

an American Standard shareholder who receives cash in lieu of a fractional share of our common stock in the distribution will be treated as having sold such fractional share for cash, and will generally recognize capital gain or loss in an amount equal to the difference between the amount of cash received and the American Standard shareholder’s adjusted tax basis in the fractional share. That gain or loss will be long-term capital gain or loss if the shareholder’s holding period for its American Standard common stock exceeds one year.

U.S. Treasury regulations require each American Standard shareholder who receives our common stock in the distribution to attach to the shareholder’s U.S. federal income tax return for the year in which the stock is received a detailed statement setting forth such data as may be appropriate to demonstrate the applicability of Section 355 of the Code to the distribution. Within a reasonable period of time after the distribution, American Standard will provide to our shareholders, either directly or through our shareholders’ banks or brokerage firms, the information necessary to comply with this requirement.

Material U.S. Federal Income Tax Consequences if the Distribution Were Taxable

Notwithstanding receipt by American Standard of the private letter ruling and opinion of counsel, the IRS could assert successfully that the distribution was taxable and the above consequences would not apply and both American Standard and holders of American Standard common stock who received shares of our common stock in the distribution could be subject to tax, as described below. In addition, future events that may or may not be within American Standard’s or our control, including acquisitions of a significant portion of American Standard common stock or our common stock, could cause the distribution not to qualify as tax-free to American Standard and/or holders of American Standard common stock. Depending on the circumstances, we may be required to indemnify American Standard for some or all of the taxes and losses resulting from the distribution not qualifying as tax-free for U.S. federal income tax purposes under Section 355 of the Code. See “Certain Relationships and Related Party Transactions—Agreements with American Standard—Tax Sharing Agreement.”

If the distribution were to fail to qualify under Section 355 of the Code, then:

•

American Standard would recognize gain in an amount equal to the excess of the fair market value of WABCO common stock on the date of the distribution distributed to American Standard shareholders (including any fractional shares sold on behalf of the shareholder) over American Standard’s adjusted tax basis in our stock;

•

each American Standard shareholder who received our common stock in the distribution would be treated as having received a taxable distribution in an amount equal to the fair market value of such stock (including any fractional shares sold on behalf of the shareholder) on the distribution date. That distribution would be taxable to the shareholder as a dividend to the extent of American Standard’s current and accumulated earnings and profits. Any amount that exceeded American Standard’s earnings and profits would be treated first as a non-taxable return of capital to the extent of the American Standard shareholder’s tax basis in its American Standard common stock (which amounts would reduce such shareholder’s tax basis in its American Standard common stock), with any remaining amounts being taxed as capital gain;

•

certain shareholders would be subject to additional special rules governing taxable distributions, such as those that relate to the dividends received deduction and extraordinary dividends; and

•

a shareholder’s tax basis in our common stock received generally would equal the fair market value of WABCO common stock on the distribution date, and the holding period for that stock would begin the day after the distribution date. The holding period for the shareholder’s American Standard common stock would not be affected by the fact that the distribution was taxable.

Even if the distribution otherwise qualifies as tax-free for U.S. federal income tax purposes under Section 355 of the Code, it could be taxable to American Standard under Section 355(e) of the Code if one or more persons were to acquire directly or indirectly stock representing a 50% or greater interest by vote or value, in American Standard or us during the four-year period beginning on the date which is two years before the date of the distribution, as part of a plan or series of related transactions that includes the distribution. If such an acquisition of our stock or American Standard’s stock were to trigger the application of Section 355(e), American Standard would recognize taxable gain as described above, but the distribution would be tax-free to each American Standard shareholder.

In connection with the distribution, we and American Standard have entered into a Tax Sharing Agreement pursuant to which we each agreed to be responsible for certain liabilities and obligations following the distribution. Our indemnification obligations will include a covenant to indemnify American Standard for any taxes that it and its subsidiaries incur if the distribution of our common stock by American Standard were to fail to qualify as tax-free for U.S. federal income tax purposes under Section 355 of the Code unless such failure is attributable to certain post-distribution actions taken by American Standard or any of its subsidiaries or shareholders. We also will be responsible for any taxes resulting from certain transactions undertaken prior to and in connection with the distribution of our common stock by American Standard unless such taxes arise as a result of certain actions by American Standard, its subsidiaries or its shareholders after the distribution. In addition, even if we were not contractually required to indemnify American Standard for tax liabilities if the distribution, together with certain related transactions, were to fail to qualify as tax-free for U.S. federal income tax purposes, we nonetheless could be legally liable under applicable tax law for such liabilities if American Standard were to fail to pay them. See “Certain Relationships and Related Party Transactions—Agreements with American Standard—Tax Sharing Agreement” for a more detailed discussion of the Tax Sharing Agreement.

The foregoing is a summary of material U.S. federal income tax consequences of the distribution under current law. The foregoing does not purport to address all U.S. federal income tax consequences or tax consequences that may arise under the tax laws of other jurisdictions or that may apply to particular categories of shareholders. Each American Standard shareholder should consult its tax advisor as to the particular tax consequences of the distribution to such shareholder, including the application of U.S. federal, state, local and foreign tax laws, and the effect of possible changes in tax laws that may affect the tax consequences described above.

Market for Common Stock

A condition to the distribution is the listing on the NYSE of our common stock. We have applied to list our common stock on the NYSE under the symbol “WBC.”

Trading Between the Record Date and Distribution Date

Beginning on or shortly before the record date and continuing up to and including through the distribution date, there will be two markets in American Standard common stock: a “regular-way” market and an “ex-distribution” market. Shares of American Standard common stock that trade on the regular way market will trade with an entitlement to shares of our common stock distributed pursuant to the distribution. Shares that trade on the ex-distribution market will trade without an entitlement to shares of our common stock distributed pursuant to the distribution. Therefore, if you sell shares of American Standard common stock in the “regular- way” market up to and including through the distribution date, you will be selling your right to receive shares of WABCO common stock in the distribution. If you own shares of American Standard common stock at the close of business on the record date and sell those shares on the “ex-distribution” market, up to and including through the distribution date, you will still receive the shares of our common stock that you would be entitled to receive pursuant to your ownership of the shares of American Standard common stock.

Furthermore, beginning on July 17, 2007 and continuing up to and including through the distribution date, there will be a “when-issued” market in our common stock. “When-issued” trading refers to a sale or purchase made conditionally because the security has been authorized but not yet issued. The “when-issued” trading market will be a market for shares of our common stock that will be distributed to American Standard shareholders on the distribution date. If you owned shares of American Standard common stock at the close of business on the record date, you would be entitled to shares of our common stock distributed pursuant to the distribution. You may trade this entitlement to shares of our common stock, without the shares of American Standard common stock you own, on the “when-issued” market. On the first trading day following the distribution date, “when issued” trading with respect to our common stock will end and “regular-way” trading will begin.

Conditions to the Distribution

We expect that the distribution will be effective on July 31, 2007, the distribution date, provided that, among other conditions described in this information statement, the following conditions shall have been satisfied or, if permissible under the Separation and Distribution Agreement, waived by American Standard:

•

the SEC shall have declared effective our registration statement on Form 10, of which this information statement is a part, under the Exchange Act, and no stop order relating to the registration statement is in effect;

•

American Standard shall have received a private letter ruling from the IRS and a legal opinion of Skadden, Arps, Slate, Meagher & Flom LLP substantially to the effect that the distribution qualifies as tax-free for U.S. federal income tax purposes under Section 355 of the Code;

•

the listing of our common stock on the NYSE shall have been approved, subject to official notice of issuance; and

•

The fulfillment of the foregoing conditions does not create any obligations on American Standard’s part to effect the distribution, and American Standard, in its sole discretion, may amend, modify or abandon the distribution at any time prior to the distribution date.

Reason for Furnishing This Information Statement

This information statement is being furnished solely to provide information to American Standard shareholders who are entitled to receive shares of WABCO common stock in the distribution. The information statement is not, and is not to be construed as an inducement or encouragement to buy, hold or sell any of our securities. We believe that the information in this information statement is accurate as of the date set forth on the cover. Changes may occur after that date and neither American Standard nor we undertake any obligation to update such information except in the normal course of our respective public disclosure obligations.

DIVIDEND AND SHARE REPURCHASE POLICY

We expect to return value to shareholders in the form of dividends and share repurchases, but only if and to the extent declared by our Board of Directors and permitted by applicable law. At separation, we will have an $800 million credit facility in place that will be available to repurchase shares and meet short-term requirements. The $800 million credit facility may also be used to pay a fine or provide a bank guarantee that will be required pursuant to a decision relating to the European Commission investigation matter as further described under the heading “Business—Legal Proceedings—The European Commission Investigation.” The declaration and payment of dividends and share repurchases will be at the sole discretion of our Board and will be evaluated from time to time in light of our financial condition, earnings, capital requirements of our business, covenants associated with certain debt obligations, legal requirements (including compliance with the IRS private letter ruling), regulatory constraints, industry practice and other factors that our Board of Directors deems relevant. If we do declare a dividend or repurchase shares, there can be no assurance that we will continue to pay dividends or repurchase shares.

CAPITALIZATION

WABCO will have a financially conservative capital structure that will allow it to maintain flexibility as a stand alone company and support long-term business growth. Outstanding indebtedness as of March 31, 2007 includes Euro denominated long-term bonds as well as bank debt, capital leases and overdraft financing. We expect to draw on as needed our new primary bank facility of $800 million to fund potential repurchases of our shares and to meet short-term requirements. Additionally, the facility may be used to pay a fine or provide a bank guarantee that will be required pursuant to a decision relating to the European Commission investigation matter as further described under the heading “Business—Legal Proceedings—The European Commission Investigation.” We are also in the process of establishing a credit facility in the amount of $20 million for our China operations, which will be drawn upon in local currency and used for general corporate purposes. The credit facility relating to our China operations is expected to be available and drawn upon prior to the separation.

The following table, which should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and accompanying notes included elsewhere herein, sets forth our combined capitalization as of March 31, 2007 on a historical basis, and on a pro forma basis reflecting elimination of long-term Euro denominated bonds.


	As of March 31, 2007
(dollars in millions)	Actual		Pro Forma
Cash and cash equivalents	$	31.6	$	31.6

Short term debt:		12.6		12.6
Long-term debt:
Euro 7.59% Guaranteed Senior Bonds due 2013		40.0		—
Bank borrowings and capital leases		25.9		25.9

Total long-term debt		65.9		25.9

Total Debt		78.5		38.5
Total Owners’ Net Investment/Shareowners’ Equity		310.2		471.1

Total capitalization	$	388.7	$	509.6

Notes:

The table does not include any anticipated drawdowns under the new credit facility of $800 million to fund potential repurchases of our shares, to meet short-term requirements, or to pay a fine or provide a bank guarantee in connection with the European Commission investigation, or the $20 million facility to fund operations in China. For a more detailed description, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial Condition.”

SELECTED FINANCIAL DATA

The following table presents our selected historical financial data and operating statistics. Except with respect to pro forma shares and per share amounts, the combined consolidated statement of income data for each of the years in the three-year period ended December 31, 2006 and the combined consolidated balance sheet data as of December 31, 2006 and 2005 have been derived from our audited financial statements included elsewhere herein. The condensed consolidated statement of income data for the three months ended March 31, 2007 and 2006, and the condensed consolidated balance sheet as of March 31, 2007 are derived from the unaudited financial statements included elsewhere herein. The combined consolidated statement of income data for the years ended December 31, 2003 and 2002 and the combined consolidated balance sheet data as of December 31, 2004, 2003 and 2002 are derived from the unaudited financial statements not included elsewhere herein. The unaudited financial statements have been prepared on the same basis as the audited financial statements and, in the opinion of our management, include all adjustments, consisting only of normal recurring adjustments and allocations, necessary for a fair presentation of the information set forth herein.

The selected historical financial data and operating statistics presented below should be read in conjunction with our financial statements and accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere herein. Our financial information may not be indicative of our future performance and does not necessarily reflect what our financial position and results of operations would have been had we operated as a separate, stand-alone entity during the periods presented, including changes that will occur in our operations and capitalization as a result of the separation and distribution from American Standard. Refer to “Unaudited Pro Forma Financial Statements” for a further description of the anticipated changes.


	Three Months Ended March 31,						Year Ended December 31,
(in millions)	2007			2006			2006			2005			2004			2003			2002
Income Statement Data:
Sales	$	558.8		$	479.9		$	2,015.2		$	1,831.0		$	1,723.8		$	1,358.2		$	1,057.1
Costs, expenses and other income:
Cost of Sales		406.1			341.3			1,463.5			1,312.5			1,252.4			972.3			767.6
Selling and administrative expenses		68.7			63.3			255.0			233.5			212.7			176.3			140.7
Product Engineering		21.3			17.9			72.2			73.5			66.2			63.5			52.3
Equity in net (income) of unconsolidated joint ventures		(4.8	)		(7.1	)		(23.3	)		(24.5	)		(20.2	)		(19.4	)		(18.2	)
Other (Income) expense		4.1			2.1			10.8			5.4			0.1			17.4			9.2
Net interest expense/(income)—related party		0.4			0.5			6.2			(6.0	)		(5.4	)		(3.8	)		(7.3	)
Interest expense		2.0			0.5			5.1			3.9			3.4			3.0			0.4

		497.8			418.5			1,789.5			1,598.3			1,509.2			1,209.3			944.7

Income before income taxes		61.0			61.4			225.7			232.7			214.6			148.9			112.4
Income taxes(a)		20.9			20.8			87.9			87.4			23.2			36.6			30.6

Net Income	$	40.1		$	40.6		$	137.8		$	145.3		$	191.4		$	112.3		$	81.8


	Three Months Ended March 31,				Year Ended December 31,
(in millions, except per share amounts)	2007		2006		2006		2005		2004		2003		2002
Pro forma net income per common share
Basic	$	0.60	$	0.61	$	2.05	$	2.17	$	2.85	$	1.67	$	1.22
Diluted	$	0.58	$	0.59	$	2.00	$	2.11	$	2.77	$	1.63	$	1.19
Pro forma common shares outstanding (b)
Basic		67.1		67.1		67.1		67.1		67.1		67.1		67.1
Diluted		69.0		69.0		69.0		69.0		69.0		69.0		69.0



	Three Months Ended March 31,		Year Ended December 31,
	2007		2006		2005		2004		2003		2002
Balance Sheet Data (at end of period):
Total assets	$	1,348.3	$	1,276.9	$	1,095.4	$	1,182.2	$	1,017.1	$	731.2
Total third party debt	$	78.5	$	75.2	$	44.4	$	54.7	$	50.7	$	10.8
Total Owners’ Net Investment	$	310.2	$	315.2	$	310.8	$	313.3	$	256.2	$	318.1

(a)

The income tax provision for 2006 included a $9.6 million charge related to adjustments of accruals for tax contingencies. This charge was partially offset by a $2.8 million benefit related to the reductions of tax contingencies and a $4.9 million benefit representing a true up of the foreign tax earnings under Section 965 of the American Jobs Creation Act of 2004.

The income tax provision for 2005 included benefits of $18.3 million from the resolution of tax audits and $4.5 million related to the impact of certain tax planning initiatives on prior tax years. Partially offsetting these benefits was a charge of $16 million associated with remitting foreign earnings under Section 965 of the American Jobs Creation Act of 2004. The combined effect of the net tax benefits that occurred in 2005, together with other ongoing tax planning activities, resulted in an effective income tax rate of 37.6% for the year.

Income taxes in 2004 included a $5.5 million benefit for the resolution of tax audits, a $7.1 million benefit relating to a reduction in withholding tax liabilities due to a decision not to distribute the earnings of certain foreign subsidiaries, and a $24.3 million benefit relating to changes in tax legislation. The combined effect of these tax benefits resulted in an effective tax rate of 10.8% in 2004.

(b)

The pro forma number of common shares outstanding for basic and diluted earnings per share was determined by applying the distribution ratio of one share of WABCO common stock for every three shares of American Standard common shares outstanding and including the effect of dilutive American Standard common stock equivalents as of March 31, 2007. As of March 31, 2007, there were no outstanding common stock equivalents that were excluded from the diluted pro forma net income per common share calculation.

For a comparative analysis of certain line items in the Income Statement Data and Balance Sheet Data section of this table, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which follows.

UNAUDITED PRO FORMA FINANCIAL STATEMENTS

The unaudited pro forma financial information presented below has been derived from WABCO’s unaudited financial statements as of and for the three months ended March 31, 2007, and the audited financial statements for the year ended December 31, 2006. The pro forma adjustments and notes to the pro forma financial information give effect to the transactions described below. The unaudited pro forma financial information should be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and WABCO’s financial statements and notes related to those financial statements included elsewhere in this registration statement.

The unaudited pro forma statements of income for the three months ended March 31, 2007 have been prepared as if the transactions described below had occurred as of January 1, 2006. The unaudited pro forma statements of income for the year ended December 31, 2006 have been prepared as if the transactions described below had occurred as of January 1, 2006. The unaudited pro forma interim Balance Sheet as of March 31, 2007 has been prepared as if the transactions described below occurred on March 31, 2007. The pro forma adjustments are based on the best information available and assumptions that management believes are reasonable given the information available; however, such adjustments are subject to change based upon the finalization of the terms of the separation and the underlying separation agreements. The unaudited pro forma financial information is for illustrative and informational purposes only and is not intended to represent, or be indicative of, what WABCO’s results of operations or financial position would have been had the transactions contemplated by the separation and distribution and related transactions occurred on the dates indicated. The unaudited pro forma financial information also should not be considered representative of WABCO’s future results of operations or financial position.

The following unaudited pro forma financial statements have been adjusted to give effect to the following separation transactions, which are described in more detail in the notes to the unaudited pro-forma financial statements:

•

Termination of WABCO’s participation in American Standard’s receivable financing facilities.

•

Assumption of tax liabilities related to tax returns related to certain non-WABCO American Standard entities.

•

Elimination of intercompany interest expense associated with WABCO loans from American Standard.

•

Redemption of long-term Euro denominated bonds of $40.0 million and associated interest expense.

•

Issuance of founders’ grant to WABCO employees, founder’s grant and initial equity award to the CEO, and initial grant to Board of Directors.

•

Recording of incremental tax costs in connection with the legal reorganization undertaken in connection with the separation.

WABCO Holdings Inc.

UNAUDITED PRO FORMA COMBINED CONSOLIDATED STATEMENT OF INCOME

For the Three Months Ended March 31, 2007

(in millions)

Historical

Pro Forma Adjustments

Pro Forma

(a)

(b)

(c)

(d)

Sales

558.8

Costs and expenses and other expense:

Cost of sales

406.1

Selling and administrative expenses

68.7

0.7

69.4

Product engineering

21.3

Equity in net (income) of unconsolidated joint ventures

(4.8

)

(4.8

)

Other expense, net

4.1

(1.8

)

2.3

Net interest expense/(income)—related party

0.4

(0.4

)

—

Interest expense

2.0

(0.7

)

1.3

497.8

(1.8

)

(0.4

)

(0.7

)

0.7

495.6

Income before income taxes

61.0

(1.8

)

(0.4

)

(0.7

)

0.7

63.2

Income taxes

20.9

0.6

0.1

0.2

(0.2

)

21.6

(e)

Net income

40.1

(1.2

)

(0.3

)

(0.5

)

0.5

41.6

Pro forma basic earnings per share (g)

0.60

0.62

Pro forma diluted earnings per share (g)

0.58

0.60

For the Year Ended December 31, 2006

(in millions)

Historical

Pro Forma Adjustments

Pro Forma

(a)

(b)

(c)

(d)

Sales

2,015.2

Costs, expenses and other income:

Cost of sales

1,463.5

Selling and administrative expenses

255.0

2.9

257.9

Product engineering

72.2

Equity in income of unconsolidated joint ventures

(23.3

)

(23.3

)

Other expense, net

10.8

(5.7

)

5.1

Net interest expense/(income)—related party

6.2

(6.2

)

—

Interest expense

5.1

(2.9

)

2.2

1,789.5

(5.7

)

(6.2

)

(2.9

)

2.9

1,777.6

Income before income taxes

225.7

(5.7

)

(6.2

)

(2.9

)

2.9

237.6

Income taxes

87.9

2.1

2.2

1.0

(1.0

)

92.2

(e)

Net income

137.8

(3.6

)

(4.0

)

(1.9

)

1.9

145.4

Pro forma basic earnings per share (g)

2.05

2.17

Pro forma diluted earnings per share (g)

2.00

2.11

WABCO Holdings Inc.

UNAUDITED PRO FORMA BALANCE SHEET

As of March 31, 2007

(in millions)

Historical

Pro Forma Adjustments

Pro
Forma

(a)

(c)

(f)

(h)

ASSETS

Current assets:

Cash and cash equivalents

31.6

46.0

31.6

(46.0

)

Accounts receivable

223.3

169.5

392.8

Inventories

156.8

Future income tax benefits

14.5

Retained Interest in securitization program

19.1

(19.1

)

—

Other current assets

53.1

Total current assets

498.4

150.4

—

648.8

Facilities, at cost, net of accumulated depreciation

298.5

Goodwill

348.1

Capitalized software costs, net of accumulated amortization—$71.5 in 2006

36.4

Long-term future income tax benefits

42.0

Investment in associated companies

85.4

Other assets

39.5

TOTAL ASSETS

1,348.3

150.4

—

1,498.7

LIABILITIES AND OWNERS’ NET INVESTMENT

Current liabilities:

Loans payable to banks

12.6

Accounts payable

176.0

Accrued payrolls

76.7

Current portion of warranties

38.6

Taxes on income

42.8

Cash collected on behalf of banks—securitization

65.7

(65.7

)

—

Other accrued liabilities

94.6

14.9

109.5

Total current liabilities

507.0

(65.7

)

—

14.9

456.2

Long-term debt

65.9

(40.0

)

25.9

Other long-term liabilities:

Post-retirement benefits

368.2

Warranties

3.9

Deferred tax liabilities

18.5

Minority interest

11.1

Other

63.5

57.4

22.9

143.8

Total liabilities

1,038.1

(65.7

)

(40.0

)

57.4

37.8

1,027.6

Owners’ net investment

301.1

216.1

46.0

(57.4

)

(37.8

)

462.0

(6.0

)

Accumulated other comprehensive income:

Foreign currency translation effects

82.3

Unrealized losses on benefit plans, net of tax

(73.2

)

(73.2

)

Total owners’ net investment

310.2

216.1

40.0

(57.4

)

(37.8

)

471.1

TOTAL LIABILITIES AND OWNERS’ NET INVESTMENT

1,348.3

150.4

—

1,498.7

WABCO Holdings Inc.

Notes to Unaudited Pro Forma Financial Information

Notes

Certain separation related costs are based on WABCO’s estimates and not on revised contracts or written agreements, and as such, have not been included as pro forma adjustment. Those costs include IT infrastructure and other system transition/implementation costs of $2-$4 million, a portion of which will be capitalized and amortized. In addition, those costs include other separation related costs, which would include employee retention/relocation, insurance costs, new branding costs, and other similar costs of approximately $3-$5 million.

The pro forma adjustments do not include the anticipated drawdown under a new credit facility of $800 million to fund potential repurchases of our shares, to meet short-term requirements or to pay a fine or provide a bank guarantee in connection with the European Commission investigation described under the heading “Business—Legal Proceedings—The European Commission Investigation.”

The pro forma income statement adjustments also do not currently reflect certain foreign tax planning that is expected to benefit WABCO in 2007 and future years. The annual tax benefit associated with this planning is currently expected to reduce the pro forma effective tax rate to approximately 25% – 28% following the separation. The actual benefit that will ultimately be realized is dependent upon various valuation and foreign tax and legal matters associated with the separation transactions. Additionally, the pro forma balance sheet adjustments do not reflect certain deferred tax assets relating to foreign net operating loss carryforwards generated by American Standard which may be available to WABCO following the separation transactions. These amounts are not determinable at this time as they are also dependent upon various valuation and foreign tax and legal matters associated with the separation transactions.

(a)

Represents the elimination of the accounts receivable securitization programs. As further described in Note 9 in the Notes to the Annual Financial Statements and in Note 9 in the Notes to Quarterly Financial Statements, WABCO participates in American Standard’s asset securitization program established in Europe with a major international bank. Under this program, WABCO sells interests in certain receivables, through a special purpose entity, to a conduit administered by the bank. In addition, WABCO sells the receivables generated on sales of product to its U.S. joint venture Meritor WABCO to a subsidiary of American Standard. In accordance with the terms of American Standard’s existing receivable financing facility, the separation and distribution of WABCO will require its withdrawal from the facility. The separation will also result in the separation of WABCO and the purchaser of the receivables due to WABCO from Meritor WABCO requiring termination of that arrangement. Accordingly, the impact of terminating these arrangements as of March 31, 2007 has been presented as a pro forma adjustment to the historical balance sheet, which includes an adjustment to accounts receivable for $169.5 million, as follows:


Third-party receivables sold as of March 31, 2007	$	216.1 million
Receivables due from Meritor WABCO as of March 31, 2007		22.0 million

		238.1 million
Collections prior to March 31, 2007 ⁽¹⁾		(65.7) million
Other accruals associated with the securitization program		(2.9) million

Adjustment to receivables	$	169.5 million

⁽¹⁾

In connection with American Standard’s servicing obligation under the facility, subsequent to the sale of the abovementioned interests, but prior to March 31, 2007, approximately $65.7 million had been collected on behalf of the purchaser of such interests.

As a result of the separation and distribution of WABCO, we will no longer sell these interests and receivables to American Standard.

The adjustment to owners’ net investment of $216.1 million represents financing required by the elimination of the securitization programs. This has been presented as a net addition to owners’ net investment because it will be financed by American Standard prior to the distribution. Actual losses on the sale of the receivables during the year ended December 31, 2006 and the three months ended March 31, 2007 amounted to $5.7 million and $1.8 million, respectively.

(b)

Represents an adjustment for related party interest expense for the year ended December 31, 2006 and the three months ended March 31, 2007 of $6.2 million and $0.4 million, respectively. For financial statement presentation all of the inter-company loans to and from American Standard have been classified in the owners’ net investment section of the balance sheet since any settlement of intercompany balances will be achieved by either a distribution or capitalization of the balances. As a result, there will not be a net inflow or outflow of assets or liabilities, except for the intercompany balances.

(c)

The separation and distribution of WABCO would have created an event of default under the terms of the 7.59% Euro denominated bonds. On April 30, 2007, the company redeemed the $40.0 million of outstanding bonds and paid $6.0 million in early-termination premiums. Accordingly, the redemption of these bonds and the associated interest expense for the year ended December 31, 2006 and the three months ended March 31, 2007 was $2.9 million and $0.7 million, respectively, determined based on the stated interest rate and the carrying value as of December 31, 2006 and March 31, 2007 have been included as pro forma adjustments. The $46.0 million paid to the bondholders, including the $6.0 million loss on the redemption of this debt have been presented as a net addition to owners’ investment since this will be financed by American Standard. There is not an adjustment for the loss on bond redemption of $6 million to the pro forma income statement since this item will not have a continuing impact on the performance of WABCO. The bonds are not expected to be replaced in conjunction with the spinoff.

(d)

Represents an adjustment for equity awards, which have been approved by the Management Development and Compensation Committee of American Standard and will be distributed to WABCO employees, the CEO, and the Board of Directors in connection with the separation totaling $8.7 million (which amount includes a $6 million founders’ grant consisting of stock options and restricted stock units for certain WABCO employees, $2.2 million in a combination of a founder’s grant and an initial equity award grant consisting of stock options and restricted stock units for the CEO and $0.5 million in restricted stock units for the Board of Directors). The dollar values associated with the stock options and restricted stock units are fixed and the number of options and restricted stock units will be determined at the distribution date. The number of options will be based on the value as derived using the Black-Scholes model applying assumptions consistent with those used to value American Standard stock options. The number of restricted stock units will be determined based on the price of the WABCO shares on the distribution date. In total the value of equity instruments being distributed upon distribution is $8.7 million which will be expensed to the statement of income over a 3 year period. The pro-forma adjustment for the year ended December 31, 2006 and the three months ended March 31, 2007 was $2.9 million and $0.7 million, respectively. These adjustments represent the expense associated with the stock options and restricted stock units.

(e)

Represents the estimated income tax associated with each pro forma adjustment calculated based on the local statutory tax rates of the country where the expense and/or income is expected to be incurred and/or generated. The following is a summary of the calculated effective tax rates utilized for each statement of income pro forma adjustment:


	Pro Forma Adjustment
	(a)	(b)	(c)	(d)
Average Effective Rate applied for March 31, 2007 and December 31, 2006	36.0%	34.7%	35.1%	35.0%
Applicable Country(s)	Germany	Germany	Belgium	Belgium
	UK	Belgium		Germany
	Netherlands	Sweden		U.S.
		Brazil
		China

(f)

As part of the separation, certain income tax liabilities in the amount of $57.4 million, as previously accrued by American Standard, will be transferred to WABCO. The amount represents accruals for contingent income tax liabilities associated with all of the non-U.S. legal entities of American Standard’s Bath and Kitchen business and is applicable to its open tax years which include years dating back to 2000 that are subject to examination by non-U.S. tax authorities. The assignment of the liability was determined by management of American Standard as stipulated in Section 2.03 (a) and (b) of the Tax Sharing Agreement. Pursuant to the broader American Standard separation transaction, an allocation of certain liabilities was made relating to American Standard’s businesses, including these tax liabilities, based among other things, on American Standard’s assessment of WABCO’s financial position. These liabilities were calculated in accordance with FASB Interpretation 48 (FIN 48), “Accounting for Uncertainty in Income Taxes,” an interpretation of FASB Statement No. 109. We do not believe that there will be any significant ongoing impact to the statement of income relating to these liabilities.

The total amount of unrecognized tax benefits determined in accordance with FIN 48 was $57.4 million. All of the $57.4 million of unrecognized tax benefits, if recognized, would impact WABCO’s effective tax rate. We do not believe that any of the $57.4 million of such unrecognized tax benefits will be recognized in the next 12 months.

(g)

Standard common stock equivalents as of March 31, 2007. As of March 31, 2007, there were no outstanding shares of common stock equivalents that were excluded from the diluted pro forma net income per common share calculation.


	March 31, 2007				December 31, 2006
(in millions, except share and per share amounts)	Historical		Pro forma		Historical		Pro forma

Net income	$	40.1			$	137.8
Pro forma net income			$	41.6			$	145.4
Pro forma net income per common share
Basic	$	0.60	$	0.62	$	2.05	$	2.17
Diluted	$	0.58	$	0.60	$	2.00	$	2.11
Pro forma common shares outstanding
Basic		67.1		67.1		67.1		67.1
Diluted		69.0		69.0		69.0		69.0

(h)

WABCO and its subsidiaries will indemnify American Standard for taxes incurred as a result of certain internal corporate reorganization transactions undertaken prior to and in connection with the distribution unless such taxes result from certain actions taken by American Standard, its subsidiaries or its shareholders after the distribution. This decision was made by management of American Standard as stipulated in Section 2.03 (a) and (b) of the Tax Sharing Agreement. Pursuant to the broader American Standard separation transaction, an allocation of certain liabilities, was made relating to American Standard’s businesses, including these tax liabilities, based among other things, on American Standard’s assessment of WABCO’s financial position. The amount reflected as a pro forma adjustment of $37.8 million represents the Company’s estimate of the tax costs expected to be paid by WABCO as a result of the internal corporate reorganization transactions which are necessary to ready WABCO for separation, and is comprised of the following types of tax costs: (i) corporate income taxes imposed on dividends and capital gains transactions (i.e., sales of assets or shares between corporate affiliates) of $32.6 million, (ii) asset transfer taxes, including real estate, stamp duty and registration taxes of $4.2 million, and (iii) withholding taxes imposed on corporate distributions (distributions of shares or assets to corporate affiliates) of $1.0 million. The amount of tax was computed based on the fair market values of shares and assets and cost basis as determined for tax purposes. With the assistance of a third party valuation firm, the fair market values were derived using a market approach, wherein the value of a business is estimated by comparing the subject entity to similar businesses or “guideline” companies whose securities are actively traded in public markets or which have recently been sold in a private transaction. The amount of tax was determined by applying the computational rules in each relevant jurisdiction, including the benefit, if any, for credits and exemptions. Approximately $22.9 million of the tax is classified as a long term liability in the unaudited pro forma balance sheet as of March 31, 2007, as these amounts are due after March 31, 2008 based upon statutory filing requirements of the tax returns, with the remainder due prior to that time. In connection with these incremental taxes, it is expected that WABCO will incur a charge to the income statement of approximately $8.5 million. This amount has not been reflected as an adjustment to the pro forma income statement since it will not have a continuing impact on the performance of WABCO.

MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations covers periods prior to the consummation of the spinoff and the related transactions (“transactions”). Accordingly, the discussion and analysis of historical periods does not reflect the impact that the transactions will have on us, including leverage, debt service requirements and differences between administrative costs allocated to us by American Standard and actual administrative costs that we will incur as a separate public company. In addition, the statements in the discussion and analysis regarding industry outlook, our expectations regarding the future performance of our business and the other non-historical statements in the discussion and analysis are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in the “Risk Factors” section. Our actual results may differ materially from those contained in any forward-looking statements. You should read the following discussion together with the section entitled “Risk Factors,” “Information Concerning Forward-Looking Statements,” “Selected Financial Information,” “Pro Forma Financial Information,” “—Liquidity and Capital Resources” and our financial statements and related notes thereto included elsewhere in this information statement.

Business Overview

We produce a variety of control systems that improve vehicle performance, safety and reduce overall vehicle operating costs for the world’s leading commercial truck, trailer, bus and passenger car manufacturers. Specifically, we develop, manufacture and sell advanced braking, stability, suspension and transmission control systems. Our largest-selling products are pneumatic anti-lock braking systems (ABS), electronic braking systems (EBS), automated manual transmission systems, air disk brakes and a large variety of conventional mechanical products such as actuators, air compressors and air control valves for heavy- and medium-sized trucks, trailers and buses. We also supply advanced electronic suspension controls and vacuum pumps to the car and SUV markets in Europe and North America. In addition we sell replacement parts, diagnostic tools training and other services to commercial vehicle aftermarket distributors, repair shops and fleet operators.

Our sales are affected by changes in truck and bus production, especially in Europe. Europe is our largest geographic market and sales to truck and bus OEMs represent our largest customer group. The table below shows the relationship between our European sales to truck and bus OEMs, which, account for approximately 78% of our global sales to truck and bus OEMs and Western European truck and bus (T&B) production, for the last five years. Sales data is shown at a constant Euro to U.S. dollar exchange rate for year to year comparability and to make comparisons to unit production meaningful.

Year to Year Change

2002

2003

2004

2005

2006

Average

Change

Sales to European T&B OEMs (at Constant FX rate)

+23

+10

Western European T&B Production

-5

+19

In general, our sales track directionally with truck and bus builds. However, individual year to year sales changes are also influenced by other factors such as timing of orders and deliveries to T&B OEM customers, application content, new product introduction, price and introduction of new customer platforms. The level of truck build activity is influenced by general economic conditions, including interest rate levels and inflation. On average for the last five years, our European sales have performed 4 percentage points above the change in Western European truck and bus builds.

In regions outside Europe, there is less correlation between our sales and regional truck and bus builds. This is because of our smaller presence (which magnifies changes in content on individual truck platforms) as well as less stringent safety regulations. As other regions adopt additional safety regulations in the future, similar to or approaching Europe’s, we expect the resulting increase in content will bring higher correlation between our regional sales and changes in regional truck and bus production.

Our aftermarket sales account for approximately 22% of total sales and are affected by a variety of factors: content on specific vehicles and breadth of our product range, number of commercial trucks in active operation, truck age, miles driven, demand for transported goods and overall economic activity. On average, our aftermarket sales (on a constant Euro to U.S. dollar exchange rate) have grown by 7% annually for the last five years as shown in the table below.

Year to Year Change

2002

2003

2004

2005

2006

Average

Change

Aftermarket Sales (at Constant FX rate)

+13

+10

Our aftermarket sales have grown at an accelerated pace over the last three years as the number of trucks in operation, the demand for transported goods shipped by truck, and the number of WABCO product offerings have all expanded. As our aftermarket sales continues to outpace the growth of our OEM sales, our total sales will become less reactive to annual variations in truck and bus production levels.

Distribution of WABCO’s Sales by Major End-Markets, Product Types and Geography


	2006	2005	2004
Major End-Markets
OE Manufacturers:
Truck & Bus products	65%	65%	64%
Trailer products	10%	10%	10%
Car products	3%	4%	6%
Aftermarket	22%	21%	20%

	100%	100%	100%
Geography
Europe	74%	73%	75%
Americas	15%	16%	15%
Asia and rest of world	11%	11%	10%

	100%	100%	100%

Our largest customer is DaimlerChrysler, which accounts for 15% of our sales. Other key customers include Arvin Meritor, Cummins, Fiat (Iveco), Ford, General Motors, Hino, Hyundai, ITE, MAN, Meritor WABCO, Nissan, Paccar (DAF, Kenworth, Leyland and Peterbuilt), SAF, Scania, Volvo (Mack and Renault) and ZF.

WABCO is currently a subsidiary of American Standard. On February 1, 2007, American Standard announced the distribution of all of the shares of common stock of WABCO, a wholly owned subsidiary of American Standard, to American Standard shareholders. Upon the completion of the distribution, we will be an independent entity with publicly traded common stock. We will hold all of the assets and liabilities associated with American Standard’s Vehicle Control Systems business. The distribution of our common stock will occur on July 31, 2007 by way of a pro rata dividend to American Standard shareholders. For every three shares of American Standard common stock that a shareholder owns on the record date, such shareholder will receive one share of WABCO common stock.

Upon consummation of the transactions, WABCO will become a standalone company. We expect that the costs we will incur as a standalone company will include the payment of transition services expected to be provided by American Standard. These services are expected to include information technology services, financial services and human resources, among other things.

Basis of Presentation

WABCO has historically operated as the Vehicle Control Systems business of American Standard. The financial statements included in this information statement have been derived from the financial statements and accounting records of American Standard, principally representing the Vehicle Control Systems segment, using the historical results of operations, and historical basis of assets and liabilities of WABCO. Historically, stand-alone financial statements have not been prepared for WABCO. We believe the assumptions underlying the allocations included in the financial statements are reasonable. The accompanying financial statements include allocations of costs that were incurred centrally by American Standard for functions such as tax administration, certain governance functions (including compliance with the Sarbanes-Oxley Act of 2002 and internal audit), external reporting, human resource administration and other general management functions. These costs include the costs of salaries, benefits and other related costs. The total costs allocated to the accompanying financial statements amounted to $21.8 million, $18.9 million and $19.7 million for the years ended December 31, 2006, 2005 and 2004, respectively. However, the financial statements may not necessarily reflect our financial position, results of operations and cash flows in the future or what our financial position, results of operations or cash flows would have been if we had been an independent public company during the periods presented, particularly since many changes will occur in our operations and capitalization as a result of the transactions.

Executive Overview

We analyze the performance of our business using the following general framework and describe the performance of the business in this context throughout the remainder of this discussion and analysis of financial condition and results of operations.

Sales—We analyze sales activity based on the impact of pricing, volume and mix of our products. The management of pricing conditions and the execution of a strategy to improve sales mix to more profitable products and customers are important to us in order to grow sales and profitability.

Productivity—We identify the impact of key productivity programs in the areas of materials procurement, labor and other productivity programs. The successful execution of productivity programs is important to offset the impacts of price decreases, commodity inflation and other cost escalations.

Commodities—We use commodities such as aluminum, copper, zinc and steel in our manufacturing process. The cost of these commodities can have a significant impact on our financial performance.

Investments—We analyze the costs for the development of new products, investments in sales and marketing programs and other infrastructure investments in support of productivity improvements. Investments in new products and sales are important to sustaining organic growth.

Please see the following paragraphs “Results of Operations for 2006 compared with 2005” and “Results of Operations 2005 compared with 2004” for an analysis of our results of operations excluding the effects of foreign exchange translation.

Results of Operations

The following discussion and analysis addresses year-over-year changes in the line items shown in the above paragraph “Executive Overview.” Approximately 92% of our sales are outside the U.S. and therefore, changes in exchange rates can have a significant impact on the reported results of our operations, which are presented in U.S. Dollars. Year-over-year changes in sales, expenses and net income for 2006 compared with 2005 and 2005 compared with 2004, as well as quarter over quarter changes in sales, expenses and net income for 2007 compared with 2006, are presented both with and without the effects of foreign exchange translation. Changes in sales, expenses and net income excluding foreign exchange effects are calculated using current year sales, expenses and net income

translated at prior year exchange rates. Presenting changes in sales, expenses and net income excluding the effects of foreign exchange translation is not in conformity with GAAP, but we analyze this data because it is useful to us in understanding the operating performance of our business. We believe this data is also useful to shareholders for the same reason. The changes in sales, expenses and net income excluding the effects of foreign exchange translation are not meant to be a substitute for measurements prepared in conformity with GAAP, nor to be considered in isolation.

Results of Operations for 2006 Compared with 2005

(dollars in millions)


	Year ended December 31,						% change reported		Excluding Foreign Exchange Translation
	2006			2005			% change reported		2006 adjusted amount			% change adjusted
Sales	$	2,015.2		$	1,831.0		10.1	%	$	1,991.5		8.8	%
Cost of sales		1,463.5			1,312.5		11.5	%		1,446.4		10.2	%

Gross profit		551.7			518.5		6.4	%		545.1		5.1	%
Operating expenses		327.2			307.0		6.6	%		323.9		5.5	%
Equity in net (income) of unconsolidated joint ventures		(23.3	)		(24.5	)	(4.9	)%		(23.7	)	(3.2	)%
Other (income) and expense		10.8			5.4		100	%		10.9		102	%
Net interest expense/(income)—related party		6.2			(6.0	)	n/a			5.5		n/a
Interest expense		5.1			3.9		30.8	%		4.4		13	%

Income before income taxes		225.7			232.7		(3.0	)%		224.1		(3.7	)%
Income taxes		87.9			87.4		(0.6	)%		86.9		(0.6	)%

Net income	$	137.8		$	145.3		(5.2	)%	$	137.2		(5.6	)%

Sales

Our sales for 2006 were $2.015 billion, an increase of 10.1% (8.8% excluding favorable foreign exchange translation effects) from $1.831 billion in 2005. The increase in sales of $160.5 million, excluding favorable foreign exchange translation impacts, was attributable primarily to increased truck and bus production of approximately $83.3 million, expanded content per vehicle, including new applications of approximately $78.1 million, and strong growth in our aftermarket business of approximately $39.1 million. This was partially offset by net price erosion of approximately 2% or $40 million. The price erosion was primarily driven by annual price reductions included in many of our OEM long-term sales contracts, primarily in Europe. Sales increased 3% in North America and 16% in Asia (15% excluding favorable foreign exchange translation effects). Asia was helped by robust growth in China of 66% (61% without foreign exchange translation impact). In South America, our sales increased 3%, but decreased 8% excluding favorable foreign exchange translation effects. In all of our markets, except North America, our sales continued to outpace the growth in heavy vehicle manufacturing.

Gross Profit

Gross profit increased by $33.2 million ($26.6 million excluding favorable foreign exchange translation effects) in 2006 as compared with 2005. Gross profit benefited from volume and mix increases of approximately $48 million primarily attributable to the items mentioned above in the discussion of sales, productivity improvements of approximately $67 million, benefits from previously announced operational consolidation programs of approximately $4 million and lower spending on operational consolidation programs of approximately $8 million. These improvements were partially offset by price decreases of approximately $40 million, commodity cost increases of approximately $17 million (mainly driven by increased aluminum prices and to a lesser extent zinc and copper prices), $8 million of foreign exchange transaction losses related to the sale

of products in countries outside of the country they are manufactured in, the absence of foreign exchange transaction gains recognized in 2005 for approximately $9 million, labor cost escalation of approximately $6 million, higher warranty cost of approximately $10 million and higher transportation costs of approximately $10 million (mainly driven by higher fuel prices and volume increase). Approximately $48 million of the productivity improvements were driven by direct material cost reductions with the remainder mainly driven by the transfer of production to lower cost countries and higher capacity utilization.

We incurred $8.2 million of operational consolidation expenses during 2006 of which $7.4 million is associated with severance relating to 2006 plans and $0.8 million pertaining to prior period plans. The majority of the 2006 plan expenses are associated with the consolidation of administrative functions. We expended $3.0 million of cash on operational consolidation expenses in 2006. We expect to realize annualized cost savings of approximately $5.0 million as a result of these plans. Operational consolidation expenses were $13.7 million in 2005.

Operating Expenses

Operating expenses increased by $20.2 million ($16.9 million excluding unfavorable foreign exchange translation effects). The increase in operating expense was primarily driven by incremental investments in sales growth initiatives of approximately $5 million, labor and other cost inflation of approximately $10 million, $2.5 million of costs relating to the expensing of stock options in 2006 and higher operational consolidation expenses of approximately $2 million. This increase was partially offset by benefits from previously announced operational consolidation programs of approximately $3 million.

Equity in Net Income of Unconsolidated Joint Ventures and Other (Income)/Expense

Equity in net income of unconsolidated joint ventures decreased $1.2 million to $23.3 million in 2006 as compared to $24.5 million in 2005. The decrease was driven by our Meritor WABCO joint venture in the U.S.

Other expense increased by $5.4 million to $10.8 million in 2006 as compared to $5.4 million in 2005. The increase was primarily attributable to increased costs relating to our participation in the securitization programs of $1.1 million, higher minority interest expense of $0.8 million and higher foreign exchange transaction losses of $0.9 million.

Net Interest (Income)/Expense—Including Related Party Interest (Income)/Expense

Including related party interest, total interest expense was $11.3 million in 2006 compared with $(2.1) million of total interest (income) in 2005. The increase in interest expense in 2006 as compared to 2005 was primarily driven by payments received by WABCO from American Standard International Inc. during 2006 to settle certain related party receivables, which reduced interest income by approximately $2.5 million in 2006, and WABCO did not charge any interest income on its loans receivable from Ideal Standard WABCO Trane Ind. Com. Ltda. in 2006, which reduced interest income by approximately $4.2 million. Additionally, in the fourth quarter of 2005, WABCO paid a related party dividend which it funded with related party debt, which increased interest expense by approximately $3.5 million in 2006.

See Note 15 of Notes to Annual Financial Statements, Related Party Transactions, for a detailed summary of the intercompany loans and related interest rates.

Income Taxes

The income tax provision for 2006 was $87.9 million. The effective income tax rate was 38.9% of pre-tax income in 2006. The income tax provision for 2005 was $87.4 million, an effective tax rate of 37.6%. The income tax provision for 2005 included benefits of $18.3 million from the resolution of tax audits and $4.5

million related to the impact of certain tax planning initiatives on prior tax years. Partially offsetting these benefits was a charge of $16 million associated with remitting foreign earnings to the U.S. under Section 965 of the American Jobs Creation Act of 2004.

We currently expect to benefit from certain foreign tax planning such that the effective tax rate following the separation will be in the range of 25% - 28%.

Results of Operations for 2005 Compared with 2004

(dollars in millions)


	Year ended December 31,						% change reported		Excluding Foreign Exchange Translation
	2005			2004			% change reported		2005 adjusted amount			% change adjusted
Sales	$	1,831.0		$	1,723.8		6.2	%	$	1,811.2		5.1	%
Cost of sales		1,312.5			1,252.4		4.9	%		1,299.5		3.8	%

Gross profit		518.5			471.4		10.0	%		511.7		8.5	%
Operating expenses		307.0			278.9		10.1	%		304.3		9.1	%
Equity in net (income) of unconsolidated Joint Ventures		(24.5	)		(20.2	)	21.3	%		(24.2	)	19.8	%
Other (income) and expense		5.4			0.1		n/a			5.1		n/a
Net interest expense/(income)—related party		(6.0	)		(5.4	)	11.1	%		(6.1	)	13.0	%
Interest expense		3.9			3.4		14.7	%		4.0		17.6	%

Income before income taxes		232.7			214.6		8.4	%		228.6		6.5	%
Income taxes		87.4			23.2		277	%		86.5		273	%

Net income	$	145.3		$	191.4		(24.1	)%	$	142.1		(25.8	)%

Sales

Our sales for 2005 were $1.831 billion, an increase of 6% (5% excluding favorable foreign exchange translation effects), from $1.724 billion in 2004. The increase in sales of $87.4 million, excluding favorable foreign exchange translation, was attributable primarily to increased truck and bus production of approximately $68.4 million, expanded content per vehicle, including new applications of $17.6 million, and strong growth in our aftermarket business of approximately $43.4 million. The increases were partially offset by lower sales in passenger cars of approximately $19 million and price erosion of approximately 1% or $23 million. The price erosion was primarily driven by annual price reductions included in many of our OEM long-term contracts, primarily in Europe. Sales in Europe, our largest market, increased 3% with and without foreign exchange translation effects in 2005. The impact of price and market growth declines was moderated by improved aftermarket sales, which increased 13% (12% excluding favorable foreign exchange translation effects). Sales increased 9% in North America (with and without foreign exchange translation effects), underperforming a market that increased an estimated 14%. The underperformance was primarily due to a reduction of certain brake platforms that will be replaced with other platforms in 2006. In Asia Pacific and South America, our sales increased 19% and 36% (17% and 13% excluding favorable foreign exchange translation effects) outperforming truck and bus markets in the year. Overall, our sales continued to grow in line with or outpace the heavy vehicle manufacturing markets.

Gross Profit

Gross profit increased by $47.1 million ($40.3 million excluding favorable foreign exchange translation effects). Gross profit benefited from volume and mix increases of approximately $23 million primarily attributable to the items mentioned above in the discussion of sales, productivity improvements of approximately $40 million, benefits from previously announced operational consolidation programs of approximately $10 million and favorable foreign exchange transaction effects of approximately $10 million. These improvements were partially offset by price decreases of approximately $23 million, commodity cost increases of approximately

$8 million (mainly driven by increased steel prices), labor cost escalations of approximately $7 million and $5 million of higher operational consolidation expenses. The $40 million of productivity improvements were primarily driven by reductions in direct material costs.

We incurred $13.7 million of operational consolidation expenses associated with the continued relocation of manufacturing activities to a lower cost location and other job elimination programs initiated during 2005 that included the elimination of 191 jobs. $9.1 million of the charge was included in cost of sales and $4.6 million was included in operating expenses. We expect to realize annualized cost savings of $8.2 million as a result of these plans. Operational consolidation expenses were $5.4 million in 2004, of which $4.4 million was included in cost of sales and $1.0 million included in operating expenses.

Operating Expenses

Operating expenses increased by $28.1 million ($25.4 million excluding unfavorable foreign exchange translation effects). The increase in operating expense was primarily driven by incremental investments in product engineering and new product development programs of approximately $4.5 million, increased investments in IT systems of $5 million, increased marketing and supply chain spending of approximately $5 million, higher operational consolidation expenses of approximately $4 million and labor cost inflation of approximately $8 million.

Equity in Net Income of Unconsolidated Joint Ventures and Other Income/(Expense)

Equity in net income of unconsolidated joint ventures increased $4.3 million to $24.5 million in 2005 as compared to $20.2 million in 2004. The increase was primarily driven by our Meritor WABCO and India joint ventures, both of which had higher sales due to increased truck and bus production.

Other expense increased by $5.3 million to $5.4 million in 2005 as compared to $0.1 million in 2004. The increase was primarily attributable to lower foreign exchange transaction gains of $2.7 million, lower interest income of $0.6 million and higher costs relating to our participation in the securitization programs in 2005 as compared to 2004 of $0.7 million.

Net Interest (Income)/Expense—Including Related Party Interest (Income)/Expense

Net interest (income) (including related party interest expense) was $(2.1) million in 2005 as compared with $(2.0) million in 2004 as average related party debt balances and interest thereon were approximately the same for both years.

Income Taxes

The income tax provision for 2005 was $87.4 million. The effective income tax rate was 37.6% of pre-tax income in 2005. The income tax provision for 2005 included tax benefits of $18.3 million from the resolution of tax audits and $4.5 million related to the impact of certain tax planning initiatives on prior tax years. Partially offsetting these benefits was a charge of $16 million associated with remitting foreign earnings to the U.S. under Section 965 of the American Jobs Creation Act of 2004. The income tax provision for 2004 was $23.2 million, an effective tax rate of 10.8%. Income taxes in 2004 included a $5.5 million benefit for the resolution of tax audits, a $7.1 million benefit relating to a reduction in withholding tax liabilities due to a decision not to distribute the earnings of certain foreign subsidiaries and a $24.3 million benefit relating to changes in tax legislation.

Backlog

Backlog at the end of the fourth quarter of 2006 was $844 million, up 17.5% (or 7% excluding favorable foreign exchange translation effects) from the fourth quarter of 2005. Backlog is not necessarily predictive of future business as it relates only to some of our products.

Liquidity and Capital Resources

Net cash provided by operating activities was $182.2 million for 2006. This compared with net cash provided by operating activities of $194.4 million for 2005. The primary factor for the decrease in 2006 net cash provided by operating activities as compared to 2005 were higher accounts receivable balances of $30.3 million, primarily driven by higher sales and delayed collections of certain accounts receivable.

In investing activities, we made capital expenditures of $73 million for 2006, including $42 million on plant and equipment, $23 million of investments in tooling, and $8 million in computer software. This compared with capital expenditures of $70 million in 2005, including $51 million on plant and equipment, $11 million of investments in tooling and $8 million in computer software.

Cash used in financing activities during 2006 included net transfers to American Standard and its affiliated entities of $139.3 million. The net effect of all operating, investing and financing activities for 2006 was a decrease in cash and cash equivalents of $5.1 million. Cash used in financing activities during 2005 included net transfers to American Standard and its affiliated entities of $106.7 million. The net effect of all operating, investing and financing activities for 2005 was an increase in cash and cash equivalents of $13.0 million.

At December 31, 2006, our total third party indebtedness was $75.2 million consisting of $39.5 million of long-term bonds as well $17.8 million in bank debt and capitalized lease obligations. Short-term borrowings, including bank debt, totaled $17.9 million.

The Euro denominated long-term bonds, maturing in 2013 are guaranteed by American Standard and certain of its other subsidiaries in conjunction with our subsidiaries. The separation and distribution of WABCO will create an event of default under the terms of these bonds. As a result, the bonds were redeemed on April 30, 2007.

Results of Operations for Three Months Ended March 31, 2007 vs. Three Months Ended March 31, 2006


	Three months ended March 31,
									Excluding foreign exchange translation
(dollars in millions)	2007			2006			% change reported		2007 adjusted amount			% change adjusted
Sales	$	558.8		$	479.9		16.4	%	$	516.7		7.7	%
Cost of sales		406.1			341.3		19.0	%		375.4		10.0	%

Gross profit		152.7			138.6		10.2	%		141.3		1.9	%
Operating expenses		90.0			81.2		10.8	%		83.7		3.1	%
Equity in net (income) of unconsolidated joint ventures		(4.8	)		(7.1	)	(32.4	)%		(4.5	)	(36.6	)%
Other (income) and expense		4.1			2.1		95.2	%		4.0		90.5	%
Net interest (income) expense-related party		0.4			0.5		(20.0	)%		0.3		(40.0	)%
Interest expense		2.0			0.5		400	%		1.8		360	%

Income before income taxes		61.0			61.4		(0.7	)%		56.0		(8.8	)%
Income taxes		20.9			20.8		0.5	%		19.3		(7.2	)%

Net income	$	40.1		$	40.6		1.2	%	$	36.7		(9.6	)%

Sales

Sales for the first quarter of 2007 were $558.8 million, an increase of 16.4% (7.7% excluding favorable foreign exchange translation effects) from $479.9 million in 2006. The increase was attributable primarily to increased truck and bus production in Europe, expanded content per vehicle, including new applications and

strong growth in our aftermarket business. Sales in Europe, our largest market increased approximately 21.9% (11.5% excluding favorable foreign exchange translation effects), which exceeded the growth in the European truck build market. We estimate that the European truck build market increased 8% as compared to 2006. We had net price erosion of slightly more than 2%, primarily in the OEM business in Europe. Sales decreased 16.3% in North America, which was less than the decreases in the North American truck build market. The decrease in the North American market was influenced by sales volume in 2006 ahead of regulations mandating better emissions standards that became effective in 2007. In Asia and South America sales increased 17.4% and 13.3%, respectively (14.8% and 9.0% excluding favorable foreign exchange translation effects, respectively). Sales performance in Asia was better than the markets in that region (which were down a net 16%), helped by a robust growth in China of 118.6% (110.7% without foreign exchange translation impact). In all of our markets, our sales continued to outpace the growth in heavy vehicle manufacturing. Backlog at the end of the quarter was $989.0 million, up 24.7% (15.0% excluding favorable foreign exchange translation effects) from the first quarter of 2006.

Gross Profit

Gross profit increased by $14.1 million (an increase of $2.7 million excluding favorable foreign exchange translation effects) in the first quarter of 2007 as compared with the first quarter of 2006. Gross profit benefited from volume and mix increases of approximately $14.2 million primarily attributable to the sales discussion above, productivity improvements of approximately $12.3 million, and lower costs of operational consolidation programs of approximately $0.5 million. These improvements were partially offset by price decreases of approximately $13.0 million, commodity cost increases of approximately $5.0 million (mainly driven by increased aluminum prices and to a lesser extent zinc and copper prices), $4.3 million of foreign exchange transaction losses related to the sale of products in countries outside of the country where they are manufactured, and labor cost escalation of approximately $2.0 million. Approximately $8.3 million of the productivity improvements were driven by direct material cost reductions with the remainder primarily driven by the transfer of production to lower cost countries and higher capacity utilization.

We incurred $0.9 million of operational consolidation expenses during the first quarter of 2007 of which $0.7 million is associated with severance relating to 2007 plans and $0.2 million pertaining to prior period plans. The 2007 plan expenses are associated with the consolidation of administrative functions. We expect to realize annualized cost savings of approximately $0.8 million as a result of these plans. We expended $1.4 million of cash on operational consolidation expenses in the first quarter of 2007 relating to all outstanding programs. Operational consolidation expenses were $1.4 million in the first quarter of 2006.

Operating Expenses

Operating expenses increased by $8.8 million ($2.5 million excluding unfavorable foreign exchange translation effects). The increase in operating expense was primarily driven by incremental investments in the product engineering field of approximately $1.0 million and labor cost inflation of approximately $1.5 million.

Equity in Net Income of Unconsolidated Joint Ventures and Other (Income)/Expense

Equity in net income of unconsolidated joint ventures decreased $2.3 million to $4.8 million in the first quarter of 2007 as compared to $7.1 million in the first quarter of 2006. The decrease was primarily driven by our Meritor WABCO joint venture in the U.S. As described above, the North American market decreased by more than 20% in the first quarter of 2007, influenced by increased sales volume in 2006 ahead of regulations mandating better emissions standards that became effective on January 1, 2007. As a result, Meritor Wabco was impacted by lower sales volumes in the first quarter of 2007.

Other expense increased by $2.0 million to $4.1 million in the first quarter 2007 as compared to $2.1 million in the first quarter of 2006. The increase was attributable to foreign exchange losses on non operating items and higher minority interest.

Net Interest/(Income) Expense—Including Related Party Interest (Income)/Expense

Total interest expense (including related party interest expense) was $2.4 million in the first quarter of 2007 as compared with $1.0 million of interest expense in the first quarter of 2006. The increase of $1.4 million is primarily driven by new third party debt that was incurred in April 2006, and thus, did not result in interest expense in the first quarter of 2006. The third party debt was still outstanding at March 31, 2007, therefore interest expense was recognized during the first quarter of 2007.

Income Taxes

The income tax provision for the first quarter of 2007 was $20.9 million, or 34.3% of pre-tax income, compared with a provision of $20.8 million, or 33.9% of pre-tax income in the first quarter of 2006. The effective income tax rate for the first quarter of 2006 included a $2.8 million benefit related to the reduction of tax contingencies .

We currently expect to benefit from certain foreign tax planning such that the effective tax rate following the separation will be in the range of 25% - 28%.

Liquidity and Capital Resources

Net cash provided by operating activities was $54.1 million in the first three months of 2007. This compared with net cash provided by operating activities of $42.1 million in the first three months of 2006. The increase in 2007 net cash provided by operating activities as compared to 2006 is primarily due to improvements in accounts receivable and accounts payable, partially offset by inventories (net improvement in working capital).

Within investing activities, we made capital expenditures of $12.3 million in the first three months of 2007 as compared to capital expenditures of $10.6 million in the first three months of 2006. Our capital expenditures for 2007 include $4.1 million on plant and equipment, $6.0 million of investments in tooling, and $2.2 million in computer software. This compared with $5.2 million on plant and equipment, $3.7 million of investments in tooling and $1.7 million in computer software during the first quarter of 2006.

Net cash used in financing activities during the first three months of 2007 included net transfers to American Standard and its affiliated entities of $45.7 million. The net effect of all operating, investing and financing activities in the first three months of 2007 was a decrease in cash and cash equivalents of $3.5 million. Cash used in financing activities during the first three months of 2006 included net transfers to American Standard and its affiliated entities of $43.2 million. The net effect of all operating, investing and financing activities in the first three months of 2006 was a decrease in cash and cash equivalents of $10.9 million. These amounts exclude the effect of exchange rate changes on cash and cash equivalents.

At March 31, 2007, our total third party indebtedness was $78.5 million consisting of $40.0 million of Euro denominated long-term bonds as well $25.9 million in bank debt and capitalized lease obligations. Short-term borrowings, including bank debt, totaled $12.6 million.

The Euro denominated long-term bonds, maturing in 2013 were guaranteed by American Standard and certain of its other subsidiaries in conjunction with our subsidiaries. Subsequent to March 31, 2007, ASE BVBA, which is a legal entity of WABCO, redeemed the $40.0 million outstanding Euro denominated long-term bonds and paid approximately $6.0 million in early redemption premiums. This early redemption loss will be reflected in WABCO’s Statement of Income in the second quarter of 2007.

Credit Agreement. At separation, we will have in place one primary bank credit agreement, which will provide WABCO and certain of its subsidiaries with an unsecured, five-year $800 million, multi-currency revolving credit facility that will expire on the fifth anniversary of the spinoff date. The primary bank credit agreement was entered into by us and certain of our subsidiaries on May 31, 2007 and the credit facility will become available to us immediately prior to the separation. The $800 million revolving line of credit is a non-amortizing facility that permits utilization up to the maximum level at any time through and until expiration, subject to the liquidity covenant in the credit agreement. The proceeds of the borrowings under the credit facility may be used to fund potential repurchases of our shares and to meet short-term requirements. Additionally, the facility may be used to pay a fine or provide a bank guarantee that will be required pursuant to a

decision relating to the European Commission investigation matter as further described under the heading “Business—Legal Proceedings—The European Commission Investigation.” Up to $100 million under this facility may be used for issuing letters of credit, and up to $75 million for same-day borrowings.

The primary bank credit agreement contains terms and provisions customary for transactions of this type, including various covenants that limit, among other things, subsidiary indebtedness, liens, and certain fundamental business changes. The covenants also require us to meet certain financial tests: ratio of net indebtedness to EBITDA, EBITDA to net interest expense, and a liquidity test described below. The liquidity covenant requires us to have at least $100 million of liquidity (which includes unused commitments under the agreement and certain other committed facilities that may be entered into, as well as unrestricted cash and cash equivalents) after giving effect to any payment of a fine or any provision of a bank guarantee that will be required pursuant to a decision relating to the European Commission investigation matter further described under the heading “Business—Legal Proceedings—The European Commission Investigation.”

For additional information relating to the terms of the credit agreement see “Description of Material Indebtedness.”

In addition, we are in the process of establishing a credit facility in the amount of $20 million for our China operations, which will be drawn upon in local currency and used for general corporate purposes. This credit facility is expected to be available and drawn upon prior to separation.

Off-Balance Sheet Arrangements

We employ several means to manage our liquidity and we are not dependent upon any one source of funding. Our sources of financing include cash flows from operations, funding arrangements with American Standard and the use of operating leases. Future rental commitments under all non-cancelable operating leases in effect at December 31, 2006, totaled $36.2 million. See the following table of Aggregate Contractual Obligations for a summary of amounts due under operating leases.

In addition, WABCO participated in receivables financing arrangements managed by American Standard. The total amount of off-balance sheet financing from leases (discounted at a rate of 6.3%) and discounted receivables at December 31, 2006 was approximately $234.4 million. Both receivables financing arrangements in place as of March 31, 2007 have been terminated in the second quarter of 2007. The termination of these programs, based on securitized balances at March 31, 2007, would result in an increase to accounts receivable of $169.5 million. As the termination was funded by American Standard, there will be no cash outflow by WABCO. No further losses will be incurred from the date the programs have terminated. Those losses amounted to $1.8 million and $1.4 million for the quarters ended March 31, 2007 and 2006, respectively, and $5.7 million for the year ended December 31, 2006.

Following is a summary of contractual obligations, both on and off the balance sheets as of December 31, 2006. There have been no material changes to these obligations since December 31, 2006, with the exception of the early redemption of the Euro 7.59% guaranteed senior bonds in the amount of $40.0 million.

Aggregate Contractual Obligations

As of December 31, 2006

(in millions)


Payments due by period(1)
Contractual Obligation	Total		2007		2008 and 2009		2010 and 2011		Beyond 2011
Long-term debt obligations (principal plus interest)(2)(3)	$	70.1	$	2.3	$	4.7	$	19.5	$	43.6
Operating lease obligations(4)		36.2		10.2		13.2		7.3		5.5
Purchase obligations(5)		139.1		139.1		—		—		—
Unfunded pension and post-retirement benefits(6)		311.2		26.9		56.7		60.0		167.6

Total	$	556.6	$	178.5	$	74.6	$	86.8	$	216.7

(1)

The amounts and timing of such obligations, as shown in the table may vary substantially from amounts that will actually be paid in future years. For example, the actual amount to be paid under long-term debt obligations under our primary credit agreement will depend on the amount of debt outstanding under the agreement in each year.

(2)	Amounts shown for long-term debt obligations include the associated interest calculated at the December 31, 2006 rates applicable to each type of debt.

(3)	Obligations under capital leases are not material (approximately $2.0 million) and are included in long-term debt.

(4)	Amounts include future rental commitments under all non-cancelable operating leases in effect at December 31, 2006. The present value of the $36.2 million total is equivalent to approximately $29.8 million, discounted at an assumed rate of 6.3%.

(5)

In the normal course of business we expect to purchase approximately $1.2 billion in 2007 of materials and services, and estimate that on average no more than approximately $139.1 million is outstanding at any one time in the form of legally binding commitments. We spent approximately $1.2 billion, $1.1 billion and $1.0 billion on materials and services in 2006, 2005 and 2004, respectively.

(6)

Amounts represent undiscounted projected benefit payments to WABCO’s unfunded plans over the next ten years, as well as expected contributions to funded pension plans for 2007. The expected benefit payments are estimated based on the same assumptions used to measure our accumulated benefit obligation at the end of 2006 and include benefits attributable to estimated future employee service of current employees.

Capital Expenditures

Our capital expenditures for 2006 were $73 million, including $42 million on plant and equipment, $23 million of investments in tooling, and $8 million in computer software. This compared with capital expenditures of $70 million in 2005, including $51 million on plant and equipment, $11 million of investments in tooling and $8 million in computer software. 2005 spending on plant and equipment was higher than 2006 spending primarily due to investments in capital for new product introductions and manufacturing site reorganizations in Europe, as well as the completion of our new manufacturing facility in Qingdao, China.

We believe our capital spending in recent years has been sufficient to maintain efficient production capacity, to implement important product and process redesigns and to expand capacity to meet increased demand. Productivity projects have freed up capacity in our manufacturing facilities and are expected to continue to do so. We expect to continue investing to expand and modernize our existing facilities and invest in our facilities to create capacity for new product development. We expect to make capital expenditures on plant and equipment, tooling and computer software in 2007 at approximately the same level as 2006.

Effect of Recently Issued Accounting Standards

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard No. 157 (“SFAS No. 157”), Fair Value Measurements . SFAS No. 157 defines fair value, provides a framework for measuring fair value under current standards in GAAP, and requires additional disclosure about fair value measurements. In accordance with SFAS No. 157, the definition of fair value retains the exchange price notion, and exchange price is defined as the price in an orderly transaction between market participants to sell an asset or transfer a liability. If there is a principal market for the asset or liability, the fair value measurement should reflect that price, whether that price is directly observable or otherwise used in a valuation technique. Depending on the asset or liability being valued, the inputs used to determine fair value can range from observable inputs (i.e. prices based on market data independent from the entity) and unobservable inputs (i.e. entity’s own assumptions about the assumptions that market participants would use). SFAS No. 157 applies to other accounting pronouncements that require or permit fair value measurements and will be effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. We are currently evaluating the provisions of SFAS No. 157 to determine the potential impact, if any, the adoption will have on WABCO’s financial statements.

SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. WABCO is currently evaluating the provisions of SFAS No. 159 to determine the potential impact, if any, the adoption will have on WABCO’s financial statements.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of financial statements in conformity with those accounting principles requires us to make judgments and estimates that affect the amounts reported in the financial statements and accompanying notes. Those judgments and estimates have a significant effect on the financial statements because they result primarily from the need to make estimates about the effects of matters that are inherently uncertain. Actual results could differ from those estimates. We frequently re-evaluate our judgments and estimates that are based upon historical experience and on various other assumptions that we believe to be reasonable under the circumstances.

We believe that of our significant accounting policies (see Note 2 of Notes to Annual Financial Statements), the ones that may involve a higher degree of uncertainty, judgment and complexity are stock-based compensation, post-retirement benefits, warranties, income taxes and commitments and contingencies.

Stock-Based Compensation —American Standard adopted the provisions of Statement of Financial Accounting Standard No. 123 (Revised 2004) (“FAS 123R”), Share Based Payments on January 1, 2006. FAS 123R requires American Standard to measure and recognize in its combined statement of income the expense associated with all share-based payment awards made to employees and directors including stock options, restricted stock units, restricted stock grants and discounts on employee stock purchases associated with the Employee Stock Purchase Plan (“ESPP”) based on estimated fair values. American Standard utilizes the Black-Scholes option valuation model to measure the amount of compensation expense to be recognized for each option award. There are several assumptions that must be made when using the Black-Scholes model such as the expected term of each option, the expected volatility of the stock price during the expected term of the option, the expected dividends to be paid and the risk free interest rate expected during the option term. American Standard has reviewed each of these assumptions carefully and based on the analysis discussed in Note 5 of Notes to Financial Statements determined its best estimate for these variables. Of these assumptions, the expected term of the option and expected volatility of American Standard’s common stock are the most difficult to estimate since they are based on the exercise behavior of employees and expected performance of American Standard’s stock. An increase in the volatility of American Standard’s stock will increase the amount of compensation expense on new awards. An increase in the holding period of options will also cause an increase in compensation expense. Dividend yields and risk-free interest rates are less difficult to estimate, but an increase in the dividend yield will cause a decrease in expense and an increase in the risk-free interest rate will increase compensation expense.

Post-Retirement Benefits —Our employees participate in a number of American Standard’s benefit plans, as well as benefit plans established specifically for our operations. Plans sponsored by American Standard include an Employee Stock Ownership Plan (the “ESOP”) and a 401(k) savings plan (the “Savings Plan”) for WABCO’s U.S. salaried employees and certain U.S. hourly employees, and a pension plan (“the Cash Balance Plan”) for certain U.S. salaried and non-union employees. The ESOP and Savings Plan are individual-account defined contribution plans. In addition, certain U.S. employees covered by collective bargaining arrangements participate in defined benefit plans that are sponsored by American Standard. Internationally, our employees in certain countries, primarily Germany and the United Kingdom, participate in defined benefit plans sponsored by local legal entities. We have significant pension and post-retirement benefit costs and liabilities that are developed from actuarial valuations either by American Standard or local entities. Inherent in these valuations are key assumptions including discount rates, expected return on plan assets, mortality rates, merit and promotion increases and the health care cost trend rate. American Standard as well as our local entities are required to consider current market conditions, including changes in interest rates and health care costs, in making their assumptions. Changes in the related pension and post-retirement benefit costs or liabilities may occur in the future due to changes in the assumptions. A decrease of one percentage point in the assumed rate of return on

plan assets and a decrease of one percentage point in the discount rate applied to projected benefit obligations would increase annual pension expense by approximately $6.7 million. The discount rates used are based on relevant indices of corporate and government securities, the duration of the liability and appropriate judgment. The assumptions as to the expected long-term rates of return on plan assets are based upon the composition of plan assets, historical long-term rates of return on similar assets and current and expected market conditions. See the disclosures about pension and post-retirement obligations, the composition of plan assets, assumptions and other matters in Note 11 of Notes to Annual Financial Statements.

Warranties —Estimated product warranty expenses are accrued in cost of good sold at the time the related sales are recognized. Estimates of warranty expenses are based primarily on warranty claims experience and specific customer contracts. Warranty expenses include accruals for basic warranties for product sold, as well as accruals for product recalls, service campaigns and other related events when they are known and estimable.

To the extent we experience changes in warranty claim activity or costs associated with servicing those claims, our warranty accrual is adjusted accordingly. Warranty accrual estimates are updated based upon the most current warranty claims information available. Such changes in estimates, including foreign exchange effects increased warranty expense by a net of $10 million in 2006 and decreased warranty expense by $6.2 million in 2005. See Note 13 of Notes to Annual Financial Statements for a three-year summary of warranty costs.

Income taxes —We record a valuation allowance to reduce our deferred tax assets to the amount that we believe is more likely than not to be realized. While we have considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance, in the event we were to determine that we would not be able to realize all or part of our net deferred tax assets in the future, an adjustment to decrease the net deferred tax assets would be charged to income in the period such determination was made. Likewise, should we determine that we would be able to realize our deferred tax assets in the future in excess of our net recorded amount, an adjustment to increase the net deferred tax assets would increase income in the period such determination was made. Deferred tax assets have been reduced by a valuation allowance of $1.3 million. We also estimate our effective income tax rate periodically, considering all known factors and the estimated effects of future events or tax planning strategies that can cause that rate to vary from the statutory rate. Estimating the outcome of future events is inherently uncertain and final resolution of those events can cause the effective rate to vary significantly.

On January 1, 2007, WABCO adopted the provision of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109 (“FIN 48”). FIN 48 provides recognition criteria and a related measurement model for tax positions taken by companies. In accordance with FIN 48, a tax position is a position in a previously filed tax return or a position expected to be taken in a future tax filing that is reflected in measuring current or deferred income tax assets and liabilities. Tax positions shall be recognized only when it is more likely than not (likelihood of greater than 50%), based on technical merits, that the position will be sustained upon examination. Tax positions that meet the more likely than not threshold should be measured using a probability weighted approach as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement. Whether the more-likely-than-not recognition threshold is met for a tax position, is a matter of judgment based on the individual facts and circumstances of that position evaluated in light of all available evidence. The adoption of FIN 48 did not have a material impact on WABCO’s financial statements.

Commitments and Contingencies —We are subject to proceedings, lawsuits and other claims related to products 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 liability to be recorded, if any, for these contingencies is made after careful analysis of each individual issue. The liabilities recorded may change in the future, possibly by significant amounts, due to new developments in any of the matters.

European Union competition rules relating to the distribution of bathroom fixtures and fittings in a number of European countries. Pursuant to the Indemnification and Cooperation Agreement, WABCO and certain of our subsidiaries will be responsible for, and will indemnify American Standard and its subsidiaries (including certain subsidiaries formerly engaged in the Bath and Kitchen business) and their respective affiliates against any fines related to this investigation. See “Business—Legal Proceedings” for additional discussion of the procedural history, response, hearing and appeals process related to the European Commission investigation.

We expect that this investigation will result in the imposition of a fine, however we are unable to reasonably estimate the loss or range of loss that may result from this matter for the reasons that follow. The European Commission recently adopted new fining guidelines (the “2006 Guidelines”) and stated their intention to apply these guidelines in all cases in which a Statement of Objections is issued after September 2006. To date, the Commission has not imposed any fines under the 2006 Guidelines, although it is anticipated that the Commission will apply the 2006 Guidelines to impose higher fines than those which would have resulted from application of the prior fining guidelines. Under the 2006 Guidelines, the Commission will determine a “basic amount” of the fine by considering the value of the sales of goods to which the infringement relates, the gravity of the infringement and its duration. In applying the 2006 Guidelines, the Commission retains considerable discretion in calculating the fine, including discretion as to the determination of the “basic amount,” evaluation of the aggravating and mitigating circumstances and the availability of leniency and the assessment of the overall deterrent effect of the fine. If the Commission were to apply the 2006 Guidelines to the allegations as set forth in the Statement of Objections, the fine would be significant primarily due to the breadth of the allegations and the alleged duration of the infringement. The Company and American Standard intend to present defenses to the allegations in the Statement of Objections. Article 23 of Council Regulation No. 1/2003 provides for a maximum fine equal to 10% of the parent company’s ( i.e ., American Standard’s) worldwide revenue attributable to all of its products for the fiscal year prior to the year in which the fine is imposed.

If the maximum fine were levied in 2007, the total liability would be approximately $1.1 billion based on American Standard’s worldwide revenue in 2006 subject to a probable reduction for leniency of at least 20% provided the leniency applicant fulfills all conditions set forth in the Commission’s leniency notice. Further, the effect, if any, of the spinoff of WABCO from American Standard and the sale of its Bath and Kitchen business on the calculation of such 10% liability cap is unclear. In any event, the fine imposed by the Commission could be material to WABCO’s operating results and cash flows for the year in which the liability would be recognized or the fine paid. However, we believe that payment of the fine will not have a material adverse effect on the financial condition or liquidity of WABCO even at the maximum fine, for the following reasons. The Company’s capital structure at the time of its separation from American Standard will include only a minimal amount of debt. As a result, WABCO expects to have sufficient funds available under its existing 5 year revolving credit facility, from operating cash flows and from additional bank credit facilities it expects to be able to arrange, to pay the fine and fund the Company’s continuing operations, while still maintaining coverage ratios consistent with the financial covenants in our $800 million credit facility and a capital structure in line with its business needs.

The $800 million revolving line of credit is a non-amortizing facility that permits utilization up to the maximum level at any time through and until expiration, subject to the liquidity covenant in the credit agreement. Additional bank credit facilities could be arranged for terms ranging from 364 days to 5 years, depending on business needs. We believe WABCO’s expected ongoing profitability, operating cash flows and financial metrics will enable it to access bank and capital markets to pay the maximum fine, if needed, as well as refinance the credit facilities at expiration. As such, credit facility drawdowns undertaken to pay the fine could be integrated into the long term capital structure of the Company.

Also, in connection with the separation of WABCO from American Standard, pursuant to the Tax Sharing Agreement and the Separation and Distribution Agreement, we will assume certain contingent non-U.S. tax liabilities and certain contingent environmental liabilities relating to American Standard’s Bath and Kitchen

business. The contingent tax liabilities that will be assumed by WABCO include liabilities associated with indemnification claims with respect to non-U.S. taxes (including income tax, value added tax and withholding tax) that may be made by a buyer of the Bath and Kitchen business for taxable periods during which American Standard owned and operated the Bath and Kitchen business up to the earlier of the date of the closing of the sale of the Bath and Kitchen business or December 31, 2007. We have included in our Unaudited Pro Forma Financial Statements $57.4 million of existing Bath and Kitchen accruals for contingent income tax liabilities, calculated in accordance with FIN 48, previously accrued by American Standard. WABCO is not aware of any other contingent non-U.S. tax liabilities. Additionally, we will indemnify American Standard for any losses it suffers in connection with its indemnification obligations to the purchaser of its Bath & Kitchen business for any unknown environmental liabilities that are retained by American Standard in connection with its sale of the Bath & Kitchen business. The Bath & Kitchen business includes 54 facilities operating in 23 countries. Based on current information, WABCO is not aware of any contingent environmental matters that would be required to be reflected in the financial statements.

Cyclical and Seasonal Nature of Business

The industry we operate in is cyclical. Over 70% of our sales are for newly manufactured trucks, buses and trailers, the production of which follows long investment cycles and is impacted by macro economic factors and legislation. Global manufacturing outputs have consistently been growing since 2001 and the industry is expecting a downturn, in some markets, next year. Our most important market is Western Europe. Historically, the Western European market has had less volatility than other markets. In 2007, the Western European market is expected to increase approximately 7%-9% as compared to 2006. Demand in our North American market is estimated to decline by approximately 40% for Class 8 heavy duty commercial vehicles in 2007 due primarily to higher 2006 production and sales of such vehicles in advance of engine emissions regulations in the United States which took effect in 2007. Approximately 11% of our total sales come from the North American market. The continued adoption of new technologies by truck and bus manufacturers helps to mitigate the impact of declines in truck and bus production. The vehicle controls industry is not subject to seasonal impacts.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We conduct operations through subsidiaries in most of the major countries of Western Europe, Brazil, Poland, China, South Korea and Japan as well as the US. In addition, we conduct business in some countries through affiliated companies and partnerships in which we own 50% or less of the stock or partnership interest. Fluctuations in currency exchange rates have a significant impact on the reported results of our operations, which are presented in U.S. dollars. The largest of these exposures to currency exchange rates is between the Euro and U.S. Dollar. We believe our primary exposures to changes in currency exchange rates are associated with the following:

•

Translation—We face foreign currency exposure that arises from translating the results of our operations to the U.S. dollar at exchange rates that have fluctuated throughout the year. A hypothetical 10% weakening of all other currencies in relation to the U.S. dollar would have resulted in an approximate $14.7 million reduction in the 2006 reported net income.

•

Sourcing and manufacturing strategy—A significant and growing portion of our products are sourced and manufactured in currencies different than the currency in which they are sold resulting in increased exposure to foreign exchange risks. Based on our 2006 transaction flow, a 10% weakening of all other currencies in relation to the U.S. dollar would have resulted in an approximate $7.8 million increase in the 2006 reported net income.

•

Transaction gains and losses—Certain of our monetary assets and liabilities are denominated in currencies other than the functional currency of the respective entity. Based on December 31, 2006 balances, a 10% weakening of all other currencies in relation to the U.S. dollar would have resulted in an approximate $1.3 million increase in the 2006 reported net income.

The aggregate impact of a hypothetical 10% weakening of all other currencies in relation to the U.S. dollar relating to the abovementioned exposures would have resulted in an approximate $5.6 million decrease in the 2006 reported net income.

As of March 31, 2007, our primary exposure continues to be fluctuations in currency exchange rates and the associated impact on the reported results of our operations, which are reported in U.S. dollars.

BUSINESS

Overview

Founded in the U.S. in 1869 as Westinghouse Air Brake Company (WABCO), the Vehicle Control Systems business was acquired by American Standard in 1968. The Vehicle Control Systems business operates under the WABCO ^® name and produces a variety of control systems that improve vehicle performance and safety and reduce overall vehicle operating costs for the world’s leading commercial truck, trailer, bus and passenger car manufacturers. Specifically, WABCO manufactures and sells advanced braking, stability, suspension, transmission control and air compressing and processing systems.

Based on internal estimates, WABCO products are included in approximately two out of three commercial vehicles with advanced vehicle control systems and offered in sophisticated, niche applications in cars and sport utility vehicles (SUVs). WABCO continues to grow in more parts of the world as it provides more components and systems throughout the life of a vehicle, from design and development to the aftermarket in more parts of the world.

Europe represents approximately 74% of WABCO’s revenues, with the remainder coming primarily from the Americas and Asia. WABCO’s products are also manufactured in Europe, Asia and in the Americas.



WABCO SALES

BY GEOGRAPHY	MAJOR END-MARKETS

	• Truck & Bus products (OEMs) • Trailer products • Aftermarket • Car products	% of Sales 65% 10% 22% 3%

Products and Services

WABCO develops, manufactures and sells advanced braking, stability, suspension and transmission control systems primarily for commercial vehicles. WABCO’s largest-selling products are pneumatic anti-lock braking systems (ABS), electronic braking systems (EBS), automated manual transmission systems, air disk brakes, and a large array of conventional mechanical products such as actuators, air compressors and air control valves for heavy- and medium-sized trucks, trailers and buses. WABCO also supplies advanced electronic suspension controls and vacuum pumps to the car and SUV markets in Europe and North America. In addition, WABCO sells replacement parts, diagnostic tools, training and other services to commercial vehicle aftermarket distributors, repair shops, and fleet operators.

WABCO is a leader in improving highway safety, with products that help drivers avoid accidents by enhancing vehicle responsiveness and stability. For example, WABCO offers a stability control system for trucks and buses that constantly monitors the vehicle’s motion and dynamic stability. If the system detects a vehicle instability such as the driver swerving to avoid another vehicle—it responds by applying the brakes at specific wheels, or slowing the vehicle down to prevent instability or a rollover.

WABCO’s key products and functions are described below.


WABCO KEY PRODUCTS
SYSTEM / PRODUCT		FUNCTION
Actuators Air Dryer/APU		Actuates Brakes in Trucks, Buses, Trailers
Air Compressors and Air Processing/Air Management Systems		Provides Clean, Compressed Air for Braking, Suspension and other Pneumatic Systems on Trucks, Buses, Cars
Air Disc Brakes		Transmits Power of Braking System to the Wheel for Trucks, Buses, Trailers
Anti-lock Braking Systems (ABS)		Prevents Wheel Locking during Braking for Trucks, Buses, Trailers
Conventional Braking Systems		Mechanical and Pneumatic Control of Braking Systems for Trucks, Buses, Trailers
Electronic Braking Systems (EBS)		Electronic Controls of Braking Systems for Trucks, Buses, Trailers
Electronic and Conventional Air Suspension Systems		Provides Stability, Comfort and Even Weight Distribution for Trucks, Buses, Trailers, Cars
Automated Manual Transmission Systems		Automates Gear Shifting for Trucks and Buses manual transmission
Vehicle ESC/RSS		Provides Stability during Deceleration for Trucks, Buses, Trailers

WABCO has marketing and product management structures in place to develop product strategies and support the implementation across its customer base and markets.

Key Markets and Trends

Electronically controlled products and systems are an important growth segment of our business. The market for these products is driven primarily by the growing electronics content of control systems in commercial vehicles. The electronics content has been increasing steadily with each successive platform introduction, as original equipment manufacturers (OEMs) look to improve safety and performance through added functionalities, and meet evolving regulatory safety standards. Although the pace varies, this growth trend is directionally prevalent in all major geographies, and braking systems are part of this broader shift from conventional to advanced electronic systems. In addition to increasing safety, improving stopping distances, and reducing installation complexity, advanced EBS also allow for new functionality to be introduced into vehicles at a lower price. The new functionality includes stability control, adaptive cruise control, automated transmission controls, air disc brakes, brake performance warning, vehicle diagnostics, driver assistance systems and engine braking/speed control. Adaptive cruise control uses sensors to detect proximity to other vehicles and automatically adjusts speed. Automated transmission controls reduce the amount of gear shifting, resulting in less physical effort and training required for drivers, less component wear, fewer parts, better fuel efficiency, and enhanced driver safety and comfort.

A fundamental driver of demand for WABCO’s products is commercial truck production. Commercial truck production generally follows a multi-year cyclical pattern. While the number of new commercial vehicles built fluctuates each year, WABCO has demonstrated the ability to grow in excess of these fluctuations by increasing the amount of content on each vehicle. For example, over the past 5 years, WABCO’s European sales to truck and bus OEM customers grew at an average annual rate of approximately 10%, excluding the impact of currency exchange rates, which exceeds industry truck builds in its key markets.

Year to Year Change

2002

2003

2004

2005

2006

Average

Change

Sales to European T&B OEMs
(at a constant FX rate)

+23

+10

Western European T&B Production

-5

+19

Customers

WABCO and its affiliates sell its products primarily to four groups of customers around the world: truck and bus (OEMs), trailer OEMs, commercial vehicle aftermarket distributors for replacement parts and services, and major car manufacturers. WABCO’s largest customer is DaimlerChrysler, which accounts for approximately 15% of WABCO sales. Other key customers include Arvin Meritor, Cummins, Fiat (Iveco), Ford, General Motors, Hino, Hyundai, ITE, MAN, Meritor WABCO, Nissan, Paccar (DAF, Kenworth, Leyland and Peterbuilt), SAF, Scania, Volvo (Mack and Renault) and ZF. In 2005, DaimlerChrysler’s global logistics organization and IVECO honored WABCO as a “supplier of the year,” and readers of three leading German trade magazines voted WABCO “best brand in brakes.”

The largest group of WABCO’s customers, representing approximately 65% of sales, consists of truck and bus OEMs who are large, increasingly global and few in number due to continued consolidation (driven largely by European players). As truck and bus OEMs grow globally, they expect suppliers to grow with them beyond their traditional markets and become reliable partners, especially in the development of new technologies. WABCO has a strong reputation for technological innovation and often collaborates closely with major OEM customers to design and develop the technologies used in its products. WABCO’s products play an important role in vehicle safety and there are few competing suppliers for the products. As a result, pricing pressure, though increasing, is generally lower than for providers of more commoditized products or passenger cars and light truck product suppliers.

The second largest group, representing approximately 22% of sales, consists of the commercial vehicle aftermarket distributor network that provides replacement parts to commercial vehicle operators. This distributor network is a fragmented and diverse group of customers, covering a broad spectrum from large OE-affiliated or owned distributors to small independent local distributors. The increasing number of commercial trucks in operation world-wide that are equipped with WABCO’s products continuously increases demand for replacement parts and services, thus generating a growing stream of recurring aftermarket revenues. Additionally, WABCO intends to develop an array of service offerings such as diagnostics, training and other services to repair shops and fleet operators that will further enhance our presence and growth in the commercial vehicle aftermarket.

The next largest group, representing approximately 10% of sales, consists of trailer manufacturers. Trailer manufacturers are also a fragmented group of local or regional players with great diversity in business size, focus and operation. Trailer manufacturers are highly dependent on suppliers such as WABCO to provide technical expertise and product knowledge. Similar to truck and bus OEMs, trailer manufacturers rely heavily on WABCO’s products for important safety functions and superior technology.

The smallest group, representing approximately 3% of sales, consists of car and SUV manufacturers to whom WABCO sells electronic air suspension systems and vacuum pumps. Electronic air suspension is a luxury feature with increasing penetration and above market growth. Vacuum pumps are used with diesel engines and, therefore, enjoy higher than average growth rates associated with increasing diesel applications in Europe and Asia. These customers are typically large, global, sophisticated and demand high product quality and overall service levels.

WABCO addresses its customers through a global sales force that is organized around key accounts and customer groups and interfaces with product marketing and management to identify opportunities and meet customer needs across its product portfolio.

Growth Strategy

WABCO’s growth strategy is focused on four key platforms: technology innovation, geographic expansion, aftermarket growth and opportunistic automotive application of our products and systems. Drivers of growth for both our aftermarket and advanced car systems are discussed in the Customers section above.

Technology

WABCO continues to drive growth by utilizing its industry-leading expertise in developing electronically controlled systems, including braking, transmission automation, air suspension and air management systems. WABCO has a strong track record of innovation and is responsible for some of the industry’s most important innovations including:

•

First heavy-duty truck anti-lock braking system (ABS).

•

First electronically controlled air suspension (ECAS) system for commercial vehicles.

•

First commercial vehicle automated manual transmission controls system.

•

First electronic stability control (ESC) system for commercial vehicles.

•

First integrated vehicle tire pressure monitoring system (IVTM) for commercial vehicles, developed in partnership with Michelin.

WABCO continues to expand its product and technology portfolio by introducing new products and functionalities, and by improving the penetration of recently launched technologies. Advanced products and functionalities are typically developed and adopted first in Europe and then migrate to North America and Asia. Important examples include the adoption of ABS and automated transmission systems that were first widely adopted in European markets before starting to penetrate North America. Over the last three years, WABCO spent approximately $212 million for research activities, product development and product engineering.

WABCO is also focused on longer-term opportunities, particularly in the areas of emissions controls and Driver Assistance Systems (DAS). DAS is a technology concept that involves connecting advanced sensors with truck control devices, such as braking and steering systems as well as engine controls, to improve safety and avoid collisions. WABCO has already launched some of the elements that would allow this concept to be brought to market, such as the adaptive cruise control already in use by several OEMs, and is well positioned for future growth in this area.

Geographic Expansion

WABCO and its affiliates continue to drive sales in high growth markets in Eastern Europe, China and India. In Eastern Europe, WABCO has been manufacturing products since 2001. The market in Eastern Europe has been experiencing rapid growth and WABCO has established relationships with local customers.

China is a key growth market for WABCO. The number of trucks built in the country is continuing to increase and adoption of the advanced systems and products made by WABCO is increasing. WABCO has been in China since 1996 and is the leading provider of ABS systems, with a strong brand and established customer relationships. In the short-to medium-term, growth will be driven by the enforcement of new regulations making ABS mandatory on trucks, buses and trailers, of which WABCO is well positioned to take advantage. Additional near term growth will be driven by introducing new products into the local market such as air compressors, clutch servos and automated manual transmission systems. To serve the growing demand for its products both in China and for export, WABCO has two facilities to manufacture conventional products, advanced systems such as ABS, and new modular air compressors. In order to make sure opportunities in Asia receive enough focus and management attention WABCO has increased its management presence in the region.

India is another future growth market for WABCO due to the number of trucks being built as well as the expected future adoption of more advanced systems in commercial vehicles. WABCO currently participates in the market through a joint venture with TVS Group (Sundaram-Clayton Ltd.), which sells primarily conventional products, as the more advanced systems have yet to be introduced. India also provides WABCO a strong base for sourcing and engineering activities, which WABCO is actively developing.

Competition

Given the importance of technological leadership, vehicle life-cycle expertise, reputation for quality and reliability, and the growing joint collaboration between OEMs and suppliers to drive new product development, the space in which WABCO mostly operates has not historically had a large number of competitors. WABCO’s principal competitors are Knorr-Bremse (Knorr’s U.S. subsidiary is Bendix Commercial Vehicle Systems) and, in certain categories, Haldex. In the advanced electronics categories, automotive players such as Siemens-VDO, Bosch (automotive), and Continental have recently been present in some commercial vehicle applications. In the mechanical product categories, several Asian competitors are emerging although they are more focused on low complexity mechanical products rather than the advanced electronic systems that WABCO emphasizes.

Manufacturing & Operations

As of February 22, 2007, WABCO conducted its manufacturing activities at 12 plants in 9 countries.


Location		Major Products Manufactured at Location
Campinas, Brazil		Vehicle control systems
Leeds, England		Vacuum pumps
Claye-Souilly, France		Vehicle control systems
Hanover, Germany		Vehicle control systems
Mannheim, Germany		Foundation brakes
Gronau, Germany		Compressors and hydraulics
Meppel, Netherlands		Actuators
Wroclaw, Poland		Vehicle control systems
Qingdao, China		Braking systems
Jinan, China		Braking systems
Pyungtaek, Korea		Braking systems
Charleston, United States		Compressors

All of the plants described above are owned by WABCO, except for Claye-Souilly, France, Meppel, Netherlands, Jinan, China and Charleston, U.S., which are leased. Our properties are generally in good condition, are well maintained, and are generally suitable and adequate to carry out our business. In 2006, the manufacturing plants, taken as a whole, met our capacity needs.

We also own or lease warehouse and office space for administrative and sales staff. Our headquarters, located in Brussels, Belgium, and our executive offices, located in Piscataway, New Jersey, are leased.

Most of WABCO’s manufacturing sites and distribution centers produce and/or house a broad range of products and serve all different types of customers. Currently, over 40% of WABCO’s manufacturing workforce is located in low cost countries, compared with approximately 10% in 1999. Facilities in low cost countries have helped reduce costs on the simpler and more labor-intensive products, while the facilities in Western Europe are focused on producing more complex technologies. All facilities globally are deploying Six Sigma Lean initiatives to improve productivity and reduce costs. By applying the Six Sigma philosophy and tools we seek to improve quality and predictability of our process by minimizing variations and adjusting the mean. Lean is geared towards eliminating waste in our supply chain, manufacturing and administrative processes. Both methodologies are customer driven and data based. In addition, WABCO’s global supply chain team makes decisions on where to manufacture which products taking into account such factors as local and export demand, customer approvals, cost, key supplier locations and factory capabilities.

WABCO’s global sourcing organization purchases a wide variety of components including electrical, electro-mechanical, cast aluminum products and steel, as well as copper, rubber and plastic containing components that represent a substantial portion of manufacturing costs. WABCO sources products on a global basis from three key regions: Western Europe, Central and Eastern Europe and Asia. To support the continuing shift of manufacturing to low cost countries, WABCO also continues to shift more of its sourcing to low cost

regions. Under the leadership of the global sourcing organization, which is organized around commodity groups, WABCO identifies and develops key suppliers and seeks to integrate them as partners into its extended enterprise. Many of its western suppliers are accompanying WABCO on its move to low cost countries. Since 1999, the share of sourcing from low cost regions has increased from 10% to approximately 35%.

WABCO has developed a strong position in the design, development, engineering and testing of its products, components and systems. WABCO is generally regarded in the industry as a systems expert, having in-depth technical knowledge and capabilities to support the development of advanced technology applications. Key customers depend on WABCO and will typically involve WABCO very early in the development process as they begin designing next generation platforms. WABCO has over 800 employees dedicated to developing new products, components and systems as well as supporting and enhancing current applications. WABCO’s “front-end” development engineers are based near customers, generally in Western Europe, and supported by sales engineers that are partially resident in customer locations. WABCO also has significant resources in low cost countries performing “back-end” functions such as drawings, testing and software component development. WABCO operates test tracks in Germany, Finland (for extreme weather test conditions) and India (through its Sundaram-Clayton Ltd. joint venture).

Joint Ventures

We use joint venture partners globally to expand and enhance our access to customers. Our important joint ventures are:

•

A 50 percent owned joint venture in North America with Arvin Meritor Automotive Inc. (Meritor WABCO) that markets ABS and other vehicle control products.

•

A majority-owned (70%) partnership in the U.S. with Cummins Engine Co. (WABCO Compressor Manufacturing Co.), a manufacturing partnership formed to produce air compressors designed by WABCO.

•

A majority-owned joint venture (70%) in China with Mingshui Automotive Fitting Factory (MAFF) that provides conventional mechanical products to the local market.

•

A majority-owned joint venture (90%) in Japan with Sanwa-Seiki that distributes WABCO’s products in the local market.

•

Minority equity investments in joint ventures in India with TVS Group (39%) (Sundaram-Clayton Ltd.) and in South Africa, WABCO has a 49 percent ownership joint venture with Sturrock & Robson Ltd (WABCO SA), a distributor of braking systems products.

Employees

WABCO employs approximately 7,000 people. Approximately 40% of the employees are salaried and 60% are hourly. Approximately 85% of the workforce is in Europe, 9% is in Asia, and the remaining 6% is in the Americas. All but approximately 240 of WABCO’s employees are permanent employees. Approximately 800 employees work in engineering/product development.

Effective July 2, 2007, the local organization of the Independent Self -governing Trade Union “Solidarity” operating at WABCO’s facility in Wroclaw, Poland notified WABCO’s Polish subsidiary that it had begun a “collective dispute” with respect to wages. Under Polish law, Solidarity has the statutory right to represent the

entire workforce at the facility in labor matters. The delivery of this notice required WABCO to commence formal good faith negotiations with Solidarity. The Wroclaw facility is WABCO’s largest manufacturing site, employing approximately 23% of its workforce, and is responsible for the manufacture of a significant amount of its products, including certain products which are only manufactured in Wroclaw. On July 19, 2007, the management of WABCO’s Polish subsidiary and Solidarity reached an agreement which ended the “collective dispute” process and established a new framework with respect to wages and operational improvements meant to increase quality and productivity at the Polish facility.

Intellectual Property

Patents and other proprietary rights are important to our business. We also rely upon trade secrets, manufacturing know-how, continuing technological innovations, and licensing opportunities to maintain and improve our competitive position. We review third-party proprietary rights, including patents and patent applications, as available, in an effort to develop an effective intellectual property strategy, avoid infringement of third-party proprietary rights, identify licensing opportunities, and monitor the intellectual property claims of others.

We own a large portfolio of patents that principally relate to our products and technologies, and we have, from time to time, licensed some of our patents. Patents for individual products and processes extend for varying periods according to the date of patent filing or grant and the legal term of patents in various countries where patent protection is obtained.

The WABCO brand is also protected by trademark registrations throughout the world in the key markets in which WABCO products are sold.

While we consider our patents and trademarks to be valued assets, we do not believe that our competitive position is dependent upon patent and trademark protection or that our operations are materially dependent upon any single patent or group of related patents.

Pre-Distribution Reorganization

As part of the separation of WABCO and the planned sale of American Standard’s Bath and Kitchen business, American Standard has engaged in a global reorganization of over 300 subsidiaries in order to separate American Standard’s three businesses. The separation and reorganization has required realignment of many entities, based primarily on their lines of business as well as tax considerations and other regulatory constraints. As part of the reorganization, certain legal entities that in the past had operations in the Vehicle Control Systems business as well as the Air Conditioning Systems and Services business or the Bath and Kitchen business were assigned to WABCO. Following the reorganization, none of our subsidiaries will continue to operate in, or hold assets of, the Air Conditioning Systems and Services business or the Bath and Kitchen business. The Separation and Distribution Agreement provides for the implementation of this reorganization as well as the allocation of certain assets and liabilities among WABCO, the Air Conditioning Systems and Services business and the Bath and Kitchen business.

Legal Proceedings

In addition to the matters described below, we are party to a variety of legal proceedings that arise in the normal course of our business. While the results of these legal proceedings cannot be predicted with certainty, management believes that the final outcome of these proceedings will not have a material adverse effect on our combined results of operations or financial position.

De Chassinel litigation

In Société de Chassinel Sarl (plaintiff) vs. WABCO France SNC and WABCO Fahrzeugsysteme GmbH (WABCO France), the plaintiff sued WABCO France and other defendants in the Commercial Court of Dijon (France) in connection with a product liability claim. This claim, amounting to Euro 2 million, relates to a fire in a warehouse that destroyed the plaintiff’s inventory of straw as well as vehicles and equipment. The fire was caused by a defect in one of the plaintiff’s trucks, which was parked in the warehouse. WABCO Fahrzeugsysteme supplied the allegedly defective suspension systems (ECAS) to the truck manufacturer, MAN. The trucks were customized by a company called Durand for the plaintiff’s specific use. WABCO France rejected liability on the basis that it believes that the cause of the problem is to be found either in the customization process performed by Durand, or by the wrong adjustment of the ECAS by the truck manufacturer, MAN. The Court appointed a technical expert to assess whether or not the ECAS supplied by WABCO Fahrzeugsysteme was defective. The expert has not rendered its conclusions yet. The expert has been inactive for about one year and the plaintiff has made no attempt to speed up the expertise proceedings.

The European Commission Investigation

In November 2004, American Standard was contacted by the European Commission as part of a multi-company investigation into possible infringement of European Union competition regulations relating to the distribution of bathroom fixtures and fittings in certain European countries. In November 2005, the European Commission sent American Standard a written request for information. On March 28, 2007, American Standard received an administrative complaint entitled a Statement of Objections from the European Commission alleging infringements of European Union competition rules by numerous bathroom fixture and fittings companies, including American Standard and certain of its European subsidiaries engaged in the Bath and Kitchen business. Certain of these legal entities will be transferred to WABCO as part of a legal reorganization that will occur prior to the Distribution. American Standard and certain of its subsidiaries and, following the legal reorganization, certain of our subsidiaries will be jointly and severally liable for any fines that result from the investigation. However, pursuant to the Indemnification and Cooperation Agreement, WABCO and certain of our subsidiaries will be responsible for, and will indemnify American Standard and its subsidiaries (including certain subsidiaries formerly engaged in the Bath and Kitchen business) and their respective affiliates against any fines related to this investigation.

American Standard, WABCO and the charged subsidiaries are carefully reviewing the Statement of Objections and will respond to the European Commission on or prior to August 1, 2007, the due date for the response. Following the submission of this written response, a hearing with the European Commission to present evidence regarding the response to the Statement of Objections is expected to occur sometime in the fall of 2007. Following the hearing, the European Commission could, among other things, issue a new Statement of Objections or request additional information before adopting a decision or adopt a decision imposing a fine. A fine would be required to be paid within three months of the decision, unless imposition of any such fine were appealed within two months of the decision in which case we would be required to pay the fine or to provide a bank guarantee for the full amount of the fine plus interest. The appeals process could take as long as 5-7 years during which time WABCO would not have access to such funds or would be required to provide the guarantee.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Commitments and Contingencies” and “Notes to Quarterly Financial Statements—Note 4. Warranties, Guarantees, Commitments and Contingencies—Contingencies—Litigation.”

Environmental Matters

WABCO’s operations are subject to local, state, federal and foreign environmental laws and regulations that govern activities or operations that may have adverse environmental effects and which impose liability for clean-up costs resulting from past spills, disposals or other releases of hazardous wastes and environmental compliance. Generally, the international requirements that impact the majority of WABCO’s operations tend to be no more restrictive than those in effect in the U.S.

Throughout the world, WABCO has been dedicated to being an environmentally responsible manufacturer, neighbor and employer. WABCO has a number of proactive programs under way to minimize its impact on the environment and believes that it is in substantial compliance with environmental laws and regulations. Manufacturing facilities are audited on a regular basis. Ten WABCO manufacturing facilities have Environmental Management Systems (EMS), which have been certified as ISO 14001 compliant. These facilities are those located in:


Claye-Souilly, France		Hannover, Germany
Gronau, Germany		Pyungtaek, Korea
Leeds, UK		Mannheim, Germany
Meppel, Netherlands		Wroclaw, Poland
Qingdao, China		Jinan, China

A number of WABCO’s facilities are undertaking responsive actions to address groundwater and soil issues. Expenditures in 2006, 2005 and 2004 to evaluate and remediate these sites were not material.

MANAGEMENT

Our Directors and Executive Officers

The following table sets forth information as of July 19, 2007, regarding individuals who are expected to serve as our directors and/or executive officers following the distribution, including their anticipated positions with our company following the distribution.

We expect that our Board of Directors following the distribution will be comprised of eight directors, at least a majority of whom will be considered independent under the independence requirements of the New York Stock Exchange. Our Board of Directors will be divided into three classes with staggered terms, which means that directors in one of the classes will be elected each year for a new three-year term. We expect that Class I directors will have an initial term expiring in 2008, Class II directors will have an initial term expiring in 2009 and Class III directors will have an initial term expiring in 2010.


Name	Age	Position(s)	Director Class
G. Peter D’Aloia	62	Director	I
Dr. Juergen Gromer	62	Director	I
James F. Hardymon	72	Director and Chairman of the Board	II
Kenneth J. Martin	52	Director	III
Michael Smith	63	Director	II
Jacques Esculier	47	Chief Executive Officer and Director	III
Nikhil M. Varty	42	Vice President, Compression & Braking	N/A
Jean-Christophe Figueroa	44	Vice President, Vehicle Dynamics and Controls	N/A
Dr. Christian Wiehen	52	Vice President, Product Development	N/A
Ulrich Michel	44	Chief Financial Officer	N/A
Todd Weinblatt	38	Controller	N/A
Kevin Tarrant	50	Senior Vice President, Human Resources	N/A

G. Peter D’Aloia has been designated as one of our director nominees. Mr. D’Aloia serves as Senior Vice President and Chief Financial Officer of American Standard, a position he has held since 2000. Before joining American Standard, Mr. D’Aloia worked for Honeywell where he most recently served as Vice President—Business Development. He spent 27 years with Honeywell’s predecessor company, AlliedSignal, in diverse finance management positions. During his career with AlliedSignal, he served as Vice President—Taxes; Vice President and Treasurer; Vice President and Controller; and Vice President and Chief Financial Officer for the Engineered Materials Sector. Early in his career, he worked as a tax attorney for the accounting firm, Arthur Young and Company. Mr. D’Aloia is a Director of FMC Corporation and AirTran Airways.

Dr. Juergen Gromer has been designated as one of our director nominees. He has been President of Tyco Electronics since April 1999 and became President and Vice Chairman of Tyco Electronics in January 2006. Dr. Gromer formerly held senior management positions from 1990 to 1998 at AMP (acquired by Tyco in April 1999) including Senior Vice President of Worldwide Sales and Services, President of the Global Automotive Division, and Vice President of Central and Eastern Europe, and General Manager of AMP Germany. Dr. Gromer has over 20 years of AMP and Tyco Electronics experience, serving in a wide variety of regional and global assignments. He is Chairman of the Board of the Society for Economic Development of the District Bergstrasse/Hessen, a member of SAE and the Advisory Board of Commerzbank, a Director of the Board and Vice President of the American Chamber of Commerce in Germany, and a member of the Board of RWE Rhein-Ruhr AG.

James F. Hardymon has been designated as one of our director nominees. He is expected to be elected by our board of directors as our Chairman of the Board. Mr. Hardymon served as a director of American Standard from 1999-2007. Mr. Hardymon was the Chairman and Chief Executive Officer of Textron, Inc., a manufacturing and financial services business, from 1993 to 1998 and continued as Chairman until his retirement in 1999. Previously, Mr. Hardymon had been Chief Executive Officer since 1992, and President and Chief Operating

Officer since 1989. Prior to his affiliation with Textron, he served from 1961 to 1989 in various executive capacities with Emerson Electric Co. Mr. Hardymon is a director of Circuit City Stores, Inc. and Lexmark International, Inc. Mr. Hardymon is also a member of the Advisory Board of Investcorp International, Inc. He has served on 10 corporate boards and as chairman of three NYSE-traded companies.

Kenneth J. Martin has been designated as one of our director nominees. Mr. Martin is the retired Chief Financial Officer and retired Vice Chairman of Wyeth (formerly American Home Products). Mr. Martin joined American Home Products in 1984 as Assistant Director of Corporate Compliance and subsequently held the positions of Assistant Vice President of Finance for American Home Food Products. In 1989, he was appointed Vice President and Comptroller of American Home Products Corporation. In 1992, he became Executive Vice President for American Home Food Products. Two years later, he was promoted to Executive Vice President of Whitehall-Robins Healthcare and in 1995, President of American Home Food Products. He was named President of Whitehall-Robins Healthcare in 1997 and Senior Vice President and Chief Financial Officer of Wyeth-Ayerst Pharmaceuticals in 1998. In 2000, he was appointed Senior Vice President and Chief Financial Officer of Wyeth and in 2002, he was named Executive Vice President and Chief Financial Officer.

Michael Smith has been designated as one of our director nominees. Mr. Smith is the retired Chairman of the Board and Chief Executive Officer of Hughes Electronics Corporation. Prior to his election to those positions in 1997, he had been Vice Chairman of Hughes Electronics and Chairman of the Hughes Aircraft Company. Mr. Smith joined Hughes Electronics in 1985 as Senior Vice President and Chief Financial Officer after spending nearly 20 years with General Motors in a variety of financial management positions. In 1992 he was elected Vice Chairman of Hughes Missile Systems, and in 1995 he was elected Chairman of Hughes Aircraft Company. Mr. Smith is a member of the board of directors of Alliant Techsystems, Inc., Ingram Micro, Inc., Teledyne Technologies, Inc. and Flir Systems, Inc.

Jacques Esculier is expected to be our Chief Executive Officer and he has been designated as one of our director nominees. Mr. Esculier currently serves as Vice President of American Standard and President of the Vehicle Control Systems business, a position he has held since January 2004. Prior to holding that position, Mr. Esculier served in the capacity of Business Leader for American Standard’s Trane Commercial Systems’ Europe, Middle East, Africa, India & Asia Region from 2002 through January 2004. Prior to joining American Standard in 2002, Mr. Esculier spent more than six years in leadership positions at AlliedSignal/Honeywell. He was Vice President and General Manager of Environmental Control and Power Systems Enterprise based in Los Angeles, and Vice President of Aftermarket Services—Asia Pacific based in Singapore.

Nikhil M. Varty is expected to be our Vice President, Compression and Braking. Mr. Varty currently serves as Vice President, Compression and Braking of the Vehicle Control Systems business, a position he has held since January 2005. Prior to holding that position, Mr. Varty served in the capacity of Chief Financial Officer of the Vehicle Control Systems business. Prior to joining American Standard in June 2001, Mr. Varty had more than 10 years of national and international senior level finance roles with Great Lakes Chemical Corp., Honeywell International/Allied Signal and Coopers & Lybrand.

Jean-Christophe Figueroa is expected to be our Vice President, Vehicle Dynamics and Controls. Mr. Figueroa joined WABCO in his current position in 2005 from tier-1 automotive supplier Valeo where he had been group vice president, purchasing, based in Paris, France. Mr. Figueroa spent 13 years in senior management business and purchasing positions for Valeo, including leadership of the Automotive Climate Control business in both Mexico and subsequently Western Europe. Prior to joining Valeo, Mr. Figueroa spent seven years with Pierburg, Mexico, in various leadership positions in logistics, purchasing and program management.

Dr. Christian Wiehen is expected to be our Vice President, Product Development. Dr. Wiehen currently serves as Vice President Product Development of the Vehicle Control Systems business, a position he has held since January 2005. Dr. Wiehen has been with the Vehicle Control Systems business for 19 years. He has held various leadership positions of increasing responsibility in Engineering, Product Development, Product Marketing and Manufacturing in Germany and in Brussels, Belgium. Prior to joining American Standard in 1988, Dr. Wiehen had been a Lecturer in Engineering at the University of Hannover, Germany.

Ulrich Michel is expected to be our Chief Financial Officer. Mr. Michel currently serves as Chief Financial Officer of the Vehicle Control Systems business, a position he has held since April 2005. Prior to holding that position, Mr. Michel served in the capacity of Chief Financial Officer for American Standard’s Trane Commercial Systems’ EMAIR (Europe, Middle East, Africa & India Region) from 2003 through April 2005. Prior to joining American Standard in 2003, Mr. Michel spent more than six years in financial leadership positions at AlliedSignal/Honeywell with areas of focus including mergers and acquisitions, the Specialty Chemicals business, and the Control Products business in Europe. Before joining AlliedSignal/Honeywell, Mr. Michel spent eight years at Price Waterhouse.

Todd Weinblatt is expected to be our Controller. Mr. Weinblatt currently serves as Assistant Controller of American Standard, a position he has held since 2004. Before joining American Standard, Mr. Weinblatt served as Director—Accounting Policy and External Reporting at The Dun & Bradstreet Corporation. His prior experience includes six years at Lucent Technologies Inc., where he was a Senior Manager of Accounting Policy and Mergers/Acquisitions/Divestitures. He began his career with PricewaterhouseCoopers, where he spent five years as an auditor.

Kevin Tarrant is expected to be our Senior Vice President, Human Resources. Most recently, Mr. Tarrant served for 2 years as vice president, global organization effectiveness for Arrow Electronics in Melville, New York. Prior to that, Mr. Tarrant was senior vice president of human resources for First Data Resources in Denver, Colorado from 2003 to 2005 after having served as vice president of human resources for First Data’s Western Union International business headquartered in Paris, France from 2002 to 2003. Before joining First Data, Mr. Tarrant spent 10 years at the headquarters and business-unit level working for various Dun & Bradstreet Corporation businesses and 6 years at the Monsanto Company’s chemical controls businesses.

Committees of the Board of Directors

Pursuant to our amended and restated by-laws, our Board of Directors will be permitted to establish committees as it deems appropriate. Initially, to facilitate independent director review, to comply with NYSE and SEC rules, and to make the most effective use of our directors’ time and capabilities, our Board of Directors will have the following committees: an Audit Committee and a Compensation, Nominating and Governance Committee.

Audit Committee

The Audit Committee will be established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934. Each member of the Audit Committee will be independent as defined by the NYSE listing standards, and at least one director will satisfy the definition of audit committee financial expert as determined by the SEC. The committee will:

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review the scope of internal and independent audits; review our quarterly and annual financial statements and annual report on Form 10-K;

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review the adequacy of management’s implementation of internal controls;

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review our accounting policies and procedures and significant changes in accounting policies;

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appoint the independent public accountants and review their independence and performance and the reasonableness of their fees; and

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review compliance with our Code of Conduct and Ethics, major litigation, compliance with environmental standards and the investment performance and funding of our retirement plans.

Compensation, Nominating and Governance Committee

Each member of the Compensation, Nominating and Governance Committee will be independent as defined by the NYSE listing standards. The committee will:

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identify individuals qualified to become members of the Board and recommend to the Board director nominees to be presented at the annual meeting of shareholders as well as nominees to fill vacancies on the Board;

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recommend Board committee memberships, including committee chairpersons;

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consider and make recommendations concerning director nominees proposed by shareholders;

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develop and recommend to the Board corporate governance principles for the company and processes for Board evaluations;

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review and make recommendations concerning compensation of directors;

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review and make recommendations concerning officers’ salaries and employee benefit and executive compensation plans and administer certain of those plans, including our incentive compensation and stock incentive plans;

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review and approve performance goals and objectives for all elected officers, including the Chief Executive Officer, evaluate performance against objectives and based on its evaluation, approve all officers’ base and incentive compensation; and

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evaluate executive succession plans, the quality of management, and leadership and management development.

Board of Directors’ Compensation

Each non-management director will be paid a retainer of $10,000 per calendar quarter and directors who are not committee chairs will receive $1,500 per day for attendance at meetings of the Board of Directors and Committees. Committee chairs will receive $3,000 per day for attendance at Board and Committee meetings. All non-management directors will receive $750 for attendance at telephonic Board or Committee meetings.

A trust will be established to hold restricted shares of WABCO common stock for each participating non-management director. A trust account will be established for each non-management director at the time he or she is first elected to the Board, and will be credited with that number of shares of WABCO common stock equivalent in value to $50,000 ($100,000 in the case of our Chairman, Mr. Hardymon) based on the closing price of WABCO common stock on the last trading day before the director’s election to the Board. In addition, non-management directors will have credited to their trust accounts annually, on the day prior to each annual meeting, that number of shares of WABCO common stock equal in value to $55,000 based on that day’s closing price of WABCO common stock. Any cash dividends issued to the trust with respect to shares held on behalf of the non-management directors will be reinvested in additional shares. The trust shares do not result in direct ownership until the director ceases service on the Board and remain subject to the claims of WABCO’s creditors while in the trust. If a director is removed for cause, his or her interest in the shares will be forfeited. In some instances where local regulations dictate, non-management directors may be granted restricted stock units rather than restricted shares. All restricted shares or restricted stock units shall be issued under the Omnibus Plan described below. At or following the distribution, Mr. Hardymon will receive a founder’s grant in recognition of his work in recruiting WABCO Board members, as well as the establishment of WABCO’s initial compensation and governance philosophies. This founder’s grant will consist of stock options and restricted stock units of WABCO stock with a fair value for accounting purposes of approximately $100,000. These equity awards will vest, subject to his continued service on the Board of Directors, in three annual increments on each of the first three anniversaries of the date of grant.

Directors will be reimbursed for reasonable expenses incurred to attend meetings and may be extended the use of company owned or leased aircraft when traveling on company business or when commercial air travel arrangements are unavailable or impractical for travel to and from Board and Committee meetings.

Compensation Discussion and Analysis

WABCO’s executive compensation programs are intended to deliver competitive total compensation upon achievement of performance objectives consistent with our strategy to attract, motivate, develop and retain world-class leaders who will drive the creation of shareholder value.

The WABCO Board of Directors will form a Compensation, Nominating and Governance Committee (CNGC), which will determine total remuneration arrangements for its officers going forward. The CNGC will review and establish the company’s compensation and benefit programs for executive officers. All compensation and benefit programs will be evaluated in light of the total remuneration package. Programs will be performance-based, intended to align the interests of executives with those of shareholders and be market competitive. Variable compensation programs will be balanced between short- and long-term objectives, placing a significant amount of the executive’s compensation at risk.

The components of the company’s total remuneration package for the chief executive officer, the chief financial officer and our three other most highly compensated executive officers (the “Named Officers”), are:

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Base Salary

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Variable Cash Compensation

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Annual Incentive Plan (AIP)

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Long-Term Incentive Plan (LTIP)

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Equity Compensation

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Benefits & Perquisites

The CEO, with input from the Senior Vice President, Human Resources, will make recommendations to the CNGC on executive officers’ base salary and incentive pay. The CNGC will consider the following when determining the appropriate compensation levels:

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Relative importance of the role within the company

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Level of experience

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Performance

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Competitive market

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Internal pay equity

The CNGC will determine the CEO’s compensation using the same criteria. Incentive pay awards will be determined by the CNGC by assessing performance against objectives that the CNGC established for the CEO at the beginning of the incentive performance period.

The CNGC is expected to select an independent compensation consultant who will advise them on total remuneration for executives. The role of the independent consultant will be to provide advice and counsel to the CNGC on executive remuneration matters and to complete an annual study on the competitiveness and appropriateness of the company’s incentive programs.

The CNGC is expected to determine a compensation survey peer group for purposes of benchmarking market practices and compensation levels for executive officers. It is intended that the peer group will be comprised of companies that compete with WABCO for executive talent and have executive positions similar in breadth, complexity and global responsibility to WABCO’s executive positions. This compensation survey group will be reviewed annually by the CNGC and adjusted as appropriate. In the interim, we have used survey data from Hewitt and Towers Perrin for companies with revenues between $1.0 billion and $3.0 billion. This data will be used as one input into setting individual compensation levels. We will broadly target the 50th percentile of the

market for annual cash and slightly above the 50th percentile for long-term incentives. Our philosophy is to have our executive officers strongly incented to drive the long-term strategy of the company and we believe this is best accomplished via the long-term incentives described below.

Annually, the CNGC will complete a comprehensive review of all elements of remuneration for executive officers. Tally sheets will be used to analyze the aggregate value of all components of each executive officer’s remuneration. The tally sheets include cash compensation, equity, retirement, other benefits, and deferred compensation under four scenarios - active employment, voluntary termination, involuntary termination and termination upon a change of control. Tally sheets, along with a review of the competitive market data, performance, and internal pay equity will be used by the CNGC in determining any changes to executive officers’ compensation.

In determining the ratios of annual and long-term compensation, the company places greater emphasis on long-term compensation as an executive’s responsibility increases. The ratio of short-term incentives to the executive’s base salary reflects both internal comparisons and market trends. Long-term compensation represents more than two-thirds of the incentive compensation of executive officers, including the Named Officers. The company believes that our executives should have a substantial amount of their compensation at risk based on the long-term, sustained performance of the company. The company will not apply specific formulas or assign mathematical weightings when determining the split between long-term cash and equity awards. However, executive officers’, including Named Officers’, rewards for long-term financial and strategic goals (long-term cash) will be balanced with shareholder value creation (equity).

Base Salary

The base salary of our Named Officers will be established taking into account the executive’s experience, the relative importance of the officer’s role and competitive market factors. Where appropriate, salary adjustments will be made to reflect individual performance and market conditions.

Section 162(m) of the Internal Revenue Code

It is expected that the CNGC will structure variable compensation programs for the Named Officers to be linked to a combination of achievement of key corporate objectives and appreciation in the price of the company’s stock. The company generally intends the variable compensation paid to the executive officers, who are U.S. taxpayers, to be “performance based” within the meaning of Section 162(m) of the Internal Revenue Code so as to be tax deductible by the company, which benefits our shareholders. In order to be performance based, the compensation must be, among other things, paid pursuant to a shareholder approved plan upon the attainment of objective performance criteria. Tax deductibility of compensation is an important factor, but not the sole factor, in setting executive compensation policy and in rewarding superior executive performance. Accordingly, the CNGC reserves the right to pay amounts that are not deductible in appropriate circumstances. In determining variable compensation programs, the company will consider other tax and accounting implications of particular forms of compensation; however, the forms of variable compensation utilized will be determined primarily by their effectiveness in providing maximum alignment with key strategic objectives and the interest of our shareholders.

Variable Cash Compensation

The company intends to offer a cash-based annual incentive program (AIP) and cash-based three-year long-term incentive program (LTIP) for its executive officers, including the Named Officers. Awards under both the AIP and the LTIP will be issued under the Omnibus Plan (described below). The CNGC will establish performance goals for the new AIP and LTIP performance periods at its first calendar meeting each year.

Annual Incentive Plan

The CNGC will establish an annual incentive program for executive officers, including Named Officers, and key managers based upon achievement of financial, strategic, and individual goals.

With respect to the portion of the 2007 fiscal year following the distribution, WABCO expects to continue in effect the annual incentives established for executive officers, including Named Officers, by American Standard, which are described in more detail under the headings “Compensation Discussion and Analysis—Chief Executive Officer Compensation” and “Compensation Discussion and Analysis—Named Officer Compensation.”

Long-Term Incentive Plan

The CNGC will establish a cash long-term incentive program for key executives, including Named Officers. The performance period will normally be three years. However, given the transition from the American Standard plans after the distribution, the first cycle will likely be 18 months (2007-2008) and the second will likely be 30 months (2007-2009). Goals are expected to include three to four of the following measures: sales, gross revenues, gross margins, earnings per share, internal rate of return, return on equity, return on capital, net income (before or after taxes), management net income, operating income, operating income before interest expense and taxes, cash flow and free cash flow.

The long-term incentives for the Named Officers in place under American Standard’s 2005-2007 performance cycle are described under the headings “Chief Executive Officer Compensation” and “Named Officer Compensation.”

Equity

It is intended that executives will also receive a portion of their long-term compensation in the form of stock options and/or other equity awards. As stated earlier, WABCO will not apply mathematical formulas to determine the split between cash and equity in long-term incentives. The number of options granted to the executive officers, including the Named Officers, will be determined on an individual basis considering the sustained performance of the recipients and their expected ability to impact future business results, an assessment of their future potential, analysis of past option grants, as well as market comparisons. The sum of the values of both cash and equity long-term incentive award grants is targeted slightly above the 50th percentile of the compensation survey group. Generally, the equity portion of the Named Officers’ long-term compensation represents greater than 50% of their long-term compensation.

Equity awards are expected to be granted on an annual basis and approved by the CNGC, with the exercise price of the grant being the average of the high and low trading price on the date of the grant. Generally, the awards will vest ratably over three years. Off-cycle grants will occasionally be made during the year in connection with new hires or promotions, with the exercise price of the grant being the average of the high and low trading price on the date of hire or promotion. The CNGC may delegate limited authority to an officer or officers of the company to approve off-cycle grants to non-executive officers under the standard terms and conditions of the Omnibus Plan (described below).

Non-qualified stock options (NQSOs) are the preferred equity vehicle to deliver highly leveraged incentive compensation value. NQSOs offer a direct connection to WABCO shareholder value creation; offer vesting features that can be used as a retention tool; and align with our philosophy to concentrate a large portion of executive pay in equity. NQSOs align employee incentives with shareholder interests since options have value only if the stock price increases over time. The company’s 10-year options help focus employees on long-term growth. In addition, options are intended to help retain key employees because they typically cannot be fully exercised for three years, keeping employees focused on long-term performance. The Omnibus Plan (described below) also permits the grant of restricted stock, restricted stock units, performance shares and stock appreciation rights. The CNGC may consider these types of grants as an alternative equity incentive for executives, including Named Officers.

Omnibus Incentive Plan

American Standard Companies Inc. has approved the adoption by us of the WABCO Holdings Inc. Omnibus Incentive Plan (the “Omnibus Plan”), which is expected to be formally adopted by our Board of Directors prior to the distribution. The Omnibus Plan is intended to promote our long-term financial success and increase shareholder value by providing us with the flexibility to implement annual and long-term cash, equity and equity based incentives. The Omnibus Plan is also intended to align the interests of our employees with the interests of our shareholders by affording them certain opportunities to acquire an interest in our stock. We believe that these incentives and opportunities will encourage our executives and other key employees to continue in our employ, by providing them with a competitive level of compensation that varies based on our performance. In addition, the existing equity awards of American Standard Companies Inc. which are adjusted into awards of, or with respect to, WABCO Holdings Inc. common stock (described above under “Existing Equity Awards”) will be issued under the Omnibus Plan. The CNGC of our Board of Directors is expected to administer the Omnibus Plan.

Set forth below is a summary of the principal provisions of the Omnibus Plan.

Types of Awards. Under the Omnibus Plan, the CNGC may issue the following types of awards: stock options, stock appreciation rights (sometimes referred to as SARs), restricted stock, restricted units, annual incentive awards and long-term incentive awards. These awards are described in more detail below.

Stock Options. The CNGC may grant non-qualified stock options and stock options qualifying as incentive stock options. Unless otherwise determined by the CNGC at the date of grant, each stock option will become exercisable on a cumulative basis in three approximately equal installments on each of the first three anniversaries of the date of grant. The CNGC may accelerate the exercisability of any stock option at any time. Once exercisable, each stock option will generally remain exercisable until the expiration of its term or its earlier cancellation in connection with a termination of employment under the circumstances described below. In no event shall the term of any stock option exceed 10 years from the date on which the stock option is granted.

The exercise price of each stock option will be at least equal to the fair market value of a share of our stock on the date the stock option is granted. To exercise a stock option, an employee may pay the exercise price in cash or cash equivalents (including using a cashless exercise program), by exchanging shares of our stock which have been owned by the employee for at least six months at the time of exercise, or by any combination of the foregoing.

In general, when an employee’s employment terminates for any reason other than due to a termination by us for cause, the employee’s outstanding exercisable stock options will remain exercisable for one year following his or her termination of employment. If we terminate an employee’s service for cause, all of his or her outstanding stock options, whether or not exercisable, shall be immediately canceled. Unless the CNGC otherwise determines, any outstanding stock options that are not exercisable at the date an employee’s employment terminates will be canceled.

Stock Appreciation Rights. The CNGC may also grant SARs that can either be freestanding awards or awards that are attached to a stock option. If SARs are attached to a stock option, the exercise of either the SAR or the stock option will cause the cancellation of the corresponding portion of the other award. Unless the CNGC determines otherwise, the terms and conditions applicable with respect to any grant of a SAR will be substantially the same as apply to the grant of a stock option. This means that the rules governing the vesting of a SAR, and the time that an employee will have to exercise the SAR after the termination of his or her employment, will be substantially the same as apply to a stock option. Upon exercise of a SAR, an employee will generally receive a payment for each SAR exercised equal to the excess of the then fair market value of our stock over the fair market value of our stock on the date the SAR was granted. Upon exercise of a SAR, payment may be made in cash, in shares of our stock, or in a combination of cash and shares as determined by the CNGC. A SAR can also be issued as a right to receive a payment in cash upon a set date equal to the increase in price in Common Stock over a specified period, sometimes otherwise known as “phantom stock.”

Restricted Stock and Restricted Units. The CNGC also has the right to grant awards of restricted stock and restricted units. Each grant made will establish a period during which the shares subject to the award will remain subject to forfeiture. An employee will not be able to dispose of the shares subject to the award prior to the expiration of this period. Except for the restrictions set forth in the Omnibus Plan, upon the grant of restricted stock an employee will generally have all the rights of a shareholder, including the right to vote the shares and receive dividends with respect to such shares of restricted stock. Restricted units are similar to restricted stock, except that the shares of our stock will not be issued to the employee until the end of the restricted period. However, the CNGC may direct that we pay cash, in whole or in part, instead of delivering shares of our stock in settlement of restricted units. If the CNGC makes a cash payment, the amount payable for each share of our stock will be equal to the fair market value of a share of our stock on the date on which the restricted period lapses. To be economically equivalent to restricted stock, there will generally be credited to an account for the employee an amount equal to any cash dividends we pay or the value of any property distributions we make on our stock during the restricted period (“Dividend Equivalents”).

Unless the CNGC otherwise determines at or after the date of grant, the restricted period with respect to an award of restricted stock or restricted units will lapse in three equal increments on each of the first three anniversaries of the date of grant of the award. In addition, the CNGC may provide for termination of the restricted period upon achievement of performance goals it specifies. The CNGC will determine, in its sole discretion, whether the performance goals have been achieved.

When a restricted stock or restricted unit award is made to any of our executive officers that is contingent on the achievement of performance goals, the performance goals will be established by the CNGC and may be based on one or more of the following criteria: sales, gross margin, earnings per share, internal rate of return, return on equity, return on capital, net income (before or after taxes), operating income, operating income before interest expense and taxes, cash flow, free cash flow or stock price. The performance goals established may reflect absolute entity performance or a relative comparison of entity performance to the performance of a peer group or other external measure. These performance criteria may also form the basis for the performance goals to be established by the CNGC in making annual incentive awards and long-term incentive awards to our executive officers.

Unless the CNGC otherwise specifies at the date of grant, in the event that an employee’s employment terminates for any reason, any shares of restricted stock then held by the employee will revert to us and all restricted units and any dividend equivalents credited with respect to such restricted units will be forfeited.

Annual and Long-Term Incentive Awards. The maximum annual incentive award payable to any of our executive officers or other employees for any single calendar year is $3,500,000. The maximum long-term incentive award opportunity that can be made available in any single calendar year is also $3,500,000.

If an employee’s employment terminates during a performance cycle due to death or disability, he or she will be entitled to receive a prorated annual incentive award or long-term incentive award assuming full achievement of the performance goals for such performance cycle and based on his or her employment during the performance period. Unless otherwise determined by the committee, if an employee’s employment terminates for any reason other than death or disability before the CNGC authorizes payment of an annual or a long-term incentive award, he or she will forfeit any right to receive payment of such Award. Except as required to comply with certain tax conditions, the Omnibus Plan gives the CNGC the power to establish rules regarding termination of employment that differ from those set forth above. Unless otherwise determined by the CNGC at or after the date of grant, annual and long-term incentive awards will be payable in cash.

Director Grants and Grants to Employees Outside of the United States. The Board may also grant our non-management directors non-qualified stock options, SARs, restricted stock or restricted units. The CNGC has the power to adopt sub-plans for our non-U.S. based employees covering in the aggregate not more than 2,000,000 shares. The terms of these sub-plans may be modified from the applicable terms of the Plan as deemed necessary or advisable to comply with non-U.S. law or practice.

Administration. As noted above, the CNGC of our Board of Directors is expected to administer the Omnibus Plan. The Omnibus Plan permits the CNGC to delegate to one or more of our employees authority to administer the Omnibus Plan in respect of participants who are not executive officers subject to the stock ownership reporting requirements of the United States Federal securities laws.

Eligibility. Incentive Awards may be granted to our employees, consultants, independent business managers and non-management directors, provided that non-management directors will not be eligible for annual incentive awards and long-term incentive awards and only employees shall be eligible for incentive stock options. The CNGC has the authority to determine the employees, consultants and independent business managers, and the Board has the authority to determine the non-management directors to whom Incentive Awards may be granted and the conditions that may be imposed on the grant of such Incentive Awards.

Number of Shares Issuable Under the Omnibus Plan. The maximum number of shares of our stock that may be issued under the Omnibus Plan in respect of newly granted Incentive Awards is 10,000,000. We have limited the total number of shares of our stock that may be used for new grants of Incentive Awards other than stock options and SARs to 1,000,000 shares.

The shares to be issued under the Omnibus Plan may be newly issued shares or treasury shares. Upon the occurrence of certain events that affect our capitalization, including, but not limited to, a stock dividend, stock split, extraordinary cash dividend, spinoff, merger or recapitalization, appropriate adjustments are required to be made in the aggregate number and limitations on the number of shares that may be issued under the Omnibus Plan in the future and in the number, price per share and/or vesting criteria under all outstanding Incentive Awards. If any part of a grant made under the Omnibus Plan is canceled or terminated without consideration for such cancellation or termination, the shares related to the portion of the award forfeited will be available for future grants under the Omnibus Plan. However, under the Omnibus Plan, shares surrendered to exercise options, or pay a participant’s tax withholding obligations, or related to an award that is settled for cash or otherwise settled for consideration other the issuance of shares, will not be available for new Incentive Awards under the Omnibus Plan.

Individual Award Limits. The total number of shares of our stock that may be subject to an award of stock options and SARs granted to any individual during any calendar year may not exceed 750,000. The total number of shares of restricted stock and restricted units that may be awarded to any individual during a calendar year may not exceed a total of 200,000 shares or units.

Accelerated Vesting and Payment upon a Change of Control. Except as otherwise described below, a Change of Control of WABCO (as defined in the Omnibus Plan) will accelerate the vesting of all employees’ outstanding Incentive Awards. This means that, upon a Change of Control, all outstanding stock options and SARs will generally become fully exercisable, and may be cashed out at the discretion of the CNGC. Any such cash out will be effected using the Change of Control settlement value established under the Omnibus Plan based on the highest price of our stock prevailing during the 60 days prior to date on which the Change of Control occurs, except that, with respect to options which vested following December 31, 2004, the fair market value of a share on the date the change of control occurs will be used to the extent required to avoid adverse federal income tax consequences that could arise from using the defined settlement value. The restriction period applicable to each outstanding share of restricted stock and restricted unit will also generally lapse upon a Change of Control. In the event that a Change of Control occurs as a result of any transaction that is submitted to our shareholders for approval, an employee whose employment is terminated due to death or disability or by the company for any reason other than for cause on or after the date of such approval will receive the same benefits as though he or she continued in our employment until the Change of Control. The distribution will not constitute a Change of Control.

Notwithstanding the foregoing, the Omnibus Plan provides that if the CNGC determines prior to a Change of Control that any stock option, SAR, restricted stock or restricted unit will be replaced or otherwise honored or

assumed by the new employer (or the parent or an affiliate of such employer) on terms that meet certain basic conditions to assure that the employee is not adversely affected and which provide for acceleration upon an involuntary or constructive termination of employment (as defined in the Omnibus Plan) within two years of a Change of Control, no acceleration of exercisability, vesting or cash settlement will occur at the time of the Change of Control.

Upon a Change of Control, all performance periods for annual incentive awards or long-term incentive awards will end and each award will be payable, at target levels, and prorated for the portion of the performance cycle completed prior to the Change of Control.

Amendment or Termination. Our Board may terminate or suspend the Omnibus Plan at any time and may amend or modify the Omnibus Plan from time to time. No such action may alter or impair a participant’s rights under any previously granted stock options, SARs, or restricted stock or restricted unit awards without his or her consent. The Omnibus Plan will expire on the tenth anniversary of the distribution. The Board may elect to terminate the Omnibus Plan as of an earlier date, but such termination will not affect any awards granted under the Omnibus Plan prior to such date of termination.

Retirement Benefits

The company will establish a tax qualified 401(k) plan, in which Messrs. Esculier and Varty will participate, which will include a basic contribution equal to 3% of eligible compensation plus a matching contribution of up to 6% of eligible compensation. In addition, all employees whose eligible compensation exceeds limits imposed by Section 401(a)(17) of the Internal Revenue Code (“IRS Limits”) will participate in the Supplemental Savings Plan to be established by the company. Under the Supplemental Savings Plan, we credit 9% on eligible compensation between the IRS Limits and $250,000 plus 6% on eligible compensation in excess of $250,000. For Mr. Esculier, the company will credit 9% on all eligible compensation in excess of the IRS Limits.

Under the Supplemental Savings Plan, the CNGC will have the discretion to determine that certain executive officers and other executives are eligible for a transitional benefit to compensate them for the shortfall between their projected pension benefit under a previous employer’s pension plans and the sum of their accrued benefit under the previous employer’s plans and their projected benefits under the company’s retirement plans. Any transition benefits will be in the form of additional credits equal to a percentage of the executive’s Supplemental Savings Plan eligible compensation in such amounts and for such period of time as the CNGC determines is appropriate under the circumstances in accordance with plan provisions.

Messrs. Michel and Figueroa will participate in a Belgian tax-qualified defined contribution plan where the company contributes 3% of base pay up to the Belgian social security covered pay limit plus 9% of base pay, and 9% of target annual incentive bonus, on pay above the Belgian social security covered pay limit.

Dr. Wiehen participates in a defined benefit German pension plan with a final pay pension formula. Dr. Wiehen’s pension benefits are described in detail under the heading “Pension Benefits (with respect to American Standard).”

Perquisites

In determining any perquisite program, WABCO will consider perquisites commonly offered at peer companies. All benefit and perquisite programs will be evaluated in light of the total remuneration package, including cash and equity compensation. At this time, no specific perquisite programs have been put in place for the executive officers, including the Named Officers.

Payments U pon Severance or Change of Control

The company will provide severance protection to the Chief Executive Officer, the Chief Financial Officer and the Senior Vice President, Human Resources, as described in detail under the heading “Severance and Change of Control Arrangements,” if their employment is terminated by the company without cause or they

terminate their employment for good reason. The types of actions that can give rise to a termination for good reason are changes to the individual’s compensation, benefits or position that result in a significant diminution in his or her position within the company. The company believes that severance payments to these officers would be appropriate in these circumstances and that the amount of the severance benefits is reasonable and necessary to attract and retain superior executive talent .

The company also provides certain payments or other benefits, described in detail under the heading “Change of Control Benefits,” to its executive officers, including the Named Officers, in the event of a change of control in order to allow them to act in the best interests of shareholders without the distraction of potential negative repercussions of a change of control on their own position with the company. The definition used for determining whether a change of control has occurred, described under the heading “Change of Control Benefits,” is designed to encompass the various circumstances where a third party would obtain the ability to control or otherwise substantially influence the operation and strategic direction of our business. Under the Omnibus Plan, in the event of a change of control, any outstanding stock options or stock appreciation rights will become immediately exercisable and may be cashed out at the discretion of the CNGC, and the restricted period shall lapse as to any outstanding restricted stock or restricted units, unless the CNGC determines prior to the change of control that any stock option, stock appreciation right, restricted share or restricted unit will be replaced or otherwise honored by the new employer on terms that do not adversely affect the participants. In addition, all performance periods for annual incentive and long-term incentive awards shall end and pay out at target on a prorated basis.

Severance benefits delivered due to a change of control are triggered only in the event of both a change of control and a Named Officer’s or other participant’s loss of job or resignation on account of material diminution in terms and conditions of employment, since those benefits are fixed and not affected by a change in the direction of the business. However, the company believes it appropriate to treat holders of equity awards, including stock options, like shareholders in the event of a change of control, since the change of control may change the direction of the company in a way that could materially alter their award opportunities. Therefore, equity awards are subject to adjustment upon a change of control, as discussed in the prior paragraph, without the requirement of a change in employment status.

Founders’ Grant

WABCO will make a special equity award to approximately 200 employees and its Chairman of the Board, effective on the date of the distribution. We believe the founders’ grant serves to foster an ownership culture and immediately aligns the interests of our employees and shareholders, as well as a retention tool for key management talent. 50 percent of the award will be in NQSOs and 50 percent will be in restricted stock units. Generally, these equity awards will vest, subject to continued employment with WABCO, in three annual increments on each of the first three anniversaries of the date of grant.

Chief Executive Officer Compensation

In his new position as WABCO’s Chief Executive Officer, Mr. Esculier is expected to receive a compensation package which provides an annual base salary of $600,000, an annual incentive target of 67% of base salary ($400,000) and a long-term cash incentive target of 100% of base salary ($600,000). This level of cash compensation will put Mr. Esculier at approximately the 50th percentile of similarly situated executives, based on market data collected with respect to multi-industry companies with a revenue base between $1.0 billion and $3.0 billion. At or following the distribution, Mr. Esculier is expected to receive a combination of a founder’s grant and an initial grant commensurate with his position as Chief Executive Officer, consisting of stock options and restricted stock units of WABCO stock with a fair value for accounting purposes of approximately $2,200,000. These equity awards will vest, subject to his continued employment with WABCO, in three annual increments on each of the first three anniversaries of the date of grant.

For 2007, Mr. Esculier participates in the annual incentive program established by American Standard for its executive officers under which maximum award payouts are determined by establishing a pool based on

1.75% of 2007 income. In determining actual award payouts for Mr. Esculier within the established maximums, the CNGC will consider performance against WABCO’s financial metrics of sales growth, gross profit margin, management net income, and free cash flow, as well as individual performance goals. This incentive is expected to be continued by WABCO through the end of 2007. It has not been decided what adjustments, if any, will be made to the annual incentive goals by the CNGC to reflect the distribution.

Mr. Esculier also participates in the long-term incentive program for 2005-2007 at American Standard under which maximum award payouts are determined by establishing a pool based on 2.0% of 2007 income. In determining actual award payouts within the established maximums, the CNGC will consider performance against American Standard’s long-term financial metrics for 2005-2007 of sales growth, earnings per share and free cash flow. It has not yet been decided what adjustments, if any, will be made to the long-term incentive plan goals to reflect the distribution.

Named Officer Compensation

Mr. Varty will continue to receive his current compensation package which provides an annual base salary of $225,000, an annual incentive target of 35% of base salary (approximately $78,750) and a long-term cash incentive target of 30% of base salary ($67,500). This level of cash compensation puts Mr. Varty below the 50th percentile of similarly situated executives, based on market data collected with respect to multi-industry companies with a revenue base between $1B and $3B. At or following the distribution, Mr. Varty is expected to receive a founder’s grant consisting of stock options and restricted stock units of WABCO stock with a fair value for accounting purposes of approximately $209,000. These equity awards will vest, subject to his continued employment with WABCO, in three annual increments on each of the first three anniversaries of the date of grant.

Mr. Figueroa will continue to receive his current compensation package which provides an annual base salary of $340,284, an annual incentive target of 35% of base salary (approximately $119,100) and a long-term cash incentive target of 30% of base salary ($102,085). This level of cash compensation puts Mr. Figueroa slightly above the 50th percentile of similarly situated executives, based on the market comparison. At or following the distribution, Mr. Figueroa is expected to receive a founder’s grant consisting of stock options and restricted stock units of WABCO stock with a fair value for accounting purposes of approximately $275,000. These equity awards will vest, subject to his continued employment with WABCO, in three annual increments on each of the first three anniversaries of the date of grant.

Dr. Wiehen will continue to receive his current compensation package which provides an annual base salary of $276,462, an annual incentive target of 45% of base salary (approximately $124,408) and a long-term cash incentive target of 70% of base salary ($193,523). This level of cash compensation puts Dr. Wiehen between the 50th and 75th percentiles of similarly situated executives, based on the market comparison.

In his new position as WABCO’s Chief Financial Officer, Mr. Michel is expected to receive a compensation package which provides an annual base salary of $350,000, an annual incentive target of 40% of base salary ($140,000) and a long-term cash incentive target of 40% of base salary ($140,000). This level of cash compensation will put Mr. Michel below the 50th percentile of similarly situated executives, based on the market comparison. At or following the distribution, Mr. Michel is expected to receive a founder’s grant consisting of stock options and restricted stock units of WABCO stock with a fair value for accounting purposes of approximately $275,000. These equity awards will vest, subject to his continued employment with WABCO, in three annual increments on each of the first three anniversaries of the date of grant.

2007 annual incentives for Messrs. Varty, Figueroa, Wiehen and Michel will be based on WABCO’s performance against financial metrics of sales, gross profit margin, management net income, and free cash flow, as well as individual performance results. Messrs. Varty, Figueroa, Wiehen and Michel also participate in the 2005-2007 long-term incentive plan established by American Standard for executives. Payouts under this

program are based on American Standard performance against financial metrics of sales growth, earnings per share, and free cash flow. It has not yet been decided what adjustments will be made to the long-term incentive plan goals to reflect the distribution.

Existing Equity Awards

Each of the Named Officers is currently employed by American Standard Companies Inc. In such capacity, the Named Officers were granted stock options with respect to American Standard common stock. Details with respect to such grants are set forth below under the table entitled “Outstanding Equity Awards at Fiscal Year End.” In accordance with the requirements of the American Standard equity plans under which these awards were made, American Standard’s Management Development and Compensation Committee has approved equitable adjustments with respect to stock options and restricted stock units relating to American Standard common stock held by employees of WABCO, including the Named Officers. These equitable adjustments will be effective upon the distribution and are intended to preserve the economic value of the awards immediately prior to the distribution.

With respect to stock options granted prior to 2007 (other than incentive stock options, which are discussed below), all such options will be adjusted into two separate options, one relating to WABCO common stock and one relating to American Standard common stock. Such adjustment is expected to be made so that immediately following the distribution (i) the number of shares relating to the WABCO option will be equal to the number of shares of WABCO common stock that the option holder would have received in the distribution had the American Standard options represented outstanding shares of American Standard common stock and (ii) the per share option exercise price of the original American Standard stock option will be proportionally allocated between the two types of stock options based upon the relative per share trading prices of the WABCO and American Standard common stock immediately following the distribution. The WABCO options issued as part of this adjustment and the remaining American Standard options will continue to be subject to their existing terms and conditions, including vesting schedules. Further, for purposes of vesting and the post-termination exercise periods applicable to such stock options, American Standard’s Management Development and Compensation Committee has determined that continued employment with WABCO will be viewed as continued employment with the issuer of the options.

Grants of options with respect to American Standard common stock that were made to the Named Officers in 2007 prior to the distribution or which are incentive stock options are expected to be equitably adjusted upon the distribution so as to relate solely to the Common Stock of WABCO. The WABCO options issued as part of this adjustment will also continue to be subject to their existing terms and conditions, including vesting schedules. American Standard’s Management Development and Compensation Committee determined that it was equitable to adjust these options into options which relate solely to WABCO shares due to the fact that, in the case of options granted in 2007, the options were granted at a time when the planned distribution had already been announced and, in the case of incentive stock options, to preserve the options’ tax status as incentive stock options.

American Standard’s Management Development and Compensation Committee may, however, determine a different treatment of options in the distribution, including making special provisions for certain options subject to foreign tax law. These equitable adjustments will be intended to preserve the economic value of the awards immediately prior to the distribution and the awards will continue to be subject to a three-year vesting schedule in which one third of the award vests on each anniversary of the date of grant, subject to the executives’ continued employment. None of the aforementioned options are exercisable for more than 10 years after the date on which they are granted.

Grants of restricted stock units based upon American Standard’s common stock will be equitably adjusted (in accordance with the requirements of the American Standard plan under which the award was made) into restricted stock units based upon WABCO’s common stock. The number of shares of WABCO stock subject to the converted restricted stock unit will be adjusted so that the value of the WABCO stock subject to the award immediately following the distribution is equal to the value of the shares of American Standard common stock subject to the original restricted stock unit immediately prior to the distribution.

Report of the Compensation Committee

WABCO’s Board of Directors has not yet constituted the Management Development and Compensation Committee. When constituted, it is expected that the committee will consist of at least two individuals, each of whom will be an “independent director” under the applicable rules of the New York Stock Exchange, a “non-employee director” within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended, and an “outside director” within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended.

Executive Compensation

Set forth below is information concerning the 2006 compensation for WABCO’s Named Officers. All compensation amounts set forth in the following tables represent compensation paid to the applicable Named Officer in connection with the executive’s service to American Standard. As is stated above under the Compensation Discussion and Analysis, the compensation and benefits provided to the Named Officers by WABCO may differ in many respects from the compensation and benefits previously provided to the Named Officers by American Standard.

SUMMARY COMPENSATION TABLE


Name & Principal Position (a)	Year (b)	Salary ($) (c)		Bonus ($)(1) (d)		Options Awards ($)(2) (e)		Non-Equity Incentive Plan Com- pensation ($)(3) (f)		Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(4) (g)		All Other Compensation ($)(5,6) (h)		Total ($) (i)
Jacques Esculier, Chief Executive Officer and Director	2006	$	400,000	$	20,000	$	743,863	$	634,000	$	90,666	$	424,817	$	2,313,346
Nikhil M. Varty, Vice President, Compression & Braking	2006	$	221,856	$	0	$	131,811	$	152,636	$	6,382	$	341,646	$	854,331
Jean-Christophe Figueroa, Vice President, Vehicle Dynamics & Controls	2006	$	340,284	$	0	$	35,368	$	213,300	$	0	$	184,194	$	773,146
Dr. Christian Wiehen, Vice President, Product Development	2006	$	276,462	$	0	$	123,581	$	260,967	$	0	$	42,316	$	703,326
Ulrich Michel, Chief Financial Officer	2006	$	253,671	$	0	$	58,265	$	145,742	$	0	$	235,254	$	692,932

1.	This represents the amount credited by WABCO on behalf of Mr. Esculier under the deferred compensation bonus arrangement related to his overseas assignment.

Amounts set forth in this column represent the dollar amount recognized by American Standard in 2006 for financial statement reporting purposes in accordance with FAS 123R with respect to stock options granted to Named Officers in 2006, and the dollar amount that would have been required to be recognized in 2006 in accordance with FAS 123R under the modified prospective transition method with respect to stock options granted prior to 2006 to Named Officers that were not vested at the time that the company transitioned to FAS 123R. All of the options that are taken into account for purposes of this column were granted under the American Standard Companies Inc. 2002 Omnibus Incentive Plan (the “ASD Omnibus Plan”). The fair value of the awards made in 2006 was determined using the valuation methodology and assumptions set forth in Note 5 of the Notes to Annual Financial Statements contained herein.

Amounts included in this column represent the cash amounts payable in respect of (a) the American Standard Companies Inc. annual incentive program performance period for 2006 and (b) the American Standard Companies Inc. long-term incentive program performance period that commenced January 1, 2004 and ended December 31, 2006. The table below shows the amounts payable under each program for the Named Officers. For Messrs. Figueroa and Michel, the amount also includes an extra 15.3% to comply with Belgian law regarding vacation pay.


Name	Annual Incentive Payment for 2006		Long-Term Incentive Payment for 2004-2006 Performance Period
Jacques Esculier	$	295,000	$	339,000
Nikhil M. Varty	$	85,291	$	67,345
Jean-Christophe Figueroa	$	151,127	$	62,173
Dr. Christian Wiehen	$	61,002	$	199,965
Ulrich Michel	$	100,225	$	45,517

For Messrs. Esculier and Varty, the full amount shown in this column is attributable to a change in pension value. None of the Named Officers had above market deferred compensation earnings. Messrs. Figueroa and Michel did not participate in defined benefit pension plans. For a more in-depth discussion of the amounts related to the change in pension value in 2006, see the “Pension Benefits” table below and accompanying text. These pension benefits were accrued under pension plans sponsored by American Standard. Pension benefits provided by WABCO following the distribution may be different.


Names (a)	Change in Pension Value (b)
Jacques Esculier	$	90,666
Nikhil M. Varty	$	6,382

5.	Set forth below is each item reported under All Other Compensation that is not a perquisite or personal benefit. Dr. Wiehen did not participate in a defined contribution plan.


Name	Premiums for Term Life Insurance		Defined Contribution Plan Allocations*		Tax Allowance**
Jacques Esculier	$	958	$	13,200	$	152,999
Nikhil M. Varty	$	426	$	13,200	$	151,408
Jean-Christophe Figueroa	$	12,853	$	17,014	$	0
Ulrich Michel	$	6,279	$	14,771	$	78,128

Includes employer basic and matching contributions to defined contribution plans in which the Named Officer participates.

Mr. Esculier, who was during 2006 on an overseas assignment as President of American Standard’s Vehicle Control Systems business, received certain additional compensation and benefits, including a tax allowance in connection with that assignment, as part of the arrangements to make his assignment abroad effectively tax and cost neutral to him. Under these arrangements, in 2006, American Standard paid on behalf of Mr. Esculier certain foreign taxes in the net amount of $152,999 in respect of services rendered during 2004, but as to which the amount payable was not due or determinable until 2006. American Standard also provided Mr. Esculier with a tax-gross-up in respect of his 2006 services in the additional amount of $45,179.

In connection with his overseas assignment, in 2006, American Standard (i) provided Mr. Esculier with an auto lease, (ii) provided reimbursement for certain utilities, goods and services, and tuition for schooling of his children; and (iii) paid him a housing differential. The aggregate amount of the benefits and payments listed in the immediately preceding sentence was $202,070. With the exception of $23,250, which relates to a special housing allowance and company car allowance, the above benefits and payments are generally provided to all employees who are asked to take an overseas assignment.

In connection with his expatriate assignment, Mr. Varty received certain tax allowances and withholdings. Under this arrangement, in 2006, American Standard Companies Inc. paid on behalf of Mr. Varty certain foreign taxes in the net amount of $151,408 in respect of services rendered during 2004, but as to which the amount payable was not due or determinable until 2006. American Standard also provided Mr. Varty with a tax-gross-up in respect of his 2006 services in the additional amount of $4,759. In connection with his expatriate assignment, in 2006, American Standard (i) provided Mr. Varty with an auto lease, (ii) reimbursed him for goods and services, (iii) paid him a housing differential, and (iv) paid tuition for schooling of his children. The aggregate amount of the benefits and payments listed in the immediately preceding sentence was $171,853.

Mr. Figueroa relocated from his home country of France from WABCO in Belgium in 2005. In 2006 American Standard (i) provided Mr. Figueroa with an auto lease, (ii) provided home leave (iii) paid him a housing differential, and (iv) paid tuition for schooling of his children. The aggregate amount of the benefits and payments listed in the immediately preceding sentence was $154,327.

In connection with his expatriate assignment, Mr. Michel received certain tax allowances and withholdings. Under this arrangement, in 2006, American Standard Companies Inc. paid on behalf of Mr. Michel certain foreign taxes in the net amount of $78,128 in respect of services rendered during 2004, but as to which the amount payable was not due or determinable until 2006. In connection with his expatriate assignment, in 2006, American Standard (i) provided Mr. Michel with an auto lease, (ii) reimbursed him for goods and services, (iii) paid him a housing differential, and (iv) reimbursed him for health care and social security benefits in Germany. The aggregate amount of the benefits and payments listed in the immediately preceding sentence was $136,076.

American Standard Companies Inc. made available to Mr. Esculier (i) company product at no cost, (ii) a corporate country club membership, (iii) financial and tax advisory services, and (iv) an executive health exam. The amount of these benefits did not exceed in 2006 the greater of $25,000 or 10% of the total value of the perquisites.

Certain amounts shown in the above tables for Messrs. Esculier, Varty, Figueroa, Wiehen and Michel were paid in Euros and converted into U.S. dollars. For purposes of the above table, the conversion for Mr. Esculier was based on the currency exchange rates prevailing at the time the amounts were paid to him during 2006. The average of the conversion rates of U.S. dollars to one Euro was $1.25. For Messrs. Varty, Figueroa, Wiehen and Michel the conversion was based on the prevailing currency exchange rate at December 31, 2006 of $1.32 to one Euro .

Grants of Plan-Based Awards (with respect to service to American Standard)


Name (a)	Grant Date (b)	Estimated Future Payouts Under Non-Equity Incentive Plan Awards								All Other Option Awards: Number of Securities Underlying Options (#)(3) (f)	Exercise or Base Price of Option Awards ($/Sh) (g)		Market Price on Grant Date ($/Sh)(4) (h)		Grant Date Fair Value of Option Awards ($) (i)
Name (a)	Grant Date (b)	Threshold ($) (c)		Target ($) (d)			Maximum ($) (e)
Jacques Esculier	2/1/2006	$	0	$	260,000	(1)	$	1,053,600	(1)
	2/1/2006	$	0	$	340,000	(2)	$	4,500,000	(2)
	2/1/2006									75,000	$	36.87	$	37.00	$	729,000
Nikhil M. Varty	2/1/2006	$	0	$	78,750	(1)	$	157,500	(1)
	2/1/2006	$	0	$	67,500	(2)	$	135,000	(2)
	2/1/2006									12,000	$	36.87	$	37.00	$	116,640
Jean-Christophe Figueroa	2/1/2006	$	0	$	119,100	(1)	$	238,200	(1)
	2/1/2006	$	0	$	102,085	(2)	$	235,450	(2)
	2/1/2006									12,000	$	36.87	$	37.00	$	116,640
Dr. Christian Wiehen	2/1/2006	$	0	$	124,408	(1)	$	248,816	(1)
	2/1/2006	$	0	$	193,523	(2)	$	387,047	(2)
	2/1/2006									8,000	$	36.87	$	37.00	$	77,760
Ulrich Michel	2/1/2006	$	0	$	76,101	(1)	$	152,202	(1)
	2/1/2006	$	0	$	76,743	(2)	$	153,486	(2)
	2/1/2006									8,000	$	36.87	$	37.00	$	77,760

This award was granted pursuant to the terms of the American Standard Omnibus Plan and relates to a one year performance period, 2006. Mr. Esculier’s award was granted under the incentive program for executive officers of American Standard Companies Inc. and becomes payable, if at all, subject to the Named Officer’s continued employment with the company during such period (except in the case of death or disability) and the achievement by the company of pre-established performance objectives related to income as established by, and subject to certification by, the Management Development and Compensation Committee of American Standard. The Committee retains full discretion to decrease, but not increase, the amount payable upon achievement of the maximum performance objectives, on account of whatever factors or criteria it shall determine to be appropriate.

Messrs. Varty, Figueroa, Wiehen and Michel were granted their awards under the annual incentive program for non-officers of American Standard, which become payable, if at all, subject to their continued employment with the company during the performance period (except in the case of death or disability) and the achievement of pre-established financial, strategic and individual performance goals. The maximum amount that can be earned under the plan for non-officers is 200% of their target award. The actual amounts payable in respect of these awards for 2006 are listed in the Summary Compensation Table above under the column headed Non-Equity Incentive Plan Compensation.

This award was granted pursuant to the terms of the American Standard Omnibus Plan and relates to a three-year performance period, 2006-2008. Mr. Esculier’s award was granted under the long-term incentive program for executive officers of American Standard and becomes payable, if at all, subject to his continued employment during such period (except in the case of death or disability) and the achievement of pre-established performance objectives related to segment income as established by, and subject to certification by, the Management Development and Compensation Committee of American Standard. The maximum level of award listed above is the maximum amount permitted to be paid in respect of such award under the American Standard Omnibus Plan; however, since the amount of each such award is based on an allocable percentage of 2008 net segment income, the actual maximum awards for each such officer is likely to be substantially below the stated amount. The American Standard Management Development and Compensation Committee retains full discretion to decrease, but not increase, the amount payable upon achievement of the maximum performance objectives, on account of whatever factors or criteria it shall determine to be appropriate.

Messers. Varty, Figueroa, Wiehen and Michel’s awards were granted under the American Standard Companies Inc. long-term incentive program for non-officers and are payable, if at all, subject to their continued employment with the company during such period (except in the case of death or disability) based on the level of achievement against performance goals related to sales growth, earnings per share and free cash flow. The treatment of these awards in the distribution has not yet been determined.

This grant was made pursuant to the terms of the American Standard Omnibus Plan. It will become vested and exercisable, generally subject to the Named Officer’s continued employment with the company or a subsidiary, in three equal installments on the first three anniversaries of the date the option is granted. The option may also become exercisable (and could be settled for cash) in connection with the occurrence of a change of control. See the description under “Existing Equity Awards” in the Compensation Discussion and Analysis for a description of the expected adjustment of these awards in the distribution.

The stock option grants made under the American Standard Omnibus Plan have an exercise price equal to the fair market value of American Standard Companies Inc. common stock on the date of grant. For purposes of that plan, fair market value is defined as the average of the high and low trading prices of a share of the company’s common stock on the date the option is granted. This is a common method to determine fair market value for the purposes of such awards, and is an accepted method of establishing such value for federal income tax purposes. Under the rules required by the Securities and Exchange Commission, if the exercise price is less than the closing price of the company’s common stock on the date of grant (and for the grants listed in the above table, the closing price was $0.13 higher than the average), the above table must include the Market Price on Grant Date column to show the closing price on the date of grant.

Executive Agreements (with respect to service to American Standard)

The prospective terms and conditions of employment of the Named Officers are described under the heading “Compensation Discussion and Analysis.”

Jacques Esculier. Mr. Esculier is on overseas assignment pursuant to an expatriate agreement with a subsidiary of American Standard, under which he receives various foreign service allowances intended to make the foreign assignment financially neutral to him. These include such items as a housing allowance, a goods and services allowance, a tax allowance, tuition reimbursement for his children and a company car, as further described in the Summary Compensation Table. Variations from the standard international assignment policy for the housing allowance and the Belgian company car allowance have been applied to Mr. Esculier, having an annual additional value to Mr. Esculier of approximately $23,250. In addition, Mr. Esculier is eligible for a completion bonus at the end of his assignment equal to 5% of his base salary at the time for each year of his assignment. Mr. Esculier will enter into a new employment agreement upon the distribution to reflect his compensation package as Chief Executive Officer and Director of WABCO.

Ni k hil M. Varty. Mr. Varty is on overseas assignment pursuant to an expatriate agreement with a subsidiary of American Standard, under which he receives various foreign service allowances intended to make the foreign assignment financially neutral to him. These include such items as a housing allowance, a goods and services allowance, a tax allowance, tuition reimbursement for his children and a company car, as further described in the Summary Compensation Table. Mr. Varty is eligible for participation in the annual incentive compensation program with a target of 35% of base pay and in the long-term incentive program with a target of 30% of base pay.

Jean-Christophe Figueroa . Under Mr. Figueroa’s current employment agreement, he is employed by the Belgian subsidiary of American Standard and is taxed as a Belgian non-resident. He receives cost of living and housing differentials to cover the difference in the cost of living between France and Belgium, where he is currently assigned. Mr. Figueroa is eligible for participation in the annual incentive compensation program with a target of 35% of base pay and in the long-term incentive program with a target of 30% of base pay. Mr. Figueroa’s current employment agreement also provides for a severance guarantee of the greater of one year’s

base salary or the amount determined under the formula prescribed by statute in Belgium (which is based on age, service and level of remuneration) in the event his employment is involuntarily terminated other than for Cause.

Dr. Christian Wiehen. Under Dr. Wiehen’s current employment agreement with a Belgian subsidiary of American Standard, he receives cost of living and housing differentials to cover the difference in the cost of living between his home country of Germany and Belgium, where he is currently assigned. Dr. Wiehen is eligible for participation in the annual incentive compensation program with a target of 45% of base pay and in the long-term incentive program with a target of 70% of base pay.

Ulrich Michel . Under Mr. Michel’s current employment agreement with a Belgian subsidiary of American Standard, he is tax equalized on the basis of a U.S. taxpayer. He receives cost of living and housing differentials to cover the difference in the cost of living between the United States and Belgium, where he is currently assigned. He is reimbursed for the cost of participation in a private health and dental insurance programs in Germany, subject to the company’s right to modify the terms and conditions of such policies. Mr. Michel is eligible for participation in the annual and long-term incentive compensation programs with targets of 30% of base pay in each. Mr. Michel’s employment agreement will be amended upon distribution to reflect his new compensation package as Chief Financial Officer of WABCO.

Outstanding Equity Awards at Fiscal Year-End (with respect to American Standard Awards)

Option Awards ⁽¹⁾


Names (a)	Number of Securities Underlying Unexercised Options—(#) Exercisable (b)	Number of Securities Underlying Unexercised Options—(#) Unexercisable (c)		Option Exercise Price ($) (d)		Option Expiration Date (e)
Jacques Esculier	0	75,000	(2)	$	36.87	2/1/2016
	23,333	46,667	(3)	$	43.34	2/2/2015
	90,000	0		$	33.62	12/4/2013
Nikhil M. Varty	0	12,000	(2)	$	36.87	2/1/2016
	4,500	9,000	(3)	$	43.34	2/2/2015
	9,000	4,500	(5)	$	35.03	2/4/2014
	12,000	0		$	22.69	2/6/2013
	3,400	0		$	22.16	6/1/2011
Jean-Christophe Figueroa	0	12,000	(2)	$	36.87	2/1/2016
	1,667	3,333	(4)	$	43.09	5/17/2015
Dr. Christian Wiehen	0	8,000	(2)	$	36.87	2/1/2016
	4,333	8,667	(3)	$	43.34	2/2/2015
	0	5,001	(5)	$	35.03	2/4/2014
Ulrich Michel	0	8,000	(2)	$	36.87	2/1/2016
	2,000	4,000	(3)	$	43.34	2/2/2015
	2,400	1,200	(5)	$	35.03	2/4/2014
	4,500	0		$	22.90	3/3/2013

1.	The awards described in this column relate to shares of American Standard common stock. The anticipated adjustment of these awards in connection with the distribution is described above under “Compensation Discussion and Analysis, Adjustment of Equity Awards.”

2.	Stock options vest at the rate of 33.3% per year, with vesting dates of 2/1/07, 2/1/08 and 2/1/09

3.	Stock options vest at the rate of 33.3% per year, with vesting dates of 2/2/06, 2/2/07 and 2/2/08

4.	Stock options vest at the rate of 33.3% per year, with vesting dates of 5/17/06, 5/17/07 and 5/17/08

5.	Stock options vest at the rate of 33.3% per year, with vesting dates of 2/4/05, 2/4/06 and 2/4/07

Option Exercises and Stock Vested (with respect to American Standard Options)

Option Awards(1)


Names (a)	Number of Shares Acquired on Exercise (#) (b)	Value Realized on Exercise ($)(1) (c)
Jacques Esculier	17,004	$	379,714
Nikhil M. Varty	18,636	$	422,490
Dr. Christian Wiehen	24,999	$	384,342

The foregoing table describes exercises of options to acquire American Standard common stock. The value set forth in the table was determined in each case based on the closing price of the stock on the day that the option was exercised. Messrs. Figueroa and Michel did not exercise stock options during 2006. None of the Named Officers vested in restricted stock during 2006.

Pension Benefits (with respect to American Standard)


Names	Plan Name	Number of Years Credited Service (#)	Present Value of Accumulated Benefit ($)		Payments During Last Fiscal Year ($)
Jacques Esculier	Pension (Cash Balance) Plan(1)	4.5	$	19,950	$	0
	Executive Supplemental Retirement Benefit Program (SERP)(2)	4.5	$	241,437	$	0
Nikhil M. Varty	Pension (Cash Balance) Plan(1)	5.6	$	17,064	$	0
Dr. Christian Wiehen	WABCO Germany Pension Plan(3)	19.0	$	699,600	$	0

The American Standard Companies Inc. Pension Plan (referred to above as the “Pension (Cash Balance) Plan”) provides a benefit that is based upon certain pay credits to a participant’s notional account and notional earnings credits on the amounts (including prior earnings credits) credited to that notional account. A participant may receive distribution of his or her vested account balance upon termination of employment at any age. Messrs. Esculier’s and Varty’s benefits under the plan are fully vested. To determine the present values shown above, which were calculated as of December 31, 2006, we assumed that Messrs. Esculier and Varty would receive a distribution of their account balances at age 65, regardless of when their employment terminates. Accordingly, we also assumed that Messrs. Esculier’s and Varty’s estimated account balance at December 31, 2006 would be credited annually, until age 65, with the same interest-crediting rate assumed in financial accounting projections as of the end of 2006 (4.75%).

For purposes of determining the incremental benefit accrued by Messrs. Esculier and Varty under the Pension (Cash Balance) Plan in 2006 (which is included in the Summary Compensation Table set forth above), we also assumed that their estimated account balances at December 31, 2005 would have been credited annually, until age 65, with the same interest crediting rate assumed in financial accounting projections as of the end of 2005 (4.25%). The differences in these assumed rates of earnings resulted in an increase in the present value of such benefits at December 31, 2006 in addition to the effect of Messrs. Esculier’s and Varty’s additional services in 2006. In each case—that is, as of December 31, 2005 and December 31, 2006—we also discounted the amount of the projected age 65 account balance (as increased by the assumed notional earnings as described above) by the discount rate used in the American Standard Companies Inc. financial statements for purposes of determining the company’s liabilities in respect of its defined benefit plans for the same period (6.00% for 2006, and 5.75% for 2005).

This difference in the applicable discount rates had the effect of reducing the amount of the present value calculated for Messrs. Esculier and Varty as compared to that calculated for 2005.

The benefit payable to Mr. Esculier under the Executive Supplemental Retirement Benefit Program is initially determined as a life annuity payable commencing at age 65, and is reduced to take into account certain other compensation and benefits that are made available in respect of his services with WABCO, as well as a portion of his projected Social Security benefits. The present values shown above were calculated based on Mr. Esculier’s accrued benefit through December 31, 2006, but payable at age 65. To commute a life annuity into a lump sum payable at age 65, we have used the mortality tables prescribed by the plan for this purpose and the lump sum discount rate used in developing financial statement information for the Executive Supplemental Retirement Benefit Program (4.00% for 2005 and 2006). The lump sum so determined is then reduced by the value of his ESOP account. The value of his ESOP account at age 65 is assumed to be equal to the value of his ESOP account at December 31, 2005 or December 31, 2006, as applicable.

Finally, since the lump sum is determined as of age 65, it must also be discounted from age 65 to December 31, 2006 (and December 31, 2005) using the discount rate used in American Standard Companies Inc.’s financial statements for purposes of determining its liabilities in respect of its defined benefit plans for the same period (5.75% for 2005 and 2006). The difference between the amounts determined as of December 31, 2006 and December 31, 2005 equal the value of the benefit earned under the plan for the year. For purposes of estimating the appropriate offset against Mr. Esculier’s accrued benefit under the Executive Supplement Retirement Benefit Program, his Social Security benefit payable at age 65 is based on the estimated benefit payable at age 65 but determined under the law in effect for 2007 or 2006 for calculations prepared as of December 31, 2006 and December 31, 2005, respectively. Benefits under the plan are vested after five years of service with the company or after attainment of age 65 while employed by the company. American Standard Companies Inc. will retain the liability for this benefit plan for Mr. Esculier.

The WABCO Germany Pension Plan provides a benefit based on final monthly earnings and service as of the date of retirement or termination of service. For Mr. Wiehen, the formula is 0.67% of final monthly earnings (FME) up to the German social security contribution ceiling plus 2.0% of FME above the ceiling times years of service (maximum of 30 years). Benefits are payable as a life annuity with no actuarial reduction for a 60% survivor annuity if married at retirement. Mr. Wiehen is fully vested. Normal retirement is age 65 and benefits may be payable as early as age 60 subject to reductions for early retirement. In accordance with German law, benefit payments are revalued every three years for cost-of-living adjustments. The assumed annual cost-of-living adjustment was 1.50% as of December 31, 2005 and 1.75% as of December 31, 2006.

The assumptions used to develop the accrued benefits and increase in present value of accrued benefits are the same that were used in the American Standard Companies Inc.’s financial statements for purposes of determining its liabilities with respect to its German defined benefit plans except that commencement of benefits was assumed to be at age 65. There was no change in the pension value for Mr. Wiehen since the benefit earned in 2006 was offset by the reduction in the present value of his total accrued benefit from December 31, 2005 to December 31, 2006 due to the increase in the discount rate (as used in American Standard Companies Inc.’s financial statements) from 4.0% as of December 31, 2005 to 4.5% as of December 31, 2006.

Nonqualified Deferred Compensation (with respect to service to American Standard)


Names (a)	Executive Contributions in Last FY ($) (b)		Registrant Contributions in Last FY ($)(1) (c)		Aggregate Earnings in Last FY ($)(2) (d)		Aggregate Withdrawals/ Distributions ($) (e)		Aggregate Balance at Last FYE ($)(3) (f)
Jacques Esculier	$	0	$	20,000	$	172	$	0	$	92,151
Nikhil M. Varty	$	0	$	1,800	$	1,702	$	0	$	15,136

1.	The column, “Registrant Contributions in Last FY,” lists the amount of contributions American Standard credited on behalf of Mr. Esculier under the deferred bonus arrangement related to his overseas assignment,

which he could not receive currently. This amount is also included in the “Bonus” column in the Summary Compensation Table set forth above, and is not in addition to the amounts reported in such Summary Compensation Table. For Mr. Varty, this column includes contributions made by American Standard to his account under the Supplemental Savings Plan.

2.	The amount shown represents the appreciation in value on notional shares and dividend equivalents credited to Messrs. Esculier and Varty under the Supplemental Savings Plan of American Standard Companies Inc.

The amount reported in the column, “Aggregate Balance at FYE,” reflects the aggregate amount of all Mr. Esculier’s deferred accounts, including the American Standard Companies Inc. Supplemental Savings Plan as well as his deferred overseas assignment bonus arrangement. For Mr. Varty, the amount represents the balance in his Supplemental Saving Plan Account.

Messrs. Figueroa, Wiehen and Michel did not participate in any nonqualified deferred compensation programs.

Severance and Change in Control Arrangements

Under their employment arrangements, Messrs. Esculier and Michel are entitled to severance payments in the event their employment is involuntarily terminated by WABCO without cause or they terminate their employment with WABCO for good reason (as defined below). Mr. Esculier will be paid a lump sum amount equal to two times his annual base salary at the time of termination, plus two times his then current annual incentive target award. Mr. Michel will be paid a lump sum amount equal to one and one half times his annual base salary at the time of termination or departure, plus one and one half times his then current annual incentive target award. In addition, group life and group medical coverage will be continued for up to 18 months (24 months, in the case of Mr. Esculier) following termination and reimbursement of financial planning services of up to $5,000 will be provided if such expenses are submitted within one year of termination of employment. Payment of some or all of these amounts may be delayed for six months following a participant’s termination, or the period over which welfare benefits are provided may be shortened, to the extent required to avoid subjecting the participant to additional taxes or accelerated income recognition under Section 409A of the Internal Revenue Code. These contractual severance benefits will be offset by any statutory entitlements to which any of the Named Officers may become entitled under applicable law. The terms “good reason” and “cause” as referenced herein have the same meaning as in the Change of Control Severance Plan described below. These severance payments and benefits will not be payable in the event Messrs. Esculier and Michel are entitled to benefits under the Change of Control Severance Plan in connection with their termination of employment. Under his current employment agreement, Mr. Figueroa is entitled to a severance payment equal to the greater of one year’s base pay or a payment determined under the formula prescribed by statute in Belgium (which is based on age, service and level of remuneration) in the event his employment is involuntarily terminated other than for Cause (as defined in his agreement).

The table set forth below illustrates the amount of severance benefits and the value of continued welfare benefits that would have been payable to each of the Named Officers if his employment were to be terminated by the company without cause or by him for good reason under the agreements described above had such agreements been in effect on December 31, 2007 and assuming that such terminations occurred prior to the occurrence of a change of control.

SEVERANCE BENEFITS


Names (a)	Cash Severance Benefit(1) (b)		Value of Continued Welfare Benefits and Financial Planning Reimbursement(2) (c)		Total Value of Termination Benefits Payable (d)
Jacques Esculier	$	1,836,666	$	8,317	$	1,844,983
Nikhil M. Varty	$	0	$	0	$	0
Jean-Christophe Figueroa	$	911,251	$	0	$	911,251
Dr. Christian Wiehen	$	0	$	0	$	0
Ulrich Michel	$	679,916	$	17,450	$	697,366

For the purposes of this table, current base salary was used for all the Named Officers, with the exception of Mr. Esculier and Mr. Michel where the approved post-distribution base salary was used. Column (b) reflects, for Mr. Esculier, two times annual base salary as of December 31, 2007, plus two times the AIP target as of December 31, 2007, and for Mr. Michel, 1.5 times annual base salary as of December 31, 2007, plus 1.5 times the AIP target as of December 31, 2007 and for Mr. Figueroa column (b) reflects the amount prescribed by his employment agreement.

Column (c) reflects, for Mr. Esculier, the estimated value of company provided group life and group medical coverage for two years and reimbursement of financial planning services of up to $5,000 for one year, and for Mr. Michel, the estimated value of company provided group life and group medical coverage for 18 months and reimbursement of financial planning services of up to $5,000 for one year.

The actual amounts payable in the event that any such Named Officer does incur a qualifying termination will likely be different from the amounts shown above, depending on the Named Officer’s then current compensation at the date of such termination.

A group of approximately 20 key executives of the company, including all the Named Officers, will participate in the Change of Control Severance Plan. Under the Change of Control Severance Plan, participants are entitled to severance benefits in the event their employment is involuntarily terminated by WABCO (or a successor entity) without cause or they terminate their employment for good reason, in each case, within 24 months after the occurrence of a change of control of WABCO. Mr. Esculier would be paid a lump sum amount equal to two times his annual base salary at the time of termination or departure, plus two times his then current annual incentive target award. Mr. Michel would be paid a lump sum amount equal to one and one half times his annual base salary at the time of termination or departure, plus one and one half times his then current annual incentive target award. Other executive participants, including Messrs. Varty, Figueroa and Wiehen would be paid a lump sum amount equal to one times annual base salary at the time of termination or departure, plus one times then current annual incentive target award. In addition, group life and group medical coverage will be continued for up to 24 months for Mr. Esculier, 18 months for Mr. Michel and 12 months for other executive participants, including Messrs. Varty, Figueroa and Wiehen following the individual’s termination and reimbursement of financial planning services of up to $5,000 will be provided if such expenses are submitted within one year of the executive’s termination of employment. Payment of some or all of these amounts may be delayed for six months following an officer’s termination of employment, or the period over which welfare benefits are provided to the executives may be shortened, to the extent required to avoid subjecting the executive to additional taxes or accelerated income recognition under Section 409A of the Internal Revenue Code. These contractual severance benefits will be offset by any statutory entitlements to which any of the executives, including the Named Officers, may become entitled under applicable law.

Benefits under the Change of Control Severance Plan are generally capped at the amount necessary to prevent the benefits from resulting in the imposition of an excise tax under the regulations of the U.S. Internal Revenue Code, unless the recipient would receive a larger net benefit on uncapped benefits after the imposition of the excise tax.

For purposes of the entitlement to severance benefits under the Change of Control Severance Plan, cause means a participant’s (1) willful and continued failure substantially to perform his duties with the company or any subsidiary after a demand for substantial performance is made identifying the manner in which it is believed that such participant has not substantially performed his or her duties and such participant is provided a period of thirty (30) days to cure such failure, (2) conviction of, or plea of nolo contendere to, a felony, or (3) the willful engaging by such participant in gross misconduct materially and demonstrably injurious to the company or any subsidiary or to the trustworthiness or effectiveness of the participant in the performance of his duties. Under the Change of Control Severance Plan, good reason is defined to mean the occurrence of any of the following events, without the written consent of the participant, so long as the participant actually terminates employment within 90 days of the occurrence of such event:

an adverse change in the participant’s position or status as an executive or a material diminution in the participant’s duties, authority, responsibilities or status;

relocation of the participant’s principal place of employment to a location more than 30 miles away from the participant’s prior principal place of employment;

a reduction in the participant’s base salary;

the taking of any action by the company or a subsidiary (including the elimination of a plan without providing substitutes therefor or the reduction of such participant’s award thereunder) that would substantially diminish the aggregate projected value of such participant’s award opportunities under the incentive plans in which he or she was participating at the time of the taking of such action; or

the taking of any action that would substantially diminish the aggregate value of the benefits provided to the participant under the medical, health, accident, disability, life insurance, thrift and retirement plans in which he or she was participating at the time of the taking of such action (unless resulting from a general change in benefits applicable to all similarly situated employees of the company and its affiliates).

However, a participant may not terminate his or her employment for good reason on account of any of the events or actions described in items 3, 4 and 5 above, if such event or action is part of a cost savings program and any adverse consequences for the executive of such events or action applies proportionately to all similarly situated executives.

Under the Omnibus Plan, in the event of a change of control of WABCO (as defined in the manner described below), any outstanding stock options or stock appreciation rights will become immediately exercisable and may be cashed out at the discretion of the CNGC, and the restricted period shall lapse as to any outstanding restricted stock or restricted units. Subject in the case of certain stock options to limitations required to comply with conditions imposed under federal income tax laws, any cash out will occur using a change of control settlement value that is based on the highest price of the stock prevailing during the 60-day trading period immediately preceding the occurrence of the event that gives rise to a change in control. Notwithstanding the foregoing, no acceleration of exercisability, vesting or cash settlement will occur if the CNGC determines, prior to the change of control, that any stock option, stock appreciation right, restricted share or restricted unit will be replaced or otherwise honored by the new employer. Upon a change of control, all performance periods for annual incentive and long-term incentive awards shall end, and awards shall become payable at target levels, prorated for the portion of the performance period completed prior to the change of control. Under the Omnibus Plan, any participant whose employment is terminated other than for cause on or after the date of the company’s shareholders approve a change of control, but before the change of control occurs, will receive the same benefits as though he or she remained employed until the change of control.

The table set forth below illustrates the amount that would be payable for each of the Named Officers under the Change of Control Severance Plan and the Omnibus Plan in the event of a change of control and a qualifying termination before or after a change of control. It does not include an estimate of the value of acceleration of unvested equity awards due to the unavailability of a trading price for WABCO common stock with which to make such an estimate, as well as the fact that no WABCO share awards are outstanding at this point, so we are unable to allocate the number of shares or any grant or exercise price to the Named Officers.

CHANGE OF CONTROL BENEFITS


Names (a)	Total Value of Termination Benefits Payable(1) (b)		Other Incremental Benefits Payable(2) (c)		Total Value of Benefits Payable Due to a Change of Control (d)
Jacques Esculier	$	1,844,983	$	1,287,361	$	3,132,344
Nikhil M. Varty	$	311,234	$	212,026	$	523,260
Jean-Christophe Figueroa	$	474,942	$	301,731	$	776,673
Dr. Christian Wiehen	$	400,870	$	510,121	$	910,991
Ulrich Michel	$	697,366	$	306,984	$	1,004,350

The table set forth above illustrates the amount that would be payable for each of the Named Officers in the event of a change of control.

For the purposes of this table, current base salary was used for all the Named Officers, with the exception of Mr. Esculier and Mr. Michel where the approved post-distribution base salary was used. For Mr. Esculier, this amount reflects two times annual base salary as of December 31, 2007, plus two times the AIP target as of December 31, 2007 and the estimated value of company provided group life and group medical coverage for two years and reimbursement of financial planning services of up to $5,000 for one year.

For Messrs. Varty, Figueroa and Wiehen, this amount reflects 1.0 times annual base salary as of December 31, 2007, plus 1.0 times the AIP target as of December 31, 2007 and the estimated value of company provided group life and group medical coverage for 12 months.

For Mr. Michel, this amount reflects 1.5 times annual base salary as of December 31, 2007, plus 1.5 times the AIP target as of December 31, 2007 and the estimated value of company provided group life and group medical coverage for 18 months and reimbursement of financial planning services of up to $5,000 for one year.

2.	Column (c) represents an estimate of the pro-rata target awards under all in progress performance cycles for Annual and Long-Term Incentive Awards as of December 31, 2007.

For Mr. Esculier, these amounts represent $318,333, $369,028, $400,000, and $200,000 for the 2007 AIP, 2005-2007, 2007-2008 (WABCO) and 2007-2009 (WABCO) Long-Term Incentive Plan performance cycles, respectively.

For Mr. Varty, these amounts represent $78,750, $66,093, $44,683 and $22,500 for the 2007 AIP, 2005-2007, 2007-2008 (WABCO) and 2007-2009 (WABCO) Long-Term Incentive Plan performance cycles, respectively.

For Mr. Figueroa, these amounts represent $119,100, $77,544, $69,654, and $35,433 for the 2007 AIP, 2005-2007, 2007-2008 (WABCO) and 2007-2009 (WABCO) Long-Term Incentive Plan performance cycles, respectively.

For Dr. Wiehen, these amounts represent $124,408, $192,261, $128,944, and $64,508 for the 2007 AIP, 2005-2007, 2007-2008 (WABCO) and 2007-2009 (WABCO) Long-Term Incentive Plan performance cycles, respectively.

For Mr. Michel, these amounts represent $103,277, $63,707, $93,333, and $46,667 for the 2007 AIP, 2005-2007, 2007-2008 (WABCO) and 2007-2009 (WABCO) Long-Term Incentive Plan performance cycles, respectively.

The amounts listed in the above table are only estimates of the amounts that would have become payable in the event that a change of control were to occur on December 31, 2007, based on the assumptions described above. The actual amounts payable in the event that a change of control does occur will be more or less than the amounts shown below, depending on the actual terms and conditions of any such event and the facts and circumstances actually prevailing at the time of such event.

For purposes of the Change of Control Severance Plan and the Omnibus Plan, a “Change of Control” is defined to include the occurrence of any of the following events: (i) a person (other than WABCO, any Subsidiary or any employee benefit plan maintained by WABCO or any Subsidiary) is or becomes the beneficial owner, directly or indirectly, of securities of the company representing 20% or more of the combined voting power of WABCO’s then-outstanding securities (or 25% to the extent that, prior to meeting the 20% threshold, the non-management members of the Board unanimously adopt a resolution consenting to such acquisition by such beneficial owners); (ii) during any consecutive 24-month period, individuals who at the beginning of such period constitute the Board, together with those individuals who first become directors during such period (other than by reason of an agreement with WABCO or the Board in settlement of a proxy contest for the election of directors) and whose election or nomination for election to the Board was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the board; (iii) the consummation of any merger, consolidation, recapitalization or reorganization involving WABCO, other than any such transaction immediately following which the persons who were the beneficial owners of the outstanding voting securities of WABCO immediately prior to such transaction are the beneficial owners of at least 55% of the total voting power represented by the voting securities of the entity surviving such transaction or the ultimate parent of such entity in substantially the same relative proportions as their ownership of WABCO’s voting securities immediately prior to such transaction; provided that, such continuity of ownership (and preservation of relative voting power) shall be deemed to be satisfied if the failure to meet such threshold (or to preserve such relative voting power) is due solely to the acquisition of voting securities by an employee benefit plan of WABCO, such surviving entity, any subsidiary or any subsidiary of such surviving entity; (iv) the sale of substantially all of the assets of WABCO to any person other than any subsidiary or any entity in which the beneficial owners of the outstanding voting securities of WABCO immediately prior to such sale are the beneficial owners of at least 55% of the total voting power represented by the voting securities of such entity or the ultimate parent of such entity in substantially the same relative proportions as their ownership of WABCO’s voting securities immediately prior to such transaction; or (v) the shareholders of WABCO approve a plan of complete liquidation or dissolution of WABCO.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

As of the date hereof, all of the outstanding shares of our common stock are owned by American Standard. After the distribution, American Standard will own none of our common stock. The following table provides information with respect to the expected beneficial ownership of our common stock by (i) each of our shareholders who we believe will be a beneficial owner of more than 5% of our outstanding common stock, (ii) each of the persons nominated to serve as our directors, (iii) each officer named in the Summary Compensation Table and (iv) all of our executive officers and directors nominees as a group. We based the share amounts on each person’s beneficial ownership of American Standard common stock and stock options as of May 15, 2007, unless we indicate some other basis for the share amounts, and assume a distribution ratio of one share of our common stock for every three shares of American Standard common stock. The mailing address for each executive officer and director nominee will be c/o WABCO Holdings Inc., One Centennial Avenue, Piscataway, New Jersey 08855.


Name of Beneficial Owner	Shares to be Beneficially Owned	Percent of Class
Principal Shareholder:
Capital Group International, Inc.(1)	5,845,167	8.8
Wellington Management Company, LLP(2)	4,648,233	7.0
American Standard Employee Stock Ownership Plan (the “Savings Plan”)(3)	3,850,093	5.8
Berkshire Hathaway Inc.(4)	3,687,567	5.6
American Standard Employee Stock Ownership Plan (the “ESOP”)(3)	3,395,439	5.1
Directors and Executive Officers(5):
G. Peter D’Aloia(6)	215,542	*
Dr. Juergen Gromer	0	*
James F. Hardymon(7)	31,974	*
Kenneth J. Martin	0	*
Michael Smith	333	*
Jacques Esculier	38,120	*
Nikhil M. Varty	9,228	*
Jean-Christophe Figueroa	1,889	*
Dr. Christian Wiehen	0	*
Ulrich Michel	4,922	*
Kevin Tarrant	0	*
All directors and executive officers as a group (11 persons)	304,154	*

*	Indicates that the percentage projected to be beneficially owned by the named individual does not exceed 1% of our common stock.

(1)

In an amended Schedule 13G filed on February 12, 2007, CGII reported that, as of December 29, 2006, it was deemed, pursuant to Rule 13d-3 of the Securities Exchange Act of 1934, as amended, to hold sole dispositive power with respect to 17,535,500 shares of American Standard common stock, but sole voting power with respect to only 13,544,470 of such shares, by virtue of the fact that it is the parent holding company of a group of investment companies, including Capital Guardian Trust Company (“CGTC”). CGII disclaimed beneficial ownership over all such shares. CGII’s address is 1110 Santa Monica Blvd, Los Angeles, CA 90025. In that same Schedule 13G. CGTC, a wholly owned subsidiary of CGII located at 1110 Santa Monica Blvd., Los Angeles, CA 90025, separately reported that it held, as of that same date, sole dispositive power over 13,018,610 shares of American Standard common stock, and sole voting power with respect to 9,497,780 shares, by virtue of its role as the investment manager for various institutional accounts held in such investment companies.

(2)

In a Schedule 13G filed on February 14, 2007, Wellington reported that, as of December 31, 2006, it was deemed, pursuant to Rule 13d-3 of the Securities Exchange Act of 1934, as amended, to hold shared voting power with respect to 9,694,300 shares of American Standard common stock but shared dispositive power with respect to 13,924,500 shares, by virtue of the fact that it is an investment advisor. Wellington’s address is 75 State Street, Boston, MA 02109.

(3)

The business address for the ESOP and Savings Plan is c/o American Standard Inc., P.O. Box 6820, One Centennial Avenue, Piscataway, New Jersey 08855-6820. Fidelity Management Trust Company is the trustee of both the ESOP and the Savings Plan. The trustee’s business address is 300 Puritan Way, Mail Zone-MM3H, Marlborough, Massachusetts 01752-3070.

(4)

In a Schedule 13G filed on February 14, 2007, Warren E. Buffett (an individual who may be deemed to control Berkshire Hathaway Inc.), Berkshire Hathaway Inc., OBH, Inc., National Indemnity Company, GEICO Corporation and Government Employees Insurance Company, filing as a group, reported that, as of December 31, 2006, it was deemed, pursuant to Rule 13d-3 of the Securities Exchange Act of 1934, as amended, to hold shared voting power and shared dispositive power with respect to 11,062,700 shares of American Standard common stock. The address for Warren E. Buffett, Berkshire Hathaway Inc. and OBH, Inc. is 1440 Kiewit Plaza, Omaha, NE 68131; the address for National Indemnity Company is 3024 Harney Street, Omaha, NE 68131; the address for GEICO Corporation and Government Employees Insurance Company is 1 Geico Plaza, Washington, DC 20076.

(5)

Where applicable, the number of shares shown for officers and directors includes options exercisable within 60 days of May 15, 2007, and shares allocated to their respective accounts in the ESOP and Savings Plan. The shares allocated to the officers’ and directors’ ESOP and Savings Plan accounts were as follows: Mr. D’Aloia, 1,534 shares; Mr. Esculier, 898 shares; and Mr. Varty, 1,062 shares.

(6)	Includes 2,366 shares held in American Standard’s Employee Stock Purchase Plan.

(7)	The number of shares shown includes options exercisable within 60 days of May 15, 2007 and shares held in the American Standard Companies Inc. Supplemental Plan for Outside Directors.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

The Distribution from American Standard

The distribution will be accomplished by American Standard distributing all of its shares of our common stock to holders of American Standard common stock entitled to such distribution, as described in “The Separation” section included elsewhere in this information statement. Completion of the distribution will be subject to satisfaction or waiver by American Standard of the conditions to the separation and distribution, as described in “The Separation—Conditions to the Distribution.”

Agreements with American Standard

In connection with our separation from American Standard, we entered into a Separation and Distribution Agreement and several other agreements with American Standard to effect the separation and provide a framework for our relationships with American Standard after the separation. These agreements govern the relationships between us and American Standard subsequent to the completion of the separation plan and provide for the allocation between us and American Standard of American Standard’s assets, liabilities and obligations (including employee benefits and tax-related assets and liabilities) attributable to periods prior our separation from American Standard. In addition to the Separation and Distribution Agreement (which contains many of the key provisions related to our separation from American Standard and the distribution of our shares of common stock to American Standard shareholders), these agreements include:

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the Tax Sharing Agreement;

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the Transition Services Agreement;

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the Employee Matters Agreement; and

•

the Indemnification and Cooperation Agreement.

The principal agreements described below have been filed as exhibits to the registration statement on Form 10 of which this information statement is a part, and the summaries of each of these agreements set forth the terms of the agreements that we believe are material. These summaries are qualified in their entireties by reference to the full text of the applicable agreements, which are incorporated by reference into this information statement.

Separation and Distribution Agreement

The Separation and Distribution Agreement sets forth our agreements with American Standard regarding the principal transactions necessary to separate us from American Standard. It also sets forth other agreements that govern certain aspects of our relationship with American Standard after the completion of the separation plan.

Transfer of Assets and Assumption of Liabilities. The Separation and Distribution Agreement identifies assets to be transferred, liabilities to be assumed and contracts to be assigned to each of us and American Standard as part of the reorganization of American Standard, and describes when and how these transfers, assumptions and assignments will occur, although, many of the transfers, assumptions and assignments had already occurred prior to the parties’ entering into the Separation and Distribution Agreement. In particular, the

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Separation and Distribution Agreement provides that, subject to the terms and conditions contained in the Separation and Distribution Agreement:

•

All of the assets and liabilities (including whether accrued, contingent or otherwise) associated with the Vehicle Controls Systems business of American Standard will be retained by or transferred to us or one of our subsidiaries.

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All other assets and liabilities (including whether accrued, contingent or otherwise) of American Standard will be retained by or transferred to American Standard or one of its subsidiaries (other than us or one of our subsidiaries).

•

Liabilities (including whether accrued, contingent or otherwise) related to, arising out of or resulting from businesses of American Standard that were previously terminated or divested will be allocated among the parties to the extent formerly owned or managed by or associated with such parties or their respective businesses.

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Each party or one of its subsidiaries will assume or retain any liabilities (including under applicable federal and state securities laws) relating to, arising out of or resulting from any registration statement or similar disclosure document that offers for sale by such party any security after the separation.

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American Standard will assume or retain any liability relating to, arising out of or resulting from any registration statement or similar disclosure document related to the separation (including the Form 10 and this information statement), but only to the extent such liability derives from a material misstatement or omission contained in the portions of this information statement that relate to American Standard; we will assume or retain any other liability relating to, arising out of or resulting from any registration statement or similar disclosure document related to the separation (including the Form 10 and this information statement).

•

Except as otherwise provided in the Separation and Distribution Agreement or any ancillary agreement, we will be responsible for any costs or expenses incurred by us or American Standard in connection with the separation other than costs and expenses relating to legal counsel, financial advisors and accounting advisory work related to the separation.

•

In addition, notwithstanding the allocation described above, we and American Standard have agreed that American Standard will be responsible for, and indemnify us against, losses related to all of the contingent liabilities (and related costs and expenses) arising out of litigation and claims alleging exposure to asbestos prior to WABCO’s separation from American Standard (including those that are described in American Standard’s public filings with the Securities and Exchange Commission).

The allocation of liabilities with respect to taxes is solely covered by the Tax Sharing Agreement and the allocation of liabilities with respect to the European Commission investigation is solely covered by the Indemnification and Cooperation Agreement.

Except as may expressly be set forth in the Separation and Distribution Agreement or any ancillary agreement, all assets will be transferred on an “as is,” “where is” basis and the respective transferees will bear the economic and legal risks that any conveyance will prove to be insufficient to vest in the transferee good title, free and clear of any security interest, that any necessary consents or governmental approvals are not obtained and that any requirements of laws or judgments are not complied with.

Information in this information statement with respect to the assets and liabilities of the parties following the separation is presented based on the allocation of such assets and liabilities pursuant to the Separation and

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Distribution Agreement, unless the context otherwise requires. Certain of the liabilities and obligations to be assumed by one party or for which one party will have an indemnification obligation under the Separation and Distribution Agreement and the other agreements relating to the separation are, and following the separation may continue to be, the legal or contractual liabilities or obligations of another party. Each such party that continues to be subject to such legal or contractual liability or obligation will rely on the applicable party that assumed the liability or obligation or the applicable party that undertook an indemnification obligation with respect to the liability or obligation, as applicable, under the Separation and Distribution Agreement, to satisfy the performance and payment obligations or indemnification obligations with respect to such legal or contractual liability or obligation.

Further Assurances. To the extent that any transfers of assets or assumptions of liabilities contemplated by the Separation and Distribution Agreement have not been consummated on or prior to the date of the separation, the parties have agreed to cooperate to effect such transfers or assumptions as promptly as practicable following the date of the separation. In addition, each of the parties has agreed to cooperate with each other and use commercially reasonable efforts to take or to cause to be taken all actions, and to do, or to cause to be done, all things reasonably necessary under applicable law or contractual obligations to consummate and make effective the transactions contemplated by the Separation and Distribution Agreement and the ancillary agreements.

The Distribution. The Separation and Distribution Agreement also governs the rights and obligations of the parties regarding the proposed distribution. Prior to the distribution, we will distribute to American Standard as a stock dividend the number of shares of such our common stock distributable in the distribution. American Standard will cause its agent to distribute to American Standard shareholders that hold shares of American Standard common stock as of the applicable record date all the issued and outstanding shares of our common stock. American Standard will have the sole and absolute discretion to determine (and change) the terms of, and whether to proceed with, the distribution and, to the extent it determines to so proceed, to determine the date of the distribution.

Conditions. The Separation and Distribution Agreement provides that the distribution is subject to several conditions that must be satisfied or waived by American Standard in its sole discretion. For further information regarding the conditions relating to our separation from American Standard, see “The Separation—Conditions to the Distribution.”

Releases and Indemnification. Except as otherwise provided in the Separation and Distribution Agreement or any ancillary agreement, each party will release and forever discharge the other party and its subsidiaries and affiliates from all liabilities existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the separation. The releases will not extend to obligations or liabilities under any agreements between the parties that remain in effect following the separation pursuant to the Separation and Distribution Agreement or any ancillary agreement.

In addition, the Separation and Distribution Agreement provides for cross-indemnities that, except as otherwise provided in the Separation and Distribution Agreement, are principally designed to place financial responsibility for the obligations and liabilities of our business with us and financial responsibility for the obligations and liabilities of American Standard’s business with American Standard. Specifically, each party will, and will cause its subsidiaries and affiliates to, indemnify, defend and hold harmless the other party, its affiliates and subsidiaries and each of its officers, directors, employees and agents for any losses arising out of or otherwise in connection with:

•

the liabilities each such party assumed or retained pursuant to the Separation and Distribution Agreement;

•

the operation of each such party’s business, whether prior to or after the distribution; and

•

any breach by such party of the Separation and Distribution Agreement or ancillary agreement.

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Finally, pursuant to the Separation and Distribution Agreement, we have agreed to indemnify American Standard for any losses it suffers as a result of or otherwise in connection with American Standard’s indemnification obligations to the purchaser of its Bath & Kitchen business for certain environmental liabilities that are retained by American Standard in connection with its sale of the Bath & Kitchen business. The Bath & Kitchen business includes 54 facilities operating in 23 countries.

Indemnification with respect to taxes will be governed solely by the Tax Sharing Agreement.

Legal Matters. Except as otherwise set forth in the Separation and Distribution Agreement (or as further described below), each party to the Separation and Distribution Agreement has assumed the liability for, and control of, all pending and threatened legal matters related to its own business or assumed or retained liabilities and will indemnify the other party for any liability arising out of or resulting from such assumed legal matters. Each party to a claim will agree to cooperate in defending any claims against the other party for events that took place prior to, on or after the date of separation.

Insurance. Following the separation, we will be responsible for obtaining and maintaining our own insurance coverage and will no longer be an insured party under American Standard’s insurance policies, except in specified circumstances to be set forth in the Separation and Distribution Agreement.

Dispute Resolution. If a dispute arises with American Standard under the Separation and Distribution Agreement, the general counsels of the parties and such other representatives as the parties may designate will negotiate to resolve any disputes for a reasonable period of time. If the parties are unable to resolve the dispute in this manner then, unless otherwise agreed by the parties and except as otherwise set forth in the Separation and Distribution Agreement, the dispute will be resolved through binding arbitration.

Other Matters Governed by the Separation and Distribution Agreement. Other matters governed by the Separation and Distribution Agreement include access to financial and other information, intellectual property, confidentiality, access to and provision of records and treatment of outstanding guarantees and similar credit support.

Tax Sharing Agreement

In connection with our separation from American Standard, we entered into a Tax Sharing Agreement that generally governs American Standard’s and our respective rights, responsibilities and obligations after the distribution with respect to taxes, including ordinary course of business taxes and taxes, if any, incurred as a result of any failure of the distribution of all of our stock to qualify as a tax-free distribution for U.S. federal income tax purposes within the meaning of Section 355 of the Code. Under the Tax Sharing Agreement, we generally are liable for, and will indemnify American Standard and its subsidiaries against, taxes incurred as a result of the distribution of our common stock not qualifying as tax-free for U.S. federal income tax purposes and certain internal reorganization transactions undertaken prior to and in connection with the distribution of our common stock, unless, in each case, such taxes result from certain actions undertaken by American Standard, any of its subsidiaries or any of its shareholders after such distribution. We have also assumed liability for and will indemnify American Standard and its subsidiaries against taxes attributable to us, our subsidiaries or any of our assets or operations for all tax periods. American Standard generally will be liable for and indemnify us against taxes attributable to American Standard, its subsidiaries or any of its assets or operations for all tax periods other than taxes arising as a result of the distribution or related transactions that are described above as payable by us. Notwithstanding the foregoing, we will be liable for and indemnify American Standard against certain indemnification claims with respect to non-U.S. taxes (including income tax, value added tax and withholding tax) that may be made by a buyer of the Bath and Kitchen business for taxable periods during which American Standard owned and operated the Bath and Kitchen business up to the earlier of the date of the closing of the sale of the Bath and Kitchen business or December 31, 2007.

Transition Services Agreement

In connection with our separation from American Standard, we entered into a Transition Services Agreement with American Standard to provide for an orderly transition to being an independent company. Under the Transition

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Services Agreement, American Standard has agreed to provide us with various services, including services relating to human resources, payroll, treasury and risk management, environmental technology, tax compliance, telecommunications services and information technology services.

Under the Transition Services Agreement, the cost of each transition service will generally reflect the same payment terms and was calculated using the same cost allocation methodologies for the particular service as those associated with the costs on our historical financial statements. The cost of each transition service will be based on either a flat fee or an allocation of the cost incurred by the company providing the service. WABCO will pay an arm’s length fee to American Standard for these services, which fee is generally intended to allow American Standard to recover all of its direct and indirect costs, generally without profit. The Transition Services Agreement was negotiated in the context of a parent-subsidiary relationship and in the context of the separation of American Standard into three companies. Unless specifically indicated below, all services to be provided under the Transition Services Agreement will be provided for a specified period of time, and the parties’ abilities to terminate those services in advance without penalty will be limited. After the expiration of the arrangements contained in the Transition Services Agreement, we may not be able to replace these services in a timely manner or on terms and conditions, including cost, as favorable as those we have received from American Standard. We are developing a plan to increase our own internal capabilities in the future to reduce our reliance on American Standard for these services. We will have the right to receive reasonable information with respect to the charges to us by American Standard and other service providers for transition services provided by them.

We currently provide some Treasury and cash management services for American Standard. Under the Transition Services Agreement we will continue to provide certain of these services for a specified period of time in exchange for an arms length fee intended to cover our direct and indirect cost of providing these services.

Employee Matters Agreement

In connection with our separation from American Standard, we will also entered into an Employee Matters Agreement with American Standard. The Employee Matters Agreement allocates liabilities and responsibilities relating to employee compensation and benefit plans and programs and other related matters in connection with the separation, including the treatment of outstanding incentive awards and certain retirement and welfare benefit obligations, both in and outside of the United States. The Employee Matters Agreement also provides that outstanding American Standard stock options will be equitably adjusted in connection with the distribution (see “Management—Compensation Discussion and Analysis—Existing Equity Awards”).

Indemnification and Cooperation Agreement

In connection with our separation from American Standard, WABCO, American Standard and certain of its and our subsidiaries entered into an Indemnification and Cooperation Agreement. Pursuant to this agreement, American Standard Europe BVBA, or ASE, a subsidiary of WABCO, has agreed to be responsible for, and to indemnify American Standard and its subsidiaries (including certain subsidiaries formerly engaged in the Bath and Kitchen business) and their respective affiliates against any fines related to the European Commission’s investigation (the “EU Matter”), as outlined in the Statement of Objections, into possible infringement of European Union competition regulations. See “Business—Legal Proceedings—The European Commission Investigation.”

Pursuant to this agreement, at least thirty calendar days prior to the date the fine is required to be paid, ASE must either provide an acceptable bank guarantee to the European Commission covering the amount of the fine plus interest or deposit with a third party escrow agent the aggregate amount of the fine imposed on American Standard, ASE or certain of their respective subsidiaries in the EU Matter. If the bank guarantee is not provided, the funds held in this escrow account will be released to the European Commission on or prior to the payment due date unless ASE provides an acceptable bank guarantee covering the amount of the fine plus interest in which case the funds held in escrow would be released to ASE.

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If we or ASE consummate a change of control transaction prior to funding the escrow account as described above, the agreement will require ASE to post a letter of credit or similar security obligation reasonably acceptable to American Standard in an amount equal to the maximum fine that could be levied on the charged parties in the EU Matter minus 20 percent, or if an initial decision in the EU Matter has been rendered, the aggregate amount of the fine specified in the initial decision. In lieu of a letter of credit, with the prior consent of American Standard, the person acquiring us or ASE, as applicable, may guarantee our and our subsidiaries’, including ASE’s, obligations under the Indemnification and Cooperation Agreement.

While ASE generally has the right to control the defense and appeal on behalf of our subsidiaries and certain subsidiaries of American Standard engaged in the Bath and Kitchen business, American Standard has the right to require ASE and such entities to appeal the initial decision, if the failure to appeal would, in any way (as determined by American Standard in good faith) prejudice American Standard’s appeal of the initial decision. In the event ASE is forced to appeal, American Standard will be responsible for the defense costs associated with the appeal and any increased amount of the fine beyond the fine imposed in the initial decision, and ASE will remain obligated for the full amount of the initial fine even if the initial fine is decreased as a result of the appeal. ASE has similar rights to force American Standard to appeal the initial decision.

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DESCRIPTION OF CAPITAL STOCK

General

The following is a summary of information concerning our capital stock. The summaries and descriptions below do not purport to be complete statements of the relevant provisions of our amended and restated certificate of incorporation or of our amended and restated by-laws. The summary is qualified in its entirety by reference to these documents, which will be filed as exhibits to the registration statement of which this information statement is a part, for greater detail on the provisions that may be important to you.

Authorized Capital Stock

Immediately following the distribution, our authorized capital stock will consist of 400,000,000 shares of common stock, par value $0.01 per share, and 4,000,000 shares of preferred stock, par value $0.01 per share.

Common Stock

Shares Outstanding . Immediately following the distribution, we expect that approximately 68 million shares of our common stock will be issued and outstanding based upon approximately 204 million shares of American Standard common stock that we expect to be outstanding on the record date. All outstanding shares of our common stock, when issued, will be fully paid and non-assessable.

Dividends . Subject to prior dividend rights of the holders of any preferred shares, holders of shares of our common stock will be entitled to receive dividends when, as and if declared by our Board out of funds legally available for that purpose. See “Dividend and Share Repurchase Policy.”

Voting Rights . Each outstanding share of our common stock will be entitled to one vote per share on each matter to be voted on by the holders of our common stock. The holders of our common stock will not be entitled to cumulative voting of their shares in elections of directors.

Other Rights . In the event of any liquidation, dissolution or winding up of our company, after the satisfaction in full of the liquidation preferences of holders of any preferred shares, holders of shares of our common stock will be entitled to ratable distribution of the remaining assets available for distribution to stockholders. The shares of our common stock will not be subject to redemption by operation of a sinking fund or otherwise. Holders of shares of our common stock will not be entitled to pre-emptive rights.

Preferred Stock

Our amended and restated certificate of incorporation authorizes our Board, without the approval of our stockholders, to issue shares of our preferred stock and to fix by resolution the designations, preferences and relative, participating, optional or other special rights, and such qualifications, limitations or restrictions thereof, including, without limitation, redemption rights, dividend rights, liquidation preferences and conversion or exchange rights of any class or series of preferred stock, and to fix the number of classes or series of preferred stock, the number of shares constituting any such class or series and the voting powers for each class or series.

The authority possessed by our Board to issue preferred stock could potentially be used to discourage attempts by third parties to obtain control of our company through a merger, tender offer, proxy contest or otherwise by making such attempts more difficult or more costly. Our Board may issue preferred stock with voting rights or conversion rights that, if exercised, could adversely affect the voting power of the holders of common stock. There are no current agreements or understandings with respect to the issuance of preferred stock and our Board has no present intention to issue any shares of preferred stock. As of the completion of the distribution, four million shares of our junior participating cumulative preference stock will be reserved for issuance upon exercise of our preferred stock purchase rights (see “—Rights Plan”).

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Rights Plan

On July 13, 2007, our Board adopted a rights agreement. Pursuant to the rights agreement, one preferred stock purchase right will be issued for each outstanding share of our common stock. Each right issued will be subject to the terms of the rights agreement.

Our Board believes that the rights agreement will protect our stockholders from coercive or otherwise unfair takeover tactics. In general terms, our rights agreement works by imposing a significant penalty upon any person or group that acquires 15% or more of our outstanding common stock, without the approval of our Board.

For a more detailed description of the rights under our rights agreement, please see “—Rights Plan.”

Anti-takeover Effects of Our Rights Plan, Our Amended and Restated Certificate of Incorporation and Amended and Restated By-Laws and Delaware Law

Our rights plan and some provisions of our amended and restated certificate of incorporation and amended and restated by-laws and of Delaware law could make the following more difficult:

•

acquisition of us by means of a tender offer or merger;

•

acquisition of us by means of a proxy contest or otherwise; or

•

removal of our incumbent officers and directors.

Our rights plan, which is summarized below, and certain provisions in our amended and restated certificate of incorporation and amended and restated by-laws, which are summarized below, are expected to discourage coercive takeover practices and inadequate takeover bids. The provisions summarized below are designed to encourage persons seeking to acquire control of us to first negotiate with our Board. We believe that the benefits of the potential ability to negotiate with the proponent of an unsolicited proposal to acquire or restructure us outweigh the disadvantages of discouraging those proposals because negotiation with such proponent could result in an improvement of their terms.

Election and Removal of Directors

Our amended and restated certificate of incorporation provides that our Board is divided into three classes. The term of the first class of directors expires at our 2008 annual meeting of stockholders, the term of the second class of directors expires at our 2009 annual meeting of stockholders and the term of the third class of directors expires at our 2010 annual meeting of stockholders. At each of our annual meetings of stockholders, the successors of the class of directors whose term expires at that meeting of stockholders will be elected for a three-year term, one class being elected each year by our stockholders. In addition, a director may only be removed from office for cause by the affirmative vote of holders of a majority of shares of common stock entitled to vote in the election of directors. This system of electing and removing directors may discourage a third party from making a tender offer or otherwise attempting to obtain control of us because it generally makes it more difficult for stockholders to replace a majority of the directors.

Size of Board and Vacancies

Our amended and restated certificate of incorporation and amended and restated by-laws provide that our Board may consist of no less than three and no more than 15 directors and our Board will fix the exact number of directors to comprise our Board. Newly created directorships resulting from any increase in our authorized number of directors will be filled by a majority of our Board then in office and any vacancies in our Board resulting from death, resignation, retirement, disqualification, removal from office or other cause will be filled generally by the majority vote of our remaining directors in office, even if less than a quorum is present.

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Elimination of Stockholder Action by Written Consent

Our amended and restated certificate of incorporation and amended and restated by-laws expressly eliminate the right of our stockholders to act by written consent. Stockholder action must take place at the annual or a special meeting of our stockholders.

Stockholder Meetings

Under our amended and restated certificate of incorporation and amended and restated by-laws, special meetings of our stockholders may only be called by our Chairman or Chief Executive Officer, or pursuant to a resolution adopted by a majority of our entire Board.

Requirements for Advance Notification of Stockholder Nominations and Proposals

Our amended and restated by-laws have advance notice procedures for stockholders to make nominations of candidates for election as directors or to bring other business before a meeting of the stockholders. The business to be conducted at an annual meeting is limited to business properly brought before the annual meeting by or at the direction of our Board or a duly authorized committee thereof or by a stockholder of record who has given timely written notice to our secretary of that stockholder’s intention to bring such business before such meeting.

Our amended and restated by-laws govern stockholder nominations of candidates for election as directors except with respect to the rights of holders of our preferred stock. Under our amended and restated by-laws, nominations of persons for election to our Board may be made at an annual meeting by a stockholder of record on the date of giving notice to our secretary and as of the record date for the determination of stockholders entitled to vote at the meeting if the stockholder submits a timely notice of nomination. A notice of a stockholder nomination will be timely only if it is delivered to us at our principal executive offices not less than 90 days nor more than 120 days prior to the anniversary date of the immediately preceding annual meeting of stockholders.

The notice of a stockholder nomination must contain specified information, including, without limitation:

•

the name, age, business and, if known, residence addresses of each nominee;

•

the principal occupation or employment of such nominee;

•

the number of shares of stock of the company beneficially owned by each such nominee and the nominating stockholder;

•

the consent of each nominee to serve as a director if so elected; and

•

any other information concerning the nominee that would be required to be included in a proxy statement or other filings pursuant to the proxy rules of the SEC.

Our amended and restated by-laws govern the notification process of all other stockholder proposals to be brought before an annual meeting. Under our amended and restated by-laws, notice of a stockholder proposal will be timely only if it is delivered to us at our principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary of the date of the immediately preceding annual meeting of stockholders. The notice of a stockholder proposal must contain specified information as described in our amended and restated by-laws.

If the chairman of the meeting determines that the stockholder nomination or proposal was not properly brought before the meeting in accordance with the provisions of our amended and restated certificate of incorporation or amended and restated by-laws, as the case may be, that person will not be eligible for election as a director or that business will not be conducted at the meeting, as the case may be.

The advance notice provisions may preclude a contest for the election of directors or the consideration of stockholder proposals if the proper procedures are not followed. Additionally, the advance notice provisions may deter a third party from conducting a solicitation to elect its own slate of directors or approve its own proposal, without regard to whether consideration of those nominees or proposals might be harmful or beneficial to us and our stockholders.

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Delaware Anti-takeover Law

Upon the distribution, we will be governed by Section 203 of the General Corporation Law of the State of Delaware (the “DGCL”). Section 203, subject to certain exceptions, prohibits a Delaware corporation from engaging in any business combination with any interested stockholder for a period of three years following the time that such stockholder became an interested stockholder, unless:

•

prior to such time, the board of directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder; or

•

upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85.0% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding specified shares; or

•

at or subsequent to such time, the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders, by the affirmative vote of at least 66 ² / 3 % of the outstanding voting stock that is not owned by the interested stockholder. The stockholders cannot authorize the business combination by written consent.

The application of Section 203 may limit the ability of stockholders to approve a transaction that they may deem to be in their best interests.

In general, Section 203 defines “business combination” to include:

•

any merger or consolidation involving the corporation and the interested stockholder; or

•

any sale, lease, exchange, mortgage, pledge, transfer or other disposition of 10.0% or more of the assets of the corporation to or with the interested stockholder; or

•

subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any of its stock to the interested stockholder; or

•

any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or

•

the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation.

In general, Section 203 defines an “interested stockholder” as any person that is:

•

the owner of 15% or more of the outstanding voting stock of the corporation; or

•

an affiliate or associate of the corporation who was the owner of 15% or more of the outstanding voting stock of the corporation at any time within three years immediately prior to the relevant date; or

•

the affiliates and associates of the above.

Under specific circumstances, Section 203 makes it more difficult for an “interested stockholder” to effect various business combinations with a corporation for a three-year period, although the stockholders may, by adopting an amendment to the corporation’s certificate of incorporation or by-laws, elect not to be governed by this section, effective twelve months after adoption.

Our amended and restated certificate of incorporation and amended and restated by-laws do not exempt us from the restrictions imposed under Section 203. We anticipate that the provisions of Section 203 may encourage companies interested in acquiring us to negotiate in advance with our Board since the stockholder approval requirement would be avoided if a majority of the directors then in office approve either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder.

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Amendment of Amended and Restated By-Laws

Our amended and restated by-laws provide that the provisions of our amended and restated by-laws relating to:

•

special meetings;

•

stockholder proposals and nominations of directors;

•

stockholder action by written consent;

•

director and officer indemnification; and

•

any provision relating to the amendment of any of these provisions;

may only be amended by the vote of a majority of our Board or by the affirmative vote of at least 65% of the voting power of the outstanding stock entitled to vote generally in the election of our Board. Our amended and restated certificate of incorporation and our amended and restated by-laws provide that any other provision of our amended and restated by-laws may only be amended by the vote of a majority of our Board or by the vote of holders of a majority of the voting power of the outstanding stock entitled to vote generally in the election of our Board.

Amendment of the Amended and Restated Certificate of Incorporation

Our amended and restated certificate of incorporation provides that the provisions of our amended and restated certificate of incorporation relating to:

•

the Board’s power to issue rights;

•

amendment of the amended and restated by-laws;

•

the size, classification, election, removal, nomination and filling of vacancies with respect to the Board of Directors;

•

director and officer indemnification;

•

cumulative voting;

•

stockholder action by written consent and ability to call special meetings; and

•

any provision relating to the amendment of any of these provisions;

may only be amended by the affirmative vote of at least 65% of the voting power of the outstanding stock entitled to vote generally in the election of our Board. As provided by Delaware law, any other provision of our amended and restated certificate of incorporation may only be amended by the vote of a majority of the voting power of the outstanding stock entitled to vote generally in the election of our Board.

No Cumulative Voting

Our amended and restated certificate of incorporation and amended and restated by-laws do not provide for cumulative voting in the election of directors.

Undesignated Preferred Stock

The authorization in our amended and restated certificate of incorporation of undesignated preferred stock makes it possible for our Board to issue our preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control of us. The provision in our amended and restated certificate of incorporation authorizing such preferred stock may have the effect of deferring hostile takeovers or delaying changes of control of our management.

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Rights Plan

The Rights . We provide the following summary description below. Please note, however, that this description is only a summary, is not complete, and should be read together with our entire rights agreement, which was filed with the Securities and Exchange Commission as an exhibit to the registration statement of which this information statement forms a part. Our Board has authorized the issuance of one right for each share of our common stock outstanding on the date the distribution is completed.

Our rights will initially trade with, and will be inseparable from, our common stock. Our rights will not be represented by certificates. New rights will accompany any new shares of common stock we issue after the date the separation is completed until the date on which the rights are separated from our common stock and exercisable as described below.

Exercise Price. Each right will allow its holder to purchase from us one one-hundredth of a share of our junior participating cumulative preferred stock, which we refer to as our preferred stock, for $250, once the rights become separated from our common stock and exercisable. Prior to its exercise, a right does not give its holder any dividend, voting or liquidation rights.

Exercisability. Each right will not be separated from our common stock and exercisable until:

•

ten business days after the public announcement that a person or group has become an “acquiring person” by acquiring beneficial ownership of 15% or more of our outstanding common stock or, if earlier,

•

ten business days (or a later date determined by our Board before the rights are separated from our common stock) after a person or group begins or publicly announces an intention to begin a tender or exchange offer that, if completed, would result in that person or group becoming an acquiring person.

Until the date the rights become exercisable, book-entry ownership of our common stock will evidence the rights, and any transfer of shares of our common stock will constitute a transfer of the rights associated with the shares of common stock. After the date the rights separate from our common stock, our rights will be evidenced by book-entry credits. Any of our rights held by an acquiring person will be void and may not be exercised.

Consequences of a Person or Group Becoming an Acquiring Person.

•

Flip In. If a person or group becomes an acquiring person, all holders of our rights except the acquiring person may, for the then applicable exercise price, purchase shares of our common stock with a market value of twice the then applicable exercise price, based on the market price of our common stock prior to such acquisition.

•

Flip Over. If we are acquired in a merger or similar transaction after the date the rights become exercisable, all holders of our rights except the acquiring person may, for the then applicable exercise price, purchase shares of the acquiring corporation with a market value of twice the then applicable exercise price, based on the market price of the acquiring corporation’s stock prior to such merger.

Expiration. Our rights will expire on July 16, 2017, unless earlier redeemed by the Board in accordance with the Rights Agreement.

Redemption. Our Board may redeem our rights for $0.01 per right at any time before a person or group becomes an acquiring person. If our Board redeems any of our rights, it must redeem all of our rights. Once our rights are redeemed, the only right of the holders of our rights will be to receive the redemption price of $0.01 per right. The redemption price will be adjusted if we have a stock split or issue stock dividends on our common stock.

Exchanges. After a person or group becomes an acquiring person, but before an acquiring person owns 50% or more of our outstanding common stock, our Board may extinguish the rights by exchanging one share of our common stock or an equivalent security for each right, other than rights held by the acquiring person.

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Anti-Dilution Provisions. The purchase price for one one-hundredth of a share of our preferred stock, the number of shares of our preferred stock issuable upon the exercise of a right and the number of our outstanding rights may be subject to adjustment in order to prevent dilution that may occur from a stock dividend, a stock split or a reclassification of our preferred stock. No adjustments to the purchase price of our preferred stock will be required until the cumulative adjustments would amount to at least 1% of the purchase price.

Amendments. The terms of our rights agreement may be amended by our Board without the consent of the holders of our common stock. After the rights separate from our common stock and become exercisable, the Board may not amend the agreement in a way that adversely affects the interests of the holders of the rights.

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is The Bank of New York.

NYSE Listing

We have filed an application to list our shares of common stock on the New York Stock Exchange. We expect that our shares will trade under the ticker symbol “WBC.”

Limitation on Liability of Directors and Indemnification of Directors and Officers

The following summary is qualified in its entirety by reference to the complete text of the statutes referred to below, our amended and restated certificate of incorporation and amended and restated by-laws, and the contracts referred to below.

Section 145 of the DGCL provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, in which such person is made a party by reason of the fact that the person is or was a director, officer, employee or agent of the corporation (other than an action by or in the right of the corporation—a “derivative action”), if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful. A similar standard is applicable in the case of derivative actions, except that indemnification only extends to expenses (including attorneys’ fees) incurred in connection with the defense or settlement of such action, and the statute requires court approval before there can be any indemnification where the person seeking indemnification has been found liable to the corporation. The statute provides that it is not exclusive of other indemnification that may be granted by a corporation’s by-laws, disinterested director vote, stockholder vote, agreement or otherwise.

Our amended and restated certificate of incorporation provides that no director shall be liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation on liability is not permitted under the DGCL, as now in effect or as amended. Currently, Section 102(b)(7) of the DGCL requires that liability be imposed for the following:

•

any breach of the director’s duty of loyalty to our company or our stockholders;

•

any act or omission not in good faith or which involved intentional misconduct or a knowing violation of law;

•

unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the DGCL; and

•

any transaction from which the director derived an improper personal benefit.

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Our amended and restated certificate of incorporation and amended and restated by-laws provide that, to the fullest extent authorized or permitted by the DGCL, as now in effect or as amended, we will indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding by reason of the fact that such person, or a person of whom he or she is the legal representative, is or was our director or officer, or by reason of the fact that our director or officer is or was serving, at our request, as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans maintained or sponsored by us. We will indemnify such persons against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such action if such person acted in good faith and in a manner reasonably believed to be in our best interests and, with respect to any criminal proceeding, had no reason to believe such person’s conduct was unlawful. A similar standard is applicable in the case of derivative actions, except that indemnification only extends to expenses (including attorneys’ fees) incurred in connection with the defense or settlement of such actions, and court approval is required before there can be any indemnification where the person seeking indemnification has been found liable to us. Any amendment of this provision will not reduce our indemnification obligations relating to actions taken before an amendment.

We intend to obtain policies that insure our directors and officers and those of our subsidiaries against certain liabilities they may incur in their capacity as directors and officers. Under these policies, the insurer, on our behalf, may also pay amounts for which we have granted indemnification to the directors or officers.

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DESCRIPTION OF MATERIAL INDEBTEDNESS

At March 31, 2007, WABCO’s debt included $40.0 million of Euro denominated 7.59% Guaranteed Senior Bonds due 2013. These bonds were guaranteed by American Standard and some of its subsidiaries, in conjunction with certain WABCO subsidiaries. Other indebtedness at March 31, 2007 included $25.9 million of bank debt and capitalized lease obligations and $12.6 million of short term borrowing including bank debt.

On April 30, 2007, WABCO redeemed and retired all the outstanding Euro denominated 7.59% Guaranteed Senior Bonds due 2013.

At separation, we will have in place one primary bank credit agreement, which will provide the company and certain of its subsidiaries with an unsecured, five-year $800 million, multi-currency revolving credit facility that will expire on the fifth anniversary of the spinoff date. The primary bank credit agreement was entered into by us and certain of our subsidiaries on May 31, 2007 and the credit facility will become available to us immediately prior to the separation. The $800 million revolving line of credit is a non-amortizing facility that permits utilization up to the maximum level at any time through and until expiration, subject to the liquidity covenant in the credit agreement. The proceeds of the borrowings under the credit facility may be used to fund potential repurchases of our shares and to meet short-term requirements. Additionally, the facility may be used to pay a fine or provide a bank guarantee that will be required pursuant to a decision relating to the European Commission investigation matter as further described under the heading “Business—Legal Proceedings—The European Commission Investigation.” Up to $100 million under this facility may be used for issuing letters of credit, and up to $75 million for same-day borrowings.

The credit facility contains customary events of default, including nonpayment of principal or other amounts when due; breach of covenants; inaccuracy of representations and warranties; cross-default and/or cross-acceleration to other material indebtedness; certain ERISA-related events; certain voluntary and involuntary bankruptcy events; undischarged, uninsured judgments greater than $75 million entered against WABCO or material subsidiaries; and a change in control. If an event of default occurs and is continuing under the credit facility, the lenders may among other things, terminate their obligations thereunder and require WABCO to repay all amounts thereunder.

Interest on loans under the credit facility will be payable at WABCO’s election as follows: (i) for Alternate Base Rate loans denominated in U.S. Dollars, interest will be calculated at a rate per annum equal to the greater of (a) JPMorgan Chase Bank, N.A.’s prime rate and (b) the Federal Funds Effective Rate plus 0.5%; (ii) for Eurocurrency loans, interest will be calculated at a rate per annum equal to LIBOR plus an applicable margin which upon the spinoff will be 0.440% but which can vary from 0.350% to 0.650% based on WABCO’s leverage ratio; and (iii) for Competitive Loans, interest will be calculated pursuant to a competitive bid procedure. The applicable margins used to determine the LIBOR loan rate are determined based upon the leverage ratio of WABCO, which represents the ratio of WABCO’s consolidated net indebtedness on the last day of any fiscal

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quarter to consolidated EBITDA for the period of four consecutive fiscal quarters ending on such day. The credit facility also provides for certain of the borrowers to pay various fees including a facility fee on the amount of the lenders’ commitments thereunder (upon the spinoff the fee will be 0.110% per annum but can vary from 0.100% to 0.150% based on WABCO’s credit rating). Interest on overdue loans under the credit facility will accrue at per annum rates that are 2% higher than the rates otherwise applicable to such loans.

The credit facility permits voluntary prepayments (without reducing availability for future revolving borrowings) and voluntary commitment reductions, in each case without premium or penalty. The borrowings will be unsecured but will be guaranteed by WABCO.

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WHERE YOU CAN FIND MORE INFORMATION

We have filed a registration statement on Form 10 with the SEC with respect to the shares of our common stock that American Standard shareholders will receive in the distribution. This information statement is a part of that registration statement and, as allowed by SEC rules, does not include all of the information you can find in the registration statement or the exhibits to the registration statement. For additional information relating to our company and the distribution, reference is made to the registration statement and the exhibits to the registration statement. Statements contained in this information statement as to the contents of any contract or document referred to are not necessarily complete and in each instance, if the contract or document is filed as an exhibit to the registration statement, we refer you to the copy of the contract or other document filed as an exhibit to the registration statement. Each such statement is qualified in all respects by reference to the applicable document.

After the distribution, we will file annual, quarterly and special reports, proxy statements and other information with the SEC. We intend to furnish our shareholders with annual reports containing financial statements audited by an independent registered public accounting firm. The registration statement is, and any of these future filings with the SEC will be, available to the public over the Internet on the SEC’s website at http//www.sec.gov. You may read and copy any filed document at the SEC’s public reference rooms in Washington, D.C. at 100 F Street, N.E., Washington, D.C. 20549 and at the SEC’s regional offices in New York at 233 Broadway, New York, New York 10279 and in Chicago at Citicorp Center, 500 W. Madison Street, Suite 1400, Chicago, Illinois 60661. Please call the SEC at 1-800-SEC-0330 for further information about the public reference rooms.

We maintain an Internet site a www.wabco-auto.com. Our website and the information contained on that site, or connected to that site, are not incorporated into this information statement or the registration statement on Form 10.

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INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE


Report of Independent Registered Public Accounting Firm		F-2
Combined Consolidated Statements of Income for the years ended December 31, 2006, 2005 and 2004		F-3
Combined Consolidated Balance Sheets December 31, 2006 and 2005		F-4
Combined Consolidated Statements of Cash Flows for the years ended December 31, 2006, 2005 and 2004		F-5
Combined Consolidated Statements of Owners’ Net Investment and Comprehensive Income for the years ended December 31, 2006, 2005 and 2004		F-6
Notes to Annual Financial Statements		F-7
Condensed Consolidated Statement of Income for the quarters ended March 31, 2007 and 2006 (unaudited)		F-31
Condensed Consolidated Balance Sheet for the quarter ended March 31, 2007 (unaudited)		F-32
Condensed Consolidated Statement of Cash Flows for the quarters ended March 31, 2007 and 2006 (unaudited)		F-33
Notes to Quarterly Financial Statements		F-34
Schedule II—Valuation and Qualifying Accounts		F-44

All other schedules have been omitted because the information is not applicable or is not material or because the information required is included in the financial statements or the notes thereto.

F-1

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholder of WABCO Holdings Inc., a wholly owned subsidiary of American Standard Companies Inc.

We have audited the accompanying combined consolidated balance sheets of WABCO Holdings Inc., a wholly owned subsidiary of American Standard Companies Inc., as of December 31, 2006 and 2005, and the related combined consolidated statements of income, owners’ net investment and comprehensive income, and cash flows for each of the three years in the period ended December 31, 2006. Our audits also included the financial statement schedule listed in the Index at Item 15(a). These financial statements and schedule are the responsibility of WABCO Holdings Inc. management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

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 provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the combined consolidated financial position of WABCO Holdings Inc. at December 31, 2006 and 2005, and the combined consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2006 in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

As discussed in Note 2 to the financial statements, the Company changed its methods of accounting for stock-based compensation on January 1, 2006, and defined benefit pension and other post-retirement plan obligations on December 31, 2006.

/s/ ERNST & YOUNG LLP

New York, New York

February 22, 2007

F-2

WABCO Holdings Inc.

(Wholly-owned by American Standard Companies Inc.)

COMBINED CONSOLIDATED STATEMENT OF INCOME


	Year Ended December 31,
(Amounts in millions)	2006			2005			2004
Sales	$	2,015.2		$	1,831.0		$	1,723.8
Costs, expenses and other income:
Cost of sales		1,463.5			1,312.5			1,252.4
Selling and administrative expenses		255.0			233.5			212.7
Product engineering		72.2			73.5			66.2
Equity in income of unconsolidated joint ventures		(23.3	)		(24.5	)		(20.2	)
Other expense, net		10.8			5.4			0.1
Net interest expense/(income)—related party		6.2			(6.0	)		(5.4	)
Interest expense		5.1			3.9			3.4

		1,789.5			1,598.3			1,509.2
Income before income taxes		225.7			232.7			214.6
Income taxes		87.9			87.4			23.2

Net income	$	137.8		$	145.3		$	191.4


Pro forma net income per common share (unaudited):
Basic	$	2.05		$	2.17		$	2.85
Diluted	$	2.00		$	2.11		$	2.77

Pro forma common shares outstanding (unaudited):
Basic		67.1			67.1			67.1
Diluted		69.0			69.0			69.0

See Notes to Financial Statements.

F-3

WABCO Holdings Inc.

(Wholly-owned by American Standard Companies Inc.)

COMBINED CONSOLIDATED BALANCE SHEET


	Year Ended December 31,
(Amounts in millions)	2006			2005
ASSETS
Current assets:
Cash and cash equivalents	$	34.8		$	39.9
Accounts receivable, less allowance for doubtful accounts—$6.5 in 2006; $5.5 in 2005		186.5			129.5
Inventories		138.0			116.3
Future income tax benefits		14.5			18.6
Retained interest in securitization program		17.4			15.8
Other current assets		35.6			28.6

Total current assets		426.8			348.7
Facilities, at cost, net of accumulated depreciation		299.7			259.9
Goodwill		343.8			311.7
Capitalized software costs, net of accumulated amortization—$71.5 in 2006; $53.7 in 2005		37.4			39.6
Long-term future income tax benefits		42.0			14.1
Investment in unconsolidated Joint Ventures		84.9			79.2
Other assets		42.3			42.2

TOTAL ASSETS	$	1,276.9		$	1,095.4

LIABILITIES AND OWNERS’ NET INVESTMENT
Current liabilities:
Loans payable to banks	$	17.9		$	7.2
Accounts payable		147.3			127.9
Accrued payrolls		74.2			55.2
Current portion of warranties		35.1			26.8
Taxes on income		65.5			39.1
Cash collected on behalf of banks—securitization		68.7			54.6
Other accrued liabilities		67.6			54.1

Total current liabilities		476.3			364.9
Long-term debt		57.3			37.2
Other long-term liabilities:
Post-retirement benefits		366.4			323.2
Warranties		5.4			7.1
Deferred tax liabilities		18.5			17.5
Minority interest		11.4			10.3
Other		26.4			24.4

Total liabilities		961.7			784.6
Commitments and contingencies:
Owners’ net investment		306.0			298.0
Accumulated other comprehensive income:
Foreign currency translation effects		82.4			63.9
Minimum pension liability adjustment, net of tax		—			(51.1	)
Unrealized losses on benefit plans, net of tax		(73.2	)		—

Total owners’ net investment		315.2			310.8

TOTAL LIABILITIES AND OWNERS’ NET INVESTMENT	$	1,276.9		$	1,095.4

See Notes to Financial Statements.

F-4

WABCO Holdings Inc.

(Wholly-owned by American Standard Companies Inc.)

COMBINED CONSOLIDATED STATEMENT OF CASH FLOWS


	Year Ended December 31,
(Amounts in millions)	2006			2005			2004
Cash provided (used) by:
Operating activities:
Net income	$	137.8		$	145.3		$	191.4
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		49.2			40.2			32.1
Amortization of capitalized software and other intangibles		32.6			36.3			37.6
Equity in earnings of unconsolidated joint ventures, net of dividends received		(4.7	)		(9.8	)		(9.2	)
Non-cash stock compensation		2.7			0.3			0.3
Deferred income taxes		(15.7	)		(9.5	)		8.9
Loss on sale of property, plant and equipment		1.6			—			—
Changes in assets and liabilities:
Accounts receivable		(38.2	)		7.9			(28.2	)
Inventories		(9.7	)		(8.2	)		(17.3	)
Accounts payable		5.0			(0.6	)		(1.9	)
Other accrued liabilities and taxes		56.3			13.5			(1.4	)
Post-retirement benefits		(31.4	)		0.2			1.6
Other current and long-term assets		(21.8	)		(24.2	)		(1.0	)
Other long-term liabilities		11.7			3.6			5.1

Net cash provided by operating activities		175.4			195.0			218.0

Investing activities:
Purchases of property, plant and equipment		(65.2	)		(61.9	)		(58.1	)
Investments in computer software		(7.5	)		(8.3	)		(11.4	)
Proceeds from disposal of property, plant and equipment		—			0.7			1.3

Net cash used by investing activities		(72.7	)		(69.5	)		(68.2	)

Financing activities:
Borrowings of long-term debt		64.8			—			—
Repayments of long-term debt		(52.7	)		(0.3	)		(0.4	)
Borrowings of short-term debt		19.6			4.6			7.8
Repayments of short-term debt		(9.3	)		(8.1	)		(6.9	)
Net change in balance due from/to American Standard or American Standard affiliated entities		(132.5	)		(107.3	)		(143.2	)

Net cash provided/(used) by financing activities		(110.1	)		(111.1	)		(142.5	)

Effect of exchange rate changes on cash and cash equivalents		2.3			(1.4	)		1.4

Net increase/(decrease) in cash and cash equivalents		(5.1	)		13.0			8.5
Cash and cash equivalents at beginning of period		39.9			26.9			18.4

Cash and cash equivalents at end of period	$	34.8		$	39.9		$	26.9

Cash paid during the year for:
Interest	$	5.0		$	3.3		$	3.0
Taxes	$	48.9		$	50.3		$	51.9

See Notes to Financial Statements.

F-5

WABCO Holdings Inc.

(Wholly-owned by American Standard Companies Inc.)

COMBINED CONSOLIDATED STATEMENT OF OWNERS’ NET INVESTMENT AND COMPREHENSIVE INCOME


				Accumulated Other Comprehensive Income
(Amounts in millions)	Owners’ Investment			Foreign Currency Translation Effects			Minimum Pension Liability Adjustment			Unrealized Losses on Benefit Plans, net of tax			Comprehensive Income
Balance at December 31, 2003	$	211.3		$	76.9		$	(32.0	)	$	—
Net income		191.4			—			—			—		$	191.4
Foreign currency translation		—			19.9			(2.4	)		—			17.5
Minimum pension liability adjustment, net of taxes		—			—			(8.8	)		—			(8.8	)

Total comprehensive income														200.1

Non-cash stock compensation		0.2
Net transfers to American Standard and affiliates		(143.2	)		—			—			—

Balance at December 31, 2004		259.7			96.8			(43.2	)		—

Net income		145.3			—			—			—		$	145.3
Foreign currency translation		—			(32.9	)		4.6			—			(28.3	)
Minimum pension liability adjustment, net of taxes		—			—			(12.5	)		—			(12.5	)

Total comprehensive income													$	104.5

Non-cash stock compensation		0.3
Net transfers to American Standard and affiliates		(107.3	)		—			—

Balance at December 31, 2005		298.0			63.9			(51.1	)		—

Net income		137.8			—			—					$	137.8
Foreign currency translation		—			18.5			(5.3	)		—			13.2
Minimum pension liability adjustment, net of taxes		—			—			23.0			—			23.0
Unrealized losses on pension, adoption of FAS 158, net of tax		—			—			33.4			(73.2	)

Total comprehensive income													$	174.0

Non-cash stock compensation		2.7
Net transfers to American Standard and affiliates		(132.5	)		—			—			—

Balance at December 31, 2006	$	306.0		$	82.4		$	—		$	(73.2	)

See Notes to Financial Statements.

F-6

WABCO Holdings Inc.

(Wholly-owned by American Standard Companies Inc.)

NOTES TO FINANCIAL STATEMENTS

NOTE 1. Description of Company and Basis of Presentation

American Standard’s Vehicle Control Systems business (“WABCO” or the “Company”) is comprised of various subsidiaries and components of American Standard Companies Inc. (“American Standard”) and its subsidiaries. WABCO Holdings Inc. is wholly-owned by American Standard and represents the various operations within American Standard that collectively comprise the Vehicle Control Systems segment of its American Standard’s consolidated financial statements and includes all assets, liabilities, revenues, expenses and cash flows directly attributable to such business. WABCO develops, manufactures and sells advanced braking, stability, suspension and transmission control systems primarily for commercial vehicles. WABCO’s largest-selling products are braking systems (“ABS” and “EBS”, respectively), automated transmission controls and suspension control systems for heavy and medium-sized trucks, buses and trailers. WABCO also sells suspension control systems to manufacturers of luxury cars and sport utility vehicles. Its products are sold directly to vehicle and component manufacturers around the world. Replacement parts are sold through both original equipment manufacturers and an independent after-market distribution network. WABCO sells its products to four groups of customers around the world: bus and truck original equipment manufacturers (“OEMs”), trailer OEMs, aftermarket for replacement parts and services and car manufacturers. WABCO’s largest customer is DaimlerChrysler (Mercedes and Freightliner), which accounted for 14.6%, 16.3% and 16.4% of WABCO’s sales for the years ended December 31, 2006, 2005 and 2004, respectively. WABCO primarily operates in Europe.

NOTE 2. Summary of Significant Accounting Policies

Financial Statement Presentation —The financial statements have been derived from the financial statements and accounting records of American Standard, principally representing the Vehicle Control Systems segment, using the historical results of operations, and historical basis of assets and liabilities of WABCO and reflect American Standard’s net investment in WABCO. Historically, stand-alone financial statements have not been prepared for WABCO. Management believes the assumptions underlying the allocations included in the financial statements are reasonable. Although the financial statements may not necessarily reflect WABCO’s results of operations, financial position and cash flows in the future, management believes the differences between the amounts presented and what its results of operations, financial position and cash flows would have been had WABCO been a standalone company during the periods presented would not be material. Because a direct ownership relationship did not exist among all of the various units and entities comprising WABCO, American Standard’s net investment in WABCO is shown in lieu of shareholders’ equity in the financial statements.

The financial statements include the accounts of certain majority-owned subsidiaries of American Standard and intercompany transactions are eliminated. WABCO investments in unconsolidated joint ventures are included at cost plus it’s equity in undistributed earnings in accordance with the equity method of accounting and reflected as investments in associated companies in the combined consolidated balance sheet.

The accompanying financial statements include allocations of costs that were incurred by American Standard for functions such as corporate human resources, finance and legal. These costs include the costs of salaries, benefits and other related costs. The total costs allocated to the accompanying financial statements for these functions amounted to $21.8 million, $18.9 million and $19.7 million for the years ended December 31, 2006, 2005 and 2004, respectively. These costs are included in selling, general and administrative expenses in the accompanying financial statements. The primary driver underlying these allocations is total WABCO revenue as a percentage of the total consolidated revenue of American Standard.

Historically, WABCO’s operations have been primarily funded through American Standard’s primary bank credit agreement via either intercompany loans or intercompany advances. The accompanying combined

F-7

WABCO Holdings Inc.

(Wholly-owned by American Standard Companies Inc.)

NOTES TO FINANCIAL STATEMENTS—(Continued)

financial statements reflect the interest expense or income, if any, charged or received on these intercompany arrangements. See Note 15 of Notes to Annual Financial Statements for additional information pertaining to Related Party Transactions. See Note 12 of Notes to Annual Financial Statements for additional disclosures pertaining to third party debt.

Use of Estimates —The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the combined financial statements and accompanying notes. Actual results could differ from those estimates. Some of the most significant estimates included in the preparation of the financial statements are related to stock-based compensation, post-retirement benefits, warranties, income taxes, sales returns, allowance for doubtful accounts and commitments and contingencies. Allocation methods are described in the notes to these financial statements where appropriate.

Foreign Currency Translation —In accordance with Statement of Financial Accounting Standards No. 52, Foreign Currency Translation, adjustments resulting from translating foreign functional currency assets and liabilities into U.S. dollars are recorded in a separate component of owners’ net investment. Gains or losses resulting from transactions in other than the functional currency are reflected in the consolidated statement of income, except for intercompany transactions of a long-term investment nature.

Revenue Recognition —In accordance with Securities and Exchange Commission’s Staff Accounting Bulletin No. 104, sales of products are principally recorded (i) upon shipment if title passes to the customer upon shipment, or upon delivery if title passes to the customer upon delivery, (ii) when persuasive evidence of an arrangement exists with the customer, (iii) when the sales price is fixed and determinable, and (iv) when the collectibility of the sales price is reasonably assured. Amounts billed to customer for shipping and handling costs are included in sales.

In accordance with EITF 01-9, Accounting for Consideration Given By a Vendor to a Customer, WABCO typically records cooperative advertising allowances, rebates and other forms of sales incentives as a reduction of sales at the later of the date of the sale or the date the incentive is offered.

Shipping and Handling Costs —Shipping, handling, receiving, inspecting, warehousing, internal transfer, procurement and other costs of distribution are included in cost of sales in the combined statements of income.

Cash Equivalents —Cash equivalents include all highly liquid investments with maturity of three months or less when purchased.

Allowance for Doubtful Accounts —In determining the allowance for doubtful accounts WABCO analyzes the aging of accounts receivable, historical bad debts, customer creditworthiness and current economic trends.

Inventories —Inventory costs are determined principally by the use of the last-in, first-out (LIFO) method, and are stated at the lower of such cost or realizable value.

Facilities —Property, plant and equipment balances are stated at cost less accumulated depreciation. WABCO capitalizes costs, including interest during construction, of fixed asset additions, improvements, and betterments that add to productive capacity or extend the asset life. WABCO assesses facilities for impairment when events or circumstances indicate that the carrying amount of these assets may not be recoverable. Maintenance and repair expenditures are expensed as incurred.

F-8

WABCO Holdings Inc.

(Wholly-owned by American Standard Companies Inc.)

NOTES TO FINANCIAL STATEMENTS—(Continued)

Depreciation —Depreciation and amortization are computed on the straight-line method based on the estimated useful life of the asset or asset group, which are 40 years for buildings, 3 years for tooling and 5 to 15 years for machinery and equipment.

Computer Software Costs —In accordance with Statement of Position 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use, WABCO capitalizes the costs of obtaining or developing internal-use computer software, including directly related payroll costs. WABCO amortizes those costs over periods up to seven years, beginning when the software is ready for its intended use.

Goodwill —In accordance with Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets , goodwill is not amortized but is subject to annual impairment tests as of each October 1 of each fiscal year or more often when events or circumstances indicate that the carrying amount of goodwill may not be recoverable. A goodwill impairment loss is recognized to the extent the carrying amount of goodwill exceeds the implied fair value of goodwill.

Warranties —Products sold by WABCO are covered by a basic limited warranty with terms and conditions that vary depending upon the product and country in which it was sold. The limited warranty covers the equipment, parts and labor (in certain cases) necessary to satisfy the warranty obligation for a period of two years, generally. Estimated product warranty expenses are accrued in cost of good sold at the time the related sale is recognized. Estimates of warranty expenses are based primarily on warranty claims experience and specific customer contracts. Warranty expenses include accruals for basic warranties for product sold, as well as accruals for product recalls, service campaigns and other related events when they are known and estimable. To the extent WABCO experiences changes in warranty claim activity or costs associated with servicing those claims, its warranty accrual is adjusted accordingly. Warranty accrual estimates are updated based upon the most current warranty claims information available. See Note 13 for a summary of warranties.

Post-retirement Benefits —All post-retirement benefits are accounted for on an accrual basis using actuarial assumptions in accordance with Statement of Financial Accounting Standards No. 87, Employers’ Accounting for Pensions and No. 106, Employers’ Accounting for Post-Retirement Benefits Other Than Pensions and related guidance. Post-retirement pension benefits are provided for substantially all employees of WABCO, both in the U.S. and abroad through either plans specific to WABCO legal entities or to a lesser extent through participation in plans managed by American Standard on a consolidated basis. In addition, in the U.S., certain WABCO employees receive post-retirement health care and life insurance benefits through participation in plans sponsored by American Standard and managed on a consolidated basis. The costs of the benefits provided through plans specific to the WABCO business are also included in the accompanying combined consolidated financial statements and summarized in detail along with other information pertaining to these plans in Note 11. Plans specific to the WABCO business are primarily concentrated in the United Kingdom, France, Germany and Switzerland. In December 2006, the Company adopted the provisions of Statement of Financial Accounting Standard No. 158 (“FAS 158”), Employers’ Accounting for Defined Benefit Pension and Other Post-Retirement Plans, an amendment of FASB Statements No, 87, 88, 106, and 132(R) . FAS 158 requires an entity to recognize in its statement of financial position an asset for a defined benefit post-retirement plan’s overfunded status or a liability for a plan’s underfunded status. Based on the funded status of our plans as of December 31, 2006, the adoption of FAS 158 decreased total assets by $5.3 million, increased total liabilities by $34.5 million, and reduced total shareholders’ equity by $39.8 million, net of taxes. The adoption of FAS 158 did not affect our results of operations.

FAS 158 also requires an entity to measure a defined benefit post-retirement plan’s assets and obligations that determine its funded status as of the end of the employer’s fiscal year, and recognize changes in the funded

F-9

WABCO Holdings Inc.

(Wholly-owned by American Standard Companies Inc.)

NOTES TO FINANCIAL STATEMENTS—(Continued)

status of a defined benefit post-retirement plan in comprehensive income in the year in which the changes occur. This provision is not required to be adopted by the Company until the year ended December 31, 2008. Since the Company currently has a measurement date of December 31st for substantially all plans, this provision will not have a material impact in the year of adoption.

Research, Development and Engineering Expenses —Research and development costs are expensed as incurred. WABCO expended approximately $72.2 million in 2006, $73.5 million in 2005 and $66.2 million in 2004 for research activities, product development and for product engineering.

Income Taxes —In accordance with Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes, deferred income taxes are determined on the asset and liability method, and are recognized for all temporary differences between the tax bases of assets and liabilities and their reported amounts in the financial statements. No provision is made for U.S. income taxes applicable to undistributed earnings of foreign subsidiaries that are indefinitely reinvested. WABCO has been included in American Standard’s consolidated federal and state income tax returns. The provision for income taxes has been computed as if WABCO filed its own consolidated income tax returns separate and apart from American Standard.

Comprehensive Income —Comprehensive income consists of net income, deferred gains or losses on hedge contracts, foreign currency translation adjustments and pension liability adjustments, unrecognized losses on post-retirement benefit plans and is presented in the Combined Consolidated Statement of Owners’ Net Investment and Comprehensive Income. The Company’s investments in its foreign subsidiaries are considered to be permanently invested and no provision for income taxes on the related foreign exchange translation adjustments of those subsidiaries has been recorded.

Stock-Based Compensation —The accompanying combined financial statements reflect the provisions of Statement of Financial Accounting Standard No. 123-Revised (“FAS 123R”), Share Based Payments . American Standard adopted FAS 123R on January 1, 2006 using the modified prospective approach. FAS 123R requires WABCO to measure and recognize in its statement of income the expense associated with all share-based payment awards made to employees and directors, including stock options, and discounts on employee stock purchases associated with American Standard’s Employee Stock Purchase Plan (“ESPP”), based on either estimated fair values or actual fair values in the case of restricted stock and restricted stock unit grants. Under the modified prospective approach, WABCO began to recognize as expense the cost of unvested awards outstanding as of January 1, 2006 as well as the cost of awards granted after January 1, 2006. Prior to January 1, 2006, the accompanying combined financial statements reflect the accounting for share-based payments under Statement of Financial Accounting Standard No. 123 Accounting for Stock-Based Compensation (“FAS 123”), which allowed for measurement of stock-based compensation cost using the intrinsic value based method of accounting prescribed by APB Opinion No. 25, Accounting for Stock Issued to Employees (“APB 25”). APB 25 compensation cost was not recognized for substantially all options granted because the exercise price of options granted was equal to the market value of American Standard’s stock on the grant date and the ESPP plan was deemed noncompensatory.

Certain WABCO employees participate in the stock-based compensation plans of American Standard. Under these plans, certain WABCO employees have received grants of stock options. In addition, all eligible WABCO employees are provided with the opportunity to participate in American Standard’s employee stock purchase plan. Stock options granted to WABCO employees under American Standard’s plans generally vest ratably over three years on the anniversary date of the awards and are exercisable generally over a period of ten years. The ESPP provides those employees that enroll with the ability to purchase shares of American Standard’s

F-10

WABCO Holdings Inc.

(Wholly-owned by American Standard Companies Inc.)

NOTES TO FINANCIAL STATEMENTS—(Continued)

stock at the end of each calendar quarter, through payroll deductions at a discount of 15% from the market price of American Standard’s stock as quoted on the New York Stock Exchange on the last day of each calendar quarter.

Under the terms of the stock option plans, the distribution would be considered a termination of employment for WABCO employees, in which case all employees that hold options to purchase shares of American Standard’s stock and whose termination meets the appropriate plan definition of retirement will have either three years or the remaining life of the option to exercise the vested shares to which that option applies, while employees who hold options to purchase shares of American Standard’s stock whose termination does not meet the appropriate plan definition of retirement will have 90 days from the date of the distribution to exercise vested options.

Subject to American Standard Companies Inc. Management Development and Compensation Committee approval, we expect that all options granted prior to 2007 will be adjusted upon the distribution into two separate options, one relating to Company common stock and one relating to American Standard Companies Inc. common stock. Such adjustment is expected to be made such that immediately following the distribution (i) the number of shares relating to the Company option will be equal to the number of shares of Company common stock that the option holder would have received in the distribution had the American Standard Companies Inc. options represented outstanding shares of American Standard Companies Inc. common stock, and (ii) the per share option exercise price of the original American Standard Companies Inc. stock option will be proportionally allocated between the two types of stock options based upon the relative per share trading prices of the Company and American Standard Companies Inc. immediately following the distribution. It is expected that options granted to WABCO employees in 2007 will be equitably adjusted upon distribution so as to relate solely to shares of the Company’s common stock. These adjustments will preserve the economic value of the awards immediately prior to the distribution. We also expect that all Company options issued as part of this adjustment and the American Standard Companies Inc. options will continue to be subject to their current vesting schedules. Further, for purposes of vesting and the post-termination exercise periods applicable to such stock options, the American Standard Companies Inc. Management Development and Compensation Committee is expected to determine that continued employment with the Company will be viewed as continued employment with the issuer of the options. American Standard Companies Inc. Management Development and Compensation Committee may, however, determine a different treatment of options in the distribution, including making special provisions for certain options subject to foreign tax law.

The following table illustrates the effect on net income if the accompanying financial statements for 2005 and 2004 reflected the fair value recognition provisions of FAS 123 , for stock-based employee compensation (dollars in millions).


	Year Ended December 31, 2005		Year Ended December 31, 2004
Net income, as reported	$	145.3	$	191.4
Deduct: Total stock-based compensation expense, net of tax, determined under fair value method for all stock option awards and discounts under ESPP		1.3		1.2

Net income including the impact of stock compensation expense	$	144.0	$	190.2

F-11

WABCO Holdings Inc.

(Wholly-owned by American Standard Companies Inc.)

NOTES TO FINANCIAL STATEMENTS—(Continued)

The fair value of the American Standard stock options was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions: risk-free interest rate of 4.30% in 2005 and 3.09% in 2004; volatility of 26% in 2005 and 28% in 2004; an expected average life of 5 years in 2005 and 2004; and a dividend yield of 1.40% in 2005 and zero in 2004.

NOTE 3. Effect of Recently Issued Accounting Standards

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard No. 157 (“SFAS No. 157”), Fair Value Measurements . SFAS No. 157 defines fair value, provides a framework for measuring fair value under current standards in GAAP, and requires additional disclosure about fair value measurements. In accordance with the Statement, the definition of fair value retains the exchange price notion, and exchange price is defined as the price in an orderly transaction between market participants to sell an asset or transfer a liability. If there is a principal market for the asset or liability, the fair value measurement should reflect that price, whether that price is directly observable or otherwise used in a valuation technique. Depending on the asset or liability being valued, the inputs used to determine fair value can range from observable inputs (i.e. prices based on market data independent from the entity) and unobservable inputs (i.e. entity’s own assumptions about the assumptions that market participants would use). The Statement applies to other accounting pronouncements that require or permit fair value measurements and will be effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. WABCO is currently evaluating the provisions of SFAS No. 157 to determine the potential impact, if any, the adoption will have on WABCO’s financial statements.

In July 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109 (“FIN 48”). FIN 48 provides recognition criteria and a related measurement model for tax positions taken by companies. In accordance with FIN 48, a tax position is a position in a previously filed tax return or a position expected to be taken in a future tax filing that is reflected in measuring current or deferred income tax assets and liabilities. Tax positions shall be recognized only when it is more likely than not (likelihood of greater than 50%), based on technical merits, that the position will be sustained upon examination. Tax positions that meet the more likely than not threshold should be measured using a probability weighted approach as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement. FIN 48 is effective for fiscal years beginning after December 15, 2006. WABCO is in the process of evaluating the provisions of FIN 48 to determine the potential impact, if any, the adoption will have on its financial statements. Although the Company has not completed its analysis, the adoption of FIN 48 is not expected to have a significant impact on the Company’s financial statements.

NOTE 4. Operational Consolidation Charges

During 2006, WABCO incurred charges totaling $8.2 million related to operational consolidation activities as more fully described below of which $1.3 million is included in cost of sales and $6.9 million is included in selling and administrative expenses. These charges included $7.4 million related to 2006 plans and $0.8 million related to prior period plans, primarily related to severance. These actions included the elimination of 59 jobs. WABCO expects to incur an additional $0.6 million charge during 2007 to complete the plans outstanding as of December 31, 2006.

F-12

WABCO Holdings Inc.

(Wholly-owned by American Standard Companies Inc.)

NOTES TO FINANCIAL STATEMENTS—(Continued)

Following is a summary of the 2006 operational consolidation programs and asset impairment charges (dollars in millions):


	2006 Program Charges		Cash Payments			Non-Cash Write-Off			Balance Dec. 31, 2006
Termination payments and other employee costs	$	6.2	$	(0.5	)	$	—		$	5.7
Asset impairments	$	0.4		—			(0.4	)		—
Other	$	0.8		(0.8	)		—			—

	$	7.4	$	(1.3	)	$	(0.4	)	$	5.7

The accrued termination payments and other employee costs are for severance and other related payments expected to be made after termination.

During 2005, WABCO incurred $13.7 million of operational consolidation expenses of which $6.8 million related to 2005 plans and $6.9 million related to 2004 carryover actions and included the elimination of 191 jobs. Of this charge, $9.1 million was included in cost of sales and $4.6 million was included in selling and administrative expenses. The 2005 charges related to plans associated with job elimination programs designed to streamline processes. The charges associated with 2004 carryover actions pertain to the continued execution of a plan to transfer production of certain products from a manufacturing facility in Leeds, UK to a facility in Poland.

Following is a summary of the 2005 operational consolidation programs and asset impairment charges (dollars in millions):


	2005 Program Charges		Cash Payments						Non-Cash Write-Off		Balance at Dec. 31, 2006
	2005 Program Charges		2005			2006			Non-Cash Write-Off		Balance at Dec. 31, 2006
Termination payments and other employee costs	$	6.8	$	(2.6	)	$	(1.7	)	$	—	$	2.5
Asset impairments		—		—			—			—		—
Other		—		—			—			—		—

	$	6.8	$	(2.6	)	$	(1.7	)	$	—	$	2.5

WABCO expects that approximately $4.3 million will be paid in 2007 on the remaining balance of $8.2 million related to 2006 and 2005 programs. The remaining amount will be paid between 2008 and 2012.

In 2004 WABCO incurred charges as part of an effort to remain cost-competitive and optimize its manufacturing capabilities. WABCO transferred production of certain products from its manufacturing facility in Leeds, UK to a facility in Poland. This action resulted in a charge of approximately $3.4 million, including costs for job elimination expenses, post-employment benefits for employees and non-cash asset impairment charges. WABCO incurred an additional $2.0 million of expenses related to other job eliminations in Europe.

During 2006 WABCO expended $1.8 million of cash on 2004 programs and $2.1 million on earlier year programs. WABCO expects that approximately $1.4 million will be paid in 2007 on the remaining balance of $2.4 million related to 2004 and earlier programs. The remaining balance will be paid in 2008 and 2009 relating to German restructuring plans including early retirement programs.

F-13

WABCO Holdings Inc.

(Wholly-owned by American Standard Companies Inc.)

NOTES TO FINANCIAL STATEMENTS—(Continued)

NOTE 5. Stock Options

As required by FAS 123R, compensation cost for each share-based payment award is recognized on a straight line basis over the requisite service period of the award, which in most cases is the explicit vesting period included in the terms of the stock option award. Compensation cost is measured on the grant date of the award, which is the date the Board of Directors of American Standard approves the granting of the award. Compensation cost on discounts associated with stock purchases of American Standard pursuant to American Standard’s stock purchase plan are recognized on the date of such purchases. The accompanying combined statement of income for the year ended December 31, 2006 includes $2.4 million of stock based compensation expense. The fair value underlying the portion of the foregoing stock compensation expense attributable to stock options is based on the Black-Scholes option valuation model as calculated by American Standard. The Black-Scholes option valuation method considers the following factors when calculating fair value—the exercise price of the option, the stock price of American Standard on the date of the grant, the expected term of the option, the expected volatility of American Standard’s stock during the expected term of the option, the expected dividends to be paid by American Standard and the risk free interest rate expected during each options term. The amount of compensation expense recognized is based on the number of awards WABCO believes will ultimately vest, which includes an estimate of the number of awards expected to be forfeited.

A summary of stock option activity and related information for the year ended December 31, 2006 is as follows:


	Stock Options
	Shares Underlying Options		Weighted- Average Exercise Price		Weighted- Average Fair Value Of Grants
Outstanding December 31, 2005	984,888		$	23.82
Granted	312,650		$	36.98	$	9.82
Exercised	(171,965	)	$	22.90
Forfeited	(25,661	)	$	39.60

Outstanding December 31, 2006	1,099,912		$	34.20

Exercisable at end of period:
Year ended December 31, 2006	510,883		$	29.10

The weighted-average fair value of grants for the years ended December 31, 2005 and 2004 was $10.09 and $10.75, respectively. The total aggregate intrinsic value of awards outstanding as of December 31, 2006 is $12.8 million. The total aggregate intrinsic value of options exercisable as of December 31, 2006 is $8.6 million. Aggregate intrinsic value is calculated by subtracting the exercise price of the option from the closing price of American Standard’s common stock on December 31, 2006 multiplied by the number of shares per each option. In addition, the weighted average remaining contractual life of options outstanding as of December 31, 2006 is 7.3 years. The total intrinsic value of options exercised during the year ended December 31, 2006 was $3.6 million and the total fair value of shares vested during the same period was $2.6 million. In addition, the accompanying financial statements reflect an actual tax benefit of $0.4 million on options exercised during the year ended December 31, 2006. The 589,029 of nonvested options as of December 31, 2006 will result in the recognition of $3.4 million of compensation cost. This cost will be recognized over the weighted average period of 1.51 years. The weighted average remaining contractual life of the vested options as of December 31, 2006 is 6.02 years. The contractual life of all options is 10 years.

F-14

WABCO Holdings Inc.

(Wholly-owned by American Standard Companies Inc.)

NOTES TO FINANCIAL STATEMENTS—(Continued)

The following table summarizes the significant assumptions used during the year ended December 31, 2006.


Assumption	Year ended December 31, 2006
Weighted average grant date fair value	$	9.80
Risk-free interest rate		4.52	%
Expected volatility		26.0	%
Expected holding period		5 years
Expected forfeiture rate		4.0	%
Dividend yield		1.62	%

The weighted average grant date fair value was calculated under the Black-Scholes option-pricing model. The risk free interest rate is based on the yield of U.S. Treasury securities that correspond to the expected holding period of the options. American Standard reviewed the historic volatility of its common stock over 12-month, 5-year and 10-year periods, and the implied volatility for at the money options to purchase shares of American Standard’s common stock. Based on this data, American Standard chose to use the average of the 5-year historical volatility of its common stock and the average implied volatility of at the money options. The 5-year historical volatility period was selected since that period corresponds with the expected holding period. The expected holding period was calculated by American Standard by reviewing the historical exercise pattern of all holders that were granted options from 1995 through 2005, the exercise pattern of domestic versus international option holders (including an analysis by country) and the exercise behavior of officers versus non-officers. The results of the analysis support one expected term for all groups of employees. The expected forfeiture rate was determined based on the historical stock option forfeiture data. The dividend yield was based on American Standard’s expected dividend rate.

Under the terms of stock options granted to employees prior to May 2002, option holders have the right to require the Company to redeem such options for cash upon a change of control. The Company is not currently aware of any events or circumstances, which would include the separation and the announced sale of Bath and Kitchen, that would constitute a change of control. Of the 1,099,912 stock options that are outstanding as of December 31, 2006, there are 146,980 stock options that contain this redemption right. For such options, the initial redemption value would be presented as a liability outside of permanent equity. However, since all of the stock options subject to this right were granted with zero dollar intrinsic values and it is not probable that the options will become redeemable, a subsequent adjustment to the initial redemption value is not required. Accordingly, no amounts have been presented as liabilities on the balance sheet.

NOTE 6. Other Expense, Net

Other expense/(income) was as follows:


	Year Ended December 31,
(Dollars in millions)	2006		2005			2004
Minority interest expense	$	2.5	$	1.8		$	1.4
Foreign exchange loss/(gain)		0.1		(0.8	)		(3.5	)
Losses on accounts receivable securitization program		5.7		4.6			3.9
Other, net		2.5		(0.2	)		(1.7	)

	$	10.8	$	5.4		$	0.1

F-15

WABCO Holdings Inc.

(Wholly-owned by American Standard Companies Inc.)

NOTES TO FINANCIAL STATEMENTS—(Continued)

NOTE 7. Inventories

The components of inventories, which are carried principally on a last-in, first-out (LIFO) basis, are as follows:


	Year Ended December 31,
(Dollars in millions)	2006		2005
Finished products	$	67.9	$	64.2
Products in process		10.3		10.0
Raw materials		59.8		42.1

Inventories at cost	$	138.0	$	116.3

The current replacement cost approximated the LIFO carrying cost for 2006 and 2005.

NOTE 8. Facilities

The components of facilities, at cost, are as follows:


	Year Ended December 31,
(Dollars in millions)	2006		2005
Land	$	13.1	$	11.9
Buildings		130.8		131.6
Machinery and equipment		434.7		344.8
Improvements in progress		32.9		19.1

Gross facilities		611.5		507.4
Less: accumulated depreciation		311.8		247.5

Net facilities	$	299.7	$	259.9

Depreciation expense for owned assets and assets under capital leases for the years ended December 31, 2006, 2005 and 2004 was $49.2 million, $40.2 million and $32.1 million, respectively.

NOTE 9. Accounts Receivable Securitization Agreements

Sales and transfers of financial instruments are accounted for under Statement of Financial Accounting Standard No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities (“FAS 140”). As a participant in American Standard’s asset securitization program, the Company sells interests in accounts receivables to a Special Purpose Entity (“SPE”) created as part of an accounts receivable financing facility established in Europe with a major international bank. The SPE in turn sells these receivables to a conduit administered by the bank. Receivables sold under such arrangements are removed from the balance sheet at the time they are sold since the transactions meet the sale criteria per FAS 140. Specifically the receivables are legally isolated from the seller, and the purchasers have the right to pledge or exchange the receivables and obtain effective control over the receivables. Any retained interests in receivables sold are recorded by the seller at fair value. The Company retains responsibilities for the collection and administration of receivables subject to these facilities.

F-16

WABCO Holdings Inc.

(Wholly-owned by American Standard Companies Inc.)

NOTES TO FINANCIAL STATEMENTS—(Continued)

WABCO subsidiaries in Europe participated in these facilities and the receivables sold through these facilities are removed from the balance sheet. The accompanying Combined Balance Sheets reflect the advance for the sold receivables. The retained interest in the receivables totaled $17.4 million and $15.8 million as of December 31, 2006 and 2005, respectively.

To the extent that the cash received and value of the retained interest is less than the net book value of the receivables sold, losses are recognized at the time of the sale. Those losses amounted to $5.7 million, $4.6 million and $3.9 million for the years ended December 31, 2006, 2005 and 2004, respectively and are included in other expense.

Following is a summary of receivables subject to the financing facilities:


	December 31, 2006		December 31, 2005
(Dollars in millions)	Total		Total
Outstanding balances of receivables sold to SPEs	$	203.1	$	168.9
Advance from the bank conduit	$	177.5	$	143.7

WABCO also participates in an arrangement whereby certain receivables generated on sales of product to its Meritor WABCO joint venture are sold to American Standard. The receivables sold to American Standard under this arrangement had a balance of $22.9 million and $23.0 million for the years ended December 31, 2006 and 2005, respectively.

Prior to or upon consummation of the planned distribution, WABCO will cease participation in both these programs.

NOTE 10. Goodwill

The following table summarizes the changes in the carrying amount of goodwill for the years ended December 31, 2006 and 2005, respectively.


	Year Ended December 31,
	2006		2005
Balance of goodwill, beginning of year	$	311.7	$	355.5
Acquisitions		—		—
Dispositions		—		—
Foreign exchange translation		32.0		(43.6	)
Other		0.1		(0.2	)

Balance of goodwill, end of year	$	343.8	$	311.7

NOTE 11. Retirement Benefits

WABCO employees participate in a number of American Standard’s benefit plans, as well as benefit plans established specifically for WABCO operations. Plans sponsored by American Standard include an Employee Stock Ownership Plan (the “ESOP”) and a 401(k) savings plan (the “Savings Plan”) for the Company’s U.S. salaried and hourly employees, and a pension plan (the “Cash Balance Plan”) for certain U.S. salaried and hourly

F-17

WABCO Holdings Inc.

(Wholly-owned by American Standard Companies Inc.)

NOTES TO FINANCIAL STATEMENTS—(Continued)

employees. The ESOP and Savings Plan are individual-account defined contribution plans. In addition, WABCO employees in certain countries, primarily Germany, the United Kingdom, France and Switzerland participate in defined benefit plans sponsored by local WABCO legal entities.

Shares of American Standard’s common stock held by the ESOP and Savings Plan are allocated to the accounts of eligible employees through basic allocations of 3% of covered compensation in the ESOP, and a matching Company contribution to the Savings Plan of up to 6% of covered compensation. Participants of the Cash Balance plan may elect to participate in the pension plan and receive a credit equal to 3% of eligible pay. For these employees, the Company match in the Savings Plan is 50% of the employee contribution (up to a Company match of 3%). For employees who do not elect to participate in the pension plan, the Company match in the Savings Plan is 100% of the employee contribution (up to a Company match of 6%).

In addition, in the U.S. American Standard also provides various retirement health and life insurance benefits to certain WABCO employees.

Benefits under defined benefit pension plans on a worldwide basis are generally based on years of service and either employee’s compensation during the last years of employment or negotiated benefit levels.

In December 2006, the Company adopted the provisions of Statement of Financial Accounting Standard No. 158 (“FAS 158”), Employers’ Accounting for Defined Benefit Pension and Other Post-Retirement Plans, an amendment of FASB Statements No, 87, 88, 106, and 132(R) . FAS 158 requires an entity to recognize in its statement of financial position an asset for a defined benefit post-retirement plan’s overfunded status or a liability for a plan’s underfunded status.

The following table provides a reconciliation of the changes in pension and retirement health and life insurance benefit obligations and fair value of assets for the years ending December 31, 2006 and 2005, and a statement of the funded status as of December 31, 2006 and 2005 for those plans that are dedicated to WABCO employees only:


	2006			2006			2005			2005
(Dollars in millions)	Health & Life Ins. Benefits			Pension Benefits			Health & Life Ins. Benefits			Pension Benefits
Reconciliation of benefit obligation:
Obligation at beginning of year	$	23.3		$	463.1		$	24.5		$	463.6
Service cost		—			9.4			—			8.8
Interest cost		1.3			21.4			1.3			23.6
Participant contributions		1.5			0.4			1.4			0.5
Plan amendments		—			—			—			—
Actuarial loss		4.3			(15.8	)		—			63.0
Curtailment		—			—			—			0.2
Benefit payments		(4.2	)		(22.5	)		(3.9	)		(26.3	)
Foreign exchange effects		—			47.9			—			(70.3	)
Other		—			—			—			—

Obligation at end of year	$	26.2		$	503.9		$	23.3		$	463.1

F-18

WABCO Holdings Inc.

(Wholly-owned by American Standard Companies Inc.)

NOTES TO FINANCIAL STATEMENTS—(Continued)


	2006			2006			2005			2005
(Dollars in millions)	Health & Life Ins. Benefits			Pension Benefits			Health & Life Ins. Benefits			Pension Benefits
Reconciliation of fair value of plan assets:
Fair value of plan assets at beginning of year		—			126.3			—			122.3
Actual return on assets		—			9.7			—			21.4
Employer contributions		2.7			20.6			2.5			23.8
Participant contributions		1.5			0.4			1.4			0.5
Benefit payments		(4.2	)		(22.5	)		(3.9	)		(26.3	)
Foreign exchange effects		—			15.8			—			(15.8	)
Acquisitions/(Divestiture)		—			—			—			1.2
Other expenses		—			(0.9	)		—			(0.8	)

Fair value of plan assets at end of year	$	—		$	149.4		$	—		$	126.3

Funded Status at December 31:
Funded status		(26.2	)		(354.5	)		(23.3	)		(336.8	)
Unrecognized prior service cost (benefit)		—			0.8			—			1.6
Unrecognized net actuarial loss		11.8			93.3			10.2			101.0

Net amount recognized	$	(14.4	)	$	(260.4	)	$	(13.1	)	$	(234.2	)

Amounts Recognized in the Balance Sheet:
Before Adoption of FAS 158:
Prepaid Benefit Cost		—			30.2			—			24.2
Accrued Benefit Liability		(14.4	)		(338.9	)		(13.1	)		(321.7	)
Intangible Asset		—			0.6			—			0.6
Accumulated Other Comprehensive Income		—			47.7			—			62.7

Net amount recognized	$	(14.4	)	$	(260.4	)	$	(13.1	)	$	(234.2	)

After Adoption of FAS 158:
Noncurrent assets		—			7.1
Current liabilities		2.6			(14.3	)
Noncurrent liabilities		(28.8	)		(347.3	)

Net amounts recognized in Balance Sheet:	$	(26.2	)	$	(354.5	)

Amounts Recognized in Other Comprehensive Income consists of :
Prior Service Cost		—			0.8
Net actuarial loss (gain)		11.8			93.3
Unrecognized net initial obligation		—			—


Total (before tax effects)	$	11.8		$	94.1

Adjustments to post-retirement benefits accrual:
Due to adoption of FAS 158 (before tax effects)		11.8			46.4
Change in Other Comprehensive Income and intangible assets due to 2006 expense		—			(15.1	)

Net adjustments to post-retirement benefits accrual	$	11.8		$	31.3

F-19

WABCO Holdings Inc.

(Wholly-owned by American Standard Companies Inc.)

NOTES TO FINANCIAL STATEMENTS—(Continued)

The following table provides a summary of pension plans dedicated to WABCO employees only with accumulated benefit obligations in excess of assets as of December 31:


	2006		2005
(Dollars in millions)	Foreign Pension Plans		Foreign Pension Plans
For all plans:
Accumulated benefit obligation	$	455.0	$	420.6
For pension plans with Accumulated Benefit Obligations in excess of plan assets:
Projected benefit obligation		503.9		463.1
Accumulated benefit obligation		455.0		420.6
Fair value of plan assets		149.4		126.3

Total post-retirement costs are shown below:


	Year ended December 31,
(Dollars in millions)	2006		2005		2004
Foreign Pensions	$	24.4	$	23.8	$	22.9
Domestic—Health & Life insurance benefits		1.8		1.8		2.0
Defined contribution plan cost, principally ESOP and Savings Plan		0.2		0.3		0.3

Total post-retirement costs, including accretion expense	$	26.4	$	25.9	$	25.2

Components of post-retirement costs are broken out in the tables below:

Pension Benefit Costs


(Dollars in millions)	2006 Pensions			2005 Pensions			2004 Pensions
Service cost-benefits earned during period	$	9.4		$	8.8		$	7.9
Interest cost on projected benefit obligation		21.4			23.7			22.2
Less assumed return on plan assets		(10.8	)		(11.5	)		(11.2	)
Amortization of prior service cost		—			(0.2	)		(0.1	)
Amortization of net (gain)/loss		4.2			2.7			2.0

Defined benefit plan cost		24.2			23.5			20.8
Curtailment loss		—			—			2.1

Allocation from American Standard for WABCO employees participating in the plans		0.2			0.3			—

Net defined benefit plan cost after curtailments for WABCO dedicated plans	$	24.4		$	23.8		$	22.9

F-20

WABCO Holdings Inc.

(Wholly-owned by American Standard Companies Inc.)

NOTES TO FINANCIAL STATEMENTS—(Continued)

Other Post-Retirement Benefit Costs


(Dollars in millions)	2006 Domestic Health & Life Ins. Benefits		2005 Domestic Health & Life Ins. Benefits		2004 Domestic Health & Life Ins. Benefits
Service cost-benefits earned during period	$	—	$	—	$	—
Interest cost on projected benefit obligation		1.3		1.3		1.4
Amortization of prior service cost		—		—		—
Amortization of net loss		0.5		0.5		0.6

Defined benefit plan cost	$	1.8	$	1.8	$	2.0

Amortization of prior service cost is computed on the straight-line method over the average remaining service period of active participants.

Major assumptions used in determining the benefit obligation and net cost for post-retirement plans are presented below as weighted averages:


Benefit Obligation at December 31,	2006 Health & Life Ins. benefits		2006 Foreign Pension Plans		2005 Health & Life Ins. Benefits		2005 Foreign Pension Plans
Discount Rate	5.76	%	4.56	%	5.75	%	4.16	%
Salary Growth	4.63	%	3.24	%	4.34	%	3.25	%
Net Periodic Pension Cost for the year
Discount Rate	5.75	%	4.16	%	5.75	%	4.81	%
Salary Growth	4.34	%	3.25	%	4.10	%	3.25	%
Expected Return on Plan Assets	N/A		7.01	%	N/A		7.25	%

The assumed rate of return is a long-term investment return that takes into account the types of assets held by the plan and expected returns for the asset class. Return expectations reflect forward-looking analysis as well as historical experience. American Standard’s asset management strategy focuses on maintaining a diversified portfolio using various asset classes to generate attractive returns while managing risk. In determining the target asset allocation for a given plan, consideration is given to the nature of its liabilities, and portfolios are periodically rebalanced with reference to the target level.


Asset Allocation	2006		2005		2004		2006 Target		2005 Target
Equity Securities	57	%	58	%	56	%	56	%	55	%
Debt Securities	39	%	37	%	37	%	40	%	39	%
Other, including Real Estate	4	%	5	%	7	%	4	%	5	%

WABCO’s affiliates make contributions to funded pension plans that at a minimum meet all statutory funding requirements. Contributions in 2006, including payment of benefits incurred by unfunded plans, totaled $20.6 million. Contributions for 2007 are expected to increase somewhat, reflecting higher levels of deficit funding in the United Kingdom.

F-21

WABCO Holdings Inc.

(Wholly-owned by American Standard Companies Inc.)

NOTES TO FINANCIAL STATEMENTS—(Continued)

Expected future benefit payments are shown in the table below:


(Dollars in millions)	2007		2008		2009		2010		2011		2012-2016
Domestic plans without subsidy	$	2.7	$	2.7	$	2.7	$	2.6	$	2.5	$	10.2
Medicare D subsidy reimbursements	$	0.1	$	0.1	$	0.1	$	0.1	$	0.1	$	0.4
Foreign Plans	$	23.8	$	24.8	$	25.6	$	26.6	$	27.4	$	154.4

The weighted average annual assumed rate of increase in the health care cost trend rate is 9.0% for 2007 and is assumed to decrease to 8.5% in 2008 and gradually decline to 4.75% by 2018. The health care cost trend rate assumption has the following effect:


(Dollars in millions)	1% Increase		1% Decrease
Effect on the health care component of accumulated post-retirement obligation	$	0.8	$	(0.8	)
Effect on total of service and interest cost components of net periodic post-retirement health care benefit costs		—		—

NOTE 12. Debt

Short-term —Short-term borrowings are available under overdraft lines that may be revoked at any time. At December 31, 2006 and December 31, 2005, WABCO had $17.9 million and $7.2 million, respectively, of such foreign short-term debt outstanding at average interest rates of 3.9% and 1.9% per annum, respectively.

Long-term —Long-term debt consists of 7.59% Euro denominated bonds of $39.5 million and $35.5 million as of December 31, 2006 and December 31, 2005, respectively. The Euro denominated bonds were issued in January 2003 through a private placement and are due in 2013. The fair value of the bonds is approximately $45.2 million. Long-term debt also consists of bank borrowings totaling $15.8 million at December 31, 2006 and no borrowings at December 31, 2005. The borrowings were undertaken under American Standard’s 5-year Revolving Credit Agreement. American Standard has one primary bank credit agreement. The agreement was established on July 7, 2005 and provides American Standard and certain WABCO subsidiaries with a senior, unsecured, five-year, $1 billion multi-currency revolving credit facility that expires in July 2010. The borrowings carried an interest rate of 5.25%. The debt matures in 2007. All drawdowns under the Revolving Credit Agreement are classified as long-term because American Standard, as well as WABCO, has the intent and the ability to refinance the debt. Additionally long-term debt consists of a capital lease obligation totaling $2.0 million and $1.6 million at December 31, 2006 and December 31, 2005, respectively.

At December 31, 2006, WABCO’s total indebtedness was $75.2 million, of which $17.9 million was considered short-term. Annual scheduled debt maturities were $15.8 million in 2010 and $41.5 million after 2011.

Average short-term borrowings for 2006 and 2005 were $10.0 million and $13.1 million, at weighted-average interest rates of 3.1% and 2.1%, respectively.

Cash interest paid for the years ended December 31, 2006, 2005 and 2004 on all outstanding indebtedness amounted to $5.0 million, $3.3 million, and $3.0 million, respectively.

F-22

WABCO Holdings Inc.

(Wholly-owned by American Standard Companies Inc.)

NOTES TO FINANCIAL STATEMENTS—(Continued)

NOTE 13. Warranties, Guarantees, Commitments and Contingencies

Warranties

Following is a summary of changes in the WABCO’s product warranty liability for the three years ended December 31, 2006:


	Year Ended December 31,
(Dollars in millions)	2006			2005			2004
Balance of basic warranty costs accrued, beginning of year	$	33.9		$	32.5		$	14.2
Warranty costs accrued		48.4			38.4			24.0
Warranty claims settled		(45.9	)		(32.4	)		(29.9	)
Increases/(decreases) in warranty estimates made in prior years, including foreign exchange translation effects		4.1			(4.6	)		24.2

Balance of basic warranty costs accrued, end of year		40.5			33.9			32.5
Current portion included in current liabilities		(35.1	)		(26.8	)		(23.0	)

Long-term warranty liability	$	5.4		$	7.1		$	9.5

Guarantees and Commitments

Future minimum rental commitments under all non-cancelable operating leases with original terms in excess of one year in effect at December 31, 2006, are: $10.2 million in 2007; $7.6 million in 2008; $5.6 million in 2009; $4.0 million in 2010; $3.3 million in 2011; and $5.5 million thereafter, a total of $36.2 million. Net rental expense for all operating leases was $11.9 million, $10.1 million and $10.4 million for the years ended December 31, 2006, 2005 and 2004, respectively.

Contingencies

WABCO and certain of its subsidiaries are parties to a number of pending legal and tax proceedings. WABCO is also subject to federal, state and local environmental laws and regulations and is involved in environmental proceedings concerning the investigation and remediation of various sites, including certain facilities that are closed. In those instances where it is probable as a result of such proceedings that WABCO will incur costs that can be reasonably determined, WABCO has recorded a liability.

In November 2004, American Standard was contacted by the European Commission as part of a multi-company investigation into possible infringement of European Union competition regulations relating to the distribution of bath and kitchen fixtures and fittings in certain European countries. In November 2005, the European Commission sent American Standard a written request for information. American Standard is cooperating fully with the investigation, which is ongoing. American Standard believes that the European Commission is preparing a statement of objections setting forth its allegations against the parties involved, which is likely to include certain subsidiaries of American Standard that will be transferred to WABCO prior to the distribution. At this time, the company is unable to reasonably estimate the loss or range of loss that may result from the investigation. However, the company believes that the resolution of this matter will not have a material adverse effect on the financial condition or liquidity of WABCO, but could be material to WABCO’s operating results for the period in which the liability, if any, would be recognized.

F-23

WABCO Holdings Inc.

(Wholly-owned by American Standard Companies Inc.)

NOTES TO FINANCIAL STATEMENTS—(Continued)

NOTE 14. Income Taxes

Income before income taxes and the applicable provision for income taxes were:


	Year Ended December 31,
(Dollars in millions)	2006			2005			2004
Income before income taxes:
Domestic	$	8.6		$	6.3			24.7
Foreign		217.1			226.4			189.9

	$	225.7		$	232.7		$	214.6

Provision for income taxes:
Current:
Domestic	$	—		$	10.0		$	(21.9	)
Foreign		103.6			86.9			36.2

		103.6			96.9			14.3

Deferred:
Domestic		(1.0	)		2.7			(2.6	)
Foreign		(14.7	)		(12.2	)		11.5

		(15.7	)		(9.5	)		8.9

Total provision	$	87.9		$	87.4		$	23.2

A reconciliation between the actual income tax expense provided and the income taxes computed by applying the statutory federal income tax rate of 35% in 2006, 2005 and 2004 to the income before income taxes is as follows:


	Year Ended December 31,
(Dollars in millions)	2006			2005			2004
Tax provision at statutory rate	$	79.2		$	81.5		$	75.0
Foreign earnings taxed at other than 35%		4.6			(3.5	)		(1.1	)
Increase (decrease) in valuation allowance		0.4			—			(16.0	)
Withholding taxes on undistributed earnings		—			—			(7.1	)
Benefit of tax audit settlements		—			(18.3	)		(5.5	)
State tax provision		—			0.3			1.6
Repatriation of foreign earnings under Jobs Creation Act		(4.0	)		16.0			—
Tax contingency		7.7			8.7			(24.3	)
Other, net		—			2.7			0.6

Total provision	$	87.9		$	87.4		$	23.2

F-24

WABCO Holdings Inc.

(Wholly-owned by American Standard Companies Inc.)

NOTES TO FINANCIAL STATEMENTS—(Continued)

The following table details the gross deferred tax liabilities and assets and the related valuation allowances:


	Year Ended December 31,
(Dollars in millions)	2006			2005
Deferred tax liabilities:
Facilities (accelerated depreciation, capitalized interest and purchase accounting differences)	$	15.0		$	12.8
Inventory (LIFO and purchase accounting differences)		1.2			1.2
Employee benefits		26.3			22.1
Intangibles		0.9			—
Basis difference in minority interest		23.9			20.4
Other		9.2			8.9

	$	76.5		$	65.4
Deferred tax assets:
Post-retirement and other employee benefits	$	58.3		$	44.7
Warranties		0.6			0.9
Foreign net operating losses and tax credits		10.3			8.4
Reserves		12.0			15.6
Inventory		3.7			5.2
Facilities		—			0.2
Intangibles		30.0			—
Foreign exchange		—			—
Other		0.9			0.3
Valuation allowances		(1.3	)		(0.9	)

		114.5			74.4

Net deferred tax assets	$	38.0		$	9.0

Deferred tax assets related to foreign net operating loss carry forwards (2006 and 2005) have been reduced by a valuation allowance since realization is dependent in part on the generation of future taxable income in the legal entity that gave rise to tax losses. The foreign net operating losses (“NOL”) are available for utilization in future years. As of December 31, 2006, $5.9 million (net of tax) of the net operating losses has an unlimited life. The carry forward period for the remaining NOLs varies in number of years by jurisdiction between five and fifteen years.

As a result of the allocation of purchase accounting (principally goodwill) to foreign subsidiaries, the book basis in the net assets of the foreign subsidiaries exceeds the related U.S. tax basis in the subsidiaries’ stock. Such investments are considered permanent in duration and accordingly, no deferred taxes have been provided on such differences, which are significant. The Company considers the earnings of all its foreign subsidiaries to be permanently reinvested and as such no additional U.S. tax cost has been provided on approximately $180 million of earnings at December 31, 2006. Estimating the tax liability that would arise if these earnings were remitted is not practicable.

As a result of the American Jobs Creation Act of 2004, WABCO repatriated approximately $314 million in 2005 and recorded a one-time charge of $16.0 million in the fourth quarter of 2005 and a one-time benefit of $4.0 million in the third quarter of 2006 attributable to the repatriation of these earnings.

F-25

WABCO Holdings Inc.

(Wholly-owned by American Standard Companies Inc.)

NOTES TO FINANCIAL STATEMENTS—(Continued)

NOTE 15. Related Party Transactions

Presented within the Company’s Combined Consolidated Statement of Cash Flows and Combined Consolidated Statement of Owners’ Net Investment and Comprehensive Income is Net Transfers to American Standard and Affiliates which includes the following types of transactions.

(Dollars in Millions)


	2006			2005			2004
Dividends to American Standard and affiliates	$	(259.8	)	$	(134.5	)	$	(123.2	)
Decrease/(increase) in loans to/from American Standard and affiliates		110.8			9.6			(15.4	)
Other, including American Standard and affiliate allocations		16.5			17.6			(4.6	)

Net Transfers to American Standard and Affiliate s	$	(132.5	)	$	(107.3	)	$	(143.2	)

Dividends to American Standard and Affiliates —Dividends paid from WABCO to other American Standard entities.

Decrease/(increase) in loans to/from American Standard and affiliate s —The amount of cash that was either provided to the Company in order to fund working capital requirements as well as capital expenditures or cash surplus provided from the Company to other American Standard entities. The net amount due from American Standard of $86.3 million, $197.0 million and $206.7 million as of December 31, 2006, 2005 and 2004, respectively, has been included in owners’ net investment since any settlement will not result in a net inflow or outflow of assets or liabilities, nor will it create any new financial asset or financial obligation between the Company and American Standard. Net interest income / (expense) totaling $(6.2) million, $6.0 million and $5.4 million for the years ended December 31, 2006, 2005 and 2004, respectively, is included in the accompanying combined consolidated Statement of Income. All interest rates are deemed to be at or near market rates except for the interest rates carrying zero percent interest. A detailed summary of these inter-company loans, which may or may not be interest bearing, is provided below.

(Dollars in Millions)


American Standard Entity	2006						2005						2004
	Balance at Dec. 31		Interest Rate		Avg. Monthly Balance		Balance at Dec. 31		Interest Rate		Avg. Monthly Balance		Balance at Dec. 31		Interest Rate		Avg. Monthly Balance
Loans Receivable
Ideal Standard Holding Italia S.r.l.	$	9.1	4.1	%	$	10.1	$	9.0	2.9	%	$	9.8	$	—	—		$	—
ASI International Inc.		—	2.9	%		16.5		97.7	2.9	%		101.0		109.4	2.8	%		98.6
WABCO Standard Trane BV		9.2	2.7	%		5.8		139.2	2.0	%		282.0		342.9	1.9	%		219.5
Ideal Standard Wabco Trane Ind. Com. Ltda		81.1	0.0	%		79.6		67.9	6.0	%		69.8		69.9	6.0	%		66.7
American Standard (UK) Co		51.0	0.0	%		47.9		45.3	0.0	%		60.8		74.4	0.0	%		73.3
Trane do Brazil Ind e Com. Ltda.		—	—			—		1.9	0.0	%		1.0		1.1	0.0	%		—
Trane Italia Srl		—	—			—		—	—			—		—	1.9	%		6.9
Ideal Standard Italia S.r.l.		—	—			—		—	—			—		14.6	2.7	%		4.7

Total Loans Receivable		150.4				159.9		361.0				524.4		612.3				469.7

F-26

WABCO Holdings Inc.

(Wholly-owned by American Standard Companies Inc.)

NOTES TO FINANCIAL STATEMENTS—(Continued)

(Dollars in Millions)


American Standard Entity	2006						2005						2004
	Balance at Dec. 31		Interest Rate		Avg. Monthly Balance		Balance at Dec. 31		Interest Rate		Avg. Monthly Balance		Balance at Dec. 31		Interest Rate		Avg. Monthly Balance
Loans Payable
A.S.E. Finance BVBA		—	3.3	%		90.6		108.9	3.3	%		9.2		—	—			—
ASI International Inc		5.8	6.0	%		5.7		5.8	6.0	%		5.7		5.8	6.0	%		5.6
WABCO Standard Trane BV		6.7	3.5	%		1.0		35.6	2.8	%		273.8		392.8	2.6	%		277.1
Teling Air Condition System (Jiangsu) Co., Ltd.		20.5	2.8	%		19.1		13.7	2.7	%		9.4		7.0	2.5	%		2.3
Teling Air Conditioning Co, Ltd		4.2	3.0	%		2.7		—	—			—		—	—			—
American Standard Trane Japan, Ltd		2.9	0.9	%		1.7		—	—			—		—	—			—
Trane do Brazil Ind e Com. Ltda.		24.0	0.0	%		21.9		—	—			—		—	—			—

Total Loans Payable		64.1				142.7		164.0				298.1		405.6				285.0

Net Loans Receivable to/from American Standard and Affiliates	$	86.3			$	17.2	$	197.0			$	226.3	$	206.7			$	184.7

Other, including American Standard and affiliate allocations – These items have also been included in owners’ net investment as these balances will not be settled as part of the Separation, and as such, have been included in owners’ net investment.

Investments in Unconsolidated Joint Ventures

WABCO has three investments in affiliates that are accounted for by the equity method. The first of these investments is in Meritor WABCO. Meritor WABCO, in which WABCO has a 50% equity ownership, is a distributor of braking systems products and sells the majority of WABCO products in the United States. The second of these investments is in WABCO SA. WABCO SA, in which WABCO has a 49% equity ownership, is a distributor of breaking systems products and sells WABCO products primarily in South Africa. The third of these investments is in Sundaram—Clayton Ltd. Sundaram—Clayton Ltd., in which WABCO has a 39% equity ownership, is a diversified industrial group headquartered in Chennai India. Its primary activities are a 56% ownership in TVS Motors, a leading Indian motorcycle manufacturer, the Sundaram-Clayton braking system businesses and an aluminum die casting business. WABCO received dividends from the joint ventures of $18.8 million, $14.2 million and $11.6 million for the years ended December 31, 2006, 2005 and 2004.


	WABCO Sales to						WABCO Purchases from
Joint Venture	2006		2005		2004		2006		2005		2004
Meritor WABCO	$	165.8	$	169.1	$	159.1	$	0.1	$	0.1	$	0.2
WABCO SA	$	5.6	$	4.6	$	5.1		—		—		—
Sundaram Clayton	$	0.3	$	0.2	$	0.2	$	0.9	$	1.1	$	0.0

F-27

WABCO Holdings Inc.

(Wholly-owned by American Standard Companies Inc.)

NOTES TO FINANCIAL STATEMENTS—(Continued)

The following table summarizes the assets, liabilities and shareholders’ equity, and results of operations of WABCO’s investments in affiliates. Meritor WABCO and WABCO SA amounts have been derived from the individual financial statements (as of and for the period ending December 31, 2006) of each of the entities underlying WABCO’s investment. Sundaram—Clayton Ltd. amounts have been derived from the consolidated financial statements as of and for the period ending March 31, 2006, as Sundaram—Clayton Ltd. only performs a full consolidation once a year at this time.


	Year Ended December 31,
	2006		2005
Assets:
Current	$	393.2	$	318.3
Noncurrent		337.0		294.4

Total assets	$	730.2	$	612.7

Liabilities and Shareholders’ Equity:
Current liabilities	$	224.9	$	196.2
Non current liabilities and shareholders’ equity		505.3		416.5

Total liabilities and shareholders’ equity	$	730.2	$	612.7


	Year Ended December 31,
	2006		2005		2004
Results of operations:
Net revenues	$	1,170	$	1,114	$	1,008
Cost of sales	$	844	$	798	$	700
Income (loss) from continuing operations	$	82	$	89	$	85
Net income	$	52	$	56	$	48

F-28

WABCO Holdings Inc.

(Wholly-owned by American Standard Companies Inc.)

NOTES TO FINANCIAL STATEMENTS—(Continued)

NOTE 16. Geographic Information

WABCO is a fully integrated global business with management structures established in a variety of ways, including around products, distribution channels and key customers. WABCO’s plants, engineering, technical support, distribution centers and other support functions are shared among various product families and serve all distribution channels with many customers. Based on the organizational structure, as well as the nature of financial information available and reviewed by the Company’s chief operating decision maker to assess performance and make decisions about resource allocations, the Company has concluded that its total WABCO operations represent one reportable segment and that WABCO’s performance and future net cash flow perspectives are best understood and assessed as such.

Geographic Data


	Year Ended December 31
(Dollars in millions)	2006		2005		2004
Product Sales:
OEM	$	1,579.9	$	1,441.4	$	1,377.6
Aftermarket		435.3		389.6		346.2
Sales—Geographic distribution (a):
United States	$	221.0	$	215.5	$	198.4
Europe (countries below are included in this total)		1,485.5		1,337.9		1,298.2
Germany		638.7		591.1		570.1
France		121.4		117.3		110.7
Sweden		162.9		135.1		133.8
Other (countries below are included in this total)		308.6		277.6		227.2
Japan		71.4		80.2		68.9
Brazil		86.9		85.1		62.1

Total sales	$	2,015.2	$	1,831.0	$	1,723.8

(a)	Revenues from external customers are classified by country of destination.


	As of December 31
(Dollars in millions)	2006		2005		2004
Long-lived Assets
Geographic distribution:
United States	$	11.8	$	13.1	$	11.7
Europe (countries below are included in this total)		626.3		575.9		655.0
Germany		355.3		329.5		374.6
Poland		78.8		67.7		65.3
Other		64.1		54.2		45.4

Total long-lived assets	$	702.2	$	643.2	$	712.1

NOTE 17. Net Income Per Share (Unaudited)

F-29

WABCO Holdings Inc.

(Wholly-owned by American Standard Companies Inc.)

NOTES TO FINANCIAL STATEMENTS—(Continued)

NOTE 18. Quarterly Data (Unaudited)

Year 2006

(Dollars in millions, except per share data)

First(a)

Second(a)

Third(a)

Fourth(a)

Sales

479.9

511.2

504.6

519.5

Cost of sales

341.3

380.4

364.5

377.3

Income before income taxes

61.3

54.8

53.9

55.7

Income taxes

20.7

20.5

15.8

30.9

Net income

40.6

34.3

38.1

24.8

Year 2005


(Dollars in millions, except per share data)	First(a)		Second(a)		Third(a)		Fourth(a)
Sales	$	479.0	$	478.3	$	435.0	$	438.7
Cost of sales		340.8		343.5		310.2		318.0
Income before income taxes		65.1		63.5		52.5		51.6
Income taxes		24.5		23.8		19.7		19.4

Net income	$	40.6	$	39.7	$	32.8	$	32.2

(a)	The sum of each line for the four quarters does not necessarily equal the amount reported for the full year because of rounding.

F-30

WABCO HOLDINGS INC.

(Wholly-owned by American Standard Companies Inc)

CONDENSED CONSOLIDATED STATEMENT OF INCOME

(Unaudited)


	Three Months Ended March 31,
(Amounts in millions)	2007			2006
Sales	$	558.8		$	479.9

Cost and expenses and other expense:
Cost of sales		406.1			341.3
Selling and administrative expenses Product engineering Equity in income of unconsolidated joint ventures		68.7 21.3 (4.8	)		63.3 17.9 (7.1	)
Other expense, net Net interest expense/(income)-related party		4.1 0.4			2.1 0.5
Interest expense		2.0			0.5

		497.8			418.5

Income before income taxes		61.0			61.4
Income taxes		20.9			20.8

Net income	$	40.1		$	40.6

Pro forma net income per common share:
Basic	$	0.60		$	0.61
Diluted	$	0.58		$	0.59
Pro forma common shares outstanding:
Basic		67.1			67.1
Diluted		69.0			69.0

See Notes to Financial Statements

F-31

WABCO HOLDINGS INC.

(Wholly-owned by American Standard Companies Inc)

CONDENSED CONSOLIDATED BALANCE SHEET


(Amounts in millions)	March 31, 2007 (unaudited)			December 31, 2006
ASSETS
Current assets:
Cash and cash equivalents	$	31.6		$	34.8
Accounts receivable, less allowance for doubtful accounts: Mar. 2007—$6.4; Dec. 2006—$6.5		223.3			186.5
Inventories:
Finished products		85.8			67.9
Products in process		7.0			10.3
Raw materials		64.0			59.8
Future income tax benefits		14.5			14.5
Retained interest in securitization program		19.1			17.4
Other current assets		53.1			35.6

Total current assets		498.4			426.8
Facilities, less accumulated depreciation		298.5			299.7
Goodwill		348.1			343.8
Capitalized software costs, less accumulated amortization: Mar. 2007—$74.7; Dec. 2006—$71.5		36.4			37.4
Long-term future income tax benefits		42.0			42.0
Investment in unconsolidated joint ventures		85.4			84.9
Other assets		39.5			42.3

TOTAL ASSETS	$	1,348.3		$	1,276.9

LIABILITIES AND OWNERS’ INVESTMENT
Current liabilities:
Loans payable to banks	$	12.6		$	17.9
Accounts payable		176.0			147.3
Accrued payrolls		76.7			74.2
Current portion of warranties		38.6			35.1
Taxes on income		42.8			65.5
Cash collected on behalf of banks—securitization		65.7			68.7
Other accrued liabilities		94.6			67.6

Total current liabilities		507.0			476.3

Long-term debt:		65.9			57.3
Post-retirement benefits		368.2			366.4
Warranties		3.9			5.4
Deferred tax liabilities		18.5			18.5
Minority interest		11.1			11.4
Other liabilities		63.5			26.4

Total liabilities		1,038.1			961.7
Commitments and contingencies:
Owners’ net investment		301.1			306.0
Accumulated other comprehensive income:
Foreign currency translation effects		82.3			82.4
Unrealized losses on benefit plans, net of tax		(73.2	)		(73.2	)

Total owners’ net investment		310.2			315.2

TOTAL LIABILITIES AND OWNERS’ NET INVESTMENT	$	1,348.3		$	1,276.9

See Notes to Financial Statements

F-32


WABCO HOLDINGS INC. (Wholly-owned by American Standard Companies Inc) CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
	Three months ended March 31,
(Amounts in millions)	2007			2006
Cash provided/(used) by operating activities:
Net income	$	40.1		$	40.6
Adjustments to reconcile net income to net cash used by operating activities:
Depreciation		14.4			11.4
Amortization of capitalized software and other intangibles		7.6			8.4
Equity in earnings of unconsolidated joint ventures, net of dividends received		(0.5	)		(0.5	)
Non-cash stock compensation		0.7			0.6
Loss on disposal of property, plant and equipment		0.4			0.7
Changes in assets and liabilities:
Accounts receivable		(35.7	)		(46.1	)
Inventories		(16.7	)		(10.3	)
Accounts payable		26.6			15.8
Other accrued liabilities and taxes		3.4			22.6
Post-retirement benefits		(2.4	)		4.9
Other current and long-term assets		(19.2	)		(1.4	)
Other long-term liabilities		35.4			(4.6	)

Net cash provided by operating activities		54.1			42.1

Investing activities:
Purchases of property, plant and equipment		(10.1	)		(8.9	)
Investments in capitalized software		(2.2	)		(1.7	)

Net cash used by investing activities		(12.3	)		(10.6	)

Financing activities:
Borrowings of long-term debt		114.5			—
Repayments of long-term debt		(108.6	)		—
Borrowings of short-term debt		—			3.0
Repayments of short-term debt		(5.5	)		(2.2	)
Net change in balance due from/to American Standard or American Standard affiliated entities		(45.7	)		(43.2	)

Net cash provided–(used) by financing activities		(45.3	)		(42.4	)

Effect of exchange rate changes on cash and cash equivalents		0.3			1.6

Net decrease in cash and cash equivalents		(3.2	)		(9.3	)
Cash and cash equivalents at beginning of period		34.8			39.9

Cash and cash equivalents at end of period	$	31.6		$	30.6

Cash interest paid	$	2.3		$	1.6
Cash taxes paid	$	5.6		$	9.0

See Notes to Financial Statements

F-33

WABCO Holdings Inc.

(Wholly-owned by American Standard Companies Inc.)

NOTES TO FINANCIAL STATEMENTS

NOTE 1. Basis of Financial Statement Presentation

The financial statements have been derived from the financial statements and accounting records of American Standard, principally representing the Vehicle Control Systems segment, using the historical results of operations, and historical basis of assets and liabilities of WABCO and reflecting American Standard’s net investment in WABCO. Historically, stand-alone financial statements have not been prepared for WABCO. Management believes the assumptions underlying the allocations included in the financial statements are reasonable. Although the financial statements may not necessarily reflect Wabco’s results of operations, financial position and cash flows in the future, management believes the differences between the amounts presented and what its results of operations, financial position and cash flows would have been had WABCO been a standalone company during the periods presented would not be material. Because a direct ownership relationship did not exist among all of the various units and entities comprising WABCO, American Standard’s net investment in WABCO is shown in lieu of shareholders’ equity in the financial statements.

The accompanying financial statements include allocations of costs that were incurred by American Standard for functions such as corporate human resources, finance and legal. These costs include the costs of salaries, benefits and other related costs. The total costs allocated to the accompanying financial statements for these functions amounted to $6.4 million and $6.9 million for the 3 months ended March 31, 2007 and March 31, 2006, respectively. These costs are included in selling, general and administrative expenses in the accompanying financial statements. The primary driver underlying these allocations is total WABCO revenue as a percentage of the total consolidated revenue of American Standard.

Historically, WABCO’s operations have been mainly funded through American Standard’s primary bank credit agreement via either intercompany loans or intercompany advances. The accompanying combined financial statements reflect the interest expense or income, if any, charged or received on these intercompany arrangements. See Note 15 of the consolidated financial statements for the year ended December 31, 2006 filed as part of this registration statement on Form 10 for additional information pertaining to Related Party Transactions.

Preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Management believes the most complex and sensitive judgments, because of their significance to the consolidated financial statements, result primarily from the need to make estimates about the effects of matters that are inherently uncertain. Management’s Discussion and Analysis and Notes 2 and 13 to the Consolidated Financial Statements for the year ended December 31, 2006 filed as part of this registration statement on Form 10 describe the most

F-34

WABCO Holdings Inc.

(Wholly-owned by American Standard Companies Inc.)

NOTES TO FINANCIAL STATEMENTS—(Continued)

significant accounting estimates and policies used in preparation of the Consolidated Financial Statements. Actual results in these areas could differ materially from management’s estimates. There have been no significant changes in the Company’s assumptions regarding critical accounting estimates during the three months of 2007.

The accompanying combined consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, including normal recurring items, considered necessary for a fair presentation of financial data have been included. The results of operations for interim periods are not necessarily indicative of the results that may be expected for the entire year. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes for the year ended December 31, 2006 included in this registration statement filed on Form 10.

NOTE 2. Comprehensive Income

Total comprehensive income consisted of the following (dollars in millions):


	Three months ended March 31,
	2007			2006
Net income	$	40.1		$	40.6
Foreign currency translation effects		(0.1	)		7.7
Minimum pension liability adjustment, net of tax		—			—
Unrealized losses on benefit plans, net of tax		—			—

Total comprehensive income	$	40.0		$	48.3

NOTE 3. Stock-Based Compensation

On January 1, 2006, American Standard adopted the provisions of Statement of Financial Accounting Standard No. 123 (Revised 2004) (“FAS 123r”), Share Based Payments using the modified prospective approach. Total share-based compensation cost recognized during the first quarter of 2007 and 2006 of $0.7 and $0.6 million, respectively, has been included in the Consolidated Statements of Income.

American Standard issues its annual share-based compensation grants to WABCO employees during the first quarter. The total number and type of awards granted in connection with the annual grant and the related weighted-average grant-date fair values, were as follows:


	2007					2006
	Underlying Shares	Weighted- Average Exercise Price		Weighted Average Grant Date Fair Value		Underlying Shares	Weighted- Average Exercise Price		Weighted Average Grant Date Fair Value
Options Granted	271,600	$	52.66	$	14.45	300,600	$	36.87	$	9.70

The options granted in 2007 are exercisable in equal annual installments over a period of three years.

F-35

WABCO Holdings Inc.

(Wholly-owned by American Standard Companies Inc.)

NOTES TO FINANCIAL STATEMENTS—(Continued)

The following table summarizes the significant assumptions used during the three-month periods ended March 31, 2007, and March 31, 2006.


Assumption	Three months ended March 31, 2007			Three months ended March 31, 2006
Weighted average grant date fair value	$	14.45		$	9.70
Risk-free interest rate		4.68	%		4.51	%
Expected volatility		26.0	%		26.0	%
Expected holding period		5 Years			5 Years
Expected forfeiture rate		4.0	%		4.0	%
Dividend yield		1.38	%		1.62	%

The weighted average grant date fair value was calculated under the Black-Scholes option-pricing model. The risk free interest rate is based on the yield of U.S. Treasury securities that correspond to the expected holding period of the options. American Standard reviewed the historic volatility of its common stock over 12-month, 5-year and 10-year periods, and the implied volatility for at the money options to purchase shares of the its common stock. Based on this data, American Standard chose to use the average of the 5-year historic volatility of its common stock and the average implied volatility of at the money options. The 5-year historical volatility period was selected since that period corresponds with the expected holding period. The expected term was calculated by reviewing the historical exercise pattern of all holders that were granted options from 1995 through 2005, the exercise pattern of domestic versus international option holders (including an analysis by country) and the exercise behavior of officers versus non officers. The results of the analysis support one expected term for all groups of employees. The expected forfeiture rate was determined based on the historical stock option forfeiture data. The dividend yield was based on the American Standard’s expected dividend rate.

Note 4. Warranties, Guarantees, Commitments and Contingencies

Warranties

Products sold by WABCO are covered by a basic limited warranty with terms and conditions that vary depending upon the product and country in which it was sold. The limited warranty covers the equipment, parts and labor (in certain cases) necessary to satisfy the warranty obligation for a period of two years, generally. Estimated product warranty expenses are accrued in cost of goods sold at the time the related sale is recognized. Estimates of warranty expenses are based primarily on warranty claims experience and specific customer contracts. Warranty expenses include accruals for basic warranties for product sold, as well as accruals for product recalls, service campaigns and other related events when they are known and estimable. To the extent WABCO experiences changes in warranty claim activity or costs associated with servicing those claims, its warranty accrual is adjusted accordingly. Warranty accrual estimates are updated based upon the most current warranty claims information available. Total warranty expense was $11.8 million and $10.6 million for the three months ended March 31, 2007 and 2006, respectively.

F-36

WABCO Holdings Inc.

(Wholly-owned by American Standard Companies Inc.)

NOTES TO FINANCIAL STATEMENTS—(Continued)

Following is a summary of changes in the Company’s product warranty liability for the three months ended March 31, 2007 and 2006 (dollars in millions).


	Three months ended March 31,
	2007			2006
Balance of basic warranty costs accrued, beginning of period	$	40.5		$	33.9
Warranty costs accrued		11.2			9.6
Warranty claims settled		(9.8	)		(8.7	)
Increases in warranty estimates made in prior years, including foreign exchange translation effects		0.6			1.0

Balance of basic warranty costs accrued, end of period		42.5			35.8
Current portion included in current liabilities		(38.6	)		(31.3	)

Long-term warranty liability	$	3.9		$	4.5

Guarantees and Commitments

There were no material changes to the disclosure on this matter made in the consolidated financial statements and accompanying notes for the year ended December 31, 2006 included in the Company’s registration statement filed on Form 10.

Contingencies

General

Income Tax Provision

Litigation

F-37

WABCO Holdings Inc.

(Wholly-owned by American Standard Companies Inc.)

NOTES TO FINANCIAL STATEMENTS—(Continued)

Certain of these legal entities will be transferred to WABCO as part of a legal reorganization that will occur prior to the Distribution. American Standard and certain of its subsidiaries and, following the legal reorganization, certain of our subsidiaries will be jointly and severally liable for any fines that result from the investigation. However, pursuant to the Indemnification and Cooperation Agreement, WABCO and certain of our subsidiaries will be responsible for, and will indemnify American Standard and its subsidiaries (including certain subsidiaries engaged in the Bath and Kitchen business) and their respective affiliates against any fines related to this investigation.

American Standard, WABCO and the charged subsidiaries are carefully reviewing the Statement of Objections and will respond to the European Commission on or prior to August 1, 2007, the due date for the response. Following the submission of this written response, a hearing with the European Commission to present evidence regarding the response to the Statement of Objections is expected to occur sometime in the fall of 2007. Following the hearing, the European Commission could, among other things, issue a new Statement of Objections or request additional information before adopting a decision or adopt a decision imposing a fine. A fine would be required to be paid within three months of notification of the decision, irrespective of whether the charged parties appeal the decision. In the event the imposition of any such fine were appealed, WABCO, as an alternative to paying the fine, could provide a bank guarantee for the full amount of the fine plus interest within three months of notification of the decision. The appeals process could take as long as 5-7 years during which time WABCO would not have access to such funds or would be required to provide the guarantee.

We expect that this investigation will result in the imposition of a fine, however we are unable to reasonably estimate the loss or range of loss that may result from this matter for the reasons that follow. The European Commission recently adopted new fining guidelines (the “2006 Guidelines”) and stated their intention to apply these guidelines in all cases in which a Statement of Objections is issued after September 2006. To date, the Commission has not imposed any fines under the 2006 Guidelines, although it is anticipated that the Commission will apply the 2006 Guidelines to impose higher fines than those which would have resulted from application of the prior fining guidelines. Under the 2006 Guidelines, the Commission will determine a “basic amount” of the fine by considering the value of the sales of goods to which the infringement relates, the gravity of the infringement and its duration. In applying the 2006 Guidelines, the Commission retains considerable discretion in calculating the fine, including discretion as to the determination of the “basic amount”, evaluation of the aggravating and mitigating circumstances and the availability of leniency and the assessment of the overall deterrent effect of the fine. If the Commission were to apply the 2006 Guidelines to the allegations as set forth in the Statement of Objections, the fine would be significant primarily due to the breadth of the allegations and the alleged duration of the infringement. The Company and American Standard intend to present defenses to the allegations in the Statement of Objections. Article 23 of Council Regulation No. 1/2003 provides for a maximum fine equal to 10% of the parent company’s ( i.e ., American Standard’s) worldwide revenue attributable to all of its products for the fiscal year prior to the year in which the fine is imposed.

F-38

WABCO Holdings Inc.

(Wholly-owned by American Standard Companies Inc.)

NOTES TO FINANCIAL STATEMENTS—(Continued)

include only a minimal amount of debt. As a result, WABCO expects to have sufficient funds available under its existing 5 year revolving credit facility, from operating cash flows and from additional bank credit facilities it expects to be able to arrange, to pay the fine and fund the Company’s continuing operations, while still maintaining coverage ratios consistent with the financial covenants in our $800 million credit facility and a capital structure in line with its business needs.

Note 5. Effect of Recently Issued Accounting Standards

On January 1, 2007, the Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109 (“FIN 48”). FIN 48 provides recognition criteria and a related measurement model for tax positions taken by companies. In accordance with FIN 48, a tax position is a position in a previously filed tax return or a position expected to be taken in a future tax filing that is reflected in measuring current or deferred income tax assets and liabilities. Tax positions shall be recognized only when it is more likely than not (likelihood of greater than 50%), based on technical merits, that the position will be sustained upon examination. Tax positions that meet the more likely than not threshold should be measured using a probability weighted approach as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement.

The total amount of unrecognized tax benefits as of the date of adoption was $54.7 million. All of the $54.7 million of unrecognized tax benefits, if recognized, would impact the Company’s effective tax rate. The Company did not have an adjustment to the unrecognized tax benefits as a result of the implementation of FIN 48. With regard to the unrecognized tax benefits at March 31, 2007, the Company believes that it is reasonably possible that $14.5 million of such unrecognized tax benefits could be recognized in the next 12 months. The benefits relate to anticipated audit settlements, focused primarily on transfer pricing matters.

The Company classifies interest and penalties related to unrecognized tax benefits in tax expense. The Company had $6.4 million of interest and penalties accrued at January 1, 2007.

The Company is subject to taxation in the U.S. and various states and foreign jurisdictions. With no material exceptions, the Company is no longer subject to U.S. federal, state, local or foreign examinations by tax authorities for years before 2000.

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. 157, Fair Value Measurements . SFAS No. 157 defines fair value, provides a framework for measuring fair value under current standards in GAAP, and requires additional disclosure about fair value measurements. In accordance with the Statement, the definition of fair value retains the exchange price notion, and exchange price is defined as the price in an orderly transaction between market participants to sell an asset or transfer a liability. If there is a principal market for the asset or liability, the fair value measurement should reflect that price, whether that price is directly observable or otherwise used in a valuation technique. Depending on the asset or liability being valued, the inputs used to determine fair value can range from

F-39

WABCO Holdings Inc.

(Wholly-owned by American Standard Companies Inc.)

NOTES TO FINANCIAL STATEMENTS—(Continued)

observable inputs (i.e. prices based on market data independent from the entity) and unobservable inputs (i.e. entity’s own assumptions about the assumptions that market participants would use). The Statement applies to other accounting pronouncements that require or permit fair value measurements and will be effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company is currently evaluating the provisions of SFAS No. 157 to determine the potential impact, if any, the adoption will have on the Company’s financial statements.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities . SFAS No. 159 permits entities to voluntarily choose to measure many financial assets and financial liabilities at fair value. The election is made on an instrument-by-instrument basis and is irrevocable. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The Company is currently evaluating the provisions of SFAS No. 159 to determine the potential impact, if any, the adoption will have on the Company’s financial statements.

Note 6. Operational Consolidation Expenses

During 2006 and 2007 the Company incurred charges related to operational consolidation activities consisting of previously announced plant reductions and severance as more fully described below.

The following is a summary of the operational consolidation programs (consisting of termination payments and other employee costs) outstanding as of March 31, 2007.


2007 Operational Consolidation Programs
Charges during the first three months of 2007	$	0.7
Payments during the first three months of 2007		(0.2	)
Reversals during the first three months of 2007		—
Non-cash write-offs during the first three months of 2007		—

Balance as of March 31, 2007	$	0.5


2006 Operational Consolidation Programs
Balance as of December 31, 2006	$	5.7
Charges during the first three months of 2007		0.2
Payments during the first three months of 2007		(0.6	)
Non-cash write-offs during the first three months of 2007		—
Reversals during the first three months of 2007		—

Balance as of March 31, 2007	$	5.3


2005 and earlier Operational Consolidation Programs
Balance as of December 31, 2006	$	4.9
Charges during the first three months of 2007
Payments during the first three months of 2007		(0.6	)
Reversals during the first three months of 2007		—

Balance as of March 31, 2007	$	4.3


Total Balance as of March 31, 2007	$	10.1

F-40

WABCO Holdings Inc.

(Wholly-owned by American Standard Companies Inc.)

NOTES TO FINANCIAL STATEMENTS—(Continued)

The Company incurred $0.9 million of operational consolidation expenses during the first quarter of 2007 of which $0.7 million is associated with severance relating to 2007 plans and $0.2 million pertains to 2006 plans. The majority of the 2007 plan is associated with administrative functions, and the related charge of $0.9 million was charged to selling and administrative expenses. The Company incurred $1.5 million of operational consolidation expenses during the first quarter of 2006, of which $1.0 million was charged to selling and administrative expenses and $0.5 million was charged to cost of sales. The Company expects to incur $8.1 million during the remainder of 2007 to complete the plans outstanding as of March 31, 2007, however, payments will continue until 2010. The Company expended $1.4 million of cash on operational consolidation activities in the first quarter of 2007.

The Company expects that essentially all of the $10.1 million balance as of March 31, 2007 will be utilized by the end of 2007.

Note 7. Post-retirement Benefits

Post-retirement pension, health and life insurance costs had the following components for the three months ended March 31, 2007 (dollars in millions):


	Three Months Ended March 31,
	2007			2007		2006			2006
	Pension Benefits			Health & Life Ins. Benefits		Pension Benefits			Health & Life Ins. Benefits
Service cost-benefits earned during the period	$	2.1		$	0.0	$	3.2		$	0.0
Interest cost on the projected benefit obligation		5.7			0.3		3.9			0.3
Less assumed return on plan assets		(2.5	)		0.0		(2.0	)		0.0
Amortization of prior service cost		0.1			0.0		0.0			0.0
Amortization of net loss		0.8			0.1		1.1			0.1

Net defined benefit cost after curtailment gain	$	6.2		$	0.4	$	6.2		$	0.4

Accretion expense as reflected in Selling & Administrative Expenses and Cost of Sales	$	3.2		$	0.3	$	1.9		$	0.3

Amortization of prior service cost is recorded on the straight-line method over the average remaining service period of active participants.

The Company expects to contribute $9.0 million to foreign plans in 2007. In the first quarter of 2007, $1.5 million was contributed to foreign plans. There have been no contributions and there are no expected contributions for domestic plans.

F-41

WABCO Holdings Inc.

(Wholly-owned by American Standard Companies Inc.)

NOTES TO FINANCIAL STATEMENTS—(Continued)

Note 8. Goodwill

The following table summarizes the changes in the carrying amount of goodwill for the three months ended March 31, 2007 (dollars in millions):


	2007
Balance of goodwill, beginning of year	$	343.8
Acquisitions		—
Dispositions		—
Foreign exchange translation		4.3

Balance of goodwill as of March 31	$	348.1

Note 9. Net Income Per Share

Note 10. Related Party Transactions

Presented within the Company’s Combined Consolidated Statement of Cash Flows for the three months ended March 31, 2007, is Net Transfers to American Standard and Affiliates which includes the following types of transactions:


(Dollars in Millions)	Three Months Ended March 31, 2007			Year Ended December 31, 2006
Dividends to American Standard and affiliates	$	(48.0	)	$	(259.8	)
Decrease/(increase) in loans to/from American Standard and affiliates		(1.0	)		110.8
Other, including American Standard and affiliate allocations		3.3			16.5

Net Transfers to American Standard and Affiliates	$	(45.7	)	$	(132.5	)

Dividends to American Standard and Affiliates —Dividends paid from WABCO to other American Standard entities.

Decrease/(increase) in loans to/from American Standard and affiliates —The amount of cash that was either provided to the Company in order to fund working capital requirements as well as capital expenditures or cash surplus provided from the Company to other American Standard entities. The net amount due from American Standard of $87.3 million and $86.3 million as of March 31, 2007 and December 31, 2006, respectively, has been included in owners’ net investment since any settlement will not result in a net inflow or outflow of assets or liabilities, nor will it create any new financial asset or financial obligation between the Company and American Standard. Net interest income / (expense) totaling $(0.4) million and $(0.5) million for the periods ended March 31, 2007 and March 31, 2006, respectively, is included in the accompanying combined

F-42

WABCO Holdings Inc.

(Wholly-owned by American Standard Companies Inc.)

NOTES TO FINANCIAL STATEMENTS—(Continued)

consolidated Statement of Income. All interest rates are deemed to be at or near market rates except for the interest rates carrying zero percent interest. A detailed summary of these inter-company loans, which may or may not be interest bearing, is provided below.


(Dollars in Millions)	2007						2006
American Standard Entity	Balance at Mar. 31		Interest Rate		Avg. Monthly Balance		Balance at Dec. 31		Interest Rate		Avg. Monthly Balance
Loans Receivable:
Ideal Standard Holding Italia S.r.l.	$	14.1	4.1	%	$	11.4	$	9.1	4.1	%	$	10.1
ASI International Inc.		—	—			—		—	2.9	%		16.5
WABCO Standard Trane BV		9.4	4.1	%		9.3		9.2	2.7	%		5.8
Ideal Standard Wabco Trane Ind. Com. Ltda		81.2	0.0	%		80.6		81.1	0.0	%		79.6
American Standard (UK) Co		49.0	0.0	%		49.1		51.0	0.0	%		47.9

Total Loans Receivable		153.7				150.4		150.4				159.9

Loans Payable:
A.S.E. Finance BVBA		—	—			—		—	3.3	%		90.6
ASI International Inc		5.8	6.0	%		5.8		5.8	6.0	%		5.7
WABCO Standard Trane BV		8.3	4.2	%		7.6		6.7	3.5	%		1.0
Teling Air Condition System (Jiangsu) Co., Ltd.		—	—			—		20.5	2.8	%		19.1
Teling Air Condition Co., Ltd.		25.1	3.0	%		25.0		4.2	3.0	%		2.7
American Standard Trane Japan, Ltd		3.0	0.9	%		2.9		2.9	0.9	%		1.7
Trane do Brazil Ind e Com. Ltda.		24.2	0.0	%		24.0		24.0	0.0	%		21.9

Total Loans Payable		66.4				65.3		64.1				142.7

Net Loans Receivable to/from American Standard and Affiliates	$	87.3			$	85.1	$	86.3			$	17.2

Other, including American Standard and affiliate allocations —These items have also been included in owners’ net investment as these balances will not be settled as part of the Separation, and as such, have been included in owner’s net investment.

Note 11. Subsequent Events

Early Redemption of Long-Term Bonds

On April 30, 2007, ASE BVBA redeemed $40 million principal amount of its 7.59% Guaranteed Senior Bonds prior to their maturity date of January 31, 2013. Prepayment of the bonds, undertaken to avoid default being triggered by the spinoff, resulted in an early redemption charge of $6 million, which will be recorded in the Company’s Income Statement for the second quarter of 2007.

Receivables Securitization

WABCO terminated its participation in American Standard’s European securitization program as of May 31, 2007. Additionally, effective April 30, 2007, WABCO terminated its arrangement to sell American Standard the receivables generated on sales of products to its U.S. joint venture Meritor WABCO. The termination of these programs, based on securitized balances at March 31, 2007, will impact the second quarter balance sheet as follows: an increase in accounts receivable of $169.5 million, a decrease in other current assets of $19.1 million and a decrease in other accruals of $65.7 million. WABCO will no longer incur losses on the sale of receivables. Those losses amounted to $1.8 million and $1.4 million for the quarters ended March 31, 2007 and 2006, respectively, and $5.7 million for the year ended December 31, 2006.

F-43

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

Years ended December 31, 2006, 2005, and 2004

(Dollars in thousands)


Description	Balance Beginning of Period		Additions Charged to Income		Deductions			Other Changes			Foreign Currency Translation Effects			Balance End of Period
2006:
Reserve deducted from assets:
Allowance for doubtful accounts receivable	$	5,484	$	1,317	$	(788	)(A)	$	(40	)	$	560		$	6,533

2005:
Reserve deducted from assets:
Allowance for doubtful accounts receivable	$	7,956	$	1,531	$	(3,007	)(A)	$	—		$	(996	)	$	5,484

2004:
Reserve deducted from assets:
Allowance for doubtful accounts receivable	$	7,064	$	3,836	$	(3,523	)(A)	$	(26	)	$	605		$	7,956

(A)	Accounts charged off.

F-44