WABCO Europe BVBA
WABCO Holdings Inc. (Form: 10-Q, Received: 11/08/2007 10:22:42)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

 


FORM 10-Q

 


(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2007

OR

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to              .

Commission file number 1-33332

 


WABCO Holdings Inc.

(Exact name of Registrant as specified in its charter)

 


 

Delaware   20-8481962

(State or other jurisdiction of

incorporation or organization)

 

(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 98 00

 


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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act (check one).

Large Accelerated filer    ¨      Accelerated filer    ¨      Non-Accelerated filer   x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     ¨   Yes     x   No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Common stock, $.01 par value, outstanding at November 6, 2007    67,709,114

 



PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

WABCO HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited)

 

    

Three Months Ended

September 30,

   

Nine Months Ended

September 30,

 

(Amounts in millions, except share data)

   2007     2006     2007     2006  

Sales

   $ 595.5     $ 504.6     $ 1,736.6     $ 1,495.7  
                                

Costs and expenses:

        

Cost of sales

     437.6       364.6       1,274.1       1,086.4  

Selling and administrative expenses

     73.8       64.4       217.0       192.5  

Product engineering expenses

     23.3       20.7       64.4       56.1  

Equity in loss / (income) of unconsolidated joint ventures

     1.8       (3.5 )     (7.0 )     (20.1 )

Other expense, net

     7.2       1.9       21.8       6.3  

Net interest expense - related party

     1.0       2.1       1.8       4.0  

Interest expense, net

     1.1       0.5       3.2       0.5  
                                
     545.8       450.7       1,575.3       1,325.7  
                                

Income before income taxes

     49.7       53.9       161.3       170.0  

Income taxes

     50.0       15.8       90.2       57.0  
                                

Net (loss) / income

   $ (0.3 )   $ 38.1     $ 71.1     $ 113.0  
                                

Net (loss) / income per common share

        

Basic

   $ (0.0 )   $ —       $ 1.04     $ —    

Diluted

   $ (0.0 )   $ —       $ 1.02     $ —    

Pro forma net income per common share

        

Basic

   $ —       $ 0.56     $ —       $ 1.66  

Diluted

   $ —       $ 0.55     $ —       $ 1.62  

Cash dividends per share of common stock

   $ 0.07       —       $ 0.07       —    

Average common shares outstanding

        

Basic

     68,064,081       —         68,109,003       —    

Diluted

     68,064,081       —         69,564,303       —    

Pro forma common shares outstanding

        

Basic

     —         67,867,159       —         67,867,159  

Diluted

     —         69,696,428       —         69,696,428  

See Notes to Condensed Consolidated Financial Statements.

 

2


WABCO HOLDINGS INC.

CONDENSED CONSOLIDATED BALANCE SHEET

 

(Amounts in millions, except share data)

  

September 30,

2007

    December 31,
2006
 
     (unaudited)        

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 165.1     $ 34.8  

Accounts receivable, less allowance for doubtful accounts: September 2007—$6.1; Dec. 2006—$6.5

     436.5       186.5  

Inventories:

    

Finished products

     100.9       67.9  

Products in process

     6.2       10.3  

Raw materials

     76.3       59.8  

Future income tax benefits

     14.5       14.5  

Retained interest in securitization program

     —         17.4  

Other current assets

     63.7       35.6  
                

Total current assets

     863.2       426.8  

Facilities, less accumulated depreciation

     311.6       299.7  

Goodwill

     362.6       343.8  

Capitalized software costs, less accumulated amortization: September 2007—$82.7; Dec. 2006—$71.5

     35.7       37.4  

Long-term future income tax benefits

     42.0       42.0  

Investment in unconsolidated joint ventures

     83.6       84.9  

Other assets

     35.2       42.3  
                

TOTAL ASSETS

   $ 1,733.9     $ 1,276.9  
                

LIABILITIES AND SHAREHOLDERS’ EQUITY / OWNER’S NET INVESTMENT

    

Current liabilities:

    

Loans payable to banks

   $ 74.1     $ 17.9  

Accounts payable

     191.0       147.3  

Accrued payroll

     96.8       74.2  

Current portion of warranties

     45.2       35.1  

Taxes on income

     70.8       65.5  

Cash collected on behalf of banks—securitization

     —         68.7  

Taxes other than income taxes

     4.5       0.8  

Indemnification liabilities (Note 11)

     26.4       —    

Other accrued liabilities

     108.0       66.8  
                

Total current liabilities

     616.8       476.3  

Long-term debt and capital leases

     2.0       57.3  

Post-retirement benefits

     389.7       366.4  

Warranties

     4.0       5.4  

Deferred tax liabilities

     18.5       18.5  

Minority interests

     12.6       11.4  

Long-term indemnification liabilities (Note 11)

     43.7       —    

Long-term income tax liabilities

     68.8       0.8  

Other liabilities

     24.7       25.6  
                

Total liabilities

     1,180.8       961.7  

Commitments and contingencies

    

Owner’s net investment

     —         306.0  

Preferred stock, 4,000,000 shares authorized; none issued and outstanding

     —         —    

Common stock, $.01 par value, 400,000,000 shares authorized; shares issued: 68,396,844 in 2007; none in 2006; and shares outstanding: 67,612,144 in 2007; none in 2006

     0.7       —    

Capital surplus

     529.0       —    

Treasury stock, at cost: 784,700 shares in 2007; no shares in 2006

     (35.6 )      

Retained earnings

     26.7       —    

Accumulated other comprehensive income:

    

Foreign currency translation effects

     105.5       82.4  

Unrealized losses on benefit plans, net of tax

     (73.2 )     (73.2 )
                

Total shareholders’ equity

     553.1       —    

Total owner’s net investment

     —         315.2  
                

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

   $ 1,733.9       —    

TOTAL LIABILITIES AND OWNER’S NET INVESTMENT

     —       $ 1,276.9  
                

See Notes to Condensed Consolidated Financial Statements.

 

3


WABCO HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

 

     Nine months ended
September 30,
 

(Amounts in millions)

   2007     2006  

Cash provided/(used) by operating activities:

    

Net income

   $ 71.1     $ 113.0  

Adjustments to reconcile net income to net cash used by operating activities:

    

Depreciation

     46.7       35.8  

Amortization of capitalized software and other intangibles

     22.2       25.1  

Equity in earnings of unconsolidated joint ventures, net of dividends received

     (0.6 )     (6.5 )

Non-cash stock compensation

     3.0       1.9  

Loss on disposal of property, plant and equipment

     2.6       1.1  

Changes in assets and liabilities:

    

Accounts receivable

     (218.3 )     (55.1 )

Inventories

     (33.9 )     (23.9 )

Accounts payable

     31.3       14.0  

Other accrued liabilities and taxes

     2.3       58.7  

Post-retirement benefits

     (2.0 )     (20.6 )

Other current and long-term assets

     (8.9 )     (3.6 )

Other long-term liabilities

     7.7       (0.1 )
                

Net cash (used) / provided by operating activities

     (76.8 )     139.8  
                

Investing activities:

    

Purchases of property, plant and equipment

     (38.1 )     (35.8 )

Investments in capitalized software

     (7.0 )     (6.0 )
                

Net cash used by investing activities

     (45.1 )     (41.8 )
                

Financing activities:

    

Borrowings of long-term debt

     142.4       64.8  

Repayments of long-term debt

     (202.0 )     (15.1 )

Borrowings of short-term debt

     70.2       43.9  

Repayments of short-term debt

     (14.4 )     (2.2 )

Purchase of treasury stock

     (29.3 )     —    

Dividend payments

     (4.8 )     —    

Proceeds from exercise of stock options

     4.4       —    

Net change in balance due from/to American Standard or American Standard affiliated entities

     281.0       (189.0 )
                
Net cash provided / (used) by financing activities      247.5       (97.6 )
                

Effect of exchange rate changes on cash and cash equivalents

     4.7       1.1  
                

Net increase / (decrease) in cash and cash equivalents

     130.3       1.5  

Cash and cash equivalents at beginning of period

     34.8       39.9  
                

Cash and cash equivalents at end of period

   $ 165.1     $ 41.4  
                

Cash paid during the period for:

    

Interest

   $ 10.2     $ 4.8  

Income taxes

   $ 33.2     $ 40.8  

Non Cash Items for the period:

    

Treasury stock repurchase accrual

   $ 6.3     $ —    

VAT receivables transferred from American Standard

   $ 6.8     $ —    

Tax reserves and separation taxes transferred from American Standard

   $ 98.1     $ —    

See Notes to Condensed Consolidated Financial Statements.

 

4


NOTE 1. Basis of Financial Statement Presentation

WABCO Holdings Inc. (“WABCO” or the “Company”) 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 manual transmission controls and air suspension controls for heavy and medium-sized trucks, buses and trailers. WABCO sells its products to four groups of customers around the world: truck and bus original equipment manufacturers (“OEMs”), trailer OEMs, aftermarket distributors of replacement parts and services, and automotive OEMs.

On February 1, 2007, American Standard Companies Inc. (“American Standard”) announced that its Board of Directors completed a strategic review of American Standard and unanimously approved a plan to separate its Vehicle Control Systems business as an independent, publicly traded company, named WABCO Holdings Inc. (the “Separation”). American Standard implemented the Separation on July 31, 2007, through a tax-free stock dividend of all of WABCO’s common stock to American Standard shareowners, who received one share of WABCO common stock for every three shares of American Standard common stock owned on the record date of July 19, 2007 (the “Distribution”). As a result, on August 1, 2007 there were 68,131,836 shares of WABCO common stock outstanding. The Separation is expected to provide WABCO with certain opportunities and benefits, including increased strategic focus, increased market recognition, improved capital flexibility and increased ability to attract, retain and motivate employees. The Separation has not triggered “change-in-control” accelerated benefits for any officers or employees of WABCO.

The accompanying condensed 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 the Registration Statement filed on Form 10, as amended.

The historical 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 through July 31, 2007. 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 historical 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 prior to July 31, 2007, 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 through July 31, 2007.

The historical financial statements through July 31, 2007, 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 its equity in undistributed earnings in accordance with the equity method of accounting and reflected as investments in unconsolidated joint ventures in the condensed 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 through July 31, 2007. 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 $1.9 million and $5.1 million for the three months ended September 30, 2007 and 2006, respectively, and $12.9 million and $18.6 million for the nine months ended September 30, 2007 and 2006, respectively. These costs are included in selling 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 substantially funded through American Standard’s primary bank credit agreement via either intercompany loans or intercompany advances. The historical accompanying condensed financial statements through July 31, 2007, reflect the interest expense or income, if any, charged or received on these intercompany arrangements.

 

5


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 Condensed Financial Statements for the year ended December 31, 2006, in the Company’s Form 10, as amended, describe the most significant accounting estimates and policies used in preparation of the Condensed 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 nine months of 2007.

Note 2. Recently Issued Accounting Standards

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 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 3. Debt

Redemption of Debt

On April 30, 2007, WABCO redeemed $40.0 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 triggered by the Separation, resulted in an early redemption charge of $6.0 million, which was recorded in Other Expense in the Company’s Condensed Consolidated Statements of Income during the second quarter of 2007.

In the month of July, WABCO repaid $52.1 million outstanding debt with JP Morgan. This redemption was primarily financed through additional cash received from American Standard.

Credit Facilities

WABCO entered into an unsecured, five-year $800 million, multi-currency revolving credit facility that will expire on July 31, 2012. The primary bank credit agreement was entered into by the Company on May 31, 2007, and the credit facility became available to us on August 1, 2007. The proceeds of the borrowings under the credit facility have been used to fund 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 may be required pursuant to a decision relating to the European Commission investigation matter as further described in Note 9 under the heading “Contingencies”. The balance outstanding on this facility on September 30, 2007, is $50 million.

Under the five year facility, the Company pays a facility fee of 0.11% per annum. Borrowings there under bear interest generally at the London Interbank Offered Rate (“LIBOR”) plus either 0.44% if borrowings are less than or equal to 50% of the total available balance, or 0.49% if borrowings are greater than 50% of the total available balance. The Company also pays 0.44% per annum plus issuance fees for letters of credit. The interest rate spreads above LIBOR are subject to adjustments should the Company’s leverage ratio change.

 

6


The five year facility contains various covenants that limit, among other things, liens, transactions, subsidiary indebtedness, and certain mergers and sales of assets. The covenants also require the Company to meet certain financial tests: ratio of Consolidated Total Debt to consolidated EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization), the ratio of Consolidated EBITDA to Consolidated Interest Expense and a Liquidity Test. As of September 30, 2007, the Company was in compliance with all the covenants contained in the credit agreement.

In addition, as of June 7, 2007, WABCO entered into a credit facility in the amount of $20 million for our China operations. This facility is drawn upon in local currency and used for general corporate purposes. The balance outstanding on this facility on September 30, 2007 is $20 million. Under the facility in China, the Company pays an interest rate equal to 90% of the base lending rate for Renmimbi, published from time to time by the People’s Bank of China. This rate was 5.913% on September 30th, 2007.

NOTE 4. Accounts Receivable Securitization Agreements

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 the programs impacted the balance sheet as follows during the second quarter: an increase in accounts receivable of $169.5 million, a decrease in retained interest in securitization program of $19.1 million and a decrease in cash collected on behalf of banks-securitization of $65.7 million.

NOTE 5. Comprehensive Income

Total comprehensive income consisted of the following (dollars in millions):

 

    

Three months ended

September 30,

   

Nine months ended

September 30,

     2007     2006     2007    2006

Net (loss) / income

   $ (0.3 )   $ 38.1     $ 71.1    $ 113.0

Foreign currency translation effects

     16.1       (2.0 )     23.1      16.1

Minimum pension liability adjustment, net of tax

     —         —         —        —  

Unrealized losses on benefit plans, net of tax

     —         —         —        —  
                             

Total comprehensive income

   $ 15.8     $ 36.1     $ 94.2    $ 129.1
                             

NOTE 6. Net Income Per Share

For all periods prior to July 31, 2007, and issuance of the common stock of WABCO, 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 June 30, 2007.

Subsequent to July 31, 2007, basic net income per share has been computed using the weighted average number of common shares outstanding. The average number of outstanding shares of common stock used in computing diluted net income per share for the three months ended September 30, 2007, does not include the effect of incremental shares for the assumed exercise of stock options and vesting of restricted stock units (“RSU’s”) since the impact would be anti-dilutive; the nine month periods ended September 30, 2007, included 1,455,300 weighted average incremental shares. The weighted average incremental shares represent the net amount of shares the Company would issue upon the assumed exercise of in-the-money employee stock options and vesting of RSU’s after assuming that the Company would use the proceeds from the exercise of options to repurchase treasury stock. The nine month period ended September 30, 2007, excluded 61,367 shares due to their anti-dilutive effect. Anti-dilutive options represent those options whose exercise price was greater than the average price of the Company’s common stock during the nine month period ended September 30, 2007.

 

7


NOTE 7. Capital Stock

On September 20, 2007, a dividend of $0.07 per share of common stock was paid to shareholders of record as of September 4, 2007, totaling $4.8 million. On October 2, 2007, the Board of Directors approved the payment of a dividend of $0.07 per share of common stock to be paid on December 20, 2007, to shareholders of record on December 3, 2007.

Following is a summary of net shares outstanding and shares issued or reacquired during the third quarter of 2007.

 

     Number of Shares of Common Stock  
     Total Shares    Treasury
Shares
    Net Shares
Outstanding
 

Issued, July 31, 2007

   68,131,836    —       68,131,836  

Shares issued upon exercise of stock options

   256,711    —       256,711  

Shares purchased for treasury

   —      (784,700 )   (784,700 )

Other shares issued or (reacquired), net

   8,297    —       8,297  
                 

Balance, September 30, 2007

   68,396,844    (784,700 )   67,612,144  

The Company accounts for purchases of treasury stock under the cost method as defined in Accounting Principles Board Opinion Number 6, Status of Accounting Research Bulletins with the costs of such share purchases reflected in treasury stock in the accompanying consolidated balance sheets. At September 30, 2007, the Company had an unexpended balance of $464.4 million available to repurchase shares under an authorization by the Board of Directors to repurchase up to $500 million, which expires on September 1, 2009. The Company plans to continue to purchase shares at prevailing market prices in the open market. Timing will vary depending on market conditions and other factors.

NOTE 8. 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 Payment using the modified prospective approach. Total stock-based compensation cost recognized during the three month period ended September 30, 2007 and 2006, and the nine month period ending September 30, 2007 and 2006, of $1.6 million and $0.6 million, and $3.0 million and $1.9 million, respectively, has been included in the Condensed Consolidated Statements of Income.

At the date of Separation, equity awards totaling approximately $8.3 million, which includes $5.5 million founders’ grant consisting of stock options and RSU’s for certain WABCO employees, $2.3 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, $0.1 million consisting of stock option and RSU’s for the Board of Directors and an equity award of restricted shares of $0.4 million to the Board of Directors, has been granted. The value of the stock options and restricted stock unit awards will be expensed ratably over a 3 year period, commencing with the Separation. The value of the restricted shares of $0.4 million was fully expensed during the third quarter of 2007 as there is no vesting period associated with these shares.

American Standard historically issued its annual stock-based compensation grants to its employees during the first quarter of each year. During 2007 the annual grant was made by American Standard and all options were converted to WABCO options upon the Separation. During 2006 the annual grant was made by American Standard and all options were converted by applying the distribution ratio as approved by the Board of Directors. The expense related to all options that employees hold, including the options held in American Standard stock, is included in the expense amounts discussed above. The total number and type of awards granted primarily in connection with the annual grant and founder’s grant and the related weighted-average grant-date fair values were as follows:

 

8


     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-WABCO Options (Annual Grant)

   333,229    $ 46.73    $ 12.72    101,478    $ 31.95    $ 8.46

Options Granted-ASD Options (Annual Grant)

   —      $ —      $ —      286,573    $ 26.17    $ 7.81

Options Granted-WABCO Options (Founder’s Grant)

   261,418    $ 48.64    $ 14.50    —      $ —      $ —  

RSU’s Granted-WABCO RSU’s (Founder’s Grant)

   84,679      —      $ 48.64    —      $ —      $ —  
                     

Total Awards

   679,326          388,051      

The options granted in 2007 and 2006 are exercisable in equal annual installments over a period of three years. The restricted stock units granted in 2007 vest ratably over a period of three years. The weighted average grant date fair value was calculated under the Black-Scholes option-pricing model.

The following table summarizes the significant assumptions used for the grants during the three and nine month periods ended September 30, 2007, and nine month period ended September 30, 2006. There were no grants during the three month period ended September 30, 2006.

 

Assumption

  

Three Months
Ended
September 30,

2007

   

Nine Months
Ended
September 30,

2007

   

Nine Months
Ended
September 30,

2006

 

Risk-free interest rate

   4.50 %   4.59 %   4.51 %

Expected volatility

   26.0 %   26.0 %   26.0 %

Expected holding period

   5 Years     5 Years     5 Years  

Expected forfeiture rate

   4.0 %   4.0 %   4.0 %

Dividend yield

   0.57 %   0.99 %   1.62 %

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 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 holding period was calculated by reviewing the historical exercise pattern of all holders that were granted options, 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 holding period 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 WABCO’s expected dividend rate. WABCO will continue to use the same assumptions as American Standard for volatility, expected term and forfeiture rate for the current year.

Note 9. 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 generally for a period of two years. 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.

 

9


Following is a summary of changes in the Company’s product warranty liability for the three and nine months ended September 30, 2007 and 2006 (dollars in millions).

 

    

Three months ended

September 30,

   

Nine months ended

September 30,

 
     2007      2006     2007      2006  

Balance of warranty costs accrued, beginning of period

   $ 46.9      $ 48.6     $ 40.5      $ 33.9  

Warranty expense

     8.5        10.0       29.1        40.3  

Warranty claims settled

     (8.4 )      (14.1 )     (23.6 )      (32.1 )

Increases in warranty estimates for foreign exchange translation effects

     2.2        0.1       3.2        2.5  
                                  

Balance of warranty costs accrued, end of period

     49.2        44.6       49.2        44.6  

Current portion included in current liabilities

     45.2        39.5       45.2        39.5  
                                  

Long-term warranty liability

   $ 4.0      $ 5.1     $ 4.0      $ 5.1  
                                  

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, as amended.

Contingencies

General

From time to time, WABCO is party to legal and tax proceedings. WABCO is also subject to federal, state, local and foreign environmental laws and regulations and is involved in environmental proceedings concerning the investigation and remediation of certain 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.

Litigation

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 were transferred to WABCO as part of a legal reorganization that occurred prior to the Separation. 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 Europe BVBA (a wholly-owned subsidiary of WABCO) 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 carefully reviewed the Statement of Objections and responded to the European Commission on August 1, 2007, by presenting defenses to the allegations in the Statement of Objections. Following the submission of this written response, an oral hearing with the European Commission to present evidence regarding the response to the Statement of Objections has been scheduled to commence on November 12, 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.

 

10


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, 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. 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 Separation 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, WABCO believes 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 includes only a minimal amount of debt. As a result, WABCO expects to have sufficient funds available under its existing five 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 five 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.

Note 10. Income Taxes

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. As a result of a foreign tax audit settlement in the quarter ended June 30, 2007, the Company realized tax benefits of $8.9 million. With regard to the unrecognized tax benefits at September 30, 2007, which amounted to $38.2 million related to the WABCO business and $37.8 million related to WABCO obligations directly to tax authorities for American Standard’s Bath & Kitchen business (see below and Note 11), the Company does not believe that it is reasonably possible that any of such unrecognized tax benefits would be recognized in the next 12 months. The unrecognized tax benefits of $7.2 million and $68.8 million at September 30, 2007 are classified within taxes on income and long-term income tax liabilities, respectively. The Company classifies interest and penalties related to unrecognized tax benefits in income tax expense.

 

11


In conjunction with the Tax Sharing Agreement discussed in Note 11, WABCO is responsible for certain tax and indemnification liabilities. These liabilities include indemnifications to American Standard of $19.5 million related to the WABCO business and $24.2 million related to American Standard’s Bath & Kitchen business. As referred to above, these liabilities also included $37.8 million of unrecognized tax benefits related to American Standard’s Bath & Kitchen business for which WABCO has obligations directly to tax authorities.

Additionally, the accompanying September 30, 2007 balance sheet does not reflect the benefit of certain substantial foreign net operating loss carry forwards which are available to WABCO following the separation. These losses which amount to approximately $315 million result in a deferred tax asset of approximately $107 million, against which a full valuation allowance has been provided because it has been determined as of September 30, 2007 that it is more likely than not that the losses will not be realizable in the foreseeable future.

The income tax provision reflects certain foreign tax planning that benefits WABCO in 2007 and future years following the separation of WABCO from American Standard. The provision also includes certain material, discrete items incurred in the third quarter of 2007 which negatively impacted the effective tax rate. These items primarily include a provision of $37.1 million related to the separation of the WABCO business from American Standard and a charge of $8.9 million related to the reduction of deferred tax assets as a result of the decrease in German tax rates enacted in the third quarter of 2007 but effective January 2008.

The Company is subject to taxation in the US and various states and foreign jurisdictions. With no material exceptions, the Company is no longer subject to US federal, state, local or foreign examinations by tax authorities for years before 2002.

Note 11. Tax and Indemnification Liabilities Transferred from American Standard to WABCO

Pursuant to a Tax Sharing Agreement between American Standard and WABCO, entered into on July 16, 2007, WABCO is responsible for certain tax and indemnification liabilities. The tax liabilities as of September 30, 2007 include $37.8 million related to non-US entities of American Standard’s Bath & Kitchen business but for which WABCO entities have obligations directly to non-US tax authorities. The $37.8 million is classified within long-term income tax liabilities on the balance sheet as of September 30, 2007. Furthermore, the indemnification liabilities include $24.2 million related to non-US entities of American Standard’s Bath & Kitchen business for which WABCO would indemnify American Standard. The tax and indemnification liabilities relate to foreign entities of American Standard’s Bath & Kitchen business and are applicable to tax years dating back to 2000 that are subject to examination by foreign tax authorities. In addition, the indemnification liabilities include $19.5 million related to the WABCO business for which WABCO would indemnify American Standard. The indemnification liabilities of $24.2 million and $19.5 million are classified as long-term within Long-term indemnification liabilities on the balance sheet as of September 30, 2007.

The Tax Sharing Agreement also provides that WABCO is responsible for $37.5 million of estimated costs as a result of internal corporate reorganization transactions needed to effect the WABCO separation from American Standard. This obligation is comprised of income taxes of $7.2 million, non-income taxes of $3.9 million and an indemnification to American Standard of $26.4 million. The $7.2 million, $3.9 million and $26.4 million are classified as short-term liabilities on the balance sheet as of September 30, 2007, within taxes on income, taxes other than income taxes, and indemnification liabilities, respectively.

Note 12. Streamlining Expenses

During 2006 and 2007, the Company incurred charges related to streamlining activities consisting of previously announced plant reductions and severance as more fully described below. The following is a summary of the streamlining programs (consisting of termination payments and other employee costs) outstanding as of September 30, 2007 (dollars in millions).

 

12


2007 Streamlining Programs

  

Charges during the first nine months of 2007

   $ 10.6  

Payments during the first nine months of 2007

     (3.1 )
        

Balance as of September 30, 2007

   $ 7.5  
        

2006 Streamlining Programs

  

Balance as of December 31, 2006

   $ 5.7  

Charges during the first nine months of 2007

     0.7  

Payments during the first nine months of 2007

     (2.6 )
        

Balance as of September 30, 2007

   $ 3.8  
        

2005 and earlier Streamlining Programs

  

Balance as of December 31, 2006

   $ 4.9  

Charges during the first nine months of 2007

     —    

Payments during the first nine months of 2007

     (2.0 )
        

Balance as of September 30, 2007

   $ 2.9  
        

Total Balance as of September 30, 2007

   $ 14.2  
        

The Company incurred $2.7 million of streamlining expenses during the third quarter of 2007 of which $2.6 million is associated with severance relating to 2007 plans and $0.1 million pertains to 2006 plans. The majority of the 2007 plan is associated with administrative functions, and $1.8 million has been charged to selling and administrative expenses and $0.9 million was charged to cost of sales. The Company incurred $3.4 million of streamlining expenses during the third quarter of 2006, of which $3.3 million was charged to selling and administrative expenses and $0.1 million was charged to cost of sales. The Company expended $2.9 million of cash on streamlining activities in the third quarter of 2007. The total balance of $14.2 million is included in other accrued liabilities as of September 30, 2007.

Note 13. Post-retirement Benefits

Post-retirement pension, health and life insurance costs had the following components for the three months and nine months ended September 30, 2007 (dollars in millions):

 

     Three Months Ended September 30,    Nine Months Ended September 30,
     2007     2007    2006     2006    2007     2007    2006     2006
     Pension
Benefits
    Health
& Life
Ins.
Benefits
   Pension
Benefits
    Health
& Life
Ins.
Benefits
   Pension
Benefits
    Health
& Life
Ins.
Benefits
   Pension
Benefits
    Health
& Life
Ins.
Benefits

Service cost-benefits earned during the period

   $ 5.0     $ —      $ 2.7     $ —      $ 8.4     $ —      $ 7.7     $ —  

Interest cost on the projected benefit obligation

     5.1       0.3      4.7       0.3      18.4       1.1      14.6       1.0

Less assumed return on plan assets

     (3.2 )     —        (2.3 )     —        (8.7 )     —        (6.6 )     —  

Amortization of prior service cost

     (0.1 )     —        (0.2 )     —        0.2       2.3      —         —  

Amortization of net loss

     0.9       0.1      1.1       0.1      2.5       0.5      3.3       0.4
                                                           

Net defined benefit cost

   $ 7.7     $ 0.4    $ 6.0     $ 0.4    $ 20.8     $ 3.9    $ 19.0     $ 1.4
                                                           

Accretion expense as reflected in Selling & Administrative expenses and Cost of Sales

   $ 1.9     $ 0.3    $ 2.4     $ 0.3    $ 9.7     $ 1.1    $ 8.0     $ 1.0
                                                           

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 $8.7 million to foreign plans in 2007. In the third quarter of 2007, $2.2 million was contributed to foreign plans. For the nine months ended September 30, 2007, $6.6 million was contributed to foreign pension plans. There have been no contributions and there are no expected contributions for domestic plans.

 

13


Note 14. Related Party Transactions

Presented within the Company’s Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2007, are Net Transfers to American Standard and Affiliates which include the following types of transactions:

 

(Dollars in Millions)

  

Nine Months

Ended
September 30,
2007

   

Year Ended
December 31,

2006

 

Dividends to American Standard and affiliates

   $ (48.0 )   $ (259.8 )

Net receipts from changes in loans due to/from American Standard and affiliates

     288.6       110.8  

Other net receipts, including American Standard and affiliate allocations

     40.4       16.5  
                

Net transfers from (to) American Standard and Affiliates

   $ 281.0     $ (132.5 )
                

Dividends to American Standard and Affiliates —Dividends paid from WABCO to other American Standard entities.

Net receipts from changes in loans due 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 $86.3 million as of December 31, 2006 (as noted in the loan table below), had been included in owners’ net investment as of December 31, 2006. The net receipts from changes in loans due to/from American Standard and affiliates for the nine month period ending September 30, 2007 was $288.6 million. As there was no settlement of outstanding net payable balances as of the date of Separation, the net liability was recognized as additional contributed capital surplus. Net interest expense totaling to $1.0 and $2.1 million for the three months ended September 30, 2007 and September 30, 2006, respectively, and totaling $1.8 million and $4.0 million for the nine months ended September 30, 2007 and September 30, 2006, respectively, is included in the accompanying Condensed Consolidated Statement of Income. All interest rates on loans are deemed to be at or near market rates except for those loans carrying zero percent interest. A detailed summary of these inter-company loans is provided below.

 

       2007    2006

(Dollars in Millions)

  

Balance

at

September 30*

   Interest
Rate
    Avg.
Monthly
Balance
  

Balance
at

Dec. 31

   Interest
Rate
    Avg.
Monthly
Balance

American Standard Entity

               

Loans Receivable

               

Ideal Standard Holding Italia S.r.l

   —      4.1 %   $ 3.8    $ 9.1    4.1 %   $ 10.1

ASI International Inc.

   —      —         —        —      2.9 %     16.5

WABCO Standard Trane BV

   —      2.7 %     3.1      9.2    2.7 %     5.8

Ideal Standard WABCO Trane Ind. Com. Ltda

   —      0.0 %     35.8      81.1    0.0 %     79.6

American Standard (UK) Co.

   —      0.0 %     16.6      51.0    0.0 %     47.9
                             

Total Loans Receivable

          59.3      150.4        159.9
                             

Loans Payable

               

A.S.E. Finance BVBA

   —      —         —        —      3.3 %     90.6

ASI International Inc.

   —      6.0 %     3.2      5.8    6.0 %     5.7

WABCO Standard Trane BV

   —      4.5 %     20.8      6.7    3.5 %     1.0

Teling Air Condition System (Jiangsu) Co., Ltd.

   —      —         —        20.5    2.8 %     19.1

Teling Air Condition Co., Ltd.

   —      3.0 %     15.7      4.2    3.0 %     2.7

American Standard Trane Japan, Ltd.

   —      0.9 %     1.3      2.9    0.9 %     1.7

American Standard Holding Italy BV

   —      —         6.1      —      0.0 %     —  

Trane do Brazil Ind e Com. Ltda

   —      0.0 %     10.7      24.0    0.0 %     21.9
                             

Total Loans Payable

   —          57.8      64.1        142.7
                             

Net amounts due (to)/from American Standard and Affiliates

   —        $ 1.5    $ 86.3      $ 17.2
                             

* There is no balance at September 30, 2007.

 

14


Other, including American Standard and affiliate allocations —These items were also included in owners’ net investment as these balances were not settled as part of the Separation.

Note 15. Agreements Entered Into During the Periods Presented

Separation-Related Agreements with American Standard

On July 16, 2007, WABCO entered into definitive agreements with American Standard that, among other things, set forth the terms and conditions of the Separation of WABCO from American Standard and provide a framework for the relationship between WABCO and American Standard following the Separation. These agreements govern the relationship between WABCO and American Standard subsequent to the completion of the Separation and provide for the allocation between WABCO and American Standard 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 Separation of WABCO and the Distribution of WABCO’s common shares to ASD’s shareholders, the parties also entered into a Tax Sharing Agreement, a Transition Services Agreement, an Employee Matters Agreement and an Indemnification and Cooperation Agreement. A summary of each of the agreements is as follows:

Separation and Distribution Agreement - sets forth WABCO’s agreements with American Standard regarding principal transactions necessary to separate WABCO from American Standard. This agreement also sets forth the other agreements that govern certain aspects of WABCO’s relationship with American Standard after the completion of the Separation from American Standard and provides for the allocation of certain assets to be transferred, liabilities to be assumed and contracts to be assigned to WABCO and American Standard as part of the Separation.

Tax Sharing Agreement - 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. For further detail, please refer to Note 11 – Tax Liabilities Transferred from American Standard to WABCO.

Transition Services Agreement - governs the orderly transition of WABCO becoming an independent company. Under the Transition Services Agreement, WABCO and American Standard have agreed to provide each other 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.

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. For further detail, please refer to Note 8 – Stock-Based Compensation.

Indemnification and Cooperation Agreement - Pursuant to this agreement, WABCO Europe BVBA (a wholly-owned 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, as outlined in a Statement of Objections received by American Standard on March 28, 2007, into possible infringement of European Union competition regulations.

 

15


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Executive Overview

The Company produces a variety of commercial vehicle control systems that improve vehicle performance, safety and reduce overall vehicle operating costs for the world’s leading commercial truck, bus and trailer OEMs. Specifically, the Company develops, manufactures and sells advanced braking, stability, suspension and transmission control systems. Company management analyzes the performance of the business using the following general framework and describes the performance of the business in this context throughout the remainder of this discussion and analysis of financial condition and results of operations.

Sales

The Company analyzes its sales activity based on the impact of pricing, volume and mix of its 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

The Company identifies 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

The Company uses commodities such as aluminum, copper, zinc and steel in its manufacturing process. The cost of these commodities can have a significant impact on the company’s financial performance.

Investments

The Company analyzes 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.

The Separation

On February 1, 2007, American Standard announced that its Board of Directors completed a strategic review of American Standard and unanimously approved a plan to separate its Vehicle Control Systems business as an independent, publicly traded company, named WABCO Holdings Inc. American Standard implemented the Separation on July 31, 2007, through a tax-free stock dividend of all of WABCO’s common stock to American Standard shareowners, who received one share of WABCO common stock for every three shares of American Standard common stock owned as of the record date of July 19, 2007. The Separation is expected to provide WABCO with certain opportunities and benefits, including increased strategic focus, increased market recognition, improved capital flexibility and increased ability to attract, retain and motivate employees. The Separation has not triggered “change-in-control” accelerated benefits for any officers or employees of WABCO. Upon completion of the Separation, WABCO has credit metrics consistent with investment grade credit ratings.

Results of Operations

The following discussion and analysis addresses changes in sales, expenses and pre-tax income for the three and nine months ended September 30, 2007, compared to the three and nine months ended September 30, 2006. Approximately 92% of 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. 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 translation 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 management analyzes the data in this manner because it is useful to them for understanding operational performance of the business. Management also uses data adjusted in this manner for purposes of determining incentive compensation. Accordingly, management believes that presenting information in this manner is also useful to shareholders in understanding the performance of the business. The changes in sales, expenses and pre-tax income excluding the effects of foreign exchange translation are not meant to be a substitute for measurements prepared in conformity with GAAP, or to be considered in isolation.

 

16


Third Quarter Results of Operations for 2007 Compared with 2006

(dollars in millions)

 

     Three months ended September 30,  
                       Excluding foreign
exchange translation
 
     2007     2006     %change
reported
    2007
adjusted
Amount
    %
change
adjusted
 

Sales

   $ 595.5     $ 504.6     18.0 %   $ 554.4     9.9 %

Cost of sales

     437.6       364.6     20.0 %     408.1     11.9 %
                            

Gross profit

     157.9       140.0     12.8 %     146.3     4.5 %

Operating expenses

     97.1       85.1     14.1 %     90.9     6.8 %

Equity in net loss / (income) of unconsolidated joint ventures

     1.8       (3.5 )   *       1.5     *  

Other expense, net

     7.2       1.9     *       4.8     *  

Net interest expense - related party

     1.0       2.1     *       1.0     *  

Interest expense, net

     1.1       0.5     *       1.0     *  
                            

Income before income taxes

     49.7       53.9     (7.8 )%     47.1     (12.6 )%

Income taxes

     50.0       15.8     (216.5 )%     48.4     (206.3 )%
                            

Net (loss) / income

   $ (0.3 )   $ 38.1     (100.8 )%   $ (1.3 )   (103.4 )%
                            

* Percentage change not meaningful

Sales

Sales for the third quarter of 2007 were $595.5 million, an increase of 18.0% (9.9% excluding favorable foreign exchange translation effects) from $504.6 million in 2006. The increase was attributable primarily to increased truck production in Europe, expanded content per vehicle and new applications. Sales in Europe, our largest market, increased approximately 23.3% (14.3% excluding favorable foreign exchange translation effects), which based on our estimate, exceeded the growth in European truck production. We estimate that Western European Truck production was up nearly 13% compared to the same period in 2006. Much of this growth continues to be driven by the strong economic development in Eastern Europe translating into increased need for heavy duty, Western European-style commercial vehicles. Sales decreased 31.8% in North America as a result of a decrease in the North American truck production, influenced by significantly increased sales volume in 2006 ahead of regulations mandating better emissions standards that became effective in 2007. In Asia and South America sales increased 24.6% and 40.8%, respectively (21.1% and 24.4% excluding favorable foreign exchange translation effects, respectively). The sales growth in Asia was driven by an increase in China sales of 129.9% (118.2% excluding favorable foreign exchange translation effects) which was primarily driven by a successful introduction of the Company’s compressor product line in the market as well as the increasing penetration of ABS. Total aftermarket sales growth in the quarter was limited to 14.9% (6.7% excluding the favorable effects of foreign exchange) as a result of supply chain capacity limitations and our need to prioritize fulfilling OEM demand above aftermarket demand.

Gross Profit

Gross profit increased by $17.9 million (an increase of $6.3 million excluding favorable foreign exchange translation effects) in the third quarter of 2007 as compared with the third quarter of 2006. Also included in gross profit was approximately $2.6 million of foreign exchange transaction losses related mainly to the sale of products in countries outside (with a different functional currency) of the country where they are manufactured. Gross profit benefited from volume and mix increases of approximately $11.3 million primarily attributable to the sales increase discussed above and productivity improvements of approximately $9.3 million and the impact of reduced warranty expenses of $3.6 million. These improvements were partially offset by sales price decreases of $12.7 million, labor and other cost escalation of approximately $2.4 million and other costs of $0.2 million.

 

17


Operating Expenses

Operating expenses increased by $12.0 million ($5.8 million excluding unfavorable foreign exchange translation effects) in the third quarter of 2007 as compared to the third quarter of 2006. The increase in operating expense was primarily driven by labor cost inflation and escalation of approximately $2.5 million and incremental investments in the sourcing and product engineering field of approximately $1.3 million offset by a decrease in spending on streamlining programs of approximately $0.7 million. During the third quarter WABCO incurred separation costs of approximately $2.6 million of operating expenses.

Streamlining Expenses

The Company incurred $2.7 million of streamlining expenses during the third quarter of 2007 of which $2.6 million is associated with severance relating to 2007 plans and $0.1 million pertains to 2006 plans. The majority of the 2007 plan is associated with administrative functions, and $1.8 million has been charged to selling and administrative expenses and $0.9 million was charged to cost of sales. The Company incurred $3.4 million of streamlining expenses during the third quarter of 2006, of which $3.3 million was charged to selling and administrative expenses and $0.1 million was charged to cost of sales.

Equity in Net Income of Unconsolidated Joint Ventures

Net income of unconsolidated joint ventures decreased by $5.3 million to a loss of $1.8 million in the third quarter of 2007 as compared to income of $3.5 million in the third quarter of 2006. The decrease was primarily driven by WABCO’s Indian joint venture, Sundaram-Clayton Ltd. (“SCL”). WABCO had to recognize a loss in the third quarter of $3.6 million for SCL which was mainly caused by start up investments in a new motorcycles plant in Indonesia, a write-off of one of its investments and tax adjustments. The Meritor WABCO joint venture in North America also contributed to the decrease. As described above, the North American commercial vehicle production decreased in the third quarter of 2007, by comparison to 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 third quarter of 2007.

WABCO and its Indian joint venture partner have agreed to separate the non-brakes division from the brakes division through a scheme of demerger, which is conditioned on various Indian regulatory and court approvals. If these conditions are met, the brakes business of SCL will be transferred to a WABCO subsidiary, WABCO-TVS (INDIA) Ltd. (“WABCO-TVS”), the shares of which are intended to be listed in India as are the shares of SCL currently. Subsequent to the demerger, it is intended that within a period of two years from such listing, WABCO’s Indian joint venture partner will transfer to WABCO its shares in WABCO-TVS, and WABCO’s percentage ownership in WABCO-TVS is expected to increase to approximately 75-80%. Similarly, during this same period, it is intended that WABCO will transfer to its Indian joint venture partner its shares in SCL post demerger, and WABCO’s percentage ownership in SCL post demerger, which will then consist of the non-brakes division of the joint venture, is expected to decrease to zero.

Other expense, net

Other expense increased by $5.3 million to $7.2 million in the third quarter 2007 as compared to $1.9 million in the third quarter of 2006. The increase was primarily attributable to separation costs of $4.1 million of which $3.7 million related to legal reorganization costs incurred in various countries, $0.3 million related to costs associated with environmental reserves transferred from American Standard, and $0.1 million of other costs.

Income Taxes

The income tax provision for the third quarter of 2007 was $50.0 million, or 100.6% of pre-tax income, compared with a provision of $15.8 million, or 29.3% of pre-tax income in the third quarter of 2006. The effective tax rate for the third quarter of 2007 increased primarily due to a provision of $37.1 million related to the separation of the WABCO business from American Standard and a charge of $8.9 million in a deferred tax asset related to the reduction in German tax rates enacted in the third quarter of 2007 but effective January 2008.

The income tax provision reflects certain foreign tax planning that benefits WABCO in 2007 and future years following the separation of WABCO from American Standard. The tax benefit associated with this planning is reflected in the annual effective tax rate for 2007. Additionally, the accompanying September 30, 2007, balance sheet does not reflect the benefit of certain substantial foreign net operating loss carry forwards which are available to WABCO following the separation. These losses which amount to approximately $315 million result in a deferred tax asset of approximately $107 million, against which a full valuation allowance has been provided because it has been determined as of September 30, 2007, that it is more likely than not that the losses will not be realizable in the foreseeable future.

 

18


Year to Date Results of Operations for 2007 Compared with 2006

(dollars in millions)

 

     Nine months ended September 30,  
                      

Excluding foreign

exchange translation

 
     2007     2006    

%

change
reported

   

2007

adjusted
Amount

   

%

change
adjusted

 

Sales

   $ 1,736.6     $ 1,495.7     16.1 %   $ 1,617.0     8.1 %

Cost of sales

     1,274.1       1,086.4     17.3 %     1,187.9     9.3 %
                            

Gross profit

     462.5       409.3     13.0 %     429.1     4.8 %

Operating expenses

     281.4       248.6     13.2 %     263.8     6.1 %

Equity in net (income) of unconsolidated joint ventures

     (7.0 )     (20.1 )   *       (6.8 )   *  

Other expense, net

     21.8       6.3     *       17.6     *  

Net interest (income) expense - related party

     1.8       4.0     *       1.9     *  

Interest expense

     3.2       0.5     *       2.6     *  
                            

Income before income taxes

     161.3       170.0     (5.1 )%     150.0     (11.8 )%

Income taxes

     90.2       57.0     58.2 %     85.6     50.2 %
                            

Net income

   $ 71.1     $ 113.0     (37.1 )%   $ 64.4     (43.0 )%
                            

* Percentage change not meaningful

Sales

Sales for the first nine months of 2007 were $1,736.6 million, an increase of 16.1% (8.1% excluding favorable foreign exchange translation effects) from $1,495.7 million in 2006. The increase was attributable primarily to increased truck and bus production in Europe, expanded content per vehicle, including new applications and growth in our aftermarket business. Sales in Europe, our largest market, increased approximately 21.1% (12.0% excluding favorable foreign exchange translation effects), which based on our estimate, exceeded the growth in European truck production. Sales decreased 22.9% in North America which was less than the decrease in North American truck production. The decrease in the North American truck production was influenced by increased sales volume in 2006 ahead of regulations mandating better emissions standards that became effective in 2007. In Asia and South America sales increased 18.7% and 27.1%, respectively (16.3% and 16.2% excluding favorable foreign exchange translation effects, respectively). The sales growth in Asia was driven by an increase in China sales of 125.2% (115.3% without foreign exchange translation impact).

Gross Profit

Gross profit increased by $53.2 million (an increase of $19.8 million excluding favorable foreign exchange translation effects) in the first nine months of 2007 as compared with the first nine months of 2006. Also, included in gross profit was approximately $9.6 million of foreign exchange transaction losses related mainly to the sale of products in countries (with a different functional currency) outside of the country where they are manufactured. Gross profit benefited from volume and mix increases of approximately $39.6 million primarily attributable to the sales increase discussed above, productivity improvements of approximately $32.5 million, and a reduction of warranty expenses of $15.0 million. These improvements were partially offset by sales price decreases of approximately $39.2 million, labor and other cost escalation of approximately $10.1 million, commodity cost increases of approximately $6.1 million (mainly driven by increased aluminum and copper prices), higher spending on streamlining programs of approximately $1.7 million, and other costs of $0.6 million. Approximately $16.5 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, higher capacity utilization, and the benefits of productivity programs.

Operating Expenses

Operating expenses increased by $32.8 million ($15.2 million excluding unfavorable foreign exchange translation effects) in the first nine months of 2007 as compared to the first nine months of 2006. The increase in operating expense was primarily driven by higher spending on streamlining programs of approximately $6.2 million, labor cost inflation and escalation of approximately $5.6 million and incremental investments in the product engineering field and sourcing of approximately $3.4 million. During the first nine months of 2007, WABCO incurred separation costs of approximately $3.2 million.

 

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Streamlining Expenses

The Company incurred $11.3 million of streamlining expenses during the first nine months of 2007 as compared with $6.2 million during the first nine months of 2006.

Equity in Net Income of Unconsolidated Joint Ventures

Equity in net income of unconsolidated joint ventures decreased $13.1 million to $7.0 million in the first nine months of 2007 as compared to $20.1 million in the first nine months of 2006. The decrease was primarily driven by WABCO’s Indian joint venture, Sundaram-Clayton Ltd. (“SCL”). WABCO had to recognize a loss in the third quarter of $3.6 million for SCL which was mainly caused by start up investments in a new motorcycles plant in Indonesia, a write-off of one of its investments and tax adjustments. The Meritor WABCO joint venture in North America also contributed to the decrease. As described above, the North American commercial vehicle production decreased in the first nine months of 2007, by comparison to 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 nine months of 2007.

WABCO and its Indian joint venture partner have agreed to separate the non-brakes division from the brakes division through a scheme of demerger, which is conditioned on various Indian regulatory and court approvals. If these conditions are met, the brakes business of SCL will be transferred to a WABCO subsidiary, WABCO-TVS (INDIA) Ltd. (“WABCO-TVS”), the shares of which are intended to be listed in India as are the shares of SCL currently. Subsequent to the demerger, it is intended that within a period of two years from such listing, WABCO’s Indian joint venture partner will transfer to WABCO its shares in WABCO-TVS, and WABCO’s percentage ownership in WABCO-TVS is expected to increase to approximately 75-80%. Similarly, during this same period, it is intended that WABCO will transfer to its Indian joint venture partner its shares in SCL post demerger, and WABCO’s percentage ownership in SCL post demerger, which will then consist of the non-brakes division of the joint venture, is expected to decrease to zero.

Other expense, net

Other expense increased by $15.5 million to $21.8 million in the first nine months of 2007 as compared to $6.3 million in the first nine months of 2006. The increase was primarily attributable to the following items: $6.0 million of early-redemption premiums on the $40.0 million of outstanding bonds that were redeemed on April 30, 2007, $5.2 million of charges resulting from the legal reorganization in various countries in the second and third quarters of 2007, and $0.3 million relating to costs associated with environmental reserves transferred from American Standard. Additionally, contributing to the increase was higher 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 $5.0 million in the first nine months of 2007 as compared with $4.5 million of interest expense in the first nine months of 2006. The increase of $0.5 million is driven by an increase in the third party debt relating to the Company’s European cash management net position and by an increase in the market interest rates.

Income Taxes

The income tax provision for the first nine months of 2007 was $90.2 million, or 55.9% of pre-tax income, compared with a provision of $57.0 million, or 33.5% of pre-tax income in the first nine months of 2006. The effective income tax rate for the first nine months of 2007 increased primarily due to a provision of $44.9 million related to the separation of the WABCO business from American Standard and a charge of $8.9 million in a deferred tax asset related to the reduction in German tax rates enacted in the third quarter of 2007 but effective January 2008, partially offset by an $8.9 million benefit related to the settlement of a foreign audit during the second quarter.

The income tax provision reflects certain foreign tax planning that benefits WABCO in 2007 and future years following the separation of WABCO from American Standard. The tax benefit associated with this planning is reflected in the annual effective tax rate for 2007. Additionally, the accompanying September 30, 2007, balance sheet does not reflect the benefit of certain substantial foreign net operating loss carry forwards which are available to WABCO following the separation. These losses which amount to approximately $315 million result in a deferred tax asset of approximately $107 million, against which a full valuation allowance has been provided because it has been determined as of September 30, 2007, that it is more likely than not that the losses will not be realizable in the foreseeable future.

 

20


Liquidity and Capital Resources

Cash Flows

Net cash used by operating activities was $76.8 million in the first nine months of 2007. This compared with net cash provided by operating activities of $139.8 million in the first nine months of 2006.

In accordance with the terms of American Standard’s existing receivable financing facility, the Separation and Distribution of WABCO required its withdrawal from American Standard’s asset securitization program. Additionally, as a result of the Separation WABCO is also no longer selling its receivables from Meritor WABCO to a subsidiary of American Standard. The impact on the net cash of terminating these two arrangements amounted to $(216.1) million: a $(169.5) million impact from accounts receivable, $19.1 million from other current assets and $(65.7) million from other accrued liabilities.

In addition to the separation related costs mentioned above the change in working capital of the Company has increased in line with the evolution in the sales.

Within investing activities , the Company made capital expenditures of $45.1 million in the first nine months of 2007 as compared to capital expenditures of $41.8 million in the first nine months of 2006. Our capital expenditures for 2007 include $18.1 million on plant and equipment, $20.0 million of investments in tooling, and $7.0 million in computer software. This compared with $22.6 million on plant and equipment, $13.2 million of investments in tooling, and $6.0 million in computer software during the first nine months of 2006.

The net cash provided by financing activities during the first nine months of 2007 amounted to $247.5 million while the financing activities during the first nine months of 2006 resulted in net cash used of $97.6 million.

The Company has redeemed $52.1 million of the outstanding credit facility with JP Morgan in the month of July. This redemption was primarily financed through additional cash obtained from American Standard. In order to finance the share buy back program and the operations of the China facilities, the Company has drawn $50 million drawn from the $800 million credit facility and the company entered into a $20 million credit facility in China.

Prior to July 31, 2007 the Company had additional changes in the balance due from and to American Standard or its affiliates. As further detailed in the Note 14 Related Party Transactions, this balance was mainly made up of the net receipts from changes in loans due to/from American Standard and its affiliates of $288.6 million and dividends paid to American Standard and its affiliates of $48.0 million. The 2007 net cash provided was mainly used to finance the termination of the securitization programs, the redemption of the $40.0 million principal amount of its 7.59% Guaranteed Senior Bonds prior to their maturity date of January 31, 2013 and the redemption of the credit facility with JP Morgan of $52.1 million.

As of September 30, 2007, our total third party indebtedness was $76.1 million consisting of $74.1 million of short term debt which was mainly driven by an outstanding balance of $50 million on the $800 million 5-year credit facility and $20 million outstanding on the China credit facility which are both discussed in Note 3 – Debt.

The Company has paid a quarterly dividend of $4.8 million on September 20, 2007. This dividend was funded via a drawdown on our $800 million credit facility. See “Credit Agreements” below for a description of the credit agreement.

We employ several means to manage our liquidity and we are not dependent upon any one source of funding. The Company’s Board of Directors has approved $500 million of expenditures under a program to purchase shares of the Company’s common stock in the open market. During the first nine months of 2007, the Company repurchased $35.6 million of shares of which $6.3 million was not settled until the month following quarter end. The Company received option proceeds during the first nine months of 2007 of $4.4 million.

Credit Agreements

WABCO and certain of its subsidiaries entered into an unsecured, five-year $800 million, multi-currency revolving credit facility that will expire on July 31, 2012. The primary bank credit agreement was entered into by the Company on May 31, 2007, and the credit facility became available to us on August 1, 2007. The proceeds of the borrowings under the credit facility are being used to fund repurchases of our shares, to pay dividends and to meet short-term requirements. Additionally, the facility may be used to pay a fine or provide a bank guarantee that may 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” in the Form 10. 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 ratios: ratio of net indebtedness to EBITDA, EBITDA to net interest expense, and a liquidity test described below.

 

21


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 may be required pursuant to a decision relating to the European Commission investigation matter as described in the Form10 under the heading “Business—Legal Proceedings—The European Commission Investigation.” For additional information relating to the terms of the credit agreement we refer to the 8-K filed by American Standard on June 5.

In addition, on June 7, 2007 WABCO entered into a credit facility in the amount of $20 million for our China operations, which is drawn upon in local currency and used for general corporate purposes.

As of September 30, 2007, the Company is in compliance with all of its covenants.

Off-Balance Sheet Arrangements

Future rental commitments under all non-cancelable operating leases have not changed significantly from the amounts disclosed in the Company’s Condensed Consolidated Financial Statements for the year ended December 31, 2006, filed as part of the Registration Statement on Form 10, as amended. In addition the Company participated in receivables financing arrangements managed by American Standard, which was terminated in the second quarter of 2007.

Aggregate Contractual Obligations

The Company has contractual obligations for operating leases, purchase obligations and unfunded pension and post-retirement benefit plans that were summarized in a table of aggregate contractual obligations for the year ended December 31, 2006 disclosed in the Registration Statement on Form 10, as amended. There have been no material changes to those obligations since December 31, 2006.

Information Concerning 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:

 

   

adverse developments in general business, economic and political conditions or any outbreak or escalation of hostilities on a national, regional or international basis;

 

   

changes in international or U.S. economic conditions, such as inflation, interest rate fluctuations, foreign exchange rate fluctuations or recessions in our markets;

 

   

unpredictable difficulties or delays in the development of new product technology;

 

   

pricing changes to our supplies or products or those of our competitors, and other competitive pressures on pricing and sales;

 

   

competition in our existing and future lines of business and the financial resources of competitors;

 

   

our failure to comply with regulations and any changes in regulations;

 

   

our failure to complete potential future acquisitions or to realize benefits from completed acquisitions;

 

   

our ability to access debt markets on a favorable basis;

 

   

our inability to implement our growth plan;

 

   

the loss of any of our senior management;

 

   

difficulties in obtaining or retaining the management and other human resource competencies that we need to achieve our business objectives;

 

   

labor relations;

 

22


   

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;

 

   

our inability to operate effectively as a stand-alone, publicly traded company;

 

   

the actual level of commercial vehicle production in our end-markets; and

 

   

periodic changes to contingent liabilities, including those associated with litigation matters and government investigations.

Other factors not identified above, including the risk factors described in the “Risk Factors” section of the Company’s Registration Statement filed on Form 10, as amended, 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” below, 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.

Critical Accounting Policies and Estimates

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 in the Company’s Form 10, as amended, describe the most 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 first nine months of 2007.

On January 1, 2007, the Company 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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There were no material changes to the disclosure on this matter for the year ended December 31, 2006 made in the Company’s Registration Statement filed on Form 10, as amended.

Item 4. Controls and Procedures

The Company has established a Disclosure Controls Committee that assists the Chief Executive Officer and Chief Financial Officer in their evaluation of the Company’s disclosure controls and procedures. Our Chief Executive Officer and Chief Financial Officer have concluded, based on their evaluation as of the end of the period covered by this report, that our disclosure controls and procedures, as defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Rule 13a-15(e), are effective to ensure that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (ii) is accumulated and communicated to the Company’s management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

 

23


There have been no changes in the Company’s internal control over financial reporting during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

There have been no significant changes since December 31, 2006, except as discussed below.

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 were transferred to WABCO as part of a legal reorganization that occurred prior to the Separation. 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 Europe BVBA (a wholly-owned subsidiary of WABCO) 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 carefully reviewed the Statement of Objections and responded to the European Commission on August 1, 2007 by presenting defenses to the allegations in the Statement of Objections. Following the submission of this written response, an oral hearing with the European Commission to present evidence regarding the response to the Statement of Objections has been scheduled to commence on November 12, 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.

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. 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 Separation 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, WABCO believes 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 includes only a minimal amount of debt. As a result, WABCO expects to have sufficient funds available under its existing five 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.

 

24


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 five 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.

Item 1A. Risk Factors

There have been no significant changes to the risk factors disclosed in the Company’s Registration Statement filed on Form 10, as amended.

Item 2. Changes in Securities, and Use of Proceeds and Issuer Purchases of Equity Securities

The Company’s Board of Directors has approved expenditures under a program to purchase shares of the Company’s common stock in the open market. On July 27, 2007 the Company’s Board of Directors approved $500 million to purchase shares of the Company’s common stock in the open market. As of September 30, 2007, the unexpended authorization on the current program totaled $464.4 million. A summary of the repurchase activity for the first nine months of 2007 follows:

ISSUER PURCHASES OF EQUITY SECURITIES

 

Period

   Total Number
of Shares
Purchased
   Average
Price Paid
per Share
  

Total Number

of Shares
Purchased as Part
of Publicly
Announced Plans
or Programs

   Maximum Dollar
Value of Shares
That May Yet Be
Purchased Under
the Plans or
Programs (a)

July 1-July 31

   —        —      —        —  

August 1-August 31

   —        —      —        —  

September 1-September 30

   784,700    $ 45.40    784,700    $ 464,371,666
               

Total third quarter

   784,700    $ 45.40    784,700   
               

Total through September 30

   784,700    $ 45.40    784,700   
               

(a) The authorization by the Board of Directors on July 27, 2007 approved the purchase of shares in an amount not to exceed $500,000,000 which expires on September 1, 2009. The unexpended balance of $464,371,666 under that authorization as of September 30, 2007, will continue to be used to repurchase shares for the remainder of 2007.

All share repurchases were effected in accordance with the safe harbor provisions of Rule 10b-18 of the Securities Exchange Act.

Item 6. Exhibits

The exhibits listed on the accompanying Index to Exhibits are filed as part of this quarterly report on Form 10-Q.

 

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SIGNATURE

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 thereunto duly authorized.

 

WABCO HOLDINGS INC.

/s/ Todd Weinblatt

Todd Weinblatt
Controller
(Principal Accounting Officer)

November 8, 2007

 

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WABCO HOLDINGS INC.

INDEX TO EXHIBITS

(The File Number of the Registrant, WABCO Holdings Inc., is 1-33332)

 

Exhibit No.  

Description

2.1   Separation and Distribution Agreement, dated as of July 16, 2007, by and between American Standard Companies Inc. and WABCO Holdings Inc. (previously filed as Exhibit 2.1 to the Company’s Form 8-K (File No. 001-33332), filed on July 20, 2007 and herein incorporated by reference).
3.1   Amended and Restated Certificate of Incorporation (previously filed as Exhibit 3.1 to the Company’s Form 8-K (File No. 001-33332), filed on July 18, 2007 and herein incorporated by reference).
3.2   Amended and Restated By-Laws of WABCO Holdings Inc. (previously filed as Exhibit 3.2 to the Company’s Form 8-K (File No. 001-33332), filed on July 18, 2007 and herein incorporated by reference).
4.1   Rights Agreement, dated July 16, 2007, by and between WABCO Holdings Inc. and The Bank of New York (previously filed as Exhibit 4.1 to the Company’s Form 8-K (File No. 001-33332), filed on July 18, 2007 and herein incorporated by reference).
4.2   Certificate of Designation of Junior Participating Cumulative Preferred Stock (previously filed as Exhibit 4.2 to the Company’s Form 8-K (File No. 001-33332), filed on July 18, 2007 and herein incorporated by reference).
4.3   Rights Certificate (attached as an exhibit to the Rights Agreement, dated July 16, 2007 filed as Exhibit 4.1 hereto).
4.4   Form of Specimen Common Stock Certificate.
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 (previously filed as Exhibit 10.1 to the Company’s Form 8-K (File No. 001-33332), filed on July 20, 2007 and herein incorporated by reference).
10.2   Transition Services Agreement, dated July 16, 2007, by and between American Standard Companies Inc. and WABCO Holdings Inc. (previously filed as Exhibit 10.2 to the Company’s Form 8-K (File No. 001-33332), filed on July 20, 2007 and herein incorporated by reference).
10.3   Employee Matters Agreement, dated July 16, 2007, by and between American Standard Companies Inc. and WABCO Holdings Inc. (previously filed as Exhibit 10.3 to the Company’s Form 8-K (File No. 001-33332), filed on July 20, 2007 and herein incorporated by reference).


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 (previously filed as Exhibit 10.4 to the Company’s Form 8-K (File No. 001-33332), filed on July 20, 2007 and herein incorporated by reference).
10.5   WABCO Holdings Inc. Omnibus Incentive Plan (previously filed as Exhibit 10.1 to the Company’s Form S-8 (File No. 333-144906), filed on July 27, 2007 and herein incorporated by reference).
10.6   Form of Indemnification Agreement (previously filed as Exhibit 10.6 to the Company’s Form 10, as amended (File No. 001-33332), filed on May 23, 2007 and herein incorporated by reference) (Entered into with all executive officers and all members of the Board of Directors).
10.7   Form of WABCO Holdings Inc. Stock Option Grant Agreement for U.S. Employees.
10.8   Form of WABCO Holdings Inc. Stock Option Grant Agreement for Non-U.S. Employees.
10.9   Form of WABCO Holdings Inc. Restricted Unit Grant Agreement for U.S. Employees.
10.10   Form of WABCO Holdings Inc. Restricted Unit Grant Agreement for Non-U.S. Employees.
10.11   WABCO Holdings Inc. Change of Control Severance Plan.
10.12   Employment Agreement by and between WABCO Expats Inc. and Jacques Esculier, dated as of July 27, 2007.
10.13   Amendment to the Employment Contract of March 1, 2003 by and between American Standard Europe BVBA and Ulrich Michel, dated July 27, 2007.
10.14   Employment Agreement by and between WABCO Expats Inc. and Kevin Tarrant, dated as of July 1, 2007.
10.15   Employment Agreement by and between World Standard Ltd. and Nikhil M. Varty, dated as of April 15, 2001.
10.16   Addendum to Employment Agreement by and between World Standard Ltd. and Nikhil M. Varty, dated February 1, 2006.
10.17   Employment Agreement by and between American Standard Europe BVBA and Jean-Christophe Figueroa, dated January 21, 2005.


10.18   Employment Agreement by and between American Standard Europe BVBA and Dr. Christian Wiehen, dated December 6, 2002.
10.19   Addendum to Employment Agreement by and between American Standard Europe BVBA and Dr. Christian Wiehen, dated March 30, 2007.
10.20   WABCO Holdings Inc. Supplemental Savings Plan.
31.1   Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2   Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1   Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2   Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 4.4

LOGO


LOGO


Exhibit 10.7

FORM OF

WABCO HOLDINGS INC.

STOCK OPTION GRANT AGREEMENT

FOR U.S. EMPLOYEES

WABCO HOLDINGS INC., a Delaware corporation (“Grantor”), hereby grants to              (“Participant”), an employee of Grantor or one of its subsidiaries, the option to purchase (“Option”), at the exercise price set forth below, a total of          shares of Common Stock, par value $.01 per share (“Common Stock”), of the Grantor, pursuant to and subject to the terms and conditions set forth in the Grantor’s Omnibus Incentive Plan (the “Plan”) and to such further terms and conditions as are set forth below in this Stock Option Grant Agreement (the “Agreement). Unless otherwise defined herein, the terms defined in the Plan shall have the same meanings in this Agreement.

1. Exercise Price . The exercise price applicable to the shares of Common Stock that may be purchased by the Participant pursuant to the Option is $          per share, representing the Fair Market Value (as defined in the Plan) of the Common Stock on the date hereof.

2. Non-Qualified Stock Option . The option to purchase shares of Common Stock pursuant to the Option is granted as a “non-qualified stock option”, within the meaning of the United States Internal Revenue Code of 1986, as amended.

3. Vesting . Participant’s right to purchase shares subject to the Option shall vest in three equal installments on each of the first three anniversaries of the grant, unless otherwise cancelled pursuant to Section 6 of the Plan.

4. Nature of Grant . In accepting the grant, the Participant acknowledges that:

(a) the Plan is established voluntarily by the Grantor, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Grantor at any time, unless otherwise provided in the Plan and this Agreement;

(b) the grant of the Option is voluntary and occasional and does not create any contractual or other right to receive future grants of options, or benefits in lieu of options, even if options have been granted repeatedly in the past;

(c) all decisions with respect to future option grants, if any, will be at the sole discretion of the Grantor;

(d) the Participant is voluntarily participating in the Plan;

(e) in the event that the Participant is not an Employee of the Grantor, the Option and Participant’s participation in the Plan will not be interpreted to form an employment or service contract or relationship with the Grantor; and, furthermore, the Option and Participant’s participation in the Plan will not be interpreted to form an employment or service contract or relationship with any Subsidiary of the Grantor; and

(f) the future value of the underlying shares of Common Stock is unknown and cannot be predicted with certainty; if the underlying shares do not increase in value, the Option will have no value.

5. Responsibility for Taxes . Regardless of any action the Grantor and/or Participant’s employer (the “Employer”) takes with respect to any or all income tax (including U.S. federal, state and local tax and/or non-U.S. tax), social insurance, payroll tax, or other tax-related withholding (“Tax-Related Items”), Participant acknowledges that the ultimate liability for all Tax-Related Items legally due by Participant is and remains Participant’s responsibility and that the


Grantor and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Option, including the grant, vesting and exercise of the Option, the delivery of shares of Common Stock, the subsequent sale of any shares of Common Stock acquired at exercise and the receipt of any dividends; and (ii) do not commit to structure the terms of the grant or any aspect of the Option to reduce or eliminate Participant’s liability for Tax-Related Items.

Prior to the relevant taxable event, Participant shall pay or make arrangements satisfactory to the Grantor and/or the Employer to satisfy all Tax-Related Items withholding obligations of the Grantor and/or the Employer. In this regard, Participant authorizes the Grantor and/or the Employer to withhold all applicable Tax-Related Items legally payable by Participant from any wages or other cash compensation paid to Participant by the Grantor and/or the Employer. Alternatively, or in addition, Participant authorizes the Grantor and/or the Employer, at its discretion and pursuant to such procedures as it may specify from time to time, to satisfy the obligations with regard to all Tax-Related Items legally payable by Participant by one or a combination of the following: (i) withholding otherwise deliverable shares of Common Stock, provided that the Grantor only withholds the amount of shares of Common Stock necessary to satisfy the minimum statutory withholding amount; and (ii) arranging for the sale of shares of Common Stock otherwise deliverable to Participant (on Participant’s behalf and at Participant’s direction pursuant to this authorization) and withholding from the proceeds of the sale of shares. If the obligation for Tax-Related Items is satisfied by withholding a number of shares of Common Stock as described herein, Participant is deemed to have been issued the full number of shares of Common Stock subject to the Option, notwithstanding that a number of the shares of Common Stock are held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of the Option. Participant shall pay to the Grantor and/or the Employer any amount of Tax-Related Items that the Grantor and/or the Employer may be required to withhold as a result of Participant’s participation in the Plan that cannot be satisfied by the means previously described. The Grantor may refuse to deliver to Participant any shares of Common Stock pursuant to Participant’s Option if Participant fails to comply with Participant’s obligations in connection with the Tax-Related Items as described in this section.

6. Electronic Delivery . The Grantor may, in its sole discretion, decide to deliver any documents related to the Option or future Options made under the Plan by electronic means or request the Participant’s consent to participate in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Grantor or a third party designated by the Grantor.

7. Severability . The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

8. Choice of Law and Venue . All disputes arising under or growing out of the Option or the provisions of this Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, United States of America, as provided in the Plan, without regard to such state’s conflict of laws rules.

9. No Compensation Deferrals . Neither the Plan nor this Agreement is intended to provide for an elective deferral of compensation that would be subject to Section 409A of the Code. The Grantor reserves the right, to the extent the Grantor deems necessary or advisable in its sole discretion, to unilaterally amend or modify the Plan and/or this Agreement to ensure that no grants (including without limitation, the Options) become subject to Section 409A, provided, however, the Grantor makes no representation that the Options are not subject to Section 409A nor makes any undertaking to preclude Section 409A from applying to the Options.

 

2


10. Acceptance . This grant is subject to acceptance in accordance with the program administrator’s online acceptance procedures.

IN WITNESS WHEREOF, the duly authorized officers of the Grantor named below have hereunto subscribed as of the day and year first above written.

 

  WABCO HOLDINGS INC.
Attest:    
  By:  

 

    Chairman and Chief Executive Officer

 

   
Secretary    

By signing this Agreement, the Participant acknowledges that he or she accepts the Option granted hereunder, is familiar with the terms and conditions of this Agreement and the Plan, and agrees to be bound by said terms and conditions.

 

 

(Date)

 

(Participant’s Signature)

This document constitutes part of a prospectus covering securities that have been registered under the Securities Act of 1933.

 

3


Exhibit 10.8

FORM OF

WABCO HOLDINGS INC.

STOCK OPTION GRANT AGREEMENT

FOR NON-U.S. EMPLOYEES

WABCO HOLDINGS INC., a Delaware corporation (“Grantor”), hereby grants to              (“Participant”), an employee of Grantor or one of its subsidiaries, the option to purchase (“Option”), at the exercise price set forth below, a total of          shares of Common Stock, par value $.01 per share (“Common Stock”), of the Grantor, pursuant to and subject to the terms and conditions set forth in the Grantor’s Omnibus Incentive Plan (the “Plan”) and to such further terms and conditions as are set forth below in this Stock Option Grant Agreement (the “Agreement). Unless otherwise defined herein, the terms defined in the Plan shall have the same meanings in this Agreement.

1. Exercise Price . The exercise price applicable to the shares of Common Stock that may be purchased by the Participant pursuant to the Option is $          per share, representing the Fair Market Value (as defined in the Plan) of the Common Stock on the date hereof.

2. Non-Qualified Stock Option . The option to purchase shares of Common Stock pursuant to the Option is granted as a “non-qualified stock option”, within the meaning of the United States Internal Revenue Code of 1986, as amended.

3. Vesting . Participant’s right to purchase shares subject to the Option shall vest in three equal installments on each of the first three anniversaries of the grant, unless otherwise cancelled pursuant to Section 6 of the Plan or Section 11 of this Agreement.

4. Nature of Grant . In accepting the grant, the Participant acknowledges that:

(a) the Plan is established voluntarily by the Grantor, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Grantor at any time, unless otherwise provided in the Plan and this Agreement;

(b) the grant of the Option is voluntary and occasional and does not create any contractual or other right to receive future grants of options, or benefits in lieu of options, even if options have been granted repeatedly in the past;

(c) all decisions with respect to future option grants, if any, will be at the sole discretion of the Grantor;

(d) the Participant is voluntarily participating in the Plan;

(e) the Option is an extraordinary item that does not constitute compensation of any kind for services of any kind rendered to the Grantor and Subsidiary, and which is outside the scope of the Participant’s employment or service contract, if any;

(f) the Option is not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculation of any severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension, retirement or welfare benefits or similar payments and in no event should be considered as compensation for, or relating in any way, to past services for the Grantor, or any Subsidiary;

(g) in the event that the Participant is not an Employee of the Grantor, the Option and Participant’s participation in the Plan will not be interpreted to form an employment or service contract or relationship with the Grantor; and, furthermore, the Option and Participant’s participation in the Plan will not be interpreted to form an employment or service contract or relationship with any Subsidiary of the Grantor;


(h) the future value of the underlying shares of Common Stock is unknown and cannot be predicted with certainty; if the underlying shares do not increase in value, the Option will have no value; and

(i) in consideration of the Option, no claim or entitlement to compensation or damages shall arise from termination of the Option or from any diminution in value of the Option or shares of Common Stock acquired upon exercise of the Option resulting from termination of Participant’s employment by the Grantor or any Subsidiary (for any reason whatsoever and whether or not in breach of local labor laws) and Participant irrevocably releases the Grantor and any Subsidiary from any such claim that may arise.

5. Responsibility for Taxes . Regardless of any action the Grantor and/or Participant’s employer (the “Employer”) takes with respect to any or all income tax (including U.S. federal, state and local tax and/or non-U.S. tax), social insurance, payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”), Participant acknowledges that the ultimate liability for all Tax-Related Items legally due by Participant is and remains Participant’s responsibility and that the Grantor and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Option, including the grant, vesting and exercise of the Option, the delivery of shares of Common Stock, the subsequent sale of any shares of Common Stock acquired at exercise and the receipt of any dividends; and (ii) do not commit to structure the terms of the grant or any aspect of the Option to reduce or eliminate Participant’s liability for Tax-Related Items.

Prior to the relevant taxable event, Participant shall pay or make arrangements satisfactory to the Grantor and/or the Employer to satisfy all Tax-Related Items withholding obligations of the Grantor and/or the Employer. In this regard, Participant authorizes the Grantor and/or the Employer to withhold all applicable Tax-Related Items legally payable by Participant from any wages or other cash compensation paid to Participant by the Grantor and/or the Employer. Alternatively, or in addition, Participant authorizes the Grantor and/or the Employer, at its discretion and pursuant to such procedures as it may specify from time to time, to satisfy the obligations with regard to all Tax-Related Items legally payable by Participant by one or a combination of the following: (i) withholding otherwise deliverable shares of Common Stock, provided that the Grantor only withholds the amount of shares of Common Stock necessary to satisfy the minimum withholding amount; and (ii) arranging for the sale of shares of Common Stock otherwise deliverable to Participant (on Participant’s behalf and at Participant’s direction pursuant to this authorization) and withholding from the proceeds of the sale of shares. If the obligation for Tax-Related Items is satisfied by withholding a number of shares of Common Stock as described herein, Participant is deemed to have been issued the full number of shares of Common Stock subject to the Option, notwithstanding that a number of the shares of Common Stock are held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of the Option. Participant shall pay to the Grantor and/or the Employer any amount of Tax-Related Items that the Grantor and/or the Employer may be required to withhold as a result of Participant’s participation in the Plan that cannot be satisfied by the means previously described. The Grantor may refuse to deliver to Participant any shares of Common Stock pursuant to Participant’s Option if Participant fails to comply with Participant’s obligations in connection with the Tax-Related Items as described in this section.

6. Data Privacy . T HE P ARTICIPANT HEREBY EXPLICITLY AND UNAMBIGUOUSLY CONSENTS TO THE COLLECTION , USE AND TRANSFER , IN ELECTRONIC OR OTHER FORM , OF HIS OR HER PERSONAL DATA AS DESCRIBED IN THIS A GREEMENT BY AND AMONG , AS APPLICABLE , THE E MPLOYER , THE G RANTOR AND ITS S UBSIDIARIES AND AFFILIATES FOR THE EXCLUSIVE PURPOSE OF IMPLEMENTING , ADMINISTERING AND MANAGING HIS OR HER PARTICIPATION IN THE P LAN .

 

2


T HE P ARTICIPANT UNDERSTANDS THAT THE G RANTOR AND THE E MPLOYER HOLD CERTAIN PERSONAL INFORMATION ABOUT HIM OR HER , INCLUDING , BUT NOT LIMITED TO , HIS OR HER NAME , HOME ADDRESS AND TELEPHONE NUMBER , WORK LOCATION AND PHONE NUMBER , DATE OF BIRTH , P LAN IDENTIFICATION NUMBER , HIRE DATE , HOME COUNTRY , DETAILS OF ALL R ESTRICTED U NITS OR ANY OTHER ENTITLEMENT TO SHARES OF C OMMON S TOCK AWARDED , CANCELLED , EXERCISED , VESTED , UNVESTED OR OUTSTANDING IN THE P ARTICIPANT S FAVOR , FOR THE PURPOSE OF IMPLEMENTING , ADMINISTERING AND MANAGING THE P LAN (“P ERSONAL D ATA ”). T HE P ARTICIPANT UNDERSTANDS THAT P ERSONAL D ATA MAY BE TRANSFERRED TO ANY THIRD PARTIES ASSISTING IN THE IMPLEMENTATION , ADMINISTRATION AND MANAGEMENT OF THE P LAN , THAT THESE RECIPIENTS MAY BE LOCATED IN THE P ARTICIPANT S COUNTRY OR ELSEWHERE , AND THAT THE RECIPIENT S COUNTRY MAY HAVE DIFFERENT DATA PRIVACY LAWS AND PROTECTIONS THAN THE P ARTICIPANT S COUNTRY . T HE P ARTICIPANT UNDERSTANDS THAT HE OR SHE MAY REQUEST A LIST WITH THE NAMES AND ADDRESSES OF ANY POTENTIAL RECIPIENTS OF THE P ERSONAL D ATA BY CONTACTING HIS OR HER LOCAL HUMAN RESOURCES REPRESENTATIVE . T HE P ARTICIPANT AUTHORIZES THE RECIPIENTS TO RECEIVE , POSSESS , USE , RETAIN AND TRANSFER THE P ERSONAL D ATA , IN ELECTRONIC OR OTHER FORM , FOR THE PURPOSES OF IMPLEMENTING , ADMINISTERING AND MANAGING HIS OR HER PARTICIPATION IN THE P LAN , INCLUDING ANY REQUISITE TRANSFER OF SUCH P ERSONAL D ATA AS MAY BE REQUIRED TO A BROKER OR OTHER THIRD PARTY WITH WHOM THE P ARTICIPANT MAY ELECT TO DEPOSIT ANY SHARES OF C OMMON S TOCK ACQUIRED UPON VESTING OF THE R ESTRICTED U NITS . T HE P ARTICIPANT UNDERSTANDS THAT P ERSONAL D ATA WILL BE HELD ONLY AS LONG AS IS NECESSARY TO IMPLEMENT , ADMINISTER AND MANAGE HIS OR HER PARTICIPATION IN THE P LAN . T HE P ARTICIPANT UNDERSTANDS THAT HE OR SHE MAY , AT ANY TIME , VIEW P ERSONAL D ATA , REQUEST ADDITIONAL INFORMATION ABOUT THE STORAGE AND PROCESSING OF P ERSONAL D ATA , REQUIRE ANY NECESSARY AMENDMENTS TO P ERSONAL D ATA OR REFUSE OR WITHDRAW THE CONSENTS HEREIN , IN ANY CASE WITHOUT COST , BY CONTACTING IN WRITING HIS OR HER LOCAL HUMAN RESOURCES REPRESENTATIVE . T HE P ARTICIPANT UNDERSTANDS , HOWEVER , THAT REFUSING OR WITHDRAWING HIS OR HER CONSENT MAY AFFECT HIS OR HER ABILITY TO PARTICIPATE IN THE P LAN . F OR MORE INFORMATION ON THE CONSEQUENCES OF THE P ARTICIPANT S REFUSAL TO CONSENT OR WITHDRAWAL OF CONSENT , THE PARTICIPANT UNDERSTANDS THAT HE OR SHE MAY CONTACT HIS OR HER LOCAL HUMAN RESOURCES REPRESENTATIVE .

7. Electronic Delivery . The Grantor may, in its sole discretion, decide to deliver any documents related to the Option or future Options made under the Plan by electronic means or request the Participant’s consent to participate in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Grantor or a third party designated by the Grantor.

8. Severability . The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

9. Choice of Law and Venue . All disputes arising under or growing out of the Option or the provisions of this Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, United States of America, as provided in the Plan, without regard to such state’s conflict of laws rules.

10. Requirements of Law . This grant is subject to, and limited by, all applicable laws and regulations and to such approvals by any governmental agencies or national securities exchanges as may be required. Any provision of this award that is deemed to be prohibited under applicable laws and regulations shall be void.

11. Acceptance . This grant is subject to acceptance, within 90 days of its receipt, by return to Grantor’s Senior Vice President-Human Resources of a signed copy of this Agreement. Failure to accept the grant within 90 days of its receipt shall result in the cancellation of the Option.

 

3


IN WITNESS WHEREOF, the duly authorized officers of the Grantor named below have hereunto subscribed as of the day and year first above written.

 

  WABCO HOLDINGS INC.
Attest:    
  By:  

 

    Chairman and Chief Executive Officer

 

   
Secretary    

By signing this Agreement, the Participant acknowledges that he or she accepts the Option granted hereunder, is familiar with the terms and conditions of this Agreement and the Plan, and agrees to be bound by said terms and conditions.

 

 

(Date)

 

(Participant’s Signature)

This document constitutes part of a prospectus covering securities that have been registered under the Securities Act of 1933.

 

4


Exhibit 10.9

FORM OF

WABCO HOLDINGS INC.

RESTRICTED UNIT GRANT AGREEMENT

FOR U.S. EMPLOYEES

WABCO HOLDINGS INC., a Delaware corporation (“Grantor”), hereby grants to              (“Participant”), an employee of Grantor or one of its subsidiaries,          Restricted Units, pursuant to and subject to the terms and conditions set forth in the Grantor’s Omnibus Incentive Plan (the “Plan”) and to such further terms and conditions as are set forth below in this Restricted Unit Grant Agreement (the “Agreement). Unless otherwise defined herein, the terms defined in the Plan shall have the same meanings in this Agreement.

1. Restricted Period . Subject to the other provisions of the Plan, the Restricted Period shall commence upon the date of grant and shall lapse with respect to one third of the Restricted Units over each of the first three anniversaries of the date of grant.

The term “lapse” shall mean, with respect to any Restricted Units, that such Units are no longer subject to forfeiture by the Participant. If the Restricted Period would lapse as to a fraction of a Restricted Unit, such Restricted Unit shall not lapse until Participant becomes entitled to the entire Restricted Unit.

2. Dividend Equivalents . Pursuant to Section 8.3 of the Plan, Participant shall be entitled to receive Dividend Equivalents on the Restricted Units, provided that, (a) Dividend Equivalents shall not accrue interest and (b) Dividend Equivalents shall be paid in cash at the time that the Restricted Period lapses with respect to the associated Restricted Units.

3. Acknowledgement of Nature of Plan and Award . In accepting the Award, Participant acknowledges that:

(a) the Plan is established voluntarily by the Grantor, it is discretionary in nature, and it may be modified, amended, suspended or terminated by the Grantor at any time, unless otherwise provided in the Plan and this Agreement;

(b) the Award is voluntary and occasional and does not create any contractual or other right to receive future awards of Restricted Units, or benefits in lieu of Restricted Units, even if Restricted Units have been awarded repeatedly in the past;

(c) all decisions with respect to future awards, if any, will be at the sole discretion of the Grantor;

(d) the Participant is voluntarily participating in the Plan;

(e) in the event that the Participant is not an Employee of the Grantor, the Award and Participant’s participation in the Plan will not be interpreted to form an employment or service contract or relationship with the Grantor; and, furthermore, the Award and Participant’s participation in the Plan will not be interpreted to form an employment or service contract or relationship with any Subsidiary of the Grantor; and

(f) the future value of the underlying shares of Common Stock is unknown and cannot be predicted with certainty.

4. Responsibility for Taxes . With respect to the Restricted Units, the Participant shall pay or make adequate arrangements satisfactory to the Grantor and/or the Employer to satisfy all income tax, social insurance, payroll tax, payment on account or other tax-related withholding obligations of the Grantor and/or the Employer (“Tax-Related Items”). In this regard, the


Participant shall notify the Grantor and/or the Employer or, if applicable, the Grantor’s administrator of the Plan, the means by which Participant elects to pay any and all withholding taxes required in connection with the grant or vesting of the Restricted Units and issuance of underlying Shares. In the event that Participant does not elect to pay any Tax-Related Items by a different permissible means under the Plan, Grantor and/or the Employer shall withhold number of Shares underlying the Restricted Units necessary to pay any required withholding taxes of the Participant. The Grantor may refuse to deliver Shares otherwise issuable to Participant hereunder if the Participant fails to comply with his or her obligations in connection with the Tax-Related Items as described in this section.

5. Electronic Delivery . The Grantor may, in its sole discretion, decide to deliver any documents related to the Award or future awards made under the Plan by electronic means or request the Participant’s consent to participate in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Grantor or a third party designated by the Grantor.

6. Severability . The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

7. Choice of Law and Venue . All disputes arising under or growing out of the Award or the provisions of this Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, United States of America, as provided in the Plan, without regard to such state’s conflict of laws rules.

8. No Compensation Deferrals . Neither the Plan nor this Agreement is intended to provide for an elective deferral of compensation that would be subject to Section 409A of the Code. The Grantor reserves the right, to the extent the Grantor deems necessary or advisable in its sole discretion, to unilaterally amend or modify the Plan and/or this Agreement to ensure that no grants (including without limitation, the Restricted Units) become subject to Section 409A, provided, however, the Grantor makes no representation that the Restricted Units are not subject to Section 409A nor makes any undertaking to preclude Section 409A from applying to the Restricted Units.

9. Acceptance . This grant is subject to acceptance, within 90 days of its receipt, by return to Grantor’s Senior Vice President-Human Resources of a signed copy of this Agreement. Failure to accept the grant within 90 days of its receipt shall result in the cancellation of the Restricted Units.


IN WITNESS WHEREOF, the duly authorized officers of the Grantor named below have hereunto subscribed as of the day and year first above written.

 

  WABCO HOLDINGS INC.
Attest:    
  By:  

 

    Chairman and Chief Executive Officer

 

   
Secretary    

By signing this Agreement, the Participant acknowledges that he or she accepts the Restricted Units granted hereunder, is familiar with the terms and conditions of this Agreement and the Plan, and agrees to be bound by said terms and conditions.

 

 

(Date)

 

(Participant’s Signature)

This document constitutes part of a prospectus covering securities that have been registered under the Securities Act of 1933.


Exhibit 10.10

FORM OF

WABCO HOLDINGS INC.

RESTRICTED UNIT GRANT AGREEMENT

FOR NON-U.S. EMPLOYEES

WABCO HOLDINGS INC., a Delaware corporation (“Grantor”), hereby grants to                      (“Participant”), an employee of Grantor or one of its subsidiaries,              Restricted Units, pursuant to and subject to the terms and conditions set forth in the Grantor’s Omnibus Incentive Plan (the “Plan”) and to such further terms and conditions as are set forth below in this Restricted Unit Grant Agreement (the “Agreement). Unless otherwise defined herein, the terms defined in the Plan shall have the same meanings in this Agreement.

1. Restricted Period . Subject to the other provisions of the Plan, the Restricted Period shall commence upon the date of grant and shall lapse with respect to one third of the Restricted Units over each of the first three anniversaries of the date of grant.

The term “lapse” shall mean, with respect to any Restricted Units, that such Units are no longer subject to forfeiture by the Participant. If the Restricted Period would lapse as to a fraction of a Restricted Unit, such Restricted Unit shall not lapse until Participant becomes entitled to the entire Restricted Unit.

2. Dividend Equivalents . Pursuant to Section 8.3 of the Plan, Participant shall be entitled to receive Dividend Equivalents on the Restricted Units, provided that, (a) Dividend Equivalents shall not accrue interest and (b) Dividend Equivalents shall be paid in cash at the time that the Restricted Period lapses with respect to the associated Restricted Units.

3. A CKNOWLEDGEMENT OF N ATURE OF P LAN AND A WARD . In accepting the Award, Participant acknowledges that:

(a) the Plan is established voluntarily by the Grantor, it is discretionary in nature, and it may be modified, amended, suspended or terminated by the Grantor at any time, unless otherwise provided in the Plan and this Agreement;

(b) the Award is voluntary and occasional and does not create any contractual or other right to receive future awards of Restricted Units, or benefits in lieu of Restricted Units, even if Restricted Units have been awarded repeatedly in the past;

(c) all decisions with respect to future awards, if any, will be at the sole discretion of the Grantor;

(d) the Participant is voluntarily participating in the Plan;

(e) the Award is an extraordinary item that does not constitute compensation of any kind for services of any kind rendered to the Grantor or any Subsidiary, and which is outside the scope of Participant’s employment or service contract, if any;

(f) the Award is not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculation of any severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Grantor or any Subsidiary;

(g) in the event that the Participant is not an Employee of the Grantor, the Award and Participant’s participation in the Plan will not be interpreted to form an employment or


service contract or relationship with the Grantor; and, furthermore, the Award and Participant’s participation in the Plan will not be interpreted to form an employment or service contract or relationship with any Subsidiary of the Grantor;

(h) the future value of the underlying shares of Common Stock is unknown and cannot be predicted with certainty; and

(i) in consideration of the Award, no claim or entitlement to compensation or damages shall arise from termination of the Award or from any diminution in value of the Award or shares of Common Stock acquired upon vesting of the Award resulting from termination of Participant’s employment by the Grantor or any Subsidiary (for any reason whatsoever and whether or not in breach of local labor laws) and Participant irrevocably releases the Grantor and any Subsidiary from any such claim that may arise.

4. Responsibility for Taxes . Regardless of any action the Grantor and/or Participant’s employer (the “ Employer ”) takes with respect to any or all income tax (including U.S. federal, state and local tax and/or non-U.S. tax), social insurance, payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”), Participant acknowledges that the ultimate liability for all Tax-Related Items legally due by Participant is and remains Participant’s responsibility and that the Grantor and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Award, including the grant of the Restricted Stock Units, the vesting of the Restricted Stock Units, the delivery of shares of Common Stock, the subsequent sale of any shares of Common Stock acquired at vesting and the receipt of any Dividend Equivalents or dividends; and (ii) do not commit to structure the terms of the grant or any aspect of the Award to reduce or eliminate Participant’s liability for Tax-Related Items.

Prior to the relevant taxable event, Participant shall pay or make arrangements satisfactory to the Grantor and/or the Employer to satisfy all Tax-Related Items withholding obligations of the Grantor and/or the Employer. In this regard, Participant authorizes the Grantor and/or the Employer to withhold all applicable Tax-Related Items legally payable by Participant from any wages or other cash compensation paid to Participant by the Grantor and/or the Employer. Alternatively, or in addition, Participant authorizes the Grantor and/or the Employer, at its discretion and pursuant to such procedures as it may specify from time to time, to satisfy the obligations with regard to all Tax-Related Items legally payable by Participant by one or a combination of the following: (i) withholding otherwise deliverable shares of Common Stock, provided that the Grantor only withholds the amount of shares of Common Stock necessary to satisfy the minimum withholding amount; and (ii) arranging for the sale of shares of Common Stock otherwise deliverable to Participant (on Participant’s behalf and at Participant’s direction pursuant to this authorization) and withholding from the proceeds of the sale of shares. If the obligation for Tax-Related Items is satisfied by withholding a number of shares of Common Stock as described herein, Participant is deemed to have been issued the full number of shares of Common Stock subject to the Award, notwithstanding that a number of the shares of Common Stock are held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of the Award. Participant shall pay to the Grantor and/or the Employer any amount of Tax-Related Items that the Grantor and/or the Employer may be required to withhold as a result of Participant’s participation in the Plan that cannot be satisfied by the means previously described. The Grantor may refuse to deliver to Participant any shares of Common Stock pursuant to Participant’s Award if Participant fails to comply with Participant’s obligations in connection with the Tax-Related Items as described in this section.

5. DATA PRIVACY NOTICE AND CONSENT . T HE P ARTICIPANT HEREBY EXPLICITLY AND UNAMBIGUOUSLY CONSENTS TO THE COLLECTION , USE AND TRANSFER , IN ELECTRONIC OR OTHER FORM , OF HIS OR HER PERSONAL DATA AS DESCRIBED IN THIS A GREEMENT BY AND AMONG , AS APPLICABLE , THE E MPLOYER , THE G RANTOR AND ITS S UBSIDIARIES AND AFFILIATES FOR THE EXCLUSIVE PURPOSE OF IMPLEMENTING , ADMINISTERING AND MANAGING HIS OR HER PARTICIPATION IN THE P LAN .


T HE P ARTICIPANT UNDERSTANDS THAT THE G RANTOR AND THE E MPLOYER HOLD CERTAIN PERSONAL INFORMATION ABOUT HIM OR HER , INCLUDING , BUT NOT LIMITED TO , HIS OR HER NAME , HOME ADDRESS AND TELEPHONE NUMBER , WORK LOCATION AND PHONE NUMBER , DATE OF BIRTH , P LAN IDENTIFICATION NUMBER , HIRE DATE , HOME COUNTRY , DETAILS OF ALL R ESTRICTED U NITS OR ANY OTHER ENTITLEMENT TO SHARES OF C OMMON S TOCK AWARDED , CANCELLED , EXERCISED , VESTED , UNVESTED OR OUTSTANDING IN THE P ARTICIPANT S FAVOR , FOR THE PURPOSE OF IMPLEMENTING , ADMINISTERING AND MANAGING THE P LAN (“P ERSONAL D ATA ”). T HE P ARTICIPANT UNDERSTANDS THAT P ERSONAL D ATA MAY BE TRANSFERRED TO ANY THIRD PARTIES ASSISTING IN THE IMPLEMENTATION , ADMINISTRATION AND MANAGEMENT OF THE P LAN , THAT THESE RECIPIENTS MAY BE LOCATED IN THE P ARTICIPANT S COUNTRY OR ELSEWHERE , AND THAT THE RECIPIENT S COUNTRY MAY HAVE DIFFERENT DATA PRIVACY LAWS AND PROTECTIONS THAN THE P ARTICIPANT S COUNTRY . T HE P ARTICIPANT UNDERSTANDS THAT HE OR SHE MAY REQUEST A LIST WITH THE NAMES AND ADDRESSES OF ANY POTENTIAL RECIPIENTS OF THE P ERSONAL D ATA BY CONTACTING HIS OR HER LOCAL HUMAN RESOURCES REPRESENTATIVE . T HE P ARTICIPANT AUTHORIZES THE RECIPIENTS TO RECEIVE , POSSESS , USE , RETAIN AND TRANSFER THE P ERSONAL D ATA , IN ELECTRONIC OR OTHER FORM , FOR THE PURPOSES OF IMPLEMENTING , ADMINISTERING AND MANAGING HIS OR HER PARTICIPATION IN THE P LAN , INCLUDING ANY REQUISITE TRANSFER OF SUCH P ERSONAL D ATA AS MAY BE REQUIRED TO A BROKER OR OTHER THIRD PARTY WITH WHOM THE P ARTICIPANT MAY ELECT TO DEPOSIT ANY SHARES OF C OMMON S TOCK ACQUIRED UPON VESTING OF THE R ESTRICTED U NITS . T HE P ARTICIPANT UNDERSTANDS THAT P ERSONAL D ATA WILL BE HELD ONLY AS LONG AS IS NECESSARY TO IMPLEMENT , ADMINISTER AND MANAGE HIS OR HER PARTICIPATION IN THE P LAN . T HE P ARTICIPANT UNDERSTANDS THAT HE OR SHE MAY , AT ANY TIME , VIEW P ERSONAL D ATA , REQUEST ADDITIONAL INFORMATION ABOUT THE STORAGE AND PROCESSING OF P ERSONAL D ATA , REQUIRE ANY NECESSARY AMENDMENTS TO P ERSONAL D ATA OR REFUSE OR WITHDRAW THE CONSENTS HEREIN , IN ANY CASE WITHOUT COST , BY CONTACTING IN WRITING HIS OR HER LOCAL HUMAN RESOURCES REPRESENTATIVE . T HE P ARTICIPANT UNDERSTANDS , HOWEVER , THAT REFUSING OR WITHDRAWING HIS OR HER CONSENT MAY AFFECT HIS OR HER ABILITY TO PARTICIPATE IN THE P LAN . F OR MORE INFORMATION ON THE CONSEQUENCES OF THE P ARTICIPANT S REFUSAL TO CONSENT OR WITHDRAWAL OF CONSENT , THE PARTICIPANT UNDERSTANDS THAT HE OR SHE MAY CONTACT HIS OR HER LOCAL HUMAN RESOURCES REPRESENTATIVE .

6. Electronic Delivery . The Grantor may, in its sole discretion, decide to deliver any documents related to the Award or future awards made under the Plan by electronic means or request the Participant’s consent to participate in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Grantor or a third party designated by the Grantor.

7. Severability . The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

8. Choice of Law and Venue . All disputes arising under or growing out of the Award or the provisions of this Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, United States of America, as provided in the Plan, without regard to such state’s conflict of laws rules.

9. Requirements of Law . This grant is subject to, and limited by, all applicable laws and regulations and to such approval by any governmental agencies or national securities exchanges as may be required. Any provision of this award that is deemed to be prohibited under applicable laws or regulations shall be void.


10. Acceptance . This grant is subject to acceptance, within 90 days of its receipt, by return to Grantor’s Senior Vice President-Human Resources of a signed copy of this Agreement. Failure to accept the grant within 90 days of its receipt shall result in the cancellation of the Restricted Units.

IN WITNESS WHEREOF, the duly authorized officers of the Grantor named below have hereunto subscribed as of the day and year first above written.

 

    WABCO HOLDINGS INC.

Attest:

   
  By:  

 

    Chairman and Chief Executive Officer

 

   
Secretary

By signing this Agreement, the Participant acknowledges that he or she accepts the Restricted Units granted hereunder, is familiar with the terms and conditions of this Agreement and the Plan, and agrees to be bound by said terms and conditions.

 

 

(Date)

 

(Participant’s Signature)

This document constitutes part of a prospectus covering securities that have been registered under the Securities Act of 1933.


Exhibit 10.11

WABCO HOLDINGS INC.

CHANGE OF CONTROL SEVERANCE PLAN

Section I. Purpose

The purpose of the Plan is to provide certain key employees of the Company and its subsidiaries with severance benefits should their employment terminate under the circumstances described herein.

Section II. Definitions

A. Act —means the Securities Exchange Act of 1934, as amended.

B. Agreement and Release —means an agreement prepared by the Company under which a Participant, in return for benefits provided under the Plan, agrees to release the Company and its Subsidiaries to the maximum extent permissible under applicable law from any and all claims which such Participant may have against such entities at the time the agreement is executed, and further agrees to certain other undertakings, including cooperation with the Company in any matter which may give rise to legal claims against the Company, a one year non-solicitation agreement, keeping confidential proprietary information of the Company as well as the terms of the Agreement and Release, settlement of any disputes concerning the Agreement and Release through binding arbitration, and such other undertakings as the Company may reasonably require from time to time, in each case to the maximum extent permissible under applicable law.

C. Base Amount —means an amount equal to the Participant’s Annualized Includable Compensation for the Base Period as defined in Section 280(G)(d)(1) and (2) of the Code.

D. Beneficial Owner —means any “person”, as such term is used in Section 13(d) of the Act, who, directly or indirectly, has or shares the right to vote or dispose of such securities or otherwise has "beneficial ownership" of such securities (within the meaning of Rule 13d-3 and Rule 13d-5 under the Act), including pursuant to any agreement, arrangement or understanding (whether or not in writing).


E. Board —means the Board of Directors of the Company.

F. Cause —means a Participant's (1) willful and continued failure substantially to perform his duties with the Company or any Subsidiary (other than any such failure resulting from incapacity due to reasonably documented physical or mental illness), after a demand for substantial performance is delivered to such Participant by the Senior Vice President of Human Resources of the Company (or, in the case of the Senior Vice President of Human Resources of the Company, by the Chief Executive Officer of the Company (the "CEO")) which specifically identifies 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. For purposes hereof, no act, or failure to act, on such Participant's part shall be considered "willful" unless done, or omitted to be done, by the Participant not in good faith and without reasonable belief that his or her action or omission was in the best interest of the Company or a Subsidiary. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by such Participant in good faith and in the best interest of the Company or such Subsidiary.

G. "Change of Control" shall mean the occurrence of any of the following events following the Distribution Date:

(i) any “person”, as such term is used in Section 13(d) of the Act (other than the Company, any Subsidiary or any employee benefit plan maintained by the Company or any Subsidiary (or any trustee or other fiduciary thereof)) is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company's then-outstanding securities, provided, however, that an acquisition of securities of the Company representing less than 25% of the combined voting power shall not constitute a Change of Control if, prior to meeting the 20% threshold, the members of the Board who are not employees of the Company or a Subsidiary unanimously adopt a resolution consenting to such acquisition by such Beneficial Owners;

 

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(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 the Company 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 the Company, other than any such transaction immediately following which the persons who were the Beneficial Owners of the outstanding voting securities of the Company 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 the Company’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 the Company, such surviving entity, any Subsidiary or any subsidiary of such surviving entity;

(iv) the sale of substantially all of the assets of the Company to any person other than any Subsidiary or any entity in which the Beneficial Owners of the outstanding voting securities of the Company 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 the Company’s voting securities immediately prior to such transaction; or

(v) the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company.

 

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H. Code —means the United States Internal Revenue Code of 1986, as amended.

I. Committee —means the Compensation, Governance and Nominating Committee of the Board (or such other committee of the Board that the Board shall designate).

J. Common Stock —means the common stock of the Company, par value $0.01 per share.

K. Company —means WABCO Holdings Inc., a Delaware corporation, and any successor thereto.

L. Distribution Date – means the date upon which American Standard Companies distributes the Common Stock to its shareholders.

M. Effective Date —means the Distribution Date.

N. Good Reason —means, coincident with or subsequent to a Change of Control, the occurrence of any of the following:

1. a material diminution in a Participant’s duties, authority, responsibilities or status;

2. 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;

3. a reduction by the Company or a Subsidiary in such Participant's base salary;

4. 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 Company's or such Subsidiary's incentive plans in which he or she was participating at the time of the taking of such action; or

5. the taking of any action by the Company or a Subsidiary that would substantially diminish the aggregate value of the benefits provided to the Participant under the Company's or such Subsidiary's 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).

 

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Notwithstanding the foregoing, the occurrence of any of the events described above will not constitute Good Reason unless the Participant gives the Company written notice that such event constitutes Good Reason within 90 days of first having knowledge of such event and the Company fails to cure the event within 30 days after receipt of such written notice.

O. Participant —means each employee of the Company or a Subsidiary who is either an officer of the Company or in the executive grade.

P. Plan —means this WABCO Holdings Inc. Change of Control Severance Plan.

Q. Plan Administrator —means the Committee or any committee or individual designated by the Committee to perform some or all of its administrative functions hereunder.

R. Subsidiary —means any corporation, partnership or limited liability company in which the Company owns, directly or indirectly, 50% or more of the total combined voting power of all classes of stock of such corporation or of the capital interest or profits interest of such partnership.

Section III. Eligibility .

Each Participant shall be eligible to receive the benefits provided under the Plan in the event of a Change of Control, if coincident therewith or within 24 months following thereafter (i) such Participant voluntarily terminates employment for Good Reason or (ii) such Participant’s employment is involuntarily terminated by the Company or a Subsidiary other than pursuant to a termination for Cause.

Section IV. Severance Payments .

A Participant who satisfies the eligibility requirements of Section III hereof shall receive severance payments equal to the following:

(A) an amount equal to the Applicable Multiplier times the Participant's annual base salary in effect on the date the termination occurs; plus

 

5


(B) subject to Section XI, an amount equal to the Applicable Multiplier times the amount of the Participant's annual incentive plan target award in effect for the calendar year in which the termination occurs, determined without regard to whether the applicable targets are attained.

Notwithstanding the foregoing, payment of any severance hereunder shall be contingent upon the Participant’s execution of an Agreement and Release in a form acceptable to the Company within 30 days of such Participant’s termination of employment. For purposes of this Section IV, the Applicable Multiplier shall be one (1), except with respect to the Company's Chief Executive Officer (the "CEO"), whose Applicable Multiplier shall be two (2) and the Company's Chief Financial Officer (the "CFO") and Senior Vice President – Human Resources ("SVP-HR"), each of whose Applicable Multiplier shall be one and one half (1.5).

Section V. Payment of Benefits . All severance payments hereunder shall be paid in a single lump sum five (5) business days following the Participant’s termination of employment, except that, if the Participant is a “key employee” within the meaning of Section 416(i) of the Code and the severance benefits payable to such Participant hereunder do not qualify as a short-term deferral not subject to such Section 409A, such lump sum payment shall be made six months following the date of the Participant’s termination of employment.

Section VI. Continuation of Welfare Plan Coverage . A Participant who is eligible to receive severance benefits pursuant to Section III above will be entitled, subject to payment of any premiums or co-payments required of the Participant for such coverage while an employee, to continue all life, accident and health coverage, on the same basis as in effect on the date he terminated employment, for a period of 12 months from the date of termination (twenty-four (24) months for the CEO and eighteen (18) months for both the CFO and SVP-HR), provided that, (i) to the extent permitted by law, such coverage may be terminated at the discretion of the Plan Administrator in the event the Participant obtains at least equal alternate coverage, and (ii) the coverage provided is subject to any limitations under the terms of any applicable contract with an insurance carrier or third party administrator. Nothing herein shall restrict the right of the Company to amend or terminate any benefit plan in a manner generally applicable to similarly situated active employees of the Company and its affiliates, and Participants shall be entitled to participate on the same basis as similarly situated active employees of the Company and its affiliates. Any continuation of benefits pursuant to this Section VI shall not run concurrent with

 

6


any continuation rights provided pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), and for purposes of applying COBRA with respect to coverage under any group health plan, the end of coverage under this Section VI shall be deemed to a qualifying event for the Participant.

Section VII. Outplacement Assistance; Financial Planning . The Company will provide and pay for outplacement services to each Participant eligible for the payment of benefits pursuant to Section III. Such services are to be provided through a nationally recognized firm selected by the Company which specializes in outplacement services and shall extend for six months from the date of termination. In addition, the CEO, CFO and SVP-HR shall be entitled to reimbursement of up to $5,000 of financial planning expenses, provided that such expenses are incurred by the Participant in the one year period following such termination and that the Participant submits a request for reimbursement not later than 60 days following the end of such period, in which case the Company shall reimburse such expense no later than 30 days following submission of the reimbursement request.

Section VIII. Mitigation; Offset . A Participant shall not be required to mitigate the amount of any Payment under the Plan by seeking employment or otherwise, and there shall be no right of set-off or counterclaim, in respect of any claim, debt or obligation, against any payments to the Participant. Notwithstanding the foregoing, a Participant shall promptly report any new employment obtained to the Company during the period for which benefits are continued pursuant to Section VI.

Section IX. Certain Limitations on Payments.

 

A. In the event a Participant’s employment is terminated pursuant to Section III of this Plan, and if in connection therewith it is determined that (i) part or all of the compensation and benefits to be paid to the Participant (whether pursuant to the terms of this Plan or otherwise) constitute “parachute payments” under Section 280G of the Code, and (ii) the payment thereof will cause the Participant to incur excise tax under Section 4999 of the Code (the "Excise Tax"), the following limitation shall apply:

If the aggregate present value of such parachute payments (the “Parachute Amount”) equals or exceeds 2.99 times the Participant’s Base Amount, then the amounts otherwise payable to or for the benefit of the Participant pursuant to this Plan (or otherwise), and taken into account in calculating the Parachute Amount (the

 

7


“Capped Payments”), shall be reduced, as further described below, to the extent necessary so that the Parachute Amount is equal to 2.99 times the Participant’s Base Amount; provided, however, that such reduction shall be applied only if the net amount of such Capped Payments (and after subtracting the net amount of federal, state and local income taxes on such Capped Payments) is greater than or equal to the net amount of such parachute payments without such reduction (but after subtracting the net amount of federal, state and local income taxes on such parachute payments and the amount of Excise Tax to which the Participant would be subject in respect of such unreduced parachute payments).

 

B. The determination of the Parachute Amount, the Capped Payments and the Base Amount, as well as any other calculations necessary to implement this Section IX shall be made by the Company’s outside auditors or by a nationally recognized accounting or benefits consulting firm appointed by the Company. The auditor’s or consultant’s fee shall be paid by the Company.

 

C. If a determination of reduction to the level of Capped Payments is made pursuant to clause A of this Section IX, the Participant may propose which and how much of any particular entitlement shall be eliminated or reduced, by advising the Company in writing of his or her proposal within ten days of the final determination of the reduction in Capped Payments. Upon the expiration of such ten-day period, the Company shall take into consideration any proposal received and determine which and how much of any entitlement shall be eliminated or reduced, and shall notify the Participant promptly of such determination. As promptly as practicable following such determination the Company shall pay to or distribute to or for the benefit of the Participant such amounts as are then due to the Participant and shall promptly pay to or distribute for the benefit of the Participant in the future such amounts as become due to the Participant.

 

D.

As a result of the uncertainty in the application of Section 280G of the Code at the time of a determination hereunder, it is possible that payments will be made by the Company which should not have been made under clause A of this Section IX (“Overpayment”). In the event that there is a final determination by the Internal Revenue Service, or a final determination by a court of competent jurisdiction, that an Overpayment has been made, any such Overpayment shall be treated for all purposes as a loan to the Participant which the Participant shall repay to the Company together with interest at the applicable Federal

 

8


 

rate provided for in Section 7872(f) (2) of the Code; provided, however, that no amount shall be payable by the Participant to the Company if and to the extent such payment would not reduce the amount which is subject to taxation under Section 4999 of the Code.

Section X. Reservation of Right to Amend and Terminate . The Company reserves the right, whether in an individual case or more generally, to amend, reduce or eliminate the Plan, in whole or in part, at any time and from time to time without notice, provided that no amendment to this Plan shall be made for two years following the occurrence of a Change of Control if such amendment would reduce the benefits hereunder and no amendment that reduces benefits hereunder shall be effective if a Change of Control occurs within six months following such amendment.

Section XI. Relationship to Other Benefits . No payment under the Plan shall be taken into account in determining any payments, benefits, coverage levels or participation rates under any incentive compensation plan, any pension, retirement, profit sharing, group insurance, or other benefit plan of the Company; provided that , the amount of the severance payments described in Section IV above shall be reduced to the extent of any severance or redundancy payment or benefit (i) sponsored by the Company or a Subsidiary (other than under the Plan) (ii) provided or required by federal, state, local or foreign law or regulation, and/or (iii) owed the Participant pursuant to a contract with the Company or a Subsidiary, unless such contract specifically provides otherwise. It is the intention of this Plan that there shall be no duplication of the severance benefits provided hereunder.

Section XII. Administration . The Plan Administrator shall have full power and authority to interpret and carry out the terms of the Plan, and to exercise discretion where necessary or appropriate in the interpretation and administration of the Plan and all decisions by the Plan Administrator shall be final and binding on all affected parties, except as otherwise provided herein or by law. The Plan is intended to be administered in a manner consistent with the requirements, where applicable, of Section 409A of the Code. Where reasonably possible and practicable, the Plan shall be administered in a manner to avoid the imposition on Participants of immediate tax recognition and additional taxes pursuant to such Section 409A. Notwithstanding anything else contained herein to the contrary, neither the Plan Administrator nor the Company shall be in breach of its obligations hereunder, nor liable for any interest or other payments, if the Company fails to make any payments hereunder on the stated date on which such payment is due.

 

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Section XIII. Reimbursement of Legal Expenses . In the event it shall be necessary for a Participant to retain legal counsel in connection with the enforcement of any or all of such Participant’s right to benefits payable under the Plan, and provided that the Participant substantially prevails in the enforcement of such rights, the Company shall reimburse the Participant for reasonable attorneys fees incurred, which reimbursement shall be made not later than the date upon which the Participant obtains a final determination evidencing that the Participant has so prevailed.

Section XIV. Expenses . All expenses of administering the Plan shall be borne by the Company.

Section XV. Withholding . The Company may withhold from any amounts payable hereunder such Federal, state or local taxes as may be required to be withheld pursuant to any applicable law or regulation.

Section XVI. Successors and Binding Effect . The Company shall require any successor, (including, without limitation, any persons acquiring directly or indirectly all or substantially all of the business and/or assets of the Company whether by purchase, merger, consolidation, reorganization or otherwise, and such successor shall thereafter be deemed the Company for purposes of the Plan), to assume and agree to perform the obligations under the Plan in the same manner and to the same extent the Company would be required to perform if no such succession had taken place. The Plan shall be binding upon and inure to the benefit of the Company and any successor to the Company, but shall not otherwise be assignable, transferable or delegable by the Company. The rights under the Plan shall inure to the benefit of and be enforceable by each Participant’s personal or legal representatives, executors, administrators, successors, heirs, distributees and/or legatees. Rights under the Plan are personal in nature and neither the Company nor any Participant shall, without the consent of the other, assign, transfer or delegate the Plan or any rights or obligations hereunder except as expressly provided in this Section. Without limiting the generality of the foregoing, a Participant’s right to receive payments hereunder shall not be assignable, transferable or delegable, whether by pledge, creation of a security interest or otherwise, other than by will or by the laws of descent and distribution, and, in the event of any attempted assignment or transfer contrary to this Section, the Company shall have no liability to pay any amount so attempted to be assigned, transferred or delegated. If a Participant shall die while any amounts would be payable hereunder had the Executive continued to live, all such amounts, unless otherwise provided herein, shall be paid to such person or persons appointed in writing by such Participant to receive such amounts or, if no person is so appointed, to the Participant’s estate.

 

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Section XVII. Severability . In the event that any provision of the Plan shall be determined to be invalid or unenforceable for any reason, the remaining provisions and portions of the Plan shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law.

Section XVIII. Governing Law . This Plan and all rights and obligations hereunder shall be construed in accordance with and governed by the laws of the State of Delaware, without reference to conflict of laws principles of such state.

 

Ratified pursuant to duly authorized

resolution by the Board of Directors of the Company

on July 27, 2007

WABCO Holdings Inc.
By:    
 

 

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Exhibit 10.12

WABCO EXPATS INC

July 16, 2007

Mr. Jacques Esculier

WABCO Inc.

1 Centennial Avenue

Piscataway, New Jersey 08855

Dear Mr. Esculier:

This is to confirm the terms and conditions of your expatriate assignment pursuant to which you will serve as Chief Executive Officer of WABCO Holdings Inc., commencing effective as of the date (the “Effective Date” ) on which WABCO Holdings Inc (the “Company” ) ceases to be a wholly owned subsidiary of American Standard Companies Inc. ( “Parent” ) by reason of a distribution of its stock to the shareholders of Parent. During this assignment, you will be an employee of WABCO Expats Inc. ( “WSW” ) assigned to WABCO Europe BVBA.

LOCATION

You will be employed by WSW in Brussels, Belgium.

SALARY COMPENSATION

Commencing on the Effective Date, your compensation from WSW will include an annual base salary of $600,000. We will review your salary periodically, and it is subject to increase in accordance with our otherwise applicable salary administration practices.

INCENTIVE COMPENSATION

You will also be eligible to receive annual and long-term incentive opportunities during your period of service with WSW. The actual amount payable to you as an annual or long-term incentive will be dependent upon the achievement of performance objectives established in accordance with the terms of such annual or long-term incentive plan. Accordingly, depending on such performance, the actual amount payable to you in respect of such


opportunities (including any equity compensation awards provided in respect of your employment) may provide you with actual compensation that is less than, greater than or equal to the target opportunities or other values specified below. Any incentive compensation award will be in such form or forms, and subject to such terms and conditions, as shall be determined by the committee responsible for the administration of the applicable plan, policy or program.

No amounts payable or awards made in respect of incentive compensation, whether payable in cash or stock, or in respect of the Founders grants described below, shall be deemed to be part of your basic compensation or otherwise treated as an entitlement under the provisions of any applicable law. Such amounts are discretionary awards, contingent on performance criteria (including stock price) and are made solely as an inducement for you to assist in the achievement of the performance objectives related thereto.

CASH INCENTIVE OPPORTUNITIES

Your annual incentive opportunity under the Annual Incentive Plan, at target performance levels, will be equal to two-thirds of your annual base salary. In addition, commencing with the awards made in respect of 2008, your annual award opportunity under the applicable long-term cash incentive plan, at target performance levels, will be equal to your annual base salary. For 2007, your annual bonus will be equal to the sum of ( i ) the bonus amount payable hereunder in respect of your services from and after the Effective Date, using the base salary and target opportunities applicable to you from and after the Effective Date, plus the amount that would have been payable to you under the programs of Parent and/or its affiliated companies for service from January 1, 2007 and prior to the Effective Date, using the base salary and target opportunities applicable to you prior to the Effective Date.

FOUNDERS AND CEO GRANT

On the Effective Date, you will be granted ( i ) a “founders” award having an aggregate value of $825,000, and ( ii ) a special grant in recognition of your acceptance of the CEO position having an aggregate value of $1,400,000. Both of these special, one-time non-recurring awards shall be granted under the WABCO Omnibus Incentive Plan and shall be subject to the terms and conditions of the WABCO Omnibus Incentive Plan (including with respect to vesting and/or the exercisability of each such award). One half of the value of each such award will be in the form of restricted stock units, which represent the right to receive, subject to the terms and conditions of such award, a corresponding number of shares of WABCO’s Common Stock, and the other half will be in non-qualified stock options. The value of, and

 

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the number of shares subject to, each such award shall be determined in a manner consistent with the generally applicable grant practices as applied by Parent prior to the date hereof (that is, the value and size of each restricted stock unit grant will be determined based on the fair market value of a share of the WABCO common stock on the grant date (the “Grant Date Value”) and of each stock option grant will be determined based on the Black-Scholes value of a stock option in respect of one share of the Common Stock, as determined based on the Grant Date Value of such Common Stock).

OTHER EQUITY COMPENSATION

In addition to these special one-time non-recurring grants, commencing in 2008, you will be eligible to receive annual awards in respect of WABCO’s Common Stock in such form or forms, in such amounts and subject to such terms and conditions, as shall be determined by the committee responsible for the administration of the WABCO Omnibus Incentive Plan.

SEVERANCE BENEFITS

In the event that your employment is terminated by us without Cause or by you for Good Reason (as each such term is defined in Appendix A), you will be entitled to receive the following severance benefits, which are in lieu of and not in addition to any statutory severance benefits that may otherwise be payable to you. If the statutory severance benefits to which you would otherwise be entitled are greater than the amounts described herein, you will receive the statutory severance benefits and no amounts shall be payable under this section. Otherwise, the statutory severance benefits payable to you will be treated as an offset against the amounts payable under this section, so that you will be entitled under this provision solely to the excess of the amounts described herein over the amount of such statutory severance benefits, if any. In all events, the amounts payable as severance under this section is subject to your executing a release of claims against WSW and its affiliated companies within 45 days of your termination of employment.

The gross severance benefits payable hereunder (prior to any offset for any statutory severance benefits payable) will include cash severance benefits in a single lump sum amount equal to twice the sum of ( i ) your then current annual base salary and ( ii ) your target annual incentive opportunity. You will also receive continued medical and life insurance coverage for a period of 24 months following such termination of employment, subject to earlier cessation if you receive comparable benefits from a future employer; and reimbursement for financial planning services up to a maximum amount of $5,000, so long as such request for reimbursement is submitted within one year of your termination of employment.

 

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You will also participate in the WABCO Change of Control Severance Plan (the “COC Severance Plan” ). If your employment is terminated under circumstances which entitle you to receive the severance benefits under the COC Severance Plan, you will receive the severance benefits available thereunder in lieu of (and not it addition to) the severance described above.

NONCOMPETITION

During your employment and during the two-year period following the termination of your employment for any reason (the “Restricted Period” ), you will not become associated with any entity, whether as a principal, partner, employee, consultant, shareholder (other than as a holder of not in excess of 1% of the outstanding voting shares of any publicly-traded company) or otherwise, that is actively engaged in the commercial vehicle supplier industry.

NONSOLICITATION

During your employment and the Restricted Period, you shall not (other than in the good faith performance of your duties for the Company) directly or indirectly induce any employee of the Company or any of its subsidiaries to terminate employment with such entity, and shall not directly or indirectly, either individually or as owner, agent, employee, consultant or otherwise, employ or offer employment to any person who is or was employed by the Company or any of its subsidiaries unless such person shall have ceased to be employed by such entity for a period of at least 6 months.

CONFIDENTIAL INFORMATION

Without the prior written consent of the Company, except to the extent required by an order of a court having competent jurisdiction or under subpoena from an appropriate government agency or in the ordinary course of business in the good faith performance of your duties hereunder, you will not disclose any trade secrets, customer lists, drawings, designs, information regarding product development, marketing plans, sales plans, manufacturing plans, management organization information, operating policies or manuals, business plans, financial records, packaging design or other financial, commercial, business or technical information relating to the Company or any of its subsidiaries or information designated as confidential or proprietary that the Company or any of its subsidiaries may receive belonging to suppliers, customers or others who do business with the Company or any of its subsidiaries (collectively, “Confidential Information” ) to any third person unless such Confidential Information has been previously disclosed to the public by the Company or is otherwise in the public domain (other than by reason of your breach of this covenant).

 

4


COMPANY PROPERTY

Promptly following your termination of employment, you shall return to the Company all property of the Company in your possession or under your control, including, but not limited to, all physical property (e.g., cars, credit cards, computers, phones, or other business equipment), and all Company data and information, whether in written, electronic or other form (including all copies thereof)); provided that you shall be permitted to retain your rolodex and similar address books, including those in electronic form.

GOODS AND SERVICES DIFFERENTIAL

When appropriate in terms of relative costs between residing in the United States and your then current location, WSW will pay a goods services differential to adjust your compensation to reflect such increased costs. Any such adjustment would be based on average expenditures by income group and family size as established by an independent research service selected by WSW. Therefore, it would not reflect your personal spending preferences. The need for any such adjustment will be reviewed from time to time and any adjustment payable may be increased or reduced to reflect significant changes in the relative costs used to determine such adjustment.

HOUSING ADJUSTMENT

WSW will pay on your behalf suitable living accommodations, including utilities and maintenance, in Brussels. Your above stated compensation will be adjusted downward to reflect a U.S. equivalent value for housing, as determined from time to time under our generally applicable administrative practices. Accordingly, the amount of any such reduction in your compensation may be modified, up or down, from time to time.

EDUCATION EXPENSE

WSW will also reimburse you for the reasonable costs of primary and secondary school education of your dependent children in Brussels. Reimbursement under this provision shall be limited to tuition fees, books and necessary supplies, and local transportation. English language instruction is eligible for reimbursement. Education costs for college and universities are not eligible for reimbursement hereunder.

 

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TRANSPORTATION

You will be provided with a suitable car in Brussels and will be reimbursed for normal operating and maintenance costs of such vehicle including insurance, registration and licensing.

INCOME TAX EQUALIZATION

WSW will pay your Belgian personal income tax liability on income received from WSW during your assignment. WSW will appoint a qualified independent accounting or tax preparation firm to prepare and file your income tax returns in Belgium related to the period of your services under this assignment.

In recognition of this obligation, the amount of your base salary, incentive payments (including with respect to any equity-based awards) and any goods and services differential will be reduced by an income tax differential adjustment (that is, a hypothetical tax), based on the estimated U.S. income tax for which you would have been liable in respect of such payment.

EMPLOYEE BENEFITS

As an employee of WSW, you are eligible to participate in the U.S. benefit plans and programs available to U.S. salaried employees of WABCO and its affiliated companies, including the WABCO 401 (k) plan and WABCO’s Supplemental Savings Plan. Under the current terms of the Supplemental Savings Plan, you will be entitled to be credited with an employer contribution equal to 9% of your eligible compensation (base salary and annual incentive plan bonus). In lieu of participation in the WABCO’s U.S. medical, dental and vision benefits, you will be covered by an approved private health insurance policy, of which you contribute 30% of the premium cost through after-tax payroll deduction. Other than as described in the preceding sentence, your participation in WABCO’s benefit plans and programs will be in accordance with and subject to the terms and conditions of the applicable plan or program.

PERQUISITES; VACATION; CAR POLICY

You shall be entitled to up to five weeks’ paid vacation annually and shall also be entitled to receive such perquisites as are generally provided to the Chief Executive Officer of WABCO in accordance with the then current policies and practices of WABCO, as they may be amended from time to time. You shall also be entitled to the use of a company car as provided to senior executives under the Company Car Policy in effect in Belgium headquarters.

 

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ANNUAL HOME LEAVE

Once each year (except for the year of repatriation), you and your family will be provided with one round-trip business class airfare to your home country. This transportation allowance is granted only in respect to travel to and from your home country and Belgium and cannot be accumulated from year to year. All vacation time is included in your annual leave, which is of five weeks’ duration. In addition, you will be reimbursed for home leave in the case of serious illness, injury or death of an immediate family member.

MEDICAL EMERGENCY

In the event of illness or accident involving any of you, your spouse or your children for which adequate medical care is not available in Brussels, you will be reimbursed for the cost of air transportation to the nearest city where adequate medical facilities are available.

REPATRIATION

If your employment is terminated by WSW other than for Cause or by you for Good Reason WSW will reimburse you for the reasonable cost of relocation to your home country in accordance with its otherwise applicable relocation policy for executives being repatriated to their home countries following an international assignment.

ENTIRE AGREEMENT

This Agreement constitutes the entire agreement between the parties hereto with respect to the matters referred to herein. There are no other agreements relating to the terms of your employment by WSW, oral or otherwise. There are no promises, representations, inducements or statements between the parties other than those that are expressly contained herein.

GOVERNING LAW

As an employee of WABCO Expats Inc., you will be subject to the personnel procedures and policies of WABCO Expats Inc. This assignment letter shall be governed by and interpreted and enforced in accordance with the laws of the State of New Jersey, without regard to its conflict of laws provisions and subject to the jurisdiction of the U.S. federal courts in the State of New Jersey.

 

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SEVERABILITY; REFORMATION.

In the event that one or more of the provisions of this Agreement shall become invalid, illegal or unenforceable in any respect, under Belgian law or otherwise, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby. In the event any of Paragraphs 8 or 9 are not enforceable in accordance with their terms, Employee and Employer agree that such Paragraph shall be reformed to make such Paragraph enforceable in a manner which provides the Employer the maximum rights permitted at law.

 

    WABCO EXPATS INC.  
       

LOGO

 
AGREED AND ACCEPTED:      

LOGO

     
JACQUES ESCULIER     Dated: July 27, 2007  

 

8


A TTACHMENT A

D EFINITIONS

Cause - means (i) your willful and continued failure substantially to perform your duties (other than any such failure resulting from incapacity due to reasonably documented physical or mental illness), after a demand for substantial performance is delivered to you, which specifically identifies the manner in which it is believed that you have not substantially performed your duties, (ii) conviction of, or plea of nolo contendere to, a felony, or (iii) the willful engaging by you in gross misconduct that is materially and demonstrably injurious to WSW and/or its affiliated companies (the “Company Group” ) or materially impairs your trustworthiness or effectiveness in the performance of your duties. For purposes hereof, no act, or failure to act, on your part shall be considered “willful” unless done, or omitted to be done, by you not in good faith and without reasonable belief that your action or omission was in the best interest of WSW and its affiliated companies. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board of Directors of WABCO or based upon the advice of counsel for WSW or any of its affiliated companies shall be conclusively presumed to be done, or omitted to be done, by you in good faith and in the best interest of the Company Group.

Good Reason - means any of the following:

(i) a material diminution in your authority, duties, responsibilities status or position(s) as an executive of the Company Group;

(ii) a relocation of your principal offices by at least 30 miles from your initial location under this assignment (other than in connection with repatriation);

(iii) a reduction by the Company Group in your base salary;

(iv) the taking of any action by the Company Group (including the elimination of a plan without providing substitutes therefor or the reduction of your awards thereunder) that would substantially diminish the aggregate projected value of your awards under the Company Group’s applicable incentive plans in which you were participating at the time of the taking of such action;

(v) the taking of any action by the Company Group that would substantially diminish the aggregate value of the benefits provided you under the Company Group’s applicable medical, health, accident, disability, life insurance, thrift and retirement plans in which you were participating at the time of the taking of such action; or

(vi) any purported termination by the Company Group of your employment that is not effected for Cause, provided that this shall not include any termination of employment pursuant to the Company Group’s applicable mandatory retirement policy for executive officers.

 

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Notwithstanding the foregoing, a termination for Good Reason shall not have occurred (a) with regard to the occurrence of the events described in subsections (iii), (iv) and (v) above prior to a Change of Control, if such reductions or actions are proportionate to the reductions or actions applicable to similarly situated executive officers of the Company Group pursuant to a cost savings plan or (b) unless you give the Company written notice that such event constitutes Good Reason within 90 days of first having knowledge of such event and the Company fails to cure the event within 30 days after receipt of such written notice.

 

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Exhibit 10.13

American Standard Europe

a Belgian private limited liability company

1789 Chaussée de Wavre, Box 15

Belgium, Brussels 1160

Telephone: 32-(0)2-663-01-20

Facsimile: 32-(0)2-675-43-42

Amendment to the Employment Contract of March 1, 2003

 

BETWEEN:

   The Belgian private limited liability company ‘American Standard Europe’ with Registered office at no. 1789 Chaussée de Wavre, Brussels 1160,
  

represented by Ms. Arielle Vander Perren, its Acting Vice-President Human Resources, and

called the ‘Employer,’ in the remainder of this instrument,

AND

   Mr. Ulrich Michel , who lives at no. 49 Rue Vilain XIV, 1000 Brussels, called the ‘Employee,’ in the remainder of this instrument,

HAVING FIRST STATED

 

 

that the Employee has been working for the Employer since March 3, 2003 and, until March 31, 2005, discharged the duties of CFO—Trane Commercial Systems, EMAIR;

 

 

that they have recognized that, since April 1, 2005, the Employee has been discharging the duties of CFO & VP Finance in the WABCO Division;

 

 

that effective with the spin off of the WABCO Holdings Inc. (“WABCO”) as a separate publicly traded company, the Employee shall become Chief Financial Officer of WABCO, and the parties therefore are concluding this Amendment to the Employment Contract of March 1, 2003, as amended March 1, 2005, in order to incorporate the terms and conditions of Employee’s new assignment;


HAVE AGREED AS FOLLOWS:

Article 1 Effective Date

These additional clauses apply effective with the spinoff of WABCO, expected to be July 31, 2007 (the “Effective Date”).

Article 2 Function

The parties have mutually agreed to change the function entrusted to the Employee under article 1 of the Employment Contract of March 1, 2003. Effective April 1, 2005, The Employee is entrusted with, and agrees to take on, the function of Chief Financial Officer—WABCO.

Article 3 Compensation

As from the Effective Date, the Employee’s monthly salary, fixed at USD 15,915 under article 5, sub-article 1, paragraph 1, of the Employment Contract of March 1, 2003, as amended, is increased to USD 29,166.67.

The Employee shall be eligible for participation in the WABCO Annual Incentive Plan (AIP) with an annual incentive target of 40% of base salary. The Employee shall participate in the WABCO Long Term Incentive Plan (LTIP) with a target of 40% of base salary. The actual amount payable to you as an annual or long-term incentive will be dependent upon the achievement of performance objectives established in accordance with the terms of such annual or long-term incentive plan. Accordingly, depending on such performance, the actual amount payable to you in respect of such opportunities (including any equity compensation awards provided in respect of your employment) may provide you with actual compensation that is less than, greater than or equal to the target opportunities or other values specified above. Any incentive compensation award will be in such form or forms, and subject to such terms and conditions, as shall be determined by the committee responsible for the administration of the applicable plan, policy or program.

No amounts payable or awards made in respect of incentive compensation, whether payable in cash or stock, or in respect of the Founders grant described below, shall be deemed to be part of your basic compensation or otherwise treated as an entitlement

 

2


under the provisions of any applicable law. Such amounts are discretionary awards, contingent on performance criteria (including stock price) and are made solely as an inducement for you to assist in the achievement of the performance objectives related thereto.

Article 4 Founders’ Grant

On the Effective Date, you will be granted a “founders” award having an aggregate value of $275,000. This special, non-recurring award shall be granted under the WABCO Omnibus Incentive Plan and shall be subject to the terms and conditions of the WABCO Omnibus Incentive Plan (including with respect to vesting and/or the exercisability of each such award). One half of the value of each such award will be in the form of restricted stock units, which represent the right to receive, subject to the terms and conditions of such award, a corresponding number of shares of WABCO’s Common Stock, and the other half will be in non-qualified stock options. The value of, and the number of shares subject to, each such award shall be determined in a manner consistent with the generally applicable grant practices as applied by Parent prior to the date hereof (that is, the value and size of each restricted stock unit grant will be determined based on the fair market value of a share of the WABCO common stock on the grant date (the “Grant Date Value”) and of each stock option grant will be determined based on the Black-Scholes value of a stock option in respect of one share of the Common Stock, as determined based on the Grant Date Value of such Common Stock).

Article 5 Other Equity Awards

In addition to the special one-time non-recurring grant, commencing in 2008, you will be eligible to receive annual awards in respect of WABCO’s Common Stock in such form or forms, in such amounts and subject to such terms and conditions, as shall be determined at the complete discretion of the committee responsible for the administration of the WABCO Omnibus Incentive Plan.


Article 6 Severance

In the event that your employment is terminated by us without Cause or by you for Good Reason (as each such term is defined in Appendix A), you will be entitled to receive the following severance benefits, which are in lieu of and not in addition to any statutory severance benefits that may otherwise be payable to you. If the statutory severance benefits to which you would otherwise be entitled are greater than the amounts described herein, you will receive the statutory severance benefits and no amounts shall be payable under this section. Otherwise, the statutory severance benefits payable to you will be treated as an offset against the amounts payable under this section, so that you will be entitled under this provision solely to the excess of the amounts described herein over the amount of such statutory severance benefits, if any. In all events, the amounts payable as severance under this section is subject to your executing a release of claims against the Employer and its affiliated companies within 45 days of your termination of employment.

The gross severance benefits payable hereunder (prior to any offset for any statutory severance benefits payable) will include cash severance benefits in a single lump sum amount equal to one and one half times the sum of ( i ) your then current annual base salary and ( ii ) your target annual incentive opportunity. You will also receive continued medical and life insurance coverage for a period of 18 months following such termination of employment, subject to earlier cessation if you receive comparable benefits from a future employer; and reimbursement for financial planning services up to a maximum amount of $5,000, so long as such request for reimbursement is submitted within one year of your termination of employment.

You will also participate in the WABCO Change of Control Severance Plan (the “COC Severance Plan” ). If your employment is terminated under circumstances which entitle you to receive the severance benefits under the COC Severance Plan, you will receive the severance benefits available thereunder in lieu of (and not it addition to) the severance described above.

Article 7 Noncompetition

During your employment and during the one-year period following the termination of your employment for any reason (the “Restricted Period” ), you will not become

 

4


associated with any entity, whether as a principal, partner, employee, consultant, shareholder (other than as a holder of not in excess of 1% of the outstanding voting shares of any publicly-traded company) or otherwise, that is actively engaged in any business which is in competition in any geographic area with the Employer’s business.

Article 8 Nonsolicitation

During your employment and the Restricted Period, you shall not (other than in the good faith performance of your duties for the Employer) directly or indirectly induce any employee of the Employer or any of its affiliates to terminate employment with such entity, and shall not directly or indirectly, either individually or as owner, agent, employee, consultant or otherwise, employ or offer employment to any person who is or was employed by the Employer any of its affiliates unless such person shall have ceased to be employed by such entity for a period of at least 6 months.

Article 9 Confidential Information

Without the prior written consent of the Employer, except to the extent required by an order of a court having competent jurisdiction or under subpoena from an appropriate government agency or in the ordinary course of business in the good faith performance of your duties hereunder, you will not disclose any trade secrets, customer lists, drawings, designs, information regarding product development, marketing plans, sales plans, manufacturing plans, management organization information, operating policies or manuals, business plans, financial records, packaging design or other financial, commercial, business or technical information relating to the Employer or any of its subsidiaries or information designated as confidential or proprietary that the Employer or any of its affiliates may receive belonging to suppliers, customers or others who do business with the Employer or any of its affiliates (collectively, “Confidential Information” ) to any third person unless such Confidential Information has been previously disclosed to the public by the Employer or is otherwise in the public domain (other than by reason of your breach of this covenant).

 

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Article 10 Maintaining of the Other Provisions of the Employment Contract

The other provisions that are contained in the Employment Contract of March 1, 2003 and that are not altered as a result of the clauses set forth in this instrument continue to be fully applicable.

Article 11 Severability; Reformation.

In the event that one or more of the provisions of this Agreement shall become invalid, illegal or unenforceable in any respect, under Belgian law or otherwise, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby. In the event any of Paragraphs 8 or 9 are not enforceable in accordance with their terms, Employee and Employer agree that such Paragraph shall be reformed to make such Paragraph enforceable in a manner which provides the Employer the maximum rights permitted at law.

*****

Executed at Brussels on July 27, 2007 in two original counterparts, of which the Employer and The Employee each recognized having received one.

 

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The Employee     For, and on behalf of, the Employer,
   

Arielle Vander Perren,

Acting Vice-President Human Resources

    WABCO

(Signature preceded by the handwritten Words: ‘read and approved’)

 

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Attachment A

Definitions

Cause —means (i) your willful and continued failure substantially to perform your duties (other than any such failure resulting from incapacity due to reasonably documented physical or mental illness), after a demand for substantial performance is delivered to you, which specifically identifies the manner in which it is believed that you have not substantially performed your duties, (ii) conviction of, or plea of nolo contendere to, a felony, or (iii) the willful engaging by you in gross misconduct that is materially and demonstrably injurious to Employer and/or its affiliated companies (the “Company Group” ) or materially impairs your trustworthiness or effectiveness in the performance of your duties. For purposes hereof, no act, or failure to act, on your part shall be considered “willful” unless done, or omitted to be done, by you not in good faith and without reasonable belief that your action or omission was in the best interest of WSW and its affiliated companies. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board of Directors of WABCO Holdings Inc. or based upon the advice of counsel for Employer or any of its affiliated companies shall be conclusively presumed to be done, or omitted to be done, by you in good faith and in the best interest of the Company Group.

Good Reason —means any of the following:

(i) a material diminution in your authority, duties, responsibilities status or position(s) as an executive of the Company Group;

(ii) a relocation of your principal offices by at least 30 miles from your initial location under this assignment (other than in connection with repatriation);

(iii) a reduction by the Company Group in your base salary;

(iv) the taking of any action by the Company Group (including the elimination of a plan without providing substitutes therefor or the reduction of your awards thereunder) that would substantially diminish the aggregate projected value of your awards under the Company Group’s applicable incentive plans in which you were participating at the time of the taking of such action;

 

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(v) the taking of any action by the Company Group that would substantially diminish the aggregate value of the benefits provided you under the Company Group’s applicable medical, health, accident, disability, life insurance, thrift and retirement plans in which you were participating at the time of the taking of such action; or

(vi) any purported termination by the Company Group of your employment that is not effected for Cause, provided that this shall not include any termination of employment pursuant to the Company Group’s applicable mandatory retirement policy for executive officers.

Notwithstanding the foregoing, a termination for Good Reason shall not have occurred (a) with regard to the occurrence of the events described in subsections (iii), (iv) and (v) above prior to a Change of Control, if such reductions or actions are proportionate to the reductions or actions applicable to similarly situated executive officers of the Company Group pursuant to a cost savings plan or (b) unless you give the Company written notice that such event constitutes Good Reason within 90 days of first having knowledge of such event and the Company fails to cure the event within 30 days after receipt of such written notice.

 

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Exhibit 10.14

WABCO Expats Inc.

June 28, 2007

Mr. Kevin Tarrant

C/O American Standard Inc.

One Centennial Avenue

Piscataway, NJ 08855

Dear Kevin:

This is to confirm your international assignment to Belgium as Sr. Vice President, Human Resources, WABCO, reporting to Jacques Esculier. In this capacity, you will be an employee of WABCO Expats Inc. (WSW) and will be assigned to American Standard Europe BVBA. Your assignment will begin on July 25, 2007 and is subject to the necessary work permit and entry visa being obtainable.

You will be located in Brussels, Belgium.

Effective with the date of your transfer to Belgium, your compensation from WSW will include a base salary of $325,000 USD. We will review your salary from time to time and you may receive adjustments in accordance with salary administration practices in the U.S. This is contingent upon final approval by the Management Development and Compensation Committee (MDC) of American Standard’s Board of Directors.

INTERNATIONAL ASSIGNMENT

Enclosed with this letter you will find a copy of the U.S. international assignment policy elements, the tax equalization policy, a glossary of terms and a balance sheet providing you with assignment related allowances. Except to the extent otherwise provided in this letter, all provisions of these policies shall apply to your assignment. The policies are, however, subject to change at management’s discretion.

As agreed you will not be subject to the car norm. The housing norm will be waived while your spouse remains in your U.S. home and you can provide proof of housing costs.

We have arranged with a tax provider for the preparation and filing of your income tax returns in the U.S. and Belgium during your assignment. A representative from the tax provider will contact you shortly to provide you with a tax orientation.

EMPLOYEE BENEFITS

As an employee of Wabco Expats Inc., effective August 1, 2007, you will be a participant in WABCO’s U.S. benefit plans for salaried employees as they are made available from time to time, subject to plan eligibility rules. Plan details are included in the summary plan descriptions and other material that you will receive. These currently consist of: medical, dental, vision, group term life insurance and a 401(k) plan and, should you choose to participate in them, long term disability insurance, flexible spending accounts (medical and dependent care), and supplemental life plans.

 

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The company also makes certain voluntary benefit programs available through a third party provider. For the period between July 25, 2007 and August 1, 2007 you will participate in American Standard’s U.S. benefit plans.

During your assignment, if applicable, WSW will make employer contributions to U.S. Social Security. Employee contributions will be limited to what you would have paid on your base salary, bonuses, stock options, and mobility and other premiums in the U.S.

As an employee of WABCO Expats Inc., you will be subject to the personnel procedures and policies of WABCO Holdings Inc. except as otherwise modified herein, WSW reserves the right to change the terms and conditions of your assignment at any time. WSW maintains an employment-at-will policy, which means that you or WSW can terminate your employment with or without cause, at any time and for any reason. There is nothing in this letter that is intended to constitute a contract of employment for a guaranteed period of time. If any term or provision of this letter or the referenced policies and procedures is held to be invalid or unenforceable in any jurisdiction, that term or provision shall be ineffective to the extent of its invalidity or unenforceability; the remaining terms and provisions shall continue in full force and effect. This letter shall be governed by and interpreted and enforced in accordance with the laws of the State of New Jersey, without regard to its conflict of laws provisions and jurisdiction is subject to the federal courts in the State of New Jersey.

Should you require further information or clarification on any of the above, please contact me. Otherwise, please sign, the enclosed duplicate copy and return it to my attention, Your signature on this letter indicates that you have read and agreed to the terms and conditions of this letter, as well as the international assignment policy and the tax equalization policy as defined in the attached documents.

 

    Very truly yours,
    WABCO Expats Inc.
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Arielle VanderPerren

Vice President, Wabco Expats Inc.

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7-1-07

Kevin Tarrant     Date
Enclosures    

 

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Exhibit 10.15

World Standard Ltd.

April 6, 2001

Mr. Nikhil Varty

c/o American Standard

1 Centennial Avenue

Piscataway, NJ 08855

Dear Nik:

This is to confirm your expatriate assignment to Belgium as CFO for WABCO. In this capacity, you will be an employee of World Standard Ltd. (WORLD). Your assignment will begin on June 1, 2001 and is subject to the necessary work permit and entry visa being obtainable.

LOCATION

You will be located in Brussels, Belgium.

SALARY COMPENSATION

Effective with the date of your transfer to Brussels, your total expatriate compensation from WORLD will include a base salary of US$ 180,000. This is in proper relationship to and competitive with the salaries paid in your base location (U.S.) for work of a similar nature. We will review your salary from time to time and you may receive adjustments in accordance with salary administration practices in the U.S.

INCENTIVE COMPENSATION

You will be eligible for incentive compensation under the Corporate Annual Incentive plan.

MOBILITY PREMIUM

At the time you commence the assignment to Brussels, we will make a lump sum payment of 15% of your annual base salary, as an added incentive.


ASSIGNMENT COMPLETION BONUS

Upon completion of your assignment, you will be eligible for a lump sum Assignment Completion Bonus. The amount of the bonus will be 5% of the base salary in effect at that time for each year of the assignment. This bonus is payable at the time of repatriation.

GOODS AND SERVICES DIFFERENTIAL

From the effective date of your relocation to Brussels, WORLD will pay, when appropriate in terms of relative costs between the U.S. and Brussels, a goods and services differential. This is to adjust your compensation for such increased costs. You should note that this allowance is based on average expenditures by income group and family size as established by an independent research service to which the Company subscribes. It therefore does not necessarily reflect your personal spending preference. It is reviewed from time to time and any significant change in the relative costs may result in a change (up or down) in the amount paid.

HOUSING ADJUSTMENT

WORLD will pay on your behalf the cost of suitable living accommodations in Brussels, including utilities and maintenance. This housing allowance, will be added to your international assignment compensation and paid on a monthly basis. Your compensation from WORLD will therefore be adjusted by a negative amount equal to the U.S. norm for the cost of housing at your income level. At the present time, this U.S. housing norm is US$ 2,278.32 per month, including utilities. It is subject to change in line with changes in U.S. housing costs.

EDUCATION EXPENSE

During your assignment, you will be reimbursed for reasonable costs of education of dependent children in Brussels. Reimbursement under this provision is limited to tuition fees, books, and necessary supplies and local transportation. Please note that education costs for pre-school, college, and university level education are not reimbursed.

INCOME TAX EQUALIZATION

The total of your base salary and goods and services differential will be reduced by an income tax adjustment (Hypothetical tax). This is an internal adjustment. The amount will equal the estimated U.S. income tax (federal & state) you would have been liable for on your base salary in the U.S.

 

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The company will pay your Belgian personal income tax liability on income received from WORLD during your assignment.

In this connection, we have arranged with Ernst & Young LLP for the preparation and filing of your income tax returns in the U.S. and Belgium during your assignment.

Ernst & Young will calculate a final Theoretical tax (stay at home tax) after the end of the year. It is based on the Company’s report of cash compensation actually paid and imputed income. It excludes overseas allowances, premiums and differentials for company provided items such as housing and goods and services living costs. It is also based on the employee’s report to Ernst & Young of personal source income (non-company income subject to US income tax) and deductions allowed. This results in a more precise determination of the amount of income tax the expatriate would have paid in the home country.

Ernst & Young will compare the theoretical tax with the hypothetical (plus any actual tax withheld). Any difference between the two will result in either final reimbursement to the expatriate of the excess, or a balance due from the expatriate to American Standard for the shortfall.

EMPLOYEE BENEFITS

As an employee of WORLD, you will be a participant in American Standard’s U.S. benefit plans for salaried employees. These are provided in detail in the benefits manual we have provided for your reference. These consist of a choice of medical insurance plans, dental plan, group term life insurance, long term disability insurance, Savings Plan, Employee Stock Purchase Plan and Employee Stock Ownership Plan (ESOP). During your assignment, WORLD will continue to make both employer and employee contributions to U.S. Social Security. Employee contributions will be limited to what you would have paid on your base salary, mobility premium and assignment completion bonus in the U.S.

ANNUAL HOME LEAVE

Once a year, except in the year of repatriation, you and your eligible dependents living with you in Brussels will each be provided with round trip business class airfare to the U.S. This transportation allowance is only granted in respect to travel to and from the U.S. and cannot be accumulated from year to year. All vacation time is included in your annual leave, which is of four weeks’ duration. In addition, you and your eligible dependents will be reimbursed for home leave in case of serious illness, injury or death of an immediate family member.

 

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TRANSPORTATION

You will be provided with a suitable car in Brussels and will be reimbursed for normal operating and maintenance costs of the vehicle including insurance, registration, and licensing.

MEDICAL EMERGENCY

In the event of illness or accident for which adequate medical care is not available in Brussels, you will be reimbursed for the cost of air transportation to the nearest city where adequate medical facilities are available.

REPATRIATION

At the completion of your assignment in Brussels, or in the event of termination, the Company will reimburse you for the cost of relocation to the home base in the United States or to a new assignment location. No payment for such repatriation expenses is due from WORLD if a suitable position with the Company is offered to you and you accept employment with another organization. The suitability of a position will be determined by the Corporate Legal and Corporate Human Resources Departments.

RELOCATION

To assist you in relocating to Brussels, WORLD will:

 

 

provide you with one way business class air transportation to Brussels.

 

 

reimburse you for reasonable living expenses and accommodation upon arrival in Brussels until suitable permanent living accommodations are found up to a maximum of one months’ duration.

 

 

arrange and pay for the cost of packing, shipping, insurance and unpacking at the destination of reasonable household and personal effects with the exception of automobiles and large items requiring extraordinary handling and transportation.

 

 

where appropriate, arrange and pay, during your assignment, for the reasonable storage of any household and personal effects in the U.S.

 

 

grant you an allowance of one month’s base salary (limit $10,000) to cover miscellaneous expenses in connection with your relocation.

 

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reimburse you for one-half of the purchase price of major electrical appliances replacing similar items disposed of or stored in the U.S. due to the difference in voltage between the U.S. and Brussels. Please note that reimbursement under this provision is subject to a maximum of US$ 3,000.

 

 

reimburse you for any expenses incurred in securing the necessary visa and immigration documentation.

 

 

give consideration to reimbursing you for any other reasonable expense directly arising out of your relocation and not adequately provided for in any of the above provisions.

As an employee of World Standard Ltd., you will be subject to the personnel procedures and policies of American Standard Inc. except as otherwise modified herein.

Should you require further information or clarification on any of the above, please let me know. Otherwise, I would appreciate it if you would acknowledge receipt of this letter by signing the enclosed duplicate copy of this letter and returning it to my attention at your earliest convenience.

 

    Very truly yours,
    World Standard Ltd.
   
   

Barbara Ann Sellinger

Vice President

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4/15/01

Nikhil Varty     Date

 

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Exhibit 10.16

World Standard Ltd.

February 1, 2006

Nikhil Varty

C/O American Standard

One Centennial Avenue

Piscataway, New Jersey 08805

Dear Nikhil,

As you know, we have made various changes to the U.S. International Assignment Policy in 2005. This letter will inform you of the terms of your assignment, effective January 1, 2006, through the balance of your assignment.

As a reminder, the new policy eliminates the foreign-service premium, institutes a car norm and makes adjustments to the goods and services and hardship allowances to correspond to current published tables. For your reference, the attached personalized transition statement will provide a comparison of provisions under both the current and new policies.

Effective January 1, 2006, you will continue to:

 

   

Be assigned in Belgium as Vice President, Compression and Braking, WABCO

 

   

Be an employee of World Standard Ltd. (WORLD)

 

   

Be assigned to American Standard Europe BVBA

 

   

Be located in Brussels, Belgium

 

   

Receive tax preparation and filing of your income tax returns in the United States and Belgium provided by a company selected tax provider.

 

   

Participate in American Standard’s U.S. benefit plans for salaried employees as an employee of WORLD, subject to plan eligibility rules.

In addition, we will continue to review your base salary from time to time and you may receive adjustments in accordance with salary administration practices in your home country or the U.S.

INTERNATIONAL ASSIGNMENT

Enclosed with this letter you will find a copy of the U.S. international assignment policy, the U.S tax equalization policy, a glossary of terms and an individualized Policy Transition Statement. Please review the materials enclosed to ensure you understand the new policies and how they impact your current assignment.


As an employee of World Standard Ltd., you will be subject to the personnel procedures and policies of American Standard Inc., except as otherwise modified herein. WORLD reserves the right to change the terms and conditions of your assignment at any time. WORLD maintains an employment-at-will policy, which means that you or WORLD can terminate your employment with or without cause, at any time and for any reason. There is nothing in this letter that is intended to constitute a contract of employment for a guaranteed period of time.

Should you require further information or clarification on any of the above, please contact your HR leader or Laura Kasser in Corporate Compensation (lkasser@americanstandard.com). Otherwise, please sign the enclosed duplicate copy and return it to my attention. Your signature on this letter indicates that you have read and understood the terms and conditions of the international assignment policy, the tax equalization policy, the glossary of terms, and your Policy Transition Statement as defined in the attached documents.

 

Very truly yours,

World Standard Ltd.

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Noreen Farrell

Director, Compensation

 

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Nikhil M. Varty

 

2/1/2006.

  (February 1, 2006)

(Name)

  Date  

Enclosure


Exhibit 10.17

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C ONTRACT OF E MPLOYMENT

“Litteral translation of the official and original French version of the Belgian employment contract”

 

Between

   AMERICAN STANDARD EUROPE BVBA with its registered office in B-1160 Brussels Chaussée de Wavre 1789, represented by Mrs. Arielle Vander Perren, Director Compensation & Benefits Europe and Mr. Joerg Baerbock, Vice President Human Resources Wabco,
   Hereafter named « the company », the first party,

And

   Mr. Jean-Christophe Figueroa
  

Domiciled at 14 rue baudelaire, F - 78960 Voisins le Bretonneux

Date of birth: 0l-May-1963

Nationality: French

   Hereafter named « the employee », the second party,

A contract of employment is concluded for an indefinite period under the following terms:

Article 1. Function

AMERICAN STANDARD EUROPE BVBA anticipates the employee to commence employment effective April 1, 2005. It is recognized that under circumstances that require the employee to remain with his current employer through mid-July 2005, the actual start date may be as late as May 16, 2005. The employee will hold the position of Segment Leader, Vehicle Dynamics & Controls, or other functions corresponding to his abilities.

In this capacity, the employee’s duties and responsibilities shall include those tasks set out in the attached job description, which forms an integral part of this agreement, it being understood however that this job description is under no circumstances limited or comprehensive.

The employee’s main place of work shall be the company’s head offices in Auderghem. However, the employee may be required to travel both within Belgium and abroad, perhaps even on a regular basis, depending on the needs of the department and on the exact tasks with which the employee is entrusted by the company. Furthermore, the company reserves the right

 

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to change the employee’s place of work unilaterally to any other place within the territory of the Kingdom of Belgium. The employee accepts the above. Moreover, the company shall be entitled to request that the employee accepts a long-term posting or even a permanent transfer to the premises of another of the group’s members outside the Kingdom of Belgium depending on the needs of the group of which the company is a member. Any such transfers would necessarily be preceded by negotiations between the parties concerned on the financial conditions of the transfer in question.

The company belongs to the Commission paritaire 218. The terms and conditions of this contract and of the position held are submitted to the company rules. The employee acknowledges having been aware of these rules, which are part of this contract.

Article 2. Compensation

The monthly gross salary of the employee is fixed at 17,959.77 € (250,000 €/year). The employee will also be entitled to a 13 th month prorated and a bonus vacation of 92% of the gross salary.

The employee’s salary shall be linked to the fluctuation of the applicable index and be increased in accordance with the applicable collective labor agreements of the commission paritaire of the company.

The employee will participate in the Corporate Annual Incentive Plan (AIP) and will therefore be eligible to receive an annual cash bonus at target equivalent to 35% of his annual gross salary, depending on personal and company performance. The AIP related to the 2005 performance will be guaranteed at no less than 75% on a full year participation basis.

The employee will participate in the Corporate Long-Term Incentive Plan (LTIP) with a target of 30% of the gross annual salary. LTIP performance cycles run three years and customarily pay out in the first quarter following the end of the cycle. However, the employee will phase in at a prorated target in each of the first three years—50% in 2005, 50% in 2006, 75% in 2007. The employee is guaranteed a minimum of 75% of the 50% target for the 2005 payout. Actual awards are based on financial results in future years.

The employee will receive a sign-on bonus equal to 50,000 € gross, upon commencement of employment. If the employee terminates his employment, for any reason during the initial 12-month period, he will be required to pay back 100% of the 50,000 Euro sign-on stipend to American Standard.

In addition, the employee will receive stock options of 5,000 shares of American Standard common stock, with a grant price equal to the fair market value of a share of such a stock (determined in accordance with the terms of the American Standard Omnibus Plan) on the

 

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day the employee commences employment. This does not constitute a commitment for a Stock Option award or the amount of such award for any period other than the one addressed. Stock Options awarded in Belgium are taxable at the time of the stock options grant.

Article 3. Relocation

The employee is eligible for a yearly net housing allowance equal to 38,400 € starting from the moment he relocates to Brussels. This allowance will be paid in 12 equal installments.

The jobholder is entitled to a lump sum gross relocation allowance equal to one month gross salary that will be paid together with the salary of the first month of employment in Belgium.

The company will bear the cost, including taxes and duties, of bringing the employee’s furniture and personal belongings to Brussels. The company does not pay for the transport of vehicles.

The company will provide a relocation service package through a relocation agent chosen by the company.

Once a year, except in the year of repatriation, the employee and dependent members of his family living with the employee in Brussels will be provided with one business class airfare to Mexico. This transportation allowance is only granted in respect to travel to and from Mexico and cannot be accumulated from year to year. All vacation time is included in the annual leave, which is of five weeks’ duration. In addition, the employee will be reimbursed for home leave in case of serious illness, injury or death of an immediate family member.

The employer will provide educational assistance to the employee for children in grades K to 12 (or up to end of secondary school). Schooling expenses typically include: fees, tuition, books, materials and local transportation (if needed).

Article 4. Payment

In mutual agreement, the salary shall be paid monthly by bank credit into the account number of the employee after deduction of all legal and allowed contractual withholdings.

Article 5. Bonus

Any bonuses of any kind that the company may voluntarily grant shall not be considered as a part of the agreed salary and cannot create a right to amend for subsequent years, for the calculation of a termination indemnity or for the calculation of vacation bonus.

 

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Article 6. Company Car

A company car (Volvo XC90 SUV or its equivalent), will be provided to the employee. The car running costs i.e. gasoline, taxes, insurance and maintenance will be borne by the company. The availability of a company car is considered a benefit in kind and will be taxed accordingly.

The employee may use the company car also for private use in accordance with the company’s car policy. For the private use of the car, an annual taxable benefit in kind shall be attributed based on the private mileage and the horsepower of the car.

The employee commits himself to use the company vehicle with all necessary care. He will ensure regular and proper servicing of the car and use it according to the instructions of the manufacturer.

The employee will bear all penal consequences of offences committed during the use of the company car.

In the event of use of the company car apart from the execution of the present employment contract, the employee is subject to the provisions of common right related to civil liability.

The company particularly highlights the strict attitude he will adopt in relation to the use of the company vehicle under the influence of alcohol or in a state of intoxication. Furthermore, the personal liability of the employee and the above-mentioned violations can lead to breach of contract on the ground of serious fault, without prejudice of the appreciation of the fact by court.

Article 7. Expatriate Tax Regime

The company and the employee will apply for the special tax regime for foreign executives in Belgium in accordance with the Belgian Administrative Circular Ci.RH 624/325.294 of August 8, 1983. The employee acknowledges that, if the application file is approved by the competent Belgian tax service, he becomes subject to tax in Belgium as a non-resident as of the original start date of the assignment (see article 1). The company will pay the costs related to the fiscal support linked to this status.

The employee agrees to cooperate with the company and the firm of tax Consultants appointed by the company for the preparation of his Belgian tax return and to carefully keep supporting documents with respect to the days spent outside Belgium for business purposes, substantiating his presence outside Belgium, as well as the business character of those trips.

 

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Article 8. Travel expenses

The company shall reimburse all costs that the employee will incur in the execution of this agreement, to the extent that they are reasonable and vouched by appropriate documents.

Article 9. Vacation

The employee is entitled to five weeks of annual vacation; starting as of the first year of employment. The dates of these holidays will be fixed each year by common consent between the employee and the company.

Article 10. Insurances

The employee shall participate in the company insurance schemes providing pension and life insurance, disability and health care insurance as far as the insurance company accepts the file and the necessary formalities were carried out by the employee.

Any personal contribution due by the employee in this respect shall be deducted from his monthly net salary. The terms and conditions of the plans shall be provided to the employee in a separate document. The company reserves the right to amend the terms and conditions of any benefit plan at any time.

Article 11. Inability to work

In case of inability to work, in case of illness or accident, the contract is suspended in compliance with the provisions of article 31 of the law governing employment contracts.

The employee cannot refuse to see a doctor appointed and paid by the company, or to have himself examined to verify his incapacity to work.

Article 12. Health and Safety

To ensure the health and safety at work environment, the employee must comply with all safety precautions related to his activities.

 

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Article 13. Confidentiality

The employee takes note that all drawings, formulae, specifications, reports, minutes, instruction books or manuals concerning the activities of the company, its production methods, technical processes and equipments are deemed confidential.

In compliance with article 17 of the law on contracts of employment, both during the contract and after its termination, without a time limit, the employee undertakes not to divulge or reveal any business or manufacturing secrets, nor any secret matter of a personal or confidential nature that may have come to his notice in the course of his professional activities. He further undertakes neither to commit nor to cooperate in any act of unfair competition with his company. Any clear infringement of this undertaking will be considered to be a serious ground sufficient to terminate the contract, without neither notice nor compensation indemnity for the employee, and without prejudice to other damages that might be claimed by the company.

At the end of the contract the employee will give back to the company any confidential documents he may have or has at his disposal, as well as any existing copies of it.

Article 14. Intellectual Rights

All industrial property rights, authors, discovery, contracts shall become and remain the sole and exclusive property of the company without any time or territory limit.

Only the company has the capacity to establish in which conditions those rights will be carried on. The company is not responsible for any indemnity payment as part of compensation.

The employee shall promptly disclose in writing to AMERICAN STANDARD EUROPE BVBA:

 

   

if during the term of this contract, a discovery arises which is not submitted to the present clause;

 

   

or if during the 12 months following the termination of this contract the employee makes a discovery in relation directly or indirectly to his previous activities with AMERICAN STANDARD EUROPE BVBA.

Article 15. Conflict of Interest

The employee agrees to devote his entire time and attention, exclusively and conscientiously to the business of the company and to abide by the regulations, which are in force within the company. The employee shall not be engaged in any other remunerated activity, unless with the prior written approval of the company.

 

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The employee will take extreme care that he, either through his own actions or through the actions of a person living in the same house, will not come into a position with regard to the company which may compromise or prejudice the interests or the reputation of the company.

Article 16. Use of electronic equipment

Electronic material shall be put at the disposal of the employee in order to enable the proper performance of his duties and responsibilities under this agreement.

This material will be exclusively destined to professional use and within the limits of the working relationship between parties.

This agreement and the work regulations govern the use of this material. The employee agrees to comply at all times with the company’s procedures and guidelines related to the use of Internet and e-mail as mentioned in these documents.

Article 17. Severance & Termination

To allay the employee’s concerns regarding termination of employment: if the employment is involuntarily terminated within the first twelve months of the employee’s commencement date for any other reason than Cause*, the employee will be provided with severance equal to one year’s annual base pay in effect at such time.

After the first year of employment, severance pay equal to the highest of the following possibilities will apply:

 

1) one year’s annual base pay in affect at such time or

 

2) the Claeys formula**; in it’s updated version at that time.

* Cause, as referenced herein, means gross inattention to or neglect of, or gross negligence or incompetence in the performance of, duties properly and reasonably assigned to the employee; or willful or intentional inflicting of substantial injury upon the company; or material waste or misuse of company assets; or embezzlement, dishonesty, fraud, or other acts of criminal nature; or refusal to follow reasonable directions properly given to the employee by company representatives.
** The CLayes formula, is based on age, seniority and level of remuneration. The receipt of termination benefits is conditioned upon the execution of a complete release and waiver agreement, which the company will provide.

 

Page 7 of 8


LOGO

 

Article 18. Obligations of the employee

The employee undertakes to devote all his efforts and his working time to the advantage of AMERICAN STANDARD EUROPE BVBA, not to accept any external employment or to have any professional activity outside of the company for the duration of this contract, without prior written agreement from the company.

Article 19. Work regulations

The employee acknowledges having received a copy of the work regulations and of the Code of Conduct and Ethics of the company, which are part of this contract, both as regards the obligatory and the optional stipulations, and accepts without reservation the clauses and conditions thereof, without prejudice to the application of the prescription of applicable laws and regulations.

Article 20. Disputes

All disputes that may arise concerning this contract will be judged by the competent law courts of Brussels; Belgian law governs the present contract.

Article 21. Acknowledgement of receipt

The employee acknowledges having received a copy of this contract. To be valid this contract needs to be signed in French.

Both parties commit to establish and sign very rapidly the French version of their employment contract.

Finalized and agreed in Brussels in duplicate on January 21, 2005.

 

The employee

  For the company ,

LOGO

  LOGO

Jean Christophe Figueroa

  Arielle Vander Perren

Signature preceded by the

  Director Compensation & Benefits Europe

hand-written words: « Read and approved »

 
  Joerg Baerbock
  Vice President Human Resources Wabco

 

Page 8 of 8


Exhibit 10.18

 

AMERICAN STANDARD EUROPE BVBA    Chaussée de Wavre 1789 box 15
   B - 1160 Brussels - Belgium
   Tel: +32 (0)2 663 98 00
   Fax: +32 (0)2 675 43 42

Mr . Christian Wiehen

WABCO Vehicle Control Systems

Chaussée de Wavre 1789

B-1160 Brussels

Belgium

6 December 2002

Dear Mr. Wiehen :

This is to confirm terms and conditions of your expatriate assignment to Brussels as “Vice President Product Marketing and Development” WABCO Vehicle Control Systems. In this capacity you will be an employee of American Standard Europe BVBA, in Brussels. The WABCO Seniority will be recognized.

The terms and conditions become effective on January 1, 2003 and will apply for the duration of your assignment, expected to be a minimum of three years, or until you are advised of any change.

LOCATION

You will be located in Brussels, Belgium.

SALARY COMPENSATION

Your base salary will be 190.580 €. This salary will be reviewed periodically. It is taxable in Belgium.

HOUSING ALLOWANCE

As long as you maintain two households—one in Belgium and one in Germany—American Standard Europe BVBA will pay a temporary housing allowance of 1.000 € per month. This arrangement will be reviewed after 2 years.

EMPLOYEE BENEFITS

During the assignment in Brussels you will remain a participant in the German social security System and are entitled to the benefits of the company pension agreement between yourself and WABCO GmbH & Co. OHG. In this respect WABCO GmbH & Co. OHG will pay the relevant premiums (employer portion) to the German State Pension, Health Insurance, Unemployment Insurance and Care Insurance as long as the Belgian government authorities exempt you and American Standard Europe BVBA from paying contributions to the Belgian Social Security System. A change between the Social Security Systems will not lead to any disadvantages. You and your family will not be covered by American Standard Benefits Plans as far as medical and dental care is concerned. WABCO GmbH & Co. OHG will continue to reimburse you for the costs of your private home telephone line in Germany.

RGB 653.750

TVA BE 475.956.135

ABN AMRO 720.5404624.87


AMERICAN STANDARD EUROPE BVBA    Chaussée de Wavre 1789 box 15
   B - 1160 Brussels - Belgium
   Tel: +32 (0)2 663 98 00
   Fax: +32 (0)2 675 43 42

TRANSPORTATION

During the assignment in Brussels, a company car will be available to you that can also be utilized for private use. You will have the usage of a petrol card at the expense of the company. Travel expenses will be reimbursed in line with the policies of American Standard Europe BVBA.

RELOCATION

To assist the relocation from Hannover to Brussels, American Standard Europe BVBA, will

 

 

Pay for the shipping of reasonable personal and household effects.

 

 

Give consideration to reimbursing you for any other reasonable expenses directly associated with the move.

REPATRIATION

At the completion of the assignment in Brussels you will be transferred back to Hannover. American Standard Europe BVBA will reimburse you for the costs of relocation back to Hannover, Germany.

As an employee of American Standard Europe BVBA you will be subject to the personnel procedures, policies, and benefit plans of American Standard, except as otherwise modified herein.

Should you require further information or clarification on any of the above terms, please let me know. Otherwise, I would appreciate it if you would acknowledge your acceptance of these terms and conditions by signing the enclosed duplicate copy of this letter and returning it to my attention at your earliest convenience.

 

LOGO

   

LOGO

Helmut Sander     Christian Wiehen

Vice President Human Resources

and Organization Development

   

RGB 653.750

TVA BE 475.956.135

ABN AMRO 720.5404624.87


Exhibit 10.19

LOGO

PERSONAL AND CONFIDENTIAL

To: Christian Wiehen

Brussels, March 30, 2007

Re: Your repatriation to Germany

Dear Christian,

Further to your conversation with Larry Costello and afterwards your meeting with Inge Oyen of March 27, 2007, I hereby would like to confirm our decision to repatriate you to Germany as of April 1, 2007.

This letter summarizes our discussion points and intends to confirm the arrangements for your return to Germany.

Housing

As discussed during our meeting the termination of your current rental agreement and utility connection in Belgium has already been arranged.

In case you need further assistance in this respect, please contact Jindra Vink of Deloitte (+32 2 600 6817) who is able to assist.

Relocation

According to your assignment contract, dated December 6, 2002, American Standard Europe BVBA will reimburse you for the costs of relocating back to Hannover, Germany and consider reimbursing you for any other reasonable expenses directly associated with the move.

Taxes

You will be contacted shortly by Deloitte, Jan Pattyn, in order to organize a meeting to give clarity on taxes in Belgium for 2006 and 2007.

Mr. Jan Pattyn

Tel. +32 2 600 6855

jpattyn@deloitte.com

 


American Standard Europe BVBA – Chaussee de Wavre 1789 – 1160 Brussels


LOGO

De-registration

Please make necessary arrangement with your town hall, in order to de-register yourself. In case you need any further assistance in this respect, please contact Jindra Vink of Deloitte (+32 2 600 6817) who is able to assist.

Payroll

After your relocation to Germany, you will be included in the domestic payroll. The appropriate payroll and HR contacts in Germany and Belgium will be informed accordingly.

Company Car

Since you have chosen a new company car last year, I will verify with Deloitte whether there are any legal and/or tax implication whether we decide that you keep this company car.

As of the date of the transfer the employment relationship will be exclusively governed by German laws.

I trust the above outlined items are helpful. Please do not hesitate to contact me if you should have any additional questions.

 

Yours sincerely,
LOGO
Arielle Vander Perren

Cc:

Remi Tersiguel

Larry Costello

Joerg Baerbock

 


American Standard Europe BVBA – Chaussee de Wavre 1789 – 1160 Brussels


Exhibit 10.20

The CORPORATE plan for Retirement SM

EXECUTIVE PLAN

Adoption Agreement

IMPORTANT NOTE

This document has not been approved by the Department of Labor, the Internal Revenue Service or any other governmental entity. An Employer must determine whether the plan is subject to the Federal securities laws and the securities laws of the various states. An Employer may not rely on this document to ensure any particular tax consequences or to ensure that the Plan is “unfunded and maintained primarily for the purpose of providing deferred compensation to a select group of management or highly compensated employees” under the Employee Retirement Income Security Act with respect to the Employer’s particular situation. Fidelity Management Trust Company, its affiliates and employees cannot and do not provide legal or tax advice or opinions in connection with this document. This document does not constitute legal or tax advice or opinions and is not intended or written to be used, and it cannot be used by any taxpayer, for the purposes of avoiding penalties that may be imposed on the taxpayer. This document must be reviewed by the Employer’s attorney prior to adoption.


ADOPTION AGREEMENT

ARTICLE 1

 

1.01   PLAN INFORMATION
  (a)   Name of Plan:
    This is the WABCO Supplemental Savings Plan (the “Plan”).
  (b)   Plan Status (Check one.) :
    (1)   Adoption Agreement effective date: 08/01/2007
    (2)   The Adoption Agreement effective date is (Check (A) or check and complete (B)) :
      (A)      

x        A new Plan effective date.

      (B)      

¨         An amendment and restatement of the Plan. The original effective date of the Plan was:                     

  (c)   Name of Administrator, if not the Employer:
   

 

1.02   EMPLOYER
  (a)   Employer Name: WABCO Holdings Inc.
  (b)   The term “Employer” includes the following Related Employer(s)
    (as defined in Section 2.01(a)(25)) participating in the Plan:
    WABCO Compressor Manufacturing Co.
    WABCO Expats Inc.
    WABCO Automotive North America Inc.
    WABCO Group Inc.

 


1.03   COVERAGE
  (Check (a) and/or (b).)
  (a)   x   The following Employees are eligible to participate in the Plan (Check (1) or (2)) :
      (1)      

¨         Only those Employees designated in writing by the Employer, which writing is hereby incorporated herein.

      (2)      

x        Only those Employees in the eligible class described below:

 

Employees participating in the WABCO 401(k) Retirement Plan with compensation in excess of the Internal Revenue Code section 401(a)(17) limit.

  (b)   ¨   The following Directors are eligible to participate in the Plan (Check (1) or (2)) :
      (1)  

¨         Only those Directors designated in writing by the Employer, which writing is hereby incorporated herein.

      (2)  

¨         All Directors, effective as of the later of the date in 1.01(b) or the date the Director becomes a Director.

      (Note: A designation in Section 1.03(a)(1) or Section 1.03(b)(1) or a description in Section 1.03(a)(2) must include the effective date of such participation.)
1.04   COMPENSATION
 

(If Section 1.03(a) is selected, select (a) or (b). If Section 1.03(b) is selected, complete (c))

 

    For purposes of determining all contributions under the Plan:

  (a)   x Compensation shall be as defined, with respect to Employees, in the WABCO 401(k) Retirement Plan maintained by the Employer:
      (1)   x to the extent it is in excess of the limit imposed under Code section 401(a)(17).
      (2)   ¨ notwithstanding the limit imposed under Code section 401(a)(17).
  (b)   ¨ Compensation shall be as defined in Section 2.01(a)(9) with respect to Employees (Check (1), and/or (2) below, if, and as, appropriate) :
      (1)   ¨ but excluding the following:
       

 

      (2)   ¨ but excluding bonuses, except those bonuses listed in the table in Section 1.05(a)(2).

 


  (c)   ¨     Compensation shall be as defined in Section 2.01(a)(9)(c) with respect to Directors, but excluding the following:
                                                                                                                                                                                                                                                                 
1.05   CONTRIBUTIONS ON BEHALF OF EMPLOYEES
    (a)   Deferral Contributions (Complete all that apply):
        (1)  

¨         Deferral Contributions. Subject to any minimum or maximum deferral amount provided below, the Employer shall make a Deferral Contribution in accordance with, and subject to, Section 4.01 on behalf of each Participant who has an executed salary reduction agreement in effect with the Employer for the applicable calendar year (or portion of the applicable calendar year).

Deferral Contributions

Type of Compensation

  

Dollar Amount

   % Amount
   Min    Max    Min    Max
           

 

      (Note: With respect to each type of Compensation, list the minimum and maximum dollar amounts or percentages as whole dollar amounts or whole number percentages.)
        (2)  

¨         Deferral Contributions with respect to Bonus Compensation only. The Employer requires Participants to enter into a special salary reduction agreement to make Deferral Contributions with respect to one or more Bonuses, subject to minimum and maximum deferral limitations, as provided in the table below.

 

       Treated As    Dollar Amount    % Amount

Deferral Contributions

Type of Bonus

   Performance
Based
  

Non-

Performance
Based

   Min    Max    Min    Max
                 

 

      (Note: With respect to each type of Bonus, list the minimum and maximum dollar amounts or percentages as whole dollar amounts or whole number percentages.)

 


    (b)     Matching Contributions (Choose (1) or (2) below, and (3) below, as applicable):
        (1)      

x        

  The Employer shall make a Matching Contribution on behalf of each Employee Participant in an amount described below:
         

(A)   

 

¨         

               % of the Employee Participant’s Deferral Contributions for the calendar year.
         

(B)   

 

¨         

  The amount, if any, declared by the Employer in writing, which writing is hereby incorporated herein.
         

(C)   

 

x        

  Other: the percentage of the Employee Participant’s Compensation for which the Company actually provided a matching contribution under the WABCO 401(k) Retirement Plan .
        (2)   ¨   Matching Contribution Offset. For each Employee Participant who has made elective contributions (as defined in 26 CFR section 1.401(k)-6 (“QP Deferrals”)) of the maximum permitted under Code section 402(g), or the maximum permitted under the terms of the                                          Plan (the “QP”), to the QP, the Employer shall make a Matching Contribution in an amount equal to (A) minus (B) below:
          (A)   The matching contributions (as defined in 26 CFR section 1.401(m)-1(a)(2) (“QP Match”)) that the Employee Participant would have received under the QP on the sum of the Deferral Contributions and the Participant’s QP Deferrals, determined as though—
             

•     no limits otherwise imposed by the tax law applied to such QP match; and

 

•     the Employee Participant’s Deferral Contributions had been made to the QP.

          (B)   The QP Match actually made to such Employee Participant under the QP for the applicable calendar year.
    Provided, however, that the Matching Contributions made on behalf of any Employee Participant pursuant to this Section 1.05(b)(2) shall be limited as provided in Section 4.02 hereof.
        (3)   ¨   Matching Contribution Limits (Check the appropriate box (es)) :
          (A)  

¨         

  Deferral Contributions in excess of              % of the Employee Participant’s Compensation for the calendar year shall not be considered for Matching Contributions.
          (B)  

¨         

  Matching Contributions for each Employee Participant for each calendar year shall be limited to $              .

 


  (c)     Employer Contributions
      (1)  

x         

 

Fixed Employer Contributions. The Employer shall make an Employer Contribution on behalf of each Employee Participant in an amount determined as described below:

 

3% of Compensation up to $250,000, provided that, for the Chief Executive Officer the $250,000 limit shall not apply.

      (2)  

¨         

  Discretionary Employer Contributions. The Employer may make Employer Contributions to the accounts of Employee Participants in any amount (which amount may be zero), as determined by the Employer in its sole discretion from time to time in a writing, which is hereby incorporated herein.
1.06   CONTRIBUTIONS ON BEHALF OF DIRECTORS
  (a)     ¨   Director Deferral Contributions
       

The Employer shall make a Deferral Contribution in accordance with, and subject to, Section 4.01 on behalf of each Director Participant who has an executed deferral agreement in effect with the Employer for the applicable calendar year (or portion of the applicable calendar year), which deferral agreement shall be subject to any minimum and/or maximum deferral amounts provided in the table below.

 

Deferral Contributions

Type of Compensation

   Dollar Amount    % Amount
   Min    Max    Min    Max
           

 

         

(Note: With respect to each type of Compensation, list the minimum and maximum dollar amounts or

percentages as whole dollar amounts or whole number percentages.)

    (b)       Matching and Employer Contributions:
              (1)  

¨         Matching Contributions. The Employer shall make a Matching Contribution on behalf of each Director Participant

         in an amount determined as described below:

                                                                                                                                                                                                                                                
                                                                                                                                                                                                                                                .
              (2)  

¨         Fixed Employer Contributions. The Employer shall make an Employer Contribution on behalf of each Director

         Participant in an amount determined as described below:

                                                                                                                                                                                                                                                
                                                                                                                                                                                                                                                .

 


     

(3)    

 

¨         Discretionary Employer Contributions. The Employer may make Employer Contributions to the accounts of Director Participants in any amount (which amount may be zero), as determined by the Employer in its sole discretion from time to time, in a writing, which is hereby incorporated herein.

1.07   DISTRIBUTIONS
 

The form and timing of distributions from the Participant’s vested Account shall be made consistent with the elections in this Section 1.07.

 

(a) (1) Distribution options to be provided to Participants

     

(A) Specified

Date

  (B) Specified
Age
  (C) Separation
From Service
 

(D) Earlier of
Separation

or Age

  (E) Earlier of
Separation or
Specified Date
  (F) Disability  

(G)

Change in
Control

  (H) Death

Deferral Contribution

  ¨  Lump Sum

 

¨  Installments

  ¨  Lump Sum

 

¨  Installments

  ¨  Lump Sum

 

¨  Installments

  ¨  Lump Sum

 

¨  Installments

  ¨  Lump Sum

 

¨  Installments

  ¨  Lump Sum

 

¨  Installments

  ¨  Lump Sum

 

  ¨  Lump Sum

 

¨  Installments

Matching Contributions

  ¨  Lump Sum

 

¨  Installments

  ¨  Lump Sum

 

¨  Installments

  x  Lump Sum

 

¨  Installments

  ¨  Lump Sum

 

¨  Installments

  ¨  Lump Sum

 

¨  Installments

  ¨  Lump Sum

 

¨  Installments

  ¨  Lump Sum

 

  ¨  Lump Sum

 

¨  Installments

Employer Contributions

  ¨  Lump Sum

 

¨  Installments

  ¨  Lump Sum

 

¨  Installments

  x  Lump Sum

 

¨  Installments

  ¨  Lump Sum

 

¨  Installments

  ¨  Lump Sum

 

¨  Installments

  ¨  Lump Sum

 

¨  Installments

  ¨  Lump Sum

 

  ¨  Lump Sum

 

¨  Installments

(Note: If the Employer elects (F), (G), or (H) above, the Employer must also elect (A), (B), (C), (D), or (E) above, and the Participant must also elect (A), (B), (C), (D), or (E) above. In the event the Employer elects only a single payment trigger and/or payment method above, then such single payment trigger and/or payment method shall automatically apply to the Participant.)

 


         
      (2)  

x        

  A Participant incurs a Disability when the Participant (Check at least one if Section 1.07(a)(1)(F) or if Section 1.08(e)(3) is elected) :
         

(A)   

 

x        

  is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.
         

(B)   

 

x        

  is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the Employer.
         

(C)   

 

¨         

  is determined to be totally disabled by the Social Security Administration or the Railroad Retirement Board.
         

(D)   

 

¨         

  is determined to be disabled pursuant to the following disability insurance program:                                          the definition of disability under which complies with the requirements in regulations under Code section 409A.
            (Note: If more than one box above is checked, then the Participant will have a Disability if he satisfies at least one of the descriptions corresponding to one of such checked boxes.)
      (3)  

¨         

  Regardless of any payment trigger and, as applicable, payment method, to which the Participant would otherwise be subject pursuant to (1) above, the first to occur of the following Plan-level payment triggers will cause payment to the Participant commencing pursuant to Section 1.07(c)(1) above in a lump sum.
            Payment Trigger
           

(A)     ¨     Separation from Service prior to:                                                              

 

(B)     ¨     Separation from Service

 

(C)     ¨     Death

 

(D)     ¨     Change in Control

    (b)     Distribution Election Change
       

A Participant

       

(1)     ¨     shall

       

(2)     x     shall not

 


      be permitted to modify a scheduled distribution election in accordance with Section 8.01(b) hereof.
    (c)   Commencement of Distributions
      (1)   Each lump sum distribution and the first distribution in a series of installment payments (if applicable) shall commence as elected in (A), (B) or (C) below:
        (A)  

x        Monthly on the 1st day of the month which day next follows the applicable triggering event described in 1.07(a).

        (B)  

¨         Quarterly on the      day of the following months                  ,                  ,                  , or              (list one month in each calendar quarter) which day next follows the applicable triggering event described in 1.07(a).

        (C)  

¨         Annually on the      day of                  (month) which day next follows the applicable triggering event described in 1.07(a).

        (Note: Notwithstanding the above: a six-month delay shall be imposed with respect to certain distributions to Specified Employees; a Participant who chooses payment on a Specified Date will choose a month, year or quarter (as applicable) only, and payment will be made on the applicable date elected in (A), (B) or (C) above that falls within such month, year or quarter elected by the Participant.)
      (2)   The commencement of distributions pursuant to the events elected in Section 1.07(a)(1) and Section 1.07(a)(3) shall be modified by application of the following:
        (A)  ¨   Separation from Service Event Delay – Separation from Service will be treated as not having occurred for              months after the date of such event.
        (B)  x   Plan Level Delay – all distribution events (other than those based on Specified Date or Specified Age) will be treated as not having occurred for 30 days (insert number of days but not more then 30).
    (d)   Installment Frequency and Duration
      If installments are available under the Plan pursuant to Section 1.07(a), a Participant shall be permitted to elect that the installments will be paid (Complete 1 and 2 below):
     

(1)    at the following intervals:

        (A)   ¨   Monthly commencing on the day elected in Section 1.07(c)(1).
        (B)   ¨   Quarterly commencing on the day elected in Section1.07 (c)(1) (with payments made at three-month intervals thereafter).
        (C)   ¨   Annually commencing on the day elected in Section 1.07(c)(1).

 


      (2)       over the following term(s) (Complete either (A) or (B)) :
          (A)   ¨     Any term of whole years between              (minimum of 1) and              (maximum of 30).
          (B)   ¨     Any of the whole year terms selected below.

 

¨    1   ¨  2   ¨ 3   ¨  4   ¨  5   ¨  6
¨    7   ¨  8   ¨ 9   ¨  10   ¨  11   ¨  12
¨  13   ¨  14   ¨ 15   ¨  16   ¨  17   ¨  18
¨  19   ¨  20   ¨ 21   ¨  22   ¨  23   ¨  24
¨  25   ¨  26   ¨  27   ¨  28   ¨  29   ¨  30

 

          (Note: Only elect a term of one year if Section 1.07(d)(1)(A) and/or Section 1.07(d)(1)(B) is elected above.)
  (e)     Conversion to Lump Sum
     

¨         

    Notwithstanding anything herein to the contrary, if the Participant’s vested Account at the time such Account becomes payable to him hereunder does not exceed $              distribution of the Participant’s vested Account shall automatically be made in the form of a single lump sum at the time prescribed in Section 1.07(c)(1).
  (f)     Distribution Rules Applicable to Pre-effective Date Accruals
      ¨     Benefits accrued under the Plan (subject to Code section 409A) prior to the date in Section 1.01(b)(1) above are subject to distribution rules not described in Section 1.07(a) through (e), and such rules are described in Attachment A Re: PRE EFFECTIVE DATE ACCRUAL DISTRIBUTION RULES.
1.08   VESTING SCHEDULE
  (a)     (1)   The Participant’s vested percentage in Matching Contributions elected in Section 1.05(b) shall be based upon the following schedule and unless Section 1.08(a)(2) is checked below will be based on the elapsed time method as described in Section 7.03(b).

 

         Years of Service    Vesting %          
     Less than 3    0      
     3    100      

 

    (2)   ¨   Vesting shall be based on the class year method as described in Section 7.03(c).
  (b)   (1)     The Participant’s vested percentage in Employer Contributions elected in Section 1.05(c)

 


        shall be based upon the following schedule and unless Section 1.08(b)(2) is checked below will be based on the elapsed time method as described in Section 7.03(b).

 

         Years of Service    Vesting%          
     Less than 3    0      
     3    100      

 

        (2)   ¨   Vesting shall be based on the class year method as described in Section 7.03(c).
      (c)   ¨   Years of Service shall exclude (Check one.) :
          (1)  

¨         for new plans, service prior to the Effective Date as defined in Section 1.01(b)(1).

          (2)  

¨         for existing plans converting from another plan document, service prior to the original Effective Date as defined in Section 1.01(b)(2)(B).

          (Note: Do not elect to apply this Section 1.08(c) if vesting is based only on the class year method.)
      (d)   ¨   Notwithstanding anything to the contrary herein, a Participant will forfeit his Matching Contributions and Employer Contributions (regardless of whether vested) upon the occurrence of the following event(s):
       

 

       

 

        (Note: Contributions with respect to Directors, which are 100% vested at all times, are subject to the rule in this subsection (d).)
      (e)   A Participant will be 100% vested in his Matching Contributions and Employer Contributions upon (Check the appropriate box(es)) :
          (1)   x   Retirement eligibility is the date the Participant attains age 65 and completes 0 Years of Service, as defined in Section 7.03(b).
          (2)   x   Death.
          (3)   x   The date on which the Participant becomes disabled, as determined under Section 1.07(a)(2).
          (Note: Participants will automatically vest upon Change in Control if Section 1.07(a)(1)(G) is elected.)
      (f)   x   Years of Service in Section 1.08 (a)(1) and Section 1.08 (b)(1) shall include service with the following employers:
          Alliance Compressors

 


Cummins Engine Company

Industrial Sheet Metal

Transamerica Joint Ventures

American Standard Inc.

FACS Services Inc.

World Standard LTD.

Service with any independently owned Trane Company field sales office

1.09 INVESTMENT DECISIONS

A Participant’s Account shall be treated as invested in the Permissible Investments as directed by the Participant unless otherwise provided below:

 

                                                                                                                                                                                                                                

                                                                                                                                                                                                                                

1.10 ADDITIONAL PROVISIONS

The Employer may elect Option below and complete the Superseding Provisions Addendum to describe overriding provisions that are not otherwise reflected in this Adoption Agreement.

 

  ¨ The Employer has completed the Superseding Provisions Addendum to reflect the provisions of the Plan that supersede provisions of this Adoption Agreement and/or the Basic Plan Document.

 


EXECUTION PAGE

(Fidelity’s Copy)

IN WITNESS WHEREOF, the Employer has caused this Adoption Agreement to be executed this                      day of                      , 20      .

 

Employer  

 

By  

 

Title  

 

 


EXECUTION PAGE

(Employer’s Copy)

IN WITNESS WHEREOF, the Employer has caused this Adoption Agreement to be executed this                      day of                      , 20      .

 

Employer  

 

By  

 

Title  

 

 


AMENDMENT EXECUTION PAGE

(Fidelity’s Copy)

Plan Name: WABCO Supplemental Savings Plan (the “Plan”)

Employer: WABCO Holdings Inc.

(Note: These execution pages are to be completed in the event the Employer modifies any prior election(s) or makes a new election(s) in this Adoption Agreement. Attach the amended page(s) of the Adoption Agreement to these execution pages.)

The following section(s) of the Plan are hereby amended effective as of the date(s) set forth below:

 

Section Amended

   Effective Date
  
  
  
  

IN WITNESS WHEREOF, the Employer has caused this Amendment to be executed on the date below.

 

Employer:  

 

By:  

 

Title:  

 

Date:  

 

 


AMENDMENT EXECUTION PAGE

(Employer’s Copy)

Plan Name: WABCO Supplemental Savings Plan (the “Plan”)

Employer: WABCO Holdings Inc.

(Note: These execution pages are to be completed in the event the Employer modifies any prior election(s) or makes a new election(s) in this Adoption Agreement. Attach the amended page(s) of the Adoption Agreement to these execution pages.)

 

Section Amended

   Effective Date
  
  
  
  

IN WITNESS WHEREOF, the Employer has caused this Amendment to be executed on the date below.

 

Employer:  

 

By:  

 

Title:  

 

Date:  

 

 


ATTACHMENT A

Re: PRE EFFECTIVE DATE ACCRUAL DISTRIBUTION RULES

Plan Name: WABCO Supplemental Savings Plan

 

                                                                                                                                                                                                                                                    

    

                                                                                                                                                                                                                                                    

    

                                                                                                                                                                                                                                                    

    

                                                                                                                                                                                                                                                    

    

                                                                                                                                                                                                                                                    

    

                                                                                                                                                                                                                                                    

    

                                                                                                                                                                                                                                                    


ATTACHMENT B

Re: SUPERSEDING PROVISIONS

for

Plan Name: WABCO Supplemental Savings Plan

 

(a) Superseding Provision(s) – The following provisions supersede other provisions of this Adoption Agreement and/or the Basic Plan Document as described below:

 

                                                                                                                                                                                                                                                    

    

                                                                                                                                                                                                                                                    

    

                                                                                                                                                                                                                                                    

    

                                                                                                                                                                                                                                                    

    

                                                                                                                                                                                                                                                    

    

                                                                                                                                                                                                                                                    

    

                                                                                                                                                                                                                                                    

 


Exhibit 31.1

CERTIFICATIONS

I, Jacques Esculier, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of WABCO Holdings Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) [ Reference to internal controls over financial reporting omitted pursuant to SEC Release Nos. 33-8238; 34-47986; IC-26068; June 5, 2003 ] for the registrant and have:

 

  (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  (b) [ Paragraph 4(b) Omitted Pursuant to SEC Release Nos. 33-8238; 34-47986; IC-26068; June 5, 2003 ];

 

  (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

  (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: November 8, 2007

/s/ Jacques Esculier

Jacques Esculier
Chief Executive Officer

Exhibit 31.2

CERTIFICATIONS

I, Ulrich Michel, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of WABCO Holdings Inc.;

 

2.