Indemnification And Cooperation Agreement

Exhibit 10.4

INDEMNIFICATION AND COOPERATION AGREEMENT

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

RECITALS WHEREAS, the Board of Directors of ASD has determined that it is appropriate, desirable and in the best interests of ASD and its shareholders to separate ASD into three separate companies: (i) one comprising the VCS Business, which shall be owned and conducted, directly or indirectly, by WABCO, all of the common stock of which is intended to be distributed to ASD shareholders, (ii) one comprising the HVAC Business, which shall continue to be owned and conducted, directly or indirectly, by ASD and (iii) one comprising the B&K Business, which ASD currently intends to sell to one or more third parties; WHEREAS, as part of the foregoing, ASD and WABCO have entered into the Separation and Distribution Agreement, dated as of July 16, 2007 (the " Distribution Agreement" ), which provides, among other things, for the pro-rata distribution by ASD of all of its shares in WABCO Common Stock to the holders of ASD Common Stock, and the execution and delivery of certain other agreements in order to facilitate and provide for the foregoing, including without limitation, the Tax Sharing Agreement, the Employee Matters Agreement, the Transition Services Agreement and this Agreement; WHEREAS, on March 28, 2007, the Charged Parties, along with a number of other companies not affiliated with ASD or WABCO, received a Statement of Objections from the European Commission (the " Statement of Objections" ) alleging infringements of European Union competition rules by certain bathroom fixture and fittings companies, including the Charged Parties; WHEREAS, the Parties acknowledge and agree that the Indemnifiable Matters relate to the B&K Business that is conducted by a division of ASD which is intended to be sold and, upon completion of such sale, will no longer be owned by ASD, WABCO or any of their Affiliates;

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


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

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

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

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

WHEREAS, the Parties desire to set forth the agreements, understandings and procedures pursuant to which ASE shall indemnify, defend and hold harmless the Indemnitees against the Indemnifiable Losses relating to the Indemnifiable Matters; WHEREAS, the Parties have also concluded that it is in their common interests with respect to the Indemnifiable Matters to cooperate with one another and to provide access to documents, information, and analyses, with respect to the Indemnifiable Matters; and

WHEREAS, the Parties recognize and acknowledge that any unauthorized disclosure or dissemination of any documents or information exchanged between the Parties would be detrimental to them and to the conduct of any potential claims. NOW, THEREFORE, in consideration of the recitals and of the respective agreements and covenants contained herein, and intending to be legally bound hereby, the Parties hereto agree as follows:

ARTICLE I

DEFINITIONS

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

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


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

(c) " ASD" shall have the meaning specified in the Preamble to this Agreement. (d) " ASD Charged Parties" means ASD and any other member of the ASD Group (other than any WABCO Charged Party or B&K Charged Party) that is or becomes a named party in the Bathroom Fittings and Fixtures Proceedings from and after the Effective Time.

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

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

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

(h) " ASE Election Notice" shall have the meaning specified in Section 2.2(c). (i) " ASE Non-Appeal Notice" shall have the meaning specified in Section 2.2(c). (j) " Bathroom Fittings and Fixtures Proceedings" means the proceedings initiated by the Commission of the European Communities contemplated by that certain Statement of Objections, dated March 26, 2007, relating to case COMP/E-1/39.092, as the same may be amended, supplemented or superseded by a new Statement of Objections, including any appeals relating thereto.

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

(l) " B&K Charged Parties" means, collectively, Venlo, IS France, IS Belgium, IS Germany and IS Italy and any member of the ASD Group that is sold to a B&K Buyer Party and is or becomes a named party in the Bathroom Fittings and Fixtures Proceedings from and after the Effective Time. (m) " B&K Sale Agreement" shall have the meaning specified in Section 4.5. (n) " Change in Control" means, and shall be deemed to have occurred if, on or after the Effective Time, (i) any " person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than a trustee or other fiduciary holding securities under an employee benefit plan of WABCO or any of its Subsidiaries acting in such capacity, is or becomes the " beneficial owner" (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of WABCO or ASE, as applicable, representing more than 35% of the total voting power represented by WABCO' s or ASE' s, as applicable, then outstanding Voting Securities, (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the board of directors of WABCO or ASE, as applicable, and any new director whose election by the board of directors of WABCO or ASE, as applicable, or nomination for election by WABCO' s or ASE' s, stockholders as applicable, was approved by a vote of at least two thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, (iii) the stockholders of WABCO or ASE, as applicable, approve a merger or consolidation of WABCO or ASE, as applicable, with any other corporation other than a merger or consolidation that would result in the Voting Securities of WABCO or ASE, as applicable, outstanding


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

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

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

(q) " Defense Agreement" shall have the meaning specified in Section 3.3. (r) " Defense Costs" shall mean fees, costs and expenses incurred on or after the Effective Time by a Party in connection with the defense of any Indemnifiable Matter, including, without limitation, legal, consultant, expert, economists, witness, accounting and other professional fees and expenses, but excluding, for the avoidance of doubt, the payment of any amounts to Governmental Entities in connection with any such Indemnifiable Matter.

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

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

(u) " Escrow Account" shall have the meaning specified in Section 4.1(b). (v) " Escrow Agreement" shall have the meaning specified in Section 4.1(b). (w) " Escrowed Amount" shall have the meaning specified in Section 4.1(b). (x) " Indemnifiable Loss" and " Indemnifiable Losses" shall mean any and all fines, penalties, judgments, obligations, interest and amounts paid in settlement, in each case arising solely out of the Indemnifiable Matters and that are imposed on any Indemnitee (whether directly or indirectly, through contract, operation of law or otherwise, or through theories of successor or transferee liability, de facto merger or similar indirect theory of liability), including, without limitation, the Initial Decision Amount (as may be modified pursuant to any appeal judgment(s)) and the amount of any interest that will accrue on the Initial Decision Amount and will be due and owing to the European Commission between the Payment Due Date and the date on which the fine and any accrued interest thereon have been paid in full following the rendering of a final resolution of the Bathroom Fittings and Fixtures Proceedings (including the final judgment concluding the appeal process initiated by the Charged Parties in connection with the Bathroom Fittings and Fixtures Proceedings), in each case determined in accordance with the Initial Decision and the applicable rules in force in the European Union.


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

(z) " Indemnitees" shall mean the ASD Charged Parties and the B&K Charged Parties and their respective Affiliates (other than any member of the WABCO Group or a WABCO Charged Party) and their respective directors, officers, employees and agents, in each case, together with their respective heirs, executors, administrators, successors and assigns, and, if applicable, the B&K Buyer Parties and other assignees following any assignment by ASD in accordance with Section 6.3 hereof. (aa) " Indemnitee Representative" shall have the meaning specified in Section 6.17. (bb) " Indemnitor" shall have the meaning set forth in the Preamble to this Agreement. (cc) " Indemnitor Representative" shall have the meaning specified in Section 6.16. (dd) " Initial Decision" shall mean the initial decision rendered by the European Commission in the Bathroom Fittings and Fixtures Proceedings in which the Initial Decision Amount is imposed.

(ee) " Initial Decision Amount" shall mean the aggregate amount of the fines (or other amounts, if any) imposed by the European Commission on all Charged Parties on the Initial Decision Date as reflected in the Initial Decision. (ff) " Initial Decision Date" shall mean the first date upon which the European Commission imposes a fine on any Charged Party and/or any of the other Indemnitees or Indemnitors or any other member of the ASD Group or WABCO Group in the Bathroom Fittings and Fixtures Proceedings.

(gg) " IS Belgium" shall have the meaning specified in the Preamble to this Agreement.

(hh) " IS France" shall have the meaning specified in the Preamble to this Agreement.


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(ii) " IS Germany" shall have the meaning specified in the Preamble to this Agreement.

(jj) " IS Italy" shall have the meaning specified in the Preamble to this Agreement. (kk) " New York Courts" shall have the meaning specified in Section 6.6. (ll) " Non-Appeal Notice" shall mean either an ASE Non-Appeal Notice or an ASD Non-Appeal Notice, as applicable. (mm) " Party" shall have the meaning specified in the Preamble to this Agreement. (nn) " Payment Due Date" means the date specified in the Initial Decision or as required under the rules in force in the European Union in respect of the Bathroom Fittings and Fixtures Proceedings pursuant to which the Charged Parties are required to make payment of the Initial Decision Amount.

(oo) " Privilege" shall have the meaning specified in Section 3.3(a).

(pp) " Privileged Information" shall have the meaning specified in Section 3.3(a).

(qq) " Release Date" shall have the meaning specified in Section 4.2.

(rr) " Representative" shall mean any Affiliates, directors, officers, members, partners, employees, accountants, agents, counsel and other professional advisors of any of the Parties to this Agreement.

(ss) " Statement of Objections" shall have the meaning specified in the Recitals to this Agreement.

(tt) " Venlo" shall have the meaning specified in the Preamble to this Agreement.

(uu) " Voting Securities" means any securities of WABCO or ASE, as applicable, that vote generally in the election of directors of WABCO or ASE, respectively.

(vv) " WABCO" shall have the meaning specified in the Preamble to this Agreement.

(ww) " WABCO Austria" shall have the meaning specified in the Preamble to this Agreement.

(xx) " WABCO Charged Parties" means ASE, WABCO Austria and any other member of the WABCO Group that is or becomes a named party in the Bathroom Fittings and Fixtures Proceedings from and after the Effective Time.


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ARTICLE II

INDEMNIFICATION

Section 2.1 Indemnification; Release . (a) The Indemnitor shall indemnify and hold harmless the Indemnitees from and against, and shall reimburse the Indemnitees with respect to, any and all Indemnifiable Losses, whether arising prior to or following the Effective Time and whether or not arising out of any acts or omissions by any Indemnitee occurring prior to or following the Effective Time. For the avoidance of doubt, Indemnifiable Losses shall not include Defense Costs.

(b) WABCO and the WABCO Charged Parties hereby remise, release and forever discharge the Indemnitees from any and all Liabilities whatsoever, whether at law or in equity (including any right of contribution), whether arising under any contract, by operation of law or otherwise (or any theories of successor or transferee liability or de facto merger or similar indirect theory of liability), including for fraud or willful misconduct, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the date of this Agreement, in each case relating to any of the Indemnifiable Matters. WABCO and the WABCO Charged Parties hereby unconditionally and irrevocably agree, on behalf of themselves and any of their Affiliates, that they shall not initiate, pursue or cause or be initiated or pursued, directly or indirectly, any judicial proceeding or Action seeking a judgment, holding or declaration that this Agreement or any of the indemnification or release obligations of WABCO and the WABCO Charged Parties provided hereunder is, was or would be illegal, invalid or unenforceable in accordance with its terms, and WABCO and the WABCO Charged Parties unconditionally and irrevocably agree that they shall not raise or assert any defense to this effect in any such proceeding or Action. WABCO and the WABCO Charged Parties acknowledge that they will receive substantial direct and indirect benefits from the transactions contemplated by the Distribution Agreement and the Ancillary Agreements (including, without limitation, the assumption by ASD of the Remainco Liabilities) and that the waiver, release and agreements set forth in this Section 2.1(b) are knowingly made in contemplation of such benefits and after the advice of counsel.

Section 2.2 Bathroom Fittings and Fixtures Proceedings .

(a) ASE shall have the right and the duty to control the defense of the Bathroom Fittings and Fixtures Proceedings (on behalf of itself, the other WABCO Charged Parties and the B&K Charged Parties); provided, however, from and after the time a B&K Sale is consummated, upon the prior written consent of ASD, the B&K Buyer Parties (on behalf of themselves and the B&K Charged Parties) shall have the right to observe and participate in the defense of the Bathroom Fittings and Fixtures Proceedings, the specific scope of such observation and participation to be determined by mutual agreement of ASD and ASE in good faith, it being understood that, without ASE' s prior written consent, such observation and participation shall in no event constitute active control in the defense, including, without limitation, affirmative rights to determine whether to appeal the Initial Decision or take other actions contemplated by this Section 2.2 (on behalf of the WABCO Charged Parties or B&K Charged Parties). ASD shall have the right and the duty to control the defense of the Bathroom Fittings and Fixtures Proceedings on behalf of itself and the ASD Charged Parties.


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(b) ASD shall be entitled to select and engage counsel on behalf of itself and the ASD Charged Parties in respect of their defense and involvement in the Bathroom Fittings and Fixtures Proceedings. The Indemnitor Representative shall be entitled to select counsel on behalf of the WABCO Charged Parties and B&K Charged Parties in respect of their involvement and defense in the Bathroom Fittings and Fixtures Proceedings; it being acknowledged that the Indemnitor Representative shall provide prior notice to ASD and the B&K Charged Parties of the selection of any such counsel other than counsel retained by the WABCO Charged Parties and B&K Charged Parties at the Effective Time and it is further acknowledged that to the extent the Indemnitor Representative (on behalf of the WABCO Charged Parties and B&K Charged Parties) choose not to retain either Baker & McKenzie or McDermott Will & Emery, ASD shall be entitled to retain either such law firm and WABCO and ASE shall not object (and shall provide a waiver of privilege to the extent requested to do so by ASD) in any way to ASD retaining such counsel on its own behalf in connection with any matter, including the Bathroom Fittings and Fixtures Proceedings. From and after the time a B&K Sale is consummated, upon the prior written consent of ASD, the B&K Buyer Parties (on behalf of themselves and the B&K Charged Parties) shall be entitled to select counsel on behalf of the B&K Charged Parties in respect of their observation of and participation in the Bathroom Fittings and Fixtures Proceedings to the limited extent contemplated by Section 2.2(a); it being understood that the Defense Costs associated with such counsel shall be the responsibility of the B&K Charged Parties as further provided in Section 2.2(e) hereof.

(c) Once an Initial Decision is rendered in the Bathroom Fittings and Fixtures Proceedings, and to the extent that the Charged Parties have standing under applicable Law to appeal the Initial Decision, (i) ASD (on behalf of the ASD Charged Parties) shall have the right, in its sole discretion and without the consent of any other Party, to appeal the Initial Decision with respect to the decision rendered against any ASD Charged Party, (ii) ASE (on behalf of the WABCO Charged Parties and the B&K Charged Parties) shall have the right, in its sole discretion and without the consent of any other Party, to appeal the Initial Decision with respect to the decision rendered against any WABCO Charged Party or any B&K Charged Party, (iii) the WABCO Charged Parties and the B&K Charged Parties may not decide to forego an appeal to the Initial Decision with respect to the decision rendered against any WABCO Charged Party or any B&K Charged Party if the failure to appeal the Initial Decision would, in any way (as determined in good faith by ASD) prejudice ASD' s appeal of the Initial Decision with respect to the decision rendered against any ASD Charged Party; it being understood that if the Indemnitor Representative provides written notice to ASD no later than twenty Business Days prior to the Appeal Deadline Date that it does not wish to appeal the Initial Decision with respect to the decision rendered against any WABCO Charged Party or any B&K Charged Party (an " ASE Non-Appeal Notice" ), ASD shall have the right, if it has determined in good faith that such non-appeal would, in any way prejudice ASD' s appeal of the Initial Decision with respect to the decision rendered against any ASD Charged Party, to cause the WABCO Charged Parties and the B&K Charged Parties to appeal the Initial Decision with respect to the decision rendered against the WABCO Charged Parties and the B&K Charged Parties by delivering a written notice within ten Business Days after its receipt of the ASE Non-Appeal Notice to the Indemnitor Representative and the B&K Charged Parties of its election to exercise such right (the " ASD Election Notice" ), and upon delivery of the ASD Election Notice the provisions of Section 4.7 shall become applicable, (iv) ASD (on behalf of the ASD Charged Parties) may not decide to forego an


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appeal to the Initial Decision with respect to the decision rendered against any ASD Charged Party if the failure to appeal the Initial Decision would, in any way (as determined in good faith by ASE) prejudice ASE' s appeal of the Initial Decision (on behalf of the WABCO Charged Parties and B&K Charged Parties) with respect to the decision rendered against any WABCO Charged Party or B&K Charged Party; it being understood that if ASD provides written notice to the Indemnitor Representative no later than twenty Business Days prior to the Appeal Deadline Date that it does not wish to appeal the Initial Decision with respect to the decision rendered against any ASD Charged Party (an " ASD Non-Appeal Notice" ), the Indemnitor Representative shall have the right, if it has determined in good faith that such non-appeal would, in any way prejudice ASE' s appeal of the Initial Decision with respect to the decision rendered against any WABCO Charged Party or B&K Charged Party, to cause the ASD Charged Parties to appeal the Initial Decision with respect to the decision rendered against the ASD Charged Parties by delivering a written notice within ten Business Days after its receipt of the ASD Non-Appeal Notice to ASD of its election to exercise such right (the " ASE Election Notice" ), and upon delivery of the ASE Election Notice the provisions of Section 4.8 shall become applicable and (v) except in connection with an appeal initiated by ASE (or ASD, in the case of an ASD Election Notice), as applicable, on behalf of the B&K Charged Parties, the B&K Charged Parties shall not have the right to otherwise appeal the Initial Decision with respect to the decision rendered against any B&K Charged Party, unless the B&K Charged Parties agree to indemnify the ASD Charged Parties and the WABCO Charged Parties for any fines imposed on the B&K Charged Parties in the Bathroom Fittings and Fixtures Proceedings with such indemnification to be provided pursuant to an agreement that is mutually acceptable to ASD and ASE. Upon prior written notice delivered by ASE (or ASD, in the case of an ASD Election Notice), as applicable, the B&K Charged Parties agree to be a party to any appeal of the Initial Decision initiated by ASE (or ASD, in the case of an ASD Election Notice), as applicable, on behalf of the WABCO Charged Parties and B&K Charged Parties.

(d) Each of ASD (on behalf of the ASD Charged Parties) and ASE (on behalf of the WABCO Charged Parties and B&K Charged Parties) will give the other Party prompt notice of any intent to appeal the Initial Decision with respect to the decision rendered against such Charged Parties; provided, that any Non-Appeal Notice must be delivered in accordance with Section 2.2(c). Any written submissions and responses, or the provision of any information or documents to Governmental Entities, in each case, with respect to the Bathroom Fittings and Fixtures Proceedings, including the contents of any submissions in the appeals process, if applicable, shall be prepared by ASD (with respect to any such matters submitted on behalf of any ASD Charged Party) and ASE (with respect to any such matters submitted on behalf of any WABCO Charged Party or any B&K Charged Party); provided, that if ASD delivers an ASD Election Notice, the contents of any such submissions on behalf of any WABCO Charged Party or any B&K Charged Party shall be prepared at the direction of ASD (which may include preparation by counsel to the WABCO Charged Parties and B&K Charged Parties existing as of the Effective Time or at the time of any such submission) and with consultation with the Indemnitor Representative; provided, further, however, if ASE delivers an ASE Election Notice, the contents of any such submissions on behalf of any ASD Charged Party shall be prepared at the direction of ASE (which may include preparation by counsel to the ASD Charged Parties existing as of the Effective Time or at the


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time of any such submission) and with consultation with ASD. The Parti ...