THIRD AMENDMENT (this  "Amendment") dated as of August 7, 1998 to
          the Amended and Restated Credit Agreement dated as of January 31, 1997
          (as amended,  the "Credit  Agreement";  capitalized terms used and not
          otherwise  defined herein shall have the meanings  assigned to them in
          the  Credit   Agreement),   among  American  Standard  Companies  Inc.
          ("Holding");  American Standard Inc. ("ASI");  the Subsidiaries of ASI
          listed in Schedule I thereto (the "Subsidiary Borrowers" and, together
          with ASI, the "Borrowers");  the financial  institutions party thereto

          (the "Lenders"); The Chase Manhattan Bank, as administrative agent for
          the Lenders (in such capacity, the "Administrative Agent");  Citibank,
          N.A., as Documentation Agent (the "Documentation Agent"); and The Bank
          of Nova Scotia and Nationsbank,  N.A., as  Co-Syndication  Agents (the
          "Co-Syndication Agents" and, together with the Documentation Agent and
          the Administrative Agent, the "Agents").


     ASI,  Holding and the  Subsidiary  Borrowers have requested that the Credit
Agreement  be  amended  in order to (a) modify  the  calculations  of  permitted
charges in  connection  with programs to establish low cost sourcing by shifting
production to low cost  countries,  (b) permit Holding to finance the repurchase
of an  additional  $300,000,000  of shares of its  common  stock,  (c)  identify
additional   countries  for  which  the  sale  or  discount  of  receivables  by
Subsidiaries is not subject to basket limitations,  (d) in the event ASI effects
covenant defeasance of its 10-7/8% Senior Notes, exclude from the definitions of
Consolidated Total Debt and Consolidated Interest Expense, respectively, the (i)
principal  amount of the 10-7/8%  Senior Notes and (ii)  interest on the 10-7/8%
Senior Notes less the accreted earnings  attributable to the instruments used to
effect the covenant  defeasance of the 10-7/8% Senior Notes,  (e) permit Holding
to form or  recapitalize  special  purpose  subsidiaries  to  acquire  shares of
corporations owning sales offices in share exchange  transactions and (f) permit
ASI to sell certain  assets  related to  distribution  of its European  plumbing
products for  consideration  in an aggregate amount not in excess of $50,000,000
without the further consent of the Required Lenders.  The Lenders and the Agents
have agreed to such  amendments upon the terms and subject to the conditions set
forth herein. Accordingly, the parties hereto agree as follows:


ARTICLE I.  AMENDMENT

     SECTION  1.01.  Amendment  of  Section  1.01.  Section  1.01 of the  Credit
Agreement  is hereby  amended  by  amending  the  definitions  of  "Consolidated
Interest Expense",  "Consolidated Total Debt" and "Special Charges" as described
below:

     (a) the definition of "Consolidated  Interest Expense" is hereby amended by
inserting the following sentence at the end of such definition:

          "Notwithstanding  the  foregoing,  in the event ASI shall  effect  the
     "covenant  defeasance option" provided for in Section 8.01(b) of the Senior
     Indenture  relating to the 10-7/8% Senior Notes, for so long as the 10-7/8%
     Senior Notes remain outstanding,  there shall be excluded from Consolidated
     Interest Expense the amount of interest expense attributable to the 10-7/8%
     Senior Notes less the amount of income attributable to the "U.S. Government
     Obligations" (as such term is defined in the Senior  Indenture  relating to
     the 10-7/8%  Senior Notes) that are deposited by ASI with the trustee under
     such Senior Indenture to effect the "covenant  defeasance  option" provided
     for in Section 8.01(b) of such Senior Indenture."

     (b) the  definition  of  "Consolidated  Total  Debt" is hereby  amended  by
inserting the following sentence at the end of such definition:

          "Notwithstanding  the  foregoing,  in the event ASI shall  effect  the
     "covenant  defeasance option" provided for in Section 8.01(b) of the Senior
     Indenture  relating to the 10-7/8% Senior Notes, for so long as the 10-7/8%
     Senior Notes remain outstanding,  there shall be excluded from Consolidated
     Total Debt the outstanding principal amount of the 10-7/8% Senior Notes."
<PAGE>

     (c) the  definition of "Special  Charges" is hereby  amended to read in its
entirety as follows:

     "Special  Charges" shall mean any charges  incurred in 1997, 1998, 1999 and
2000 in an aggregate  amount not to exceed  $150,000,000,  as reflected in ASI's
financial  statements  delivered  pursuant to paragraphs  (a) and (b) of Section
5.01,  related to  programs  to  relocate  production  capabilities  to low-cost
sourcing facilities."

     SECTION 1.02.  Amendment of Section 3.04(a).  Section 3.04(a) of the Credit
Agreement  is hereby  amended  by  amending  clause  (C)  thereof to read in its
entirety as follows:

     "(C) to finance the repurchase by Holding (y) in an aggregate amount not to
exceed  $308,000,000  of shares  of its  common  stock and (z) in an  additional
aggregate  amount  not to exceed  $300,000,000  of shares of its  common  stock;
provided that the aggregate  amount of repurchases by Holding pursuant to clause
(z) shall not exceed $100,000,000 in each consecutive 12-month period commencing
on July 9, 1998.

     SECTION 1.03. Amendment of Section 6.02(a)(ii).  Section 6.02(a)(ii) of the
Credit  Agreement is hereby amended by amending clause (1) thereof by adding the
following proviso immediately  following the word "Lenders" in the sixth line of
Section 6.02(a)(ii):

     "provided,  that during the period  commencing on August 7, 1998 and ending
on June 1, 1999 and subject to the requirement  that the written approval of the
Required  Lenders shall have been obtained for  transfers for  consideration  in
excess of $50,000,000 in the aggregate during any fiscal year of ASI, ASI or any
Subsidiary may transfer assets of its European plumbing distribution  businesses
for  consideration  in an amount  not to  exceed  $50,000,000  in the  aggregate
without obtaining the written approval of the Required Lenders".

     SECTION 1.04. Amendment of Section 6.02(a)(iv).  Section 6.02(a)(iv) of the
Credit  Agreement  is hereby  amended  by  amending  paragraph  (B)  thereof  by
replacing  the  reference  to "or  Spain"  appearing  in the  last  line of such
paragraph  (B)  with  ",  Spain,  Australia,  the  Peoples  Republic  of  China,
Indonesia,  Japan,  Malaysia,  Phillippines,  Singapore,  South  Korea,  Taiwan,
Thailand or Vietnam".

     SECTION 1.05.  Amendment of Article VI Paragraph B. Paragraph B. of Article
VI of the Credit Agreement is hereby amended by inserting the following sentence
at the end of such paragraph:

          "Notwithstanding the foregoing, Holding shall be permitted (a) to form
     direct,  wholly owned  subsidiaries,  the sole purpose of which shall be to
     acquire  from  third  parties  100%  of the  shares  of  capital  stock  of
     corporations  owning sales  offices  engaged in the sale of ASI's Trane air
     conditioning  products  (the  "Sales  Offices   Corporations")  or  (b)  to
     recapitalize direct subsidiaries of ASI, the sole purpose of which shall be
     to merge with Sales  Offices  Corporations  such that Holding  shall own at
     least 80% of the capital stock of such subsidiaries;  provided,  that in no
     event (i) shall the total number of  subsidiaries  formed or  recapitalized
     pursuant  to clauses (a) or (b) exceed  three and (ii) shall the  aggregate
     contributed equity capital of all such subsidiaries exceed $50,000,000."

ARTICLE II.   REPRESENTATIONS AND WARRANTIES

     Each of Holding, ASI and the other Borrowers hereby represents and warrants
(but, in the case of representations  and warranties  relating to Credit Parties
and  their  Subsidiaries,  only as to  itself  and its  Subsidiaries,  it  being
understood  that Holding and ASI make all  representations  and warranties as to
all parties) to each Lender and the Administrative Agent that this Amendment (a)
has been duly authorized,  executed and delivered by Holding, ASI and each other
Borrower or Credit Party and constitutes the legal, valid and binding obligation
of each such person enforceable  against it in accordance with its terms, except
as  enforcement  thereof may be limited by  applicable  bankruptcy,  insolvency,
reorganization,  moratorium and other similar laws affecting the  enforceability
of creditors' rights generally and by general principles of equity, and (b) will
not  conflict in any respect  material to the rights or interests of the Lenders
with or  result in any  breach of any of the  terms,  covenants,  conditions  or
provisions  of, or  constitute  (with notice or lapse of time or both) a default
under, or result in a required prepayment of, or (other than as permitted by the
Credit Agreement as amended hereby or as contemplated by the Security Documents)
result in the creation or imposition of (or the  obligation to create or impose)
any Lien upon any of the  properties or assets of any Credit Party or any of its
Subsidiaries pursuant to the terms of, any indenture,  mortgage,  deed of trust,
agreement or other  instrument  to which any Credit Party is a party or by which
it may be subject.

ARTICLE III.   EFFECTIVENESS

     SECTION 3.01. Effectiveness. This Amendment shall become effective when the
following conditions precedent shall have been satisfied:



<PAGE>


     (a) the Administrative Agent shall have received, on behalf of the Lenders,
an Officer's  Certificate of ASI, dated the date of this  Amendment,  confirming
compliance with the conditions  precedent set forth in paragraphs (b) and (c) of
Section 4.01 of the Credit Agreement insofar as such conditions precedent relate
to ASI and its subsidiaries;

     (b) all legal matters incidental to this Amendment shall be satisfactory to
the  Administrative  Agent  and to  Cravath,  Swaine  & Moore,  counsel  for the
Administrative Agent; and

     (c) the  signature  lines at the foot of this  Amendment  shall  have  been
executed by Lenders  sufficient to effect this Amendment  under the terms of the
Credit Agreement.

ARTICLE IV.   MISCELLANEOUS

     SECTION  4.01.  APPLICABLE  LAW. THIS  AMENDMENT  SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

     SECTION 4.02. Expenses. ASI shall pay all reasonable out-of-pocket expenses
incurred  by the  Administrative  Agent  in  connection  with  the  preparation,
negotiation,  execution, delivery and enforcement of this Amendment,  including,
but not limited to, the reasonable fees,  charges and  disbursements of Cravath,
Swaine & Moore, counsel for the Administrative Agent. The agreement set forth in
this Section 4.02 shall survive the termination of the Credit Agreement.

     SECTION 4.03. Counterparts. This Amendment may be executed in any number of
counterparts,  each of which shall  constitute an original but all of which when
taken together shall constitute but one agreement.


                  IN WITNESS  WHEREOF,  the  parties  hereto  have  caused  this
Amendment to be duly executed by their duly authorized  officers,  all as of the
date first above written.


                                          AMERICAN STANDARD COMPANIES INC.,

                                          by
                                         
                                             Name:
                                             Title:



                                           AMERICAN STANDARD INC.,

                                           
                                           by

                                              Name:
                                              Title:


                                           AMERICAN STANDARD CREDIT INC.,

                                             
                                           by
                                              Name:
                                              Title:


                                           WABCO STANDARD GMBH,

                                             
                                           by

                                              Name:
                                              Title:




<PAGE>

                                       
                                           AMERICAN STANDARD (UK) CO.,

                                           by

                                              Name:
                                              Title:


                                           STANDARD EUROPE, a European Economic
                                             Interest Grouping,

                                           by

                                              Name:
                                              Title:



                                           WABCO STANDARD TRANE INC.,

                                           by

                                              Name:
                                              Title:


                                           WABCO STANDARD TRANE B.V.,

                                           by

                                              Name:
                                              Title:


                                          THE CHASE MANHATTAN BANK, individually
                                             and as Administrative Agent,

                                            by

                                               Name:
                                               Title:


                                          CITIBANK, N.A., individually and as
                                           Documentation Agent,

                                             by

                                               Name:
                                               Title:


                                           THE BANK OF NOVA SCOTIA, individually
                                            and as Co-Syndication Agent,

                                             by

                                               Name:
                                               Title:




<PAGE>


NATIONSBANK, N.A., individually and as
Co-Syndication Agent,

  by

    Name:
    Title:


BANKERS TRUST COMPANY,

  by

    Name:
    Title:


DEUTSCHE BANK AG, NEW YORK AND/OR CAYMAN ISLANDS BRANCH,

  by

    Name:
    Title:

  by

    Name:
    Title:



THE BANK OF NEW YORK,

  by

    Name:
    Title:


BANQUE PARIBAS,

  by

    Name:
    Title:

  by

    Name:
    Title:


CIBC INC.,

  by

    Name:
    Title:




<PAGE>


COMPAGNIE FINANCIERE DE CIC ET DE L'UNION EUROPEENNE,

  by

    Name:
    Title:

  by

    Name:
    Title:


CREDIT LYONNAIS NEW YORK BRANCH,

  by

    Name:
    Title:


THE INDUSTRIAL BANK OF JAPAN TRUST COMPANY,

  by

    Name:
    Title:

THE LONG TERM CREDIT BANK OF JAPAN, LIMITED,

  by

    Name:
    Title:


THE SANWA BANK LIMITED, NEW YORK BRANCH,

  by

    Name:
    Title:


THE SUMITOMO BANK, LTD.,

  by

    Name:
    Title:


THE TORONTO-DOMINION BANK,

  by

    Name:
    Title:




<PAGE>


ABN AMRO BANK N.V., NEW YORK BRANCH,

  by

    Name:
    Title:

  by

    Name:
    Title:


ALLIED IRISH BANK plc, CAYMAN ISLANDS BRANCH,

  by

    Name:
    Title:

  by

    Name:
    Title:


ARAB BANKING CORPORATION,

  by

    Name:
    Title:


BANCA COMMERCIALE ITALIANA, NEW YORK BRANCH,

  by

    Name:
    Title:

  by

    Name:
    Title:


BANK OF AMERICA ILLINOIS,

  by

    Name:
    Title:


BANK OF IRELAND,

  by

    Name:
    Title:




<PAGE>


BANK OF MONTREAL,

  by

    Name:
    Title:


BANK OF SCOTLAND,

  by

    Name:
    Title:


THE BANK OF TOKYO-MITSUBISHI, LTD., NEW YORK BRANCH,

  by

    Name:
    Title:


CREDIT AGRICOLE,

  by

    Name:
    Title:


CREDITO ITALIANO, SpA,

  by

    Name:
    Title:

  by

    Name:
    Title:


FLEET NATIONAL BANK,

  by

    Name:
    Title:


LLOYDS BANK, PLC,

  by

    Name:
    Title:

  by

    Name:
    Title:



<PAGE>



MERITA BANK LTD.,

  by

    Name:
    Title:

  by

    Name:
    Title:


THE MITSUBISHI TRUST AND BANKING CORPORATION,

  by

    Name:
    Title:

THE MITSUI TRUST AND BANKING COMPANY, LTD.,

  by

    Name:
    Title:


NATIONAL CITY BANK,

  by

    Name:
    Title:


THE ROYAL BANK OF SCOTLAND plc,

  by

    Name:
    Title:


THE SAKURA BANK, LIMITED,

  by

    Name:
    Title:


SOCIETE GENERALE, NEW YORK BRANCH,

  by

    Name:
    Title:



<PAGE>



STANDARD CHARTERED BANK,

  by

    Name:
    Title:

  by

    Name:
    Title:


THE SUMITOMO TRUST AND BANKING CO., LTD., NEW YORK BRANCH,

  by

    Name:
    Title:

THE TOKAI BANK, LIMITED, NEW YORK BRANCH,

  by

    Name:
    Title:


UNITED STATES NATIONAL BANK OF OREGON,

  by

    Name:
    Title:


UNION BANK OF CALIFORNIA, N.A.,

  by

    Name:
    Title:


BAYERISCHE VEREINSBANK AG,

 by

    Name:
    Title:


DAI-ICHI KANGYO BANK, LIMITED,

 by

    Name:
    Title:



<PAGE>



FIRST UNION NATIONAL BANK,

 by

    Name:
    Title:


FUJI BANK LIMITED,

 by

    Name:
    Title:

TOYO TRUST & BANKING CO., LTD.,

 by

    Name:
    Title:

NATEXIS BANQUE BFCE,

 by

    Name:
    Title: