Document:

EXHIBIT 10.6

 

Exhibit 10.6

January 13, 2004

Dear Mr. Olivié:

     This letter constitutes the entire agreement between American Standard
Companies and you regarding the separation of your employment with the Company.
Please read this letter carefully, then sign the copy of this Agreement and
Release where indicated on the last page and return it to me by February 3,
2004.

	 	1.	 	Your employment as an officer of the Company and any of its
affiliates of which you have been an officer or director will
terminate on May 1, 2004 (“Termination Date”) and you will remain on
the payroll through May 1, 2004 (at the same Base Salary of $400,000
per annum) even if the Company determines that you do not have to
report to the office throughout this time period. Through the
Termination Date, your Employment Agreement dated March 2, 2001,
revised March 19, 2001 (“Employment Agreement”), shall remain in
effect except as modified hereby.
	 
	 	2.	 	On or about May 1, 2004, in severance payments, you shall
receive in a lump sum payment of $1,400,000 less statutory
deductions representing an amount equal to two times the sum of your
current Base Salary and your Annual Incentive Plan Target award.
	 
	 	3.	 	On or about May 1, 2004, you will also receive an additional
lump sum payment of $350,000, less statutory deductions.
	 
	 	4.	 	With respect to the Annual Incentive Plan, you will receive
the $300,000 award, which you have previously earned with respect to
the 2003 Annual Incentive Plan Year, and which you are entitled to
thereunder. You will also receive a Long-Term Incentive award in
the amount of $520,000 under the Long-Term Incentive Plan, which you
have previously earned with respect to the 2001-03 Long-Term
Incentive Plan year, and which you are entitled to thereunder.
Payments under the foregoing plans will be made at the same time as
payments are made to other participants under each plan.
	 
	 	5.	 	On or about May 1, 2004, you will also be paid a lump sum
amount of $208,897, less statutory deductions, as a special
retention award payment in accordance with your Employment
Agreement.

 

 

	 	6.	 	In consideration of the receipt of the payments described in
Sections 1, 2, 3 and 5, you will surrender any and all rights to
those stock options granted to you under the American Standard
Companies Inc Stock Incentive Plan and the American Standard
Companies Inc. 2002 Omnibus Incentive Plan which have not vested as
of January 15, 2004 (the “Options”), and you release the Company
from any and all claims with respect to the Options.
	 
	 	7.	 	Your accounts in the Savings Plan of American Standard Inc.
and Participating Subsidiary Companies and in the American-Standard
Employee Stock Ownership Plan (the “ESOP”) are fully vested and your
rights and interests therein will be governed by their respective
terms. Contributions to such accounts will cease as of your
Termination Date.
	 
	 	8.	 	On or about May 1, 2004, you will receive a lump sum payment
equal to your accrued, unused vacation time as of your Termination
Date.
	 
	 	9.	 	Your medical, accident and life insurance benefits will be
continued through your Termination Date and for two years following
your Termination Date, under the same terms and conditions as though
you were actively employed, unless and until you acquire at least
equal alternative coverage.
	 
	 	10.	 	The Company will reimburse you for all reasonable bills that
you receive and submit for financial planning, tax return
preparation and audit for one year following your Termination Date,
in accordance with the same procedures for such reimbursement as are
now in effect and applicable to executive officers of the Company,
up to an aggregate maximum of $10,000.
	 
	 	11.	 	The Company shall provide a written reference letter. All
verbal references will be entirely consistent with this written
reference.
	 
	 	12.	 	Release of Claims Against American Standard Inc. In exchange
for those benefits provided herein to which you would not otherwise
be entitled you hereby waive, release and forever discharge American
Standard Companies Inc., American Standard Inc., its subsidiaries,
successors, predecessors and assigns, its employees, agents,
directors, officers and stockholders, past and present, from any and
all claims of any nature whatsoever you have arising out of or in
any way related to your employment and termination of employment,
known or unknown, including, but not limited to, any claims arising
under the Federal Age Discrimination in Employment Act (“ADEA”),
Americans with Disabilities Act (“ADA”), Title VII of the Federal
Civil Rights Act, The Civil Rights Act of 1991, or any other
Federal, State or Local Statutes or Common Law concerning
employment, and you agree to bring no action, suit or other
proceedings in connection hereunder. The Company hereby waives,
releases and forever discharges you from any and all claims of any
nature whatsoever its has arising out of or in any way related to
your employment or your termination of

 

 

	 	 	 	employment. This Section and the release hereunder shall not apply to
claims arising under ADEA after your execution of this Agreement and
Release. Except as may be expressly varied herein, any rights to
benefits under American Standard sponsored benefit plans are governed
exclusively by the written Plan documents.
	 
	 	13.	 	For a period of fifteen months after your Termination Date,
you shall not, directly or indirectly, engage in or have any
ownership interest or financial participation in (other than an
ownership interest of not more than five percent of the outstanding
shares of capital stock of any corporation), or be employed by, or
offer services to, the businesses set forth on Schedule I
(“Competitors”), or become involved, affiliated or provide
assistance with any Competitors as an executive, shareholder,
director, officer, agent, partner, member, investor, employee,
consultant, independent contractor, joint venturer, or otherwise
(other than an ownership interest of not more than five percent of
the outstanding shares of capital stock of any corporation).
	 
	 	14.	 	You agree that for a period of fifteen months following your
Termination Date, you shall not solicit any employee of the Company
or its affiliates to terminate his or her employment.
	 
	 	15.	 	You shall not disclose to any other employer or person any trade
secrets or any proprietary, confidential or privileged information or
materials pertaining to the Company or its affiliates, including
(without limitation) any information concerning the management,
business operations, financial conditions, capital and credit
arrangements or any projections, forecasts or plans with respect to
any of the foregoing (“Confidential Information”); provided that you
have the right to disclose Confidential Information in response to a
governmental inquiry, including a governmental tax audit or a judicial
subpoena. Confidential Information shall not include any data or
information that has been disclosed voluntarily to the public by the
Company, or that has been independently disclosed by others, or that
otherwise enters the public domain at any time through no fault of
yours.
	 
	 	 	 	The American Standard Inc. and Subsidiaries Agreement Concerning
Inventions and Proprietary Information, is incorporated by reference
as if set forth fully herein and as such, you continue to be bound by
all of its provisions.
	 
	 	 	 	In accordance with reasonable ethical and professional standards, you
will refrain from taking actions or making statements, written or
oral, which disparage or defame the good will or reputation of the
Company, its directors, officers, executives and employees of which
could adversely affect the morale of other employees.
	 
	 	 	 	In accordance with reasonable ethical and professional standards, the
Company’s Officers and Directors will refrain from taking actions or
making statements, written or oral, which disparage or defame your
reputation.

 

 

	 	16.	 a)	You agree that you will personally provide reasonable
assistance and cooperation to the Company in activities related to
the prosecution or defense of any pending or future lawsuits or
claims involving the Company. The Company agrees to pay all
reasonable expenses and other costs related to such assistance and
cooperation.
	 
	 	 	 b)	You will promptly notify the Company if you receive any
requests for information regarding the Company from (i) any
member of the press, (ii) in connection with any litigation or
claims described in Section 16(a), or (iii) any third party
regarding any Confidential Information. For a period of fifteen
months after your Date of Termination, you will also notify the
Company if you become aware of any material potential claims
against the Company.
	 
	 	 	 c)	You will refrain from providing any information related
to any claim or potential litigation against the Company to any
non-Company representative without either the Company’s written
permission or being required to provide information pursuant to
legal process.
	 
	 	 	 d)	If required by law to provide sworn testimony regarding
any Company-related matter, you will consult with and have
Company-designated legal counsel present for such testimony.
	 
	 	 	 e)	The Company will be responsible for the costs of such
designated counsel and you will bear no cost for same and also be
responsible for any other reasonable costs incurred by you in
connection with any litigation, claim or investigation regarding
the Company.
	 
	 	 	 f)	You will confine your testimony to items about which
you have knowledge rather than speculation, unless otherwise
directed by legal process.
	 
	 	 	 g)	You will cooperate with the Company’s attorneys to
assist their efforts, especially on matters you have been privy
to, holding all privileged attorney-client matters in strictest
confidence.
	 
	 	 	Nothing in sentences c-g of the above paragraph is intended to apply
to governmental or judicial investigations; provided, however, the
Company will reimburse you for legal expenses if you are compelled to
appear in a government or judicial investigation.
	 
	 	17.	Severability; Entire Agreement; No Oral Modification; No
Waivers
	 
	 	 	Should any of the provisions of this Agreement and Release be
determined to be invalid by a court of competent jurisdiction, the
parties agree that this shall not affect the enforceability of the
other provisions in good faith to effectuate its or their purpose and
to confirm the provision or provisions to law. This Agreement and

 

 

	 	 	 	Release constitutes a single integrated contract expressing the entire
agreement of the parties with respect to the subject matter hereof and
supersedes all prior and contemporaneous oral and written agreements
and discussions with respect to the subject matter hereof. This
Agreement and Release, and all provisions contained in it, shall be
binding upon and inure to the benefit of the parties and their
respective heirs, personal representatives, successors and assigns.
This Agreement and Release may be amended or modified only by an
agreement in writing signed by you and the Company and no amendments
or modifications are contemplated at this time. The failure by the
Company or you to declare a breach or otherwise to assert its rights
under this Agreement and Release or American Standard Sponsored
benefit plans shall not be construed as a waiver of any right the
Company or your, as applicable, have under this Agreement and Release
or under any Company sponsored benefit plans. Your obligations under
Sections 13 — 16 of this Agreement and Release shall not apply in the
event the Company materially breaches this Agreement and Release or
becomes bankrupt
	 
	 	18.	 	Acknowledgements and Certifications
	 
	 	 	 	You acknowledge and certify that you:
	 

	 	a.	 	have read and understand all of the terms of this
Agreement and Release and do not rely on any representation or
statement, written or oral, not set forth in the Agreement and
Release.
	 
	 	b.	 	have had a reasonable period of time to consider this
Agreement and Release;
	 
	 	c.	 	are signing this Agreement and Release knowingly and
voluntarily;
	 
	 	d.	 	have been advised to consult with an attorney before
signing this Agreement and Release;
	 
	 	e.	 	have the right to consider the terms of this Agreement
and Release for 21 days and if you take fewer than 21 days to
review this Agreement and Release, you hereby waive any and all
rights to the balance of the 21 day review period; and
	 
	 	f.	 	have the right to revoke this Agreement and Release
within seven consecutive calendar days after signing and dating
it, by providing written notice of revocation to J. Paul McGrath,
Senior Vice President, General Counsel and Secretary, American
Standard Companies Inc. If you revoke this Agreement and Release
during this seven-day period, it becomes null and void in its
entirety. If you do not revoke this Agreement and Release, after
such seven days, it becomes final.
	 

	 	19.	 	If the Company reasonably, non-discriminatorily,
non-capriciously and non-arbitrarily, determines that you have
materially violated any of your material obligations under this
Agreement and Release, then the Company will notify you in

 

 

	 	 	 	writing of this violation and the Company may, at its option,
terminate the Salary and Benefit Continuation and any other benefits
hereunder to which you were not otherwise entitled. Prior to doing
so, however, you and the Company must discuss and attempt to reach an
agreement, including granting you a period of 30 days to cure an
alleged violation. In the event that agreement cannot be reached or
you fail to cure the alleged violation during the 30-day period, the
determination of whether you have materially violated your material
obligations under this Agreement and Release, and, in the event it is
determined that you have materially violated your material obligations
under this Agreement and Release, the remedy therefor, shall be
settled exclusively through binding arbitration in accordance with
the then applicable rules of the American Arbitration Association, and
judgment upon any award so rendered may be entered in any court having
jurisdiction thereof. Any arbitration shall be conducted in
[Piscataway, New Jersey] or such other location as mutually agreed by
the parties. The arbitration provisions of this section shall be
interpreted according to, and governed by, the Federal Arbitration
Act, 9 U.S.C. § 1 et seq. The prevailing party shall be entitled to
recover his legal fees and expenses incurred in accordance with this
Section, or in accordance with applicable law if it provides for a
greater recovery.
	 
	 	20.	 	The current policy which provides coverage for current and
former Officers and Directors will apply to you.
	 
	 	21.	 	Any amounts payable hereunder or benefits to be provided
hereunder shall be payable to your beneficiary in the event of your
death prior to the payments being made or benefits being provided.
Medical, accident and life insurance benefits will be continued for
your spouse and dependents after your death for the period described
in Section 9.
	 
	 	22.	 	Your obligations and the obligations of the Company as set
forth in this Agreement and Release will survive indefinitely.

[REST OF PAGE INTENTIONALLY BLANK]

	 	 	 	 	 
	Understood
and Agreed:

	 	Sincerely,
	By:	 	/s/ Marc R. Olivié	 	/s/ Lawrence Costello
	 	 	

	 	

	 	 	
Marc R. Olivié
	 	Lawrence Costello

Senior Vice President, Human Resources
	Dated:	 	 	 	 
	 	 	

	 	 
	 	 	 	 	 
	By:	 	 	 	 
	 	 	

	 	 

 

 

	 	 	 	 	 
	 	 	
Marc R. Olivié

	 	 
	Dated:	 	 	 	 
	 	 	

	 	 

 

 

SCHEDULE I

     The Bathroom and Kitchen Line of Businesses of the following Companies:

	 	 	 	 
	 	-	 	
Masco
	 	-	 	
Kohler
	 	-	 	
Toto
	 	-	 	
Grohe
	 	-	 	
Roca
	 	-	 	
Sanitec
	 	-	 	
Jacuzzi
	 	-	 	
CraneEXHIBIT 10.9

 

Exhibit 10.9

TRUST AGREEMENT FOR AMERICAN STANDARD COMPANIES INC.

LONG-TERM INCENTIVE COMPENSATION PLAN AND

AMERICAN STANDARD COMPANIES INC.

SUPPLEMENTAL INCENTIVE COMPENSATION PLAN

(As Amended and Restated in its Entirety As of July 10, 2003)

     This Trust Agreement dated as of January 1, 1993, and amended and restated
in its entirety as of July 10, 2003, by and between American Standard Companies
Inc., a Delaware corporation, and Robert M. Kennedy, as Trustee, provides, on
the terms and conditions set forth below, for the establishment and
administration of a trust to hold shares of Common Stock issued as payouts
under the American Standard Companies Inc. Long -Term Incentive Compensation
Plan and the American Standard Companies Inc. Supplemental Incentive
Compensation Plan.

1. Definitions.

     For purposes of this Trust Agreement, the following definitions shall
apply:

     1.1. Beneficiary means any one person or trust appointed by a Participant
in an unrevoked writing filed with the Company directing that, in the event of
such Participant’s death, all of such Participant’s rights under and interests
in the Plan, as recorded pursuant to this Trust, shall vest in such person or
trust, provided that a Participant’s Beneficiary shall be deemed to be the
estate or legal representative of such Participant if such written appointment
is revoked and not replaced by another such written appointment filed with the
Company, or if a Participant’s Beneficiary does not survive such Participant.

     1.2 “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).

 

 

     1.3. Board means the Board of Directors of the Company.

     1.4. Cash Value means the value of the Shares credited to a Participant’s
Share Award Account, which shall be determined as follows: if the Shares in the
Participant’s Share Award Account

	 	(A)	 	are retained in the Trust or sold to the Company or a
Subsidiary, based on the Fair Market Value as of the last day of the
month in which the Participant’s Termination Date occurs or
	 
	 	(B)	 	are sold to any person other than the Company or a Subsidiary
to effect a distribution in cash, the net proceeds of any such sale;
provided that, any sale by the Trustee to effect a distribution
hereunder shall be effected as of the last day of the month in which
the Participant’s Termination Date occurs.

     1.5. Change of Control means the occurrence of any of the following
events:

		
	 	     (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;

		
	 	     (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 (the “Continuing Directors”), cease
for any reason to constitute a majority of the Board;

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	 	     (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.

     1.5. Committee means the Management Development and Nominating Committee,
or such other committee appointed by the Board, consisting of three or more
persons who may or may not be directors or officers of the Company, to
administer this Trust Agreement.

     1.6. Change of Control Stock Value means the value of a share of Common
Stock determined as follows:

		
	 	     (i) if the Change of Control results from an event described in
clause (iii) of the Change of Control definition, the highest per share
price paid for shares of Common Stock of the Company in the transaction
resulting in the Change of Control; or

- 3 -

 

		
	 	     (ii) if the Change of Control results from an event described in
clauses (i), (ii) (iv) or (v) of the Change of Control definition and no
event described in clause (iii) of the Change of Control definition has
occurred in connection with such Change of Control, the highest sale price
of a share of Common Stock of the Company on any trading day during the 60
consecutive trading days immediately preceding and following the date of
such Change of Control as reported on the New York Stock Exchange
Composite Tape, or other national securities exchange on which the Common
Stock is traded, and published in The Wall Street Journal

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

     1.8. Company means American Standard Companies Inc., a Delaware
corporation.

     1.9. Creditor means a general creditor of the Company or a Subsidiary, as
appropriate, and Judgment Creditor means a Creditor who has obtained a judgment
against the Company or a Subsidiary, as appropriate, from a court of competent
jurisdiction and who has made written demand to the Company or such Subsidiary
for payment on such judgment which has gone unsatisfied for at least 180 days.

     1.10. Fair Market Value on any date means the closing price of a Share on
such date as reported on the New York Stock Exchange consolidated reporting
system.

     1.11 Insolvent means the inability to pay debts as they mature or being
subject to proceedings as a debtor under the United States Bankruptcy Code, and
Insolvency means the state of being insolvent.

     1.12. Participant means an employee of the Company or one of its
Subsidiaries who participates in the Plan.

     1.13. Plan means either the American Standard Companies Inc. Long -Term
Incentive Compensation Plan or the American Standard Companies Inc.
Supplemental Incentive Plan, as either is in effect from time to time.

     1.14. Plan Payout means a payment made pursuant to Section 5(a) of the
American Standard Companies Inc. Long -Term Incentive Compensation Plan or
pursuant to the payout provisions of the American Standard Companies Inc.
Supplemental Incentive Compensation Plan.

- 4 -

 

     1.15. Prime Rate means the rate of interest publicly announced from time
to time by the New York City office of Citibank N.A. as its prime or reference
rate, adjusted as of the first business day of each calendar quarter.

     1.16. Share means a share of Common Stock.

     1.17. Share Award Account means a separate account established under the
Trust with respect to which the Participant’s interests under the Plan are
credited.

     1.18. Subsidiary means a corporation in which the Company owns, directly
or indirectly, more than 50% of the voting power represented by stock entitled
to vote for the election of directors, or a partnership in which the Company
owns, directly or indirectly, at least 50% of the capital or profits interests
in such partnership.

     1.19. Restatement Date means February 3, 1995.

     1.20. Termination Date of a Participant means the date on which such
Participant’s employment with the Company and each of its Subsidiaries
terminates for any reason, including death.

     1.21. Trust means the trust fund established under this Trust Agreement.

     1.22. Trustee means Robert M. Kennedy or such successor trustee as shall
be appointed by the Committee pursuant to Section 19 hereof.

2. Establishment and Duration of Trust; Trustees Powers.

     The Trust is hereby established under the Plan to fulfill certain
obligations thereunder of the Company and the Company’s Subsidiaries to
Participants. The Company and the Subsidiaries shall remain primarily
responsible to fulfill payment obligations under the Plans, and may make
payments directly to Participants as they become due. Such employers shall
notify the Trustee of any decisions to pay benefits directly. To the extent
payments are made from the Trust, the employer’s liability to make payments
shall be reduced correspondingly. The Trust shall continue in effect until
terminated by action of the Board; provided that the Trust shall in any event
terminate when all amounts owed to Participants have been paid or the Trust has
been exhausted.
The Trust is intended to be a grantor trust within the meaning of Sections
671 through 679 of the Internal Revenue Code of 1986, as needed (the “Code”).

- 5 -

 

     The Trustee shall invest and reinvest the assets of the Trust without
distinction between principal and income; provided, however, that the Trustee
shall hold in the Trust all Shares that it receives, and the Trustee shall
distribute such Shares to the Participants (or to their Beneficiaries) entitled
to such distributions when and as directed by the Committee in accordance with
the terms of the Plan. The Committee shall direct the investment of any cash
contributions to the Trust in its discretion. Pending investment of any such
cash contributions, the Trustee may temporarily invest and reinvest such
contributions in any marketable short- and medium-term fixed income securities,
United States Treasury Bills, other short- and medium-term government
obligations, commercial paper, other money market instruments and part
interests in any one or more of the foregoing, or may maintain cash balances
consistent with the liquidity needs of the Trust as determined by the Trustee.
The Committee may direct the Trustee to maintain separate investment funds,
allocate contributions among such funds, and make transfers among such funds.

     Subject to the provisions hereof, the Trustee shall be authorized and
empowered to exercise any and all of the following rights, powers and
privileges with respect to any cash, securities or other properties held by the
Trustee in trust hereunder:

     1.     To sell, exchange, mortgage or lease any such property and to convey,
transfer or dispose of any such property on such terms and conditions as the
Trustee deems appropriate.

     2.     To grant options for the sale, transfer, exchange or disposal of any
such property and to exercise any subscription rights or conversion privileges
with respect to any securities held in the Trust Fund.

     3.     To exercise all voting rights pertaining to any securities; to consent
to or request any action on the part of the issuer of any such securities; and
to give general or special proxies or powers of attorney with or without power
of substitution.

     4.     To collect and receive any and all money and other property of
whatsoever kind or nature due or owing or belonging to the Trust Fund and to
give full discharge and acquaintance therefor; and to extend the time of
payment of any obligation at any time owing to the Trust Fund, as long as such
extension is for a reasonable period and continues reasonable interest.

     5.     To cause any securities or other property to be registered in, or
transferred to, the individual name of the Trustee or in the name of one or
more of its nominees, or one or more
nominees of any system for the centralized handling of securities, or to
retain such investments

- 6 -

 

unregistered and in form permitting transferability by
delivery (provided that the books and records of the Trust at all times show
that all such investments are a part of the Trust Fund).

     6.     To settle, compromise or submit to arbitration any claims, debts or
damages due or owing to or from the Trust; to commence or defend suits or legal
proceedings whenever, in its judgment, any interest of the Trust requires it;
and to represent the Trust in all suits or legal proceedings in any court of
law or equity or before any other body or tribunal, insofar as such suits or
proceedings relate to any property forming part of the Trust Fund or to the
administration of the Trust Fund.

     7.     Generally, to do all acts, whether or not expressly authorized, which
are necessary or appropriate to carry out the intent of this Trust Agreement.

3. Contribution of Shares to Trust.

     As of the date any Plan Payout authorized under the Plan which consists in
whole or in part of Shares is made, the Company shall contribute to the Trust,
for credit to the Share Award Account of each Participant who is granted such a
Plan Payout, that number of whole and fractional Shares, valued at their Fair
Market Value on such date, equal to the percentage of such Plan Payout
consisting of Shares.

4. Share Award Accounts.

     Each Participant’s Share Award Account shall record the number of Shares
and fractions thereof credited to such Share Award Account as a Plan Payout and
the date as of which each such Plan Payout was made.

5. Voting Rights.

     Shares credited to each Participant’s Share Award Account shall be voted
by the Trustee as recommended by the Board on its proxy voting card.

6. Distributions from Trust.

     The Committee may at any time prior to a Change of Control direct that the
Shares and any other property (“Non-Share Interests”) credited to a
Participant’s Share Award Account be distributed from the Trust. If not
earlier distributed in accordance with the foregoing sentence, upon the
termination of a Participant’s employment prior to a Change of Control, such
Participant
(or, in the event of his death, his Beneficiary) shall be entitled to a
distribution from the Trust of all

- 7 -

 

Shares and Non-Share Interests credited to
his Share Award Account; provided that, so long as such direction shall not
cause the Company or its Subsidiaries to breach any covenant or otherwise
incur a default under any credit or other financing agreement to which it is a
party, the Company may direct the Trustee to pay the Participant (or his
Beneficiary) the Cash Value of such Shares in lieu of a distribution in Shares.
Notwithstanding the foregoing, in the case of any Participant whose employment
terminated prior to the Restatement Date and, as of the Restatement Date, whose
Share Award Account is credited with Shares, such Shares and Non-Share
Interests credited to such Account shall be distributed to such Participant as
soon as administratively practicable following the Restatement Date, but in any
event, no later than one year from such Date.

7. Change of Control.

     Upon a Change of Control, each Participant shall be entitled to receive a
lump sum cash payment equal to the sum of (i) the Change of Control Stock Value
of all Shares credited to his Share Award Account and (ii) the value of any
Non-Share Interests credited to his Share Award Account (unless within one (1)
business day following such a Change of Control, such Participant has delivered
written notice to the Trustee pursuant to Section 10 hereof requesting a
distribution from the Trust of all Shares and/or Non-Share Interests credited
to such Participant’s Share Award Account in the event of a Change of Control,
in lieu of a cash payment equal to the Change of Control Stock Value of such
Shares and/or the value of Non-Share Interests, in which case such Participant
shall be entitled to receive a distribution of all Shares and/or Non-Share
Interests credited to such Participant’s Share Award Account) as soon as
practicable. Upon a Change of Control, the Trustee shall determine as promptly
as practicable the Change of Control Stock Value of the Shares in the Trust and
shall promptly thereafter deliver a written notice (the “Trustee Notice”) to
the Company setting forth such Change of Control Stock Value and the manner of
its determination and requesting that the Company purchase all Shares in the
Trust (except for Shares credited to Participants’ Share Award Accounts as to
which Participants have requested a distribution in the event of a Change of
Control in lieu of a cash payment equal to the Change of Control Value
therefor). A copy of such Trustee Notice shall be sent to each Participant.
Following the receipt of the Trustee Notice, the Company shall, within three
(3) business days following the Company’s receipt of such Trustee Notice, make
a cash payment to the Trustee equal to the Change of Control Stock Value of
such Shares against delivery of such Shares by the Trustee to the Company. In
the event that the Company shall not have made such cash payment
to the Trustee within such (3) business day period, interest on the amount
owing to the Trustee will

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accrue at a rate per annum equal to the Prime Rate
plus 4% and shall be compounded monthly until paid. Upon a Change of Control,
the Trustee shall sell as promptly as practicable the Non-Share Interests
(other than cash) of the Trust (except for such Non-Share Interests credited to
Participants’ Share Award Accounts as to which Participants have requested a
distribution in-kind in the event of a Change of Control in lieu of a cash
payment equal to the value therefor). Upon receipt by the Trustee of (i) the
cash payment from the Company for the Shares and (ii) the proceeds from the
sale of the Non-Share Interests (other than cash), the Trustee shall make to
each Participant the lump-sum cash payment contemplated by the first sentence
of this Section 7 with interest, if any, accrued pursuant to this Section 7,
plus a cash payment equal to the cash, if any, credited to such Participant’s
Share Award Account. For purposes of this Section 7, the Trustee’s
determination of the Change of Control Stock Value of a Participant in the
Trust shall be binding and conclusive.

8. Issuance of Share Certificates.

     If a Participant (or, in the event of his death, his Beneficiary) receives
a distribution of Shares pursuant to Section 6 or 7, the Trustee shall deliver
to such Participant or Beneficiary a certificate or certificates evidencing the
Shares credited to such Participant’s Share Award Account, as soon as
administratively practicable after the Participant’s Termination Date or a
Change of Control, as the case may be.

9. Changes in Capital Structure.

     In the event of the payment of any dividend payable in, or the making of
any distribution of, Shares to holders of record of Shares during the period
any Shares awarded under the Plan are credited to a Participant’s Share Award
Account; or in the event of any stock split, combination of Shares,
recapitalization or other similar change in the authorized capital stock of the
Company during such period; or in the event of the merger or consolidation of
the Company into or with any other corporation or the reorganization,
dissolution or liquidation of the Company during such period; there shall be
credited to such Participant’s Share Award Account such new, additional or
other shares of capital stock of any class, or other property (including cash),
as such Participant
would be entitled to receive as a matter of law if such Participant were a
shareholder of the Company at the time of such event.

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10. Administration.

     This Trust Agreement shall be administered by the Committee, which shall
have full power and authority (to the extent not inconsistent with the terms
and purposes of the Plan and this Trust Agreement) prior to a Change of Control
to interpret and carry out the terms of, and to establish, amend or rescind
rules and regulations relating to, this Trust Agreement; to appoint a
recordkeeper for this Trust Agreement and to rescind any such appointment; and
to take such other actions and to make such other determinations relating to
this Trust Agreement as may be necessary or advisable in connection with the
Plan. The Board or the Committee may, by resolution or written direction,
delegate to any agent or agents it shall appoint, including any officer or
employee of the Company, the authority to exercise any of its administrative
duties and responsibilities hereunder.

     All forms required to be filed hereunder and all other communications with
respect hereto shall be addressed to the Committee, the Company or the
Trustee, as the case may be, in care of the Secretary, American Standard
Companies Inc., One Centennial Avenue, Piscataway, New Jersey, 088556820, or to
such other address as the Committee, the Company or the Trustee, as the case
may be, may designate from time to time.

11. Trust Subject to Creditor Claims.

     Notwithstanding any other provision of this Trust Agreement or the Plan,
the Trustee shall hold the assets of the Trust for the benefit of Creditors to
the extent provided in Sections 12 and 13 hereof. No Participant or
Beneficiary shall have any rights greater than the rights of any other
unsecured Creditor, and no Participant or Beneficiary shall have any right
against or security interest in the Trust. The Chief Executive Officer or
Chief Financial Officer of the Company or each Subsidiary shall have the duty
to inform the Trustee in writing of the Insolvency of the Company or any such
Subsidiary, as the case may be.

12. Effects of Insolvency.

     Upon receipt prior to a Change of Control of any written allegation of the
Insolvency of the Company or any Subsidiary which has an interest in the
Trust, the Trustee shall suspend the making of any distribution from the Trust
and shall immediately notify the Company and any affected Subsidiary in
writing of such allegation. Within 30 days of receipt of such an allegation,
the Trustee shall determine whether the Company or the relevant Subsidiary is
Insolvent. If the Trustee determines the Company or the relevant Subsidiary to
be Insolvent, or if the Trustee

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otherwise has actual knowledge that the Company
or the relevant Subsidiary is Insolvent, the Trustee shall cease making
distributions hereunder and shall hold the portion of the Trust held for the
benefit of such entity for the benefit of its Creditors until otherwise
instructed by a court of competent jurisdiction. If the Trustee determines
that the Company or the relevant Subsidiary is not Insolvent, the Trustee shall
resume making appropriate distributions from the Trust to Participants and
Beneficiaries in accordance with this Agreement. Notwithstanding the
foregoing, if the Board, the Chief Executive Officer or the Chief Financial
Officer of the Company or the relevant Subsidiary delivers to the Trustee a
sworn statement that the Company or such Subsidiary is Insolvent, the Trustee
shall make distributions from the portion of the Trust held for the benefit of
such entity only as directed by a court of competent jurisdiction, until such
time as the Trustee determines that the Company or the relevant Subsidiary, as
the case may be, is not Insolvent.

13. Judgment Creditor Claims.

     In addition to the rights of Creditors set forth in Section 12 hereof, and
notwithstanding any other provision of this Trust Agreement, the assets of the
Trust shall at all times prior to a Change of Control be available to satisfy
claims of Judgment Creditors. Upon receipt by the Trustee of proof
satisfactory to the Trustee that a Creditor is a Judgment Creditor, the Trustee
shall satisfy the claim of such Judgment Creditor, to the extent possible, from
the assets of the Trust, and the Trustee shall be fully indemnified hereunder
in satisfying such claim.

14. Distributions Due to Certain Tax Consequences.

     Notwithstanding any provision of this Trust Agreement other than Sections
12 and 13 hereof, if a Participant (or Beneficiary) is determined to be subject
to United States federal income tax on any portion of his interest in the Trust
prior to the time of distribution of such interest that portion of such
interest shall be distributed by the Trustee to such Participant or
Beneficiary. A portion of a Participant’s (or Beneficiary’s) interest in the
Trust shall be determined to be subject to United States federal income tax
upon the earliest of (i) receipt by the Participant (or Beneficiary) of a
notice of deficiency from the United States Internal Revenue Service with
respect to such interest which is not contested by such Participant (or
Beneficiary); (ii) execution of a closing agreement between the Participant (or
Beneficiary) and the Internal Revenue Service which provides that such interest
is includible in the Participant’s (or Beneficiary’s) gross income; and (iii)
a final determination by the United States Tax Court or any other federal court
which holds that such interest is includible in the Participant’s (or
Beneficiary’s) gross income.

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15. Reports and Records.

     The Trustee shall:

     15.1. keep accurate and detailed accounts of all investments, receipts,
disbursements and other transactions in the Trust as he shall deem necessary
and proper with respect to his administration of the Trust, and permit
inspection of such accounts, records and assets of the Trust by any duly
authorized representative of the Company at any time during usual business
hours;

     15.2. make such periodic reports to the Company as it shall reasonably
request;

     15.3. prepare and timely file such tax returns and other reports, together
with supporting data and schedules, as may be required of the Trustee by law,
with any taxing authority or any other government authority, whether local,
state or federal.

16. Taxes.

     The Company and each participating Subsidiary agree that their respective
share of all income, deductions and credits of the Trust belong to them as
owners for income tax purposes and shall, as appropriate, be included on their
tax returns. The Company or a Subsidiary of the Company shall from time to
time pay taxes (references in this Trust Agreement to the payment of taxes
shall include interest and applicable penalties) of any and all kinds
whatsoever which at any time are lawfully levied or assessed upon or become
payable in respect of the Trust, the income or any property forming a part
thereof, or any security transaction pertaining thereto. Any amounts
distributed from the Trust shall be reduced by the amount of any withholding
taxes required by law, and the Trustee shall have the responsibility to
withhold and pay such amounts to the appropriate governmental authorities. The
Trustee shall inform the Company in writing of all amounts withheld and of all
distributions hereunder to a Participant or Beneficiary. The Trustee shall be
entitled to satisfy such withholding tax obligations and payments to a
Participant or Beneficiary by retaining an appropriate number of Shares and
selling such Shares.

17. For the Benefit of the Trustee.

     17.1. Expenses of the Trustee. The Company shall reimburse the Trustee
for any expenses incurred by the Trustee including, but not limited to, all
proper charges and
disbursements of the Trustee, and reasonable fees for legal services
rendered to the Trustee (whether or not rendered in connection with a judicial
or administrative proceeding). The Trustee’s

- 12 -

 

entitlement to reimbursement
hereunder shall not be affected by the resignation or removal of the Trustee or
by the termination of the Trust.

     17.2. Indemnification of Trustee. The Company shall indemnify, defend
and hold the Trustee harmless from and against any claim, liability, cost or
expense (including reasonable attorneys’ fees) asserted against, imposed on or
suffered or incurred by the Trustee in the good-faith carrying out of his
duties and responsibilities hereunder and in his good-faith compliance with any
written instructions delivered to him by the Company with respect thereto.

18. Resignation and Removal of Trustee.

     The Trustee may be removed by the Committee at any time with the approval
of Participants whose Share Award Accounts comprise 75% or more of the Shares
held by the Trust. The Trustee may resign at any time upon notice in writing
to the Company .

19. Successor Trustee.

     Upon the removal or resignation of the Trustee, the Committee may
designate a successor Trustee to act hereunder, which shall have the same
powers and duties as those conferred upon the Trustee. Upon such designation,
and upon the written acceptance of the successor Trustee, the former Trustee
shall, if necessary, assign, transfer and pay over to such successor Trustee
the assets then constituting the Trust. A successor Trustee shall have all the
rights and powers under this Trust Agreement as an original Trustee.

20. Amendment of Trust.

     All contributions made by the Company or any Subsidiary shall be
irrevocable unless the benefits payable hereunder have been otherwise paid to
the Participants by the Company or a Subsidiary; provided that, the Company
may amend, in whole or in part, any or all of the provisions of this Trust
Agreement, provided that no such amendment may affect the rights, protections,
duties or responsibilities of the Trustee without his consent and, provided
further, that no such amendment may (a) permit any part of the corpus or income
of the Trust to be returned or
diverted to the Company or (b) diminish, reduce, alter, or impair any
Participant’s Share Award Account without such Participant’s consent.

- 13 -

 

21. No Right of Alienation or Employment.

     Except as required in Sections 11 through 13 hereof, at no time prior to
the satisfaction of all liabilities with respect to Participants and their
Beneficiaries shall any part of the corpus and/or income of the Trust be used
for, or diverted to purposes other than for the exclusive purpose of providing
benefits to Participants and their Beneficiary. No Participant or Beneficiary
shall have any right or interest in the assets of the Trust which is greater
than the rights of any Creditor. The assets of the Trust shall not be subject
to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or
charge. This Trust Agreement does not give any Participant a right to
continued employment with the Company or any Subsidiary.

22. Headings.

     Section headings in this Trust Agreement are for reference only. In the
event of a conflict between a heading and the content of a Section, the content
of the Section shall control.

23. Construction.

     This Trust Agreement shall be construed and regulated by the laws of the
State of New York except where such laws are superseded by federal laws.

24. Successors.

     This Trust Agreement shall be binding upon, and the powers herein granted
to the Committee, the Company and the Trustee, respectively, shall be
exercisable by, the respective successors and assigns of the Committee, the
Company and the Trustee.

25. Separability.

     If any part of this Trust Agreement shall be found to be invalid or
unenforceable, such invalidity or unenforceability shall not affect the
remaining provisions hereof. Such invalid or unenforceable part shall be fully
separable and this Trust Agreement shall be construed and enforced as if such
part had not been inserted herein.

26. Gender and Number.

     Whenever used herein, the masculine shall be interpreted to include the
feminine and neuter, the neuter to include the masculine and feminine, the
singular to include the plural and the plural to include the singular, in each
case unless the context requires otherwise.

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27. Assignment.

     The benefits payable under this Trust Agreement may not be assigned,
alienated, pledged, attached or garnished.

     IN WITNESS WHEREOF, each of the parties hereto has executed or caused to
be executed this Trust Agreement as of the date and year first written above.

	 	 	 
	 	 	
AMERICAN STANDARD COMPANIES INC.
	 	 	 
	 	 	/s/ J. Paul McGrath
	 	 	

	 	 	
By: J. Paul McGrath

	 	 	
Its: Senior Vice President, General Counsel & Secretary

	 	 	
THE TRUSTEE:
	 	 	 
	 	 	/s/ Robert M. Kennedy
	 	 	

	 	 	
ROBERT M. KENNEDY

- 15 -

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