Document:

EXHIBIT 10.12

 

Exhibit 10.12

TRUST AGREEMENT FOR

THE AMERICAN STANDARD COMPANIES INC.

SUPPLEMENTAL COMPENSATION PLAN FOR OUTSIDE DIRECTORS

     This Trust Agreement amended and restated as of October 2, 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. Supplemental
Compensation Plan for Outside Directors.

1. Definitions.

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

     1.1. Act means the Securities Exchange Act of 1934, as amended.

     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. 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.

     1.4 Board means the Board of Directors of the Company.

 

 

     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 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;

		
	 	          (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;

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	 	          (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.

     1.6. 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

		
	 	          (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 clauses (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 Committee means the Management Development and Compensation Committee
of the Board (or such other committee of the Board that the Board shall
designate), which shall consist of two or more members, each of whom shall be a
non-employee director within the meaning of Rule 16b-3, as promulgated under
the Act and serving at the pleasure of the Board.

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

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

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     1.10. 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.

     1.11. 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.

     1.12. 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.

     1.13. Participant means a member of the Board who is not an employee of
the Company.

     1.14. Plan means American Standard Companies Inc. Supplemental
Compensation Plan for Outside Directors, as such is in effect from time to
time.

     1.15. Plan Administrator means the Secretary of the Company.

     1.16. Plan Payout means a payment made pursuant to Sections 2 or 3 of the
Plan.

     1.17. 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.

     1.18. Share means a share of Common Stock.

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

     1.20. 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.

     1.21. Termination Date of a Participant means the date on which such
Participant’s membership with the Board terminates for any reason, including
death.

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

     1.23. Trustee means Robert M. Kennedy or such successor trustee as shall
be appointed by the Plan Administrator 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 to Participants. The Company shall
remain primarily responsible to fulfill payment obligations under the Plan. 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”).

     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 Plan Administrator in
accordance with the terms of the Plan. The Plan Administrator 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 Plan Administrator 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:

     (i)  To sell, exchange, mortgage or lease any such property and to convey,
transfer

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or dispose of any such property on such terms and conditions as the
Trustee deems appropriate.

     (ii). 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.

     (iii)  To exercise all voting rights pertaining to any securities, provided
that Shares credited to Share Award Accounts of Participants shall be voted as
directed by such Participants ; 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.

     (iv)  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.

     (v)  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 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).

     (vi)  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.

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

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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 credited to such
Participant under the Plan.

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 directed by such Participant.

6. Distributions from Trust.

     The Plan Administrator 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 membership on the Board, other than a
termination for cause, 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 Shares and Non-Share Interests credited to his Share
Award Account. In the event that a Participant’s membership on the Board is
terminated for cause, such Participant shall forfeit all interest to his or her
Share Award Account and any Shares in such account shall revert back to the
Company.

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

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     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 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.

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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.

10. Administration.

     This Trust Agreement shall be administered by the Plan Administrator, who
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 Plan Administrator may by 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

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responsibilities hereunder.

     All forms required to be filed hereunder and all other communications with
respect hereto shall be addressed to the Secretary, American Standard Companies
Inc., One Centennial Avenue, Piscataway, New Jersey, 088556820, or to such
other address as the Plan Administrator, 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, the Trustee shall suspend the making of any
distribution from the Trust and shall immediately notify the Company in writing
of such allegation. Within 30 days of receipt of such an allegation, the
Trustee shall determine whether the Company is Insolvent. If the Trustee
determines the Company to be Insolvent, or if the Trustee otherwise has actual
knowledge that the Company 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 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 delivers to the
Trustee a sworn statement that the Company is Insolvent, the Trustee shall make
distributions from the portion of the Trust held for the benefit of such entity
only as

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directed by a court of competent jurisdiction, until such time as the Trustee
determines that the Company 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.

15. Reports and Records.

     The Trustee shall:

     i) 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

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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;

     (ii). make such periodic reports to the Company as it shall reasonably
request;

     (iii). 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 agrees that its share of all income, deductions and credits of
the Trust belongs to it as owner for income tax purposes and shall, as
appropriate, be included on its tax returns. 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 entitlement to
reimbursement hereunder shall not be affected by the resignation or removal of
the Trustee or by the termination of the Trust.

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     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 Plan Administrator 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, resignation or death of the Trustee, the Plan
Administrator 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 shall be irrevocable unless the
benefits payable hereunder have been otherwise paid to the Participants by the
Company; 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.

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21. No Right of Alienation.

     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.

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 Plan Administrator, the Committee, the Company and the Trustee,
respectively, shall be exercisable by, the respective successors and assigns of
the Plan Administrator, 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

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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.

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/ Lawrence B. Costello
	 	 	

	 	 	 
	 	 	
By: Lawrence B. Costello
	 	 	 
	 	 	
Its: Senior Vice President - Human Resources
	 	 	 
	 	 	
THE TRUSTEE:
	 	 	 
	 	 	/s/ Robert M. Kennedy
	 	 	

	 	 	 
	 	 	
ROBERT M. KENNEDY

- 15 -EXHIBIT 10.13

 

Exhibit 10.13

AMERICAN STANDARD COMPANIES INC.

CORPORATE OFFICER SEVERANCE PLAN

(As Amended and Restated as of July 10, 2003)

Section I. Purpose.

     The purpose of the Plan is to provide elected officers of the Company with
severance benefits should their employment with the Company terminate under the
circumstances described below. The Plan supersedes any and all previous
severance pay practices or policies of the Company, whether written or
unwritten.

Section II. Definitions.

     A.     Agreement and Release – means an agreement prepared by the Company
under which a Participant, in return for the benefits provided under the Plan,
agrees to release the Company and its affiliates from any and all claims which
such Participant may have against the Company at the time the agreement is
executed, and further agrees to certain other undertakings, including
cooperation with the Company in any matter which may give rise to legal claims
against the Company, a one year non-competition obligation, keeping
confidential proprietary information of the company as well as the terms of the
Agreement and Release, settlement of any disputes concerning the Agreement and
Release through binding arbitration, and such other undertakings as the Company
may require from time to time.

     B.     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).

     C.     Board -  means the Board of Directors of the Company.

     D.     Cause -  means a Participant’s (i) willful and continued failure
substantially to perform his or her duties with the Company or any Subsidiary
(other than any such failure resulting from incapacity due to reasonably
documented physical or mental illness), after a

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demand for substantial
performance is delivered to such Participant by the Chairman of the
Board or officer of equivalent authority which specifically identifies the
manner in which it is believed that such Participant has not substantially
performed his or her duties, (ii) conviction of, or plea of nolo contendere
to, a felony, or (iii) the willful engaging by such Participant in gross
misconduct materially and demonstrably injurious to the Company or any
Subsidiary or to the trustworthiness or effectiveness of the Participant in the
performance of his or her duties. For purposes hereof, no act, or failure to
act, on such Participant’s part shall be considered “willful” unless done, or
omitted to be done, by him or her not in good faith and without reasonable
belief that his or her action or omission was in the best interest of the
Company or a Subsidiary. Any act, or failure to act, based upon authority
given pursuant to a resolution duly adopted by the Board or based upon the
advice of counsel for the Company shall be conclusively presumed to be done, or
omitted to be done, by such Participant in good faith and in the best interest
of the Company or such Subsidiary.

     E.     Change of Control -   shall mean 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 Corporation or a Subsidiary Company
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

- 2 -

 

		
	 	or nomination for election was previously so approved (the
“Continuing Directors”), cease for any reason to constitute a
majority of the Board;

		
	 	     (iii) the consummation of any merger, consolidation,
recapitalization or reorganization involving the Company, other
than any such transaction immediately following which the persons
who were the Beneficial Owners of the outstanding voting securities
of the Company immediately prior to such transaction are the
Beneficial Owners of at least 55% of the total voting power
represented by the voting securities of the entity surviving such
transaction or the ultimate parent of such entity in substantially
the same relative proportions as their ownership of the Company’s
voting securities immediately prior to such transaction; provided
that, such continuity of ownership (and preservation of relative
voting power) shall be deemed to be satisfied if the failure to
meet such threshold (or to preserve such relative voting power) is
due solely to the acquisition of voting securities by an employee
benefit plan of the Company, such surviving entity, any Subsidiary
or any subsidiary of such surviving entity;

		
	 	     (iv) the sale of substantially all of the assets of the
Company to any person other than any Subsidiary or any entity in
which the Beneficial Owners of the outstanding voting securities of
the Company immediately prior to such sale are the Beneficial
Owners of at least 55% of the total voting power represented by the
voting securities of such entity or the ultimate parent of such
entity in substantially the same relative proportions as their
ownership of the Company’s voting securities immediately prior to
such transaction; or

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

     F.     Company -  means American Standard Companies Inc., a Delaware
corporation, and any successor thereto.

     G.     Disability -  means a Participant’s inability, due to reasonably
documented physical or mental illness, for more than six months to perform his
or her duties with the Company or a Subsidiary on a full time basis if, within
30 days after written notice of termination has been given to such Participant,
he or she shall not have returned to the full time performance of his or her
duties.

- 3 -

 

H.     Effective Date -  means April 27, 1991.

I.     Good Reason -  means any of the following:

		
	          (i) an adverse change in a Participant’s status or position(s) as an
executive of the Company, any adverse change in a Participant’s status or
position as an executive of the Company as a result of a material
diminution in his or her duties or responsibilities or a relocation of a
Participant’s principal place of employment to a location which is at
least 30 miles further from such Participant’s principal residence than
his or her current location or the assignment to him or her of any duties
or responsibilities which are inconsistent with such status or
position(s), or any removal of such Participant from or any failure to
reappoint or reelect him or her to such position(s) (except in connection
with the termination of his or her employment for Cause, Disability or
retirement or as a result of his or her death or by him or her other than
for Good Reason);

           (ii)  a reduction by the Company in such Participant’s base salary;

		
	          (iii) the taking of any action by the Company or a Subsidiary
(including the elimination of a plan without providing substitutes
therefor or the reduction of his or her awards thereunder) that would
substantially diminish the aggregate projected value of such
Participant’s awards under the Company’s or such Subsidiary’s bonus and
benefit plans in which he or she was participating at the time of the
taking of such action;

		
	          (iv) the taking of any action by the Company or such Subsidiary that
would substantially diminish the aggregate value of the benefits provided
such Participant under the Company’s or such Subsidiary’s medical,
health, accident, disability, life insurance, thrift and retirement plans
in which he or she was participating at the time of the taking of such
action; or

		
	          (v) any purported termination by the Company of such Participant’s
employment that is not effected for Cause, provided that this shall not
include termination of employment at age sixty-five pursuant to the
Company’s mandatory retirement policy for Corporate Officers.

- 4 -

 

		
	 	     Notwithstanding the foregoing, a termination for Good Reason shall
not have occurred (a) if the Participant consented in writing to the
event giving rise to the “Good Reason”, (b) if the Participant
voluntarily terminates his or her employment more than ninety (90) days
after the occurrence of the event constituting Good Reason, or (c) with
regard to the occurrence of the events described in paragraphs 4(ii),
(iii) and (iv) above prior to a Change of Control, if such reductions or
actions are proportionate to the reductions or actions applicable to
other employees in similar positions pursuant to a cost savings plan.

     J.     Participant -  means each elected officer of the Company.

     K.     Plan -  means the American Standard Companies Inc. Corporate Officer
Severance Plan.

     L.     Plan Administrator -  means the Management Development and Compensation
Committee of the Board (the “MDC”) or any committee or individual designated by
the MDC to perform some or all of its administrative functions hereunder.

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

Section III. Eligibility.

     A Participant shall be eligible to receive the benefits provided under the
Plan in the event that:

	 	(i)	 	such Participant voluntarily terminates his or her employment
for Good Reason or suffers an involuntary termination by the Company
other than a termination for Cause, provided that in either case
such termination shall not include a termination upon attainment of
age sixty-five pursuant to the Company’s mandatory retirement policy
for Corporate Officers; and
	 
	 	(ii)	 	such Participant executes an Agreement and Release in a form
acceptable to the Company at the time of the Participant’s
termination of employment.

- 5 -

 

No other individual shall be eligible for benefits under the Plan and the
payment of benefits hereunder shall not be affected by the payment of
retirement or other benefits under any other Company plan.

Section IV. Severance Payments.

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

     A.     an amount equal to two times (or in the case of the Chief Executive
Officer of the Company three times) the Participant’s annual base salary in
effect on the date the termination occurs; plus

     B.     the amount of the Participant’s annual incentive plan target award in
effect for the calendar year in which the termination occurs determined without
regard to whether the applicable targets are obtained, multiplied by a
fraction, the numerator of which is the number of days in the year of
termination that the Participant was an employee of the Company, and the
denominator of which is 365; plus

     C.     the amount (or in the case of the Chief Executive Officer, two times
the amount) of the Participant’s annual incentive plan target award in effect
for the year in which the termination occurs determined without regard to
whether the applicable targets are obtained.

Section V. Certain Additional Payments by the Company.

     (A)  Anything in this Plan to the contrary notwithstanding, in the event it
shall be determined that any payment, award, benefit or distribution (or any
acceleration of any payment, award, benefit or distribution) by the Company (or
any of its affiliated entities) or any entity which effectuates a Change of
Control (or any of its affiliated entities) to or for the benefit of a
Participant (whether pursuant to the terms of this Plan or otherwise, but
determined without regard to any additional payments required under this
Section V) (the “Payments”) would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), or
any interest or penalties are incurred by a Participant with respect to such
excise tax (such excise tax, together with any such interest and penalties, are
hereinafter

- 6 -

 

collectively referred to as the “Excise Tax”), then the Company shall pay
to such Participant (or to the Internal Revenue Service on behalf of
Participant) an additional payment (a “Gross-Up Payment”) in an amount such
that after payment by such Participant of all taxes (including any Excise Tax)
imposed upon the Gross-Up Payment, such Participant retains (or has had paid to
the Internal Revenue Service on his behalf) an amount of the Gross-Up Payment
equal to the sum of (x) the Excise Tax imposed upon the Payments and (y) the
product of any deductions disallowed because of the inclusion of the Gross-Up
Payment in such Participant’s adjusted gross income and the highest applicable
marginal rate of federal income taxation for the calendar year in which the
Gross-Up Payment is to be made. For purposes of determining the amount of the
Gross-Up Payment, a Participant shall be deemed (i) to pay federal income taxes
at the highest marginal rates of federal income taxation for the calendar year
in which the Gross-Up Payment is to be made, (ii) to pay applicable state and
local income taxes at the highest marginal rate of taxation for the calendar
year in which the Gross-Up Payment is to be made, net of the maximum reduction
in federal income taxes which could be obtained from deduction of such state
and local taxes and (iii) to have otherwise allowable deductions for federal
income tax purposes at least equal to the Gross-Up Payment.

     (B)  Subject to the provisions of Section V(a), all determinations required
to be made under this Section V, including whether and when a Gross-Up Payment
is required, the amount of such Gross-Up Payment, and the assumptions to be
utilized in arriving at such determinations, shall be made by the public
accounting firm that is retained by the Company as of the date immediately
prior to the Change of Control (the “Accounting Firm”) which shall provide
detailed supporting calculations both to the Company and the Participant within
fifteen (15) business days of the receipt of notice from the Company or
Participant that there has been a Payment, or such earlier time as is requested
by the Company (collectively, the “Determination”). In the event that the
Accounting Firm is serving as accountant or auditor for the individual, entity
or group effecting the Change of Control, the Participant may appoint another
nationally recognized public accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall
be borne solely by the Company and the Company shall enter into any agreement
reasonably requested by the Accounting Firm in connection with the performance
of the services hereunder. The Gross-Up Payment under this Section V with
respect to any Payments shall be made no later than thirty (30) days following
such Payment. If the Accounting Firm determines that no Excise Tax is payable
by the

- 7 -

 

Participant, it shall furnish the Participant with a written opinion to
such effect, and to the effect that failure to report the Excise Tax, if any,
on the Participant’s applicable federal income tax return will not result in
the imposition of a negligence or similar penalty. The Determination by the
Accounting Firm shall be binding upon the Company and Participant. As a result
of the uncertainty in the application of Section 4999 of the Code at the time
of the Determination, it is possible that Gross-Up Payments which will not have
been made by the Company should have been made (“Underpayment”) or Gross-Up
Payments are made by the Company which should not have been made
(“Overpayment”), consistent with the calculations required to be made
hereunder. In the event that the Participant thereafter is required to make
payment of any Excise Tax or additional Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code) shall be promptly paid by the Company to or for the
benefit of the Participant. In the event the amount of the Gross-Up Payment
exceeds the amount necessary to reimburse the Participant for his Excise Tax,
the Accounting Firm shall determine the amount of the Overpayment that has been
made and any such Overpayment (together with interest at the rate provided in
Section 1274(b)(2) of the Code) shall be promptly paid by the Participant (to
the extent he has received a refund if the applicable Excise Tax has been paid
to the Internal Revenue Service) to or for the benefit of the Company.

Section VI. Payment of Benefits.

     Unless the Plan Administrator determines otherwise, all severance payments
hereunder shall be paid in a single lump sum at, or as soon as practicable
after, the Participant’s termination of employment.

Section VII. Continuation of Welfare Plan Coverage.

     In the event of a Participant’s voluntary termination for Good Reason or
his or her involuntary termination by the Company other than a termination for
Cause, such Participant will be entitled, upon payment of any premiums or
co-payments theretofore required for such coverage, to continue all life,
accident and health coverage, on the same basis as in effect on the date he or
she terminated employment, for a period of 24 months from the date of
termination (36 months in the case of the Chief Executive Officer), provided
that, to the extent permitted by law, such coverage may be terminated at the
discretion of the Plan Administrator in the event the Participant obtains at
least equal alternate coverage.

- 8 -

 

Section VIII. Financial Planning Assistance.

     The Company will reimburse a Participant for all bills which the Plan
Administrator determines are reasonably related to financial planning
assistance and tax preparation, provided that such bills are incurred and
evidence of payment by the Participant is submitted to the Plan Administrator
within one year after the date of termination.

Section IX. Reservation of Right to Amend and Terminate.

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

Section X. Relationship to Other Benefits.

     No payment under the Plan shall be taken into account in determining any
payments, benefits, coverage levels or participation rates under any incentive
compensation plan, any pension, retirement, profit sharing, group insurance, or
other benefit plan of the Company; provided that, a Participant shall not be
entitled to receive the severance payment set forth in Section IV.B. of this
Plan if such Participant becomes entitled to receive a comparable payment
pursuant to Section 10.3 of the Company’s 2002 Omnibus Incentive Plan (or any
successor thereto) by reason of a Change of Control.

Section XI. Administration.

     Subject to Section V of the Plan, the Plan Administrator shall have full
power and authority to interpret and carry out the terms of the Plan, and to
exercise discretion where necessary or appropriate in the interpretation and
administration of the Plan, and prior to a Change of Control all decisions by
the Plan Administrator shall be final and binding on all affected parties.

Section XII. Expenses.

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

- 9 -

 

Section XIII. Withholding.

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

Section XIV. Governing Law.

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

- 10 -

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