<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 17, 1996.
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
Form S-3
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
------------------------
AMERICAN STANDARD COMPANIES INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of
incorporation or organization)
13-3465896
(I.R.S. Employer
Identification Number)
ONE CENTENNIAL AVENUE
P.O. BOX 6820
PISCATAWAY, NJ 08855-6820
(908) 980-6000
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
------------------------
RICHARD A. KALAHER, ESQ.
VICE PRESIDENT, GENERAL COUNSEL & SECRETARY
AMERICAN STANDARD COMPANIES INC.
ONE CENTENNIAL AVENUE
P.O. BOX 6820
PISCATAWAY, NJ 08855-6820
(908) 980-6000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------
COPIES TO:
PAUL H. WILSON, JR., ESQ.
DEBEVOISE & PLIMPTON
875 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212) 909-6000
MICHAEL A. BECKER, ESQ.
CAHILL GORDON & REINDEL
80 PINE STREET
NEW YORK, NEW YORK 10005
(212) 701-3000
------------------------
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, check the following box.
[ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) FEE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock ($.01 par value)... 11,435,600 $38 $434,552,800 $131,682.67
- ----------------------------------------------------------------------------------------------------------
Common Stock Rights(3).......... 11,435,600 NA NA NA
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</TABLE>
(1) Includes up to 1,491,600 shares the Underwriters may purchase to cover
over-allotments, if any.
(2) Estimated pursuant to Rule 457(c) under the Securities Act of 1933 based on
the average trading price of the Common Stock on the New York Stock Exchange
on December 12, 1996 solely for purposes of calculating the registration
fee.
(3) Each share of Common Stock will have associated with it one right to
purchase a share of the Company's preferred stock at a stipulated price in
certain circumstances. No separate consideration will be received for the
Common Stock Rights.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
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<PAGE> 2
EXPLANATORY NOTE
This Registration Statement contains two forms of prospectus: one to be
used in connection with an offering in the United States (the "U.S. Prospectus")
and one to be used in a concurrent international offering outside the United
States (the "International Prospectus"). The U.S. Prospectus and the
International Prospectus are identical except for the front and back cover
pages, the inside front cover page and the sections entitled "Underwriting" and
"Certain United States Tax Consequences to Non-U.S. Holders" (the section
entitled "Certain United States Tax Consequences to Non-U.S. Holders" appears
only in the International Prospectus). The form of U.S. Prospectus is included
herein and is followed by those pages to be used in the International Prospectus
which differ from, or are in addition to, those in the U.S. Prospectus. Each of
the alternate pages for the International Prospectus included herein is labeled
"Alternate Page for International Prospectus".
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED DECEMBER 17, 1996
9,944,000 SHARES
AMERICAN STANDARD COMPANIES INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
-------------------
Of the 9,944,000 shares of Common Stock offered, 7,500,000 shares are being
offered hereby in the United States and 2,444,000 shares are being offered in a
concurrent international offering outside the United States (collectively, the
"Offerings"). The initial public offering price and the aggregate underwriting
discount per share will be identical for both Offerings. See "Underwriting".
All of the shares of Common Stock offered are being sold by Kelso ASI
Partners, L.P. ("ASI Partners" or the "Selling Stockholder"). Concurrently with
the consummation of the Offerings, the Company will repurchase a number of
shares of Common Stock from ASI Partners determined by dividing $300 million by
an amount equal to the initial public offering price. See "The Selling
Stockholder and Stockholder Transactions".
The last reported sale price of the Common Stock, which is listed under the
symbol "ASD", on the New York Stock Exchange on December 12, 1996 was $38 per
share. See "Price Range of Common Stock and Dividend Policy".
SEE "RISK FACTORS" ON PAGES 8-9 FOR CERTAIN CONSIDERATIONS RELEVANT TO AN
INVESTMENT IN THE COMMON STOCK.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
-------------------
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO SELLING
OFFERING PRICE DISCOUNT(1) STOCKHOLDER(2)
---------------------------------------------------------------
<S> <C> <C> <C>
Per Share............................ $ $ $
Total(3)............................. $ $ $
</TABLE>
- ------------
(1) The Company, American Standard Inc. and the Selling Stockholder have agreed
to indemnify the Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933.
(2) Before deducting estimated expenses of $ payable by the Company.
(3) ASI Partners has granted the U.S. Underwriters an option for 30 days after
the date of this Prospectus to purchase up to an additional 1,125,000 shares
at the initial public offering price per share, less the underwriting
discount, solely to cover over-allotments. Additionally, an over-allotment
option on 366,600 shares has been granted by ASI Partners as part of the
international offering. If such options are exercised in full, the total
initial public offering price, underwriting discount and proceeds to Selling
Stockholder will be $ , $ and $ ,
respectively. See "Underwriting".
-------------------
The shares offered hereby are offered severally by the U.S. Underwriters,
as specified herein, subject to receipt and acceptance by them and subject to
their right to reject any order in whole or in part. It is expected that
certificates for the shares will be ready for delivery in New York, New York, on
or about , 1997 against payment therefor in immediately available
funds.
GOLDMAN, SACHS & CO.
MORGAN STANLEY & CO.
INCORPORATED
SMITH BARNEY INC.
S.G.WARBURG & CO. INC.
------------------------
The date of this Prospectus is , 1997.
<PAGE> 4
AVAILABLE INFORMATION
American Standard Companies Inc. (the "Company") is subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith files reports, proxy
statements and other information with the Securities and Exchange Commission
(the "Commission"). Reports, proxy statements and other information filed by the
Company may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, and at the Commission's Regional Offices located at Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60611 and
7 World Trade Center, Suite 1300, New York, New York 10048. Copies of such
materials can be obtained upon written request from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. In addition, such material may also be inspected and copied at
the offices of the New York Stock Exchange, Inc. (the "NYSE"), 20 Broad Street,
New York, New York 10005. The Commission maintains a Website that contains
reports, proxy and information statements and other information regarding
reporting companies under the Exchange Act, including the Company, at
http://www.sec.gov.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the shares (the "Shares") of its common
stock, par value $.01 per share (the "Common Stock"), offered hereby. This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. This Prospectus, which constitutes a part of the
Registration Statement, does not contain all the information set forth in the
Registration Statement, certain items of which are contained in schedules and
exhibits to the Registration Statement as permitted by the rules and regulations
of the Commission. Statements made in this Prospectus as to the contents of any
contract, agreement or other document referred to are not necessarily complete;
with respect to each such contract, agreement or other document filed as an
exhibit to the Registration Statement, reference is made to the exhibit for a
more complete description of the matter involved, and each such statement shall
be deemed qualified in its entirety by such reference. For further information,
reference is hereby made to the Registration Statement.
------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company (File No. 1-11415) with the
Commission pursuant to the Exchange Act are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the year ended December 31,
1995, including portions incorporated therein of the Company's
definitive Proxy Statement dated March 28, 1996.
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1996, June 30, 1996 and September 30, 1996.
3. The descriptions of the Common Stock and the common stock rights
associated with each Share of Common Stock contained in the Registration
Statement on Form 8-A dated January 5, 1995, incorporated by reference
from the Company's Registration Statement on Form S-2 under the
Securities Act, Commission File Number 33-56409, under the captions
"Description of Capital Stock -- Common Stock" and "-- Stockholder
Rights Plan".
4. All other documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Shares.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of any such person, a copy of any or all of the
documents which are incorporated herein by reference, other than exhibits to
such information (unless such exhibits are specifically incorporated by
reference into such documents). Requests should be directed to the Company, One
Centennial Avenue, P.O. Box 6820, Piscataway, NJ 08855-6820, Attention: Office
of the Secretary, telephone: (908) 980-6000.
------------------------
Any statement contained in a document all or a portion of which is
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified shall not be deemed to
constitute a part of this Prospectus except as so modified, and any statement so
superseded shall not be deemed to constitute part of this Prospectus.
AMERICAN STANDARD(R), IDEAL STANDARD(R), STANDARD(R), TRANE(R) and WABCO(R)
are registered trademarks of American Standard Inc. PERROT(R) and PORCHER(R) are
registered trademarks of Deutsche Perrot-Bremsen GmbH and Porcher S.A.,
respectively, subsidiaries of the Company. DEMAND FLOW(R) is a registered
trademark of J-I-T Institute of Technology, Inc.
------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements
included elsewhere or incorporated by reference in this Prospectus. American
Standard Companies Inc. (the "Company") is a Delaware corporation that has as
its only significant asset all the outstanding common stock of American Standard
Inc., a Delaware corporation ("American Standard Inc."). Hereinafter, "American
Standard" or "the Company" will refer to the Company, or to the Company and
American Standard Inc., including its subsidiaries, as the context requires.
Unless otherwise indicated, all information set forth in this Prospectus assumes
no exercise of the over-allotment options to be granted to the U.S. Underwriters
and the International Underwriters (collectively, the "Underwriters").
THE COMPANY
GENERAL
American Standard is a globally-oriented manufacturer of high quality,
brand-name products in three major product groups: air conditioning systems (57%
of 1995 sales); bathroom and kitchen fixtures and fittings (24% of 1995 sales);
and braking and control systems for medium-sized and heavy trucks, buses,
trailers and utility vehicles (19% of 1995 sales). American Standard is a market
leader in each of these business segments in the principal geographic areas in
which it competes. The Company's brand names include TRANE(R) and AMERICAN
STANDARD(R) for air conditioning systems, AMERICAN STANDARD(R), IDEAL
STANDARD(R), STANDARD(R) and PORCHER(R) for plumbing products and WABCO(R) and
PERROT(R) for braking and related systems. The Company emphasizes
technologically advanced products such as air conditioning systems that utilize
energy-efficient compressors and environmentally-preferred refrigerants,
water-saving plumbing products and commercial vehicle braking and related
systems (including antilock braking systems ("ABS")) that utilize electronic
controls.
American Standard had sales and operating income of $5.2 billion and $534
million, respectively, in 1995. Sales in the first nine months of 1996 were $4.4
billion, compared with $3.9 billion in the first nine months of 1995. Operating
income before asset impairment loss was $463 million in the first nine months of
1996, compared with operating income of $428 million in the first nine months of
1995. Including the asset impairment loss, operating income in the first nine
months of 1996 was $228 million. During the first nine months of 1996, sales
from operations outside the United States represented approximately 48% of the
Company's total sales. At September 30, 1996 American Standard had 103
manufacturing facilities in 35 countries.
American Standard's business strategy is to promote growth in sales and
earnings. Key elements of this strategy are:
- INCREASE MARKET SHARES. The Company plans to increase the market
shares of its products by developing, manufacturing and selling high
quality, technologically advanced products and by providing superior
customer service.
- EXPAND SALES IN DEVELOPING MARKETS. The Company plans to build on its
historical global presence by focusing a significant portion of its
new business activities (principally through joint ventures in which
the Company has operating control) in developing market areas with the
potential for high economic growth and/or demand for the Company's
products, such as the Far East, including the People's Republic of
China ("PRC"), Latin America and Eastern Europe.
- CONTINUE APPLICATION OF DEMAND FLOW. To build on its position as a
leader in each of its industries, the Company continues to apply
principles of DEMAND FLOW(R) technology ("Demand Flow") to all its
businesses. The Company's use of Demand Flow is designed
3
<PAGE> 6
to streamline processes, improve product quality, enhance customer
service and reduce product cycle times, while improving efficiency,
reducing working capital needs and lowering costs. The Company
believes that Demand Flow, which it began to apply in 1990, has
resulted in significant benefits.
The Company is a Delaware corporation formed by Kelso & Company, L.P.
("Kelso") in 1988 to effect the acquisition (the "Acquisition") of American
Standard Inc. American Standard Inc. was incorporated in 1929 following the
merger of American Radiator Company and Standard Sanitary Manufacturing Company,
each of which traced its roots to the nineteenth century. The Company's
principal executive offices are located at One Centennial Avenue, P.O. Box 6820,
Piscataway, NJ 08855-6820, and its telephone number is (908) 980-6000.
BUSINESS SEGMENTS
American Standard operates three business segments: Air Conditioning
Products, Plumbing Products and Automotive Products.
AIR CONDITIONING PRODUCTS. American Standard is a leading U.S.
manufacturer of air conditioning systems for both domestic and export sales, and
also manufactures air conditioning systems outside the United States. Air
Conditioning Products manufactures "applied" (custom engineered, site-assembled)
and "unitary" (self-contained, factory-assembled) air conditioning systems that
are sold primarily under the TRANE(R) and AMERICAN STANDARD(R) names. Air
Conditioning Products' sales to the commercial and residential markets
represented approximately 75% and 25%, respectively, of Air Conditioning
Products' total sales in 1995 and the first nine months of 1996. Approximately
60% of Air Conditioning Products' sales in these periods was to the replacement,
renovation and repair markets, which have been less cyclical than the new
residential and commercial construction markets. Of Air Conditioning Products'
1995 worldwide sales, approximately 79% was derived from U.S. operations
(including 7% related to export sales) and 21% was derived from operations
outside the United States.
Air Conditioning Products' sales increased to $2,602 million in the first
nine months of 1996, compared with $2,201 million in the first nine months of
1995. This increase was due principally to substantial volume increases and
price gains for applied and unitary commercial systems, higher volumes and
prices for residential products in the U.S. and sales by the new operations in
the PRC. Management believes that Air Conditioning Products is well positioned
for growth because of its high quality, brand-name products, significant
existing market shares, the introduction of new product features such as
electronic controls, the expansion of its broad distribution network and
conversion to products utilizing environmentally-preferred refrigerants.
PLUMBING PRODUCTS. American Standard is a leading manufacturer in Europe,
the U.S. and a number of other countries of bathroom and kitchen fixtures and
fittings for the residential and commercial construction markets and retail
sales channels. Plumbing Products manufactures and distributes its products
under the AMERICAN STANDARD(R), IDEAL STANDARD(R), STANDARD(R) and PORCHER(R)
names. Of Plumbing Products' worldwide 1995 sales, approximately 71% was derived
from operations outside the United States and 29% was derived from operations in
the United States.
Plumbing Products' sales increased to $1,079 million in the first nine
months of 1996, compared to $952 million in the first nine months of 1995, due
principally to sales by Porcher, the French manufacturer acquired in the fourth
quarter of 1995, and higher sales in North American and Latin American
operations. Management believes that Plumbing Products is well positioned for
growth due to the high quality of its brand-name products, significant existing
market shares in a number of countries and the expansion of existing operations
in developing market areas throughout the world (principally the Far East, Latin
America and Eastern Europe).
4
<PAGE> 7
AUTOMOTIVE PRODUCTS. American Standard is a leading manufacturer,
primarily in Europe and Brazil, of braking and related systems for the
commercial and utility vehicle industry. Its most important products are
pneumatic braking systems and related electronic and other control systems
(including ABS) marketed under the WABCO(R) name for medium-size and heavy
trucks, tractors, buses, trailers and utility vehicles. American Standard
supplies vehicle manufacturers such as Mercedes-Benz, Volvo, Iveco (Fiat), RVI
(Renault) and Rover.
Automotive Products' sales decreased to $687 million in the first nine
months of 1996, compared to $757 million in the first nine months of 1995, due
principally to decreased levels of commercial vehicle production in Europe.
Management believes that Automotive Products is well positioned to benefit from
any future improvement in market conditions in Europe and Brazil and from
increasing demand for ABS and other sophisticated electronic control systems in
a number of markets (including the commercial vehicle market in the United
States, where phase-in of ABS is mandated beginning in 1997), as well as from
the technological advances embodied in the Company's products and its close
relationships with a number of vehicle manufacturers.
See "Business -- Air Conditioning Products Segment"; "-- Plumbing Products
Segment" and "-- Automotive Products Segment".
GLOBALIZATION
American Standard has historically had a significant global presence. One
of its major strategic objectives is to continue to expand that presence through
the growth of existing operations and the establishment of new operations in
developing market areas in the Far East, Latin America and Eastern Europe. The
Company often uses joint ventures with local manufacturing and distribution
partners to facilitate risk sharing and to allow the Company to benefit from the
additional expertise of local market participants. See
"Business -- Strategy -- Globalization".
Air Conditioning Products plans to continue to expand its operations in the
Far East, Latin America and Europe. In 1994, it established a joint venture in
Australia. In 1995 and 1996, it established three joint ventures in the PRC to
become an integrated manufacturer, marketer and distributor of a broad range of
air conditioning systems and related products for residential and commercial
applications. Air Conditioning Products also continues to expand its sales
forces in the Far East, Latin America, the Middle East and India.
Plumbing Products has entered new markets through joint ventures in Eastern
Europe, Spain, Portugal and Vietnam and is continuing to expand using this
approach. In 1995, operations were expanded in France through the acquisition of
Porcher S.A. ("Porcher"). Plumbing Products has expanded its operations in the
PRC through its affiliate, A-S China Plumbing Products Limited ("ASPPL"), in
which American Standard has a current ownership position of approximately 28%
and effective control over day-to-day operations. ASPPL has expanded its
operations to Beijing, Tianjin, Shanghai and Guangzhou through seven joint
ventures in order to provide a full product line of fixtures, fittings and
bathtubs throughout the PRC market.
Automotive Products, headquartered in Europe, has since 1993 established a
joint venture in the PRC, acquired a business in Spain, is in the process of
establishing joint ventures in Eastern Europe and is expanding the volume of
business done through its existing joint ventures in the United States and
Japan.
DEMAND FLOW
To build on its position as a leader in each of its industries and to
increase sales and operating income, American Standard began in 1990 to apply
Demand Flow to all its businesses. Under Demand Flow, products are produced as
and when required by the customer, the production process is streamlined, and
quality control is integrated into each step of the manufacturing process. The
benefits of Demand Flow include better customer service, quicker response to
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changing market needs, improved quality control, higher productivity, increased
inventory turnover rates and reduced requirements for working capital and
manufacturing and warehouse space.
As part of American Standard's strategy to integrate Demand Flow into all
of its operations, most of American Standard's approximately 44,000 employees
worldwide have been trained in Demand Flow, which has been implemented in
substantially all of American Standard's production facilities as of September
30, 1996. In addition, American Standard is implementing Demand Flow methods in
its acquired operations such Perrot, a German brake manufacturer acquired in
January 1994, and Porcher, acquired in 1995. American Standard is also applying
Demand Flow to administrative functions and is re-engineering its organizational
structure to manage its businesses based on processes instead of functions.
American Standard believes that its implementation of Demand Flow has
achieved significant benefits. Product cycle time (the time from the beginning
of the manufacturing of a product to its completion) has been reduced and, on
average, inventory turnover rates have more than tripled since 1990. Principally
as a result of the implementation of Demand Flow, American Standard has reduced
inventories by 49% from December 31, 1989 through December 31, 1995, while
related sales have grown 57% for the same period. American Standard further
believes that as a result of the introduction of Demand Flow employee
productivity has risen significantly, customer service has improved and, without
reducing production capacity, the Company has been able to free more than three
million square feet of manufacturing and warehouse space, allowing for
expansion, plant consolidation or other uses.
THE SELLING STOCKHOLDER AND STOCKHOLDER TRANSACTIONS
The Company, ASI Partners and Kelso have entered into an agreement
providing for the sale by ASI Partners of Shares in the Offerings and the
repurchase by the Company from ASI Partners of all Shares expected to be owned
by ASI Partners after giving effect to the Offerings and the distribution (the
"Share Distribution") by ASI Partners of Shares to certain of its partners at
their election (collectively, the "Stockholder Transactions"). Concurrently with
the consummation of the Offerings, the Company will repurchase a number of
Shares from ASI Partners determined by dividing $300 million by an amount equal
to the initial public offering price. To the extent the Underwriters'
over-allotment options are exercised, the number of Shares that the Company will
repurchase and the total cash purchase price will be reduced. The Company plans
to finance the repurchase with borrowings under the Revolving Facilities (as
defined).
The agreement also provides that the Company will issue to ASI Partners
3,000,000 warrants (the "Warrants") to purchase Common Stock at a price equal to
$10 above the initial public offering price ($ assuming an initial public
offering price of $ per Share). If there is a change of control of the
Company consummated in a manner specified in the Company's agreement with ASI
Partners and Kelso (a "Transaction") prior to January 31, 1998 (or October 1,
1998 in certain cases), the agreement provides that the Company would be
required to make a cash payment to ASI Partners in respect of the aggregate
number of Shares sold by ASI Partners in the Offerings and to the Company
pursuant to the Share repurchase based on the excess, if any, of the per share
acquisition price over the cash price per share received by ASI Partners in the
Offerings and pursuant to the Share repurchase. The Warrants would expire if a
Transaction occurs entitling ASI Partners to such a payment, and will not be
exercisable until the possibility of such a payment no longer exists.
Following the Offerings, the repurchase by the Company and the Share
Distribution, ASI Partners will own no Shares. See "Capitalization", "Pro Forma
Financial Data", "The Selling Stockholder and Stockholder Transactions" and
"Underwriting".
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SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
The unaudited summary pro forma financial data presented below give effect
to the repurchase from ASI Partners for a total cash purchase price of $300
million (7.9 million Shares at an assumed price of $38 per Share) and proposed
borrowings of $300 million under the Revolving Facilities in connection with the
Stockholder Transactions, in each case as if the Stockholder Transactions had
occurred at the beginning of each of the periods presented and assuming no
exercise of the Underwriters' over-allotment options. The information presented
below should be read in conjunction with "Summary Historical Financial Data" and
"Pro Forma Financial Data".
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, 1995 SEPTEMBER 30, 1996
-------------------- --------------------
ACTUAL PRO FORMA ACTUAL PRO FORMA
------ --------- ------ ---------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Sales........................................... $5,221 $ 5,221 $4,368 $ 4,368
Cost of sales................................ 3,887 3,887 3,277 3,277
Selling and administrative expenses.......... 854 854 680 680
Asset impairment loss(a)..................... -- -- 235 235
Other expense................................ 40 40 28 28
Interest expense............................. 213 234 151 165
------ ------ ------ ------
Income (loss) before income taxes and
extraordinary item........................... 227 206 (3) (17)
Income taxes.................................... 85 77 83 78
------ ------ ------ ------
Income (loss) before extraordinary item......... $ 142 $ 129 $ (86) $ (95)
====== ====== ====== ======
INCOME (LOSS) PER COMMON SHARE:
Income (loss) before extraordinary item......... $ 1.90 $ 1.93 $(1.10)(a) $ (1.36)(a)
Average number of outstanding common shares..... 74.7 66.8 77.8 69.9
</TABLE>
- ---------------
(a) Income before extraordinary item per share for the nine months ended
September 30, 1996 would have been $1.92 and $2.00 on an actual and pro
forma basis, respectively, if the asset impairment loss were excluded.
Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standards No. 121 ("FAS 121"), Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, resulting in
a non-cash asset impairment charge in 1996 of $235 million, for which there
was no tax benefit.
RISK FACTORS
Prospective purchasers of the Shares should consider carefully the specific
risk factors set forth under "Risk Factors", as well as the other information
set forth or incorporated by reference in this Prospectus.
7
<PAGE> 10
RISK FACTORS
Prospective purchasers of the Shares should consider carefully the
following risk factors, as well as other information set forth or incorporated
by reference in this Prospectus.
SUBSTANTIAL LEVERAGE
In connection with the Acquisition in 1988 of American Standard Inc., the
Company incurred substantial indebtedness, resulting in its highly leveraged
capital structure. At September 30, 1996, the Company's total indebtedness was
approximately $2.0 billion, including short-term debt and the current portion of
long-term debt. See "Capitalization". American Standard Inc. also had the
ability as of September 30, 1996 to incur $347 million of additional
indebtedness under the Revolving Facilities and the Company's foreign
subsidiaries had an additional $70 million available under overdraft facilities.
At September 30, 1996, American Standard had scheduled principal payments of $78
million, $82 million and $235 million for the years 1997, 1998 and 1999,
respectively. The Company expects to borrow approximately $300 million
(approximately $243 million if the Underwriters were to exercise their
over-allotment options in full) under the Revolving Facilities in connection
with the Stockholder Transactions. American Standard intends to use cash
generated by operations to meet interest and principal repayment obligations,
for general corporate purposes and to reduce its indebtedness. Subject to
restrictions in its debt instruments, the Company may also incur additional
indebtedness from time to time to finance expansion through capital
expenditures, acquisitions or joint ventures or to fund other expenditures.
American Standard's substantial leverage could have important consequences,
including: limiting the Company's ability to obtain additional financing; the
need to use substantial portions of operating cash flow to meet interest and
principal repayment obligations; exposure to interest rate fluctuations due to
floating interest rates; increased vulnerability to changes in general economic
conditions, competitive pressures and changes in government regulations; and
potential limitations on its ability to realize some or all of the benefit of
significant business opportunities. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources".
HISTORICAL LOSSES
Since the Acquisition in 1988 by Kelso, American Standard has had net
losses (after income taxes, cumulative effects of changes in accounting methods
and extraordinary losses on retirement of debt) of $227 million in 1989, $54
million in 1990, $143 million in 1991, $57 million in 1992, $209 million in 1993
and $86 million in 1994. In 1995 the Company had net income of $112 million and
in the first nine months of 1996 a net loss of $86 million (which includes a
$235 million non-cash asset impairment charge). The Company's results of
operations reflect the effects of purchase accounting and significant interest
expense resulting from its highly leveraged capital structure. Results of
operations in 1991, 1992 and 1993 were also affected by recessions in the
Company's markets. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations".
INTERNATIONAL OPERATIONS
The Company conducts significant non-U.S. operations through subsidiaries
in most of the major countries of Western Europe, Brazil, the PRC, Thailand,
Mexico, the Philippines, Central American countries, Canada, Malaysia, South
Korea, Taiwan, Australia and Egypt. In addition, the Company conducts business
in these and other countries through affiliated companies and partnerships in
which the Company owns 50% or less of the stock or partnership interest. The
Company has manufacturing operations in 35 countries. International operations
are subject to a number of special risks, including currency exchange rate
fluctuations, trade barriers, exchange controls, governmental expropriation,
political risks and risks of increases in taxes. In addition, various
jurisdictions outside the United States have laws limiting the right and ability
of non-U.S.
8
<PAGE> 11
subsidiaries and affiliates to pay dividends and remit earnings to affiliated
companies unless specified conditions are met.
The Company's financial performance on a U.S. dollar denominated basis can
be significantly affected by fluctuations in currency exchange rates. Such
fluctuations have much less effect on local operating results, however, because
the Company for the most part sells its products within the countries in which
they are manufactured. The asset exposure of foreign operations to the effects
of exchange volatility has been partly offset by the denomination in foreign
currencies of a portion of the Company's borrowings. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations".
TAX MATTERS
The Company has from time to time reorganized and restructured, and may in
the future reorganize and restructure, its international operations based on
certain assumptions it believes to be correct relating to the various tax laws
(including capital gains and withholding tax laws), U.S. and international tax
treaty developments, international currency exchange and capital repatriation
laws and other relevant laws of a variety of non-U.S. jurisdictions. While
management believes that such assumptions are correct, there can be no assurance
that taxing or other authorities will reach the same conclusion. If such
assumptions are incorrect, or if such laws were changed or modified, the Company
may experience adverse tax and other financial consequences.
In connection with examinations of the tax returns of the Company's German
subsidiaries for the years 1984 through 1990, the German tax authorities have
raised questions regarding the treatment of certain significant matters. In
prior years the Company paid approximately $20 million (at September 30, 1996
exchange rates) of a disputed German income tax. A suit is pending to obtain a
refund of this tax. In March 1996 the Company received an assessment, which it
has appealed, for additional taxes of approximately $71 million (at September
30, 1996 exchange rates) (principally relating to the 1988 to 1990 period), plus
interest, for the tax return years under audit. In addition, significant
transactions similar to those which gave rise to such assessment occurred in
years subsequent to 1990. Having assessed additional taxes for the 1988-1990
period, the German tax authorities might, after future tax audits, propose tax
adjustments for years 1991 to 1993 that could be as much as 50% higher. The
Company, on the basis of the opinion of German legal counsel, Meilicke &
Partner, believes the German tax returns are substantially correct as filed and
any such adjustments would be inappropriate and intends to vigorously contest
any adjustments which have been or may be assessed. Accordingly, the Company has
not recorded any loss contingency at September 30, 1996 with respect to such
matters.
Under German law, the authorities may demand immediate payment of the
amount assessed prior to final resolution of the issues. The Company believes,
on the basis of the opinion of German legal counsel, that it is highly likely
that a significant suspension of payment pending final resolution would be
obtained. Approximately $7 million (at September 30, 1996 exchange rates) of tax
refunds have already been applied by the German tax authorities to establish a
partial prepayment. If full immediate payment were required, the Company expects
that it would be able to make such payment from available sources of liquidity
or credit support.
As a result of German tax legislation, first effective in 1994, the
Company's tax provision in Germany was higher in 1994 and in 1995 and will
continue to be in the future. As a result of this German tax legislation and the
related additional tax provisions, the Company believes its tax exposure to the
major issues under the audit referred to above will be reduced for 1994, 1995
and future years.
CERTAIN PROVISIONS RELATING TO CHANGES IN CONTROL
The Company's constituent documents and certain debt instruments and other
agreements contain provisions that may have the effect of making more difficult
an acquisition of control of the Company that has not been approved by the
Company's Board of Directors.
9
<PAGE> 12
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
The Company's Common Stock is traded on the NYSE under the symbol "ASD".
The following table sets forth the high and low reported sale prices for the
Common Stock as quoted by the NYSE for the periods indicated.
<TABLE>
<CAPTION>
MARKET
PRICE
-----------
CALENDAR PERIOD HIGH LOW
- --------------- ---- ---
<S> <C> <C>
1995
First Quarter (from February 3, 1995).......................................... $25 $19 5/8
Second Quarter................................................................. 28 1/4 24 1/4
Third Quarter.................................................................. 32 26
Fourth Quarter................................................................. 31 7/8 26 1/4
1996
First Quarter.................................................................. 31 3/8 25 1/2
Second Quarter................................................................. 33 3/8 26 1/2
Third Quarter.................................................................. 35 1/4 28 1/8
Fourth Quarter (through December 12, 1996)..................................... 39 3/4 34 1/4
</TABLE>
The last reported sale price for the Common Stock by the NYSE on December
12, 1996 was $38 per Share.
The Company has not historically paid dividends on its Common Stock, and
does not currently intend to pay dividends. Moreover, the terms of certain debt
instruments (including the Credit Agreement as well as the indentures related to
certain of American Standard Inc.'s public debt securities) prohibit or restrict
the payment of dividends or other distributions by American Standard Inc. to the
Company. The declaration and timing of any dividends in the future will be
determined by the Company's Board of Directors, based on its results of
operations, financial condition, cash requirements, certain corporate law
requirements, applicable restrictive covenants and other factors. After the
Stockholder Transactions, the Company's ability to effect additional repurchases
of Shares of Common Stock will be significantly limited under the terms of the
indentures related to certain of American Standard Inc.'s public debt
securities.
USE OF PROCEEDS
All of the Shares of Common Stock offered hereby are being offered by the
Selling Stockholder. The Company will receive no proceeds from the Offerings.
10
<PAGE> 13
CAPITALIZATION
The following table sets forth the capitalization of the Company and its
subsidiaries at September 30, 1996 and at that date as adjusted to give effect
to the financing of the Stockholder Transactions with proposed borrowings of
$300 million under the Revolving Facilities (assuming a total cash purchase
price pursuant to the Share repurchase of $300 million and no exercise of the
Underwriters' over-allotment options). See "The Selling Stockholder and
Stockholder Transactions". This table should be read in conjunction with the
Company's consolidated financial statements and notes thereto which have been
incorporated herein by reference. All amounts are translated where applicable
using September 30, 1996 currency exchange rates.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
------------------------
ACTUAL ADJUSTED
-------- -----------
(IN MILLIONS)
<S> <C> <C>
SHORT-TERM DEBT:
Loans payable to banks............................................ $ 36 $ 36
Revolving Facilities.............................................. 145 445(a)
Current maturities of long-term debt.............................. 65 65
-------- ------
Total short-term debt.......................................... 246 546
LONG-TERM DEBT:
Credit Agreement.................................................. 366 366
Other debt obligations............................................ 1,437 1,437
-------- ------
1,803 1,803
Less current maturities........................................... (65) (65)
-------- ------
Total long-term debt........................................... 1,738 1,738
-------- ------
TOTAL STOCKHOLDERS' DEFICIT......................................... (434) (734)(a)
-------- ------
Total capitalization.............................................. $ 1,550 $ 1,550
======== ======
</TABLE>
- ---------------
(a) Reflects proposed borrowings of $300 million under the Revolving Facilities
to repurchase from the Selling Stockholder approximately 7.9 million Shares
at an assumed price of $38 per Share in connection with the Stockholder
Transactions (assuming no exercise of the Underwriters' over-allotment
options). If the Underwriters were to exercise their over-allotment options
in full (which would represent approximately 1.5 million Shares), the
proposed borrowings under the Revolving Facilities would be approximately
$243 million and total stockholders' deficit would be $677 million. As part
of the Stockholder Transactions, the Company will issue to ASI Partners
certain Warrants. See "The Selling Stockholder and Stockholder
Transactions". For a discussion of the Revolving Facilities, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations".
11
<PAGE> 14
SUMMARY HISTORICAL FINANCIAL DATA
The following tables set forth summary historical financial data and
segment financial data of the Company for each of the three years in the period
ended December 31, 1995 and the nine month periods ended September 30, 1995 and
1996. The summary annual historical financial data are derived from the
Company's consolidated financial statements and notes thereto. Information for
the nine months ended September 30, 1995 and 1996 is derived from unaudited
interim financial statements which reflect, in the opinion of the Company, all
adjustments, which include only normal recurring adjustments, necessary for a
fair presentation of the financial data for such periods. Results for interim
periods are not necessarily indicative of results for the full year. This table
should be read in conjunction with the Company's consolidated financial
statements and notes thereto which have been incorporated herein by reference.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations".
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------- -----------------
1993 1994 1995 1995 1996
------ ------ ------ ------ ------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED FINANCIAL DATA:
STATEMENT OF OPERATIONS DATA:
Sales............................................... $3,830 $4,457 $5,221 $3,910 $4,368
Cost of sales..................................... 2,903 3,377 3,887 2,893 3,277
Selling and administrative expenses............... 692 779 854 631 680
Asset impairment loss(a).......................... -- -- -- -- 235
Other expense..................................... 38 57 40 27 28
Interest expense.................................. 278 259 213 162 151
------ ------ ------ ------ ------
Income (loss) before income taxes and extraordinary
item.............................................. (81) (15) 227 197 (3)
Income taxes........................................ 36 62 85 78 83
------ ------ ------ ------ ------
Income(loss) before extraordinary item.............. (117) (77) 142 119 (86)
Extraordinary loss on retirement of debt (b)........ (92) (9) (30) (30) --
------ ------ ------ ------ ------
Net income (loss)................................... (209) (86) 112 89 (86)
Preferred dividend.................................. (8) -- -- -- --
------ ------ ------ ------ ------
Net income (loss) applicable to common shares....... $ (217) $ (86) $ 112 $ 89 $ (86)
====== ====== ====== ====== ======
NET INCOME (LOSS) PER COMMON SHARE:
Income (loss) before extraordinary item............. $(2.11) $(1.29) $ 1.90 $ 1.61 $(1.10)(a)
Extraordinary loss on retirement of debt............ (1.55) (.15) (.40) (.40) --
------ ------ ------ ------ ------
Net income (loss) per common share.................. $(3.66) $(1.44) $ 1.50 $ 1.21 $(1.10)(a)
====== ====== ====== ====== ======
Average number of outstanding common shares......... 59.3 59.9 74.7 74.0 77.8
OTHER DATA:
Depreciation expense................................ $ 106 $ 123 $ 110 $ 84 $ 91
Amortization of goodwill............................ 31 31 33 25 21
EBIT (c)............................................ 197 244 440 359 148
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital..................................... $ 80 $ (14) $ (12) $ (15) $ 154
Goodwill (net)...................................... 1,026 1,053 1,082 1,071 851
Total assets........................................ 2,987 3,156 3,520 3,434 3,445
Total debt.......................................... 2,336 2,364 2,083 2,070 1,984
Stockholders' deficit............................... (723) (798) (390) (419) (434)
</TABLE>
- ---------------
(a) Effective January 1, 1996 the Company adopted FAS 121, resulting in a
non-cash charge of $235 million, or $3.02 per share, for which there was no
tax benefit. Excluding the asset impairment loss, income before
extraordinary item would have been $1.92 per share.
(b) Reflects redemptions of debt in 1993, 1994 and 1995 which resulted in
extraordinary charges of $92 million, $9 million and $30 million,
respectively, including call premiums, the write-off of deferred debt
issuance costs, and, in 1993, loss on cancellation of foreign currency swap
contracts, for which there were no tax benefits.
(c) EBIT is the sum of (i) income (loss) before income taxes and extraordinary
item and (ii) interest expense.
12
<PAGE> 15
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
----------------------------- -----------------
1993 1994 1995 1995 1996
------- ------- ------- ------- -------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
SEGMENT FINANCIAL DATA:
SALES:
Air Conditioning Products........................ $ 2,100 $ 2,480 $ 2,953 $ 2,201 $ 2,602
Plumbing Products................................ 1,167 1,218 1,270 952 1,079
Automotive Products.............................. 563 759 998 757 687
------- ------- ------- ------- -------
Total Sales........................................ $ 3,830 $ 4,457 $ 5,221 $ 3,910 $ 4,368
======= ======= ======= ======= =======
OPERATING INCOME BEFORE ASSET IMPAIRMENT LOSS AND
SPECIAL CHARGES:
Air Conditioning Products........................ $ 138 $ 189 $ 259 $ 209 $ 284
Plumbing Products................................ 109 130 120 96 88
Automotive Products.............................. 43 76 155 123 91
------- ------- ------- ------- -------
290 395 534 428 463
Asset impairment loss and special charges(a):
Air Conditioning Products........................ (5) (7) -- -- (121)
Plumbing Products................................ (1) (19) -- -- (114)
Automotive Products.............................. (2) (14) -- -- --
------- ------- ------- ------- -------
Total Operating Income............................. $ 282 $ 355 $ 534 $ 428 $ 228
======= ======= ======= ======= =======
</TABLE>
- ---------------
(a) Includes the non-cash charge of $235 million in the first quarter of 1996 as
a result of the adoption of FAS 121, for which there was no tax benefit, and
the special charges incurred in 1993 and 1994 applicable to consolidation of
production facilities, employee severance, other cost reduction actions and
a provision for the early disposition of certain assets.
13
<PAGE> 16
PRO FORMA FINANCIAL DATA
The following unaudited pro forma financial data give effect to the
repurchase from the Selling Stockholder for a total cash purchase price of $300
million (7.9 million Shares at an assumed price of $38 per Share) and proposed
borrowings of $300 million under the Revolving Facilities in connection with the
Stockholder Transactions, in each case as if the Stockholder Transactions had
occurred at the beginning of each of the periods presented and assuming no
exercise of the Underwriters' over-allotment options. The pro forma financial
data are based upon available information and certain assumptions that
management believes are reasonable, including those set forth in the footnotes
thereto. The pro forma financial data do not purport to represent what the
Company's results of operations would actually have been had the Stockholder
Transactions in fact occurred on the assumed date or at the beginning of the
periods indicated or to project the Company's results of operations for any
future period. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "The Selling Stockholder and Stockholder
Transactions".
<TABLE>
<CAPTION>
YEAR NINE MONTHS NINE MONTHS
ENDED ENDED ENDED
DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
1995 1995 1996
------------ ------------- --------------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Sales........................................ $5,221 $ 3,910 $4,368
Cost of sales............................. 3,887 2,893 3,277
Selling and administrative expenses....... 854 631 680
Asset impairment loss(a).................. -- -- 235
Other expense............................. 40 27 28
Interest expense(b)....................... 234 178 165
------ ------ ------
Income (loss) before income taxes and
extraordinary item........................ 206 181 (17)
Income taxes(b).............................. 77 72 78
------ ------ ------
Income (loss) before extraordinary item...... $ 129 $ 109 $ (95)
====== ====== ======
INCOME (LOSS) PER COMMON SHARE:
Income (loss) before extraordinary item...... $ 1.93(a) $ 1.65(a) $(1.36)(a)
Average number of outstanding common
shares(b)................................. 66.8 66.1 69.9
</TABLE>
- ---------------
(a) Income before extraordinary item per share for the nine months ended
September 30, 1996 would have been $2.00 on a pro forma basis if the asset
impairment loss were excluded. Effective January 1, 1996, the Company
adopted FAS 121, resulting in a non-cash charge in 1996 of $235 million, for
which there was no tax benefit. Exercise of the Underwriters' over-allotment
option in full (which would represent approximately 1.5 million shares)
would have no material effect on income before asset impairment loss and
extraordinary item per share on a pro forma basis for each of the periods
presented.
(b) The adjustment to reflect the repurchase of approximately 7.9 million Shares
from the Selling Stockholder for $300 million increases interest expense by
$21 million, $16 million and $14 million and decreases income taxes by $8
million, $6 million and $5 million for the year ended December 31, 1995 and
the nine months ended September 30, 1995 and 1996, respectively.
14
<PAGE> 17
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW FOR THE THIRD QUARTER AND FIRST NINE MONTHS OF 1996
Operating income increased 16% to $163 million in the third quarter of 1996
from $140 million in the third quarter of 1995 on strong growth for Air
Conditioning Products and an improvement by Plumbing Products, offset partly by
a decrease for Automotive Products related to weak markets. Effective January 1,
1996 the Company adopted FAS 121 related to impairment of long-lived assets.
Applying the criteria established by FAS 121, the Company concluded that certain
assets and related goodwill of its Canadian, French and Mexican operating units
were impaired. As a result, the Company recorded a non-cash charge in the first
quarter of 1996 of $235 million, approximately 90% of which represented the
write-down of goodwill, for which there is no tax benefit. This charge included
$121 million for Air Conditioning Products' operations in Canada and France, and
$114 million for Plumbing Products' operations in Canada and Mexico. Excluding
this charge, operating income for the first nine months of 1996 was $463
million, an increase of 8% over the $428 million of operating income in the
first nine months of 1995.
SUMMARY SEGMENT AND INCOME DATA
(IN MILLIONS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995 1996 1995 1996
------ ------ ------ ------
<S> <C> <C> <C> <C>
Sales:
Air Conditioning Products.......................... $ 776 $ 920 $2,201 $2,602
Plumbing Products.................................. 307 359 952 1,079
Automotive Products................................ 233 206 757 687
------ ------ ------ ------
Total sales........................................ $1,316 $1,485 $3,910 $4,368
====== ====== ====== ======
Operating income before asset impairment loss:
Air Conditioning Products.......................... $ 81 $ 111 $ 209 $ 284
Plumbing Products.................................. 23 31 96 88
Automotive Products................................ 36 21 123 91
------ ------ ------ ------
140 163 428 463
Asset impairment loss:
Air Conditioning Products.......................... -- -- -- (121)
Plumbing Products.................................. -- -- -- (114)
------ ------ ------ ------
-- -- -- (235)
------ ------ ------ ------
Total operating income.......................... 140 163 428 228
Interest expense..................................... (51) (49) (162) (151)
Corporate and other expenses (a)..................... (22) (27) (69) (80)
------ ------ ------ ------
Income (loss) before income taxes and
extraordinary item................................. $ 67 $ 87 $ 197 $ (3)
====== ====== ====== ======
</TABLE>
- ---------------
(a) Corporate and other expenses includes administrative, general and corporate
development expenses, accretion charges on postretirement benefit
liabilities, equity in net income (loss) of affiliated companies, minority
interest, foreign exchange transaction gains and losses and miscellaneous
income and expense.
15
<PAGE> 18
RESULTS OF OPERATIONS FOR THE THIRD QUARTER AND FIRST NINE MONTHS OF 1996
COMPARED WITH THE THIRD QUARTER AND FIRST NINE MONTHS OF 1995
Consolidated sales for the third quarter of 1996 were $1,485 million, an
increase of $169 million, or 13% (14% excluding the unfavorable effects of
foreign exchange), from $1,316 million in the third quarter of 1995. Sales
increased 19% for Air Conditioning Products and 17% for Plumbing Products, while
sales for Automotive Products decreased 12% compared with the third quarter of
1995. Operating income for the third quarter of 1996 was $163 million, an
increase of $23 million, or 16% (17% excluding the unfavorable effects of
foreign exchange), from $140 million in the third quarter of 1995. Operating
income increased 37% for Air Conditioning Products and 35% for Plumbing Products
but decreased 42% for Automotive Products.
Consolidated sales for the first nine months of 1996 were $4,368 million,
an increase of $458 million, or 12% (13% excluding the unfavorable effects of
foreign exchange), from $3,910 million in the first nine months of 1995. Sales
increased 18% for Air Conditioning Products and 13% for Plumbing Products, while
sales for Automotive Products declined 9%. Operating income (excluding the asset
impairment charge previously mentioned) was $463 million for the first nine
months of 1996, an increase of 8% (9% excluding the unfavorable effects of
foreign exchange), compared with $428 million in the first nine months of 1995.
Operating income for the first nine months of 1996 increased 36% for Air
Conditioning Products but declined 8% for Plumbing Products and 26% for
Automotive Products.
Sales of Air Conditioning Products increased 19% (with little effect from
foreign exchange) to $920 million for the third quarter of 1996 from $776
million for the comparable quarter of 1995. This improvement resulted from
substantial volume increases and price gains for applied and unitary commercial
systems; higher volumes and prices and a favorable shift to higher-efficiency,
higher-capacity products for residential products in the U.S.; and sales by the
new operations in the PRC. Sales of commercial products in the U.S. increased
because of improved markets, demand for chiller replacement (due to the ban on
CFC refrigerant production), higher prices and gains in market share.
Residential sales in the U.S. increased because of strong demand (particularly
in the replacement and renovation market), hot weather in some parts of the U.S.
and improved economic conditions. International sales for the third quarter of
1996 increased principally because of sales by the new PRC operations, along
with volume increases in most other businesses. Sales for Air Conditioning
Products for the first nine months of 1996 increased by 18% to $2,602 million
from $2,201 million in the first nine months of 1995, primarily for the reasons
cited for the third quarter increase.
Operating income of Air Conditioning Products increased 37% (with little
effect from foreign exchange) to $111 million in the third quarter of 1996 from
$81 million in the 1995 quarter, primarily reflecting expanded commercial and
residential product sales in the U.S. Despite higher sales (primarily in the
PRC), operating income for international operations was essentially unchanged.
The new PRC operations were at break even, while results in other operations
changed little from levels of the third quarter of 1995. Operating income for
the first nine months of 1996, excluding the asset impairment charge explained
above, increased 36% essentially for the reasons mentioned for the third quarter
increase.
Sales of Plumbing Products increased 17% (18% excluding the unfavorable
effects of foreign exchange) to $359 million in the third quarter of 1996 from
$307 million in the third quarter of 1995 primarily as a result of sales by
Porcher, the French manufacturer acquired in the fourth quarter of 1995, and
higher sales in North and Latin American operations. Excluding Porcher and
foreign exchange effects, 1996 third quarter sales increased 3% compared with
the 1995 quarter, as a result of an 8% increase for U.S. operations, while the
international group was essentially flat despite the Latin American gains. Sales
in the U.S. increased as a result of higher volumes (primarily in the retail
market channel) and higher prices. For the international group, volume gains in
Latin American operations (primarily in Mexico) were offset by a sales decline
in Europe, particularly in Germany,
16
<PAGE> 19
Italy and France which continued to experience weak economic conditions. Sales
of Plumbing Products for the first nine months of 1996 increased 13% (14%
excluding the unfavorable effects of foreign exchange) to $1,079 million from
$952 million in the first nine months of 1995. Excluding Porcher and foreign
exchange effects, sales decreased by 1% for the first nine months of 1996
compared with the 1995 period as a result of the same factors affecting the
third quarter results and because of a five-week strike in the Philippines that
occurred in the first quarter of 1996.
Operating income of Plumbing Products increased 35% (37% excluding the
unfavorable effects of foreign exchange) to $31 million for the third quarter of
1996 from $23 million for the third quarter of 1995 as a result of a solid gain
in U.S. operating income, while international operations were flat overall. In
the U.S., operating income improved because of the higher sales, benefits of
lower-cost product sourcing from the Company's Mexican facilities and
manufacturing and operating cost improvements. For international operations,
operating income gains in Latin America were offset by declines in the weak
European markets, particularly in Germany and, to a lesser extent, in Italy and
France. Despite a gain for U.S. operations, operating income for the first nine
months of 1996, excluding the aforementioned asset impairment charge, declined
by 8% (7% excluding foreign exchange effects) from the first nine months of 1995
because of a decline in international operations in the first half of 1996,
including the effects of the first quarter Philippines strike.
Sales of Automotive Products for the third quarter of 1996 decreased 12%
(10% excluding the unfavorable effects of foreign exchange) to $206 million from
$233 million in the third quarter of 1995, primarily because of a decline in
European commercial vehicle production as a result of market weakness and order
delays at several large customers in anticipation of new truck model
introductions. Unit volume of truck and bus production in Western Europe
decreased from the third quarter of 1995, especially in Germany and France.
Trailer, export and Brazilian markets also decreased, contributing to the sales
decline. Sales of Automotive Products for the first nine months of 1996
decreased 9% (7% excluding the unfavorable effects of foreign exchange) to $687
million from $757 million in the first nine months of 1995, primarily for the
reasons which caused declines in the third quarter.
Operating income for Automotive Products for the third quarter of 1996 was
$21 million, a decrease of 42% (39% excluding the unfavorable effects of foreign
exchange) from $36 million in the third quarter of 1995. This reflected the
lower sales and start-up costs associated with new product introductions on 1997
truck models, offset partly by productivity improvements. Operating income for
Automotive Products for the first nine months of 1996 decreased by 26% (24%
excluding the unfavorable effects of foreign exchange) to $91 million from $123
million in the first nine months of 1995, principally for the same reasons
described with respect to the third quarter.
FINANCIAL REVIEW
Interest expense decreased in the third quarter and first nine months of
1996 compared to the year-earlier periods, primarily as a result of reduced debt
together with lower overall interest rates under the Company's 1995 bank credit
agreement (the "Credit Agreement"). The increase in corporate and other expenses
for the third quarter and first nine months of 1996 is primarily attributable to
spending for corporate development and lower equity in the net results of
unconsolidated joint ventures.
Income tax provisions for the three months and nine months ended September
30, 1996 were $30 million and $83 million, respectively, compared with
provisions of $24 million and $78 million in the corresponding periods of 1995.
Effective income tax rates for the third quarter and first nine months of 1996
were 34.5% and 35.6% of pretax income (excluding the asset impairment charge in
the nine month period on which there was no tax benefit), compared with rates of
35.2% and 39.5% in the corresponding year-earlier periods. Both third quarter
periods reflect reductions in the estimated full year tax rates. The lower
effective tax rates resulted from increased levels of U.S. income (enabling the
Company to recognize previously unrecognized tax benefits in both 1995 and
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1996) and, in 1996, from proportionately greater pretax income earned in the
U.S. (at a lower effective rate) compared to that earned in higher-rate
jurisdictions in Europe and elsewhere.
As a result of the redemption of debt in the first quarter of 1995 upon
completion of a refinancing, the first nine months of 1995 included an
extraordinary charge of $30 million attributable to the write-off of unamortized
debt issuance costs, for which no tax benefit was available.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities, after cash interest paid of $87
million, was $200 million for the first nine months of 1996, compared with $202
million for the first nine months of 1995. Higher income before extraordinary
item (excluding the non-cash asset impairment loss of $235 million) along with
improved working capital utilization were offset primarily by higher payments of
income taxes. Inventory turnover as of September 30, 1996 improved one full turn
from September 30, 1995, and working capital as a percent of sales improved
nearly one percentage point. The Company made capital expenditures of $135
million for the first nine months of 1996, including $12 million of investments
in affiliated companies, compared with capital expenditures of $115 million in
the first nine months of 1995, which included $19 million of investments in
affiliated companies (see "-- Capital Expenditures"). Scheduled debt repayments
of $50 million were made during the first nine months of 1996.
At September 30, 1996, the Company's total indebtedness was $1,984 million
and the Company had scheduled debt maturities of $78 million, $82 million, and
$235 million for the years 1997, 1998 and 1999, respectively. The Company
believes that the amounts available from operating cash flows, funds available
under the Revolving Facilities and future debt or equity financings will be
sufficient to meet its expected operating needs and planned capital expenditures
for the foreseeable future.
The Credit Agreement provides American Standard Inc. and certain
subsidiaries with a secured facility aggregating $1.0 billion including
revolving credit facilities (the "Revolving Facilities") which provide for
aggregate borrowings of up to $550 million, of which up to $200 million may
consist of outstanding letters of credit. In addition, up to $40 million of the
Revolving Facilities may be used for same day short-term borrowings. Each
revolving loan is due at the end of the respective interest period (a maximum of
six months). The Company may, however, concurrently reborrow the outstanding
obligations subject to compliance with applicable conditions of the Credit
Agreement. Upon achieving certain financial ratios in mid-1995, the Company
obtained an interest rate reduction of .25% and in March 1996 achieved an
additional interest rate reduction of .25%.
At September 30, 1996 the Company had outstanding borrowings of $145
million under the Revolving Facilities. There was $347 million available under
the Revolving Facilities after reduction for borrowings and $58 million of
outstanding letters of credit. In addition, at September 30, 1996, the Company's
foreign subsidiaries had $70 million available under overdraft facilities which
can be withdrawn by the banks at any time. Borrowings under the Revolving
Facilities are short-term by their terms. Because a significant portion of the
long-term debt under the Company's previous bank credit agreement was replaced
with borrowings under the Revolving Facilities, a significantly larger portion
of the Company's debt is now classified as short-term.
The Credit Agreement contains various covenants that limit, among other
things, mergers and asset sales, indebtedness, dividends on and redemption of
capital stock of the Company, voluntary prepayment of certain other
indebtedness, rental expense, liens, capital expenditures, investments or
acquisitions, the use of proceeds from asset sales, intercompany transactions
and transactions with affiliates and certain other business activities. The
covenants also require the Company to meet certain financial tests. Certain
other American Standard Inc. debt instruments also contain financial and other
covenants. The Company believes it is currently in compliance with the covenants
contained in the Credit Agreement and its other debt instruments.
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In addition, the terms of the Credit Agreement and the indentures related
to certain of American Standard Inc.'s public debt securities permit the lenders
under the Credit Agreement and the holders of such debt securities,
respectively, to accelerate payment or require redemption upon certain events
which constitute a change of control of the Company or American Standard Inc.
At September 30, 1996, the Company held swap agreements to hedge the
redemption value of a portion of its long-term debt and effectively change such
debt from a fixed interest rate of 10 1/2% to an average fixed rate of
approximately 7%. The redemption value hedged by the swaps is the fair value of
the debt at the commencement of the swaps. The swaps mature in June 1998 and
have a notional debt value of $147 million. The Company's financial instruments
with off-balance sheet risks are with major financial institutions. The Company
does not anticipate non-performance by such counterparties.
In August, 1996, the Company entered into a financial services partnership,
American Standard Financial Services, with Transamerica Commercial Finance
Corporation, a subsidiary of Transamerica Corporation, to provide a wide range
of financial services to support sales of the Company's products while reducing
cash requirements to expand its business. The partnership will offer inventory
and consumer financing, commercial leasing and asset-based lending programs,
which are expected to enhance the Company's cash flow.
In connection with examinations of the tax returns of the Company's German
subsidiaries for the years 1984 through 1990, the German tax authorities have
raised questions regarding the treatment of certain significant matters. In
prior years the Company paid approximately $20 million (at September 30, 1996
exchange rates) of a disputed German income tax. A suit is pending to obtain a
refund of this tax. In March 1996 the Company received an assessment, which it
has appealed, for additional taxes of approximately $71 million (at September
30, 1996 exchange rates) (principally relating to the 1988 to 1990 period), plus
interest, for the tax return years under audit. In addition, significant
transactions similar to those which gave rise to such assessment occurred in
years subsequent to 1990. Having assessed additional taxes for the 1988-1990
period, the German tax authorities might, after future tax audits, propose tax
adjustments for years 1991 to 1993 that could be as much as 50% higher. The
Company, on the basis of the opinion of German legal counsel, Meilicke &
Partner, believes the German tax returns are substantially correct as filed and
any such adjustments would be inappropriate and intends to vigorously contest
any adjustments which have been or may be assessed. Accordingly, the Company has
not recorded any loss contingency at September 30, 1996 with respect to such
matters.
Under German law, the authorities may demand immediate payment of the
amount assessed prior to final resolution of the issues. The Company believes,
on the basis of the opinion of German legal counsel, that it is highly likely
that a significant suspension of payment pending final resolution would be
obtained. Approximately $7 million (at September 30, 1996 exchange rates) of tax
refunds have already been applied by the German tax authorities to establish a
partial prepayment. If full immediate payment were required, the Company expects
that it would be able to make such payment from available sources of liquidity
or credit support.
As a result of German tax legislation, first effective in 1994, the
Company's tax provision in Germany was higher in 1994 and in 1995 and will
continue to be in the future. As a result of this German tax legislation and the
related additional tax provisions, the Company believes its tax exposure to the
major issues under the audit referred to above will be reduced for 1994, 1995
and future years.
American Standard Inc. makes substantial interest payments to its indirect
wholly-owned Netherlands subsidiary. These interest payments had been exempt
from U.S. withholding tax under an income tax treaty between the United States
and the Netherlands. Under a provision in a new treaty such payments would have
become subject to 15% U.S. withholding tax, except that the Company received a
ruling in 1996 from the IRS making a determination that no U.S. withholding tax
will be imposed for a fifteen-year period.
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CAPITAL EXPENDITURES
American Standard from time to time has invested in the expansion and
modernization of its existing facilities and affiliated companies and considers
entering into and increasing investments in joint ventures and making
complementary acquisitions. Capital expenditures have been financed out of
operating cash flow and through borrowings under the Credit Agreement.
The Company's capital expenditures for the first nine months of 1996 were
$135 million, including $12 million of investments in affiliated companies,
compared with $115 million (including $19 million of investments in affiliated
companies) for the first nine months of 1995. The increase for 1996 relates
primarily to investments in affiliated companies, lower-cost product sourcing,
expansion in newer operations, new products, expansion to meet market demand and
the continuing implementation of Demand Flow.
The Company's capital expenditures for the year 1995 were $207 million
compared with $130 million for 1994, an increase of 59%. The increase for 1995
relates primarily to investments in affiliated companies ($42 million in 1995
compared to $24 million in 1994), modernization of recent acquisitions, new
products and the continuing implementation of Demand Flow. The Company expects
that capital expenditures (including investments in affiliates) will increase
approximately 10% for 1996 compared with 1995 and by approximately 15% in 1997.
Capital expenditures for Air Conditioning Products for 1995 were $70
million, including $11 million of investments in affiliates, an increase of 56%
over the $45 million of capital spending in 1994. Major expenditures included
investments in affiliates in the PRC and projects related to the expansion of
manufacturing capacity for large chillers, implementation of Demand Flow and new
products.
Plumbing Products' capital expenditures for the year 1995 were $93 million,
including $31 million of investments in affiliated companies (primarily
Porcher), compared with capital expenditures of $55 million in 1994 (including
investments of $10 million in affiliated companies), an increase of 69% (75%
excluding the effects of foreign exchange). Expenditures for 1995 included cash
investments in Porcher and affiliates in the PRC, expansion of capacity in
Mexico, expansion in Far East operations and modernization of the Czech Republic
operations.
Capital expenditures for Automotive Products for 1995 were $44 million,
compared with 1994 capital expenditures of $30 million, an increase of 47% (38%
excluding the effects of foreign exchange). Major projects included completion
of a test track in Germany, continued implementation of Demand Flow and
cost-reduction projects.
CYCLICALITY; SEASONALITY
American Standard's businesses are cyclical. Although the exposure of Air
Conditioning Products and Plumbing Products to cyclicality in the new
construction market is somewhat mitigated by their increasing emphasis on the
replacement, renovation and repair markets (approximately 60% of their 1995
sales), which have been less cyclical, Air Conditioning Products' and Plumbing
Products' sales to the new construction market continue to constitute a
substantial portion of their sales (approximately 40% of their 1995 sales).
Automotive Products' sales are highly dependent on production levels of
medium-sized and heavy trucks and buses, particularly in Europe, which have also
been cyclical. Western European truck and bus production declined significantly
from its historical high in 1989 of approximately 395,000 trucks and buses in
excess of six tons to a recent low of approximately 227,000 units in 1993. While
production recovered in 1994 and 1995, to approximately 351,000 units in 1995,
it declined again in 1996 to an estimated 319,000 units on an annualized basis.
Total Company sales tend to be seasonally higher in the second and third
quarters of the year because a significant percentage of Air Conditioning
Products' sales is attributable to residential and commercial construction
activity, which is generally higher in the second and third quarters of the
year, and because summer is the peak season for sales of air conditioning
products.
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INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS
Certain of the statements contained in this Prospectus and in documents
incorporated herein by reference (other than the historical financial data and
other statements of historical fact), including, without limitation, statements
as to management's expectations and belief presented in this "Management's
Discussion and Analysis of Financial Condition and Results of Operations," are
forward-looking statements. Forward-looking statements are made based upon
management's expectations and belief concerning future developments and their
potential effect upon the Company. There can be no assurance that future
developments will be in accordance with management's expectations or that the
effect of future developments on the Company will be those anticipated by
management. There are certain important factors that could cause actual results
to differ materially from estimates reflected in such forward-looking
statements, including the level of new construction activity in the Company's
Air Conditioning Products' and Plumbing Products' markets; production levels of
trucks and buses in the Company's Automotive Products' markets, particularly in
Western Europe; changes in U.S. or international economic conditions, such as
inflation, interest rate fluctuations or recessions in the Company's markets;
pricing changes to the Company's products or those of its competitors, and other
competitive pressures on pricing and sales; risks generally relating to the
Company's international operations (see "Risk Factors -- International
Operations" and "-- Tax Matters"); and transactions or other events affecting
the need for, timing and extent of the Company's capital expenditures. See "Risk
Factors" and "-- Results of Operations For the Third Quarter and First Nine
Months of 1996 Compared with the Third Quarter and First Nine Months of 1995".
While the Company periodically reassesses material trends and uncertainties
affecting the Company's financial condition and results of operations in
connection with its preparation of management's discussion and analysis of
financial condition and results of operations contained in its quarterly and
annual reports, the Company does not intend to review or revise any particular
forward-looking statement referenced in this Prospectus or incorporated herein
by reference in light of future events.
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BUSINESS
American Standard is a globally-oriented manufacturer of high quality,
brand-name products in three major product groups: air conditioning systems (57%
of 1995 sales); bathroom and kitchen fixtures and fittings (24% of 1995 sales);
and braking and control systems for medium-sized and heavy trucks, buses,
trailers and utility vehicles (19% of 1995 sales). American Standard is a market
leader in each of these business segments in the principal geographic areas in
which it competes. The Company's brand names include TRANE(R) and AMERICAN
STANDARD(R) for air conditioning systems, AMERICAN STANDARD(R), IDEAL
STANDARD(R), STANDARD(R) and PORCHER(R) for plumbing products and WABCO(R) and
PERROT(R) for braking and related systems. The Company emphasizes
technologically advanced products such as air conditioning systems that utilize
energy-efficient compressors and environmentally-preferred refrigerants,
water-saving plumbing products and commercial vehicle braking and related
systems (including ABS) that utilize electronic controls. At September 30, 1996,
American Standard had 103 manufacturing facilities in 35 countries.
American Standard's business strategy is to promote growth in sales and
earnings. Key elements of this strategy are:
- INCREASE MARKET SHARES. The Company plans to increase the market
shares of its products by developing, manufacturing and selling high
quality, technologically advanced products and by providing superior
customer service.
- EXPAND SALES IN DEVELOPING MARKETS. The Company plans to build on its
historical global presence by focusing a significant portion of its
new business activities (principally through joint ventures in which
the Company has operating control) in developing market areas with the
potential for high economic growth and/or demand for the Company's
products, such as the Far East, including the PRC, Latin America and
Eastern Europe.
- CONTINUE APPLICATION OF DEMAND FLOW. To build on its position as a
leader in each of its industries, the Company continues to apply
Demand Flow to all its businesses. The Company's use of Demand Flow is
designed to streamline processes, improve product quality, enhance
customer service and reduce product cycle times, while improving
efficiency, reducing working capital needs and lowering costs. The
Company believes that Demand Flow, which it began to apply in 1990,
has resulted in significant benefits.
OVERVIEW OF BUSINESS SEGMENTS
American Standard operates three business segments: Air Conditioning
Products, Plumbing Products and Automotive Products.
AIR CONDITIONING PRODUCTS. American Standard is a leading U.S.
manufacturer of air conditioning systems for both domestic and export sales, and
also manufactures air conditioning systems outside the United States. Air
Conditioning Products manufactures "applied" (custom engineered, site-assembled)
and "unitary" (self-contained, factory-assembled) air conditioning systems that
are sold primarily under the TRANE(R) and AMERICAN STANDARD(R) names. Air
Conditioning Products' sales to the commercial and residential markets
represented approximately 75% and 25%, respectively, of Air Conditioning
Products' total sales in 1995 and the first nine months of 1996. Approximately
60% of Air Conditioning Products' sales in these periods was to the replacement,
renovation and repair markets, which have been less cyclical than the new
residential and commercial construction markets. Of Air Conditioning Products'
1995 worldwide sales, approximately 79% was derived from U.S. operations
(including 7% related to export sales) and 21% was derived from operations
outside the United States. Management believes that Air Conditioning Products is
well positioned for growth because of its high quality, brand-name products,
significant existing market shares, the introduction of new product features
such as electronic controls, the
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expansion of its broad distribution network and conversion to products utilizing
environmentally-preferred refrigerants.
PLUMBING PRODUCTS. American Standard is a leading manufacturer in Europe,
the U.S. and a number of other countries of bathroom and kitchen fixtures and
fittings for the residential and commercial construction markets and retail
sales channels. Plumbing Products manufactures and distributes its products
under the AMERICAN STANDARD(R), IDEAL STANDARD(R), STANDARD(R) and PORCHER(R)
names. Of Plumbing Products' worldwide 1995 sales, approximately 71% was derived
from operations outside the United States and 29% was derived from operations in
the United States. Management believes that Plumbing Products is well positioned
for growth due to the high quality of its brand-name products, significant
existing market shares in a number of countries and the expansion of existing
operations in developing market areas throughout the world (principally the Far
East, Latin America and Eastern Europe).
AUTOMOTIVE PRODUCTS. American Standard is a leading manufacturer,
primarily in Europe and Brazil, of braking and related systems for the
commercial and utility vehicle industry. Its most important products are
pneumatic braking systems and related electronic and other control systems
(including ABS) marketed under the WABCO(R) name for medium-size and heavy
trucks, tractors, buses, trailers and utility vehicles. American Standard
supplies vehicle manufacturers such as Mercedes-Benz, Volvo, Iveco (Fiat), RVI
(Renault) and Rover. Management believes that Automotive Products is well
positioned to benefit from any future improvement in market conditions in Europe
and Brazil and increasing demand for ABS and other sophisticated electronic
control systems in a number of markets (including the commercial vehicle market
in the United States, where phase-in of ABS is mandated beginning in 1997), as
well as from the technological advances embodied in the Company's products and
its close relationships with a number of vehicle manufacturers.
STRATEGY
GLOBALIZATION
American Standard has historically had a significant global presence. One
of its major strategic objectives is to continue to expand that presence through
the growth of existing operations and the establishment of new operations in
developing market areas in the Far East, Latin America and Eastern Europe. The
Company often uses joint ventures with local manufacturing and distribution
partners to facilitate risk sharing and to allow the Company to benefit from the
additional expertise of local market participants.
Air Conditioning Products continues to expand its operations in the Far
East, Latin America and Europe. In 1994, it established a joint venture in
Australia and continues to expand its sales forces in the Far East, Latin
America, the Middle East and India. In December 1995 the Company completed
arrangements for the development and expansion of its air conditioning business
in the PRC, to become an integrated manufacturer, marketer and distributor of a
broad range of air conditioning systems and related products for residential and
commercial applications. The Company and a minority investor established ASI
China Holdings Limited ("ASI China"), in which the Company has an initial
ownership interest of 64.4%, and formed A-S Air Conditioning Products Limited
("ASAP"), owned 50.4% by ASI China, to establish or acquire majority ownership
in up to five manufacturing joint ventures as well as sales and service
businesses in the PRC. The Company contributed to ASAP its 50% interest (valued
at $10 million) in a Hong Kong joint venture (which imports and distributes air
conditioning products) and has committed to contribute $20 million in cash, $8
million of which had been contributed as of December 31, 1995. The minority
investor in ASI China and third-party investors in ASAP have committed to
contribute a total of $62 million, $26 million of which had been contributed as
of December 31, 1995. As of December 31, 1995, ASAP had acquired majority
ownership in three manufacturing joint ventures and in conjunction therewith
assumed debt of $21 million.
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Plumbing Products has entered new markets through joint ventures in Eastern
Europe, Spain, Portugal and Vietnam and is continuing to expand using this
approach. In 1995, operations were expanded in France through the acquisition of
Porcher (see "--Plumbing Products Segment"). Plumbing Products continues to
expand its operations in the PRC through its affiliate, A-S China Plumbing
Products Limited ("ASPPL"), in which American Standard has a current ownership
position of approximately 28% and effective control over day-to-day operations.
ASPPL, which had total assets of approximately $125 million at September 30,
1996, has expanded its operations to Beijing, Tianjin, Shanghai and Guangzhou in
order to provide a full product line of fixtures, fittings, and bathtubs
throughout the PRC market. ASPPL has entered into seven joint ventures with
local business concerns which, together with one wholly-owned operation, have
received business licenses from Chinese government authorities. These include
two recently constructed chinaware manufacturing facilities, an existing
chinaware manufacturing facility being expanded, two operating fittings plants
and two operating steel tub factories. The Company's ownership interest in ASPPL
is expected to increase over time to up to 51% of the equity of ASPPL through
reinvestment of royalties and management fees and through additional stock
purchases.
Automotive Products, headquartered in Europe, has since 1993 established a
joint venture in the PRC, acquired a business in Spain, is in the process of
establishing joint ventures in Eastern Europe and is expanding the volume of
business done through its existing joint ventures in the United States and
Japan.
DEMAND FLOW
To build on its position as a leader in each of its industries and to
increase sales and operating income, American Standard began in 1990 to apply
Demand Flow to all its businesses. Under Demand Flow, products are produced as
and when required by the customer, the production process is streamlined, and
quality control is integrated into each step of the manufacturing process. The
benefits of Demand Flow include better customer service, quicker response to
changing market needs, improved quality control, higher productivity, increased
inventory turnover rates and reduced requirements for working capital and
manufacturing and warehouse space.
As part of American Standard's strategy to integrate Demand Flow into all
of its operations, most of American Standard's approximately 44,000 employees
worldwide have been trained in Demand Flow which has been implemented in
substantially all of American Standard's production facilities as of September
30, 1996. In addition, American Standard is implementing Demand Flow in its
acquired operations such as Perrot, a German brake manufacturer acquired in
January 1994, and Porcher, acquired in 1995. American Standard is also applying
Demand Flow to administrative functions and is reengineering its organizational
structure to manage its businesses based on processes instead of functions.
American Standard believes that its implementation of Demand Flow has
achieved significant benefits. Product cycle time (the time from the beginning
of the manufacturing of a product to its completion) has been reduced and, on
average, inventory turnover rates have more than tripled since 1990. Principally
as a result of the implementation of Demand Flow, American Standard has reduced
inventories by 49% from December 31, 1989 through December 31, 1995, while
related sales have grown 57% for the same period. American Standard further
believes that as a result of the introduction of Demand Flow, employee
productivity has risen significantly, customer service has improved and, without
reducing production capacity, the Company has been able to free more than three
million square feet of manufacturing and warehouse space, allowing for
expansion, plant consolidation or other uses.
AIR CONDITIONING PRODUCTS SEGMENT
Air Conditioning Products began with the 1984 acquisition by the Company of
The Trane Company, a manufacturer and distributor of air conditioning products
since 1913. Air conditioning
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products are sold primarily under the TRANE(R) and AMERICAN STANDARD(R) names.
In 1995 Air Conditioning Products, with revenues of $2,953 million, accounted
for approximately 57% of the Company's sales and 49% of its operating income.
Outside the United States, Air Conditioning Products derived 21% of its sales in
1995 from manufacturing operations and 7% from U.S. exports. Approximately 60%
of Air Conditioning Products sales in 1995 was from the replacement, renovation
and repair markets, which in general are less cyclical than the new residential
and commercial construction markets.
Air Conditioning Products manufactures three general types of air
conditioning systems. The first, called "unitary," which is sold for residential
and commercial applications, is a factory-assembled central air conditioning
system which generally encloses in one or two units all the components to cool
or heat, clean, humidify or dehumidify, and move air. The second, called
"applied," is typically custom-engineered for commercial use and involves field
installation of several different components of the air conditioning system.
Trane is a world leader in both unitary and applied air conditioning products.
The third type, called "mini-split," is a small unitary air conditioning system,
generally for residential use, which operates without air ducts. Air
Conditioning Products manufactures and distributes mini-split units principally
in the Far East and Europe.
Product and marketing programs have been, and are being, developed to
increase penetration in the growing replacement, renovation and repair
businesses, in which margins are higher than on sales of original equipment.
Much of the equipment sold in the fast-growing air conditioning markets of the
1960's and 1970's is reaching the end of its useful life. Also, equipment sold
in the 1980's is likely to be replaced earlier than originally expected with
higher efficiency products recently developed to meet required efficiency
standards and to capitalize on the availability of environmentally-preferred
refrigerants.
In May 1994 a subsidiary of the Company, Standard Compressors Inc.,
concluded arrangements for a partnership, Alliance Compressors, formed in
December 1993 with Heatcraft Technologies Inc., a subsidiary of Lennox
International Inc., for the manufacture of compressors for use in air
conditioning and refrigeration equipment. Each partner has a 50% interest in
Alliance Compressors, which initially is manufacturing reciprocating compressors
in a section of the Company's existing facility in Tyler, Texas. Construction is
ongoing on a new facility in Natchitoches, Louisiana, for the manufacture of a
new scroll compressor being developed for use primarily in residential air
conditioners.
Many of the products manufactured by Air Conditioning Products utilize
HCFCs and in the past utilized CFCs as refrigerants. Various federal and state
laws and regulations, principally the 1990 Clean Air Act Amendments, require the
eventual phase-out of the production and use of these chemicals because of their
possible deleterious effect on the earth's ozone layer if released into the
atmosphere. Phase-in of substitute refrigerants will require replacement or
modification of much of the air conditioning equipment already installed, which
management believes has created a new market opportunity. In order to ensure
that the Company's products will be compatible with the substitute refrigerants,
Air Conditioning Products has been working closely with the manufacturers that
are developing substitutes for those refrigerants being phased out. Air
Conditioning Products has incurred and will continue to incur research and
development costs in this effort. These costs and the substitution of
alternative refrigerants are not expected to have a material adverse impact on
Air Conditioning Products.
Various federal and state statutes, including the National Appliance Energy
Conservation Act of 1987, as amended, impose energy efficiency standards for
certain of the Company's unitary air conditioning products. Although the Company
has been able to meet or exceed such standards to date, stricter standards in
the future could require substantial research and development expense and
capital expenditures to maintain compliance.
At September 30, 1996 Air Conditioning Products had 31 manufacturing plants
in 9 countries, employing approximately 20,300 people.
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Air Conditioning Products comprises three operating groups: Unitary
Products, North American Commercial, and International.
UNITARY PRODUCTS GROUP
Unitary Products, which accounted for approximately 37% of Air Conditioning
Products' 1995 sales, manufactures and distributes products for commercial and
residential unitary applications in the United States. This group benefits the
most from the growth of the replacement market for residential and commercial
air conditioning systems. Other major suppliers in the unitary market are
Carrier, Rheem, Lennox, Goodman Industries and Inter-City Products.
Commercial unitary products range from 2 to 120 tons and include
combinations of air conditioners, heat pumps, and gas furnaces, along with
variable-air-volume equipment and integrated control systems. Typical
applications are in retail stores, small-to-medium-size office buildings,
manufacturing plants, restaurants, and commercial buildings located in office
parks and strip malls. These products are sold through commercial sales offices
in 121 locations. Residential central air conditioning products range from 1 to
5 tons and include air conditioners, heat pumps, air handlers, furnaces, and
coils. These products are sold through independent wholesale distributors and
Company-owned sales offices in over 250 locations to dealers and contractors who
sell and install the equipment.
During 1994 and 1995 the Unitary Products Group successfully introduced
several new products, including a new line of outdoor condensing units for the
AMERICAN STANDARD(R) brand; a very high efficiency residential air conditioner;
a new furnace line; micro-electronic controlled large rooftop units; rooftop
units with special features that appeal to national accounts; and a large
rooftop line (27.5 tons to 50 tons). The commercial unitary business also
concentrated on enhancements and new capabilities for existing products.
The Company also markets an AMERICAN STANDARD(R) brand name product to
serve distributors who typically carry other products in addition to air
conditioning products.
NORTH AMERICAN COMMERCIAL GROUP
North American Commercial Group, which accounted for 42% of Air
Conditioning Products' 1995 sales, manufactures and distributes products in the
United States for sale in the United States and Canada for air conditioning
applications in larger commercial, industrial, and institutional buildings.
Other major suppliers of commercial systems are Carrier, McQuay and York.
North American Commercial Group distributes its products through 95 sales
offices. Thirty-four of these offices are Company-owned and 61 are franchised.
The Company acquired the Toronto, Canada, and St. Louis, Missouri offices in
1994 and the Albany, New York and Nashville, Tennessee offices in 1995. In 1996,
the Company acquired the Grand Rapids, Michigan; Pittsburgh, Pennsylvania; and
New Haven, Connecticut offices and expects to continue to acquire major sales
offices from its franchisees.
Over the last few years the North American Commercial Group has added
additional aftermarket business activities, such as emergency rentals of air
conditioning equipment. Also, the group has expanded its line to include
components for converting installed centrifugal chiller products to use more
environmentally-preferred refrigerants.
During 1994 and 1995 the Company continued its introduction of a number of
new products such as the high-efficiency centrifugal chiller, an expanded air
cooled series R chiller line, and the new fan coil line. Integrated Comfort
Systems continue to grow as a percentage of total sales. Indoor air quality is
emerging as a significant new application to be served by the Company's products
and services.
26
<PAGE> 29
INTERNATIONAL GROUP
The International Group, which accounted for approximately 21% of Trane's
1995 sales, manufactures applied and unitary products in foreign facilities
operated by subsidiaries and joint ventures and exports many of the products
manufactured in the United States by the Unitary Products and North American
Commercial Groups. Like the North American Commercial Group, the International
Group has an extensive network of sales and service agencies, both Company-owned
and franchised, to provide maintenance and warranty service for its equipment
installed around the world.
Trane expects to continue the expansion of its presence outside the U.S. In
the Asia-Pacific region Trane recently established a joint venture in Australia
as well as three manufacturing joint ventures in the PRC (see
"-- Strategy -- Globalization") and expanded its operations in Malaysia. In the
early 1990's it purchased an air conditioning manufacturing and distribution
firm in Taiwan, and entered into a sales and manufacturing joint venture in
Thailand. In Europe, in addition to its plants in Epinal and Charmes, France,
the group opened plants in Mirecourt and in Colchester, U.K., in 1992. A joint
venture in Egypt commenced operations in 1992 to serve markets in the Middle
East.
PLUMBING PRODUCTS SEGMENT
Plumbing Products manufactures and distributes bathroom and kitchen
fixtures and fittings primarily under the IDEAL STANDARD(R), AMERICAN
STANDARD(R), STANDARD(R) and PORCHER(R) names. In 1995 Plumbing Products, with
revenues of $1,270 million, accounted for 24% of the Company's sales and 22% of
its operating income. Plumbing Products derived approximately 71% of its total
1995 sales from operations outside the United States.
Of Plumbing Products' sales, 53% consists of vitreous china fixtures, 26%
consists of fittings (typically brass), 7% consists of bathtubs, and the
remainder consists of related plumbing products. Throughout the world these
products are generally sold through wholesalers and distributors and installed
by plumbers and contractors. In total the residential market accounts for
approximately 75% of Plumbing Products' sales, with the commercial and
industrial markets providing the remaining 25%.
Plumbing Products operates through four primary geographic groups: European
Plumbing Products, U.S. Plumbing Products, Americas International and the Far
East Group. Plumbing Products' fittings operations are organized as the
Worldwide Fittings Group, which has primary responsibility for faucet
technology, product development and manufacturing, with manufacturing facilities
in Germany, Bulgaria, the U.S., and Mexico. Worldwide Fittings sales and
operating results are reported in the four primary geographic groups within
which it operates.
European Plumbing Products, which sells products primarily under the brand
names IDEAL STANDARD(R) and PORCHER(R), manufactures and distributes bathroom
and kitchen fixtures and fittings through subsidiaries or joint ventures in
Germany, Italy, France, England, Greece, the Czech Republic, Spain, Portugal,
and Egypt. In November 1995 the Company acquired substantially all of the
remaining outstanding common shares and convertible bonds of Porcher, a French
manufacturer and distributor of plumbing products in which the Company
previously had an ownership interest of 32.88%. The $25 million cost of the
acquisition was funded with a borrowing under the Company's revolving credit
facilities. In addition $31 million of Porcher debt was assumed. In 1995 Porcher
had sales of $216 million.
U.S. Plumbing Products manufactures bathroom and kitchen fixtures and
fittings, selling under the brand names AMERICAN STANDARD(R) and STANDARD(R) in
the United States. Americas International manufactures bathroom and kitchen
fixtures and fittings, selling under the names AMERICAN STANDARD(R), IDEAL
STANDARD(R), and STANDARD(R) through its wholly owned operations in Mexico,
Canada, and Brazil and its majority-owned subsidiaries in Central America.
27
<PAGE> 30
The Far East Group manufactures bathroom and kitchen fixtures and fittings,
selling under the names AMERICAN STANDARD(R), IDEAL STANDARD(R), and STANDARD(R)
through its wholly owned operations in South Korea, its majority-owned
operations in Thailand and the Philippines, and its manufacturing joint venture
in Indonesia and is developing a new joint venture in Vietnam. The Company is
also significantly expanding its operations in the PRC. See "-- Strategy --
Globalization".
The market for the Company's plumbing products is divided into the
replacement and remodeling market and the new construction market. The
replacement and remodeling market accounts for about 60% of the European and
U.S. Groups' sales but only about 40% of the sales of the Far East Group, for
which new construction is more important. In the United States and Europe the
replacement and remodeling market has historically been more stable than the new
construction market and has shown moderate growth over the past several years.
In 1995 the new construction market in Europe declined slightly, especially in
Germany and France, after recovering somewhat in 1994 and 1993. In the U.S. the
new construction market hit its recent low in 1992 but had some recovery through
1995. The new construction market, in which the product selection is made by
builders or contractors, is more price-competitive and volume-oriented than the
replacement and remodeling market. In the replacement and remodeling market
consumers make the model selection and, therefore, this market is more
responsive to quality and design than price, making it the principal market for
higher-margin luxury products. Although management believes it must continue to
offer a full line of fixtures and fittings in order to support its distribution
system, Plumbing Products' current strategy is to focus on increasing its sales
of higher-margin products in the middle and upper segments of both the
remodeling and new construction markets.
Plumbing Products also has continued its programs to expand its presence in
high-quality showrooms and showplaces featuring its higher-end products in
certain major countries. These programs, along with expanded sales training
activities, have enhanced the image of the Company's products with interior
designers, decorators, consumers and plumbers.
U.S. Plumbing Products is focusing on the unique needs of the growing mass
retail home center industry, using products sourced from several of the
Company's manufacturing locations throughout the Americas. This market channel
accounted for about 26% of U.S. Plumbing Products' sales in 1995, and this
proportion is expected to grow.
In an effort to capture a larger share of the replacement and remodeling
market, over the last few years Plumbing Products has introduced a variety of
new products designed to suit customer tastes in particular countries. New
offerings include additional colors and ensembles, bathroom suites from
internationally known designers, and electronically controlled products. Faucet
technology is centered on anti-leak, anti-scald and other features to meet
emerging consumer and legislative requirements.
Water-saving fixtures and fittings have been a major focus of Plumbing
Products for the past several years, particularly in light of recent water
shortages experienced in a number of areas of the U.S. The Company produces one
of the most extensive lines of water-saving fixtures available in the United
States. Manufacture of water-saving toilets was mandated for residential use by
federal law since January 1994 and for commercial use in January 1997.
Many of the Company's bathtubs are made from a proprietary porcelain on
metal composite, AMERICAST(R), which has gained an increasing share of the
worldwide market. Products made from the composite AMERICAST(R) have the
durability of cast iron with only one-half the weight and are characterized by
improved resistance to breaking and chipping. AMERICAST(R) products are easier
to ship, handle and install and are less expensive to produce than cast iron
products. Use of this advanced composite was extended to kitchen sinks, bathroom
lavatories and acrylic surfaced products during the early 1990's.
28
<PAGE> 31
At September 30, 1996, Plumbing Products employed approximately 18,000
people and, including affiliated companies, had 58 manufacturing plants in 25
countries.
In the U.S., Plumbing Products has several important competitors, including
Kohler Company and Masco Corporation in selected product lines. There are also
important competitors in foreign markets, for the most part operating
nationally. Friederich Grohe GmbH, the major manufacturer of fittings in Europe,
is a pan-European competitor. In Europe Villeroy Boch and Sanitec are the major
fixtures competitors, and in the Far East Toto is the major competitor.
AUTOMOTIVE PRODUCTS SEGMENT
Operating under the WABCO(R) name, Automotive Products manufactures air
brake and related systems for the commercial vehicle industry in Europe and
Brazil. WABCO's most important products are pneumatic braking systems and
related electronic control and other systems and components (including ABS) for
medium-size and heavy trucks, tractors, buses, trailers and utility vehicles. In
1995 WABCO, with sales of $998 million, accounted for 19% of the Company's sales
and 29% of its operating income. The Company believes that WABCO is a worldwide
technological leader in the heavy truck and bus braking industry. Electronic
controls, first introduced in ABS in the early 1980's, are increasingly applied
in other systems sold to the commercial vehicle industry.
WABCO's products are sold directly to vehicle and component manufacturers.
Spare parts are sold through both original equipment manufacturers and an
independent distribution network. Although the business is not dependent on a
single or related group of customers, sales of truck braking systems are
dependent on the demand for heavy trucks. Some of the Company's important
customers are Mercedes-Benz, Volvo, Iveco (Fiat), RVI (Renault) and Rover.
Principal competitors are Knorr, Robert Bosch, and Bendix.
The European market for new trucks, buses, trailers, and replacement parts
recovered in 1994 and 1995 after significant declines in 1992 and 1993, before
declining again in 1996. European legislation mandating the phase-in of ABS
beginning in 1991 has had a positive impact on sales and is expected to continue
to do so. The Brazilian market has experienced a significant decline in 1996.
Through 1995 the WABCO(R) ABS system, which the Company believes leads the
market, has been installed in approximately one million heavy trucks, buses, and
trailers worldwide since 1981. Annual sales volume in Europe has significantly
increased in recent years to approximately 175,000 units in 1995 and to 56,000
units annually in other markets, primarily the United States and Japan. In
addition, WABCO has developed electronically controlled pneumatic gear shifting
systems, electronically controlled air suspension systems, and automatic
climate-control and door-control systems for the commercial vehicle industry.
These systems have resulted in greater sales per vehicle for WABCO. Significant
progress was made in recent years in market acceptance of electronically
controlled systems. New products under development are an advanced electronic
braking system and additional electronic drive line control systems. In
addition, WABCO has developed and implemented an electronic data interchange
system, which links certain customers directly to WABCO's information systems,
providing timely, accurate information and just-in-time delivery to the
customer.
At September 30, 1996 WABCO and affiliated companies employed approximately
5,700 people and had 14 manufacturing facilities and 7 sales organizations
operating in 17 countries. Principal manufacturing operations are in Germany,
France, the United Kingdom, and Brazil. WABCO has joint ventures in the United
States with Rockwell International (Rockwell WABCO) and with Cummins Engine Co.
Inc., in Japan with Sanwa Seiki (SANWAB), in India with TVS Group (Clayton
Sundaram) and in the PRC. There is also a licensee in the PRC.
In January 1994 the Company acquired Perrot, a German brake manufacturer.
Through this acquisition the Company is able to offer complete brake systems for
trucks, buses and trailers, especially in the important and growing air-disc
brake business.
29
<PAGE> 32
Since 1991 ABS for commercial vehicles has been gaining acceptance in the
United States and Japan, where WABCO participates through its joint venture
operations. Rockwell WABCO is now a supplier of WABCO systems to Freightliner,
Mack, Volvo-GM, Kenworth, Peterbilt and other vehicle manufacturers in North
America. SANWAB supplies Hino, Nissan and trailer manufacturers in Japan. In
most European countries, ABS has become mandatory for commercial vehicles. In
March 1995, the U.S. Department of Transportation, National Highway Traffic
Safety Administration, adopted amended federal regulations which require that
new medium and heavy vehicles be equipped with antilock brake systems (ABS).
These amended regulations will be phased in over a two-year period beginning in
March 1997. WABCO believes it is in a good position to take advantage of this
opportunity.
30
<PAGE> 33
THE SELLING STOCKHOLDER AND STOCKHOLDER TRANSACTIONS
THE SELLING STOCKHOLDER
Prior to the Stockholder Transactions, ASI Partners owns 20,838,656 Shares,
representing approximately 27% of the Company's Common Stock. In the Offerings
and the Share repurchase by the Company, it is expected that ASI Partners will
sell an aggregate of Shares ( Shares in the Offerings,
assuming no exercise of the Underwriters' over-allotment options). In
conjunction with the Stockholder Transactions, ASI Partners expects to
distribute in the Share Distribution to certain of its partners, at their
election, up to 3,000,000 Shares that it currently owns, which number of Shares
is subject to change by agreement among the Company, ASI Partners and Kelso.
Following these transactions, ASI Partners will own no Shares. As part of the
Stockholder Transactions, the Company will issue the Warrants. See "--The
Stockholder Transactions".
THE STOCKHOLDER TRANSACTIONS
The Company, ASI Partners and Kelso have entered into an agreement
providing for the sale by ASI Partners of Shares in the Offerings and the
repurchase by the Company from ASI Partners of all Shares expected to be owned
by ASI Partners after giving effect to the Offerings and the Share Distribution.
Concurrently with the consummation of the Offerings, the Company will repurchase
a number of Shares from ASI Partners determined by dividing $300 million by an
amount equal to the initial public offering price. To the extent the
Underwriters' over-allotment options are exercised, the number of Shares that
the Company will repurchase and the total cash purchase price will be reduced.
The Company plans to finance the repurchase with borrowings under the Revolving
Facilities.
The agreement also provides that the Company will issue to ASI Partners
3,000,000 Warrants to purchase Common Stock at a price equal to $10 above the
initial public offering price (the "Exercise Price") ($ assuming an initial
public offering price of $ per Share). The Warrants will entitle holders to
purchase 3,000,000 Shares of Common Stock at the Exercise Price or, at the
Company's election, to receive an amount in cash or a designated number of
Shares based on the difference between the then market value of the Company's
Common Stock and the Exercise Price. The Company has agreed that, upon exercise
of any Warrant by ASI Partners or its direct or indirect partners, the Company
will exercise such election. In that case, the Company may make payment in cash
or Shares, at its option. The Warrants will be exercisable after the time that
it is no longer possible for any cash payment to be made to ASI Partners in
respect of a Transaction and prior to the fifth anniversary of the closing date
of the Offerings.
If a Transaction occurs after the closing of the Offerings and prior to
January 31, 1998 (or October 1, 1998 in the case of certain Transactions
proposed prior to January 31, 1998), the agreement provides that the Company
would be required to make a cash payment to ASI Partners in respect of the
aggregate number of Shares sold by ASI Partners in the Offerings and to the
Company pursuant to the Share repurchase. A Transaction is specified in the
agreement to include the sale of all or substantially all of the shares of
capital stock or all or substantially all of the assets of the Company or the
acquisition of majority control of the Company by any person or group. The total
cash payment would be equal to the excess, if any, of the consideration per
share received by holders of the Common Stock in the Transaction over the cash
price per share received by ASI Partners in the Offerings and pursuant to the
Share repurchase, respectively, multiplied by the number of Shares sold by ASI
Partners in the Stockholder Transactions. If a Transaction occurs entitling ASI
Partners to such a payment, the Warrants would not be exercisable and would
expire upon the consummation of such Transaction. See "Capitalization", "Pro
Forma Financial Data" and "Underwriting".
31
<PAGE> 34
UNDERWRITING
Subject to the terms and conditions of the U.S. Underwriting Agreement, the
Selling Stockholder has agreed to sell to each of the U.S. Underwriters named
below, and each of such U.S. Underwriters has severally agreed to purchase from
the Selling Stockholder, the respective number of shares of Common Stock set
forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
U.S. UNDERWRITERS COMMON STOCK
----------------- ------------
<S> <C>
Goldman, Sachs & Co...........................................
Morgan Stanley & Co. Incorporated.............................
Smith Barney Inc..............................................
S.G.Warburg & Co. Inc.........................................
---------
Total.......................................... 7,500,000
=========
</TABLE>
Under the terms and conditions of the U.S. Underwriting Agreement, the U.S.
Underwriters are committed to take and pay for all of the Shares offered hereby,
if any are taken.
The U.S. Underwriters propose to offer the Shares in part directly to the
public at the initial public offering price set forth on the cover page of this
Prospectus, and in part to certain securities dealers at such price less a
concession of $ per share. The U.S. Underwriters may allow, and such dealers
may reallow, a concession not in excess of $ per share to certain brokers
and dealers. After the Shares of Common Stock are released for sale to the
public, the offering price and other selling terms may from time to time be
varied by the U.S. Underwriters.
The Company and the Selling Stockholder have entered into an underwriting
agreement (the "International Underwriting Agreement") with the underwriters of
the international offering (the "International Underwriters") providing for the
concurrent offer and sale of 2,444,000 Shares in an international offering
outside the United States. The initial public offering price and aggregate
underwriting discount per share for the two Offerings are identical. The closing
of the offering made hereby is a condition to the closing of the international
offering, and vice versa. The International Underwriters are Goldman Sachs
International, Morgan Stanley & Co. International Limited, SBC Warburg, a
division of Swiss Bank Corporation, and Smith Barney Inc.
Pursuant to an agreement between the U.S. and International Underwriting
Syndicates (the "Agreement Between") relating to the two Offerings, each of the
U.S. Underwriters named herein has agreed or will agree pursuant to the
Agreement Between that, as a part of the distribution of the Shares offered
hereby and subject to certain exceptions, it will offer, sell or deliver the
Shares offered hereby and other shares of Common Stock, directly or indirectly,
only in the United States of America (including the 50 States and the District
of Columbia), its territories, its possessions and other areas subject to its
jurisdiction (the "United States") and to U.S. persons, which term shall mean,
for purposes of this paragraph: (a) any individual who is a resident of the
United States or (b) any corporation, partnership or other entity organized in
or under the laws of the United States or any political subdivision thereof and
whose office most directly involved with the purchase is located in the United
States. Each of the International Underwriters has agreed or will agree pursuant
to the Agreement Between that, as a part of the distribution of the Shares
offered as a part of the international offering, and subject to certain
exceptions, it will (i) not, directly or indirectly, offer, sell or deliver
shares of Common Stock (a) in the United States or to any U.S. persons or (b) to
any person whom it believes intends to reoffer, resell or deliver the shares in
the United States or to any U.S. persons, and (ii) cause any dealer to whom it
may sell such shares at any concession to agree to observe a similar
restriction.
32
<PAGE> 35
Pursuant to the Agreement Between, sales may be made between the U.S.
Underwriters and the International Underwriters of such number of shares of
Common Stock as may be mutually agreed. The price of any shares so sold shall be
the initial public offering price, less an amount not greater than the selling
concession.
ASI Partners has granted the U.S. Underwriters an option exercisable for 30
days after the date of this Prospectus to purchase up to an aggregate of
1,125,000 additional shares of Common Stock to cover over-allotments, if any, at
the initial public offering price, less the underwriting discount, as set forth
in this Prospectus. If the U.S. Underwriters exercise their over-allotment
option, the U.S. Underwriters have severally agreed, subject to certain
conditions, to purchase approximately the same percentage thereof that the
number of shares to be purchased by each of them, as shown in the foregoing
table, bears to the total number of shares. The U.S. Underwriters may exercise
such option only to cover over-allotments in connection with the sale of the
shares. ASI Partners has granted the International Underwriters an option
exercisable for 30 days after the date of this Prospectus to purchase up to an
aggregate of 366,600 additional shares of Common Stock, solely to cover
over-allotments, at the initial public offering price less the underwriting
discount, as set forth on the cover page of this Prospectus.
The Company and certain management stockholders have agreed not to offer,
sell or otherwise dispose of any shares of Common Stock for a period of 90 days
after the date of this Prospectus without the prior written consent of the
Underwriters. The foregoing agreements are subject to certain exceptions. In
addition, ASI Partners expects to distribute not more than 3,000,000 additional
Shares to certain of its partners in conjunction with the Offerings. See "The
Selling Stockholder and Stockholder Transactions". The recipients of such
distributions have agreed with ASI Partners and the Underwriters not to offer,
sell or otherwise dispose of such Shares for a period of 180 days after the date
of this Prospectus without the prior written consent of ASI Partners and
Goldman, Sachs & Co. Such consents may be provided without prior notice to
holders of the Shares or to the markets where such securities are traded.
The Common Stock is traded on the New York Stock Exchange.
The Underwriters have in the past provided and may continue to provide
investment banking services to the Company and Kelso.
The Company, American Standard Inc. and the Selling Stockholder have agreed
to indemnify the several Underwriters against certain liabilities, including
liabilities under the Securities Act.
LEGAL MATTERS
The validity of the Shares will be passed upon for the Company by Debevoise
& Plimpton, New York, New York. Debevoise & Plimpton also acts and may hereafter
act as counsel to Kelso and its affiliates, including ASI Partners, and has
acted as counsel to Kelso and ASI Partners in connection with the Stockholder
Transactions, in which the Company and its independent directors have been
separately advised by other counsel. Certain legal matters in connection with
the Offerings will be passed upon for the Underwriters by Cahill Gordon &
Reindel (a partnership including a professional corporation), New York, New
York.
EXPERTS
The consolidated financial statements of the Company as of December 31,
1994 and 1995, and for each of the three years in the period ended December 31,
1995, incorporated by reference in this Prospectus from the Company's Annual
Report on Form 10-K for the year ended December 31, 1995, have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
incorporated herein by reference, and have been so incorporated by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
Certain information with respect to German tax matters has been included
herein in reliance upon the authority of Meilicke & Partner as experts in German
tax matters.
33
<PAGE> 36
======================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR ANY OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................. 2
Incorporation of Certain Documents by
Reference............................ 2
Prospectus Summary..................... 3
Risk Factors........................... 8
Price Range of Common Stock and
Dividend Policy...................... 10
Use of Proceeds........................ 10
Capitalization......................... 11
Summary Historical Financial Data...... 12
Pro Forma Financial Data............... 14
Management's Discussion and Analysis
of Financial Condition and Results of
Operations........................... 15
Business............................... 22
The Selling Stockholder and
Stockholder Transactions............. 31
Underwriting........................... 32
Legal Matters.......................... 33
Experts................................ 33
</TABLE>
======================================================
======================================================
9,944,000 SHARES
AMERICAN STANDARD
COMPANIES INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
------------------------------
AMERICAN STANDARD COMPANIES LOGO
------------------------------
GOLDMAN, SACHS & CO.
MORGAN STANLEY & CO.
INCORPORATED
SMITH BARNEY INC.
S.G.WARBURG & CO. INC.
======================================================
<PAGE> 37
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
SUBJECT TO COMPLETION, DATED DECEMBER 17, 1996
9,944,000 SHARES
AMERICAN STANDARD COMPANIES INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
-------------------
Of the 9,944,000 shares of Common Stock offered, 2,444,000 shares are being
offered hereby in an international offering outside the United States and
7,500,000 shares are being offered in a concurrent U.S. offering (collectively,
the "Offerings"). The initial public offering price and the aggregate
underwriting discount per share will be identical for both Offerings. See
"Underwriting".
All of the shares of Common Stock offered are being sold by Kelso ASI
Partners, L.P. ("ASI Partners" or the "Selling Stockholder"). Concurrently with
the consummation of the Offerings, the Company will repurchase a number of
shares of Common Stock from ASI Partners determined by dividing $300 million by
an amount equal to the initial public offering price. See "The Selling
Stockholder and Stockholder Transactions".
The last reported sale price of the Common Stock, which is listed under the
symbol "ASD", on the New York Stock Exchange on December 12, 1996 was $38 per
share. See "Price Range of Common Stock and Dividend Policy".
SEE "RISK FACTORS" ON PAGES 8-9 FOR CERTAIN CONSIDERATIONS RELEVANT TO AN
INVESTMENT IN THE COMMON STOCK.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
-------------------
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO SELLING
OFFERING PRICE DISCOUNT(1) STOCKHOLDER(2)
---------------------------------------------------------------
<S> <C> <C> <C>
Per Share............................ $ $ $
Total(3)............................. $ $ $
</TABLE>
- ------------
(1) The Company, American Standard Inc. and the Selling Stockholder have agreed
to indemnify the Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933.
(2) Before deducting estimated expenses of $ payable by the Company.
(3) ASI Partners has granted the International Underwriters an option for 30
days after the date of this Prospectus to purchase up to an additional
366,600 shares at the initial public offering price per share, less the
underwriting discount, solely to cover over-allotments. Additionally, an
over-allotment option on 1,125,000 shares has been granted by ASI Partners
as part of the U.S. offering. If such options are exercised in full, the
total initial public offering price, underwriting discount and proceeds to
Selling Stockholder will be $ , $ and $ ,
respectively. See "Underwriting".
-------------------
The shares offered hereby are offered severally by the International
Underwriters, as specified herein, subject to receipt and acceptance by them and
subject to their right to reject any order in whole or in part. It is expected
that certificates for the shares will be ready for delivery in New York, New
York, on or about , 1997 against payment therefor in immediately
available funds.
GOLDMAN SACHS INTERNATIONAL
MORGAN STANLEY & CO.
INTERNATIONAL
SBC WARBURG
A DIVISION OF
SWISS BANK
CORPORATION
SMITH BARNEY INC.
-------------------
The date of this Prospectus is , 1997.
<PAGE> 38
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
AVAILABLE INFORMATION
American Standard Companies Inc. (the "Company") is subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith files reports, proxy
statements and other information with the Securities and Exchange Commission
(the "Commission"). Reports, proxy statements and other information filed by the
Company may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, and at the Commission's Regional Offices located at Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60611 and
7 World Trade Center, Suite 1300, New York, New York 10048. Copies of such
materials can be obtained upon written request from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. In addition, such material may also be inspected and copied at
the offices of the New York Stock Exchange, Inc. (the "NYSE"), 20 Broad Street,
New York, New York 10005. The Commission maintains a Website that contains
reports, proxy and information statements and other information regarding
reporting companies under the Exchange Act, including the Company, at
http://www.sec.gov.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the shares (the "Shares") of its common
stock, par value $.01 per share (the "Common Stock"), offered hereby. This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. This Prospectus, which constitutes a part of the
Registration Statement, does not contain all the information set forth in the
Registration Statement, certain items of which are contained in schedules and
exhibits to the Registration Statement as permitted by the rules and regulations
of the Commission. Statements made in this Prospectus as to the contents of any
contract, agreement or other document referred to are not necessarily complete;
with respect to each such contract, agreement or other document filed as an
exhibit to the Registration Statement, reference is made to the exhibit for a
more complete description of the matter involved, and each such statement shall
be deemed qualified in its entirety by such reference. For further information,
reference is hereby made to the Registration Statement.
------------------------
This Prospectus does not constitute an offer to sell or the solicitation of
an offer to buy the Shares in any jurisdiction in which such offer or
solicitation is unlawful. There are restrictions on the offer and sale of the
Shares in the United Kingdom. All applicable provisions of the Public Offers of
Securities Regulations 1995, the Financial Services Act 1986 and the Companies
Act 1985 with respect to anything done by any person in relation to the Shares
in, from, or otherwise involving the United Kingdom must be complied with. See
"Underwriting".
In this Prospectus, reference to "dollars", "U.S.$" and $ are United States
dollars.
------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company (File No. 1-11415) with the
Commission pursuant to the Exchange Act are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the year ended December 31,
1995, including portions incorporated therein of the Company's
definitive Proxy Statement dated March 28, 1996.
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1996, June 30, 1996 and September 30, 1996.
3. The descriptions of the Common Stock and the common stock rights
associated with each Share of Common Stock contained in the Registration
Statement on Form 8-A dated January 5, 1995, incorporated by reference
from the Company's Registration Statement on Form S-2 under the
Securities Act, Commission File Number 33-56409, under the captions
"Description of Capital Stock -- Common Stock" and "-- Stockholder
Rights Plan".
4. All other documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Shares.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of any such person, a copy of any or all of the
documents which are incorporated herein by reference, other than exhibits to
such information (unless such exhibits are specifically incorporated by
reference into such documents). Requests should be directed to the Company, One
Centennial Avenue, P.O. Box 6820, Piscataway, NJ 08855-6820, Attention: Office
of the Secretary, telephone: (908) 980-6000.
------------------------
Any statement contained in a document all or a portion of which is
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified shall not be deemed to
constitute a part of this Prospectus except as so modified, and any statement so
superseded shall not be deemed to constitute part of this Prospectus.
------------------------
AMERICAN STANDARD(R), IDEAL STANDARD(R), STANDARD(R), TRANE(R) and WABCO(R)
are registered trademarks of American Standard Inc. PERROT(R) and PORCHER(R) are
registered trademarks of Deutsche Perrot-Bremsen GmbH and Porcher S.A.,
respectively, subsidiaries of the Company. DEMAND FLOW(R) is a registered
trademark of J-I-T Institute of Technology, Inc.
------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
X-2
<PAGE> 39
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
CERTAIN UNITED STATES TAX
CONSEQUENCES TO NON-U.S. HOLDERS
The following is a general discussion of certain United States Federal
income and estate tax consequences of the ownership and disposition of Common
Stock by a person other than (i) a citizen or resident of the United States,
(ii) a corporation, partnership or other entity created or organized in the
United States or under the laws of the United States or of any State or (iii) an
estate or trust treated as a domestic estate or trust for United States Federal
income tax purposes (referred to hereafter as a "non-U.S. holder").
The discussion is based on provisions of the Internal Revenue Code of 1986,
as amended (the "Code") and administrative and judicial interpretations as of
the date hereof, all of which are subject to change, possibly with retroactive
effect. Furthermore, this discussion does not consider specific facts and
circumstances that may be relevant to a particular holder's tax position.
Prospective purchasers are urged to consult a tax adviser with respect to the
United States Federal income and estate tax consequences of owning and disposing
of Common Stock, as well as any tax consequences under the laws of any other
taxing jurisdiction.
INCOME TAX
DIVIDENDS. Generally, dividends paid to a non-U.S. holder of Common Stock
will be subject to U.S. Federal income tax. Except in the case of dividends that
are effectively connected with the holder's conduct of a trade or business
within the United States, this tax is imposed and withheld at the rate of 30% of
the amount of the dividend, unless reduced by an applicable income tax treaty.
Currently, dividends paid to an address in a foreign country are presumed to be
paid to a resident of such country in determining the applicability of a treaty
for such purposes. However, the Internal Revenue Service has issued proposed
regulations which, if adopted, would require a non-U.S. holder to provide
certain certifications under penalties of perjury in order to obtain treaty
benefits.
Except as may be otherwise provided in an applicable income tax treaty,
dividends which are effectively connected with the non-U.S. holder's conduct of
a trade or business within the United States are subject to tax at ordinary
Federal income tax rates, which tax is not collected by withholding (except as
described below under "Backup Withholding and Information Reporting"). All or
part of any effectively connected dividends received by a foreign corporation
may also, under certain circumstances, be subject to an additional "branch
profits" tax at a 30% rate or such lower rate as may be specified by an
applicable income tax treaty. Non-U.S. holders of Common Stock must comply with
certain certification and disclosure requirements to claim an exception from
withholding under the rules described in this paragraph.
A non-U.S. holder that is eligible for a reduced rate of U.S. withholding
tax pursuant to a tax treaty may obtain a refund of any excess amounts withheld
by filing an appropriate claim for refund with the United States Internal
Revenue Service.
DISPOSITION OF COMMON STOCK. Generally, non-U.S. holders will not be
subject to United States Federal income tax (or withholding thereof) in respect
of gain recognized on a disposition of Common Stock unless (i) the gain is
effectively connected with the non-U.S. holder's conduct of a trade or business
within the United States (in which case the "branch profits" tax described above
may also apply if the holder is a foreign corporation), (ii) in the case of a
non-U.S. holder who is a non-resident alien individual and holds the Common
Stock as a capital asset, such holder is present in the United States for 183 or
more days in the taxable year of the sale and certain other conditions are met;
or (iii) the Company is or has been a "United States real property holding
corporation" for Federal income tax purposes (which the Company does not believe
it has been or is currently) and the non-U.S. holder has held directly or
constructively more than 5% of the outstanding Common Stock within the five-year
period ending on the date of the disposition.
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<PAGE> 40
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
ESTATE TAX
If an individual non-U.S. holder owns, or is treated as owning, Common
Stock at the time of his or her death, such stock would be subject to U.S.
Federal estate tax imposed on the estates of nonresident aliens, in the absence
of a contrary provision contained in any applicable tax treaty.
BACKUP WITHHOLDING AND INFORMATION REPORTING
DIVIDENDS. The Company must report annually to the Internal Revenue
Service and to each non-U.S. holder the amount of dividends paid to, and the
U.S. federal income tax withheld, if any, with respect to, such holder. These
information reporting requirements apply regardless of whether withholding was
reduced by an applicable tax treaty. Backup withholding generally will not apply
to dividends paid on shares of Common Stock to a non-U.S. holder at an address
outside the United States. Certain recently proposed regulations will, if
adopted, provide certain presumptions, however, under which non-U.S. holders may
be subject to backup withholding in the absence of required certifications.
BROKER SALES. Payments of proceeds from the sale of Common Stock by a
non-U.S. holder made to or through a foreign office of a broker generally will
not be subject to information reporting or backup withholding. However, certain
foreign offices, including the foreign offices of a U.S. broker, are subject to
information reporting unless the holder certifies its non-U.S status under
penalties of perjury or otherwise establishes its entitlement to an exemption.
Payments of proceeds from the sale of Common Stock by a non-U.S. holder to or
through a U.S. office of a broker are currently subject to both information
reporting and backup withholding at a rate of 31% unless the holder certifies
its status as a non-U.S. holder under penalties of perjury or otherwise
establishes an exemption.
A non-U.S. holder may obtain a refund of any excess amounts withheld under
the backup withholding rules by filing the appropriate claim for refund with the
IRS.
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<PAGE> 41
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
UNDERWRITING
Subject to the terms and conditions of the International Underwriting
Agreement, the Selling Stockholder has agreed to sell to each of the
International Underwriters named below, and each of such International
Underwriters has severally agreed to purchase from the Selling Stockholder, the
respective number of shares of Common Stock set forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
INTERNATIONAL UNDERWRITERS COMMON STOCK
----------------------------------------------------------- ------------
<S> <C>
Goldman Sachs International................................
Morgan Stanley & Co. International Limited.................
SBC Warburg................................................
Smith Barney Inc...........................................
------------
Total............................................ 2,444,000
===============
</TABLE>
Under the terms and conditions of the International Underwriting Agreement,
the International Underwriters are committed to take and pay for all of the
Shares offered hereby, if any are taken.
The International Underwriters propose to offer the Shares in part directly
to the public at the initial public offering price set forth on the cover page
of this Prospectus, and in part to certain securities dealers at such price less
a concession of $ per share. The International Underwriters may allow, and
such dealers may reallow, a concession not in excess of $ per share to
certain brokers and dealers. After the Shares of Common Stock are released for
sale to the public, the offering price and other selling terms may from time to
time be varied by the International Underwriters.
The Company and the Selling Stockholder have entered into an underwriting
agreement (the "U.S. Underwriting Agreement") with the underwriters of the U.S.
offering (the "U.S. Underwriters") providing for the concurrent offer and sale
of 7,500,000 Shares in an offering in the United States. The initial public
offering price and aggregate underwriting discount per share for the two
Offerings are identical. The closing of the offering made hereby is a condition
to the closing of the U.S. offering, and vice versa. The U.S. Underwriters are
Goldman, Sachs & Co., Morgan Stanley & Co. Incorporated, Smith Barney Inc. and
S.G. Warburg & Co. Inc.
Pursuant to an agreement between the U.S. and International Underwriting
Syndicates (the "Agreement Between") relating to the two Offerings, each of the
U.S. Underwriters has agreed or will agree pursuant to the Agreement Between
that, as a part of the distribution of the Shares offered as part of the U.S.
offering and subject to certain exceptions, it will offer, sell or deliver the
Shares offered as part of the U.S. offering and other shares of Common Stock,
directly or indirectly, only in the United States of America (including the 50
States and the District of Columbia), its territories, its possessions and other
areas subject to its jurisdiction (the "United States") and to U.S. persons,
which term shall mean, for purposes of this paragraph: (a) any individual who is
a resident of the United States or (b) any corporation, partnership or other
entity organized in or under the laws of the United States or any political
subdivision thereof and whose office most directly involved with the purchase is
located in the United States. Each of the International Underwriters named
herein has agreed or will agree pursuant to the Agreement Between that, as a
part of the distribution of the Shares offered hereby, and subject to certain
exceptions, it will (i) not, directly or indirectly, offer, sell or deliver
shares of Common Stock (a) in the United States or to any U.S. persons or (b) to
any person whom it believes intends to reoffer, resell or deliver the shares in
X-5
<PAGE> 42
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
the United States or to any U.S. persons, and (ii) cause any dealer to whom it
may sell such shares at any concession to agree to observe a similar
restriction.
Pursuant to the Agreement Between, sales may be made between the U.S.
Underwriters and the International Underwriters of such number of shares of
Common Stock as may be mutually agreed. The price of any shares so sold shall be
the initial public offering price, less an amount not greater than the selling
concession.
ASI Partners has granted the International Underwriters an option
exercisable for 30 days after the date of this Prospectus to purchase up to an
aggregate of 366,600 additional shares of Common Stock to cover over-allotments,
if any, at the initial public offering price, less the underwriting discount, as
set forth in this Prospectus. If the International Underwriters exercise their
over-allotment option, the International Underwriters have severally agreed,
subject to certain conditions, to purchase approximately the same percentage
thereof that the number of shares to be purchased by each of them, as shown in
the foregoing table, bears to the total number of shares. The International
Underwriters may exercise such option only to cover over-allotments in
connection with the sale of the shares. ASI Partners has granted the U.S.
Underwriters an option exercisable for 30 days after the date of this Prospectus
to purchase up to an aggregate of 1,125,000 additional shares of Common Stock,
solely to cover over-allotments, at the initial public offering price less the
underwriting discount, as set forth on the cover page of this Prospectus.
The Company, and certain management stockholders have agreed not to offer,
sell or otherwise dispose of any shares of Common Stock for a period of 90 days
after the date of this Prospectus without the prior written consent of the
Underwriters. The foregoing agreements are subject to certain exceptions. In
addition, ASI Partners expects to distribute not more than 3,000,000 additional
Shares to certain of its partners in conjunction with the Offerings. See "The
Selling Stockholder and Stockholder Transactions". The recipients of such
distributions have agreed with ASI Partners and the Underwriters not to offer,
sell or otherwise dispose of such Shares for a period of 180 days after the date
of this Prospectus without the prior written consent of ASI Partners and
Goldman, Sachs & Co. Such consents may be provided without prior notice to
holders of the Shares or to the markets where such securities are traded.
The Common Stock is traded on the New York Stock Exchange.
The Underwriters have in the past provided and may continue to provide
investment banking services to the Company and Kelso.
The Company, American Standard Inc. and the Selling Stockholder have agreed
to indemnify the several Underwriters against certain liabilities, including
liabilities under the Securities Act.
X-6
<PAGE> 43
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
======================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR ANY OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................. 2
Incorporation of Certain Documents by
Reference............................ 2
Prospectus Summary..................... 3
Risk Factors........................... 8
Price Range of Common Stock and
Dividend Policy...................... 10
Use of Proceeds........................ 10
Capitalization......................... 11
Summary Historical Financial Data...... 12
Pro Forma Financial Data............... 14
Management's Discussion and Analysis
of Financial Condition and Results of
Operations........................... 15
Business............................... 22
The Selling Stockholder and
Stockholder Transactions............. 31
Certain United States Tax Consequences
to Non-U.S. Holders.................. 32
Underwriting........................... 34
Legal Matters.......................... 35
Experts................................ 35
</TABLE>
======================================================
======================================================
9,944,000 SHARES
AMERICAN STANDARD
COMPANIES INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
------------------------------
AMERICAN STANDARD COMPANIES LOGO
------------------------------
GOLDMAN SACHS INTERNATIONAL
MORGAN STANLEY & CO.
INTERNATIONAL
SBC WARBURG
A DIVISION OF SWISS BANK CORPORATION
SMITH BARNEY INC.
======================================================
X-7
<PAGE> 44
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Registration fee....................................................... $ 131,683
NASD fee............................................................... 30,500
*Blue Sky fees and expenses.............................................
*Transfer agent's fees..................................................
*Printing and engraving expenses........................................
*Legal fees and expenses................................................
*Accounting fees and expenses...........................................
*Miscellaneous..........................................................
----------
*Total........................................................ $
=========
None of the expenses will be borne by the Selling Stockholder.
</TABLE>
- ---------------
* To be supplied by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware (the
"Delaware Law") empowers a Delaware corporation to indemnify any persons who
are, or are threatened to be made, parties to any threatened, pending or
completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of such
corporation), by reason of the fact that such person was an officer or director
of such corporation, or is or was serving at the request of such corporation as
a director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided that such officer or
director acted in good faith and in a manner he reasonably believed to be in, or
not opposed to, the corporation's best interests, and, for criminal proceedings,
had no reasonable cause to believe his conduct was illegal. A Delaware
corporation may indemnify officers and directors in an action by or in the right
of the corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to be
liable to the corporation in the performance of his duty. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him against the expenses which
such officer or director actually and reasonably incurred.
In accordance with the Delaware Law, the Restated Certificate of
Incorporation of the Company contains a provision to limit the personal
liability of the directors for violations of their fiduciary duty. This
provision eliminates each director's liability to the Company or its respective
stockholders for monetary damages except (i) for any breach of the director's
duty of loyalty to the Company or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the Delaware Law providing for liability of
directors for unlawful payment of dividends or unlawful stock purchases or
redemptions, or (iv) for any transaction from which a director derived an
improper personal benefit. The effect of this provision is to eliminate the
personal liability of directors for monetary damages for actions involving a
breach of their fiduciary duty of care, including any such actions involving
gross negligence.
Subsection (b) of Article EIGHTH of the Company's Restated Certificate of
Incorporation provides for indemnification of directors and officers as follows:
(b) The Corporation shall indemnify, to the fullest extent now or
hereafter permitted by the General Corporation Law of the State of
Delaware, any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the
fact that he or she is or was or has agreed to
II-1
<PAGE> 45
become a Director or officer of the Corporation, or is or was serving or
has agreed to serve at the request of the Corporation as a Director or
officer of another corporation, partnership, joint venture, trust or other
enterprise, or by reason of any action alleged to be taken or omitted in
such capacity, and may to the same extent indemnify any person who was or
is a party or is threatened to be made a party to such an action, suit or
proceeding by reason of the fact that he or she is or was or has agreed to
become an employee or agent of the Corporation, or is or was serving or has
agreed to serve at the request of the Corporation as an employee or agent
of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement in connection with such action, suit or
proceeding or any appeal therefrom.
Article VI of the Amended By-Laws of the Company provides for
indemnification of directors and officers as follows:
Section 6.1. Nature of Indemnity. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he is or
was or has agreed to become a Director or officer of the Corporation, or is or
was serving or has agreed to serve at the request of the Corporation as a
director or officer of another corporation, partnership, joint venture, trust or
other enterprise, or by reason of any action alleged to have been taken or
omitted in such capacity, and may indemnify any person who was or is a party or
is threatened to be made a party to such an action, suit or proceeding by reason
of the fact that he is or was or has agreed to become an employee or agent of
the Corporation, or is or was serving or has agreed to serve at the request of
the Corporation as an employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or on his behalf in connection with such action, suit or
proceeding and any appeal therefrom, if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding had no
reasonable cause to believe his conduct was unlawful; except that in the case of
an action or suit by or in the right of the Corporation to procure a judgment in
its favor (1) such indemnification shall be limited to expenses (including
attorneys' fees) actually and reasonably incurred by such person in the defense
or settlement of such action or suit, and (2) no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the Corporation unless and only to the extent that the
Delaware Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Delaware Court of
Chancery or such other court shall deem proper.
The termination of any action, suit or proceeding by judgment, order
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was unlawful.
Section 6.2. Successful Defense. To the extent that a Director, officer,
employee or agent of the Corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in Section
6.1 hereof or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
Section 6.3. Determination That Indemnification Is Proper. Any
indemnification of a Director or officer of the Corporation under Section 6.1
hereof (unless ordered by a court) shall be made by the Corporation unless a
determination is made that indemnification of the Director or officer is not
proper in the circumstances because he has not met the applicable standard of
conduct set forth in Section 6.1 hereof. Any indemnification of an employee or
agent of the Corporation under Section 6.1 hereof (unless ordered by a court)
may be made by the Corporation upon a determination that indemnification of the
employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in Section 6.1 hereof. Any such
determination shall be made (1) by a majority vote of the Directors who are not
parties to such action, suit or proceeding, even though less than a quorum, or
(2) if there are no such Directors, or if such Directors so direct, by
independent legal counsel in a written opinion, or (3) by the stockholders.
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<PAGE> 46
Section 6.4. Advance Payment of Expenses. Expenses (including attorneys'
fees) incurred by a Director or officer in defending any civil, criminal,
administrative or investigative action, suit or proceeding shall be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the Director or
officer to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the Corporation as authorized in this Article.
Such expenses (including attorneys' fees) incurred by other employees and agents
may be so paid upon such terms and conditions, if any, as the Board of Directors
deems appropriate. The Board of Directors may authorize the Corporation's
counsel to represent such Director, officer, employee or agent in any action,
suit or proceeding, whether or not the Corporation is a party to such action,
suit or proceeding.
Section 6.5. Procedure for Indemnification of Directors and Officers. Any
indemnification of a Director or officer of the Corporation under Sections 6.1
and 6.2, or advance of costs, charges and expenses to a Director or officer
under Section 6.4 of this Article, shall be made promptly, and in any event
within 30 days, upon the written request of the Director or officer. If a
determination by the Corporation that the Director or officer is entitled to
indemnification pursuant to this Article is required, and the Corporation fails
to respond within sixty days to a written request for indemnity, the Corporation
shall be deemed to have approved such request. If the Corporation denies a
written request for indemnity or advancement of expenses, in whole or in part,
or if payment in full pursuant to such request is not made within 30 days, the
right to indemnification or advances as granted by this Article shall be
enforceable by the Director or officer in any court of competent jurisdiction.
Such person's costs and expenses incurred in connection with successfully
establishing his right to indemnification, in whole or in part, in any such
action shall also be indemnified by the Corporation. It shall be a defense to
any such action (other than an action brought to enforce a claim for the advance
of costs, charges and expenses under Section 6.4 of this Article where the
required undertaking, if any, has been received by the Corporation) that the
claimant has not met the standard of conduct set forth in Section 6.1 of this
Article, but the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its Board of Directors, its
independent legal counsel, and its stockholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant is
proper in the circumstances because he has met the applicable standard of
conduct set forth in Section 6.1 of this Article, nor the fact that there has
been an actual determination by the Corporation (including its Board of
Directors, its independent legal counsel, and its stockholders) that the
claimant has not met such applicable standard of conduct, shall be a defense to
the action or create a presumption that the claimant has not met the applicable
standard of conduct.
Section 6.6. Survival; Preservation of Other Rights. The foregoing
indemnification provisions shall be deemed to be a contract between the
Corporation and each Director, officer, employee and agent who serves in any
such capacity at any time while these provisions as well as the relevant
provisions of the General Corporation Law of the State of Delaware are in
effect. Any repeal or modification of these indemnification provisions shall not
affect any right or obligation then existing with respect to any state of facts
then or previously existing or any action, suit or proceeding previously or
thereafter brought or threatened based in whole or in part upon any such state
of facts. Such a "contract right" may not be modified retroactively without the
consent of such Director, officer, employee or agent.
The indemnification provided by this Article VI shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any by-law, agreement, vote of stockholders or disinterested Directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a Director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
Section 6.7. Insurance. The Corporation shall purchase and maintain
insurance on behalf of any person who is or was or has agreed to become a
Director or officer of the Corporation, or is or was serving at the request of
the Corporation as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him or on his behalf in any such capacity, or arising out of
his status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this Article,
provided that such insurance is available on acceptable terms, which
determination shall be made by a vote of a majority of the entire Board of
Directors.
II-3
<PAGE> 47
Section 6.8. Severability. If this Article VI or any portion hereof shall
be invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each Director or officer and may
indemnify each employee or agent of the Corporation as to costs, charges and
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative, including an action by or in the
right of the Corporation, to the fullest extent permitted by any applicable
portion of this Article that shall not have been invalidated and to the fullest
extent permitted by applicable law.
ITEM 16. EXHIBITS.
The File Number of American Standard Companies Inc., the Registrant (the
"Company"), and for all Exhibits incorporated by reference is 1-11415, except
those Exhibits incorporated by reference in filings made by American Standard
Inc. ("American Standard Inc.") whose File Number is 33-64450 (formerly 1-470).
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- --------------- -----------------------------------------------------------------------------
<C> <C> <S>
(1) Form of U.S. Underwriting Agreement.*
(4) (i) Form of Common Stock Certificate; previously filed as Exhibit 4(i) in
Amendment No. 3 to Registration Statement No. 33-56409 of the Company under
the Securities Act of 1933, as amended, filed January 5, 1995, and herein
incorporated by reference.
(ii) Indenture, dated as of November 1, 1986, between American Standard Inc. and
Manufacturers Hanover Trust Company, Trustee, including the form of 9 1/4%
Sinking Fund Debenture Due 2016 issued pursuant thereto on December 9, 1986,
in the aggregate principal amount of $150,000,000; previously filed as
Exhibit (4)(iii) by American Standard Inc. in its Form 10-K for the fiscal
year ended December 31, 1986, and herein incorporated by reference.
(iii) Instrument of Resignation, Appointment and Acceptance, dated as of April 25,
1988 among American Standard Inc., Manufacturers Hanover Trust Company (the
"Resigning Trustee") and Wilmington Trust Company (the "Successor Trustee"),
relating to resignation of the Resigning Trustee and appointment of the
Successor Trustee, under the Indenture described in (4)(ii) above; previously
filed as Exhibit (4)(ii) in Registration Statement No. 33-64450 of American
Standard Inc. under the Securities Act of 1933, as amended, and herein
incorporated by reference.
(iv) Indenture dated as of May 15, 1992, between American Standard Inc. and First
Trust National Association, Trustee, relating to American Standard Inc.'s
10 7/8% Senior Notes due 1999, in the aggregate principal amount of
$150,000,000; previously filed as Exhibit (4)(i) by American Standard Inc. in
its Form 10-Q for the quarter ended June 30, 1992, and herein incorporated by
reference.
(v) Form of 10 7/8% Senior Notes due 1999 included as Exhibit A to the Indenture
described in (4)(iv) above.
(vi) Indenture dated as of May 15, 1992, between American Standard Inc. and First
Trust National Association, Trustee, relating to American Standard Inc.'s
11 3/8% Senior Debentures due 2004, in the aggregate principal amount of
$250,000,000; previously filed as Exhibit (4)(iii) by American Standard Inc.
in its Form 10-Q for the quarter ended June 30, 1992, and herein incorporated
by reference.
(vii) Form of 11 3/8% Senior Debentures due 2004 included as Exhibit A to the
Indenture described in (4)(vi) above.
(viii) Form of Indenture, dated as of June 1, 1993, between American Standard Inc.
and United States Trust Company of New York, as Trustee, relating to American
Standard Inc.'s 9 7/8% Senior Subordinated Notes Due 2001; previously filed
as Exhibit (4) (xxxi) in Amendment No. 1 to Registration Statement No.
33-61130 of American Standard Inc. under the Securities Act of 1933, as
amended, and herein incorporated by reference.
</TABLE>
- ---------------
<TABLE>
<C> <C> <S>
* To be filed by amendment.
</TABLE>
II-4
<PAGE> 48
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- --------------- -----------------------------------------------------------------------------
<C> <C> <S>
(ix) Form of Note evidencing the 9 7/8% Senior Subordinated Notes Due 2001
included as Exhibit A to the Form of Indenture referred to in 4(viii) above.
(x) Form of Indenture, dated as of June 1, 1993, between American Standard Inc.
and United States Trust Company of New York, as Trustee, relating to American
Standard Inc.'s 10 1/2% Senior Subordinated Discount Debentures Due 2005;
previously filed as Exhibit (4) (xxxiii) in Amendment No. 1 to Registration
Statement No. 33-61130 of American Standard Inc. under the Securities Act of
1933, as amended, and herein incorporated by reference.
(xi) Form of Debenture evidencing the 10 1/2% Senior Subordinated Discount
Debentures Due 2005 included as Exhibit A to the Form of Indenture referred
to in 4 (x) above.
(xii) Assignment and Amendment Agreement dated as of February 9, 1995, among the
Company, American Standard Inc., certain subsidiaries of American Standard
Inc., and the financial institutions listed in Schedule I thereto (the
Original Lenders); the financial institutions listed in Schedule II thereto
(the Continuing Lenders), including Chemical Bank as Administrative Agent for
the Original Lenders and Continuing Lenders and as Collateral Agent for the
Original Lenders and Continuing Lenders; previously filed as Exhibit 4(xvi)
by the Company in its Form 10-K for the fiscal year ended December 31, 1994,
and herein incorporated by reference.
(xiii) Amended and Restated Credit Agreement, dated as of February 9, 1995, among
the Company, American Standard Inc., certain subsidiaries of American
Standard Inc. and the lending institutions listed therein, Chemical Bank, as
Administrative Agent; Citibank, N.A. and NationsBank, N.A. (Carolinas), as
Senior Managing Agents; Bank of America Illinois, The Bank of Nova Scotia,
Bankers Trust Company, The Chase Manhattan Bank, N.A., Compagnie Financiere
de CIC et de L'Union Europeenne, Credit Suisse, Deutsche Bank AG, The
Industrial Bank of Japan Trust Company, The Long-Term Credit Bank of Japan,
Limited and The Sumitomo Bank, Ltd., as Managing Agents; and The Bank of New
York, Canadian Imperial Bank of Commerce, The Fuji Bank, Limited and The
Sanwa Bank Limited, as Co-Agents, with exhibits but without schedules;
previously filed as Exhibit 4 (xvii) by the Company in its Form 10-K for the
fiscal year ended December 31, 1994 (Schedules I, II, and III previously
filed by the Company in its Form 10-Q for the quarter ended March 31, 1995),
and herein incorporated by reference.
(xiv) Credit Documents Amendment Agreement dated as of February 9, 1995, among the
Company, American Standard Inc., certain domestic and foreign subsidiaries of
American Standard Inc., and Chemical Bank, as Administrative Agent and as
Collateral Agent for the Lenders under the Amended and Restated Credit
Agreement dated as of February 9, 1995, described in Exhibit 4 (xvii) above;
previously filed as Exhibit 4 (xviii) by the Company in its Form 10-K for the
fiscal year ended December 31, 1994, and herein incorporated by reference.
(xv) First Amendment, dated as of March 15, 1995, to the Amended and Restated
Credit Agreement referred to in 4(xiii) above; previously filed as Exhibit
4(vi) by the Company in its Form 10-Q for the quarter ended March 31, 1995,
and herein incorporated by reference.
(xvi) Amended and Restated Stockholders Agreement, dated as of December 2, 1994,
among the Company, Kelso ASI Partners, L.P., and the Management Stockholders
named therein; previously filed as Exhibit 4(xxi) in Amendment No. 1 to
Registration Statement No. 33-56409 of the Company under the Securities Act
of 1933, as amended, filed December 20, 1994, and herein incorporated by
reference.
(xvii) Rights Agreement, dated as of January 5, 1995 between the Company and
Citibank, N.A. as Rights Agent; previously filed as Exhibit 4(xxv) by the
Company in its Form 10-K for the year ended December 31, 1994, and herein
incorporated by reference.
</TABLE>
II-5
<PAGE> 49
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ---------------- ----------------------------------------------------------------------------
<C> <C> <S>
(5) Opinion of Debevoise & Plimpton regarding the legality of the securities
being registered.*
(10) (i) Stock Disposition Agreement, dated as of December 16, 1996, among the
Company, Kelso & Company, L.P. and Kelso ASI Partners, L.P.
(ii) Form of Warrant Agreement between the Company and Citibank, N.A. as Warrant
Agent, included as Annex A to the Stock Disposition Agreement filed as
Exhibit 10(i).
(23) (i) Consent of Ernst & Young LLP.
(ii) Consent of Debevoise & Plimpton, included in the opinion of Debevoise &
Plimpton filed as Exhibit (5).*
(iii) Consent of Meilicke & Partner.
(24) Powers of Attorney.
(27) Financial Data Schedule; previously filed as Exhibit 27 by the Company in
its Form 10-Q for the quarter ended September 30, 1996, and herein
incorporated by reference.
</TABLE>
- ---------------
* To be filed by amendment.
ITEM 17. UNDERTAKINGS.
(A) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(B) The undersigned registrant hereby undertakes that:
1. For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
the form of prospectus filed by the registrant pursuant to Rule 424(b)(1)
or (4) or 497(h) under the Securities Act shall be deemed to be part of
this registration statement as of the time it was declared effective.
2. For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(C) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-6
<PAGE> 50
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Township of Piscataway, State of New Jersey on December 17,
1996.
AMERICAN STANDARD COMPANIES INC.
By: /s/ EMMANUEL A. KAMPOURIS
------------------------------------
(Emmanuel A. Kampouris)
Chairman, President and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on December 17, 1996.
<TABLE>
<C> <S>
/s/ EMMANUEL A. KAMPOURIS Chairman, President and Chief Executive Officer;
- ------------------------------------- Director
(Emmanuel A. Kampouris) (Principal Executive Officer)
/s/ FRED A. ALLARDYCE Vice President and Chief Financial Officer
- ------------------------------------- (Principal Financial Officer)
(Fred A. Allardyce)
/s/ G. RONALD SIMON Vice President and Controller
- ------------------------------------- (Principal Accounting Officer)
(G. Ronald Simon)
/s/ STEVEN E. ANDERSON* Director
- -------------------------------------
(Steven E. Anderson)
/s/ HORST HINRICHS* Director
- -------------------------------------
(Horst Hinrichs)
/s/ GEORGE H. KERCKHOVE* Director
- -------------------------------------
(George H. Kerckhove)
/s/ SHIGERU MIZUSHIMA* Director
- -------------------------------------
(Shigeru Mizushima)
/s/ FRANK T. NICKELL* Director
- -------------------------------------
(Frank T. Nickell)
/s/ ROGER W. PARSONS* Director
- -------------------------------------
(Roger W. Parsons)
/s/ J. DANFORTH QUAYLE* Director
- -------------------------------------
(J. Danforth Quayle)
/s/ DAVID M. RODERICK* Director
- -------------------------------------
(David M. Roderick)
/s/ JOHN RUTLEDGE* Director
- -------------------------------------
(John Rutledge)
/s/ JOSEPH S. SCHUCHERT* Director
- -------------------------------------
(Joseph S. Schuchert)
*By: /s/ RICHARD A. KALAHER
- -------------------------------------
(Richard A. Kalaher,
as attorney-in-fact)
</TABLE>
II-7
<PAGE> 51
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
- -------------- ---------------------------------------------------------------------------------
<C> <C> <S> <C>
(1) Form of U.S. Underwriting Agreement.*
(4) (i) Form of Common Stock Certificate; previously filed as Exhibit
4(i) in Amendment No. 3 to Registration Statement No. 33-56409 of
the Company under the Securities Act of 1933, as amended, filed
January 5, 1995, and herein incorporated by reference.
(ii) Indenture, dated as of November 1, 1986, between American
Standard Inc. and Manufacturers Hanover Trust Company, Trustee,
including the form of 9 1/4% Sinking Fund Debenture Due 2016
issued pursuant thereto on December 9, 1986, in the aggregate
principal amount of $150,000,000; previously filed as Exhibit
(4)(iii) by American Standard Inc. in its Form 10-K for the
fiscal year ended December 31, 1986, and herein incorporated by
reference.
(iii) Instrument of Resignation, Appointment and Acceptance, dated as
of April 25, 1988 among American Standard Inc., Manufacturers
Hanover Trust Company (the "Resigning Trustee") and Wilmington
Trust Company (the "Successor Trustee"), relating to resignation
of the Resigning Trustee and appointment of the Successor
Trustee, under the Indenture described in (4)(ii) above;
previously filed as Exhibit (4)(ii) in Registration Statement No.
33-64450 of American Standard Inc. under the Securities Act of
1933, as amended, and herein incorporated by reference.
(iv) Indenture dated as of May 15, 1992, between American Standard
Inc. and First Trust National Association, Trustee, relating to
American Standard Inc.'s 10 7/8% Senior Notes due 1999, in the
aggregate principal amount of $150,000,000; previously filed as
Exhibit (4)(i) by American Standard Inc. in its Form 10-Q for the
quarter ended June 30, 1992, and herein incorporated by
reference.
(v) Form of 10 7/8% Senior Notes due 1999 included as Exhibit A to
the Indenture described in (4)(iv) above.
(vi) Indenture dated as of May 15, 1992, between American Standard
Inc. and First Trust National Association, Trustee, relating to
American Standard Inc.'s 11 3/8% Senior Debentures due 2004, in
the aggregate principal amount of $250,000,000; previously filed
as Exhibit (4)(iii) by American Standard Inc. in its Form 10-Q
for the quarter ended June 30, 1992, and herein incorporated by
reference.
(vii) Form of 11 3/8% Senior Debentures due 2004 included as Exhibit A
to the Indenture described in (4)(vi) above.
(viii) Form of Indenture, dated as of June 1, 1993, between American
Standard Inc. and United States Trust Company of New York, as
Trustee, relating to American Standard Inc.'s 9 7/8% Senior
Subordinated Notes Due 2001; previously filed as Exhibit (4)
(xxxi) in Amendment No. 1 to Registration Statement No. 33-61130
of American Standard Inc. under the Securities Act of 1933, as
amended, and herein incorporated by reference.
(ix) Form of Note evidencing the 9 7/8% Senior Subordinated Notes Due
2001 included as Exhibit A to the Form of Indenture referred to
in 4(viii) above.
</TABLE>
- ---------------
<TABLE>
<C> <C> <S> <C>
* To be filed by amendment.
</TABLE>
<PAGE> 52
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
- -------------- ---------------------------------------------------------------------------------
<C> <C> <S> <C>
(x) Form of Indenture, dated as of June 1, 1993, between American
Standard Inc. and United States Trust Company of New York, as
Trustee, relating to American Standard Inc.'s 10 1/2% Senior
Subordinated Discount Debentures Due 2005; previously filed as
Exhibit (4) (xxxiii) in Amendment No. 1 to Registration Statement
No. 33-61130 of American Standard Inc. under the Securities Act
of 1933, as amended, and herein incorporated by reference.
(xi) Form of Debenture evidencing the 10 1/2% Senior Subordinated
Discount Debentures Due 2005 included as Exhibit A to the Form of
Indenture referred to in 4 (x) above.
(xii) Assignment and Amendment Agreement dated as of February 9, 1995,
among the Company, American Standard Inc., certain subsidiaries
of American Standard Inc., and the financial institutions listed
in Schedule I thereto (the Original Lenders); the financial
institutions listed in Schedule II thereto (the Continuing
Lenders), including Chemical Bank as Administrative Agent for the
Original Lenders and Continuing Lenders and as Collateral Agent
for the Original Lenders and Continuing Lenders; previously filed
as Exhibit 4(xvi) by the Company in its Form 10-K for the fiscal
year ended December 31, 1994, and herein incorporated by
reference.
(xiii) Amended and Restated Credit Agreement, dated as of February 9,
1995, among the Company, American Standard Inc., certain
subsidiaries of American Standard Inc. and the lending
institutions listed therein, Chemical Bank, as Administrative
Agent; Citibank, N.A. and NationsBank, N.A. (Carolinas), as
Senior Managing Agents; Bank of America Illinois, The Bank of
Nova Scotia, Bankers Trust Company, The Chase Manhattan Bank,
N.A., Compagnie Financiere de CIC et de L'Union Europeenne,
Credit Suisse, Deutsche Bank AG, The Industrial Bank of Japan
Trust Company, The Long-Term Credit Bank of Japan, Limited and
The Sumitomo Bank, Ltd., as Managing Agents; and The Bank of New
York, Canadian Imperial Bank of Commerce, The Fuji Bank, Limited
and The Sanwa Bank Limited, as Co-Agents, with exhibits but
without schedules; previously filed as Exhibit 4 (xvii) by the
Company in its Form 10-K for the fiscal year ended December 31,
1994 (Schedules I, II, and III previously filed by the Company in
its Form 10-Q for the quarter ended March 31, 1995), and herein
incorporated by reference.
(xiv) Credit Documents Amendment Agreement dated as of February 9,
1995, among the Company, American Standard Inc., certain domestic
and foreign subsidiaries of American Standard Inc., and Chemical
Bank, as Administrative Agent and as Collateral Agent for the
Lenders under the Amended and Restated Credit Agreement dated as
of February 9, 1995, described in Exhibit 4 (xvii) above;
previously filed as Exhibit 4 (xviii) by the Company in its Form
10-K for the fiscal year ended December 31, 1994, and herein
incorporated by reference.
(xv) First Amendment, dated as of March 15, 1995, to the Amended and
Restated Credit Agreement referred to in 4(xiii) above;
previously filed as Exhibit 4(vi) by the Company in its Form 10-Q
for the quarter ended March 31, 1995, and herein incorporated by
reference.
</TABLE>
<PAGE> 53
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
- -------------- --------------------------------------------------------------------------------
<C> <C> <S> <C>
(xvi) Amended and Restated Stockholders Agreement, dated as of
December 2, 1994, among the Company, Kelso ASI Partners, L.P.,
and the Management Stockholders named therein; previously filed
as Exhibit 4(xxi) in Amendment No. 1 to Registration Statement
No. 33-56409 of the Company under the Securities Act of 1933, as
amended, filed December 20, 1994, and herein incorporated by
reference.
(xvii) Rights Agreement, dated as of January 5, 1995 between the
Company and Citibank, N.A. as Rights Agent; previously filed as
Exhibit 4(xxv) by the Company in its Form 10-K for the year
ended December 31, 1994, and herein incorporated by reference.
(5) Opinion of Debevoise & Plimpton regarding the legality of the
securities being registered.*
(10) (i) Stock Disposition Agreement, dated as of December 16, 1996,
among the Company, Kelso & Company, L.P. and Kelso ASI Partners,
L.P.
(ii) Form of Warrant Agreement between the Company and Citibank, N.A.
as Warrant Agent, included as Annex A to the Stock Disposition
Agreement filed as Exhibit 10(i).
(23) (i) Consent of Ernst & Young LLP.
(ii) Consent of Debevoise & Plimpton, included in the opinion of
Debevoise & Plimpton filed as Exhibit (5).*
(iii) Consent of Meilicke & Partner.
(24) Powers of Attorney.
(27) Financial Data Schedule; previously filed as Exhibit 27 by the
Company in its Form 10-Q for the quarter ended September 30,
1996, and herein incorporated by reference.
</TABLE>
- ---------------
* To be filed by amendment.
<PAGE> 1
EXHIBIT 10(I)
<PAGE> 2
================================================================================
STOCK DISPOSITION AGREEMENT
among
American Standard Companies Inc.,
Kelso & Company, L.P.
and
Kelso ASI Partners, L.P.
Dated as of December 16, 1996
================================================================================
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
DEFINITIONS AND TERMS
<S> <C> <C>
Section 1.1 Specific Definitions................................................................ 2
Section 1.2 Other Terms......................................................................... 3
ARTICLE II
PURCHASE SHARES
Section 2.1 Purchase and Sale of Purchase Shares................................................ 4
Section 2.2 Closing; Delivery and Payment....................................................... 4
ARTICLE III
OTHER AGREEMENTS
Section 3.1 Registered Underwritten Secondary Sale.............................................. 5
Section 3.2 Transaction Payment................................................................. 7
Section 3.3 Warrants............................................................................ 9
Section 3.4 Modification of Agreements.......................................................... 12
Section 3.5 Confidentiality..................................................................... 12
Section 3.6 Indemnity........................................................................... 13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES............................................... 17
ARTICLE V
CONDITIONS TO CLOSING.................................................... 18
ARTICLE VI
TERMINATION
Section 6.1 Termination......................................................................... 19
Section 6.2 Effect of Termination............................................................... 20
ARTICLE VII
MISCELLANEOUS
Section 7.1 Notices............................................................................. 20
Section 7.2 Amendment; Waiver................................................................... 21
Section 7.3 Assignment.......................................................................... 22
Section 7.4 Entire Agreement.................................................................... 23
Section 7.5 Parties in Interest................................................................. 24
Section 7.6 Public Disclosure................................................................... 24
Section 7.7 Expenses............................................................................ 25
Section 7.8 Governing Law; Submission to Jurisdic-
tion; Selection of Forum.......................................................... 25
Section 7.9 Counterparts........................................................................ 26
</TABLE>
-i-
<PAGE> 4
STOCK DISPOSITION AGREEMENT, dated as of December 16, 1996,
among American Standard Companies, Inc., a Delaware corporation ("ASCI" or the
"Company"), on the one hand, and Kelso & Company, L.P., a Delaware limited
partnership ("Kelso"), and Kelso ASI Partners, L.P., a Delaware limited
partnership ("ASI Partners"), on the other hand.
W I T N E S S E T H :
WHEREAS, Kelso, ASI Partners and their Affiliates (as defined
in Section 1.1), including certain funds managed by Kelso (together, the "Kelso
Group") own 21,659,377 shares (the "Kelso Shares") of common stock, par value
$.01 per share, of ASCI ("ASCI Common Stock");
WHEREAS, ASI Partners desires to sell and transfer to ASCI,
and ASCI desires to purchase from ASI Partners certain of the Kelso Shares;
WHEREAS, ASCI has agreed to issue to ASI Partners certain
warrants to buy 3,000,000 shares of ASCI Common Stock in connection with such
purchase by ASCI of certain of the Kelso Shares; and
WHEREAS, Kelso and ASI Partners desire that ASCI facilitate
the sale to the public through a secondary offering of certain of the Kelso
Shares;
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and on the terms and subject to the conditions
set forth herein, the parties
<PAGE> 5
hereto, each representing to the others that its execution, delivery and
performance of this Agreement has been fully and duly authorized, agree as
follows:
ARTICLE I
DEFINITIONS AND TERMS
Section 1.1 Specific Definitions. As used in this
Agreement, the following terms shall have the meanings set forth below:
"Affiliate" shall mean, with respect to any person, any person
directly or indirectly controlling, controlled by, or under common
control with, such other Person at any time during the period for which
the determination of affiliation is being made.
"Business Day" shall mean any day other than a Saturday, a Sunday or a day on
which banks in New York City are authorized or obligated by law or
executive order to close.
"Closing" shall mean the closing of the Offering described in Section 3.1 and of
the other transactions contemplated by this Agreement to close
simultaneously therewith.
"Closing Date" shall mean the date on which the Closing occurs.
"Closing Price" of ASCI Common Stock on any day shall mean the last reported
sale price regular way on such day or, in case no such sale takes place
on such day, the average of the reported closing bid and asked prices
regular way of the Common Stock, in each case on the New York Stock
Exchange, or, if the Common Stock is not listed or admitted to trading
on such Exchange, on the principal national securities exchange or
quotation system on which the Common Stock is listed or admitted to
trading or quoted, or, if not listed or admitted to trading or quoted
on any national securities exchange or quotation system, the average of
the closing bid and asked prices of the Common Stock in the
over-the-counter market on the day in question as reported by the
National Quotation Bureau Incorporated, or a similarly generally
accepted reporting service, or, if not so available in such manner, as
furnished by any New York Stock Exchange
-2-
<PAGE> 6
member firm selected from time to time by the board of directors of the
Company for the purpose. When reference is made in this Agreement to
the closing price of ASCI Common Stock on the New York Stock Exchange,
such price shall mean the closing price reported in the New York Stock
Exchange, Inc. composite transactions reporting system (as reported in
the New York City edition of The Wall Street Journal or, if not so
reported, another authoritative source).
"Governmental Entity" shall mean any supranational, national, federal, state or
local judicial, legislative, executive or regulatory authority.
"Transaction" shall mean the sale of all or substantially all of the shares of
capital stock or of all or substantially all of the assets of the
Company, including by merger, consolidation, tender offer, sale of
assets or any similar transaction, to any person, or the acquisition of
control of 50% or more of the combined voting power of all capital
stock or 50% or more (or the right to designate 50% or more) of the
seats on the board of directors, of the Company by any person or group
by tender offer, proxy solicitation or exchange offer or in a
transaction to which the Company is a party.
"Transaction Value" shall mean the sum of the cash and the fair value of any
securities, rights or other assets received per share by holders of
ASCI Common Stock in a Transaction, with the fair value of any non-cash
assets received being determined by an investment banking firm of
recognized stature designated in good faith by ASCI's board of
directors or, if ASI Partners does not agree with such determination,
as determined by agreement by such firm and another investment banking
firm of recognized stature designated in good faith by ASI Partners, or
failing such agreement, by a third investment banking firm of
recognized stature designated by such two firms.
Section 1.2 Other Terms. Other terms are defined elsewhere in
this Agreement and, unless otherwise indicated, shall have such meaning
throughout this Agreement.
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ARTICLE II
PURCHASE SHARES
Section 2.1 Purchase and Sale of Purchase Shares. On the terms
and subject to the conditions set forth herein, at the Closing, ASI Partners
agrees to sell and transfer to ASCI, and ASCI agrees to purchase from ASI
Partners, at the Offering Price (as hereafter defined), that number of Kelso
Shares (the "Purchase Shares") equal to $300,000,000 divided by the Offering
Price, rounded to the nearest whole share, and reduced by the number of such
shares included in and purchased by the underwriters pursuant to an option (the
"Option") to be granted to the underwriters of the Offering to purchase up to
15% of the Registered Shares (as hereafter defined) in order to cover
over-allotments, ASI Partners hereby agreeing to provide such option to such
underwriters for thirty days following the date of the prospectus for such
Offering. The Purchase Shares shall be free of any liens, charges or
encumbrances. The Purchase Shares shall not be purchased or sold pursuant to
this Agreement unless the Registered Shares are sold at the Closing.
Section 2.2 Closing; Delivery and Payment.
(a) The closing shall take place at such time and
place in New York City simultaneously with the Closing of the Offering (as
hereafter defined) as ASI Partners and ASCI shall agree.
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(b) On the Closing Date, ASI Partners shall deliver to ASCI
certificates representing the Purchase Shares (less any shares subject to the
Option) duly endorsed and in form for transfer to ASCI, and ASCI shall pay to
ASI Partners the Offering Price for the Purchase Shares in immediately available
funds to an account designated by ASI Partners not less than two Business Days
prior to the Closing; any Purchase Shares which are subject to the Option but
are not purchased by the underwriters shall be purchased and paid for by ASCI in
such manner on or before the second Business Day following the day on which the
Option expires or is relinquished by the underwriters.
ARTICLE III
OTHER AGREEMENTS
Section 3.1 Registered Underwritten Secondary Sale.
(a) The Company will use its best efforts (i) to
file a registration statement for an underwritten secondary offering of all of
the Kelso Shares other than (A) the Purchase Shares and (B) up to 3,000,000 of
the Kelso Shares (in addition to the Kelso Shares currently held by Affiliates
of Kelso and ASI Partners) which the Kelso Group elects to retain (the
"Registered Shares") with the Securities and Exchange Commission by December 31,
1996 and (ii) prior to February 15, 1997 to effect the registration of the
Registered
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Shares under the Securities Act of 1933, as amended, for sale in an underwritten
public offering (the "Offering").
(b) Kelso and ASI Partners agree that they and the other
members of the Kelso Group will sell the Registered Shares to the underwriters
in the Offering so long as (1) the per share purchase price at which the
Registered Shares are initially offered to the public (the "Offering Price")
less underwriting commissions or discounts (the "Net Offering Price") is to the
satisfaction of ASI Partners in its sole discretion, (2) the terms and
conditions of the underwriting (including indemnities and sharing of expenses,
but excluding underwriters' commissions and discounts) are not less favorable to
ASI Partners than those in the underwriting agreements relating to the secondary
offering of ASCI Common Stock pursuant to the ASCI prospectus dated September
21, 1995, with such changes to which ASI Partners does not reasonably object,
(3) the Closing of the offering occurs on or before February 28, 1997, and (4)
the underwriters of the Offering will be such investment banking firms as ASI
Partners and ASCI shall agree upon.
(c) Kelso and ASI Partners (without limiting ASI Partners'
rights under Section 3.1(b)), for themselves and any other members of the Kelso
Group, and ASCI agree to cooperate with one another and to use all reasonable
efforts to cause the Offering to occur and to close as contemplated by this
Section 3.1.
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(d) The parties agree that the indemnity provisions contained
in Section 8 of the Stockholders Agreement (as hereinafter defined) shall be
applicable to the Offering.
Section 3.2 Transaction Payment. If at any time after the
Closing and prior to January 31, 1998 (or prior to October 1, 1998 in the case
of a Transaction proposed prior to January 31, 1998 either non-publicly in
writing to ASCI or orally to ASCI and discussed by the Board of Directors of
ASCI, or publicly, and not consummated or withdrawn as of January 31, 1998, it
being agreed that a proposal shall be considered withdrawn if the proposer has
not contacted the Company or made a public statement concerning the proposal for
a period of more than 3 months as of January 31, 1998), ASCI consummates a
Transaction which has not directly or indirectly been actively encouraged or
supported by Kelso, ASI Partners or their Affiliates after the date hereof, ASCI
shall make a cash payment to ASI Partners equal to (i) the number of Purchase
Shares sold pursuant to this Agreement multiplied by the excess, if any, of (A)
the Transaction Value over (B) the Offering Price plus (ii) the number of
Registered Shares sold by ASI Partners pursuant to this Agreement multiplied by
the excess, if any, of (A) the Transaction Value over (B) the Net Offering
Price. In the event that subsequent to the Closing there is a change in the
number of shares of ASCI Common Stock issued and outstanding as a result of a
reclassification, stock split (including a reverse split), stock dividend or
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distribution or other similar transaction or any other transaction that would
cause an adjustment under Section 10 of the Warrant Agreement (as defined in
Section 3.3(a)), the number of Purchase Shares and of Registered Shares used in
the foregoing determination of the cash payment to ASI Partners shall be
equitably adjusted to eliminate any dilutive or accretive effects of such event
or transaction. Such payment shall be made in immediately available funds at the
time of consummation of such Transaction or such later date as the value of any
non-cash assets is determined for purposes of establishing the Transaction
Value. ASCI shall also pay interest on any part of such payment made after
consummation of such Transaction from the date of such consummation to the date
of payment at an annual rate equal to the prime lending rate of Citibank, N.A.
in effect at the time of consummation of such Transaction. Any action by any
director of ASCI designated by ASI Partners taken in such director's capacity as
a director in meetings of or discussions with other directors or with senior
officers of ASCI, or any action by any direct or indirect partner of ASI
Partners or limited partner of Kelso (other than an Affiliate of either of them
with respect to any action other than the voting or tendering of any of their
shares of ASCI Common Stock or the granting or withholding of proxies or
consents relating thereto) taken in such partner's individual capacity as a
shareholder of ASCI or otherwise, shall not be deemed to be direct or indirect
active
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encouragement or support of any Transaction by any of ASI Partners, Kelso or
their Affiliates. Without limiting the foregoing, should any person initiate any
discussion with ASI Partners, Kelso or any of their Affiliates concerning a
Transaction, such discussion shall not be deemed to be direct or indirect
encouragement or support of any Transaction if ASI Partners, Kelso or any of
their Affiliates, as the case may be, requests the other party to such
discussion to refer inquiries to ASCI. The Company agrees that it will not
intentionally delay the consummation of any Transaction for the purpose of
avoiding a payment under this Section 3.2.
Section 3.3 Warrants.
(a) At the Closing, the Company shall issue unregistered
warrants (the "Warrants") to ASI Partners or their designated direct or indirect
partners, permitting ASI Partners or such designees, subject to Section 3.3(b)
below, to purchase 3,000,000 shares of ASCI Common Stock at a price per share
equal to the Offering Price plus $10.00 (the "Warrant Exercise Price") or, at
the election of an original holder of the Warrants (including direct or indirect
partners to whom ASI Partners distributes the Warrants) to receive by
surrendering the Warrants without further payment a number of shares of ASCI
Common Stock equal to (i) the amount, if positive, equal to the then per share
Market Value (as defined in the Warrant Agreement) of ASCI Common Stock less the
Warrant Exercise Price, (ii) divided by such per share Market
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Value and (iii) multiplied by the number of shares for which the surrendered
Warrants could be exercised. Such Warrants shall be exercisable prior to the
fifth anniversary of the Closing Date at the times and upon the terms and
conditions set forth in the Warrant Agreement attached hereto as Annex A (the
"Warrant Agreement").
(b) The Warrants shall not be exercisable until the
possibility of a payment becoming due to ASI Partners pursuant to Section 3.2 of
this Agreement no longer exists, and if any Transaction occurs which would
entitle ASI Partners to such a payment, the Warrants shall expire at the time
such Transaction occurs, provided that payment is made as required by Section
3.2 hereof.
(c) The Warrants need not be registered by ASCI under the
Securities Act of 1933, as amended (the "Act"). Kelso and ASI Partners agree
that they and their distributees will not sell, transfer, or otherwise dispose
of Warrants in any manner that would cause a violation of the registration
requirements of the Act, and that the Company may place an appropriate legend on
the Warrant certificates, and institute stop transfer procedures, designed to
assure that no such violations occur. The Company will not, however, require
Kelso or ASI Partners to provide it with a legal opinion as to the compliance
with the Act of the distribution of Warrants to direct or indirect partners in
ASI Partners or the sale by ASI
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Partners or any direct or indirect partners in ASI Partners of Warrants to
Goldman, Sachs & Co.
(d) The Company agrees that it will take all action necessary
in a timely manner, including any required registration under the Act of any
shares of ASCI Common Stock issued by it upon exercise of Warrants and the
subsequent sale of such shares without further such registration, in order that
the issuance by it of ASCI Common Stock on exercise of Warrants will not violate
the registration requirements of the Act and that the shares of such ASCI Common
Stock acquired by persons exercising Warrants can be freely resold by them
without registration under the Act other than such registration as may
previously have been effected, provided that Affiliates of the Company may be
required to comply with Rule 144 under the Act or any successor provision. The
Company shall bear all expenses (including, without limitation, all filing fees)
incurred by it in connection with its performance of this Section 3.3(d). The
holders of a Warrant or shares issued upon exercise of Warrants shall not be
required to make any representations (other than as to the ownership of such
Warrants or shares) or provide any indemnity in connection with any registration
effected as contemplated by this Section 3.3. If ASI Partners reasonably
believes that further assurance is needed at a time when the Warrants have
become exercisable, the Company will at the request of ASI Partners provide ASI
Partners with either an opinion of
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counsel of recognized stature (who may be the general counsel of or other
counsel regularly engaged by the Company) or a no-action letter from the
Securities and Exchange Commission's staff to the effect that shares of ASCI
Common Stock acquired upon the exercise of Warrants may be freely resold by the
Warrant holder without registration under the Act other than such registration
as may previously have been effected and, in the case of an Affiliate of the
Company, provided such resale is in accordance with the requirements of Rule 144
under the Act or a successor rule or regulation. If the Company does not provide
such an opinion or no-action letter in a timely manner, it shall use its best
efforts, at its expense, promptly to effect the registration under the Act of
the shares of ASCI Common Stock issued or issuable upon the exercise of Warrants
to the extent necessary to permit the resale thereof in compliance with the Act.
Section 3.4 Modification of Agreements. The terms and
provisions of the Stockholders Agreement and the agreement between American
Standard Inc., ASCI and Kelso dated as of December 2, 1994 (the "Kelso
Agreement") are hereby modified and amended to provide for and permit the
transactions contemplated by this Agreement.
Section 3.5 Confidentiality. Kelso and ASI Partners agree that
they shall keep (and shall use their best efforts to cause their general
partners, officers, employees, representatives, outside advisors and Affiliates
to keep) all
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non-public information relating to the Company (including any such information
received prior to the date hereof) confidential except information which (i)
becomes known to such party from a source, other than the Company, its
directors, officers, employees, representatives or outside advisors, which is
not known by Kelso or ASI Partners to be obligated to the Company to keep such
information confidential or (ii) becomes generally available to the public
through no breach of this Agreement. Notwithstanding the foregoing, Kelso and
ASI Partners may disclose non-public information if required to do so by a court
of competent jurisdiction or by any Governmental Entity; provided, however, that
prompt notice of such required disclosure be given to the Company prior to the
making of such disclosure so that the Company may seek a protective order or
other appropriate remedy. In the event that such protective order or other
remedy is not obtained, the party hereto required to disclose the non-public
information will disclose only that portion which such party is advised by
opinion of counsel is legally required to be disclosed and will request that
confidential treatment be accorded such portion of the non-public information.
Section 3.6 Indemnity.
(a) The Company shall indemnify and hold harmless each of
Kelso, ASI Partners and their partners, officers, employees, representatives,
outside advisors, agents and Affiliates from and against any and all losses,
claims,
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damages or liabilities (or actions or proceedings in respect thereof), including
reasonable fees and expenses of counsel incurred in investigation or defense of
any of the same or in successfully asserting any of their respective rights
hereunder, which are not the subject of the indemnification provisions of the
underwriting agreements relating to the Offering or of Section 8 of the
Stockholders Agreement and which arise, directly or indirectly, out of claims or
charges against any of them resulting from the entering into or performance by
Kelso or ASI Partners of this Agreement or the transactions contemplated hereby
or from any action or inaction as a stockholder of the Company other than claims
or charges (1) by direct or indirect partners of ASI Partners or members of the
Kelso Group by reason of Kelso or ASI Partners having agreed to sell, or
selling, ASCI Common Stock pursuant to this Agreement, having agreed to any of
the restrictions or commitments in this Agreement with respect to ASCI Common
Stock, or for any alleged breach of fiduciary duty as general partners of Kelso
or ASI Partners or any investment partnerships that are direct or indirect
partners in Kelso or ASI Partners or for breach of any organizational or
investment agreement of Kelso, ASI Partners or any such investment partnership
or (2) by ASCI for breach of any representation and warranty by Kelso or ASI
Partners contained in Article IV of this Agreement. This indemnity shall not
apply, however, to amounts paid in settlement of any such loss, claim, damage,
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liability, action or proceeding if such settlement is effected without the
consent of the Company (which consent shall not be unreasonably withheld).
(b) Promptly after receipt by an indemnified party of notice
of the commencement of any action or proceeding involving a claim referred to in
the preceding paragraph, such indemnified party will, if a claim in respect
thereof is to be made against the Company, give written notice to the latter of
the commencement of such action or proceeding, provided that the failure of any
indemnified party to give notice as provided herein shall not relieve the
Company of its obligations under the preceding paragraph except to the extent
that the Company is materially prejudiced by such failure to give notice. In
case any such action is brought against an indemnified party, the Company will
be entitled to participate therein and to assume the defense thereof, to the
extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the Company to such indemnified party
of its election so to assume the defense thereof, the Company will not be liable
to such indemnified party for any legal or other expenses subsequently incurred
by the latter in connection with the defense thereof except for the reasonable
fees and expenses of any counsel retained by such indemnified party to monitor
such action or proceeding. Notwithstanding the foregoing, if such indemnified
party and the Company reasonably determine, based upon advice of their
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respective independent counsel, that a conflict of interest may exist between
the indemnified party and the Company with respect to such action and that it is
advisable for such indemnified party to be represented by separate counsel, such
indemnified party may retain other counsel, reasonably satisfactory to the
Company, to represent such indemnified party, and the Company shall pay all
reasonable fees and expenses of such counsel. The Company, in the defense of any
such claim or litigation, shall not, except with the consent of such indemnified
party, which consent shall not be unreasonably withheld, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect of such claim or litigation.
(c) Any indemnification required to be made by the Company
pursuant hereto shall be made by periodic payments to the indemnified party
during the course of the action or proceeding, as and when bills are received by
the Company with respect to an indemnifiable loss, claim, damage, liability or
expense incurred by such indemnified party, provided that the Company receives
an undertaking by or on behalf of such indemnified party to repay amounts so
advanced if it shall ultimately be determined that such indemnified party is not
entitled to be indemnified hereunder.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
ASCI represents and warrants as to itself to Kelso
and ASI Partners, and Kelso and ASI Partners each represents and warrants as to
itself to ASCI, as follows:
(a) It has duly obtained all necessary authority for the
execution, delivery and performance of this Agreement by it; it has duly
executed and delivered this Agreement; and this Agreement is a valid and legally
binding agreement, enforceable against it in accordance with its terms, assuming
it has been duly executed and delivered by the other parties.
(b) Performance of this Agreement by it will not violate or
conflict with any law, regulation, order or agreement, or in the case of ASCI
its certificate of incorporation or by-laws, and it requires no governmental
approvals or third party consents to enter into and perform its obligations
pursuant to this Agreement. Such execution and performance does not and will not
constitute a default under any agreement or obligation binding on it or result
in the forfeiture or loss of any rights or assets by it except as specifically
provided for in this Agreement. The representations and warranties of Kelso and
ASI Partners herein assume the correctness of those of ASCI herein.
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ARTICLE V
CONDITIONS TO CLOSING
Conditions to the Obligations of ASCI, Kelso and ASI Partners.
The obligations of the parties hereto to effect the Closing are subject to the
satisfaction (or waiver) prior to the Closing of the following conditions:
(a) No Injunctions. There shall not be in effect any statute,
regulation, order, decree or judgment of any Governmental Entity which makes
illegal or enjoins or prevents in any material respect the consummation of the
transactions contemplated by this Agreement.
(b) Representations. As to any party to this Agreement, all
representations made to such party to this Agreement in Article IV hereof shall
be true and correct in all material respects at and as of the Closing Date, and
such party shall have received a certificate of a senior officer of each party
making such representations to that effect.
(c) Agreements. As to any party to this Agreement, all
agreements made by another party or parties for the benefit of such party and to
be performed at or before the Closing shall have been duly performed in all
material respects or waived, and all transactions to be consummated at the
Closing shall be completed concurrently to the reasonable satisfaction of each
party.
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ARTICLE VI
TERMINATION
Section 6.1 Termination. This Agreement may be
terminated at any time prior to the Closing:
(a) by written agreement of ASCI, Kelso and ASI Partners;
(b) either by ASCI or by ASI Partners and Kelso, by written
notice of such termination to the other, if the Closing of the Offering shall
not have occurred on or prior to February 28, 1997 unless the failure to
consummate the Offering by such date shall be due to the failure of the party or
parties seeking to terminate this Agreement to have fulfilled in all material
respects its or their obligations under this Agreement);
(c) either by ASCI or by ASI Partners and Kelso if any court
of competent jurisdiction or other competent Governmental Entity shall have by
statute, rule, regulation, order, decree or injunction or other action
permanently restrained, enjoined or otherwise prohibited any of the transactions
contemplated by this Agreement;
(d) either by ASCI or by ASI Partners and Kelso if the other
has materially breached any agreement contained in this Agreement and such
breach is either not capable of being cured prior to the Closing or, if such
breach is capable of being cured, is not so cured within a reasonable amount of
time; or
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(e) by ASI Partners and Kelso, if any person makes, and has
not withdrawn or abandoned, a bona fide proposal, either non-publicly in writing
to ASCI or publicly, to effect a Transaction.
Section 6.2 Effect of Termination. In the event of the
termination of this Agreement in accordance with Section 6.1 hereof, this
Agreement shall thereafter become void and have no effect, and no party hereto
shall have any liability to the other party hereto or their respective
Affiliates, directors, officers or employees, except for the obligations of the
parties hereto contained in this Section 6.2 and in Sections 7.1, 7.6, 7.7 and
7.8 hereof, and except that nothing herein will relieve any party from liability
for any breach of this Agreement prior to such termination.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Notices. All notices or other communications
hereunder shall be deemed to have been duly given and made if in writing and if
served by personal delivery upon the party for whom it is intended, if delivered
registered or certified mail, return receipt requested, or by a national courier
service, if sent by facsimile transmission, provided that the facsimile
transmission is promptly confirmed by telephone confirmation thereof, or on the
third day after posting in the United States postage prepaid if sent by
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registered or certified mail, return receipt requested, to the person at the
address set forth below, or such other address as may be designated in writing
hereafter, in the same manner, by such person:
To ASCI:
Richard A. Kalaher, Esq.
Vice President and General Counsel
American Standard Companies Inc.
One Centennial Avenue
Piscataway, NJ 08855
Tel: (908) 980-6057
Fax: (908) 980-6118
With a copy to:
W. Loeber Landau, Esq.
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
Tel: (212) 558-4000
Fax: (212) 558-3588
To Kelso and to ASI Partners:
Kelso & Company
320 Park Avenue - 24th Floor
New York, NY 10022
Attention: James J. Connors, II, Esq.
Tel: (212) 751-3939
Fax: (212) 223-2379
With a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, NY 10022
Attention: Richard D. Bohm, Esq.
Tel: (212) 909-6000
Fax: (212) 909-6836
Section 7.2 Amendment; Waiver. Any provision of this
Agreement may be amended or waived if, and only if, such amendment or waiver is
in writing and signed, in the case of
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an amendment, by ASCI, ASI Partners and Kelso, or in the case of a waiver, by
the party against whom the waiver is to be effective. No failure or delay by any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and,
except as otherwise provided herein, shall not be exclusive of any rights or
remedies provided by law.
Section 7.3 Assignment. No party to this Agreement may assign
any of its rights or obligations under this Agreement without the prior written
consent of each other party hereto, provided that subsequent to the Closing,
Kelso and ASI Partners may make such assignments with notice to ASCI but without
the need for its consent and without relieving Kelso or ASI Partners of their
responsibilities for any obligation, to their Affiliates or to any direct or
indirect partner of Kelso or ASI Partners, and the Company may assign or
transfer its rights and obligations hereunder to any successor entity in
connection with a merger of the Company or sale of all, or substantially all, of
the assets of the Company. Prior to any transfer of rights or obligations by
Kelso or ASI Partners hereunder, ASI Partners shall designate in writing to the
Company a representative (which may be Kelso or ASI Partners and which, if not,
is approved by the Company)
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to act on behalf of Kelso and ASI Partners and any such transferee in connection
with any exercise of Kelso's, ASI Partners' and such transferee's rights
hereunder. All actions to be taken by Kelso, ASI Partners and any of their
transferees hereunder, including the right to provide consents or waivers, shall
only be exercised by such representative. The Company shall be entitled to rely
on any consent or waiver given or any other action taken hereunder by such
representative as the consent, waiver, or action, as the case may be, of Kelso,
ASI Partners and each of their transferees. Kelso and ASI Partners shall be
entitled, but only with the written consent of the Company, not to be
unreasonably withheld, to change such representative at any time.
Section 7.4 Entire Agreement. This Agreement, including Annex
A hereto, contains the entire agreement among the parties hereto with respect to
the subject matter hereof and supersedes all prior agreements and
understandings, oral or written, among them with respect to such matters other
than the Stockholders Agreement and the Kelso Agreement, and any written
agreement of the parties that expressly provides that it is not superseded by
this Agreement. Unless this Agreement is terminated prior to the Closing, the
provisions of Sections 11 and 12(a) of the Stockholders Agreement and 3(a) of
the Kelso Agreement shall be inapplicable to any tender or sale of ASCI Common
Stock by ASI Partners or any of its Affiliates in a public tender offer and upon
such a sale this Agreement
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shall terminate. Notwithstanding the foregoing, the parties agree that from and
after the Closing, the Stockholders Agreement and the Kelso Agreement shall
terminate and be of no force or effect, except that the indemnification
provisions contained in Section 8 of the Stockholders Agreement shall survive
until they shall otherwise terminate in accordance with Section 13 of the
Stockholders Agreement and the indemnification provisions contained in Section 5
of the Kelso Agreement shall survive for an identical period of time.
Section 7.5 Parties in Interest. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing in this Agreement, express or implied,
is intended to confer upon any person other than ASCI, ASI Partners or Kelso,
and their successors or permitted assigns, any rights or remedies under or by
reason of this Agreement.
Section 7.6 Public Disclosure. Notwithstanding anything herein
to the contrary, each of the parties to this Agreement hereby agrees with the
other party hereto that, except as may be required to comply with the
requirements of any applicable laws, and the rules and regulations of the New
York Stock Exchange, no press release or similar public announcement or
communication shall, if prior to the Closing, be made or caused to be made
concerning the execution or performance of this Agreement unless the parties
shall have consulted in advance with respect thereto.
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Section 7.7 Expenses. Except as otherwise expressly provided
in this Agreement, whether or not the transactions contemplated by this
Agreement are consummated, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be borne as
provided in Section 2.3 of the Stockholders Agreement to the extent covered
thereby and, to the extent not so covered, shall be borne by the party incurring
such expenses.
Section 7.8 Governing Law; Submission to Jurisdiction;
Selection of Forum. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK. Each party hereto agrees that it shall bring any action or proceeding
in respect of any claim arising out of or related to this Agreement or the
transactions contained in or contemplated by this Agreement, whether in tort or
contract or at law or in equity, exclusively in the United States District Court
for the Southern District of New York or the Supreme Court of the state of New
York for the county of New York, and solely in connection with claims arising
under this Agreement or the transactions contained in or contemplated by this
Agreement (i) irrevocably submits to the exclusive jurisdiction of such courts,
(ii) waives any objection to laying venue in any such action or proceeding in
such courts, (iii) waives any objection that such courts are an inconvenient
forum or do not have jurisdiction over any party hereto and (iv) agrees that
service of process upon such party in any such action or
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<PAGE> 29
proceeding shall be effective if notice is given in accordance with section 6.1
of this Agreement.
Section 7.9 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, and all of
which shall constitute one and the same Agreement.
IN WITNESS WHEREOF, the parties have executed or caused this
Agreement to be executed as of the date first written above.
AMERICAN STANDARD COMPANIES INC.
By:___________________________
Name:
Title:
KELSO & COMPANY, L.P.
By:__________________________
Kelso Companies, Inc.,
Its General Partner
By:______________________
Name:
Title:
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<PAGE> 30
KELSO ASI PARTNERS, L.P.
By:___________________________
Kelso American Standard
Partners, L.P.,
Its General Partner
By:______________________
Name:
Title:
-27-
<PAGE> 31
ANNEX A
TO STOCK DISPOSITION AGREEMENT
================================================================================
AMERICAN STANDARD COMPANIES INC.
and
CITIBANK, N.A.
Warrant Agent
--------------------------------------------------
Warrant Agreement
Dated as of _______ __, 1997
================================================================================
<PAGE> 32
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 1. Certain Definitions........................................................................ 2
Section 2. Appointment of Warrant Agent............................................................... 4
Section 3. Form of Warrant Certificates............................................................... 4
Section 4. Countersignature and Registration.......................................................... 5
Section 5. Transfer, Split Up, Combination and
Exchange of Warrant Certificates; Mutilated,
Destroyed, Lost or Stolen Warrant
Certificates............................................................................ 6
Section 6. Exercise of Warrants; Purchase Price;
Expiration Date of Warrants............................................................. 8
Section 7. Cancellation and Destruction of Warrant
Certificates............................................................................ 12
Section 8. Reservation and Availability of Shares of
Common Stock; Reports; Taxes............................................................ 13
Section 9. Common Stock Record Date................................................................... 16
Section 10. Adjustment of Purchase Price, Number of
Shares or Number of Warrants............................................................ 17
Section 11. Certification of Adjusted Purchase Price
or Number of Shares..................................................................... 30
Section 12. Consolidation, Merger or Sale or Transfer
of Assets............................................................................... 31
Section 13. Fractional Warrants and Fractional Shares.................................................. 33
Section 14. Right of Action............................................................................ 35
Section 15. Agreement of Warrant Certificate Holders................................................... 35
Section 16. Warrant Certificate Holder Not Deemed a
Shareholder............................................................................. 36
Section 17. Concerning the Warrant Agent............................................................... 36
Section 18. Merger or Consolidation or Change of Name
of Warrant Agent........................................................................ 37
</TABLE>
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<PAGE> 33
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 19. Duties of Warrant Agent................................................................... 39
Section 20. Change of Warrant Agent................................................................... 43
Section 21. Issuance of New Warrant Certificates...................................................... 45
Section 22. Purchase of Warrants by the Company....................................................... 45
Section 23. Notice of Proposed Actions................................................................ 46
Section 24. Notices................................................................................... 47
Section 25. Supplements and Amendments................................................................ 48
Section 26. Successors................................................................................ 49
Section 27. Benefits of this Agreement................................................................ 49
Section 28. Governing Law; Submission to Jurisdiction;
Selection of Forum...................................................................... 50
Section 29. Counterparts.............................................................................. 51
Section 30. Captions.................................................................................. 51
Exhibit A Form of Warrant Certificate
</TABLE>
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<PAGE> 34
WARRANT AGREEMENT
This Agreement, dated as of _______ __, 1997, between AMERICAN
STANDARD COMPANIES INC., a Delaware corporation (the "Company"), and CITIBANK,
N.A., a national banking association (the "Warrant Agent").
W I T N E S S E T H
WHEREAS, the Company has entered into a Stock Disposition
Agreement, dated as of December 16, 1996 (the "Stock Disposition Agreement"),
with Kelso & Company, L.P., a Delaware limited partnership ("Kelso"), and Kelso
ASI Partners, L.P., a Delaware limited partnership ("ASI Partners"), providing,
inter alia, for the disposition of shares of common stock, par value $.01 (the
"Shares" or the "Common Stock"), of the Company and the issuance by the Company
of warrants (the "Warrants") to purchase, in the aggregate, three million shares
of Common Stock pursuant to the terms of the Stock Disposition Agreement; and
WHEREAS, the Company wishes the Warrant Agent to act on behalf
of the Company and the Warrant Agent is willing so to act in connection with the
issuance, division, transfer, exchange and exercise of Warrants;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as follows:
<PAGE> 35
Section 1. Certain Definitions. For purposes of this
Agreement, the terms set forth below have the meanings indicated. Other terms
are defined elsewhere in this Agreement. Capitalized terms used in this
Agreement but not defined herein have the meaning given to them in the Stock
Disposition Agreement.
(a) "Affiliate" shall mean, with respect to any person, any
person directly or indirectly controlling, controlled by, or under common
control with, such other Person at any time during the period for which the
determination of affiliation is being made.
(b) "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in New York are authorized or
obligated by law or executive order to close.
(c) "Close of Business" on any given date shall mean 5:00
P.M., New York City time, on such date; provided, however, that if such date is
not a Business Day it shall mean 5:00 P.M., New York City time, on the next
succeeding Business Day.
(d) "Closing Date" shall mean the Closing Date under the Stock
Disposition Agreement.
(e) "Closing Price" shall mean the last reported sale price
regular way on the day in question or, in case no such sale takes place on such
day, the average of the reported closing bid and asked prices regular way of the
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<PAGE> 36
Common Stock, in each case on the New York Stock Exchange ("NYSE"), or, if the
Common Stock is not listed or admitted to trading on the NYSE, on the principal
national securities exchange or quotation system on which the Common Stock is
listed or admitted to trading or quoted, or, if not listed or admitted to
trading or quoted on any national securities exchange or quotation system, the
average of the closing bid and asked prices of the Common Stock in the
over-the-counter market on the day in question as reported by the National
Quotation Bureau Incorporated, or a similarly generally accepted reporting
service, or, if not so available in such manner, as furnished by any NYSE member
firm selected from time to time by the board of directors of the Company for the
purpose. In the case of a Closing Price of Common Stock on the NYSE, such price
shall mean the closing price reported in the NYSE composite transactions
reporting system (as reported in the New York City edition of The Wall Street
Journal or, if not so reported, another authoritative source).
(f) "Original Warrant Holder" of a Warrant shall mean a Person
to whom the Warrant was issued on the Closing Date and any direct or indirect
partner in ASI Partners to whom ASI Partners distributes the Warrant.
(g) "Person" shall mean an individual, corpora-
tion, limited liability company, association, partnership,
joint venture, trust, unincorporated organization,
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<PAGE> 37
government or political subdivision thereof or governmental agency or other
entity.
(h) "Trading Day" shall mean a day on which the principal
national securities exchange on which the shares of Common Stock are listed or
admitted to trading is open for the transaction of business or, if the shares of
Common Stock are not listed or admitted to trading on any national securities
exchange, a Monday, Tuesday, Wednesday, Thursday or Friday on which banking
institutions in the State of New York are not authorized or obligated by law or
executive order to close.
Section 2. Appointment of Warrant Agent. The Company hereby
appoints the Warrant Agent to act as agent for the Company in accordance with
the terms and conditions hereof, and the Warrant Agent hereby accepts such
appointment. The Company may from time to time appoint such Co-Warrant Agents as
it may, in its sole discretion, deem necessary or desirable.
Section 3. Form of Warrant Certificates. The Warrant
Certificates (together with the form of election to purchase Common Stock and
the form of assignment to be printed on the reverse thereof) shall be
substantially in the form of Exhibit A hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions
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<PAGE> 38
of this Agreement and the Stock Disposition Agreement or as may be required to
comply with any law or with any rule or regulation made pursuant thereto or with
any rule or regulation of any stock exchange or quotation system on which the
Warrants may from time to time be listed, admitted to trading or quoted. Subject
to the provisions of Section 21 hereof, the Warrant Certificates, whenever
issued, shall be dated as of the Closing Date and on their face shall entitle
the holders thereof to purchase such number of shares of Common Stock as shall
be set forth therein for $_______ per share (the "Purchase Price"), but the
number of such shares and the Purchase Price shall be subject to the adjustments
as provided herein. Not more than 3,000,000 Warrants may be issued pursuant to
this Warrant Agreement except as provided in Section 10 hereof.
Section 4. Countersignature and Registration. The Warrant
Certificates shall be executed on behalf of the Company by its Chairman,
President, Chief Executive Officer or any of its Vice Presidents, either
manually or by facsimile signature, and have affixed thereto the Company's seal
or a facsimile thereof which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. The Warrant
Certificate shall be manually countersigned by the Warrant Agent and shall not
be valid for any purpose unless so countersigned. In case any officer of the
Company who shall have signed any
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<PAGE> 39
of the Warrant Certificates shall cease to be such officer of the Company before
countersignature by the Warrant Agent and issuance and delivery by the Company,
such Warrant Certificates, nevertheless, may be countersigned by the Warrant
Agent, issued and delivered with the same force and effect as though the person
who signed such Warrant Certificates had not ceased to be such officer of the
Company; and any Warrant Certificate may be signed on behalf of the Company by
any person who, at the actual date of the execution of such Warrant Certificate,
shall be a proper officer of the Company to sign such Warrant Certificate,
although at the date of the execution of this Warrant Agreement any such person
was not such an officer.
The Warrant Agent will keep or cause to be kept, at one of its
offices in New York, New York, books for registration and transfer of the
Warrant Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Warrant Certificates, the number of
Warrants evidenced on its face by each of the Warrant Certificates and the date
of each of the Warrant Certificates.
Section 5. Transfer, Split Up, Combination and Exchange of
Warrant Certificates; Mutilated, Destroyed, Lost or Stolen Warrant Certificates.
Subject to the provisions of Section 13 hereof, at any time after the Close of
Business on the date hereof, and at or prior to the Close of
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<PAGE> 40
Business on the Expiration Date (as such term is hereinafter defined), any
Warrant Certificate or Warrant Certificates may be transferred, split up,
combined or exchanged for another Warrant Certificate or Warrant Certificates,
entitling the registered holder to purchase a like number of shares of Common
Stock as the Warrant Certificate or Warrant Certificates surrendered then
entitled such holder to purchase. Any registered holder desiring to transfer,
split up, combine or exchange any Warrant Certificate shall make such request in
writing delivered to the Warrant Agent, and shall surrender the Warrant
Certificate or Warrant Certificates to be transferred, split up, combined or
exchanged at the principal office of the Warrant Agent. The Company will make a
new Warrant Certificate or Warrant Certificates available to the Warrant Agent
for delivery of such Warrant Certificates to the appropriate registered holder.
Thereupon the Warrant Agent shall countersign and deliver to the person entitled
thereto a Warrant Certificate or Warrant Certificates, as the case may be, as so
requested. The Company may require payment of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any transfer,
split up, combination or exchange of Warrant Certificates.
Upon receipt by the Company and the Warrant Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Warrant Certificate,
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<PAGE> 41
and, in case of loss, theft or destruction, of indemnity or, in the case of any
holder other than an Original Warrant Holder, security reasonably satisfactory
to them, if requested, and reimbursement to the Company and the Warrant Agent of
all reasonable expenses incidental thereto, and upon surrender to the Warrant
Agent and cancellation of the Warrant Certificate if mutilated, the Company will
make and deliver a new Warrant Certificate of like tenor to the Warrant Agent
for delivery to the registered holder in lieu of the Warrant Certificate so
lost, stolen, destroyed or mutilated.
Section 6. Exercise of Warrants; Purchase Price; Expiration
Date of Warrants. (a) From and after the time that it is no longer possible for
any payment to be made to ASI Partners pursuant to Section 3.2 of the Stock
Disposition Agreement, the registered holder of any Warrant Certificate may
exercise the Warrants evidenced thereby in whole or in part upon presentation
and surrender of the Warrant Certificate, with the Form of Election to Purchase
on the reverse side thereof duly executed, to the Warrant Agent at the principal
office of the Warrant Agent in New York, New York, together with payment of the
Purchase Price in immediately available funds for each share of Common Stock as
to which the Warrants are exercised, at or prior to the Close of Business on the
fifth anniversary of the Closing Date or, if such date is not a Business Day,
the
-8-
<PAGE> 42
next Business Day thereafter (the "Expiration Date"); provided, however, that
the Company, in its sole discretion, may instead elect (a "Spread Value
Election") to pay, either in cash or Shares (valued at Market Value, as defined
below), to such holder against surrender of the Warrants the product of (i) the
number of shares of Common Stock as to which the Warrants are exercised, times
(ii) the amount of the excess, if any, of (A) the average of the Closing Price
per share of the Common Stock for the five Trading Days prior to the date the
Warrants are exercised or surrendered (the "Market Value") over (B) the Purchase
Price, in which case the registered holder will not be required to submit such
cash payment for the Purchase Price. The Company shall, at the request by any
Warrant holder received by the Company five Business Days in advance of a
proposed exercise of a Warrant, advise such holder at least one Business Day
prior to the proposed exercise date whether the Company elects in its discretion
to pay for the surrender of the Warrant, without payment by the holder, in
either cash or Shares. The Company further agrees that, upon the exercise of any
Warrant by any Original Warrant Holder, the Company will exercise its Spread
Value Election to make such payment in cash or Shares for surrender of Warrants
by such Original Warrant Holder. The Company may also by notice to the Warrant
Agent make a Spread Value Election in advance, specifying that payment by it
will be made in cash, in
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<PAGE> 43
Shares or reserving its right to elect either in its discretion from time to
time, in which case such Spread Value Election shall be binding in accordance
with its terms on the Company and the Warrant holders for all exercises of
Warrants subsequent to such notice. The Company shall give prompt notice of such
election to the Warrant holders. In the event that a Transaction occurs after
the date a payment by reason thereof would otherwise be due, any Warrant holder
exercising a Warrant may require the Company to exercise its Spread Value
Election for cash, and the Company shall be obligated to do so. Except as
provided in the immediately preceding sentence, whenever the Company exercises a
Spread Value Election upon exercise of a Warrant, it shall, within three
Business Days of the date of its exercise of such Spread Value Election, (i)
make its choice of payment in cash or the issuance of shares of ASCI Common
Stock pursuant to the Spread Value Election and (ii) make to the Warrant holder
the cash payment or delivery of the shares, but any shares of ASCI Common Stock
delivered pursuant to such Spread Value Election shall be deemed to have been
issued and delivered to the Warrant holder and to be outstanding as of the date
provided in Section 9 of this Agreement notwithstanding such deferred delivery
by the Company.
(b) The Purchase Price is subject to adjustment from time to
time as provided in Section 10 hereof.
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<PAGE> 44
(c) Upon receipt of a Warrant Certificate, with the Form of
Election to Purchase duly executed, accompanied, in the case of an election by
any holder other than an Original Warrant Holder, by payment, if any, of the
Purchase Price for the shares to be purchased and an amount equal to any
applicable tax or governmental charge payable by the holder pursuant to Section
8 in cash, or by certified check or bank draft payable to the order of the
Company, the Warrant Agent shall within two Business Days (i) requisition from
any transfer agent of the Common Stock of the Company certificates for the
number of whole shares of Common Stock to be purchased and the Company hereby
irrevocably authorizes its transfer agent to comply with all such requests, (ii)
when appropriate, requisition from the Company the amount of cash to be paid in
lieu of issuance of whole or fractional shares and (iii) after receipt of such
certificates cause the same to be delivered to or upon the order of the
registered holder of such Warrant Certificate, registered in such name or names
as may be designated by such holder, and, when appropriate, after receipt
promptly deliver such cash to or upon the order of the registered holder of such
Warrant Certificate. Upon instruction or request from time to time by the
Company, the Warrant Agent will pay to or at the direction of the Company any
amounts of cash received and held by the Warrant Agent for the Company's
account.
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<PAGE> 45
(d) In case the registered holder of any Warrant Certificate
shall exercise less than all the Warrants evidenced thereby, a new Warrant
Certificate evidencing Warrants equivalent to the Warrants remaining unexercised
shall be issued by the Warrant Agent at the Company's expense to the registered
holder of such Warrant Certificate or to his duly authorized assigns, subject to
the provisions of Section 13 hereof.
(e) All Warrants shall expire and be of no further force and
effect upon the occurrence of any Transaction (as defined in the Stock
Disposition Agreement) which will require a payment to ASI Partners by the
Company pursuant to Section 3.2 of the Stock Disposition Agreement, provided
payment is made as required by such Section 3.2. The Company shall give prompt
notice to the Warrant Agent and the Warrant holders of such expiration.
Section 7. Cancellation and Destruction of Warrant
Certificates. All Warrant Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the Company
or to any of its agents, be delivered to the Warrant Agent for cancellation or
in cancelled form, or, if surrendered to the Warrant Agent, shall be cancelled
by it, and no Warrant Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Warrant Agreement. The
Company shall deliver to the Warrant Agent
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<PAGE> 46
for cancellation and retirement, and the Warrant Agent shall so cancel and
retire, any other Warrant Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Warrant Agent shall deliver all
cancelled Warrant Certificates to the Company, or shall, at the written request
of the Company, destroy such cancelled Warrant Certificates, and in such case
shall deliver a certificate of destruction thereof to the Company.
Section 8. Reservation and Availability of Shares of Common
Stock; Reports; Taxes. The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of Common
Stock or its authorized and issued shares of Common Stock held in its treasury
the number of shares of Common Stock that will be sufficient to permit the
exercise in full of all outstanding Warrants. The transfer agent for the Common
Stock (the "Transfer Agent") will be irrevocably authorized and directed at all
times to reserve such number of authorized shares as shall be required for such
purpose. The Company will keep a copy of this Agreement on file with the
Transfer Agent. The Warrant Agent is hereby irrevocably authorized to
requisition from time to time from such Transfer Agent the stock certificates
required to honor outstanding Warrants upon exercise thereof in accordance with
the terms of this Agreement.
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<PAGE> 47
So long as the Common Stock issuable upon the exercise of
Warrants may be listed on the NYSE or any other national securities exchange,
the Company shall use its best efforts to cause all shares reserved for such
issuance to be listed on the NYSE or such other exchange upon official notice of
issuance upon such exercise.
The Company covenants and agrees that (i) it will take all
action necessary in a timely manner, including any required registration under
the Securities Act of 1933, as amended (the "Securities Act"), of any shares of
Common Stock issued by it upon exercise of Warrants and the subsequent sale of
such shares without further registration, in order that the issuance by it of
Common Stock on exercise of the Warrants will not violate the registration
requirements of the Securities Act and that the shares of Common Stock acquired
by Persons exercising Warrants can be freely resold by them without registration
under the Securities Act other than such registration as may previously have
been effected, provided that Affiliates of the Company may be required to comply
with Rule 144 of the Securities Act or any successor provisions thereto, and
(ii) it will take all such actions in a timely manner as may be necessary to
insure that all shares of Common Stock delivered upon exercise of Warrants, if
any, shall, at the time of delivery of the certificates for such shares (subject
to payment, if any, of the Purchase Price), be duly
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<PAGE> 48
authorized, validly issued, fully paid and nonassessable, free of preemptive
rights and free from all taxes, liens, charges and security interests with
respect to the issue thereof.
The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the original issuance or delivery of the Warrant
Certificates and the initial issuance of shares of Common Stock upon the
exercise of Warrants. The Company shall not, however, be required to pay any tax
or governmental charge which may be payable in respect of any transfer involved
in the transfer or delivery of Warrant Certificates or the issuance or delivery
of certificates for Common Stock in a name other than that of the registered
holder of the Warrant Certificate evidencing Warrants surrendered for exercise
or to issue or deliver any certificates for shares of Common Stock upon the
exercise of any Warrants until any such tax or governmental charge shall have
been paid (any such tax or governmental charge being payable by the holder of
such Warrant Certificate at the time of surrender) or until it has been
established to the Company's reasonable satisfaction that no such tax or
governmental charge is due.
So long as any of the Warrants remain outstanding, at the
request of a Warrant holder, the Company shall cause copies of any quarterly and
annual financial reports and of
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<PAGE> 49
any information, documents and other reports (or copies of such portions of any
of the foregoing as the SEC may by rules and regulations prescribe) that the
Company is required to file with the SEC ("SEC Reports") pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), to be mailed to such Warrant holder within 15 days after the later of
such request or such filing with the SEC. If the Company is not subject to the
requirements of Section 13 or 15(d) of the Exchange Act, the Company shall
nevertheless continue to cause SEC Reports, comparable to those that it would be
required to file pursuant to Section 13 or 15(d) of the Exchange Act if it were
then subject to the requirements of either such Section, to be filed with the
SEC for public availability (unless the SEC will not accept such a filing) and
mailed to holders of Warrants, upon their request, within the same time periods
as would have applied under the preceding sentence had the Company then been
subject to the requirements of Section 13 or 15(d) of the Exchange Act. The
Company shall make all such information available to investors, securities
analysts and broker-dealers who request it in writing.
Section 9. Common Stock Record Date. Each person in whose name
any certificate for shares of Common Stock is issued upon the exercise of
Warrants shall for all purposes be deemed to have become the holder of record
for the Common
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<PAGE> 50
Stock represented thereby on, and such certificate shall be dated, the date upon
which the Warrant Certificate evidencing such Warrants was duly surrendered and
payment, if any, of the Purchase Price (and any applicable transfer taxes) was
made; provided, however, that if the date of such surrender and payment is a
date upon which the Common Stock transfer books of the Company are closed, such
person shall be deemed to have become the record holder of such shares on, and
such certificate shall be dated, the next succeeding Business Day on which the
Common Stock transfer books of the Company are open.
Section 10. Adjustment of Purchase Price, Number of Shares or
Number of Warrants. The Purchase Price, the number of shares covered by each
Warrant and the number of Warrants outstanding are subject to adjustment from
time to time as provided in this Section 10.
(a) In the event the Company shall at any time after the date
of this Agreement (i) pay a dividend or make a distribution on the Common Stock
in shares of capital stock, (ii) subdivide the outstanding Common Stock, (iii)
combine the outstanding Common Stock into a smaller number of shares, or (iv)
issue any shares of capital stock in a reclassification of the Common Stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing corporation), the Purchase Price
and the number and kind of shares of
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<PAGE> 51
capital stock issuable upon the exercise of a Warrant (as in effect immediately
prior to such action) shall be proportionately adjusted so that the holder of
any Warrant exercised after such action shall be entitled to receive the
aggregate number and kind of shares of capital stock which he would have owned
immediately following such action, if such Warrant had been exercised
immediately prior to such action. The adjustment shall become effective
immediately after the record date in the case of a dividend or distribution and
immediately after the effective date in the case of a subdivision, combination
or reclassification. Such adjustment shall be made successively whenever any
event listed above shall occur and, in the event that such dividend or
distribution is not paid, such adjustment shall be readjusted retroactively.
(b) In case the Company shall fix a record date for the
issuance (without consideration) of rights, options or warrants to all holders
of Common Stock entitling them (for a period expiring within 60 calendar days
after such date of issue) to subscribe for or purchase Common Stock (or
securities convertible into or exchangeable or exercisable for Common Stock) at
a price per share of Common Stock (or having an initial conversion, exchange or
exercise price per share of Common Stock, if a security convertible into or
exchangeable or exercisable for Common Stock) less than the current market price
per share of Common Stock (as defined
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<PAGE> 52
in Section 10(e)) on such record date, the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction of which the numerator shall
be the number of shares of Common Stock outstanding on such record date plus the
number of shares of Common Stock which the aggregate offering price of the total
number of shares of Common Stock so to be offered (or the aggregate offering
price for the convertible, exchangeable or exercisable securities so to be
offered) would purchase at such current market price and of which the
denominator shall be the number of shares of Common Stock outstanding on such
record date plus the number of additional shares of Common Stock to be offered
for subscription or purchase (or into which the convertible, exchangeable or
exercisable securities so to be offered are initially convertible, exchangeable
or exercisable). In case such subscription price may be paid in a consideration
part or all of which shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a statement filed with
the Warrant Agent. The aggregate offering price for the issuance of convertible,
exchangeable or exercisable securities shall be deemed to be the consideration
to be received by the Company for such securities plus the additional minimum
initial
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<PAGE> 53
consideration, if any, to be received by the Company upon the conversion,
exchange or exercise thereof. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that such rights or
warrants are not so issued and, to the extent, if issued, they expire without
being exercised, the Purchase Price shall be readjusted retroactively to be the
Purchase Price which would then be in effect if such record date had not been
fixed.
(c) In case the Company shall fix a record date for the making
of a dividend or distribution (other than a cash dividend or distribution out of
retained earnings or earned surplus, except a special or extraordinary dividend
or distribution, and dividends or distributions of the stock of the Company
which are covered by Section 10(a)) to all holders of Common Stock (including
any distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation), of evidences of indebtedness or assets
(including cash, except in respect of dividends and distributions other than
special or extraordinary dividends or distributions) or rights or warrants
(excluding those referred to in Section 10(b)) to purchase debt securities,
assets or other securities of the Company, the Purchase Price to be in effect
after such record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a
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<PAGE> 54
fraction of which the numerator shall be the current market price per share of
Common Stock (as defined in Section 10(e)) on such record date, less the fair
market value (as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Warrant Agent) of such distribution applicable to one share of Common Stock, and
of which the denominator shall be such current market price per share of Common
Stock. Such adjustment shall be made successively whenever such a record date is
fixed; and in the event that such distribution is not so made, the Purchase
Price shall be readjusted retroactively to be the Purchase Price which would
then be in effect if such record date had not been fixed.
(d) In the event that the rights (the "Rights") outstanding
under the Rights Agreement, dated as of January 5, 1995, between the Company and
the Rights Agent, as such Agreement may be amended from time to time, or any
similar agreements or arrangements (the "Rights Agreement"), become entitled to
receive, with or without payment of an exercise price, shares of capital stock
or other securities of the Company or another Person, or cash or other assets,
by reason of any Person having become an Acquiring Person or a Stock Acquisition
Date or Distribution Date (as those terms are defined in the Rights Agreement)
having occurred, then upon the exercise thereafter of each Warrant, the
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Warrant holder shall also receive (upon payment, if any, of any amount the
holder of a Right would be required to pay upon any such exercise thereof) such
Common Stock, other securities, assets and cash as would be received by the
holder of Rights appertaining to that number of shares of Common Stock for which
the Warrant would have been exercisable immediately prior to the event referred
to above, provided that to the extent any adjustment has been made under any
other provision of this Section 10 or Section 12 with respect to the Rights, no
additional adjustment shall be made pursuant to this subsection.
(e) If the Company issues shares of Common Stock for a
consideration per share less than the current market price per share of Common
Stock on the date the Company fixes the offering price of such additional
shares, the Purchase Price to be in effect immediately after such issuance shall
be determined by multiplying the Purchase Price in effect immediately prior to
such issuance by a fraction of which the numerator shall be the number of shares
of Common Stock outstanding on such date of issuance plus the number of shares
of Common Stock which the aggregate consideration received for the issuance of
such additional shares would purchase at such current market price and of which
the denominator shall be the number of shares of Commons Stock outstanding
immediately after the issuance of such additional shares. The adjustment shall
be
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made successively whenever any such issuance is made and shall become effective
immediately after such issuance.
(f) If the Company issues any securities convertible into or
exchangeable or exercisable for Common Stock (other than securities issued in
transactions described in the foregoing subsections of this Section 10) for a
consideration per share of Common Stock initially deliverable upon conversion of
or exchange or exercise for such securities (plus the consideration for the
security convertible, exchangeable or exercisable for such share of Common
Stock) less than the current market price per share on the date of issuance of
such securities, the Purchase Price to be in effect immediately after such
issuance shall be determined by multiplying the Purchase Price in effect
immediately prior to such issuance by a fraction of which the numerator shall be
the number of shares of Common Stock outstanding on such date of issuance plus
the number of shares of Common Stock which the aggregate consideration received
for the issuance of such securities would purchase at such current market price
and of which the denominator shall be the number of shares of Common Stock
outstanding immediately prior to the issuance of such securities plus the
maximum number of shares of Common Stock deliverable upon conversion of or in
exercise or exchange for such securities at the initial conversion rate. The
aggregate consideration received for the issuance of such securities
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shall be deemed to be the consideration received by the Company for the issuance
of such securities plus the additional minimum initial consideration, if any, to
be received by the Company upon the conversion, exchange or exercise thereof.
The adjustment shall be made successively whenever any such issuance is made and
shall become effective immediately after such issuance.
(g) For the purpose of any computation pursuant to this
Section 10, the "current market price" per share of Common Stock on any date
shall be deemed to be the average of the daily Closing Price per share of such
Common Stock for the 30 consecutive Trading Days immediately prior to such date.
If the Common Stock is not publicly held or not so listed or traded, "current
market price" per share shall mean the fair value per share as determined in
good faith by the Board of Directors of the Company, whose determination shall
be described in a statement filed with the Warrant Agent.
(h) No adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at least 1% in
such price; provided, however, that any adjustments which by reason of this
Section 10(h) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section
10 shall be made to the
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nearest cent or the nearest ten-thousandth of a share, as the case may be.
(i) In the event that at any time, as a result of an
adjustment made pursuant to this Section 10, the holder of any Warrant
thereafter exercised shall become entitled to receive any shares of capital
stock of the Company other than shares of Common Stock, thereafter the number of
such other shares so receivable upon exercise of any Warrant shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the shares contained in this
Section 10 (as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Warrant Agent), and the provisions of Sections 6, 8, 9 and 12 with respect to
the shares of Common Stock shall apply on like terms to any such other shares.
(j) Unless the Company shall have exercised its election as
provided in Section 10(k), upon each adjustment of the Purchase Price as a
result of the calculations made in this Section 10, each Warrant outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of shares
(calculated to the nearest ten-thousandth) obtained by (i) multiplying (x) the
number of shares covered by a Warrant immediately prior to this
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adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(k) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Warrants, in
substitution for any adjustment in the number of shares of Common Stock
purchasable upon the exercise of a Warrant. The aggregate Warrants outstanding
immediately after such adjustment of the number of Warrants shall be exercisable
for the same number of shares of Common Stock for which the aggregate Warrants
were exercisable immediately prior to such adjustment of the number of Warrants.
Each Warrant held of record prior to such adjustment of the number of Warrants
shall become that number of Warrants (calculated to the nearest ten-thousandth)
obtained by dividing the Purchase Price in effect prior to adjustment of the
Purchase Price by the Purchase Price in effect after adjustment of the Purchase
Price. The Company shall notify the Warrant Agent and the record holders of
Warrants of its election to adjust the number of Warrants, indicating the record
date for the adjustment, and, if known at the time, the amount of the adjustment
to be made. This record date may be the date on which the Purchase Price is
adjusted or any day thereafter,
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but shall be at least 10 days later than the date of the public announcement.
Upon each adjustment of the number of Warrants pursuant to this subsection (i)
the Company shall, as promptly as practicable, cause to be distributed to
holders of record of Warrant Certificates on such record date Warrant
Certificates evidencing, subject to Section 13, the additional Warrants to which
such holders shall be entitled as a result of such adjustment, or, at the option
of the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Warrant Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Warrant Certificates evidencing all the Warrants to which such
holders shall be entitled after such adjustment. Warrant Certificates so to be
distributed shall be issued, executed and countersigned in the manner provided
for herein (and may bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the holders of record of Warrant
Certificates on the record date specified in the public announcement.
(l) Irrespective of any adjustment or change in the Purchase
Price or the number of shares of Common Stock issuable upon the exercise of the
Warrants, the Warrant Certificates theretofore and thereafter issued may
continue to express the Purchase Price per share and the number of
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shares which were expressed upon the initial Warrant Certificates issued
hereunder.
(m) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the shares of
Common Stock issuable upon exercise of the Warrants, the Company shall take any
corporate action which may be necessary in order that the Company may validly
issue fully paid and nonassessable shares of such Common Stock at such adjusted
Purchase Price.
(n) In any case in which this Section 10 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Warrant exercised after such record date
of the shares of Common Stock and other capital stock of the Company, if any,
issuable upon such exercise over and above the shares of Common Stock and other
capital stock of the Company, if any, issuable upon such exercise on the basis
of the Purchase Price in effect prior to such adjustment; provided, however,
that the Company shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional shares upon
the occurrence of the event requiring such adjustment.
(o) Anything in this Section 10 to the contrary
notwithstanding, the Company shall be entitled to make such
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reductions in the Purchase Price, in addition to those adjustments expressly
required by this Section 10, as and to the extent that it in its sole discretion
shall determine to be advisable in order that any event treated for federal
income tax purposes as a distribution of stock or stock rights shall not be
taxable to the recipients; provided, however, that any reduction of the Purchase
Price pursuant to this Section 10(o), other than a reduction which the Company
has irrevocably committed will be in effect for so long as any Warrants are
outstanding, does not change or adjust the Purchase Price otherwise in effect
for purposes of subsections (a)-(f) of this Section 10.
(p) If any event shall occur as to which the provisions of
this Section 10 are not strictly applicable but the failure to make any
adjustment would in the good faith judgment of the Company's Board of Directors
adversely affect the purchase rights represented by the Warrants in accordance
with the essential intent and principles of this Section 10, then, in each such
case, the Company shall appoint an investment banking firm of recognized
national standing, or any other financial expert that does not (or whose
directors, officers, employees, affiliates or stockholders do not) have a direct
or material indirect financial interest in the Company or any of its
subsidiaries, who has not been, and, at the time it is called upon to give
independent financial advice to the
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Company, is not (and none of its directors, officers, employees, affiliates or
stockholders are) a director or officer of the Company or any of its
subsidiaries, which shall give their opinion upon the adjustment, if any, on a
basis consistent with the essential intent and principles established in Section
10, necessary to preserve, without dilution or accretion, the rights represented
by the Warrants. Upon receipt of such opinion, the Company will promptly mail a
copy thereof to the holders of the Warrants and shall make the adjustments
described therein.
(q) The Company will not, by amendment of its certificate of
incorporation or through any consolidation, merger, reorganization, transfer of
assets, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of the
Warrants, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the holder of the Warrants against
dilution or other impairment.
Section 11. Certification of Adjusted Purchase Price or Number
of Shares. Whenever the Purchase Price or the number of shares of Common Stock
issuable upon the exercise of each Warrant is adjusted as provided in Section 10
or 12, the Company shall (a) promptly prepare a certificate signed by an
executive officer of the Company
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and one of its accounting officers setting forth the Purchase Price as so
adjusted and/or the number of shares of Common Stock issuable upon exercise of
each Warrant as so adjusted, and a brief statement of the facts accounting for
such adjustment and setting forth a computation by which such adjustment was
made, (b) promptly file with the Warrant Agent and with each transfer agent for
the Common Stock a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Warrant Certificate in accordance with Section 24.
Section 12. Consolidation, Merger or Sale or Transfer of
Assets. In case of any consolidation or merger of the Company with another
corporation or in case of any sale, lease or conveyance to another Person of all
or substantially all of the assets or property of the Company, the Company or
such successor or purchasing corporation, as the case may be, shall execute with
the Warrant Agent an agreement that each holder of a Warrant shall have the
right, upon payment of the Purchase Price in effect immediately prior to such
action, to purchase upon exercise of each Warrant the kind and amount of shares
or other securities or property that he would have owned or have been entitled
to receive after the happening of such action, had such Warrant been exercised
immediately prior to such action. Notwithstanding the foregoing, in the case of
any merger or other transaction in which the publicly held
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Common Stock shall be converted into the right to receive a consideration
consisting solely of cash, each holder of a Warrant, without having to take any
other action than the surrendering of such Warrant to the Company, shall receive
in full and complete satisfaction of the rights appertaining to the Warrants an
amount equal to the amount (if any) by which the price per share payable to, or
which would be received by, any public holder of Common Stock in connection with
such transaction exceeds the Purchase Price in effect immediately prior to such
merger or other transaction. The Company shall mail by first-class mail, postage
prepaid, to each holder of a Warrant, notice of the execution of any such
agreement referred to in the first sentence of this Section 12. Such agreement
shall provide for adjustments, which shall be as nearly equivalent as may be
practicable to the adjustments provided for in Section 10 in relation to any
securities or property (including cash) thereafter deliverable upon the exercise
of the Warrants. The Warrant Agent shall be under no responsibility to determine
the correctness of any provisions contained in any such agreement relating
either to the kind or amount of shares or other securities or property
receivable upon exercise of Warrants or with respect to the method employed and
provided therein for any adjustments and shall be entitled to rely upon the
provisions contained in any such agreement. The provisions of this Section 12
shall similarly apply to
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successive mergers or consolidations or sales or other transfers.
Section 13. Fractional Warrants and Fractional Shares. (a) The
Company shall not be required to issue fractions of Warrants or to distribute
Warrant Certificates which evidence fractional Warrants, except at the request
of a Warrant holder in the event the Company makes an adjustment in the number
of Warrants pursuant to Section 10(k) which results in fractional Warrant
interests. In lieu of such fractional Warrants, there shall be paid to the
registered holders of the Warrant Certificates with regard to which such
fractional Warrants would otherwise be issuable an amount in cash equal to the
same fraction of the current market value of a whole Warrant. For the purposes
of this Section 13(a), the current market value of a whole Warrant shall be the
closing price of the Warrant for the Trading Day immediately prior to the date
on which such fractional Warrant would have been otherwise issuable. The closing
price for any day shall be the last sale price, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the NYSE or, if the Warrants are not listed or admitted to trading on
NYSE, as reported in the principal consolidated transaction
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reporting system with respect to securities listed on the principal national
securities exchange on which the Warrants are listed or admitted to trading or,
if the Warrants are not listed or admitted to trading on any national securities
exchange, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ. If on any such date the Warrants
are not quoted by any such organization, the fair value of the Warrants on such
date as determined in good faith by the Board of Directors of the Company shall
be used.
(b) The Company shall not be required to issue fractions of
shares upon exercise of the Warrants or to distribute certificates which
evidence fractional shares. In lieu of fractional shares, there shall be paid to
the registered holders of Warrant Certificates at the time such Warrant
Certificates are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of a share of Common Stock. For
purposes of this Section 13(b), the current market value of a share of Common
Stock shall be the closing price of a share of Common Stock (as determined
pursuant to the second sentence of Section 10(e)) for the Trading Day
immediately prior to the date of such exercise.
(c) Except as provided in Section 13(a), the holder of a
Warrant by the acceptance of the Warrant
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expressly waives his right to receive any fractional Warrant or any fractional
share upon exercise of a Warrant.
Section 14. Right of Action. All rights of action in respect
of this Agreement are vested in the respective registered holders of the Warrant
Certificates; and any registered holder of any Warrant Certificate, without the
consent of the Warrant Agent or of the holder of any other Warrant Certificate,
may, on his own behalf and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, his rights relating to the Warrants, including his
right to exercise the Warrants as provided in such Warrant Certificate and in
this Agreement.
Section 15. Agreement of Warrant Certificate Holders. Every
holder of a Warrant Certificate by accepting the same consents and agrees with
the Company and the Warrant Agent and with every other holder of a Warrant
Certificate that:
(a) the Warrant Certificates are transferable only on the
registry books of the Warrant Agent if surrendered at the principal office of
the Warrant Agent, duly endorsed or accompanied by a proper instrument of
transfer; and
(b) the Company and the Warrant Agent may deem and treat the
person in whose name the Warrant Certificate is registered as the absolute owner
thereof and of the
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Warrants evidenced thereby (notwithstanding any notations of ownership or
writing on the Warrant Certificates made by anyone other than the Company or the
Warrant Agent) for all purposes whatsoever, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary.
Section 16. Warrant Certificate Holder Not Deemed a
Shareholder. No holder, as such, of any Warrant Certificate shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of Common Stock
or any other securities of the Company which may at any time be issuable on the
exercise or conversion of the Warrants represented thereby, nor shall anything
contained herein or in any Warrant Certificate be construed to confer upon the
holder of any Warrant Certificate, as such, any of the rights of a shareholder
of the Company or any right to vote for the election of directors or upon any
matter submitted to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting shareholders (except as provided in Section 24), or to receive
dividends or subscription rights, or otherwise, until the Warrant or Warrants
evidenced by such Warrant Certificate shall have been exercised in accordance
with the provisions hereof.
Section 17. Concerning the Warrant Agent. The Company agrees
to pay to the Warrant Agent reasonable compensation for all services rendered by
it hereunder and,
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from time to time, on demand of the Warrant Agent, its reasonable expenses and
counsel fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Warrant Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
gross negligence, bad faith or willful misconduct on the part of the Warrant
Agent, for anything done or omitted by the Warrant Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the premises.
The Warrant Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any
Warrant Certificate or certificate for Common Stock or for other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
person or persons.
Section 18. Merger or Consolidation or Change of Name of
Warrant Agent. Any Person into which the Warrant Agent or any successor Warrant
Agent may be merged or with
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which it may be consolidated, or any Person resulting from any merger or
consolidation to which the Warrant Agent or any successor Warrant Agent shall be
a party, or any Person succeeding to the corporate trust business of the Warrant
Agent or any successor Warrant Agent, shall be the successor to the Warrant
Agent under this Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such Person
would be eligible for appointment as a successor Warrant Agent under the
provisions of Section 20. In case at the time such successor Warrant Agent shall
succeed to the agency created by this Agreement any of the Warrant Certificates
shall have been countersigned but not delivered, any such successor Warrant
Agent may adopt the countersignature of the predecessor Warrant Agent and
deliver such Warrant Certificates so countersigned; and in case at that time any
of the Warrant Certificates shall not have been countersigned, any successor
Warrant Agent may countersign such Warrant Certificates either in the name of
the predecessor Warrant Agent or in the name of the successor Warrant Agent; and
in all such cases such Warrant Certificates shall have the full force provided
in the Warrant Certificates and in this Agreement.
In case at any time the name of the Warrant Agent shall be
changed and at such time any of the Warrant Certificates shall have been
countersigned but not delivered, the
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Warrant Agent may adopt the countersignature under its prior name and deliver
Warrant Certificates so countersigned; and in case at that time any of the
Warrant Certificates shall not have been countersigned, the Warrant Agent may
countersign such Warrant Certificates either in its prior name or in its changed
name; and in all such cases such Warrant Certificates shall have the full force
provided in the Warrant Certificates and in this Agreement.
Section 19. Duties of Warrant Agent. The Warrant Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Warrant Certificates, by their acceptance thereof, shall be bound:
(a) The Warrant Agent may consult with legal counsel (who may
be legal counsel for the Company), and the opinion of such counsel
shall be full and complete authorization and protection to the Warrant
Agent as to any action taken or omitted by it in good faith and in
accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Warrant Agent shall deem it necessary or desirable that
any fact or matter be proved or established by the Company prior to
taking or suffering any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed)
may be deemed to be conclu-
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sively proved and established by a certificate signed by the Chairman,
President, Chief Executive Officer or any Vice President of the Company
and by the Treasurer or any Assistant Treasurer or the Secretary of the
Company and delivered to the Warrant Agent; and such certificate shall
be full authorization to the Warrant Agent for any action taken or
suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate. The Warrant Agent shall be entitled to
rely on any certificate, notice or other document reasonably believed
by it to be genuine and correct and to have been signed, given or sent
by the proper Person or Persons.
(c) The Warrant Agent shall be liable hereunder only for its
own gross negligence, bad faith or willful misconduct.
(d) The Warrant Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement
or in the Warrant Certificates (except its countersignature thereof) or
be required to verify the same, but all such statements and recitals
are and shall be deemed to have been made by the Company only.
(e) The Warrant Agent shall not be under any
responsibility in respect of the validity of this
Agreement or the execution and delivery hereof (except
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the due execution hereof by the Warrant Agent) or in respect of the
validity or execution of any Warrant Certificate (except its
countersignature thereof); nor shall it be responsible for any breach
by the Company of any covenant or condition contained in this Agreement
or in any Warrant Certificate; nor shall it be responsible for the
adjustment of the Purchase Price or the making of any change in the
number of shares of Common Stock required under the provisions of
Section 10 or 12 or responsible for the manner, method or amount of any
such change or the ascertaining of the existence of facts that would
require any such adjustment or change (except with respect to the
exercise of Warrants evidenced by Warrant Certificates after actual
notice of any adjustment of the Purchase Price); nor shall it by any
act hereunder be deemed to make any representation or warranty as to
the authorization or reservation of any shares of Common Stock to be
issued pursuant to this Agreement or any Warrant Certificate or as to
whether any shares of Common Stock will, when issued, be duly
authorized, validly issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts, instruments
and assurances
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as may reasonably be required by the Warrant Agent for the carrying out
or performing by the Warrant Agent of the provisions of this Agreement.
(g) the Warrant Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from the Chairman, President, Chief Executive Officer, any of
the Vice Presidents or the Secretary of the Company, and to apply to
such officers for advice or instructions in connection with its duties,
and it shall not be liable for any action taken or suffered to be taken
by it in good faith in accordance with instructions of any such
officer.
(h) The Warrant Agent and any shareholder, director, officer
or employee of the Warrant Agent may buy, sell or deal in any of the
Warrants or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested,
or contract with or lend money to the Company or otherwise act as fully
and freely as though it were not Warrant Agent under this Agreement.
Nothing herein shall preclude the Warrant Agent from acting in any
other capacity for the Company or for any other legal entity.
(i) The Warrant Agent may exercise any of the rights or powers
hereby vested in it or perform any
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duty hereunder either itself or by or through its attorney or agents,
and the Warrant Agent shall not be answerable or accountable for any
act, default, neglect or misconduct of any such attorneys or agents or
for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the
selection and continued employment thereof.
Section 20. Change of Warrant Agent. The Warrant Agent may
resign and be discharged from its duties under this Agreement upon 30 days'
notice in writing mailed to the Company and to each transfer agent of the Common
Stock by registered or certified mail, and to the holders of the Warrant
Certificates by first-class mail. The Company may remove the Warrant Agent or
any successor Warrant Agent upon 30 days' notice in writing, mailed to the
Warrant Agent or successor Warrant Agent, as the case may be, and to each
transfer agent of the Common Stock by registered or certified mail, and to the
holders of the Warrant Certificates by first-class mail. If the Warrant Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Warrant Agent or elect by notice to the
holders of the Warrant Certificates by first-class mail to act itself as the
Warrant Agent until by like notice it elects to appoint a new Warrant Agent. If
the Company shall fail to
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make such appointment or election within a period of 30 days after such removal
or after it has been notified in writing of such resignation or incapacity by
the resigning or incapacitated Warrant Agent or by the holder of a Warrant
Certificate (who shall, with such notice, submit his Warrant Certificate for
inspection by the Company), then the registered holder of any Warrant
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Warrant Agent. Any successor Warrant Agent (other than the Company),
whether appointed by the Company or by such a court, shall be a Person organized
and doing business under the laws of the United States or of a state thereof, in
good standing, which is authorized under such laws to exercise corporate trust
powers and is subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Warrant Agent a
combined capital and surplus of at least $50,000,000. After appointment or
election, the successor Warrant Agent or the Company, as the case may be, shall
be vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Warrant Agent without further act or deed; but the
predecessor Warrant Agent shall deliver and transfer to the successor Warrant
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such
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appointment or election the Company shall file notice thereof in writing with
the predecessor Warrant Agent and each transfer agent of the Common Stock, and
mail a notice thereof in writing to the registered holders of the Warrant
Certificates. Failure to give any notice provided for in this Section 20,
however, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Warrant Agent or the appointment of the successor
Warrant Agent or the election by the Company to serve as the Warrant Agent, as
the case may be.
Section 21. Issuance of New Warrant Certificates.
Notwithstanding any of the provisions of this Agreement or of the Warrants to
the contrary, the Company may, at its option, issue new Warrant Certificates
evidencing Warrants in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Purchase Price per share and the number
or kind or class of shares of stock or other securities or property purchasable
under the several Warrant Certificates made in accordance with the provisions of
this Agreement.
Section 22. Purchase of Warrants by the Company. The Company
shall have the right, except as limited by applicable law or other agreements,
to purchase or otherwise acquire Warrants at such time, in such manner and for
such consideration as may be agreed to by the Company and any selling Warrant
holder.
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Section 23. Notice of Proposed Actions. In case the Company
shall propose (a) to take any action which may require an adjustment in the
Purchase Price or other terms of the Warrants pursuant to Section 10 or Section
12 of this Agreement, or (b) to effect the liquidation, dissolution or winding
up of the Company, then, in each such case, the Company shall give to each
holder of a Warrant, in accordance with Section 24, a notice of such proposed
action, which shall specify the record date for the purposes of such stock
dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of Common Stock, if any such date is to be fixed, and
such notice shall be so given in the case of any action covered by clause (a) or
(b) above at least twenty days prior to the record date for determining holders
of the Common Stock for purposes of such action, and in the case of any such
other action, at least twenty days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of Common
Stock, whichever shall be the earlier. The failure to give notice required by
this Section 23 or any defect therein shall not affect the legality or validity
of the action taken by the Company or the vote upon any such action. Unless
specifically required by Section 10, the Purchase Price, the
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<PAGE> 80
number of shares covered by each Warrant and the number of Warrants outstanding
shall not be subject to adjustment as a result of the Company being required to
give notice pursuant to this Section 23.
Section 24. Notices. Notices or demands authorized by this
Agreement to be given or made by the Warrant Agent or by the holder of any
Warrant Certificate to or on the Company shall be in writing and shall be deemed
given or made when delivered or on the third day following the date sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Warrant Agent) or on the date sent by facsimile transmission
(provided that such facsimile transmission is promptly confirmed by telephone
confirmation thereof) as follows:
American Standard Companies Inc.
One Centennial Avenue
Piscataway, New Jersey 08855
Tel: (908) 980-6000
Fax: (908) 980-6118
Attention: Secretary
Subject to the provisions of Section 20, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Warrant
Certificate to or on the Warrant Agent shall be in writing and shall be deemed
given or made when delivered or on the third date following the date sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Company with notice to each Warrant holder)
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<PAGE> 81
or on the date sent by facsimile transmission (provided that such facsimile
transmission is promptly confirmed by telephone confirmation thereof) as
follows:
Citibank, N.A.
111 Wall Street, Fifth Floor
New York, NY 10043
Tel: (212) 412-6209
Fax: (212) 480-1614
Attention: Stock Transfer
Notices or demands authorized by this Agreement to be given or made by the
Company or the Warrant Agent to the holder of any Warrant Certificate shall be
in writing and shall be deemed given or made on the third day following the date
sent by first-class mail, postage prepaid, addressed to such holder at the
address of such holder as shown on the registry books of the Company or, if the
Warrant holder has provided the Company with a facsimile transmission address,
on the date sent by facsimile transmission (provided that such facsimile
transmission is promptly confirmed by telephone confirmation thereof).
Section 25. Supplements and Amendments. (a) The Company and
the Warrant Agent may from time to time supplement or amend this Agreement
without the approval of any holders of Warrant Certificates in order to cure any
ambiguity, to correct or supplement any provision contained herein which may
be defective or inconsistent with any other provisions herein, or to make any
other provisions with regard to matters or questions arising hereunder which the
Company and
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<PAGE> 82
the Warrant Agent may deem necessary or desirable and which shall not adversely
affect the interests of the holders of Warrant Certificates.
(b) With the consent of the holders of Warrants exercisable
for not less than a majority of the Shares (as adjusted from time to time)
issuable upon exercise of all then outstanding Warrants, the Company and the
Warrant Agent may modify this Agreement for the purpose of adding any provision
to or changing in any manner or eliminating any of the provisions of this
Warrant Agreement or modifying in any manner the rights of the holders of the
Warrant Certificates; provided, however, that no modification of the terms
(including but not limited to the adjustments described in Section 10) upon
which the Warrants are exercisable or reducing the percentage required for
consent to modification of this Agreement may be made without the consent of the
holder of each outstanding Warrant affected thereby.
Section 26. Successors. All covenants and provisions of this
Agreement by or for the benefit of the Company or the Warrant Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 27. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give any Person other than the Company, the
Warrant Agent and the registered
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<PAGE> 83
holders of the Warrant Certificates any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Warrant Agent and the registered holders
of the Warrant Certificates.
Section 28. Governing Law; Submission to Jurisdiction;
Selection of Forum. THIS AGREEMENT AND EACH WARRANT CERTIFICATE ISSUED HEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK, WITHOUT GIVING EFFECT TO ITS LAWS GOVERNING CONFLICTS OF LAW. Each
party hereto agrees that it shall bring any action or proceeding in respect of
any claim arising out of or related to this Agreement or the transactions
contained in or contemplated by this Agreement, whether in tort or contract or
at law or in equity, exclusively in the United States District Court for the
Southern District of New York or the Supreme Court of the state of New York for
the county of New York, and solely in connection with claims arising under this
Agreement or the transactions contained in or contemplated by this Agreement (i)
irrevocably submits to the exclusive jurisdiction of such courts, (ii) waives
any objection to laying venue in any such action or proceeding in such courts,
(iii) waives any objection that such courts are an inconvenient forum or do not
have jurisdiction over any party hereto and (iv) agrees that service of process
upon such party in any such
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<PAGE> 84
action or proceeding shall be effective if notice is given in accordance with
Section 24 of this Agreement.
Section 29. Counterparts. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 30. Captions. The caption of the sections of this
Agreement have been inserted for convenience only and shall not control or
affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
AMERICAN STANDARD COMPANIES INC.
By
-----------------------------------
Title:
CITIBANK, N.A., as
Warrant Agent
By
-----------------------------------
Title:
-51-
<PAGE> 85
Exhibit A
To Warrant Agreement
[Form of Warrant Certificate]
Certificate No. _______________________________________________ Warrants
NOT EXERCISABLE AFTER _______ __, 2002
Warrant Certificate
THE WARRANTS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS
OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT
AND SUCH STATE LAWS. THE COMPANY MAY REQUIRE AS A CONDITION TO
THE TRANSFER OF THIS WARRANT AN OPINION FROM COUNSEL FOR THE
WARRANT HOLDER, SATISFACTORY TO THE COMPANY, THAT THE TRANSFER
MAY BE MADE WITHOUT PRIOR REGISTRATION OF THE WARRANT UNDER
SUCH ACT OR LAWS.
AMERICAN STANDARD COMPANIES INC.
This certifies that ________________________, or registered
assigns, is the registered owner of the number of Warrants set forth above, each
of which entitles the owner thereof, subject to the terms, provisions and
conditions of the Warrant Agreement dated as of _______ __, 1997 (the "Warrant
Agreement") between American Standard Companies Inc., a Delaware corporation
(the "Company"), and Citibank, N.A., a national banking association (the
"Warrant Agent"),
<PAGE> 86
from and after the time that it is no longer possible for any payment to be made
to ASI Partners pursuant to Section 3.2 of the Stock Disposition Agreement, to
purchase from the Company at any time after _______ __, 1997 and prior to 5:00
P.M. (New York City time) on ________ __, 2002 at the principal office of the
Warrant Agent, or its successors as Warrant Agent, in New York, New York,
___________ fully paid and nonassessable shares of the Common Stock, par value
$.01 per share ("Shares" or "Common Stock"), of the Company, at a purchase price
of $_______ (the "Purchase Price") upon presentation and surrender of this
Warrant Certificate with the Form of Election to Purchase duly executed,
together with payment of the Purchase Price in immediately available funds for
each share of Common Stock as to which the Warrants are exercised, at or prior
to the Close of Business on the fifth anniversary of the Closing Date or, if
such date is not a Business Day, the next Business Day thereafter (the
"Expiration Date"); provided, however, that the Company, in its sole discretion,
may instead elect (a "Spread Value Election") to pay, either in cash or Shares
(valued at Market Value, as defined below), to such holder against surrender of
the Warrants the product of (i) the number of shares of Common Stock as to which
the Warrants are exercised times (ii) the amount of the excess, if any, of (A)
the average of the Closing Price per share of the Common Stock for the five
Trading Days prior to the date the
-2-
<PAGE> 87
Warrants are exercised or surrendered (the "Market Value") over (B) the Purchase
Price, in which case the registered holder will not be required to submit such
cash payment for the Purchase Price. The Company shall, at the request by any
Warrant holder received by the Company five Business Days in advance of a
proposed exercise of a Warrant, advise such holder at least one Business Day
prior to the proposed exercise date whether the Company elects in its discretion
to pay for the surrender of the Warrant, without payment by the holder, in
either cash or Shares. The Company further agrees that, upon exercise of any
Warrant by any Original Warrant Holder, the Company will exercise its Spread
Value Election to make such payment in cash or Shares for surrender of Warrants
by such Original Warrant Holder. The Company may also by notice to the Warrant
Agent make a Spread Value Election in advance, specifying that payment by it
will be made in cash, in Shares or reserving its right to elect either in its
discretion from time to time, in which case such Spread Value Election shall be
binding in accordance with its terms on the Company and the Warrant holders for
all exercises of Warrants subsequent to such notice. The Company shall give
prompt notice of such election to the Warrant holders. In the event that a
Transaction occurs after the date a payment by reason thereof would otherwise be
due, any Warrant holder exercising a Warrant may require the Company to exercise
its
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<PAGE> 88
Spread Value Election for cash, and the Company shall be obligated to do so.
Except as provided in the immediately preceding sentence, whenever the Company
exercises a Spread Value Election upon exercise of a Warrant, it shall within
three Business Days of the date of its exercise of such Spread Value Election,
(i) make its choice of payment in cash or the issuance of shares of ASCI Common
Stock pursuant to the Spread Value Election and (ii) make to the Warrant holder
the cash payment or delivery of the shares, but any shares of ASCI Common Stock
delivered pursuant to such Spread Value Election shall be deemed to have been
issued and delivered to the Warrant holder and to be outstanding as of the date
provided in Section 9 of this Agreement notwithstanding such deferred delivery
by the Company.
All Warrants shall expire and be of no further force and
effect upon the occurrence of any Transaction which will require a payment to
ASI Partners by the Company pursuant to Section 3.2 of the Stock Disposition
Agreement, provided payment is made as required by such Section 3.2. The Company
shall give prompt notice to the Warrant Agent and the Warrant holders of such
expiration.
The number of Warrants evidenced by this Warrant Certificate
(and the number of shares which may be purchased upon exercise thereof) set
forth above and the Purchase Price per share set forth above are the number and
Purchase Price as of ______ __, 1997, based on the shares of Common
-4-
<PAGE> 89
Stock of the Company as constituted at such date. As provided in the Warrant
Agreement, the Purchase Price and the number of shares of Common Stock which may
be purchased upon the exercise of the Warrants evidenced by this Warrant
Certificate are subject to modification and adjustment upon the occurrence of
certain events.
This Warrant Certificate is subject to all of the terms,
provisions and conditions of the Warrant Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Warrant Agreement reference is hereby made for a full description
of the rights, limitations of rights, obligations, duties and immunities
hereunder of the Warrant Agent, the Company and the holders of the Warrant
Certificates. Copies of the Warrant Agreement are on file at the above-mentioned
office of the Warrant Agent.
This Warrant Certificate, with or without other Warrant
Certificates, upon surrender at the principal office of the Warrant Agent, may
be exchanged for another Warrant Certificate or Warrant Certificates of like
tenor and date evidencing Warrants entitling the holder to purchase a like
aggregate number of shares of Common Stock as the Warrants evidenced by the
Warrant Certificate or Warrant Certificates surrendered shall have entitled such
holder to purchase. If this Warrant Certificate shall be exercised in part, the
holder hereof shall be entitled to receive upon surrender
-5-
<PAGE> 90
hereof another Warrant Certificate or Warrant Certificates for the number of
whole Warrants not exercised.
No fractional shares of Common Stock will be issued upon the
exercise of any Warrant or Warrants evidenced hereby, but in lieu thereof a cash
payment will be made, as provided in the Warrant Agreement.
No holder of this Warrant Certificate shall be entitled to
vote or receive dividends or to be deemed for any purpose the holder of Common
Stock or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Warrant
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Warrant Agreement), or to receive dividends or subscription
rights, or otherwise, until the Warrant or Warrants evidenced by this Warrant
Certificate shall have been exercised as provided in the Warrant Agreement.
Terms used in this Warrant Certificate have the same meaning
as they do in the Warrant Agreement.
THIS AGREEMENT AND EACH WARRANT CERTIFICATE ISSUED
HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
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<PAGE> 91
WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ITS LAWS
GOVERNING CONFLICTS OF LAW.
This Warrant Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Warrant Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of _______ __, 1997.
AMERICAN STANDARD COMPANIES INC.
By
------------------------------
Title:
ATTEST:
-----------------------
Secretary
Countersigned:
CITIBANK, N.A.
By
----------------------------
Authorized signature
-7-
<PAGE> 92
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Warrant Certificate.)
To Citibank, N.A., as Warrant Agent
The undersigned hereby irrevocably elects to exercise
__________________ Warrants represented by this Warrant Certificate to purchase
the shares of Common Stock issuable upon the exercise of such Warrants and
requests that Certificates for such shares be issued in the name of:
Please insert social security
or other identifying number
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
If such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, a new Warrant Certificate for the balance remaining of such
Warrants shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
Dated:
--------------------
----------------------------------
Signature
(Signature must conform in all
respects to name of holder as
specified on the face of this
Warrant Certificate)
Signature Guaranteed:
<PAGE> 1
EXHIBIT 23(I)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated February 26, 1996 in the Registration Statement
(Form S-3, No. 333- ) and related Prospectus of American Standard Companies
Inc. for the registration of shares of its common stock.
We also consent to the incorporation by reference therein of our report
with respect to the financial statement schedules of American Standard Companies
Inc. for the years ended December 31, 1995, 1994 and 1993 included in the Annual
Report on Form 10-K for 1995 filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
New York, New York
December 17, 1996
<PAGE> 1
EXHIBIT 23(III)
CONSENT
MEILICKE & PARTNER
POPPELSDORFER ALLEE 106
BONN 53115 GERMANY
DECEMBER 17, 1996
The undersigned is the German tax counsel identified in this Registration
Statement on Form S-3 filed with respect to an offering of shares of American
Standard Companies Inc. (the "Company") common stock, par value $.01 per share,
by certain of the Company's stockholders, and hereby consents to the references
to our firm as experts in German tax matters under the headings "Risk
Factors -- Tax Matters", "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources" and
"Experts", contained in the prospectus constituting a part of such Registration
Statement.
Yours truly,
MEILICKE & PARTNER
/s/ W. MEILICKE
- ------------------------------------------------------
Dr. W. Meilicke
<PAGE> 1
EXHIBIT 24
POWER OF ATTORNEY
The undersigned, a Director of American Standard Companies Inc. (formerly
named ASI Holding Corporation), a Delaware corporation (the "Corporation"), does
hereby constitute and appoint Richard A. Kalaher, Frederick W. Jaqua and
Frederick C. Paine, and each of them, as his true and lawful attorneys-in-fact
and agents, with full power of substitution, to execute and deliver in his name
and on his behalf:
a. One or more Registration Statements of the Corporation on an
appropriate form, proposed to be filed with the Securities and Exchange
Commission (the "SEC") for the purpose of registering under the Securities
Act of 1933, as amended (the "Securities Act"), shares of the Corporation's
Common Stock, par value $.01 per share (and associated Common Stock Rights)
(the "Shares"), to be offered for sale to the public on behalf of certain
Management Stockholders and others as contemplated by that certain Amended
and Restated Stockholders Agreement of American Standard Companies Inc.,
dated as of December 2, 1994, among the Corporation, Kelso ASI Partners,
L.P. and the Management Stockholders named therein; and
b. Any and all supplements and amendments (including, without
limitation, post-effective amendments) to such Registration Statement or
Statements;
and any and all other documents and instruments in connection with the offering
and sale of the Shares which such attorneys-in-fact and agents, or any one of
them, deem necessary or advisable to enable the Corporation to comply with (a)
the Securities Act and the other federal securities laws of the United States of
America (including, without limitation, the Securities Exchange Act of 1934) and
the rules, regulations and requirements of the SEC in respect of any thereof,
(b) the securities or Blue Sky laws of any state or other governmental
subdivision of the United States of America, (c) the rules and regulations of
the New York Stock Exchange or any other national or foreign securities exchange
or authorized interdealer quotation system, (d) the requirements of the National
Association of Securities Dealers, Inc. and (e) the securities laws of any
foreign jurisdiction, including, without limitation, Canada; and the undersigned
does hereby ratify and confirm as his own acts and deeds all that such
attorneys-in-fact and agents, and each of them, shall do or cause to be done by
virtue hereof.
Each one of such attorneys-in-fact and agents shall have, and may exercise,
all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed this power of
attorney this 10th day of December, 1996.
/s/ STEVEN E. ANDERSON
--------------------------------------
Name: Steven E. Anderson
Title: Director
<PAGE> 2
POWER OF ATTORNEY
The undersigned, a Director of American Standard Companies Inc. (formerly
named ASI Holding Corporation), a Delaware corporation (the "Corporation"), does
hereby constitute and appoint Richard A. Kalaher, Frederick W. Jaqua and
Frederick C. Paine, and each of them, as his true and lawful attorneys-in-fact
and agents, with full power of substitution, to execute and deliver in his name
and on his behalf:
a. One or more Registration Statements of the Corporation on an
appropriate form, proposed to be filed with the Securities and Exchange
Commission (the "SEC") for the purpose of registering under the Securities
Act of 1933, as amended (the "Securities Act"), shares of the Corporation's
Common Stock, par value $.01 per share (and associated Common Stock Rights)
(the "Shares"), to be offered for sale to the public on behalf of certain
Management Stockholders and others as contemplated by that certain Amended
and Restated Stockholders Agreement of American Standard Companies Inc.,
dated as of December 2, 1994, among the Corporation, Kelso ASI Partners,
L.P. and the Management Stockholders named therein; and
b. Any and all supplements and amendments (including, without
limitation, post-effective amendments) to such Registration Statement or
Statements;
and any and all other documents and instruments in connection with the offering
and sale of the Shares which such attorneys-in-fact and agents, or any one of
them, deem necessary or advisable to enable the Corporation to comply with (a)
the Securities Act and the other federal securities laws of the United States of
America (including, without limitation, the Securities Exchange Act of 1934) and
the rules, regulations and requirements of the SEC in respect of any thereof,
(b) the securities or Blue Sky laws of any state or other governmental
subdivision of the United States of America, (c) the rules and regulations of
the New York Stock Exchange or any other national or foreign securities exchange
or authorized interdealer quotation system, (d) the requirements of the National
Association of Securities Dealers, Inc. and (e) the securities laws of any
foreign jurisdiction, including, without limitation, Canada; and the undersigned
does hereby ratify and confirm as his own acts and deeds all that such
attorneys-in-fact and agents, and each of them, shall do or cause to be done by
virtue hereof.
Each one of such attorneys-in-fact and agents shall have, and may exercise,
all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed this power of
attorney this 10th day of December, 1996.
/s/ HORST HINRICHS
--------------------------------------
Name: Horst Hinrichs
Title: Director
<PAGE> 3
POWER OF ATTORNEY
The undersigned, a Director of American Standard Companies Inc. (formerly
named ASI Holding Corporation), a Delaware corporation (the "Corporation"), does
hereby constitute and appoint Richard A. Kalaher, Frederick W. Jaqua and
Frederick C. Paine, and each of them, as his true and lawful attorneys-in-fact
and agents, with full power of substitution, to execute and deliver in his name
and on his behalf:
a. One or more Registration Statements of the Corporation on an
appropriate form, proposed to be filed with the Securities and Exchange
Commission (the "SEC") for the purpose of registering under the Securities
Act of 1933, as amended (the "Securities Act"), shares of the Corporation's
Common Stock, par value $.01 per share (and associated Common Stock Rights)
(the "Shares"), to be offered for sale to the public on behalf of certain
Management Stockholders and others as contemplated by that certain Amended
and Restated Stockholders Agreement of American Standard Companies Inc.,
dated as of December 2, 1994, among the Corporation, Kelso ASI Partners,
L.P. and the Management Stockholders named therein; and
b. Any and all supplements and amendments (including, without
limitation, post-effective amendments) to such Registration Statement or
Statements;
and any and all other documents and instruments in connection with the offering
and sale of the Shares which such attorneys-in-fact and agents, or any one of
them, deem necessary or advisable to enable the Corporation to comply with (a)
the Securities Act and the other federal securities laws of the United States of
America (including, without limitation, the Securities Exchange Act of 1934) and
the rules, regulations and requirements of the SEC in respect of any thereof,
(b) the securities or Blue Sky laws of any state or other governmental
subdivision of the United States of America, (c) the rules and regulations of
the New York Stock Exchange or any other national or foreign securities exchange
or authorized interdealer quotation system, (d) the requirements of the National
Association of Securities Dealers, Inc. and (e) the securities laws of any
foreign jurisdiction, including, without limitation, Canada; and the undersigned
does hereby ratify and confirm as his own acts and deeds all that such
attorneys-in-fact and agents, and each of them, shall do or cause to be done by
virtue hereof.
Each one of such attorneys-in-fact and agents shall have, and may exercise,
all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed this power of
attorney this 10th day of December , 1996.
/s/ GEORGE H. KERCKHOVE
--------------------------------------
Name: George H. Kerckhove
Title: Director
<PAGE> 4
POWER OF ATTORNEY
The undersigned, a Director of American Standard Companies Inc. (formerly
named ASI Holding Corporation), a Delaware corporation (the "Corporation"), does
hereby constitute and appoint Richard A. Kalaher, Frederick W. Jaqua and
Frederick C. Paine, and each of them, as his true and lawful attorneys-in-fact
and agents, with full power of substitution, to execute and deliver in his name
and on his behalf:
a. One or more Registration Statements of the Corporation on an
appropriate form, proposed to be filed with the Securities and Exchange
Commission (the "SEC") for the purpose of registering under the Securities
Act of 1933, as amended (the "Securities Act"), shares of the Corporation's
Common Stock, par value $.01 per share (and associated Common Stock Rights)
(the "Shares"), to be offered for sale to the public on behalf of certain
Management Stockholders and others as contemplated by that certain Amended
and Restated Stockholders Agreement of American Standard Companies Inc.,
dated as of December 2, 1994, among the Corporation, Kelso ASI Partners,
L.P. and the Management Stockholders named therein; and
b. Any and all supplements and amendments (including, without
limitation, post-effective amendments) to such Registration Statement or
Statements;
and any and all other documents and instruments in connection with the offering
and sale of the Shares which such attorneys-in-fact and agents, or any one of
them, deem necessary or advisable to enable the Corporation to comply with (a)
the Securities Act and the other federal securities laws of the United States of
America (including, without limitation, the Securities Exchange Act of 1934) and
the rules, regulations and requirements of the SEC in respect of any thereof,
(b) the securities or Blue Sky laws of any state or other governmental
subdivision of the United States of America, (c) the rules and regulations of
the New York Stock Exchange or any other national or foreign securities exchange
or authorized interdealer quotation system, (d) the requirements of the National
Association of Securities Dealers, Inc. and (e) the securities laws of any
foreign jurisdiction, including, without limitation, Canada; and the undersigned
does hereby ratify and confirm as his own acts and deeds all that such
attorneys-in-fact and agents, and each of them, shall do or cause to be done by
virtue hereof.
Each one of such attorneys-in-fact and agents shall have, and may exercise,
all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed this power of
attorney this 13th day of December, 1996.
/s/ SHIGERU MIZUSHIMA
--------------------------------------
Name: Shigeru Mizushima
Title: Director
<PAGE> 5
POWER OF ATTORNEY
The undersigned, a Director of American Standard Companies Inc. (formerly
named ASI Holding Corporation), a Delaware corporation (the "Corporation"), does
hereby constitute and appoint Richard A. Kalaher, Frederick W. Jaqua and
Frederick C. Paine, and each of them, as his true and lawful attorneys-in-fact
and agents, with full power of substitution, to execute and deliver in his name
and on his behalf:
a. One or more Registration Statements of the Corporation on an
appropriate form, proposed to be filed with the Securities and Exchange
Commission (the "SEC") for the purpose of registering under the Securities
Act of 1933, as amended (the "Securities Act"), shares of the Corporation's
Common Stock, par value $.01 per share (and associated Common Stock Rights)
(the "Shares"), to be offered for sale to the public on behalf of certain
Management Stockholders and others as contemplated by that certain Amended
and Restated Stockholders Agreement of American Standard Companies Inc.,
dated as of December 2, 1994, among the Corporation, Kelso ASI Partners,
L.P. and the Management Stockholders named therein; and
b. Any and all supplements and amendments (including, without
limitation, post-effective amendments) to such Registration Statement or
Statements;
and any and all other documents and instruments in connection with the offering
and sale of the Shares which such attorneys-in-fact and agents, or any one of
them, deem necessary or advisable to enable the Corporation to comply with (a)
the Securities Act and the other federal securities laws of the United States of
America (including, without limitation, the Securities Exchange Act of 1934) and
the rules, regulations and requirements of the SEC in respect of any thereof,
(b) the securities or Blue Sky laws of any state or other governmental
subdivision of the United States of America, (c) the rules and regulations of
the New York Stock Exchange or any other national or foreign securities exchange
or authorized interdealer quotation system, (d) the requirements of the National
Association of Securities Dealers, Inc. and (e) the securities laws of any
foreign jurisdiction, including, without limitation, Canada; and the undersigned
does hereby ratify and confirm as his own acts and deeds all that such
attorneys-in-fact and agents, and each of them, shall do or cause to be done by
virtue hereof.
Each one of such attorneys-in-fact and agents shall have, and may exercise,
all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed this power of
attorney this 10th day of December, 1996.
/s/ FRANK T. NICKELL
--------------------------------------
Name: Frank T. Nickell
Title: Director
<PAGE> 6
POWER OF ATTORNEY
The undersigned, a Director of American Standard Companies Inc. (formerly
named ASI Holding Corporation), a Delaware corporation (the "Corporation"), does
hereby constitute and appoint Richard A. Kalaher, Frederick W. Jaqua and
Frederick C. Paine, and each of them, as his true and lawful attorneys-in-fact
and agents, with full power of substitution, to execute and deliver in his name
and on his behalf:
a. One or more Registration Statements of the Corporation on an
appropriate form, proposed to be filed with the Securities and Exchange
Commission (the "SEC") for the purpose of registering under the Securities
Act of 1933, as amended (the "Securities Act"), shares of the Corporation's
Common Stock, par value $.01 per share (and associated Common Stock Rights)
(the "Shares"), to be offered for sale to the public on behalf of certain
Management Stockholders and others as contemplated by that certain Amended
and Restated Stockholders Agreement of American Standard Companies Inc.,
dated as of December 2, 1994, among the Corporation, Kelso ASI Partners,
L.P. and the Management Stockholders named therein; and
b. Any and all supplements and amendments (including, without
limitation, post-effective amendments) to such Registration Statement or
Statements;
and any and all other documents and instruments in connection with the offering
and sale of the Shares which such attorneys-in-fact and agents, or any one of
them, deem necessary or advisable to enable the Corporation to comply with (a)
the Securities Act and the other federal securities laws of the United States of
America (including, without limitation, the Securities Exchange Act of 1934) and
the rules, regulations and requirements of the SEC in respect of any thereof,
(b) the securities or Blue Sky laws of any state or other governmental
subdivision of the United States of America, (c) the rules and regulations of
the New York Stock Exchange or any other national or foreign securities exchange
or authorized interdealer quotation system, (d) the requirements of the National
Association of Securities Dealers, Inc. and (e) the securities laws of any
foreign jurisdiction, including, without limitation, Canada; and the undersigned
does hereby ratify and confirm as his own acts and deeds all that such
attorneys-in-fact and agents, and each of them, shall do or cause to be done by
virtue hereof.
Each one of such attorneys-in-fact and agents shall have, and may exercise,
all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed this power of
attorney this 11th day of December, 1996.
/s/ ROGER W. PARSONS
--------------------------------------
Name: Roger W. Parsons
Title: Director
<PAGE> 7
POWER OF ATTORNEY
The undersigned, a Director of American Standard Companies Inc. (formerly
named ASI Holding Corporation), a Delaware corporation (the "Corporation"), does
hereby constitute and appoint Richard A. Kalaher, Frederick W. Jaqua and
Frederick C. Paine, and each of them, as his true and lawful attorneys-in-fact
and agents, with full power of substitution, to execute and deliver in his name
and on his behalf:
a. One or more Registration Statements of the Corporation on an
appropriate form, proposed to be filed with the Securities and Exchange
Commission (the "SEC") for the purpose of registering under the Securities
Act of 1933, as amended (the "Securities Act"), shares of the Corporation's
Common Stock, par value $.01 per share (and associated Common Stock Rights)
(the "Shares"), to be offered for sale to the public on behalf of certain
Management Stockholders and others as contemplated by that certain Amended
and Restated Stockholders Agreement of American Standard Companies Inc.,
dated as of December 2, 1994, among the Corporation, Kelso ASI Partners,
L.P. and the Management Stockholders named therein; and
b. Any and all supplements and amendments (including, without
limitation, post-effective amendments) to such Registration Statement or
Statements;
and any and all other documents and instruments in connection with the offering
and sale of the Shares which such attorneys-in-fact and agents, or any one of
them, deem necessary or advisable to enable the Corporation to comply with (a)
the Securities Act and the other federal securities laws of the United States of
America (including, without limitation, the Securities Exchange Act of 1934) and
the rules, regulations and requirements of the SEC in respect of any thereof,
(b) the securities or Blue Sky laws of any state or other governmental
subdivision of the United States of America, (c) the rules and regulations of
the New York Stock Exchange or any other national or foreign securities exchange
or authorized interdealer quotation system, (d) the requirements of the National
Association of Securities Dealers, Inc. and (e) the securities laws of any
foreign jurisdiction, including, without limitation, Canada; and the undersigned
does hereby ratify and confirm as his own acts and deeds all that such
attorneys-in-fact and agents, and each of them, shall do or cause to be done by
virtue hereof.
Each one of such attorneys-in-fact and agents shall have, and may exercise,
all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed this power of
attorney this 16th day of December, 1996.
/s/ J. DANFORTH QUAYLE
--------------------------------------
Name: J. Danforth Quayle
Title: Director
<PAGE> 8
POWER OF ATTORNEY
The undersigned, a Director of American Standard Companies Inc. (formerly
named ASI Holding Corporation), a Delaware corporation (the "Corporation"), does
hereby constitute and appoint Richard A. Kalaher, Frederick W. Jaqua and
Frederick C. Paine, and each of them, as his true and lawful attorneys-in-fact
and agents, with full power of substitution, to execute and deliver in his name
and on his behalf:
a. One or more Registration Statements of the Corporation on an
appropriate form, proposed to be filed with the Securities and Exchange
Commission (the "SEC") for the purpose of registering under the Securities
Act of 1933, as amended (the "Securities Act"), shares of the Corporation's
Common Stock, par value $.01 per share (and associated Common Stock Rights)
(the "Shares"), to be offered for sale to the public on behalf of certain
Management Stockholders and others as contemplated by that certain Amended
and Restated Stockholders Agreement of American Standard Companies Inc.,
dated as of December 2, 1994, among the Corporation, Kelso ASI Partners,
L.P. and the Management Stockholders named therein; and
b. Any and all supplements and amendments (including, without
limitation, post-effective amendments) to such Registration Statement or
Statements;
and any and all other documents and instruments in connection with the offering
and sale of the Shares which such attorneys-in-fact and agents, or any one of
them, deem necessary or advisable to enable the Corporation to comply with (a)
the Securities Act and the other federal securities laws of the United States of
America (including, without limitation, the Securities Exchange Act of 1934) and
the rules, regulations and requirements of the SEC in respect of any thereof,
(b) the securities or Blue Sky laws of any state or other governmental
subdivision of the United States of America, (c) the rules and regulations of
the New York Stock Exchange or any other national or foreign securities exchange
or authorized interdealer quotation system, (d) the requirements of the National
Association of Securities Dealers, Inc. and (e) the securities laws of any
foreign jurisdiction, including, without limitation, Canada; and the undersigned
does hereby ratify and confirm as his own acts and deeds all that such
attorneys-in-fact and agents, and each of them, shall do or cause to be done by
virtue hereof.
Each one of such attorneys-in-fact and agents shall have, and may exercise,
all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed this power of
attorney this 11th day of December, 1996.
/s/ DAVID M. RODERICK
--------------------------------------
Name: David M. Roderick
Title: Director
<PAGE> 9
POWER OF ATTORNEY
The undersigned, a Director of American Standard Companies Inc. (formerly
named ASI Holding Corporation), a Delaware corporation (the "Corporation"), does
hereby constitute and appoint Richard A. Kalaher, Frederick W. Jaqua and
Frederick C. Paine, and each of them, as his true and lawful attorneys-in-fact
and agents, with full power of substitution, to execute and deliver in his name
and on his behalf:
a. One or more Registration Statements of the Corporation on an
appropriate form, proposed to be filed with the Securities and Exchange
Commission (the "SEC") for the purpose of registering under the Securities
Act of 1933, as amended (the "Securities Act"), shares of the Corporation's
Common Stock, par value $.01 per share (and associated Common Stock Rights)
(the "Shares"), to be offered for sale to the public on behalf of certain
Management Stockholders and others as contemplated by that certain Amended
and Restated Stockholders Agreement of American Standard Companies Inc.,
dated as of December 2, 1994, among the Corporation, Kelso ASI Partners,
L.P. and the Management Stockholders named therein; and
b. Any and all supplements and amendments (including, without
limitation, post-effective amendments) to such Registration Statement or
Statements;
and any and all other documents and instruments in connection with the offering
and sale of the Shares which such attorneys-in-fact and agents, or any one of
them, deem necessary or advisable to enable the Corporation to comply with (a)
the Securities Act and the other federal securities laws of the United States of
America (including, without limitation, the Securities Exchange Act of 1934) and
the rules, regulations and requirements of the SEC in respect of any thereof,
(b) the securities or Blue Sky laws of any state or other governmental
subdivision of the United States of America, (c) the rules and regulations of
the New York Stock Exchange or any other national or foreign securities exchange
or authorized interdealer quotation system, (d) the requirements of the National
Association of Securities Dealers, Inc. and (e) the securities laws of any
foreign jurisdiction, including, without limitation, Canada; and the undersigned
does hereby ratify and confirm as his own acts and deeds all that such
attorneys-in-fact and agents, and each of them, shall do or cause to be done by
virtue hereof.
Each one of such attorneys-in-fact and agents shall have, and may exercise,
all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed this power of
attorney this 10th day of December, 1996.
/s/ JOHN RUTLEDGE
--------------------------------------
Name: John Rutledge
Title: Director
<PAGE> 10
POWER OF ATTORNEY
The undersigned, a Director of American Standard Companies Inc. (formerly
named ASI Holding Corporation), a Delaware corporation (the "Corporation"), does
hereby constitute and appoint Richard A. Kalaher, Frederick W. Jaqua and
Frederick C. Paine, and each of them, as his true and lawful attorneys-in-fact
and agents, with full power of substitution, to execute and deliver in his name
and on his behalf:
a. One or more Registration Statements of the Corporation on an
appropriate form, proposed to be filed with the Securities and Exchange
Commission (the "SEC") for the purpose of registering under the Securities
Act of 1933, as amended (the "Securities Act"), shares of the Corporation's
Common Stock, par value $.01 per share (and associated Common Stock Rights)
(the "Shares"), to be offered for sale to the public on behalf of certain
Management Stockholders and others as contemplated by that certain Amended
and Restated Stockholders Agreement of American Standard Companies Inc.,
dated as of December 2, 1994, among the Corporation, Kelso ASI Partners,
L.P. and the Management Stockholders named therein; and
b. Any and all supplements and amendments (including, without
limitation, post-effective amendments) to such Registration Statement or
Statements;
and any and all other documents and instruments in connection with the offering
and sale of the Shares which such attorneys-in-fact and agents, or any one of
them, deem necessary or advisable to enable the Corporation to comply with (a)
the Securities Act and the other federal securities laws of the United States of
America (including, without limitation, the Securities Exchange Act of 1934) and
the rules, regulations and requirements of the SEC in respect of any thereof,
(b) the securities or Blue Sky laws of any state or other governmental
subdivision of the United States of America, (c) the rules and regulations of
the New York Stock Exchange or any other national or foreign securities exchange
or authorized interdealer quotation system, (d) the requirements of the National
Association of Securities Dealers, Inc. and (e) the securities laws of any
foreign jurisdiction, including, without limitation, Canada; and the undersigned
does hereby ratify and confirm as his own acts and deeds all that such
attorneys-in-fact and agents, and each of them, shall do or cause to be done by
virtue hereof.
Each one of such attorneys-in-fact and agents shall have, and may exercise,
all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed this power of
attorney this 12th day of December, 1996.
/s/ JOSEPH S. SCHUCHERT
--------------------------------------
Name: Joseph S. Schuchert
Title: Director
<PAGE> 11
POWER OF ATTORNEY
The undersigned, the Chairman, President, Chief Executive Officer and a
Director of American Standard Companies Inc. (formerly named ASI Holding
Corporation), a Delaware corporation (the "Corporation"), does hereby constitute
and appoint Richard A. Kalaher, Frederick W. Jaqua and Frederick C. Paine, and
each of them, as his true and lawful attorneys-in-fact and agents, with full
power of substitution, to execute and deliver in his name and on his behalf:
a. One or more Registration Statements of the Corporation on an
appropriate form, proposed to be filed with the Securities and Exchange
Commission (the "SEC") for the purpose of registering under the Securities
Act of 1933, as amended (the "Securities Act"), shares of the Corporation's
Common Stock, par value $.01 per share (and associated Common Stock Rights)
(the "Shares"), to be offered for sale to the public on behalf of certain
Management Stockholders and others as contemplated by that certain Amended
and Restated Stockholders Agreement of American Standard Companies Inc.,
dated as of December 2, 1994, among the Corporation, Kelso ASI Partners,
L.P. and the Management Stockholders named therein; and
b. Any and all supplements and amendments (including, without
limitation, post-effective amendments) to such Registration Statement or
Statements;
and any and all other documents and instruments in connection with the offering
and sale of the Shares which such attorneys-in-fact and agents, or any one of
them, deem necessary or advisable to enable the Corporation to comply with (a)
the Securities Act and the other federal securities laws of the United States of
America (including, without limitation, the Securities Exchange Act of 1934) and
the rules, regulations and requirements of the SEC in respect of any thereof,
(b) the securities or Blue Sky laws of any state or other governmental
subdivision of the United States of America, (c) the rules and regulations of
the New York Stock Exchange or any other national or foreign securities exchange
or authorized interdealer quotation system, (d) the requirements of the National
Association of Securities Dealers, Inc. and (e) the securities laws of any
foreign jurisdiction, including, without limitation, Canada; and the undersigned
does hereby ratify and confirm as his own acts and deeds all that such
attorneys-in-fact and agents, and each of them, shall do or cause to be done by
virtue hereof.
Each one of such attorneys-in-fact and agents shall have, and may exercise,
all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed this power of
attorney this 10th day of December, 1996.
/s/ EMMANUEL A. KAMPOURIS
--------------------------------------
Name: Emmanuel A. Kampouris
Title: Chairman, President, Chief
Executive Officer and Director
<PAGE> 12
POWER OF ATTORNEY
The undersigned, the Vice President and Controller of American Standard
Companies Inc. (formerly named ASI Holding Corporation), a Delaware corporation
(the "Corporation"), does hereby constitute and appoint Fred A. Allardyce,
Richard A. Kalaher and Frederick C. Paine, and each of them, as his true and
lawful attorneys-in-fact and agents, with full power of substitution, to execute
and deliver in his name and on his behalf:
a. One or more Registration Statements of the Corporation on an
appropriate form, proposed to be filed with the Securities and Exchange
Commission (the "SEC") for the purpose of registering under the Securities
Act of 1933, as amended (the "Securities Act"), shares of the Corporation's
Common Stock, par value $.01 per share (and associated Common Stock Rights)
(the "Shares"), to be offered for sale to the public on behalf of certain
Management Stockholders and others as contemplated by that certain Amended
and Restated Stockholders Agreement of American Standard Companies Inc.,
dated as of December 2, 1994, among the Corporation, Kelso ASI Partners,
L.P. and the Management Stockholders named therein; and
b. Any and all supplements and amendments (including, without
limitation, post-effective amendments) to such Registration Statement or
Statements;
and any and all other documents and instruments in connection with the offering
and sale of the Shares which such attorneys-in-fact and agents, or any one of
them, deem necessary or advisable to enable the Corporation to comply with (a)
the Securities Act and the other federal securities laws of the United States of
America (including, without limitation, the Securities Exchange Act of 1934) and
the rules, regulations and requirements of the SEC in respect of any thereof,
(b) the securities or Blue Sky laws of any state or other governmental
subdivision of the United States of America, (c) the rules and regulations of
the New York Stock Exchange or any other national or foreign securities exchange
or authorized interdealer quotation system, (d) the requirements of the National
Association of Securities Dealers, Inc. and (e) the securities laws of any
foreign jurisdiction, including, without limitation, Canada; and the undersigned
does hereby ratify and confirm as his own acts and deeds all that such
attorneys-in-fact and agents, and each of them, shall do or cause to be done by
virtue hereof.
Each one of such attorneys-in-fact and agents shall have, and may exercise,
all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed this power of
attorney this 10th day of December, 1996.
/s/ G. RONALD SIMON
--------------------------------------
Name: G. Ronald Simon
Title: Vice President and Controller
<PAGE> 13
POWER OF ATTORNEY
The undersigned, the Vice President and Chief Financial Officer of American
Standard Companies Inc. (formerly named ASI Holding Corporation), a Delaware
corporation (the "Corporation"), does hereby constitute and appoint Richard A.
Kalaher, G. Ronald Simon and Frederick C. Paine, and each of them, as his true
and lawful attorneys-in-fact and agents, with full power of substitution, to
execute and deliver in his name and on his behalf:
a. One or more Registration Statements of the Corporation on an
appropriate form, proposed to be filed with the Securities and Exchange
Commission (the "SEC") for the purpose of registering under the Securities
Act of 1933, as amended (the "Securities Act"), shares of the Corporation's
Common Stock, par value $.01 per share (and associated Common Stock Rights)
(the "Shares"), to be offered for sale to the public on behalf of certain
Management Stockholders and others as contemplated by that certain Amended
and Restated Stockholders Agreement of American Standard Companies Inc.,
dated as of December 2, 1994, among the Corporation, Kelso ASI Partners,
L.P. and the Management Stockholders named therein; and
b. Any and all supplements and amendments (including, without
limitation, post-effective amendments) to such Registration Statement or
Statements;
and any and all other documents and instruments in connection with the offering
and sale of the Shares which such attorneys-in-fact and agents, or any one of
them, deem necessary or advisable to enable the Corporation to comply with (a)
the Securities Act and the other federal securities laws of the United States of
America (including, without limitation, the Securities Exchange Act of 1934) and
the rules, regulations and requirements of the SEC in respect of any thereof,
(b) the securities or Blue Sky laws of any state or other governmental
subdivision of the United States of America, (c) the rules and regulations of
the New York Stock Exchange or any other national or foreign securities exchange
or authorized interdealer quotation system, (d) the requirements of the National
Association of Securities Dealers, Inc. and (e) the securities laws of any
foreign jurisdiction, including, without limitation, Canada; and the undersigned
does hereby ratify and confirm as his own acts and deeds all that such
attorneys-in-fact and agents, and each of them, shall do or cause to be done by
virtue hereof.
Each one of such attorneys-in-fact and agents shall have, and may exercise,
all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed this power of
attorney this 10th day of December, 1996.
/s/ FRED A. ALLARDYCE
--------------------------------------
Name: Fred A. Allardyce
Title: Vice President and Chief
Financial Officer
