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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
AMENDMENT NO. 1
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarterly Period Ended SEPTEMBER 30, 1995
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Commission file number 0-20469
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U. S. TRUST CORPORATION
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(Exact name of registrant as specified in its charter)
New York 13-3818952
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
114 West 47th Street, New York, New York 10036
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(Address of principal executive offices) (Zip Code)
(212) 852-1000
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(Registrant's telephone number, including area code)
NOT APPLICABLE
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(Former name, former address and former fiscal year, if
changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
9,739,144 shares, Common Stock $1 par value, as of October 31, 1995
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The following is an amendment to U.S. Trust Corporation's Quarterly Report on
Form 10-Q for the quarterly period ended September 30, 1995, as filed November
14, 1995. Portions of Exhibit 2.6 to such report (the Services Agreement
between the former United States Trust Company of New York and New U.S. Trust
Company of New York) were omitted pursuant to a request for confidential
treatment pursuant to Rule 24b-2. The Registrant is amending the September 30,
1995 Form 10-Q to include Schedule C, pages C-1 through C-10, redacted as
requested by the Registrant's amended application (dated December 11, 1995) for
confidential treatment.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused Amendment No. 1 to be signed on its behalf by the
undersigned thereunto duly authorized.
U.S. Trust Corporation
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(Registrant)
Date: December 27, 1995 Richard E. Brinkmann
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Richard E. Brinkmann
Senior Vice President
and Comptroller
(Principal Accounting Officer)
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EXHIBIT INDEX
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EXHIBIT 2.6 -- Schedule C to the Services Agreement
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SCHEDULE C
(to the Services Agreement)
Additional Charges
1. Additional Volume Charges
(a) General. NEW TRUSTCO shall pay an Additional Volume charge in the event
that the volume of any benchmark described below during a Contract Year
exceeds the then current baseline for that benchmark, as determined in
the manner set forth herein.
(b) Definitions. For purposes hereof, the following terms shall have the
meanings set forth below:
(i) "Accounts" shall mean Deposit Accounts, Deposit Accounts With
Reconciliation Services, Investment Advisory Accounts, Loan
Accounts, Tax Accounts and/or Trust Accounts. The Accounts of
the participant in a Replacement Joint Venture referred to in
Schedule H to the Agreement shall be treated as NEW TRUSTCO
customer accounts for purposes of the calculation of Additional
Volume Charges if such accounts are being serviced by Chase
under the Agreement.
(ii) "AMG" shall mean the Asset Management Group of UST (prior to the
commencement Date) or NEW TRUSTCO (on or after the Commencement
Date), as applicable.
(iii) * * * *
(iv) "Book Entry Transactions" shall mean the primary transactions and
secondary transactions described in Attachment 1 to this
Schedule C which are executed on behalf of AMG or CTG customers.
(v) "Check Issuances" shall mean the number of checks rendered by
Chase in connection with NEW TRUSTCO or its Affiliates serving
as the paying agent for bond and equity issues.
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**** This section has been omitted and will be filed separately with the
Securities and Exchange Commission to receive confidential treatment
pursuant to Rule 24b-2.
C-1
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(vi) "Corporate Systems" shall mean all Applications Software
operated for the benefit of UST (prior to the Commencement
Date), NEW TRUSTCO (on or after the Commencement Date) or their
Affiliates in the test and production environments other than
AMS, GTAS and banking systems.
(vii) "Corporate Systems CPU Hours" shall mean the aggregate number
of Data Center mainframe host CPU hours utilized during any
relevant period in operating Corporate Systems in the test and
production environments, but not including any Systems Overhead.
(viii) "Corporate Systems DASD" shall mean the average daily number of
gigabytes of DASD during any relevant period that is connected
to Data Center mainframe host CPUs and is allocated to Corporate
Systems in the test and production environments, but not
including any Systems Overhead. Allocations of DASD by Chase
shall at all times be reasonable in amount.
(ix) "CTG" shall mean the Corporate Trust Group of UST (prior to the
Commencement Date) or NEW TRUSTCO (on or after the Commencement
Date), as applicable.
(x) "Deposit Accounts" shall mean deposit accounts of customers of
UST (prior to the Commencement Date), NEW TRUSTCO (on or after
the Commencement Date) or their Affiliates, as applicable, for
which the bank operations services described in Article III of
the Services Schedule are performed. The term "Deposit Accounts"
shall not include any Deposit Accounts With Reconciliation
Services.
(xi) "Deposit Accounts With Reconciliation Services" shall mean
accounts for which UST (prior to the Commencement Date), NEW
TRUSTCO (on or after the Commencement Date) or their Affiliates
provide reconciliation of checks issued and compare to checks
paid.
(xii) * * * *
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**** This section has been omitted and will be filed separately with the
Securities and Exchange Commission to receive confidential treatment
pursuant to Rule 24b-2.
C-2
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(xiii) * * * *
(xiv) * * * *
(xv) "Investment Advisory Accounts" shall mean accounts of customers
of UST (prior to the Commencement Date), NEW TRUSTCO (on or
after the Commencement Date) or their Affiliates, as applicable,
which are maintained on AMS but for which the custody of the
assets in such accounts is not with UST or NEW TRUSTCO.
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**** This section has been omitted and will be filed separately with the
Securities and Exchange Commission to receive confidential treatment
pursuant to Rule 24b-2.
C-3
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(xvi) "Loan Accounts" shall mean loan accounts of customers of UST
(prior to the Commencement Date), NEW TRUSTCO (on or after the
Commencement Date) or their Affiliates, as applicable, for which
the bank operations services described in Article III of the
Services Schedule are performed.
(xvii) "Systems Overhead" shall mean computer resource usage
attributable to (i) systems overhead or system level work
(including without limitation resources used for operating
systems and system utilities), (ii) monitoring or measuring
system performance or computer resource usage, or (iii) reruns
due to Chase error.
(xviii)"Tax Accounts" shall mean accounts of customers of UST (prior
to the Commencement Date), NEW TRUSTCO (on or after the
Commencement Date) or their Affiliates, as applicable, which are
maintained on AMS by the Tax Department of UST, NEW TRUSTCO or
their Affiliates, as applicable, and contain customer
information.
(xix) * * * *
(xx) "Trust Accounts" shall mean accounts of customers with AMG or
CTG for which the securities processing services described in
Article II of the Services Schedule are performed, but not
including any Tax Accounts, Investment Advisory Accounts,
inactive accounts (i.e., accounts for which a customer has
terminated its business relationship with UST, NEW TRUSTCO or
their Affiliates, but the accounts have not been closed) or
closed accounts of AMG or CTG customers. For purposes of this
Schedule C, the number of Trust Accounts shall include only
active accounts.
(c) * * * *
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**** This section has been omitted and will be filed separately with the
Securities and Exchange Commission to receive confidential treatment
pursuant to Rule 24b-2.
C-4
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(d) * * * *
(e) * * * *
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**** This section has been omitted and will be filed separately with the
Securities and Exchange Commission to receive confidential treatment
pursuant to Rule 24b-2.
C-5
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(f) * * * *
(g) * * * *
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**** This section has been omitted and will be filed separately with the
Securities and Exchange Commission to receive confidential treatment
pursuant to Rule 24b-2.
C-6
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(h) * * * *
(i) Reporting. Chase shall track all benchmark volumes each month
and provide to NEW TRUSTCO a detailed report of such volumes
within thirty (30) days after the end of each month.
(j) Payments of Additional Volume Charges.
(i) NEW TRUSTCO shall make two payments of Additional Volume Charges
(if any) each Contract Year: (A) an interim payment which is
based on the first six months of benchmark volumes during the
Contract Year (the "Interim Payment"), and (B) a final payment
which is based on the full twelve months of benchmark volumes
(the "Final Payment").
(ii) * * * *
(iii) Notwithstanding the foregoing, the Interim Payment of Additional
Volume Charges for Global Transactions Dollar Amount for the
first Contract Year only shall be determined as follows: (A) the
baseline for Global Transactions Dollar Amount for the first six
months of the Contract Year shall be 105% of the average monthly
Global Transactions Dollar Amount during the first six months of
the first Contract Year; and (B) if the actual Global
Transactions Dollar Amount during any of the first six months
following the Commencement Date exceeds the monthly average
baseline for that category, such excess amounts for each such
month shall be added together and such sum shall be the amount
of the Interim Payment for Global Transactions Dollar Amount for
the first Contract Year.
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**** This section has been omitted and will be filed separately with the
Securities and Exchange Commission to receive confidential treatment
pursuant to Rule 24b-2.
C-7
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(iv) The amount of the Final Payment each Contract Year shall equal
(A) the total combined amount of Additional Volume Charges for
all benchmarks based on volumes for the full twelve months of
the Contract Year, less (B) the amount of the Interim Payment.
If the amount of the Interim Payment exceeds the amount
determined under item (A) above, then Chase shall refund the
difference to NEW TRUSTCO within forty-five (45) days after the
end of the Contract Year. Invoices of Additional Volume Charges
shall be due and payable by NEW TRUSTCO within thirty (30) days
after receipt by NEW TRUSTCO.
2. New Services and Products: In the event that NEW TRUSTCO requests Chase to
provide a service or product described in Section 3.1(a)(ii) of the
Agreement (a "New Service"), the Parties' obligations with respect to
such New Service will be as follows:
(a) Chase will quote to NEW TRUSTCO a charge for such New Service which is
commercially reasonable. Chase will not charge NEW TRUSTCO for any New
Service requested by NEW TRUSTCO which it typically offers its similar
customers without additional charge. If Chase does not typically offer
its similar customers such New Service without charge at the time NEW
TRUSTCO requests such New Service, but subsequently offers such New
Service to its similar customers without additional charge, Chase shall
so notify NEW TRUSTCO in writing and thereafter make such New Service
available to NEW TRUSTCO without additional charge.
(b) Charges for a custody or banking New Service will reflect **** for such
New Service. Chase will not separately charge for computer resources
used to provide custody and banking New Services; Chase's costs for such
resources will be recovered through its charges for the New Services.
(c) NEW TRUSTCO, upon receipt of Chase's quote, may then elect to have CHASE
perform the New Service, and the charges under this Agreement will be
adjusted, if appropriate, to reflect such New Service. If NEW TRUSTCO so
elects, such New Services shall then be deemed "Services" and shall be
subject to the provisions of this Agreement.
(d) Subject to Section 3.1(c) of the Agreement, NEW TRUSTCO may elect to
solicit and receive bids from third parties to perform such New Service.
If NEW TRUSTCO elects such third party services, CHASE shall cooperate
with those third parties as described in Section 3.7 of the Agreement.
(e) If the Services evolve or are supplemented and enhanced over time such
as by changes made which keep pace with technological advancements or
improvements in the methods of delivering services or otherwise during
the Term, the Parties acknowledge that these evolutionary changes will
not be deemed to result in New Services.
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**** This section has been omitted and will be filed separately with the
Securities and Exchange Commission to receive confidential treatment
pursuant to Rule 24b-2.
C-8
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(f) If NEW TRUSTCO's request for a New Service includes a request for Chase
to correspondingly reduce or eliminate Services it is providing, such
New Service will be considered a "Replacement Service." In such event,
the Parties shall determine the resources and expenses required to
provide the Replacement Services, including implementation and on-going
support, and the reduction in resources and expenses related to the
Services being replaced. The net increase or decrease in resources and
expenses will be the basis on which Chase will quote a price to NEW
TRUSTCO for Replacement Service. This provision shall not require Chase
to reduce the Fixed Fee or the Supplemental Fee.
3. Additional Charges for Certain Accounts: Subject to Section 7 of the Post
Closing Covenants Agreement, Chase will be compensated for Services provided
in respect of accounts established by NEW TRUSTCO after the Commencement
Date for any corporation, trust (other than a Family Trust as defined in the
Post Closing Covenants Agreement), foundation client, including such
accounts that are part of a Family (as defined in the Post Closing Covenants
Agreement) or Family Office (as defined in the Post Closing Covenants
Agreement) relationship, ****. The preceding sentence is not intended to
apply to non-institutional Family Office or individual accounts. None of the
accounts described in this Section, or transactions executed on behalf of
those accounts, shall be counted in determining the Additional Volume
Charges under Section 1 of this Schedule C.
4. Acquisitions. In the event that NEW TRUSTCO or any Affiliate of NEW TRUSTCO
(including its parent NEW HOLDINGS) directly or indirectly acquires a
corporation or other entity or affiliated group of corporations or other
entities that is engaged in the Processing Business as defined in the
Contribution Agreement (an "Acquired Person") and the revenues earned from
the Processing Business by such Acquired Person during the twelve month
period ending on the last day of the month immediately preceding the month
of such acquisition **** Chase shall be compensated for all Services
provided to such Acquired Person (or its successor-in-interest) with
respect to the Processing Business****.
5. No Double Payments. Notwithstanding any provision to the contrary in this
Schedule, in no event shall NEW TRUSTCO be required to pay twice for the
same services (e.g., once as part of the Fixed Fee and again as part of the
Additional Volume Charges or a charge for New Services). In the event that
any provision of the Agreement (including this Schedule) produces such a
result, the Parties shall negotiate in good faith an equitable adjustment to
the provisions hereof to remedy such situation.
6. Material Errors. If Chase discovers a material error in its assessment of
work it will actually be required to perform in providing the Services under
this Agreement within thirty (30) calendar days after the Commencement Date,
Chase shall so notify NEW TRUSTCO not later than 30 calendar days after the
Commencement Date and the Parties will negotiate in good faith an equitable
adjustment to the unit rates of the Additional Volume Charges. No
adjustment shall be made to the Fixed Fee or the Supplemental Fee
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**** This section has been omitted and will be filed separately with the
Securities and Exchange Commission to receive confidential treatment
pursuant to Rule 24b-2.
C-9
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pursuant to this Section. Chase acknowledges that it has reviewed and taken
into account the description of Services set forth in the Services Schedule
and the volume statistics and other information set forth in Attachment 4 to
this Schedule C in making its assessment of the work it will actually be
required to perform in providing the Services.
7. Measurement of Volume Statistics. UST has provided Chase with a copy of the
program which UST uses as of the date of this Agreement to track and capture
volume statistics relating to the Additional Volume Charges and which was
used to generate the volume statistics in Attachment 4. The Parties will
continue to use this program during the Term to capture volume statistics
and compute Investment Advisory Accounts, Tax Accounts, Trust Accounts and
Transactions (but not Global Transactions, Global Asset Dollar Value Amount,
Deposit Accounts, Deposit Accounts With Reconciliation Services, Loan
Accounts or Check Issuances) for purposes of determining the amount of any
Additional Volume Charges relating to such Accounts and Transactions. The
Parties will not make any changes to this program unless mutually agreed to
in writing by both Parties. The Parties will use the systems of M&I Data
Services to count the number of Deposit Accounts, Deposit Accounts With
Reconciliation Services and Loan Accounts, and GTAS to count the number of
Check Issuances.
C-10
