<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarterly Period Ended SEPTEMBER 30, 1995
-----------------------------------------------------
Commission file number 0-20469
---------------------------------------------------------
U. S. TRUST CORPORATION
- -----------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
New York 13-3818952
- -----------------------------------------------------------------------
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
114 West 47th Street, New York, New York 10036
- -----------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
</TABLE>
(212) 852-1000
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
NEW USTC HOLDINGS CORPORATION
- --------------------------------------------------------------------------------
(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
--------- ---------
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
Page 1 of 31 Pages
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
An index of the financial statements included in this Form 10-Q
filing follows. All page numbers refer to pages within this Form 10-Q.
<TABLE>
<CAPTION>
Title of Financial Statement Page #
- ---------------------------- ------
<S> <C>
Consolidated Statement of Income:
For the Three-Month Periods Ended September 30, 1995 and 1994 3
For the Nine-Month Periods Ended September 30, 1995 and 1994 4
Consolidated Statement of Condition as of September 30,
1995 and December 31, 1994 5
Consolidated Statement of Changes in Stockholders' Equity
for the Nine-Month Periods Ended September 30, 1995 and 1994 6
Consolidated Statement of Cash Flows for the Nine-Month
Periods Ended September 30, 1995 and 1994 7
Notes to the Consolidated Financial Statements 8
Consolidated Net Interest Income and Average Balances:
For the Three-Month Periods Ended September 30, 1995 and 1994 11
For the Nine-Month Periods Ended September 30, 1995 and 1994 12
</TABLE>
In the opinion of management, all adjustments necessary for a
fair presentation of the consolidated financial position and results of
operations for the interim periods have been made. Such adjustments,
except for the items mentioned in the Notes to the Consolidated
Financial Statements and/or Management's Discussion and Analysis of
Financial Condition and Results of Operations, are of a normal recurring
nature.
-2-
<PAGE> 3
U.S. TRUST CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(In Thousands, Except Per Share Amounts)
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three Month Periods Ended September 30,
------------------------------------------------------------------------------
Better (Worse)
----------------------------------
1995 1994 $ %
------------ ---------- ------------ --------
<S> <C> <C> <C> <C>
Fee Revenue and Other Income $ 73,003 $ 76,951 $ (3,948) (5.1) %
Interest Income (Note 3) 51,470 50,378 1,092 2.2
Interest Expense (Note 3) 24,521 22,365 (2,156) (9.6)
------------ ---------- ------------ ------
Net Interest Income 26,949 28,013 (1,064) (3.8)
Provision for Credit Losses 400 500 100 20.0
------------ ---------- ------------ ------
Net Interest Income After Provision
For Credit Losses 26,549 27,513 (964) (3.5)
Securities Gains, Net 5,032 25 5,007 -
------------ ---------- ------------ ------
TOTAL REVENUE NET OF INTEREST EXPENSE
AND PROVISION FOR CREDIT LOSSES 104,584 104,489 95 0.1
------------ ---------- ------------ ------
OPERATING EXPENSES
Salaries 31,662 34,253 2,591 7.6
Employee Benefits and Performance
Compensation 17,914 15,787 (2,127) (13.5)
------------ ---------- ------------ ------
Total Salaries and Benefits 49,576 50,040 464 0.9
Net Occupancy 10,013 10,312 299 2.9
Equipment 4,002 4,794 792 16.5
Other 26,051 17,376 (8,675) (49.9)
Restructuring Costs 147,725 - (147,725) -
------------ ---------- ------------ ------
TOTAL OPERATING EXPENSES 237,367 82,522 (154,845) (187.6)
------------ ---------- ------------ ------
Income (Loss) Before Income Tax Expense (132,783) 21,967 (154,750) -
Income Tax Expense (Benefit) (59,121) 9,022 68,143 -
------------ ---------- ------------ ------
NET INCOME (LOSS) $ (73,662) $ 12,945 $ (86,607) - %
============ ========== ============ ======
NET INCOME (LOSS) PER SHARE $ (7.60) $ 1.30 $ (8.90) - %
============ ========== ============ ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
-3-
<PAGE> 4
U.S. TRUST CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(In Thousands, Except Per Share Amounts)
(UNAUDITED)
<TABLE>
<CAPTION>
For the Nine Month Periods Ended September 30,
--------------------------------------------------------------------------------
Better (Worse)
------------------------------------
1995 1994 $ %
------------ ---------- ------------ ------
<S> <C> <C> <C> <C>
Fee Revenue and Other Income $ 228,441 $ 227,626 $ 815 0.4 %
Interest Income (Note 3) 150,307 136,762 13,545 9.9
Interest Expense (Note 3) 69,538 54,371 (15,167) (27.9)
---------- ---------- ------------ ------
Net Interest Income 80,769 82,391 (1,622) (2.0)
Provision for Credit Losses 1,200 1,500 300 20.0
---------- ---------- ------------ ------
Net Interest Income After Provision
For Credit Losses 79,569 80,891 (1,322) (1.6)
Securities Gains, Net 4,188 2,059 2,129 103.4
---------- ---------- ------------ ------
TOTAL REVENUE NET OF INTEREST EXPENSE
AND PROVISION FOR CREDIT LOSSES 312,198 310,576 1,622 0.5
---------- ---------- ------------ ------
OPERATING EXPENSES
Salaries 101,134 100,530 (604) (0.6)
Employee Benefits and Performance
Compensation 55,323 52,550 (2,773) (5.3)
---------- ---------- ------------ ------
Total Salaries and Benefits 156,457 153,080 (3,377) (2.2)
Net Occupancy 30,803 29,445 (1,358) (4.6)
Equipment 13,590 13,541 (49) (0.4)
Other 65,217 51,556 (13,661) (26.5)
Restructuring Costs 155,589 - (155,589) -
---------- ---------- ------------ ------
TOTAL OPERATING EXPENSES 421,656 247,622 (174,034) (70.3)
---------- ---------- ------------ ------
Income (Loss) Before Income Tax Expense (109,458) 62,954 (172,412) - %
Income Tax Expense (Benefit) (49,791) 26,441 76,232 -
---------- ---------- ------------ ------
NET INCOME (LOSS) $ (59,667) $ 36,513 $ (96,180) - %
========== ========== ============ ======
NET INCOME (LOSS) PER SHARE $ (6.21) $ 3.68 $ (9.89) - %
========== ========== ============ ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE> 5
U.S. TRUST CORPORATION
CONSOLIDATED STATEMENT OF CONDITION
(Dollars In Thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
ASSETS 1995 1994
----------------- --------------------
<S> <C> <C>
Cash and Due from Banks $ 152,600 $ 164,610
Investment Securities 813,255 1,175,050
Loans 1,392,942 1,626,898
Less: Allowance for Credit Losses 16,862 14,699
----------------- --------------------
Net Loans 1,376,080 1,612,199
Premises and Equipment 71,222 109,346
Other Assets 186,741 162,006
----------------- --------------------
Total Assets $ 2,599,898 $ 3,223,211
================= ====================
LIABILITIES
Deposits:
Non-Interest Bearing $ 438,817 $ 1,031,538
Interest Bearing 1,510,330 1,408,833
----------------- --------------------
Total Deposits 1,949,147 2,440,371
Short-Term Credit Facilities 213,348 350,515
Accounts Payable and Accrued Liabilities 238,688 148,078
Long Term Debt 19,434 60,924
----------------- --------------------
Total Liabilities 2,420,617 2,999,888
----------------- --------------------
STOCKHOLDERS' EQUITY
Common Stock, $1.00 Par Value; 40,000,000 Shares
Authorized; 9,739,144 Shares Issued in 1995
and 11,581,373 Shares Issued in 1994 9,739 11,581
Capital Surplus 125 72,605
Retained Earnings 181,902 244,639
Treasury Stock at Cost (2,129,448 Shares in 1994) - (86,139)
Loan to ESOP (13,434) (16,171)
Unrealized Gain (Loss), Net of Taxes, on
Securities Available for Sale 949 (3,192)
----------------- --------------------
Total Stockholders' Equity 179,281 223,323
----------------- --------------------
Total Liabilities and Stockholders' Equity $ 2,599,898 $ 3,223,211
================= ====================
</TABLE>
The accompanying notes are an integral part of these financial statements.
-5-
<PAGE> 6
U.S. TRUST CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(In Thousands, Except Per Share Amounts)
(UNAUDITED)
<TABLE>
<CAPTION>
For the Nine-Month Periods
Ended September 30,
----------------------------------------------------
1995 1994
-------------------- --------------------
<S> <C> <C>
COMMON STOCK
Balance, January 1 $ 11,581 $ 11,436
Issuance of Shares Under Employee Benefit Plans 298 76
Retirement of Treasury Stock (Note 1) (2,140) -
-------------------- ------------------
Balance, September 30 $ 9,739 $ 11,512
==================== ==================
CAPITAL SURPLUS
Balance, January 1 $ 72,605 $ 67,898
Employee Benefit Plans 11,776 2,292
Retirement of Treasury Stock (Note 1) (84,256) -
-------------------- ------------------
Balance, September 30 $ 125 $ 70,190
==================== ==================
RETAINED EARNINGS
Balance, January 1 $ 244,639 $ 242,112
Net Income (Loss) (59,667) 36,513
Cash Dividends Declared ($0.50 and $1.50 Per Share) (4,850) (14,052)
Tax Benefit on Dividends Paid to ESOP 2,671 233
Retirement of Treasury Stock (Note 1) (891) -
-------------------- ------------------
Balance, September 30 $ 181,902 $ 264,806
==================== ==================
TREASURY STOCK
Balance, January 1 $ (86,139) $ (82,857)
Purchases - (4,729)
Issuance (Tender) of Shares Under Employee
Benefit Plans, Net (1,148) 1,691
Retirement of Treasury Stock (Note 1) 87,287 -
-------------------- ------------------
Balance, September 30 $ 0 $ (85,895)
==================== ==================
LOAN TO ESOP
Balance, January 1 $ (16,171) $ (18,697)
Principal Payment by ESOP 2,737 2,526
-------------------- ------------------
Balance, September 30 $ (13,434) $ (16,171)
===================== ==================
UNREALIZED GAIN (LOSS), NET OF TAXES, ON
SECURITIES AVAILABLE FOR SALE
Balance, January 1 $ (3,192) $ 8,695
Net Change in Fair Value, After Taxes 4,141 (13,500)
-------------------- ------------------
Balance, September 30 $ 949 $ (4,805)
==================== ==================
TOTAL STOCKHOLDERS' EQUITY $ 179,281 $ 239,637
==================== ==================
</TABLE>
The accompanying notes are an integral part of these financial statements.
-6-
<PAGE> 7
U.S. TRUST CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(In Thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
For Nine-Month Periods
Ended September 30,
-------------------------------------------------------
1995 1994
----------------------- ---------------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income (Loss) $ (59,667) $ 36,513
Adjustments to Reconcile Net Income (Loss) to Net Cash
Provided by Operating Activities:
Provision for Credit Losses 1,200 1,500
Depreciation and Amortization 28,370 10,597
Net Amortization/(Accretion) of Premium/(Discount):
Available for Sale (6,463) 2,614
Held to Maturity - 1,618
Net Change in Accruals and Other Receivables (25,184) 134,651
Net Change in Accounts Payable and Other Liabilities 129,020 (1,919)
Net Change in Accounts Payable and Other Liabilities
due to Disposition and Merger (32,869) -
Other, Net (8,841) (4,537)
---------------------- ----------------------
Net Cash Provided by Operating Activities 25,566 181,037
---------------------- ----------------------
Cash Flows From Investing Activities:
Net Change in Short-Term Investments 1,086,681 217,591
Net Change in Short-Term Investments due to Disposition and Merger (946,387) -
Purchases of Securities:
Available for Sale (1,913,773) (1,062,448)
Held to Maturity - (402,051)
Proceeds From Sales of Available for Sale Securities 877,492 43,957
Proceeds From Maturities, Calls and Mandatory
Redemptions of Securities:
Available for Sale 1,275,011 545,144
Held to Maturity - 39,177
Net Change in Loans 399,510 (170,895)
Net Change in Loans due to Disposition and Merger (165,615) -
Expenditures for Premises and Equipment, Net of Retirements (3,623) (7,956)
Principal Payment by ESOP 2,737 2,526
Other, Net 19,730 (14,289)
---------------------- ----------------------
Net Cash Provided (Used) by Investing Activities 631,763 (809,244)
---------------------- ----------------------
Cash Flows From Financing Activities:
Net Change in Non-Interest Bearing Deposits 544,010 (130,137)
Net Change in Money Market and Other Savings Deposits 515,925 5,652
Net Change in Time Deposits (407,189) 21,080
Net Change in Deposits due to Disposition and Merger (1,143,970) -
Net Change in Short-Term Credit Facilities (137,167) 929,886
Issuance of Long Term Debt 3,000 -
Repayments of Long Term Debt (44,490) (2,526)
Issuance of Common Stock 10,086 2,572
Purchases of Treasury Stock - (4,729)
Dividends Paid (9,544) (13,774)
---------------------- ----------------------
Net Cash Provided (Used) by Financing Activities (669,339) 808,024
---------------------- ----------------------
Net Change in Cash and Cash Equivalents (12,010) 179,817
Cash and Cash Equivalents at January 1 164,610 179,117
---------------------- ----------------------
Cash and Cash Equivalents at September 30 $ 152,600 $ 358,934
====================== ======================
- -------------------------------------------------------------------------------------------------------------------------------
Income Taxes Paid $ 3,596 $ 27,283
Interest Expense Paid 69,817 53,590
</TABLE>
The Disposition and Merger had the following impact on the
Corporation's September 30, 1995 statement of condition:
<TABLE>
<S> <C>
Short-Term Investments $ 946,387
Loans 165,615
Other Assets 64,837
Deposits 1,143,970
Accounts Payable and Other Liabilities 32,869
</TABLE>
The accompanying notes are an integral part of these financial statements.
-7-
<PAGE> 8
U. S. TRUST CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Disposition and Merger Transaction
On September 2, 1995, former U.S. Trust Corporation ("UST") merged
into The Chase Manhattan Corporation ("Chase") (the "Transaction"). On
September 1, 1995, UST spun-off to its shareholders (the "Distribution") all of
the outstanding shares of the Registrant, a newly-formed entity which assumed
the name U.S. Trust Corporation (the "Corporation"). In the Transaction, Chase
purchased UST's institutional custody, mutual funds servicing and unit trust
businesses and certain of UST's back office functions for $363.5 million in
Chase common stock. The Corporation's assets and liabilities are derived from
asset management, private banking, special fiduciary and corporate trust
activities (the "Core Businesses"). The Distribution to shareholders was
accounted for by the Corporation as if UST had continued existence, with the
carrying amount of assets and liabilities distributed accounted for in
accordance with generally accepted accounting principles, at their recorded
amount as reported in the Consolidated Statement of Condition. For financial
reporting purposes the Corporation is a successor registrant to UST and, as
such, all historical financial information of UST is the historical financial
information of the Corporation.
At the date of the Transaction, UST had $1.2 billion of assets and
liabilities, including approximately $946 million of federal funds sold, $230
million of other assets and $1.1 billion of deposits that were merged into
Chase. Concurrent with the consummation of the Transaction, UST retired all
outstanding treasury stock (2,140,287 shares) and satisfied and discharged
$10.8 million of 8 1/2% Capital Notes due 2001 and $30 million of 8% Notes due
1996.
Total restructuring charges associated with the Transaction were $205.8
million ($114.9 million after taxes), including $27.9 million after taxes, or
$2.74 per share, recorded in the fourth quarter of 1994. Approximately $56.5
million (pre-tax) remains to be paid. See "Results of Operations" in the
Management's Discussion and Analysis section for a detailed description of the
restructuring charges.
2. Acquisition
On April 28, 1995, UST purchased the individual account business of J.
& W. Seligman & Co. Inc., and acquired J. & W. Seligman Trust Company
("Seligman") for approximately $9 million in cash, in a transaction that was
accounted for as a purchase. J. & W. Seligman & Co. Inc. is a privately held
investment manager and advisor located in New York City. Under the terms of
the agreement, the Corporation may pay up to an additional $11 million in cash
for the business acquired (approximately $800 million in assets under
management) subject to certain business retention and other conditions.
-8-
<PAGE> 9
U. S. TRUST CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3. Net Interest Income
The following is an analysis of the composition of net interest income.
<TABLE>
<CAPTION>
Three-Month Periods Nine-Month Periods
Ended September 30, % Ended September 30, %
------------------- Better -------------------- Better
(In Thousands) 1995 1994 (Worse) 1995 1994 (Worse)
---- ---- ------- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C>
Interest Income
Loans $27,261 $24,846 9.7 % $ 81,836 $ 67,562 21.1 %
Securities:
Taxable 9,207 21,761 (57.7) 36,031 55,991 (35.6)
Exempt from Federal Income Tax 962 1,224 (21.4) 3,174 3,843 (17.4)
Short Term Investments 13,210 789 - 27,184 6,315 -
Deposits with Banks 830 1,758 (52.8) 2,082 3,051 (31.8)
------- ------- ----- -------- -------- -----
Total Interest Income 51,470 50,378 2.2 150,307 136,762 9.9
------- ------- ----- -------- -------- -----
Interest Expense
Deposits 20,610 12,892 (59.9) 56,727 32,525 (74.4)
Short Term Credit Facilities 3,003 8,201 63.4 9,535 18,011 47.1
Long Term Debt 908 1,272 28.6 3,276 3,835 14.6
------- ------- ----- -------- -------- -----
Total Interest Expense 24,521 22,365 (9.6) 69,538 54,371 (27.9)
------- ------- ----- -------- -------- -----
Net Interest Income $26,949 $28,013 (3.8)% $ 80,769 $ 82,391 (2.0)%
======= ======= ===== ======== ======== ======
</TABLE>
-9-
<PAGE> 10
U. S. TRUST CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
4. Adoption of New Accounting Standards
As of January 1, 1995, UST adopted Statement of Financial Accounting
Standards No. 114, "Accounting by Creditors for Impairment of a Loan," ("FAS
114"), and Statement of Financial Accounting Standards No. 118, "Accounting by
Creditors for Impairment of a Loan - Income Recognition and Disclosures," ("FAS
118"), an amendment of FAS 114. FAS 114 requires that an impaired loan be
measured based on the present value of expected future cash flows discounted at
the loan's effective interest rate, or, as a practical expedient, at the loan's
observable market price or the fair value of the collateral if the loan is
collateral dependent. FAS 118 amends the disclosure requirements of FAS 114 to
require information about the recorded investment in certain impaired loans and
amends the income recognition criteria of FAS 114. In accordance with FAS 114,
loans previously classified as in-substance foreclosures but for which the
Corporation has not taken possession of the collateral have been reclassified
as loans. The adoption of FAS 114 and FAS 118 had no impact on the financial
condition or results of operations of the Corporation.
As of September 30, 1995, the carrying amount of impaired loans, as
defined in FAS 114, was approximately $9.5 million. The average balance of
impaired loans for the third quarter of 1995 was approximately $8.1 million.
Interest income, which is recognized on a cash basis, related to impaired loans
for the third quarter of 1995 was negligible.
UST's income recognition policy for impaired loans is consistent
with the existing income recognition policy for nonperforming loans discussed
in "Notes to the Consolidated Financial Statements" No. 2 (e) of the
Corporation's 1994 Annual Report to Shareholders.
5. Pledged Assets
Financial instruments carried at $105,422,000 on September 30, 1995
and $303,304,000 on December 31, 1994 were pledged to secure public deposits,
as collateral for borrowings, to qualify for fiduciary powers and for other
purposes.
6. Contingencies
There are various pending and threatened actions and claims against
the Corporation and its subsidiaries in which the Corporation has denied
liability and which it will vigorously contest. Management, after consultation
with counsel, is of the opinion that the ultimate resolution of such matters is
unlikely to have any future material effect on the Corporation's financial
position or results of operations.
-10-
<PAGE> 11
U.S. TRUST CORPORATION
CONSOLIDATED NET INTEREST INCOME AND AVERAGE BALANCES
(Dollars in Thousands; Interest and Average Rates on a Taxable Equivalent
Basis)
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three-Month Periods Ended September 30,
---------------------------------------------------------------------------------------
1995 1994
------------------------------------------ -----------------------------------------
AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE INTEREST RATE BALANCE INTEREST RATE
------------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Short-Term Investments $ 957,075 $ 14,040 5.82 % $ 219,533 $ 2,547 4.60 %
------------ ---------- ------ ------------- ---------- ------
Securities (1):
U.S. Government Obligations 270,477 3,631 5.37 906,130 10,339 4.56
Federal Agency Obligations 180,469 3,293 7.30 683,676 10,569 6.18
State and Municipal
Obligations (4) 65,074 1,530 9.40 80,914 1,963 9.70
Collateralized Mortgage
Obligations (2) 47,511 755 6.36 69,960 860 4.92
Other Securities 110,171 1,653 6.00 38,714 430 4.44
------------ ---------- ------ ------------- ---------- ------
Total Securities 673,702 10,862 6.45 1,779,394 24,161 5.43
------------ ---------- ------ ------------- ---------- ------
Loans (3) (4) 1,372,939 27,261 7.88 1,358,874 24,853 7.26
------------ ---------- ------ ------------- ---------- ------
Total Interest Earning Assets 3,003,716 52,163 6.90 3,357,801 51,561 6.12
------------ ---------- ------ ------------- ---------- ------
Allowance for Credit Losses (16,477) (14,225)
Cash and Due from Banks 289,747 378,656
Other Assets 390,031 436,752
------------ -------------
Total Assets $ 3,667,017 $ 4,158,984
============ =============
LIABILITIES AND
STOCKHOLDERS' EQUITY
Interest Bearing Deposits $ 1,580,794 20,610 5.17 $ 1,382,817 12,892 3.70
Short-Term Credit Facilities 203,707 3,003 5.85 707,691 8,201 4.60
Long Term Debt 44,324 908 8.19 62,574 1,272 8.13
------------ --------- ------ ------------- ---------- ------
Total Sources on Which
Interest is Paid 1,828,825 24,521 5.32 2,153,082 22,365 4.12
------------ --------- ------ ------------- ---------- ------
Total Non-Interest Bearing
Deposits 1,419,293 1,607,475
Other Liabilities 172,945 151,682
Stockholders' Equity (3) 245,954 246,745
------------ -------------
Total Liabilities and
Stockholders' Equity $ 3,667,017 $ 4,158,984
============ =============
Net Interest Income -
Tax Equivalent Basis 27,642 29,196
Tax Equivalent Adjustment (693) (1,183)
---------- -----------
Net Interest Income $ 26,949 $ 28,013
========== ===========
Net Yield on Interest
Earning Assets 3.66 % 3.47 %
====== ======
Interest Spread 1.58 % 2.00 %
====== ======
</TABLE>
(1) Includes securities classified as available for sale and held to
maturity. The average balance and average rate for securities
available for sale have been calculated using their amortized cost.
(2) Primarily comprised of variable rate collateralized mortgage
obligations.
(3) Loans include the Loan to ESOP, which had an average balance of
$13,434,000 in 1995 and $16,171,000 in 1994.
(4) Yields on obligations of states and political subdivisions are stated
on a fully taxable basis, employing the statutory federal tax rate
adjusted for the effect of state and local taxes, resulting in an
effective tax rate of 47%.
-11-
<PAGE> 12
U.S. TRUST CORPORATION
CONSOLIDATED NET INTEREST INCOME AND AVERAGE BALANCES
(Dollars in Thousands; Interest and Average Rates on a Taxable Equivalent
Basis)
(UNAUDITED)
<TABLE>
<CAPTION>
For the Nine-Month Periods Ended September 30,
------------------------------------------------------------------------------------
1995 1994
------------------------------------------- --------------------------------------
Average Average Average Average
Balance Interest Rate Balance Interest Rate
------------- ----------- ----------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Short-Term Investments $ 663,525 $ 29,266 5.90 % $ 355,791 $ 9,366 3.52 %
------------ ----------- ------- ------------- ------------ -------
Securities (1):
U.S. Government Obligations 467,619 19,177 5.47 759,313 25,090 4.41
Federal Agency Obligations 214,553 11,763 7.31 637,563 27,831 5.82
State and Municipal
Obligations (4) 69,875 5,070 9.68 81,928 6,154 10.02
Collateralized Mortgage
Obligations (2) 52,524 2,533 6.43 86,011 2,672 4.14
Other Securities 71,845 3,169 5.88 56,732 1,618 3.80
------------ ----------- ------- ------------- ------------ -------
Total Securities 876,416 41,712 6.35 1,621,547 63,365 5.21
------------ ----------- ------- ------------- ------------ -------
Loans (3) (4) 1,366,594 81,836 8.01 1,291,170 67,585 7.00
------------ ----------- ------- ------------- ------------ -------
Total Interest Earning Assets 2,906,535 152,814 7.02 3,268,508 140,316 5.73
------------ ----------- ------- ------------- ------------ -------
Allowance for Credit Losses (15,873) (13,919)
Cash and Due from Banks 269,893 344,565
Other Assets 435,408 452,918
------------ -------------
Total Assets $ 3,595,963 $ 4,052,072
============ =============
LIABILITIES AND
STOCKHOLDERS' EQUITY
Interest Bearing Deposits $ 1,492,339 56,727 5.08 $ 1,346,418 32,525 3.23
Short-Term Credit Facilities 220,434 9,535 5.78 591,500 18,011 4.07
Long Term Debt 53,591 3,276 8.15 62,861 3,835 8.14
------------ ----------- ------- ------------- ------------ -------
Total Sources on Which
Interest is Paid 1,766,364 69,538 5.26 2,000,779 54,371 3.63
------------ ----------- ------- ------------- ------------ -------
Total Non-Interest Bearing
Deposits 1,426,838 1,638,770
Other Liabilities 156,406 168,846
Stockholders' Equity (3) 246,355 243,677
------------ -------------
Total Liabilities and
Stockholders' Equity $ 3,595,963 $ 4,052,072
============ =============
Net Interest Income -
Tax Equivalent Basis 83,276 85,945
Tax Equivalent Adjustment (2,507) (3,554)
----------- ------------
Net Interest Income $ 80,769 $ 82,391
=========== ============
Net Yield on Interest
Earning Assets 3.82 % 3.51 %
======= =======
Interest Spread 1.76 % 2.10 %
======= =======
</TABLE>
(1) Includes securities classified as available for sale and held to maturity.
The average balance and average rate for securities available for sale
have been calculated using their amortized cost.
(2) Primarily comprised of variable rate collateralized mortgage obligations.
(3) Loans include the Loan to ESOP, which had an average balance of
$13,744,000 in 1995 and $16,458,000 in 1994.
(4) Yields on obligations of states and political subdivisions are stated on a
fully taxable basis, employing the statutory federal tax rate adjusted
for the effect of state and local taxes, resulting in an effective tax
rate of 47%.
-12-
<PAGE> 13
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Disposition and Merger Transaction
On November 18, 1994, U.S. Trust Corporation ("UST") announced that
it had entered into an agreement under which Chase was to acquire UST's
institutional custody, mutual funds servicing and unit trust businesses (the
"Processing Business") and certain of UST's back office functions (collectively
the "Chase Acquired Business").
The Transaction was consummated through two steps. First,
on September 1, 1995, UST spun-off to its shareholders the assets
not included in the Chase Acquired Business by establishing the Registrant as a
newly-formed entity which assumed the name U.S. Trust Corporation (the
"Corporation") to hold such assets and distributing its shares to shareholders
of UST on a one-for-one basis (the "Disposition"). Second, on September 2,
1995, UST, which then included only the assets and liabilities of the Chase
Acquired Business, merged into Chase (the "Merger") and the shareholders of UST
received 0.68 shares of Chase common stock for each share of UST. The number of
shares of Chase common stock received by UST shareholders was based on an
exchange formula set forth in the agreement with Chase. The exchange formula
stipulated that the exchange ratio be calculated by dividing the purchase price
of $363.5 million by the average of the daily average of the high and low sales
prices of Chase common stock for the ten trading days immediately before the
closing date. Based on the exchange formula, Chase issued 6,619,758 shares.
As part of the agreement, Chase provides securities processing,
custodial, data processing and other services to the Corporation under the
five-year term of a services agreement (the "Services Agreement") at an annual
base fee of $10 million. The Services Agreement may be extended for an
additional two to five years beyond its initial term.
The pro forma condensed statement of income for the year ended December
31, 1994 and the nine-month period ended September 30, 1995 (filed herewith as
Exhibit 99) have been prepared to present the estimated effects of the
Disposition and Merger as if the Transaction had occurred as of January 1, 1994.
-13-
<PAGE> 14
Results of Operations
For the one-month period ended September 30, 1995, the first month
since the Disposition and Merger, the Corporation's net income was $3.8 million,
or $0.36 per share on a fully diluted basis. The month's results included a
one-time pre-tax rebate from the FDIC of $1.4 million ($0.07 per share).
The Corporation is a continuing reporting entity of UST, and
accordingly, its 1995 results include the operating results of the Chase
Acquired Business through the consummation of the Disposition and Merger as well
as the restructuring charges related to their sale.
The net loss for the third quarter ended September 30, 1995 amounted
to $73.7 million, compared to net income of $12.9 million in the third quarter
of 1994. On a fully diluted per share basis, the net loss for the 1995 quarter
was $7.60, versus $1.30 earned in the third quarter of 1994. For the nine-month
period ended September 30, 1995, the Corporation recorded a net loss of $59.7
million, versus $36.5 million earned in the first nine months of 1994. On a
fully diluted per share basis, the net loss for the nine-month period was
$6.21, compared to $3.68 earned in 1994.
The 1995 third quarter includes $147.7 million ($81.6 million after
taxes or $8.42 per share) of restructuring charges incurred in
connection with the Transaction. For the nine-month period, these charges
amounted to $155.6 million ($86.9 million after taxes or $9.05 per share).
Total restructuring charges associated with the Transaction were $205.8 million
($114.9 million after taxes), including $27.9 million after taxes, or $2.74 per
share, recorded in the fourth quarter of 1994. The following table shows the
pre-tax composition of total restructuring charges:
<TABLE>
<CAPTION>
(In Thousands)
<S> <C>
Severance and other termination related costs $ 83,400
Asset/liability and portfolio balancing 45,200
Disposition of facilities, premises and equipment 28,200
Professional fees and other 49,000
--------
Total Restructuring Charges $205,800
========
</TABLE>
-14-
<PAGE> 15
Fee Revenue
For the third quarter of 1995, fee revenue decreased 5.1% to $73.0
million from $77.0 million in the third quarter of 1994. For the nine-month
period of 1995, fee revenue amounted to $228.4 million, moderately higher than
the $227.6 million earned in the first nine months of 1994. Excluding the
Processing Business, fee revenue increased $5.1 million to $55.9 million in the
third quarter of 1995. For the nine-month period of 1995, fee revenue
increased $11.3 million to $161.2 million. Fee revenue for the most part is
based on the prior quarter's asset values, thus the increase in Core
Businesses' fee revenue reflects the overall strong equity and bond markets
during the second quarter of 1995, in addition to net new business.
<TABLE>
<CAPTION>
Three-Month Periods Nine-Month Periods
Ended September 30, % Ended September 30, %
------------------- Better --------------------- Better
(In Thousands) 1995 1994 (Worse) 1995 1994 (Worse)
------- ------- ------ -------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
Asset Management $48,873 $44,076 10.9 % $139,332 $130,615 6.7 %
Corporate Trust and Agency 7,024 6,680 5.1 21,897 19,331 13.3
------- ------- -------- --------
Total Core Businesses 55,897 50,756 10.1 161,229 149,946 7.5
------- ------- -------- --------
Processing Business 17,106 26,195 - 67,212 77,680 -
------- ------- -------- --------
Total $73,003 $76,951 (5.1)% $228,441 $227,626 0.4 %
======= ======= ==== ======== ======== ====
</TABLE>
Assets under management increased 7.6% to $44.3 billion at September
30, 1995, from $41.2 billion at June 30, 1995, and 45.2% from $30.5
billion at September 30, 1994. Special Fiduciary assets under management
includes approximately $6.2 billion of GM-E stock (contributed by General
Motors Corporation to its defined benefit plan during the first quarter of 1995
and managed by the Corporation's special fiduciary services group until the
stock is distributed into the market). Assets under management, increased by
8.8% from June 30, 1995, and 16.6% from September 30, 1994 excluding special
fiduciary assets, assets related to the Seligman acquisition ( see Notes to the
Consolidated Financial Statements No. 2) and amounts pertaining to the
Processing Business at June 30, 1995 and September 30, 1994.
-15-
<PAGE> 16
Fee Revenue (Cont'd.)
<TABLE>
<CAPTION>
Sept. 30, June 30, Sept. 30,
(In Billions) 1995 1995 1994
--------- -------- --------
<S> <C> <C> <C>
Assets Under Management:
Investment Management $ 31.7 $ 29.2 $ 26.5
Special Fiduciary 12.6 12.0 4.0
------- ------- -------
Total 44.3 41.2 30.5
------- ------- -------
Processing Business - 2.2 1.9
------- ------- -------
Total Assets Under Management 44.3 43.4 32.4
------- ------- -------
Assets Under Administration:
Personal Custody and Other
Assets Under Administration 12.9 11.4 7.7
Corporate and Municipal
Trusteeships and Agency
Relationships (Par Value) 183.0 175.9 156.3
------- ------- -------
Total 195.9 187.3 164.0
------- ------- -------
Processing Business - 221.3 222.9
------- ------- -------
Total Assets Under Administration 195.9 408.6 386.9
------- ------- -------
Total Assets Under Management
and Administration $ 240.2 $ 452.0 $ 419.3
======= ======= =======
</TABLE>
Net Interest Income (Taxable Equivalent Basis)
Net interest income, on a taxable equivalent basis, was $1.6 million
lower in the third quarter of 1995, compared to the third quarter of 1994. For
the nine months ended September 30, net interest income, on a taxable equivalent
basis, was $2.7 million lower in 1995 than the comparable 1994 period. The
decline in net interest income was significantly impacted by the following
events.
First, in anticipation of closing the Chase Transaction, the
Corporation reduced the overall size of the balance sheet, (the average volume
of securities for the quarter and nine-month period ended September 30, 1995 are
$1.1 billion and $745 million lower than the corresponding periods of 1994) and
shortened the maturity structure of the securities portfolio.
-16-
<PAGE> 17
Net Interest Income (Taxable Equivalent Basis) (Cont'd.)
Second, the Corporation's net interest revenue was dependent upon the
average volume of non-interest bearing deposits generated by the Processing
Business ("investable balances") as well as the general interest rate
environment. Throughout 1995, the volume of the Processing Business' investable
balances was lower in comparison to the 1994 levels.
Finally, the nine-month period ended September 30, 1995 includes eight
months of available investable balances from the Processing Business versus a
full nine months for the respective 1994 period.
<TABLE>
<CAPTION>
Three-Month Periods Nine-Month Periods
Ended September 30, % Ended September 30, %
------------------- Better --------------------- Better
(In Thousands) 1995 1994 (Worse) 1995 1994 (Worse)
------- ------- ------ -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Interest Income $51,470 $50,378 2.2 % $150,307 $136,762 9.9 %
Taxable Equivalent Adjustment 693 1,183 (41.4) 2,507 3,554 (29.5)
------- ------- ------ -------- -------- -------
Total Interest Income 52,163 51,561 1.2 152,814 140,316 8.9
Interest Expense 24,521 22,365 (9.6) 69,538 54,371 (27.9)
Net Interest Income 27,642 29,196 (5.3) 83,276 85,945 (3.1)
======= ======= ====== ======== ======== =======
</TABLE>
Net Gains (Losses) on Securities
Net securities gains in the third quarter of 1995 were approximately
$5.0 million versus a negligible gain in the third quarter of 1994. Net
securities gains totalled $4.2 million for the first nine months of 1995,
versus $2.1 million for the 1994 period. Both periods exclude security
transactions entered into to re-balance the securities portfolio in
anticipation of the Chase Transaction, which are included in the restructuring
charges.
-17-
<PAGE> 18
Operating Expenses
<TABLE>
<CAPTION>
Three-Month Periods Nine-Month Periods
Ended September 30, % Ended September 30, %
-------------------- Better --------------------- Better
(In Thousands) 1995 1994 (Worse) 1995 1994 (Worse)
-------- ------- ------ -------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
Salaries $ 31,662 $34,253 7.6 % $101,134 $100,530 (0.6)%
Employee Benefits and
Performance Compensation 17,914 15,787 (13.5) 55,323 52,550 (5.3)
-------- ------- -------- --------
Total Salaries and Benefits 49,576 50,040 0.9 156,457 153,080 (2.2)
Net Occupancy 10,013 10,312 2.9 30,803 29,445 (4.6)
Equipment 4,002 4,794 16.5 13,590 13,541 (0.4)
Other 26,051 17,376 (49.9) 65,217 51,556 (26.5)
Restructuring Costs 147,725 - - 155,589 - -
-------- ------- -------- --------
Total Operating Expenses $237,367 $82,522 - $421,656 $247,622 (70.3)
======== ======= ==== ======== ======== ====
</TABLE>
Operating expenses, excluding Transaction-related restructuring
charges, amounted to $89.6 million in the third quarter of 1995, 8.6% higher
than the $82.5 million reported in the third quarter of 1994. Excluding
amounts attributable to the Processing Business, operating expenses were $77.6
million for the 1995 third quarter, compared to $65.4 million for the 1994
third quarter. The 1995 third quarter includes approximately $3.0 million of
expenses related to the revaluation of certain intangible assets and an
approximate $3.0 million reserve for receivables.
For the nine-month period ended September 30, 1995, operating
expenses, excluding Transaction-related restructuring charges, were $266.1
million, an increase of 7.4% from the $247.6 million recorded in the first
nine months of 1994. Excluding amounts attributable to the Processing
Business, operating expenses were $219.0 million, compared to $197.0 million
in the first nine months of 1994. In addition to the $3.0 million related to
the revaluation of intangible assets and an approximate $3.0 million reserve
for receivables recorded in the third quarter of 1995, the 1994 nine-month
period included a $3.7 million reduction of operating expenses, primarily the
result of the favorable impact of terminating certain lease commitments.
Income Taxes
The Corporation's effective tax rate for the third quarter of 1995 was
a benefit of 44.5%, compared to a charge of 41.1% for the comparable 1994
period. For the nine months ended September 30, 1995, the effective tax rate
was a benefit of 45.5% versus a charge of 42.0% in 1994.
-18-
<PAGE> 19
Capital and Liquidity
The Corporation's ratio of tier 1 capital at September 30, 1995 to
period end risk-adjusted assets was 9.47%, compared to 14.19% at September 30,
1994. The ratio of total capital at September 30, 1995 to period end
risk-adjusted assets was 10.73%. At September 30, 1994 this ratio was 15.51%.
The leverage ratio amounted to 5.01% and 5.70% at September 30, 1995 and 1994,
respectively. The reduction in the Corporation's capital ratios is a direct
result of the change, effective April 1, 1995, in the Federal Reserve Board's
(the "Federal Reserve") method of determining tier 1 capital. Specifically,
the Federal Reserve now limits the amount of deferred tax assets that qualify
for tier 1 capital to the lower of 10% of tier 1 capital or the Corporation's
projected earnings for the next year. However, if the Corporation has the
ability to recover deferred tax assets from income taxes paid in prior years,
the amount of the "carry back" capability, as defined, qualifies as tier 1
capital. Because the Corporation is a new tax payer, as of September 1, 1995,
it does not have any tax carry back capability and accordingly, all of its
deferred tax assets are subject to the aforementioned limitations. As the
Corporation generates taxable income, the impact of the Federal Reserve's
regulation on deferred tax assets will be mitigated.
At September 30, 1995, the United States Trust Company of New York's
(the "Trust Company") tier 1 capital ratio was 10.96% compared to 13.72% at
September 30, 1994. The Trust Company's leverage ratio was 5.64% and 5.59% at
September 30, 1995 and 1994, respectively.
The Corporation requires access to funds sufficient to pay dividends
to common shareholders, interest and principal to debt holders and for other
corporate purposes. While the Disposition and Merger have had a
significant effect on capital resources and the overall asset and liability
structure, specifically the elimination of non-interest bearing deposits as a
long-term funding source ( see "Asset/Liability Management" section for further
information), the Corporation has maintained sufficient liquidity at the parent
and each of its active subsidiaries.
In connection with the Disposition and Merger, the Trust Company has
satisfied and discharged the $10.8 million balance of its 8.5% Capital Notes Due
2001 and the Corporation has satisfied and discharged the $30 million balance of
its 8% Notes due 1996.
-19-
<PAGE> 20
Capital and Liquidity (Cont'd.)
The Corporation announced the decision by its Board of Directors to
declare quarterly dividends of $0.25 per share each. The first dividend is
payable October 24, 1995, the second dividend is payable December 12, 1995.
The Corporation's banking subsidiaries are subject to limitations on
the amount of dividends they can pay to the Corporation without prior approval
of the bank regulatory authorities. The Trust Company has received approval from
bank regulatory authorities to pay dividends to the Corporation out of current
earnings beginning September 1, 1995. At September 30, 1995, the banking
subsidiaries can declare, in the aggregate, approximately $18.0 million without
prior approval. Additionally, the Corporation may borrow, subject to certain
regulatory restrictions, on a fully-collateralized basis from its subsidiaries.
The Corporation has a $25 million unsecured revolving credit facility
with a major financial institution maturing in 1998. At September 30, 1995, the
credit facility is fully utilized.
Asset/Liability Management
The principal functions of asset and liability management are
to provide for adequate liquidity, to manage interest rate exposure by
maintaining a prudent relationship between interest rate sensitive
assets and liabilities and to manage the size and composition of the
balance sheet so as to maximize net interest income, while complying
with bank regulatory agency capital standards.
As part of its overall asset and liability management process, the
Corporation uses interest rate swaps ("swaps") as hedges. Swaps are used to
hedge the net yield earned on pools of fixed rate residential real estate
mortgage loans. The following table provides details, as of September 30,
1995, of the notional amounts of swaps by maturity and the related average
interest rates paid and received. The Corporation is a fixed rate payor on all
of its swaps.
<TABLE>
<CAPTION>
Maturing
-----------------------
Within 1 1 to 5
(Dollars In Thousands) Year Years Total
-------- -------- --------
<S> <C> <C> <C>
Fixed Pay Swaps $ 30,250 $317,250 $347,500
Average Rate Paid 7.8461% 6.8028% 6.8936%
Average Rate Received* 5.9014% 5.8945% 5.8951%
</TABLE>
* Represents the average variable rate that will be received by the
Corporation based upon the rate in effect at the latest variable rate reset
date of each swap.
-20-
<PAGE> 21
Asset/Liability Management (Cont'd.)
Due to the elimination of the Processing Business' non-interest
bearing deposits as a long-term funding source, the Corporation sold over $800
million of long-term U.S. Government Treasury and Agency securities in the
fourth quarter of 1994, and shortened the maturity structure of the securities
portfolio. The Corporation has retained its fixed rate loan portfolio. As a
result, the Corporation' s use of swaps as an asset/liability management tool
has increased as a greater proportion of the Corporation's fixed rate assets
will be funded with short-term interest bearing liabilities.
The impact of the Corporation's hedging activities upon net interest
revenue is detailed in the following table. The difference between the results
"As Reported" and "Excluding Hedging Activities" reflects the cost of utilizing
swaps.
<TABLE>
<CAPTION>
Three Month-Periods Nine-Month Periods
Ended September 30, Ended September 30,
(Taxable Equivalent Basis; -------------------- ---------------------
Dollars In Thousands) 1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Interest Income:
As Reported $ 27,642 $ 29,196 $ 83,276 $ 85,945
Excluding Hedging Activities $ 28,464 $ 29,484 $ 84,947 $ 88,812
Net Yield on Interest Earning Assets:
As Reported 3.66% 3.47% 3.82% 3.51%
Excluding Hedging Activities 3.78% 3.51% 3.93% 3.62%
</TABLE>
Securities Available for Sale
During the first nine months of 1995, the Corporation purchased
approximately $1.9 billion of securities available for sale, primarily U.S.
Government and Federal Agency securities. During the nine-month period ended
September 30, 1995, the Corporation sold approximately $874 million, versus
$41.9 million of securities sold for the 1994 period.
Approximately 66% of the Corporation's portfolio of securities
available for sale is comprised of U.S. Treasury fixed rate obligations. The
remaining portfolio is primarily comprised of variable rate collateralized
mortgage obligations ("CMOs") and obligations of states and municipalities.
CMOs are primarily collateralized by GNMAs.
The market value of securities available for sale exceeded their
amortized cost by $1.8 million at September 30, 1995. At September 30, 1994,
the amortized cost of securities available for sale exceeded their market value
by $8.9 million. The increase in market value reflects the reduction of the
Corporation's holdings of fixed rate U.S. Government Treasury obligations and
GNMAs (see Asset/Liability Management) which during 1994, had a reduced market
value due to the rising interest rate environment.
-21-
<PAGE> 22
Interest Rate Sensitivity
Interest rate risk arises from differences in the timing of repricing
assets and liabilities. One measure of interest rate risk is the difference in
asset and liability repricing on a cumulative basis within a specified time
frame. Gap analysis has inherent limitations as an analytical tool because it
only measures the Corporation's exposure at a single point in time. Exposure to
interest rates is constantly changing as a result of the Corporation's ongoing
business and its management initiatives.
The following table provides the components of the Corporation's
interest rate sensitivity gaps at September 30, 1995. To reflect anticipated
payments, certain asset and liability categories are included in the table based
on estimated rather than contractual maturity or repricing dates. As of
September 30, 1995, the Corporation had more liabilities repricing or maturing
than assets (liability sensitive) in the 0-3 month category and had more assets
repricing or maturing than liabilities (asset sensitive) in the 4-6 months and
7-12 months categories. In general, when an enterprise is liability sensitive,
its net interest income will improve in a declining interest rate environment
and will decline in a rising interest rate environment. Conversely, an asset
sensitive enterprise will realize a benefit in net interest income if rates are
rising and will have lower net interest income in a declining rate environment.
-22-
<PAGE> 23
Interest Rate Sensitivity (Cont'd.)
<TABLE>
<CAPTION>
Net Other
0 - 3 4 - 6 7 - 12 1 - 5 Over Assets/
(In Thousands) Months Months Months Years 5 Years Liabilities Total
---------- ----------- ---------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
INTEREST EARNING ASSETS:
Short-Term Investments $ 1,230 $ - $ - $ - $ - $ - $ 1,230
Investment Securities 570,044 38,501 88,778 100,378 14,324 - 812,025
Loans, Net of Allowance
for Credit Losses 691,488 20,425 45,642 336,408 282,117 - 1,376,080
---------- ----------- ---------- ---------- ---------- ---------- ----------
Total Interest Earning Assets 1,262,762 58,926 134,420 436,786 296,441 - 2,189,335
---------- ----------- ---------- ---------- ---------- ---------- ----------
INTEREST BEARING LIABILITIES:
Interest Bearing Deposits 1,504,940 1,560 1,260 2,570 - - 1,510,330
Short-Term Credit Facilities 213,348 - - - - - 213,348
Long Term Debt - - - 17,434 2,000 - 19,434
---------- ----------- ---------- ---------- ---------- ---------- ----------
Total Interest Bearing Liabilities 1,718,288 1,560 1,260 20,004 2,000 - 1,743,112
---------- ----------- ---------- ---------- ---------- ---------- ----------
Asset/(Liability) Interest
Sensitivity Gap (455,526) 57,366 133,160 416,782 294,441 - 446,223
Interest Rate Swaps 344,750 (28,000) (1,500) (315,250) - - -
---------- ----------- ---------- ---------- ---------- ---------- ----------
Interest Rate Sensitivity Gap (110,776) 29,366 131,660 101,532 294,441 - 446,223
Net Non Interest Earning Assets/
(Bearing Liabilities) and
Stockholders' Equity 5,063 (4,731) (9,462) (276,976) (179,392) 19,275 (446,223)
---------- ----------- ---------- ---------- ---------- ---------- ----------
Maturity/Repricing Gap (105,713) 24,635 122,198 (175,444) 115,049 19,275 -
---------- ---------- --------- ---------- ---------- ---------- ----------
Cumulative Gap $ (105,713) $(81,078) $ 41,120 $(134,324) $ (19,275) $ - $ -
========== =========== ========== ========== ========== ========== ==========
</TABLE>
In managing its interest rate sensitivity gaps, the Corporation takes
into account the nature of its business operations. The Corporation invests in
fixed rate U.S. Treasury securities and fixed rate residential real estate
mortgage loans. Historically, these investments have been funded by a portion
of the non-interest bearing deposits of the Processing Business. To the extent
that long-term fixed rate assets exceed long-term funding sources, the
Corporation has obtained interest rate swaps to mitigate its interest rate
exposure. The Corporation has increased the notional amount of swaps
outstanding from approximately $68 million at September 30, 1994 to
approximately $348 million at September 30, 1995. Investments in short-term
and variable rate instruments, which are largely indexed to London Interbank
Offered Rate, and investments in variable rate loans that are indexed to the
Corporation's prime rate are funded by money market deposits mainly derived
from private banking clients and other short-term interest bearing liabilities.
-23-
<PAGE> 24
Asset Quality
The Corporation's loan portfolio is primarily comprised of credit
extensions to private banking customers. Average loans remained relatively
stable with a moderate increase from $1.34 billion in the third quarter of 1994
to $1.36 billion in the third quarter of 1995. Residential real estate
mortgages comprised approximately 65% of total loans at September 30, 1995 with
fixed rate loans amounting to approximately 52% of the total portfolio.
An analysis of the allowance for credit losses follows.
<TABLE>
<CAPTION>
Three-Month Periods Nine-Month Periods
Ended September 30, Ended September 30,
----------------------- -----------------------
(In Thousands) 1995 1994 1995 1994
------- ------- ------- -------
<S> <C> <C> <C> <C>
Balance, Beginning of Period $15,871 $14,017 $14,699 $13,393
Provision Charged to Income 400 500 1,200 1,500
Recoveries:
Private Banking 757 273 2,771 566
Other 25 35 139 176
------- ------- ------- -------
782 308 2,910 742
Charge-offs:
Private Banking (154) (398) (890) (1,058)
Other (37) - (1,057) (150)
------- ------- ------- -------
(191) (398) (1,947) (1,208)
------- ------- ------- -------
Net (Charge-Offs) Recoveries 591 (90) 963 (466)
------- ------- ------- -------
Balance, End of Period $16,862 $14,427 $16,862 $14,427
======= ======= ======= =======
</TABLE>
As a percentage of average loans, annualized net loan recoveries were 17 basis
points for the third quarter of 1995, compared to annualized net loan
charge-offs of three basis points for the third quarter of 1994. For the nine
months of 1995, annualized net loan recoveries as a percentage of average loans
were ten basis points, versus annualized net loan charge-offs of five basis
points for the 1994 period.
The allowance for credit losses as a percentage of nonperforming loans
was 178.32% at September 30, 1995, compared to 230.72% at December 31, 1994,
and 268.71% at September 30, 1994. The ratio of nonperforming assets to
period-end loans and real estate owned was 1.42% at September 30, 1995,
compared to 1.14% at December 31, 1994 and 1.09% at September 30, 1994.
Nonperforming assets, which include non-accrual loans and real estate acquired
in restructurings, are as follows:
-24-
<PAGE> 25
Asset Quality (Cont'd.)
<TABLE>
<CAPTION>
Sept. 30, December 31, Sept. 30,
(In Millions) 1995 1994 1994
-------- ------------ --------
<S> <C> <C> <C>
Non-accrual loans $ 9.4 $ 6.4 $ 5.4
Real estate acquired in
restructurings 10.5 12.3 11.9
----- ----- -----
Total Nonperforming Assets $19.9 $18.7 $17.3
===== ===== =====
</TABLE>
Accounting Standards Not Yet Adopted
Statement of Financial Accounting Standards No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of," ("FAS 121") issued in March 1995, establishes accounting standards for the
impairment of long-lived assets, certain identifiable intangibles, and
goodwill. FAS 121 requires review for impairment of long-lived assets whenever
events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. Impairment exists if the sum of the undiscounted
expected future cash flows is less than the carrying amount of the asset.
Impairment is measured as the amount by which the carrying amount exceeds the
fair value of the asset. FAS 121 is effective for fiscal years beginning after
December 15, 1995. The Corporation is currently evaluating the impact of the
adoption of FAS 121 on the financial condition and results of operations of the
Corporation.
-25-
<PAGE> 26
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 10-Q
(a) EXHIBITS:
2.1 - Agreement and Plan of Merger dated as of November 18, 1994
(as amended, supplemented or otherwise modified from time to
time) between The Chase Manhattan Corporation ("Chase") and
the former U.S. Trust Corporation ("UST"), filed as Exhibit
2.1 to UST's Annual Report on Form 10-K (File No. 0-8709) for
the fiscal year ended December 31, 1994 ("Form 10-K") and
included in the Form 10-K as Appendix A to the Proxy Statement/
Prospectus dated February 9, 1995, filed as Exhibit 99.1 to
the Form 10-K ("Exhibit 99.1"). (1)(2)
2.2 - Form of Agreement and Plan of Distribution among UST, the
former United States Trust Company of New York ("USTNY"), the
Corporation and New U.S. Trust Company of New York (the
"Trust Company"), filed as Exhibit 2.2 to the Form 10-K and
included in the Form 10-K as Appendix B to Exhibit 99.1.
(1)(2)
2.3 - Form of Contribution and Assumption Agreement between USTNY
and the Trust Company, filed as Exhibit 2.3 to the Form 10-K
and included in the Form 10-K as Appendix C to Exhibit 99.1.
(1)(2)
2.4 - Form of Post Closing Covenants Agreement among Chase, UST,
USTNY, the Corporation and the Trust Company, filed as
Exhibit 2.4 to the Form 10-K and included in the Form 10-K as
Appendix D to Exhibit 99.1. (1)
2.5 - Tax Allocation Agreement dated as of September 1, 1995 among
UST, the Corporation and Chase.
2.6 - Services Agreement between USTNY and the Trust Company, dated
September 1, 1995.
- ----------------
(1) Incorporated herein by reference.
(2) The copy of this document being incorporated by reference herein
does not include the exhibits and schedules thereto which are
identified as being omitted in the table of contents of this
document. The Corporation undertakes to furnish any such omitted
exhibits and schedules to the Commission upon its request.
-26-
<PAGE> 27
Item 6. Exhibits and Reports on Form 10-Q (Continued)
(a) EXHIBITS:
3.1 - Restated Certificate of Incorporation of the Corporation,
filed as Exhibit 4(b) to the Corporation's Registration
Statement on Form S-8 (Registration No. 33-62371). (1)
3.2 - By-Laws of the Corporation, filed as Appendix II to the
Corporation's Registration Statement on Form 10 dated
February 9, 1995. (1)
4 - Note: The exhibits filed herewith do not include the
instruments with respect to long-term debt of the Corporation
and its subsidiaries, inasmuch as the total amount of debt
authorized under any such instrument does not exceed 10% of
the total assets of the Corporation and its subsidiaries on a
consolidated basis. The Corporation agrees, pursuant to Item
601 (b)(4)(iii) of Regulation S-K, that it will furnish a
copy of any such instrument to the Securities and Exchange
Commission upon request.
4.1 - Rights Agreement, dated as of September 1, 1995, between the
Corporation and First Chicago Trust Company of New York, as
Rights Agent, filed on September 5, 1995 as Exhibit 1 to the
Corporation's Registration Statement on Form 8-A. (1)
4.2 - Specimen certificate representing Rights to Purchase the
Corporation's Series A Participating Cumulative Preferred
Shares, filed on September 5, 1995 as Exhibit B to Exhibit 1
to the Corporation's Registration Statement on Form 8-A
registering such Rights. (1)
10.1 - Sublease agreement, dated September 1, 1995, between The Chase
Manhattan Bank (National Association) as Sublessor, and the
Trust Company, as Sublessee, covering space at 770 Broadway,
New York, New York.
- ----------------
(1) Incorporated herein by reference.
-27-
<PAGE> 28
Item 6. Exhibits and Reports on Form 10-Q (Continued)
(a) EXHIBITS:
10.2 - Lease, dated as of September 10, 1987, between 46-47
Associates, as Lessor, and USTNY, as Lessee, covering
space at 114 West 47th Street, New York, New York;
letters modifying the terms of such Lease dated,
respectively, September 10, 1987 and October 2, 1989;
Subordination Agreement dated as of September 10, 1987
between USTNY and 1133 Building Corp. subordinating to
such Lease a ground lease with respect to the property
subject to such Lease; Right of First Refusal dated as
of September 10, 1987 between USTNY and the Lessor
respecting the construction of an annex (at 130 West
47th Street, New York, New York) adjacent to the
property subject to such Lease and which annex is to be
subject to such Lease; and Agreement dated as of September
10, 1987 among USTNY, the Lessor and 1155 Office Building
Corp. under which USTNY and the Lessor may exercise an option
to purchase property (at 132 West 47th Street, New York,
New York) contiguous to the property subject to such Lease,
filed as Exhibit (10)(k) to UST's Annual Report on Form 10-K (File
No. 0-8709) for the fiscal year ended December 31, 1989.(1)
10.3 - Lease modification agreement dated December 7, 1987, be-
tween 46-47 Associates, as Lessor, and USTNY, as Lessee;
Modification of Annex Agreement, dated December 7, 1987,
between 46-47 Associates and USTNY; Modification of Right
of First Refusal Agreement, dated December 7, 1987, between
1133 Building Corp. and USTNY, filed as Exhibit 10.5 to UST's
Annual Report on Form 10-K (File No. 0-8709) for the fiscal
year ended December 31, 1993 (the "1993 10-K"). (1)
10.4 - Confirmation and Clarification Agreement dated March 10,
1992, between 46-47 Associates, as Lessor, and USTNY,
as Lessee, amending the lease agreement dated September 10,
1987, filed as Exhibit 10.6 to the 1993 10-K. (1)
- ----------------
(1) Incorporated herein by reference.
-28-
<PAGE> 29
Item 6. Exhibits and Reports on Form 10-Q (Continued)
(a) EXHIBITS:
10.5 - Clarification of Lease Modification Agreement, dated March
24, 1992, between 46-47 Associates, as Lessor, and USTNY,
as Lessee; Clarification of Right of First Refusal Agreement,
dated March 24, 1992, between 1133 Building Corp. and USTNY;
Termination of Annex Agreement, dated March 24, 1992, between
46-47 Associates and USTNY; Agreement, dated March 24, 1992,
between 46-47 Associates and USTNY; Grant of Easement and Zoning
Lot and Development Agreement, dated March 24, 1992, between 46-47
Associates and 1133 Building Corp., and Indenture, dated March 24,
1992, between 46-47 Associates and David Puchall, filed as Exhibit
10.7 to the 1993 10-K. (1)
10.6 - Second Lease Modification Agreement, dated May 10, 1993,
between 46-47 Associates, as Lessor, and USTNY, as Lessee,
amending the lease agreement dated September 10, 1987, filed
as Exhibit 10.8 to the 1993 10-K. (1)
10.7 - License agreement between 46-47 Associates and USTNY for space
in Cellar 201 at 114 West 47th Street, New York, New York, filed
as Exhibit 10.9 to UST's Annual Report on Form 10-K (File No.
0-8709) for the fiscal year ended December 31, 1994. (1)
EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS
10.8 - U.S. Trust Corporation Stock Plan for Non-Officer Directors,
as amended and restated effective as of September 1, 1995.
10.9 - 1989 Stock Compensation Plan and Predecessor Plans of the
Corporation, as amended, restated and renamed effective as of
September 1, 1995.
10.10 - Benefit Equalization Plan of the Corporation, as amended and
restated effective as of September 1, 1995.
10.11 - Board Members' Retirement Plan of the Corporation, as
amended and restated effective as of September 1, 1995.
10.12 - Board Members' Deferred Compensation Plan of the Corporation,
as amended and restated effective as of September 1, 1995.
10.13 - 1990 Annual Incentive Plan of the Trust Company and
Affiliated Companies as amended and restated effective as of
September 1, 1995.
- ----------------
(1) Incorporated herein by reference.
-29-
<PAGE> 30
Item 6. Exhibits and Reports on Form 10-Q (Continued)
(a) EXHIBITS:
10.14 - Incentive Award Plan of the Trust Company and Affiliated
Companies as amended and restated effective as of
September 1, 1995.
10.15 - 1995 Annual Incentive Plan of the Trust Company and
Affiliated Companies.
10.16 - 1990 Change in Control and Severance Policy for Top Tier
Officers of the Trust Company and Affiliated Companies as
amended and restated effective September 1, 1995.
10.17 - 1990 Change in Control and Severance Policy for Officers and
Employees of the Trust Company and Affiliated Companies as
amended and restated effective September 1, 1995.
10.18 - Executive Deferred Compensation Plan of the Corporation, as
amended and restated effective as of September 1, 1995.
10.19 - Executive Incentive Plan of the Corporation, as adopted
effective September 1, 1995.
10.20 - 1995 Stock Option Plan of the Corporation, as adopted
effective September 1, 1995.
10.21 - Agreements re supplemental retirement benefits for Messrs.
Schwarz, Maurer, Taylor and Abramowitz, as amended and
restated as of August 29, 1995.
11 - Statement re Computation of Net Income Per Share.
99 - Pro Forma Financial Information
(b) REPORTS ON FORM 8-K:
(1) Current Report dated September 1, 1995, reporting under Item 2.
Acquisition or Disposition of Assets, the consummation of the sale of the
Corporation's institutional custody, mutual funds servicing and unit trust
businesses to The Chase Manhattan Corporation ("Chase") for $363.5 million in
Chase common stock.
-30-
<PAGE> 31
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
U. S. Trust Corporation
-----------------------
(Registrant)
Date: November 14, 1995 Richard E. Brinkmann
----------------- -------------------------------
Richard E. Brinkmann
Senior Vice President
and Comptroller
(Principal Accounting Officer)
-31-
<PAGE> 32
EXHIBIT INDEX
2.1 - Agreement and Plan of Merger dated as of November 18, 1994
(as amended, supplemented or otherwise modified from time to
time) between The Chase Manhattan Corporation ("Chase") and
the former U.S. Trust Corporation ("UST"), filed as Exhibit
2.1 to UST's Annual Report on Form 10-K (File No. 0-8709) for
the fiscal year ended December 31, 1994 ("Form 10-K") and
included in the Form 10-K as Appendix A to the Proxy Statement/
Prospectus dated February 9, 1995, filed as Exhibit 99.1 to
the Form 10-K ("Exhibit 99.1"). (1)(2)
2.2 - Form of Agreement and Plan of Distribution among UST, the
former United States Trust Company of New York ("USTNY"), the
Corporation and New U.S. Trust Company of New York ("the
"Trust Company"), filed as Exhibit 2.2 to the Form 10-K and
included in the Form 10-K as Appendix B to Exhibit 99.1.
(1)(2)
2.3 - Form of Contribution and Assumption Agreement between USTNY
and the Trust Company, filed as Exhibit 2.3 to the Form 10-K
and included in the Form 10-K as Appendix C to Exhibit 99.1.
(1)(2)
2.4 - Form of Post Closing Covenants Agreement among Chase, UST,
USTNY, the Corporation and the Trust Company, filed as
Exhibit 2.4 to the Form 10-K and included in the Form 10-K as
Appendix D to Exhibit 99.1. (1)
2.5 - Tax Allocation Agreement dated as of September 1, 1995 among
the UST, the Corporation and Chase.
2.6 - Services Agreement between USTNY and the Trust Company, dated
September 1, 1995.
- ----------------
(1) Incorporated herein by reference.
(2) The copy of this document being incorporated by reference herein
does not include the exhibits and schedules thereto which are
identified as being omitted in the table of contents of this
document. The Corporation undertakes to furnish any such omitted
exhibits and schedules to the Commission upon its request.
<PAGE> 33
3.1 - Restated Certificate of Incorporation of the Corporation,
filed as Exhibit 4(b) to the Corporation's Registration
Statement on Form S-8 (Registration No. 33-62371). (1)
3.2 - By-Laws of the Corporation, filed as Appendix II to the
Corporation's Registration Statement on Form 10 dated
February 9, 1995. (1)
4 - Note: The exhibits filed herewith do not include the
instruments with respect to long-term debt of the Corporation
and its subsidiaries, inasmuch as the total amount of debt
authorized under any such instrument does not exceed 10% of
the total assets of the Corporation and its subsidiaries on a
consolidated basis. The Corporation agrees, pursuant to Item
601 (b)(4)(iii) of Regulation S-K, that it will furnish a
copy of any such instrument to the Securities and Exchange
Commission upon request.
4.1 - Rights Agreement, dated as of September 1, 1995, between the
Corporation and First Chicago Trust Company of New York, as
Rights Agent, filed on September 5, 1995 as Exhibit 1 to the
Corporation's Registration Statement on Form 8-A. (1)
4.2 - Specimen certificate representing Rights to Purchase the
Corporation's Series A Participating Cumulative Preferred
Shares, filed on September 5, 1995 as Exhibit B to Exhibit 1
to the Corporation's Registration Statement on Form 8-A
registering such Rights. (1)
10.1 - Sublease agreement, dated September 1, 1995, between The Chase
Manhattan Bank (National Association) as Sublessor, and the
Trust Company, as Sublessee, covering space at 770 Broadway,
New York, New York.
- ----------------
(1) Incorporated herein by reference.
<PAGE> 34
10.2 - Lease, dated as of September 10, 1987, between 46-47
Associates, as Lessor, and USTNY, as Lessee, covering
space at 114 West 47th Street, New York, New York;
letters modifying the terms of such Lease dated,
respectively, September 10, 1987 and October 2, 1989;
Subordination Agreement dated as of September 10, 1987
between USTNY and 1133 Building Corp. subordinating to
such Lease a ground lease with respect to the property
subject to such Lease; Right of First Refusal dated as
of September 10, 1987 between USTNY and the Lessor
respecting the construction of an annex (at 130 West
47th Street, New York, New York) adjacent to the
property subject to such Lease and which annex is to be
subject to such Lease; and Agreement dated as of September
10, 1987 among USTNY, the Lessor and 1155 Office Building
Corp. under which USTNY and the Lessor may exercise an option
to purchase property (at 132 West 47th Street, New York,
New York) contiguous to the property subject to such Lease,
filed as Exhibit (10)(k) to UST's Annual Report on Form 10-K (File
No. 0-8709) for the fiscal year ended December 31, 1989.(1)
10.3 - Lease modification agreement dated December 7, 1987, be-
tween 46-47 Associates, as Lessor, and USTNY, as Lessee;
Modification of Annex Agreement, dated December 7, 1987,
between 46-47 Associates and USTNY; Modification of Right
of First Refusal Agreement, dated December 7, 1987, between
1133 Building Corp. and USTNY, filed as Exhibit 10.5 to UST's
Annual Report on Form 10-K (File No. 0-8709) for the fiscal
year ended December 31, 1993 (the "1993 10-K"). (1)
10.4 - Confirmation and Clarification Agreement dated March 10,
1992, between 46-47 Associates, as Lessor, and USTNY,
as Lessee, amending the lease agreement dated September 10,
1987, filed as Exhibit 10.6 to the 1993 10-K. (1)
- ----------------
(1) Incorporated herein by reference.
<PAGE> 35
10.5 - Clarification of Lease Modification Agreement, dated March
24, 1992, between 46-47 Associates, as Lessor, and USTNY,
as Lessee; Clarification of Right of First Refusal Agreement,
dated March 24, 1992, between 1133 Building Corp. and USTNY;
Termination of Annex Agreement, dated March 24, 1992, between
46-47 Associates and USTNY; Agreement, dated March 24, 1992,
between 46-47 Associates and USTNY; Grant of Easement and Zoning
Lot and Development Agreement, dated March 24, 1992, between 46-47
Associates and 1133 Building Corp., and Indenture, dated March 24,
1992, between 46-47 Associates and David Puchall, filed as Exhibit
10.7 to the 1993 10-K. (1)
10.6 - Second Lease Modification Agreement, dated May 10, 1993,
between 46-47 Associates, as Lessor, and USTNY, as Lessee,
amending the lease agreement dated September 10, 1987, filed
as Exhibit 10.8 to the 1993 10-K. (1)
10.7 - License agreement between 46-47 Associates and USTNY for space
in Cellar 201 at 114 West 47th Street, New York, New York, filed
as Exhibit 10.9 to UST's Annual Report on Form 10-K (File No.
0-8709) for the fiscal year ended December 31, 1994. (1)
EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS
10.8 - U.S. Trust Corporation Stock Plan for Non-Officer Directors,
as amended and restated effective as of September 1, 1995.
10.9 - 1989 Stock Compensation Plan and Predecessor Plans of the
Corporation, as amended, restated and renamed effective as of
September 1, 1995.
10.10 - Benefit Equalization Plan of the Corporation, as amended and
restated effective as of September 1, 1995.
10.11 - Board Members' Retirement Plan of the Corporation, as
amended and restated effective as of September 1, 1995.
10.12 - Board Members' Deferred Compensation Plan of the Corporation,
as amended and restated effective as of September 1, 1995.
10.13 - 1990 Annual Incentive Plan of the Trust Company and
Affiliated Companies as amended and restated effective as of
September 1, 1995.
- ----------------
(1) Incorporated herein by reference.
<PAGE> 36
10.14 - Incentive Award Plan of the Trust Company and Affiliated
Companies as amended and restated effective as of
September 1, 1995.
10.15 - 1995 Annual Incentive Plan of the Trust Company and
Affiliated Companies.
10.16 - 1990 Change in Control and Severance Policy for Top Tier
Officers of the Trust Company and Affiliated Companies as
amended and restated effective September 1, 1995.
10.17 - 1990 Change in Control and Severance Policy for Officers and
Employees of the Trust Company and Affiliated Companies as
amended and restated effective September 1, 1995.
10.18 - Executive Deferred Compensation Plan of the Corporation, as
amended and restated effective as of September 1, 1995.
10.19 - Executive Incentive Plan of the Corporation, as adopted
effective September 1, 1995.
10.20 - 1995 Stock Option Plan of the Corporation, as adopted
effective September 1, 1995.
10.21 - Agreements re supplemental retirement benefits for Messrs.
Schwarz, Maurer, Taylor and Abramowitz, as amended and
restated as of August 29, 1995.
11 - Statement re Computation of Net Income Per Share.
27 - Financial Data Schedule
99 - Pro Forma Financial Information
<PAGE> 1
EXHIBIT 2.5
EXECUTION COPY
===========================================================================
TAX ALLOCATION AGREEMENT
Dated as of September 1, 1995
Among
U.S. TRUST CORPORATION
NEW USTC HOLDINGS CORPORATION
and
THE CHASE MANHATTAN CORPORATION
===========================================================================
<PAGE> 2
TAX ALLOCATION AGREEMENT (the "Agreement")
dated as of September 1, 1995, among
U.S. TRUST CORPORATION, a New York corporation
(the "Company"),
NEW USTC HOLDINGS CORPORATION, a New York corporation
("New Holdings") and THE CHASE MANHATTAN CORPORATION,
a Delaware corporation ("Parent").
WHEREAS, the Company is currently the common parent of an affiliated group of
corporations (the "Affiliated Group") filing consolidated Federal income Tax
returns and unitary or combined state income Tax returns ("Consolidated
Returns"), pursuant to which the Company and one or more other members of the
Affiliated Group pay Taxes on a consolidated, combined or unitary basis
("Consolidated Taxes");
WHEREAS, on September 1, 1995, United States Trust Company of New York, a New
York State chartered bank and trust company ("USTNY") and a wholly owned
subsidiary of the Company, transferred certain assets and liabilities
associated with USTNY's private banking and asset management businesses to New
U.S. Trust Company of New York, a New York State chartered bank and trust
company ("New Trustco") and a newly formed, wholly owned subsidiary of USTNY
("Contribution No. 1");
WHEREAS, immediately thereafter, USTNY distributed the stock of New Trustco to
the Company ("Spinoff No. 1") in a transaction intended to qualify as a
tax-free distribution under Section 355 of the Internal Revenue Code of 1986,
as amended (the "Code");
WHEREAS, immediately thereafter, the Company contributed the stock of New
Trustco, the stock of certain other subsidiaries of the Company and certain
other assets to New Holdings, a newly formed, wholly owned subsidiary of the
Company ("Contribution No. 2");
WHEREAS, the company intends to distribute all the stock of New Holdings to its
shareholders ("Spinoff No. 2") in a transaction intended to qualify as a
tax-free spin-off under Section 355 of the Code (Contribution No. 1,
Contribution No. 2, spinoff No. 1 and Spinoff No. 2 are referred to,
collectively, herein as the "Spinoffs");
WHEREAS, on the beginning of the first day after the date on which Spinoff No.
2 occurs (the "Distribution Date"), New Holdings and its subsidiaries,
including New Trustco (collectively, the "Holdings Group") will cease to be
members of the Affiliated Group of which the Company is the common parent
corporation, within the meaning of Section 1502 of the Code, and which has
elected to file Consolidated Returns;
WHEREAS, immediately following Spinoff No. 2 pursuant to an agreement between
the Company and the Parent, the Company shall merge with the Parent or a
subsidiary of the Parent and USTNY may merge with a subsidiary of the Parent
(collectively, the "Merger");
WHEREAS, the Company and New Holdings desire to allocate the liability for the
Taxes (including any interest or penalties thereon and additions thereto) of
members of the Affiliated Group for any taxable period (including short taxable
periods and any portion of any taxable period) which period (or portion) ends on
or before the effective date of the Merger (a "Pre-Merger Tax Period") and to
provide for certain other tax-related matters;
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
parties agree as follows.
1. Indemnification by the Company and USTNY. The Company and its
subsidiaries, other than USTNY, shall indemnify and hold harmless New Holdings
against any Federal, state, local and foreign income,
<PAGE> 3
property, sales, excise, transfer, withholding, employment or other
taxes, tariffs or governmental charges (and all penalties and interest relating
thereto) imposed by a governmental authority pursuant to the exercise of its
power to tax (collectively, "Taxes") (i) imposed on the Company, USTNY or any
of their respective subsidiaries at the Effective Time of the Merger for any
taxable period (including short taxable periods and any portion of any taxable
period) which period (or portion) begins on or after and ends after the
effective date of the Merger (a "Post-Merger Tax Period"), (ii) imposed on any
member of the Affiliated Group as a result of the Merger failing to qualify as
a reorganization under Section 368(a) of the Code solely by reason of one or
more actions, other than a Contemplated Action, taken by the Company, the
Parent or any of their respective subsidiaries after the Merger or (iii)
imposed as a result of the Spinoffs on any member of the Affiliated Group
solely by reason of one or more actions, other than a Contemplated Action,
taken by the Company, the Parent or any of their respective subsidiaries after
the Merger. As used herein, "Contemplated Action" shall mean any action or
inaction set forth in the documents prepared in connection with the Spinoffs
and the Merger, and actions or inactions contemplated to be taken as specified
in writing by the Parent to New Holdings in connection with the preparation of
a private letter ruling request to be completed in connection with the Spinoffs
and the Merger. Except as specifically provided in this Section 1, none of
Parent, the Company nor any of their respective subsidiaries shall have any
obligation to any of New Holdings, New Trustco or any of their respective
subsidiaries for any Taxes arising from or related to the Spinoffs or the
Merger.
2. INDEMNIFICATION BY NEW HOLDINGS. New Holdings and each direct or indirect
subsidiary thereof, other than New Trustco, shall indemnify and hold harmless
the Parent, the Company, USTNY and each direct or indirect subsidiary thereof
against any and all Taxes, other than Taxes for which New Holdings, New Trustco
and each direct or indirect subsidiary thereof has been indemnified under
Section 1, (i) imposed on any member of the Affiliated Group with respect to a
Pre-Merger Tax Period or (ii) imposed on Parent, Company and each direct or
indirect subsidiary thereof as a result of the Spinoffs or the Merger.
3. CONTROL OF TAX MATTERS. (a) The Company hereby irrevocably designates,
and agrees to cause each of its subsidiaries to so designate, New Holdings as
its agent to take any and all actions, at New Holdings' sole expense, necessary
or incidental to the preparation of Tax returns and the filing of claims for
refunds or forms relating to any Pre-Merger Tax Period. For any Straddle
Period (as defined in Section 4) of the Company or any of its subsidiaries that
was a member of the Affiliated Group for any Pre-Merger Tax Period, Parent, at
Parent's sole expense, will timely file (in a manner consistent with past
practice of the Company, unless Parent reasonably determines that such practice
is inconsistent with the then existing state of the law) with the appropriate
Taxing authorities all Tax returns required to be filed.
(b) If requested by New Holdings the Company will, and will cause each of its
subsidiaries that was a member of the Affiliated Group for any Pre-Merger Tax
Period to, and New Holdings will, and will cause each of its subsidiaries that
was a member of the Affiliated Group for any Pre-Merger Tax Period to, join in
the filing of Consolidated Returns for all Pre-Merger Tax Periods to the extent
the Company, New Holdings and their subsidiaries are respectively eligible to
join in such Consolidated Returns. Such Consolidated Returns will be filed on
behalf of the Affiliated Group by New Holdings or, if so requested by New
Holdings, by the Company.
(c) The Company shall refrain, and shall cause each of its subsidiaries to
refrain, from making any material tax election (including an election under
Section 13261(g)(2) of the Revenue Reconciliation Act of 1993) without the
prior written consent of New Holdings that would (i) bind New Holdings or any
member of the Holdings Group or (ii) materially affect the Tax liability of the
Affiliated Group.
(d) Without the prior written consent of Parent, New Holdings shall refrain,
and shall cause each of its subsidiaries to refrain, from making, filing or
amending any Tax return that includes any Pre-Merger Tax Period that (i) is
inconsistent with the existing and historic method used by the Affiliated Group
in
3
<PAGE> 4
calculating the taxable income of the Affiliated Group and (ii) would
materially affect the Tax liability of the Parent, Company and each direct or
indirect subsidiary thereof for any Post-Merger Tax Period.
4. ALLOCATION BETWEEN TAXABLE PERIODS. (a) In the case of any taxable
period that includes but does not end on the effective date of the Merger (a
"Straddle Period"),
(i) real, personal and intangible property Taxes, other than transfer
and similar Taxes, ("Property Taxes") allocated to the Pre-Merger Tax Period
shall be equal to the amount of such Property Taxes for the entire Straddle
Period multiplied by a fraction, the numerator of which is the number of days
during the Straddle Period that are in the Pre-Merger Tax Period and the
denominator of which is the number of days in the Straddle Period; and
(ii) all Taxes (other than Property Taxes) for the Pre-Merger Tax
Period shall be computed based on an actual closing of the books as if such
taxable period ended as of the close of business on the effective date of the
Merger and, in the case of any Taxes attributable to the ownership of any
equity interest in any partnership or other "flow through" entity, based on an
actual closing of the books as if the taxable period of such partnership or
other "flow through" entity ended as of the close of business on the effective
date of the Merger; PROVIDED, HOWEVER, the transfers and transactions
(including Taxes attributable thereto) which occur to effectuate the Spinoffs
or the Merger shall be allocated to the Pre-Merger Tax Period.
(b) In the case of any taxable period other than a Straddle Period, all
income, deductions and other items shall be allocated between the Pre-Merger
Tax Period and the Post-Merger Tax Period in a manner consistent with
applicable tax accounting principles and based on an actual closing of the
books of the Company on the effective date of the Merger except that (i)
allowances or deductions that are calculated on an annual basis (such as the
deductions for amortization, depreciation or capital allowances) and Property
Taxes shall be prorated on a daily basis, (ii) transfers and transactions
(including Taxes attributable thereto) which occur to effectuate the Spinoffs
or the Merger shall be allocated to the Pre-Merger Tax Period, and (iii) if the
effective date of the Merger occurs on a date other than the first day of a
fiscal month of the Company, all income, deductions and other items for such
month (other than amounts attributable to transactions not in the ordinary
course of business and other than closing adjustments and other similar
adjustments) will be prorated on a daily basis. Any adjustments made by any
Taxing authority shall be allocated in accordance with the principles of this
Section 4(b).
(c) Without limiting the foregoing provisions of this Section 4 setting forth
the principles for allocating income, gain, loss, deduction, credits, events or
transfers between Pre-Merger and Post-Merger Tax Periods, and any Straddle
Period, New Holdings, Parent, and the Company shall file, or cause to be filed,
all relevant Tax returns and execute, or cause to be executed, such other
documents as may be required by any Taxing authority, on the basis that the
Spinoffs and the Merger shall occur for Tax purposes as of the close of
business on the day before the effective date of the Merger and refrain from
taking any position inconsistent with such basis with any Taxing authority
unless the relevant Taxing authority will not accept a Tax return filed on such
basis, or unless otherwise required under applicable law after a final
determination thereof.
5. COOPERATION. The Company agrees to cooperate with New Holdings, and will
cause each of its subsidiaries to so cooperate, in a timely manner consistent
with existing practice in filing any return or consent contemplated by this
Agreement. The Company also agrees to take, and will cause the appropriate
subsidiary to take, such action or actions as New Holdings may reasonably
request, including but not limited to the filing of requests for the extension
of time within which to file tax returns, and to cooperate in connection with
any refund claim with respect to any Pre-Merger Tax Period. The Company
further agrees to furnish timely, and to cause each of its subsidiaries to so
furnish, New Holdings with any and all
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<PAGE> 5
information reasonably requested by New Holdings in order to carry out the
provisions of this Agreement. Without limiting the generality of the foregoing
sentence, the Company specifically agrees to provide to New Holdings promptly,
but in any event within 10 days of receipt thereof, copies of any correspondence
or notices received from the Internal Revenue Service or any other Taxing
authority with respect to Taxes of the Affiliated Group for a Pre-Merger Tax
Period. New Holdings agrees to furnish timely to the Company any and all
information requested by the Company in order to carry out the provisions of
this Agreement.
6. REFUNDS AND CARRYBACKS; CARRYFORWARDS. (a) Any refund or reduction of any
Tax that results from any refund or carryback of a loss, credit or similar
item of the Company arising from or attributable to a PreMerger Tax Period to a
Taxable period beginning prior to the effective date of the Merger shall be
for the account of New Holdings. The Company shall, promptly upon receipt by
the Company, pay to New Holdings any such refund or reduction (whether payable
pursuant to a Consolidated Return or not) together with any interest relating
thereto at the Federal statutory rate used by the Internal Revenue Service or
the relevant Taxing authority in computing the interest payable by or to it,
regardless of whether such refund is attributable to a carryback, adjustment or
any other factor. The Company's obligations under this Section 6(a) shall be
limited to amounts (including interest) actually received by the Company with
respect to such refund. A refund or reduction will be considered to have been
received by the Company or its affiliate (i) to the extent that the amount of
Taxes such person would be required to pay but for such refund or carryback is
reduced, or the amount of a Tax refund such person would receive but for such
refund or carryback is increased and (ii) at the time a Tax payment or refund
referred to in clause (i) is actually paid or received, as the case may be, by
the Company or its then existing affiliates. New Holdings and its direct and
indirect subsidiaries shall reimburse Company for any payment (including any
expenses, interest or penalties related thereto) made by Company under this
Section 6(a) promptly upon a determination that the refund or reduction to
which such payment relates was erroneous.
(b) Any refund or reduction of any Tax that results from any carryforward of a
loss, credit or similar item of the Company from a Taxable period beginning
prior to the effective date of the Merger to a Taxable period beginning on or
after the effective date of the Merger shall be for the account of New
Holdings. In the event the Company, USTNY or any subsidiary of the Company
that was a member of the Affiliated Group for a Pre-Merger Tax Period carries
forward such loss, credit or similar item from a Pre-Merger Tax Period to a
taxable period ending after the date of the Merger, the Company shall pay to
New Holdings the Tax benefit attributable to such carryforward as and when such
Tax benefit is realized. In computing the amount of any such refund or
reduction of Tax, the Company or its affiliate will be deemed to recognize all
items of income, gain, loss, reduction or credit before recognizing any item so
carried forward. A refund or reduction will be considered to have been
received by the Company or its affiliate (i) to the extent that the amount of
Taxes such person would be required to pay but for such carryforward is
reduced, or the amount of a Tax refund such person would receive but for such
carryforward is increased and (ii) at the time a Tax payment or refund referred
to in clause (i) is actually paid or received, as the case may be, by the
Company or its affiliates. Such amount shall be paid by the Company to New
Holdings within five business days of a written request therefor by New
Holdings, which request shall set forth in reasonable detail the computation of
such amount and the date such Tax benefit was received. New Holdings and its
direct and indirect subsidiaries shall reimburse Company for any payment
(including any expenses, interest or penalties related thereto) made by Company
under this Section 6(b) promptly upon a determination that the refund or
reduction to which such payment relates was erroneous.
(c) To the extent Parent reasonably determines that any refund or reduction
received by Company or its direct or indirect subsidiaries which is payable to
New Holdings under this Section 6 is based on a position that is likely to be
successfully challenged by Taxing authorities, Company shall have the right to
require New Holdings to secure its reimbursement obligation in a manner and for
a term reasonably satisfactory to Parent; PROVIDED, FURTHER, Company's
obligations hereunder to pay such refund to New Holdings shall be conditioned
upon the prior receipt of such security. Provided, however, if the amount
Company or its direct
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<PAGE> 6
or indirect subsidiaries must pay to any Taxing authority with respect to any
such refund or reduction exceeds the amount of security, if any, provided the
Company pursuant to this Section 6(c), New Holdings shall pay such excess to
the Company as provided in Sections 6(a) or 6(b), as applicable.
7. CONTESTS. (a) Except as provided below, in the event that any
deficiencies or refund claims arise with respect to a Tax liability of the
Affiliated Group for a Pre-Merger Tax Period, New Holdings shall control all
proceedings with respect thereto. In the event that any issue or issues are
raised during such proceedings that may result, directly or indirectly, in
deficiencies or refund claims related to Taxes that would be required to be
paid by the Company pursuant to Section 1 hereof, both New Holdings and Parent
agree and acknowledge that the contest of any such issue or issues shall be
conducted jointly; provided, however, all major decisions regarding the conduct
of such contest shall be made by Parent. New Holdings' right to indemnity
hereunder shall be conditioned on New Holdings' compliance with Section 4 of
the Post Closing Covenants Agreement except that New Holdings' shall be
required to give notice to Parent under Section 4 of the Post Closing Covenants
Agreement upon the receipt of oral or written notice by New Holdings from any
governmental authority or agent thereof of an issue that may result in Taxes
for which a claim for indemnity from Parent, Company or USTNY may be made
under this Agreement.
(b) New Holdings and the Company agree to cooperate in all reasonable respects
with respect to Tax deficiencies or refund claims described in Sections 6(a)
and (b), which cooperation shall include executing and filing such waivers,
consents, forms, court petitions, refund claims, complaints, powers of attorney
and other documents needed from time to time in order to defend, prosecute or
resolve such deficiencies or claims.
8. COMPUTATIONS. Other than determinations of whether there are any
indemnity obligations under this Agreement, all computations or recomputations
of Tax liability and all determinations, computations or recomputations of any
amount or any payment (including, but not limited to, computations of the
amount of the Tax liability, the amount or effect of any loss, credit or
deduction, the effect of a Federal statutory Tax rate change for a Taxable
year, and the amount of any interest, penalties or additions imposed with
respect to any Tax) shall be prepared by New Holdings and submitted to Parent
for its written approval. Any disagreement as to such computations after
submission to the Parent by New Holdings shall be resolved by a nationally
recognized accounting firm, with expertise in Tax, independent of each of the
parties hereto. Without limiting the foregoing, New Holdings shall calculate
the Taxable income of the Affiliated Group in accordance with the existing and
historic methodology used by the Affiliated Group in calculating Taxable income
of the Affiliated Group and submit such calculation to the Parent in accordance
with the provisions of this Section 8.
9. OFFSETS. No payment shall be required to be made by either party to the
other pursuant to this Agreement to the extent that there is an amount then due
and payable under this Agreement to the party that is to make such payment.
10. ASSIGNMENT. Neither this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise by any of the parties without the prior written
consent of the other parties. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of, and be enforceable
by, the parties hereto and their respective successors and assigns.
11. SURVIVAL. The provisions of this Agreement shall survive the effective
date of the Merger and remain in full force until all periods of limitations,
including any extensions or waiver periords, for all Taxable periods of the
Company and New Holdings prior to or including the effective date of the Merger
have expired.
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12. NOTICES. Any notices, payments or other communications required by this
Agreement shall be made as provided in the Section 10 of the Post Closing
Covenants Agreement; however, copies of such notices, payments or other
communications shall, for both New Holdings and the Company, be sent to the
attention of the Director of Taxes.
13. GOVERNING LAW. The principles and provisions of Section 8.7 of the Merger
Agreement shall apply to this Agreement.
14. ENTIRE AGREEMENT. This Agreement (a) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter of this Agreement and (b)
is not intended to confer upon any person other than the parties hereto any
rights or remedies. The parties agree that to the extent the provisions of any
other agreements executed in connection with the Spinoffs or the Merger are
inconsistent with the provisions hereof, the provisions of this Agreement shall
prevail.
15. COUNTERPARTS. The principles and provisions of Section 8.5 of the Merger
Agreement shall apply to this Agreement.
16. SERVERABILITY. If any provision of this Agreement or the application of
any such provision to any person or circumstances shall be held invalid,
illegal or unenforceable in any respect by a court of competent jurisdiction,
such invalidity, illegality or unenforceability shall not affect any other
provision hereof.
17. HEADINGS. Headings of sections in this Agreement are inserted for
convenience of reference only and are not intended to be a part of or to
affect the meaning or interpretation of this Agreement.
18. DEFINITIONS. Any capitalized item not defined in this Agreement shall have
the meaning given to such term by the Contribution and Assumption Agreement,
the Agreement and Plan of Distribution or the Merger Agreement.
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<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the date first above written.
U.S. TRUST CORPORATION
By: /s/
---------------------------------
Name:
Title:
NEW USTG HOLDINGS CORPORATION
By: /s/
---------------------------------
Name:
Title:
THE CHASE MANHATTAN
CORPORATION
By: /s/
---------------------------------
Name:
Tile:
8
<PAGE> 1
Exhibit 2.6
SERVICES AGREEMENT
between
UNITED STATES TRUST COMPANY OF NEW YORK
and
NEW U.S. TRUST COMPANY
OF NEW YORK
Dated
September 1, 1995
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE 1. DEFINITIONS 1
ARTICLE 2. TERM 4
ARTICLE 3. CHASE RESPONSIBILITIES 5
3.1 Services 5
3.2 Performance Standards 7
3.3 Chase Organization and Personnel 8
3.4 Management and Control 10
3.5 Migration of Data Center 13
3.6 Systems Migration 13
3.7 Third Party Work 14
3.8 Loss of Data 14
3.9 Certain Matters Relating to Securities Held For NEW TRUSTCO and its 14
Customers
ARTICLE 4. NEW TRUSTCO RESPONSIBILITIES 15
4.1 NEW TRUSTCO Project Executive 15
4.2 Cooperation 15
4.3 Savings Clause 15
4.4 Transition Activities 15
4.5 Limited Agent 16
4.6 Accuracy of Data 16
4.7 Certain Chase Products 16
4.8 Security Violations 18
4.9 Settlement for Transactions Processed by Chase 18
ARTICLE 5. CHARGES AND PAYMENT TERMS 18
5.1 Charges 18
5.2 Payment Terms 20
5.3 Taxes 21
ARTICLE 6. INTELLECTUAL PROPERTY RIGHTS 22
6.1 NEW TRUSTCO Software 22
6.2 Third Party Software Licensed by NEW TRUSTCO 22
6.3 Third Party Software Licensed by Chase 23
6.4 Ownership of Work Product 23
6.5 No Other Rights 23
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C>
ARTICLE 7. DATA SECURITY/CONFIDENTIALITY/AUDITS 24
7.1 Safeguarding NEW TRUSTCO Data 24
7.2 Confidentiality 24
7.3 Audit Rights 25
ARTICLE 8 TERMINATION 27
8.1 Termination for Cause 28
8.2 Termination for Convenience 28
8.3 Termination For Insolvency 28
8.4 Termination Upon Change of Control 28
8.5 Termination/Expiration Assistance 28
8.6 Termination/Expiration Fee 31
ARTICLE 9. FORCE MAJEURE 31
ARTICLE 10. REPRESENTATIONS AND WARRANTIES 31
10.1 Non-Infringement 32
10.2 Compliance with Laws And Regulations 32
10.3 Authorization 32
10.4 Disclaimer 33
ARTICLE 11. INDEMNITIES 33
11.1 Indemnity by Chase 33
11.2 Indemnity by NEW TRUSTCO 33
11.3 Cross Indemnities 34
11.4 Indemnification Procedures 34
11.5 Subrogation 36
ARTICLE 12. INSURANCE AND RISK OF LOSS 36
12.1 Insurance 36
12.2 Risk of Loss 37
ARTICLE 13. LIMITATION OF LIABILITY 37
13.1 Limitation on Liability 37
ARTICLE 14. CERTAIN LOSSES 39
14.1 General 39
ARTICLE 15. DISPUTE RESOLUTION 43
15.1 Informal Dispute Resolution 43
15.2 General Resolution Procedures 44
15.3 Litigation 45
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
15.4 Continued Performance 45
15.5 Affiliates 46
ARTICLE 16. GENERAL 46
16.1 Binding Nature and Assignment 46
16.2 Entire Agreement; Amendment 46
16.3 Notices 47
16.4 Counterparts 48
16.5 Governing Law 48
16.6 Headings 48
16.7 Relationship of Parties 48
16.8 Severability 49
16.9 Consents and Approvals 49
16.10 No Waiver of Default; Cumulative Remedies 49
16.11 Survival 49
16.12 No Third Party Beneficiaries 50
16.13 Media Releases 50
16.14 Covenant of Good Faith 50
16.15 Non-Hiring 50
Schedule A: Services Schedule
Schedule B: Key Transitioning Personnel
Schedule C: Additional Charges
Schedule D: COLA
Schedule E: Side Letter
Schedule F: Side Letter Supplement
Schedule G: Reports
Schedule H: FACAM Joint Venture
Schedule I: FTE Letter Agreement
Schedule J: Termination/Expiration Fee
Schedule K: Procedures Manual Certificate
</TABLE>
iii
<PAGE> 5
THIS SERVICES AGREEMENT, dated as of September 1, 1995, is made and
entered into by and between NEW U.S. TRUST COMPANY OF NEW YORK, a New York State
chartered bank and trust company ("NEW TRUSTCO"), and UNITED STATES TRUST
COMPANY OF NEW YORK, a New York State chartered bank and trust company ("USTNY")
As used in this Agreement, the term "Chase" shall mean USTNY prior to the
effectiveness of the merger of USTNY into The Chase Manhattan Bank, N.A. and
shall mean The Chase Manhattan Bank, N.A. from and after the effectiveness of
such merger and the term "Party" shall mean either NEW TRUSTCO or Chase, as
appropriate, and "Parties" shall mean NEW TRUSTCO and Chase.
RECITALS
1. Chase desires to provide securities processing, bank operations,
information technology and related back office support services to NEW TRUSTCO,
as set forth in this Agreement.
2. NEW TRUSTCO desires to have Chase provide such services in accordance
with the terms and conditions of this Agreement.
NOW THEREFORE, in consideration of the mutual agreements contained
herein and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the Parties agree as follows:
ARTICLE 1.
DEFINITIONS
The following terms, when capitalized, are defined as follows:
(a) "Acquisition" means the acquisition by Chase pursuant to the
Acquisition Documents of certain portions of UST's business.
(b) "Acquisition Documents" shall mean the Agreement and Plan of Merger,
dated as of November 18, 1994, among The Chase Manhattan Corporation and U.S.
Trust Corporation (the "Merger Agreement"), and all agreements, instruments and
other documents executed in connection therewith by such parties and their
Affiliates.
(c) "Additional Volume Charges" shall mean, collectively, the volume
charges set forth in Section 1 of Schedule C.
(d) "Affiliate" shall mean any entity controlled by, controlling, or
under common control with any other entity. The term "control" and its
derivatives shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of an entity,
whether through the ownership of voting securities, by contract or otherwise.
Notwithstanding anything to the contrary herein, it is understood and agreed
that the FACAM joint venture described in Schedule H, and, subject to the
limitations set forth in Schedule H, any joint venture or other entity which is
organized as a replacement for such joint venture, shall be deemed to be an
"Affiliate" of NEW TRUSTCO.e
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(e) "AMS" shall mean any asset management system used by Chase in
providing the Services.
(f) "Applications Software" or "Applications" shall mean those programs
(whether or not in process), including all supporting documentation and media,
that perform or are intended to perform specific user related data processing
and telecommunications tasks.
(g) "Broadway Data Center" shall mean the UST data center acquired by
Chase in the Acquisition which is located at 770 Broadway, New York, New York.
(h) "Chase Data" shall mean the information of Chase and its Affiliates
respecting their businesses, including, without limitation, information relating
to their customers, technology, operations, facilities, consumer markets,
products, capacities, systems, procedures, security practices, research,
development, business affairs, ideas, concepts, innovations, inventions,
designs, business methodologies, improvements, trade secrets, copyrightable
subject matter and proprietary information, all as provided to or obtained by
NEW TRUSTCO during the Term.
(i) "Chase Prevailing Rates" shall mean, for any particular service or
product, the rates charged by Chase ***** pursuant to this Agreement.
(j) "Commencement Date" shall mean the closing date of the Acquisition.
(k) "Contract Year" shall mean any twelve-month period during the Term
beginning on the Commencement Date or any anniversary of the Commencement Date.
(l) "Contribution Agreement" shall mean that certain Contribution
and Assumption Agreement to be entered into by UST and NEW TRUSTCO pursuant to
the Merger Agreement.
(m) "Data Center" shall mean: (i) during the time and to the extent
Services are being performed from there, the Broadway Data Center; (ii) during
the time and to the extent Services are being performed from there, the
MetroTech Data Center; or (iii) such other facility from which Chase will
perform some or all of the Services as permitted under Section 3.5.
(n) "Direct Cost" shall mean any costs for personnel (salary and
benefits), equipment, supplies, materials or services of any kind provided under
this Agreement, but not including any corporate overhead costs or corporate
administrative expenses.
(o) "End User Equipment" shall mean workstations, branch hardware, data
terminals, LAN servers, communications equipment (from the cluster controller
back to the NEW TRUSTCO end user) and other similar types of field equipment
located on NEW TRUSTCO's premises, and associated peripheral equipment, which
are used by NEW TRUSTCO and NEW TRUSTCO licensees to access systems operated by
Chase under this Agreement.
(p) "Equipment" shall mean the computer and telecommunications equipment
used by Chase to provide the Services, but not including End User Equipment.
**** 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.
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<PAGE> 7
(q) "Fixed Fee" shall mean the fixed annual fee payable pursuant to
Article 5.
(r) "FTE Letter Agreement" shall mean the letter agreement, dated July
19, 1995, between UST and Chase and annexed hereto as Schedule I, which sets
forth the understanding of the Parties with respect to certain support to be
provided by Chase with respect to the AMS, GTAS and CIS 2 systems.
(s) "GTAS" shall mean any corporate trust and agency system used by
Chase in providing the Services.
(t) "Losses" shall mean any liabilities, claims, actions, suits,
proceedings, judgments, losses, damages, deficiencies and expenses. The term
"Losses" shall not include, however, legal and other expenses incurred in
defending an indemnifiable claim under Article 11 for which the financial
responsibilities of the Parties are specified in Section 11.5.
(u) "MetroTech Data Center" shall mean the data center owned or operated
by Chase which is located at 4 Chase MetroTech Center, Myrtle Avenue, Brooklyn,
New York.
(v) "NEW TRUSTCO Data" shall mean all information of NEW TRUSTCO and its
Affiliates respecting their businesses, including, without limitation,
information relating to their customers, technology, operations, facilities,
consumer markets, products, capacities, Systems, procedures, security practices,
research, development, business affairs, ideas, concepts, innovations,
inventions, designs, business methodologies, improvements, trade secrets,
copyrightable subject matter and proprietary information, all as provided to or
obtained by Chase during the Term.
(w) "Performance Standards" shall mean the service levels specified in
the Services Schedule, as such service levels may be supplemented or adjusted
pursuant to Section 3.2(d).
(x) "Post Closing Covenants Agreement" shall mean that certain Post
Closing Covenants Agreement to be entered into among The Chase Manhattan
Corporation, U.S. Trust Corporation, United States Trust Company of New York,
New USTC Holdings Corporation and NEW TRUSTCO pursuant to the Merger Agreement.
(y) "Procedures Manual" shall have the meaning set forth in
Section 3.4.
(z) "Required Consents" shall mean any consents required to be
obtained from third parties to grant the rights of access and use of Third Party
Software which are required by this Agreement.
(aa) "Services" shall mean those services, functions, and
responsibilities that Chase provides to NEW TRUSTCO or undertakes pursuant to
this Agreement, as further described in Article 3.
(ab) "Services Schedule" shall mean the description of Services to be
provided by Chase under this Agreement, and associated Performance Standards,
which is attached as Schedule A.
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<PAGE> 8
(ac) "Side Letter" shall mean the letter agreement, dated November 18,
1994, between UST and The Chase Manhattan Corporation and annexed hereto as
Schedule E, which sets forth the understanding of the Parties with respect to
(i) the sharing of costs incurred by UST in connection with certain transition
and implementation activities, and (ii) the sharing of costs of obtaining the
necessary license rights to certain Third Party Software.
(ad) "Side Letter Supplement" shall mean the letter agreement, of even
date herewith, between UST and The Chase Manhattan Corporation and annexed
hereto as Schedule F, which supplements the Side Letter.
(ae) "Software" shall mean Application Software and Systems Software
unless a more specific reference is required.
(af) "Supplemental Fee" shall mean the supplemental annual fee payable
pursuant to Article 5.
(ag) "Systems Software" shall mean those programs (whether or not in
process), including all supporting documentation and media, that perform or are
intended to perform tasks basic to the functioning of the Equipment and which
are required to operate the Applications Software or otherwise support the
provision of Services by Chase. Systems Software includes, but is not limited
to, operating systems, systems utilities, data security software,
telecommunications monitors and database managers.
(ah) "Term" shall mean the initial and any renewal term of this
Agreement, as provided in Article 2.
(ai) "Termination Date" shall mean the date on which this Agreement
expires or terminates.
(aj) "Third Party Software" shall mean Software used to perform the
Services that is provided under license or lease to Chase or NEW TRUSTCO.
(ak) "UST" shall mean U.S. Trust Corporation and its Affiliates (as the
same existed prior to the closing of the Acquisition).
(al) "UST Employees" shall mean employees of UST and individuals who
have been retained by UST to perform work on a contract basis.
Other terms used in this Agreement are defined in the context in which
they are used and shall have the meanings there indicated.
ARTICLE 2.
TERM
The Term of this Agreement shall begin on the Commencement Date and
shall expire on the fifth anniversary of the Commencement Date unless terminated
earlier or extended in accordance with this Agreement. NEW TRUSTCO may extend
the Term of this Agreement for
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<PAGE> 9
an additional five (5) years upon the same terms and conditions by giving Chase
at least six (6) months advance written notice of its desire to do so; provided,
however, that (i) Chase may increase the Fixed Fee payable during the renewal
Term by an amount equal to 10% of the total fees payable by NEW TRUSTCO during
the fifth Contract Year pursuant to this Agreement (excluding fees for
applications development and maintenance work which is not included in the Fixed
Fee, any amounts paid to Chase as a pass-through expense for products or
services obtained from third parties, Additional Volume Charges for global
custody services and charges for new services or products first provided to NEW
TRUSTCO during the fifth Contract Year), and (ii) Chase consents to such
extension (which consent may be granted or withheld in Chase's sole
discretion). Alteratively, NEW TRUSTCO, in its sole discretion, may extend the
Term of this Agreement for an additional two (2) years upon the same terms and
conditions by giving Chase at least six (6) months advance written notice of its
desire to do so; provided, however, that Chase may increase the Fixed Fee
payable during the renewal Term by an amount equal to 10% of the total fees
payable by NEW TRUSTCO during the fifth Contract Year pursuant to this Agreement
(excluding fees for applications development and maintenance work which is not
included in the Fixed Fee, any amounts paid to Chase as a pass-through expense
for products or services obtained from third parties, Additional Volume Charges
for global custody services and charges for new services or products first
provided to NEW TRUSTCO during the fifth Contract Year). Notwithstanding the
foregoing, NEW TRUSTCO will not have the right to extend the Term of this
Agreement under this Article 2 if NEW TRUSTCO is in breach of any of its payment
obligations at the time notice of extension is given and it fails to cure such
breach within the applicable cure period following notice of such breach from
Chase.
ARTICLE 3.
CHASE RESPONSIBILITIES
3.1 SERVICES
(a) General. During the Term, Chase shall provide Services, consisting
of the following:
(i) the services, functions and responsibilities described in
this Agreement (including its Schedules); and
(ii) subject to the provisions of Article 5, new or
substantially changed products or services resulting from the
evolution or change of NEW TRUSTCO's business; provided, however,
that at any time during the Term, Chase offers, has offered or plans
to offer such products or services to other clients.
The description of the Services set forth in the Services Schedule is intended
to be comprehensive, but not necessarily all-inclusive (i.e., the Services
Schedule contains a high level description of the types of services to be
performed by Chase, but does not list all of the specific functions to be
performed by personnel of Chase and its subcontractors in providing those
services). Subject to Section 3.1 (b), Chase will perform any function which was
performed by an Affected UST Employee (as defined below) at any time during the
twelve (12) months preceding the Commencement Date (and continues to be
performed as of the Commencement Date) even if such function is not specifically
enumerated in the Services Schedule, provided that such function is reasonably
related to the types of securities processing, bank operations, information
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<PAGE> 10
technology and related back-office services described in the Services Schedule.
At either Party's request, the Parties will modify the Services Schedule to
specifically identify such function therein. NEW TRUSTCO shall have the burden
of demonstrating, by a preponderance of the evidence, that a function was
performed by an Affected UST Employee at any time during the twelve (12) months
preceding the Commencement Date (and continues to be performed as of the
Commencement Date) if a dispute arises between the Parties as to whether Chase
is obligated to perform such function.
Chase will not be obligated to perform a particular function which was performed
by an Affected UST Employee during the twelve (12) months preceding the
Commencement Date (and continues to be performed as of the Commencement Date)
if such function is not reasonably related to the types of services described in
the Services Schedule. If Chase does not perform such function for that reason,
there shall be an equitable adjustment to the Fixed Fee to reflect the costs (if
any) that NEW TRUSTCO will incur as a result of Chase not performing such
function. For purposes hereof, the term "Affected UST Employee" shall mean a UST
Employee who is transferred to Chase or whose position or responsibilities are
eliminated as a result of the Acquisition.
The services, functions and responsibilities described in this Agreement will be
provided to NEW TRUSTCO and such of its present and future Affiliates as require
those services from tie to time. References in this Agreement (including its
schedules) to NEW TRUSTCO in its capacity as a service user are to be read as
references to NEW TRUSTCO and such of its present or future AffIliates as
require such services from time to time. At NEW TRUSTCO'S request and without
additional charge to NEW TRUSTCO, Chase will convert future NEW TRUSTCO
Affiliates to the systems then used by Chase in providing the Services at the
rate of one (1) per Contract Year. The Parties recognize the possibility that
NEW TRUSTCO may request that more than one future NEW TRUSTCO Affiliate be
converted during a given Contract Year to the Systems then used by Chase in
providing the Services. The Parties further recognize that such request may
present operational and feasibility issues for Chase. Therefore, in such event,
the Parties will meet to discuss and address the implications and issues for
Chase, and will work on developing a mutually acceptable conversion time frame
and mutually acceptable fees for the additional conversion. In agreeing upon
such fees, the Parties will consider the number of prior conversions performed
by Chase during the Term.
Except as otherwise expressly provided in this Agreement: (A) NEW TRUSTCO shall
not be responsible for providing, maintaining or supporting any facilities,
Equipment, Software, personnel and other resources which are required by Chase
to provide the Services; (B) Chase shall not be responsible for providing,
maintaining or supporting any End User Equipment or Software utilized on End
User Equipment (except for front end Applications Software necessary for NEW
TRUSTCO users to interface with Software operated by Chase); and (C) Chase shall
not be responsible for installing Software on End User Equipment.
(b) EXCLUDED SERVICES. In no event shall Chase provide:
(i) Services for NEW TRUSTCO's broker dealer services,
provided, however, that Chase will provide NEW TRUSTCO's existing and
future broker dealer subsidiaries access to AMS for execution and
confirmation of trades;
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(ii) credit facilities or collateral monitoring services for
NEW TRUSTCO's Institutional Banking Services; or
(iii) Services for any "back-up servicer" obligations of NEW
TRUSTCO or its Affiliates in structured financing transactions or
similar corporate or institutional trust or agency transactions
(c) EXCLUSIVE PROVIDER. Chase shall be the exclusive provider to NEW
TRUSTCO's clients (including institutional clients) of (i) securities lending
and the investment of related collateral, (ii) securities and commodities
clearing services, and (iii) so long as Chase's pricing is competitive, foreign
exchange transactions, except where a NEW TRUSTCO client requests that NEW
TRUSTCO use another provider for foreign exchange transactions and securities
and commodities clearing services. The services described in items (i), (ii) and
(iii) above are not within the scope of this Agreement and will be provided
pursuant to separate agreements between the Parties if NEW TRUSTCO elects to
receive such services; provided that any services within the scope of this
Agreement which are performed by Chase for NEW TRUSTCO or its Affiliates
(whether for their own account or for the benefit of their respective customers)
in executing a foreign exchange transaction shall be governed by this Agreement.
3.2 PERFORMANCE STANDARDS
(a) GENERAL. Performance Standards for certain of the Services are set
forth in the Services Schedule. Chase shall meet or exceed those Performance
Standards, subject to any adjustments thereto as provided in Paragraph (d) below
and in the Services Schedule. NEW TRUSTCO will have the right to add to the
Services Schedule any additional Performance Standards which were achieved by
UST prior to the Commencement Date which are identified by UST at least fifteen
(15) days before the Commencement Date; provided; however, that if Chase does
not meet any such additional Performance Standard in performing services for
itself and Chase reasonably believes that it will not be able to meet such
additional Performance Standard for NEW TRUSTCO without incurring unreasonable
additional costs, and subject further to the provisions of Sections III.A.6 and
III.B.1(c) of the Services Schedule relating to third patty agreements, then
Chase will so notify NEW TRUSTCO in writing within fifteen (15) days of the date
NEW TRUSTCO identifies such additional Performance Standard and the Parties will
agree upon an alternative Performance Standard which comes as close as possible
to the additional Performance Standard identified by NEW TRUSTCO without
imposing unreasonable additional costs on Chase.
(b) FAILURE TO PERFORM. If Chase fails to meet any Performance
Standard; Chase shall (i) promptly investigate the causes of the problem and
prepare a report identifying the same; (ii) use all reasonable efforts to
correct the problem and to begin meeting the Performance Standard as soon as
practicable; and (iii) advise NEW TRUSTCO, as and to the extent requested by NEW
TRUSTCO, of the status of remedial efforts being undertaken with respect to such
problems.
(c) MEASUREMENT OF PERFORMANCE. Throughout the Term, Chase shall
implement the necessary measurement and monitoring tools and procedures required
to measure and report Chase's performance of the Services against the
Performance Standards set forth in the Services Schedule and agreed upon project
plans. Such measurement and monitoring shall permit
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reporting at a level of detail sufficient to verify compliance with such
Performance Standards and plans. Chase shall provide NEW TRUSTCO with
information and access to such tools and procedures upon request for purposes of
verification.
(d) PERIODIC REVIEW. Commencing in the second quarter of the first
Contract Year, and at least annually thereafter, the Parties shall review the
Performance Standards, and shall make adjustments and additions thereto as
mutually agreed upon by the Parties, as appropriate, to reflect enhancements,
evolution and changes in the Services or in their use.
(e) CONTROL. Subject to the provisions of this paragraph (e) and
Section 3.4(b), Chase shall have control over the manner in which it provides
the Services. During the Term, Chase shall not make any changes in the way the
Services are provided without NEW TRUSTCO's approval if such changes would (i)
in any material respect adversely impact the operations of NEW TRUSTCO or
materially increase NEW TRUSTCO's cost, or (ii) in any material respect
adversely impact the way NEW TRUSTCO's customers are serviced (subject, however,
to changes that Chase is required to make to comply with regulatory requirements
or changes arising from events beyond Chase's reasonable control).
3.3 CHASE ORGANIZATION AND PERSONNEL
(a) CHASE ACCOUNT EXECUTIVE. As of the Commencement Date, Chase shall
designate one individual to whom all NEW TRUSTCO communications concerning this
Agreement and the Services may be addressed and who has authority to act for
Chase in connection with all aspects of this Agreement (the "Chase Account
Executive") and one alternate who will substitute for the Chase Account
Executive when the individual designated as the Chase Account Executive is not
available.
(b) ACCOUNT TEAM. Chase shall organize an "Account Team for NEW
TRUSTCO" which shall consist of senior Chase personnel from each major area of
Services, designated as securities processing, bank operations, and information
technology. The organizational structure and responsibilities of the Account
Team for NEW TRUSTCO shall be subject to change from time to time upon the
mutual agreement of the Parties. The Account Team for NEW TRUSTCO shall have
prima Chase responsibility for (i) overall management of the relationship
between NEW TRUSTCO and Chase with respect to the Services, and (ii)
communications between NEW TRUSTCO and Chase with respect to the Services. The
Account Team for NEW TRUSTCO's responsibilities shall be to: (A) discuss with
the NEW TRUSTCO Project Executive issues and concerns of NEW TRUSTCO regarding
the Services; (B) take appropriate steps so that the Services are performed
subject to the provisions of this Agreement; (C) report NEW TRUSTCO requests for
additional Services to appropriate Chase personnel; and (D) review the status of
previously reported NEW TRUSTCO requests for additional Services.
(c) KEY CHASE PERSONNEL.
(i) During the first twelve (12) months after the
Commencement Date, Chase will notify NEW TRUSTCO before: (A)
terminating any of the individuals listed in Schedule B who accept
offers of employment with Chase ("Key Transitioning Personnel"); or (B)
reassigning any Key Transitioning Personnel. If, after being notified
thereof, NEW
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TRUSTCO in good faith objects to the proposed termination or
reassignment within fifteen (15) working days then Chase agrees to
discuss such objection with NEW TRUSTCO and attempt to resolve such
concerns on a mutually agreeable basis.
(ii) Before assigning the Chase Account Executive or the Chase
employee in charge of AMS (together the "Key Chase Personnel"), whether
as an initial assignment or a subsequent assignment, Chase shall notify
NEW TRUSTCO of the proposed assignment and shall provide NEW TRUSTCO
with a resume and any other information about such individuals
reasonably requested by NEW TRUSTCO. If, after being notified thereof,
NEW TRUSTCO in good faith objects to the proposed assignment within
fifteen (15) working days, then Chase agrees to discuss such objections
with NEW TRUSTCO and attempt to resolve such concerns on a mutually
agreeable basis.
(iii) All Key Chase Personnel shall have sufficient knowledge
and authority within the Chase organization to assure that Chase will be
responsive to NEW TRUSTCO's reasonable requests.
(d) REPLACEMENT OF CHASE PERSONNEL. In the event that NEW TRUSTCO
reasonably and in good faith determines that the continued assignment to the NEW
TRUSTCO account of any Chase employee performing Services hereunder is not in
the best interests of NEW TRUSTCO, then NEW TRUSTCO shall give Chase written
notice to that effect requesting that the employee be replaced. Promptly after
its receipt of such a request by NEW TRUSTCO, Chase shall investigate the
matters stated in the request, discuss its findings with NEW TRUSTCO and attempt
to resolve NEW TRUSTCO's concerns on a mutually agreeable basis. Nothing in this
provision shall be deemed to give NEW TRUSTCO the right to require Chase to
terminate any Chase employee's employment; it is intended to give NEW TRUSTCO
only the right to request that Chase discontinue using an employee in the
performance of the Services for NEW TRUSTCO.
(e) RETENTION OF EXPERIENCED PERSONNEL. NEW TRUSTCO and Chase both
agree that it is in their best interests to keep the turnover rate of the Chase
personnel performing the Services to a reasonably low level. Accordingly, if NEW
TRUSTCO reasonably determines that Chase's turnover rate is excessive and so
notifies Chase, Chase shall provide data concerning its turnover rate at the
next quarterly meeting referred to in Section 3.4(d) and shall discuss the
reasons for the turnover rate at such meeting. In any event, notwithstanding
transfer or turnover of personnel, Chase reams obligated to perform the Services
without degradation and in accordance with this Agreement.
(f) USE OF SUBCONTRACTORS.
(i) Chase shall not subcontract performance of a major portion
of the Services without NEW TRUSTCO's prior written consent unless the
subcontractor will also be providing the same and substantial services
for Chase on the same terms and conditions. NEW TRUSTCO shall also have
the right during the Term to revoke its prior approval of a
subcontractor if there was a material misrepresentation concerning the
subcontractor at the time NEW TRUSTCO's approval was given and the
subcontractor's performance is deficient in any material respect;
provided, however, that NEW TRUSTCO shall not
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exercise this right unless it has given Chase notice of its intention to
do so and the subcontractor fails to correct such performance deficiency
within 30 days after the date of such notice. No subcustodian,
depository, pricing service, correspondent bank, broker or other similar
agents appointed by Chase to perform a custody or banking transaction
(collectively, "Chase Transaction Facilitators") shall be considered to
be a subcontractor of Chase for purposes of this Agreement.
(ii) Chase shall remain responsible for obligations performed by
subcontractors to the same extent as if such obligations were performed
by Chase employees. In addition, Chase shall not disclose any
Confidential Information (as defined in Article 7) of NEW TRUSTCO to any
subcontractor unless and until such subcontractor has agreed in writing
to protect the confidentiality of such Confidential Information in a
manner substantially equivalent to that required of Chase by Article 7.
(g) QUALIFICATIONS OF CERTAIN PERSONNEL. During the Term, the personnel
assigned by Chase to perform applications development and maintenance work with
respect to AMS and GTAS shall have, as a group, a level of general training,
education, experience and skills which is equivalent to that of the AMS and GTAS
applications development and maintenance personnel transferred to Chase pursuant
to the Acquisition. On an annual basis, the Parties will review the
qualifications of Chase's AMS and GTAS applications development and maintenance
personnel at one of the quarterly meetings referred to in Section 3.4(c).
3.4 MANAGEMENT AND CONTROL
(a) PROCEDURES MANUAL. The Parties have jointly developed written
materials describing how the Parties will perform their obligations in
connection with the Services, including how the Parties will interface with each
other (both from a procedural standpoint and from the standpoint of systems
interfaces), except that systems life cycle procedures will be jointly developed
within ninety (90) days after the Commencement Date. In addition, Chase shall
provide NEW TRUSTCO with Chase's and third party providers' user documentation
describing how NEW TRUSTCO end users will use Chase provided systems. Such
written materials and user documentation are referred to in this Agreement as
the "Procedures Manual." On at least an annual basis, the Parties shall meet to
determine whether any changes to the Procedures Manual are necessary and shall
prepare such changes as are appropriate under the circumstances. Any changes to
the Procedures Manual must be in writing and signed by the NEW TRUSTCO Project
Executive and the Chase Account Executive to become effective. Chase and NEW
TRUSTCO will comply with the Procedures Manual (as changed by the Parties in
accordance with the preceding sentence). This Agreement (including all Schedules
hereto) and the Procedures Manual are intended to be read together. The
Procedures Manual, as such Procedures Manual exists as of the Commencement Date,
is reflected in the attachments to the certificate, of even date herewith,
attached hereto as Schedule K. As of the Commencement Date, the Parties believe
that there is no conflict between the provisions of this Agreement (including
the Schedules) and the Procedures Manual. However, the following provisions
shall apply in the event that such a conflict is later, found to exist as of the
Commencement Date or arises thereafter as a result of changes made to this
Agreement or the Procedures Manual:
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(i) with respect to any conflict between the provisions of this
Agreement (but not including the Services Schedule) and the Procedures
Manual (as such Procedures Manual exists as of the Commencement Date),
the provisions of this Agreement (but not including the Services
Schedule) shall control;
(ii) with respect to any conflict between the Performance
Standards set forth in the Services Schedule (including without
limitation all time deadlines set forth in the Services Schedule) and
the provisions of the Procedures Manual (as such Procedures Manual
exists as of the Commencement Date), the Performance Standards set forth
in the Services Schedule shall control;
(iii) with respect to any conflict between the functions and
responsibilities of the Parties specified in the Services Schedule (but
not including the Performance Standards set forth therein) and the
functions and responsibilities of NEW TRUSTCO (but not Chase) specified
in the Procedures Manual (as such Procedures Manual exists as of the
Commencement Date), the functions and responsibilities of NEW TRUSTCO
specified in the Procedures Manual shall control;
(iv) with respect to any conflicts between the provisions of the
Services Schedule and the Procedures Manual (as such Procedures Manual
exists as of the Commencement Date) other than those described in items
(ii) and (iii) above, such conflicts will be resolved on a case-by-case
basis with neither document being deemed in advance to be controlling;
(v) with respect to any conflict between the provisions of this
Agreement (but not including the Services Schedule) and the Procedures
Manual which arises after the Commencement Date as a result of changes
made to this Agreement (but not including the Services Schedule) or the
Procedures Manual, the provisions of this Agreement (but not including
the Services Schedule) shall control; and
(vi) with respect to any conflict between the provisions of the
Services Schedule and the Procedures Manual which arises after the
Commencement Date as a result of changes made to the Services Schedule
or the Procedures Manual, the provision which was adopted last by the
Parties shall control.
(b) Change Control. The Procedures Manual shall contain a change
control procedure, which provides, at a minimum, as follows:
(i) Prior to using any Equipment or Software to provide the
Services, Chase shall have reasonably verified that the item has been
properly installed, is operating in accordance with its specifications,
and is performing its intended functions in a reliable manner.
(ii) Chase shall reasonably ensure that all programs are moved
from the development and test environments to the production environment
in a controlled and documented manner.
(iii) Chase shall prepare and provide to NEW TRUSTCO a quarterly
"look ahead" schedule for ongoing and planned changes to the Services.
Chase agrees to discuss with NEW TRUSTCO any objections NEW TRUSTCO may
have to Chase's proposed schedule
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for such changes and to attempt to resolve such concerns. The status of
such changes shall be monitored and tracked against the applicable
schedule.
(c) REPORTING.
(i) Chase shall provide the production reports for NEW
TRUSTCO and its customers which were provided by UST immediately prior
to the Commencement Date in the same frequency and formats as provided
by UST (as such may be modified from time to time by mutual agreement of
the Parties).
(ii) Chase shall also provide NEW TRUSTCO with reports
measuring Chase's performance against applicable Performance Standards.
Unless otherwise specified in this Agreement, such reports shall be
provided to NEW TRUSTCO on a monthly basis. If NEW TRUSTCO has reason to
question the accuracy of any such performance report, Chase will
promptly provide NEW TRUSTCO with adequate supporting documentation to
enable NEW TRUSTCO to verify the accuracy of such report.
(iii) In addition, Chase shall provide such other reports as are
reasonably requested by NEW TRUSTCO and mutually agreed upon by the
Parties.
(iv) On or before the Commencement Date, the Parties will
prepare a list, annexed hereto as Schedule G, of the performance reports
which Chase will provide to NEW TRUSTCO based on the Performance
Standards as of the Commencement Date and any other reports which the
Parties have agreed under Subparagraph (iii) above that Chase will
provide to NEW TRUSTCO. Schedule G will be amended from time to time, as
mutually agreed by the Parties, to reflect any changes in the reports to
be provided by Chase under Subparagraphs (ii) and (iii) above.
(d) MEETINGS. Unless otherwise mutually agreed to by the Parties, the
Parties shall hold quarterly meetings, at mutually agreed upon sites, for the
purpose of, among other things, reviewing performance and contract issues,
reviewing Chase personnel turnover and reviewing Chase's quarterly "look ahead"
schedule for on-going and planned changes to the Services. All meetings shall
have a published agenda issued by Chase sufficiently in advance of the meeting
to allow meeting participants a reasonable opportunity to prepare for the
meeting. In addition to any matters included by Chase for review, such agenda
shall include such matters as are reasonably requested by NEW TRUSTCO. Each
Party shall be responsible for its own expenses relating to such meetings.
(e) TECHNOLOGY PLANNING; COMMON ASSET MANAGEMENT SYSTEM. Chase will
apprise NEW TRUSTCO of Chase's technology planning activities as they relate to
the Services on a quarterly basis. As part of this process, Chase will consult
with NEW TRUSTCO on mutually beneficial technology developments and potential
joint development efforts. Chase will endeavor to include NEW TRUSTCO inputs in
its development efforts; however, unless a written joint development agreement
is reached on a particular development, Chase will make development decisions in
its sole discretion. The Parties recognize that, if it can be accomplished
consistent with their respective business needs and objectives, it would be
desirable to develop a common technology direction for asset management Systems
support. Accordingly, by the end of the fourth Contract Year, the Parties will
seek to develop a strategy to achieve this objective, including an evaluation
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of AMS/1 or AMS/Open products licensed from Financial Technologies International
L.P. as a common platform. For purposes of clarification, in the event that
Chase has not developed a detailed migration plan reasonably acceptable to NEW
TRUSTCO for the migration of the Parties to a common asset management system by
the end of the fourth Contract Year, the number of FTEs included in the Fixed
Fee will increase as provided in Section 5.1(b)(i).
3.5 MIGRATION OF DATA CENTER
(a) METROTECH MIGRATION. Chase shall migrate all data processing
operations from the Broadway Data Center to the MetroTech Data Center. Chase
shall complete such migration within twelve (12) months after the Commencement
Date. Chase shall reimburse NEW TRUSTCO for the Direct Costs that NEW TRUSTCO
incurs due to Chase's use of the Broadway Data Center between the Commencement
Date and the date that Chase ceases to perform any data processing operations
from the Broadway Data Center (the "Migration Period"), including, without
limitation, the following: (i) rental payments for Equipment utilized by Chase
at the Broadway Data Center, and (ii) salaries and benefits of NEW TRUSTCO
personnel working at the Broadway Data Center who Chase requests NEW TRUSTCO to
retain for the purpose of assisting Chase in providing the Services. Chase shall
reimburse NEW TRUSTCO for severance payments made by NEW TRUSTCO to the
aforementioned personnel (but not to exceed the amount of severance benefit that
would have been payable to such employees by Chase under Paragraph 1 of Schedule
5.8(c) of the Merger Agreement if the employee had been a Retained Employee, as
defined therein, at the tune of his or her termination of employment) and the
rental payments relating to NEW TRUSTCO's lease of the 8th floor of the premises
located at 770 Broadway, New York, New York during the Migration Period. If the
Migration Period exceeds twelve (12) months, Chase shall, on the first
anniversary of the Commencement Date, (A) assume the leases for all leased
Equipment at the Broadway Data Center, and (B) purchase all Equipment owned by
NEW TRUSTCO at the Broadway Data Center at its then fair market value.
(b) NEW TRUSTCO APPROVAL. Chase will not migrate NEW TRUSTCO's data
processing operations to any Data Center other than the MetroTech Data Center
without NEW TRUSTCO's prior written approval unless Chase migrates other Chase
customers to such Data Center or Chase utilizes such Data Center for substantial
data processing operations for Chase.
(c) MIGRATION PROCEDURE. In connection with the migration to the
MetroTech Data Center and any other proposed Data Center migration, Chase will
prepare a reasonably detailed migration plan for NEW TRUSTCO's review and
comment. Chase will make all reasonable efforts to resolve any reasonable,
material NEW TRUSTCO concerns with respect to migration and on-going operations
at the new Data Center. Chase will pay all costs associated with the migration
(subject to the provisions of the Side Letter and the Side Letter Supplement
relating to the sharing of costs of obtaining the necessary license rights to
certain Third Party Software) and will provide full normal services to NEW
TRUSTCO during the migration period without material disruption to NEW TRUSTCO's
operations.
3.6 SYSTEMS MIGRATION
NEW TRUSTCO will have the right, at any time during the Term (but only
once) and at Chase's expense, to migrate to any asset management system then
used to support Chase's private
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banking business. Any such migration shall be performed pursuant to a
reasonably detailed migration plan approved by NEW TRUSTCO and in a manner which
will not cause a material disruption in NEW TRUSTCO's operations.
3.7 THIRD PARTY WORK
Except as otherwise provided in Section 3.1(c), during the Term, NEW
TRUSTCO shall have the right to provide itself, or use third parties to provide,
products or services which overlap with, replace or are in addition to the
Services, including without limitation Software development work. Chase shall
reasonably cooperate with NEW TRUSTCO and any such third party. Any programmer
costs relating to such cooperation shall be subject to Section 5.1(b) and any
additional Equipment costs relating to such cooperation shall be reimbursed by
NEW TRUSTCO. Chase shall notify NEW TRUSTCO and obtain its approval before
incurring such additional costs; provided, however, that Chase will not be
obligated to provide any such cooperation which would require it to incur such
costs until NEW TRUSTCO provides the necessary approvals. Chase's obligations
hereunder shall be subject to the relevant third party's (i) compliance with
Chase's reasonable security and other applicable standards and procedures, (ii)
execution of appropriate confidentiality agreements, and (iii) scheduling access
to and use of resources to be furnished by Chase pursuant to this Agreement.
3.8 LOSS OF DATA.
Chase shall take reasonable steps to avoid the corruption, loss or
mistransmission of data and to ensure the security of data during transmission,
including the use of reasonable and customary data encryption techniques. In the
event that Chase becomes aware of any corruption, loss or mistransmission of
data or any breach of data security during transmission, Chase shall take
reasonable steps to remedy such situation. Provided that Chase complies with the
provisions of this Section, Chase shall not be responsible for any corruption,
loss or mistransmission of data, or for any breach of data security during
transmission. NEW TRUSTCO shall take appropriate steps to ensure that access by
employees and customers of NEW TRUSTCO and its Affiliates to the systems used to
provide or access the Services under this Agreement is properly authorized and
in accordance with security procedures then in place.
3.9 CERTAIN MATTERS RELATING TO SECURITIES HELD FOR NEW TRUSTCO AND ITS
CUSTOMERS
(a) Chase will maintain appropriate records showing (i) the security
accounts that are maintained for NEW TRUSTCO (and its Affiliates) and the
security accounts that are accounts of customers of NEW TRUSTCO (and its
Affiliates), and (ii) the securities that are held for NEW TRUSTCO (and its
Affiliates) and the customers of NEW TRUSTCO (and its Affiliates). For purposes
of Article 8 of the Uniform Commercial Code as in effect from time to time,
these accounts, taken together, shall be deemed to constitute a security account
maintained for NEW TRUSTCO (and its Affiliates) on the books of Chase.
(b) With respect to securities and other assets that NEW TRUSTCO has
identified to Chase as held for customers of NEW TRUSTCO (and its Affiliates):
(i) Chase will follow directions received from NEW TRUSTCO; (ii) Chase
recognizes that this property is the
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property of such customers; and (iii) unless otherwise expressly agreed by a
customer, Chase will have no banker's lien, setoff rights or other rights to or
to use such property.
ARTICLE 4.
NEW TRUSTCO RESPONSIBILITIES
In addition to any of NEW TRUSTCO's responsibilities as set forth
elsewhere in this Agreement, whether general or specific, NEW TRUSTCO shall be
responsible for performing the following on a timely basis:
4.1 NEW TRUSTCO PROJECT EXECUTIVE
As of the Commencement Date, NEW TRUSTCO shall designate one individual
to whom all Chase communications concerning this Agreement and the Services may
be addressed and who has authority to act for NEW TRUSTCO in connection with all
aspects of this Agreement (the "NEW TRUSTCO Project Executive") and one
alternate who will substitute for the NEW TRUSTCO Project Executive when the
individual designated as the NEW TRUSTCO Project Executive is not available. NEW
TRUSTCO shall have the right to change the designation of the individuals who
will act as the NEW TRUSTCO Project Executive and the alternate upon prior
written notice to Chase.
4.2 COOPERATION
NEW TRUSTCO agrees to cooperate with Chase, its employees and agents, in
connection with this Agreement by, among other things, making available, as
reasonably requested by Chase, management decisions, information, approvals and
acceptances so that Chase may accomplish its obligations and responsibilities
hereunder.
4.3 SAVINGS CLAUSE
NEW TRUSTCO's failure to perform any of its responsibilities under this
Agreement (other than its payment obligations) will not constitute a material
breach of this Agreement, but Chase's nonperformance of its obligations will be
excused if and to the extent that it results from NEW TRUSTCO's failure of
performance and Chase uses reasonable efforts to perform.
4.4 TRANSITION ACTIVITIES
The Parties hereby acknowledge that each Party has agreed to perform the
transition activities set forth in the Side Letter and the Side Letter has not
been superseded by any term of this Agreement and remains in full force and
effect. In connection with additional transition and implementation activities
not covered by the Side Letter or Section 3.5, the Parties agree that, in the
event that Chase is unable to provide all of the Services on and from the
Commencement Date in a manner comparable to the manner in which UST performed
such Services as of the Commencement Date (other than as a result of undue delay
or inactivity by UST or NEW TRUSTCO), then NEW TRUSTCO shall provide the
required operational support pending assumption of the Services by Chase, and
Chase shall reimburse NEW TRUSTCO for the Direct Costs of such support. For
purposes of this Section, a Service is provided in a "comparable"
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manner if it does not (i) materially adversely impact the functions or
operations of end users or materially increase NEW TRUSTCO's costs, or (ii)
materially adversely impact the way NEW TRUSTCO's clients are serviced.
4.5 LIMITED AGENT
NEW TRUSTCO hereby appoints Chase as NEW TRUSTCO's limited agent to the
extent required for Chase to perform the Services, and NEW TRUSTCO agrees to
promptly notify all appropriate third parties of such appointment.
4.6 ACCURACY OF DATA
NEW TRUSTCO will take reasonable steps to ensure the accuracy of the NEW
TRUSTCO instructions, information and data that it provides to Chase pursuant to
this Agreement. NEW TRUSTCO will review any reports and systems output which UST
Employees (other than UST Employees who are transferred to Chase or whose
positions or responsibilities are eliminated as a result of the Acquisition)
regularly reviewed prior to the Commencement Date to determine the accuracy of
instructions, information and data provided to UST's back office operations.
Chase will take reasonable steps to detect inaccuracies in the NEW TRUSTCO
instructions, information and data, including the performance of normal review
and editing routines. if Chase detects an inaccuracy, Chase will contact
appropriate NEW TRUSTCO personnel before taking further action on such
instructions, information or data.
4.7 CERTAIN CHASE PRODUCTS
(a) EXECUTION OF SEPARATE AGREEMENTS.
(i) With respect to Chase's "Microstation" and any future
products for which Chase requires its customers to execute separate
agreements, (A) NEW TRUSTCO (or its Affiliates) will enter into a
written agreement with Chase under which NEW TRUSTCO will agree to be
responsible for its customer's compliance with the terms and conditions
contained in Chase's standard agreement for such product, and (B) unless
Chase, at its own initiative, proposes to use such product as a
replacement for another product, NEW TRUSTCO (or its Affiliates) will
require its customers who will use any such product to (I) execute an
agreement with NEW TRUSTCO (or its Affiliates) which contains the terms
and conditions set forth in Chase's standard agreement for such product
with such modifications thereto as are appropriate in light of NEW
TRUSTCO (or its Affiliate) rather than Chase being the party to such
agreement, or (II) execute Chase's standard agreement for such product,
as determined under subparagraph (ii) below. In addition, Chase may
require NEW TRUSTCO to execute Chase's standard agreement for any such
product used by NEW TRUSTCO.
(ii) With respect to any product covered under item (B) of
subparagraph (i) above which includes material that Chase licenses from
a third party, Chase will negotiate in good faith to obtain, at no
additional cost to Chase or as little additional costs to Chase as
possible, the right for NEW TRUSTCO to sublicense the product to
customers of NEW TRUSTCO (and its Affiliates) as provided in item (B)(I)
of such subparagraph (i.e., so that NEW TRUSTCO may be the party to the
agreement with its customers rather than Chase).
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If Chase will be required to make additional payments to such third
party to obtain such right, then Chase shall so notify NEW TRUSTCO,
which notice shall indicate the amount of such additional payments.
if requested by NEW TRUSTCO, Chase will allow NEW TRUSTCO to participate
with Chase in negotiations with the third party concerning the amount of
such additional payments, provided that if NEW TRUSTCO's participation
would in Chase's good faith opinion materially delay Chase closing its
transaction with the third party, Chase may close the transaction and
allow NEW TRUSTCO to negotiate the amount of such payments with the
third party after the closing. If NEW TRUSTCO desires for Chase to
obtain such right and agrees to reimburse Chase for such additional
payments, then the product will be sublicensed to NEW TRUSTCO customers
in accordance with item (B)(I) of subparagraph (i) above. If NEW TRUSTCO
does not agree to reimburse Chase for such additional payments, then the
product will be sublicensed to NEW TRUSTCO customers in accordance with
item (B)(II) of subparagraph (i) above.
(iii) In no event will the terms and conditions in any Chase
standard agreement be construed to diminish any of the Performance
Standards or Chase's obligations under this Agreement.
(iv) Notwithstanding anything to the contrary herein, if it
objects to Chase's standard agreement for a particular product, NEW
TRUSTCO will not be obligated to enter into the agreement referred to in
item (A) of subparagraph (i) above or to require its customers to enter
into the agreements referred to in item (B)(I) or (B)(II) of
subparagraph (i) above. In such event, Chase will not be obligated to
make such product available to NEW TRUSTCO or its customers and, if such
product is a replacement for another product then used by Chase in
providing the Services, Chase will continue using such other product for
NEW TRUSTCO and its customers.
(b) CHARGES. There will be no additional charge for the use by NEW
TRUSTCO or its Affiliates for Microstation (except that NEW TRUSTCO and its
Affiliates will be responsible for providing the End User Equipment and Systems
Software required to operate Microstation). Any charges to NEW TRUSTCO and its
Affiliates for future products covered under Section 4.7(a) will be determined
pursuant to Section 2 of Schedule C. Customers of NEW TRUSTCO (or its
Affiliates) may be charged a reasonable fee for the use of Microstation and
future products referred to above, except that there will be no charge for the
use of any such product if (i) Chase generally provides it to its clients
without additional charge, or (ii) Chase, at is own initiative, proposes to use
the product as a replacement for another product for which there is no separate
charge by Chase to such customers (e.g., if Chase, at its own initiative,
proposes to use MicroStation as a replacement for NEW TRUSTCO's Ready Access
product).
(c) BREACHES. In the event that a customer of NEW TRUSTCO (or its
Affiliates) materially breaches an agreement executed pursuant to Section
4.7(a), NEW TRUSTCO will notify such customer in writing of such breach promptly
after becoming aware of the same. If such customer fails to cure such breach
within fifteen (15) days after receipt of such notice, then NEW TRUSTCO will, at
Chase's written request, require the customer to cease using the product covered
by such agreement.
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4.8 SECURITY VIOLATIONS.
Notwithstanding anything to the contrary in this Agreement, Chase will
have the right to take immediate remedial action, in consultation with NEW
TRUSTCO, with respect to a customer of NEW TRUSTCO (or its Affiliates) which is
reasonable under the circumstances in the event that Chase determines that there
has been a security violation in connection with the use of any Chase product.
4.9 SETTLEMENT FOR TRANSACTIONS PROCESSED BY CHASE.
On each New York banking day, by the time specified in the Procedures
Manual, Chase will have posted entries to U.S. Trust's 920 account with Chase or
other similar account (the "920 Account") for the settlement of all transactions
processed by Chase or its Affiliates on behalf of NEW TRUSTCO, its Affiliates
and their respective customers in accordance with this Agreement NEW TRUSTCO
authorizes Chase to make debit and credit entries to its 920 Account for such
transactions. If the resulting balance in the 920 Account is a debit balance, by
the time specified in the Procedures Manual NEW TRUSTCO shall deposit additional
funds to the 920 Account in the amount of such debit balance, and if NEW TRUSTCO
fails to make such deposit it shall repay the overdraft as soon as practicable
on the next New York banking day together with interest thereon at a rate per
annum equal to one percent (1%) plus the effective Federal Funds Rate, as
published by the Federal Reserve Bank of New York, on each day the 920 Account
remains overdrawn. If the resulting balance in the 920 Account is a credit
balance, Chase shall pay the amount of such credit balance as NEW TRUSTCO
directs.
ARTICLE 5.
CHARGES AND PAYMENT TERMS
5.1 CHARGES
(a) FIXED FEE AND SUPPLEMENTAL FEE. NEW TRUSTCO will pay a fixed annual
fee often million dollars ($10,000,000) (the "Fixed Fee") in equal monthly
installments throughout the Term. In addition, NEW TRUSTCO will pay a
supplemental fee of **** **** per year in equal monthly installments during the
first three (3) years of the Term and **** per year in equal monthly
installments during the remainder of the Term (the "Supplemental Fee") in
consideration of the expansion of the scope of services to be performed by Chase
under this Agreement subsequent to the establishment of the Fixed Fee.
(b) APPLICATIONS DEVELOPMENT AND MAINTENANCE.
(i) AMS AND GTAS. The Fixed Fee includes an applications
development and maintenance staff of **** full time equivalents
("FTEs") dedicated to AMS and GTAS applications development and
maintenance during the Term, as further described in the Services
Schedule; provided, however, that beginning with the fifth Contract
Year, the number of FTEs included in the Fixed Fee will increase by ****
FTEs per Contract Year for
**** 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.
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Contract Years five through seven unless and until Chase has developed a
detailed implementation plan reasonably acceptable to NEW TRUSTCO for
the migration of the Parties to a common asset management system (at
which time the number of FTEs will revert to 24). Any applications
development and maintenance work requested by NEW TRUSTCO which requires
Chase to provide more FTEs than are included in the Fixed Fee will be
priced at the rate of **** per FTE per year, subject to annual
cost-of-living adjustments pursuant to the provisions of Schedule D
hereto.
(ii) BANKING SYSTEMS. In the event that NEW TRUSTCO requests
applications development to be performed on Software which is part of
the banking systems operated by Chase pursuant to Article III of the
Services Schedule, then (A) if Chase performs such applications
development work, NEW TRUSTCO will be charged for such work at the FTE
rates set forth in Section 5.1(b)(i); and (B) if a third party selected
by Chase performs such applications development work, NEW TRUSTCO will
be responsible for paying such third party's charges for such work and
any subsequent increase in the license or maintenance fees payable to
such third party which are attributable to such development work,
provided that Chase notifies NEW TRUSTCO in writing and obtains its
written approval before incurring such charges.
(c) TERMINATION ASSISTANCE CHARGES. The Termination Assistance
described in Section 8.5 shall be provided at no charge to NEW TRUSTCO, except
as provided therein and in this Section 5.1(c). So long as Chase continues to
provide any portion of the Services after the Termination Date pursuant to
Section 8.5(b), NEW TRUSTCO will pay Chase, at the Chase Prevailing Rates, for
such portion of the Services that Chase continues to provide. In addition, NEW
TRUSTCO will (i) pay Chase at the rates specified in Section 5.1(b) if and to
the extent that Chase is required to provide FTEs in excess of the number
included in the Fixed Fee in order to provide Termination Assistance, and (ii)
reimburse Chase for any additional Direct Costs incurred by Chase in providing
Termination Assistance to the extent such Direct Costs are not covered by the
Fixed Fee and other charges under this Agreement.
(d) ADDITIONAL CHARGES. NEW TRUSTCO shall pay Chase the additional
charges set forth in Schedule C.
(e) EXPENSES. Except as otherwise expressly provided in this Agreement,
all expenses that Chase incurs in performing the Services are covered by the
Fixed Fee, the Supplemental Fee, the charges set forth in Schedule C and this
Article 5 and will not be separately reimbursable by NEW TRUSTCO, including
without limitation depository fees.
(f) NO OTHER CHARGES. For all the Services provided or to be provided by
Chase under this Agreement, NEW TRUSTCO shall not be obligated to pay Chase any
amounts in addition to the charges specified in this Agreement.
(g) PROOF OF CHASE PREVAILING RATES. Wherever this Agreement provides
that Chase's charges to NEW TRUSTCO will be based on Chase Prevailing Rates,
Chase shall provide to NEW TRUSTCO, to the fullest extent possible without
violating any confidentiality obligations to third parties, information
reasonably requested by NEW TRUSTCO to verify the level of such rates at any
relevant times. At NEW TRUSTCO's request at any time (but not more frequently
**** 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.
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than quarterly), Chase shall provide NEW TRUSTCO with a certificate, signed
by an officer designated by Chase having a rank of senior vice-president or
higher, certifying the level of such rates and compliance with the requirements
of this Paragraph(f).
5.2 PAYMENT TERMS
(a) INVOICES.
(i) Chase shall invoice NEW TRUSTCO on or before the first day
of each month (but not before the beginning of the prior month) for the
portion of the Fixed Fee and the Supplemental Fee attributable to such
month. Invoices of the Fixed Fee and the Supplemental Fee shall be due
and payable on or before the fifteenth (15th) day of the month.
Additional Volume Charges will be invoiced after the end of each six
month period following the Commencement Date in the manner set forth in
Section 1(j) of Schedule C. Any charges by Chase for FTEs in excess of
the number included in the Fixed Fee will be invoiced on a monthly
basis, which invoices shall be due and payable within thirty (30) days
after receipt by NEW TRUSTCO. Any charges by Chase for new products or
services will be invoiced in the manner agreed to by the Parties at the
time this Agreement is amended to include such new products or services.
Any amount due under this Agreement for which a time for payment is not
otherwise specified will be due and payable within thirty (30) days
after receipt of the invoice for such amount.
(ii) Notwithstanding the provisions of Section 5.2(a)(i), in the
event that this Agreement is terminated due to a material breach by NEW
TRUSTCO, then Chase may require NEW TRUSTCO to pay for any Termination
Assistance and continued provision of Services pursuant to Section 8.5
monthly in advance based on a reasonable estimate by Chase of the total
monthly charges for such Termination Assistance and continued provision
of Services. Chase shall invoice NEW TRUSTCO for such estimated charges
at least fifteen (15) days before the beginning of the month and each
such invoice shall be payable on or before the first day of the month.
As soon as practicable after the end of each month, Chase shall provide
NEW TRUSTCO with a reconciliation of the actual versus estimated monthly
charges for such Termination Assistance and continued provision of
Services, and an appropriate adjustment shall be made on the next
monthly invoice (or if there will be no subsequent monthly invoices, the
appropriate Party shall pay the difference to the other Party within
fifteen (15) days of Chase notifying NEW TRUSTCO of the reconciliation).
If payment is not timely made under this Subparagraph (ii), Chase shall
have no further obligation to continue to provide Termination Assistance
or other Services.
(b) ACCOUNTABILITY. Chase shall maintain complete and accurate records
of and supporting documentation for all financial transactions arising under
this Agreement and for all amounts billable to and payments made by NEW TRUSTCO
hereunder, and shall retain such records for a period of six (6) years following
the end of the Term or as otherwise required by law. Chase agrees to provide NEW
TRUSTCO with documentation and other information with respect to each invoice as
maintained by Chase, its subcontractors or suppliers and as may be reasonably
requested by NEW TRUSTCO to verify that Chase's charges to NEW TRUSTCO are
accurate, correct and valid in accordance with the provisions of this Agreement
NEW TRUSTCO and its authorized agents and representatives shall have access to
such records for
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purposes of audit during normal business hours during the Term of this
Agreement and during the period for which Chase is required to maintain such
records.
(c) PRORATION. Any periodic charges under this Agreement are to be
computed on a calendar month basis, and shall be prorated for any partial month.
Notwithstanding the preceding sentence, the Supplemental Fee shall not be
prorated for any partial month but shall be fully paid when invoiced.
(d) DISPUTED CHARGES. NEW TRUSTCO shall pay undisputed charges when
such payments are due and payable under this Article 5. NEW TRUSTCO may withhold
payment of particular charges, except for the Fixed Fee and the Supplemental
Fee, that NEW TRUSTCO disputes in good faith and in that case NEW TRUSTCO shall
advise Chase in writing of the nature of the dispute and the Parties shall
promptly commence dispute resolution as specified in Article 15.
(e) METHOD OF PAYMENT. All payments, reimbursements and refunds made by
one Party to the other Party hereunder shall be made by wire transfer. Unless
otherwise agreed by NEW TRUSTCO, Chase shall not have the right to receive
payment of its charges by debiting NEW TRUSTCO's account with Chase.
Notwithstanding the foregoing, in the event that NEW TRUSTCO fails to make
timely payment of any installment of the Fixed Fee or the Supplemental Fee or
any undisputed charge arising under this Agreement, Chase shall have the right
to receive payment of such fee or charge by debiting NEW TRUSTCO's account with
Chase, but only if NEW TRUSTCO fails to make payment of such fee or charge,
including interest as set forth below, within fifteen (15) days after receiving
written notice from Chase that payment is past due. Interest on any such late
payment shall be at a rate equal to the effective Federal Funds rate as
published by the Federal Reserve Bank of New York, on each day from the date
such payment is due until the earlier of (i) date that such payment is made, or
(ii) the date that Chase debits NEW TRUSTCO's account.
(f) ALLOCATION. Chase invoices shall allocate Chase's charges among NEW
TRUSTCO and each of its Affiliates based upon a methodology provided by NEW
TRUSTCO which will be consistent with the volume methodology set forth in
Schedule C.
5.3 TAXES
The Parties' respective responsibilities for taxes arising under or in
connection with this Agreement shall be as follows:
(a) Each Party shall be responsible for any personal property taxes on
property it owns or leases, for franchise and privilege taxes on its business,
and for taxes based on its net income or gross receipts.
(b) Chase shall be responsible for any sales, use, excise,
value-added, services, consumption, and other taxes and duties payable by Chase
on any goods or services used or consumed by Chase in providing the Services
where the tax is imposed on Chase's acquisition or use of such goods or services
or the amount of tax is measured by Chase's costs in acquiring such goods or
services.
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(c) In the case of any sales, use, excise, value-added, services,
consumption, or other tax during the Term that is assessed on the provision of
the Services as a whole, or on any particular Service received by NEW TRUSTCO
from Chase, NEW TRUSTCO shall be responsible for such tax.
(d) The Parties agree to fully cooperate with each other to enable each
to more accurately determine its own tax liability and to minimize such
liability to the extent legally permissible. Chase's invoices shall separately
state the portion of its charges which are subject to any taxes described in
paragraph (c) above and the amounts of any taxes Chase is collecting from NEW
TRUSTCO. Each Party shall provide and make available to the other any resale
certificates, information regarding out-of-state or out-of-country sales or use
of equipment, materials or services, and other exemption certificates or
information reasonably requested by either Party.
ARTICLE 6.
INTELLECTUAL PROPERTY RIGHTS
6.1 NEW TRUSTCO SOFTWARE
NEW TRUSTCO grants to Chase a worldwide, paid-up, royalty-free,
nonexclusive license during the Term to use, copy, modify and enhance, for the
sole purpose of providing the Services to NEW TRUSTCO, all existing and future
Software owned by NEW TRUSTCO which is required for Chase to provide the
Services. Such license shall be in addition to any licenses of such Software
granted to United States Trust Company of New York pursuant to the License
Agreement to be entered into between United States Trust Company of New York
and NEW TRUSTCO in connection with the Acquisition (the "License Agreement").
Except as provided above or in the License Agreement, Chase shall have no
right, title or interest in any Software owned by NEW TRUSTCO.
6.2 THIRD PARTY SOFTWARE LICENSED BY NEW TRUSTCO.
(a) Subject to obtaining any Required Consents, NEW TRUSTCO grants to
Chase, during the Term, for the sole purpose of providing the Services to NEW
TRUSTCO, the same rights of access and use that NEW TRUSTCO has with respect to
Third Party Software licensed by NEW TRUSTCO as of the Commencement Date and
required by Chase to provide the Services. Such right of access and use shall
be in addition to any license of such Third Party Software granted to Chase
under the License Agreement. Chase will have financial and administrative
responsibility for such Third Party Software and related maintenance
obligations during the Term (subject to the provisions of the Side Letter and
the Side Letter Supplement). Chase will comply with all duties, including use
and nondisclosure restrictions, imposed on NEW TRUSTCO by any Third Party
Software license.
(b) The Parties will cooperate with each other in seeking all Required
Consents. If any Required Consent is not obtained, then, unless and until such
Required Consent is obtained, Chase shall determine and adopt, subject to NEW
TRUSTCO's prior approval, such alternative approaches as are necessary and
sufficient to provide the Services without such Required
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Consents, including the use of the substitute products if they do not degrade
service to NEW TRUSTCO or result in any additional cost or expense to NEW
TRUSTCO.
6.3 THIRD PARTY SOFTWARE LICENSED BY CHASE
Chase will not use any Third Party Software in performing the Services
which is not commercially available at the time Chase chooses to utilize such
Software without first obtaining NEW TRUSTCO's written consent.
6.4 OWNERSHIP OF WORK PRODUCT
(a) Except as otherwise provided in the License Agreement, all Software
developed by Chase or its Affiliates under this Agreement as to which
development is fully paid for by NEW TRUSTCO shall be considered works made for
hire owned by NEW TRUSTCO (subject to the rights of Chase, its Affiliates or
third parties in pre-existing works which are incorporated into such work
product). Chase will notify NEW TRUSTCO in advance if it proposes to perform a
particular development project on a shared funding basis. As to NEW TRUSTCO
owned Software described in this Section 6.4(a) which is not subject to the
terms of the License Agreement, NEW TRUSTCO hereby grants to Chase a worldwide,
perpetual, paid-up, royalty free, nonexclusive, nontransferable license to use,
modify and enhance such NEW TRUSTCO owned Software solely in the course of Chase
providing the Services.
(b) The content of all system output and similar material from Services
performed for NEW TRUSTCO pursuant to this Agreement, and all copies thereof,
shall be considered works made for hire owned by NEW TRUSTCO (subject to the
rights of Chase, its Affiliates or third parties in pre-existing works which are
incorporated into such work product).
(c) If any work product referred to in Paragraph (a) or (b) above may
not be considered a work made for hire under applicable law, Chase hereby
irrevocably assigns, and shall cause its Affiliates to assign, to NEW TRUSTCO
without further consideration, their right, title and interest in and to such
work product, including U.S. and foreign copyrights (subject to the rights of
Chase, its Affiliates or third parties in pre-existing works which are
incorporated into such work product). Chase acknowledges that NEW TRUSTCO and
the successors and assigns of NEW TRUSTCO shall have the right to obtain and
hold in their own name any intellectual property rights in and to such work
product Chase agrees to execute any documents and take any other actions
reasonably requested by NEW TRUSTCO to effectuate the purposes of this Article
and shall cause its Affiliates to do the same. Notwithstanding the provisions of
this Section 6.4, NEW TRUSTCO's ownership of such work product shall not
prohibit Chase or its Affiliates from independently developing similar products
without reference to or use of such work product or NEW TRUSTCO's Confidential
Information (as defined in Section 7.2).
6.5 NO OTHER RIGHTS
This Agreement shall not confer upon either Party intellectual property
rights in materials of the other Party (to the extent not covered by this
Article) unless otherwise so provided in other provisions of this Agreement.
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ARTICLE 7.
DATA SECURITY/CONFIDENTIALITY/AUDITS
7.1 SAFEGUARDING NEW TRUSTCO DATA
Chase shall establish and maintain safeguards against the destruction,
loss or alteration of NEW TRUSTCO Data in the possession of Chase which are no
less rigorous than those maintained by Chase for its own information of a
similar nature. NEW TRUSTCO shall have the right to establish backup security
for data and to keep backup data and data files in its possession if it chooses.
7.2 CONFIDENTIALITY
(a) OBLIGATIONS. As used herein, "Confidential Information" shall mean
NEW TRUSTCO Data and Chase Data and, in addition, any information of a Party
which is marked confidential, restricted, or proprietary. Each Party's
Confidential Information shall remain the property of that Party except as
expressly provided otherwise by the other provisions of this Agreement. NEW
TRUSTCO and Chase shall each use at least the same degree of care to prevent
disclosing to third parties the Confidential Information of the other as it
employs to avoid unauthorized disclosure, publication or dissemination of its
own information of a similar nature (including the use of written
confidentiality agreements with employees); provided, however, that the Parties
may disclose such information to persons or entities performing services
required or permitted hereunder where (i) use of such person or entity is
authorized under this Agreement, (ii) such disclosure is necessary or otherwise
naturally occurs in that person's or entity's scope of responsibility, (iii) the
person or entity agrees in writing to assume the obligations described in this
Section, and (iv) the disclosing Party assumes full responsibility for the acts
or omissions of such person or entity. Any disclosure to such person or entity
shall be under the terms and conditions as provided herein. Furthermore, neither
Chase nor NEW TRUSTCO shall (A) commercially exploit any Confidential
Information of the other, (B) make any use or copies of the Confidential
Information of the other except as contemplated by this Agreement, (C) acquire
any right in or assert any lien against the Confidential Information of the
other, or (D) refuse for any reason (including a default or material breach of
this Agreement by the other Party) to promptly provide the other Party's
Confidential Information (including copies thereof) to it if requested to do
so. Chase and NEW TRUSTCO shall each promptly provide copies of or return
Confidential Information of the other Party at the other Party's request, in a
form reasonably requested by the other Party, or shall, at the other Party's
request, destroy it (excluding, however, copies of such Confidential Information
as may be necessary to be retained by reason of legal, accounting or regulatory
requirements). Access of non-NEW TRUSTCO personnel to information relating to
customers of NEW TRUSTCO and its Affiliates must be approved by NEW TRUSTCO (by
the functional group or department requiring access rather than on a
person-by-person basis); provided, however, that Chase shall be excused from
performance to the extent that (i) NEW TRUSTCO denies access to Chase personnel
who require such access to perform the Services, and (ii) Chase has provided NEW
TRUSTCO with written notice of such requirement. Chase shall limit disclosure of
NEW TRUSTCO Data to employees and subcontractors of Chase on a need-to-know
basis (including employees and subcontractors within approved functional groups
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and departments), and will be responsible for any unauthorized disclosures by
such employees and subcontractors.
(b) EXCLUSIONS. Notwithstanding Paragraph (a) above, this Section 7.2
shall not apply to any particular information which Chase or NEW TRUSTCO can
demonstrate (i) was, at the time of disclosure to it, in the public domain; (ii)
after disclosure to it, is published or otherwise becomes part of the public
domain through no fault of the receiving Party; (iii) was in the possession of
the receiving Party at the tune of disclosure to it; (iv) was received after
disclosure to it from a third party who had a lawful right to disclose such
information to it; or (v) was independently developed by the receiving Party
without reference to Confidential Information of the furnishing Party. In
addition, a Party shall not be considered to have breached its obligations under
this Section for disclosing Confidential Information of the other Party as
required to satisfy any legal requirement of a competent government body,
provided that, immediately upon receiving any such request and to the extent
that it may legally do so, such Party advises the other Party promptly and prior
to making such disclosure in order that the other Party may interpose an
objection to such disclosure, take action to assure confidential handling of the
Confidential Information, or take such other action as it deems appropriate to
protect the Confidential Information. Further, Chase shall not be considered to
be in breach of its obligations under this Section for disclosing to potential
customers of securities processing, bank operations, information technology and
related back office support services offered by Chase the total volume of such
services (e.g., number of custody accounts and transactions) performed by Chase
for NEW TRUSTCO and other external customers of Chase, provided that the
information disclosed would not enable the recipient of such information to
determine the volume (or approximate volume) of any such services performed for
NEW TRUSTCO.
(c) LOSS OF CONFIDENTIAL INFORMATION. In the event of any unauthorized
disclosure or loss of, or inability to account for, any Confidential Information
of the furnishing Party, the receiving Party shall notify the furnishing Party
immediately.
(d) NO IMPLIED RIGHTS. Nothing contained in this Section shall be
construed as obligating a Party to disclose its Confidential Information to the
other Party, or as granting to or conferring on a Party, expressly or impliedly,
any rights or license to the Confidential Information of the other Party;
provided, however, that each Party shall have such rights of use of the other
Party's Confidential Information as may be set forth elsewhere in this
Agreement.
7.3 AUDIT RIGHTS
(a) GENERAL. Chase shall provide to NEW TRUSTCO's (and its Affiliates')
regulators access at all reasonable times to the part of any facility at which
Chase is providing the Services, to Chase personnel providing the Services, and
to data and records relating to the Services, in connection with any regulatory
examinations of NEW TRUSTCO (or any of its Affiliates). In addition, (i) Chase
shall allow NEW TRUSTCO's external and internal auditors (on behalf of NEW
TRUSTCO and its Affiliates) to utilize computer assisted audit techniques
provided by NEW TRUSTCO (or any of its Affiliates) against those NEW TRUSTCO
(and its Affiliates) computer systems and files, and files created by Chase for
shared Systems that represent NEW TRUSTCO (and its Affiliates) data, that are
operated, supported or maintained by Chase pursuant
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to this Agreement, and (ii) with respect to any applications under development
under this Agreement, Chase shall allow NEW TRUSTCO's external and internal
auditors who participate in some or all of the acceptance testing of such
applications under Section III.E of Schedule A access at all reasonable times
to the part of any facility at which Chase is performing such applications
development, to Chase personnel performing such applications development, and
to data and records relating to such applications development, for the purpose
of testing that agreed internal controls for such applications have been
included. Further, Chase shall provide customers and proprietary fluids of NEW
TRUSTCO (and its Affiliates), issuers of securities, and their respective
auditors, with access to (A) the vault in which physical securities for which
NEW TRUSTCO (or any of its Affiliates) acts as trustee or custodian are held
for the purpose of verifying physical holdings, and (13) reconciliations of
depository records for securities for which NEW TRUSTCO (or any of its
Affiliates) acts as trustee or custodian for the purpose of verifying book
entry holdings. Chase shall cooperate with such auditors and regulators and
provide them with any assistance that they reasonably require to install and
operate audit software.
(b) AUDIT REPORTS.
(i) Chase shall provide NEW TRUSTCO with a copy of a report
annually prepared and opined by external auditors contracted for by
Chase (which auditors shall be a nationally recognized firm) in
accordance with Statement on Auditing Standards No. 70 issued by the
American Institute of Certified Public Accountants, as amended or
superseded by subsequent pronouncements (such types of reports, whether
or not contracted for by Chase, being referred to herein as "SAS 70
Reports"), covering the services provided by Chase's Global Securities
Services (referred to herein as "GSS") to its clients and NEW TRUSTCO
(and its Affiliates).
(ii) Chase will require its external auditors to use their
reasonable best efforts to plan and to substantially complete their
work on the GSS SAS 70 Report, except for the follow-up and update
testing, on or before January 15 following the calendar year then ended
in order to provide a verbal report to NEW TRUSTCO's internal and
external auditors (which auditors will act on behalf of NEW TRUSTCO and
its Affiliates) by such date with respect to such report. The mutual
intent of the Parties is for Chase's external auditors to inform NEW
TRUSTCO's internal and external auditors in such verbal report, subject
to completion of update testing, whether the specified internal control
policies and procedures were suitably designed at December 31 of the
calendar year then ended, and whether such policies and procures were
operating with sufficient effectiveness during such year. This
information is required in order for NEW TRUSTCO's external auditors to
report on NEW TRUSTCO's (and its Affiliates') financial statements in
accordance with Securities and Exchange Commission requirements on a
timely basis, which is considered to be no more than three (3) weeks
after the close of the fiscal year. Chase will allow NEW TRUSTCO's
external and internal auditors (on behalf of NEW TRUSTCO and its
Affiliates) to meet with Chase's external auditors prior to December 31
of each calendar year to discuss the status of the GSS SAS 70
procedures and related testing for such year. The final GSS SAS 70
Report will be provided to NEW TRUSTCO on approximately April 30
following the calendar year then ended. The GSS SAS 70 Report will
incorporate policies, procedures and controls over the processing of
NEW TRUSTCO'S (and its
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Affiliates') data and the population sampled for testing will include
NEW TRUSTCO (and its Affiliates') data. NEW TRUSTCO shall have the
right to meet with Chase in following up any exceptions disclosed in
SAS 70 Reports and to discuss the steps taken to correct them.
(iii) In addition to the GSS SAS 70 Reports, Chase will provide
NEW TRUSTCO with SAS 70 Reports from third party servicers and other
audit reports conducted by Chase's internal auditors with respect to
NEW TRUSTCO (and its Affiliates) systems, systems shared with Chase
and/or the Services.
(iv) With respect to the audits of systems and Services
conducted by Chase and not covered in the aforementioned SAS 70
Reports, Chase will agree with NEW TRUSTCO on the audit scope prior to
the commencement of the audits. Chase's internal draft and final audit
reports and workpapers relative to NEW TRUSTCO (and its Affiliates)
shall be available for review by NEW TRUSTCO's internal and external
auditors (on behalf of NEW TRUSTCO and its Affiliates). NEW TRUSTCO
shall have the right to meet with Chase in following up any NEW TRUSTCO
(and its Affiliates) exceptions disclosed in the internal audit reports
and to discuss the steps taken to correct them. Chase's internal
auditors will agree with NEW TRUSTCO on the risk rating for those
Services not covered in the aforementioned SAS 70 Reports using Chase's
risk rating methodology. For those Services with a very high risk
rating, the internal audits will be conducted during the twelve month
period ending September 30 of each year and the draft reports shall be
issued no later than December 15 of each year. Final audit reports
shall be issued no later than December 31 of each year. An other
Services will be audited in accordance with Chase's internal audit
cycle. The draft and final audit reports relating to such Services
shall be provided to NEW TRUSTCO upon issuance thereof by Chase
internally. The workpapers associated with such reports shall also be
available for review by NEW TRUSTCO's internal and external auditors
upon issuance of the draft audit reports by Chase internally. If there
are any Services that NEW TRUSTCO believes should be audited and such
Services are not covered in the GSS SAS 70 Reports or other SAS 70
Reports and audits provided by Chase, Chase will allow NEW TRUSTCO to
engage Chase's external auditors to perform audits of such Services at
NEW TRUSTCO's expense.
(v) Except as provided in the last sentence of subparagraph
(iv) above, the professional fees and expenses related to the
preparation of SAS 70 Reports and other reports and audits referred to
in this Section 7.3 shall be borne by Chase.
ARTICLE 8.
TERMINATION
8.1 TERMINATION FOR CAUSE
In the event that either Party materially breaches any of its duties or
obligations under this Agreement, which breach shall not be cured within thirty
(30) days after written notice specifying the breach is given to the breaching
Patty, then the Party not in breach may, by giving written notice to the
breaching Party, terminate this Agreement for cause as of a date specified in
the notice of termination, provided, however, that the Party not in breach may
only give such notice
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after the expiration of a fifteen (15) day informal dispute resolution process
conducted pursuant to Section 15.2(e). Without limiting the foregoing, repeated
breaches by a Party of its duties or obligations under this Agreement shall be
deemed a material breach of this Agreement.
8.2 TERMINATION FOR CONVENIENCE
At any time after the first Contract Year, NEW TRUSTCO may terminate this
Agreement for convenience and without regard to cause by giving Chase at least
six (6) months prior written notice (which may be given before the end of the
first Contract Year) designating the termination date. A termination fee of two
million five hundred thousand dollars ($2,500,000) shall apply if the effective
date of termination is during the second Contract Year. Such termination fee
shall be reduced pro rata by the amount of $69,444.44 per month for each month
beyond the end of the second Contract Year. No other break-up fees or penalties
will be payable in the event of termination for convenience.
8.3 TERMINATION FOR INSOLVENCY
In the event that either Patty (a) files for bankruptcy; (b) becomes or is
declared insolvent, or is the subject of any proceedings related to its
liquidation, insolvency or the appointment of a receiver or similar officer for
it; (c) makes an assignment for the benefit of all or substantially all of its
creditors; or (d) enters into an agreement for the composition, extension, or
readjustment of substantially all of its obligations, then the other Party may,
by giving written nonce of termination to such Party, terminate this Agreement
as of a date specified in such notice of termination.
8.4 TERMINATION UPON CHANGE OF CONTROL
Chase shall promptly notify NEW TRUSTCO of any Chase Change of Control (as
defined below). In the event of a Chase Change of Control, NEW TRUSTCO shall
have the right to terminate this Agreement by giving Chase written notice of
termination within six (6) months after the consummation of such Chase Change
of Control specifying a termination date. For purposes of this Section, the
term "Chase Change of Control" shall mean (i) the sake of all or substantially
all of the assets of Chase or its parent corporation, in a single transaction
or series of related transactions, to any person or entity, or group of related
persons and entities, (ii) the merger or consolidation of Chase or its parent
corporation into or with another entity where Chase (or its parent corporation)
is not the (ii) entity (but occluding any such merger or consolidation as to
which at least 50% of the outstanding voting securities of the surviving entity
are owned by the owners of Chase or its parent corporation. immediately prior
to the merger or consolidation), or (iii) the acquisition by a person or
entity, or group of related persons or entities, of at least 50% of the
outstanding voting securities of Chase or its parent corporation.
8.5 TERMINATION/EXPIRATION ASSISTANCE
(a) GENERAL. Subject to the provisions of Section 5.1(c) and 5.2(a)(ii),
except as otherwise expressly stated herein, Chase will provide reasonably
requested termination assistance to NEW TRUSTCO or its designee for a period
commencing six (6) months prior to expiration or termination of this Agreement,
and continuing for up to one year after the expiration or termination of this
Agreement (for any reason, including termination for the material breach of
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NEW TRUSTCO) to facilitate a smooth transition. of the Services to NEW TRUSTCO
or its designee ("Termination Assistance"); provided, however, that Chase will
be required to provide Termination Assistance for only up to six (6) months
after any termination of this Agreement by Chase based on a Change of Control
(as defined in the Post Closing Covenants Agreement). Termination Assistance
shall include, without limitation, the following:
(i) Chase will assist in the development of a transition plan,
will make available necessary project personnel and resources to
facilitate the transition, and will provide training, documentation and
other materials necessary to enable NEW TRUSTCO or its designee to
assume responsibility for the Services using any Equipment or Systems
previously used by Chase.
(ii) If and to the extent that a third party is designated
by NEW TRUSTCO to assume responsibility for the Services, Chase shall
provide the Termination Assistance to NEW TRUSTCO's designee. Chase
shall provide the designee with such information regarding the Services
as is reasonably prudent or necessary in order for the designee to
assume responsibility for, and continue the performance of, the
Services in an orderly manner. However, prior to providing any of the
foregoing Termination. Assistance to NEW TRUSTCO's designee, Chase
shall have the right to receive from such designee, in a form
reasonably acceptable to Chase, written assurances that (A) the
designee shall maintain at all times the confidentiality of any Chase
proprietary information, Chase Software, or other confidential
materials disclosed or provided to, or learned by, such designee in the
course of receiving the Termination Assistance, and (B) the designee
shall use such proprietary information, Chase Software, and other
confidential materials only for the purpose of providing services to
NEW TRUSTCO.
(iii) The provisions of Section 7(b) of the Post Closing
Covenants Agreement and Section 16.15 of this Agreement shall not
prevent NEW TRUSTCO and its designee from offering employment to any
Chase employees (including without limitation individuals performing
work for Chase on a contract basis) who are primarily performing
Services for NEW TRUSTCO's account at any time during the six (6) month
period prior to expiration or termination of this Agreement.
(iv) Chase shall grant to NEW TRUSTCO and its Affiliates a
worldwide, perpetual, paid-up (when NEW TRUSTCO has paid Chase the
one-time license fee referred to below), royalty free, nonexclusive
license (A) to use, copy, modify and enhance, in the course of
providing banking, trust, custody or other financial services, any then
existing Software owned by Chase or any of its Affiliates (including
any modifications, enhancements or derivative works of Software
licensed by Chase from third parties, if and to the extent that Chase
is the owner of such modifications, enhancements or derivative works)
which is part of an asset management system or corporate trust and
agency system and is used to provide Services to NEW TRUSTCO
immediately prior to the Termination Date (the "Chase Software"), and
(B) to sublicense to NEW TRUSTCO Clients (as defined below) the right
to use the Chase Software (in object code form only) in the course of
NEW TRUSTCO or its Affiliates providing banking, trust, custody or
other financial services to such NEW TRUSTCO Clients. For purposes of
this Section 8.5(a)(iv), "NEW TRUSTCO Clients" shall mean any persons
or entities to whom NEW TRUSTCO or its
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Affiliates provides any services. NEW TRUSTCO and its Affiliates shall
have the right to permit their contractors to exercise their rights
under such license for their benefit, but solely for their benefit,
in the course of providing banking, trust, custody or other financial
services. Such licenses shall be in addition to any licenses of
such Chase Software granted to NEW TRUSTCO pursuant to the License
Agreement. As part of such license, (I) NEW TRUSTCO shall be required to
execute a license agreement which contains terms and conditions which
conform in form and substance to the relevant provisions of the License
Agreement, (II) Chase will provide copies of source code and technical
documentation for such Chase Software, and (III) NEW TRUSTCO shall pay
Chase the then current fair market value of such license as a one-time
license fee. Such license will not be transferable by NEW TRUSTCO
without Chase's prior written approval, except in connection with a
direct or indirect acquisition of NEW TRUSTCO by another institution
which is not a competitor of Chase. In the event that there is a direct
or indirect acquisition of NEW TRUSTCO by another institution which is
a competitor of Chase, neither NEW TRUSTCO nor the acquirer shall use
the Chase Software for processing any accounts of persons or entities
who were not NEW TRUSTCO Clients as of the closing date of such
acquisition without Chase's prior approval, which approval may be
granted or withheld at Chase's sole discretion and may be subject to
additional fees and terms and conditions; provided, however, that to
enable NEW TRUSTCO to successfully transition to a new asset management
and/or corporate trust and agency system, NEW TRUSTCO (or the acquirer)
may use the Chase Software, without additional fees, to process all
accounts of NEW TRUSTCO Clients (including accounts of persons and
entities who become NEW TRUSTCO Clients after the closing date of such
acquisition) for a period of up to eighteen (18) months following the
closing date of such acquisition. Such new accounts shall not include
any accounts of the acquirer prior to closing date of the acquisition.
As a condition to the transfer of the license granted under this
Subparagraph (iv), the transferee shall execute and deliver to Chase a
writing in which the transferee agrees to be bound by the terms and
conditions of the license agreement referred to in item (I) above.
(v) To the extent NEW TRUSTCO is not the licensee of Third
Party Software then being used by Chase to provide the Services, Chase
shall use reasonable efforts, at NEW TRUSTCO's request and subject to
obtaining any Required Consents, to provide NEW TRUSTCO (or its
designee, if requested by NEW TRUSTCO) with a sublicense or other right
to use such Software after termination or expiration of this Agreement,
for the benefit of NEW TRUSTCO and its Affiliates, and their respective
customers, in supporting the business of NEW TRUSTCO and ks Affiliates.
NEW TRUSTCO shall be responsible for paying any fees required to obtain
Required Consents.
(vi) Chase shall make available to NEW TRUSTCO or its designee,
pursuant to reasonable terms and conditions, any Equipment owned or
leased by Chase or its Affiliates that is substantially dedicated to
the performance of the Services. NEW TRUSTCO or its designee may
purchase such Equipment owned by Chase or its Affiliates at fair market
value and may assume their rights and obligations with respect to any
such Equipment leased by them. Chase shall return to NEW TRUSTCO any
NEW TRUSTCO Equipment then in Chase's possession or control.
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(vii) Chase shall make available to NEW TRUSTCO or its
designee, pursuant to reasonable terms and conditions, any third party
services then being utilized by Chase solely in the performance of the
Services. Chase shall be entitled to retain the right to utilize any
such third party services in connection with the performance of
services for any other Chase customer.
(viii) In providing the Termination Assistance, Chase shall
provide NEW TRUSTCO and its designees, agents, contractors, and
consultants with reasonable access to and use of all systems then being
used by Chase to provide the Services (subject to restrictions
contained in agreements with third parties).
(b) SERVICES AFTER EXPIRATION/TERMINATION. In addition to the
Termination Assistance provided pursuant to Section 8.5(a), at NEW TRUSTCO's
request, for a period of up to one (1) year following the Termination. Date (or
six months following any termination of this Agreement by Chase based upon a
Change of Control), Chase shall provide to NEW TRUSTCO any or all of the
Services being performed by Chase prior to such Termination Date, including
without limitation. any of the Services under this Section. Except as provided
in Section 5.1(c), to the extent Chase is to perform Services under this
Section, the provisions of this Agreement shall be applicable as such
provisions would have been applicable to such Services prior to such
Termination. Date.
8.6 TERMINATION/EXPIRATION FEE
Upon expiration or termination. of this Agreement for any reason
including without limitation for cause, NEW TRUSTCO shall pay the applicable
termination/expiration fee set forth in Schedule J.
ARTICLE 9.
FORCE MAJEURE
Each Party will be excused from performance delays and failures due to
acts of God and other causes beyond the reasonable control of such Party
(except for subcontractor defaults which are not the result of a force majeure
event), provided the delay could not have been avoided by reasonable
precautions (such as backup systems) and cannot reasonably be circumvented
through the use of alternative sources, workaround plans and other means. Any
Patty so delayed in its performance shall immediately notify the Party to whom
performance is due by telephone (to be confirmed in writing within two (2) days
of the inception of such delay) and describe at a reasonable level of detail
the circumstances causing such delay. If a force majeure condition materially
restricts the performance of the Services for more than three (3) days, NEW
TRUSTCO may procure such Services from alternative sources. The Parties will
share equally the charges of such alternative source and NEW TRUSTCO will
continue to pay Chase the Fixed Fee and the Supplemental Fee. If the force
majeure event persists for more than five (5) days, NEW TRUSTCO may terminate
the Services Agreement.
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ARTICLE 10.
REPRESENTATIONS AND WARRANTIES
10.1 NON-INFRINGEMENT
Each Party represents and warrants that it shall perform its
responsibilities under this Agreement in a manner that does not infringe, or
constitute an infringement or misappropriation of, any patent, copyright,
trademark, trade secret, trade name, service mark or other proprietary rights
of any third party.
10.2 COMPLIANCE WITH LAWS AND REGULATIONS
(a) NEW TRUSTCO and Chase each represent and warrant to the other
that it shall perform its responsibilities under this Agreement in a manner
that complies with all laws, regulations, ordinances and codes applicable to
this Agreement and the Services, including without limitation identifying and
procuring required permits, certificates, approvals and inspections. If a
charge of non-compliance with any such laws, regulations, ordinances, or codes
occurs, then the Party so charged shall promptly notify the other Party of such
charge in writing, provided that the Party so charged shall be obligated to
give such notice only if it is reasonably likely that (i) such charge of
non-compliance could adversely affect its ability to perform its obligations
hereunder at such time or in the future, or (ii) such charge of non-compliance
could have an adverse impact on the other Party or the other Party's clients
at such time or in the future.
(b) NEW TRUSTCO and Chase each further represent and warrant to the
other that its performance of this Agreement will not constitute: a violation
of any judgment, order or decree, a material default under any material
contract by which it or any of its material assets are bound; or an event that
would, with notice or lapse of time, or both, constitute such a default.
(c) Each Party agrees that it will not perform its responsibilities
under this Agreement with actual knowledge on the part of the business unit(s)
performing such responsibilities that the manner in which such responsibilities
are performed would cause the other Party to be in violation of any laws,
regulations, ordinances and codes which are imposed on such other Party.
10.3 AUTHORIZATION
Each Party represents and warrants to the other that:
(a) it has all requisite corporate power and authority to enter into
this Agreement and to carry out the transactions contemplated by this
Agreement; and
(b) the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated by this Agreement have been duly
authorized by all requisite corporate action on the part of such Party.
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10.4 DISCLAIMER
THIS IS A SERVICE AGREEMENT AND IS NOT SUBJECT TO ARTICLE 2 OR 2A OF THE
UNIFORM COMMERCIAL CODE AS ENACTED BY THE STATE OF NEW YORK OR OTHERWISE. OTHER
THAN THE WARRANTIES SET FORTH IN THIS ARTICLE 10, CHASE MAKES NO WARRANTIES
WITH RESPECT TO THIS AGREEMENT OR THE PERFORMANCE OF ITS OBLIGATIONS
HEREUNDER (INCLUDING WARRANTIES WITH RESPECT TO ITS SERVICES, DELIVERABLES, OR
WORK PRODUCT HEREUNDER), EXPRESS OR IMPLIED INCLUDING, BUT NOT LIMITED TO,
IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
CHASE DOES NOT WARRANT THAT THE SERVICES SHALL BE UNINTERRUPTED OR ERROR FREE.
OTHER THAN THE WARRANTIES SET FORTH IN THIS ARTICLE 10, NEW TRUSTCO MAKES NO
WARRANTIES WITH RESPECT TO THIS AGREEMENT OR THE PERFORMANCE OF ITS OBLIGATIONS
HEREUNDER, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
ARTICLE 11.
INDEMNITIES
11.1 INDEMNITY BY CHASE
Chase agrees to indemnify and hold harmless NEW TRUSTCO and its
Affiliates and their respective directors, officers, employees, agents and
assigns, as applicable, in accordance with the procedures described in Section
11.4, against any and all Losses, as incurred, for or on account of or arising
from or in connection with or otherwise with respect to:
(a) any claim of infringement of any patent, trade secret, trademark,
trade name, service mark, copyright or other proprietary rights alleged to have
occurred because of Systems or other resources provided to NEW TRUSTCO or based
upon performance of the Services by Chase; or
(b) any claim by (i) any subcontractor of Chase of any tier (i.e.,
direct subcontractors of Chase, subcontractors of such subcontractors and so
on), (ii) any Chase Transaction Facilitator (as defined in Section 3.3(f)(i)),
or (iii) any other person or entity furnishing products or services to Chase
in. connection with the provision. of the Services under this Agreement (i.e.,
a supplier), except to the extent that NEW TRUSTCO is at fault, in whole or in
part, in causing the loss or injury alleged by such person or entity.
For purposes of Paragraph (b) above, the extent of NEW TRUSTCO's fault, if any,
shall be determined with reference to its obligations under this Agreement.
11.2 INDEMNITY BY NEW TRUSTCO
NEW TRUSTCO agrees to indemnify and hold harmless Chase and its
Affiliates and their respective directors, officers, employees, agents and
assigns, as applicable, in accordance with the
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procedures described in Section 11.4, against any and all Losses, as incurred,
for or on account of or arising from or in connection with or otherwise with
respect to:
(a) any claim of infringement of any patent, trade secret, trademark,
trade name, service mark, copyright or other proprietary rights alleged to have
occurred because of systems or other resources provided to Chase by NEW TRUSTCO
pursuant to this Agreement; or
(b) any claim by a customer of NEW TRUSTCO (or any of its Affiliates)
or a third parry (other than a Chase Transaction Facilitator or a subcontractor
or supplier of Chase) in connection with the provision of the Services under
this Agreement except (i) in the case of claims based on Article 14 Losses, to
the extent that Chase is liable for such Article 14 Loss, and (ii) in the case
of all other claims, to the extent that Chase or a subcontractor or supplier of
Chase is at fault, in whole or in part, in causing the loss or injury alleged
by such customer or third party.
For purposes of Paragraph (b) above, Chase's fault, if any, shall be determined
with reference to its obligations under this Agreement.
11.3 CROSS INDEMNITIES
Chase and NEW TRUSTCO each agree to indemnify and hold harmless the
other, and its Affiliates and their respective directors, officers, employees,
agents and assigns, as applicable, in accordance with the procedures described
in Section 11.4, against any and all Losses, as incurred, for or on. account of
or arising from or in connection with or otherwise with respect to any of the
following in connection with this Agreement: (a) the death or bodily injury of
any agent, employee, customer, contractor, business invitee or business visitor
of such other Party to the extent caused or contributed to by the indemnitor,
its Affiliates, employees, contractors or agents; (b) the damage, loss or
destruction of any real or personal property owned or leased by the indemnitee
to the extent caused or contributed to by the indemnitor, its Affiliates,
employees, contractors or agents; (c) except as otherwise provided in the Post
Closing Covenants Agreement, any claim asserted against the other Party
resulting from an act or omission of the indemnitor, its Affiliates,
contractors or agents in their capacity as an employer of a person, and (d) any
claim asserted against the other Party in connection with this Agreement
resulting from the indemnifying Party's failure to comply with any laws,
regulations, ordinances and codes. Subparagraphs (b) and (d) above shall not
apply to any matter covered under Article 14.
11.4 INDEMNIFICATION PROCEDURES
(a) Any Party seeking any indemnification provided for under this
Agreement (the "Indemnified Party") in respect of, arising out of or involving
the commencement or threatened commencement of any civil, administrative or
investigative action or proceeding against the Indemnified Party (a "Third
Party Claim"), shall notify in writing (and to the extent received, deliver
copies of all related notices and documents (including court papers) to) the
Party from whom indemnification is sought (the "Indemnifying Party") of the
Third Party Claim within fifteen (15) Business Days (as defined in the Post
Closing Covets Agreement) after receipt by such Indemnified Party of written
notice of the Third Party Claim; provided, however, that failure to give such
notification shall not affect the indemnification provided hereunder except to
the extent the Indemnifying Party shall have been actually prejudiced as a
result of such failure (except that
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the Indemnifying Party shall not be liable for any expenses incurred during the
period in which the Indemnified Party failed to give such notice if such
Indemnified Party failed to give such notice within the allotted fifteen
Business Days). Thereafter, the Indemnified Party shall deliver to the
Indemnifying Party, within five (5) Business Days' time after the Indemnified
Party's receipt thereof, copies of all other notices and documents (including
court papers) received by the Indemnified Party relating to the Third Party
Claim.
(b) If a Third Party Claim is made against an Indemnified Party, the
Indemnifying Party shall be entitled to participate in the defense thereof and,
if it so chooses (except as provided in Section 11.4(c)), to assume the defense
thereof with experienced counsel selected by the Indemnifying Party and
reasonably satisfactory to the Indemnified Party. Should the Indemnifying Party
so elect to assume the defense of a Third Party Claim, the Indemnifying Party
sill not be liable to the Indemnified Party for any legal expenses (except as
provided below and in Section 11.4(c)) subsequently incurred by the Indemnified
Party in connection with the defense thereof Notwithstanding the Indemnifying
Party's election to assume the defense of such Third Party Claim, the
Indemnified Party shall have the right to employ separate counsel and to
participate in the defense of such action at its own expense; provided however,
that the Indemnifying Party shall bear the reasonable fees, costs, and expenses
of such separate counsel if (i) the use of counsel chosen by the Indemnifying
Party to represent the Indemnified Party would present such counsel with a
conflict of interest that would preclude such counsel from representing the
Indemnified Party pursuant to legal canons of ethics or other applicable law;
(ii) the Indemnifying Party shall not have employed counsel reasonably
satisfactory to the Indemnified Party to represent it within thirty (30) days
after notice to the Indemnifying Party of the institution of such Third Party
Claim, or (iii) the Indemnifying Party shall authorize the Indemnified Party to
employ separate counsel at the Indemnifying Party's expense. If the
Indemnifying Party chooses to defend or prosecute a Third Party Claim, each
Party hereto shall cooperate in the defense or prosecution thereof. Such
cooperation shall include the retention and (upon the Indemnifying Party's
request) the provision to the Indemnifying Party of records and information
which are reasonably relevant to such Third Party Claim, and making employees
available (subject to reimbursement by the Indemnifying Party of actual
expenses incurred therewith) on a mutually convenient basis to provide
addItional information and explanation of any material provided hereunder. If
the Indemnifying Party chooses to defend or prosecute any Third Party Claim,
the Indemnified Party shall agree to any settlement, compromise or discharge of
such Third Party Claim which the Indemnifying Party may recommend and which by
its terms obligates the Indemnifying Party to pay the full amount of the
liability in connection with such Third Party Claim and releases the
Indemnified Party completely in connection with such Third Party Claim.
(c) Notwithstanding anything set forth in Section 11.4(b) to the
contrary, in the event an Indemnified Party reasonably believes and so notifies
the Indemnifying Party in writing that the applicable claim, even if fully
indemnified for, is reasonably likely to have a material adverse effect on the
Indemnified Party's business, financial condition. or results of operations,
then the Indemnifying Party shall not have the right to assume the defense of
such claim but shall have the right to employ separate counsel and to
participate in the defense of such action at its own expense. In such an event,
(i) the Indemnified Party and its counsel shall consult, wherever reasonably
practicable, with the Indemnifying Party and its counsel with respect to the
status of
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the claim and any related litigation, and (ii) the Indemnified Party shall bear
the fees, costs arid expenses of its counsel.
(d) Whether or not the Indemnifying Party shall have assumed the
defense of a Third Party Claim, so long as the Indemnifying Party acknowledges
in writing its obligation to indemnify the Indemnified Party with respect to
the applicable claims, the Indemnified Party shall not admit any liability with
respect to, or settle, compromise or discharge, such Third Party Claim without
the Indemnifying Party's prior written consent, which consent may not be
withheld unless, in the Indemnifying Party's good-faith judgment, such
settlement, compromise or discharge is unreasonable in light of such Third
Party Claim against, and defenses available to, the Indemnified Party.
11.5 SUBROGATION
In the event that an Indemnifying Party shall be obligated to indemnify
an Indemnified Party pursuant to this Article, the Indemnifying Party shall,
upon payment of such indemnity in full, be subrogated to all rights of the
Indemnified Party with respect to the Losses indemnified, and the Indemnified
Party agrees to execute and deliver to the Indemnifying Party such instruments
as may be reasonably required to evidence such subrogation.
ARTICLE 12.
INSURANCE AND RISK OF LOSS
12.1 INSURANCE
(a) GENERAL. Each Party shall procure and maintain throughout the Term
at least the following insurance coverages in a policy or policies of
insurance, primary and excess, including, where appropriate, umbrella or
catastrophic form:
(i) Disability and Workers Compensation. Insurance, including
not less than $1,000,000 Employers Liability Coverage.
(ii) Commercial General Liability Insurance against loss
from injuries or death to any person and from damage to any property
with combined single limits of not less than $15,000,000, including the
following coverages: (i) bodily injury and property damage; (ii) broad
form contractual liability; (iii) broad form property damage; and (iv)
personal injury.
(iii) Financial Institution Bond Insurance. Such insurance
shall include, without limitation, fidelity, premises, transit, check
forgery, securities forgery and computer crime in the amount of
$50,000,000 for NEW TRUSTCO and $100,000,000 for Chase. In addition
Chase shall carry excess securities coverage of not less than
$75,000,000.
The Parties agree that, if NEW TRUSTCO increases the assets under
administration, care, custody and/or control of Chase, then NEW TRUSTCO may
request that Chase obtain such additional Financial Institution Bond Insurance
and excess securities coverage as is reasonable and customary in view of the
total amount of NEW TRUSTCO's assets under administration, care, custody and/or
control of Chase. If Chase obtains such additional coverage, Chase will
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provide to NEW TRUSTCO, by broker's representation letter or otherwise,
evidence of such additional coverage.
(b) INSURANCE CERTIFICATES. A certificate of insurance or a brokers
representation letter corresponding to each such policy shall be delivered by
the Party required to obtain such insurance to the other Party on or before the
Commencement Date. With respect to insurance noted in items (i) and (ii) of
paragraph (a) above, such certificates of insurance shall contain an agreement
by the king insurance company(ies) that such insurance will not be canceled or
terminated without thirty (30) days prior written notice to the insured With
respect to insurance noted in item (iii) of paragraph (a) above, each Party
shall use reasonable efforts to notify the other Party in the event of
cancellation, termination or material modification thirty (30) days in advance
of such change. Each insured will use reasonable efforts to notify the other
Party immediately upon receipt of such notice of cancellation or termination.
Each insured will use reasonable efforts to deliver to the other Party written
notice of renewal and or material modification within a reasonable time after
such event, but not longer than thirty (30) days thereafter.
12.2 RISK OF LOSS
Each Party shall be responsible for risk of loss of, and damage to, any
Equipment, End User Equipment, Software or other materials in its possession or
under its control.
ARTICLE 13.
LIMITATION OF LIABILITY
13.1 LIMITATION ON LIABILITY
(a) THE LIMITATIONS ON LIABILITY SET FORTH IN SECTIONS 13.1(b), (c)
AND) (d) BELOW SHALL NOT APPLY TO CHASE'S LIABILITY UNDER ARTICLE 14 IN
CONNECTION WITH CHASE'S PERFORMANCE OF (OR FAILURE TO PERFORM) (i) ANY OF THE
SERVICES DESCRIBED IN SECTION II.A OF THE SERVICES SCHEDULE, OR (ii) ANY FUNDS
TRANSFER PURSUANT TO SECTION II.B OF THE SERVICES SCHEDULE WHICH IS DIRECTLY
RELATED TO SECURITIES FOR WHICH CHASE IS A CUSTODIAN OR WILL SHORTLY BECOME A
CUSTODIAN.
(b) IN EACH CONTRACT YEAR, CHASE AND NEW TRUSTCO SHALL SHARE EQUALlY
LIABILITY FOR ALL ARTICLE 14 LOSSES (AS DEFINED IN ARTICLE 14), OTHER THAN
THOSE DESCRIBED IN SECTION 13.1(a) ABOVE, FOR WHICH CHASE WOULD OTHERWISE BE
LIABLE UNDER ARTICLE 14 UNTIL NEW TRUSTCO HAS PAID AN AMOUNT EQUAL TO THE NET
FINANCIAL LOSSES (AS DEFINED BELOW) FOR ANY LIABILITY ABOVE THE AMOUNT OF SUCH
SHARED LIABILITY, CHASE will PAY ONE HUNDRED PERCENT (100%) OF ALL ARTICLE 14
LOSSES, OTHER THAN THOSE DESCRIBED IN SECTION 13.1(a) ABOVE, FOR WHICH CHASE
WOULD OTHERWISE BE LIABLE UNDER ARTICLE 14, UP TO A TOTAL AGGREGATE AMOUNT
EQUAL TO **** IN ANY CONTRACT YEAR. AS USED HEREIN, THE TERM "NET FINANCIAL
LOSSES" SHALL MEAN THE NET FINANCIAL LOSSES INCURRED BY UST AND ITS AFFILIATES
DURING
**** 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.
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CALENDAR YEAR 1994 AS A RESULT OF ACTS OR OMISSIONS OF UST IN PERFORMING, FOR
ITSELF OR ITS AFFILIATES, ANY SERVICES WHICH CHASE IS OBLIGATED TO PERFORM
UNDER THIS AGREEMENT OTHER THAN THOSE DESCRIBED IN SECTION 13.1(a) ABOVE,
PROVIDED THAT THE FINANCIAL LOSSES TAKEN INTO ACCOUNT SHALL BE LIMITED TO THOSE
FINANCIAL LOSSES FOR WHICH CHASE WOULD HAVE BEEN RESPONSIBLE UNDER ARTICLE
14 IF CHASE HAD PROVIDED SUCH SERVICES UNDER THIS AGREEMENT DURING CALENDAR
YEAR 1994. FOR PURPOSES OF APPLYING THE LIMITATIONS SET FORTH IN THIS SECTION
13.1(b), THE AMOUNT OF CHASE'S LIABILITY HEREUNDER FOR ANY CONTRACT YEAR SHALL
BE MEASURED BASED ON THE DATE THE EVENT RESULTING IN SUCH LIABILITY OCCURRED
(RATHER THAN THE DATE WHEN CHASE SATISFIES THE LIABILITY).
(c) EXCEPT AS OTHERWISE PROVIDED IN PARAGRAPHS (a) AND (b) ABOVE,
EACH PARTY'S AGGREGATE LIABILITY TO THE OTHER PARTY FOR All CAUSES OF ACTION OR
CLAIMS, INCLUDING, WITHOUT LIMITATION, BREACH OF CONTRACT, BREACH OF WARRANTY,
NEGLIGENCE (INCLUDING NEGLIGENT MISREPRESENTATION), AND OTHER TORTS ARISING OUT
OF OR RELATING TO THIS AGREEMENT SHALL NOT EXCEED ****.
(d) NEITHER PARTY SHALL HAVE LIABILITY, WHETHER BASED ON CONTRACT, TORT
(INCLUDING, WITHOUT LIMITATION, NEGLIGENCE), WARRANTY OR ANY OTHER LEGAL OR
EQUITABLE GROUNDS, FOR ANY PUNITIVE, EXEMPLARY, CONSEQUENTIAL, SPECIAL,
INDIRECT OR INCIDENTAL LOSS OR DAMAGE SUFFERED BY THE OTHER PARTY, INCLUDING
WITHOUT LIMITATION, LOSS OF DATA, PROFITS (EXCLUDING PROFITS UNDER THIS
AGREEMENT), INTEREST OR REVENUE, OR USE OR INTERRUPTION OF BUSINESS, ARISING
FROM OR RELATED TO THIS AGREEMENT, EVEN IF SUCH PARTY IS ADVISED OF THE
POSSIBILITY OF SUCH LOSSES OR DAMAGES.
(e) THE LIMITATIONS SET FORTH IN SECTIONS 13.1(b), 13.1(c) AND
13.1(d) ABOVE ARE NOT INTENDED TO IMPLY THAT CUSTOMERS OR OTHER THIRD PARTIES
HAVE A RIGHT TO RECOVER PUNITIVE, EXEMPLARY, CONSEQUENTIAL, SPECIAL, INDIRECT,
OR INCIDENTAL LOSSES OR DAMAGES AND SHALL NOT APPLY TO (i) CHASE'S AND NEW
TRUSTCO'S INDEMNifY OBLIGATIONS UNDER ARTICLE 11, (ii) AMOUNTS INADVERTENTLY
OVERPAID TO EITHER PARTY BY THE OTHER, (iii) AMOUNTS FOR CHARGES, FEES,
REFUNDS, CREDITS, ADJUSTMENTS, REIMBURSEMENTS, ETC. DUE UNDER ARTICLE 3, ARTICLE
5, SCHEDULE C OR OTHERWISE DUE AND PAYABLE UNDER THIS AGREEMENT, OR (iv)
DAMAGES OCCASIONED BY THE WILLFUL MISCONDUCT OR GROSS NEGLIGENCE (i.e., CONDUCT
EVINCING A RECKLESS INDIFFERENCE TO THE RIGHTS OF OTHERS) OF A PARTY.
(f) A PARTY MAY NOT ASSERT AGAINST THE OTHER PARTY ANY CLAIM OR SEEK
ANY REMEDY IN CONNECTION WITH THIS AGREEMENT OR ACTS DONE OR OMITTED HEREUNDER
UNLESS THE ASSERTING PARTY HAS GIVEN THE
**** 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.
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OTHER PARTY WRITTEN NOTICE OF THE CLAIM WITHIN TWO (2) YEARS AFTER THE
ASSERTING PARTY FIRST HAD ACTUAL KNOWLEDGE OF THE FACTS SUPPORTING THE CLAIM.
NOTWITHSTANDING THE FOREGOING, THE PROVISIONS OF THIS SECTION 13.1(f) SHALL NOT
APPLY TO ANY MATTER COVERED UNDER ARTICLE 11 OR ANY ARTICLE 14 LOSSES
COVERED UNDER ITEM (i) OF SECTION 14.1(a), PROVIDED THAT IN THE CASE OF SUCH
ARTICLE 14 LOSSES THE APPROPRIATE NOTICE UNDER ARTICLE 14 HAS BEEN GIVEN EXCEPT
AS PROVIDED IN THIS SECTION 13.1(f), THE STATUTE OF LIMITATIONS FOR ALL CLAIMS
SHALL BE AS PROVIDED UNDER APPLICABLE LAW.
(g) NEW TRUSTCO AND CHASE EXPRESSLY ACKNOWLEDGE AND AGREE THAT THE
LIMITATIONS AND EXCLUSIONS CONTAINED HEREIN REPRESENT THE PARTIES' AGREEMENT AS
TO THE ALLOCATION OF RISK BETWEEN THE PARTIES AND THEIR MUTUAL OBLIGATIONS OF
CONTRACT IN CONNECTION WITH CHASE'S OBLIGATIONS UNDER THIS AGREEMENT. THE
AMOUNTS PAYABLE TO CHASE IN CONNECTiON HEREWITH REFLECT THIS ALLOCATION OF RISK
AND THE EXCLUSION OF CONSEQUENTIAL AND PUNITIVE DAMAGES IN THIS AGREEMENT.
ARTICLE 14.
CERTAIN LOSSES
14.1 GENERAL
(a) The term "Article 14 Loss" shall mean any financial loss described
in item (i), (ii) or (iii) below which arises out of, in whole or in part, any
act or omission of Chase or any of its subcontractors in connection with its
performance (or failure to perform) any Services and for which Chase or any of
its subcontractors is at fault, in whole or in part (as "fault" is determined
in Paragraph (b) below):
(i) financial loss to a customer of NEW TRUSTCO (or any of
its Affiliates) or other third party (notwithstanding that NEW TRUSTCO
(or one of its Affiliates) may be liable to the customer or other third
party);
(ii) financial loss to NEW TRUSTCO (or any of its Affiliates)
when acting as a principal or for its own account; or
(iii) financial loss to NEW TRUSTCO (or any of its Affiliates)
due to an incorrect credit or payment being made to a customer of NEW
TRUSTCO (or any of its Affiliates) or other third party.
(b) Subject to the terms and conditions of this Article 14, Chase
shall be liable for an Article 14 Loss based on the degree of fault of Chase
and its subcontractors in causing such Article 14 Loss in relation to the
degree of fault of all other persons and entities (including without limitation
NEW TRUSTCO and its Affiliates and their respective customers and
counterparties in a settlement or transaction). For purposes hereof, the degree
of fault of Chase
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and its subcontractors shall be determined with reference to Chase's
obligations under this Agreement. Notwithstanding anything to the contrary in
this Agreement, the following provisions shall apply in determining Chase's
liability, if any, for an Article 14 Loss:
(i) Chase will use reasonable care in performing its
obligations under this Agreement, including without limitation the
safekeeping of assets;
(ii) Chase shall be liable for an Article 14 Loss which shall
occur as the result of the failure of a subcustodian to exercise
reasonable care with respect to securities settlement and the
safekeeping of assets; but only to the extent that Chase would be
liable if Chase were performing the settlement or holding the assets in
New York. In the event of any Article 14 Loss incurred by a customer of
NEW TRUSTCO (or any of its Affiliates) by reason of the failure of
Chase or its subcustodians to utilize reasonable care, Chase shall be
liable only to the extent of the direct damages of such customers, to
be determined based on the market value of the property which is the
subject of the Article 14 Loss at the date of discovery thereof, unless
Chase would be liable for other types of damages under Section
14.1(b)(v);
(iii) Chase will not have liability for an Article 14 Loss to
the extent it was caused by:
(A) ****
(B) **** provided that:
(I) if Chase is unable to obtain reimbursement from
any such Agent for such Article 14 Loss after its initial
efforts in seeking reimbursement in accordance with Article V
of the Services Schedule, then Chase shall either assign its
claim against such Agent to NEW TRUSTCO or pursue such claim
itself in which case any amounts ultimately recovered from such
Agent shall be distributed as follows: first, to reimburse the
expenses of collection, second, to reimburse the person or
entity suffering the Article 14 Loss for such loss; third, if
NEW TRUSTCO and/or Chase reimbursed the person or entity
suffering the Article 14 Loss prior to the recovery of such
amounts from such Agent, then to reimburse the Parties in
proportion to the amount each Party paid as reimbursement to
the person or entity suffering such loss; and
(II) Chase and NEW TRUSTCO shall share equally
liability for an Article 14 Loss to the extent it was caused by
an act or omission of any such correspondent bank;
**** 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.
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(C) the insolvency of a subcustodian which it
appoints unless such appointment was made negligently or in bad
faith;
(D) the general risk of investing;
(E) the risk of investing or holding assets in a
particular country, such as losses resulting from
nationalization, expropriation or other government actions;
regulation of the banking or securities industry; currency
restrictions; devaluations or fluctuations; market conditions
which prevent the orderly execution of securities transactions
or affect the value of assets; and, other market practices or
conditions disclosed in writing by Chase to NEW TRUSTCO on a
market-by-market basis; provided, however, that this exclusion
from liability shall not apply if and to the extent that such
Article 14 Loss was caused by the negligent failure (under the
standard set forth in Section 14.1(b)(ii) above) of Chase or
its subcustodian to comply with the laws or regulations of such
country;
(F) actions taken or omitted in reliance upon any
instruction, order, indenture, stock certificate, power of
attorney, assignment, affidavit or other instrument reasonably
believed by Chase, in good faith, to be genuine or bearing the
signature of a person or persons believed by Chase, in good
faith, to be authorized to sign, countersign or execute the
same; provided, however, that this provision shall not be
construed to diminish Chase's responsibilities under Section
4.6; and provided further that this provision shall not apply
to any Article 14 Loss arising out of Chase's failure to
perform its obligations in accordance with this Agreement
relating to check or item processing (including without
limitation Chase's obligations under Sections III(C)(3), (4),
(7) and (9) of the Services Schedule);
(G) Chase acting in accordance with applicable laws,
regulations, rules or policies (including, but not limited to,
rules, regulations and policies of the various payment
Systems), or with the terms of its agreements with other banks
or financial institutions regarding the transaction of business
with those banks or institutions, provided such terms are not
manifestly unreasonable;
(H) force majeure events for which Chase would be
excused from delay or failure of performance under Article 9;
(iv) Chase will not be liable to NEW TRUSTCO for any Article 14
Loss arising out of Chase's failure to perform its obligations in
accordance with this Agreement relating to check or item processing
(including without limitation. Chase's obligations under Sections
III(C)(3), (4), (7) and (9) of the Services Schedule) (any such Article
14 Loss being referred to herein as a "Check Processing Loss") if and
to the extent that NEW TRUSTCO (or one of its Affiliates) has valid
defenses under Article 4 of the Uniform Commercial Code of the
applicable jurisdiction which, if asserted by NEW TRUSTCO (or its
Affiliate), would avoid liability to its customer. Chase will be
subrogated, to the extent of any payments made to NEW TRUSTCO for any
Check Processing Loss, to the rights of NEW TRUSTCO (or its Affiliate)
with respect to such Article 14 Loss; and
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(v) in no event shall Chase be liable for indirect or
consequential damages or lost profits or loss of business, even if
previously informed of the possibility of such damages, except that
Chase shall be liable for such damages occasioned by its willful
misconduct or gross negligence (i.e., conduct evincing a reckless
indifference to the rights of others) to the extent provided under New
York law (without assuming knowledge of NEW TRUSTCO's customers being
imputed to Chase).
Chase shall not have liability for an Article 14 Loss to the extent that its
liability would have been avoided or reduced by the provisions set forth in
the preceding sentence. If there are changes in the financial services industry
after the date of this Agreement which result in financial institutions
routinely including in their customer contracts and enforcing against their
customers liability protections which are different than those set forth in
this Section 14.1(b), the Parties will discuss in good faith and agree upon
appropriate changes to the provisions of this Section 14.1(b).
(c) Each Party shall notify the other Party of an Article 14 Loss
promptly after it becomes aware of the same. If NEW TRUSTCO (or any of its
Affiliates) falls to give prompt notice to Chase of an Article 14 Loss, then
Chase shall not be liable in respect of such Article 14 Loss to the extent that
Chase can demonstrate, by a preponderance of the evidence, that its ability to
investigate or mitigate such Article 14 Loss was impaired by such failure to
give prompt notice.
(d) NEW TRUSTCO will have the option of attempting to resolve any
Article 14 Loss described in Section 14.1(a)(i) above itself or jointly with
Chase. If NEW TRUSTCO settles the Article 14 Loss itself, ft may make a claim
against Chase under this Article 14 to the extent that it believes that Chase
is liable to it, in whole or in part, for the amount paid by it to settle such
Article 14 Loss. If there is a dispute between the Parties as to Chase's
financial responsibility for any Article 14 Loss which NEW TRUSTCO resolves by
itself, NEW TRUSTCO will have the burden of demonstrating, by a preponderance
of the evidence, (i) that the Article 14 Loss occurred, (ii) the amount of the
Article 14 Loss, and (iii) the degree of fault of Chase in causing the Article
14 Loss. Chase's liability for the Article 14 Loss will equal the amount
actually paid by NEW TRUSTCO in settlement of the loss multiplied by a
percentage which represents Chase's degree of fault as determined under Section
14.1(b) above.
(e) With respect to Article 14 Losses described in Section
14.1(a)(ii) above, NEW TRUSTCO (or its Affiliates) will take any reasonable
steps requested by Chase in writing to mitigate the amount of the financial
loss to NEW TRUSTCO (or its Affiliates). Chase will not be responsible for
losses incurred by NEW TRUSTCO (or its Affiliates) due to the failure of NEW
TRUSTCO (or its Affiliates) to take such reasonable steps requested by Chase.
(f) With respect to Article 14 Losses described in Section
14.1(a)(iii) above, NEW TRUSTCO (or its Affiliates) will take any reasonable
steps requested by Chase in writing to recover the incorrect credit or payment.
Chase will be liable to NEW TRUSTCO, based on the relative degree of fault of
Chase and its subcontractors as determined under Paragraph (b) above, for the
reasonable costs incurred by NEW TRUSTCO (and its Affiliates) in attempting to
recover the same.
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(g) If a customer of NEW TRUSTCO (or any of its Affiliates) or other
third party commences, or threatens to commence, an action or proceeding
against NEW TRUSTCO (or any of its Affiliates) based on an Article 14 Loss
described in. Section 14.1(a)(i) above, the indemnification procedures set
forth in Section 11.4 shall apply to the defense or settlement of such action
of proceeding (or threatened action or proceeding). In applying the procedures
described in Section 11.4, such action or proceeding (or threatened action or
proceeding) shall be considered to be a "Third Party Claim."
ARTICLE 15.
DISPUTE RESOLUTION
15.1 INFORMAL DISPUTE RESOLUTION
NEW TRUSTCO and Chase acknowledge that, from time to time during the
Term, there may arise between them issues regarding the Parties' rights, duties
and obligations, including without limitation, issues arising as a result of
changes in circumstances which are not reasonably anticipated as of the
Commencement Date, and which require the attention of NEW TRUSTCO and Chase
management. In order to resolve any such issues arising under this Agreement as
quickly and efficiently as feasible and at the lowest management level
possible, NEW TRUSTCO and Chase agree to utilize the following procedures:
(a) LEVEL ONE. If NEW TRUSTCO identifies an issue, or issues, that
requires resolution, NEW TRUSTCO will give the Chase Account Executive written
notice identifying the issue(s), and if Chase identifies an issue, or issues,
that requires resolution, Chase will give the NEW TRUSTCO Project Executive
written notice identifying the issue(s). The NEW TRUSTCO Project Executive and
the Chase Account Executive will then negotiate in good faith on a regular
basis to resolve the issue(s) as expeditiously as feasible under the
circumstances; provided, however, such negotiation will extend no more than ten
(10) business days from the date the receiving Party received the written
notice identifying the issue(s). Notwithstanding the above ten (10) business
day period, the NEW TRUSTCO Project Executive and the Chase Account Executive
may, without waiver of any rights, agree to extend such period to another date,
provided that such agreement is in a signed writing delivered prior to the
expiration of the ten (10) business day period to the Senior NEW TRUSTCO
Project Executive and the Senior Chase Account Executive (collectively, the
"Senior Executives"). The "Senior NEW TRUSTCO Project Executive" shall be the
senior level executive with management responsibility for the Chase
relationship. The "Senior Chase Account Executive" shall be the senior level
executive with management responsibility for the NEW TRUSTCO relationship.
In the event any issue(s) remain unresolved upon the expiration. of the
time period referred to in the preceding paragraph or, prior to such
expiration, either the NEW TRUSTCO Project Executive or the Chase Account
Executive states in writing to the other that he/she will not be able to
resolve the issue(s) through continued negotiation, they will refer the
issue(s) to the Senior NEW TRUSTCO Project Executive and the Senior Chase
Account Executive.
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<PAGE> 48
No later than five (5) business days from the date of such referral,
the NEW TRUSTCO Project Executive and the Chase Account Executive will each
prepare a written statement describing in derail their respective positions
related to the issue(s) (the "Issue Statements"). The Issue Statements will be
submitted to both of the Senior NEW TRUSTCO Project Executive and the Senior
Chase Account Executive no later than the expiration of the time period
referred to in the preceding sentence. The purpose of preparing and submitting
the Issue Statements is to facilitate the resolution process. However, the
Issue Statements will not preclude either Party from identifying any additional
relevant issues during the resolution process, nor in any event will the Issue
Statements constitute a waiver of or prejudice or limit either Party's rights
or remedies.
(b) LEVEL TWO. When the Issue Statements are received by the Senior
NEW TRUSTCO Project Executive and the Senior Chase Account Executive as
described above, they will negotiate in good faith on a regular basis to
resolve the issue(s) as expeditiously as feasible under the circumstances;
provided, however, such negotiation will extend no more than five (5) business
days from the date the Senior NEW TRUSTCO Project Executive and the Senior
Chase Account Executive each received the Issue Statements. Notwithstanding the
above five (5) business day period, the Senior NEW TRUSTCO Project Executive
and the Senior Chase Account Executive may, without waiver of any rights, agree
to extend such period to another date, provided that such agreement is in a
writing signed prior to the expiration of the five (5) business day period.
Within five (5) business days of the conclusion of the Senior NEW
TRUSTCO Project Executive's and the Senior Chase Account Executive's
negotiation, these senior Executives will submit a joint written recommendation
for any issue(s) agreed upon and separate written recommendations for any
issue(s) not agreed upon or remaining unresolved. NEW TRUSTCO and Chase agree
to be bound by the joint written recommendation for any issues agreed upon.
For any issues that remain unresolved, either Party may institute litigation in
accordance with Section 15.3.
15.2 GENERAL RESOLUTION PROCEDURES
(a) At each management level, the designated representatives of the
Parties may utilize such practices and procedures for resolving the issue(s) as
they determine in their discretion are most likely to result in an early and
amicable resolution.
(b) Except pursuant to Section 15.2(d) below, NEW TRUSTCO and Chase
each agree that they will refrain from instituting any litigation, and no court
shall be competent to address any dispute properly addressed in this fashion,
until either the Senior NEW TRUSTCO Project Executive or the Senior Chase
Account Executive provides a written notice to the other that he/she has
concluded in good faith that amicable resolution through continued negotiation
of the issue(s) does not appear likely after the conclusion of the resolution
process set forth in Section 15.1 above.
(c) Notwithstanding anything to the contrary in this Article 15, if
the issue(s) being addressed pursuant to this Article 15 involves a major
payment, service level or post-termination dispute, both Parties agree that the
duly empowered negotiating representative of either Party
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<PAGE> 49
may escalate the issue(s) to the next management level for resolution at any
time and for any reason.
(d) Notwithstanding anything to the contrary in this Article 15, this
provision will not be construed to prevent a Party from instituting, and a
Party is authorized to institute litigation earlier to (i) avoid, based on a
well-founded belief, the expiration of any applicable limitations period
applicable to a particular claim, (ii) to preserve a superior position. with
respect to other creditors, or (iii) seek a temporary restraining order or
other immediate injunctive relief.
(e) Notwithstanding any to the contrary in this Article 15, in the
event that a Party initiates a fifteen (15) day informal dispute resolution
process pursuant to Section 8.1, the dispute resolution process shall be
accelerated and shall be resolved by the Senior NEW TRUSTCO Project Executive
and the Senior Chase Account Executive. The NEW TRUSTCO Project Executive and
the Chase Account Executive shall each prepare their respective Issue
Statements within two (2) days of the commencement of this informal accelerated
resolution procedure and deliver same to the Senior Executives. The Senior
Executives shall either resolve the dispute within the remaining thirteen (13)
days whereby the Parties shall be bound by the decision of the Senior
Executives or either Party may institute litigation proceedings.
(f) Chase shall not debit or freeze NEW TRUSTCO's account with Chase
for the purpose of collecting (i) any money damages that Chase believes it is
entitled to recover from NEW TRUSTCO for breach of this Agreement or (ii) any
amounts that Chase believes it is entitled to recover from NEW TRUSTCO under
the indemnification provisions of Article 11; provided, however, that this
restriction shall not apply in any instance where (A) Chase notifies NEW
TRUSTCO in writing that it believes it is entitled to recover such money
damages or indemnifiable amounts (as applicable) and intends to debit NEW
TRUSTCO's account for the same, and (B) NEW TRUSTCO does not dispute in good
faith Chase's right to recover such money damages or indemnifiable amounts (as
applicable) as evidenced by NEW TRUSTCO's failure to provide written. notice to
Chase, within thirty (30) days after receipt of Chase's notice under item (A)
above, disputing Chase's right to recover the same. The provision shall not
apply to any charges payable by NEW TRUSTCO to Chase under Article 5.
15.3 LITIGATION
The Parties consent to the nonexclusive jurisdiction of the United
States District Court for the Southern District of New York and of any state
court sitting in New York, New York for all litigation which may be brought
with respect to the terms of, and the transactions and relationships
contemplated by, this Agreement.
15.4 CONTINUED PERFORMANCE
Each Party agrees to continue performing its obligations under this
Agreement while any dispute is being resolved unless and until such obligations
are terminated by the termination or expiration of this Agreement.
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15.5 AFFILIATES
Although NEW TRUSTCO's Affiliates shall have no right to bring any
claim or action, or to seek and obtain money damages or other relief, directly
against Chase in connection with any dispute or controversy arising out of or
relating to this Agreement, NEW TRUSTCO shall be entitled to (i) treat any
damages sustained by its Affiliates as damages to NEW TRUSTCO as a party
hereunder (and such damages shall be aggregated into NEW TRUSTCO's damages and
shall be subject to all applicable limitations of liability set forth in
Article 13), and (ii) pursue equitable and other relief relating to the
provision of Services to its Affiliates under this Agreement.
ARTICLE 16.
GENERAL
16.1 BINDING NATURE AND ASSIGNMENT
(a) ****
Except as provided in the preceding two sentences, Chase may not assign its
right or obligations under this Agreement without the prior written consent
of NEW TRUSTCO, which consent may be granted or withheld in NEW TRUSTCO's sole
discretion. In addition, Chase shall not assign its rights or obligations under
this Agreement to another person or entity unless such person or entity has
sufficient operating assets and capital to operate its business and fulfill its
obligations.
(b) NEW TRUSTCO may not assign its rights and obligations under this
Agreement without the prior written consent of Chase (which consent shall not
be unreasonably withheld).
(c) For purposes of this Section, any assignment by operation of law,
order of any court, or pursuant to any plan of merger, consolidation, or
liquidation shall be deemed an assignment subject to the provisions of this
Section. Any assignment made in violation of this Section shall be void and of
no effect as between the Parties. Subject to the foregoing, this Agreement
shall be binding on the Parties hereto and their respective successors and
assigns; provided that the Party assigning this Agreement notifies the other
Party in writing of the assignment and the assignee agrees in writing to be
bound by all the terms and conditions of this Agreement.
16.2 ENTIRE AGREEMENT; AMENDMENT
Except with respect to the obligations of the Parties in connection
with the Acquisition Documents (including the Side Letter), the FTE Letter
Agreement and the Side Letter
**** 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.
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Supplement, this Agreement, including any Schedules referred to herein and
attached hereto, each of which is incorporated herein for all purposes,
constitutes the entire agreement with respect to the subject matter hereof and
supersedes all prior agreements, whether written or oral, with respect to the
subject matter contained in this Agreement and there are no representations,
understandings or agreements relative hereto which are not fully expressed
herein. Notwithstanding the foregoing, this Agreement shall supersede (i) the
Services Agreement Term Sheet, between The Chase Manhattan Corporation and
U.S. Trust Corporation, dated November 18, 1994 (except for Sections 4.1 and
4.2 thereof), and (ii) that certain letter agreement, between The Chase
Manhattan Corporation and U.S. Trust Corporation, dated November 18, 1994,
relating to the payment of base salary and severance to certain employees
located at the Broadway Data Center. No change, waiver, or discharge hereof
shall be valid unless in writing and signed by an authorized representative of
the Party against which such change, waiver, or discharge is sought to be
enforced.
16.3 NOTICES
All notices, requests, demands, and determinations under this Agreement
(other than routine operational communications), shall be in writing and shall
be deemed duly given (a) when delivered by hand, (b) one (1) day after being
given to an express courier with a reliable system for tracking delivery, (c)
when sent by confirmed facsimile with a copy sent by another means specified in
this Section, or (d) six (6) days after the day of mailing, when mailed by
United States mail, registered or certified mall, return receipt requested,
postage prepaid, and addressed as follows:
In the case of Chase:
Chase Account Executive
Chase Manhattan Bank, N.A.
4 MetroTech
19th Floor
Brooklyn, New York 11245
Attn: Mr. Kamel Zaki
with a copy to:
Legal Department
Chase Manhattan Bank, N.A.
1 Chase Manhattan Plaza
25th Floor
New York, New York 10081
Attn: Robert M. MacAllister, Esq.
In the case of NEW TRUSTCO:
New U.S. Trust Company of New York
114 West 47th Street
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New York, New York 10036-1532
Attn: Mr. John M. Deignan
with a copy to:
Legal Department
U.S. Trust Corporation.
114 West 47th Street
New York, New York 10036-1532
Attn: Maureen Bateman, Esq.
A Party may from time to time change its address or designee for notification
purposes by giving the other prior written notice of the new address or
designee and the date upon which it will become effective.
16.4 COUNTERPARTS
This Agreement may be executed in several counterparts, each of which
shall be an original, all of which taken together shall constitute one single
agreement between the Parties hereto.
16.5 GOVERNING LAW
This Agreement and performance under it shall be governed by and
construed in accordance with the laws of the state of New York, as such laws
are applied to contracts between New York residents that are entered into and
to be performed entirely within New York.
16.6 HEADINGS
The article, section and paragraph headings and the table of contents
used herein are for reference and convenience only and shall not enter into the
interpretation hereof.
16.7 RELATIONSHIP OF PARTIES
(a) Except as otherwise expressly provided in this Agreement, Chase, in
furnishing the Services to NEW TRUSTCO hereunder, is acting only as an
independent contractor. No legal partnership or joint venture is intended to be
created by or pursuant to this Agreement. Chase shall be solely responsible for
the payment of compensation of Chase personnel assigned to perform services
hereunder and such personnel are not entitled to the provisions of any NEW
TRUSTCO employee benefits. NEW TRUSTCO shall not be responsible for payment of
worker's compensation, disability benefits and unemployment insurance or for
withholding and paying employment taxes for any Chase personnel performing
services hereunder, but such responsibility shall be that of Chase. Chase is
not an agent of NEW TRUSTCO and has no authority to represent NEW TRUSTCO as to
any matters, except as expressly authorized in this Agreement.
(b) Without limiting the generality of the foregoing, with respect to
securities held by NEW TRUSTCO (or any of its Affiliates) for its customers and
security accounts maintained by
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NEW TRUSTCO (or any of its Affiliates) for its customers, the Parties
acknowledge that (i) the customers are and will remain customers of NEW TRUSTCO
(or its Affiliates); (ii) NEW TRUSTCO (and each of as Affiliates) maintains and
will continue to maintain security accounts for its customers in the ordinary
course of its business and is acting and will continue to aa in that capacity;
(iii) neither the customer relationship nor the accounts are being assigned or
transferred to Chase; (iv) Chase is acting as the agent of NEW TRUSTCO (and
each of its Affiliates) in providing recordkeeping and custodial services under
Article II of the Services Schedule with respect to such securities and such
accounts; and (v) the changes in custody arrangements taking place at the time
this Agreement becomes effective are not transfers by the customers.
16.8 SEVERABILITY
Any provision in this Agreement which is found to be prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions or affecting the validity or
enforceability of such provisions in any other jurisdiction.
16.9 CONSENTS AND APPROVALS
(a) Each Party will cooperate with the other by, among other things,
making available, as reasonably requested by the other, management decisions,
information, approvals, and acceptances in order that each Party may properly
accomplish its obligations and responsibilities hereunder. Except where
expressly provided as being in the sole discretion of a Party, where agreement,
approval, acceptance, consent or similar action by either Party hereto is
required by any provision of this Agreement, such action shall not be
unreasonably delayed or withheld.
(b) An approval or consent given by a Party under this Agreement shall
not relieve the other Party from responsibility for complying with the
requirements of this Agreement, nor shall it be construed as a waiver of any
rights under this Agreement, except as and to the extent otherwise expressly
provided in such approval or consent.
16.10 NO WAIVER OF DEFAULT; CUMULATIVE REMEDIES
A delay or omission by either Party hereto to exercise any right or
power under this Agreement shall not be construed to be a waiver thereof. A
waiver by either of the Parties hereto of any of the covenants to be performed
by the other or any breach thereof shall not be construed to be a waiver of any
succeeding breach thereof or of any other covenant herein contained. All
remedies provided for in this Agreement shall be cumulative and in addition to
and not in lieu of any other remedies available to either Party at law, in
equity or otherwise.
16.11 SURVIVAL
Notwithstanding any provisions of this Agreement to the contrary, all
payment obligations relating to periods prior to the expiration or termination
of this Agreement, as well as Sections 6.4, 7.2 and 8.5, Articles 10, 11, 13,
14, 15 and 16, and any other provision of this Agreement that by its terms,
nature or operation of law should survive the expiration or termination of this
Agreement, shall survive the expiration of termination of this Agreement.
49
<PAGE> 54
SCHEDULE A
(to Services Agreement)
Services Schedule
-----------------------
<PAGE> 55
16.12 NO THIRD PARTY BENEFICIARIES
This Agreement is entered into solely between, and may be enforced only
by, NEW TRUSTCO and Chase, and this Agreement shall not be deemed to create any
rights in third parties, including without limitation employees, vendors,
suppliers and customers of a Party, or to create any obligations of a Party to
any such third parties.
16.13 MEDIA RELEASES
Each Party shall submit to the other all advertising, written sales
promotion, press releases and other publicity matters relating to this
Agreement in which the other Party's name or mark is mentioned or language from
which the connection of said name or mark may be inferred or implied, and shall
not publish or use such advertising, sales promotion, press releases, or
publicity matter without prior written approval of the other Party. Each Party
may disclose the existence and general relationship established by this
Agreement.
16.14 COVENANT OF GOOD FAITH
Each Party agrees that, in its respective dealings with the other Party
under or in connection with this Agreement, it shall act in good faith.
16.15 NON-HIRING
Except as otherwise provided in Section 8.5(a)(iii), Chase and NEW
TRUSTCO each agree that, during the Term and for six (6) months thereafter, it
shall not, except with the prior written consent of the other Party, directly
or indirectly offer employment to any person then-employed by the other Party
or so employed six (6) months prior to such offer (except if such person's
employment was terminated by the other Party) if such person was, (a) in the
case of Chase employees, primarily performing Services for NEW TRUSTCO under
this Agreement, or (b) in the case of NEW TRUSTCO employees, working in NEW
TRUSTCO's securities processing, bank operations or information technology
group.
50
<PAGE> 56
IN WITNESS WHEREOF, USTNY and NEW TRUSTCO have each caused this
Agreement to be signed and delivered by its duly authorized officers, all as of
the date first set forth above.
UNITED STATES TRUST COMPANY
OF NEW YORK
By: JOHN M. DEIGNAN
-----------------------------------
Name:
Title:
NEW U.S. TRUST COMPANY OF
NEW YORK
By: JEFFREY S. MAURER
-----------------------------------
Name:
Title:
The Chase Manhattan Bank N.A. agrees to be bound by this Agreement in
place of USTNY upon the effectiveness of the merger of USTNY into The Chase
Manhattan Bank, N.A.
THE CHASE MANHATTAN BANK, N.A.
By: KAMEL ZAKI
-----------------------------------
Name:
Title: V.P.
<PAGE> 57
Table of Contents Page
I. INTRODUCTION 1
II. SECURITIES PROCESSING 1
A. Custody 1
B. Cash Data Entry Funds Transfer 7
C. Validation of Trade Information on the Trade
Authorization System (TAS) 8
III. BANK OPERATIONS 8
A. General 8
B. Systems 9
C. Operations / Processing 12
IV. INFORMATION TECHNOLOGY SERVICES 14
A. Introduction 14
B. Data Processing Services 14
C. Data Network Management 20
D. Help Desk and Problem Management 20
E. Applications Development and Maintenance 21
F. Back-Up Disaster Recovery 26
G. Viruses and Disabling Code 28
H. Other Services 28
I. Information Technology Performance Standards 30
V. CHASE CUSTODY TRANSACTION FACILITATORS 30
<PAGE> 58
Attachments
- -----------
Attachment II(A)(2)(b) Credit on Collection
Attachment II(A)(2)(c)(i) Capital Changes/Corporate Actions
Attachment II(A)(2)(c)(v) Credit on Corporate Actions
Attachment II(A)(3)(d) Auto Credit Product Profile
Attachment II(A)(3)(e) Interest Bearing Currency Accounts
Attachment II(A)(3)(f) Contractual Settlement
Attachment II(A)(3)(g) Global Proxy Services
Attachment II(A)(6) Securities Processing Instructional Deadlines
Attachment II(A)(8) Pricing Vendor/Product List
Attachment III(A)(6)(1) Bank Operations Functions
Attachments II(A)(9) Corporate Trust Performance Standards
Attachment III(A)(6)(2) Bank Operations Performance Standards
Attachment IV(I) Information Technology Performance
Standards
<PAGE> 59
SERVICES SCHEDULE
I. INTRODUCTION
This Services Schedule describes securities processing, bank operations,
information technology and related back office support services, functions and
responsibilities of Chase included within the Services, together with
associated Performance Standards. Chase shall provide all Services under the
Agreement as a "private label" service or as a correspondent bank, as
appropriate. During the Term the parties may also agree on different or
additional services and amend this Services Schedule in writing accordingly.
Unless otherwise indicated, this Services Schedule is to be read consistently
with the Agreement.
Capitalized terms used herein without definition have the meanings
ascribed to such terms in the Agreement.
II. SECURITIES PROCESSING
A. Custody.
-------
Chase will act as custody agent, but in some cases safekeeping only,
for all types of investment vehicles, cash, precious metals and other
property of NEW TRUSTCO and its customers. Securities for safekeeping
only or non-serviced securities include securities registered in
customer name in care of customer; securities with no known payment
schedules and where information cannot be obtained after reasonable
effort; property not requiring servicing; sealed envelopes
containing documents or "said to contain" documents, jewelry, gold,
coins, agreements, wills, trustee agreements or the like. However,
in the case of such non-serviced securities, Chase will credit moneys
when received and will make reasonable efforts to follow up and
ascertain payment schedules.
1. General.
--------
(a) Chase will provide custodial services for NEW TRUSTCO
which include custody, transaction settlement,
rendering of customer statements, and servicing of
securities, cash, precious metals and other property
held at DTC, FRB, PTC, and other depositories,
subcustodians and custodians, and physical securities
held in Chase's vaults.
(b) Chase will carry NEW TRUSTCO/NEW TRUSTCO client
reference numbers on its Securities Movement and
Control ("SMAC") and communicate it back to AMS for
global transactions.
<PAGE> 60
<PAGE> 61
(c) Chase will provide recordkeeping services for investment
advisory accounts.
2. Domestic Settlements.
--------------------
(a) Chase will perform all settlement functions for Next Day
Funds Securities ("NDFS") and obtain net settlement
balance for the net buys, sells, calls, maturities, etc. on
settlement/payable date. If money is owed to NEW TRUSTCO,
Chase will credit NEW TRUSTCO's account. If money is owed
to Chase, NEW TRUSTCO will fund it. A separate and similar
settlement and reconciliation will be done for Same Day
Funds Securities ("SDFS").
(b) Chase shall credit all dividend, interest and other income
collections, including, but not limited to, P&I on all
MBS/ABS to NEW TRUSTCO client accounts, in accordance with
the schedule set forth in Attachment II(A)(2)(b).
(c) Capital Changes/Corporate Actions
(i) Upon receipt from one or more of the current
services or publications of information listed in
Attachment II(A)(2)(c)(i) regarding calls for
redemption of bonds or other corporate actions,
Chase will screen such information to determine
whether NEW TRUSTCO has holders of the affected
securities and notify NEW TRUSTCO of relevant
corporate actions on receipt of announcement.
(ii) Put options: **** days prior to the put date, Chase
shall notify NEW TRUSTCO if it is affected by
running a current job in AMS that produces this
information.
(iii) Voluntary Reorganization: within **** hours of Chase
receiving the notifications, Chase shall notify
NEW TRUSTCO if all the necessary materials are not
available from the agent within the **** hour
timeframe, Chase will notify NEW TRUSTCO of the
delay. Notifications received by Chase within 5
business days before proration or expiration date
shall be communicated by Chase to NEW TRUSTCO via
telephone and fax, notifications received by Chase
more than 5 business days before proration or
expiration date shall be communicated by Chase to
NEW TRUSTCO via fax. NEW TRUSTCO will respond to
Chase by the appropriate deadline for each action
indicating the number of "yes" responses, the number
of "no" responses and the number of "no responses"
A-2
**** 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.
<PAGE> 62
received by Chase. By 11 a.m. on the answer due
date, Chase will inform NEW TRUSTCO of the
shares/bond amounts that have not responded to the
offer. Chase will advise NEW TRUSTCO of the
shares/bond amounts for which responses are needed
but have not been received.
(iv) Class actions, Defaults, Bankruptcies, Consents;
Copies of all pertinent documents and prospectuses
available to Chase from agents and depositories
shall be sent by Chase to NEW TRUSTCO in a timely
manner.
(v) Chase shall credit all corporate actions in
accordance with the schedule set forth in Attachment
II(A)(2)(c)(v) and will be compensated (at the
effective Federal Funds Rate, as published by the
Federal Reserve Bank of New York, for each day such
amount is outstanding) for the open uncollected
fluids upon presentation of satisfactory
documentation if Chase advances Rinds to NEW TRUSTCO
earlier than Chase's crediting practice at that
time. Chase will maintain a collection rate
consistent with the baseline standard of UST as of
the Commencement Date. NEW TRUSTCO will not pay
compensation in excess of such baseline. UST's
baseline collection rate (uncollected balance vs.
total monthly anticipated amount) as of the
Commencement Date is **** for dividends and
interest **** for maturities and redemptions, and
**** for calls.
(d) End of Day ("EOD") Settlement
(i) Chase will perform net EOD settlement with NEW TRUSTCO
(ii) There will be a separate net settlement every day for
each of NDF and SDF.
3. Global Settlements.
------------------
(a) Chase global services for NEW TRUSTCO includes all
transaction, safekeeping and out of pocket expenses. It does
not include significant one time charges (e.g.
registration charges to initiate trading in Brazil).
(b) NEW TRUSTCO will input global securities and related
transactions into the trade authorization system of AMS.
Chase will input the
A-3
**** 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.
<PAGE> 63
transaction into Chase's global custody system using the AMS
ticket as its instruction.
(c) Chase will provide foreign tax reclamation services where
available subject to NEW TRUSTCO's provision of required
documentation at the beneficial owner level. Reclamation
forms will be completed and filed by Chase with the proper
authorities. Chase will provide ongoing follow up with the
appropriate agents or tax authorities to review outstanding
reclaims.
(d) Foreign interest and dividends will be paid based upon the
Chase Autocredit schedule on payable date in countries where
offered, or if not offered, then as received. See Attachment
II(A)(3)(d).
(e) Chase will provide interest bearing cash accounts as
outlined in Attachment II(A)(3)(e).
(f) Chase will provide contractual settlement date accounting of
cash as outlined in Attachment II(A)(3)(f).
(g) Chase will provide global proxy services as outlined in
Attachment II(A)(3)(g).
(h) Under Chase's existing policy, items (d)-(g) include the
expansion to countries not listed on the referenced
schedules without additional charge to NEW TRUSTCO Chase
reserves the right to change its policy and such change will
apply to NEW TRUSTCO.
4. MASTER SECURITY FILE
(a) Chase will provide **** turn-around on set up of a new
security issue at least **** of the time. In the event of
undue delay, Chase will notify NEW TRUSTCO of the delay and
estimated turnaround time.
(b) Chase will obtain daily reset rates by **** and weekly reset
rates by **** and download such information to the Master
Security File using UST's existing process and procedure in
effect as of the Commencement Date.
5. INQUIRIES. Resolution of inquiries shall be within a **** period
unless an inquiry involves a third party or is longer than 12
months old.
6. SETTLEMENTS. Chase will provide settlement of securities within
the schedules as set forth in Attachment II(A)(6).
A-4
**** 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.
<PAGE> 64
7. PROXY PROCESSING. Chase will provide proxy processing
for NEW TRUSTCO using UST's procedures in effect as of the
Commencement Date. Notwithstanding anything to the contrary in
the Agreement, Chase shall not migrate proxy services to a third
party provider in the future without NEW TRUSTCO's approval,
which approval will not be withheld if Chase selects a nationally
recognized proxy services provider which agrees to meet NEW
TRUSTCO's customer service standards.
8. PRICING SERVICES. Chase shall provide reports and updates from the
vendors on the securities listed on Attachment II(A)(8). By the
Commencement Date, Chase and NEW TRUSTCO will mutually develop a
process to update prices not currently available on automated
vendor feeds.
9. CORPORATE TRUST.
(a) Chase shall provide the servicing of NEW TRUSTCO's corporate
trust activity meeting the same Performance Standards as
those met by UST's existing process as of the Commencement
Date, including those set forth in Attachment II(A)(9)(a).
Such servicing will include banking services, securities
settlement, custodial and technological services, and
mailing and enclosing activities (to include checks with
enclosures, statements and notices to holders, etc.). NEW
TRUSTCO, in its capacity as a transfer agent, will operate
its own receive and deliver window; maintain its own vault
facility to control and inventory unissued and cancelled
certificates; and operate its own certificate printing
facility. All administrative work which is part of NEW
TRUSTCO's corporate trust activities will remain a function
of NEW TRUSTCO, and NEW TRUSTCO will not rely on Chase to
perform such administrative functions.
(b) Chase will allow NEW TRUSTCO to utilize UST's existing (as
of the Commencement Date) transfer agent numbers and
corporate trust participant accounts for FAST and NON-FAST
issues through DTC. Without limiting the generality of the
foregoing, Chase will:
(i) Provide NEW TRUSTCO's corporate trust department
("Corporate Trust") access to DTC's participant
terminal system ("PTS") terminal with the ability to
input, confirm and inquire any transactions and
security positions for DTC participant accounts 1522
and 2969.
(ii) Act as NEW TRUSTCO's agent with respect to all of its
duties and responsibilities associated with processing
medium term notes and commercial paper through DTC
participant accounts 1522 (commercial paper) and 2969
(medium term
A-5
<PAGE> 65
notes). Accordingly, Chase will follow NEW TRUSTCO's
direction in a timely manner with respect to all
processing for these DTC accounts, including the
prompt execution and delivery of DTC's standard
agreements and letters of representation related to
medium term notes and commercial paper. Without
limiting the generality of the foregoing, Chase shall
settle in a timely fashion and in accordance with DTC
procedures, the trade authorization system ("TAS")
transactions initiated by Corporate Trust pertaining
to activities of commercial paper and medium term
notes. Such settlements shall include free deliveries,
free receives, delivery versus payment and receipt
versus payment. If either of the two accounts exceed
their predetermined net debit cap, Corporate Trust
will be notified by Chase and instructed to wire
funds to DTC for the value of the deficiency. At the
end of the day, the related trust account will be
credited by Chase via cash data entry ("CDE") for the
amount wired to DTC for credit to DTC participant
accounts 1522 and/or 2969.
(iii) Provide DTC with a net settlement end of day cash
total. In the event of an out of proof condition,
Corporate Trust will be notified by Chase by **** on
the same day of the condition and Corporate Trust
will then adjust the TAS entry in accordance with
instructions provided by Chase.
(iv) Promptly forward any correspondence received
pertaining to DTC participant accounts 1522 and 2969
to a person designated by Corporate Trust.
(c) With respect to DTC participant accounts 1522 and 2969, NEW
TRUSTCO will:
(i) Safekeep and protect passwords which allow access to the
DTC PTS network. Chase will be restricted to inquiry only
access to DTC participant account numbers 1522 and 2969.
(ii) Keep current on all DTC regulations and deadlines that
govern DTC participant account numbers 1522 and 2969.
(iii) Ensure that access to TAS is restricted by Profile
Allocation Control ("PAC").
(iv) Grant access to TAS and be responsible for the input,
validation and authorization of trades as well as the
accuracy of the
A-6
**** 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.
<PAGE> 66
information released via TAS and PTS including CUSIP,
unit amount, dollar amount, maturity date, interest
rate, issue date and, where applicable, the broker
number.
(v) Release all trade information on maturities (RVP/Free
Deliveries) and issuance (DVP/Free Deliveries) in a
manner consistent with current UST practices as of the
Commencement Date).
(vi) Be responsible for the safekeeping and servicing of
the master notes utilized in commercial paper and
medium term notes processing. This responsibility
includes but is not limited to all activity and
reconciliation with DTC as well as the required
safekeeping and servicing of the master notes by NEW
TRUSTCO. While Chase will own the accounts designated
for the process at DTC, NEW TRUSTCO will accept total
responsibility for the operation of the master note
accounts.
(d) NEW TRUSTCO will reimburse Chase for the mailing of
corporate trust checks to the extent NEW TRUSTCO is
reimbursed by the issuer of the securities in question.
B. CASH DATA ENTRY FUNDS TRANSFER
1. Chase will provide automated interfaces between NEW TRUSTCO's Fed
wire system (as in effect on the Commencement Date) and Chase's
Fed wire payment system for incoming and outgoing cash wires.
Chase will be responsible for interfacing with the Federal
Reserve Bank. For NEW TRUSTCO's outgoing Fed cash wires, Chase
will pass acknowledgments to NEW TRUSTCO's Fed system (as in
effect on the Commencement Date). NEW TRUSTCO will utilize its
systems (as in effect as of the Commencement Date) for
inquiries and Fed wire acknowledgment numbers. Chase will be
responsible for maintaining NEW TRUSTCO's Fed wire system.
2. If NEW TRUSTCO puts up a CDE wire and at such time either (a) is
in a net cash position or (b) is within the intraday overdraft
limit established between Chase and NEW TRUSTCO, then such CDE
wire will be immediately processed through Chase's Fed wire
system (even if Chase is in an overdraft position at such time
and even though processing such CDE wire will increase Chase's
overdraft position).
3. Incoming funds shall be immediately credited to NEW TRUSTCO if
the routing of such funds is automated. Incoming funds which
require manual routing will be processed within **** Incoming
funds which do not have an account number, name or other
identification (e.g., Attn: John Doe)
A-7
**** 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.
<PAGE> 67
will be returned by Chase, on the same day of receipt, to the
sender asking for more information.
4. NEW TRUSTCO will be responsible for granting access to CDE via
PAC.
5. NEW TRUSTCO will be responsible for the input, validation and
authorization of cash wires released via CDE.
C. Validation of Trade Information on the Trade Authorization System (TAS).
-----------------------------------------------------------------------
1. The Trade Authorization System (TAS) requires a co-signature
(i.e., a different user ID other than the originator's) for any
transaction that will decrease the holdings of an account(s),
such as free deliveries. However, any transaction that increases
the holdings in an account(s), such as free receives and receive
vs. payments, does not require a co-signature. Furthermore,
both increases and decreases of holdings instructions originated
and released through TAS have built-in system edits, some of
which require an "override" by the releasing party. It is the
responsibility of NEW TRUSTCO or its customer to review all
edits which are brought to NEW TRUSTCO's attention by Chase
before they are overridden. It is agreed that once the trade is
"released" by NEW TRUSTCO or its customer (this status is
placed by the system when the instructions are deemed correct
by NEW TRUSTCO or its customer), all particulars to the trade are
valid and awaiting settlement.
2. Any information related to a trade (placed in fields identified
as "special" or "free" instructions) or for the trade (which
includes without limitation price, CUSIP, contra party's address
(referred to as CHN # or mnemonic), trade date, net dollar amount
and units), once "released" by NEW TRUSTCO or its customer, is
considered valid and in agreement with NEW TRUSTCO and its
customer.
3. NEW TRUSTCO will ensure that access to TAS is restricted by the
Profile Allocation Control (PAC).
III. BANK OPERATIONS
A. General.
--------
1. As of the Commencement Date, Chase will assume responsibility for
a significant portion of NEW TRUSTCO's bank operations. Without
the generality of the preceding sentence, pursuant to a letter
agreement dated July 14, 1995 (the "M&I Letter") between United
States Trust Company of New York and M&I Data Services, Inc.
("M&I"), M&I has agreed that Chase will assume (and Chase hereby
assumes) administrative and financial responsibility for the
service bureau Systems contract with M&I (deposits,
A-8
<PAGE> 68
loans, etc.), related systems and services (check processing,
ARP, ACH, etc.) and the related operations and clerical
support/processing support that utilize these related systems.
Chase as part of the Agreement is responsible for providing
system functionalities and processing services for NEW TRUSTCO's
bank operations. NEW TRUSTCO hereby appoints Chase as NEW
TRUSTCO's limited agent to the extent required by Chase to
perform such services.
2. As part of these bank operations services, Chase shall on a
timely basis upgrade and enhance the systems and services to
incorporate regulatory, industry and business condition
changes, subject to Section 5.1(b)(ii) of the Agreement and to
the limitations (if any) in existing third party systems and
services agreements which limitations are beyond Chase's
reasonable ability to control (to the extent Chase cannot,
without incurring material costs, legally terminate such third
party Systems and services agreements or otherwise remedy the
situation).
3. Chase will perform operational and technology continuity and
disaster recovery planning and services for Chase-managed bank
operations and systems.
4. Chase shall provide a liaison function between Chase and NEW
TRUSTCO which will monitor and support mutually agreed upon
levels of customer service. This function will include, but not
be limited to, all NEW TRUSTCO customer service queries to
and from M&I and interaction with various parts of the Chase
organization. Chase has customer service software (e.g., PEGA)
which will be made available to NEW TRUSTCO as part of this
liaison process as well as for NEW TRUSTCO's use in performing
customer service for its clients.
5. The term "bank operations," includes the functional areas of
NEW TRUSTCO and all Affiliates of check processing, loan
processing, deposit services, records storage and retrieval,
research and adjustment, international paying and receiving,
cash management, return items, electronic funds transfer
(FedWire and ACH), customer service, and other current services
(ATM, voice response, etc.). NEW TRUSTCO shall provide reasonable
notice to Chase in advance of requesting bank operations services
for a new Affiliate of NEW TRUSTCO.
6. Attachment III(A)(6)(1) lists (i) the specific functions that
will be performed by Chase and (ii) the retained bank operations
functions which NEW TRUSTCO will perform. The Parties acknowledge
and agree that Attachment III(A)(6)(1) is an overview and not a
final statement of the specific tasks to be performed by each
Party within each function, and that such tasks will be further
specified by the Parties prior to the Commencement Date and
incorporated into the Procedures Manual, as mutually agreed to by
the
A-9
<PAGE> 69
Parties. If there are any inaccuracies in such Attachment, the
Parties will amend such Attachment accordingly. Attachment
III(A)(6)(2) states the Performance Standards applicable to those
functions designated as Chase's responsibility. These
Performance Standards are not necessarily all inclusive and may
be amended by mutual consent as business conditions and process-
ing support requirements change over time. With respect to the
FiServ agreement to be assumed by Chase and similar third party
agreements to be assumed by Chase, Chase will not be responsible
for such third party's failure to achieve Performance Standards
set forth in such third party contract; however, Chase will use
commercially reasonable efforts (which shall not require Chase
to make additional payments to third parties) in managing third
party agreements to cause third parties to achieve the
Performance Standards set forth in this Services Schedule.
7. Chase shall perform its obligations relating to check and item
processing and electronic funds transfer set forth herein
(including without limitation under Sections III(C)(3), (4), (7),
(9), (10) of this Services Schedule) in accordance with
Articles 4 and 4A of the Uniform Commercial Code, applicable
Federal Reserve regulations and operating letters, clearing house
rules, and other laws, rules and regulations applicable to such
obligations.
8. Chase shall only be required to
****
Chase shall only be required to comply with the lower
standard with respect to such customer accounts.
B. Systems.
1. M&I Data Services.
-----------------
(a) As set forth herein and in the M&I Letter, Chase will assume
administrative and financial responsibility of and for the
service bureau contract in place between UST and M&I as of
the Commencement Date Chase will meet all M&I and/or NEW
TRUSTCO related interface and update deadlines in effect as
of the Commencement. Date Chase will perform, or M&I will
continue to perform, those activities which M&I is
performing for UST.
(b) NEW TRUSTCO anticipates that from time to time it will
require modifications and enhancements to "M&I Systems"
and/or to the functionality it is currently receiving.
Subject to Section 5.1(b)(ii) of the Agreement, if NEW
TRUSTCO requests such modifications, and Chase has retained
M&I as the service provider for NEW
A-10
**** 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.
<PAGE> 70
TRUSTCO, Chase will use commercially reasonable efforts to
facilitate such changes with M&I.
(c) ****
set forth in the M&I
Agreement; however, Chase will use commercially reasonable
efforts (which shall not require Chase to make additional
payments to M&I) in managing the M&I Agreement to cause M&I
to achieve the Performance Standards set forth in this
Services Schedule.
2. Other Related Systems.
---------------------
(a) To the extent that Chase does not replace NEW TRUSTCO's
existing Systems, Chase will assume administrative and
financial responsibility under all license and maintenance
agreements for the suite of in-house banking related systems
being operated by NEW TRUSTCO or its contractors as of the
Commencement Date. Subject to Section 5.1(b)(ii) of the
Agreement, Chase will perform enhancements to such Systems
requested by NEW TRUSTCO or arrange for third parties to
perform such enhancements. Chase may, at any time propose
the replacement of these in-house systems with Chase's
Systems software and/or system access suitable for the sup-
port of NEW TRUSTCO's businesses.
(b) If Chase proposes such systems replacement, and to the
extent NEW TRUSTCO agrees to change banking system platforms
as described above, Chase will create, modify and/or
resynchronize system interfaces and associated
interoperability to emulate the environment in existence as
of the Commencement Date (e.g., Customer Information Files
and System Interfaces, AMS, Finance, HR) Chase may implement
such new Systems in whole or in part. As such new systems
are implemented Chase will provide necessary training and
documentation for the NEW TRUSTCO user community.
(c) Chase's and NEW TRUSTCO's costs associated with such system
conversion to another platform/system will be assumed by
Chase and such conversion shall be phased in upon a mutually
agreed upon schedule. Additionally, to the extent Chase
implements a Chase, or other vendor system, to support NEW
TRUSTCO, Chase will integrate NEW TRUSTCO's client base as
a "correspondent banking relationship" or "private label"
operations as applicable and migrate the existing operations
of NEW TRUSTCO into Chase's facilities or data processing
environment in a manner that does not adversely impact NEW
TRUSTCO's client base.
A-11
**** 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.
<PAGE> 71
(d) To the extent Chase does not implement Chase's standard
client or other systems of comparable functionality, and
until such time as Chase does implement such
functionality, Chase will operate NEW TRUSTCO's systems in
place as of the Commencement Date to meet the standards of
performance set forth in Attachment III(A)(6)(2)
notwithstanding anything to the contrary in the Agreement.
3. APPROVALS CONVERSIONS AND CONNECTIVITY. To the extent applicable,
Section 2 above applies to M&I. To the extent Chase desires to
implement other systems to replace M&I services, such changes to
M&I services shall be subject to the same approvals, conversions
and connectivity constraints outlined in (a) - (d) above.
C. Operations/Processing.
---------------------
1. Chase may, within mutually agreed upon timeframes (assumed to be
the Commencement Date unless otherwise agreed by NEW TRUSTCO and
Chase), replace all correspondent and third party service
relationships presently in place between UST and other
organizations (e.g., ATM Settlement, Check Clearing, International
Transfer, and Collections, inbound transportation, Courier,
fiche and film production).
2. In providing LOAN SERVICES, Chase will provide access to, and
output from, the M&I loan systems, or a Chase replacement system,
in the same media as is provided as of the Commencement Date or as
is otherwise mutually agreed upon by NEW TRUSTCO and Chase.
Additionally, Chase will provide loan statement mailing services
in accordance with the schedules established by NEW TRUSTCO.
3. In providing DEPOSIT SERVICES, Chase will print, separate and
distribute (via mail or courier) statements (with checks enclosed
as applicable), advices and notices generated from the M&I service
bureau or from a mutually agreed upon replacement system(s). Chase
shall provide report distribution to NEW TRUSTCO in the same media
as is provided as of the Commencement Date or as is otherwise
mutually agreed upon by NEW TRUSTCO and Chase.
4. In providing CHECK PROCESSING services Chase will assume
responsibility and provide all standard functions related to these
activities including the activities listed in Attachment
III(A)(6)(1).
5. In providing RECORD STORAGE and retrieval services, Chase will
create and maintain appropriate records and store such records for
the same retention periods as are provided on the Commencement
Date or as NEW TRUSTCO
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and Chase otherwise mutually agree. Chase will deliver these stored
records to NEW TRUSTCO on a timely basis.
6. In providing RESEARCH AND ADJUSTMENT services, Chase will perform all
interbank research and adjustments. Adjustments to NEW TRUSTCO client
accounts will be directed to NEW TRUSTCO customer service who will
perform such updates or adjustments. Where there are processing fees
associated with adjustments, compensation will be determined by USCIB,
NYCH and FED rules and regulations.
7. In providing INTERNATIONAL PAYING AND RECEIVING services, Chase will act
as a correspondent bank for NEW TRUSTCO providing PC based software
(e.g., Chase Trader and Microstation/Infostation Software) to assist NEW
TRUSTCO accomplishing the functions and activities listed in Attachment
III(A)(6)(1), Section F. NEW TRUSTCO shall use the
Microstation/Infostation when available.
8. In providing CASH MANAGEMENT services, Chase will perform the functions
and activities listed in Attachment III(A)(6)(1) in accordance with the
Performance Standards set forth in Attachment III(A)(6)(2), Section G.
9. Consistent with normal banking practices, Chase will serve as "Bank of
First Deposit". In conjunction with NEW TRUSTCO, Chase will perform the
RETURN ITEMS services listed in Attachment III(A)(6)(1), Section H.
10. In providing ELECTRONIC FUNDS TRANSFER services, Chase will provide the
systems and personnel to complete the transfer of funds within NEW
TRUSTCO client accounts, as well as externally through established EFT
vehicles (e.g., FedWire and ACH). The necessary risk management and
funds control practices and authorization process must be in place to
support this activity. NEW TRUSTCO personnel and clients will have
access to transfer information on a real-time basis as is feasible.
11. In practice, NEW TRUSTCO will be the intermediary between Chase and
NEW TRUSTCO clients in providing CUSTOMER SERVICE and related activi-
ties. However, this will necessitate a close working relationship between
Chase and NEW TRUSTCO, and will require use of Chase's inquiry man-
agement tools (e.g., PEGA). NEW TRUSTCO client account postings will
be performed exclusively by NEW TRUSTCO personnel.
12. In providing BRANCH AUTOMATION support, Chase will provide PC based,
user-friendly, front-end software functions (such as on-line update and
inquiry) in the event that NEW TRUSTCO and Chase choose to migrate
from the M&I processing environment. Such functions shall be at least
comparable to or better than M&I's PC Teller/sales Partner combination
and NEW
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TRUSTCO's current SQN which are in use in UST branches as
of the Commencement Date.
13. In providing VOICE RESPONSE services, (known within NEW
TRUSTCO as "private access line") Chase will provide a
voice response environment which will enable NEW TRUSTCO
clients to access deposit and loan information.
14. [In providing ATM related services, Chase will act, or
will cause M&I to act as the switch to necessary ATM
networks (e.g., NYCE, PULSE, HONOR, CIRRUS, PLUS, etc.)
including the required authorization functions to
deposits and related systems. Chase will act as the
settlement bank and provide required authorizations for
ATM withdrawals on behalf of NEW TRUSTCO. The production,
issuance and control functions related to NEW TRUSTCO
client ATM cards is part of the M&I Data Services contract
for which Chase is assuming administrative and financial
responsibility as set forth in the M&I Letter.
15. Chase shall provide required BATCH AND ON-LINE DATA
TRANSMISSION control and validation for NEW TRUSTCO to
operate the M&I service bureau as it is done for UST as of
the Commencement Date.
IV. INFORMATION TECHNOLOGY SERVICES
A. Introduction.
------------
Chase will perform the data processing, data network, help desk
and problem management, applications development and
maintenance, back-up/disaster recovery, and other services
described below. The Services will meet the Performance Standards
in Section IV(I) below. If NEW TRUSTCO elects to use Customer
Information System/2 and Access Security at any time during the
Term, Chase, in connection with such systems will adhere to the
design methodology and data model usage of Financial Technologies
International L.P. ("FTI") or, any successor in interest or
subsequent owner of Access Security and CIS/2.
B. Data Processing Services.
------------------------
1. PROCESSING, OPERATIONS. Chase will perform all processing
operations functions and services necessary to run the
applications and systems software used to support NEW
TRUSTCO's business requirements and meet the Performance
Standards during the Term. NEW TRUSTCO will provide Chase
with data center operations manuals and other pertinent
documentation in NEW TRUSTCO's possession. Included in its
responsibilities, and subject to reasonableness standards
and the non-disruption of the data processing environment,
Chase will:
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(a) Make available, monitor and process on-line and batch
applications, including scheduled, unscheduled and on-request
applications development and maintenance ("AD/M") functions as
well as end-user initiated processing.
(b) Provide complete computer room operations and technical support
for test and production environments.
(c) Schedule systems maintenance so as not to interfere with the
business needs of NEW TRUSTCO. Reasonable sufficient regular
"windows" must be agreed to in order to accomplish maintenance.
(d) Process special request activities within time frames reasonably
requested by NEW TRUSTCO.
(e) Provide mainframe processing to support all client/server applica-
tions during the term.
(f) Regularly monitor end-user job submissions so that such jobs are
successfully completed in a timely manner.
(g) Continuously enhance processing capabilities and efficiencies
through system tuning and other run time improvements.
2. SYSTEMS SOFTWARE. Chase will evaluate, acquire, install, maintain and
support Systems Software as required to provide the Services. Included
in Chase's responsibilities, Chase will:
(a) Perform modifications, enhancements and changes necessary to pre-
vent and correct errors such that each item of Systems Software
operates according to its documentation and the Services
dependent on such Software are provided in accordance with the
Performance Standards.
(b) Unless otherwise specified and agreed upon by NEW TRUSTCO and
Chase, install and upgrade Systems Software at mutually agreed
upon time frames.
(c) Install new releases of existing Systems Software or new Systems
Software products in a test environment which will be maintained
by Chase prior to its introduction into the production
environment. The tests will determine functional deficiencies of
the new release, compatibility with other production Systems
Software and compatibility with production Applications Software.
Any detected problems will be resolved in accordance with
procedures set forth in the
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Procedures Manual before any systems software is moved to the pro-
duction environment.
(d) Subject to restrictions in third-party agreements, promptly
provide NEW TRUSTCO with all information and documentation
requested by NEW TRUSTCO relating to any Systems Software used in
providing the Services.
3. EQUIPMENT. Chase will evaluate, acquire, maintain, repair, replace or up-
grade all Data Center Equipment as necessary to perform the Services and
meet the Performance Standards.
4. PRODUCTION CONTROL. Chase will maintain production schedules in order to
satisfy performance requirements. Chase will cooperate with NEW
TRUSTCO in responding to priority job execution, special processing re-
quests and new processing requirements.
5. FILE SERVICES ACTIVITIES. Chase will manage files in a manner which is
designed to provide for the availability and performance of and
preserve the integrity of, NEW TRUSTCO data under Chase control.
Included in such responsibilities, Chase will:
(a) Manage file services so that all files under its control are
current and available during requested access times.
(b) Review Chase's file retention policies with NEW TRUSTCO and, if
necessary, revise such policies to conform to NEW TRUSTCO's en-
vironment, as such environment exists as of the Commencement
Date.
(c) Initiate and complete required processing management functions de-
signed to preserve the integrity of all data.
(d) Verify (using procedures acceptable to NEW TRUSTCO) the suc-
cessful receipt of all incoming files and the successful
transmission of all outgoing files.
(e) Maintain, update and execute file backup and recovery procedures
so that disaster recovery time, and data recovery point
objectives can be met.
(f) Conduct routine monitoring and corrective action according to pro-
cedures approved by NEW TRUSTCO for intermediate files used for
on-line and batch processing.
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(g) Provide adequate file space for processing.
6. TAPE MANAGEMENT. Chase will perform both on- and off-site tape manage-
ment services. Included in such responsibilities, Chase will:
(a) Provide logging and tracking of all physical tapes in and out of
the Data Center, and provide required rotation of tapes for
off-site vault storage.
(b) Develop procedures with NEW TRUSTCO governing time periods for
retention of tapes, including reasonable periods for retention of
tapes for auditing purposes.
(c) Store tapes and paper documentation at secure off-site vault
storage as required by NEW TRUSTCO.
(d) Provide NEW TRUSTCO with the capability to monitor compliance
with retention and storage procedures.
(e) Provide reliable tape media and keep read/write errors to a
minimum.
(f) Maintain adequate supplies for the tape environment and a scratch
tape pool which is sufficient to fulfill all data center needs.
(g) Store tapes in a physically and environmentally protected area.
Authorized NEW TRUSTCO representatives shall be granted access
to inspect storage areas.
(h) Retrieve archived tapes and restore required files and datasets
within time frames specified in the Performance Standards.
(i) Provide tape media for delivery to third parties.
7. MAINFRAME DATA BASE ADMINISTRATION. Chase will be responsible for man-
agement of data base and file administration, including (data base
design, documentation, application support, tuning, backup and recovery,
standards, and support for applicable NEW TRUSTCO databases (e.g., AMS,
GTAS, Banking). Included in such responsibilities, Chase will:
(a) Provide adequate production and test data base subsystems with the
ability to increase the number over the Term.
(b) Support, control and provide inquiry access to the data
dictionary required for NEW TRUSTCO data management and data
base management.
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(c) Perform all logical and physical data base control functions to sup-
port current systems and planned new systems development.
(d) Perform data base tuning and reorganization functions as required to
maintain system performance standards in accordance with a sched-
ule that is mutually agreed upon by NEW TRUSTCO and Chase.
(e) Plan for changes in the size of data bases due to business growth
and project implementation based on information provided by NEW
TRUSTCO, and review plans with NEW TRUSTCO on a regular
basis.
(f) Provide data base environments for application development, mainte-
nance, testing, quality assurance and ad-hoc reporting separate from
the production data base environment as required.
(g) Develop, maintain and document standard data base access routines
for use by applications support and development personnel.
(h) Implement physical data base design, create indices and make recom-
mendations on methods to optimize application performance, in a
manner that is mutually agreed upon by NEW TRUSTCO and Chase.
(i) Audit, evaluate and approve all data base design changes associated
with applications development and maintenance ("AD/M") support.
(j) Maintain and upgrade as necessary automated monitoring tools to
monitor data base performance and integrity and data base space
utilization, and identify and recommend modifications for improved
performance. Chase will implement recommended modifications as
mutually agreed upon by NEW TRUSTCO and Chase.
(k) Maintain or modify data base archive and purge processes and proce-
dures to meet NEW TRUSTCO business requirements as mutually
agreed upon by NEW TRUSTCO and Chase.
(l) Maintain and provide data base backup procedures to recover from a
data base outage or corrupt data base within time frames established
by mutual agreement of NEW TRUSTCO and Chase.
(m) Maintain data base definitions and make data base definitions avail-
able to NEW TRUSTCO upon request.
(n) Maintain and provide user guides for data base products and partici-
pate in standards development.
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(o) Test and implement data base environment changes in a manner as
mutually agreed upon by NEW TRUSTCO and Chase.
(p) Determine data base changes and impact of AD/M work, and imple-
ment necessary changes to relevant data bases in a manner mutually
agreed upon by NEW TRUSTCO and Chase.
(q) Chase will perform all of the functions described above with
respect to data bases for the asset management systems, corporate
trust and agency system and the banking systems operated by Chase
for NEW TRUSTCO's benefit. Chase will perform only the functions
described in paragraphs (a), (b), (f), (j), (l) and (o) with
respect to the data bases for Corporate Systems (as defined in
Section (b) of Schedule C). NEW TRUSTCO will perform the other
functions described above with respect to the data bases for
Corporate Systems. Chase will provide the required facilities to
enable NEW TRUSTCO to perform these functions.
(r) For Corporate Systems data bases covered by Sections (a), (b),
(f), (j), (l) and (o), NEW TRUSTCO and Chase will develop a
mutually agreed upon set of performance and resource usage
standards.
8. OUTPUT. Chase will perform output device processing and distribution
functions. Included in such responsibilities, Chase will:
(a) Produce, separate, package and distribute output on time and
within defined quality standards, as set forth in the Performance
Standards.
(b) Effectively track, manage, communicate and resolve all output
problems.
9. DATA ACCESS. Chase will provide NEW TRUSTCO and its customers with the
capability to access and download NEW TRUSTCO data base and file
information (including but not limited to, AMS, GTAS and banking data)
and create their own reports. The above facility will be provided by,
but not limited to, RAPID USERPROD, NEW TRUSTCO developed programs, TSO
user submitted jobs and ad hoc query tools (e.g., Powerview, Crystal).
Where applicable, in the AMS environment, PAC and MultiBank functions
will be employed to limit and control access to NEW TRUSTCO data resid-
ing within the AMS environment. NEW TRUSTCO shall co-operate with Chase
in preventing abuses of ad hoc query and reporting.
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C. Data Network Management.
-----------------------
1. Chase will assume operational and management responsibility for
the Chase NEW TRUSTCO Network. As used herein, the term "Chase
NEW TRUSTCO Network"' shall mean all Equipment, Software, lines
and cabling (including appropriate recovery links) used to
provide a network link into a single NEW TRUSTCO domestic
location. NEW TRUSTCO is responsible for all network distribution
from that point to its end users.
2. Chase's responsibilities will include providing and maintaining
sufficient bandwidth, and evaluating, acquiring, installing,
upgrading, maintaining, repairing and replacing all necessary
Equipment, Software, lines and cabling, to support NEW TRUSTCO's
business requirements (including Access Security and CIS/2) and
meet the Performance Standards.
D. Help Desk and Problem Management.
--------------------------------
NEW TRUSTCO's help desk will act as the initial point of contact for NEW
TRUSTCO end users reporting problems relating to the Services. NEW
TRUSTCO's help desk at its discretion, may refer any or all such
reported problems to Chase. Chase will provide a help desk function with
a single telephone number for NEW TRUSTCO's help desk to call for
problem resolution twenty-four (24) hours per day, seven (7) days per
week (the "Chase Help Desk"). The Chase Help Desk will provide second
and third level problem resolution. Unless requested by NEW TRUSTCO's
help desk, the Chase Help Desk will interface directly with NEW
TRUSTCO's help desk and not directly with NEW TRUSTCO end users in
resolving reported problems. Included in its help desk and problem
management responsibilities, Chase will:
1. Use an automated problem tracking and management system to which
the NEW TRUSTCO help desk will be provided access.
2. Log reported problems upon receipt and monitor, control and
report on each problem until it is corrected.
3. Monitor time to repair for each reported problem and measure the
mean time to repair ("MITR") for all reported problems with the
Services.
4. Escalate unresolved problems according to mutually agreed upon
procedures.
5. Maintain communications with NEW TRUSTCO's help desk on all
problems through resolution.
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6. Provide a mechanism for expedited handling of problems which are
of high business priority to NEW TRUSTCO.
7. Correct problems within the scope of its responsibility. Chase
and NEW TRUSTCO will consider a problem unresolved until Chase
receives confirmation from NEW TRUSTCO's help desk that it has
been corrected.
8. Provide reports on problems, including statistics on types of
problems, total number of problems, outstanding problems and
resolution time.
9. Conduct with NEW TRUSTCO mutually agreed upon periodic problem re-
view meetings to ensure accurate problem resolution.
10. Analyze trends and recommend actions to reduce the number of
reported problems.
E. Application Development and Maintenance.
---------------------------------------
This Section E applies to applications development and maintenance for
the systems used by Chase to provide the Services. Notwithstanding
anything to the contrary herein, NEW TRUSTCO will remain responsible for
performing applications development and maintenance work with respect
to Corporate Systems (as defined in Section 1(b) of Schedule C), and
Chase's obligations with respect to Corporate Systems applications
development and maintenance shall be limited to the provisions set forth
in Paragraph 2(a) of this Section E. Pricing of applications development
and maintenance work described in this Section is as set forth in
Article 5 of the Agreement. Notwithstanding anything to the contrary
in the Agreement, so long as each of Chase and NEW TRUSTCO are using AMS
and/or GTAS, Chase shall not implement a change to the functionality
of AMS or GTAS until the parties agree that such change will not
adversely impact the other party's use of such systems. The Parties will
reasonably cooperate with each other in assessing the impact of all such
changes. After Chase no longer is using AMS or GTAS for itself and
notwithstanding anything to the contrary in the Agreement, Chase shall
not make any change to the functionality of AMS or GTAS without the
prior approval of NEW TRUSTCO (subject however, to changes that Chase is
required to make to comply with regulatory requirements).
1. APPLICATIONS MAINTENANCE. Chase shall support and maintain all
applications operated by Chase in providing Services to NEW
TRUSTCO. Applications maintenance shall include the following
activities:
(a) Corrective maintenance, including correction of systems
defects in accordance with applicable specifications and,
where it is determined that systems documentation is in
error, correction of systems documentation.
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(b) Preventative maintenance, including prevention of
systems problems by, where appropriate, improving
systems documentation, source code restructuring,
database/index reorganization, system reengineer-
ing and tool construction.
(c) Provision and installation of all future
modifications, enhancements, modules, upgrades and
releases to all Chase proprietary Software used in
providing the Services so as to remain on the
then-current version of such Software (unless
otherwise approved by NEW TRUSTCO).
(d) Provision and installation of new Software
releases issued by third-party vendors pursuant
to such vendor's normal maintenance practices
and in a manner that ensures continued eligibility
for support and maintenance of any third-party
vendor for such Software.
(e) Development and maintenance of current
documentation, including related end user
documentation, on AMS, GTAS and banking systems
Software.
2. GENERAL AD/M RESPONSIBILITIES. Chase's development and
maintenance responsibilities for Applications Software
include the following responsibilities:
(a) NEW TRUSTCO AND THIRD PARTY DEVELOPMENT. Chase
will cooperate with NEW TRUSTCO and third
parties in conjunction with their performance of
development and maintenance functions with respect
to Software other than AMS and GTAS. Chase will
provide NEW TRUSTCO and such third parties with
access (such access not to unreasonably
interfere with Chase's operations) to the
Equipment, Software, facilities and other
resources used by Chase to perform the Services.
In addition, Chase will provide the following:
(i) Production, test and quality assurance
environments for the installation of third
party/NEW TRUSTCO customized Software.
(ii) Systems Software necessary to provide current
platforms for execution of third party/NEW
TRUSTCO customized Software. NEW TRUSTCO
will be financially responsible for any new
Systems Software products so required.
(iii) Technical services support to insure 24 hour
operation as necessary to process the
business of the client.
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(iv) 24 hour access for applications support into production and
test environments.
(b) STANDARD INDUSTRY TOOLS. Chase will use standard industry tools to
develop Software.
(c) INTERFACES. Chase will develop, implement and maintain Software
interfaces necessary for the Data Center to communicate with
NEW TRUSTCO's systems.
(d) QUALITY ASSURANCE. Chase will be responsible for performing and
implementing quality assurance processes and procedures that
are reasonably necessary to assure that Chase software
development and maintenance responsibilities are executed
accurately and in a timely manner. This includes, without
limitation, performing the full regression testing of the AMS
and GTAS environments, as performed by UST as of the Commencement
Date, for the purpose of determining whether there will be
negative impact on existing production Software functionality.
These testing environments must perform all functions in an
environment that fully duplicates the anticipated production
environment. Subject to the foregoing, the Parties will mu-
tually agree upon checkpoint reviews, Software testing and
acceptance and other quality assurance procedures.
(e) TIMELINESS AND EFFICIENCY. Chase will perform all tasks necessary
to complete applications development projects in a timely and
efficient manner.
(f) PROJECT METHODOLOGY. Chase will utilize a disciplined systems
life cycle (SLC) methodology on all applications development
projects performed for NEW TRUSTCO. Within 90 days after
Commencement Date, Chase will provide NEW TRUSTCO with details of
the SLC methodology to be used for review and comment. Chase and
NEW TRUSTCO will jointly agree on any appropriate modifications
to the SLC methodology. The Chase SLC methodology will include
the following elements:
(i) PROJECT INITIATION. Upon receiving a request setting forth
additional business requirements, the methodology will
incorporate a process to assess the feasibility. This will
include assessing the resource requirements, time
requirements, impact on other applications development
projects, and other information as required so that NEW
TRUSTCO may make a reasonable business decision on whether
to continue. The
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methodology will provide for such assessments
to be completed within a reasonable
specified timeframe.
(ii) PROJECT PLAN. The project plan will provide a
reasonable estimate of the resources
required to complete the project, the process
to be undertaken, the deliverables to be
produced, the estimated schedule for
completion, and the effect, if any, of the
project on other ongoing or projected work.
The project plan will also show any impact on
existing production systems, processing
windows, or response times. Preliminary
project plans will be developed during the
project initiation and user requirements
phases of the project. The final project plan
will be developed during the design phase.
(iii) USER REQUIREMENTS. The methodology will
include a process that will assist in
developing and refining detailed user re-
quirements, at a level sufficient to
formuLate acceptance criteria. NEW TRUSTCO
will provide the appropriate resources and
documentation required to assist Chase in
completing the user requirements phase at NEW
TRUSTCO's expense.
(iv) DESIGN. The methodology will include a design
phase that will document and demonstrate how
the applications development project will
satisfy the user requirements. The design
phase will include a process for
accommodating and tracking ongoing scope
changes to the applications development pro-
ject, and a process for auditing the
applications development project. Design
documentation will be presented to NEW
TRUSTCO for approval.
(v) CODING. The methodology will include a
coding phase for application development.
This phase will incorporate the use of coding
standards, reviews, and audit trails,
including release control. The methodology
will allow for user walk-throughs upon
request.
(vi) TESTING. The testing phase will include the
development of a test plan early in the
applications development project, that will
be presented to NEW TRUSTCO, for NEW
TRUSTCO's approval. Included in the testing
phase will be exception testing and volume
tests, where appropriate, that will
thoroughly test all components of the
applications development project. Prior to
completion of the testing phase, NEW TRUSTCO
will be provided with the detailed test
results.
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(vii) ACCEPTANCE. A formal acceptance process will be included in
the methodology. This will include Chase developing jointly
with NEW TRUSTCO an objective and thorough acceptance
testing criteria that will allow NEW TRUSTCO users to ver-
ify the applications development project capabilities, effec-
tiveness and completeness. This phase will include a process
and an audit trail for tracking and correcting problems. Ac-
ceptance is not complete until NEW TRUSTCO notifies
Chase that the applications development project meets the
agreed-upon user requirements. NEW TRUSTCO will provide
the appropriate resources required to assist Chase in
completing the acceptance test.
(viii) IMPLEMENTATION. The methodology will include an implemen-
tation phase. An implementation plan will be presented to
NEW TRUSTCO, for NEW TRUSTCO approval, that will document
the process that will be used to incorporate the ap-
plications development project into production, including
identification of all interfaces and any required
conversions. Chase and NEW TRUSTCO will mutually agree on a
mechanism to ensure that NEW TRUSTCO is aware of any
changes to AMS and/or GTAS in a timely manner.
(g) DEVELOPMENT PRIORITIES. NEW TRUSTCO will establish priorities
with respect to applications development projects and communicate
the same to Chase. Chase will perform applications development
projects in accordance with such priorities. In this regard, NEW
TRUSTCO may request that Chase propose such priorities for NEW
TRUSTCO's approval or modification. NEW TRUSTCO may from time to
time adjust priorities previously established. Chase and NEW
TRUSTCO will mutually agree to project schedules, priorities and
overall resource allocation. Chase will promptly inform NEW
TRUSTCO if it determines that NEW TRUSTCO's directions may result
in the extension of other project schedules, or may impact the
provision of Services, particularly for projects that are
critical to NEW TRUSTCO operations or that are required to
maintain regulatory compliance. Subject to the foregoing, Chase
will remain responsible for timely completion of maintenance
and development projects.
(h) MONITORING, REPORTS AND MEETINGS. NEW TRUSTCO will have the
right to monitor the performance of the work done by maintenance
and development without adversely affecting the work. Chase will
provide NEW TRUSTCO with periodic reports, no less frequently
than once per month, in appropriate detail as mutually agreed upon
by Chase and NEW TRUSTCO, specifying how Chase used the
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resources of applications development personnel during
the relevant period, Chase's plan for using such
resources in the next period, and the status of each
pending or approved request for applications de-
velopment. For planning purposes, the report will also
specify the extent to which resources are available to
perform any new work. Chase will provide further
status information upon NEW TRUSTCO's request. In
addition. Chase will make available appropriate
personnel to meet with NEW TRUSTCO on a mutually agreed
upon schedule to review the status of existing
projects, to discuss new projects, and to review the
utilization of applications development resources.
(i) DOCUMENTATION. Chase will prepare and maintain
technical documentation for the Applications
Software, including modifications, updates and
enhancements of the Applications Software. The
documentation will provide sufficient information for a
trained computer programmer to install, operate,
maintain and modify the Applications Software.
Documentation should include detailed descriptions of
various software functions, flow-charts or other
graphic presentations of system logic and the computer
source code. Chase will assist NEW TRUSTCO to the
extent necessary or requested by NEW TRUSTCO in the
preparation and maintenance of user documentation for
the Applications Software, including modifications,
updates and enhancements thereof Chase will provide NEW
TRUSTCO with all such copies of documentation as NEW
TRUSTCO may reasonably request.
(j) TRAINING. Chase will provide train-the-trainers
training to NEW TRUSTCO in the use of the Applications
Software. Chase will provide NEW TRUSTCO with copies
of all instructor manuals and other training materials
used by Chase personnel in conducting such training.
Subject to the proprietary rights of third parties,
Chase grants NEW TRUSTCO a royalty-free, irrevocable,
perpetual right and license to use, reproduce, modify,
incorporate in other works and distribute all such
trailing materials solely for the use of NEW TRUSTCO
internally and for its clients in connection with their
relationship with NEW TRUSTCO.
F. Back-Up Disaster Recovery.
-------------------------
Chase will provide and maintain Data Center backup,
disaster/recovery and storage services. Chase's responsibilities
will include disaster/recovery functions for all Equipment,
systems and Software operating in the Data Center which are used
to provide the Services, and maintaining the agreed-upon recovery
of all production Data Center and Chase NEW TRUSTCO Network
operations and Equipment. The
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recovery site may be with an outside service provider or with internal
Chase reresources, at Chase's option. Chase will inform NEW TRUSTCO
of its recovery provider. Chase's responsibilities also include the
following:
1. Chase will develop a Disaster Recovery Plan that will provide the
manner in which Chase will perform backup and disaster recovery
functions, and NEW TRUSTCO's priorities for backup and disaster
recovery and methods for changing those priorities. Chase will
provide NEW TRUSTCO with a draft of the plan for NEW TRUSTCO's
review and approval, and will incorporate NEW TRUSTCO's comments
or suggestions into the plan as mutually agreed. Chase will
provide the final plan for NEW TRUSTCO's approval within 90 days
following the Commencement Date or prior to migration to the
MetroTech Data Center, whichever comes first. The Disaster
Recovery Plan will provide for, and Chase will achieve, full
recovery of all NEW TRUSTCO production systems operated by Chase
within 24 hours of a declared disaster using data included in
the last backups taken and shipped off-site, or as otherwise
specified in the Plan. Other non-production systems availability
will be consistent with Chase's then current standards.
2. Chase will be responsible for implementation, maintenance and
testing of the Disaster Recovery Plan. NEW TRUSTCO must approve
any change or modification to the Disaster Recovery Plan, which
will affect the level of service specifically provided to NEW
TRUSTCO.
3. Chase will test the Disaster Recovery Plan at least twice per
year in cooperation with NEW TRUSTCO. Testing dates will be
scheduled with NEW TRUSTCO and test objectives will be identified
with success criteria defined as mutually agreed upon by NEW
TRUSTCO and Chase.
4. Chase will provide NEW TRUSTCO with a formal report of the test
results.
5. Chase will provide proposed Disaster Recovery Plan modifications
so that problem resolution and re-testing of all unsuccessful
test components is performed in a timely manner. At NEW
TRUSTCO's request this may include additional tests.
6. Chase will maintain, and NEW TRUSTCO will have access to,
off-site storage of NEW TRUSTCO's data, Software and
documentation to support disaster recovery.
7. In the event of a disaster, Chase will assume responsibility for
operating the Equipment and providing the functions in accordance
with the Disaster Recovery Plan. Either of the Party's
respective account managers can declare a disaster, provided,
however, that before such a unilateral declaration, the
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<PAGE> 87
declaring party must use reasonable efforts to secure the
other Party's concurrence.
8. Chase will provide a single-point-of-contact for disaster
recovery-related communications and activities.
9. Chase will reasonably increase its disaster recovery
capability as necessary during the term to accommodate
growth in NEW TRUSTCO business volumes, application
enhancements or new functions requested.
G. Viruses and Disabling Code.
--------------------------
Each Party will use commercially reasonable efforts to ensure
that no viruses or similar items ("Viruses") are coded or
introduced into the systems used to provide the Services. Each
Party agrees that, in the event a Virus is found to have been in-
troduced into the Systems used to provide the Services, such
Party will take all reasonable actions at its own expense to
assist in reducing the effects of the Virus and, if the Virus
causes a loss of operational efficiency or loss of data, to
cooperate to the same extent to mitigate and restore such losses.
Chase shall not, without the prior written consent of NEW
TRUSTCO, insert into the Software any code which would have the
effect of disabling or otherwise shutting down all or any portion
of the Services. Furthermore, with respect to any disabling code
that may be part of the Software, Chase shall not invoke such
disabling code at any time, including, upon expiration or
termination of the Agreement for any reason, without NEW
TRUSTCO's prior written consent.
H. Other Services.
--------------
1. SECURITY. Chase will provide security services as required
to allow NEW TRUSTCO to administer or otherwise control the
access and use of NEW TRUSTCO data and applications
software. Included in such responsibilities, Chase will:
(a) Review with NEW TRUSTCO all documented information
security procedures, develop security procedures for
NEW TRUSTCO's review and approval (including a breach
of security action plan), and adhere to NEW TRUSTCO
data security policies. This review is subject to
compliance with reasonable Chase security practices and
procedures.
(b) Prior to the Commencement Date, NEW TRUSTCO and Chase
will mutually agree upon and develop a method of
implementing, modifying and deleting user IDs and
their associated access rights.
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<PAGE> 88
(c) Ensure that all users of the processing environment have
authorized access, as granted by the appropriate areas of
responsibility of Chase or NEW TRUSTCO. Chase will not be
responsible for allowing access to an unauthorized person
who presents an authorized ID, except to the extent that
Chase has contributed to the security breach.
(d) Monitor, review and respond in a timely and appropriate
manner, considering the severity of the violation, to all
access violations that are within the control of data
processing operations.
(e) Promptly provide written reports of all information security
breaches discovered or made known to Chase.
(f) Initiate corrective actions to ensure any security breach
will not occur again if it is within Chase's scope of
responsibility.
(g) Chase and NEW TRUSTCO will cooperate to recover from the im-
pact of security violations that result in loss of, or
damage to, information. Financial responsibility for the
recovery will be borne by the Party responsible for the
security violation.
2. CHANGE MANAGEMENT. To the extent not otherwise provided in this
Services Schedule, Chase will perform the following change
management functions:
(a) Control changes to the data processing environment,
implement changes as mutually agreed in accordance with
Chase change control procedures in effect as of the
Commencement Date or procedures to be determined by mutual
agreement, and implement such changes in a manner to provide
continuity when changes are initiated.
(b) Review, schedule and communicate all proposed application,
network and processing environment changes.
(c) Conduct periodic change management meetings with NEW
TRUSTCO's participation.
(d) Collect data on every change attempted, as pertains to NEW
TRUSTCO, including the cause of any problems and whether the
change was successful from the perspective of a user of the
system. This data will be summarized and reported to NEW
TRUSTCO on a periodic basis (but not less than every two
weeks).
(e) Obtain NEW TRUSTCO approval for all changes to production
processing schedules. In the case of an emergency, however,
Chase may change production processing schedules without
first obtaining
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<PAGE> 89
NEW TRUSTCO's approval to the extent required to
correct the emergency, provided that Chase
notifies NEW TRUSTCO of the changes as soon as
possible and in any event within one hour after
making the changes.
(f) Provide at least 72 hours advance notice of
scheduled outages, and schedule outages for system
maintenance, expansions and modifications during
hours that meet NEW TRUSTCO's operational needs
and minimize disruption.
(g) Where applicable, NEW TRUSTCO will promptly inform
Chase's change control group of LAN/WAN structural
changes that could impact Chase's processing
environment.
3. UTILIZATION AND CHARGEBACK. Chase will provide NEW
TRUSTCO with Chase's utilization reports that NEW
TRUSTCO can use to allocate data center usage within
NEW TRUSTCO's organization. Performance and op-
erational data (e:g., real time monitors, system logs,
error files, trace data, DB2 monitors, etc.) will be
made available to the extent required to support NEW
TRUSTCO's applications.
I. Information Technology Performance Standards.
--------------------------------------------
Subject to adjustment as provided in Section 3.2(d) of the
Agreement, Chase will achieve the performance standards set
forth in Attachment IV(I).
V. CHASE CUSTODY TRANSACTION FACILITATORS
Chase will use a similar level of effort in seeking reimbursement from
Chase Transaction Facilitators (as defined in Section 3.3(f)(i) of the
Agreement) for financial losses incurred by NEW TRUSTCO and its Affiliates, and
their respective customers, attributable to acts, omissions or insolvency of
Chase Transaction Facilitators that Chase uses on behalf of its own customers
for financial losses of similar size and type.
A-30
<PAGE> 90
ATTACHMENT II(A)(2)(b)
CREDIT ON COLLECTIONS
<TABLE>
<CAPTION>
SECURITY TYPE PAYMENT TYPE CREDITING STANDARD SDF/NDF*
------------- ------------ ------------------ --------
<S> <C> <C> <C>
Corporate/Muni. Bonds Interest **** ****
Common Stock Dividends **** ****
Preferred Stock Dividends **** ****
Mutual Funds Regular P&I or **** ****
Reinvestment
Unannounced Dividends Dividends **** ****
GNMA - PTC Eligible Regular P&I **** ****
GNMA - Physical Regular P&I **** ****
Asset Backed - DTC Eligible Regular P&I **** ****
Asset Backed - Physical Regular P&I **** ****
Variable and Floating Rate Interest **** ****
Government (Fed) P&I **** ****
Private Placements Interest and/or **** ****
Regular P&I and/or
Dividend
Foreign Securities Held in U.S. P&I **** ****
Global As per Attachment II(A)(3)(d)
</TABLE>
* Standard shall be changed from NDF to SDF if necessary to reflect
then current industry or regulatory standards.
**** 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.
A-31
<PAGE> 91
ATTACHMENT II(A)(2)(c)(i)
CAPITAL CHANGES/CORPORATE ACTIONS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
VENDOR NAME PUBLICATION INFORMATION INFORMATION TYP
- -------------------------------------------------------------------------------------
ISSUE REFERENCE FILE
- -------------------------------------------------------------------------------------
<S> <C> <C>
**** **** ****
**** **** ****
**** **** ****
**** **** ****
**** **** ****
**** **** ****
**** **** ****
**** **** ****
**** **** ****
**** **** ****
**** **** ****
**** **** ****
**** **** ****
**** **** ****
**** **** ****
**** **** ****
**** **** ****
**** **** ****
**** **** ****
**** **** ****
**** **** ****
**** **** ****
**** **** ****
**** **** ****
**** **** ****
**** **** ****
**** **** ****
**** **** ****
**** **** ****
**** **** ****
</TABLE>
**** 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.
A-32
<PAGE> 92
ATTACHMENT II(A)(2)(c)(v)
CREDIT ON CORPORATE ACTIONS
<TABLE>
<CAPTION>
TRANSACTION TYPE PAYMENT TYPE CREDITING STANDARD SDF/NDF*
- ---------------- ------------ ------------------ --------
<S> <C> <C> <C>
Maturities Principal **** ** ****
Calls P&I **** ****
Reorganization P&I **** ****
Foreign Securities Held in U.S. P&I **** ****
Stock Splits Shares **** ****
Stock Dividends Shares **** ****
Stock Dividends Shares **** ****
Global See Attachment II(A)(3)(d)
</TABLE>
* Standard shall be changed from NDF to SDF if necessary to reflect then
current industry or regulatory standards.
** ****
**** 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.
A-33
<PAGE> 93
ATTACHMENT II(A)(3)(d)
Product Profile
Auto Credit from
The Chase Manhattan Bank, N.A.
Description
To assist you in maximizing your returns, Chase provides global custody clients
with an accounting procedure through which we provisionally credit income to
your cash accounts on pay date, whether or not we have actually received the
income from the issuing company or its agent.
AUTOCREDIT benefits you by provisionally crediting income prior to the actual
account reconciliation process. You have access to your funds sooner so that
you can manage your cash more efficiently. Today, Chase makes AUTOCREDIT
available to you in 27 of the world's major investment markets. The majority
of our customers' investment and business is conducted in these 27 key markets.
To help you maximize the additional control that AUTOCREDIT gives you, all
related information is available in the reports generated by the Chase
InfoStation.TM
- Conditional dividend projection
information is updated daily.
- Daily cash reports reflect the
credits based on the value date of
the dividend payment.
- Daily "Income Received" reports
give you the status of your income
credits, showing all provisional
confirmed and credited income
separately.
Because AUTOCREDIT is a provisional accounting device, Chase may reverse income
that was mistakenly credited or was never actually received in the ordinary
course of business. Before this is done, however, Chase will provide you with
written notice five days prior to the reversal. This right to effect a
reversal is a fundamental term of our agreement to provide AUTOCREDIT.
INCOME
Chase's AUTOCREDIT service applies to bond interest, cash dividend payments and
cash stock options relating to the underlying securities under custody which
are known:
- To be part of your portfolio
holdings.
- To have declared a dividend or to
have scheduled an interest payment
as of a certain date.
AUTOCREDIT applies to cash stock options only when you instruct Chase that you
have elected to take the cash dividend on 100 percent of your entitlement, and
your holding is in an AUTOCREDIT nominee account. If you have failed to
instruct Chase on the uptake of a cash dividend two days
A-34
<PAGE> 94
prior to the pay date or you elect to take stock on all or part of your
entitlement, AUTOCREDIT does not apply.
If you do not maintain your cash account with Chase in the U.K., you may
receive provisional in come after pay date reflecting the time it takes Chase
to move funds from our London account to your designated bank. This process can
delay income crediting by up to three working days.
RIGHT TO REVERSE AUTOCREDIT INCOME
Chase's aim in making any reversals is to make sure you return to the position
you would have been in had the credit not been made. Therefore, any reversal is
performed at the original exchange rate at which (where applicable) the credit
was made.
As AUTOCREDIT is a provisional accounting procedure, Chase reserves the right
to reverse income that has been inadvertently credited, or is not actually
received in the ordinary course of business. This can happen for example, if
our sources announce an incorrect dividend rate or currency or if there has
been a change in applicable withholding taxes since the last dividend
notification
In these cases, you are given written notice that the appropriate amount must
be repaid to Chase within five business days of Chase's notification. This
allows sufficient time to fund your cash account in order to avoid debit
balances. Chase reverses the credit at the end of the five-day notice period
by debiting your cash account for the amount credited under the AUTOCREDIT
service. The exchange rate used in cases of overpayment, or where there was no
entitlement, is that used in the original credit. Should the entitlement have
been calculated incorrectly, then the correct amount is recredited with the
same value date and at the same exchange rate as the original credit.
When there has been an underpayment, Chase reverses the full amount
immediately, back-valuing the credit to the date of the original credit and
using the same exchange rate as the original. Chase recredits the correct
amount with the value date and exchange rate as the original credit.
If you do not maintain your cash account with Chase in the U.K., Chase notifies
you of any overpayment or erroneous credits and requires the repayment of the
funds. When this is done, we will make the necessary adjustment. If the case of
a lesser entitlement being due, Chase recredits the income using the exchange
rate of the original credit.
FOREIGN EXCHANGE TRANSACTIONS
You can instruct Chase to credit income to your cash account in the currency of
the payment, or in the base or concentration currency you specify. Unless you
give us alternate instructions, Chase will book the necessary foreign exchange
within the account's general operating procedures, using the exchange rates
applicable up to one day prior to pay date to ensure that we have enough time
to credit cash funds in the local market.
AUTOCREDIT EXCEPTIONS
1. AUTOCREDIT does not operate for American Depository Receipts
(ADRs).
A-35
<PAGE> 95
2. AUTOCREDIT only applies for cash stock options where you elect
to take all of the entitlement as cash and instructions are
received 2 days prior to pay date.
3. Where dividends are received by Chase in a currency different to
the currency of the asset's incorporation AUTOCREDIT does not
apply.
4. AUTOCREDIT is paid on permanent holdings less any unsettled
trades as of record/ex date, therefore AUTOCREDIT is not paid in
respect of unsettled purchases.
5. Market claims are not subject to AUTOCREDIT.
6. Where client payment instructions are missing, income is not
paid through AUTOCREDIT.
7. Where pay date occurs on a non-U.K. business day, AUTOCREDIT
payments are made on the next business day.
These operating procedures may be amended from time to time by Chase in its
sole discretion upon reasonable advance notice to the customer.
The provision of AUTOCREDIT does not in any way change the extent of Chase's
obligations to its customers under the applicable custody or trust agreement.
The crediting of income items under this provisional accounting device does not
guarantee in any way that such items will, in due course, be paid and Chase
shall not be deemed a guarantor of any income so credited to a customer's
account.
A-36
<PAGE> 96
AUTOCREDIT MARKETS
****
****
****
****
****
****
****
****
****
****
****
****
****
****
**** 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.
A-37
<PAGE> 97
ATTACHMENT II (A)(3)(e)
INTEREST BEARING CURRENCY ACCOUNTS
****
****
****
****
NOTE: ****
****
**** 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.
A-38
<PAGE> 98
ATTACHMENT II(A)(3)(f)
CONTRACTUAL SETTLEMENT
<TABLE>
<CAPTION>
Contractual Settlement --- Buys and Sells
<S> <C> <C>
Argentina Germany Norway
Australia Hong Kong Philippines (Local Only)
Austria Ireland Portugal
Belgium Italy Singapore
Brazil (Local Only) Japan Spain (Rapport Only)
Canada Luxembourg Sweden
Cedel Malaysia Switzerland
Denmark Mexico Thailand (Local Only)
Finland Netherlands United Kingdom
France New Zealand United States of America
</TABLE>
<TABLE>
<CAPTION>
Contractual Settlements Buys --- Actual Settlement Sales
<S> <C> <C>
Bangladesh India South Korea
Botswana Indonesia Spain (Non-Rapport)
Chile Israel Sri Lanka
China (Shanghai) Jordan Tunisia
China (Shenzen) Mauritius Taiwan
Columbia Morocco Turkey
Czech Republic Pakistan Uruguay
Egypt Poland Venezuela
Greece Peru Zimbabwe
Hungary South Africa
</TABLE>
A-39
<PAGE> 99
[GLOBAL SECURITIES SERVICES LOGO]
- --------------------------------------------------------------------------------
NOTIFICATION TIMEFRAMES
FOR
SETTLEMENT INSTRUCTIONS
*CHASE WILL ENDEAVOR TO MAKE ANY TRANSACTION ON A BEST EFFORTS BASIS
AFTER THE LASTEST DEADLINE SHOWN.
DAGGER FILING DEADLINES ARE SUBJECT TO CHANGE TO THE EXTENT NECESSARY TO
COMPLY WITH THE REQUIREMENTS AT EUROPE CENTRAL BANKS AND FOREIGN
BANK EXCHANGES.
- --------------------------------------------------------------------------------
This document is for information only and is designed to keep you abreast of
market conditions and procedures. The information contained in this document is
believed to be accurate. This document is intended neither to influence
investment decisions nor to amend or supplement any agreements governing your
relationship with The Chase Manhattan Bank, N.A., Global Securities Division.
The Chase Manhattan Bank, N.A. has gathered the information from a source it
considers reliable, however we cannot be held responsible for inaccuracies
and/or incomplete information. While the Chase Manhattan Bank, N.A. intends to
update the information contained in this document, we do not undertake to do
so.
A-40
<PAGE> 100
================================================================================
ARROW NOTIFICATION TIMEFRAMES DO NOT INCLUDE DAY OF RECEIPT.
<TABLE>
<CAPTION>
Country Timeframe Notes
- ------- --------- -----
DAYS
----
<S> <C> <C>
ARGENTINA** 2 The market operates on a cash basis, i.e., no
contractual settlement date. Therefore, for purchases,
settlement will take place 3 days after notification.
For sales, settlement will take place 4 days after
notification.
AUSTRALIA Settlement takes place on T + 5. Pre-matching is
effected manually. For physical transactions
Purchases 2 securities settle as follows:
Sales 3 Purchases: the broker contracts tour sub-custodian 24
hours prior to actual settlement to confirm trade
details. On settlement date the broker delivers the
scrip in exchange for a bank check.
Sales: Our subcustodian withdraws stock, prepares a
transfer deed and then contacts the broker to arrange
settlement.
AUSTRIA 3 Settlement is against payment and is not
simultaneous. Settlement takes place on the second
Monday following the trading week.
BANGLADESH Physical share and funds delivery for DSE
transactions take place of T + 2.
Sales 2
Purchases 4
BELGIUM 2 The forward market settles on a fixed two week
calendar. The cash market settles on T + 3. Brokers
are obliged to hold cash accounts with the National
Bank and cash is debted/credited to their accounts.
<FN>
- --------------------------------------------------------------------------------
** Please note that approval must be obtained from Relationship Management
before trading.
</TABLE>
This document is for information only and is designed to keep you abreast of
market conditions and procedures. The information contained in this document is
believed to be accurate. This document is intended neither to influence
investment decisions nor to amend or supplement any agreements governing your
relationship with The Chase Manhattan Bank, N.A., Global Securities Division.
The Chase Manhattan Bank, N.A. has gathered the information from a source it
considers reliable, however we cannot be held responsible for inaccuracies
and/or incomplete information. While the Chase Manhattan Bank, N.A. intends to
update the information contained in this document, we do not undertake to do
so.
A-41
<PAGE> 101
================================================================================
<TABLE>
<CAPTION>
Country Timeframe Notes
- ------- --------- -----
DAYS
----
<S> <C> <C>
BOTSWANA 2 The standard market time frames for settlement is
anywhere up to T + 14. Chase has established a T + 4
rolling settlement cycle with our sub-custodian
Standard Charter Bank.
BRAZIL** We must have trade instructions on trade date, due to
strict settlement regulations. We strongly advise that
Security 2 FX's be executed through Banco Chase. Repatriation
of sales proceeds must be specified on trade
Foreign Exchange 1 instruction, if desired, and can take up to 2-3 days
after settlement.
CANADA Cash and securities are exchanged simultaneously via
the CDS (central depository). The net cash position is
- Equities, Bonds, 3 remitted to/received from the CDS via a check with
Money Markets same day value.
- Treasuries 1 The settlement of non-CDS eligible securities is
effected over-the-counter, with securities being
exchanged for a same day value check.
There are currently no procedures in place for partial
settlement.
CHILE** 2 Actual settlement.
CHINA
Shanghai**
Shenzen** 3 Actual settlement.
<FN>
- --------------------------------------------------------------------------------
** Please note that approval must be obtained from Relationship Management
before trading.
</TABLE>
This document is for information only and is designed to keep you abreast of
market conditions and procedures. The information contained in this document is
believed to be accurate. This document is intended neither to influence
investment decisions nor to amend or supplement any agreements governing your
relationship with The Chase Manhattan Bank, N.A., Global Securities Division.
The Chase Manhattan Bank, N.A. has gathered the information from a source it
considers reliable, however we cannot be held responsible for inaccuracies
and/or incomplete information. While the Chase Manhattan Bank, N.A. intends to
update the information contained in this document, we do not undertake to do
so.
A-42
<PAGE> 102
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Country Timeframe Notes
- ------- --------- -----
Days
----
<S> <C> <C>
Columbia** 2 Market settlement for equities can vary between T + 0
and T + 5. Chase recommends a T + 3 settlement for
which instructions should be received on trade date.
Market settlement for fixed income is normally traded
on a same day or next day basis, but can settle in the
same way as equities. Instructions are required by
trade date.
Sales: Actual settlement.
Czech Republic 1 Settlement off market or via the Stock Exchange
Registry takes place on T + 3, according to market
practice.
Denmark 2 Brokers are obliged to settle transactions on T+3.
Therefore, instructions are to be received no later than
T+1, or a costly by-in and/or interest claim may
ensue.
Egypt 2 The official settlement timeframe is T + 2; however,
delayed settlement may be negotiated.
Euro Certificates of 2 CEDEL and Euroclear clear transactions by book-
Deposits entry transfer on participants' securities and cash
accounts on a settlement date agreed by the
Eurobonds 2 contracting parties. This is usually five business days
from trade date. Securities and cash are
debited/credited simultaneously.
Finland 3 As of 1/2/95, the Helsinki Stock Exchange has
introduced penalty fees (2) for late settlement of trades
clearing on the automated trading market (known as
"Heti").
France 2 Domestic trades settle in two ways; either on T + 3
rolling settlement, or at month end.
<FN>
2. Please contact your Relationship Manager for a quote of fees.
- ------------------------------------------------------------------------------
** Please note that approval must be obtained from Relationship Management
before trading.
This document is for information only and is designed to keep you abreast of
market conditions and procedures. The information contained in this document is
believed to be accurate. This document is intended neither to influence
investment decisions nor to amend or supplement any agreement governing your
relationship with The Chase Manhattan Bank, N.A., Global Securities Division.
The Chase Manhattan Bank, N.A. has gathered the information from a source it
considers reliable; however we cannot be held responsible for inaccuracies
and/or incomplete information. While the Chase Manhattan Bank, N.A. intends to
update the information contained in this document, we do not undertake to do
so.
</TABLE>
A-43
<PAGE> 103
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Country Timeframe Notes
- ------- --------- -----
Days
----
<S> <C> <C>
Germany 2 There is no standard settlement time, but T + 2 is usual
for trades executed between domestic counterparties
and T + 5 for trades between international
counterparties.
Ghana 4 The official settlement time frame for trades executed
on the Ghana Stock Exchange will be T + 10.
However Chase request its clients to instruct their
brokers to settle on T + 7 or a buy-in may ensue.
Therefore, clients settlement and funding instructions
for T + 7 settlement should be with Chase no later than
T + 3.
Greece** 2 Greece's settlement period is T + 2.
Bonds 3 Sales: Actual settlement
Hong Kong 2 Settlement of SEHK transactions takes place on T + 2.
Hungary** 2 Stock Exchange trades: The listed share market
operates on a T + 5 rolling settlement basis; settlement
of transactions is modified delivery versus payment.
Sales: The Stock Exchange requires that sold
securities be lodged with it by noon on T + 3; failure
to do so will result in an automatic buyback.
<FN>
- ------------------------------------------------------------------------------
** Please note that approval must be obtained from Relationship Management
before trading.
This document is for information only and is designed to keep you abreast of
market conditions and procedures. The information contained in this document is
believed to be accurate. This document is intended neither to influence
investment decisions nor to amend or supplement any agreements governing your
relationship with The Chase Manhattan Bank, N.A., Global Securities Division.
The Chase Manhattan Bank, N.A. has gathered the information from a source it
considers reliable; however we cannot be held responsible for inaccuracies
and/or incomplete information. While the Chase Manhattan Bank, N.A. intends to
update the information contained in this document, we do not undertake to do
so.
</TABLE>
A-44
<PAGE> 104
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Country Timeframe Notes
- ------- --------- -----
Days
----
<S> <C> <C>
India**
Bombay Exchange 1 Instructions should be with Chase no later than trade
date plus 1.
- Purchase and 1
sales
Calcutta & Delhi Instructions should be with Chase no later than trade
Exchanges date plus 1.
- Purchases Notification should be provided to Chase no later than
trade date plus 1.
- Sales(3) Instructions should be with Chase no later than trade
date plus 1.
Madras
- Purchases Instructions should be with Chase no later than trade
date plus 1.
- Sales(3)
Indonesia** 3 Sales: Actual settlement.
The custodian bank must deliver the physical shares
to the selling broker on settlement date. Delivery is
made against a broker check. Investors should note
that check clearance takes between 24 and 48 hours,
depending upon the time of receipt of the check and,
therefore, proceeds on sales are credited on actual
settlement date basis.
Ireland 3 Market settlement occurs on the second Monday
following the 2 week account.
Bonds
- -------------------------
3. Securities purchased in Calcutta, Madras and Delhi are sent to Bombay for safe keeping. If securities are sold in Calcutta,
Madras and Delhi, the certificates have to be delivered to the HSBC branches in those cities: therefore, an additional three (3)
days are required (i.e., trade, instructions must be received by Chase the day prior to the end of the trading period).
<FN>
** Please note that approval must be obtained from Relationship Management
before trading.
This document is for information only and is designed to keep you abreast of
market conditions and procedures. The information contained in this document is
believed to be accurate. This document is intended neither to influence
investment decisions nor to amend or supplement any agreement governing your
relationship with The Chase Manhattan Bank, N.A., Global Securities Division.
The Chase Manhattan Bank, N.A. has gathered the information from a source it
considers reliable; however we cannot be held responsible for inaccuracies
and/or incomplete information. While the Chase Manhattan Bank, N.A. intends to
update the information contained in this document, we do not undertake to do
so.
</TABLE>
A-45
<PAGE> 105
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Country Timeframe Notes
- ------- --------- -----
Days
----
<S> <C> <C>
ISRAEL** See notes T+0 market settlement. Therefore, it is necessary to confirm trade
instructions directly with the agent on Trade Date and then send
instructions to Chase.
ITALY 4 NOTE: All instructions received after the 12th day of the month
Bonds 2 will be settled at the end of the following month.
JAPAN 2 Settlement takes place on T+3.
JORDAN** 1 The official settlement at the AFM is T+2; however, different
settlement timeframes may be agreed with the brokers.
LUXEMBOURG 3
MALAYSIA** Client may trade odd lot share; however, agent requires at least
3 weeks prior notification to arrange splitting of shares.
Held in MYR, traded 3 Failure to notify agent may result in automatic buy-in on T+6.
in Malaysia.
Held in MYR, traded
in Singapore.
- Purchases 3
- Sales 4
MAURITIUS There is no rolling settlement system. The date appearing on the
contract note represents the clearing date.
Cash settlement of purchases takes place on clearing date minus 2.
Sales settle on clearing date.
<FN>
- ------------------------------------------------------------------------------------------------------------------------------------
** Please note that approval must be obtained from Relationship Management before trading.
This document is for information only and is designed to keep you abreast of market conditions and procedures. The information
contained in this document is believed to be accurate. This document is intended neither to influence investment decisions nor to
amend or supplement any agreement governing your relationship with The Chase Manhattan Bank, N.A., Global Securities Division. The
Chase Manhattan Bank, N.A. has gathered the information from a source it considers reliable; however we cannot be held responsible
for inaccuracies and/or incomplete information. While the Chase Manhattan Bank, N.A. intends to update the information contained in
this document, we do not undertake to do so.
</TABLE>
A-46
<PAGE> 106
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Country Timeframe Notes
- ------- --------- -----
Days
----
<S> <C> <C>
MEXICO Instructions must be received on Trade Date. For same day
settlements, instructions must be received by 11:00 am
Equities 2 (NY Time) on Trade Date.
Gov't. Securities 1
MOROCCO** see notes
NETHERLANDS 2 This is essentially a cash market, and therefore there is no
standard period between trade date and settlement date. Settlements
normally take place between two days and one week after trade date.
Chase will settle on the date quoted by the customer, or three business
days after notification, whichever is later.
NEW ZEALAND 3
NORWAY 2 Following the dematerialization of stock in Norway through the VP System,
brokers are obligated to settle transactions on trade date plus 3.
Therefore, your instructions must be with Chase no later than trade date plus
one business day, or a costly buy-in or interest claim may ensue.
PAKISTAN** 4 The market operates on a 13-day account cycle. Monday to Sunday trading cycle (no
trading on Thursday and Friday) with settlement the following Sunday (i.e., 7-13
days later).
SALES: Actual settlement.
PERU** 2 Instructions should be with Chase no later than trade date.
SALES: Actual settlement.
PHILIPPINES** 3 Contractual settlement if local currency is held and actual settlement of FX is
required.
<FN>
- ------------------------------------------------------------------------------------------------------------------------------------
** Please note that approval must be obtained from Relationship Management before trading.
This document is for information only and is designed to keep you abreast of market conditions and procedures. The information
contained in this document is believed to be accurate. This document is intended neither to influence investment decisions nor to
amend or supplement any agreement governing your relationship with The Chase Manhattan Bank, N.A., Global Securities Division. The
Chase Manhattan Bank, N.A. has gathered the information from a source it considers reliable; however we cannot be held responsible
for inaccuracies and/or incomplete information. While the Chase Manhattan Bank, N.A. intends to update the information contained in
this document, we do not undertake to do so.
</TABLE>
A-47
<PAGE> 107
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Country Timeframe Notes
- ------- --------- -----
Days
----
<S> <C> <C>
POLAND** 3 Trade instructions and funding details
must be received by Chase no later than
Trade Date.
Sales: Actual settlement
-----
PORTUGAL** 2 Portugal settlement is T+3.
SINGAPORE 3
Held in SGD, traded
in Singapore.
Held in SGD, traded
in Malaysia.
Purchases 3
Sales 4
SOUTH AFRICA
Cash Deals 3 T+6 for trades executed on a Monday to T+2
for trades that take place on a Friday.
Chase requires settlement instructions no
later than 3pm London time 2 days prior to
the Tuesday settlement date (T+1).
Immediate Deals 3 Usually traded for settlement on T+1 or
T+2. Clients should trade for a minimum of
T+2; Chase will require settlement on
trade date.
SOUTH KOREA** 2 Institutions who have been granted an
exception by the Korea Stock Exchange will
no longer have to place the entrustment
deposit. However, if no exception was
granted a cash collateral deposit of 40%
of the trade amount must be on deposit in
the broker's account on trade date, 9:00
am. The cash details must be delivered to
Chase no loater than T minus 3 to effect
settlement.
- ------------------------------------------------------------------------------
<FN>
** Please note that approval must be obtained from Relationship Management
before trading.
This document is for information only and is designed to keep you abreast of
market conditions and procedures. The information contained in this document is
believed to be accurate. This document is intended neither to influence
investment decisions nor to amend or supplement any agreements governing your
relationship with The Chase Manhattan Bank, N.A., Global Securities Division.
The Chase Manhattan Bank, N.A. has gathered the information from a source it
considers reliable, however we cannot be held responsible for inaccuracies
and/or incomplete information. While the Chase Manhattan Bank, N.A. intends to
update the information contained in this document, we do not undertake to do
so.
</TABLE>
A-48
<PAGE> 108
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Country Timeframe Notes
- ------- --------- -----
Days
----
<S> <C> <C>
SPAIN Only sales contracted with Rapport member
--------------
brokers who clear through Chase Madrid
--------------------------------------
- Puchases 3 are eligible for contract settlement. That
is, funds will be credited to the Spanish
- Sales See note account on settlement date. Trade
instructions must specify "Rapport With
------------
Chase Madrid." All other sales are subject
------------
to actual settlement date accounting. That
is we will credit the Spanish peseta account
two business days after notification of
receipt of funds in Madrid. Chase will
advise you of the cash settlement by telex
within one business day of notification by
our Spanish agent, after which we will
accept instructions to pay away or convert
pesetas.
SRI-LANKA** The settlement period for purchase is T+5
and for sales is T+7. Physical settlement
- Purchases 2 no longer exists as all trades are now
settled at the CDS.
- Sales
SWEDEN The re-registration of Swedish securities
requires on average six days to complete.
Purchases Transactions will be instructed for
settlement on the date stipulated by the
- Sales settling 2 customer; however, cash will be posted six
with business days after notification of the
Skandanaviska trade.
Enskilda Banken
If the counter-party is ENSKILDA
- All other sales 2 FONDKOMMISSION (i.e., the broker subsidiary
or our agent, SEB), this six day rule will
- Bonds 3 not apply and our normal contractural
settlement date accounting will occur,
provided that Chase receives instructions
two days prior to settlement. The same
settlement rule will apply if the
counter-party uses SKANDINAVISKA as
clearance/settlement agent, provided your
instructions clearly state this and provided
that the broker has given matching
instructions to SKANDINAVISKA.
- ------------------------------------------------------------------------------
<FN>
** Please note that approval must be obtained from Relationship Management
before trading.
This document is for information only and is designed to keep you abreast of
market conditions and procedures. The information contained in this document is
believed to be accurate. This document is intended neither to influence
investment decisions nor to amend or supplement any agreements governing your
relationship with The Chase Manhattan Bank, N.A., Global Securities Division.
The Chase Manhattan Bank, N.A. has gathered the information from a source it
considers reliable, however we cannot be held responsible for inaccuracies
and/or incomplete information. While the Chase Manhattan Bank, N.A. intends to
update the information contained in this document, we do not undertake to do
so.
</TABLE>
A-49
<PAGE> 109
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Country Timeframe Notes
- ------- --------- -----
Days
----
<S> <C> <C>
Switzerland 3 Swiss custodians require two business days to
process a securities transaction, one of which is
the notification period required by the
centralized depository. Consequently, Chase will
process transactions for settlement three business
days following receipt of instruction.
Taiwan** Actual settlement. Need instructions on Trade
Date.
- Purchases 1
- Sales 1
Thailand** 2 SALES: Actual settlement. Settlement takes place
on T+3.
Tunisia 3 Settlement of all transaction on the BVM takes
place on T+7. Settlement is accomplished via the
exchange of certificates or MAD (if
certificates are not available) against same day
value bank checks.
Turkey 2 Actual settlement. Due to the physical nature of
the market, transactions are actual settlement.
United Kingdom Currently, there is a 10 day rolling settlement.
However, effective June 26, 1995 the settlement
timeframe will change to a 5 day rolling
settlement.
Account settlements
- Purchases 4
- Sales 4
Gilt settlements 1 Need instructions on Trade Date.
1
- Purchases
- Sales
United States 1 For DTC eligible securities, direct affirmation is
preferred.
- ------------------------------------------------------------------------------
<FN>
** Please note that approval must be obtained from Relationship Management
before trading.
This document is for information only and is designed to keep you abreast of
market conditions and procedures. The information contained in this document is
believed to be accurate. This document is intended neither to influence
investment decisions nor to amend or supplement any agreements governing your
relationship with The Chase Manhattan Bank, N.A., Global Securities Division.
The Chase Manhattan Bank, N.A. has gathered the information from a source it
considers reliable, however we cannot be held responsible for inaccuracies
and/or incomplete information. While the Chase Manhattan Bank, N.A. intends to
update the information contained in this document, we do not undertake to do
so.
</TABLE>
A-50
<PAGE> 110
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Country Timeframe Notes
- ------- --------- -----
Days
----
<S> <C> <C>
Uruguay** 1 All securities, with the exception of Treasury
bills, settle on T+1. Treasury bills settle on the
same day basis for secondary market transactions.
The primary market for Treasury bills is a weekly
auction, with accepted bids referred back to the
investor's intermediary for settlement the
next business day.
Venezuela** 3 Must verify purchase settlement prior to sell
execution. Chase requests customers to contract
for a minimum settlement of T+5 on equities and
bonds, to allow sufficient time for all
documentation to be gathered and foreign
exchange arrangements to be completed.
SALES: Actual settlement.
Zimbabwe** 2 Settlement date varies, but the Stock Exchange
Committee rules state that settlement cannot
exceed T+14. The usual settlement period is T+7.
Clients are advised to confirm the settlement date
with the broker at the time the trade is
executed.
- ------------------------------------------------------------------------------
<FN>
** Please note that approval must be obtained from Relationship Management
before trading.
This document is for information only and is designed to keep you abreast of
market conditions and procedures. The information contained in this document is
believed to be accurate. This document is intended neither to influence
investment decisions nor to amend or supplement any agreements governing your
relationship with The Chase Manhattan Bank, N.A., Global Securities Division.
The Chase Manhattan Bank, N.A. has gathered the information from a source it
considers reliable, however we cannot be held responsible for inaccuracies
and/or incomplete information. While the Chase Manhattan Bank, N.A. intends to
update the information contained in this document, we do not undertake to do
so.
</TABLE>
A-51
<PAGE> 111
ATTACHMENT II(A)(3)(g)
GLOBAL PROXY SERVICES
Summary Notification of Meeting Agenda and Voting
<TABLE>
<CAPTION>
<S> <C> <C>
Argentina (Early 1995) Australia Austria
Canada France Germany
Greece Hong Kong Indonesia
Ireland Italy Japan
Jordan Malaysia Mexico
Netherlands New Zealand Singapore
Spain Switzerland United Kingdom
United States
</TABLE>
A-52
<PAGE> 112
ATTACHMENT II (A)(6)
SECURITIES PROCESSING INSTRUCTIONAL DEADLINES
PHYSICAL DELIVERIES
(FREE & DVP)
*
NEXT DAY FUNDS ****
**** **** ****
*
SAME DAY FUNDS **** ****
**** **** ****
SPECIAL NOTES ALL DELIVERIES PENDED AFTER ESTABLISHED
GUIDELINES WILL BE MADE ON A BEST EFFORTS
BASIS.
* STREET DELIVERY CUTOFFS
**** 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.
A-53
<PAGE> 113
SECURITIES PROCESSING INSTRUCTIONAL DEADLINES
ALL RECEIVES
(FREE & RVP)
BOOK ENTRY SALES
*
DTC (MDH) **** ****
**** ****
**** ****
PTC **** ****
FRB **** ****
SPECIAL NOTES ALL DELIVERIES PENDED AFTER ESTABLISHED
GUIDELINES WILL BE MADE ON A BEST EFFORT
BASIS. ANY RECYCLE RECEIVED WITH A PENDING
SALE WILL BE DONE ON A BEST EFFORTS BASIS.
* STREET DELIVERY CUTOFFS
**** 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.
A-54
<PAGE> 114
FRB OUTGOING WIRES
NEW TRUSTCO'S normal internal cutoff time for transmitting FRB
outgoing wires will be
****
All outgoing wires released after the established guidelines will be
made on a best effort basis.
FRB INCOMING WIRES
Wires that end up in the repair queue, which are identified with an
account number or name, will be corrected *****.
**** 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.
A-55
<PAGE> 115
TRANSFERS
For Issues with New York City Trans- Negotiable securities will be
fer Agents shipped within **** Telephone follow
up will commence **** days from date
of shipment.
For Issues with Transfer Agents out- Negotiable securities will be shipped
side of New York City within **** business days of receipt.
Telephone follow up will
commence **** days from date of
shipment.
**** 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.
A-56
<PAGE> 116
DEADLINES FOR SENDING
SPECIAL PROCESSING ITEMS TO CHASE
Red-Tick Adjustments ****
Pair-offs vs. Fed Wires/Vouchers* ****
* The First/Last Day of Month ****
* End of Quarter ****
Account-to-Account Transfers/Gifts ****
Bookkeeping Entries ****
Rec and Del
Special Note:
*USTPNW
The deadline for **** N.Y. time
and USTPNW will call Chase's book entry section directly.
**** 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.
A-57
<PAGE> 117
SECURITIES PROCESSING DEADLINES FOR NOTIFICATION
FROM CHASE ON BOOK ENTRY PROBLEM FILE AND PHYSICAL PROBLEMS
BOOK ENTRY - RECEIVE & DELIVERY
Chase will attempt to identify exceptions in all problem files within
**** NEW TRUSTCO will be notified of the NEW TRUSTCO problems no later
than **** after the problem has been identified as NEW TRUSTCO's. Such
notification will be given to NEW TRUSTCO as soon as possible but not
later than **** prior to the reclaim cut-off time. Trades
hitting the problem file during the last **** will be
communicated to NEW TRUSTCO as soon as possible. Certain conditions
such as account transitions or bulk securities transfers may impact
Chase's ability to adhere to these time frames.
Chase will reclaim all unresolved trades, unless otherwise instructed,
starting at **** before the reclaim deadline.
In the event that Chase receives an item for NEW TRUSTCO without
sufficient time to research or reclaim, Chase will contact NEW TRUSTCO
and post the item into NEW TRUSTCO's holdover account. If NEW
TRUSTCO verifies on the following day that the item posted to the
holdover account was invalid posting, Chase will compensate NEW
TRUSTCO within **** **** on each day in question, minus reserves.
NEW TRUSTCO will accept a reversal of compensation credit if the item
or items in question are in fact a NEW TRUSTCO transaction.
For corporate trust accounts at any depository which are under the
control of NEW TRUSTCO, all items going into holdover will not be
compensated by Chase.
NOTWITHSTANDING THE ABOVE, CHASE WILL NOTIFY NEW TRUSTCO OF ANY
CONDITION THAT MAY PREVENT IT FROM FULFILLING THE ABOVE
REQUIREMENTS.
PHYSICAL RECEIVES
<TABLE>
<S> <C>
NSCC **** Cutoff
OVER WINDOW **** Cutoff
FREE RECEIVED **** Cutoff
</TABLE>
Physical deliveries shall be re-delivered on a best efforts basis.
**** 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.
A-58
<PAGE> 118
VOLUNTARY CORPORATE ACTIONS
DEADLINE FOR NEW TRUSTCO RESPONSES
Offers which expire in New York and involve **** prior to expiration/
**** NEW TRUSTCO accounts. pro-ration date.
Offers which expire in New York with approxi- **** prior to expiration/
mately **** accounts or more (based on the pro-ration date.
number of accounts per page), as well as, out-
of-town expirations.
**** 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.
A-59
<PAGE> 119
VOLUNTARY CORPORATION ACTIONS
PERFORMANCE STANDARDS
****
**** 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.
A-60
<PAGE> 120
<TABLE>
RUSH ITEMS
DEADLINES FOR SENDING
INSTRUCTIONS BY NEW TRUSTCO
AND PROCESSING BY CHASE
<S> <C>
ISSUES WITH NEW YORK CITY
TRANSFER AGENTS: NEW TRUSTCO will send information to Chase by ****
Chase will send securities to the transfer agent **** and will
pick-up securities from special window at transfer agents in ac-
cordance with agent time line.
ISSUES WITH TRANSFER
AGENTS OUTSIDE OF NEW NEW TRUSTCO will send instructions to Chase by **** .
YORK CITY:
Chase will send securities to the transfer agent ****
and will make arrangements to receive in similar
manner.
DTC DEPOSITS: NEW TRUSTCO will send instructions to Chase by ****
Chase will use full legal deposit and deposit the ****
<FN>
**** 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.
</TABLE>
A-61
<PAGE> 121
PERFORMANCE STANDARDS FOR
MISCELLANEOUS ITEMS
<TABLE>
<S> <C>
Vault check for trading (sales) ****
Vault check for other transactions ****
Inform NEW TRUSTCO of potential sale fails
(for T+3 trades) ****
Assistance with private placement ****
Assistance with legal transfers ****
Update FINS database with broker number ****
<FN>
**** 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.
</TABLE>
A-62
<PAGE> 122
ATTACHMENT II(A)(8)
PRICING VENDOR/PRODUCT LIST
<TABLE>
<CAPTION>
PRIMARY SECONDARY
TYPE OF SECURITY FREQUENCY VENDOR VENDOR
- ---------------- --------- ------- ---------
<S> <C>
US Treasury Notes ****
US Treasury Bonds ****
US Treasury Bills ****
Govt Nat'l Mort. Assoc./Federal Nat'l ****
Mort. Assoc.
Federal Home Loan Corp./Federal ****
Home Loan Bank
Mutual Funds (listed) ****
Municipal Bonds
-- Tax Exempt (Model priced) ****
-- Taxable ****
Domestic Corporate Bonds ****
-- Medium Term Notes ****
<FN>
**** 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.
</TABLE>
A-63
<PAGE> 123
<TABLE>
<CAPTION>
PRIMARY SECONDARY
TYPE OF SECURITY FREQUENCY VENDOR VENDOR
- ---------------- --------- ------- ---------
<S> <C>
-- Floating Rate Notes/Adjusted Rate ****
Mortgage
-- Convertible Bonds ****
-- Private Placements ****
-- Yankee/Euro ****
-- Collateralized Mortgage ****
Obligation/Remic
Foreign Denominated Bonds ****
Foreign Convertible ****
Currency (Exchange Rates) ****
Domestic Common Stock
-- Listed ****
-- Unlisted ****
-- Preferred ****
-- Convertible Preferred ****
Foreign Denominated Stock
-- Listed ****
-- Unlisted ****
<FN>
**** 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.
</TABLE>
A-64
<PAGE> 124
<TABLE>
<CAPTION>
PRIMARY SECONDARY
TYPE OF SECURITY FREQUENCY VENDOR VENDOR
- ---------------- --------- ------- ---------
<S> <C>
-- Preferred Stock ****
-- Convertible ****
Options/Futures ****
Foreign Exchange Contracts ****
Common Trust Funds ****
American Depository Receipts
-- Listed ****
-- Unlisted ****
Automatically Coded Within System
Permanently At:
Cost
-- Bankers Acceptances
-- Discount Notes
-- Repurchase Agreements (Open
End)
Par
<FN>
**** 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.
</TABLE>
A-65
<PAGE> 125
<TABLE>
<CAPTION>
PRIMARY SECONDARY
TYPE OF SECURITY FREQUENCY VENDOR VENDOR
---------------- --------- ------- ---------
<S> <C> <C> <C> <C>
- Certificates of Deposits
- Commercial Paper
- Demand Notes
- Repurchase Agreements (Close
End)
- Savings Deposits
</TABLE>
A-66
<PAGE> 126
1 Notification of mis-delivered mail ****
ATTACHMENT II(A)(9)(a)
CORPORATE TRUST
PERFORMANCE STANDARDS FOR CHASE
MAILING OPERATIONS
<TABLE>
<CAPTION>
CATEGORY STANDARD
<S> <C> <C>
1 Delivery of Schedule of Mailings. ****
Schedule to include 24 hour to 2 week notice
2 Mailings - enclosed, metered and delivered to P.O. ****
****
****
****
3 Confirmation of completed mailing ****
****
4 Reimbursement of postage charges ****
****
5 Notification of discrepancy in # of pieces ****
****
6 Defect Rate (Destroyed Checks)* ****
****
7 Year-end Statements ****
****
</TABLE>
* This rate is dependent on the quality of the forms/envelopes.
** But in any case by January 31st, provided **** of total is
delivered at least **** prior to January 31st.
DWAC PROCESSING
<TABLE>
<CAPTION>
CATEGORY STANDARD
<S> <C> <C>
1 Fax daily DWAC sheet ****
****
2 DWAC input to PTS ****
****
3 Notification of delivery with no instructions or in- ****
correct instructions ****
****
4 Free Delivery during reclaim period ****
</TABLE>
**** 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.
A-67
<PAGE> 127
<TABLE>
<S> <C> <C>
5 Occasional necessity to Broadcast ****
****
</TABLE>
MEDIUM TERM NOTE & COMMERCIAL PAPER PROCESSING
<TABLE>
<CAPTION>
CATEGORY STANDARD
<S> <C> <C>
1 Notification of excess of Net Debit Cap ****
2 Notification of Net Settlement Out-of-Proof ****
</TABLE>
MAIL RECEIPT
<TABLE>
<CAPTION>
CATEGORY STANDARD
<S> <C> <C>
1 Notification of mis-delivered mail ****
</TABLE>
**** 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.
A-68
<PAGE> 128
ATTACHMENT III (A)(6)(1)
BANK OPERATIONS FUNCTIONS
<TABLE>
<CAPTION>
NEW
FUNCTION CHASE TRUSTCO
-------- ----- -------
<S> <C> <C>
A. LOAN SERVICES
LOAN PAYMENT PROCESSING X
LOAN ORIGINATION X
LOAN DOCUMENTATION (OPTICAL) X
LOAN STATEMENT RENDERING X
LOAN SERVICING X
LOAN COLLATERAL PROCESSING X
B. DEPOSIT SERVICES
TT&L X
LOCAL DISTRIBUTION OF OUTPUT (PAPER AND ELEC- X
TRONIC) FOR NY OFFICES
REMOTE DISTRIBUTION OF OUTPUT (PAPER AND X
ELECTRONIC) FOR REGIONAL OFFICES
ON-US COLLECTIONS X
DEPOSIT STATEMENT RENDERING X
FEDWIRE ADVICE MAILING X
DEPOSIT ACCOUNT PROCESSING X
STOP PAYMENT ORIGINATION X
C. CHECK PROCESSING
INCLEARING PROCESSING X
INBOUND TRANSPORTATION (BRANCH) X
</TABLE>
A-69
<PAGE> 129
<TABLE>
<CAPTION>
NEW
FUNCTION CHASE TRUSTCO
-------- ----- -------
<S> <C> <C>
CHECK CLEARING X
CHECK SETTLEMENT X
ECP (CURRENTLY SEND ONLY) X
NOTE PROCESSING & PRESENTMENT X
BLIND VERIFICATION (AMS CHECKS) X
FLOAT MANAGEMENT X
IMAGE CAPTURE (NOT CURRENTLY AVAILABLE) X
EXCEPTION ITEM OUTSORT X
ENCODING X
BULK FILING X
MAIL DEPOSIT PROCESSING X
POD PROCESSING X
SIGNATURE VERIFICATION X
D. RECORDS STORAGE AND RETRIEVAL
DOCUMENT STORAGE (OPTICAL) X
MICROFILM & FICHE PRODUCTION X
RECORDS ARCHIVING X
CHECK SAFEKEEPING X
E. RESEARCH AND ADJUSTMENT
INTERBANK RESEARCH & ADJUSTMENT X
DUE FROM/DUE TO RECONCILIATION X
PHOTO RETRIEVAL X
F. INTERNATIONAL PAYING AND RECEIVING
CHIPS TRANSFERS X
FOREIGN CHECK COLLECTION X
FOREIGN TRANSFERS X
</TABLE>
A-70
<PAGE> 130
<TABLE>
<CAPTION>
NEW
FUNCTION CHASE TRUSTCO
-------- ----- -------
<S> <C> <C>
TELEX X
FOREIGN DRAFTS X
G. CASH MANAGEMENT
INTERNAL ACCOUNT RECONCILIATION X
PC BOOK TRANSFER X
PC FEDWIRE INITIATION X
CONTROLLED DISBURSEMENT X
CHECK ISSUE DATA RECEIPT (ARP) X
PAYOR BANK SERVICES X
CASH MANAGEMENT ACCOUNT RECONCILIATION X
OFFICIAL CHECK RECONCILIATION X
PC CASH MGMNT BALANCE REPORTING (INTRA DAY X
PRIOR DAY)
ARP BASED STOP PAYMENT X
ACCOUNT ANALYSIS X
STOP PAYMENT ORIGINATION X
H. RETURN ITEMS
RETURN ITEMS-ON-US X
RETURN ITEMS DEPOSITED X
RETURN ITEM NOTIFICATION (>$2500) X
I. ELECTRONIC FUNDS TRANSFER
ACH PROCESSING AND SETTLEMENT X
PC BASED ACH ORIGINATION (RA) X
FEDWIRE TRANSFER PROCESSING X
UST BOOK TRANSFER PROCESSING X
</TABLE>
A-71
<PAGE> 131
<TABLE>
<CAPTION>
NEW
FUNCTION CHASE TRUSTCO
-------- ----- -------
<S> <C> <C>
J. CUSTOMER SERVICE X
K. OTHER
ATM SWITCHING X
BRANCH AUTOMATION SUPPORT X
VOICE RESPONSE (PAL) X
BATCH AND ON-LINE TRANSMISSIONS X
ATM SETTLEMENT X
END-OF-DAY PROOF & RELEASE X
VOLUME/UTILIZATION REPORTS X
GENERAL LEDGER RECONCILIATION X
</TABLE>
A-72
<PAGE> 132
ATTACHMENT III(A)(6)(2)
BANKING SERVICES PERFORMANCE STANDARDS
<TABLE>
<CAPTION>
Processing
Standard
----------
<S> <C> <C>
A. LOAN SERVICES
1. Loan Statements Mailed ****
2. Loan Advices Mailed ****
3. Collateral Updated ****
4. Loan Payment Processed ****
5. Loan Origination Exceptions Resolved ****
6. Loan Documentation Updated & Scanned ****
7. Loan Account/Note Inquiry ****
8. Loan Maintenance ****
9. Loan Output Distribution ****
10. End of Day Proof & Release (M&I) ****
B. DEPOSIT SERVICES
1. Non-enclosure Statements Rendered ****
2. All Statements Rendered ****
3. Statement Rendering Quality (Error Rate) ****
4. Stop Payment Confirmation Distribution ****
5. FedWire Advices Mailed ****
6. M&I Advices Mailed ****
7. Maturity Notices Distributed ****
8. **** ****
- Fax discrepancies to NEW TRUSTCO ****
- Fax all checks > **** NEW TRUSTCO ****
- NEW TRUSTCO Verification to Chase ****
</TABLE>
**** 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.
A-73
<PAGE> 133
<TABLE>
<CAPTION>
Processing
Standard
----------
<S> <C>
9. Stop/Special Referral Processing
- NEW TRUSTCO Notification to Chase ****
- Fax checks to NEW TRUSTCO ****
- NEW TRUSTCO Verification to Chase ****
10. Non Posted Checks
- Fax checks to NEW TRUSTCO ****
- NEW TRUSTCO Notification to Chase ****
11. M&I Access ****
12. SQN Signature File Update (NY only) ****
13. SQN Signature File Distribution (NY only) ****
14. Distribution of Reports - Exporter ****
15. Distribution of Reports - Paper ****
16. Distribution of Reports - Fiche ****
17. End of Day Proof & Release (M&I) ****
18. General Ledger Deposits (Copy) ****
General Ledger Deposits (Original) ****
19. Non Posted Transaction Copies ****
20. Deposited Return Item Notification ****
- Notification to NEW TRUSTCO ****
- Instructions to Chase ****
- Fundamental -- Fax Copies to NEW TRUSTCO ****
- Referrals (i.e. > **** G/L) ****
- Large Dollar Notification (>**** ****
21. Investigations
- Inquiries ****
- Adjustments ****
- Inquiries/Adjustments - Third Party ****
22. Account Analysis Distribution
- Daily Reports ****
- Statistical Feeds to Budget Systems ****
- Preliminary Statements ****
- Final Statements ****
23. On-US Return Item Notification (>**** ****
24. On-US Return Items Cleared (Qualified) ****
25. Forgery Claim Processing ****
</TABLE>
**** 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.
A-74
<PAGE> 134
<TABLE>
<CAPTION>
Processing
Standard
----------
<S> <C> <C>
26. Forgery Reimbursement ****
C. CHECK PROCESSING
1. All incoming Checks Processed ****
2. All Deposits Posted ****
3. All Checks Cleared ****
4. MICR Testing ****
5. Mail Deposits Processed ****
6. Availability - NYC Items**** ****
7. Availability - Out of NYC **** ****
8. Availability - Out of NYC **** ****
9. Ready Access Intraday Feeds
- 1st Check Presentment ****
- 2nd Check Presentment ****
- 3rd Check Presentment ****
- Final Totals ****
10. Investigations
- Inquiries ****
- Adjustments ****
- Inquiries/Adjustments - Third Party ****
Source of Receipt-Internal ****
Source of Receipt-External ****
11. Money Desk Reporting
- Preliminary Totals ****
- Final Totals ****
12. M&I Posting File ****
13. AMS Posting File ****
14. Pay Thru Draft Transmission to Clients ****
D. RESEARCH & ADJUSTMENT
1. Archive Retrieval (Urgent) ****
2. Archive Retrieval (Regular) ****
3. Due from Bank Exceptions Resolved ****
</TABLE>
**** 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.
A-75
<PAGE> 135
<TABLE>
<CAPTION>
Processing
Standard
----------
<S> <C> <C>
4. Original Check (On-Site) ****
5. Original Check (Archive) ****
6. Photocopy Requests (Urgent) (Current Only) ****
7. Photocopy Requests (Current) ****
8. Photocopy Requests (Aged) ****
E. INTERNATIONAL PAYING AND RECEIVING
1. CHIPS Payment ($USD)-4PM Receipt ****
2. Foreign Payment (FX)-4PM Receipt ****
3. Telex Processing-5PM Receipt ****
4. Foreign Collection-3PM Receipt ****
5. CHIPS Receive ****
6. Foreign Transfer Receive ****
7. Foreign Drafts (FX)-3PM ****
8. Investigations
- Inquiries ****
- Adjustments ****
- Inquiries/Adjustments - Third Party ****
F. CASH MANAGEMENT - SYRACUSE
1. Partial Account Reconciliation ****
2. Full Account Reconciliation ****
3. Official Account Reconciliation ****
4. Performance Report External ARP ****
5. Performance Report Internal ARP ****
6. Controlled Disbursement Notification - Early ****
7. Controlled Disbursement Notification - Final ****
8. Issue Input Processing ****
9. ARP On-line Inquiry and Transactions
Availability ****
10. Original Check Retrieval (On-Site) ****
11. Original Check Retrieval (Archived) ****
</TABLE>
**** 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.
A-76
<PAGE> 136
<TABLE>
<CAPTION>
Processing
Standard
----------
<S> <C> <C>
12. Signature Verification ****
13. Exception Notification/Referral ****
- Fax Checks to NEW TRUSTCO ****
- Fax all checks > **** to NEW TRUSTCO ****
- NEW TRUSTCO Notification to Chase ****
14. Original Hole Punched Checks ****
15. Mailing Pay Thru Drafts & Statements ****
16. Investigations ****
- Inquiries ****
- Adjustments ****
- Inquiries/Adjustments - Third Party ****
17. Photocopy Requests (Urgent) (Current Only) ****
18. Photocopy Requests (Current) ****
19. Photocopy Requests (Aged) ****
G. EFT
1. All ACH File Processing Deadlines Met ****
2. ACH Returns (Originated) ****
3. ACH Ready Access Intraday File ****
- First File ****
- Last File ****
4. ACH M&I Memo Post File Transmission ****
5. ACH M&I Posting File Transmission ****
6. ACH AMS Posting File Transmission ****
7. ACH Credit Reject Item Notification ****
8. ACH Money Desk Reporting ****
9. ACH Notification of Stop Payment Not
Processed ****
10. ACH Stop Payment set up - Originating Client ****
11. ACH Maximum Dollar Limit Reject Notification ****
12. ACH Non Posted/Return Requests ****
13. ACH Service Bureau Clients
- Existing Relationship ****
- New Relationship ****
</TABLE>
**** 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.
A-77
<PAGE> 137
<TABLE>
<CAPTION>
Processing
Standard
----------
<S> <C> <C>
14. ACH Investigations
- Inquiries ****
- Adjustments ****
- Inquiries/Adjustments - Third Party ****
H. MONEY TRANSFER
1. Wire Transfer Execution ****
2. Ready Access Fed Wire Availability ****
3. NEW TRUSTCO Book Transfer Execution ****
4. Ready Access Wire and Book Transfers ****
5. Investigations
- Inquiry Response ****
- Adjustments ****
- Inquiries/Adjustment - Third Party ****
6. Chase Book Transfer Execution ****
I. OTHER
1. ATM Network Access (Host Availability) ****
2. ATM Settlement ****
3. Private Access Line Access **** ****
4. G/L Update ****
5. Ready Access Availability **** ****
J. NEW TRUSTCO'S RESPONSIBILITY
</TABLE>
NEW TRUSTCO, in its dealings with Chase for Electronic Funds Transfer
(EFT) will follow the operating rules and procedures established by the
National Automated Clearing House (NACHA) and the New York Automated
Clearing House (NYACH).
NOTE: SOME LOAN SERVICES AND DEPOSIT SERVICES STANDARDS ARE IN-
CLUDED DUE TO THE DEPENDENCY ON THE M&I SYSTEMS AND THE
LEVELS WHICH MUST BE ACHIEVED BY A REPLACEMENT SYSTEM.
**** 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.
A-78
<PAGE> 138
ATTACHMENT IV(I)
INFORMATION TECHNOLOGY
PERFORMANCE STANDARDS
<TABLE>
<CAPTION>
CATEGORY STANDARD
<S> <C>
On-Line Availability ****
On-Line Response Time (Average) ****
Print Quality ****
Request of a Tape from Offsite ****
Schedule of New Tape Retention ****
Problem Assignment ****
Change the Batch Schedule ****
Back-Up Disaster Recovery ****
Network Availability ****
Corporate Systems Development ****
Environment
Corporate Systems Production ****
Environment
</TABLE>
**** 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.
A-79
<PAGE> 139
<TABLE>
<CAPTION>
CATEGORY STANDARD
<S> <C>
Tape Delivery to 770 Broadway ****
Problem Notification ****
</TABLE>
Any forms or stationary used by Chase on behalf of NEW TRUSTCO shall be of the
same quality and standard (envelope, paper and print) as that used by UST as
of the Commencement Date.
**** 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.
A-80
<PAGE> 140
DATA CENTER
<TABLE>
<CAPTION>
CATEGORY STANDARD
<S> <C>
Daily Computer Requested Jobs ****
Including Print JCOMD500
JRCSD810 & 815
JGTCUVUS
JGTCD410
JGTCTAXR
Overnight Computer Jobs Including Print ****
Internal Computer Requested Jobs Includ- ****
ing Print
Rapid/User Prod, Computer Requested ****
Jobs Including Print
</TABLE>
On-Line System Availability on Saturday, request notice must be submitted ****
days in advance.
On-Line System Availability on Sunday by mutual consent, with a minimum
guarantee of once **** request notice must be submitted **** days in advance.
In the event of any failure, production systems must be back up and running
within a reasonable timeframe but in any event, not less than Chase's standard
recovery time. Specific timeframes will be jointly determined with Chase as a
result of NEW TRUSTCO's review of Chase's current recovery procedure.
Disaster recovery procedures will within **** of declared disaster provide for
system availability with current data as of the last backup or incremental
backup sent offsite.
Chase and NEW TRUSTCO will mutually agree upon the format and frequency of
system performance reports to be provided by Chase.
**** 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.
A-81
<PAGE> 141
ADMINISTRATION
<TABLE>
<CAPTION>
CATEGORY STANDARD
<S> <C>
Emergency Terminal Definitions in VTAM ****
All Other Terminal Definitions ****
Password Resets ****
Application Restarted ****
Abends Restarted ****
On-Line Response Problems ****
</TABLE>
**** 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.
A-82
<PAGE> 142
VALUATION/PROXY/OUTPUT/COLLECTION AREA
<TABLE>
<CAPTION>
CATEGORY STANDARD
<S> <C>
Promissory Note Rates Held by US Trust ****
Accounts
Annual Federal Reserve Report ****
Annual Federal Reserve Unpriced Holding ****
Report
Historical Prices not on AMS ****
Challenged Prices ****
NEW TRUSTCO issues no vender/broker ****
price available
Proxy Processing ****
Proxy Mailing Report ****
Mailing of Client Statements (RAIDS) ****
Client Statement (RAIDS) Mis-match ****
Report
Client Statement (RAIDS) Monthly Vol- ****
ume Report
Detail Verbal Response (written if re- ****
quested) Regarding Problems on Pricing,
Mailings on Client Statements or Proxies
Detail Verbal Acknowledge (written if re- ****
quested) Regarding Problems on Pricing,
Mailing on Client Statements or Proxies
</TABLE>
**** 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.
A-83
<PAGE> 143
SYSTEMS DEVELOPMENT
<TABLE>
<CAPTION>
CATEGORY STANDARD
<S> <C>
Emergency IMS Terminal Changes ****
Detail Notification of AMS Enhancements ****
Detail Response to Reported On- ****
Line/Client Statement Problems
Detail Response to Reported On-Line/ ****
Statement problems
Project Development ****
Rapid Problems ****
Report of Selected Client Statements ****
(RAIDS) by accounts
Report Level Maintenance Journal ****
SIC Table Report ****
Array Table Report ****
Report Code Report ****
Tracs/Sweep/Cost Lot Compare Report ****
Standardware Table Report ****
</TABLE>
**** 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.
A-84
<PAGE> 144
SCHEDULE B
(to the Services Agreement)
Key Transitioning Personnel
---------------------------
Raymond Berberich (CSD)
Thomas J. O'Day (CSD)
Joseph T. Kinlin (CSD)
Henry Pierron (CSD)
Joseph A. Baratta (CSD)
Robert F. Cardillo (SS&TO)
Glenn A. Windisch (SS&TO)
B-1
<PAGE> 145
SCHEDULE C
(to the Services Agreement)
Additional Charges
------------------
****
****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
<PAGE> 146
****
****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
<PAGE> 147
****
****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
<PAGE> 148
****
****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
<PAGE> 149
****
****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
<PAGE> 150
****
****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
<PAGE> 151
****
****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
<PAGE> 152
****
****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
<PAGE> 153
****
****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
<PAGE> 154
****
****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-10
<PAGE> 155
Attachment 1 to Schedule C
BOOK ENTRY TRANSACTIONS
-----------------------
DTC Purchase (Receive vs. Payment)
DTC Sale (Deliver vs. Payment)
DTC Free Receive
DTC Free Deliver
PTC Purchase (Receive vs. Payment)
PTC Sale (Deliver vs. Payment)
PTC Free Receive
PTC Free Deliver
FRB Purchase (Receive vs. Payment)
FRB Sale (Receive vs. Payment)
FRB Free Receive
FRB Free Deliver
Calls: Book Entry
Reorganization: Book Entry
Redemptions: Book Entry
Book Entry Transfer (DTC Withdrawal)
Fed Wire (Cash Wire & CDE)
Options (Purchases)
Options (Sales)
Money Funds Purchases (Manual Only)
Money Funds Sales (Manual Only)
C-1-1
<PAGE> 156
Attachment 2 to Schedule C
TRANSACTIONS
------------
DTC Purchase (Receive vs. Payment)
DTC Sale (Deliver vs. Payment)
DTC Free Receive
DTC Free Deliver
PTC Purchase (Receive vs. Payment)
PTC Sale (Deliver vs. Payment)
PTC Free Receive
PTC Free Deliver
FRB Purchase (Receive vs. Payment)
FRB Sale (Receive vs. Payment)
FRB Free Receive
FRB Free Deliver
Time Deposit/Record Keeping Purchase (Receive vs. Payment)
Time Deposit/Record Keeping Sale (Deliver vs. Payment)
Time Deposit/Record Keeping Free Receive
Time Deposit/Record Keeping Free Deliver
Physical Purchase (Receive vs. Payment)
Physical Sale (Deliver vs. Payment)
Physical Free Receive
Physical Free Deliver
Calls: Book Entry & Physical
Reorganization: Book Entry & Physical
Redemptions: Book Entry & Physical
Book Entry Transfer (DTC Withdrawal)
Physical Transfer
Fed Wire (Cash Wire & CDE)
Options (Purchases)
Options (Sales)
Money Funds Purchases (Manual Only)
Money Funds Sales (Manual Only)
C-2-1
<PAGE> 157
Attachment 3 to Schedule C
CHASE PREVAILING RATES FOR GLOBAL CUSTODY AS OF COMMENCEMENT DATE
-----------------------------------------------------------------
C-3-1
<PAGE> 158
The Chase Manhattan Bank, N.A.
Chase MetroTech Center
Brooklyn, New York 11245
[CHASE MANHATTAN LOGO]
September 1, 1995
Mr. John Deignan
Executive Vice President
New Trustco
770 Broadway
New York, New York
Dear John:
This letter serves to confirm that the attached global custody fees, as
currently quoted to U.S. Trust Company of N.Y., are consistent with fees quoted
to our most valued customers over the last six months.
Sincerely,
<PAGE> 159
<TABLE>
<CAPTION>
Safekeeping Transaction
Market (BPs) (USD)
- ------------------------------------------------------------------
<S> <C> <C>
**** **** ****
**** **** ****
**** **** ****
**** **** ****
**** **** ****
</TABLE>
**** 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.
<PAGE> 160
Attachment 4 to Schedule C
VOLUME STATISTICS AND OTHER INFORMATION
---------------------------------------
SEE ATTACHED
C-4-1
<PAGE> 161
<TABLE>
<S> <C> <C>
**** **** **** ****
**** **** **** ****
**** **** **** ****
**** **** **** ****
**** **** **** ****
**** **** **** ****
**** **** **** ****
**** **** **** ****
**** **** **** ****
**** **** **** ****
**** **** **** ****
**** **** **** ****
**** **** **** ****
**** **** **** ****
</TABLE>
**** 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.
<PAGE> 162
SCHEDULE D
(to the Services Agreement)
Cost of Living Adjustment
-------------------------
1. DEFINITIONS. For purposes of this Schedule D.
(a) "CPI" shall mean the Consumer Price Index for All Urban Consumers,
New York, Northern New Jersey - Long Island - for the New York, New
Jersey, Connecticut Consolidated Metropolitan Statistical Area, for
All Items (1982-1984 = 100), as published by the Bureau of Labor
Statistics of the U.S. Department of Labor.
(b) "Adjustment Date" shall mean September 1 of each year during the Term
beginning on September 1, 1996.
(c) "Current CPI" shall mean with respect to each Adjustment Date, the
CPI published as final by the Bureau of Labor Statistics for March of
the then current calendar year.
(d) "Base CPI" shall mean the CPI published as final by the Bureau of
Labor Statistics for March of the year immediately preceding the then
current calendar year.
(e) "Net CPI" shall mean, with respect to each Adjustment Date, the
Current CPI for that Adjustment Date minus the Base CPI for that
Adjustment Date.
(f) "CPI Percentage Change" shall mean, with respect to each Adjustment
Date, the Net CPI for that Adjustment Date divided by the Base CPI
for that Adjustment Date.
2. PERSONNEL CHARGE ADJUSTMENT. The FTE rate for additional FTEs not
included in the Fixed Fee, as set forth in Section 5.1(b) of the
Agreement, will be adjusted prospectively, effective as of each
Adjustment Date, by increasing the then current rate by an amount equal
to the CPI Percentage Change for that Adjustment Date multiplied by the
then current FTE rate.
3. INDEX REPLACEMENT. In the event that the Bureau of Labor Statistics stops
publishing or substantially changes the content or format of the CPI, the
Parties will substitute another comparable index published by a mutually
agreeable source; provided, however, that if the change is merely to
redefine the base period to some other period, the Parties will continue
to use the affected index but will, if necessary, convert either the
current or prior level of such index to the same basis as the other by
using an appropriate conversion factor.
D-1
<PAGE> 163
SCHEDULE E
(to the Services Agreement)
Side Letter
-----------
E-1
<PAGE> 164
U.S. TRUST CORPORATION 114 WEST 47TH STREET
NEW YORK, NY 10056-1532
TELEPHONE 212 852-1000
U.S. TRUST
November 18, 1994
The Chase Manhattan Corporation
One Chase Manhattan Plaza
New York, New York 10081
Gentlemen:
The Chase Manhattan Corporation ("Chase") is entering into an Agreement
and Plan of Merger with U.S. Trust Corporation ("UST") under which Chase will,
among other things, acquire certain portions of UST's processing business
through a merger of UST with Chase or one of its subsidiaries (the "Merger").
Certain other assets of UST's business not acquired by Chase will, prior to the
Merger, be transferred by UST to "NEW TRUSTCO."
Chase proposes to provide certain processing and support services to
NEW TRUSTCO and its affiliates under a Services Agreement to be finalized
during the period between the execution and closing of the Merger (the
"Transition Period"). During the Transition Period, Chase will perform certain
transition and implementation activities with the cooperation and assistance of
UST. In addition, the parties will work together to make arrangements for
Chase to obtain the right to use, beginning on the closing date of the Merger,
the third party software currently licensed by UST which is required to support
the part of the UST business to be purchased by Chase and to provide services
to NEW TRUSTCO under the Services Agreement.
This letter sets forth the understanding of the parties with respect to
(i) the sharing of costs incurred by UST in connection with such transition and
implementation activities, and (ii) the sharing of costs of obtaining the
necessary license rights to such third party software.
<PAGE> 165
1. Transition and Implementation Activities.
----------------------------------------
Except as otherwise specified below, each party will bear its own costs
incurred in performing transition and implementation activities.
UST and Chase have prioritized how to make the best use of UST's total
budgeted resources for systems development during the Transition Period as
follows:
(a) first, changes required to meet regulatory
requirements (e.g., T+3) and normal systems
support;
(b) second, work on CIS-2;
(c) third, client-related deliverables (both for
persons/entities who will be Chase customers
after the Merger and persons/entities who will
be NEW TRUSTCO customers after the Merger) and
general maintenance and other non-transition
activities, with the parties to mutually
identify such work (including consideration of
internal and external customer requests) and
decide how to prioritize such work;
(d) fourth, modifications to UST's asset management
system ("AMS") which are required to provide
multibank capabilities; and
(e) fifth, non-multibank transition activities, with
the parties to mutually decide how to prioritize
such work.
The parties will work together and agree how the above work will be scheduled
and managed.
UST will pay for all costs it incurs in performing the work described
in items (a) and (b) above regardless of whether it exceeds UST's total
budgeted resources for system development work.
Except as provided below in this paragraph, UST will pay all costs
incurred in performing the systems development work described in item (c) above
regardless of whether they exceed UST's total budgeted resources for systems
development work. Without limiting the generality of the foregoing, UST will
pay all costs it incurs in
2
<PAGE> 166
performing systems development work (regardless of whether such costs exceed
UST's total budgeted resources for systems development work), if UST
represented to Chase on or before the execution date of the Merger Agreement
(the "Merger Execution Date") that such systems development work would result
in increased revenue for the part of the UST business that is being purchased
by Chase. However, Chase will pay for all direct costs incurred by UST in
performing systems development work that is expected to result in increased
revenue for the part of the UST business that is being purchased by Chase, if
UST did not represent to Chase on or before the Merger Execution Date that such
increased revenue would be realized, provided that Chase will only be
responsible for such costs to the extent that they exceed UST's total budgeted
resources for systems development (after taking into account the budgeted
resources utilized in performing the work in items (a) and (b) above).
Chase will pay 65% of the direct costs incurred by UST in performing
multibank work (i.e., item (d) above) which are in excess of UST's total
budgeted resources for systems development work (after taking into account the
budgeted resources utilized in performing the work described in items (a) - (c)
above).
Chase will pay 100% of the direct costs incurred by UST in performing
non-multibank transition activities (i.e., item (e) above) which are in excess
of UST's total budgeted resources for systems development work (after taking
into account the budgeted resources utilized in performing the work described
in items (a) - (d) above).
As used in this letter agreement, the term "direct costs" shall mean
the salaries and benefits of the UST employees performing systems development
work and the compensation paid to subcontractors hired by UST to perform such
work.
2. Third Party Software Licenses.
-----------------------------
The parties will share equally the first $2 million in Additional Fees
(as defined below), if any, which are required to be paid for third party
software licensed by UST or its subsidiaries as of the closing date of the
Merger in order to:
3
<PAGE> 167
(a) obtain the right for Chase to access, use and obtain support for, at
the UST data center at 770 Broadway and the Chase MetroTech data
center, third party software covered under the NEW TRUSTCO Acquired
Licenses (as defined below) solely for the purpose of (i) providing
services to NEW TRUSTCO under the Services Agreement, and (ii) to the
extent applicable, supporting the UIT Business, the MFS Business and
the IAS Business, as those terms are defined in the Contribution and
Assumption Agreement to be entered into as of the closing date of the
Merger between United States Trust Company of New York ("USTNY") and
NEW TRUSTCO (the "Contribution Agreement"); and
(b) obtain the right for Chase to access, use and obtain support for, at
the UST data center at 770 Broadway and the Chase MetroTech data
center, third party software covered under licenses retained by USTNY
pursuant to the Contribution Agreement solely for the purpose of (i)
supporting the UIT Business, the MFS Business and the IAS Business
(as those terms are defined in the Contribution Agreement), and (ii)
to the extent applicable, providing services to NEW TRUSTCO under the
Services Agreement.
NEW TRUSTCO will be responsible for Additional Fees to the extent that
they exceed $2 million in the aggregate. UST's portion of any Additional Fees
shall be paid as an adjustment to the fees payable under the Service Agreement.
The term "NEW TRUSTCO Acquired Licenses" shall mean those licenses for third
party software which are part of the assets acquired by NEW TRUSTCO pursuant to
the Contribution Agreement.
For purposes of this letter agreement, the term "Additional Fees" shall
include: (i) one-time transfer, upgrade and incremental fees imposed by
licensors of the third party software described above in order for Chase to
obtain the license rights described in items (a) and (b) above; (ii) any such
fees that are imposed on a periodic (e.g., annual, monthly) basis, but only for
the first four years during which such periodic fees are imposed or until the
termination of the Services Agreement, whichever comes first; (iii) License
Termination Fees (as defined below)
4
<PAGE> 168
and (iv) License Termination Credits (as defined below). The parties will
cooperate and use their best reasonable efforts to minimize any Additional
Fees.
The term "Additional Fees" shall not include any incremental amounts
charged by licensors for new versions of a third party software product unless
required by the vendor as a prerequisite for support and transfer of third
party software described above. The term "Additional Fees" shall include
one-time software charges for CPU upgrades associated with the move from 770
Broadway to the Chase MetroTech data center, but shall not include any
subsequent CPU-upgrade charges thereafter; provided, however, that the parties
will during the Transition Period review the apportionment of substantial
one-time CPU upgrade charges associated with moving any of the third party
software described above to the Chase MetroTech data center, if Chase will
obtain benefits from the upgraded CPU license for purposes other than those
described in items (a) and (b) above.
This Section 2 will be reviewed by the parties during the Transition
Period to take account of Chase's use of Chase or UST software other than
Duplicative or non-Duplicative Software which provides equivalent
functionality and which can enable Chase to fulfill its obligations under the
Services Agreement and reduce the level of Additional Fees.
The term "Duplicative Software" shall mean all third party software
described in items (a) and (b) above for which Chase currently holds a license
for its Chase MetroTech data center. Unless otherwise agreed by the parties,
Duplicative Software used by Chase in providing services to NEW TRUSTCO under
the Services Agreement will be licensed under the existing licenses held by
Chase (as licenses may be amended to permit Chase to use such Duplicative
Software to provide such services to NEW TRUSTCO), and the licenses held by UST
for the Duplicative Software will be cancelled, with any termination fees
imposed by the vendor in connection with the cancellation of such licenses
("License Termination Fees") to be included in Additional Fees. The total
amount of any reductions in UST licensing costs resulting from any such
cancellation of Duplicative Licenses shall be multiplied
5
<PAGE> 169
by four and the resulting amount ("License Termination Credits") shall be
credited against, and deducted from, any Additional Fees.
* * * * *
Please acknowledge your agreement with the terms of this letter
agreement by signing and dating this letter in the spaces provided below.
Sincerely,
/s/ Jeffrey S. Maurer
Jeffrey S. Maurer,
President
ACCEPTED AND AGREED:
The Chase Manhattan Corporation
By: Ronald C. Mayer
-----------------------------------
Title: SECRETARY
--------------------------------
Date: NOVEMBER 18, 1994
---------------------------------
6
<PAGE> 170
SCHEDULE F
(to the Services Agreement)
Side Letter Supplement
----------------------
E-2
<PAGE> 171
September 1, 1995
The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
New York, NY 10081
Gentlemen:
This letter agreement supplements the letter agreement between The
Chase Manhattan Corporation ("CMC") and U.S. Trust Corporation ("UST"), dated
November 18, 1994 (the "Side Letter"), regarding the implementation of the
Services Agreement, between United States Trust Company of New York and New
U.S. Trust Company of New York ("New Trustco"), of even date herewith (the
"Services Agreement"). New Trustco and The Chase Manhattan Bank, N.A.
("Chase") hereby assume all obligations of UST and CMC, respectively, under
part 2 (pages 3-6) of the Side Letter, and release CMC and UST from all
obligations thereunder.
This letter sets forth the understanding of the parties hereto with
respect to (i) the payment of certain amounts pursuant to agreements with
**** , (ii) reimbursements to Chase,
(iii) adjustments, and (iv) licenses in respect of New Trustco Affiliates (as
defined in the Services Agreement).
1. Reimbursement of Payments to **** **** ; Credit Balance.
Notwithstanding any provision to the contrary in the Side Letter, New Trustco
shall reimburse Chase for the remaining balance due on the ****
amount payable to **** on June 30, 1999, pursuant to Section 4 of the
Payment and Processing Terms Addendum, between Chase and **** dated as of
June 30, 1995 (the "Credit Balance"); provided, however, that in the event that
any such amount paid by New Trustco is later applied for the benefit of Chase
or its affiliates as a credit toward the procurement of licenses, UMF or
processing grants, Chase shall reimburse New Trustco for the amount of such
credit within thirty (30) days after the application of such credit.
****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.
<PAGE> 172
2. REIMBURSEMENTS TO CHASE. Schedule A hereto represents the results
of the parties' calculation of total Additional Fees to be paid under the Side
Letter to third party software licensors listed on such Schedule ("Total
Fees"). Chase shall pay $1,000,000 of such Total Fees ("Chase's Share") and
New Trustco shall pay $1,998,061 of such Total Fees ("New Trustco's Share").
Payments to licensors shall be made by Chase, and New Trustco shall reimburse
Chase until the entire New Trustco Share has been paid to Chase. The initial
payment to Chase of $1,532,997 shall be paid, upon prior invoice, on September
15, 1995. The remaining payments to Chase under this Paragraph of $116,266 each
shall be paid, upon prior invoice, on March 31, 1996, 1997, 1998 and 1999.
3. ADJUSTMENTS. Chase and New Trustco acknowledge that the
payments to be made by New Trustco pursuant to Paragraph 2 do not include
payments of Additional Fees for certain third party software licensors or
licensed products included on Schedule A. Upon negotiation with such third
party software licensors, all Additional Fees relating to those licensors or
licensed products shall be added to New Trustco's Share.
The parties agree that (i) in the event third party software licensors
or licensed products were inadvertently omitted from or included in those to be
included in the calculation of amounts due under the Side Letter, or (ii) in
the event of mistakes in calculation in the amounts due under the Side Letter,
the parties will equitably adjust the New Trustco Share as appropriate. All
adjustments will be identified and agreed to by the parties no later than
thirty (30) days after the completion of the migration of the Data Center to
MetroTech. There will be no further adjustments with respect to items not
identified by the parties by the end of such period.
4. LICENSES IN RESPECT OF NEW TRUSTCO AFFILIATES. If Chase becomes
obligated to pay additional fees (including taxes) to third party software
licensors due to New Trustco adding one or more Affiliates, the business of
which is to be processed under the Services Agreement, then New Trustco will
reimburse Chase for all such amounts paid by Chase to such third party software
licensors during the period that Chase performs such Services. With respect to
any relevant negotiations with third party software licensors pursuant to
Paragraph 3 and this Paragraph 4, New Trustco shall be entitled to participate
in such negotiations.
* * * * *
2
<PAGE> 173
Please acknowledge your agreement with the terms of this letter
agreement by signing and dating this letter in the spaces provided below.
Sincerely,
New U.S. Trust Company of New York
by /s/ Jeffrey S. Maurer
------------------------------------
Jeffrey S. Maurer,
President
ACCEPTED AND AGREED:
The Chase Manhattan Bank, N.A.
by /s/ Ronald Mayer
-------------------------------
Title: Secretary
------------------------
Date: November 18, 1994
-------------------------
3
<PAGE> 174
EXHIBIT A
****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.
Page 1
<PAGE> 175
****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.
Page 2
<PAGE> 176
****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.
Page 3
<PAGE> 177
****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.
Page 4
<PAGE> 178
****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.
Page 5
<PAGE> 179
****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.
Page 6
<PAGE> 180
****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.
Page 7
<PAGE> 181
****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.
Page 8
<PAGE> 182
SCHEDULE G
(to the Services Agreement)
Reports
-------
<TABLE>
<CAPTION>
Name of the report Job # Frequency
- ------------------ ----- ---------
<S> <C> <C>
Standardware Table Report Upon Request
Unpriced Federal Reserve Report JTRPU281 Daily 1/1 thru 1/10 or prior
business day
Anticipated Proxy Report Weekly (Monday)
Proxy Mailing Volume Report Weekly (Monday)
Client Statement Volume Report Monthly (15th of month)
SIC Table Report Quarterly at month end
Array Table Report Quarterly at month end
Report Code Report Quarterly at month end
Tracs/Sweep/Cost Lot Compare Quarterly at month end
Report
BUDGET CAPTURE VOLUME MONTHLY
STATISTICAL DATA
Foreign Holdings RAPID download Monthly, as of the close of
Lotus Format business after the last business day
(HLDS695.PRN)
Foreign Transactions RAPID download Monthly, as of the close of
LOTUS Format business after the last business day
(TRAN695.PRN)
</TABLE>
G-1
<PAGE> 183
<TABLE>
<CAPTION>
Name of the report Job# Frequency
- ------------------ ---- ---------
<S> <C>
Foreign Asset Value (USD) by country Monthly
& by account
Foreign PSRD Transactions by country Monthly
& by account
Outstanding Tax Reclaim Due UST Monthly
(New Trustco)
Order Room Sale Falls Monthly
</TABLE>
G-2
<PAGE> 184
SCHEDULE H
(to the Services Agreement)
FACAM Joint Venture
-------------------
****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.
H-1
<PAGE> 185
SCHEDULE I
(to the Services Agreement)
FTE Letter Agreement
--------------------
I-1
<PAGE> 186
The Chase Manhattan Bank, N.A.
3 MetroTech Center
Brooklyn, New York 11245
July 19, 1995
[Chase logo]
Mr. John Deignan
Executive Vice President
U.S. Trust Company
770 Broadway
New York, New York 10003-9598
Mr. Deignan:
The following details the agreements reached between U.S. Trust and Chase in
relation to Chase's obligations, as defined in the "Service Agreement", to
provide U.S. Trust with support of the AMS, CTAS and CIS 2 systems.
****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.
<PAGE> 187
****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.
<PAGE> 188
Please acknowledge your agreement with the terms of this letter by signing and
dating this letter in the spaces provided below.
/s/ Kamel Zaki
Kamel Zaki
Vice President
Chase Manhattan Bank, N.A.
/s/ John M. Deignan
Accepted and Agreed:
By: John M. Deignan
Title: Executive Vice President
Date: July 27, 1995
cc: Mr. Joel Abramowitz, UST
Mr. Ray Berbertch, UST
Mr. Steve Wolinsky, Chase
Mr. Donald Ventre, Chase
Mr. Paula Sausville, Chase
<PAGE> 189
SCHEDULE J
(to the Services Agreement)
Termination/Expiration Fee
--------------------------
-iv-
<PAGE> 190
SCHEDULE: J
<TABLE>
<CAPTION>
MONTHS INTO TERMINATION
CONTRACT* EXPIRATION FEES
<S> <C>
1 $8,916,667
2 $8,833,333
3 $8,750,000
4 $8,666,667
5 $8,583,333
6 $8,500,000
7 $8,416,667
8 $8,333,333
9 $8,250,000
10 $8,166,667
11 $8,083,333
12 $8,000,000
13 $7,916,667
14 $7,833,333
15 $7,750,000
16 $7,666,667
17 $7,583,333
18 $7,500,000
19 $7,416,667
20 $7,333,333
21 $7,250,000
22 $7,166,667
23 $7,083,333
24 $7,000,000
25 $6,916,667
26 $6,833,333
27 $6,750,000
28 $6,666,667
29 $6,583,333
</TABLE>
* Months into contract = 1 means termination during calendar
month September, 1995.
<PAGE> 191
<TABLE>
<CAPTION>
MONTHS INTO TERMINATION
CONTRACT* EXPIRATION FEES
<S> <C>
30 $6,500,000
31 $6,416,667
32 $6,333,333
33 $6,250,000
34 $6,166,667
35 $6,083,333
36 $6,000,000
37 $5,875,000
38 $5,750,000
39 $5,625,000
40 $5,500,000
41 $5,375,000
42 $5,250,000
43 $5,125,000
44 $5,000,000
45 $4,785,000
46 $4,750,000
47 $4,625,000
48 $4,500,000
49 $4,375,000
50 $4,250,000
51 $4,125,000
52 $4,000,000
53 $3,875,000
54 $3,750,000
55 $3,625,000
56 $3,500,000
57 $3,375,000
58 $3,250,000
59 $3,125,000
60 $3,000,000
</TABLE>
* Months into contract = 1 means termination during calendar
month September, 1995.
<PAGE> 192
<TABLE>
<CAPTION>
MONTHS INTO TERMINATION
CONTRACT* EXPIRATION FEES
<S> <C>
61 $2,875,000
62 $2,750,000
63 $2,625,000
64 $2,500,000
65 $2,375,000
66 $2,250,000
67 $2,125,000
68 $2,000,000
69 $1,875,000
70 $1,750,000
71 $1,625,000
72 $1,500,000
73 $1,375,000
74 $1,250,000
75 $1,125,000
76 $1,000,000
77 $875,000
78 $750,000
69 $625,000
80 $500,000
81 $375,000
82 $250,000
83 $125,000
84 $0
</TABLE>
* Months into contract = 1 means termination during calendar
month September, 1995.
<PAGE> 193
SCHEDULE K
CERTIFICATE
The undersigned parties to that certain Services Agreement dated
September 1, 1995 between The Chase Manhattan Bank, N.A. and New U.S. Trust
Company of New York (the "Agreement") do hereby certify to one another that
the Procedures Manual attached hereto as Attachment A represents the Procedures
Manual referred to in Section 3.4(a) of the Agreement in existence as of the
Commencement Date (as defined in the Agreement). This Certificate is made by
each party with the intention that the other party shall rely upon it.
IN WITNESS WHEREOF, the undersigned have executed this Certificate this
1st day of September, 1995.
THE CHASE MANHATTAN BANK, N.A.
By:
-------------------------------
NEW U.S. TRUST COMPANY
OF NEW YORK
By:
-------------------------------
K-1
<PAGE> 1
EXHIBIT 10.1
SUBLEASE
AGREEMENT OF SUBLEASE, made as of the 1st day of September, 1995, by
and between UNITED STATES TRUST COMPANY OF NEW YORK, a New York State chartered
bank and trust company to be merged on or after the date hereof with and into
The Chase Manhattan Bank (National Association), a national banking associated
domiciled in New York, having an office at 1 Chase Manhattan Plaza, New York,
New York 10081 (hereinafter referred to as "Sublessor"), and NEW U.S. TRUST
COMPANY OF NEW YORK, a New York State chartered bank and trust company to be
renamed United States Trust Company of New York on or after the date Sublessor
is merged with and into The Chase Manhattan Bank (National Association), having
an office at 114 West 47th Street, New York, New York 10036-1532 (hereinafter
referred to as "Sublessee").
WITNESSETH:
WHEREAS, Sublessor is presently the tenant under that certain
agreement of lease dated as of June 20, 1980 with New York Equities, Inc. as
amended and modified by agreements dated as of December 22, 1980, April 20,
1981, July 1, 1981, May 31, 1984, May 15, 1986, December 8, 1988 and June 1,
1990 (such agreement of lease, as so amended and modified and by any other
amendments thereto being herein called the "Prime Lease"), covering certain
space (the "Sublessor's Premises") in the building known as 770 Broadway, New
York, New York (the "Building"), and New York Equities Company ("Prime Lessor")
is the successor as Prime Lessor to New York Equities, Inc.; and
WHEREAS, Sublessee desires to sublease from Sublessor and Sublessor is
willing to sublease to Sublessee portions of the Sublessor's Premises, which
portions are located on the 7th,
<PAGE> 2
8th, 9th, 10th and 13th floors of the Building, approximately as shown on
Exhibits A-1 through A-5 respectively, attached hereto and made a part hereof
(the "Subleased Premises");
NOW, THEREFORE, in consideration of the mutual covenants contained,
the parties agree as follows:
1. Sublessor does hereby lease to Sublessee and Sublessee does
hire and take from Sublessor the following Subleased Premises for the terms
hereinafter described:
Approximately 16,780 rentable square feet on the 7th floor for
a term commencing September 1, 1995 and terminating when
Sublessee vacates said space but in no event later than
February 28, 1996; and
Approximately 9,540 rentable square feet on the 8th floor for
a term commencing on September 1, 1995 and terminating when
Sublessee vacates said space but in no event later than
February 28, 1996;
Approximately 18,883 rentable square feet on the 10th floor
for a term commencing on September 1, 1995 and terminating as
to approximately 11,851 rentable square feet when Sublessee
vacates said space but in no event later than October 6, 1995
and terminating as to the balance of approximately 7032
rentable square feet when Sublessee vacates said space but in
no event later than February 28, 1996. Sublessee acknowledges
that it is crucial to Sublessor's occupancy of the 10th floor
that Sublessee vacates the 11,851 rentable square feet as soon
as possible after September 1, 1995. Sublessee agrees to use
its best efforts to vacate said space as soon after September
1, 1995 as possible. It is understood that
-2-
<PAGE> 3
Sublessor currently occupies space on the 13th floor and that
Sublessor must vacate this space in order to enable Sublessee
to occupy same and to vacate its Space in the Building.
Sublessor shall leave the 13th floor in broom clean condition
as that term is herewith defined.
The entire 9th floor (excluding the cafeteria) in various
segments starting at 25,869 rentable square feet and
increasing to 31,393 rentable square feet for a term
commencing on various dates on and after September 1, 1995 and
ending on December 31, 1996; and
The 13th floor in various segments starting at 18,768 rentable
square feet and increasing to 62,600 rentable square feet for
a term commencing on various dates between September 1, 1995
and February 28, 1996 and ending on June 30, 2000. Sublessee
shall have the right to request consent from the Prime Lessor
to extend the Sublease as to the 13th floor only until June 3,
2005. If Prime Lessor consents to the extension, Sublessor
shall extend the Sublease as to the 13th floor only up to June
30, 2005. If Prime Lessor fails to approve the request, the
Sublease shall terminate on June 30, 2000.
(unless sooner terminated or extended pursuant to the terms hereof.)
-3-
<PAGE> 4
Notwithstanding the above termination date, Sublessee and Sublessor
agree to use their best efforts to vacate the Subleased Premises in accordance
with the Restack Schedule attached hereto as Exhibit B.
The parties acknowledge that (i) it is important to Sublessor that
timely possession of all but the 9th and 13th floor Subleased Premises be
delivered to Sublessor by the dates hereinabove set forth, and (ii) that such
dates may be extended by any delay by Sublessor in giving broom-clean
possession of various space to Sublessee with certain work done therein (as
elsewhere provided in this Sublease). Broom clean condition shall be defined
for all purposes in this Sublease as all personal property, furniture and
fixtures to be removed and the space shall be swept clean of all debris in all
areas. Telecommunication cabling will be removed from the furniture systems,
neatly coiled and laid on the floor No telecommunication cabling should be cut
or removed from the premises. The parties therefore agree as follows:
a. If Sublessee fails to vacate and surrender possession
to Sublessor of any such space by February 28, 1996 (as such date may have been
extended by the terms hereof), then Sublessee shall pay to Sublessor "Fixed
Annual Rent" for any space not timely surrendered at three (3) times the rate
set forth in Paragraph 4 hereof for said space (but not including the
$1,160,000 per annum portion of Fixed Annual Rents), until the date when
possession of such space is so surrendered to Sublessor. Notwithstanding
anything to the contrary contained herein, in the event Sublessor fails to
timely vacate the 13th floor in accordance with Exhibit B, the February 28,
1996 expiration date shall be extended one day for each day of delay by
Sublessor. And
-4-
<PAGE> 5
b. If for any reason (except delay caused by Sublessor)
Sublessee shall fail to vacate and surrender possession to Sublessor of all but
the 9th floor and 13th floor portions of the Subleased Premises on or before
June 30, 1996, then Sublessee hereby agrees that, subject to any extensions as
may be granted by Sublessor, or any delays resulting from acts or omissions of
Sublessor, then, and in such event, Sublessee hereby appears and consents to
the jurisdiction of the Civil Court of the City of New York, New York County in
any summary proceeding commenced thereafter by Sublessor in order to regain
lawful possession of all but the 9th and 13th floor premises demised hereunder
and Sublessee hereby consents to the entry of a final judgment of possession
only in favor of Sublessor in such proceeding. Additionally, Sublessee agrees
(i) to pay the reasonable legal fees of Sublessor for any such summary
proceeding, and (ii) to pay to Sublessor the actual and consequential damages
caused by any failure of Sublessee to surrender possession of said Subleased
Premises to Sublessor on or before December 31, 1996.
2. The parties agree that the rentable square foot area of the
Subleased Premises on the Commencement Date shall be deemed to be 89,840 square
feet, which the parties agree is comprised of the following:
<TABLE>
<CAPTION>
Location Rentable Square Feet
-------- --------------------
<S> <C>
7th floor 16,780
8th floor 9,540
9th floor 25,869
10th floor 18,883
13th floor 18,768
</TABLE>
3. Sublessee shall use and occupy the Subleased Premises only for
such purposes and to the extent and at the locations permitted under the Prime
Lease, and for no other purpose.
4. Sublessee shall pay to the Sublessor fixed annual rent
(exclusive of electricity) at the same rate(s) as payable by Sublessor to the
Prime Lessor under the Prime Lease for the space
-5-
<PAGE> 6
from time to time constituting the Subleased Premises hereunder plus the sum of
$1,160,000(1) per annum ("Fixed Annual Rent"). The $1,160,000 per annum shall
be paid for the entire term of the Sublease but not including any renewal or
extension beyond June 30, 2000. Notwithstanding anything to the contrary
contained herein for the first 16 months of the term of the Sublease, Sublessee
will pay to Sublessor fixed rent for the 13th floor computed as if Sublessee
occupied the 8th floor, using the square footage and rental rates for the 8th
floor. Commencing on January 1, 1997, the fixed rent for the 13th floor will
be computed on the basis of the square footage and rent being paid by Sublessor
to Prime Lessor for the 13th floor.
Sublessee agrees to pay said Fixed Annual Rent in equal monthly
installments, in advance, on the first day of each month during the term of
this Sublease, at the office of the Sublessor. All costs, charges and
expenses which Sublessee assumes, agrees or is obligated to pay to Sublessor
pursuant to this Sublease shall be deemed additional rent, and in the event of
nonpayment, after notice and demand, Sublessor shall have all the rights and
remedies with respect thereto as are provided for in case of nonpayment of
rent. Sublessee covenants to pay the rent, additional rents and any
adjustments of rent as in this Sublease provided, when due, without any setoff
or deduction whatsoever, except as may otherwise be provided herein, and
without notice or demand therefor.
5. Sublessee shall pay as additional rent to Sublessor, at the
offices of Sublessor as aforesaid, promptly as due and payable under the Prime
Lease and upon written notice of the amount thereof, Sublessee's share (i.e.,
for each of the subleased floors) of any tax and operating expense or other
type of escalation additional rent due to Prime Lessor under the Prime Lease
- ----------------------------------
(1) The $1,160,000 shall be reduced by the amount equal to the New York City
Commercial Rent Tax (CRT) payable thereon.
-6-
<PAGE> 7
and properly allocable to those spaces. It is the intention of the parties
that rents and other occupancy costs will be payable by Sublessee hereunder on
a pass-through basis (i.e., at Sublessor's rental rates and costs for the
Subleased Premises.)
Sublessor shall furnish Sublessee with statements showing the
computation of the additional rent payments due hereunder, which statements
shall be accompanied by a copy of the relevant Prime Lessor statement to
Sublessor for the additional rent due under the Prime Lease. Sublessee shall
not be bound by any agreement now or hereafter made between Sublessor and the
Prime Lessor under the Prime Lease with respect to the fixed annual rents or
tax or operating expense escalation obligation thereunder, unless Sublessee has
approved such agreement in advance, in writing. Sublessee's obligation to make
the aforesaid payments shall survive the expiration or sooner termination of
the term of this Sublease.
6. Sublessee will purchase and receive electricity for the 13th
floor Subleased Premises as a direct Con Edison customer. Sublessor will
redistribute electricity to the 7th, 8th, 9th, and 10th floors Subleased
Premises on a rent inclusion basis. For such redistributed electricity,
Sublessee shall pay to Sublessor the "Sublessor's Cost" (as hereinafter
defined). Sublessor's Cost for such redistributed electricity shall be equal
to the result obtained by multiplying Sublessee's electricity consumption
(i.e., energy and demand) for the relevant billing period (based on survey), by
the public utility rate schedule pursuant to which Sublessor purchased
electricity for the Subleased Premises for the relevant billing period, plus
all taxes and other charges imposed thereon. There shall be added to the
foregoing total of Sublessor's Cost a sum equal to Sublessee's share of
Sublessor's out-of-pocket cost for its electrical consultant.
Rent Inclusion: If and so long as Sublessor provides
electricity to Subleased Premises on a rent inclusion basis, Sublessee agrees:
-7-
<PAGE> 8
(1). The fixed annual rent shall be increased by
the amount of the Electricity Rent Inclusion Factor ("ERIF"), as hereinafter
defined. Sublessee acknowledges and agrees (i) that the fixed annual rent
hereinabove set forth in this Sublease does not yet, but is to include an ERIF
to compensate Sublessor for its redistribution of electric current as an
additional service; and (ii) that such ERIF, which is a portion of the fixed
annual rent, shall be subject to periodic adjustments as herein provided.
(2). The ERIF, subject to change based on a survey
or on rate changes as hereinafter provided, shall be equal to $2.25 per
rentable square foot per year. If after the start of the relevant billing
period, the cost to Sublessor of electricity shall be increased or decreased,
by virtue of change in Sublessor's electric rates, charges, fuel adjustment or
service classifications, or by taxes or charges of any kind imposed thereon, or
for any other such reason, then the ERIF shall be redetermined, effective as of
the date of such change in rates, etc., by Sublessor's electrical consultant,
in accordance with the provisions hereof and so as to reflect such change in
cost.
(3). The parties agree that a reputable,
independent electrical consultant, selected by Sublessor ("Sublessor's
electrical consultant") may by survey determine an estimate of Sublessee's
demand and energy in order to calculate the ERIF in accordance with this
Article, and that Sublessor's electrical consultant may from time to time make
surveys in the Subleased Premises of the electrical equipment and fixtures and
the use of current in and for such space.
Pending the results of any initial survey and
determination to be made by Sublessor's consultant, as herein provided,
Sublessee shall pay to Sublessor an ERIF at the rate of $2.25 per rentable
square foot per year as aforesaid (which ERIF shall thereafter be changed
-8-
<PAGE> 9
by increases or decreases in Sublessor's cost due to rate changes (as
aforedescribed) or based on a survey and computations as herein provided, for
any portion of the Subleased Premises receiving electricity on a rent inclusion
basis. The ERIF shall be adjusted in accordance with surveys and
determinations made by Sublessor's electrical consultant retroactive to the
date of each such survey.
The parties understand and agree that in any survey
of Sublessee's electricity consumption in and for the Subleased Premises, the
consultant's survey results shall be calculated to reflect a proper demand
(diversity) factor. If and so long as the 9th floor Subleased Premises shall
remain unoccupied and not used (except on an emergency basis) then Sublessee
shall pay to Sublessor, during any such time, an electricity charge equal to
the so-called minimum rate then charged by Con Edison.
B. General Conditions: Determination(s) by Sublessor's
electrical consultant shall be binding and conclusive on Sublessor and on
Sublessee from and after the delivery of copies of such determinations to
Sublessor and Sublessee, unless, within ninety (90) days after delivery
thereof, Sublessee disputes the determination(s). If Sublessee so disputes the
determination(s), it shall, at its own expense, obtain from a reputable,
independent electrical consultant its own determination(s) in accordance with
the provisions of this Article. Sublessee's consultant and Sublessor's
consultant then shall seek to agree. If they cannot within thirty (30) days,
they shall choose a third reputable electrical consultant, whose cost shall be
shared equally by the parties, to make similar determinations, which shall be
controlling. (If they cannot agree on such third consultant within ten (10)
days, then either party may apply to the Supreme Court of the County of New
York for such appointment.) However, pending such controlling determination,
Sublessee shall pay to Sublessor for the electricity consumed in and
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<PAGE> 10
for the Subleased Premises, in accordance with the determinations of
Sublessor's electrical consultant. If the controlling determinations differ
from the determinations of the Sublessor's electrical consultant, then the
parties shall promptly make adjustment for any deficiency owed by Sublessee or
overage paid by Sublessee.
C. Sublessor shall not be liable to Sublessee for any
loss or damage or expense which Sublessee may sustain or incur if either the
quantity or character of electric service is changed or is no longer available
or suitable for Sublessee's requirements, except if such loss, damage or
expense is occasioned by the negligence or willful misconduct of Sublessor or
its agents or employees. Sublessee covenants and agrees that at no time will
its use of electric current exceed the capacity of existing feeders to the
Building or the risers or wiring installation.
7. In the event that the Prime Lessor shall charge Sublessor for
water charges for water provided by Prime Lessor to the Subleased Premises or
for overtime heat or air conditioning or elevator service, or for any other
services, under the Prime Lease, then Sublessee agrees to pay to Sublessor, as
additional rent hereunder, or, at Sublessor's option, pay same directly to
Prime Lessor, all of such charges attributable to Sublessee's operation and use
of the Subleased Premises. Sublessor makes no representation as to the
availability of or the cost of such services.
8. A. The parties acknowledge that Sublessee presently
occupies the Subleased Premises. Sublessee acknowledges that it has read and
examined the Prime Lease and is fully familiar with all of the terms, covenants
and conditions on the Sublessor's part to be performed thereunder, and subject
to the express provisions of this Sublease, all of the terms, covenants and
conditions of the Prime Lease are incorporated herein as if set forth at length
except to the extent
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<PAGE> 11
that they are inapplicable to, inconsistent with or modified by the provisions
of this Sublease; those applying to the Prime Lessor therein shall apply to the
Sublessor and those applying to Tenant therein shall apply to Sublessee and,
unless the context otherwise requires, references to the Demised Premises shall
be deemed to refer to the Subleased Premises and references to the Lease shall
be deemed to refer to this Sublease, except that the following articles and
portions of the Prime Lease shall not be deemed a part of this Sublease: In
the lease dated as of June 20, 1980, Article 1 up to the section thereof
entitled "Escalation Additional Rent," which shall be included in its entirety
with the exception of subsection (h) thereof; the second and third paragraphs
of Article 7; Article 11, except for the first paragraph thereof; Article 12
except for the first paragraph of new Article 12 of the lease as set forth in
Section 2 of the as of April 20, 1981 Second Amendment to lease; beginning with
the section entitled "Name of Building"; Article 23; the second paragraph of
Article 28 (appearing at the top of page 23); Articles 29 (but see the first
paragraph of Article 13 of this Sublease), 32, 34, 35, 36, and 37, the
interpretive memorandum and Exhibit A; The entire December 22, 1980 amendment
to lease; The entire April 20, 1981 Second Amendment to lease, (except as
described above); the entire July 1, 1981 Third, May 31, 1984 Fourth, May 15,
1986 Fifth, December 8, 1988 Sixth and June 1, 1990 Seventh amendments to
lease.
B. Sublessee shall not take or omit to take any action
which action or omission shall violate any provision of the Prime Lease or
which shall or might by notice or the passage of time or otherwise give Prime
Lessor the right to terminate the Prime Lease.
Sublessee does hereby assume and agree to be bound by and
perform all of the terms, covenants and conditions on Sublessor's part to be
performed under the Prime Lease as
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<PAGE> 12
the same affect the Subleased premises including, without limitation providing
insurance as set forth therein, and naming Sublessor and Prime Lessor as an
additional insured.
9. In the event Sublessee shall default beyond any applicable
notice and/or grace period in the full performance of any of the terms,
covenants and conditions on its part to be performed under this Sublease, then
Sublessor shall have the same rights and remedies with respect to such default
as are given to Prime Lessor under the Prime Lease with respect to defaults by
Sublessor, as tenant, under the Prime Lease.
Notwithstanding the foregoing, this Sublease is separate from and
subordinate to the Prime Lease. Anything contained in any provision of this
Sublease to the contrary notwithstanding, Sublessee agrees, with respect to the
Subleased Premises, to comply with and remedy any default within the period
allowed to Sublessor as tenant under the Prime Lease, even if such time period
is shorter than the period otherwise allowed in the Prime Lease, due to the
fact that notice of default from Sublessor to Sublessee is given after the
corresponding notice of default from Prime Lessor to Sublessor. Sublessor
agrees to forward to Sublessee at the address indicated above and at the
Subleased Premises, immediately upon receipt thereof by Sublessor, a copy of
each such notice of default received by Sublessor in its capacity as tenant
under the Prime Lease. Sublessee agrees to forward to Sublessor, immediately
upon receipt thereof, copies of any such notices received by Sublessee from
Prime Lessor or from any governmental authorities.
10. Neither Sublessor nor Sublessor's agents have made any
representations or promises with respect to the physical condition of the
Building or the Subleased Premises, or with respect to taxes, operating
expenses or any other matter affecting the Subleased Premises and/or the
Building, or this transaction, other than as expressly set forth herein.
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<PAGE> 13
Sublessee hereby expressly acknowledges that it has inspected the
Subleased Premises and is fully familiar with the physical condition thereof,
and agrees to take the same "as is". Sublessee acknowledges that Sublessor
shall have no obligation to do any work in and to the Subleased Premises, or
incur any expense in connection with said work, in order to make them suitable
and ready for occupancy and use by the Sublessee, except that Sublessee shall
pay all costs incurred in connection with demising the 9th floor premises in
accordance with the New York City Building and Fire Codes applicable to a
multi-tenanted floor. Said work must be completed on or before October 15,
1995 and if said work is not completed by that date, Sublessor shall have the
right, but not the obligation to complete said work and bill the cost of said
work together with reasonable overhead costs (including reasonable legal fees)
to Sublessee as Additional Rent. Sublessee will diligently seek to obtain sign
offs from the appropriate City Agencies even if this goes beyond October 15,
1995. Notwithstanding the foregoing, Sublessor and Sublessee acknowledge that
a wall has been built on the 7th floor separating Corporate Trust and Unit
Trust and another wall will be built on the 10th floor.
11. Sublessee shall not make or permit the making of any
alterations, decorations, installments, additions or improvements in or to the
Subleased Premises without Sublessor's prior written consent, which consent
shall not be unreasonably withheld or delayed, and any necessary prior written
consent of Prime Lessor in accordance with the Prime Lease. Sublessee agrees
to pay all costs and expenses in connection with obtaining such consent and in
making such alterations, decorations, installments, additions or improvements.
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<PAGE> 14
12. This Sublease is made pursuant to Article 11 of the Prime
Lease. Sublessee agrees to immediately notify Prime Lessor of this Sublease
and promptly to advise Sublessor of any and all action taken by Prime Lessor
pursuant to said notification. The parties hereto agree that if consent is
required pursuant to the Prime Lease, both parties will diligently pursue the
attaining of said consent.
13. Sublessee shall be entitled to receive all services and
repairs to be provided to Sublessor under the Prime Lease for the Subleased
Premises and the Building. Sublessee shall look solely to Prime Lessor for all
such services and repairs and shall not, under any circumstances, seek or
require Sublessor to perform any of such services or repairs, nor shall
Sublessee make any claim upon Sublessor for any damages which may arise by
reason of the default of Prime Lessor under the Prime Lease or Prime Lessor's
negligence, whether by omission or commission. No default by Prime Lessor
under the Prime Lease shall excuse Sublessee from the performance of any of its
obligations to be performed under this Sublease or entitle Sublessee to
terminate this Sublease, or to any reduction in or abatement of any of the
rents provided for in this Sublease, unless, and only to the extent that,
Sublessor shall be entitled to be excused from the performance of a
corresponding obligation as the tenant under the Prime Lease or shall be
entitled to a reduction in or abatement of any of the rents provided for in the
Prime Lease with respect to the Subleased Premises.
In furtherance of the foregoing, Sublessee does, to the extent
permitted by law, and except for the negligence or intentional act of
Sublessor, hereby waive any cause of action and any right to bring an action
against Sublessor by reason of any act or omission of Prime Lessor under the
Prime Lease. Sublessor agrees to cooperate with Sublessee, at Sublessee's sole
cost and expense, in the bringing of any action, proceeding or suit against
Prime Lessor by Sublessee,
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<PAGE> 15
in Sublessor's name, if required, or otherwise, in the event of a default by
Prime Lessor in fulfilling its obligations under the Prime Lease with respect
to or affecting the Subleased Premises; provided however, that if space demised
under the Prime Lease which is not within the Subleased Premises is also
covered or affected, then Sublessor and Sublessee each agree to be responsible
for its proportionate share of the costs and expenses required to bring such
action, proceeding or suit against Prime Lessor, and Sublessor and Sublessee
shall each receive its proportionate share of any damages, or rent credit,
recovered by Sublessor against Prime Lessor.
Sublessee acknowledges and agrees that Prime Lessor does not provide
cleaning service for the Sublessor's Premises under the Prime Lease. Sublessor
shall provide cleaning, as well as certain other services, to Sublessee, at
Sublessee's cost pursuant to the terms of a Services Agreement attached hereto
as Exhibit C.
14. If the Subleased Premises shall be damaged by fire or other
cause under circumstances in which the Prime Lessor is required to make repairs
pursuant to the Prime Lease, the sole obligation of Sublessor shall be to use
best efforts to cause the obligations of the Prime Lease to be fulfilled by
Prime Lessor in accordance with the terms of the Prime Lease. Until such
repairs shall be substantially completed, rent shall be apportioned according
to the extent all or any portion of the Subleased Premises are not usable and
not used by Sublessee.
Sublessee shall give prompt notice to Sublessor in case of fire or
other casualty causing damage in the Subleased Premises.
15. The parties hereto understand and acknowledge that the Prime
Lease contains certain specific provisions pursuant to which Sublessor has
rights to cancel the leasing of certain space, including the Subleased
Premises, and/or portions thereof, effective as of specified dates.
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<PAGE> 16
Sublessee acknowledges that it has been informed by Sublessor that Sublessor
will exercise its option to cancel the Prime Lease as to the 9th floor as of
December 31, 1996.
16. If Sublessor is unable to give possession of the Subleased
Premises on the commencement date because of the holding over or retention of
possession of any tenant or occupant or the failure to obtain any necessary
consents to this Sublease or for any other reason whatsoever, Sublessor shall
not be subject to any liability for failure to give possession on said date and
the validity of this Sublease shall not be impaired or its term extended, but
the rent payable hereunder shall abate (provided Sublessee is not responsible
for the Sublessor's inability to give possession) until such time as Sublessor
gives Sublessee written notice that Sublessee may take possession of the
Subleased Premises. The provisions of this Article are intended to constitute
"an express provision to the contrary" within the meaning of Section 223-a of
the New York Real Property Law.
17. If as a result of any negligence on the part of Sublessee, any
claim, action or suit is made or brought against Sublessor, Sublessee does
hereby agree to indemnify Sublessor and to defend (including reasonable
attorneys' fees) and to hold Sublessor harmless of and free from any claim,
liability, damage or loss resulting from any such negligence on the part of
Sublessee.
18. A. Neither Sublessee nor its legal representatives or
successors in interest by operation of law or otherwise, shall assign, mortgage
or encumber this Sublease, nor underlet or suffer or permit the Subleased
Premises or any part thereof to be used by others without the prior written
consent of Sublessor and, if necessary, of Prime Lessor.
B. Anything hereinabove contained to the contrary
notwithstanding, and provided any necessary consent from Prime Lessor is
obtained, Sublessor herewith consents to an assignment of this Sublease, or to
the sub-sublease of all but not part of the Subleased
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<PAGE> 17
Premises, (i) to the parent of Sublessee or to an affiliate (as hereinafter
defined) of Sublessee or of said parent, or (ii) to any corporation (x) to
which substantially all the assets of Sublessee are transferred or (y) into
which Sublessee may be merged and consolidated. For purposes of this Sublease,
an "affiliate" shall mean any entity controlling, controlled by or under common
control with Sublessee. The provisions of this Article shall be applicable to
transactions covered by this subdivision, and Sublessee shall promptly provide
notice of any such change pursuant to this subdivision, together with a copy of
all documentation reasonably requested by Prime Lessor with respect thereto.
C. Anything in this Article or this Sublease to the
contrary notwithstanding, but subject to receipt of any necessary consent of
Prime Lessor, Sublessor herewith consents to the assignment of this Sublease,
or to the subletting of all or part of the Subleased Premises, to any entity
which is a successor to the business of Sublessee by arrangement effected
pursuant to any law or regulatory agency having or asserting jurisdiction over
such activity. The provisions of this Article, except those of subparagraph
(i) hereof, shall be applicable to transactions covered by this paragraph, and
Sublessee shall promptly provide notice of any such change pursuant to this
paragraph together with a copy of all documentation reasonably requested by
Prime Lessor with respect thereto.
D. If Sublessee requests Sublessor's consent to a
specific assignment or sub-subletting, it shall submit in writing to Sublessor
(i) the name and address of the proposed assignee or sub-sublessee, (ii) a duly
executed counterpart of the proposed agreement of assignment or sub-sublease,
(iii) reasonably satisfactory information as to the nature and character of the
business of the proposed assignee or sub-sublessee, and as to the nature of its
proposed use of the space, and (iv) banking, financial or other credit
information relating to the
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<PAGE> 18
proposed assignee or sub-sublessee reasonably sufficient to enable Sublessor to
determine the financial responsibility and character of the proposed assignee
or sub-sublessee(2).
E. Any consent of Sublessor under this Article shall be
subject to the terms of this Article and the Prime Lease, and shall be
conditioned upon (i) there being no default by Sublessee, beyond any applicable
notice and/or grace period, under any of the material terms, covenants and
conditions of this Sublease at the time that Sublessor's consent to any such
sub-subletting or assignment is requested and on the date of the commencement
of the term of any proposed sub-sublease or the effective date of any proposed
assignment, and (ii) the making or performing by Sublessee or its successor, at
its sole cost and expense and in accordance with the provisions of the Sublease
and of the Prime Lease, and Sublessee agrees that it or its successor shall so
make or perform, at its sole cost and expense: (a) any necessary alteration in
and to the Subleased Premises to comply with applicable laws, rules or
regulations in connection with the sub-subletting or assignment, and (b) any
alteration required or reasonably desired by Sublessor with respect to
separation of space, including without limitation, the construction of demising
walls.
F. Sublessee understands and agrees that no assignment
or subletting shall be effective unless and until Sublessee, upon receiving any
necessary Sublessor's and Prime Lessor's written consent (and unless it was
theretofore delivered to Sublessor) causes a duly executed copy of the
sub-sublease or assignment to be delivered to Sublessor within thirty (30) days
after execution thereof. Any such sub-sublease shall provide that the
sub-sublessee shall comply with all applicable terms and conditions of this
Sublease to be performed by the
- ----------------------------------
(2) Sublessor agrees it will not unreasonably withhold or delay consent to such
sub-subletting.
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<PAGE> 19
Sublessee hereunder. Any such assignment of Sublease shall contain an
assumption by the assignee of all the terms, covenants and conditions of this
Lease to be performed by the Sublessee.
G. If this Sublease be assigned or if the Subleased
Premises or any part thereof be sublet or occupied by any person or persons
other than Sublessee, whether or not in violation of the provisions of this
Sublease, Sublessor may, after default by Sublessee beyond any applicable grace
period, collect rent from the assignee, sub-subtenant or occupant and apply the
net amount collected to the curing of any default hereunder in any order or
priority Sublessor may elect, any unexpended balance to be applied by Sublessor
against any rental or other obligations subsequently becoming due, but no such
assignment, sub-subletting, occupancy or collection of rent shall be deemed a
waiver of the covenants in this Article, nor shall it be deemed acceptance of
the assignee, sub-subtenant or occupant as a tenant or a release of Sublessee
from the full performance by Sublessee of all of the terms, conditions and
covenants of this Sublease.
19. Whenever (a) any loss, cost, damage, injury or expense
resulting from fire, explosion or any other casualty or occurrence normally
covered by fire and extended coverage insurance is incurred by either party to
this Sublease in connection with the Subleased Premises, and (b) such party is
then covered in whole or in part by insurance with respect to such loss, cost,
damage, injury and expense, then the party so insured hereby releases the other
party from any liability it may have on account of such loss, cost, damage,
injury or expense, to the extent of any amount recovered by reason of such
insurance, and waives any right of subrogation which might otherwise exist in
or accrue to any person on account thereof, provided that such release of
liability and waiver of the right of subrogation shall not be operative in any
case where the effect
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<PAGE> 20
thereof would be to invalidate such insurance coverage or increase the cost
thereof (provided that, in the case of increased cost, the other party shall
have the right, within thirty (30) days following written notice, to pay such
increased cost, thereupon keeping such release and waiver in full force and
effect).
20. Sublessee represents and warrants that Sublessee neither
consulted nor negotiated with any broker or finder with regard to the Subleased
Premises or this Sublease. Sublessee agrees to indemnify, defend and save
Sublessor harmless from and against any claims for fees and commissions from
anyone with whom Sublessee has dealt in connection with the Subleased Premises
or this Sublease.
21. In the event the fixed annual rent or additional rent or any
part thereof provided to be paid by Sublessee under the provisions of this
Sublease during the term of this Sublease shall become uncollectible or shall
be reduced or required to be reduced or refunded by virtue of any Federal,
State, County or City law, order or regulation, or by any direction of a public
officer of body pursuant to law, or the orders, rules, code or regulations of
any organization or entity formed pursuant to law, which such organization or
entity be public or private, then Sublessor, at its option, may at any time
thereafter terminate this Sublease by not less than thirty (30) days' written
notice to Sublessee, on a date set forth in said notice, in which event this
Sublease and the term hereof shall terminate and come to an end on the date
fixed in said notice as if the said date were the date originally fixed herein
for the termination of the term. Sublessor shall not have the right so to
terminate this Sublease if Sublessee within such period of thirty (30) days
shall in writing lawfully agree that the rentals herein reserved are a
reasonable rental and agree to continue to pay said rentals, and if such
agreement by Sublessee shall then be legally enforceable by Sublessor.
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<PAGE> 21
22. All notices and demands to Sublessor shall be deemed
sufficiently given when delivered personally or mailed by certified mail,
return receipt requested, to Sublessor at the Subleased Premises, or at such
other address as Sublessor shall from time to time designate in writing by
notice given hereunder to Sublessee. All notices and demands to Sublessee
shall be deemed sufficiently given when mailed by certified mail, return
receipt requested, to Sublessee at the address set forth above, Attention: Mr.
Richard E. Morgan, Senior Vice President, or at such other address as Sublessee
shall from time to time designate in a notice given hereunder to Sublessor.
Bills for rent or additional rent may be mailed by ordinary mail rather than
certified mail, return receipt requested.
23. Upon payment by Sublessee of all rents herein provided, and
upon observance and performance of all the covenants, terms and conditions on
Sublessee's part to be observed or performed, Sublessee may peaceably and
quietly hold and enjoy the Subleased Premises, for the term set forth herein,
subject to the terms and conditions of this Sublease and of the Prime Lease.
24. Upon the schedule set forth in paragraph 1 or sooner
termination of the term of this Sublease, Sublessee shall vacate the Subleased
Premises, broom clean, free of subtenancies or other occupants, with all
fixtures and improvements remaining in place; provided, however, to the extent
permitted by the Prime Lease, Sublessee shall have the right, prior to the
expiration or sooner termination of this Sublease, to remove, at Sublessee's
cost and expense, any and all trade fixtures and other personal property of
Sublessee. Notwithstanding anything contained herein to the contrary,
Sublessee shall be obligated to effect any restoration in regard to the vault
on the 13th floor in accordance with the terms of the Prime Lease.
25. It is understood and agreed that this Sublease is submitted to
Sublessee on the understanding that it shall not be considered an offer and
shall not bind Sublessor in any way
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<PAGE> 22
until, subject to the provisions of Article 12 hereof, and any other applicable
provisions of this Sublease, (i) Sublessee has duly executed and delivered
duplicate originals to Sublessor and (ii) Sublessor has executed and delivered
one of said originals to Sublessee.
26. This Sublease contains the entire agreement and understanding
between the parties. There are no oral understandings, terms or other
conditions, and neither party has relied upon any representation, express or
implied, not contained in this Sublease. All prior understandings, terms,
representations or conditions are deemed merged in this Sublease. This
Sublease cannot be changed or supplemented orally but only by an agreement in
writing signed by both parties hereto.
27. The covenants, terms, conditions, provisions and undertakings
in this Sublease shall extend to and be binding upon the successors and
permitted assigns of the respective parties hereto.
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<PAGE> 23
IN WITNESS WHEREOF, the parties hereto have caused this Sublease to be
executed as of the day and year first above written.
UNITED STATES TRUST COMPANY OF NEW YORK
By: H. MARSHALL SCHWARZ
---------------------------
Name: H. Marshall Schwarz
Title: Chairman
NEW U.S. TRUST COMPANY OF NEW YORK
By: H. MARSHALL SCHWARZ
---------------------------
Name: H. Marshall Schwarz
Title: Chairman
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<PAGE> 24
[FLOOR PLAN]
<PAGE> 25
[FLOOR PLAN]
<PAGE> 26
[FLOOR PLAN]
<PAGE> 27
[FLOOR PLAN]
<PAGE> 28
[FLOOR PLAN]
<PAGE> 29
EXHIBIT B
RESTACK SCHEDULE
<TABLE>
<CAPTION>
LOCATION MOVE FROM MOVE DATE
- -------- --------- ---------
<S> <C> <C>
UST Mail Room - 7th Floor September 2, 1995
UST Protection - 7th floor September 1, 1995
Chase SSTO - 13th Floor September 22, 1995
Chase Proxy & Proof - 9th Floor September 22, 1995
Chase International Settlements -
13th Floor October 20, 1995
Chase Institutional Asset Services -
13th Floor October 20, 1995
UST Bank Operations - 10th Floor January 5, 1996
UST Corporate Trust - 7th Floor January 12, 1996
UST Tech Services - 8th Floor January 26, 1996
UST Computer Sciences - 8th Floor January 26, 1996
Chase Valuation & Output Services -
9th Floor *
</TABLE>
* Move date to be mutually agreed upon by the parties.
<PAGE> 1
EXHIBIT 10.8
U.S. TRUST CORPORATION STOCK PLAN FOR NON-OFFICER DIRECTORS
AS AMENDED AND RESTATED EFFECTIVE AS OF SEPTEMBER 1, 1995
SECTION 1. PURPOSE
The purpose of the U.S. Trust Corporation Stock Plan for Non-Officer Directors
is to promote the interests of the Corporation and its shareholders by
providing non-officer members of the Board of Directors, whose services are
considered essential to the Corporation's continued growth and progress,
compensation in the form of share ownership in the Corporation for services
actually performed, thereby reinforcing the mutuality of interest between such
Directors and the Corporation's shareholders.
The Plan as hereinafter set forth represents a continuation of the U.S. Trust
Corporation Stock Plan for Non-Officer Directors, as amended and restated
effective as of September 1, 1995 (a) to reflect the transfer of the Plan to
and the adoption of the Plan by the Corporation, and the Corporation's
assumption of and becoming solely responsible for all liabilities and
obligations of U.S. Trust Corporation under the Plan, effective immediately
before the "New Holdings Distribution", as defined in the Agreement and Plan of
Merger dated as of November 18, 1994 between The Chase Manhattan Corporation
and U.S. Trust Corporation (the "Merger Agreement"), and (b) to reflect the
"Distribution" and the "Merger", as defined in the Merger Agreement.
SECTION 2. DEFINITIONS
When used herein, the following terms shall have the following meanings:
(a) "Board" means the Board of Directors of the Corporation.
(b) "Committee" means the committee appointed pursuant to Section 12
of the Board Members' Deferred Compensation Plan of U.S. Trust
Corporation.
(c) "Common Shares" means common shares ($1.00 par value per share) of
the Corporation.
(d) "Corporation" means New USTC Holdings Corporation, which will
assume the name of "U.S. Trust Corporation" as of the time the New
Holdings Distribution is effective.
(e) "Disability" means a Participant's complete and permanent
inability by reason of illness or accident to perform his or her
duties as a member of the Board, as determined by the Committee
based on medical evidence acceptable to it.
<PAGE> 2
(f) "Non-Officer" means a person who at the time in question (i) is
not a full-time employee of the Corporation or any of its
affiliated companies, and (ii) has not been a full-time employee
of the Corporation or any of its affiliated companies at any time
during the previous six months.
(g) "Participant" means any member of the Board who is a Non-Officer.
(h) "Plan" means the U.S. Trust Corporation Stock Plan for Non-Officer
Directors, as amended from time to time.
SECTION 3. ADMINISTRATION
The Plan shall be administered by the Committee. A majority of the members of
the Committee shall constitute a quorum. The Committee may act at a meeting,
including a telephone meeting, by action of a majority of the members present,
or without a meeting by unanimous written consent.
Subject to the provisions of the Plan, the Committee shall have the authority
to establish from time to time any guidelines deemed necessary or appropriate
for the administration or interpretation of the Plan, interpret the Plan, and
make all determinations and take all other actions considered necessary or
advisable for the administration of the Plan. All decisions, actions or
interpretations of the Committee that are within the scope of this Section 3
shall be final, conclusive and binding upon all parties.
SECTION 4. PARTICIPATION
Participation in the Plan shall be limited to members of the Board who are
Non-Officers. Each individual who is a Non-Officer member of the Board on
[July 21, 1995] shall be a Participant as of that date; each individual who is
not a Non-Officer member of the Board on [July 21, 1995] and becomes a
Non-Officer member of the Board thereafter while the Plan is in effect shall
become a Participant at the time he or she becomes such a member; and no other
person shall be eligible to be a Participant.
SECTION 5. GRANTS
On February 15, 1996 and on February 15 of each year thereafter, each
Participant then serving as a member of the Board shall be granted 200 Common
Shares. The Common Shares used for such grants under the Plan may be treasury
shares, authorized but previously unissued shares, or shares purchased on the
open market (at such time or times and in such manner as the Committee may
determine).
Common Shares granted hereunder shall constitute compensation for services
actually performed as a Director and shall supplement cash retainer fees. The
Plan shall not be construed as conferring
-2-
<PAGE> 3
any rights upon any Participant to continue as a Director for any period of
time, or at any particular rate of compensation.
SECTION 6. CERTAIN ADJUSTMENTS TO PLAN SHARES
In the event of any change in the Common Shares by reason of any stock
dividend, stock split, recapitalization, reorganization, merger, consolidation,
split-up, combination or exchange of shares, or of any similar change affecting
the Common Shares, appropriate adjustments shall be made in the number and kind
of Common Shares or other securities or property subject to subsequent grants
hereunder to reflect such changes.
SECTION 7. REGULATORY LIMITATIONS
No Common Share granted to a Participant under this Plan may be sold for at
least six months after the date of grant, except in the case of death or
Disability of such Participant. The Corporation reserves the right to legend
the share certificates, to retain custody of certificates for an appropriate
period of time and to take other actions designed to assure compliance with
applicable securities laws. The Corporation shall have the right to require,
prior to the delivery of any share certificate, payment of any taxes required
by law to be withheld with respect to the grant.
SECTION 8. LISTING AND QUALIFICATION OF SHARES
The Corporation, in its discretion, may postpone the issuance or delivery of
Common Shares until completion of such stock exchange listing or other
qualification of such shares under any state or federal law, rule or regulation
as the Corporation may consider appropriate, and may require any Participant to
make such representations and furnish such information as it may consider
appropriate in connection with the issuance or delivery of the shares in
compliance with applicable laws, rules and regulations.
SECTION 9. NO LIABILITY OF COMMITTEE MEMBERS
No member of the Committee shall be personally liable by reason of any contract
or other instrument executed by such member or on his or her behalf in his or
her capacity as a member of the Committee or for any mistake of judgment made
in good faith, and the Corporation shall indemnify and hold harmless each
employee, officer or director of the Corporation to whom any duty or power
relating to the administration or interpretation of the Plan may be allocated
or delegated against any cost or expense (including counsel fees) or liability
(including any sum paid in settlement of a claim with the approval of the
Board) arising out of any act or omission to act in connection with the Plan
unless arising out of such person's own fraud or bad faith.
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SECTION 10. AMENDMENT OR TERMINATION
The Board may, with prospective or retroactive effect, amend, suspend or
terminate the Plan or any portion thereof at any time; provided, however, that
the provisions of this Plan regarding eligibility, timing of grants, and the
number of shares included in any grant may not be amended or revised more than
once every six months other than to conform to changes in the Internal Revenue
Code of 1986, as amended, or the rules and regulations thereunder.
SECTION 11. GOVERNING LAW
The Plan shall be governed by and construed in accordance with the laws of New
York, without reference to the principles of conflicts of law thereof.
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EXHIBIT 10.9
1989 STOCK COMPENSATION PLAN AND PREDECESSOR PLANS
OF U.S. TRUST CORPORATION
AS AMENDED, RESTATED AND RENAMED
EFFECTIVE AS OF SEPTEMBER 1, 1995
SECTION 1. INTRODUCTION
1.1 PURPOSE
The Plan hereinafter set forth represents a continuation of certain
stock-based compensation plans maintained by U.S. Trust Corporation before its
merger with The Chase Manhattan Corporation ("Chase") pursuant to the Agreement
and Plan of Merger dated as of November 18, 1994 between Chase and U.S. Trust
Corporation (the "Merger Agreement"). The plans so continued are (i) all
portions of the 1989 Stock Compensation Plan of U.S. Trust Corporation other
than Section 2 thereof and any other provisions of such plan to the extent they
relate to stock options (such continued portions are referred to herein as the
"Prior Plan"), (ii) the 1988 Long-Term Performance Plan of U.S. Trust
Corporation, and (iii) the Long-Term Performance Plan of U.S. Trust Corporation
(the plans described in (ii) and (iii) are referred to herein as the
"Predecessor Plans").
As set forth herein, the Prior Plan and the Predecessor Plans have
been amended, restated and renamed effective as of September 1, 1995 (a) to
reflect the transfer of the Prior Plan and the Predecessor Plans to and their
adoption by the Corporation, and the Corporation's assumption of and becoming
solely responsible for all liabilities and obligations of U.S. Trust
Corporation under the Prior Plan and the Predecessor Plans, effective
immediately before the "New Holdings Distribution", as defined in the Merger
Agreement, (b) to consolidate the Prior Plan and the Predecessor Plans, as so
transferred and adopted, into a single plan, and (c) to reflect the
"Distribution" and the "Merger", as defined in the Merger Agreement.
The purpose of this Plan is to set forth the terms under which payment
will be made with respect to Restricted Common Shares, Performance Share Units
and Benefit Equalization Units awarded to Participants under the Prior Plan and
Predecessor Plans. No new Restricted Common Shares, Performance Share Units or
Benefit Equalization Units shall be awarded to any Participant under this Plan.
1.2 DEFINITIONS
As used herein, the following terms shall have the following meanings:
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"Adjusted Number" shall mean, with respect to the Phantom Share Units
and Benefit Equalization Units standing to a Participant's credit under the
Plan immediately prior to the Effective Time, an adjusted number of such units
determined by dividing (i) the product of (A) the number of such Phantom Share
Units, or Benefit Equalization Units, as the case may be, multiplied by (B) the
Average Market Value of one Common Share of U.S. Trust Corporation during the
30- day period ending on the day immediately preceding the Chase Merger Closing
Date, by (ii) the Average When-Issued Market Value of one common share of the
Corporation.
"AFFILIATED COMPANIES" shall mean (i) with respect to U.S. Trust
Corporation, each of its direct or indirect subsidiaries, and (ii) with respect
to the Corporation, each of its direct or indirect subsidiaries.
"AVERAGE MARKET VALUE" shall mean, with respect to one Common Share as
of any date or with respect to any period, the mean between the per-share high
and low prices for the Common Shares on such date, or on each trading day
during such period, as quoted on the NASDAQ National Market System, or, if the
Common Shares are not traded on such system, on such other securities market or
securities exchange on which such shares are traded as the Committee shall
determine.
"Average When-Issued Market Value" shall mean, with respect to one
common share of the Corporation, the amount representing the 10-day average of
the daily average of the high bid and low asked prices for such share in the
over-the-counter market as reported by the National Quotation Bureau
Incorporated on a "when-issued" basis on each of the 10 trading days
immediately preceding the Chase Merger Closing Date.
"AWARD shall mean the award of Performance Share Units made to a
Participant for an Open Cycle pursuant to Section 4.1 of the Prior Plan.
"BENEFICIARY" shall mean the person or persons designated by a
Participant in accordance with Section 6.9 to receive any amount, or any Common
Shares, payable under the Plan upon the Participant's death.
"BENEFIT EQUALIZATION UNIT," "PERFORMANCE SHARE UNIT" and "PHANTOM
SHARE UNIT" shall mean a unit of measurement equivalent to one Common Share,
with none of the attendant rights of a shareholder of such share, including,
without limitation, the right to vote such share and the right to receive
dividends thereon, except to the extent otherwise specifically provided herein.
"BOARD OF DIRECTORS" shall mean the Board of Directors of the
Corporation.
"CHANGE IN CONTROL" shall mean that any of the following events has
occurred after the Chase Merger Closing Date:
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(i) 20% or more of the Common Shares has been acquired by
any person (as defined by Section 3(a)(9) of the Securities Exchange
Act of 1934) other than directly from the Corporation;
(ii) there has been a merger or equivalent combination after
which 49% or more of the voting shares of the surviving corporation is
held by persons other than former shareholders of the Corporation; or
(iii) 20% or more of the directors elected by shareholders to
the Board of Directors are persons who were not nominated by
management in the most recent proxy statement of the Corporation;
provided, however, that notwithstanding anything in the Plan to the contrary,
no Change in Control shall be deemed to have occurred, and no rights arising
upon a Change in Control as provided in Sections 3.6, 4.7 and 5.4 shall exist,
to the extent that the Board of Directors so directs by resolution adopted
prior to the Change in Control, or not later than 45 days after the Change in
Control if the percentage of Common Shares acquired or directors elected under
clause (i) or (iii) of the foregoing definition of Change in Control shall be
at least 20% but less than 25%. Any resolution of the Board of Directors
adopted in accordance with the provisions of this definition directing that a
Change in Control shall be deemed not to have occurred for purposes of this
Plan and that Sections 3.6, 4.7 and 5.4, or any of such Sections shall not
become effective, may be rescinded or countermanded at any time with or without
retroactive effect.
"CHASE MERGER CLOSING DATE" shall mean the "Closing Date", as defined
in Section 1.2 of the Merger Agreement.
"COMMITTEE" shall mean the Compensation and Benefits Committee of the
Board of Directors.
"COMMON SHARES" shall mean (i) prior to the Chase Merger Closing Date,
the common shares ($1.00 par value per share) of U.S. Trust Corporation, and
(ii) after the Chase Merger Closing Date, the common shares ($1.00 par value
per share) of the Corporation.
"CORPORATION" shall mean New USTC Holdings Corporation, which will
assume the name of "U.S. Trust Corporation" as of the time the New Holdings
Distribution is effective.
"DETERMINED VALUE" shall mean the higher of (i) the highest bid price
per Common Share during the twelve months immediately preceding the date of a
Change in Control, or (ii) the highest price per Common Share actually paid in
connection with any Change in Control (including, without limitation, prices
paid in any subsequent merger or combination with any entity that acquires
control of the Corporation).
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"DIVIDEND PAYMENT DATE" shall mean the date on which a dividend is
paid on Common Shares.
"EFFECTIVE TIME" shall mean "Effective Time" as defined in Section 1.3
of the Merger Agreement.
"401(k) Plan" shall mean the 401(k) Plan and ESOP of United States
Trust Company of New York and Affiliated Companies.
"OPEN CYCLES" shall mean the Performance Cycles (as defined in the
Prior Plan) established under Section 4 of the Prior Plan for the periods
ending, respectively, on December 31, 1995, and on December 31, 1996.
"PARTICIPANT" shall mean any employee or former employee of the
Corporation, U.S. Trust Corporation, or any of their Affiliated Companies who,
immediately prior to the Chase Merger Closing Date, had any unpaid amount,
Phantom Share Unit, Benefit Equalization Unit, or any Performance Share Unit
for any Open Cycle standing to his or her credit under the Prior Plan or any of
the Predecessor Plans.
"PRIME RATE" shall mean, with respect to any calendar month, the prime
rate as quoted by United States Trust Company of New York on the last business
day of such month.
"RESTRICTED COMMON SHARES" shall mean Common Shares which are subject
to Restrictions, and any new, additional or different securities a Participant
may become entitled to receive with respect to such shares by virtue of a stock
split or stock dividend or any other change in corporate or capital structure
of U.S. Trust Corporation or the Corporation.
"RESTRICTED PERIOD" shall mean the period of time during which
Restricted Common Shares are subject to Restrictions as provided in Section 3.
"RESTRICTIONS shall mean the restrictions applicable to Restricted
Common Shares as provided in Section 3.
1.3 ADMINISTRATION
The Plan shall be administered by the Committee. A majority of the
members of the Committee shall constitute a quorum. The Committee may act at a
meeting, including a telephone meeting, by action of a majority of the members
present, or without a meeting by unanimous written consent. The Committee
shall have the authority, in its discretion, to establish from time to time
guidelines or regulations for the administration of the Plan, interpret the
Plan, cause appropriate records to be established, and make all determinations
and take all other actions considered necessary or advisable for the
administration of the Plan.
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All decisions, actions or interpretations of the Committee under the
Plan shall be final, conclusive and binding upon all parties.
SECTION 2. AUTHORIZED SHARES
2.1 MAXIMUM NUMBER OF COMMON SHARES AVAILABLE FOR AWARDS
Subject to Section 2.2 but notwithstanding any other provision of the
Plan, the number of Common Shares that may be distributed to Participants
pursuant to this Plan shall be limited to (i) 400,000 Common Shares, plus (ii)
a number of Common Shares equal to the total number of additional Phantom Share
Units and Benefit Equalization Units credited to Participants with respect to
dividends paid on Common Shares pursuant to Sections 4.5 and 5.2.
2.2 ADJUSTMENT IN MAXIMUM NUMBER OF SHARES
As of the Effective Time, the number of Common Shares that may be
distributed to Participants pursuant to this Plan, as specified in clause (i)
of Section 2.1, shall be adjusted so as to equal the sum of (w) the aggregate
number of Phantom Share Units to be credited to Participants pursuant to the
first sentence of Section 4.2(d) and the first sentence of Section 4.2(e)(iv),
(x) the aggregate Adjusted Number of Phantom Share Units determined for
Participants under Section 4.3(d), (y) the aggregate Adjusted Number of Benefit
Equalization Units determined for Participants under Section 5.1, and (z) 4,500
Common Shares.
2.3 SOURCE OF SHARES
The Common Shares distributed under the Plan may be authorized and
unissued shares, shares held in the treasury of the Corporation, or shares
purchased on the open market by the Corporation (at such time or times and in
such manner as it may determine); provided, however, that Restricted Common
Shares (other than any such shares that are shares of Chase common stock) shall
be distributed from shares held in the treasury of the Corporation. The
Corporation shall be under no obligation to acquire Common Shares for
distribution to Participants before payment in Common Shares is due.
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SECTION 3. RESTRICTED COMMON SHARES
3.1 AWARDS OF RESTRICTED COMMON SHARES
Restricted Common Shares awarded to a Participant under the Prior Plan
shall remain subject to the same Restrictions, for the same Restricted Period,
as applied with respect to such shares under Section 3.2 of the Prior Plan.
Such Restrictions shall be binding on the Corporation and on the Participants
and their Beneficiaries.
3.2 RESTRICTIONS AND RESTRICTED PERIOD
All Common Shares of the Corporation and all shares of Chase common
stock received with respect to a Participant's Restricted Common Shares
pursuant to the Distribution and the Merger shall be treated as Restricted
Common Shares for purposes of this Plan, and shall be subject to the same
Restrictions, for the same Restricted Period, as applied to the shares with
respect to which they were received.
3.3 RIGHTS AS SHAREHOLDERS
Except for the Restrictions referred to in Sections 3.1 and 3.2, and
subject to the forfeiture provisions described in Section 3.5, each Participant
shall have, with respect to his or her Restricted Common Shares, all rights of
a holder of Common Shares including the right to receive all dividends or other
distributions made or paid in respect of such shares and the right to vote such
shares at regular or special meetings of the shareholders of the Corporation.
3.4 DELIVERY OF SHARES
A Participant's Restricted Common Shares shall be held in the
Participant's name in a book entry account maintained by the Corporation. At
the conclusion of the Restricted Period imposed with respect to a Participant's
Restricted Common Shares, or upon the prior approval of the Committee as
provided in Section 3.5, and subject to the satisfaction of the applicable tax
withholding requirements provided in Section 6.8, certificates representing
such Restricted Common Shares will be delivered to the Participant or, if the
Participant has died, to the Participant's Beneficiary, free of all
Restrictions.
3.5 TERMINATION OF EMPLOYMENT
In the event of any Participant's termination of employment with the
Corporation and its Affiliated Companies, all of the Participant's Restricted
Common Shares which are then still subject to Restrictions will be forfeited by
the Participant and become the property of the Corporation.
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However, the Committee may, if the Committee in its sole discretion determines
that the circum stances warrant such action, approve the delivery to the
Participant of all or any part of the Restricted Common Shares which would
otherwise be forfeited pursuant to this Section, upon such conditions as it
shall determine.
3.6 CHANGE IN CONTROL
Upon the occurrence of a Change in Control, all Restricted Periods
shall end, the Restrictions applicable to all Restricted Common Shares shall
lapse, and in lieu of delivery of such shares to the Participants free from
such Restrictions as provided in Section 3.4, the Corporation's obligation in
respect of such shares shall be discharged by payment to each of the applicable
Participants of a single cash lump sum. The amount of such cash lump sum shall
be determined by multiplying the number of Restricted Common Shares held in the
Participant's name by the Determined Value of one Common Share. The single
cash lump sum amount so determined, reduced by any taxes withheld pursuant to
Section 6.8, shall be paid to the Participant as soon as practicable following
the Change in Control.
SECTION 4. PERFORMANCE SHARE UNITS
4.1 PERFORMANCE SHARE UNIT AWARDS FOR OPEN CYCLES
At the Effective Time, all Performance Goals (as defined in the Prior
Plan) determined for each of the Open Cycles pursuant to Section 4.1 of the
Prior Plan shall be deemed to have been fully met, and all Performance Share
Units awarded to each Participant for each of the Open Cycles pursuant to
Section 4.1 of the Prior Plan shall be deemed to have been fully earned.
4.2 PAYMENT OF AWARDS FOR OPEN CYCLES
Payment with respect to a Participant's Award for an Open Cycle shall
be made in accordance with the following provisions:
(a) The total amount payable with respect to a Participant's Award
for an Open Cycle shall be equal to the product of (i) the sum of (A) the
number of Performance Share Units awarded to the Participant for such cycle and
(B) the number of additional Performance Share Units credited to the
Participant with respect to such Award pursuant to Section 4.1 of the Prior
Plan on account of dividends paid on Common Shares after the start of such
cycle and before the Chase Merger Closing Date, multiplied by (ii) the Average
Market Value of one Common Share during the 30-day period ending on the day
immediately preceding the Chase Merger Closing Date.
(b) The portion of the total amount payable with respect to a
Participant's Award for an Open Cycle which the Participant has not elected to
defer pursuant to an election made by the
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Participant under Section 4.4 of the Prior Plan (the "Non-Deferred Portion of
the Participant's Award") shall be paid to the Participant as soon as
practicable after the close of such cycle. In the case of a Participant whose
employment with the Corporation and its Affiliated Companies terminates after
the Chase Merger Closing Date but before the end of the cycle by reason of
death, disability or retirement, payment of the Non-Deferred Portion of the
Participant's Award for such cycle shall be made as of the first day of the
month following the date of such termination of the Participant's employment
(the Participant's "Termination Date").
(c) Payment with respect to 50% of the Non-Deferred Portion of a
Participant's Award for an Open Cycle shall be made in the form of a single
lump-sum cash payment. Such payment shall include interest on 50% of the
Non-Deferred Portion of the Participant's Award, which shall be credited at the
Prime Rate for each calendar month or portion thereof in the period from the
Chase Merger Closing Date to the end of the cycle or, if earlier, the last day
of the month in which the Participant's Termination Date occurs.
(d) With respect to the remaining 50% of the Non-Deferred Portion of
a Participant's Award for an Open Cycle, the Participant shall be credited, as
of the Chase Merger Closing Date, with a number of Phantom Share Units
("PSU's") determined by dividing (i) the dollar value of 50% of the
Non-Deferred Portion of the Participant's Award, by (ii) the Average
When-Issued Market Value of one common share of the Corporation. As of each
Dividend Payment Date occurring after the Chase Merger Closing Date but before
the end of such cycle or, if earlier, the last day of the month in which the
Participant's Termination Date occurs, the Participant shall also be credited
hereunder with a number of additional PSU's determined by first (x) multiplying
(A) the number of PSU's standing to the Participant's credit under this Section
4.2(d) on the date such dividend was declared, by (B) the per-share dollar
amount of the dividend so paid, and then (y) dividing the resulting amount by
the Average Market Value of one Common Share on the Dividend Payment Date.
Payment with respect to such remaining 50% of the Non-Deferred Portion of the
Participant's Award shall be made in the form of (1) a number of Common Shares
equal to the number of whole PSU's standing to the Participant's credit under
this Section 4.2(d) as of the last day of the month preceding the month in
which such payment is made, and (2) a cash payment in an amount determined by
multiplying (A) any fractional part of a PSU standing to the Participant's
credit as of such last day, by (B) the Average Market Value of one Common Share
on the business day immediately preceding the date on which such payment is
made.
(e) The portion of a Participant's Award for an Open Cycle which the
Participant has elected to defer pursuant to an election made by the
Participant under Section 4.4 of the Prior Plan (the "Deferred Portion" of the
Participant's Award) shall be credited to the "Account" established for the
Participant under Section 4.3, in accordance with the following provisions:
(i) The Deferred Portion of a Participant's Award for an
Open Cycle shall be credited to the Participant's Account as of the
first day of the month following the close of
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such cycle or, if earlier, on the first day of the month following the
Participant's Termination Date.
(ii) The Deferred Portion of a Participant's Award shall be
credited to the "Interest Portion" and to the "PSU Portion" (as
defined in Section 4.3) of the Participant's Account in such
percentages as the Participant specified in the deferral election made
by the Participant with respect to such Award pursuant to Section 4.4
of the Prior Plan.
(iii) That part of the Deferred Portion of a Participant's
Award for an Open Cycle which the Participant elected to have credited
to the Interest Portion of his or her Account shall be credited to the
Interest Portion together with interest on the amount to be so
credited, calculated at the Prime Rate, for each calendar month or
portion thereof in the period from the Chase Merger Closing Date to
the end of the cycle or, if earlier, the last day of the month in
which the Participant's Termination Date occurs.
(iv) With respect to that part of the Deferred Portion of a
Participant's Award for an Open Cycle which the Participant elected to
have credited to the PSU Portion of his or her Account, the
Participant shall be credited, as of the Chase Merger Closing Date,
with a number of PSU's determined by dividing (A) the dollar value of
that part of the Deferred Portion by (B) the Average When-Issued
Market Value of one common share of the Corporation. As of each
Dividend Payment Date occurring after the Chase Merger Closing Date
but before the end of such cycle or, if earlier, the last day of the
month in which the Participant's Termination Date occurs, the
Participant shall be credited hereunder with a number of additional
PSU's determined by first (x) multiplying (A) the number of PSU's
standing to the Participant's credit under this Section 4.2(e)(iv) on
the date such dividend was declared, by (B) the per-share dollar
amount of the dividend so paid, and then (y) dividing the resulting
amount by the Average Market Value of one Common Share on the Dividend
Payment Date. That part of the Deferred Portion of a Participant's
Award for an Open Cycle that is to be credited to the PSU Portion of
the Participant's Account shall be credited thereto in the form of a
number of PSU's equal to the total number of PSU's standing to the
Participant's credit under this Section 4.2(e)(iv) as of the time the
Deferred Portion of the Participant's Award is to be credited to the
Participant's Account as provided in clause (i) above.
(f) Notwithstanding any other provisions in Section 4.1 or in this
Section 4.2 to the contrary, a Participant whose employment terminates prior to
the end of any Open Cycle for any reason other than death, disability or
retirement shall not be entitled to receive any payment with respect to the
Participant's Award for such cycle, or to have any portion of such Award
deferred pursuant to any election the Participant may have made under Section
4.4 of the Prior Plan, except to the extent that the Committee, in its sole
discretion, otherwise determines.
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4.3 ACCOUNTS FOR DEFERRED AWARDS
As of the time this Plan is adopted by the Corporation, there shall be
established on the books and records of the Corporation, for bookkeeping
purposes only, a separate account ("Account") for each Participant, to reflect
the Participant's interest in the Deferred Portion of the Participant's Awards
for Open Cycles, and in all amounts which the Participant elected to defer
under the Prior Plan and the Predecessor Plans that remained unpaid or that had
not yet become payable as of the time of the adoption of this Plan. The
Account so established for each Participant shall be maintained in accordance
with the following provisions:
(a) The Account established for each Participant shall consist of two
sub-accounts referred to herein, respectively, as the "Interest Portion" and
the "PSU Portion".
(b) As of the time this Plan is adopted by the Corporation, the
Interest Portion of each Participant's Account shall be credited with an amount
equal to the aggregate amount of the balances, determined as of the close of
business on the day preceding the Chase Merger Closing Date, of the Interest
Portion of the Accounts maintained for the Participant under the Prior Plan and
the Predecessor Plans. For purposes of the foregoing, the balance of the
Interest Portion of a Participant's Account under the Long-Term Performance
Plan of U.S. Trust Corporation, as determined as of the close of business on
such preceding day, shall reflect the crediting of interest to the "R.O.E.
Balance" (as defined in Section 7F of such plan) of the Interest Portion of the
Participant's Account (i) for the fiscal year 1994, based on a deemed "R.O.E."
(as defined in Section 7F of such plan) for U.S. Trust Corporation for such
year of 20%; and (ii) for all periods beginning on January 1, 1995 and ending
at the close of business on the day preceding the Chase Merger Closing Date,
based on the "Earnings Crediting Options" (as defined in Section 7G(iii) of
such plan) in effect for the R.O.E. Balance for such periods pursuant to the
election made by the Participant under such plan.
(c) As of the time this Plan is adopted by the Corporation, the PSU
Portion of each Participant's Account shall be credited with a number of PSU's
equal to the aggregate number of PSU's included in the balances, determined as
of the close of business on the day preceding the Chase Merger Closing Date, of
the PSU Portion of the Participant's Accounts under the Prior Plan and the
Predecessor Plans.
(d) As of the Effective Time, the number of PSU's credited to the PSU
Portion of a Participant's Account hereunder pursuant to (c) above shall be
adjusted so as to equal the Adjusted Number of such PSU's.
(e) The Interest Portion and the PSU Portion of a Participant's
Account shall be credited with amounts in respect of the Deferred Portion of a
Participant's Award for any Open Cycle, at the time and in the manner provided
in Section 4.2(e).
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(f) The Interest Portion and the PSU Portion of a Participant's
Account shall be adjusted from time to time to reflect all interest or Earnings
(as defined in Section 4.4), and all additional PSU's, to be credited to such
Portions pursuant to Sections 4.4 and 4.5, and all payments made with respect
to such Portions pursuant to Section 4.6.
(g) A Participant's interest in his or her Account shall be fully
vested and nonforfeitable at all times.
4.4 CREDITS TO INTEREST PORTION
In the case of any Participant whose employment with U.S. Trust
Corporation and its Affiliated Companies terminated prior to January 1, 1994,
interest shall continue to be credited to the Interest Portion of such
Participant's Account hereunder in accordance with the applicable provisions of
the Prior Plan and the Predecessor Plans as in effect at the time of such
Participant's termination of employment, for all periods ending after the Chase
Merger Closing Date, until payment with respect to the Interest Portion of such
Participant's Account has been made in full; provided, however, that interest
on the R.O.E. Balance of the Interest Portion of any such Participant's Account
under the Long-Term Performance Plan of U.S. Trust Corporation shall be
credited at the Prime Rate for all periods ending after the Chase Merger
Closing Date. In the case of each other Participant, the Interest Portion of
the Participant's Account shall be credited with Earnings for periods ending
after the Chase Merger Closing Date in accordance with the following
provisions:
(a) As of the last day of each calendar month, each part of the
balance of the Interest Portion of a Participant's Account for which a separate
Earnings Crediting Option (as hereinafter defined) is in effect under this
Section 4.4 shall be credited with an amount determined by multiplying such
part of the balance by a percentage corresponding to the Applicable Rate of
Return (as hereinafter defined) for such month under such Earnings Crediting
Option. The amount so credited (which may be positive or negative depending on
whether the Applicable Rate of Return for the month is positive or negative) is
referred to herein as "Earnings".
(b) For purposes of this Section 4.4, the term "Earnings Crediting
Option" shall mean, initially, (i) the Prime Rate, and (ii) any investment fund
maintained under the 401(k) Plan other than the ESOP Stock Fund or the U.S.T.
Corp. Stock Fund. Any investment fund described in clause (ii) of the
preceding sentence is referred to herein as a "401(k) Plan Fund".
Notwithstanding the foregoing, the Committee may at any time, in its
sole discretion, determine (x) that the Prime Rate or any 401(k) Plan Fund
shall cease to constitute an Earnings Crediting Option for purposes of this
Section 4.4, (y) that any investment fund that is added to the 401(k) Plan at
any time after the Chase Merger Closing Date shall not constitute an Earnings
Crediting Option for purposes of the Plan, or (z) that any other hypothetical
investment fund or index or referenced rate of return shall constitute an
Earnings Crediting Option for purposes of this Plan.
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Participants shall be notified in writing, at least 45 days in advance, of any
such change in the Plan's Earnings Crediting Options.
(c) The "Applicable Rate of Return" for any month, under any Earnings
Crediting Option, shall mean (i) in the case of an Earnings Crediting Option
that is a 401(k) Plan Fund, the percentage by which the value of such Fund, as
determined by the 401(k) Plan's Trustee as of the Valuation Date (as defined in
the 401(k) Plan) for such month, exceeds, or is less than, the value of such
Fund, as determined by the 401(k) Plan's Trustee as of the Valuation Date for
the immediately preceding month; and (ii) in the case of any other Earnings
Crediting Option, the rate of return applicable for such month, as determined
by the Committee in its sole discretion.
(d) The Earnings Crediting Options in effect for the Interest Portion
of a Participant's Accounts under the Prior Plan and the Predecessor Plans
immediately prior to the Chase Merger Closing Date (including the Earnings
Crediting Options selected in any election made by the Participant under
Section 4.7(d) of the Prior Plan with respect to the Deferred Portion of the
Participant's Award for any Open Cycle) shall remain in effect for purposes of
this Plan, and shall apply to the Interest Portion of the Participant's Account
hereunder, until the Participant makes an election in accordance with (e) below
to change such Earnings Crediting Options.
(e) A Participant may change the Earnings Crediting Options that are
to apply with respect to the Interest Portion of his or her Account by making a
new election hereunder. Such new election shall be made in writing, on a form
which is provided by the Committee for this purpose and which the Participant
files with the Committee. In such form, the Participant shall specify, by
percentages (which must be even multiples of 5%), the respective parts of the
balance of the Interest Portion that are to be credited with Earnings under
each of the Earnings Crediting Options designated by the Participant in such
form. The Participant's new election shall become effective as of the first
day of the calendar month following the date on which such election is filed
with the Committee, provided that it is so filed at least 15 days prior to such
first day. The Earnings Crediting Options selected by the Participant in such
new election shall remain in effect until the Participant again changes his
election with respect to the Interest Portion of his or her Account in
accordance with this Section 4.4(e).
(f) The Interest Portion of a Participant's Account shall continue to
be credited with Earnings in accordance with the provisions of this Section 4.4
until all payments required to be made with respect to the Interest Portion
under Section 4.6 have been made. For this purpose, any payments made under
Section 4.6 with respect to the Interest Portion of the Participant's Account
will be deemed to have been made pro rata from the respective parts of the
balance of the Interest Portion that are subject to separate Earnings Crediting
Options.
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<PAGE> 13
4.5 CREDITS TO PSU PORTION
As of each Dividend Payment Date, the PSU Portion of each
Participant's Account shall be credited with additional PSU's the number of
which shall be determined by first (i) multiplying the number of PSU's standing
to the Participant's credit in the PSU Portion of the Participant's Account on
the date such dividend was declared by the per-share dollar amount of the
dividend so paid, and then (ii) dividing the resulting amount by the Average
Market Value of one Common Share on the Dividend Payment Date.
4.6 PAYMENT OF DEFERRED AWARDS
In the case of any Participant whose employment with U.S. Trust
Corporation and its Affiliated Companies terminated prior to the Chase Merger
Closing Date, any amounts remaining to be paid with respect to such
Participant's Account as of such date shall be paid in accordance with the
applicable provisions of the Prior Plan and the Predecessor Plans in effect at
the time of such Participant's termination of employment. In the case of each
other Participant, payment with respect to the Participant's Account shall be
made in accordance with the following provisions:
(a) The balances of the Interest Portion and the PSU Portion of a
Participant's Account shall become payable upon the Participant's termination
of employment with the Corporation and its Affiliated Companies for any reason.
For this purpose, a Participant who ceases active employment by reason of
disability but who becomes entitled to receive benefit payments under the
long-term disability plan maintained by the Corporation or any of its
Affiliated Companies shall be treated as continuing to be employed with the
Corporation and its Affiliated Companies during all periods for which he or she
continues to receive benefit payments under such plan.
(b) Payment with respect to the Interest Portion and the PSU Portion
of a Participant's Account shall be made in the form of a series of 10 annual
installments. The first such installment payment shall be made on the last
business day of February of the calendar year following the year in which the
Participant's employment with the Corporation and its Affiliated Companies
terminates, and the remaining installment payments shall be made on the last
business day of February of each succeeding year.
(c) Each installment payment to be made with respect to the Interest
Portion of a Participant's Account shall be made in cash, in an amount
determined by dividing (i) the balance of the Interest Portion determined as of
the last day of the calendar year preceding the year in which such payment is
to be made, by (ii) the number of installment payments remaining to be made.
The last such installment payment shall include Earnings credited to the
Interest Portion for the month preceding the month in which such payment is
made.
(d) Each installment payment to be made with respect to the PSU
Portion of a Participant's Account shall be made partly in Common Shares, and
partly in cash. The number of shares to be
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<PAGE> 14
included in each such installment payment shall be equal to the number of whole
PSU's included in the quotient resulting from dividing (i) the total number of
PSU's included in the balance of the PSU Portion of the Participant's Account
as of the last day of the calendar year preceding the year in which such
payment is to be made, by (ii) the number of installment payments remaining to
be made; and the amount of cash to be included in each such installment payment
shall be determined by multiplying (iii) the fractional part of a PSU included
in the aforementioned quotient by (iv) the Average Market Value of one Common
Share on the business day immediately preceding the date on which such
installment payment is to be made. The last such installment payment shall
include a number of Common Shares equal to the whole number of any additional
PSU's that are credited to the PSU Portion of the Participant's Account under
Section 4.5 during the month preceding the month in which such payment is made,
together with cash (in an amount determined in the same manner as described in
clause (iv) of the preceding sentence) for any fractional part of a PSU that is
so credited.
(e) If a Participant should die before receiving all payments
required to be made hereunder with respect to the Participant's Account, any
payments remaining to be made at the date of the Participant's death shall be
made to the Participant's Beneficiary in the same form, at the same times and
in the same amounts, as such payments would have been made to the Participant
(i) if he or she had not died, and (ii) if the Participant died while still
employed, if the Participant's employment had otherwise terminated on the date
of his or her death.
(f) Notwithstanding any other provision in this Section 4.6 to the
contrary, payment with respect to any part or all of the Participant's Account
balances may be made to the Participant or, if the Participant has died, to the
Participant's Beneficiary, on any date earlier than the date on which such
payment is to be made pursuant to such other provisions of this Section 4.6 if
(i) the Participant, or his or her Beneficiary, requests such early payment and
(ii) the Committee, in its sole discretion, determines that such early payment
is necessary to help the Participant, or his or her Beneficiary, meet an
"unforeseeable emergency" within the meaning of Section 1.457-2(h)(4) of the
federal Income Tax Regulations. The amount that may be so paid may not exceed
the amount necessary to meet such emergency.
4.7 CHANGE IN CONTROL
In the event of a Change in Control, the provisions of this Section
4.7 shall apply notwithstanding any other provision herein to the contrary (but
subject to the proviso contained in the definition of "Change in Control" in
Section 1.2). Upon the occurrence of a Change in Control, the balance of each
Participant's Account shall become immediately payable in full. Payment with
respect to each Participant's Account balance shall be made in the form of a
single cash lump sum payment. The amount so payable with respect to each
Participant's Account shall be equal to the sum of (i) the aggregate amount of
the balance of the Interest Portion of the Participant's Account, plus (ii) an
amount determined by multiplying the aggregate number of PSU's then included in
the
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<PAGE> 15
balance of the PSU Portion of the Participant's Account by the Determined Value
of one Common Share.
If the Change in Control occurs prior to the end of any Open Cycle,
each Participant's Award for such cycle shall become immediately payable in
full. Payment with respect to each Participant's Award for such cycle shall be
made in the form of a single cash lump-sum payment. The amount so payable with
respect to a Participant's Award shall be equal to the sum of (x) an amount
determined by multiplying the aggregate number of PSU's then standing to the
Participant's credit under Sections 4.2(d) and 4.2(e)(iv) with respect to such
Award, by the Determined Value of one Common Share; (y) the amount that
otherwise was to be paid with respect to the Non-Deferred Portion of such Award
pursuant to Section 4.2(c); and (z) the amount that otherwise was to be
credited to the Interest Portion of the Participant's Account with respect to
the Deferred Portion of such Award pursuant to Section 4.2(e)(iii). The
amounts referred to in clauses (y) and (z) of the preceding sentence shall
include interest credited as provided in Sections 4.2(c) and 4.2(e)(iii)
through the last day of the calendar month preceding the month in which payment
pursuant to this Section 4.7 is made.
All amounts payable to Participants pursuant to this Section 4.7,
reduced by any taxes withheld pursuant to Section 6.8, shall be paid to such
Participants as soon as practicable following the Change in Control.
SECTION 5. BENEFIT EQUALIZATION UNITS
5.1 ACCOUNTS FOR BENEFIT EQUALIZATION UNITS
As of the time this Plan is adopted by the Corporation, there shall be
established on the books and records of the Corporation, for bookkeeping
purposes only, an account ("BEU Account") for each Participant, to reflect the
Participant's interest in the Benefit Equalization Units awarded to the
Participant under the Prior Plan. Upon adoption of the Plan, each
Participant's BEU Account shall be credited with a number of Benefit
Equalization Units equal to the total number of Benefit Equalization Units
standing to the Participant's credit under Section 5 of the Prior Plan as of
the close of business on the day preceding the Chase Merger Closing Date.
As of the Effective Time, the number of Benefit Equalization Units so
credited to each Participant's BEU Account shall be adjusted so as to equal the
Adjusted Number of such Benefit Equalization Units.
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<PAGE> 16
A Participant's interest in his or her BEU Account shall be fully
vested and nonforfeitable at all times.
5.2 DIVIDEND EQUIVALENTS
As of each Dividend Payment Date, each Participant's BEU Account shall
be credited with additional Benefit Equalization Units, the number of which
shall be determined by first (i) multi plying the number of Benefit
Equalization Units standing to the Participant's credit in the Participant's
BEU Account on the date such dividend was declared by the per-share dollar
amount of the dividend so paid, and then (ii) dividing the resulting amount by
the Average Market Value of one Common Share on the Dividend Payment Date.
5.3 PAYMENT OF BENEFIT EQUALIZATION UNITS
Payment with respect to a Participant's Benefit Equalization Units
shall be made as soon as practicable after the termination of the Participant's
employment with the Corporation and its Affiliated Companies, for any reason.
Payment shall be made in the form of (i) a number of Common Shares equal to the
number of whole Benefit Equalization Units included in the balance of the
Participant's BEU Account as of the last day of the month preceding the month
in which such payment is made, and (ii) a cash payment in an amount determined
by multiplying (A) the fractional part of the Benefit Equalization Unit
included in such balance as of such last day, by (B) the Average Market Value
of one Common Share on the business day immediately preceding the date on which
such payment is made.
5.4 CHANGE IN CONTROL
Notwithstanding any other provision herein to the contrary (but
subject to the proviso contained in the definition of "Change in Control" in
Section 1.2), payment with respect to a Participant's Benefit Equalization
Units shall be made in accordance with the provisions of this Section 5.4 in
the event of a Change in Control. Upon the occurrence of a Change in Control,
the balance of each Participant's BEU Account shall become immediately payable
in full. Payment with respect to each Participant's BEU Account balance shall
be made in the form of a single cash lump sum payment. The amount so payable
with respect to each Participant's BEU Account shall be determined by
multiplying the number of Benefit Equalization Units then standing to the
Participant's credit in his or her BEU Account, by the Determined Value of one
Common Share. All amounts payable to Participants pursuant to this Section
5.4, reduced by taxes withheld pursuant to Section 6.8, shall be paid to such
Participants as soon as practicable following the Change in Control.
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<PAGE> 17
SECTION 6. GENERAL PROVISIONS
6.1 CERTAIN ADJUSTMENTS TO PLAN SHARES
In the event of any change in the Common Shares occurring after the
Chase Merger Closing Date by reason of any stock dividend, recapitalization,
reorganization, merger, consolidation, split-up, combination or exchange of
shares, or any rights offering to purchase Common Shares at a price
substantially below fair market value, or any similar change affecting the
Common Shares, the number and kind of shares represented by Phantom Share Units
or Benefit Equalization Units and the number and kind of shares subject to
Restrictions shall be appropriately adjusted consistent with such change in
such manner as the Committee, in its sole discretion, may deem equitable to
prevent substantial dilution or enlargement of the rights granted to, or
available for, the Participants here under. The Committee shall give notice to
each Participant of any adjustment made pursuant to this Section and, upon such
notice, such adjustment shall be effective and binding for all purposes.
6.2 SUCCESSOR CORPORATION
The obligations of the Corporation under the Plan shall be binding
upon any successor corporation or organization resulting from the merger,
consolidation or other reorganization of the Corporation, or upon any successor
corporation or organization succeeding to substantially all of the assets and
business of the Corporation. The Corporation agrees that it will make
appropriate provision for the preservation of Participants' rights under the
Plan in any agreement or plan which it may enter into or adopt to effect any
such merger, consolidation, reorganization or transfer of assets.
6.3 NON-ALIENATION OF BENEFITS
A Participant's rights to payments under the Plan shall not be subject
in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, or garnishment by creditors of the Participant or his
or her Beneficiary.
6.4 GENERAL CREDITOR STATUS
Participants shall have no right, title, or interest whatsoever in or
to any investments which the Corporation may make to aid it in meeting its
obligations under the Plan. Nothing contained in the Plan, and no action taken
pursuant to its provisions, shall create or be construed to create a trust of
any kind, or a fiduciary relationship between the Corporation and any
Participant, Beneficiary, or any other person. To the extent that any person
acquires a right to receive payments from the Corporation under the Plan, such
right shall be no greater than the right of a general unsecured creditor of the
Corporation. The Plan shall constitute a mere promise by the Corporation to
make
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<PAGE> 18
payments in the future of the benefits provided for herein. It is intended
that the arrangements reflected in this Plan be treated as unfunded for tax
purposes, as well as for purposes of Title I of ERISA. All payments to be made
hereunder shall be paid from the general funds of the Corporation and no
special or separate fund shall be established and no segregation of assets
shall be made to assure payment of such amounts except as expressly set forth
in the Plan. In its sole discretion, the Corporation may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Common Shares or pay cash; provided, however, that, unless
the Committee otherwise determines with the consent of the affected
Participant, the existence of such trusts or other arrangements shall be
consistent with the "unfunded" status of the Plan.
6.5 NO RIGHT TO CONTINUED EMPLOYMENT
Neither the Plan nor any action taken thereunder shall be construed as
giving any employee any right to be retained in the employ of the Corporation
or any of its Affiliated Companies.
6.6 AWARDS NOT TREATED AS COMPENSATION UNDER BENEFIT PLANS
No Award shall be considered as compensation under any employee
benefit plan of U.S. Trust Corporation, the Corporation, or any of their
Affiliated Companies, except as specifically provided in any such plan or as
otherwise determined by the Board of Directors.
6.7 LISTING AND QUALIFICATION OF COMMON SHARES
The Corporation, in its discretion, may postpone the issuance,
delivery, distribution or release of Common Shares pursuant to an Award of
Restricted Stock, Performance Share Units or Benefit Equalization Units until
completion of such stock exchange listing or other qualification of such shares
under any state or federal law, rule or regulation as the Corporation may
consider appropriate, and may require any Participant or Beneficiary to make
such representations and furnish such information as it may consider
appropriate in connection with the issuance or delivery of the shares in
compliance with applicable laws, rules and regulations.
6.8 TAXES
The Corporation or any of its Affiliated Companies may make such
provisions and take such steps as it may deem necessary or appropriate for the
withholding of all federal, state and local taxes required by law to be
withheld with respect to amounts payable under the Plan including, but not
limited to (i) deducting the amount so required to be withheld from any other
amount then or thereafter payable to a Participant or Beneficiary, (ii)
reducing the amount of any Award of Performance Share Units otherwise required
to be deferred pursuant to a Participant's election under Section 4.4 of the
Prior Plan, by the amount so required to be withheld with respect to such
deferred amount, and/or (iii) requiring a Participant or Beneficiary to pay to
the Corporation or any of its
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Affiliated Companies the amount so required to be withheld as a condition of
the issuance, delivery, distribution or release of any Common Shares.
6.9 DESIGNATION AND CHANGE OF BENEFICIARY
Each Participant shall file with the Committee a written designation
of one or more persons as the Beneficiary who shall be entitled to receive any
amount, or any Common Shares, payable under the Plan upon his or her death. A
Participant may, from time to time, revoke or change his or her Beneficiary
designation without the consent of any previously designated Beneficiary by
filing a new designation with the Committee. The last such designation
received by the Committee shall be controlling; provided, however, that no
designation, or change or revocation thereof, shall be effective unless
received by the Committee prior to the Participant's death, and in no event
shall it be effective as of a date prior to such receipt. If at the date of a
Participant's death, there is no designation of a Beneficiary in effect for the
Participant pursuant to the provisions of this Section 6.9, or if no
Beneficiary designated by the Participant in accordance with the provisions
hereof survives to receive any amount or Common Shares that becomes payable
under the Plan by reason of the Participant's death, the Participant's estate
shall be treated as the Participant's Beneficiary for purposes of the Plan.
6.10 PAYMENTS TO PERSONS OTHER THAN PARTICIPANT
If the Committee shall find that any Participant or Beneficiary to
whom any amount, or any Common Shares, is payable under the Plan is unable to
care for his or her affairs because of illness, accident or legal incapacity,
then if the Committee so directs, such amount, or such Common Shares, may be
paid to such Participant's or Beneficiary's spouse, child or other relative, an
institution main taining or having custody of such person, or any other person
deemed by the Committee to be a proper recipient on behalf of such Participant
or Beneficiary, unless a prior claim therefor has been made by a duly appointed
legal representative of the Participant or Beneficiary. Any payment made under
this Section 6.10 shall be a complete discharge of the liability of the
Corporation with respect to such payment.
6.11 NO LIABILITY OF COMMITTEE MEMBERS
No member of the Committee shall be personally liable by reason of any
contract or other instrument executed by such member or on his or her behalf in
his or her capacity as a member of the Committee nor for any mistake of
judgment made in good faith, and the Corporation shall indemnify and hold
harmless each member of the Committee, and each employee, officer, director or
trustee of the Corporation or any of its Affiliated Companies to whom any duty
or power relating to the administration or interpretation of the Plan may be
allocated or delegated, against any cost or expense (including counsel fees) or
liability (including any sum paid in settlement of a claim with the approval of
the Board of Directors) arising out of any act or omission to act in connection
with the Plan unless arising out of such person's own fraud or bad faith.
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6.12 AMENDMENT OR TERMINATION
Except as to matters that in the opinion of the Corporation's legal
counsel require shareholder approval, any provision of the Plan may be modified
as to a Participant by an individual agreement approved by the Board of
Directors. The Board of Directors may, with prospective or retroactive effect,
amend, suspend or terminate the Plan or any portion thereof at any time;
provided, however, that (i) no amendment that would materially increase the
cost of the Plan to the Corporation may be made by the Board of Directors
without the approval of the shareholders of the Corporation and (ii) no
amendment, suspension or termination of the Plan shall deprive any Participant
of any rights under the Plan without his or her written consent. Any amendment
that the Board of Directors would be permitted to make pursuant to the
preceding sentence may also be made by the Committee where appropriate to
facilitate the administration of the Plan or to comply with applicable law or
any applicable rules and regulations of government authorities.
6.13 GOVERNING LAW
The Plan shall be governed by and construed in accordance with the
laws of the State of New York, without reference to the principles of conflicts
of law thereof.
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EXHIBIT 10.10
BENEFIT EQUALIZATION PLAN
OF
U.S TRUST CORPORATION
AS AMENDED AND RESTATED
EFFECTIVE AS OF SEPTEMBER 1, 1995
------
1. PURPOSE
The Plan hereinafter set forth represents a continuation of the
Benefit Equalization Plan maintained by U.S. Trust Corporation, before its
merger with The Chase Manhattan Corporation ("Chase") pursuant to the Agreement
and Plan of Merger dated as of November 18, 1994 between Chase and U.S. Trust
Corporation (the "Merger Agreement"). The Plan has been amended and restated
effective as of September 1, 1995 (a) to reflect the transfer of the Plan to
and the adoption of the Plan by the Corporation, and the Corporation's
assumption of and becoming solely responsible for all liabilities and
obligations of U.S. Trust Corporation under the Plan, effective immediately
before the "New Holdings Distribution", as defined in the Merger Agreement, and
(b) to reflect the "Distribution" and the "Merger", as defined in the Merger
Agreement.
The purpose of the Plan, as so continued, is to provide members of the
Employees' Retirement Plan of United States Trust Company of New York and
Affiliated Companies, and their surviving spouses, with benefits that would
have been payable to them under such plan but for the limitations placed on
benefits payable under such plan by sections 401(a)(17) and 415 of the Code.
The Plan is intended to constitute an "excess benefit plan", as that
term is defined in section 3(36) of ERISA, to the extent that the Plan provides
benefits equal to any reduction in benefits under the Retirement Plan
attributable solely to the limitations imposed by section 415 of the Code. The
Plan is intended to constitute an unfunded plan of deferred compensation for "a
select group of management or highly compensated employees", within the meaning
of sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, to the extent that the
Plan provides any other benefits.
2. DEFINITIONS
When used herein, the following terms shall have the following
meanings:
<PAGE> 2
"AFFILIATED COMPANIES" means (i) with respect to U.S. Trust
Corporation, each of its direct or indirect subsidiaries, and (ii) with respect
to the Corporation, each of its direct or indirect subsidiaries.
"BENEFIT LIMITATIONS" means (i) the limitation imposed by section
401(a)(17) of the Code on the amount of an Eligible Employee's annual
compensation that may be taken into account in computing the Eligible
Employee's pension benefit under the Retirement Plan and (ii) the limitations
imposed by section 415 of the Code on the amount of the pension benefit payable
to an Eligible Employee under the Retirement Plan.
"BOARD OF DIRECTORS" means the Board of Directors of the Corporation.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time.
"COMMITTEE" means the Compensation and Benefits Committee of the Board
of Directors.
"CORPORATION" means New USTC Holdings Corporation, which will assume
the name of "U.S. Trust Corporation" as of the time the New Holdings
Distribution is effective.
"EARLIEST PAYMENT DATE" means (i) the date as of which payment of an
Eligible Employee's Pension under the Retirement Plan commences, or (ii) if
earlier, the earliest date as of which the Eligible Employee could elect, under
the Retirement Plan, to have payment of his or her Pension commence.
"ELIGIBLE EMPLOYEE" means any Employee who becomes entitled to receive
a Pension pursuant to Article 5 or Article 6 of the Retirement Plan, the amount
of which is less than the amount of the Pension he or she would be entitled to
receive if the Employee's Pension were calculated without regard to the Benefit
Limitations.
"ELIGIBLE SPOUSE" means the surviving spouse of a deceased Employee
who, upon such Employee's death, becomes entitled to receive a Spouse's
Preretirement Survivorship Pension pursuant to Section 8.7 of the Retirement
Plan, the amount of which is less than the amount of the Spouse's Preretirement
Survivorship Pension he or she would be entitled to receive if the Pension that
the deceased Employee would have been entitled to receive had he or she not
died were calculated without regard to the Benefit Limitations.
Notwithstanding the foregoing, the surviving spouse of a deceased Employee
shall not be treated as an Eligible Spouse for purposes of this Plan if payment
of an Excess Pension Benefit to such deceased Employee had commenced prior to
his or her death.
"EMPLOYEE" means any person employed, or formerly employed, by the
Corporation, U.S. Trust Corporation, or any of their Affiliated Companies that
participates, or formerly participated, in the Retirement Plan.
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<PAGE> 3
"EQUIVALENT ACTUARIAL VALUE" shall have the same meaning as is
assigned to such term under the Retirement Plan for purposes of converting a
life annuity to a 50% joint and survivor annuity, or, as the context may
require, for purposes of determining the amount of distributions payable in the
form of a lump sum payment under Section 7.6 of the Retirement Plan.
"JOINT AND SURVIVOR PENSION" means a monthly annuity payable to an
Eligible Employee during his lifetime, with a monthly survivor's annuity
payable after the death of such Eligible Employee to his spouse on his Payment
Starting Date who survives him for such spouse's life (regardless of such
spouse's remarriage after his death) in the amount of 50% of the monthly
annuity paid to the Eligible Employee prior to his death.
"PAYMENT STARTING DATE" means the first day of the month coinciding
with or next following the later of (i) the date of the Eligible Employee's
Termination of Employment, or (ii) the Eligible Employee's Earliest Payment
Date.
"PLAN" means the Benefit Equalization Plan of U.S. Trust Corporation,
as set forth herein and as amended and restated from time to time.
"RETIREMENT PLAN" means the Employees' Retirement Plan of United
States Trust Company of New York and Affiliated Companies, as amended and
restated from time to time.
"TERMINATION OF EMPLOYMENT" means the termination of an Employee's
employment with the Corporation and all of its Affiliated Companies.
Each other capitalized term used herein, not otherwise defined, shall
have the meaning given to such term under the Retirement Plan.
3. EXCESS PENSION BENEFIT
Upon an Eligible Employee's Termination of Employment for any reason
other than death, the Eligible Employee shall be entitled to receive an Excess
Pension Benefit under this Plan.
The Excess Pension Benefit shall be a Pension which is equal to the
excess of (i) the Pension that would be payable to the Eligible Employee under
the Retirement Plan in the form of a single life annuity if payment thereof
were to commence on the Eligible Employee's Payment Starting Date, calculated
without regard to the Benefit Limitations, over (ii) the Pension that would be
payable to the Eligible Employee under the Retirement Plan in the form of a
single life annuity if payment thereof were to commence on the Eligible
Employee's Payment Starting Date, calculated by taking into account the Benefit
Limitations.
The Excess Pension Benefit shall be payable on a monthly basis, and
each payment thereof shall be due on the first day of the month. In the case
of an Eligible Employee who is not married
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on his Payment Starting Date, the Excess Pension Benefit shall be payable in
the form of a single life annuity. In the case of an Eligible Employee who is
married on his Payment Starting Date, the Excess Pension Benefit shall be
payable in the form of a Joint and Survivor Pension which shall be of
Equivalent Actuarial Value to the Excess Pension Benefit payable in the form of
a single life annuity.
Payment of the Excess Pension Benefit to the Eligible Employee shall
commence as of his Payment Starting Date, and shall terminate with the payment
due for the month in which he dies. Payment of a survivor's annuity under the
Excess Pension Benefit to the Eligible Employee's surviving spouse shall
commence on the first day of the month following the date of the Eligible
Employee's death, and shall terminate with the payment due for the month in
which the surviving spouse dies.
4. EXCESS SURVIVORSHIP PENSION BENEFIT
Upon the death of an Employee, the Employee's Eligible Spouse shall be
entitled to receive an Excess Survivorship Pension Benefit under this Plan.
The Excess Survivorship Pension Benefit shall be a Pension which is
equal to the excess of (i) the Spouse's Preretirement Survivorship Pension that
would be payable to the Eligible Spouse under the Retirement Plan if payment
thereof were to commence on the first day of the month following the date of
the Employee's death, calculated without regard to the Benefit Limitations,
over (ii) the Spouse's Preretirement Survivorship Pension that would be payable
to the Eligible Spouse under the Retirement Plan if payment thereof were to
commence on the first day of the month following the date of the Employee's
death, calculated by taking into account the Benefit Limitations.
The Excess Survivorship Pension Benefit shall be payable in the form
of a single life annuity. Payments shall be made on a monthly basis, and shall
be due on the first day of the month. Payment of the Excess Survivorship
Pension Benefit to the Eligible Spouse shall commence as of the first day of
the month following the date of the Employee's death, and shall terminate with
the payment due for the month in which the surviving spouse dies.
5. SOURCE OF PAYMENT
All payments to be made hereunder shall be paid from the general
assets of the Corporation, and no special or separate fund shall be established
and no segregation of assets shall be made to assure such payments. Nothing
contained in the Plan, and no action taken pursuant to the provisions of the
Plan, shall create or be construed to create a trust of any kind, or as
creating in any Eligible Employee or any other person any right, title or
beneficial ownership interest in or to any assets of the Corporation. The Plan
constitutes a mere promise by the Corporation to make benefit payments in the
future. It is the intention of the Corporation that the Plan be treated as
unfunded for Federal
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<PAGE> 5
income tax purposes and for purposes of Title I of ERISA. To the extent that
any person acquires a right to receive payments from the Corporation under the
Plan, such right shall be no greater than the right of any unsecured general
creditor of the Corporation.
Notwithstanding the foregoing, the Corporation may establish a
bookkeeping reserve to reflect its obligations hereunder, or may establish a
"grantor" trust, within the meaning of sections 671 through 679 of the Code, to
assist it in making the payments provided for hereunder; provided, however,
that any bookkeeping reserve, and the assets of any trust, so established shall
not be deemed to constitute assets of this Plan, and the assets of any trust so
established shall at all times prior to payment to Eligible Employees and
Eligible Spouses remain a part of the general assets of the Corporation and
subject to the claims of the Corporation's general creditors.
6. CHANGE IN CONTROL
Notwithstanding any other provision in the Plan to the contrary (but
subject to the proviso contained in the definition of "Change in Control" in
(e) below), upon the occurrence of a Change in Control, the following
provisions shall apply.
(a) Each Eligible Employee and each Eligible Spouse for whom an
Excess Pension Benefit or an Excess Survivorship Pension Benefit had become
payable prior to a Change in Control shall be entitled, upon the occurrence of
such Change in Control, to receive, in full discharge of the Corporation's
obligations hereunder to such Eligible Employee or Eligible Spouse, an
immediate lump-sum cash payment, in an amount that is of Equivalent Actuarial
Value to the Excess Pension Benefit or the Excess Survivorship Pension Benefit
so payable.
(b) In the event of an Eligible Employee's Involuntary Termination
(as defined below) following a Change in Control, such Eligible Employee shall
be entitled, upon such Involuntary Termination, to receive, in full discharge
of the Corporation's obligations hereunder to such Eligible Employee, a single
lump-sum cash payment, in an amount that is of Equivalent Actuarial Value to
the Excess Pension Benefit that otherwise would have been payable to the
Eligible Employee under Section 4 as a result of such Termination of
Employment.
(c) All amounts payable under this Section 6, reduced by any taxes
withheld pursuant to Section 9(c), shall be paid as soon as practicable
following the Change in Control.
(d) As used herein, the term "Involuntary Termination" shall mean an
Eligible Employee's Termination of Employment (i) by the Corporation or any of
its Affiliated Companies or (ii) by the Eligible Employee after any reduction
in his or her salary, any change in location of the Eligible Employee's place
of employment to a location outside the Borough of Manhattan without his or her
consent, a material decrease in the Eligible Employee's responsibilities with
respect to the business of the Corporation or any of its Affiliated Companies,
or any other material adverse change in the
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<PAGE> 6
conditions of the Eligible Employee's employment by the Corporation or any of
its Affiliated Companies.
(e) As used herein, the term "Change in Control" shall mean that any
of the following has occurred after the "Closing Date", as defined in the
Merger Agreement:
(i) 20% or more of the common shares of the Corporation has
been acquired by any person (as defined by Section
3(a)(9) of the Securities Exchange Act of 1934) other
than directly from the Corporation;
(ii) there has been a merger or equivalent combination after
which 49% or more of the voting shares of the surviving
corporation is held by persons other than former
shareholders of the Corporation; or
(iii) 20% or more of the directors elected by shareholders to
the Board of Directors are persons who were not
nominated by management in the most recent proxy
statement of the Corporation;
provided, however, that no Change in Control shall be deemed to have occurred,
and no right to receive any amount that becomes payable upon or after a Change
in Control as provided in this Section 6 shall exist, to the extent that the
Board of Directors so directs by resolution adopted prior to the Change in
Control, or not later than 45 days after the Change in Control if the
percentage of the Corporation's common shares acquired or directors elected
under clauses (i) or (iii) of the foregoing definition of Change in Control
shall be at least 20% but less than 25%. Any resolution of the Board of
Directors adopted in accordance with the provisions of this definition
directing that a Change in Control shall be deemed not to have occurred for
purposes of this Plan may be rescinded or countermanded at any time with or
without retroactive effect.
7. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Committee, which shall have full
power and authority, in its discretion, to interpret and construe the Plan, to
make all determinations considered necessary or advisable for the
administration of the Plan and the calculation of the amount of benefits
payable thereunder, and to review claims for benefits under the Plan. The
Committee's interpretations and constructions of the Plan and its decisions or
actions thereunder shall be binding and conclusive on all persons for all
purposes.
No member of the Committee shall be personally liable by reason of any
contract or other instrument executed by such member or on his or her behalf in
his or her capacity as a member of the Committee nor for any mistake of
judgment made in good faith, and the Corporation shall indemnify and hold
harmless each member of the Committee and each other employee, officer, or
director or trustee of the Corporation or any of its Affiliated Companies to
whom any duty or power
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<PAGE> 7
relating to the administration or interpretation of the Plan may be allocated
or delegated, against any cost or expense (including counsel fees) or liability
(including any sum paid in settlement of a claim with the approval of the Board
of Directors) arising out of any act or omission to act in connection with the
Plan unless arising out of such person's own fraud or bad faith.
8. AMENDMENT AND TERMINATION
The Plan may be amended, suspended or terminated, with prospective or
retroactive effect, in whole or in part, by the Board of Directors without the
consent of any Employee or any other person. The Committee may adopt any
amendment that may be necessary or appropriate to facilitate the
administration, management and interpretation of the Plan or to conform the
Plan thereto, provided any such amendment does not have a material effect on
the currently estimated cost to the Corporation of maintaining the Plan. No
such amendment, suspension or termination shall retroactively impair or
otherwise adversely affect the rights of any Employee or other person to
benefits under the Plan that have accrued prior to the date of such action as
determined by the Committee in its sole discretion.
Notwithstanding the above, and notwithstanding any other provision in
this Plan to the contrary, the Committee may direct that no benefit
attributable to the application under the Retirement Plan of the Benefit
Limitation described in clause (i) of the definition of the term "Benefit
Limitations" be paid with respect to an Eligible Employee if the Committee, in
its sole dis cretion, determines that the payment of such benefit would
jeopardize the Plan's status as a plan of deferred compensation for "a select
group of management or highly compensated employees" within the meaning of the
applicable provisions of ERISA with respect to such benefits.
9. GENERAL PROVISIONS.
The following additional provisions shall be applicable with respect
to the Plan.
(a) The Plan shall be binding upon and inure to the benefit of the
Corporation and its successors and assigns, and Eligible Employees, Eligible
Spouses, and their estates. The Plan shall also be binding upon any successor
corporation or organization succeeding to substantially all of the assets and
business of the Corporation, but nothing in the Plan shall preclude the
Corporation from merging or consolidating into or with, or transferring all or
substantially all of its assets to, an other corporation or organization that
assumes the Plan and all obligations of the Corporation hereunder. The
Corporation agrees that it will make appropriate provision for the preservation
of Employees' rights under the Plan in any agreement or plan that it may enter
into to effect any merger, consolidation, reorganization or transfer of assets.
Upon such a merger, consolidation, reorganization, or transfer of assets and
assumption, the term "Corporation" shall refer to such other corporation or
organization and the Plan shall continue in full force and effect.
(b) Neither the Plan nor any action taken hereunder shall be
construed as giving to any Employee the right to be retained in the employ of
the Corporation or any of its Affiliated
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<PAGE> 8
Companies or as affecting the right of the Corporation or any of its Affiliated
Companies to dismiss any Employee.
(c) The Corporation shall withhold from all benefits otherwise
payable under the Plan all Federal, state, local or other taxes required
pursuant to law to be withheld with respect to such payments.
(d) The rights or interests of any Eligible Employee under the Plan
shall not be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by creditors or
beneficiaries of such person.
(e) If the Committee shall find that any person to whom any amount is
payable under the Plan is unable to care for his or her affairs because of
illness, accident or legal incapacity, then, if the Committee so directs, any
payment due to such person may be paid to such person's spouse, child or other
relative, an institution maintaining or having custody of such person, or any
other person deemed by the Committee to be a proper recipient on behalf of such
person, unless a prior claim for payment of such amount has been made by a duly
appointed legal representative of such person. Any such payment shall be a
complete discharge of the liability of the Corporation therefor.
(f) The Plan shall be governed by the laws of the State of New York
from time to time in effect.
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<PAGE> 1
EXHIBIT 10.11
BOARD MEMBERS' RETIREMENT PLAN
OF
U. S. TRUST CORPORATION
AS AMENDED AND RESTATED EFFECTIVE AS OF
SEPTEMBER 1, 1995
----------
ARTICLE I
PURPOSE
1.1 The Plan, as hereinafter set forth, represents a continuation
of the Board Members' Retirement Plan of U.S. Trust Corporation, as amended and
restated effective as of September 1, 1995 (a) to reflect the transfer of the
Plan to and the adoption of the Plan by the Corporation, and the Corporation's
assumption of and becoming solely responsible for all liabilities and
obligations of U.S. Trust Corporation under the Plan, effective immediately
before the "New Holdings Distribution", as defined in the Agreement and Plan of
Merger dated as of November 18, 1994 between The Chase Manhattan Corporation
and U.S. Trust Corporation (the "Merger Agreement"), and (b) to reflect the
"Distribution" and the "Merger", as defined in the Merger Agreement.
1.2 The purpose of the Plan, as so continued, is to assist in
attracting and retaining individuals of superior talent, ability and
achievement, to serve as Board Members by providing a retirement income for
Board Members.
ARTICLE II
DEFINITIONS
When used herein, the following terms shall have the following
meanings:
<PAGE> 2
2.1 "AFFILIATED COMPANIES" means (i) with respect to U.S. Trust
Corporation, each of its direct or indirect subsidiaries, and (ii) with respect
to the Corporation, each of its direct or indirect subsidiaries.
2.2 "ANNUAL RETAINER" means the sum of (i) cash retainer fees paid
for service to the Board without regard to the number of meetings attended and
(ii) the Fair Market Value on the date of grant of the Common Shares issued to
each Board Member pursuant to the terms of the U.S. Trust Corporation Stock
Plan for Non-Employee Directors.
2.3 "BENEFICIARY" means the person or persons designated in
accordance with Article VI of the Plan to receive the amount, if any, payable
upon the death of an Eligible Board Member.
2.4 "BOARD" means (i) the Board of Directors, (ii) with respect to
periods prior to the Chase Merger Closing Date, the Board of Trustees of United
States Trust Company of New York, and with respect to periods after the Chase
Merger Closing Date, the Board of Trustees of New U.S. Trust Company of New
York, which will assume the name of "United States Trust Company of New York"
as of the time the New Holdings Distribution is effective, or (iii) the board
of directors of any other Affiliated Company of the Corporation (or, for
periods prior to the Chase Merger Closing Date, U.S. Trust Corporation), the
members of which board have been designated by the Board of Directors as being
eligible for participation in this Plan.
2.5 "BOARD MEMBER" means any individual who is a member of any
Board.
2.6 "BOARD OF DIRECTORS" means (i) with respect to periods prior to
the Chase Merger Closing Date, the Board of Directors of U.S. Trust
Corporation, and (ii) with respect to periods after the Chase Merger Closing
Date, the Board of Directors of the Corporation.
2.7 "CHASE MERGER CLOSING DATE" shall mean the "Closing Date" as
defined in Section 1.2 of the Merger Agreement.
2.8 "COMMITTEE" means the persons appointed by the Board of
Directors to administer the Plan in accordance with Section 7.2.
2.9 "COMMON SHARES" shall mean (i) prior to the Chase Merger
Closing Date, the common shares ($1.00 par value per share) of U.S. Trust
Corporation, and (ii) after the Chase Merger Closing Date, the common shares
($1.00 par value per share) of the Corporation.
2.10 "CORPORATION" means New USTC Holdings Corporation, which will
assume the name of "U.S. Trust Corporation" as of the time the New Holdings
Distribution is effective.
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<PAGE> 3
2.11 "ELIGIBLE BOARD MEMBER" means a Board Member who retires from
active service as such and meets both of the following conditions: (i)
retirement takes place on reaching age 72 or after completing fifteen years of
such service and (ii) at no time has he or she been an officer or an employee
of U.S. Trust Corporation, the Corporation, or any of their Affiliated
Companies.
2.12 "FAIR MARKET VALUE" means, with respect to Common Shares on
any date of grant, the Average Market Value of one Common Share on such date
or, if such date is not a business day, on the business day next preceding such
date. For this purpose, the "Average Market Value" of one Common Share on any
business day shall mean the average of the mean between the per-share high and
low prices for the Common Shares during such day, as quoted on the NASDAQ
National Market System, or, if the Common Shares are not traded on such system,
on such other securities market or securities exchange on which such shares are
traded as the Committee shall determine.
2.13 "PLAN" means the Board Members' Retirement Plan of U.S. Trust
Corporation as set forth herein and as amended and restated from time to time.
2.14 "RETIREMENT BENEFIT" means the benefit described in Article
III of the Plan.
ARTICLE III
RETIREMENT BENEFITS
3.1 An Eligible Board Member upon retirement from active service as
a Board Member shall receive an annual Retirement Benefit equal to the amount
of the Annual Retainer payable to such Board Member during the last full year
of such active service, which shall be payable for the period set forth in
Article IV.
3.2 The Retirement Benefit shall be payable in four quarterly
installments on the first business day of the month following the end of each
calendar quarter, with the first and last such payment adjusted where
appropriate to reflect the number of full months for which such benefit has
been earned.
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<PAGE> 4
ARTICLE IV
DURATION OF RETIREMENT BENEFITS
4.1 If an Eligible Board Member retires at age 72 having served as
such for a minimum of 10 years, the Retirement Benefit shall be payable for
life.
4.2 If an Eligible Board Member retires at age 72 having served as
such for less than 10 years, the Retirement Benefit shall be payable for a
period equal to the number of whole years and whole months of such service or
for life, whichever is shorter.
4.3 If an Eligible Board Member retires prior to reaching age 72
having served a minimum of 15 years, the Retirement Benefit shall be payable
for a period equal to the number of whole years and whole months of such
service or for life, whichever is shorter.
ARTICLE V
SOURCE OF PAYMENT
5.1 All payments of Retirement Benefits hereunder shall be paid
from the general funds of the Corporation, and no special or separate fund
shall be established or other segre gation of assets made to assure such
payments; provided, however, that the Corporation may establish a bookkeeping
reserve to meet its obligations hereunder. Nothing contained in the Plan, and
no action taken pursuant to the provisions of the Plan, shall create or be
construed to create a trust of any kind, or a fiduciary relationship between
the Corporation or the Committee, and any Board Member or other person. An
Eligible Board Member shall have the status of a general unsecured creditor of
the Corporation with respect to his or her right to receive any payment under
the Plan.
ARTICLE VI
DESIGNATION OF BENEFICIARIES
6.1 Each Board Member who participates in the Plan shall file with
the Committee a written designation of one or more persons as the Beneficiary
who shall be entitled to receive the amount, if any, payable under the Plan
upon his or her death. A Board Member may, from time to time, revoke or change
his or her Beneficiary designation without the consent of any
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<PAGE> 5
previously designated Beneficiary by filing a new designation with the
Committee. The last such designation received by the Committee shall be
controlling; provided, however, that no designation, or change or revocation
thereof, shall be effective unless received by the Committee prior to the Board
Member's death, and in no event shall it be effective as of the date prior to
such receipt.
6.2 If no such Beneficiary designation is in effect at the time of
a Board Member's death, or if no designated Beneficiary survives the Board
Member, or if such designation con flicts with law, the Board Member's estate
shall be deemed to have been designated as his or her Beneficiary and shall
receive the payment of the amount, if any, payable under the Plan upon his or
her death. If the Committee is in doubt as to the right of any person to
receive such amount, the Committee may retain such amount, without liability
for any interest thereon, until the rights thereto are determined, or the
Committee may pay such amount into any court of appropriate jurisdiction and
such payment shall be a complete discharge of the liability of the Corporation
therefor.
ARTICLE VII
ADMINISTRATION OF THE PLAN
7.1 The Plan shall be administered by the Committee which shall
have full power and authority to interpret and construe the Plan, to make all
determinations considered necessary or advisable for the administration of the
Plan and the calculation of the amount of benefits payable thereunder, and to
review claims for benefits under the Plan. The Committee's interpretations and
constructions of the Plan and its decisions or actions thereunder shall be
binding and conclusive on all persons for all purposes.
7.2 The Committee shall be composed of at least three Board Members
who shall be appointed by the Board of Directors from among Board Members who
are disqualified from becoming Eligible Board Members because of their failure
to meet the condition set forth in Section 2.11(ii). If at any time there are
less than three such Board Members, additional members of the Committee shall
be appointed from among those Board Members who have never participated in the
Plan or, in the absence of any such Board Members, from among any senior
officers of the Corporation or any of its Affiliated Companies.
7.3 No member of the Committee shall be personally liable by reason
of any contract or other instrument executed by such member or on his or her
behalf in his or her capacity as a member of the Committee nor for any mistake
of judgment made in good faith, and the Corporation shall indemnify and hold
harmless, each member of the Committee and each other employee, officer,
director or trustee of the Corporation or any of its Affiliated Companies to
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<PAGE> 6
whom any duty or power relating to the administration or interpretation of the
Plan may be allocated or delegated, against any cost or expense (including
counsel fees) or liability (including any sum paid in settlement of a claim
with the approval of the Board of Directors) arising out of any act or omission
to act in connection with the Plan unless arising out of such person's own
fraud or bad faith.
ARTICLE VIII
AMENDMENT AND TERMINATION
8.1 The Plan may be amended, suspended or terminated, with
prospective or retroactive effect, in whole or in part, by the Board of
Directors without the consent of any Board Member or Beneficiary. The
Committee may adopt any amendment which may be necessary or appropriate to
facilitate the administration, management and interpretation of the Plan or to
conform the Plan thereto, provided any such amendment does not have a material
effect on the currently estimated cost to the Corporation of maintaining the
Plan. No such amendment, suspension or termination shall retroactively impair
or otherwise adversely affect the rights of any Eligible Board Member to
benefits under the Plan which have arisen prior to the date of such action, as
determined by the Committee in its sole discretion.
ARTICLE IX
GENERAL PROVISIONS
9.1 The Plan shall be binding upon and inure to the benefit of the
Corporation and its successors and assigns and the Eligible Board Member, his
or her successors, assigns, designees and estate. The Plan shall also be
binding upon any successor corporation or organization succeeding to
substantially all of the assets and business of the Corporation, but nothing in
the Plan shall preclude the Corporation from merging or consolidating into or
with, or transferring all or substantially all of the assets to, another
corporation which assumes the Plan and all obligations of the Corporation
hereunder. The Corporation agrees to make appropriate provision for the
preservation of Eligible Board Members' rights under the Plan in any agreement
or plan which it may enter into to effect any merger, consolidation,
reorganization or transfer of assets. Upon such a merger, consolidation,
reorganization, or transfer of assets and assumption, the term "Corporation"
shall refer to such other corporation and the Plan shall continue in full force
and effect.
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<PAGE> 7
9.2 Neither the Plan nor any action taken hereunder shall be
construed as giving to any person the right to be proposed or elected as a
director or trustee of the Corporation or any of its Affiliated Companies.
9.3 The Corporation shall withhold from all amounts payable under
the Plan all federal, state, local or other taxes required pursuant to law to
be withheld with respect to such amounts.
9.4 An Eligible Board Member's rights to payments under the Plan
shall not be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by creditors of the
Eligible Board Member or his or her Beneficiary.
9.5 If the Committee shall find that any person to whom any amount
is payable under the Plan is unable to care for his or her affairs because of
illness, accident or legal incapacity, then, if the Committee so directs, such
amount may be paid to such person's spouse, child, or other relative, an
institution maintaining or having custody of such person, or any other person
deemed by the Committee to be a proper recipient on behalf of such person,
unless a prior claim therefor has been made by a duly appointed legal
representative of such person. Any payment shall be a complete discharge of
the liability of the Corporation with respect to such payment.
9.6 All elections, designations, requests, notices, instructions,
and other communications from an Eligible Board Member, Beneficiary or other
person to the Committee required or permitted under the Plan shall be in such
form as is prescribed from time to time by the Committee, shall be mailed by
first class mail or delivered to such location as shall be specified by the
Committee and shall be deemed to have been given and delivered only upon actual
receipt thereof at such location.
9.7 The captions preceding the sections and articles hereof have
been inserted solely as a matter of convenience and shall not in any manner
define or limit the scope or intent of any provisions of the Plan.
9.8 The Plan shall constitute a mere promise by the Corporation to
make payments in the future of the benefits provided for herein. It is
intended that the arrangements reflected in this Plan be treated as unfunded
for tax purposes.
9.9 The Plan shall be governed by the laws of the State of New York
from time to time in effect.
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<PAGE> 1
EXHIBIT 10.12
BOARD MEMBERS' DEFERRED COMPENSATION PLAN
OF
U.S. TRUST CORPORATION
AS AMENDED AND RESTATED EFFECTIVE AS OF
SEPTEMBER 1, 1995
------------
1. PURPOSE
The Plan hereinafter set forth represents a continuation of the Board
Members' Deferred Compensation Plan maintained by U.S. Trust Corporation before
its merger with The Chase Manhattan Corporation ("Chase") pursuant to the
Agreement and Plan of Merger dated as of November 18, 1994 between Chase and
U.S. Trust Corporation (the "Merger Agreement"). The Plan has been amended and
restated effective as of September 1, 1995 (a) to reflect the transfer of the
Plan to and its adoption by the Corporation, and the Corporation's assumption
of and becoming solely responsible for all liabilities and obligations of U.S.
Trust Corporation under the Plan, effective immediately before the "New
Holdings Distribution", as defined in the Merger Agreement, and (b) to reflect
the "Distribution" and the "Merger", as defined in the Merger Agreement.
The purpose of the Plan, as so continued, is to provide Eligible
Board Members of the Corporation and its Affiliated Companies with an
opportunity to defer payment of certain por tions of their compensation, at
their election, in accordance with the provisions hereof.
2. DEFINITIONS
As used herein, the following terms shall have the following meanings:
"ACCOUNT" shall mean the Account established for a Participant
pursuant to Section 4.
"AVERAGE MARKET VALUE" shall mean, with respect to one Common Share as
of any date or with respect to any period, the average of the mean between the
per-share high and low prices for the Common Shares on such date, or on each
trading day during such period, as quoted on the NASDAQ National Market System,
or, if the Common Shares are not traded on such system, on such other
securities market or securities exchange on which such shares are traded as the
Committee shall determine.
<PAGE> 2
"BENEFICIARY" shall mean the person or persons designated by a
Participant in accordance with Section 9 to receive any amount, or any common
shares of the Corporation, payable under the Plan by reason of his or her
death.
"BOARD" shall mean (i) the Board of Directors, (ii) with respect to
periods prior to the Chase Merger Closing Date, the Board of Trustees of United
States Trust Company of New York, and with respect to periods after the Chase
Merger Closing Date, the Board of Trustees of New U.S. Trust Company of New
York, which will assume the name of "United States Trust Company of New York"
as of the time the New Holdings Distribution is effective, or (iii) the board
of directors of any other direct or indirect subsidiary of the Corporation (or,
for periods prior to the Chase Merger Closing Date, U.S. Trust Corporation),
the members of which board have been designated by the Board of Directors as
being eligible for participation in this Plan.
"BOARD OF DIRECTORS" shall mean (i) with respect to periods prior to
the Chase Merger Closing Date, the Board of Directors of U.S. Trust
Corporation, and (ii) with respect to periods after the Chase Merger Closing
Date, the Board of Directors of the Corporation.
"BUSINESS DAY" shall mean any day on which Common Shares are traded on
the NASDAQ National Market System or, if Common Shares are not traded on such
system, on such other securities market or securities exchange on which such
shares are traded as the Committee shall determine.
"CHASE MERGER CLOSING DATE" shall mean the "Closing Date", as defined
in Section 1.2 of the Merger Agreement.
"COMMITTEE" shall mean the persons appointed by the Board of Directors
to administer the Plan in accordance with Section 12.
"COMMON SHARES" shall mean (i) prior to the Chase Merger Closing Date,
the common shares ($1.00 par value per share) of U.S. Trust Corporation, and
(ii) after the Chase Merger Closing Date, the common shares ($1.00 par value
per share) of the Corporation.
"CORPORATION" shall mean New USTC Holdings Corporation, which will
assume the name of "U.S. Trust Corporation" as of the time the New Holdings
Distribution is effective.
"ELIGIBLE BOARD MEMBER" shall mean any individual who is a member of
any Board and who is entitled to receive compensation for services rendered in
such capacity.
"ELIGIBLE COMPENSATION" shall mean, with respect to any Eligible Board
Member for any Plan Year beginning on or after January 1, 1995, all fees
payable to such Board Member
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<PAGE> 3
during such year for attendance at meetings of any Board or committees thereof,
and all fees payable to such Board Member during such year by way of retainer
for service as a member or chairman of any Board or committees thereof
regardless of the number of meetings attended ("Retainer Fees").
Notwithstanding the foregoing, the term "Eligible Compensation" shall not
include any compensation payable to an Eligible Board Member in a form other
than cash.
"PARTICIPANT" shall mean any Eligible Board Member who has made an
election under Section 3 (or under the applicable provisions of the Prior Plan)
to defer any portion of his or her Eligible Compensation for any Plan Year.
"PHANTOM SHARE UNIT" or "PSU" shall mean a unit of measurement
equivalent to one Common Share, with none of the attendant rights of a holder
of such share, including, without limitation, the right to vote such share and
the right to receive dividends thereon, except to the extent otherwise
specifically provided herein.
"PLAN" shall mean the Board Members' Deferred Compensation Plan of
U.S. Trust Corporation, as set forth herein and as amended from time to time.
"PLAN YEAR" shall mean the calendar year.
"PRIOR PLAN" shall mean the Board Members' Deferred Compensation Plan
of U.S. Trust Corporation, as in effect from time to time prior to the Chase
Merger Closing Date.
3. DEFERRAL ELECTIONS
With respect to each Plan Year beginning on or after January 1, 1994,
an Eligible Board Member may elect to have payment of any part or all of his or
her Eligible Compensation for such year deferred, and to have payment of such
portion made under the terms of this Plan. Any such election shall be made in
accordance with the following rules:
(a) A deferral election shall be made in writing, on a form provided
by the Committee for such purpose.
(b) In the election form, the Eligible Board Member (i) shall
specify, by percentage (which must be an even multiple of 5%), the portion of
his or her Eligible Compensation the Eligible Board Member wishes to defer
hereunder (the amounts so deferred are hereinafter referred to as the Eligible
Board Member's "Deferred Amounts"), and (ii) shall specify, by percentage
(which must be an even multiple of 5%), the portions of the Eligible Board
Member's Deferred Amounts that he or she wishes to have allocated,
respectively, to the PSU Portion and to the Interest Portion of the Account
established for the Eligible Board Member pursuant to
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Section 4. At least 50% of the Eligible Board Member's Deferred Amounts for
each Plan Year must be allocated to the PSU Portion of such Account.
(c) An Eligible Board Member's election to defer Eligible
Compensation for any Plan Year beginning on or after January 1, 1995 shall be
filed with the Committee by no later than June 30 of the preceding Plan Year.
(d) Notwithstanding the provisions of paragraph (b) above, a newly
elected Eligible Board Member may make an initial deferral election hereunder
with respect to Eligible Compensation for the Plan Year in which he or she is
first elected to serve as a member of any Board and, if so elected after June
30 of such year, for the next following Plan Year, by filing his or her
election form with the Committee by no later than 30 days after the date on
which he or she commences to serve as a member of such Board. Any deferral
election so made shall be effective only with respect to Eligible Compensation
earned for services performed after the date on which the Eligible Board
Member's initial deferral election has been filed with the Committee.
(e) Any deferral election made by an Eligible Board Member with
respect to his or her Eligible Compensation for a Plan Year, and any election
made hereunder as to the allocation of the Deferred Amounts for such year to
the PSU Portion and the Interest Portion of his or her Account, shall be
irrevocable.
4. ACCOUNTS
For each Participant, there shall be established on the books and
records of the Corporation, for bookkeeping purposes only, a separate Account
for each Participant to reflect the Participant's interest under the Plan. The
Account so established for each Participant shall be maintained in accordance
with the following provisions:
(a) The Account established for each Participant shall consist of two
sub-accounts referred to herein, respectively, as the "PSU Portion" and the
"Interest Portion".
(b) As of the time this Plan is adopted by the Corporation, the
Interest Portion of each Participant's Account shall be credited with an amount
equal to the balance, determined as of the close of business on the day
preceding the Chase Merger Closing Date, of the Interest Portion of the Account
maintained for the Participant under the Prior Plan, and the PSU Portion of
each Participant's Account shall be credited with a number of PSU's equal to
the number of PSU's included in the balance, determined as of the close of
business on the day preceding the Chase Merger Closing Date, of the PSU Portion
of the Account maintained for the Participant under the Prior Plan.
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<PAGE> 5
(c) As of the Effective Time (as defined in Section 1.3 of the Merger
Agreement), the number of PSU's credited to the PSU Portion of a Participant's
Account hereunder pursuant to (b) above shall be adjusted so as to equal the
number of such PSU's determined by dividing (i) the product of (A) the number
of such PSU's multiplied by (B) the Average Market Value of one Common Share of
U.S. Trust Corporation during the 30-day period ending on the day immediately
preceding the Chase Merger Closing Date, by (ii) the amount representing the
10-day average of the daily average of the high bid and low asked prices for
one Common Share of the Corporation in the over-the-counter market as reported
by the National Quotation Bureau Incorporated on a "when-issued" basis on each
of the 10 trading days immediately preceding the Chase Merger Closing Date.
(d) The PSU Portion and the Interest Portion of each Participant's
Account shall be credited with amounts equal to the portions of the
Participant's Deferred Amounts for each Plan Year (but only for periods
subsequent to the Chase Merger Closing Date, in the case of Deferred Amounts
for the Plan Year beginning on January 1, 1995) that the Participant has
elected under Section 3 hereof (or under Section 3 of the Prior Plan) to have
allocated to such Portions. Such amounts shall be so credited as of the first
day of the calendar month following the month in which the amounts in question
would have been paid to the Participant had the Participant not elected to have
payment of such amounts deferred.
(e) The PSU Portion and the Interest Portion of a Participant's
Account shall be adjusted to reflect all additional PSU's, interest and
Earnings (as defined in paragraph (c) of Section 6) to be credited to such
Portions pursuant to Section 6, and all payments made with respect to such
Portions pursuant to Section 8.
(f) A Participant's interest in his or her Account shall be fully
vested and nonforfeitable at all times.
5. CONVERSION TO PSU'S
Amounts credited to the PSU Portion of a Participant's Account
pursuant to paragraph (d) of Section 4 (and any interest credited thereon
pursuant to paragraph (b) of Section 6) shall be converted into (and after such
conversion shall be reflected in such Portion as) a number of Phantom Share
Units ("PSU's"). The conversion shall be made in accordance with the following
rules.
(a) Amounts so credited shall be converted as of the following dates
(the date for the conversion of each such amount is hereinafter referred to as
the "Conversion Date"):
(i) In the case of any amount so credited with respect to
a Participant's Deferred Amounts for any Plan Year beginning on or
after January 1, 1995, the
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Conversion Date shall be the same date as the date as of which such
amount is so credited, except as provided in (ii) below.
(ii) In the case of any amount so credited with respect to
a newly elected Eligible Board Member's Deferred Amounts for the Plan
Year in which he or she is first elected to serve as a Member of any
Board and, if so elected after June 30 of such year, for the next
following Plan Year, the Conversion Date shall be the later of (A) the
date as of which such amount is so credited, or (B) the first day of
the month following the expiration of six months from the date on
which the Eligible Member's initial deferral election was filed with
the Committee pursuant to Section 3(d).
(b) The number of PSU's into which any amount credited to the PSU
Portion of a Participant's Account (and any interest credited thereon under
paragraph (b) of Section 6) is to be converted shall be determined by dividing
(i) the dollar value of such amount by (ii) the Average Market Value of one
Common Share on the Conversion Date for such amount or, if such Conversion Date
is not a Business Day, on the Business Day next preceding such Conver sion
Date.
6. CREDITING OF EARNINGS
Until payment with respect to a Participant's Account has been made in
full in accordance with Section 8, the PSU Portion of a Participant's Account
shall be credited with additional PSU's or interest, and the Interest Portion
of the Participant's Account shall be credited with Earnings, in accordance
with the following provisions:
(a) As of each date on which the Corporation pays a dividend on its
Common Shares ("Dividend Payment Date") the PSU Portion of each Participant's
Account shall be credited with additional PSU's, the number of which shall be
determined by first (i) multiplying the number of PSU's standing to the
Participant's credit on the date such dividend was declared by the per-share
dollar amount of the dividend so paid, and then (ii) dividing the resulting
amount by the Average Market Value of one Common Share on the Dividend Payment
Date.
(b) If, as of the last day of any calendar month, any part of the
balance of the PSU Portion of a Participant's Account has not yet been
converted into PSU's in accordance with Section 5, such part of the balance
shall be credited, as of such last day, with interest computed at the Prime
Rate (as hereinafter defined).
(c) As of the last day of each calendar month, each part of the
balance of the Interest Portion of a Participant's Account for which a separate
Earnings Crediting Option (as hereinafter defined) is in effect pursuant to the
Participant's election hereunder (or under the Prior Plan) shall be credited
with an amount determined by multiplying such part of the balance by a
percentage
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corresponding to the Applicable Rate of Return (as hereinafter defined) for
such month under such Earnings Crediting Option. The amount so credited (which
may be positive or negative depending on whether the Applicable Rate of Return
for the month is positive or negative) is referred to herein as "Earnings".
(d) For purposes of this Section 6, the term "Earnings Crediting
Option" shall mean, initially, (i) the Prime Rate, and (ii) any investment fund
maintained under the 401(k) Plan and ESOP of United States Trust Company of New
York and Affiliated Companies (the "401(k) Plan") other than the ESOP Stock
Fund or the U.S.T. Corp. Stock Fund; and the term "Prime Rate" shall mean, with
respect to any calendar month, the prime rate as quoted by United States Trust
Company of New York on the last Business Day of such month. Any investment
fund described in clause (ii) of the preceding sentence is referred to herein
as a "401(k) Plan Fund".
Notwithstanding the foregoing, the Committee may at any time, in its
sole discretion, determine (x) that the Prime Rate or any 401(k) Plan Fund
shall cease to constitute an Earnings Crediting Option for purposes of the
Plan, (y) that any investment fund that is added to the 401(k) Plan at any time
after the Chase Merger Closing Date shall not constitute an Earnings Crediting
Option for purposes of the Plan, or (y) that any other hypothetical investment
fund or index or referenced rate of return shall constitute an Earnings
Crediting Option for purposes of the Plan. Participants shall be notified in
writing, at least 45 days in advance, of any such change in the Plan's Earnings
Crediting Options.
(e) The "Applicable Rate of Return" for any month, under any Earnings
Crediting Option, shall mean (i) in the case of an Earnings Crediting Option
that is a 401(k) Plan Fund, the percentage by which the value of such Fund, as
determined by the 401(k) Plan's Trustee as of the Valuation Date (as defined in
the 401(k) Plan) for such month, exceeds, or is less than, the value of such
Fund, as determined by the 401(k) Plan's Trustee as of the Valuation Date for
the immediately preceding month; and (ii) in the case of any other Earnings
Crediting Option, the rate of return applicable for such month, as determined
by the Committee in its sole discretion.
(f) A Participant may make elections with respect to the Earnings
Crediting Options that are to apply with respect to the Interest Portion of his
or her Account, in accordance with the following rules:
(i) a Participant may elect to have any part or all of
the balance of the Interest Portion credited with Earnings under any
Earnings Crediting Option available under the Plan at the time of his
or her election.
(ii) each Participant shall make an initial election as to
the Earnings Crediting Options that are to apply with respect to the
Interest Portion at the time the Participant first elects under
Section 3 to have any part of the Participant's Deferred Amounts for
any
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<PAGE> 8
Plan Year allocated to the Interest Portion of his or her Account.
Such election shall be made in the election form in which the
Participant makes his or her election under Section 3 to have such
part of the Participant's Deferred Amounts for such Plan Year
allocated to the Interest Portion. In such election form, the
Participant shall specify, by percentages (which must be even
multiples of 5%) the respective parts of the balance of the Interest
Portion of his or her Account that are to be credited with Earnings
under each of the Earnings Crediting Options designated by the
Participant in such form.
(iii) The Earnings Crediting Options selected in the
initial election made by the Participant under clause (ii) above shall
remain in effect (and shall apply to all additional amounts allocated
to the Interest Portion pursuant to any deferral elections made by the
Participant under Section 3 with respect to any subsequent Plan Years)
until the Participant changes his or her election in accordance with
clause (iv) below. The Earnings Crediting Options in effect for the
Interest Portion of a Participant's Account under the Prior Plan as of
the close of business on the day preceding the Chase Merger Closing
Date shall remain in effect with respect to the Interest Portion of
the Participant's Account under this Plan, until the Participant makes
an election under clause (iv) below to change the Earnings Crediting
Options for such Interest Portion.
(iv) A Participant may change the Earnings Crediting
Options that are to apply with respect to the Interest Portion of his
or her Account by making a new election hereunder. Such new election
shall be made in writing, on a form which is provided by the Committee
for this purpose and which the Participant files with the Committee.
In such form, the Participant shall specify, in the same manner as
described in clause (ii) above, the respective parts of the balance of
the Interest Portion that are to be credited with Earnings under each
of the Earnings Crediting Options designated by the Participant in
such form. The Participant's new election shall become effective as
of the first day of the calendar month following the date on which
such election is filed with the Committee, provided that it is so
filed at least 15 days prior to such first day. The Earnings
Crediting Options selected by the Participant in such new election
shall remain in effect until the Participant again changes his
election with respect to the Interest Portion of his or her Account in
accordance with this clause (iv).
(g) The Interest Portion of a Participant's Account shall continue to
be credited with Earnings in accordance with the provisions of this Section 6
until all payments required to be made with respect to the Interest Portion
under Section 8 have been made. For this purpose, any payments made under
Section 8 with respect to the Interest Portion of the Participant's Account
will be deemed to have been made pro rata from the respective parts of the
balance of the Interest Portion that are subject to separate Earnings Crediting
Options.
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<PAGE> 9
7. ADJUSTMENT OF PSU'S
In the event of any change in the Common Shares occurring after the
Chase Merger Closing Date by reason of any stock dividend, recapitalization,
reorganization, merger, consolidation, split-up, combination or exchange of
shares, or any rights offering to purchase such shares at a price substantially
below fair market value, or any similar change affecting the Common Shares, the
number and kind of shares represented by Phantom Share Units shall be
appropriately adjusted consistent with such change in such manner as the
Committee, in its sole discretion, may deem equitable to prevent substantial
dilution or enlargement of the rights granted to, or available for, the
Participants hereunder. The Committee shall give notice to each Participant of
any adjustment made pursuant to this Section 7 and, upon such notice, such
adjust ment shall be effective and binding for all purposes of the Plan.
8. PAYMENT OF ACCOUNT BALANCES
Payment with respect to a Participant's Account shall be made in
accordance with the following provisions:
(a) The balances of the PSU Portion and the Interest Portion of a
Participant's Account shall become payable upon the Participant's ceasing to be
a member of any Board, for any reason.
(b) Except as otherwise provided in paragraph (e) below, payment with
respect to the PSU Portion and the Interest Portion of a Participant's Account
shall be made in the form of a series of 10 annual installments. The first
such installment payment shall be made on the last Business Day of February of
the Plan Year following the year in which the Participant ceases to be a member
of any Board, and the remaining installment payments shall be made on the last
Business Day of February of each succeeding Plan Year.
(c) Each installment payment to be made with respect to the Interest
Portion of a Participant's Account shall be made in cash, in an amount
determined by dividing (i) the balance of the Interest Portion determined as of
the last day of the Plan Year preceding the year in which such payment is to be
made, by (ii) the number of installment payments remaining to be made. The last
such installment payment shall include Earnings credited to the Interest
Portion for the month preceding the month in which such payment is made.
(d) Each installment payment to be made with respect to the PSU
Portion of a Participant's Account shall be made partly in Common Shares, and
partly in cash. The number of shares to be included in each such installment
payment shall be equal to the number of whole PSU's included in the quotient
resulting from dividing (i) the total number of PSU's included in the balance
of the PSU Portion of the Participant's Account as of the last day of the Plan
Year
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preceding the year in which such payment is to be made, by (ii) the number of
installment payments remaining to be made; and the amount of cash to be
included in each such installment payment shall be determined by multiplying
(iii) the fractional part of a PSU included in the aforementioned quotient by
(iv) the Average Market Value of one Common Share on the Business Day
immediately preceding the date on which such installment payment is to be made.
The last such installment payment shall include a number of Common Shares equal
to the whole number of any additional PSU's that are credited to the PSU
Portion of the Participant's Account under Section 6(a) during the month
preceding the month in which such payment is made, together with cash (in an
amount determined in the same manner as described in clause (iv) of the
preceding sentence) for any fractional part of a PSU that is so credited.
(e) If a Participant should die before receiving all payments
required to be made hereunder with respect to the Participant's Account, any
payments remaining to be made at the date of the Participant's death shall be
made to the Participant's Beneficiary as follows:
(i) Payment with resect to the Interest Portion
of the Participant's Account shall be made in the form of a single
lump-sum cash payment, in an amount equal to the balance of the
Interest Portion determined as of the last day of the month preceding
the month in which such payment is made.
(ii) Payment with respect to the PSU Portion of
the Participant's Account shall be made in the form of (A) a number of
Common Shares equal to the number of whole PSU's included in the
balance of the PSU Portion as of the last day of the month preceding
the month in which such payment is made, and (b) a cash payment in an
amount determined by multiplying (x) the fractional part of a PSU
included in such balance as of such last day, by (y) the Average
Market Value of one Common Share on the Business Day immediately
preceding the date on which such payment is made.
(iii) The payments to be made hereunder to the
Participant's Beneficiary shall be made as soon as practicable after
the date of the Participant's death.
(f) Notwithstanding any other provision in this Section 8 to the
contrary, payment with respect to any part or all of the Participant's Account
balances may be made to the Participant on any date earlier than the date on
which such payment is to be made pursuant to such other provisions of this
Section 8 if (i) the Participant requests such early payment and (ii) the
Committee, in its sole discretion, determines that such early payment is
necessary to help the Participant meet an "unforeseeable emergency" within the
meaning of Section 1.457-2(h)(4) of the federal Income Tax Regulations. The
amount that may be so paid may not exceed the amount necessary to meet such
emergency.
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<PAGE> 11
(g) There shall be deducted from the amount of any payment otherwise
required to be made under the Plan all Federal, state and local taxes required
by law to be withheld with respect to such payment.
9. DESIGNATION AND CHANGE OF BENEFICIARY
Each Participant shall file with the Committee a written designation
of one or more persons as the Beneficiary who shall be entitled to receive any
amount, or any Common Shares, payable under the Plan by reason of his or her
death. A Participant may, from time to time, revoke or change his or her
Beneficiary designation without the consent of any previously designated
Beneficiary by filing a new designation with the Committee. The last such
designa tion received by the Committee shall be controlling; provided, however,
that no designation, or change or revocation thereof, shall be effective unless
received by the Committee prior to the Participant's death, and in no event
shall it be effective as of a date prior to such receipt. If at the date of a
Participant's death, there is no designation of a Beneficiary in effect for the
Participant pursuant to the provisions of this Section 9, or if no Beneficiary
designated by the Participant in accordance with the provisions hereof survives
to receive any amount payable under the Plan by reason of the Participant's
death, the Participant's estate shall be treated as the Participant's
Beneficiary for purposes of the Plan.
10. PAYMENTS TO PERSONS OTHER THAN PARTICIPANTS
If the Committee shall find that any Participant or Beneficiary to
whom any amount, or any Common Shares, is payable under the Plan is unable to
care for his or her affairs because of illness, accident or legal incapacity,
then, if the Committee so directs, such amount, or such Common Shares, may be
paid to such Participant's or Beneficiary's spouse, child or other relative, an
institution maintaining or having custody of such person, or any person deemed
by the Committee to be a proper recipient on behalf of such Participant or
Beneficiary, unless a prior claim therefor has been made by a duly appointed
legal representative of the Participant or Beneficiary.
Any payment made under this Section 10 shall be a complete discharge
of the liability of the Corporation with respect to such payment.
11. RIGHTS OF PARTICIPANTS
A Participant's rights and interests under the Plan shall be subject
to the following provisions:
(a) A Participant shall have the status of a general unsecured
creditor of the Corporation with respect to his or her right to receive any
payment under the Plan. The Plan shall constitute
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a mere promise by the Corporation to make payments in the future of the
benefits provided for herein. It is intended that the arrangements reflected
in this Plan be treated as unfunded for tax purposes.
(b) The Corporation may, but shall not be required to, purchase a
life insurance policy or policies, to assist it in funding any of its payment
obligations under the Plan. If any policy is so purchased, it shall, at all
times, remain subject to the claims of the Corporation's creditors. No
Participant or Beneficiary shall have any interest in, or rights with respect
to, such policy.
(c) A Participant's rights to payments under the Plan shall not be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, attachment, or garnishment by creditors of the Participant
or his or her Beneficiary.
12. ADMINISTRATION
The Plan shall be administered by a Committee composed of at least
three Board members who shall be appointed by the Board of Directors from among
Board members who are not Eligible Board Members. If at any time there are
less than three such Board members, additional members of the Committee shall
be appointed from among those Board members who have never participated in the
Plan or, in the absence of any such Board members, from among any senior
officers of the Corporation or any of its direct or indirect subsidiaries.
All decisions, actions or interpretations of the Committee under the
Plan shall be final, conclusive and binding upon all parties.
No member of the Committee shall be personally liable by reason of any
contract or other instrument executed by such member or on his or her behalf in
his or her capacity as a member of the Committee nor for any mistake of
judgment made in good faith, and the Corporation shall indemnify and hold
harmless each member of the Committee, and each employee, officer, director or
trustee of the Corporation or any of its direct or indirect subsidiaries to
whom any duty or power relating to the administration or interpretation of the
Plan may be delegated, against any cost or expense (including counsel fees) or
liability (including any sum paid in settlement of a claim with the approval of
the Board of Directors) arising out of any act or omission to act in connection
with the Plan unless arising out of such person's own fraud or bad faith.
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13. AMENDMENT OR TERMINATION
The Board of Directors may, with prospective or retroactive effect,
amend, suspend or terminate the Plan or any portion thereof at any time;
provided, however, that no amendment of the Plan shall deprive any Participant
of any rights to receive payment of any amounts due him or her under the terms
of the Plan as in effect prior to such amendment without his or her written
consent.
Any amendment that the Board of Directors would be permitted to make
pursuant to the preceding paragraph may also be made by the Committee where
appropriate to facilitate the administration of the Plan or to comply with
applicable law or any applicable rules and regulations of governing authorities
provided that the cost of the Plan to the Corporation is not materially
increased by such amendment.
14. SUCCESSOR CORPORATION
The obligations of the Corporation under the Plan shall be binding
upon any successor corporation or organization resulting from the merger,
consolidation or other reorganization of the Corporation, or upon any successor
corporation or organization succeeding to substantially all of the assets and
business of the Corporation. The Corporation agrees that it will make
appropriate provision for the preservation of Participants' rights under the
Plan in any agreement or plan which it may enter into or adopt to effect any
such merger, consolidation, reorganization or transfer of assets.
15. GOVERNING LAW
The provisions of the Plan shall be governed by and construed in
accordance with the laws of the State of New York.
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EXHIBIT 10.13
1990 ANNUAL INCENTIVE PLAN OF
UNITED STATES TRUST COMPANY OF NEW YORK
AND
AFFILIATED COMPANIES
AS AMENDED AND RESTATED
EFFECTIVE AS OF SEPTEMBER 1, 1995
1. PURPOSE
The Plan hereinafter set forth represents a continuation of the 1990
Annual Incentive Plan maintained by United States Trust Company of New York
before the merger of U.S. Trust Corporation with The Chase Manhattan
Corporation ("Chase") pursuant to the Agreement and Plan of Merger dated as of
November 18, 1994 between Chase and U.S. Trust Corporation (the "Merger
Agreement"). The Plan has been amended and restated effective as of September
1, 1995 (a) to reflect the transfer of the Plan to and its adoption by New U.S.
Trust Company of New York, and New U.S. Trust Company of New York's assumption
of and becoming solely responsible for all liabilities and obligations of
United States Trust Company of New York under the Plan, effective immediately
before the "New Holdings Distribution", as defined in the Merger Agreement, and
(b) to reflect the "Distribution" and the "Merger", as defined in the Merger
Agreement.
The purpose of the Plan, as so continued, is to encourage greater
focus on performance among the key decision makers of the Trust Company (as
hereinafter defined) and its affiliated companies by relating a significant
portion of their total compensation to the achievement of annual financial and
strategic objectives.
2. DEFINITIONS
As used herein, the following terms shall have the following meanings:
"AWARD" shall mean a payment to be earned in accordance with the
provisions of the Plan.
"BENEFICIARY" shall mean the person or person designated in accordance
with Section 13 to receive the amount, if any, payable under the Plan upon the
death of a Participant.
"BOARD OF TRUSTEES" shall mean the Board of Trustees of the Trust
Company.
<PAGE> 2
"CHASE MERGER CLOSING DATE" shall mean the "Closing Date" as defined
in Section 1.2 of the Merger Agreement.
"COMMITTEE" shall mean the Compensation and Benefits Committee of the
Board of Trustees.
"CORPORATION" shall mean (i) with respect to periods prior to the
Chase Merger Closing Date, U.S. Trust Corporation, and (ii) with respect to
periods after the Chase Merger Closing Date, New USTC Holdings Corporation,
which will assume the name of "U.S. Trust Cor poration" as of the time the
New Holdings Distribution is effective.
"ESOP CONTRIBUTION" shall mean the ESOP Contribution as defined under
the 401(k) Plan.
"EXECUTIVE DEFERRED COMPENSATION PLAN" shall mean the Executive
Deferred Compensation Plan of U.S. Trust Corporation.
"401(k) PLAN" shall mean the 401(k) Plan and ESOP of United States
Trust Company of New York and Affiliated Companies.
"MANAGEMENT" shall mean the senior officers of the Trust Company who
are responsible for determining business and strategic policies.
"MAXIMUM AMOUNT AVAILABLE FOR AWARDS" shall mean, with respect to any
fiscal year, the total amount available for Awards for all Participants in such
fiscal year based upon the extent to which applicable Performance Goals set
with respect to the fiscal year have been achieved.
"PARTICIPANT" shall mean an employee of the Trust Company who is
selected to participate in the Plan.
"PERFORMANCE GOALS" shall mean the annual performance objectives of
the Corporation or individual Participant established for the purpose of
determining whether, and to what extent, Awards will be earned for a fiscal
year.
"PLAN" shall mean the 1990 Annual Incentive Plan of United States
Trust Company of New York and Affiliated Companies.
"TRUST COMPANY" shall mean (i) for periods prior to the Chase Merger
Closing Date, United States Trust Company of New York, and (ii) for periods
after the Chase Merger Closing Date, New U.S. Trust Company of New York, which
will assume the name of "United States
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Trust Company of New York" as of the time the New Holdings Distribution is
effective. All references herein to the Trust Company shall include its
affiliated companies unless the context otherwise requires.
3. ADMINISTRATION
The Plan shall be administered by the Committee. In no event shall a
member of the Committee be eligible for an Award under the Plan.
A majority of the members of the Committee shall constitute a quorum.
The Committee may act at a meeting, including a telephone meeting, by action of
a majority of the members present, or without a meeting by unanimous written
consent. In addition to the responsibilities and powers assigned to the
Committee elsewhere in the Plan, the Committee shall have the authority to:
(i) Select the Participants;
(ii) Establish the Performance Goals;
(iii) Determine the Maximum Amount Available for Awards for
all Participants, the allocation of such Maximum Amount Available for
Awards among indi vidual Participants or categories of Participants
and actual Awards for each Participant; and
(iv) Establish from time to time regulations for the
administration of the Plan, interpret the Plan, and make all
determinations considered necessary or advisable for the
administration of the Plan.
All decisions, actions or interpretations of the Committee under the
Plan shall be final, conclusive and binding upon all parties.
4. PARTICIPATION
Participants in the Plan shall be selected for each fiscal year from
those employees of the Trust Company whose efforts contribute materially to the
annual success of the Trust Company. No employee shall at any time have the
right to be selected as a Participant in the Plan for any fiscal year, to be
entitled automatically to an Award, nor, having been selected as a Participant
for one fiscal year, to be a Participant in any other fiscal year.
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<PAGE> 4
5. AWARDS
Awards will be earned on the basis of performance measured against
preestablished Performance Goals which relate to corporate performance,
individual performance or a combination of corporate and individual
performance.
Corporate goals will be based upon an annual growth in the earnings
per share of the Corporation and/or upon such other corporate objectives as the
Committee shall determine annually. The Committee shall have the authority to
adjust Performance Goals, or performance measurement standards, for any fiscal
year as it deems equitable in recognition of (i) extraordinary or nonrecurring
events experienced by the Corporation during the fiscal year, or by any other
corporation whose performance is relevant to the determination of the amount of
any Award hereunder, (ii) changes in applicable accounting rules or principles
or changes in the Corporation's or in any other such corporation's methods of
accounting during the fiscal year, (iii) the occurrence of a reorganization,
recapitalization, stock split, stock dividend, combination of shares, merger,
consolidation, rights offering, or any other change in the capital structure of
the Corporation, or of any other such corporation, or (iv) such other events,
changes, occurrences, conditions or circumstances as it shall determine warrant
such adjustment.
Individual goals will be set and performance measured annually by the
Committee based upon recommendations of Management.
The Committee shall determine the Maximum Amount Available for Awards
as a percentage or percentages of the aggregate base salary earned for the year
while a Participant of all Participants, either individually or by categories
of Participants, provided that the Committee may, in its sole discretion, also
apply such percentage or percentages to other current or deferred compensation
and determine the year for which such deferred compensation shall be counted.
The Committee shall determine whether the Performance Goals to be used
in determining the Maximum Amount Available for Awards and the actual Awards
for Participants, individually or by categories of Participants, will be based
on corporate performance, individual performance or a combination of corporate
and individual performance.
The Committee may allocate, in the Committee's discretion, the
portion, if any, of the Maximum Amount Available for Awards which is to be
based on individual performance to categories of Participants, and may
determine the actual Award, if any, to be based on individual performance for
each Participant in a category by apportioning, in the Committee's discretion,
all or part of any such allocated amount among any one or more of such
Participants. The Committee may also allocate, in the Committee's discretion,
a portion of the Maximum Amount
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<PAGE> 5
Available for Awards to be utilized for special additional Awards without
regard to categories of Participants.
No Award shall be considered as compensation under any employee
benefit plan of the Trust Company, except as specifically provided in any such
plan or as otherwise determined by the Board of Trustees.
6. PAYMENT OF AWARDS
The amount payable to a Participant with respect to an Award earned
under the Plan for any fiscal year beginning on or after January 1, 1994, shall
be the amount of the Award so earned, reduced by the sum of (a) the amount of
any ESOP Contribution to be made on behalf of the Participant under the 401(k)
Plan for the "Plan Year" (as defined in the 401(k) Plan) corresponding to such
fiscal year, and (b) the amount taken into account in determining the
Supplemental ESOP Contribution amount to be credited to the Participant's
account under the Executive Deferred Compensation Plan, in either case with
respect to the base salary of such Participant taken into account in
determining the Maximum Amount Available for Awards under the Plan for that
fiscal year.
The amount payable with respect to an Award earned under the Plan for
any fiscal year beginning on or after January 1, 1994, as determined under the
preceding paragraph, shall be paid by the Trust Company in cash as soon as
practicable after the end of such fiscal year, except to the extent that the
Participant (a) has elected, under the applicable provisions of the 401(k)
Plan, to have any portion of such Award reduced, and to have an amount equal to
such portion of the Award contributed to the 401(k) Plan on the Participant's
behalf and/or (b) has elected, under the applicable provisions of the Executive
Deferred Compensation Plan, to defer any portion of such Award.
With respect to the portion of any Award that is subject to a
Participant's election under the 401(k) Plan, the Trust Company shall
contribute an amount equal to such portion of the Award to the 401(k) Plan on
behalf of the Participant; and thereupon, the Trust Company's obligation with
respect to payment of such portion of the Award shall be fully discharged.
However, no such contribution shall be made to the extent it would cause any
limitation applicable under the 401(k) Plan to be exceeded.
With respect to the portion of any Award that is subject to a
Participant's election under the Executive Deferred Compensation Plan, the
Trust Company's obligation under this Plan with respect to payment of such
portion of the Award shall be fully discharged upon the crediting of such
portion of the Award to the Participant's account under the Executive Deferred
Compensation Plan in accordance with the applicable provisions of such Plan.
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<PAGE> 6
Participants shall have no right, title, or interest whatsoever in or
to any investments which the Trust Company may make to aid in meeting its
obligations under the Plan. Nothing contained in the Plan, and no action taken
pursuant to its provisions, shall create or be construed to create a trust of
any kind, or a fiduciary relationship between the Trust Company and any
Participant, Beneficiary, or any other person. To the extent that any person
acquires a right to receive payments from the Trust Company under the Plan,
such right shall be no greater than the right of a general unsecured creditor
of the Trust Company. All payments to be made hereunder shall be paid from the
general funds of the Trust Company and no special or separate fund shall be
established and no segregation of assets shall be made to assure payment of
such amounts except as expressly set forth in the Plan.
Unless paid by the Trust Company, all liabilities in respect of
Participants who are employees of affiliates of such company shall be
discharged by the respective employing affiliates.
7. PARTIAL AWARDS
An employee who is a Participant for less than a full year, whether by
reason of commencement or termination of employment or otherwise, shall receive
such portion of an Award, if any, for that year as the Committee shall
determine.
8. CHANGE IN CONTROL OR OTHER DISCONTINUANCE
Notwithstanding anything in the Plan to the contrary, upon the
occurrence of a Change in Control of the Corporation (as hereinafter defined)
after the Chase Merger Closing Date, unless the Board of Trustees otherwise
directs by resolution adopted prior to the Change in Control, or not later than
45 days after the Change in Control if the percentage of the Corporation's
common shares acquired or directors elected under clause (i) or (iii) of the
definition of Change in Control set forth below shall be at least 20% but less
than 25%, the provisions of this Section 8 shall apply. All corporate and
individual Performance Goals with respect to the fiscal year in which the
Change in Control occurs shall be deemed to have been attained to the full and
maximum extent. Unless another formula shall have been designated by the
Committee prior to the Change in Control, each Participant shall be allocated a
portion of the Maximum Amount Available for Awards (which shall be the amount
of awards payable with respect to the fiscal year of the Change in Control)
equal to the Maximum Amount Available for Awards multiplied by a fraction, the
numerator of which is the portion of the anticipated annual compensation of the
Participant which was taken into account by the Committee in determining the
Maximum Amount Available for Awards, and the denominator of which is the sum of
all such amounts. As soon as practicable following the Change in Control, all
Awards which are deemed to have been earned to the full and maximum extent upon
the occurrence of the Change in Control shall be payable in full in single cash
lump sums, reduced by any taxes withheld
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<PAGE> 7
pursuant to Section 12 and by the amount of any ESOP Contributions to be made
on behalf of Participants under the 401(k) Plan for the year of the Change in
Control. No Awards payable in accordance with this Section shall be
forfeitable on account of a Participant's termination of employment upon or
following the Change in Control. Any resolution of the Board of Trustees
adopted in accordance with the provisions of this Section directing that this
Section not become effective may be rescinded or countermanded at any time with
or without retroactive effect.
For purposes of this Section "Change in Control" shall mean that:
(i) 20% or more of the common shares of the
Corporation has been acquired by any person (as defined by Section
3(a)(9) of the Securities Exchange Act of 1934) other than directly
from the Corporation;
(ii) there has been a merger or equivalent
combination after which 49% or more of the voting shares of the
surviving corporation is held by persons other than former
shareholders of the Corporation; or
(iii) 20% or more of the directors elected by
shareholders to the Board of Directors of the Corporation are persons
who were not nominated in the most recent proxy statement of the
Corporation.
9. SUCCESSOR CORPORATION
The obligations of the Trust Company under the Plan shall be binding
upon any successor corporation or organization resulting from the merger,
consolidation or other reorganization of the Trust Company, or upon any
successor corporation or organization succeeding to substantially all of the
assets and business of the Trust Company. The Trust Company agrees that it
will make appropriate provision for the preservation of Participants' rights
under the Plan in any agreement or plan which it may enter into or adopt to
effect any such merger, consolidation, reorganization or transfer of assets.
10. NON-ALIENATION OF BENEFITS
A Participant shall not assign, sell, encumber, transfer or otherwise
dispose of any rights or interests under the Plan and any attempted disposition
shall be null and void.
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<PAGE> 8
11. NO CLAIM OR RIGHT UNDER THE PLAN
No employee or other person shall have any claim or right to be
granted an Award under the Plan. Neither the Plan nor any action taken
thereunder shall be construed as giving any employee any right to be retained
in the employ of the Trust Company.
12. TAXES
The Trust Company shall deduct from all amounts otherwise payable
under the Plan all federal, state, local and other taxes required by law to be
withheld with respect to such amounts.
13. DESIGNATION AND CHANGE OF BENEFICIARY
Each Participant shall file with the Committee a written designation
of one or more persons as the Beneficiary who shall be entitled to receive the
amount, if any, payable under the Plan upon his or her death. A Participant
may, from time to time, revoke or change his or her Beneficiary designation
without the consent of any previously designated Beneficiary by filing a new
designation with the Committee. The last such designation received by the
Committee shall be controlling; provided, however, that no designation, or
change or revocation thereof, shall be effective unless received by the
Committee prior to the Participant's death, and in no event shall it be
effective as of a date prior to such receipt. If at the date of a
Participant's death, there is no designation of a Beneficiary in effect for the
Participant pursuant to the provisions of this Section 13, or if no Beneficiary
designated by the Participant in accordance with the provisions hereof survives
to receive any amount payable under the Plan by reason of the Participant's
death, the Participant's estate shall be treated as the Participant's
Beneficiary for purposes of the Plan.
14. PAYMENTS TO PERSONS OTHER THAN PARTICIPANT
If the Committee shall find that any person to whom any amount is
payable under the Plan is unable to care for his or her affairs because of
illness, accident or legal incapacity, then, if the Committee so directs, any
payment due to such person may be paid to such person's spouse, child or other
relative, an institution maintaining or having custody of such person, or any
other person deemed by the Committee to be a proper recipient on behalf of such
person, unless a prior claim for payment of such amount has been made by a duly
appointed legal representative of such person. Any such payment shall be a
complete discharge of the liability of the Trust Company therefor.
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<PAGE> 9
15. NO LIABILITY OF COMMITTEE MEMBERS
No member of the Committee shall be personally liable by reason of any
contract or other instrument executed by such member or on his or her behalf in
his or her capacity as a member of the Committee nor for any mistake of
judgment made in good faith, and the Trust Company shall indemnify and hold
harmless each member of the Committee, and each employee, officer, director or
trustee of the Trust Company to whom any duty or power relating to the
administration or interpretation of the Plan may be allocated or delegated,
against any cost or expense (including counsel fees) or liability (including
any sum paid in settlement of a claim with the approval of the Board of
Trustees) arising out of any act or omission to act in connection with the Plan
unless arising out of such person's own fraud or bad faith.
16. AMENDMENT OR TERMINATION
The Board of Trustees may, with prospective or retroactive effect,
amend, suspend or terminate the Plan or any portion thereof at any time,
provided, however, that no amendment, suspension or termination of the Plan
shall deprive any Participant of any rights to Awards previously made under the
Plan without his or her written consent. Any amendment that the Board of
Trustees would be permitted to make pursuant to the preceding sentence may also
be made by the Committee where appropriate to facilitate the administration of
the Plan or to comply with applicable law or any applicable rules and
regulations of government authorities, provided that the cost of the Plan to
the Trust Company is not materially increased thereby. Subject to earlier
termination pursuant to the provisions of this Section, and unless the Board of
Trustees shall have approved an extension of the Plan beyond such date, no
further Awards shall be made with respect to any fiscal year of the Trust
Company ending after December 31, 1999.
17. GOVERNING LAW
The Plan shall be governed by and construed in accordance with the
laws of the State of New York.
18. EFFECTIVE DATE
The Plan shall be effective as of January 1, 1990.
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<PAGE> 10
19. CHASE MERGER PROVISIONS
Notwithstanding any other provisions of this Plan to the contrary, the
following provisions shall apply in connection with the Merger:
(a) Awards under this Plan for the fiscal year beginning on January
1, 1995 (the "1995 Fiscal Year") shall be based on corporate and individual
Performance Goals established and measured on the basis of performance only
during the period from January 1, 1995 to the day immediately preceding the
Chase Merger Closing Date (the "Pre-Merger Period"), and the Maximum Amount
Available for Awards for the 1995 Fiscal Year shall be determined on the basis
of the aggregate amount of base salary earned by Participants only during the
Pre-Merger Period.
(b) At or immediately prior to the close of the Pre-Merger Period,
the Committee shall determine the extent to which corporate goals established
in connection with Awards for the 1995 Fiscal Year have been met and, based
thereon, shall determine the portion of the Maximum Amount Available for Awards
for the 1995 Fiscal Year that has been earned and that is in fact available for
making Awards to Participants (the "1995 Awards Pool").
(c) The entire 1995 Awards Pool, as so determined by the Committee,
shall be awarded and paid to Participants. The amount of the Awards to
Participants shall be determined and paid in accordance with the following
provisions:
(i) The following Participants shall be eligible to
receive full Awards for the 1995 Fiscal Year: (A) each Participant who
is employed with the Trust Company on December 31, 1995; (B) each
Participant whose employment with the Trust Company terminates at any
time during the 1995 Fiscal Year as a result of the Participant's
retirement under the applicable provisions of the 401(k) Plan; (C)
each Participant whose employment with the Trust Company terminates as
of the Chase Merger Closing Date and who becomes on such date a
"Retained Employee" as defined in Section 5.8 of the Merger Agreement;
(D) each Participant whose employment is involuntarily terminated at
any time during the 1995 Fiscal Year as a result of staff reductions
associated with the Distribution and the Merger. Any other
Participant whose employment with the Trust Company terminates prior
to the close of the 1995 Fiscal Year may receive such portion, if any,
of an Award for such fiscal year as the Committee may determine in its
sole discretion.
(ii) In the case of Participants whose employment with the
Trust Company terminates on or prior to the Chase Merger Closing Date,
the Committee shall determine the amount of the Award earned by each
such Participant at or immediately prior to the
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<PAGE> 11
close of the Pre-Merger Period. In the case of all other
Participants, the Committee shall determine the amount of the Award
earned by each such other Participant at the same time as the amount
of the awards for the 1995 Fiscal Year to participants under the 1995
Executive Incentive Plan of U.S. Trust Corporation and the 1995 Annual
Incentive Plan of U.S. Trust Corporation are determined.
(iii) The amount payable to a Participant with respect to
an Award for the 1995 Fiscal Year shall be determined in the manner
described in the first paragraph of Section 6. The amount so
determined shall be paid by the Trust Company in the manner and at the
time described in the second paragraph of Section 6; provided,
however, that in the case of any Participant whose employment with the
Trust Company terminates on or prior to the Chase Merger Closing Date,
the amount payable with respect to such Participant's Award for such
year shall be paid as soon as practicable after the Chase Merger
Closing Date.
(d) No Awards shall be made under this Plan for any fiscal year
after the 1995 Fiscal Year.
(e) This Plan shall automatically terminate as soon as all amounts
payable to all Participants with respect to the Awards earned by them for the
1995 Fiscal Year have been paid to them, contributed to the 401(k) Plan on
their behalf, or credited to their accounts under the Executive Deferred
Compensation Plan, as provided in (c)(iii) above and in Section 6.
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<PAGE> 1
EXHIBIT 10.14
INCENTIVE AWARD PLAN
OF
UNITED STATES TRUST COMPANY OF NEW YORK
AND
AFFILIATED COMPANIES
AS AMENDED AND RESTATED
EFFECTIVE AS OF SEPTEMBER 1, 1995
1. PURPOSE
The Plan hereinafter set forth represents a continuation of the
Incentive Award Plan maintained by United States Trust Company of New York
before the merger of U.S. Trust Corporation with The Chase Manhattan
Corporation ("Chase") pursuant to the Agreement and Plan of Merger dated as of
November 18, 1994 between Chase and U.S. Trust Corporation (the "Merger
Agreement"). The Plan has been amended and restated effective as of September
1, 1995 (a) to reflect the transfer of the Plan to and its adoption by New U.S.
Trust Company of New York, and New U.S. Trust Company of New York's assumption
of and becoming solely responsible for all liabilities and obligations of
United States Trust Company of New York under the Plan, effective immediately
before the "New Holdings Distribution", as defined in the Merger Agreement, and
(b) to reflect the "Distribution" and the "Merger", as defined in the Merger
Agreement.
The purpose of the Plan, as so continued, is to encourage greater
focus on performance among Employees by relating a portion of their total
compensation to the contributions they make, collectively and individually, to
the annual financial success of the Trust Company (as hereinafter defined) and
its affiliated companies.
2. DEFINITIONS
As used herein, the following terms shall have the following meanings:
"BOARD OF TRUSTEES" shall mean the Board of Trustees of the Trust
Company.
"CHASE MERGER CLOSING DATE" shall mean the "Closing Date" as defined
in Section 1.2 of the Merger Agreement.
"COMMITTEE" shall mean such individuals as shall be appointed by the
Board of Trustees from time to time to administer the Plan.
<PAGE> 2
"COMPENSATION" shall mean, with respect to any Employee for any Plan
Year, the base salary paid by the Trust Company to the Employee during such
year, before reduction for any amounts deferred pursuant to the Employee's
election under the 401(k) Plan and any salary reduction contributions made on
the Employee's behalf under the Trust Company's Flexible Spending Plan. An
Employee's "Compensation" shall not include any amounts paid to the Employee
for any period prior to the date on which the Employee has completed at least
one Year of Service.
"CORPORATION" shall mean (i) with respect to periods prior to the
Chase Merger Closing Date, U.S. Trust Corporation, and (ii) with respect to
periods after the Chase Merger Closing Date, New USTC Holdings Corporation,
which will assume the name of "U.S. Trust Cor poration" as of the time the
New Holdings Distribution is effective.
"ELIGIBLE EMPLOYEE" shall mean, with respect to any Plan Year, (i) any
individual who, on the last day of such year, is an Employee and has completed
at least one Year of Service; (ii) any individual who has retired during such
year under the applicable provisions of the 401(k) Plan; and (iii) any Employee
not described in (i) or (ii) who has been selected by his or her division
manager to receive an Incentive Award for such year. Notwithstanding the
foregoing, no Employee who is selected to participate in the 1990 Annual
Incentive Plan of United States Trust Company of New York and Affiliated
Companies for any fiscal year shall be treated as an "Eligible Employee" with
respect to the Plan Year corresponding to such fiscal year, for purposes of
this Plan.
"EMPLOYEE" shall mean any individual employed by the Trust Company.
"401(k) PLAN" shall mean the 401(k) Plan and ESOP of United States
Trust Company of New York and Affiliated Companies.
"PLAN" shall mean the Incentive Award Plan of United States Trust
Company of New York and Affiliated Companies, as set forth herein and as
amended from time to time.
"PLAN YEAR" shall mean the 12-month period beginning on January 1,
1992 and ending on December 31, 1992, and each calendar year thereafter.
"R.O.E." shall mean the Corporation's rate of return on shareholders'
equity. For purposes of determining the amount of the awards to be made to
Eligible Employees pursuant to Sections 4 and 5 for the year 1994, the
Corporation's R.O.E. for such year shall be deemed to be 20%.
"TRUST COMPANY" shall mean (i) for periods prior to the Chase Merger
Closing Date, United States Trust Company of New York, and (ii) for periods
after the Chase Merger Closing
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<PAGE> 3
Date, New U.S. Trust Company of New York, which will assume the name of "United
States Trust Company of New York" as of the time the New Holdings Distribution
is effective. All references herein to the Trust Company shall include its
affiliated companies unless the context otherwise requires.
"YEAR OF SERVICE" shall have the meaning given to such term in the
401(k) Plan.
3. ADMINISTRATION
The Plan shall be administered by the Committee. All decisions,
actions or interpretations of the Committee under the Plan shall be final,
conclusive and binding upon all parties.
4. CORPORATE PERFORMANCE AWARDS
For each Plan Year, each Eligible Employee shall be entitled to
receive a Corporate Performance Award from the Trust Company, in an amount
determined by multiplying the Eligible Employees' Compensation for such year by
the percentage determined in accordance with the following table, based on the
Corporation's R.O.E. for such year:
<TABLE>
<CAPTION>
THE PERCENTAGE OF COMPENSATION
IF R.O.E. IS: TO BE AWARDED SHALL BE:
<S> <C>
Less than 14% 0%
At least 14% but less than 15% 0.5%
At least 15% but less than 16% 1.5%
16% or more 2.5%
</TABLE>
Corporate Performance Awards for any Plan Year shall be made as soon
as practicable after the close of such year.
5. INCENTIVE AWARDS
For each Plan Year, the Trust Company shall make available, for
Incentive Awards to Eligible Employees within each of its divisions, an
aggregate amount determined for each divi sion by multiplying the Compensation
of all Eligible Employees of such division for such year by the percentage
determined in accordance with the following table, based on the Corporation's
R.O.E. for such year:
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<PAGE> 4
<TABLE>
<CAPTION>
THE PERCENTAGE OF COMPENSATION
IF R.O.E. IS: TO BE AWARDED SHALL BE:
<S> <C>
Less than 6% 0%
At least 6% but less than 8% 1%
At least 8% but less than 9% 2%
At least 9% but less than 10% 2%
At least 10% but less than 11% 4%
At least 11% but less than 12% 5%
At least 12% but less than 13% 6%
At least 13% but less than 14% 7%
14% or more 7.5%
</TABLE>
The aggregate amount available for Incentive Awards for the Eligible
Employees of any division for any Plan Year, as so determined, less the
aggregate amount of Incentive Awards made to Eligible Employees of such
division for such year pursuant to Section 6, shall be awarded to Eligible
Employees of such division as soon as practicable after the close of such Plan
Year. Such awards shall be made to such of the Eligible Employees of the
division, and in such amounts, as the division manager of such division
determines in his or her sole discretion. However, for any Plan Year for which
the Corporation's R.O.E. is at least 6%, any Eligible Employee whose
performance for a Plan Year is determined, in the sole judgment of his or her
division manager, to have been satisfactory shall be entitled to receive an
Incentive Award for such year in an amount that is at least equal to 1% of his
or her Compensation.
6. INTERIM INCENTIVE AWARDS
Incentive Awards for any Plan Year may be made prior to the close of
such year, in accordance with the following rules:
(a) As soon as practicable after the start of a Plan Year, the
Committee shall (i) make an estimate of the Corporation's R.O.E. for the year,
(ii) determine the percentage of Compensation that would be available for
Incentive Awards for the year pursuant to Section 5 if the Corporation's R.O.E.
for the year was at least equal to the Committee's estimate of it under clause
(i), and (iii) make an estimate of the aggregate amount of Compensation for the
year of all employees of each division who the Committee determines may be
Eligible Employees as of the last day of the year.
(b) The Committee shall then determine the Interim Incentive Award
Amount for the year, for each division. For any division, the "Interim
Incentive Award Amount" for a Plan Year
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<PAGE> 5
shall be an amount equal to 25% of the product of (i) the amount of
Compensation estimated by the Committee for such division under (a)(iii) above,
multiplied by (ii) the percentage determined by the Committee under (a)(ii)
above.
(c) Promptly after making its determination under (b) above, the
Committee shall notify each division manager of the Interim Incentive Award
Amount applicable to his or her division for the year.
(d) After receiving such notice, each division manager may (but shall
not be required to) make Incentive Awards to Eligible Employees of his or her
division, at any time during the Plan Year, provided that the total amount so
awarded does not exceed the Interim Incentive Award Amount determined by the
Committee for such division, for such year. Awards may be so made to such
Eligible Employees, and in such amounts, as each division manager determines in
his or her sole discretion.
7. ADDITIONAL AWARDS
Notwithstanding the provisions of Sections 4 and 5, the Board of
Trustees, by resolution duly adopted prior to the close of any Plan Year, may
direct that the percentage of Compensation to be used in determining the amount
of awards to be made for such year under Section 4, under Section 5, or under
both Sections 4 and 5, shall be such greater percentage of Compensation than
the percentage determined in accordance with the tables set forth in such
Sections as the Board of Trustees specifies in such resolution.
8. PAYMENT OF AWARDS
Amounts awarded under the Plan shall be payable in the following
manner:
(a) Except as otherwise provided in (b) below, any amount awarded to
an Eligible Employee hereunder shall be paid to the Eligible Employee in a
single cash lump sum as soon as practicable after the award is made.
(b) To the extent that an Eligible Employee has elected, under the
applicable provisions of the 401(k) Plan, to have any portion of an award made
to the Eligible Employee hereunder reduced, and to have an amount equal to such
portion of the award contributed to the 401(k) Plan on the Eligible Employee's
behalf, the Trust Company shall contribute an amount equal to such portion of
the award to the 401(k) Plan on behalf of the Eligible Employee; and thereupon
the Trust Company's obligation with respect to payment of such portion of the
award shall be fully discharged. However, no such contribution shall be made
to the 401(k) Plan to the extent it would cause any limitation applicable under
the 401(k) Plan to be exceeded.
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<PAGE> 6
(c) All liabilities with respect to amounts awarded under the Plan to
Eligible Employees who are employees of affiliates of the Trust Company shall
be discharged by the respective employing affiliates.
9. CHANGE IN CONTROL
For any Plan Year during which a Change in Control occurs (hereinafter
referred to as the "Year of Change") awards for such Plan Year shall be made in
accordance with the pro visions of this Section 8, notwithstanding any other
provision of the Plan to the contrary.
(a) For the Year of Change, a Corporate Performance Award shall be
made to each Eligible Employee in an amount equal to 2.5% of his or her
Compensation for such year.
(b) For the Year of Change, the aggregate amount available for
Incentive Awards for the Eligible Employees of each division shall be an amount
equal to 7.5% of the Compensation of all Eligible Employees of such division
for such year. The aggregate amount so available shall be allocated among, and
awarded to, the Eligible Employees of the division on a pro rata basis, in
accordance with the respective amounts of each such Eligible Employees'
Compensation for the Year of Change. Notwithstanding the foregoing, in the
case of any Eligible Employee who, prior to the date on which the Change in
Control occurred ("Date of Change"), received an Incentive Award for the Year
of Change pursuant to Section 6, the amount otherwise allocable to such
Eligible Employee pursuant to the preceding sentence shall be reduced by the
amount of the award so made to the Eligible Employee. If, prior to the Date of
Change, any Eligible Employee has received an Incentive Award for the Year of
Change pursuant to Section 6 in an amount that exceeds the amount allocable to
him pursuant to the second preceding sentence hereof, the Eligible Employee may
retain the excess amount; and the Trust Company shall make available, for
allocation to the other Eligible Employees pursuant to the second preceding
sentence hereof, an amount equal to such excess.
(c) For purposes of this Section, an Employee shall be treated as an
Eligible Employee for the Year of Change if he or she would be an Eligible
Employee as defined in Section 1 on the day immediately preceding the Date of
Change if such day were treated as the last day of the Year of Change. For
this purpose, an Employee shall be treated as having completed at least one
Year of Service as of the day immediately preceding the Date of Change if, on
such day, it can be reasonably anticipated that the Employee will have
completed at least one Year of Service by the last day of the Year of Change if
the Employee continued to be employed with the Trust Company until such last
day.
(d) For purposes of this Section, the Compensation of an Eligible
Employee for the Year of Change shall mean the Compensation paid to the
Eligible Employee during the portion of such year ending on the day immediately
preceding the Date of Change, plus the Compensation
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that would be payable to the Eligible Employee for such year if he or she
continued in employ ment with the Trust Company until the last day of such year
(or, if earlier, the last day of the month in which he or she attains age 65)
at a rate of Compensation equal to the rate in effect for the Eligible Employee
on the day immediately preceding the Date of Change.
(e) Awards to be made for the Year of Change pursuant to this Section
shall be in lieu of awards otherwise to be made for such year pursuant to
Sections 4 and 5.
(f) Awards to be made to Eligible Employees pursuant to this Section
shall be payable in the form of a single cash lump sum. Payment shall be made
as soon as practicable after the Date of Change. No award payable pursuant to
this Section shall be forfeitable as a result of an Eligible Employee's
termination of employment for any reason on or after the Date of Change.
(g) For purposes of this Section, "Change in Control" means that
after the Chase Merger Closing Date:
twenty percent (20%) or more of the common stock of the Corporation
has been acquired by any person (as defined by Section 3(a)(9) of the
Securities Exchange Act of 1934) other than directly from the
Corporation;
(ii) there has been a merger or equivalent combination
after which forty-nine percent (49%) or more of the voting stock of
the surviving corporation is held by persons other than former
stockholders of the Corporation; or
(iii) twenty percent (20%) or more of the directors elected
by stockholders to the Board of Directors of the Corporation are
persons who were not nominated in the most recent proxy statement of
the Corporation.
Notwithstanding the foregoing, at any time before a Change in Control,
as so defined, or within 45 days following a Change in Control where the
percentage of stock acquired under clause (i) above, or directors appointed
under clause (iii) above, is less than 25%, the Board of Trustees may direct by
resolution that the provisions of this Section 8 not apply. Any such
resolution adopted by the Board of Trustees may be rescinded or countermanded
at any time with or without retroactive effect.
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10. UNSECURED CREDITOR STATUS
No Employee shall have any right, title or interest whatsoever in or
to any investments that the Trust Company may make to aid in meeting its
obligations under the Plan. Nothing contained in the Plan, and no action taken
pursuant to its provisions, shall create or be construed to create a trust of
any kind, or a fiduciary relationship between the Trust Company and any
Employee, beneficiary, legal representative or any other person. To the extent
that any person acquires a right to receive payments from the Trust Company
under the Plan, such right shall be no greater than the right of an unsecured
general creditor of the Trust Company. All payments to be made hereunder shall
be paid from the general funds of the Trust Company and no special or separate
fund shall be established and no segregation of assets shall be made to assure
payment of such amounts except as expressly set forth in the Plan.
11. SUCCESSOR CORPORATION
The obligations of the Trust Company under the Plan shall be binding
upon any successor corporation or organization resulting from the merger,
consolidation or other reorganization of the Trust Company, or upon any
successor corporation or organization succeeding to substantially all of the
assets and business of the Trust Company. The Trust Company agrees that it
will make appropriate provision for the preservation of Employees' rights under
the Plan in any agreement or plan that it may enter into or adopt to effect any
such merger, consolidation, reorganization or transfer of assets.
12. NONALIENATION OF BENEFITS
No Employee or other person shall assign, sell, encumber, transfer,
pledge, or otherwise dispose of any rights or interests under the Plan and any
attempted disposition shall be null and void.
13. NO CLAIM OR RIGHT UNDER THE PLAN
No Employee or other person shall have any claim or right to be
granted an Award under the Plan. Neither the Plan nor any action taken
thereunder shall be construed as giving any Employee any right to be retained
in the employ of the Trust Company.
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14. TAXES
The Trust Company shall deduct from all amounts otherwise payable
under the Plan all Federal, state, local and other taxes required by law to be
withheld with respect to such payments.
15. PAYMENTS TO PERSONS OTHER THAN EMPLOYEE
If the Committee shall find that any person to whom any amount is
payable under the Plan is unable to care for his or her affairs because of
illness or accident, or is a minor, or has died, then any payment due to such
person or his or her estate (unless a prior claim therefor has been made by a
duly appointed leal representative), may, if the Committee so directs the Trust
Company, be paid to his or her spouse, a child, a relative, an institution
maintaining or having custody of such person, or any other person deemed by the
Committee to be a proper recipient on behalf of such person otherwise entitled
to payment. Any such payment shall be a complete discharge of the liability of
the Committee and the Trust Company therefor.
16. NO LIABILITY OF COMMITTEE MEMBERS
No member of the Committee shall be personally liable by reason of any
contract or other instrument executed by such member or on his or her behalf in
his or her capacity as a member of the Committee nor for any mistake of
judgment made in good faith, and the Trust Company shall indemnify and hold
harmless each employee, officer, director or trustee of the Trust Company to
whom any duty or power relating to the administration or interpretation of the
Plan may be allocated or delegated, against any cost or expense (including
counsel fees) or liability (including any sum paid in settlement of a claim
with the approval of the Board of Trustees) arising out of any act or omission
to act in connection with the Plan unless arising out of such person's own
fraud or bad faith.
17. AMENDMENT OR TERMINATION
The Board of Trustees may, with prospective or retroactive effect,
amend, suspend or terminate the Plan or any portion thereof at any time,
provided, however, that no amendment, suspension or termination of the Plan
shall deprive any Employee of any rights to awards previously made under the
Plan without his or her written consent. Any amendment that the Board of
Trustees would be permitted to make pursuant to the preceding sentence may also
be made by the Committee where appropriate to facilitate the administration of
the Plan or to comply with applicable law or any applicable rules and
regulations of government authorities, provided that the cost of the Plan to
the Trust Company is not materially increased thereby.
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18. GOVERNING LAW
The provisions of the Plan shall be governed by and construed in
accordance with the laws of the State of New York.
19. EFFECTIVE DATE
The Plan shall be effective as of January 1, 1992.
20. CHASE MERGER PROVISIONS
Notwithstanding any other provisions of this Plan to the contrary, the
following provisions shall apply in connection with the Merger:
(a) For purposes of determining the amount of the Corporation
Performance Awards and the Incentive Awards (collectively, the "Awards") to be
made to Eligible Employees for the Plan Year beginning on January 1, 1995 (the
"1995 Plan Year") the following special rules shall apply:
(i) An Eligible Employee's "Compensation" as otherwise
defined in Section 2 shall take into account the base salary paid by
the Trust Company to the Employee only during the period from January
1, 1995 to the day immediately preceding the Chase Merger Closing Date
(the "Pre-Merger Period").
(ii) Awards for the 1995 Plan Year shall be based on the
Corporation's R.O.E. for only the Pre-Merger Period in such year. The
Corporation's R.O.E. for the Pre-Merger Period shall be determined
for this purpose without taking into account any extraordinary charges
that are otherwise required to be recognized in such period in
connection with the Distribution and the Merger.
(b) For purposes of determining the eligibility of Employees for
Awards for the 1995 Plan Year, any individual who meets all of the conditions
set forth in the definition of "Eligible Employee" contained in Section 2
except for the requirement that he or she be an Employee on the last day of the
Plan Year shall nevertheless be treated as an Eligible Employee for the 1995
Plan Year if (i) such Employee's employment with the Trust Company terminates
as of the Chase Merger Closing Date and he or she becomes on such date a
"Retained Employee" as defined in Section 5.8 of the Merger Agreement, or (ii)
such Employee's employment is involuntarily terminated at any time during the
1995 Plan Year as a result of staff reductions associated with the Distribution
and the Merger.
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(c) In the case of Eligible Employees whose employment with the Trust
Company terminates on or prior to the Chase Merger Closing Date, the amount of
the Incentive Award to be made to each such Employee shall be determined at or
immediately prior to the close of the Pre-Merger Period. In the case of all
other Eligible Employees, the amount of the Incentive Award to be made to each
such other Employee shall be determined at the same time as the amounts to be
awarded for the 1995 Fiscal Year to participants under the 1995 Annual
Incentive Plan of U.S. Trust Corporation are determined.
(d) Awards made to Eligible Employees for the 1995 Plan Year shall be
payable in the manner and at the time provided in Section 8.
(e) No Awards shall be made under this Plan for any Plan Year after
the 1995 Plan Year.
(f) This Plan shall automatically terminate as soon as all amounts
payable to all Eligible Employees with respect to the Awards made to them for
the 1995 Plan Year have been paid to them, or contributed to the 401(k) on
their behalf, as provided in Section 8.
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EXHIBIT 10.15
1995 ANNUAL INCENTIVE PLAN OF
UNITED STATES TRUST COMPANY OF NEW YORK
AND
AFFILIATED COMPANIES
1. PURPOSE
The purpose of the Plan is to encourage greater focus on performance
among officers and employees of United States Trust Company of New York and its
Affiliated Companies by relating a significant portion of their total
compensation to the achievement of annual financial and strategic objectives.
2. DEFINITIONS
As used herein, the following terms shall have the following meanings:
"AWARD" shall mean a payment to be earned in accordance with the
provisions of the Plan.
"BENEFICIARY" shall mean the person or person designated in accordance
with Section 9 to receive the amount, if any, payable under the Plan upon the
death of a Participant.
"BOARD OF TRUSTEES" shall mean the Board of Trustees of United States
Trust Company of New York.
"CHANGE IN CONTROL" shall mean that any of the following events has
occurred:
(i) 20% or more of the common shares of the Corporation has
been acquired by any person (as defined by Section 3(a)(9) of the
Securities Exchange Act of 1934) other than directly from the
Corporation;
(ii) there has been a merger or equivalent combination after
which 49% or more of the voting shares of the surviving corporation is
held by persons other than former shareholders of the Corporation; or
(iii) 20% or more of the directors elected by shareholders to
the Board of Directors of the Corporation are persons who were not
nominated by management in the most recent proxy statement of the
Corporation;
<PAGE> 2
provided, however, that notwithstanding anything in the Plan to the contrary,
no Change in Control shall be deemed to have occurred, and no rights arising
upon a Change in Control as provided in Section 7 shall exist, to the extent
that the Board of Trustees so directs by resolution adopted prior to the Change
in Control, or not later than 45 days after the Change in Control if the
percentage of Common Shares acquired or directors elected under clause (i) or
(iii) of the foregoing definition of Change in Control shall be at least 20%
but less than 25%. Any reso lution of the Board of Trustees adopted in
accordance with the provisions of this definition directing that a Change in
Control shall be deemed not to have occurred for purposes of this Plan and that
Section 7 shall not become effective, may be rescinded or countermanded at any
time with or without retroactive effect.
"COMMITTEE" shall mean the Management Committee of the Trust Company,
or any successor committee consisting of those senior officers of the Trust
Company who are responsible for determining business and strategic policies.
"CORPORATION" shall mean U.S. Trust Corporation.
"EMPLOYEE" shall mean any individual employed by the Trust Company.
"ESOP CONTRIBUTION" shall mean the ESOP Contribution as defined under
the 401(k) Plan.
"EXECUTIVE DEFERRED COMPENSATION PLAN" shall mean the Executive
Deferred Compensation Plan of U.S. Trust Corporation.
"401(k) PLAN" shall mean the 401(k) Plan and ESOP of United States
Trust Company of New York and Affiliated Companies.
"PARTICIPANT" shall mean any Employee who meets the requirements set
forth in Section 3 for eligibility to participate in the Plan.
"PLAN" shall mean the 1995 Annual Incentive Plan of United States
Trust Company of New York and Affiliated Companies, as set forth herein and as
amended from time to time.
"PLAN YEAR" shall mean, initially, the period beginning on September
1, 1995 and ending on December 31, 1995, and thereafter, each calendar year.
"TRUST COMPANY" shall mean United States Trust Company of New York and
its Affiliated Companies.
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<PAGE> 3
3. ELIGIBILITY FOR PARTICIPATION
Any individual shall be eligible to participate in the Plan if he or
she (a) is an Employee, (b) is not a Participant in the Executive Incentive
Plan of U.S. Trust Corporation, (c) is not compensated, in whole or in part, on
a commission basis, (d) is not eligible to receive any bonus or incentive
payments pursuant to any employment agreement between the Employee and the
Corporation or the Trust Company and (e), in the case of any Employee under the
rank of Vice President, has completed at least one "Year of Service" as defined
in the 401(k) Plan.
Notwithstanding the foregoing, an Employee described in clause (e) of
the preceding paragraph who has met the requirements set forth in clauses (c)
and (d) thereof shall, if the Committee so determines based on the
recommendation of such Employee's division manager, be treated as eligible to
participate in the Plan, commencing as of any date prior to the Eligible
Employee's completion of a Year of Service as the Committee shall specify in
such determination.
Any Employee who meets all of the foregoing requirements on the
Effective Date of the Plan, as set forth in Section 16, shall commence
participation in the Plan on such date. Any other Employee shall commence
participation in the Plan on the first day of the calendar month following the
date on which he or she meets all of the foregoing requirements for
eligibility.
An Employee shall cease participation in the Plan as to the first date
on which he or she no longer meets all of the foregoing requirements for
eligibility.
4. AWARDS
Awards for any Plan Year shall be made in accordance with the
following provisions:
(a) At the start of the Plan Year, the Compensation Committee of the
Board of Trustees (the "Compensation Committee") shall establish (i) the
corporate performance goals (the "Performance Goals") which will apply in
determining the Awards for such year, (ii) the aggregate amount that will be
available for Awards for such year if such Performance Goals are achieved (the
"Target Awards Pool"), and (iii) the percentages of the Target Awards Pool that
will in fact be available for Awards for the year based on the level of
achievement of such Performance Goals, which percentages may be greater than
100% if the Performance Goals are exceeded and less than 100% if the
Performance Goals have not been fully achieved (the "Actual Awards Pool").
(b) The Performance Goals established for the year shall be based upon
an annual growth in the earnings per share of the Corporation and/or upon such
other corporate objectives as the Compensation Committee shall determine. The
Compensation Committee shall have the
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<PAGE> 4
authority at any time to adjust the Performance Goals, or performance
measurement standards, for the Plan Year as it deems equitable in recognition
of (i) extraordinary or nonrecurring events experienced by the Corporation (or
by any other corporation whose performance is relevant to the determination of
the amount of any Award hereunder) during the Plan Year, (ii) changes in
applicable accounting rules or principles or changes in the Corporation's (or
in any other such corporation's) methods of accounting during the Plan Year,
(iii) the occurrence of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, consolidation, rights offering, or any
other change in the capital structure of the Corporation (or of any other such
corporation), or (iv) such other events, changes, occurrences, conditions or
circumstances as in the Compensation Committee's judgment, shall warrant such
adjustment.
(c) The Compensation Committee shall determine the amount of the
Target Awards Pool as a percentage or percentages of the aggregate base salary
earned for the year while a Participant of all Participants, either
individually or by categories of Participants, provided that the Compensation
Committee may, in its sole discretion, also apply such percentage or
percentages to other current or deferred compensation and determine the year
for which such deferred compensation shall be counted.
(d) At the end of the Plan Year, the Compensation Committee shall
determine the extent to which the Performance Goals for the year have been met
and, based thereon, the amount of the Actual Awards Pool; and the Committee
shall determine the amount of the Award, if any, earned by each Participant for
the year, based on the level of the Participant's achievement of the goals and
objectives established for the Participant at the start of the Plan Year. The
individual goals for each Participant for each Plan Year shall be set, and the
Participant's performance relative to such goals shall be measured, by the
Committee based upon the recommendations of the Participant's division manager.
(e) The Committee may, in its discretion, make Awards to Participants
in an aggregate amount less than the amount of the Actual Awards Pool. The
Committee may also, in its discretion, allocate any portion of the Actual
Awards Pool for use in making Awards to one or more groups or categories of
Participants, or for use in making special additional Awards to particular
Participants.
(f) An Employee who is a Participant for less than a full year shall
receive such portion of an Award, if any, for that year as the Committee shall
determine.
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5. PAYMENT OF AWARDS
The amount payable to a Participant with respect to an Award earned by
a Participant under the Plan for any Plan Year shall be the amount of the Award
so earned, reduced by the sum of (a) the amount of any ESOP Contribution to be
made on behalf of the Participant under the 401(k) Plan for the "Plan Year" (as
defined in the 401(k) Plan) corresponding to such Plan Year, and (b) the
Supplemental ESOP Contribution amount (if any) to be credited to the
Participant's account under the Executive Deferred Compensation Plan, in either
case with respect to the base salary of such Participant that was taken into
account in determining the Target Awards Pool for that Plan Year.
The amount payable with respect to an Award earned under the Plan for
any Plan Year, as determined under the preceding paragraph, shall be paid to
the Participant in cash as soon as practicable after the end of such Plan Year,
except to the extent that the Participant (a) has elected, under the applicable
provisions of the 401(k) Plan, to have any portion of such Award reduced, and
to have an amount equal to such portion of the Award contributed to the 401(k)
Plan on the Participant's behalf and/or (b) has elected, under the applicable
provisions of the Executive Deferred Compensation Plan, to defer any portion of
such Award.
With respect to the portion of any Award that is subject to a
Participant's election under the 401(k) Plan, the Trust Company shall
contribute an amount equal to such portion of the Award to the 401(k) Plan on
behalf of the Participant; and thereupon, the Trust Company's obligation with
respect to payment of such portion of the Award shall be fully discharged.
However, no such contribution shall be made to the extent it would cause any
limitation applicable under the 401(k) Plan to be exceeded.
With respect to the portion of any Award that is subject to a
Participant's election under the Executive Deferred Compensation Plan, the
Trust Company's obligation under this Plan with respect to payment of such
portion of the Award shall be fully discharged upon the crediting of such
portion of the Award to the Participant's account under the Executive Deferred
Compensation Plan in accordance with the applicable provisions of such Plan.
Unless paid by Unites States Trust Company of New York, all
liabilities in respect of Participants who are employees of affiliates of such
company shall be discharged by the respective employing affiliates.
6. PARTIAL AWARDS
An Employee who is a Participant for less than a full Plan Year,
whether by reason of commencement or termination of employment or otherwise,
shall receive such portion of an
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<PAGE> 6
Award, if any, for that year as the Committee shall determine based on the
recommendation of such Employee's division manager.
7. CHANGE IN CONTROL
Notwithstanding any other provision in the Plan to the contrary (but
subject to the proviso contained in the definition of "Change in Control" in
Section 2), upon the occurrence of a Change in Control, the following
provisions shall apply.
(a) All Performance Goals and individual goals and objectives with
respect to the Plan Year in which the Change in Control occurs (the "Year of
Change") shall be deemed to have been attained to the full and maximum extent,
and the Actual Awards Pool for the Year of Change shall be determined by
multiplying the Target Awards Pool for such year by the highest percentage
thereof established by the Compensation Committee under Section 4(a)(iii) for
determining the amount of the Actual Awards Pool for such year.
(b) Unless another formula shall have been designated by the
Committee prior to the Change in Control, each Participant shall be allocated a
portion of the Actual Awards Pool for the Year of Change, as determined under
(a) above, equal to the amount of such Actual Awards Pool, multiplied by a
fraction, the numerator of which is the portion of the anticipated annual
compensation of the Participant which was taken into account by the
Compensation Committee in determining the Target Awards Pool for the Year of
Change, and the denominator of which is the sum of all such amounts.
(c) As soon as practicable following the Change in Control, all
Awards which are deemed to have been earned to the full and maximum extent upon
the occurrence of the Change in Control shall be payable in full in single cash
lump sums, reduced by any taxes withheld pursuant to Section 8 and by the
amount of any ESOP Contributions to be made on behalf of Participants under the
401(k) Plan for the Year of the Change.
(d) No Awards payable in accordance with this Section shall be
forfeitable on account of a Participant's termination of employment upon or
following the Change in Control.
8. TAXES
The Trust Company shall deduct from all amounts otherwise payable
under the Plan all federal, state, local and other taxes required by law to be
withheld with respect to such amounts.
9. DESIGNATION AND CHANGE OF BENEFICIARY
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Each Participant shall file with the Committee a written designation
of one or more persons as the Beneficiary who shall be entitled to receive the
amount, if any, payable under the Plan upon his or her death. A Participant
may, from time to time, revoke or change his or her Beneficiary designation
without the consent of any previously designated Beneficiary by filing a new
designation with the Committee. The last such designation received by the
Committee shall be controlling; provided, however, that no designation, or
change or revocation thereof, shall be effective unless received by the
Committee prior to the Participant's death, and in no event shall it be
effective as of a date prior to such receipt. If at the date of a
Participant's death, there is no designation of a Beneficiary in effect for the
Participant pursuant to the provisions of this Section 9, or if no Beneficiary
designated by the Participant in accordance with the provisions hereof survives
to receive any amount payable under the Plan by reason of the Participant's
death, the Participant's estate shall be treated as the Participant's
Beneficiary for purposes of the Plan.
10. PAYMENTS TO PERSONS OTHER THAN PARTICIPANT
If the Committee shall find that any person to whom any amount is
payable under the Plan is unable to care for his or her affairs because of
illness, accident or legal incapacity, then, if the Committee so directs, any
payment due to such person may be paid to such person's spouse, child or other
relative, an institution maintaining or having custody of such person, or any
other person deemed by the Committee to be a proper recipient on behalf of such
person, unless a prior claim for payment of such amount has been made by a duly
appointed legal representative of such person. Any such payment shall be a
complete discharge of the liability of the Trust Company therefor.
11. RIGHTS OF PARTICIPANTS
A Participant's rights and interests under the Plan shall be subject
to the following provisions:
(a) A Participant shall have the status of a general unsecured
creditor of the Trust Company with respect to his or her right to receive any
payment under the Plan. The Plan shall constitute a mere promise by the Trust
Company to make payments in the future of the benefits provided for herein. It
is intended that the arrangements reflected in this Plan be treated as unfunded
for tax purposes, as well as for purposes of any applicable provisions of Title
I of ERISA.
(b) A Participant's rights to payments under the Plan shall not be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, attachment, or garnishment by creditors of the Participant
or his or her Beneficiary.
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<PAGE> 8
(c) Neither the Plan nor any action taken hereunder shall be
construed as giving any Participant any right to be retained in the employment
of the Trust Company.
(d) No Employee shall have the right, by virtue of being a
Participant in the Plan, to be automatically entitled to receive an Award for
any Plan Year.
(e) No Award shall be considered as compensation under any employee
benefit plan of the Corporation or the Trust Company, except as specifically
provided in any such plan or as otherwise determined by the Board of Directors
of the Corporation or by the Board of Trustees.
12. ADMINISTRATION
The Plan shall be administered by the Committee. A majority of the
members of the Committee shall constitute a quorum. The Committee may act at a
meeting, including a telephone meeting, by action of a majority of the members
present, or without a meeting by unanimous written consent. In addition to the
responsibilities and powers assigned to the Committee elsewhere in the Plan,
the Committee shall have the authority to establish from time to time
guidelines or regulations for the administration of the Plan, interpret the
Plan, and make all determinations considered necessary or advisable for the
administration of the Plan.
All decisions, actions or interpretations of the Committee under the
Plan shall be final, conclusive and binding upon all parties.
No member of the Committee shall be personally liable by reason of any
contract or other instrument executed by such member or on his or her behalf in
his or her capacity as a member of the Committee nor for any mistake of
judgment made in good faith, and the Trust Company shall indemnify and hold
harmless each member of the Committee, and each employee, officer, director or
trustee of the Corporation or the Trust Company to whom any duty or power
relating to the administration or interpretation of the Plan may be delegated,
against any cost or expense (including counsel fees) or liability (including
any sum paid in settlement of a claim with the approval of the Board of
Trustees) arising out of any act or omission to act in connection with the Plan
unless arising out of such person's own fraud or bad faith.
13. AMENDMENT OR TERMINATION
The Board of Trustees may, with prospective or retroactive effect,
amend, suspend or terminate the Plan or any portion thereof at any time,
provided, however, that no amendment, suspension or termination of the Plan
shall deprive any Participant of any rights to Awards previously made under the
Plan without his or her written consent. Any amendment that the Board of
Trustees would be permitted to make pursuant to the preceding sentence may also
be made by the Committee where appropriate to facilitate the administration of
the Plan or to
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<PAGE> 9
comply with applicable law or any applicable rules and regulations of
government authorities, provided that the cost of the Plan to the Trust Company
is not materially increased thereby.
14. SUCCESSOR CORPORATION
The obligations of the Trust Company under the Plan shall be binding
upon any successor corporation or organization resulting from the merger,
consolidation or other reorganization of the Trust Company, or upon any
successor corporation or organization succeeding to substantially all of the
assets and business of the Trust Company. The Trust Company agrees that it
will make appropriate provision for the preservation of Participants' rights
under the Plan in any agreement or plan which it may enter into or adopt to
effect any such merger, consolidation, reorganization or transfer of assets.
15. GOVERNING LAW
The Plan shall be governed by and construed in accordance with the
laws of the State of New York.
16. EFFECTIVE DATE
The Plan shall be effective as of September 1, 1995.
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<PAGE> 1
EXHIBIT 10.16
1990 CHANGE IN CONTROL AND SEVERANCE POLICY
FOR TOP TIER OFFICERS OF UNITED STATES TRUST COMPANY
OF NEW YORK AND AFFILIATED COMPANIES
AS AMENDED AND RESTATED
EFFECTIVE AS OF SEPTEMBER 1, 1995
1. PURPOSE
The Plan hereinafter set forth represents a continuation of the 1990
Change in Control and Severance Policy for Top Tier Officers of United States
Trust Company of New York, as maintained by United States Trust Company of New
York, before the merger of U.S. Trust Corporation with The Chase Manhattan
Corporation ("Chase") pursuant to the Agreement and Plan of Merger dated as of
November 18, 1994 between Chase and U.S. Trust Corporation (the "Merger
Agreement"). The Plan has been amended and restated effective as of September
1, 1995 (a) to reflect the transfer of the Plan to and its adoption by New U.S.
Trust Company of New York, and New U.S. Trust Company of New York's assumption
of and becoming solely responsible for all liabilities and obligations of
United States Trust Company of New York under the Plan, effective immediately
before the "New Holdings Distribution", as defined in the Merger Agreement, and
(b) to reflect the "Distribution" and the "Merger", as defined in the Merger
Agreement.
The purpose of the Plan, as so continued, is to provide for payments
to (and other benefits for) certain officers of the Trust Company (as
hereinafter defined) and designated affiliates thereof whose service is
terminated under certain circumstances following changes in the ownership or
management of the Corporation (as hereinafter defined), and to provide for
regular severance payments to certain of such officers whose service is
otherwise terminated.
2. DEFINITIONS
The following definitions are applicable to the Plan:
"ACT" means the Employee Retirement Income Security Act of 1974, as
now in effect or as hereafter amended.
"AFFILIATE" means any affiliate of the Trust Company that has been
designated by the Committee specifically for purposes of participation in the
Plan.
<PAGE> 2
"AWARDS PLANS" means the 1990 Annual Incentive Plan of United States
Trust Company of New York and Affiliated Companies (the "AIP"), the Executive
Incentive Plan of U.S. Trust Corporation, the 1995 Annual Incentive Plan of
United States Trust Company of New York and Affiliated Companies, and any
successor plan of any of the foregoing.
"BASE SALARY" means, with respect to any Participant, his base salary
as in effect at the time his service is terminated; provided, however, that if
a Participant terminates his service following a reduction in the Participant's
base salary, then, for purposes of Section 5, his "Base Salary" shall mean his
base salary as in effect immediately prior to any such reduction.
"BOARD OF DIRECTORS" means the Board of Directors of the Corporation.
"BOARD OF TRUSTEES" means the Board of Trustees of the Trust Company.
"CHANGE IN CONTROL" has the meaning set forth in Section 5(f).
"CHANGE IN CONTROL BENEFIT" means any payment or other benefit that a
Participant may be entitled to receive under any Change in Control Plan upon a
change in control (as defined in such Plan) or upon the Participant's
involuntary termination (as defined in such Plan) following such change in
control.
"CHANGE IN CONTROL PLAN" means any plan (including this Plan),
program, policy, or agreement or resolution of the Board of Trustees or Board
of Directors (or, with respect to periods prior to the New Holdings
Distribution, the Board of Trustees of United States Trust Company of New York
or the Board of Directors of U.S. Trust Corporation) under which a Change in
Control Benefit may be provided to a Participant. All Change in Control Plans
shall be listed in Schedule C hereto, which shall be amended as necessary, from
time to time, by the Committee.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTEE" means the Compensation and Benefits Committee of the Board
of Trustees.
"CORPORATION" means New USTC Holdings Corporation, which will assume
the name of "U.S. Trust Corporation" as of the time the New Holdings
Distribution is effective.
"FORMER MANAGEMENT COMMITTEE MEMBER" means any of the individuals
listed in Schedule B hereto.
"401(k) PLAN" means the 401(k) Plan and ESOP of United States Trust
Company of New York and Affiliated Companies.
"INVOLUNTARY TERMINATION" has the meaning set forth in Section 5(e).
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<PAGE> 3
"1987 POLICY" means the 1987 Change in Control Policy of United States
Trust Company of New York and Affiliated Companies, as set forth in and adopted
by resolutions of the Board of Directors of U.S. Trust Corporation at its
meeting on December 8, 1987, and as in effect immediately prior to the
effective date of the Plan. The 1987 Policy is reproduced in Schedule D
hereto.
"PARTICIPANT" has the meaning set forth in Section 4.
"PAYMENT" means any and all payments to which a Participant is or may
become entitled in accordance with the provisions of the Plan.
"PLAN" means the 1990 Change in Control and Severance Policy for Top
Tier Officers of United States Trust Company of New York and Affiliated
Companies, as set forth herein and as amended from time to time.
"PROFIT-SHARING PLAN" means the Employees' Profit-Sharing Plan of
United States Trust Company of New York and Affiliated Companies, as in effect
on December 31, 1991 and any prior date.
"RETIREMENT PLAN" means the Employees' Retirement Plan of United
States Trust Company of New York and Affiliated Companies.
"STOCK PLAN" means the 1989 Stock Compensation Plan of U.S. Trust
Corporation, as in effect on any date prior to January 1, 1994.
"TRUST COMPANY" means New U.S. Trust Company of New York, which will
assume the name of "United States Trust Company of New York" as of the time the
New Holdings Distribution is effective.
3. ADMINISTRATION
The Plan shall be administered by the Committee. The Committee shall
have exclusive authority to determine all matters involving the administration,
operation and interpretation of the Plan, in its discretion. All decisions,
actions or interpretations of the Committee under the Plan shall be final,
conclusive and binding upon all parties. After a Change in Control, all powers
of the Committee under this Plan shall be exercised solely by the Committee as
it was constituted immediately prior to such Change in Control.
4. PARTICIPATION
(a) A "Participant" shall mean any officer of the Trust Company or an
Affiliate who (i) is a Participant in the Executive Incentive Plan of U.S.
Trust Corporation, or (ii) is included in the list
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<PAGE> 4
of persons designated for participation in the Plan set forth in Schedule A
hereto, as the same may be amended from time to time by the Committee, in its
sole discretion.
(b) Notwithstanding any other provisions of the Plan, no Participant
who is otherwise eligible to receive a Payment under the Plan who is employed
by the Trust Company or an Affiliate under the terms of a written employment
contract shall be entitled to receive such Payment, except to the extent
otherwise provided in such contract.
5. CHANGE IN CONTROL
(a) SPECIAL SEVERANCE PAYMENT. A Participant who experiences an
Involuntary Termination within two years following a Change in Control shall be
entitled to receive a Payment in an amount equal to
(i) the sum of:
(A) two times his annual Base Salary,
(B) two times the average of the highest three
awards he earned under the Awards Plans for the five
years prior to the year during which the Change in
Control occurs, and
(C) in the case of a Participant who is a Former
Management Committee Member not entitled to a Payment
under Section 6, the amount of the Payment to which he
would otherwise be entitled under Section 6 if he were a
Senior Vice President,
(ii) reduced by the aggregate amount he is actually paid
under all other severance or separation plans, policies and
arrangements maintained by the Trust Company or its Affiliates.
For purposes of computing amounts described in clause (i)(B) above, awards
earned under the Awards Plans for years preceding the year in which a Change in
Control occurs shall be deemed to have equalled the amount of such awards
before reduction on account of (w) any Profit-Sharing Amounts (as defined in
the AIP as in effect on or prior to December 31, 1991) contributed to or for
the benefit of the Participant under the Profit-Sharing Plan, (x) any ESOP
Contributions made on behalf of the Participant under the 401(k) Plan, (y) any
amount taken into account in determining the number of Benefit Equalization
Units (as defined in the Stock Plan) to be credited to the Participant's
account under the Stock Plan or (z) any Supplemental ESOP Contribution amount
to be credited to the Participant's account under the Executive Deferred
Compensation Plan of U.S. Trust Corporation. Except as otherwise provided in
Section 7(a), no Participant's Payment under the Plan shall be less than the
amount he would have received under the 1987 Policy.
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<PAGE> 5
(b) OTHER BENEFITS. Any Payment payable to a Participant under this
Section 5 shall be paid in addition to any payments or benefits the Participant
receives under Section 6 and under any other applicable plans, programs or
agreements.
(c) MEDICAL/LIFE INSURANCE CONTINUATION COVERAGE. A Participant who,
without regard to the limitation set forth in Section 4(b), is entitled a
Payment under this Section 5 shall also be entitled to the continuation (on the
same terms and conditions) of any medical and life insurance coverage to which
the Participant was entitled immediately prior to his Involuntary Termination
for a period of two years following his Involuntary Termination.
Notwithstanding the above, to the extent that a Participant becomes
covered under the medical or life insurance arrangements of an employer other
than the Trust Company or an Affiliate, the Trust Company shall no longer be
obligated to provide comparable benefits hereunder.
(d) METHOD OF PAYMENT. Any Payment payable to a Participant under
this Section 5 shall be paid in a lump sum cash payment as soon as practicable
after the Involuntary Termination of such Participant, but, in any event, by no
later than six months after the date of such Participant's Involuntary
Termination.
(e) INVOLUNTARY TERMINATION. For purposes of this Section 5, an
"Involuntary Termination" shall mean the termination of a Participant's
employment with the Trust Company or an Affiliate
(i) by the Trust Company or Affiliate, or
(ii) by such Participant following any
(A) reduction in his Base SALARY,
(B) change, without his consent, in the location
of his place of employment to an borough other than
Manhattan or, if such place of employment is not in
Manhattan, to a city other than the city in which his
place of employment is located,
(C) material diminishment of his responsibilities
with respect to the business of the Trust Company or
Affiliate, or
(D) other material adverse change in the
conditions of his employment with the Trust Company or
Affiliate.
An Involuntary Termination pursuant to clause (ii) above shall be
deemed to occur within two years of a Change in Control if the event described
in subclause (A), (B), (C) or (D) that gives
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<PAGE> 6
rise to such termination occurs within two years of a Change in Control and
such termination occurs within six months after such event.
Notwithstanding any other provision herein, no payment shall be made
to a Participant pursuant to this Section 5 upon the Participant's termination
of employment unless such termination of employment constitutes an "Involuntary
Termination", as defined in this Section 5(e).
(f) CHANGE IN CONTROL. For purposes of this Section 5, a "Change in
Control" shall mean that any of the following events has occurred after the
"Closing Date", as defined in the Merger Agreement:
(i) 20% or more of the common shares of the Corporation
has been acquired by any person (as defined by Section 3(a)(9) of the
Securities Exchange Act of 1934) other than directly from the
Corporation,
(ii) there has been a merger or equivalent combination
after which 49% or more of the voting shares of the surviving
corporation is held by persons other than former shareholders of the
Corporation, or
(iii) 20% or more of the directors elected by shareholders
to the Board of Directors are persons who were not nominated in the
most recent proxy statement of the Corporation.
6. REGULAR SEVERANCE
(a) REGULAR SEVERANCE PAYMENT. Any Participant who is a Senior Vice
President of the Trust Company whose employment is terminated by the Trust
Company because of job discontinuance or inadequate job performance shall be
entitled to a Payment in an amount equal to 26 times his weekly Base Salary.
A Participant who is entitled to a Payment under this Section 6 shall
also be offered the services of a professional outplacement counseling firm,
such services to be paid for by the Trust Company. The duration, extent and
cost of such services will be determined by the Trust Company in its sole
discretion.
Notwithstanding the foregoing, a Participant whose employment is
terminated by the Trust Company because of dishonesty or other malfeasance
shall not be entitled to any Payment or other benefit under this Section 6.
(b) METHOD OF PAYMENT. Any Payment payable under this Section 6 with
respect to a Participant's termination of employment shall be paid in a
lump-sum cash payment as soon as practicable following such Participant's
termination of employment.
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<PAGE> 7
7. PAYMENT LIMITATIONS
Notwithstanding any other provision of the Plan to the contrary, the
amount of the Payments that a Participant may otherwise be entitled to receive
hereunder shall be subject to the following limitations:
(a) LIMIT ON SECTION 5(a)(i)(A) AND (B) AMOUNTS. In the case of any
Participant whose employment with the Trust Company or an Affiliate is
terminated after he has attained age 63, the amounts that otherwise would be
taken into account under Section 5(a)(i)(A) and (B) in determining the Payment
to which the Participant is entitled under Section 5 shall be that percentage
of such amounts determined by dividing (x) the number of calendar months in the
period that begins on the first day of the month in which the Participant's
employment is terminated and that ends on the last day of the month in which
the Participant will attain age 65, by (y) 24.
(b) LIMIT ON SECTION 5(a)(i)(C) AND SECTION 6 AMOUNTS. In the case
of any Participant whose employment with the Trust Company is terminated at any
time within six months prior to the date on which the Participant will attain
age 65, the amount that otherwise would be taken into account under Section
5(a)(i)(C) in determining the Payment to which the Participant is entitled
under Section 5, or that otherwise would be taken into account in determining
the Payment to which the Participant is entitled under Section 6, shall be that
percentage of such amount determined by dividing (x) the number of calendar
months in the period that begins on the first day of the month in which the
Participant's employment is terminated and that ends on the last day of the
month in which the Participant will attain age 65, by (y) 6.
(c) EXCESS PARACHUTE PAYMENT CUTBACK. Whenever any Participant
becomes entitled to receive a Change in Control Benefit under any Change in
Control Plan, the Trust Company's independent auditors, as designated by the
Board of Trustees prior to the change in corporate management or control giving
rise to such entitlement, shall determine whether any amount of the aggregate
Change in Control Benefits that such Participant has received, or is entitled
to receive, under the Change in Control Plans will constitute an "excess
parachute payment" (as defined under Section 280G of the Code, or any successor
provision) and, if so, whether the Participant would receive a greater
after-tax benefit if such aggregate Change in Control Benefits were reduced.
In the event a greater after-tax benefit would result, such reduction, as
computed by such auditors, will be made, provided that the Participant may
choose which Change in Control Benefits shall be reduced.
8. PAYMENT OF LEGAL FEES
The Trust Company shall promptly pay, or reimburse each Participant
for, all reasonable legal fees and expenses incurred by him in seeking to
obtain, or enforce or defend his right to receive, any Change in Control
Benefit provided under any Change in Control Plan.
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<PAGE> 8
9. AMENDMENT
Prior to a Change in Control, the Board of Trustees may amend or
terminate this Plan, in whole or in part, at any time. Except as hereinafter
provided, the Plan, and any Schedules attached to the Plan, shall not be
amended or terminated following a Change in Control. The Board of Trustees
may, however, at any time before a Change in Control, or within 45 days
following a Change in Control where the percentage of the Corporation's common
shares acquired or directors appointed under clause (i) or (iii), respectively,
of Section 5(f) is at least 20% but less than 25%, direct by resolution that no
Payments shall be made and no benefits provided pursuant to Section 5, which
resolution may be rescinded or countermanded at any time with or without
retroactive effect.
10. UNSECURED CREDITOR STATUS
A Participant shall have the status of a general unsecured creditor of
the Trust Company with respect to his or her right to receive any payment under
the Plan. The Plan shall constitute a mere promise by the Trust Company to
make payments in the future of the benefits provided for herein. It is
intended that the arrangements reflected in this Plan be treated as unfunded
for tax purposes, as well as for purposes of any applicable provisions of Title
I of ERISA.
All payments to be made under the Plan shall be paid from the general
assets of the Trust Company and no special or separate fund shall be
established and no segregation of assets shall be made to assure payment of
such amounts, except that the Trust Company may establish and fund a "grantor
trust" (as defined in Sections 671, et seq., of the Code) to provide for any
payments under the Plan.
Neither the Plan nor any action taken hereunder shall be construed as
giving any Participant any right to be retained in the employ of the Trust
Company or any affiliate thereof.
11. NONALIENATION OF PAYMENT
A Participant's rights to payments under the Plan shall not be subject
in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, or garnishment by creditors of the Participant or his
or her beneficiary.
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<PAGE> 9
12. TAXES
The Trust Company shall deduct from any Payment otherwise required to
be made under the Plan all Federal, state, local and other taxes required by
law to be withheld with respect to such Payment.
13. PAYMENTS TO PERSONS OTHER THAN PARTICIPANTS
If the Committee shall find that any Participant to whom a Payment is
payable under the Plan is unable to care for his affairs because of illness,
accident or legal incapacity, then any Payment due to such Participant may, if
the Committee so directs the Trust Company, be paid to his spouse, child or
other relative, an institution maintaining or having custody of such person, or
any person deemed by the Committee to be a proper recipient on behalf of such
Participant, unless a prior claim therefor has been made by a duly appointed
legal representative. In the event that any Participant to whom any Payment is
payable under the Plan dies before he receives his Payment, such Payment shall
be paid to his estate.
Any payment made under this Section 13 shall be a complete discharge
of the liability of the Trust Company therefor.
14. NO LIABILITY OF COMMITTEE MEMBERS
No member of the Committee shall be personally liable by reason of any
contract or other instrument executed by such member or on his behalf in his
capacity as a member of the Committee nor for any mistake of judgment made in
good faith, and the Trust Company shall indemnify and hold harmless each member
of the Committee, and each employee, officer or director of the Trust Company
to whom any duty or power relating to the administration or interpretation of
the Plan may be allocated or delegated, against any cost or expense (including
counsel fees) or liability (including any amount paid in settlement of a claim
with the approval of the Board of Trustees) arising out of any act or omission
in connection with the Plan unless arising out of such person's own fraud or
bad faith.
15. SUPERSEDING EFFECT
Except to the extent otherwise provided herein, the Plan supersedes
the 1987 Policy. In addition, Section 8 supersedes the resolution adopted by
the Board of Trustees of United States Trust Company of New York at its meeting
on January 26, 1988, regarding the payment of legal fees and expenses.
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<PAGE> 10
16. GOVERNING LAW
The provisions of the Plan shall be governed by and construed in
accordance with the applicable provisions of the Act and the laws of the State
of New York.
17. SUCCESSORS
The Plan shall inure to the benefit of the Participants and shall be
binding upon the Trust Company, the Corporation, and any assignee or successor
corporation or organization resulting from the merger, consolidation or other
reorganization thereof or succeeding to substantially all of the assets and
business thereof. The Trust Company and the Corporation agree that they will
make appropriate provision for the preservation of the Participants' rights
under the Plan in any agreement or plan that they may enter into or adopt to
effect any such merger, consolidation, reorganization or transfer of assets.
18. SEVERABILITY
If any provision of the Plan is determined to be invalid or
unenforceable, the remaining provisions of the Plan shall not for that reason
alone also be determined to be invalid or unenforceable.
19. GENDER
Whenever used in the Plan, the masculine gender includes the feminine.
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<PAGE> 11
SCHEDULE A
William G. Campbell
James B. Cowperthwait
Richard E. Foley
W. Michael Funck
Carl A. Harnish
Ashton Harvey
Nancy L. Jacob
Ralph C. Rittenour
Franklin E. Ulf
Howard E.N. Wilson
<PAGE> 12
SCHEDULE B
H. Marshall Schwarz
Joel Abramowitz
Jeffrey S. Maurer
Frederick B. Taylor
<PAGE> 13
SCHEDULE C
Employees' Retirement Plan of United States Trust Company of New York and
Affiliated Companies
Benefit Equalization Plan of U.S. Trust Corporation
Supplemental Pension Agreements between U.S. Trust Corporation and Messrs.
Abramowitz, Maurer, Roberts, Schwarz, Taylor and Wonham
1989 Stock Compensation Plan and Predecessor Plans of U.S. Trust Corporation
1995 Stock Option Plan of U.S. Trust Corporation
Executive Incentive Plan of U.S. Trust Corporation
Executive Deferred Compensation Plan of U.S. Trust Corporation
1990 Change in Control and Severance Policy for Top Tier Officers of United
States Trust Company of New York and Affiliated Companies
<PAGE> 14
SCHEDULE D
1987 CHANGE IN CONTROL POLICY
Set forth below are the terms of the 1987 Change in Control Policy of
United States Trust Company of New York and Affiliated Companies:
In the event of an "involuntary termination" within two years
following a "change in control" of a senior officer who is a member of
the Management Committee of United States Trust Company of New York or
such entity as may succeed to substantially the same rights and
responsibilities of such committee (the "Management Committee") on the
date of such "change in control", such senior officer shall be paid in
a lump sum, promptly following such termination, the sum of (a) an
amount equal to such senior officer's then current annual base salary,
plus (b) an amount equal to the average of the highest three of the
prior five years' awards payable to such senior officer pursuant to
the Annual Incentive Plan of United States Trust Company of New York
and Affiliated Companies (the "Annual Plan"), such amounts to be in
addition to any other coverages, payments and distributions to which
such senior officer is entitled, except as may be specifically
provided in a written agreement entered into by United States Trust
Company of New York (the "Trust Company") and such senior officer.
<PAGE> 1
EXHIBIT 10.17
1990 CHANGE IN CONTROL AND SEVERANCE POLICY
FOR OFFICERS AND EMPLOYEES OF UNITED STATES TRUST COMPANY
OF NEW YORK AND AFFILIATED COMPANIES
AS AMENDED AND RESTATED
EFFECTIVE AS OF SEPTEMBER 1, 1995
1. PURPOSE
The Plan hereinafter set forth represents a continuation of the 1990
Change in Control and Severance Policy for Officers and Employees of United
States Trust Company of New York, as maintained by United States Trust Company
of New York, before the merger of U.S. Trust Corporation with The Chase
Manhattan Corporation ("Chase") pursuant to the Agreement and Plan of Merger
dated as of November 18, 1994 between Chase and U.S. Trust Corporation (the
"Merger Agreement"). The Plan has been amended and restated effective as of
September 1, 1995 (a) to reflect the transfer of the Plan to and its adoption
by New U.S. Trust Company of New York, and New U.S. Trust Company of New York's
assumption of and becoming solely responsible for all liabilities and
obligations of United States Trust Company of New York under the Plan,
effective immediately before the "New Holdings Distribution", as defined in the
Merger Agreement, and (b) to reflect the "Distribution" and the "Merger", as
defined in the Merger Agreement.
The purpose of the Plan, as so continued, is to provide for payments
to (and other benefits for) certain officers and other employees of United
States Trust Company of New York and designated affiliates thereof whose
service is terminated under certain circumstances following changes in the
ownership or management of U.S. Trust Corporation, and to provide for regular
severance payments to such officers and employees whose service is otherwise
terminated.
2. DEFINITIONS
The following definitions are applicable to the Plan:
"ACT" means the Employee Retirement Income Security Act of 1974, as
now in effect or as hereafter amended.
"AFFILIATE" means any affiliate of the Trust Company that has been
designated by the Committee specifically for purposes of participation
in the Plan.
<PAGE> 2
"AIP" means the 1990 Annual Incentive Plan of United States Trust
Company of New York and Affiliated Companies, the 1995 Annual Incentive Plan of
United States Trust Company of New York and Affiliated Companies, and any
successor plan.
"BASE SALARY" means, with respect to any Participant, his base salary
as in effect at the time his service is terminated; provided, however, that if
a Participant terminates his service following a reduction in the Participant's
base salary, then, for purposes of Section 5, his "Base Salary" shall mean his
base salary as in effect immediately prior to any such reduction.
"BOARD OF DIRECTORS" means the Board of Directors of the Corporation.
"BOARD OF TRUSTEES" means the Board of Trustees of the Trust Company.
"CHANGE IN CONTROL" has the meaning set forth in Section 5(g).
"CHANGE IN CONTROL BENEFIT" means any payment or other benefit that a
Participant may be entitled to receive under any Change in Control Plan upon a
change in control (as defined in such Plan) or upon the Participant's
involuntary termination (as defined in such Plan) following such change in
control.
"CHANGE IN CONTROL PLAN" means any plan (including this Plan),
program, policy, or agreement or resolution of the Board of Trustees or Board
of Directors (or, with respect to periods prior to the New Holdings
Distribution, the Board of Trustees of United States Trust Company of New York
or the Board of Directors of U.S. Trust Corporation) under which a Change in
Control Benefit may be provided to a Participant. All Change in Control Plans
shall be listed in Schedule A hereto, which shall be amended as necessary, from
time to time, by the Committee.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTEE" means the Compensation and Benefits Committee of the Board
of Trustees.
"CORPORATION" means New USTC Holdings Corporation, which will assume
the name of "U.S. Trust Corporation" as of the time the New Holdings
Distribution is effective.
"EMPLOYEE" means any employee of the Trust Company or an Affiliate who is not
an officer.
"401(k) PLAN" means the 401(k) Plan and ESOP of United States Trust
Company of New York and Affiliated Companies.
"INVOLUNTARY TERMINATION" has the meaning set forth in Section 5(f).
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<PAGE> 3
"1988 POLICY" means the 1988 Change in Control Policy of United States
Trust Company of New York and Affiliated Companies, as set forth in and adopted
by resolutions of the Board of Directors of U.S. Trust Corporation at its
meeting on January 26, 1988, and as in effect immediately prior to the
effective date of the Plan. The 1988 Policy is reproduced in Schedule B
hereto.
"OFFICER" means any officer of the Trust Company or an Affiliate who
is not eligible for participation in the 1990 Change in Control and Severance
Policy for Top Tier Officers of United States Trust Company of New York and
Affiliated Companies.
"PARTICIPANT" has the meaning set forth in Section 4.
"PAYMENT" means any and all payments to which a Participant is or may
become entitled in accordance with the provisions of the Plan.
"PLAN" means the 1990 Change in Control and Severance Policy for
Officers and Employees of United States Trust Company of New York and
Affiliated Companies.
"RETIREMENT PLAN" means the Employees' Retirement Plan of United
States Trust Company of New York and Affiliated Companies.
"STOCK PLAN" means the 1989 Stock Compensation Plan of U.S. Trust
Corporation, as in effect on any date prior to January 1, 1994.
"TRUST COMPANY" means New U.S. Trust Company of New York, which will
assume the name of "United States Trust Company of New York" as of the time the
New Holdings Distribution is effective.
"YEARS OF SERVICE" means, with respect to any Participant, the total
number of years (including fractions of a year) during which the Participant
was employed with the Trust Company, or with any Affiliate, determined by
taking into account all periods of such employment whether or not consecutive.
For this purpose, any period during which a Participant was employed with any
affiliate of the Trust Company or, with respect to periods prior to the New
Holdings Distribution, with United States Trust Company of New York, shall be
treated as a period of employment with the Trust Company or with an Affiliate.
3. ADMINISTRATION
The Plan shall be administered by the Committee. The Committee shall
have exclusive authority to determine all matters involving the administration,
operation and interpretation of the Plan, in its discretion. All decisions,
actions or interpretations of the Committee under the Plan shall be final,
conclusive and binding upon all parties. After a Change in Control, all powers
of the
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<PAGE> 4
Committee under this Plan shall be exercised solely by the Committee as it was
constituted immediately prior to such Change in Control.
4. PARTICIPATION
(a) A "Participant" shall mean any Officer or Employee who is
entitled to receive a Payment or other benefits under Section 5 or 6.
(b) Notwithstanding any other provisions of the Plan, no Participant
who is otherwise eligible to receive a Payment under the Plan who is employed
by the Trust Company or an Affiliate under the terms of a written employment
contract shall be entitled to receive such Payment, except to the extent
otherwise provided in such contract.
5. CHANGE IN CONTROL
(a) SPECIAL SEVERANCE PAYMENT FOR OFFICERS. An Officer who
experiences an Involuntary Termination within two years following a Change in
Control shall be entitled to receive a Payment in an amount equal to the sum
of:
(i) an amount determined by multiplying the Officer's
monthly Base Salary by the number of his Years of Service; provided,
however, that the amount determined hereunder shall not be less than
the Officer's annual Base Salary nor shall it be greater than two
times his annual Base Salary, and
(ii) in the case of an Officer who participates in the
AIP, an amount equal to the Officer's maximum award under the AIP for
the year during which the Change in Control occurs, determined as if
all goals had been met, or
(iii) in the case of an Officer who is a Vice President or
higher and does not participate in the AIP, an amount equal to the
aggregate commissions (excluding sales incentive commissions) he
earned with respect to the year immediately prior to the year in which
his termination of employment occurs, or
(iv) in the case of an Officer who does not participate in
the AIP and whose compensation does not include commissions, an amount
equal to the sum of all regular cash bonuses (excluding bonuses
related to the acquisition of an affiliate of the Trust Company) he
received for the year immediately prior to the year in which his
termination occurs.
For purposes of computing amounts described in clause (ii) above, the Officer's
maximum AIP award for the year during which a Change in Control occurs shall
not be reduced on account of (x) any ESOP Contribution to be made on behalf of
the Participant under the 401(k) Plan, (y) any amount taken into account in
determining the number of Benefit Equalization Units (as defined
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<PAGE> 5
under the Stock Plan) to be credited to the Participant's account under the
Stock Plan or (z) any Supplemental ESOP Contribution amount to be credited to
the Participant's account under the Executive Deferred Compensation Plan of
U.S. Trust Corporation. Notwithstanding any other provisions of the Plan, in
no event shall an Officer's Payment under the Plan be less than the amount he
would have received under the 1988 Policy.
(b) SPECIAL SEVERANCE PAYMENT FOR EMPLOYEES. An Employee who
experiences an Involuntary Termination within 2 years following a Change in
Control shall be entitled to a Payment in an amount determined on the basis of
his Years of Service, in accordance with the table set forth below:
<TABLE>
<CAPTION>
YEARS OF SERVICE PAYMENT AMOUNT
<S> <C>
Less than 1 2 times weekly Base Salary
1 or more but less than 10 2 times weekly Base Salary for each Year of Service,
but no less than 3 times monthly Base salary
10 or more (i) 20 times weekly Base Salary plus (ii) 1 times
monthly Base Salary for each Year of Service in excess
of 10, but not to exceed 18 times monthly Base Salary)
</TABLE>
(c) OTHER BENEFITS. Any Payment payable to a Participant under this
Section 5 shall be paid in addition to any payments or benefits the Participant
receives under Section 6 and under any other applicable plans, programs or
agreements.
(d) MEDICAL/LIFE INSURANCE CONTINUATION COVERAGE. An Officer or
Employee who is (or who, in the absence of the limitation set forth in Section
4(b), would be) entitled a Payment under this Section 5 shall also be entitled
to the continuation (on the same terms and conditions) of any medical and life
insurance coverage to which such Officer or Employee was entitled immediately
prior to his Involuntary Termination. Such coverage shall continue for a
period of one year, in the case of an Officer, and six months in the case of an
Employee, following such Officer's or Employee's Involuntary Termination.
Notwithstanding the above, to the extent that an Officer or Employee
becomes covered under the medical or life insurance arrangements of an employer
other than the Trust Company or an Affiliate, the Trust Company shall no longer
be obligated to provide comparable benefits hereunder.
(e) METHOD OF PAYMENT. Any Payment payable to a Participant under
this Section 5 shall be paid in a lump sum cash payment as soon as practicable
after the Involuntary Termination of such Participant, but, in any event, by no
later than six months after the date of such Participant's Involuntary
Termination.
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<PAGE> 6
(f) INVOLUNTARY TERMINATION. For purposes of this Section 5, an
"Involuntary Termination" shall mean the termination of a Participant's
employment with the Trust Company or an Affiliate
(i) by the Trust Company or Affiliate, or
(ii) by such Participant following any
(A) reduction in his Base Salary,
(B) change, without his consent, in the location of
his place of employment to an borough other than
Manhattan or, if such place of employment is not in
Manhattan, to a city other than the city in which his
place of employment is located,
(C) material diminishment of his responsibilities
with respect to the business of the Trust Company or
Affiliate, or
(D) other material adverse change in the conditions
of his employment with the Trust Company or Affiliate.
An Involuntary Termination pursuant to clause (ii) above shall be
deemed to occur within two years of a Change in Control if the event described
in subclause (A), (B), (C) or (D) that gives rise to such termination occurs
within two years of a Change in Control and such termination occurs within six
months after such event.
Notwithstanding any other provision herein, no payment shall be made
to a Participant pursuant to this Section 5 upon the Participant's termination
of employment unless such termination of employment constitutes an "Involuntary
Termination", as defined in this Section 5(f).
(g) CHANGE IN CONTROL. For purposes of this Section 5, a "Change in
Control" shall mean that any of the following events has occurred after the
"Closing Date", as defined in the Merger Agreement:
(i) 20% or more of the common shares of the Corporation
has been acquired by any person (as defined by Section 3(a)(9) of the
Securities Exchange Act of 1934) other than directly from the
Corporation,
(ii) there has been a merger or equivalent combination
after which 49% or more of the voting shares of the surviving
corporation is held by persons other than former shareholders of the
Corporation, or
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<PAGE> 7
(iii) 20% or more of the directors elected by shareholders
to the Board of Directors are persons who were not nominated in the
most recent proxy statement of the Corporation.
6. REGULAR SEVERANCE
(a) REGULAR SEVERANCE PAYMENT. Any Participant whose employment is
terminated by the Trust Company because of job discontinuance or inadequate job
performance shall be entitled to a Payment in an amount determined in
accordance with the table set forth below:
<TABLE>
<CAPTION>
RANK PAYMENT AMOUNT
<S> <C>
Senior Vice President 26 times weekly Base Salary
Other Officer 13 times weekly Base Salary
Employee 1 times weekly Base Salary for each Year of Service,
but not less than 2 times nor more than 13 times weekly
Base Salary
</TABLE>
Notwithstanding the foregoing, no Officer under the rank of Senior Vice
President shall be entitled to any Payment under this Section 6 unless he has
had at least three Years of Service, and no Employee shall be entitled to any
Payment under this Section 6 unless he has had at least one Year of Service.
(b) METHOD OF PAYMENT. Any Payment payable under this Section 6 with
respect to a Participant's termination of employment shall be paid in a
lump-sum cash payment as soon as practicable following such Participant's
termination of employment.
(c) OTHER BENEFIT. Any Officer who is entitled to a Payment under
this Section 6 shall also be offered the services of a professional
outplacement counseling firm, such services to be paid for by the Trust
Company. The duration, extent and cost of such services will be determined by
the Trust Company in its sole discretion.
(d) DISQUALIFICATION. Notwithstanding any other provision herein, a
Participant whose employment is terminated by the Trust Company because of
dishonesty or other malfeasance shall not be entitled to any Payment or other
benefit under this Section 6.
7. PAYMENT LIMITATION
Notwithstanding any other provision of the Plan to the contrary, the
amount of the Payments that a Participant may otherwise be entitled to receive
hereunder shall be subject to the following limitation: Whenever any
Participant becomes entitled to receive a Change in Control Benefit under any
Change in Control Plan, the Trust Company's independent auditors, as designated
by the Board of Trustees prior to the change in corporate management or control
giving rise to such entitlement,
-7-
<PAGE> 8
shall determine whether any amount of the aggregate Change in Control Benefits
that such Participant has received, or is entitled to receive, under the Change
in Control Plans will constitute an "excess parachute payment" (as defined
under Section 280G of the Code, or any successor provision) and, if so, whether
the Participant would receive a greater after-tax benefit if such aggregate
Change in Control Benefits were reduced. In the event a greater after-tax
benefit would result, such reduction, as computed by such auditors, will be
made, provided that the Participant may choose which Change in Control Benefits
shall be reduced.
8. PAYMENT OF LEGAL FEES
The Trust Company shall promptly pay, or reimburse each Participant
for, all reasonable legal fees and expenses incurred by him in seeking to
obtain, or enforce or defend his right to receive, any Change in Control
Benefit provided under any Change in Control Plan.
9. AMENDMENT
Prior to a Change in Control, the Board of Trustees may amend or
terminate this Plan, in whole or in part, at any time. Except as hereinafter
provided, the Plan, and any Schedules attached to the Plan, shall not be
amended or terminated following a Change in Control. The Board of Trustees
may, however, at any time before a Change in Control, or within 45 days
following a Change in Control where the percentage of the Corporation's common
shares acquired or directors appointed under clause (i) or (iii), respectively,
of Section 5(g) is at least 20% but less than 25%, direct by resolution that no
Payments shall be made and no benefits provided pursuant to Section 5, which
resolution may be rescinded or countermanded at any time with or without
retroactive effect.
10. UNSECURED CREDITOR STATUS
A Participant shall have the status of a general unsecured creditor of
the Trust Company with respect to his or her right to receive any payment under
the Plan. The Plan shall constitute a mere promise by the Trust Company to
make payments in the future of the benefits provided for herein. It is
intended that the arrangements reflected in this Plan be treated as unfunded
for tax purposes, as well as for purposes of any applicable provisions of Title
I of ERISA.
All payments to be made under the Plan shall be paid from the general
assets of the Trust Company and no special or separate fund shall be
established and no segregation of assets shall be made to assure payment of
such amounts, except that the Trust Company may establish and fund a "grantor
trust" (as defined in Sections 671, et seq., of the Code) to provide for any
payments under the Plan.
Neither the Plan nor any action taken hereunder shall be construed as
giving any Participant any right to be retained in the employ of the Trust
Company or any affiliate thereof.
-8-
<PAGE> 9
11. NONALIENATION OF PAYMENT
A Participant's rights to payments under the Plan shall not be subject
in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, or garnishment by creditors of the Participant or his
or her beneficiary.
12. TAXES
The Trust Company shall deduct from any Payment otherwise required to
be made under the Plan all Federal, state, local and other taxes required by
law to be withheld with respect to such Payment.
13. PAYMENTS TO PERSONS OTHER THAN PARTICIPANTS
If the Committee shall find that any Participant to whom a Payment is
payable under the Plan is unable to care for his affairs because of illness,
accident or legal incapacity, then any Payment due to such Participant may, if
the Committee so directs the Trust Company, be paid to his spouse, child or
other relative, an institution maintaining or having custody of such person, or
any person deemed by the Committee to be a proper recipient on behalf of such
Participant, unless a prior claim therefor has been made by a duly appointed
legal representative. In the event that any Participant to whom any Payment is
payable under the Plan dies before he receives his Payment, such Payment shall
be paid to his estate.
Any payment made under this Section 13 shall be a complete discharge
of the liability of the Trust Company therefor.
14. NO LIABILITY OF COMMITTEE MEMBERS
No member of the Committee shall be personally liable by reason of any
contract or other instrument executed by such member or on his behalf in his
capacity as a member of the Committee nor for any mistake of judgment made in
good faith, and the Trust Company shall indemnify and hold harmless each member
of the Committee, and each employee, officer or director of the Trust Company
to whom any duty or power relating to the administration or interpretation of
the Plan may be allocated or delegated, against any cost or expense (including
counsel fees) or liability (including any amount paid in settlement of a claim
with the approval of the Board of Trustees) arising out of any act or omission
in connection with the Plan unless arising out of such person's own fraud or
bad faith.
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<PAGE> 10
15. SUPERSEDING EFFECT
Except to the extent otherwise provided herein, the Plan supersedes
the 1988 Policy. In addition, Section 8 supersedes the resolution adopted by
the Board of Trustees of United States Trust Company of New York at its meeting
on January 26, 1988, regarding the payment of legal fees and expenses.
16. GOVERNING LAW
The provisions of the Plan shall be governed by and construed in
accordance with the applicable provisions of the Act and the laws of the State
of New York.
17. SUCCESSORS
The Plan shall inure to the benefit of the Participants and shall be
binding upon the Trust Company, the Corporation, and any assignee or successor
corporation or organization resulting from the merger, consolidation or other
reorganization thereof or succeeding to substantially all of the assets and
business thereof. The Trust Company and the Corporation agree that they will
make appropriate provision for the preservation of the Participants' rights
under the Plan in any agreement or plan that they may enter into or adopt to
effect any such merger, consolidation, reorganization or transfer of assets.
18. SEVERABILITY
If any provision of the Plan is determined to be invalid or
unenforceable, the remaining provisions of the Plan shall not for that reason
alone also be determined to be invalid or unenforceable.
19. GENDER
Whenever used in the Plan, the masculine gender includes the feminine.
-10-
<PAGE> 11
SCHEDULE A
Employees' Retirement Plan of United States Trust Company of New York and
Affiliated Companies
Benefit Equalization Plan of U.S. Trust Corporation
1989 Stock Compensation Plan and Predecessor Plans of U.S. Trust Corporation
1995 Stock Option Plan of U.S. Trust Corporation
1995 Annual Incentive Plan of United States Trust Company and Affiliated
Companies
Executive Deferred Compensation Plan of U.S. Trust Corporation
1990 Change in Control and Severance Policy for Officers and Employees of
United States Trust Company of New York and Affiliated Companies
<PAGE> 12
SCHEDULE B
1988 CHANGE IN CONTROL POLICY
Set forth below are the terms of the 1988 Change in Control Policy of
United States Trust Company of New York and Affiliated Companies:
1. In the event of an "involuntary termination" within two years
following a "change in control" of an employee who is a participant in the
Annual Plan (other than a senior officer who is a member of the Management
Committee) on the date of such "change in control", such employee shall be paid
in a lump sum, promptly following such termination, an amount equal to such
employee's then current annual base salary, such amount to be in addition to
any other coverages, payments and distributions to which such employee is
otherwise entitled.
2. In the event of an "involuntary termination" within two years
following a "change in control" of an employee who is a Vice President or above
of the Trust Company or certain affiliates designated for such purpose by the
Compensation and Benefits Committee of the Board of Trustees (an "Affiliate"),
who is such and who is neither a participant in the Annual Plan nor a senior
officer who is a member of the Management Committee on the date of such "change
in control", such officer shall be paid in a lump sum, promptly following such
termination, the sum of (a) an amount equal to such officer's then current
annual base salary, plus either (b) in the case of an officer whose total
compensation includes commissions (other than sales incentive commissions), an
amount equal to the aggregate commissions earned with respect to the preceding
year or (c) in the case of an officer who is not paid commissions, an amount
equal to the sum of any regular cash bonuses earned with respect to the
preceding year (other than any bonus, however described, which is related to
the acquisition of an Affiliate), all such amounts to be in addition to an
other coverages, payments an distributions to which such officer is otherwise
entitled.
<PAGE> 1
EXHIBIT 10.18
EXECUTIVE DEFERRED COMPENSATION PLAN
OF
U.S. TRUST CORPORATION
AS AMENDED AND RESTATED EFFECTIVE AS OF
SEPTEMBER 1, 1995
------------
1. PURPOSE
The Plan hereinafter set forth represents a continuation of the
Executive Deferred Compensation Plan maintained by U.S. Trust Corporation
before its merger with The Chase Manhattan Corporation ("Chase") pursuant to
the Agreement and Plan of Merger dated as of November 18, 1994 between Chase
and U.S. Trust Corporation (the "Merger Agreement"). The Plan has been amended
and restated effective as of September 1, 1995 (a) to reflect the transfer of
the Plan to and its adoption by the Corporation, and the Corporation's
assumption of and becoming solely responsible for all liabilities and
obligations of U.S. Trust Corporation under the Plan, effective immediately
before the "New Holdings Distribution", as defined in the Merger Agreement, (b)
to reflect the "Distribution" and the "Merger", as defined in the Merger
Agreement, and (c) to make certain other changes.
The purpose of the Plan, as so continued, is to provide Eligible
Officers of the Corporation with an opportunity to defer payment of certain
portions of their compensation, at their election, in accordance with the
provisions herein set forth. In addition, the Plan will provide benefits to
Members of the 401(k) Plan (as hereinafter defined) whose allocations under the
401(k) Plan are reduced as a result of the operation of the limitations imposed
under sections 401(a)(17) and 415 of the Internal Revenue Code of 1986, as
amended.
The Plan is intended to constitute an unfunded plan of deferred
compensation for "a select group of management or highly compensated employees"
within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
2. DEFINITIONS
As used herein, the following terms shall have the following meanings:
<PAGE> 2
"ACCOUNT" or "ACCOUNTS" shall mean the account or accounts established
for a Participant pursuant to Section 6.
"AFFILIATED COMPANIES" shall mean (i) with respect to U.S. Trust
Corporation, each of its direct or indirect subsidiaries, and (ii) with respect
to the Corporation, each of its direct or indirect subsidiaries.
"AIP CASHOUT PAYMENT" shall mean the payment which, in the absence of
an election by an Eligible Officer under Section 4, would be made to the
Eligible Officer upon the consummation of the Merger with respect to the unpaid
balance of his or her account under the Annual Incentive Plan of U.S. Trust
Corporation.
"AWARD" shall mean any award made to a Participant under the Executive
Incentive Plan of U.S. Trust Corporation or the 1995 Annual Incentive Plan of
U.S. Trust Corporation, and any award made to a Participant under the 1990
Annual Incentive Plan of United States Trust Company of New York and Affiliated
Companies for the Pre-Merger Period, as defined in such plan.
"BENEFICIARY" shall mean the person or persons designated by a
Participant in accordance with Section 9 to receive any amount payable under
the Plan by reason of his or her death.
"BOARD OF DIRECTORS" shall mean (i) with respect to periods prior to
the Chase Merger Closing Date, the Board of Directors of U.S. Trust
Corporation, and (ii) with respect to periods after the Chase Merger Closing
Date, the Board of Directors of the Corporation.
"CHANGE IN CONTROL" shall mean that any of the following has occurred
after the Chase Merger Closing Date:
(i) 20% or more of the common shares of the Corporation has
been acquired by any person (as defined by Section
3(a)(9) of the Securities Exchange Act of 1934) other
than directly from the Corporation;
(ii) there has been a merger or equivalent combination after
which 49% or more of the voting shares of the surviving
corporation is held by persons other than former
shareholders of the Corporation; or
(iii) 20% or more of the directors elected by shareholders to
the Board of Directors are persons who were not
nominated by management in the most recent proxy
statement of the Corporation;
2
<PAGE> 3
provided, however, that notwithstanding anything in the Plan to the contrary no
Change in Control shall be deemed to have occurred, and no right to receive any
amount that becomes payable upon a Change in Control as provided in Section 8
shall exist, to the extent that the Board of Directors so directs by resolution
adopted prior to the Change in Control, or not later than 45 days after the
Change in Control if the percentage of the Corporation's common shares acquired
or directors elected under clauses (i) or (iii) of the foregoing definition of
Change in Control shall be at least 20% but less than 25%. Any resolution of
the Board of Directors adopted in accordance with the provisions of this
definition directing that a Change in Control shall be deemed not to have
occurred for purposes of this Plan may be rescinded or countermanded at any
time with or without retroactive effect.
"CHASE MERGER CLOSING DATE" shall mean the "Closing Date" as defined
in Section 1.2 of the Merger Agreement.
"COMMITTEE" shall mean the Compensation and Benefits Committee of the
Board of Directors.
"CORPORATION" shall mean New USTC Holdings Corporation, which will
assume the name of "U.S. Trust Corporation" as of the time the New Holdings
Distribution is effective.
"ELIGIBLE COMPENSATION" shall mean, with respect to any Eligible
Officer for any Plan Year, (i) any Award that becomes payable to the Eligible
Officer during such year as reduced by the sum of (A) the amount of any ESOP
Contribution to be made to the 401(k) Plan on behalf of the Eligible Officer
with respect to such Award, (B) the amount that is taken into account with
respect to such Award in determining the Supplemental ESOP Contribution amount
to be credited to the Eligible Officer's Account or Accounts pursuant to
Section 5 hereof, and (C) any amount that is contributed to the 401(k) Plan on
the Eligible Officer's behalf with respect to such Award pursuant to the
Eligible Officer's election under the applicable provisions of the 401(k) Plan,
and (D) in the case of an Award under the 1995 Executive Incentive Plan, the
portion of such Award that is payable in the form of Restricted Units; (ii) any
commissions (including any "trail" commissions and any commission "overrides")
that are payable to the Eligible Officer during such year (but, in the case of
any amount payable during such year with respect to commissions that were
earned prior to the start of such year, only to the extent of such of those
commissions as were earned after the date on which the Eligible Officer filed
his or her deferral election for such year under Section 3), exclusive of (A)
the amount of any such commissions that are included in the Eligible Officer's
base compensation for any Plan Year pursuant to the Eligible Officer's
election; (B) the amount by which any such commissions are reduced with respect
to any ESOP Contribution made to the 401(k) Plan on behalf of the Eligible
Officer, and (C) the amount by which any such commissions are reduced with
respect to any Supplemental ESOP Contribution amount credited to the Eligible
Officer's Account or Accounts pursuant to Section 5 hereof; and (iii) any bonus
or incentive payments payable to the Eligible Officer pursu-
3
<PAGE> 4
ant to any employment agreement between the Eligible Officer and the
Corporation (or, for periods prior to the Chase Merger Closing Date, U.S. Trust
Corporation) or any of its Affiliated Companies, to the extent earned during
such year, regardless of the year in which such bonus or incentive payments are
payable.
"ELIGIBLE OFFICER" shall mean any officer of the Corporation (or, for
periods prior to the Chase Merger Closing Date, of U.S. Trust Corporation) or
any of its Affiliated Companies at or above the rank of Vice President, who,
for the Plan Year immediately preceding (i) the Plan Year in which such officer
first makes a deferral election under Section 3 or 4, or (ii) the Plan Year in
which a Supplemental ESOP Contribution amount is first credited to such
officer's Account pursuant to Section 5, had total compensation in excess of
$150,000. For this purpose an officer's "total compensation" for any Plan Year
shall mean the sum of (i) the aggregate amount reported as the officer's
compensation from the Corporation (or, for periods prior to the Chase Merger
Closing Date, from U.S. Trust Corporation) and its Affiliated Companies in Form
W-2 filed with respect to the officer for such year, for Federal income tax
purposes; (ii) the aggregate amount of all 401(k) Contributions and ESOP
Contributions made on behalf of the officer for such year under the 401(k)
Plan; and (iii) the aggregate amount of all salary reduction contributions made
on behalf of the officer for such year under the Employees' Flexible Spending
Plan of United States Trust Company of New York and Affiliated Companies. For
any Plan Year beginning on or after January 1, 1995, the $150,000 amount
referred to in the second preceding sentence shall be adjusted to the extent
necessary for such amount to equal the amount of the limitation on annual
compensation in effect for such year under section 401(a)(17) of the Internal
Revenue Code of 1986. Notwithstanding the foregoing, an officer's "total
compensation" for the Plan Year beginning on January 1, 1995 shall not include
the amount of any AIP Cashout Payment, or the amount of any Stock Option
Cashout Payment, that becomes payable to the officer during such Plan Year.
"ESOP CONTRIBUTION" shall mean, for any 401(k) Plan Year, the ESOP
Contribution to be made on behalf of a Participant under the provisions of the
401(k) Plan in effect for such Plan Year.
"401(k) PLAN" shall mean the 401(k) Plan and ESOP of United States
Trust Company of New York and Affiliated Companies.
"401(k) PLAN YEAR" shall mean the "Plan Year" as defined in the 401(k)
Plan.
"PARTICIPANT" shall mean any Eligible Officer (i) who has made an
election under Section 3 hereof (or under Section 3 of the Prior Plan) to defer
any portion of his or her Eligible Compensation for any Plan Year , (ii) who
has made an election under Section 4 hereof to defer any portion of his or her
1995 Cashout Payments (as defined in Section 4), or (iii) whose
4
<PAGE> 5
Account or Accounts have been credited with a Supplemental ESOP Contribution
amount for any 401(k) Plan Year pursuant to Section 5 hereof.
"PLAN" shall mean the Executive Deferred Compensation Plan of U.S.
Trust Corporation, as set forth herein and as amended from time to time.
"PLAN YEAR" shall mean the calendar year.
"PRIOR PLAN" shall mean the Executive Deferred Compensation Plan of
U.S. Trust Corporation, as in effect prior to the Chase Merger Closing Date.
"RETIREMENT" shall mean a Participant's termination of employment with
the Corporation (or, for periods prior to the Chase Merger Closing Date, with
U.S. Trust Corporation) and its Affiliated Companies for any reason other than
death if, as of the date of the Participant's termination of employment, (i)
the Participant has attained age 65 or (ii) the sum of Participant's age and
the number of his or her "Years of Service", as defined in the 401(k) Plan, is
at least equal to 80. In addition, in the case of any Participant who becomes
entitled to receive benefit payments under the long-term disability plan
maintained by the Corporation or any of its Affiliated Companies and who
continues to receive payments under such plan throughout the entire period
ending on the date on which the Participant first meets the age, or the age and
service, requirements set forth in clause (i) or (ii) above, such Participant
shall be treated, for purposes of the Plan, as having terminated employment
with the Corporation and its Affiliated Companies as a result of Retirement, on
the first day of the month following the date on which the Participant first
meets such requirements. In applying clause (ii) above for this purpose, the
Participant's "Years of Service" shall include the number of calendar years (or
part thereof) during which the Participant has received benefits payments under
such long-term disability plan.
"STATUTORY LIMITATIONS" shall mean, with respect to any 401(k) Plan
Year, the limitations imposed under sections 401(a)(17) and 415 of the Code
with respect to the amount of compensation that may be taken into account in
calculating contributions on behalf of any Member, and the amount of
contributions that may be allocated to a Member's account, under the 401(k)
Plan for such year.
"STOCK OPTION CASHOUT PAYMENT" shall mean the payment which, in the
absence of an election by an Eligible Officer under Section 4, would be made to
the Eligible Officer upon the consummation of the Merger with respect to the
shares subject to any unexercised stock option granted to the Eligible Officer
under the 1989 Stock Compensation Plan of U.S. Trust Corporation or under the
United States Trust Company of New York and Affiliated Companies 1986 Stock
Option Plan.
5
<PAGE> 6
3. DEFERRAL OF ELIGIBLE COMPENSATION
With respect to each Plan Year beginning on or after January 1, 1994,
an Eligible Officer may elect to have payment of any part or all of his or her
Eligible Compensation for such year deferred, and to have payment of such
portion made under the terms of this Plan. Any such election shall be made in
accordance with the following rules:
(a) A deferral election shall be made in writing, on a form provided
by the Committee for such purpose.
(b) In the election form, the Eligible Officer (i) shall specify, by
amount or percentage (which must be an even multiple of 5%), the portion of his
or her Eligible Compensation the Eligible Officer wishes to defer (the amounts
so deferred are hereinafter referred to as the Eligible Officer's "Deferred
Amounts"), and (ii) shall specify, by percentage (which must be an even
multiple of 5%), the portions of the Eligible Officer's Deferred Amounts that
he or she wishes to have allocated, respectively, to the Lump Sum Payment
Account and to the Installment Payment Account established for the Eligible
Officer pursuant to Section 6.
(c) Notwithstanding the provisions of (b) above, (i) in the case of
any Eligible Officer whose employment terminates during the Plan Year beginning
on January 1, 1995 (the "1995 Plan Year") as a result of Retirement, all of
such officer's Deferred Amounts with respect to his or her Eligible
Compensation for the 1995 Plan Year shall be credited to such officer's
Installment Payment Account; (ii) in the case of any Eligible Officer whose
employment terminates during the 1995 Plan Year other than as a result of
Retirement and who either is a "Retained Employee" as defined in Section 5.8 of
the Merger Agreement, or is not a Retained Employee but whose employment
terminates as a result of staff reductions associated with the Distribution and
the Merger, all of such officer's Deferred Amounts with respect to his or her
Eligible Compensation for the 1995 Plan Year shall be credited to the Special
1995 Deferral Account established for such officer pursuant to Section 6; and
(iii) in the case of any Eligible Officer whose employment terminates as a
result of Retirement during the 1995 Plan Year or any later Plan Year, all of
such officer's Deferred Amounts with respect to his or her Eligible
Compensation for the Plan Year following the Plan Year in which such officer's
employment so terminates shall be credited to such officer's Installment
Payment Account or, if such officer made an election under Section 8(e), to the
Retiree Payment Account established for such officer pursuant to Section 6(f).
(d) An Eligible Officer's election to defer Eligible Compensation for
any Plan Year beginning on or after January 1, 1995 shall be filed with the
Committee by no later than November 15 of the preceding Plan Year (September 30
of the preceding Plan Year, in the case of Eligible Compensation described in
clause (ii) of the definition of such term contained in
6
<PAGE> 7
Section 2), or by such other date as the Committee may determine in its
discretion subject, however, to the limitation in paragraph (f)(iii) below.
Notwithstanding the foregoing, in the case of any Eligible Officer described in
Section 3(c)(i) or (ii) whose employment terminates on or prior to the Chase
Merger Closing Date, such officer's election to defer Eligible Compensation for
the 1995 Plan Year shall be filed with the Committee by no later than March 17,
1995.
(e) Any deferral election made by an Eligible Officer with respect to
his or her Eligible Compensation for a Plan Year, and any election made by an
Eligible Officer as to the allocation of the Eligible Officer's Deferred
Amounts for such year to his or her Accounts, shall be irrevocable except as
otherwise provided in Section 8(d) or (e).
(f) Notwithstanding any other provision herein to the contrary, a
deferral election otherwise permitted to be made hereunder shall be subject to
the following requirements:
(i) no amount may be deferred pursuant to an Eligible
Officer's election unless such amount equals or exceeds $1,000;
(ii) no portion of an Eligible Officer's Eligible
Compensation may be deferred hereunder to the extent that any tax is
required to be withheld from such portion pursuant to applicable
federal, state or local law; and
(iii) no portion of an Eligible Officer's Eligible
Compensation may be deferred hereunder to the extent that such portion
has been earned prior to the date on which the Eligible Officer's
election to defer such portion has been filed with the Committee.
4. DEFERRAL OF 1995 CASHOUT PAYMENTS
An Eligible Officer may elect to have any part or all of his or her
AIP Cashout Payment, and any part or all of his or her Stock Option Cashout
Payment (such payments are collectively referred to herein as an Eligible
Officer's "1995 Cashout Payments") deferred, and to have payment of such
portions made under the terms of this Plan. Any such election shall be made in
accordance with the following rules.
(a) A deferral election with respect to an Eligible Officer's 1995
Cashout Payments shall be made in writing, on a form provided by the Committee
for such purpose.
(b) In the election form, the Eligible Officer (i) shall specify, by
amount or percentage (which must be an even multiple of 5%), the portions of
his or her 1995 Cashout Payments the Eligible Officer wishes to defer, and (ii)
shall specify, by percentage (which must be an even multiple of 5%), the
portions of the amounts so deferred that the Eligible Officer wishes to have
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<PAGE> 8
allocated, respectively, to his or her Lump Sum Payment Account and to his or
her Installment Payment Account.
(c) Notwithstanding the provisions of (b) above, (i) in the case of
any Eligible Officer described in Section 3(c)(i), all amounts deferred with
respect to such officer's 1995 Cashout Payments shall be credited to such
officer's Installment Payment Account, and (ii) in the case of any Eligible
Officer described in Section 3(c)(ii), all amounts deferred with respect to
such officer's 1995 Cashout Payments shall be credited to the Special 1995
Deferral Account established for such officer pursuant to Section 6.
(d) An Eligible Officer's election to defer his or her 1995 Cashout
Payments shall be filed with the Committee by no later than March 17, 1995.
(e) Any deferral election made by an Eligible Officer with respect to
his or her 1995 Cashout Payments, and any election made by an Eligible Officer
as to the portions of the amounts so deferred that are to be allocated to the
Eligible Officer's Accounts, shall be irrevocable except as otherwise provided
in Section 8(d) or (e).
(f) Notwithstanding any other provision herein to the contrary, no
portion of an Eligible Officer's 1995 Cashout Payments may be deferred
hereunder to the extent that any tax is required to be withheld from such
portion pursuant to applicable federal, state or local law.
5. DEFERRAL OF SUPPLEMENTAL ESOP CONTRIBUTION AMOUNTS
For each 401(k) Plan Year beginning on or after January 1, 1994 for
which any portion of the ESOP Contribution that otherwise would have been made
to the 401(k) Plan on behalf of an Eligible Officer cannot be made, or cannot
be allocated (or cannot result in the allocation of ESOP Stock) to such
officer's account under the 401(k) Plan, because of the Statutory Limitations,
there shall be credited to such Officer's Account or Accounts hereunder an
amount equal to excess of (i) the amount of the ESOP Contribution for such
year that would have been made on the Eligible Officer's behalf and that would
have been allocated (or that would have resulted in the allocation of ESOP
Stock) to the Eligible Officer's account under the 401(k) Plan in the absence
of the Statutory Limitations, over (ii) the amount of the ESOP Contribution for
such year that was made on the Eligible Officer's behalf and that was allocated
(or that resulted in the allocation of ESOP Stock) to the Eligible Officer's
account under the 401(k) Plan. The amount to be so credited for any 401(k)
Plan Year is hereinafter referred to as an Eligible Officer's "Supplemental
ESOP Contribution amount" for such year. Notwithstanding the foregoing, the
Supplemental ESOP Contribution amount otherwise to be credited to the Eligible
Officer's Account or Accounts for any 401(k) Plan Year shall be reduced by the
amount of any tax required to be withheld therefrom pursuant to applicable
federal, state or local law.
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<PAGE> 9
For each 401(k) Plan Year, each Eligible Officer may make an election
as to the portions of the Supplemental ESOP Contribution amount to be credited
to such officer for such year that are to be allocated, respectively, to the
Eligible Officer's Lump Sum Payment Account and to his or her Installment
Payment Account. Such election shall be made in writing, on a form provided by
the Committee for such purpose. The form shall be filed with the Committee by
no later than November 15 of such 401(k) Plan Year, or by such other date as
the Committee may determine in its discretion. In the event that an Eligible
Officer fails to make a timely election as to the allocation of his or her
Supplemental ESOP Contribution amount for a 401(k) Plan Year, all of such
Supplemental ESOP Contribution amount shall be credited to the Eligible
Officer's Lump Sum Payment Account.
Notwithstanding the foregoing, in the case of any Eligible Officer
whose employment terminates prior to the end of a 401(k) Plan Year as a result
of Retirement, the Supplemental ESOP Contribution amount to be credited to such
officer's Account hereunder for such year shall be credited to the officer's
Installment Payment Account or, if he or she has made an election under Section
8(e), to the Retiree Payment Account established for such officer pursuant to
Section 6(f).
6. ACCOUNTS
There shall be established and maintained on the books and records of
the Corporation, for bookkeeping purposes only, separate Accounts for each
Participant, to reflect the Participant's interest under the Plan. Such
Accounts shall be established and maintained in accordance with the following
rules:
(a) For each Participant , there shall be established a Lump Sum
Payment Account and an Installment Payment Account, and for each Participant
described in Section 3(c)(ii), there shall be established a Special 1995
Deferral Account.
(b) As of the time this Plan is adopted by the Corporation, each
Participant's Lump Sum Payment Account and Installment Account shall be
credited, respectively, with amounts equal to the balances of the Lump Sum
Payment Account and the Installment Payment Account maintained for the
Participant under the Prior Plan, determined as of the close of business on the
day preceding the Chase Merger Closing Date.
(c) A Participant's Lump Sum Payment Account, Installment Account,
Retiree Payment Account, and Special 1995 Deferral Account shall be credited
with amounts equal to that portion of the Participant's Deferred Amounts for
each Plan Year beginning on or after January 1, 1995 that the Participant has
elected under Section 3(b) to have allocated to each such Account, or that are
required to be credited to such Account pursuant to Section 3(c). Such amounts
shall be so credited to the Participant's Account or Accounts as of the last
business day of the calendar
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<PAGE> 10
month following the month in which the amounts in question would have been paid
to the Participant had the Participant not elected under Section 3 to have
payment of such amounts deferred under this Plan.
(d) A Participant's Lump Sum Payment Account, Installment Payment
Account and Special 1995 Deferral Account shall be credited with amounts equal
to that portion of the amounts deferred with respect to the Participant's 1995
Cashout Payments that the Participant has elected under Section 4(b) to have
allocated to each such Account, or that are required to be credited to such
Account pursuant to Section 4(c). Such amounts shall be so credited to the
Participant's Account or Accounts as of the Chase Merger Closing Date.
(e) A Participant's Lump Sum Payment Account and Installment Payment
Account, or the Participant's Retiree Payment Account, shall be credited with
amounts equal to that portion of the Participant's Supplemental ESOP
Contribution amount for each 401(k) Plan Year that the Participant has elected
to have allocated to each such Account, or which is required to be credited to
such Account pursuant to Section 5. Such amounts shall be so credited as of
the last business day of March following the 401(k) Plan Year for which such
Supplemental ESOP Contribution amount is to be credited.
(f) A Retiree Payment Account shall be established and maintained for
each Participant who elects under Section 8(e) to have payment with respect to
his or her Account or Accounts made in the manner therein provided.
(g) A Participant's Accounts shall be adjusted to reflect all
Earnings (as defined in paragraph (a) of Section 7) or interest to be credited
to such Accounts pursuant to Section 7, all transfers to or from such Accounts
pursuant to Section 8(d)(ii) or (e), and all payments made with respect to the
Participant's Account balances pursuant to Section 8.
(h) A Participant's interest in each of his or her Accounts shall be
fully vested and nonforfeitable at all times.
7. CREDITING OF EARNINGS
Until payment with respect to a Participant's Accounts has been made
in full, the Participant's Accounts shall be credited with Earnings or interest
in accordance with the follow ing provisions:
(a) As of the last day of each calendar month, each part of the
balance of each of a Participant's Accounts for which a separate Earnings
Crediting Option (as hereinafter defined) is in effect pursuant to the
Participant's election hereunder (or under the Prior Plan) shall be credited
with an amount determined by multiplying such part of the balance of the
Participant's
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<PAGE> 11
Account by a percentage corresponding to the Applicable Rate of Return (as
hereinafter defined) for such month under such Earnings Crediting Option. The
amount so credited (which may be positive or negative depending on whether the
Applicable Rate of Return for the month is positive or negative) is referred to
herein as "Earnings".
(b) For purposes of this Section 7, the term "Earnings Crediting
Option" shall mean, initially, any investment fund maintained under the 401(k)
Plan other than the ESOP Stock Fund or the U.S.T. Corp. Stock Fund. Any such
investment fund is referred to herein as a "401(k) Plan Fund".
Notwithstanding the foregoing, the Committee may at any time, in its
sole discretion, determine (i) that any 401(k) Plan Fund shall cease to
constitute an Earnings Crediting Option for purposes of this Plan, (ii) that
any investment fund that is added to the 401(k) Plan at any time after the
Chase Merger Closing Date shall not constitute an Earnings Crediting Option for
purposes of this Plan, or (iii) that any other hypothetical investment fund or
index or referenced rate of return shall constitute an Earnings Crediting
Option for purposes of this Plan. Participants shall be notified in writing, at
least 45 days in advance, of any such change in the Plan's Earnings Crediting
Options.
(c) The "Applicable Rate of Return" for any month, under any Earnings
Crediting Option, shall mean (i) in the case of an Earnings Crediting Option
that is a 401(k) Plan Fund, the percentage by which the value of such Fund, as
determined by the 401(k) Plan's Trustee as of the Valuation Date (as defined in
the 401(k) Plan) for such month, exceeds, or is less than, the value of such
Fund, as determined by the 401(k) Plan's Trustee as of the Valuation Date for
the immediately preceding month; and (ii) in the case of any other Earnings
Crediting Option, the rate of return applicable for such month, as determined
by the Committee in its sole discretion.
(d) A Participant may make elections with respect to the Earnings
Crediting Options that are to apply with respect to his or her Accounts other
than his or her Retiree Payment Account, in accordance with the following
rules:
(i) a Participant may elect to have any part or all of the
balance of any such Account credited with Earnings under any Earnings
Crediting Option available under the Plan at the time of his or her
election.
(ii) each Participant shall make an initial election as to
the Earnings Crediting Options that are to apply with respect to an
Account at the time the Participant first elects under Section 3, 4 or
5 to have any amount allocated to that Account. Such election shall
be made in the election form in which the Participant makes his or her
election under Section 3, 4 or 5 to have such amount allocated to that
Account. In such election form, the Participant shall specify, by
percentages (which must be even multiples of 5%) the
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<PAGE> 12
respective parts of the balance of such Account that are to be
credited with Earnings under each of the Earnings Crediting Options
designated by the Participant in such form. If a Participant has
failed to make a timely election as to the Earnings Crediting Options
that are to apply to any Account prior to the date as of which an
amount is first credited to such Account, the Participant shall be
deemed to have selected the Fixed Income Fund under the 401(k) Plan as
the Earnings Crediting Option to apply to the entire balance of such
Account.
(iii) The Earnings Crediting Options selected (or deemed to
have been selected) by the Participant with respect to an Account
under clause (ii) above shall remain in effect for that Account (and
shall apply to all additional amounts allocated to such Account
pursuant to any elections made by the Participant under Section 3, 4
or 5 with respect to any subsequent Plan Years) until the Participant
changes his or her election as to the Earnings Crediting Options for
that Account in accordance with clause (iv) below. The Earnings
Crediting Options in effect for a Participant's Lump Sum Payment
Account and Installment Payment Account under the Prior Plan as of the
close of business on the day preceding the Chase Merger Closing Date
shall remain in effect with respect to the Lump Sum Payment Account
and the Installment Payment Account established for the Participant
under this Plan, until the Participant makes an election under clause
(iv) below to change the Earnings Crediting Options for such Accounts.
(iv) A Participant may change the Earnings Crediting Options
that are to apply with respect to an Account by making a new election
hereunder with respect to that Account. Such new election shall be
made in writing, on a form which is provided by the Committee for such
purpose and which the Participant files with the Committee. In such
form, the Participant shall specify, in the same manner as described
in clause (ii) above, the respective parts of the balance of such
Account that are to be credited with Earnings under each of the
Earnings Crediting Options designated by the Participant in such form.
The Participant's new election shall become effective as of the first
day of the calendar month following the date on which such election is
filed with the Committee, provided that it is so filed at least 15
days prior to such first day. The Earnings Crediting Options selected
by the Participant in such new election shall remain in effect with
respect to the Participant's Account until the Participant again
changes his or her election with respect to that Account in accordance
with this clause (iv).
(e) As of the last day of each calendar month, the balance of a
Participant's Retiree Payment Account shall be credited with interest at a rate
equal to the monthly average constant maturity yield for a 10-year maturity on
U.S. Treasury securities, for the month preceding the month in which payments
with respect to the Participant's Retiree Payment Account commences.
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(f) If payment with respect to any Account maintained for a
Participant is to be made in form of annual installments pursuant to Section
8(c)(ii), 8(d)(i) or 8(e), such Account shall continue to be credited with
Earnings or interest in accordance with the provisions of this Section 7 until
all payments required to be made with respect to such Account have been made.
For this purpose, any such payments with respect to any Account other than a
Participant's Retiree Payment Account shall be deemed to have been made pro
rata from the respective portions of the balance of such Account that are
subject to separate Earnings Crediting Options.
8. PAYMENT OF ACCOUNT BALANCES
Payment with respect to a Participant's Account balances shall be made
in accordance with the following provisions:
(a) A Participant's Account balances shall become payable upon the
earliest to occur of the following events (hereinafter referred to as "Payment
Events"): (i) the Participant's death, (ii) the Participant's Retirement,
(iii) the Participant's termination of employment with the Corporation (or, for
periods prior to the Chase Merger Closing Date, with U.S. Trust Corporation)
and its Affiliated Companies for any reason other than death or Retirement, and
(iv) the occurrence of a Change in Control.
(b) Unless a Participant otherwise elects under Section 8(d)(ii) or
8(e) with respect to his or her Lump Sum Payment Account, payment with respect
to such Account shall be made in the form of a single lump sum cash payment.
Such payment shall be made to the Participant or, if the Participant's Accounts
become payable by reason of his or her death, to the Participant's Beneficiary.
Payment shall be made as soon as practicable after the occurrence of any
Payment Event; provided, however, that if payment with respect to the
Participant's Installment Payment Account is required to be made in the form of
annual installments pursuant to Section 8(c)(ii), or if a Participant has made
the election provided in Section 8(e) with respect to his or her Installment
Payment Account but not with respect to his or her Lump Sum Payment Account,
payment with respect to the Participant's Lump Sum Payment Account shall be
made on the same date as the date on which the first annual installment payment
is required to be made under Section 8(c)(ii) or 8(e). The amount so payable
shall be equal to the balance of the Participant's Lump Sum Payment Account
determined as of the last day of the month preceding the month in which payment
is made.
(c) Unless a Participant otherwise elects under Section 8(d)(ii) or
8(e) with respect to his or her Installment Payment Account, payment with
respect to such Account shall be made in accordance with the following rules:
(i) except as provided in clause (ii) below, payment shall
be made to the Participant or, in the event of the Participant's
death, to his or her Beneficiary, in the
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<PAGE> 14
same form, at the same time, and in an amount determined in the same
manner, as payment with respect to the Participant's Lump Sum Payment
Account is to be made, as provided in paragraph (b) above.
(ii) if the Participant's Account balances become payable as
a result of the Participant's Retirement, or as a result of the
Participant's death while he or she is still employed with the
Corporation or any of its Affiliated Companies but after the
Participant has met the age, or the age and service, requirements for
eligibility for Retirement stated in the definition of such term
contained in Section 2, payment with respect to the Participant's
Installment Payment Account shall be made to the Participant or, in
the event of the Participant's death, to his or her Beneficiary, in
the form of a series of 10 annual installments. The first such
installment payment shall be made on the last business day of March of
the Plan Year following the year in which the Participant's Retirement
or death occurs, and the remaining installment payments shall be made
on the last business day of March of each succeeding Plan Year. The
amount of each such installment payment shall be determined by
dividing (A) the balance of the Participant's Installment Payment
Account determined as of the last day of the Plan Year preceding the
year in which such payment is to be made, by (B) the number of
installment payments remaining to be made. The last such installment
payment shall include Earnings credited to the Installment Payment
Account for the month preceding the month in which such payment is
made.
(d) Payment with respect to a Participant's Special 1995 Deferral
Account shall be made in accordance with the following rules:
(i) Payment with respect to the Participant's Special 1995
Deferral Account shall be made to the Participant in the form of a
series of 10 annual installments. The first such installment payment
shall be made on the last business day of February, 1996, and the
remaining installment payments shall be made on the last business day
of February of each succeeding Plan Year. The amount of each such
installment payment shall be determined by dividing (A) the balance of
the Participant's Special 1995 Deferral Account determined as of the
last day of the Plan Year preceding the year in which such payment is
to be made, by (B) the number of installment payments remaining to be
made. The last such installment payment shall include Earnings
credited to the Special 1995 Deferral Account for the month preceding
the month in which such payment is made.
(ii) If a Lump Sum Payment Account and/or an Installment
Payment Account is being maintained for a Participant described in
Section 3(c)(ii) in addition to the Special 1995 Deferral Account that
has been established for such Participant, the Participant may elect
to have payment with respect to either or both of such other
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<PAGE> 15
Accounts made in the same form, at the same times, and in amounts
determined in the same manner, as the payments to be made with respect
to the Participant's Special 1995 Deferral Account as provided in
clause (i) above. Any such election shall be made in writing, on a
form which is provided by the Committee for such purpose and which is
filed by the Participant with the Committee by no later than March 17,
1995. If a Participant makes such an election, the balance of the
Account or Accounts specified by the Participant in such election
shall be transferred and credited to the Participant's 1995 Special
Deferral Account as of the last day of the month in which the
Participant's employment with the Corporation (or, for periods prior
to the Chase Merger Closing Date, with U.S. Trust Corporation) and its
Affiliated Companies terminates.
(e) Any Participant whose employment with the Corporation (or, for
periods prior to the Chase Merger Closing Date, with U.S. Trust Corporation)
and its Affiliated Companies terminates after March 31, 1995 as a result of
Retirement may elect to have the balance of the Participant's Installment
Payment Account, or the balances of that Account and the Participant's Lump Sum
Payment Account, transferred and credited to the Retiree Payment Account
established for the Participant pursuant to Section 6, and to have payment with
respect to the Participant's Retiree Payment Account made in the form of a
series of 15 annual installments, with interest credited on the unpaid balance
of such Account as provided in Section 7(e). Such Account balance or balances
shall be so transferred and credited as of the first day of the month in which
the first installment payment with respect to such Account is to be made.
Any such election shall be made in writing, on a form which is
provided by the Committee for this purpose and which is filed by the
Participant with the Committee at least 12 months prior to the date of the
Participant's Retirement or, in the case of any Participant who retires prior
to March 31, 1996, by no later than March 17, 1995.
In the case of a Participant who makes such election, the first
installment payment with respect to his or her Retiree Payment Account shall be
made on the last business day of March following the Plan Year in which the
Participant retires, and the remaining installment payment, shall be made on
the last business day of March of each succeeding Plan Year. The amount of the
first installment shall be determined by dividing the balance of the
Participant's Retiree Payment Account on the day on which such payment is to be
made (after any amounts required to be credited to such Account on such day
pursuant to Section 6(c), 6(e) or 7 have been credited), by 15. The amount of
each remaining installment payment shall be determined by dividing (A) the
balance of the Participant's Retiree Payment Account determined as of the last
day of the month preceding the month in which such payment is to be made, by
(B) the number of installment payments remaining to be made.
(f) In any case where payment with respect to any Account is to be
made in the form of annual installment payments, the following special rules
shall apply:
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(i) if the Participant should die before receiving all
installment payments required to be made with respect to such Account,
any installment payments remaining to be made at the date of the
Participant's death shall be made to the Participant's Bene ficiary in
the same form, at the same times, and in the same amounts, as such
payments would have been made to the Participant (A) if he or she had
not died, and (B), in the case of installment payments required to be
made to a Beneficiary under Section 8(c)(ii) due to the death of a
Participant occurring before the Participant had received any such
payments, if the Participant's employment had terminated as a result
of Retirement on the date of his or her death.
(ii) if a Change in Control should occur before all
installment payments required to be made with respect to the such
Account have been made, the balance of such Account shall become
immediately due and payable upon the occurrence of such Change in
Control. Payment with respect to such balance shall be made to the
Participant or, if the Participant has died, to his or her
Beneficiary, in the form of a single lump sum cash payment. Payment
shall be made as soon as practicable after the occurrence of such
Change in Control. The amount so payable shall be equal to the
balance of the Participant's Account determined as of the last day of
the month preceding the month in which payment is made.
(g) Notwithstanding any other provision in this Section 8 to the
contrary, payment with respect to any part or all of the Participant's Account
balances may be made to the Participant or, if applicable, the Participant's
Beneficiary, on any date earlier than the date on which such payment is to be
made pursuant to such other provisions of this Section 8 if (i) the
Participant, or his or her Beneficiary, requests such early payment and (ii)
the Committee, in its sole discretion, determines that such early payment is
necessary to help the Participant, or his or her Beneficiary, meet an
"unforeseeable emergency" within the meaning of Section 1.457-2(h)(4) of the
federal income tax regulations. The amount that may be so paid may not exceed
the amount necessary to meet such emergency.
(h) There shall be deducted from the amount of any payment otherwise
required to be made under the Plan all Federal, state and local taxes required
by law to be withheld with respect to such payment.
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9. DESIGNATION AND CHANGE OF BENEFICIARY
Each Participant shall file with the Committee a written designation
of one or more persons as the Beneficiary who shall be entitled to receive any
amount payable under the Plan by reason of his or her or her death. A
Participant may, from time to time, revoke or change his or her Beneficiary
designation without the consent of any previously designated Beneficiary by
filing a new designation with the Committee. The last such designation
received by the Committee shall be controlling; provided, however, that no
designation, or change or revocation thereof, shall be effective unless
received by the Committee prior to the Participant's death, and in no event
shall it be effective as of a date prior to such receipt. If at the date of a
Participant's death, there is no designation of a Beneficiary in effect for the
Participant pursuant to the provisions of this Section 9, or if no Beneficiary
designated by the Participant in accordance with the provisions hereof survives
to receive any amount payable under the Plan by reason of the Participant's
death, the Participant's estate shall be treated as the Participant's
Beneficiary for purposes of the Plan.
10. PAYMENTS TO PERSONS OTHER THAN PARTICIPANTS
If the Committee shall find that any Participant or Beneficiary to
whom any amount is payable under the Plan is unable to care for his or her
affairs because of illness, accident or legal incapacity, then, if the
Committee so directs, such amount may be paid to such Participant's or
Beneficiary's spouse, child or other relative, an institution maintaining or
having custody of such person, or any person deemed by the Committee to be a
proper recipient on behalf of such Participant, unless a prior claim therefor
has been made by a duly appointed legal representative of the Participant or
Beneficiary.
Any payment made under this Section 10 shall be a complete discharge
of the liability of the Corporation with respect to such payment.
11. RIGHTS OF PARTICIPANTS
A Participant's rights and interests under the Plan shall be subject
to the following provisions:
(a) A Participant shall have the status of a general unsecured
creditor of the Corporation with respect to his or her right to receive any
payment under the Plan. The Plan shall constitute a mere promise by the
Corporation to make payments in the future of the benefits provided for herein.
It is intended that the arrangements reflected in this Plan be treated as
unfunded for tax purposes, as well as for purposes of Title I of ERISA.
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<PAGE> 18
(b) The Corporation may, but shall not be required to, purchase a
life insurance policy or policies, to assist it in funding any of its payment
obligations under the Plan. If any policy is so purchased, it shall, at all
times, remain subject to the claims of the Corporation's creditors. No
Participant or Beneficiary shall have any interest in, or rights with respect
to, such policy.
(c) A Participant's rights to payments under the Plan shall not be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, attachment, or garnishment by creditors of the Participant
or his or her Beneficiary.
(d) Neither the Plan nor any action taken hereunder shall be
construed as giving any Participant any right to be retained in the employment
of the Corporation or any of its Affiliated Companies.
12. ADMINISTRATION
The Plan shall be administered by the Committee. The Committee shall
have exclusive authority to determine all matters involving the administration,
operation and interpretation of the Plan, in its discretion. All decisions,
actions or interpretations of the Committee under the Plan shall be final,
conclusive and binding upon all parties.
No member of the Committee shall be personally liable by reason of any
contract or other instrument executed by such member or on his or her behalf in
his or her capacity as a member of the Committee nor for any mistake of
judgment made in good faith, and the Corporation shall indemnify and hold
harmless each member of the Committee, and each employee, officer, director or
trustee of the Corporation or any of its Affiliated Companies to whom any duty
or power relating to the administration or interpretation of the Plan may be
delegated, against any cost or expense (including counsel fees) or liability
(including any sum paid in settlement of a claim with the approval of the Board
of Directors) arising out of any act or omission to act in connection with the
Plan unless arising out of such person's own fraud or bad faith.
13. AMENDMENT OR TERMINATION
The Board of Directors may, with prospective or retroactive effect,
amend, suspend or terminate the Plan or any portion thereof at any time;
provided, however, that no amendment of the Plan shall deprive any Participant
of any rights to receive payment of any amounts due him or her under the terms
of the Plan as in effect prior to such amendment without his or her written
consent.
Any amendment that the Board of Directors would be permitted to make
pursuant to the preceding paragraph may also be made by the Committee where
appropriate to facilitate the administration of the Plan or to comply with
applicable law or any applicable rules and
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regulations of governing authorities provided that the cost of the Plan to the
Corporation is not materially increased by such amendment.
Notwithstanding any other provision in this Plan to the contrary, the
Committee may terminate any Participant's participation in the Plan, and direct
that an immediate payment be made with respect to the balances of the
Participant's Accounts, if the Committee, in its sole discretion, determines
that such termination of participation and payment are necessary in order to
preserve the Plan's status as a plan of deferred compensation for "a select
group of manage ment or highly compensated employees" within the meaning of the
applicable provisions of ERISA.
14. SUCCESSOR CORPORATION
The obligations of the Corporation under the Plan shall be binding
upon any successor corporation or organization resulting from the merger,
consolidation or other reorganization of the Corporation, or upon any successor
corporation or organization succeeding to substantially all of the assets and
business of the Corporation. The Corporation agrees that it will make
appropriate provision for the preservation of Participants' rights under the
Plan in any agreement or plan which it may enter into or adopt to effect any
such merger, consolidation, reorganization or transfer of assets.
15. GOVERNING LAW
The provisions of the Plan shall be governed by and construed in
accordance with the laws of the State of New York.
19
<PAGE> 1
EXHIBIT 10.19
EXECUTIVE INCENTIVE PLAN
OF
U. S. TRUST CORPORATION
AS ADOPTED EFFECTIVE SEPTEMBER 1, 1995
1. PURPOSE
The purpose of the Executive Incentive Plan of U.S. Trust Corporation
is to (i) encourage greater focus on performance among the key executives of
U.S. Trust Corporation and its Affili ated Companies by relating a significant
portion of their total compensation to the achievement of annual financial and
strategic objectives, and (ii) to promote on the part of such executives an
increased level of ownership of the Common Shares of the Corporation by
providing for a significant portion of their awards under the Plan to be paid
in the form of the Corporation's Common Shares.
The provisions of the Plan under which payment with respect to
Restricted Units granted to a Participant may be deferred are intended to
constitute an unfunded plan of deferred compensation for "a select group of
management or highly compensated employees" within the meaning of Sections
201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA").
2. DEFINITIONS
As used herein, the following terms shall have the following meanings:
"AFFILIATED COMPANIES" shall mean United States Trust Company of New
York, and each other direct or indirect subsidiary of the Corporation.
"AVERAGE MARKET VALUE" shall mean, with respect to one Common Share as
of any date or with respect to any period, the mean between the per-share high
and low prices for the Corporation's Common Shares on such date, or the average
of the mean between such prices on each day during such period, as quoted on
the NASDAQ National Market System, or, if the Corporation's Common Shares are
not traded on such system, on such other securities market or securities
exchange on which such shares are traded as the Committee shall determine.
<PAGE> 2
"AWARD" shall mean a payment earned by a Participant in accordance
with the provisions of the Plan.
"BENEFICIARY" shall mean the person or person designated by a
Participant in accordance with Section 11 to receive any amount, or any Common
Shares, payable under the Plan upon the Participant's death.
"BOARD OF DIRECTORS" shall mean the Board of Directors of the
Corporation.
"CHANGE IN CONTROL" shall mean that any of the following events has
occurred:
(i) 20% or more of the Corporation's Common Shares has been
acquired by any person (as defined by Section 3(a)(9) of the
Securities Exchange Act of 1934) other than directly from the
Corporation;
(ii) there has been a merger or equivalent combination after
which 49% or more of the voting shares of the surviving corporation is
held by persons other than former shareholders of the Corporation; or
(iii) 20% or more of the directors elected by shareholders to
the Board of Directors are persons who were not nominated by the Board
of Directors or the Executive Committee of the Board of Directors in
the most recent proxy statement of the Corporation;
provided, however, that notwithstanding anything in the Plan to the contrary,
no Change in Control shall be deemed to have occurred, and no rights arising
upon a Change in Control as provided in Section 9 shall exist, to the extent
that the Board of Directors so directs by resolution adopted prior to the
Change in Control, or not later than 45 days after the Change in Control if the
percentage of Common Shares acquired or directors elected under clause (i) or
(iii) of the foregoing definition of Change in Control shall be at least 20%
but less than 25%. Any reso lution of the Board of Directors adopted in
accordance with the provisions of this definition directing that a Change in
Control shall be deemed not to have occurred for purposes of this Plan and that
Section 9 shall not become effective, may be rescinded or countermanded at any
time with or without retroactive effect.
"COMMITTEE" shall mean the Compensation and Benefits Committee of
the Board of Directors.
"COMMON SHARES" shall mean the common shares ($1.00 par value per
share) of the Corporation.
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<PAGE> 3
"CORPORATION" shall mean U.S. Trust Corporation.
"DETERMINED VALUE" shall mean (i) the highest price per Common Share
paid in connection with any Change in Control (including, without limitation,
prices paid in any subsequent merger or combination with any entity that
acquires control of the Corporation), or (ii) in the case of a Change in
Control occurring as a result of an event described in clause (iii) of the
definition of a Change in Control contained in this Section 2, the Average
Market Value of a Common Share during the 30-day period ending on the day
preceding the occurrence of such Change in Control.
"ESOP CONTRIBUTION" shall mean the ESOP Contribution as defined
under the 401(k) Plan.
"EXECUTIVE DEFERRED COMPENSATION PLAN" shall mean the Executive
Deferred Compensation Plan of U.S. Trust Corporation.
"401(k) PLAN" shall mean the 401(k) Plan and ESOP of United States
Trust Company of New York and Affiliated Companies.
"PARTICIPANT" shall mean an officer of the Corporation or any of its
Affiliated Companies who is selected to participate in the Plan.
"PLAN" shall mean the Executive Incentive Plan of U.S. Trust
Corporation, as set forth herein and as amended from time to time.
"PLAN YEAR" shall mean, initially, the period beginning on September
1, 1995 and ending on December 31, 1995, and thereafter, each calendar year.
"RESTRICTED UNIT shall mean a unit of measurement equivalent to one
Common Share, with none of the attendant rights of a shareholder of such share,
including, without limitation, the right to vote such share and the right to
receive dividends thereon, except to the extent otherwise specifically provided
herein.
3. MAXIMUM NUMBER OF COMMON SHARES OF STOCK AVAILABLE FOR AWARDS
Notwithstanding any other provision of the Plan, the number of Common
Shares that may be distributed with respect to Restricted Units granted under
the Plan shall be limited to 120,000 Common Shares, plus a number of Common
Shares equal to the total number of additional Restricted Units credited to
Participants with respect to dividends paid on Common Shares pursuant to the
terms of the agreements evidencing their grants, as provided in Section
6(d)(vii). In the event that any Restricted Units initially granted or
thereafter credited to a
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<PAGE> 4
Participant shall be forfeited, the number of Common Shares no longer payable
with respect to the Restricted Units so forfeited shall thereupon be released
and shall thereafter be available for new grants of Restricted Units under the
Plan. The limitation provided under this Section 3 shall be subject to
adjustment as provided in Section 7.
The Common Shares distributed under the Plan may be authorized and
unissued shares, shares held in the treasury of the Corporation, or shares
purchased on the open market by the Corporation at such time or times and in
such manner as it may determined. The Corporation shall be under no obligation
to acquire Common Shares for distribution to Participants before payment in
Common Shares is due.
4. PARTICIPATION
Participants in the Plan shall be limited to those officers of the
Corporation and its Affiliated Companies who the Committee, in its sole
discretion, selects to participate in the Plan.
The Committee may select as a Participant for any Plan Year, any
officer who, in the sole judgment of the Committee, has made contributions in
the past, and who is expected to continue to make contributions in the future,
that are critical to the success of the Corporation and its Affiliated
Companies and to the growth of their business.
Any person who has been selected as a Participant for any Plan Year
shall continue to be a Participant in the Plan for each subsequent Plan Year
during the period of his or her employment, subject, however, to the
Committee's right to terminate such individual's participation in the Plan as
of any Plan Year commencing after the date on which the Committee makes its
determination to terminate such individual's participation..
5. AWARDS
Awards for any Plan Year shall be made in accordance with the
following provisions:
(a) At the start of the Plan Year, the Committee shall establish (i)
the corporate performance goals (the "Performance Goals") which will apply in
determining the Awards for such year, (ii) the aggregate amount that will be
available for Awards for such year if such Performance Goals are achieved (the
"Target Awards Pool"), and (iii) the percentages of the Target Awards Pool that
will in fact be available for Awards for the year based on the level of
achievement of such Performance Goals, which percentages may be greater than
100% if the Performance Goals are exceeded and less than 100% if the
Performance Goals have not been fully achieved (the "Actual Awards Pool").
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<PAGE> 5
(b) The Performance Goals established for the year shall be based upon
achievement of a specified level of earnings per share of the Corporation
and/or upon such other corporate objectives as the Committee shall determine.
The Committee shall have the authority at any time to adjust the Performance
Goals, or performance measurement standards, for the Plan Year as it deems
equitable in recognition of (i) extraordinary or nonrecurring events
experienced by the Corporation (or by any other corporation whose performance
is relevant to the determination of the amount of any Award hereunder) during
the Plan Year, (ii) changes in applicable accounting rules or principles or
changes in the Corporation's (or in any other such corporation's) methods of
accounting during the Plan Year, (iii) the occurrence of a reorganization,
recapitalization, stock split, stock dividend, combination of shares, merger,
consolidation, rights offering, or any other change in the capital structure of
the Corporation (or of any other such corporation), or (iv) such other events,
changes, occurrences, conditions or circumstances as in the Committee's
judgment, shall warrant such adjustment.
(c) The Committee shall determine the amount of the Target Awards
Pool as a percentage or percentages of the aggregate base salary earned for the
year while a Participant of all Participants, either individually or by
categories of Participants, provided that the Committee may, in its sole
discretion, also apply such percentage or percentages to other current or
deferred compensation and determine the year for which such deferred
compensation shall be counted.
(d) At the end of the Plan Year, the Committee shall determine the
extent to which the Performance Goals for the year have been met and, based
thereon, the amount of the Actual Awards Pool. The Committee shall also
determine the amount of the Award, if any, earned by each Participant for the
year, based on the level of the Participant's achievement of the goals and
objectives established for the Participant at the start of the Plan Year. In
the case of all Participants other than the Chief Executive Officer, the
individual goals for each Plan Year shall be set, and the Participant's
performance relative to such goals will be measured, by the Committee based
upon the recommendations of the Chief Executive Officer.
(e) The Committee may, in its discretion, make Awards to Participants
in an aggregate amount less than the amount of the Actual Awards Pool. The
Committee may also, in its discretion, allocate any portion of the Actual
Awards Pool for use in making special additional Awards to particular
Participants.
(f) An individual who is a Participant for less than a full year
shall receive such portion of an Award, if any, for that year as the Committee
shall determine.
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<PAGE> 6
6. PAYMENT OF AWARDS
The amount payable hereunder to a Participant with respect to an Award
earned for any Plan Year shall be determined in accordance with the following
provisions:
(a) The amount payable with respect to a Participant's Award for a
Plan Year shall be the total amount of the Award earned by the Participant,
reduced by the sum of (i) the amount of any ESOP Contribution to be made on
behalf of the Participant under the 401(k) Plan for the "Plan Year" (as defined
in the 401(k) Plan) corresponding to such Plan Year, and (ii) the Supplemental
ESOP Contribution amount to be credited to the Participant's account under the
Executive Deferred Compensation Plan for such Plan Year, in either case with
respect to the base salary of such Participant that was taken into account in
determining the Target Awards Pool for that Plan Year.
(b) The amount payable with respect to a Participant's Award, as
determined under (a) above, shall be payable partly in cash and partly in the
form of Restricted Units (the portions so payable are hereinafter referred to,
respectively, as the "Cash Portion", and the "Restricted Units Portion", of the
Participant's Award), in such percentages as the Committee in its discretion
shall determine; provided, however, that the Restricted Units Portion shall be
equal to at least 25%, and shall not exceed 33-1/3%, of the total amount so
payable with respect to the Participant's Award. Notwithstanding the
foregoing, the 25% minimum referred to in the preceding sentence shall be
reduced in such manner as the Committee shall determine in its discretion, to
the extent necessary in order for the aggregate number of Restricted Units
granted with respect to Awards made to Participants hereunder for any Plan Year
not to exceed 80,000 Restricted Units.
(c) The number of Restricted Units to be granted to a Participant
with respect to the Restricted Units Portion of the Participant's Award shall
be determined by dividing the amount of the Restricted Units Portion by the
Average Market Value of one Common Share on the date on which the Committee
makes its determination of the Awards earned by Participants for the Plan Year
in question.
(d) The grant of Restricted Units with respect to the Restricted
Units Portion of a Participant's Award for any Plan Year shall be evidenced by
a written agreement between the Corporation and the Participant in a form
approved by the Committee. In addition to including such other terms and
conditions as the Committee may require, the agreement shall
(i) specify the number of Restricted Units granted to the
Participant, and the date of grant;
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<PAGE> 7
(ii) provide for such Restricted Units to become vested on
the fifth anniversary of the date of grant, or if earlier, on the date
of the Participant's death, disability or retirement at age 65 (the
"Vesting Date" for the Participant's Restricted Units);
(iii) provide for the forfeiture of the Participant's
Restricted Units in the event of his or her termination of employment
prior to the Vesting Date for such Restricted Units for any reason
other than the Participant's death, disability or retirement at age
65, except to the extent the Committee in its discretion otherwise
determines;
(iv) require that payment with respect to the
Participant's Restricted Units be made in the form of Common Shares;
(v) provide for such payment to be made as soon as
practicable after the Vesting Date for such Restricted Units;
(vi) permit the Participant to elect to defer payment with
respect to such Restricted Units upon such terms and conditions as are
set forth in such agreement; and
(vii) provide for the Participant to be credited with an
additional number of Restricted Units in respect of dividends paid on
the Corporation's Common Shares during the period from the date of
grant to the date on which payment with respect to the Participant's
Restricted Units is made in full.
(e) The Cash Portion of a Participant's Award for any Plan Year shall
be paid in the form of a single lump sum cash payment as soon as practicable
after the end of such Plan Year, except to the extent that the Participant (i)
has elected, under the applicable provisions of the 401(k) Plan, to have any
part of such portion of such Award reduced, and to have an amount equal to such
part contributed to the 401(k) Plan on the Participant's behalf and/or (ii) has
elected, under the applicable provisions of the Executive Deferred Compensation
Plan, to defer any part of such portion of such Award.
(f) With respect to that part of the Cash Portion of any Award that
is subject to a Participant's election under the 401(k) Plan, an amount equal
to such part of the Cash Portion shall be contributed to the 401(k) Plan on
behalf of the Participant; and thereupon, the obligation of the Corporation and
its Affiliated Companies with respect to payment of such part of the Cash
Portion of the Award shall be fully discharged. However, no such contribution
shall be made to the extent it would cause any limitation applicable under the
401(k) Plan to be exceeded.
(g) With respect to that part of the Cash Portion of any Award that
is subject to a Participant's election under the Executive Deferred
Compensation Plan, the obligation of the
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<PAGE> 8
Corporation and its Affiliated Companies under this Plan with respect to
payment of such part of the Cash Portion of the Award shall be fully
discharged upon the crediting of such part of the Cash Portion of the Award to
the Participant's account under the Executive Deferred Compensation Plan in
accordance with the applicable provisions of such Plan.
(h) All liabilities in respect of the Cash Portion of Awards earned
by Participants under the Plan shall be discharged by the respective Affiliated
Companies employing such Participants.
7. CERTAIN ADJUSTMENTS TO PLAN SHARES
In the event of any change in the Common Shares by reason of any stock
dividend, recapitalization, reorganization, merger, consolidation, split-up,
combination or exchange of shares, or any rights offering to purchase Common
Shares at a price substantially below fair market value, or any similar change
affecting the Common Shares, the number and kind of shares represented by
Restricted Units shall be appropriately adjusted consistent with such change in
such manner as the Committee, in its sole discretion, may deem equitable to
prevent substantial dilution or enlargement of the rights granted to, or
available for, the Participants here under. The Committee shall give notice to
each Participant of any adjustment made pursuant to this Section and, upon such
notice, such adjustment shall be effective and binding for all purposes.
8. LISTING AND QUALIFICATION OF COMMON SHARES
The Corporation, in its discretion, may postpone the issuance,
delivery, or distribution of Common Shares pursuant to a grant of Restricted
Units until completion of such stock exchange listing or other qualification of
such shares under any state or federal law, rule or regulation as the
Corporation may consider appropriate, and may require any Participant or
Beneficiary to make such representations and furnish such information as it may
consider appropriate in connection with the issuance or delivery of the shares
in compliance with applicable laws, rules and regulations.
9. CHANGE IN CONTROL
Notwithstanding any other provision in the Plan to the contrary (but
subject to the proviso contained in the definition of "Change in Control" in
Section 2), upon the occurrence of a Change in Control, the following
provisions shall apply.
(a) All Performance Goals and individual goals and objectives with
respect to the Plan Year in which the Change in Control occurs (the "Year of
Change") shall be deemed to have been attained to the full and maximum extent,
and the Actual Awards Pool for the Year of Change shall be determined by
multiplying the Target Awards Pool for such year by the highest
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<PAGE> 9
percentage thereof established by the Committee under Section 5(a)(iii) for
determining the amount of the Actual Awards Pool for such year.
(b) Unless another formula shall have been designated by the
Committee prior to the Change in Control, each Participant shall be allocated a
portion of the Actual Awards Pool for the Year of Change, as determined under
(a) above, equal to the amount of such Actual Awards Pool, multiplied by a
fraction, the numerator of which is the portion of the anticipated annual
compensation of the Participant which was taken into account by the Committee
in determining the Target Awards Pool for the Year of Change, and the
denominator of which is the sum of all such amounts.
(c) As soon as practicable following the Change in Control, all
Awards which are deemed to have been earned to the full and maximum extent upon
the occurrence of the Change in Control shall be payable in full in single cash
lump sums, reduced by any taxes withheld pursuant to Section 10 and by the
amount of any ESOP Contributions to be made on behalf of Participants under the
401(k) Plan for the Year of the Change.
(d) No Awards payable in accordance with this Section shall be
forfeitable on account of a Participant's termination of employment upon or
following the Change in Control.
(e) All Restricted Units granted or credited to a Participant that
had not previously become vested shall become vested upon the occurrence of the
Change in Control.
(f) The Corporation shall make payment to each Participant with
respect to all of the Restricted Units standing to his or her credit at the
time of the Change in Control, including all Restricted Units subject to any
deferral elections made by the Participant as provided in Section 6(d)(vi). The
amount to be paid to each Participant shall be an amount determined by
multiplying the aggregate number of Restricted Units then standing to the
Participant's credit by the Determined Value of one Common Share. All amounts
payable to Participants pursuant to this Section 9(f), reduced by any taxes
withheld pursuant to Section 10, shall be paid to such Participants as soon as
practicable following the Change in Control.
10. TAXES
The Corporation or any of its Affiliated Companies may make such
provisions and take such steps as it may deem necessary or appropriate for the
withholding of all federal, state and local taxes required by law to be
withheld with respect to amounts payable under the Plan including, but not
limited to (i) deducting the amount so required to be withheld from any other
amount then or thereafter payable to a Participant or Beneficiary, (ii)
reducing the payment otherwise required to be deferred pursuant to a
Participant's election under Section 6 (d)(vi) with respect to his or her
Restricted Units, by the amount so required to be withheld with respect to
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<PAGE> 10
such deferred payment, and/or (iii) requiring a Participant or Beneficiary to
pay to the Corporation or any of its Affiliated Companies the amount so
required to be withheld as a condition of the issuance, delivery, or
distribution of any Common Shares. The Committee may permit such amount to be
paid in Common Shares previously owned by the Participant, or a portion of the
Common Shares that otherwise would be distribution to such Participant in
respect to his or her vested Restricted Units, or a combination of cash and
such Common Shares.
11. DESIGNATION AND CHANGE OF BENEFICIARY
Each Participant shall file with the Committee a written designation
of one or more persons as the Beneficiary who shall be entitled to receive any
amount, or any Common Shares, payable under the Plan upon his or her death. A
Participant may, from time to time, revoke or change his or her Beneficiary
designation without the consent of any previously designated Beneficiary by
filing a new designation with the Committee. The last such designation
received by the Committee shall be controlling; provided, however, that no
designation, or change or revocation thereof, shall be effective unless
received by the Committee prior to the Participant's death, and in no event
shall it be effective as of a date prior to such receipt. If at the date of a
Participant's death, there is no designation of a Beneficiary in effect for the
Participant pursuant to the provisions of this Section 11, or if no Beneficiary
designated by the Participant in accordance with the provisions hereof survives
to receive any amount, or any Common Shares, payable under the Plan by reason
of the Participant's death, the Participant's estate shall be treated as the
Participant's Beneficiary for purposes of the Plan.
12. PAYMENTS TO PERSONS OTHER THAN PARTICIPANT
If the Committee shall find that any person to whom any amount, or any
Common Shares, is payable under the Plan is unable to care for his or her
affairs because of illness, accident or legal incapacity, then, if the
Committee so directs, any payment due to such person may be paid to such
person's spouse, child or other relative, an institution maintaining or having
custody of such person, or any other person deemed by the Committee to be a
proper recipient on behalf of such person, unless a prior claim for payment of
such amount, or payment of such Common Shares, has been made by a duly
appointed legal representative of such person. Any such payment shall be a
complete discharge of the liability of the Corporation or the applicable
Affiliated Company therefor.
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<PAGE> 11
13. RIGHTS OF PARTICIPANTS
A Participant's rights and interests under the Plan shall be subject
to the following provisions:
(a) A Participant shall have the status of a general unsecured
creditor of the Corporation with respect to his or her right to receive any
payment under the Plan. The Plan shall constitute a mere promise by the
Corporation or the applicable Affiliated Company to make payments in the future
of the benefits provided for herein. It is intended that the arrangements
reflected in this Plan be treated as unfunded for tax purposes, as well as for
purposes of any applicable pro visions of Title I of ERISA.
(b) A Participant's rights to payments under the Plan shall not be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, attachment, or garnishment by creditors of the Participant
or his or her Beneficiary.
(c) Neither the Plan nor any action taken hereunder shall be
construed as giving any Participant any right to be retained in the employment
of the Corporation or any of its Affiliated Companies.
(d) No Participant shall have the right, by virtue of having been
selected as a Participant in the Plan, to be automatically entitled to receive
an Award for any Plan Year.
(e) No Award shall be considered as compensation under any employee
benefit plan of the Corporation or any of its Affiliated Companies, except as
specifically provided in any such plan or as otherwise determined by the Board
of Directors.
14. ADMINISTRATION
The Plan shall be administered by the Committee. A majority of the
members of the Committee shall constitute a quorum. The Committee may act at a
meeting, including a telephone meeting, by action of a majority of the members
present, or without a meeting by unanimous written consent. In addition to the
responsibilities and powers assigned to the Committee elsewhere in the Plan,
the Committee shall have the authority, in its discretion, to establish from
time to time guidelines or regulations for the administration of the Plan,
interpret the Plan, and make all determinations considered necessary or
advisable for the administration of the Plan.
All decisions, actions or interpretations of the Committee under the
Plan shall be final, conclusive and binding upon all parties.
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<PAGE> 12
No member of the Committee shall be personally liable by reason of any
contract or other instrument executed by such member or on his or her behalf in
his or her capacity as a member of the Committee nor for any mistake of
judgment made in good faith, and the Corporation shall indemnify and hold
harmless each member of the Committee, and each employee, officer, director or
trustee of the Corporation or any of its Affiliated Companies to whom any duty
or power relating to the administration or interpretation of the Plan may be
delegated, against any cost or expense (including counsel fees) or liability
(including any sum paid in settlement of a claim with the approval of the Board
of Directors) arising out of any act or omission to act in connection with the
Plan unless arising out of such person's own fraud or bad faith.
15. AMENDMENT OR TERMINATION
The Board of Directors may, with prospective or retroactive effect,
amend, suspend or terminate the Plan or any portion thereof at any time,
provided, however, that no amendment, suspension or termination of the Plan
shall deprive any Participant of any rights to Awards previously made under the
Plan without his or her written consent. Any amendment that the Board of
Directors would be permitted to make pursuant to the preceding sentence may
also be made by the Committee where appropriate to facilitate the
administration of the Plan or to comply with applicable law or any applicable
rules and regulations of government authorities, provided that the cost of the
Plan to the Corporation and its Affiliated Companies is not materially
increased thereby.
16. SUCCESSOR CORPORATION
The obligations of the Corporation under the Plan shall be binding
upon any successor corporation or organization resulting from the merger,
consolidation or other reorganization of the Corporation, or upon any successor
corporation or organization succeeding to substantially all of the assets and
business of the Corporation. The Corporation agrees that it will make
appropriate provision for the preservation of Participants' rights under the
Plan in any agreement or plan which it may enter into or adopt to effect any
such merger, consolidation, reorganization or transfer of assets.
17. GOVERNING LAW
The Plan shall be governed by and construed in accordance with the
laws of the State of New York.
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18. EFFECTIVE DATE
The Plan shall be effective as of September 1, 1995, subject, however,
to approval by the holders of a majority of the outstanding Common Shares of
the Corporation present or represented at the first meeting of the
Corporation's shareholders to be held after September 1, 1995.
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<PAGE> 1
EXHIBIT 10.20
1995 STOCK OPTION PLAN
OF
U.S. TRUST CORPORATION
AS ADOPTED EFFECTIVE SEPTEMBER 1, 1995
1. PURPOSE
The purpose of the 1995 Stock Option Plan of U.S. Trust Corporation is
to advance and promote the interests of U.S. Trust Corporation and its
Affiliated Companies by encouraging and enabling their officers to acquire
common shares of U.S. Trust Corporation. The Plan is intended as a means of
attracting and retaining outstanding management and promoting a close identity
of interest between management and U.S. Trust Corporation's shareholders.
2. DEFINITIONS
As used herein, the following terms shall have the following meanings:
"AFFILIATED COMPANIES" shall mean United States Trust Company of New
York, and each other direct or indirect subsidiary of the Corporation.
"BENEFICIARY" shall mean the person or persons designated by an
Eligible Employee in accordance with Section 9 to exercise any Option, or to
receive any amount, payable under the Plan upon the Eligible Employee's death.
"BOARD OF DIRECTORS" shall mean the Board of Directors of the
Corporation.
"CHANGE IN CONTROL" shall mean that any of the following events has
occurred:
(i) 20% or more of the Common Shares has been acquired by
any person (as defined by Section 3(a)(9) of the Securities Exchange
Act of 1934) other than directly from the Corporation;
(ii) there has been a merger or equivalent combination after
which 49% or more of the voting shares of the surviving corporation is
held by persons other than former shareholders of the Corporation; or
<PAGE> 2
(iii) 20% or more of the directors elected by shareholders to
the Board of Directors are persons who were not nominated by the Board
of Directors or the Executive Committee of the Board of Directors in
the most recent proxy statement of the Corporation;
provided, however, that notwithstanding anything in the Plan to the contrary,
no Change in Control shall be deemed to have occurred, and no rights arising
upon a Change in Control as provided in Sections 5(e)(v) or 5(i) shall exist,
to the extent that the Board of Directors so directs by resolution adopted
prior to the Change in Control, or not later than 45 days after the Change in
Control if the percentage of Common Shares acquired or directors elected under
clause (i) or (iii) of the foregoing definition of Change in Control shall be
at least 20% but less than 25%. Any resolution of the Board of Directors
adopted in accordance with the provisions of this definition directing that a
Change in Control shall be deemed not to have occurred for purposes of this
Plan and that Sections 5(e)(v) or 5(i) or either of such Sections shall not
become effective, may be rescinded or countermanded at any time with or without
retroactive effect.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"COMMITTEE" shall mean the Compensation and Benefits Committee of the
Board of Directors.
"COMMON SHARES" shall mean the common shares ($1.00 par value per
share) of the Corporation.
"CORPORATION" shall mean U.S. Trust Corporation.
"DETERMINED VALUE" shall mean (i) the highest price per Common Share
paid in connection with any Change in Control (including, without limitation,
prices paid in any subsequent merger or combination with any entity that
acquires control of the Corporation), or (ii) in the case of a Change in
Control occurring as a result of an event described in clause (iii) of the
definition of a Change in Control contained in this Section 2, the Average
Market Value of a Common Share during the 30- day period ending on the day
preceding the occurrence of such Change in Control. For this purpose, the
"Average Market Value" of a Common Share during such period shall mean the
average of the mean between the per-share high and low prices for the
Corporation's Common Shares on each day during such period, as quoted on the
NASDAQ National Market System, or, if the Corporation's Common Shares are not
traded on such system, on such other securities market or securities exchange
on which such shares are traded as the Committee shall determine.
"ELIGIBLE EMPLOYEE" shall mean any officer of the Corporation or any
of its Affiliated Companies at or above the rank of Vice President.
"INCENTIVE STOCK OPTION" shall mean an option to purchase Common
Shares that qualifies as an incentive stock option within the meaning of
section 422 of the Code.
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<PAGE> 3
"NONQUALIFIED STOCK OPTION" shall mean an option to purchase Common
Shares that does not qualify as an Incentive Stock Option.
"OPTION" shall mean an Incentive Stock Option or a Nonqualified Stock
Option granted to an Eligible Employee under the Plan.
"OPTION HOLDER shall mean any Eligible Employee to whom an Option has
been granted, or with respect to any Option held by an Eligible Employee at the
date of his or her death, the Eligible Employee's Beneficiary.
"PLAN" shall mean the 1995 Stock Option Plan of U.S. Trust
Corporation, as set forth herein and as amended from time to time.
"RETIREMENT" shall mean an Eligible Employee's termination of
employment with the Corporation and its Affiliated Companies for any reason
other than death if, as of the date of the Eligible Employee's termination of
employment, (i) the Eligible Employee has attained age 65 or (ii) (A) the sum
of Participant's age and the number of his or her "Years of Service", as
defined in the 401(k) Plan and ESOP of United States Trust Company of New York
and Affiliated Companies, is at least equal to 80, and (B) the Committee has
consented to treating such termination of employ ment as a "Retirement" for
purposes of the Plan.
"VESTED PORTION" and "NON-VESTED PORTION" shall mean, respectively,
with respect to any Option as of any date, the portion of such Option that is
exercisable on such date, and the portion of such Option that is not
exercisable on such date, under the terms of the Plan and the Option.
3. MAXIMUM NUMBER OF COMMON SHARES
AVAILABLE FOR OPTIONS
Notwithstanding any other provision of the Plan, the aggregate number
of Common Shares that may be issued pursuant to Options granted under the Plan
shall be limited to 850,000 Common Shares. In the event any Option granted
under the Plan shall expire or the Non-Vested Portion of any Option shall be
forfeited, the number of Common Shares no longer subject to such Option shall
be available for new grants of Options under the Plan. In the event of a
cancellation of an Option as provided in Section 5(i), the number of Common
Shares as to which such Option was canceled shall not again become available
for use under the Plan. The limitation provided under this Section 3 shall be
subject to adjustment as provided in Section 6.
The Common Shares distributed under the Plan may be authorized and
unissued shares, shares held in the treasury of the Corporation, or shares
purchased on the open market by the Corporation at such time or times and in
such manner as it may determine.
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<PAGE> 4
4. GRANT OF OPTIONS
Subject to the provisions of the Plan, the Committee shall determine
and designate from time to time those Eligible Employees to whom Incentive
Stock Options, or Nonqualified Stock Options, or both, are to be granted and
the number of Common Shares that may be purchased under each Option so granted;
provided, however, that (i) the aggregate fair market value (determined at the
time the Option is granted) of the Common Shares with respect to which
Incentive Stock Options are exercisable for the first time by any Eligible
Employee during any calendar year (under all incentive stock option plans of
the Eligible Employee's employer corporation and its parent and subsidiary
corporations) shall not exceed $100,000; and (ii) the total number of Common
Shares with respect to which Options may be granted to any Eligible Employee
during any calendar year shall not exceed 100,000 Common Shares.
No Incentive Stock Option may be granted under this Plan after the
expiration of 10 years from the Effective Date of the Plan specified in Section
16, unless the shareholders of the Corporation shall have approved an extension
of the period for granting Incentive Stock Options under this Plan beyond such
date.
5. TERMS AND CONDITIONS OF OPTIONS
Each Option granted under the Plan shall be evidenced in writing in a
form approved by the Committee, and shall contain the following terms and
conditions, and such other terms and conditions as the Committee may deem
appropriate:
(a) OPTION TERM. Each Option shall specify the period during which
the Option may be exercised (the "Option Term"). The Option shall provide that
the Option shall expire at the end of the Option Term. The Committee may extend
the Option Term, provided, however, that in the case of any Option that the
Committee previously determined to constitute an Incentive Stock Option, no
such extension shall be made to the extent it would disqualify the Option as an
Incentive Stock Option. In no case shall the Option Term, including any such
extensions, end later than (i) ten years from the date of grant, or (ii) in the
case of Incentive Stock Options granted to an Eligible Employee who, at the
time the Incentive Stock Option is granted, owns shares possessing more than 10
percent of the total combined voting power of all classes of shares of his or
her employer corporation or of its parent or subsidiary corporation (a "Ten
Percent Shareholder"), five years from the date of grant.
(b) PURCHASE PRICE. The price per Common Share at which Common
Shares subject to any Option may be purchased shall be determined by the
Committee at the time any Option is granted, and shall be not less than (i) the
fair market value, or (ii) in the case of Incentive Stock Options granted to a
Ten Percent Shareholder, 110 percent of the fair market value (but in no event
less than the par value) of a Common Share on the date the Option is granted,
as determined by the Committee.
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<PAGE> 5
(c) EXERCISE OF OPTION. Except as otherwise provided under the Plan,
no part of any Option may be exercised until the Eligible Employee to whom the
Option was granted shall have remained in the employ of the Corporation or any
of its Affiliated Companies for such period after the date on which the Option
is granted as the Committee may specify in the Option, and the Option may
provide for exercisability in installments.
(d) PAYMENT OF PURCHASE PRICE UPON EXERCISE. Each Option shall
provide that the purchase price of the Common Shares as to which an Option
shall be exercised shall be paid to the Corporation at the time of exercise
either in cash or in such other consideration as the Committee deems
appropriate, including, but not limited to, Common Shares already owned by the
Option Holder having a total fair market value, as determined by the Committee,
equal to the purchase price, or a combination of cash and Common Shares having
a total fair market value, as so determined, equal to the purchase price. The
Committee in its sole discretion may also provide that the purchase price may
be paid by delivering a properly executed exercise notice in a form approved by
the Committee together with irrevocable instructions to a broker to promptly
deliver to the Corporation the amount of the applicable sale or loan proceeds
to pay the purchase price.
(e) EXERCISE IN THE EVENT OF TERMINATION OF EMPLOYMENT OR CHANGE IN
CONTROL. In the event an Eligible Employee's employment with the Corporation
and its Affiliated Companies should terminate, or if a Change in Control should
occur, Options granted to the Eligible Employee may be exercised in accordance
with the following provisions:
(i) If an Eligible Employee's employment terminates as a
result of Retirement, such Eligible Employee shall be entitled to
exercise each Option held by the Eligible Employee at the date of his
or her termination of employment (A) with respect to the Vested
Portion of such Option, at any time or from time to time during his or
her Post-Termination Exercise Period (as defined below) and (B) with
respect to the Non-Vested Portion of such Option, at any time or from
time to time on or after the date or dates during the Eligible
Employee's Post-Termination Exercise Period on which such portion of
the Option becomes exercisable under the terms of the Option. If such
Eligible Employee should die prior to the end of his or her
Post-Termination Exercise Period, the Non-Vested Portion, if any, of
each Option held by the Eligible Employee at the date of his or her
death shall cease to be exercisable, and shall be forfeited, as of
such date; and the Vested Portion of each such Option may be exercised
by the Eligible Employee's Beneficiary at any time or from time to
time after the Eligible Employee's death until the earlier of the
second anniversary of such date or the date on which the Option Term
for such Option expires.
(ii) If an Eligible Employee's employment terminates for
any reason other than Retirement, the Non-Vested Portion of each
Option held by the Eligible Employee at the date of his or her
termination of employment shall cease to be exercisable, and shall be
forfeited, as of such date; and the Eligible Employee may exercise the
Vested Portion of each such Option at any time and from time to time
during his or her Post-Termination Exercise Period.
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<PAGE> 6
If an Eligible Employee whose employment has terminated as a result of
permanent disability should die before the end of his or her
Post-Termination Exercise Period, the Vested Portion of each Option
held by the Eligible Employee at the date of his or her death shall
continue to be exercisable by the Eligible Employee's Beneficiary at
any time or from time to time after the date of the Eligible
Employee's death until the earlier of the second anniversary of such
date or the date on which the Option Term for such Option expires.
(iii) Notwithstanding the foregoing, the Committee may, in
its sole discretion, determine that any part or all of the Non-Vested
Portion of any Option held by an Eligible Employee at the date of his
or her termination of employment shall not be forfeited, and may
continue to be exercised by the Eligible Employee (or in the event of
his or her death by his or her Beneficiary) for such period after such
date and prior to the expiration of the Option Term for such Option,
as the Committee shall specify in such determination.
(iv) For purposes of the foregoing, an Eligible Employee's
Post-Termination Exercise Period shall mean the period beginning on
the date of his or her termination of employment and ending (A) on the
fifth anniversary of such date, if the Eligible Employee's employment
has terminated as a result of Retirement, (B) on the second
anniversary of such date, if the Eligible Employee's employment has
terminated as a result of his or her death, (C) on the first
anniversary of such date, if the Eligible Employee's employment has
terminated as a result of his or her permanent disability, (D) on the
90th day following such date, if the Eligible Employee's employment
has terminated for any reason other than Retirement, death or
permanent disability. Notwithstanding the foregoing, an Eligible
Employee's Post-Termination Exercise Period with respect to any Option
shall end no later than the date on which the Option Term for such
Option expires.
(v) Notwithstanding any other provision herein to the
contrary (but subject to the proviso contained in the definition of
"Change in Control" in Section 2), upon the occurrence of a Change in
Control, the Non-Vested Portion of any Option held by an Eligible
Employee who is in the employ of the Corporation or any of its
Affiliated Companies on the date on which such Change in Control
occurs, and the Non-Vested Portion of any Option held on such date by
any Eligible Employee whose employment terminated prior to such date
as a result of Retirement, shall become immediately and fully
exercisable.
(f) NONTRANSFERABILITY OF OPTIONS. Any Option granted to an Eligible
Employee under the Plan shall be nontransferable and may be exercised during
the Eligible Employee's lifetime only by the Eligible Employee.
(g) INVESTMENT REPRESENTATION. Each Option may provide that, upon
demand by the Committee for such a representation, the Option Holder shall
deliver to the Committee, at the time of any exercise of an Option or portion
thereof, a written representation that the shares to be acquired upon such
exercise are to be acquired for investment and not for resale or with a view to
the
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<PAGE> 7
distribution thereof. Upon such demand, delivery of such representation prior
to the delivery of any Common Shares issued upon exercise of an Option shall be
a condition precedent to the right of the Option Holder to purchase any Common
Shares. In the event certificates are delivered for any Common Shares with
respect to which such an investment representation has been obtained, the
Committee may cause a legend or legends to be placed on such certificates to
make appropriate reference to such representation and to restrict transfer in
the absence of compliance with applicable federal or state securities laws.
(h) OTHER OPTION PROVISIONS. Each Option may contain such other
provisions, not inconsistent with the provisions of the Plan, as the Committee
may, from time to time, determine. Without limiting the foregoing, the
Committee may require an Eligible Employee to agree, as a condition to
receiving an Option, that part or all of any Options previously granted to such
Eligible Employee be terminated; and the Committee may include in any Option
provisions under which the Option (including the Vested Portion thereof) may be
canceled by the Corporation at any time, and the Eligible Employee's right to
exercise the Option will thereupon be forfeited, in the event that the
Committee determines that: (i) the Eligible Employee has committed fraud,
embezzlement or other act of dishonesty involving the Corporation or any of its
Affiliated Companies, (ii) the Eligible Employee's employment has been
terminated as a result of discharge for cause, (iii) the Eligible Employee has
at any time furnished or divulged to any other person, corporation or business
entity, or has himself or herself used, any information of a proprietary nature
owned by the Corporation or any of its Affiliated Companies that is in the
nature of confidential business information or trade secrets, other than as
required in the course of his or her employment by the Corporation or any of
its Affiliated Companies, (iv) the Eligible Employee has at any time induced or
attempted to induce any officer of the Corporation or any of its Affiliated
Companies to terminate such officer's employment with the Corporation or any of
its Affiliated Companies; (v) the Eligible Employee has at any time induced or
attempted to induce any customer of, or any other person or entity having
business relations with the Corporation or any of its Affiliated Companies to
terminate or curtail such relationship with the Corporation or any of its
Affiliated Companies; or (vi) the Eligible Employee has at any time engaged in
any other conduct directly and materially detrimental to the business of the
Corporation or any of its Affiliated Companies. Each Option shall also specify
that the Option granted thereunder shall be subject to all applicable
provisions of the Plan.
(i) CANCELLATION OF OPTIONS UPON A CHANGE IN CONTROL. Upon the
occurrence of a Change in Control, all Options that have not been fully
exercised, or that have not expired or that have not been forfeited, prior to
the date of such Change in Control shall be cancelled. In the event of any
such cancellation, the Corporation's obligation in respect of each such Option
shall be discharged by payment to the Eligible Employee of a single cash lump
sum (reduced by any taxes withheld pursuant to Section 8) in an amount equal to
the excess, if any, of the Determined Value of the Common Shares subject to the
Option or portion thereof so cancelled over the aggregate purchase price of
such shares as set forth in the Option; provided, however, that no such payment
shall be made with respect to any Option granted less than six months prior to
the date of such Change in Control to any Eligible Employee who is subject to
Section 16 of the Securities Exchange Act of
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<PAGE> 8
1934. All such amounts shall be payable as soon as practicable following the
Change in Control. In the case of any such Option that is to become exercisable
in full upon the occurrence of a Change in Control pursuant to Section 5(e)(v)
above, the holder of such Option shall be provided an opportunity to exercise
such option at such time prior to the time the Change in Control becomes
effective, and in accordance with such procedures, as the Committee shall
determine in its discretion.
6. CERTAIN ADJUSTMENTS TO PLAN SHARES
In the event of any change in the Common Shares by reason of any stock
dividend, recapitalization, reorganization, merger, consolidation, split-up,
combination or exchange of shares, or any rights offering to purchase Common
Shares at a price substantially below fair market value, or any similar change
affecting the Common Shares, the number and kind of shares available for the
grant of Options, and the number and kind of shares subject to outstanding
Options and the purchase price per share thereof shall be appropriately
adjusted consistent with such change in such manner as the Committee, in its
sole discretion, may deem equitable to prevent substantial dilution or
enlargement of the rights granted to, or available for, Option Holders
hereunder. Any adjustment of an Incentive Stock Option pursuant to this
Section shall be made only to the extent it would not constitute a
"modification" of such Option within the meaning of section 424(h)(3) of the
Code. The Committee shall give notice to each Option Holder of any adjustment
made pursuant to this Section and, upon such notice, such adjustment shall be
effective and binding for all purposes.
7. LISTING AND QUALIFICATION OF COMMON SHARES
The Corporation, in its discretion, may postpone the issuance,
delivery, distribution or release of Common Shares upon any exercise of an
Option until completion of such stock exchange listing or other qualification
of such shares under any state or federal law, rule or regulation as the
Corporation may consider appropriate, and may require any Option Holder to make
such representa tions and furnish such information as it may consider
appropriate in connection with the issuance or delivery of the shares in
compliance with applicable laws, rules and regulations.
8. TAXES
The Corporation or any of its Affiliated Companies may make such
provisions and take such steps as it may deem necessary or appropriate for the
withholding of all federal, state and local taxes required by law to be
withheld with respect to Options granted under the Plan and the exercise
thereof including, but not limited to (i) deducting the amount so required to
be withheld from any other amount then or thereafter payable to an Option
Holder, and/or (ii) requiring an Option Holder to pay to the Corporation or any
of its Affiliated Companies the amount so required to be withheld as a
condition of the issuance, delivery, distribution or release of any Common
Shares.
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<PAGE> 9
9. DESIGNATION AND CHANGE OF BENEFICIARY
Each Eligible Employee to whom an Option has been granted shall file
with the Committee a written designation of one or more persons as the
Beneficiary who shall be entitled to exercise any Options, or to receive any
amount, payable under the Plan upon his or her death. An Eligible Employee
may, from time to time, revoke or change his or her Beneficiary designation
without the consent of any previously designated Beneficiary by filing a new
designation with the Committee. The last such designation received by the
Committee shall be controlling; provided, however, that no designation, or
change or revocation thereof, shall be effective unless received by the
Committee prior to the Eligible Employee's death, and in no event shall it be
effective as of a date prior to such receipt. If at the date of an Eligible
Employee's death, there is no designation of a Beneficiary in effect for the
Eligible Employee pursuant to the provisions of this Section 9, or if no
Beneficiary designated by the Eligible Employee in accordance with the
provisions hereof survives to exercise any Options that become exercisable, or
to receive any amount that becomes payable, under the Plan by reason of the
Eligible Employee's death, the Eligible Employee's estate shall be treated as
the Eligible Employee's Beneficiary for all purposes.
10. PAYMENTS TO PERSONS OTHER THAN OPTION HOLDER
If the Committee shall find that any Option Holder to whom any amount,
or any Common Shares, is payable under the Plan is unable to care for his or
her affairs because of illness, accident or legal incapacity, then if the
Committee so directs, such amount, or such Common Shares, may be paid to such
Option Holder's spouse, child or other relative, an institution maintaining or
having custody of such person, or any other person deemed by the Committee to
be a proper recipient on behalf of such Option Holder, unless a prior claim
therefor has been made by a duly appointed legal representative of the Option
Holder. Any payment made under this Section 10 shall be a complete discharge
of the liability of the Corporation with respect to such payment.
11. RIGHTS OF OPTION HOLDERS
An Option Holder's rights and interests under the Plan shall be
subject to the following provisions:
(a) An Option Holder shall have the status of a general unsecured
creditor of the Corporation with respect to his or her right to receive any
payment under the Plan. The Plan shall constitute a mere promise by the
Corporation to make payments in the future of the benefits provided for herein.
It is intended that the arrangements reflected in this Plan for the making of
any payment required to be made hereunder shall be treated as unfunded for tax
purposes, as well as for purposes of any applicable provisions of Title I of
ERISA.
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<PAGE> 10
(b) An Option Holder's rights to any payment under the Plan shall not
be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by creditors of the
Option Holder or his or her beneficiary.
(c) Neither the Plan nor any action taken hereunder shall be
construed as giving any Option Holder any right to be retained in the
employment of the Corporation or any of its Affiliated Companies.
(d) An Option Holder shall not have any rights as a shareholder with
respect to any Common Shares that are subject to any Option held by the Option
Holder prior to the date as of which such shares are issued to the Option
Holder pursuant to his or her exercise of such Option.
12. ADMINISTRATION
The Plan shall be administered by the Committee. A majority of the
members of the Committee shall constitute a quorum. The Committee may act at a
meeting, including a telephone meeting, by action of a majority of the members
present, or without a meeting by unanimous written consent. In addition to the
responsibilities and powers assigned to the Committee elsewhere in the Plan,
the Committee shall have the authority, in its discretion but subject to the
provisions of the Plan, to:
(i) select the Eligible Employees to whom Options are to
be granted;
(ii) determine the number of shares to be covered by each
Option granted, the time or times when and the manner in which each
Option may be exercised, and the purchase price per share at which
each Option shall be exercised;
(iii) determine whether an Option that is granted to an
Eligible Employee shall constitute a Nonqualified Stock Option or an
Incentive Stock Option;
(iv) amend any Option, with the consent of the Option
Holder;
(v) establish from time to time guidelines or regulations
for the administration of the Plan, interpret the Plan, cause
appropriate records to be established, and make all determinations and
take all other actions considered necessary or advisable for the admin
istration of the Plan.
All decisions, actions or interpretations of the Committee under the
Plan shall be final, conclusive and binding upon all parties.
No member of the Committee shall be personally liable by reason of any
contract or other instrument executed by such member or on his or her behalf in
his or her capacity as a member of
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<PAGE> 11
the Committee nor for any mistake of judgment made in good faith, and the
Corporation shall indemnify and hold harmless each member of the Committee, and
each employee, officer, director or trustee of the Corporation or any of its
Affiliated Companies to whom any duty or power relating to the administration
or interpretation of the Plan may be allocated or delegated, against any cost
or expense (including counsel fees) or liability (including any sum paid in
settlement of a claim with the approval of the Board of Directors) arising out
of any act or omission to act in connection with the Plan unless arising out of
such person's own fraud or bad faith.
13. AMENDMENT OR TERMINATION
Except as to matters that in the opinion of the Corporation's legal
counsel require shareholder approval, any provision of the Plan may be modified
as to an Option Holder by an individual agreement approved by the Board of
Directors. The Board of Directors may, with prospective or retroactive effect,
amend, suspend or terminate the Plan or any portion thereof at any time;
provided, however, that (i) no amendment that would materially increase the
cost of the Plan to the Corporation may be made by the Board of Directors
without the approval of the shareholders of the Corporation and (ii) no
amendment, suspension or termination of the Plan shall deprive any Option
Holder of any rights to Options previously granted under the Plan without his
or her written consent. Any amendment that the Board of Directors would be
permitted to make pursuant to the preceding sentence may also be made by the
Committee where appropriate to facilitate the administration of the Plan or to
comply with applicable law or any applicable rules and regulations of
government authorities.
14. SUCCESSOR CORPORATION
The obligations of the Corporation under the Plan shall be binding
upon any successor corporation or organization resulting from the merger,
consolidation or other reorganization of the Corporation, or upon any successor
corporation or organization succeeding to substantially all of the assets and
business of the Corporation. The Corporation agrees that it will make
appropriate provision for the preservation of Option Holders' rights under the
Plan in any agreement or plan which it may enter into or adopt to effect any
such merger, consolidation, reorganization or transfer of assets.
15. GOVERNING LAW
The Plan shall be governed by and construed in accordance with the
laws of the State of New York, without reference to the principles of conflicts
of law thereof.
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<PAGE> 12
16. EFFECTIVE DATE
The Plan shall be effective as of September 1, 1995, subject, however,
to approval by the holders of a majority of the outstanding Common Shares of
the Corporation entitled to vote thereon at the first meeting of the
Corporation's shareholders to be held after September 1, 1995. The Committee
may grant Options as provided herein prior to such shareholder approval,
subject to such approval being obtained at such first meeting.
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<PAGE> 1
[letterhead of U.S. Trust Corporation]
Exhibit 10.21
August 29, 1995
Mr. H. Marshall Schwarz
1120 Park Avenue
Apartment 6A
New York, NY 10128
Dear Marshall:
The purpose of this letter is to amend and restate the prior
agreements between you and U.S. Trust, which set forth the terms
and conditions under which you were to be provided a supplemental
retirement benefit (the "Supplemental Pension"), so as to reflect
the transactions that will be undertaken in connection with the
merger of U.S. Trust Corporation (the "Corporation") with The
Chase Manhattan Corporation ("Chase") pursuant to the Agreement
and Plan of Merger between Chase and the Corporation dated as of
November 18, 1994 (the "Merger Agreement") and to make certain
other changes.
Upon your acknowledgment of and agreement to this Amendment and
Restatement as provided on the last page hereof, this letter
agreement (the "Agreement") shall supersede and replace, in its
entirety, the prior agreements, and the Supplemental Pension shall
be provided on the terms and conditions set forth below. All
capitalized terms not otherwise defined herein shall have the same
meaning as is given to them in the Employees' Retirement Plan of
United States Trust Company of New York and Affiliated Companies
(the "Retirement Plan").
(1) The Supplemental Pension shall be equal to the Pension
that you would have been entitled to receive under the Retirement
Plan upon retirement on your Normal Retirement Date calculated as
if:
(A) you had been a Member of the Retirement Plan for an
uninterrupted period beginning on February 6, 1967 (the "Starting
Date"), and ending on December 1, 2001 (your "Normal Retirement
Date");
(B) your Credited Service in fact equalled the maximum
number of units of
<PAGE> 2
Mr. H. Marshall Schwartz 2
Credited Service that could be credited for such uninterrupted period
under the Retirement plan as now in effect or, if greater, as in
effect on the date of your termination ("Maximum Units of Service");
(C) the provisions of Sections 401 (a)(17) and 415 of the
Internal Revenue Code of 1986, as amended, and the Maximum Pension
Limitations of Section 7.7 (or any successor provision) of the
Retirement Plan were inapplicable; and
(D) you had elected, with the consent of your spouse to the
extent required by the terms of the Retirement Plan or applicable
law, the normal form of Pension payable to a retired Member only
during his lifetime pursuant to Option 3 of Section 8.4 (or any
successor provision) of the Retirement Plan; such amount to be
reduced (but not below zero) by the sum of the annual amounts that
you are in fact entitled to receive on your retirement on your
Normal Retirement Date (i) from the Retirement Plan, (ii) from the
Benefit Equalization Plan of U.S. Trust Corporation or any similar
pension or executive benefit plan of the Corporation or any of
its affiliated companies (all such plans are hereinafter
collectively referred to as the "Benefit Equalization Plan") to
the extent that any such amount is attributable to the Retirement
Plan, and (iii) from any qualified defined benefit plan in which
you participated during any previous employment (the "Prior
Plans"). For purposes of determining the amount of the reduction
required under the preceding sentence, if any amount described in
clause (i), (ii) or (iii) thereof is not in fact payable in the
same form as specified in Option 3 of Section 8.4 (or any
successor provision) of the Retirement Plan, such amount shall be
converted into an amount that is of Equivalent Actuarial Value (as
defined in the Retirement Plan) to such amount if such amount were
payable in the form specified in Option 3.
(2) Notwithstanding the method of calculation described
above, you may elect, with the consent of the Compensation and
Benefit Committee of the Board of Directors (the "Committee"), to
have such amount paid on an actuarially equivalent basis under any
of the optional forms of Pension then available under Section 8.4
(or any successor provision) of the Retirement Plan, using the
same factors as are prescribed under the Retirement Plan for
determining actuarial equivalence. Any such election must be made
at least two years prior to your Normal Retirement Date.
(3) Except as provided in Paragraph 5 below, the
Supplemental Pension shall not be payable to you prior to your
Normal Retirement Date or, if later, the effective date of your
termination of employment with the Corporation or any of its
affiliated
<PAGE> 3
Mr. H. Marshall Schwartz 3
companies.
(4) Notwithstanding any other provision of the Agreement, no
Supplemental Pension shall be payable hereunder except as provided
in Paragraphs 5 and 6 below if prior to your Normal Retirement
Date your employment with the Corporation or any of its affiliated
companies is terminated for any reason other than disability.
(5) In the event of your death prior to the commencement of
the Supplemental Pension, while you are employed by the
Corporation or any of its affiliated companies and a Member of the
Retirement Plan, there shall be paid to your surviving spouse (if
any) an amount equal to (A) the Spouse's Preretirement
Survivorship Pension which would have been paid to your surviving
spouse, based on your Maximum Units of Service, if you (i) had
satisfied the Retirement Plan's requirements for payment of a
Spouse's Preretirement Survivorship Pension, (ii) had been a
Member of the Retirement Plan for an uninterrupted period
beginning on the Starting Date and ending on the date of your
death or, if your date of death is on or after the date of a
"change in control," ending on the date which would have been your
Normal Retirement Date if you had not died and had remained in the
employ of the Corporation or any of its affiliated companies
until your Normal Retirement Date, and (iii) had not waived such
coverage, reduced (but not below zero) by (B) the sum of any
amounts actually payable to your surviving spouse under (i) the
Retirement Plan, (ii) the Benefit Equalization Plan and (iii) the
Prior Plans, or, if greater, by (C) the sum of any amounts which
would have been payable under the plans referred to in clause (B)
if you had not waived any preretirement survivor benefit under
such plans and, with regard to the Prior Plans, you had elected a
50 percent joint and survivor annuity. The amount so payable to
your surviving spouse under this Paragraph 5 shall be paid to her
in the same form as the Spouse's Preretirement Survivorship
Pension is payable to her under the Retirement Plan, with payments
commencing at the earliest date as of which she could elect under
the Retirement Plan to receive the Spouse's Preretirement
Survivorship Pension, whether or not she makes any such election.
If any amount payable to your surviving spouse under any plan
referred to in clause (B) hereof is to be paid in a form, or if
payment of such amount is to commence at a date, other than the
form or commencement date applicable to the payments to be made to
your surviving spouse under this Paragraph 5, the reduction
required under clause (B) or clause (C) hereof with respect to the
amount so payable shall be determined by converting such amount to
an amount that is of Equivalent Actuarial Value to the amount that
would be payable to your surviving spouse under such plan if
payment thereof were to be made in the same form, and were to
commence as of the same date, as the form and commencement date
<PAGE> 4
Mr. H. Marshall Schwartz 4
specified herein for the payments that are to be made to your
surviving spouse pursuant to this Paragraph 5.
(6) In the event of your "involuntary termination" following
a "change in control", the Supplemental Pension benefit provided
for you hereunder shall be paid to you in a single cash lump sum,
within 30 days after the date of your "involuntary termination".
The amount so payable to you shall be equal to the single lump sum
amount that is of Equivalent Actuarial Value to the Supplemental
Pension that would have been payable to you at your Normal
Retirement Date under Paragraph (1) above if you had remained in
the employ of the Corporation or any of its affiliated companies
through your Normal Retirement Date at an annual rate of
Compensation equal to the annual rate of your Compensation in
effect immediately prior to your "involuntary termination" or,
if your "involuntary termination" occurs following a reduction of
your salary under Paragraph (7)(ii) below, the annual rate of your
Compensation in effect immediately prior to such reduction of your
salary. For this purpose, the single lump sum amount that is of
Equivalent Actuarial Value to your Supplemental Pension shall be
determined using the conversion factors that were in effect under
the Retirement Plan on July 24, 1990. Notwithstanding the
foregoing, the amount so payable to you under this Paragraph (6)
shall be subject to reduction as required under the "excess
parachute payment cutback" provisions of Section 7(c) of the 1990
Change in Control and Severance Policy for Top Tier Officers of
United States Trust Company of New York and Affiliated Companies.
(7) The term "involuntary termination" as used in the
Agreement means the termination of your employment with the
Corporation or any of its affiliated companies (i) by the
Corporation or any of its affiliated companies or (ii) by you
after any reduction in your salary, any change in location of your
place of employment to a location outside the Borough of Manhattan
without your consent, a material decrease in your responsibilities
with respect to the business of the Corporation or any of its
affiliated companies, or any other material adverse change in the
conditions of your employment by the Corporation or any of its
affiliated companies.
(8) The term "change in control" as used in the Agreement
means that after the "Closing Date" as defined in the Merger
Agreement:
(A) 20% or more of the common shares of the Corporation has
been acquired by any person (as defined by Section 3 (a)(9) of the
Securities Exchange Act
<PAGE> 5
Mr. H. Marshall Schwartz 5
of 1934) other than directly from the Corporation;
(B) there has been a merger or equivalent combination after
which 49% or more of the voting shares of the surviving
corporation is held by persons other than former shareholders of
the Corporation; or
(C) 20% or more of the directors elected by shareholders to
the Board of Directors of the Corporation are persons who were not
nominated in the most recent proxy statement of the Corporation.
(9) Notwithstanding any other provision of the Agreement, no
amounts shall become payable pursuant to Paragraph 6 above to the
extent that the Board of Directors otherwise directs by resolution
adopted prior to the change in control, or not later than 45 days
after the change in control (if the percentage of common shares
acquired or directors appointed under (A) or (C) of the definition
of change in control shall be at least 20% but less than 25%).
Any resolution of the Board of Directors adopted in accordance
with the provisions of this Paragraph directing that such amounts
not become payable may be rescinded or countermanded at any time
with or without retroactive effect. Notwithstanding the foregoing,
any resolution of the Board of Directors directing that amounts
otherwise payable under Paragraph 6 above shall not become
payable, and any resolution of the Board of Directors rescinding
or countermanding any such resolution, shall be given effect for
purposes of this Agreement only if, at the time the Board of
Directors adopts such resolution or rescinding resolution, it also
adopts, or has previously adopted, a similar resolution with
respect to the Change in Control Benefits payable to participants
under each other Change in Control Plan maintained by the
Corporation or any of its affiliated companies. For this purpose,
the terms "Change in Control Benefits" and "Change in Control
Plans" shall have the same meaning as assigned to such terms under
the 1990 Change in Control and Severance Policy for Top Tier
Officers of United States Trust Company of New York and Affiliated
Companies.
(10) In the event of a change in control, all powers of the
Committee under the Agreement shall thereafter be exercised solely
by the Committee as it was constituted immediately prior to the
change in control.
(11) The determination of the amount of the Supplemental
Pension payable and of the amount of all benefit offsets described
herein shall be made by the Committee in
<PAGE> 6
Mr. H. Marshall Schwartz 6
its sole discretion and any determination or interpretation of the
Committee shall be final, binding and conclusive on all persons. You
shall furnish, or take whatever steps are necessary to permit you to
furnish, the Committee with all information that is reasonably
requested by it to enable it to make such determination. Except as
otherwise provided in Paragraph 6, if, notwithstanding any election
that you might have made, payment of any benefit offsets described in
Paragraph 1 could not have commenced on the date payment of your
Supplemental Pension under Paragraph 1 is to commence, such benefit
offsets shall be taken into account on the earliest date on which
payment of such benefit offsets could have commenced.
(12) All Supplemental Pension payments shall be paid in cash
from the general funds of the Corporation, and no special or
separate fund shall be established, and no segregation of assets
shall be made, to assure payment of such Supplemental Pension.
You shall have the status of a general unsecured creditor of the
Corporation with respect to your right to receive any payment
under the Agreement. The Agreement shall constitute a mere
promise by the Corporation to make payments in the future of the
benefits provided for herein. It is intended that the
arrangements reflected in this Agreement be treated as unfunded
for tax purposes, as well as for purposes of Title I of ERISA.
Nothing in the Agreement shall preclude the Corporation from
establishing and funding a "rabbi trust" to provide for the
payment of benefits under the Agreement.
(13) No Supplemental Pension payable under the Agreement
shall be deemed salary or other compensation to you for the
purpose of computing benefits to which you may be entitled under
the Retirement Plan, the 401(K) Plan and ESOP of United States
Trust Company of New York and Affiliated Companies or any other
plan or arrangement maintained by the Corporation or any of its
affiliated companies for the benefit of its employees.
(14) The Agreement shall be binding upon and inure to the
benefit of the Corporation and its successors and assigns and you,
your designees and your estate. It is understood and agreed that
immediately prior to the New Holdings Distribution, as defined in
the Merger Agreement, this Agreement shall be transferred to New
USTC Holdings Corporation, and that upon such transfer, New USTC
Holdings Corporation will assume and become solely responsible for
all of the liabilities and obligations of the Corporation under
this Agreement.
<PAGE> 7
Mr. H. Marshall Schwartz 7
(15) Your rights to payments under the Agreement shall not be
subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, incumbrance, attachment, or garnishment by
your creditors or those of your Beneficiary.
(16) The Agreement is not an employment agreement and nothing
contained herein shall give you any right or claim to be retained
in the employ of the Corporation or any of its affiliated
companies, or shall obligate the Corporation or any of its
affiliated companies to continue your employment.
(17) The Corporation may withhold from any Supplemental
Pension or other payments otherwise required to be made under the
Agreement all Federal, State, City or other taxes as shall be
required pursuant to any law or governmental regulation or
ruling.
(18) The Agreement supersedes and replaces all prior
agreements between you and the Corporation and any of its
affiliated companies with respect to the subject matter hereof. I
have been authorized to execute the Agreement on behalf of the
Corporation. Please acknowledge your agreement to be bound by the
terms and conditions of the Agreement by signing the enclosed
copy of the Agreement and returning it to me.
- ----------------------------------
Philip L. Smith, Chairman
Compensation and Benefits Committee
Acknowledged and Agreed to the
________ day of _____________ 1995
- -------------------------------------
<PAGE> 8
[letterhead of U.S. Trust Corporation]
August 29, 1995
Mr. Jeffrey S. Maurer
10 Clover Drive
Great Neck, NY 11021
Dear Jeff:
The purpose of this letter is to amend and restate the prior
agreements between you and U.S. Trust, which set forth the terms
and conditions under which you were to be provided a supplemental
retirement benefit (the "Supplemental Pension"), so as to reflect
the transactions that will be undertaken in connection with the
merger of U.S. Trust Corporation (the "Corporation") with The
Chase Manhattan Corporation ("Chase") pursuant to the Agreement
and Plan of Merger between Chase and the Corporation dated as of
November 18, 1994 (the "Merger Agreement") and to make certain
other changes.
Upon your acknowledgment of and agreement to this Amendment and
Restatement as provided on the last page hereof, this letter
agreement (the "Agreement") shall supersede and replace, in its
entirety, the prior agreements, and the Supplemental Pension shall
be provided on the terms and conditions set forth below. All
capitalized terms not otherwise defined herein shall have the same
meaning as is given to them in the Employees' Retirement Plan of
United States Trust Company of New York and Affiliated Companies
(the "Retirement Plan").
(1) The Supplemental Pension shall be equal to the Pension
that you would have been entitled to receive under the Retirement
Plan upon retirement on your Normal Retirement Date calculated as
if:
(A) you had been a Member of the Retirement Plan for an
uninterrupted period beginning on June 8, 1970 (the "Starting
Date"), and ending on August 1, 2012 (your "Normal Retirement
Date");
(B) your Credited Service in fact equalled the maximum
number of units of Credited Service that could be credited for
such uninterrupted period under the Retirement
<PAGE> 9
Mr. Jeffrey S. Maurer 2
plan as now in effect or, if greater, as in effect on the date of
your termination ("Maximum Units of Service");
(C) the provisions of Sections 401 (a)(17) and 415 of the
Internal Revenue Code of 1986, as amended, and the Maximum Pension
Limitations of Section 7.7 (or any successor provision) of the
Retirement Plan were inapplicable; and
(D) you had elected, with the consent of your spouse to the
extent required by the terms of the Retirement Plan or applicable
law, the normal form of Pension payable to a retired Member only
during his lifetime pursuant to Option 3 of Section 8.4 (or any
successor provision) of the Retirement Plan; such amount to be
reduced (but not below zero) by the sum of the annual amounts that
you are in fact entitled to receive on your retirement on your
Normal Retirement Date (i) from the Retirement Plan, (ii) from the
Benefit Equalization Plan of U.S. Trust Corporation or any similar
pension or executive benefit plan of the Corporation or any of its
affiliated companies (all such plans are hereinafter collectively
referred to as the "Benefit Equalization Plan") to the extent that
any such amount is attributable to the Retirement Plan, and (iii)
from any qualified defined benefit plan in which you participated
during any previous employment (the "Prior Plans"). For purposes
of determining the amount of the reduction required under the
preceding sentence, if any amount described in clause (i), (ii) or
(iii) thereof, is not in fact payable in the same form as
specified in Options 3 of Section 8.4 (or any successor provision)
of the Retirement Plan, such amount shall be converted into an
amount that is of Equivalent Actuarial Value (as defined in the
Retirement Plan) to such amount if such amount were payable in the
form specified in Option 3.
(2) Notwithstanding the method of calculation described
above, you may elect, with the consent of the Compensation and
Benefit Committee of the Board of Directors (the "Committee"), to
have such amount paid on an actuarially equivalent basis under any
of the optional forms of Pension then available under Section 8.4
(or any successor provision) of the Retirement Plan, using the
same factors as are prescribed under the Retirement Plan for
determining actuarial equivalence. Any such election must be made
at least two years prior to your Normal Retirement Date.
(3) Except as provided in Paragraph 5 below, the
Supplemental Pension shall not be payable to you prior to your
Normal Retirement Date or, if later, the effective date of your
termination of employment with the Corporation or any of its
affiliated
<PAGE> 10
Mr. Jeffrey S. Maurer 3
companies.
(4) Notwithstanding any other provision of the Agreement, no
Supplemental Pension shall be payable hereunder except as provided
in Paragraphs 5 and 6 below if prior to your Normal Retirement
Date your employment with the Corporation or any of its affiliated
companies is terminated for any reason other than disability.
(5) In the event of your death prior to the commencement of
the Supplemental Pension, while you are employed by the
Corporation or any of its affiliated companies and a Member of the
Retirement Plan, there shall be paid to your surviving spouse (if
any) an amount equal to (A) the Spouse's Preretirement
Survivorship Pension which would have been paid to your surviving
spouse, based on your Maximum Units of Service, if you (i) had
satisfied the Retirement Plan's requirements for payment of a
Spouse's Preretirement Survivorship Pension, (ii) had been a
Member of the Retirement Plan for an uninterrupted period
beginning on the Starting Date and ending on the date of your
death or, if your date of death is on or after the date of a
"change in control," ending on the date which would have been your
Normal Retirement Date if you had not died and had remained in the
employ of the Corporation or any of its affiliated companies until
your Normal Retirement Date, and (iii) had not waived such
coverage, reduced (but not below zero) by (B) the sum of any
amounts actually payable to your surviving spouse under (i) the
Retirement Plan, (ii) the Benefit Equalization Plan and (iii) the
Prior Plans, or, if greater, by (C) the sum of any amounts which
would have been payable under the plans referred to in clause (B)
if you had not waived any preretirement survivor benefit under
such plans and, with regard to the Prior Plans, you had elected a
50 percent joint and survivor annuity. The amount so payable to
your surviving spouse under this Paragraph 5 shall be paid to her
in the same form as the Spouse's Preretirement Survivorship
Pension is payable to her under the Retirement Plan, with payments
commencing at the earliest date as of which she could elect under
the Retirement Plan to receive the Spouse's Preretirement
Survivorship Pension, whether or not she makes any such election.
If any amount payable to your surviving spouse under any plan
referred to in clause (B) hereof is to be paid in a form, or if
payment of such amount is to commence at a date, other than the form
or commencement date applicable to the payments to be made to your
surviving spouse under this Paragraph 5, the reduction required under
clause (B) or clause (C) hereof with respect to the amount so payable
shall be determined by converting such amount to an amount that is of
Equivalent Actuarial Value to the amount that would be payable to
your surviving spouse under such plan if payment thereof were to be
made in the same form, and were to commence as of the same date, as
the form and commencement date
<PAGE> 11
Mr. Jeffrey S. Maurer 4
specified herein for the payments that are to be made to your
surviving spouse pursuant to this Paragraph 5
(6) In the event of your "involuntary termination" following
a "change in control", the Supplemental Pension benefit provided
for you hereunder shall be paid to you in a single cash lump sum,
within 30 days after the date of your "involuntary termination".
The amount so payable to you shall be equal to the single lump sum
amount that is of Equivalent Actuarial Value to the Supplemental
Pension that would have been payable to you at your Normal
Retirement Date under Paragraph (1) above if you had remained in
the employ of the Corporation or any of its affiliated companies
through your Normal Retirement Date at an annual rate of
Compensation equal to the annual rate of your Compensation in
effect immediately prior to your "involuntary termination" or, if
your "involuntary termination" occurs following a reduction of
your salary under Paragraph (7)(ii) below, the annual rate of your
Compensation in effect immediately prior to such reduction of your
salary. For this purpose, the single lump sum amount that is of
Equivalent Actuarial Value to your Supplemental Pension shall be
determined using the conversion factors that were in effect under
the Retirement Plan on July 24, 1990. Notwithstanding the
foregoing, the amount so payable to you under this Paragraph (6)
shall be subject to reduction as required under the "excess
parachute payment cutback" provisions of Section 7(c) of the 1990
Change in Control and Severance Policy for Top Tier Officers of
United States Trust Company of New York and Affiliated Companies.
(7) The term "involuntary termination" as used in the
Agreement means the termination of your employment with the
Corporation or any of its affiliated companies (i) by the
Corporation or any of its affiliated companies or (ii) by you
after any reduction in your salary, any change in location of your
place of employment to a location outside the Borough of Manhattan
without your consent, a material decrease in your responsibilities
with respect to the business of the Corporation or any of its
affiliated companies, or any other material adverse change in the
conditions of your employment by the Corporation or any of its
affiliated companies.
(8) The term "change in control" as used in the Agreement
means that after the "Closing Date" as defined in the Merger
Agreement:
(A) 20% or more of the common shares of the Corporation has
been acquired by any person (as defined by Section 3 (a)(9) of the
Securities Exchange Act of
<PAGE> 12
Mr. Jeffrey S. Maurer 5
1934) other than directly from the Corporation;
(B) there has been a merger or equivalent combination after
which 49% or more of the voting shares of the surviving
corporation is held by persons other than former shareholders of
the Corporation; or
(C) 20% or more of the directors elected by shareholders to
the Board of Directors of the Corporation are persons who were not
nominated in the most recent proxy statement of the Corporation.
(9) Notwithstanding any other provision of the Agreement, no
amounts shall become payable pursuant to Paragraph 6 above to the
extent that the Board of Directors otherwise directs by resolution
adopted prior to the change in control, or not later than 45 days
after the change in control (if the percentage of common shares
acquired or directors appointed under (A) or (C) of the definition
of change in control shall be at least 20% but less than 25%).
Any resolution of the Board of Directors adopted in accordance
with the provisions of this Paragraph directing that such amounts
not become payable may be rescinded or countermanded at any time
with or without retroactive effect. Notwithstanding the foregoing,
any resolution of the Board of Directors directing that amounts
otherwise payable under Paragraph 6 above shall not become
payable, and any resolution of the Board of Directors rescinding
or countermanding any such resolution, shall be given effect for
purposes of this Agreement only if, at the time the Board of
Directors adopts such resolution or rescinding resolution, it also
adopts, or has previously adopted, a similar resolution with
respect to the Change in Control Benefits payable to participants
under each other Change in Control Plan maintained by the
Corporation or any of its affiliated companies. For this purpose,
the terms "Change in Control Benefits" and "Change in Control
Plans" shall have the same meaning as assigned to such terms under
the 1990 Change in Control and Severance Policy for Top Tier
Officers of United States Trust Company of New York and Affiliated
Companies.
(10) In the event of a change in control, all powers of the
Committee under the Agreement shall thereafter be exercised solely
by the Committee as it was constituted immediately prior to the
change in control.
(11) The determination of the amount of the Supplemental
Pension payable and of the amount of all benefit offsets described
herein shall be made by the Committee in
<PAGE> 13
Mr. Jeffrey S. Maurer 6
its sole discretion and any determination or interpretation of the
Committee shall be final, binding and conclusive on all persons. You
shall furnish, or take whatever steps are necessary to permit you to
furnish, the Committee with all information that is reasonably
requested by it to enable it to make such determination. Except as
otherwise provided in Paragraph 6, if, notwithstanding any election
that you might have made, payment of any benefit offsets described in
Paragraph 1 could not have commenced on the date payment of your
Supplemental Pension under Paragraph 1 is to commence, such benefit
offsets shall be taken into account on the earliest date on which
payment of such benefit offsets could have commenced.
(12) All Supplemental Pension payments shall be paid in cash
from the general funds of the Corporation, and no special or
separate fund shall be established, and no segregation of assets
shall be made, to assure payment of such Supplemental Pension.
You shall have the status of a general unsecured creditor of the
Corporation with respect to your right to receive any payment
under the Agreement. The Agreement shall constitute a mere
promise by the Corporation to make payments in the future of the
benefits provided for herein. It is intended that the
arrangements reflected in this Agreement be treated as unfunded
for tax purposes, as well as for purposes of Title I of ERISA.
Nothing in the Agreement shall preclude the Corporation from
establishing and funding a "rabbi trust" to provide for the
payment of benefits under the Agreement.
(13) No Supplemental Pension payable under the Agreement
shall be deemed salary or other compensation to you for the
purpose of computing benefits to which you may be entitled under
the Retirement Plan, the 401(K) Plan and ESOP of United States
Trust Company of America and Affiliated Companies or any other
plan or arrangement maintained by the Corporation or any of its
affiliated companies for the benefit of its employees.
(14) The Agreement shall be binding upon and inure to the
benefit of the Corporation and its successors and assigns and you,
your designees and your estate. It is understood and agreed that
immediately prior to the New Holdings Distribution, as defined in
the Merger Agreement, this Agreement shall be transferred to New
USTC Holdings Corporation, and that upon such transfer, New USTC
Holdings Corporation will assume and become solely responsible for
all of the liabilities and obligations of the Corporation under
this Agreement.
<PAGE> 14
Mr. Jeffrey S. Maurer 7
(15) Your rights to payments under the Agreement shall not be
subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, incumbrance, attachment, or garnishment by
your creditors or those of your Beneficiary.
(16) The Agreement is not an employment agreement and nothing
contained herein shall give you any right or claim to be retained
in the employ of the Corporation or any of its affiliated
companies, or shall obligate the Corporation or any of its
affiliated companies to continue your employment.
(17) The Corporation may withhold from any Supplemental
Pension or other payments otherwise required to be made under the
Agreement all Federal, State, City or other taxes as shall be
required pursuant to any law or governmental regulation or
ruling.
(18) The Agreement supersedes and replaces all prior
agreements between you and the Corporation and any of its
affiliated companies with respect to the subject matter hereof.
I have been authorized to execute the Agreement on behalf of the
Corporation. Please acknowledge your agreement to be bound by the
terms and conditions of the Agreement by signing the enclosed copy
of the Agreement and returning it to me.
- ----------------------------------
Philip L. Smith, Chairman
Compensation and Benefits Committee
Acknowledged and Agreed to the
________ day of _____________ 1995
- ------------------------------------
<PAGE> 15
[letterhead of U.S. Trust Corporation]
August 29, 1995
Mr. Frederick B. Taylor
One Westerleigh Court
Purchase, NY 10577
Dear Fred:
The purpose of this letter is to amend and restate the prior
agreements between you and U.S. Trust, which set forth the terms
and conditions under which you were to be provided a supplemental
retirement benefit (the "Supplemental Pension"), so as to reflect
the transactions that will be undertaken in connection with the
merger of U.S. Trust Corporation (the "Corporation") with The
Chase Manhattan Corporation ("Chase") pursuant to the Agreement
and Plan of Merger between Chase and the Corporation dated as of
November 18, 1994 (the "Merger Agreement") and to make certain
other changes.
Upon your acknowledgment of and agreement to this Amendment and
Restatement as provided on the last page hereof, this letter
agreement (the "Agreement") shall supersede and replace, in its
entirety, the prior agreements, and the Supplemental Pension shall
be provided on the terms and conditions set forth below. All
capitalized terms not otherwise defined herein shall have the same
meaning as is given to them in the Employees' Retirement Plan of
United States Trust Company of New York and Affiliated Companies
(the "Retirement Plan").
(1) The Supplemental Pension shall be equal to the Pension
that you would have been entitled to receive under the Retirement
Plan upon retirement on your Normal Retirement Date calculated as
if:
(A) you had been a Member of the Retirement Plan for an
uninterrupted period beginning on June 27, 1966 (the "Starting
Date"), and ending on September 1, 2006 (your "Normal Retirement
Date");
(B) your Credited Service in fact equalled the maximum
number of units of Credited Service that could be credited for
such uninterrupted period under the Retirement
<PAGE> 16
Mr. Frederick B. Taylor 2
plan as now in effect or, if greater, as in effect on the date of
your termination ("Maximum Units of Service");
(C) the provisions of Sections 401 (a)(17) and 415 of the
Internal Revenue Code of 1986, as amended, and the Maximum Pension
Limitations of Section 7.7 (or any successor provision) of the
Retirement Plan were inapplicable; and
(D) you had elected, with the consent of your spouse to the
extent required by the terms of the Retirement Plan or applicable
law, the normal form of Pension payable to a retired Member only
during his lifetime pursuant to Option 3 of Section 8.4 (or any
successor provision) of the Retirement Plan; such amount to be
reduced (but not below zero) by the sum of the annual amounts that
you are in fact entitled to receive on your retirement on your
Normal Retirement Date (i) from the Retirement Plan, (ii) from the
Benefit Equalization Plan of U.S. Trust Corporation or any similar
pension or executive benefit plan of the Corporation or any of its
affiliated companies (all such plans are hereinafter collectively
referred to as the "Benefit Equalization Plan") to the extent that
any such amount is attributable to the Retirement Plan, and (iii)
from any qualified defined benefit plan in which you participated
during any previous employment (the "Prior Plans"). For purposes
of determining the amount of the reduction required under the
preceding sentence, if any amount described in clause (i), (ii) or
(iii) thereof, is not in fact payable in the same form as
specified in Option 3 of Section 8.4 (or any successor provision)
of the Retirement Plan, such amount shall be converted into an
amount that is of Equivalent Actuarial Value (as defined in the
Retirement Plan) to such amount if such amount were payable in the
form specified in Option 3.
(2) Notwithstanding the method of calculation described
above, you may elect, with the consent of the Compensation and
Benefit Committee of the Board of Directors (the "Committee"), to
have such amount paid on an actuarially equivalent basis under any
of the optional forms of Pension then available under Section 8.4
(or any successor provision) of the Retirement Plan, using the
same factors as are prescribed under the Retirement Plan for
determining actuarial equivalence. Any such election must be made
at least two years prior to your Normal Retirement Date.
(3) Except as provided in Paragraph 5 below, the
Supplemental Pension shall not be payable to you prior to your Normal
Retirement Date or, if later, the effective date of your termination
of employment with the Corporation or any of its affiliated
<PAGE> 17
Mr. Frederick B. Taylor 3
companies.
(4) Notwithstanding any other provision of the Agreement, no
Supplemental Pension shall be payable hereunder except as provided
in Paragraphs 5 and 6 below if prior to your Normal Retirement
Date your employment with the Corporation or any of its affiliated
companies is terminated for any reason other than disability.
(5) In the event of your death prior to the commencement of
the Supplemental Pension, while you are employed by the
Corporation or any of its affiliated companies and a Member of the
Retirement Plan, there shall be paid to your surviving spouse (if
any) an amount equal to (A) the Spouse's Preretirement
Survivorship Pension which would have been paid to your surviving
spouse, based on your Maximum Units of Service, if you (i) had
satisfied the Retirement Plan's requirements for payment of a
Spouse's Preretirement Survivorship Pension, (ii) had been a
Member of the Retirement Plan for an uninterrupted period
beginning on the Starting Date and ending on the date of your
death or, if your date of death is on or after the date of a
"change in control," ending on the date which would have been your
Normal Retirement Date if you had not died and had remained in the
employ of the Corporation or any of its affiliated companies until
your Normal Retirement Date, and (iii) had not waived such
coverage, reduced (but not below zero) by (B) the sum of any
amounts actually payable to your surviving spouse under (i) the
Retirement Plan, (ii) the Benefit Equalization Plan and (iii) the
Prior Plans, or, if greater, by (C) the sum of any amounts which
would have been payable under the plans referred to in clause (B)
if you had not waived any preretirement survivor benefit under
such plans and, with regard to the Prior Plans, you had elected a
50 percent joint and survivor annuity. The amount so payable to
your surviving spouse under this Paragraph 5 shall be paid to her
in the same form as the Spouse's Preretirement Survivorship
Pension is payable to her under the Retirement Plan, with payments
commencing at the earliest date as of which she could elect under
the Retirement Plan to receive the Spouse's Preretirement
Survivorship Pension, whether or not she makes any such election.
If any amount payable to your surviving spouse under any plan
referred to in clause (B) hereof is to be paid in a form, or if
payment of such amount is to commence at a date, other than the form
or commencement date applicable to the payments to be made to your
surviving spouse under this Paragraph 5, the reduction required under
clause (B) or clause (C) hereof with respect to the amount so payable
shall be determined by converting such amount to an amount that is of
Equivalent Actuarial Value to the amount that would be payable to
your surviving spouse under such plan if payment thereof were to be
made in the same form, and were to commence as of the same date, as
the form and commencement date
<PAGE> 18
Mr. Frederick B. Taylor 4
specified herein for the payments that are to be made to your
surviving spouse pursuant to this Paragraph 5.
(6) In the event of your "involuntary termination" following
a "change in control", the Supplemental Pension benefit provided
for you hereunder shall be paid to you in a single cash lump sum,
within 30 days after the date of your "involuntary termination".
The amount so payable to you shall be equal to the single lump sum
amount that is of Equivalent Actuarial Value to the Supplemental
Pension that would have been payable to you at your Normal
Retirement Date under Paragraph (1) above if you had remained in
the employ of the Corporation or any of its affiliated companies
through your Normal Retirement Date at an annual rate of
Compensation equal to the annual rate of your Compensation in
effect immediately prior to your "involuntary termination" or, if
your "involuntary termination" occurs following a reduction of
your salary under Paragraph (7)(ii) below, the annual rate of your
Compensation in effect immediately prior to such reduction of your
salary. For this purpose, the single lump sum amount that is of
Equivalent Actuarial Value to your Supplemental Pension shall be
determined using the conversion factors that were in effect under
the Retirement Plan on July 24, 1990. Notwithstanding the
foregoing, the amount so payable to you under this Paragraph (6)
shall be subject to reduction as required under the "excess
parachute payment cutback" provisions of Section 7(c) of the 1990
Change in Control and Severance Policy for Top Tier Officers of
United States Trust Company of New York and Affiliated Companies.
(7) The term "involuntary termination" as used in the
Agreement means the termination of your employment with the
Corporation or any of its affiliated companies (i) by the
Corporation or any of its affiliated companies or (ii) by you
after any reduction in your salary, any change in location of your
place of employment to a location outside the Borough of Manhattan
without your consent, a material decrease in your responsibilities
with respect to the business of the Corporation or any of its
affiliated companies, or any other material adverse change in the
conditions of your employment by the Corporation or any of its
affiliated companies.
(8) The term "change in control" as used in the Agreement
means that after the "Closing Date" as defined in the Merger
Agreement:
(A) 20% or more of the common shares of the Corporation has
been acquired by any person (as defined by Section 3 (a)(9) of the
Securities Exchange Act of
<PAGE> 19
Mr. Frederick B. Taylor 5
1934) other than directly from the Corporation;
(B) there has been a merger or equivalent combination after
which 49% or more of the voting shares of the surviving
corporation is held by persons other than former shareholders of
the Corporation; or
(C) 20% or more of the directors elected by shareholders to
the Board of Directors of the Corporation are persons who were not
nominated in the most recent proxy statement of the Corporation.
(9) Notwithstanding any other provision of the Agreement, no
amounts shall become payable pursuant to Paragraph 6 above to the
extent that the Board of Directors otherwise directs by resolution
adopted prior to the change in control, or not later than 45 days
after the change in control (if the percentage of common shares
acquired or directors appointed under (A) or (C) of the definition
of change in control shall be at least 20% but less than 25%).
Any resolution of the Board of Directors adopted in accordance
with the provisions of this Paragraph directing that such amounts
not become payable may be rescinded or countermanded at any time
with or without retroactive effect. Notwithstanding the foregoing,
any resolution of the Board of Directors directing that amounts
otherwise payable under Paragraph 6 above shall not become
payable, and any resolution of the Board of Directors rescinding
or countermanding any such resolution, shall be given effect for
purposes of this Agreement only if, at the time the Board of
Directors adopts such resolution or rescinding resolution, it also
adopts, or has previously adopted, a similar resolution with
respect to the Change in Control Benefits payable to participants
under each other Change in Control Plan maintained by the
Corporation or any of its affiliated companies. For this purpose,
the terms "Change in Control Benefits" and "Change in Control
Plans" shall have the same meaning as assigned to such terms under
the 1990 Change in Control and Severance Policy for Top Tier
Officers of United States Trust Company of New York and Affiliated
Companies.
(10) In the event of a change in control, all powers of the
Committee under the Agreement shall thereafter be exercised solely
by the Committee as it was constituted immediately prior to the
change in control.
(11) The determination of the amount of the Supplemental
Pension payable and of the amount of all benefit offsets described
herein shall be made by the Committee in
<PAGE> 20
Mr. Frederick B. Taylor 6
its sole discretion and any determination or interpretation of the
Committee shall be final, binding and conclusive on all persons. You
shall furnish, or take whatever steps are necessary to permit you to
furnish, the Committee with all information that is reasonably
requested by it to enable it to make such determination. Except as
otherwise provided in Paragraph 6, if, notwithstanding any election
that you might have made, payment of any benefit offsets described in
Paragraph 1 could not have commenced on the date payment of your
Supplemental Pension under Paragraph 1 is to commence, such benefit
offsets shall be taken into account on the earliest date on which
payment of such benefit offsets could have commenced.
(12) All Supplemental Pension payments shall be paid in cash
from the general funds of the Corporation, and no special or
separate fund shall be established, and no segregation of assets
shall be made, to assure payment of such Supplemental Pension.
You shall have the status of a general unsecured creditor of the
Corporation with respect to your right to receive any payment
under the Agreement. The Agreement shall constitute a mere
promise by the Corporation to make payments in the future of the
benefits provided for herein. It is intended that the
arrangements reflected in this Agreement be treated as unfunded
for tax purposes, as well as for purposes of Title I of ERISA.
Nothing in the Agreement shall preclude the Corporation from
establishing and funding a "rabbi trust" to provide for the
payment of benefits under the Agreement.
(13) No Supplemental Pension payable under the Agreement
shall be deemed salary or other compensation to you for the
purpose of computing benefits to which you may be entitled under
the Retirement Plan, the 401(K) Plan and ESOP of United States
Trust Company of New York and Affiliated Companies or any other
plan or arrangement maintained by the Corporation or any of its
affiliated companies for the benefit of its employees.
(14) The Agreement shall be binding upon and inure to the
benefit of the Corporation and its successors and assigns and you,
your designees and your estate. It is understood and agreed that
immediately prior to the New Holdings Distribution, as defined in
the Merger Agreement, this Agreement shall be transferred to New
USTC Holdings Corporation, and that upon such transfer, New USTC
Holdings Corporation will assume and become solely responsible for
all of the liabilities and obligations of the Corporation under
this Agreement.
<PAGE> 21
Mr. Frederick B. Taylor 7
(15) Your rights to payments under the Agreement shall not be
subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, incumbrance, attachment, or garnishment by
your creditors or those of your Beneficiary.
(16) The Agreement is not an employment agreement and nothing
contained herein shall give you any right or claim to be retained
in the employ of the Corporation or any of its affiliated
companies, or shall obligate the Corporation or any of its
affiliated companies to continue your employment.
(17) The Corporation may withhold from any Supplemental
Pension or other payments otherwise required to be made under the
Agreement all Federal, State, City or other taxes as shall be
required pursuant to any law or governmental regulation or
ruling.
(18) The Agreement supersedes and replaces all prior
agreements between you and the Corporation and any of its
affiliated companies with respect to the subject matter hereof.
I have been authorized to execute the Agreement on behalf of the
Corporation. Please acknowledge your agreement to be bound by the
terms and conditions of the Agreement by signing the enclosed copy
of the Agreement and returning it to me.
- ----------------------------------
Philip L. Smith, Chairman
Compensation and Benefits Committee
Acknowledged and Agreed to the
________ day of _____________ 1995
- --------------------------------------
<PAGE> 22
[letterhead of U.S. Trust Corporation]
August 29, 1995
Mr. Joel Abramowitz
2591 Kevin Road
Seaford, NY 11783
Dear Joel:
Mr. Joel Abramowitz
The purpose of this letter is to amend and restate the prior
agreements between you and U.S. Trust, which set forth the terms
and conditions under which you were to be provided a supplemental
retirement benefit (the "Supplemental Pension"), so as to reflect
the transactions that will be undertaken in connection with the
merger of U.S. Trust Corporation (the "Corporation") with The
Chase Manhattan Corporation ("Chase") pursuant to the Agreement
and Plan of Merger between Chase and the Corporation dated as of
November 18, 1994 (the "Merger Agreement") and to make certain
other changes.
Upon your acknowledgment of and agreement to this Amendment and
Restatement as provided on the last page hereof, this letter
agreement (the "Agreement") shall supersede and replace, in its
entirety, the prior agreements, and the Supplemental Pension shall
be provided on the terms and conditions set forth below. All
capitalized terms not otherwise defined herein shall have the same
meaning as is given to them in the Employees' Retirement Plan of
United States Trust Company of New York and Affiliated Companies
(the "Retirement Plan").
(1) The Supplemental Pension shall be equal to the Pension
that you would have been entitled to receive under the Retirement
Plan upon retirement on your Normal Retirement Date calculated as
if:
(A) you had been a Member of the Retirement Plan for an
uninterrupted period beginning on May 11, 1959 (the "Starting
Date"), and ending on March 1, 2006 (your "Normal Retirement
Date");
(B) your Credited Service in fact equalled the maximum
number of units of Credited Service that could be credited for
such uninterrupted period under the Retirement
<PAGE> 23
Mr. Joel Abramowitz 2
plan as now in effect or, if greater, as in effect on the date of
your termination ("Maximum Units of Service");
(C) the provisions of Sections 401 (a)(17) and 415 of the
Internal Revenue Code of 1986, as amended, and the Maximum Pension
Limitations of Section 7.7 (or any successor provision) of the
Retirement Plan were inapplicable; and
(D) you had elected, with the consent of your spouse to the
extent required by the terms of the Retirement Plan or applicable
law, the normal form of Pension payable to a retired Member only
during his lifetime pursuant to Option 3 of Section 8.4 (or any
successor provision) of the Retirement Plan; such amount to be
reduced (but not below zero) by the sum of the annual amounts that
you are in fact entitled to receive on your retirement on your
Normal Retirement Date (i) from the Retirement Plan, (ii) from the
Benefit Equalization Plan of U.S. Trust Corporation or any similar
pension or executive benefit plan of the Corporation or any of its
affiliated companies (all such plans are hereinafter collectively
referred to as the "Benefit Equalization Plan") to the extent that
any such amount is attributable to the Retirement Plan, and (iii)
from any qualified defined benefit plan in which you participated
during any previous employment (the "Prior Plans"). For purposes
of determining the amount of the reduction required under the
preceding sentence, if any amount described in clause (i), (ii) or
(iii) thereof, is not in fact payable in the same form as
specified in Option 3 of Section 8.4 (or any successor provision)
of the Retirement Plan, such amount shall be converted into an
amount that is of Equivalent Actuarial Value (as defined in the
Retirement Plan) to such amount if such amount were payable in the
form specified in Option 3.
(2) Notwithstanding the method of calculation described
above, you may elect, with the consent of the Compensation and
Benefit Committee of the Board of Directors (the "Committee"), to
have such amount paid on an actuarially equivalent basis under any
of the optional forms of Pension then available under Section 8.4
(or any successor provision) of the Retirement Plan, using the
same factors as are prescribed under the Retirement Plan for
determining actuarial equivalence. Any such election must be made
at least two years prior to your Normal Retirement Date.
(3) Except as provided in Paragraph 5 below, the
Supplemental Pension shall not be payable to you prior to your
Normal Retirement Date or, if later, the effective date of your
termination of employment with the Corporation or any of its
affiliated
<PAGE> 24
Mr. Joel Abramowitz 3
companies.
(4) Notwithstanding any other provision of the Agreement, no
Supplemental Pension shall be payable hereunder except as provided
in Paragraphs 5 and 6 below if prior to your Normal Retirement
Date your employment with the Corporation or any of its affiliated
companies is terminated for any reason other than disability.
(5) In the event of your death prior to the commencement of
the Supplemental Pension, while you are employed by the
Corporation or any of its affiliated companies and a Member of the
Retirement Plan, there shall be paid to your surviving spouse (if
any) an amount equal to (A) the Spouse's Preretirement
Survivorship Pension which would have been paid to your surviving
spouse, based on your Maximum Units of Service, if you (i) had
satisfied the Retirement Plan's requirements for payment of a
Spouse's Preretirement Survivorship Pension, (ii) had been a
Member of the Retirement Plan for an uninterrupted period
beginning on the Starting Date and ending on the date of your
death or, if your date of death is on or after the date of a
"change in control," ending on the date which would have been your
Normal Retirement Date if you had not died and had remained in the
employ of the Corporation or any of its affiliated companies until
your Normal Retirement Date, and (iii) had not waived such
coverage, reduced (but not below zero) by (B) the sum of any
amounts actually payable to your surviving spouse under (i) the
Retirement Plan, (ii) the Benefit Equalization Plan and (iii) the
Prior Plans, or, if greater, by (C) the sum of any amounts which
would have been payable under the plans referred to in clause (B)
if you had not waived any preretirement survivor benefit under
such plans and, with regard to the Prior Plans, you had elected a
50 percent joint and survivor annuity. The amount so payable to
your surviving spouse under this Paragraph 5 shall be paid to her
in the same form as the Spouse's Preretirement Survivorship
Pension is payable to her under the Retirement Plan, with payments
commencing at the earliest date as of which she could elect under
the Retirement Plan to receive the Spouse's Preretirement
Survivorship Pension, whether or not she makes any such election.
If any amount payable to your surviving spouse under any plan
referred to in clause (B) hereof is to be paid in a form, or if
payment of such amount is to commence at a date, other than the form
or commencement date applicable to the payments to be made to your
surviving spouse under this Paragraph 5, the reduction required under
clause (B) or clause (C) hereof with respect to the amount so payable
shall be determined by converting such amount to an amount that is of
Equivalent Actuarial Value to the amount that would be payable to
your surviving spouse under such plan if payment thereof were to be
made in the same form, and were to commence as of the same date, as
the form and commencement date
<PAGE> 25
Mr. Joel Abramowitz 4
specified herein for the payments that are to be made to your
surviving spouse pursuant to this Paragraph 5.
(6) In the event of your "involuntary termination" following
a "change in control", the Supplemental Pension benefit provided
for you hereunder shall be paid to you in a single cash lump sum,
within 30 days after the date of your "involuntary termination".
The amount so payable to you shall be equal to the single lump sum
amount that is of Equivalent Actuarial Value to the Supplemental
Pension that would have been payable to you at your Normal
Retirement Date under Paragraph (1) above if you had remained in
the employ of the Corporation or any of its affiliated companies
through your Normal Retirement Date at an annual rate of
Compensation equal to the annual rate of your Compensation in
effect immediately prior to your "involuntary termination" or, if
your "involuntary termination" occurs following a reduction of
your salary under Paragraph (7)(ii) below, the annual rate of your
Compensation in effect immediately prior to such reduction of your
salary. For this purpose, the single lump sum amount that is of
Equivalent Actuarial Value to your Supplemental Pension shall be
determined using the conversion factors that were in effect under
the Retirement Plan on July 24, 1990. Notwithstanding the
foregoing, the amount so payable to you under this Paragraph (6)
shall be subject to reduction as required under the "excess
parachute payment cutback" provisions of Section 7(c) of the 1990
Change in Control and Severance Policy for Top Tier Officers of
United States Trust Company of New York and Affiliated Companies.
(7) The term "involuntary termination" as used in the
Agreement means the termination of your employment with the
Corporation or any of its affiliated companies (i) by the
Corporation or any of its affiliated companies or (ii) by you
after any reduction in your salary, any change in location of your
place of employment to a location outside the Borough of Manhattan
without your consent, a material decrease in your responsibilities
with respect to the business of the Corporation or any of its
affiliated companies, or any other material adverse change in the
conditions of your employment by the Corporation or any of its
affiliated companies.
(8) The term "change in control" as used in the Agreement
means that after the "Closing Date" as defined in the Merger
Agreement:
(A) 20% or more of the common shares of the Corporation has
been acquired by any person (as defined by Section 3 (a)(9) of the
Securities Exchange Act of
<PAGE> 26
Mr. Joel Abramowitz 5
1934) other than directly from the Corporation;
(B) there has been a merger or equivalent combination after
which 49% or more of the voting shares of the surviving
corporation is held by persons other than former shareholders of
the Corporation; or
(C) 20% or more of the directors elected by shareholders to
the Board of Directors of the Corporation are persons who were not
nominated in the most recent proxy statement of the Corporation.
(9) Notwithstanding any other provision of the Agreement, no
amounts shall become payable pursuant to Paragraph 6 above to the
extent that the Board of Directors otherwise directs by resolution
adopted prior to the change in control, or not later than 45 days
after the change in control (if the percentage of common shares
acquired or directors appointed under (A) or (C) of the definition
of change in control shall be at least 20% but less than 25%).
Any resolution of the Board of Directors adopted in accordance
with the provisions of this Paragraph directing that such amounts
not become payable may be rescinded or countermanded at any time
with or without retroactive effect. Notwithstanding the foregoing,
any resolution of the Board of Directors directing that amounts
otherwise payable under Paragraph 6 above shall not become
payable, and any resolution of the Board of Directors rescinding
or countermanding any such resolution, shall be given effect for
purposes of this Agreement only if, at the time the Board of
Directors adopts such resolution or rescinding resolution, it also
adopts, or has previously adopted, a similar resolution with
respect to the Change in Control Benefits payable to participants
under each other Change in Control Plan maintained by the
Corporation or any of its affiliated companies. For this purpose,
the terms "Change in Control Benefits" and "Change in Control
Plans" shall have the same meaning as assigned to such terms under
the 1990 Change in Control and Severance Policy for Top Tier
Officers of United States Trust Company of New York and Affiliated
Companies.
(10) In the event of a change in control, all powers of the
Committee under the Agreement shall thereafter be exercised solely
by the Committee as it was constituted immediately prior to the
change in control.
(11) The determination of the amount of the Supplemental
Pension payable and of the amount of all benefit offsets described
herein shall be made by the Committee in
<PAGE> 27
Mr. Joel Abramowitz 6
its sole discretion and any determination or interpretation of the
Committee shall be final, binding and conclusive on all persons. You
shall furnish, or take whatever steps are necessary to permit you to
furnish, the Committee with all information that is reasonably
requested by it to enable it to make such determination. Except as
otherwise provided in Paragraph 6, if, notwithstanding any election
that you might have made, payment of any benefit offsets described in
Paragraph 1 could not have commenced on the date payment of your
Supplemental Pension under Paragraph 1 is to commence, such benefit
offsets shall be taken into account on the earliest date on which
payment of such benefit offsets could have commenced.
(12) All Supplemental Pension payments shall be paid in cash
from the general funds of the Corporation, and no special or
separate fund shall be established, and no segregation of assets
shall be made, to assure payment of such Supplemental Pension.
You shall have the status of a general unsecured creditor of the
Corporation with respect to your right to receive any payment
under the Agreement. The Agreement shall constitute a mere
promise by the Corporation to make payments in the future of the
benefits provided for herein. It is intended that the
arrangements reflected in this Agreement be treated as unfunded
for tax purposes, as well as for purposes of Title I of ERISA.
Nothing in the Agreement shall preclude the Corporation from
establishing and funding a "rabbi trust" to provide for the
payment of benefits under the Agreement.
(13) No Supplemental Pension payable under the Agreement
shall be deemed salary or other compensation to you for the
purpose of computing benefits to which you may be entitled under
the Retirement Plan, the 401(K) Plan and ESOP of United States
Trust Company of New York and Affiliated Companies or any other
plan or arrangement maintained by the Corporation or any of its
affiliated companies for the benefit of its employees.
(14) The Agreement shall be binding upon and inure to the
benefit of the Corporation and its successors and assigns and you,
your designees and your estate. It is understood and agreed that
immediately prior to the New Holdings Distribution, as defined in
the Merger Agreement, this Agreement shall be transferred to New
USTC Holdings Corporation, and that upon such transfer, New USTC
Holdings Corporation will assume and become solely responsible for
all of the liabilities and obligations of the Corporation under
this Agreement.
<PAGE> 28
Mr. Joel Abramowitz 7
(15) Your rights to payments under the Agreement shall not be
subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, incumbrance, attachment, or garnishment by
your creditors or those of your Beneficiary.
(16) The Agreement is not an employment agreement and nothing
contained herein shall give you any right or claim to be retained
in the employ of the Corporation or any of its affiliated
companies, or shall obligate the Corporation or any of its
affiliated companies to continue your employment.
(17) The Corporation may withhold from any Supplemental
Pension or other payments otherwise required to be made under the
Agreement all Federal, State, City or other taxes as shall be
required pursuant to any law or governmental regulation or
ruling.
(18) The Agreement supersedes and replaces all prior
agreements between you and the Corporation and any of its
affiliated companies with respect to the subject matter hereof.
I have been authorized to execute the Agreement on behalf of the
Corporation. Please acknowledge your agreement to be bound by the
terms and conditions of the Agreement by signing the enclosed copy
of the Agreement and returning it to me.
- ----------------------------------
Philip L. Smith, Chairman
Compensation and Benefits Committee
Acknowledged and Agreed to the
________ day of _____________ 1995
- ------------------------------------
<PAGE> 1
U.S. TRUST CORPORATION
EXHIBIT 11 - COMPUTATION OF NET INCOME (LOSS) PER SHARE
<TABLE>
<CAPTION>
Three-Month Periods Nine-Month Periods
Ended September 30, Ended September 30,
-------------------------------- --------------------------------
1995 1994 1995 1994
--------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
PRIMARY NET INCOME (LOSS) PER SHARE:
Net Income (Loss) $ (73,662,000) $ 12,945,000 $ (59,667,000) $ 36,513,000
Plus Dividend Equivalent on Deferred
Long-Term Performance Plan Awards
(After-Tax) - 82,737 - 222,102
--------------- -------------- --------------- --------------
Adjusted Net Income (Loss) $ (73,662,000) $ 13,027,737 $ (59,667,000) $ 36,735,102
=============== ============== =============== ==============
Weighted average number of common shares
outstanding 9,689,851 9,380,437 9,603,647 9,375,036
Add average shares issuable under
stock option variable stock award plans - 585,407 - 589,271
--------------- -------------- --------------- --------------
Total Common and Common
Equivalent Shares 9,689,851 9,965,844 9,603,647 9,964,307
=============== ============== =============== ==============
Primary Net Income (Loss) Per Share $ (7.60) $ 1.31 $ (6.21) $ 3.69
FULLY DILUTED NET INCOME (LOSS) PER SHARE:**
Net Income (Loss) $ (73,662,000) $ 12,945,000 $ (59,667,000) $ 36,513,000
Plus Dividend Equivalent on Deferred
Long-Term Performance Plan Awards
(After-Tax) - 82,737 - 222,102
--------------- -------------- --------------- --------------
Adjusted Net Income (Loss) $ (73,662,000) $ 13,027,737 $ (59,667,000) $ 36,735,102
=============== ============== =============== ==============
Weighted average number of common
shares outstanding 9,689,851 9,380,437 9,603,647 9,375,036
Add maximum dilutive impact of average
shares issuable under stock option
and variable stock award plans* - 620,292 - 618,215
--------------- -------------- --------------- --------------
Total Dilutive Shares 9,689,851 10,000,729 9,603,647 9,993,251
=============== ============== =============== ==============
Fully Diluted Net Income (Loss) Per Share $ (7.60) $ 1.30 $ (6.21) $ 3.68
</TABLE>
* Assumes issuance of the maximum number of shares calculated as follows:
Stock option plans - computed using the higher of the average market price
or period-end market price of the Corporation's common stock.
Variable stock award plans - computed assuming the issuance of performance
stock awards that have been awarded but not yet vested.
** Due to the net loss incurred for the three and nine month periods ended
September 30, 1995, fully diluted earnings per share have been calculated
using only the average amount of common shares outstanding.
-1-
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000936301
<NAME> U. S. TRUST CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 152600
<INT-BEARING-DEPOSITS> 1230
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 812025
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 1392942
<ALLOWANCE> 16862
<TOTAL-ASSETS> 2599898
<DEPOSITS> 1949147
<SHORT-TERM> 213348
<LIABILITIES-OTHER> 238688
<LONG-TERM> 19434
<COMMON> 9739
0
0
<OTHER-SE> 169542
<TOTAL-LIABILITIES-AND-EQUITY> 2599898
<INTEREST-LOAN> 81836
<INTEREST-INVEST> 39205
<INTEREST-OTHER> 29266
<INTEREST-TOTAL> 150307
<INTEREST-DEPOSIT> 56727
<INTEREST-EXPENSE> 69538
<INTEREST-INCOME-NET> 80769
<LOAN-LOSSES> 1200
<SECURITIES-GAINS> 4188
<EXPENSE-OTHER> 421656
<INCOME-PRETAX> (109458)
<INCOME-PRE-EXTRAORDINARY> (109458)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (59667)
<EPS-PRIMARY> (6.21)
<EPS-DILUTED> (6.21)
<YIELD-ACTUAL> 3.82
<LOANS-NON> 9456
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 14699
<CHARGE-OFFS> 1947
<RECOVERIES> 2910
<ALLOWANCE-CLOSE> 16862
<ALLOWANCE-DOMESTIC> 16862
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 16862
</TABLE>
<PAGE> 1
U.S. TRUST CORPORATION
Exhibit 99 - Pro Forma Condensed Financial Statements
The following unaudited pro forma condensed statements of income for the
year ended December 31, 1994 and the nine-month period ended September 30, 1995
(collectively, the "Pro Forma Statements"), were prepared to present the
estimated effects of the Disposition and Merger transaction with The Chase
Manhattan Corporation, the related restructuring transactions and the effect of
the Services Agreement as if such transactions had occurred as of January 1,
1994.
The "Disposition Adjustments" column in each of the Pro Forma Statements
includes the elimination from operations of the revenue and expenses related to
the sale of the Chase Acquired Business.
The "Other Adjustments" column in each of the Pro Forma Statements
includes the ongoing impact on the Corporation's results of operations arising
from the nonrecurring adjustments and the Services Agreement including the
nonrecurring adjustments that have been incurred during the fourth quarter of
1994 and the first nine months of 1995.
All of the pro forma adjustments are based upon available information and
upon certain assumptions that the Corporation believes are appropriate. The
information is not intended to be indicative of the Corporation's actual
results had the transactions occurred as of the date indicated above nor do
they purport to indicate results which may be attained in the future. The Pro
Forma Statements and accompanying notes should be read in conjunction with the
historical financial statements and other financial information relating to the
Corporation.
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PRO FORMA CONDENSED STATEMENT OF INCOME
Year Ended December 31, 1994
(Dollars In Thousands, Except Per Share Amounts)
(UNAUDITED)
<TABLE>
<CAPTION>
Reversal of
Back Office Corporation
Disposition & Corporate Before Other Other Corporation
Historical(1) Adjustments(b) Staff (c) Adjustments Adjustments Pro Forma(a)
------------ -------------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
REVENUES
Fee Revenue $ 312,313 $(108,151) $ - $204,162 $ (1,966)(h) $202,196
Net Interest Income After
Provision for Credit Losses 106,112 (42,133) - 63,979 - 63,979
Securities Gains (Losses), net 2,054 - - 2,054 - 2,054
---------- --------- -------- -------- -------- --------
Total Revenue 420,479 (150,284) - 270,195 (1,966) 268,229
---------- --------- -------- -------- -------- --------
OPERATING EXPENSES
Salaries and Benefits 207,483 (72,798) 24,691 159,376 (31,696)(g) 127,680
Net Occupancy 40,030 (10,616) 4,659 34,073 (4,763)(g) 29,310
Other 88,417 (30,190) 17,236 75,463 (12,532)(g) 62,931
Restructuring Costs 50,177 - - 50,177 (50,177)(a) -
---------- --------- -------- -------- -------- --------
Total Operating Expenses 386,107 (113,604) 46,586 319,089 (99,168) 219,921
---------- --------- -------- -------- -------- --------
Income Before Income Tax
Expense 34,372 (36,680) (46,586) (48,894) 97,202 48,308
Income Tax Expense
(Benefit) (d) 13,405 (16,506) (20,964) (24,065) 43,291 19,226
---------- --------- -------- -------- -------- --------
Net Income $ 20,967 $ (20,174) $(25,622) $(24,829) $ 53,911 $ 29,082
========== ========= ======== ======== ======== ========
Net Income Per Share: (f)
Fully Diluted $ 2.12 $ 2.83
========= ==========
Average Shares Outstanding:
Fully Diluted 10,019,592 10,400,000
========== ==========
</TABLE>
(1) Reclassified to conform to current years presentation.
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PRO FORMA CONDENSED STATEMENT OF INCOME
Nine Months Ended September 30, 1995
(Dollars In Thousands, Except Per Share Amounts)
(UNAUDITED)
<TABLE>
<CAPTION>
Reversal of
Back Office Corporation
Disposition & Corporate Before Other Other Corporation
Historical Adjustments(b) Staff(c) Adjustments Adjustments Pro Forma(a)
---------- ------------- ----------- ------------ ----------- --------------
<S> <C> <C> <C> <C> <C>
REVENUES
Fee Revenue $ 228,441 $ (69,803) $ - $ 158,638 $ - $158,638
Net Interest Income After
Provision for Credit Losses 79,569 (29,587) - 49,982 - 49,982
Securities Gains, Net 4,188 - - 4,188 - 4,188
--------- --------- -------- --------- -------- --------
Total Revenue 312,198 (99,390) - 212,808 - 212,808
---------- --------- -------- --------- -------- --------
OPERATING EXPENSES
Salaries and Benefits 156,457 (45,588) 12,795 123,664 (22,485)(g) 101,179
Net Occupancy 30,803 (7,440) 2,950 26,313 (2,863)(g) 23,450
Other 78,807 (22,350) 13,206 69,663 (15,533)(g) 54,130(e)
Restructuring Costs 155,589 - - 155,589 (155,589)(a) -
---------- --------- -------- --------- -------- --------
Total Operating Expenses 421,656 (75,378) 28,951 375,229 (196,470) 178,759
---------- --------- -------- --------- -------- --------
Income (Loss) Before Income
Tax Expense (109,458) (24,012) (28,951) (162,421) 196,470 34,049
Income Tax Expense
(Benefit) (d) (49,791) (10,805) (13,028) (73,624) 87,584 13,960
---------- --------- -------- --------- -------- --------
Net Income (Loss) $ (59,667) $ (13,207) $(15,923) $ (88,797) $108,886 $ 20,089
========== ========= ======== ========= ======== ========
Net Income (Loss) Per Share:(f)
Fully Diluted $ (6.21) $ 1.93(e)
========= ==========
Average Shares Outstanding:
Fully Diluted 9,603,647 10,453,898
========== ==========
</TABLE>
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NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS
(a) The objective of the Pro Forma Statements is to provide information
concerning the impact of the Transaction by showing how it might have affected
historical financial statements if the Transaction had been consummated as of
an earlier date. Accordingly, the analysis begins with the historical
financial statements of the Corporation, deletes the Processing Business and
reflects other pro forma adjustments, to present the pro forma results of the
surviving entity.
Therefore, the Pro Forma Statements report net income which does not
include material nonrecurring charges and credits and related tax effects, as
presented below, which result directly from the Disposition and Merger.
Corporation Pro Forma net income is computed assuming the Transaction was
consummated at the beginning of the period presented and includes adjustments
which give effect to events that are directly attributable to the Transaction
and that are expected to have a continuing impact on the Corporation.
The adjustments are related to severance and other termination related
costs associated with the elimination of approximately 150 positions, the cost
of the disposition of certain facilities, premises and equipment and the
termination and modification of certain leases and third party services
agreements. The Corporation has incurred and reflected in its historical
statements of income for the year ended December 31, 1994 and the nine months
ended September 30, 1995, charges summarized below. Of the total cumulative
restructuring charges of $114.9 million, approximately $56.5 million remains to
be paid. Approximately $32.5 million of the remaining $56.5 million will be
paid within the next year.
<TABLE>
<CAPTION>
Nine Twelve
Months Months
Ended Ended
Sept. 30, Dec. 31, Cumulative
1995 1994 Restructuring
(Millions) -------- -------- -------------
<S> <C> <C> <C>
Severance and other termination
related costs $ 83.4 - $ 83.4
Asset/liability and portfolio balancing 1.0 $44.2 45.2
Disposition of facilities, premises and
equipment 28.2 - 28.2
Professional fees and other 43.0 6.0 49.0
-------- -------- -------------
155.6 50.2 205.8
Tax benefit 68.7 22.2 90.9
-------- -------- -------------
Total $ 86.9 $28.0 $114.9
======== ======== =============
</TABLE>
These charges are eliminated in the Other Adjustments columns so
that the Corporation Pro Forma results exclude the one-time
nonrecurring effect of these charges.
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(b) Disposition Adjustments -- The Disposition Adjustments reflect the
disposition of the Chase Acquired Business pursuant to the Disposition and
Merger. The Disposition Adjustments include the revenues and expenses of the
Chase Acquired Business as allocated in accordance with the methodologies
utilized by the Corporation's internal management reporting system. The amount
of net interest income is based upon the average Investable Balances multiplied
by an internally calculated interest rate. The rate is based upon the rates
earned by the Corporation's long- and short-term securities.
Fee Revenue represents amounts earned by the Chase Acquired Business.
Expenses reflect direct costs incurred and allocations of other costs in
accordance with the Corporation's internal management reporting system.
(c) Back Office and Corporate Staff -- The $46.6 million of back office
and corporate staff charges for the year ended December 31, 1994, and the
$29.0 million for the nine-month period ended September 30, 1995 are derived
from the Corporation's internal management accounting system and represent the
amounts allocated to the Chase Acquired Business for services provided. Back
office support costs include securities processing and custody, check clearance
and computer services processing and support services while the corporate staff
cost allocations include financial, personnel, legal and general services
support functions. Such back office support and corporate staff costs have been
added to the expenses of the Corporation Before Other Adjustments because such
costs were not eliminated in connection with the disposition of the Chase
Acquired Business. The estimated downsizing of the corporate staff and the
impact of the Services Agreement are reflected in the Other Adjustments.
(d) Income Taxes -- Income taxes reflected in the Pro Forma Statements of
Income are recorded at the statutory Federal tax rate of 35%, adjusted for the
impact of state and local taxes and nondeductible items. The resulting
effective tax rate for the Corporation was approximately 40% at December 31,
1994 and 41% at September 30, 1995.
(e) Other operating expenses includes approximately $6.0 million of
expenses due to the revaluation of certain intangible assets and an approximate
reserve for receivables. Other operating expenses at September 30, 1995 also
include a $1.0 million charge for funding the U.S. Trust Foundation for
charitable contributions to be disbursed in 1995 and 1996. The after tax
impact of these charges is $5.1 million or $0.48 per share.
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(f) Pro Forma Net Income Per Share -- Net income per share has
been calculated on a basis consistent with the Corporation's past
practices and was determined by dividing "Net Income -- Corporation
Pro Forma" by the estimated fully diluted average shares outstanding
for each period. For the nine-month period ended September 30, 1995, actual
fully diluted shares outstanding were 10,453,898. For the year ended December
31, 1994, estimated fully diluted average shares outstanding include the actual
average shares outstanding, the assumed exercise of stock options and the
dilutive effects of approximately 800,000 phantom shares. For both periods,
dividends paid on phantom shares have been added back to net income on an
after-tax basis. For both periods, the primary and fully diluted net income
per share amounts are the same.
(g) Salaries and Benefits, Net Occupancy and Other Expenses -- Reflects
the reduction of personnel, net occupancy costs and other expenses resulting
from the Disposition and Merger, the downsizing of the Corporation's corporate
staff and the Services Agreement.
(h) Other Income -- The $2.0 million adjustment reflects the elimination
of certain revenues generated from computer processing activities conducted for
third parties which will no longer be provided following the Disposition and
Merger.
(i) The pro forma impact of the Disposition and Merger on average balances
for the nine-month period ended September 30, 1995 resulted in a reduction in
total average assets and total average liabilities and stockholders' equity of
approximately $1.0 billion, primarily consisting of a $725 million decrease in
average securities and short-term investments and a $973 million decrease in
average deposits. On a pro forma basis, total average assets and total average
liabilities and stockholders' equity for the nine-month period ended September
30, 1995 were approximately $2.5 billion.
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