EXHIBIT 10.5 INSURANCE MATTERS AGREEMENT

EXHIBIT 10.5

 

INSURANCE MATTERS AGREEMENT

 

This INSURANCE MATTERS AGREEMENT (this “Agreement”), dated as of May 10, 2005, by and between Lazard Group LLC, a Delaware limited liability company (“Lazard Group”), and LFCM Holdings LLC, a Delaware limited liability company (“LFCM,” and together with Lazard Group, the “Parties” and each a “Party”).

 

RECITALS

 

WHEREAS, Lazard Group intends to effect the Separation (as defined below) effective as of the Separation Time (as defined below), on the terms, and subject to the conditions, set forth in the Master Separation Agreement dated as of the date hereof, by and among Lazard Ltd, a Bermuda company (“Lazard Ltd”), Lazard Group, LAZ-MD Holdings LLC, a Delaware limited liability company, and LFCM (as amended from time to time, the “Master Separation Agreement”); and

 

WHEREAS, pursuant to the Master Separation Agreement, the Parties have agreed to enter into this Agreement prior to the Separation to set forth certain agreements regarding insurance matters with respect to the Separation.

 

NOW, THEREFORE, in consideration of the premises, and of the representations, warranties, covenants and agreements set forth herein, and intending to be legally bound hereby, the Parties hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

SECTION 1.1 Definitions. As used in this Agreement, the following terms shall have the meanings set forth below (such meanings to be equally applicable to both the singular and plural forms of the terms defined). Terms used but not defined herein shall have the meanings assigned to them in the Master Separation Agreement.

 

“Agreement” has the meaning assigned to such term in the Preamble hereto.

 

“Ancillary Agreement” has the meaning set forth in the Master Separation Agreement.

 

“Coverage Amount” has the meaning set forth in Section 2.5(a) hereto.

 

“Current Lazard Group Companies Policies” means the Insurance Policies that (a) insure Lazard Group or one or more of the other members of the Lazard Group Companies or the LFCM Companies, (b) have policy periods that begin before and end after the Separation Time and (c) are set forth on Schedule A hereto.

 

“D&O Policies” has the meaning set forth in Section 2.1(b) hereto.

 

“Excess” has the meaning set forth in Section 2.5(b) hereto.

 

“First Distribution” has the meaning set forth in the Master Separation Agreement.

 

“Group” has the meaning set forth in the Master Separation Agreement.

 

“Insurance Policies” means insurance policies in existence before the Separation pursuant to which a person makes a true risk transfer to an insurer, including Lazard Group Companies Policies.

 

“Insurance Proceeds” has the meaning set forth in the Master Separation Agreement.

 

“Insured LFCM Liability” means any LFCM Liability to the extent that (i) it is covered under the terms of the Lazard Group Companies Policies, and (ii) neither LFCM nor any other member of the LFCM Companies is a named insured under, or otherwise entitled to the benefits of, any Insurance Policies of the LFCM Companies that provide coverage for such LFCM Liability.

 

“Lazard Group” has the meaning assigned to such term in the Preamble hereto.

 

“Lazard Group Companies” has the meaning set forth in the Master Separation Agreement.

 

“Lazard Group Companies Policies” means Current Lazard Group Companies Policies and Prior Lazard Group Companies Policies.

 

“Lazard Group Indemnitee” has the meaning set forth in the Master Separation Agreement.

 

“Lazard Group Liabilities” has the meaning set forth in the Master Separation Agreement.

 

“Lazard Ltd” has the meaning assigned to such term in the Recitals hereto.

 

“LFCM” has the meaning assigned to such term in the Preamble hereto.

 

“LFCM Companies” has the meaning set forth in the Master Separation Agreement.

 

“LFCM Liabilities” has the meaning set forth in the Master Separation Agreement.

 

“LFCM Policies” has the meaning set forth in Section 2.2 hereto.

 

“Liabilities” has the meaning set forth in the Master Separation Agreement.

 

“Lloyd’s E&O Policy” has the meaning set forth in Section 2.1(a) hereto.

 

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“Master Separation Agreement” has the meaning assigned to such term in the Recitals hereto.

 

“Overallocated Party” has the meaning set forth in Section 2.5(b) hereto.

 

“Party” and “Parties” have the meaning set forth in the Preamble hereto.

 

“Prior Lazard Group Companies Policies” means Insurance Policies that (a) insure or have previously insured Lazard Group or one or more of the other members of the Lazard Group Companies and/or the LFCM Companies, and (b) have policy periods that begin and end before the Separation Time.

 

“Separation” has the meaning set forth in the Master Separation Agreement.

 

“Separation Date” means the date on which the First Distribution is consummated.

 

“Separation Time” means the time at which the Second Distribution will be consummated in accordance with the Master Separation Agreement.

 

“Shared Percentage” means, with respect to the Lazard Group Companies, 90% and, with respect to the LFCM Companies, 10%.

 

“Subsidiary” has the meaning set forth in the Master Separation Agreement.

 

“Underallocated Party” has the meaning set forth in Section 2.5(b) hereto.

 

SECTION 1.2 General. Wherever required by the context of this Agreement, the singular shall include the plural and vice versa, and the masculine gender shall include the feminine and neuter genders and vice versa, and references to any agreement, document or instrument shall be deemed to refer to such agreement, document or instrument as amended, supplemented or modified from time to time. When used herein:

 

(a) “dollars” or “$” means United States dollars;

 

(b) the word “or” is not exclusive;

 

(c) the word “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any person, means the direct or indirect possession of the power to direct or cause the direction of the management or policies of such person, whether through the ownership of voting securities, by contract or otherwise;

 

(d) the words “including,” “includes,” “included” and “include” are deemed to be followed by the words “without limitation”;

 

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(e) the terms “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular section, paragraph or subdivision;

 

(f) the word “person” means any individual, corporation, limited liability company, trust, joint venture, association, company, partnership or other legal entity or a government or any department or agency thereof or self-regulatory organization; and

 

(g) all section, paragraph or clause references not attributed to a particular document shall be references to such parts of this Agreement, and all exhibit, annex and schedule references not attributed to a particular document shall be references to such exhibits, annexes and schedules to this Agreement.

 

SECTION 1.3 References to Time. All references in this Agreement to times of day shall be to New York City time.

 

ARTICLE II

 

INSURANCE MATTERS

 

SECTION 2.1 Existing Policies.

 

(a) E&O. With respect to the Errors and Omissions and Bankers’ Blanket Bond policy no. FB 0405788 issued by certain Underwriters at Lloyd’s, London (the “Lloyd’s E&O Policy”), the Parties agree to negotiate with the insurer and use their commercially reasonable efforts to obtain an endorsement to that policy which will provide as follows: (i) the policy is amended to provide that the named insured is Lazard Ltd and its subsidiaries or affiliates; and (ii) the policy, subject to its terms, covers Lazard Ltd and its subsidiaries or affiliates for claims made through June 30, 2005, or such later expiration date as may be agreed upon between Lazard Ltd (in its absolute discretion) and the insurer. Lazard Ltd and LFCM and each of their respective subsidiaries or affiliates acknowledge that in light of the “change of control” provision in the Lloyd’s E&O Policy, LFCM and its subsidiaries or affiliates may be eligible for coverage for claims made through June 30, 2005, or such later expiration date as may be agreed between Lazard Ltd (in its absolute discretion) and the insurer, but only for acts and omissions occurring prior to the Separation Date, in which case, upon LFCM’s written direction, Lazard Ltd shall make a claim under the Lloyd’s E&O Policy if any such acts or omissions occur (provided that LFCM shall reimburse Lazard Ltd for any and all costs and expenses reasonably incurred by or on behalf of Lazard Ltd in connection therewith). Lazard Ltd may, in its absolute discretion, agree with the insurers to extend the term of the Lloyd’s E&O Policy beyond June 30, 2005, but is not obligated to do so.

 

(b) D&O Policies. With respect to Management Liability and Company Reimbursement Insurance Policy No. ELU088383-05 issued by XL Specialty Insurance Company, Directors and Officers Liability Policy No. BM00020470D005A issued by XL Insurance (Bermuda), and any insurance policy which is specifically in excess of those policies (collectively, the “D&O Policies”), the ability of any of the Lazard Group Companies or the

 

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LFCM Companies to make any claim on any such policies will be determined by the terms of those policies except as otherwise limited by the terms of this Agreement.

 

(c) Current Lazard Group Companies Policies. With respect to all other Insurance Policies listed in Schedule A, Lazard Ltd and LFCM agree that LFCM and its subsidiaries or affiliates shall cease to be insured under such policies as of the Separation; provided, however, the ability of the Lazard Group Companies and/or the LFCM Companies to make any permitted claim on any such policies will be determined by the terms of such policies except as otherwise limited by the terms of this Agreement. Lazard Ltd and LFCM agree that to the extent such policies are composite policies that the Lazard Group Companies and the LFCM Companies may make claims under such policies for their respective rights and interests irrespective of the party or parties named therein as insureds and in accordance with the terms of this Agreement for Liabilities arising out of occurrences before the Separation Time.

 

(d) Prior Lazard Group Companies Policies. With respect to all Prior Lazard Group Companies Policies, such policies shall continue to exist in their current form without any change whatsoever by reason of the Separation. The ability of the Lazard Group Companies and/or the LFCM Companies to make any claim on any such policies will be determined by the terms of such policies except as otherwise limited by the terms of this Agreement. Lazard Ltd and LFCM agree that to the extent such policies are composite policies that the Lazard Group Companies and the LFCM Companies may make claims under such policies for their respective rights and interests irrespective of the party or parties named therein as insureds and in accordance with the terms of this Agreement.