EXHIBIT 10.23
AGREEMENT RELATING TO RETENTION AND
NONCOMPETITION AND OTHER COVENANTS
AGREEMENT by and among Lazard Ltd, a
company incorporated under the laws of Bermuda (the “
Company ”), Lazard Group LLC, a Delaware limited
liability company (“ Lazard Group ”), and Bruce
Wasserstein (the “ Executive ”), dated as of the
4th day of May, 2005.
The Company has determined that it
is in the best interests of the Company and its shareholders to
assure that the Company and Lazard Group will have the continued
dedication of the Executive following the sale of its shares in an
initial public offering (the “ IPO ”).
Therefore, in order to accomplish these objectives, the Board of
Directors of each of the Company and Lazard Group has respectively
caused the Company and Lazard Group to enter into this
Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS
FOLLOWS:
1. Effective Time . The
“ Effective Time ” shall mean the effective time
of consummation of the mandatory sale of all
“Interests” (as defined in the Third Amended and
Restated Operating Agreement of Lazard LLC, dated as of January 1,
2002, as amended (as it may be amended from time to time, the
“ LLC Agreement ”) pursuant to Section 6.02(b)
of the LLC Agreement (as the provisions of such Section 6.02(b) may
be waived or modified) or otherwise. The date on which the
Effective Time shall occur shall be referred to herein as the
“ Effective Date ”).
2. Employment Period . The
Company and Lazard Group hereby agree to employ the Executive, and
the Executive hereby agrees to enter into the employ of the Company
and continue to be employed by Lazard Group, subject to the terms
and conditions of this Agreement, for the period commencing on the
Effective Time and ending on the third anniversary of the Effective
Date (the “ Employment Period ”).
3. Terms of Employment . (a)
Position and Duties . (i) During the Employment Period, the
Executive shall serve as Chairman and Chief Executive Officer of
each of the Company and of Lazard Group, with such authority,
duties and responsibilities as are commensurate with such
positions, and shall serve as a member of the Company’s Board
of Directors (the “ Board ”).
(ii) During the Employment Period,
and excluding any periods of vacation and sick leave to which the
Executive is entitled, the Executive agrees to devote substantially
all of his attention and time during normal business hours to the
business and affairs of the Company and Lazard Group and, to the
extent necessary to discharge the responsibilities assigned to the
Executive hereunder, to use the Executive’s reasonable best
efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a
violation of this Agreement for the Executive to, consistent with
and subject to the policies applicable to members of the Board (A)
serve on corporate, civic or charitable boards or committees, (B)
deliver lectures or fulfill speaking engagements, and (C) manage
personal investments or engage in other activities consistent with
past practice, so long as such activities do not significantly
inter-
fere with the performance of the
Executive’s responsibilities as an employee of the Company
and Lazard Group in accordance with this Agreement.
(b) Compensation .
(i) Base Salary . During the
Employment Period, the Executive shall receive an annual base
salary (“ Annual Base Salary ”) of no less than
$4,800,000, which shall be payable in accordance with the normal
payroll practices of Lazard Group. The term “Base
Salary” shall refer to the Annual Base Salary as it may be
increased.
(ii) Other Benefits . During
the Employment Period, the Executive shall be entitled to
participate in all employee pension, welfare, and other benefit
plans, practices, policies and programs generally applicable to the
most senior executives of the Company and Lazard Group on a basis
and on terms no less favorable than that provided to such senior
executives; provided that the Executive shall not be
eligible to participate in any equity-related, bonus, incentive,
profit sharing or deferred compensation plan or any similar plan,
scheme or arrangement without the consent of the Board other than
(A) as set forth in Section 3(b)(i), (B) participation in the
tax-qualified and supplemental retirement plans of Lazard Group or
its affiliates or (C) participation in plans that provide the
Executive only the opportunity to defer the receipt of income
otherwise payable hereunder. In addition, the Executive shall be
entitled to perquisites and fringe benefits no less favorable than
those provided to him by Lazard Group immediately prior to the
Effective Date, to the extent not inconsistent with the policies of
the Company or Lazard Group, as applicable, as in effect from time
to time.
(iii) Expenses . During the
Employment Period, the Executive shall be entitled to receive
prompt reimbursement for all reasonable business expenses incurred
by the Executive in the performance of his duties in accordance
with the policies of the Company or Lazard Group, as applicable, as
in effect from time to time.
(iv) Vacation . During the
Employment Period, the Executive shall be entitled to paid vacation
in accordance with the plans, policies, programs and practices of
the Company or Lazard Group, as applicable, as in effect from time
to time with respect to the senior executives of the Company and
Lazard Group.
4. Termination of Employment
. (a) Death or Disability . The Executive’s employment
shall terminate automatically upon the Executive’s death
during the Employment Period. If the Company determines in good
faith that the Disability of the Executive has occurred during the
Employment Period (pursuant to the definition of Disability set
forth below), it may give the Executive written notice in
accordance with Section 11(b) of this Agreement of its intention to
terminate the Executive’s employment. In such event, the
Executive’s employment with the Company shall terminate
effective on the 30th day after receipt of such notice by the
Executive (the “ Disability Effective Date ”),
provided that, within the 30 days after such receipt, the
Executive shall not have returned to full-time performance of the
Executive’s duties. For purposes of this Agreement, “
Disability ” shall mean the absence of the Executive
from the Executive’s duties with the Company on a full-time
basis for 180 consecutive business days in a 365-day period as a
result of incapacity due to mental or physical illness that is
determined to be
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total and permanent by a physician selected by
the Company or its insurers and reasonably acceptable to the
Executive or the Executive’s legal representative.
(b) Cause . The Company may
terminate the Executive’s employment during the Employment
Period either with or without Cause. For purposes of this
Agreement, “ Cause ” shall mean:
(i) the Executive is convicted of,
or pleads guilty or nolo contendere to a charge of commission of, a
felony;
(ii) the Executive has engaged in
gross neglect or willful misconduct in carrying out his duties,
which results in material economic harm to the Company;
or
(iii) an act or failure to act by
the Executive, which, under the provisions of applicable law,
disqualifies the Executive from acting as the Chief Executive
Officer of the Company or as a director of the Company.
For purposes of this provision, no act or
failure to act, on the part of the Executive, shall be considered
“willful” unless it is done, or omitted to be done, by
the Executive in bad faith or without reasonable belief that the
Executive’s action or omission was in the best interests of
the Company. Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board or upon the
instructions of the Board or based upon the advice of counsel for
the Company shall be conclusively presumed to be done, or omitted
to be done, by the Executive in good faith and in the best
interests of the Company. The cessation of employment of the
Executive shall not be deemed to be for Cause unless and until
there shall have been delivered to the Executive a copy of each of
the resolutions duly adopted by (1) the affirmative vote of a
majority of the members then in office of the Nominating and
Governance Committee of the Board recommending such action to the
Board (at a meeting of such Committee called and held for such
purpose, after reasonable notice is provided to the Executive and
he is given an opportunity, together with counsel, to be heard) and
(2) the affirmative vote of a majority of the members of the Board
then in office approving such recommendation, after delivery of
notice to each director and the Executive at least seven (7)
business days before the date of a meeting called and held for such
purpose (which meeting shall be at least seven (7) days after the
Committee meeting) and at which the Executive is given an
opportunity, together with counsel, to be heard (it being
understood that the failure to provide adequate notice in
accordance with this clause (2) shall invalidate any action or
resolution of the Board to terminate the Executive for Cause),
which resolutions find that, in the good faith opinion of both the
Committee and the Board, the Executive is guilty of the conduct
described in subsections (i), (ii) or (iii) above, and, with
respect to subsections (ii) and (iii) specifies the particulars
thereof in detail.
(c) Good Reason . During the
Employment Period, the Executive’s employment may be
terminated by the Executive with or without Good Reason. For
purposes of this Agreement, “ Good Reason ”
shall mean in the absence of a written consent of the
Executive:
(i) the assignment to the Executive
of any duties inconsistent in any material respect with the
Executive’s position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as
contemplated by Section 3(a)(i) of this Agreement, or
any
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other action by the Company or Lazard Group, as
applicable, which results in a material diminution in such
position, authority, duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent action not taken
in bad faith and which is remedied by the Company or Lazard Group,
as applicable, promptly after receipt of notice thereof given by
the Executive; or
(ii) a material breach of the terms
of this Agreement, including, without limitation, any failure by
the Company or Lazard Group, as applicable, to comply with any of
the provisions of Section 3(b) or 10(c) of this Agreement,
excluding for this purpose an action not taken in bad faith and
which is remedied by the Company or Lazard Group, as applicable,
promptly after receipt of notice thereof given by the
Executive.
The Executive’s mental or physical
incapacity following the occurrence of an event described above in
clause (i) or (ii) shall not affect the Executive’s ability
to terminate employment for Good Reason.
(d) Notice of Termination .
Any termination by the Company for Cause, or by the Executive for
Good Reason, shall be communicated by Notice of Termination to the
other party hereto given in accordance with Section 11(b) of this
Agreement. For purposes of this Agreement, a “ Notice of
Termination ” means a written notice which (i) indicates
the specific termination provision in this Agreement relied upon,
(ii) to the extent applicable, sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination
of the Executive’s employment under the provision so
indicated, and (iii) if the Date of Termination (as defined below)
is other than the date of receipt of such notice, specifies the
termination date (which date shall be not more than 30 days after
the giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or Cause
shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company,
respectively, from asserting such fact or circumstance in enforcing
the Executive’s or the Company’s rights
hereunder.
(e) Date of Termination . For
purposes of this Agreement, “ Date of Termination
” means (i) if the Executive’s employment is terminated
by the Company for Cause, or by the Executive for Good Reason, the
date of receipt of the Notice of Termination or any later date
specified therein within 30 days of such notice, as the case may
be, (ii) if the Executive’s employment is terminated by the
Company other than for Cause or Disability, the Date of Termination
shall be the date on which the Company notifies the Executive of
such termination, (iii) if the Executive’s employment is
voluntarily terminated by the Executive without Good Reason, the
Date of Termination shall be the date as specified by the Executive
in the Notice of Termination which date shall not be less than
three months after the Executive notifies the Company of such
termination, unless waived in writing by the Company, and (iv) if
the Executive’s employment is terminated by reason of death
or Disability, the Date of Termination shall be the date of death
of the Executive or the Disability Effective Date, as the case may
be.
5. Obligations of the Company
upon Termination . (a) By the Company Other Than for Cause,
Death or Disability or By the Executive for Good Reason, prior to a
Change of Control . If, during the Employment Period and prior
to a “ Change of Control ” (as
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defined in the LAZ-MD Holdings LLC Operating
Agreement), the Company shall terminate the Executive’s
employment other than for Cause, death or Disability or the
Executive shall terminate employment for Good Reason:
(i) Lazard Group shall pay to the
Executive in a lump sum in cash within 30 days after the Date of
Termination the aggregate of the following amounts:
A. the sum of (1) the
Executive’s Annual Base Salary through the Date of
Termination, and (2) any earned and unpaid cash bonus amounts for
calendar years completed prior to the Date of Termination, in each
case, to the extent not theretofore paid (the sum of the amounts
described in subclauses (1) and (2), the “ Accrued
Obligations ”); and
B. the amount equal to the product
of (1) two and (2) the Executive’s Annual Base Salary;
and
(ii) (A) for the remainder of the
Executive’s life and that of his current spouse, the
Executive, his spouse and his eligible dependents shall continue to
be eligible to participate in the medical and dental benefit plans
of Lazard Group on the same basis as the Executive participated in
such plans immediately prior to the Date of Termination, to the
extent that the applicable plan permits such continued
participation for all or any portion of such period (it being
agreed that Lazard Group will use its reasonable efforts to cause
such continued coverage to be permitted under the applicable plan
for the entire period) and (B) in the event such benefits
continuation period is required to be limited to a shorter period,
the actual period of continuation shall not run concurrently with
or reduce the Executive’s right to continued coverage under
COBRA and, for purposes of determining the Executive’s
eligibility for and right to commence receiving benefits under the
retiree healthcare benefit plans of Lazard Group, the Executive
shall receive additional years of age and service credit equal to
the number of years and portions thereof in the applicable benefits
continuation period (collectively the “Medical
Benefits”);
(iii) to the extent not theretofore
paid or provided, Lazard Group shall timely pay or provide to the
Executive any other amounts or benefits required to be paid or
provided or which the Executive is eligible to receive under any
plan, program, policy or practice or contract or agreement of
Lazard Group and its affiliates through the Date of Termination
(such other amounts and benefits shall be hereinafter referred to
as the “ Other Benefits ”).
(b) Death . If the
Executive’s employment is terminated by reason of the
Executive’s death during the Employment Period, this
Agreement shall terminate without further obligations to the
Executive’s legal representatives under this Agreement, other
than for the payment of the Accrued Obligations, and the timely
payment or provision of Other Benefits. The Accrued Obligations
shall be paid to the Executive’s estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of
Termination. With respect to the provision of Other Benefits, the
term Other Benefits as utilized in this Section 5(b) shall include
death benefits as in effect on the date of the Executive’s
death with respect to senior executives of the Company and Lazard
Group and their beneficiaries, and the provision of the Medical
Benefits to the Executive’s current spouse and his eligible
dependents.
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(c) Disability . If the
Executive’s employment is terminated by reason of the
Executive’s Disability during the Employment Period, this
Agreement shall terminate without further obligations to the
Executive, other than for the payment of the Accrued Obligations
and the timely payment or provision of Other Benefits. The Accrued
Obligations shall be paid to the Executive in a lump sum in cash
within 30 days of the Date of Termination. With respect to the
provision of Other Benefits, the term Other Benefits as utilized in
this Section 5(c) shall include, and the Executive shall be
entitled after the Disability Effective Date to receive, disability
and other benefits as in effect at any time thereafter generally
with respect to senior executives of the Company and Lazard Group
and the provision of the Medical Benefits to the Executive and his
current spouse and his eligible dependents.
(d) Cause; Other than for Good
Reason; Expiration of the Employment Period . If, during the
Employment Period, the Executive’s employment shall be
terminated for Cause or the Executive terminates his employment
without Good Reason, or if the Executive’s employment with
the Company ceases upon or following the expiration of the
Employment Period, this Agreement shall terminate without further
obligations to the Executive other than the obligation to pay or
provide to the Executive (i) the Accrued Obligations, (ii) the
Medical Benefits (other than upon a termination for Cause) and
(iii) the Other Benefits, in each case to the extent theretofore
unpaid.
(e) By the Company Other Than for
Cause, Death or Disability or By the Executive for Good Reason, On
or After a Change of Control . If, during the Employment Period
and on or after a Change of Control, the Company shall terminate
the Executive’s employment other than for Cause, death or
Disability or the Executive shall terminate employment for Good
Reason, Lazard Group shall pay or provide to the Executive (i) a
lump sum cash payment within 30 days after the Date of Termination
equal to the sum of (A) the Accrued Obligations and (B) the amount
equal to the product of (1) three and (2) the Executive’s
Annual Base Salary, (ii) the Medical Benefits and (iii) the Other
Benefits.
(f) Section 409A .
Notwithstanding the timing of the payments pursuant to Section 5(a)
of this Agreement, to the extent the Executive would otherwise be
entitled to a payment during the six months beginning on the Date
of Termination that would be subject to the additional tax imposed
under Section 409A of the Internal Revenue Code of 1986, as amended
(the “ Code ”), (i) the payment will not be made
to the Executive and instead will be made, at the election of
Lazard Group, either to a trust in compliance with Rev. Proc. 92-64
or an escrow account established to fund such payments (provided
that such funds shall be at all times subject to the creditors of
the Company and its affiliates) and (ii) the payment, together with
interest thereon at the rate of “prime” plus 1%, will
be paid to the Executive on the earlier of the six-month
anniversary of Date of Termination or the Executive’s death
or disability (within the meaning of Section 409A of the Code).
Similarly, to the extent the Executive would otherwise be entitled
to any benefit (other than a cash payment) during the six months
beginning on the Date of Termination that would be subject to the
additional tax under Section 409A of the Code, the benefit will be
delayed and will begin being provided (together, if applicable,
with an adjustment to compensate the Executive for the delay, with
such adjustment to be determined in Lazard Group’s reasonable
good faith discretion) on the earlier of the six-month anniversary
of the Date of Termination or the Executive’s death or
disability (within the meaning of Section 409A of the Code). Lazard
Group will establish the trust or escrow account, as applicable,
no
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later than ten days after the Executive’s
Date of Termination. It is the intention of the parties that the
payments and
