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MASTER SEPARATION AGREEMENT
by and among
LAZARD LTD,
LAZARD LLC,
LAZ-MD HOLDINGS LLC
and
LFCM HOLDINGS LLC
Dated as of May 10, 2005
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS...................................................3
1.1 Definitions...................................................3
1.2 General......................................................20
1.3 References to Time...........................................21
ARTICLE II THE SEPARATION...............................................21
2.1 The Separation...............................................21
2.2 Actions Prior to the Forced Sale.............................21
2.3 The Exchange and the Forced Sale.............................21
2.4 Actions Prior to the Contribution............................21
2.5 The Contribution.............................................22
2.6 Actions Prior to the First Distribution......................24
2.7 The First Distribution.......................................24
2.8 Ancillary Agreements.........................................25
2.9 Post-Contribution Adjustment.................................25
ARTICLE III THE RECAPITALIZATION.........................................26
3.1 The Recapitalization.........................................26
3.2 The First Redemption.........................................26
3.3 Actions Prior to the Financing Transactions..................27
3.4 The Financing Transactions...................................27
3.5 Actions Prior to the Second Redemption.......................30
3.6 The Second Redemption........................................30
3.7 Actions Prior to the Second Distribution.....................30
3.8 The Second Distribution......................................30
3.9 Conditions to the Separation and the Recapitalization........30
ARTICLE IV SURVIVAL AND INDEMNIFICATION.................................32
4.1 Survival of Agreements.......................................32
4.2 Indemnification by LFCM......................................32
4.3 Indemnification by Lazard Group..............................32
4.4 Indemnification by LAZ-MD....................................33
4.5 Indemnification Obligations Net of Insurance Proceeds and
Other Amounts................................................33
4.6 Procedures for Indemnification of Third Party Claims.........34
4.7 Additional Matters...........................................35
4.8 Remedies Cumulative..........................................36
4.9 Survival of Indemnities......................................36
ARTICLE V CERTAIN ADDITIONAL COVENANTS RELATING TO THE SEPARATION AND
RECAPITALIZATION.............................................36
5.1 Intercompany Agreements; Intercompany Accounts...............36
5.2 Guarantee Obligations........................................37
5.3 Commercially Reasonable Efforts..............................37
ARTICLE VI ACCESS TO INFORMATION........................................38
6.1 Agreement for Exchange of Information........................38
6.2 Ownership of Information.....................................39
6.3 Compensation for Providing Information.......................39
6.4 Record Retention.............................................39
6.5 Limitation of Liability......................................39
6.6 Other Agreements Providing for Exchange of Information.......40
6.7 Production of Witnesses; Records; Cooperation................40
6.8 Confidentiality..............................................41
6.9 Protective Arrangements......................................42
ARTICLE VII NO REPRESENTATIONS OR WARRANTIES.............................42
7.1 No Representations or Warranties to LFCM.....................42
7.2 LFCM to Bear Risk............................................42
7.3 LAZ-MD to Bear Risk..........................................43
7.4 No Representations or Warranties to LAZ-MD...................43
ARTICLE VIII LAZ-MD EXCHANGEABLE INTERESTS................................43
8.1 Exchange Rights..............................................43
8.2 Elective Exchange............................................44
8.3 Mandatory Exchanges..........................................45
8.4 Exchangeable Interests Generally.............................47
8.5 No Fractional Shares.........................................48
8.6 Taxes........................................................48
8.7 Lazard Ltd Common Stock......................................48
8.8 Adjustments to LAZ-MD Exchange Ratio.........................49
8.9 Adjustments to Lazard Group Exchange Ratio...................49
8.10 Beneficiaries of This Article................................51
ARTICLE IX RELATIONSHIP AMONG THE PARTIES...............................51
9.1 Scope of LAZ-MD Operations...................................51
9.2 Parity of Lazard Group Common Units and Shares of Lazard Ltd
Common Stock.................................................51
9.3 Lazard Ltd Expenses..........................................52
ARTICLE X TERMINATION..................................................52
10.1 Termination..................................................52
10.2 Effect of Termination........................................52
ARTICLE XI MISCELLANEOUS................................................52
11.1 Representations..............................................52
11.2 Entire Agreement.............................................52
11.3 Expenses.....................................................53
11.4 Notices......................................................53
11.5 Amendment, Modification or Waiver............................54
11.6 Successors and Assigns; No Third Party Beneficiaries.........54
11.7 Counterparts.................................................55
11.8 Negotiation..................................................55
11.9 Specific Performance.........................................55
11.10 Governing Law................................................55
11.11 Delaware Court...............................................55
11.12 Interpretation; Conflict with Ancillary Agreements...........56
11.13 Severability.................................................56
11.14 Additional Parties...........................................56
Exhibits to the Master Separation Agreement
Exhibit A Form of Administrative Services Agreement
Exhibit B Form of Amended and Restated Bye-laws of Lazard Ltd
Exhibit C Form of Business Alliance Agreement
Exhibit D Form of Employee Benefits Agreement
Exhibit E Form of Insurance Matters Agreement
Exhibit F Form of LAZ-MD Stockholders' Agreement
Exhibit G Form of LFCM Note
Exhibit H Form of License Agreement
Exhibit I Form of Operating Agreement of LAZ-MD Holdings LLC
Exhibit J Form of Operating Agreement of Lazard Group LLC
Exhibit K Form of Operating Agreement of LFCM Holdings LLC
Exhibit L Forms of Retention Agreements
Exhibit M Form of Tax Receivable Agreement
MASTER SEPARATION AGREEMENT
This MASTER SEPARATION AGREEMENT (including the schedules hereto, this
"Agreement"), dated as of May 10, 2005, by and among Lazard Ltd, a Bermuda
exempted company ("Lazard Ltd"), Lazard LLC, a Delaware limited liability
company that will be renamed "Lazard Group LLC" ("Lazard Group"), LAZ-MD
Holdings LLC, a Delaware limited liability company (formerly known as LF
Holdings LLC) ("LAZ-MD"), and LFCM Holdings LLC, a Delaware limited liability
company and currently a wholly owned subsidiary of Lazard Group ("LFCM," and
together with Lazard Ltd, Lazard Group and LAZ-MD, the "Parties" and each a
"Party").
RECITALS
WHEREAS, on December 16, 2004, Lazard Ltd, Lazard Group and LAZ-MD Holdings
entered into that certain Class B-1 and Class C Members Transaction Agreement
relating to Lazard LLC (the "Transaction Agreement"); and
WHEREAS, on the date hereof, the Board of Directors of Lazard Group has
determined that it is in the best interests of Lazard Group and its members to
separate Lazard Group's businesses into two separate companies (the
"Separation") and to recapitalize Lazard Group through the Financing
Transactions (as defined below) and the First Redemption (as defined below) and
Second Redemption (as defined below) and related transactions (the
"Recapitalization"), each on the terms and subject to the conditions set forth
in this Agreement; and
WHEREAS, the Parties are entering into this Agreement to set forth the
principal corporate transactions required to effect, and the principal terms and
conditions of, the Separation and Recapitalization and related transactions and
the relationship among the Parties and their respective Subsidiaries (as defined
below) after the consummation of the Separation, the Recapitalization and such
related transactions; and
WHEREAS, to effect the Separation and Recapitalization, pursuant to the
Transaction Agreement and this Agreement, on the date hereof, certain members of
Lazard Group shall transfer all of their limited liability company interests in
Lazard Group to LAZ-MD in exchange for limited liability company interests in
LAZ-MD (the "Exchange"), and simultaneously therewith pursuant to Section
6.02(b) of the Third Amended and Restated Operating Agreement of Lazard LLC,
dated as of January 1, 2002, as amended (the "Old Lazard Group Operating
Agreement"), all other limited liability company interests in Lazard Group shall
be transferred to LAZ-MD in exchange for limited liability company interests in
LAZ-MD and the admission of LAZ-MD as the sole member of Lazard Group, on the
terms and subject to the conditions set forth in this Agreement (the "Forced
Sale"); and
WHEREAS, on the date hereof after consummation of the Forced Sale, the Old
Lazard Group Operating Agreement shall be amended and restated in accordance
with the terms thereof to read in its entirety as the New Lazard Group Operating
Agreement (as defined below), effective immediately upon execution thereof; and
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WHEREAS, on the date hereof after the consummation of the Forced Sale and
effectiveness of the New Lazard Group Operating Agreement, Lazard Group is
filing a Certificate of Amendment with the Secretary of State of the State of
Delaware to reflect the change in Lazard Group's name from "Lazard LLC" to
"Lazard Group LLC"; and
WHEREAS, to effect the Recapitalization, on the date hereof immediately
after the effectiveness of the New Lazard Group Operating Agreement, LAZ-MD
shall redeem the LAZ-MD Redeemable Interests (as defined below) in full in
exchange for the Lazard Group Redeemable Interests (as defined below), on the
terms and subject to the conditions set forth in this Agreement (the "First
Redemption"); and
WHEREAS, to effect the Separation, on the date hereof immediately after the
First Redemption, Lazard Group shall cause, on the terms and subject to the
conditions set forth herein, certain of its Subsidiaries to transfer and
contribute to LFCM (or one of its designated Subsidiaries) all of the issued and
outstanding capital stock of certain Subsidiaries of Lazard Group and certain
other assets of Subsidiaries of Lazard Group relating to the LFCM Businesses (as
defined below), and in exchange therefor LFCM shall assume certain liabilities
of Lazard Group and its Subsidiaries related to the LFCM Businesses and issue
the LFCM Common Interest (as defined below) to Lazard Group, each on the terms
and subject to the conditions set forth in this Agreement (such transactions,
collectively, the "Contribution"); and
WHEREAS, to effect the Separation, on the date hereof immediately after the
consummation of the Contribution, Lazard Group shall distribute to LAZ-MD as the
sole Lazard Group Common Member the entire LFCM Common Interest beneficially
owned by Lazard Group, on the terms and subject to the conditions set forth in
this Agreement (the "First Distribution"); and
WHEREAS, to effect the Recapitalization, on the date hereof immediately
after the First Distribution, (1) Lazard Ltd shall consummate the initial public
offering (the "Common Stock IPO") of shares of Class A common stock, par value
$.01 per share, of Lazard Ltd ("Lazard Ltd Common Stock"), (2) Lazard Ltd shall
cause the contribution to Lazard Group of an amount equal to the net proceeds of
the Common Stock IPO (the "Lazard Ltd Contribution"), (3) in exchange therefor,
Lazard Group shall issue to each Subsidiary of Lazard Ltd that shall contribute
such amounts to Lazard Group a Lazard Group Common Interest (as defined herein)
and shall admit such Subsidiaries to Lazard Group as Lazard Group Common
Members, and (4) Lazard Group shall admit Lazard Group Finance LLC, a Delaware
limited liability company ("FinanceCo"), to Lazard Group as the Lazard Group
Managing Member, in the case of clauses (3) and (4), effective immediately upon
consummation of the Lazard Ltd Contribution, on the terms and subject to the
conditions set forth in this Agreement (the "Common Stock IPO Transaction"); and
WHEREAS, to effect the Recapitalization, on the date hereof immediately
after the First Distribution, (1) Lazard Ltd and FinanceCo shall consummate the
initial public offering of the Exchangeable Securities (as defined herein) (the
"Exchangeable Securities IPO") and FinanceCo shall purchase, and Lazard Group
shall sell, debt securities of Lazard Group in exchange for the net proceeds
from such offering, on the terms and subject to the conditions set forth in this
Agreement (the "Exchangeable Securities IPO Transaction"), (2) Lazard Group
shall
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consummate the offering of the Debt Securities (as defined herein), on the
terms and subject to the conditions set forth in this Agreement (the "Debt
Securities Offering"), and (3) each of Lazard Ltd and FinanceCo shall consummate
the sale of Lazard Ltd Common Stock and Exchangeable Securities to
IXIS-Corporate & Investment Bank, an entity organized under the laws of France
(the "Investor", and such transaction, the "Third Party Investment"; together
with the Common Stock IPO Transaction, the Exchange Securities IPO Transaction
and the Debt Securities Offering, the "Financing Transactions"); and
WHEREAS, to effect the Recapitalization, immediately after consummation of
the Financing Transactions, Lazard Group shall redeem the Lazard Group
Redeemable Interests for the Redemption Consideration (each as defined herein),
in each case on the terms and subject to the conditions set forth in this
Agreement (the "Second Redemption"); and
WHEREAS, to effect the Recapitalization and Separation, pursuant to this
Agreement, immediately after the Second Redemption on the date hereof, LAZ-MD
shall distribute or otherwise transfer to LAZ-MD Members the entire LFCM Common
Interest held by LAZ-MD, on the terms and subject to the conditions set forth in
this Agreement (the "Second Distribution," and together with the First
Distribution, the "Distributions"); and
WHEREAS, the Board of Directors or Member(s) or Managing Member, as
applicable, of each Party has determined that the Separation, the
Recapitalization and the other transactions contemplated by this Agreement and
the Ancillary Agreements (as defined below) are in furtherance of and consistent
with their respective business strategies and are in the best interests of their
respective companies.
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):
"Accelerated Exchange Date" has the meaning assigned to such term in
Section 8.2(a)(ii).
"Action" means any demand, action, suit, countersuit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority or any
arbitration or mediation tribunal or authority.
"Administrative Services Agreement" means the Administrative Services
Agreement to be entered into by and among Lazard Group, LFCM and LAZ-MD,
substantially in the form of Exhibit A hereto, with such changes as may be
determined by the parties thereto.
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"Affiliate" means, with respect to any specified person, a person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with, such specified person; provided,
however, that, for purposes of this Agreement, no member of a Group shall be
deemed to be an Affiliate of any member of the other Group.
"Agreement" has the meaning assigned to such term in the preamble to this
Agreement, and includes any amendments or modifications to this Agreement after
the date hereof.
"Alternative Investments Assets" means all of the Assets of Lazard Group
and the Lazard Group Companies that are set forth below:
(a) all rights and incidents of Lazard Group and the Lazard Group Companies
as of the Contribution Effective Time in, to and under all contracts and
agreements set forth on Schedule 1.1(a);
(b) all equipment, furniture, tools and other tangible personal property
owned by Lazard Group and the Lazard Group Companies listed on Schedule 1.1(a);
(c) all accounts and notes receivable and other receivables of Lazard Group
and the Lazard Group Companies as of the Contribution Effective Time to the
extent primarily related to the Alternative Investments Business;
(d) the intellectual property of Lazard Group and the Lazard Group
Companies set forth on Schedule 1.1(a);
(e) all books and records (other than Tax Returns), files, papers, tapes,
disks, manuals, keys, reports, plans, catalogs, sales and promotional materials,
and all other printed and written materials, to the extent available and
primarily related to the Alternative Investments Business;
(f) all permits or licenses issued by any Governmental Authority to the
extent primarily related to the Alternative Investments Business and permitted
by applicable law to be transferred; and
(g) all other Assets primarily relating to the Alternative Investments
Business set forth on Schedule 1.1(a).
"Alternative Investments Business" means (a) the management, sponsorship or
formation of alternative investment Funds (including related joint ventures and
alliances and including management, general partner and investment activities)
whose primary objective is to make privately negotiated investments in (i)
companies or other entities (x) primarily doing business in North America or
headquartered in North America with substantial business in North America or (y)
primarily doing business in Europe or headquartered in Europe with substantial
business in Europe, (ii) real estate located in North America or Europe or (iii)
loans relating to real estate located in North America or Europe and (b) any and
all private investment activities (including related joint ventures and
alliances, and including management, general partner and investment activities)
conducted by or on behalf of Lazard Freres & Co. LLC, Lazard & Co.,
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Holdings Ltd, Lazard Group or any of their respective Subsidiaries (including,
for the avoidance of doubt, any LFCM Company) or any predecessor companies,
whether conducted at any time prior to or at the Distribution Time, including
the activities operated under the names Lazard Technology Partners, Lazard
Capital Partners, Corporate Partners, Lazard Freres Real Estate Investors,
Lazard Freres Real Estate Fund, Lazard Alternative Asset Advisors, Lazard
European Private Equity Partners, Lazard Private Equity, LF Strategic Realty
Investors and Lazard Structured Finance Investors; provided, however, that, for
the avoidance of doubt, any activities currently conducted by (1) Lazard Freres
S.A.S., Lazard Freres Gestion S.A.S., Lazard Asset Management LLC or any of
their respective Subsidiaries or (2) the private fund advisory group, as
currently conducted by or within Lazard & Co., Limited or Lazard Freres & Co.
LLC, shall not be included in the Alternative Investments Business.
"Ancillary Agreements" means the Administrative Services Agreement, the
Benefits Agreement, the Business Alliance Agreement, the Insurance Matters
Agreement, the License Agreement, the Tax Receivable Agreement, the LAZ-MD
Stockholders' Agreement, the Retention Agreements, the Rollover Option
Agreement, the LFCM Note, the Lazard Group I Note, the Lazard Group II Note, the
Financing Documents and the other agreements to be entered into pursuant to this
Agreement and the transactions contemplated hereby or in connection with the
Separation pursuant to Section 2.4, including any amendments or supplements
thereto from time to time.
"Applicable Exchange Date" has the meaning assigned to such term in Section
8.2(a)(ii).
"Asset" means any right, property or asset, whether real, personal or
mixed, tangible or intangible, of any kind, nature and description, whether
accrued, contingent or otherwise, and wheresoever situated and whether or not
carried or reflected, or required to be carried or reflected, on the books of
any person.
"Benefits Agreement" means the Employee Benefits Agreement to be entered
into by and between Lazard Group and LFCM, substantially in the form of Exhibit
D hereto, with such changes as may be agreed to by the parties thereto.
"Business" means any of the LFCM Businesses or the Lazard Group Businesses.
"Business Alliance Agreement" means the Business Alliance Agreement to be
entered into by and between Lazard Group and LFCM, substantially in the form of
Exhibit C hereto, with such changes as may be agreed to by the parties thereto.
"Capital Markets Assets" means all of the Assets of Lazard Group and the
Lazard Group Companies that are set forth below:
(a) all rights and incidents of Lazard Group and the Lazard Group Companies
as of the Contribution Effective Time in, to and under all contracts and
agreements set forth on Schedule 1.1(b);
(b) all equipment, furniture, tools and other tangible personal property
owned by Lazard Group and the Lazard Group Companies listed on Schedule 1.1(b);
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(c) all accounts and notes receivable and other receivables of Lazard Group
and the Lazard Group Companies as of the Contribution Effective Time to the
extent primarily related to the Capital Markets Business;
(d) the intellectual property of Lazard Group and the Lazard Group
Companies set forth on Schedule 1.1(b);
(e) all books and records (other than Tax Returns), files, papers, tapes,
disks, manuals, keys, reports, plans, catalogs, sales and promotional materials,
and all other printed and written materials, to the extent available and
primarily related to the Capital Markets Business;
(f) all permits or licenses issued by any Governmental Authority to the
extent primarily related to the Capital Markets Business and permitted by
applicable law to be transferred; and
(g) all other Assets primarily relating to the Capital Markets Business set
forth on Schedule 1.1(b).
"Capital Markets Business" means any and all sales and trading, proprietary
trading, brokerage, research, underwriting and distribution services (including
related joint ventures and alliances but excluding private placement group and
private fund advisory group), or private investments in public equities (or
PIPEs) or Rule 144A offerings of equity, debt or convertible securities,
provided by or on behalf of Lazard Group or any of its Subsidiaries (including,
for the avoidance of doubt, any LFCM Company) or any predecessor companies, in
each case in the United States and in the United Kingdom and whether provided at
any time prior to or at the Distribution Time and includes the formation of
Funds described in Schedule 1.1(c) attached hereto; provided, however, that, for
the avoidance of doubt, any activities currently conducted by (a) Lazard Freres
S.A.S. or any of its Subsidiaries (other than any interest held by Lazard Freres
S.A.S. in Three Houses Investment Company Limited), by Lazard Italy Limited or
any of its Subsidiaries or (b) the equity capital markets group of Lazard & Co.,
Limited, shall not be included in the Capital Markets Business.
"Cash Contribution" means an amount in cash equal to $15,000,000.
"Change in Control" means a "Change in Control" as defined in the Lazard
Ltd 2005 Equity Incentive Plan, as it may be amended from time to time,
consummated after the first anniversary of the date hereof.
"Closing Balance Sheet" has the meaning assigned to such term in Section
2.9(a).
"Closing Members' Equity" has the meaning assigned to such term in Section
2.9(a).
"Common Stock IPO" has the meaning set forth in the recitals to this
Agreement.
"Common Stock IPO Price" means the price per share of Lazard Ltd Common
Stock to the public in the Common Stock IPO.
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"Common Stock IPO Transaction" has the meaning set forth in the recitals to
this Agreement.
"Consents" means any consents, waivers or approvals from, or notification
or filing requirements to or with, or any authorization or permits from, any
third parties.
"Contributed Interests" means the equity interests listed on Schedule
1.1(d).
"Contributing Subsidiaries" has the meaning assigned to such term in
Section 3.4(a)(iii)(B).
"Contribution" has the meaning assigned to such term in the recitals to
this Agreement.
"Contribution Effective Time" means the effective time of the Contribution
pursuant to Section 2.5(a).
"Covered Information" has the meaning assigned to such term in Section
6.8(a).
"Current Market Price" has the meaning assigned to such term in Section
8.9(b).
"Debt Securities" has the meaning assigned to such term in Section 3.4(c).
"Debt Securities Offering" has the meaning set forth in the recitals to
this Agreement.
"Debt Securities Prospectus" means the offering memorandum of Lazard Group
relating to the Debt Securities to be issued in the Debt Securities Offering
under Rule 144A promulgated under the Securities Act.
"Dispute Notice" has the meaning assigned to such term in Section 2.9(b).
"Distribution Time" means the time at which the First Distribution shall be
effected, to be determined by, or under the authority of, the Board of Directors
of Lazard Group consistent with this Agreement.
"Distributions" has the meaning assigned to such term in the recitals to
this Agreement.
"Electing Member" has the meaning set forth in Section 8.2(b)(ii).
"Elective Exchange" has the meaning set forth in Section 8.2(a).
"Elective Exchange Effective Time" has the meaning set forth in Section
8.2(b)(iii).
"Exchange" has the meaning assigned to such term in the recitals to this
Agreement.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended,
together with the rules and regulations promulgated thereunder.
"Exchange Effective Date" has the meaning set forth in Section
8.2(b)(ii)(B).
"Exchange Request" has the meaning set forth in Section 8.2(b)(ii) (C).
"Exchangeable Interest" means a LAZ-MD Class II Interest or a Lazard Group
MD Common Interest, in each case that is entitled to the rights set forth in
Article VIII of this Agreement.
"Exchangeable MD Member" means a LAZ-MD Class II Member or a Lazard Group
MD Common Member, as applicable.
"Exchangeable Securities" has the meaning assigned to such term in Section
3.4(b)(ii).
"Exchangeable Securities IPO" has the meaning assigned to such term in the
recitals to this Agreement.
"Exchangeable Securities IPO Transaction" has the meaning assigned to such
term in the recitals to this Agreement.
"Exchangeable Securities Over-allotment Option" has the meaning assigned to
such term in Section 3.4(b)(iv).
"Exchanging Members" has the meaning set forth in Section 8.3(a).
"Excluded Assets" means (1) all of the Lazard Names and Lazard Marks and
any goodwill associated with, or any rights to use, or other rights in, to or
under, such Lazard Names and Lazard Marks, and (2) the Assets set forth on
Schedule 1.1(e) hereto.
"Excluded Liability" means (1) the Liabilities expressly retained by Lazard
Group pursuant to the Benefits Agreement, (2) obligations of Lazard Group
described in Section 9.3, (3) the Liabilities set forth on Schedule 1.1(f)
hereto, (4) if the North America Closing (as defined in the Business Alliance
Agreement) shall have occurred, any Liabilities expressly assumed by Lazard
Group pursuant to the agreement executed between LFCM and Lazard Group and
referenced in Section 3.2(c) of the Business Alliance Agreement, effective
immediately upon consummation of the North America Closing, and (5) if the
Europe Closing (as defined in the Business Alliance Agreement) shall have
occurred, any Liabilities expressly assumed by Lazard Group pursuant to the
agreement executed between LFCM and Lazard Group and referenced in Section
3.4(c) of the Business Alliance Agreement, effective immediately upon
consummation of the Europe Closing.
"FinanceCo" has the meaning assigned to such term in the recitals to this
Agreement.
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"Financing Documents" means the agreements to be entered into in connection
with the Financing Transactions by the parties hereto or their affiliates,
including (1) the Underwriting Agreement, dated as of May 4, 2005, by and among
Lazard Ltd, Lazard Group and Xxxxxxx, Xxxxx & Co., as representative of the
underwriters, with respect to the Common Stock IPO Transaction, (2) the
Underwriting Agreement, dated as of May 4, 2005, by and among Lazard Ltd, Lazard
Group, FinanceCo and Xxxxxxx, Xxxxx & Co., as representative of the
underwriters, with respect to the Exchangeable Debt Securities IPO Transaction,
(3) the purchase agreement, dated as of May 4, 2005, by and between Lazard Group
and Citigroup Global Markets, Inc. and X.X. Xxxxxx Securities Inc., as
representatives of the initial purchasers, with respect to the offering of the
Debt Securities, (4) the registration rights agreement, dated as of the date
hereof, by and between the Company and Citigroup Global Markets, Inc. and X.X.
Xxxxxx Securities Inc., as representatives of the initial purchasers, with
respect to the Debt Securities, (5) the Indenture for FinanceCo, with The Bank
of New York as Trustee, dated as of the date hereof, (6) the First Supplemental
Indenture for FinanceCo, with The Bank of New York as Trustee, dated as of the
date hereof, with respect to the Exchangeable Debt Securities, (7) the Indenture
for Lazard Group, with The Bank of New York as Trustee, dated as of the date
hereof, (8) the First Supplemental Indenture for Lazard Group, with The Bank of
New York as Trustee, dated as of the date hereof, with respect to the Debt
Securities, (9) the Second Supplemental Indenture for Lazard Group, with The
Bank of New York as Trustee, dated as of the date hereof, with respect to the
Exchangeable Debt Securities, (10) the Investment Letter, dated as of March 15,
2005, by and among Lazard Group, Lazard Ltd and the Investor, (11) the
Registration Rights Agreement to be entered into by and among FinanceCo, Lazard
Group and the Investor, (12) the Senior Revolving Credit Agreement to be entered
into among Lazard Group, JPMorgan Chase Bank, N.A., Citibank, N.A., The Bank of
New York and JPMorgan Chase Bank, N.A., as Administrative Agent, (13) each of
the Revolving Subordination Loan Agreements to be entered into by and between
LFNY and each of JPMorgan Chase Bank, N.A., Citibank, N.A. and The Bank of New
York, (14) the Intercreditor Agreement to be entered into among the Lenders time
to time parties thereto, Citibank, N.A., The Bank of New York, JPMorgan Chase
Bank, N.A., as a lender and as Administrative Agent, and LFNY, (15) the
Guarantee Agreement made by Lazard Group in favor of JPMorgan Chase Bank, N.A.,
as Administrative Agent and (16) each other agreement to be entered to pursuant
to the foregoing.
"Financing Transactions" has the meaning assigned to such term in the
recitals to this Agreement.
"First Distribution" has the meaning assigned to such term in the recitals
to this Agreement.
"First Redemption" has the meaning assigned to such term in the recitals to
this Agreement.
"Forced Sale" has the meaning assigned to such term in the recitals to this
Agreement.
"Fund" means any fund or similar investment vehicle through which
commingled capital is managed, including any co-investment vehicle, alternative
investment vehicle, side-by-side vehicle or managed accounts incidental thereto.
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"General Exchange Date" has the meaning assigned to such term in Section
8.2(a)(i).
"Governmental Approvals" means any notices, reports or other filings to be
made, or any consents, registrations, approvals, licenses, permits or
authorizations to be obtained from, any Governmental Authority.
"Governmental Authority" means any national, local or foreign (including
U.S. federal, state or local) or supranational (including European Union)
governmental, judicial, administrative or regulatory (including self-regulatory)
agency, commission, department, board, bureau, entity or authority of competent
jurisdiction.
"Group" means the Lazard Group Companies or the LFCM Companies, as
applicable.
"Incumbent Lazard Ltd Board" means the members of the Lazard Ltd Board who
were members of the Lazard Ltd Board immediately after the consummation of the
Common Stock IPO; provided, however, that any individual becoming a director
subsequent to the consummation of the Common Stock IPO whose election, or
nomination for election by Lazard Ltd's shareholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent Lazard Ltd
Board shall be considered as though such individual were a member of the
Incumbent Lazard Ltd Board, but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Lazard Ltd Board.
"Indemnifiable Losses" means all out-of-pocket Liabilities suffered or
incurred by an Indemnitee, including any reasonable fees, costs or expenses of
enforcing any indemnity hereunder; provided that "Indemnifiable Losses" shall
not include any Special Damages except if and to the extent awarded in an Action
involving a Third Party Claim against such Indemnitee.
"Indemnifying Party" has the meaning assigned to such term in Section
4.5(a)(i).
"Indemnitee" has the meaning assigned to such term in Section 4.5(a)(i).
"Indemnity Payment" has the meaning assigned to such term in Section
4.5(a)(ii).
"Information" means all information, whether or not patentable or
copyrightable, in written, oral, electronic or other tangible or intangible
forms, stored in any medium, including studies, reports, records, books,
contracts, instruments, surveys, discoveries, ideas, concepts, know-how,
techniques, designs, specifications, drawings, blueprints, diagrams, models,
prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes,
computer programs or other software, marketing plans, customer names,
communications by or to attorneys, memos and other materials prepared by
attorneys or under their direction (including attorney work product), and other
technical, financial, legal, employee or business information or data.
"Initial Grant" has the meaning set forth in Section 2.4(b).
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"Insurance Matters Agreement" means the Insurance Matters Agreement to be
entered into by and between Lazard Group and LFCM on the date hereof,
substantially in the form of Exhibit E hereto, with such changes as may be
agreed by the parties thereto.
"Insurance Proceeds" means amounts:
(a) received by an insured from an insurance carrier;
(b) paid by an insurance carrier on behalf of the insured; or
(c) received (including by way of set-off) from any third party in the
nature of insurance, contribution or indemnification in respect of any
Liability;
in any such case net of any applicable premium adjustments (including reserves
and retrospectively rated premium adjustments) and net of any costs or expenses
incurred in the collection thereof.
"Intellectual Property Rights" means any domestic and foreign patents and
applications therefor, statutory, common law and registered copyrights and
registrations therefor, trademarks and registrations and applications therefor,
service marks and registrations and applications therefor, trade names and
registrations and applications therefor, service names and registrations and
applications therefor, trade styles and registrations and applications therefor,
product registrations and licenses and applications therefor, and translations,
adaptations, derivations and combinations of the foregoing; any mask works,
inventions, discoveries, trade secrets, confidential information, know-how,
data, proprietary processes and formulae (including any registrations, licenses
and similar agreements and research, analysis and supporting documentation in
respect of the foregoing); any unregistered trademarks, service marks, trade
names, service names and trade styles; any goodwill associated with any of the
foregoing; and any rights to use the foregoing and other rights in, to and under
the foregoing; provided, however, that the term "Intellectual Property Rights"
shall exclude all of the Lazard Names and Lazard Marks (and any goodwill
associated with, or any rights to use, or other rights in, to or under, such
Lazard Names and Lazard Marks).
"Investor" has the meaning assigned to such term in the recitals to this
Agreement.
"IPO Date" means the date of the closing of the Common Stock IPO (ignoring
for this purpose the date of closing of any Over-allotment Option granted in
connection with the Common Stock IPO).
"Lazard Group" has the meaning assigned to such term in the preamble to
this Agreement.
"Lazard Group I Note" means the promissory note of Lazard Group to be
issued to LAZ-MD and repaid on the date hereof in the aggregate principal amount
of $83,000,000.
"Lazard Group II Note" means the promissory note of Lazard Group to be
issued to LFCM and repaid on the date hereof in the aggregate principal amount
of $67,000,000.
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"Lazard Group Assets" means all Assets of Lazard Group and the Lazard Group
Companies other than the LFCM Assets.
"Lazard Group Businesses" means all businesses and operations (including
related joint ventures and alliances) of Lazard Group and the Lazard Group
Companies, other than the LFCM Businesses.
"Lazard Group Class B-1 Interest" means a "Class B-1 Interest" as defined
in the Old Lazard Operating Agreement.
"Lazard Group Common Capital" means "Common Capital" as defined in the New
Lazard Group Operating Agreement.
"Lazard Group Common Capital Account" means a "Common Capital Account" as
defined in the New Lazard Group Operating Agreement.
"Lazard Group Common Interest" means a "Common Interest" as defined in the
New Lazard Group Operating Agreement.
"Lazard Group Common Member" means a "Common Member" as defined in the New
Lazard Group Operating Agreement.
"Lazard Group Common Unit" means a "Common Unit" as defined in the New
Lazard Group Operating Agreement.
"Lazard Group Companies" means Lazard Group, Lazard Ltd and their
respective Subsidiaries other than any LFCM Company.
"Lazard Group Exchange" has the meaning set forth in Section 8.1(a).
"Lazard Group Exchange Ratio" means, with respect to each Lazard Group
Exchange, one (1) Lazard Group Common Unit shall be exchangeable for one (1)
share of Lazard Ltd Common Stock, subject to adjustment as provided in Section
8.9.
"Lazard Group Exchangeable Debt Securities" has the meaning assigned to
such term in Section 3.4(b)(iii).
"Lazard Group Indemnitees" has the meaning assigned to such term in Section
4.2.
"Lazard Group Liabilities" means all of the Liabilities of the Lazard Group
Companies other than the LFCM Liabilities.
"Lazard Group Managing Member" means the "Managing Member" as defined in
the New Lazard Group Operating Agreement
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"Lazard Group MD Common Interest" means a Lazard Group Common Interest
received by a LAZ-MD Class II Member in exchange for a LAZ-MD Class II Interest
pursuant to a LAZ-MD Exchange.
"Lazard Group MD Common Member" means a Lazard Group Common Member who
holds a Lazard Group MD Common Interest.
"Lazard Group Profit Participation Interest" means a "Profit Participation
Interest" as defined in the New Lazard Group Operating Agreement.
"Lazard Group Redeemable Interest" means a "Redeemable Interest" as defined
in the New Lazard Group Operating Agreement.
"Lazard Group Subsidiaries" means all Subsidiaries of Lazard Group other
than LFCM and the LFCM Subsidiaries.
"Lazard Ltd" has the meaning assigned to such term in the preamble to this
Agreement.
"Lazard Ltd Board" means the board of directors of Lazard Ltd.
"Lazard Ltd Bye-laws" means the Amended and Restated Bye-Laws of Lazard
Ltd, dated as of the date hereof, which are attached hereto as Exhibit B.
"Lazard Ltd Common Stock" has the meaning assigned to such term in the
recitals to this Agreement.
"Lazard Ltd Contribution" has the meaning assigned to such term in the
recitals to this Agreement.
"Lazard Ltd Sub A" means "Lazard Ltd Sub A" as defined in the New Lazard
Group Operating Agreement.
"Lazard Ltd Sub A Common Stock" has the meaning assigned to such term in
Section 2.2(b).
"Lazard Ltd Sub A Share Transfer Agreement" means the Stock Exchange
Agreement dated as of the date hereof by and among Xxxxx Xxxxxxxxxxx and Xxxxxx
Ltd Sub A or the Stock Exchange Agreement dated as of the date hereof by and
among Xxxxx Xxxxxxxxxxx and Lazard Ltd, as applicable.
"Lazard Ltd Sub B" means "Lazard Ltd Sub B" as defined in the New Lazard
Group Operating Agreement.
"Xxxxxx Xxxx" means a "Xxxxxx Xxxx" as defined in the New Lazard Group
Operating Agreement.
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"Lazard Name" means a "Lazard Name" as defined in the New Lazard Group
Operating Agreement.
"LAZ-MD" has the meaning assigned to such term in the preamble to this
Agreement.
"LAZ-MD Class I Interest" means a "Class I Interest" as defined in the
LAZ-MD Operating Agreement.
"LAZ-MD Class II Interest" means a "Class II Interest" as defined in the
LAZ-MD Operating Agreement.
"LAZ-MD Class II Member" means a "Class II Member" as defined in the LAZ-MD
Operating Agreement.
"LAZ-MD Class II Unit" means a "Class II Unit" as defined in the LAZ-MD
Operating Agreement.
"LAZ-MD Exchange" has the meaning assigned to such term in Section 8.1(a).
"LAZ-MD Exchange Ratio" means, with respect to each LAZ-MD Exchange, one
(1) LAZ-MD Class II Unit shall be exchangeable for one (1) Lazard Group Common
Unit, subject to adjustment as provided in Section 8.8.
"LAZ-MD Indemnitees" has the meaning assigned to such term in Section 4.2.
"LAZ-MD Operating Agreement" means the Operating Agreement of LAZ-MD
Holdings LLC, as amended and restated and dated as of the date hereof, which is
set forth on Exhibit I, and as it may be amended from time to time after the
date hereof.
"LAZ-MD Redeemable Interest" means a "Class III Redeemable Interest" or a
"Class IV Redeemable Interest" as defined in the LAZ-MD Operating Agreement.
"LAZ-MD Stockholders' Agreement" means the Stockholders' Agreement of
LAZ-MD Holdings LLC to be entered into on the date hereof in the form set forth
on Exhibit F, and as it may be amended from time to time after the date hereof.
"LEPEP" means Lazard European Private Equity Partners LLP, a limited
liability partnership formed and registered in England and Wales.
"LFCM" has the meaning assigned to such term in the preamble to this
Agreement.
"LFCM Assets" means (without duplication) (1) the Assets of Lazard Group
and its Subsidiaries set forth on Schedule 1.1(g) hereto, (2) the Capital
Markets Assets, (3) the Alternative Investments Assets, (4) the Contributed
Interests, (5) the Cash Contribution, and (6) LFCM's rights under this Agreement
and each of the Ancillary Agreements to which it or any
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other LFCM Company is a party; provided that the LFCM Assets shall not include
any Excluded Asset.
"LFCM Businesses" means (1) the Capital Markets Business, (2) the
Alternative Investments Business, (3) the holding and management of the
investments to be transferred to LFCM that shall not be Capital Markets Business
or Alternative Investments Business, and (4) any and all activities, services,
businesses and operations (including related joint ventures and alliances) of
any LFCM Companies to the extent conducted or provided at any time on or after
the Contribution Effective Time.
"LFCM Common Capital Account" means a "Common Capital Account" as defined
in the LFCM Operating Agreement.
"LFCM Common Interest" means a "Common Interest" as defined in the LFCM
Operating Agreement.
"LFCM Common Unit" means a "Common Unit" as defined in the LFCM Operating
Agreement.
"LFCM Companies" means LFCM and the LFCM Subsidiaries.
"LFCM Entities" means the following entities and each of their
Subsidiaries: (1) Lazard Alternative Investments Holdings LLC, a Delaware
limited liability company and a wholly owned subsidiary of LFCM; (2) Lazard
Alternative Investments LLC, a Delaware limited liability company and a wholly
owned subsidiary of Lazard Alternative Investments Holdings LLC; (3) Lazard
Alternative Investments (Europe) Limited, a limited company formed under the
laws of England and Wales and a wholly owned subsidiary of Lazard Alternative
Investments Holdings LLC; (4) Lazard Capital Markets LLC, a Delaware limited
liability company and a wholly owned subsidiary of LFCM; (5) UKPG Holdings LLC,
a Delaware limited liability company; and (6) LEPEP.
"LFCM Indemnitees" has the meaning assigned to such term in Section 4.3.
"LFCM Liabilities" means (1) all Liabilities that are contemplated by this
Agreement or any Ancillary Agreement to which LFCM or any other LFCM Company is
or will be a party or by which LFCM or any other LFCM Company is or will be
bound (or the Schedules hereto or thereto) to be Liabilities of, or to be
assumed by, LFCM or any other LFCM Company, and all agreements, obligations and
Liabilities of any LFCM Company under this Agreement or any such Ancillary
Agreement, regardless of whether such Liabilities arise prior to, on or after
the Contribution Effective Time or the Distribution Time; (2) all Liabilities
relating to, arising out of or resulting from any LFCM Asset regardless of
whether such Liabilities arise prior to, on or after the Contribution Effective
Time or the Distribution Time; (3) all Liabilities relating to, arising out of
or resulting from any LFCM Business, including, for the avoidance of doubt, any
Liabilities relating to, arising out of or resulting from the offering or
provision of any services or products of an LFCM Business regardless of whether
such Liabilities arise prior to, on or after the Contribution Effective Time or
the Distribution Time; (4) all Liabilities relating to, arising out of or
resulting from any of the terminated, divested or discontinued businesses and
operations that were part of any LFCM Business prior to such
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termination, divestiture or discontinuation, or otherwise regardless of whether
such Liabilities arise prior to, on or after the Contribution Effective Time or
the Distribution Time; (5) all Liabilities relating to, arising out of or
resulting from the business or operations of any LFCM Company, regardless of
whether such Liabilities arise prior to, on or after the Contribution Effective
Time or the Distribution Time; (6) all Liabilities relating to, arising out of
or resulting from the matters described on Schedule 1.1(h) and (7) all
Liabilities relating to, arising out of or resulting from the investment or
management activities of any Fund (including any such activities conducted on
behalf of any Fund and including any such activities relating to any portfolio
company or portfolio investment of any such Fund) formed, sponsored or managed
by (A) any Lazard Group Company (or any predecessors thereto) on or prior to the
date hereof or (B) any LFCM Company (or any predecessor or successors thereto);
provided that the LFCM Liabilities shall not include (i) any Excluded Liability,
(ii) if the North America Closing (as defined in the Business Alliance
Agreement) shall have occurred, any Liabilities expressly assumed by Lazard
Group pursuant to the agreement executed between LFCM and Lazard Group and
referenced in Section 3.2(c) of the Business Alliance Agreement, or (iii) if the
Europe Closing (as defined in the Business Alliance Agreement) shall have
occurred, any Liabilities expressly assumed by Lazard Group pursuant to the
agreement executed between LFCM and Lazard Group and referenced in Section
3.4(c) of the Business Alliance Agreement.
"LFCM Member" means a "Member" as defined in the LFCM Operating Agreement.
"LFCM Note" means the promissory note of LFCM in the aggregate principal
amount of $132,000,000 in the form attached hereto as Exhibit G.
"LFCM Operating Agreement" means the Operating Agreement of LFCM, dated as
of the date hereof, which is set forth on Exhibit K, and as it may be amended
from time to time after the date hereof.
"LFCM Subsidiaries" means all direct and indirect Subsidiaries of LFCM,
including the LFCM Entities and other Subsidiaries to be transferred (including
by transfer of the Contributed Interests) to or formed by LFCM in connection
with the Separation.
"Liabilities" means any and all losses, liabilities, claims, charges,
debts, demands, actions, causes of action, suits, damages, fines, penalties,
offsets, obligations, payments, costs and expenses, sums of money, bonds,
indemnities and similar obligations, covenants, contracts, controversies,
agreements, promises, omissions, guarantees, make whole agreements and similar
obligations, and other liabilities, including all contractual obligations,
whether absolute or contingent, inchoate or otherwise, matured or unmatured,
liquidated or unliquidated, accrued or unaccrued, known or unknown, whenever
arising, and including those arising under any law, rule, regulation, Action or
threatened or contemplated Action (including the costs and expenses of demands,
assessments, judgments, settlements and compromises relating thereto and
attorneys' fees and any and all costs and expenses (including allocated costs of
in-house counsel and other personnel) reasonably incurred in investigating,
preparing or defending against any such Actions or threatened or contemplated
Actions), order or consent decree of any Governmental Authority or any award of
any arbitrator or mediator of any kind, and those arising under any contract,
commitment or undertaking, including those arising under this
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Agreement or any Ancillary Agreement, in each case, whether or not recorded or
reflected or required to be recorded or reflected on the books and records or
financial statements of any person.
"License Agreement" means the License Agreement to be entered into on the
date hereof in the form set forth on Exhibit H, and as it may be amended from
time to time after the date hereof.
"Lien" means any debts, claims, security interests, liens, encumbrances,
pledges, mortgages, hypothecations, rights of others, assessments, restrictions,
voting trust agreements, options, rights of first offer, assessments, proxies,
title defects, and charges or other restrictions or limitations of any nature
whatsoever.
"Mandatory Exchange" has the meaning assigned to such term in Section
8.3(a).
"Mandatory Exchange Members" has the meaning assigned to such term in
Section 8.3(a).
"Mandatory Lazard Group Exchange" means a "Mandatory Lazard Group Exchange"
as defined in the New Lazard Group Operating Agreement.
"Market Price" has the meaning assigned to such term in Section 8.9(b).
"MD Exchanges" has the meaning assigned to such term in Section 8.1(a).
"Members' Equity" shall mean, as of any applicable date, the members'
equity of LFCM, on a consolidated basis, as prepared in accordance with United
States generally accepted accounting principles and consistent with past
practice; provided, however, that, in calculating such members' equity: (a)
employee compensation and benefits expense in respect of the period beginning on
January 1, 2005 and ending on such applicable date shall be assumed to have
accrued at an amount equal to 57.5% of the aggregate "operating revenues" (as
defined in the Registration Statement on Form S-1 for the issuance of shares of
Lazard Ltd Common Stock) of LFCM, on a pro forma basis as if the Separation had
occurred, for such period, and all LFCM managing directors' payment for services
rendered during such period shall be assumed to have been included within the
foregoing accrued employee compensation and benefits expense (rather than as a
distribution to members or minority interest expense); (b) no reserves or
write-offs shall be booked in respect of indemnities that LFCM provides to
Lazard Group under this Agreement, including in respect of potential lease and
pension reimbursements; (c) all costs and expenses in connection with the IPO
and Recapitalization shall be accounted for as expenses incurred after the
Distribution; and (d) the LFCM Note shall be disregarded.
"New Lazard Group Operating Agreement" means the Operating Agreement of
Lazard Group LLC, to be entered into on the date hereof in the form set forth on
Exhibit J, and as it may be amended from time to time after the date hereof.
"NYSE" means the New York Stock Exchange, Inc.
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"Offering Document" means any of the Registration Statements, the Debt
Securities Prospectus or any other registration statement, prospectus, offering
memorandum or other document pursuant to which Lazard Ltd Common Stock,
Exchangeable Securities or Debt Securities are being offered in connection with
the Financing Transactions.
"Old Lazard Group Operating Agreement" has the meaning assigned to such
term in the recitals to this Agreement.
"Operating Agreement" means the New Lazard Group Operating Agreement or the
LAZ-MD Operating Agreement, as applicable.
"Over-allotment Option" has the meaning assigned to such term in Section
3.4(a)(iv).
"Partial LAZ-MD Mandatory Exchange" has the meaning assigned to such term
in Section 8.3(a)(iii).
"Party" or "Parties" has the meaning assigned to such term in the preamble
to this Agreement, and shall include each of Lazard Ltd Sub A and Lazard Ltd Sub
B for the purposes of Article VIII and Article XI hereto in the event such
persons are added as parties to this Agreement pursuant to Section 11.14.
"Recapitalization" has the meaning assigned to such term in the recitals to
this Agreement.
"Redemption Consideration" means the "Redemption Consideration" as defined
in the New Lazard Group Operating Agreement.
"Registration Exchange Date" has the meaning set forth in Section
8.2(b)(ii)(B).
"Registration Statement" means, as applicable, (1) the registration
statement on Form S-1 of Lazard Ltd under the Securities Act relating to the
Lazard Ltd Common Stock to be issued in the Common Stock IPO or (2) the
registration statement on Form S-1 of FinanceCo and Lazard Ltd under the
Securities Act relating to the Exchangeable Securities to be issued in the
Exchangeable Securities IPO, in each case as amended or supplemented from time
to time.
"Representative" has the meaning assigned to such term in Section 6.8(a).
"Resolution Date" has the meaning assigned to such term in Section 2.9(d).
"Resolution Period" has the meaning assigned to such term in Section
2.9(b).
"Retention Agreement" means the retention agreements and reorganization
agreements, as the case may be, entered into on or prior to the date hereof
substantially in the forms set forth on Exhibit L, and any other written
agreement entered into on or prior to the date hereof between Lazard Group and
any person who shall become an Exchangeable MD Member on the date hereof
(including any trust or other entity) pursuant to which accelerated exchange
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rights are provided with respect to such Exchangeable MD Member's Exchangeable
Interest (or applicable portion thereof), in each case, as such agreements may
be amended from time to time.
"Review Period" has the meaning assigned to such term in Section 2.9(b).
"Rollover Option Agreement" means the "Rollover Option Agreement" as
defined in the LAZ-MD Operating Agreement.
"SEC" means the Securities and Exchange Commission.
"Second Distribution" has the meaning assigned to such term in the recitals
to this Agreement.
"Second Redemption" has the meaning assigned to such term in the recitals
to this Agreement.
"Securities Act" means the Securities Act of 1933, as amended, together
with the rules and regulations promulgated thereunder.
"Separation" has the meaning assigned to such term in the recitals to this
Agreement.
"Special Damages" means any special, indirect, incidental, punitive or
consequential damages whatsoever, including damages for lost profits and lost
business opportunities or damages calculated based upon a multiple of earnings
approach or variant thereof.
"Subsidiary" means, with respect to any person, any corporation, limited
liability company, company, partnership, trust, association or other legal
entity or organization of which such person (either directly or through one or
more Subsidiaries of such person) (a) owns, directly or indirectly, a majority
of the capital stock or other equity interests the holders of which are
generally entitled to vote for the election of the board of directors or other
governing body of such corporation, limited liability company, company,
partnership, trust, association or other legal entity or organization, or (b) is
otherwise entitled to exercise (1) a majority of the voting power generally in
the election of the board of directors or other governing body of such
corporation, limited liability company, company, partnership, trust, association
or other legal entity or organization or (2) control of such corporation,
limited liability company, company, partnership, trust, association or other
legal entity or organization; provided, however, that the term "Subsidiary"
shall not include any portfolio company or portfolio investment of any Fund
formed, sponsored or managed by such person or such person's Subsidiaries.
"Target Closing Members' Equity" shall mean $245,600,000.
"Tax Receivable Agreement" means the Tax Receivable Agreement to be entered
into by and among LFCM, Lazard Ltd Sub A and Lazard Ltd Sub B, substantially in
the form of Exhibit M hereto, with such changes as may be determined by the
parties thereto.
"Third Party" has the meaning assigned to such term in Section 4.6(a).
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"Third Party Claim" has the meaning assigned to such term in Section
4.6(a).
"Third Party Investment" has the meaning assigned to such term in the
recitals to this Agreement.
"Third Party Investment Agreement" means the Letter Agreement, dated as
of March 14, 2005, by and among the Investor, Lazard Group and Lazard Ltd, as
amended from time to time.
"Time of Determination" has the meaning assigned to such term in Section
8.9(b).
"Transaction Agreement" has the meaning set forth in the recitals of this
Agreement.
"UK DC Obligations" means the deferred compensation obligations of Lazard
& Co., Services Limited pursuant to the letter agreements, dated as of the
date hereof, from such person to the applicable Managing Director.
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) the word "or" is not exclusive;
(b) 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;
(c) the words "including," "includes," "included" and "include" are
deemed to be followed by the words "without limitation";
(d) 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;
(e) the word "person" means any individual, corporation, limited
liability company, trust, joint venture, association, company, partnership or
other legal entity or a Governmental Authority; and
(f) 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.
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SECTION 1.3 References to Time. All references in this Agreement to times
of day shall be to New York City time.
ARTICLE II
THE SEPARATION
SECTION 2.1 The Separation. On the date hereof and subject to the
satisfaction or waiver of the conditions set forth in Section 3.9, the Parties
shall effect the Separation by consummating the Exchange, the Forced Sale, the
Contribution and the First Distribution in the order, on the terms, and
subject to the conditions, set forth in this Article II.
SECTION 2.2 Actions Prior to the Forced Sale. (a) On the date hereof,
immediately prior to the approval of the Lazard Board (as defined in the Old
Lazard Group Operating Agreement) of the Exchange, certain Class A-2 Members
(as defined in the Old Lazard Group Operating Agreement) shall forfeit and
surrender their options to acquire Class A-2 Shares (as defined in the Old
Lazard Group Operating Agreement) in full pursuant to the Rollover Option
Agreement in effect on the date hereof.
(b) On the date hereof, the Parties shall use their commercially
reasonable efforts to ensure that, immediately prior to the Exchange and the
Forced Sale, the Lazard Group Class B-1 Interest held by Xxxxx Xxxxxxxxxxx
shall be transferred to Lazard Ltd Sub A, in exchange for all of the shares of
common stock, par value $.01 per share, of Lazard Ltd Sub A (the "Lazard Ltd
Sub A Common Stock") pursuant to the Lazard Ltd Sub A Share Transfer
Agreement, in order to permit Xxxxx Xxxxxxxxxxx to exchange such Lazard Ltd
Sub A Common Stock for shares of Lazard Ltd Common Stock in lieu of being
redeemed for cash pursuant to the Second Redemption.
SECTION 2.3 The Exchange and the Forced Sale. On the date hereof
immediately after the effectiveness of this Agreement, the Exchange and the
Forced Sale shall be effected as follows: the members of Lazard Group who are
party to the Transaction Agreement shall transfer limited liability company
interests in Lazard Group to LAZ-MD in exchange for limited liability company
interests in LAZ-MD, in the classes and in the amounts set forth in the LAZ-MD
Operating Agreement in accordance with the terms and conditions of the
Transaction Agreement. Simultaneously therewith pursuant to Section 6.02(b) of
the Old Lazard Group Operating Agreement, (a) all other limited liability
company interests in Lazard Group shall be transferred to LAZ-MD in exchange
for limited liability company interests in LAZ-MD, in the classes and in the
amounts set forth in the LAZ-MD Operating Agreement, and all of the persons
whose Lazard Group limited liability company interests are transferred
pursuant to the Exchange and the Forced Sale shall be admitted as members of
LAZ-MD and (b) Lazard Group shall admit LAZ-MD as the sole member of Lazard
Group (and LAZ-MD hereby agrees to become the member of Lazard Group and abide
by the terms of the Old Lazard Group Operating Agreement), in each case in
accordance with the Transaction Agreement and the LAZ-MD Operating Agreement.
SECTION 2.4 Actions Prior to the Contribution. (a) The Parties
acknowledge and agree that the transactions involving the initial transfers of
certain assets and
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businesses in furtherance of the Separation set forth on Schedule 2.4(a) were
consummated prior to the date hereof.
(b) On the date hereof and immediately after completion of the Exchange
and the Forced Sale and prior to the Contribution, LAZ-MD shall grant the
LAZ-MD Class II Interests pursuant to, and subject to the terms and conditions
set forth in, the Rollover Option Agreement (the "Initial Grant").
(c) On the date hereof and immediately after completion of the Forced
Sale and prior to the Contribution, LAZ-MD and Lazard Group shall amend and
restate the Old Lazard Group Operating Agreement to read in its entirety as
the New Lazard Group Operating Agreement, effective immediately upon execution
thereof, and an authorized person of Lazard Group shall file a Certificate of
Amendment with the Secretary of State of the State of Delaware to reflect the
change in Lazard Group's name from "Lazard LLC" to "Lazard Group LLC."
Immediately after the effectiveness of the New Lazard Group Operating
Agreement, LAZ-MD shall hold, inter alia, a Lazard Group Common Interest
consisting of 62,500,000 Lazard Group Common Units.
(d) On the date hereof and immediately after the actions set forth in
Section 2.4(c) and prior to the First Redemption, Lazard Group shall issue and
distribute the Lazard Group I Note to LAZ-MD.
(e) On the date hereof and simultaneously with the consummation of the
Forced Sale and the Exchange, Lazard Group shall transfer and assign to
LAZ-MD, and LAZ-MD shall assume and agree faithfully to perform and discharge
in due course in full in all respects, all of the rights and obligations of
Lazard Group with respect to memorandum capital of Lazard Group. LAZ-MD agrees
(i) to comply fully with the terms of such memorandum capital, including with
respect to the timing of payment thereof as provided in the Old Lazard Group
Operating Agreement, as modified by the Retention Agreements and (ii) to
reimburse Lazard Group for any and all UK DC Obligations actually paid by
Lazard Group or one of its Subsidiaries.
SECTION 2.5 The Contribution. (a) On the date hereof and subject to
Section 2.5(d) and Section 2.5(e), immediately after the effectiveness of the
New Lazard Group Operating Agreement pursuant to Section 2.4(c) and completion
of the issuance of the Lazard Group I Note and consummation of the First
Redemption (such time, the "Contribution Effective Time"), Lazard Group shall
effect and consummate the Contribution by (i) contributing, assigning,
transferring, conveying and delivering, or causing another Lazard Group
Company to contribute, assign, transfer, convey and deliver to LFCM or to
another LFCM Company all of Lazard Group's (or, as the case may be, the
applicable Lazard Group Company's) right, title and interest in, to and under
the LFCM Assets and (ii) issuing and contributing the Lazard Group II Note to
LFCM. In consideration therefor, LFCM shall simultaneously therewith (i)
assume and agree faithfully to perform and discharge in due course in full all
of the LFCM Liabilities in accordance with their respective terms and (ii)
issue and deliver to Lazard Group (A) an LFCM Common Interest consisting of
62,500,000 LFCM Common Units and having an LFCM Common Capital Account of
$113,600,000, which LFCM Common Interest will constitute all of
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the issued and outstanding limited liability company interests of LFCM
immediately after the Contribution Effective Time, and (B) the LFCM Note.
(b) The contribution, assignment, transfer, conveyance and delivery of
the LFCM Assets and the assignment and assumption in full of the LFCM
Liabilities pursuant to Section 2.5(a) shall be effected pursuant to the
transactions set forth on, and transfer and assumption agreements attached to,
Schedule 2.5(b) (it being understood that the failure to (i) contribute,
assign, transfer, convey or deliver any LFCM Asset pursuant to any such
transaction or agreement or (ii) assign, delegate or assume in full any LFCM
Liability pursuant to any such transaction or agreement, shall not affect the
obligations of Lazard Group and LFCM pursuant to Section 2.5(a) (including
LFCM's obligation to assume and agree faithfully to perform and discharge in
due course in full all of the LFCM Liabilities in accordance with their
respective terms) and in the event of any conflict between this Agreement and
any such transfer and assumption agreements, this Agreement shall control).
(c) From and after the Contribution Effective Time, LFCM shall be
responsible for all LFCM Liabilities, regardless of when or where such LFCM
Liabilities arose or arise, or whether the facts on which they are based
occurred prior to or subsequent to the date hereof, regardless of where or
against whom such LFCM Liabilities are asserted or determined (including any
LFCM Liabilities arising out of claims made by any Lazard Group Company's or
LFCM Company's respective directors, officers, employees, agents, Subsidiaries
or Affiliates against any member of the Lazard Group Companies or the LFCM
Companies) or whether asserted or determined prior to the date hereof, and
regardless of whether arising from or alleged to arise from negligence,
recklessness, violation of law, fraud or misrepresentation by any member of
the Lazard Group Companies or the LFCM Companies or any of their respective
directors, officers, employees, agents, Subsidiaries or Affiliates.
(d) Nothing herein shall be deemed to require the contribution,
assignment, transfer, conveyance or delivery of any LFCM Assets or the
assumption of any LFCM Liabilities that by their terms or operation of law
cannot be contributed, assigned, transferred, conveyed, delivered or assumed;
provided, however, that Lazard Group and LFCM shall, and shall cause the
respective members of their Groups to, use their commercially reasonable
efforts and cooperate to obtain any necessary consents, approvals or waivers
for, and to resolve any impediments to, the contribution, assignment,
transfer, conveyance or delivery of such LFCM Assets or assumption of such
LFCM Liabilities contemplated to be contributed, assigned, transferred,
conveyed, delivered or assumed pursuant to this Section 2.5; provided further,
however, that Lazard Group shall not be obligated to pay any consideration
therefor to the party from whom any such consent, approval or waiver is
necessary in order to obtain any such consent, approval or waiver.
(e) To the extent that any contribution, assignment, transfer,
conveyance, delivery or assumption referred to in Section 2.5(a) shall not
have been consummated at or prior to the Contribution Effective Time, (i)
Lazard Group and LFCM shall, and shall cause the respective members of their
Groups to, use reasonable best efforts and cooperate to effect such
contribution, assignment, transfer, conveyance, delivery or assumption as
promptly following the Contribution Effective Time as shall be practicable;
and (ii) Lazard Group shall thereafter, with respect to any such LFCM Asset,
use reasonable best efforts, with the costs of Lazard Group
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related thereto to be promptly reimbursed by LFCM, to hold such Asset in trust
for the use and benefit of LFCM and, with respect to any such LFCM Liability,
retain such LFCM Liability for the account of LFCM, and to take such other
action, including as may be reasonably requested by LFCM, in order to place
each Party, insofar as reasonably possible, in the same position as would have
existed had such LFCM Asset or LFCM Liability been contributed, assigned,
transferred, conveyed, delivered or assumed as contemplated hereby (it being
understood that Lazard Group shall not be required to take any action pursuant
to this sentence that would, or could reasonably be expected to, result in a
material financial obligation, or restriction on the business or operations,
of Lazard Group). To the extent that LFCM is provided the use or benefits of
any LFCM Asset or has any LFCM Liability held for its account pursuant to this
Section 2.5(e), LFCM shall perform at the direction of Lazard Group and for
the benefit of any third person the obligations of Lazard Group thereunder or
in connection therewith; provided, that if LFCM shall fail to perform to the
extent required herein, LFCM shall hold Lazard Group harmless and indemnify
Lazard Group therefor. As and when any such LFCM Asset or LFCM Liability
becomes contributable, assignable, transferable, conveyable, deliverable or
assumable, such contribution, assignment, transfer, conveyance, delivery or
assumption, as applicable, shall be effected as promptly as practicable
thereafter.
(f) The Parties agree that, notwithstanding anything in Section 2.5 to
the contrary, LFCM shall be deemed to have acquired all of Lazard Group's
right, title and interest in and to the LFCM Assets, and shall be deemed to
have assumed in full in accordance with the terms of this Agreement all of the
LFCM Liabilities, in each case effective as of the Contribution Effective
Time.
(g) Lazard Group and LFCM hereby agree to the matters set forth on
Schedule 2.5(g).
SECTION 2.6 Actions Prior to the First Distribution. (a) On the date
hereof, after the consummation of the Contribution and prior to the First
Distribution, each of Lazard Group and LFCM shall, or shall cause the
appropriate members of such Party's Group to, enter into each of the
Administrative Services Agreement, the Benefits Agreement, the Business
Alliance Agreement, the Insurance Matters Agreement, the License Agreement and
the Tax Receivable Agreement.
(b) On the date hereof, after the consummation of the Contribution and
prior to the First Distribution, Lazard Group and LFCM shall, or shall cause
the appropriate member of such Party's Group to, enter into the subleases,
deeds of indemnity and other agreements attached hereto as Schedule 2.6(b)
relating to LFCM's use of real property of Lazard Group. If the approval or
consents necessary for such subleases shall not have been obtained on or prior
to the consummation of the Contribution, or Lazard Group and LFCM shall be
unable to enter into a license or alternative arrangement, including the
arrangement described on Schedule 2.6(b), for the subject premises of the
sublease on or prior to the consummation of the Contribution, then LFCM shall
cause the appropriate member of the LFCM Companies to vacate the subject
premises of the sublease on the date of the consummation of the Contribution.
SECTION 2.7 The First Distribution. On the date hereof immediately after
the consummation of the Contribution, the First Redemption and the actions set
forth in Section
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2.6, Lazard Group shall effect the First Distribution by distributing to
LAZ-MD as the sole Lazard Group Common Member (a) the entire LFCM Common
Interest held by Lazard Group in accordance with the New Lazard Group
Operating Agreement and (b) the LFCM Note. Immediately after the First
Distribution, Lazard Group shall cease to be a member of LFCM and bound by the
LFCM Operating Agreement and LAZ-MD shall simultaneously be admitted to LFCM
as a member and bound by the LFCM Operating Agreement.
SECTION 2.8 Ancillary Agreements. (a) On or prior to the Contribution
Effective Time, each of Lazard Group and LFCM shall, or shall cause the
appropriate members of such Party's Group to, enter into (i) such bills of
sale, stock powers, certificates of title, assignments of contracts and other
instruments of transfer, conveyance and assignment requested by Lazard Group
or LFCM that are necessary or advisable to evidence the contribution,
transfer, conveyance and assignment of all of Lazard Group's right, title and
interest in and to the LFCM Assets to LFCM or the applicable LFCM Company
pursuant to Section 2.5(a); (ii) such bills of sale, stock powers,
certificates of title, assumptions of contracts and other instruments of
transfer, conveyance, assignment and assumption requested by Lazard Group or
LFCM that are necessary or advisable to evidence the assumption in full of the
LFCM Liabilities by LFCM pursuant to Section 2.5(a); (iii) such bills of sale,
stock powers, certificates of title, assumptions of contracts and other
instruments of transfer, conveyance, assignment and assumption requested by
Lazard Group that are necessary or advisable to evidence the valid and
effective issuance and delivery of the LFCM Common Interest to Lazard Group
pursuant to Section 2.5(a); and (iv) such other agreements, certificates and
other documents as may be deemed to be advisable by Lazard Group in connection
with the Separation.
(b) Notwithstanding anything to the contrary in the Benefits
Agreement, LFCM hereby agrees, effective upon consummation of the First
Distribution, to satisfy the funding and guarantee obligations of LFCM set
forth on Schedule 2.8(b) with respect to the pension funds set forth on such
Schedule. LAZ-MD agrees, effective upon the First Distribution, to satisfy the
support obligations of LAZ-MD set forth on Schedule 2.8(b) with respect to the
pension funds set forth on such Schedule.
SECTION 2.9 Post-Contribution Adjustment. (a) As promptly as practicable,
but no later than ninety (90) days after the Contribution Effective Date,
Lazard Group shall, at Lazard Group's expense, prepare, or cause to be
prepared, in good faith and deliver to LFCM (i) a balance sheet of LFCM (the
"Closing Balance Sheet") prepared in accordance with United States generally
accepted accounting principles and (ii) a calculation in reasonable detail
based upon the Closing Balance Sheet setting forth the amounts of Members'
Equity as of immediately after the Contribution Effective Time (the "Closing
Members' Equity"). Lazard Group and its accountants and advisers shall be
provided with reasonable access to the work papers of LFCM and its accountants
to prepare the Closing Balance Sheet and the calculation of Closing Members'
Equity.
(b) LFCM shall have sixty (60) days from the date on which the Closing
Balance Sheet and the calculation of Closing Members' Equity are delivered to
it to assess the Closing Balance Sheet and such calculation of Closing
Members' Equity (the "Review Period"). If LFCM believes that the Closing
Balance Sheet or that Lazard Group's calculation of Closing Members' Equity
was incorrect, LFCM may, on or prior to the last day of the Review Period,
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deliver a notice to Lazard Group setting forth, in reasonable detail, each
disputed item or amount and the basis for LFCM's disagreement therewith,
together with supporting calculations (the "Dispute Notice"). Following
delivery of a Dispute Notice to Lazard Group, Lazard Group and its accountants
and advisers shall be provided with reasonable access to the work papers of
LFCM and its accountants relating to the calculation of the amounts of Closing
Members' Equity as set forth in such Dispute Notice. If no Dispute Notice is
received by Lazard Group on or prior to the last day of the Review Period, the
Closing Balance Sheet and the amount of Closing Members' Equity, as delivered
by Lazard Group to LFCM, shall be deemed accepted by LFCM and shall be final
and binding on LFCM. If a Dispute Notice is received by Lazard Group on or
prior to the last day of the Review Period, Lazard Group and LFCM shall,
during the thirty (30)-day period following the date of such notice (the
"Resolution Period"), attempt to resolve their differences in good faith, and
any resolution by them as to any disputed amounts shall be final, binding and
conclusive.
(c) If, at the conclusion of the Resolution Period, there are amounts
remaining in dispute with respect to the calculation of Closing Members'
Equity as to which a valid Dispute Notice has been timely delivered to Lazard
Group, Lazard Group's good-faith determination of Closing Members' Equity
shall be final, binding and conclusive upon Lazard Group and LFCM, and shall
be deemed a final arbitration award that is enforceable in any court having
jurisdiction.
(d) Effective upon (i) the end of the Review Period (if a timely Dispute
Notice is not delivered), (ii) the resolution of all matters set forth in the
Dispute Notice by agreement of the parties (if a timely Dispute Notice is
delivered) or (iii) the conclusion of the Review Period (the "Resolution
Date"), the Closing Balance Sheet and the amounts of Closing Members' Equity
shall be adjusted if and to the extent necessary to reflect the final
resolution of any disputed items and shall be final, binding and conclusive on
Lazard Group and LFCM. Promptly and, in any event, no later than three (3)
Business Days following the Resolution Date, (i) if the Closing Members'
Equity (as finally determined under this Section 2.9) is greater than the
Target Closing Members' Equity, LFCM shall pay to Lazard Group an amount of
cash equal to such difference, and (ii) if Target Closing Members' Equity is
greater than the Closing Members' Equity (as finally determined under this
Section 2.9), Lazard Group shall pay to LFCM an amount of cash equal to such
difference.
ARTICLE III
THE RECAPITALIZATION
SECTION 3.1 The Recapitalization. On the date hereof and subject to
Section 3.9, the Parties shall effect the Recapitalization by consummating the
First Redemption, the Financing Transactions, the Second Redemption and the
Second Distribution in the order, on the terms, and subject to the conditions,
set forth in this Article III.
SECTION 3.2 The First Redemption. On the date hereof immediately after
the effectiveness of the New Lazard Group Operating Agreement, LAZ-MD shall
effect the First Redemption by redeeming the LAZ-MD Redeemable Interests in
full in exchange for the Lazard Group Redeemable Interests pursuant to, and in
accordance with, the LAZ-MD Operating Agreement and the New Lazard Operating
Agreement and the Transaction Agreement.
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SECTION 3.3 Actions Prior to the Financing Transactions. (a) Effective on
or prior to the date hereof and prior to the consummation of the Common Stock
IPO Transaction, the bye-laws of Lazard Ltd shall be amended and restated to
read in their entirety as the Lazard Ltd Bye-laws.
(b) Lazard Ltd and Lazard Group shall use their respective commercially
reasonable efforts to cause the Registration Statements with respect to each
of the Common Stock IPO and the Exchangeable Securities IPO to become
effective under the Securities Act and the Exchange Act and to keep the
applicable Registration Statement effective as long as is necessary to
consummate the Common Stock IPO and Exchangeable Securities IPO, as
applicable.
(c) Lazard Group shall take all such action as Lazard Group may determine
necessary or appropriate under federal or state securities or blue sky laws of
the United States (and any comparable laws under any foreign jurisdiction) in
connection with the Financing Transactions.
SECTION 3.4 The Financing Transactions. On the date hereof immediately
after the consummation of the First Redemption and the First Distribution and
the actions set forth in Section 3.3, the Parties shall effect the Financing
Transactions as follows:
(a) Common Stock IPO Transaction. (i) Common Stock IPO. Lazard Ltd shall
use its commercially reasonable efforts to take all actions necessary to
consummate the Common Stock IPO.
(ii) Use of Proceeds. The Common Stock IPO will be a primary
offering of Lazard Ltd Common Stock. The net proceeds of the Common Stock
IPO (including from the exercise of any Over-allotment Option) will
primarily be used by Lazard Ltd for the Lazard Ltd Contribution.
(iii) The Common Stock Contributions. Immediately after the
consummation of the Common Stock IPO and receipt of the proceeds thereof:
(A) Lazard Ltd shall effect the Lazard Ltd Contribution by
causing the contribution to Lazard Group of an amount in cash equal
to the net proceeds of the Common Stock IPO through the contribution
transaction described on Schedule 3.4(a)(iii); and
(B) in exchange therefor, simultaneously with such cash
contributions to Lazard Group, Lazard Group shall (1) issue to the
direct or indirect wholly-owned Subsidiaries of Lazard Ltd that
shall directly contribute cash to Lazard Group pursuant to the
Lazard Ltd Contribution as described on Schedule 3.4(a)(iii) (the
"Contributing Subsidiaries") Lazard Group Common Interests consisting
of an aggregate number of Lazard Group Common Units equal to the
number of shares of Lazard Ltd Common Stock sold pursuant to the
Common Stock IPO and an aggregate amount of Lazard Group Common
Capital equal to the net proceeds of the Common Stock IPO so
contributed, with such units and capital allocated among the
Contributing Subsidiaries as set forth on Schedule
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3.4(a)(iii), and (2) admit each Contributing Subsidiary to Lazard
Group as a Lazard Group Common Member and admit FinanceCo as the
Lazard Group Managing Member.
(iv) Over-allotment Option. In the event that the underwriters'
over-allotment option (the "Over-allotment Option") shall be exercised in
whole or in part in the Common Stock IPO, immediately after the closing
of the Over-allotment Option and receipt of the proceeds thereof:
(A) Lazard Ltd shall cause the contribution to Lazard Group by
the Contributing Subsidiaries of an amount in cash equal to the net
proceeds of such Over-allotment Option through the transactions
described on Schedule 3.4(a)(iii); and
(B) in exchange therefor, simultaneously with such cash
contributions to Lazard Group, Lazard Group shall issue to the
Contributing Subsidiaries an aggregate number of additional Lazard
Group Common Units equal to the number of shares of Lazard Ltd
Common Stock sold pursuant to the Over-allotment Option, and shall
credit the Contributing Subsidiaries' Lazard Group Common Capital
Accounts by an aggregate amount equal to net proceeds of the
Over-allotment Option so contributed by such Contributing
Subsidiaries, with such units and capital allocated among the
Contributing Subsidiaries as set forth on Schedule 3.4(a)(iii).
(b) Exchangeable Securities IPO Transaction. (i) Exchangeable Securities
IPO. Lazard Ltd shall, and shall cause FinanceCo to, use its commercially
reasonable efforts to take all actions necessary to consummate the
Exchangeable Securities IPO.
(ii) Use of Proceeds. The Exchangeable Securities IPO will be a
primary offering of 6.625% Equity Security Units (the "Exchangeable
Securities") by Lazard Ltd and FinanceCo. The net proceeds of the
Exchangeable Securities IPO (including from the exercise of any
Exchangeable Securities Over-allotment Option) will be used by FinanceCo
to purchase the Lazard Group Exchangeable Debt Securities.
(iii) Purchase of the Lazard Group Debt Securities. Immediately
after the consummation of the Exchangeable Securities IPO and receipt of
the proceeds thereof, FinanceCo shall purchase, and Lazard Group shall
sell, 6.120% Senior Notes Due 2035 in principal amount equal to the
aggregate principal amount of the senior notes of FinanceCo included in
the Exchangeable Securities issued pursuant to the Exchangeable
Securities IPO (the "Lazard Group Exchangeable Debt Securities") for the
aggregate consideration equal to the net proceeds of the Exchangeable
Securities IPO in cash in immediately available funds.
(iv) Exchangeable Securities Over-allotment Option. In the event
that the underwriters' over-allotment option (the "Exchangeable
Securities Over-allotment Option") shall be exercised in whole or in part
in the Exchangeable Securities IPO, immediately after the closing of the
Exchangeable Securities Over-allotment Option and receipt of the proceeds
thereof, FinanceCo shall purchase, and Lazard Group shall sell, Lazard
Group Exchangeable
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Debt Securities in principal amount equal to the aggregate principal amount of
the senior notes of FinanceCo included in the Exchangeable Securities issued
pursuant to the Exchangeable Securities Over-allotment Option for the
aggregate consideration equal to the net proceeds of the Exchangeable
Securities Over-allotment Option in cash in immediately available funds.
(v) Parallel Forward. In connection with the Exchangeable Securities
IPO, each of Lazard Group and the Contributing Subsidiaries, with Lazard
Ltd as guarantor thereof, shall enter into appropriate forward contracts
providing for the issuance of Lazard Group Common Units to such
Contributing Subsidiaries on substantially similar terms in respect of
pricing, timing and antidilution as set forth in the forward purchase
contracts forming part of the Exchangeable Securities.
(c) Debt Securities Offering Transaction. Lazard Group shall use its
commercially reasonable efforts to take all actions necessary to consummate
the Debt Securities Offering. The Debt Securities Offering will be a primary
offering of 7.125% Senior Notes due 2015 in principal amount of $550,000,000
(the "Debt Securities") by Lazard Group.
(d) Third Party Investment. Lazard Group and Lazard Ltd shall use their
respective commercially reasonable efforts to take all actions necessary to
consummate the Third Party Investment.
(i) Immediately after the consummation of the Third Party Investment
and receipt by Lazard Ltd of its share of the proceeds thereof:
(A) Lazard Ltd shall cause the contribution to Lazard Group of
an amount in cash equal to the net proceeds thereof received by
Lazard Ltd through the contribution transaction described on
Schedule 3.4(a)(iii); and
(B) in exchange therefor, simultaneously with such cash
contributions to Lazard Group, Lazard Group shall issue to the
Contributing Subsidiaries an aggregate number of Lazard Group Common
Units equal to the number of shares of Lazard Ltd Common Stock sold
pursuant to the Third Party Investment and an aggregate amount of
Lazard Group Common Capital equal to the aggregate amount of such
contribution, with such units and capital allocated among the
Contributing Subsidiaries as set forth on Schedule 3.4(a)(iii).
(ii) Immediately after the consummation of the Third Party
Investment and receipt by FinanceCo of its share of the proceeds thereof,
FinanceCo shall purchase, and Lazard Group shall sell, Lazard Group
Exchangeable Debt Securities in principal amount equal to the aggregate
principal amount of the senior notes of FinanceCo included in the
Exchangeable Securities issued pursuant to the Third Party Investment for
aggregate consideration equal to the net proceeds of the Third Party
Investment received by FinanceCo in cash in immediately available funds.
(iii) In connection with the Third Party Investment, each of Lazard
Group and the Contributing Subsidiaries, with Lazard Ltd as guarantor
thereof, shall enter into appropriate forward contracts providing for the
issuance of Lazard Group Common Units to such Contributing Subsidiaries
on substantially similar terms in respect of pricing, timing and
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antidilution as set forth in the forward purchase contracts forming part of
the Exchangeable Securities.
(e) Use of Proceeds by Lazard Group. The portion of the net proceeds of
the Common Stock IPO Transaction, the Exchangeable Securities IPO Transaction,
the Debt Securities Offering and the Third Party Investment that are received
by Lazard Group shall be used by Lazard Group to fund the Second Redemption,
for general corporate purposes of Lazard Group and such other purposes set
forth in the Registration Statements.
SECTION 3.5 Actions Prior to the Second Redemption. On the date hereof
after the consummation of the Financing Transactions and immediately prior to
the Second Redemption, the stockholders of Lazard Ltd Sub A shall be permitted
to sell and transfer to Lazard Ltd, and Lazard Ltd shall purchase and acquire
in such sale and transfer, all of the outstanding shares of Lazard Ltd Sub A,
in consideration for the issuance of shares of Lazard Ltd Common Stock to the
transferring stockholder of Lazard Ltd Sub A, on the terms and subject to the
conditions set forth in the Lazard Ltd Sub A Share Transfer Agreement and
simultaneously with the payment of the Redemption Consideration. Pursuant to
the Second Redemption, the Lazard Group Redeemable Interests held by Lazard
Ltd Sub A will be redeemed in exchange for Lazard Group Common Units in
accordance with the New Lazard Group Operating Agreement.
SECTION 3.6 The Second Redemption. On the date hereof immediately after
consummation of the Financing Transactions and the actions set forth in
Section 3.5 and in accordance with the New Lazard Group Operating Agreement,
Lazard Group shall redeem the Lazard Group Redeemable Interests for the
Redemption Consideration.
SECTION 3.7 Actions Prior to the Second Distribution. On the date hereof
immediately after consummation of the Second Redemption, Lazard Group shall
repay in full all outstanding amounts under each of the Lazard Group I Note
and the Lazard Group II Note.
SECTION 3.8 The Second Distribution. On the date hereof immediately after
the consummation of the Second Redemption and the actions set forth in Section
3.7, LAZ-MD shall effect the Second Distribution by distributing or otherwise
transferring to each LAZ-MD Class II Member an LFCM Common Interest with an
equivalent number of LFCM Common Units and pro rata portion (based on number
of LAZ-MD Class II Units) of the capital associated with the LFCM Common
Interest held by LAZ-MD immediately prior to the Second Distribution, on the
terms set forth in the LAZ-MD Operating Agreement. Pursuant to such
distribution and transfer, each recipient of an LFCM Common Interest will be
admitted as an LFCM Common Member, on the terms and subject to the conditions
set forth in the LFCM Operating Agreement.
SECTION 3.9 Conditions to the Separation and the Recapitalization. (a)
Subject to satisfaction or waiver of the additional conditions set forth in
Section 3.9(b) with respect to the consummation of each of the First
Redemption and the Second Redemption and the provisions of Section 3.9(c), the
obligations of the Parties to consummate the Separation and the
Recapitalization are subject to the satisfaction, or waiver by Lazard Group in
its sole discretion, of each of the following conditions prior to the
consummation of the Exchange and the Forced Sale:
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(i) All of the conditions to the Exchange set forth in Section 4(b)
of the Transaction Agreement shall have been satisfied or waived in
accordance with the terms thereof.
(ii) Approval of the Separation and Recapitalization shall have been
given by the Board of Directors of Lazard Group in its sole discretion
and not revoked.
(iii) Each of the Registration Statements shall have been filed and
declared effective by the SEC, and there shall be no stop-order in effect
with respect thereto.
(iv) The actions and filings necessary or appropriate under federal
and state securities laws and state blue sky laws of the United States
(and any comparable laws under any foreign jurisdictions) in connection
with the Financing Transactions (including, if applicable, any actions
and filings relating to the Registration Statements or the prospectuses
contained therein or any comparable registration statements or
prospectuses in any foreign jurisdictions) shall have been taken and,
where applicable, have become effective or been accepted.
(v) The Lazard Ltd Common Stock to be issued in the Common Stock IPO
and the Exchangeable Securities to be issued in the Exchangeable
Securities IPO shall have been accepted for listing on the NYSE, subject
to official notice of issuance.
(vi) No order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the Separation or the Recapitalization, including any
of the Exchange, the Forced Sale, the Contribution, the First Redemption,
the First Distribution, the Financing Transactions, the Second Redemption
or the Second Distribution, or any of the other transactions contemplated
by this Agreement or any Ancillary Agreement, shall be in effect.
(vii) All Consents and Governmental Approvals required in connection
with the Separation and the Recapitalization, including the Exchange, the
Forced Sale, the Contribution, the First Redemption, the First
Distribution, the Financing Transactions, the Second Redemption and the
Second Distribution, and any of the other transactions contemplated by
this Agreement or any Ancillary Agreement, shall have been received.
(viii) Neither this Agreement nor the Transaction Agreement shall
have been terminated, and each of this Agreement and the Transaction
Agreement shall be in full force and effect.
(b) The obligations of the Parties to consummate the First Redemption and
the Second Redemption, as applicable, are subject to the satisfaction, or
waiver by Lazard Group in its sole discretion, of the following conditions:
(i) With respect to the First Redemption, the condition to the First
Redemption set forth in Section 4(c)(i) of the Transaction Agreement
shall have been satisfied or waived in accordance with the terms thereof.
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(ii) With respect to the Second Redemption, the condition to the
Second Redemption set forth in Section 4(c)(ii) of the Transaction
Agreement shall have been satisfied or waived in accordance with the
terms thereof.
(c) In the event that after the consummation of the Exchange and Forced
Sale but prior to the consummation of the Second Distribution any of the
conditions to the Separation and Recapitalization set forth in this Section
3.9 shall cease to be satisfied (unless earlier waived by Lazard Group as
provided herein), Lazard Group may, in its sole discretion, elect to terminate
the obligations of the Parties to continue to consummate the Separation and
the Recapitalization.
(d) Any determination made by Lazard Group (including the Board of
Directors of Lazard Group) concerning the satisfaction or waiver of any or all
of the conditions set forth in this Section 3.9 shall be conclusive and
binding on the Parties.
ARTICLE IV
SURVIVAL AND INDEMNIFICATION
SECTION 4.1 Survival of Agreements. All covenants and agreements of the
Parties contained in this Agreement shall survive each of the Separation and
the Recapitalization (including the Exchange, the Forced Sale, the
Contribution, the First Redemption, the First Distribution, the Financing
Transactions, the Second Redemption and the Second Distribution).
SECTION 4.2 Indemnification by LFCM. LFCM shall indemnify, defend and
hold harmless (1) Lazard Group, each other Lazard Group Company and each of
their respective directors, officers and employees, and each of the heirs,
executors, successors and assigns of any of the foregoing (collectively, the
"Lazard Group Indemnitees") and (2) LAZ-MD and each of its directors, officers
and employees, and each of the heirs, executors, successors and assigns of any
of the foregoing (collectively, the "LAZ-MD Indemnitees"), from and against
any and all Indemnifiable Losses of the Lazard Group Indemnitees and the
LAZ-MD Indemnitees to the extent relating to, arising out of or resulting from
any of the following items regardless of whether arising from or alleged to
arise from negligence, recklessness, violation of law, fraud or
misrepresentation (without duplication):
(a) the failure of LFCM or any other LFCM Company or any other person to
pay, perform or otherwise promptly discharge any LFCM Liabilities or any
contract, agreement or arrangement included in the LFCM Assets in accordance
with their respective terms, whether prior to, at or after the Distribution
Time;
(b) any LFCM Company, any LFCM Liability or any LFCM Asset; and
(c) any breach by LFCM of this Agreement or any of the Ancillary
Agreements to which it is a party or any breach by any other LFCM Company of
any of the Ancillary Agreements to which it is a party.
SECTION 4.3 Indemnification by Lazard Group. Lazard Group shall
indemnify, defend and hold harmless LFCM, each other LFCM Company and each of
their respective directors, officers and employees, and each of the heirs,
executors, successors and
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assigns of any of the foregoing (collectively, the "LFCM Indemnitees") and the
LAZ-MD Indemnitees, from and against any and all Indemnifiable Losses of the
LFCM Indemnitees and the LAZ-MD Indemnitees to the extent relating to, arising
out of or resulting from any of the following items regardless of whether
arising from or alleged to arise from negligence, recklessness, violation of
law, fraud or misrepresentation (without duplication):
(a) the failure of Lazard Group or any other Lazard Group Company or any
other person to pay, perform or otherwise promptly discharge any Lazard Group
Liabilities or any contract, agreement, or arrangement included in the Lazard
Group Assets in accordance with their respective terms, whether prior to, at
or after the Distribution Time;
(b) any Lazard Group Company, any Lazard Group Liability or any Lazard
Group Asset;
(c) any Excluded Asset or Excluded Liability;
(d) any breach by Lazard Group of this Agreement or any of the Ancillary
Agreements to which it is a party or any breach by any other Lazard Group
Company of any of the Ancillary Agreements to which it is a party; and
(e) any untrue statement or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, contained
in any Offering Document.
SECTION 4.4 Indemnification by LAZ-MD. LAZ-MD shall indemnify, defend and
hold harmless each LFCM Indemnitee and each Lazard Group Indemnitee from and
against any and all Indemnifiable Losses of the LFCM Indemnitees and the
Lazard Group Indemnitees to the extent relating to, arising out of or
resulting from any breach by LAZ-MD of this Agreement or any of the Ancillary
Agreements to which it is a party.
SECTION 4.5 Indemnification Obligations Net of Insurance Proceeds and
Other Amounts. (a) The Parties intend that any Indemnifiable Loss subject to
indemnification or reimbursement pursuant to this Agreement will be net of
Insurance Proceeds actually recovered by or on behalf of the Indemnitee in
reduction of the related Indemnifiable Loss. Accordingly, except as otherwise
expressly provided in such sections of the Insurance Matters Agreement, (i)
the amount that any Party (an "Indemnifying Party") is required to pay to any
person entitled to indemnification hereunder (an "Indemnitee") will be reduced
by any Insurance Proceeds theretofore actually recovered by or on behalf of
the Indemnitee in reduction of the related Indemnifiable Loss; and (ii) if an
Indemnitee receives a payment (an "Indemnity Payment") required by this
Agreement from an Indemnifying Party in respect of any Indemnifiable Loss and
subsequently receives Insurance Proceeds in reduction of such Indemnifiable
Loss, then the Indemnitee will promptly pay to the Indemnifying Party an
amount equal to the excess of the Indemnity Payment received over the amount
of the Indemnity Payment that would have been due if the Insurance Proceeds
had been received, realized or recovered before the Indemnity Payment was
made.
(b) The existence of a claim by an Indemnitee for monies from an insurer
or against a third party in respect of an Indemnifiable Loss shall not,
however, delay any Indemnity
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Payment pursuant to the indemnification provisions contained herein and
otherwise determined to be due and owing by an Indemnifying Party.
SECTION 4.6 Procedures for Indemnification of Third Party Claims. (a) If
an Indemnitee shall receive actual notice of the assertion by a person
(including any Governmental Authority) other than LAZ-MD, any Lazard Group
Company or any LFCM Company or any of their respective Affiliates (a "Third
Party") of any claim, or of the commencement by any such person of any Action,
with respect to which an Indemnifying Party may be obligated to provide
indemnification to such Indemnitee pursuant to Section 4.2, 4.3 or 4.4 or any
other indemnification provision set forth herein or in any Ancillary Agreement
(collectively, a "Third Party Claim"), such Indemnitee shall give such
Indemnifying Party and, if Lazard Group is not the Indemnifying Party, Lazard
Group prompt written notice thereof (and in any event not more than 30 days
after receiving such actual notice of such Third Party Claim). Any such notice
shall describe the Third Party Claim in reasonable detail, including, if
known, the amount of the Indemnifiable Loss for which indemnification may be
available or a good faith estimate thereof. Notwithstanding the foregoing, the
failure of any Indemnitee or other person to give notice within the 30-day
period as provided in this Section 4.6(a) shall not relieve the related
Indemnifying Party of its obligations under this Article IV, except to the
extent that such Indemnifying Party is actually prejudiced by such failure to
give notice within such 30-day period.
(b) An Indemnifying Party may elect (but is not required) to assume the
defense of and defend, at such Indemnifying Party's own expense and by such
Indemnifying Party's own counsel, any Third Party Claim. Within 30 days after
the receipt of notice from an Indemnitee in accordance with Section 4.6(a),
the Indemnifying Party shall notify the Indemnitee of its election whether the
Indemnifying Party will assume responsibility for defending such Third Party
Claim, which election shall specify any reservations or exceptions. After
notice from an Indemnifying Party to an Indemnitee of its election to assume
the defense of a Third Party Claim, such Indemnitee shall have the right to
employ separate counsel and to participate in (but not control) the defense,
compromise, or settlement thereof, but the fees and expenses of such counsel
shall be the expense of such Indemnitee. Notwithstanding anything to the
contrary, Lazard Group or its designee shall have the right to assume the
defense of and defend, at the Indemnifying Party's expense and by Lazard
Group's own counsel, any of the claims or matters set forth on Schedule
4.6(b).
(c) If an Indemnifying Party elects not to assume responsibility for
defending a Third Party Claim, or fails to notify an Indemnitee of its
election as provided in Section 4.6(b), such Indemnitee may defend such Third
Party Claim at the cost and expense of the Indemnifying Party; provided, that
the Indemnifying Party may thereafter assume the defense of such Third Party
Claim upon notice to the Indemnitee (but the cost and expense of such
Indemnitee in defending such Third Party Claim incurred from the last day of
the notice period under Section 4.6(b) until such date as the Indemnifying
Party shall assume the defense of such Third Party Claim shall be paid by the
Indemnifying Party).
(d) If an Indemnifying Party elects not to assume responsibility for
defending a Third Party Claim, or fails to notify an Indemnitee of its
election as provided in Section 4.6(b), and has not thereafter assumed such
defense as provided in Section 4.6(c), such Indemnitee shall
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have the right to settle or compromise such Third Party Claim, and any such
settlement or compromise made or caused to be made of such Third Party Claim
in accordance with this Article IV shall be binding on the Indemnifying Party,
in the same manner as if a final judgment or decree had been entered by a
court of competent jurisdiction in the amount of such settlement or
compromise. Notwithstanding the foregoing sentence, the Indemnitee shall not
compromise or settle a Third Party Claim without the express prior consent of
the Indemnifying Party (which consent the Indemnifying Party may withhold in
its sole discretion unless the compromise or settlement includes, as a part
thereof, a full and unconditional release by the plaintiff or claimant of the
Indemnitee and the Indemnifying Party from all liability with respect to such
Third Party Claim and does not require the Indemnifying Party to be subject to
any non-monetary remedy, in which case such consent may not be unreasonably
withheld or delayed).
(e) The Indemnifying Party shall have the right to compromise or settle a
Third Party Claim the defense of which it shall have assumed pursuant to
Section 4.6(b) or Section 4.6(c) and any such settlement or compromise made or
caused to be made of a Third Party Claim in accordance with this Article IV
shall be binding on the Indemnitee, in the same manner as if a final judgment
or decree had been entered by a court of competent jurisdiction in the amount
of such settlement or compromise. Notwithstanding the foregoing sentence, the
Indemnifying Party shall not have the right to admit Liability on behalf of
the Indemnitee and shall not compromise or settle a Third Party Claim in each
case without the express prior consent of the Indemnitee (not to be
unreasonably withheld or delayed); provided that such prior consent shall not
be required in the case of any such compromise or settlement if and only if
the compromise or settlement includes, as a part thereof, a full and
unconditional release by the plaintiff or claimant of the Indemnitee from all
liability with respect to such Third Party Claim and does not require the
Indemnitee to make any payment that is not fully indemnified under this
Agreement or to be subject to any non-monetary remedy.
SECTION 4.7 Additional Matters. (a) Any claim on account of an
Indemnifiable Loss that does not result from a Third Party Claim shall be
asserted by written notice given by the Indemnitee to the related Indemnifying
Party, which notice shall be given promptly after the Indemnitee shall receive
actual notice of such Indemnifiable Loss (and in any event not more than 30
days after receiving such actual notice of such Indemnifiable Loss). Such
Indemnifying Party shall have a period of 30 days after the receipt of such
notice within which to respond thereto. If such Indemnifying Party does not
respond within such 30-day period, such Indemnifying Party shall be deemed to
have agreed to accept responsibility to make payment. If such Indemnifying
Party does not respond within such 30-day period or rejects such claim in
whole or in part, such Indemnitee shall be free to pursue such remedies as may
be available to such Party as contemplated by this Agreement and the Ancillary
Agreements. Any such notice shall describe the claimed Indemnifiable Loss in
reasonable detail, including, if known, the amount of the Indemnifiable Loss
for which indemnification may be available or a good faith estimate thereof.
Notwithstanding the foregoing, the failure of any Indemnitee or other person
to give notice within the 30-day period as provided in this Section 4.7(a)
shall not relieve the related Indemnifying Party of its obligations under this
Article IV, except to the extent that such Indemnifying Party is actually
prejudiced by such failure to give notice within such 30-day period.
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(b) In the event of payment by or on behalf of any Indemnifying Party to
any Indemnitee in connection with any Third Party Claim, such Indemnifying
Party shall be subrogated to and shall stand in the place of such Indemnitee
as to any events or circumstances in respect of which such Indemnitee may have
any right, defense or claim relating to such Third Party Claim against any
claimant or plaintiff asserting such Third Party Claim or against any other
person. Such Indemnitee shall cooperate with such Indemnifying Party in a
reasonable manner, and at the cost and expense of such Indemnifying Party, in
prosecuting any subrogated right, defense or claim.
(c) LFCM shall, and shall cause the other LFCM Indemnitees to, Lazard
Group shall, and shall cause the other Lazard Group Indemnitees to, and LAZ-MD
shall, and shall cause the other LAZ-MD Indemnitees to, make available to each
other, their counsel and other representatives, all information and documents
reasonably available to them that relate to any Third Party Claim, and
otherwise cooperate as may reasonably be required in connection with the
investigation, defense and settlement thereof, subject to the terms and
conditions of a mutually acceptable joint defense agreement.
SECTION 4.8 Remedies Cumulative. The remedies provided in this Article IV
shall be cumulative and shall not preclude assertion by any Indemnitee of any
other rights or the seeking of any and all other remedies against any
Indemnifying Party; provided, that the procedures set forth in Section 4.6 and
Section 4.7 shall be the exclusive procedures governing any indemnity action
brought under this Agreement, except as otherwise expressly provided in any of
the Ancillary Agreements.
SECTION 4.9 Survival of Indemnities. The rights and obligations of each
of Lazard Group, LAZ-MD and LFCM and their respective Indemnitees under this
Article IV shall survive the sale or other transfer by any Party of any Assets
or businesses or the assignment by it of any Liabilities.
ARTICLE V
CERTAIN ADDITIONAL COVENANTS RELATING
TO THE SEPARATION AND RECAPITALIZATION
SECTION 5.1 Intercompany Agreements; Intercompany Accounts. (a) All
contracts, licenses, agreements, commitments or other arrangements, formal or
informal, written or oral, between any of LAZ-MD or any Lazard Group Company,
on the one hand, and any LFCM Company, on the other hand, in existence as of
the Distribution Time, shall terminate effective as of the Distribution Time,
and no persons party to any such contract, license, agreement, commitment or
other arrangement shall have any rights under such contract, license,
agreement, commitment or arrangement, except, in each case, (i) for this
Agreement and any Ancillary Agreement (including each other agreement or
instrument expressly contemplated by this Agreement or any Ancillary Agreement
(A) to be entered into by any of the Parties or, if applicable, any of the
members of their respective Groups or (B) to survive the Separation), (ii) for
any contracts, licenses, agreements, commitments or other arrangements to
which any person other than the Parties or their respective Subsidiaries is a
party and (iii) the agreements set forth on Schedule 5.1.
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(b) Notwithstanding anything to the contrary in Section 5.1(a), after the
Distribution Time, the Parties shall be obligated to pay only those
intercompany accounts between any of LAZ-MD or any Lazard Group Company, on
the one hand, and any LFCM Company, on the other hand, outstanding as of the
Distribution Time that arose in connection with transfers of goods and
services in the ordinary course of business, consistent with past practices
(which the Parties shall use reasonable efforts to settle prior to the
Distribution Time) and all other intercompany accounts outstanding as of the
Distribution Time shall be settled without transfer of non-financial assets as
of the Distribution Time, except as otherwise contemplated by this Agreement.
SECTION 5.2 Guarantee Obligations. (a) Lazard Group and LFCM shall
cooperate, and shall cause their respective Groups to cooperate, to terminate,
or to cause a Lazard Group Company to be substituted in all respects for any
LFCM Company in respect of, all obligations of any LFCM Company under any
Lazard Group Liabilities for which such LFCM Company may be liable, as
guarantor, original tenant, primary obligor or otherwise. If such a
termination or substitution is not effected by the Distribution Time, (i)
Lazard Group shall indemnify and hold harmless the LFCM Indemnitees for any
Indemnifiable Loss arising from or relating thereto, and (ii) without the
prior written consent of LFCM, from and after the Distribution Time, Lazard
Group shall not, and shall not permit any other Lazard Group Company to, renew
or extend the term of, increase its obligations under, or transfer to a third
party, any loan, lease, contract or other obligation for which any LFCM
Company is or may be liable unless all obligations of the LFCM Companies with
respect thereto are thereupon terminated by documentation reasonably
satisfactory in form and substance to LFCM; provided, that the limitations
contained in clause (ii) shall not apply in the event that a Lazard Group
Company obtains a letter of credit from a financial institution reasonably
acceptable to LFCM and for the benefit of LFCM with respect to such obligation
of the LFCM Companies.
(b) Lazard Group and LFCM shall cooperate, and shall cause their
respective Groups to cooperate, to terminate, or to cause an LFCM Company to
be substituted in all respects for any Lazard Group Company in respect of, all
obligations of any Lazard Group Company under any LFCM Liabilities for which
such Lazard Group Company may be liable, as guarantor, original tenant,
primary obligor or otherwise. If such a termination or substitution is not
effected by the Distribution Time, (i) LFCM shall indemnify and hold harmless
the Lazard Group Indemnitees for any Indemnifiable Loss arising from or
relating thereto, and (ii) without the prior written consent of Lazard Group,
from and after the Distribution Time, LFCM shall not, and shall not permit any
other LFCM Company to, renew or extend the term of, increase its obligations
under, or transfer to a third party, any loan, lease, contract or other
obligation for which any Lazard Group Company is or may be liable unless all
obligations of the Lazard Group Companies with respect thereto are thereupon
terminated by documentation reasonably satisfactory in form and substance to
Lazard Group; provided, that the limitations contained in clause (ii) shall
not apply in the event that an LFCM Company obtains a letter of credit from a
financial institution reasonably acceptable to Lazard Group and for the
benefit of Lazard Group with respect to such obligation of the Lazard Group
Companies.
SECTION 5.3 Commercially Reasonable Efforts. (a) In addition to the
actions specifically provided for elsewhere in this Agreement, each of the
Parties shall use its commercially reasonable efforts, prior to, at and after
the Distribution Time, to take, or cause to
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be taken, all actions, and to do, or cause to be done, all things, reasonably
necessary, proper or advisable under applicable laws, regulations and
agreements to consummate and make effective the transactions contemplated by
this Agreement and the Ancillary Agreements.
(b) Without limiting the foregoing, prior to, at and after the
Distribution Time, each Party shall cooperate with the other Parties, and
without any further consideration, to cause to be executed and delivered all
instruments, including instruments of conveyance, assignment and transfer, and
to make all filings with, and to obtain all consents, approvals or
authorizations of, any Governmental Authority or any other person under any
permit, license, agreement, indenture or other instrument (including any
Consents or Governmental Approvals), and to take all such other actions as
such Party may reasonably be requested to take by any other Party from time to
time, consistent with the terms of this Agreement and the Ancillary
Agreements, in order to effectuate the provisions and purposes of this
Agreement and the Ancillary Agreements and each of the Separation and
Recapitalization (including the Exchange, Forced Sale, Contribution, First
Redemption, First Distribution, Financing Transactions, Second Redemption and
Second Distribution) and the other transactions contemplated hereby and
thereby.
(c) Each of the Parties shall, and, if applicable, shall cause members of
its Group to, use its commercially reasonable efforts to obtain, or cause to
be obtained, any consent, substitution, approval or amendment required to
novate (including with respect to any federal government contract) or assign
all obligations under agreements, leases, licenses and other obligations or
Liabilities of any nature whatsoever that constitute LFCM Liabilities, or to
obtain in writing the unconditional release of all parties to such
arrangements other than any member of the LFCM Companies, so that, in any such
case, LFCM and its Group will be solely responsible for such Liabilities;
provided, that no Party or the other members of its Group shall be obligated
to pay any consideration therefor to any Governmental Authority or third party
from whom such consents, approvals, substitutions and amendments are
requested.
ARTICLE VI
ACCESS TO INFORMATION
SECTION 6.1 Agreement for Exchange of Information. (a) At any time
before, on or after the Distribution Time, (i) Lazard Group, on behalf of each
Lazard Group Company, agrees to provide, or cause to be provided, to each of
LAZ-MD and LFCM, (ii) LFCM, on behalf of each LFCM Company, agrees to provide,
or cause to be provided, to each of LAZ-MD and Lazard Group, and (iii) LAZ-MD
agrees to provide, or cause to be provided, to each of LFCM and Lazard Group,
in each case as soon as reasonably practicable after written request therefor
from such other Party, any Information in the possession or under the control
of such respective Group, if applicable, that the requesting Party reasonably
needs (i) to comply with reporting, disclosure, filing or other requirements
imposed on the requesting Party (including under applicable securities or tax
laws) by a Governmental Authority having jurisdiction over the requesting
Party, (ii) for use in any other judicial, regulatory, administrative, tax or
other proceeding or in order to satisfy audit, accounting, claims, regulatory,
litigation, tax or other similar requirements, or (iii) to comply with its
obligations under this Agreement or any Ancillary Agreement; provided,
however, that in the event that any Party reasonably determines that any such
provision of Information could be commercially detrimental to such Party or
any
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member of its Group, if applicable, violate any law or agreement to which
such Party or member of its Group, if applicable, is a party, or waive any
attorney-client privilege applicable to such Party or member of its Group, if
applicable, the Parties shall take all reasonable measures to permit the
compliance with the obligations pursuant to this Section 6.1(a) in a manner
that avoids any such harm or consequence (including by entering into joint
defense or similar arrangements); provided, further, that in the event, after
taking all such reasonable measures, the Party subject to such law or
agreement is unable to provide any Information without violating such law or
agreement, such Party shall not be obligated to provide such Information to
the extent it would violate such law or agreement. The Parties intend that any
transfer of Information that would otherwise be within the attorney-client
privilege shall not operate as a waiver of any potentially applicable
privilege. Each Party shall make its employees and facilities available and
accessible during normal business hours and on reasonable prior notice to
provide an explanation of any Information provided hereunder.
(b) Notwithstanding anything to the contrary in Section 6.1(a), after the
Distribution Time, LFCM shall provide, or cause to be provided, to Lazard
Group in such form as Lazard Group shall request, at no charge to Lazard
Group, all financial and other data and Information in the possession or under
the control of LFCM or any other LFCM Company as Lazard Group determines
necessary or advisable in order to prepare Lazard Group's and other Lazard
Group Companies' financial statements or any other reports or filings of
Lazard Group Companies with any Governmental Authority.
SECTION 6.2 Ownership of Information. Any Information owned by one Group
or Party that is provided to a requesting Party pursuant to Section 6.1 shall
be deemed to remain the property of the providing person (or person on whose
behalf such Information is being provided). Unless specifically set forth
herein, nothing contained in this Agreement shall be construed as granting or
conferring rights of license or otherwise in any such Information.
SECTION 6.3 Compensation for Providing Information. The Party requesting
such Information agrees to reimburse the other Party for the reasonable
out-of-pocket costs, if any, of creating, gathering and copying such
Information, to the extent that such costs are incurred for the benefit of the
requesting Party by or on behalf of such other Party or its Group, if
applicable. Except as may be otherwise specifically provided elsewhere in this
Agreement or in any other Ancillary Agreement, such costs shall be computed in
accordance with the providing Party's standard methodology and procedures.
SECTION 6.4 Record Retention. To facilitate the possible exchange of
Information pursuant to this Article VI and other provisions of this Agreement
after the Distribution Time, the Parties agree to use their reasonable best
efforts to retain all Information in their respective possession or control at
the Distribution Time in accordance with the policies of Lazard Group as in
effect at the Distribution Time.
SECTION 6.5 Limitation of Liability. No Party shall have any liability to
the other Party in the event that any Information exchanged or provided
pursuant to this Agreement that is an estimate or forecast, or which is based
on an estimate or forecast, is found to be inaccurate, in the absence of
willful misconduct or fraud by the Party providing such
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Information. No Party shall have any liability to the other Party if any
Information is destroyed after using its reasonable best efforts in accordance
with the provisions of Section 6.4.
SECTION 6.6 Other Agreements Providing for Exchange of Information. The
rights and obligations granted under this Article VI are subject to any
specific limitations, qualifications or additional provisions on the sharing,
exchange or confidential treatment of Information set forth in any Ancillary
Agreement.
SECTION 6.7 Production of Witnesses; Records; Cooperation. (a) After the
Distribution Time, except in the case of an adversarial Action by one Party
(or, if applicable, any member of its Group) against another Party (or, if
applicable, any member of its Group) (which shall be governed by such
discovery rules as may be applicable thereto), each Party shall use its
reasonable best efforts to make available to the other Party, upon written
request, the former, current and future directors, officers, employees, other
personnel and agents of the members of its respective Group as witnesses and
any books, records or other documents within its control or which it otherwise
has the ability to make available, at the offices of such Party during normal
business hours, in each case to the extent that any such person (giving
consideration to business demands of such directors, officers, employees,
other personnel and agents) or books, records or other documents may
reasonably be required (and, in the case of any such person, for reasonable
periods of time) in connection with any Action in which the requesting Party
may from time to time be involved, regardless of whether such Action is a
matter with respect to which indemnification may be sought hereunder. The
requesting Party shall bear all out-of-pocket costs and expenses (including
allocated costs of in-house counsel and other personnel) in connection
therewith.
(b) If an Indemnifying Party chooses to defend or to seek to compromise
or settle any Third Party Claim, each Party shall use its reasonable best
efforts to make available to the other Party, upon written request, the
former, current and future directors, officers, employees, other personnel and
agents of such Party and, if applicable, the members of its respective Group
as witnesses and any books, records or other documents within its control or
which it otherwise has the ability to make available during normal business
hours, to the extent that any such person (giving consideration to business
demands of such directors, officers, employees, other personnel and agents) or
books, records or other documents may reasonably be required (and, in the case
of any such person, for reasonable periods of time) in connection with such
defense, settlement or compromise, as the case may be, and shall otherwise
cooperate in such defense, settlement or compromise, as the case may be, in
each case at the Indemnifying Party's expense. The Indemnifying Party shall
bear all out-of-pocket costs and expenses (including allocated costs of
in-house counsel and other personnel) in connection therewith.
(c) Without limiting the foregoing, the Parties shall cooperate and
consult, and, if applicable, cause each member of its respective Group to
cooperate and consult, to the extent reasonably necessary with respect to any
Actions.
(d) Without limiting any provision of this Section 6.7, each of the
Parties agrees to cooperate, and, if applicable, to cause each member of its
respective Group to cooperate, with each other in the defense of any
infringement or similar claim with respect to any intellectual property and
shall not claim to acknowledge, or permit any member of its respective
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Group to claim to acknowledge, the validity or infringing use of any
intellectual property of a third person in a manner that would hamper or
undermine the defense of such infringement or similar claim.
(e) The obligation of the Parties to provide witnesses pursuant to this
Section 6.7 is intended to be interpreted in a manner so as to facilitate
cooperation and shall include the obligation to provide as witnesses,
directors, officers, employees, other personnel and agents without regard to
whether any such individual could assert a possible business conflict (subject
to the exception set forth in the first sentence of Section 6.7(a)).
(f) In connection with any matter contemplated by this Section 6.7, the
applicable Parties will enter into a mutually acceptable joint defense
agreement so as to maintain to the extent practicable any applicable
attorney-client privilege or work product immunity of any Party or, if
applicable, any member of any Group.
SECTION 6.8 Confidentiality. (a) Subject to Section 6.9, each of the
Parties agrees to hold, and to cause each member of its Group and its and each
member of its Group's respective directors, officers, employees, agents,
accountants, counsel and other advisors and representatives (collectively, and
together with the members of its Group, "Representatives") to hold, in strict
confidence, with at least the same degree of care that applies to Lazard
Group's confidential and proprietary information pursuant to policies in
effect at the Distribution Time, all Information concerning each such other
Party or Group (including such person's clients, transactions, business,
assets, liabilities, performance or operations) that is either in its
possession (including Information in its possession prior to any of the date
hereof, the Contribution Effective Time or the Distribution Time) or furnished
by any such other Party or its Representatives at any time pursuant to this
Agreement, any Ancillary Agreement or otherwise (collectively, "Covered
Information"), except that the following shall not be deemed to be Covered
Information: any such Information to the extent that (i) at the time of
disclosure such Information is generally available to and known by the public
(other than as a result of a disclosure by the disclosing Party or by any of
its Representatives in breach of this Section 6.8) or (ii) such Information
has after the Distribution Time been lawfully acquired from other sources by
such Party (or, if applicable, any member of such Party's Group) on a
non-public basis which sources are, to the knowledge of the Party acquiring
such Information, not themselves bound by a contractual, legal or fiduciary
obligation that would limit or prohibit disclosure of such Information.
(b) Subject to Section 6.9, each Party agrees (i) not to use any Covered
Information other than for such purposes as shall be expressly permitted
hereunder or under any Ancillary Agreement and (ii) not to release or
disclose, or permit to be released or disclosed, any Covered Information to
any other person, except its Representatives who need to know such Covered
Information (who shall be advised of their obligations hereunder with respect
to such Covered Information), except in compliance with Section 6.9. Without
limiting the foregoing, when any Covered Information is no longer needed for
the purposes contemplated by this Agreement or any Ancillary Agreement, each
Party will promptly after request of the Party that provided such Covered
Information either return to such Party all such Covered Information in a
tangible form (including all copies thereof and all notes, analyses,
presentations, extracts or summaries based thereon) or certify to the other
Party that it has destroyed such Covered
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Information (and such copies thereof and such notes, extracts, analyses,
presentations or summaries based thereon). Notwithstanding the return or
destruction of the Covered Information, such Party will continue to be bound
by its obligations of confidentiality and other obligations hereunder.
SECTION 6.9 Protective Arrangements. In the event that any Party or any
member of its Group either determines on the advice of its counsel that it is
required to disclose any Covered Information of any other Party (or any member
of such other Party's Group) pursuant to applicable law or receives any demand
under lawful process or from any Governmental Authority to disclose or provide
Covered Information of any other Party (or any member of such other Party's
Group), such Party shall notify the other Party prior to disclosing or
providing such Covered Information and shall cooperate at the expense of the
requesting Party in seeking any reasonable protective arrangements requested
by such other Party. Subject to the foregoing, the person that received such
request may thereafter disclose or provide Covered Information if and to the
extent required by such law (as so advised by counsel) or by lawful process or
such Governmental Authority; provided, that the person shall only disclose
such portion of the Covered Information so required to be disclosed or
provided.
ARTICLE VII
NO REPRESENTATIONS OR WARRANTIES
SECTION 7.1 No Representations or Warranties to LFCM. LFCM, on behalf of
itself and all LFCM Companies and their Representatives, understands and
agrees that, except as expressly set forth herein or in any other Ancillary
Agreement, (a) none of Lazard Group, any other Lazard Group Company, LAZ-MD,
their respective Representatives or any other person is, in this Agreement or
in any other agreement or document, making any representation or warranty of
any kind whatsoever, express or implied, to LFCM, any other LFCM Company or
any of their Representatives in any way with respect any of the transactions
contemplated hereby or the business, assets, condition or prospects (financial
or otherwise) of, or any other matter involving, the Assets, Liabilities or
businesses of Lazard Group, any other Lazard Group Company, LAZ-MD, LFCM or
any other LFCM Company, any LFCM Assets, any LFCM Liabilities or the LFCM
Businesses, (b) LFCM and each member of the LFCM Companies shall take all of
the LFCM Assets, the LFCM Businesses and LFCM Liabilities on an "as is, where
is" basis, and all implied warranties of merchantability, fitness for a
specific purpose or otherwise are hereby expressly disclaimed by LAZ-MD,
Lazard Group (on behalf of itself and each other Lazard Group Company), their
respective Representatives and each other person, and (c) none of Lazard
Group, any other Lazard Group Company, LAZ-MD, their respective
Representatives or any other person is making any representation or warranty
with respect to the Separation and the Recapitalization (including the
Exchange, Forced Sale, Contribution, First Redemption, First Distribution,
Financing Transactions, Second Redemption and Second Distribution) or the
entering into of this Agreement or the Ancillary Agreements or the
transactions contemplated hereby and thereby.
SECTION 7.2 LFCM to Bear Risk. Except as expressly set forth herein or in
any other Ancillary Agreement, LFCM and each other LFCM Company shall bear the
economic and legal risk that the LFCM Assets shall prove to be insufficient or
that the title of any LFCM
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Company to any LFCM Assets shall be other than good and marketable and free
from encumbrances.
SECTION 7.3 LAZ-MD to Bear Risk. Except as expressly set forth herein or
in any other Ancillary Agreement, LAZ-MD shall bear the economic and legal
risk that the assets it holds immediately after the Separation and
Recapitalization shall prove to be insufficient or that the title of LAZ-MD to
any such assets shall be other than good and marketable and free from
encumbrances.
SECTION 7.4 No Representations or Warranties to LAZ-MD. LAZ-MD, on behalf
of itself and its Representatives, understands and agrees that, except as
expressly set forth herein or in any other Ancillary Agreement, (a) none of
Lazard Group, any other Lazard Group Company, LFCM, any other LFCM Company,
their respective Representatives or any other person is, in this Agreement or
in any other agreement or document, making any representation or warranty of
any kind whatsoever, express or implied, to LAZ-MD or its Representatives in
any way with respect any of the transactions contemplated hereby or the
business, assets, condition or prospects (financial or otherwise) of, or any
other matter involving, the Assets, Liabilities or businesses of Lazard Group,
any other Lazard Group Company, LAZ-MD, LFCM or any other LFCM Company, any
LFCM Assets, any LFCM Liabilities or the LFCM Businesses, (b) LFCM and each
member of the LFCM Companies shall take all of the LFCM Assets, the LFCM
Businesses and LFCM Liabilities on an "as is, where is" basis, and all implied
warranties of merchantability, fitness for a specific purpose or otherwise are
hereby expressly disclaimed by Lazard Group (on behalf of itself and each
other Lazard Group Company), its Representatives and each other person, and
(c) none of Lazard Group, any other Lazard Group Company, LFCM, any other LFCM
Company, their respective Representatives or any other person is making any
representation or warranty with respect to the Separation and the
Recapitalization (including the Exchange, Forced Sale, Contribution, First
Redemption, First Distribution, Financing Transactions, Second Redemption and
Second Distribution) or the entering into of this Agreement or the Ancillary
Agreements or the transactions contemplated hereby and thereby.
ARTICLE VIII
LAZ-MD EXCHANGEABLE INTERESTS
SECTION 8.1 Exchange Rights. (a) LAZ-MD Class II Interests shall be
exchangeable with LAZ-MD for Lazard Group Common Interests held by LAZ-MD, on
the terms, and subject to the conditions, set forth in this Article VIII, at
the LAZ-MD Exchange Ratio then in effect (the "LAZ-MD Exchange"), and Lazard
Group Common Interests held by LAZ-MD or any Lazard Group MD Common Interests
shall be exchangeable with Lazard Ltd Sub A and Lazard Ltd Sub B for shares of
Lazard Ltd Common Stock, on the terms, and subject to the conditions, set
forth in this Article VIII, at the Lazard Group Exchange Ratio then in effect
(the "Lazard Group Exchange," and together with the LAZ-MD Exchange, the "MD
Exchanges").
(b) Provisions that apply to the exchange of all of an Exchangeable
Interest shall also apply to an exchange of a portion of an Exchangeable
Interest. Each MD Exchange
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shall be expressed in terms of the LAZ-MD Class II Units or Lazard Group
Common Units being exchanged, as applicable (with each Exchange involving the
transfer of the entire Exchangeable Interest (or applicable portion thereof,
including associated capital, being exchanged)). Notwithstanding anything
herein to the contrary, neither the portion of any LAZ-MD Class II Interest
consisting of "Class II Exchangeable Units" nor any "Dormant Class II
Interest" (each as defined in the LAZ-MD Operating Agreement) shall be
exchangeable for Lazard Group Common Interests held by LAZ-MD or for Lazard
Ltd Common Stock.
(c) A holder of a LAZ-MD Class II Interest is not entitled to any rights
of a holder of a Lazard Group Common Interest or Lazard Ltd Common Stock with
respect to such LAZ-MD Class II Interest until, in the case of a Lazard Group
Common Interest, such holder has exchanged its LAZ-MD Class II Interest for
such Lazard Group Common Interest and only to the extent that such LAZ-MD
Class II Interest shall have been exchanged for a Lazard Group Common Interest
pursuant to this Article VIII, and, in the case of Lazard Ltd Common Stock,
such holder has exchanged its Lazard Group Common Interest for such Lazard Ltd
Common Stock and only to the extent that such Lazard Group Common Interest
shall have been exchanged for Lazard Ltd Common Stock pursuant to this Article
VIII. A holder of a Lazard Group Common Interest is not entitled to any rights
of a holder of Lazard Ltd Common Stock with respect to such Lazard Group
Common Interest until such holder has exchanged its Lazard Group Common
Interest for such Lazard Ltd Common Stock, and only to the extent that such
Lazard Group Common Interest shall have been exchanged for Lazard Ltd Common
Stock pursuant to this Article VIII.
SECTION 8.2 Elective Exchange. (a) Elective Exchanges. Each Exchangeable
MD Member shall be entitled to effect the MD Exchanges for shares of Lazard
Ltd Common Stock in accordance with this Article VIII (each such exchange, an
"Elective Exchange") on the following dates:
(i) Each Exchangeable MD Member shall be entitled to effect the MD
Exchanges with respect to all of such Exchangeable MD Member's
Exchangeable Interest for shares of Lazard Ltd Common Stock on the date
that is the eighth anniversary of the IPO Date and on each subsequent
anniversary date of the IPO Date (the "General Exchange Date"); and
(ii) Each Exchangeable MD Member who is a party to a Retention
Agreement and entitled to accelerated exchange rights thereunder or who
shall otherwise be entitled to accelerated exchange rights under any
Retention Agreement shall be entitled to effect the MD Exchanges with
respect to such Exchangeable MD Member's Exchangeable Interest (or
applicable portion thereof) on the anniversary dates of the IPO Date or
such other dates, in each case as set forth in the applicable Retention
Agreement (each, an "Accelerated Exchange Date", and together with the
General Exchange Date, the "Applicable Exchange Date"), in each case in
the amounts, on the terms and subject to the conditions set forth in such
Retention Agreement.
(b) Procedures. (i) Subject to clause (ii) below, each Elective Exchange
of a LAZ-MD Class II Interest shall be effected in accordance with Section 7.4
of the LAZ-MD Operating Agreement and Section 7.05(a) of the New Lazard Group
Operating Agreement, and
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each Elective Exchange of a Lazard Group MD Common Interest shall be effected
in accordance with Section 7.05(b) of the New Lazard Group Operating
Agreement.
(ii) Except as otherwise provided in this clause (ii), each Exchangeable
MD Member who shall be entitled to make an Elective Exchange and desires to
exchange such member's Exchangeable Interest (or portion thereof) so
exchangeable (an "Electing Member") shall prepare and deliver to LAZ-MD and
each of Lazard Ltd Sub A and Lazard Ltd Sub B a written request signed by such
Electing Member (A) stating the amount of Units underlying the Exchangeable
Interest that such Electing Member desires to exchange, (B) stating whether
the Electing Member shall elect to have such exchange consummated on the
Applicable Exchange Date or the date immediately prior to the date of
effectiveness of any registration statement of Lazard Ltd that Lazard Ltd may
file in order to register the sale by the Electing Member of the shares of
Lazard Ltd Common Stock to be issued in such exchange to such Electing Member
(such date, the "Registration Exchange Date", and the date selected by the
Exchanging Member, the "Exchange Effective Date"), and (C) certifying that
such Electing Member is entitled to exchange the portion of the Exchangeable
Interest that such member desires to exchange and that such Electing Member is
the beneficial owner of such Exchangeable Interest (each such request, an
"Exchange Request"). A properly completed Exchange Request must be delivered
to LAZ-MD and each of Lazard Ltd Sub A and Lazard Ltd Sub B not less than 60
days or more than 90 days prior to the anniversary date on which such Electing
Member desires to effect the Exchanges in accordance with this Section. Each
of Lazard Ltd Sub A and Lazard Ltd Sub B shall have the right to determine
whether any Exchange Request is proper or to waive any infraction of these
procedures. Once delivered, an Exchange Request shall be irrevocable.
(iii) Each Elective Exchange shall be consummated effective as of the
close of Lazard Ltd's business on the applicable Exchange Effective Date (such
time, the "Elective Exchange Effective Time"), and the Electing Member shall
be deemed to have become the holder of record of the applicable shares of
Lazard Ltd Common Stock at such Elective Exchange Effective Time (or, in the
case of an Electing Member who is an Electing LAZ-MD Exchange Member (as
defined in the LAZ-MD Operating Agreement), at the time of receipt of such
shares of Lazard Ltd Common Stock) and all rights of the Electing Member in
respect of the portion of the Exchangeable Interest so exchanged shall
terminate at such Elective Exchange Effective Time. In the event that an
Electing Member shall select the Registration Exchange Date as the Exchange
Effective Date in accordance with clause (ii) above, such Elective Exchange
shall be null and void (and such Electing Member shall continue to hold the
applicable Exchangeable Interest) in the event that the applicable
registration statement shall be abandoned by Lazard Ltd prior to its
effectiveness.
SECTION 8.3 Mandatory Exchanges. (a) Mandatory Exchanges. With respect to
each Exchangeable Interest, a LAZ-MD Exchange and/or a Lazard Group Exchange
shall occur with respect to all or a portion of such Exchangeable Interest,
without any action required on the part of the Exchangeable MD Member holding
such Exchangeable Interest (a "Mandatory Exchange"), as follows:
(i) A Mandatory Exchange with respect to all Exchangeable Interests
shall occur in the event of a Change in Control unless otherwise
determined by the Incumbent Lazard Ltd Board;
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(ii) Each of (1) LAZ-MD and (2) Lazard Ltd Sub A and Lazard Ltd Sub
B (with the prior approval of the Lazard Ltd Board) shall be entitled to
cause the Mandatory Exchange (including any Mandatory Lazard Group
Exchange) with respect to all or any portion of the Exchangeable
Interests, in such party's or parties' discretion (as applicable),
beginning on the date that is the ninth anniversary of the IPO Date and
ending thirty days thereafter (and during an equivalent 30 day period
starting on each subsequent anniversary of the IPO Date); and
(iii) Each of (1) LAZ-MD and (2) Lazard Ltd Sub A and Lazard Ltd Sub
B (with the prior approval of the Lazard Ltd Board) shall be entitled
after the first anniversary of the date hereof to cause a Mandatory
Exchange involving only a LAZ-MD Exchange (a "Partial LAZ-MD Mandatory
Exchange") with respect to all or any portion of the LAZ-MD Class II
Interests in such party's or parties' discretion (as applicable) at any
time in the event that such person determines, in good faith, that such
Partial LAZ-MD Mandatory Exchange is necessary or advisable in light of
actual or potential tax, legal or regulatory concerns.
The Exchangeable MD Member(s) to which any such Mandatory Exchange under this
Section 8.3 shall apply, the "Mandatory Exchange Members," and together with the
Electing Members, the "Exchanging Members." In the event of a transaction that
would otherwise be a Change in Control but for the requirement in the definition
thereof that a Change in Control be consummated after the first anniversary of
the date hereof, a Mandatory Exchange with respect to all Exchangeable Interests
shall occur on the first business day following the first anniversary of the
date hereof unless otherwise determined by the Incumbent Lazard Ltd Board.
(b) Procedures. (i) Each Mandatory Exchange of a LAZ-MD Class II Interest
shall be effected in accordance with Section 7.4 of the LAZ-MD Operating
Agreement and Section 7.05(a) of the New Lazard Group Operating Agreement;
provided, however, that each Partial LAZ-MD Mandatory Exchange shall be
effected in accordance with Section 7.4 of the LAZ-MD Operating Agreement and
Section 7.05(b) and Section 7.05(c) of the New Lazard Group Operating
Agreement; and provided further that each Mandatory Lazard Group Exchange
shall be effected in accordance with Section 7.05(b) of the New Lazard Group
Operating Agreement.
(ii) A Mandatory Exchange pursuant to Section 8.3(a)(i) shall be
consummated immediately prior to the applicable Change in Control or, at the
discretion of Lazard Ltd Sub A and Lazard Ltd Sub B (with the prior approval
of the Lazard Ltd Board), at an earlier time specified by Lazard Ltd Sub A and
Lazard Ltd Sub B in order to permit the holders of the Exchangeable Interests
to participate in such Change in Control together with the holders of Lazard
Ltd Common Stock.
(iii) In the event of a Mandatory Exchange pursuant to Section 8.3(a)(ii)
or Section 8.3(a)(iii), the party electing to cause the Mandatory Exchange
shall provide written notice to each of LAZ-MD and Lazard Group of such
election, which notice shall state (A) the clause of Section 8.3(a) pursuant
to which such party is electing to cause the Mandatory Exchange, (B) whether
the Mandatory Exchange shall apply to all or a portion of the Exchangeable
Interests and, if it shall apply only to a portion thereof, to which
Exchangeable
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Interests such Mandatory Exchange shall apply, and (C) the date and time
on which the Mandatory Exchange shall be consummated. If no date or time
is specified in such notice, then such Mandatory Exchange shall be
consummated 10 business days after the date of such notice.
(iv) In the event of any Mandatory Exchange, Lazard Ltd Sub A and
Lazard Ltd Sub B shall use their respective reasonable best efforts to
deliver notice thereof to the Mandatory Exchange Members not less than 30
days prior to the effective date of such Mandatory Exchange.
Notwithstanding anything to the contrary set forth herein, any failure to
provide such notice for any reason shall not affect the validity or
enforceability of any Mandatory Exchange.
SECTION 8.4 Exchangeable Interests Generally. (a) No New Issuances of
Exchangeable Interests. LAZ-MD hereby agrees not to grant, issue or otherwise
allocate any LAZ-MD Class II Interests (including any LAZ-MD Class II Units),
or any securities exchangeable for or convertible into any LAZ-MD Class II
Interests, other than the issuance of LAZ-MD Class II Interests pursuant to
the Exchange and the Forced Sale and the Initial Grant. Lazard Group hereby
agrees not to grant, issue or otherwise allocate any Lazard Group Common
Interests (including any Lazard Group Common Units), or any securities
exchangeable for or convertible into any Lazard Group Common Interests, other
than (1) the issuance to LAZ-MD of a Lazard Group Common Interest in
connection with the recapitalization of the limited liability company
interests of Lazard Group at the time of effectiveness of the New Lazard Group
Operating Agreement, (2) the issuance of Lazard Group Common Interests to the
Contributing Subsidiaries pursuant to the Financing Transactions, or (3) the
issuance of Lazard Group Common Interests to the Contributing Subsidiaries or
Lazard Ltd or its other Subsidiaries as set forth in Article IX.
(b) Transfers of Exchangeable Interests. No Exchangeable MD Member may
transfer, sell, convey, assign, gift, hypothecate, pledge or otherwise dispose
of, or encumber, any of its Exchangeable Interest except as permitted by the
applicable Operating Agreement or pursuant to an exchange contemplated by this
Article VIII. LAZ-MD shall have the right to effect a Lazard Group Exchange
with respect to the Lazard Group Common Interest that it holds at any time in
accordance with this Article VIII.
LAZ-MD hereby agrees that, notwithstanding anything herein to the
contrary, it shall not transfer, sell, convey, assign, gift, hypothecate,
pledge or otherwise dispose of all or any portion of the Lazard Group Common
Interest it from time to time holds or agree to subject such Lazard Group
Common Interest to a lien, pledge, security interest, right of first refusal,
option or other similar limitation, except as contemplated or permitted by
this Article VIII or as required by law.
(c) Repurchases of Exchangeable Interests. LAZ-MD may repurchase any
LAZ-MD Class II Interest, and Lazard Group may repurchase any Lazard Group MD
Common Interest, pursuant to a written agreement with the Exchangeable MD
Member to transfer such Exchangeable Interest to LAZ-MD or Lazard Group, as
applicable. Any repurchase of a LAZ-MD Class II Interest shall require the
simultaneous sale by LAZ-MD, and repurchase by Lazard Group, of a portion of
LAZ-MD's Lazard Group Common Interest consisting of the number of
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Lazard Group Common Units into which the LAZ-MD Class II Interest being
repurchased would then be exchangeable pursuant to a LAZ-MD Exchange.
SECTION 8.5 No Fractional Shares. Notwithstanding anything to the
contrary herein, Lazard Ltd Sub A and Lazard Ltd Sub B will not transfer any
fractional shares of Lazard Ltd Common Stock upon any Lazard Group Exchange.
In lieu thereof, in each Lazard Group Exchange, Lazard Ltd Sub A and Lazard
Ltd Sub B will transfer shares of Lazard Ltd Common Stock rounded to the
nearest whole share.
SECTION 8.6 Taxes. (a) In any MD Exchange, Lazard Group shall pay any
documentary, stamp or similar issue or transfer tax due on the issue of Lazard
Group Common Interests or shares of Lazard Ltd Common Stock, as applicable,
upon such MD Exchange; provided, that the holder of the Exchangeable Interest
being so exchanged shall pay any such tax which is due because the holder
requests the shares of Lazard Ltd Common Stock to be issued in a name other
than the holder's name. Lazard Ltd Sub A and Lazard Ltd Sub B may refuse to
deliver the certificate representing the Lazard Ltd Common Stock being
transferred to a person other than the Exchanging Member until Lazard Group
receives a sum sufficient to pay any tax which will be due because the shares
are to be transferred to a person other than the Exchanging Member. Nothing
herein shall preclude any tax withholding required by law or regulation.
(b) By effecting an MD Exchange, a holder of an Exchangeable Interest
agrees to treat the U.S. federal income tax consequences of its MD Exchange in
a manner consistent with the U.S. federal income tax characterization
described in the Tax Receivable Agreement.
SECTION 8.7 Lazard Ltd Common Stock. (a) Lazard Ltd covenants and agrees
that it shall from time to time as may be necessary reserve, out of its
authorized but unissued Lazard Ltd Common Stock, a sufficient number of shares
of Lazard Ltd Common Stock solely to sell or otherwise transfer to Lazard Ltd
Sub A and Lazard Ltd Sub B to effect the exchange of all outstanding
Exchangeable Interests into shares of Lazard Ltd Common Stock pursuant to the
MD Exchanges; provided that nothing contained herein shall preclude Lazard Ltd
from satisfying its obligations in respect of the sale or other transfer of
shares of Lazard Ltd Common Stock to Lazard Ltd Sub A and Lazard Ltd Sub B by
delivery of (1) purchased shares which are held by any of its other
Subsidiaries or (2) shares issued to any other Subsidiary of Lazard Ltd.
(b) In the event of any Lazard Group Exchange, Lazard Ltd Sub A and
Lazard Ltd Sub B shall transfer the requisite shares of Lazard Ltd Common
Stock to the Exchanging Member, in such proportions from each of Lazard Ltd
Sub A and Lazard Ltd Sub B as such persons shall determine. All such shares of
Lazard Ltd Common Stock will be duly authorized, validly issued, fully paid
and nonassessable and will be free from preemptive rights and free of any lien
or adverse claim created by Lazard Ltd Sub A, Lazard Ltd Sub B or Lazard Ltd.
(c) Lazard Ltd shall use its reasonable best efforts promptly to comply
with all federal and state securities laws regulating the offer and delivery
of shares of Lazard Ltd Common Stock upon exchange of Exchangeable Interests,
if any, and to list or cause to have quoted such shares of Lazard Ltd Common
Stock on each national securities exchange or on the
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Nasdaq National Market or other over-the-counter market or such other market
on which the Lazard Ltd Common Stock is then listed or quoted; provided,
however, that if rules of such automated quotation system or exchange permit
Lazard Ltd to defer the listing of such Lazard Ltd Common Stock until the
first exchange of the Exchangeable Interests into Lazard Ltd Common Stock in
accordance with the provisions of this Article VIII, Lazard Ltd shall use its
reasonable best efforts to list such Lazard Ltd Common Stock issuable upon
exchange of the Exchangeable Interests in accordance with the requirements of
such automated quotation system or exchange at such time.
SECTION 8.8 Adjustments to LAZ-MD Exchange Ratio. The LAZ-MD Exchange
Ratio shall be appropriately adjusted in the event of any transfer, sale or
other disposition of any Lazard Group Common Interests by LAZ-MD that would
result in the number of Lazard Group Common Units held by LAZ-MD being less
than the number of outstanding LAZ-MD Class II Units (other than, for the
avoidance of doubt, pursuant to any Exchange). Any such transfer, sale or
other disposition of any such Lazard Group Common Interests by LAZ-MD shall
not affect or otherwise alter or adjust the Lazard Group Exchange Ratio except
as provided in Section 8.9.
SECTION 8.9 Adjustments to Lazard Group Exchange Ratio. (a) In the event
that Lazard Ltd shall:
(i) pay a dividend or make a distribution on shares of Lazard Ltd
Common Stock in the form of shares of Lazard Ltd Common Stock;
(ii) subdivide the outstanding shares of Lazard Ltd Common Stock
into a greater number of shares;
(iii) combine the outstanding shares of Lazard Ltd Common Stock into
a smaller number of shares;
(iv) make a distribution on shares of Lazard Ltd Common Stock in
shares of its share capital other than Lazard Ltd Common Stock; or
(v) issue by reclassification of the outstanding shares of Lazard
Ltd Common Stock any shares of its share capital,
then the Lazard Group Exchange Ratio in effect immediately prior to such action
shall be adjusted so that the holder of an Exchangeable Interest thereafter
exchanged in accordance with this Article VIII may receive the number of shares
of share capital of Lazard Ltd that it would have owned immediately following
such action if it had exchanged its Exchangeable Interests in full for shares of
Lazard Ltd Common Stock immediately prior to such action.
(b) In the event that Lazard Ltd shall issue to all or substantially all
holders of Lazard Ltd Common Stock any rights, options or warrants (other than
pursuant to any dividend reinvestment, share purchase or similar plan)
entitling the holders thereof to subscribe for or purchase shares of Lazard
Ltd Common Stock (or securities exchangeable for or convertible into such
shares) for a period expiring within 60 days from the date of issuance of such
rights, options or warrants at a price per share less than the Current Market
Price as of the Time of
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Determination, then the Lazard Group Exchange Ratio in effect immediately
prior to such action shall be adjusted by multiplying it by a fraction:
(i) the numerator of which is the sum of (a) the number of shares of
Lazard Ltd Common Stock (for the avoidance of doubt, excluding
Exchangeable Interests) outstanding on the record date fixed for the
applicable distribution plus (b) the total number of additional shares of
Lazard Ltd Common Stock offered for subscription or purchase, and
(ii) the denominator of which is the sum of (a) the number of shares
of Lazard Ltd Common Stock (for the avoidance of doubt, excluding
Exchangeable Interests) outstanding on the record date fixed for the
distribution plus (b) the total number of shares of Lazard Ltd Common
Stock that the aggregate offering price of the total number of shares
offered for subscription or purchase would purchase at the Current Market
Price,
except that no adjustment will be made if holders of the Exchangeable Interests
may participate in the distribution on a basis and with the notice that the
Lazard Ltd Board determines to be fair and appropriate. Any such adjustment
shall be subject to further adjustment in order to preserve to the maximum
extent practicable the economic rights of the Exchangeable Interests, with any
such adjustment to be determined in good faith by the Lazard Ltd Board in
consultation with the Board of Directors of LAZ-MD. The adjustment shall become
effective immediately after the record date for the determination of
shareholders entitled to receive the rights, warrants or options to which this
Section 8.9(b) applies. To the extent that such rights, warrants or options are
not exercised prior to their expiration (and as a result no additional shares of
Lazard Ltd Common Stock are delivered or issued pursuant to such rights,
warrants or options), the Lazard Group Exchange Ratio shall be readjusted to the
Lazard Group Exchange Ratio that would then be in effect had the adjustments
made upon the issuance of such rights, warrants or options been made on the
basis of delivery or issuance of only the number of shares of Lazard Ltd Common
Stock actually delivered or issued. "Time of Determination" means the time and
date of the earlier of (i) the determination of stockholders entitled to receive
rights, warrants or options to which this Section 8.9(b) applies and (ii) the
time immediately prior to the commencement of ex-dividend" trading for such
rights, warrants or options on the NYSE or such other U.S. national or regional
exchange or market on which the Lazard Ltd Common Stock are then listed or
quoted. "Current Market Price" per share of Lazard Ltd Common Stock on any day
means the average of the closing price per share of Lazard Ltd Common Stock on
each of the 20 consecutive trading days ending on the earlier of the day in
question and the day before the "ex date" with respect to the issuance requiring
such computation. For purposes of this paragraph, the term "ex date," when used
with respect to any issuance, means the first date on which the shares of Lazard
Ltd Common Stock trade without the right to receive the issuance.
(c) In the event of (i) any reclassification or change of shares of
Lazard Ltd Common Stock issuable upon exchange of the Exchangeable Interests
(other than a change in par value, or from par value to no par value, or from
no par value to par value, or as a result of a subdivision or combination, or
any other change for which an adjustment is provided in Section 8.9(a) or
Section 8.9(b)); (ii) any consolidation or merger or combination to which
Lazard Ltd is a party other than a merger in which Lazard Ltd is the
continuing corporation and which does not
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result in any reclassification of, or change (other than in par value, or from
par value to no par value, or from no par value to par value, or as a result
of a subdivision or combination) in, outstanding shares of Lazard Ltd Common
Stock; or (iii) any sale, transfer or other disposition of all or
substantially all of the assets of Lazard Ltd, directly or indirectly, to any
person as a result of which holders of Lazard Ltd Common Stock shall be
entitled to receive stock, securities or other property or assets (including
cash) with respect to or in exchange for Lazard Ltd Common Stock, then Lazard
Ltd shall take all necessary action such that the Exchangeable Interests then
outstanding shall be exchangeable into the kind and amount of shares of stock
and other securities and property (including cash) receivable upon such
reclassification, change, combination, consolidation, merger, sale, transfer
or other disposition by a holder of the number of shares of Lazard Ltd Common
Stock deliverable upon exchange of such Exchangeable Interests immediately
prior to such reclassification, change, combination, consolidation, merger,
sale, transfer or other disposition. The provisions of this Section 8.9(c)
shall similarly apply to successive reclassifications, changes, combinations,
consolidations, mergers, sales or conveyances.
SECTION 8.10 Beneficiaries of This Article. Notwithstanding anything
herein to the contrary, LFCM shall not be deemed to be a party to, or
beneficiary of, this Article VIII and shall have no rights, including any
claim or cause or right of action, either in law or in equity, under this
Article VIII.
ARTICLE IX
RELATIONSHIP AMONG THE PARTIES
SECTION 9.1 Scope of LAZ-MD Operations. LAZ-MD hereby agrees not to
conduct any business other than as set forth in Section 2.5 of the LAZ-MD
Operating Agreement.
SECTION 9.2 Parity of Lazard Group Common Units and Shares of Lazard Ltd
Common Stock. It is the non-binding intention of each of Lazard Ltd and Lazard
Group that, unless otherwise determined by the Lazard Ltd Board, the number of
Lazard Group Common Units held directly or indirectly by Lazard Ltd shall at
all times equal the number of outstanding shares of Lazard Ltd Common Stock
(such that the number of Lazard Group Common Units held directly or indirectly
by Lazard Ltd would be proportionately adjusted in the event of any issuance
or repurchase by Lazard Ltd of shares of Lazard Ltd Common Stock by means of a
parallel issuance or repurchase transaction between Lazard Ltd and its
applicable Subsidiaries and Lazard Group), and each of Lazard Ltd and Lazard
Group agree to cooperate to effect the intent of this sentence. Any event that
would result in an adjustment to the Lazard Group Exchange Ratio pursuant to
Section 8.9(a) shall result in an equivalent and customary adjustment of the
ratio of shares of Lazard Ltd Common Stock to Lazard Group Common Units
established in the immediately preceding sentence to the extent necessary to
preserve the economic rights of LAZ-MD and Lazard Ltd in Lazard Group, with
such adjustment to be determined in good faith by the Lazard Ltd Board in
consultation with LAZ-MD. Notwithstanding anything herein to the contrary,
LFCM shall not be deemed to be a party to, or beneficiary of, this Section 9.2
and shall have no rights, including any claim or cause or right of action,
either in law or in equity, under this Section 9.2.
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SECTION 9.3 Lazard Ltd Expenses. It is the non-binding intention of
Lazard Group and Lazard Ltd that Lazard Group shall reimburse Lazard Ltd for
all reasonable third party costs, fees and expenses incurred by Lazard Ltd in
the ordinary course of business, including all costs associated with all
reports and other filings with the SEC. Notwithstanding anything herein to the
contrary, LFCM shall not be deemed to be a party to, or beneficiary of, this
Section 9.3 and shall have no rights, including any claim or cause or right of
action, either in law or in equity, under this Section 9.3.
ARTICLE X
TERMINATION
SECTION 10.1 Termination. This Agreement may be terminated by Lazard
Group in its sole discretion at any time prior to the later of the
consummation of the Separation and the consummation of the Recapitalization.
SECTION 10.2 Effect of Termination. In the event of any termination of
this Agreement pursuant to Section 10.1, no Party (or any member of its Group
or any of its or its Group's directors or officers) shall have any Liability
or further obligation to any other Party.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Representations. Lazard Group represents on behalf of itself
and each other member of the Lazard Group Companies, LFCM represents on behalf
of itself and each other member of the LFCM Companies, and LAZ-MD represents
on behalf of itself, as follows:
(a) each such person has the requisite corporate or other power and
authority and has taken all corporate or other action necessary in order to
execute, deliver and perform each of this Agreement and each other Ancillary
Agreement to which it is a party and to consummate the transactions
contemplated by this Agreement and the Ancillary Agreements to which it is a
party; and
(b) this Agreement has been duly executed and delivered by such person
(if such person is a Party) and constitutes a valid and binding agreement of
it enforceable against such person in accordance with the terms thereof
(assuming the due execution and delivery thereof by the other Party), and each
of the other Ancillary Agreements to which it will be a party will be duly
executed and delivered by it and will constitute a valid and binding agreement
of it enforceable against such person in accordance with the terms thereof
(assuming the due execution and delivery thereof by the other party or parties
to such Ancillary Agreement).
SECTION 11.2 Entire Agreement. This Agreement, the Exhibits and Schedules
hereto and the Ancillary Agreements shall constitute the entire agreement
among the Parties with respect to the subject matter hereof and shall
supersede all previous negotiations, commitments and writings with respect to
such subject matter.
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SECTION 11.3 Expenses. (a) Except as expressly set forth in this
Agreement or in any Ancillary Agreement, and regardless whether or not the
Separation or the Recapitalization is consummated, all third party fees, costs
and expenses paid or incurred in connection with the transactions contemplated
by this Agreement and the Ancillary Agreements will be paid by the Party
incurring such fees, costs or expenses.
(b) With respect to the Common Stock IPO Transaction, Lazard Ltd shall
pay all third party costs, fees and expenses relating to the Common Stock IPO
Transaction, all of the reimbursable expenses of the managing underwriters
pursuant to the underwriting agreements, all of the costs of producing and
filing the applicable Registration Statement (or any comparable foreign
securities law filing) and printing, mailing and otherwise distributing the
prospectus contained in such Registration Statement (or any comparable foreign
securities law filing), as well as the underwriters' discount as provided in
the underwriting agreement.
(c) With respect to the Exchangeable Securities IPO Transaction,
FinanceCo shall pay all third party costs, fees and expenses relating to the
Exchangeable Securities IPO Transaction, all of the reimbursable expenses of
the managing underwriters pursuant to the underwriting agreements, all of the
costs of producing and filing the applicable Registration Statement (or any
comparable foreign securities law filing) and printing, mailing and otherwise
distributing the prospectus contained in such Registration Statement (or any
comparable foreign securities law filing), as well as the underwriters'
discount as provided in the underwriting agreement.
(d) With respect to the Debt Securities Offering, Lazard Group shall pay
all third party costs, fees and expenses relating to the Debt Securities
Offering, all of the reimbursable expenses of the managing underwriters
pursuant to the underwriting agreements, all of the costs of producing and
filing the Debt Securities Prospectus (or any comparable foreign securities
law filing) and printing, mailing and otherwise distributing the prospectus
contained in such Debt Securities Prospectus (or any comparable foreign
securities law filing), as well as the underwriters' discount as provided in
the underwriting agreement.
For the avoidance of doubt, all costs, fees and expenses of the LFCM
Companies arising in connection with LFCM's broker-dealer subsidiary's
involvement as an underwriter in any of the Common Stock IPO Transaction, the
Exchangeable Securities IPO Transaction and the Debt Securities Offering
(regardless of when such costs, fees and expenses were or are incurred) shall
be borne solely by the LFCM Companies.
SECTION 11.4 Notices. All notices, consents, waivers and other
communications required or permitted by this Agreement shall be in writing and
shall be deemed given to a Party when (a) delivered to the appropriate address
by hand or by nationally recognized overnight courier service (costs prepaid);
(b) sent by facsimile with confirmation of transmission by the transmitting
equipment; or (c) received or rejected by the addressee, if sent by certified
mail, return receipt requested, in each case to the following addresses and
facsimile numbers and marked to the attention of the person (by name or title)
designated below (or to such other address, facsimile number or person as a
Party may designate by notice to the other Parties):
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If to Lazard Group or any other Lazard Group Company (other than Lazard
Ltd):
Lazard Group LLC
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Fax: (000) 000-0000
If to Lazard Ltd:
Lazard Ltd
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Fax: (000) 000-0000
If to LFCM or any other LFCM Company:
LFCM Holdings LLC
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Executive Officer
Fax: (000) 000-0000
If to LAZ-MD:
LAZ-MD Holdings LLC
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Board of Directors
Fax: (000) 000-0000
SECTION 11.5 Amendment, Modification or Waiver. This Agreement may be
amended, modified, waived or supplemented, in whole or in part, only by a
written agreement signed by all of the Parties; provided, that any amendment,
modification, waiver or supplement to Article VIII shall only require a
written agreement signed by Lazard Ltd, Lazard Group and LAZ-MD and, provided,
further, that any amendment, modification, waiver or supplement to Section 9.2
or Section 9.3 shall only require a written agreement signed by Lazard Group
and Lazard Ltd. No failure or delay on the part of any Party in the exercise
of any right hereunder shall impair such right or be construed to be a waiver
of, or acquiescence in, any breach of any representation, warranty or
agreement herein, nor shall any single or partial exercise of any such right
preclude other or further exercise thereof or of any other right. The waiver
by such Parties of any breach of this Agreement shall not be construed as a
waiver of any subsequent breach.
SECTION 11.6 Successors and Assigns; No Third Party Beneficiaries. (a)
This Agreement and all of the provisions hereof shall be binding upon and
inure to the benefit of the Parties and their successors and permitted
assigns, but neither this Agreement nor any of the
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rights, interests and obligations hereunder shall be assigned or otherwise
transferred, in whole or in part, by any Party without the prior written
consent of each of the Parties.
(b) Except for the provisions of Article IV, which are also for the
benefit of the Indemnitees, this Agreement is solely for the benefit of the
Parties and is not intended to confer upon any other persons any rights or
remedies hereunder.
SECTION 11.7 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 11.8 Negotiation. In the event of any dispute or disagreement
between any of the Parties hereto (or any of their respective Group members)
arising out of or in connection with this Agreement or any Ancillary Agreement
(including with respect to the interpretation or performance of any provision
hereof or thereof), the dispute or disagreement, upon written request of a
Party, as applicable, shall be referred to representatives of the Parties
involved in such dispute for decision, Lazard Ltd and Lazard Group being
represented by their respective Chief Executive Officers, LFCM being
represented by its Chief Executive Officer, and LAZ-MD being represented by
its board of managers. Such applicable representatives of the Parties shall
promptly meet in a good faith effort to resolve the dispute or disagreement or
determine a means to resolve the dispute or disagreement. If such
representatives do not agree upon a decision within 30 days after reference of
the matter to them, the Parties shall be free to exercise all rights and
remedies available to them under this Agreement or the applicable Ancillary
Agreement.
SECTION 11.9 Specific Performance. The Parties acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement or any of the Ancillary Agreements to which it is a party were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the Parties shall be entitled to an injunction
or injunctions to prevent or cure breaches of the provisions of this Agreement
and such Ancillary Agreement and to enforce specifically the terms and
provisions hereof and thereof, this being in addition to any other remedy to
which they may be entitled by law or equity.
SECTION 11.10 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware (other than the
laws regarding choice of laws and conflicts of laws that would apply the
substantive laws of any other jurisdiction) as to all matters, including
matters of validity, construction, effect, performance and remedies.
SECTION 11.11 Delaware Court. Each of the Parties agrees that all actions
or proceedings arising out of or in connection with this Agreement or any
Ancillary Agreement, or for recognition and enforcement of any judgment
arising out of or in connection with this Agreement or any Ancillary
Agreement, shall be tried and determined exclusively in the state or federal
courts in the State of Delaware, and each of the Parties hereby irrevocably
submits with regard to any such action or proceeding for itself and in respect
to its property, generally and unconditionally, to the exclusive jurisdiction
of the aforesaid courts. Each of the Parties hereby
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expressly waives any right it may have to assert, and agrees not to assert, by
way of motion, as a defense, counterclaim or otherwise, in any such action or
proceeding: (a) any claim that it is not subject to personal jurisdiction in
the aforesaid courts for any reason; (b) that it or its property is exempt or
immune from jurisdiction of any such court or from any legal process commenced
in such courts; and (c) that (i) any of the aforesaid courts is an
inconvenient or inappropriate forum for such action or proceeding, (ii) venue
is not proper in any of the aforesaid courts and (iii) this Agreement or any
Ancillary Agreement, or the subject matter hereof or thereof, may not be
enforced in or by any of the aforesaid courts.
SECTION 11.12 Interpretation; Conflict with Ancillary Agreements. The
Article and Section headings contained in this Agreement are solely for the
purpose of reference, are not part of the agreement of the Parties and shall
not in any way affect the meaning or interpretation of this Agreement. The
provisions of this Agreement shall govern in the event of any conflict between
any provision of this Agreement and that of any Ancillary Agreement, and the
Parties shall execute or cause to be executed an amendment, if necessary in
their good faith judgment, to such Ancillary Agreement to remove such
conflict.
SECTION 11.13 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any applicable
rule of law or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or
incapable of being enforced, the Parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the Parties as
closely as possible in an acceptable manner to the end that transactions
contemplated hereby are fulfilled to the extent possible.
SECTION 11.14 Additional Parties. Each of Lazard Ltd Sub A and Lazard Ltd
Sub B may be added as parties to this Agreement for the purposes of Article
VIII and this Article XI only after the date hereof by execution of a written
agreement signed by such person to become a party hereto. It is expressly
agreed that this Agreement shall become effective and be in full force and
effect immediately upon the execution and delivery hereof by each of the
Parties set forth in the Preamble hereto. Until such time as Lazard Ltd Sub A
and Lazard Ltd Sub B are added as parties hereto in accordance with this
Section 11.14, Lazard Ltd shall cause each of Lazard Ltd Sub A and Lazard Ltd
Sub B to comply with its obligations and responsibilities under Article VIII.
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed as of the date first above written.
LAZARD LTD
By: /s/ Xxxxxxx X. Xxxxxxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Director and Vice President
LAZARD LLC
By: /s/ Xxxxxxx X. Xxxxxxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Chief Financial Officer
LAZ-MD HOLDINGS LLC
By: /s/ Xxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Member
LFCM HOLDINGS LLC
By: /s/ Xxxxxxx X. Xxxxxxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Authorized Signatory
[Signature Page to Master Separation Agreement]
