Form of Employee Benefits Agreement

Exhibit 10.4


FORM OF


EMPLOYEE BENEFITS AGREEMENT

by and among


LAZARD LTD,

LAZARD GROUP LLC,


LAZ-MD HOLDINGS LLC


AND


LFCM HOLDINGS LLC


DATED AS OF , 2005


TABLE OF CONTENTS


ARTICLE I DEFINITIONS 1

1.1 401(k) Cost Invoice 1

1.2 401(k) Eligible Employees 1

1.3 401(k) Transition Period 1

1.4 401(k) Plan Transfer 1

1.5 Agreement 1

1.6 Approved Leave of Absence 1

1.7 Auditing Party 2

1.8 Benefit Plan 2

1.9 Close of the date hereof 2

1.10 COBRA 2

1.11 Code 2

1.12 ERISA 2

1.13 Employees on Leave 2

1.14 Flex Account Statement 2

1.15 Former Lazard Group Employee 2

1.16 Former LFCM Employee 2

1.17 Grandfathered LFCM Employee 2

1.18 Health and Welfare Plans 2

1.19 Health Cost Invoice 3

1.20 Health Plan Bill 3

1.21 Health Plan Transition Period 3

1.22 Health Care Reimbursement Account 3

1.23 HIPAA 3

1.24 Immediately after the date hereof 3

1.25 Insured Enrolled Total 3

1.26 Lazard Group 3

1.27 Lazard Group Cafeteria Plan 3

1.28 Lazard Group Employee 3

1.29 Lazard Group Health Plan 3

1.30 Lazard Group Non-Qualified Pension Plan 3

1.31 Lazard Group Pension Plan 3

1.32 Lazard Group Profit-Sharing Plan 3

1.33 Lazard Group Retiree Medical Benefits Plan 3

1.34 Lazard Group Savings Plan 3

1.35 LAZ-MD 4

1.36 LFCM 4

1.37 LFCM Cafeteria Plan 4

1.38 LFCM Employee 4

1.39 LFCM Savings Plan 4

1.40 LFCM Savings Plan Trust 4

1.41 Non-Parties 4

1.42 Parties 4

1.43 Separation Agreement 4


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ARTICLE II GENERAL PRINCIPLES 4

2.1 Employment of LFCM Employees 4

2.2 Assumption and Retention of Liabilities; Related Assets 4

2.3 LFCM Participation in Lazard Group Benefit Plans 6

2.4 Service Recognition 6

2.5 Non-U.S. Employees 6

ARTICLE III DEFINED CONTRIBUTION AND DEFINED BENEFIT RETIREMENT PLANS 6

3.1 Savings Plan 6

3.2 Lazard Group Pension Plan, Lazard Group Non-Qualified Pension Plan, and Lazard Group Profit Sharing Plan 8

ARTICLE IV HEALTH AND WELFARE PLANS 9

4.1 General 9

4.2 Health Plan Transition Period 10

4.3 Health Care Reimbursement Account 11

4.4 Continued Coverage of Employees on Leave and Former LFCM Employees under the Lazard Group Health and Welfare Benefits 12

4.5 Vacation 13

4.6 Workers' Compensation Liabilities 13

4.7 Post Retirement Welfare Benefits 13

4.8 COBRA and HIPAA Compliance 14

ARTICLE V COMPENSATION AND EMPLOYMENT ARRANGEMENTS 14

5.1 Payroll 14

5.2 Annual Incentive Awards 14

5.3 Employment and Other Individual Agreements 14

ARTICLE VI GENERAL AND ADMINISTRATIVE 15

6.1 Sharing of Participant Information 15

6.2 Reasonable Efforts/Cooperation 15

6.3 No Third-Party Beneficiaries 15

6.4 Audit Rights With Respect to Information Provided 15

6.5 Payroll Taxes and Reporting of Compensation 16

6.6 Tax Deductions 16

6.7 Consent of Third Parties 17

ARTICLE VII MISCELLANEOUS 17

7.1 Relationship of Parties 17

7.2 Affiliates 17

7.3 Incorporation of Separation Agreement Provisions 17


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EMPLOYEE BENEFITS AGREEMENT


This EMPLOYEE BENEFITS AGREEMENT (this " Agreement" ), dated as of , 2005 is by and between Lazard Ltd, a Bermuda limited company (" Lazard Ltd" ), Lazard LLC, a Delaware limited liability company and currently a wholly owned subsidiary of LAZ-MD (as defined below) 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" ). Capitalized terms used herein and not otherwise defined shall have the respective meanings assigned to them in Article I hereof or assigned to them in the Separation Agreement (as defined below), as applicable.


WHEREAS, the Parties have entered into a Master Separation Agreement, dated as of the date hereof (the " Separation Agreement" ), and other ancillary agreements that will govern certain matters relating to the Separation;

WHEREAS, pursuant to the Separation Agreement, the Parties have agreed to enter into this Agreement for the purpose of allocating assets, Liabilities and responsibilities with respect to certain employee compensation and benefit plans and programs between and among them; and

WHEREAS, the employment of the LFCM Employees (as defined below) has been transferred from the Lazard Group Companies to the LFCM Companies.


NOW, THEREFORE, the Parties, intending to be legally bound, agree as follows:


ARTICLE I

DEFINITIONS


For purposes of this Agreement, the following terms shall have the following meanings:

1.1 " 401(k) Cost Invoice" has the meaning set forth in Section 3.1(a)(ii).


1.2 " 401(k) Eligible Employees" has the meaning set forth in Section 3.1(a)(i).


1.3 " 401(k) Transition Period" has the meaning set forth in Section 3.1(a)(i).

1.4 " 401(k) Plan Transfer" has the meaning set forth in Section 3.1(b).


1.5 " Agreement" is defined in the preamble to this Agreement.

1.6 " Approved Leave of Absence" means an absence from active service (i) due to an individual' s inability to perform his or her regular job duties by reason of illness or injury and resulting in eligibility to receive benefits pursuant to the terms of the applicable short-term disability insurance program, salary continuation program (including child care paid leave), extended medical leave policy, workers' compensation program or long-term disability insurance program covering such individual, or (ii) pursuant to an approved leave policy with a guaranteed right of reinstatement.

1.7 " Auditing Party" has the meaning set forth in Section 6.4(a).

1.8 " Benefit Plan" shall mean, with respect to an entity or any of its Subsidiaries, each " employee benefit plan" (as defined in Section 3(3) of ERISA, but whether or not subject to ERISA) sponsored, maintained or contributed to by such entity or any of its Subsidiaries (or to which such entity or any of its Subsidiaries contributes or is required to contribute). When immediately preceded by " Lazard Group," Benefit Plan means any Benefit Plan sponsored, maintained or contributed to by Lazard Group or a Lazard Group Company. When immediately preceded by " LFCM," Benefit Plan means any Benefit Plan sponsored, maintained or contributed to by LFCM or any LFCM Company.

1.9 " Close of the date hereof" means 11:59:59 P.M., Eastern Standard Time or Eastern Daylight Time (whichever shall then be in effect), on the date hereof.


1.10 " COBRA" means the continuation coverage requirements for " group health plans" under Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and as codified in Code a7 4980B and ERISA a7a7 601 through 608.


1.11 " Code" means the Internal Revenue Code of 1986, as amended, or any successor federal income tax law. Reference to a specific Code provision also includes any proposed, temporary or final regulation in force under that provision.


1.12 " ERISA" means the Employee Retirement Income Security Act of 1974, as amended. Reference to a specific provision of ERISA also includes any proposed, temporary or final regulation in force under that provision.

1.13 " Employees on Leave" has the meaning set forth in Section 1.38.


1.14 " Flex Account Statement" has the meaning set forth in Section 4.3.

1.15 " Former Lazard Group Employee" means any individual who, as of the date hereof, is (x) a former employee or partner of a Lazard Group Company or a LFCM Company and (y) not a Former LFCM Employee, LFCM Employee or Lazard Group Employee.


1.16 " Former LFCM Employee" means any individual who, as of the date hereof, is a former employee or partner of a Lazard Group Company or a LFCM Company (and is not a Lazard Group Employee or LFCM Employee) and whose employment or service, as of immediately prior to such individual' s last day of employment or service with a Lazard Group Company or LFCM Company, consisted primarily of providing services to the LFCM Businesses.


1.17 " Grandfathered LFCM Employee" has the meaning set forth in Section 4.7.

1.18 " Health and Welfare Plans" shall mean any plan, fund or program which was established or is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, medical, dental, vision, surgical or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment, including any such plan, fund or program as defined in Section 3(1) of ERISA. When immediately preceded by " Lazard Group," Health and Welfare Plans means each Health and Welfare Plan


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that is a Lazard Group Benefit Plan. When immediately preceded by " LFCM," Health and Welfare Plans means each Health and Welfare Plan that is a LFCM Benefit Plan.


1.19 " Health Cost Invoice" has the meaning set forth in Section 4.2(b).


1.20 " Health Plan Bill" has the meaning set forth in Section 4.2(b).


1.21 " Health Plan Transition Period" has the meaning set forth in Section 4.2(a).

1.22 " Health Care Reimbursement Account" has the meaning set forth in Section 4.3.

1.23 " HIPAA" means the health insurance portability and accountability requirements for " group health plans" under the Health Insurance Portability and Accountability Act of 1996, as amended.

1.24 " Immediately after the date hereof" means on the first moment of the day after the date hereof.

1.25 " Insured Enrolled Total" has the meaning set forth in Section 4.2(b).


1.26 " Lazard Group" is defined in the preamble to this Agreement.


1.27 " Lazard Group Cafeteria Plan" means one or more plans, maintained by the Lazard Group Companies, each of which is intended to qualify under Section 125 of the Code and includes a healthcare flexible spending reimbursement account arrangement.


1.28 " Lazard Group Employee" means any individual who, immediately prior to the Distribution Time, is either actively employed by or providing services to, including as a partner, or then on Approved Leave of Absence from, any Lazard Group Company.

1.29 " Lazard Group Health Plan" means each of the CIGNA PPO Plan, CIGNA Indemnity Plan, AETNA HMO Plan, HIP HMO Plan, CIGNA High Deductible Health Plan, CIGNA Catastrophic Plan, MetLife Dental Plan and the Vision Service Plan sponsored or maintained by Lazard Group as of the date hereof.

1.30 " Lazard Group Non-Qualified Pension Plan" means the Lazard Fre8res & Co. LLC Employees' Pension Plan Supplement.


1.31 " Lazard Group Pension Plan" means the Lazard Fre8res & Co. LLC Employees' Pension Plan.

1.32 " Lazard Group Profit-Sharing Plan" means the Lazard Fre8res & Co. LLC Profit Sharing Plan.

1.33 " Lazard Group Retiree Medical Benefits Plan" means the Health and Welfare Plan of Lazard Group providing hospital, medical and prescription benefits for retirees.

1.34 " Lazard Group Savings Plan" means the Lazard Fre8res & Co. LLC Employees' Savings Plan, as in effect from time to time.


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1.35 " LAZ-MD" is defined in the preamble to this Agreement.

1.36 " LFCM" is defined in the preamble to this Agreement.


1.37 " LFCM Cafeteria Plan" means one or more plans, maintained by LFCM or any of its affiliates, each of which is intended to qualify under Section 125 of the Code and includes a healthcare flexible spending reimbursement account arrangement.

1.38 " LFCM Employee" means the individuals listed on Exhibit A . Exhibit B lists the employees on Approved Leave of Absence from the Lazard Group Companies who would have been classified as LFCM Employees were they actively providing services as of the date hereof (the " Employees on Leave" ). An Employee on Leave shall not be considered an LFCM Employee for any purpose unless and until such employee returns to active service within the applicable period during which such a return is required under the terms of the applicable Approved Leave of Absence, in which case such employee will return to the employ or service of the applicable LFCM Company and be treated as an LFCM Employee for purposes of this Agreement (treating references to the " date hereof," events occurring " on the date hereof," the " Distribution Time" and the " Contribution Effective Time" as referring to the date of such return to active service for purposes of application of the provisions of this Agreement to such employee).


1.39 " LFCM Savings Plan" means the 401(k) savings plan to be established by LFCM pursuant to Section 3.1 of this Agreement, as in effect as of the time relevant to the applicable provision of this agreement.

1.40 " LFCM Savings Plan Trust" means a trust relating to the LFCM Savings Plan intended to qualify under Section 401(a) and be exempt under Section 501(a) of the Code.


1.41 " Non-Parties" has the meaning set forth in Section 6.4(b).


1.42 " Parties" is defined in the preamble to this Agreement.

1.43 " Separation Agreement" is defined in the recitals to this Agreement.


ARTICLE II

GENERAL PRINCIPLES


2.1 Employment of LFCM Employees . No later than immediately prior to the Distribution Time, the employment of all LFCM Employees shall have been transferred to LFCM or another LFCM Company, and all LFCM Employees shall continue to be employees of LFCM or another LFCM Company, as the case may be, immediately after the Distribution Time.


2.2 Assumption and Retention of Liabilities; Related Assets .


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(a) Lazard Group Employees and Former Lazard Group Employees . From and after the Contribution Effective Time, except as expressly provided in this Agreement, the Lazard Group Companies shall retain, and Lazard Group hereby agrees to pay, perform, fulfill and discharge, in due course in full (i) all Liabilities under all Lazard Group Benefit Plans, (ii) all Liabilities with respect to the employment or performance of services or termination of employment or services of all Lazard Group Employees, Former Lazard Group Employees and other service providers to the Lazard Group Businesses (including any individual who is, or was, an independent contractor, temporary employee, temporary service worker, consultant, freelancer, agency employee, leased employee, on-call worker, incidental worker or non-payroll worker of any Lazard Group Company or in any other employment, non-employment or retainer arrangement or relationship with any Lazard Group Company or with or for the benefit of the Lazard Group Businesses), and their respective dependents and beneficiaries, in each case to the extent arising in connection with or as a result of employment with or the performance of services to any Lazard Group Company or to or for the benefit of the Lazard Group Businesses, and (iii) all Liabilities that are expressly assigned to or retained by the Lazard Group under this Agreement, in each case, regardless of when or where such Liabilities arose or arise, or whether the facts on which they are based occurred prior to or subsequent to the date hereof. All assets held in trust to fund the Lazard Group Benefit Plans and all insurance policies funding the Lazard Group Benefit Plans shall be Lazard Group Assets, except to the extent specifically provided in Sections 3.1(b) and 4.3 of this Agreement.


(b) LFCM Employees; Former LFCM Employees and Employees on Leave . From and after the Contribution Effective Time, except as expressly provided in this Agreement, LFCM and the LFCM Companies shall assume or retain, as applicable, and LFCM hereby agrees to pay, perform, fulfill and discharge, in due course in full (i) all Liabilities under all LFCM Benefit Plans, (ii) all Liabilities with respect to the employment or performance of services or termination of employment or services of all LFCM Employees, Former LFCM Employees, Employees on Leave and other service providers to the LFCM Businesses (including any individual who is, or was, an independent contractor, temporary employee, temporary service worker, consultant, freelancer, agency employee, leased employee, on-call worker, incidental worker or non-payroll worker of LFCM or a LFCM Company or in any other employment, non-employment or retainer arrangement or relationship with LFCM or a LFCM Company or with or for the benefit of the LFCM Businesses), and their respective dependents and beneficiaries, in each case to the extent arising in connection with or as a result of employment with or the performance of services to any LFCM Company or to or for the benefit of the LFCM Businesses, and (iii) all Liabilities that are expressly assigned to or retained by LFCM or any LFCM Company, or for which LFCM has an obligation to reimburse Lazard Group, under this Agreement, in each case, regardless of when or where such Liabilities arose or arise, or whether the facts on which they are based occurred prior to or subsequent to the date hereof. To the extent that LFCM or an LFCM Company assumes or retains a Liability pursuant to this Agreement but such Liability must be satisfied in the first instance by Lazard Group, whether directly or through a Lazard Group Benefit Plan, LFCM or the applicable LFCM Company shall promptly reimburse Lazard Group or such plan for such Liability in an amount equal to the out-of-pocket cost to Lazard Group, which out-of-pocket cost shall be reduced by any insurance proceeds or employee contributions that Lazard Group actually receives in respect of such Liability. To the extent not otherwise specifically provided for in this Agreement, the billing and payment procedures set forth


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in Section 3.1(a)(ii) below shall apply to the reimbursement obligations of LFCM under this Agreement.

2.3 LFCM Participation in Lazard Group Benefit Plans . Except as expressly provided in this Agreement, effective as of the Close of the date hereof, the LFCM Employees shall no longer be eligible actively to participate in the Lazard Group Benefit Plans and, to the extent applicable, LFCM and each other LFCM Company shall cease to be a participating employer in any Lazard Group Benefit Plan.


2.4 Service Recognition . LFCM shall cause the LFCM Benefit Plans with respect to which service is a relevant factor to credit the LFCM Employees who are employed by the LFCM Companies immediately following the Distribution Time with service before the Distribution Time recognized by the Lazard Group Companies under the terms of Lazard Group Benefit Plans with respect to which service is a relevant factor, except (a) to the extent duplication of benefits would result and (b) for purposes of benefit accruals under any defined benefit pension plan.


2.5 Non-U.S. Employees . Notwithstanding anything else contained herein, none of the following provisions of this Agreement shall apply with respect to Lazard Group Employees, LFCM Employees, Former Lazard Group Employees or Former LFCM Group Employees who are employed outside of the United States: Article III and Sections 4.2, 4.3, 4.4, 4.6, 4.7 and 4.8.

ARTICLE III

DEFINED CONTRIBUTION AND DEFINED BENEFIT RETIREMENT PLANS


3.1 Savings Plan .


(a) 401(k) Transition Period .

(i) Lazard Group agrees that to the extent it continues to maintain and administer the Lazard Group Savings Plan during the period (the " 401(k) Transition Period" ) commencing on the date hereof and ending on December 31, 2005 (unless the Parties agree to terminate the 401(k) Transition Period on an earlier date) ...