Unassociated Document


    AGREEMENT FOR INTERIM
PAYMENT

     

    In
consideration of the mutual promises, covenants, terms and conditions herein
contained, LKI and Underwriters (as each are defined below) agree as of December
31, 2009 as follows:

    DEFINITIONS

     

    In this
Interim Payment Agreement, the singular includes the plural, and vice versa. The
following terms as used herein shall be given the following
meanings:

     

    “Agreement”
shall mean this Interim Payment Agreement.

     

    “Underwriters”
shall mean all of the insurers, Names, Underwriters and Syndicates at Lloyd’s,
London, and all of the companies doing business in the London insurance market
or elsewhere, and any other person in their capacity as having severally
subscribed, each in his or its own proportionate share, to the Global Policies
(defined below) and all their past and present subsidiaries and the predecessors
and successors of such subsidiaries; their past and present parent companies,
affiliates and joint ventures and their predecessors and successors, and all its
past, present and future assigns.

     

     “Parties”
shall mean the Underwriters and LKI collectively.

     

    “LKI”
shall mean Lazare Kaplan International Inc., all its past and present
affiliates, subsidiaries and the predecessors and successors of such
subsidiaries; their past and present parent companies, affiliates and their
predecessors, assigns and successors.

     

    The
“Global Policies” shall mean the policies of insurance numbered [Subject to a request for
confidential treatment; Separately filed with the Commission] and [Subject to a request for
confidential treatment; Separately filed with the Commission] subscribed
by Underwriters and issued to LKI.

     

    The
“Angola Policies” shall mean the policies of insurance numbered [Subject to a request for
confidential treatment; Separately filed with the Commission] and [Subject to a request for
confidential treatment; Separately filed with the Commission] subscribed
by Underwriters and issued to LKI.

     

    “Claim”
shall mean the claims submitted by LKI for losses under the Global
Policies.

     

    “Sue and
Labor” shall mean costs and expenses incurred by or on behalf of LKI to take
such measures as were reasonable for the purpose of averting and mitigating its
losses and to otherwise insure that its rights in respect of the Insured
Interest were properly protected.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    “Insured
Interest” shall mean those interests defined as “Insured Interest” in the Global
Policies.

     

    “Interim
Payment” shall mean a payment made under and by reason of this Agreement for an
amount less than the total amount of all losses sustained by LKI recoverable
under the Global Policies.

     

    “Termination
Date” shall mean the latest date upon which Underwriters (a) pay any such
further indemnity to LKI in return for a final release for the same; (b)
otherwise secure a policy release for the Global Policies with LKI or, in the
event of litigation, between the parties, (c) such litigation is concluded
either through settlement or judgment (after exhaustion of all appeals and
motions).

     

    RECITALS

     

    WHEREAS,  Underwriters
severally subscribed to the Global Policies; and

     

    WHEREAS, LKI timely submitted
Claims under the Global Policies against Underwriters for losses to certain
Insured Interests;

     

    WHEREAS,  LKI has
incurred costs and expenses to investigate the circumstances of the losses and
mitigate the losses as well as mitigate the consequential and collateral damage
to LKI as a result of such losses; and

     

    WHEREAS,  Underwriters
have commenced an investigation into the Claim and said investigation has not
been completed; and

     

    WHEREAS,  the
Parties have entered into a confidentiality agreement, a copy of which is
annexed hereto and made a part hereof; and

     

    WHEREAS,  LKI has
submitted Claims under the Global Policies for amounts in excess of
$140,000,000; and

     

    WHEREAS, Underwriters agree to
make an Interim Payment to Lazare Kaplan International, Inc. of US
$28,000,000.00 United States dollars;

    


    REPRESENTATIONS AND
WARRANTIES

     

    1.           The
Parties represent and warrant that they are duly organized, validly existing,
and in good standing under the laws of the respective jurisdictions where they
are organized and, in respect of Underwriters, are licensed to subscribe to
contracts of insurance. The Parties further represent and warrant that they have
the full power and authority to enter into and perform this Agreement and that
the signatories are authorized to execute this Agreement on behalf of their
respective parties.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    2.            LKI
represents and warrants that (a) it is the owner of or is otherwise
contractually responsible for the Insured Interest for which it presents its
Claim, (b) subject to the rights of its bankers, it has not assigned, set over,
transferred or hypothecated any right, title or interest to said Insured
Interest to any individual person, firm or corporation, (c) it is entitled to
recover for the Claim, (d) no release has been given to anyone responsible or
potentially responsible for the Losses, and (e) no such release will be given by
LKI without the express written consent of Underwriters.

    


    3.            This
Agreement has been duly executed and delivered by the Parties and constitutes
the legal, valid and binding obligation of the Parties, enforceable against the
other in accordance with its terms, except as such enforceability may be limited
by applicable bankruptcy, insolvency or other similar laws affecting creditors
rights generally and except as rights to specific enforcement may be limited by
the application of equitable principles (whether such equitable principles are
applied in a proceeding at law or in equity).

                

    INTERIM
PAYMENT

     

    4.           Underwriters
shall pay Lazare Kaplan International, Inc $28,000,000 within fourteen (14)
calendar days after receiving a fully executed copy of this
Agreement.  The aforementioned Interim Payment shall be made by means
of a wire transfer to account as set forth in the attached Wire
Instructions.  Except as set forth in Paragraph 11 below, Underwriters
waive and release any right to recover this amount, directly or indirectly by
any means, from LKI either by way of offset, setoff, recoupment, counterclaim or
otherwise.

     

    5.            The
Parties agree that the terms and conditions contained in the Agreement and the
Interim Payment made hereunder are confidential. LKI and Underwriters
agree that they will not publicize, discuss, or disclose, or authorize their
agents, servants, employees, attorneys, or representatives to publicize,
discuss, or disclose, directly or indirectly, orally or in writing,
spontaneously or in response to an inquiry, to any entity or person, including
any party to the Angola Party (other than the Underwriters to the Angola
Policies and their duly authorized representatives and LKI) the terms of the
Agreement and the Interim Payment except that LKI and Underwriters are permitted
to disclose the terms of the Agreement and the Interim Payment to: (a) their
reinsurers, attorneys, accountants, and bankers; (b) the Underwriters to the
Angola Policies and their duly authorized representatives and (c) as otherwise
may be required by law or legal process.

    


    6.            Except
as otherwise specifically set forth herein, this Agreement does not modify,
alter or amend the Global Policies.

    


    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    7.            Underwriters
acknowledge that until the Termination Date, the Interim Payment does not
subrogate to Underwriters such rights, claims and interest which LKI may have
against any person, firm or corporation liable for the loss or damage to the
property mentioned above, including but not limited to the right to claim
recovery under any other available insurance respecting the Insured Interest,
and does not authorize Underwriters to sue, compromise or settle in the name of
LKI or otherwise.

    


    8.            Subject
to (a) the execution of any additional binding confidentiality agreements that
either of the Parties may require, (b) such limitations as are applicable by
reason of applicable laws related to the sale or transfer of securities, (c) the
rules of the American Stock Exchange and/or (d) its duties to its shareholders,
LKI will cooperate with Underwriters in the mitigation of the losses under the
Global Policies. However, notwithstanding the foregoing, unless and until the
Termination Date, LKI shall control in its sole discretion any such mitigation
efforts and in no event shall be required to take any action, make any statement
or present any of its officers directors or employees to or in any proceeding,
formal or otherwise which might otherwise adversely affect LKI or subject LKI
and/or its officers, directors or employees to the possibility of claims,
subpoenas, arbitration, investigation, suits or proceedings by third parties for
civil, regulatory, administrative or criminal proceedings.  Nothing in
this document shall constitute a waiver by any of the Parties to any evidentiary
privilege to which they are otherwise entitled to assert.  Further,
nothing in this Agreement shall relieve LKI from its duty to cooperate with
Underwriters investigation into the Claim, as required by the terms of the
Global Policies and at law.

    


    9.           LKI
and Underwriters shall negotiate in good faith and enter in such additional
agreements as may be reasonably necessary to allow Underwriters access to LKI’s
investigation into the losses and , the benefits of the Sue and Labor to
date.  LKI and Underwriters shall meet at such times and places as are
reasonably necessary to discuss the status of LKI’s investigation and Sue and
Labor efforts. But, LKI shall have no obligation to disclose any documents or
information that would require LKI to: a) waive attorney client or a similar
cognizable privilege; b) breach a contract, including but not limited to
contracts with outside consultants or investigators or to disclose material that
is subject to a confidentiality agreement, or (c) would subject LKI or any of
its officers, directors, employees or agents to liability or the potential for
suit. Notwithstanding LKI’s intent and desire to cooperate with Underwriters and
to see Underwriters recoup any payments made under the Global Policies to LKI
from such persons or entities who were the proximate cause of the insured losses
to LKI, Underwriters acknowledge that until the Termination Date, LKI has an
obligation to its shareholders to retain sole control of its efforts to
investigate and mitigate the insured losses and Underwriters shall undertake no
action and make no statements to any third parties that might prejudice, impede,
delay, reduce or adversely affect in any fashion such efforts.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    10.            The
Interim Payment  of the sum of US $28,000,000.00 United States dollars
will be issued solely to Lazare Kaplan International, Inc. whether on account or
otherwise, and shall be credited to Underwriters’ obligations and
responsibilities with respect to the Global Policies only to the extent of
Interim Payment  actually received by Lazare Kaplan International,
Inc..

    


    11.           In
advancing such Interim Payment, Underwriters do not waive any of their rights or
privileges under the Global Policies.  Underwriters reserve their
right to disclaim coverage pursuant to the terms and conditions of its contract
of insurance. Further, this Interim Payment shall not be construed as an
admission of coverage under the Global Policies.   Further, in
accepting such an Interim Payment, LKI does not waive any of its rights or
privileges under the Global Policies and reserve all of its rights under the
Global Policies and arising as a matter of law, except as set forth in paragraph
13 in respect of consequential damages

    


    12.  If,
at any time after the Termination Date should LKI recover the Insured Interests,
or any portion thereof, or receive payment for the Insured Interests for which
it makes claim herein, or receive any insurance proceeds from insurance other
than the Global Policies or Angolan Policies, indemnifying LKI in whole or in
part for the loss of the Insured Interests then in that event LKI shall repay to
Underwriters to the extent of the actual receipt of any such
recovery.  Such repayment shall be by the same terms as set forth in
the Global Policies and Angola Policies.

    


    13.           In
consideration of the Interim Payment, the payment of the amounts for Sue
and Labor and the commitment to reach
a decision by May 3, 2010 whether there is coverage for the Claims and if so,
the amount of payment for the same, LKI hereby agrees to
waive all rights at law, equity, or otherwise, to pursue against Underwriters
any claims for consequential, extra-contractual, or such other claims as may
sound in tort or any other legal theory, and hereby agrees to pursue only such
policy indemnity as exceeds the amount of the Interim Payment made hereunder.
For the avoidance of doubt, there can be no claim against Underwriters for
consequential loss.


     

    SUE AND
LABOR

     

    14.           LKI
shall make a submission of Sue and Labor claims under the Global Policies to
Underwriters by January 18, 2010, Underwriters have the right to review and
audit such submission. Thereafter, Underwriters shall pay said claim for Sue and
Labor no later than February 1, 2010,   Underwriters shall have
the right to make reasonable inquiry of  LKI with respect to such Sue
and Labor submission including meeting with LKI and requesting supporting
documentation.  LKI specifically reserves its right to make further
submissions of Sue and Labor as such amounts are incurred or bills received
until the Termination Date and Underwriters shall have similar rights to review
and audit such further submissions.  Underwriters will pay all such further
submissions of Sue and Labor within a reasonable period of time after actual
receipt of supporting documentation but in no event later than May 3,
2010;  thereafter, the parties reserve all of their rights with respect to
Sue and Labor as set forth in the Global Policies. It is understood that LKI
shall have no obligation to provide or disclose to Underwriters any
documentation or information that may breach attorney
client  privilege or another cognizable privilege or any other
material that is otherwise subject to a confidentiality agreement or would
subject LKI or any of its officers, directors or employees or agents to
liability or the potential for suit.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    ACCORD AND
SATISFACTION

     

    15.           The
Parties hereto expressly agree and acknowledge that this Agreement is not in
full and final accord, satisfaction and payment of the claims and disputes
between them; and that each of the Parties has entered into this Agreement
freely and voluntarily after consultation with independent counsel of each
party’s own choosing.

     

    GOVERNING
LAW

    


    16.           This
Agreement shall be interpreted in accord with the laws of the State of New York
without reference to its conflicts of laws rules and shall in all respects be
governed, construed, applied, and enforced in accordance with the laws of New
York.

     

    17.           The Parties agree that the
federal or New York State courts sitting in New York County, New York shall have
exclusive jurisdiction over all disputes between them with respect to the
interpretation and enforcement of this Agreement, hereby expressly consenting to
and agreeing not to contest such exclusive jurisdiction and hereby irrevocably
consent to the personal and subject-matter jurisdiction of any such court for
all purposes necessary to effectuate this Paragraph.  Each
Party agrees not to assert, by way of motion, as a defense, or otherwise, in any
such action, suit or proceeding, any claim that such party is not subject
personally to the jurisdiction of such court, that its property is exempt or
immune from attachment or execution, that the action, suit or proceeding is
brought in an inconvenient forum, that the venue of the action, suit or
proceeding is improper or that any dispute regarding this Agreement or the
subject matter hereof may not be enforced in or by such court.  Each
Party further irrevocably submits to the jurisdiction of any such court in any
such action, suit or proceeding.  Any and all service of process and
any other notice in any such action, suit or proceeding shall be effective
against either Party if given personally or by registered or certified mail,
return receipt requested, or by any other means of mail that requires a signed
receipt, postage prepaid.  Nothing herein contained shall be deemed to
affect the right of either Party to serve process in any manner permitted by
law.  Nothing in this Paragraph alters, modifies, amends, discharges
or deletes those provisions of the Global Policies or Angola Policies that sets
forth applicable law and jurisdiction for the resolution of any disputes or
claims regarding or under the Global Policies or Angola Policies.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    ENTIRE
AGREEMENT

     

    18.           This
Agreement constitutes the entire understanding between the Parties and
supersedes any and all prior and contemporaneous negotiations and agreements of
the Parties regarding the Interim Payment.

     

    MODIFICATION

     

    19.           Neither
this Agreement nor any term set forth herein may be modified, changed, waived,
discharged, or terminated except by a writing signed by the
Parties.

     

    NO
ADMISSION

     

    20.           Nothing
contained in this Agreement, nor the Agreement itself, shall be admissible in
any proceedings between the Parties, except to enforce the terms
hereof.  Nothing contained in this Agreement shall be deemed to
constitute an admission of wrongdoing or liability by the Parties, or coverage
under the Global Policies issued by Underwriters.  This Agreement does
not constitute, and shall not be construed to reflect, the adoption of any
coverage position by the Parties, nor will it have any bearing upon or relevance
to the interpretation or meaning of the terms, definitions, conditions or
exclusions contained in any policies of insurance.  This Agreement
does not reflect upon the Parties view as to rights and obligations with respect
to matters or persons outside the scope of this Agreement.  This
Agreement is without prejudice to positions taken by Underwriters with regard to
other insureds or claimants.  The Parties specifically disavow any
intention to create rights in third parties under, or in relation to, this
Agreement.

     

    EXECUTION

     

    21.           This
Agreement may be executed in identical counterparts.  Each counterpart
hereof shall be deemed to be an original instrument, but all counterparts hereof
taken together shall constitute a single document.  Facsimile
signatures shall be deemed originals.

     

    22.  The
Parties agree to execute any and all documents reasonably necessary to implement
the terms and conditions of this Agreement.

     

    SEVERABILITY

     

    23.           If
any provision of this Agreement other than Paragraph 4 is held to be illegal,
invalid or unenforceable under any present or future law, (a) such provision
will be fully severable, (b) this Agreement will be construed and enforced as if
such illegal, invalid or unenforceable provision had never comprised a part
hereof, and (c) the remaining provisions of this Agreement will remain in full
force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    CONSTRUCTION

     

    24.           The
Parties understand and agree that neither of them shall be deemed to be the
drafter hereof for purposes of construction of this Agreement.

     

    25           The
Parties acknowledge that, except as provided herein, no representation of fact
or opinion has been made by any of the Parties, or anyone on their behalf, to
induce this compromise and Interim Payment.

     

    UNITED STATES SECURITIES
LAWS

     

    26.           Underwriters
acknowledge that LKI is a publically traded company and is regulated, inter
alia, by the laws and regulations of the United States  as well as the
exchange on which its stock is presently traded.  At no time will
Underwriters seek LKI to make or refrain from making any statement or for LKI to
act or refrain from acting if such conduct would be in violation of such laws or
regulations.  Additionally, until the Termination Date those
provisions of paragraphs 5 and  6 of the Confidentiality Agreement
between the parties dated December 23, 2009 shall remain in full force and
effect.

     

    COSTS OF
ENFORCEMENT

     

    27.           In
the event of any dispute between the Parties regarding the enforcement of this
Agreement or any provision hereof, the Party prevailing in such dispute shall be
paid all of its fees and costs, including attorney fees related to such
dispute.

     

    BINDING
EFFECT

     

    28.           This
Agreement and all the provisions contained herein shall be binding upon and
inure to the benefit of the Parties, their respective heirs, successors and
assigns, including but not limited to any receiver, trustee in bankruptcy,
representative or other person appointed under foreign or domestic bankruptcy, receivership, or similar proceedings, except as otherwise
set forth herein.

     

    29.           Nothing
in this Agreement shall inure to the benefit of any third party and shall only
inure to the benefit of Underwriters in their capacity as having severally
subscribed, each in his or its own proportionate share, to the Global
Policies.

    


    Signed:                      

    __/s/______________________

    


    By:_______________________

    Name and Title

    


    STATE OF
 , COUNTY
OF ____________     SS.:

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    


    On                          ,
2009, before me personally came __________________, to me known, and known to me
to be the individual(s) described in, and who executed the foregoing RELEASE,
and acknowledged to me that he executed the same.

    


    


    ___________________________

    NOTARY
PUBLIC

    


    


    Signed:                     /s/_________________________

    Underwriters

    By:           Dennis
M. Wade

    Attorney-In-Fact

    


    


    STATE OF
NEW YORK, COUNTY OF NEW
YORK       SS.:

    


    On                              ,
2009, before me personally came Dennis M. Wade, to me known, and known to me to
be the individual(s) described in, and who executed the foregoing RELEASE, and
acknowledged to me that he executed the same.

    


    
      ___________________________

      NOTARY
PUBLIC