EXHIBIT 10.11
AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT
          THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) dated
as of October 30, 2007 (the “Effective Date”) is entered into by and among Pzena
Investment Management, Inc. (the “Company”), Pzena Investment Management, LLC.
(the “Operating Company” and together with the Company, the “Employer”) and
William L. Lipsey (the “Executive”).
          WHEREAS, the Executive currently provides services to the Operating
Company and owns units therein (the “OC Units”);
          WHEREAS, Executive and the Operating Company have previously entered
into an employment agreement (the “Original Employment Agreement”);
          WHEREAS, the Employer desires to continue to employ Executive in the
positions set forth below and to enter into this Agreement amending and
restating the terms of the Original Employment Agreement and embodying the terms
of such employment;
          WHEREAS, the Agreement is entered into in connection with: (1) the
initial public offering and sale of shares of Class A common stock of the
Company (the “Class A Shares”) and simultaneous listing of the Class A Shares on
the New York Stock Exchange, (2) the Company’s acquisition of interests in the
Operating Company in exchange for certain OC Units and its appointment as the
managing member thereof (the “Managing Member”), (3) the amendment and
restatement of the operating agreement of the Operating Company, to be dated as
of October 30, 2007 (the “Operating Agreement”), pursuant to which the
Executive’s OC Units will become exchangeable for Class A Common Stock at the
times and in the amounts described therein and to sell such Class A Shares at
the times and in the amounts and the manner described therein.
          NOW, THEREFORE, in consideration of the promises and mutual covenants
set forth herein and for other good and valuable consideration, the parties
agree as follows:

1.   Term of Employment. Subject to earlier termination as provided herein,
Executive shall be employed by the Employer for a period commencing on the
Effective Date and ending on the third anniversary of the Effective Date (the
“Term”) on the terms and subject to the conditions set forth in this Agreement;
provided, however, that commencing with the third anniversary of the Effective
Date and on each anniversary thereof (each, an “Extension Date”), the Term shall
be automatically extended for an additional one-year period, unless the Employer
provides the Executive 60 days’ prior written notice or the Executive provides
the Employer six (6) months’ prior written notice, in each case, before the next
Extension Date that the Term shall not be so extended. For purposes of this
Agreement, “Employment Term” shall mean the period of time that Executive is
employed under this Agreement.

 

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2.   Positions.

  (a)   During the Employment Term, the Executive shall serve as (i) President,
Marketing and Client Service of the Operating Company and have the authority
commensurate with such position and such duties commensurate with such position,
as shall be determined from time to time by the Managing Member, and
(ii) President, Marketing and Client Service of the Company and have the
authority commensurate with such position and such duties commensurate with such
position, as shall be determined from time to time by the Board of Directors of
the Company (the “Board”). If appointed thereto, the Executive further agrees to
serve, without additional compensation, as a director of the Company or a
director (or equivalent for non-corporate entities) or officer of the Operating
Company or any other consolidated subsidiary of the Company.     (b)   During
the Employment Term, the Executive will devote Executive’s full business time
and best efforts to the performance of the duties of the positions in which he
serves pursuant to Section 2(a) hereof and will not engage in any other
business, profession or occupation for compensation or otherwise which would
conflict or materially interfere with the rendition of such services either
directly or indirectly, without the prior written consent of the Board and the
Managing Member; provided that nothing herein shall preclude Executive from
(i) continuing to serve on any board of directors or trustees of any business
corporation or charitable organization on which the Executive serves as of the
Effective Date and which have been previously disclosed to the Employer,
(ii) serving on the boards of directors (or bodies with similar management
powers) of any entities managed by the Operating Company and/or consolidated by
the Company; or (iii) subject to the prior written consent of the Board and the
Managing Member, from accepting appointment to any board of directors or
trustees of any business corporation or charitable organization; provided in
each case, and in the aggregate, that such activities do not conflict or
materially interfere with the performance of the Executive’s duties hereunder or
conflict with Section 5 of this Agreement.

3.   Guaranteed Payments and Employee Benefits.

  (a)   During the Employment Term, the Operating Company shall make a
“guaranteed payment” to the Executive at the annual rate of $300,000, payable in
regular installments in accordance with the Operating Company’s usual payment
practices for members. With respect to each fiscal year of the Operating Company
which ends during the Employment Term, the Operating Company shall also make an
additional “guaranteed payment” (the “Performance Payment”) to the Executive in
an amount to be determined by the Compensation Committee of the Board of the
Managing Member in its sole discretion, which Performance Payment shall not
exceed $2,700,000 for any fiscal year of the Company ending

 

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      during the Employment Term. The Performance Payment, if any, shall be paid
to the Executive in a lump sum when payments are made to other members, but in
no event later than the 15th day of the third month following the end of the
fiscal year in respect of which such guaranteed payment is earned, so long as
Executive is providing services to the Employer as of the last day of the fiscal
year in respect of which such guaranteed payment is earned.

  (b)   During the Employment Term, the Executive shall be entitled to
participate in all employee benefit programs of the Employer on a basis which is
no less favorable than is provided to any other executives of the Employer.

4.   Termination.

  (a)   General. This Agreement and the Executive’s employment hereunder may be
terminated by either party at any time and for any reason; provided that the
Executive shall be required to give the Employer at least six (6) months’
advance written notice of any resignation of the Executive’s employment
hereunder. Following any such termination, the Executive shall have no further
rights to any payments or other benefits provided pursuant to the provisions of
this Agreement.     (b)   Expiration of Term.

  (i)   In the event the Term is not extended pursuant to Section 1 of this
Agreement, unless this Agreement and the Executive’s employment hereunder has
been earlier terminated pursuant to paragraph (a) of this Section 4, the
Executive’s employment hereunder shall be deemed terminated (whether or not the
Executive continues to provide services to the Employer thereafter) as the close
of business on the day immediately preceding the next scheduled Extension Date.
Following any such expiration of the Term, the Executive shall have no further
rights to any payments or other benefits provided pursuant to the provisions of
this Agreement.     (ii)   Unless the parties otherwise agree in writing,
continuation of the Executive’s employment by the Employer beyond the expiration
of the Term shall be deemed employment “at-will” and shall not be deemed to
extend any of the provisions of this Agreement, except for Sections 5 and 6 of
this Agreement, each of which shall survive the expiration of the Term and any
termination of this Agreement.

 

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  (c)   Notice of Termination. Any purported termination by the Employer or by
the Executive (other than due to the Executive’s death) shall be communicated by
written notice of termination to the other party hereto in accordance with
Section 6(h) hereof.

5.   Executive Covenants. The Executive acknowledges and recognizes the highly
competitive nature of the business of the Employer and its affiliates and
accordingly agrees to be bound by the restrictive covenants set forth in
Sections 5.07 and 5.08 of the Operating Agreement, to which the Executive is a
party, and, in the event of his violation of such restrictive covenants, the
forfeiture of certain of his OC Units pursuant to Section 6.02 of the Operating
Agreement. A recitation of such restrictive covenants is set forth in Exhibit A
hereto. The Executive further acknowledges that he and the Employer have agreed
to enter into this Agreement in connection with the transactions described in
the recitals hereto, pursuant to which the Executive will have the opportunity
to exchange OC Units for Class A Shares and sell such Class A Shares.   6.  
Miscellaneous.

  (a)   Survival of Certain Provisions. The provisions of Sections 5 and 6 of
this Agreement shall survive any expiration of the Term or any termination of
the Employment Term or this Agreement.     (b)   Governing Law. This Agreement
shall be governed by and construed in accordance with the laws of the State of
New York, without regard to conflicts of laws principles thereof.     (c)  
Entire Agreement; Amendments. This Agreement, along with the Operating
Agreement, contains the entire understanding of the parties with respect to the
services (or any termination thereof) to be provided by the Executive to the
Company and the Operating Company, and supersedes all prior agreements and
understandings (including the Original Employment Agreement and any verbal
agreements) between the Executive and any of the Company, the Operating Company
or their respective affiliates regarding the terms and conditions of the
Executive’s services to the Company, the Operating Company and their respective
affiliates. There are no restrictions, agreements, promises, warranties,
covenants or undertakings between the parties with respect to the subject matter
of this Agreement other than those expressly set forth in this Agreement. This
Agreement may not be altered, modified, or amended except by written instrument
signed by the parties hereto.     (d)   No Waiver. The failure of a party to
insist upon strict adherence to any term of this Agreement on any occasion shall
not be considered a waiver of such party’s

 

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      rights or deprive such party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement.

  (e)   Severability. In the event that any one or more of the provisions of
this Agreement shall be or become invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
of this Agreement shall not be affected thereby.     (f)   Assignment. This
Agreement, and all of the Executive’s rights and duties hereunder, shall not be
assignable or delegable by the Executive. Any purported assignment or delegation
by the Executive in violation of the foregoing shall be null and void ab initio
and of no force and effect. This Agreement may be assigned by the Employer to a
person or entity which is an affiliate or a successor in interest to
substantially all of the business operations of the Employer. Upon such
assignment, the rights and obligations of the Employer hereunder shall become
the rights and obligations of such affiliate or successor person or entity.    
(g)   Successors; Binding Agreement. This Agreement shall inure to the benefit
of and be binding upon personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.     (h)
  Notice. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered by hand or overnight courier or
three days after it has been mailed by United States registered mail, return
receipt requested, postage prepaid, addressed to the respective addresses set
forth below in this Agreement, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon receipt.         If to the
Employer:

120 West 45th Street
New York, New York 10036
Attention: General Counsel

      If to the Executive:         To the most recent address of the Executive
set forth in the personnel records of the Employer.     (i)   Cooperation. The
Executive shall provide the Executive’s reasonable cooperation in connection
with any action or proceeding (or any appeal from any action or

 

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      proceeding) which relates to events occurring during the Executive’s
employment hereunder.

  (j)   Withholding Taxes. The Employer may withhold from any amounts payable
under this Agreement such Federal, state and local taxes as may be required to
be withheld pursuant to any applicable law or regulation.     (k)  
Counterparts. This Agreement may be signed in counterparts, each of which shall
be an original, with the same effect as if the signatures thereto and hereto
were upon the same instrument.

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     IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.

            PZENA INVESTMENT MANAGEMENT, INC.
      By:    /s/ Richard S. Pzena       Name:   Richard S. Pzena        Title:  
Chief Executive Officer        PZENA INVESTMENT MANAGEMENT, LLC
      By:   Pzena Investment Management, Inc.,         its Managing Member     
      By:    /s/ Richard S. Pzena       Name:   Richard S. Pzena        Title:  
Chief Executive Officer        EXECUTIVE:
       /s/ William L. Lipsey     Name:   William L. Lipsey           

 

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Exhibit A
Restrictive Covenants
Excerpted from the Amended and Restated Operating Agreement of Pzena Investment
Management, LLC, dated as of October 30, 2007, as may be amended from time to
time. All capitalized terms used but not defined in this Exhibit A have the
meaning assigned to them in such agreement.
     5.07 Non-Solicitation/Non Compete.
          (a) In consideration of the Class B Units granted and to be granted to
the Employee Members from time to time by the Company, each Employee Member
agrees that during the entire term of the Non-Compete Period applicable to such
Employee Member, such employee shall not, directly or indirectly, whether as an
officer, director, owner, partner, investor, member, adviser, representative,
consultant, agent, employee, co-venturer or otherwise, provide Investment
Advisory Services, except in the performance of his duties with the Company
Group, or engage, or assist others to engage, in whole or in part, in any
business in competition with the business of the Company Group.
          (b) In consideration of the Class B Units granted and to be granted to
the Employee Members from time to time by the Company Group, each Employee
Member agrees that during the entire term of the Non-Solicitation Period
applicable to such Employee Member, such Employee Member shall not, directly or
indirectly (other than in the course of performing his duties to the Company
Group) (i) solicit the hiring of or hire any employee of the Company Group or
any Person who, within the prior six months had been an employee of the Company
Group, assist in, or encourage such hiring by any Person or encourage any such
employee to terminate or alter his relationship with the Company Group; (ii) in
competition with the Company Group, solicit, seek, induce, pursue in any way, or
accept a business relationship of any kind with, any Person who is a Client of
the Company Group, including by way of indirect or sub-advisory arrangements
(such obligation to include the duty of the Employee Member to decline any such
offered business activity even if unsolicited); (iii) otherwise solicit,
encourage or induce any Client to terminate or reduce its business or
relationship with the Company Group; or (iv) otherwise take any action or have
any communication with any Person which purpose is, or the reasonably likely
effect of which could be, to cause any such Client to terminate, alter, reduce,
modify or restrict in any way its relationship or business with the Company
Group.
          (c) In the event that the Employee Member, upon notice from the
Company of an inadvertent breach of Section 5.07(b) by such Employee Member,
promptly pays to the Company all fees and other compensation that are earned by
such Employee Member during the Non-Solicitation Period in connection with such
breach, such inadvertent breach shall not be treated as a breach resulting in a
forfeiture of Class B Units pursuant to Section 6.02(b)(2) or (3).

 

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          (d) Each Employee Member acknowledges and agrees that the covenants
set forth in this Section 5.07 are reasonable and necessary for the protection
of the Company. Each Employee Member further agrees that irreparable injury will
result to the Company in the event of any breach of any of the terms of
Section 5.07, and that in the event of any actual or threatened breach of any of
the provisions contained in Section 5.07, the Company will have no adequate
remedy at Law. Each Employee Member accordingly agrees that in the event of any
actual or threatened breach by such Employee Member of any of the provisions
contained in this Section 5.07, the Company shall be entitled to seek such
injunctive and other equitable relief as may be deemed necessary or appropriate
by a court of competent jurisdiction, without the necessity of showing actual
monetary damages and without posting any bond or other security.
          (e) If any court of competent jurisdiction shall at any time deem the
term of any particular restrictive covenant contained in this Section 5.07 too
lengthy or the geographic scope too extensive, the other provisions of this
Section 5.07 shall nevertheless stand, the Non-Compete Period and the
Non-Solicitation Period applicable to such Employee Member shall be deemed to be
the longest period permissible by applicable Law under the circumstances and the
geographic scope shall be deemed to comprise the largest territory permissible
by applicable Law under the circumstances. The court in each case shall reduce
the Non-Compete Period, the Non-Solicitation Period and/or geographic scope to
permissible duration or size.
          (f) During the six (6) month period following the termination of
employment of a 1% Member with the Company Group, the Managing Member may, in
its sole discretion, elect to cause the Company Group to provide base and bonus
compensation to such 1% Member at the same rate and the same time as it was then
compensating such 1% Member, provided that the bonus component of such
compensation applicable to such six (6) month period shall equal 50% (subject to
reduction pursuant to the last sentence of this Section 5.07(f)) of the annual
bonus earned by such 1% Member most recently prior to such termination of
employment and shall be paid in cash promptly following the end of such six
(6) month period. In the event the Managing Member elects to provide such 1%
Member such compensation, the Non-Compete Period applicable to such 1% Member
shall continue until the last day of such six (6) month period. In order to make
such election, the Managing Member shall, within five (5) Business Days upon
issuing to or receiving from a 1% Member a written notice of termination of
employment, notify such 1% Member in writing whether the Company Group will
provide such base and bonus compensation for such six (6) month period. If the
Managing Member does not timely make such an election, then the Non-Compete
Period shall end when such 1% Member’s employment with the Company Group
terminates. Notwithstanding the foregoing, to the extent that a 1% Member gives
a notice of termination of employment at least fourteen (14) days in advance of
such termination, (i) such 1% Members’ Non-Compete Period shall be reduced, for
up to ninety (90) days, by the number of days elapsed between the date of such
notice and the date of the termination of such 1% Member’s employment (such
number, the “Reduced Number of Days”), (ii) the period during which the Company
shall provide compensation pursuant to this Section 5.07(f) shall be reduced by
the Reduced Number of Days and (iii) the percentage contained in the proviso to
the first sentence of this Section 5.07(f) (including with respect to the annual
bonus) shall equal the product of 50% multiplied by a fraction the numerator of
which is 182 minus the Reduced Number of Days and the denominator of which is
182.