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  Exhibit 10.3    
    


 
 

  SECURITY AGREEMENT    
    


        THIS SECURITY AGREEMENT dated as of October 28, 2008 (this
"Security Agreement") is being entered into among PZENA INVESTMENT MANAGEMENT, LLC, a Delaware
limited liability company (the "Borrower"), EACH OF THE UNDERSIGNED SUBSIDIARIES OF THE BORROWER AND EACH OTHER PERSON WHO SHALL
BECOME A PARTY HERETO BY EXECUTION OF A SECURITY JOINDER AGREEMENT (each a "Guarantor" and, together with the Borrower,
collectively, the "Grantors"), and BANK OF AMERICA, N.A., as Administrative Agent (in such capacity, the
"Administrative Agent") for each of the Secured Parties (as defined in the Credit Agreement referenced) below. 


 
 

RECITALS:    
    


        A.    Pursuant
to a Credit Agreement dated as of July 23, 2007 (as amended, restated, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, the Administrative Agent, Bank of America, N.A., as L/C Issuer, and the lenders now or hereafter party thereto
(the "Lenders"), the Lenders have agreed to provide to the Borrower a term loan and a revolving credit facility with a letter of credit sublimit. 


        B.    Certain
additional extensions of credit may be made from time to time for the benefit of the Grantors pursuant to certain Cash Management Agreements and Hedge Agreements
(each as defined in the Credit Agreement). 



        C.    It
is a condition precedent to the Secured Parties' obligations to make and maintain such extensions of credit that the Grantors shall have executed and delivered this
Security Agreement to the Administrative Agent. 


        In
order to induce the Secured Parties to from time to time make and maintain extensions of credit under the Credit Agreement and such Cash Management Agreements and Hedge Agreements,
the parties hereto agree as follows: 


        1.    Certain Definitions.    All capitalized terms used but not otherwise defined herein shall have the meanings
assigned thereto in the Credit Agreement. Terms used in this Security Agreement that are not otherwise expressly defined herein or in the Credit Agreement, and for which meanings are provided in the
UCC, shall have such meanings as provided in the UCC. In addition, for purposes of this Security Agreement, "Secured Obligations" means (a) as to
the Borrower, all of the Obligations, including, the payment and performance of its obligations and liabilities (whether now existing or hereafter arising) (i) under the Credit Agreement and
each of the other Loan Documents (including this Security Agreement) to which it is now or hereafter becomes a party, and (ii) any Secured Cash Management Agreements and Secured Hedge
Agreements to which it is now or hereafter becomes a party, and (b) as to each Guarantor, the payment and performance of its obligations and liabilities (whether now existing or hereafter
arising) (i) under the Guaranty and each of the other Loan Documents (including this Security Agreement) to which it is now or hereafter becomes a party, and (ii) any Secured Cash
Management Agreements and Secured Hedge Agreements to which it is now or hereafter becomes a party. 


        2.    Grant of Security Interest.    Each Grantor hereby grants as collateral security for the payment, performance
and satisfaction of the Secured Obligations, to the Administrative Agent for the benefit of the Secured Parties a continuing first priority security interest in and to, and collaterally assigns to the
Administrative Agent for the benefit of the Secured Parties, the following property of such Grantor or in which such Grantor has or may have or acquire an interest or the power to transfer rights
therein, whether now owned or existing or hereafter created, acquired or arising and wheresoever located: 



        (a)   All
accounts, and including accounts receivable, contracts, bills, acceptances, choses in action, and other forms of monetary obligations at any time owing to such
Grantor for services 








 

rendered
or to be rendered by such Grantor, and all of such Grantor's rights as an unpaid vendor or lienor (collectively referred to hereinafter as
"Accounts"); 


        (b)   All
books and records relating to any of the foregoing (including customer data, credit files, ledgers, computer programs, printouts, and other computer materials and
records (and all media on which such data, files, programs, materials and records are or may be stored)); and 


        (c)   All
proceeds of any of the foregoing. 




        All
of the property and interests in property described in subsections (a) through (c) are herein collectively referred to as the
"Collateral." 


        3.    Perfection.    As of the date of execution of this Security Agreement or Security Joinder Agreement by each
Grantor, as applicable (with respect to each Grantor, its "Applicable Date"), such Grantor shall have furnished the Administrative Agent with duly
authorized financing statements in form, number and substance suitable for filing, sufficient under applicable law, and satisfactory to the Administrative Agent in order that upon the filing of the
same the Administrative Agent, for the benefit of the Secured Parties, shall have a duly perfected security interest in all Collateral in which a security interest can be perfected by the filing of
financing statements, with the effect that the Liens conferred in favor of the Administrative Agent shall be and remain duly perfected and of first priority subject only, to the extent applicable, to
Permitted Liens. All financing statements (including all amendments thereto and continuations thereof) are sometimes referred to herein as "Perfection
Documents". The delivery of possession of items of or evidencing Collateral, causing other Persons to execute and deliver Perfection Documents as appropriate, the filing or
recordation of Perfection Documents, the establishment of control over items of Collateral, and the taking of such other actions as may be necessary or advisable in the determination of the
Administrative Agent to create, enforce, protect, perfect, or establish or maintain the priority of, the security interest of the Administrative Agent for the benefit of the Secured Parties in the
Collateral is sometimes referred to herein as "Perfection Action". 


        4.    Maintenance of Security Interest; Further Assurances.    



        (a)   Each
Grantor will from time to time at its own expense, take such other or additional Perfection Action, as may be required by the terms of the Loan Documents or as the
Administrative Agent may reasonably request in connection with the administration or enforcement of this Security Agreement or related to the Collateral or any part thereof in order to carry out the
terms of this Security Agreement, to perfect, protect, maintain the priority of or enforce the Administrative Agent's security interest in the Collateral, subject only to Permitted Liens, or otherwise
to better assure and confirm unto the Administrative Agent its rights, powers and remedies for the benefit of the Secured Parties hereunder. Without limiting the foregoing, each Grantor hereby
irrevocably authorizes the Administrative Agent to file (with, or to the extent permitted by applicable law, without the signature of the Grantor appearing thereon) financing statements (including
amendments thereto and initial financing statements in lieu of continuation statements) or other Perfection Documents (including copies thereof) showing such Grantor as "debtor" at such time or times
and in all filing offices as the Administrative Agent may from time to time determine to be necessary or advisable to perfect or protect the rights of the Administrative Agent and the Secured Parties
hereunder, or otherwise to give effect to the transactions herein contemplated. Each Grantor hereby irrevocably ratifies and acknowledges the Administrative Agent's authority to have effected filings
of Perfection Documents made by the Administrative Agent prior to its Applicable Date. 


        (b)   With
respect to any and all Collateral, each Grantor agrees to do and cause to be done all things necessary to perfect, maintain the priority of and keep in full force
the security interest granted in favor of the Administrative Agent for the benefit of the Secured Parties, including, but not limited to, the prompt payment upon demand therefor by the Administrative
Agent of all fees 



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and
expenses (including documentary stamp, excise or intangibles taxes) incurred in connection with the preparation, delivery, or filing of any Perfection Document or the taking of any Perfection
Action to perfect, protect or enforce a security interest in Collateral in favor of the Administrative Agent for the benefit of the Secured Parties, subject only to Permitted Liens. All amounts not so
paid when due shall constitute additional Secured Obligations and (in addition to other rights and remedies resulting from such nonpayment) shall bear interest from the date of demand until paid in
full at the Default Rate. 


        (c)   Each
Grantor agrees to maintain among its books and records appropriate notations or evidence of, and to make or cause to be made appropriate disclosure upon its
financial statements of, the security interest granted hereunder to the Administrative Agent for the benefit of the Secured Parties. 


        (d)   Each
Grantor agrees that, in the event any proceeds (other than goods) of Collateral shall be or become commingled with other property not constituting Collateral, then
such proceeds may, to the extent permitted by law, be identified by application of the lowest intermediate balance rule to such commingled property. 




        5.    Receipt of Payment.    In the event an Event of Default shall occur and be continuing and a Grantor (or any of
its Affiliates, subsidiaries, stockholders, directors, officers, employees or agents) shall receive any proceeds of Collateral, including without limitation monies, checks, notes, drafts or any other
items of
payment, at the direction of the Administrative Agent, each Grantor shall hold all such items of payment in trust for the Administrative Agent for the benefit of the Secured Parties, and as the
property of the Administrative Agent for the benefit of the Secured Parties, separate from the funds and other property of such Grantor, and no later than the first Business Day following the receipt
thereof, at the election of the Administrative Agent, such Grantor shall cause such Collateral to be forwarded to the Administrative Agent for its custody, possession and disposition on behalf of the
Secured Parties in accordance with the terms hereof and of the other Loan Documents. 


        6.    Preservation and Protection of Collateral.    



        (a)   The
Administrative Agent shall be under no duty or liability with respect to the collection, protection or preservation of the Collateral, or otherwise. Each Grantor
shall be responsible for the safekeeping of its Collateral, and in no event shall the Administrative Agent have any responsibility for (i) any loss or damage thereto or destruction thereof
occurring or arising in any manner or fashion from any cause, (ii) any diminution in the value thereof, or (iii) any act or default of any bailee or forwarding agency thereof or other
Person in any way dealing with or handling such Collateral. 


        (b)   Each
Grantor agrees (i) to pay when due all taxes, charges and assessments against the Collateral in which it has any interest, unless being contested in good
faith by appropriate proceedings diligently conducted and against which adequate reserves have been established in accordance with GAAP applied on a basis consistent with the application of GAAP in
the Audited Financial Statements and evidenced to the satisfaction of the Administrative Agent and provided that all enforcement proceedings in the nature of levy or foreclosure are effectively
stayed, and (ii) to cause to be terminated and released all Liens (other than Permitted Liens) on the Collateral. Upon the failure of any Grantor to so pay or contest such taxes, charges, or
assessments, or cause such Liens to be terminated, the Administrative Agent at its option may pay or contest any of them or amounts relating thereto (the Administrative Agent having the sole right to
determine the legality or validity and the amount necessary to discharge such taxes, charges, Liens or assessments) but shall not have any obligation to make any such payment or contest. All sums so
disbursed by the Administrative Agent, including all fees and expenses of counsel (collectively, "Attorneys' Costs"), court costs, expenses and other
charges related thereto, shall be payable on demand by the applicable Grantor to the Administrative Agent and shall be additional 



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Secured
Obligations secured by the Collateral, and any amounts not so paid on demand (in addition to other rights and remedies resulting from such nonpayment) shall bear interest from the date of
demand until paid in full at the Default Rate. 




        7.    Status of Grantors and Collateral Generally.    Each Grantor represents and warrants to, and covenants with, the
Administrative Agent for the benefit of the Secured Parties, with respect to itself and the Collateral as to which it has or acquires any interest, that: 



        (a)   It
is at its Applicable Date (or as to Collateral acquired after its Applicable Date will be upon the acquisition of the same) and, except as permitted by the Credit
Agreement and subsection (b) of this Section 7, will continue to be, the owner of the Collateral, free and clear of all Liens, other than
the security interest hereunder in favor of the Administrative Agent for the benefit of the Secured Parties and Permitted Liens, and that it will at its own cost and expense defend such Collateral and
any products and proceeds thereof against all claims and demands of all Persons (other than holders of Permitted Liens) to the extent of their claims permitted under the Credit Agreement at any time
claiming the same or any interest therein adverse to the Secured Parties. Upon the failure of any Grantor to so defend, the Administrative Agent may do so at its option but shall not have any
obligation to do so. All sums so disbursed by the Administrative Agent, including reasonable Attorneys' Costs, court costs, expenses and other charges related thereto, shall be payable on demand by
the applicable Grantor to the Administrative Agent and shall be additional Secured Obligations secured by the Collateral, and any amounts not so paid on demand (in addition to other rights and
remedies resulting from such nonpayment) shall bear interest from the date of demand until paid in full at the Default Rate. 


        (b)   It
shall abide by Sections 7.01 and 7.04 of the Credit Agreement
as if it were the Borrower. 


        (c)   It
has full power, legal right and lawful authority to enter into this Security Agreement (and any Security Joinder Agreement applicable to it) and to perform its terms,
including the grant of the security interests in the Collateral herein provided for. 


        (d)   No
material authorization, consent, approval or other action by, and no notice to or filing with, any Governmental Authority or any other Person which has not been given
or obtained, as the case may be, is required either (i) for the grant by such Grantor of the security interests granted hereby or for the execution, delivery or performance of this Security
Agreement (or any Security Joinder Agreement) by such Grantor, or (ii) for the perfection of or the exercise by the Administrative Agent, on behalf of the Secured Parties, of its rights and
remedies hereunder, except for action required by the Uniform Commercial Code to perfect and exercise remedies with respect to the security interest conferred hereunder. 


        (e)   No
effective financing statement or other Perfection Document similar in effect, nor any other Perfection Action, covering all or any part of the Collateral purported to
be granted or taken by or on behalf of such Grantor (or by or on behalf of any other Person and which remains effective as against all or any part of the Collateral) has been filed in any recording
office, delivered to another Person for filing (whether upon the occurrence of a contingency or otherwise), or otherwise taken, as the case may be, except such as pertain to Permitted Liens and such
as may have been filed for the benefit of, delivered to, or taken in favor of, the Administrative Agent for the benefit of the Secured Parties in connection with the security interests conferred
hereunder. 


        (f)    Schedule 7(f) attached hereto contains true and complete information as to each of the following: (i) the
exact legal name of each Grantor as it appears in its Organization Documents as of its Applicable Date and at any time during the five (5) year period ending as of its Applicable Date (the
"Covered Period"), (ii) the jurisdiction of formation and form of organization of each 



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Grantor,
and the identification number of such Grantor in its jurisdiction of formation (if any), (iii) each address of the chief executive office of each Grantor as of its Applicable Date and
at any time during the Covered Period, (iv) all trade names or trade styles used by such Grantor as of its Applicable Date and at any time during the Covered Period, (v) the address of
each location of such Grantor at which any Collateral (including records of its Accounts ("Account Records") and documents relating to the Accounts,
including without limitation, repayment histories and present status reports (collectively, "Account Documents")) is located at its Applicable Date or
has been located at any time during the Covered Period and (vi) with respect to each location described in clause (v) that is not owned beneficially and of record by such Grantor, the
name and address of the owner thereof. No Grantor shall change its name, change its jurisdiction of formation (whether by reincorporation, merger or otherwise), change the location of its chief
executive office, or utilize any additional location where Collateral (including Account Records and Account Documents) may be located, except in each case upon giving not less than thirty
(30) days' prior written notice to the Administrative Agent and taking or causing to be taken at such Grantor's expense all such Perfection Action, including the delivery of such Perfection
Documents, as may be reasonably requested by the Administrative Agent to perfect or protect, or maintain the perfection and priority of, the Lien of the Administrative Agent for the benefit of the
Secured Parties in Collateral contemplated hereunder. 




        8.    Inspection.    Each Grantor shall comply with Section 6.10  of the Credit Agreement as if it were the Borrower, and if
an Event of Default has occurred and is continuing the Administrative Agent (by any of its representatives or
independent contractors) shall have the right to contact Persons obligated on any Accounts of such Grantor ("Account Debtors") to verify the amount,
quality, value and condition of, or any other matter relating to, the Collateral with such Account Debtors. 


        9.    Accounts.    With respect to its Accounts whether now existing or hereafter created or acquired and wheresoever
located, each Grantor represents, warrants and covenants to the Administrative Agent for the benefit of the Secured Parties that: 



        (a)   All
Account Records and Account Documents are and shall at all times be located only at such Grantor's current chief executive office as set forth on  Schedule 7(f) attached hereto, such other locations
as are specifically identified on Schedule 7(f)  attached hereto as an "Account Documents location," or as to which the Grantor has complied with
 Section 7(f) hereof. 


        (b)   The
Accounts are genuine, are in all respects what they purport to be, are not evidenced by an instrument or document or, if evidenced by an instrument or document, are
only evidenced by one original instrument or document. 


        (c)   The
Accounts cover bona fide sales, leases, licenses or other dispositions of property usually dealt in by such Grantor, or the rendition by such Grantor of services, to
an Account Debtor in the ordinary course of business. 


        (d)   The
property or services giving rise thereto are not, and were not at the time of the sale or performance thereof, subject to any Lien, claim, encumbrance or security
interest, except those of the Administrative Agent for the benefit of Secured Parties and Permitted Liens. 



        (e)   In
the event any amounts due and owing in excess of $250,000 individually, or $500,000 in the aggregate amount, are in dispute between any Account Debtor and a Grantor
(which shall include without limitation any dispute in which an offset claim or counterclaim may result), such Grantor shall provide the Administrative Agent with written notice thereof as soon as
practicable, explaining in detail the reason for the dispute, all claims related thereto and the amount in controversy. 




        10.    Rights and Remedies Upon Event of Default.    Upon and after an Event of Default, the Administrative Agent
shall have the following rights and remedies on behalf of the Secured Parties in 


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addition
to any rights and remedies set forth elsewhere in this Security Agreement or the other Loan Documents, all of which may be exercised with or, if allowed by law, without notice to a Grantor: 



        (a)   All
of the rights and remedies of a secured party under the UCC or under other applicable law, all of which rights and remedies shall be cumulative, and none of which
shall be exclusive, to the extent permitted by law, in addition to any other rights and remedies contained in this Security Agreement or any other Loan Document; 


        (b)   The
right to foreclose the Liens and security interests created under this Security Agreement by any available judicial procedure or without judicial process; 


        (c)   The
right to (i) enter upon the premises of a Grantor through self-help and without judicial process, without first obtaining a final judgment or
giving such Grantor notice or opportunity for a hearing on the validity of the Administrative Agent's claim and without any obligation to pay rent to such Grantor, or any other place or places where
any Collateral is located and kept, and remove the Collateral therefrom to the premises of the Administrative Agent or any agent of the Administrative Agent, for such time as the Administrative Agent
may desire, in order effectively to collect or liquidate the Collateral, and (ii) require such Grantor or any bailee or other agent of such Grantor to assemble the Collateral and make it
available to the Administrative Agent at a place to be designated by the Administrative Agent that is reasonably convenient to both parties; and 


        (d)   The
right to (i) exercise all of a Grantor's rights and remedies with respect to the collection of Accounts, including the right to demand payment thereof and
enforce payment, by legal proceedings or otherwise; (ii) settle, adjust, compromise, extend or renew all or any Accounts or any legal proceedings pertaining thereto; (iii) discharge and
release all or any Accounts; (iv) take control, in any manner, of any item of payment or proceeds referred to in Section 5 above;
(v) prepare, file and sign a Grantor's name on any Proof of Claim in bankruptcy, notice of Lien, assignment or satisfaction of Lien or similar document in any action or proceeding adverse to
any obligor under any Payment Collateral or otherwise in connection with any Accounts; (vi) endorse the name of a Grantor upon any chattel paper, document, instrument, invoice, freight bill,
bill of lading or similar document or agreement relating to any Collateral; (vii) use the information recorded on or contained on a Grantor's internet website or otherwise in any data
processing equipment and computer hardware and software relating to any Collateral to which a Grantor has access; (viii) open such Grantor's mail and collect any and all amounts due to such
Grantor from any Account Debtors or other obligor in respect of Accounts; (ix) take over such Grantor's post office boxes or make other arrangements as the Administrative Agent, on behalf of
the Secured Parties, deems necessary to receive such Grantor's mail, including notifying the post office authorities to change the address for delivery of such Grantor's mail to such address as the
Administrative Agent, on behalf of the Secured Parties, may designate; (x) notify any or all Account Debtors or other obligor on any Account that such Account has been assigned to the
Administrative Agent for the benefit of the Secured Parties and that Administrative Agent has a security interest therein for the benefit of the Secured Parties (provided that the Administrative Agent
may at any time give such notice to an Account Debtor that is a department, agency or authority of the United States government); each Grantor hereby agrees that any such notice, in the Administrative
Agent's sole discretion, may (but need not) be sent on such Grantor's stationery, in which event such Grantor shall co-sign such notice with the Administrative Agent if requested to do so
by the Administrative Agent; and (xi) do all acts and things and execute all documents necessary, in Administrative Agent's sole discretion, to collect the Accounts. 




        The
net cash proceeds resulting from the collection, liquidation, sale, or other disposition of the Collateral shall be applied first to the expenses (including all Attorneys' Costs) of
retaking, holding, storing, processing and preparing for sale, selling, collecting, liquidating and the like, and then to the 


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satisfaction
of all Secured Obligations in accordance with the terms of Section 8.03 of the Credit Agreement. Each Grantor shall be liable to the
Administrative Agent, for the benefit of the Secured Parties, and shall pay to the Administrative Agent, for the benefit of the Secured Parties, on demand any deficiency which may remain after such
sale, disposition, collection or liquidation of the Collateral. 


        11.    Attorney-in-Fact.    Each Grantor hereby appoints the Administrative Agent as the
Grantor's attorney-in-fact for the purposes of carrying out the provisions of this Security Agreement and taking any action and executing any instrument which the
Administrative Agent may deem necessary or advisable to accomplish the purposes hereof, which appointment is irrevocable and coupled with an interest; provided,  that the Administrative Agent shall have
and may exercise rights under this power of attorney only upon the occurrence and during the continuance of an Event of Default.
Without limiting the generality of the foregoing, upon the
occurrence and during the continuance of an Event of Default, the Administrative Agent shall have the right and power 



        (a)   to
ask, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the
Collateral; 


        (b)   to
receive, endorse and collect any drafts or other instruments, documents and chattel paper in connection with clause (a) above; 


        (c)   to
endorse such Grantor's name on any checks, notes, drafts or any other payment relating to or constituting proceeds of the Collateral which comes into the
Administrative Agent's possession or the Administrative Agent's control, and deposit the same to the account of the Administrative Agent, for the benefit of the Secured Parties, on account and for
payment of the Secured Obligations; 


        (d)   to
file any claims or take any action or institute any proceedings that the Administrative Agent may deem necessary or desirable for the collection of any of the
Collateral or otherwise to enforce the rights of the Administrative Agent, for the benefit of the Secured Parties, with respect to any of the Collateral; and 



        (e)   to
execute, in connection with any sale or other disposition of Collateral provided for herein, any endorsement, assignments, or other instruments of conveyance or
transfer with respect thereto. 




        12.    Reinstatement.    The granting of a security interest in the Collateral and the other provisions hereof shall
continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Secured Obligations is rescinded or must otherwise be returned by any Secured Party or is repaid
by any Secured Party in whole or in part in good faith settlement of a pending or threatened avoidance claim, whether upon the insolvency, bankruptcy or reorganization of any Grantor or any other Loan
Party or otherwise, all as though such payment had not been made. The provisions of this Section 12 shall survive repayment of all of the Secured
Obligations and the termination or expiration of this Security Agreement in any manner, including but not limited to termination upon occurrence of the Facility Termination Date. 


        13.    Certain Waivers by the Grantors.    Each Grantor waives to the extent permitted by applicable law
(a) any right to require any Secured Party or any other obligee of the Secured Obligations to (x) proceed against any Person or entity, including without limitation any Loan Party,
(y) proceed against or exhaust any Collateral or other collateral for the Secured Obligations, or (z) pursue any other remedy in its power; (b) any defense arising by reason of
any disability or other defense of any other Person, or by reason of the cessation from any cause whatsoever of the liability of any other Person or entity, (c) any right of subrogation, and
(d) any right to enforce any remedy which any Secured Party or any other obligee of the Secured Obligations now has or may hereafter have against any other Person and any benefit of and any
right to participate in any collateral or security whatsoever now or hereafter held by the Administrative Agent for the benefit of the Secured Parties. Each Grantor 


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authorizes
each Secured Party and each other obligee of the Secured Obligations without notice (except notice required by applicable law) or demand and without affecting its liability hereunder or
under the Loan Documents from time to time to: (i) take and hold security, other than the Collateral herein described, for the payment of such Secured Obligations or any part thereof, and
exchange, enforce, waive and release the Collateral herein described or any part thereof or any such other security; and (ii) apply such Collateral or other security and direct the order or
manner of sale thereof as such Secured Party or obligee in its discretion may determine. 


        The
Administrative Agent may at any time deliver (without representation, recourse or warranty) the Collateral or any part thereof to a Grantor and the receipt thereof by such Grantor
shall be a complete and full acquittance for the Collateral so delivered, and the Administrative Agent shall thereafter be discharged from any liability or responsibility therefor. 


        14.    Continued Powers.    Until the Facility Termination Date shall have occurred, the power of sale and other
rights, powers and remedies granted to the Administrative Agent for the benefit of the Secured Parties hereunder shall continue to exist and may be exercised by the Administrative Agent at any time
and from time to time irrespective of the fact that any of the Secured Obligations or any part thereof may have become barred by any statute of limitations or that any part of the liability of any
Grantor may have ceased. 


        15.    Other Rights.    The rights, powers and remedies given to the Administrative Agent for the benefit of the
Secured Parties by this Security Agreement shall be in addition to all rights, powers and remedies given to the Administrative Agent or any Secured Party under any other Loan Document or by virtue of
any statute or rule of law. Any forbearance or failure or delay by the Administrative Agent in exercising any right, power or remedy hereunder shall not be deemed to be a waiver of such right, power
or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not preclude the further exercise thereof; and every right, power and remedy of the Secured Parties shall
continue in full force and effect until such right, power or remedy is specifically waived in accordance with the terms of the Credit Agreement. 


        16.    Anti-Marshaling Provisions.    The right is hereby given by each Grantor to the Administrative
Agent, for the benefit of the Secured Parties, to make releases (whether in whole or in part) of all or any part of the Collateral agreeable to the Administrative Agent without notice to, or the
consent, approval or agreement of other parties and interests, including junior lienors, which releases shall not impair in any manner the validity of or priority of the Liens and security interests
in the remaining Collateral conferred hereunder, nor release any Grantor from personal liability for the Secured Obligations. Notwithstanding the existence of any other security interest in the
Collateral held by the Administrative Agent, for the benefit of the Secured Parties, the Administrative Agent shall have the right to determine the order in which any or all of the Collateral shall be
subjected to the remedies provided in this Security Agreement. Each Grantor hereby waives any and all right to require the marshaling of assets in connection with the exercise of any of the remedies
permitted by applicable law or provided herein or in any other Loan Document. 


        17.    Entire Agreement.    This Security Agreement and each Security Joinder Agreement, together with the Credit
Agreement and other Loan Documents, constitutes and expresses the entire understanding between the parties hereto with respect to the subject matter hereof, and supersedes all prior negotiations,
agreements and understandings, inducements, commitments or conditions, express or implied, oral or written, except as contained in the Loan Documents. The express terms hereof and of the Security
Joinder Agreements control and supersede any course of performance or usage of the trade inconsistent with any of the terms hereof or thereof. Neither this Security Agreement nor any Security Joinder
Agreement nor any portion or provision hereof or thereof may be changed, altered, modified, supplemented, discharged, canceled, terminated, or amended orally or in any manner other than as provided in
the Credit Agreement. 


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        18.    Third Party Reliance.    Each Grantor hereby consents and agrees that all issuers of or obligors in respect of
any Collateral, and all securities intermediaries, warehousemen, bailees, public officials and other Persons having any interest in, possession of, control over or right, privilege, duty or discretion
in respect of, any Collateral shall be entitled to accept the provisions hereof and of the Security Joinder Agreements as conclusive evidence of the right of the Administrative Agent, on behalf of the
Secured Parties, to exercise its rights hereunder or thereunder with respect to the Collateral, notwithstanding any other notice or direction to the contrary heretofore or hereafter given by any
Grantor or any other Person to any of such Persons. 


        19.    Binding Agreement; Assignment.    This Security Agreement and each Security Joinder Agreement, and the terms,
covenants and conditions hereof and thereof, shall be binding upon and inure to the benefit of the parties hereto, and to their respective successors and assigns, except that no Grantor shall be
permitted to assign this Security Agreement, any Security Joinder Agreement or any interest herein or therein or, except as expressly permitted herein or in the Credit Agreement, in the Collateral or
any part thereof or interest therein. Without limiting the generality of the foregoing sentence of this Section 19, any Lender may assign to one
or more Persons, or grant to one or more Persons participations in or to, all or any part of its rights and obligations under the Credit Agreement (to the
extent permitted by the Credit Agreement); and to the extent of any such assignment or participation such other Person shall, to the fullest extent permitted by law, thereupon become vested with all
the benefits in respect thereof granted to such Lender herein or otherwise, subject however, to the provisions of the Credit Agreement, including Article IX  thereof (concerning the Administrative
Agent) and Section 10.06 thereof (concerning assignments and participations). All
references herein to the Administrative Agent and to the Secured Parties shall include any successor thereof or permitted assignee, and any other obligees from time to time of the Secured Obligations. 



        20.    Secured Cash Management Agreements and Secured Hedging Agreements.    No Secured Party (other than the
Administrative Agent) that obtains the benefit of this Security Agreement shall have any right to notice of any action or to consent to, direct or object to any action hereunder or otherwise in
respect of the Collateral (including the release or impairment of any Collateral) other than in its capacity as a Lender and, in such case, only to the extent expressly provided in the Loan Documents.
Notwithstanding any other provision of this Security Agreement to the contrary, the Administrative Agent shall only be required to verify the payment of, or that other satisfactory arrangement have
been made with respect to, the Secured Obligations arising under Secured Cash Management Agreements and Secured Hedge Agreements to the extent the Administrative Agent has received written notice of
such Obligations, together with such supporting documentation as it may request, from the applicable Cash Management Bank or Hedge Bank, as the case may be. Each Secured Party not a party to the
Credit Agreement that obtains the benefit of this Security Agreement shall be deemed to have acknowledged and accepted the appointment of the Administrative Agent pursuant to the terms of the Credit
Agreement, and that with respect to the actions and omissions of the Administrative Agent hereunder or otherwise relating hereto that do or may affect such Secured Party, the Administrative Agent and
each of its Related Parties shall be entitled to all the rights, benefits and immunities conferred under Article IX of the Credit Agreement. 


        21.    Severability.    If any provision of this Security Agreement is held to be illegal, invalid or unenforceable,
(a) the legality, validity and enforceability of the remaining provisions of this Security Agreement shall not be affected or impaired thereby and (b) the parties shall endeavor in good
faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 


        22.    Counterparts.    This Security Agreement may be executed in any number of counterparts each of which when so
executed and delivered shall be deemed an original, and it shall not be necessary in 


9







 



making
proof of this Security Agreement to produce or account for more than one such counterpart executed by the Grantor against whom enforcement is sought. Without limiting the foregoing provisions
of this Section 22, the provisions of Section 10.10 of the Credit Agreement shall be
applicable to this Security Agreement. 


        23.    Termination.    Subject to the provisions of Section 12,  this Security Agreement and each Security Joinder Agreement,
and all obligations of the Grantors hereunder (excluding those obligations and liabilities that expressly survive
such termination) shall terminate without delivery of any instrument or performance of any act by any party on the Facility Termination Date. Upon such termination of this Security Agreement, the
Administrative Agent shall, at the request and sole expense of the Grantors, promptly deliver to the Grantors such termination statements and take such further actions as the Grantors may reasonably
request to terminate of record, or otherwise to give appropriate notice of the termination of, any Lien conferred hereunder. 


        24.    Notices.    Any notice required or permitted hereunder shall be given (a) with respect to the Borrower,
at the address for the giving of notice then in effect under the Credit Agreement, (b) with respect to any Grantor, at the address then in effect for the giving of notices to such Grantor under
the Guaranty, and (c) with respect to the Administrative Agent or a Lender, at the Administrative Agent's address indicated in Schedule 10.02  of the Credit Agreement. All such addresses may be
modified, and all such notices shall be given and shall be effective, as provided in
Schedule 10.02 of the Credit Agreement for the giving and effectiveness of notices and modifications of addresses thereunder. 


        25.    Joinder.    Each Person that shall at any time execute and deliver to the Administrative Agent a Security
Joinder Agreement substantially in the form attached as Exhibit A hereto shall thereupon irrevocably, absolutely and unconditionally become a
party hereto and obligated hereunder as a Grantor and shall have thereupon pursuant to Section 2 hereof granted a security interest in and
collaterally assigned to the Administrative Agent for the benefit of the Secured Parties all Collateral in which it has at its Applicable Date or thereafter acquires any interest or the power to
transfer, and all references herein and in the other Loan Documents to the Grantors or to the parties to this Security Agreement shall be deemed to include such Person as a Grantor hereunder. Each
Security Joinder Agreement shall be accompanied by the Supplemental Schedules referred to therein, appropriately completed with information relating to the Grantor executing such Security Joinder
Agreement and its property. Each of the applicable Schedules attached hereto shall be deemed amended and supplemented without further action by such information reflected on the Supplemental
Schedules. 


        26.    Rules of Interpretation.    The rules of interpretation contained in  Section 1.02 of the Credit Agreement shall be
applicable to this Security Agreement and each Security Joinder Agreement and are hereby
incorporated by reference. All representations and warranties contained herein shall survive the delivery of documents and any Credit Extensions referred to herein or secured hereby. 


        27.    Governing Law; Jurisdiction; Etc.    



        (a)   THIS
SECURITY AGREEMENT AND EACH SECURITY JOINDER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. 


        (b)   EACH
PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING
IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS SECURITY AGREEMENT OR ANY SECURITY JOINDER AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION 



10







 




OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL
JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS SECURITY
AGREEMENT OR ANY SECURITY JOINDER AGREEMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS SECURITY AGREEMENT OR ANY
SECURITY JOINDER AGREEMENT AGAINST ANY GRANTOR OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION. 


        (c)   EACH
GRANTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR ANY SECURITY JOINDER AGREEMENT IN ANY COURT REFERRED TO IN PARAGRAPH (b) OF THIS SECTION. EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT. 



        (d)   EACH
PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 24.  NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY APPLICABLE LAW. 




        28.    Waiver of Jury Trial.    EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR ANY SECURITY JOINDER AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE
OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS SECURITY AGREEMENT OR ANY SECURITY JOINDER AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. 


[Signature page follows.]


11













































  
        IN WITNESS WHEREOF, the parties have duly executed this Security Agreement on the day and year first written above. 



							
	 	 	 GRANTORS:
	

 	
 	
 PZENA INVESTMENT MANAGEMENT, LLC
	
 	
 	
By:	
 	
/s/ WAYNE A. PALLADINO







 
	 	 	 	 	Name:	 	Wayne A. Palladino







 
	 	 	 	 	Title:	 	Chief Financial Officer







 
	

 	
 	
 PZENA ALTERNATIVE INVESTMENTS, LLC
	
 	
 	
By:	
 	
/s/ LAWRENCE KOHN







 
	 	 	 	 	Name:	 	Lawrence Kohn







 
	 	 	 	 	Title:	 	President







 












							
	 	 	 ADMINISTRATIVE AGENT:
	
 	
 	
 BANK OF AMERICA, N.A., as Administrative Agent
	

 	
 	
By:	
 	
/s/ FRED ZAGAR







 
	 	 	 	 	Name:	 	Fred Zagar







 
	 	 	 	 	Title:	 	Senior Vice President







 




















































 
 

  SCHEDULE 7(f)    
    


 Grantor Information  



											
	I. 	 	II. 	 	III. 	 	IV. 	 	V. 	 	VI. 
	Name 	 	Jurisdiction of

Formation/

Form of Equity/I.D.

Number 	 	Address of Chief

Executive Office 	 	Trade Styles 	 	Collateral

Locations

(and Type

of Collateral) 	 	Name and address

of Owner of

Collateral Location

(If other than Grantor) 
	Pzena Investment Management, LLC	 	Delaware/2565079	 	120 West 45th Street,

20th Floor

New York, New York

10036	 	None	 	120 West 45th Street,

20th Floor

New York, New York

10036	 	N/A
	
 Pzena Alternative Investments, LLC	
 	
Delaware/4112085	
 	
120 West 45th Street,

20th Floor

New York, New York

10036	
 	
None	
 	
120 West 45th Street,

20th Floor

New York, New York

10036	
 	
N/A




















































 
 

  EXHIBIT A    
    


 Form of Security Joinder Agreement

SECURITY JOINDER AGREEMENT  


THIS SECURITY JOINDER AGREEMENT dated as
of                                , 20    (this "Security Joinder
Agreement"), is made
by                                    ,
a                                    (the "Joining Grantor"), in favor of BANK OF
AMERICA, N.A., in its capacity as Administrative Agent (the "Administrative Agent") for the Secured Parties (as defined in the
Credit Agreement referenced below; all capitalized terms used but not defined herein shall have the meanings given to such terms in such Credit Agreement). 


RECITALS:  


        A.    Pursuant
to a Credit Agreement dated as of July 23, 2007 (as amended, restated, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among Pzena Investment Management, LLC, a Delaware limited liability company (the
"Borrower"), the Administrative Agent, Bank of America, N.A., as L/C Issuer, and the lenders now or hereafter party thereto (the
"Lenders"), the Lenders have agreed to provide to the Borrower a term loan and revolving credit facility with a letter of credit sublimit. 


        B.    The
Borrower, certain of its Subsidiaries and the Administrative Agent, are party to a Security Agreement dated as of October 28, 2008 (as in effect on the date
hereof, the "Security Agreement"). 


        C.    The
Joining Grantor is a Subsidiary of the Borrower and is required by the terms of the Credit Agreement to become a Guarantor and be joined as a party to the Security
Agreement as a Grantor. 


        D.    The
Joining Grantor will materially benefit directly and indirectly from the making and maintenance of the extensions of credit made from time to time under the Credit
Agreement, Cash Management Agreements and Hedge Agreements. 


        In
order to induce the Secured Parties to from time to time make and maintain extensions of credit under the Credit Agreement, Cash Management Agreements and Hedge Agreements, the
Joining Grantor hereby agrees as follows: 


        1.    Joinder.    The Joining Grantor hereby irrevocably, absolutely and unconditionally becomes a party to the
Security Agreement as a Grantor and bound by all the terms, conditions, obligations, liabilities and undertakings of each Grantor or to which each Grantor is subject thereunder. In furtherance of the
foregoing, the Joining Grantor hereby grants a security interest to the Administrative Agent for the benefit of the Secured Parties in the property and property rights constituting Collateral (as
defined in Section 2 of the Security Agreement) of such Grantor or in which such Grantor has or may have or acquire an interest or the power to
transfer rights therein, whether now owned or existing or hereafter created, acquired or arising and wheresoever located, as security for the payment and performance of the Secured Obligations, all
with the same force and effect as if the Joining Grantor were a signatory to the Security Agreement. 



        2.    Affirmations.    The Joining Grantor hereby acknowledges and reaffirms as of the date hereof with respect to
itself, its properties and its affairs each of the waivers, representations, warranties, acknowledgements and certifications applicable to any Grantor contained in the Security Agreement. 


        3.    Supplemental Schedules.    Attached to this Security Joinder Agreement are duly completed schedules (the
"Supplemental Schedules") supplementing as thereon indicated the respective Schedules to the Security Agreement. The Joining Grantor represents and
warrants that the information contained on
each of the Supplemental Schedules with respect to such Joining Grantor and its properties and affairs is true, complete and accurate as of the date hereof. 


        4.    Severability.    The provisions of this Security Joinder Agreement are independent of and separable from each
other. If any provision hereof shall for any reason be held invalid or 







 



unenforceable,
such invalidity or unenforceability shall not affect the validity or enforceability of any other provision hereof, but this Security Joinder Agreement shall be construed as if such
invalid or unenforceable provision had never been contained herein. 


        5.    Counterparts.    This Security Joinder Agreement may be executed in any number of counterparts each of which
when so executed and delivered shall be deemed an original, and it shall not be necessary in making proof of this Security Joinder Agreement to produce or account for more than one such counterpart
executed by the Joining Grantor. Without limiting the foregoing provisions of this Section 5, the provisions of  Section 10.10 of the Credit
Agreement shall be applicable to this Security Joinder Agreement. 


        6.    Delivery.    Joining Grantor hereby irrevocably waives notice of acceptance of this Security Joinder Agreement
and acknowledges that the Secured Obligations are and shall be deemed to be incurred, and credit extensions under the Loan Documents, Cash Management Agreement and Hedge Agreements made and
maintained, in reliance on this Security Joinder Agreement and the Grantor's joinder as a party to the Security Agreement as herein provided. 



        7.    Governing Law; Jurisdiction; Waiver of Jury Trial; Etc..    The provisions of  Sections 27 and 28 of the Security Agreement are hereby incorporated by reference as if fully set
forth herein. 


[Signature page follows.]


2







 

        IN WITNESS WHEREOF, the Joining Grantor has duly executed and delivered this Security Joinder Agreement as of the day and year first
written above. 



							
	 	 	 JOINING GRANTOR:
	

 	
 	






  
	

 	
 	
By:	
 	
  







 
	 	 	 	 	Name:	 	 






 
	 	 	 	 	Title:	 	 






 





3

















































 
 

  SUPPLEMENTAL
  SCHEDULE 7(f)    
    


 Grantor Information  



											
	I. 	 	II. 	 	III. 	 	IV. 	 	V. 	 	VI. 
	Name 	 	Jurisdiction of

Formation/

Form of Equity/I.D.

Number 	 	Address of Chief

Executive Office 	 	Trade Styles 	 	Collateral

Locations

(and Type

of Collateral) 	 	Name and address

of Owner of

Collateral Location

(If other than Grantor) 
	 	 	 	 	 	 	 	 	 	 	 
	
 	
 	

 	
 	

 	
 	

 	
 	

 	
 	

 
		 	 	 	 	 	 	 	 	 	 






Delivered pursuant to Security Joinder Agreement
of                                    . 


Applicable
Date:                                    ,
20    











QuickLinks



Exhibit 10.3


SECURITY AGREEMENT

RECITALS



SCHEDULE 7(f)




EXHIBIT A




SUPPLEMENTAL SCHEDULE 7(f)