Exhibit 10.2**FINAL**TAX RECEIVABLE AGREEMENT          This TAX RECEIVABLE AGREEMENT (as amended from time to time, this “Agreement”), datedas of October 30, 2007, is hereby entered into by and among Pzena Investment Management, Inc., aDelaware corporation (the “Corporation”), Pzena Investment Management, LLC, a Delawarelimited liability company (“PIM”) and each of the undersigned parties hereto identified as“Continuing Members” or “Exiting Members.”**RECITALS**          WHEREAS, the Continuing Members hold membership interests (“Units”) in PIM, which istreated as a partnership for United States federal income Tax (as defined below) purposes;          WHEREAS, immediately prior to the consummation of the IPO (as defined below) and theCorporation’s acquisition of certain Units from the Exiting Members in exchange for a portion ofthe net proceeds of the IPO, the Exiting Members held Units in PIM;          WHEREAS, the Corporation is the managing member of, and holds and will hold Units in, PIM;          WHEREAS, as a result of the Continuing Members’ agreement to hold Units rather thantransferring all of their Units in exchange for shares of Class A common stock of the Corporation,par value $0.01 per share (“Class A Shares”), the Corporation is expected to incursignificantly lower Tax liabilities on an ongoing basis with respect to the operations of PIM;          WHEREAS, (i) certain of the Continuing Members have sold a portion of the Units they hold tothe Corporation and (ii) each of the Exiting Members have sold all the Units they hold to theCompany (together, the “Original Sale”) in exchange for the net proceeds of the IPO, eachon the date hereof;          WHEREAS, the Units are exchangeable for Class A Shares;          WHEREAS, PIM and each of its direct and indirect subsidiaries treated as a partnership forUnited States federal income Tax purposes has or will have in effect an election under Section 754of the Internal Revenue Code of 1986, as amended (the “Code”), for the
 

 
Taxable Year (as defined below) in which the Original Sale occurs and for each subsequent Taxable Year in which anexchange of Units for Class A Shares occurs, which election will result in an adjustment to the Taxbasis of the assets owned by PIM and such subsidiaries, solely with respect to the Corporation, atthe time of the Original Sale, an exchange of Units for Class A Shares or any other deemed oractual acquisition of Units by the Corporation for cash or otherwise (collectively, and togetherwith the Original Sale, an “Exchange”) (such time, including the date of the Original Sale,the “Exchange Date”) by reason of such Exchange and the payments under this Agreement;          WHEREAS, the income, gain, loss, expense and other Tax items of (i) PIM, solely with respectto the Corporation, may be affected by the Basis Adjustment (defined below) and (ii) theCorporation may be affected by the Imputed Interest (as defined below); and          WHEREAS, the parties to this Agreement desire to make certain arrangements with respect to theeffect of the Basis Adjustment and Imputed Interest on the actual liability for Taxes of theCorporation.          NOW, THEREFORE, in consideration of the foregoing and the respective covenants and agreementsset forth herein, and intending to be legally bound hereby, the parties hereto agree as follows:**ARTICLE I****DEFINITIONS**          Definitions. As used in this Agreement, the terms set forth in this Article I shallhave the following meanings (such meanings to be equally applicable to both the singular and pluralforms of the terms defined).          “Advisory Firm” means Ernst & Young LLP, or any other accounting firm that isnationally recognized as being expert in Tax matters and that is appointed by the Board.          “Advisory Firm Letter” shall mean a letter from the Advisory Firm stating that therelevant schedule, notice or other information to be provided by the Corporation to the ApplicableMember and all supporting schedules and work papers were prepared by the Corporation in good faith.          “Affiliate” means, with respect to any Person, any other Person that directly orindirectly, through one or more intermediaries, Controls, is Controlled by, or is under commonControl with, such first Person.
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          “Agreed Rate” means LIBOR.          “Agreement” is defined in the preamble of this Agreement.          “Amended Schedule” is defined in Section 2.04(b) of this Agreement.          “Applicable Member” means in respect of that portion of any Tax Benefit Payment thatarises from an Exchange or a deemed Exchange pursuant to clause (5) of the definition of “ValuationAssumptions”, the Exchanging Member or Member deemed to Exchange, as applicable.          “Basis Adjustment” means the adjustment to the Tax basis of an Exchange Asset as aresult of an Exchange and the payments made pursuant to this Agreement, as calculated under Section2.01 of this Agreement, under Section 732(b) of the Code (in a situation where, as a result of oneor more Exchanges, PIM becomes an entity that is disregarded as separate from its owner for Taxpurposes) or Sections 743(b) and 754 of the Code (including in situations where, following anExchange, PIM remains in existence as an entity for Tax purposes) or otherwise, as applicable, and,in each case, comparable sections of state, local and foreign Tax laws. Notwithstanding any otherprovision of this Agreement, the amount of any Basis Adjustment resulting from an Exchange of oneor more Units shall be determined without regard to any Pre-Exchange Transfer of such Units and asif any such Pre-Exchange Transfer had not occurred.          A “Beneficial Owner” of a security is a Person who directly or indirectly, through anycontract, arrangement, understanding, relationship or otherwise, has or shares: (i) voting power,which includes the power to vote, or to direct the voting of, such security and/or (ii) investmentpower, which includes the power to dispose of, or to direct the disposition of, such security. Theterms “Beneficially Own” and “Beneficial Ownership” shall have correlativemeanings.          “Board” means the board of directors of the Corporation.          “Business Day” means Monday through Friday of each week, except that a legal holidayrecognized as such by the government of the United States of America or the State of New York shallnot be regarded as a Business Day.          “Change of Control” means the occurrence of any of the following events: (i) any Person or any group of Persons actingtogether which would constitute a “group” for purposes of Section 13(d)of the Securities and Exchange Act of 1934, or any successorprovisions thereto, excluding a group of Persons, which, if it includesany Key
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   Member or any of such Key Member’s Affiliates, includes all KeyMembers then employed by PIM or any of PIM’s Affiliates, is or becomesthe Beneficial Owner, directly or indirectly, of securities of theCorporation representing more than fifty percent (50%) of the combinedvoting power of the Corporation’s then outstanding voting securities;or  (ii) the following individuals cease for any reason to constitute amajority of the number of directors of the Corporation then serving:individuals who, on the date of the consummation of the IPO, constitute theBoard and any new director (other than a director whose initial assumption ofoffice is in connection with an actual or threatened election contest,including but not limited to a consent solicitation, relating to an election ofdirectors of the Corporation) whose appointment or election by the Board ornomination for election by the Corporation’s stockholders was approved orrecommended by a vote of at least two-thirds (2/3) of the directors then stillin office who either were directors on the date of the consummation of the IPOor whose appointment, election or nomination for election was previously soapproved or recommended by the directors referred to in this clause (ii); or  (iii) there is consummated a merger or consolidation of theCorporation with any other corporation or other entity, and, immediately afterthe consummation of such merger or consolidation, either (x) the Boardimmediately prior to the merger or consolidation does not constitute at least amajority of the board of directors of the company surviving the merger or, ifthe surviving company is a subsidiary, the ultimate parent thereof, or (y) allof the Persons who were the respective Beneficial Owners of the votingsecurities of the Corporation immediately prior to such merger or consolidationdo not Beneficially Own, directly or indirectly, more than 50% of the combinedvoting power of the then outstanding voting securities of the Person resultingfrom such merger or consolidation; or  (iv) the stockholders of the Corporation approve a plan of completeliquidation or dissolution of the Corporation or there is consummated anagreement or series of related agreements for the sale or other disposition,directly, or indirectly, by the Corporation of all or substantially all of theCorporation’s assets, other than such sale or other disposition by theCorporation of all or substantially all of the Corporation’s assets to anentity, at least fifty percent (50%) of the combined voting power of the votingsecurities of which are owned by stockholders of the Corporation insubstantially the same proportions as their voting power of the Corporationimmediately prior to such sale.     Notwithstanding the foregoing, except with respect to clause (ii) and clause (iii)(x) above, a“Change in Control” shall not be deemed to have occurred by virtue of the consummation of
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any transaction or series of integrated transactions immediately following which the record holders ofthe shares of capital stock of the Corporation immediately prior to such transaction or series oftransactions continue to have substantially the same proportionate voting power in an entity whichowns all or substantially all of the assets of the Corporation immediately following suchtransaction or series of transactions.          “Class A Shares” is defined in the Recitals of this Agreement.          “Code” is defined in the Recitals of this Agreement.          “Continuing Members” is defined in the Preamble of this Agreement.          “Control” means the possession, direct or indirect, of the power to direct or causethe direction of the management and policies of a Person, whether through ownership of votingsecurities, by contract or otherwise.          “Corporation” is defined in the Preamble of this Agreement.          “Corporation Return” means the United States federal, state, local and/or foreign TaxReturn, as applicable, of the Corporation filed with respect to Taxes for any Taxable Year.          “Cumulative Net Realized Tax Benefit” for a Taxable Year means the cumulative amountof Realized Tax Benefits for all Taxable Years of the Corporation, up to and including such TaxableYear, net of the cumulative amount of Realized Tax Detriments for the same period. The RealizedTax Benefit and Realized Tax Detriment for each Taxable Year shall be determined based on the mostrecent Tax Benefit Schedule or Amended Schedule, if any, in existence at the time of suchdetermination.          “Default Rate” means LIBOR plus 300 basis points.          “Determination” shall have the meaning ascribed to such term in Section 1313(a) of theCode or similar provision of state, local and foreign Tax law, as applicable, or any other event(including the execution of a Form 870-AD) that finally and conclusively establishes the amount ofany liability for Tax.          “Dispute” is defined in Section 7.08(a).
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          “Early Termination Date” means the date of an Early Termination Notice for purposes ofdetermining the Early Termination Payment.          “Early Termination Notice” is defined in Section 4.02 of this Agreement.          “Early Termination Schedule” is defined in Section 4.02 of this Agreement.          “Early Termination Payment” is defined in Section 4.03(b) of this Agreement.          “Early Termination Rate” means the long-term Treasury rate in effect on the applicabledate.          “Exchange” is defined in the Recitals of this Agreement; “Exchanged” and “Exchanging”shall have correlative meanings.          “Exchange Assets” means each asset that is held by PIM, or by any of its direct orindirect subsidiaries treated as a partnership or disregarded entity for purposes of the applicableTax, at the time of an Exchange.          “Exchange Basis Schedule” is defined in Section 2.02 of this Agreement.          “Exchange Date” is defined in the Recitals of this Agreement.          “Exchange Payment” is defined in Section 5.01.          “Exiting Members” is defined in the Preamble of this Agreement.          “Expert” is defined in Section 7.09 of this Agreement.          “Hypothetical Tax Liability” means, with respect to any Taxable Year, the liabilityfor Taxes of the Corporation (or PIM, but only with respect to income realized by PIM the Taxliability for which is allocable to the Corporation for such Taxable Year using the same methods,elections, conventions and similar practices used on the relevant Corporation Return) but using theNon-Stepped Up Tax Basis instead of the Tax basis of the Exchange Assets and excluding anydeduction attributable to Imputed Interest.
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          “Imputed Interest” shall mean any interest imputed under Section 1272, 1274 or 483 orother provision of the Code and any similar provision of state, local and foreign Tax law withrespect to the Corporation’s payment obligations under this Agreement.          “IPO” means the initial public offering of the Class A Shares that is beingconsummated on the date hereof.          “IRS” means the United States Internal Revenue Service.          “Key Member” means any of Richard S. Pzena, A. Rama Krishna, John P. Goetz, William L.Lipsey, Joel M. Greenblatt or Milestone Associates, L.L.C.          “LIBOR” means for each month (or portion thereof) during any period, an interest rateper annum equal to the rate per annum reported, on the date two days prior to the first day of suchmonth, as published by Reuters (or other commercially available source providing quotations ofLIBOR) for London interbank offered rates for United States dollar deposits for such month (orportion thereof).          “LLC Agreement” means the Amended and Restated Operating Agreement of PIM, datedOctober 30, 2007, as may be amended from time to time.          “Market Value” means, with respect to the Class A Shares, on any given date: (i) ifthe Class A Shares are listed for trading on the New York Stock Exchange, the closing sale priceper share of the Class A Shares on the New York Stock Exchange on that date (or, if no closing saleprice is reported, the last reported sale price), (ii) if the Class A Shares are not listed fortrading on the New York Stock Exchange, the closing sale price (or, if no closing sale price isreported, the last reported sale price) as reported on that date in composite transactions for theprincipal national securities exchange registered pursuant to Section 6(g) of the Securities andExchange Act of 1934, as amended, on which the Class A Shares are listed, (iii) if the Class AShares are not so listed on a national securities exchange, the last quoted bid price for the ClassA Shares on that date in the over-the-counter market as reported by Pink Sheets LLC or a similarorganization, or (iv) if the Class A Shares are not so quoted by Pink Sheets LLC or a similarorganization such value as the Board, in its sole discretion, shall determine in good faith.          “Material Objection Notice” has the meaning set forth in Section 4.02.          “Members” means the Continuing Members and the Exiting Members, and each other Personwho from time to time executes a Joinder Agreement in the form attached hereto as Exhibit A.
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          “Non-Stepped Up Tax Basis” means, with respect to any asset at any time, the Tax basisthat such asset would have had at such time if no Basis Adjustment had been made.          “Objection Notice” has the meaning set forth in Section 2.04(a).          “Original Sale” is defined in the Recitals of this Agreement.          “Payment Date” means any date on which a payment is required to be made pursuant tothis Agreement.          “Person” means any individual, corporation, firm, partnership, joint venture, limitedliability company, estate, trust, business association, organization, governmental entity or otherentity.          “Pre-Exchange Transfer” means any transfer (including upon the death of a Member) ofone or more Units (i) that occurs prior to an Exchange of such Units, and (ii) to which Section743(b) of the Code applies.          “Realized Tax Benefit” means, for a Taxable Year and for all Taxes collectively, thenet excess, if any, of the Hypothetical Tax Liability over the actual liability for Taxes of theCorporation (or PIM, but only with respect to income realized by PIM the Tax liability for which isallocable to the Corporation for such Taxable Year using the same methods, elections, conventionsand similar practices used on the relevant Corporation Return), determined, for the avoidance ofdoubt, using the “with or without” methodology. If all or a portion of the actual liability forTaxes of the Corporation (or PIM, but only with respect to income realized by PIM the Tax liabilityfor which is allocable to the Corporation for such Taxable Year using the same methods, elections,conventions and similar practices used on the relevant Corporation Return) for the Taxable Yeararises as a result of an audit by a Taxing Authority of any Taxable Year, such liability shall notbe included in determining the Realized Tax Benefit unless and until there has been aDetermination.          “Realized Tax Detriment” means, for a Taxable Year and for all Taxes collectively, thenet excess, if any, of the actual liability for Taxes of the Corporation (or PIM, but only withrespect to income realized by PIM the Tax liability for which is allocable to the Corporation forsuch Taxable Year using the same methods, elections, conventions and similar practices used on therelevant Corporation Return) over the Hypothetical Tax Liability for such Taxable Year determined,for the avoidance of doubt, using the “with or without” methodology. If all or a portion of theactual liability for Taxes of the Corporation (or PIM, but only with respect to income realized byPIM the Tax liability for which is allocable to the Corporation for such Taxable Year using thesame methods, elections, conventions and similar practices used on the relevant Corporation Return)for the Taxable Year arises as a result of an audit by a Taxing
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Authority of any Taxable Year, such liability shall not be included in determining theRealized Tax Detriment unless and until there has been a Determination.          “Reconciliation Dispute” has the meaning set forth in Section 7.09.          “Reconciliation Procedures” shall mean those procedures set forth in Section 7.09 ofthis Agreement.          “Schedule” means any Exchange Basis Schedule or Tax Benefit Schedule and the EarlyTermination Schedule.          “Senior Obligations” is defined in Section 5.01 of this Agreement.          “Subsidiaries” means, with respect to any Person, as of any date of determination, anyother Person as to which such Person, owns, directly or indirectly, or otherwise controls more than50% of the voting shares or other similar interests or the sole general partner interest ormanaging member or similar interest of such Person.          “Tax Benefit Payment” is defined in Section 3.01(b) of this Agreement.          “Tax Benefit Schedule” is defined in Section 2.03 of this Agreement.          “Tax Return” means any return, declaration, report or similar statement required to befiled with respect to Taxes (including any attached schedules), including, without limitation, anyinformation return, claim for refund, amended return and declaration of estimated Tax.          “Taxable Year” means a Taxable year of the Corporation as defined in Section 441(b) ofthe Code or comparable section of state, local or foreign Tax law, as applicable (and, therefore,for the avoidance of doubt, may include a period of less than 12 months for which a Tax Return isprepared)in which there is a Basis Adjustment or increased depreciation, amortization or interestdeductions attributable to an Exchange.          “Taxes” means any and all United States federal, state, local and foreign Taxes,assessments or similar charges that are based on or measured with respect to net income or profits,whether as an exclusive or on an alternative basis, and any interest related to such Tax.          “Taxing Authority” shall mean any domestic, foreign, federal, national, state, countyor municipal or other local government, any subdivision, agency, commission or
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authority thereof, or any quasi-governmental body exercising any Taxing authority or any otherauthority exercising Tax regulatory authority.          “Treasury Regulations” means the final, temporary and proposed regulations under theCode promulgated from time to time (including corresponding provisions and succeeding provisions)as in effect for the relevant Taxable period.          “Units” is defined in the Recitals of this Agreement.          “Valuation Assumptions” shall mean, as of an Early Termination Date, or following aChange of Control, as applicable, the assumptions that (1) in each Taxable Year ending on or aftersuch Early Termination Date, the Corporation will have sufficient Taxable income to fully offsetthe deductions in such Taxable Year attributable to any Basis Adjustment, increased depreciation oramortization deductions attributable to an Exchange, and Imputed Interest, (2) the U.S. federalincome Tax rates and state, local and foreign income Tax rates that will be in effect for each suchTaxable Year will be those specified for each such Taxable Year by the Code and other law as ineffect on the Early Termination Date, (3) any loss carryovers generated by any Basis Adjustment orImputed Interest and available as of the date of the Early Termination Schedule will be used by theCorporation on a pro rata basis from the date of the Early Termination Schedule through thescheduled expiration date of such loss carryovers, (4) any non-amortizable assets will be disposedof on the fifteenth anniversary of the Early Termination Date, provided, however,that, in the event of a Change of Control, non-amortizable assets shall be deemed disposed of atthe earlier of (i) the time of sale of the relevant asset or (ii) as generally provided in thisValuation Assumption (4) and (5) if, at the Early Termination Date, there are Units that have notbeen Exchanged, then each such Unit shall be deemed to be Exchanged for the Market Value of theClass A Shares and the amount of cash that would be transferred if the Exchange occurred on theEarly Termination Date.**ARTICLE II****DETERMINATION OF CUMULATIVE REALIZED TAX BENEFIT**          Section 2.01 Basis Adjustment.               (a) Exchange Assets. For purposes of this Agreement, as a result of an Exchange, PIMshall be entitled to a Basis Adjustment for each Exchange Asset with respect to the Corporation,the amount of which Basis Adjustment will be the excess, if any, of (i) the sum of (x) the MarketValue of the Class A Shares, cash or the amount of any other consideration transferred to theApplicable Member pursuant to the Exchange as payment for the exchanged Units, to the extentattributable to such Exchange Assets, plus (y) the amount of payments made pursuant to thisAgreement with respect to such Exchange, to the extent attributable to such Exchange Assets, plus(z) the amount of debt and other liabilities allocated to the Units acquired pursuant to suchExchange, to the extent attributable to such Exchange Assets; over (ii) the
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Corporation’s share of PIM’s basis for such Exchange Assets immediately after the Exchange,attributable to the Units exchanged, determined as if (x) PIM were to remain in existence as anentity for Tax purposes and (y) PIM had not made the election provided by Section 754 of the Code.               (b) Imputed Interest. For the avoidance of doubt, payments made under this Agreementshall not be treated as resulting in a Basis Adjustment to the extent such payments are treated asImputed Interest.          Section 2.02 Exchange Basis Schedule. Within 45 calendar days after the filing of theUnited States federal income Tax return of the Corporation for each Taxable Year, the Corporationshall deliver to each Member a schedule (the “Exchange Basis Schedule”) that shows, inreasonable detail, for purposes of federal income Taxes, (i) the actual unadjusted Tax basis of theExchange Assets as of each applicable Exchange Date, (ii) the Basis Adjustment with respect to theExchange Assets as a result of the Exchanges effected in such Taxable Year, calculated in theaggregate, (iii) the period or periods, if any, over which the Exchange Assets are amortizableand/or depreciable and (iv) the period or periods, if any, over which each Basis Adjustment isamortizable and/or depreciable (which, for non-amortizable assets, shall be based on the ValuationAssumptions).          Section 2.03 Tax Benefit Schedule. Within 45 calendar days after the filing of the UnitedStates federal income Tax return of the Corporation for any Taxable Year in which there is aRealized Tax Benefit or Realized Tax Detriment, the Corporation shall provide to each Member aschedule showing, in reasonable detail, the calculation of the Realized Tax Benefit or Realized TaxDetriment for such Taxable Year (a “Tax Benefit Schedule”). The Tax Benefit Schedule willbecome final as provided in Section 2.04(a) and may be amended as provided in Section 2.04(b)(subject to the procedures set forth in Section 2.04(b)).          Section 2.04 Procedures, Amendments               (a) Procedure. Every time the Corporation delivers to the Applicable Member anapplicable Schedule under this Agreement, including any Amended Schedule delivered pursuant toSection 2.04(b), but excluding any Early Termination Schedule or amended Early TerminationSchedule, the Corporation also shall (x) deliver to the Applicable Member schedules and work papersproviding reasonable detail regarding the preparation of such Schedule and an Advisory Firm Lettersupporting such Schedule and (y) allow the Applicable Member reasonable access, at no cost, to theappropriate representatives at the Corporation and the Advisory Firm in connection with a review ofsuch Schedule. The applicable Schedule shall become final and binding on all parties unless theApplicable Member, within 30 calendar days after receiving an Exchange Basis Schedule or amendmentthereto or a Tax Benefit Schedule or amendment thereto, provides the Corporation with notice of amaterial objection to such Schedule (“Objection Notice”) made in good faith. If theparties, for any reason, are unable to successfully resolve the issues raised in such notice within30 calendar days of receipt by the Corporation of an Objection Notice with respect to such ExchangeBasis Schedule or Tax
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Benefit Schedule, the Corporation and the Applicable Member shall employ the reconciliationprocedures as described in Section 7.09 of this Agreement (the “ReconciliationProcedures”).               (b) Amended Schedule. The applicable Schedule for any Taxable Year may be amended fromtime to time by the Corporation (i) in connection with a Determination affecting such Schedule,(ii) to correct material inaccuracies in the Schedule identified as a result of the receipt ofadditional factual information relating to a Taxable Year after the date the Schedule was providedto the Applicable Member, (iii) to comply with the Expert’s determination under the ReconciliationProcedures, (iv) to reflect a material change in the Realized Tax Benefit or Realized Tax Detrimentfor such Taxable Year attributable to a carryback or carryforward of a loss or other Tax item tosuch Taxable Year, (v) to reflect a material change in the Realized Tax Benefit or Realized TaxDetriment for such Taxable Year attributable to an amended Tax Return filed for such Taxable Year,or (vi) to adjust the Exchange Basis Schedule to take into account payments made pursuant to thisAgreement (such Schedule, an “Amended Schedule”).**ARTICLE III****TAX BENEFIT PAYMENTS**          Section 3.01 Payments               (a) Payments. Within three (3) business days of a Tax Benefit Schedule that wasdelivered to an Applicable Member becoming final in accordance with Section 2.04(a), theCorporation shall pay to the Applicable Member for such Taxable Year the Tax Benefit Paymentdetermined pursuant to Section 3.01(b). Each such Tax Benefit Payment shall be made by wiretransfer of immediately available funds to a bank account of the Applicable Member previouslydesignated by such Member to the Corporation. For the avoidance of doubt, no Tax Benefit Paymentshall be made in respect of estimated Tax payments, including, without limitation, U.S. federalincome Tax payments.               (b) A “Tax Benefit Payment” means an amount, not less than zero, equal to 85% of thesum of the Net Tax Benefit and the Interest Amount. The “Net Tax Benefit"foreach Taxable Year shall be an amount equal to the excess, if any, of the Cumulative Net RealizedTax Benefit as of the end of such Taxable Year over the total amount of payments previously madeunder this Section 3.01, excluding payments attributable to the Interest Amount; provided,however, that for the avoidance of doubt, no Member shall be required to return any portionof any previously received Tax Benefit Payment under any circumstances. The “InterestAmount” for a given Taxable Year shall equal the interest on the Net Tax Benefit for suchTaxable Year calculated at the Agreed Rate from the due date (without extensions) for filing theCorporation Return with respect to Taxes for the most recently ended Taxable Year until the PaymentDate. The Net Tax Benefit and the Interest Amount shall be determined separately with respect toeach separate Exchange. Notwithstanding the foregoing, for each Taxable Year
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ending on or after the date of a Change of Control, all Tax Benefit Payments, whether paidwith respect to Partnership Units that were exchanged (i) prior to the date of such Change ofControl or (ii) on or after the date of such Change of Control, shall be calculated by utilizingValuation Assumptions (1), (3), and (4), substituting in each case the terms “the closing date of aChange of Control” for an “Early Termination Date”.          Section 3.02 No Duplicative Payments. It is intended that the provisions of this Agreementwill not result in duplicative payment of any amount (including interest) required under thisAgreement. It is also intended that the provisions of this Agreement will result in 85% of theCorporation’s Cumulative Net Realized Tax Benefit, and the Interest Amount thereon, being paid tothe Members pursuant to this Agreement. The provisions of this Agreement shall be construed in theappropriate manner to achieve these fundamental results.          Section 3.03 Pro Rata Payments. For the avoidance of doubt, to the extent that (i) theCorporation’s deductions with respect to any Basis Adjustment is limited in a particular TaxableYear or (ii) the Corporation lacks sufficient funds to satisfy or is prevented under any creditagreement or other arrangement from satisfying its obligations to make all Tax Benefit Payments duein a particular Taxable year, the limitation on the deduction, or the Tax Benefit Payments that maybe made, as the case may be, shall be taken into account or made for the Applicable Member in thesame proportion as Tax Benefit Payments would have been made absent the limitations in clauses (i)and (ii) of this paragraph, as applicable.**ARTICLE IV****TERMINATION**          Section 4.01 Early Termination and Breach of Agreement.               (a) The Corporation may terminate this Agreement with respect to all of the Units held (orpreviously held and Exchanged) by all Members at any time by paying to the Members the EarlyTermination Payment; provided, however, that this Agreement shall terminate onlyupon the receipt of the Early Termination Payment by all Members, and provided,further, that the Corporation may withdraw any notice to execute its termination rightsunder this Section 4.01(a) prior to the time at which any Early Termination Payment has been paid.Upon payment of the Early Termination Payments by the Corporation, neither the Members nor theCorporation shall have any further payment obligations under this Agreement, other than for any (x)Tax Benefit Payment agreed by the Corporation acting in good faith and the Applicable Member to bedue and payable but unpaid as of the Early Termination Notice and (y) Tax Benefit Payment due forthe Taxable Year ending with or including the date of the Early Termination Notice (except to theextent that the amount described in clause (y) is included in the Early Termination Payment). Forthe avoidance of doubt, if an Exchange occurs after the Corporation makes the Early TerminationPayments with respect to all Members, the Corporation shall have no obligations under thisAgreement with respect to such Exchange, and its only obligations under this Agreement in such caseshall be its obligations to all Members under Section 4.03(a).
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               (b) In the event that the Corporation breaches any of its material obligations under thisAgreement, whether as a result of failure to make any payment when due, failure to honor any othermaterial obligation required hereunder or by operation of law as a result of the rejection of thisAgreement in a case commenced under the Bankruptcy Code or otherwise, then all obligationshereunder shall be accelerated and such obligations shall be calculated as if an Early TerminationNotice had been delivered on the date of such breach and shall include, but shall not be limitedto, (1) the Early Termination Payment calculated as if an Early Termination Notice had beendelivered on the date of a breach, (2) any Tax Benefit Payment agreed by the Corporation acting ingood faith and any Applicable Member to be due and payable but unpaid as of the date of a breach,and (3) any Tax Benefit Payment due for the Taxable Year ending with or including the date of abreach. Notwithstanding the foregoing, in the event that the Corporation breaches this Agreement,the Members shall be entitled to elect to receive the amounts set forth in clauses (1), (2) and (3)above or to seek specific performance of the terms hereof. The parties agree that the failure tomake any payment due pursuant to this Agreement within three months of the date such payment is dueshall be deemed to be a breach of a material obligation under this Agreement for all purposes ofthis Agreement, and that it shall not be considered to be a breach of a material obligation underthis Agreement to make a payment due pursuant to this Agreement within three months of the datesuch payment is due.               (c) The Corporation, PIM and each of the Members hereby acknowledge that, as of the date ofthis Agreement, the aggregate value of the Tax Benefit Payments cannot reasonably be ascertainedfor United States federal income Tax or other applicable Tax purposes.          Section 4.02 Early Termination Notice. If the Corporation chooses to exercise its right ofearly termination under Section 4.01 above, the Corporation shall deliver to each present or formerMember notice of such intention to exercise such right (“Early Termination Notice”) and aschedule (the “Early Termination Schedule”) specifying the Corporation’s intention toexercise such right and showing in reasonable detail the calculation of the Early TerminationPayment. The Early Termination Schedule shall become final and binding on all parties unless anApplicable Member, within 30 calendar days after receiving the Early Termination Schedule, providesthe Corporation with notice of a material objection to such Schedule made in good faith(“Material Objection Notice”). If the parties, for any reason, are unable to successfullyresolve the issues raised in such notice within 30 calendar days after receipt by the Corporationof the Material Objection Notice, the Corporation and the applicable Member shall employ theReconciliation Procedures as described in Section 7.09 of this Agreement.          Section 4.03 Payment upon Early Termination. (a) Within three (3) business days after theEarly Termination Schedule has become final and binding, the Corporation shall pay to eachApplicable Member an amount equal to the Early Termination Payment. Such payment shall be made bywire transfer of immediately available funds to a bank account designated by the Applicable Member.
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               (b) The “Early Termination Payment” as of the date of the delivery of an EarlyTermination Schedule shall equal with respect to the Applicable Member the present value,discounted at the Early Termination Rate as of such date, of all Tax Benefit Payments that would berequired to be paid by the Corporation to the Applicable Member beginning from the EarlyTermination Date and assuming that the Valuation Assumptions are applied.**ARTICLE V****SUBORDINATION AND LATE PAYMENTS**          Section 5.01 Subordination. Notwithstanding any other provision of this Agreement to thecontrary, any Tax Benefit Payment or Early Termination Payment required to be made by theCorporation to the Members under this Agreement (an “Exchange Payment”) shall ranksubordinate and junior in right of payment to any principal, interest or other amounts due andpayable in respect of any obligations in respect of indebtedness for borrowed money of theCorporation and its Subsidiaries (“Senior Obligations”) and shall rank pari passu with allcurrent or future unsecured obligations of the Corporation that are not Senior Obligations.          Section 5.02 Late Payments by the Corporation. The amount of all or any portion of anyExchange Payment not made to any Member when due (without regard to Section 5.01) under the termsof this Agreement shall be payable together with any interest thereon, computed at the Default Rateand commencing from the date on which such Exchange Payment was due and payable.**ARTICLE VI****NO DISPUTES; CONSISTENCY; COOPERATION**          Section 6.01 Member Participation in the Corporation and PIM’s Tax Matters. Except asotherwise provided herein, the Corporation shall have full responsibility for, and sole discretionover, all Tax matters concerning the Corporation and PIM, including without limitation thepreparation, filing or amending of any Tax Return and defending, contesting or settling any issuepertaining to Taxes. Notwithstanding the foregoing, the Corporation shall notify each applicableMember of, and keep such applicable Member reasonably informed with respect to the portion of anyaudit of the Corporation and PIM by a Taxing Authority the outcome of which is reasonably expectedto affect such applicable Member’s rights and obligations under this Agreement, and shall provideto such applicable Member reasonable opportunity to provide information and other input to theCorporation, PIM and their respective advisors concerning the conduct of any such portion of suchaudit; provided, however, that the Corporation and PIM shall not be required totake any action that is inconsistent with any provision of the LLC Agreement.          Section 6.02 Consistency. Except upon the written advice of an Advisory Firm, theCorporation and the Applicable Member agree to report and cause to be reported for all purposes,including U.S. federal, state, local and foreign Tax purposes and financial reporting
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purposes, all Tax-related items (including without limitation the Basis Adjustment and each TaxBenefit Payment) in a manner consistent with that specified by the Corporation in any Schedulerequired to be provided by or on behalf of the Corporation under this Agreement. Any Disputeconcerning such advice shall be subject to the terms of Section 7.09. In the event that anAdvisory Firm is replaced with another firm acceptable to the Corporation and the ApplicableMember, such replacement Advisory Firm shall be required to perform its services under thisAgreement using procedures and methodologies consistent with the previous Advisory Firm, unless (a)otherwise required by law or (b) the Corporation and the Applicable Member agree to the use ofother procedures and methodologies.          Section 6.03 Cooperation. The Applicable Member shall (a) furnish to the Corporation in atimely manner such information, documents and other materials as the Corporation may reasonablyrequest for purposes of making any determination or computation necessary or appropriate under thisAgreement, preparing any Tax Return or contesting or defending any audit, examination orcontroversy with any Taxing Authority, (b) make itself available to the Corporation and itsrepresentatives to provide explanations of documents and materials and such other information asthe Corporation or its representatives may reasonably request in connection with any of the mattersdescribed in clause (a) above, and (c) reasonably cooperate in connection with any such matterdescribed in clause (a) above. The Corporation shall reimburse the Applicable Member for anyreasonable third-party costs and expenses incurred pursuant to this Section 6.03.**ARTICLE VII****MISCELLANEOUS**          Section 7.01 Notices. All notices, requests, claims, demands and other communicationshereunder shall be in writing and shall be deemed duly given and received (a) on the date ofdelivery if delivered personally, or by facsimile upon confirmation of transmission by the sender’sfax machine if sent on a Business Day (or otherwise on the next Business Day) or (b) on the firstBusiness Day following the date of dispatch if delivered by a recognized next-day courier service.All notices hereunder shall be delivered as set forth below, or pursuant to such other instructionsas may be designated in writing by the party to receive such notice:if to the Corporation, to:Pzena Investment Management, Inc.