Document:

EX-10.5

 

EXHIBIT 10.5

Pzena Investment Management, Inc.

Equity Incentive Plan

	1.	 	PURPOSE; TYPES OF AWARDS; CONSTRUCTION.

The purposes of the Pzena Investment Management, Inc. Equity Incentive Plan are to attract,
motivate and retain (a) employees of the Company and any Subsidiary or Affiliate, (b) independent
contractors who provide significant services to the Company, any Subsidiary or Affiliate and (c)
nonemployee directors of the Company, any Subsidiary or any Affiliate. The Plan is also designed
to encourage stock ownership by such persons, thereby aligning their interest with those of the
Company’s stockholders and to permit the payment of compensation that qualifies as
performance-based compensation under Section 162(m) of the Code. Pursuant to the provisions
hereof, there may be granted stock options (including “incentive stock options” and “non-qualified
stock options”), and other stock-based awards, including but not limited to restricted stock,
restricted stock units, dividend equivalents, performance units, Stock Appreciation Rights (payable
in cash or shares) and other long-term stock-based or cash-based Awards. Notwithstanding any
provision of the Plan, to the extent that any Award would be subject to Section 409A of the Code,
no such Award may be granted if it would fail to comply with the requirements set forth in Section
409A of the Code and any regulations or guidance promulgated thereunder.

	2.	 	DEFINITIONS. For purposes of the Plan, the following terms shall be defined as set forth
below:

     (a) “Affiliate” means an affiliate of the Company, as defined in Rule 12b-2 promulgated under
Section 12 of the Exchange Act.

     (b) “Award” means individually or collectively, a grant under the Plan of Options, Restricted
Stock, Restricted Stock Units or Other Stock-Based Awards or Other Cash-Based Awards.

     (c) “Award Terms” means any written agreement, contract, or other instrument or document
evidencing an Award.

     (d) “Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Exchange Act.

     (e) “Board” means the Board of Directors of the Company.

     (f) “Cause” shall mean, with respect to a Grantee, (a) such Grantee being charged or indicted
for a felony involving the Company or any Affiliate’s business, or being convicted of any other
felony (or guilty plea, or nolo contendere plea in connection therewith), (b) such Grantee’s
willfully and materially defrauding the Company or any Affiliate, or (c) such Grantee’s committing
a willful and material breach of such Grantee’s obligations to protect the Company or any
Affiliate’s confidential information, such Grantee’s obligation of loyalty to the Company or any
Affiliate or such Grantee’s obligation to comply with the Company or any Affiliate’s Code of Ethics
or any other compliance regulations, policies or procedures, (d) the

1

 

gross negligence or willful misconduct of such Grantee in the performance of such Grantee’s
duties which gross negligence or willful misconduct has the purpose, or the reasonable likely
effect, of causing material harm to the Company or any Affiliate, or (e) such Grantee fails to
maintain in good standing any and all licenses, registrations or other permits necessary for the
performance of his duties hereunder. For purposes of the definition of Cause, “materially,” and
“material” shall mean damages caused to the Company or any Affiliate in excess of $100,000 or any
significant damage to the reputation of the Company or any Affiliate.

     (g) “Change in Control” shall have the meaning set forth in Section 7(b) hereof.

     (h) “Code” means the Internal Revenue Code of 1986, as amended from time to time.

     (i) “Committee” means the Compensation Committee of the Board. Unless otherwise determined by
the Board, the Committee shall be comprised solely of directors who are (a) “nonemployee directors”
under Rule 16b-3 of the Exchange Act, (b) “outside directors” under Section 162(m) of the Code and
(c) “independent directors” pursuant to New York Stock Exchange requirements.

     (j) “Company” means Pzena Investment Management, Inc., a corporation organized under the laws
of the State of Delaware, or any successor corporation.

     (k) “Covered Employee” shall have the meaning set forth in Section 162(m)(3) of the Code.

     (l) “Effective Date” means the date that the Plan was adopted by the Board.

     (m) “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time,
and as now or hereafter construed, interpreted and applied by regulations, rulings and cases.

     (n) “Excise Tax” shall have the meaning set forth in Section 7(d) hereof.

     (o) “Fair Market Value” means, with respect to Stock or other property, the fair market value
of such Stock or other property determined by such methods or procedures as shall be established
from time to time by the Committee. Unless otherwise determined by the Committee in good faith,
the per share Fair Market Value of Stock as of a particular date shall mean (i) if the Stock is
listed for trading on the New York Stock Exchange, the closing sale price per share of Stock on the
New York Stock Exchange on that date (or, if no closing sale price is reported, the last reported
sale price), (ii) if the Stock is not listed for trading on the New York Stock Exchange, the
closing sale price (or, if no closing sale price is reported, the last reported sale price) as
reported on that date in composite transactions for the principal national securities exchange
registered pursuant to Section 6(g) of the Exchange Act on which the Stock is listed, (iii) if the
Stock is not so listed on a national securities exchange, the last quoted bid price for the Stock
on that date in the over-the-counter market as reported by Pink Sheets LLC or a similar
organization, or (iv) if the Stock is not so quoted by Pink Sheets LLC or a similar organization
such value as the Committee, in its sole discretion, shall determine in good faith.

2

 

     (p) “Grantee” means a person who, as an employee of or independent contractor or nonemployee
director with respect to the Company, a Subsidiary or an Affiliate, has been granted an Award under
the Plan.

     (q) “IPO” means the initial public offering of Stock, as contemplated in the Company’s
prospectus, dated [ , 2007].

     (r) “ISO” means any Option intended to be and designated as an incentive stock option within
the meaning of Section 422 of the Code.

     (s) “NQSO” means any Option that is designated as a nonqualified stock option.

     (t) “Option” means a right, granted to a Grantee under Section 6(b)(i), to purchase shares of
Stock. An Option may be either an ISO or an NQSO.

     (u) “Other Cash-Based Award” means an Award granted to a Grantee under Section 6(b)(iv)
hereof, including cash awarded as a bonus or upon the attainment of Performance Goals or otherwise
as permitted under the Plan.

     (v) “Other Stock-Based Award” means an Award granted to a Grantee pursuant to Section 6(b)(iv)
hereof, that may be denominated or payable in, valued in whole or in part by reference to, or
otherwise based on, or related to, Stock including but not limited to performance units, Stock
Appreciation Rights (payable in cash or shares) or dividend equivalents, each of which may be
subject to the attainment of Performance Goals or a period of continued employment or other terms
and conditions as permitted under the Plan.

     (w) “Performance Goals” means performance goals based on one or more of the following
criteria: (i) earnings including operating income, earnings before or after taxes, earnings before
or after interest, depreciation, amortization, or extraordinary or special items or book value per
share (which may exclude nonrecurring items); (ii) pre-tax income or after-tax income; (iii)
earnings per common share (basic or diluted); (iv) operating profit; (v) revenue, revenue growth or
rate of revenue growth; (vi) return on assets (gross or net), return on investment, return on
capital, or return on equity; (vii) returns on sales or revenues; (viii) operating expenses; (ix)
stock price appreciation; (x) cash flow, free cash flow, cash flow return on investment (discounted
or otherwise), net cash provided by operations, or cash flow in excess of cost of capital; (xi)
implementation or completion of critical projects or processes; (xii) economic value created;
(xiii) cumulative earnings per share growth; (xiv) operating margin or profit margin; (xv) common
stock price or total stockholder return; (xvi) cost targets, reductions and savings, productivity
and efficiencies; (xvii) strategic business criteria, consisting of one or more objectives based on
meeting specified market penetration, geographic business expansion, customer satisfaction,
employee satisfaction, human resources management, supervision of litigation, information
technology, and goals relating to acquisitions, divestitures, joint ventures and similar
transactions, and budget comparisons; (xviii) personal professional objectives, including any of
the foregoing performance goals, the implementation of policies and plans, the negotiation of
transactions, the development of long-term business goals, formation of joint ventures, research or
development collaborations, and the completion of other corporate transactions; and (xix) any
combination of, or a specified increase in, any of the foregoing.

3

 

Where applicable, the Performance Goals may be expressed in terms of attaining a specified
level of the particular criteria or the attainment of a percentage increase or decrease in the
particular criteria, and may be applied to one or more of the Company, a Subsidiary or Affiliate,
or a division or strategic business unit of the Company, or may be applied to the performance of
the Company relative to a market index, a group of other companies or a combination thereof, all as
determined by the Committee. The Performance Goals may include a threshold level of performance
below which no payment will be made (or no vesting will occur), levels of performance at which
specified payments will be made (or specified vesting will occur), and a maximum level of
performance above which no additional payment will be made (or at which full vesting will occur).
Each of the foregoing Performance Goals shall be determined in accordance with generally accepted
accounting principles, if applicable, and shall be subject to certification by the Committee;
provided that, to the extent an Award is intended to satisfy the performance-based compensation
exception to the limits of Section 162(m) of the Code and then to the extent consistent with such
exception, the Committee shall have the authority to make equitable adjustments to the Performance
Goals in recognition of unusual or non-recurring events affecting the Company or any Subsidiary or
Affiliate or the financial statements of the Company or any Subsidiary or Affiliate, in response to
changes in applicable laws or regulations, or to account for items of gain, loss or expense
determined to be extraordinary or unusual in nature or infrequent in occurrence or related to the
disposal of a segment of a business or related to a change in accounting principles.

     (x) “Person” shall have the meaning set forth in Section 3(a)(9) of the Exchange Act, as
modified and used in Sections 13(d) and 14(d) thereof and the rules thereunder, except that such
term shall not include (1) the Company or any Subsidiary corporation, (2) a trustee or other
fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary
corporation, (3) an underwriter temporarily holding securities pursuant to an offering of such
securities, or (4) a corporation owned, directly or indirectly, by the stockholders of the Company
in substantially the same proportions as their ownership of stock of the Company.

     (y) “Plan” means this Pzena Investment Management, Inc. Equity Incentive Plan, as amended from
time to time.

     (z) “Plan Year” means a calendar year.

     (aa) “Restricted Stock” means an Award of shares of Stock to a Grantee under Section 6(b)(ii)
that may be subject to certain restrictions and to a risk of forfeiture.

     (bb) “Restricted Stock Unit” means a right granted to a Grantee under Section 6(b)(iii) of the
Plan to receive Stock or cash at the end of a specified period, which right may be subject to the
attainment of Performance Goals in a period of continued employment or other terms and conditions
as permitted under the Plan.

     (cc) “Rule 16b-3” means Rule 16b-3, as from time to time in effect promulgated by the
Securities and Exchange Commission under Section 16 of the Exchange Act, including any successor to
such Rule.

4

 

     (dd) “Stock” means shares of Class A common stock, par value $0.01 per share, of the Company.

     (ee) “Stock Appreciation Right” means an Other Stock-Based Award, payable in cash or stock,
that entitles a Grantee upon exercise to the excess of the Fair Market Value of the Stock
underlying the Award over the base price established in respect of such Stock.

     (ff) “Subsidiary” means any corporation in an unbroken chain of corporations beginning with
the Company if, at the time of granting of an Award, each of the corporations (other than the last
corporation in the unbroken chain) owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in the chain.

     (gg) “Total Payments” shall have the meaning set forth in Section 7(d) hereof.

	3.	 	ADMINISTRATION.

     (a) The Plan shall be administered by the Committee or, at the discretion of the Board, the
Board, provided that any Award to the Chairman of the Board shall be subject to ratification by the
Board. In the event the Board is the administrator of the Plan, references herein to the Committee
shall be deemed to include the Board. The Board may from time to time appoint a member or members
of the Committee in substitution for or in addition to the member or members then in office and may
fill vacancies on the Committee however caused. The Board or the Committee may delegate the
ability to grant Awards to employees who are not subject to potential liability under Section 16(b)
of the 1934 Act with respect to transactions involving equity securities of the Company at the time
any such delegated authority is exercised.

     (b) The decision of the Committee as to all questions of interpretation and application of the
Plan shall be final, binding and conclusive on all persons. The Committee shall have the authority
in its discretion, subject to and not inconsistent with the express provisions of the Plan, to
administer the Plan and to exercise all the power and authority either specifically granted to it
under the Plan or necessary or advisable in the administration of the Plan, including without
limitation, the authority to grant Awards, to determine the persons to whom and the time or times
at which Awards shall be granted, to determine the type and number of Awards to be granted, the
number of shares of Stock to which an Award may relate and the terms, conditions, restrictions and
Performance Goals relating to any Award; to determine Performance Goals no later than such time as
is required to ensure that an underlying Award which is intended to comply with the requirements of
Section 162(m) of the Code so complies; to determine whether, to what extent, and under what
circumstances an Award may be settled, canceled, forfeited, accelerated, exchanged, or surrendered
(provided that, unless approved by the Company’s stockholders, no Award shall be settled, canceled,
forfeited, exchanged or surrendered in exchange or otherwise in consideration for a new Award with
a value in excess of the value of such settled, canceled, forfeited, exchanged or surrendered
Award); to make adjustments in the terms and conditions (including Performance Goals) applicable to
Awards; to construe and interpret the Plan and any Award; to prescribe, amend and rescind rules and
regulations relating to the Plan; to determine the terms and provisions of the Award Terms (which
need not be identical for each Grantee); and to make all other determinations deemed necessary or
advisable for the administration of the Plan. The Committee may correct any defect or supply any
omission or reconcile any

5

 

inconsistency in the Plan or in any Award Terms granted hereunder in the manner and to the
extent it shall deem expedient to carry the Plan into effect and shall be the sole and final judge
of such expediency. No Committee member (or member of the Management Committee) shall be liable
for any action or determination made with respect to the Plan or any Award.

	4.	 	ELIGIBILITY.

     (a) Awards may be granted to officers, independent contractors, employees and nonemployee
directors of the Company or of any of its Subsidiaries and Affiliates; provided, that ISOs shall be
granted only to employees (including officers and directors who are also employees) of the Company,
its parent or any of its Subsidiaries.

     (b) No ISO shall be granted to any employee of the Company, its parent or any of its
Subsidiaries if such employee owns, immediately prior to the grant of the ISO, stock representing
more than 10% of the voting power or more than 10% of the value of all classes of stock of the
Company or a parent or a Subsidiary, unless the purchase price for the stock under such ISO shall
be at least 110% of its Fair Market Value at the time such ISO is granted and the ISO, by its
terms, shall not be exercisable more than five years from the date it is granted. In determining
the stock ownership under this paragraph, the provisions of Section 424(d) of the Code shall be
controlling.

	5.	 	STOCK SUBJECT TO THE PLAN.

     (a) The maximum number of shares of Stock reserved for the grant or settlement of Awards under
the Plan (the “Share Limit”) shall be 1.0% of the sum of the number of shares of (i) Class A common
stock and (ii) Class B common stock, par value $0.01 per share, of the Company, outstanding
immediately after the consummation of the IPO and shall be subject to adjustment as provided
herein. The aggregate number of shares of Stock made subject to Awards granted during any fiscal
year to any single individual shall not exceed 0.2%. Determinations made in respect of the
limitation set forth in the preceding sentence shall be made in a manner consistent with Section
162(m) of the Code. Such shares may, in whole or in part, be authorized but unissued shares or
shares that shall have been or may be reacquired by the Company in the open market, in private
transactions or otherwise. If any shares subject to an Award are forfeited, canceled, exchanged or
surrendered or if an Award otherwise terminates or expires without a distribution of shares to the
Grantee, the shares of stock with respect to such Award shall, to the extent of any such
forfeiture, cancellation, exchange, surrender, termination or expiration, again be available for
Awards under the Plan. Notwithstanding the foregoing, shares of Stock that are exchanged by a
Grantee or withheld by the Company as full or partial payment in connection with any Award under
the Plan, as well as any shares of Stock exchanged by a Grantee or withheld by the Company or any
Subsidiary to satisfy the tax withholding obligations related to any Award under the Plan, shall
not be available for subsequent Awards under the Plan. Upon the exercise of any Award granted in
tandem with any other Awards, such related Awards shall be canceled to the extent of the number of
shares of Stock as to which the Award is exercised and, notwithstanding the foregoing, such number
of shares shall no longer be available for Awards under the Plan.

6

 

     (b) Except
as provided in any Award Terms or as otherwise provided in the Plan, in the event
that the Committee shall determine that any dividend or other distribution (whether in the form of
cash, Stock, or other property), recapitalization, Stock split, reverse split, reorganization,
merger, consolidation, spin-off, combination, repurchase, or share exchange, or other similar
corporate transaction or event, affects the Stock such that an adjustment is appropriate in order
to prevent dilution or enlargement of the rights of Grantees under the Plan, then the Committee
shall make such equitable changes or adjustments as it deems necessary or appropriate to any or all
of (i) the number and kind of shares of Stock or other property (including cash) that may
thereafter be issued in connection with Awards or the total number of Awards issuable under the
Plan, (ii) the number and kind of shares of Stock or other property issued or issuable in respect
of outstanding Awards, (iii) the exercise price, grant price or purchase price relating to any
Award, (iv) the Performance Goals and (v) the individual limitations applicable to Awards; provided
that, with respect to ISOs, any adjustment shall be made in accordance with the provisions of
Section 424(h) of the Code and any regulations or guidance promulgated thereunder, and provided
further that no such adjustment shall cause any Award hereunder which is or becomes subject to
Section 409A of the Code to fail to comply with the requirements of such section.

	6.	 	SPECIFIC TERMS OF AWARDS.

     (a) General. The term of each Award shall be for such period as may be determined by
the Committee. Subject to the terms of the Plan and any applicable Award Terms, payments to be made
by the Company or a Subsidiary or Affiliate upon the grant, maturation, or exercise of an Award may
be made in such forms as the Committee shall determine at the date of grant or thereafter,
including, without limitation, cash, Stock, or other property, and may be made in a single payment
or transfer, in installments, or, subject to the requirements of Section 409A of the Code, on a
deferred basis.

     (b) Awards. The Committee is authorized to grant to Grantees the following Awards, as
deemed by the Committee to be consistent with the purposes of the Plan. The Committee shall
determine the terms and conditions of such Awards.

	 	(i)	 	Options. The Committee is authorized to grant Options
to Grantees on the following terms and conditions:

	 	(A)	 	The Award Terms evidencing the grant of an
Option under the Plan shall designate the Option as an ISO or an NQSO.
	 
	 	(B)	 	The exercise price per share of Stock
purchasable under an Option shall be determined by the Committee, but
in no event shall the exercise price of an Option per share of Stock be
less than the Fair Market Value of a share of Stock as of the date of
grant of such Option. The purchase price of Stock as to which an
Option is exercised shall be paid in full at the time of exercise;
payment may be made in cash, which may be paid by check, or other
instrument acceptable to the Company, or, with the consent of the
Committee, in shares of Stock, valued at the Fair Market Value on the
date of

7

 

	 	 	 	exercise (including shares of Stock that otherwise would be
distributed to the Grantee upon exercise of the Option), or if there
were no sales on such date, on the next preceding day on which there
were sales or (if permitted by the Committee and subject to such
terms and conditions as it may determine) by surrender of outstanding
Awards under the Plan, or the Committee may permit such payment of
exercise price by any other method it deems satisfactory in its
discretion. In addition, subject to applicable law and pursuant to
procedures approved by the Committee, payment of the exercise price
may be made through the sale of Stock acquired on exercise of the
Option, valued at Fair Market Value on the date of exercise,
sufficient to pay for such Stock (together with, if requested by the
Company, the amount of federal, state or local withholding taxes
payable by Grantee by reason of such exercise). Any amount necessary
to satisfy applicable federal, state or local tax withholding
requirements shall be paid promptly upon notification of the amount
due. The Committee may permit such amount of tax withholding to be
paid in shares of Stock previously owned by the employee, or a
portion of the shares of Stock that otherwise would be distributed to
such employee upon exercise of the Option, or a combination of cash
and shares of such Stock.
	 
	 	(C)	 	Options shall be exercisable over the exercise
period (which shall not exceed ten years from the date of grant), at
such times and upon such conditions as the Committee may determine, as
reflected in the Award Terms; provided that, the Committee shall have
the authority to accelerate the exercisability of any outstanding
Option at such time and under such circumstances as it, in its sole
discretion, deems appropriate. An Option may be exercised to the extent
of any or all full shares of Stock as to which the Option has become
exercisable, by giving written notice of such exercise to the Committee
or its designated agent. No partial exercise may be made for less than
one hundred (100) full shares of Stock.
	 
	 	(D)	 	Upon the termination of a Grantee’s employment
or service with the Company and its Subsidiaries or Affiliates, the
Options granted to such Grantee, to the extent that they are
exercisable at the time of such termination, shall remain exercisable
for such period as may be provided in the applicable Award Terms, but
in no event following the expiration of their term. The treatment of
any Option that is unexercisable as of the date of such termination
shall be as set forth in the applicable Award Terms.
	 
	 	(E)	 	Options may be subject to such other conditions
including, but not limited to, restrictions on transferability of, or
provisions for recovery of, the shares acquired upon exercise of such
Options (or

8

 

	 	 	 	proceeds of sale thereof), as the Committee may prescribe in its
discretion or as may be required by applicable law.

	 	(ii)	 	Restricted Stock.

	 	(A)	 	The Committee may grant Awards of Restricted
Stock, alone or in tandem with other Awards under the Plan, subject to
such restrictions, terms and conditions, as the Committee shall
determine in its sole discretion and as shall be evidenced by the
applicable Award Terms (provided that any such Award is subject to the
vesting requirements described herein). The vesting of a Restricted
Stock Award granted under the Plan may be conditioned upon the
completion of a specified period of employment or service with the
Company or any Subsidiary or Affiliate, upon the attainment of
specified Performance Goals, and/or upon such other criteria as the
Committee may determine in its sole discretion.
	 
	 	(B)	 	The Committee shall determine the price, which,
to the extent required by law, shall not be less than par value of the
Stock, to be paid by the Grantee for each share of Restricted Stock or
unrestricted stock or stock units subject to the Award. Each Award
Terms with respect to such stock award shall set forth the amount (if
any) to be paid by the Grantee with respect to such Award and when and
under what circumstances such payment is required to be made.
	 
	 	(C)	 	Except as provided in the applicable Award
Terms, no shares of Stock underlying a Restricted Stock Award may be
assigned, transferred, or otherwise encumbered or disposed of by the
Grantee until such shares of Stock have vested in accordance with the
terms of such Award.
	 
	 	(D)	 	If and to the extent that the applicable Award
Terms may so provide, a Grantee shall have the right to vote and
receive dividends on Restricted Stock granted under the Plan. Unless
otherwise provided in the applicable Award Terms, any Stock received as
a dividend on or in connection with a stock split of the shares of
Stock underlying a Restricted Stock Award shall be subject to the same
restrictions as the shares of Stock underlying such Restricted Stock
Award.
	 
	 	(E)	 	Upon the termination of a Grantee’s employment
or service with the Company and its Subsidiaries or Affiliates, the
Restricted Stock granted to such Grantee shall be subject to the terms
and conditions specified in the applicable Award Terms.

9

 

	 	(iii)	 	Restricted Stock Units. The Committee is authorized to
grant Restricted Stock Units to Grantees, subject to the following terms and
conditions:

	 	(A)	 	At the time of the grant of Restricted Stock
Units, the Committee may impose such restrictions or conditions to the
vesting of such Awards as it, in its discretion, deems appropriate,
including, but not limited to, the achievement of Performance Goals.
The Committee shall have the authority to accelerate the settlement of
any outstanding award of Restricted Stock Units at such time and under
such circumstances as it, in its sole discretion, deems appropriate,
subject to the requirements of Section 409A of the Code.
	 
	 	(B)	 	Unless otherwise provided in Award Terms or
except as otherwise provided in the Plan, upon the vesting of a
Restricted Stock Unit there shall be delivered to the Grantee, as soon
as practicable following the date on which such Award (or any portion
thereof) vests (but in any event within such period as is required to
avoid the imposition of a tax under Section 409A of the Code), that
number of shares of Stock equal to the number of Restricted Stock Units
becoming so vested.
	 
	 	(C)	 	Subject to the requirements of Section 409A of
the Code, an Award of Restricted Stock Units may provide the Grantee
with the right to receive dividend equivalent payments with respect to
Stock subject to the Award (both before and after the Stock subject to
the Award is earned or vested), which payments may be either made
currently or credited to an account for the Participant, and may be
settled in cash or Stock, as determined by the Committee. Any such
settlements and any such crediting of dividend equivalents may be
subject to such conditions, restrictions and contingencies as the
Committee shall establish, including the reinvestment of such credited
amounts in Stock equivalents.
	 
	 	(D)	 	Upon the termination of a Grantee’s employment
or service with the Company and its Subsidiaries or Affiliates, the
Restricted Stock Units granted to such Grantee shall be subject to the
terms and conditions specified in the applicable Award Terms.

	 	(iv)	 	Other Stock-Based or Cash-Based Awards.

	 	(A)	 	The Committee is authorized to grant Awards to
Grantees in the form of Other Stock-Based Awards or Other Cash-Based
Awards, as deemed by the Committee to be consistent with the purposes
of the Plan. The Committee shall determine the terms and conditions of
such Awards, consistent with the terms of the Plan, at the date of
grant or thereafter, including the Performance Goals and

10

 

	 	 	 	performance periods. Stock or other securities or property delivered
pursuant to an Award in the nature of a purchase right granted under
this Section 6(b)(iv) shall be purchased for such consideration, paid
for at such times, by such methods, and in such forms, including,
without limitation, Stock, other Awards, notes or other property, as
the Committee shall determine, subject to any required corporate
action.
	 
	 	(B)	 	The maximum value of the aggregate payment that
any Grantee may receive with respect to Other Cash-Based Awards
pursuant to this Section 6(b)(iv) in respect of any annual performance
period is $15 million and for any other performance period in excess of
one year, such amount multiplied by a fraction, the numerator of which
is the number of months in the performance period and the denominator
of which is twelve. No payment shall be made to a Covered Employee
prior to the certification by the Committee that the Performance Goals
have been attained. The Committee may establish such other rules
applicable to the Other Stock- or Cash-Based Awards to the extent not
inconsistent with Section 162(m) of the Code.
	 
	 	(C)	 	Payments earned in respect of any Cash-Based
Award may be decreased or, with respect to any Grantee who is not a
Covered Employee, increased in the sole discretion of the Committee
based on such factors as it deems appropriate. Notwithstanding the
foregoing, any Awards may be adjusted in accordance with Section 5(b)
hereof.

	7.	 	CHANGE IN CONTROL PROVISIONS.

     (a) Unless otherwise determined by the Committee or evidenced in an applicable Award Terms or
employment or other agreement, in the event of a Change in Control, the Committee shall have the
discretion, exercisable either in advance of such Change in Control or at the time thereof, to
provide for one or more of the following:

	 	(i)	 	the continuation of outstanding Awards after the Change in
Control without change;
	 
	 	(ii)	 	the cash-out of outstanding Options as of the time of the
transaction as part of the transaction for an amount equal to the difference
between the price that would have been paid for the shares of Stock subject to
such outstanding Options if such Options were exercised upon the closing of
such transaction and the exercise price of such outstanding Options; provided
that if the exercise price of the Options exceeds the price that would have
been paid for the shares of Stock subject to the outstanding Options if such
Options were exercised upon the closing of the transaction,

11

 

	 	 	 	then such Options may be cancelled without making a payment to the
Optionees;
	 
	 	(iii)	 	the expiration of the exercise period for outstanding Options
upon the closing of the transaction;
	 
	 	(iv)	 	the cancellation of outstanding Restricted Stock, Restricted
Stock Units and/or Other Stock-Based Awards and payment to the Participants
holding such Awards equal to the value of the underlying shares of Stock as of
the closing date of the transaction, in such form and at such time as the
Committee shall determine;
	 
	 	(v)	 	a requirement that the buyer in the transaction assume
outstanding Options and/or Restricted Stock and/or Restricted Stock Units;
	 
	 	(vi)	 	a requirement that the buyer in the transaction substitute
outstanding Options with comparable options to purchase the equity interests of
the buyer or its parent and/or substitute outstanding Restricted Stock Units
and/or Other Stock-Based Awards with comparable restricted stock or units of
the buyer or its parent; and
	 
	 	(vii)	 	the acceleration of outstanding Options, Restricted Stock
Units and Other Stock-Based Awards.

Notwithstanding any other provision of the Plan, in the event of a Change in Control in which the
consideration paid to the holders of shares of Stock is solely cash, the Committee may, in its
discretion, provide that each Award shall, upon the occurrence of a Change in Control, be canceled
in exchange for a payment in an amount equal to (i) the excess of the consideration paid per share
of Stock in the Change in Control over the exercise or purchase price (if any) per share of Stock
subject to the Award multiplied by (ii) the number of Shares granted under the Award.

     (b) A “Change in Control” shall be deemed to have occurred if the event set forth in any one
of the following paragraphs shall have occurred:

	 	(i)	 	any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired directly from the
Company or its Affiliates) representing 30% or more of the combined voting
power of the Company’s then outstanding securities, excluding any Person who
becomes such a Beneficial Owner in connection with a transaction described in
clause (I) of paragraph (iii) below; or
	 
	 	(ii)	 	the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who, on the date
hereof, constitute the Board and any new director (other than a director whose
initial assumption of office is in connection with an actual or threatened
election contest, including but not limited to a consent solicitation, relating
to the election of directors of the Company) whose appointment or

12

 

	 	 	 	election by the Board or nomination for election by the Company’s
stockholders was approved or recommended by a vote of at least two-thirds
(2/3) of the directors then still in office who either were directors on the
date hereof or whose appointment, election or nomination for election was
previously so approved or recommended; or
	 
	 	(iii)	 	there is consummated a merger or consolidation of the Company
or any direct or indirect subsidiary of the Company with any other corporation
or other entity, other than (I) a merger or consolidation which results in (A)
the voting securities of the Company outstanding immediately prior to such
merger or consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity or any parent thereof), in combination with the ownership of any trustee
or other fiduciary holding securities under an employee benefit plan of the
Company or any subsidiary of the Company, at least 60% of the combined voting
power of the securities of the Company or such surviving entity or any parent
thereof outstanding immediately after such merger or consolidation and (B) the
individuals who comprise the Board immediately prior thereto constituting
immediately thereafter at least a majority of the board of directors of the
Company, the entity surviving such merger or consolidation or, if the Company
or the entity surviving such merger is then a subsidiary, the ultimate parent
thereof, or (II) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no Person is
or becomes the Beneficial Owner, directly or indirectly, of securities of the
Company (not including in the securities Beneficially Owned by such Person any
securities acquired directly from the Company or its Affiliates) representing
30% or more of the combined voting power of the Company’s then outstanding
securities; or
	 
	 	(iv)	 	the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated an agreement
for the sale or disposition by the Company of all or substantially all of the
Company’s assets (it being conclusively presumed that any sale or disposition
is a sale or disposition by the Company of all or substantially all of its
assets if the consummation of the sale or disposition is contingent upon
approval by the Company’s stockholders unless the Board expressly determines in
writing that such approval is required solely by reason of any relationship
between the Company and any other Person or an Affiliate of the Company and any
other Person), other than a sale or disposition by the Company of all or
substantially all of the Company’s assets to an entity (i) at least 60% of the
combined voting power of the voting securities of which are owned by
stockholders of the Company in substantially the same proportions as their
ownership of the Company immediately prior to such sale or disposition and (ii)
the majority of whose board of directors immediately following such sale or
disposition consists of individuals who comprise the Board immediately prior
thereto.

13

 

     (c) Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have occurred
by virtue of the consummation of any transaction or series of integrated transactions immediately
following which the record holders of the common stock of the Company immediately prior to such
transaction or series of transactions continue to have substantially the same proportionate
ownership in an entity which owns all or substantially all of the assets of the Company immediately
following such transaction or series of transactions.

     (d) Unless otherwise provided by the Committee or set forth in a Grantee’s Award Terms,
notwithstanding the provisions of this Plan, in the event that any payment or benefit received or
to be received by the Grantee in connection with a Change in Control or the termination of the
Grantee’s employment or service (whether pursuant to the terms of this Plan or any other plan,
arrangement or agreement with the Company, any Subsidiary, any Affiliate, any Person whose actions
result in a Change in Control or any Person affiliated with the Company or such Person) (all such
payments and benefits, “Total Payments”) would be subject (in whole or part), to the excise tax
imposed by Section 4999 of the Code (the “Excise Tax”), then, after taking into account any
reduction in the Total Payments provided by reason of Section 280G of the Code in such other plan,
arrangement or agreement, the payment or benefit to be received by the Grantee upon a Change in
Control shall be reduced to the extent necessary so that no portion of the Total Payments is
subject to the Excise Tax but only if the net amount of such Total Payments, as so reduced (and
after subtracting the net amount of federal, state and local income taxes on such reduced Total
Payments) is greater than or equal to the net amount of such Total Payments without such reduction
(but after subtracting the net amount of federal, state and local income taxes on such Total
Payments and the amount of Excise Tax to which the Executive would be subject in respect of such
unreduced Total Payments).

	8.	 	GENERAL PROVISIONS.

     (a) Nontransferability, Deferrals and Settlements. Unless otherwise determined by the
Committee or provided in an Award Terms, Awards shall not be transferable by a Grantee except by
will or the laws of descent and distribution and shall be exercisable during the lifetime of a
Grantee only by such Grantee or his guardian or legal representative. Notwithstanding the
foregoing, any transfer of Awards to independent third parties for cash consideration without
stockholder approval is prohibited. Any Award shall be null and void and without effect upon any
attempted assignment or transfer, except as herein provided, including without limitation any
purported assignment, whether voluntary or by operation of law, pledge, hypothecation or other
disposition, attachment, divorce, trustee process or similar process, whether legal or equitable,
upon such Award. The Committee may require or permit Grantees to elect to defer the issuance of
shares of Stock (with settlement in cash or Stock as may be determined by the Committee or elected
by the Grantee in accordance with procedures established by the Committee), or the settlement of
Awards in cash under such rules and procedures as established under the Plan to the extent that
such deferral complies with Section 409A of the Code and any regulations or guidance promulgated
thereunder. It may also provide that deferred settlements include the payment or crediting of
interest, dividends or dividend equivalents on the deferral amounts.

     (b) No Right to Continued Employment, etc. Nothing in the Plan or in any Award
granted or any Award Terms, promissory note or other agreement entered into pursuant hereto shall
confer upon any Grantee the right to continue in the employ or service of the Company, any

14

 

Subsidiary or any Affiliate or to be entitled to any remuneration or benefits not set forth in
the Plan or such Award Terms, promissory note or other agreement or to interfere with or limit in
any way the right of the Company or any such Subsidiary or Affiliate to terminate such Grantee’s
employment or service.

     (c) Clawback. If a Grantee engages in misconduct (as defined herein), the Grantee:
(i) forfeits the right to receive any future Awards or other equity-based incentive compensation
under the Plan; and (ii) the Company may demand repayment of any Awards or cash payments already
received by a Grantee, including without limitation repayment due to making retroactive adjustments
to any Awards or cash payments already received by a Grantee under the Plan where such Award or
cash payment was predicated upon the achievement of certain financial results that were
subsequently the subject of a restatement as a result of misconduct by the Grantee. The Grantee
shall be required to provide repayment within ten (10) days following such written demand. For the
purposes of the Plan, “misconduct” means (i) Grantee’s employment or service is terminated for
Cause, or (ii) the breach of a noncompete or confidentiality covenant set out in the employment
agreement between the Grantee and the Company or an Affiliate, or (iii) the Company has been
required to prepare an accounting restatement due to material noncompliance, as a result of fraud
or misconduct, with any financial reporting requirement under the securities laws, and the
Committee has determined in its sole discretion that the Grantee: (A) had knowledge of the material
noncompliance or the circumstances that gave rise to such noncompliance and failed to take
reasonable steps to bring it to the attention of appropriate individuals within the Company; or (B)
personally and knowingly engaged in practices which materially contributed to the circumstances
that enabled a material noncompliance to occur.

     (d) Taxes. The Company or any Subsidiary or Affiliate is authorized to withhold from
any Award granted, any payment relating to an Award under the Plan, including from a distribution
of Stock, or any other payment to a Grantee, amounts of withholding and other taxes due in
connection with any transaction involving an Award, and to take such other action as the Committee
may deem advisable to enable the Company and Grantees to satisfy obligations for the payment of
withholding taxes and other tax obligations relating to any Award. This authority shall include
authority to withhold or receive Stock or other property with a Fair Market Value not in excess of
the minimum amount required to be withheld and to make cash payments in respect thereof in
satisfaction of a Grantee’s tax obligations.

     (e) Stockholder Approval; Amendment and Termination. The Plan shall take effect on
the Effective Date but the Plan (and any grants of Awards made prior to the stockholder approval
mentioned herein) shall be subject to the requisite approval of the stockholders of the Company,
which approval must occur within twelve (12) months of the date that the Plan is adopted by the
Board. In the event that the stockholders of the Company do not ratify the Plan at a meeting of the
stockholders at which such issue is considered and voted upon, then upon such event the Plan and
all rights hereunder shall immediately terminate and no Grantee (or any permitted transferee
thereof) shall have any remaining rights under the Plan or any Award Terms entered into in
connection herewith. The Board may amend, alter or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made that would impair the rights of a Grantee under any
Award theretofore granted without such Grantee’s consent, or that without the approval of the
stockholders (as described below) would, except as provided in Section 5, increase the total number
of shares of Stock reserved for the purpose of the Plan. In addition,

15

 

stockholder approval shall be required with respect to any amendment that materially increases
benefits provided under the Plan or materially alters the eligibility provisions of the Plan or
with respect to which stockholder approval is required under the rules of any stock exchange on
which Stock is then listed. Unless earlier terminated by the Board pursuant to the provisions of
the Plan, the Plan shall terminate on the tenth anniversary of its Effective Date. No Awards shall
be granted under the Plan after such termination date.

     (f) No Rights to Awards; No Stockholder Rights. No individual shall have any claim to
be granted any Award under the Plan, and there is no obligation for uniformity of treatment of
Grantees. No individual shall have any right to an Award or to payment or settlement under any
Award unless and until the Committee or its designee shall have determined that an Award or payment
or settlement is to be made. Except as provided specifically herein, a Grantee or a transferee of
an Award shall have no rights as a stockholder with respect to any shares covered by the Award
until the date of the issuance of such shares.

     (g) Unfunded Status of Awards. The Plan is intended to constitute an “unfunded” plan
for incentive and deferred compensation. With respect to any payments not yet made to a Grantee
pursuant to an Award, nothing contained in the Plan or any Award shall give any such Grantee any
rights that are greater than those of a general creditor of the Company.

     (h) No Fractional Shares. No fractional shares of Stock shall be issued or delivered
pursuant to the Plan or any Award. The Committee shall determine whether cash, other Awards, or
other property shall be issued or paid in lieu of such fractional shares or whether such fractional
shares or any rights thereto shall be forfeited or otherwise eliminated.

     (i) Regulations and Other Approvals.

	 	(i)	 	The obligation of the Company to sell or deliver Stock with
respect to any Award granted under the Plan shall be subject to all applicable
laws, rules and regulations, including all applicable federal and state
securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.
	 
	 	(ii)	 	Each Award is subject to the requirement that, if at any time
the Committee determines, in its absolute discretion, that the listing,
registration or qualification of Stock issuable pursuant to the Plan is
required by any securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the grant of an Award or
the issuance of Stock, no such Award shall be granted or payment made or Stock
issued, in whole or in part, unless listing, registration, qualification,
consent or approval has been effected or obtained free of any conditions not
acceptable to the Committee.
	 
	 	(iii)	 	In the event that the disposition of Stock acquired pursuant
to the Plan is not covered by a then current registration statement under the
Securities Act of 1933, as amended (the “Securities Act”), and is not otherwise

16

 

	 	 	 	exempt from such registration, such Stock shall be restricted against
transfer to the extent required by the Securities Act or regulations
thereunder, and the Committee may require a Grantee receiving Stock pursuant
to the Plan, as a condition precedent to receipt of such Stock, to represent
to the Company in writing that the Stock acquired by such Grantee is
acquired for investment only and not with a view to distribution.

     (j) Section 409A. This Plan is intended to comply and shall be administered in a
manner that is intended to comply with Section 409A of the Code and shall be construed and
interpreted in accordance with such intent. To the extent that an Award, issuance and/or payment
is subject to Section 409A of the Code, it shall be awarded and/or issued or paid in a manner that
will comply with Section 409A of the Code, including proposed, temporary or final regulations or
any other guidance issued by the Secretary of the Treasury and the Internal Revenue Service with
respect thereto. Any provision of this Plan that would cause an Award, issuance and/or payment to
fail to satisfy Section 409A of the Code shall have no force and effect until amended to comply
with Code Section 409A (which amendment may be retroactive to the extent permitted by applicable
law).

     (k) Governing Law. The Plan and all determinations made and actions taken pursuant
hereto shall be governed by the laws of the State of Delaware without giving effect to the conflict
of laws principles thereof.

17EX-10.6

 

Exhibit 10.6

FINAL

TAX RECEIVABLE AGREEMENT

     This TAX RECEIVABLE AGREEMENT (as amended from time to time, this “Agreement”), dated
as of September ___, 2007, is hereby entered into by and among Pzena Investment Management,
Inc., a Delaware corporation (the “Corporation”), Pzena Investment Management,
LLC, a Delaware limited liability company (“PIM”) and each of the undersigned parties
hereto identified as “Members.”

RECITALS

     WHEREAS, the Members hold membership interests (“Units”) in PIM, which is treated as a
partnership for United States federal income Tax (as defined below) purposes;

     WHEREAS, the Corporation is the managing member of, and holds and will hold Units in, PIM;

     WHEREAS, as a result of the Members agreeing to hold Units rather than transferring 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 incur significantly lower Tax
liabilities on an ongoing basis with respect to the operations of PIM;

     WHEREAS, certain of the Members will sell Units to the Corporation (the “Original
Sale”) in exchange for the net proceeds from the IPO (as defined below);

     WHEREAS, the Units are exchangeable for Class A Shares of the Corporation;

     WHEREAS, PIM and each of its direct and indirect subsidiaries treated as a partnership for
United States federal income Tax purposes has or will have in effect an election under Section 754
of 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 an
exchange of Units for Class A Shares occurs, which election will result in an adjustment to the Tax
basis of the assets owned by PIM and such subsidiaries, solely with respect to the Corporation, at
the time of the Original Sale, an exchange of Units for Class A Shares or any other deemed or
actual acquisition of Units by the Corporation for cash or otherwise (collectively, and together
with 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 respect
to the Corporation, may be affected by the Basis Adjustment (defined below) and (ii) the
Corporation 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 the
effect of the Basis Adjustment and Imputed Interest on the actual liability for Taxes of the
Corporation.

     NOW, THEREFORE, in consideration of the foregoing and the respective covenants and agreements
set 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 shall
have the following meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined).

     “Advisory Firm” means Ernst & Young LLP, or any other accounting firm that is
nationally 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 the
relevant schedule, notice or other information to be provided by the Corporation to the Applicable
Member 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 or
indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common
Control with, such first Person.

     “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.

2

 

     “Applicable Member” means in respect of that portion of any Tax Benefit Payment that
arises from an Exchange or a deemed Exchange pursuant to clause (5) of the definition of “Valuation
Assumptions”, the Exchanging Member or Member deemed to Exchange, as applicable.

     “Basis Adjustment” means the adjustment to the Tax basis of an Exchange Asset as a
result of an Exchange and the payments made pursuant to this Agreement, as calculated under Section
2.01 of this Agreement, under Section 732(b) of the Code (in a situation where, as a result of one
or more Exchanges, PIM becomes an entity that is disregarded as separate from its owner for Tax
purposes) or Sections 743(b) and 754 of the Code (including in situations where, following an
Exchange, 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 other
provision of this Agreement, the amount of any Basis Adjustment resulting from an Exchange of one
or more Units shall be determined without regard to any Pre-Exchange Transfer of such Units and as
if any such Pre-Exchange Transfer had not occurred.

     A “Beneficial Owner” of a security is a Person who directly or indirectly, through any
contract, 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) investment
power, which includes the power to dispose of, or to direct the disposition of, such security. The
terms “Beneficially Own” and “Beneficial Ownership” shall have correlative
meanings.

     “Board” means the board of directors of the Corporation.

     “Business Day” means Monday through Friday of each week, except that a legal holiday
recognized as such by the government of the United States of America or the State of New York shall
not 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 acting
together which would constitute a “group” for purposes of Section 13(d)
of the Securities and Exchange Act  of 1934, or any successor
provisions thereto, excluding a group of Persons, which, if it includes
any Key Member or any of such Key Member’s Affiliates, includes all Key
Members then employed by PIM or any of PIM’s Affiliates, is or becomes
the Beneficial Owner, directly or indirectly, of securities of the
Corporation representing more than fifty percent (50%) of the combined
voting power of the Corporation’s then outstanding voting securities;
or

	 	(ii)	 	the following individuals cease for any reason to constitute a
majority of the number of directors of the Corporation then serving:
individuals who, on the date of the consummation of the IPO, constitute the
Board and any new director (other than a director whose initial assumption of
office is in

3

 

	 	 	 	connection with an actual or threatened election contest, including but not
limited to a consent solicitation, relating to an election of directors of
the Corporation) whose appointment or election by the Board or nomination
for election by the Corporation’s stockholders was approved or recommended
by a vote of at least two-thirds (2/3) of the directors then still in office
who either were directors on the date of the consummation of the IPO or
whose appointment, election or nomination for election was previously so
approved or recommended by the directors referred to in this clause (ii); or
	 
	 	(iii)	 	there is consummated a merger or consolidation of the
Corporation with any other corporation or other entity, and, immediately after
the consummation of such merger or consolidation, either (x) the Board
immediately prior to the merger or consolidation does not constitute at least a
majority of the board of directors of the company surviving the merger or, if
the surviving company is a subsidiary, the ultimate parent thereof, or (y) all
of the Persons who were the respective Beneficial Owners of the voting
securities of the Corporation immediately prior to such merger or consolidation
do not Beneficially Own, directly or indirectly, more than 50% of the combined
voting power of the then outstanding voting securities of the Person resulting
from such merger or consolidation; or
	 
	 	(iv)	 	the stockholders of the Corporation approve a plan of complete
liquidation or dissolution of the Corporation or there is consummated an
agreement or series of related agreements for the sale or other disposition,
directly, or indirectly, by the Corporation of all or substantially all of the
Corporation’s assets, other than such sale or other disposition by the
Corporation of all or substantially all of the Corporation’s assets to an
entity, at least fifty percent (50%) of the combined voting power of the voting
securities of which are owned by stockholders of the Corporation in
substantially the same proportions as their voting power of the Corporation
immediately 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 any
transaction or series of integrated transactions immediately following which the record holders of
the shares of capital stock of the Corporation immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate voting power in an entity which
owns all or substantially all of the assets of the Corporation immediately following such
transaction or series of transactions.

     “Class A Shares” is defined in the Recitals of this Agreement.

     “Code” is defined in the Recitals of this Agreement.

4

 

     “Control” means the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a Person, whether through ownership of voting
securities, 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 Tax
Return, 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 amount
of Realized Tax Benefits for all Taxable Years of the Corporation, up to and including such Taxable
Year, net of the cumulative amount of Realized Tax Detriments for the same period. The Realized
Tax Benefit and Realized Tax Detriment for each Taxable Year shall be determined based on the most
recent Tax Benefit Schedule or Amended Schedule, if any, in existence at the time of such
determination.

     “Default Rate” means LIBOR plus 300 basis points.

     “Determination” shall have the meaning ascribed to such term in Section 1313(a) of the
Code 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 of
any liability for Tax.

     “Dispute” is defined in Section 7.08(a).

     “Early Termination Date” means the date of an Early Termination Notice for purposes of
determining 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 applicable
date.

5

 

     “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 or
indirect subsidiaries treated as a partnership or disregarded entity for purposes of the applicable
Tax, 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.

     “Expert” is defined in Section 7.09 of this Agreement.

     “Hypothetical Tax Liability” means, with respect to any Taxable Year, the liability
for Taxes of the Corporation (or PIM, but only with respect to income realized by PIM the Tax
liability 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 the
Non-Stepped Up Tax Basis instead of the Tax basis of the Exchange Assets and excluding any
deduction attributable to Imputed Interest.

     “Imputed Interest” shall mean any interest imputed under Section 1272, 1274 or 483 or
other provision of the Code and any similar provision of state, local and foreign Tax law with
respect to the Corporation’s payment obligations under this Agreement.

     “IPO” means the initial public offering of the Class A Shares that is being
consummated 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 rate
per annum equal to the rate per annum reported, on the date two days prior to the first day of such
month, as published by Reuters (or other commercially available source providing

6

 

quotations of LIBOR) for London interbank offered rates for United States dollar deposits for
such month (or portion thereof).

     “LLC Agreement” means, with respect to PIM, the Amended and Restated Operating
Agreement of PIM.

     “Market Value” means, with respect to the Class A Shares, on any given date: (i) if
the Class A Shares are listed for trading on the New York Stock Exchange, the closing sale price
per share of the Class A Shares on the New York Stock Exchange on that date (or, if no closing sale
price is reported, the last reported sale price), (ii) if the Class A Shares are not listed for
trading on the New York Stock Exchange, the closing sale price (or, if no closing sale price is
reported, the last reported sale price) as reported on that date in composite transactions for the
principal national securities exchange registered pursuant to Section 6(g) of the Securities and
Exchange Act of 1934, as amended, on which the Class A Shares are listed, (iii) if the Class A
Shares are not so listed on a national securities exchange, the last quoted bid price for the Class
A Shares on that date in the over-the-counter market as reported by Pink Sheets LLC or a similar
organization, or (iv) if the Class A Shares are not so quoted by Pink Sheets LLC or a similar
organization 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 parties hereto, other than the Corporation, and each other Person
who from time to time executes a Joinder Agreement in the form attached hereto as Exhibit A.

     “Non-Stepped Up Tax Basis” means, with respect to any asset at any time, the Tax basis
that 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 to
this Agreement.

     “Person” means any individual, corporation, firm, partnership, joint venture, limited
liability company, estate, trust, business association, organization, governmental entity or other
entity.

7

 

     “Pre-Exchange Transfer” means any transfer (including upon the death of a Member) of
one or more Units (i) that occurs prior to an Exchange of such Units, and (ii) to which Section
743(b) of the Code applies.

     “Realized Tax Benefit” means, for a Taxable Year and for all Taxes collectively, the
net excess, if any, of the Hypothetical Tax Liability over the actual liability for Taxes of the
Corporation (or PIM, but only with respect to income realized by PIM the Tax liability 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), determined, for the avoidance of
doubt, using the “with or without” methodology. If all or a portion of the actual liability for
Taxes of the Corporation (or PIM, but only with respect to income realized by PIM the Tax liability
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) for the Taxable Year
arises as a result of an audit by a Taxing Authority of any Taxable Year, such liability shall not
be included in determining the Realized Tax Benefit unless and until there has been a
Determination.

     “Realized Tax Detriment” means, for a Taxable Year and for all Taxes collectively, the
net excess, if any, of the actual liability for Taxes of the Corporation (or PIM, but only with
respect to income realized by PIM the Tax liability 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) 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 the
actual liability for Taxes of the Corporation (or PIM, but only with respect to income realized by
PIM the Tax liability 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)
for the Taxable Year arises as a result of an audit by a Taxing Authority of any Taxable Year, such
liability shall not be included in determining the Realized 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 of
this Agreement.

     “Schedule” means any Exchange Basis Schedule or Tax Benefit Schedule and the Early
Termination Schedule.

     “Senior Obligations” is defined in Section 5.01 of this Agreement.

8

 

     “Subsidiaries” means, with respect to any Person, as of any date of determination, any
other Person as to which such Person, owns, directly or indirectly, or otherwise controls more than
50% of the voting shares or other similar interests or the sole general partner interest or
managing 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 be
filed with respect to Taxes (including any attached schedules), including, without limitation, any
information 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) of
the 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 is
prepared)in which there is a Basis Adjustment or increased depreciation, amortization or interest
deductions 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, county
or municipal or other local government, any subdivision, agency, commission or authority thereof,
or any quasi-governmental body exercising any Taxing authority or any other authority exercising
Tax regulatory authority.

     “Treasury Regulations” means the final, temporary and proposed regulations under the
Code 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 a
Change of Control, as applicable, the assumptions that (1) in each Taxable Year ending on or after
such Early Termination Date, the Corporation will have sufficient Taxable income to fully offset
the deductions in such Taxable Year attributable to any Basis Adjustment, increased depreciation or
amortization deductions attributable to an Exchange, and Imputed

9

 

Interest, (2) the U.S. federal income Tax rates and state, local and foreign income Tax rates
that will be in effect for each such Taxable Year will be those specified for each such Taxable
Year by the Code and other law as in effect on the Early Termination Date, (3) any loss carryovers
generated by any Basis Adjustment or Imputed Interest and available as of the date of the Early
Termination Schedule will be used by the Corporation on a pro rata basis from the date of the Early
Termination Schedule through the scheduled expiration date of such loss carryovers, (4) any
non-amortizable assets will be disposed of 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 at the earlier of (i) the time of sale of the relevant asset or
(ii) as generally provided in this Valuation Assumption (4) and (5) if, at the Early Termination
Date, there are Units that have not been Exchanged, then each such Unit shall be deemed to be
Exchanged for the Market Value of the Class A Shares and the amount of cash that would be
transferred if the Exchange occurred on the Early 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, PIM
shall 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 Market
Value of the Class A Shares, cash or the amount of any other consideration transferred to the
Applicable Member pursuant to the Exchange as payment for the exchanged Units, to the extent
attributable to such Exchange Assets, plus (y) the amount of payments made pursuant to this
Agreement 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 such
Exchange, to the extent attributable to such Exchange Assets; over (ii) the 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 an entity 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 Agreement
shall not be treated as resulting in a Basis Adjustment to the extent such payments are treated as
Imputed Interest.

     Section 2.02 Exchange Basis Schedule. Within 45 calendar days after the filing of the
United States federal income Tax return of the Corporation for each Taxable Year, the Corporation
shall deliver to each Member a schedule (the “Exchange Basis Schedule”) that shows, in
reasonable detail, for purposes of federal income Taxes, (i) the actual unadjusted Tax basis of the
Exchange Assets as of each applicable Exchange Date, (ii) the Basis Adjustment with respect to the
Exchange Assets as a result of the Exchanges effected in such Taxable Year,

10

 

calculated in the aggregate, (iii) the period or periods, if any, over which the Exchange Assets
are amortizable and/or depreciable and (iv) the period or periods, if any, over which each Basis
Adjustment is amortizable and/or depreciable (which, for non-amortizable assets, shall be based on
the Valuation Assumptions).

     Section 2.03 Tax Benefit Schedule. Within 45 calendar days after the filing of the United
States federal income Tax return of the Corporation for any Taxable Year in which there is a
Realized Tax Benefit or Realized Tax Detriment, the Corporation shall provide to each Member a
schedule showing, in reasonable detail, the calculation of the Realized Tax Benefit or Realized Tax
Detriment for such Taxable Year (a “Tax Benefit Schedule”). The Tax Benefit Schedule will
become 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 an
applicable Schedule under this Agreement, including any Amended Schedule delivered pursuant to
Section 2.04(b), but excluding any Early Termination Schedule or amended Early Termination
Schedule, the Corporation also shall (x) deliver to the Applicable Member schedules and work papers
providing reasonable detail regarding the preparation of such Schedule and an Advisory Firm Letter
supporting such Schedule and (y) allow the Applicable Member reasonable access, at no cost, to the
appropriate representatives at the Corporation and the Advisory Firm in connection with a review of
such Schedule. The applicable Schedule shall become final and binding on all parties unless the
Applicable Member, within 30 calendar days after receiving an Exchange Basis Schedule or amendment
thereto or a Tax Benefit Schedule or amendment thereto, provides the Corporation with notice of a
material objection to such Schedule (“Objection Notice”) made in good faith. If the
parties, for any reason, are unable to successfully resolve the issues raised in such notice within
30 calendar days of receipt by the Corporation of an Objection Notice with respect to such Exchange
Basis Schedule or Tax Benefit Schedule, the Corporation and the Applicable Member shall employ the
reconciliation procedures as described in Section 7.09 of this Agreement (the “Reconciliation
Procedures”).

          (b) Amended Schedule. The applicable Schedule for any Taxable Year may be amended from
time 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 of
additional factual information relating to a Taxable Year after the date the Schedule was provided
to the Applicable Member, (iii) to comply with the Expert’s determination under the Reconciliation
Procedures, (iv) to reflect a material change in the Realized Tax Benefit or Realized Tax Detriment
for such Taxable Year attributable to a carryback or carryforward of a loss or other Tax item to
such Taxable Year, (v) to reflect a material change in the Realized Tax Benefit or Realized Tax
Detriment 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 this
Agreement (such Schedule, an “Amended Schedule”).

11

 

ARTICLE III

TAX BENEFIT PAYMENTS

     Section 3.01 Payments

          (a) Payments. Within three (3) business days of a Tax Benefit Schedule that was
delivered to an Applicable Member becoming final in accordance with Section 2.04(a), the
Corporation shall pay to the Applicable Member for such Taxable Year the Tax Benefit Payment
determined pursuant to Section 3.01(b). Each such Tax Benefit Payment shall be made by wire
transfer of immediately available funds to a bank account of the Applicable Member previously
designated by such Member to the Corporation. For the avoidance of doubt, no Tax Benefit Payment
shall be made in respect of estimated Tax payments, including, without limitation, U.S. federal
income Tax payments.

          (b) A “Tax Benefit Payment” means an amount, not less than zero, equal to 85% of the
sum of the Net Tax Benefit and the Interest Amount. The “Net Tax Benefit" for
each Taxable Year shall be an amount equal to the excess, if any, of the Cumulative Net Realized
Tax Benefit as of the end of such Taxable Year over the total amount of payments previously made
under 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 portion
of any previously received Tax Benefit Payment under any circumstances. The “Interest
Amount” for a given Taxable Year shall equal the interest on the Net Tax Benefit for such
Taxable Year calculated at the Agreed Rate from the due date (without extensions) for filing the
Corporation Return with respect to Taxes for the most recently ended Taxable Year until the Payment
Date. The Net Tax Benefit and the Interest Amount shall be determined separately with respect to
each separate Exchange. Notwithstanding the foregoing, for each Taxable Year ending on or after
the date of a Change of Control, all Tax Benefit Payments, whether paid with respect to Partnership
Units that were exchanged (i) prior to the date of such Change of Control or (ii) on or after the
date of such Change of Control, shall be calculated by utilizing Valuation Assumptions (1), (3),
and (4), substituting in each case the terms “the closing date of a Change of Control” for an
“Early Termination Date”.

     Section 3.02 No Duplicative Payments. It is intended that the provisions of this Agreement
will not result in duplicative payment of any amount (including interest) required under this
Agreement. It is also intended that the provisions of this Agreement will result in 85% of the
Corporation’s Cumulative Net Realized Tax Benefit, and the Interest Amount thereon, being paid to
the Members pursuant to this Agreement. The provisions of this Agreement shall be construed in the
appropriate manner to achieve these fundamental results.

     Section 3.03 Pro Rata Payments. For the avoidance of doubt, to the extent that (i) the
Corporation’s deductions with respect to any Basis Adjustment is limited in a particular Taxable
Year or (ii) the Corporation lacks sufficient funds to satisfy or is prevented under any credit
agreement or other arrangement from satisfying its obligations to make all Tax Benefit

12

 

Payments due in a particular Taxable year, the limitation on the deduction, or the Tax Benefit
Payments that may be made, as the case may be, shall be taken into account or made for the
Applicable Member in the same 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 (or
previously held and Exchanged) by all Members at any time by paying to the Members the Early
Termination Payment; provided, however, that this Agreement shall terminate only
upon the receipt of the Early Termination Payment by all Members, and provided,
further, that the Corporation may withdraw any notice to execute its termination rights
under 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 the
Corporation 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 be
due and payable but unpaid as of the Early Termination Notice and (y) Tax Benefit Payment due for
the Taxable Year ending with or including the date of the Early Termination Notice (except to the
extent that the amount described in clause (y) is included in the Early Termination Payment). For
the avoidance of doubt, if an Exchange occurs after the Corporation makes the Early Termination
Payments with respect to all Members, the Corporation shall have no obligations under this
Agreement with respect to such Exchange, and its only obligations under this Agreement in such case
shall be its obligations to all Members under Section 4.03(a).

          (b) In the event that the Corporation breaches any of its material obligations under this
Agreement, whether as a result of failure to make any payment when due, failure to honor any other
material obligation required hereunder or by operation of law as a result of the rejection of this
Agreement in a case commenced under the Bankruptcy Code or otherwise, then all obligations
hereunder shall be accelerated and such obligations shall be calculated as if an Early Termination
Notice had been delivered on the date of such breach and shall include, but shall not be limited
to, (1) the Early Termination Payment calculated as if an Early Termination Notice had been
delivered on the date of a breach, (2) any Tax Benefit Payment agreed by the Corporation acting in
good 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 a
breach. 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 to
make any payment due pursuant to this Agreement within three months of the date such payment is due
shall be deemed to be a breach

13

 

of a material obligation under this Agreement for all purposes of this Agreement, and that it
shall not be considered to be a breach of a material obligation under this Agreement to make a
payment due pursuant to this Agreement within three months of the date such payment is due.

          (c) The Corporation, PIM and each of the Members hereby acknowledge that, as of the date of
this Agreement, the aggregate value of the Tax Benefit Payments cannot reasonably be ascertained
for United States federal income Tax or other applicable Tax purposes.

     Section 4.02 Early Termination Notice. If the Corporation chooses to exercise its right of
early termination under Section 4.01 above, the Corporation shall deliver to each present or former
Member notice of such intention to exercise such right (“Early Termination Notice”) and a
schedule (the “Early Termination Schedule”) specifying the Corporation’s intention to
exercise such right and showing in reasonable detail the calculation of the Early Termination
Payment. The Early Termination Schedule shall become final and binding on all parties unless an
Applicable Member, within 30 calendar days after receiving the Early Termination Schedule, provides
the 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 successfully
resolve the issues raised in such notice within 30 calendar days after receipt by the Corporation
of the Material Objection Notice, the Corporation and the applicable Member shall employ the
Reconciliation Procedures as described in Section 7.09 of this Agreement.

     Section 4.03 Payment upon Early Termination. (a) Within three (3) business days after the
Early Termination Schedule has become final and binding, the Corporation shall pay to each
Applicable Member an amount equal to the Early Termination Payment. Such payment shall be made by
wire transfer of immediately available funds to a bank account designated by the Applicable Member.

          (b) The “Early Termination Payment” as of the date of the delivery of an Early
Termination 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 be
required to be paid by the Corporation to the Applicable Member beginning from the Early
Termination 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 the
contrary, any Tax Benefit Payment or Early Termination Payment required to be made by the
Corporation to the Members under this Agreement (an “Exchange Payment”) shall rank
subordinate and junior in right of payment to any principal, interest or other amounts due and
payable in respect of any obligations in respect of indebtedness for borrowed money of

14

 

the Corporation and its Subsidiaries (“Senior Obligations”) and shall rank pari passu with
all current 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 any
Exchange Payment not made to any Member when due (without regard to Section 5.01) under the terms
of this Agreement shall be payable together with any interest thereon, computed at the Default Rate
and 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 as
otherwise provided herein, the Corporation shall have full responsibility for, and sole discretion
over, all Tax matters concerning the Corporation and PIM, including without limitation the
preparation, filing or amending of any Tax Return and defending, contesting or settling any issue
pertaining to Taxes. Notwithstanding the foregoing, the Corporation shall notify each applicable
Member of, and keep such applicable Member reasonably informed with respect to the portion of any
audit of the Corporation and PIM by a Taxing Authority the outcome of which is reasonably expected
to affect such applicable Member’s rights and obligations under this Agreement, and shall provide
to such applicable Member reasonable opportunity to provide information and other input to the
Corporation, PIM and their respective advisors concerning the conduct of any such portion of such
audit; provided, however, that the Corporation and PIM shall not be required to
take 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, the
Corporation 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 purposes, all
Tax-related items (including without limitation the Basis Adjustment and each Tax Benefit Payment)
in a manner consistent with that specified by the Corporation in any Schedule required to be
provided by or on behalf of the Corporation under this Agreement. Any Dispute concerning such
advice shall be subject to the terms of Section 7.09. In the event that an Advisory Firm is
replaced with another firm acceptable to the Corporation and the Applicable Member, such
replacement Advisory Firm shall be required to perform its services under this Agreement 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 of other
procedures and methodologies.

     Section 6.03 Cooperation. The Applicable Member shall (a) furnish to the Corporation in a
timely manner such information, documents and other materials as the Corporation may reasonably
request for purposes of making any determination or computation necessary or appropriate under this
Agreement, preparing any Tax Return or contesting or defending any audit, examination or
controversy with any Taxing Authority, (b) make itself available to the Corporation and its
representatives to provide explanations of documents and

15

 

materials and such other information as the Corporation or its representatives may reasonably
request in connection with any of the matters described in clause (a) above, and (c) reasonably
cooperate in connection with any such matter described in clause (a) above. The Corporation shall
reimburse the Applicable Member for any reasonable 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 communications
hereunder shall be in writing and shall be deemed duly given and received (a) on the date of
delivery if delivered personally, or by facsimile upon confirmation of transmission by the sender’s
fax machine if sent on a Business Day (or otherwise on the next Business Day) or (b) on the first
Business 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 instructions
as may be designated in writing by the party to receive such notice:

if to the Corporation, to:

Pzena Investment Management, Inc.

c/o Pzena Investment Management, L.L.C.

120 West Forty-Fifth Street, 20th Floor

New York, NY 10036

(T) (212) 583-1291

(F) (212)308-0010

Attention: General Counsel

with a copy to:

Skadden, Arps, Slate, Meagher & Flom LLP

Four Times Square

New York, New York 10036

(T) (212) 735-3000

(F) (212) 735-2000

Attention: Richard B. Aftanas, Esq.

                  Ralph Arditi, Esq.

If to the Applicable Member, to:

The address and facsimile number set forth in the records of PIM.

16

 

Any party may change its address or fax number by giving the other party written notice of its new
address or fax number in the manner set forth above.

     Section 7.02 Counterparts. This Agreement may be executed in one or more counterparts, all
of which shall be considered one and the same Agreement and shall become effective when one or more
counterparts have been signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart. Delivery of an executed signature
page to this Agreement by facsimile transmission shall be as effective as delivery of a manually
signed counterpart of this Agreement.

     Section 7.03 Entire Agreement; No Third Party Beneficiaries. This Agreement constitutes the
entire agreement and supersedes all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and their respective successors and permitted
assigns, and nothing in this Agreement, express or implied, is intended to or shall confer upon any
other Person any right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement.

     Section 7.04 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the law of the State of New York, without regard to the conflicts of laws
principles thereof that would mandate the application of the laws of another jurisdiction.

     Section 7.05 Severability. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any law or public policy, all other terms and provisions
of this Agreement shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision is invalid, illegal
or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as possible in an
acceptable manner in order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.

     Section 7.06 Successors; Assignment; Amendments; Waivers. No Member may assign this
Agreement to any person without the prior written consent of the Corporation; provided,
however, that (i) to the extent Units are transferred in accordance with the terms of the
LLC Agreement, the transferring Member shall have the option to assign to the transferee of such
Units the transferring Member’s rights under this Agreement with respect to such transferred Units,
as long as such transferee has executed and delivered, or, in connection with such transfer,
executes and delivers, a joinder to this Agreement, in form and substance reasonably satisfactory
to the Corporation, agreeing to become a “Member” for all purposes of this Agreement, except as
otherwise provided in such joinder, and (ii) once an Exchange has occurred, any and all payments
that may become payable to a Member pursuant to this Agreement with respect to the Exchanged Units
may be assigned to any Person or Persons as long as any such Person has executed and delivered, or,
in connection with such assignment, executes and delivers, a joinder to this Agreement, in form and
substance reasonably satisfactory to the Corporation, agreeing to be bound by Section 7.12 and
acknowledging specifically the terms of the next paragraph of this Section 7.06. For the avoidance
of doubt, if a Person transfers

17

 

Units (regardless of whether the transferee is a “Permitted Transferee” under the terms of the LLC
Agreement) but does not assign to the transferee of such Units such Person’s rights, if any, under
this Agreement with respect to such transferred Units, such Person shall be entitled to receive the
Tax Benefit Payments, if any, due hereunder with respect to, including any Tax Benefit Payments
arising in respect of a subsequent Exchange of, such Units.

     Notwithstanding the foregoing provisions of this Section 7.06, no transferee described in
clause (i) of the first sentence of the immediately preceding paragraph shall have the right to
enforce the provisions of Section 2.04, 4.02, 6.01 or 6.02 of this Agreement, and no assignee
described in clause (ii) of the first sentence of the immediately preceding paragraph shall have
any rights under this Agreement except for the right to enforce its right to receive payments under
this Agreement.

     No provision of this Agreement may be amended unless such amendment is approved in writing by
each of the Corporation and PIM and by Members who would be entitled to receive at least two-thirds
of the Early Termination Payments payable to all Members hereunder if the Corporation had exercised
its right of early termination on the date of the most recent Exchange prior to such amendment
(excluding, for purposes of this sentence, all payments made to any Member pursuant to this
Agreement since the date of such most recent Exchange); provided, however, that no
such amendment shall be effective if such amendment would have a disproportionate effect on the
payments certain Members will or may receive under this Agreement unless all such Members
disproportionately effected consent in writing to such amendment. No provision of this Agreement
may be waived unless such waiver is in writing and signed by the party against whom the waiver is
to be effective.

     Except as otherwise specifically provided herein, all of the terms and provisions of this
Agreement shall be binding upon, shall inure to the benefit of and shall be enforceable by the
parties hereto and their respective successors, assigns, heirs, executors, administrators and legal
representatives. The Corporation shall require and cause any direct or indirect successor (whether
by purchase, merger, consolidation or otherwise) to all or substantially all of the business or
assets of the Corporation, by written agreement, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that the Corporation would be required to
perform if no such succession had taken place. Notwithstanding anything to the contrary herein, in
the event a Member transfers his Units to a Permitted Transferee (as defined in the LLC Agreement),
excluding any other Member, such Member shall have the right, on behalf of such transferee, to
enforce the provisions of Sections 2.04, 4.02 or 6.01 with respect to such transferred Units.

     Section 7.07 Titles and Subtitles. The titles of the sections and subsections of this
Agreement are for convenience of reference only and are not to be considered in construing this
Agreement.

     Section 7.08 Resolution of Disputes.

18

 

          (a) Any and all disputes which are not governed by Section 7.09, including but not limited to
any ancillary claims of any party, arising out of, relating to or in connection with the validity,
negotiation, execution, interpretation, performance or non-performance of this Agreement (including
the validity, scope and enforceability of this arbitration provision) (each a “Dispute”)
shall be finally settled by arbitration conducted by a single arbitrator in New York in accordance
with the then-existing Rules of Arbitration of the International Chamber of Commerce. If the
parties to the Dispute fail to agree on the selection of an arbitrator within ten (10) days of the
receipt of the request for arbitration, the International Chamber of Commerce shall make the
appointment. The arbitrator shall be a lawyer admitted to the practice of law in the State of New
York and shall conduct the proceedings in the English language. Performance under this Agreement
shall continue if reasonably possible during any arbitration proceedings. In addition to monetary
damages, the arbitrator shall be empowered to award equitable relief, including, but not limited to
an injunction and specific performance of any obligation under this Agreement. The arbitrator is
not empowered to award damages in excess of compensatory damages, and each party hereby irrevocably
waives any right to recover punitive, exemplary or similar damages with respect to any Dispute.
The award shall be final and binding upon the parties as from the date rendered, and shall be the
sole and exclusive remedy between the parties regarding any claims, counterclaims, issues, or
accounting presented to the arbitral tribunal. Judgment upon any award may be entered and enforced
in any court having jurisdiction over a party or any of its assets.

          (b) Notwithstanding the provisions of paragraph (a), the Corporation may bring an action or
special proceeding in any court of competent jurisdiction for the purpose of compelling a party to
arbitrate, seeking temporary or preliminary relief in aid of an arbitration hereunder, and/or
enforcing an arbitration award and, for the purposes of this paragraph (b), each Member (i)
expressly consents to the application of paragraph (c) of this Section 7.08 to any such action or
proceeding, (ii) agrees that proof shall not be required that monetary damages for breach of the
provisions of this Agreement would be difficult to calculate and that remedies at law would be
inadequate, and (iii) irrevocably appoints the Corporation as such Member’s agent for service of
process in connection with any such action or proceeding and agrees that service of process upon
such agent, who shall promptly advise such Member of any such service of process, shall be deemed
in every respect effective service of process upon the Member in any such action or proceeding.

          (c) (i) EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF COURTS LOCATED IN NEW
YORK, NEW YORK FOR THE PURPOSE OF ANY JUDICIAL PROCEEDING BROUGHT IN ACCORDANCE WITH THE PROVISIONS
OF PARAGRAPH (B) OF THIS SECTION 7.08, OR ANY JUDICIAL PROCEEDING ANCILLARY TO AN ARBITRATION OR
CONTEMPLATED ARBITRATION ARISING OUT OF OR RELATING TO OR CONCERNING THIS AGREEMENT. Such ancillary
judicial proceedings include any suit, action or proceeding to compel arbitration, to obtain
temporary or preliminary judicial relief in aid of arbitration, or to confirm an arbitration award.
The parties acknowledge that the forums designated by this paragraph (c) have a reasonable relation
to this Agreement, and to the parties’ relationship with one another; and (ii) the parties hereby
waive, to the fullest extent permitted by applicable law,

19

 

any objection which they now or hereafter may have to personal jurisdiction or to the laying
of venue of any such ancillary suit, action or proceeding brought in any court referred to in
paragraph (c) (i) of this Section 7.08 and such parties agree not to plead or claim the same.

     Section 7.09 Reconciliation. In the event that the Corporation and the applicable Member
are unable to resolve a disagreement with respect to the matters governed by Sections 2.04, 4.02
and 6.02 within the relevant period designated in this Agreement (“Reconciliation
Dispute”), the Reconciliation Dispute shall be submitted for determination to a nationally
recognized expert (the “Expert”) in the particular area of disagreement mutually acceptable
to both parties. The Expert shall be a partner in a nationally recognized accounting firm or a law
firm (other than the Advisory Firm), and the Expert shall not, and the firm that employs the Expert
shall not, have any material relationship with either the Corporation or the applicable Member or
other actual or potential conflict of interest. If the parties are unable to agree on an Expert
within fifteen (15) days of receipt by the respondent(s) of written notice of a Reconciliation
Dispute, the Expert shall be appointed by the International Chamber of Commerce Centre for
Expertise. The Expert shall resolve any matter relating to the Exchange Basis Schedule or an
amendment thereto or the Early Termination Schedule or an amendment thereto within thirty (30)
calendar days and shall resolve any matter relating to a Tax Benefit Schedule or an amendment
thereto within fifteen (15) calendar days or as soon thereafter as is reasonably practicable, in
each case after the matter has been submitted to the Expert for resolution. Notwithstanding the
preceding sentence, if the matter is not resolved before any payment that is the subject of a
disagreement would be due (in the absence of such disagreement) or any Tax Return reflecting the
subject of a disagreement is due, the undisputed amount shall be paid on such date and such Tax
Return may be filed as prepared by the Corporation, subject to adjustment or amendment upon
resolution. In the event that this reconciliation provision is utilized, the fees of the Expert
shall be paid in proportion to the manner in which the dispute is resolved, such that, for example,
if the entire dispute is resolved in favor of the Corporation, the applicable Member shall pay all
of the fees, or if the items in dispute are resolved 50% in favor of the Corporation and 50% in
favor of the applicable Member, each of the Corporation and the applicable Member shall pay 50% of
the fees of the Expert. Any dispute as to whether a dispute is a Reconciliation Dispute within the
meaning of this Section 7.09 shall be decided by the Expert. The Expert shall finally determine
any Reconciliation Dispute and the determinations of the Expert pursuant to this Section 7.09 shall
be binding on the Corporation and the applicable Member and may be entered and enforced in any
court having jurisdiction.

     Section 7.10 Withholding. The Corporation shall be entitled to deduct and withhold from any
payment payable pursuant to this Agreement such amounts as the Corporation is required to deduct
and withhold with respect to the making of such payment under the Code or any provision of state,
local or foreign Tax law. To the extent that amounts are so withheld and paid over to the
appropriate Taxing Authority by the Corporation, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the Applicable Member.

20

 

     Section 7.11 Admission of the Corporation into a Consolidated Group; Transfers of
Corporate Assets.

          (a) If the Corporation becomes a member of another affiliated or consolidated group of
corporations that files a consolidated income Tax return pursuant to Sections 1501 et seq. of the
Code or any corresponding provisions of state, local or foreign law, then: (i) the provisions of
this Agreement shall be applied with respect to the group as a whole; and (ii) Tax Benefit
Payments, Early Termination Payments and other applicable items hereunder shall be computed with
reference to the consolidated Taxable income of the group as a whole.

          (b) If any entity that is obligated to make an Exchange Payment hereunder transfers one or
more assets to a corporation with which such entity does not file a consolidated Tax return
pursuant to Section 1501 of the Code, such entity, for purposes of calculating the amount of any
Exchange Payment (e.g., calculating the gross income of the entity and determining the Realized Tax
Benefit of such entity) due hereunder, shall be treated as having disposed of such asset in a fully
Taxable transaction on the date of such contribution. The consideration deemed to be received by
such entity shall be equal to the fair market value of the contributed asset, plus (i) the amount
of debt to which such asset is subject, in the case of a contribution of an encumbered asset or
(ii) the amount of debt allocated to such asset, in the case of a contribution of a partnership
interest.

     Section 7.12 Confidentiality. Each Member and assignee acknowledges and agrees that the
information of the Corporation and of its Affiliates is confidential and, except in the course of
performing any duties as necessary for the Corporation and its Affiliates, as required by law or
legal process or to enforce the terms of this Agreement, such person shall keep and retain in the
strictest confidence and not disclose to any Person any confidential matters, acquired pursuant to
this Agreement, of the Corporation and its Affiliates and successors, concerning PIM and its
Affiliates and successors or the other Members, learned by the Member heretofore or hereafter.
This clause 7.12 shall not apply to (i) any information that has been made publicly available by
the Corporation or any of its Affiliates, becomes public knowledge (except as a result of an act of
such Member in violation of this Agreement) or is generally known to the business community and
(ii) the disclosure of information to the extent necessary for a Member to prepare and file his or
her Tax returns, to respond to any inquiries regarding the same from any Taxing authority or to
prosecute or defend any action, proceeding or audit by any Taxing authority with respect to such
returns. Notwithstanding anything to the contrary herein, each Member and assignee (and each
employee, representative or other agent of such Member or assignee, as applicable) may disclose to
any and all Persons, without limitation of any kind, the Tax treatment and Tax structure of the
Corporation, PIM, the Members and their Affiliates, and any of their transactions, and all
materials of any kind (including opinions or other Tax analyses) that are provided to the Members
relating to such Tax treatment and Tax structure.

  If a Member or assignee commits a breach, or threatens to commit a breach, of any of the
provisions of this Section 7.12, the Corporation shall have the right and remedy to have the
provisions of this Section 7.12 specifically enforced by injunctive relief or otherwise by any

21

 

court of competent jurisdiction without the need to post any bond or other security, it being
acknowledged and agreed that any such breach or threatened breach shall cause irreparable injury to
the Corporation or any of its Subsidiaries or the other Members and the accounts and funds managed
by the Corporation and that money damages alone shall not provide an adequate remedy to such
Persons. Such rights and remedies shall be in addition to, and not in lieu of, any other rights
and remedies available at law or in equity.

     Section 7.13 LLC Agreement. This Agreement shall be treated as part of the partnership
agreement of PIM as described in Section 761(c) of the Code and Sections 1.704-1(b)(2)(ii)(h) and
1.761-1(c) of the Treasury Regulations.

     Section 7.14 Partnerships. The Corporation hereby agrees that, to the extent it acquires a
general partnership interest, managing member interest or similar interest in any Person after the
date hereof, it shall cause such Person to execute and deliver a joinder to this Agreement and such
Person shall be treated as a “partnership” for all purposes of this Agreement.

22

 

     IN WITNESS WHEREOF, the Corporation and each Member have duly executed this Agreement as of
the date first written above.

PZENA INVESTMENT MANAGEMENT, INC.

	 	 	 	 	 
	By:

	 	 	 	 
	 

	 	 	 	 
	 

	 	Richard S. Pzena

Chief Executive Officer	 	 
	 
	 	 	 	 
	PZENA INVESTMENT MANAGEMENT, LLC	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Richard S. Pzena

Chief Executive Officer	 	 

CLASS B STOCKHOLDERS:

	 	 	 
	 

Richard S. Pzena

	 	 
	 
	 	 
	 

John P. Goetz
	 	 
	 
	 	 
	 

Amelia C. Jones
	 	 

23

 

	 	 	 
	 

William L. Lipsey
	 	 
	 
	 	 
	 

A. Rama Krishna
	 	 
	 
	 	 
	 

Antonio DeSpirito
	 	 
	 
	 	 
	 

Michael D. Peterson
	 	 
	 
	 	 
	 

Keith Komar
	 	 
	 
	 	 
	 

Lawrence Kohn
	 	 
	 
	 	 
	 

Lisa Roth
	 	 

24

 

	 	 	 
	 

Evan Fire
	 	 
	 
	 	 
	 

Joan Berger
	 	 
	 
	 	 
	 

Benjamin Silver
	 	 
	 
	 	 
	 

Caroline Cai
	 	 
	 
	 	 
	 

Allison Fisch
	 	 
	 
	 	 
	 

Brian Mann
	 	 
	 
	 	 
	 

William C. Connolly
	 	 

25

 

	 	 	 
	 

Courtney Hehre
	 	 
	 
	 	 
	 

Wayne Palladino
	 	 
	 
	 	 
	 

Manoj Tandon
	 	 
	 
	 	 
	 

Spencer Chen
	 	 
	 
	 	 
	 

Gregory Martin
	 	 
	 
	 	 
	 

Topalli Murti
	 	 

26

 

	 	 	 	 	 
	THE RACHEL THERESA GOETZ TRUST	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Amelia C. Jones, Trustee	 	 
	 
	 	 	 	 
	THE CARRIE ESTHER GOETZ TRUST	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Amelia C. Jones, Trustee	 	 
	 
	 	 	 	 
	THE KRISHNA FAMILY TRUST	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Franklin David, Trustee	 	 
	 
	 	 	 	 
	THE ACJF TRUST	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Daniel Feinberg, Trustee	 	 

27

 

	 	 	 	 	 
	THE WILLIAM LIPSEY DYNASTY TRUST	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 
	 	 	 	 
	 
	 	Amy Lipsey, Trustee	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	James M. Krebs	 	 
	 
	 	 	 	 
	THE WILLIAM LIPSEY GRANTOR

RETAINED ANNUITY TRUST	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Amy Lipsey, Trustee	 	 
	 
	 	 	 	 
	RICHARD S. PZENA DESCENDANTS’ TRUST	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Jeff Pzena, Trustee	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	Laura Pzena, Trustee	 	 

28

 

	 	 	 	 	 
	THE MICHAEL D. PETERSON GRANTOR	 	 
	 
	 	 	 	 
	RETAINED ANNUITY TRUST	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Michael D. Peterson, Trustee of
the Michael D. Peterson Grantor
Retained Annuity Trust dated
May 4, 2007	 	 
	 
	 	 	 	 
	THE SARAH M. PETERSON GRANTOR	 	 
	 
	 	 	 	 
	RETAINED ANNUITY TRUST	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Sarah M. Peterson, Trustee of the
Sarah M. Peterson Grantor Retained
Annuity Trust dated May 4, 2007	 	 

29

 

	 	 	 	 	 
	CC GRANTOR RETAINED ANNUITY TRUST I	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Yabin Chen, Trustee	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Yi Sheng, Independent Trustee	 	 
	 
	 	 	 	 
	LJK TRUST I	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Philip D. Collins, Trustee	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Alisa C. Kohn, Trustee	 	 

30

 

	 	 	 	 	 
	LJK TRUST IV	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 
	 	 
	 

	 	Philip D. Collins, Trustee	 	 
	 
	 	 	 	 
	ADS III 2007 GRANTOR RETAINED	 	 
	 
	 	 	 	 
	ANNUITY TRUST	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 
	 	 
	 

	 	Carolyn DeSpirito, Trustee	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 
	 	 
	 

	 	Karen DeSpirito, Trustee	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 
	 	 
	 

	 	Gale Toegemann, Trustee	 	 

31

 

	 	 	 	 	 
	BSS GRANTOR RETAINED ANNUITY TRUST	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 
	 	 
	 

	 	Naomi B. Silver Trustee	 	 

32

 

EXHIBIT A

JOINDER

     This JOINDER (this “Joinder”) to the Tax Receivable Agreement, dated as of
                    , by and among Pzena Investment Management, Inc., a Delaware corporation (the
“Corporation”), Pzena Investment Management, L.L.C., a Delaware limited liability company (“PIM”)
and                      (“Permitted Transferee”).

     WHEREAS,
on
                    , Permitted Transferee acquired (the “Acquisition”) ___ Units
in PIM and the corresponding shares of Class B common stock of the Corporation (collectively,
“Interests” and, together with all other Interests hereinafter acquired by Permitted
Transferee from Transferor and its Permitted Transferees (as defined in the Tax Receivable
Agreement), the “Acquired Interests”) from                      (“Transferor”); and

     WHEREAS, Transferor, in connection with the Acquisition, has required Permitted Transferee to
execute and deliver this Joinder pursuant to Section 7.06 of the Tax Receivable Agreement.

     NOW, THEREFORE, in consideration of the foregoing and the agreements contained herein,
Permitted Transferee hereby agrees as follows:

     Section 1.1 Definitions. To the extent capitalized words used in this Joinder are not
defined in this Joinder, such words shall have the meaning set forth in the Tax Receivable
Agreement.

     Section 1.2 Joinder. Permitted Transferee hereby acknowledges and agrees to become a
“Member” (as defined in the Tax Receivable Agreement) for all purposes of the Tax Receivable
Agreement, including but not limited to, being bound by Sections 7.12, 2.04, 4.02, 6.01 and 6.02 of
the Tax Receivable Agreement, with respect to the Acquired Interests, and any other Interests
Permitted Transferee acquires hereafter.

     Section 1.3 Notice. All notices, requests, consents and other communications
hereunder to Permitted Transferee shall be deemed to be sufficient if contained in a written
instrument delivered in person or sent by facsimile (provided a copy is thereafter promptly
delivered as provided in this Section 1.3) or nationally recognized overnight courier, addressed to
Permitted Transferee at the address or facsimile number set forth below or such other address or
facsimile number as may hereafter be designated in writing by Permitted Transferee:

     Section 1.4 Governing Law. THIS JOINDER SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS
PRINCIPLES THEREOF.

33

 

     IN WITNESS WHEREOF, this Joinder has been duly executed and delivered by Permitted Transferee
as of the date first above written.

                                                            

Signature Page for Joinder by                     

to the Tax Receivable Agreement

34

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00130-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00130-of-00352.parquet"}]]