EX-10.12: INDEMNIFICATION AGREEMENT: PZENA

EXHIBIT 10.12

INDEMNIFICATION AGREEMENT

     This Indemnification Agreement (“Agreement”) is made as of October 24, 2007, by and between Pzena Investment Management, Inc., a Delaware corporation (along with any entities referred to in Section 2(c) below, the “Company”), and Richard S. Pzena (“Director”).

RECITALS

      WHEREAS , highly competent persons have become more reluctant to serve publicly-held corporations as directors or in other capacities unless they are provided with adequate protection through insurance or adequate indemnification against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of the corporation.

      WHEREAS , the Board of Directors of the Company (the “Board”) has determined that, in order to attract and retain qualified individuals as members of the Board, the Company will attempt to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving the Company and its subsidiaries from certain liabilities. Although the furnishing of such insurance has been a customary and widespread practice among United States based corporations and other business enterprises, such insurance may be available to it in the future only at higher premiums and with more exclusions. At the same time, directors are being increasingly subjected to expensive and time-consuming litigation relating to the business and affairs of corporations. The Company recognizes that the cost of defending and otherwise participating in such litigation is far greater than the financial benefits of serving as a Director. Article Seventh of the Certificate of Incorporation of the Company, as in effect on the date hereof, and the Delaware General Corporation Law (“DGCL”) expressly provide that the indemnification provisions set forth therein are not exclusive and contemplate that agreements may be entered into between the Company and members of the Board (or parties serving at the request of the Board) with respect to indemnification;

      WHEREAS , the uncertainties relating to insurance have increased the difficulty of attracting and retaining directors;

      WHEREAS , the Board has determined that the increased difficulty in attracting and retaining directors is detrimental to the best interests of the Company’s stockholders;

      WHEREAS , it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to pay expenses on behalf of, directors to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified;

      WHEREAS , this Agreement is in furtherance of the Amended and Restated Certificate of Incorporation of the Company, its Amended and Restated Bylaws and any resolutions adopted pursuant thereto, and the DGCL, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Director thereunder;

      WHEREAS , the Company has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Director to serve as a director or officer of the Company, and the Company acknowledges that Director is relying upon this Agreement in serving as a director or officer of the Company; and

      WHEREAS , Director is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on the condition that he be so indemnified;

      NOW, THEREFORE , in consideration of the promises and the covenants contained herein, the Company and Director do hereby covenant and agree as follows:

1. Services to the Company . Director will serve or continue to serve, at the will of the Company and its stockholders for so long as Director is duly elected or appointed or until Director tenders his or her resignation.

2. Definitions . As used in this Agreement:

     (a) “Beneficial Owner” shall have the meaning given to such term in Rule 13d-3 under the Securities Exchange Act of 1934.

     (b) A “Change in Control” shall be deemed to occur upon the earliest to occur after the date of this Agreement of any of the following events:

          (i) Acquisition of Stock by Third Party . Any Person, other than a Principal or a Related Party of a Principal (as each such term is defined below), is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing fifteen percent (15%) or more of the combined voting power of the Company’s then outstanding securities;

          (ii) Change in Board of Directors . During any period of two (2) consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board (together with any new directors whose election to the Board or whose nomination for election by the stockholders of the Company was approved by a vote of a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute at least a majority of the members of the Board;

          (iii) Corporate Transactions . The effective date of a merger or consolidation of the Company with any other entity, unless such merger or consolidation would result in 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, including the parent corporation of such surviving entity) at least 50% of the total voting power of the voting securities of the surviving entity outstanding immediately after such merger or consolidation and with the power to elect at least a majority of the board of directors or other governing body of such surviving entity;

          (iv) Liquidation . The approval by the stockholders of the Company of a complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; and

          (v) Other Events . There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any similar item on any similar schedule or form) promulgated under the Exchange Act (as defined below), whether or not the Company is then subject to such reporting requirement.

     (c) “Company” shall include, in addition to Pzena Investment Management, Inc., any corporation, partnership, joint venture, limited liability company, trust or other enterprise of which such Director is or was serving as a director, officer, employee or agent of at the request of the Company, or any corporation which results from or survives a consolidation or merger with Pzena Investment Management, Inc., as well as any corporation resulting from a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees or agents, so that if Director is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, limited liability company , trust or other enterprise, Director shall stand in the same position under the provisions of this Agreement with respect to the resulting or surviving corporation as Director would have with respect to such constituent corporation if its separate existence had continued.

     (d) “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding as defined herein in respect of which indemnification is sought by Director.

     (e) “Enterprise” shall mean the Company and any other corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise of which Director is or was serving at the request of the Company as a director, officer, employee, agent or fiduciary.

     (f) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

     (g) “Expenses” shall include all reasonable attorneys’ and accountants’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise being involved with, a Proceeding as defined in this Agreement. Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding, including without limitation the premium, security for, and other costs relating to any cost bond, supersedeas bond, or other appeal

bond or its equivalent. Expenses, however, shall not include amounts paid in settlement by Director or the amount of judgments or fines against Director.

     (h) “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent: (i) the Company or Director in any matter material to either such party or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Director in an action to determine Director’s rights under this Agreement.

     (i) “Person” shall have the meaning as set forth in Sections 13(d) and 14(d) of the Exchange Act; provided, however, that Person shall exclude (i) the Company or a person or entity that directly or indirectly controls, is controlled by, or is under common control with, the Company, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company, and (iii) any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

     (j) “Principal” means Richard S. Pzena, John P. Goetz, William L. Lipsey, A. Rama Krishna and Joel Greenblatt.

     (k) The term “Proceeding” shall include any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation (including but not limited to any internal corporate investigation), inquiry, administrative hearing or any other actual, threatened or completed proceeding, including any and all appeals, whether brought in the right of the Company or otherwise and whether of a civil, criminal, administrative or investigative nature, in which Director was, is, or will be a party to, a witness in or otherwise participates in by reason of the fact that Director is or was a director or officer of the Company, by reason of any action taken by him or of any action on his part while acting as director or officer of the Company, or by reason of the fact that he is or was serving at the request of the Company as a director, officer, employee or agent of another Enterprise, in each case whether or not serving in such capacity at the time any liability or expense is incurred for which indemnification, reimbursement, or payment of expenses can be provided under this Agreement; except one initiated by a Director to enforce his rights under this Agreement. Any Director serving, in any capacity, (i) another corporation of which a majority of the shares entitled to vote in the election of its directors is held by the Company, or (ii) any employee benefit plan of the Company or of any corporation referred to in clause (i), shall be deemed to be doing so at the request of the Company.

     (l) “Related Party” means: (1) in the case of an individual, any immediate family member of any Principal; or (2) any trust, corporation, partnership, limited liability company or other entity, the beneficiaries, stockholders, partners, members, owners or Persons beneficially holding an 80% or more controlling interest of which

consist of any one or more Principals and/or such other Persons referred to in the immediately preceding clause (1).

     (m) References to “fines” shall include, but are not limited to, any excise tax assessed with respect to any employee benefit plan; references to “serving at the request of the Company” shall include any service as a director, officer, employee or agent of the Company which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Company” as referred to in this Agreement.

3. Indemnity in Third-Party Proceedings . A Third-Party Proceeding is a Proceeding other than a Proceeding by or in the right of the Company to procure a judgment in its favor. The Company shall indemnify Director in accordance with the provisions of this Section 3 if Director is, or is threatened to be made, a party to, a witness in or otherwise participates in any Third-Party Proceeding. Pursuant to this Section 3, Director shall be indemnified against all Expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by Director or on his behalf in connection with such Third-Party Proceeding or any claim, issue or matter therein, if Director acted in good faith and in a manner Director reasonably believed to be in or not opposed to the best interests of the Company and, in the case of a criminal proceeding had no reasonable cause to believe that such conduct was unlawful.

4. Indemnity in Proceedings by or in the Right of the Company . The Company shall indemnify Director in accordance with the provisions of this Section 4 if Director is, or is threatened to be made, a party to, a witness in or otherwise participates in any Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 4, Director shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection with such Proceeding or any claim, issue or matter therein and to the extent permitted by law, amounts paid in settlement, if Director acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company. No indemnification for Expenses shall be made under this Section 4 in respect of any claim, issue or matter as to which Director shall have been finally adjudged by a court to be liable to the Company, unless and only to the extent that the Delaware Court of Chancery or any court in which the Proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Director is fairly and reasonably entitled to indemnification.

5. Indemnification for Expenses of a Party Who is Wholly or Partly Successful .

     (a) In any Proceeding referred to in Section 4, if Director is not wholly successful in such Proceeding, but has been adjudged to be liable to the Company as to one or more but less than all claims, issues or matters in such Proceeding, no indemnification shall be made in respect of any claim, issue or matter as to which

Director shall have been adjudged to be liable to the Company, unless and only to the extent that the Delaware Court of Chancery or any court in which the Proceeding was brought shall determine upon application that, despite the adjudication of liability to the Company, in view of all the circumstances of the case, Director is fairly and reasonably entitled to such indemnification. However, in any Proceeding referred to in Section 4, the Company shall indemnify Director against all Expenses actually and reasonably incurred by him or on his behalf and, to the extent permitted by law, amounts paid in settlement, in connection with each claim, issue or matter as to which Director is successful on the merits or has reached a settlement.

     (b) To the extent that Director has been successful on the merits or otherwise in defense of any Proceeding (including any Proceeding referred to in Section 4), or in defense of any claim, issue or matter therein, Director shall be indemnified and held harmless by the Company to the fullest extent authorized by the DGCL, as the same exists or may hereafter be amended, against all Expenses actually and reasonably incurred or suffered by Director or on Director’s behalf in connection therewith. Indemnification pursuant to this Section 5(b) shall not require a determination pursuant to Section 10 of this Agreement.

     (c) For purposes of this Section 5 and without limitation, the termination of any claim, issue or matter in a Proceeding in which Director is a defendant by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

6. Additional Indemnification .

     (a) Notwithstanding any limitation in Sections 3, 4, or 5, the Company shall indemnify Director to the extent permitted by law if Director is a party to or threatened to be made a party to, a witness in or otherwise participates in any Proceeding against all Expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by Director in connection with the Proceeding (1) unless Director’s conduct constitutes a breach of Director’s duty of loyalty to the Company or its stockholders , (2) except for liability for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (3) except for liability under Section 174 of the DGCL, or (4) except for liability relating to any transaction from which the Director derived an improper benefit.

     (b) For purposes of Section 6(a), the meaning