SUB-ADMINISTRATION AND SUB-TRANSFER AGENCY AND SHAREHOLDER SERVICES AGREEMENT
Exhibit h(viii)
SUB-ADMINISTRATION AND
SUB-TRANSFER AGENCY AND SHAREHOLDER SERVICES AGREEMENT
SUB-TRANSFER AGENCY AND SHAREHOLDER SERVICES AGREEMENT
AGREEMENT dated as of January 1, 2008 between Diamond Hill Capital Management, Inc. (the
“Administrator”), an Ohio corporation, and JPMorgan Chase Bank, N.A. (“JPMorgan”), a Delaware
corporation.
WHEREAS, Diamond Hill Funds (the “Trust”) is a management investment company registered under
the Investment Company Act of 1940, as amended (the “1940 Act”); and
The Administrator hereby appoints JPMorgan as agent to perform those services described in
this Agreement for the Funds. JPMorgan shall act under such appointment and perform the
obligations thereof in accordance with the Trust’s current Registration Statement and as required
by applicable federal laws and regulations upon the terms and conditions hereinafter set forth.
The appointment shall begin at a time mutually agreed upon by the parties.
The Administrator will furnish from time to time the following documents:
A. Each resolution of the Board of Trustees of the Trust authorizing the original issue of the
shares of the Funds;
B. Each Registration Statement filed with the Securities and Exchange Commission (the “SEC”)
and amendments thereof;
C. A certified copy of the Agreement and Declaration of Trust and the Bylaws of the Trust and
each amendment thereto;
D. Certified copies of each resolution of the Board of Trustees authorizing officers to give
instructions to the Administrator or JPMorgan;
E. Copies of all agreements with service providers on behalf of the Funds, including advisory
agreements, sub-advisory agreements, underwriting and dealer agreements and custody agreements in
effect;
F. Copies of all policies and procedures adopted by the Board of Trustees, including the
Trust’s Compliance Program adopted pursuant to Rule 38a-1 under the 1940 Act (the “Compliance
Program”);
G. Copies of any or all deficiency letters or other correspondence resulting from
examinations, audits or reviews conducted by the SEC, the Financial Industry Regulatory Authority
(“FINRA”) or any other administrative or regulatory body, whether governmental or private;
H. A listing of all jurisdictions in which each Fund (and class thereof) is lawfully available
for sale as of the date of this Agreement and in which the Trust desires JPMorgan to effect a blue
sky filing;
I. All Notices of and Proxy materials related to any Annual or Special Meetings of
Shareholders of the Trust, including any that proposed the merger, reorganization or liquidation of
a Fund;
J. Copies of all documents relating to special investment or withdrawal plans which are
offered or may be offered in the future by the Funds and for which JPMorgan is to act as plan
agent;
K. Such other certificates, documents or opinions that JPMorgan may, in its discretion, deem
necessary or appropriate in the proper performance of its duties; and
L. A copy of the Trust’s written Anti-Money Laundering Program (the “AML Program”), including
any related Policies and Procedures.
M. The Administrator shall furnish JPMorgan with written copies of any amendments to, or
changes in, any of the items referred to in this Paragraph 2 forthwith upon such amendments or
changes becoming effective. In addition, the Trust agrees that no amendments or changes will be
made to the Trust’s Prospectuses or Statement of Additional Information, the AML Program or the
Compliance Program, which might have the effect of changing the procedures employed by JPMorgan in
providing the services agreed to hereunder or which amendment might affect the duties of JPMorgan
hereunder unless the Trust first obtains JPMorgan’s approval of such amendments or changes, which
approval shall not be withheld unreasonably.
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Subject to the ultimate direction and control of the Board of Trustees of the Trust, JPMorgan
shall perform the sub-administration services to the Trust detailed in Schedule A. JPMorgan shall
perform such other administrative and services for the Trust and each of the Funds that are
mutually agreed upon by the parties from time to time, for which the Administrator will pay
JPMorgan the amounts agreed upon between them.
Subject to the ultimate direction and control of the Board of Trustees of the Trust, JPMorgan
shall perform the transfer agency and shareholder services to the Trust detailed in Schedule B.
JPMorgan shall perform for the Trust and each of the Funds such other services that are mutually
agreed upon by the parties from time to time, for which the Administrator will pay JPMorgan the
amounts agreed upon between them.
JPMorgan is hereby granted such power and authority as may be necessary to establish one or
more bank accounts for the Trust with such bank or banks as are acceptable to the Trust, as may be
necessary or appropriate from time to time in connection with the transfer agency services to be
performed hereunder. The Trust shall be deemed to be the customer of such Bank or Banks for
purposes of such accounts. To the extent that the performance of such services hereunder shall
require JPMorgan to disburse amounts from such accounts in payment of dividends, redemption
proceeds or for other purposes hereunder, the Trust shall provide such bank or banks with all
instructions and authorizations necessary for JPMorgan to effect such disbursements.
Prior to the commencement of JPMorgan’s responsibilities under this Agreement, if applicable,
the Administrator shall deliver or cause to be delivered over to JPMorgan (i) an accurate,
certified list of shareholders of each Fund, showing each shareholder’s address of record, number
of shares owned and whether such shares are represented by outstanding share certificates and (ii)
all shareholder records, files, and other materials necessary or appropriate for proper performance
of the functions assumed by JPMorgan under this Agreement including, without limitation, special
instructions regarding withholding, dividend options and householding (collectively referred to as
the “Materials”). The Administrator shall, on behalf of each applicable Fund or class, indemnify
and hold JPMorgan, its directors, officers, employees, shareholders, agents, control persons and
affiliates of any thereof, harmless from and against any and all losses, damages, claims, suits,
actions, demands, costs, charges, fees, payments, expenses and liabilities (whether with or
without basis in fact or law), including legal fees and expenses and investigation expenses, of any
and every nature, arising out of or attributable to
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any error, omission, inaccuracy or other deficiency of the Materials, or out of the failure of the
Administrator to provide any portion of the Materials or to provide any information in the
Administrator’s possession or control reasonably needed by JPMorgan to perform the services
described in this Agreement.
A. The Administrator acknowledges that the Trust is a financial institution subject to the law
entitled United and Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (“USA PATRIOT”) Act of 2001 and the Bank Secrecy Act (collectively, the “AML
Acts”) and shall comply with the AML Acts and applicable regulations adopted thereunder
(collectively, the “Applicable AML Laws”) in all relevant respects, subject to the delegation of
certain responsibilities to JPMorgan as provided in the next sub-paragraph below.
B. The Administrator and the Trust hereby delegate to JPMorgan the performance, on behalf of
the Trust, of the anti-money laundering services set forth in the Anti-Money Laundering Program
Service Addendum (the “AML Services”) with respect to the shareholder accounts maintained by
JPMorgan pursuant to this Agreement. JPMorgan agrees to the foregoing delegation and agrees to
perform such services in accordance with the Trust’s AML Program. In connection therewith,
JPMorgan agrees to maintain policies and procedures, and related internal controls, that are
consistent with the Trust’s AML Program and the requirement that the Trust employ procedures
reasonably designed to achieve compliance with the Applicable AML Laws, including the requirement
to have policies and procedures that can be reasonably expected to detect and cause the reporting
of transactions under Section 5318 of the Bank Secrecy Act. JPMorgan’s obligations under this
delegation shall be subject to Paragraphs 2.L. and 2.M., which require that the AML Program and any
material amendments thereto be submitted to JPMorgan for its review and consent.
C. The Trust agrees and acknowledges that, notwithstanding the delegation provided for in the
foregoing paragraph, the Trust maintains full responsibility for ensuring that its AML Program is,
and shall continue to be, reasonably designed to ensure compliance with the Applicable AML Laws, in
light of the Trust’s particular business, taking into account factors such as its size, location,
activities and risks or vulnerabilities to money laundering.
D. In connection with the foregoing delegation, the Trust also acknowledges that the
performance of the AML Services involves the exercise of discretion which in some circumstances may
result in consequences to the Trust and its shareholders (such as in the case of the reporting of
suspicious activities and the freezing of shareholder accounts). In this regard, (i) under
circumstances in which the AML Program authorizes the taking of certain actions, JPMorgan is
granted the discretion to take any such action as may be authorized under the AML Program, and
consultation with the Trust shall not be required in connection therewith unless specifically
required under the AML Program, and (ii) the Trust instructs JPMorgan that it may avail the Trust
of any safe harbor from civil liability that may be available under Applicable AML Laws for making
a disclosure or filing a report thereunder.
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E. As concerns Networking Level III accounts and omnibus accounts, the AML Services performed
by JPMorgan are subject to a more limited scope, as contemplated under the release concerning the
interim final rule of the Department of the Treasury, 31 CFR 103, effective April 24, 2002 (the
“Interim Final Rule”) and the performance by the Trust of the risk-based evaluation of entities
holding such accounts, as contemplated under the release pertaining to the Interim Final Rule. The
foregoing reference to the Interim Final Rule shall be deemed to include laws and regulations
adopted subsequent to the Interim Final Rule, if and to the extent consistent therewith.
BLUE SKY
7. Subject to the ultimate direction and control of the Board of Trustees of the Trust,
JPMorgan shall qualify each Fund for sale in various states (“blue sky” filings) as instructed by
the Trust. With few exceptions, every offer or sale of a security must, before it is offered or
sold in a state, be registered or exempt from registration under the securities (blue sky) laws of
the state or states in which the security is offered or sold. In the event that a Fund is not
registered in all fifty states, JPMorgan shall qualify that Fund for sale in a particular promptly
upon notice. The Trust agrees to indemnify and hold harmless JPMorgan for any and all damages and
costs associated with the Trust’s offer or sale of a Fund in a state for which the Fund is not
qualified for offer or sale, unless the Fund was not so qualified due to JPMorgan’s failure to act
promptly following notice from the Trust.
8. The Administrator, on behalf of the Trust, hereby grants JPMorgan, and JPMorgan hereby
accepts, a limited power of attorney on behalf of the Trust and each of the Funds to execute all
blue sky filings and other related documents necessary to effect such blue sky services. JPMorgan
will remit to the respective jurisdictions the requisite blue sky filing fees for the shares of the
relevant Fund(s) (or classes thereof); provided however, that the Trust timely provides JPMorgan in
advance of such filings with (i) the requisite number of copies of each document (i.e., definitive
prospectuses) requested by JPMorgan (to the extent such documents are required to effect the
relevant filing) and (ii) filing fees. The Trust will, from time to time as specifically agreed
between the parties, facilitate a wire transfer of funds to JPMorgan for the payment of the
aforementioned filing fees promptly upon request by JPMorgan. JPMorgan will request the funds
necessary for the payment of the filing fees in advance of the date the fees become due.
A. JPMorgan shall keep and maintain on behalf of the Trust all books and records which the
Trust is, or may be, required to keep and maintain by applicable laws, rules and regulations,
including but not limited to records required by Section 31(a) of the 1940 Act and the rules
thereunder, as the same may be amended from time to time, pertaining to the various functions
performed by JPMorgan and not otherwise created and maintained by another party pursuant to
contract with the Trust. Where applicable, such records shall be maintained by JPMorgan for the
periods and in the places required by Rules 31a-1 and 31a-2 under the 1940
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Act. The retention of such records and other data created and maintained pursuant to this
Agreement shall be at the expense of the Trust. All such records shall be the property of the
Trust at all times and shall be available during regular business hours for reasonable audit and
inspection by the Trust or its agents, or any regulatory agency having authority over the Trust.
B. JPMorgan may at its option at any time, and shall promptly upon the Trust’s demand, turn
over to the Trust and cease to retain the Trust’s files, records and documents created and
maintained by JPMorgan pursuant to this Agreement which are no longer needed by JPMorgan in the
performance of its services or for its legal protection. If not so turned over to the Trust, such
documents and records will be retained by JPMorgan for six years from the year of creation.
The Administrator acknowledges that the data bases, computer programs, screen formats, report
formats, interactive design techniques, and documentation manuals furnished to the Administrator by
JPMorgan as part of the Administrator’s ability to access certain Trust-related data (“Customer
Data”) maintained by JPMorgan on data bases under the control and ownership of JPMorgan or another
third party (“Data Access Services”) constitute copyrighted, trade secret, or other proprietary
information (collectively, “Proprietary Information”) of substantial value to JPMorgan or other
third party. In no event shall Proprietary Information be deemed Customer Data. The Administrator
agrees to treat all Proprietary Information as proprietary to JPMorgan and further agrees that it
shall not divulge any Proprietary Information to any person or organization except as may be
provided hereunder.
JPMorgan shall cooperate with the Trust’s independent public accountants and shall take all
reasonable action in the performance of its obligations under this Agreement to assure that the
necessary information is made available to such accountants for the expression of their unqualified
opinion where required for any document for the Trust.
A. JPMorgan may provide special services and reports with respect to the Trust, subject to an
additional charge as detailed in Schedule C, or such other services and reports as may be
reasonably requested by the Administrator or the Trust’s investment adviser, which may result in an
additional charge, the amount of which shall be agreed upon between the parties. JPMorgan will
make available to the Administrator other services, at its option, such as the i-online services
set forth in the Addendums attached hereto.
B. JPMorgan may provide exception processing upon the request of the Administrator or the
Trust’s investment adviser, which may result in an additional charge, the amount of which shall be
agreed upon between the parties. Exception processing includes, but is not limited to, processing
which:
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(i) requires JPMorgan to use methods and procedures other than those
usually employed by JPMorgan to perform its obligations under this Agreement;
(ii) involves the provision of information to JPMorgan after the commencement of the nightly
processing cycle of JPMorgan’s transfer agency, administration and/or fund accounting processing
system; or
(iii) requires more manual intervention by JPMorgan, either in the entry of data or in the
modification or amendment of reports generated by JPMorgan’s transfer agency, administration and/or
fund accounting processing system than is usually required.
C. Instructions / Certain Procedures, etc.
JPMorgan shall be protected in acting upon any document that it reasonable believes to be
genuine and to have been signed or presented by the proper person or persons. JPMorgan will not be
held to have notice of any change of authority of any officers, employees or agents of the Trust
until receipt of actual notice thereof from the Trust.
Whenever JPMorgan is requested or authorized to take action hereunder pursuant to instructions
from a shareholder, or a properly authorized agent of a shareholder (“shareholder’s agent”),
concerning an account in a Fund, JPMorgan shall be entitled to rely upon any certificate, letter or
other instrument or communication (including electronic mail), reasonably believed by JPMorgan to
be genuine and to have been properly made, signed or authorized by an officer or other authorized
agent of the Trust or by the shareholder or shareholder’s agent, as the case may be, and shall be
entitled to receive as conclusive proof of any fact or matter required to be ascertained by it
hereunder a certificate signed by an officer of the Trust or any other person authorized by the
Board or by the shareholder or shareholder’s agent, as the case may be.
As to the services to be provided hereunder, JPMorgan may rely conclusively upon the terms of
the relevant Prospectus and Statement of Additional Information, and Rule 38a-1 Compliance Program
of the Trust relating to the extent that such services are described therein unless JPMorgan
receives written instructions to the contrary in a timely manner from the Trust.
The parties hereto may amend any procedures adopted, approved or set forth herein by written
agreement as may be appropriate or practical under the circumstances, and JPMorgan may conclusively
assume that any special procedure which has been approved by an executive officer of the Trust
(other than an officer or employee of JPMorgan) does not conflict with or violate any requirements
of the Trust’s Declaration of Trust, By-Laws or then-current prospectuses, or any rule, regulation
or requirement of any regulatory body.
The Administrator acknowledges and agrees that deviations from JPMorgan’s written transfer
agent operational and compliance procedures may involve a substantial risk of loss. In the event
an authorized representative of the Administrator or the Trust requests that an exception be made
from any written compliance, transfer agency, administration, fund
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accounting or any other procedures adopted by JPMorgan, or any requirements of the AML
Program or Compliance Program, JPMorgan may in its sole discretion determine whether to permit
such exception. In the event JPMorgan determines to permit such exception, the same shall become
effective when set forth in a written instrument executed by an authorized representative of the
Trust (other than an employee of JPMorgan) and delivered to JPMorgan (an “Exception”); provided
that an Exception concerning the requirements of the Trust’s AML Program shall be authorized by the
Trust’s AML Compliance Officer. An Exception shall be deemed to remain effective until the
relevant instrument expires according to its terms (or if no expiration date is stated, until
JPMorgan receives written notice from the Trust that such instrument has been terminated and the
Exception is no longer in effect). Notwithstanding any provision in this Agreement that expressly
or by implication provides to the contrary, as long as JPMorgan acts in good faith, JPMorgan shall
have no liability for any loss, liability, expenses or damages to the Trust resulting from the
Exception, and the Administrator shall indemnify JPMorgan and hold JPMorgan harmless from any loss,
liability, expenses (including reasonable attorneys fees) and damages resulting to JPMorgan there
from.
JPMorgan may, at its expense, subcontract with any entity or person concerning the provision
of the services contemplated hereunder; provided, however, that JPMorgan shall not be relieved of
any of its obligations under this Agreement by the appointment of such subcontractor and provided
further, that JPMorgan shall be responsible for all acts of such subcontractor as if such acts were
its own.
For performing its services under this Agreement, the Administrator shall pay JPMorgan a
monthly fee with respect to each Fund in accordance with Schedule D attached hereto.
A. JPMorgan shall furnish, at its expense and without cost to the Administrator, the services
of JPMorgan personnel to the extent that such services are required to carry out its obligations
under this Agreement. All costs and expenses not expressly assumed by JPMorgan under this
Paragraph shall be paid by the Administrator. A list of typical Trust expenses is set forth in
Schedule E; this list is not all inclusive.
B. The Administrator authorizes JPMorgan to receive payment of fees due to JPMorgan or to be
reimbursed for Fund expenses JPMorgan pays on behalf of the Fund directly from the Fund. JPMorgan
will provide the Administrator with documentation detailing such fees or expenses within a
reasonable time corresponding to the payment of the fees or expenses. Administrator approval shall
not, however, be required in advance of such payments. In the event of a dispute arising from the
payment of fees or expenses and upon mutual agreement by the Administrator and JPMorgan as to the
appropriate resolution of the dispute, the Administrator and/or JPMorgan shall make the necessary
reimbursements to the Fund.
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A. Neither the Administrator, the Trust or their agents shall circulate any printed matter
that contains any reference to JPMorgan without the prior written approval of JPMorgan, excepting
solely such printed matter as merely identifies JPMorgan as Sub-Administrative Services Agent and
Sub-Transfer, Shareholder Servicing and Dividend Disbursing Agent. The Administrator will submit
printed matter requiring approval to JPMorgan in draft form, allowing sufficient time for review by
JPMorgan and its counsel prior to any deadline for printing.
B. JPMorgan shall not circulate any printed matter that contains any reference to the
Administrator or the Trust without the prior written approval of the Administrator or the Trust,
excepting solely such printed matter as merely identifies the Administrator as a client of
JPMorgan. JPMorgan will submit printed matter requiring approval to the Administrator in draft
form, allowing sufficient time for review by the Administrator and its counsel prior to any
deadline for printing.
A. JPMorgan shall not be liable for any error of judgment or mistake of law or for any loss or
expense suffered by the Administrator or third parties, in connection with the matters to which
this Agreement relates, except for a loss or expense solely caused by or resulting from JPMorgan’s
gross negligence or willful misconduct.
B. JPMorgan shall not be responsible for, and the Administrator shall indemnify and hold
JPMorgan and its directors, officers, agents and employees (collectively the “Indemnitees”)
harmless from and against any and all claims, liabilities, losses, damages, fines, penalties and
expenses, including out-of-pocket and incidental expenses and legal fees (“Losses”) that may be
imposed on, incurred by, or asserted against, the Indemnitees or any of them in the performance of
its/their duties hereunder, including but not limited to those arising out of or attributable to:
(i) any and all actions of the Indemnitees required to be taken pursuant to this Agreement;
(ii) the reliance on or use by the Indemnitees of information, records, or documents which are
received by the Indemnitees and furnished to it or them by or on behalf of the Administrator, and
which have been prepared or maintained by the Administrator or any third party on behalf of the
Administrator;
(iii) the Administrator’s refusal or failure to comply with the terms of this Agreement or the
Administrator’s lack of good faith, or its actions, or lack thereof, involving negligence or
willful misfeasance;
(iv) the breach of any representation or warranty of the Administrator hereunder;
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(v) following any instructions or other directions reasonably believed to be requests of the
Administrator or otherwise duly authorized, and upon which JPMorgan is authorized to rely pursuant
to the terms of this Agreement;
(vi) any delays, inaccuracies, errors in or omissions from information or data provided to
JPMorgan by the Administrator, the Trust’s investment advisers and/or sub-advisers, and providers
of other services such as data services, corporate action services, pricing services or securities
brokerage;
(vii) the offer or sale of shares by the Trust in violation of any requirement under the
Federal securities laws or regulations or the securities laws or regulations of any state, or in
violation of any stop order or other determination or ruling by any Federal agency or any state
agency with respect to the offer or sale of such shares in such state (1) resulting from
activities, actions, or omissions by the Trust or its other service providers and agents, or (2)
existing or arising out of activities, actions or omissions by or on behalf of the Trust prior to
the effective date of this Agreement;
(viii) any failure of the Trust’s registration statement to comply with the Securities Act of
1933, as amended, (the “1933 Act”) and the 1940 Act (including the rules and regulations
thereunder) and any other applicable laws, or any untrue statement of a material fact or omission
of a material fact necessary to make any statement therein not misleading in a Trust’s prospectus;
(ix) the actions taken by the Trust, its investment adviser and/or sub-advisers, and its
distributor in compliance with applicable securities, tax, commodities and other laws, rules and
regulations, or the failure to so comply; and
(x) all actions, inactions, omissions, or errors caused by third parties to whom the
Administrator or the Indemnitees have assigned any rights and/or delegated any duties under this
Agreement at the request of or as required by the Administrator, the Trust, its investment
advisers, distributor, administrator or sponsor.
C. In addition to and not in limitation of paragraph B immediately above, the Administrator
also agrees to indemnify and hold the Indemnitees and each of them harmless from and against any
and all Losses that may be imposed on, incurred by, or asserted against, the Indemnitees or any of
them in connection with or arising out of JPMorgan’s performance under this Agreement, provided the
Indemnitees have not acted with negligence or engaged in willful misconduct.
D. In performing its services hereunder, JPMorgan shall be entitled to rely on any oral or
written instructions, notices or other communications, including electronic transmissions, from the
Administrator, the Trust and its custodians, officers and directors, investment advisers and
sub-advisers, investors, agents and other service providers which JPMorgan reasonably believes to
be genuine, valid and authorized. JPMorgan shall also be entitled to consult with and rely on the
advice and opinions of outside legal counsel and public accountants retained by the Administrator
or
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the Trust, as necessary or appropriate.
E. Anything in this Agreement to the contrary notwithstanding, in no event shall JPMorgan be
liable for any indirect, incidental, special or consequential losses or damages of any kind
whatsoever (including but not limited to lost profits), even if JPMorgan has been advised of the
likelihood of such loss or damage and regardless of the form of action in which any such loss or
damage may be claimed. This provision shall survive the termination of this Agreement.
A. The provisions of this Agreement shall be effective on the date first above written, shall
remain in full force and effect for one year (“Initial Term”) from that date and shall continue in
force for each one year period thereafter (“Renewal Term”), but only so long as such continuance is
approved by JPMorgan and the Administrator.
B. Either party may terminate this Agreement at the end of the Initial Term or at the end of
any subsequent Renewal Term by giving the other party at least ninety (90) days’ prior written
notice of such termination specifying the date fixed therefore. In the event this Agreement is
terminated by the Administrator prior to the end of the Initial Term or any subsequent Renewal
Term, the Administrator shall make a one-time cash payment to JPMorgan in consideration of services
provided under this Agreement, and not as a penalty, equal to the remaining balance of the fees
payable to JPMorgan under this Agreement through the end of the Initial Term or Renewal Term, as
applicable. In the event this Agreement is terminated by the JPMorgan prior to the end of the
Initial Term or any subsequent Renewal Term, the Administrator shall not be obligated to pay to
JPMorgan the remaining balance of the fees payable to JPMorgan under this Agreement through the end
of the Initial Term or Renewal Term, as applicable. The Administrator shall reimburse JPMorgan for
any out-of-pocket expenses and disbursements (“out-of-pocket expenses”) reasonably incurred by
JPMorgan in connection with the services provided under this Agreement within 30 days of
notification to the Administrator of such out-of-pocket expenses regardless of whether such
out-of-pocket expenses were incurred before or after the termination of this Agreement.
Notwithstanding the foregoing, following any such termination, in the event that JPMorgan in
fact continues to perform any one or more of the services contemplated by this Agreement with the
consent of the Administrator, the provisions of this Agreement, including without limitation the
provisions dealing with compensation and indemnification, shall continue in full force and effect.
Such continuation of performance by JPMorgan shall not constitute a waiver of any of rights or
remedies offered JPMorgan under this Agreement or otherwise. Fees and out-of-pocket expenses
incurred by JPMorgan but unpaid by the Administrator upon such termination shall be immediately due
and payable upon and notwithstanding such termination.
C. If a party materially fails to perform its duties and obligations hereunder (a “Defaulting
Party”) resulting in a material loss to another party, such other party (the “Non-Defaulting
Party”) may give written notice thereof to the Defaulting Party, which such notice shall set forth
with sufficient detail the nature of the breach. The Defaulting Party shall have ninety (90) days
from its receipt of notice to cure the breach. If such material breach shall not
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have been remedied to commercially reasonable operating standards, the Non-Defaulting Party
may terminate this Agreement by giving sixty (60) days written notice of such termination to the
Defaulting Party. If JPMorgan is the Non-Defaulting Party, its termination of this Agreement shall
not constitute a waiver of any rights or remedies with respect to services it performed prior to
such termination, or the right of JPMorgan to receive such compensation as may be due as of the
date of termination or to be reimbursed for all reasonable out-of-pocket expenses. In all cases,
termination by the Non-Defaulting Party shall not constitute a waiver by the Non-Defaulting Party
of any other rights it might have under this Agreement or otherwise against a Defaulting Party.
D. Unless this Agreement has been terminated in accordance with this Section, the terms and
provisions of this Agreement shall become automatically applicable to any entity that is a
successor to the Administrator or any Administrator as a result of reorganization, recapitalization
or change of domicile.
E. JPMorgan will be entitled to collect from the Administrator all reasonable expenses
incurred in conjunction with termination of this Agreement, including but not limited to
out-of-pocket expenses, employee time, system fees and fees charged by third parties with whom
JPMorgan has contracted.
Nothing in this Agreement shall prevent JPMorgan or any affiliated person (as defined in the
0000 Xxx) of JPMorgan from providing services for any other person, firm or corporation (including
other investment companies); provided, however, that JPMorgan expressly represents that it will
undertake no activities that, in its judgment, will adversely affect the performance of its
obligations to the Administrator under this Agreement.
A. The parties hereto acknowledge and agree that nothing contained herein shall be construed
to require JPMorgan to perform any services for the Administrator that could cause JPMorgan to be
deemed an “investment adviser” of the Trust within the meaning of Section 2(a)(20) of the 1940 Act
or to supersede or contravene the Trust’s prospectus or statement of additional information or any
provisions of the 1940 Act and the rules thereunder. Except as otherwise provided in this
Agreement and except for the accuracy of information furnished to it by JPMorgan, the Administrator
and the Trust assumes full responsibility for complying with all applicable requirements of the
1940 Act, the 1933 Act, and any other laws, rules and regulations of governmental authorities
having jurisdiction.
B. Regulatory Requirements and Changes. JPMorgan will use commercially reasonable efforts to
develop and implement changes to the recordkeeping systems it uses so that the data processing
services provided under this Agreement continue to comply with applicable regulations and rules of
regulatory authorities. With respect to each change in the recordkeeping systems necessitated by
regulatory matters, excluding routine, annual regulatory maintenance
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changes applying to existing regulatory matters (e.g., including, but not limited to, tax position forms or magnetic tape/filing
changes), the Administrator will pay its proportionate share of
JPMorgan’s direct vendor costs based upon the ratio of the number of the Trust’s shareholder
accounts then serviced by JPMorgan, to the total number of shareholder accounts then serviced by
JPMorgan for all of its clients affected by the change. “Each change” as stated previously, is
defined as those modification(s) necessary to comply with regulatory requirements or changes (for
example, all modifications required to support SEC Redemption Fee Rule 22c-1, or changes to IRS
1099-B Reporting, Anti-Money Laundering, NSCC Processing/Interface changes, etc.).
21. | LIMITATION OF LIABILITY OF ADMINISTRATOR, STANDARD OF CARE, TRUST’S REPRESENTATIONS AND WARRANTIES. |
A. It is expressly agreed that the obligations of the Administrator hereunder shall not be
binding upon any of the Trustees, shareholders, nominees, officers, agents or employees of the
Administrator, personally, but bind only the corporate assets of the Administrator.
JPMorgan shall maintain adequate and reliable computer and other equipment necessary or
appropriate to carry out its obligations under this Agreement. In the event of equipment failures
beyond JPMorgan’s reasonable control, JPMorgan shall take all steps necessary to minimize service
interruptions but shall have no liability with respect thereto. JPMorgan shall endeavor to enter
into one or more agreements making provision for emergency use of electronic data processing
equipment to the extent appropriate equipment is available. Upon the Administrator’s reasonable
request, JPMorgan shall provide supplemental information concerning the aspects of its disaster
recovery and business continuity plan that are relevant to the services provided hereunder.
Notwithstanding the foregoing or any other provision of this Agreement, JPMorgan assumes no
responsibility hereunder, and shall not be liable for, any damage, loss of data, delay or any other
loss whatsoever caused by events beyond its reasonable control. Events beyond JPMorgan’s
reasonable control include, without limitation, force majeure events. In the event of force
majeure, computer or other equipment failures or other events beyond its reasonable control,
JPMorgan shall follow applicable procedures in its disaster recovery and business continuity plan
and use all commercially reasonable efforts to minimize any service interruption.
JPMorgan shall provide the Administrator, at such times as the Administrator may reasonably
require, copies of reports rendered by independent public accountants on the internal controls and
procedures of JPMorgan relating to the services provided by JPMorgan under this Agreement.
13
The Administrator represents and warrants to JPMorgan that:
(i) It is a corporation duly incorporated and validly existing under the laws of the
jurisdiction of its formation, and has full capacity and authority to enter into this agreement and
to carry out its obligations hereunder;
(ii) It has all necessary authorizations, licenses and permits to carry out its business as
currently conducted;
(iii) It has been in, and shall continue to be in compliance in all material respects with all
laws and regulations applicable to its business and operations and that it is not aware of any
investigation commenced by the SEC or any other regulatory or self-regulatory organization, or any
proceeding or threatened proceeding that concerns the Administrator;
(iv) This Agreement has been duly authorized by the Administrator and, when executed and
delivered by the Administrator, will constitute a legal, valid and binding obligation of the
Administrator, enforceable against the Administrator in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting
the right and remedies of creditors and secured parties;
(v) As of the close of business on the effective date of this Agreement, each Fund has
authorized unlimited shares; and
(vi) By virtue of its Declaration of Trust, shares of each Fund which are redeemed by the
Trust may be sold by the Trust from its treasury.
The Administrator also represents and warrants that (i) the Trust has adopted the written AML
Program that has been submitted to JPMorgan pursuant to Paragraph 2.L., and has appointed an
officer of the Trust as the Trust’s anti-money laundering compliance officer (“AML Compliance
Officer”), (ii) the AML Program and the designation of the AML Officer have been approved by the
Board, (iii) the delegation of certain services thereunder to JPMorgan, as provided in Paragraph 6,
has been approved by the Trust’s Board of Trustees, and (d) the Trust will submit any material
amendments to the AML Program to JPMorgan for JPMorgan’ review and consent prior to adoption in
accordance with Paragraph 2.M.
In the event any provision of this Agreement is determined to be void or unenforceable, such
determination shall not affect the remainder of this Agreement, which shall continue to be in
force.
14
This Agreement shall be governed by and construed in accordance with the laws of the State of
New York. Any question of interpretation of any term or provision of this Agreement having a
counterpart in or otherwise derived from a term or provision of the 1940 Act shall be resolved by
reference to such term or provision of the 1940 Act and to interpretations thereof, if any, by the
United States Courts or in the absence of any controlling decision of any such court, by rules,
regulations or orders of the SEC issued pursuant to said 1940 Act. In addition, where the effect
of a requirement of the 1940 Act, reflected in any provision of this Agreement, is revised by rule,
regulation or order of the SEC, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
A. Without the prior consent of the other party, no party shall disclose Confidential
Information (as defined below) of any other party received in connection with the services provided
under this Agreement. The receiving party shall use the same degree of care as it uses to protect
its own confidential information of like nature, but no less than a reasonable degree of care, to
maintain in confidence the Confidential Information of the disclosing party. The foregoing
provisions shall not apply to any information that (i) is, at the time of disclosure, or thereafter
becomes, part of the public domain through a source other than the receiving party, (ii) is
subsequently learned from a third party that, to the knowledge of the receiving party, is not under
an obligation of confidentiality to the disclosing party, (iii) was known to the receiving party at
the time of disclosure, or (iv) is generated independently by the receiving party, or (v) is
disclosed pursuant to applicable law, subpoena, applicable professional standards, request of a
governmental or regulatory agency, or other process. The parties further agree that a breach of
this provision would irreparably damage the other party and accordingly agree that each of them is
entitled, in addition to all other remedies at law or in equity, to an injunction or injunctions
without bond or other security to prevent breaches of this provision.
B. For the purpose of this Section, Confidential Information shall mean Technical Elements (as
defined below), any information identified by either party as “Confidential” and/or “Proprietary”
or which, under all of the circumstances, ought reasonably to be treated as confidential and/or
proprietary, or any nonpublic information obtained hereunder concerning another party. JPMorgan
retains the right to use its knowledge, experience, and know-how, including processes, ideas,
concepts and techniques developed in the course of performing the services.
C. In connection with performing its services under this Agreement, JPMorgan may use certain
data, modules, components, designs, utilities, subsets, objects, program listings, tools, models,
methodologies, programs, systems, analysis frameworks, leading practices, data bases, screen
formats, report formats, interactive design technologies, documentation manuals and specifications
(“Technical Elements”). Certain Technical Elements were owned or developed by JPMorgan prior to,
or independently from, its engagement hereunder and are the sole and exclusive property of JPMorgan
and JPMorgan retains all rights thereto; and certain other Technical Elements consist of third
party works and products which
15
JPMorgan has acquired the right to use. The Trust shall have no rights in the Technical
Elements. The Trust agrees to treat all Technical Elements as Confidential Information.
D. Nonpublic personal financial information relating to consumers or customers of the Trust
provided by, or at the direction of the Trust to JPMorgan, or collected or retained by JPMorgan in
the course of performing its duties as transfer agent shall remain the sole property of the Trust.
JPMorgan shall not give, sell or in any way transfer such confidential information to any person or
entity, other than affiliates of JPMorgan except at the direction of the Trust or as required or
permitted by law (including Applicable AML Laws). JPMorgan represents, warrants and agrees that it
has in place and will maintain physical, electronic and procedural safeguards reasonably designed
to protect the security, confidentiality and integrity of, and to prevent unauthorized access to or
use of records and information relating to consumers or customers of the Trust. The Trust
represents to JPMorgan that it has adopted a Statement of its privacy policies and practices as
required by Regulation S-P and agrees to provide JPMorgan with a copy of that statement annually.
The provisions of this Section shall survive the termination of this Agreement. The parties
agree to comply with any and all regulations promulgated by the SEC or other applicable laws
regarding the confidentiality of shareholder information.
All notices required or permitted under this Agreement shall be in writing and shall be deemed
effective on the date of personal delivery (by private messenger, courier service or otherwise) or
upon confirmed receipt of telex or facsimile, whichever occurs first, or upon receipt if by mail to
the parties at the following address (or such other address as a party may specify by notice to the
other):
To the Administrator:
|
Diamond Hill Capital Management, Inc. | |
000 Xxxx X. XxXxxxxxx Xxxxxxxxx, Xxxxx 000 | ||
Xxxxxxxx, Xxxx 00000 | ||
Attention: X.X. Xxxxxx | ||
To JPMorgan:
|
JPMorgan Chase Bank, N.A. | |
000 Xxxxxxxx, Xxxxx 0000 | ||
Xxxxxxxxxx, Xxxx 00000 | ||
Attention: Xxx X. Xxxxxx |
This Agreement may not be amended or modified except by a written agreement executed by all
parties.
16
Each of the undersigned expressly warrants and represents that he or she has the full power
and authority to sign this Agreement on behalf of the party indicated, and that his or her
signature will operate to bind the party indicated to the foregoing terms.
This Agreement may be executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same instrument.
Notwithstanding any other provision of this Agreement, JPMorgan assumes no responsibility
hereunder, and shall not be liable, for any damage, loss of data, delay or any other loss
whatsoever caused by events beyond its reasonable control, including and without limitation, acts
of God, interruption of power or other utility, transportation, mail, or communication services,
acts of civil or military authority, sabotages, war, terrorism, insurrection, riots, national
emergencies, explosion, flood, accident, earthquake or other catastrophe, fire, strike or other
labor problems, legal action, present or future law, actions, decrees or orders of governmental
bodies, rule or regulation, or shortages of suitable parts, materials, labor or transportation.
The captions in this Agreement are included for convenience of reference only and in no way
define or limit any of the provisions hereof or otherwise affect their construction or effect.
Each party agrees to perform such further acts and execute such further documents as are
necessary to effectuate the purposes hereof.
DIAMOND HILL CAPITAL MANAGEMENT, INC. |
||||
By: | ||||
Its: President | ||||
JPMORGAN CHASE BANK, N.A. |
||||
By: | ||||
Its: Senior Vice President | ||||
17
Schedule A
January 1, 2008
January 1, 2008
SUB-ADMINISTRATION SERVICES
In consideration of the compensation detailed in this Agreement, JPMorgan shall perform the
following administration services as applicable:
1. Prepare and file post-effective amendments to the registration statements, Form N-CSR, Form
N-Q and other documents on behalf of the Funds with the Securities and Exchange Commission and
other federal and state regulatory authorities as required by law.
2. Coordinate the scheduling of Board of Trustees’ meetings, prepare the appropriate reports
to the trustees and record and maintain the minutes.
3. Prepare financial statements and supporting statements, footnotes, per share information
and schedule of investments for the inclusion in the semiannual and annual reports.
4. Prepare and maintain the necessary journals and schedules to report the required
information on Form N-SAR.
5. Maintain all books and records of each Fund as required by federal and state laws.
6. Coordinate the preparation, filing and distribution of proxy materials and periodic reports
as required by law.
7. Coordinate and monitor third-party services.
8. File all necessary documentation upon reciept, whether from the Administrator or the
Trust’s Custodian, of notices of Class Actions that a Fund may be join as a plaintiff.
18
Schedule B
January 1, 2008
January 1, 2008
SUB-TRANSFER AGENCY AND SHAREHOLDER SERVICES
In consideration of the compensation detailed in this Agreement, JPMorgan shall perform the
following transfer agency and shareholder services as applicable:
Shareholder Accounts
1. Establish new shareholder accounts
2. Record changes to shareholder registration information
3. Process shareholder purchase and redemption orders
4. Process shareholder transfer and exchange requests
5. Issue periodic statements for shareholders
6. Provide shareholders with JPMorgan’s standard shareholder statement and confirmation
package
7. Issue transaction confirmations
8. Process dividend payments, including the purchase of new shares through dividend
reimbursement
9. Prepare shareholder tax information, i.e., Form 1099, 1042, and 5498
10. Maintain shareholder account documentation
11. Answer telephone inquiries and accept financial transactions from shareholders and their
properly designated representative
12. Provide servicing support for broker-dealers
13. Withhold taxes on U.S. Resident and non-resident alien accounts
14. Reply to shareholder calls and correspondence
15. Cancel share certificates
16. Provide lost-shareholder services in accordance with Rule 17Ad-17 of the Securities
Exchange Act of 1934
19
17. Direct processing of checks, wires, and ACH
Sales Load Processing
1. Support front-end, level-load, and CDSC share classes
2. Calculate fees due under Rule 12b-1 plans for distribution and marketing expense
3. Track and pay sales commissions on direct shareholder purchases
*NSCC Services
1. FundServ
2. Networking
3. CommissionServ
4. ACATS
5. ToRA
6. Mutual Fund Profile
7. DCC&S
* NSCC Services may be subject to set-up charges and ongoing fees in accordance with this
Agreement.
Shareholder Records
JPMorgan shall maintain records for each shareholder account showing the following:
1. Names, addresses and tax identifying numbers;
2. Name of the dealer of record, if any;
3. Number of shares held of each Fund;
4. Historical information regarding the account of each shareholder, including dividends and
distributions in cash or invested in shares;
5. Information with respect to the source of all dividends and distributions allocated among
income, realized short-term gains and realized long-term gains;
20
6. Any instructions from a shareholder including all forms furnished by the Trust and executed
by a shareholder with respect to (i) dividend or distribution elections and (ii) elections with
respect to payment options in connection with the redemption of shares;
7. Any correspondence relating to the current maintenance of a shareholder’s account;
8. Certificate numbers and denominations for any shareholder holding certificates;
9. Any stop or restraining order placed against a shareholder’s account;
10. Information with respect to withholding in the case of a foreign account or any other
account for which withholding is required by the Internal Revenue Code of 1986, as amended; and
11. Any information required in order for JPMorgan to perform the calculations contemplated
under this Agreement.
Returned Checks
In the event that JPMorgan is notified by the Trust’s Cash Management Bank that any check or
other order for the payment of money is returned unpaid for any reason, JPMorgan will:
1. In the absence of other instructions from the Trust, take such steps as may be necessary to
redeem any shares purchased on the basis of such returned check and cause the proceeds of such
redemption plus any dividends declared with respect to such shares to be credited to the account of
the Trust and to request the Trust’s Cash Management Bank to forward such returned check to the
person who originally submitted the check; and
2. Upon notification of the Trust, collect any fees from the person who originally submitted
the check including losses to the Trust resulting from the returned check.
For shareholders who select to receive distributions or redemptions in cash and the U.S.
Postal Service cannot deliver their checks or if their checks remain uncashed for 90 days, JPMorgan
will reinvest the amount uncashed check into their account at the then current NAV and their
account will be converted to the reinvest option. No interest will accrue on an amount represented
by uncashed distribution checks. JPMorgan will make commercially reasonable attempts to contact
the shareholder prior to taking the action described above.
JPMorgan shall place a stop notice against any certificate reported to be lost or stolen and
comply with all applicable federal regulatory requirements for reporting such loss or alleged
21
misappropriation. New certificates shall not be issued. Replacement shares will be issued in
book form only upon:
(i) The shareholder’s pledge of a lost instrument bond or such other appropriate indemnity
bond issued by a surety company approved by JPMorgan; and
(ii) Completion of a release and indemnification agreement signed by the shareholder to
protect JPMorgan and its affiliates.
22
Schedule C
January 1, 2008
January 1, 2008
SPECIAL SERVICES AND REPORTS
Customized Reports
Reports are created based on the Trust’s design specification and are scheduled to be created on a
set schedule such as daily, weekly, every 2 weeks, monthly, quarterly or annually. Programming for
requests is $___ an hour and there is a one-time set-up fee of $___.
Fee Schedule:
Frequency | Charge | |
Daily
|
$Per Month | |
Weekly
|
$Per Month | |
Every 2 Weeks
|
$Per Month | |
Monthly
|
$Per Month | |
Quarterly
|
$Per Quarter | |
Annually
|
$Annually |
On Demand Reports
The charge is $___ per request for reports requested with the Trust’s specifications one time and
not on a set schedule. If such an on demand report were requested with the same criteria as a
previous request the charge would be $___. If programming time exceeds 2 hours, a $___ per hour
charge will apply.
Early Cash Reporting provides the Trust’s investment advisors preliminary cash estimates for
shareholder activity daily by 7:30 a.m. ET for fluctuating NAV funds. The reporting allows
investment advisors to forecast future cash inflows and outflows from shareholder activity prior to
the FINAL cash figures being available from JPMorgan at 9:30 a.m. ET. The preliminary cash
estimates are subject to change. The information is available via a Secured Internet Site.
Fee Schedule:
One-time set-up fee $___
Monthly fee $___
One-time set-up fee $___
Monthly fee $___
23
Schedule D
January 1, 2008
January 1, 2008
COMPENSATION FOR SUB-ADMINISTRATION SERVICES
Each Fund will pay JPMorgan, on the first business day following the end of each month, a fee
based on its average daily net assets during such month as follows:
Percentage Rate | Average Daily Net Assets | |
0.0250% | First $2,500,000,000 | |
0.0200% | Next $1,000,000,000 | |
0.0175% | Over $3,500,000,000 |
COMPENSATION FOR SUB-TRANSFER AGENCY AND SHAREHOLDER SERVICES
Each class of each Fund will pay JPMorgan, on the first business day following the end of each
month, an annual per account charge as follows:
Open Accounts |
||||
Fund Direct |
$ | 20.00 | ||
Networking Level III |
$ | 14.50 | ||
Closed Accounts |
$ | 4.00 |
JPMorgan will charge each XXX shareholder account an annual fee of $___ per account for the
additional servicing work for XXX accounts. The additional servicing work is set forth in
Attachment A of the Retirement Plan Services Addendum attached to this Agreement.
Each Fund will reimburse JPMorgan for out-of-pocket expenses incurred in the performance of
its services under this Agreement.
24
Schedule E
January 1, 2008
January 1, 2008
EXAMPLES OF TRUST EXPENSES
Trust expenses may include, but are not limited to costs and expenses of:
1. Meetings of the Board of Trustees and shareholders of the Trust, including costs and
expenses of Fund officers and employees of JPMorgan in attending such meetings;
2. All regulatory filings, postage, envelopes, checks, drafts, continuous forms, bank charges,
reports, communications, proxies (including production, legal fee and administrative costs),
statements and other materials;
3. File interface expenses (e.g., Blue Sky, Expeditor and other distribution partners);
4. Label file creation;
5. Blue Sky filing fees;
6. Typesetting and printing of all documents;
7. EDGARization;
8. Confirmations, statements, fulfillment and any other shareholder
correspondence;
9. Use of outside pricing services;
10. Use of outside solicitation, tabulation and mailing firms;
11. Necessary outside record storage, record destruction, document shredding, media for
storage of records (e.g., microfilm, microfiche, computer tapes);
12. Costs and fees, including employee time and system expenses, associated with exception
processing and resolution of errors not caused by JPMorgan; and
Postage for mailings of dividends, proxies, reports and other mailings to all shareholders
shall be advanced to JPMorgan three business days prior to the mailing date of such materials.
25
Addendum 1
This Addendum is entered into as of January 1, 2008 by and between JPMorgan Chase Bank, N.A.
(“JPMorgan”) and the Diamond Hill Capital Management, Inc., (“Administrator”).
1. To the services described in the Service Agreement shall be added the Anti-Money
Laundering Program Service (“AML Service”) in accordance with the Service Description document
(Attachment A to this Addendum). To the fees described in the Service Agreement shall be added
fees described in Attachment B to this Addendum, which shall apply only to the AML Service. All
other full or partial sections left unchanged in the Services Agreement shall remain the same
throughout the term of this Addendum.
2. All terms utilized in this Addendum which are defined in the Service Agreement shall have
the meaning set forth in the Service Agreement, unless the context otherwise requires.
3. Except as specifically amended in this Addendum, the Service Agreement shall continue in
full force and effect and be binding upon the parties notwithstanding the execution and delivery of
this Addendum.
4. To facilitate execution, this Addendum may be executed in any number of counterparts, each
of which when so executed and delivered shall be an original, but all of which shall together
constitute one and the same Agreement.
5. This Addendum shall be binding upon the parties and, to the extent permitted by the Service
Agreement, their respective successors and assigns.
6. This Addendum shall be governed by and construed in accordance with the laws of the State
or Commonwealth specified in the Service Agreement or in the state of Ohio if none is specified
elsewhere.
7. The AML Service shall begin on the date of this Addendum and shall automatically renew on
the anniversary of the Service Agreement for each successive term, unless canceled by either party
as provided below. Either party may terminate this service in full
26
by giving ninety (90) days prior written notice to the other party at any time regardless of when
the Service Agreement or this Addendum expires. All fees and minimum charges shall apply only
until the termination date of the current renewal term.
8. The Trust acknowledges and agrees that deviations from JPMorgan’s written transfer agent
operational and compliance procedures may involve a substantial risk of loss. In the event an
authorized representative of the Trust requests that an exception be made from any written
compliance or transfer agency procedures adopted by JPMorgan, or any requirements of the Trust’s
AML Program, JPMorgan may in its sole discretion determine whether to permit such exception. In
the event JPMorgan determines to permit such exception, the same shall become effective when set
forth in a written instrument executed by an authorized representative of the Trust (other than an
employee of JPMorgan) and delivered to JPMorgan (an “Exception”); provided that an Exception
concerning the requirements of the Trust’s AML Program shall be authorized by the Trust’s AML
Compliance Officer. An Exception shall be deemed to remain effective until the relevant instrument
expires according to its terms (or if no expiration date is stated, until JPMorgan receives written
notice from the Trust that such instrument has been terminated and the Exception is no longer in
effect). Notwithstanding any provision in this Addendum or the Service Agreement that expressly or
by implication provides to the contrary, as long as JPMorgan acts in good faith, neither JPMorgan
nor its directors, officers, employees, shareholders, agents, control persons or affiliates of any
thereof shall be subject to any liability (whether with or without basis in fact or law) for, or
any and all losses, damages, claims, suits, actions, demands, or expenses, including legal fees and
expenses and investigation expenses, of any and every nature, incurred by the Trust resulting from
the Exception., Furthermore, the Trust shall indemnify and hold harmless JPMorgan, its
shareholders, directors, officers, employees agents, control persons or affiliates of any thereof
from and against any and all losses, damages, claims, suits, actions, demands, or expenses,
including legal fees and expenses and investigation expenses, of any and every nature, resulting to
JPMorgan there from.
9. The Trust also represents and warrants that (i) the Trust has adopted the written AML
Program including any related Policies and Procedures that has been submitted to JPMorgan, and has
appointed an officer of the Trust as the Trust’s AML Compliance Officer, (ii) the AML Program and
the designation of the AML Compliance Officer have been approved by the Trust’s Board of Trustees
(the “Board), (iii) the delegation of certain services thereunder to JPMorgan, as provided below,
has been approved by the Board, and (d) the Trust will submit any material amendments to the AML
Program to JPMorgan for JPMorgan’s review and consent prior to adoption.
10. The Trust acknowledges that it is responsible for updating its shareholder documents
including but not limited to prospectuses, statements of additional information, new account
applications and website disclosures for the purpose of providing shareholders with appropriate
notices and disclosures that are to be provided to shareholders under the Act.
11. The Trust acknowledges its responsibility to file with FinCEN under Section 314(b) of the
Act if it wishes to engage in information sharing with other financial institutions.
27
12. The Trust is responsible for conducting an independent audit of its AML Program on a
periodic basis as required by law.
Diamond Hill Capital Management, Inc. | JPMorgan Chase Bank, N.A. | |||||||
By:
|
By: | |||||||
Print Name:
|
Print Name: | |||||||
Print Title:
|
Print Title: | |||||||
Date:
|
Date: | |||||||
28
Attachment A
Anti-Money Laundering Program Service
Service Description Document
Service Description Document
JPMorgan as Sub-Transfer Agent for the Trust agrees to perform the procedures as described below as
required by the USA PATRIOT Act of 2001 (the “Act”) and applicable sections of the Bank Secrecy Act
and the Internal Revenue Service Code.
1. JPMorgan will perform the AML procedures described below in accordance with the Trust’s
written AML Program. JPMorgan will:
a. Develop and implement an anti-money laundering program reasonably designed to detect
activities indicative of money laundering and achieve compliance with such regulatory requirements
applicable to money laundering;
b. Provide the Trust’s AML Compliance Officer with a copy of JPMorgan’s AML Program;
c. Monitor the mutual fund accounts of Trust’s shareholders for suspicious activity;
d. Apply “Red Flag” monitoring of fund direct account activity to detect potential suspicious
activity;
e. Investigate potential suspicious activity using commercially reasonable means and provide
the Trust’s AML Compliance Officer with investigation results for review and action;
f. Implement training programs to educate JPMorgan’s officers and employees regarding its
anti-money laundering policies and procedures;
g. Designate a compliance officer with sufficient authority to oversee JPMorgan’s anti-money
laundering policies and procedures and to interact with the Trust’s AML Compliance Officer;
h. Conduct an independent audit of JPMorgan’s anti-money laundering policies and procedures on
an periodic basis as required by law;
i. Provide the Trust’s AML Compliance Officer with a report of the independent audit findings;
j. Provide the Trust’s AML Compliance Officer with periodic reports regarding the
administration of JPMorgan’s AML Program;
k. Search the Trust’s shareholder files that are maintained by JPMorgan as requested by the
Federal Crimes Enforcement Center (FinCEN);
29
l. Provide appropriate Federal agencies with information and records relating to JPMorgan’s
anti-money laundering program including results of inspections related to its anti-money laundering
program;
m. File IRS Form 8300 reports as required;
n. Check shareholder names against lists of known or suspected terrorists or terrorist
organizations such as those persons and organizations listed on Treasury’s Office of Foreign Assets
Control (OFAC) or other lists as designated by the government using commercially available or
proprietary databases; and,
o. Retain records on behalf of the Trust as required by the Act.
a. The Trust authorizes JPMorgan to accept only those new accounts for which the elements
required by law are presented.
b. In the event the required elements (above) are not provided, JPMorgan shall make reasonable
efforts to obtain the missing information within one business day of receipt of the new account
application. JPMorgan will not open any account without the required elements.
c. The Trust authorizes JPMorgan to refuse to open any account whose owner’s identity it is
unable to verify to its satisfaction without consultation with the Trust and in accordance with the
Trust’s AML Program policies and procedures and Section IX of this Addendum.
d. The Trust authorizes JPMorgan to employ commercially available or proprietary databases to
verify the identity of shareholders as described by JPMorgan’s AML Program and as required by law.
e. In the event that a discrepancy arises related to the verification of a shareholder’s
identity, JPMorgan will make commercially reasonable efforts to resolve the discrepancy to verify
the identity of the shareholder to its satisfaction and without consultation with the Trust and in
accordance with the Trust’s AML program policies and procedures and Section IX of this Addendum.
f. The Trust authorizes JPMorgan to open accounts for non-US persons only if:
i. The account is opened through a broker-dealer with whom the Fund or its principal
underwriter has an established dealer agreement; and
30
ii. The broker-dealer is a U.S.-registered firm; and
iii. (A) The broker-dealer through which the account is established has provided the necessary
certifications to the Fund or its principal underwriter regarding its anti-money laundering
program; or
(B) The Trust specifically directs JPMorgan in writing to accept the account and certifies to
JPMorgan that it has verified the identity of the shareholder.
g. The Trust delegates to and authorizes JPMorgan to request and obtain AML program
certifications as may be required from qualified financial institutions for the purposes of selling
shares of the Trust through the qualified financial institution and, in the absence of such
certification, JPMorgan shall not accept orders from an uncertified financial institution except as
specifically directed by the Trust in writing and in accordance with Section IX of this agreement.
31
Attachment B
Anti-Money Laundering
Program Services
Program Services
Fee Schedule
The following fee schedule shall be effective upon execution of this Addendum. The Trust will be
assessed fees for all qualified new accounts as identified in the Trust’s AML Program policies and
procedures.
Verification of Customer Identity
|
$2.50 per new account opened* | |
Government List Searches
|
$included |
* | File transmission fees may apply |
32
Addendum 2
XXX Custodial Services Addendum
This Addendum is made and entered into this 1st day of January, 2008, by and
between JPMorgan Chase Bank, N.A. (“JPMorgan”), 000 Xxxxxxxx, Xxxxx 0000 Xxxxxxxxxx, Xxxx 00000,
and Diamond Hill Funds (the “Trust”), 000 Xxxx X. XxXxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxx, Xxxx
00000.
1. The Trust hereby appoints JPMorgan to act as Custodian of each Account. JPMorgan accepts
such appointment and agrees to perform all services necessary or required pursuant to each
Custodial Agreement or pursuant to the terms of the Agreement or this Amendment, including the
services required as set forth on Schedule A hereto (collectively, the “Services”).
2. In its capacity as Custodian of the Accounts, JPMorgan will act only as a Bank Custodian
(within the meaning of Section 1.408(a)(2) of the Internal Revenue Code) and will not have any
discretion to direct investments within any of the Accounts.
3. JPMorgan shall keep and maintain on behalf of the Trust all books and records that are
customary or that are required to be kept in connection with the services to be rendered pursuant
to the Custodial Agreement, the Agreement or this Amendment. These records will include, but not
be limited to, Internal Revenue Service Forms 0000-X, 0000-XX, 0000-XX, 0000-XXX, account
applications, custodial agreements, beneficiary designations, investment election forms,
distribution forms, transfer and rollover forms, and federal tax forms (“Records”). Further,
JPMorgan shall comply with any and all record retention, notice, return and other filing,
statement, and servicing obligations and shall comply with all rules, regulations, and similar
requirements under the Internal Revenue Code of 1986, as amended, and any other applicable laws.
4. JPMorgan shall be compensated for providing the custodial services set forth in the
Custodial Agreements, the Agreement and this Amendment. The annual custodial fee shall be $10.00
per Account holder, per Account type and will be charged to the Account or the holder of the
Account in accordance with the applicable Custodial Agreement. The annual fee will be charged and
payable within the month prior to December 31st of each such year, or at the time of
account liquidation.
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Diamond Hill Funds | JPMorgan Chase Bank N.A. | |||||||||
By:
|
By: | |||||||||
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SCHEDULE A
SERVICES TO BE PERFORMED BY
JPMORGAN CHASE BANK, N.A.
FOR SPECIFIED RETIREMENT ACCOUNTS
JPMORGAN CHASE BANK, N.A.
FOR SPECIFIED RETIREMENT ACCOUNTS
Retirement Account Processing, Maintenance and Tax Reporting
• | New Account Set up: Traditional, Xxxx, SEP, Xxxxxxxxx Education Savings Accounts | ||
• | Process contributions and distributions for Account Holders | ||
• | Process account transfers for Account Holders, as a result of divorce or death. | ||
• | Mailing monthly/quarterly statements | ||
• | Processing dividends and capital gain distributions | ||
• | Notification of distribution requirements related to age 70 1/2 | ||
• | Maintaining beneficiary information on system | ||
• | Calculating distributions, withdrawals, required withholding and other payments to Account Holders | ||
• | Process annual custodial fee withdrawals, and collect any pre-paid custodial fees | ||
• | Maintaining Account Holder records | ||
• | Changing addresses for Account Holders | ||
• | Preparing periodic reports on accounts, numbers of shares, etc. upon request | ||
• | Preparation and filing of the appropriate federal tax forms, 1099R, 1099Q, 5498 and 5498ESA | ||
• | Replying to shareholder correspondence and inquiries | ||
• | Responding to telephone inquiries about Accounts | ||
• | Annual review of custodial agreements for compliance | ||
• | Complete annual W4P federal withholding solicitation |
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Addendum 3
i-online Sales Reporting
Service Description Document
Sublicense Agreement
and Service Addendum
Sublicense Agreement
and Service Addendum
This Agreement is entered into as of January 1, 2008 by and between JPMorgan Chase Bank, N.A.
(“JPMorgan”) and Diamond Hill Capital Management, Inc., (“Client”).
I. INTRODUCTION
This document provides a Service Description regarding Client’s use of the i-online Sales
Reporting (“i-online”). This document describes the services and responsibilities, as
agreed between Client and JPMorgan.
A. | Service Description | ||
i-online Sales Reporting is a powerful sales reporting solution designed specifically for the financial services industry. This technology has many options that meet the sales reporting needs of product managers, sales and distribution managers, compensation officers and wholesalers. Data from mutual funds, annuities and separate accounts can be housed in the system so you can receive a complete picture across all of your product lines. Fund companies can also view information from the underlying omnibus/supermarkets to see which reps are selling their products. Wholesaler activity levels and compensation measures can be viewed using many of the numerous reports that are available. |
II. SUBLICENSE AGREEMENT
This Sublicense Agreement (“Agreement”) is entered into between JPMorgan and Client
(“Sublicensee”).
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JPMorgan hereby sublicenses the Software to Sublicensee and Sublicensee hereby sublicenses
the Software from JPMorgan, on the condition that Sublicensee agrees as follows:
1. | it shall use the Software in object code format only; | ||
2. | it shall not transfer the Software; | ||
3. | it shall not assign, timeshare or rent the Software; | ||
4. | it shall not gain title to the Software by virtue of this Sublicense; | ||
5. | it shall not reverse engineer, disassemble or decompile the programs except for a single backup or archival copy; | ||
6. | it disclaims, to the extent permitted by applicable law, SalesFocus Solution’s and JPMorgan’s liability for any damages, whether direct, indirect, incidental or consequential, arising from the use of the Software; | ||
7. | it shall discontinue use and destroy or return to SalesFocus Solutions all copies of the Software at the termination of the Sublicense; | ||
8. | it shall comply fully with all relevant export laws and regulations to assure that the Software is not exported in violation of export laws; and | ||
9. | SalesFocus Solutions is a third party beneficiary of this Sublicense Agreement to the extent permitted by applicable law. | ||
10. | it shall provide JPMorgan with a completed Annual Compliance Report in the form attached as Exhibit A setting forth the information specified concerning the types and numbers of Software and System users. |
III. SERVICE DEFINITION
A. | Service Functions and Deliverables | ||
The functions and deliverables described below comprise JPMorgan’s current support of the i-online Sales Reporting Service. | |||
B. | Service Initiation and Acceptance | ||
Upon receipt of authorization by Client for i-Online Sales Reporting Service, JPMorgan and the Client will determine detailed business requirements and agree to a service implementation schedule that includes the service initiation, installation and acceptance testing. | |||
C. | Professional Services and Support | ||
JPMorgan shall provide to Client, during JPMorgan’s normal business hours, telephone support regarding Client’s proper and authorized use of the latest release of the i-online Sales Reporting Service that is generally available to |
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JPMorgan’s i-Online Customer base (“Latest Release”). For any non-support-related assistance or consulting, Client may contract with JPMorgan for additional Professional Services in accordance with the Service Agreement. |
ASSOCIATED FEES AND EXPENSES
IV. SERVICE FEES
None
V. PROFESSIONAL SERVICES
At Client’s request, JPMorgan will provide to Client consulting services, custom
modification programming, and general support services relating to i-online Sales Reporting
Service at the Professional Services hourly rate of $75 as well as any additional costs
incurred by SalesFocus.
VI. ADDITIONAL SERVICES AND CHARGES
A. | JPMorgan shall perform the following tasks: |
1. | Transaction resolution; | ||
2. | SMA data files; | ||
3. | Category updates; | ||
4. | Client contact; and | ||
5. | Rep reports. |
B. | JPMorgan reserves the right to charge for services outside of the range of normal support services. These services will not be performed until the Client has provided written authorization to proceed. |
VII. TERMINATION
This agreement may be terminated by either party with 60 days written notice.
Client shall have exclusive ownership of the data housed on the i-online system. Upon termination, Client shall receive
all data in the form of a database. Programming fees for such database will be decided at the time of termination, an
amount that is fair and agreed upon by all parties.
VIII. INVOICING
Service fees shall be invoiced following the Software installation date. Further, the Services Agreement thereof shall
govern payment.
In Witness Whereof, the parties have executed this Agreement effective as of the date indicated
above.
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JPMorgan Chase Bank, N.A. | Diamond Hill Capital Management, Inc. | |||||||||
By:
|
By: | |||||||||
Title:
|
Title: | |||||||||
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EXHIBIT A
ANNUAL COMPLIANCE REPORT
Type of Device | ||||||
User Name | (desktop/laptop/ | Device Name or | ||||
(position/title) | Location | handheld) | Number | |||
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