FIFTH AMENDED AND RESTATED ADMINISTRATIVE, FUND ACCOUNTING AND TRANSFER AGENCY SERVICES AGREEMENT
FIFTH
AMENDED
AND
RESTATED
ADMINISTRATIVE,
FUND ACCOUNTING
FIFTH AMENDED
AND
RESTATED ADMINISTRATIVE, FUND ACCOUNTING
AND
TRANSFER AGENCY SERVICES AGREEMENT
dated as of May
31, 2002, as amended August 8, 2002, January 31,
2005,
April 30, 2005, April 30, 2006 and April 30, 2007 between
Diamond
Hill Funds (the “Trust”), an Ohio business trust, and Diamond Hill Capital
Management, Inc. (“DHCM”), an Ohio corporation.
WHEREAS,
the Trust has been
organized to operate as an open-end management investment company registered
under the Investment Company Act of 1940 (the “Act”); and
WHEREAS,
the Trust has
engaged DHCM to act as investment adviser to one or more of the Trust’s several
series, as they are duly authorized and offered, a complete list of which is
set
forth on Schedule A attached hereto, as it may be amended from time to time
(individually a “Fund” and collectively the “Funds”); and
WHEREAS,
the Trust wishes
to retain DHCM to perform certain administrative, fund accounting and transfer
agency services as hereinafter described on behalf of the Funds; provided,
however,
that DHCM is
authorized at its own expense to contract with other service providers to
perform any or all of the administrative, fund accounting and transfer agency
services hereinafter described; and
WHEREAS,
DHCM wishes to
provide, or arrange for the provision of, such services to the Trust under
the
conditions set forth below;
NOW,
THEREFORE, in
consideration of
the promises and mutual covenants contained in this Agreement, the Trust and
DHCM agree as follows:
1. Employment.
The Trust, being
duly authorized, hereby employs DHCM to perform the services described in this
Agreement. DHCM shall perform such services upon the terms and conditions
hereinafter set forth. Any services undertaken by DHCM pursuant to this
Agreement, as well as any other activities undertaken by DHCM on behalf of
the
Trust pursuant hereto, shall at all times be subject to any directives of the
Board of Trustees of the Trust.
2. Trust
Administration.
DHCM shall give
the Trust the benefit of its best judgment, efforts and facilities in rendering
its administrative services. DHCM shall at all times conform to: (i) all
applicable provisions of the Act and any rules and regulations adopted
thereunder, (ii) the provisions of the Registration Statement of the Trust
under
the Securities Act of 1933 and the Act as amended from time to time, (iii)
the
provisions of the Amended and Restated Agreement and Declaration of Trust and
the By-Laws of the Trust, as each shall be amended from time to time and (iv)
any other applicable provisions of state and federal law.
Subject
to the
direction and control of the Trust, DHCM shall supervise the Fund's business
affairs not otherwise supervised by other agents of the Trust. To the extent
not
otherwise the primary responsibility of, or provided by, other parties under
agreement with the Trust, DHCM shall supply (i) non-investment related
statistical and research data, (ii) internal regulatory compliance services,
and
(iii) executive and administrative services. DHCM shall supervise the
preparation of (i) tax returns, (ii) reports to shareholders of the Fund, (iii)
reports to and filings with the Securities and Exchange Commission, state
securities commissions and Blue Sky authorities including preliminary and
definitive proxy materials and post-effective amendments to the Fund's
registration statement, and (iv) necessary materials for meetings of the Trust's
Board of Trustees. DHCM shall provide personnel to serve as officers of the
Trust if so elected by the Board of Trustees. Executive and administrative
services include, but are not limited to, the coordination of all third parties
furnishing services to the Fund, review of the books and records of the Trust
maintained by such third parties, and the review and submission to the officers
of the Trust for their approval, of invoices or other requests for payment
of
Trust expenses; and such other action with respect to the Trust as may be
necessary in the opinion of DHCM to perform its duties hereunder.
3. Fund
Accounting.
DHCM shall
maintain and keep current the general ledger for each of the Funds of the Trust,
recording all income and expenses, capital share activity and security
transactions of the Trust. DHCM shall calculate the net asset value of each
of
the Funds of the Trust and the per share net asset value of each of the Funds
of
the Trust, in accordance with the Trust's current prospectus and statement
of
additional information, once daily as of the time selected by the Trust's Board
of Trustees. DHCM shall prepare and maintain a daily valuation of all securities
and other assets of the Trust in accordance with instructions from a designated
officer of the Trust and in the manner set forth in the Trust's current
prospectus and statement of additional information. In valuing securities of
the
Trust, DHCM may contract with, and rely upon market quotations provided by,
outside services.
DHCM
shall also
perform all such fund accounting services and duties as are customary and
necessary in the industry, including but not limited to: DHCM shall process
each
request received from the Trust or its authorized agents for payment of the
Trust's expenses. Upon receipt of written instructions signed by an officer
or
other authorized agent of the Trust, DHCM shall prepare checks in the
appropriate amounts which shall be signed by an authorized officer of DHCM
and
mailed to the appropriate party.
4. Transfer
Agency.
DHCM shall record
the issuance of shares of the Trust and maintain pursuant to applicable rules
of
the SEC a record of the total number of shares of the Trust which are
authorized, issued and outstanding, based upon data provided to it by the Trust.
DHCM shall also provide the Trust on a regular basis or upon reasonable request
the total number of shares which are authorized, issued and outstanding, but
shall have no obligation when recording the issuance of the Trust's shares,
except as otherwise set forth herein, to monitor the issuance of such shares
or
to take cognizance of any laws relating to the issue or sale of such shares,
which functions shall be the sole responsibility of the Trust. DHCM shall not
handle physical shares. Upon receipt of a proper request for transfer and upon
surrender to DHCM of certificates, if any, in proper form for transfer, DHCM
shall approve such transfer and shall take all necessary steps to effectuate
the
transfer as indicated in the transfer request. Upon approval of the transfer,
DHCM shall notify the Trust in writing of each such transaction and shall make
appropriate entries on the shareholder records maintained by DHCM.
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DHCM
shall also
perform all such transfer agency services and duties as are customary and
necessary in the industry, including but not limited to: accounting for and
processing checks received for purchase of shares of the various series;
processing purchase orders for shares of the various series; processing returned
checks; processing dividends and distributions as and when made by the Trust;
accounting for unclaimed dividends and unclaimed redemption proceeds; processing
redemptions and exchanges; processing automatic withdrawal orders pursuant
to
the provisions of withdrawal plans duly executed by shareholders; processing
wire-order purchases; withholding such sums as are required to be withheld
under
applicable federal and state income tax laws, rules and regulations; create
and
maintain all records required by applicable laws, rules and regulations,
including but not limited to records required by Section 31(a) of the Act and
the rules thereunder; maintain records for each shareholder account and receive
and answer all shareholder and dealer inquiries relating to account status,
share purchases, redemptions and exchanges and other investment plans available
to Trust shareholders.
5. Allocation
of
Charges and Expenses.
DHCM will pay all
operating expenses of the Fund not specifically assumed by the Fund, including
without limitation the compensation and expenses of any employees of the Fund
and of any other persons rendering any services to the Fund; clerical and
shareholder service staff salaries; office space and other office expenses;
fees
and expenses incurred by the Fund in connection with membership in investment
company organizations; legal, auditing and accounting expenses; expenses of
registering shares under federal and state securities laws, including expenses
incurred by the Fund in connection with the organization and initial
registration of shares of the Fund; insurance expenses; fees and expenses of
the
transfer agent, dividend disbursing agent, shareholder service agent, plan
agent, administrator (excluding fees and expenses payable to DHCM under this
Agreement), accounting and pricing services agent and principal underwriter
of
the Fund; expenses, including clerical expenses, of issue, sale, redemption
or
repurchase of shares of the Fund; the cost of preparing and distributing reports
and notices to shareholders, the cost of printing or preparing prospectuses
and
statements of additional information for delivery to the Fund's current
shareholders; the cost of printing or preparing stock certificates or any other
documents, statements or reports to shareholders; expenses of shareholders'
meetings and proxy solicitations; and all other operating expenses not
specifically assumed by the Fund. The Fund will be directly responsible for
payment of the fees and expenses of the custodian.
The
Fund will pay
all brokerage fees and commissions, taxes, borrowing costs (such as (a) interest
and (b) dividend expenses on securities sold short), fees and expenses of
trustees of the Trust who are not interested persons of the Trust, as defined
in
the Act, and such extraordinary or non-recurring expenses as may arise,
including litigation to which the Fund may be a party and indemnification of
the
Trust's trustees and officers with respect thereto. The Fund will also pay
the
fees paid pursuant to its Management Agreement between DHCM and the Trust,
and
all expenses which it is authorized to pay pursuant to Rule 12b-1 under the
1940
Act. DHCM may obtain reimbursement from the Fund, at such time or times as
DHCM
may determine in its sole discretion, for any of the expenses advanced by DHCM,
which the Fund is obligated to pay, and such reimbursement shall not be
considered to be part of DHCM’s compensation pursuant to this
Agreement.
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6. Record
Keeping
and Other Information.
DHCM shall create
and maintain all necessary records in accordance with all applicable laws,
rules
and regulations, including but not limited to records required by Section 31(a)
of the Act and the rules thereunder, as the same may be amended from time to
time, pertaining to the various functions performed by it and not otherwise
created and maintained by another party pursuant to contract with the Trust.
Where applicable, such records shall be maintained by DHCM for the periods
and
in the places required by Rule 31a-2 under the Act.
7. Audit,
Inspection and Visitation.
DHCM shall make
available to the Trust during regular business hours all records and other
data
created and maintained pursuant to the foregoing provisions of this Agreement
for reasonable audit and inspection by the Trust or any regulatory agency having
authority over the Trust.
8. Compensation.
For the
performance of DHCM's obligations under this Agreement, each Fund listed on
Schedule A shall pay DHCM a monthly fee as set forth on Schedule A, on the
first
business day following the end of each month.
The
average value
of the daily net assets of the
different
classes of shares of each
Fund shall be
determined pursuant to the applicable provisions of the Amended and Restated
Agreement and Declaration of Trust of the Trust or a resolution of the Board,
if
required. If, pursuant to such provisions, the determination of net asset value
of a Fund is suspended for any particular business day, then for the purposes
of
this paragraph, the value of the net assets of a Fund as last determined shall
be deemed to be the value of the net assets as of the close of the business
day,
or as of such other time as the value of a Fund's net assets may lawfully be
determined, on that day. If the determination of the net asset value of a Fund
has been suspended for a period including such month, DHCM’s compensation
payable at the end of such month shall be computed on the basis of the value
of
the net assets of that Fund as last determined (whether during or prior to
such
month).
9. Limitation
of
Liability.
DHCM may rely on
information reasonably believed by it to be accurate and reliable. Except as
may
otherwise be required by the Act or the rules thereunder, neither DHCM nor
its
shareholders, officers, directors, employees, agents, control persons or
affiliates of any thereof (collectively, the "DHCM Employees") shall be subject
to any liability for, or any damages, expenses or losses incurred by the Trust
in connection with, any error of judgment, mistake of law, any act or omission
in connection with or arising out of any services rendered under or payments
made pursuant to this Agreement or any other matter to which this Agreement
relates, except by reason of willful misfeasance, bad faith or gross negligence
on the part of any such persons in the performance of the duties of DHCM under
this Agreement or by reason of reckless disregard by any of such persons of
the
obligations and duties of DHCM under this Agreement. Any person, even though
also a director, officer, employee, shareholder or agent of DHCM, who may be
or
become an officer, trustee, employee or agent of the Trust, shall be deemed,
when rendering services to the Trust or acting on any business of the Trust
(other than services or business in connection with DHCM's duties hereunder),
to
be rendering such services to or acting solely for the Trust and not as a
director, officer, employee, shareholder or agent, or one under the control
or
direction of DHCM, even though paid by it.
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10. Indemnification
of DHCM.
Subject to and
except as otherwise provided in the Securities Act of 1933, as amended, and
the
Act, the Trust shall indemnify DHCM and each DHCM Employee (hereinafter
collectively referred to as a "Covered Person") against all liabilities,
including but not limited to amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and expenses, including reasonable
accountants' and counsel fees, incurred by any Covered Person in connection
with
the defense or disposition of any action, suit or other proceeding, whether
civil or criminal, before any court or administrative or legislative body,
in
which such Covered Person may be or may have been involved as a party or
otherwise or with which such person may be or may have been threatened, while
serving as the administrator for the Trust or as a DHCM Employee, or,
thereafter, by reason of being or having been the administrator for the Trust
or
a DHCM Employee, including but not limited to liabilities arising due to any
misrepresentation or misstatement in the Trust's prospectus, other regulatory
filings, and amendments thereto, or in other documents originating from the
Trust. In no case shall a Covered Person be indemnified against any liability
to
which such Covered Person would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
of
such Covered Person.
11. Services
for
Others.
Nothing in this
Agreement shall prevent DHCM or any affiliated person of DHCM from providing
services for any other person, firm or corporation, including other investment
companies; provided, however, that DHCM expressly represents that it will
undertake no activities which, in its judgment, will adversely affect the
performance of its obligations to the Trust under this Agreement.
12. Compliance
with
the Act.
The parties
hereto acknowledge and agree that nothing contained herein shall be construed
to
require DHCM to perform any services for any series of the Trust which services
could cause DHCM to be deemed an "investment adviser" of the Fund within the
meaning of Section 2(a)(20) of the Act or to supersede or contravene the
Prospectus or Statement of Additional Information of any series of the Trust
or
any provisions of the Act and the rules thereunder.
13. Renewal
and
Termination.
This Agreement
shall become effective on the date first above written and shall remain in
force
until May 31, 2003, and from year to year thereafter, but only so long as such
continuance is specifically approved at least annually by the vote of a majority
of the Trustees who are not interested persons of the Trust or DHCM, cast in
person at a meeting called for the purpose of voting on such approval and by
a
vote of the Board of Trustees or of a majority of the Fund's outstanding voting
securities. This Agreement may be terminated without the payment of any penalty
by either party upon sixty (60) days' written notice to the other party. Upon
the termination of this Agreement, the Trust shall pay DHCM such compensation
as
may be payable for the period prior to the effective date of such termination.
14. The
Trust.
The term “Diamond
Hill Funds” means and refers to the Trustees from time to time serving under the
Trust’s Agreement and Declaration of Trust as the same may subsequently thereto
have been, or subsequently hereto may be, amended. It is expressly agreed that
the obligations of the Trust hereunder shall not be binding upon any of the
Trustees, shareholders, nominees, officers, agent or employees of the Trust,
personally, but bind only the trust property of the Trust. The execution and
delivery of this Agreement have been authorized by the Trustees of the Trust
and
signed by an officer of the Trust, acting as such, and neither such
authorization by such Trustees nor such execution and delivery by such officer
shall be deemed to have been made by any of them individually or to impose
any
liability on any of them personally, but shall bind only the trust property
of
the Trust.
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15. Miscellaneous.
Each party agrees
to perform such further acts and execute such further documents as are necessary
to effectuate the purposes hereof. This Agreement shall be construed and
enforced in accordance with and governed by the laws of the State of Ohio.
The
captions in this Agreement are included for convenience of reference only and
in
no way define or delimit any of the provisions hereof or otherwise affect their
construction or effect.
IN
WITNESS
WHEREOF,
the parties have
duly executed this Agreement as of the day and year first above written.
|
By:
/s/
Xxxxx
X. Xxxxx
Xxxxx
X.
Xxxxx
Its:
President
Diamond
Hill Capital Management, Inc.
By:
/s/
X.X.
Xxxxxx
X.X.
Xxxxxx
Its:
President
|
6
Schedule
A
April
30,
2007
Diamond
Hill Small
Cap Fund
Diamond
Hill
Small-Mid Cap Fund
Diamond
Hill Large
Cap Fund
Diamond
Hill Select
Fund
Diamond
Hill
Long-Short
Fund
Diamond
Hill
Financial Long Short Fund
Diamond
Hill Strategic
Income Fund
Each
Fund shall pay
DHCM a fee at an annual rate of 0.32% of the average
daily net
assets
of the Class A and
C shares of each Fund, and at an annual rate of 0.18% of the average daily
net
assets of the Class I shares of each Fund.
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