AMENDED AND RESTATED
CUSTODY AGREEMENT
BETWEEN
U.S. BANK, N.A.
(FORMERLY STAR BANK, N.A.)
AND
DIAMOND HILL FUNDS
(FORMERLY THE BSG FUNDS)
TABLE OF CONTENTS
ARTICLE I - Definitions .................................................... 1
I. A. DEFINITIONS ................................................... 1
ARTICLE II - Appointment; Acceptance; and Furnishing of Documents .......... 4
II. A. APPOINTMENT OF CUSTODIAN ...................................... 4
II. B. ACCEPTANCE OF CUSTODIAN ....................................... 4
II. C. DOCUMENTS TO BE FURNISHED ..................................... 4
II. D. NOTICE OF APPOINTMENT OF DIVIDEND AND TRANSFER AGENT .......... 5
ARTICLE III --Receipt of Trust Assets ...................................... 5
III. A. DELIVERY OF MONEYS ............................................ 5
III. B. DELIVERY OF SECURITIES ........................................ 5
III. C. PAYMENTS FOR SHARES ........................................... 5
III. D. DUTIES UPON RECEIPT ........................................... 6
ARTICLE IV - Disbursement of Trust Assets .................................. 6
IV. A. DECLARATION OF DIVIDENDS BY TRUST ............................. 6
IV. B. SEGREGATION OF REDEMPTION PROCEEDS ............................ 6
IV. C. DISBURSEMENTS OF CUSTODIAN .................................... 6
IV. D. PAYMENT OF CUSTODIAN FEES ..................................... 7
ARTICLE V - Custody of Trust Assets ........................................ 7
V. A. SEPARATE ACCOUNTS FOR EACH FUND ............................... 7
V. B. SEGREGATION OF NON-CASH ASSETS ................................ 7
V. C. SECURITIES IN BEARER AND REGISTERED FORM ...................... 7
V. D. DUTIES OF CUSTODIAN AS TO SECURITIES .......................... 8
V. E. CERTAIN ACTIONS UPON WRITTEN INSTRUCTIONS ..................... 8
V. F. CUSTODIAN TO DELIVER PROXY MATERIALS .......................... 9
V. G. CUSTODIAN TO DELIVER TENDER OFFER INFORMATION ................. 9
V. H. CUSTODIAN TO DELIVER SECURITY AND TRANSACTION INFORMATION ..... 9
ARTICLE VI - Purchase and Sale of Securities ............................... 10
VI. A. PURCHASE OF SECURITIES ........................................ 10
VI. B. SALE OF SECURITIES ............................................ 11
VI. C. DELIVERY VERSUS PAYMENT FOR PURCHASES AND SALES ............... 11
VI. D. PAYMENT ON SETTLEMENT DATE .................................... 11
VI. E. SEGREGATED ACCOUNTS ........................................... 12
VI. F. ADVANCES FOR SETTLEMENT ....................................... 13
ARTICLE VII - Trust Indebtedness ........................................... 13
VII. A. BORROWINGS .................................................... 13
VII. B. ADVANCES ...................................................... 14
ARTICLE VIII - Concerning the Custodian .................................... 14
VIII. A. LIMITATIONS ON LIABILITY OF CUSTODIAN ......................... 14
VIII. B. ACTIONS NOT REQUIRED BY CUSTODIAN ............................. 16
VIII. C. NO DUTY TO COLLECT AMOUNTS DUE FROM DIVIDEND AND
TRANSFER AGENT ................................................ 17
VIII. D. NO ENFORCEMENT ACTIONS ........................................ 17
VIII. E. AUTHORITY TO USE AGENTS AND SUB-CUSTODIANS .................... 17
VIII. F. NO DUTY TO SUPERVISE INVESTMENTS .............................. 18
VIII. G. ALL RECORDS CONFIDENTIAL ...................................... 18
VIII. H. COMPENSATION OF CUSTODIAN ..................................... 18
VIII. I. RELIANCE UPON INSTRUCTIONS .................................... 18
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VIII. J. BOOKS AND RECORDS ............................................. 19
VIII. K. INTERNAL ACCOUNTING CONTROL SYSTEMS ........................... 19
VIII. L. NO MANAGEMENT OF ASSETS BY CUSTODIAN .......................... 19
VIII. M. ASSISTANCE TO TRUST ........................................... 19
VIII. X. XXXXX OF SECURITY INTEREST .................................... 20
ARTICLE IX - Termination ................................................... 20
IX. A. TERMINATION ................................................... 20
IX. B. FAILURE TO DESIGNATE SUCCESSOR TRUSTEE ........................ 20
ARTICLE X - Force Majeure .................................................. 21
ARTICLE XI - Miscellaneous ................................................. 21
XI. A. DESIGNATION OF AUTHORIZED PERSONS ............................. 21
XI. B. LIMITATION OF PERSONAL LIABILITY .............................. 21
XI. C. AUTHORIZATION BY BOARD ........................................ 22
XI. D. CUSTODIAN'S CONSENT TO USE OF ITS NAME ........................ 22
XI. E. NOTICES TO CUSTODIAN .......................................... 22
XI. F. NOTICES TO TRUST .............................................. 23
XI. G. AMENDMENTS IN WRITING ......................................... 23
XI. H. SUCCESSORS AND ASSIGNS ........................................ 23
XI. I. GOVERNING LAW ................................................. 23
XI. J. JURISDICTION .................................................. 23
XI. K. COUNTERPARTS .................................................. 23
XI. L. HEADINGS ...................................................... 23
APPENDIX A
APPENDIX B
APPENDIX C
APPENDIX D
APPENDIX E
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AMENDED AND RESTATED
CUSTODY AGREEMENT
This Amended and Restated Custody Agreement (the "Agreement") is entered
into as of the 31st day of May, 2002, by and between Diamond Hill Funds
(formerly The BSG Funds), an Ohio business trust (the "Trust") and U.S. Bank,
N.A. (formerly Star Bank, National Association) (the "Custodian"), a national
banking association having its principal office at 000 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxx, 00000.
WHEREAS, the Trust and Custodian heretofore entered into a Custodian
Agreement dated as of the 3rd day of June, 1997 which currently is in full force
and effect ("Current Agreement"); and
WHEREAS, the Trust and the Custodian desire to amend and update the Current
Agreement in certain minor respects and to enter into this Agreement to provide
for the custody and safekeeping of the assets of the Trust as required by the
Act (as hereafter defined) and desire that the Agreement amend in its entirety,
and replace, the Current Agreement.
THEREFORE, in consideration of the mutual promises hereinafter set forth,
the Trust and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
-----------
I. A. DEFINITIONS. The following words and phrases, when used in this
Agreement, unless the context otherwise requires, shall have the following
meanings:
ACT - the Investment Company Act of 1940, as amended.
1934 ACT - the Securities and Exchange Act of 1934, as amended.
AUTHORIZED PERSON - any person, whether or not any such person is an
officer or employee of the Trust, who is duly authorized by the Board of
Trustees of the Trust to give Oral Instructions and Written Instructions on
behalf of the Trust or any Fund, and named in Appendix A attached hereto and as
amended from time to time by resolution of the Board of Trustees, certified by
an Officer, and received by the Custodian.
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BOARD OF TRUSTEES - the Trustees from time to time serving under the
Trust's Amended and Restated Agreement and Declaration of Trust, as from time to
time amended.
BOOK-ENTRY SYSTEM - a federal book-entry system as provided in Subpart O of
Treasury Circular Xx. 000, 00 XXX 306, in Subpart B of 31 CFT Part 350, or in
such book-entry regulations of federal agencies as are substantially in the form
of Subpart O.
BUSINESS DAY - any day recognized as a settlement day by the New York Stock
Exchange, Inc. and any other day for which the Trust computes the net asset
value of Shares of any Fund.
DEPOSITORY - The Depository Trust Company ("DTC"), a limited purpose trust
company, its successor(s) and its nominee(s). Depository shall include any other
clearing agency registered with the SEC under Section 17A of the 1934 Act which
acts as a system for the central handling of Securities where all Securities of
any particular class or series of an issuer deposited within the system are
treated as fungible and may be transferred or pledged by bookkeeping entry
without physical delivery of the Securities provided that the Custodian shall
have received a copy of a resolution of the Board of Trustees, certified by an
Officer, specifically approving the use of such clearing agency as a depository
for the Funds.
DIVIDEND AND TRANSFER AGENT - the dividend and transfer agent appointed,
from time to time, pursuant to a written agreement between the dividend and
transfer agent and the Trust.
FOREIGN SECURITIES - a) securities issued and sold primarily outside of the
United States by a foreign government, a national of any foreign country, or a
trust or other organization incorporated or organized under the laws of any
foreign country or; b) securities issued or guaranteed by the government of the
United States, by any state, by any political subdivision or agency thereof, or
by any entity organized under the laws of the United States or of any state
thereof, which have been issued and sold primarily outside of the United States.
FUND - each series of the Trust listed in Appendix B and any additional
series added pursuant to Proper Instructions. A series is individually referred
to as a "Fund" and collectively referred to as the "Funds."
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MONEY MARKET SECURITY - debt obligations issued or guaranteed as to
principal and/or interest by the government of the United States or agencies or
instrumentalities thereof, commercial paper, obligations (including certificates
of deposit, bankers' acceptances, repurchase agreements and reverse repurchase
agreements with respect to the same), and time deposits of domestic banks and
thrift institutions whose deposits are insured by the Federal Deposit Insurance
Corporation, and short-term corporate obligations where the purchase and sale of
such securities normally require settlement in federal funds or their equivalent
on the same day as such purchase and sale, all of which mature in not more than
thirteen (13) months.
NASD - the National Association of Securities Dealers, Inc.
OFFICER - the Chairman, President, Secretary, Treasurer, any Vice
President, Assistant Secretary or Assistant Treasurer of the Trust.
ORAL INSTRUCTIONS - instructions orally transmitted to and received by the
Custodian from an Authorized Person (or from a person that the Custodian
reasonably believes in good faith to be an Authorized Person) and confirmed by
Written Instructions in such a manner that such Written Instructions are
received by the Custodian on the Business Day immediately following receipt of
such Oral Instructions.
PROPER INSTRUCTIONS - Oral Instructions or Written Instructions. Proper
Instructions may be continuing Written Instructions when deemed appropriate by
both parties.
PROSPECTUS - the Trust's then currently effective prospectus(es) and
Statement(s) of Additional Information, as filed with and declared effective
from time to time by the Securities and Exchange Commission.
SECURITY OR SECURITIES - Money Market Securities, common stock, preferred
stock. options, financial futures, bonds, notes, debentures, corporate debt
securities, mortgages, bank certificates of deposit, bankers' acceptances,
mortgage-backed securities or other obligations and any certificates, receipts,
warrants, or other instruments or documents representing rights to receive,
purchase, or subscribe for the same or evidencing or representing any other
rights or interest therein, or any similar property or assets, including
securities of any registered investment company, that the Custodian has the
facilities to clear and to service.
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SEC - the Securities and Exchange Commission of the United States of
America.
SHARES - with respect to a Fund, the units of beneficial interest issued by
the Trust on account of such Fund.
TRUST - the business trust organized under the laws of Ohio which is an
open-end management investment company registered under the Act.
WRITTEN INSTRUCTIONS - communications in writing actually received by the
Custodian from an Authorized Person. A communication in writing includes a
communication by facsimile, telex or between electro-mechanical or electronic
devices (where the use of such devices have been approved by resolution of the
Board of Trustees and the resolution is certified by an Officer and delivered to
the Custodian). All written communications shall be directed to the Custodian,
attention: Mutual Fund Custody Department.
ARTICLE II
APPOINTMENT: ACCEPTANCE; AND FURNISHING OF DOCUMENTS
----------------------------------------------------
II. A. APPOINTMENT OF CUSTODIAN. The Trust hereby constitutes and
appoints the Custodian as custodian of all Securities and cash owned by the
Trust at any time during the term of this Agreement.
II. B. ACCEPTANCE OF CUSTODIAN. The Custodian hereby accepts appointment
as such custodian and agrees to perform the duties thereof as hereinafter set
forth.
II. C. DOCUMENTS TO BE FURNISHED. The following documents, including any
amendments thereto, will be provided contemporaneously with the execution of the
Agreement, to the Custodian by the Trust:
1. A copy of the Amended and Restated Agreement and Declaration of Trust
of the Trust certified by the Secretary.
2. A copy of the By-Laws of the Trust certified by the Secretary.
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3. A copy of the resolution of the Board of Trustees of the Trust
appointing the Custodian, certified by the Secretary.
4. A copy of the then current Prospectus.
5. A Certificate of the President and Secretary of the Trust setting
forth the names and signatures of all Authorized Persons.
II. D. NOTICE OF APPOINTMENT OF DIVIDEND AND TRANSFER AGENT. The Trust
agrees to notify the Custodian in writing of the appointment, termination or
change in appointment of any Dividend and Transfer Agent.
ARTICLE III
RECEIPT OF TRUST ASSETS
-----------------------
III. A. DELIVERY OF MONEYS. During the term of this Agreement, the Trust
will deliver or cause to be delivered to the Custodian all moneys to be held by
the Custodian for the account of any Fund. The Custodian shall be entitled to
reverse any deposits made on any Fund's behalf where such deposits have been
entered and moneys are not finally collected within 30 days of the making of
such entry.
III. B. DELIVERY OF SECURITIES. During the term of this Agreement, the
Trust will deliver or cause to be delivered to the Custodian all Securities to
be held by the Custodian for the account of any Fund. The Custodian will not
have any duties or responsibilities with respect to such Securities until
actually received by the Custodian. The Custodian is hereby authorized by the
Trust, acting on behalf of the Fund, to actually deposit any assets of the Fund
in the Book-Entry System or in a Depository, provided, however, that the
Custodian shall always be accountable to the Trust for the assets of the Fund so
deposited. Assets deposited in the Book-Entry System or the Depository will be
represented in accounts which include only assets held by the Custodian for
customers, including but not limited to accounts in which the Custodian acts in
a fiduciary or representative capacity.
III. C. PAYMENTS FOR SHARES. As and when received, the Custodian shall
deposit to the account(s) of a Fund any and all payments for Shares of that Fund
issued or sold from time to time as they are received from the Trust's principal
underwriter or Dividend and Transfer Agent or from the Trust itself.
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III. D. DUTIES UPON RECEIPT. The Custodian shall not be responsible for
any Securities, moneys or other assets of any Fund until actually received.
ARTICLE IV
DISBURSEMENT OF TRUST ASSETS
----------------------------
IV. A. DECLARATION OF DIVIDENDS BY TRUST. The Trust shall furnish to the
Custodian a copy of the resolution of the Board of Trustees of the Trust,
certified by the Trust's Secretary, either (i) setting forth the date of the
declaration of any dividend or distribution in respect of Shares of any Fund of
the Trust, the date of payment thereof, the record date as of which the Fund
shareholders entitled to payment shall be determined, the amount payable per
share to Fund shareholders of record as of that date, and the total amount to be
paid by the Dividend and Transfer Agent on the payment date, or (ii) authorizing
the declaration of dividends and distributions in respect of Shares of a Fund on
a daily basis and authorizing the Custodian to rely on Written Instructions
setting forth the date of the declaration of any such dividend or distribution,
the date of payment thereof, the record date as of which the Fund shareholders
entitled to payment shall be determined, the amount payable per share to Fund
shareholders of record as of that date, and the total amount to be paid by the
Dividend and Transfer Agent on the payment date.
On the payment date specified in the resolution or Written Instructions
described above, the Custodian shall segregate such amounts from moneys held for
the account of the Fund so that they are available for such payment.
IV. B. SEGREGATION OF REDEMPTION PROCEEDS. Upon receipt of Proper
Instructions so directing it, the Custodian shall segregate amounts necessary
for the payment of redemption proceeds to be made by the Dividend and Transfer
Agent from moneys held for the account of the Fund so that they are available
for such payment.
IV. C. DISBURSEMENTS OF CUSTODIAN. Upon receipt of a Certificate
directing payment and setting forth the name and address of the person to whom
such payment is to be made, the amount of such payment, the name of the Fund
from which payment is to be made, and the purpose for which payment is to be
made, the Custodian shall disburse amounts as and when directed from the assets
of that Fund. The Custodian is authorized to rely on such directions and shall
be under no obligation to inquire as to the propriety of such directions.
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IV. D. PAYMENT OF CUSTODIAN FEES. Upon receipt of Written Instructions
directing payment, the Custodian shall disburse moneys from the assets of the
Trust in payment of the Custodian's fees and expenses as provided in Article
VIII hereof.
ARTICLE V
CUSTODY OF TRUST ASSETS
-----------------------
V. A. SEPARATE ACCOUNTS FOR EACH FUND. As to each Fund, the Custodian
shall open and maintain a separate bank account or accounts in the United States
in the name of the Trust coupled with the name of such Fund, subject only to
draft or order by the Custodian acting pursuant to the terms of this Agreement,
and shall hold all cash received by it from or for the account of the Fund,
other than cash maintained by the Fund in a bank account established and used by
the Fund in accordance with Rule 17f-3 under the Act. Moneys held by the
Custodian on behalf of a Fund may be deposited by the Custodian to its credit as
Custodian in the banking department of the Custodian. Such moneys shall be
deposited by the Custodian in its capacity as such, and shall be withdrawable by
the Custodian only in such capacity.
V. B. SEGREGATION OF NON-CASH ASSETS. All Securities and non-cash
property held by the Custodian for the account of a Fund (other than Securities
maintained in a Depository or Book-entry System) shall be physically segregated
from other Securities and non-cash property in the possession of the Custodian
(including the Securities and non-cash property of the other Funds) and shall be
identified as subject to this Agreement.
V. C. SECURITIES IN BEARER AND REGISTERED FORM. All Securities held
which are issued or issuable only in bearer form, shall be held by the Custodian
in that form; all other Securities held for the Fund may be registered in the
name of the Custodian, any sub-custodian appointed in accordance with this
Agreement, or the nominee of any of them. The Trust agrees to furnish to the
Custodian appropriate instruments to enable the Custodian to hold, or deliver in
proper form for transfer, any Securities that it may hold for the account of any
Fund and which may, from time to time, be registered in the name of a Fund.
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V. D. DUTIES OF CUSTODIAN AS TO SECURITIES. Unless otherwise instructed
by the Trust, with respect to all Securities held for the Trust, the Custodian
shall on a timely basis (concerning items 1 and 2 below, as defined in the
Custodian's Standards of Service Guide, as amended from time to time, annexed
hereto as Appendix D):
1.) Collect all income due and payable with respect to such Securities;
2.) Present for payment and collect amounts payable upon all Securities
which may mature or be called, redeemed, or retired, or otherwise
become payable;
3.) Surrender interim receipts or Securities in temporary form for
Securities in definitive form; and
4.) Execute, as Custodian, any necessary declarations or certificates of
ownership under the Federal income tax laws or the laws or regulations
of any other taxing authority, including any foreign taxing authority,
now or hereafter in effect.
V. E. CERTAIN ACTIONS UPON WRITTEN INSTRUCTIONS. Upon receipt of a
Written Instructions and not otherwise, the Custodian shall:
1.) Execute and deliver to such persons as may be designated in such
Written Instructions proxies, consents, authorizations, and any other
instruments whereby the authority of the Trust as beneficial owner of
any Securities may be exercised;
2.) Deliver any Securities in exchange for other Securities or cash issued
or paid in connection with the liquidation, reorganization,
refinancing, merger, consolidation, or recapitalization of any
corporation, or the exercise of any conversion privilege;
3.) Deliver any Securities to any protective committee, reorganization
committee, or other person in connection with the reorganization,
refinancing, merger, consolidation, recapitalization, or sale of
assets of any corporation, and receive and hold under the terms of
this Agreement such certificates of deposit, interim receipts or other
instruments or documents as may be issued to it to evidence such
delivery;
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4.) Make such transfers or exchanges of the assets of any Fund and take
such other steps as shall be stated in the Written Instructions to be
for the purpose of effectuating any duly authorized plan of
liquidation, reorganization, merger, consolidation or recapitalization
of the Trust; and
5.) Deliver any Securities held for any Fund to the depository agent for
tender or other similar offers.
V. F. CUSTODIAN TO DELIVER PROXY MATERIALS. The Custodian shall
promptly deliver to the Trust all notices, proxy material and executed but
unvoted proxies pertaining to shareholder meetings of Securities held by any
Fund. The Custodian shall not vote or authorize the voting of any Securities or
give any consent, waiver or approval with respect thereto unless so directed by
Written Instructions.
V. G. CUSTODIAN TO DELIVER TENDER OFFER INFORMATION. The Custodian
shall promptly deliver to the Trust all information received by the Custodian
and pertaining to Securities held by any Fund with respect to tender or exchange
offers, calls for redemption or purchase, or expiration of rights as described
in the Standards of Service Guide attached as Appendix D. If the Trust desires
to take action with respect to any tender offer, exchange offer or other similar
transaction, the Trust shall notify the Custodian at least five Business Days
prior to the date on which the Custodian is to take such action. The Trust will
provide or cause to be provided to the Custodian all relevant information for
any Security which has unique put/option provisions at least five Business Days
prior to the beginning date of the tender period.
V. H. CUSTODIAN TO DELIVER SECURITY AND TRANSACTION INFORMATION. On
each Business Day that the Federal Reserve Bank is open, the Custodian shall
furnish the Trust with a detailed statement of monies held for the Fund under
this Agreement and with confirmations and a summary of all transfers to or from
the account of the Fund. At least monthly and from time to time, the Custodian
shall furnish the Trust with a detailed statement of the Securities held for the
Fund under this Agreement. Where Securities are transferred to the account of
the Fund without physical delivery, the Custodian shall also identify as
belonging to the Fund a quantity of Securities in a fungible bulk of Securities
registered in the name of the Custodian (or its nominee) or shown on the
Custodian's account on the books of the Book-Entry System or the Depository.
With respect to information. provided by this section, it shall not be necessary
for the Custodian to provide notice as described by Article XI Section F.
Notices to Trust; it shall be sufficient to communicate by such means as shall
be mutually agreeable to the Trust and the Custodian.
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ARTICLE VI
PURCHASE AND SALE OF SECURITIES
VI. A. PURCHASE OF SECURITIES. Promptly after each purchase of
Securities by the Trust, the Trust shall deliver to the Custodian (i) with
respect to each purchase of Securities which are not Money Market Securities,
Written Instructions, and (ii) with respect to each purchase of Money Market
Securities, Proper Instructions, specifying with respect to each such purchase
the:
1.) name of the issuer and the title of the Securities,
2.) the number of shares, principal amount purchased (and accrued
interest, if any) or other units purchased,
3.) date of purchase and settlement,
4.) purchase price per unit,
5.) total amount payable,
6.) name of the person from whom, or the broker through which, the
purchase was made,
7.) the name of the person to whom such amount is payable, and
8.) the Fund for which the purchase was made.
The Custodian shall, against receipt of Securities purchased by or for the
Trust, pay out of the moneys held for the account of such Fund the total amount
specified in the Written Instructions, or Oral Instructions, if applicable, to
the person named therein. The Custodian shall not be under any obligation to pay
out moneys to cover the cost of a purchase of Securities for a Fund, if in the
relevant Fund custody account there is insufficient cash available to the Fund
for which such purchase was made. With respect to any repurchase agreement
transaction for the Funds, the Custodian shall assure that the collateral
reflected on the transaction advice is received by the Custodian.
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VI. B. SALE OF SECURITIES. Promptly after each sale of Securities by a
Fund, the Trust shall deliver to the Custodian (i) with respect to each sale of
Securities which are not Money Market Securities, Written Instructions, and (ii)
with respect to each sale of Money Market Securities, Proper Instructions,
specifying with respect to each such sale the:
1.) name of the issuer and the title of the Securities,
2.) number of shares, principal amount sold (and accrued interest, if any)
or other units sold,
3.) date of sale and settlement,
4.) sale price per unit,
5.) total amount receivable,
6.) name of the person to whom, or the broker through which, the sale was
made,
7.) name of the person to whom such Securities are to be delivered, and
8.) Fund for which the sale was made.
The Custodian shall deliver the Securities against receipt of the total amount
specified in the Written Instructions, or Oral Instructions, if applicable.
VI. C. DELIVERY VERSUS PAYMENT FOR PURCHASES AND SALES. Purchases and
sales of Securities effected by the Custodian will be made on a delivery versus
payment basis. The Custodian may, in its sole discretion, upon receipt of
Written Instructions, elect to settle a purchase or sale transaction in some
other manner, but only upon receipt of acceptable indemnification from the Fund.
VI. D. PAYMENT ON SETTLEMENT DATE. On contractual settlement date, the
account of the Fund will be charged for all purchased Securities settling on
that day, regardless of whether or not delivery is made. Likewise, on
contractual settlement date, proceeds from the sale of Securities settling that
day will be credited to the account of the Fund, irrespective of delivery.
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VI. E. SEGREGATED ACCOUNTS. The Custodian shall, upon receipt of Proper
Instructions so directing it, establish and maintain a segregated account or
accounts for and on behalf of a Fund. Cash and/or Securities may be transferred
into such account or accounts for specific purposes, to-wit:
1.) in accordance with the provision of any agreement among the Trust, the
Custodian, and a broker-dealer registered under the 1934 Act, and also
a member of the NASD (or any futures commission merchant registered
under the Commodity Exchange Act), relating to compliance with the
rules of the Options Clearing Corporation and of any registered
national securities exchange, the Commodity Futures Trading
Commission, any registered contract market, or any similar
organization or organizations requiring escrow or other similar
arrangements in connection with transactions by the Fund;
2.) for purposes of segregating cash or Securities in connection with
options purchased, sold, or written by the Fund or commodity futures
contracts or options thereon purchased or sold by the Fund;
3.) for the purpose of compliance by the Fund with the procedures required
for reverse repurchase agreements, firm commitment agreements, standby
commitment agreements, short sales, or any other securities by Act
Release No. 10666, or any subsequent release or releases or rule of
the SEC relating to the maintenance of segregated accounts by
registered investment companies;
4.) for the purpose of segregating collateral for loans of Securities made
by the Fund; and
5.) for other proper corporate purposes, but only upon receipt of, in
addition to Proper Instructions, a copy of a resolution of the Board
of Trustees, certified by an Officer, setting forth the purposes of
such segregated account.
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Each segregated account established hereunder shall be established and
maintained for a single Fund only. All Proper Instructions relating to a
segregated account shall specify the Fund involved.
VI. F. ADVANCES FOR SETTLEMENT. Except as otherwise may be agreed upon
by the parties hereto, the Custodian shall not be required to comply with any
Written Instructions to settle the purchase of any Securities on behalf of a
Fund unless there is sufficient cash in the account(s) pertaining to such Fund
at the time or to settle the sale of any Securities from such an account(s)
unless such Securities are in deliverable form. Notwithstanding the foregoing,
if the purchase price of such Securities exceeds the amount of cash in the
account(s) at the time of such purchase, the Custodian may, in its sole
discretion, advance the amount of the difference in order to settle the purchase
of such Securities. The amount of any such advance shall be deemed a loan from
the Custodian to the Trust payable on demand and bearing interest accruing from
the date such loan is made up to but not including the date such loan is repaid
at the rate per annum customarily charged by the Custodian on similar loans.
ARTICLE VII
TRUST INDEBTEDNESS
------------------
VII. A. BORROWINGS. In connection with any borrowings by the Trust, the
Trust will cause to be delivered to the Custodian by a bank or broker requiring
Securities as collateral for such borrowings (including the Custodian if the
borrowing is from the Custodian), a notice or undertaking in the form currently
employed by such bank or broker setting forth the amount of collateral. The
Trust shall promptly deliver to the Custodian Written Instructions specifying
with respect to each such borrowing: (a) the name of the bank or broker, (b) the
amount and terms of the borrowing, which may be set forth by incorporating by
reference an attached promissory note duly endorsed by the Trust, or a loan
agreement, (c) the date, and time if known, on which the loan is to be entered
into, (d) the date on which the loan becomes due and payable, (e) the total
amount payable to the Trust on the borrowing date, and (f) the description of
the Securities securing the loan, including the name of the issuer, the title
and the number of shares or other units or the principal amount. The Custodian
shall deliver on the borrowing date specified in the Written Instructions the
required collateral against the lender's delivery of the total loan amount then
payable, provided that the same conforms to that which is described in the
Written Instructions. The Custodian shall deliver, in the manner directed by the
Trust, such Securities as additional collateral, as may be specified in Written
Instructions, to secure further any transaction described in this Article VII.
The Trust shall cause all Securities released from collateral status to be
returned directly to the Custodian and the Custodian shall receive from time to
time such return of collateral as may be tendered to it.
13
The Custodian may, at the option of the lender, keep such collateral in its
possession, subject to all rights therein given to the lender because of the
loan. The Custodian may require such reasonable conditions regarding such
collateral and its dealings with third-party lenders as it may deem appropriate.
VII. B. ADVANCES. With respect to any advances of cash made by the
Custodian to or for the benefit of a Fund for any purpose which results in the
Fund incurring an overdraft at the end of any Business Day, such advance shall
be repayable immediately upon demand made by the Custodian at any time.
ARTICLE VIII
CONCERNING THE CUSTODIAN
------------------------
VIII. A. LIMITATIONS ON LIABILITY OF CUSTODIAN. Except as otherwise
provided herein, the Custodian shall not be liable for any loss or damage,
including counsel fees, resulting from its action or omission to act or
otherwise, except for any such loss or damage arising out of its negligence or
willful misconduct. The Trust, on behalf of the Fund and only from assets of the
Fund (or insurance purchased by the Trust with respect to its liabilities on
behalf of the Fund hereunder), shall defend, indemnify and hold harmless the
Custodian and its directors, officers, employees and agents with respect to any
14
loss, claim, liability or cost (including reasonable attorneys' fees) arising or
alleged to arise from or relating to the Trust's duties hereunder or any other
action or inaction of the Trust or its Trustees, officers, employees or agents,
except such as may arise from the negligent action, omission, willful misconduct
or breach of this Agreement by the Custodian, its directors, officers, employees
or agents.. The Custodian shall defend, indemnify and hold harmless the Trust
and its trustees, officers, employees or agents with respect to any loss, claim,
liability or cost (including reasonable attorneys' fees) arising or alleged to
arise from or relating to the Custodian's duties as specifically set forth in
this agreement with respect to the Fund hereunder or any other action or
inaction of the Custodian or its directors, officers, employees, agents,
nominees, or Sub-Custodians as to the Fund, except such as may arise from the
negligent action, omission or willful misconduct of the Trust, its trustees,
officers, employees, or agents. The Custodian may, with respect to questions of
law apply for and obtain the advice and opinion of counsel to the Trust at the
expense of the Fund, or of its own counsel at its own expense, and shall be
fully protected with respect to anything done or omitted by it in good faith in
conformity with the advice or opinion of counsel to the Trust, and shall be
similarly protected with respect to anything done or omitted by it in good faith
in conformity with advice or opinion of its counsel, unless counsel-to the Fund
shall, within a reasonable time after being notified of legal advice received by
the Custodian, have a differing interpretation of such question of law. The
Custodian shall be liable to the Trust for any proximate loss or damage
resulting from the use of the Book-Entry System or any Depository arising by
reason of any negligence, misfeasance or misconduct on the part of the Custodian
or any of its employees, agents, nominees or Sub-Custodians, but not for any
special, incidental, consequential, or punitive damages; provided, however, that
nothing contained herein shall preclude recovery by the Trust, on behalf of the
Fund, of principal and of interest to the date of recovery on Securities
incorrectly omitted from the Fund's account or penalties imposed on the Trust,
in connection with the Fund, for any failures to deliver Securities.
In any case in which one party hereto may be asked to indemnify the other
or hold the other harmless, the party from whom indemnification is sought (the
"Indemnifying Party") shall be advised of all pertinent facts concerning the
situation in question, and the party claiming a right to indemnification (the
"Indemnified Party") will use reasonable care to identify and notify the
Indemnifying Party promptly concerning any situation which presents or appears
to present a claim for indemnification against the Indemnifying Party. The
Indemnifying Party shall have the option to defend the Indemnified Party against
any claim which may be the subject of the indemnification, and in the event the
Indemnifying Party so elects, such defense shall be conducted by counsel chosen
by the Indemnifying Party and
15
satisfactory to the Indemnified Party and the Indemnifying Party will so notify
the Indemnified Party and thereupon such Indemnifying Party shall take over the
complete defense of the claim and the Indemnifying Party shall sustain no
further legal or other expenses in such situation for which indemnification has
been sought under this paragraph, except the expenses of any additional counsel
retained by the Indemnified Party. In no case shall any party claiming the right
to indemnification confess any claim or make any compromise in any case in which
the other party has been asked to indemnify such party (unless such confession
or compromise is made with such other party's prior written consent. The
provisions of this section VIII. A. shall survive the termination of this
Agreement.
VIII. B. ACTIONS NOT REQUIRED BY CUSTODIAN. Without limiting the
generality of the foregoing, the Custodian, acting in the capacity of Custodian
hereunder, shall be under no obligation to inquire into, and shall not be liable
for:
1.) The validity of the issue of any Securities purchased by or for the
account of any Fund, the legality of the purchase thereof, or the
propriety of the amount paid therefor;
2.) The legality of the sale of any Securities by or for the account of
any Fund, or the propriety of the amount for which the same are sold;
3.) The legality of the issue or sale of any Shares of any Fund, or the
sufficiency of the amount to be received therefor;
4.) The legality of the redemption of any Shares of any Fund, or the
propriety of the amount to be paid therefor;
5.) The legality of the declaration or payment of any dividend by the
Trust in respect of Shares of any Fund;
6.) The legality of any borrowing by the Trust on behalf of the Trust or
any Fund, using Securities as collateral;
16
7.) Whether the Trust or a Fund is in compliance with the Act, the
regulations thereunder, the provisions of the Trust's charter
documents or by-laws, or its investment objectives and policies as
then in effect.
VIII. C. NO DUTY TO COLLECT AMOUNTS DUE FROM DIVIDEND AND TRANSFER AGENT.
The Custodian shall not be under any duty or obligation to take action to effect
collection of any amount due to the Trust from any Dividend and Transfer Agent
of the Trust nor to take any action to effect payment or distribution by any
Dividend and Transfer Agent of the Trust of any amount paid by the Custodian to
any Dividend and Transfer Agent of the Trust in accordance with this Agreement.
VIII. D. NO ENFORCEMENT ACTIONS. Notwithstanding Section D of Article V,
the Custodian shall not be under any duty or obligation to take action, by legal
means or otherwise, to effect collection of any amount, if the Securities upon
which such amount is payable are in default, or if payment is refused after due
demand or presentation, unless and until (i) it shall be directed to take such
action by Written Instructions and (ii) it shall be assured to its satisfaction
(including prepayment thereof) of reimbursement of its costs and expenses in
connection with any such action.
VIII. E. AUTHORITY TO USE AGENTS AND SUB-CUSTODIANS. The Trust
acknowledges and hereby authorizes the Custodian to hold Securities through its
various agents described in Appendix C annexed hereto. In addition, the Trust
acknowledges that the Custodian may appoint one or more financial institutions,
as agent or agents or as sub-custodian or sub-custodians, including, but not
limited to, banking institutions located in foreign countries, for the purpose
of holding Securities and moneys at any time owned by the Fund. The Custodian
shall not be relieved of any obligation or liability under this Agreement in
connection with the appointment or activities of such agents or sub-custodians.
Any such agent or sub-custodian shall be qualified to serve as such for assets
of investment companies registered under the Act. The Funds shall reimburse the
Custodian for all costs incurred by the Custodian in connection with opening
accounts with any such agents or sub-custodians. Upon request, the Custodian
shall promptly forward to the Trust any documents it receives from any agent or
sub-custodian appointed hereunder which may assist trustees of registered
investment companies to fulfill their responsibilities under Rule 17f-5 of the
Act.
17
VIII. F. NO DUTY TO SUPERVISE INVESTMENTS. The Custodian shall not be
under any duty or obligation to ascertain whether any Securities at any time
delivered to or held by it for the account of the Trust are such as properly may
be held by the Trust under the provisions of the Declaration of Trust and the
Trust's By-Laws.
VIII. G. ALL RECORDS CONFIDENTIAL. The Custodian shall treat all records
and other information relating to the Trust and the assets of all Funds as
confidential and shall not disclose any such records or information to any other
person unless (i) the Trust shall have consented thereto in writing or (ii) such
disclosure is compelled by law.
VIII. H. COMPENSATION OF CUSTODIAN. The Custodian shall be entitled to
receive and the Trust agrees to pay to the Custodian, for the Fund's account
from the Fund's assets only, such compensation as shall be determined pursuant
to Appendix E attached hereto, or as shall be determined pursuant to amendments
to Appendix E as approved by the Custodian and the Trust. The Custodian shall be
entitled to charge against any money held by it for the accounts of the Fund the
amount of any loss, damage, liability or expense, including counsel fees, for
which it shall be entitled to reimbursement under the provisions of this
Agreement as determined by agreement of the Custodian and the Trust or by the
final order of any court or arbitrator having jurisdiction and as to which all
rights of appeal shall have expired. The expenses which the Custodian may charge
against the account of a Fund include, but are not limited to, the expenses of
agents or Sub-Custodians incurred in settling transactions involving the
purchase and sale of Securities of the Fund.
VIII. I. RELIANCE UPON INSTRUCTIONS. The Custodian shall be entitled to
rely upon any Proper Instructions if such reliance is made in good faith. The
Trust agrees to forward to the Custodian Written Instructions confirming Oral
Instructions in such a manner so that such Written Instructions are received by
the Custodian, whether by hand delivery, telex, facsimile or otherwise, on the
same Business Day on which such Oral Instructions were given. The Trust agrees
that the failure of the Custodian to receive such confirming instructions shall
in no way affect the validity of the transactions or enforceability of the
transactions hereby authorized by the Trust. The Trust agrees that the Custodian
shall incur no liability to the Trust for acting upon Oral Instructions given to
the Custodian hereunder concerning such transactions.
18
VIII. J. BOOKS AND RECORDS. The Custodian will (i) set up and maintain
proper books of account and complete records of all transactions in the accounts
maintained by the Custodian hereunder in such manner as will meet the
obligations of the Fund under the Act, with particular attention to Section 31
thereof and Rules 31a-1 and 31a-2 thereunder and those records are the property
of the Trust, and (ii) preserve for the periods prescribed by applicable Federal
statute or regulation all records required to be so preserved. All such books
and records shall be the property of the Trust, and shall be available, upon
request, for inspection by duly authorized officers, employees or agents of the
Trust and employees of the SEC.
VIII. K. INTERNAL ACCOUNTING CONTROL SYSTEMS. The Custodian shall send to
the Trust any report received on the systems of internal accounting control of
the Custodian, or its agents or sub-custodians, as the Trust may reasonably
request from time to time.
VIII. L. NO MANAGEMENT OF ASSETS BY CUSTODIAN. The Custodian performs only
the services of a custodian and shall have no responsibility for the management,
investment or reinvestment of the Securities or other assets from time to time
owned by any Fund. The Custodian is not a selling agent for Shares of any Fund
and performance of its duties as custodian shall not be deemed to be a
recommendation to any Fund's depositors or others of Shares of the Fund as an
investment. The Custodian shall have no duties or obligations whatsoever except
such duties and obligations as are specifically set forth in this Agreement, and
no covenant or obligation shall be implied in this Agreement against the
Custodian.
VIII. M. ASSISTANCE TO TRUST. The Custodian shall take all reasonable
action, that the Trust may from time to time request, to assist the Trust in
obtaining favorable opinions from the Trust's independent accountants, with
respect to the Custodian's activities hereunder, in connection with the
preparation of the Trust's Form N-IA, Form N-SAR, or other annual reports to the
SEC.
19
VIII. X. XXXXX OF SECURITY INTEREST. The Trust hereby pledges to and
grants the Custodian a security interest in the assets of any Fund to secure the
payment of any liabilities of the Fund to the Custodian for money borrowed from
the Custodian. This pledge is in addition to any other pledge of collateral by
the Trust to the Custodian.
ARTICLE IX
TERMINATION
-----------
IX. A. TERMINATION. Either party hereto may terminate this Agreement for
any reason by giving to the other party a notice in writing specifying the date
of such termination, which shall be not less than ninety (90) days after the
date of giving of such notice. If such notice is given by the Trust, it shall be
accompanied by a copy of a resolution of the Board of Trustees of the Trust,
certified by the Secretary of the Trust, electing to terminate this Agreement
and designating a successor custodian or custodians each of which shall be a
bank or trust company having not less than $100,000,000 aggregate capital,
surplus, and undivided profits. In the event such notice is given by the
Custodian, the Trust shall, on or before the termination date, deliver to the
Custodian a copy of a resolution of the Board of Trustees of the Trust,
certified by the Secretary, designating a successor custodian or custodians to
act on behalf of the Trust. In the absence of such designation by the Trust, the
Custodian may designate a successor custodian which shall be a bank or trust
company having not less than $100,000,000 aggregate capital, surplus, and
undivided profits. Upon the date set forth in such notice this Agreement shall
terminate, and the Custodian, provided that it has received a notice of
acceptance by the successor custodian, shall deliver, on that date, directly to
the successor custodian all Securities and monies then owned by the Fund and
held by it as Custodian. Upon termination of this Agreement, the Trust shall pay
to the Custodian on behalf of the Trust such compensation as may be due as of
the date of such termination. The Trust agrees on behalf of the Trust that the
Custodian shall be reimbursed for its reasonable costs in connection with the
termination of this Agreement.
IX. B. FAILURE TO DESIGNATE SUCCESSOR TRUSTEE. If a successor custodian
is not designated by the Trust, or by the Custodian in accordance with the
preceding paragraph, or the designated successor cannot
20
or will not serve, the Trust shall, upon the delivery by the Custodian to the
Trust of all Securities (other than Securities held in the Book-Entry System
which cannot be delivered to the Trust) and moneys then owned by the Trust, be
deemed to be the custodian for the Trust, and the Custodian shall thereby be
relieved of all duties and responsibilities pursuant to this Agreement, other
than the duty with respect to Securities held in the Book-Entry System, which
cannot be delivered to the Trust, which shall be held by the Custodian in
accordance with this Agreement.
ARTICLE X
FORCE MAJEURE
-------------
Neither the Custodian nor the Trust shall be liable for any failure or
delay in performance of its obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond its reasonable control,
including, without limitation, acts of God; earthquakes; fires; floods; wars;
civil or military disturbances; sabotage; strikes; epidemics; riots; labor
disputes; acts of civil or military authority; governmental actions; or
inability to obtain labor, material, equipment or transportation; provided,
however, that the Custodian, in the event of a failure or delay, shall use its
best efforts to ameliorate the effects of any such failure or delay.
ARTICLE XI
MISCELLANEOUS
-------------
XI. A. DESIGNATION OF AUTHORIZED PERSONS. Appendix A sets forth the
names and the signatures of all Authorized Persons as of this date, as certified
by the Secretary of the Trust. The Trust agrees to furnish to the Custodian a
new Appendix A in form similar to the attached Appendix A, if any present
Authorized Person ceases to be an Authorized Person or if any other or
additional Authorized Persons are elected or appointed. Until such new Appendix
A shall be received, the Custodian shall be fully protected in acting under the
provisions of this Agreement upon Oral Instructions or signatures of the then
current Authorized Persons as set forth in the last delivered Appendix A.
XI. B. LIMITATION OF PERSONAL LIABILITY. No recourse under any
obligation of this Agreement or for any claim based thereon shall be had against
any organizer, shareholder, officer, trustee, past, present
21
or future as such, of the Trust or of any predecessor or successor, either
directly or through the Trust or any such predecessor or successor, whether by
virtue of any constitution, statute or rule of law or equity, or by the
enforcement of any assessment or penalty or otherwise; it being expressly agreed
and understood that this Agreement and the obligations thereunder are
enforceable solely against the assets of the Trust, and that no such personal
liability whatever shall attach to, or is or shall be incurred by, the
organizers, shareholders, officers, or trustees of the Trust or of any
predecessor or successor, or any of them as such, because of the obligations
contained in this Agreement or implied therefrom and that any and all such
liability is hereby expressly waived and released by the Custodian as a
condition of, and as a consideration for, the execution of this Agreement.
XI. C. AUTHORIZATION BY BOARD. The obligations set forth in this
Agreement as having been made by the Trust have been made by the Board of
Trustees, acting as such Trustees for and on behalf of the Trust, pursuant to
the authority vested in them under the laws of the State of Ohio, the
Declaration of Trust and the By-Laws of the Trust. This Agreement has been
executed by Officers of the Trust as officers, and not individually, and the
obligations contained herein are not binding upon any of the Trustees, Officers,
agents or holders of shares, personally, but bind only the Trust and then only
to the extent of the assets of the Trust.
XI. D. CUSTODIAN'S CONSENT TO USE OF ITS NAME. The Trust shall obtain
the Custodian's consent prior to the publication and/or dissemination or
distribution, of the Prospectus and any other documents (including advertising
material) specifically mentioning the Custodian (other than merely by name and
address).
XI. E. NOTICES TO CUSTODIAN. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the Custodian, shall be
sufficiently given if addressed to the Custodian and mailed or delivered to it
at its offices at U.S. Bank, N.A., 425 Walnut .Street, M. L. XX-XX-00XX,
Xxxxxxxxxx, Xxxx 00000, attention Mutual Fund Custody Department, or at such
other place as the Custodian may from time to time designate in writing.
22
XI. F. NOTICES TO TRUST. Any notice or other instrument in writing,-
authorized or required by this Agreement to be given to the Trust shall be
sufficiently given when delivered to the Trust or on the second Business Day
following the time such notice is deposited in the U.S. mail postage prepaid and
addressed to the Trust at its office at 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000,
Xxxxxxxx, Xxxx 00000 or at such other place as the Trust may from time to time
designate in writing.
XI. G. Amendments In Writing. This Agreement, with the exception of the
Appendices, may not be amended or modified in any manner except by a written
agreement executed by both parties with the same formality as this Agreement,
and authorized and approved by a resolution of the Board of Trustees of the
Trust.
XI. H. SUCCESSORS AND ASSIGNS. This Agreement shall extend to and shall
be binding upon the parties hereto, and their respective successors and assigns;
provided, however, that this Agreement shall not be assignable by the Trust or
by the Custodian, and no attempted assignment by the Trust or the Custodian
shall be effective without the written consent of the other party hereto.
XI. I. GOVERNING LAW. This Agreement shall be construed in accordance
with the laws of the State of Ohio.
XI. J. JURISDICTION. Any legal action, suit or proceeding to be
instituted by either party with respect to this Agreement shall be brought by
such party exclusively in the courts of the State of Ohio or in the courts of
the United States for the Southern District of Ohio, and each party, by its
execution of this Agreement, irrevocably (i) submits to such jurisdiction and
(ii) consents to the service of any process or pleadings by first class U.S.
mail, postage prepaid and return receipt requested, or by any other means from
time to time authorized by the laws of such jurisdiction.
XI. K. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
XI. L. HEADINGS. The headings of paragraphs in this Agreement are for
convenience of reference only and shall not affect the meaning or construction
of any provision of this Agreement.
23
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective Officers, thereunto duly authorized as of the day
and year first above written.
ATTEST: TRUST:
Diamond Hill Funds
By: /s/ Xxxxx X. Xxxxx
----------------------------
Xxxxx X. Xxxxx
Title: President
---------------------
ATTEST: CUSTODIAN:
U.S. Bank, N.A.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------
Xxxxxx X. Xxxxxxx
Title: Senior Vice President
---------------------
24
APPENDIX A
Authorized Persons Specimen Signatures
------------------ -------------------
Trust Officers:
President: Xxxxx X. Xxxxx
----------------------
Vice President: ___________________
----------------------
Secretary: Xxxxxx X. Xxxxx
----------------------
Treasurer: Xxxxx X. Xxxxx
----------------------
Adviser Employees: X.X. Xxxxxx
----------------------
Xxxxxx X. Xxxxxxxxx
----------------------
Xxxxxxxxxxx Xxxxxxxx
----------------------
Xxxx X. Xxxxxx
----------------------
Xxxxxxx X. Zox
----------------------
Transfer Agent/Fund Accountant
Employees:
Xxxxx XxXxxxxx
----------------------
Xxxxx Xxxxxxxxx
----------------------
Xxxxxxx Xxxxxx
----------------------
Xxxxx Xxxx
----------------------
APPENDIX B
19-2450 DIAMOND HILL BANK & FINANCIAL FUND
19-2451 DIAMOND HILL FOCUS FUND
19-2452 DIAMOND HILL SMALL CAP FUND
19-2453 DIAMOND HILL LARGE CAP FUND
19-2454 DIAMOND HILL SHORT TERM FIXED INCOME FUND
APPENDIX C
AGENTS OF THE CUSTODIAN
The following agents are employed currently by U.S. Bank, N.A. for
securities processing and control ...
The Depository Trust Company (New York)
0 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
The Federal Reserve Bank
Cincinnati and Cleveland Branches
Bank of New York
0 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
(For Foreign Securities and certain non-DTC eligible Securities)
APPENDIX D
U. S. BANK INSTITUTIONAL CUSTODY SERVICES
STANDARDS OF SERVICE GUIDE
May, 2002
U. S. Bank, N.A. is committed to providing superior quality service to all
customers and their agents at all times. We have compiled this guide as a tool
for our clients to determine our standards for the processing of security
settlements, payment collection, and capital change transactions. Deadlines
recited in this guide represent the times required for U. S. Bank to guarantee
processing. Failure to meet these deadlines will result in settlement at our
client's risk. In all cases, U. S. Bank will make every effort to complete all
processing on a timely basis.
U. S. Bank is a direct participant of the Depository Trust Company, a
direct member of the Federal Reserve Bank of Cleveland, and utilizes the Bank of
New York as its agent for ineligible and foreign securities.
For corporate reorganizations, U. S. Bank utilizes SEI's Reorg Source,
Financial Information, Inc., XCITEK, DTC Important Notices, Capital Changes
Daily (CCH) and the Wall Street Journal.
For bond calls and mandatory puts, U. S. Bank utilizes SEI's Bond Source,
Xxxxx Information Systems, Standard & Poor's Corporation, XCITEK, and DTC
Important Notices. U. S. Bank will not notify clients of optional put
opportunities.
Any securities delivered free to U. S. Bank or its agents must be received
three (3) business days prior to any payment or settlement in order for the U.
S. Bank standards of service to apply.
Should you have any questions regarding the information contained in this
guide, please feel free to contact your account representative.
The information contained in this Standards of Service Guide is subject to
change. Should any changes be made U. S. Bank will provide you with an
updated copy of its Standards of Service Guide.
U. S. BANK SECURITY SETTLEMENT STANDARDS
TRANSACTION TYPE INSTRUCTIONS DEADLINES* DELIVERY INSTRUCTIONS
DTC 1:30 P.M. on Settlement Date DTC Participant #0000
Xxxxx Xxxx XX 00000
Institutional #________________
For Account #____________
Federal Reserve Book Entry 12:30 P.M. on Settlement Date Federal Reserve Bank of Cleveland
for U. S. Bank, N.A. ABA# 000000000
XXXXX/1050
For Account #_____________
Federal Reserve Book Entry 1:00 P.M. on Settlement Date Federal Reserve Bank of Cleveland
(Repurchase Agreement for U. S. Bank, N.A. ABA# 000000000
Collateral Only) XXXXX/1040
For Account #_____________
PTC Securities 12:00 P.M. on Settlement Date Federal Reserve Bank of Cleveland
(GNMA Book Entry) for U. S. Bank, N.A. ABA# 000000000
XXXXX/1050
For Account #_____________
Physical Securities 9:30 A.M. EST on Settlement Date U. S. Bank Trust Services
(for Deliveries, by 4:00 P.M. on X.X. Xxx 0000
Settlement Date minus 1) Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Securities Processing
CEDEL/EURO-CLEAR 11:00 A..M. on Settlement Date Bank of New York Cedel Account 55021
minus 2 For the Account: Firstar Trust Services
Account: 387000 Firstar Bank / Global Omnibus
Cash Wire Transfer 3:00 P.M. U. S. Bank,X.X. Xxxxx/Trust ABA# 000000000
Credit Account #112950027
Account of U. S. Trust Services
Further Credit to ___________
Account # _______________
* All times listed are Eastern Standard Time.
U. S. BANK PAYMENT STANDARDS
SECURITY TYPE INCOME PRINCIPAL
Equities Payable Date
Municipal Bonds* Payable Date Payable Date
Corporate Bonds* Payable Date Payable Date
Federal Reserve Bank Book Entry* Payable Date Payable Date
PTC GNMA's (P&I) Payable Date + 1 Payable Date + 1
CMOs *
DTC Payable Date + 1 Payable Date + 1
Bank of New York Payable Date + 1 Payable Date + 1
SBA Loan Certificates When Received When Received
Unit Investment Trust Certificates* Payable Date Payable Date
Certificates of Deposit* Payable Date + 1 Payable Date + 1
Limited Partnerships When Received When Received
Foreign Securities When Received When Received
*Variable Rate Securities
Federal Reserve Bank Book Entry Payable Date Payable Date
DTC Payable Date + 1 Payable Date + 1
Bank of New York Payable Date + 1 Payable Date + 1
NOTE: If a payable date falls on a weekend or bank holiday, payment
will be made on the immediately following business day.
U. S. BANK CORPORATE REORGANIZATION STANDARDS
TYPE OF ACTION NOTIFICATION TO CLIENT DEADLINE FOR CLIENT INSTRUCTIONS TRANSACTION
TO U. S. BANK POSTING
Rights, Warrants, Later of 10 business days prior 5 business days prior to expiration Upon receipt
and Optional Mergers to expiration or receipt of notice
Mandatory Puts with Later of 10 business days prior 5 business days prior to expiration Upon receipt
Option to Retain to expiration or receipt of notice
Class Actions 10 business days prior to expiration 5 business days prior to expiration Upon receipt
date
Voluntary Tenders, Later of 10 business days prior 5 business days prior to expiration Upon receipt
Exchanges, to expiration or receipt of notice
and Conversions
Mandatory Puts, Defaults, At posting of funds or securities None Upon receipt
Liquidations, Bankruptcies, received
Stock Splits, Mandatory
Exchanges
Full and Partial Calls Later of 10 business days prior to None Upon receipt
expiration or receipt of notice
NOTE: Fractional shares/par amounts resulting from any of the above
will be sold.
APPENDIX E
SCHEDULE OF COMPENSATION
DIAMOND HILL FUNDS
Star Bank, N.A., as Custodian, will receive monthly compensation for services
according to the terms of the following Schedule:
I. PORTFOLIO TRANSACTION FEES:
---------------------------
(a) For each repurchase agreement transaction $ 7.00
(b) For each portfolio transaction processed through
DTC or Federal Reserve $ 9.00
(c) For each portfolio transaction processed through
our New York custodian $25.00
(d) For each GNMA/Amortized Security Purchase $16.00
(e) For each GNMA Prin/Int Paydown, GNMA Sales $ 8.00
(f) For each option/future contract written, exercised
or expired $40.00
(g) For each Cedel/Euro clear transaction $80.00
(h) For each Disbursement (Fund expenses only) $ 5.00
A transaction is a purchase/sale of a security, free receipt/free delivery
(excludes initial conversion), maturity, tender or exchange:
II. MONTHLY VALUE FEE (aggregate for all funds in
the series trust) Based upon an annual rate of: Million
-------
.0003 (3 Basis Points) on First $20
.0002 (2 Basis Points) on Next $20
.00015 (1.5 Basis Points) on Balance
III. MONTHLY MINIMUM FEE-PER FUND $400.00
IV. OUT-OF-POCKET EXPENSES
The only out-of-pocket expenses charged to your
account will be shipping fees or transfer fees.
V. XXX DOCUMENTS
Per Shareholder/year to hold each XXX Document $ 8.00
VI. EARNINGS CREDITS
On a monthly basis any earnings credits generated from uninvested custody
balances will be applied against any cash management service fees
generated. Earnings credits are based on the average yield on the 91 day
U.S. Treasury Xxxx for the preceding thirteen weeks less the 10% reserve.
APPENDIX E SCHEDULE OF COMPENSATION CONTINUED
25
SERVICES UNIT COST ($) MONTHLY COST ($)
-------- ------------- ----------------
D.D.A. Account Maintenance 14.00
Deposits .399
Deposited Items .109
Checks Paid .159
Balance Reporting - P.C. Access 50.00
ACH Transaction .095
ACH Monthly Maintenance 40.00
Controlled Disbursement (1st account) 110.00
Each additional account 25.00
Deposited Items Returned 6.00
International Items Returned 10.00
NSF Returned Checks 25.00
Stop Payments 22.00
Data Transmission per account 110.00
Date Capture* .10
Drafts Cleared .179
Lockbox Maintenance** 55.00
Lockbox items Processed
with copy of check .32
without copy of check .26
Checks Printed .20
Positive Pay .06
Issued Items .015
Wires Incoming
Domestic 10.00
International 10.00
Wires Outgoing
Domestic
Repetitive 12.00
Non-Repetitive 13.00
International
Repetitive 35.00
Non-Repetitive 40.00
PC - Initiated Wires:
Domestic
Repetitive 9.00
Non-Repetitive 9.00
International
Repetitive 25.00
Non-Repetitive 25.00
------------------------------------
***Uncollected Charge Star Bank Prime Rate as of first of month plus 4%
* Price can vary depending upon what information needs to be captured
** With the use of lockbox, the collected balance in the demand deposit
account will be significantly increased and therefore earnings to offset
cash management service fees will be maximized.
*** Fees for uncollected balances are figured on the MONTHLY AVERAGE OF ALL
COMBINED ACCOUNTS.
**** Other available cash management services are priced separately.
