FOURTH AMENDED AND RESTATED ADMINISTRATIVE, FUND ACCOUNTING AND TRANSFER AGENCY SERVICES AGREEMENT
Exhibit
23(h)(x)
FOURTH AMENDED
AND RESTATED
ADMINISTRATIVE,
FUND ACCOUNTING
AND
TRANSFER AGENCY SERVICES AGREEMENT
FOURTH AMENDED
AND RESTATED ADMINISTRATIVE, FUND ACCOUNTINGAND
TRANSFER AGENCY SERVICES AGREEMENT
dated as
of May 31, 2002, as amended August 8, 2002, January 31,
2005,
April
30, 2005 and April 30, 2006 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 custodian, 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 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.
| Diamond Hill Funds | ||
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| By: | /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ | |
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▇▇▇▇▇ ▇. ▇▇▇▇▇ |
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| Its: | President | |
| Diamond Hill Capital Management, Inc. | ||
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| By: | /s/ ▇.▇. ▇▇▇▇▇▇ | |
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▇.▇. ▇▇▇▇▇▇ |
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| Its: | President | |
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Schedule
A
April
30,
2006
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 0.36% 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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