SECURITIES LENDING AGREEMENT: Customer Agreement (Fund/Indemnified)
Customer
Agreement (Fund/Indemnified)
Customer
Agreement
This
Securities
Lending Agreement, made as of this 1st
day of May, 2007
including all exhibits attached hereto, all of the terms of which are
incorporated herein by reference, in each case, as amended and/or supplemented
from time to time in accordance with the terms hereof (this “Agreement”),
by and between
U.S. Bank National Association (the “Bank”)
and Diamond Hill
Funds, an Ohio Business Trust, on behalf of each respective series identified
in
Exhibit A attached hereto (each such series hereinafter referred to as a
separate “Customer”).
WITNESSETH:
WHEREAS,
Customer
is an open-end management investment company registered under the Investment
Company Act of 1940 (the “1940 Act”) which offers its shares in one or more
separate series, with each such series representing a separate and distinct
pool
of cash, securities, and other assets (collectively “Property”);
and
WHEREAS,
the
Customer desires to have the Bank engage in securities lending as Customer’s
agent with respect to certain Securities; and
WHEREAS,
the Bank
and the Customer desire to specify the terms and conditions under which such
securities lending will be performed.
NOW,
THEREFORE, in
consideration of the mutual premises, covenants and undertakings set forth
herein, the parties hereto agree as follows:
1. Definitions:
For purposes
hereof:
“Borrower”
shall
be, subject
to the other provisions of this Agreement, one or more (i) broker-dealers
registered under the Securities Exchange Act of 1934 (the “1934 Act”); (ii)
broker-dealers exempt from registration under 15(a)(1) of the 1934 Act as a
dealer in exempted Government Securities, or (iii) bank(s), with which the
Bank
or one of its agents has established a securities lending agreement whereby
Borrower may borrow Securities and which the Customer has expressly approved
in
accordance with the last sentence of this paragraph. Such potential Borrowers
are listed in Exhibit B attached hereto. Borrowers may be added to or deleted
from Exhibit B by (i) the Customer by means of written notice delivered by
the
Customer to the Bank, or (ii) written notice delivered by the Bank to the
Customer which is confirmed by the Customer via letter, fax or
e-mail.
“Borrower
Agreement”
shall
have the
meaning provided such term in Section 3(a) hereof.
“Business
Day”
shall
mean, with
respect to any Loan hereunder, a day on which regular trading occurs in the
principal market for the Loaned Securities subject to such Loan, provided,
however, that for purposes of determining the Market Value of any Securities
hereunder, such term shall mean a day on which regular trading occurs in the
principal market for the Securities whose value is being determined.
Notwithstanding the foregoing, in no event shall a Saturday or Sunday be
considered a Business Day.
“Close
of
Trading”
shall
mean, with
respect to any Security, the end of the primary trading session established
by
the principal market for such Security on a Business Day.
“Collateral”
shall
be
collateral which the Bank shall receive from Borrower(s) to secure Loans on
behalf of a Customer in the form of (i) cash denominated in United States
dollars (“Cash
Collateral”),
(ii) securities
issued or guaranteed by the United States Government or its agencies, or (iii)
irrevocable bank letters of credit issued by a person other than the Borrower
or
an affiliate thereof, or equivalent obligation denominated in United States
dollars..
“Government
Securities”
shall
mean
government securities as defined in Section 3(a)(42)(A)-(C) of the 1934 Act,
as
amended.
“Loans”
shall
be the
lending of Securities to Borrower(s).
“Loaned
Securities”
shall
be those
Securities which are loaned to the Borrower(s) by the Bank, securities identical
to such Securities, or securities equivalent to such loaned securities in the
event of a reorganization, recapitalization or merger affecting the originally
loaned securities.
“Margin
Percentage”
shall
mean, with
respect to any Loan as of any date, a percentage agreed to by the Borrower
and
the Bank, provided that in no event shall the Margin Percentage be less than
100% of the Market Value of the Loaned Securities.
“▇▇▇▇
to
Market”
shall
be the
procedure whereby the Bank determines the Market Value of securities Collateral
and Loaned Securities.
“Market
Value”
shall
be:
(i) If
the principal
market for the securities to be valued is a national securities exchange in
the
United States, their Market Value shall be determined by their last sale price
on such exchange at the most recent Close of Trading or, if there was no sale
on
the Business Day of the most recent Close of Trading, by the last sale price
at
the Close of Trading on the next preceding Business Day on which there was
a
sale on such exchange, all as quoted on the Consolidated Tape or, if not quoted
on the Consolidated Tape, then as quoted by such exchange, including where
applicable, accrued interest to the extent not already included therein, unless
market practice with respect to the valuation of such securities in connection
with securities loans is to the contrary.
(ii) If
the principal
market for the securities to be valued is the over-the-counter market, and
the
securities are quoted on The Nasdaq Stock Market (“Nasdaq”),
their Market
Value shall be the last sale price on Nasdaq at the most recent Close of Trading
or, if the securities are issues for which last sale prices are not quoted
on
Nasdaq, the last bid price at such Close of Trading. If the relevant quotation
did not exist at such Close of Trading, then the Market Value shall be the
relevant quotation on the next preceding Close of Trading at which there was
such a quotation, including where applicable, accrued interest to the extent
not
already included therein, unless market practice with respect to the valuation
of such securities in connection with securities loans is to the
contrary.
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(iii) Except
as provided
in Subsection (iv) of this definition, if the principal market for the
securities to be valued is the over-the-counter market, and the securities
are
not quoted on Nasdaq, their Market Value shall be determined in accordance
with
market practice for such securities, based on the price for such securities
as
of the most recent Close of Trading obtained from a generally recognized source
agreed to by the Bank and the Borrower(s) or the closing bid quotation at the
most recent Close of Trading obtained from such a source. If the relevant
quotation did not exist at such Close of Trading, then the Market Value shall
be
the relevant quotation on the next preceding Close of Trading at which there
was
such a quotation, including where applicable, accrued interest to the extent
not
already included therein, unless market practice with respect to the valuation
of such securities in connection with securities loans is to the
contrary.
(iv) The
Market Value of
a letter of credit shall be the outstanding amount thereof.
“Offering
Memorandum”
shall
mean the
offering memorandum dated on or about March 31, 2006 relating to the Selected
Series.
“Person”
shall
be any
natural person, corporation, partnership, limited partnership, joint venture,
firm, association, trust, unincorporated organization, government or
governmental agency or political subdivision or any other entity, whether acting
in an individual, fiduciary or other capacity.
“RIC”
shall
be the
Mount ▇▇▇▇▇▇ Securities Lending Trust.
“Securities”
shall
be
securities, of any type, that are owned or controlled by the Customer and that
have been hereby approved for use in securities lending by the
Customer.
“Selected
Series”
shall
be the
series of the RIC that is selected by the Customer for investment of Cash
Collateral, as identified on the Customer Information Sheet attached hereto.
The
Selected Series may be changed by the Customer upon thirty (30) days written
notice to the Bank.
“Substitute
Payments”
shall
mean
payments in amounts equal to all distributions made to holders of Loaned
Securities during the term of the loan, including, but not limited to, cash
dividends, interest payments, shares of stock as a result of stock splits,
and
rights to purchase additional securities.
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2. Appointment
and
Acceptance.
The Customer
hereby appoints the Bank as its agent for the purpose of lending Securities;
and
the Bank hereby agrees to accept such appointment and act in such
capacity.
3. Delivery
of
Securities; Receipt of Collateral; Return of Collateral.
Until given
written notice of termination pursuant to Section 15, the Customer hereby
authorizes the Bank, and the Bank agrees, to undertake the
following:
(a) To
enter into and
maintain securities loan agreements with Borrower(s) which set forth terms
consistent with this Agreement. The Customer acknowledges that the standard
form(s) of Borrower Agreement(s) entered or to be entered with Borrowers will
be
substantially in the form of the most current Master Securities Loan Agreement
produced by the Bond Market Association and the Customer authorizes the Bank
to
lend Securities to Borrowers pursuant to agreements substantially in the form
thereof (each such agreement referred to herein as a “Borrower Agreement”). The
Customer may from time to time direct the Bank not to enter into loans with
a
Borrower, as the Customer specifies by written notice to the Bank, in each
case
notwithstanding the Customer’s prior approval of such Borrower in accordance
with the terms contained herein.
(b) To
negotiate fees
with Borrowers in connection with securities lending, subject to the following
requirements. In the case of a Loan for which the Collateral is Cash Collateral,
the Bank shall negotiate a fee (the “Borrower
Rebate
Fee”)
to be paid by
the Bank to the Borrower on behalf of the Customer. In the case of a Loan for
which the Collateral is non-cash, the Bank shall negotiate a loan fee to be
paid
by the Borrower.
(c) To
deliver to
Borrowers, from time to time, such Securities as the Bank may in its discretion
select for securities lending in accordance with this Agreement.
(d) To
use the
securities lending services and custodial services of other financial
institutions, including, without limitation, FAF Advisors, Inc. (“FAF
Advisors”)
and other
financial institutions that are agents or affiliates of the Bank as agents
of
the Bank, for the benefit of the Customer, as the Bank in its discretion shall
determine to be necessary or desirable to perform securities lending on behalf
of the Customer.
(e) In
connection with
each Loan, to receive from the Borrower, at the time the Securities are loaned,
Collateral of a value at least equal to 102% of the then current Market Value
of
the Loaned Securities. Such Collateral shall be held as security by the Bank
on
behalf of the Customer for the due and punctual performance by the Borrower
of
any and all of the Borrower’s obligations under the Borrower
Agreement.
(f) To
hold and
safekeep the Collateral on behalf of the Customer with other securities lending
collateral held by the Bank, provided that the Customer’s specific interest in
the Customer’s Collateral shall at all times be noted in the records of the
Bank, provided further, however, that all Collateral shall be held separate
from
any other securities held by the Bank on behalf of an other person or
entity.
(g) To
invest Cash
Collateral for the benefit of the Customer in the Selected Series.
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(h) Upon
termination of
any Loan, to liquidate Cash Collateral investments made with the Collateral
and
to return the Collateral to the Borrower in accordance with the Borrower
Agreement so long as the Borrower is not in default and the Bank receives the
Loaned Securities from the Borrower.
(i) To
receive from the
Borrower Substitute Payments and to forward such Substitute Payments to the
Customer.
(j) To
pay to the
Borrower all interest and dividend payments, including Substitute Payments,
received on Securities which are held as Collateral, provided that there is
no
material default by the Borrower of the terms and conditions of the Borrower
Agreement, in cases where the Borrower has provided non-cash Collateral in
the
form of securities, in whole or in part.
(k) To
originate or
terminate any Loan at any time as the Bank may in its discretion determine
pursuant to the terms of this Agreement, without prior notice to the
Customer.
(l) In
connection with
the Customer’s Loaned Securities, to collect loan fees owed by Borrowers and
income earned on Cash Collateral investments, and to dispose of such monies
pursuant to Sections 3(b) and 8 of this Agreement.
(m) To
disclose to any
Borrower, or to any Person to an investment entered into pursuant to Section
3(g) above, the name of the Customer and such other information required by
such
Borrower or such Person to enable such Borrower or such Person to comply with
applicable federal or state law, as the Bank may in its discretion deem
necessary.
(n) To
group the
Customer’s securities together with the securities of other securities lending
customers for the purposes of facilitating Loans to Borrowers. The Customer
acknowledges that whether particular securities are loaned depends on many
variables, including, but not limited to, the demand for a particular security
by Borrowers, the Bank’s automated queuing system for equitable utilization of
all available securities for lending transactions, and the quantity of a
particular security that is held in the lendable pool, and that the Bank cannot
ensure that the Customer’s Securities will become the subject of any particular
Loan or that the Customer’s Securities will be loaned.
4. Voting
Rights.
Customer shall
not retain voting rights of Loaned Securities while loaned to any
Borrower.
5. ▇▇▇▇
to
Market.
The Bank shall on
a daily basis (a) ▇▇▇▇ to Market Loaned Securities and Collateral. If the Market
Value of the Collateral at the close of trading on a Business Day is less than
the Margin Percentage of the Market Value of the Loaned Securities at the close
of trading on that day, the Borrower shall deliver, by the close of business
on
the following Business Day, an additional amount of Collateral the Market Value
of which, together with the Market Value of all previously delivered collateral,
equals at least the Margin Percentage of the Market Value of the Loaned
Securities as of such preceding day. In the event that the Market Value of
the
Collateral exceeds the Margin Percentage of the Market Value of the Loaned
Securities, part of the Collateral may be returned to the Borrower as long
as
the Market Value of the remaining Collateral equals at least the Margin
Percentage of the Market Value of the Loaned Securities.
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6. Accountings.
The Bank shall
include in a monthly report to the Customer daily information concerning all
securities loans outstanding, including an accounting of all securities lending
transactions.
7. Loan
Termination
by Customer.
(a) Unless
otherwise
agreed in writing, the Customer may, in its discretion, elect to terminate
a
Loan on a termination date established by notice given to the Bank prior to
the
close of business on a Business Day. The termination date established by a
termination notice shall be a date no earlier than the standard settlement
date
that would apply to a purchase or sale of the Loaned Securities, which date
shall be determined in accordance with the terms of the Borrower Agreement.
Upon
receipt of such notice, the Bank shall notify the appropriate Borrower for
return of the Loaned Securities in accordance with the terms of the Borrower
Agreement.
(b) The
Bank shall be
deemed to have received appropriate notice as required by this Section 7 upon
receipt of written or oral directions (i) signed or given by any person whose
name and signature is listed on the most recent certificate delivered by the
Customer to the Bank which lists those persons authorized to give directions
in
the name and on behalf of the Customer or (ii) signed or given by any other
person(s), duly authorized by the Customer to give directions to the Bank
hereunder or whom the Bank reasonably believes to be so authorized. Appropriate
notice as required by this Section 7 shall include notice sent to the Bank
by
letter, memorandum, telegram, cable, telex, telecopy facsimile, video (CRT)
terminal or other “on-line” system, or similar means of communication, or given
over the telephone or in person.
8. Fees.
(a) The
Customer shall
pay fees to the Bank in the amount and at such times set forth on Exhibit C
attached hereto and made a part hereof as though fully set forth herein. The
provisions of Exhibit C may be renegotiated at any time upon five days written
notice by either party hereto and may be amended by a separate writing between
the Bank and the Customer. The Bank shall charge such fees against the net
income received as proceeds from securities lending transactions (after payment
of any applicable Borrower Rebate Fees) (“Net
Income”);
provided,
however, that if not so charged, the Customer shall pay such fees.
(b) Any
Borrower Rebate
Fee incurred by a Customer arising from the receipt of cash as Collateral for
Loaned Securities shall be charged against the gross income received by the
Customer as proceeds from securities lending transactions and the Bank shall
pay
such Borrower Rebate Fee to the appropriate Borrower on behalf of the Customer;
provided, however, that if not so charged, the Customer shall pay such Borrower
Rebate Fee.
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9. Customer
Representations and Warranties.
(a) The
Customer
represents and warrants that: (i) the Customer has the legal right, power and
authority to execute, deliver and perform this Agreement and to carry out all
of
the transactions contemplated hereby; (ii) the execution and delivery of this
Agreement by the Customer will not violate any provision of its charter, bylaws
or any other governing documents, or any law, or any regulation, interpretation
or order or any court or other government agency, or judgment, applicable to
the
Customer; (iii) the Customer has obtained all necessary authorizations,
including those from any persons who may have an interest in the Securities,
including the consent or approval of any governmental agency or instrumentality;
(iv) the execution, delivery and performance of this Agreement and the carrying
out of any of the transactions contemplated hereby will not be in conflict
with,
result in a breach of or constitute a default under any agreement or other
instrument to which the Customer is a party or which is otherwise known to
the
Customer, including but not limited to, liens against and/or pledges of
Securities; and (v) all persons executing this Agreement on behalf of the
Customer and carrying out the transactions contemplated hereby on behalf of
the
Customer are duly authorized to do so.
(b) The
Customer
represents and warrants that it is an “investment company” as that term is
defined in the Investment Company Act of 1940 (the “1940 Act”) and that it will
indicated each “affiliate” as that term is defined in the 1940 Act by
instructing the Bank not to lend the Customer’s Securities to such Borrower by
completion of Exhibit B hereto.
(c) The
Customer is
aware that it is possible to loan portfolio securities without incurring the
loan fees payable pursuant hereto by administering such a program itself, rather
than hiring the Bank.
(d) The
Customer
represents and warrants that each Person who owns, controls or possesses
securities which may be lent pursuant to this agreement is identified in the
Customer Information Sheet attached hereto and made a part hereof as though
fully set forth herein, such Customer Information Sheet to be updated from
time
to time upon written notice to the Bank from the Customer (the “Customer
Information Sheet”)
and that the tax
identification number of such Person is set forth opposite such Person’s name on
such Customer Information Sheet.
(e) The
Customer
represents and warrants (i) that the information contained in the attached
Customer Information Sheet is complete and accurate in all respects as of the
date hereof and the Customer acknowledges and affirms that the Bank may rely
upon the accuracy and completeness of the information contained in the Customer
Information Sheet in complying with its obligations under applicable laws and
regulations and (ii) that the Customer has reviewed and understands the Offering
Memorandum.
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(f) The
Customer
represents and warrants that all recitals contained herein are true and correct
in all respects.
10. The
Bank’s
Responsibilities.
The Bank’s duties
and responsibilities shall only be those expressly set forth in this Agreement.
The Bank hereby agrees that it shall at all times during the term of this
Agreement exercise its reasonable care and efforts in performing its obligations
hereunder. The Bank will perform such obligations and responsibilities in
accordance with all applicable laws, including, but not limited to Securities
and Exchange Commission rules and regulations. The Bank intends to rely on
the
Securities and Exchange Commission no-action letters entitled Sife
Trust
Fund
(Feb. 17, 1982),
Norwest
Bank
Minnesota, N.A.
(May 25, 1995) and
The
Chase Manhattan Bank
(July 24, 2001) in
performing its responsibilities under this Agreement. Neither the Bank nor
its
agents shall be responsible for any loss or liability arising from their
performance of the Bank’s duties under this Agreement, except for direct loss or
liability (but not consequential or punitive damages) arising from the Bank’s,
or its agent’s, willful misfeasance, bad faith or gross negligence in the
performance of the Bank’s duties under this Agreement. In no event shall the
Bank be liable for special, indirect or consequential damages, or lost profits
or loss of business, arising under or in connection with this Agreement, even
if
previously informed of the possibility of such damages and regardless of the
form of action.
11. Customer
Responsibilities.
(a) The
Customer agrees
to (i) promptly notify the Bank of any change that the Customer wishes to make
to Exhibit B, (ii) promptly notify the Bank if any information contained in
the
Customer Information Sheet becomes inaccurate or untrue and (iii) indemnify
the
Bank for any losses resulting from the Customer’s failure to adhere to the
provisions of Subsection (a) of this Section 11.
(b) The
Customer agrees
that, to the extent any loss arising out of investments of Cash Collateral
in
the Selected Series results in a deficiency in the amount of Collateral
available for return to a Borrower, the Customer shall pay to the Bank, on
demand, cash in an amount equal to such deficiency.
(c) The
Customer
acknowledges that the Bank is acting as an agent on the Customer’s behalf in
connection with the lending of the Customer’s assets and the investment of cash
received as Collateral for such Loans. The Customer understands that it bears
the risks of investment loss, including any decline in value of Cash Collateral
investment and loss resulting from any securities lending default by a
Borrower.
(d) The
Customer
acknowledges that it is responsible for paying any taxes that are incurred
as a
result of Loans made on behalf of the Customer, and the Customer agrees that
it
shall reimburse the Bank for any taxes paid on Customer’s behalf by the
Bank.
(e) The
Customer agrees
to reimburse the Bank and to hold the Bank harmless from and against any and
all
costs, expenses, damages, liabilities or claims, including reasonable fees
and
expenses of counsel incurred by the Bank which the Bank may sustain or incur
or
which may be asserted against the Bank by reason of or as a result of any action
taken or omitted by the Bank in connection with operating under this Agreement
(including, but not limited to, actions or omissions related to the lending
of
Securities to Borrowers or the holding or investment of Collateral or resulting
from the Customer’s failure to comply with its obligations under Section 11(a)
hereof) other than those costs, expenses, damages, liabilities or claims arising
out of the Bank’s gross negligence, bad faith or willful misfeasance, as
adjudicated by a court of competent jurisdiction. The foregoing shall be a
continuing obligation of the Customer and the Customer’s successors and assigns,
notwithstanding the termination of any Loans hereunder or of this Agreement.
The
Bank may charge any amounts to which it is entitled hereunder against the
account in which the Customer’s Securities are held.
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12. Indemnification.
(a) In
the event of a
Borrower’s material default of the terms and conditions of the Borrower
Agreement, the Bank shall:
(i) take
all actions
the Bank deems appropriate, in its discretion, to liquidate the
Collateral,
(ii) at
its own expense,
but subject to the Customer’s obligations pursuant to Section 11(c) hereto,
replace as soon as reasonably practicable such Loaned Securities with identical
securities or the equivalent thereof in the event of a reorganization,
recapitalization or merger of the issuer of the Loaned Securities,
or
(iii) if
the Bank is
unable to obtain replacement securities, the Bank shall provide the Customer
with immediately available funds in an amount equal to the Market Value of
such
Loaned Securities. The Market Value shall be calculated (1) in the case of
a
Borrower insolvency, on the date of such insolvency, or (2) in the case of
a
Borrower’s failure to return Loaned Securities, on the date that the Bank
deposits funds to the Customer’s account.
(b) If
the Market Value
of the Collateral on the date of such replacement or credit is less than that
which is required to purchase replacement securities or to provide equivalent
funds to the Customer as a result of a decrease in the Market Value of
investments of Cash Collateral, the Bank will not be responsible for such
decrease. In such event, the Bank shall purchase and deposit replacement
securities, or deposit cash to the Customer’s account, in an amount equal to the
then current Market Value of Cash Collateral investments. If the Market Value
of
the Collateral on the date of such replacement or credit is less than that
which
is required to purchase replacement securities or to credit equivalent funds
to
Customer’s account as a result of any reason other than a decrease in the Market
Value of investments of Cash Collateral, Bank shall pay such additional amounts
as are necessary to purchase replacement securities in an amount equal to the
Market Value of such Loaned Securities or credit equivalent funds to Customer’s
account as of the date of such replacement. The Bank shall not be liable for
any
appreciation in the Market Value of the Loaned Securities subsequent to such
date.
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(c) The
Customer agrees
that the Bank shall be subrogated to the rights of the Customer in the
Collateral and against the Borrower to the extent of any amount paid by the
Bank
to the Customer hereunder.
(d) Except
as provided
for herein, the Bank shall have no additional liability to the Customer relating
to any Borrower’s failure to return Loaned Securities and no duty or obligation
to take action to effect payment by a Borrower of any amounts owed by such
Borrower pursuant to the Borrower Agreement.
(e) Notwithstanding
the
foregoing, the Bank shall not be required to act inconsistently with (i) any
court or government agency order regarding such Collateral or (ii) the Borrower
Agreement.
(f) With
respect to its
use in this Section 12, a Borrower’s “insolvency” is defined to mean any of the
following: (i) the Borrower shall commence any case or proceeding under any
bankruptcy, insolvency, reorganization, liquidation, dissolution or similar
law,
or seek the appointment of a receiver, conservator, trustee, custodian or
similar official for such party or any substantial part of its property; (ii)
any case, proceeding or appointment referred to in the preceding Clause (i)
shall be commenced against the Borrower, or any application shall be filed
against the Borrower for a protective decree under the provisions of the
Securities Investor Protection Act of 1970 as amended, any of which (aa) is
consented to or not timely contested by the Borrower, (bb) results in the entry
of any order for relief, such an appointment, the issuance of such a protective
decree or the entry of any order having a similar effect, or (cc) is not
dismissed within 15 days; (iii) the Borrower shall make a general assignment
for
the benefit of creditors; or (iv) the Borrower shall admit in writing its
inability to pay its debts as they become due.
13. Agreement
Modification.
This Agreement,
together with the Exhibits hereto, contains a complete statement of the parties
with respect to its subject matter, supersedes all existing agreements between
them concerning the subject and cannot be amended or modified in any manner
except by a written agreement executed by all parties hereto. Notwithstanding
the foregoing, Exhibit B may be amended in the manner set forth in the
definition of “Borrower” contained in Section 1 and the fee schedule set forth
in Exhibit B may be renegotiated and amended in the manner set forth in Section
8(a).
14. Notice.
Any notice
required to be given in writing under this Agreement shall be delivered by
hand
or mailed by registered mail, postage prepaid, to FAF Advisors, Inc., ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Securities Lending,
or
such other address provided by the Bank, and to the Customer at the most recent
address of such party provided to the Bank.
15. Termination.
This Agreement
may be terminated at any time by the Bank or the Customer upon thirty (30)
days
prior written notice to the other party. All outstanding Loans, unless a
Customer shall specify otherwise, shall remain outstanding until such Loans
terminate pursuant to the securities loan agreement with Borrower, even if
such
date is past the termination date established by either party pursuant to this
Section 15 (but subject to Section 7 and to any other agreement between the
Customer and the Bank).
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16. Assignment.
This Agreement
shall not be assignable by the Bank or the Customer without the written consent
of the other party, except that the Bank may assign this Agreement to an
affiliate of the Bank. Subject to the preceding sentence hereof, this Agreement
shall be binding upon and shall inure to the benefit of the parties and their
respective successors and assigns.
17. Governing
Law.
This Agreement
shall be construed and enforced in accordance with the laws of the State of
Minnesota without reference to its conflicts or choice of law
principles.
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IN
WITNESS WHEREOF,
the parties hereto have hereunto set their hands as of the day and year first
above written.
|
Diamond
Hill
Funds on behalf of each series thereof listed on Exhibit “A”
hereto
By:
________James
F.
Laird______________
Name:
___/s/
▇▇▇▇▇
▇. Laird______________
Its:
________President___________________
|
[Customer
Signature
Page]
|
U.S.
BANK
NATIONAL ASSOCIATION
By:
_
▇▇▇▇▇▇▇
▇. Delecki__________
Name:
____/s/
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ _________
Its:
___Product
Manager, Securities Lending__
|
[Bank
Signature
Page]
Exhibit
A
List
of
Customers
Diamond
Hill Small
Cap Fund
Diamond
Hill Large
Cap Fund
Diamond
Hill
Strategic Income Fund
Diamond
Hill Select
Fund
Diamond
Hill
Small-Mid Cap Fund
Diamond
Hill
Financial Long-Short Fund
Diamond
Hill
Long-Short Fund
Exhibit
A-1
EXHIBIT
B
APPROVED
BORROWERS
The
following entities are pre-approved as “Borrowers” pursuant to Section 1 of the
Agreement unless the Customer places an “X” on the line across from a Borrower
name.
|
ABN
Amro Bank
N.V. New York Branch
|
______________________
|
|
ABN
Amro
Incorporated
|
____________________
|
|
Ameritrade
Clearing
|
______________________
|
|
Bank
of
America Securities, LLC
|
______________________
|
|
Barclays
Capital Inc.
|
______________________
|
|
Bear,
▇▇▇▇▇▇▇
and Co. Inc.
|
______________________
|
|
Bear,
▇▇▇▇▇▇▇
Securities Corp.
|
______________________
|
|
BNP
Paribas
Securities Corp.
|
______________________
|
|
Calyon
Securities (USA) Inc.
|
______________________
|
|
Cantor
▇▇▇▇▇▇▇▇▇▇ Securities
|
______________________
|
|
CIBC
World
Markets
|
______________________
|
|
Citadel
Trading Group, LLC
|
______________________
|
|
Citigroup
Global Markets, Inc.
|
______________________
|
|
Credit
Suisse
Securities (USA) LLC
|
______________________
|
|
Deutsche
Bank
NA
|
______________________
|
|
Deutsche
Bank
Securities, Inc.
|
______________________
|
|
Dresdner
Kleinwort ▇▇▇▇▇▇▇▇▇▇▇ Securities, LLC
|
______________________
|
|
▇▇▇▇▇▇▇,
▇.▇.
Inc.
|
______________________
|
|
First
Clearing, LLC (Wachovia Corp.)
|
______________________
|
|
Fortis
Securities, LLC
|
______________________
|
|
▇▇▇▇▇▇▇
Sachs
& Co., Incorporated
|
______________________
|
|
RBS
Greenwich
Capital, Inc.
|
______________________
|
|
HSBC
Securities (USA), Inc.
|
______________________
|
|
ING
Financial
Markets, LLC
|
______________________
|
|
▇▇▇▇▇▇▇▇▇
& Company, Inc.
|
______________________
|
|
▇▇▇▇▇▇
Brothers, Inc.
|
______________________
|
|
▇▇▇▇▇▇▇
▇▇▇▇▇
Government Securities Inc.
|
______________________
|
|
▇▇▇▇▇▇▇
Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
|
______________________
|
|
▇▇▇▇▇▇
▇▇▇▇▇▇▇ & Co., Inc.
|
______________________
|
|
▇.▇.
▇▇▇▇▇▇
Securities, Inc.
|
___________X__________
|
|
▇.▇.
▇▇▇▇▇▇
▇▇▇▇▇ Bank
|
___________X__________
|
|
Paloma
Securities, LLC
|
______________________
|
|
▇▇▇▇▇▇▇
▇▇▇▇▇
& Associates, Incorporated
|
______________________
|
|
RBC
▇▇▇▇
▇▇▇▇▇▇▇▇
|
______________________
|
|
RBC
Capital
Markets Corporation
|
______________________
|
|
SG
Americas
Securities, LLC
|
______________________
|
|
Societe
Generale, New York Branch
|
______________________
|
|
Swiss
American Securities, Incorporated
|
______________________
|
|
UBS
Securities LLC
|
______________________
|
|
Wachovia
Bank
NA
|
______________________
|
|
Wachovia
Securities, Inc.
|
______________________
|
Please
Initial Here to Approve Borrowers ___JFL____
Exhibit
B-1
EXHIBIT
C
LOAN
FEE SCHEDULE
The
following shall
be the fees paid to the Bank referred to in Section 8 (entitled “Fees”) of the
Agreement. The Bank shall be paid a fee for administering a securities lending
program for the Customer, which shall equal 30% of the Net Securities Lending
Revenues generated under this Agreement as compensation for its securities
lending services and the Customer shall be entitled to the remainder of such
net
securities lending revenues. For purposes hereof, “Net Securities Lending
Revenues” shall mean (i) all Loan premium fees derived from the Bank’s
acceptance of non-cash Collateral; plus (ii) all gains and losses, income and
earnings from the investment and reinvestment of the Customer’s Cash Collateral
minus rebate and similar fees paid by the Bank to the Borrower. Notwithstanding
the foregoing, costs incurred by the Bank with respect to a Loan, Loanable
Securities, Collateral, a rebate or loan fee, including without limitation,
wire
fees, telecommunications fees and charges, and SWIFT and other charges
associated with the receipt of delivery of any such instruments or cash that
are
not required to be paid by a Borrower shall be borne by the Bank and shall
not
offset or reduce Net Securities Lending Revenues. Moreover, Customer directs
a
sufficient amount of the 70% of the Net Securities Lending Revenue be paid
as
credits, and not as cash, to offset against costs and other charges incurred
by
each Customer with the Custodian.. In the event that the 70% of the Net
Securities Lending Revenue exceeds the costs and other charges incurred by
each
Customer with the Custodian, then the Customer directs the remaining portion
of
the 70% of Net Securities Lending revenue to be paid, as cash, to the
Customer.
Exhibit
C-1
CUSTOMER
INFORMATION SHEET
Please
provide the Bank with the following information for each Customer:
Name:
Diamond Hill Funds
Tax
identification number: N/A
Principal
place of business: Ohio
State
and nation of incorporation or organization: Ohio, United States of
America
|
Address
(or the address of
|
|
|
your
registered agent) within
|
|
|
state
of incorporation or organization:
|
▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
|
|
▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
Please
indicate your investment election of the designated series of the Mount ▇▇▇▇▇▇
Securities Lending Trust in which you wish the Bank to invest Cash Collateral
(each series is described more fully in such series’ respective Offering
Memorandum):
(The
Bank will be unable to lend your securities if you fail to make an investment
election.)
Please
set forth below the name of each entity which owns, controls or possesses
securities which may be lent pursuant to the Customer Agreement and the tax
identification number of such entity (attach additional pages if
necessary):
|
Name
|
Tax
ID
|
|
Diamond
Hill Small Cap Fund
|
▇▇-▇▇▇▇▇▇▇
|
|
Diamond
Hill Large Cap Fund
|
▇▇-▇▇▇▇▇▇▇
|
|
Diamond
Hill Strategic Income Fund
|
▇▇-▇▇▇▇▇▇▇
|
|
Diamond
Hill Select Fund
|
▇▇-▇▇▇▇▇▇▇
|
|
Diamond
Hill Small-Mid Cap Fund
|
▇▇-▇▇▇▇▇▇▇
|
|
Diamond
Hill Financial Long-Short Fund
|
▇▇-▇▇▇▇▇▇▇
|
|
Diamond
Hill Long-Short Fund
|
▇▇-▇▇▇▇▇▇▇
|