SECURITIES LENDING AGREEMENT:
Customer Agreement (Fund/Indemnified)
SECURITIES LENDING 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”).
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.
“Mark to Market” shall be the procedure whereby the Bank determines the Market Value of securities Collateral and Loaned Securities.
“Market Value” shall be: