EXHIBIT 10.1
EMPLOYMENT AGREEMENT
FOR
RODERICK H. DILLON, JR.
     This Agreement is entered into this 10th day of August, 2006, by and
between Diamond Hill Investment Group, Inc. (hereinafter referred to as the
“Employer”) and Roderick H. Dillon, Jr. (hereinafter referred to as the
“Executive”).
     WHEREAS, the Executive is currently employed as the President and Chief
Executive Officer (“CEO”) of the Employer pursuant to the terms of an employment
agreement, dated May 11, 2000 (the “Prior Agreement”);
     WHEREAS, the Employer desires to continue to employ the Executive as its
President and CEO;
     WHEREAS, it is the intention of the Employer that the Executive shall be a
long term employee with the Employer, and it is the intention of the Executive
that he will be a long term employee with the Employer; provided, however, that
the employment relationship between the Employer and the Executive shall be
governed by the terms of this Agreement; and
     WHEREAS, the Executive desires to continue his employment with the Employer
in such capacity under the terms of this Agreement which shall supersede the
terms of the Prior Agreement;
     NOW, THEREFORE, and in consideration of the mutual covenants herein
contained and other valuable consideration, the receipt and adequacy of which is
agreed to by the parties, the Employer and the Executive hereby mutually agree
as follows:
     1. Employment and Duties. The Employer hereby employs the Executive, and
the Executive hereby accepts continued employment with the Employer upon the
terms and conditions hereinafter set forth. The Executive will continue to serve
the Employer as its President and CEO. In such capacity, the Executive will
report directly to the Board of Directors of the Employer (the “Board”) and have
all powers, duties, and obligations as are normally associated with such
positions. Subject to the provisions of Paragraph 5 [“Termination of
Employment"], the Executive will further perform such other duties and hold such
other positions related to the business of the Employer and its Affiliates as
may from time to time be reasonably requested of him by the Board; provided that
the Executive shall not be required to perform such services that involve a
material decrease in the level of responsibility currently maintained by the
Executive. For purposes of this Agreement, an “Affiliate” shall mean any
corporation (including any non-profit corporation), general or limited
partnership, limited

 

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liability company, joint venture, trust, association or organization which is,
directly or indirectly, controlled by, or under common control with, the
Employer. Except as otherwise set forth in this Agreement, the Executive will
devote all of his skills and substantially all of his time and attention to said
positions and in furtherance of the business and interests of the Employer and
its Affiliates and will not directly or indirectly render any services of a
business, commercial or professional nature to any person or organization
without the prior written consent of the Board (which consent will not be
unreasonably withheld or delayed); provided, however, that the Executive will
not be precluded from participation in community, civic, charitable or similar
activities which do not unreasonably interfere with his responsibilities
hereunder.
     2. Term of Employment
          a. Original Term. This Agreement will be effective upon execution by
both parties. The term of employment will begin, or be deemed to have begun, on
January 1, 2006 (the “Effective Date”), and to the extent the Executive’s
Compensation (as defined in Section 3, below) is increased, retroactive payments
will be made back to the Effective Date within 30 days of the execution of this
Agreement. The Agreement will continue through the five-year period ending on
the day before the fifth anniversary date of the Effective Date, subject,
however, to prior termination or to extension, as herein provided.
          b. Extension of Term. The Employer and the Executive agree that the
Board will review the Executive’s performance with the intent that, if the
Executive’s performance so warrants, the Employer may extend the term of this
Agreement for additional time periods to be determined in the discretion of the
Board and as agreed upon by the Executive. By October 1, 2010, or, in the event
that this Agreement is extended as provided for in this Paragraph 2(b), within
ninety (90) days preceding the end of any extension period, the Chairman of the
Board (the “Chairman”) will notify the Executive of the Employer’s decision
whether or not to grant an extension of this Agreement for an additional time
period. In the event that the Chairman fails to notify the Executive, on or
before the date described in the preceding sentence, of the decision regarding
the extension of the term of this Agreement, the term of this Agreement will
automatically be extended for an additional one-year period.
     3. Compensation.
          a. Salary. The Executive will receive an initial annual base salary of
a minimum of $360,000, which may be increased on an annual basis, but not
decreased without the Executive’s written consent, by the Board during the term
of this Agreement. In the event that the Board increases the Executive’s initial
base salary, the amount of the initial base salary, together with any
increase(s) will be his base salary (hereinafter referred to as the “Base
Salary”). Following the end of each calendar year, and no later than March 15 of
each year, the Board will review the Executive’s Base Salary, and in the event
that the Company has met profit and growth goals agreed upon between the Board
and the Executive, the Base Salary will be increased by a percentage determined
by the Board, based upon its review of objective information reflecting the base
salaries of executive officers of similarly sized entities in the same business
as the

 

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Employer. The Base Salary will be payable in accordance with the Employer’s
regular payroll payment practices.
          b. Bonus. Each calendar year during which the Employer has in effect a
performance-based compensation plan (the “Performance Plan”) in compliance with
the provisions of Section 162(m) of the Internal Revenue Code of 1986, as
amended (the “Code”), the Executive will be eligible for bonus compensation
equal to a specified percentage of a bonus pool established for employees of the
Employer (the “Bonus”). Such bonus pool will be based upon the attainment of
goals and objectives which may include average assets under management,
investment advisory revenue and target operating profit margin for the relevant
calendar year. The Executive’s percentage of the bonus pool will be determined
by the Compensation Committee of the Board, based upon his satisfaction of
certain performance criteria, including, but not limited to, investment
performance of client portfolios and his overall contribution to the investment
team and to the firm. All bonus payments to be made pursuant to this Paragraph
3(b) will be made pursuant to the terms and conditions of the Performance Plan
and will be paid to the Executive in either cash or equity awards under the
Employer’s Equity Incentive Plan no later than March 15th of the calendar year
following the calendar year for which such bonus is payable.
     4. Fringe Benefits and Expenses.
          a Fringe Benefits. The Employer will provide the Executive with all
health and life insurance coverages, disability programs, tax-qualified
retirement plans, equity compensation programs, paid holidays, paid vacation,
perquisites, and such other fringe benefits of employment as the Employer may
provide from time to time to actively employed senior executives of the
Employer; and consistent with the foregoing the Executive shall be entitled to a
minimum of the following benefits during the term of this Agreement:
     (i) standard health insurance of such coverage and term as provided by the
Employer to actively employed senior executives of the Employer;
     (ii) a minimum of six (6) weeks paid vacation each year, based on current
year Base Salary;
     (iii) continued participation in the Employer’s 401(k) retirement savings
plan;
     (iv) participation in such other health, disability, insurance, pension,
profit sharing or other employee benefit plan that the Employer may establish
from time to time in which the Executive is otherwise eligible to participate.
Notwithstanding any provision contained in this Agreement, the Employer may
discontinue or terminate at any time any employee benefit plan, policy or
program, now existing or hereafter

 

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adopted, to the extent permitted by the terms of such plan, policy or program
and will not be required to compensate the Executive for such discontinuance or
termination.
          b. Expenses. The Employer shall reimburse the Executive for all
reasonable travel, industry, entertainment, and out-of-pocket and miscellaneous
expenses incurred by the Executive in connection with the performance of his
business activities under this Agreement in accordance with the existing
policies and procedures of the Employer pertaining to reimbursement of such
expenses to senior executives. In addition, the Employer agrees to reimburse the
Executive for reasonable legal expenses in connection with the review and
analysis of this Agreement by an attorney selected by the Executive, in an
amount not to exceed $10,000.
     5. Termination of Employment.
          a. Death of Executive. The Executive’s employment hereunder will
terminate upon his death and the Executive’s beneficiary (as designated by the
Executive in writing with the Employer prior to his death) will be entitled to
the following payments and benefits:
               i. any Base Salary that is accrued but unpaid, the value of any
vacation that is accrued but unused (determined by dividing Base Salary by 365
and multiplying such amount by the number of unused vacation days), and any
business expenses that are unreimbursed—all, as of the date of termination of
employment; and
               ii. any rights and benefits (if any) provided under plans and
programs of the Employer, determined in accordance with the applicable terms and
provisions of such plans and programs, including but not limited to a pro rata
portion of the Bonus payment specified in Paragraph 3(b), above, and such
payment shall be made no later than March 15th of the calendar year following
the calendar year for which such Bonus is payable.
     In the absence of a beneficiary designation by the Executive, or, if the
Executive’s designated beneficiary does not survive him, payments and benefits
described in this subparagraph will be paid to the Executive’s estate.
          b. Disability. The Executive’s employment hereunder may be terminated
by the Employer upon 45 days written notice from the Employer following the
determination, as set forth immediately below, that he suffers from a Permanent
Disability. For purposes of this Agreement, “Permanent Disability” means a
disability that, in the opinion of the Employer, renders, or will render, the
Executive unable to perform his duties under this Agreement by reason of any
medically determinable impairment, which can be expected to result in death, or
which has lasted or can be expected to last, for a continuous period of at least
twelve months. If the Executive disagrees with the Employer’s decision that the
Executive’s disability renders or will render him unable to perform his duties
under this Agreement, such dispute shall be resolved by a panel of three
physicians: one physician to be chosen by the Employer, one physician to be
chosen by the Executive, and a third physician to be chose by the first two
physicians. Each

 

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physician shall have the opportunity to examine the Executive and the decision
of a majority of the physicians on the panel shall be binding on the Employer
and the Executive, and shall be rendered within 45 days after the third
physician is appointed to the panel. The cost of the physicians shall be paid by
the Employer. During any period that the Executive fails to perform his duties
hereunder as a result of a Permanent Disability (“Disability Period”), the
Executive will continue to receive his Base Salary at the rate then in effect
for such period until his employment is terminated pursuant to this
subparagraph; provided, however, that payments of Base Salary so made to the
Executive will be reduced by the sum of the amounts, if any, that were payable
to the Executive at or before the time of any such salary payment under any
disability benefit plan or plans of the Employer and that were not previously
applied to reduce any payment of Base Salary. In the event that the Employer
elects to terminate the Executive’s employment pursuant to this subparagraph,
the Executive will be entitled to the following payments and benefits:
               i. any Base Salary that is accrued but unpaid, the value of any
vacation that is accrued but unused (determined by dividing Base Salary by 365
and multiplying such amount by the number of unused vacation days), and any
business expenses that are unreimbursed—all, as of the date of termination of
employment; and
               ii. any rights and benefits (if any) provided under plans and
programs of the Employer, determined in accordance with the applicable terms and
provisions of such plans and programs, including but not limited to a pro rata
portion of the Bonus payment specified in Paragraph 3(b), above, and such
payment shall be made no later than March 15th of the calendar year following
the calendar year for which such Bonus is payable.
          c. Termination of Employment for Cause. The Employer may terminate the
Executive’s employment upon written notice at any time for “Cause” if such Cause
is reasonably determined by the Board (provided the Executive does not fully
cure the effect of the event giving rise to “Cause” to the Employer’s reasonable
satisfaction within thirty (30) days following his receipt of notice of
termination from the Employer). For purposes of this Agreement, the term “Cause”
means that the Executive has:
               i. caused the Employer or any of its Affiliates, other than
pursuant to the advice of the Employer’s legal counsel, to violate a law which,
in the opinion of the Employer’s legal counsel, is reasonable grounds for civil
penalties in excess of $250,000 or criminal penalties against the Employer, an
Affiliate or the Board;
               ii. engaged in conduct which constitutes a material violation of
the established written policies or procedures of the Employer regarding the
conduct of its employees, including policies regarding sexual harassment of
employees and use of illegal drugs or substances in the course of his employment
with Employer;
               iii. committed fraud, or acted with willful misconduct or gross
negligence, in carrying out his duties under this Agreement;

 

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               iv. been convicted of any crime involving moral turpitude or a
violation of federal or state securities or investment adviser laws; or
               vi. committed a breach of any material covenant, provision, term,
condition, understanding or undertaking set forth in this Agreement.
     In the event that the Employer terminates the Executive’s employment for
Cause, the Executive will be entitled to the following payments and benefits:
                    A. any Base Salary that is accrued but unpaid, the value of
any vacation that is accrued but unused (determined by dividing Base Salary by
365 and multiplying such amount by the number of unused vacation days), and any
business expenses that are unreimbursed—all, as of the date of termination of
employment; and
                    B. any rights and benefits (if any) provided under plans and
programs of the Employer, determined in accordance with the applicable terms and
provisions of such plans and programs.
          d. Termination Without Cause. The Employer may terminate the
Executive’s employment for any reason upon ninety (90) days prior written notice
to the Executive. If the Executive’s employment is terminated by the Employer
for any reason other than the reasons set forth in subparagraphs b or c of this
Paragraph 5, subject to the applicable provisions of Section 409A of the Code,
the Executive will be entitled to the following payments and benefits:
               i. any Base Salary that is accrued but unpaid, the value of any
vacation that is accrued but unused (determined by dividing Base Salary by 365
and multiplying such amount by the number of unused vacation days), and any
business expenses that are unreimbursed—all, as of the date of termination of
employment;
               ii. any rights and benefits (if any) provided under plans and
programs of the Employer, determined in accordance with the applicable terms and
provisions of such plans and programs, including but not limited to a pro rata
portion of the Bonus payment specified in Paragraph 3(b), above, and such
payment shall be made no later than March 15th of the calendar year following
the calendar year for which such Bonus is payable.;
               iii. a single lump sum payment, payable within 15 days following
the date of termination of employment, equal to six (6) months of the Base
Salary applicable to the Executive on the date of termination of employment;
               iv. beginning on the first day of the seventh month following the
date of termination of employment, continuation of the Executive’s Base Salary
in effect on the date of his termination of employment for a period of six
(6) months; provided, that these payments will be made in separate, equal
payments no less frequently than monthly over such six-month period; and

 

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               v. a single lump sum payment, payable within fifteen (15) days
following the date of termination of employment, equal to the Bonus paid or
payable to the Executive with respect to the most recently completed fiscal year
of the Employer.
          e. Voluntary Termination by Executive. The Executive may resign and
terminate his employment with the Employer for any reason whatsoever upon not
less than ninety (90) days prior written notice to the Employer. In the event
that the Executive terminates his employment voluntarily pursuant to this
Paragraph 5(e), the Executive will be entitled to the following payments and
benefits:
               i. any Base Salary that is accrued but unpaid, the value of any
vacation that is accrued but unused (determined by dividing Base Salary by 365
and multiplying such amount by the number of unused vacation days), and any
business expenses that are unreimbursed—all, as of the date of termination of
employment; and
               ii. any rights and benefits (if any) provided under plans and
programs of the Employer, determined in accordance with the applicable terms and
provisions of such plans and programs.
          f. Good Reason Termination. The Executive may resign and terminate his
employment with the Employer for “Good Reason” upon not less than thirty
(30) days prior written notice to the Employer. For purposes of this Agreement,
the Executive will have “Good Reason” to terminate his employment with the
Employer if any of the following events occur (provided the Employer does not
fully cure the effect of such event to the Executive’s reasonable satisfaction
within ten (10) days following its receipt of notice of termination of
employment from the Executive):
               i. the Executive’s Base Salary is reduced for any reason other
than in connection with the termination of his employment;
               ii. without the Executive’s consent, the percentage assigned to
the Executive of any bonus pool created by the Employer for its employees is
less than 20%;
               iii. without his consent, the Employer permanently and/or
consistently assigns the Executive to duties that are materially inconsistent in
any respect with his position (including, without limitation, his status, office
and title), authority, duties or responsibilities as set forth in Paragraph 1
(but excluding any other duties related to the business of the Employer or its
Affiliates reasonably requested of him by the Board), or takes any other action
that results in a permanent and/or consistent material diminution in such
position, authority, duties, or responsibilities;
               iv. without his consent, the Employer changes the Executive’s
reporting structure within the organization so that the Executive no longer
reports directly to the Board; or

 

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               v. the Employer breaches any material covenant, provision, term,
condition, understanding or undertaking set forth in this Agreement.
     In the event that the Executive terminates his employment for Good Reason
pursuant to this Paragraph 5(f), subject to the applicable provisions of
Section 409A of the Code, the Executive will be entitled to the following
payments and benefits:
                    A. any Base Salary that is accrued but unpaid, the value of
any vacation that is accrued but unused (determined by dividing Base Salary by
365 and multiplying such amount by the number of unused vacation days), and any
business expenses that are unreimbursed—all, as of the date of termination of
employment;
                    B. any rights and benefits (if any) provided under plans and
programs of the Employer, determined in accordance with the applicable terms and
provisions of such plans and programs, including but not limited to a pro rata
portion of the Bonus payment specified in Paragraph 3(b), above, and such
payment shall be made no later than March 15th of the calendar year following
the calendar year for which such Bonus is payable;
                    C. a single lump sum payment, payable within 15 days
following the date of termination of employment, equal to six (6) months’ of the
Base Salary applicable to the Executive on the date of termination of
employment;
                    D. beginning on the first day of the seventh month following
the date of termination of employment, continuation of the Executive’s Base
Salary in effect on the date of his termination of employment for a period of
six (6) months; provided, that these payments will be made in separate, equal
payments no less frequently than monthly over such six-month period; and
                    E. a single lump sum payment, payable within fifteen
(15) days following the date of termination of employment, equal to the Bonus
paid or payable to the Executive with respect to the most recently completed
fiscal year of the Employer.
          g. Failure to Extend Term of Agreement. If the Employer notifies the
Executive that the Employer will not extend the term of this Agreement under the
provisions of Paragraph 2(b) hereof, the Executive’s employment under this
Agreement will terminate at the end of such term and the Executive will be
entitled to the following payments and benefits:
               i. any Base Salary that is accrued but unpaid, the value of any
vacation that is accrued but unused (determined by dividing Base Salary by 365
and multiplying such amount by the number of unused vacation days), and any
business expenses that are unreimbursed — all as of the date of termination of
employment; and
               ii. any rights and benefits (if any) provided under plans and
programs of the Employer, determined in accordance with the applicable terms and
provisions of such plans and programs, including but not limited to the Bonus
payment specified in Paragraph 3(b),

 

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above, and such payment shall be made no later than March 15th of the calendar
year following the calendar year for which such bonus is payable.
     6. Change In Control.
          a Occurrence of Change in Control. In the event that during the term
of this Agreement, a Change in Control [as defined under Section 409A of the
Code and the regulations thereunder] occurs and, within twenty-four (24) months
following such Change in Control, the Executive’s employment is terminated by
the Employer or its successor for any reason other than the reasons set forth in
subparagraphs b or c of Paragraph 5 or is terminated by the Executive under
subparagraph f of Paragraph 5, then in addition to any other provision of
Paragraph 5 of this Agreement and subject to the applicable provisions of
Section 409A of the Code, the Employer or its successor will pay to the
Executive the following payments and benefits:
               i. any Base Salary that is accrued but unpaid, the value of any
vacation that is accrued but unused, (determined by dividing Base Salary by 365
and multiplying such amount by the number of unused vacation days), and any
business expenses that are unreimbursed all, as of the date of termination of
employment;
               ii. any rights and benefits (if any) provided under plans and
programs of the Employer, determined in accordance with the applicable terms and
provisions of such plans and programs;
               iii. a single lump sum payment, payable within 30 days following
the date of termination of employment, equal to the total annual Base Salary and
Bonus paid or payable to the Executive with respect to the most recently
completed fiscal year of the Employer; and
               iv. a single lump sum payment, payable within 60 days following
the date of termination of employment, equal to twelve (12) months of the
premium applicable to the Executive on the date of termination of employment for
the Executive and his family (provided the Executive had family coverage on such
date) under the Employer’s group health plan.
          b. Treatment of Taxes. If payments provided under this Agreement, when
combined with payments and benefits under all other plans and programs
maintained by the Employer, constitute “excess” parachute payments as defined in
Section 280G(b) of the Code, the Employer or its successor will reduce the
Executive’s benefits under this Agreement and/or the other plans and programs
maintained by the Employer (in a manner to be mutually agreed upon between the
Employer or its successor and the Executive) so that the Executive’s total
“parachute payment” as defined in Code §280G(b)(2)(A) under this Agreement and
all other plans and programs will be One Dollar ($1) less than the amount that
would be an “excess parachute payment.” Treatment of taxes under this paragraph
6(b) will be made at the time and in the manner mutually agreed to by the
parties to this Agreement. In addition, in the event of

 

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any subsequent inquiries regarding the treatment of tax payments under this
Paragraph 6, the parties will agree to the procedures to be followed in order to
deal with such inquiries.
     7. Nonexclusivity of Rights. Nothing in this Agreement will prevent or
limit the Executive’s continuing or future participation in any incentive,
fringe benefit, deferred compensation, or other plan or program provided by the
Employer and for which the Executive may qualify, nor will anything herein limit
or otherwise affect such rights as the Executive may have under any other
agreements with the Employer. Amounts that are vested benefits or that the
Executive is otherwise entitled to receive under any plan or program of the
Employer at or after the date of termination of employment, will be payable in
accordance with such plan or program.
     8. Noncompetition Covenant. The Executive agrees that, during the term of
this Agreement, including any extension thereof, and for a period of one
(1) year thereafter following his termination of employment, he shall not:
          a. call upon or solicit, either for the Executive or for any other
person or firm that engages in competition with any business operation actively
conducted by the Employer or any Affiliate during the term of this Agreement,
any customer with whom the Employer or any Affiliate directly conducts business
(including, solely by way of example, intermediaries and corporations that
purchase directly from the Employer or an Affiliate); or interfere with any
relationship, contractual or otherwise, between the Employer or any Affiliate
and any customer with whom the Employer or any Affiliate directly conducts
business; or
          b. induce any person who is an employee, officer or agent of the
Employer or any Affiliate to terminate said relationship.
     Nothing in this Paragraph or this Agreement shall be interpreted to
(i) limit or reduce the Executive’s ownership rights in the Dillon Value Model
(the “DVM”); (ii) prevent the Executive from devoting his time and attention to
the revision of the DVM; or (iii) limit or preclude the Executive from licensing
the use of the DVM to any individual or entity following his termination of
employment with the Employer.
     In the event of a breach by the Executive of any covenant set forth in this
Paragraph 8, the term of such covenant will be extended by the period of the
duration of such breach and such covenant will survive any termination of this
Agreement but only for the limited period of such extension.
     The restrictions on competition provided herein shall supersede any
restrictions on competition contained in any other agreement between the
Employer and the Executive and may be enforced by the Employer and/or any
successor thereto, by an action to recover payments made under this Agreement,
an action for injunction, and/or an action for damages. The provisions of this
Paragraph 8 constitute an essential element of this Agreement, without which the
Employer would not have entered into this Agreement. Notwithstanding any other
remedy available to the Employer at law or at equity, the parties hereto agree
that the Employer or any

 

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successor thereto, will have the right, at any and all times, to seek injunctive
relief in order to enforce the terms and conditions of this Paragraph 8.
     If the scope of any restriction contained in this Paragraph 8 is too broad
to permit enforcement of such restriction to its fullest extent, then such
restriction will be enforced to the maximum extent permitted by law, and the
Executive hereby consents and agrees that such scope may be judicially modified
accordingly in any proceeding brought to enforce such restriction.
     9. Confidential Information. The Executive will hold in a fiduciary
capacity, for the benefit of the Employer, all secret or confidential
information, knowledge, and data relating to the Employer and its Affiliates,
that shall have been obtained by the Executive during his employment with the
Employer and that is not public knowledge (other than by acts by the Executive
or his representatives in violation of this Agreement). During and after
termination of the Executive’s employment with the Employer, the Executive will
not, without the prior written consent of the Board, communicate or divulge any
such information, knowledge, or data to anyone other than the Employer or those
designated by it, unless the communication of such information, knowledge or
data is required pursuant to a compulsory proceeding in which the Executive’s
failure to provide such information, knowledge, or data would subject the
Executive to criminal or civil sanctions and then only with prior notice to the
Employer.
     The restrictions imposed on the release of information described in this
Paragraph 9 may be enforced by the Employer and/or any successor thereto, by an
action to recover payments made under this Agreement, an action for injunction,
and/or an action for damages. The provisions of this Paragraph 9 constitute an
essential element of this Agreement, without which the Employer would not have
entered into this Agreement. Notwithstanding any other remedy available to the
Employer at law or at equity, the parties hereto agree that the Employer or any
successor thereto, will have the right, at any and all times, to seek injunctive
relief in order to enforce the terms and conditions of this Paragraph 9.
     If the scope of any restriction contained in this Paragraph 9 is too broad
to permit enforcement of such restriction to its fullest extent, then such
restriction will be enforced to the maximum extent permitted by law, and the
Executive hereby consents and agrees that such scope may be judicially modified
accordingly in any proceeding brought to enforce such restriction.
     10. Intellectual Property. The Executive agrees to communicate to the
Employer, promptly and fully, and to assign to the Employer all intellectual
property developed or conceived solely by the Executive, or jointly with others,
during the term of his employment, which are within the scope of either the
Employer ‘s business or an Affiliate’s business, or which utilized Employer
materials or information. For purposes of this Agreement, “intellectual
property” means inventions, discoveries, business or technical innovations,
creative or professional work product, or works of authorship. The Executive
further agrees to execute all necessary papers and otherwise to assist the
Employer, at the Employer ‘s sole expense, to obtain patents, copyrights or
other legal protection as the Employer deems fit. Any such intellectual property
is to be the property of the Employer whether or not patented, copyrighted or
published.

 

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Notwithstanding any provision contained herein or anywhere else in the
Agreement, the provisions of this Paragraph 10 shall not apply to the DVM.
     11. Assignment and Survivorship of Benefits. The rights and obligations of
the Employer under this Agreement will inure to the benefit of, and will be
binding upon, the successors and assigns of the Employer, if the Employer shall
at any time be merged or consolidated into, or with, any other company, or if
substantially all of the assets of the Employer are transferred to another
company, then the provisions of this Agreement will be binding upon and inure to
the benefit of the company resulting from such merger or consolidation or to
which such assets have been transferred, and this provision will apply in the
event of any subsequent merger, consolidation, or transfer.
     12. Notices. Any notice given to either party to this Agreement will be in
writing, and will be deemed to have been given when delivered personally or sent
by certified mail, postage prepaid, return receipt requested, duly addressed to
the party concerned, at the address indicated below or to such changed address
as such party may subsequently give notice of:

     
If to Diamond Hill:
  Diamond Hill Investment Group, Inc.
325 John H. McConnell Blvd.
Suite 200
Columbus, Ohio 43215

If to the Executive:
  Roderick H. Dillon, Jr.
At the last address on file
with the Employer

     13. Indemnification. The Executive shall be indemnified by the Employer to
the extent provided in the case of officers under the Employer’s Articles of
Incorporation or Regulations, to the maximum extent permitted under applicable
law. The Employer shall use commercially reasonable efforts to continue its
Director and Officer Liability Insurance (“DOL Insurance") under substantially
similar terms and in substantially similar amounts as in existence prior to the
termination of employment. The DOL Insurance shall be maintained for at least
seven (7) years from termination of employment and without limiting the
foregoing, the Executive shall not be excluded from coverage under such DOL
Insurance during such period.
     14. Taxes. Anything in this Agreement to the contrary notwithstanding, all
payments required to be made hereunder by the Employer to the Executive will be
subject to withholding of such amounts relating to taxes as the Employer may
reasonably determine that it should withhold pursuant to any applicable law or
regulations. In lieu of withholding such amounts, in whole or in part, however,
the Employer may, in its sole discretion, accept other provision for payment of
taxes, provided that it is satisfied that all requirements of the law affecting
its responsibilities to withhold such taxes have been satisfied.

 

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     15. Arbitration; Enforcement of Rights. Any controversy or claim arising
out of, or relating to this Agreement, or the breach thereof, except with
respect to Paragraphs 8, 9 and 10, will be settled by arbitration in the city of
Columbus, Ohio, in accordance with the Rules of the American Arbitration
Association, and judgment upon the award rendered by the arbitrator or
arbitrators may be entered in any court having jurisdiction thereof.
     All legal and other fees and expenses, including, without limitation, any
arbitration expenses, incurred by the Executive in connection with seeking in
good faith to obtain or enforce any right or benefit provided for in this
Agreement, or in otherwise pursuing any right or claim, will be paid by the
Employer, to the extent permitted by law, provided that the Executive is
successful in whole or in part as to such claims as the result of litigation,
arbitration, or settlement.
     In the event that the Employer refuses or otherwise fails to make a payment
when due and is ultimately decided that the Executive is entitled to such
payment, such payment will be increased to reflect an interest equivalent for
the period of delay, compounded annually, equal to the prime or base lending
rate used by Bank of America, and in effect as of the date the payment was first
due.
     16. Governing Law/Captions/Severance. This Agreement will be construed in
accordance with, and pursuant to, the laws of the State of Ohio. The captions of
this Agreement will not be part of the provisions hereof, and will have no force
or effect. The invalidity or unenforceability of any provision of this Agreement
will not affect the validity or enforceability of any other provision of this
Agreement. Except as otherwise specifically provided in this paragraph, the
failure of either party to insist in any instance on the strict performance of
any provision of this Agreement or to exercise any right hereunder will not
constitute a waiver of such provision or right in any other instance.
     17. Entire Agreement/Amendment. This instrument contains the entire
agreement of the parties relating to the subject matter hereof, and the parties
have made no agreement, representations, or warranties relating to the subject
matter of this Agreement that are not set forth herein. This Agreement may be
amended only by mutual written agreement of the parties. However, by signing
this Agreement, the Executive agrees without any further consideration, to
consent to any amendment necessary to avoid penalties under Code §409A.

 

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     IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.

              DIAMOND HILL INVESTMENT GROUP, INC.

 
  By:   /s/ David R. Meuse
David R. Meuse, Chairman

 
      /s/ R. H. Dillon
 
       
 
      Roderick H. Dillon, Jr.