EXHIBIT 10.5
                                                                October 24, 2001

James F. Laird
5277 Brynwood Drive
Columbus, Ohio 43220

Dear James:

     We are  pleased  to offer you this  letter of  employment  in the  position
described  below  as  part  of  Diamond  Hill  Capital  Management,   Inc.  (the
"Company").  This letter, if accepted by your signing the "Acceptance" below and
returning a signed copy,  is intended to constitute a formal  agreement  legally
binding upon both of us (this  "Agreement"),  subject to the following terms and
conditions.

1.   POSITION.  You will become as of a mutually agreed date or such date as you
     can work a  transition  out of your  current  responsibilities  ("Effective
     Date") President of our NASD broker-dealer (the  "Broker-Dealer"),  Diamond
     Hill  Securities,  Inc.,  subject to the direction of the Company's CEO and
     the overall  authority of the Company's and the Broker Dealer's  respective
     Boards  of  Directors,  subject  to  all  of  the  Company's  policies  and
     procedures  regarding its employees except to the extent superseded by this
     Agreement.

2.   REGULAR COMPENSATION.  For your services during the term of this Agreement,
     you will be paid a salary at the gross  annual rate (prior to all taxes and
     other  withholdings) of $135,000.  The gross annual rate will be subject to
     annual  adjustments  of $9,000  after each year of  service  based upon the
     evaluation of your performance  during that year on the same basis as other
     executives.  This will be paid in accordance  with the Company's  customary
     practices applicable to its executives.

3.   BONUS.  You will be entitled  as a bonus to  participate  in the  Company's
     stock option and incentive  compensation  plan. Under that plan you will be
     granted (a) as of the Effective  Date an option to purchase  50,000 Company
     shares  at the  then  market  price  and  (b) at each  anniversary  of your
     Effective  Date  during  the term of this  Agreement  a  similar  option to
     purchase  50,000 Company  shares at the same price,  subject to approval of
     the Company's stock option and executive compensation  committee.  You will
     be  eligible  for future  grants of options  pursuant  to the terms of that
     plan.

4.   VACATION.  You will accrue and be paid for vacation  (which may be taken at
     such times and in such  increments  as you may  choose) of up to four weeks
     annually on the same basis as other executives of the Company.

5.   OTHER BENEFITS. You will be entitled to participate in all employee benefit
     plans, practices, and programs maintained by the Company and made available
     to its executives generally and as may be in effect from time to time.

6.   TERM.  The  term  of  this  Agreement  will  be for  the  five-year  period
     commencing  with the  Effective  Date;  provided,  however,  that  upon the
     expiration of such period, the term of this Agreement will be automatically
     extended for a period of one year,  unless  either you or the Company gives
     written notice to the other at least 30 days prior thereto that the term of
     this Agreement will not be so extended.  Notwithstanding the foregoing, all
     employees  of the Company are "at will," and  accordingly  your  employment
     will be terminated  upon death or  disability  and may be terminated at any
     time, including during the term of this Agreement:

     (a)  Discharge.  By the  Company's  giving  written  notice of discharge at
          least 30 days before the effective date of termination,  provided that
          if such  discharge  is  claimed  by the  Company  to be for  Cause (as
          defined  herein),  the notice of such discharge will state such Cause;
          and

     (b)  Resignation.  By your giving  written notice of resignation to the CEO
          of the  Company  at  least  30  days  before  the  effective  date  of
          termination,  provided that if the resignation is claimed by you to be
          for Good Reason (as defined  herein),  the notice of such  resignation
          will state such Good Reason.

<PAGE>

7.   COMPENSATION  UPON  TERMINATION.  If you are discharged for Cause or resign
     without Good  Reason,  you will not be entitled to any  compensation  other
     than any earned but unpaid  salary at the gross  annual rate then in effect
     for your service through the effective date of your termination.  If during
     term of this Agreement you are  discharged  without Cause or you resign for
     Good Reason, in addition to the foregoing you will be entitled to continued
     payment of your salary at the gross annual rate then in effect for a period
     of one  year  after  the  effective  date  of  termination  reduced  by any
     employment  compensation  earned by you elsewhere on or after the beginning
     of the 6th calendar month following the effective date of this termination.
     For this purpose,

     (a)  "Cause"  exists if you engage in conduct  demonstrably  and materially
          injurious  to the goodwill and  reputation  of the Company;  cause the
          Company,  other than pursuant to the advice of Company legal  counsel,
          to violate a law which,  in the opinion of Company legal  counsel,  is
          reasonable grounds for civil or criminal penalties against the Company
          or its Board of  Directors;  engage in  conduct  which  constitutes  a
          violation of the  established  written  policies or  procedures of the
          Company  regarding the conduct of its  employees,  including  policies
          regarding  sexual  harassment of employees and use of illegal drugs or
          substances;  fail  within 30 days after  receipt of notice to cure any
          violations of your  covenants  under the heading  "Covenants"  of this
          Agreement;  without  due cause fail  within 30 days  after  receipt of
          notice to follow any lawful  order given by or under  direction of the
          Company's or the Broker-Dealer's Board of Directors; or do not correct
          within 30 days after  receipt of notice any act or omission  that,  in
          the opinion of the Company's  legal counsel,  gives rise to a cause of
          action by the Company personally  against You to specifically  enforce
          or restrain  some action for purpose of avoiding  some loss or damage,
          or to recover losses or damages, for an amount in excess of $10,000.

     (b)  "Good Reason"  exists in the absence of Cause (1) if you cease to hold
          position and title of President of the  Broker-Dealer  as contemplated
          under the heading  "Position"  of this  Agreement,  or a position  and
          title  of a more  senior  position  which  you  accept;  there  is any
          reduction  in or a material  delay in payment of salary as provided in
          this  Agreement;  you become  disabled (to the extent that you cannot,
          with reasonable accommodation, effectively perform the requirements of
          your   position)   and  are  unable  to   effectively   perform   your
          responsibilities under this Agreement; or the Company does not correct
          within 30 days after  receipt of notice any act or omission that gives
          rise to a cause of action by you  personally  against  the  Company to
          specifically  enforce or restrain  some action for purpose of avoiding
          some loss or damage, or to recover losses or damages, for an amount in
          excess of  $10,000;  and (2) for a period of one year from the date of
          any Change in Control.

     (c)  "Change in Control" occurs if

          (1)  A purchase or other acquisition by any person, entity or group of
               persons  (within  the  meaning of  Section  13(d) or 14(d) of the
               Securities  Exchange Act of 1934, as amended ("the Exchange Act")
               or any comparable successor provisions),  directly or indirectly,
               which results in the beneficial  ownership (within the meaning of
               Rule 13d-3  promulgated  under the Exchange  Act) of such person,
               entity or group of persons  equaling fifty percent or more of the
               combined voting power of the then outstanding  voting  securities
               of the Company  entitled  to vote  generally  in the  election of
               directors  ("Voting   Securities");   excluding,   however,   any
               acquisition  (A) by the Company or any person  controlled  by the
               Company  or the Board of  Directors  of the  Company,  (B) by any
               employee benefit plan or related trust sponsored or maintained by
               the Company,  (C) by you, or (D) by another group  including you,
               but only if you and other  executives of the Company control such
               group;

          (2)  A change,  within any rolling  two-year period beginning with any
               date on or after the Effective  Date, in the  composition  of the
               Board such that the  individuals  who  constitute  the Board (the
               "Incumbent  Board") at the beginning of such rolling period cease
               for any reason to  constitute  at least a majority  of the Board;
               provided,  however,  that for  purposes of this  definition,  any
               individual  who becomes a member of the Board after the Effective
               Date,  whose  election,   or  nomination  for  election,  by  the
               Company's  security-holders  was approved by a vote of at least a
               majority  of those  individuals  who are members of the Board and
               who were also members of the Incumbent  Board shall be considered
               as though such individual  were a member of the Incumbent  Board;
               and provided,  further  however,  that any such individual  whose
               initial  assumption  of  office  occurs  as a  result  of  or  in
               connection with either an actual or threatened  election  contest
               (as  such  terms  are  used  in Rule  14a-11  of  Regulation  14A
               promulgated under the Exchange Act) or other actual or threatened
               solicitation of proxies or consents by or on behalf of any person
               other than the Board  shall not be so  considered  as a member of
               the Incumbent Board;

<PAGE>

          (3)  A merger, reorganization or consolidation to which the Company is
               a party or a sale or other  disposition  of all or  substantially
               all  of  the  assets  of  the   Company   (each,   a   "Corporate
               Transaction");   excluding  however,  any  Corporate  Transaction
               pursuant to which (A) persons  who were  security  holders of the
               Company  immediately  prior  to  such  Corporate  Transaction  do
               (solely  because of their  Voting  Securities  owned  immediately
               prior to Corporate  Transaction) own immediately  thereafter more
               than 50 percent of the combined  voting power entitled to vote in
               the election of directors of the then  outstanding  securities or
               the  company   surviving  the  Corporate   Transaction   and  (B)
               individuals who constitute the Incumbent  Board will  immediately
               after the consummation of the Corporate Transaction constitute at
               least a majority of the members of the board of  directors of the
               company surviving such Corporate Transaction;

          (4)  Approval  by the  security-holders  of the  Company  of a plan of
               complete liquidation or dissolution of the Company; or

          (5)  Any  change in the  Company's  CEO or the  person  serving as the
               chief  executive  officer of the  Company  to someone  other than
               Roderick H. Dillon, Jr.

8.   COVENANTS. Without the prior consent of the Company, you will not, directly
     or indirectly:

     (a)  No Unauthorized Competing Concern. During the term of your employment,
          engage in any other duties or pursuits  requiring your active personal
          services  that will  conflict  with your  ability  or  objectivity  in
          performing your obligations under this Agreement;

     (b)  No  Unauthorized  Disclosure.  During the term of your  employment and
          thereafter,  make or cause to be made any  unauthorized  disclosure or
          other use (within the meaning of Section  1333.51 of the Ohio  Revised
          Code) of any confidential  information regarding the Company or any of
          its  activities  and  operations,  except  to  the  extent  reasonably
          necessary or appropriate in connection  with the performance by you of
          your employment responsibilities; or

     (c)  No Unauthorized  Solicitation.  During the term of your employment and
          for a period of one year  thereafter,  either alone or in  conjunction
          with another  party,  interfere  with or harm, or attempt to interfere
          with  or  harm,  the  relationship  of  the  Company  (or  any  of its
          subsidiaries  or affiliates)  with any person who is then an employee,
          customer,  or supplier of the Company (or any of its  subsidiaries  or
          affiliates).

          You  acknowledge  by signing below that breach of any these  covenants
          may result in  irreparable  injury and damage to the Company for which
          the Company may have no adequate remedy at law. Accordingly, you agree
          that in the event of any such  breach or any  threat  of  breach,  the
          Company shall, in addition to any other remedies or damages  available
          to it at law or in equity,  be entitled  to  immediate  and  permanent
          injunctive  relief  restraining  such  breach  or  threatened  breach,
          without  having to prove  damages.  In  addition,  the Company will be
          entitled to all costs and expenses,  including  reasonable  attorneys'
          fees and costs in enforcing these  covenants.  These covenants and the
          remedies  of  the  Company  will  survive  any   termination  of  this
          Agreement.

9.   RESOLUTION OF DISPUTE. Any disputes arising under this Agreement, including
     any dispute as to the  existence of Cause or Good Reason,  will be resolved
     exclusively as follows:

     (a)  Negotiation. You and the Company will attempt in good faith to resolve
          any such dispute  promptly by  negotiation.  Either may give the other
          written  notice of any  dispute not  resolved in the normal  course of
          business,   stating  that   party's   position   and   designating   a
          representative of that party to proceed with  negotiations.  Within 10
          days after delivery of the notice,  the receiving party will submit to
          the other a written response,  stating the responding party's position
          and designating a  representative  of the responding  party to proceed
          with  negotiations.  Within 20 days after  delivery  of the  disputing
          party's  notice,  the designated  representative  of each party to the
          dispute  will  meet at a  mutually  acceptable  time  and  place,  and
          thereafter as often as they reasonably  deem necessary,  to attempt to
          resolve the dispute.  All reasonable  requests for information made by
          one party to the other will be honored.

     (b)  Mediation.  If any issues are not resolved by  negotiation as provided
          herein within 30 days of delivery of the disputing  party's  notice or
          if the parties fail to meet within the 20-day period  specified above,
          either pary may then  institute  mediation  proceedings to resolve the
          dispute by delivering  written  demand for mediation  (the  "Mediation
          Demand") to the other party to the  dispute.  A copy of the  Mediation
          Demand will be  simultaneously  delivered to the nearest office of the
          American  Arbitration   Association  (the  "Association").   Mediation
          proceedings  will  commenced not later than 30 days after  delivery of
          the  Mediation  Demand under the  Association's  commercial  mediation
          rules.

     (c)  Arbitration.  If any issues not  resolved  by  mediation  as  provided
          herein  within  60 days of  delivery  of the  Mediation  Demand  or if
          mediator does not begin proceedings  within 30 days of delivery of the
          Mediation  Demand,   either  party  may  then  institute   arbitration
          proceedings  to resolve any  unresolved  issues by delivering  written
          demand for arbitration (the  "Arbitration  Demand") to the other party
          to  the   dispute.   A  copy  of  the   Arbitration   Demand  will  be
          simultaneously  delivered to the same office of the  Association  that
          the Mediation Demand had been delivered.  Arbitration proceedings will
          commence  no later  than 30 days  after  delivery  of the  Arbitration
          Demand under the Association's commercial arbitration rules.

     (d)  General Rules. Any negotiation,  mediation and arbitration  under this
          Section will be conducted in Columbus, Ohio. The forgoing negotiation,
          mediation and arbitration  will be the exclusive remedy of the parties
          for  resolution of any such dispute other than the Company's  right to
          specifically  enforce covenants under the heading  "Covenants" of this
          Agreement.

<PAGE>

10.  GOVERNING LAW. Your employment will be governed by the law of Ohio, and any
     legal  proceedings or other action  regarding your  employment or the terms
     and conditions  thereof or otherwise  arising out of this Agreement will be
     brought   exclusively  in  courts   located  in  Ohio  having   appropriate
     jurisdiction.  We each agree that any process may be served upon each of us
     in any manner authorized by Ohio law for any such legal proceeding or other
     action.

     If you have any questions regarding the terms of this letter, please do not
     hesitate to let me know. You may accept by signing the  "Acceptance"  below
     and returning the signed copy of this letter.

                                        Diamond Hill Capital Management, Inc.


                                        By: /S/ R.H. Dillon
                                            ------------------------------
                                        Title: Chief Executive Officer
                                               ---------------------------

                                        ACCEPTANCE


                                            /S/ James F. Laird
------------------------------              ------------------------------
                                            Signature