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Exhibit (8)(i)
SECURITIES LENDING AMENDMENT TO CUSTODY AGREEMENT
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This Securities Lending Amendment (the "Amendment") refers to the
Custodian Agreement, dated April 1, 1992 (the "Custody Agreement") between The
Arch Fund, Inc. (the "Principal") and Mercantile Bank of St. Louis N.A. (the
"Agent") which governs Mercantile Bank of St. Louis N.A.'s safekeeping of
securities deposited by the Principal in its custodian account under the Custody
Agreement (the "Custodian Account"). This Amendment authorizes Mercantile Bank
of St. Louis N.A. to act in accordance with the conditions of this Amendment as
agent for the Principal on a disclosed basis with respect to loans of securities
held in the Custodian Account. This Amendment further authorizes the Agent to
appoint a subagent (the "Subagent") to carry out the security lending
transactions on behalf of the Custodian Account. In that connection, the
Principal and the Agent agree as follows:
1. DEFINITIONS.
For purposes of this Amendment:
"AVAILABLE SECURITIES" shall mean all Government Securities and
Corporate Securities which may, from time to time, be held by the Subagent in
the Custodian Account except Government Securities and Corporate Securities that
the Agent notifies the Subagent are unavailable for Loans.
"BORROWED SECURITIES" shall mean any Available Securities which are the
subject of a Loan under a Securities Borrowing Agreement, except that if any new
or different securities shall be exchanged for any Borrowed Securities by reason
of recapitalization, merger, consolidation or other corporate action, these new
or different securities shall, effective upon such exchange, be deemed to be
Borrowed Securities which have been substituted for the Borrowed Securities for
which such exchange was made.
"BORROWER" shall mean a borrower under a Securities Borrowing
Agreement.
"BUSINESS DAY" shall mean any day, from Monday through Friday, when a
bank organized under the laws of the State of New York is open to transact
business.
"CASH COLLATERAL" shall mean Collateral in the form of cash and
evidenced by a certified check, bank cashier's check or, if the Borrowed
Securities are delivered through a Depository, funds delivered through such
Depository, including all accounts or instruments in which any such check or
funds are deposited or invested, any proceeds of the foregoing, and any
increases or decreases to Cash Collateral resulting from marking to market
adjustments prescribed by Section 6 hereof.
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"CASH COLLATERAL INVESTMENTS" shall mean the instruments in which Cash
Collateral is invested in accordance with Section 8 hereof.
"COLLATERAL" shall mean the Cash Collateral, the Securities Collateral,
or any combination thereof received from time to time by the Subagent from
Borrowers pursuant to Securities Borrowing Agreements.
"COLLATERAL REQUIREMENT" shall mean with respect to each Loan an amount
equal to at least 102% of the then current Market Value of the Borrowed
Securities which are the subject of that Loan as of the close of trading on the
preceding Business Day.
"CORPORATE SECURITIES" shall mean equity securities and corporate
bonds, debentures, notes and other evidences of indebtedness.
"DEFAULT" shall mean an "Event of Default" as defined in a Securities
Borrowing Agreement.
"DEPOSITORY" shall mean The Depository Trust Company, a Federal Reserve
Bank which maintains a book-entry system or, if agreed to by the parties to a
Securities Borrowing Agreement, such other central depository system at which
the Borrower and the Subagent maintain accounts.
"EQUIVALENT SECURITIES" shall mean the identical number of securities
of the same issuer and of the same class as the Borrowed Securities.
"GOVERNMENT SECURITIES" shall mean securities issued, or guaranteed as
to principal and interest, by the United States Government, its agencies or
instrumentalities.
"LOAN" shall mean the lending of Available Securities by the Subagent
to a Borrower pursuant to the terms of a Securities Borrowing Agreement.
"MARKET VALUE" shall mean with respect to Government Securities the
price of such securities as quoted by a recognized pricing service at the time
the determination of Market Value is made, or such other amount as shall be
agreed upon by the Subagent and the Borrower, plus interest, if any, accrued but
not yet due and owing at the time such determination is made, and shall mean
with respect to Corporate Securities, the price of such securities as quoted by
a recognized pricing service at the time such determination is made, plus
interest, if any, accrued but not yet due and owing at the time such
determination is made.
"PREMIUM" shall mean the loan premium based an the then current Market
Value of the Borrowed Securities, for Corporate
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Securities, and on the par value of the Borrowed Securities, for Government
Securities, which the Borrower is obligated to deliver to the Subagent in
consideration of a Loan made against Securities Collateral.
"SECURITIES BORROWING AGREEMENTS" shall mean the agreements between the
Subagent and the Borrowers setting forth the terms and conditions applicable to
Loans of Available Securities.
"SECURITIES COLLATERAL" shall mean Collateral consisting of Government
Securities, together with all present and future proceeds therefrom, including
all accrued and unpaid interest, and any and all distributions made by the
issuers on or with respect thereto, and including any increases or decreases
thereto by reason of marking to market adjustments described by Section 6
hereof.
"VALUE" shall mean with respect to Cash Collateral the amount of such
Cash Collateral and with respect to Securities Collateral the Market Value of
such Securities Collateral.
"YIELD" shall mean the income earned on Cash Collateral Investments.
"PORTFOLIO" shall mean the investment portfolios of the Principal.
Terms defined herein which import the singular number shall include the
plural and vice versa.
2. CAPACITY; LISTS OF BORROWER AND LENDERS.
The Principal authorizes the Agent through the Subagent, for all
purposes hereunder, to act as its agent on a disclosed basis. Attached hereto as
Schedule C is an initial list of potential Borrowers, which list shall be
updated from time to time by the Agent through the Subagent to add additional
potential Borrowers and to delete entities which have ceased to be potential
Borrowers. The Subagent shall provide the Agent, and the Agent shall provide the
Principal with a notice of each addition of a potential Borrower to such list.
If the Agent notifies the Subagent in writing within five Business Days from the
date hereof or the date any such notice is sent to the Agent, as the case may
be, that it or the Principal objects to any potential Borrower named either on
such list or in such notice, no Loans of Available Securities shall be made to
such potential Borrower. If the Agent does not so object within such five
Business Day period, each potential Borrower named either on such list or in
such notice, as the case may be, shall be deemed acceptable to the Principal.
The Agent through the Subagent shall also from time to time provide each
Borrower with a list of potential lenders, including the Principal, for whom the
Subagent is authorized as agent to make Loans of
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securities pursuant to the terms and conditions substantially the same as the
terms and conditions hereof.
The Agent shall provide to Principal a list of the approved borrowers.
Whenever possible, the Agent shall provide a Standard & Poor's Corporation,
Xxxxx'x Investors Service, Inc., or similar credit ratings if available and
allow the Principal access to the Agent's credit files if needed.
The Agent shall also provide Principal on a monthly basis with a
listing of lending activity broken down by Portfolio, and should keep the
Subagent informed as to the maximum to be lent out at any one time by each
Portfolio, and provide a breakdown of total revenues generated by each Portfolio
and showing the exact amount of fees paid to each Portfolio.
3. SECURITIES BORROWING AGREEMENTS.
The Agent hereby authorizes the Subagent to enter into, on behalf of
the Principal and with respect to up to a maximum of 33-1/3% (1/3) of each
Portfolio's assets at any one given time, Securities Borrowing Agreements with
each of the Borrowers named on the list or in a notice referred to in Section 2
hereof, subject to the Principal's right of objection in Section 2 hereof. Upon
request, the Subagent shall furnish its standard form of Securities Borrowing
Agreement to the Agent. Subject to the provisions of Section 26 hereof, the
Subagent shall have the right to make or decline to make any Loans under any
Securities Borrowing Agreement in its discretion and without prior notice to the
Agent or Principal. The Subagent shall give prompt notice to the Agent if, other
than pursuant to the Agent's or Principal's request, the Subagent gives or
receives notice of termination of any Securities Borrowing Agreement.
4. DELIVERY OF THE BORROWED SECURITIES.
The Principal authorizes the Agent through the Subagent to deliver
Borrowed Securities from time to time to each of the Borrowers. The Subagent
shall notify the Agent of activity in respect of Loans of the Available
Securities by mailing to the Agent an advice for each such Loan.
5. RECEIPT OF COLLATERAL.
The Principal authorizes the Agent through the Subagent to receive
Collateral from each of the Borrowers, which Collateral may consist of (a) Cash
Collateral, (b) Securities Collateral or (c) any combination thereof, with an
aggregate Value at least equal to the Collateral Requirement. The Subagent and
Agent acknowledge that they are each a "fiduciary" as defined in the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") with
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respect to the investment of Cash Collateral, to the extent such Cash Collateral
is deemed a plan asset under ERISA.
6. MARKING TO MARKET.
With respect to each Loan, if the aggregate Value of the Collateral
held by the Subagent on behalf of the Principal at the close of trading on any
Business Day is less than the then current Market Value of all of the Borrowed
Securities which are the subject of such Loan, the Borrower, upon notice thereof
by the Subagent on behalf of the Principal, shall provide additional Collateral,
which shall be delivered by the close of trading on the next Business Day. Such
additional Collateral, together with the Collateral then held by the Subagent on
behalf of the Principal for such Loan, shall equal no less than the Collateral
Requirement for such Loan.
With respect to each Loan, if the aggregate Value of the Collateral
held by the Subagent on behalf of the Principal at the close of trading on any
Business Day exceeds the Collateral Requirement for all of the Borrowed
Securities which are subject of such Loan, the Borrower, by notice to the Agent
through the Subagent, may require the Agent through the Subagent, on behalf of
the Principal, to return, and the Principal hereby authorizes the Agent through
the Subagent to return, to the Borrower the excess of such Collateral over the
Collateral Requirement.
7. SUBSTITUTION.
With respect to each Loan, the Principal authorizes the Agent through
the Subagent without the Principal's prior consent to accept substitute
Securities Collateral therefor and release the Securities Collateral for which
the same is substituted. Such substituted Securities Collateral, together with
all Collateral then held by the Subagent on behalf of the Principal for such
Loan, shall equal no less than the Collateral Requirement for such Loan.
8. INVESTMENT OF CASH COLLATERAL.
(a) The Principal hereby authorizes the Agent to direct the
Subagent to invest Cash Collateral for the Principal's account and risk in the
following:
(i) Securities issued by the United States
Treasury and federal agencies;
(ii) Repurchase agreements, which are fully
collateralized at not less than 102% of the
repurchase price (including accrued
interest) by United States Treasury,
federal agency or mortgage-backed
securities, with (a) primary or reporting
dealers as designated by the
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Xxxxxxx Xxxxxxx Xxxx xx Xxx Xxxx, (x)
government securities dealers who have a
minimum net worth of $50 million, or (c)
member banks of the Federal Reserve System.
(b) The Subagent shall limit its investment in the securities
of any one issuer, to (i) 15% of the market value of the Cash Collateral, or
(ii) $250,000, whichever is greater, except that this restriction shall not
apply to investments in repurchase agreements.
(c) The Subagent shall only invest in United States dollar
denominated investments.
(d) The maximum maturity of any single security the Subagent
invests in shall be 90 days. The Subagent shall not invest in any security which
will cause the maximum weighted average maturity of the Cash Collateral to be
greater than 45 days.
(e) The Subagent shall comply with the investment restrictions
set forth in this Section 8 solely at the time of the initial investment of any
Cash Collateral.
(f) To the extent that the Subagent invests Cash Collateral in
deposit instruments outside of the United States as provided in this Section 8,
Principal understands that such investments are subject to the sovereignty of
the local government and are not covered by Federal Deposit Insurance
Corporation insurance. Subagent shall not maintain the indicia of ownership of
any Cash Collateral investment outside of the United States.
(g) The Subagent shall not invest any Cash Collateral in the
obligations of, or conduct business with, Subagent or any affiliate or
subsidiary thereof, provided however that any Subagent may invest in (i) common
or collective trust funds or pooled investment funds maintained by Subagent, and
(ii) time deposits maintained with Subagent.
9. POSSESSION OF COLLATERAL.
The Agent shall leave the Collateral and the Cash Collateral
Investments exclusively in the Subagent's possession and control (subject to the
removal of Cash Collateral from such possession and control in connection with
the making of Cash Collateral Investments).
10. ALLOTMENT OF LOANS.
The Subagent in no way represents that any of the Available Securities
will in fact be the subject of Loans. All requests for Loans from Borrowers may
be allotted in the Subagent's sole
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discretion among its custodian account customers in any manner deemed in its
judgment to be fair and equitable.
11. LOAN OF SUBAGENT'S SECURITIES.
Where the Subagent's own portfolio contains Government Securities which
may be utilized for loans to Borrowers or potential Borrowers, Subagent may lend
its own securities prior to making a Loan to any of such Borrowers or potential
Borrowers as the Subagent hereunder.
12. SUBAGENT'S STATUS AS A CREDITOR.
The Subagent may, through its commercial, trust or other departments,
be a creditor for its own account of, or represent in a fiduciary or any other
capacity, any Borrower or potential Borrower, any broker-dealer or any other
creditors or customers of any of the foregoing, even though any of such
interests may potentially or in fact be in conflict with those of the Principal.
13. YIELD AND PREMIUM.
In regard to any Loan made against Cash Collateral, the Yield (net of
(a) the Agent's and any of its Subagent's compensation under Section 14 hereof
and (b) a negotiated percentage of the Yield which shall be paid to the
Borrower) attributable to such Loan shall be paid monthly to the Principal by a
deposit to the Custodian Account. The Subagent shall make such deposits (i)
bi-monthly by the tenth Business Day of each month and the tenth Business Day
following the fourteenth day of each month in regard to Loans of Government
Securities; and (ii) monthly by the tenth Business Day of each month in regard
to Loans of Corporate Securities.
The Principal authorizes the Agent through the Subagent to pay on the
Principal's behalf any amounts due to the Borrower in regard to a Loan,
including a negotiated percentage of the Yield.
In regard to any Loan made against Securities Collateral, the Premium
(net of the Agent's and Subagent's compensation under Section 14 hereof)
attributable to such Loan shall be paid to the Principal by a deposit to the
Custodian Account. Subagent shall make such deposits (i) bi-monthly by the tenth
Business Day of each month and the tenth Business Day following the fourteenth
day of each month in regard to Loans of Government Securities; and (ii) monthly
by the tenth Business Day of each month in regard to Loans of Corporate
Securities.
Any such Yield or Premium may vary depending upon market conditions.
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14. AGENT'S AND SUBAGENT'S COMPENSATION.
The compensation of the Agent and any of its Subagents for services
rendered under this Agreement shall be based upon rates which they shall
determine and set from time to time subject to the Principal's approval. The
Agent's and Subagent's current compensation schedules are annexed hereto as
Schedule A and Schedule B.
15. STATEMENTS TO PRINCIPAL.
Except as otherwise specifically provided herein or otherwise mutually
agreed upon in writing, notification of any income due to the Principal pursuant
to this Amendment will be made by mailing to the Principal a monthly statement
with respect to Corporate Securities that are the subject of a Loan and a
bimonthly statement with respect to Government Securities that are the subject
of a Loan.
16. DISTRIBUTIONS ON AND VOTING RIGHTS OF THE BORROWED SECURITIES.
The Principal represents and warrants that it is entitled to receive
all distributions made by the issuer in respect of the Borrowed Securities on
the date on which such sums are payable, including without limitation cash
dividends and interest. Whether or not the Borrower under any Securities
Borrowing Agreement pays and delivers to the Subagent all such distributions as
provided in such Securities Borrowing Agreement, the Subagent will deposit to
the Custodian Account all such distributions or an amount equivalent thereto on
the date on which such distributions are payable to the full extent it would
deposit such distributions if the Borrowed Securities had not been lent to the
Borrower. The Principal shall not retain voting rights of the Borrowed
Securities.
Pursuant to the Securities Borrowing Agreements, upon the payment of
any distribution made by the issuer in respect of the Borrowed Securities to any
person other than the Subagent, (a) in the case of a cash distribution, the
Borrower shall pay an equal amount to the Subagent on the date of such
distribution, and (b) in the case of a non-cash distribution, the amount of the
distributed securities shall be added to the Loan on the date for such
distribution and shall become Borrowed Securities unless otherwise agreed.
17. TERMINATION OF LOANS.
Loans shall be terminated with respect to each of the Borrowed
Securities no later than one (1) business day prior to the date on which voting
rights are determined with respect to the next scheduled or special meeting of
shareholders of such Borrowed
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Securities (hereinafter referred as the "Return Date"). The Subagent shall use
its best efforts to ensure the return of Borrowed Securities on or before the
Return Date.
Loans shall be terminable by the Principal at will and in no case shall
such termination exceed five (5) Business Days after notice by the Agent on
behalf of the Principal to the Subagent. The Principal through the Agent shall
immediately notify the Subagent of its intention to terminate a Loan. If the
Borrowed Securities which are the subject of a Loan being terminated by the
Agent are being sold by the Agent, such notice shall in no event be given later
than the trade date established by the Agent for the sale of such Borrowed
Securities. The Principal understands and agrees that the Subagent shall not be
liable to the Principal for fails occurring on the settlement date for such a
sale if timely notice is not given by the Principal in the manner provided in
this Section 17.
The Principal authorizes the Subagent, in its sole discretion, to
terminate any Loan at any time without prior notice to the Principal or Agent.
18. TERMINATION OF AMENDMENT.
This Amendment may be terminated by either party hereto on five
Business Day's written notice to the other party, provided that any outstanding
obligations of the parties hereto shall remain subject to the terms of this
Amendment.
19. RETURN OF BORROWED SECURITIES AND COLLATERAL.
(a) In the event of any Default by the Borrower in returning
Borrowed Securities or tendering Equivalent Securities, the Subagent shall
return the Borrowed Securities or deposit Equivalent Securities in replacement
of unreturned Borrowed Securities to the Custodian Account as soon as
practicable. In that case, in addition to the Subagent's rights under Section 22
hereof, all of the Principal's rights to the Borrowed Securities shall be deemed
assigned to the Subagent, and the Subagent shall be entitled to take any legal
or other action against the Borrower which the Subagent deems necessary or
appropriate to recover from the Borrower any losses incurred by the Subagent as
a result of its performance of its aforementioned obligation to return the
Borrowed Securities or deposit Equivalent Securities to the Custodian Account.
However, in the event of any such Default by the Borrower, if the Value of the
Collateral at such time is less than that which is required to purchase
Equivalent Securities to replace the unreturned Borrowed Securities as a result
of a decrease in the Value of the Cash Collateral Investments, the Subagent will
return the Borrowed Securities or deposit Equivalent Securities to the Custodian
Account only to the extent of and in an amount equal to the Value of the
Collateral at the time of the Default. To the
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extent that the Value of the Cash Collateral is insufficient as a result of an
increase in the Market Value of the Borrowed Securities the Subagent shall be
responsible for the difference, at the time of the Default, between the Value of
the Cash Collateral and the Market Value of the Borrowed Securities.
(b) In the event that at the time the Collateral is to be
returned to the Borrower the amount of Cash Collateral is less than that which
is required to be returned to the Borrower as a result of a decrease in the
Value of the Cash Collateral Investments, the Principal shall pay to the
Subagent promptly upon its demand an amount in cash equal to the deficiency in
order to provide for the return of the total amount of the Collateral to the
Borrower.
(c) Agent will identify to the Principal, the Portfolio or
Portfolios affected by a Borrower's Default as soon as practicable after such
Default.
20. LIMITATION ON PRINCIPAL'S ACTIONS AND WAIVERS.
The Principal shall not take any action, or permit any action to be
taken except by the Subagent, with respect to any Borrowed Securities. Without
the Subagent's written consent, the Principal shall not change or waive any of
its rights under or with respect to a Securities Borrowing Agreement or
terminate any Securities Borrowing Agreement (except as provided in Section 17
hereof with respect to termination of Loans by the Subagent at the request of
the Principal). The Principal or Agent shall promptly notify the Subagent of any
notice or property received directly by the Principal or Agent pursuant to any
Securities Borrowing Agreement.
21. ADVANCES BY THE SUBAGENT.
The Subagent may at its option advance its own funds to make any
restoration of the Cash Collateral due from the Principal under Section 19(b)
hereof and to pay any fees due to the Borrower as provided in Section 13 hereof.
If the Subagent makes any such advance, or if the Principal fails to make any
such payment required by Sections 19(b) or 13 hereof or any payment of the
Agent's and Subagent's compensation under Section 14 hereof, the Principal shall
be liable to the Agent or the Subagent for the amount of such advance or
payment, from the date of the Subagent's demand for the amount of such payment
or advance (or, in the case of the Agent's and Subagent's compensation, from the
date due) until payment by the Principal of such liability. As security for such
liability, the Principal hereby pledges, assigns and grants to the Subagent a
continuing security interest in, and a lien on, the Principal's property and the
proceeds thereof in the Custodian Account or otherwise in the possession or
under the control of the Subagent, and the Subagent shall have with respect
thereto all of
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the rights and remedies of a secured party under the New York Uniform Commercial
Code.
22. SUBROGATION OF THE SUBAGENT.
(a) If the Subagent makes any deposit to the Custodian Account
pursuant to Section 16 hereof, the Principal agrees that the Subagent is and
shall be subrogated to (i) all rights of the Principal in and to any
distributions made by an issuer in respect of the Borrowed Securities, or the
equivalent thereof, on account of which such deposit is made, and (ii) all
rights of the Principal (A) in and to the Collateral under the pertinent
Securities Borrowing Agreement and (B) against any person, corporation or other
entity with respect to any such distributions or the equivalent thereof, and the
Principal hereby assigns to the Subagent all such rights.
(b) If the Subagent makes any deposit to the Custodian Account
pursuant, to Section 19(a) hereof, the Principal agrees that the Subagent is and
will be subrogated to all rights of the Principal (i) in and to the Collateral
under the pertinent Securities Borrowing Agreement and (ii) against any person,
corporation or entity with respect to the Default specified in Section 19 (a),
and the Principal hereby assigns to the Subagent all such rights.
(c) The Principal agrees to execute and deliver all such
assignments and other documents, and to do whatever else is reasonably necessary
from time to time, to give effect to any assignments and rights of subrogation
referred to in Section 19(a) hereof and this Section 22.
23. PRINCIPAL'S REPRESENTATIONS AND WARRANTIES.
The Principal represents and warrants that: (i) it has the legal right,
power and authority to execute, deliver and perform this Amendment and to carry
out all of the transactions contemplated hereby; (ii) it has obtained all
necessary authorizations, including those from any persons that may have an
interest in the Available Securities; (iii) the execution, delivery and
performance of this Amendment and the carrying out of any of the transactions
contemplated hereby will not be in conflict with, result in a breach of or
constitutes a default under any agreement or other instrument to which the
Principal is a party or which is otherwise known to the Principal; (iv) it does
not require the consent or approval of any governmental agency or
instrumentality, except any such consents and approvals which the Principal has
obtained; (v) the execution and delivery of this Amendment by the Principal will
not violate any law, regulation, charter, by-law, order of any court or other
government agency or judgment applicable to the Principal; (vi) it has no
present intention to sell the Borrowed Securities; and (vii) all persons
executing this
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Amendment on behalf of the Principal and carrying out the transactions
contemplated hereby on behalf of the Principal are duly authorized to do so.
24. AGENT'S REPRESENTATIONS AND WARRANTIES.
The Agent represents and warrants that: (i) it has the legal right,
power and authority to execute, deliver and perform this Amendment and to carry
out all of the transactions contemplated hereby; (ii) the execution, delivery
and performance of this Amendment 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 Agent is a party or which is otherwise known to the Agent; (iii) it
does not require the consent or approval of any governmental agency or
instrumentality, except any such consents and approvals which the Agent has
obtained; (iv) the execution and delivery of this Amendment by the Agent will
not violate any law, regulation, charter, by-law, order of any court or other
government agency or judgment applicable to the Agent; and (v) all persons
executing this Amendment on behalf of the Agent carrying out the transactions
contemplated hereby on behalf of the Agent are duly authorized to do.
25. GENERAL.
The Principal agrees that the Agent shall have no responsibilities or
duties with respect to the subject matter of this amendment other than those
expressly set forth herein and in the Letter of Agreement attached hereto. The
Principal also agrees to execute such documents as the Agent may reasonably
request to assist the Agent in carrying out its responsibilities and duties
hereunder.
26. ERISA.
The Principal has informed the Agent that the Custodian Account is not
subject to the requirements of ERISA and the rules and regulations thereunder
("ERISA").
27. SEVERABILITY.
In case any one or more of the provisions contained in this Amendment
should be or become invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall in no way be affected, prejudiced or disturbed thereby.
28. GOVERNING LAW.
The provisions of and the validity and construction of this Amendment
shall be governed by and construed in accordance with the
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laws of the State of New York, despite the fact that the Custody Agreement
between Principal and Agent is governed by the laws of the State of Missouri.
IN WITNESS WHEREOF, the parties hereto, each intending to be bound
hereby, have caused this instrument to be executed by their duly authorized
representatives as of the dates written below.
Mercantile Bank of St. Louis N.A.
By:/S/ Xxxxx X. Xxxx
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Title:Vice President
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Date:August 4, 1994
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The ARCH Fund, Inc.
By:/S/ X.X. Xxxxx
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Title:Treasurer
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Date:August 4, 1994
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SCHEDULE A
SECURITIES LENDING PROGRAM COMPENSATION SCHEDULE - AGENT
A. CORPORATE AND GOVERNMENT SECURITIES LOANS VS. CASH COLLATERAL: 5% of
the remaining interest income earned on cash collateral invested after rebate.
B. CORPORATE AND GOVERNMENT SECURITIES LOANS VS. GOVERNMENT SECURITIES
COLLATERAL: 5% of the loan premium paid by the broker/dealer (Borrower).
There are no transaction fees associated with our Securities Lending Program
other than the fees outlined above.
On Loans vs. Cash Collateral in which the Subagent invests the funds and on
Loans in which a Premium is received, we will not earn a greater return than you
on any individual loan transaction.
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SCHEDULE B
SECURITIES LENDING PROGRAM COMPENSATION SCHEDULE - Subagent
A. CORPORATE AND GOVERNMENT SECURITIES LOANS VS. CASH COLLATERAL: 45%
of the remaining interest income earned on cash collateral invested after
rebate.
B. CORPORATE AND GOVERNMENT SECURITIES LOANS VS. GOVERNMENT SECURITIES
COLLATERAL: 45% of the loan premium paid by the broker/dealer (Borrower).
There are no transaction fees associated with the Subagent's Securities Lending
Program other than the fees outlined above.
On Loans vs. Cash Collateral in which the Subagent invests the funds and on
Loans in which a Premium is received, the Subagent will not earn a greater
return than the Principal on any individual loan transaction.
