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Exhibit (8)(e)
November 15, 1996
Mercantile Bank National Association
One Mercantile Center
St. Louis, Missouri 63101
RE: Custody Fees for the ARCH Equity Income, National
Municipal Bond and Short-Intermediate Corporate
Bond Portfolios
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Gentlemen:
This letter constitutes our agreement with respect to
compensation to be paid to Mercantile Bank National Association ("Mercantile")
with respect to The ARCH Equity Income Portfolio (comprised of Class M, Class M
- Special Series 1, Class M Special Series 2 and Class M - Special Series 3
shares), The ARCH National Municipal Bond Portfolio (comprised of Class N, Class
N - Special Series 1 and Class N - Special Series 2 shares) and The ARCH
Short-Intermediate Corporate Bond Portfolio (comprised of Class O, Class O -
Special Series 1 and Class O - Special Series 2 shares) (each class a "Series")
under the terms of the Custodian Agreement dated as of April 1, 1992 (the
"Custodian Agreement") between The ARCH Fund, Inc. (the "Fund") and Mercantile.
Pursuant to Paragraph 23 of the Custodian Agreement, and in consideration of the
services to be provided by you, we will pay Mercantile the following:
1. An annual custody fee (exclusive of any transaction charges),
which shall be calculated daily and paid monthly (in arrears) for each Series
as follows:
- The ARCH Equity Income Portfolio - the greater of
$6,000.00 or $.30 for each $1,000.00 of the Series'
average daily net assets;
- The ARCH National Municipal Bond Portfolio - the greater of
$6,000.00 or $.30 for each $1,000.00 of the Series' average
daily net assets; and
- The ARCH Short-Intermediate Corporate Bond Portfolio the
greater of $6,000.00 or $.30 for each $1,000.00 of the Series'
average daily net assets.
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Mercantile Bank National Association
November 15, 1996
Page Two
2. A transaction charge of $15.00 for each purchase, sale or delivery
of a security upon its maturity date, $50.00 for each interest collection or
claim item, $20.00 for each transaction involving GNMA, tax-free or other
non-depository registered items with monthly dividends or interest, $30.00 for
each purchase, sale or expiration of an option contract, $50.00 for each
purchase, sale or expiration of a futures contract, and $15.00 for each
repurchase trade with an institution other than Mercantile;
3. Mercantile's incremental costs in providing foreign custody services
for foreign denominated and held securities; and
4. Mercantile's out-of-pocket expenses, including but not limited to
postage, telephone, telex, Federal Express and Federal Reserve wire fees, on
behalf of the Series.
The fee and expenses attributable to each Series shall be the
obligation of that Series and not of any other portfolio of the Fund. The fee
for the period from the day of the year this agreement is entered into until the
end of that fiscal year of the Series, or for any portion of a fiscal year
immediately prior to its termination, shall be pro-rated according to the
proportion which such period bears to the full annual period.
If the foregoing accurately sets forth our agreement and you
intend to be legally bound thereby, please execute a copy of this letter and
return it to us.
Very truly yours,
THE ARCH FUND, INC.
By:/s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx, President
ACCEPTED: MERCANTILE BANK NATIONAL ASSOCIATION
By: /s/ Xxxxxxx Xxxxxxxx
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Senior Vice President
Dated as of: November 15, 1996
