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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
SCHEDULE 14D-9
Solicitation/Recommendation Statement
under
Section 14(d)(4) of the Securities Exchange Act of 1934
---------------
MFS GOVERNMENT MARKETS INCOME TRUST
(Name of Subject Company)
---------------
MFS GOVERNMENT MARKETS INCOME TRUST
(Name of Person Filing Statement)
COMMON SHARES OF BENEFICIAL INTEREST, WITHOUT PAR VALUE
(Title of Class of Securities)
552939100
(CUSIP Number of Class of Securities)
---------------
Susan S. Newton
Massachusetts Financial Services Company
500 Boylston Street
Boston, Massachusetts 02116
(617) 954-5000
(Name, Address and Telephone Number of Person Authorized to Receive
Notice and Communications On Behalf of the Person Filing Statement)
WITH A COPY TO:
Gregory D. Sheehan, Esq.
Ropes & Gray LLP
One International Place
Boston, Massachusetts 02110
(617) 951-7000
---------------
Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
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Item 1. Subject Company Information.
The name of the subject company is MFS Government Markets Income Trust,
a Massachusetts business trust (the "Fund"). The address of its principal
executive offices is 500 Boylston Street, Boston, Massachusetts 02116. The
telephone number at its principal executive offices is (617) 954-5000.
The title of the class of equity securities to which this
Solicitation/Recommendation Statement on Schedule 14D-9 (together with the
Exhibits hereto, this "Statement") relates is the common shares of beneficial
interest without par value of the Fund (the "Common Shares"). As of September 4,
2007, there were 51,332,556 shares of Common Shares outstanding.
Item 2. Identity and Background of Filing Person.
The filing person is the subject company. The Fund's name, business
address and business telephone number are set forth in Item 1 above.
This Statement relates to the offer by Bulldog Investors General
Partnership ("BIGP"), which, according to the Schedule TO filed by it on
September 12, 2007 (the "BIGP Schedule TO"), is a New York general partnership,
to purchase up to 5,000,000 of the issued and outstanding Common Shares at a
price per share equal to 96.25% of the net asset value per share determined as
of the close of the regular trading session of the New York Stock Exchange on
the Expiration Date, as defined in the BIGP Schedule TO, net to the seller in
cash (subject to a $50 processing fee that BIGP will charge for processing each
Letter of Transmittal, applicable withholding taxes and any brokerage fees that
may apply), without interest upon the terms and subject to the conditions set
forth in the Offer to Purchase, dated September 11, 2007 (the "BIGP Offer to
Purchase"), and in the related Letter of Transmittal (which, together with the
BIGP Offer to Purchase, constitute the "BIGP Offer"). The BIGP Schedule TO and
BIGP Offer to Purchase refer to "shares of common stock". For purposes of this
Statement only, the Fund assumes that the BIGP Offer relates to the Fund's
Common Shares. The Fund notes that it has no outstanding securities with the
title "common stock."
According to the BIGP Schedule TO, the business address of BIGP is Park
80 West, Plaza Two, Suite 750, Saddle Brook, New Jersey 07663, and the business
telephone number of BIGP is (646) 378-2105.
Item 3. Past Contracts, Transactions, Negotiations and Agreements.
Except as described in this Statement or in the excerpts from the
Fund's proxy statement dated September 14, 2007 (the "2007 Proxy Statement")
filed as Exhibit (e)(1) to this Statement, there are no material agreements,
arrangements, understandings, or any actual or potential conflicts of interest
between the Fund or its affiliates and (1) the Fund, its executive officers,
trustees or affiliates or (2) BIGP or its executive officers, directors or
affiliates. The excerpts from the 2007 Proxy Statement filed as Exhibit (e)(1)
to this Statement are incorporated herein by this reference and include the
information beginning on the following pages and with the following headings:
o Page 12: Share Ownership.
1
o Page 13: Trustee Compensation Table.
o Page 19: Trust Information. Investment Adviser and Administrator.
Description of Relevant Agreements.
o Investment Advisory Agreement: Dated January 1, 2002, the Investment
Advisory Agreement generally provides that MFS shall act as the investment
adviser to the Fund and, as such, shall (i) furnish continuously an
investment program for the Fund, (ii) determine what investments shall be
purchased, held, sold or exchanged by the Fund, and (iii) determine what
portion, if any, of the assets of the Fund shall be held uninvested,
subject to the control of the Trustees of the Fund. MFS is paid a fee for
its services monthly. The Investment Advisory Agreement provides that it
must be approved at least annually by the affirmative vote of (1) a
majority of the Trustees who are not interested persons of the Fund or MFS
at a meeting specifically called for the purpose of voting on such
approval, and (2) by the Board of Trustees of the Fund, or by vote of a
majority of the outstanding voting securities of the Fund, and is not
earlier terminated by the Fund or MFS. This summary description of the
Investment Advisory Agreement does not purport to be complete and is
qualified in its entirety by reference to the Investment Advisory
Agreement, which is filed as Exhibit (e)(2) hereto and incorporated herein
by reference.
o Closed End Fund Oversight Agreement: Dated January 1, 2007, the Closed-End
Fund Oversight Agreement generally provides that MFS Service Center, Inc.
("MFSC") shall provide oversight services with respect to the activities of
Computershare Trust Company, N.A. ("Computershare"), the transfer agent for
the Fund, and Computershare Shareholder Services, Inc. ("CSS"), the agent
for the Fund's dividend reinvestment plan. MFSC is paid a fee for its
services monthly, and also receives payment from the Fund for out-of-pocket
expenses paid by MFSC on behalf of the Fund. This summary description of
the Closed-End Fund Oversight Agreement does not purport to be complete and
is qualified in its entirety by reference to the Closed-End Fund Oversight
Agreement, which is filed as Exhibit (e)(3) hereto and incorporated herein
by reference.
o Administrative Services Agreement: Dated August 1, 2006, as amended August
1, 2007, the amended and restated administrative services agreement (the
"Administrative Services Agreement") generally provides that MFS shall
provide certain accounting, legal, shareholder communications, compliance,
and other administrative services to the Fund. The Fund pays MFS a fixed
amount plus a fee based on average daily net assets of the Fund. This
summary description of the Administrative Services Agreement does not
purport to be complete and is qualified in its entirety by reference to the
Administrative Services Agreement, which is filed as Exhibit (e)(4) hereto
and incorporated herein by reference.
o Fidelity Bond Claim Agreement: The Fund and certain other MFS funds have
entered into a fidelity bond claim agreement (the "Fidelity Bond Claim
Agreement") with the MFS Parties (as defined in the Fidelity Bond Claim
Agreement). Each of the parties to the agreement are named insureds under
broker's blanket bonds described in the Fidelity Bond Claim Agreement (the
"Bonds"). The Fidelity Bond Claim Agreement establishes the criteria by
which the premium for payment of the bonds shall be allocated among
2
the parties and the criteria by which losses in excess of the face amount
of the Bonds shall be allocated among the parties. This summary description
of the Fidelity Bond Claim Agreement does not purport to be complete and is
qualified in its entirety by reference to the Fidelity Bond Claim
Agreement, which is filed as Exhibit (e)(5) hereto and incorporated herein
by reference.
o Indemnification Agreement: The Fund is party to an indemnification
agreement dated January 24, 2006 (the "Indemnification Agreement") with
each of the Trustees who are not "interested persons" of the Fund as
defined in the Investment Company Act of 1940 ("Independent Trustees").
Under the Indemnification Agreement, the Fund shall indemnify and hold
harmless each Trustee against any and all Expenses actually incurred or
paid by the Trustee in any Proceeding in connection with the Trustee's
service to the Fund ("Expenses" and "Proceeding" are each defined in the
Indemnification Agreement). This summary description of the Indemnification
Agreement does not purport to be complete and is qualified in its entirety
by reference to the Indemnification Agreement, which is filed as Exhibit
(e)(6) hereto and incorporated herein by reference.
Item 4. The Solicitation or Recommendation.
(a) Solicitation/ Recommendation.
The Board of Trustees ("Board") of the Fund met to consider and discuss
the BIGP Offer on September 19, 2007. At that meeting, the Board appointed a
special committee (the "Special Committee") of the Board, which is comprised
solely of Independent Trustees, to evaluate and assess the terms of the BIGP
Offer in consultation with "independent legal counsel" (as defined in Rule
0-1(a)(6) under the Investment Company Act of 1940), the Fund's Independent
Chief Compliance Officer, a full-time senior officer appointed by and reporting
to the independent Trustees, and such other experts as the Special Committee
chooses to engage.
The Special Committee met to consider and discuss the BIGP Offer on
September 24, 2007. At that meeting, the Board's independent legal counsel made
presentations regarding legal matters pertaining to the BIGP Offer and the
Fund's potential responses, including an overview of public filing and other
obligations under applicable securities laws. After careful consideration at the
September 24th meeting, the Special Committee concluded that (1) the closed-end
structure offers the Fund the best platform to achieve its objective, (2) the
actions taken by the Board to address the Fund's discount to NAV represent a
more favorable long-term solution to narrowing or eliminating the Fund's
discount to NAV than the BIGP Offer, (3) the conditions in the BIGP Offer raise
substantial doubt regarding BIGP's obligation to consummate the BIGP Offer, (4)
the BIGP Offer is, by its nature, coercive, and contains economically
disadvantageous terms, and (5) the BIGP Offer contains inadequate information to
assess whether BIGP has the financial resources to consummate the BIGP Offer.
Accordingly, the Special Committee determined that the BIGP Offer was not in the
best interests of shareholders and, therefore, recommended to the Board that the
Board recommend that the Fund's shareholders reject the BIGP Offer and not
tender their shares to BIGP.
At a meeting held on September 25, 2007, the Board met to receive the
recommendation of the Special Committee and to consider and discuss the BIGP
Offer and the factors considered by the Special Committee in making its
recommendation. At that meeting, the Board, by unanimous vote, determined to
recommend that the Fund's shareholders reject the BIGP Offer and not tender
their shares to BIGP.
3
The following discussion of the information and factors considered by
the Board and the Special Committee is not meant to be exhaustive, but includes
material information, factors and analyses considered by the Board and the
Special Committee in reaching their respective conclusions and recommendations.
The members of the Board and the Special Committee evaluated the various factors
listed below in light of their knowledge of the business, financial condition,
and prospects of the Fund and based upon the advice of independent legal
counsel. In light of the number and variety of factors that the Board and the
Special Committee considered, the members of the Board and the Special Committee
did not find it practicable to assign relative weights to the foregoing factors.
The recommendations of the Board and Special Committee were made after
considering the totality of the information and factors involved. In addition,
individual members of the Board or the Special Committee may have given
different weight to different factors.
(b) Reasons
In reaching the conclusions and in making the recommendation
described above, the Board and the Special Committee consulted with its legal
advisors and the Fund's Independent Chief Compliance Officer, and considered a
number of factors, including, but not limited to those set forth below:
The Fund operates best as a closed-end fund. BIGP has announced that it
is making the BIGP Offer to gain influence over management of the Fund and that
it seeks a fundamental change in the structure of the Fund - causing the Fund to
convert from a closed-end structure to an open-end structure. The Board and the
Special Committee believe that BIGP intends to use its higher percentage
ownership of the Fund following consummation of the BIGP Offer to effect this
change, to the detriment of shareholders of the Fund who invested in the Fund on
the basis that it was structured as a closed-end fund, and who wish to remain
invested in a closed-end fund.
While conversion to an open-end structure would eliminate any
then-existing discount to NAV, it would also have adverse consequences that the
closed-end structure of the Fund was designed to prevent. For example,
conversion to an open-end structure would mean that the Fund's portfolio
managers will no longer be able to cause the Fund's assets to be fully invested
in income-generating securities, thereby reducing the Fund's yield. In addition,
as a result of restrictions that the Investment Company Act places on leveraging
by open-end funds, conversion to an open-end structure would significantly
jeopardize the portfolio manager's efforts to seek increased investment return
through leverage.
Experience also has shown that professional fund arbitrageurs and
certain hedge funds which are current shareholders of the Fund would likely
redeem their shares in the Fund immediately upon its conversion to an open-end
structure, thereby reducing the Fund's assets - potentially substantially - and
causing the Fund's expense ratio to rise significantly. These arbitrageurs are
interested solely in short-term gain at the expense of shareholders who wish to
hold the Fund's shares as a long-term investment.
4
The Board has taken actions to address the Fund's discount to NAV. The
Board regularly considers actions that may be taken to minimize the Fund's
discount to NAV and from time to time has authorized the Fund to repurchase its
shares in the open market as a means of narrowing the Fund's discount. In 2006,
the Board was advised by an independent third party regarding methods by which
closed-end funds attempt to manage their discounts. In April 2007, the Board
approved a change to the Fund's investment strategy to permit the Fund to invest
in higher yielding securities and recommended approval by shareholders of a
proposal to allow the use of leverage in the management of the Fund.
Shareholders have not yet had the opportunity to consider this proposal as it is
proposed for approval at the Fund's annual shareholder meeting schedule for
November 1, 2007. The Board believes that both of these measures may increase
the Fund's yield and also result in a narrowing or elimination of the Fund's
discount to NAV.
In addition, in July 2007, the Board authorized the adoption of a level
distribution plan pursuant to which the Fund now makes monthly distributions at
a minimum annual rate of 7.25%. The Fund's first distribution under this plan
was declared on September 4, 2007, and will be paid to shareholders of record on
September 28, 2007. The Board believes that this plan, upon implementation, may
have the effect of narrowing or eliminating the Fund's discount to NAV.
The BIGP Offer is excessively conditional. The BIGP Offer is subject to
numerous conditions. One important condition ties BIGP's obligation to
consummate the offer to the election of four trustee candidates that BIGP has
stated that it proposes to nominate at the Fund's shareholder meeting on
November 1, 2007 to replace four current members of the Board. Specifically,
BIBP is not required to consummate the offer if shareholders do not elect its
trustee candidates. However, even if BIGP's candidates are elected, the broadly
worded nature of the other conditions in the BIGP Offer make it uncertain that
the offer will be consummated. For example, if there occurs "any change,
circumstance, event or effect" that "could reasonably be expected to have, in
the sole discretion of BIGP, a material adverse effect on the Fund or the value
of the Shares or, assuming consummation of the BIGP Offer, on BIGP or any of its
affiliates," BIGP could elect not to consummate the offer The BIGP Offer to
Purchase also states that BIGP has the right to declare a condition not
satisfied even if the failure to be satisfied was caused by an action or
inaction of BIGP. In addition, by tying the tender offer to the election of its
trustee candidates, BIGP is inducing shareholders to elect trustee candidates
about whom the Fund currently does not have enough information to determine that
they are not "interested persons" of the Fund (as defined in the Investment
Company Act of 1940), creating uncertainty about compliance with the requirement
under regulatory settlements that 75% of the Fund's trustees be comprised of
non-interested persons. Because of the broad nature of BIGP's other conditions,
as well as the fact that the tender offer closes after the November 1st
shareholder meeting, it is possible that BIGP will induce shareholders to vote
for its trustee candidates yet not consummate the tender offer.
The BIGP Offer is coercive. The BIGP Offer represents a threat to
shareholders because the BIGP Offer is designed to coerce shareholders to
participate in the offer on disadvantageous terms. BIGP states that the BIGP
Offer is being made to allow BIGP to gain influence over management of the Fund
and increase BIGP's voting power to cause the Fund to become an open-ended fund.
The BIGP Offer is coercive because it creates an economic incentive for
5
shareholders to tender so that they can avoid (i) being left as minority
shareholders of a fund with a shareholder - BIGP - that is seeking to increase
its influence and force its agenda upon management and the other shareholders
and (ii) facing a radical change in the structure of the Fund. As a result, even
shareholders who wish to remain invested in the Fund may feel compelled to
participate in the BIGP Offer in order to minimize their investment in the Fund
during a period when radical changes are being made to its structure. Further,
if the BIGP Offer is over-subscribed, shareholders who had hoped to redeem
completely from the Fund will have to remain at least partially invested in the
Fund during this period of change.
The BIGP Offer has economically disadvantageous terms. BIGP will assess
a $50 processing fee to each shareholder who tenders. This amount is
considerably higher than the amount that the depositary charges to actually
process the letter of transmittal submitted by a shareholder who chooses to
tender his or her shares. For shareholders who hold shares in multiple names
(e.g., John Jones, John and Mary Jones, and John Jones as trustee for Mary
Jones), a separate letter of transmittal will be required for each account and
the $50 fee will be charged each time. The $50 processing fee, when deducted
from the proceeds of small account holders (or holders whose tendered shares are
reduced if the BIGP Offer is oversubscribed), could significantly reduce the
return realized by these shareholders.
Shareholders have inadequate information to evaluate BIGP's financial
resources. While BIGP states that the BIGP Offer is not subject to a financing
condition, BIGP has not provided adequate information to evaluate its ability to
complete the BIGP Offer, other than to state that it will pay the aggregate
costs of the BIGP Offer (and any other tender offers it may launch against other
companies or funds) using its investment capital. No BIGP financial statements
are included as part of the Schedule TO.
In light of the factors described above, each of the Board and the
Special Committee has determined that the BIGP Offer is not in the best
interests of the Fund's shareholders. Therefore, the Board recommends that
shareholders of the Fund reject the BIGP Offer and not tender their shares into
the BIGP Offer.
(c) Intent to Tender
To the best knowledge of the Fund, none of its trustees, executive
officers, affiliates, or subsidiaries currently intends to tender Common Shares
held of record or beneficially by such person for purchase pursuant to the BIGP
Offer.
Item 5. Person/Assets Retained, Employed, Compensated or Used.
Members of the Board of the Fund and employees of MFS may make
recommendations to the shareholders of the Fund with respect to the BIGP Offer.
Item 6. Interest in Securities of the Subject Company.
During the past 60 days, no transactions with respect to the Common
Shares have been effected by the Fund or, to the Fund's knowledge, by any of its
executive officers, trustees, affiliates or subsidiaries.
6
Item 7. Purposes of the Transaction and Plans or Proposals.
The Board continually considers all strategic alternatives available to
the Fund and, in light of the BIGP Offer, discussions between representatives of
the Fund and BIGP have taken place.
The Fund reserves the right to develop and evaluate other alternatives
to the BIGP Offer.
Item 8. Additional Information.
This Statement is not an offer to sell, nor a solicitation of an offer
to buy, shares of any fund, nor is it a solicitation of any proxy in connection
with the Fund's shareholder meeting. On September __, 2007, the Fund issued a
press release (the "Press Release") relating to the proposed BIGP Offer, which
contains important information. The materials have also been filed with the
Securities and Exchange Commission (the "SEC"). For more information regarding
the funds, or to receive a free copy of the materials filed with the SEC,
including the Press Release, please visit www.mfs.com. Free copies of such
materials can also be found on the SEC's website (http://www.sec.gov). Please
note that the information contained at www.mfs.com does not constitute part of
this Statement.
7
Item 9. Material to be Filed as Exhibits.
Exhibit No. Description
(a)(1) Press Release issued by the Fund on September 25, 2007.
Filed herewith.
(e)(1) Excerpts from the Proxy Statement of the Fund, dated September
14, 2007, filed with the Securities
and Exchange Commission on Schedule 14A on September 14, 2007.
Filed herewith.
(e)(2) Investment Advisory Agreement, dated January 1, 2002, between
the Fund and Massachusetts Financial Services Company. Filed
herewith.
(e)(3) Closed-End Fund Oversight Agreement, dated January 1, 2007,
between MFSC and each of the closed-end funds identified on
Exhibit A thereto. Filed herewith.
(e)(4) Amended and Restated Master Administrative Services Agreement,
dated August 1, 2006 between the Fund and MFS (with Exhibits
revised as of August 1, 2007). Filed herewith.
(e)(5) Fidelity Bond Claim Agreement, dated as of November 1, 1993, as
amended and restated June 12, 2002 between certain MFS Funds
named on Exhibit A thereto and the MFS Parties (as defined
therein). Filed herewith.
(e)(6) Form of Indemnification Agreement, dated as of January 24, 2006,
between certain MFS Funds named on Exhibit A thereto and the
Trustees of each Fund. Filed herewith.
--------------------------------------------------------------------------------
8
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
MFS GOVERNMENT MARKETS INCOME TRUST
By:/s/ Susan S. Newton
--------------------------------------
Name: Susan S. Newton
Title: Assistant Secretary
Dated: September 25, 2007
9
Exhibit (a)(1)
FOR IMMEDIATE RELEASE
CONTACT: John Reilly
(617) 954-5305
BOARD OF TRUSTEES OF MFS GOVERNMENT MARKETS INCOME TRUST
RECOMMENDS THAT SHAREHOLDERS REJECT BIGP'S TENDER OFFER
BOSTON, Massachusetts (September 25, 2007) - The Board of Trustees of MFS
Government Markets Income Trust (the "Fund") recommends that the Fund's
shareholders reject the offer by Bulldog Investors General Partnership ("BIGP")
announced on September 11, 2007 to purchase shares of the Fund. The Board
appointed a special committee comprised solely of independent trustees to
evaluate and assess the terms of the tender offer.
The Board, upon the recommendation of the special committee, has carefully
considered BIGP's tender offer (the "BIGP Offer") and found that it is not in
the best interest of shareholders for the following reasons.
o The Fund operates best as a closed-end fund. BIGP has announced that
it is making the BIGP Offer to gain influence over management of the
Fund and that it wants to cause the Fund to convert from a closed-end
structure to an open-end structure. The Board believes that a
conversion to an open-end structure will hurt those shareholders who
invested in the Fund on the basis that it was structured as a
closed-end fund, and who wish to remain invested in a closed-end fund.
While conversion to an open-end structure would eliminate any
then-existing discount to NAV, it would also have adverse consequences
that the closed-end structure of the Fund was designed to prevent. For
example, conversion to an open-end structure would prevent the Fund's
assets from being fully invested in income-generating securities,
thereby reducing the Fund's yield. In addition, as a result of
restrictions that the Investment Company Act places on leveraging by
open-end funds, conversion to an open-end structure would
significantly jeopardize the portfolio manager's efforts to seek
increased investment return through leverage.
Experience also has shown that professional fund arbitrageurs and
certain hedge funds which are current shareholders of the Fund would
likely redeem their shares in the Fund immediately upon its conversion
to an open-end structure, thereby reducing the Fund's assets -
potentially substantially - and causing the Fund's expense ratio to
rise significantly. These arbitrageurs are interested solely in
short-term gain at the expense of shareholders who wish to hold the
Fund's shares as a long-term investment.
1
o The Board has taken actions to address the Fund's discount to NAV. The
Board regularly considers actions that may be taken to minimize the
Fund's discount to NAV and has from time to time authorized the Fund
to repurchase its shares in the open market as a means of narrowing
the Fund's discount. In 2006, the Board was advised by an independent
third party regarding methods by which closed-end funds attempt to
manage their discounts. In April 2007, the Board approved a change to
the Fund's investment strategy to permit the Fund to invest in higher
yielding securities and recommended approval by shareholders of a
proposal to allow the use of leverage in the management of the Fund.
Shareholders have not yet had the opportunity to consider this
proposal as it is proposed for approval at the Fund's annual
shareholder meeting schedule for November 1, 2007. The Board believes
that both of these measures may increase the Fund's yield and also
result in a narrowing or elimination of the Fund's discount to NAV.
In addition, in July 2007, the Board authorized the adoption of a
level distribution plan pursuant to which the Fund now makes monthly
distributions at a minimum annual rate of 7.25%. The Fund's first
distribution under this plan was declared on September 4, 2007, and
will be paid to shareholders of record on September 28, 2007. The
Board believes that this plan, upon implementation, may have the
effect of narrowing or eliminating the Fund's discount to NAV.
o The BIGP Offer is excessively conditional. The BIGP Offer is subject
to numerous conditions. One important condition ties BIGP's obligation
to consummate the offer to the election of four trustee candidates
that BIGP has stated that it proposes to nominate at the Fund's
shareholder meeting on November 1, 2007 to replace four current
members of the Board. Specifically, BIGP is not required to consummate
the offer if shareholders do not elect its trustee candidates.
However, even if BIGP's candidates are elected, the broadly worded
nature of the other conditions in the BIGP Offer make it uncertain
that the offer will be consummated. For example, if there occurs "any
change, circumstance, event or effect" that "could reasonably be
expected to have, in the sole discretion of BIGP, a material adverse
effect on the Fund or the value of the Shares or, assuming
consummation of the BIGP Offer, on BIGP or any of its affiliates,"
BIGP could elect not to consummate the offer The BIGP Offer to
Purchase also states that BIGP has the right to declare a condition
not satisfied even if the failure to be satisfied was caused by an
action or inaction of BIGP. In addition, by tying the tender offer to
the election of its trustee candidates, BIGP is inducing shareholders
to elect trustee candidates about whom the Fund currently does not
have enough information to determine that they are not "interested
persons" of the Fund (as defined in the Investment Company Act of
1940), creating uncertainty about compliance with the requirement
under regulatory settlements that 75% of the Fund's trustees be
comprised of non-interested persons. Because of the broad nature of
BIGP's other conditions, as well as the fact that the tender offer
closes after the November 1st shareholder meeting, it is possible that
BIGP will induce shareholders to vote for its trustee candidates yet
not consummate the tender offer.
o The BIGP Offer is coercive. The BIGP Offer represents a threat to
shareholders because the BIGP Offer is designed to coerce shareholders
to participate in the offer on
2
disadvantageous terms. BIGP states that the purpose of the BIGP Offer
is for BIGP to gain influence over management of the Fund and increase
BIGP's voting power to cause the Fund to become an open-ended fund.
The BIGP Offer is coercive because it is creates an economic incentive
for shareholders to tender in order to avoid (i) being left as
minority shareholders a fund with a shareholder - BIGP - that is
seeking to increase its influence and force its agenda upon management
and other shareholders and (ii) facing a radical change in the
structure of the Fund. As a result, even shareholders who wish to
remain invested in the Fund may feel compelled to participate in the
BIGP Offer in order to minimize their investment in the Fund during a
period when radical changes are being made to its structure. Further,
if the BIGP Offer is over-subscribed, shareholders who had hoped to
redeem completely from the Fund will have to remain at least partially
invested in the Fund during this period of change.
o The BIGP Offer has economically disadvantageous terms. BIGP will
assess a $50 processing fee to each shareholder who tenders. This
amount is as much as five times higher than the amount that the
depositary charges to actually process the letter of transmittal
submitted by a shareholder who chooses to tender his or her shares.
For shareholders who hold shares in multiple names (e.g., John Jones,
John and Mary Jones, and John Jones as trustee for Mary Jones), a
separate letter of transmittal will be required for each account and
the $50 fee will be charged each time. The $50 processing fee, when
deducted from the proceeds of small account holders (or holders whose
tendered shares are reduced if the BIGP Offer is oversubscribed),
could significantly reduce the return realized by these shareholders.
o Shareholders have inadequate information to evaluate BIGP's financial
resources. While BIGP states that the BIGP Offer is not subject to a
financing condition, BIGP has not provided adequate information to
evaluate its ability to complete the BIGP Offer, other than to state
that it will pay the aggregate costs of the BIGP Offer (and any other
tender offers it may launch against other companies or funds) using
its investment capital. No BIGP financial statements are included as
part of the Schedule TO.
In light of the factors described above, the Board has determined that the
tender offer is not in the best interests of the Fund's shareholders. Therefore,
the Board recommends that shareholders of the Fund reject the tender offer and
not tender their shares to BIGP.
In connection with the tender offer, the Fund has filed a
Solicitation/Recommendation Statement on Schedule 14D-9 with the Securities and
Exchange Commission (the "SEC"). Investors and security holders are strongly
advised to read the Solicitation/Recommendation Statement because it contains
important information about the BGIP Offer. Free copies of the
Solicitation/Recommendation Statement are available at www.mfs.com and on the
SEC's website at www.sec.gov.
About MFS Investment Management:
MFS manages $202 billion in assets on behalf of more than 5 million individual
and institutional
3
investors worldwide as of June 30, 2007. The company traces its origins to 1924
and the creation of America's first mutual fund. For more information, please go
to www.mfs.com.
* * * * *
The foregoing is not an offer to sell, nor a solicitation of an offer to buy,
shares of any fund, nor is it a solicitation of any proxy.
4
Exhibit (e)(1)
EXCERPTS FROM THE FUND'S PROXY STATEMENT, DATED SEPTEMBER 14, 2007
[Page 12]
Share Ownership
As of September 4, 2007, the Trustees and officers of the Trust as a whole owned
less than 1% of the outstanding shares of the Trust.
The following table shows the dollar range of equity securities beneficially
owned by each nominee or Trustee (a) of the Trust and (b) on an aggregate basis,
in all MFS funds overseen by the nominee or Trustee, as of September 4, 2007.
The following dollar ranges apply:
N. None
A. $1 - $10,000
B. $10,001 - $50,000
C. $50,001 - $100,000
D. Over $100,000
Aggregate Aggregate Dollar
Dollar Range of
Range of Securities in
Equity All MFS Funds
Securities Overseen or
in to be Overseen by
Name of Trustee Trust Name the Trust the Nominee
---------------------------------- ----------------------------------------------- --------------------- -------------------
INTERESTED TRUSTEES
Robert J. Manning MFS Government Markets Income Trust N D
Robert C. Pozen MFS Government Markets Income Trust N D
INDEPENDENT TRUSTEES
Robert E. Butler MFS Government Markets Income Trust N D
Lawrence H. Cohn, M.D. MFS Government Markets Income Trust B D
David H. Gunning MFS Government Markets Income Trust N D
William R. Gutow MFS Government Markets Income Trust N D
Michael Hegarty MFS Government Markets Income Trust N D
J. Atwood Ives MFS Government Markets Income Trust N D
Lawrence T. Perera MFS Government Markets Income Trust A D
J. Dale Sherratt MFS Government Markets Income Trust B D
Laurie J. Thomsen MFS Government Markets Income Trust N D
Robert W. Uek MFS Government Markets Income Trust B D
....
[Page 13]
1
Trustee Compensation Table
The table below shows the cash compensation paid to the Trustees by the Trust
for the fiscal year ended November 30, 2006. Interested Trustees receive no
compensation from the Trust for their services as Trustees. The table includes
information for Ms. Amy B. Lane, who retired as Trustee of the Trust on February
22, 2006.
Total Cash
Retirement Benefits Compensation
Trustee Fees Accrued as Part of from Trust and
Name of Trustee(1) from Trust Trust Expense Fund Complex(2)
------------------------------------ ---------------------------- ---------------------------- ----------------------------
------------------------------------ ---------------------------- ---------------------------- ----------------------------
Robert E. Butler(4) $5,358 N/A $210,289
Lawrence H. Cohn, M.D. $6,016 $1,537 $208,289
David H. Gunning $5,820 N/A $219,642
William R. Gutow $6,016 N/A $208,289
Michael Hegarty $6,020 N/A $209,289
J. Atwood Ives $6,335 $0 $285,289
Amy B. Lane(3) $2,020 N/A $ 50,423
Lawrence T. Perera $6,079 $0 $228,289
J. Dale Sherratt $6,158 $1,390 $250,289
Laurie J. Thomsen $6,020 N/A $209,289
Robert W. Uek(4) $5,408 N/A $227,789
(1) Each Trustee who is an "interested person" of MFS within the meaning of the
1940 Act (Pozen and Manning) serves without any compensation from the Trust.
(2) For calendar year 2006. Trustees receiving compensation from the Trust
served as Trustee of 97 funds within the MFS Fund Complex (having aggregate net
assets at December 31, 2006 of approximately $102 billion).
(3) Ms. Lane retired as a Trustee of the Trust on February 22, 2006.
(4) Messrs. Butler and Uek became Trustees of the Trust on January 1, 2006.
Retirement Benefit Deferral Plan -- Under a Retirement Benefit Deferral Plan,
certain Trustees have deferred benefits from a prior retirement plan. The value
of the benefits is periodically readjusted as though the Trustee had invested an
equivalent amount in Class A shares of other fund(s) designated by such Trustee.
The value of the deferred benefits will be paid to the Trustees upon retirement
or thereafter. The plan does not obligate a Fund to retain the services of any
Trustee or pay any particular level of compensation to any Trustee. The plan is
not funded and a Fund's obligation to pay the Trustee's deferred compensation is
a general unsecured obligation.
....
[Page 19]
TRUST INFORMATION
....
Investment Adviser and Administrator
The Trust engages as its investment adviser and administrator MFS, a Delaware
corporation with offices at 500 Boylston Street, Boston, Massachusetts 02116.
MFS is a majority owned subsidiary of Sun Life of Canada (U.S.) Financial
Services Holdings, Inc., which in turn is a majority-owned subsidiary of Sun
Life Financial (U.S.) Holdings, Inc., 500 Boylston Street, Boston, Massachusetts
02116, which in turn is a wholly-owned subsidiary of Sun Life Assurance Company
of Canada--U.S. Operations Holdings, Inc., One Sun Life Executive Park,
Wellesley Hills, Massachusetts 02481 ( "Sun Life U.S. Operations "). Sun Life
U.S. Operations is a wholly-owned subsidiary of Sun Life Financial Corp., 150
King Street West, Toronto, Canada MSH 1J9, which in turn is a wholly-owned
subsidiary of Sun Life Financial Inc.
2
Exhibit (e)(2)
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT, dated this 1st day of January, 2002, by
and between MFS GOVERNMENT MARKETS INCOME TRUST, a Massachusetts business trust
(the "Trust"), and MASSACHUSETTS FINANCIAL SERVICES COMPANY, a Delaware
corporation (the "Adviser").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an investment company
registered under the Investment Company Act of 1940; and
WHEREAS, the Adviser is willing to provide services to the Trust on
the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties hereto as herein set forth, the parties covenant and agree as
follows:
Article 1. Duties of the Adviser. (a) The Adviser shall provide the
Trust with such investment advice and supervision as the latter may from time to
time consider necessary for the proper supervision of its assets. The Adviser
shall act as investment adviser to the Trust and as such shall furnish
continuously an investment program and shall determine from time to time what
securities or other instruments shall be purchased, sold or exchanged and what
portion of the assets of the Trust shall be held uninvested, subject always to
the restrictions of the Trust's Amended and Restated Declaration of Trust, dated
January 1, 2002, and By-Laws, each as amended from time to time (respectively,
the "Declaration" and the "By-Laws"), to the provisions of the Investment
Company Act of 1940 and the Rules, Regulations and orders thereunder and to the
Trust's then-current Prospectus and Statement of Additional Information. The
Adviser also shall exercise voting rights, rights to consent to corporate
actions and any other rights pertaining to the Trust's portfolio securities in
accordance with the Adviser's policies and procedures as presented to the
Trustees of the Trust from time to time. Should the Trustees at any time,
however, make any definite determination as to the investment policy and notify
the Adviser thereof in writing, the Adviser shall be bound by such determination
for the period, if any, specified in such notice or until similarly notified
that such determination shall be revoked.
(b) The Adviser shall take, on behalf of the Trust, all actions which
it deems necessary to implement the investment policies determined as provided
above, and in particular to place all orders for the purchase or sale of
portfolio securities or other instruments for the Trust's account with brokers
or dealers selected by it, and to that end, the Adviser is authorized as the
agent of the Trust to give instructions to the Custodian of the Trust as to the
deliveries of securities or other instruments and payments of cash for the
account of the Trust. In connection with the
1
selection of such brokers or dealers and the placing of such orders, the Adviser
is directed to seek for the Trust the best overall price and execution available
from responsible brokerage firms, taking account of all factors it deems
relevant, including by way of illustration: price; the size of the transaction;
the nature of the market for the security; the amount of the commission; the
timing and impact of the transaction taking into account market prices and
trends; the reputation, experience and financial stability of the broker or
dealer involved; and the quality of services rendered by the broker or dealer in
other transactions. In fulfilling this requirement, the Adviser shall not be
deemed to have acted unlawfully or to have breached any duty, created by this
Agreement or otherwise, solely by reason of its having caused the Trust to pay a
broker or dealer an amount of commission for effecting a securities transaction
in excess of the amount of commission another broker or dealer would have
charged for effecting that transaction, if the Adviser determined in good faith
that such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the Adviser's overall
responsibilities with respect to the Trust and to other clients of the Adviser
as to which the Adviser exercises investment discretion. Subject to seeking the
best price and execution as described above, and in accordance with applicable
rules and regulations, the Adviser also is authorized to consider sales of
shares of the Trust or of other funds or accounts of the Adviser as a factor in
the selection of brokers and dealers.
(c) The Adviser may from time to time enter into sub-investment
advisory agreements with respect to the Trust with one or more investment
advisers with such terms and conditions as the Adviser may determine, provided
that such sub-investment advisory agreements have been approved in accordance
with applicable provisions of the Investment Company Act of 1940 and any rules,
regulations or orders of the Securities and Exchange Commission thereunder.
Subject to the provisions of Article 6, the Adviser shall not be liable for any
error of judgment or mistake of law by any sub-adviser or for any loss arising
out of any investment made by any sub-adviser or for any act or omission in the
execution and management of the Trust by any sub-adviser.
Article 2. Allocation of Charges and Expenses. (a) The Adviser shall
furnish at its own expense investment advisory and administrative services,
office space, equipment and clerical personnel necessary for servicing the
investments of the Trust and maintaining its organization, and investment
advisory facilities and executive and supervisory personnel for managing the
investments and effecting the portfolio transactions of the Trust. The Adviser
shall arrange, if desired by the Trust, for directors, officers and employees of
the Adviser to serve as Trustees, officers or agents of the Trust if duly
elected or appointed to such positions and subject to their individual consent
and to any limitations imposed by law.
(b) It is understood that the Trust will pay all of its own expenses
incurred in its operations and the offering of its shares, unless specifically
provided otherwise in this Agreement or except to the extent that the Adviser
agrees in a written instrument executed by the Adviser (specifically referring
to this Article 2(b)) to assume or otherwise pay for specified expenses of the
Trust, including, without limitation: compensation of Trustees "not affiliated"
with the Adviser; governmental fees; interest charges; taxes; membership dues in
the Investment Company Institute allocable to the Trust; fees and expenses of
independent auditors, of legal counsel, and of any transfer agent, registrar or
dividend disbursing agent of the Trust;
2
expenses of repurchasing and redeeming shares and servicing shareholder
accounts; expenses of preparing, printing and mailing stock certificates,
shareholder reports, notices, proxy statements and reports to governmental
officers and commissions; brokerage and other expenses connected with the
execution, recording and settlement of portfolio security transactions;
insurance premiums; fees and expenses of the custodian for all services to the
Trust, including safekeeping of funds and securities and maintaining required
books and accounts; expenses of calculating the net asset value of shares of the
Trust; organizational and start up costs; such non-recurring or extraordinary
expenses as may arise, including those relating to actions, suits or proceedings
to which the Trust is a party or otherwise may have an exposure, and the legal
obligation which the Trust may have to indemnify the Trust's Trustees and
officers with respect thereto; and expenses relating to the issuance,
registration and qualification of shares of the Trust and the preparation,
printing and mailing of prospectuses for such purposes (except to the extent
that any Distribution Agreement to which the Trust is a party provides that
another party is to pay some or all of such expenses).
(c) The payment or assumption by the Adviser of any expenses of the
Trust that the Adviser is not obligated by this Agreement or otherwise to pay or
assume shall not obligate the Adviser to pay or assume the same or any similar
expenses of the Trust on any subsequent occasion.
Article 3. Compensation of the Adviser. For the services to be rendered
and the facilities provided, the Trust shall pay to the Adviser an investment
advisory fee computed and paid monthly as set forth in Appendix A attached
hereto. If the Adviser shall serve for less than the whole of any period
specified in this Article 3, the compensation paid to the Adviser will be
prorated.
Article 4. Additional Services. Should the Trust have occasion to
request the Adviser or its affiliates to perform administrative or other
additional services not herein contemplated or to request the Adviser or its
affiliates to arrange for the services of others, the Adviser or its affiliates
will act for the Trust upon request to the best of its ability, with
compensation for the services to be agreed upon with respect to each such
occasion as it arises. No such agreement for additional services shall expand,
reduce or otherwise alter the obligations of the Adviser, or the compensation
that the Adviser is due, under this Agreement.
Article 5. Covenants of the Adviser. The Adviser agrees that it will
not deal with itself, or with the Trustees of the Trust or the Trust's
distributor, if any, as principals in making purchases or sales of securities or
other property for the account of the Trust, except as permitted by the
Investment Company Act of 1940 and any rules, regulations or orders of the
Securities and Exchange Commission thereunder, will not take a long or short
position in the shares of the Trust except as permitted by the applicable law,
and will comply with all other provisions of the Declaration and the By-Laws and
the then-current Prospectus and Statement of Additional Information of the Trust
relative to the Adviser and its directors and officers.
Article 6. Limitation of Liability of the Adviser. The Adviser shall
not be liable for any error of judgment or mistake of law or for any loss
arising out of any investment or for any act or omission in the execution and
management of the Trust, except for willful misfeasance,
3
bad faith, gross negligence or reckless disregard of its duties and obligations
hereunder. As used in this Article 6, the term "Adviser" shall include
directors, officers and employees of the Adviser as well as that corporation
itself.
Article 7. Activities of the Adviser. (a) The Trust acknowledges that
the services of the Adviser are not exclusive, the Adviser being free to render
investment advisory and/or other services to others. The Trust further
acknowledges that it is possible that, based on their investment objectives and
policies, certain funds or accounts managed by the Adviser or its affiliates may
at times take investment positions or engage in investment techniques which are
contrary to positions taken or techniques engaged in on behalf of the Trust.
Notwithstanding the foregoing, the Adviser will at all times endeavor to treat
all of its clients in a fair and equitable manner.
(b) The Trust acknowledges that whenever the Trust and one or more
other funds or accounts advised by the Adviser have available monies for
investment, investments suitable and appropriate for each shall be allocated in
a manner believed by the Adviser to be fair and equitable to each entity.
Similarly, opportunities to sell securities or other investments shall be
allocated in a manner believed by the Adviser to be fair and equitable to each
entity. The Trust acknowledges that in some instances this may adversely affect
the size of the position that may be acquired or disposed of for the Trust.
(c) It is understood that the Trustees, officers and shareholders of
the Trust are or may be or become interested in the Adviser, as directors,
officers, employees, or otherwise and that directors, officers and employees of
the Adviser are or may become similarly interested in the Trust, and that the
Adviser may be or become interested in the Trust as a shareholder or otherwise.
Article 8. MFS Name. The Trust acknowledges that the names
"Massachusetts Financial Services," "MFS" or any derivatives thereof or logos
associated with those names (collectively, the "MFS Marks") are the valuable
property of the Adviser and its affiliates. The Adviser grants the Trust a
non-exclusive and non-transferable right and sub-license to use the MFS Marks
only so long as the Adviser serves as investment adviser to the Trust. The Trust
agrees that if the Adviser for any reason no longer serves as investment adviser
to the Trust, and the Adviser so requests, the Trust promptly shall cease to use
the MFS Marks and promptly shall amend its registration statement to delete any
references to the MFS Marks. The Trust acknowledges that the Adviser may permit
other clients to use the MFS Marks in their names or other material. For
purposes of this Article, the Trust shall be deemed to have taken the required
action "promptly" if such action is taken within 90 days of the Adviser no
longer serving as the investment adviser to the Trust, or from the date of the
Adviser's request, as the case may be.
Article 9. Duration, Termination and Amendment of this Agreement. (a)
This Agreement shall become effective with respect to the Trust on the date
first written above. Thereafter, this Agreement will remain in effect with
respect to the Trust for a period of two years from the date first written
above, on which date it will terminate for the Trust unless its continuance is
"specifically approved at least annually" (i) by the vote of a majority of the
Trustees of the Trust who are not "interested persons" of the Trust or of the
Adviser at a meeting
4
specifically called for the purpose of voting on such approval, and (ii) by the
Board of Trustees of the Trust, or by "vote of a majority of the outstanding
voting securities" of the Trust.
(b) This Agreement may be terminated as to the Trust at any time
without the payment of any penalty by the Trustees or by "vote of a majority of
the outstanding voting securities" of the Trust, or by the Adviser, in each case
on not more than sixty days' nor less than thirty days' written notice to the
other party. This Agreement shall automatically terminate in the event of its
"assignment".
(c) This Agreement may be amended with respect to the Trust only if
such amendment is in writing signed by or on behalf of the Trust and the Adviser
and is approved by "vote of a majority of the outstanding voting securities" of
the Trust (if such shareholder approval is required by the Investment Company
Act of 1940).
Article 10. Scope of Trust's Obligations. A copy of the Trust's
Declaration of Trust is on file with the Secretary of State of The Commonwealth
of Massachusetts. The Adviser acknowledges that the obligations of or arising
out of this Agreement are not binding upon any of the Trust's Trustees,
officers, employees, agents or shareholders individually, but are binding solely
upon the assets and property of the Trust.
Article 11. Definitions and Interpretations. The terms "specifically
approved at least annually," "vote of a majority of the outstanding voting
securities," "assignment," "affiliated person," and "interested person," when
used in this Agreement, shall have the respective meanings specified, and shall
be construed in a manner consistent with, the Investment Company Act of 1940 and
the rules and regulations promulgated thereunder. Any question of interpretation
of any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the Investment Company Act of 1940, the
Investment Advisers Act of 1940, the Securities Act of 1933, or the Securities
Exchange Act of 1934 (collectively, the "Federal Securities Acts") shall be
resolved by reference to such term or provision of the Federal Securities Acts
and to interpretations thereof, if any, by United States federal courts or, in
the absence of any controlling decisions of any such court, by rules or
regulations of the Securities and Exchange Commission. Where the effect of a
requirement of the Federal Securities Acts reflected in any provision of this
Agreement is revised by rule or regulation of the Securities and Exchange
Commission, such provisions shall be deemed to incorporate the effect of such
rule or regulation.
Article 12. Record Keeping. The Adviser will maintain records in a form
acceptable to the Trust and in compliance with the rules and regulations of the
Securities and Exchange Commission, including but not limited to records
required to be maintained by Section 31(a) of the Investment Company Act of 1940
and the rules thereunder, which at all times will be the property of the Trust
and will be available for inspection and use by the Trust.
Article 13. Miscellaneous. (a) This Agreement contains the entire
understanding and agreement of the parties with respect to the subject
matter hereof.
5
(b) Headings in this Agreement are for ease of reference only and shall not
constitute a part of the Agreement.
(c) Should any portion of this Agreement for any reason be held void in law
or equity, the remainder of the Agreement shall be construed to the extent
possible as if such voided portion had never been contained herein.
(d) This Agreement shall be governed by the laws of the Commonwealth of
Massachusetts, without giving effect to the choice of laws provisions thereof,
except that questions of interpretation shall be resolved in accordance with the
provisions of Article 11 above.
6
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered in their names and on their behalf by the
undersigned officers thereunto duly authorized, all as of the day and year first
above written. The undersigned officer of the Trust has executed this Agreement
not individually, but as an officer under the Declaration and the obligations of
this Agreement are not binding upon any of the Trustees, officers or
shareholders of the Trust, individually, but bind only the trust estate.
MFS GOVERNMENT MARKETS INCOME TRUST
By: /s/ James R. Bordewick, Jr.
-------------------------------
Name: James R. Bordewick, Jr.
Title: Assistant Secretary
MASSACHUSETTS FINANCIAL SERVICES
COMPANY
By:/s/ Jeffrey L. Shames
------------------------------
Name: Jeffrey L. Shames
Title: Chairman
7
Appendix A
Compensation to the Adviser
The investment advisory fee payable by the Trust shall be computed and paid
monthly in an amount equal to the sum of .32% of the Trust's average daily net
assets plus 5.33% of the Trust's gross income (i.e., income other than gains
from the sale of securities, short-term gains from options and futures
transactions and premium income from options written), in each case on an annual
basis for the Trust's then-current fiscal year.
1
Exhibit (e)(3)
CLOSED-END FUND OVERSIGHT AGREEMENT
CLOSED-END FUND OVERSIGHT AGREEMENT effective the 1st day of January 1, 2007, by
and among MFS Service Center, Inc., a Delaware corporation (the
"Administrator"), and each of the closed-end funds identified from time to time
on Exhibit A hereto (each a "Fund" and collectively the "Funds").
W I T N E S S E T H:
WHEREAS, the Funds have engaged Computershare Trust Company, N.A.
("Computershare") as the sole transfer agent for the Funds pursuant to that
certain Transfer Agency and Service Agreement dated as of December 18, 2006 by
and among the Funds, Computershare and Computershare Shareholder Services, Inc.
("CSS") (the "TA Agreement") pursuant to which Computershare provides transfer
agency services to the Funds and CSS acts as the agent for the Funds' dividend
reinvestment plans;
WHEREAS, the Funds desire to retain the Administrator to provide oversight
services with respect to the performance by Computershare and CSS of their
respective obligations to the Funds under the TA Agreement in the manner and on
the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants and agreements of the
parties hereto and hereinafter set forth, the parties covenant and agree as
follows:
1. Oversight Services. The Administrator shall, at its expense (subject to
Sections 2 and 3 hereof), and subject always to the control of the trustees,
directors or other governing body of the Funds (referred to herein as
"Trustees"), oversee the performance by Computershare and CSS of their
respective obligations to the Funds under the TA Agreement (the "Oversight
Services"). Exhibit B hereto lists the Oversight Services to be provided by the
Administrator hereunder. If there occurs a material change in the level of
oversight required by the Funds in the future necessitating a material increase
or decrease the types or quantities of Oversight Services required by the Funds,
the Funds and the Administrator shall negotiate in good faith an adjustment to
the Oversight Fee payable under Section 5 hereof.
2. Responsibility for Charges and Expenses. During the term of this Agreement,
the Administrator will pay all expenses incurred by it in connection with its
obligations under this Agreement, except such expenses as are assumed by the
Funds under this Agreement and any expenses that are paid by the Funds or by a
party other than the Funds on behalf of the Funds under the terms of any other
agreement to which the Funds are a party or a third-party beneficiary. The
Administrator assumes and shall pay for maintaining its staff and personnel and
shall, at its own expense, provide the equipment, office space, and facilities
necessary to perform its obligations under this Agreement.
3. Services Provided by Third Parties. It is acknowledged and agreed that the
Funds shall remain obligated to bear all costs incurred by the Funds pursuant to
the TA Agreement (including all per account fees and out-of-pocket expenses) and
that the Administrator shall not be obligated for any such costs.
4. Maintenance of Books and Records. It is acknowledged and agreed that (a) the
Administrator shall have no obligation to preserve for each Fund that is
registered as an investment company with the Securities and Exchange Commission
(the "SEC") any records required to be maintained as prescribed by the rules and
regulations of the SEC and (b) such record keeping obligations are the sole
responsibility of Computershare and CSS pursuant to the terms of the TA
Agreement.
1
5. Oversight Fee. Each Fund shall pay the Administrator a fee as agreed to from
time to time and as set forth in Exhibit C hereto (the "Oversight Fee"). The
Oversight Fee shall be accrued on the first day of each calendar month and shall
be paid monthly to the Administrator on the second to last business day of each
calendar month. If this Agreement becomes effective or terminates before the end
of any calendar month, the Oversight Fee for the period from the effective date
to the end of such calendar month or from the beginning of such calendar month
to the date of termination, as the case may be, shall be prorated according to
the proportion which such period bears to the full month in which such
effectiveness or termination occurs.
6. Non-Exclusivity. The services of the Administrator to the Funds hereunder are
not to be deemed exclusive and the Administrator shall be free to render similar
services to others.
7. Standard of Care. Neither the Administrator, nor any of its directors,
officers, stockholders, agents or employees, shall be liable or responsible to
any Fund or its shareholders for any error of judgment, mistake of law or any
loss arising out of any act or omission in the performance by the Administrator
of its duties under this Agreement, except for liability resulting from (a)
willful misfeasance, (b) bad faith, (c) gross negligence, or (d) reckless
disregard by the Administrator of its obligations and duties under this
Agreement.
8. Term, Termination, Amendment and Assignment. This Agreement shall begin on
the date first written above and shall continue indefinitely with respect to
each Fund until terminated as follows:
(i) the Agreement may be terminated at any time, without payment of any
penalty, by the Trustees of the Fund upon sixty (60) days' written notice to the
Administrator;
(ii) the Agreement may be terminated by the Administrator with respect
to any Fund at any time upon sixty (60) days' written notice to the Fund; and
(iii) if the Trustees of the Fund, including a majority of the
Independent Trustees, do not specifically approve at least annually the
continuance of this Agreement, then this Agreement shall automatically terminate
at the close of business on the anniversary of its execution, or upon the
expiration of one year from the effective date of the last such continuance,
whichever is later.
This Agreement may be amended at any time by a written agreement
executed by each party hereto and may be assigned with respect to any Fund only
with the written consent of the Fund and the Administrator.
9. Miscellaneous.
a. Captions. The captions in this Agreement are included for
convenience of reference only and in no way define or
delineate any of the provisions hereof or otherwise affect
their construction or effect.
b. Governing Law. The provisions of this Agreement shall be
construed and interpreted in accordance with the domestic
substantive laws of The Commonwealth of Massachusetts, without
giving effect to any conflicts or choice of laws rule or
provision that would result in the application of the domestic
substantive laws of any other jurisdiction.
c. Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and
the same instrument.
d. Joinder of Funds. In the event that additional funds are
created or acquired from time to time which desire to retain
the Administrator to provide them with Oversight Services
pursuant to this Agreement, the Administrator and the
additional fund may jointly amend Schedule A hereto to add the
additional fund, and the additional fund shall thereafter be
deemed a "Fund" for all
2
purposes of this Agreement. The consent of the other parties
to this Agreement shall not be required to amend Schedule A
hereto.
e. Scope of Fund's Obligations. A copy of the Declaration of
Trust of each Fund (or trust of which the Fund is a series)
organized as a Massachusetts business trust (each a
"Trust"), is on file with the Secretary of State of The
Commonwealth of Massachusetts. The Administrator
acknowledges that the obligations of or arising out of this
Agreement are not binding upon any of a Trust's Trustees,
officers, employees, agents or shareholders individually,
but are binding solely upon the assets and property of the
Trust in accordance with its proportionate interest
thereunder and hereunder. If this Agreement is executed by a
Trust on behalf of one or more series of the Trust, the
Administrator further acknowledges that the assets and
liabilities of each series of the Trust are separate and
distinct and that the obligations of or arising out of this
Agreement are binding solely upon the assets or property of
the series on whose behalf the Trust has executed this
Agreement. The Administrator also agrees that the
obligations of each Fund hereunder shall be separate and not
joint nor joint and several, in accordance with its
proportionate interest hereunder, and agrees not to proceed
(by way of claim, set-off or otherwise) against any Fund for
the obligations of another Fund.
3
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by their respective officers thereunto duly authorized and their respective
corporate seals to be hereunto affiliated, as of the date first written above.
On behalf of the MFS Closed-End Funds
listed on Exhibit A hereto
By: /s/ Susan S. Newton
---------------------------------------
Susan S. Newton
Assistant Secretary
MFS SERVICE CENTER, INC.
By: /s/ Maureen Leary-Jago
---------------------------------------
Maureen Leary-Jago
President
4
As of January 1, 2007
Closed-End Fund Oversight Agreement - Exhibit A
Item 10. Funds
MFS Closed-End Funds
MFS Charter Income Trust
MFS Government Markets Income Trust
MFS Intermediate Income Trust
MFS Multimarket Income Trust
MFS Municipal Income Trust
MFS Special Value Trust
1
Oversight Services Exhibit B
----------------------------- ------------------------------------------- -----------------------------------------
OVERSIGHT JAN '07 - JUNE '07 (2FTES) JULY '07 - DEC'07 (1FTE)
SERVICES
----------------------------- ------------------------------------------- -----------------------------------------
----------------------------- ------------------------------------------- -----------------------------------------
1. Relationship |X| Establish single point of |X| Maintain single point of
Management contact for Computershare, enabling contact for Computershare,
centralized and consolidated enabling centralized and
monitoring, reporting and evaluation consolidated monitoring,
of service delivery. reporting and evaluation of
|X| Handle operational transition service delivery.
issues, inclusive of coordinating |X| Primary liaison between MFS,
problem resolution, coordination Computershare and custodian.
with Fund Treasury and custodian |X| Review all policy and process
|X| Validate monthly dividend changes that have potential impact to our
funding approval and DRIP share servicing
allocations with Computershare, Fund [X] Review all personnel, control or servicing
Treasury, and State Street until transitioned modifications prior to
to Fund Treasury. implementation.
|X| Coordinate transition of |X| Conduct quarterly training for
residual items inclusive of change staff on MFS products and
in DRP agent (May '01); closure of expectations
MFSC TA DDA and conversion of |X| Validate invoices and
outstanding checks. out-of-pocket expenses. Provide
|X| Establish invoice and periodic internal reporting
out-of-pocket validation process, inclusive of BOD reporting as
inclusive of training on required.
Computershare web interface. |X| Discuss any changes in
|X| Establish internal reporting and products and services offered and
performance reporting mechanism, marketing strategies
inclusive of BOD reporting as |X| Review any changes to third
required. party service providers or other
technology vendors; and
----------------------------- ------------------------------------------- -----------------------------------------
----------------------------- ------------------------------------------- -----------------------------------------
2. Establishment and |X| Coordinate with Computershare for the |X| Monitor SLA
monitoring of generation of monthly SLA |X| Conduct monthly service level
service levels reporting package in accordance with review meetings. Develop and
MFSC standards monitor srvice improvement
|X| Establish monitoring program with plans with vendor
Computershare |X| Review samples of all print
|X| Monitor SLA performance mail items prior to mailing.
|X| Implement and monitor Monitor Shareholder Client
Shareholder Client Feedback mechanism Feedback
|X| Conduct monthly review meetings
----------------------------- ------------------------------------------- -----------------------------------------
----------------------------- ------------------------------------------- -----------------------------------------
3. Evaluation of |X| Validate and, if necessary, |X| Annual evaluation SAS 70
third party audit establish appropriate user controls report inclusive of monitoring
reports, inclusive identified in SAS 70 of user controls
SAS 70 reports |X| (Evaluation SAS 70 conducted as |X| Continuous follow up
part of RFP) open items or exceptions noted
----------------------------- ------------------------------------------- -----------------------------------------
----------------------------- ------------------------------------------- -----------------------------------------
4. Compliance with |X| Validate and document compliance |X| Periodic review and validation of
Fund Documents and with Fund Documents compliance with fund documents
relevant MFS policy
|X| Update DRP Brochure for changes
in Transfer Agent - issuance dates
and coordinate distribution with
Legal and MarComm
----------------------------- ------------------------------------------- -----------------------------------------
2
----------------------------- ------------------------------------------- -----------------------------------------
OVERSIGHT JAN '07 - JUNE '07 (2FTES) JULY '07 - DEC'07 (1FTE)
SERVICES
SERVICES
----------------------------- ------------------------------------------- -----------------------------------------
----------------------------- ------------------------------------------- -----------------------------------------
5. Management |X| Establish management |X| Monitor compliance with
certifications certification process - SOX 404 & quarterly certifications and
internal control validation, and 38A1 evaluate results
|X| Monitor compliance and evaluate |X| Follow up on any open items or
results exceptions noted
|X| Review and validate 38a1
documentation
----------------------------- ------------------------------------------- -----------------------------------------
----------------------------- ------------------------------------------- -----------------------------------------
6. Periodic due |X| Conduct due diligence meetings |X| Conduct due diligence meetings
diligence visits as deemed necessary. as deemed necessary
----------------------------- ------------------------------------------- -----------------------------------------
----------------------------- ------------------------------------------- -----------------------------------------
7. Conformance with |X| Establish process for monitoring |X| Perform periodic monitoring of
contractual terms. for conformance with contractual contractual terms
terms.
----------------------------- ------------------------------------------- -----------------------------------------
3
Exhibit C
Oversight Fee
In return for the Oversight Services provided by the Administrator
under this Agreement, the Funds shall pay the Administrator an aggregate monthly
fee of $20,833, such fee to be allocated by the Funds across all open accounts
being maintained by the Funds.
4
Exhibit (e)(4)
MASTER ADMINISTRATIVE SERVICES AGREEMENT
Amended and Restated
August 1, 2006
Exhibit A, as revised:
February 27, 2007 (Addition of MFS Series Trust XIV)
May 1, 2007 (Redesignation of MFS Capital Opportunities Series to
MFS Core Equity Series)
June 22, 2007 (Termination of AGF, MVF, IBF and MMB)
June 29, 2007 (Addition of CCA, CXE, CMK, CIF, CXH, CMU)
August 1, 2007 (Termination of MFS Institutional International Research Equity
Fund and MFS Institutional Municipal Money Market Portfolio)
Exhibit D, as revised:
August 1, 2007 (Revised Fee Schedule)
1
MASTER ADMINISTRATIVE SERVICES AGREEMENT
MASTER ADMINISTRATIVE SERVICES AGREEMENT initially dated the 1st day of March,
1997, and as amended and restated on this 1st day of August, 2006, by and among
Massachusetts Financial Services Company, a Delaware corporation (the
"Administrator"), and each of the funds (or trusts acting on behalf of their
series) identified from time to time on Exhibit A hereto (each a "Fund" and
collectively the "Funds").
W I T N E S S E T H:
WHEREAS, the Funds have entered into Investment Advisory Agreements with the
Administrator (the "Advisory Agreements") pursuant to which the Administrator
provides investment advisory services to the Funds;
WHEREAS, the Funds desire to retain the Administrator to render the legal,
financial administration and other administrative services required by the Funds
in the manner and on the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants and agreements of the
parties hereto and hereinafter set forth, the parties covenant and agree as
follows:
1. Administrative Services. The Administrator shall, at its expense (subject to
Sections 2 and 3 hereof), and subject always to the control of the trustees,
directors or other governing body of the Funds (referred to herein as
"Trustees"), manage, supervise and conduct all of the day-to-day and ordinary
course non-investment related affairs and business of the Funds and matters
incidental thereto not required to be provided by the Administrator under the
Advisory Agreements (together "Administrative Services"). Exhibit B hereto lists
various categories of Administrative Services to be provided by the
Administrator hereunder, it being understood that such list is not exhaustive
and that the Funds may require Administrative Services in addition to those
specified or referenced in Exhibit B. If there occurs a material change in the
laws, rules or regulations governing the Funds or related Fund policies that
materially increase or decrease the types or quantities of Administrative
Services required by the Funds, the Funds and the Administrator shall negotiate
in good faith an adjustment to the Administrative Fee payable under Section 5
hereof. In the performance of its duties, the Administrator will comply with the
provisions of the Declaration of Trust and Bylaws of each Fund and applicable
law, and shall comply with such compliance and other policies and procedures as
the Trustees may adopt, approve or determine from time to time.
2. Responsibility for Charges and Expenses. During the term of this Agreement,
the Administrator will pay all expenses incurred by it in connection with its
obligations under this Agreement, except such expenses as are assumed by the
Funds under this Agreement and any expenses that are paid by the Funds or by a
party other than the Funds on behalf of the Funds under the terms of any other
agreement to which the Funds are a party or a third-party beneficiary. The
Administrator further agrees to pay or cause its affiliates to pay all salaries,
fees, and expenses of any officer or Trustee of the Funds who is an officer,
director, or employee of the Administrator or an affiliate of the Administrator.
The Administrator assumes and shall pay for maintaining its staff and personnel
and shall, at its own expense, provide the equipment, office space, and
facilities necessary to perform its obligations under this Agreement.
The Administrator shall not, under the terms of this Agreement, bear the
categories of expenses listed on Exhibit C hereto (although the Administrator or
an affiliate may bear certain of these expenses under one or more other
agreements).
3. Administrative Services Provided by Third Parties. It is acknowledged and
agreed that the Funds will require and bear the costs of administrative services
to be provided by third parties in addition to Administrative Services which the
Administrator is required to provide or procure at its own expense under this
Agreement, such as legal services to be provided by legal counsel to the Funds
and the Trustees who are not "interested persons" (as defined in the Investment
Company Act of 1940) of the Funds ("Independent Trustees"), and services to be
provided
2
to the Funds by independent accountants or other auditors or consultants which
would otherwise constitute Administrative Services ("Separate Third Party
Services"). It is further acknowledged and agreed that, from time to time, due
to resource constraints or otherwise, the Administrator may cause or arrange for
third parties to provide Administrative Services that the Administrator is
required to provide or procure at its own expense under this Agreement (e.g.,
the use of outside legal counsel to draft routine Fund proxy statements or
prospectuses) ("Outsourced Third Party Services"). Subject to any policies or
procedures that are adopted by the Funds, the Administrator shall pay for the
costs of any Outsourced Third Party Service unless it obtains the approval of
the Trustees (or a committee or other delegate of the Trustees) for the Funds to
bear some or all of such costs prior to causing or arranging for the Outsourced
Third Party Service to be provided to the Funds. The parties recognize that
there may be circumstances in which it is unclear as to whether a particular
administrative service provided by a third party constitutes a Separate Third
Party Service or an Outsourced Third Party Service. Subject to any policies or
procedures that are adopted by the Funds, the Administrator shall use its best
efforts to identify and bring such circumstances to the attention of the
Trustees, in which case the Trustees shall, in good faith, determine whether the
particular service constitutes a Separate Third Party Service or an Outsourced
Third Party Service for purposes of this Agreement. (1)
4. Maintenance of Books and Records. With respect to the provision of
Administrative Services, the Administrator will preserve for each Fund that is
registered as an investment company with the Securities and Exchange Commission
(the "SEC") all records required to be maintained as prescribed by the rules and
regulations of the SEC in the manner and for the time periods prescribed by such
rules. The Administrator agrees that all such records shall be the property and
under the control of each Fund for which they are maintained and shall be made
available, within five business days of any request therefore, to the Fund's
Trustees or independent accountants during regular business hours at the
Administrator's offices. In the event of termination of this Agreement for any
reason, all such records shall be returned, without charge, promptly to the
appropriate Fund, free from any claim or retention of rights by the
Administrator, except that the Administrator may retain copies of such records.
5. Administrative Fee. Each Fund shall pay the Administrator a fee as agreed to
from time to time and as set forth in Exhibit D hereto (the "Administrative
Fee"). The Administrative Fee shall be accrued for each calendar day and the sum
of the daily fee accruals shall be paid monthly to the Administrator on the
second to last business day of each calendar month. If this Agreement becomes
effective or terminates before the end of any calendar month, the Administrative
Fee for the period from the effective date to the end of such calendar month or
from the beginning of such calendar month to the date of termination, as the
case may be, shall be prorated according to the proportion which such period
bears to the full month in which such effectiveness or termination occurs.
6. Non-Exclusivity. The services of the Administrator to the Funds hereunder are
not to be deemed exclusive and the Administrator shall be free to render similar
services to others.
7. Standard of Care. Neither the Administrator, nor any of its directors,
officers, stockholders, agents or employees, shall be liable or responsible to
any Fund or its shareholders for any error of judgment, mistake of law or any
loss arising out of any act or omission in the performance by the Administrator
of its duties under this Agreement, except for liability resulting from (a)
willful misfeasance, (b) bad faith, (c) gross negligence, or (d) reckless
disregard by the Administrator of its obligations and duties under this
Agreement.
8. Term, Termination, Amendment and Assignment. This Agreement shall begin on
the date first written above and shall continue indefinitely with respect to
each Fund until terminated as follows:
(i) the Agreement may be terminated at any time, without payment of any
penalty, by the Trustees of the Fund upon sixty (60) days' written notice to the
Administrator;
__________________
(1) The Funds/Trustees and the Administrator may from time to time develop
written policies designed to delineate various administrative services and
responsibilities to be provided by third party service providers to the Funds or
the Independent Trustees (for which the Funds bear the associated expenses), on
the one hand, and those to be provided by the Administrator at is own expense,
on the other, as well as procedures to be followed by the Administrator in
utilizing third party service providers on behalf of the Funds. In this regard,
reference is made to the document entitled "Role of Ropes & Gray LLP as Counsel
to the MFS Funds and the Independent Trustees," as it may be amended from time
to time.
3
(ii) the Agreement may be terminated by the Administrator with respect
to any Fund at any time upon sixty (60) days' written notice to the Fund; and
(iii) if the Trustees of the Fund, including a majority of the
Independent Trustees, do not specifically approve at least annually the
continuance of this Agreement, then this Agreement shall automatically terminate
at the close of business on the anniversary of its execution, or upon the
expiration of one year from the effective date of the last such continuance,
whichever is later.
This Agreement may be amended at any time by a written agreement
executed by each party hereto and may be assigned with respect to any Fund only
with the written consent of the Fund and the Administrator.
9. Miscellaneous.
a. Captions. The captions in this Agreement are included for
convenience of reference only and in no way define or
delineate any of the provisions hereof or otherwise affect
their construction or effect.
b. Governing Law. The provisions of this Agreement shall be
construed and interpreted in accordance with the domestic
substantive laws of The Commonwealth of Massachusetts, without
giving effect to any conflicts or choice of laws rule or
provision that would result in the application of the domestic
substantive laws of any other jurisdiction.
c. Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and
the same instrument.
d. Joinder of Funds. In the event that additional funds are
created from time to time which desire to retain the
Administrator to provide them with Administrative Services
pursuant to this Agreement, the Administrator and the
additional fund may jointly amend Schedule A hereto to add the
additional fund, and the additional fund shall thereafter be
deemed a "Fund" for all purposes of this Agreement. The
consent of the other parties to this Agreement shall not be
required to amend Schedule A hereto.
e. Scope of Fund's Obligations. A copy of the Declaration of
Trust of each Fund (or trust of which the Fund is a series)
organized as a Massachusetts business trust (each a
"Trust"), is on file with the Secretary of State of The
Commonwealth of Massachusetts. The Administrator
acknowledges that the obligations of or arising out of this
Agreement are not binding upon any of a Trust's Trustees,
officers, employees, agents or shareholders individually,
but are binding solely upon the assets and property of the
Trust in accordance with its proportionate interest
thereunder and hereunder. If this Agreement is executed by a
Trust on behalf of one or more series of the Trust, the
Administrator further acknowledges that the assets and
liabilities of each series of the Trust are separate and
distinct and that the obligations of or arising out of this
Agreement are binding solely upon the assets or property of
the series on whose behalf the Trust has executed this
Agreement. The Administrator also agrees that the
obligations of each Fund hereunder shall be several and not
joint nor joint and several, in accordance with its
proportionate interest hereunder, and agrees not to proceed
(by way of claim, set-off or otherwise) against any Fund for
the obligations of another Fund.
4
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by their respective officers thereunto duly authorized and their respective
corporate seals to be hereunto affiliated, as of the date first written above.
On behalf of the MFS Family
of Funds, MFS Closed-End
Funds and MFS Institutional
Funds listed on Exhibit A
hereto
By: /s/ J. Atwood Ives
---------------------------------------
J. Atwood Ives
Chair of the Trustees
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By: /s/ Robert C. Pozen
----------------------------------------
Robert C. Pozen
Chairman
5
As of August 1, 2007
Master Administrative Services Agreement - Exhibit A
Funds
MFS Family of Funds
MFS Series Trust I:
-------------------
MFS Cash Reserve Fund
MFS Core Equity Fund
MFS Core Growth Fund
MFS New Discovery Fund
MFS Research International Fund
MFS Technology Fund
MFS Value Fund
MFS Series Trust II:
MFS Emerging Growth Fund
MFS Series Trust III:
MFS High Income Fund
MFS High Yield Opportunities Fund
MFS Municipal High Income Fund
MFS Series Trust IV:
MFS Government Money Market Fund
MFS Mid Cap Growth Fund
MFS Money Market Fund
MFS Series Trust V:
MFS International New Discovery Fund
MFS Research Fund
MFS Total Return Fund
MFS Series Trust VI:
MFS Global Equity Fund
MFS Global Total Return Fund
MFS Utilities Fund
MFS Series Trust VII:
MFS Series Trust VIII:
MFS Global Growth Fund
MFS Strategic Income Fund
MFS Series Trust IX:
MFS Bond Fund
MFS Inflation-Adjusted Bond Fund
MFS Limited Maturity Fund
MFS Municipal Limited Maturity Fund
MFS Research Bond Fund
MFS Research Bond Fund J
6
MFS Series Trust X:
MFS Aggressive Growth Allocation Fund
MFS Conservative Allocation Fund
MFS Emerging Markets Debt Fund
MFS Emerging Markets Equity Fund
MFS Floating Rate High Income Fund
MFS Growth Allocation Fund
MFS International Diversification Fund
MFS International Growth Fund
MFS International Value Fund
MFS Moderate Allocation Fund
MFS New Endeavor Fund
MFS Strategic Value Fund
MFS Series Trust XI:
MFS Mid Cap Value Fund
MFS Union Standard Equity Fund
MFS Series Trust XII:
MFS Lifetime Retirement Income Fund
MFS Lifetime 2010 Fund
MFS Lifetime 2020 Fund
MFS Lifetime 2030 Fund
MFS Lifetime 2040 Fund
MFS Sector Rotational Fund
MFS Series Trust XIII:
MFS Diversified Income Fund
MFS Government Securities Fund
MFS Series Trust XIV:
MFS Institutional Money Market Portfolio
MFS Municipal Series Trust:
MFS Alabama Municipal Bond Fund
MFS Arkansas Municipal Bond Fund
MFS California Municipal Bond Fund
MFS Florida Municipal Bond Fund
MFS Georgia Municipal Bond Fund
MFS Maryland Municipal Bond Fund
MFS Massachusetts Municipal Bond Fund
MFS Mississippi Municipal Bond Fund
MFS New York Municipal Bond Fund
MFS North Carolina Municipal Bond Fund
MFS Pennsylvania Municipal Bond Fund
MFS South Carolina Municipal Bond Fund
MFS Tennessee Municipal Bond Fund
MFS Virginia Municipal Bond Fund
MFS West Virginia Municipal Bond Fund
MFS Municipal Income Fund
7
MFS Growth Opportunities Fund
Massachusetts Investors Growth Stock Fund
MFS Government Limited Maturity Fund
Massachusetts Investors Trust
II. MFS Closed-End Funds
--------------------
MFS Charter Income Trust
MFS Government Markets Income Trust
MFS Intermediate Income Trust
MFS Multimarket Income Trust
MFS Municipal Income Trust
MFS Special Value Trust
MFS Special Value Trust
MFS California Insured Municipal Fund
MFS High Income Municipal Fund
MFS InterMarket Income Trust I
MFS Intermediate Grade Municipal Trust
MFS High Yield Municipal Trust
III. MFS Institutional Funds
MFS Institutional International Equity Fund
MFS Institutional Large Cap Value Fund
MFS Variable Insurance Trust:
MFS Core Equity Series
MFS Emerging Growth Series
MFS Global Equity Series
MFS High Income Series
MFS Investors Growth Stock Series
MFS Investors Trust Series
MFS Mid Cap Growth Series
MFS Money Market Series
MFS New Discovery Series
MFS Research Bond Series
MFS Research International Series
MFS Research Series
MFS Strategic Income Series
MFS Total Return Series
MFS Utilities Series
MFS Value Series
8
Exhibit B
Administration Services
I. FINANCIAL ADMINISTRATIVE SERVICES.
A. General Services.
1. Prepare such financial information of the Fund as is reasonably
necessary for reports to shareholders of the Fund, reports to the
Fund's Trustees and officers, and reports to appropriate regulatory
authorities including, without limitation, prospectuses, shareholder
reports, shareholder notices, proxy statements and other periodic
reports and render statements or copies of records as from time to time
are reasonably requested by the Fund.
2. Facilitate audits of accounts by the Fund's independent public
accountants or by any of the auditors employed or engaged by the Fund
or by any regulatory body with jurisdiction over the Fund. Coordinate
with, and monitor the performance of, the custodian banks retained by
the Fund to perform the necessary custodial services for the Fund
including, without limitation, the safekeeping of the funds and
securities.
3. Negotiate contracts for computing the Fund's net asset value per
share, and, if applicable, its public offering price and/or its daily
dividend rates and money market yields and other investment performance
quotations, in accordance with sub-paragraph C below, and oversee the
notification to the Fund and such other persons as the Fund may
reasonably request of the net asset value per share, the public
offering price and/or its daily dividend rates and money market yields
and other investment performance quotations (with the expenses under
such contracts to be paid separately by the Funds).
B. Valuation of Securities. The Administrator shall ensure that the
value of the Fund's securities is computed in accordance with governing
law, rules and regulations, the Fund's governing instruments and
subject to the oversight and direction of the Fund's Trustees. The
Administrator shall oversee the use of one or more external pricing
services (at the separate expense of the Funds) to provide the value of
a Fund's securities, including broker/dealers, provided that the Fund's
Trustees or a committee or an individual designated by the Fund's
Trustees has approved the use of such pricing services.
The Administrator shall administer the Valuation Policies approved by
the Trustees for the Fund, including the implementation and application
of fair valuation methods and security valuation factors for applicable
securities and other assets, including those provided by third-party
service providers at the expense of the Funds, and provide such reports
to the Fund's Trustees or a committee thereof as is required by such
Policies or otherwise requested.
C. Computation of Net Asset Value, Public Offering Price, Daily
Dividend Rates and Performance Quotations. The Administrator
shall assure that the Fund's net asset value, net income,
public offering price, dividend rates and money market yields,
if applicable, and other investment performance quotations are
calculated in a manner and at such time or times as the Fund
shall direct and in accordance with governing law, rules and
regulations and the Fund's governing instruments and subject
to the oversight and direction of the Fund's Trustees. The
Administrator will oversee the computation of the net asset
value and public offering price as calculated by service
providers of the Funds.
D. Other Financial Administration Services.
1. Provide Treasurers or Assistant Treasurers to serve as
officers of the Fund;
9
2. Coordinate the meetings of the Audit Committees of the Fund,
assure that meetings are scheduled and that agendas are
prepared; participate in meetings of the Audit Committee;
3. Review contracts and negotiate fees for the Fund for services
such as independent audit fees, custodian fees, bank lines of
credit, transfer agent fees and the fees of other service
providers to the Fund;
4. Oversee the preparation of accounting records by service
providers of the Fund required to be maintained by the Fund.
Assure that any audit of Fund records is coordinated and
completed timely;
5. Direct the preparation of Fund Financial Statements and
Footnotes included in shareholder and other regulatory
reports. Assure that all statements and disclosures are in
accordance with generally accepted accounting principles and
that disclosures meet current regulatory or accounting
requirements. Establish and maintain disclosure controls and
internal controls over financial reporting to assist in the
Funds' officers certification under the Sarbanes-Oxley Act of
2002;
6. Calculate and/or oversee the calculation of income and capital
gain distributions for applicable funds. Assure that all
distributions of the Fund meet the distribution and excise tax
requirements to assure qualification and to minimize taxes
paid by the Fund;
7. Establish the tax policies and procedures for the Fund;
maintain procedures and policies with respect to tax matters;
maintain or oversee the maintenance of certain tax accounting
records of the Fund; complete or review tax returns and excise
tax forms for the Fund; assist in preparing the 1099-DIV
information delivered to shareholders;
8. Prepare materials for the Trustees of the Fund and committees
thereof, including materials for board meetings and in
connection with the renewal of investment advisory and
distribution contracts;
9. Direct the accrual of Fund expenses; review and approve all invoices
submitted to the Fund;
10. Calculate total return and other performance information for
each Fund and its respective classes;
11. Prepare and file or oversee preparation and review the Funds'
annual and semi-annual N-CSR and other periodic reports; and
12. Administer the Funds' securities lending program.
II. LEGAL ADMINISTRATIVE SERVICES.
A. Organizational Matters and Initial Registration.
1. Draft, negotiate as appropriate, and file with appropriate
regulatory authorities the Fund's charter documents, service
contracts, and registration statement or other similar
registration documentation (the "Registration Statement"),
except that the out-of-pocket expenses incurred in connection
therewith shall be paid by the Funds;
2. Otherwise arrange for and oversee registration and
qualification of the Fund's shares, except that the
out-of-pocket expenses incurred in connection therewith shall
be paid by the Funds.
B. Ongoing Regulatory Filings, Reports and Meetings.
10
1. Prepare and file with appropriate regulatory authorities
amendments to the Fund's Registration Statement, and
supplements to the Fund's prospectus and statement of
additional information;
2. Design and draft documents or materials required to be
prepared by or on behalf of the Fund for distribution to
shareholders of the Fund, the Fund's Trustees and officers and
any governmental officers or commissions as required of the
Fund including, without limitation, prospectuses, shareholder
reports, shareholder notices and proxy statements;
3. Prepare and file or oversee preparation and review and provide
legal guidance on the Fund's annual, semi-annual and other
periodic reports and tax filings and reports;
4. Establish and maintain a disclosure controls and procedures
program to assist in the Funds' officers certification under
the Sarbanes-Oxley Act of 2002;
5. Develop or assist in developing guidelines and procedures to
improve overall compliance by the Funds;
6. Provide consultation and advice for resolving compliance
questions together with the Funds' outside legal counsel;
7. Prepare and file with appropriate regulatory authorities
various reports in order to maintain the Fund's status in good
standing;
8. Arrange for and attend shareholders' meetings;
9. Prepare the Fund's representatives who will attend shareholder
meetings and all necessary materials in connection with such
meetings including, without limitation, a written script for
such meetings, minutes and any follow-up documents.
C. Securities Trading and Investment Practices.
1. Review and negotiate private placement and municipal
securities offering documentation and provide legal guidance
on transfer restrictions;
2. Provide guidance on legal considerations relating to the types
and levels of ownership of securities, including foreign
securities;
3. Draft and negotiate documentation necessary to permit the Fund
to engage in a variety of derivative and securities trading
practices and provide legal guidance with respect to these
practices.
D. Regulated Activities. Applicable securities laws regulate
numerous aspects of the Fund's business, including such
matters as the Fund's: prospectus disclosure; investment
activities; affiliated transactions; investment in senior
securities; sales, redemptions and exchanges; distribution of
income and capital gains; distribution of Fund shares; board
composition; code of ethics; fidelity bond; custodial
services; and investment advisory and distribution contracts.
The Administrator will provide the Fund with legal guidance
with respect to these matters and to the general application
of securities laws to the Fund's business.
E. Tax Considerations. Procure legal guidance with respect to the
application of tax rules to the Fund and analysis from a tax
perspective new types of securities, investment practices and
investment products or practices as may be appropriate for the
Fund (it being understood that such legal guidance and
analysis provided by third-parties will be at the expense of
the Fund).
F. Board Matters.
11
1. Coordinate and prepare agendas and materials for and attend
board and committee meetings, draft and keep records of
minutes of such meetings, and coordinate any follow up issues;
and
2. Provide advice and guidance and prepare materials on legal
issues relevant to the Fund's business, including composition
of the governing board.
G. Miscellaneous/Extraordinary Events.
1. Supervise outside legal counsel retained at the expense of the
Fund with respect to litigation brought by the Fund and
against the Fund and negotiate litigation settlements and
pre-litigation settlements and work-out arrangements;
2. Obtain the required documentation to be filed in connection
with any lawsuits against the Fund and provide information or
expertise on administrative matters affecting such litigation;
3. Provide legal guidance on alternative distribution structures
for the Fund's shares (such as the adoption of a multiple
class structure);
4. Review all contracts concerning the acquisition of other
investment companies or the liquidation of the Fund, draft,
negotiate and file various documentation required in
connection therewith, provide guidance on the manner such
transactions should be structured to comply with applicable
law and obtain at the Fund's expense legal opinions and
regulatory authority rulings necessary for such transactions
to comply with applicable law;
5. Seek formal guidance from regulatory authorities concerning
the application of various regulations to the Fund and seek
exemptive relief where appropriate; and
6. Provide or arrange for all other legal services that
constitute Administrative Services required by the Fund and
not otherwise provided for under this Agreement (it being
understood that various legal services will be provided to the
Fund and the Independent Trustees at the expense of the Funds,
as described in Section 3 of the Agreement).
12
III. OTHER ADMINISTRATIVE SERVICES.
1. Arrange for persons or other entities to serve as transfer
agent, registrar or dividend disbursing agent as required by
the Fund, and provide legal guidance on applicable laws
regulating such agents;
2. Arrange for consideration by the Board of appropriate or necessary
insurance coverage for the Fund;
3. Develop and implement procedures to monitor each Fund's compliance
with:
o Regulatory requirements as required by Rule 38a-1 of the
Investment Company Act of 1940, as amended;
o Each Fund's investment policies and restrictions as set
forth in each Fund's currently effective Prospectus and
Statement of Additional Information filed under the
Securities Act of 1933, as amended;
o Establishing and maintaining an anti-money laundering
program to assist in the Funds' compliance with the USA
Patriot Act and the Bank Secrecy Act;
o Performing IRS sub-Chapter M testing;
o Reviewing and filing with the NASD semi-annual and annual
reports;
o Assisting in training of certain MFS personnel including
Portfolio Managers and other investment staff;
o Monitoring "Access Persons" transactions and their adherence
under the terms of the Funds' Code of Ethics Policy;
o Providing assistance and resources to the Funds' Independent
Chief Compliance Officer ("ICCO") as requested by the ICCO.
4. Prepare, and arrange for the printing and mailing of, any
necessary investment communications;
5. Arrange for the printing and mailing of any documents or
written materials required to be prepared by or on behalf of
the Fund including, without limitation, stock certificates,
prospectuses, shareholder reports, shareholder notices, proxy
statements and reports to governmental officers and
commissions;
6. Arrange for any other printing, production and delivery
services required of the Fund and not otherwise specifically
provided for under this Agreement;
7. Provide a system of internal controls adequate to carry-out
the business of the Fund and arrange for the annual report on
internal controls of the Fund and its agents;
8. Review the Fund's disclosure documents to ensure that
disclosures and policies conform to the Fund's actual
operation;
9. Provide for the calculation and timely disbursement of
appropriate regulatory authority registration fees; and
10. Oversee and assist in the coordination of, and as the Trustees
may reasonably request or deem appropriate, make reports and
recommendations to the Trustees on, the performance of
administrative and professional services rendered to the Fund
by others, including the custodian, accountants, attorneys,
underwriters, brokers and dealers, insurers, banks, transfer
agents and dividend disbursing agents and such other persons
in any such other capacity deemed necessary or desirable by
the Trustees.
13
Exhibit C
Categories of Non-Administrator Expenses
a. The fees and expenses described in Article 2(b) or Section
2.2(b) of the MFS Family of Funds' Advisory Agreements and
Article 5 of the MFS/Sun Life Series Trust and Compass
Product's Advisory Agreements.
b. Investment advisory fees and other expenses associated with
the investment management of the Funds' portfolios.
c. Costs of brokerage fees, commissions, ticket charges and
transfer taxes in connection with the purchase and sale of
portfolio securities and other assets for the Funds.
d. Distribution and marketing expenses of the Funds, including
Rule 12b-1 fees. e. Expenses of the Funds for transfer
agent(s), registrar(s) and dividend disbursing agent(s). f.
Expenses of the Funds for custodian(s) and related custodial
services. g. Except as described in Section 3 of the
Agreement, costs of Fund accounting services provided by third
parties to the Funds, including the fund accounting services
of the type currently provided by State Street Bank to the MFS
Funds.
h. Except as described in Section 3 of the Agreement, costs of
services provided by independent accountants and outside legal
and tax counsel to the Funds and the Independent Trustees.
i. Taxes, if any, levied against the Funds.
j. Costs, including interest expenses, commitment fees,
facilities fees and unused line fees of any borrowings made by
the Funds.
k. The Funds' allocable portion of the fidelity bond required by
Section 17(g) of the Investment Company Act of 1940, and
directors' and officers' liability and other insurance
premiums.
l. Proxy filing fees and the costs of printing and mailing of any
proxy materials for meetings of shareholders' of the Funds.
m. All applicable registration and filing fees required to be
paid by the Funds under federal and state securities laws.
n. The Funds' allocable portion of expenses of obtaining
quotations and other pricing information for calculating the
value of the Fund's net assets, including the costs of
independent pricing services.
o. Fees, expenses and other compensation of or payable by the
Funds to Independent Trustees, including expenses to maintain
the Independent Trustees' retirement plan, including actuarial
services provided by Watson Wyatt Wordwide.
p. Printing, mailing and filing costs associated with the
preparation and distribution of registration statements,
prospectuses and reports of the Fund to its shareholders, the
filing of reports with regulatory bodies, the maintenance of
the Trust's existence and qualification to do business, and
the registration of shares with federal and state securities
authorities.
q. Extraordinary expenses as may arise, including judgments and
expenses incurred in connection with litigation, bankruptcies,
workouts and restructurings, proceedings and other claims
against the Funds, and the legal obligations of the
14
Funds to indemnify its trustees, officers, employees,
shareholders, distributors, and agents with respect thereto.
r. The Funds' allocable portion of dues for membership in various
industry organizations, including the Investment Company
Institute, the Independent Directors' Forum and the Mutual
Funds Directors Forum.
s. The costs of third-party software used for the Funds'
financial reporting, N-SAR reporting, tax preparation and
registration statement preparation as appropriately allocated
to the Funds.
t. Costs of third-party tax notification services used for the
Funds (e.g., Ernst & Young's PFIC list). u. The costs of
third-party legal advice regarding state tax law issues for
the municipal Funds. v. The allocable costs of third-party
legal services to review loan documentation for the MFS
Floating Rate
High Income Fund and other Funds that purchase bank loans.
w. The costs of third-party legal, accounting or other expert
advice incurred in connection with an examination,
investigation, enforcement proceeding, litigation or other
regulatory proceeding of or against the Funds.
15
Effective August 1, 2007
Master Administrative Services Agreement - Exhibit D
Administrative Fee
In return for the Administrative Services provided by the Administrator
under this Agreement, each Fund, other than MFS Institutional Money Market
Portfolio, shall pay the Administrator fees as described below:
(i) Fixed Fee: Regardless of asset size, each Fund shall pay an annual
fee to the Administrator in the amount of $17,500.
(ii) Asset-Based Fee: In addition to the Fixed Fee, each Fund, other
than Funds that invest substantially all of their assets in other Funds ("Asset
Allocation Funds")(2), shall pay a fee at the following annual rates, stated as
a percentage of the average daily net assets of the Fund:
0.0000% on average daily net assets from $0 to $50 million;
0.0155% on average daily net assets in excess of $50 million and less than
or equal to $750 million;
0.0150% on average daily net assets in excess of $750 million and less than
or equal to $1.5 billion;
0.0143% on average daily net assets in excess of $1.5 billion and less than
or equal to $2.5 billion;
0.0120% on average daily net assets in excess of $2.5 billion and less than
or equal to $4.0 billion; and
0.0000% on average daily net assets in excess of $4.0 billion.
(iii) Maximum Fees: The maximum aggregate fees payable by the Funds for
the period August 1, 2007, to December 31, 2007, shall be $5.3 million.
______________________
(2) The Asset Allocation Funds will only be charged the fixed fee of $17,500.
The Asset Allocation Funds already incur administrative services fees indirectly
through their holdings in the underlying Funds.
16
IN WITNESS WHEREOF, the parties hereto have caused this Exhibit D to be
signed by their respective officers thereunto duly authorized and their
respective corporate seals to be hereunto affiliated, as of the date first
written above.
On behalf of the MFS Family
of Funds, MFS Closed-End
Funds and MFS Institutional
Funds listed on Exhibit A
to this Agreement
By: /s/ Susan S. Newton
---------------------------------------
Susan S. Newton
Assistant Secretary
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By: /s/ Robert J. Manning
---------------------------------------
Robert J. Manning
Chief Executive Officer, Chief
Investment Officer and
President
17
Exhibit (e)(5)
FIDELITY BOND CLAIM AGREEMENT
THIS MASTER FIDELITY BOND CLAIM AGREEMENT dated November 1,
1993, as amended and restated June 12, 2002, by and among (i) each of the funds
listed from time to time in Exhibit A (collectively, the "Funds" or "Fund
Parties") and (ii) Massachusetts Financial Services Company ("MFS"), MFS Service
Center, Inc. ("MFSC"), MFS Fund Distributors, Inc. ("MFD"), MFS Heritage Trust
Company, MFS Institutional Advisors, Inc., MFS International Ltd., MFS Holdings
Australia Pty Ltd., and MFS Retirement Services, Inc. (collectively, the "MFS
Parties").
WHEREAS, MFS or certain other MFS Parties act as investment adviser to
all of the Funds and certain other clients, MFD acts as distributor for certain
of the Funds and MFSC acts as the transfer and shareholder servicing agent for
certain of the Funds; and from time to time hereafter each may act in the same
capacities with respect to other clients including other investment companies;
WHEREAS, all the parties hereto are named insureds under broker's
blanket bonds issued by National Union Insurance Company/Federal Insurance
Company ("National Union"), by Chubb & Sons Insurance Company ("Chubb"), by Gulf
Insurance Company ("Gulf") and by ICI Mutual Insurance Company ("ICI"), and/or
such other insurance companies as from time to time may insure parties hereto as
such bonds may be amended and/or restated from time to time (collectively the
"Bonds");
WHEREAS, the parties desire to establish (i) the criteria by which the
premium for the Bonds shall be allocated among the parties, (ii) the basis on
which additional investment companies for which MFS, or any subsidiary thereof,
may hereafter act as investment adviser and/or for which MFD may act as
distributor, and additional affiliates of MFS may from time to time be added as
named insureds under the Bonds and (iii) the criteria by which losses in excess
of the face amounts of the Bonds shall be allocated among the parties.
NOW THEREFORE, it is agreed as follows:
1. Each of the Funds shall pay a portion of each premium which shall be
determined as of a specified date (the "Date") which is the same date
for all Fund Parties by calculating the proportion which the minimum
amount of fidelity bond coverage required for such Fund (calculated in
accordance with Rule 17g-1 under the Investment Company Act of 1940, as
amended, ("Rule 17g-1")) bears to the total amount of coverage provided
for under the Bonds and applying said proportion to the total annual
premium. The amount remaining after calculating the portions of the
premium to be paid by the Funds shall be paid by MFS or such MFS
Parties as MFS shall determine.
2. If National Union, Chubb, Gulf and/or ICI (or such other insurers as
from time to time may insure the parties hereto) are willing without
additional premium until the next renewal date to add, as an insured
under any of the Bonds, (i) any investment company permitted to be
included on the Bonds pursuant to Rule 17g-1 for which MFS (or any
subsidiary thereof) may act as investment adviser and/or for which MFD
may act as distributor, or (ii) any affiliate of MFS permitted to be
included on the Bonds pursuant to Rule 17g-1, the parties hereto agree
(a) that such addition may be made, (b) that such investment company
shall become a party to this Agreement and be included within the terms
"Funds" and "Fund Parties" and (c) that such affiliate shall become a
party to this Agreement and be included within the term "MFS Parties."
3. In the event that the claims of loss of two or more insureds under the
Bonds are so related that the insurer is entitled to assert that the
claims must be aggregated with the result that the claims exceed the
face amount of the Bonds but the total amount payable on such claims is
limited to the face amount of the Bonds, the following rules for
determining, as among such insureds, the priority of satisfaction of
the claims under the Bonds shall apply:
A. All claims of Funds which have been duly proved and established under
the Bonds shall be satisfied in full before satisfaction of any claims
of MFS or other MFS Parties, if any.
1
B. If the claims of Funds which have been duly proved and established
under the Bonds exceed the face amount of the Bonds, the insurance
proceeds shall be applied to those claims in the following manner:
(i) first, the insurance proceeds shall be applied to the claim of each
Fund up to its respective minimum fidelity bond requirement as
determined pursuant to paragraph one above with respect to the Funds;
and
(ii) the remaining amount of insurance proceeds then shall be applied to the
unsatisfied claims of the Funds in proportion to their respective
minimum fidelity bond requirements as determined pursuant to paragraph
one above with respect to the Funds.
C. If after giving effect to Paragraph A there remains a portion of the
insurance under the Bonds available for the satisfaction of claims of
MFS or other MFS Parties, if any, which have been duly proved and
established under the Bonds, such remainder shall be applied as MFS
shall determine.
4. This Agreement hereby supercedes all prior or contemporaneous
agreements among the parties hereto (or any two or more of them) (which other
agreements may include other parties) relating to the subject matter hereof.
5. The Agreement shall be governed by and construed in accordance with
the laws of The Commonwealth of Massachusetts.
6. Exhibit A hereto may be amended from time to time to reflect the
changes in the funds insured under the Bonds.
7. A copy of the Declaration of Trust of each Fund is on file with the
Secretary of State of The Commonwealth of Massachusetts. Each party hereto
acknowledges that the obligations of or arising out of this Agreement are not
binding upon any of the Fund's Trustees, officers, employees, agents or
shareholders individually, but are binding solely upon the assets and property
of the Fund. If this Agreement is executed by the Fund on behalf of one or more
series of the Fund, each party hereto further acknowledges that the assets and
liabilities of each series are separate and distinct and that the obligations of
or arising out of this Agreement concerning a series are binding solely upon the
assets or property of such series and not upon the assets or property of any
other series.
8. This Agreement may be amended or modified only with the prior written
consent of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered in their names and on their behalf by the
undersigned officers thereunto duly authorized, all as of the day and year first
above written.
MASSACHUSETTS FINANCIAL SERVICES COMPANY
MFS INSTITUTIONAL ADVISORS, INC.
MFS INTERNATIONAL LTD.
By: /s/ Robert T. Burns
------------------------
Robert T. Burns
Secretary
2
MFS HERITAGE TRUST COMPANY
By: /s/ Robert T. Burns
---------------------
Robert T. Burns
Clerk
MFS FUND DISTRIBUTORS, INC.
MFS RETIREMENT SERVICES, INC.
MFS SERVICE CENTER, INC.
MFS INSTITUTIONAL ADVISORS (AUSTRALIA) LTD.
By: /s/ Robert T. Burns
------------------------
Robert T. Burns
Secretary
On Behalf of the Funds Listed From Time to Time
On Exhibit A Hereto:
By: /s/ James R. Bordewich, Jr.
-------------------------------
James R. Bordewick, Jr.
Assistant Secretary or Assistant Clerk
3
FIDELITY BOND CLAIM AGREEMENT
EXHIBIT A
As of February 27, 2007
MFS SERIES TRUST I
MFS Cash Reserve Fund
MFS Core Growth Fund
MFS Core Equity Fund
MFS New Discovery Fund
MFS Research International Fund
MFS Strategic Growth Fund
MFS Technology Fund
MFS Value Fund
MFS SERIES TRUST II
MFS Emerging Growth Fund
MFS SERIES TRUST III
MFS High Income Fund
MFS High Yield Opportunities Fund
MFS Municipal High Income Fund
MFS SERIES TRUST IV
MFS Government Money Market Fund
MFS Mid Cap Growth Fund
MFS Money Market Fund
MFS Municipal Bond Fund
MFS SERIES TRUST V
MFS Research Fund
MFS Total Return Fund
MFS International New Discovery Fund
MFS SERIES TRUST VI
MFS Global Equity Fund
MFS Global Total Return Fund
MFS Utilities Fund
MFS SERIES TRUST VII
MFS Capital Opportunities Fund
MFS SERIES TRUST VIII
MFS Global Growth Fund
MFS Strategic Income Fund
MFS SERIES TRUST IX
MFS Bond Fund
MFS Inflation-Adjusted Bond Fund
MFS Intermediate Investment Grade Bond Fund
MFS Limited Maturity Fund
MFS Municipal Limited Maturity Fund
4
MFS Research Bond Fund
MFS Research Bond Fund J
MFS SERIES TRUST X
MFS Aggressive Growth Allocation Fund
MFS Conservative Allocation Fund
MFS Emerging Markets Debt Fund
MFS Emerging Markets Equity Fund
MFS Floating Rate High Income Fund
MFS Growth Allocation Fund
MFS International Diversification Fund
MFS International Growth Fund
MFS International Value Trust
MFS Moderate Allocation Fund
MFS New Endeavor Fund
MFS Strategic Value Fund
MFS SERIES TRUST XI
MFS Mid Cap Value Fund
MFS Union Standard Equity Fund
MFS SERIES TRUST XII
MFS Lifetime Retirement Income Fund
MFS Lifetime 2010 Fund
MFS Lifetime 2020 Fund
MFS Lifetime 2030 Fund
MFS Lifetime 2040 Fund
MFS Sector Rotational Fund
MFS SERIES TRUST XIII
MFS Diversified Income Fund
MFS Government Securities Fund
MFS SERIES TRUST XIV
MFS Institutional Money Market Portfolio
MFS Institutional Municipal Money Market Portfolio
STAND-ALONE FUNDS
MFS Growth Opportunities Fund
Massachusetts Investors Growth Stock Fund
MFS Government Limited Maturity Fund
Massachusetts Investors Trust
CLOSED-END FUNDS
MFS Charter Income Trust
MFS Government Markets Income Trust
MFS Intermediate Income Trust
MFS Multimarket Income Trust
MFS Municipal Income Trust
MFS Special Value Trust
MFS MUNICIPAL SERIES TRUST
5
MFS Alabama Municipal Bond Fund
MFS Arkansas Municipal Bond Fund
MFS California Municipal Bond Fund
MFS Florida Municipal Bond Fund
MFS Georgia Municipal Bond Fund
MFS Maryland Municipal Bond Fund
MFS Massachusetts Municipal Bond Fund
MFS Mississippi Municipal Bond Fund
MFS New York Municipal Bond Fund
MFS North Carolina Municipal Bond Fund
MFS Pennsylvania Municipal Bond Fund
MFS South Carolina Municipal Bond Fund
MFS Tennessee Municipal Bond Fund
MFS Virginia Municipal Bond Fund
MFS West Virginia Municipal Bond Fund
MFS Municipal Income Fund
MFS INSTITUTIONAL TRUST
MFS Institutional International Equity Fund
MFS Institutional International Research Equity Fund
MFS Institutional Large Cap Value Fund
MFS VARIABLE INSURANCE TRUST
MFS Capital Opportunities Series
MFS Emerging Growth Series
MFS Global Equity Series
MFS High Income Series
MFS Investors Growth Stock Series
MFS Investors Trust Series
MFS Mid Cap Growth Series
MFS Money Market Series
MFS New Discovery Series
MFS Research Bond Series
MFS Research International Series
MFS Research Series
MFS Strategic Income Series
MFS Total Return Series
MFS Utilities Series
MFS Value Series
6
SUN LIFE PRODUCTS
MFS/Sun Life Series Trust:
Bond Series
Capital Appreciation Series
Capital Opportunities Series
Core Equity Series
Emerging Growth Series
Emerging Markets Equity Series
Global Governments Series
Global Growth Series
Global Total Return Series
Government Securities Series
High Yield Series
International Growth Series
International Value Series
Massachusetts Investors Growth Stock Series
Massachusetts Investors Trust Series
Mid Cap Growth Series
Mid Cap Value Series
Money Market Series
New Discovery Series
Research International Series
Research Series
Strategic Growth Series
Strategic Income Series
Strategic Value Series
Technology Series
Total Return Series
Utilities Series
Value Series
Compass Variable Accounts:
-------------------------
Capital Appreciation Variable Account
Government Securities Variable Account
Global Governments Variable Account
High Yield Variable Account
Money Market Variable Account
Total Return Variable Account
7
Exhibit (e)(6)
FORM OF INDEMNIFICATION AGREEMENT
This Indemnification Agreement (this "Agreement") is made as of January
24, 2006 by and between (i) each investment company listed on Appendix A hereto,
as the same may be amended from time to time, acting on behalf of itself and
each of its portfolio series whether existing on the date hereof or subsequently
established (the "Funds") and (ii) the trustee of the Funds whose name is set
forth on the signature page (the "Trustee").
WHEREAS, the Trustee is a trustee of the Funds, and the Funds wish the
Trustee to continue to serve in that capacity;
WHEREAS, the declarations of trust of the Funds do not limit any rights
to indemnification that the Trustee may be entitled to by contract or otherwise
under law; and
WHEREAS, to induce the Trustee to continue to provide services to the
Funds as a trustee of the Funds and to provide the Trustee with contractual
assurance that indemnification will be available to the Trustee, the Funds
desire to provide the Trustee with protection against personal liability and
delineate certain procedural aspects relating to indemnification and advancement
of expenses, as more fully set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual agreements set forth herein, the parties hereby agree as set forth below.
Item 11. Definitions. For purposes of this Agreement, the following terms
shall have the following meanings:
"Disabling Conduct" shall mean the Trustee's willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his or her office.
"Expenses" shall include without limitation all judgments, penalties,
fines, amounts paid in settlement or compromise, prohibited transaction excise
taxes, liabilities, losses, interest, expenses of investigation, attorneys'
fees, retainers, court costs, transcript costs, fees of experts and witnesses,
expenses of preparing for and attending depositions and other proceedings,
travel expenses, duplicating costs, printing and binding costs, telephone
charges, postage, delivery service fees and all other costs, disbursements or
expenses of the type customarily incurred in connection with prosecuting,
defending, preparing to prosecute or defend, investigating or acting as a
witness in a Proceeding.
"Final Adjudication" shall mean a final adjudication by court order or
judgment of the court or other body before which a matter is pending, from which
no further right of appeal or review exists.
"Non-Party Trustee" shall mean a trustee of a Fund who is not (i) an
"interested person" of such Fund as defined in Section 2(a)(19) of the
Investment Company Act of 1940, as amended, (ii) a party to the Proceeding with
respect to which indemnification or advances are sought or (iii) a
1
party to any other Proceeding based on the same or similar grounds that is then
or has been pending.
The term "Proceeding" shall include without limitation any threatened,
pending or completed claim, demand, discovery request, request for testimony or
information, action, suit, arbitration, alternative dispute mechanism,
investigation, hearing or other proceeding, including any appeal from any of the
foregoing, whether civil, criminal, administrative or investigative and, except
as otherwise provided herein, shall also include any proceeding brought by or in
the right of any Fund and any proceeding brought by a Trustee against any Fund.
The Trustee's "service to a relevant Fund" or "service to such Fund"
shall include without limitation the Trustee's service as a trustee or advisory
trustee of the Fund and his or her service at the request of the Fund as a
trustee, director, officer, employee, agent or representative of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise.
"Special Counsel" shall mean a law firm, or a member of a law firm,
that is experienced in matters of investment company law and neither at the time
of designation is, nor in the five years immediately preceding such designation
was, retained to represent (i) the relevant Fund or the Trustee (except that a
majority of the Non-Party Trustees may determine, in their sole discretion, that
any prior representation of the Fund or Trustee shall not disqualify such law
firm or a member of a law firm from representation if the prior representation
is not related to the issue in dispute) or (ii) any other party to the
Proceeding (or any party reasonably expected to become a party to the
Proceeding) giving rise to a claim for indemnification or advancements
hereunder. Notwithstanding the foregoing, however, the term "Special Counsel"
shall not include any person who, under the applicable standards of professional
conduct then prevailing, would have a conflict of interest in representing
either the relevant Fund or the Trustee in an action to determine the Trustee's
rights pursuant to this Agreement, regardless of when the Trustee's act or
failure to act occurred.
Item 12. Indemnification. Each of the Funds severally shall indemnify and hold
harmless the Trustee against any and all Expenses actually incurred or paid by
the Trustee in any Proceeding in connection with the Trustee's service to the
relevant Fund, subject to the provisions of the following sentence and the
provisions of Section 3 and paragraph (h) of Section 6 of this Agreement,
provided that in any Proceeding initiated by the Trustee, other than one
instituted pursuant to Section 6(d) or 6(f), the initiation of the Proceeding by
the Trustee was approved in advance by a majority of the Non-Party Trustees. The
Trustee shall be indemnified pursuant to this Section 2 against any and all
Expenses unless (i) the Trustee is subject to such Expenses by reason of the
Trustee's not having acted in good faith in the reasonable belief that his or
her action was in the best interests of the Fund or (ii) the Trustee is liable
to the Fund or its shareholders by reason of the Trustee's Disabling Conduct,
and with respect to each of (i) and (ii), there has been a Final Adjudication in
an adjudication on the merits in the relevant Proceeding that the Trustee's
conduct fell within (i) or (ii).
Item 13. Advancement of Expenses. Expenses, including counsel fees incurred by
the Trustee (but excluding amounts paid in satisfaction of judgments, in
compromise or as fines or penalties), shall be paid from time to time by the
Fund in advance of Final Adjudication of a Proceeding in connection with the
Trustee's service to a Fund, upon receipt by the Fund of an
2
undertaking by or on behalf of the Trustee to repay amounts so paid to the Fund
if it is ultimately determined that the Trustee is not entitled to
indemnification of such Expenses under this Agreement, provided, that (a) the
Trustee shall provide security for his or her undertaking, (b) the Fund shall be
insured against losses arising by reason of the Trustee's failure to fulfill his
or her undertaking (it being understood that the Fund shall not be required to
obtain such insurance), or (c) a majority of the Non-Party Trustees (provided
that a majority of such Non-Party Trustees then in office act on the matter), or
Special Counsel in a written opinion shall determine, based on a review of
readily available facts (but not a full trial-type inquiry), that there is
reason to believe the Trustee ultimately will be entitled to indemnification.
Item 14. Presumptions. For purposes of the determination or opinion referred to
in clause (c) of Section 3 or clauses (y)(i) or (y)(ii) of subsection (h) of
Section 6 of this Agreement, the Non-Party Trustees or Special Counsel, as the
case may be, shall be entitled to rely upon a rebuttable presumption that the
Trustee has not engaged in Disabling Conduct.
Item 15. Witness Expenses. To the extent the Trustee is, by reason of the
Trustee's service to the relevant Fund, a witness for any reason in any
Proceeding to which such Trustee is not a party, such Trustee shall be
indemnified against any and all Expenses actually incurred by or on behalf of
such Trustee in connection therewith.
Item 16. Procedure for Determination of Entitlement to Indemnification and
Advancements. A request by the Trustee for indemnification or advancement of
Expenses shall be made in writing and shall be accompanied by such relevant
documentation and information as is reasonably available to the Trustee. The
Secretary of the relevant Fund shall promptly advise the trustees of such Fund
of such request.
Methods of Determination. Upon the Trustee's request for
indemnification or advancement of Expenses, a determination with respect to the
Trustee's entitlement thereto shall be made in a manner consistent with the
terms of this Agreement, unless (in the case of advancements) the relevant Fund
and the Trustee shall have received written confirmation in reasonably
acceptable form that such Fund is insured against losses arising by reason of
any lawful advancements and that the insurer will pay the Expenses of the
Trustee in a reasonably prompt manner, in which case no determination shall be
required. The Trustee shall cooperate with the person or persons making such
determination, including without limitation providing to such person or persons
upon reasonable advance request any documentation or information that is not
privileged or otherwise protected from disclosure and is reasonably available to
the Trustee and reasonably necessary to such determination. Any failure by the
Trustee to cooperate with the person or persons making such determination shall
extend as necessary and appropriate the period or periods described in paragraph
(c) of this Section 6 regarding determinations deemed to have been made. Any
Expenses incurred by the Trustee in so cooperating shall be borne by such Fund,
irrespective of the determination as to the Trustee's entitlement to
indemnification or advancement of Expenses.
Special Counsel. If the determination of entitlement to indemnification
or advancement of Expenses is to be made by Special Counsel, the Special Counsel
shall be selected by a majority of the Non-Party Trustees of the relevant Fund
(or, if there are no Non-Party Trustees with respect to the matter in question,
by a majority of the Trustees of the Fund who are not
3
"interested persons" of the Fund, as defined in Section 2(a)(19) of the
Investment Company Act of 1940, as amended (the "Independent Trustees")), and
such Fund shall give written notice to the Trustee advising the Trustee of the
identity of the Special Counsel selected. The Trustee may, within five (5) days
after receipt of such written notice, deliver to such Fund a written objection
to such selection. Such objection may be asserted only on the ground that the
Special Counsel so selected does not meet the requirements set forth in Section
1 and shall set forth with particularity the factual basis of such assertion.
The Non-Party Trustees (or Independent Trustees, as the case may be) of such
Fund shall determine the merits of the objection and, in their discretion,
either determine that the proposed Special Counsel shall, despite the objection,
act as such hereunder or select another Special Counsel who shall act as such
hereunder.
If within fourteen (14) days after submission by the Trustee of a
written request for indemnification or advancement of Expenses no such Special
Counsel shall have been finally selected as provided in the previous paragraph,
then either the relevant Fund or the Trustee may petition an appropriate court
of the Commonwealth of Massachusetts or any other court of competent
jurisdiction for the appointment as Special Counsel of a person selected by the
court or by such other person as the court shall designate, and the person so
appointed shall act as Special Counsel.
The relevant Fund shall pay all reasonable fees and Expenses charged or
incurred by Special Counsel in connection with his, her or its determinations
pursuant to this Agreement and shall pay all reasonable fees and Expenses
incident to the procedures described in this paragraph, regardless of the manner
in which such Special Counsel was selected or appointed.
Failure to Make Timely Determination. Subject to paragraph (a) of this Section
6, if the person or persons empowered or selected to determine whether the
Trustee is entitled to indemnification or advancement of Expenses (other than
determinations that are made or to be made by a court) shall not have made such
determination within thirty (30) days after receipt by the relevant Fund of the
request therefor, the requisite determination of entitlement to indemnification
or advancement of Expenses shall be deemed to have been made, and the Trustee
shall be entitled to such indemnification or advancement, absent (i) an
intentional misstatement by the Trustee of a material fact, or an intentional
omission of a material fact necessary to make the Trustee's statement not
materially misleading, in connection with the request for indemnification or
advancement of Expenses, (ii) a prohibition of such indemnification or
advancements under applicable law or the relevant Fund's declaration of trust or
by-laws, (iii) a requirement under the Investment Company Act of 1940, as
amended, for insurance or security, which has not been satisfied, or (iv) a
subsequent Final Adjudication or, in a matter disposed of without a Final
Adjudication, determination pursuant to subsection (h) of Section 6, that the
Trustee is not entitled to indemnification under this Agreement; provided,
however, that such period may be extended for a reasonable period of time, not
to exceed an additional thirty (30) days, if the person or persons making the
determination in good faith require such additional time to obtain or evaluate
documentation or information relating thereto. Any assertion under clauses (i),
(ii), or (iii) of this Section 6(c) shall be made in writing, specify the basis
for the assertion, and be delivered to the Trustee within thirty (30) days after
receipt by the relevant Fund of the request for indemnification or advancement
of Expenses (or any extension of such period provided under this Section 6(c)).
The Trustee shall be entitled to adjudication of such assertion in an
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appropriate court of the Commonwealth of Massachusetts or any other court of
competent jurisdiction.
Payment upon Determination of Entitlement. If a determination is made pursuant
to Section 2 or Section 3 (or is deemed to be made pursuant to paragraph (c) of
this Section 6 and, in the case of advancement of Expenses, the other conditions
are satisfied) that the Trustee is entitled to indemnification or advancement of
Expenses, payment of any indemnification amounts or advancements owing to the
Trustee shall be made within ten (10) days after such determination (and, in the
case of advancements of further Expenses, within ten (10) days after submission
of supporting information, including the required undertaking and evidence of
any required security). If such payment is not made when due, the Trustee shall
be entitled to adjudication of the Trustee's entitlement to such indemnification
or advancements in an appropriate court of the Commonwealth of Massachusetts or
any other court of competent jurisdiction. The Trustee shall commence any
proceeding seeking adjudication within 60 days following the date on which he or
she first has the right to commence such proceeding pursuant to this paragraph
(d). In any such proceeding, the relevant Fund shall be bound by the
determination that the Trustee is entitled to indemnification or advancements,
absent (i) an intentional misstatement by the Trustee of a material fact, or an
intentional omission of a material fact necessary to make his or her statement
not materially misleading, in connection with the request for indemnification or
advancements, (ii) a prohibition of such indemnification or advancements under
applicable law or (iii) a requirement under the Investment Company Act of 1940,
as amended, for insurance or security, which has not been satisfied.
Appeal of Adverse Determination. If a determination is made that the Trustee is
not entitled to indemnification or advancements (other than determinations that
are made by a court), the Trustee shall be entitled to adjudication of such
matter in an appropriate court of the Commonwealth of Massachusetts or any other
court of competent jurisdiction. Alternatively, the Trustee, at his or her
option, may seek an award in arbitration to be conducted by a single arbitrator
pursuant to the rules of the American Arbitration Association. The Trustee shall
commence such proceeding or arbitration within 60 days following the date on
which the adverse determination is made. Any such judicial proceeding or
arbitration shall be conducted in all respects as a de novo trial or arbitration
on the merits, and the Trustee shall not be prejudiced by reason of such prior
adverse determination.
Expenses of Appeal. If the Trustee seeks arbitration or a judicial adjudication
to determine or enforce his or her rights under, or to recover damages for
breach of, the indemnification or Expense advancement provisions of this
Agreement, the Trustee shall be entitled to recover from the relevant Fund, and
shall be indemnified by such Fund against, any and all Expenses actually
incurred by the Trustee in such arbitration or judicial adjudication, but only
if the Trustee prevails therein. If it shall be determined in such arbitration
or judicial adjudication that the Trustee is entitled to receive part but not
all of the indemnification or advancement of Expenses sought, the expenses
incurred by the Trustee in connection with such arbitration or judicial
adjudication shall be appropriately prorated.
Validity of Agreement. In any arbitration or judicial proceeding commenced
pursuant to this Section 4, the relevant Fund shall be precluded from asserting
that the procedures and presumptions set forth in this Agreement are not valid,
binding and enforceable against such
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Fund and shall stipulate in any such court or before any such arbitrator that
such Fund is bound by all the provisions of this Agreement.
Lack of Adjudication. Notwithstanding any provision herein to the contrary, as
to any matter disposed of (whether by compromise payment, pursuant to a consent
decree or otherwise) without a Final Adjudication in an adjudication on the
merits by a court, or by any other body before which the Proceeding was brought,
that the Trustee either (a) did not act in good faith in the reasonable belief
that the Trustee's action was in the best interests of the Fund or (b) is liable
to the Fund or its shareholders by reason of Disabling Conduct, indemnification
shall be provided if there has been (x) a determination that the Trustee did not
engage in Disabling Conduct by the court or other body approving any settlement
or other disposition of the matter or (y) there has been a reasonable
determination, based upon a review of readily available facts (but not a full
trial-type inquiry), that the Trustee acted in good faith in the reasonable
belief that the Trustee's action was in the best interests of the Fund and is
not liable to the Fund or its shareholders by reason of Disabling Conduct, by
(i) the vote of a majority of the Non-Party Trustees (provided that a majority
of such Non-Party Trustees then in office act on the matter) or (ii) Special
Counsel in a written opinion.
Item 17. General Provisions.
Non-Exclusive Rights. The provisions for indemnification of, and advancement of
Expenses to, the Trustee set forth in this Agreement shall not be deemed
exclusive of any other rights to which the Trustee may otherwise be entitled,
including any other rights to be indemnified or have Expenses advanced by the
relevant Fund. The relevant Fund shall not be liable under this Agreement to
make any payment of amounts otherwise indemnifiable hereunder if and to the
extent that the Trustee has otherwise actually received such payment under any
insurance policy, contract, agreement or otherwise, if such payment is not
recoverable from the Trustee.
Continuation of Provisions. This Agreement shall be binding upon all successors
of each Fund, including without limitation any transferee of all or
substantially all assets of a Fund and any successor by merger, consolidation or
operation of law and shall inure to the benefit of the Trustee's spouse, heirs,
assigns, devisees, executors, administrators and legal representatives. The
provisions of this Agreement shall continue with respect to a Fund until the
later of (i) ten (10) years after the Trustee has ceased to provide any service
to such Fund and (ii) the final termination of all Proceedings in respect of
which the Trustee has asserted, is entitled to assert or has been granted rights
of indemnification or advancement of Expenses hereunder and of any proceeding
commenced by the Trustee pursuant to Section 4 relating thereto. No amendment of
the applicable declaration of trust or by-laws of a Fund shall limit or
eliminate the right of the Trustee to indemnification and advancement of
Expenses set forth in this Agreement.
Selection of Counsel. The relevant Fund shall be entitled to assume the defense
of any Proceeding for which the Trustee seeks indemnification or advancement of
Expenses under this Agreement. However, counsel selected by the Trustee shall
conduct the defense of the Trustee to the extent reasonably determined by such
counsel to be necessary to protect the interests of the Trustee, and the
relevant Fund shall indemnify the Trustee therefor to the extent otherwise
permitted under this Agreement, if (i) the Trustee reasonably determines that
there may be a conflict in the Proceeding between the positions of the Trustee
and the positions of such Fund or
6
the other parties to the Proceeding that are indemnified by such Fund and not
represented by separate counsel, or the Trustee otherwise reasonably concludes
that representation of both the Trustee, such Fund and such other parties by the
same counsel would not be appropriate, or (2) the Proceeding involves the
Trustee but neither the relevant Fund nor any such other party who is
indemnified by the Fund and the Trustee reasonably withholds consent to being
represented by counsel selected by such Fund. If the relevant Fund shall not
have elected to assume the defense of any such Proceeding for the Trustee within
thirty (30) days after receiving written notice thereof from the Trustee, such
Fund shall be deemed to have waived any right it might otherwise have to assume
such defense. If the relevant Fund does not assume or conduct the defense of any
Proceeding, the Trustee shall not consent to a settlement or any other
disposition not involving a Final Adjudication without the prior written consent
of the Fund.
D&O Insurance. To the extent any Fund maintains an insurance policy or policies
providing liability insurance to its trustees or its trustees who are not
"interested persons" of the Fund as defined in Section 2(a)(19) of the
Investment Company Act of 1940, as amended, the Trustee shall be covered by such
policy or policies at all times when serving as a member of the Board, in
accordance with its or their terms, to the maximum extent of the coverage
available for any similarly situated trustee of such Fund. For a period of six
(6) years after the Trustee has ceased to serve as a member of the Board and to
the extent insurance as provided in the previous sentence does not continue to
cover the Trustee even though he is no longer serving as a member of the Board,
such Fund shall purchase and maintain in effect, through "tail" or other
appropriate coverage, one or more policies of insurance on behalf of the Trustee
to the maximum extent of the coverage provided to then serving trustees of such
Fund, unless the purchase of such insurance by the Fund is not permitted by
applicable law, including for these purposes any fiduciary duties applicable to
the persons then constituting the trustees of such Fund, such insurance is not
generally available, or in the reasonable business judgment of the persons then
constituting the Board, the premium for such insurance is substantially
disproportionate to the amount of coverage afforded.
Subrogation. In the event of any payment by any Fund pursuant to this Agreement,
such Fund shall be subrogated to the extent of such payment to all of the rights
of recovery of the Trustee, who shall, upon reasonable written request by such
Fund and at such Fund's expense, execute all such documents and take all such
reasonable actions as are necessary to enable such Fund to enforce such rights.
Nothing in this Agreement shall be deemed to diminish or otherwise restrict the
right of such Fund or the Trustee to proceed or collect against any insurers or
to give such insurers any rights against such Fund under or with respect to this
Agreement, including without limitation any right to be subrogated to the
Trustee's rights hereunder, unless otherwise expressly agreed to by such Fund in
writing, and the obligation of such insurers to such Fund and the Trustee shall
not be deemed to be reduced or impaired in any respect by virtue of the
provisions of this Agreement.
Notice of Proceedings. The Trustee shall promptly notify the relevant Fund in
writing upon being served with any summons, citation, subpoena, complaint,
indictment, information or other document relating to any Proceeding that may be
subject to indemnification or advancement of Expenses pursuant to this
Agreement, but no delay in providing such notice shall in any way limit or
affect the Trustee's rights or the relevant Fund's obligations under this
Agreement.
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Notices. All notices, requests, demands and other communications to a party
pursuant to this Agreement shall be in writing and shall be deemed to have been
duly given when delivered personally (with a written receipt by the addressee)
or two (2) days after being sent (i) by certified or registered mail, postage
prepaid, return receipt requested or (ii) by nationally recognized overnight
courier service to 500 Boylston Street, Boston, MA 02116 (if addressed to a
Fund), the address specified on the signature page of this Agreement (if
addressed to the Trustee) or such other address as may have been furnished by
such party by notice in accordance with this paragraph.
Severability. If any provision of this Agreement shall be held to be invalid,
illegal or unenforceable, in whole or in part, for any reason whatsoever, (i)
the validity, legality and enforceability of the remaining provisions of this
Agreement (including without limitation each portion of any Section of this
Agreement containing any provision that is not itself invalid, illegal or
unenforceable) shall not in any way be affected or impaired thereby and (ii) to
the fullest extent possible, the remaining provisions of this Agreement shall be
construed so as to give effect to the intent manifested by the provision held
invalid, illegal or unenforceable.
Modification and Waiver. This Agreement supersedes any existing or prior
agreement between the relevant Fund and the Trustee pertaining to the subject
matter of indemnification, advancement of Expenses and insurance, other than
such Fund's declaration of trust, by-laws and the terms of any liability
insurance policies, which shall not be modified or amended by this Agreement. No
supplement, modification or amendment of this Agreement shall be binding unless
executed in writing by both parties or their respective successors or legal
representatives; provided, however, that any supplements, modifications or
amendments to the declaration of trust, by-laws or the terms of the liability
insurance policy or policies of any Fund shall not be deemed to constitute
supplements, modifications or amendments to this Agreement. Any waiver by either
party of any breach by the other party of any provision contained in this
Agreement to be performed by the other party must be in writing and signed by
the waiving party or such party's successor or legal representative, and no such
waiver shall be deemed a waiver of similar or other provisions at the same or
any prior or subsequent time.
Joinder of Funds. In the event that additional funds are created from time to
time, Appendix A listing each Fund that is party to this Agreement may be
amended to add the additional funds by each applicable fund's execution and
delivery to the Trustee of an amended Appendix A. As of the date set forth on
the amended Appendix A, the additional fund shall thereafter be deemed a "Fund"
for all purposes of this Agreement.
Headings. The headings of the Sections of this Agreement are for convenience
only and shall not be deemed to control or affect the meaning or construction of
any provision of this Agreement.
Counterparts. This Agreement may be executed in one or more counterparts, each
of which shall be an original, and all of which when taken together shall
constitute one document.
Applicable Law. This Agreement shall be governed by and construed and enforced
in accordance with the laws of the Commonwealth of Massachusetts without
reference to principles of conflict of laws.
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WAIVER OF RIGHT TO JURY TRIAL. BY EXECUTING THIS AGREEMENT, THE PARTIES
KNOWINGLY AND WILLINGLY WAIVE ANY RIGHT THEY HAVE UNDER APPLICABLE LAW TO A
TRIAL BY JURY IN ANY DISPUTE ARISING OUT OF OR IN ANY WAY RELATED TO THIS
AGREEMENT OR THE ISSUES RAISED BY THAT DISPUTE.
Miscellaneous. Copies of the declarations of trust of the Funds are on file with
the Secretary of the Commonwealth of the Commonwealth of Massachusetts. The
obligations of or arising out of this Agreement are not binding upon any of the
Trusts' trustees, officers, employees, agents or shareholders individually, but
are binding solely upon the assets and property of the Funds in accordance with
their proportionate interests hereunder. The assets and liabilities of each of
the Funds are separate and distinct, and the obligations of or arising out of
this instrument are binding solely upon the assets or property of the respective
Funds.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed in its name and on its behalf on the date set forth above.
Each Investment Company listed on TRUSTEE
Appendix A Attached Hereto, on Behalf
of itself and each of its
Portfolio Series
____________________________ ____________________________________
Name: Maria F. Dwyer Name:
Title: President
Address for Notices:
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APPENDIX A
TO
INDEMNIFICATION AGREEMENT
BETWEEN
[TRUSTEE] AND EACH OF THE INVESTMENT COMPANIES
DATED AS OF JANUARY 24, 2006
MASSACHUSETTS INVESTORS GROWTH STOCK FUND, a Massachusetts business trust
MASSACHUSETTS INVESTORS TRUST, a Massachusetts business trust
MFS CHARTER INCOME TRUST, a Massachusetts business trust
MFS GOVERNMENT LIMITED MATURITY FUND, a Massachusetts business trust
MFS GOVERNMENT MARKETS INCOME TRUST, a Massachusetts business trust
MFS GOVERNMENT SECURITIES FUND, a Massachusetts business trust
MFS GROWTH OPPORTUNITIES FUND, a Massachusetts business trust
MFS INTERMEDIATE INCOME TRUST, a Massachusetts business trust
MFS MULTIMARKET INCOME TRUST, a Massachusetts business trust
MFS MUNICIPAL INCOME TRUST, a Massachusetts business trust
MFS SPECIAL VALUE TRUST, a Massachusetts business trust
MFS SERIES TRUST I, a Massachusetts business trust, on behalf of each of:
MFS Cash Reserve Fund
MFS Core Equity Fund
MFS Core Growth Fund
MFS New Discovery Fund
MFS Research International Fund
MFS Strategic Growth Fund
MFS Technology Fund
MFS Value Fund
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MFS SERIES TRUST II, a Massachusetts business trust, on behalf of each of:
MFS Emerging Growth Fund
MFS SERIES TRUST III, a Massachusetts business trust, on behalf of each of:
MFS High Income Fund
MFS High Yield Opportunities Fund
MFS Municipal High Income Fund
MFS SERIES TRUST IV, a Massachusetts business trust, on behalf of each of:
MFS Government Money Market Fund
MFS Mid Cap Growth Fund
MFS Money Market Fund
MFS Municipal Bond Fund
MFS SERIES TRUST V, a Massachusetts business trust, on behalf of each of:
MFS International New Discovery Fund
MFS Research Fund
MFS Total Return Fund
MFS SERIES TRUST VI, a Massachusetts business trust, on behalf of each of:
MFS Global Equity Fund
MFS Global Total Return Fund
MFS Utilities Fund
MFS SERIES TRUST VII, a Massachusetts business trust, on behalf of:
MFS Capital Opportunities Fund
MFS SERIES TRUST VIII, a Massachusetts business trust, on behalf of each of:
MFS Global Growth Fund
MFS Strategic Income Fund
MFS SERIES TRUST IX, a Massachusetts business trust, on behalf of each of:
MFS Bond Fund
MFS Inflation-Adjusted Bond Fund
MFS Intermediate Investment Grade Bond Fund
MFS Limited Maturity Fund
MFS Municipal Limited Maturity Fund
MFS Research Bond Fund
MFS Research Bond Fund J
MFS SERIES TRUST X, a Massachusetts business trust, on behalf of each of:
MFS Aggressive Growth Allocation Fund
MFS Conservative Allocation Fund
MFS Emerging Markets Debt Fund
MFS Emerging Markets Equity Fund
MFS Floating Rate High Income Fund
2
MFS Growth Allocation Fund
MFS International Diversification Fund
MFS International Growth Fund
MFS International Value Fund
MFS Moderate Allocation Fund
MFS New Endeavor Fund
MFS Strategic Value Fund
MFS SERIES TRUST XI, a Massachusetts business trust, on behalf of each of:
MFS Mid Cap Value Fund
MFS Union Standard Equity Fund
MFS SERIES TRUST XII, a Massachusetts business trust, on behalf of each of
MFS Lifetime Retirement Income Fund
MFS Lifetime 2010 Fund
MFS Lifetime 2020 Fund
MFS Lifetime 2030 Fund
MFS Lifetime 2040 Fund
MFS MUNICIPAL SERIES TRUST, a Massachusetts business trust, on behalf of
each of:
MFS Alabama Municipal Bond Fund
MFS Arkansas Municipal Bond Fund
MFS California Municipal Bond Fund
MFS Florida Municipal Bond Fund
MFS Georgia Municipal Bond Fund
MFS Maryland Municipal Bond Fund
MFS Massachusetts Municipal Bond Fund
MFS Mississippi Municipal Bond Fund
MFS Municipal Income Fund
MFS New York Municipal Bond Fund
MFS North Carolina Municipal Bond Fund
MFS Pennsylvania Municipal Bond Fund
MFS South Carolina Municipal Bond Fund
MFS Tennessee Municipal Bond Fund
MFS Virginia Municipal Bond Fund
MFS West Virginia Municipal Bond Fund
MFS VARIABLE INSURANCE TRUST, a Massachusetts business trust, on behalf of
each of:
MFS Capital Opportunities Series
MFS Emerging Growth Series
MFS Global Equity Series
MFS High Income Series
MFS Investors Growth Stock Series
MFS Investors Trust Series
MFS Mid Cap Growth Series
MFS Money Market Series
3
MFS New Discovery Series
MFS Research Bond Series
MFS Research International Series
MFS Research Series
MFS Strategic Income Series
MFS Total Return Series
MFS Utilities Series
MFS Value Series
MFS INSTITUTIONAL TRUST, a Massachusetts business trust, on behalf of each of:
MFS Institutional International Equity Fund
MFS Institutional International Research Equity Fund
MFS Institutional Large Cap Growth Fund
MFS Institutional Large Cap Value Fund
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