<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
JANUARY 28, 1998
1940 ACT FILE NO. 811-5822
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-2
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No. 9 |X|
MFS CHARTER INCOME TRUST
(Exact Name of Registrant as Specified in Charter)
500 Boylston Street, Boston, Massachusetts 02116
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: 617-954-5000
Stephen E. Cavan
Secretary and Clerk
MFS Charter Income Trust
c/o Massachusetts Financial Services Company
500 Boylston Street
Boston, Massachusetts 02116
(Name and Address of Agent for Service)
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits:
1. Exhibits:
(a)(1) -- Amended and Restated Declaration of
Trust, dated June 13, 1989; filed
herewith.
(b)(1) -- Amended and Restated By-Laws, dated
December 14, 1994 (previously
filed as Exhibit (2)(b) to Amendment
No. 8 to the Registration Statement
on Form N-2 filed with the SEC on
March 30, 1995 ("Amendment No. 8");
incorporated herein by reference.
(c) -- Inapplicable.
(d) -- Specimen certificate for Shares of
Beneficial Interest, without par
value; filed herewith.
(e) -- The section "Dividend Reinvestment
and Cash Purchase Plan" on page 3
of the Registrant's Annual Report
to its Shareholders, for its fiscal
year ended November 30, 1997;
incorporated herein by reference.
(f) -- Inapplicable.
(g)(1) -- Investment Advisory Agreement, dated
July 19, 1989; filed herewith.
(g)(2) Administrative Services Agreement,
dated March 1, 1997, between
Massachusetts Financial Services
Company and the Registrant; filed
herewith.
(h) -- Omitted pursuant to General
Instruction G.3. to Form N-2.
(i) -- Retirement Plan for Non-Interested
Person Trustees, dated January 1,
1991; filed herewith.
(j)(1) -- Custodian Agreement dated July 24,
1989; filed herewith.
- 2 -
<PAGE>
(j)(2) -- Amendment to Custodian Agreement,
dated September 11, 1991; filed
herewith.
(j)(3) -- Amendment to Custodian Agreement,
dated October 1, 1989; filed
herewith.
(k)(1) -- Registrar, Transfer Agency and
Service Agreement between Registrant
and MFS Service Center, Inc.,
dated August 15, 1994 (previously
filed as Exhibit (k)(2) with
Amendment No. 8); incorporated
herein by reference.
(k)(2) -- Loan Agreement by and among the
Banks named therein, the MFS
Funds named therein, and The First
National Bank of Boston, dated as
of February 21, 1995 (previously
filed as Exhibit (k)(3) with
Amendment No. 8); incorporated
herein by reference.
(l) -- Omitted pursuant to General
Instruction G.3 to Form N-2.
(m) -- Inapplicable.
(n) -- Omitted pursuant to General
Instruction G.3 to Form N-2.
(o) -- Omitted pursuant to General
Instructions G.3 to Form N-2.
(p) -- Form of Purchase Agreement; filed
herewith.
(q) -- Inapplicable.
(r) -- Inapplicable.
- 3 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this Amendment to its Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Boston and Commonwealth of Massachusetts on the 27th day of January, 1998.
MFS CHARTER INCOME TRUST
By: JAMES R. BORDEWICK, JR.
Name: James R. Bordewick, Jr.
Title: Assistant Secretary
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description of Exhibit
(a)(1) Amended and Restated Declaration of Trust, dated
June 13, 1989.
(d) Specimen certificate for Shares of Beneficial
Interest, without par value.
(g)(1) Investment Advisory Agreement, dated July 19, 1989.
(g)(2) Administrative Services Agreement, dated March 1,
1997, between Massachusetts Financial Services Company and
the Registrant.
(i) Retirement Plan for Non-Interested Person Trustees,
dated January 1, 1991.
(j)(1) Custodian Agreement dated, July 24, 1989.
(j)(2) Amendment to Custodian Agreement, dated September
11, 1991.
(j)(3) Amendment to Custodian Agreement, dated October 1, 1989.
(p) Form of Purchase Agreement.
<PAGE>
EXHIBIT NO. 99.(a)(1)
MFS CHARTER INCOME TRUST
----------------
AMENDED AND RESTATED
DECLARATION OF TRUST
----------------
Dated June 13, 1989
<PAGE>
TABLE OF CONTENTS
ARTICLE I--Name and Definitions
Section 1.1. Name
Section 1.2. Definitions
Section 1.3. Address
ARTICLE II--Trustees
Section 2.1. Number of Trustees
Section 2.2. Term of Office of Trustees
Section 2.3. Resignation and Appointment of Trustees
Section 2.4. Vacancies
Section 2.5. Delegation of Power to Other Trustees
ARTICLE III--Powers of Trustees
Section 3.1. General
Section 3.2. Investments
Section 3.3. Legal Title
Section 3.4. Issuance and Repurchase of Securities
Section 3.5. Borrowing Money; Lending Trust
Property
Section 3.6. Delegation; Committees
Section 3.7. Collection and Payment
Section 3.8. Expenses
Section 3.9. Manner of Acting; By-Laws
Section 3.10. Miscellaneous Powers
Section 3.11. Principal Transactions
Section 3.12. Trustees and Officers as Shareholders
ARTICLE IV--Investment Adviser, Distributor and
Transfer Agent
Section 4.1. Investment Adviser
Section 4.2. Distributor
Section 4.3. Transfer Agent
Section 4.4. Parties to Contract
<PAGE>
ARTICLE V--Limitations of Liability of Share-
holders, Trustees and Others
Section 5.1. No Personal Liability of Share-
holders, Trustees, etc.
Section 5.2. Non-Liability of Trustees, etc.
Section 5.3. Mandatory Indemnification
Section 5.4. No Bond Required of Trustees
Section 5.5. No Duty of Investigation; Notice in Trust
Instruments, etc.
Section 5.6. Reliance on Experts, etc.
ARTICLE VI--Shares of Beneficial Interest
Section 6.1. Beneficial Interest
Section 6.2. Rights of Shareholders
Section 6.3. Trust Only
Section 6.4. Issuance of Shares
Section 6.5. Register of Shares
Section 6.6. Transfer of Shares
Section 6.7. Notices
Section 6.8. Voting Powers
ARTICLE VII---Determination of Net Asset Value, Net
Income and Distributions
ARTICLE VIII-Duration; Termination of Trust; Amendment;
Mergers, Etc.
Section 8.1. Duration
Section 8.2. Termination of Trust
Section 8.3. Amendment Procedure
Section 8.4. Merger, Consolidation and Sale of Assets
Section 8.5. Incorporation and Reorganization
Section 8.6. Conversion
Section 8.7. Certain Transactions
<PAGE>
ARTICLE IX--Reports to Shareholders
ARTICLE X--Miscellaneous
Section 10.1. Filing
Section 10.2. Governing Law
Section 10.3. Counterparts
Section 10.4. Reliance by Third Parties
Section 10.5. Provisions in Conflict with Law
or Regulations
SIGNATURE PAGE
<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
MFS CHARTER INCOME TRUST
Dated June 13, 1989
DECLARATION OF TRUST made June 13, 1989 by the Trustees:
WHEREAS, pursuant to a Declaration of Trust dated June 2, 1989, the
Trustees established a trust for the investment and reinvestment of funds
contributed thereto;
WHEREAS, said Declaration of Trust provides that the beneficial
interest in the trust assets be divided into transferable shares of beneficial
interest, as hereinafter provided;
WHEREAS, said Declaration provides that all money and property
contributed to the trust established hereunder shall be held and managed in
trust for the benefit of holders, from time to time of the shares of beneficial
interest issued hereunder and subject to the provisions hereof; and
WHEREAS, the Trustees desire to amend and restate said Declaration of
Trust in its entirety as hereafter provide;
NOW, THEREFORE, the undersigned Trustees hereby amend and restate the
Declaration of Trust in its entirety, as follows:
ARTICLE I
NAME AND DEFINITIONS
Section 1.1. Name. The name of the trust created hereby is the "MFS
Charter Income Trust"
Section 1.2. Definitions. Wherever they are used herein, the following
terms have the following respective meanings:
(a) "By-Laws" mean the By-laws referred to in section 3.9 hereof, as
from time to time amended.
(b) the terms "Commission," "Interested Person," and "Majority
Shareholder Vote" (the 67% or 50% requirement of the third sentence of Section
2(a)(42) of the 1940 Act, whichever may be applicable) have the meanings given
to them in the 1940 Act.
<PAGE>
(c) "Declaration" means this Declaration of Trust as amended from time
to time. Reference in this Declaration of Trust to "Declaration," "herein" and
"hereunder" shall be deemed to refer to this Declaration rather than the article
or section in which such words appear.
(d) "Distributor" means the party, other than the Trust, to the
contract described in Section 4.2 hereof.
(e) "Investment Adviser" means a party furnishing services to the Trust
pursuant to any contract described in Section 4.1 hereof.
(f) The "1940 Act" means the Investment Company Act of 1940 and the
Rules and Regulations thereunder, as amended from time to time.
(g) "Persons" means and includes individuals, corporations,
partnerships, trusts, associations, joint ventures and other entities, whether
or not legal entities, and governments and agencies and political subdivisions
thereof, whether domestic or foreign.
(h) "Shareholder" means a record owner of outstanding Shares.
(i) "Shares" means the Shares of Beneficial Interest into which the
beneficial interest in the Trust shall be divided from time to time and includes
fractions of Shares as well as whole Shares.
(j) "Transfer Agent" means the party, other than the Trust, to the
contract described in Section 4.3 hereof.
(k) The "Trust" means the entity specified in Section 1.1 above.
(l) The "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of the
Trust or the Trustees.
(m) The "Trustees" means the persons who have signed the Declaration,
so long as they shall continue in office in accordance with the terms hereof,
and all other persons who may from time to time be duly elected, qualified and
serving as Trustees in accordance with the provisions hereof, and reference
herein to a Trustee or the Trustees shall refer to such person or persons in
their capacity as trustees hereunder.
<PAGE>
Section 1.3. Address. The address of the Trust shall be:
500 Boylston Street
Boston, Massachusetts 02116
ARTICLE II
TRUSTEES
Section 2.1. Number of Trustees. The number of Trustees shall be such
number as shall be fixed from time to time by a written instrument signed by a
majority of the Trustees, provided, however, that the number of Trustees shall
in no event be less than three (3) nor more than fifteen (15). No reduction in
the number of Trustees shall have the effect of removing any Trustee from office
prior to the expiration of his term unless the Trustee is specifically removed
pursuant to Section 2.2 of this Article II at the time of the decrease.
<PAGE>
Section 2.2. Term of Office of Trustees. The Board of Trustees shall be
divided into three classes. Within the limits above specified, the number of
Trustees in each class shall be determined by resolution of the Board of
Trustees. The term of office of all of the Trustees shall expire on the date of
first annual meeting of shareholders or special meeting in lieu thereof
following the effective date of the Registration Statement relating to the
Shares under the Securities Act of 1933, as amended. The term of office of the
first class shall expire on the date of the second annual meeting of
shareholders or special meeting in lieu thereof. The term of office of the
second class shall expire on the date of the third annual meeting of
shareholders or special meeting in lieu thereof. The term of office of the third
class shall expire on the date of the fourth annual meeting of shareholders or
special meeting in lieu thereof. Upon expiration of the term of office of each
class as set forth above, the number of Trustees in such class, as determined by
the Board of Trustees, shall be elected for a term expiring on the date of the
third annual meeting of shareholders or special meeting in lieu thereof
following such expiration to succeed the Trustees whose terms of office expire.
The Trustees shall be elected at an annual meeting of the shareholders or
special meeting in lieu thereof called for that purpose, except as provided in
Section 2.3 of this Article and each Trustee elected shall hold office until his
successor shall have been elected and shall have qualified; except (a) that any
Trustee may resign his trust (without need for prior or subsequent accounting)
by an instrument in writing signed by him and delivered to the other Trustees,
which shall take effect upon such delivery or upon such later date as is
specified therein; (b) that any Trustee may be removed (provided the aggregate
number of Trustees after such removal shall not be less than the number required
by Section 2.1 hereof) with cause, at any time by written instrument, signed by
at least two-thirds of the remaining Trustees, specifying the date when such
removal shall become effective; (c) that any Trustee who requests in writing to
be retired or who has become incapacitated by illness or injury may be retired
by written instrument signed by a majority of the other Trustees, specifying the
date of his retirement; and (d) a Trustee may be removed at any meeting of
Shareholders by a vote of two-thirds of the outstanding Shares. Upon the
resignation or removal of a Trustee, or his otherwise ceasing to be a Trustee,
he shall execute and deliver such documents as the remaining Trustees shall
require for the purpose of conveying to the Trust or the remaining Trustees any
Trust property held in the name of the resigning or removed Trustee. Upon the
incapacity or death of any Trustee, his legal representative shall execute and
deliver on his behalf such documents as the remaining Trustees shall require as
provided in the preceding sentence.
<PAGE>
Section 2.3. Resignation and Appointment of Trustees. In case of the
declination, death, resignation, retirement, removal or inability of any of the
Trustees, or in case a vacancy shall, by reason of an increase in number, or for
any other reason, exist, the remaining Trustees shall fill such vacancy by
appointing such other person as they in their discretion shall see fit. Such
appointment shall be evidenced by a written instrument signed by a majority of
the Trustees in office. Any such appointment shall not become effective,
however, until the person named in the written instrument or appointment shall
have accepted in writing such appointment and agreed in writing to be bound by
the terms of the Declaration. Within twelve months of such appointment, the
Trustees shall cause notice of such appointment to be mailed to each Shareholder
at his address as recorded on the books of the Trustees. An appointment of a
Trustee may be made by the Trustees then in office and notice thereof mailed to
Shareholders as aforesaid in anticipation of a vacancy to occur by reason of
retirement, resignation or increase in number of Trustees effective at a later
date, provided that said appointment shall become effective only at or after the
effective date of said retirement, resignation or increase in number of
Trustees. The power of appointment is subject to the provisions of Section 16(a)
of the 1940 Act.
Section 2.4. Vacancies. The death, declination, resignation,
retirement, removal or incapacity of the Trustees, or any one of them, shall not
operate to annul the Trust or to revoke any existing agency created pursuant to
the terms of this Declaration. Whenever a vacancy in the number of Trustees
shall occur, until such vacancy is filled as provided in Section 2.3, the
Trustees in office, regardless of their number, shall have all the powers
granted to the Trustees and shall discharge all the duties imposed upon the
Trustees by the Declaration. A written instrument certifying the existence of
such vacancy signed by a majority of the Trustees shall be conclusive evidence
of the existence of such vacancy.
Section 2.5. Delegation of Power to Other Trustees. Any Trustee may, by
power of attorney, delegate his power for a period not exceeding six (6) months
at any one time to any other Trustee or Trustees; provided that in no case shall
less than two (2) Trustees personally exercise the powers granted to the
Trustees under the Declaration except as herein otherwise expressly provided.
ARTICLE III
POWERS OF TRUSTEES
Section 3.1. General. The Trustees shall have exclusive and absolute
control over the Trust Property and over the business of the Trust to the same
extent as if the Trustees were
<PAGE>
the sole owners of the Trust Property and business in their own right, but with
such powers of delegation as may be permitted by the Declaration. The Trustees
shall have power to conduct the business of the Trust and carry on its
operations in any and all of its branches and maintain offices both within and
without the Commonwealth of Massachusetts, in any and all states of the United
States of America, in the District of Columbia, and in any and all
commonwealths, territories, dependencies, colonies, possessions, agencies or
instrumentalities of the United States of America and of foreign governments and
to do all such other things and execute all such instruments as the Trustees
deem necessary, proper or desirable in order to promote the interests of the
Trust although such things are not herein specifically mentioned. Any
determination as to what is in the interests of the Trust made by the Trustees
in good faith shall be conclusive. In construing the provisions of the
Declaration, the presumption shall be in favor of a grant of power to the
Trustees.
The enumeration of any specific power herein shall not be construed as
limiting the aforesaid power. Such powers of the Trustees may be exercised
without order of or resort to any court.
Section 3.2. Investments. (a) The Trustees shall have the power to:
(i) conduct, operate and carry on the business of an investment
company;
(ii) subscribe for, invest in, reinvest in, purchase or otherwise
acquire, own, hold, pledge, sell, assign, transfer, exchange, distribute, lend
or otherwise deal in or dispose of United States and foreign currencies, any
form of gold and other precious metals, commodity contracts, options, contracts
for the future acquisition or delivery of securities and securities of every
nature and kind, including, without limitation, all types of bonds, debentures,
stocks, negotiable or non-negotiable instruments, obligations, evidence of
indebtedness, certificates of deposit or indebtedness, commercial paper,
repurchase agreements, bankers' acceptances, and other securities of any kind,
issued, created, guaranteed or sponsored by any and all Persons, including,
without limitation, states, territories and possessions of the United States and
the District of Columbia and any of the political subdivisions, agencies or
instrumentalities thereof, and by the United States Government, any foreign
government, political subdivisions thereof or their agencies or
instrumentalities, or by any bank or savings institution, or by any corporation
or organization organized under the laws of the United States or of any state,
territory or possession thereof, or by any corporation or organization organized
under any foreign law, or in "when issued" contracts
<PAGE>
for any such securities, or retain Trust assets in cash and from time to time
change the investments of the assets of the Trust; and to exercise any and all
rights, powers and privileges, of ownership or interest in respect of any and
all such investments of every kind and description, including, without
limitation, the right to consent and otherwise act with respect thereto, with
power to designate one or more persons, firms, associations or corporations to
exercise any of said rights, powers and privileges in respect of any of said
instruments.
(iii) to carry on any other business in connection with or incidental to any of
the foregoing powers, to do everything necessary, suitable or proper for the
accomplishment of any purpose or the attainment of any object or the furtherance
of any power hereinbefore set forth, and to do every other act or thing
incidental or appurtenant to or connected with the aforesaid purposes, objects
or powers.
(b) The Trustees shall not be limited to investing in obligations
maturing before the possible termination of the Trust, nor shall the Trustees be
limited by any law limiting the investments which may be made by fiduciaries.
Section 3.3. Legal Title. Legal title to all the Trust Property shall
be vested in the Trustees as joint tenants except that the Trustees shall have
power to cause legal title to any Trust Property to be held by or in the name of
one or more of the Trustees, or in the name of the Trust, or in the name of any
other Person as nominee, on such terms as the Trustees may determine. The right,
title and interest of the Trustees in the Trust Property shall vest
automatically in each Person who may hereafter become a Trustee. Upon the
resignation, removal or death of a Trustee he shall automatically cease to have
any right, title or interest in any of the Trust Property, and the right, title
and interest of such Trustee in the Trust property shall vest automatically in
the remaining Trustees. Such vesting and cessation of title shall be effective
whether or not conveyancing documents have been executed and delivered.
Section 3.4. Issuance and Repurchase of Securities. The Trustees shall
have the power to issue, sell, repurchase, retire, cancel, acquire, hold,
resell, reissue, dispose of, transfer, and otherwise deal in Shares, bonds,
debentures, notes or other instruments evidencing indebtedness and, to apply to
any such retirement, cancellation or acquisition of Shares, bonds, debentures,
notes or other instruments evidencing indebtedness any funds or property of the
Trust whether capital or surplus or otherwise, to the full extent now or
hereafter permitted by the laws of the Commonwealth of Massachusetts governing
business corporations.
Section 3.5. Borrowing Money; Lending Trust Property. The trustees
shall have power to borrow money or otherwise obtain
<PAGE>
credit and to secure the same by mortgaging, pledging or otherwise subjecting as
security the assets of the Trust, to endorse, guarantee, or undertake the
performance of any obligation, contract or engagement of any other Person and to
lend Trust property.
Section 3.6. Delegation; Committees. The Trustees shall have power to
delegate from time to time to such of their number or to officers, employees or
agents of the Trust the doing of such things and the execution of such
instruments either in the name of the Trust or the names of the Trustees or
otherwise as the Trustees may deem expedient.
Section 3.7. Collection and Payment. The Trustees shall have power to
collect all property due to the Trust; to pay all claims, including taxes,
against the Trust Property; to prosecute, defend, compromise or abandon any
claims relating to the Trust Property; to foreclose any security interest
securing any obligations by virtue of which any property is owed to the Trust;
and to enter into releases, agreements and other instruments.
Section 3.8. Expenses. The Trustees shall have the power to incur and
pay any expenses which in the opinion of the Trustees are necessary or
incidental to carry out any of the purposes of the Declaration, and to pay
reasonable compensation from the funds of the Trust to themselves as Trustees.
The Trustees shall fix the compensation of all officers, employees and Trustees.
Section 3.9. Manner of Acting; Bylaws. Except as otherwise provided
herein or in the By-laws, any action to be taken by the Trustees may be taken by
a majority of the Trustees present at a meeting of Trustees (a quorum being
present), including any meeting held by means of a conference telephone circuit
or similar communications equipment by means of which all persons participating
in the meeting can hear each other, or by written consents of all the Trustees.
The Trustees may adopt By-laws not inconsistent with this Declaration to provide
for the conduct of the business of the Trust and may amend or repeal such
By-laws to the extent such power is not reserved to the Shareholders.
Section 3.10. Miscellaneous Powers. The Trustees shall have the power
to: (a) employ or contract with such Persons as the Trustees may deem desirable
for the transaction of the business of the Trust; (b) enter into joint ventures,
partnerships and other combinations or associations; (c) remove Trustees or fill
vacancies in or add to their number, elect and remove such officers and appoint
and terminate such agents or employees as they consider appropriate, and appoint
from their own number, and terminate, any one or more committees which may
exercise some or all of the power and
<PAGE>
authority of the Trustees as the Trustees may determine; (d) purchase, and pay
for out of Trust Property, insurance policies insuring the Shareholders,
Trustees, Officers, employees, agents, investment advisers, distributors,
selected dealers or independent contractors of the Trust against all claims
arising by reason of holding any such position or by reason of any action taken
or omitted by any such Person in such capacity whether or not constituting
negligence, or whether or not the Trust would have the power to indemnify such
Person against such liability; (e) establish pension, profit sharing, share
purchase and other retirement, incentive and benefit plans for any Trustees,
officers, employees and agents of the Trust; (f) to the extent permitted by law,
indemnify any person with whom the Trust has dealings, including the Investment
Adviser, Distributor, Transfer Agent and selected dealers to such extent as the
Trustees shall determine; (g) guarantee indebtedness or contractual obligations
of others; (h) determine and change the fiscal year of the Trust and the method
by which its accounts shall be kept; and (i) adopt a seal for the Trust but the
absence of such seal shall not impair the validity of any instrument executed on
behalf of the Trust.
Section 3.11. Principal Transactions. Except in transactions permitted
by the 1940 Act, or any order of exemption issued by the Commission, the
Trustees shall not, on behalf of the Trust, buy any securities (other than
shares) from or sell any securities (other than Shares) to, or lend any assets
of the Trust to, any Trustee or officer of the Trust or any firm of which any
such Trustee or officer is a member of the Trust or any firm of which any such
Trustee or officer is a member of the Trust or any firm of which any such
Trustee or officer is a member acting as principal, or have any such dealings
with the Investment Adviser, Distributor or Transfer Agent or with any
Interested Person of such Person; but the Trust may employ any such Person, or
firm or company in which such Person is an Interested Person, as broker, legal
counsel, registrar, transfer agent, dividend disbursing agent or custodian upon
customary terms.
Section 3.12. Trustees and Officers as Shareholders. No officer,
Trustee or Member of the Advisory Board of the Trust, and no member, partner,
officer, director or trustee of the Investment Adviser or of the Distributor,
and no Investment Adviser or Distributor of the Trust, shall take a short
position in the securities issued by the Trust.
ARTICLE IV
INVESTMENT ADVISER, DISTRIBUTOR AND TRANSFER AGENT
Section 4.1. Investment Adviser. Subject to a Majority Shareholder
Vote, the Trustees may in their discretion from time to time enter into one or
more investment advisory or management contracts whereby a party to such
contract shall
<PAGE>
undertake to furnish the Trust such management, investment advisory, statistical
and research facilities and services, promotional activities, and such other
facilities and services, if any, as the Trustees shall from time to time
consider desirable and all upon such terms and conditions as the Trustees may in
their discretion determine. Notwithstanding any provisions of the Declaration,
the Trustees may delegate to the Investment Adviser authority (subject to such
general or specific instructions as the Trustees may from time to time adopt) to
effect purchases, sales, loans or exchanges of assets of the Trust on behalf of
the Trustees or may authorize any officer, employee or Trustee to effect such
purchases, sales, loans or exchanges pursuant to recommendations of the
Investment Adviser (and all without further action by the Trustees). Any such
purchases, sales, loans and exchanges shall be deemed to have been authorized by
all of the Trustees.
Section 4.2. Distributor. The Trustees may in their discretion from
time to time enter into a contract providing for the sale of Shares whereby the
Trust may either agree to sell the Shares to the other party to the contract or
appoint such other party its sales agent for such Shares. In either case, the
contract shall be on such terms and conditions as the Trustees may in their
discretion determine not inconsistent with the provisions of this Article IV or
the By-laws; and such contract may also provide for the sale of Shares by such
other party as principal or as agent of the Trust and may provide that such
other party may enter into selected dealer agreements with registered securities
dealers to further the purpose of the distribution of the Shares.
Section 4.3. Transfer Agent. The Trustees may in their discretion from
time to time enter into a transfer agency and shareholder service contract or
contracts whereby the other party to such contract shall undertake to furnish
transfer agency and/or shareholder services to the Trust. The contract or
contracts shall have such terms and conditions as the Trustees may in their
discretion determine not inconsistent with the Declaration or the By-laws. Such
services may be provided by one or more Persons.
Section 4.4. Parties to Contract. Any contract of the character
described in Section 4.1, 4.2 or 4.3 of this Article IV or any Custodian
contract, as described in the By-laws, may be entered into with any Person,
although one or more of the Trustees or officers of the Trust may be an officer,
partner, director, trustee, shareholder, or member of such other party to the
contract, and no such contract shall be invalidated or rendered voidable by
reason of the existence of any such relationship; nor shall any Person holding
such relationship be liable merely by reason of such relationship for any loss
or expense to the Trust under or by reason of said contract or accountable for
any profit realized directly or indirectly
<PAGE>
therefrom, provided that the contract when entered into was not inconsistent
with the provisions of this Article IV or the By-laws. The same Person may be
the other party to contracts entered into pursuant to Section 4.1, 4.2 and 4.3
above or Custodian contracts, and any individual may be financially interested
or otherwise affiliated with Persons who are parties to any or all of the
contract mentioned in this Section 4.4.
ARTICLE V
LIMITATIONS OF LIABILITY OF SHAREHOLDERS,
TRUSTEES AND OTHERS
Section 5.1. No Personal Liability of Shareholders, Trustees, etc.
Subject to Section 5.3, no Shareholder shall be subject to any personal
liability whatsoever to any Person in connection with Trust Property or the
acts, obligations or affairs of the Trust. No Trustee, officer, employee or
agent of the Trust shall be subject to any personal liability whatsoever to any
Person, other than the Trust or its Shareholders, in connection with Trust
Property or the affairs of the Trust, save only that arising from bad faith,
willful misfeasance, gross negligence or reckless disregard for his duty to such
Person; and all such Persons shall look solely to the Trust Property for
satisfaction of claims of any nature arising in connection with the affairs of
the Trust. If any Shareholder, Trustee, officer, employee, or agent, as such, of
the Trust, is made a party to any suit or proceeding to enforce any such
liability, he shall not, on account thereof, be held to any personal liability.
The Trust shall indemnify and hold each Shareholder harmless from and against
all claims and liabilities to which such Shareholder may become subject by
reason of his being or having been a Shareholder, and shall reimburse such
Shareholder for all legal and other expenses reasonably incurred by him in
connection with any such claim or liability. The rights accruing to a
Shareholder under this Section 5.1 shall not exclude any other right to which
such Shareholder may be lawfully entitled, nor shall anything herein contained
restrict the right of the Trust to indemnify or reimburse a Shareholder in any
appropriate situation even though not specifically provided herein.
Section 5.2. Non-Liability of Trustees, etc. Subject to Section 5.3, no
Trustee, officer, employee or agent of the Trust shall be liable to the Trust,
its Shareholders, or to any Shareholder, Trustee, officer, employee, or agent
thereof for any action or failure to act (including without limitation the
failure to compel in any way any former or acting Trustee to redress any breach
of trust) except of his own bad faith, willful misfeasance, gross negligence or
reckless disregard of his duties.
Section 5.3. Mandatory Indemnification. (a) Subject to the
exceptions and limitations contained in paragraph (b) below:
<PAGE>
(i) every person who is or has been a Trustee or officer of the Trust
shall be indemnified by the Trust against all liability and against all expenses
reasonably incurred or paid by him in connection with any claim, action, suit or
proceeding in which he becomes involved as a party or otherwise by virtue of his
being or having been a Trustee or officer and against amounts paid or incurred
by him in the settlement thereof;
(ii) the words "claim," "action," "suit," or "proceeding" shall apply
to all claims, actions, suits or proceedings (civil, criminal, or other,
including appeals), actual or threatened; and the words "liability" and
"expenses" shall include, without limitation, attorneys' fees, costs, judgments,
amounts paid in settlement, fines penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Trustee or
officer:
(i) against any liability to the Trust or the Shareholders by reason
of a final adjudication by the court or other body before which the proceeding
was brought that he engaged in willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of his office;
(ii) with respect to any matter as to which he shall have been finally
adjudicated not to have acted in good faith in the reasonable belief that his
action was in the best interest of the Trust;
(iii) in the event of a settlement involving a payment by a Trustee or
officer or other disposition not involving a final adjudication as provided in
paragraph (b)(i) or (b)(ii) resulting in a payment by a Trustee or officer,
unless there has been either a determination that such Trustee or officer did
not engage in willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office by the court or
other body approving the settlement or other disposition or a reasonable
determination, based upon a review of readily available facts (as opposed to a
full trial-type inquiry) that he did not engage in such conduct:
(A) by vote of a majority of the Disinterested Trustees acting
on the matter (provided that a majority of the Disinterested Trustees
then in office act on the matter); or
(B) by written opinion of independent legal counsel.
<PAGE>
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall not
affect any other rights to which any Trustee or officer may now or hereafter be
entitled, shall continue as to a Person who has ceased to be such Trustee or
officer and shall inure to the benefit of the heirs, executors and
administrators of such Person. Nothing contained herein shall affect any rights
to indemnification to which personnel other than Trustees and officers may be
entitled by contract or otherwise under law.
(d) Expenses of preparation and presentation of a defense to any claim,
action, suit, or proceeding of the character described in paragraph (a) of this
Section 5.3 shall be advanced by the Trust prior to final disposition thereof
upon receipt of an undertaking by or on behalf of the recipient to repay such
amount if it is ultimately determined that he is not entitled to indemnification
under this Section 5.3, provided that either
(i) such undertaking is secured by a surety bond or some other
appropriate security or the Trust shall be insured against losses arising out of
any such advances; or
(ii) a majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees then in office act on
the matter) or an independent legal counsel in a written opinion, shall
determine, based upon a review of readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the recipient
ultimately will be found entitled to indemnification.
As used in this Section 5.3, a "Disinterested Trustee" is one (i) who
is not an "Interested Person" of the Trust (including anyone who has been
exempted from being an "interested Person" by any rule, regulation or order of
the Commission, and (ii) against whom none of such actions, suits or other
proceedings or another action, suit or other proceeding on the same or similar
grounds is then or had been pending.
Section 5.4. No Bond Required of Trustees. No Trustee shall be
obligated to give any bond or other security for the performance of any of his
duties hereunder.
Section 5.5. No Duty of Investigation; Notice in Trust Instruments,
etc. No purchaser, lender, transfer agent or other Person dealing with the
Trustees or any officer, employee or agent of the Trust shall be bound to make
any inquiry concerning the validity of any transaction purporting to be made by
the Trustees or by said officer, employee or agent or be liable for the
application of money or property paid, loaned, or delivered to or on the order
of the Trustees or of said officer, employee or agent. Every obligation,
contract,
<PAGE>
instrument, certificate, Share, other security of the Trust or undertaking, and
every other act or thing whatsoever executed in connection with the Trust shall
be conclusively presumed to have been executed or done by the executors thereof
only in their capacity as Trustees under the Declaration or in their capacity as
officers, employees or agents of the Trust. Every written obligation, contract,
instrument, certificate, Share, other security of the Trust or undertaking made
or issued by the Trustees shall recite that the same is executed or made by them
not individually, but as Trustees under the Declaration, and that the
obligations of any such instrument are not binding upon any of the Trustees or
Shareholders, individually, but bind only the trust estate, and may contain any
further recital which they or he may deem appropriate, but the omission of such
recital shall not operate to bind any of the Trustees or Shareholders
individually. The Trustees shall at all times maintain insurance for the
protection of the Trust Property, its Shareholders, Trustees, officers,
employees and agents in such amount as the Trustees shall deem adequate to cover
possible tort liability, and such other insurance as the Trustees in their sole
judgment shall deem advisable.
Section 5.6. Reliance on Experts, etc. Each Trustee and officer or
employee of the Trust shall, in the performance of his duties, be fully and
completely justified and protected with regard to any act or any failure to act
resulting from reliance in good faith upon the books of account or other records
of the Trust, upon an opinion of counsel, or upon reports made to the Trust by
any of its officers or employees or by the Investment Adviser, the Distributor,
Transfer Agent, selected dealers, accountants, appraisers or other experts or
consultants selected with reasonable care by the Trustees, officers or employees
of the Trust, regardless of whether such counsel or expert may also be a
Trustee.
ARTICLE VI
SHARES OF BENEFICIAL INTEREST
Section 6.1. Beneficial Interest. The interest of the beneficiaries
hereunder shall be divided into transferable shares of beneficial interest, all
of one class, without par value. The number of shares of beneficial interest
authorized hereunder is unlimited. All Shares issued hereunder including,
without limitation, Shares issued in connection with a dividend in Shares or a
split of Shares, shall be fully paid and non-assessable.
Section 6.2. Rights of Shareholders. The ownership of the Trust
Property of every description and the right to conduct any business hereinbefore
described are vested exclusively in the Trustees, and the Shareholders shall
have no interest therein other than the beneficial interest conferred by their
<PAGE>
Shares, and they shall have no right to call for any partition or division of
any property, profits, rights or interests of the Trust nor can they be called
upon to assume any losses of the Trust or suffer any assessment of any kind by
virtue of their ownership of Shares. The Shares shall be personal property
giving only the rights in the Declaration specifically set forth. The Shares
shall not entitle the holder to preference, preemptive, appraisal, conversion or
exchange rights.
Section 6.3. Trust Only. It is the intention of the Trustees to create
only the relationship of Trustee and beneficiary between the Trustees and each
Shareholder from time to time. It is not the intention of the Trustees to create
a general partnership, limited partnership, joint stock association,
corporation, bailment or any form of legal relationship other than a trust.
Nothing in the Declaration shall be construed to make the Shareholders, either
by themselves or with the Trustees, partners and members of a joint stock
association.
Section 6.4 Issuance of Shares. The Trustees, in their discretion may,
from time to time without vote of the Shareholders, issue Shares, in addition to
the then issued and outstanding Shares and Shares held in the treasury, to such
party or parties and for such amount and type of consideration, including cash
or property, at such time or times, and on such terms as the Trustees may deem
best, and may in such manner acquire other assets (including the acquisition of
assets subject to, and in connection with the assumption of liabilities) and
businesses. In connection with any issuance of Shares, the Trustees may issue
fractional Shares. The Trustees may from time to time divide or combine the
Shares into a greater or lesser number without thereby changing the
proportionate beneficial interests in the Trust. Contributions to the Trust may
be accepted for whole Shares and/or 1 1,000 this of a Share or integral
multiples thereof.
Section 6.5. Register of Shares. A register shall be kept at the
principal office of the Trust or at an office of the Transfer Agent which shall
contain the names and addresses of the Shareholders and the number of Shares
held by them respectively and a record of all transfers thereof. Such register
shall be conclusive as to who are the holders of the Shares and who shall be
entitled to receive dividends or distributions or otherwise to exercise or enjoy
the rights of Shareholders. No Shareholder shall be entitled to receive payment
of any dividend or distribution, no to have notice given to him as herein or in
the By-laws provided, until he has given his address to the Transfer Agent or
such other officer or agent of the Trustees as shall keep the said register for
entry thereon. The Trustees, in their discretion, may authorize the issuance of
Share certificates and promulgate appropriate rules and regulations as to their
use.
<PAGE>
Section 6.6. Transfer of Shares. Shares shall be transferable on the
records of the Trust only by the record holder thereof or by his agent thereunto
duly authorized in writing, upon delivery to the Trustees or the Transfer Agent
of a duly executed instrument of transfer, together with any certificate or
certificates (if issued) for such Shares and such evidence of the genuiness of
each such execution and authorization and of other matters as may reasonably be
required. Upon such delivery the transfer shall be recorded on the register of
the Trust. Until such record is made, the Shareholder of record shall be deemed
to be the holder of such Shares for all purposes hereunder and neither the
Trustees nor any Transfer Agent or register nor any officer, employee or agent
of the Trust shall be affected by any notice of the proposed transfer.
Any person becoming entitled to any Shares in consequence of the death,
bankruptcy, or incompetence of any Shareholder, or otherwise by operation of
law, shall be recorded on the register of Shares as the holder of such Shares
upon production of the proper evidence thereof to the Trustees or the Transfer
of the proper evidence thereof to the Trustees or the Transfer Agent; but until
such record is made, the Shareholder of record shall be deemed to be the holder
of such Shares for all purposes hereunder and neither the Trustees nor any
Transfer Agent or registrar nor any officer or agent of the Trust shall be
affected by any notice of such death, bankruptcy or incompetence, or other
operation of law.
Section 6.7. Notices. Any and all notices to which any Shareholder may
be entitled and any and all communications shall be deemed duly served or given
if mailed, postage prepaid, addressed to any Shareholder of record at his last
known address as recorded on the register of the Trust.
Section 6.8. Voting Powers. The Shareholders shall have power to vote
only (i) for the election of Trustees or for their removal as provided in
Section 2.2 hereof, (ii) with respect to any investment advisory or management
contract as provided in Section 4.1, (iii) with respect to termination of the
Trust as provided in Section 8.2, (iv) with respects to any amendment of the
Declaration to the extent and as provided in Section 8.3, (v) with respect to
any merger, consolidation, conversion or sale of assets as provided in Sections
8.4, 8.5 and 8.7, (vi) with respect to incorporation of the Trust to the extent
and as provided in Section 8.5, (vii) to the same extent as the stockholders of
a Massachusetts business corporation as to whether or not a court action,
proceeding or claim should or should not be brought or maintained derivatively
or as a class action on behalf of the Trust or the Shareholders, and (viii) with
respect to such additional matters relating to the Trust as may be required by
the Declaration, the By-laws or any registration of the Trust with the
Commission (or any successor agency) or any state, or as the Trustees may
consider necessary or desirable. Each whole Share shall be entitled to one vote
<PAGE>
as to any matter on which it is entitled to vote and each fractional Share shall
be entitled to a proportionate fractional vote, except that Shares held in the
treasury of the Trust shall not be voted. There shall be no cumulative voting in
the election of Trustees. Until Shares are issued, the Trustees may exercise all
rights of Shareholders and may take any action required by law, the Declaration
or the By-laws to be taken by Shareholders. The By-laws may include further
provisions for Shareholders' votes and meetings and related matters.
ARTICLE VII
DETERMINATION OF NET ASSET VALUE,
NET INCOME AND DISTRIBUTIONS
The Trustees, in their absolute discretion, may prescribe and shall set
forth in the By-laws or in a duly adopted vote of the Trustees such bases and
times for determining the per Share net asset value of the Shares or net income,
or the declaration and payment of dividends and distributions, as they may deem
necessary or desirable.
ARTICLE VIII
DURATION; TERMINATION OF TRUST;
AMENDMENT; MERGERS, ETC.
Section 8.1. Duration. The Trust shall continue without limitation
of time but subject to the provisions of this Article VIII.
Section 8.2. Termination of Trust. (a) The Trust may be terminated (i)
by the affirmative vote of the holders of not less than two-thirds of the Shares
outstanding and entitled to vote at any meeting of Shareholders, or (ii) by an
instrument in writing, without a meeting, signed by a majority of the Trustees
and consented to by the holders of not less than two-thirds of such Shares. Upon
the termination of the Trust:
(i) The Trust shall carry on no business except for the purpose of
winding up its affairs;
(ii) The Trustees shall proceed to wind up the affairs of the Trust and
all of the powers of the Trustees under this Declaration shall continue until
the affairs of the Trust shall have been wound up, including the power to
fulfill or discharge the contracts of the Trust, collect its assets, sell,
convey, assign, exchange, transfer or otherwise dispose of all or any part of
the remaining Trust Property to one or more persons at public or private sale
for consideration which may consist in whole or in part of cash, securities or
other property of any kind, discharge or pay its liabilities, and to do all
other acts appropriate to liquidate its business; provided, that any
<PAGE>
sale, conveyance, assignment, exchange, transfer or other disposition of all or
substantially all of the Trust Property shall require Shareholder approval in
accordance with Section 8.4 hereof; and
(iii) After paying or adequately providing for the payment of all liabilities,
and upon receipt of such releases, indemnities and refunding agreements as they
deem necessary for their protection, the Trustees may distribute the remaining
Trust Property, in cash or in kind or partly in cash and partly in kind, among
the Shareholders according to their respective rights.
(b) After termination of the Trust and distribution of the Shareholders as
herein provided, a majority of the Trustees shall execute and lodge among the
records of the Trust an instrument in writing setting forth the fact of such
termination, and the Trustees shall thereupon be discharged from all further
liabilities and duties hereunder, and the rights and interests of all
Shareholders shall thereupon cease.
Section 8.3. Amendment Procedure. (a) Except as provided in paragraph
(c) of this Section 8.3 this Declaration may be amended by a Majority
Shareholder Vote or by an instrument in writing, without a meeting, signed by a
majority of the Trustees and consented to by the holders of not less than a
majority of the Shares outstanding and entitled to vote. The Trustees may also
amend this Declaration without the vote or consent of Shareholders to change the
name of the Trust, to supply any omission, to cure, correct or supplement any
ambiguous, defective or inconsistent provision hereof, or if they deem it
necessary to conform this Declaration to the requirements of applicable federal
or state laws or regulations or the requirements of the regulated investment
company provisions of the Internal Revenue Code, but the Trustees shall not be
liable for failing so to do.
(b) No amendment may be made under this Section 8.3 which would change
any rights with respect to any Shares by reducing the amount payable thereon
upon liquidation of the Trust or by diminishing or eliminating any voting rights
pertaining thereto, except with the vote or consent of the holders of two-thirds
of the Shares outstanding and entitled to vote. Nothing contained in this
Declaration shall permit the amendment of this Declaration to impair the
exemption from personal liability of the Shareholders, Trustees, officers,
employees and agents of the Trust or to permit assessment upon Shareholders.
<PAGE>
(c) No amendment may be made under this Section 8.3 which shall amend,
alter, change or repeal any of the provisions of Section 2.2, 8.3, 8.4, 8.6 and
8.7 unless the amendment effecting such amendment, alteration, change or repeal
shall receive the affirmative vote or consent of sixty-six and two-thirds
percent (66 2/3%) of the Shares outstanding and entitled to vote. Such
affirmative vote or consent shall be in addition to the vote or consent of the
holders of Shares otherwise required by law or by the terms of any class or
series of preferred stock, whether now or hereafter authorized, or any agreement
between the Trust and any national securities exchange.
(d) A certificate signed by a majority of the Trustees setting forth an
amendment and reciting that it was duly adopted by the Shareholders or by the
Trustees as aforesaid or a copy of the Declaration, as amended, and executed by
a majority of the Trustees, shall be conclusive evidence of such amendment when
lodged among the records of the Trust.
Notwithstanding any other provision hereof, until such time as a Registration
Statement under the Securities Act of 1933, as amended, covering the first
public offering of securities of the Trust shall have become effective, this
Declaration may be terminated or amended in any respect by the affirmative vote
of a majority of the Trustees or by an instrument signed by a majority of the
Trustees.
Section 8.4. Merger, Consolidation and Sale of Assets. The Trust may merge or
consolidate with any other corporation, association, trust or other organization
or may sell, lease or exchange all or substantially all of the Trust Property,
including its good will, upon such terms and conditions and for such
consideration when and as authorized at any meeting of Shareholders called for
the purpose by the affirmative vote of the holders of not less than two-thirds
of the Shares outstanding and entitled to vote, or by an instrument or
instruments in writing without a meeting, consented to by the holders of not
less than two-thirds of such Shares, provided, however, that if such merger,
consolidation, sale, lease or exchange is recommended by the Trustees, the vote
or written consent of the holders of a majority of Shares outstanding and
entitled to vote, shall be sufficient authorization; and any such merger,
consolidation, sale, lease or exchange shall be deemed for all purposes to have
been accomplished under and pursuant to the statutes of the Commonwealth of
Massachusetts. Nothing contained herein shall be construed as requiring approval
of shareholder for any sale of assets in the ordinary course of business of the
Trust.
<PAGE>
Section 8.5. Incorporation and Reorganization. With the approval of the holders
of a majority of the Shares outstanding and entitled to vote, the Trustees may
cause to be organized or assist in organizing a corporation or corporations
under the laws of any jurisdiction, or any other trust, partnership, association
or other organization to take over all of the Trust Property or to carry on any
business in which the Trust shall directly or indirectly have any interest, and
to sell, convey and transfer the Trust Property to any such corporation, trust,
partnership, association or organization in exchange for the shares or
securities thereof or otherwise and to lend money to, subscribe for the Shares
or securities of, and enter into any contracts with any such corporation, trust,
partnership, association or organization in which the Trust holds or is about to
acquire shares or any other interest. Subject to Section 8.4 hereof, the
Trustees may also cause a merger or consolidation between the Trust or any
successor thereto and any such corporation, trust, partnership, association or
other organization if and to the extent permitted by law, as provided under the
law then in effect. Nothing contained herein shall be construed as requiring
approval of Shareholders for the Trustees to organize or assist in organizing
one or more corporations, trusts, partnerships, associations or other
organizations and selling, conveying or transferring a portion of the Trust
Property to such organizations or entities.
Section 8.6. Conversion. (a) Notwithstanding any other provision of this
Declaration, at any time prior to and including December 31, 1994, the
conversion of the Trust from a "closed-end company" to an "open-end company" as
those terms are defined in Sections 5(a)(2) and 5(a)(1), respectively, of the
1940 Act as in effect on December 1, 1986, shall require the affirmative vote or
consent of the holders of sixty-six and two-thirds percent (66 2/3%) of the
Shares outstanding and entitled to vote. Such affirmative vote or consent shall
be in addition to the vote or consent of the holders of the Shares otherwise
required by law or by the terms of any class or series of preferred stock,
whether now or hereafter authorized, or any agreement between the Trust and any
national securities exchange.
(b) Notwithstanding any other provision of this Declaration, at any time after
December 31, 1994, the conversion of the Trust from a "closed-end company" to an
"open-end company," as those terms are defined in Sections 5(a)(2) and 5(a)(1),
respectively, of the 1940 Act as in effect on December 1, 1986, shall require a
Majority Shareholder Vote. Such affirmative vote or consent shall be in addition
to the vote or consent of
<PAGE>
the holders of the Shares otherwise required by law or by the terms of any class
or series of preferred stock, whether now or hereafter authorized, or any
agreement between the Trust and any national securities exchange.
Section 8.7. Certain Transactions. (a) Notwithstanding any other provision of
this Declaration and subject to the exceptions provided in paragraph (d) of this
Section, the types of transactions described in paragraph (c) of this Section
shall require the affirmative vote or consent of the holders of sixty-six and
two-thirds (66 2/3%) of the Shares outstanding and entitled to vote, when a
Principal Shareholder (as defined in paragraph (b) of this Section) is party to
the transaction. Such affirmative vote or consent shall be in addition to the
vote or consent of the holders of Shares otherwise required by law or by the
terms of any class or series of preferred stock, whether now or hereafter
authorized, or any agreement between the Trust and any national securities
exchange.
(b) The term "Principal Shareholder" shall mean any corporation, person or other
entity which is the beneficial owner, directly or indirectly, of more than five
percent (5%) of the outstanding Shares and shall include any affiliate or
associate, as such terms are defined in clause (ii) below, of a Principal
Shareholder. For the purposes of this Section, in addition to the Shares which a
corporation, person or other entity beneficially owns directly, (a) any
corporation, person or other entity shall be deemed to be the beneficial owner
of any Shares (i) which it has the right to acquire pursuant to any agreement or
upon exercise of conversion rights or warrants, or otherwise (but excluding
share options granted by the Trust) or (ii) which are beneficially owned,
directly or indirectly (including Shares deemed owned through application of
clause (i) above), by any other corporation, person or entity with which its
"affiliate" or "associate" (as defined below) has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of
Shares, or which is its "affiliate" or "associate" as those terms are defined in
Rule 12b-2 of the General Rules and Regulations under the Securities Exchange
Act of 1934 as in effect on December 1, 1986, and (b) the outstanding Shares
shall include Shares deemed owned through application of clauses (i) and (ii)
above but shall not include any other Shares which may be issuable pursuant to
any agreement, or upon exercise of conversion rights or warrants, or otherwise.
(c) This Section shall apply to the following transactions:
<PAGE>
(i) The merger or consolidation of the Trust or any subsidiary
of the Trust with or into any Principal Shareholder.
(ii) The issuance of any securities of the Trust to any principal
Shareholder for cash.
(iii) The sale, lease or exchange of all or any substantial
part of the assets of the Trust to any Principal Shareholder
(except assets having an aggregate fair market value of less
than $1,000,000, aggregating for the purpose of such
computation all assets sold, leased or exchanged in any series
of similar transactions within a twelve-month period or assets
sold in the ordinary course of business).
(iv) The sale, lease or exchange to the Trust or any
subsidiary thereof, in exchange for securities of the Trust of
any assets of any Principal Shareholder (except assets having
an aggregate fair market value of less than $1,000,000,
aggregating for the purposes of such computation all assets
sold, leased or exchanged in any series of similar
transactions within a twelve-month period).
(d) The provisions of this Section shall not be applicable to (i)
any of the transactions described in paragraph (c) of this Section if the Board
of Trustees of the Trust shall by resolution have approved a memorandum of
understanding with such Principal Shareholder with respect to and substantially
<PAGE>
consistent with such transaction, or (ii) any such transaction with any
corporation of which a majority of the outstanding shares of all classes of
stock normally entitled to vote in elections of directors is owned of record or
beneficially by the Trust and its subsidiaries.
(e) The Board of Trustees shall have the power and duty to determine
for the purposes of this Section on the basis of information known to the Trust,
whether (i) a corporation, person or entity beneficially owns more than five
percent (5%) of the outstanding Shares, (ii) a corporation, person or entity is
an "affiliate" or "associate" (as defined above) of another, (iii) the assets
being acquired or leased to or by the Trust or any subsidiary thereof,
constitute a substantial part of the assets of the Trust and have an aggregate
fair market value of less than $1,000,000 and (iv) the memorandum of
understanding referred to in paragraph (d) hereof is substantially consistent
with the transaction covered thereby. Any such determination shall be conclusive
and binding for all purposes of this Section.
ARTICLE IX
REPORTS TO SHAREHOLDERS
The Trustees shall at least semi-annually submit to the Shareholders a
written financial report of the transactions of the Trust, including financial
statements which shall at least annually be certified by independent public
accountants.
ARTICLE X
MISCELLANEOUS
Section 10.1. Filing. This Declaration and any amendment hereto shall
be filed in the office of the Secretary of the Commonwealth of Massachusetts and
in such other places as may be required under the laws of Massachusetts and may
also be filed or recorded in such other places as the Trustees deem appropriate.
Each amendment so filed shall be accompanied by a certificate signed and
acknowledged by a Trustee stating that such action was duly taken in a manner
provided herein, and unless such amendment or such certificate sets forth some
later time for the effectiveness of such amendment, such amendment shall be
effective upon its filing. A restated Declaration, integrating into a single
instrument all of the provisions of the Declaration which are then in effect and
operative, may be executed from time to time by a majority of the Trustees and
shall, upon filing with the Secretary of the Commonwealth of Massachusetts, be
conclusive evidence of all amendments contained therein and may thereafter be
referred to in lieu of the original Declaration and the various amendment
thereto.
<PAGE>
Section 10.2. Governing Law. This Declaration is executed by the
trustees and delivered in the Commonwealth of Massachusetts and with reference
to the laws thereof, and the rights of all parties and the validity and
construction of every provision hereof shall be subject to and construed
according to the laws of said State.
Section 10.3. Counterparts. This Declaration may be simultaneously
executed in several counterparts, each of which shall be deemed to be an
original, and such counterparts, together, shall constitute one and the same
instrument, which shall be sufficiently evidenced by any such original
counterpart.
Section 10.4. Reliance by Third Parties. Any certificate executed by an
individual who, according to the records of the Trust appear to be a Trustee
hereunder, certifying to: (a) the number or identity of Trustees or
Shareholders, (b) the due authorization of the execution of any instrument or
writing, (c) the form of any vote passed at a meeting of Trustees or
Shareholders, (d) the fact that the number of Trustees or Shareholders present
at any meeting or executing any written instrument satisfies the requirements of
this Declaration, (e) the form of any By-laws adopted by or the identity of any
officers elected by the Trustees, or (f) the existence of any fact or facts
which in any manner relate to the affairs of the Trust, shall be conclusive
evidence as to the matters so certified in favor of any Person dealing with the
Trustees and their successors.
Section 10.5. Provisions in Conflict with Law or Regulations. (a) The
provisions of the Declaration are severable, and if the Trustees shall
determine, with the advice of counsel, that any of such provisions is in
conflict with the 1940 Act, the regulated investment company provisions of the
Internal Revenue Code or with other applicable laws and regulations, the
conflicting provision shall be deemed never to have constituted a part of the
Declaration; provided, however, that such determination shall not affect any of
the remaining provisions of the Declaration or render invalid or improper any
action taken or omitted prior to such determination.
(b) If any provision of the Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction or any other provision of the
Declaration in any jurisdiction.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this instrument this
13th day of June, 1989.
DANIEL M. JAFFE
Daniel M. Jaffe
as Trustee
and not individually
500 Boylston Street
Boston, Massachusetts
W. THOMAS LONDON
W. Thomas London
as Trustee
and not individually
500 Boylston Street
Boston, Massachusetts
LINDA J. HOARD
Linda J. Hoard
as Trustee
and not individually
500 Boylston Street
Boston, Massachusetts
COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, SS BOSTON, MASSACHUSETTS
June 13, 1989
Then personally appeared the above-named W. Thomas London, Daniel M. Jaffe
and Linda J. Hoard who severally acknowledged the foregoing instrument to be
their free act and deed.
Before me,
KATHLEEN M. ALVES
Notary Public
My Commission Expires: 5/30/91
<PAGE>
EXHIBIT NO. 99.(d)
TEMPORARY CERTIFICATE - Exchangeable for Definitive
Engraved Certificate When Ready for Delivery
MFS CHARTER INCOME TRUST
ORGANIZED UNDER THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS
THIS CERTIFICATE IS TRANSFERABLE IN BOSTON AND IN NEW YORK CITY
SHARES OF BENEFICIAL INTEREST SHARES OF BENEFICIAL INTEREST
WITHOUT PAR VALUE WITHOUT PAR VALUE
C U S I P 552727 10 9
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFIES THAT
S P E C I M E N
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF BENEFICIAL INTEREST OF
MFS CHARTER INCOME TRUST, transferable on the books of the Trust by the holder
hereof in person or by duly authorized attorney upon surrender of this
Certificate properly endorsed. This Certificate and the shares represented
hereby are issued and shall be subject to all of the provisions of the
Declaration of Trust and By-Laws of the Trust, each as from time to time
amended, (copies of which are on file with the Transfer Agent), to all of which
the holder by acceptance hereof assents. This Certificate is not valid until
countersigned and registered by the Transfer Agent and Registrar.
Witness the facsimile seal of the Trust and the facsimile signatures of
its duly authorized officers.
Dated: MFS CHARTER INCOME TRUST
COUNTERSIGNED AND REGISTERED: BY:
W. THOMAS LONDON A. KEITH BRODKIN
W. Thomas London A. Keith Brodkin
TREASURER PRESIDENT
<PAGE>
EXHIBIT NO. 99.(g)(1)
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT, dated this 19th day of July, 1989, by and between
MFS CHARTER 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 a closed-end investment company
registered under the Investment Company Act of 1940; and
WHEREAS, the adviser is willing to provide business management 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:
1. Duties of the Adviser. 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 funds. The Adviser shall act as
Adviser to the Trust and as such shall furnish continuously an investment
program and shall determine from time to time what securities 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 its Declaration of
Trust, dated June 13, 1989, and By-Laws, as each may be amended from time to
time (respectively the "Declaration" and "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. The Adviser shall also make
recommendations as to the manner in which voting rights, rights to consent to
corporate action and any other rights pertaining to the Trust's portfolio
securities shall be exercised. Should the Trustees at any time, however, make
any definite determination as to 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 has been revoked. 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 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 deliveries
of securities and payments of cash for the account of the Trust. In connection
with the selection
<PAGE>
of such brokers or dealers and the placing of such orders, the Adviser is
directed to seek for the Trust execution at the best available price. Subject to
this requirement of seeking the best available price, securities may be bought
from or sold to broker dealers who have furnished statistical, research and
other information or services to the Adviser.
2. Allocation of Charges and Expenses. The Adviser shall furnish 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. It is understood that the Trust will pay all of its own expenses
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 dispursing agent of the Trust; expenses of servicing shareholder
accounts; expenses of preparing, printing and mailing share 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; expenses of shareholder meetings; 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).
3. Compensation of the Adviser. For the services to be rendered and the
facilities to be provided, the Trust shall pay to the Adviser out of the assets
of the Trust an investment advisory fee computed and paid monthly in an amount
equal to the sum of [.32]% of the Trust's average daily net assets (average
daily net assets being computed for this purpose without deducting any liability
for money borrowed for investment in accordance with the Trust's investment
objective and policies) and [4.57]% of the Trust's gross income (i.e., income
other than gains from the sale of securities, gains from options and futures
transactions, premium income from options written and gains from foreign
exchange transactions) in each case on an annual basis
<PAGE>
for the Trust's then-current fiscal year. However, that portion of the Adviser's
fee which is based on income from leveraging, if any, shall be imposed only on
net income from leveraging (i.e., gross income from leveraging less expenses of
leveraging). If the Adviser shall serve for less than the whole of any period
specified in this Article 3, the compensation to the Adviser will be prorated.
4. Covenants of the Adviser. The Adviser agrees that it will not deal
with itself, or with the Trustees of the Trust or the Trust principal
underwriter, 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 the Rules, Regulations or orders thereunder,
will not take a long or short position in the shares of the Trust except as
permitted by the Declaration, and will comply with all other provisions of the
declaration and By-Laws and the then-current Prospectus of the Trust relative to
the Adviser and its directors and officers.
5. Limitation of Liability of the Adviser. The Adviser shall not be
liable for any error of judgement 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, bad faith or gross negligence in the
performance of its duties, or by reason of reckless disregard of its duties and
obligations hereunder. As used in this Section 5, the term "Adviser" shall
include directors, officers and employees of the Adviser as well as that
corporation itself.
6. Activities of the Adviser. The services of the Adviser to the Trust
are not to be deemed to be exclusive, the Adviser being free to render
investment advisory and/or other services to others. The Adviser may permit
other fund clients to use the initials "MFS" in their names. The Trust agrees
that if the Adviser shall for any reason no longer serve as the Adviser to the
Trust, the Trust will change its name so as to delete the initials "MFS". It is
understood that 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
be become similarly interested in the Trust, and that the Adviser may be or
become interested in the Trust as a shareholder or otherwise.
7. Duration, Termination and Amendments of this Agreement. This
Agreement shall become effective as of the day and year first above written and
shall govern the relations between the parties hereto thereafter, and shall
remain in force until August 1, 1990, on which date it will terminate unless its
continuance after August 1, 1990 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 specifically
called for the purpose of voting on such
<PAGE>
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.
This Agreement may be terminated 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".
This Agreement may be amended only if such amendment is approved by "vote of a
majority of the outstanding voting securities" of the Trust.
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 in, and shall be construed in a manner consistent with, in
the Investment Company Act of 1940 and the Rules and Regulations thereunder,
subject, however, to such exemptions as may be granted by the Securities and
Exchange Commission under said Act.
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, thereunder
duly authorized, all as of the day and year first above written. The undersigned
Trustee of the Trust has executed this Agreement not individually, but as
Trustee under the Declaration and the obligations of this Agreement are not
binding upon any of the Trustees or shareholders of the Trust, individually, but
bind only the trust estate.
MFS CHARTER INCOME TRUST
By ILLEGIBLE SIGNATURE
(Illegible Signature)
Chairman and Trustee
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By ILLEGIBLE SIGNATURE
(Illegible Signature)
President
<PAGE>
EXHIBIT NO. 99(g)(2)
MASTER ADMINISTRATIVE SERVICES AGREEMENT
MASTER ADMINISTRATIVE SERVICES AGREEMENT dated this 1st day of March, 1997, 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 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 Advisory Agreements recite that the Administrator will bear certain
expenses associated with the provision of investment advisory services and that
the Funds will bear their own expenses, including expenses of legal counsel to
the Funds, expenses connected with the execution, recording and settlement of
the Funds' portfolio security transactions and expenses of calculating the
Funds' net asset values;
WHEREAS, the Administrator, at its expense, has provided a variety of
administrative services to the Funds for the benefit of the Funds and their
shareholders; and
WHEREAS, the Funds desire to retain the Administrator to render certain legal,
financial administration and other administrative services to 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. Subject to the limitations set forth in the second
paragraph of Section 3 of this Agreement, the Administrator shall render to each
Fund the financial administration services set forth on Exhibit B hereto (the
"Financial Administration Services"), the legal services set forth on Exhibit C
hereto (the "Legal Services") and the other administrative services set forth on
Exhibit D hereto ("Other Administrative Services") (the Financial Administration
Services, Legal Services and Other Administrative Services are collectively
referred to as the "Administrative Services").
The Administrative Services provided by the Administrator to each Fund
may not include all Administrative Services required by the Fund, due to a
number of considerations, including, without limitation, the Administrator's
level of work flow, staffing and resources, the specialized or unique nature of
the Administrative Services and the relative priorities of such Administrative
Services. The Administrator may, on behalf of each Fund, arrange for or engage
outside legal counsel, accounting or auditing firm or any other outside service
provider or vendor
<PAGE>
(collectively, "third party vendors") to perform Administrative Services for the
Fund, and the Fund will bear the expense of any such third party vendors;
provided however, that the Administrator shall promptly inform the Fund's
governing board in the event any third party vendor is engaged to perform
Administrative Services for a Fund on a basis that is expected to generate
significant expenses for a Fund.
2. Maintenance of Books and Records. With respect to the provision of
Administrative Services, the Administrator will preserve for each Fund that is
registered as a registered 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 therefor,
to the Fund's Board of Trustees or auditors 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.
3. Administrative Fee. Each Fund shall pay the Administrator a fee as agreed to
from time to time and as set forth in Exhibit E 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.
The governing board of each Fund will, on an annual basis, review the
services provided, the Administrator's costs in providing such services, amounts
paid to third party vendors pursuant to the arrangement described in Section 1
and the amount paid by the Fund to the Administrator pursuant to this Agreement
(including the extent to which such amount is greater or lesser than the
Administrator's costs in providing such services) and such other information as
such board may reasonably request.
4. Scope of Administrative Services; Regulatory and Business and Industry
Practice Developments. The Administrative Services to be furnished by the
Administrator include only those services required by a Fund or which are being
furnished by the Administrator at March 1, 1997. In the event that, subsequent
to March 1, 1997, because of regulatory developments, or new or modified
business or industry practices, the Fund requires services in addition to the
Administrative Services, at the request of the Fund, the Administrator will
consider furnishing such additional services, with compensation for such
additional services to be agreed upon with respect to each such occasion as it
arises.
-2-
<PAGE>
5. 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.
6. 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) in the case of Financial Administration
Services, negligence, and, in the case of Legal Services and Other
Administrative Services, gross negligence, in each case on the Administrator's
part or (d) from reckless disregard by the Administrator of its obligations and
duties under this Agreement.
7. Term, Termination, Amendment and Assignment. This Agreement shall begin on
the date first written above and shall continue indefinitely. The Agreement may
be terminated at any time, without payment of any penalty, by the Board of
Directors/Trustees which oversees the Fund upon sixty (60) days' written notice
to the Administrator. This Agreement may be terminated by the Administrator with
respect to any Fund at any time upon sixty (60) days' written notice to the
Fund. 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.
8. 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 Administration 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.
-3-
<PAGE>
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
the 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, 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-
<PAGE>
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/ A. KEITH BRODKIN
A. Keith Brodkin
Chairman and President
On behalf of the MFS/Sun
Life Series Trust and
Compass Products listed
on Exhibit A hereto
By:/S/ JOHN D. MCNEIL
John D. McNeil
Chairman
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By:/S/ JEFFREY L. SHAMES
Jeffrey L. Shames
President
-5-
<PAGE>
Exhibit A
Funds
I. MFS Family of Funds
MFS Series Trust I:
MFS Managed Sectors Fund
MFS Cash Reserve Fund
MFS World Asset Allocation Fund
MFS Special Opportunities Fund
MFS Aggressive Growth Fund
MFS Research Growth and Income Fund
MFS Equity Income Fund
MFS Core Growth Fund
MFS Convertible Securities Fund
MFS Blue Chip Fund
MFS New Discovery Fund
MFS Science & Technology Fund
MFS Research International Fund
MFS Series Trust II:
MFS Emerging Growth Fund
MFS Capital Growth Fund
MFS Gold & Natural Resources Fund
MFS Intermediate Income Fund
MFS Series Trust III:
MFS High Income Fund
MFS Municipal High Income Fund
MFS Series Trust IV:
MFS Money Market Fund
MFS Government Money Market Fund
MFS Municipal Bond Fund
MFS OTC Fund
MFS Series Trust V:
MFS Total Return Fund
MFS Research Fund
MFS Series Trust VI:
MFS World Total Return Fund
MFS Utilities Fund
MFS World Equity Fund
MFS Series Trust VII:
MFS World Governments Fund
MFS Value Fund
MFS Series Trust VIII:
MFS Strategic Income Fund
MFS World Growth Fund
-6-
<PAGE>
MFS Series Trust IX:
MFS Bond Fund
MFS Limited Maturity Fund
MFS Municipal Limited Maturity Fund
MFS Series Trust X:
MFS Government Mortgage Fund
MFS/Foreign & Colonial Emerging Markets Equity Fund
MFS/Foreign & Colonial International Growth Fund
MFS/Foreign & Colonial International Growth and Income Fund
MFS Municipal Series Trust:
MFS Alabama Municipal Bond Fund
MFS Arizona 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 Growth Opportunities Fund
MFS Government Securities Fund
Massachusetts Investors Growth Stock Fund
MFS Government Limited Maturity Fund
Massachusetts Investors Trust
II. MFS Closed-End Funds
MFS Municipal Income Trust
MFS Multimarket Income Trust
MFS Government Markets Income Trust
MFS Intermediate Income Trust
MFS Charter Income Trust
MFS Special Value Trust
-7-
<PAGE>
III. MFS Institutional Funds
MFS Institutional Trust:
MFS Institutional Emerging Equities Fund
MFS Institutional Worldwide Fixed Income Fund
MFS Institutional Emerging Markets Income Fund
MFS Institutional International Equity Fund
MFS Institutional Mid-Cap Growth Equity Fund
MFS Institutional Research Fund
MFS Institutional Core Plus Fixed Income Fund
MFS Union Standard Trust:
MFS Union Standard Equity Fund
MFS Variable Insurance Trust:
MFS Emerging Growth Series
MFS Value Series
MFS Research Series
MFS Growth With Income Series
MFS Total Return Series
MFS Utilities Series
MFS High Income Series
MFS World Governments Series
MFS Strategic Fixed Income Series
MFS Bond Series
MFS Limited Maturity Series
MFS Money Market Series
IV. MFS/Sun Life Series Trust
MFS Capital Appreciation Series
MFS Conservative Growth Series
MFS Government Securities Series
MFS World Governments Series
MFS High Yield Series
MFS Managed Sectors Series
MFS Money Market Series
MFS Total Return Series
MFS Utilities Series
MFS World Growth Series
MFS Zero Coupon Series 2000
MFS Research Series
MFS World Asset Allocation Series
MFS World Total Return Series
MFS Emerging Growth Series
MFS/Foreign & Colonial International Growth and Income Series
MFS/Foreign & Colonial International Growth Series
MFS/Foreign & Colonial Emerging Markets Equity Series
MFS Value Series
-8-
<PAGE>
V. Compass Products
MFS Capital Appreciation Variable Account
MFS Government Securities Variable Account
MFS World Governments Variable Account
MFS High Yield Variable Account
MFS Managed Sectors Variable Account
MFS Money Market Variable Account
MFS Total Return Variable Account
-9-
<PAGE>
Exhibit B
Financial Administration Services
The Administrator shall perform the following Financial Administration
Services for each Fund:
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 governing board 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 notify 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.
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 governing body. The Administrator may use one or more
external pricing services in computing the value of a Fund's securities,
including broker/dealers, provided that the Fund's governing body or an
individual designated by the Fund's governing body has approved the use of such
pricing services.
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
-10-
<PAGE>
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 governing board.
D. Other Financial Administration Services. In addition, the
Administrator shall provide the following Financial Administration Services:
(1) Provide Treasurers or Assistant Treasurers to serve as
officers of the Fund;
(2) Coordinate the meetings of the Audit Committees, 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, transfer agent
fees and the fees of other service providers to the Fund;
(4) Oversee the preparation of accounting records 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. Assure that all statements and disclosures are in
accordance with generally accepted accounting principles and
that disclosures meet current regulatory or accounting
requirements;
(6) 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
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) Complete materials for the governing board of the Fund,
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; and
(10) Perform or arrange for the performance of all other Financial
Administration Services required of the Fund.
-11-
<PAGE>
Exhibit C
Legal Services
The Administrator shall provide the following Legal Services to each
Fund:
A. Organizational Matters and Initial Registration. The Administrator
shall perform the following functions relating to the organization and initial
registration of the Fund:
Draft and file with appropriate regulatory authorities the
Fund's charter documents;
Draft, negotiate and file with appropriate regulatory
authorities the Fund's service contracts;
Prepare and file the Fund's registration statement or other
similar registration documentation with appropriate regulatory
authorities (the "Registration Statement") and negotiate with such
regulatory authorities; and
Otherwise arrange for and oversee registration and qualification
of the Fund's shares.
B. Ongoing Regulatory Filings, Reports and Meetings. The Administrator
shall perform the following functions relating to ongoing regulatory filings,
reports and meetings of the Fund:
Prepare and file with appropriate regulatory authorities
amendments to the Fund's Registration Statement;
Prepare and file with appropriate regulatory authorities
supplements to the Fund's prospectus and statement of additional
information;
Design and write documents or materials required to be prepared
by or on behalf of the Fund for distribution to shareholders of
the Fund, the Fund's governing board and officers and any
governmental officers or commissions as required of the Fund and
not otherwise provided for under this Agreement including, without
limitation, prospectuses, shareholder reports, shareholder notices
and proxy statements;
Prepare and file or oversee preparation and review and provide
legal guidance on the Fund's annual, semi-annual and other
periodic reports;
Prepare and file or oversee preparation and provide legal
guidance on the Fund's tax filings and reports;
Prepare and file with appropriate regulatory authorities the
Fund's proxy statement and negotiate with such regulatory
authorities;
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Prepare and file with appropriate regulatory authorities various
reports in order to maintain the Fund's status in good standing;
Arrange for shareholders' meetings;
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, shareholder minutes and any follow-up documents; and
Attend shareholder meetings.
C. Securities Trading and Investment Practices. The Administrator shall
perform the following functions relating to the Fund's securities trading and
investment practices:
Review and negotiate private placement and municipal securities
offering documentation and provide legal guidance on transfer
restrictions;
Provide guidance on legal considerations relating to the
purchase of foreign securities;
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;
Negotiate the Fund's line of credit documentation; and
Provide legal guidance on applicable laws regulating the types
and levels of ownership of securities by the Fund.
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.
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E. Tax Considerations. The Administrator shall perform the following
functions relating to the application of tax rules to the Fund:
Provide legal guidance with respect to the application of tax
rules to the Fund and analyze from a tax perspective new types of
securities purchased by the Fund, new investment practices engaged
in by the Fund and new investment products or practices adopted by
the Fund; and
Draft and/or review sections of the Fund's prospectus describing
the tax consequences of an investment in the Fund.
F. Board Considerations. The Administrator shall perform the following
functions with respect to the Fund's governing board:
Provide advice concerning applicable rules governing the
composition of the Fund's governing board;
Coordinate, prepare materials for and attend board and
committee meetings and coordinate any follow up issues; and
Provide guidance and prepare materials on legal issues relevant
to the Fund's business.
G. Miscellaneous/Extraordinary Events. The Administrator shall perform
the following miscellaneous functions for the Fund:
Provide legal guidance with respect to litigation brought by the
Fund and against the Fund and negotiate litigation settlements and
pre-litigation settlements and work-out arrangements;
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;
Provide legal guidance on alternative distribution structures for
the Fund's shares (such as the adoption of a multiple class
structure);
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 legal
opinions and regulatory authority rulings necessary for such
transactions to comply with applicable law;
Seek formal guidance from regulatory authorities concerning the
application of various regulations to the Fund and seek exemptive
relief where appropriate; and
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Provide or arrange for all other Legal Services required of the
Fund and not otherwise provided for under this Agreement other
than the services of any counsel retained to represent the members
of the governing boards of the funds who are not "interested
persons" of the Administrator or its affiliates, as such term is
defined in the Investment Company Act of 1940.
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Exhibit D
OTHER ADMINISTRATIVE SERVICES
The Administrator shall provide the following Other Administrative
Services to each Fund:
(1) Arrange for persons or other entities to serve as transfer
agent, registrar or dividend disbursing agent as required by the
Fund;
(2) Arrange for a line of credit in the event of an unanticipated
redemption of shares;
(3) Arrange for consideration by the Board of appropriate or
necessary insurance coverage for the Fund;
(4) Subject to Section 4 hereof, perform or arrange for all
compliance functions required of the Fund;
(5) Prepare, and arrange for the printing and mailing of, any
necessary investment communications;
(6) 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;
(7) Arrange for any other printing, production and delivery services
required of the Fund and not otherwise provided for under this
Agreement;
(8) 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;
(9) Review the Fund's disclosure documents to ensure that
disclosures and policies conform to the Fund's actual operation;
and
(10) Provide for the calculation and timely disbursement of
appropriate regulatory authority registration fees.
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Exhibit E
ADMINISTRATIVE FEE
The Administrative Fee shall be an amount, computed as set forth below,
designed to reimburse the Administrator for its actual costs (excluding costs of
staffing so-called residual matters as set forth in Exhibit #2 to Exhibit H to
the Memorandum to the Trustees of the Funds from Stephen E. Cavan and Joseph W.
Dello Russo dated September 23, 1996 (Offshore Board) or October 1, 1996
(Compass, Crimson, Institutional Products and Red Boards)) for providing the
Financial Administration Services and Legal Services (the "Actual Costs") for
providing such services for a calendar year computed pursuant to the principles
set forth in such Exhibit H, subject to such changes in those principles as may
be agreed to from time to time by the Funds and the Administrator (the "Approved
Budgeted Costs"). In computing its Actual Costs, the Administrator will follow
the cost allocation principles set forth in the Deloitte & Touche LLP Report of
Independent Consultant dated November 29, 1996 under the caption "Review of MFS
Cost Reimbursement Methodologies", subject to such changes as may be agreed to
from time to time by the Funds and the Administrator.
For calendar year 1997, the Approved Budgeted Costs are agreed to be
$5.5 million, such amount to be pro rated from the effective date of this
Agreement. For each subsequent calendar year, the Approved Budgeted Costs shall
be an amount agreed to by the Funds and the Administrator prior to the beginning
of the year, provided that, until Approved Budgeted Costs for a year are agreed
to, the Approved Budgeted Costs and Administrative Fee for the prior year shall
remain in effect.
Subject to the adjustments required by the next paragraph, the
Administrative Fee for a calendar year shall be computed by allocating the
Approved Budgeted Costs for that year among the Funds based on each Fund's
average daily net assets for its then-current fiscal year at rates reflecting a
basic rate on the first $1 billion of net assets of a Fund, a 16 2/3% discount
from the basic rate on the next $1 billion, a 33 1/3% discount from the basic
rate on the next $1 billion, and the elimination of any charge on assets in
excess of $3 billion. For 1997 the rates shall be:
0.0150% on first $1 billion;
0.0125% on next $1 billion;
0.0100% on next $1 billion;
0.0% on amounts in excess of $ 3 billion
in each case on an annualized basis for a Fund's then-current fiscal
year.
In the event that the aggregate amount of all Administrative Fees
received by the Administrator during a calendar year at any time equals 110% of
the amount of the Approved Budgeted Costs for that year, no further payments of
Administrative Fees shall be made by the Funds to the Administrator for that
calendar year. In the event that the aggregate amount of the Administrative Fees
received by the Administrator for a calendar year is less than the amount of
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the Approved Budgeted Costs for that year, the Administrator shall not be
entitled to recovery of this shortfall during the current calendar year;
however, the amount of such shortfall will be taken into account when
establishing the Administrative Fee for following calendars years. In the event
that the aggregate amount of the Administrative Fees received by the
Administrator for a calendar year is greater than the Administrator's Actual
Costs for that year, such excess fees shall be applied as a credit against the
Administrative Fees payable by the Funds hereunder for the subsequent calendar
year.
The Administrator will provide the Funds with such information as may
reasonably be required to review the Administrator's Actual Costs as of June 30
and December 31 in each year.
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EXHIBIT NO. 99(i)
MFS CHARTER INCOME TRUST
RETIREMENT PLAN FOR NON-INTERESTED PERSON TRUSTEES
MFS Charter Income Trust (the "Fund") has adopted this Retirement Plan
for Non-Interested Person Trustees (the "Plan"). The Plan has been established
for the purpose of providing certain benefits to eligible Independent Trustees
of the Fund, or their beneficiaries, after termination of the Independent
Trustees' services as such.
1. DEFINITIONS
The following terms shall have the following meanings:
Accrued Benefit: A benefit which is equal to the Normal
Retirement Benefit calculated using an Independent Trustee's
Years of Service and Annual Compensation as of the
determination date.
Actuarial Equivalent: A benefit equal in value, based on (a)
an interest rate equal to the immediate annuity rate published
by the Pension Guaranty Corporation for the January of the Plan
Year of calculation and (b) the 1983 Individual Annuity
Mortality Tables for Males.
Annual Compensation: The average of the total compensation
(retainer and meeting fees) received by an Independent Trustee
during each of the last three Plan Years preceding his
termination of services as such for which he served either as an
Independent Trustee or a Nonaffiliated Trustee for the entire
year; provided, that if an Independent Trustee served as an
Independent Trustee and/or a Nonaffiliated Trustee for fewer
than three full Plan Years prior to his termination of services,
there shall be taken into account his annualized compensation
for the one or more most recent partial Plan Years (if any) for
which he served as an Independent Trustee or a Nonaffiliated
Trustee that, when aggregated with his full Plan Years, does not
exceed three Plan Years.
Disability: Disability as defined in ss.22(e)(3) of the
Internal Revenue Code of 1986, as amended.
Independent Trustee: A Trustee of the Fund who is not an
"interested person" (as defined in Section 2(a)(19) of the
Investment Company Act of 1940, as amended) of the Fund,
Lifetime Advisers, Inc. ("Lifetime"), Massachusetts Financial
Services Company ("MFS") or MFS Financial Services, Inc.
("FSI").
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Nonaffiliated Trustee: A Trustee of the Fund who has no
material business or professional relationship with the Fund,
Lifetime, MFS or FSI and who is subject to being declared an
"interested person" solely by reason of his relationship
with the Fund, Lifetime, MFS or FSI during the two most
recently completed fiscal years of the Fund.
Normal Retirement Benefit: An annual benefit at Normal
Retirement Date equal to 5% of an Independent Trustee's Annual
Compensation multiplied by the Independent Trustee's whole Years
of Service, up to a maximum of ten Years of Service, payable in
the Normal Form of Benefit, as defined in ss.3(g).
Normal Retirement Date: December 31 of the Plan Year in
which an Independent Trustee attains age 72.
Plan Year: January 1 through December 31.
Retirement: Termination of service of an Independent Trustee
after having completed at least five Years of Service and having
attained age 62, other than: (1) any termination by reason of
death; (ii) any termination by reason of Disability, provided
that any Independent Trustee who suffers a Disability and who
has otherwise satisfied the requirements for Retirement shall
have the right to elect whether his termination is by reason of
Retirement or by reason of Disability; or (iii) any termination
resulting from the Independent Trustee's willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Independent Trustee
("Misconduct").
Year of Service: A Plan Year during which an Independent
Trustee completed at least six months of service as either a
Nonaffiliated Trustee or an Independent Trustee.
2. ELIGIBILITY
No Trustee of the Fund shall be eligible to participate in the
Plan or be entitled to any rights or benefits hereunder until
the Trustee becomes an Independent Trustee. Each individual who
completes any service as an Independent Trustee on or after the
Effective Date of this Plan, and who so elects in such manner as
the Committee determines from time to time, will be eligible to
participate in the Plan.
3. RETIREMENT DATE; AMOUNT OF BENEFIT
(a) Retirement. Each Independent Trustee shall retire
on that Independent Trustee's Normal Retirement Date, if he
has not previously ceased to perform services as an
Independent Trustee. Each retired Independent Trustee is
referred to as a "Retired Trustee".
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(b) Normal Retirement Benefit. Upon an
Independent Trustee's Retirement on his Normal Retirement
Date, the Independent Trustee shall receive, commencing
on his Normal Retirement Date, his Normal Retirement
Benefit.
(c) Early Retirement Benefit. Upon an Independent
Trustee's Retirement prior to his Normal Retirement Date,
the Independent Trustee shall receive an Early Retirement
Benefit commencing on the Independent Trustee's date of
Retirement. The benefit payable on an Independent Trustee's
early Retirement shall be his Accrued Benefit reduced by 3%
for every year that payment of an Early Retirement Benefit
precedes that Trustee's Normal Retirement Date.
(d) Deferred Termination Benefit. If an Independent
Trustee's service as such terminates, other than (i)
termination as a result of his Misconduct or (ii)
termination that constitutes termination by reason of his
Retirement, Disability or death, after he has completed at
least five Years of Service, he shall receive, commencing
on the date he attains age 62, his Accrued Benefit reduced
by 30%.
(e) Disability Benefit. If an Independent Trustee's
service as such terminates by reason of his Disability and,
if the Independent Trustee is eligible for Retirement, he
elects that his termination be treated as being by reason
of Disability, he shall receive his Accrued Benefit paid
for the one hundred twenty (120) months immediately
following the month in which his service so terminates. In
the event the Independent Trustee dies before he has
received one hundred twenty (120) payments, monthly
payments in the same amount shall be paid to his
beneficiary until the number of payments to the Independent
Trustee plus the number of payments to the beneficiary
equal one hundred twenty (120) payments.
(f) Death Benefit. Each Independent Trustee who
elects to participate in this Plan shall designate a
beneficiary in such form as the Committee approves from
time to time to receive any benefits payable under this
Plan in the event of his death. In the event there is no
validly designated beneficiary in existence on the date of
an Independent Trustee's death, his beneficiary shall be
his surviving spouse, if any, or if none, his estate. The
beneficiary of an Independent Trustee who dies during
service, and with respect to whom benefit payments have not
commenced, shall be entitled to that Independent Trustee's
Accrued Benefit paid for the one hundred twenty (120)
months immediately following death.
(g) Form of Benefit. Except as otherwise provided in
this ss.3, benefits payable under this ss.3 shall be
payable in the form of a monthly annuity for the life of
the Independent Trustee, and, if the Independent Trustee
dies before he has received one hundred twenty (120)
payments, monthly payments in the same amount shall be
payable to his beneficiary until the number of payments to
the
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Independent Trustee plus the number of
payments to the beneficiary equal one hundred twenty (120)
payments (the "Normal Form of Benefit"). However,
notwithstanding any other provision of this Section 3 to
the contrary, if an Independent Trustee's beneficiary is
entitled to payments under this Plan upon the Independent
Trustee's death, then (i) if the Independent Trustee's
beneficiary is his estate, the lump sum Actuarial
Equivalent present value of those payments shall be paid to
the estate in a single lump sum as soon as administratively
reasonable following the Independent Trustee's death, and
(ii) if the Independent Trustee's beneficiary is other than
his estate, the Committee in its sole discretion may direct
that the Actuarial Equivalent value of those payments be
paid in such form other than the Normal Form of Benefit
(including without limitation a lump sum) as it determines.
4. PAYMENT OF BENEFIT; ALLOCATION OF COSTS
The Fund is responsible for the payment of the benefits, as
well as all expenses of administration of the Plan, including
without limitation all accounting, legal and actuarial fees and
expenses. The obligations of the Fund to pay such benefits and
expenses will not be secured or funded in any manner, and the
obligations will not have any preference over the lawful claims
of the Fund's creditors and shareholders. The Fund shall be
under no obligation to segregate any assets for the purpose of
providing retirement benefits pursuant to this Plan, and to the
extent that any Independent Trustee or beneficiary acquires a
right to receive a benefit under the Plan, such right shall be
limited to that of a recipient of an unfunded, unsecured promise
to pay amounts in the future and such person's position with
respect to such amounts shall be that of a general unsecured
creditor of the Fund. To the extent that the Fund consists of
one or more separate portfolios, costs and expenses will be
allocated among the portfolios by the Board of Trustees of the
Fund (the "Board") in a manner that is determined by the Board
to be fair and equitable under the circumstances.
5. ADMINISTRATION
(a) The Committee. Any question involving entitlement
to payments under or the interpretation or administration
of the Plan will be referred to a committee (the
"Committee") of Independent Trustees designated by the
Board. Except as otherwise provided herein, the Committee
will make all interpretations and determinations necessary
or desirable for the Plan's administration, and such
interpretations and determinations will be final and
conclusive.
(b) Powers of the Committee. The Committee will
represent and act on behalf of the Fund in respect of the
Plan and, subject to the other provisions of the Plan, the
Committee may adopt, amend or repeal by-laws or other
regulations, relating to the administration of the Plan,
the conduct of the Committee's affairs, its rights or
powers or the rights or powers of its members or of the
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Board. The Committee will report to the Board from
time to time on its activities in respect of the Plan.
The Committee or persons designated by it will cause such
records to be kept as may be necessary for the
administration of the Plan.
6. MISCELLANEOUS PROVISIONS
(a) Rights Not Assignable. The right to
receive any payment under the Plan may not be
transferred, assigned, pledged or otherwise alienated.
(b) Amendment, etc. The Committee, with the
concurrence of the Board, may at any time amend or
terminate the Plan or waive any provision of the Plan,
provided that no amendment, termination or waiver will
impair the rights of an Independent Trustee to receive
upon Retirement the payments which would have been made to
that Independent Trustee had there been no such amendment,
termination or waiver (based upon that Independent
Trustee's Years of Service to the date of such amendment,
termination or waiver) or the rights of a former
Independent Trustee or Retired Trustee to receive any
benefit due under the Plan, without the consent of such
present or former Independent Trustee or Retired Trustee,
as the case may be. A present or former Independent
Trustee or Retired Trustee may elect to waive receipt of
his benefit by so advising the Committee.
Notwithstanding any provision of this Plan
to the contrary, however, in the event of the sale of all
or substantially all of the assets of the Fund, the
liquidation or dissolution of the Fund, or any merger or
other similar reorganization of the Fund that the Fund
does not survive:
(i) if although the Fund does not
survive there is a surviving entity, all rights and
benefits (including without limitation those of
Retired Trustees) under the Plan shall cease upon
consummation of such transaction, unless, and only
to the extent that, the board of trustees (or other
similar governing body) of the surviving entity
agrees to assume the Plan and/or to provide any
such rights or benefits; and
(ii) if there is no surviving
entity, the Board shall have the right to take
specific action to terminate the Plan and/or to
cause any or all rights and benefits (including
without limitation those of Retired Trustees) under
the Plan to cease as of the date of such event but,
in the absence of any such specific action, the
lump sum Actuarial Equivalent present value of the
Accrued Benefit of each present or former
Independent Trustee or Retired Trustee (or
beneficiary thereof) who on the date of liquidation
is receiving or entitled to receive a benefit under
the Plan or would be entitled to receive a benefit
under the Plan based on his actual or deemed
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termination of service as
of the date of such liquidation shall be paid to
such person.
(c) No Right to Re-election. Nothing in the Plan will create
any obligation on the part of the Board to nominate
any Independent Trustee for re-election.
(d) Vacancies. Although the Board will retain the right
to increase or decrease its size, it shall be the general
policy of the Board to replace each person who ceases to
serve as an Independent Trustee by selecting a new
Independent Trustee from candidates duly proposed.
(e) Consulting. Each Retired Trustee may render such
services for the Fund, for such compensation, as may be
agreed upon from time to time by such Trustee and the
Board of the Fund.
(f) Construction. Whenever any masculine terminology is
used in this Plan, it shall be taken to include the
feminine, unless the context otherwise indicates. The
titles and headings included herein are for convenience
only and shall not be construed as in any way
affecting or modifying the text of this Plan, which text
shall control. This Plan shall be construed and regulated
in accordance with the laws of The Commonwealth of
Massachusetts, except to the extent such state law
is preempted by federal law.
(g) Effective Date. This Plan will become effective on
January 1, 1991 (the "Effective Date").
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EXHIBIT NO. 99(j)(1)
CUSTODIAN CONTRACT
Between
MFS CHARTER INCOME TRUST
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
PAGE
1. Employment of Custodian and Property to be
Held By It 1
2. Duties of the Custodian with Respect to Property
of the Trust Held by the Custodian 2
2.1 Holding Securities 2
2.2 Delivery of Securities 2
2.3 Registration of Securities 7
2.4 Bank Accounts 7
2.5 Investment and Availability of Federal Funds 8
2.6 Collection of Income 9
2.7 Payment of Trust Monies 9
2.8 Liability for Payment in Advance of Receipt of
Securities Purchased 12
2.9 Appointment of Agents 12
2.10 Deposit of Trust Assets in Securities System 13
2.10A Fund Assets Held in the Custodian's Direct Paper System 13
2.11 Segregated Account 16
2.12 Ownership Certificates for Tax Purposes 19
2.13 Proxies 19
2.14 Communications Relating to Trust Portfolio Securities 19
2.15 Reports to Trust by Independent Public Accountants 20
3. Duties of the Custodian with Respect to Property of the
fund held outside of the united states 21
3.1 Appointment of Foreign Sub-Custodians 21
3.2 Assets to be Held 21
3.3 Foreign Securities Depositories 22
3.4 Segregation of Securities 22
3.5 Agreements with Foreign Banking Institutions 22
3.6 Access of Independent Accountants of the Fund 23
3.7 Reports by Custodian 23
3.8 Transactions in Foreign Custody Account 24
3.9 Liability of Foreign Sub-Custodians 25
3.10 Liability of Custodian 25
3.11 Reimbursement of Advances 26
3.12 Monitoring Responsibilities 27
3.13 Branches of U.S. Banks 28
4. Proper Instructions 28
5. Actions Permitted Without Express Authority 29
6. Evidence of Authority 30
7. Duties of Custodian with Respect to the Books
of Account and Calculation of Net Asset Value
and Net Income 30
<PAGE>
8. Records 31
9. Opinion of Trust's Independent Accountant 32
10. Compensation of Custodian 32
11. Responsibility of Custodian 32
12. Effective Period, Termination and Amendment 33
13. Successor Custodian 35
14. Interpretive and Additional Provisions 36
15. Massachusetts Law to Apply 36
16. Prior Contracts 37
<PAGE>
CUSTODIAN CONTRACT
This Contract between MFS Charter Income Trust, a business trust
organized and existing under the laws of Massachusetts, having its principal
place of business at 500 Boylston Street, Boston, Massachusetts 02116,
hereinafter called the "Trust", and State Street Bank and Trust Company, a
Massachusetts trust company, having its principal place of business at 225
Franklin Street, Boston, Massachusetts, 02110, hereinafter called the
"Custodian",
WITNESSETH: That in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It.
The Trust hereby employs the Custodian as the custodian of the assets
pursuant to the provisions of the Declaration of Trust. The Trust agrees to
deliver to the Custodian all securities and cash owned by it, and all payments
of income, payments of principal or capital distributions received by it with
respect to all securities owned by the Trust from time to time, and the cash
consideration received by it for such shares of beneficial interest, ("Shares")
of the Trust as may be issued or sold from time to time. The Custodian shall not
be responsible for any property of the Trust held or received by the Trust and
not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article
4), the Custodian shall from time to time employ one or more sub-custodians, but
only in accordance with an
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applicable vote by the Board of Trustees of the Trust, and provided that the
Custodian shall have no more or less responsibility or liability to the Trust on
account of any actions or omissions of any sub-custodian so employed than any
such sub-custodian has to the Custodian.
2. Duties of the Custodian with Respect to Property of the Trust Held By
the Custodian.
2.1. Holding Securities. The Custodian shall hold and physically segregate
for the account of the Trust all non-cash property, including all
securities owned by the Trust, other than securities which are
maintained pursuant to Section 2.10 in a clearing agency which acts as
a securities depository or in a book-entry system authorized by the
U.S. Department of the Treasury, collectively referred to herein as
"Securities System".
2.2. Delivery of Securities. The Custodian shall release and deliver
securities owned by the Trust held by the Custodian or in a Securities
System account of the Custodian only upon receipt of Proper
Instructions, which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:
1) Upon sale of such securities for the
account of the Trust and receipt of payment therefor;
2) Upon the receipt of payment in connection
with any repurchase agreement related to such securities
entered into by the Trust;
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3) In the case of a sale effected through a
Securities System, in accordance with the provisions of
Section 2.10 hereof;
4) To the depository agent in connection with
tender or other similar offers for portfolio securities
of the Trust;
5) To the issuer thereof or its agent when such
securities are called, redeemed, retired or otherwise
become payable; provided that, in any such case, the cash
or other consideration is to be delivered to the
Custodian;
6) To the issuer thereof, or its agent, for transfer
into the name of the Trust or into the name of any nominee
or nominees of the Custodian or into the name or nominee
name of any agent appointed pursuant to Section 2.9 or
into the name or nominee name of any sub-custodian
appointed pursuant to Article 1; or for exchange for a
different number of bonds, certificates or other evidence
representing the same aggregate face amount or number of
units; provided that, in any such case, the new securities
are to be delivered to the Custodian;
7) Upon the sale of such securities for the
account of the Trust, to the broker or its
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clearing agent, against a receipt, for
examination in accordance with "street delivery" custom;
provided that in any such case, the Custodian shall have
no responsibility or liability for any loss arising from
the delivery of such securities prior to receiving payment
for such securities except as may arise from the
Custodian's own negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of
merger, consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion
contained in such securities, or pursuant to any deposit
agreement; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the
Custodian;
9) In the case of warrants, rights or similar
securities, the surrender thereof in the exercise of such
warrants, rights or similar securities or the surrender of
interim receipts or temporary securities for definitive
securities; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the
Custodian;
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10) For delivery in connection with any loans of
securities made by the Trust, but only against receipt of
adequate collateral as agreed upon from time to time by
the Custodian and the Trust, which may be in the form of
cash or obligations issued by the United States
government, its agencies or instrumentalities, except that
in connection with any loans for which collateral is to be
credited to the Custodian's account in the book-entry
system authorized by the U.S. Department of the Treasury,
the Custodian will not be held liable or responsible for
the delivery of securities owned by the Trust prior to the
receipt of such collateral;
11) For delivery as security in connection with any
borrowings by the Trust requiring a pledge of assets by
the Trust, but only against receipt of amounts borrowed;
12) For delivery in accordance with the provisions of
any agreement among the Trust, the Custodian and a
broker-dealer registered under the Securities Exchange Act
of 1934 (the "Exchange Act") and a member of The National
Association of Securities Dealers, Inc. ("NASD"), relating
to compliance with the rules of The Options Clearing
Corporation
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<PAGE>
and of any registered national securities
exchange, or of any similar organization or organizations,
regarding escrow or other arrangements in connection with
transactions by the Trust;
13) For delivery in accordance with the provisions of
any agreement among the Trust, the Custodian, and a
Futures Commission Merchant registered under the Commodity
Exchange Act, relating to compliance with the rules of the
Commodity Futures Trading Commission and/or any Contract
Market, or any similar organization or organizations,
regarding account deposits in connection with transactions
by the Trust; and
14) For any other proper corporate purpose, but only
upon receipt of, in addition to Proper Instructions, a
certified copy of a resolution of the Board of Trustees or
of the Executive Committee signed by an officer of the
Trust and certified by the Secretary or an Assistant
Secretary, setting forth the purpose for which such
delivery is to be made, declaring such purposes to be
proper corporate purposes, and naming the person or
persons to whom delivery of such securities shall be made.
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2.3. Registration of Securities. Securities held by the Custodian (other
than bearer securities) shall be registered in the name of the Trust
or in the name of any nominee of the Trust or of any nominee of the
Custodian which nominee shall be assigned exclusively to the Trust,
unless the Trust has authorized in writing the appointment of a
nominee to be used in common with other registered investment
companies having the same investment adviser as the Trust, or in the
name or nominee name of any agent appointed pursuant to Section 2.9
or in the name or nominee name of any sub-custodian appointed
pursuant to Article 1. All securities accepted by the Custodian on
behalf of the Trust under the terms of this Contract shall be in
"street name" or other good delivery form.
2.4. Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts (the "Trust's Account or Accounts") in the name
of the Trust, subject only to draft or order by the Custodian acting
pursuant to the terms of this Contract, and shall hold in such
Account or Accounts, subject to the provisions hereof, all cash
received by it from or for the account of the Trust, other than cash
maintained by the Trust in a bank Account established and used in
accordance with Rule 17f-3 under the Investment Company Act of 1940.
Funds held by the Custodian for the Trust may be deposited by it to
its credit as Custodian in the Banking Department of the
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<PAGE>
Custodian or in such other banks or trust companies as it may in its
discretion deem necessary or desirable; provided, however, that every
such bank or trust company shall be qualified to act as a custodian
under the Investment Company Act of 1940 and that each such bank or
trust company and the funds to be deposited with each such bank or
trust company shall be approved by vote of a majority of the Board of
Trustees of the Trust. Such funds shall be deposited by the Custodian
in its capacity as Custodian and shall be withdrawable by the Custodian
only in that capacity.
2.5. Investment and Availability of Federal Funds. Upon mutual agreement
between the Trust and the Custodian, the Custodian shall, upon the
receipt of Proper Instructions,
1) invest in such instruments as may be set
forth in such instruments as may be set forth in such
instructions on the same day as received all federal
funds received after a time agreed upon between the
Custodian and the Trust; and
2) make federal funds available to the Trust
as of specified times agreed upon from time to time
by the Trust and the Custodian in the amount of
checks received in payment for Shares of the Trust
which are deposited into the Trust's account.
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<PAGE>
2.6. Collection of Income. The Custodian shall collect on a timely basis
all income and other payments with respect to registered securities
held hereunder to which the Trust shall be entitled either by law or
pursuant to custom in the securities business, and shall collect on a
timely basis all income and other payments with respect to bearer
securities if, on the date of payment by the issuer, such securities
are held by the Custodian or agent thereof and shall credit such
income, as collected, to the Trust's custodian account. Without
limiting the generality of the foregoing, the Custodian shall detach
and present for payment all coupons and other income items requiring
presentation as and when they become due and shall collect interest
when due on securities held hereunder. Income due the Trust on
securities loaned pursuant to the provisions of Section 2.2 (10)
shall be the responsibility of the Trust. The Custodian will have no
duty or responsibility in connection therewith, other than to provide
the Trust with such information or data as may be necessary to assist
the Trust in arranging for the timely delivery to the Custodian of
the income to which the Trust is properly entitled.
2.7. Payment of Trust Monies. Upon receipt of Proper Instructions, which may
be continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out monies of the Trust in the following cases
only:
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1) Upon the purchase of securities, for the account
of the Trust but only (a) against the delivery of such
securities to the Custodian (or any bank, banking firm or
trust company doing business in the United States or
abroad which is qualified under the Investment Company Act
of 1940, as amended, to act as a custodian and has been
designated by the Custodian as its agent for this purpose)
registered in the name of the Trust or in the name of a
nominee of the Custodian referred to in Section 2.3 hereof
or in proper form for transfer; (b) in the case of a
purchase effected through a Securities System, in
accordance with the conditions set forth in Section 2.10
hereof; or (c) in the case of repurchase agreements
entered into between the Trust and the Custodian, or
another bank, or a broker-dealer which is a member of
NASD,
(i) against delivery of the securities
either in certificate form or through an entry crediting
the Custodian's account at the Federal Reserve Bank with
such securities or (ii) against delivery of the receipt
evidencing purchase by the Trust of securities owned by
the Custodian along with written evidence of the agreement
by the
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Custodian to repurchase such securities
from the Trust;
2) In connection with conversion, exchange or
surrender of securities owned by the Trust as set forth
in Section 2.2 hereof;
3) For the payment of any expense or liability
incurred by the Trust, including but not limited to the
following payments for the account of the Trust: interest,
taxes, management, accounting, transfer agent and legal
fees, and operating expenses of the Trust whether or not
such expenses are to be in whole or part capitalized or
treated as deferred expenses;
4) For the payment of any dividends declared
pursuant to the governing documents of the Trust;
5) For payment of the amount of dividends
received in respect of securities sold short;
6) For any other proper purpose, but only upon
receipt of, in addition to Proper Instructions, a
certified copy of a resolution of the Board of Trustees or
of the Executive Committee of the Trust signed by an
officer of the Trust and certified by its Secretary or an
Assistant Secretary, setting forth the purpose for which
such payment is
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to be made, declaring such purpose to be a
proper purpose, and naming the person or persons to whom
such payment is to be made.
2.8. Liability for Payment in Advance of Receipt of Securities Purchased.
In any and every case where payment for purchase of securities for
the account of the Trust is made by the Custodian in advance of
receipt of the securities purchased in the absence of specific
written instructions from the Trust to so pay in advance, the
Custodian shall be absolutely liable to the Trust for such securities
to the same extent as if the securities had been received by the
Custodian, except that in the case of repurchase agreements entered
into by the Trust with a bank which is a member of the Federal
Reserve System, the Custodian may transfer funds to the account of
such bank prior to the receipt of written evidence that the
securities subject to such repurchase agreements have been
transferred by book-entry into a segregated non-proprietary account
of the Custodian maintained with the Federal Reserve Bank of Boston
or of the safekeeping receipt, provided that such securities have in
fact been so transferred by book-entry.
2.9. Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act of
1940, as amended, to act as a custodian, as its agent to carry out
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such of the provisions of this Article 2 as the Custodian may from time
to time direct; provided, however, that the appointment of any agent
shall not relieve the Custodian of its responsibilities or liabilities
hereunder.
2.10 Deposit of Trust Assets in Securities Systems. The Custodian may
deposit and/or maintain securities owned by the Trust in a clearing
agency registered with the Securities and Exchange Commission under
Section 17A of the Securities Exchange Act of 1934, which acts as a
securities depository, or in the book-entry system authorized by the
U.S. Department of the Treasury and certain federal agencies,
collectively referred to herein as "Securities System" in accordance
with applicable Federal Reserve Board and Securities and Exchange
Commission rules and regulations, if any, and subject to the following
provisions:
1) The Custodian may keep securities of the Trust in
a Securities System provided that such securities are
represented in an account ("Custodian's Account") of the
Custodian in the Securities System which shall not include
any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
2) The records of the Custodian with respect
to securities of the Trust which are maintained in a
Securities System shall identify by
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<PAGE>
book-entry those securities belonging to
the Trust;
3) The Custodian shall pay for securities purchased
for the account of the Trust upon (i) receipt of advice
from the Securities System that such securities have been
transferred to the Custodian's Account, and (ii) the
making of an entry on the records of the Custodian to
reflect such payment and transfer for the account of the
Trust. The Custodian shall transfer securities sold for
the account of the Trust upon (i) receipt of advice from
the Securities System that payment for such securities has
been transferred to the Custodian's Account, and (ii) the
making of an entry on the records of the Custodian to
reflect such transfer and payment for the account of the
Trust. Copies of all advices from the Securities System of
transfers of securities for the account of the Trust shall
identify the Trust, be maintained for the Trust by the
Custodian and be provided to the Trust at its request.
Upon request, the Custodian shall furnish the Trust
confirmation of each transfer to or from the account of
the Trust in the form of a written advice or notice and
shall furnish
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<PAGE>
to the Trust copies of daily transaction
sheets reflecting each day's transactions in the
Securities System for the account of the Trust.
4) The Custodian shall provide the Trust with any
report obtained by the Custodian on the Securities
System's accounting system, internal accounting control
and procedures for safeguarding securities deposited in
the Securities System;
5) The Custodian shall have received the
initial or annual certificate, as the case may be,
required by Article 12 hereof;
6) Anything to the contrary in this Contract
notwithstanding, the Custodian shall be liable to the
Trust for any loss or damage to the Trust resulting from
use of the Securities System by reason of any negligence,
misfeasance or misconduct of the Custodian or any of its
agents or of any of its or their employees or from failure
of the Custodian or any such agent to enforce effectively
such rights as it may have against
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<PAGE>
the Securities System; at the election of
the Trust, it shall be entitled to be subrogated to the
rights of the Custodian with respect to any claim against
the Securities System or any other person which the
Custodian may have as a consequence of any such loss or
damage if and to the extent that the Trust has not been
made whole for any such loss or damage.
2.10.A Fund Assets Held in the Custodian's Direct Paper System. The Custodian
may deposit and/or maintain securities owned by the Fund in the Direct
Paper System of the Custodian subject to the following provisions:
1) No transaction relating to securities in the Direct
Paper System will be effected in the absence of
Proper Instructions;
2) The Custodian may keep securities of the Fund in the
Direct Paper System only if such securities are
represented in an account ("Account") of the
Custodian in the Direct Paper System which shall not
include any assets of the Custodian other than assets
held as a fiduciary, custodian or otherwise for
customers;
3) The records of the Custodian with respect to
securities of the Fund which are maintained in the
Direct Paper System shall identify by book-entry
those securities belonging to the Fund;
4) The Custodian shall pay for securities purchased
for the account of the Fund upon
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the making of an entry on the records of the
Custodian to reflect such payment and transfer of
securities to the account of the Fund. The Custodian
shall transfer securities sold for the account of the
Fund upon the making of an entry on the records of
the Custodian to reflect such transfer and receipt of
payment for the account of the Fund;
5) The Custodian shall furnish the Fund confirmation of
each transfer to or from the account of the Fund, in
the form of a written advice or notice, of Direct
Paper on the next business day following such
transfer and shall furnish to the Fund copies of
daily transaction sheets reflecting each day's
transaction in the Securities System for the account
of the Fund;
6) The Custodian shall provide the Fund with any report
on its system of internal accounting control as the
Fund may reasonably request from time to time.
2.11 Segregated Account. The Custodian shall upon receipt of Proper
Instructions establish and maintain a segregated account or accounts
for and on behalf of the Trust, into which account or accounts may be
transferred cash and/or securities, including securities maintained in
an account
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by the Custodian pursuant to Section 2.10 hereof, (i) in accordance
with the provisions of any agreement among the Trust, the Custodian and
a broker-dealer registered under the Exchange Act and a member of the
NASD (or any futures commission merchant registered under the Commodity
Exchange Act), relating to compliance with the rules of The Options
Clearing Corporation and of any registered national securities exchange
(or the Commodity Futures Trading Commission or any registered contract
market), or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions by the
Trust, (ii) for purposes of segregating cash or government securities
in connection with options purchased, sold or written by the Trust or
commodity futures contracts or options thereon purchased or sold by the
Trust, (iii) for the purposes of compliance by the Trust with the
procedures required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and Exchange
Commission relating to the maintenance of segregated accounts by
registered investment companies and (iv) for other proper corporate
purposes, but only, in the case of clause (iv), upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of
the Board of Trustees or of the Executive Committee signed by an
officer of the Trust and certified by the Secretary or an Assistant
Secretary, setting forth the
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purpose or purposes of such segregated account and declaring such
purposes to be proper corporate purposes.
2.12. Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other
payments with respect to securities of the Trust held by it and in
connection with transfers of securities.
2.13. Proxies. The Custodian shall, with respect to the securities held
hereunder, cause to be promptly executed by the registered holder of
such securities, if the securities are registered otherwise than in the
name of the Trust or a nominee of the Trust, all proxies, without
indication of the manner in which such proxies are to be voted, and
shall promptly deliver to the Trust such proxies, all proxy soliciting
materials and all notices relating to such securities.
2.14. Communications Relating to Trust Portfolio Securities. The Custodian
shall transmit promptly to the Trust all written information
(including, without limitation, pendency of calls and maturities of
securities and expirations of rights in connection therewith and
notices of exercise of call and put options written by the Trust and
the maturity of futures contracts purchased or sold by the Trust)
received by the Custodian from issuers of the securities being held
for the Trust. With respect to tender or exchange offers, the
Custodian shall transmit
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<PAGE>
promptly to the Trust all written information received by the Custodian
from issuers of the securities whose tender or exchange is sought and
from the party (or his agents) making the tender or exchange offer. If
the Trust desires to take action with respect to any tender offer,
exchange offer or any other similar transaction, the Trust shall notify
the Custodian at least three business days prior to the date on which
the Custodian is to take such action.
2.15 Reports to Trust by Independent Public Accountants. The Custodian shall
provide the Trust, at such times as the Trust may reasonably require,
with reports by independent public accountants on the accounting
system, internal accounting control and procedures for safeguarding
securities, futures contracts and options on futures contracts,
including securities deposited and/or maintained in a Securities
System, relating to the services provided by the Custodian under this
Contract; such reports, shall be of sufficient scope and in sufficient
detail, as may reasonably be required by the Trust, to provide
reasonable assurance that any material inadequacies would be disclosed
by such examination, and, if there are no such inadequacies, the
reports shall so state.
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<PAGE>
3. Duties of the Custodian with Respect to Property of the Fund Held
Outside of the United States.
3.1 Appointment of Foreign Sub-Custodians.
The Fund hereby authorizes and instructs the Custodian to employ as
sub-custodians for the Fund's securities and other assets maintained
outside the United States the foreign banking institutions and foreign
securities depositories designated on Schedule A hereto ("foreign
sub-custodians"). Upon receipt of "Proper Instructions", as defined in
Section 4 of this Contract, together with a certified resolution of the
Fund's Board of Directors, the Custodian and the Fund may agree to
amend Schedule A hereto from time to time to designate additional
foreign banking institutions and foreign securities depositories to act
as sub-custodian. Upon receipt of Proper Instructions, the Fund may
instruct the Custodian to cease the employment of any one or more such
sub-custodians for maintaining custody of the Fund's assets.
3.2. Assets to be Held. The Custodian shall limit the securities and other
assets maintained in the custody of the foreign sub-custodians to: (a)
"foreign securities", as defined in paragraph (c)(1) of Rule 17f-5
under the Investment Company Act of 1940, and (b) cash and cash
equivalents in such amounts as the Custodian or the Fund may determine
to be reasonably necessary to effect the Fund's foreign securities
transactions.
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3.3 Foreign Securities Depositories. Except as may otherwise be agreed upon
in writing by the Custodian and the Fund, assets of the Fund shall be
maintained in foreign securities depositories only through arrangements
implemented by the foreign banking institutions serving as
sub-custodians pursuant to the terms hereof. Where possible, such
arrangements shall include entry into agreements containing the
provisions set forth in Section 3.5 hereof.
3.4 Segregation of Securities.
The Custodian shall identify on its books as belonging to the Fund, the
foreign securities of the Fund held by each foreign sub-custodian. Each
agreement pursuant to which the Custodian employs a foreign banking
institution shall require that such institution establish a custody
account for the Custodian on behalf of the Fund and physically
segregate in that account, securities and other assets of the Fund,
and, in the event that such institution deposits the Fund's securities
in a foreign securities depository, that it shall identify on its books
as belonging to the Custodian, as agent for the Fund, the securities so
deposited.
3.5 Agreement with Foreign Banking Institutions. Each agreement with a
foreign banking institution shall be substantially in the form set
forth in Exhibit 1 hereto and shall provide that: (a) the Fund's assets
will not be subject to any right, charge, security interest, lien
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or claim of any kind in favor of the foreign banking institution or its
creditors or agent, except a claim of payment for their safe custody or
administration; (b) beneficial ownership of the Fund's assets will be
freely transferable without the payment of money or value other than
for custody or administration; (c) adequate records will be maintained
identifying the assets as belonging to the Fund; (d) officers of or
auditors employed by, or other representatives of the Custodian,
including to the extent permitted under applicable law the independent
public accountants for the Fund, will be given access to the books and
records of the foreign banking institution relating to its actions
under its agreement with the Custodian; and (e) assets of the Fund held
by the foreign sub-custodian will be subject only to the instructions
of the Custodian or its agents.
3.6 Access of Independent Accountants of the Fund. Upon request of the
Fund, the Custodian will use its best efforts to arrange for the
independent accountants of the Fund to be afforded access to the books
and records of any foreign banking institution employed as a foreign
sub-custodian insofar as such books and records relate to the
performance of such foreign banking institution under its agreement
with the Custodian.
3.7 Reports by Custodian. The Custodian will supply to the Fund from time
to time, as mutually agreed upon, statements in respect of the
securities and other assets
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of the Fund held by foreign sub-custodians, including but not limited
to an identification of entities having possession of the Fund's
securities and other assets and advices or notifications of any
transfers of securities to or from each custodial account maintained by
a foreign banking institution for the Custodian on behalf of the Fund
indicating, as to securities acquired for the Fund, the identity of the
entity having physical possession of such securities.
3.8 Transactions in Foreign Custody Account.
(a) Except as otherwise provided in paragraph (b) of this Section 3.8,
the provision of Sections 2.2 and 2.7 of this Contract shall apply,
mutatis mutandis to the foreign securities of the Fund held outside the
United States by foreign sub-custodians.
(b) Notwithstanding any provision of this Contract to the contrary,
settlement and payment for securities received for the account of the
Fund and delivery of securities maintained for the account of the Fund
may be effected in accordance with the customary established securities
trading or securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs, including,
without limitation, delivering securities to the purchaser thereof or
to a dealer therefor (or an agent for such purchaser or dealer) against
a receipt with the expectation of receiving later payment for such
securities from such purchaser or dealer.
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<PAGE>
(c) Securities maintained in the custody of a foreign sub-custodian may
be maintained in the name of such entity's nominee to the same extent
as set forth in Section 2.3 of this Contract, and the Fund agrees to
hold any such nominee harmless from any liability as a holder of record
of such securities.
3.9 Liability of Foreign Sub-Custodians. Each agreement pursuant to which
the Custodian employs a foreign banking institution as a foreign
sub-custodian shall require the institution to exercise reasonable care
in the performance of its duties and to indemnify, and hold harmless,
the Custodian and each fund from and against any loss, damage, cost,
expense, liability or claim arising out of or in connection with the
institution's performance of such obligations. At the election of the
Fund, it shall be entitled to be subrogated to the rights of the
Custodian with respect to any claims against a foreign banking
institution as a consequence of any such loss, damage, cost, expense,
liability or claim if an to the extent that the Fund has not been made
whole for any such loss, damage, cost, expense, liability or claim.
3.10 Liability of Custodian. The Custodian shall be liable for the acts or
omissions of a foreign banking institution to the same extent as set
forth with respect to sub-custodians generally in this Contract and,
regardless of whether assets are maintained in the custody of a foreign
banking institution, a foreign
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securities depository or a branch of a U.S. bank as contemplated by
paragraph 3.13 hereof, the Custodian shall not be liable for any loss,
damage, cost, expense, liability or claim resulting from
nationalization, expropriation, currency restrictions, or acts of war
or terrorism or otherwise resulting from a bank or a securities
depository failure to exercise reasonable care. Notwithstanding the
foregoing provisions of this paragraph 3.10, in delegating custody
duties to State Street London Ltd., the Custodian shall not be relieved
of any responsibility to the Fund for any loss due to such delegation,
except such loss as may result from (a) political risk (including, but
not limited to, exchange control restrictions, confiscation,
expropriation, nationalization, insurrection, civil strife or armed
hostilities) or (b) other risk of loss (excluding a bankruptcy or
insolvency of State Street London Ltd. not caused by political risk)
for which neither the Custodian nor State Street London Ltd. would be
liable (including, but not limited to, losses due to Acts of God,
nuclear incident or other losses under circumstances where the
Custodian and State Street London Ltd. have exercised reasonable care).
3.11 Reimbursement for Advances. If the Fund requires the Custodian to
advance cash or securities for any purpose including the purchase or
sale of foreign exchange or of contracts for foreign exchange, or in
the event that the
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Custodian or its nominee shall incur or be assessed any taxes, charges,
expenses, assessments, claims or liabilities in connection with the
performance of this Contract, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful
misconduct, any property at any time held for the account of the Fund
shall be security therefor and should the Fund fail to repay the
Custodian promptly, the Custodian shall be entitled to utilize
available cash and to dispose of the Fund assets to the extent
necessary to obtain reimbursement.
3.12 Monitoring Responsibilities. The Custodian shall furnish annually to
the Fund, during the month of June, information concerning the foreign
sub-custodians employed by the Custodian. Such information shall be
similar in kind and scope to that furnished to the Fund in connection
with the initial approval of this Contract. In addition, the Custodian
will promptly inform the Fund in the event that the Custodian learns of
a material adverse change in the financial condition of a foreign
sub-custodian or any material loss of the assets of the Fund or in the
case of any foreign sub-custodian not the subject of an exemptive order
from the Securities and Exchange Commission is notified by such foreign
sub-custodian that there appears to be a substantial likelihood that
its shareholders' equity will decline below $200 million (U.S. dollars
or equivalent
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thereof) or that its shareholders' equity has declined below $200
million (in each case computed in accordance with generally accepted
U.S. accounting principles).
3.13 Branches of U.S. Banks.
(a) Except as otherwise set forth in this Contract, the provisions
hereof shall not apply where the custody of the Fund assets are
maintained in a foreign branch of a banking institution which is a
"bank" as defined by Section 2(a)(5) of the Investment Company Act of
1940 meeting the qualification set forth in Section 26(a) of said Act.
The appointment of any such branch as a sub-custodian shall be governed
by paragraph 1 of this Contract. (b) Cash held for the Fund in the
United Kingdom shall be maintained in an interest bearing account
established for the Fund with the Custodian's London branch, which
account shall be subject to the direction of the Custodian, State
Street London Ltd. or both.
4. Proper Instructions. Proper Instructions as used throughout this Contract
means writing signed or initialed by one or more person or persons as the Board
of Trustees shall have from time to time authorized. Each such writing shall set
forth the specific transaction or type of transaction involved, including a
specific statement of the purpose for which such action is requested. Oral
instructions will be considered Proper Instructions if the Custodian reasonably
believes them to have been given by a person authorized to give such
instructions with
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respect to the transaction involved. The Trust shall cause all oral instructions
to be confirmed in writing. Upon receipt of a certificate of the Secretary or an
Assistant Secretary as to the authorization by the Board of Trustees of the
Trust accompanied by a detailed description of procedures approved by the Board
of Trustees, Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices provided that the Board of
Trustees and the Custodian are satisfied that such procedures afford adequate
safeguards for the Trust's assets.
5. Actions Permitted without Express Authority. The Custodian may in
its discretion, without express authority from the Trust:
1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to its
duties under this Contract, provided that all such payments
shall be accounted for to the Trust;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Trust, checks,
drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and
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property of the Trust except as otherwise directed by the
Board of Trustees of the Trust.
6. Evidence of Authority. The Custodian shall be protected in acting upon any
instructions, notice, request, consent, certificate or other instrument or paper
believed by it to be genuine and to have been properly executed by or on behalf
of the Trust. The Custodian may receive and accept a certified copy of a vote of
the Board of Trustees of the Trust as conclusive evidence (a) of the authority
of any person to act in accordance with such vote or (b) of any determination or
of any action by the Board of Trustees pursuant to the Declaration of Trust as
described in such vote, and such vote may be considered as in full force and
effect until receipt by the Custodian of written notice to the contrary.
7. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income.
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of Trustees of the Trust to keep
the books of account of the Trust and/or compute the net asset value per share
of the outstanding shares of the Trust or, if directed in writing to do so by
the Trust, shall itself keep such books of account and/or compute such net asset
value per share. If so directed, the Custodian shall also calculate weekly the
net income of the Trust as described in the Trust's currently effective
prospectus and shall advise the Trust and the Transfer Agent weekly of the total
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<PAGE>
amounts of such net income and, if instructed in writing by an officer of the
Trust to do so, shall advise the Transfer Agent periodically of the division of
such net income among its various components. The calculations of the net asset
value per share and the weekly income of the Trust shall be made at the time or
times described from time to time in the Trust's currently effective prospectus.
8. Records.
The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will meet the
obligations of the Trust under the Investment Company Act of 1940, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder,
applicable federal and state tax laws and any other law or administrative rules
or procedures which may be applicable to the Trust. All such records shall be
the property of the Trust and shall at all times during the regular business
hours of the Custodian be open for inspection by duly authorized officers,
employees or agents of the Trust and employees and agents of the Securities and
Exchange Commission. The Custodian shall, at the Trust's request, supply the
Trust with a tabulation of securities owned by the Trust and held by the
Custodian and shall, when requested to do so by the Trust and for such
compensation as shall be agreed upon between the Trust and the Custodian,
include certificate numbers in such tabulations.
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<PAGE>
9. Opinion of Trust's Independent Accountant
The Custodian shall take all reasonable action, as the Trust may from
time to time request, to obtain from year to year favorable opinions from the
Trust's independent accountants with respect to its activities hereunder in
connection with the preparation of the Trust's Form N-2, and Form N-SAR or other
annual reports to the Securities and Exchange Commission and with respect to any
other requirements of such Commission.
10. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between the
Trust and the Custodian.
11. Responsibility of Custodian.
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties.
The Custodian shall be held to the exercise of reasonable care in carrying out
the provisions of this Contract and shall be indemnified by the Trust for any
action taken or omitted by it in the proper execution of instructions from the
Trust. It shall be entitled to rely on and may act upon advice of counsel for
the Trust on all matters and shall be without liability for any action
reasonably taken or omitted pursuant to such advice.
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<PAGE>
The Trust agrees to indemnify and hold harmless the Custodian and its
nominee from and against all taxes, charges, expenses, assessments, claims and
liabilities (including counsel fees) incurred or assessed against it or its
nominee in connection with the performance of this Contract, except such as may
arise from it or its nominee's own negligent action, negligent failure to act or
willful misconduct. The Custodian is authorized to charge any account of the
Trust for such items and its fees. To secure any such authorized charges and any
advances of cash or securities made by the Custodian to or for the benefit of
the Trust for any purpose which results in the Trust incurring and overdraft at
the end of any business day or for extraordinary or emergency purposes during
any business day, the Trust hereby grants to the Custodian a security interest
in and pledges to the Custodian securities held for it by the Custodian, in an
amount not to exceed five percent of the Trust's gross assets, the specific
securities to be designated in writing from time to time by the Trust or its
investment adviser (the "Pledged Securities"). Should the Trust fail to repay
promptly any advances of cash or securities, the Custodian shall be entitled to
use available cash and to dispose of the Pledged Securities as is necessary to
repay any such advances.
12. Effective Period, Termination and Amendment.
This Contract shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter provided, may
be amended at any time by mutual agreement of the parties hereto and may be
terminated by either
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<PAGE>
party by an instrument in writing delivered or mailed, postage prepaid to the
other party, such termination to take effect not sooner than thirty (30) days
after the date of such delivery or mailing; provided, however that the Custodian
shall not act under Section 2.10 hereof in the absence of receipt of an initial
certificate of the Secretary or an Assistant Secretary that the Board of
Trustees of the Trust has approved the initial use of a particular Securities
System and the receipt of an annual certificate of the Secretary or an Assistant
Secretary that the Board of Trustees has reviewed the use by the Trust of such
Securities System, as required in each case by Rule 17f-4 under the Investment
Company Act of 1940, as amended and; provided further, however, (a) that the
Trust shall not amend or terminate this Contract in contravention of any
applicable federal or state regulations, or any provision of the Declaration of
Trust, and (b) that the Trust may at any time by action of its Board of Trustees
(i) substitute another bank or trust company for the Custodian by giving notice
as described above to the Custodian, or (ii) immediately terminate this Contract
in the event of the appointment of a conservator or receiver for the Custodian
or upon the happening of a like event at the direction of an appropriate
regulatory agency or court of competent jurisdiction.
Upon termination of the Contract, the Trust shall pay to the Custodian
such compensation as may be due as of the date of such termination and shall
likewise reimburse the Custodian for its costs, expenses and disbursements.
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<PAGE>
13. Successor Custodian.
If a successor custodian shall be appointed by the Board of Trustees of
the Trust, the Custodian shall, upon termination, deliver to such successor
custodian at the office of the Custodian, duly endorsed and in the form for
transfer, all securities then held by it hereunder and shall transfer to an
account of the successor custodian all of the Trust's securities held in a
Securities System.
If no such successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a certified copy of a vote of the Board of
Trustees of the Trust, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Trustees shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company Act of 1940, of
its own selection, having an aggregate capital, surplus, and undivided profits,
as shown by its last published report, of not less than $25,000,000, all
securities, funds and other properties held by the Custodian and all instruments
held by the Custodian relative thereto and all other property held by it under
this Contract and to transfer to an account of such successor custodian all of
the Trust's securities held in any Securities System. Thereafter, such bank or
trust company shall be the successor of the Custodian under this Contract.
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<PAGE>
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Trust to procure the certified copy of the vote referred to or of
the Board of Trustees to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
14. Interpretive and Additional Provisions
In connection with the operation of this Contract, the Custodian and
the Trust may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, provided that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations or any provision of
the Declaration of Trust of the Trust. No interpretive or additional provisions
made as provided in the preceding sentence shall be deemed to be an amendment of
this Contract.
15. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
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<PAGE>
16. Prior Contracts
This Contract supersedes and terminates, as of the date hereof, all
prior contracts between the Trust and the Custodian relating to the custody of
the Fund's assets.
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 24th day of July, 1989.
ATTEST MFS CHARTER INCOME TRUST
LINDA J. HOARD By A. KEITH BRODKIN
Linda J. Hoard A. Keith Brodkin
ATTEST STATE STREET BANK AND TRUST COMPANY
ILLEGIBLE By: ILLEGIBLE
(Illegible) (Illegible)
Assistant Secretary Vice President
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<PAGE>
Schedule A
The following foreign banking institutions and foreign securities
depositories have been approved by the Board of Trustees of MFS Charter Income
Trust for use as sub-custodians for the Fund's securities and other assets:
(insert banks and securities depositories)
Country Bank
Australia ANZ Banking Group Ltd.
Austria Girozentrale Und Bank Der
Osterreichischen
Belgium Banque Bruxelles Lambert
Canada Canada Trust Company
Denmark Den Danske Bank
Finland Kansallis-Osake Pankki
France Credit Commercial De France
Germany Berliner Handels Und
Frankfurter Bank
Hong Kong Standard Chartered Bank
Italy Credito Italiano
Japan Sumitomo Trust & Banking
Company Limited
Malaysia Standard Chartered Bank
Mexico Citibank Mexico
Netherlands Bank Mees & Hope, N.V.
Algemene Bank Nederland
New Zealand Westpac Banking Corp.
Norway Christiana Bank Og
Kreditkasse
Philippines Standard Chartered Bank
Singapore DBS Trustee Ltd.
Spain Banco Hispano Americano
Sweden Skandinaviska Enskilda Banken
Switzerland Union Bank of Switzerland
Thailand Standard Chartered Bank
United Kingdom State Street London Limited
State Street Boston Corp.
Depositories
Austria Oesterreichischen
Kontrollbank AG
Wertpapiersammelbank beider
(OeKB-WSB)
Belgium Caisse Interprofessionelle de
Deports et de Virements de Titres
S.A. (C.I.K.)
Canada The Canada Depository for Securities
Ltd. (CDS)
<PAGE>
Denmark Vaerdipapircentralen (VP-Centralen)
France SICOVAM
Germany Kassenverein
Italy Monte Titoli SPA
Mexico Instituto Nacionel de Valares
Netherlands Netherlands Clearing Institute for
Giro Securities Deliveries (NECIGEF)
New Zealand The Reserve Bank of New Zealand
Spain Legal depository system (through the
Junita Sindical in force in Spain)
Switzerland Schweizerische Effekten Giro A.G.
(SEGA)
- ------------------------------------------------------------------------------
EuroClear (Brussels, Belgium)
Cedel (Luxembourg)
<PAGE>
EXHIBIT I
CUSTODIAN AGREEMENT
To:
Gentlemen:
The undersigned ("State Street") hereby requests that you (the "Bank")
establish a custody account and a cash account for each State Street client
whose account is identified to this Agreement. Each such custody or cash account
as applicable will be referred to herein as the "Account" and will be subject to
the following terms and conditions:
1. The Bank shall hold as agent for State Street and shall physically
segregate in the Account such cash, bullion, coin, stocks, shares, bonds,
debentures, notes and other securities and other property which is delivered to
the Bank for that State Street Account (the "Property").
2. (a) Without the prior approval of State Street it will not deposit
securities in any securities depository or utilize a clearing agency,
incorporated or organized under the laws of a country other than the United
States, unless such depository or clearing house operates the central system for
handling of securities or equivalent book-entries in that country or operates a
transnational system for the central handling of securities or equivalent
book-entries.
(b) When Securities held for an Account are deposited in a
securities depository or clearing agency by the Bank, the Bank shall identify on
its books as belonging to State Street as agent for such account, the Securities
so deposited.
The Bank represents that either:
3. (a) It currently has stockholders' equity in excess of $200 million
(US dollars or the equivalent of US dollars computed in accordance with
generally accepted US accounting principles) and will promptly inform State
Street in the event that there appears to be a substantial likelihood that its
stockholders' equity will decline below $200, or in any event, at such time as
its stockholders' equity in fact declines below $200 million; or
(b) It is the subject of an exemptive order issued by the
United States Securities and Exchange Commission, which such order permits State
Street to employ the Bank as a subcustodian, notwithstanding the fact that the
Bank's stockholders' equity is currently below $200 million or may in the future
decline below $200 million due to currency fluctuation.
4. Upon the written instructions of State Street as permitted by
Section 8, the Bank is authorized to pay out cash from the Account and to sell,
assign, transfer, deliver or exchange, or to purchase for the Account,
<PAGE>
any and all stocks, shares, bonds, debentures, notes and other securities
("Securities") bullion, coin and other property, but only as provided in such
written instructions. The Bank shall not be held liable for any act or omission
to act on instructions given or purported to be given should there be any error
in such instructions.
5. Unless the Bank receives written instructions of State Street to the
contrary, the Bank is authorized:
a. To promptly receive and collect all income and principal
with respect to the Property and to credit cash receipts to
the Account;
b. To promptly exchange Securities where the exchange is purely
ministerial (including, without limitation, the exchange of
temporary Securities for those in definitive form and the
exchange of warrants, or other documents of entitlement to
Securities, for the Securities themselves);
c. To promptly surrender Securities at maturity or when called
for redemption upon receiving payment therefor;
d .Whenever notification of a rights entitlement or a
fractional interest resulting from a rights issue, stock
dividend or stock split is received for the Account and such
rights entitlement or fractional interest bears an
expiration date, the Bank will endeavor to obtain State
Street's instructions, but should these not be received in
time for the Bank to take timely action, the Bank is
authorized to sell such rights entitlement or fractional
interest and to credit the Account;
e. To hold registered in the name of the nominee of the Bank or
its agents such Securities as are ordinarily held in
registered form;
f. To execute in State Street's name for the Account, whenever
the Bank deems it appropriate, such ownership and other
certificates as may be required to obtain the payment of
income from the Property; and
g. To pay or cause to be paid from the Account any and all taxes
and levies in the nature of taxes imposed on such assets by
any governmental authority, and shall use reasonable efforts
to promptly reclaim any foreign withholding tax relating to
the Account.
6. If the bank shall receive any proxies, notices, reports, or other
communications relative to any of the Securities of the Account in connection
with tender offer; reorganizations, mergers, consolidations, or similar events
which may have an impact upon the issuer thereof, the Bank shall promptly
transmit any such communication to State Street by means as will permit State
Street to take timely action with respect thereto.
7. The Bank is authorized in its discretion to appoint brokers and
agents in connection with the Bank's handling of transactions relating to the
Property provided that
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<PAGE>
any such appointment shall not relieve the Bank of any of its responsibilities
or liabilities hereunder.
8. Written instructions shall include (i) instructions in writing
signed by such persons as are designated in writing by State Street (ii) telex
or tested telex instructions of State Street, (iii) other forms of instruction
in computer readable form as shall be customarily utilized for the transmission
of like information and (iv) such other forms of communication as from time to
time shall be agreed upon by State Street and the Bank.
9. The Bank shall supply periodic reports with respect to the
safekeeping of assets held by it under this Agreement. The content of such
reports shall include but not be limited to any transfer to or from any Account
held by the Bank hereunder and such other information as State Street may
reasonably request.
10. In addition to its obligations under Section 2 hereof, the Bank
shall maintain such other records as may be necessary to identify the assets
hereunder as belonging to each State Street client identified to this Agreement
from time to time.
11. The Bank agrees that its books and records relating to its actions
under this Agreement shall be opened to the physical, on-premises inspection and
audit at reasonable times by officers of, auditors employed by or other
representatives of State Street (including to the extent permitted under
___________ law the independent public accountants for any entity whose Property
is being held hereunder) and shall be retained for such period as shall be
agreed by State Street and the Bank.
12. The Bank shall be entitled to reasonable compensation for its
services and expenses as custodian under this Agreement, as agreed upon from
time to time by the Bank and State Street.
13. The Bank shall exercise reasonable care in the performance of its
duties as are set forth or contemplated herein or contained in instructions
given to the Bank which are not contrary to this Agreement, and shall maintain
adequate insurance and agrees to indemnify and hold State Street and each
Account from and against any loss, damage, cost, expense, liability or claim
arising out of or in connection with the Bank's performance of its obligations
hereunder.
14. The Bank agrees that (i) the Property is not subject to any right,
charge, security interest, lien or claim of any kind in favor of the Bank or any
of its agents or its creditors except a claim of payment for their safe custody
and administration and (ii) the beneficial ownership of the Property shall be
freely transferable without the payment of money or other value other than for
safe custody or administration.
15. This agreement may be terminated by the Bank or State Street by at
least 60 days' written notice to the other, sent by registered mail or express
courier. The Bank, upon the date this Agreement terminates pursuant to notice
which has been given in a timely fashion, shall deliver the Property in
accordance with written instructions of State Street specifying the name(s) of
the persons(s) to whom the Property shall be delivered.
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<PAGE>
16. The Bank and State Street shall each use its best efforts to
maintain the confidentiality of the Property in each Account, subject, however,
to the provisions of any laws requiring the disclosure of the Property.
17. The Bank agrees to follow such Operating Requirements as State
Street may require from time to time. A copy of the current State Street
Operating Requirements is attached as an exhibit to this Agreement.
18. Unless otherwise specified in this Agreement, all notices with
respect to matters contemplated by this Agreement shall be deemed duly given
when received in writing or by tested telex by the Bank or State Street at their
respective addresses set forth below, or at such other address as specified in
each case in a notice similarly give:
To State Street Global Custody Services Division
STATE STREET BANK AND
TRUST COMPANY
P.O. Box 470
Boston, Massachusetts 02102
To the Bank:
19. This Agreement shall be governed and construed in accordance with
the laws of ________.
Please acknowledge your agreement to the foregoing by executing a copy
of this letter.
Very truly yours,
STATE STREET BANK AND TRUST COMPANY
By ______________________________
Agreed to by:
By __________________________
Date _________________________
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<PAGE>
EXHIBIT NO. 99(j)(2)
AMENDMENT
The Custodian Contract dated July 24, 1989 between MFS Charter Income
Trust (referred to herein as the "Trust") and State Street Bank and Trust
Compnay (the "Custodian") is hereby amended as follows:
I. Section 2.1 is amended to read as follows:
"Holding Securities". The Custodian shall hold and physically segregate
for the account of the Trust all non-cash property, including all securities
owned by the Trust, other than (a) securities which are maintained pursuant to
Section 2.10 in a clearing agency which acts as a securities depository or in a
book-entry system authorized by the U.S. Department of the Treasury,
collectively referred to herein as "Securities System" and (b) commercial paper
of an issuer for which State Street Bank and Trust Company acts as issuing and
paying agent ("Direct Paper") which is deposited and/or maintained in the Direct
Paper System of the Custodian pursuant to Section 2.10A.
II. Section 2.2 is amended to read, in relevant part as follows:
"Delivery of Securities. The Custodian shall release and
deliver securities owned by the Trust held by the Custodian or in a Securities
System account of the Custodian or in the
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<PAGE>
Custodian's Direct Paper book entry system account ("Direct Paper System
Account") only upon receipt of Proper Instructions which may be continuing
instructions when deemed appropriate by the parties, and only in the following
cases:
1) . . . . .
.
.
.
14) . . . . ."
III. Section 2.7(1) is amended to read in relevant part as follows:
"Payment of Trust Monies. Upon receipt of Proper Instructions,
which may be continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out monies of the Trust in the following cases only:
1) Upon the purchase of securities, options, future
contracts or options on futures contracts for the
account of the Trust but only (a) against the
delivery of such securities or evidence of title
to such options, futures contracts or options on
futures contracts, to the Custodian (or any bank,
banking firm or trust company doing business in
the United States or abroad which is qualified
-2-
<PAGE>
under the Investment Act of 1940, as amended, to
act as a custodian and has been designated by the
Custodian as its agent for this purpose)
registered in the name of the Trust or in the
name of a nominee of the Custodian referred to in
Section 2.3 hereof or in proper form for
transfer; (b) in the case of a purchase effected
through a Securities System, in accordance with
the conditions set forth in Section 2.10 hereof
or (c) in the case of a purchase involving the
Direct Paper System, in accordance with the
conditions set forth in Section 2.10A; or (d) in
the case of repurchase agreements entered into
between the Trust and the Custodian, or another
bank, or a broker-dealer which is a member of
NASD, (i) against delivery of the securities
either in certificate form or through an entry
crediting the Custodian's account at the Federal
Reserve Bank with such securities or (ii) against
delivery of the receipt evidencing purchase by
the Trust of securities owned by the Custodian
along with written evidence of the agreement by
the Custodian to repurchase such securities from
the Trust or (e) for transfer to a time deposit
account of the Trust in any bank, whether
domestic or foreign; such transfer may be
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<PAGE>
effected prior to receipt of a confirmation from
a broker and/or the applicable bank pursuant to
Proper Instructions from the Trust as defined in
Section 4;"
IV. Following Section 2.10 there is inserted a new Section 2.10.A to
read as follows:
2.10.A "Trust Assets Held in the Custodian's Direct Paper System. The Custodian
may deposit and/or maintain securities owned by the Trust in the Direct Paper
System of the Custodian subject to the following provisions:
1) No transaction relating to securities in the
Direct Paper System will be effected in the
absence of Proper Instructions;
2) The Custodian may keep securities of the Trust in
the Direct Paper System only if such securities
are represented in an account ("Account") of the
Custodian in the Direct Paper System which shall
not include any assets of the Custodian other
than assets held as a fiduciary, custodian or
otherwise for customers;
3) The records of the Custodian with respect to
securities of the Trust which are maintained in
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<PAGE>
the Direct Paper System shall identify by
book-entry those securities belonging to the
Trust;
4) The Custodian shall pay for the securities
purchased for the account of the Trust upon the
making of an entry on the records of the
Custodian to reflect such payment and transfer of
securities to the account of the Trust. The
Custodian shall transfer securities sold for the
account of the Trust upon the making of an entry
on the records of the Custodian to reflect such
transfer and receipt of payment for the account
of the Trust;
5) The Custodian shall furnish the Trust
confirmation of each transfer to or from the
account of the Trust, in the form of a written
advice or notice, of Direct Paper on the next
business day following such transfer and shall
furnish to the Trust copies of daily transaction
sheets reflecting each day's transaction in the
Securities System for the account of the Trust;
6) The Custodian shall provide the Trust with any
report on its system of internal accounting
control as the Trust may reasonably request from
time to time."
-5-
<PAGE>
V. Section 12 is hereby amended to read as follows:
"Effective Period, Termination and Amendment"
This contract shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter provided, may
be amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party such termination to take effect not sooner
than thirty (30) days after the date of such delivery or mailing; provided,
however that the Custodian shall not act under Section 2.10 hereof in the
absence of receipt of an initial certificate of the Secretary or an Assistant
Secretary that the Board of Trustees of the Trust has approved the initial use
of a particular Securities System and the receipt of an annual certificate of
the Secretary or an Assistant Secretary that the Board of Trustees has reviewed
the use by the Trust of such Securities System, as required in each case by Rule
17f-4 under the Investment Company Act of 1940, as amended and that the
Custodian shall not act under Section 2.10.A hereof in the absence of receipt of
an initial certificate of the Secretary or an Assistant Secretary that the Board
of Trustees has approved the initial use of the Direct Paper System and the
receipt of an annual certificate of the Secretary or an Assistant Secretary that
the Board of Trustees has reviewed the use by the Trust of the Direct Paper
System; provided further, however, that the Trust shall not amend or terminate
this
-6-
<PAGE>
Contract in contravention of any applicable federal or state regulations, or any
provision of the Declaration of Trust, and further provided, that the Trust may
at any time by action of its Board of Trustees (i) substitute another bank or
trust company for the Custodian by giving notice as described above to the
Custodian, or (ii) immediately terminate this Contract in the event of the
appointment of a conservator or receiver for the Custodian by the Comptroller of
the Currency or upon the happening of a like event at the direction of an
appropriate regulatory agency or court of competent jurisdiction.
Upon termination of the Contract, the Trust shall pay to the Custodian
such compensation as may be due as of the date of such termination and shall
likewise reimburse the Custodian for its costs, expenses and disbursements."
Except as otherwise expressly amended and modified herein, the
provisions of the Custodian Contract shall remain in full force and effect.
-7-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to be executed in its name and on its behalf by its duly authorized
representatives and its Seal to be hereto affixed as of the 11th day of
September, 1991.
ATTEST: MFS CHARTER INCOME TRUST
LINDA J. HOARD By THOMAS W. LONDON
Linda J. Hoard Thomas W. London
Assistant Secretary Treasurer
ATTEST: STATE STREET BANK AND TRUST COMPANY
ILLEGIBLE SIGNATURE By ILLEGIBLE SIGNATURE
(Illegible Signature) (Illegible Signature)
Assistant Secretary Vice President
-8-
<PAGE>
AMENDMENT TO CUSTODIAN CONTRACT
Agreement made as of this 1st day of October, 1989 by and between State
Street Bank and Trust Company (the "Custodian") and MFS Charter Income Trust
(the "Trust").
WHEREAS, the Custodian and the Trust are parties to a Custodian Contract
dated July 24, 1989 (the "Custodian Contract") which governs the terms and
conditions under which the Custodian maintains custody of the securities and
other assets of the Trust;
WHEREAS, the Custodian may delegate to Massachusetts Financial Services
Company ("MFS") the performance of certain duties the Custodian would otherwise
be obligated to perform pursuant to the Custodian Agreement;
WHEREAS, the Trust agrees to any such delegation of certain Custodian
duties;
NOW THEREFORE, the Custodian and the Trust hereby amend the terms of the
Custodian Contract and mutually agree to the following:
1) Add New Section 17 which shall read as follows:
17. Delegation of Certain Custodian Duties to MFS
<PAGE>
The Custodian may delegate to MFS the performance of any or all of its
duties hereunder relating to (i) accounting for investments in currency and for
financial instruments (including, without limitation, options, contracts,
futures contracts, options on futures contracts, options on foreign currency and
forward foreign currency exchange contracts) and (ii) federal and state
regulatory compliance. The Custodian shall compensate MFS for the performance of
such duties at such fee or fees as MFS shall determine to be equal to MFS's cost
for performing such duties (the "MFS Fees"). Following its payment of the MFS
Fees to MFS, the Custodian shall recover the amount of the MFS Fees and from the
Trust on such terms as the Custodian and the Trust shall agree. MFS assumes
responsibility for all duties delegated to it by the Custodian pursuant to this
Section 17, and the Custodian may rely on MFS for the accuracy and correctness
of the accounting information provided by MFS to the Custodian pursuant to this
Section 17.
IN WITNESS WHEREOF, each of the parties hereto have caused this instrument to be
executed in its name and on its behalf by a duly authorized representative as of
the aforementioned day and year.
ATTEST MFS CHARTER INCOME TRUST
LINDA J. HOARD By A. KEITH BRODKIN
Linda J. Hoard A. Keith Brodkin
ATTEST STATE STREET BANK AND TRUST COMPANY
ILLEGIBLE SIGNATURE By ILLEGIBLE SIGNATURE
(Illegible Signature) (Illegible Signature)
Assistant Secretary Vice President
<PAGE>
EXHIBIT NO. 99(p)
MFS CHARTER INCOME TRUST
MFS Charter Income Trust
200 Berkeley Street
Boston, MA 02116
Gentlemen:
In connection with my purchase of ___________________________ Shares of
Beneficial Interest (without par value) of MFS Charter Income Trust, I hereby
represent and warrant to you that I am purchasing said shares as an investment
with no intention of redeeming or reselling said shares until a date at least
two years hereafter.
Very truly yours,
