EXHIBIT NO. 99.5(b)
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT, made as of this 1st day of September, 1993 by and
between MFS SERIES TRUST VII, a Massachusetts business trust (the "Trust"), on
behalf of MFS VALUE FUND, a series of the Trust (the "Fund"), and MASSACHUSETTS
FINANCIAL SERVICES COMPANY, a Delaware corporation (the "Adviser").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end investment company
registered under the Investment Company Act of 1940; and
WHEREAS, the Adviser is willing to provide business management services to the
Fund on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements of the
parties hereto as herein set forth, the parties covenant and agree as follows:
ARTICLE 1. Duties of the Adviser. The Adviser shall provide the Fund 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 Fund 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 Fund shall be held
uninvested, subject always to the restrictions of the Trust's Declaration of
Trust, dated November 7, 1980, and By-Laws, as each may be amended from time to
time (respectively, the "Declaration" and the "By-Laws"), to the provisions of
the Investment Company Act of 1940 and to the Fund'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 Fund'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similarly notified that such determination has been revoked.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 Fund, 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 Fund's
account with brokers or dealers selected by it, and to that end the Adviser is
authorized as the agent of the Fund to give instructions to the Custodian of the
Fund as to deliveries of securities and payments of cash for the account of the
Fund. In connection with the selection of such brokers or dealers and the
placing of such orders, the Adviser is directed to seek for the Fund execution
at the most favorable price by responsible brokerage firms at reasonably
competitive commission rates. In fulfilling this requirement the Adviser shall
not be deemed to have acted unlawfully or to have breached any duty, created by
this Agreement or otherwise, solely by reason of its having caused the Fund to
pay a broker or
dealer an amount of commission for effecting a securities transaction in excess
of the amount of commission another broker or dealer would have charged for
effecting that transaction, if the Adviser determined in good faith that such
amount of commission was reasonable in relation to the value of the brokerage
and research services provided by such broker or dealer, viewed in terms of
either that particular transaction or the Adviser's overall responsibilities
with respect to the Fund and to other clients of the Adviser as to which the
Adviser exercises investment discretion.
ARTICLE 2. Allocation of Charges and Expenses. The Adviser shall furnish at its
own expense investment advisory and administrative services, office space,
equipment and clerical personnel necessary for servicing the investments of the
Fund and maintaining its organization, and investment advisory facilities and
executive and supervisory personnel for managing the investments and effecting
the portfolio transactions of the Fund. 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 Fund 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 Fund, fees and expenses of
independent auditors, of legal counsel and of any transfer agent, registrar or
dividend disbursing agent of the Fund, expenses of repurchasing and redeeming
shares and servicing shareholder accounts, expenses of preparing, printing and
mailing stock certificates, prospectuses, shareholder reports, notices, proxy
statements and reports to governmental officers and commissions, brokerage and
other expenses connected with the execution of portfolio security transactions,
insurance premiums, fees and expenses of the custodian for all services to the
Fund, including safekeeping of funds and securities and keeping of books and
calculating the net asset value of shares of the Fund, expenses of shareholder
meetings and expenses relating to the issuance, registration and qualification
of shares of the Fund.
ARTICLE 3. Compensation of the Adviser. For the services to be rendered and the
facilities to be provided, the Fund shall pay to the Adviser an investment
advisory fee computed and paid monthly at the annual rate equal to 0.75% of the
Fund's average daily net assets. Payment of the foregoing fee is subject to the
provision that within 30 days following the close of any fiscal year of the
Fund, the Adviser will pay to the Fund a sum equal to the amount by which the
aggregate expenses of the Fund, but excluding interest, taxes and brokerage
commissions, incurred during such fiscal year exceed 1 1/2% of the Fund's
average daily net assets for such fiscal year. The obligation of the Adviser to
reimburse the Fund for expenses incurred for any year may be terminated or
revised at any time by the Adviser without the consent of the Fund by notice in
writing from the Adviser to the Fund, provided, however, that termination or
revision of the Adviser's obligation to reimburse for expenses is not to be
effective with respect to the fiscal year within which such notice is given. If
the Adviser shall serve for less than the whole of any period specified in this
Article 3, the compensation to the Adviser shall be prorated.
ARTICLE 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's principal
underwriter, if any, as principals in making
purchases or sales of securities or other property for the account of the Fund,
will not take a long or short position in the shares of the Fund 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 Fund relative to
the Adviser and its Directors and officers.
ARTICLE 5. Limitation of Liability of the Adviser. The Adviser shall not be
liable for any error of judgment or mistake of law or for any loss arising out
of any investment or for any act or omission in the execution and management of
the Fund, except for willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of reckless disregard of its obligations
and duties hereunder. As used in this Article 5, the term "Adviser" shall
include Directors, officers and employees of the Adviser as well as that
corporation itself.
ARTICLE 6. Activities of the Adviser. The services of the Adviser to the Fund
are not to be deemed to be exclusive, the Adviser being free to render services
to others. The Adviser may permit other fund clients to use the initials "MFS"
in their names. The Fund agrees that if the Adviser shall for any reason no
longer serve as the Adviser to the Fund, the Fund 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 become similarly interested in the Fund and
that the Adviser may be or become interested in the Fund as a shareholder or
otherwise.
ARTICLE 7. Duration, Termination and Amendments of this Agreement. This
Agreement shall become effective on the date of its execution and shall govern
the relations between the parties hereto thereafter, and shall remain in force
until August 1, 1995 on which date it will terminate unless its continuance
after August 1, 1995 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 approval, and (ii) by the Trustees of the Trust, or by vote of a
majority of the outstanding voting securities of the Fund. The aforesaid
requirement that continuance of this Agreement be "specifically approved at
least annually" shall be construed in a manner consistent with the Investment
Company Act of 1940 and the Rules and Regulations thereunder.
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 Fund, or by the Adviser, in each case on not more than 60 days' nor less
than 30 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 Fund.
The terms "vote of a majority of the outstanding voting securities",
"assignment", "affiliated person", and "interested persons", when used in this
Agreement, shall have the respective meanings specified 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 have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, and their respective seals to be hereto affixed, all
as of the day and year first written above. 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 applicable to the Fund.
MFS SERIES TRUST VII on behalf of
MFS VALUE FUND
By: A. XXXXX XXXXXXX
A. Xxxxx Xxxxxxx
Chairman and Trustee
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By: A. XXXXX XXXXXXX
A. Xxxxx Xxxxxxx
Chairman
