Exhibit (d)(1)
MGF TENDER AND STANDSTILL AGREEMENT
This Agreement ("Agreement") is made and entered into effective as of the 4th
day of October 2007 by and between Massachusetts Financial Services Company
("MFS"), a Delaware corporation, having its principal place of business at 000
Xxxxxxxx Xxxxxx, Xxxxxx, XX 00000, and Bulldog Investors General Partnership, a
New York general partnership, having a place of business at Park 00 Xxxx, Xxxxx
Xxx, Xxxxx 000, Xxxxxx Xxxxx, XX 00000, and its officers, directors, partners,
employees, and "affiliated persons" (as that term is defined in the Investment
Company Act of 1940) (collectively "Bulldog").
WHEREAS, MFS is a registered investment adviser that acts as adviser
to MFS Government Markets Income Trust ("MGF," or the "Trust");
WHEREAS, on March 7, 2007, Bulldog submitted a precatory shareholder
proposal for inclusion in the proxy statement of the Trust relating to the
Trust's 2007 annual meeting of shareholders, requesting that the Trust's Board
of Trustees "promptly take the steps necessary to open end the Trust or
otherwise enable shareholders to realize net asset value ('NAVY) for their
shares," as subsequently revised on May 12, 2007 (the "Bulldog Proposal");
WHEREAS, the Bulldog Proposal was included in the Trust's definitive
proxy statement filed with the SEC on September 14, 2007 ("Proxy Statement"),
as amended from time to time;
WHEREAS, the Proxy Statement also included as Item 1 a proposal to
elect Xxxxxx X. Xxxxxxx, Xxxxxxxx X. Xxxx, M.D., Xxxxxxxx X. Xxxxxx, and Xxxxxx
X. Xxxxxxxx (the "Incumbent Trustees") as Trustees of the Trust and as Item 2 a
"proposal to amend the Trust's fundamental investment policy concerning
borrowing" to permit the Trust to use leverage (the "Leverage Proposal");
WHEREAS, on September 12, 2007, Bulldog filed a preliminary proxy
statement with the SEC ("Bulldog Proxy Statement") and included as Proposal 1
a proposal to elect each of Xxxxxx Xxxxx, Xxxxxxx Xxxxxxxxx, Xxxxxx Xxxxxxxxx,
and Xxxxxx Xxx (the "Bulldog Nominees") as a Trustee of the Trust;
WHEREAS, on September 12 and 28, 2007, Bulldog made SEC filings
relating to a tender offer for 5,000,000 common shares of the Trust at 96.25%
of NAV on November 9, 2007, subject to certain conditions including the absence
of a competing tender offer (the "Bulldog Offer");
WHEREAS, the parties to this Agreement wish to resolve disputed
matters concerning the Bulldog Proposal, the Bulldog Offer, the Bulldog
Nominees, and the Leverage Proposal;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, and other good and valuable consideration, the
parties agree as follows:
1. RECOMMENDATION TO TRUSTEES. MFS agrees to recommend that the Board of
Trustees of the Trust approve a tender offer by the Trust for 37.5% of its
issued and outstanding common shares at a price equal to 99% of net asset value
("NAV") to expire as of market close on November 14, 2007, subject to
substantially the same the conditions as are set forth in Appendix A hereto
(the "MGF Tender");
2. BULLDOG OBLIGATIONS. Upon public announcement by the Trust of its intention
to commence the MGF Tender (the "Announcement"):
a) Bulldog shall take all necessary steps to withdraw the Bulldog Proposal
within 1 business day of the Announcement;
b) Bulldog shall take all necessary steps to terminate the Bulldog Offer
within 1 business day of the Announcement;
c) Bulldog shall take all necessary steps to withdraw the Bulldog Nominees
as nominees for Trustee of the Trust within 1 business day of the
Announcement;
d) Bulldog shall agree to vote at the Trust's November 1 annual meeting FOR
the Leverage Proposal and, at MFS's election, shall advocate in a manner
not unacceptable to MFS that other shareholders vote FOR the Leverage
Proposal;
e) Bulldog shall, for a period of five years from the time that the MGF
Tender is consummated, (i) refrain from directly or indirectly making
or supporting any shareholder proposals concerning the Trust, (ii) vote
in accordance with MFS's recommendations on any matters affecting the
Trust, (iii) refrain from directly or indirectly soliciting or
encouraging others to vote against MFS's recommendations on any
matters affecting the Trust; and (iv) refrain from directly or
indirectly proposing, or making any filing with respect to, any form of
business combination, restructuring, recapitalization, dissolution or
similar transaction involving the Trust, including, without limitation,
a merger, tender or exchange offer, open-ending, share repurchase or
liquidation of the Trust's assets.
f) Bulldog shall, for a period of 18 months from the time that the MGF
Tender is consummated, (i) refrain from directly or indirectly making or
supporting any shareholder proposals concerning any other existing or
future MFS-advised closed-end funds ("Other MFS Funds"), (ii) vote in
accordance with MFS's recommendations on any matters affecting the Other
MFS Funds, (iii) refrain from directly or indirectly soliciting or
encouraging others to vote against MFS's recommendations on any matters
affecting the Other MFS Funds; and (iv) refrain from directly or
indirectly proposing, or making any filing with respect to, any form of
business combination, restructuring, recapitalization, dissolution or
similar transaction involving the Other MFS Funds, including, without
limitation, a merger, tender or exchange offer, open-ending, share
repurchase or liquidation of the Other MFS Funds' assets.
3. NO DISPARAGEMENT. For a period of 18 months from the date of this Agreement,
each party hereto shall refrain from directly or indirectly disparaging,
impugning, or taking any action reasonably likely to damage the reputation of
the other party or the Trustees of the Trust with respect to the MGF Tender and
the matters that are the subject of the Proxy Statement, the Bulldog Offer, and
the Bulldog Proposal. The foregoing shall not apply to any compelled testimony
or production of information, either by legal process, subpoena, or as part of
a response to a request for information from any governmental authority with
jurisdiction over the party from whom information is sought.
4. NO ASSIGNMENT. This Agreement shall be binding upon the parties and their
respective legal successors and permitted assigns. Neither party may assign
this Agreement without the prior written consent of the other party and any
such attempted assignment shall be void.
5. APPLICABLE LAW. The validity of this Agreement, the construction and
enforcement of its terms, and the interpretations of the rights and duties of
the parties shall be governed by the laws of the State of New York, without
regard to conflicts of law rules. The parties hereto agree that the state and
federal courts of the State of New York shall be the proper forums for any
legal controversy arising in connection with this Agreement, and the parties
hereby irrevocably and unconditionally consent to the exclusive jurisdiction of
such courts for such purposes.
6. INJUNCTIVE RELIEF: Each party acknowledges that a breach of its obligations
under this Agreement may result in irreparable harm to the other party for
which monetary damages will not be sufficient. Each party hereto agrees that,
in the event of a breach or threatened breach by the other party of its
obligations under this Agreement, the non-breaching party shall be entitled, in
addition to its other rights and remedies hereunder or at law, to injunctive or
other equitable relief, and such further relief as may be proper from a court
of competent jurisdiction, including specific performance of the obligations
set forth in Paragraph 2(e) and 2(f) of this Agreement.
7. MODIFICATION. No modification, amendment, supplement to or waiver of this
Agreement of any of its provisions shall be binding upon the parties hereto
unless made in writing and duly signed by all parties.
8. INVALIDITY. In the event that any one or more of the provisions of this
Agreement shall for any reason be held to be invalid, illegal, or
unenforceable, the remaining provisions of this Agreement shall be unimpaired,
and the invalid, illegal or unenforceable provision shall be replaced by a
mutually acceptable provision, which being valid, legal and enforceable, comes
closest to the economic effect and intent of the parties underlying the
invalid, illegal or unenforceable provision.
9. NO WAIVER. A waiver of a breach or default under this Agreement shall not be
a waiver of any other or subsequent breach or default. The failure or delay in
enforcing compliance with any term or condition of this Agreement shall not
constitute a waiver of such term or condition unless such term or condition is
expressly waived in writing,
10. COUNTERPARTS. This Agreement may be executed in counterparts transmitted by
facsimile or other electronic means, and each counterpart shall have the effect
of an original.
11. ENTIRE AGREEMENT. This Agreement and any other written agreement entered
into by the parties on or after the date of this Agreement shall constitute the
entire Agreement among the parties and shall supersede all previous agreements,
promises, proposals, representations, understandings and negotiations, whether
written or oral, among the parties respecting the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement of
the day, month, and year first above written.
BULLDOG INVESTORS MASSACHUSETTS FINANCIAL
SERVICES COMPANY
By: /s/ Xxxxxxx Xxxxxxxxx By: /s/ Xxxx Xxxxxxxx
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Name: Xxxxxxx Xxxxxxxxx Name: Xxxx Xxxxxxxx
Title: Principal Title: General Counsel
APPENDIX A
MGF TENDER CONDITIONS:
The Trust will not accept tenders during any period when (a) such transactions,
if consummated, would (i) result in the delisting of the Trust's shares from
the New York Stock Exchange or (ii) impair the Trust's status as a regulated
investment company under the Code (which would make the Trust a taxable entity,
causing the Trust's income to be taxed at the Trust level in addition to the
taxation of shareholders who receive distributions from the Trust); (b) there
is any (i) legal or regulatory action or proceeding instituted or threatened
challenging such transaction, (ii) suspension of or limitation on prices for
trading securities generally on the New York Stock Exchange or other national
securities exchanges, (iii) declaration of a banking moratorium by federal or
state authorities or any suspension of payment by banks in the United States or
New York State, (iv) limitation affecting the Trust imposed by federal or state
authorities on the extension of credit by lending institutions, or (v) outbreak
or escalation of hostilities, declaration by the United States of a national
emergency or war, or other calamity or crisis the effect of which on financial
markets is such as to make it, in the good faith judgment of the board of
trustees of the Trust, impractical or inadvisable to proceed with the offer;
(c) the board of trustees of the Trust determines in good faith that effecting
any such transaction would constitute a breach of its fiduciary duty owed to
the Trust or its shareholders, or (d) that the Leverage Proposal fails to
receive the requisite votes at the Trust's November 1 annual meeting.
