PIONEER PROTECTED PRINCIPAL PLUS FUND II
AMENDMENT NO. 1, DATED AS OF JUNE 13, 2003 (THE "AMENDMENT"), TO THE
FINANCIAL GUARANTEE AGREEMENT, DATED AS OF FEBRUARY 26, 2003,
AMONG AMBAC ASSURANCE CORPORATION, PIONEER INVESTMENT MANAGEMENT INC., AND
PIONEER PROTECTED PRINCIPAL TRUST, ON BEHALF OF ITS SERIES
PIONEER PROTECTED PRINCIPAL PLUS FUND II
WHEREAS, Ambac Assurance Corporation (the "Insurer"), Pioneer Protected
Principal Trust (the "Trust") on behalf of its series, Pioneer Protected
Principal Plus Fund II (the "Fund"), and Pioneer Investment Management Inc. (the
"Adviser") are parties to a Financial Guarantee Agreement, dated as of February
26, 2003 (the "Financial Guarantee Agreement" or the "Agreement").
WHEREAS, the Trust, on behalf of the Fund, and the Adviser are parties
to an Expense Limit and Reimbursement Agreement, dated as of February 26, 2003
(the "Expense Limitation Agreement").
WHEREAS, the Insurer, the Trust and the Adviser wish to make certain
modifications to the Financial Guarantee Agreement and the Trust and the Adviser
wish to make certain modifications to the Expense Limitation Agreement in order
to increase the permitted allocation of the Fund's assets to equity securities.
NOW THEREFORE, the Insurer, the Trust on behalf of the Fund and the
Adviser, for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, agree as follows:
Section 1. AMENDMENTS TO THE FINANCIAL GUARANTEE AGREEMENT.
(a) The definitions of "Expense Limitation Agreement" and "Maturity
Date" in Section 1.01 of the Agreement are amended in their entirety to read as
follows:
"EXPENSE LIMITATION AGREEMENT" means the Expense Limit and Reimbursement
Agreement, dated as of February 26, 2003 and amended and restated as of June 13,
2003, between the Adviser and the Trust on behalf of the Fund, as further
amended from time to time in accordance with this Agreement."
"MATURITY DATE" means June 4, 2010, but if that date is not a Business Day, the
Maturity Date shall be the first Business Day thereafter.
(b) The following definitions are inserted in Section 1.01 of the
Agreement in the appropriate alphabetical order:
"APPLICABLE PERCENTAGE" means, collectively, the Class A Applicable Percentage,
the Class B Applicable Percentage, and the Class C Applicable Percentage.
"CLASS A APPLICABLE PERCENTAGE" has the meaning provided in SECTION 3.05(C).
"CLASS B APPLICABLE PERCENTAGE" has the meaning provided in SECTION 3.05(C).
"CLASS C APPLICABLE PERCENTAGE" has the meaning provided in SECTION 3.05(C).
"ELECTIVE REINSTATEMENT EVENT" has the meaning provided in SECTION 3.05(D).
"FULL REINSTATEMENT EVENT" has the meaning provided in SECTION 3.05(D).
"PARTIAL REINSTATEMENT EVENT" has the meaning provided in SECTION 3.05(D).
"POST DEFEASANCE PREMIUM FEE PERCENTAGE" has the meaning provided in SECTION
2.04.
(c) The last sentence of Section 2.04 is amended in its entirety to
read as follows:
"Notwithstanding the foregoing, in the event that the Fund's assets are required
to be invested in a Defeasance Portfolio, the Premium Fee with respect to those
assets comprising the Defeasance Portfolio shall be calculated using the Post
Defeasance Premium Fee Percentage. The "Post Defeasance Premium Fee Percentage"
shall be 0.45% per annum, subject to reduction and reinstatement as set forth in
Section 3.05(d)."
(d) Section 3.05(c) of the Financial Guarantee Agreement is amended to
read in its entirety as follows:
"(c) For purposes hereof, the term "EXPENSE AMOUNT" means the sum of
(i) the sum of the following products with respect to each Class of
Shares outstanding (determined in each case as of the time of
determination): (A) the number of Shares of such Class outstanding, (B)
the Guarantee per Share for such Class of Shares, (C) the Class A
Applicable Percentage with respect to the Class A Shares, the Class B
Applicable Percentage with respect to the Class B Shares, and the Class
C Applicable Percentage with respect to the Class C Shares, and (D) the
time remaining to the Maturity Date, expressed as years and fractions
thereof; and (ii) the maximum amount of fees and expenses not subject
to the Expense Limitation Agreement that the Fund would owe if the
Fund's assets were required to be invested in the Defeasance Portfolio
at the time of determination (excluding contingent expenses, but
including any other expenses that the Fund will be obligated to pay on
or before the Maturity Date).
"CLASS A APPLICABLE PERCENTAGE" means 1.20%, subject to reduction and
reinstatement as set forth in SECTION 3.05(D).
"CLASS B APPLICABLE PERCENTAGE" means 1.95%, subject to reduction and
reinstatement as set forth in SECTION 3.05(D).
"CLASS C APPLICABLE PERCENTAGE" means 1.95%, subject to reduction and
reinstatement as set forth in SECTION 3.05(D)."
(e) Section 3.05 of the Financial Guarantee Agreement is amended to
insert the following as subsection (d) thereof:
(d) On the Inception Date, each Applicable Percentage shall be reduced
by 108 basis points and the Post Defeasance Premium Fee Percentage
shall be reduced by 25 basis points, in each case until the occurrence
of a Partial Reinstatement Event, a Full Reinstatement Event, or an
Elective Reinstatement Event, whereupon each Applicable Percentage and
the Post Defeasance Premium Fee Percentage shall be reinstated as and
to the extent provided herein.
(i) A "Partial Reinstatement Event" shall occur if the Maximum Equity
Exposure, as set forth in the Daily Report, equals or exceeds 30% on
any Business Day. If a Partial Reinstatement Event occurs, the Adviser
shall notify the Insurer in writing not later than the second Business
Day following the Business Day on which Maximum Equity Exposure first
equaled or exceeded 30% (the "PARTIAL EVENT DATE"). On the third
Business Day following the Partial Event Date (the "PARTIAL EVENT
EFFECTIVE DATE"), the Class A Applicable Percentage shall be 0.875% (or
such higher amount as shall have resulted from one or more Elective
Reinstatement Events), the Class B Applicable Percentage shall be
1.625% (or such higher amount as shall have resulted from one or more
Elective Reinstatement Events), the Class C Applicable Percentage shall
be 1.625% (or such higher amount as shall have resulted from one or
more Elective Reinstatement Events), and the Post Defeasance Premium
Fee Percentage shall be 0.325%(or such higher amount as shall have
resulted from one or more Elective Reinstatement Events), and such
amounts shall be reflected in the Reports commencing with Reports in
respect of the Partial Event Effective Date. The reinstatements
contemplated by this SECTION 3.05(D)(I) shall take effect on the
Partial Event Effective Date without regard to any change in Maximum
Equity Exposure occurring at any time subsequent to the Partial Event
Date.
(ii) A "Full Reinstatement Event" shall occur if the Maximum Equity
Exposure, as set forth in the Daily Report, equals or exceeds 35% on
any Business Day. If a Full Reinstatement Event occurs, the Adviser
shall notify the Insurer in writing not later than the second Business
Day following the Business Day on which Maximum Equity Exposure first
equaled or exceeded 35% (the "FULL EVENT DATE"). On the third Business
Day following the Full Event Date (the "FULL EVENT EFFECTIVE DATE"),
the Class A Applicable Percentage shall be 1.00% (or such higher amount
as shall have resulted from one or more Elective Reinstatement Events),
the Class B Applicable Percentage shall be 1.75% (or such higher amount
as shall have resulted from one or more Elective Reinstatement Events),
the Class C Applicable Percentage shall be 1.75% (or such higher amount
as shall have resulted from one or more Elective Reinstatement Events),
and the Post Defeasance Premium Fee Percentage shall be 0.45%, and such
amounts shall be reflected in the Reports commencing with the Reports
in respect of the Full Event Effective Date. The reinstatements
contemplated by this SECTION 3.05(D)(II) shall take effect on the Full
Event Effective Date without regard to any change in Maximum Equity
Exposure occurring at any time subsequent to the Full Event Date.
(iii) An "Elective Reinstatement Event" shall occur if (i) the Maximum
Equity Exposure on a Business Day (using the Applicable Percentages as
proposed to be reinstated in computing the Bond Floor) is equal to or
greater than 17.5%, and (ii) the Adviser notifies the Insurer in
writing that the Adviser is exercising its election hereunder to
reinstate the Applicable Percentages, in whole or in part, as specified
in such notice. Such notice (the "ELECTIVE EVENT NOTICE") shall include
the proposed reinstatement amounts, the Business Day on which such
reinstatement shall be effective (the "ELECTIVE EVENT EFFECTIVE DATE",
which shall not be less than three Business Days following the Business
Day on which such notice is delivered to the Insurer) and all
calculations necessary to confirm that the conditions to an Elective
Reinstatement Event have been met and that no Trigger Event will occur
upon such reinstatement. Any reinstatement, in any increment, of the
Class A Applicable Percentage from 0.12% to and including 0.75%, the
Class B Applicable Percentage from 0.87% to and including 1.50%, and
the Class C Applicable Percentage from 0.87% to and including 1.50%,
shall not result in any increase in the Post Defeasance Premium Fee
Percentage. Any reinstatement, in any increment, of the Class A
Applicable Percentage above 0.75% to and including 1.00%, the Class B
Applicable Percentage above 1.50% to and including 1.75%, and the Class
C Applicable Percentage above 1.50% to and including 1.75%, shall
result in a corresponding increase in the Post Defeasance Premium Fee
Percentage, until the Class A Applicable Percentage is 1.00%, the Class
B Applicable Percentage is 1.75%, the Class C Applicable Percentage is
1.75%, and the Post Defeasance Premium Fee Percentage is 0.45%. Any
reinstatement, in any increment, of the Class A Applicable Percentage
above 1.00% to and including 1.20%, the Class B Percentage above 1.75%
to and including 1.95%, and the Class C Percentage above 1.75% to and
including 1.95%, shall not result in any increase in the Post
Defeasance Premium Fee Percentage. Each of the reinstatements
contemplated by this Section 3.05(d)(iii) shall take effect on the
relevant Elective Event Effective Date without regard to any change in
Maximum Equity Exposure occurring at any time subsequent to the date of
the corresponding Elective Event Notice.
(iv) Any reinstatement required or elected hereunder may not be
rescinded or waived without the prior written consent of the Insurer.
(v) The Expense Limitation Agreement shall be amended upon the
occurrence of a Full Reinstatement Event, a Partial Reinstatement Event
or an Elective Reinstatement Event so that, at any time, the expense
limitation applicable to a Class of Shares in the event that the Fund
invests in a Defeasance Portfolio is the same as the Applicable
Percentage attributable to such Class of Shares pursuant to this
Agreement.
(f) Section 12.02(b) of the Financial Guarantee Agreement is amended to
read in its entirety as follows:
"Notices permitted or required to be given pursuant to Section 3.05(d),
Section 3.06, and Section 4.01 hereof shall be given as set forth in
Schedule 3 hereto."
(g) The Financial Guarantee Agreement is amended by replacing Schedule
3 thereof with the document attached as Annex A hereto.
Section 2. AMENDMENTS TO THE EXPENSE LIMITATION AGREEMENT. The Insurer
consents to the amendment and restatement of the Expense Limitation Agreement in
the form set forth in Annex B hereto, and to the further amendment thereof as
required by Section 3.05(d)(v) of the Agreement.
Section 3. PROVISIONS RELATED TO THE INCEPTION DATE. The Inception Date
shall be June 13, 2003 and the documents required to be delivered pursuant to
Section 2.03(b) of the Financial Guarantee Agreement shall be delivered on such
date. Notice of the Inception Date required by Section 2.02 of the Financial
Guarantee Agreement is hereby accepted and shall be deemed to have been
delivered in a timely manner by the Fund.
Section 4. GOVERNING LAW. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York (including
Section 5-1401 of the New York General Obligations Law but excluding all other
choice of law and conflicts of law rules).
Section 5. COUNTERPARTS. This Amendment may be executed in counterparts
of the parties hereto, and each such counterpart shall be considered an original
and all such counterparts shall constitute one and the same instrument.
Section 6. PARAGRAPH HEADINGS; DEFINED TERMS. The headings of
paragraphs contained in this Amendment are provided for convenience only. They
form no part of this Amendment and shall not affect its construction or
interpretation. Any capitalized terms used herein and not defined herein shall
have the meaning assigned thereto in the Financial Guarantee Agreement.
[SIGNATURES FOLLOW]
IN WITNESS WHEREOF, the parties hereto have executed this Amendment,
all as of the day and year first above mentioned.
AMBAC Assurance Corporation, as Insurer
By: /s/__________________________________________________
Name:
Title:
PIONEER INVESTMENT MANAGEMENT, INC., as Adviser
By: /s/__________________________________________________
Name:
Title:
PIONEER PROTECTED PRINCIPAL TRUST, on behalf of its
series
Pioneer Protected Principal Plus Fund II
By: /s/__________________________________________________
Name:
Title:
