Exhibit (g)(2)
SUB-ADVISORY AGREEMENT
SUB-ADVISER AGREEMENT made as of this __ day of _______, 2007 by and
between PIONEER INVESTMENT MANAGEMENT, INC., a Delaware corporation and a member
of the UniCredito Italiano banking group, register of banking groups with its
principal place of business at 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 (the
"Adviser"), and MONTPELIER CAPITAL ADVISORS, LTD, a Bermuda limited corporation
with its principal place of business at 00 Xxxxx Xxx Xxxx, Xxxxxxxx, Xxxxxxx
XX00 ("Sub-Adviser").
WITNESSETH
WHEREAS, pursuant to authority granted to the Adviser by the Board of
Trustees (the "Board") of the PIONEER DIVERSIFIED HIGH INCOME TRUST (the "Fund")
and pursuant to the provisions of the Management Agreement dated as of [_____],
2007 between the Adviser and the Fund (the "Management Agreement"), the Adviser
has selected the Sub-Adviser to act as a sub-investment adviser of the Managed
Assets (as defined below) of the Fund and to provide certain other services, as
more fully set forth below, and to perform such services under the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and benefits set
forth herein, the Adviser and the Sub-Adviser do hereby agree as follows:
1. THE SUB-ADVISER'S SERVICES.
(a) Investment Services. The Sub-Adviser shall act as sub-investment
adviser with respect to that portion of the Fund investing in event-linked
bonds ("Managed Assets"). In such capacity, the Sub-Adviser shall, with
respect to the Managed Assets, and subject to the supervision of the
Adviser and the Board, regularly provide the Fund with investment research,
advice and supervision and shall furnish continuously an investment program
for the Fund, consistent with the investment objectives and policies of the
Fund. As it relates to the Managed Assets, the Sub-Adviser shall determine
from time to time what securities shall be purchased for the Fund, what
securities shall be held or sold by the Fund and what portion of the
[Managed Assets shall be held uninvested in cash,] subject always to the
provisions of the Fund's Certificate of Trust, Agreement and Declaration of
Trust, By-Laws and its registration statement on Form N-2 (the
"Registration Statement") under the Investment Company Act of 1940, as
amended (the "1940 Act"), and under the Securities Act of 1933, as amended
(the "1933 Act"), covering the Fund's shares, as filed with the Securities
and Exchange Commission (the "Commission"), and to the investment
objectives, policies and restrictions of the Fund, as each of the same
shall be from time to time in effect. To carry out such obligations, the
Sub-Adviser shall, with respect to the Managed Assets, exercise full
discretion and act for the Fund in the same manner and with the same force
and effect as the Fund itself might or could do with respect to purchases,
sales or other transactions, as well as with respect to all other such
things necessary or incidental to the furtherance or conduct of such
purchases, sales or other transactions. Notwithstanding the foregoing, the
Sub-Adviser shall, upon written instructions from the Adviser, effect such
portfolio
transactions for the Fund as the Adviser may from time to time direct. No
reference in this Agreement to the Sub-Adviser having full discretionary
authority over the Fund's investments shall in any way limit the right of
the Adviser, in its sole discretion, to establish or revise policies in
connection with the management of the Fund's assets, including the Managed
Assets, or to otherwise exercise its right to control the overall
management of this Fund's assets.
(b) Compliance. The Sub-Adviser agrees to comply with the requirements
of the 1940 Act, the Investment Advisers Act of 1940 (the "Advisers Act"),
the 1933 Act, the Securities Exchange Act of 1934, as amended (the "1934
Act"), the Commodity Exchange Act and the respective rules and regulations
thereunder, as applicable, as well as with all other applicable federal and
state laws, rules, regulations and case law that relate to the services and
relationships described hereunder and to the conduct of its business as a
registered investment adviser. The Sub-Adviser also agrees to comply with
the objectives, policies and restrictions set forth in the Registration
Statement, as amended or supplemented, of the Fund, and with any policies,
guidelines, instructions and procedures approved by the Board or the
Adviser and provided to the Sub-Adviser. In selecting the Fund's portfolio
securities and performing the Sub-Adviser's obligations hereunder, the
Sub-Adviser shall cause the Fund to comply with the requirements of
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"),
for qualification as a regulated investment company. The Sub-Adviser shall
maintain compliance procedures for the Fund that it reasonably believes are
adequate to ensure the Fund's compliance with the foregoing. The
Sub-Adviser shall also maintain compliance procedures that it reasonably
believes are designed to comply with the federal securities laws, rules and
regulations and agrees to provide certifications of such compliance, in a
mutually agreeable format, as may be requested by the Adviser from time to
time. No supervisory activity undertaken by the Adviser shall limit the
Sub-Adviser's full responsibility for any of the foregoing.
(c) Proxy Voting. The Board has the authority to determine how proxies
with respect to securities that are held by the Fund shall be voted, and
the Board has initially determined to delegate the authority and
responsibility to vote proxies for the Fund's securities to the Adviser. So
long as proxy voting authority for the Fund has been delegated to the
Adviser, the Sub-Adviser shall provide such assistance to the Adviser with
respect to the voting of proxies for the Fund as the Adviser may from time
to time reasonably request, and the Sub-Adviser shall promptly forward to
the Adviser any information or documents necessary for the Adviser to
exercise its proxy voting responsibilities. The Sub-Adviser shall not vote
proxies with respect to the securities held by the Fund unless and until
the Board or the Adviser delegates such authority and responsibility to the
Sub-Adviser or otherwise instructs the Sub-Adviser to do so in writing,
whereupon the Sub-Adviser shall carry out such responsibility in accordance
with the Fund's Proxy Voting Policies and any instructions that the Board
or the Adviser shall provide from time to time and shall provide such
reports and keep such records relating to proxy voting as the Board or the
Adviser may reasonably request or as may be necessary for the Fund to
comply with the 1940 Act and other applicable law. Any such delegation of
proxy voting responsibility to the Sub-Adviser may be revoked or modified
by the Board or the Adviser at any time.
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(d) Recordkeeping. The Sub-Adviser shall not be responsible for the
provision of administrative, bookkeeping or accounting services to the
Fund, except as otherwise provided herein or as may be necessary for the
Sub-Adviser to supply to the Adviser, the Fund or its Board the information
required to be supplied under this Agreement.
The Sub-Adviser shall maintain separate books and detailed records of
all matters pertaining to the Fund's assets advised by the Sub-Adviser
required by Rule 31a-1 under the 1940 Act (other than those records being
maintained by the Adviser, custodian or transfer agent appointed by the
Fund) relating to its responsibilities provided hereunder with respect to
the Fund, and shall preserve such records for the periods and in a manner
prescribed therefore by Rule 31a-2 under the 1940 Act (the "Fund's Books
and Records"). The Fund's Books and Records shall be available to the
Adviser and the Board at any time upon request, shall be delivered to the
Fund upon the termination of this Agreement and shall be available for
telecopying without delay during any day the Fund is open for business.
(e) Holdings Information and Pricing. The Sub-Adviser shall keep the
Fund and the Adviser informed of developments materially affecting the
Fund's holdings, and shall, on its own initiative, furnish the Fund and the
Adviser from time to time with whatever information the Sub-Adviser
believes is appropriate for this purpose. With respect to the Managed
Assets, the Sub-Adviser agrees to immediately notify the Adviser if the
Sub-Adviser believes that the market value of any security held by the Fund
is not an appropriate fair value and provide pricing information to the
Adviser and/or the Fund's pricing agent as may be necessary to make
determinations of the fair value of certain portfolio securities when
market quotations are not readily available or such information is
otherwise required in accordance with the 1940 Act and the Fund's valuation
procedures for the purpose of calculating the Fund's net asset value in
accordance with procedures and methods established by the Board.
(f) Cooperation with Agents of the Adviser and the Fund. The
Sub-Adviser agrees to cooperate with and provide reasonable assistance to
the Adviser, the Fund, the Fund's custodian and foreign sub-custodians, the
Fund's pricing agents and all other agents and representatives of the Fund
and the Adviser, such information with respect to the Fund as they may
reasonably request from time to time in the performance of their
obligations, provide prompt responses to reasonable requests made by such
persons and establish appropriate interfaces with each so as to promote the
efficient exchange of information and compliance with applicable laws and
regulations.
2. CODE OF ETHICS. The Sub-Adviser has adopted a written code of ethics
that it reasonably believes complies with the requirements of Rule 17j-1 under
the 1940 Act, which it will provide to the Adviser and the Fund. The Sub-Adviser
shall ensure that its Access Persons (as defined in the Sub-Adviser's Code of
Ethics) comply in all respects with the Sub-Adviser's Code of Ethics, as in
effect from time to time. Upon request, the Sub-Adviser shall provide the Fund
with a (i) a copy of the Sub-Adviser's current Code of Ethics, as in effect from
time to time, and (ii) certification that it has adopted procedures reasonably
necessary to prevent Access Persons from engaging in any conduct prohibited by
the Sub-Adviser's Code of Ethics.
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Annually, the Sub-Adviser shall furnish a written report, which complies with
the requirements of Rule 17j-1, concerning the Sub-Adviser's Code of Ethics to
the Fund and the Adviser. The Sub-Adviser shall respond to requests for
information from the Adviser as to violations of the Code by Access Persons and
the sanctions imposed by the Sub-Adviser. The Sub-Adviser shall immediately
notify the Adviser of any material violation of the Code, whether or not such
violation relates to any security held by the Fund.
3. INFORMATION AND REPORTING. The Sub-Adviser shall keep the Fund and the
Adviser informed of developments relating to its duties as Sub-Adviser of which
the Sub-Adviser has, or should have, knowledge that materially affect the Fund.
In this regard, the Sub-Adviser shall provide the Fund, the Adviser, and their
respective officers with such periodic reports concerning the obligations the
Sub-Adviser has assumed under this Agreement as the Fund and the Adviser may
from time to time reasonably request.
(a) Notification of Breach / Compliance Reports. The Sub-Adviser shall
notify the Adviser immediately upon detection of (i) any failure to manage
the Managed Assets of the Fund in accordance with its investment objectives
and policies or any applicable law; or (ii) any breach of any of the Fund's
or the Adviser's policies, guidelines or procedures as they relate to the
Managed Assets. In addition, the Sub-Adviser shall provide a monthly
certification that the Fund, as it relates to the Managed Assets, is in
compliance with its investment objectives and policies, applicable law,
including, but not limited to the 1940 Act and Subchapter M of the Code,
and the Fund's and the Adviser's policies, guidelines or procedures. The
Sub-Adviser acknowledges and agrees that the Adviser may, in its
discretion, provide such monthly compliance certifications to the Board.
The Sub-Adviser agrees to correct any such failure promptly and to take any
action that the Adviser may reasonably request in connection with any such
breach. The Sub-Adviser shall also provide the officers of the Fund with
supporting certifications in connection with such certifications of the
Fund's financial statements and disclosure controls pursuant to the
Xxxxxxxx-Xxxxx Act. The Sub-Adviser will promptly notify the Adviser if (i)
the Sub-Adviser is served or otherwise receives notice of any action, suit,
proceeding, inquiry or investigation, at law or in equity, before or by any
court, public board, or body, involving the affairs of the Fund (excluding
class action suits in which the Fund is a member of the plaintiff class by
reason of the Fund's ownership of shares in the defendant) or the
compliance by the Sub-Adviser with the federal or state securities laws or
(ii) the controlling stockholder or executive committee of the Sub-Adviser
changes, there is otherwise an actual change in control (whether through
sale of all or substantially all the assets of the Sub-Adviser or a
material change in management of the Sub-Adviser) or an "assignment" (as
defined in the 0000 Xxx) has or is proposed to occur.
(b) Inspection. Upon request, with at least 24 hours advance notice,
the Sub-Adviser agrees to make its records and premises (including the
availability of the Sub-Adviser's employees for interviews) to the extent
that they relate to the conduct of services provided to the Fund or the
Sub-Adviser's conduct of its business as an investment adviser available
for compliance audits by the Adviser or the Fund's employees, accountants
or counsel; in this regard, the Fund and the Adviser acknowledge that the
Sub-Adviser shall have no obligations to make available proprietary
information
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unrelated to the services provided to the Fund or any information related
to other clients of the Sub-Adviser, except to the extent necessary for the
Adviser to confirm the absence of any conflict of interest and compliance
with any laws, rules or regulations in the management of the Fund.
(c) Board and Filings Information. The Sub-Adviser will also provide
the Adviser with any information reasonably requested regarding its
management of the Fund required for any meeting of the Board, or for any
shareholder report, amended registration statement, proxy statement, or
prospectus supplement to be filed by the Fund with the Commission. The
Sub-Adviser will make its officers and employees available to meet with the
Board from time to time on due notice to review the investments of the Fund
in light of current and prospective economic and market conditions and
shall furnish to the Board such information as may reasonably be necessary
in order for the Board to evaluate this Agreement or any proposed
amendments thereto.
(d) Transaction Information. The Sub-Adviser shall furnish to the
Adviser such information concerning portfolio transactions as may be
necessary to enable the Adviser to perform such compliance testing on the
Fund and the Sub-Adviser's services as the Adviser may, in its sole
discretion, determine to be appropriate. The provision of such information
by the Sub-Adviser in no way relieves the Sub-Adviser of its own
responsibilities for ensuring the Fund's compliance.
4. BROKERAGE.
(a) Principal and Agency Transactions. With respect to the Managed
Assets, in connection with purchases or sales of securities for the account
of the Fund, neither the Sub-Adviser nor any of its directors, officers,
employees or affiliated persons will act as a principal or agent or receive
any commission except as permitted by the 1940 Act.
(b) Placement of Orders. The Sub-Adviser shall arrange for the placing
of all orders for the Managed Assets for the purchase and sale of
securities for the Fund's account with brokers or dealers selected by the
Sub-Adviser. In the selection of such brokers or dealers and the placing of
such orders, the Sub-Adviser is directed at all times to seek for the Fund
the most favorable execution and net price available except as described
herein. It is also understood that it is desirable for the Fund that the
Sub-Adviser have access to supplemental investment and market research and
security and economic analyses provided by brokers who may execute
brokerage transactions at a higher cost to the Fund than may result when
allocating brokerage to other brokers, as consistent with Section 28(e) of
the 1934 Act and any Commission staff interpretations thereof. Therefore,
the Sub-Adviser is authorized to place orders for the purchase and sale of
securities for the Fund with such brokers, subject to review by the Adviser
and the Board from time to time with respect to the extent and continuation
of this practice. It is understood that the services provided by such
brokers may be useful to the Sub-Adviser in connection with its or its
affiliates' services to other clients.
(c) Aggregated Transactions. On occasions when the Sub-Adviser deems
the purchase or sale of a security to be in the best interest of the Fund
as well as other clients
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of the Sub-Adviser, the Sub-Adviser may, to the extent permitted by
applicable law and regulations, aggregate the order for securities to be
sold or purchased in order to obtain the best execution and lower brokerage
commissions, if any. In such event, allocation of the securities so
purchased or sold, as well as the expenses incurred in the transaction,
will be made by the Sub-Adviser in the manner the Sub-Adviser considers to
be the most equitable and consistent with its fiduciary obligations to the
Fund and to such other clients.
(d) Affiliated Brokers. The Sub-Adviser or any of its affiliates may
act as broker in connection with the purchase or sale of securities or
other investments for the Fund, subject to: (a) the requirement that the
Sub-Adviser seek to obtain best execution and price within the policy
guidelines determined by the Board and set forth in the Fund's current
prospectus and statement of additional information; (b) the provisions of
the Investment Company Act, the Advisers Act and the rules of the
Commission under such Acts; (c) the provisions of the 1934 Act; and (d)
other provisions of applicable law. These brokerage services are not within
the scope of the duties of the Sub-Adviser under this Agreement. Subject to
the requirements of applicable law and any procedures adopted by the Board,
the Sub-Adviser or its affiliates may receive brokerage commissions, fees
or other remuneration from the Fund for these services in addition to the
Sub-Adviser's fees for services under this Agreement.
(e) Alternative Trading Arrangements. From time to time the
Sub-Adviser and the Adviser may agree that the Sub-Advisor will place some
or all of the trades for the Fund through the Adviser's trading desk. In
such event, the Adviser shall have complete authority to determine the
brokers or dealers through which any trade by the Fund is placed through
the Advisers trading desk and as to the timing and manner of the execution
of any such trade, although the Sub-Adviser may give guidance. In such
event, the Adviser shall be responsible for obtaining best execution on
behalf of the Fund on trades placed by the Adviser and the Sub-Adviser
shall remain responsible for all other compliance issues in connection with
the Fund's portfolio transactions, including the appropriate and accurate
placement of orders on behalf of the Fund into the Adviser's trading system
and confirming the appropriate settlement of the transactions.
5. CUSTODY. Nothing in this Agreement shall permit the Sub-Adviser to take
or receive physical possession of cash, securities or other investments of the
Fund.
6. ALLOCATION OF CHARGES AND EXPENSES. The Sub-Adviser will bear its own
costs of providing services hereunder. Other than as herein specifically
indicated, the Sub-Adviser shall not be responsible for the Fund's or the
Adviser's expenses, including brokerage and other expenses incurred in placing
orders for the purchase and sale of securities and other investment instruments.
Specifically, the Sub-Adviser will not be responsible for expenses of the Fund
or the Adviser, as the case may be, including, but not limited to, the
following: (i) charges and expenses for accounting, pricing and appraisal
services and related overhead, including, to the extent such services are
performed by personnel of the Sub-Adviser or its affiliates, office space and
facilities, and personnel compensation, training and benefits; (ii) the charges
and expenses of auditors; (iii) the charges and expenses of any custodian,
transfer agent, plan agent, dividend disbursing agent and registrar appointed by
the Fund; (iv) underwriting commissions and issue
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and transfer taxes chargeable to the Fund in connection with securities
transactions to which the Fund is a party; (v) insurance premiums, interest
charges, expenses in connection with any preferred shares, dues and fees for
membership in trade associations and all taxes and corporate fees payable by the
Fund to federal, state or other governmental agencies; (vi) fees and expenses
involved in registering and maintaining registrations of the Fund's shares with
federal regulatory agencies, state or blue sky securities agencies and foreign
jurisdictions, including the preparation of prospectuses and statements of
additional information for filing with such regulatory authorities; (vii) all
expenses of shareholders' and Board meetings and of preparing, printing and
distributing prospectuses, statements of additional information, notices, proxy
statements and all reports to shareholders and to governmental agencies; (viii)
charges and expenses of legal counsel to the Fund and the Board; (ix)
compensation and expenses of the Board; (x) the cost of preparing and printing
share certificates; (xi) interest on borrowed money, if any; (xii) the fees and
other expenses of listing the Fund's shares on the New York Stock Exchange or
any other securities exchange; and (xiii) any other expense that the Fund, the
Adviser or any other agent of the Fund may incur (A) as a result of a change in
the law or regulations, (B) as a result of a mandate from the Board with
associated costs of a character generally assumed by similarly structured
investment companies or (C) that is similar to the expenses listed above, and
that is approved by the Board (including a majority of the Independent Trustees)
as being an appropriate expense of the Fund. The Fund or the Adviser, as the
case may be, shall reimburse the Sub-Adviser for any such expenses or other
expenses of the Fund or the Adviser, as may be reasonably incurred by such
Sub-Adviser on behalf of the Fund or the Adviser. The Sub-Adviser shall keep and
supply to the Fund and the Adviser adequate records of all such expenses.
7. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) Properly Licensed. The Sub-Adviser is registered as an investment
adviser under the Advisers Act, and will remain so registered for the
duration of this Agreement. The Sub-Adviser agrees to promptly notify the
Adviser of the occurrence of any event that would disqualify the
Sub-Adviser from serving as an investment adviser to an investment company.
The Sub-Adviser is in compliance in all material respects with all
applicable federal and state law in connection with its investment
management operations.
(b) ADV Disclosure. The Sub-Adviser has provided the Adviser with a
copy of its Form ADV as most recently filed with the SEC and will, promptly
after filing any amendment to its Form ADV with the SEC, furnish a copy of
such amendments to the Adviser. The information contained in the
Sub-Adviser's Form ADV is accurate and complete in all material respects
and does not omit to state any material fact necessary in order to make the
statements made, in light of the circumstances under which they were made,
not misleading.
(c) Fund Disclosure Documents. The Sub-Adviser has reviewed and will
in the future review, the Registration Statement, and any amendments or
supplements thereto, the annual or semi-annual reports to shareholders,
other reports filed with the Commission and any marketing material of the
Fund (collectively the "Disclosure Documents") and represents and warrants
that with respect to disclosure about the Sub-Adviser, the manner in which
the Fund is managed or information relating directly or
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indirectly to the Sub-Adviser, such Disclosure Documents contain or will
contain, as of the date thereof, no untrue statement of any material fact
and does not omit any statement of material fact which was required to be
stated therein or necessary to make the statements contained therein not
misleading.
(d) No Statutory Disqualification As An Investment Adviser. The
Sub-Adviser is not prohibited by the Advisers Act or the 1940 Act from
performing the services contemplated by this Agreement, and to the best
knowledge of the Sub-Adviser, there is no proceeding or investigation that
is reasonably likely to result in the Sub-Adviser being prohibited from
performing the services contemplated by this Agreement.
(e) Use Of The Name "Montpelier". The Sub-Adviser has the right to use
the name "Montpelier" in connection with its services to the Fund and that
the Adviser and the Fund shall have the right to use the name "Montpelier"
in connection with the management and operation of the Fund and its assets,
and that there are no threatened or existing actions, claims, litigation or
proceedings that would adversely effect or prejudice the rights of the
Sub-Adviser, Adviser or Fund to use the name "Montpelier".
(f) Insurance. The Sub-Adviser shall maintain errors and omissions and
fidelity insurance coverage in an amount agreed upon from time to time by
the Adviser and the Sub-adviser and from an insurance provider that is in
the business of regularly providing insurance coverage to investment
advisers. The Sub-Adviser shall provide prior written notice to the Adviser
(i) of any material changes in its insurance policies or insurance
coverage; or (ii) if any material claims will be made on its insurance
policies. Furthermore, it shall upon request provide to the Adviser any
information it may reasonably require concerning the amount of or scope of
such insurance. The Sub-Adviser's insurance shall, at a minimum, cover
errors and omissions of the Sub-Adviser.
(g) Competent Staff. The Sub-Adviser shall ensure that sufficient and
competent investment management, administrative and compliance staff
experienced in managing accounts similar to the Fund shall have charge at
all times of the conduct of, and shall maintain close supervision of, the
investment and management of the Fund. For the avoidance of doubt, the
Sub-Adviser shall ensure that any affiliate or third party to whom its
duties have been delegated, shall comply with the foregoing.
(h) No Detrimental Agreement. The Sub-Adviser represents and warrants
that it has no arrangement or understanding with any party, other than the
Fund, that would influence the decision of the Sub-Adviser with respect to
its selection of securities for the Fund, and that all selections shall be
done in accordance with what is in the best interest of the Fund.
(i) Conflicts. The Sub-Adviser shall act honestly, in good faith and
in the best interests of the Fund including requiring any of its personnel
with knowledge of the Fund's activities to place the interest of the Fund
first, ahead of their own interests, in all personal trading scenarios that
may involve a conflict of interest with the Account.
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(j) Representations. The representations and warranties in this
Section 7 shall be deemed to be made on the date this Agreement is executed
and at the time of delivery of the monthly compliance report required by
Section 3(a), whether or not specifically referenced in such certificate.
8. SUB-ADVISER'S COMPENSATION. The Adviser shall pay to the Sub-Adviser, as
compensation for the Sub-Adviser's services hereunder, a fee, determined as
described in Schedule A that is attached hereto and made a part hereof. Such fee
shall be computed daily and paid monthly in arrears by the Adviser. The Fund
shall have no responsibility for any fee payable to the Sub-Adviser. In the
event that the fee paid to the Adviser for managing the Fund is reduced by
regulatory authorities or the Board for any reason whatsoever, the fee hereunder
shall be subject to the same percentage reduction.
In the event of termination of this Agreement, the fee provided in this
Section shall be computed on the basis of the period ending on the last business
day on which this Agreement is in effect subject to a pro rata adjustment based
on the number of days elapsed in the current month as a percentage of the total
number of days in such month.
9. INDEPENDENT CONTRACTOR. In the performance of its duties hereunder, the
Sub-Adviser is and shall be an independent contractor and, unless otherwise
expressly provided herein or otherwise authorized in writing, shall have no
authority to act for or represent the Fund or the Adviser in any way or
otherwise be deemed to be an agent of the Fund or the Adviser. If any occasion
should arise in which the Sub-Adviser gives any advice to its clients concerning
the shares of the Fund, the Sub-Adviser will act solely as investment counsel
for such clients and not in any way on behalf of the Fund.
10. ASSIGNMENT AND AMENDMENTS. This Agreement shall automatically
terminate, without the payment of any penalty, in the event of (i) its
assignment, including any change in control of the Adviser or the Sub-Adviser,
as defined in the 1940 Act, or (ii) in the event of the termination of the
Management Agreement; provided that such termination shall not relieve the
Adviser or the Sub-Adviser of any liability incurred hereunder.
This Agreement may not be added to or changed orally and may not be
modified or rescinded except by a writing signed by the parties hereto and in
accordance with the 1940 Act, when applicable.
11. DURATION AND TERMINATION.
(a) This Agreement shall become effective as of the date executed and
shall remain in full force and effect continually thereafter, subject to
renewal as provided in Section 12(d) and unless terminated automatically as
set forth in Section 11 hereof or until terminated as follows:
(b) The Adviser may at any time terminate this Agreement by not more
than sixty (60) days' nor less than thirty (30) days' written notice
delivered or mailed by registered mail, postage prepaid, to the
Sub-Adviser. In addition, the Fund may cause this Agreement to terminate
either (i) by vote of its Board or (ii) upon the affirmative vote of a
majority of the outstanding voting securities of the Fund; or
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(c) The Sub-Adviser may at any time terminate this Agreement by not
more than sixty (60) days' nor less than thirty (30) days' written notice
delivered or mailed by registered mail, postage prepaid, to the Adviser; or
(d) This Agreement shall automatically terminate on December 31st of
any year, beginning on December 31, 2008, in which its terms and renewal
shall not have been approved by (A) (i) a majority vote of the Board or
(ii) the affirmative vote of a majority of the outstanding voting
securities of the Fund; provided, however, that if the continuance of this
Agreement is submitted to the shareholders of the Fund for their approval
and such shareholders fail to approve such continuance of this Agreement as
provided herein, the Sub-Adviser may continue to serve hereunder as to the
Fund in a manner consistent with the 1940 Act and the rules and regulations
thereunder; and (B) a majority vote of the Trustees who are not "interested
persons" (as set forth in the 1940 Act, subject, however, to such
exemptions as may be granted by the Commission under the 0000 Xxx) of the
Fund, the Adviser or the Sub-Adviser, at a meeting called for the purpose
of voting on such approval.
(e) For the purposes of this Agreement, "Affirmative vote of a
majority of the outstanding voting securities of the Fund" shall have the
meaning set forth in the 1940 Act, subject, however, to such exemptions as
may be granted by the Commission under the 1940 Act or any interpretations
of the staff of the Commission.
Termination of this Agreement pursuant to this Section shall be without
payment of any penalty.
In the event of termination of this Agreement for any reason, the
Sub-Adviser shall, immediately upon notice of termination or on such later date
as may be specified in such notice, cease all activity on behalf of the Fund and
with respect to any of its assets. In addition, the Sub-Adviser shall deliver
the Fund's Books and Records to the Adviser by such means and in accordance with
such schedule as the Adviser shall direct and shall otherwise cooperate in the
transition of portfolio asset management to any successor of the Sub-Adviser,
including the Adviser, for a period up to thirty-days (30) from such
termination.
12. LIABILITY OF THE SUB-ADVISER. The Sub-Adviser shall not be liable to
the Adviser Indemnitees (as defined below) for any losses, claims, damages,
liabilities or litigation (including legal and other expenses) incurred or
suffered by an Adviser Indemnitee as a result of any error of judgment or
mistake of law by the Sub-Adviser with respect to the Fund, except that nothing
in this Agreement shall operate or purport to operate in any way to exculpate,
waive or limit the liability of the Sub-Adviser for, and the Sub-Adviser shall
indemnify and hold harmless the Adviser, the Fund and all affiliated persons
thereof (within the meaning of Section 2(a)(3) of the 0000 Xxx) and all
controlling persons (as described in Section 15 of the 1933 Act) (collectively,
the "Adviser Indemnitees") against any and all losses, claims, damages,
liabilities or litigation (including reasonable legal and other expenses) by
reason of or arising out of: (a) the Sub-Adviser being in violation of any
applicable federal or state law, rule or regulation or any investment policy or
restriction set forth in the Fund's Registration Statement or any written
guidelines or instruction provided in writing by the Board or the Adviser, (b)
the Fund's failure to satisfy the diversification or source of income
requirements of Subchapter M of the Code by
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reason of any action or omission of the Sub-Adviser, unless acting at the
direction of the Adviser, (c) the Sub-Adviser's willful misfeasance, bad faith
or gross negligence generally in the performance of its duties hereunder or its
reckless disregard of its obligations and duties under this Agreement or (d) the
Fund being in violation of any applicable federal or state law, rule or
regulation or any investment policy or restriction set forth in the Fund's
Registration Statement or any written guidelines or instruction provided in
writing by the Board or the Adviser, by reason of any action or omission of the
Sub-Adviser.
13. ENFORCEABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms or provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
14. LIMITATION OF LIABILITY. The parties to this Agreement acknowledge and
agree that all litigation arising hereunder, whether direct or indirect, and of
any and every nature whatsoever shall be satisfied solely out of the assets of
the Fund and that no Trustee, officer or holder of shares of beneficial interest
of the Fund shall be personally liable for any of the foregoing liabilities. The
Fund's Certificate of Trust, as amended from time to time, is on file in the
Office of the Secretary of State of the State of Delaware. Such Certificate of
Trust and the Fund's Agreement and Declaration of Trust describe in detail the
respective responsibilities and limitations on liability of the Trustees,
officers, and holders of shares of beneficial interest.
15. JURISDICTION. This Agreement shall be governed by and construed in
accordance with the substantive laws of The Commonwealth of Massachusetts and
the Sub-Adviser consents to the jurisdiction of courts, both state or federal,
in Boston, Massachusetts, with respect to any dispute under this Agreement.
16. PARAGRAPH HEADINGS. The headings of paragraphs contained in this
Agreement are provided for convenience only. The form no part of this Agreement
and shall not affect its construction.
17. 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.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
signed on their behalf by their duly authorized officers as of the date first
above written.
PIONEER INVESTMENT MANAGEMENT, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
MONTPELIER CAPITAL ADVISORS LTD.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
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SCHEDULE A
The Adviser shall pay to the Sub-Adviser, as compensation for the Sub-Adviser's
services and expenses assumed hereunder, a fee at the annual rate equal to 0.80%
of the Trust's average daily Managed Assets, as defined above. Managed Assets
shall include any form of investment leverage, minus all accrued expenses
incurred in the normal course of operations, but not excluding any liabilities
or obligations attributable to investment leverage obtained through (i)
indebtedness of any type (including, without limitation, borrowing through a
credit facility or the issuance of debt securities), (ii) the issuance of
preferred stock or other similar preference securities, (iii) the reinvestment
of collateral received for securities loaned in accordance with the Fund's
investment objectives and policies, and/or (iv) any other means. For the
purposes of the Schedule A, the liquidation preference on any preferred shares
shall not be considered a liability.
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