EXHIBIT 5
INVESTMENT ADVISORY AGREEMENT
AGREEMENT ("Agreement") made as of the 17 day of December, 1997 by and
between Pacholder Heron, L.P., a Delaware limited partnership, (hereinafter
called the "Fund"), and Pacholder Associates, Inc. (hereinafter called the
"Advisor"),
WHEREAS, The Advisor is registered as an investment advisor under the
Investment Advisers Act of 1940 (the "Act"), and engages in the business of
acting as investment advisor; and
WHEREAS, The Fund desires to retain the Advisor to render management and
investment advisory services in the manner and on the terms and conditions
hereafter set forth; and
WHEREAS, The Advisor desires to be retained to perform services on said
terms and conditions;
NOW, THEREFORE, in consideration of the promises and the mutual covenants
hereinafter contained, the Fund and the Advisor agree as follows:
1. Duties and Responsibilities of Advisor.
A. Investment Advisory Services. The Fund hereby retains the
Advisor to act as investment manager of the Fund and, subject to the
supervision of the Fund's General Partner's Board of Managers, to supervise
the investment activities of the Fund as hereinafter set forth. Without
limiting the generality of the foregoing, the Advisor:
(i) shall obtain and evaluate such information and advice
relating to the economy, securities market and Securities as it deems
necessary or useful to discharge its duties hereunder;
(ii) shall continuously manage the assets of the Fund in a
manner consistent with the investment objectives and policies of the
Fund;
(iii) shall determine the securities to be purchased, sold or
otherwise disposed of by the Fund and the timing of such purchases,
sales and dispositions; and
(iv) shall take such further action, including the placing of
purchase and sale orders on behalf of the Fund, as the Advisor shall
deem necessary or appropriate. The Advisor shall also furnish to or
place at the disposal of the Fund such of the information,
evaluations, analyses and opinions formulated or obtained by the
Advisor in the discharge of its duties as the Fund may, from time to
time, reasonably request.
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B. Reports. The Advisor shall furnish monthly portfolio
valuations, quarterly reports to partners and such other information,
reports, evaluations, analyses and opinions as the Fund may, at any time or
from time to time, reasonably request or as the Advisor may deem helpful to
the Fund.
C. Fund Personnel. The Advisor agrees to permit individuals who
are officers or employees of the Advisor to serve as managers of the Fund's
General Partner without remuneration from or other cost to the Fund.
D. Personnel, Office Space, and Facilities of Advisor. The Advisor
at its own expense shall furnish or provide and pay the cost of such office
space, office equipment, office personnel, and office services as the
Advisor requires in the performance of its investment advisory and other
obligations under this Agreement.
E. Accounting and Recordkeeping Services.
(i) The Advisor shall be responsible for (i) accounting relating
to the Fund and investment transactions of the Fund, (ii) the
determination of net asset value of the outstanding partners'
interests in the Fund as of the last day of each calendar month and in
the manner described in the Fund's Private Offering memorandum
("pricing"), and the timely communication of such information to the
Fund's General Partner, (iii) maintaining the books of account of the
Fund and (iv) monitoring, in conjunction with the Fund's custodian
(the "Custodian"), all corporate actions taken by companies whose
securities are held by the Custodian for the Fund which affect such
securities.
(ii) The Advisor shall create and maintain all necessary records
in accordance with all applicable laws, rules and regulations, and
those records pertaining to the various functions performed by it
hereunder. All records shall be the property of the Fund at all times
and shall be available for inspection and use by the Fund.
(iii) The Advisor shall make available during regular business
hours all records and other data created and maintained pursuant to
this Agreement for reasonable audit and inspection by the Fund, any
person retained by the Fund, or any regulatory agency having authority
over the Fund. Upon notice by the Fund, the Advisor shall make
available during regular business hours its facilities and premises
employed in connection with its performance of this Agreement for
visitation by any person designated by the Fund, or any regulatory
agency having authority over the Fund.
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2. Allocation of Expenses.
A. Expenses Paid by Advisor. The Advisor shall bear the cost of
rendering the investment management and supervisory services to be
performed by it under this Agreement. Notwithstanding the foregoing,
Advisor shall not be responsible for the costs of retaining professional
consultants in the legal, accounting, investment banking or other
specialized areas in connection with the review, analysis or due diligence
of investments or potential investments on behalf of the Fund or in
connection with capital restructurings, bankruptcy proceedings or other
transactions involving issuers of securities or similar instruments in
which the Fund has invested.
B. Expenses Paid by Fund. The Fund assumes and shall pay or cause
to be paid all other expenses of the Fund, including, without limitation;
the charges and expenses of any registrar, any custodian or depository
appointed by the Fund for the safekeeping of its cash, portfolio securities
and other property; brokers' commissions chargeable to the Fund in
connection with portfolio transactions to which the Fund is a party; all
taxes, including securities issuance and transfer taxes, and fees payable
by the Fund to federal, state or other governmental agencies; charges and
expenses of any outside service used for pricing of the securities and
other investments held by the Fund; charges and expenses of legal counsel
and accountants of the Fund in connection with any matter relating to the
Fund; insurance premiums relating to the property or activities of the Fund
and its Partners which inure to the Fund's benefit; extraordinary expenses
(including, but not limited to, legal claims and liabilities and litigation
costs and any indemnification related thereto); fees and expenses of
counsel accountants and investment bankers retained in connection with the
Fund's investments; and all other charges and costs of the Fund's operation
unless otherwise explicitly provided herein.
3. Advisory Fee.
A. In return for its services pursuant to this Agreement, Advisor
will receive an annual fee equal to .50% of the fair market value of the
net assets of the Partnership, including accrued interest, on the day
immediately prior to the date on which the fee is to be paid (the "Advisory
Fee"). Fees will be payable quarterly in advance from Partnership assets,
based on the value of the Partnership assets on the day immediately
preceding such payment date. For any period less than three (3) full
months for which an Advisory Fee is paid, the Advisory Fee will be prorated
on the basis of the actual number of days in that period and the Advisor
will return to the Partnership, based upon such proration, the excess
portion of the Advisory Fee paid at the beginning of such period.
B. Any fees paid to the Advisor or to any of its Affiliates by any
portfolio company or by any creditors committee or board of directors of
any portfolio company shall not be required to be paid by the Advisor or
any of its Affiliates to the partnership or any Partner and shall not be
available as an offset or credit against the Advisory Fee.
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4. Brokerage. Subject to the approval of the Board of Managers of
the General Partner of the Fund, the Advisor, in carrying out its duties under
Paragraph 1.A., may cause the Fund to pay a broker-dealer which furnishes
brokerage or research services, as such services are defined under Section 28(e)
of the Securities Exchange Act of 1934, as amended (the "34 Act"), a higher
commission than that which might be charged by another broker-dealer which does
not furnish brokerage or research services or which furnishes brokerage or
research services deemed to be of lesser value, if such commission is deemed
reasonable in relation to the brokerage and research services provided by the
broker-dealer, viewed in terms of either that particular transaction or the
overall responsibilities of the Advisor with respect to the accounts as to which
it exercises investment discretion (as such term is defined under Section 3(a)
(35) of the 34 Act).
5. Advisor's Use of the services of Others. The Advisor may employ,
retain or otherwise avail itself of the services or facilities of other persons
or organizations for the purpose of providing the Advisor or the Fund with such
statistical and other factual information, such advice regarding economic
factors and trends, such advice as to occasional transactions in specific
securities or such other information, advice or assistance as the Advisor may
deem necessary, appropriate or convenient for the discharge of its obligations
hereunder or otherwise helpful to the Fund, or in the discharge of Advisor's
overall responsibilities with respect to the other accounts which it serves as
investment advisor.
6. Limitation of Liability of Advisor. In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations hereunder, the Advisor shall not be liable to the Fund or any of its
investors for any error of judgment or mistake of law or for any act or omission
by the Advisor or for any losses sustained by the Fund or its investors.
7. Services to Other Clients. Nothing contained in this Agreement
shall prevent the Advisor or any affiliated person of the Advisor from acting as
investment advisor or manager for any other person, firm or corporation and
shall not in any way bind or restrict the Advisor or any such affiliated person
from buying, selling or trading any securities or commodities for their own
accounts or for the account of others for whom they may be acting. Nothing in
this Agreement shall limit or restrict the right of any director, officer or
employee of the Advisor to engage in any other business or to devote his or her
time and attention in part to the management or other aspects of any other
business whether of a similar or dissimilar nature.
8. Term of Agreement. This Agreement shall remain in effect until
terminated by written agreement duly executed by both the Advisor and the Fund,
or as follows: (a) the Fund may, at any time and without the payment of any
penalty, terminate this Agreement upon thirty days' written notice to the
Advisor; (b) this Agreement shall immediately terminate in the event of its
assignment (to the extent required by law or regulation); and (c) the Advisor
may terminate this Agreement without payment of penalty on one hundred eighty
(180) days' written notice to the Fund. Any notice under this Agreement shall
be given in writing, addressed and delivered, or mailed post-paid, to the other
party at the principal office of such party.
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9. Amendment; Entire Agreement. This Agreement may be amended
modified or supplemented only by means of a writing duly executed by both the
Advisor and the Fund. This Agreement constitutes the entire agreement between
the parties hereto with respect to the subject matter hereof and supersedes any
and all prior or contemporaneous oral or written agreements, understandings or
assumptions.
10. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Ohio and the applicable provisions of
the Act. To the extent the applicable law of the State of Ohio, or any of the
provisions herein, conflict with the applicable provisions of the Act, the
latter shall control
11. Custody of Partnership Assets. Neither the Advisor nor any
of its Affiliates shall have physical custody of the assets or funds of the
Partnership and all transactions with respect to such assets or funds shall be
carried out through such entities ("Custodians") other than the Advisor or its
Affiliates as the Advisor shall appoint in writing. Each such Custodian shall
be either (i) a broker-dealer subject to and in compliance with Rules 15c3-1 and
15c3-3 under the Securities Exchange Act of 0000 (xxx "Xxxxxxxx Xxx"); or (ii) a
bank as defined in Section 3(a)(6) of the Exchange Act.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement on the day and year first above written.
PACHOLDER HERON LIMITED PARTNERSHIP
BY: OP GENERAL PARTNER LLC
BY: /s/ XXXXX X. XXXXXXXX, XX.
--------------------------
MANAGER
PACHOLDER ASSOCIATES, INC.
BY: /s/ XXXXX X. XXXXXXXX, XX.
--------------------------
ITS: MANAGING DIRECTOR AND
GENERAL COUNSEL
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