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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.
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.
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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 0accordance 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.
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
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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.
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
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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.
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
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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.
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MANAGER
PACHOLDER ASSOCIATES, INC.
BY: /s/ XXXXX X. XXXXXXXX, XX.
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ITS: MANAGING DIRECTOR AND GENERAL COUNSEL
