CUSTOMER AGREEMENT
SB AAA MASTER FUND LLC
This Customer Agreement made and entered into as of the 23rd day of August,
2001, by and among SB AAA MASTER FUND LLC (the "Fund") and XXXXXXX XXXXX XXXXXX
INC., a Delaware corporation ("SSB").
W I T N E S S E T H :
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WHEREAS, the Fund, formed on August 17, 2001, has been organized to engage
in the speculative trading of commodity interests, including, but not limited
to, futures contracts, options, physical commodities, spot, swap and forward
contracts; and
WHEREAS, Xxxxx Xxxxxx Futures Management LLC ("SBFM" or the "Managing
Member") is the Managing Member of the Fund; and
WHEREAS, the Fund will act as a master fund whose initial feeder funds will
be Xxxxx Xxxxxx AAA Energy Fund L.P. and Xxxxx Xxxxxx Orion Futures Fund L.P.,
or such other accounts managed by SBFM or the Advisor as permitted by SBFM from
time to time (each a "Feeder Fund" and collectively, the "Feeder Funds"); and
WHEREAS, the Fund and SSB wish to enter into this Customer Agreement
setting forth the terms and conditions upon which SSB will perform brokerage and
other services for the Fund;
NOW, THEREFORE, in consideration of the promises and the mutual covenants
contained herein, it is agreed as follows:
1. Appointment of Broker/Dealer and Opening of Account. The Fund hereby
appoints SSB as its commodity broker/dealer through whom the Fund will execute
trades in commodity interests including futures contracts, options, physical
commodities, spot, swap and forward contracts. The Fund shall deposit or cause
to be deposited the Feeder Funds' capital contributions in a commodity brokerage
account with SSB, and will maintain all of its assets, as they from time to time
exist, in such account except for such amounts as may be necessary or desirable
to be maintained in a bank account or with a broker to facilitate trading in
interbank forward foreign currency transactions and the payment of Fund
expenses, withdrawals or distributions. The Fund shall execute such other
documents as shall be necessary or appropriate to permit SSB to perform its
services hereunder.
2. Services of SSB. SSB agrees to use its best efforts to effect
transactions for the Fund's account. SSB agrees to assist the Fund in performing
various functions. These include, but are not limited to: (a) calculating the
Fund's Net Assets and Net Asset Value (as such terms are defined in the Fund's
Operating Agreement) at such times as may be required, (b) preparing and
confirming financial information for annual or interim audits and reports and
(c) establishing procedures for effecting withdrawals, cash distributions and
the liquidation of the Fund upon termination. SSB further agrees to furnish
clerical and bookkeeping support for the administration of the Fund.
3. Brokerage and Other Fees. SSB's direct brokerage commissions or fees
shall be paid by the Feeder Funds in accordance with their individual customer
agreements with SSB based upon the trades allocable to each Feeder Fund. The
Fund shall pay National Futures Association, exchange, clearing, user, give-up
and floor brokerage fees, or shall reimburse SSB for all such fees previously
paid by SSB on behalf of the Fund.
4. Payment of Interest. SSB shall pay interest to each Feeder Fund in
accordance with the terms set forth in each Feeder Fund's customer agreement
with SSB.
5. Trading Authorization. The Managing Member has entered into a Management
Agreement with AAA Capital Management, Inc. as the Fund's Advisor (the
"Advisor"). Pursuant to the Management Agreement, the Advisor shall have
discretion to order purchases and sales of commodity interests including futures
contracts, options, physical commodities, spot, swap and forward contracts. SBFM
may select or appoint additional or replacement trading advisors. SSB is hereby
authorized to execute all orders placed by the Advisor for the account of the
Fund until notified by SBFM to the contrary, and shall have no obligation to
inquire into the reason for or method of determining such orders, nor any
obligation to monitor such orders in relation to the Fund's trading policies.
The provisions of this Paragraph 5 shall apply with equal force and effect to
any other commodity trading advisor designated in the future by SBFM.
6. Terms of the Account. The following terms and conditions shall be
applicable to the Fund's account: --------------------
(a) The word "property" is used herein to mean securities of all kinds,
monies, options, commodities and contracts for the future delivery of, or
otherwise relating to, commodities or securities and all property usually and
customarily dealt in by brokerage firms.
(b) All transactions for the Fund's account shall be subject to the
regulations of all applicable federal, state and self-regulatory agencies
including, but not limited to, the various commodity exchanges and the
constitutions, rules and customs, as the same may be constituted from time to
time, of the exchange or market (and its clearinghouse, if any) where executed.
Actual deliveries are intended on all transactions. The Fund also agrees not to
exceed the speculative position limits for its own account, acting alone or in
concert with others, and promptly to advise SSB if it is required to file
reports of its commodity positions with the Commodity Futures Trading Commission
("CFTC").
(c) Any and all property belonging to the Fund, or in which it may have an
interest, held by SSB or carried in the Fund's account (either individually or
jointly with others) shall be subject to a general lien for the discharge of the
Fund's obligations to SSB, wherever or however arising and without regard to
whether or not SSB has made advances with respect to such property, and SSB is
hereby authorized to sell and/or purchase any and all property in the Fund's
account without notice to satisfy such general lien.
(d) The Fund agrees to maintain such collateral and/or margin as SSB may,
in its discretion, require from time to time and will pay on demand any amount
owing with respect to its account. Against a "short" position in any commodity
contract, prior to the maturity thereof, the Fund will give SSB instructions to
cover, or furnish SSB with all necessary delivery documents, and in default
thereof, SSB may, without demand or notice, cover the contracts, or if an order
to buy in such contracts cannot be executed under prevailing conditions, SSB may
procure the actual commodity and make delivery thereof upon any terms and by any
method which may be feasible. It is further agreed that if the Fund fails to
receive sufficient funds to pay for any commodities and commodity futures
contracts and/or to satisfy any demands for original and/or variation margin,
SSB may, without prior demand and notice, sell any property held by it in the
Fund's account and any loss resulting therefrom will be charged to the Fund's
account.
(e) SSB may, whenever in its discretion it considers it necessary for its
protection, sell any or all property held in the Fund's account, cancel any open
orders for the purchase or sale of any property with or without notice to the
Fund, and SSB may borrow or buy in any property required to make delivery
against any sales, including a short sale, effected for the Fund. Such sale or
purchase may be public or private and may be made without advertising or notice
to the Fund and in such manner as SSB may, in its discretion, determine, and no
demands, calls, tenders or notices which SSB may make or give in any one or more
instances shall invalidate the aforesaid waiver on the Fund's part. At any such
sale SSB may purchase the property free of any right of withdrawal and the Fund
shall be liable for any deficiency in its account.
(f) SSB and the Fund agree that the parties shall have the right to offset
any unrealized gains and losses on the Fund's open positions and to net any open
orders for the purchase or sale of any property of the Fund.
(g) The Fund agrees to pay service fees and/or interest charges upon its
account monthly at the prevailing and/or allowable rates according to the laws
of the State of New York, as determined by SSB at the time of the acceptance of
this Agreement in its New York office and thereafter.
(h) If any provisions herein are or should become inconsistent with any
present or future law, rule or regulation of any sovereign government or a
regulatory body having jurisdiction over the subject matter of this Agreement,
such provision shall be deemed to be rescinded or modified in accordance with
any such law, rule or regulation. In all other respects, this Agreement shall
continue and remain in full force and effect.
7. Indemnification.
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(a) In any action, suit, or proceeding to which SSB was or is a party or is
threatened to be made a party by reason of the fact that it is or was the
commodity broker for the Fund (other than an action by or in the right of the
Fund), the Fund shall indemnify and hold harmless SSB, subject to subparagraph
(c), against any loss, liability, damage, cost, expense (including attorneys'
fees and accountants' fees), judgments and amounts paid in settlement actually
and reasonably incurred by it in connection with such action, suit or proceeding
if SSB acted in good faith and in a manner it reasonably believed to be in the
best interests of the Fund, except that no indemnification shall be made in
respect of any claim, issue or matter which as to SSB constituted negligence,
misconduct or breach of its fiduciary obligations to the Fund, unless, and only
to the extent that, the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all circumstances of the case, SSB is fairly and reasonably entitled to
indemnification for such expenses which such court shall deem proper; and
further provided that no indemnification shall be available from the Fund if
such indemnification is prohibited by Section 13 of the Fund's Operating
Agreement. The termination of any action, suit or proceeding by judgment, order
or settlement shall not, of itself, create a presumption that SSB did not act in
good faith, and in a manner which it reasonably believed to be in or not opposed
to the best interests of the Fund.
(b) To the extent that SSB has been successful on the merits or otherwise
in defense of any action, suit or proceeding referred to in subparagraph (a)
above, or in defense of any claim, issue or matter therein, the Fund shall
indemnify it against the expenses, including attorneys' fees, actually and
reasonably incurred by it in connection therewith.
(c) Any indemnification under subparagraph (a) above, unless ordered by a
court, shall be made by the Fund only as authorized in the specific case and
only upon a determination by independent legal counsel in a written opinion that
indemnification is proper in the circumstances because SSB has met the
applicable standard of conduct set forth in subparagraph (a) above.
(d) The term SSB as used in this Paragraph 7 shall include SSB, its
officers, directors, stockholders, employees and affiliates.
8. The Fund hereby represents that it is a qualified eligible person as
defined in CFTC Rule 4.7.
9. Termination. This Agreement may be terminated at any time by either party
hereto upon notice to the other, in which event the brokerage accounts
shall be closed and all positions open at such time shall be liquidated or
shall be transferred to another broker as directed by the Fund.
10. Miscellaneous. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
This Agreement shall be governed by the laws of the State of New York.
IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto as of
the day and year first above written.
SB AAA MASTER MASTER FUND LLC
By: Xxxxx Xxxxxx Futures Management LLC
(Managing Member)
By: /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
President
XXXXXXX XXXXX BARNEY INC.
(Commodity Broker/Dealer)
By: /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
Executive Vice President
