UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 [No Fee Required]
For the year ended December 31, 1998 or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [No Fee Required]
For the transition period from ________________to___________________
Commission File Number 0-19901
DEAN WITTER GLOBAL PERSPECTIVE PORTFOLIO L.P.
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(Exact name of registrant as specified in its Limited Partnership Agreement)
DELAWARE 13-3642323
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
c/o Demeter Management Corporation
Two World Trade Center, - 62nd Flr., New York, N.Y. 10048
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 392-5454
-------------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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None None
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
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(Title of Class)
Indicate by check-mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check-mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment of this Form 10-K.[X ]
State the aggregate market value of the Units of Limited Partnership Interest
held by non-affiliates of the registrant. The aggregate market value shall be
computed by reference to the price at which units were sold as of a specified
date within 60 days prior to the date of filing: $18,008,985.65 at January 31,
1999.
DOCUMENTS INCORPORATED BY REFERENCE
(See Page 1)
<PAGE>
DEAN WITTER GLOBAL PERSPECTIVE PORTFOLIO L.P.
INDEX TO ANNUAL REPORT ON FORM 10-K
DECEMBER 31, 1998
Page No.
--------
DOCUMENTS INCORPORATED BY REFERENCE. . . . . . . . . . . . . . . . . . . . 1
Part I .
Item 1. Business. . . . . . . . . . . . . . . . . . . . . . . . 2-4
Item 2. Properties. . . . . . . . . . . . . . . . . . . . . . . 4
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . 4-6
Item 4. Submission of Matters to a Vote of Security Holders . . 6
Part II.
Item 5. Market for the Registrant's Partnership Units and
Related Security Holder Matters . . . . . . . . 7
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . 8
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . 9-17
Item 7A. Quantitative and Qualitative Disclosures About
Market Risk . . . . . . . . . . . . . . . . . . . . . 17-29
Item 8. Financial Statements and Supplementary Data . . . . . . 29
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure . . . . . . . . . . 29
Part III.
Item 10. Directors and Executive Officers of the Registrant. . . 30-34
Item 11. Executive Compensation . . . . . . . . . . . . . . . . 34
Item 12. Security Ownership of Certain Beneficial Owners
and Management. . . . . . . . . . . . . . . . . . . . . 34
Item 13. Certain Relationships and Related Transactions. . . . . 35
Part IV.
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K . . . . . . . . . . . . . . . . . . 36
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference as follows:
Documents Incorporated Part of Form 10-K
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Partnership's Prospectus dated December
31, 1991, together with the Supplement
to the Prospectus dated April 27, 1992 I and IV
Annual Report to the Dean Witter Global
Perspective Portfolio L.P. Limited Partners
for the year ended December 31, 1998 II, III and IV
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PART I
Item 1. BUSINESS
(a) General Development of Business. Dean Witter Global Perspective
Portfolio L.P. (the "Partnership") is a Delaware limited partnership organized
to engage in the speculative trading of futures contracts, commodity options
contracts and forward contracts (collectively, "futures interests"). The general
partner is Demeter Management Corporation ("Demeter"). The non-clearing
commodity broker is Dean Witter Reynolds Inc. ("DWR") and an unaffiliated
clearing commodity broker, Carr Futures Inc. ("Carr"), provides clearing and
execution services. Both Demeter and DWR are wholly-owned subsidiaries of Morgan
Stanley Dean Witter & Co. ("MSDW"). The trading advisors for the Partnership are
ELM Financial, Inc., EMC Capital Management, Inc. and Millburn Ridgefield
Corporation (the "Trading Advisors").
The Partnership's Net Asset Value per Unit, as of December 31, 1998,
was $1,076.00, representing an increase of 11.24 percent from the Net Asset
Value per Unit of $967.23 on December 31, 1997. For a more detailed description
of the Partnership's business, see subparagraph (c).
(b) Financial Information about Industry Segments. For financial
information reporting purposes, the Partnership is deemed to engage in one
industry segment, the speculative trading of futures interests. The relevant
financial information is presented in Items 6 and 8.
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(c) Narrative Description of Business. The Partnership is in the
business of speculative trading of futures interests, pursuant to trading
instructions provided by its Trading Advisors. For a detailed description of the
different facets of the Partnership's business, see those portions of the
Partnership's prospectus, dated December 31, 1991, (the "Prospectus"),
incorporated by reference in this Form 10-K, set forth below.
Facets of Business
------------------
1. Summary 1. "Summary of the Prospectus"
(Pages 1-6 of the
Prospectus).
2. Commodity Markets 2. "The Commodities Markets"
(Pages 66-73 of the
Prospectus).
3. Partnership's Commodity 3. "Trading Policies" (Page
Trading Arrangements and 61 of the Prospectus).
Policies "The Trading Advisors"
(Pages 32-60 of the
Prospectus).
4. Management of the Part- 4. "The Management Agreement"
nership (Pages 63-66 of the
Prospectus). "The
General Partner" (Pages
28-30 of the Prospectus)
"The Commodity Broker"
(Pages 61-63 of the
Prospectus) and "The
Limited Partnership
Agreement" (Pages
75-78 of the Prospectus).
5. Taxation of the Partner- 5. "Material Federal Income
ship's Limited Partners Tax Considerations" and
"State and Local Income
Tax Aspects" (Pages 81-
89 of the Prospectus).
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(d) Financial Information About Foreign and Domestic Operations and
Export Sales.
The Partnership has not engaged in any operations in foreign countries;
however, the Partnership (through the commodity brokers) enters into forward
contract transactions where foreign banks are the contracting party and trades
in futures interests on foreign exchanges.
Item 2. PROPERTIES
The executive and administrative offices are located within the offices
of DWR. The DWR offices utilized by the Partnership are located at Two World
Trade Center, 62nd Floor, New York, NY 10048.
Item 3. LEGAL PROCEEDINGS
On September 6, 10, and 20, 1996, and on March 13, 1997, similar
purported class actions were filed in the Superior Court of the State of
California, County of Los Angeles, on behalf of all purchasers of interests in
limited partnership commodity pools sold by DWR. Named defendants include DWR,
Demeter, Dean Witter Futures & Currency Management, Inc. ("DWFCM"), MSDW (all
such parties referred to hereafter as the "Dean Witter Parties"), certain other
limited partnership commodity pools of which Demeter is the general partner, and
certain trading advisors to those pools. On June 16, 1997, the plaintiffs in the
above actions filed a consolidated amended complaint, alleging, among other
things, that the defendants committed fraud, deceit, negligent
misrepresentation, various violations of the California Corporations
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Code, intentional and negligent breach of fiduciary duty, fraudulent and unfair
business practices, unjust enrichment, and conversion in the sale and operation
of the various limited partnership commodity pools. Similar purported class
actions were also filed on September 18 and 20, 1996, in the Supreme Court of
the State of New York, New York County, and on November 14, 1996 in the Superior
Court of the State of Delaware, New Castle County, against the Dean Witter
Parties and certain trading advisors on behalf of all purchasers of interests in
various limited partnership commodity pools, sold by DWR. A consolidated and
amended complaint in the action pending in the Supreme Court of the State of New
York was filed on August 13, 1997, alleging that the defendants committed fraud,
breach of fiduciary duty, and negligent misrepresentation in the sale and
operation of the various limited partnership commodity pools. On December 16,
1997, upon motion of the plaintiffs, the action pending in the Superior Court of
the State of Delaware was voluntarily dismissed without prejudice. The New York
Supreme Court dismissed the New York action in November 1998, but granted
plaintiffs leave to file an amended complaint, which they did in early December
1998. The defendants have filed a motion to dismiss the amended complaint with
prejudice on February 1, 1999. The complaints seek unspecified amounts of
compensatory and punitive damages and other relief. It is possible that
additional similar actions may be filed and that, in the course of these
actions, other parties could be added as
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defendants. The Dean Witter Parties believe that they have strong defenses to,
and they will vigorously contest the actions. Although the ultimate outcome of
legal proceedings cannot be predicted with certainty, it is the opinion of
management of the Dean Witter Parties that the resolution of the actions will
not have a material adverse effect on the financial condition or the results of
operations of any of the Dean Witter Parties.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
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PART II
Item 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP UNITS AND RELATED
SECURITY HOLDER MATTERS
There is no established public trading market for the Units of Limited
Partnership Interest ("Units") in the Partnership. The number of holders of
Units at December 31, 1998 was approximately 2,253. No distributions have been
made by the Partnership since it commenced trading operations on March 1, 1992.
Demeter has sole discretion to decide what distributions, if any, shall be made
to investors in the Partnership. No determination has yet been made as to future
distributions.
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Item 6. SELECTED FINANCIAL DATA (in dollars)
<TABLE>
<CAPTION>
For the Years Ended December 31,
-------------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Total Revenues
(including interest) 4,169,027 4,917,569 4,375,881 7,723,714 (11,717,844)
Net Income (Loss) 2,022,979 2,420,203 1,766,076 4,586,655 (16,267,965)
Net Income (Loss)
Per Unit (Limited
& General Partners) 108.77 97.12 73.76 114.30 (315.44)
Total Assets 19,185,631 21,221,634 22,267,408 24,852,070 29,736,302
Total Limited
Partners' Capital 18,754,867 20,276,293 21,020,037 23,774,361 28,148,186
Net Asset Value Per
Unit of Limited
Partnership Interest 1,076.00 967.23 870.11 796.35 682.05
</TABLE>
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Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity - Assets of the Partnership are deposited with DWR as
non-clearing broker and Carr as clearing broker in separate futures interest
trading accounts. Such assets are held in either non-interest bearing bank
accounts or in securities approved by the Commodity Futures Trading Commission
("CFTC") for investment of customer funds. The Partnership's assets held by DWR
and Carr may be used as margin solely for the Partnership's trading. Since the
Partnership's sole purpose is to trade in futures interests, it is expected that
the Partnership will continue to own such liquid assets for margin purposes.
The Partnership's investment in futures interests may, from time to
time, be illiquid. Most United States futures exchanges limit fluctuations in
certain futures interest prices during a single day by regulations referred to
as "daily price fluctuations limits" or "daily limits". Pursuant to such
regulations, during a single trading day no trades may be executed at prices
beyond the daily limit. If the price for a particular futures interest has
increased or decreased by an amount equal to the daily limit, positions in such
futures interest can neither be taken nor liquidated unless traders are willing
to effect trades at or within the limit. Futures interests prices have
occasionally moved the daily limit for several consecutive days with little or
no trading. Such market conditions could prevent the Partnership from promptly
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liquidating its futures interests and result in restrictions on redemptions.
There is no limitation on daily price moves in trading forward contracts on
foreign currency. The markets for some world currencies have low trading volume
and are illiquid, which may prevent the Partnership from trading in potentially
profitable markets or from promptly liquidating unfavorable positions in such
markets, and subjecting it to substantial losses. Either of these market
conditions could result in restrictions on redemptions.
Capital Resources. The Partnership does not have, nor does it expect to
have, any capital assets. Future redemptions and exchanges of Units of Limited
Partnership Interest will affect the amount of funds available for investment in
futures interests in subsequent periods. Since they are at the discretion of
Limited Partners, it is not possible to estimate the amount and therefore, the
impact of future redemptions and exchanges.
Results of Operations. As of December 31, 1998, the Partnership's total
capital was $18,987,243, a decrease of $1,981,552 from the Partnership's total
capital of $20,968,795 at December 31, 1997. For the year ended December 31,
1998, the Partnership generated net income of $2,022,979 and total redemptions
aggregated $4,004,531.
For the year ended December 31, 1998, the Partnership's total trading
revenues, including interest income, were $4,169,027. The Partnership's total
expenses for the year were $2,146,048, resulting in net income of $2,022,979.
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The value of an individual unit in the Partnership increased from $967.23 at
December 31, 1997 to $1,076.00 at December 31, 1998.
As of December 31, 1997, the Partnership's total capital was
$20,968,795, a decrease of $674,210 from the Partnership's total capital of
$21,643,005, at December 31, 1996. For the year ended December 31, 1997, the
Partnership generated net income of $2,420,203 and total redemptions aggregated
$3,094,413.
For the year ended December 31, 1997, the Partnership's total trading
revenues, including interest income, were $4,917,569. The Partnership's total
expenses for the year were $2,497,366, resulting in net income of $2,420,203.
The value of an individual unit in the Partnership increased from $870.11 at
December 31, 1996 to $967.23 at December 31, 1997.
As of December 31, 1996, the Partnership's total capital was
$21,643,005, a decrease of $2,701,511 from the Partnership's total capital of
$24,344,516 at December 31, 1995. For the year ended December 31, 1996, the
Partnership generated net income of $1,766,076 and total redemptions aggregated
$4,467,587.
For the year ended December 31, 1996, the Partnership's total trading
revenues, including interest income, were $4,375,881. The Partnership's total
expenses for the year were $2,609,805, resulting in net income of $1,766,076.
The value of an individual unit in the Partnership increased from $796.35 at
December 31, 1995 to $870.11 at December 31, 1996.
The Partnership's overall performance record represents varied results
of trading in different futures interests markets. For a further description of
trading results, refer to the letter to the Limited Partners in the
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accompanying 1998 Annual Report to Limited Partners, incorporated by reference
in this Form 10-K. The Partnership's gains and losses are allocated among its
partners for income tax purposes.
Credit Risk. In entering into futures forward contracts there is a
credit risk to the Partnership that the counterparty on a contract will not be
able to meet its obligations to the Partnership. The ultimate counterparty of
the Partnership for futures contracts traded in the United States and most
foreign exchanges on which the Partnership trades is the clearinghouse
associated with such exchange. In general, a clearinghouse is backed by the
membership of the exchange and will act in the event of non-performance by one
of its members or one of its member's customers, and, as such, should
significantly reduce this credit risk. For example, a clearinghouse may cover a
default by (i) drawing upon a defaulting member's mandatory contributions and/or
non-defaulting members' contributions to a clearinghouse guarantee fund,
established lines or letters of credit with banks, and/or the clearinghouse's
surplus capital and other available assets of the exchange and clearinghouse, or
(ii) assessing its members.
In cases where the Partnership trades on a foreign exchange where the
clearinghouse is not funded or guaranteed by the membership or where the
exchange is a "principals' market" in which performance is the responsibility of
the exchange member and not the exchange or a clearinghouse, or when the
Partnership enters into off-exchange contracts with a counterparty, the sole
recourse of the Partnership will be the clearinghouse, the exchange member or
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the off-exchange contract counterparty, as the case may be. There can be no
assurance that a clearinghouse, exchange or other exchange member will meet its
obligations to the Partnership, and the Partnership is not indemnified against a
default by such parties from Demeter, MSDW or DWR.
Further, the law is unclear as to whether a commodity broker has any
obligation to protect its customers from loss in the event of an exchange,
clearinghouse or other exchange member default on trades effected for the
broker's customers. Any such obligation on the part of the broker appears even
less clear where the default occurs in a non-US jurisdiction.
Demeter deals with the credit risks of all partnerships for which it
serves as general partner in several ways. First, it monitors the Partnership's
credit exposure to each exchange on a daily basis, calculating not only the
amount of margin required for it but also the amount of its unrealized gains at
each exchange, if any. The Commodity brokers inform the Partnership, as with all
their customers, of its net margin requirements for all its existing open
positions, but do not break that net figure down, exchange by exchange. Demeter,
however, has installed a system which permits it to monitor the Partnership's
potential margin liability, exchange by exchange. Demeter is then able to
monitor the Partnership's potential net credit exposure to each exchange by
adding the unrealized trading gains on that exchange, if any, to the
Partnership's margin liability thereon.
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Second, the Partnership's trading policies limit the amount of its net
assets that can be committed at any given time to futures contracts and require,
in addition, a certain minimum amount of diversification in the Partnership's
trading, usually over several different products. One of the aims of such
trading policies has been to reduce the credit exposure of the Partnership to a
single exchange and, historically, such Partnership exposure has typically
amounted to only a small percentage of its total net assets. On those relatively
few occasions where a partnership's credit exposure may climb above that level,
Demeter deals with the situation on a case by case basis, carefully weighing
whether the increased level of credit exposure remains appropriate.
Third, Demeter has secured, with respect to Carr acting as the clearing
broker for the Partnership, a guarantee by Credit Agricole Indosuez, Carr's
parent, of the payment of the "net liquidating value" of the transactions
(futures, options and forward contracts) in the Partnership's account.
With respect to forward contract trading, the Partnership trades with
only those counterparties which Demeter, together with DWR, have determined to
be creditworthy. At the date of this filing, the Partnership deals only with
Carr as its counterparty on forward contracts. The guarantee by Carr's parent,
discussed above, covers these forward contracts.
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See "Financial Instruments" under Notes to Financial Statements in the
Partnership's Annual Report to Limited Partners for the year ended December 31,
1998, incorporated by reference in this Form 10-K.
Year 2000 Problem. Commodity pools, like financial and business
organizations and individuals around the world, depend on the smooth functioning
of computer systems. Many computer systems in use today cannot recognize the
computer code for the year 2000, but revert to 1900 or some other date. This is
commonly known as the "Year 2000 Problem". The Partnership could be adversely
affected if computer systems used by it or any third party with whom it has a
material relationship do not properly process and calculate date-related
information and data concerning dates on or after January 1, 2000. Such a
failure could adversely affect the handling or determination of futures trades
and prices and other services.
MSDW began its planning for the Year 2000 Problem in 1995, and
currently has several hundred employees working on the matter. It has developed
its own Year 2000 compliance plan to deal with the problem and had the plan
approved by the company's executive management, Board of Directors and
Information Technology Department. Demeter is coordinating with MSDW to address
the Year 2000 Problem with respect to Demeter's computer systems that affect the
Partnership. This includes hardware and software upgrades, systems consulting
and computer maintenance.
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Beyond the challenge facing internal computer systems, the systems
failure of any of the third parties with whom the Partnership has a material
relationship - the futures exchanges and clearing organizations through which it
trades, Carr, or the Trading Advisors - could result in a material financial
risk to the Partnership. All U.S. futures exchanges are subject to monitoring by
the CFTC of their Year 2000 preparedness and the major foreign futures exchanges
are also expected to be subject to market-wide testing of their Year 2000
compliance during 1999. Demeter intends to monitor the progress of Carr and the
Trading Advisors throughout 1999 in their Year 2000 compliance and, where
applicable, to test its external interface with Carr and the Trading Advisors.
A worst case scenario would be one in which trading of contracts on
behalf of the Partnership becomes impossible as a result of the Year 2000
Problem encountered by any third parties. A less catastrophic but more likely
scenario would be one in which trading opportunities diminish as a result of
technical problems resulting in illiquidity and fewer opportunities to make
profitable trades. MSDW has begun developing various "contingency plans" in the
event that the systems of such third parties fail. Demeter intends to consult
closely with MSDW in implementing those plans. Despite the best efforts of both
Demeter and MSDW, however, it is possible that these steps will not be
sufficient to avoid any adverse impact to the Partnership.
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Risks Associated with the Euro. On January 1, 1999, eleven countries in
the European Union established fixed conversion rates on their existing
sovereign currencies and converted to a common single currency (the "euro").
During a three-year transition period, the sovereign currencies will continue to
exist but only as a fixed denomination of the euro. Conversion to the euro
prevents the Trading Advisors from trading in certain currencies and thereby
limit their ability to take advantage of potential market opportunities that
might otherwise have existed had separate currencies been available to trade.
This could adversely affect the performance results of the Partnership.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Introduction
The Partnership is a commodity pool engaged primarily in the
speculative trading of futures interests. The market sensitive instruments held
by the Partnership are acquired solely for speculative trading purposes and, as
a result, all or substantially all of the Partnership's assets are subject to
the risk of trading loss. Unlike an operating company, the risk of market
sensitive instruments is integral, not incidental, to the Partnership's primary
business activities.
The futures interests traded by the Partnership involve varying degrees
of related market risk. Such market risk is often dependent upon changes in the
level or volatility of interest rates, exchange rates, and/or market values of
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financial instruments and commodities. Fluctuations in related market risk based
upon the aforementioned factors result in frequent changes in the fair value of
the Partnership's open positions, and, consequently, in its earnings and cash
flow.
The Partnership's total market risk is influenced by a wide variety of
factors, including the diversification effects among the Partnership's existing
open positions, the volatility present within the market(s) and the liquidity of
the market(s). At varying times, each of these factors may act to exacerbate or
mute the market risk associated with the Partnership.
The Partnership's past performance is not necessarily indicative of its
future results. Any attempt at quantifying the Partnership's market risk must be
qualified by the inherent uncertainty of its speculative trading, which may
cause future losses and volatility (i.e. "risk of ruin") far in excess of the
Partnership's experience to date and/or any reasonable expectation premised upon
historical changes in the fair value of its market sensitive instruments.
Quantifying the Partnership's Trading Value at Risk
The following quantitative disclosures regarding the Partnership's
market risk exposures contain "forward-looking statements" within the meaning of
the safe harbor from civil liability provided for such statements by the Private
Securities Litigation Reform Act of 1995 (set forth in Section 27A of the
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Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934).
All quantitative disclosures in this section are deemed to be forward-looking
statements for purposes of the safe harbor, except for statements of historical
fact.
The Partnership accounts for open positions on the basis of
mark-to-market accounting principles. As such, any loss in the fair value of the
Partnership's open positions is directly reflected in the Partnership's
earnings, whether realized or unrealized, and the Partnership's cash flow, as
profits and losses on open positions off exchange traded-futures interests are
settled daily through variation margin.
The Partnership's risk exposure in the various market sectors traded by
the Trading Advisors is estimated below in terms of Value at Risk ("VaR"). The
VaR model employed by the Partnership incorporates numerous variables that could
impact the fair value of the Partnership's trading portfolio. The Partnership
estimates VaR using a model based on historical simulation with a confidence
level of 99%. Historical simulation involves constructing a distribution of
hypothetical daily changes in trading portfolio value. The VaR model generally
takes into account linear exposures to price and interest rate risk. Market
risks that are incorporated in the VaR model include equity and commodity
prices, interest rates, foreign exchange rates, as well as correlation that
exists among these variables. The hypothetical changes in
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portfolio value are based on daily observed percentage changes in key market
indices or other market factors ("market risk factors") to which the portfolio
is sensitive. In the case of the Partnership's VaR, the historical observation
period is approximately four years. The Partnership's one-day 99% VaR
corresponds to the negative change in portfolio value that, based on observed
market risk factor moves, would have been exceeded once in 100 trading days.
VaR models such as the Partnership's are continually evolving as
trading portfolios become more diverse and modeling techniques and systems
capabilities improve. It must also be noted that the VaR model is used to
quantify market risk for historic reporting purposes only and is not utilized by
either Demeter or the Trading Advisors in their daily risk management
activities.
The Partnership's Value at Risk in Different Market Sectors
The following table indicates the VaR associated with the Partnership's
open positions as a percentage of total net assets by market category as of
December 31, 1998. As of December 31, 1998, the Partnership's total
capitalization was approximately $19 million.
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Primary Market December 31, 1998
Risk Category Value at Risk
------------- -------------
Interest Rate (1.58)%
Currency (.99)
Equity (.72)
Commodity (1.07)
Aggregate Value at Risk (2.15)%
Aggregate value at risk represents the aggregate VaR of the
Partnership's open positions and not the sum of the VaR of the individual
categories listed above. Aggregate VaR will be lower as it takes into account
correlation among different positions and categories.
The table above represents the VaR of the Partnership's open positions
at December 31, 1998 only and is not necessarily representative of either the
historic or future risk of an investment in the Partnership. As the
Partnership's sole business is the speculative trading of primarily futures
interests, the composition of its portfolio of open positions can change
significantly over any given time period or even within a single trading day.
Such changes in open positions could materially impact market risk as measured
by VaR either positively or negatively.
The table below supplements the year end VaR by presenting the
Partnership's high, low and average VaR as a percentage of total net assets for
the four quarterly reporting periods from January 1, 1998 through December 31,
1998.
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Primary Market
Risk Category High Low Average
- - ------------- ---- --- -------
Interest Rate (2.32)% (.61)% (1.66)%
Currency (2.01) (.95) (1.39)
Equity (.72) (.34) (.54)
Commodity (1.08) (.60) (.92)
Aggregate Value at Risk (3.00)% (2.15)% (2.53)%
Limitations on Value at Risk as an Assessment of Market Risk
The face value of the market sector instruments held by the Partnership
is typically many times the applicable margin requirements, as such margin
requirements generally range between 2% and 15% of contract face value.
Additionally, due to the use of leverage, the face value of the market sector
instruments held by the Partnership is typically many times the total
capitalization of the Partnership. The financial magnitude of the Partnership's
open positions thus creates a "risk of ruin" not typically found in other
investment vehicles. Due to the relative size of the positions held, certain
market conditions, may cause the Partnership to incur losses greatly in excess
of VaR within a short period of time. The foregoing VaR tables, as well as the
past performance of the Partnership, gives no indication of such "risk of ruin".
In addition, VaR risk measures should be interpreted in light of the
methodology's limitations, which include the following: past changes in market
risk factors will not always yield accurate predictions of the distributions and
correlations of future market movements; changes in portfolio value in response
to market movements may
- 22 -
<PAGE>
differ from the responses implicit in a VaR model; published VaR results reflect
past trading positions while future risk depends on future positions; VaR using
a one-day time horizon does not fully capture the market risk of positions that
cannot be liquidated or hedged within one day; and the historical market risk
factor data used for VaR estimation may provide only limited insight into losses
that could be incurred under certain unusual market movements.
The foregoing VaR tables present the results of the Partnership's VaR
for each of the Partnership's market risk exposures and on an aggregate basis at
December 31, 1998 and for the end of quarter periods during calendar 1998. Since
VaR is based on historical data, VaR should not be viewed as predictive of the
Partnership's future financial performance or its ability to manage and monitor
risk and there can be no assurance that the Partnership's actual losses on a
particular day will not exceed the VaR amounts indicated or that such losses
will not occur more than 1 in 100 trading days.
Non-Trading Risk
The Partnership has non-trading market risk on its foreign cash
balances not needed for margin. However, such balances, as well as any market
risk they may represent, are immaterial. The Partnership also maintains a
substantial portion (approximately 81%) of its available assets in cash at DWR.
A decline in short-term interest rates will result in a decline in the
Partnership's cash management income. This cash flow risk is not considered
material.
- 23 -
<PAGE>
Materiality, as used throughout this section, is based on an assessment of
reasonably possible market movements and the potential losses caused by such
movements, taking into account the leverage, optionality and multiplier features
of the Partnership's market sensitive instruments.
Qualitative Disclosures Regarding Primary Trading Risk Exposures
The following qualitative disclosures regarding the Partnership's
market risk exposures - except for (i) those disclosures that are statements of
historical fact and (ii) the descriptions of how the Partnership manages its
primary market risk exposures - constitute forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act. The Partnership's primary market risk exposures as well as the
strategies used and to be used by Demeter and the Trading Advisors for managing
such exposures are subject to numerous uncertainties, contingencies and risks,
any one of which could cause the actual results of the Partnership's risk
controls to differ materially from the objectives of such strategies. Government
interventions, defaults and expropriations, illiquid markets, the emergence of
dominant fundamental factors, political upheavals, changes in historical price
relationships, an influx of new market participants, increased regulation and
many other factors could result in material losses as well as in material
changes to the risk exposures and the risk management
- 24 -
<PAGE>
strategies of the Partnership. Investors must be prepared to lose all or
substantially all of their investment in the Partnership.
The following were the primary trading risk exposures of the
Partnership as of December 31, 1998, by market sector. It may be anticipated
however, that these market exposures will vary materially over time.
Interest Rate. Interest rate risk is the principal market exposure of
the Partnership. Interest rate movements directly affect the price of the
sovereign futures positions held by the Partnership and indirectly the value of
its stock index and currency positions. Interest rate movements in one country
as well as relative interest rate movements between countries materially impact
the Partnership's profitability. The Partnership's primary interest rate
exposure is to interest rate fluctuations in the United States and the other G-7
countries. However, the Partnership also takes futures positions in the
government debt of smaller nations - e.g. Australia. Demeter anticipates that
G-7 interest rates will remain the primary market exposure of the Partnership
for the foreseeable future. The changes in interest rates which have the most
effect on the Partnership are changes in long-term, as opposed to short-term,
rates. Most of the speculative future positions held by the Partnership are in
medium-to-long term instruments. Consequently, even a material change in
short-term rates would have little effect on the Partnership were the
medium-to-long term rates to remain steady.
Currency. The Partnership's currency exposure is to exchange rate
fluctuations, primarily fluctuations which disrupt the historical pricing
relationships between different currencies and currency pairs. These
fluctuations
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<PAGE>
are influenced by interest rate changes as well as political and general
economic conditions. The Partnership trades in a large number of currencies,
including cross-rates - i.e., positions between two currencies other than the
U.S. dollar. However, the Partnership's major exposures have typically been in
the dollar/yen, dollar/mark and dollar/pound positions. Demeter does not
anticipate that the risk profile of the Partnership's currency sector will
change significantly in the future, although it is difficult at this point to
predict the effect of the introduction of the Euro on the Trading Advisors'
currency trading strategies.
Equity. The Partnership's primary equity exposure is to equity price
risk in the G-7 countries. The stock index futures traded by the Partnership are
by law limited to futures on broadly based indices. As of December 31, 1998, the
Partnership's primary exposures were in the S&P 500, Nikkei (Japan) and DAX
(Germany) stock indices. The Partnership is primarily exposed to the risk of
adverse price trends or static markets in the major U.S., European and Japanese
indices. (Static markets would not cause major market changes but would make it
difficult for the Partnership to avoid being "whipsawed" into numerous small
losses).
Commodity.
Metals. The Partnership's primary metals market exposure is to
fluctuations in the price of gold and silver. Although the Trading Advisors will
from time to time trade base metals such as aluminum, copper, nickel and zinc,
the principal market exposures of the Partnership have consistently been in the
precious metals,
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<PAGE>
gold and silver. The Trading Advisors' gold trading has been increasingly
limited due to the long-lasting and mainly non-volatile decline in the price of
gold over the last 10-15 years. However, silver prices have remained volatile
over this period, and the Trading Advisors have from time to time taken
substantial positions as they have perceived market opportunities to develop.
Demeter anticipates that gold and silver will remain the primary metals market
exposure for the Partnership.
Soft Commodities. One of the Partnership's primary commodities exposure
is to fluctuations in the price of soft commodities, which are often directly
affected by severe or unexpected weather conditions. Soybeans, grains, and
coffee accounted for the substantial bulk of the Partnership's commodities
exposure at December 31, 1998. The Partnership has market exposure to live
cattle and lean hogs. However, Demeter anticipates that the Trading Advisors
will maintain an emphasis on soybeans, grains, and coffee, in which the
Partnership has historically taken it's largest positions.
Energy. The Partnership's primary energy market exposure is to gas and
oil price movements, often resulting from political developments in the Middle
East. Although the Trading Advisors trade natural gas to a limited extent, oil
is by far the dominant energy market exposure of the Partnership. Oil prices are
currently depressed, but they can be volatile and substantial profits and losses
have been and are expected to continue to be experienced in this market.
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<PAGE>
Qualitative Disclosures Regarding Non-Trading Risk Exposure
The following was the only non-trading risk exposures of the
Partnership at December 31, 1998:
Foreign Currency Balances. The Partnership's primary foreign currency
balances are in Japanese yen, German marks, British pounds, French francs and
euros. The Partnership controls the non-trading risk of these balances by
regularly converting these balances back into U.S. dollars at varying intervals,
depending upon such factors as size, volatility, etc.
Qualitative Disclosures Regarding Means of Managing Risk Exposure
The means by which the Partnership and the Trading Advisors, severally,
attempt to manage the risk of the Partnership's open positions are essentially
the same in all market categories traded. Demeter attempts to manage the
Partnership's market exposure by (i) diversifying the Partnership's assets among
different Trading Advisors each of whose strategies focus on different market
sectors and trading approaches, and (ii), monitoring the performance of the
Trading Advisors on a daily basis. In addition, the Trading Advisors establish
diversification guidelines, often set in terms of the maximum margin to be
committed to positions in any one market sector or market sensitive instrument.
- 28 -
<PAGE>
Demeter monitors and controls the risk of the Partnership's non-trading
instruments, cash, which is the only Partnership investment directed by Demeter,
rather than the Trading Advisors.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item appears in the Annual Report to
Limited Partners for the year ended December 31, 1998.and is incorporated by
reference in this Annual Report on Form 10-K.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
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<PAGE>
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
There are no directors or executive officers of the Partnership. The
Partnership is managed by Demeter.
Directors and Officers of the General Partner
The directors and officers of Demeter are as follows:
Mark J. Hawley, age 55, is Chairman of the Board and a Director of
Demeter. Mr. Hawley is also Chairman of the Board and a Director of DWFCM. Mr.
Hawley previously served as President of Demeter throughout 1998. Mr. Hawley
joined DWR in February 1989 as Senior Vice President and is currently the
Executive Vice President and Director of DWR's Product Management for Individual
Asset Management. In this capacity, Mr. Hawley is responsible for directing the
activities of the firm's Managed Futures, Insurance, and Unit Investment Trust
Business. From 1978 to 1989, Mr. Hawley was a member of the senior management
team at Heinold Asset Management, Inc., a CPO, and was responsible for a variety
of projects in public futures funds. From 1972 to 1978, Mr. Hawley was a Vice
President in charge of institutional block trading for the Mid-West at Kuhn Loeb
& Company.
Joseph G. Siniscalchi, age 53, is a Director of Demeter. Mr.
Siniscalchi joined DWR in July 1984 as a First Vice President, Director of
General Accounting and served as a Senior Vice President and Controller for
- 30 -
<PAGE>
DWR's Securities Division through 1997. He is currently Executive Vice President
and Director of the Operations Division of DWR. From February 1980 to July 1984,
Mr. Siniscalchi was Director of Internal Audit at Lehman Brothers Kuhn Loeb,
Inc.
Edward C. Oelsner, III, age 56, is a Director of Demeter. Mr.
Oelsner is currently an Executive Vice President and head of the Product
Development Group at Dean Witter InterCapital Inc., an affiliate of DWR. Mr.
Oelsner joined DWR in 1981 as a Managing Director in DWR's Investment Banking
Department specializing in coverage of regulated industries and, subsequently,
served as head of the DWR Retail Products Group. Prior to joining DWR, Mr.
Oelsner held positions at The First Boston Corporation as a member of the
Research and Investment Banking Departments from 1967 to 1981. Mr. Oelsner
received his M.B.A. in Finance from the Columbia University Graduate School of
Business in 1966 and an A.B. in Politics from Princeton University in 1964.
Robert E. Murray, age 38, is President and a Director of Demeter.
Mr. Murray is also President and a Director of DWFCM. Effective as of the
close of business on December 31, 1998, Mr. Murray replaced Mr. Hawley as
President of Demeter. Mr. Murray is also a Senior Vice President of DWR's
Managed Futures Department and is the Senior Administrative Officer of DWFCM.
Mr. Murray began his career at DWR in 1984 and is currently the Director of
the Managed Futures Department. In this capacity, Mr. Murray is responsible
for overseeing all aspects of the firm's Managed Futures Department. Mr.
Murray currently serves as a Director of the Managed Funds Association, an
industry
- 31 -
<PAGE>
association for investment professionals in futures, hedge funds and other
alternative investments. Mr. Murray graduated from Geneseo State University
in May 1983 with a B.A. degree in Finance.
Lewis A. Raibley, III, age 36, is Vice President, Chief Financial
Officer and a Director of Demeter. Effective as of the close of business on
December 31, 1998, Mr. Raibley was elected to Demeter's Board of Directors. Mr.
Raibley is currently Senior Vice President and Controller in the Individual
Asset Management Group of MSDW. From July 1997 to May 1998, Mr. Raibley served
as Senior Vice President and Director in the Internal Reporting Department of
MSDW and prior to that, from 1992 to 1997, he served as Senior Vice President
and Director in the Financial Reporting and Policy Division of Dean Witter
Discover & Co. He has been with MSDW and its affiliates since June 1986.
Mitchell M. Merin, age 45, became a Director of Demeter on March 17,
1999. Mr. Merin was appointed the Chief Operating Officer of Asset Management
for MSDW in December 1998 and the President and Chief Executive Officer of
Morgan Stanley Dean Witter Advisors in February 1998. He has been an Executive
Vice President of DWR since 1990, during which time he has been Director of
DWR's Taxable Fixed Income and Futures divisions, Managing Director in Corporate
Finance and Corporate Treasurer. Mr. Merin received his Bachelor's degree from
Trinity College in Connecticut and his M.B.A. degree in
- 32 -
<PAGE>
finance and accounting from the Kellogg Graduate School of Management of
Northwestern University in 1977.
Richard A. Beech, age 47, became a Director of Demeter on March 17,
1999. Mr. Beech has been associated with the futures industry for over 23 years.
He has been at DWR since August 1984 where he is presently Senior Vice President
and head of Branch Futures. Mr. Beech began his career at the Chicago Mercantile
Exchange, where he became the Chief Agricultural Economist doing market
analysis, marketing and compliance. Prior to joining DWR, Mr. Beech also had
worked at two investment banking firms in Operations, Research, Managed Futures
and Sales Management.
Ray Harris, age 42, became a Director of Demeter on March 17, 1999. Mr.
Harris is currently Senior Vice President, Planning and Administration for
Morgan Stanley Dean Witter Asset Management and has worked at DWR or its
affiliates since July 1982, serving in both financial and administrative
capacities. From August 1994 to January 1999, he worked in two separate DWR
affiliates, Discover Financial Services and Novus Financial Corp., culminating
as Senior Vice President. Mr. Harris received his B.A. degree from Boston
College and his M.B.A. in finance from the University of Chicago.
Richard M. DeMartini, age 46, previously served as the Chairman of the
Board and as a Director of Demeter throughout 1998. Effective as of the close of
business on December 31, 1998, Mr. DeMartini resigned as the Chairman of the
Board and as a Director of Demeter due to changes in his responsibilities within
MSDW.
- 33 -
<PAGE>
Lawrence Volpe, age 51, served as a Director to Demeter throughout
1998. Effective as of the close of business on December 31, 1998, Mr. Volpe
resigned as a Director of Demeter.
Patti L. Behnke, age 38, served as Vice President and Chief Financial
Officer of Demeter through May 1998. Effective June 1, 1998, Ms. Behnke resigned
as Vice President and Chief Financial Officer of Demeter in order to take on new
responsibilities as Operations Officer - Controllers Division for MSDW, and was
replaced by Mr. Raibley.
Item 11. EXECUTIVE COMPENSATION
The Partnership has no directors and executive officers. As a
limited partnership, the business of the Partnership is managed by Demeter,
which is responsible for the administration of the business affairs of the
Partnership but receives no compensation for such services.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners - As of December
31, 1998, there were no persons known to be beneficial owners of more than 5
percent of the Units.
(b) Security Ownership of Management - At December 31, 1998, Demeter
owned 215.962 Units of General Partnership Interest in the Partnership,
representing a 1.22 percent interest in the Partnership.
(c) Changes in Control - None
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<PAGE>
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Refer to Note 2 - "Related Party Transactions" of "Notes to Financial
Statements", in the accompanying 1998 Annual Report to Limited Partners,
incorporated by reference in this Form 10-K. In its capacity as the
Partnership's retail commodity broker, DWR received commodity brokerage
commissions (paid and accrued by the Partnership) of $1,308,493 for the year
ended December 31, 1998.
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<PAGE>
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Listing of Financial Statements
The following financial statements and report of independent auditors,
all appearing in the accompanying Annual Report to Limited Partners for the year
ended December 31, 1998 are incorporated by reference in this Form 10-K:
- Report of Deloitte & Touche LLP, independent auditors, for the
years ended December 31, 1998, 1997 and 1996.
- Statements of Financial Condition as of December 31, 1998
and 1997.
- Statements of Operations, Changes in Partners' Capital, and
Cash Flows for the years ended December 31, 1998, 1997 and
1996.
- Notes to Financial Statements.
With the exception of the aforementioned information and the
information incorporated in Items 7, 8, and 13, the Annual Report to Limited
Partners for the year ended December 31, 1998 is not deemed to be filed with
this report.
2. Listing of Financial Statement Schedules
No financial statement schedules are required to be filed with this
report.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed by the Partnership during the
last quarter of the period covered by this report.
(c) Exhibits
Refer to Exhibit Index on Page E-1.
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<PAGE>
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
DEAN WITTER GLOBAL PERSPECTIVE PORTFOLIO L.P.
(Registrant)
BY: Demeter Management Corporation,
General Partner
March 29, 1999 BY: /s/ Robert E. Murray
----------------------------------------
Robert E. Murray, Director and
President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Demeter Management Corporation.
BY: /s/ Robert E. Murray March 29, 1999
-------------------------------------------
Robert E. Murray, Director and
President
/s/ Mark J. Hawley March 29, 1999
-------------------------------------------
Mark J. Hawley, Director
and Chairman of the Board
/s/ Joseph G. Siniscalchi March 29, 1999
-------------------------------------------
Joseph G. Siniscalchi, Director
/s/ Edward C. Oelsner III March 29, 1999
-------------------------------------------
Edward C. Oelsner III, Director
/s/ Mitchell M. Merin March 29, 1999
-------------------------------------------
Mitchell M. Merin, Director
/s/ Richard A. Beech March 29, 1999
-------------------------------------------
Richard A. Beech, Director
/s/ Ray Harris March 29, 1999
-------------------------------------------
Ray Harris, Director
/s/ Lewis A. Raibley, III March 29, 1999
-------------------------------------------
Lewis A. Raibley, III, Director, Chief
Financial Officer and Principal
Accounting Officer
- 37 -
<PAGE>
EXHIBIT INDEX
ITEM METHOD OF FILING
---- ----------------
-3.01 Limited Partnership Agreement of
the Partnership, dated as of
November 7, 1991. (1)
- - -10.01 Management Agreements among the
Partnership, Demeter and A.O. Management, (2)
Inc., Chang Crowell and Millburn
each dated as of December 31, 1991.
- - -10.02 Management Agreement among the Partnership, Demeter
Management Corporation and ELM Financial Incorporated
dated as of May 1, 1994. (4)
- - -10.03 Management Agreement among the Partnership, Demeter
Management Corporation and EMC Capital Managements, Inc.
dated as of June 1, 1994. (5)
- - -10.04 Amended and Restated Customer Agreement, dated
as of December 1, 1997, between the Partnership
and Dean Witter Reynolds Inc. (6)
- - -10.05 Customer Agreement, dated as of December 1, 1997,
among the Partnership, Carr Futures, Inc., and Dean
Witter Reynolds Inc. (6)
- - -10.06 International Foreign Exchange Master Agreement,
dated as of August 1, 1997, between the Partnership
and Carr Futures, Inc. (6)
- - -13..01 Annual Report to Limited Partners for the year ended
December 31, 1998. (6)
- - -21.01 Supplement (dated April 27, 1992) to the Prospectus. (3)
(1) Incorporated by reference to Exhibit 3.01 and Exhibit 3.02 of the
Partnership's Registration Statement on Form S-1.
(2) Incorporated by reference by Exhibit 10.02 of the Partnership's
Registration Statement on Form S-1.
(3) Incorporated by reference to the Partnership's Registration
Statement on Form S-1, Post Effective Amendment Number 1.
(4) Incorporated by reference to Exhibit 10.03 of the Partnership's Annual
Report on Form 10-K for the fiscal year ended December 31, 1994.
(5) Incorporated by reference to Exhibit 10.04 of the Partnership's Annual
Report on Form 10-K for the fiscal year ended December 31, 1994.
(6) Filed herewith.
E-1
EXHIBIT 10.04
AMENDED AND RESTATED CUSTOMER AGREEMENT
THIS AMENDED AND RESTATED CUSTOMER AGREEMENT (this "Agreement"),
made as of the 1st day of December, 1997, by and between DEAN WITTER GLOBAL
PERSPECTIVE PORTFOLIO L.P., a Delaware limited partnership (the "Customer"), and
DEAN WITTER REYNOLDS INC., a Delaware corporation ("DWR");
W I T N E S S E T H :
WHEREAS, the Customer was organized pursuant to a Certificate of
Limited Partnership filed in the office of the Secretary of State of the State
of Delaware on November 7, 1991, and a Limited Partnership Agreement dated as of
November 7, 1991, between Demeter Management Corporation, a Delaware corporation
("Demeter"), acting as general partner (in such capacity, the "General
Partner"), and the limited partners of the Customer to trade, buy, sell, spread
or otherwise acquire, hold, or dispose of commodities (including, but not
limited, to foreign currencies, mortgage-backed securities, money market
instruments, financial instruments, and any other securities or items which are,
or may become, the subject of futures contract trading), domestic and foreign
commodity futures contracts, commodity forward contracts, foreign exchange
commitments, options on physical commodities and on futures contracts, spot
(cash) commodities and currencies, and any rights pertaining thereto
(hereinafter referred to collectively as "futures interests") and securities
(such as United States Treasury bills) approved by the Commodity Futures Trading
Commission (the "CFTC") for investment of customer funds, and to engage in all
activities incident thereto;
WHEREAS, the Customer (which is a commodity pool) and the General
Partner (which is a registered commodity pool operator) have entered into
management agreements (the "Management Agreements") with certain trading
advisors (each, a "Trading Advisor" and collectively, the "Trading Advisors"),
which provide that the Trading Advisors have authority and responsibility,
except in certain limited situations, to direct the investment and reinvestment
of the assets of the Customer in futures interests under the terms set forth in
the Management Agreements;
WHEREAS, the Customer and DWR entered into that certain Amended and
Restated Customer Agreement dated as of September 1, 1996 (the "Customer
Agreement"), whereby DWR agreed to perform futures interests brokerage and
certain other services for the Customer; and
WHEREAS, the Customer and DWR wish to amend and restate the Customer
Agreement to set forth the terms and conditions upon which DWR will continue to
perform certain non-clearing futures interests brokerage and certain other
services for the Customer;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Definitions. All capitalized terms not defined herein shall have
the meaning given to them in the Customer's most recent prospectus as filed with
the Securities and Exchange Commission (the "Prospectus") relating to the
offering of units of limited partnership interest of the Customer (the "Units")
and in any amendment or supplement to the Prospectus.
2. Duties of DWR. DWR agrees to act as a non-clearing commodity
broker for the Customer and introduce the Customer's account to Carr Futures,
Inc. ("CFI") for execution and clearing of futures interests transactions on
behalf of the Customer in accordance with instructions provided by the Trading
Advisors, and the Customer agrees to retain DWR as a non-clearing commodity
broker for the term of this Agreement.
DWR agrees to furnish to the Customer as soon as practicable all of
the information from time to time in its possession which Demeter, as the
general partner of the Customer, is required to furnish to the Limited Partners
pursuant to the Limited Partnership Agreement as from time to time in effect and
as required by applicable law, rules, or regulations and to perform such other
services for the Customer as are set forth herein and in the Prospectus.
3. Obligations and Expenses.
(a) Except as otherwise set forth herein, the Customer, and
not DWR, shall be responsible for all taxes, management and incentive fees to
the Trading Advisors, brokerage commissions to DWR, and all extraordinary
expenses incurred by it. In addition, the Customer, and not DWR, shall pay the
charges of CFI for executing and clearing the Customer's futures interests
trades (as described in paragraph 5(b) below).
(b) The Customer will pay its ordinary administrative
expenses, subject to a cap of 0.25% per year of the Customer's average month-end
Net Assets, including expenses for services provided by third parties selected
by the General Partner and reimbursement of all out-of-pocket expenses incurred
by such persons and by the General Partner and its affiliates in providing
services to the Customer. Such expenses shall include legal, accounting and
auditing expenses (including expenses incurred in preparing reports and tax
information to Limited Partners and regulatory authorities and expenses for
specialized administrative services), printing and duplication expenses, mailing
expenses, and filing fees. The General Partner or its affiliates shall pay any
ordinary administrative expenses which exceed the cap.
4. Agreement Nonexclusive. DWR shall be free to render services of
the nature to be rendered to the Customer hereunder to other persons or entities
in addition to the Customer, and the parties acknowledge that DWR may render
such services to additional entities similar in nature to the Customer,
including other partnerships organized with Demeter as their general partner. It
is expressly understood and agreed that this Agreement is nonexclusive and that
the Customer has no obligation to execute any or all of its trades for futures
interests through DWR. The parties acknowledge that the Customer may utilize
such other broker or brokers as Demeter may direct from time to time. The
Customer's utilization of an additional commodity broker shall neither terminate
this Agreement nor modify in any regard the respective rights and obligations of
the Customer and DWR hereunder.
5. (a) Compensation of DWR. The Customer will pay brokerage
commissions to DWR at a roundturn rate (but charged on a half-turn basis) of 80%
of DWR's published non-member rates for speculative accounts (which covers both
the taking and liquidation of a position), and substantially equivalent rates
for currency forward contract transactions in the forward contract and interbank
markets.
The Customer will pay DWR brokerage commissions for currency forward
contract transactions at rates established with reference to the brokerage
commission rate charged on exchange-traded currency futures contracts. DWR may
from time to time adjust the United States dollar size of currency forward
contracts so that the brokerage commission rate charged on such contracts will
approximate the rate charged on exchange-traded currency futures contracts of
similar United States dollar value. DWR shall also charge the Partnership
brokerage commissions for rollovers of forward contract positions.
(b) Compensation of CFI. The Customer will pay certain charges
of CFI for executing and clearing trades for the Customer pursuant to that
certain Customer Agreement dated as of December 1, 1997, among the Customer, CFI
and DWR. In addition, DWR shall pay CFI certain charges with respect to the
execution and clearance of trades for the Customer as agreed from time to time
between DWR and CFI.
(c) Notwithstanding the foregoing, brokerage commissions,
together with transaction fees and costs including those paid by the Customer to
CFI, with respect to each Trading Advisor's allocated Net Assets will be capped
at 13/20 of 1% per month (in the case of Trading Advisors that employ multiple
trading systems in trading on behalf of the Customer, the foregoing cap is
applied on a per trading system basis) of the Customer's Net Assets allocated to
such Trading Advisor or trading system as of the last day of each month (a
maximum 7.8% annual rate). In addition, the aggregate of (i) brokerage
commissions and transaction fees and costs payable by the Customer, and (ii) net
excess interest and compensating balance benefits to DWR (after crediting the
Customer with interest) shall not exceed 14% annually of the Customer's average
month-end Net Assets during each calendar year.
(d) Any brokerage commissions, and transaction fees and costs
in excess of such caps shall be borne or paid by DWR or an affiliate and shall
not be reimbursed by the Customer. The foregoing caps may not be increased
except as permitted in the Customer's Limited Partnership Agreement, as amended
from time to time.
6. Investment Discretion. The parties recognize that DWR shall have
no authority to direct the futures interests investments to be made for the
Customer's account. However, the parties agree that DWR, and not the Trading
Advisors, shall have the authority and responsibility with regard to the
investment, maintenance, and management of the Customer's assets that are held
in segregated or secured accounts, as provided in Section 7 hereof.
7. Investment of Customer Funds. The Customer shall deposit its
assets in accounts with DWR. The Customer's assets deposited with DWR will be
segregated or secured in accordance with the Commodity Exchange Act and CFTC
regulations. DWR will credit the Customer with interest income at month-end in
an amount equal to 80% of the Customer's average daily Net Assets for the month
at a rate equal to the average yield on the 13-week U.S. Treasury Bills issued
during such month. All of such funds will be available for margin for the
Customer's trading. For the purpose of such interest payments, Net Assets will
not include monies due to the Customer on or with respect to forward contracts
and other futures interests but not actually received by it from banks, brokers,
dealers and other persons. The Customer understands that it will not receive any
other interest income on its assets and that DWR will receive interest income
from CFI, as agreed from time to time by DWR and CFI, on the Customer's assets
deposited as margin with CFI. The Customer's funds will either be invested along
with other customer segregated and secured funds of DWR or held in non-interest
bearing bank accounts. The Customer's assets held by DWR may be used solely as
margin for the Customer's trading.
Ownership of the right to receive interest on the Customer's assets
pursuant to the preceding paragraph shall be reflected and maintained and may be
transferred only on the books and records of DWR. Any purported transfer of such
ownership shall not be effective or recognized until such transfer shall have
been recorded on the books and records of DWR.
8. Standard of Liability and Indemnity. Subject to Section 2 hereof,
DWR and its affiliates (as defined below) shall not be liable to the Customer,
the General Partner or Limited Partners, or any of its or their respective
successors or assigns, for any act, omission, conduct, or activity undertaken by
or on behalf of the Customer pursuant to this Agreement which DWR determines, in
good faith, to be in the best interests of the Customer, unless such act,
omission, conduct, or activity by DWR or its affiliates constituted misconduct
or negligence.
The Customer shall indemnify, defend and hold harmless DWR and its
affiliates from and against any loss, liability, damage, cost or expense
(including attorneys' and accountants' fees and expenses incurred in the defense
of any demands, claims, or lawsuits) actually and reasonably incurred arising
from any act, omission, conduct or activity undertaken by DWR on behalf of the
Customer pursuant to this Agreement, including, without limitation, any demands,
claims or lawsuits initiated by a Limited Partner (or assignee thereof),
provided that (i) DWR has determined, in good faith, that the act, omission,
conduct, or activity giving rise to the claim for indemnification was in the
best interests of the Customer, and (ii) the act, omission, conduct, or activity
that was the basis for such loss, liability, damage, cost, or expense was not
the result of misconduct or negligence. Notwithstanding anything to the contrary
contained in the foregoing, neither DWR nor any of its affiliates shall be
indemnified by the Customer for any losses, liabilities, or expenses arising
from or out of an alleged violation of federal or state securities laws unless
(a) there has been a successful adjudication on the merits of each count
involving alleged securities law violations as to the particular indemnitee, or
(b) such claims have been dismissed with prejudice on the merits by a court of
competent jurisdiction as to the particular indemnitee, or (c) a court of
competent jurisdiction approves a settlement of the claims against the
particular indemnitee and finds that indemnification of the settlement and
related costs should be made, provided, with regard to such court approval, the
indemnitee must apprise the court of the position of the SEC, and the positions
of the respective securities administrators of Massachusetts, Missouri,
Tennessee and/or those other states and jurisdictions in which the plaintiffs
claim they were offered or sold Units, with respect to indemnification for
securities laws violations before seeking court approval for indemnification.
Furthermore, in any action or proceeding brought by a Limited Partner in the
right of the Customer to which DWR or any affiliate thereof is a party
defendant, any such person shall be indemnified only to the extent and subject
to the conditions specified in the Delaware Revised Uniform Limited Partnership
Act, as amended, and this Section 8. The Customer shall make advances to DWR or
its affiliates hereunder only if: (i) the demand, claim, lawsuit, or legal
action relates to the performance of duties or services by such persons to the
Customer; (ii) such demand, claim, lawsuit, or legal action is not initiated by
a Limited Partner; and (iii) such advances are repaid, with interest at the
legal rate under Delaware law, if the person receiving such advance is
ultimately found not to be entitled to indemnification hereunder.
DWR shall indemnify, defend and hold harmless the Customer and its
successors or assigns from and against any losses, liabilities, damages, costs,
or expenses (including in connection with the defense or settlement of claims;
provided DWR has approved such settlement) incurred as a result of the
activities of DWR or its affiliates, provided, further, that the act, omission,
conduct, or activity giving rise to the claim for indemnification was the result
of bad faith, misconduct or negligence.
The indemnities provided in this Section 8 by the Customer to DWR
and its affiliates shall be inapplicable in the event of any losses,
liabilities, damages, costs, or expenses arising out of, or based upon, any
material breach of any warranty, covenant, or agreement of DWR contained in this
Agreement to the extent caused by such breach. Likewise, the indemnities
provided in this Section 8 by DWR to the Customer and any of its successors and
assigns shall be inapplicable in the event of any losses, liabilities, damages,
costs, or expenses arising out of, or based upon, any material breach of any
warranty, covenant, or agreement of the Customer contained in this Agreement to
the extent caused by such breach.
As used in this Section 8, the term "affiliate" of DWR shall mean:
(i) any natural person, partnership, corporation, association, or other legal
entity directly or indirectly owning, controlling, or holding with power to vote
10% or more of the outstanding voting securities of DWR; (ii) any partnership,
corporation, association, or other legal entity 10% or more of whose outstanding
voting securities are directly or indirectly owned, controlled, or held with
power to vote by DWR; (iii) any natural person, partnership, corporation,
association, or other legal entity directly or indirectly controlling,
controlled by, or under common control with, DWR; or (iv) any officer or
director of DWR. Notwithstanding the foregoing, "affiliates" for purposes of
this Section 8 shall include only those persons acting on behalf of DWR within
the scope of the authority of DWR, as set forth in this Agreement.
9. Term. This Agreement shall continue in effect until terminated by
either party giving not less than 60 days' prior written notice of termination
to the other party. Any such termination by either party shall be without
penalty.
10. Complete Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the matters referred to herein,
and no other agreement, verbal or otherwise, shall be binding as between the
parties unless in writing and signed by the party against whom enforcement is
sought.
11. Assignment. This Agreement may not be assigned by either party
without the express written consent of the other party.
12. Amendment. This Agreement may not be amended except by the
written consent of the parties and provided such amendment is consistent with
the Limited Partnership Agreement.
13. Notices. All notices required or desired to be delivered under
this Agreement shall be in writing and shall be effective when delivered
personally on the day delivered, or when given by registered or certified mail,
postage prepaid, return receipt requested, on the day of receipt, addressed as
follows (or to such other address as the party entitled to notice shall
hereafter designate in accordance with the terms hereof):
if to the Customer:
DEAN WITTER GLOBAL PERSPECTIVE PORTFOLIO L.P.
c/o Demeter Management Corporation
Two World Trade Center, 62nd Floor
New York, New York 10048
Attn: Mark J. Hawley
President
if to DWR:
DEAN WITTER REYNOLDS INC.
Two World Trade Center, 62nd Floor
New York, New York 10048
Attn: Mark J. Hawley
Executive Vice President
14. Survival. The provisions of this Agreement shall survive the
termination of this Agreement with respect to any matter arising while this
Agreement was in effect.
15. Headings. Headings of Sections herein are for the convenience of
the parties only and are not intended to be a part of or to affect the meaning
or interpretation of this Agreement.
16. Incorporation by Reference. The Futures Customer Agreement
annexed hereto is hereby incorporated by reference herein and made a part hereof
to the same extent as if such document were set forth in full herein. If any
provision of this Agreement is or at any time becomes inconsistent with the
annexed document, the terms of this Agreement shall control.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed for and on
behalf of the undersigned as of the day and year first above written.
DEAN WITTER GLOBAL PERSPECTIVE PORTFOLIO
L.P.
By: Demeter Management Corporation,
General Partner
By: /s/ Mark J. Hawley
-----------------------------------
Mark J. Hawley
President
DEAN WITTER REYNOLDS INC.
By: /s/ Mark J. Hawley
-----------------------------------
Mark J. Hawley
Executive Vice President
<PAGE>
FUTURES CUSTOMER AGREEMENT
In consideration of the acceptance by Dean Witter Reynolds Inc. ("DWR") of one
or more accounts of the undersigned ("Customer") (if more than one account is
carried by DWR, all are covered by this Agreement and are referred to
collectively as the "Account") and DWR's agreement to act as Customer's broker
for the execution, clearance and/or carrying of transactions for the purchase
and sale of commodity interests, including commodities, commodity futures
contracts and commodity options, Customer agrees as follows:
1. APPLICABLE RULES AND REGULATIONS - The Account and each transaction
therein shall be subject to the terms of this Agreement and to (a) all
applicable laws and the regulations, rules and orders (collectively
"regulations") of all regulatory and self-regulatory organizations having
jurisdiction and (b) the constitution, by-laws, rules, regulations,
orders, resolutions, interpretations and customs and usages (collectively
"rules") of the market and any associated clearing organization (each an
"exchange") on or subject to the rules of which such transaction is
executed and/or cleared. The reference in the preceding sentence to
exchange rules is solely for DWR's protection and DWR's failure to comply
therewith shall not constitute a breach of this Agreement or relieve
Customer of any obligation or responsibility under this Agreement. DWR
shall not be liable to Customer as a result of any action by DWR, its
officers, directors, employees or agents to comply with any rule or
regulation.
2. PAYMENTS TO DWR - Customer agrees to pay to DWR immediately on request (a)
commissions, fees and service charges as are in effect from time to time
together with all applicable regulatory and self-regulatory organization
and exchange fees, charges and taxes; (b) the amount of any debit balance
or any other liability that may result from transactions executed for the
account; and (c) interest on such debit balance or liability at the
prevailing rate charged by DWR at the time such debit balance or liability
arises and service charges on any such debit balance or liability together
with any reasonable costs and attorney's fees incurred in collecting any
such debit balance or liability. Customer acknowledges that DWR may charge
commissions at other rates to other customers.
3. CUSTOMER'S DUTY TO MAINTAIN ADEQUATE MARGIN - Customer shall at all times
and without prior notice or demand from DWR maintain adequate margins in
the account so as continually to meet the original and maintenance margin
requirements established by DWR for Customer. DWR may change such
requirements from time to time at DWR's discretion. Such margin
requirements may exceed the margin requirements set by any exchange or
other regulatory authority and may vary from DWR's requirements for other
customers. Customer agrees, when so requested, immediately to wire
transfer margin funds and to furnish DWR with names of bank officers for
immediate verification of such transfers. Customer acknowledges and agrees
that DWR may receive and retain as its own any interest, increment,
profit, gain or benefit directly or indirectly, accruing from any of the
funds DWR receives from Customer.
4. DELIVERY; OPTION EXERCISE
(a) Customer acknowledges that the making or accepting of delivery
pursuant to a futures contract may involve a much higher degree of
risk than liquidating a position by offset. DWR has no control over
and makes no warranty with respect to grade, quality or tolerances
of any commodity delivered in fulfillment of a contract.
(b) Customer agrees to give DWR timely notice and immediately on request
to inform DWR if Customer intends to make or take delivery under a
futures contract or to exercise an option contract. If so requested,
Customer shall provide DWR with satisfactory assurances that
Customer can fulfill Customer's obligation to make or take delivery
under any contract. Customer shall furnish DWR with property
deliverable by it under any contract in accordance with DWR's
instructions.
(c) DWR shall not have any obligation to exercise any long option
contract unless Customer has furnished DWR with timely exercise
instructions and sufficient initial margin with respect to each
underlying futures contract.
5. FOREIGN CURRENCY - If DWR enters into any transaction for Customer
effected in a currency other than U.S. dollars: (a) any profit or loss
caused by changes in the rate of exchange for such currency shall be for
Customer's account and risk and (b) unless another currency is designated
in DWR's confirmation of such transaction, all margin for such transaction
and the profit or loss on the liquidation of such transaction shall be in
U.S. dollars at a rate of exchange determined by DWR in its discretion on
the basis of then prevailing market rates of exchange for such foreign
currency.
6. DWR MAY LIMIT POSITIONS HELD - Customer agrees that DWR, at its
discretion, may limit the number of open positions (net or gross) which
Customer may execute, clear and/or carry with or acquire through it.
Customer agrees (a) not to make any trade which would have the effect of
exceeding such limits, (b) that DWR may require Customer to reduce open
positions carried with DWR and (c) that DWR may refuse to accept orders to
establish new positions. DWR may impose and enforce such limits, reduction
or refusal whether or not they are required by applicable law, regulations
or rules. Customer shall comply with all position limits established by
any regulatory or self-regulatory organization or any exchange. In
addition, Customer agrees to notify DWR promptly if customer is required
to file position reports with any regulatory or self-regulatory
organization or with any exchange.
7. NO WARRANTY AS TO INFORMATION OR RECOMMENDATION - Customer acknowledges
that:
(a) Any market recommendations and information DWR may communicate to
Customer, although based upon information obtained from sources
believed by DWR to be reliable, may be incomplete and not subject to
verification;
(b) DWR makes no representation, warranty or guarantee as to, and shall
not be responsible for, the accuracy or completeness of any
information or trading recommendation furnished to Customer;
(c) recommendations to Customer as to any particular transaction at any
given time may differ among DWR's personnel due to diversity in
analysis of fundamental and technical factors and may vary from any
standard recommendation made by DWR in its market letters or
otherwise; and
(d) DWR has no obligation or responsibility to update any market
recommendations or information it communicates to Customer.
Customer understands that DWR and its officers, directors,
affiliates, stockholders, representatives or associated persons may have
positions in and may intend to buy or sell commodity interests which are the
subject of market recommendations furnished to Customer, and that the market
positions of DWR or any such officer, director, affiliate, stockholder,
representative or associated person may or may not be consistent with the
recommendations furnished to Customer by DWR.
8. LIMITS ON DWR DUTIES; LIABILITY - Customer agrees:
(a) that DWR has no duty to apprise Customer of news or of the value of
any commodity interests or collateral pledged or in any way to
advise Customer with respect to the market;
(b) that the commissions which DWR receives are consideration solely for
the execution, reporting and carrying of Customer's trades;
(c) that if Customer has authorized any third party or parties to place
orders or effect transactions on behalf of Customer in any Account,
each such party has been selected by Customer based on its own
evaluation and assessment of such party and that such party is
solely the agent of Customer, and if any such party allocates
commodity interests among its customers, Customer has reviewed each
such party's commodity interest allocation system, has satisfied
itself that such allocation system is fair and will seek recovery
solely from such party to recover any damages sustained by Customer
as the result of any allocation made by such party; and
(d) to waive any and all claims, rights or causes of action which
Customer has or may have against DWR or its officers, employees and
agents (i) arising in whole or in part, directly or indirectly, out
of any act or omission of any person, whether or not legally deemed
an agent of DWR, who refers or introduces Customer to DWR or places
orders for Customer and (ii) for any punitive damages and to limit
any claims arising out of this Agreement or the Account to
Customer's direct out-of-pocket damages.
9. EXTRAORDINARY EVENTS - Customer shall have no claim against DWR for any
loss, damage, liability, cost, charge, expense, penalty, fine or tax
caused directly or indirectly by (a) governmental, court, exchange,
regulatory or self-regulatory organization restrictions, regulations,
rules, decisions or orders, (b) suspension or termination of trading, (c)
war or civil or labor disturbance, (d) delay or inaccuracy in the
transmission or reporting of orders due to a breakdown or failure of
computer services, transmission or communication facilities, (e) the
failure or delay by any exchange to enforce its rules or to pay to DWR any
margin due in respect of Customer's Account, (f) the failure or delay by
any bank, trust company, clearing organization or other person which,
pursuant to applicable exchange rules, is holding Customer funds,
securities or other property to pay or deliver the same to DWR or (g) any
other cause or causes beyond DWR's control.
10. INDEMNIFICATION OF DWR - Customer agrees to indemnify, defend and hold
harmless DWR and its officers, employees and agents from and against any
loss, cost, claim, damage (including any consequential cost, loss or
damage), liability or expense (including reasonable attorneys' fees) and
any fine, sanction or penalty made or imposed by any regulatory or
self-regulatory authority or any exchange as the result, directly or
indirectly, of:
(a) Customer's failure or refusal to comply with any provision of this
Agreement or perform any obligation on its part to be performed
pursuant to this Agreement; and
(b) Customer's failure to timely deliver any security, commodity or
other property previously sold by DWR on Customer's behalf.
11 NOTICES; TRANSMITTALS - DWR shall transmit all communications to Customer
at Customer's address, telefax or telephone number set forth in the
accompanying Futures Account Application or to such other address as
Customer may hereafter direct in writing. Customer shall transmit all
communications to DWR (except routine inquiries concerning the Account) to
130 Liberty Street, New York, NY 10006, Attention: Futures Compliance
Officer. All payments and deliveries to DWR shall be made as instructed by
DWR from time to time and shall be deemed received only when actually
received by DWR.
12. CONFIRMATION CONCLUSIVE - Confirmation of trades and any other notices
sent to Customer shall be conclusive and binding on Customer unless
Customer or Customer's agent notifies DWR to the contrary (a) in the case
of an oral report, orally at the time received by Customer or its agent or
(b) in the case of a written report or notice, in writing prior to opening
of trading on the business day next following receipt of the report. In
addition, if Customer has not received a written confirmation that a
commodity interest transaction has been executed within three business
days after Customer has placed an order with DWR to effect such
transaction, and has been informed or believes that such order has been or
should have been executed, then Customer immediately shall notify DWR
thereof. Absent such notice, Customer conclusively shall be deemed
estopped to object and to have waived any such objection to the failure to
execute or cause to be executed such transaction. Anything in this Section
12 withstanding, neither Customer nor DWR shall be bound by any
transaction or price reported in error.
13. SECURITY INTEREST - All money and property ("collateral") now or at any
future time held in Customer's Account, or otherwise held by DWR for
Customer, is subject to a security interest in DWR's favor to secure any
indebtedness at any time owing to it by Customer. DWR, in its discretion,
may liquidate any collateral to satisfy any margin or Account deficiencies
or to transfer the collateral to the general ledger account of DWR.
14. TRANSFER OF FUNDS - At any time and from time to time and without prior
notice to Customer, DWR may transfer from one account to another account
in which Customer has any interest, such excess funds, equities,
securities or other property as in DWR's judgment may be required for
margin, or to reduce any debit balance or to reduce or satisfy any
deficits in such other accounts except that no such transfer may be made
from a segregated account subject to the Commodity Exchange Act to another
account maintained by Customer unless either Customer has authorized such
transfer in writing or DWR is effecting such transfer to enforce DWR's
security interest pursuant to Section 13. DWR promptly shall confirm all
transfers of funds made pursuant hereto to Customer in writing.
15. DWR'S RIGHT TO LIQUIDATE CUSTOMER POSITIONS - In addition to all other
rights of DWR set forth in this Agreement:
(a) when directed or required by a regulatory or self-regulatory
organization or exchange having jurisdiction over DWR or the
Account;
(b) whenever, in its discretion, DWR considers it necessary for its
protection because of margin requirements or otherwise;
(c) if Customer or any affiliate of Customer repudiates, violates,
breaches or fails to perform on a timely basis any term, covenant or
condition on its part to be performed under this Agreement or
another agreement with DWR;
(d) if a case in bankruptcy is commenced or if a proceeding under any
insolvency or other law for the protection of creditors or for the
appointment of a receiver, liquidator, trustee, conservator,
custodian or similar officer is filed by or against Customer or any
affiliate of Customer, or if Customer or any affiliate of Customer
makes or proposes to make any arrangement or composition for the
benefit of its creditors, or if Customer (or any such affiliate) or
any or all of its property is subject to any agreement, order,
judgment or decree providing for Customer's dissolution, winding-up,
liquidation, merger, consolidation, reorganization or for the
appointment of a receiver, liquidator, trustee, conservator,
custodian or similar officer of Customer, such affiliate or such
property;
(e) DWR is informed of Customer's death or mental incapacity; or
(f) if an attachment or similar order is levied against the Account or
any other account maintained by Customer or any affiliate of
Customer with DWR;
DWR shall have the right to (i) satisfy any obligations due DWR out of any
Customer's property in DWR's custody or control, (ii) liquidate any or all
of Customer's commodity interest positions, (iii) cancel any or all of
Customer's outstanding orders, (iv) treat any or all of Customer's
obligations due DWR as immediately due and payable, (v) sell any or all of
Customer's property in DWR's custody or control in such manner as DWR
determines to be commercially reasonable, and/or (vi) terminate any or all
of DWR's obligations for future performance to Customer, all without any
notice to or demand on Customer. Any sale hereunder may be made in any
commercially reasonable manner. Customer agrees that a prior demand, call
or notice shall not be considered a waiver of DWR's right to act without
demand or notice as herein provided, that Customer shall at all times be
liable for the payment of any debit balance owing in each account upon
demand whether occurring upon a liquidation as provided under this Section
15 or otherwise under this Agreement, and that in all cases Customer shall
be liable for any deficiency remaining in each Account in the event of
liquidation thereof in whole or in part together with interest thereon and
all costs relating to liquidation and collection (including reasonable
attorneys' fees).
16. CUSTOMER REPRESENTATIONS, WARRANTIES AND AGREEMENTS - Customer represents
and warrants to and agrees with DWR that:
(a) Customer has full power and authority to enter into this Agreement
and to engage in the transactions and perform its obligations
hereunder and contemplated hereby and (i) if a corporation or a
limited liability company, is duly organized under the laws of the
jurisdiction set forth in the accompanying Futures Account
Application, or (ii) if a partnership, is duly organized pursuant to
a written partnership agreement and the general partner executing
this Agreement is duly authorized to do so under the partnership
agreement;
(b) Neither Customer nor any partner, director, officer, member, manager
or employee of Customer nor any affiliate of Customer is a partner,
director, officer, member, manager or employee of a futures
commission merchant introducing broker, exchange or self-regulatory
organization or an employee or commissioner of the Commodity Futures
Trading Commission (the "CFTC"), except as previously disclosed in
writing to DWR;
(c) The accompanying Futures Account Application and Personal Financial
Statements, if applicable, (including any financial statements
furnished in connection therewith) are true, correct and complete.
Except as disclosed on the accompanying Futures Account Application
or otherwise provided in writing, (i) Customer is not a commodity
pool or is exempt from registration under the rules of the
Commission, and (ii) Customer is acting solely as principal and no
one other than Customer has any interest in any Account of Customer.
Customer hereby authorizes DWR to contact such banks, financial
institutions and credit agencies as DWR shall deem appropriate for
verification of the information contained herein.
(d) Customer has determined that trading in commodity interests is
appropriate for Customer, is prudent in all respects and does not
and will not violate Customer's charter or by-laws (or other
comparable governing document) or any law, rule, regulation,
judgment, decree, order or agreement to which Customer or its
property is subject or bound;
(e) As required by CFTC regulations, Customer shall create, retain and
produce upon request of the applicable contract market, the CFTC or
the United States Department of Justice documents (such as
contracts, confirmations, telex printouts, invoices and documents of
title) with respect to cash transactions underlying exchanges of
futures for cash commodities or exchange of futures in connection
with cash commodity transactions;
(f) Customer consents to the electronic recording, at DWR's discretion,
of any or all telephone conversations with DWR (without automatic
tone warning device), the use of same as evidence by either party in
any action or proceeding arising out of the Agreement and in DWR's
erasure, at its discretion, of any recording as part of its regular
procedure for handling of recordings;
(g) Absent a separate written agreement between Customer and DWR with
respect to give-ups, DWR, in its discretion, may, but shall have no
obligation to, accept from other brokers commodity interest
transactions executed by such brokers on an exchange for Customer
and proposed to be "given-up" to DWR for clearance and/or carrying
in the Account;
(h) DWR, for and on behalf of Customer, is authorized and empowered to
place orders for commodity interest transactions through one or more
electronic or automated trading systems maintained or operated by or
under the auspices of an exchange, that DWR shall not be liable or
obligated to Customer for any loss, damage, liability, cost or
expense (including but not limited to loss of profits, loss of use,
incidental or consequential damages) incurred or sustained by
Customer and arising in whole or in part, directly or indirectly,
from any fault, delay, omission, inaccuracy or termination of a
system or DWR's inability to enter, cancel or modify an order on
behalf of Customer on or through a system. The provisions of this
Section 16(h) shall apply regardless of whether any customer claim
arises in contract, negligence, tort, strict liability, breach of
fiduciary obligations or otherwise; and
(i) If Customer is subject to the Financial Institution Reform, Recovery
and Enforcement Act of 1989, the certified resolutions set forth
following this Agreement have been caused to be reflected in the
minutes of Customer's Board of Directors (or other comparable
governing body) and this Agreement is and shall be, continuously
from the date hereof, an official record of Customer.
Customer agrees to promptly notify DWR in writing if any of the warranties
and representations contained in this Section 16 becomes inaccurate or in
any way ceases to be true, complete and correct.
17. SUCCESSORS AND ASSIGNS - This Agreement shall inure to the benefit of DWR,
its successors and assigns, and shall be binding upon Customer and
Customer's executors, trustees, administrators, successors and assigns,
provided, however, that this Agreement is not assignable by Customer
without the prior written consent of DWR.
18. MODIFICATION OF AGREEMENT BY DWR; NON-WAIVER PROVISION - This Agreement
may only be altered, modified or amended by mutual written consent of the
parties, except that if DWR notifies Customer of a change in this
Agreement and Customer thereafter effects a commodity interest transaction
in an account, Customer agrees that such action by Customer will
constitute consent by Customer to such change. No employee of DWR other
than DWR's General Counsel or his or her designee, has any authority to
alter, modify, amend or waive in any respect any of the terms of this
Agreement. The rights and remedies conferred upon DWR shall be cumulative,
and its forbearance to take any remedial action available to it under this
Agreement shall not waive its right at any time or from time to time
thereafter to take such action.
19. SEVERABILITY - If any term or provision hereof or the application thereof
to any persons or circumstances shall to any extent be contrary to any
exchange, government or self-regulatory regulation or contrary to any
federal, state or local law or otherwise be invalid or unenforceable, the
remainder of this Agreement or the application of such term or provision
to persons or circumstances other than those as to which it is contrary,
invalid or unenforceable, shall not be affected thereby.
20. CAPTIONS - All captions used herein are for convenience only, are not a
part of this Agreement, and are not to be used in construing or
interpreting any aspect of this Agreement.
21. TERMINATION - This Agreement shall continue in force until written notice
of termination is given by Customer or DWR. Termination shall not relieve
either party of any liability or obligation incurred prior to such notice.
Upon giving or receiving notice of termination, Customer will promptly
take all action necessary to transfer all open positions in each account
to another futures commission merchant.
22. ENTIRE AGREEMENT - This Agreement constitutes the entire agreement between
Customer and DWR with respect to the subject matter hereof and supersedes
any prior agreements between the parties with respect to such subject
matter.
23. GOVERNING LAW; CONSENT TO JURISDICTION -
(a) In case of a dispute between Customer and DWR arising out of or
relating to the making or performance of this Agreement or any
transaction pursuant to this Agreement (i) this Agreement and its
enforcement shall be governed by the laws of the State of New York
without regard to principles of conflicts of laws, and (ii) Customer
will bring any legal proceeding against DWR in, and Customer hereby
consents in any legal proceeding by DWR to the jurisdiction of, any
state or federal court located within the State and City of New York
in connection with all legal proceedings arising directly,
indirectly or otherwise in connection with, out of, related to or
from Customer's Account, transactions contemplated by this Agreement
or the breach thereof. Customer hereby waives all objections
Customer, at any time, may have as to the propriety of the court in
which any such legal proceedings may be commenced. Customer also
agrees that any service of process mailed to Customer at any address
specified to DWR shall be deemed a proper service of process on the
undersigned.
(b) Notwithstanding the provisions of Section 23 (a)(ii), Customer may
elect at this time to have all disputes described in this Section
resolved by arbitration. To make such election, Customer must sign
the Arbitration Agreement set forth in Section 24. Notwithstanding
such election, any question relating to whether Customer or DWR has
commenced an arbitration proceeding in a timely manner, whether a
dispute is within the scope of the Arbitration Agreement or whether
a party (other than Customer or DWR) has consented to arbitration
and all proceedings to compel arbitration shall be determined by a
court as specified in Section 23 (a)(ii).
24. ARBITRATION AGREEMENT (OPTIONAL) - Every dispute between Customer and DWR
arising out of or relating to the making or performance of this Agreement
or any transaction pursuant to this Agreement, shall be settled by
arbitration in accordance with the rules, then in effect, of the National
Futures Association, the contract market upon which the transaction giving
rise to the claim was executed, or the National Association of Securities
Dealers as Customer may elect. If Customer does not make such election by
registered mail addressed to DWR at 130 Liberty Street, 29th Floor, New
York, NY 10006; Attention: Deputy General Counsel, within 45 days after
demand by DWR that the Customer make such election, then DWR may make such
election. DWR agrees to pay any incremental fees which may be assessed by
a qualified forum for making available a "mixed panel" of arbitrators,
unless the arbitrators determine that Customer has acted in bad faith in
initiating or conducting the proceedings. Judgment upon any award rendered
by the arbitrators may be entered in any court having jurisdiction
thereof.
IN ADDITION TO FOREIGN FORUMS, THREE FORUMS EXIST FOR THE RESOLUTION OF
COMMODITY DISPUTES: CIVIL COURT LITIGATION, REPARATIONS AT THE COMMODITY
FUTURES TRADING COMMISSION ("CFTC") AND ARBITRATION CONDUCTED BY A
SELF-REGULATORY OR OTHER PRIVATE ORGANIZATION.
THE CFTC RECOGNIZES THAT THE OPPORTUNITY TO SETTLE DISPUTES BY ARBITRATION
MAY IN SOME CASES PROVIDE MANY BENEFITS TO CUSTOMERS, INCLUDING THE
ABILITY TO OBTAIN AN EXPEDITIOUS AND FINAL RESOLUTION OF DISPUTES WITHOUT
INCURRING SUBSTANTIAL COSTS. THE CFTC REQUIRES, HOWEVER, THAT EACH
CUSTOMER INDIVIDUALLY EXAMINE THE RELATIVE MERITS OF ARBITRATION AND THAT
YOUR CONSENT TO THIS ARBITRATION AGREEMENT BE VOLUNTARY.
BY SIGNING THIS AGREEMENT, YOU (1) MAY BE WAIVING YOUR RIGHT TO SUE IN A
COURT OF LAW AND (2) ARE AGREEING TO BE BOUND BY ARBITRATION OF ANY CLAIMS
OR COUNTERCLAIMS WHICH YOU OR DWR MAY SUBMIT TO ARBITRATION UNDER THIS
AGREEMENT. YOU ARE NOT, HOWEVER, WAIVING YOUR RIGHT TO ELECT INSTEAD TO
PETITION THE CFTC TO INSTITUTE REPARATIONS PROCEEDINGS UNDER SECTION 14 OF
THE COMMODITY EXCHANGE ACT WITH RESPECT TO ANY DISPUTE WHICH MAY BE
ARBITRATED PURSUANT TO THIS AGREEMENT. IN THE EVENT A DISPUTE ARISES, YOU
WILL BE NOTIFIED IF DWR INTENDS TO SUBMIT THE DISPUTE TO ARBITRATION. IF
YOU BELIEVE A VIOLATION OF THE COMMODITY EXCHANGE ACT IS INVOLVED AND IF
YOU PREFER TO REQUEST A SECTION 14 "REPARATIONS" PROCEEDINGS BEFORE THE
CFTC, YOU WILL HAVE 45 DAYS FROM THE DATE OF SUCH NOTICE IN WHICH TO MAKE
THAT ELECTION.
YOU NEED NOT AGREE TO THIS ARBITRATION AGREEMENT TO OPEN AN ACCOUNT WITH
DWR. See 17 CFR 180.1-180.5. ACCEPTANCE OF THIS ARBITRATION AGREEMENT
REQUIRES A SEPARATE SIGNATURE ON PAGE 8.
25. CONSENT TO TAKE THE OTHER SIDE OF ORDERS (OPTIONAL) - Without its prior
notice, Customer agrees that when DWR executes sell or buy orders on
Customer's behalf, DWR, its directors, officers, employees, agents,
affiliates, and any floor broker may take the other side of Customer's
transaction through any account of such person subject to its being
executed at prevailing prices in accordance with and subject to the
limitations and conditions, if any, contained in applicable rules and
regulations.
26. AUTHORIZATION TO TRANSFER FUNDS (OPTIONAL) - Without limiting other
provisions herein, DWR is authorized to transfer from any segregated
account subject to the Commodity Exchange Act carried by DWR for the
Customer to any other account carried by DWR for the Customer such amount
of excess funds as in DWR's judgment may be necessary at any time to avoid
a margin call or to reduce a debit balance in said account. It is
understood that DWR will confirm in writing each such transfer of funds
made pursuant to this authorization within a reasonable time after such
transfer.
27. SUBORDINATION AGREEMENT (APPLIES ONLY TO ACCOUNTS WITH FUNDS HELD IN
FOREIGN COUNTRIES) - Funds of customers trading on United States contract
markets may be held in accounts denominated in a foreign currency with
depositories located outside the United States or its territories if the
customer is domiciled in a foreign country or if the funds are held in
connection with contracts priced and settled in a foreign currency. Such
accounts are subject to the risk that events could occur which hinder or
prevent the availability of these funds for distribution to customers.
Such accounts also may be subject to foreign currency exchange rate risks.
If authorized below, Customer authorizes the deposit of funds into such
foreign depositories. For customers domiciled in the United States, this
authorization permits the holding of funds in regulated accounts offshore
only if such funds are used to margin, guarantee, or secure positions in
such contracts or accrue as a result of such positions. In order to avoid
the possible dilution of other customer funds, a customer who has funds
held outside the United States agrees by accepting this subordination
agreement that his claims based on such funds will be subordinated as
described below in the unlikely event both of the following conditions are
met: (1) DWR is placed in receivership or bankruptcy, and (2) there are
insufficient funds available for distribution denominated in the foreign
currency as to which the customer has a claim to satisfy all claims
against those funds.
By initialing the Subordination Agreement below, Customer agrees that if
both of the conditions listed above occur, its claim against DWR's assets
attributable to funds held overseas in a particular foreign currency may
be satisfied out of segregated customer funds held in accounts denominated
in dollars or other foreign currencies only after each customer whose
funds are held in dollars or in such other foreign currencies receives its
pro-rata portion of such funds. It is further agreed that in no event may
a customer whose funds are held overseas receive more than its pro-rata
share of the aggregate pool consisting of funds held in dollars, funds
held in the particular foreign currency, and non-segregated assets of DWR.
<PAGE>
OPTIONAL ELECTIONS
The following provisions, which are set forth in this agreement, need not be
entered into to open the Account. Customer agrees that its optional elections
are as follows:
SIGNATURE REQUIRED FOR EACH ELECTION
ARBITRATION AGREEMENT:
(Agreement Paragraph 24)
-----------------------------------------
CONSENT TO TAKE THE OTHER
SIDE OF ORDERS:
(Agreement Paragraph 25) X /s/ Mark J. Hawley
-----------------------------------------
AUTHORIZATION TO TRANSFER FUNDS:
(Agreement Paragraph 26)
-----------------------------------------
ACKNOWLEDGEMENT TO SUBORDINATION
AGREEMENT (Agreement Paragraph 27) X /s/ Mark J. Hawley
-----------------------------------------
(Required for accounts holding non-U.S.
currency)
- - --------------------------------------------------------------------------------
HEDGE ELECTION
Customer confirms that all transactions in the Account will [ ]
represent bona fide hedging transactions, as defined by the
Commodity Futures Trading Commission, unless DWR is notified
otherwise not later than the time an order is placed for the
Account [check box if applicable]:
Pursuant to CFTC Regulation 190.06(d), Customer specifies and agrees, with
respect to hedging transactions in the Account, that in the unlikely event of
DWR's bankruptcy, it prefers that the bankruptcy trustee [check appropriate
box]:
A. Liquidate all open contracts without first seeking [ ]
instructions either from or on behalf of Customer.
B. Attempt to obtain instructions with respect to the [ ]
disposition of all open contracts. (IF NEITHER BOX IS
CHECKED, CUSTOMER SHALL BE DEEMED TO ELECT A)
- - --------------------------------------------------------------------------------
ACKNOWLEDGEMENT OF RECEIPT OF RISK DISCLOSURE STATEMENTS
The undersigned each hereby acknowledges its separate receipt from DWR, and its
understanding of each of the following documents prior to the opening of the
account:
o Risk Disclosure Statement o Project A(TM) Customer Information
for Futures and Options Statement
(in the form prescribed by
CFTC Regulation 1.55(c))
o LME Risk Warning Notice o Questions & Answers on Flexible
Options Trading at the CBOT
o Dean Witter Order Presumption o CME bAverage Pricing System Dis-
for After Hours Electronic Markets closure Statement
o NYMEX ACCESS(SM) Risk Disclosure o Special Notice to Foreign Brokers
Statement and Foreign Traders
o Globex(R) Customer Information and
Risk Disclosure Statement
- - --------------------------------------------------------------------------------
REQUIRED SIGNATURES
The undersigned has received, read, understands and agrees to all the provisions
of this Agreement and the separate risk disclosure statements enumerated above
and agrees to promptly notify DWR in writing if any of the warranties and
representations contained herein become inaccurate or in any way cease to be
true, complete and correct.
DEAN WITTER GLOBAL PERSPECTIVE PORTFOLIO L.P.
- - --------------------------------------------------------------------------------
CUSTOMER NAME(S)
By: DEMETER MANAGEMENT CORPORATION
By: /s/ Mark J. Hawley December 1, 1997
- - ----------------------------------------------- ------------------------------
AUTHORIZED SIGNATURE(S) DATE
Mark J. Hawley, President
- - --------------------------------------------------------------------------------
(If applicable, print name and title of signatory)
EXHIBIT 10.05
CUSTOMER AGREEMENT
THIS CUSTOMER AGREEMENT (this "Agreement"), made as of the 1st day
of December, 1997, by and among DEAN WITTER GLOBAL PERSPECTIVE PORTFOLIO L.P., a
Delaware limited partnership (the "Customer"), CARR FUTURES INC., a Delaware
corporation ("CFI"), and DEAN WITTER REYNOLDS INC., a Delaware corporation
("DWR");
W I T N E S S E T H :
WHEREAS, the Customer was organized pursuant to a Certificate of
Limited Partnership filed in the office of the Secretary of State of the State
of Delaware on November 7, 1991, and a Limited Partnership Agreement dated as of
November 7, 1991 between Demeter Management Corporation, a Delaware corporation
("Demeter"), acting as general partner (in such capacity, the "General
Partner"), and the limited partners of the Customer, to trade, buy, sell,
spread, or otherwise acquire, hold, or dispose of commodities (including, but
not limited to, foreign currencies, mortgage-backed securities, money market
instruments, financial instruments, and any other securities or items which are,
or may become, the subject of futures contract trading), domestic and foreign
commodity futures contracts, commodity forward contracts, foreign exchange
commitments, options on physical commodities and on futures contracts, spot
(cash) commodities and currencies, and any rights pertaining thereto
(hereinafter referred to collectively as "futures interests"), and securities
(such as United States Treasury bills) approved by the Commodity Futures Trading
Commission (the "CFTC") for investment of customer funds, and to engage in all
activities incident thereto;
WHEREAS, the Customer (which is a commodity pool) and the General
Partner (which is a registered commodity pool operator) have entered into
management agreements (the "Management Agreements") with certain trading
advisors (each, a "Trading Advisor" and collectively, the "Trading Advisors"),
which provide that the Trading Advisors have authority and responsibility,
except in certain limited situations, to direct the investment and reinvestment
of the assets of the Customer in futures interests under the terms set forth in
the Management Agreements;
WHEREAS, the Customer and DWR have entered into that certain Amended
and Restated Customer Agreement, dated as of December 1, 1997 (the "DWR Customer
Agreement"), whereby DWR agreed to perform certain non-clearing futures
interests brokerage and other services for the Customer; and
WHEREAS, the Customer, DWR and CFI wish to enter into this Agreement
to set forth the terms and conditions upon which CFI will perform futures
interests execution and clearing services for the Customer;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Duties of CFI. CFI agrees to execute and clear all futures
interests brokerage transactions on behalf of the Customer in accordance with
instructions provided by DWR, Demeter or the Trading Advisors, and the Customer
agrees to retain CFI as its clearing broker for the term of this Agreement. CFI
agrees to maintain such number of subaccounts for the Customer as DWR reasonably
shall request. The execution and clearing services of CFI provided hereunder
shall be in accordance with applicable exchange rules.
CFI agrees to furnish to the Customer as soon as practicable all of
the information from time to time in its possession which Demeter, as the
general partner of the Customer, is required to furnish to the Limited Partners
pursuant to the Limited Partnership Agreement as from time to time in effect and
as required by applicable law, rules, or regulations. CFI shall disclose such
information (including, without limitation, financial statements) regarding
itself and its affiliates as may be required by the Customer for SEC, CFTC and
state blue sky disclosure purposes.
CFI agrees to notify the applicable Trading Advisor and DWR
immediately upon discovery of any error committed by CFI or any of its agents
with respect to a trade executed or cleared by CFI on behalf of the Customer and
to notify DWR promptly of any order or trade for the Customer's account which
CFI believes was not executed or cleared in accordance with proper instructions
given by DWR, Demeter or any Trading Advisor or other agent for the Customer's
account. Notwithstanding any provision of this Agreement to the contrary, CFI
shall assume financial responsibility for any errors committed or caused by it
in executing or clearing orders for the purchase or sale of futures interests
for the Customer's account and shall credit the Customer's account with any
profit resulting from an error of CFI. Errors made by floor brokers appointed or
selected by CFI shall constitute errors made by CFI. However, CFI shall not be
responsible for errors committed by the Trading Advisors.
CFI acknowledges that other partnerships of which the General
Partner is the general partner are not affiliates of the Customer.
2. Margins. The futures and futures option trades for the Customer's
account shall be margined at the applicable exchange or clearinghouse minimum
rates for speculative accounts; all subaccounts shall be combined for
determining such margin requirements. All margin calls for the Customer's
account shall be made to DWR by CFI, and each such call for margin shall be met
by Customer within three hours after DWR has received such call. CFI shall
accept as margin for the Customer's account any instrument deemed acceptable
under exchange or clearinghouse rules pertaining to such account. Upon oral or
written request by DWR, CFI shall, within three hours after receipt of any such
request, wire transfer (by federal bank wire system) to DWR for Customer's
account any funds in the Customer's account with CFI in excess of the margin
requirements for such account.
3. Obligations and Expenses. Except as otherwise set forth herein,
the Customer, and not CFI, shall be responsible for all taxes, management and
incentive fees to the Trading Advisors, the brokerage commissions to DWR
pursuant to the DWR Customer Agreement, and all extraordinary expenses incurred
by it.
4. Agreement Nonexclusive. CFI shall be free to render services of
the nature to be rendered to the Customer hereunder to other persons or entities
in addition to the Customer, and the parties acknowledge that CFI may render
such services to additional entities similar in nature to the Customer,
including other partnerships organized with Demeter as their general partner. It
is expressly understood and agreed that this Agreement is nonexclusive and that
the Customer has no obligation to execute any or all of its trades for futures
interests through CFI. The parties acknowledge that the Customer may execute and
clear trades for futures interests through such other broker or brokers as
Demeter may direct from time to time. The Customer's utilization of an
additional commodity broker shall neither terminate this Agreement nor modify in
any regard the respective rights and obligations of the Customer and CFI
hereunder.
5. Compensation of CFI. In compensation of CFI's services pursuant
to this Agreement, the Customer shall pay CFI all NFA fees, clearinghouse fees,
exchange fees or other regulatory fees, taxes (other than income taxes), floor
brokerage fees, third-party clearing fees and give-up fees. DWR shall pay to CFI
such charges with respect to the execution and clearance of trades for the
Customer as DWR and CFI shall agree from time to time. Subject to the brokerage
commission and transaction fees and costs caps set forth in the DWR Customer
Agreement, DWR shall have no obligation to reimburse the Customer for any
payments made by the Customer to CFI. The Customer shall have no obligation to
reimburse DWR for any payments made by DWR to CFI.
6. Investment Discretion. The parties recognize that CFI shall have
no authority to direct the futures interests investments to be made for the
Customer's account, but shall execute only such orders for the Customer's
account as DWR, Demeter or the Trading Advisors may direct from time to time.
However, the parties agree that CFI, and not the Trading Advisors, shall have
the authority and responsibility with regard to the investment, maintenance, and
management of the Customer's assets that are held in segregated or secured
accounts, as provided in Section 7 hereof.
7. Interest on Customer Funds. The Customer's assets deposited with
CFI will be segregated or secured in accordance with the Commodity Exchange Act
and CFTC regulations. All of such funds will be available for margin for the
Customer's trading. CFI shall pay to DWR such interest income on the Customer's
assets held by CFI as CFI and DWR shall agree from time to time. The Customer
understands that it will not receive any interest income on its assets held by
CFI other than that paid by DWR pursuant to the DWR Customer Agreement. The
Customer's assets held by CFI may be used solely as margin for the Customer's
trading.
8. Recording Conversations. CFI consents to the electronic
recording, at the discretion of the Customer, Customer's agents or DWR, of any
or all telephone conversations with CFI (without automatic tone warning device),
the use of same as evidence by either party in any action or proceeding arising
out of this Agreement, and in the Customer's, Customer's agents' or DWR's
erasure, at its discretion, of any recording as a part of its regular procedure
for handling of recordings.
9. Delivery; Option Exercise.
(a) The Customer acknowledges that the making or accepting of
delivery pursuant to a futures contract may involve a much higher degree of risk
than liquidating a position by offset. CFI has no control over and makes no
warranty with respect to grade, quality or tolerances of any commodity delivered
in fulfillment of a contract.
(b) The Customer agrees to give CFI timely notice and immediately on
request to inform CFI if the Customer intends to make or take delivery under a
futures contract or to exercise an option contract. If so requested, the
Customer shall provide CFI with satisfactory assurances that the Customer can
fulfill the Customer's obligation to make or take delivery under any contract.
The Customer shall furnish CFI with property deliverable by it under any
contract in accordance with CFI's instructions.
(c) CFI shall not have any obligation to exercise any long option
contract unless the Customer has furnished CFI with timely exercise instructions
and sufficient initial margin with respect to each underlying futures contract.
10. Standard of Liability and Indemnity. Subject to Section 1
hereof, CFI and its affiliates (as defined below) shall not be liable to the
Customer, the General Partner or Limited Partners, or any of its or their
respective successors or assigns, for any act, omission, conduct, or activity
undertaken by or on behalf of the Customer pursuant to this Agreement which CFI
determines, in good faith, to be in the best interests of the Customer, unless
such act, omission, conduct, or activity by CFI or its affiliates constituted
misconduct or negligence.
The Customer shall indemnify, defend and hold harmless CFI and its
affiliates from and against any loss, liability, damage, cost or expense
(including attorneys' and accountants' fees and expenses incurred in the defense
of any demands, claims, or lawsuits) actually and reasonably incurred arising
from any act, omission, conduct, or activity undertaken by CFI on behalf of the
Customer pursuant to this Agreement, including, without limitation, any demands,
claims or lawsuits initiated by a Limited Partner (or assignee thereof),
provided that (i) CFI has determined, in good faith, that the act, omission,
conduct, or activity giving rise to the claim for indemnification was in the
best interests of the Customer, and (ii) the act, omission, conduct, or activity
that was the basis for such loss, liability, damage, cost, or expense was not
the result of misconduct or negligence. Notwithstanding anything to the contrary
contained in the foregoing, neither CFI nor any of its affiliates shall be
indemnified by the Customer for any losses, liabilities, or expenses arising
from or out of an alleged violation of federal or state securities laws unless
(a) there has been a successful adjudication on the merits of each count
involving alleged securities law violations as to the particular indemnitee, or
(b) such claims have been dismissed with prejudice on the merits by a court of
competent jurisdiction as to the particular indemnitee, or (c) a court of
competent jurisdiction approves a settlement of the claims against the
particular indemnitee and finds that indemnification of the settlement and
related costs should be made, provided, with regard to such court approval, the
indemnitee must apprise the court of the position of the SEC, and the positions
of the respective securities administrators of Massachusetts, Missouri,
Tennessee and/or those other states and jurisdictions in which the plaintiffs
claim they were offered or sold Units, with respect to indemnification for
securities laws violations before seeking court approval for indemnification.
Furthermore, in any action or proceeding brought by a Limited Partner in the
right of the Customer to which CFI or any affiliate thereof is a party
defendant, any such person shall be indemnified only to the extent and subject
to the conditions specified in the Delaware Revised Uniform Limited Partnership
Act, as amended, and this Section 10. The Customer shall make advances to CFI or
its affiliates hereunder only if: (i) the demand, claim, lawsuit, or legal
action relates to the performance of duties or services by such persons to the
Customer; (ii) such demand, claim, lawsuit, or legal action is not initiated by
a Limited Partner; and (iii) such advances are repaid, with interest at the
legal rate under Delaware law, if the person receiving such advance is
ultimately found not to be entitled to indemnification hereunder.
CFI shall indemnify, defend and hold harmless the Customer and its
successors or assigns from and against any losses, liabilities, damages, costs
or expenses (including in connection with the defense or settlement of claims;
provided CFI has approved such settlement) incurred as a result of the
activities of CFI or its affiliates, provided, further, that the act, omission,
conduct, or activity giving rise to the claim for indemnification was the result
of bad faith, misconduct or negligence.
The indemnities provided in this Section 10 by the Customer to CFI
and its affiliates shall be inapplicable in the event of any losses,
liabilities, damages, costs, or expenses arising out of, or based upon, any
material breach of any warranty, covenant, or agreement of CFI contained in this
Agreement to the extent caused by such breach. Likewise, the indemnities
provided in this Section 10 by CFI to the Customer and any of its successors and
assigns shall be inapplicable in the event of any losses, liabilities, damages,
costs, or expenses arising out of, or based upon, any material breach of any
warranty, covenant, or agreement of the Customer contained in this Agreement to
the extent caused by such breach.
As used in this Section 10, the term "affiliate" of CFI shall mean:
(i) any natural person, partnership, corporation, association, or other legal
entity directly or indirectly owning, controlling, or holding with power to vote
10% or more of the outstanding voting securities of CFI; (ii) any partnership,
corporation, association, or other legal entity 10% or more of whose outstanding
voting securities are directly or indirectly owned, controlled, or held with
power to vote by CFI; (iii) any natural person, partnership, corporation,
association, or other legal entity directly or indirectly controlling,
controlled by, or under common control with, CFI; or (iv) any officer or
director of CFI. Notwithstanding the foregoing, "affiliates" for purposes of
this Section 10 shall include only those persons acting on behalf of CFI within
the scope of the authority of CFI, as set forth in this Agreement.
11. Term. This Agreement shall continue in effect until terminated
by any party giving not less than 60 days' prior written notice of termination
to the other parties. The Customer shall have the right to terminate this
Agreement
(i) at any time, effective upon thirty (30) days' prior
written notice to CFI, in the event that:
(A) CFI announces plans to discontinue the provision
of execution and clearing services with respect to
futures contracts, options on futures contracts or
acting as a dealer counterparty for foreign
exchange cash and forward contracts; or
(B) CFI merges or consolidates with or into or
acquires or is acquired by, another entity or
entities acting in concert (excluding any
intergroup reorganizations with any affiliates
of CFI or any capital contributions by, or sale
of CFI stock to any affiliates of CFI, provided
that the guarantee agreement between DWR and
Credit Agricole Indosuez S.A. dated as of July
31, 1997 remains in place or a comparable
guaranty is substituted by a bank with a net
worth and credit rating equal to Credit
Agricole Indosuez S.A.) in a transaction
involving the purchase or sale of stock or
substantially all of the assets of the acquired
entity or which involves a capital contribution
to or by such entity or entities (in an amount
representing fifty percent (50%) or more of the
book value of CFI's or such entity's (or their
respective affiliate's) net worth), or the
purchase or sale of stock representing fifty
percent (50%) or more of CFI's or such entity's
(or their respective affiliate's) outstanding
equity securities; and
(ii) at any time effective immediately upon written notice to
CFI in the event:
(A) CFI ceases to be registered or conduct business as
a futures commission merchant or discontinues its
membership or clearing membership on any major
futures interest exchange in the United States (or
any affiliated clearing corporation) or in the
NFA; or
(B) a receiver, liquidator or trustee of CFI is
appointed by court order and such order remains in
effect for more than thirty (30) days; or CFI is
adjudicated bankrupt or insolvent; or any of CFI's
property is sequestered by court order and such
order remains in effect for more than thirty (30)
days; or a petition is filed against CFI under any
bankruptcy, reorganization, arrangement,
insolvency, readjustment or debt, dissolution or
liquidation law of any jurisdiction, whether now
or hereafter in effect, and is not dismissed
within thirty (30) days after such filing; or CFI
files a petition in voluntary bankruptcy or
seeking relief under any provision of any
bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, whether now
or hereafter in effect, or consents to the filing
of any petition against it under any such law; or
(C) CFI, DWR or the Customer is ordered or otherwise
directed to terminate this Agreement by any
governmental, regulatory, or self-regulatory
authority.
Any such termination by any party shall be without penalty.
12. Complete Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the matters referred to herein, and
no other agreement, verbal or otherwise, shall be binding as among the parties
unless in writing and signed by the party against whom enforcement is sought.
13. Assignment. This Agreement may not be assigned by any party
without the express written consent of the other parties.
14. Amendment. This Agreement may not be amended except by the
written consent of the parties.
15. Notices. All notices required or desired to be delivered under
this Agreement shall be in writing and shall be effective when delivered
personally on the day delivered, or when given by registered or certified mail,
postage prepaid, return receipt requested, on the day of receipt, addressed as
follows (or to such other address as the party entitled to notice shall
hereafter designate in accordance with the terms hereof):
if to the Customer:
DEAN WITTER GLOBAL PERSPECTIVE PORTFOLIO L.P.
c/o Demeter Management Corporation
Two World Trade Center, 62nd Floor
New York, New York 10048
Attn: Mark J. Hawley
President
if to DWR:
DEAN WITTER REYNOLDS INC.
Two World Trade Center, 62nd Floor
New York, New York 10048
Attn: Mark J. Hawley
Executive Vice President
if to CFI:
CARR FUTURES INC
10 South Wacker Drive, Suite 1125
Chicago, Illinois 60606
Attn: Legal/Compliance Department
16. Survival. The provisions of this Agreement shall survive the
termination of this Agreement with respect to any matter arising while this
Agreement was in effect.
17. Headings. Headings of Sections herein are for the convenience of
the parties only and are not intended to be a part of or to affect the meaning
or interpretation of this Agreement.
18. Incorporation by Reference. The Futures Account Agreement
annexed hereto is hereby incorporated by reference herein and made a part hereof
to the same extent as if such document were set forth in full herein. If any
provision of this Agreement is or at any time becomes inconsistent with the
annexed document, the terms of this Agreement shall control.
19. Governing Law; Venue. This Agreement shall be governed by, and
construed in accordance with, the law of the State of New York (without regard
to its choice of law principles). If any action or proceeding shall be brought
by a party to this Agreement or to enforce any right or remedy under this
Agreement, each party hereto hereby consents and will submit to the jurisdiction
of the courts of the State of New York or any federal court sitting in the
County, City and State of New York. Any action or proceeding brought by any
party to this Agreement to enforce any right, assert any claim, or obtain any
relief whatsoever in connection with this Agreement shall be brought by such
party exclusively in the courts of the State of New York or any federal court
sitting in the County, City and State of New York.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed for and on
behalf of the undersigned as of the day and year first above written.
DEAN WITTER GLOBAL PERSPECTIVE PORTFOLIO
L.P.
By: Demeter Management Corporation,
General Partner
By: /s/ Mark J. Hawley
------------------------------------
Mark J. Hawley
President
DEAN WITTER REYNOLDS INC.
By: /s/ Mark J. Hawley
------------------------------------
Mark J. Hawley
Executive Vice President
CARR FUTURES INC.
By: /s/ Bruce A. Beatus
------------------------------------
Name: Bruce A. Beatus
---------------------------------
Title: General Counsel
---------------------------------
<PAGE>
CARR FUTURES INC.
FUTURES ACCOUNT AGREEMENT
In consideration of the acceptance by Carr Futures Inc. ("Carr") of one or more
accounts of the undersigned ("Customer") (if more than one account is at any
time opened or reopened with Carr, all are covered by this Agreement and are
referred to individually and collectively as the "Account"), and Carr's
agreement to act as broker, directly or indirectly, or as dealer, for the
execution, clearance and/or carrying of transactions for the purchase and sale
of commodity interests, including commodities, forward contracts, commodity
futures contracts, options on commodity futures contracts and transaction
involving the exchange of futures for cash commodities or the exchange of
futures in connection with cash commodity transactions, Customer agrees as
follows:
1. APPLICABLE RULES AND REGULATIONS
The Account and each transaction therein shall be subject to the terms of
this Agreement and to (a) all applicable laws and the regulations, rules
and orders (collectively "regulations") of all regulatory and
self-regulatory organizations having jurisdiction and (b) the
constitution, by-laws, rules, regulations, orders, resolutions,
interpretations and customs and usages (collectively "rules") of the
market and any associated clearing organization (each an "exchange") on or
subject to the rules of which such transaction is executed and/or cleared.
The reference in the preceding sentence to exchange rules is solely for
Carr's protection and Carr's failure to comply therewith shall not
constitute a breach of this Agreement or relieve Customer of any
obligation or responsibility under this Agreement. Carr shall not be
liable to Customer as a result of any action by Carr, its officers,
directors, employees or agents to comply with any rule or regulation.
2. PAYMENTS TO CARR
Customer agrees to pay to Carr immediately on request (a) commissions,
give-up charges, fees and service charges as are in effect from time to
time, together with all applicable regulatory and self-regulatory
organization and exchange fees, charges and taxes; (b) the amount of any
debit balance or any other liability that may result from transactions
executed for the Account; and (c) interest on such debit balance or
liability at the prevailing rate charged by Carr at the time such debit
balance or liability arises and service charges on any such debit balance
or liability together with any reasonable costs and attorneys' fees
incurred in collecting any such debit balance or liability. Customer
acknowledges that Carr may charge commissions at other rates to other
customers.
3. CUSTOMER'S DUTY TO MAINTAIN ADEQUATE MARGIN
Customer shall at all times, and without prior notice or demand from Carr,
maintain adequate margin (also known as "performance bond") in the Account
so as to continually to meet the original and maintenance margin
requirements established by Carr for Customer. Carr may change such
requirements from time to time at Carr's discretion. Such margin
requirements may exceed the margin requirements set by any exchange or
other regulatory authority and may vary from Carr's requirements for other
customers. Customer agrees, when so requested, orally or by written
notice, immediately (in no less than one hour) to wire transfer (by
federal bank wire system to the account of Carr) margin funds, and to
furnish Carr with names of bank officers for immediate verification of
such transfers. Customer acknowledges and agrees that Carr may receive and
retain as its own any interest, increment, profit, gain or benefit,
directly or indirectly, accruing from any of the funds Carr receives from
Customer.
4. DELIVERY; OPTION EXERCISE
Liquidating instructions on open positions maturing in a current delivery
month must be given to Carr at least five business days prior to the first
notice day in the case of long positions, and at least five business days
prior to the last trading day in the case of short positions.
Alternatively, sufficient funds to take delivery or the necessary delivery
documents must be delivered to Carr within the same period described
above. If funds, documents or instructions are not received, Carr may,
without notice, either liquidate Customer's position or make or receive
delivery on behalf of Customer upon such terms and by such methods as
Carr, in its sole discretion, determines.
If, at any time, Customer fails to deliver to Carr any property previously
sold by Carr on Customer's behalf in compliance with commodity interest
contracts, or Carr shall deem it necessary (whether by reason of the
requirements of any exchange, clearing house or otherwise) to replace any
securities, commodity interest contracts, financial instruments, or other
property previously delivered by Carr for the Account of Customer with
other property of like or equivalent kind or amount, Customer hereby
authorizes Carr, in its sole judgment, to borrow or to buy any property
necessary to make delivery thereof, or to replace any such property
previously delivered, or to deliver the same to such other party or to
whom delivery is to be made. Carr may subsequently repay any borrowing or
purchase thereof with property purchased or otherwise acquired for the
amount of Customer. Customer shall pay Carr for any cost, loss and damages
from the foregoing, including, but not limited to, consequential damages,
penalties and fines which Carr may incur or which Carr may sustain from
its inability to borrow or buy any such property.
Customer understands that some exchanges and clearing houses have
established cut-off times for the tender of exercise instructions, and
that an option will become worthless if instructions are not delivered
before such expiration time. Customer also understands that certain
exchanges and clearing houses automatically will exercise some
"in-the-money" options unless instructed otherwise. Customer acknowledges
full responsibility for taking action either to exercise or to prevent the
exercise of an option contract, as the case may be, and Carr is not
required to take any action with respect to an option contract, including
without limitations any action to exercise an option prior to its
expiration date, or to prevent the automatic exercise of an option, except
upon Customer's express instructions. Customer further understands that
Carr may establish exercise cut-off times which may be different from the
times established by exchanges and clearing houses.
Customer understands that (a) all short option positions are subject to
assignment at any time, including positions established on the same day
that exercises are assigned, and (b) exercised assignment notices are
allocated randomly from among all Carr customer's short options positions
which are subject to exercise. A more detailed description of Carr's
allocation procedures is available upon request.
5. FOREIGN CURRENCY
If Carr enters into any transaction for Customer effected in a currency
other than U.S. dollars: (a) any profit or loss caused by changes in the
rate of exchange for such currency shall be for Customer's Account and
risk and (b) unless another currency is designated in Carr's confirmation
of such transaction, all margin for such transaction and the profit or
loss on the liquidation of such transaction shall be in U.S. dollars at a
rate of exchange determined by Carr in its discretion on the basis of then
prevailing market rates of exchange for such foreign currency.
6. CARR MAY LIMIT POSITIONS HELD
Customer agrees that Carr, at its discretion, may limit the number of open
positions (net or gross) which Customer may execute, clear and/or carry
with or acquire through it. Customer agrees (a) not to make any trade
which would have the effect or exceeding such limits, (b) that Carr may
require Customer to reduce open positions carried with Carr and (c) that
Carr may refuse to accept orders to establish new positions. Carr may
impose and enforce such limits, reduction or refusal whether or not they
are required by applicable law, regulations or rules. Customer shall
comply with all position limits established by any regulatory or
self-regulatory organization or any exchange. In addition, Customer agrees
to notify Carr promptly if Customer is required to file position reports
with any regulatory or self-regulatory organization or with any exchange.
7. NO WARRANTY AS TO INFORMATION OR RECOMMENDATION
Customer acknowledges that:
(a) Any market recommendations and information Carr may communicate to
Customer, although based upon information obtained from sources
believed by Carr to be reliable, may be incomplete and not subject
to verification;
(b) Carr makes no representation, warranty or guarantee as to, and shall
not be responsible for, the accuracy or completeness of any
information or trading recommendation furnished to Customer;
(c) Recommendations to Customer as to any particular transaction at any
given time may differ among Carr's personnel due to diversity in
analysis of fundamental and technical factors and may vary from any
standard recommendation made by Carr in its research reports or
otherwise; and
(d) Carr has no obligation or responsibility to update any market
recommendations, research or information it communicates to
Customer.
Customer understands that Carr and its officers, directors, affiliates,
stockholders, representatives or associated persons may have positions in
and may intend to buy or sell commodity interests that are the subject of
market recommendations furnished to Customer, and that the market
positions of Carr or any such officer, director, affiliate, stockholder,
representative or associated person may or may not be consistent with the
recommendations furnished to Customer by Carr.
8. LIMITS ON CARR DUTIES; LIABILITY
Customer agrees:
(a) That Carr has no duty to apprise Customer of news or of the value of
any commodity interests or collateral pledged or in any way to
advise Customer with respect to the market;
(b) That the commissions which Carr receives are consideration solely
for the execution, reporting and carrying of Customer's trades;
(c) If there is an Account Manager, an Account Manager's Agreement for
the Account Manager will be provided to Carr. Customer represents it
has received: (1) a disclosure document concerning such Account
Manager's trading advice, including, in the event the Account
Manager will trade options, the options strategies to be utilized,
or (2) a written statement explaining why Account Manager is not
required under applicable law to provide such a disclosure document
to Customer; and
(d) Customer acknowledges, understands and agrees that Carr is in no way
responsible for any loss to Customer occasioned by the actions of
the Account Manager and Carr does not by implication or otherwise
endorse the operating methods or trading strategies or programs of
the Account Manager.
9. EXTRAORDINARY EVENTS
Customer agrees that Carr shall have no liability for damages, claims,
losses or expenses caused by any errors, omissions or delays resulting
from an act, condition or cause beyond the reasonable control of Carr,
including, but not limited to: war; insurrection; riot; strike; act of
God; fire; flood; extraordinary weather conditions; accident; action of
government authority; action of exchange, clearinghouse or clearing
organization; communications or power failure; equipment or software
malfunction; error, omission or delay in the report of transactions;
prices, exchange rates or other market or transaction information; or the
insolvency, bankruptcy, receivership, liquidation or other financial
difficulty of any bank, clearing broker, exchange, market, clearinghouse
or clearing organization.
10. INDEMNIFICATION OF CARR, CONTRIBUTION AND REIMBURSEMENT
(a) To the extent permitted by law, Customer agrees to indemnify and
hold harmless Carr and its shareholders, directors, officers,
employees, agents, affiliates and controlling persons against any
liability for damages, claims, losses or expenses which they may
incur as the result of: (x) Customer's violation of federal or state
laws or regulations, or of rules of any exchange or self-regulatory
organization; (y) any other breach of this Agreement by Customer; or
(z) any breach by Carr of federal or state laws or regulations, or
of the charter provisions, by-laws, rules, margin or other
requirements, of the exchanges or self-regulatory organizations,
provided that such violation was caused by Carr's acting in good
faith on Customer's behalf. Such damages, claims, losses or expenses
shall include legal fees and expenses, costs of settling claims,
interest, and fines or penalties imposed by the exchanges,
self-regulatory organization or governmental authority.
(b) Customer agrees that if the indemnification provided in paragraph
(a) above is held to be unavailable to Carr, the parties hereto
shall share in and contribute to such damages, claims, losses or
expenses in proportion to their relative benefits from the
transactions involved and their relative degree of fault in causing
the liability.
(c) Customer agrees to reimburse Carr and its shareholders, directors,
officers, employees, agents, affiliates and controlling persons on
demand for any costs incurred in collecting any sums Customer owes
under this Agreement and any costs of successfully defending against
claims asserted against them by Customer.
11. NOTICES; TRANSMITTALS
Carr shall transmit all communications to Customer at Customer's address,
facsimile or telephone number set forth below or to such other address as
Customer may hereafter direct in writing. Customer shall transmit all
communications to Carr regarding this Agreement (except routine inquiries
concerning the Account) to 10 South Wacker Drive, Suite 1100, Chicago,
Illinois 60606; facsimile (312) 441-4201, Attention: Legal/Compliance
Department. All payments and deliveries to Carr shall be made as
instructed by Carr from time to time and shall be deemed received only
when actually received by Carr.
12. CONFIRMATION CONCLUSIVE
Confirmation of trades and any other notices sent to Customer shall be
conclusive and binding on Customer unless customer or Customer's agent
notifies Carr to the contrary (a) in the case of an oral report, orally at
the time received by Customer or its agent; or (b) in the case of a
written report or notice, in writing prior to opening of trading on the
business day next following receipt of the report. In addition, if
Customer has not received a written confirmation that a commodity interest
transaction has been executed within three business days after Customer
has placed an order with Carr to effect such transaction, and has been
informed or believes that such order has been or should have been
executed, then Customer immediately shall notify Carr thereof. Absent such
notice, Customer conclusively shall be deemed estopped to object and to
have waived any such objection to the failure to execute or cause to be
executed such transaction. Anything in this Section 12 notwithstanding,
neither Customer nor Carr shall be bound by any transaction or price
reported in error.
13. SECURITY INTEREST
Customer hereby grants to Carr a first lien upon and a security interest
in any and all cash, securities, whether certificated or uncertificated,
security entitlements, investment property, financial assets, foreign
currencies, commodity interests and other property (including securities
and options) and the proceeds of all of the foregoing (together the
"Collateral") belonging to Customer or in which Customer may have an
interest, now or in the future, and held by Carr or in Carr's control or
carried in any of Customer's Accounts, or in Customer's accounts carried
under other agreements with Carr or its affiliates. Such security interest
is granted as security for the performance by Customer of its obligations
hereunder and for the payment of all loans and other liabilities which
Customer has or may in the future have to Carr, whether under this
Agreement or any other agreement between the parties hereto. Customer
agrees to execute such further instruments, documents, filings and
agreements as may be requested at any time by Carr in order to perfect and
maintain perfected the foregoing lien and security interest. Carr, in its
discretion, may liquidate any Collateral to satisfy any margin or Account
deficiencies or to transfer the Collateral to the general ledger account
of Carr.
In the event that the provisions of Section 13, which relate to Collateral
in any account carried by Carr for Customer other than an Account
instituted hereunder, conflict with the agreement under which such other
account was instituted, such other agreement between Carr and Customer
shall take precedence over the provisions of this Section 13.
14. TRANSFER OF FUNDS
At any time and from time to time and without prior notice to Customer,
Carr may transfer from one Account to another Account in which Customer
has any interest, such excess funds, equities, securities or other
property as in Carr's judgment may be required for margin, or to reduce
any debit balance or to reduce or satisfy any deficits in such other
Accounts except that no such transfer may be made from a segregated
Account subject to the Commodity Exchange Act to another Account
maintained by Customer unless either Customer has authorized such transfer
in writing or Carr is effecting such transfer to enforce Carr's security
interest pursuant to Section 13. Carr promptly shall confirm all transfers
of funds made pursuant hereto to Customer in writing.
15. CARR'S RIGHT TO LIQUIDATE CUSTOMER POSITIONS
In addition to all other rights of Carr set forth in this Agreement:
(a) When directed or required by a regulatory or self-regulatory
organization or exchange having jurisdiction over Carr or the
Account;
(b) Whenever Carr reasonably considers it necessary for its protection
because of margin requirements or otherwise;
(c) If Customer or any affiliate of Customer repudiates, violates,
breaches or fails to perform on a timely basis any term, covenant or
condition on its part to be performed under this Agreement or
another agreement with Carr;
(d) If a case in bankruptcy is commenced or if a proceeding under any
insolvency or other law for the protection of creditors or for the
appointment of a receiver, liquidator, trustee, conservator,
custodian or similar officer is filed by or against Customer or any
affiliate of Customer, or if Customer or any affiliate of Customer
makes or proposes to make any arrangement or composition for the
benefit of its creditors, or if Customer (or any such affiliate) or
any or all of its property is subject to any agreement, order,
judgment or decree providing for Customer's dissolution, winding-up,
liquidation, merger, consolidation, reorganization or for the
appointment of a receiver, liquidator, trustee, conservator,
custodian or similar officer of Customer, such affiliate or such
property;
(e) Carr is informed of Customer's death or mental incapacity; or
(f) If an attachment or similar order is levied against the Account or
any other account maintained by a Customer or any affiliate of
Customer with Carr;
Carr shall have the right to (i) satisfy any obligations due Carr out of
any Customer's property (also referred to as "Collateral") in Carr's
custody or control, (ii) liquidate any or all of Customer's commodity
interest positions, such liquidation shall include transactions involving
the exchange of futures for cash commodities or the exchange of futures in
connection with cash commodity transactions, (iii) cancel any or all of
Customer's outstanding orders, (iv) treat any or all of Customer's
obligations due Carr as immediately due and payable, (v) sell any or all
of Customer's property in Carr's custody or control in such manner as Carr
determines to be commercially reasonable, and/or (vi) terminate any or all
of Carr's obligations for future performance to Customer, all without any
notice to or demand on Customer if deemed necessary by Carr. Any sale
hereunder may be made in any commercially reasonable manner. Customer
agrees that a prior demand, call or notice shall not be considered a
waiver of Carr's right to act without demand or notice as herein provided,
that Customer shall at all times be liable for the payment of any debit
balance owing in each Account upon demand whether occurring upon a
liquidation as provided under this Section 15 or otherwise under this
Agreement, and that in all cases Customer shall be liable for any
deficiency remaining in each Account in the event of liquidation thereof
in whole or in part together with interest thereon and all costs relating
to liquidation and collection (including reasonable attorneys' fees). In
the event that the provisions of Section 15, which relate to Collateral in
any account carried by Carr for Customer other than an Account instituted
hereunder, conflict with the agreement under which such other account was
instituted, such other agreement between Carr and Customer shall take
precedence over the provisions of this Section 15.
16. CUSTOMER REPRESENTATIONS, WARRANTIES AND AGREEMENTS
Customer represents and warrants to and agrees with Carr that:
(a) Customer has full power and authority to enter into this Agreement
and to engage in the transactions and perform its obligations
hereunder and contemplated hereby, and:
(1) If Customer is a corporation or partnership, Customer
represents and warrants that (a) it is duly organized and in
good standing under the laws of the jurisdiction in which it
is established and in every state in which it does business;
(b) is empowered to enter into and perform this Agreement and
to effectuate transactions in commodity interests, financial
instruments and foreign currency as contemplated hereby; (c)
that Customer has determined that trading in commodity
interests is appropriate for Customer, is prudent in all
respects and does not and will not violate any statute, rule,
regulation, judgment or decree to which Customer is subject or
bound; (d) that Customer has had at least one year's prior
experience in effectuating transactions in commodity
interests, financial instruments, and foreign currency as
contemplated hereby; and (e) no person or entity has any
interest in or control of the Account to which this Agreement
pertains except as disclosed by Customer to Carr in writing.
(2) If Customer is a trust, Customer represents and warrants that
(a) it is a duly formed and existing trust under the laws of
the state of its formation or such other laws as are
applicable, including ERISA or similar state law, and the
party or parties designated as trustee or trustees by Customer
to Carr in writing submitted herewith constitute the only or
all of the proper trustees thereof; (b) the trustee or
trustees are empowered to enter into and perform this
Agreement and to effectuate transactions in commodity
interests, financial instruments, and foreign currency as
contemplated hereby; (c) the trustee or trustees make the
representations set forth in Section 1 hereof as if the term
trustee(s) were substituted for the term Customer therein; and
(d) no person or entity has any interest in or control of the
Account to which this Agreement pertains except as disclosed
by Customer to Carr in writing.
(b) Neither Customer nor any partner, director, officer, member, manager
or employee of Customer nor any affiliate of Customer is a partner,
director, officer, member, manager or employee of a futures
commission merchant, introducing broker, bank, broker-dealer,
exchange or self-regulatory organization or an employee or
commissioner of the Commodity Futures Trading Commission (the
"CFTC"), except as previously disclosed in writing to Carr;
(c) Any financial statements or other information furnished in
connection therewith are true, correct and complete. Except as
disclosed in writing, (i) Customer is not a commodity pool or is
exempt from registration under the rules of the CFTC, and (ii)
Customer is acting solely as principal and no one other than
Customer has any interest in any Account of Customer. Customer
hereby authorizes Carr to contact such banks, financial institutions
and credit agencies as Carr shall deem appropriate for verification
of the information contained herein;
(d) Customer has determined that trading in commodity interests is
appropriate for Customer, is prudent in all respects and does not
and will not violate Customer's charter or by-laws (or other
comparable governing document) or any law, rule, regulation,
judgment, decree, order or agreement to which Customer or its
property is subject or bound;
(e) As required by CFTC regulations, Customer shall create, retain and
produce upon request of the applicable contract market, the CFTC or
other regulatory authority documents (such as contracts,
confirmations, telex printouts, invoices and documents of title)
with respect to cash transactions underlying exchanges of futures
for cash commodities or exchange of futures in connection with cash
commodity transactions;
(f) Customer consents to the electronic recording, at Carr's discretion,
of any or all telephone conversations with Carr (without automatic
tone warning device); the use of same as evidence by either party in
any action or proceeding arising out of the Agreement and in Carr's
erasure, at its discretion, of any recording as part of its regular
procedure for handling of recordings;
(g) Absent a separate written agreement between Customer and Carr with
respect to give-ups, Carr, in its discretion, may, but shall have no
obligation to, accept from other brokers commodity interest
transactions executed by such brokers on an exchange for Customer
and proposed to be "given-up" to Carr for clearance and/or carrying
in the Account;
(h) Carr, for and on behalf of Customer, is authorized and empowered to
place orders for commodity interest transactions through one or more
electronic or automated trading systems maintained or operated by or
under the auspices of an exchange, that Carr shall not be liable or
obligated to Customer for any loss, damage, liability, cost or
expense (including but not limited to loss of profits, loss of use,
incidental or consequential damages) incurred or sustained by
Customer and arising in whole or in part, directly or indirectly,
from any fault, delay, omission, inaccuracy or termination of a
system or Carr's inability to enter, cancel or modify an order on
behalf of Customer on or through a system. The provisions of this
Section 16(h) shall apply regardless of whether any customer claim
arises in contract, negligence, tort, strict liability, breach or
fiduciary obligations or otherwise; and
(i) If Customer is subject to the Financial Institution Reform, Recovery
and Enforcement Act of 1989, the certified resolutions set forth
following this Agreement have been caused to be reflected in the
minutes of Customer's Board of Directors (or other comparable
governing body) and this Agreement is and shall be, continuously
from the date hereof, an official record of Customer.
Customer agrees to promptly notify Carr in writing if any of the
warranties and representations contained in this Section 16 become
inaccurate or in any way cease to be true, complete and correct.
17. SUCCESSORS AND ASSIGNS
This Agreement shall inure to the benefit of the parties hereto, their
successors and assigns, and shall be binding upon the parties hereto,
their successors and assigns, provided, however, that this Agreement is
not assignable by any party without the prior written consent of the other
parties.
18. MODIFICATION OF AGREEMENT BY CARR; NON-WAIVER PROVISION
This Agreement may only be altered, modified or amended by mutual written
consent of the parties. The rights and remedies conferred upon Carr shall
be cumulative, and its forbearance to take any remedial action available
to it under this Agreement shall not waive its right at any time or from
time to time thereafter to take such action.
19. SEVERABILITY
If any term or provision hereof or the application thereof to any persons
or circumstances shall to any extent be contrary to any exchange,
government or self-regulatory regulation or contrary to any federal, state
or local law or otherwise be invalid or unenforceable, the remainder of
this Agreement or the application of such term or provision to persons or
circumstances other than those as to which it is contrary, invalid or
unenforceable, shall not be affected thereby.
20. CAPTIONS
All captions used herein are for convenience only, are not a part of this
Agreement, and are not to be used in construing or interpreting any aspect
of this Agreement.
21. TERMINATION
This Agreement shall continue in force until written notice of termination
is given by Customer or Carr. Termination shall not relieve either party
of any liability or obligation incurred prior to such notice. Upon giving
or receiving notice of termination, Customer will promptly take all action
necessary to transfer all open positions in each Account to another
futures commission merchant.
22. ENTIRE AGREEMENT
This Agreement (as amended by the attached Customer Agreement dated the
date hereof into which this Agreement is incorporated by reference)
constitutes the entire agreement between Customer and Carr with respect to
the subject matter hereof and supersedes any prior agreements between the
parties with respect to such subject matter.
23. GOVERNING LAW; CONSENT TO JURISDICTION
(a) In case of a dispute between Customer and Carr arising out of or
relating to the making or performance of this Agreement or any
transaction pursuant to this Agreement (i) this Agreement and its
enforcement shall be governed by the laws of the State of Illinois
without regard to principles of conflicts of laws, and (ii) Customer
will bring any legal proceeding against Carr in, and Customer hereby
consents in any legal proceeding by Carr to the jurisdiction of, any
state or federal court located within Chicago, Illinois, in
connection with all legal proceedings arising directly, indirectly
or otherwise in connection with, out of, related to or from
Customer's Account, transactions contemplated by this Agreement or
the breach thereof. Customer hereby waives all objections Customer,
at any time, may have as to the propriety of the court in which any
such legal proceedings may be commenced. Customer also agrees that
any service of process mailed to Customer at any address specified
to Carr shall be deemed a proper service of process on the
undersigned. Customer agrees that venue of all proceedings shall be
in Chicago, Illinois.
(b) Notwithstanding the provisions of Section 23(a)(ii), Customer may
elect at this time to have all disputes described in this Section
resolved by arbitration. To make such election, Customer must sign
the Arbitration Agreement set forth in Section 24. Notwithstanding
such election, any question relating to whether Customer or Carr has
commenced an arbitration proceeding in a timely manner, whether a
dispute is within the scope of the Arbitration Agreement or whether
a party (other than Customer or Carr) has consented to arbitration
and all proceedings to compel arbitration shall be determined by a
court as specified in Section 23(a)(ii).
24. ARBITRATION AGREEMENT (OPTIONAL)
Every dispute between Customer and Carr arising out of or relating to the
making or performance of this Agreement or any transaction pursuant to
this Agreement, shall be settled by arbitration in accordance with the
rules, then in effect, of the National Futures Association, the contract
market upon which the transacting giving rise to the claim was executed,
or the National Association of Securities Dealers as Customer may elect.
If Customer does not make such election by registered mail addressed to
Carr at 10 South Wacker Drive, Suite 1100, Chicago, Illinois 60606,
Attention: Legal/Compliance Department, within 45 days after demand by
Carr that the Customer make such election, then Carr may make such
election. Carr agrees to pay any incremental fees which may be assessed by
a qualified forum for making available a "mixed panel" of arbitrators,
unless the arbitrators determine that Customer has acted in bad faith in
initiating or conducting the proceedings. Judgment upon any aware rendered
by the arbitrators may be entered in any court having jurisdiction
thereof.
THREE FORUMS EXIST FOR THE RESOLUTION OF COMMODITY DISPUTES: CIVIL COURT
LITIGATION, REPARATIONS AT THE COMMODITY FUTURES TRADING COMMISSION
("CFTC") AND ARBITRATION CONDUCTED BY A SELF-REGULATORY OR OTHER PRIVATE
ORGANIZATION.
THE CFTC RECOGNIZES THAT THE OPPORTUNITY TO SETTLE DISPUTES BY ARBITRATION
MAY IN SOME CASES PROVIDE MANY BENEFITS TO CUSTOMERS, INCLUDING THE
ABILITY TO OBTAIN AN EXPEDITIOUS AND FINAL RESOLUTION OF DISPUTES WITHOUT
INCURRING SUBSTANTIAL COSTS. THE CFTC REQUIRES, HOWEVER, THAT EACH
CUSTOMER INDIVIDUALLY EXAMINE THE RELATIVE MERITS OF ARBITRATION AND THAT
YOUR CONSENT OF THIS ARBITRATION AGREEMENT BE VOLUNTARY.
BY SIGNING THIS AGREEMENT, YOU (1) MAY BE WAIVING YOUR RIGHT TO SUE IN A
COURT OF LAW AND (2) ARE AGREEING TO BE BOUND BY ARBITRATION OF ANY CLAIMS
OR COUNTERCLAIMS WHICH YOU OR CARR MAY SUBMIT TO ARBITRATION UNDER THIS
AGREEMENT. YOU ARE NOT HOWEVER, WAIVING YOUR RIGHT TO ELECT INSTEAD TO
PETITION THE CFTC TO INSTITUTE REPARATIONS PROCEEDINGS UNDER SECTION 14 OF
THE COMMODITY EXCHANGE ACT WITH RESPECT TO ANY DISPUTE WHICH MAY BE
ARBITRATED PURSUANT TO THIS AGREEMENT. IN THE EVENT A DISPUTE ARISES, YOU
WILL BE NOTIFIED IF CARR INTENDS TO SUBMIT THE DISPUTE TO ARBITRATION. IF
YOU BELIEVE A VIOLATION OF THE COMMODITY EXCHANGE ACT IS INVOLVED AND IF
YOU PREFER TO REQUEST A SECTION 14 "REPARATIONS" PROCEEDINGS BEFORE THE
CFTC, YOU WILL HAVE 45 DAYS FROM THE DATE OF SUCH NOTICE IN WHICH TO MAKE
THAT ELECTION.
YOU NEED NOT AGREE TO THIS ARBITRATION AGREEMENT TO OPEN AN ACCOUNT WITH
CARR.
See 17 CFR 1890.1-180.5.
Acceptance of this arbitration agreement requires a separate signature on
page 15.
25. CONSENT TO TAKE THE OTHER SIDE OF ORDERS (OPTIONAL)
Without its prior notice, Customer agrees that when Carr executes sell or
buy orders on Customer's behalf, Carr, its directors, officers, employees,
agents, affiliates, and any floor broker may take the other side of
customer's transaction through any Account of such person subject to its
being executed at prevailing prices in accordance with and subject to the
limitations and conditions, if any, contained in applicable rules and
regulations.
26. AUTHORIZATION TO TRANSFER FUNDS (OPTIONAL)
Without limiting other provisions herein, Carr is authorized to transfer
from any segregated Account subject to the Commodity Exchange Act carried
by Carr for the Customer to any other Account carried by Carr for the
Customer such amount of excess funds as in Carr's judgment may be
necessary at any time to avoid a margin call or to reduce a debit balance
in said Account. It is understood that Carr will confirm in writing each
such transfer of funds made pursuant to this authorization within a
reasonable time after such transfer.
27. ELECTRONIC TRANSMISSION OF STATEMENTS (OPTIONAL)
Customer elects and consents to receive transmission of statements of
transactions and statements of account solely by electronic means,
including without limitation, by electronic mail or facsimile. Customer
shall not incur any costs or fees in connection with the receipt of such
statements by electronic transmission. Customer shall receive such
statements by electronic transmission until such time as it revokes its
consent in writing to Carr.
28. SUBORDINATION AGREEMENT
(Applies only to Accounts with funds held in foreign currencies)
Funds of customers trading on United States contract markets may be held
in accounts denominated in a foreign currency with depositories located
outside or inside the United States or its territories if the customer is
domiciled in a foreign country or if the funds are held in connection with
contracts priced and settled in a foreign currency. Such accounts are
subject to the risk that events could occur which hinder or prevent the
availability of these funds for distribution to customers. Such accounts
also may be subject to foreign currency exchange rate risks.
If authorized below, Customer authorizes the deposit of funds into such
depositories. For customer domiciled in the United States, this
authorization permits the holding of funds in regulated accounts only if
such funds are used to margin, guarantee, or secure positions in such
contracts or accrue as a result of such positions. In order to avoid the
possible dilution of other customer funds, a customer agrees by accepting
this subordination agreement that his claims based on such funds will be
subordinated as described below in the unlikely event both of the
following conditions are met: (1) Carr is placed in receivership or
bankruptcy, and (2) there are insufficient funds available for
distribution denominated in the foreign currency as to which the customer
has a claim to satisfy all claims against those funds.
By initialing the Subordination Agreement below, Customer agrees that if
both of the conditions listed above occur, its claim against Carr's assets
attributable to funds held overseas in a particular foreign currency may
be satisfied out of segregated customer funds held in accounts denominated
in dollars or other foreign currencies only after each customer whose
funds are held in dollars or in such other foreign currencies receives its
pro-rata portion of such funds. It is further agreed that in no event may
a customer whose funds are so held receive more than its pro-rata share of
the aggregate pool consisting of funds held in dollars, funds held in the
particular foreign currency, and non-segregated assets of Carr.
<PAGE>
OPTIONAL ELECTIONS/ACKNOWLEDGMENT
The following provisions, which are set forth in this Agreement, need not be
entered into to open the Account. Customer agrees that its optional elections
are as follows:
SIGNATURE REQUIRED FOR EACH ELECTION
ARBITRATION AGREEMENT ---------------------------------------
(Agreement Paragraph 24) (Date)
CONSENT TO TAKE THE OTHER SIDE OF
ORDERS (Agreement Paragraph 25) X /S/ MARK J. HAWLEY 12-1-97
---------------------------------------
(Date)
AUTHORIZATION TO TRANSFER
FUNDS (Agreement Paragraph 26) ---------------------------------------
(Date)
CONSENT TO RECEIVE STATEMENTS BY
ELECTRONIC TRANSMISSION ---------------------------------------
(Agreement Paragraph 27) (Date)
ACKNOWLEDGMENT OF SUBORDINATION
AGREEMENT (Agreement Paragraph 28) X /S/ MARK J. HAWLEY 12-1-97
---------------------------------------
(Required for accounts holding non-U.S. (Date)
currency)
HEDGE ELECTION
|_| Customer confirms that all transactions in the Account will represent bona
fide hedging transactions, as defined by the Commodity Futures Trading
Commission, unless Carr is notified otherwise not later than the time an
order is placed for the Account:
Pursuant to CFTC Regulation 190.06(d), Customer specifies and agrees, with
respect to hedging transactions in the Account, that in the unlikely event of
Carr's bankruptcy, it prefers that the bankruptcy trustee [check appropriate
box]:
A) |_| Liquidate all open contracts without first seeking instructions either
from or on behalf of Customer.
B) |_| Attempt to obtain instructions with respect to the disposition of all
open contracts.
(If neither box is checked, Customer shall be deemed to elect A.)
<PAGE>
ACKNOWLEDGMENT OF RECEIPT OF RISK DISCLOSURE STATEMENTS
The undersigned hereby acknowledges its separate receipt from Carr, and its
understanding of each of the following documents prior to opening of the
Account:
o Risk Disclosure Statement for Futures and Options
o LME Risk Warning Notice
o NYMEX ACCESS(SM) Risk Disclosure Statement
o Globex(R)Customer Information and Risk Disclosure Statement
o Project A(TM)Customer Information Statement
o Questions & Answers on Flexible Options Trading at the CBOT
o CME Average Pricing System Disclosure Statement
o Special Notice to Foreign Brokers and Foreign Traders
REQUIRED SIGNATURES
CUSTOMER
The undersigned has received, read, understands and agrees to all the provisions
of this Agreement and the separate risk disclosure statements enumerated above
and agrees to promptly notify Carr in writing if any of the warranties and
representations contained herein become inaccurate or in any way cease to be
true, complete and correct.
Dean Witter Global Perspective Portfolio L.P.
Customer name(s)
By: DEMETER MANAGEMENT CORPORATION
By: /s/ Mark J. Hawley December 1, 1997
---------------------------------------------------------------------------
Authorized signature(s) Date
Mark J. Hawley, President
- - --------------------------------------------------------------------------------
[If applicable, print name and title of signatory]
CARR FUTURES INC.
Accepted and Agreed:
Carr Futures Inc.
By: /s/ Bruce A. Beatus By: /s/ Susan Schultz
------------------------------------ -----------------------------
Title: Bruce A. Beatus, General Counsel Title: Associate General Counsel
-------------------------------- --------------------------
Date: December 1, 1997 Date: December 1, 1997
-------------------------------- --------------------------
EXHIBIT 10.06
CARR FUTURES INC.
10 South Wacker Drive, Suite 1100
Chicago, IL 60606
Facsimile (312) 441-4201
INTERNATIONAL FOREIGN EXCHANGE MASTER AGREEMENT
MASTER AGREEMENT dated as of August 1, 1997, by and between CARR
FUTURES INC., a Delaware corporation and DEAN WITTER GLOBAL PERSPECTIVE
PORTFOLIO L.P.
SECTION 1. DEFINITIONS
Unless otherwise required by the context, the following terms
shall have the following meanings in the Agreement:
"Agreement" has the meaning given to it in Section 2.2.
"Base Currency", as to a Party, means the Currency agreed to as
such in relation to it in Part VII of the Schedule.
"Business Day" means for purposes of: (i) clauses (i), (vii) and
(xii) of the definition of Event of Default, a day which is a
Local Banking Day for the Non-Defaulting Party; (ii) solely in
relation to delivery of a Currency, a day which is a Local Banking
Day in relation to that Currency; and (iii) any other provision of
the Agreement, a day which is a Local Banking Day for the
applicable Designated Offices of both Parties; provided, however,
that neither Saturday nor Sunday shall be considered a Business
Day for any purpose.
"Close-Out Amount" has the meaning given to it in Section 5.1.
"Close-Out Date" means a day on which, pursuant to the provisions
of Section 5.1, the Non-Defaulting Party closes out Currency
Obligations or such a close-out occurs automatically.
"Closing Gain", as to the Non-Defaulting Party, means the
difference described as such in relation to a particular Value
Date under the provisions of Section 5.1.
"Closing Loss", as to the Non-Defaulting Party, means the
difference described as such in relation to a particular Value
Date under the provisions of Section 5.1.
"Confirmation" means a writing (including telex, facsimile, or
other electronic means from which it is possible to produce a hard
copy) evidencing an FX Transaction, and specifying:
(i) the Parties thereto and their Designated Offices through
which they are respectively acting,
(ii) the amounts of the Currencies being bought or sold and by
which Party,
(iii) the Value Date, and
(iv) any other term generally included in such a writing in
accordance with the practice of the relevant foreign
exchange market.
"Credit Support" has the meaning given to it in Section 5.2.
"Credit Support Document", as to a Party (the "first Party"),
means a guaranty, hypothecation agreement, margin or
security agreement or document, or any other document
containing an obligation of a third party ("Credit Support
Provider") or of the first Party in favor of the other Party
supporting any obligations of the first Party under the
Agreement.
"Credit Support Provider" has the meaning given to it in the
definition of Credit Support Document.
"Currency" means money denominated in the lawful currency of any
country or the Ecu.
"Currency Obligation" means any obligation of a Party to deliver a
Currency pursuant to an FX Transaction or the application of
Section 3.3(a) or (b).
"Custodian" has the meaning given to it in the definition of
Insolvency Proceeding.
"Defaulting Party" has the meaning given to it in the definition
of Event of Default.
"Designated Office(s)", as to a Party, means the office or offices
specified in Part II of the Schedule.
"Effective Date" means the date of this Master Agreement.
"Event of Default" means the occurrence of any of the following
with respect to a Party (the "Defaulting Party", the other Party
being the "Non-Defaulting Party"):
(i) the Defaulting Party shall (A) default in any payment when due
under the Agreement to the Non-Defaulting Party with respect
to any Currency Obligation and such failure shall continue for
two (2) Business Days after the Non-Defaulting Party has given
the Defaulting Party written notice of non-payment, or (B)
fail to perform or comply with any other obligation assumed by
it under the Agreement and such failure is continuing thirty
(30) days after the Non-Defaulting Party has given the
Defaulting Party written notice thereof;
(ii)the Defaulting Party shall commence a voluntary Insolvency
Proceeding or shall take any corporate action to authorize any
such Insolvency Proceeding;
(iii) a governmental authority or self-regulatory organization
having jurisdiction over either the Defaulting Party or its
assets in the country of its organization or principal office
(A) shall commence an Insolvency Proceeding with respect to
the Defaulting Party or its assets or (B) shall take any
action under any bankruptcy, insolvency or other similar law
or any banking, insurance or similar law or regulation
governing the operation of the Defaulting Party which may
prevent the Defaulting Party from performing its obligations
under the Agreement as and when due;
(iv)an involuntary Insolvency Proceeding shall be commenced with
respect to the Defaulting Party or its assets by a person
other than a governmental authority or self-regulatory
organization having jurisdiction over either the Defaulting
Party or its assets in the country of its organization or
principal office and such Insolvency Proceeding (A) results in
the appointment of a Custodian or a judgment of insolvency or
bankruptcy or the entry of an order for winding-up,
liquidation, reorganization or other similar relief, or (B) is
not dismissed within five (5) days of its institution or
presentation;
(v) the Defaulting Party is bankrupt or insolvent, as defined
under any bankruptcy or insolvency law applicable to it;
(vi)the Defaulting Party fails, or shall otherwise be unable,
to pay its debts as they become due;
(vii) the Defaulting Party or any Custodian acting on behalf of
the Defaulting Party shall disaffirm, disclaim or repudiate
any Currency Obligation;
(viii) any representation or warranty made or given or deemed made
or given by the Defaulting Party pursuant to the Agreement or
any Credit Support Document shall prove to have been false or
misleading in any material respect as at the time it was made
or given or deemed made or given and one (1) Business Day has
elapsed after the Non-Defaulting Party has given the
Defaulting Party written notice thereof;
(ix)the Defaulting Party consolidates or amalgamates with or
merges into or transfers all or substantially all its assets
to another entity and (A) the creditworthiness of the
resulting, surviving or transferee entity is materially weaker
than that of the Defaulting Party prior to such action, or (B)
at the time of such consolidation, amalgamation, merger or
transfer the resulting, surviving or transferee entity fails
to assume all the obligations of the Defaulting Party under
the Agreement by operation of law or pursuant to an agreement
satisfactory to the Non-Defaulting Party;
(x) by reason of any default, or event of default or other similar
condition or event, any Specified Indebtedness (being
Specified Indebtedness of an amount which, when expressed in
the Currency of the Threshold Amount, is in aggregate equal to
or in excess of the Threshold Amount) of the Defaulting Party
or any Credit Support Provider in relation to it: (A) is not
paid on the due date therefor and remains unpaid after any
applicable grace period has elapsed, or (B) becomes, or
becomes capable at any time of being declared, due and payable
under agreements or instruments evidencing such Specified
Indebtedness before it would otherwise have been due and
payable;
(xi)the Defaulting Party is in breach of or default under any
Specified Transaction and any applicable grace period has
elapsed, and there occurs any liquidation or early termination
of, or acceleration of obligations under, that Specified
Transaction or the Defaulting Party (or any Custodian on its
behalf) disaffirms, disclaims or repudiates the whole or any
part of a Specified Transaction;
(xii) (A) any Credit Support Provider of the Defaulting Party or
the Defaulting Party itself fails to comply with or perform
any agreement or obligation to be complied with or performed
by it in accordance with the applicable Credit Support
Document and such failure is continuing after any applicable
grace period has elapsed; (B) any Credit Support Document
relating to the Defaulting Party expires or ceases to be in
full force and effect prior to the satisfaction of all
obligations of the Defaulting Party under the Agreement,
unless otherwise agreed in writing by the Non-Defaulting
Party; (C) the Defaulting Party or any Credit Support Provider
of the Defaulting Party (or, in either case, any Custodian
acting on its behalf) disaffirms, disclaims or repudiates, in
whole or in part, or challenges the validity of, any Credit
Support Document; (D) any representation or warranty made or
given or deemed made or given by any Credit Support Provider
of the Defaulting Party pursuant to any Credit Support
Document shall prove to have been false or misleading in any
material respect as at the time it was made or given or deemed
made or given and one (1) Business Day has elapsed after the
Non-Defaulting Party has given the Defaulting Party written
notice thereof; or (E) any event set out in (ii) to (vii) or
(ix) to (xi) above occurs in respect of any Credit Support
Provider of the Defaulting Party; or
(xiii) any other condition or event specified in Part IX of the
Schedule or in Section 8.14 if made applicable to the
Agreement in Part XI of the Schedule.
"FX Transaction" means any transaction between the Parties for the
purchase by one Party of an agreed amount in one Currency against
the sale by it to the other of an agreed amount in another
Currency, both such amounts either being deliverable on the same
Value Date or, if the Parties have so agreed in Part VI of the
Schedule, being cash-settled in a single Currency, which is or
shall become subject to the Agreement and in respect of which
transaction the Parties have agreed (whether orally,
electronically or in writing): the Currencies involved, the
amounts of such Currencies to be purchased and sold, which Party
will purchase which Currency and the Value Date.
"Insolvency Proceeding" means a case or proceeding seeking a
judgment of or arrangement for insolvency, bankruptcy,
composition, rehabilitation, reorganization, administration,
winding-up, liquidation or other similar relief with respect to
the Defaulting Party or its debts or assets, or seeking the
appointment of a trustee, receiver, liquidator, conservator,
administrator, custodian or other similar official (each, a
"Custodian") of the Defaulting Party or any substantial part of
its assets, under any bankruptcy, insolvency or other similar law
or any banking, insurance or similar law governing the operation
of the Defaulting Party.
"LIBOR", with respect to any Currency and date, means the average
rate at which deposits in the Currency for the relevant amount and
time period are offered by major banks in the London interbank
market as of 11:00 a.m. (London time) on such date, or, if major
banks do not offer deposits in such Currency in the London
interbank market on such date, the average rate at which deposits
in the Currency for the relevant amount and time period are
offered by major banks in the relevant foreign exchange market at
such time on such date as may be determined by the Party making
the determination.
"Local Banking Day" means (i) for any Currency, a day on which
commercial banks effect deliveries of that Currency in accordance
with the market practice of the relevant foreign exchange market,
and (ii) for any Party, a day in the location of the applicable
Designated Office of such Party on which commercial banks in that
location are not authorized or required by law to close.
"Master Agreement" means the terms and conditions set forth in
this Master Agreement, including the Schedule.
"Matched Pair Novation Netting Office(s)", in respect of a Party,
means the Designated Office(s) specified in Part V of the
Schedule.
"Non-Defaulting Party" has the meaning given to it in the
definition of Event of Default.
"Novation Netting Office(s)", in respect of a Party, means the
Designated Office(s) specified in Part V of the Schedule.
"Parties" means the parties to the Agreement, including their
successors and permitted assigns (but without prejudice to the
application of clause (ix) of the definition Event of Default);
and the term "Party" shall mean whichever of the Parties is
appropriate in the context in which such expression may be used.
"Proceedings" means any suit, action or other proceedings relating
to the Agreement or any FX Transaction.
"Schedule" means the Schedule attached to and part of this Master
Agreement, as it may be amended from time to time by agreement of
the Parties.
"Settlement Netting Office(s)", in respect of a Party, means the
Designated Office(s) specified in Part V of the Schedule.
"Specified Indebtedness" means any obligation (whether present or
future, contingent or otherwise, as principal or surety or
otherwise) in respect of borrowed money, other than in respect of
deposits received.
"Specified Transaction" means any transaction (including an
agreement with respect thereto) between one Party to the Agreement
(or any Credit Support Provider of such Party) and the other Party
to the Agreement (or any Credit Support Provider of such Party)
which is a rate swap transaction, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity
linked swap, equity or equity index option, bond option, interest
rate option, foreign exchange transaction, cap transaction, floor
transaction, collar transaction, currency swap transaction,
cross-currency rate swap transaction, currency option or any other
similar transaction (including any option with respect to any of
these transactions) or any combination of any of the foregoing
transactions.
"Spot Date" means the spot delivery day for the relevant pair of
Currencies as generally used by the relevant foreign exchange
market.
"Threshold Amount" means the amount specified as such for each
Party in Part VIII of the Schedule.
"Value Date" means, with respect to any FX Transaction, the
Business Day (or where market practice in the relevant foreign
exchange market in relation to the two Currencies involved
provides for delivery of one Currency on one date which is a Local
Banking Day in relation to that Currency but not to the other
Currency and for delivery of the other Currency on the next Local
Banking Day in relation to that other Currency ("Split
Settlement") the two (2) Local Banking Days in accordance with
that market practice) agreed by the Parties for delivery of the
Currencies to be purchased and sold pursuant to such FX
Transaction, and, with respect to any Currency Obligation, the
Business Day (or, in the case of Split Settlement, Local Banking
Day) upon which the obligation to deliver Currency pursuant to
such Currency Obligation is to be performed.
SECTION 2. FX TRANSACTIONS
2.1 Scope of the Agreement. The Parties (through their respective
Designated Offices) may enter into FX Transactions, for such
quantities of such Currencies, as may be agreed subject to the
terms of the Agreement; provided that neither Party shall be
required to enter into any FX Transaction with the other Party.
Unless otherwise agreed in writing by the Parties, each FX
Transaction entered into between Designated Offices of the Parties
on or after the Effective Date shall be governed by the Agreement.
Each FX Transaction between any two Designated Offices of the
Parties outstanding on the Effective Date which is identified in
Part I of the Schedule shall also be governed by the Agreement.
2.2 Single Agreement. This Master Agreement, the terms agreed
between the Parties with respect to each FX Transaction (and, to
the extent recorded in a Confirmation, each such Confirmation),
and all amendments to any of such items shall together form the
agreement between the Parties (the "Agreement") and shall together
constitute a single agreement between the Parties. The Parties
acknowledge that all FX Transactions are entered into in reliance
upon such fact, it being understood that the Parties would not
otherwise enter into any FX Transaction.
2.3 Confirmations. FX Transactions shall be promptly confirmed by
the Parties by Confirmations exchanged by mail, telex, facsimile
or other electronic means from which it is possible to produce a
hard copy. The failure by a Party to issue a Confirmation shall
not prejudice or invalidate the terms of any FX Transaction.
2.4 Inconsistencies. In the event of any inconsistency between the
provisions of the Schedule and the other provisions of the
Agreement, the Schedule will prevail. In the event of any
inconsistency between the terms of a Confirmation and the other
provisions of the Agreement, the other provisions of the Agreement
shall prevail, and the Confirmation shall not modify the other
terms of the Agreement.
SECTION 3. SETTLEMENT AND NETTING
3.1 Settlement. Subject to Sections 3.2 and 3.3, each Party shall
deliver to the other Party the amount of the Currency to be
delivered by it under each Currency Obligation on the Value Date
for such Currency Obligation.
3.2 Settlement Netting. If, on any date, more than one delivery of
a particular Currency under Currency Obligations is to be made
between a pair of Settlement Netting Offices, then each Party
shall aggregate the amounts of such Currency deliverable by it and
only the difference between these aggregate amounts shall be
delivered by the Party owing the larger aggregate amount to the
other Party, and, if the aggregate amounts are equal, no delivery
of the Currency shall be made.
3.3 Novation Netting.
(a) By Currency. If the Parties enter into an FX Transaction
through a pair of Novation Netting Offices giving rise to a
Currency Obligation for the same Value Date and in the same
Currency as a then existing Currency Obligation between the
same pair of Novation Netting Offices, then immediately upon
entering into such FX Transaction, each such Currency
Obligation shall automatically and without further action be
individually canceled and simultaneously replaced by a new
Currency Obligation for such Value Date determined as follows:
the amounts of such Currency that would otherwise have been
deliverable by each Party on such Value Date shall be
aggregated and the Party with the larger aggregate amount
shall have a new Currency Obligation to deliver to the other
Party the amount of such Currency by which its aggregate
amount exceeds the other Party's aggregate amount, provided
that if the aggregate amounts are equal, no new Currency
Obligation shall arise. This Section 3.3 shall not affect any
other Currency Obligation of a Party to deliver any different
Currency on the same Value Date.
(b) By Matched Pair. If the Parties enter into an FX Transaction
between a pair of Matched Pair Novation Netting Offices then
the provisions of Section 3.3(a) shall apply only in respect
of Currency Obligations arising by virtue of FX Transactions
entered into between such pair of Matched Pair Novation
Netting Offices and involving the same pair of Currencies and
the same Value Date.
3.4 General.
(a) Inapplicability of Sections 3.2 and 3.3. The provisions of
Sections 3.2 and 3.3 shall not apply if a Close-Out Date has
occurred or a voluntary or involuntary Insolvency Proceeding
or action of the kind described in clause (ii), (iii) or (iv)
of the definition of Event of Default has occurred without
being dismissed in relation to either Party.
(b) Failure to Record. The provisions of Section 3.3 shall apply
notwithstanding that either Party may fail to record the new
Currency Obligations in its books.
(c) Cutoff Date and Time. The provisions of Section 3.3 are
subject to any cut-off date and cut-off time agreed between
the applicable Novation Netting Offices and Matched Pair
Novation Netting Offices of the Parties.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS
4.1 Representations and Warranties. Each Party represents and
warrants to the other Party as of the Effective Date and as of the
date of each FX Transaction that: (i) it has authority to enter
into the Agreement (including such FX Transaction); (ii) the
persons entering into the Agreement (including such FX
Transaction) on its behalf have been duly authorized to do so;
(iii) the Agreement (including such FX Transaction) is binding
upon it and enforceable against it in accordance with its terms
(subject to applicable bankruptcy, reorganization, insolvency,
moratorium or similar laws affecting creditors' rights generally
and applicable principles of equity) and does not and will not
violate the terms of any agreements to which such Party is bound;
(iv) no Event of Default, or event which, with notice or lapse of
time or both, would constitute and Event of Default, has occurred
and is continuing with respect to it; and (v) it acts as principal
in entering into each FX Transaction; and (vi) if the Parties have
so specified in Part XV of the Schedule, it makes the
representations and warranties set forth in such Part XV.
4.2 Covenants. Each Party covenants to the other Party that: (i)
it will at all times obtain and comply with the terms of and do
all that is necessary to maintain in full force and effect all
authorizations, approvals, licenses and consents required to
enable it lawfully to perform its obligations under the Agreement;
(ii) it will promptly notify the other Party of the occurrence of
any Event of Default with respect to itself or any Credit Support
Provider in relation to it; and (iii) if the Parties have set
forth additional covenants in Part XVI of the Schedule, it makes
the covenants set forth in such Part XVI.
SECTION 5 CLOSE-OUT AND LIQUIDATION
5.1 Manner of Close-Out and Liquidation. (a) Close-Out. If an
Event of Default has occurred and is continuing, then the
Non-Defaulting Party shall have the right to close-out all, but
not less than all, outstanding Currency Obligations (including any
Currency Obligation which has not been performed and in respect of
which the Value Date is on or precedes the Close-Out Date) except
to the extent that in the good faith opinion of the Non-Defaulting
Party certain of such Currency Obligations may not be closed-out
under applicable law. Such close-out shall be effective upon
receipt by the Defaulting Party of notice that the Non-Defaulting
Party is terminating such Currency Obligations. Notwithstanding
the foregoing, unless otherwise agreed by the Parties in Part X of
the Schedule, in the case of an Event of Default in clause (ii),
(iii) or (iv) of the definition thereof with respect to a Party
and, if agreed by the Parties in Part IX of the Schedule, in the
case of any other Event of Default specified and so agreed in Part
IX with respect to a Party, close-out shall be automatic as to all
outstanding Currency Obligations, as of the time immediately
preceding the institution of the relevant Insolvency Proceeding or
action. The Non-Defaulting Party shall have the right to liquidate
such closed-out Currency Obligations as provided below.
(b) Liquidation. Liquidation of Currency Obligations terminated by
close-out shall be effected as follows:
(i) Calculating Closing Gain or Loss. The Non-Defaulting
------------------------------------ Party shall calculate
in good faith, with respect to each such terminated
Currency Obligation, except to the extent that in the good
faith opinion of the Non-Defaulting Party certain of such
Currency Obligations may not be liquidated as provided
herein under applicable law, as of the Close-Out Date or as
soon thereafter as reasonably practicable, the Closing
Gain, or, as appropriate, the Closing Loss, as follows:
(A) for each Currency Obligation calculate a "Close-Out
Amount" as follows:
(1) in the case of a Currency Obligation whose Value
Date is the same as or is later than the Close-Out
Date, the amount of such Currency Obligation; or
(2) in the case of a Currency Obligation whose Value
Date precedes the Close-Out Date, the amount of
such Currency Obligation increased, to the extent
permitted by applicable law, by adding interest
thereto from and including the Value Date to but
excluding the Close-Out Date at overnight LIBOR;
and
(3) for each such amount in a Currency other than the
Non-Defaulting Party's Base Currency, convert such
amount into the Non-Defaulting Party's Base
Currency at the rate of exchange at which, at the
time of the calculation, the Non-Defaulting Party
can buy such Base Currency with or against the
Currency of the relevant Currency Obligation for
delivery (x) if the Value Date of such Currency
Obligation is on or after the Spot Date as of such
time of calculation for the Base Currency, on the
Value Date of that Currency Obligation or (y) if
such Value Date precedes such Spot Date, for
delivery on such Spot Date (or, in either case, if
such rate of exchange is not available, conversion
shall be accomplished by the Non-Defaulting Party
using any commercially reasonable method); and
(B) determine in relation to each Value Date: (1) the sum
of all Close-Out Amounts relating to Currency
Obligations under which the Non-Defaulting Party would
otherwise have been entitled to receive the relevant
amount on that Value Date; and (2) the sum of all
Close-Out Amounts relating to Currency Obligations
under which the Non-Defaulting Party would otherwise
have been obliged to deliver the relevant amount to the
Defaulting Party on that Value Date; and
(C) if the sum determined under (B)(1) is greater than the
sum determined under (B)(2), the difference shall be
the Closing Gain for such Value Date; if the sum
determined under (B)(1) is less than the sum determined
under (B)(2), the difference shall be the Closing Loss
for such Value Date.
(ii) Determining Present Value. To the extent permitted by
--------------------------- applicable law, the
Non-Defaulting Party shall adjust the Closing Gain or
Closing Loss for each Value Date falling after the Close-Out
Date to present value by discounting the Closing Gain or
Closing Loss from and including the Value Date to but
excluding the Close-Out Date, at LIBOR with respect to the
Non-Defaulting Party's Base Currency as at the Close-Out
Date or at such other rate as may be prescribed by
applicable law.
(iii) Netting. The Non-Defaulting Party shall aggregate the
following amounts so that all such amounts are netted into a
single liquidated amount payable to or by the Non-Defaulting
Party: (x) the sum of the Closing Gains for all Value Dates
(discounted to present value, where appropriate, in
accordance with the provisions of Section 5.1(b)(ii)) (which
for the purposes of this aggregation shall be a positive
figure); and (y) the sum of the Closing Losses for all Value
Dates (discounted to present value, where appropriate, in
accordance with the provisions of Section 5.1(b)(ii)) (which
for the purposes of the aggregation shall be a negative
figure).
(iv) Settlement Payment. If the resulting net amount is positive,
it shall be payable by the Defaulting Party to the
Non-Defaulting Party, and if it is negative, then the
absolute value of such amount shall be payable by the
Non-Defaulting Party to the Defaulting Party.
5.2 Set-Off Against Credit Support. Where close-out and
liquidation occurs in accordance with Section 5.1, the
Non-Defaulting Party shall also be entitled (i) to set off the net
payment calculated in accordance with Section 5.1(b)(iv) which the
Non-Defaulting Party owes to the Defaulting Party, if any, against
any credit support or other collateral ("Credit Support") held by
the Defaulting Party pursuant to a Credit Support Document or
otherwise (including the liquidated value of any non-cash Credit
Support) in respect of the Non-Defaulting Party's obligations
under the Agreement or (ii) to set off the net payment calculated
in accordance with Section 5.1(b)(iv) which the Defaulting Party
owes to the Non-Defaulting Party, if any, against any Credit
Support held by the Non-Defaulting Party (including the liquidated
value of any non-cash Credit Support) in respect of the Defaulting
Party's obligations under the Agreement; provided that, for
purposes of either such set-off, any Credit Support denominated in
a Currency other than the Non-Defaulting Party's Base Currency
shall be converted into such Base Currency at the spot price
determined by the Non-Defaulting Party at which, at the time of
calculation, the Non-Defaulting Party could enter into a contract
in the foreign exchange market to buy the Non-Defaulting Party's
Base Currency in exchange for such Currency.
5.3 Other Foreign Exchange Transactions. Where close-out and
liquidation occurs in accordance with Section 5.1, the
Non-Defaulting Party shall also be entitled to close-out and
liquidate, to the extent permitted by applicable law, any other
foreign exchange transaction entered into between the Parties
which is then outstanding in accordance with provisions of Section
5.1, with each obligation of a Party to deliver a Currency under
such a foreign exchange transaction being treated as if it were a
Currency Obligation under the Agreement.
5.4 Payment and Late Interest. The net amount payable by one Party
to the other Party pursuant to the provisions of Sections 5.1 and
5.3 above shall be paid by the close of business on the Business
Day following the receipt by the Defaulting Party of notice of the
Non-Defaulting Party's settlement calculation, with interest at
overnight LIBOR from and including the Close-Out Date to but
excluding such Business Day (and converted as required by
applicable law into any other Currency, any costs of conversion to
be borne by, and deducted from any payment to, the Defaulting
Party). To the extent permitted by applicable law, any amounts
owed but not paid when due under this Section 5 shall bear
interest at overnight LIBOR (or, if conversion is required by
applicable law into some other Currency, either overnight LIBOR
with respect to such other Currency or such other rate as may be
prescribed by such applicable law) for each day for which such
amount remains unpaid. Any addition of interest or discounting
required under this Section 5 shall be calculated on the basis of
a year of such number of days as is customary for transactions
involving the relevant Currency in the relevant foreign exchange
market.
5.5 Suspension of Obligations. Without prejudice to the foregoing,
so long as a Party shall be in default in payment or performance
to the other Party under the Agreement and the other Party has not
exercised its rights under this Section 5, or, if "Adequate
Assurances" is specified as applying to the Agreement in Part XI
of the Schedule, during the pendency of a reasonable request to a
Party for adequate assurances of its ability to perform its
obligations under the Agreement, the other Party may, at its
election and without penalty, suspend its obligation to perform
under the Agreement.
5.6 Expenses. The Defaulting Party shall reimburse the
Non-Defaulting Party in respect of all out-of-pocket expenses
incurred by the Non-Defaulting Party (including fees and
disbursements of counsel, including attorneys who may be employees
of the Non-Defaulting Party) in connection with any reasonable
collection or other enforcement proceedings related to the
payments required under the Agreement.
5.7 Reasonable Pre-Estimate. The Parties agree that the amounts
recoverable under this Section 5 are a reasonable pre-estimate of
loss and not a penalty. Such amounts are payable for the loss of
bargain and the loss of protection against future risks and,
except as otherwise provided in the Agreement, neither Party will
be entitled to recover any additional damages as a consequence of
such losses.
5.8 No Limitation of Other Rights; Set-Off. The Non-Defaulting
Party's rights under this Section 5 shall be in addition to, and
not in limitation or exclusion of, any other rights which the
Non-Defaulting Party may have (whether by agreement, operation of
law or otherwise), and, to the extent not prohibited by law, the
Non-Defaulting Party shall have a general right of set-off with
respect to all amounts owed by each Party to the other Party,
whether due and payable or not due and payable (provided that any
amount not due and payable at the time of such set-off shall, if
appropriate, be discounted to present value in a commercially
reasonable manner by the Non-Defaulting Party). The Non-Defaulting
Party's rights under this Section 5.8 are subject to Section 5.7.
SECTION 6. FORCE MAJEURE, ACT OF STATE, ILLEGALITY OR IMPOSSIBILITY
6.1 Force Majeure, Act of State, Illegality or Impossibility. If
either Party is prevented from or hindered or delayed by reason of
force majeure or act of state in the delivery or receipt of any
Currency in respect of a Currency Obligation or if it becomes or,
in the good faith judgment of one of the Parties, may become
unlawful or impossible for either Party to make or receive any
payment in respect of a Currency Obligation, then the Party for
whom such performance has been prevented, hindered or delayed or
has become illegal or impossible shall promptly give notice
thereof to the other Party and either Party may, by notice to the
other Party, require the close-out and liquidation of each
affected Currency Obligation in accordance with the provisions of
Sections 5.1 and, for such purposes, the Party unaffected by such
force majeure, act of state, illegality or impossibility (or, if
both Parties are so affected, whichever Party gave the relevant
notice) shall perform the calculation required under Section 5.1
as if it were the Non-Defaulting Party. Nothing in this Section
6.1 shall be taken as indicating that the Party treated as the
Defaulting Party for the purpose of calculations required by
Section 5.1 has committed any breach or default.
6.2 Transfer to Avoid Force Majeure, Act of State, Illegality or
Impossibility. If Section 6.1 becomes applicable, unless
prohibited by law, the Party which has been prevented, hindered or
delayed from performing shall, as a condition to its right to
designate a close-out and liquidation of any affected Currency
Obligation, use all reasonable efforts (which will not require
such Party to incur a loss, excluding immaterial, incidental
expenses) to transfer as soon as practicable, and in any event
before twenty (20) days after it gives notice under Section 6.1,
all its rights and obligations under the Agreement in respect of
the affected Currency Obligations to another of its Designated
Offices so that such force majeure, act of state, illegality or
impossibility ceases to exist. Any such transfer will be subject
to the prior written consent of the other Party, which consent
will not be withheld if such other Party's policies in effect at
such time would permit it to enter into transactions with the
transferee Designated Office on the terms proposed, unless such
transfer would cause the other Party to incur a material tax or
other cost.
SECTION 7. PARTIES TO RELY ON THEIR OWN EXPERTISE
Each Party will be deemed to represent to the other Party on the
date on which it enters into an FX Transaction that (absent a
written agreement between the Parties that expressly imposes
affirmative obligations to the contrary for that FX Transaction):
(i)(A) it is acting for its own account, and it has made its own
independent decisions to enter into that FX Transaction and as to
whether that FX Transaction is appropriate or proper for it based
upon its own judgment and upon advice from such advisors as it has
deemed necessary; (B) it is not relying on any communication
(written or oral) of the other Party as investment advice or as a
recommendation to enter into that FX Transaction, it being
understood that information and explanations related to the terms
and conditions of an FX Transaction shall not be considered
investment advice or a recommendation to enter into that FX
Transaction; and (C) it has not received from the other Party any
assurance or guarantee as to the expected results of that FX
Transaction; (ii) it is capable of evaluating and understanding
(on its own behalf or through independent professional advice),
and understands and accepts, the terms, conditions and risks of
that FX Transaction; and (iii) the other Party is not acting as a
fiduciary or an advisor for it in respect of that FX Transaction.
SECTION 8. MISCELLANEOUS
8.1 Currency Indemnity. The receipt or recovery by either Party
(the "first Party") of any amount in respect of an obligation of
the other Party (the "second Party") in a Currency other than that
in which such amount was due, whether pursuant to a judgment of
any court or pursuant to Section 5 or 6, shall discharge such
obligation only to the extent that, on the first day on which the
first Party is open for business immediately following such
receipt or recovery, the first Party shall be able, in accordance
with normal banking practice, to purchase the Currency in which
such amount was due with the Currency received or recovered. If
the amount so purchasable shall be less than the original amount
of the Currency in which such amount was due, the second Party
shall, as a separate obligation and notwithstanding any judgment
of any court, indemnify the first Party against any loss sustained
by it. The second Party shall in any event indemnify the first
Party against any costs incurred by it in making any such purchase
of Currency.
8.2 Assignment. Neither Party may assign, transfer or charge or
purport to assign, transfer or charge its rights or its
obligations under the Agreement to a third party without the prior
written consent of the other Party and any purported assignment,
transfer or charge in violation of this Section 8.2 shall be void.
8.3 Telephonic Recording. The Parties agree that each Party and
its agents may electronically record all telephonic conversations
between them and that any such recordings may be submitted in
evidence to any court or in any Proceedings for the purpose of
establishing any matters pertinent to the Agreement.
8.4 Notices. Unless otherwise agreed, all notices, instructions
and other communications to be given to a Party under the
Agreement shall be given to the address, telex (if confirmed by
the appropriate answerback), facsimile (confirmed if requested) or
telephone number and to the individual or department specified by
such Party in Part III of the Schedule. Unless otherwise
specified, any notice, instruction or other communication given in
accordance with this Section 8.4 shall be effective upon receipt.
8.5 Termination. Each of the Parties may terminate the Agreement
at any time by seven (7) days' prior written notice to the other
Party delivered as prescribed in Section 8.4, and termination
shall be effective at the end of such seventh day; provided,
however, that any such termination shall not affect any
outstanding Currency Obligations, and the provisions of the
Agreement shall continue to apply until all the obligations of
each Party to the other under the Agreement have been fully
performed.
8.6 Severability. In the event any one or more of the provisions
contained in the Agreement should be held invalid, illegal or
unenforceable in any respect under the law of any jurisdiction,
the validity, legality and enforceability of the remaining
provisions contained in the Agreement under the law of such
jurisdiction, and the validity, legality and enforceability of
such and any other provisions under the law of any other
jurisdiction shall not in any way be affected or impaired thereby.
The Parties shall endeavor in good faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid
provisions the economic effect of which comes as close as possible
to that of the invalid, illegal or unenforceable provisions.
8.7 No Waiver. No indulgence or concession granted by a Party and
no omission or delay on the part of a Party in exercising any
right, power or privilege under the Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any
such right, power or privilege preclude any other or further
exercise thereof or the exercise of any other right, power or
privilege.
8.8 Master Agreement. Where one of the Parties to the Agreement is
domiciled in the United States, the Parties intend that the
Agreement shall be a master agreement, as referred to in 11 U.S.C.
Section 101(53B)(C) and 12 U.S.C. Section 1821(e)(8)(D)(vii).
8.9 Time of Essence. Time shall be of the essence in the
Agreement.
8.10 Headings. Headings in the Agreement are for ease of reference
only.
8.11 Payments Generally. All payments to be made under the
Agreement shall be made in same day (or immediately available) and
freely transferable funds and, unless otherwise specified, shall
be delivered to such office of such bank, and in favor of such
account as shall be specified by the Party entitled to receive
such payment in Part IV of the Schedule or in a notice given in
accordance with Section 8.4.
8.12 Amendments. No amendment, modification or waiver of the
Agreement will be effective unless in writing executed by each of
the Parties.
8.13 Credit Support. A Credit Support Document between the Parties
may apply to obligations governed by the Agreement. If the Parties
have executed a Credit Support Document, such Credit Support
Document shall be subject to the terms of the Agreement and is
hereby incorporated by reference in the Agreement. In the event of
any conflict between a Credit Support Document and the Agreement,
the Agreement shall prevail, except for any provision in such
Credit Support Document in respect of governing law.
8.14 Adequate Assurances. If the Parties have so agreed in Part XI
of the Schedule, the failure by a Party to give adequate
assurances of its ability to perform any of its obligations under
the Agreement within two (2) Business Days of a written request to
do so when the other Party has reasonable grounds for insecurity
shall be an Event of Default under the Agreement.
8.15 Correction of Confirmations. Unless either Party objects to
the terms contained in any Confirmation sent by the other Party or
sends a corrected Confirmation within three (3) Business Days of
receipt of such Confirmation, or such shorter time as may be
appropriate given the Value Date of the FX Transaction, the terms
of such Confirmation shall be deemed correct and accepted absent
manifest error. If the Party receiving a Confirmation sends a
corrected Confirmation within such three (3) Business Days, or
shorter period, as appropriate, then the Party receiving such
corrected Confirmation shall have three (3) Business Days, or
shorter period, as appropriate, after receipt thereof to object to
the terms contained in such corrected Confirmation.
SECTION 9. LAW AND JURISDICTION
9.1 Governing Law. The Agreement shall be governed by, and
construed in accordance with the laws of the jurisdiction set
forth in Part XII of the Schedule without giving effect to
conflict of laws principles.
9.2 Consent to Jurisdiction. (a) With respect to any Proceedings,
each Party irrevocably (i) submits to the non-exclusive
jurisdiction of the courts of the jurisdiction set forth in Part
XIII of the Schedule and (ii) waives any objection which it may
have at any time to the laying of venue of any Proceedings brought
in any such court, waives any claim that such Proceedings have
been brought in an inconvenient forum and further waives the right
to object, with respect to such Proceedings, that such court does
not have jurisdiction over such Party. Nothing in the Agreement
precludes either Party from bringing Proceedings in any other
jurisdiction nor will the bringing of Proceedings in any one or
more jurisdictions preclude the bringing of Proceedings in any
other jurisdiction.
(b) Each Party irrevocably appoints the agent for service of
process (if any) specified with respect to it in Part XIV of the
Schedule. If for any reason any Party's process agent is unable to
act as such, such Party will promptly notify the other Party and
within thirty (30) days will appoint a substitute process agent
acceptable to the other Party.
9.3 Waiver of Jury Trial. Each Party irrevocably waives any and
all right to trial by jury in any Proceedings.
9.4 Waiver of Immunities. Each Party irrevocably waives, to the
fullest extent permitted by applicable law, with respect to itself
and its revenues and assets (irrespective of their use or intended
use), all immunity on the grounds of sovereignty or other similar
grounds from (i) suit, (ii) jurisdiction of any courts, (iii)
relief by way of injunction, order for specific performance or for
recovery of property, (iv) attachment of its assets (whether
before or after judgment) and (v) execution or enforcement of any
judgment to which it or its revenues or assets might otherwise be
entitled in any Proceedings in the courts of any jurisdiction and
irrevocably agrees, to the extent permitted by applicable law,
that it will not claim any such immunity in any Proceedings.
<PAGE>
IN WITNESS WHEREOF, the Parties have caused the Agreement to be duly
executed by their respective authorized officers as of the date first written
above.
CARR FUTURES INC.
By /s/ Lawrence P. Anderson
-------------------------------------------
Name: Lawrence P. Anderson
Title: Executive Vice President
DEAN WITTER GLOBAL PERSPECTIVE PORTFOLIO L.P.
By Demeter Management Corporation
General Partner
By /s/ Mark Hawley
-------------------------------------------
Name: Mark Hawley
Title: President
<PAGE>
SCHEDULE
Schedule to the International Foreign Exchange Master Agreement
dated as of August 1, 1997
between Dean Witter Global Perspective Portfolio L.P. ("Party A") and Carr
Futures Inc. ("Party B").
Part I. Scope of Agreement
The Agreement shall apply to all foreign exchange transactions
outstanding between any two Designated Offices of the Parties on
the Effective Date.
It shall be understood that Party A shall typically be conducting
its foreign exchange transactions under the Agreement through its
Trading Advisors who shall be disclosed by Party A to Party B from
time to time by notice. The Trading Advisors will act as Party A's
agents for all purposes hereunder until further notice.
Part II. Designated Offices
Each of the following shall be a Designated Office:
Party A:
c/o Demeter Management
Corporation
Two World Trade Center
62nd Floor
New York, NY 10048
Attn: Robert E. Murray
Telephone No.: (212) 392-7404
Facsimile No.: (212) 392-2804
Party B:
Carr Futures Inc.
One World Trade Center
92nd Floor
New York, NY 10048
Attn: David Mangold
Telephone No.: (212) 453-6365
Facsimile No.: (212) 453-6361
Part III. Notices:
If sent to Party A:
Address: c/o Demeter Management Corporation
Two World Trade Center, 62nd Floor
New York, New York 10048
Telephone Number: (212) 392-7404
Facsimile Number: (212) 392-2804
Name of Individual or Department to whom Notices are to be sent:
Robert E. Murray
With copies to Party A's designated Trading Advisors.
If sent to Party B:
Address: Carr Futures Inc.
One World Trade Center
New York, New York 10048
Telephone Number: (212) 453-6365
Facsimile Number: (212) 453-6361
Name of Individual or Department to whom Notices are to be sent:
David Mangold
Part IV. Payment Instructions
Name of Bank and Office, Account Number and Reference with respect
to relevant Currencies:
Party A Party B
Citibank, N.A. Harris Trust & Savings Bank, Chicago
ABA: 021-000089 ABA: 071.000.288
Account Name: Dean Witter For the Account of Carr Futures Inc.,
Reynolds, Inc. Chicago Customer Segregated
Account No. 40611164 Account No. 203-908-9
FFC: Dean Witter Global FFC: Dean Witter Global
Perspective Portfolio L.P., Perspective Portfolio L.P.,
Account # (As Party B is Account # (As Party A is notified
notified from time to time) from time to time)
Part V. Netting
A. Settlement Netting Offices
Each of the following shall be a Settlement Netting Office:
Party A: Same as in Part II.
Party B: Same as in Part II.
B. Novation Netting Offices
Each of the following shall be a Novation Netting Office:
Party A: Same as in Part V-A.
Party B: Same as in Part V-A.
.
C. Matched Pair Novation Netting Offices
Each of the following shall be a Matched Pair Novation Netting
Office:
Party A: Not Applicable.
Party B: Not Applicable.
.
Part VI. Cash Settlement of FX Transactions
The following provision shall apply:
The definition of FX Transaction in Section 1 shall include
foreign exchange transactions for the purchase and sale of one
Currency against another but which shall be settled by the
delivery of only one Currency based on the difference between
exchange rates as agreed by the Parties as evidenced in a
Confirmation. Section 3.1 is modified so that only one Currency
shall be delivered for any such FX Transaction in accordance with
the formula agreed by the Parties. Section 5.1(b)(i)(A) is
modified so that the Close-Out Amount for any such FX Transaction
for which the cash settlement amount has been fixed on or before
the Close-Out Date pursuant to the terms of such FX Transaction
shall be equal to the Currency Obligation arising therefrom
(increased by adding interest in the manner provided in clause
(A)(2) if the Value Date precedes the Close-Out Date) and for any
such FX Transaction for which the cash settlement amount has not
yet been fixed on the Close-Out Date pursuant to the terms of such
FX Transaction, the Close-Out Amount shall be as determined by the
Non-Defaulting Party in good faith and in a commercially
reasonable manner.
Part VII. Base Currency
Party A's Base Currency is the United States dollar.
Party B's Base Currency is the United States dollar.
Part VIII. Threshold Amount
For purposes of clause (x) of the definition of Event of Default:
Party A's Threshold Amount is 3% of Party A's equity capital as
evidenced by Party A's latest financial statements.
Party B's Threshold Amount is 3% of Party B's equity capital as
evidenced by Party B's latest financial statements.
Part IX. Additional Events of Default
The following provisions which are checked shall constitute Events
of Default:
None.
[ ] (a) occurrence of garnishment or provisional garnishment
against a claim against the Defaulting Party acquired by
the Non-Defaulting Party. The automatic termination
provisions of Section 5.1 [shall] [shall not] apply to
either Party that is a Defaulting Party in respect of this
Event of Default.
[ ] (b) suspension of payment by the Defaulting Party or any
Credit Support provider in accordance with the Bankruptcy
Law or the Corporate Reorganization Law in Japan. The
automatic termination provision of Section 5.1 [shall]
[shall not] apply to either Party that is a Defaulting
Party in respect of this Event of Default.
[ ] (c) disqualification of the Defaulting Party or any Credit
Support Provider by any relevant bill clearing house
located in Japan. The automatic termination provision of
Section 5.2 [shall][shall not] apply to either Party that
is a Defaulting Party in respect of this Event of Default.
Part X. Automatic Termination
The automatic termination provision of Section 5.1 shall not apply
to Party A as Defaulting Party in respect of clause (ii), (iii) or
(iv) of the definition of Event of Default.
The automatic termination provision of Section 5.1 shall not apply
to Party B as Defaulting Party in respect of clause (ii), (iii) or
(iv) of the definition of Event of Default.
Part XI. Adequate Assurances
Adequate Assurances under Section 8.14 shall apply to the
Agreement.
Part XII. Governing Law
In accordance with Section 9.1 of the Agreement, the Agreement
shall be governed by the laws of the State of New York.
Part XIII. Consent to Jurisdiction
In accordance with Section 9.2 of the Agreement, each Party
irrevocably submits to the non-exclusive jurisdiction of the
courts of the State of New York and the United States District
Court located in the Borough of Manhattan in New York City.
Part XIV. Agent for Service of Process
Not applicable.
Part XV. Certain Regulatory Representations
A. The following FDICIA representation shall not apply:
1. Party A represents and warrants that it qualifies as a
"financial institution" within the meaning of the Federal
Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") by virtue of being a:
[ ] broker or dealer within the meaning of FDICIA;
[ ] depository institution within the meaning of FDICIA;
[ ] futures commission merchant within the meaning of
FDICIA;
[ ] "financial institution" within the meaning of
Regulation EE (see below).
2. Party B hereby represents and warrants that it qualifies as a
"financial institution" by virtue of being a:
[ ] broker or dealer within the meaning of FDICIA;
[ ] depository institution within the meaning of FDICIA;
[ ] futures commission merchant within the meaning of
FDICIA;
[ ] "financial institution" within the meaning of
Regulation EE (see below).
3. A Party representing that it is a "financial institution" as
that term is defined in 12 C.F.R. Section 231.3 of Regulation
EE issued by the Board of Governors of the Federal Reserve
System ("Regulation EE") represents that:
(a) it is willing to enter into financial contracts" as a
counterparty "on both sides of one or more financial
markets" as those terms are used in Section 231.3 of
Regulation EE; and
(b) during the 15-month period immediately preceding the
date it makes or is deemed to make this representation,
it has had on at least one (1) day during such period,
with counterparties that are not its affiliates (as
defined in Section 231.2(b) of Regulation EE) either:
(i) one or more financial contracts of a total gross
notional principal amount of $1 billion
outstanding; or
(ii)total gross mark-to-market positions (aggregated
across counterparties) of $100 million; and
(c) agrees that it will notify the other Party if it no
longer meets the requirements for status as a financial
institution under Regulation EE.
4. If both Parties are financial institutions in accordance with
the above, the Parties agree that the Agreement shall be a
netting contract, as defined in 12 U.S.C. Section 4402(14), and
each receipt or payment or delivery obligation under the
Agreement shall be a covered contractual payment entitlement or
covered contractual payment obligation, respectively, as
defined in FDICIA.
B. The following ERISA representation shall apply:
Each Party represents and warrants that it is neither (i) an
"employee benefit plan" as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974 which is subject to Part 4
of Subtitle B of Title I of such Act; (ii) a "plan" as defined in
Section 4975(e)(1) of the Internal Revenue Code of 1986; nor (iii)
an entity the assets of which are deemed to be assets of any such
"employee benefit plan" or "plan" by reason of the U.S. Department
of Labor's plan asset regulation, 29 C.F.R.
Section 2510.3-101.
C. The following CFTC eligible swap participant representation shall
apply:
Each Party represents and warrants that it is an "eligible swap
participant" under, and as defined in, 17 C.F.R. Section 35.1.
Part XVI. Additional Covenants
The following covenant[s] shall apply to the Agreement:
A. Party B covenants and agrees that when Party A or an agent for
Party A requests Party B to an FX Transaction, Party B will do a
back-to-back principal trade and the price of the FX Transaction
to Party A will be the same price at which Party B effects its
back-to-back trade with its counterparty, and Party B will not
profit from any mark-up or spread on the FX Transaction.
B. With respect to each FX Transaction, Party A shall pay to Party B
a round-turn fee as follows. For FX Transactions not having a
Party B-imposed forward date, the fee shall be $4.30 per
round-turn ($2.15 per side) for each $85,000 equivalent of the
Currency in the FX Transaction. For FX Transactions with a Party
B-imposed forward date restriction, the fee shall be $5.00 per
round-turn ($2.50 per side) for each $135,000 equivalent of the
Currency in the FX Transaction.
C. Party A shall post margin with Party B with respect to all FX
Transactions in an amount equal to 3.0% of the value of such FX
Transactions on major currencies and 5.0% of the value of such FX
Transactions on minor currencies. All calls for margin shall be
made by Party B orally or by written notice to Dean Witter
Reynolds, and each such call for margin shall be met by Party A
within three hours after Dean Witter Reynolds has received such
call by wire transfer (by federal bank wire system) to the
account of Party B. Party B shall accept as margin any
instrument deemed acceptable as margin under the rules of the
Chicago Mercantile Exchange. Upon oral or written request by
Dean Witter Reynolds, Party B shall, within three hours after
receipt of any such request, wire transfer (by federal bank wire
system) to Dean Witter Reynolds for Party A's account any margin
funds held by Party B in excess of the margin requirements
specified hereby. Notwithstanding Part VI above, all payments,
unless otherwise agreed to, shall be paid in U.S. dollars.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from Dean Witter
Global Perspective Portfolio L.P. and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 17,208,838
<SECURITIES> 0
<RECEIVABLES> 165,812<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 19,185,631<F2>
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 19,185,631<F3>
<SALES> 0
<TOTAL-REVENUES> 4,169,027<F4>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,146,048
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,022,979
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,022,979
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,022,979
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Receivables include due from DWR of $111,358 and interest receivable of
$54,454.
<F2>In addition to cash and receivables, total assets include net unrealized
gain on open contracts of $1,810,981 and net option premiums of $0.
<F3>Liabilities include redemptions payable of $138,458, accrued management fees
of $47,934 and accrued administrative expenses of $11,996.
<F4>Total revenue includes realized trading revenue of $2,823,992, net change in
unrealized of $606,283 and interest income of $738,752.
</FN>
</TABLE>
