-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Mv5S8cL4D6kl4yB8NJ6o2ZhKK2uMkwDwr9XAXGVK5SdGuLErg3WuBJsbtSVdqgiC LPEZuhm10C+X9pVJubAdLw== 0000898733-98-000214.txt : 19980515 0000898733-98-000214.hdr.sgml : 19980515 ACCESSION NUMBER: 0000898733-98-000214 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980514 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WORLD MONITOR TRUST SERIES A CENTRAL INDEX KEY: 0001051822 STANDARD INDUSTRIAL CLASSIFICATION: INVESTORS, NEC [6799] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-43033 FILM NUMBER: 98619435 BUSINESS ADDRESS: STREET 1: ONE NEW YORK PLAZA 13TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10292-2013 BUSINESS PHONE: 2127787866 MAIL ADDRESS: STREET 1: ONE NEW YORK PLAZA 13TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10292-2013 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WORLD MONITOR TRUST SERIES B CENTRAL INDEX KEY: 0001051823 STANDARD INDUSTRIAL CLASSIFICATION: ASSET-BACKED SECURITIES [6189] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-43041 FILM NUMBER: 98619625 BUSINESS ADDRESS: STREET 1: ONE NEW YORK PLAZA 13TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10292-2013 BUSINESS PHONE: 2127787866 MAIL ADDRESS: STREET 1: ONE NEW YORK PLAZA 13TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10292-2013 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WORLD MONITOR TRUST SERIES C CENTRAL INDEX KEY: 0001051824 STANDARD INDUSTRIAL CLASSIFICATION: INVESTORS, NEC [6799] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-43043 FILM NUMBER: 98619436 BUSINESS ADDRESS: STREET 1: ONE NEW YORK PLAZA 13TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10292-2013 BUSINESS PHONE: 2127787866 MAIL ADDRESS: STREET 1: ONE NEW YORK PLAZA 13TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10292-2013 10-Q 1 WORLD MONITOR TRUST--SERIES A, B, C SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1998 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________________ to ______________________ Commission file number: 333-43033 333-43041 333-43043 WORLD MONITOR TRUST-SERIES A WORLD MONITOR TRUST-SERIES B WORLD MONITOR TRUST-SERIES C - -------------------------------------------------------------------------------- (Exact name of Registrant as specified in its charter) 13-3985040 13-3985041 Delaware 13-3985042 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) One New York Plaza, 13th Floor, New York, New York 10292 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (212) 778-7866 N/A - -------------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report Indicate by check CK 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 ___ No _CK_ Part I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS WORLD MONITOR TRUST (a Delaware Business Trust) STATEMENTS OF FINANCIAL CONDITION MARCH 31, 1998 (Unaudited) - -------------------------------------------------------------------------------- ASSETS
Series A Series B Series C -------- -------- -------- Cash................................................................ $ 1,000 $ 1,000 $ 1,000 -------- -------- -------- -------- -------- -------- TRUST CAPITAL General Interests (10 Interests issued and outstanding for each Series A, B and C, respectively).................................. $ 1,000 $ 1,000 $ 1,000 -------- -------- -------- -------- -------- -------- - -------------------------------------------------------------------------------------------------------
STATEMENTS OF FINANCIAL CONDITION DECEMBER 31, 1997 (Unaudited)
ASSETS Series A Series B Series C -------- -------- -------- Cash................................................................ $ 1,000 $ 1,000 $ 1,000 -------- -------- -------- -------- -------- -------- TRUST CAPITAL General Interests (10 Interests issued and outstanding for each Series A, B and C, respectively).................................. $ 1,000 $ 1,000 $ 1,000 -------- -------- -------- -------- -------- -------- - -------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements. 2 WORLD MONITOR TRUST (a Delaware Business Trust) NOTES TO STATEMENT OF FINANCIAL CONDITION MARCH 31, 1998 (Unaudited) A. General The Trust, Trustee, Managing Owner and Affiliates World Monitor Trust (the 'Trust') is a business trust organized under the laws of Delaware on December 17, 1997. The Trust has not yet commenced operations. The Trust will terminate on December 31, 2047 unless terminated sooner as provided in the Second Amended and Restated Declaration of Trust and Trust Agreement. The Trust was formed to engage in the speculative trading of a diversified portfolio of futures, forward and options contracts and may, from time to time, engage in cash and spot transactions. The trustee of the Trust is Wilmington Trust Company. The managing owner is Prudential Securities Futures Management Inc. (the 'Managing Owner'), a wholly owned subsidiary of Prudential Securities Incorporated ('PSI') which, in turn, is a wholly owned subsidiary of Prudential Securities Group Inc. PSI is the selling agent for the Trust as well as the commodity broker ('Commodity Broker') of the Trust. The Offering Beneficial interests in the Trust ('Interests') are being offered pursuant to Rule 415 of Regulation C under the Securities Act of 1933 in three separate and distinct series ('Series'): Series A, B and C. The assets of each Series are segregated from the other Series, separately valued and independently managed. Up to $100,000,000 of Interests ('Subscription Maximum'); $34,000,000 for Series A and $33,000,000 each for Series B and C, are being offered to investors who meet certain established suitability standards, with a minimum initial subscription of $5,000 per subscriber or, for any investment made on behalf of an individual retirement account ('IRA'), the minimum initial subscription is $2,000. A subscriber may purchase Interests in any one or a combination of Series, although the minimum purchase for any single Series is $1,000. Initially, the Interests for each Series are being offered through no later than July 24, 1998, representing up to 120 days after the date of the Prospectus ('Initial Offering Period'). Each Series may commence operations at any time if the minimum amount of Interests have been sold before the end of the Initial Offering Period is reached ('Subscription Minimum'). The Subscription Minimum is $4,000,000 for Series A and $3,000,000 each for Series B and C. If the Subscription Minimum is not sold for any Series during the Initial Offering Period, the subscription amount (which will be held in escrow) plus interest will be returned to the subscriber. The price per Interest during the Initial Offering Period is $100. Thereafter, or until the Subscription Maximum for each Series is sold ('Continuous Offering Period'), each Series' Interests will continue to be offered on a weekly basis at the Net Asset Value per Interest. Additional purchases may be made in $100 increments. To date, $1,000 has been contributed to each Series by the Managing Owner and in return the Managing Owner has received 10 General Interests in each Series. The Managing Owner is required to maintain at least a one percent interest in the capital, profits and losses of each Series so long as it is acting as the Managing Owner, and it will make such contributions (and in return will receive such General Interests) as are necessary to effect this requirement. The Trading Advisors Each Series has its own professional commodity trading advisor that will make that Series' trading decisions. The Managing Owner, on behalf of the Trust, entered into advisory agreements with Eagle Trading Systems, Inc., Eclipse Capital Management, Inc. and Hyman Beck & Company, Inc. (each a 'Trading Advisor') to make the trading decisions for Series A, B and C, respectively. Each advisory agreement may be terminated at the discretion of the Managing Owner. The Managing Owner will allocate one hundred percent of the proceeds from the initial offering of each Series' Interests to the Trading Advisor for that Series and it is currently contemplated that each Series' Trading Advisor will continue to be allocated one hundred percent of additional capital raised for that Series during the continuous offering of Interests. 3 Exchanges, Redemptions and Termination Once trading commences, Interests owned in one Series may be exchanged, without any charge, for Interests of one or more other Series on a weekly basis for as long as Interests in those Series are being offered to the public. Exchanges are made at the applicable Series' then current net asset value per Interest as of the close of business on the Friday immediately preceding the week in which the exchange request is effected. The exchange of Interests will be treated as a redemption of Interests in one Series (with the related tax consequences) and the simultaneous purchase of Interests in the Series exchanged into. Redemptions will be permitted on a weekly basis. Interests redeemed on or before the end of the first and second successive six-month periods after their effective dates will be subject to a redemption fee of four percent and three percent, respectively, of the net asset value at which they are redeemed. Redemption fees will be paid to the Managing Owner. In the event that the estimated net asset value per Interest of a Series at the end of any business day, after adjustments for distributions, declines by fifty percent or more since the first day of a fiscal year, the Series will terminate. B. Summary of Significant Accounting Policies Basis of accounting The books and records of each Series are maintained on the accrual basis of accounting in accordance with generally accepted accounting principles. Income taxes Each Series is not required to provide for, or pay, any federal or state income taxes. Income tax attributes that arise from their operations will be passed directly to the individual limited owners including the Managing Owner. Each Series may be subject to other state and local taxes in jurisdictions in which they operate. Profit and loss allocations and distributions Each Series will allocate profits and losses for both financial and tax reporting purposes to the owners weekly on a pro rata basis based on each owner's Interests outstanding during the week. Distributions will be made at the sole discretion of the Managing Owner on a pro rata basis in accordance with the respective capital balances of the owners; however, the Managing Owner does not presently intend to make any distributions. C. Fees Organizational, offering, general and administrative costs PSI or its affiliates pay the costs of organizing each Series and offering their Interests as well as administrative costs incurred by the Managing Owner or its affiliates for services it performs for each Series. These costs include, but are not limited to, those discussed in Note D below. Routine legal, audit, postage, and other routine third party administrative costs also are paid by PSI or its affiliates. Management and incentive fees Each Series will pay its Trading Advisor a management fee at an annual rate of two percent of each Series' net asset value allocated to its management. The management fee will be determined weekly and the sum of such weekly amounts will be paid monthly. Each Series will also pay its Trading Advisor a quarterly incentive fee equal to twenty-three percent for each of Series A and C and twenty percent for Series B of such Trading Advisor's 'New High Net Trading Profits' (as defined in each advisory agreement). The incentive fee will also accrue weekly. Commissions The Managing Owner and the Trust entered into a brokerage agreement (the 'Brokerage Agreement') with PSI to act as Commodity Broker for each Series whereby each Series will pay a fixed fee for brokerage services rendered at an annual rate of 7.75% of each Series' net asset value. The fee will be determined weekly and the sum of such weekly amounts will be paid monthly. From this fee, PSI will pay all organizational, offering, general and administrative expenses discussed above, execution costs (i.e., floor brokerage expenses, give-up charges and NFA, clearing and exchange fees), as well as compensation to employees who sell Interests in each Series. 4 D. Related Parties The Managing Owner or its affiliates perform services for each Series which include but are not limited to: brokerage services, accounting and financial management, investor communications, printing and other administrative services. Except for costs related to brokerage services, PSI or its affiliates pay the costs of these services in addition to costs of organizing the Trust and offering its Interests as well as the routine operational, administrative, legal and auditing fees. All of the proceeds of this offering are received in the name of each Series and deposited and maintained in cash in segregated trading accounts maintained for each Series at PSI. Except for that portion of any Series' assets that is deposited as margin to maintain forward currency contract positions as further discussed below, each Series' assets will be maintained either on deposit with PSI or, for margin purposes, with the various exchanges on which the Series are permitted to trade. PSI will credit each Series with one hundred percent of the interest earned on the average net assets of each Series on deposit at PSI. Each Series, acting through its Trading Advisor, may execute over-the-counter, spot, forward and option foreign exchange transactions with PSI. PSI will then engage in back-to-back trading with an affiliate, Prudential-Bache Global Markets Inc. ('PBGM'). PBGM will attempt to earn a profit on such transactions. PBGM will keep its prices on foreign currency competitive with other interbank currency trading desks. All over-the-counter currency transactions will be conducted between PSI and each Series pursuant to a line of credit. PSI may require that collateral be posted against the marked-to-market position of each Series. E. Credit and Market Risk Since each Series' business will be to trade futures, forward (including foreign exchange transactions) and options contracts, their capital will be at risk due to changes in the value of these contracts (market risk) or the inability of counterparties to perform under the terms of the contracts (credit risk). Futures, forward and options contracts involve varying degrees of off-balance sheet risk; and changes in the level of volatility of interest rates, foreign currency exchange rates or the market values of the contracts (or commodities underlying the contracts) will frequently result in changes in each Series' unrealized gain (loss) on open commodity positions to be reflected in the statements of financial condition. Each Series' exposure to market risk will be influenced by a number of factors including the relationships among the contracts to be held by each Series as well as the liquidity of the markets in which the contracts are to be traded. Futures and options contracts are traded on organized exchanges and are thus distinguished from forward contracts which are entered into privately by the parties. The credit risks associated with futures and options contracts are typically perceived to be less than those associated with forward contracts because exchanges typically provide clearinghouse arrangements in which the collective credit (subject to certain limitations) of the members of the exchanges is pledged to support the financial integrity of the exchange. On the other hand, each Series must rely solely on the credit of their broker (PSI) with respect to forward transactions. Each Series will present unrealized gains and losses on open forward positions as a net amount in the statements of financial condition because they have a master netting agreement with PSI. The Managing Owner will attempt to minimize both credit and market risks by requiring each Series' Trading Advisor to abide by various trading limitations and policies. The Managing Owner will monitor compliance with these trading limitations and policies which include, but are not limited to, executing and clearing all trades with creditworthy counterparties (currently, PSI will be the sole counterparty or broker); limiting the amount of margin or premium required for any one commodity or all commodities; and generally limiting transactions to contracts which are traded in sufficient volume to permit the taking and liquidating of positions. The Managing Owner may impose additional restrictions (through modifications of such trading limitations and policies) upon the trading activities of the Trading Advisors as it, in good faith, deems to be in the best interests of each Series. PSI, when acting as each Series' futures commission merchant in accepting orders for the purchase or sale of domestic futures and options contracts, will be required by Commodity Futures Trading Commission ('CFTC') regulations to separately account for and segregate as belonging to each Series all assets of each Series relating to domestic futures and options trading and is not to commingle such assets with other assets of PSI. Part 30.7 of the CFTC regulations also will require PSI to secure assets of each Series related to foreign futures and options trading. There are no segregation requirements for assets related to forward trading. 5 WORLD MONITOR TRUST (a Delaware Business Trust) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources As of March 31, 1998 the minimum required capital of $4,000,000 for Series A and $3,000,000 each for Series B and C through their public offering of Interests had not yet become available. This caused the Trust to have limited funds on March 31, 1998. Each Series plans to use the funds raised from investors by means of this offering of Interests for the speculative trading of a diversified portfolio consisting of commodity futures, forward and options contracts and may, from time to time, engage in cash and spot transactions. Additional Interests of each Series will continue to be offered on a weekly basis at the Net Asset Value per Interest until the Subscription Maximum of $34,000,000 for Series A and $33,000,000 each for Series B and C is sold. Each Series' net assets will be held in accounts at PSI. Except for that portion of any Series' assets that is deposited as margin to maintain forward currency contract positions, each Series' assets will be maintained either on deposit with PSI or, for margin purposes, with the various exchanges on which the Series are permitted to trade. PSI will credit each Series with one hundred percent of the interest earned on the average net assets of each Series on deposit with PSI. The commodities contracts are subject to periods of illiquidity because of market conditions, regulatory considerations and other reasons. For example, commodity exchanges limit fluctuations in commodity futures contract prices during a single day by regulations referred to as 'daily limits.' During a single day, no trades may be executed at prices beyond the daily limit. Once the price of a futures contract for a particular commodity has increased or decreased by an amount equal to the daily limit, positions in the commodity can neither be taken nor liquidated unless traders are willing to effect trades at or within the limit. Commodity futures prices have occasionally moved the daily limit for several consecutive days with little or no trading. Such market conditions could prevent a Series from promptly liquidating its commodity futures positions. Since each Series' business will be to trade futures, forward (including foreign exchange transactions) and options contracts, its capital will be at risk due to changes in the value of these contracts (market risk) or the inability of counterparties to perform under the terms of the contracts (credit risk). The Managing Owner will attempt to minimize these risks by requiring the Series' Trading Advisors to abide by various trading limitations and policies. See Note E to the financial statements for a further discussion of the credit and market risks associated with each Series' futures, forward and options contracts. No Series has, nor do they expect to have, any capital assets. Future redemptions and contributions will impact the amount of funds available for investment in commodity contracts in subsequent periods. Results of Operations Through March 31, 1998, no Series had operations. 6 PART II. OTHER INFORMATION Item 1. Legal Proceedings--There are no material legal proceedings pending by or against the Registrant or the Managing Owner Item 2. Changes in Securities--None Item 3. Defaults Upon Senior Securities--None Item 4. Submission of Matters to a Vote of Security Holders--None Item 5. Other Information--None Item 6. Exhibits and Reports on Form 8-K (a) Exhibits-- 3.1 and 4.1-- Second Amended and Restated Declaration of Trust and Trust Agreements of World Monitor Trust dated as of March 17, 1998 (incorporated by reference to Exhibit 3.1 and 4.1 to each of Series A, B and C's Registration Statements on Form S-1, File Nos. 333-43033, 333-43041 and 333-43043, respectively, dated as of March 23, 1998) 4.2-- Form of Request for Redemption (incorporated by reference to Exhibit 4.2 to each of Series A, B and C's Registration Statements on Form S-1, File Nos. 333-43033, 333-43041 and 333-43043, respectively, dated as of March 23, 1998) 4.3-- Form of Exchange Request (incorporated by reference to Exhibit 4.3 to each of Series A, B and C's Registration Statements on Form S-1, File Nos. 333-43033, 333-43041 and 333-43043, respectively, dated as of March 23, 1998) 4.4-- Form of Subscription Agreement (incorporated by reference to Exhibit 4.4 to each of Series A, B and C's Registration Statements on Form S-1, File Nos. 333-43033, 333-43041 and 333-43043, respectively, dated as of March 23, 1998) 10.1-- Form of Escrow Agreement among the Trust, Prudential Securities Futures Management, Inc., Prudential Securities Incorporated and the Bank of New York (incorporated by reference to Exhibit 10.1 to each of Series A, B and C's Registration Statements on Form S-1, File Nos. 333-43033, 333-43041 and 333-43043, respectively, dated as of March 23, 1998) 10.2-- Form of Brokerage Agreement among the Trust and Prudential Securities Incorporated (incorporated by reference to Exhibit 10.2 to each of Series A, B and C's Registration Statements on Form S-1, File Nos. 333-43033, 333-43041 and 333-43043, respectively, dated as of March 23, 1998) 10.3-- Form of Advisory Agreement among the Trust, Prudential Securities Futures Management Inc., and each Trading Advisor (incorporated by reference to Exhibit 10.3 to each of Series A, B and C's Registration Statements on Form S-1, File Nos. 333-43033, 333-43041 and 333-43043, respectively, dated as of March 23, 1998) 10.4-- Form of Representation Agreement Concerning the Representation Statement and the Prospectus among the Trust, Prudential Securities Futures Management Inc., Prudential Securities Incorporated, Wilmington Trust Company and the Trading Advisors (incorporated by reference to Exhibit 10.4 to each of Series A, B and C's Registration Statements on Form S-1, File Nos. 333-43033, 333-43041 and 333-43043, respectively, dated as of March 23, 1998) 7 10.5-- Form of Net Worth Agreement between Prudential Securities Futures Management Inc. and Prudential Securities Group Inc. (incorporated by reference to Exhibit 10.5 to each of Series A, B and C's Registration Statements on Form S-1, File Nos. 333-43033, 333-43041 and 333-43043, respectively, dated as of March 23, 1998) 10.6-- Form of Foreign Currency Addendum to Brokerage Agreement between World Monitor Trust and Prudential Securities Incorporated (filed herewith) 27.1-- Financial Data Schedule (filed herewith) (b) Reports on Form 8-K--None 8 SIGNATURES Pursuant to the requirements 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. WORLD MONITOR TRUST--SERIES A WORLD MONITOR TRUST--SERIES B WORLD MONITOR TRUST--SERIES C By: Prudential Securities Futures Management Inc. A Delaware corporation, Managing Owner By: /s/ Steven Carlino Date: May 14, 1998 ---------------------------------------- Steven Carlino Vice President Chief Accounting Officer for the Registrant 9 EX-10.6 2 EXHIBIT 10.6 FORM OF FOREIGN CURRENCY ADDENDUM This addendum ("Addendum") supplements the terms and conditions of the Futures Account Client Agreement ("Agreement") entered into by and between World Monitor Trust ("Customer") and Prudential Securities Incorporated ("PSI") as of , 199 . In consideration of PSI agreeing to enter into various forward and spot foreign currency and foreign currency options transactions (collectively "Forex Contracts") with Customer, the parties agree as follows: 1. Relationship to Agreement. Except as otherwise provided in this Addendum, the terms and conditions of the Agreement shall remain in full force and effect, and shall apply to all Forex Contracts that PSI may transact with Customer. If there are any conflicts between the terms and conditions of the Agreement and this Addendum, the terms and conditions of this Addendum will govern with respect to Forex Contracts. 2. Forex Contracts. PSI and Customer will each act as principals with respect to Forex Contracts. Forex Contracts will be transacted within the non-regulated portion of Customer's PSI futures account. Customer acknowledges that Forex Contracts are not traded on or guaranteed by a regulated exchange or its clearing house and accordingly, acknowledges that trading in Forex Contracts is not subject to the same regulatory or financial protections as is trading in futures contracts. Customer represents and warrants that (a) it is authorized to enter into Forex Contracts, (b) it understands that as principal opposite PSI the parties will each be relying on the creditworthiness of the other, (c) each Forex Contract will be individually negotiated as to its material economic terms, and (d) PSI will be entitled to rely on any instructions, notices and communications that it reasonably believes to have originated with any authorized representative of Customer, including a person with a Power of Attorney over trading decisions, and Customer shall be bound thereby. 3. Limits. This Addendum does not evidence a commitment of PSI or Customer to enter into Forex Contracts generally or to enter into any specific Forex Contract. PSI shall have the right to set limits on the number of Forex Contracts that PSI will transact with Customer. PSI reserves the right to increase or decrease such limits as, in PSI's good faith judgment, market and economic conditions warrant, including but not limited to the material change in Customer's credit rating or Customer's country or sovereign rating by an internationally recognized rating agency. Additionally, PSI reserves the right, exercisable at any time when warranted by market conditions in PSI's sole discretion, to refuse acceptance of Customer's orders. 4. Confirmations. Upon entering into a Forex Contract with Customer, PSI shall verbally confirm the economic terms to Customer followed by a written confirmation (via letter, telex, facsimile or telecopier at PSI's election) (the "Confirmation") specifying the amount of foreign currency bought or sold by Customer against U.S. dollars or another foreign currency, the exchange rate, and the date on which, and the location where, the currency is to be delivered. Confirmations shall be conclusive and binding on Customer unless Customer promptly notifies PSI of any objection within three (3) days of receipt by Customer of the Confirmation. 5. Collateral; Settlement. PSI reserves the right to require customer to deposit collateral with respect to Forex Contract transactions. All Forex Contracts will be transacted pursuant to a line of credit or will be otherwise collateralized at PSI's option, and will be subject to the netting provisions set forth in Section 8 below. All payments due under a Forex Contract shall be made by wire transfer on the delivery date specified in the Confirmation in immediately available funds in the designated currency. In the event that either party's performance of its payment obligations shall be interrupted or delayed by reason of war, riot, civil commotion, sovereign conduct or other acts of state, the time of performance of such party's obligations shall be extended for the period of such interruption. 6. Dispute Resolution. Any dispute between Customer and PSI relating to Customer's Forex Contracts shall be settled and determined by an arbitration panel of either the New York Stock Exchange, the National Association of Securities Dealers Inc., or the National Futures Association as Customer may elect, or if the foregoing qualified forums decline to arbitrate such dispute, before such forum as may be agreed upon between the parties. At such time that PSI notifies Customer of its intent to submit a claim to arbitration Customer will have seven business days to elect a qualified forum for conducting the proceeding. If Customer fails to notify PSI of its selection within seven business days, PSI shall have the absolute right to make such selection. 7. Governing Law. The interpretation and enforcement of this Addendum (and the Forex Contracts covered hereunder) and the rights, obligations and remedies of the parties shall be governed by and construed in accordance with the laws of the State of New York, without regard to principles of choice of law. 8. Netting Provisions. (a) Netting by Novation. Unless separately agreed and set out in the Confirmation regarding a specific Forex Contract, each Forex Contract made between Customer and PSI will immediately, upon its being entered into, be netted with all then existing Forex Contracts between Customer and PSI for the same paired currencies having the same delivery date. Each Forex Contract containing an obligation to deliver that has been netted pursuant to the foregoing shall immediately be deemed cancelled and simultaneously replaced by a single transaction. For purposes hereof, each Forex Contract shall be deemed a Forex Contract from and after its inception for all purposes. 2 (b) Payment Netting. If on any delivery date more than one delivery of a particular currency is to be made between Customer and PSI pursuant to a Forex Contract, each party shall aggregate the amounts deliverable by it and only the difference, if any, between these aggregate amounts shall be delivered by the party owing the larger amount to the other party. (c) Discharge and Termination of Options. Any call option or any put option written by a party will automatically be terminated and discharged, in whole or in part, as applicable, against a call option or a put option, respectively, written by the other party, such termination and discharge to occur automatically upon the payment in full of the premium payable in respect of such options; provided that such termination and discharge may occur only in respect of options: (i) each being with respect to the same put currency and the same call currency; (ii) each having the same expiration date and expiration time; (iii) each being of the same style, i.e. both being America Style options or both being European Style options; (iv) each having the same strike price; and (v) neither of which shall have been exercised by delivery of a notice of exercise; and, upon the occurrence of such termination and discharge, neither party shall have any further obligation to the other party in respect of the relevant options or, as the case may be, parts thereof so terminated and discharged. In the case of a partial termination and discharge (i.e., where the relevant options are for different amounts of the currency), the remaining portion of the option that is partially discharged shall continue to be a Forex Contract for all purposes of this Addendum. (d) The occurrence at any time with respect to a party of any of the following events constitutes an event of default (an "Event of Default") with respect to such party: (i) Failure to Pay or Deliver. Failure by the party to make, when due, any payment under this Addendum or delivery required to be made by it if such failure is not remedied on or before the third business day after notice of such failure is given to such party; (ii) Breach of Agreement. Failure by the party to comply with or perform any agreement or obligation under this Addendum if such failure is not 3 remedied on or before the third business day after notice of such failure is given to the Defaulting Party: (iii) Failure to Provide Adequate Assurances. Failure by Customer to provide adequate assurances of its ability to perform any of its obligations under this Addendum within three business days of a written request from PSI to do so when PSI has reasonable grounds for insecurity; (iv) Bankruptcy. The Party - (A) is dissolved (other than pursuant to a consolidation, amalgamation or merger); (B) becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due; (C) makes a general assignment, arrangement or composition with or for the benefit of its creditors; (D) institutes or has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors' rights, or a petition is presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition (1) results in a judgment or insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation or (2) is not dismissed, discharged, stayed or restrained in each case within 30 days of the institution or presentation thereof; (E) has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger); (F) seeks or becomes subject to the appoint of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all of its assets; (G) has a secured party take possession of all or substantially all of its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all of its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 30 days thereafter; (H) causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in clauses (A) to (G) (inclusive); or (i) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts. (e) Close-Out Netting. If an Event of Default has occurred and is continuing in respect of a party ("Defaulting Party"), the other party ("Non-Defaulting Party") shall be entitled in its reasonable discretion, immediately and at any time and upon notice (unless such notice cannot practicably be provided in the circumstances) to close-out all Defaulting Party's Forex Contracts, and may in its reasonable discretion at any time or from time to time upon notice (unless such 4 notice cannot practicably be provided in the circumstances) liquidate all or some of Defaulting Party's collateral in Non-Defaulting Party's possession or control on any commercially reasonable basis and apply the proceeds of such collateral to any amounts owing by Defaulting Party to Non-Defaulting Party resulting from the close-out of such Forex Contracts. Any such close-out of Forex Contracts shall be accomplished by the Non-Defaulting Party: (i) closing-out each such Forex Contract so that each such Forex Contract is cancelled and calculating settlement amounts equal to the difference between the market value (as determined by PSI in good faith) and contract value of the Forex Contract or, in the case of options, settlement amounts equal to the current market premium for a comparable option (as determined by PSI in good faith); (ii) discounting each settlement amount then due to present value at the time of close-out (to take into account the period between the date of close-out and the maturity date of the relevant liquidated Forex Contract using an interest rate equal to PSI's cost of funds as determined by PSI in good faith); (iii) calculating an aggregate settlement payment in an amount equal to the net amount of such discounted settlement amounts as is then due from one party to the other; and (iv) setting off the settlement payments, if any, that Non-Defaulting Party owes Defaulting Party as a result of such liquidation and all collateral held by or for Non-Defaulting Party against the settlement payments, if any, that Defaulting Party owes to Non-Defaulting Party as a result of such close-out; so that all such amounts are netted to a single liquidated amount payable by one party to the other party, as appropriate, on the business day following the close-out. Notwithstanding anything to the contrary set forth above regarding the Non-Defaulting Party's rights to close-out and value Forex Contracts, if an event specified in clause (iv) of this sub-section (d) has occurred, then upon the occurrence of such event, all outstanding Forex Contracts will be deemed to have been automatically terminated as of the time immediately preceding the institution of the relevant proceeding, or the presentation of the relevant petition upon the occurrence with respect to the party to such specified event. The rights of PSI under this sub-section (e) shall be in addition to, and not in limitation or exclusion of any other rights that PSI may have (whether by agreement, operation of law or otherwise). 9. Liquidated Damages. The parties agree that the amount owing by one party to the other party hereunder is a reasonable computation of the loss or gain it would have incurred or received on the obligations between the parties governed by this Addendum and is not a penalty. Such amount is payable as liquidated damages to the other party for the loss of the benefit of its bargains and neither party shall be entitled to recover additional damages in respect of such loss of the bargain. The determination of such amount shall be conclusive, absent manifest error. 5 10. Understanding of Risks. Each party will be deemed to represent to the other party on the date on which it enters into a Forex Contract that it has the capability to evaluate and understand (on its own behalf or through independent professional advice), and does understand, the terms, conditions and risks of that Forex Contract and is willing to accept those terms and conditions and to assume (financially and otherwise) those risks. 11. Termination. Each party may terminate this Addendum at any time on three (3) business days prior written notice. No such termination shall affect any Forex Contracts entered into prior to such termination and this Addendum shall continue to govern any such Forex Contract. - ----------------------- ----------------------------------- Date Name of Customer By:________________________________ Title:_____________________________ Signature:_________________________ Accepted By Prudential Securities Incorporated By:________________________________ Date:______________________ Title:_____________________________ Signature:_________________________ 6 EX-27 3 ART. 5 FDS FOR 1ST QUARTER 10-Q
5 The Schedule contains summary financial information extracted from the financial statements for World Monitor Trust--Series A and is qualified in its entirety by reference to such financial statements 1051822 World Monitor Trust--Series A 1 Dec-31-1998 Jan-1-1998 Mar-31-1998 3-Mos 1,000 0 0 0 0 1,000 0 0 1,000 0 0 0 0 0 1,000 1,000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
EX-27.1 4 ART. 5 FDS FOR 1ST QUARTER 10-Q
5 The Schedule contains summary financial information extracted from the financial statements for World Monitor Trust--Series B and is qualified in its entirety by reference to such financial statements 1051823 World Monitor Trust--Series B 1 Dec-31-1998 Jan-1-1998 Mar-31-1998 3-Mos 1,000 0 0 0 0 1,000 0 0 1,000 0 0 0 0 0 1,000 1,000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
EX-27.2 5 ART. 5 FDS FOR 1ST QUARTER 10-Q
5 The Schedule contains summary financial information extracted from the financial statements for World Monitor Trust--Series C and is qualified in its entirety by reference to such financial statements 1051824 World Monitor Trust--Series C 1 Dec-31-1998 Jan-1-1998 Mar-31-1998 3-Mos 1,000 0 0 0 0 1,000 0 0 1,000 0 0 0 0 0 1,000 1,000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
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