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  DIVERSIFIED  FUTURES
FUND III 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.

                  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 DIVERSIFIED FUTURES
                                            FUND III 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 Diversified Futures Fund III 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



<PAGE>

Part IV.             Payment Instructions
                     --------------------

                     Name of Bank and Office,  Account Number and Reference with
                     respect to relevant Currencies:

<TABLE>
<CAPTION>
                     Party A                             Party B

                     <S>                                 <C>
                     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 Diversified       FFC:  Dean Witter Diversified
                     Futures Fund III L.P.,              Futures Fund III L.P.,
                     Account # (As Party B is notified   Account # (As Party A is notified
                                from time to time)                  from time to time)

</TABLE>

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.