EXHIBIT 9.1
PORTFOLIO SUPPORT AND LICENSE AGREEMENT
This Agreement, dated as of September 1st, 2018, is made by and between Xxx
Xxxxx Research, Inc. a Florida corporation ("Consultant/Licensor"), and
Guggenheim Funds Distributor, LLC., ("GFD" or "Licensee") as sponsor to,
'Precious Metals & Miners Portfolio' UIT (the "Trust").
RECITALS
A. Consultant/Licensor is an investment adviser federally registered or exempt
under the Investment Advisers Act of 1940, as amended.
B. GFD sponsors, underwrites and distributes a wide array of unit investment
trusts ("UITs").
C. Consultant/Licensor has developed an investment strategy (which includes
without limitation selection criteria and methodology) set forth in
Schedule A (the "Strategy "), and Consultant/Licensor owns rights in and to
the Strategy and the proprietary data relating to the Strategy (such
rights, including without limitation, copyright, trademark and proprietary
rights and trade secrets, being hereinafter collectively referred to as the
"Intellectual Property ").
D. The parties desire to enter into an agreement whereby Consultant/Licensor,
through its employee, Xxxx Xxxxxxxxxx, shall provide to GFD a list of
securities selected in accordance with the Strategy (any securities
selected in accordance with the Strategy are referred to herein as
"Appropriate Securities") for deposit by GFD, in its discretion, into the
Trust.
E. Consultant/Licensor uses in commerce and has trade name, trademark and/or
service xxxx rights to the marks set forth in Schedule B (such rights are
individually and collectively referred to herein as the "Marks").
F. Licensee wishes to use the Strategy, Intellectual Property and the Marks in
connection with the Trust.
The parties agree as follows:
1. CONSULTANT/LICENSOR SERVICES
a. Selection of Securities. Prior to 12:00 p.m. (C.S.T.) on the third
business day before the September 20th, 2019 (such prior day being the
"Target Date"), Consultant/Licensor shall provide GFD with a list of
Appropriate Securities for deposit by GFD, in its sole discretion,
into the Trust. If Consultant/Licensor fails to provide GFD with a
list of Appropriate Securities prior to 12:00 p.m. on the Target Date:
(i) Consultant/Licensor shall be liable (and shall promptly pay) for
any costs and expenses incurred by GFD and the Trust resulting from
such delay and (ii) the Portfolio Fee and the License Fee set forth in
Section 4, below, shall each be reduced by one (1) basis point for
each 24-hour period of delay following 12:00 p.m. on the Target Date.
The date that the Appropriate Securities are deposited is referred to
herein as the "Deposit Date". GFD shall provide to Consultant/Licensor
the registration statement relating to the Trust (the "Registration
Statement"). Consultant/Licensor hereby covenants, represents and
warrants that, as of any Trust's Deposit Date, any list of Appropriate
Securities furnished pursuant to this Agreement shall be appropriate
for inclusion in such Trust based on the investment objectives and
criteria set forth in the Trust's Registration Statement.
Consultant/Licensor further covenants, represents and warrants that:
i. as of the Trust's Deposit Date, the Appropriate Securities and
any consultation it provides with respect to the Trust will be
consistent, and not conflict, with that provided to other
Consultant/Licensor clients with similar investment objectives
and strategies and a substantially similar investment program.
ii. the Appropriate Securities shall be selected based on a
completely objective, verifiable and non-discretionary strategy.
iii. the historical performance results of securities selected
pursuant to the Strategy will be based on all of the components
of the Strategy; and (iv) Consultant/Licensor shall not tamper
with such results on a historical or "going forward" basis.
b. Consultation. Consultant/Licensor shall:
i. upon GFD's reasonable request, provide GFD with information about
the Appropriate Securities as reasonably necessary for use by GFD
in preparing and updating Registration Statement disclosures and
marketing materials for the Trust; and,
ii. promptly review for accuracy and completeness information
provided and, disclosures made in the Registration Statement for
the Trust in which the Appropriate Securities are deposited.
c. Key Personnel and Standard of Performance. Consultant/Licensor
represents and warrants that:
i. the services will be performed with that degree of skill and care
generally observed by companies performing the same or similar
services and,
ii. the services will he provided in compliance with all applicable
statutes, acts, ordinances, laws, rules, regulations, codes and
standards.
d. Non-disclosure. Neither Consultant/Licensor nor any of its officers,
directors, employees, members or agents shall disclose in any manner
any information concerning the Trust, including any Appropriate
Securities, prior to the Trust's Deposit Date.
2. GRANT OF LICENSE
x. Xxxxx. Subject to the terms and conditions of this Agreement,
Consultant/Licensor hereby grants to the Licensee a non-transferable
(except as otherwise provided herein), license to use and refer to the
Consultant/Licensor Marks, Strategy and Intellectual Property (i) in
connection with the creation, issuance, sale, marketing and promotion
of the Trust in order to indicate (x) that the securities included in
the Trust are determined through the use of the Strategy, (y) the
historical performance of the Strategy, and (z) that
Consultant/Licensor is the source of the Strategy; (H) as may
otherwise be required by applicable laws, rules or regulations and
court orders or under this Agreement; and (iii) in the name of the
Trust (collectively, the "License").
b. Scope. Consultant/Licensor agrees that no person or entity (including
without limitation, the Trust) other than the Licensee shall need to
obtain a License in connection with the creation, issuance, sale,
marketing and promotion of the Trust and that Licensee has the right
to sublicense the License to the Trust or other appropriate party if
necessary or helpful in achieving the intent of this Agreement.
c. Ownership and Retention of Rights. The Licensee acknowledges that the
Strategy and the Consultant/Licensor Marks are the exclusive property
of Consultant/Licensor and that Consultant/Licensor has and retains
all Intellectual Property rights therein. Except as otherwise
specifically provided herein, Consultant/Licensor reserves all rights
to the Strategy and the Consultant/Licensor Marks, and this Agreement
shall not be construed to transfer to the Licensee any ownership right
to, or equity interest in, any of the Strategy or the
Consultant/Licensor Marks, or in any Intellectual Property or other
proprietary rights pertaining thereto.
d. Duty to Maintain. During the term of this Agreement,
Consultant/Licensor shall use its best efforts to maintain in full
force and effect U.S. federal registrations for the
Consultant/Licensor Marks.
3. TERM. The term of this Agreement shall commence as of the date set forth
above and shall remain in full force and effect until the termination of
the Trust.
4. FEES. As consideration for the services and license granted herein, GFD
shall pay to Consultant/ Licensor the following fees (which fees are Trust
costs that GFD expects the Trust to reimburse pursuant to the applicable
Trust Indenture):
a. a portfolio consulting fee equal to seven basis points (0.007%) of the
aggregate daily liquidation value of transactional sales (specifically
excluding fee-based sales) made during the primary offering period of
the Trust (the "Portfolio Fee"); and,
b. a license fee equal to seven basis points (0.007%) of the aggregate
daily liquidation value of transactional sales (specifically excluding
fee-based sales) made during the primary offering period of the Trust
(the "License Fee").
The Portfolio Fee and License Fee shall be paid on a one-time basis on or before
the 15th day of the second month after the close of the primary offering period.
Consultant/Licensor acknowledges that:
a) GFD may at any time determine that it does not wish to go forward with
a primary offering of the Trust and, if it so determines, GFD shall
not be responsible for the payment of any Portfolio Fee or License Fee
under this Agreement,
b) GFD may delay the Deposit Date in its discretion, and
c) GFD has full authority to determine the length of any offering period,
and may shorten or lengthen such offering period for any reason in its
sole discretion.
5. RELATIONSHIP OF THE PARTIES. This Agreement shall not be deemed to create
any partnership or joint venture between GFD and Consultant/Licensor, and
the services provided by Consultant/Licensor shall be as an independent
contractor and not as an employee or agent of GFD. Consultant/Licensor
shall have no authority whatsoever to bind GFD on any agreement or
obligation. Consultant/Licensor agrees that it shall not hold itself out as
an employee or agent of GFD.
6. CONFIDENTIALITY. A party may obtain proprietary, non-public information
concerning the other party ("Confidential Information") during the term of
this Agreement. Each party shall keep the other party's Confidential
Information confidential and shall not use such information in any manner
except as required to perform its obligations hereunder. In no event shall
the following information be deemed a disclosing party's Confidential
Information:
a. information that is or becomes generally available to the public other
than as a result of disclosure by the receiving party;
b. information that was within the receiving party's possession prior to
its being furnished by the disclosing party;
c. information that becomes available to the receiving party from a third
party who is not, to the receiving party's knowledge, bound by an
obligation of confidentiality to the disclosing party and
d. information that is independently developed by the receiving party
without the receiving party violating its obligations under this
agreement. Notwithstanding the above, a receiving party may disclose
the disclosing party's confidential Information to the receiving
party's existing and potential affiliates and its and their respective
employees, agents, advisors, directors and officers (collectively,
"Representatives"), provided, however, such Representatives are made
aware of this Agreement and agree to comply with the terms of this
Agreement as if they were parties hereto. Each party acknowledges that
a breach of this Section would cause permanent and irreparable damage
for which money damages would be an inadequate remedy. Therefore, each
party shall be entitled to seek equitable relief in the event of any
breach of the provisions of this Section in addition to all other
remedies available at law or in equity.
7. INDEMNIFICATION. Each party shall defend, indemnify and hold harmless the
other party from any and all liabilities, losses, damages, costs and
expenses (including reasonable attorneys' fees) which the other party
suffers by reason of any claims, demands, actions or suits brought by a
third party arising from the other party's
a. failure to comply with this Agreement or,
b. breach of a representation or warranty contained in this Agreement.
8. LIMITATION OF LIABILITY. Neither party shall be liable to the other party
for any liabilities, damages, costs and expenses except for those resulting
from the other party's breach of a representation or warranty contained in
this Agreement, gross negligence or willful misfeasance. Notwithstanding
the above, in no event shall either party be liable to the other party for
any punitive, special, indirect, consequential, incidental or similar
damages or losses, regardless of how such damages or losses arise. Nothing
in this paragraph is intended to limit a party's right to indemnification
under Section 7.
9. REPRESENTATIONS AND WARRANTIES.
a. GFD. Guggenheim represents, warrants and covenants that it is a
limited liability company duly formed, existing and in good standing
under the laws of the state of Delaware, with full right, power and
authority to enter into and perform this Agreement, and the execution
and performance of this Agreement does not conflict with or violate
any agreement to which it is a party, any court order to which it is
subject, or its governing documents.
b. Consultant/Licensor. Consultant/Licensor represents, warrants and
covenants that it is a corporation duly formed, existing and in good
standing under the laws of the state of its incorporation, with full
right, power and authority to enter into and perform this Agreement,
and the execution and performance of this Agreement does not conflict
with or violate any agreement to which it is a party, any court order
to which it is subject, or any of its organizational documents.
Consultant/Licensor further represents, warrants and covenants that it
is an investment adviser federally registered or exempt from
registration under the Investment Advisers Act of 1940, as amended,
and any applicable state statutes, (iii) the Strategy, Intellectual
Property and Consultant/Licensor Marks are the exclusive property of
Consultant/Licensor and, (iv) neither the selection of Appropriate
Securities pursuant to the Strategy nor the Intellectual Property or
the License granted pursuant to this Agreement infringes or otherwise
violates any third-party's intellectual property rights or other
proprietary rights.
10. MISCELLANEOUS.
a. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Illinois without
giving effect to any conflict of laws principles.
b. Arbitration. Except as to any matter as to which the parties may seek
equitable relief, any dispute arising out of this Agreement shall be
settled by arbitration in accordance with the Rules of the American
Arbitration Association. Any such arbitration shall be held in the
city of Chicago, in the State of Illinois. The arbitrator of any such
controversy shall not have the authority to modify or alter any
express condition or provision of this Agreement. Any arbitration
award rendered under this Section shall be final and binding, and
judgment may be entered on the award in any court of competent
jurisdiction.
c. Entire Agreement. This Agreement, including the Appendices and
Schedules hereto, constitutes the entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior
oral or written agreements relating to the subject matter hereof.
d. Assignment. Consultant/Licensor shall not assign any rights or
delegate any obligations under this Agreement without the prior
written consent of GED, which consent shall not be unreasonably
withheld. Any assignment in violation of this provision shall be void.
GED may assign its rights and obligations under this Agreement to any
successor in interest to all or substantially all of GFD's assets.
This Agreement shall be binding upon the heirs, successors, legal
representatives and permitted assigns of the parties.
e. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of
which together shall constitute one and the same instrument.
f. Survival. The provisions of Sections 6, 7, 8, 10(a), 10(b), and 10(f)
shall survive the termination of this Agreement.
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first set forth above.
CONSULTANT/LICENSOR
/s/ Xxxxxx Xxxxxxxx
--------------------
Xxxxxx Xxxxxxxx
Chief Product Officer
GUGGENHEIM FUNDS DISTRIBUTOR LLC AS SPONSOR OF THE TRUST
/s/ Xxxxxx Xxxxxxxx
--------------------
Xxxxxx Xxxxxxxx
Managing Director
SCHEDULE A
THE STRATEGY
INVESTMENT OBJECTIVE
Strategy suggests the opportunity to outperform the existing static benchmark
and strategy while keeping the bulk of the existing offering intact.
Benchmark: Philadelphia Stock Exchange Gold & Silver Sector Index
PRINCIPAL INVESTMENT STRATEGY
Two objective, data- driven models, a miners equity selection sub-model, and a
metals vs. equities overlay model, which are then combined to produce the final
holdings.
SOURCE UNIVERSE
25-35 ETFs and common equities, both U.S. and foreign-listed where the benchmark
is the Philadelphia Stock Exchange Gold & Silver Sector Index
SECURITY SELECTION
Precious metals: gold, silver, and platinum ETFs
Equities: stock portfolio of high-quality, global metals & mining producers
PRECIOUS METALS ALLOCATION (Metals) A static allocation of 55% gold, 35% silver,
10% platinum is used for the physical metals. The allocation is roughly based on
the global production of said metals. The implementation of this strategy is via
U.S.- listed ETFs. This allocation is never more than 50% of the total fund
allocation.
COMBINED MODEL & PORTFOLIO CONSTRUCTION The total value of the portfolio is
allocated to 25-35 securities (combination of ETFs and common equities) based on
the above-mentioned models. The final portfolio utilizes an optimization process
which identifies the most favorable mining equities, while taking into account
position size constraints (i.e. max of 5% in any single equity position),
regional constraints, and diversification goals. A proven, repeatable process
enables consistent implementation across the UIT
SCREENING APPLICATION
ASSET ALLOCATION (Miners vs. Metals)
The first decision is the allocation between the physical, precious metals and
the common equity of the mining companies. The model takes 1 of 3 potential
positions for the duration of the UIT series:
o Bullish model allocation: 90% equities / 10% precious metals
o Neutral model allocation: 70% equities / 30% precious metals
o Bearish model allocation: 50% equities / 50% precious metals.
The model is biased towards the equity allocation, which produces superior total
returns in most two year segments. Based on NDR's deep macroeconomic research
and data/factor library, nine factors were chosen to best evaluate the relative
attractiveness of the precious metals versus the equity of the companies which
mine them.
Factors used in the miners versus metals model are: o Gold prices (i.e. rising
gold prices indicates market stress and favors the metal over equity) o Silver
prices
o Platinum prices
o Geopolitical risk index (i.e. rising risk favors the precious metals
over equity)
o S&P 500
o U.S. dollar
o U.S. 10-year Treasury yield
o U.S. 10 - 1 year Treasury yield spread
o Crude oil price
Each of the factors produces a bullish (+1), neutral (0), or bearish (-1) signal
based on a transformation of the data. The factors are aggregated to produce a
single score, from which the final allocation is drawn. A high score would
result in the bullish equity scenario (90% equities and 10% precious metals) and
vice- versa.
STOCK SELECTION (Miner's Model)
Individual equities are selected from a custom universe of global stocks that
are producing gold, silver, or platinum (according to a Reuters fundamental
database).
NDR maintains and routinely evaluates a library of 200+ factors for selecting
global equities. The library consists of fundamental, macroeconomic, and
price/market-based factors. NDR selected 10 different factors that were
empirically tested for efficacy in selecting mining companies.
o Net income (i.e. increasing is better)
o Operating cash flow
o Operating cash flow - Net Income (numerator of accrual ratio)
o Revenue
o Gross profit margin
o Debt ratio (i.e. lower is better)
o Current ratio
Each stock receives a composite score (worst = 0, best = 10) which is the sum of
the 10 indicators. The highest scored securities are most likely to appear in
the final portfolio and/or have higher weightings.
SCHEDULE B
CONSULTANT/LICENSOR MARKS
Xxx Xxxxx Research Inc. Logo
