EXHIBIT 9.1
PORTFOLIO LICENSE AGREEMENT
ZACKS INCOME ADVANTAGE STRATEGY, SERIES 41
This Agreement, dated as of February 14th, 2018, is made by and between
Zacks Investment Research, Inc., an Illinois corporation ("Zacks or Licensor"),
and Guggenheim Funds Distributors, LLC. ("Guggenheim" or "Licensee") as sponsor
to, Zacks Income Advantage Strategy, Series 41 (the "Trust").
RECITALS
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A. Guggenheim sponsors, underwrites and distributes a wide array of unit
investment trusts, including the Trust.
B. Licensor has developed an investment strategy (which includes without
limitation selection criteria and methodology) set forth in Schedule A (the
"Strategy"), and Licensor owns rights in and to the Strategy and the proprietary
data relating to the Strategy (such rights, including without limitation,
copyright, trademark or proprietary rights and trade secrets, being hereinafter
collectively referred to as the "Intellectual Property").
C. 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").
D. Licensee wishes to use the Strategy, Intellectual Property and the
related Marks in connection with the Trust.
The parties agree as follows:
1. Grant of License.
(a) Grant. Subject to the terms and conditions of this Agreement, Licensor
hereby grants to the Licensee a non-transferable (except as otherwise provided
herein), license to use and refer to the Licensor Marks, Intellectual Property
and the Strategy (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 Licensor is the source of the
Strategy; (ii) 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.
(b) Scope. Licensor agrees that no person or entity (including without
limitation, the Trust) other than the Licensee shall need to obtain a license
from Licensor with respect to the use of the Licensor Marks, Intellectual
Property or Strategy 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 Licensor Marks are the exclusive property of Licensor, and that
Licensor has and retains all intellectual property and other proprietary rights
therein. Except as otherwise specifically provided herein, Licensor reserves all
rights to the Strategy and the 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 Licensor Marks, or in any Intellectual Property
or other proprietary rights pertaining thereto.
(d) Duty to Maintain. During the term of this Agreement, Licensor shall use
its best efforts to maintain in full force and effect U.S. federal registrations
for the Licensor Marks.
2. 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.
3. Fees. As consideration for the license granted herein, Guggenheim shall
pay to Licensor a license fee equal to seven basis points (0.07%) 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") (which fee is a Trust cost that Guggenheim expects the Trust to
reimburse pursuant to the applicable Trust Indenture). The 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. Licensor acknowledges that (a) Guggenheim
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, Guggenheim shall not be
responsible for the payment of any License Fee under this Agreement, (b)
Guggenheim may delay the Deposit Date in its discretion, and (c) Guggenheim 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.
4. Relationship of the Parties. This Agreement shall not be deemed to
create any partnership or joint venture between Guggenheim and Licensor, and the
services provided by Licensor shall be as an independent contractor and not as
an employee or agent of Guggenheim. Licensor shall have no authority whatsoever
to bind Guggenheim on any agreement or obligation. Licensor agrees that it shall
not hold itself out as an employee or agent of Guggenheim.
5. 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. Any misuse or disclosure by a party's Representative not
permitted by this Agreement shall be deemed a breach of this Agreement by such
party. 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.
6. 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.
7. 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 6.
8. Representations and Warranties.
(a) Guggenheim. 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) Licensor. 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 organization, 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.
Licensor further represents, warrants and covenants that (i) the Strategy,
Intellectual Property and Licensor Marks are the exclusive property of Licensor,
(ii) none of either the Strategy, Intellectual Property, Licensor Marks or the
license granted pursuant to this Agreement infringes or otherwise violates any
third-party's intellectual property rights or other proprietary rights, and
(iii) neither Licensor nor any of its officers, directors, employees, members or
agents shall disclose in any manner any information concerning the Trust prior
to the Trust's deposit date.
9. 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 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) Licensor shall not assign any rights or delegate any obligations under
this Agreement without the prior written consent of Guggenheim, which consent
shall not be unreasonably withheld. Any assignment in violation of this
provision shall be void. Guggenheim may assign its rights and obligations under
this Agreement to any successor in interest to all or substantially all of
Guggenheim'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 5, 6, 7, 9(a), 9(b), 9(d) and 9(f)
shall survive the termination of this Agreement.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first set forth above.
ZACKS INVESTMENT RESEARCH, INC.
By /s/ Xxxxx Xxxxx
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Name: Xxxxx Xxxxx
Title:
GUGGENHEIM FUNDS DISTRIBUTORS, LLC.., AS
SPONSOR OF THE TRUST
By /s/ Xxxxxx Xxxxxxxx
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Name: Xxxxxx Xxxxxxxx
Title: Managing Director
SCHEDULE A
THE STRATEGY
These securities include only Closed-End Funds, common stocks, ADRs, MLPs
and REITs. From this initial universe, the Trust portfolio is compiled
using factors designed to identify securities in each segment below that
meet certain investment criteria.
MLP Segment
The MLP portion of the Trust's portfolio is reduced to 15 MLPs based on the
following pre-set quantitative investment criteria:
1. Eliminate those MLPs with a share price less than $10.00 and less than
$3 million in liquidity, where liquidity is defined as share price times
the most recent 3-month trading volume as reported to Zacks Investment
Research, Inc. by Sungard Reference Data Solutions, Inc.
2. Rank the remaining MLPs based on proportional short interest and
eliminate the 20% with the largest amount of short interest, where short
interest is defined as the percentage of shares outstanding that are held
short as reported to the New York Stock Exchange or the NASDAQ Stock Market
on the 15th day and last day of each month (the most recent reporting will
be used).
3. Rank the remaining MLPs based on descending dividend yield, where
dividend yield is defined as a company's annual dividend (trailing 12
months dividend as reported by Morningstar) divided by its current market
price, and select the highest 15 MLPs for inclusion in the Trust.
4. Weight these 15 MLPs based on dividend yield to make up 17.5% of the
Trust. To weight these MLPs based on dividend yield, add together each of
the 15 MLPs' dividend yields to determine the aggregate dividend yield
("Aggregate Dividend Yield") of the MLP Segment. Weight the 15 MLPs based
on their individual contribution to the Aggregate Dividend Yield of the MLP
Segment. For example, if the Aggregate Dividend Yield of the MLPs Segment
is 50%, a MLP with a dividend yield of 3.5% will have a weighting equal to
7% (in other words, 3.5% divided by 50% equals 7% of the Aggregate Dividend
Yield) of the MLP Segment.
Common Stock/ADR Segment
The Common Stock/ADR portion of the Trust's portfolio is reduced to 40
securities based on the following pre-set quantitative investment criteria:
1. Eliminate all securities from the Zacks Oil/Energy Sector.
2. Rank the remaining securities in this asset segment by descending market
capitalization and eliminate those securities not among the largest 1,000.
3. Eliminate those securities with a payout ratio of greater than 80%,
where payout ratio is defined as a company's most recent indicated annual
dividend per share (defined as the last dividend declared, multiplied by
four and then divided by the number of shares outstanding) divided by a
company's most recently reported earnings per share (defined as the
trailing 12-month actual earnings divided by the number of shares
outstanding), as reported by Zacks Investment Research.
4. From the remaining universe, eliminate those securities with a share
price less than $10.00 and less than $5 million in liquidity, where
liquidity is defined as share price times the most recent 3- month trading
volume as reported to Zacks Investment Research, Inc. by Sungard Reference
Data Solutions, Inc.
5. Rank the remaining securities based on descending dividend yield and
select the highest 40 securities for inclusion in the Trust.
6. Weight these 40 stocks based on their individual contribution to the
Aggregate Dividend Yield generated by the Common Stock/ADR Segment, which
will make up 37.5% of the Trust.
REIT Segment
The REIT portion of the Trust's portfolio is reduced to 20 REITs based on
the following pre-set quantitative investment criteria:
1. Eliminate those REITs with a share price less than $10.00 and less than
$5 million in liquidity, where liquidity is defined as share price times
the most recent 3-month trading volume as reported to Zacks Investment
Research, Inc. by Sungard Reference Data Solutions, Inc.
2. Rank the remaining REITs based on proportional short interest and
eliminate the 20% with the largest amount of short interest.
3. Rank the remaining REITs based on descending dividend yield and select
the highest 20 REITs for inclusion in the Trust.
4. Weight these 20 REITs based on their individual contribution to the
Aggregate Dividend Yield generated by the REIT Segment, which will make up
20% of the Trust.
5. Mortgage REITs cannot make up more than 50% of the REIT Segment (i.e.,
10% of the total portfolio). Should mortgage REITs make up more than 50% of
the REIT Segment, their weight will be limited 10% of the total portfolio
and the remainder will be proportionally weighted to the remaining REITs.
Oil & Energy Companies Segment
The Oil & Energy Companies portion of the Trust's portfolio is reduced to
10 stocks based on the following pre-set quantitative investment criteria:
1. Eliminate any Oil & Energy stocks with a share price less than $10.00
and less than $3 million in liquidity, where liquidity is defined as share
price times the most recent 3-month trading volume as reported to Zacks
Investment Research, Inc. by Sungard Reference Data Solutions, Inc.
2. Rank the remaining stocks based on descending dividend yield and select
the highest 10 stocks for inclusion in the Trust.
3. Weight these 10 stocks based on liquidity to make up 15% of the Trust.
To weight these stocks based on liquidity, add together each of the 10
stocks' liquidities to determine the aggregate liquidity ("Aggregate
Liquidity") of the Oil & Energy Companies Segment. Weight the 10 stocks
based on their individual contribution to the Aggregate Liquidity of the
Oil & Energy Companies Segment.
Closed-End Fund Segment
The Closed-End Fund portion of the Trust's portfolio is reduced to 15
Closed-End Funds based on the following pre-set quantitative investment
criteria:
1. Eliminate those Closed-End Funds that are not trading at a discount or
have less than $300 million in assets under management.
2. Eliminate those Closed-End Funds that have a dividend yield equal to
zero.
3. Eliminate those Closed-End Funds with less than $3 million in liquidity,
where liquidity is defined as share price times the most recent 3-month
trading volume as reported to Zacks Investment Research, Inc. by
Morningstar, Inc.
4. Rank the remaining Closed-End Funds based on descending dividend yield
and select the highest 15 Closed-End Funds for inclusion in the Trust.
5. Weight these 15 Closed-End Funds based on their individual contribution
to the Aggregate Dividend Yield generated by the Closed-End Fund Segment,
which will make up 10% of the Trust.
Final Portfolio Construction
The 5 asset segments are combined to form the total portfolio. A final
liquidity check is performed to ensure investability and portfolio
capacity. Any security eligible for inclusion in the Trust portfolio with
liquidity of less than the estimated total dollar value of the security as
of the Security Selection Date will be removed from the Trust portfolio and
replaced by the next highest ranked security in the same asset segment.
Individual securities are capped at a maximum weighting of 4%.
In the event that a security that has a pending cash or stock merger and
acquisition or bankruptcy which will lead to delisting the security is
chosen, that security will be removed and the next security in the list
will be selected for inclusion in the portfolio. Such events will be
determined by reviewing the announced merger and acquisition data from
Bloomberg and if the announced date falls before the Security Selection
Date, an announcement of an agreement to be acquired in whole for cash or
stock from an acquiring company or bankruptcy filing will cause removal.
In the event that a non-MLP security is selected which is not treated as a
corporation for U.S. tax purposes, that non-MLP security will be removed
and the next security in the list will be selected for inclusion in the
portfolio.
SCHEDULE B
LICENSOR MARKS
ZACKS LOGO
