EXPENSE LIMITATION AGREEMENT
Exhibit h(iii)
This EXPENSE LIMITATION AGREEMENT (this “Agreement”) is made and entered into as of this
30th day of October, 2009, by and between Federal Life Trust, a Delaware statutory trust
(the “Trust”), on behalf of each of its portfolios, the Federal Life Fixed Income Portfolio and the
Federal Life Equity Portfolio (each a “Portfolio” and collectively, the “Portfolios”), and Federal
Life Insurance Company (Mutual), an Illinois mutual insurance company (the “Sponsor”).
WHEREAS, the Trust is registered as an open-end management investment company under the
Investment Company Act of 1940, as amended (the “1940 Act”);
WHEREAS, the Trust is the sole investment medium of Federal Life Variable Annuity Account — A,
a separate account of the Sponsor, for its individual variable deferred annuity contract; and
WHEREAS, the Sponsor desires to reimburse certain operating expenses of the Portfolios to
maintain their expenses at specified levels as set forth below.
NOW, THEREFORE, in consideration of the promises and mutual covenants herein contained, it is
agreed between the parties hereto as follows:
1. Expense Limitation. The Sponsor agrees that in the event the operating expenses,
other than the management fee paid to FLC Investment Management Company, LLC, incurred by a
Portfolio in any fiscal year, but excluding the amount of any items not normally considered
operating expenses such as extraordinary expenses (including, but not limited to, legal claims and
liabilities and litigation costs and any indemnification related thereto) paid or payable by the
Portfolio (the “Portfolio Operating Expenses”), exceed 0.25% of the Portfolio’s average daily net
assets (the “Expense Limit”), the Sponsor shall reimburse the Portfolio for Portfolio Operating
Expenses by the extent of such excess. Operating expenses shall be calculated net of balance
credits and similar offset arrangements (excluding directed brokerage arrangements).
2. Recapture of Reimbursements. If, at the end of any year, there is no liability of
the Sponsor to pay a Portfolio any excess amount described in Section 1 above and, during the
preceding three fiscal years, any reimbursement has been made by the Sponsor to a Portfolio in
order to maintain the Portfolio Operating Expenses at the Expense Limit, the amount of such
reimbursement may be recaptured at the Sponsor’s election, provided that the Sponsor shall not be
entitled to recapture any amount that would cause the Portfolio Operating Expenses to exceed the
Expense Limit for that fee payment period.
3. Term and Termination. This Agreement shall remain in force for an initial term of
one year and shall automatically renew from year to year thereafter. This Agreement may, on sixty
(60) days written notice, be terminated at any time without the payment of any penalty, by the
Board of Trustees of the Trust, or by vote of a majority of the outstanding voting securities of
each Portfolio, individually, or by the Sponsor; provided, however, that the
obligations of the parties set forth in Section 2 of this Agreement shall survive for three (3)
years following the termination of this Agreement. This Agreement shall automatically terminate in
the event of its assignment.
4. Captions. The captions in this Agreement are included for convenience of reference
and in no other way define or delineate any of the provisions hereof or otherwise affect their
construction or effect.
5. Amendment. This Agreement may be amended only by a written instrument signed by
each of the parties hereto.
6. Governing Law. This Agreement shall be governed by, subject to and construed in
accordance with the 1940 Act and the Investment Advisers Act of 1940, and to the extent not
inconsistent, the laws of the State of Illinois without regard to the conflicts of law provisions
thereof. All terms used herein shall have the meanings ascribed to such terms by the 1940 Act, the
rules and regulations promulgated thereunder and the written positions of the Securities Exchange
Commission and its staff.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their
officers designated below as of the day and year first above written.
| FEDERAL LIFE TRUST |
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| By: | /s/ Xxxxxxx X. Xxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxx | |||
| Title: | President | |||
| FEDERAL LIFE INSURANCE COMPANY (MUTUAL) |
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| By: | /s/ Xxxxxxx X. Xxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxx | |||
| Title: | President | |||
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