FORM OF
EXPENSE REIMBURSEMENT, FEE WAIVER AND RECOVERY AGREEMENT
THIS EXPENSE REIMBURSEMENT, FEE WAIVER AND RECOVERY AGREEMENT (this
"Agreement") is entered into between First Trust Exchange-Traded Fund II, a
Massachusetts business trust (the "Trust"), and First Trust Advisors L.P., an
Illinois limited partnership ("FTA"), as of ____________, 200__.
RECITALS:
A. WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), comprised of various exchange-traded funds (each, a "Fund," and,
collectively, the "Funds") set forth on Exhibit A attached hereto, which may be
amended from time to time. Each Fund constitutes a separate exchange-traded fund
with its own investment objectives and policies.
B. WHEREAS, FTA is the investment adviser to the Funds and is
responsible for the selection and ongoing monitoring of the securities in the
Funds' portfolios and certain other services necessary for the management of the
Funds and is paid an annual management fee by the Funds.
C. WHEREAS, FTA has voluntarily agreed to waive management fees and
reimburse certain expenses to prevent a Fund's Expense Ratio from exceeding a
particular Expense Cap (as such terms are hereinafter defined) for a term
provided herein; provided, however, FTA has reserved the right to seek
restitution of any fees waived and expenses reimbursed within three years to the
extent that such restitution would not cause a Fund to exceed the current
expense limitations.
D. WHEREAS, FTA and the Trust desire to more fully describe and
document the above-described fee waivers, expense reimbursements and recovery
all in accordance with the terms and provisions hereinafter set forth.
NOW, THEREFORE, IN CONSIDERATION of the foregoing facts and other good
and valuable consideration, the parties hereto hereby agree as follows:
Section 1. Definitions. The following terms shall have the following
definitions in this Agreement:
"Expense Ratio" is defined as a Fund's annual investment management
fees and expenses (excluding taxes, interest, all brokerage commissions, other
normal charges incident to the purchase and sale of portfolio securities, and
extraordinary expenses) as a percentage of such Fund's daily net asset value.
"Expense Cap" shall be equal to an Expense Ratio for the Funds as set
forth on Exhibit A.
Section 2. Waiver of Fees and Reimbursement of Expenses. On a Fund by
Fund basis, FTA will waive investment management fees payable to it by a Fund
and/or reimburse a Fund for other expenses borne by such Fund up to such Fund's
respective Expense Cap set forth in Exhibit A for the term set forth in Exhibit
A (the "Expense Cap Term"), subject to FTA's right to recover such fees and
expenses set forth in Section 3. The aggregate amount of investment management
fees waived and expenses reimbursed for a Fund from time to time under this
Agreement for a particular Fund shall collectively be referred to as the
"Reimbursed Amount." The Reimbursed Amount shall be accrued and paid on a
monthly basis for each Fund but calculated and settled on an annual fiscal year
basis.
Section 3. Recovery. To the extent that the Expense Ratio of a
particular Fund is less than such Fund's applicable Expense Cap, FTA may recover
a portion of the Reimbursed Amount for such Fund equal to the amount of the
Expense Cap less the actual Expense Ratio for such Fund (the "Recovered Amount")
for up to three (3) years from the date the fee or expense was incurred during
the Expense Cap Term (the "Recovery Period"). The Recovered Amount shall be
accrued and paid on a monthly basis for each Fund but calculated and settled on
an annual fiscal year basis. Under no circumstances, however, will FTA be
eligible to recover any of the Reimbursed Amount if such recovery would cause
the Expense Ratio for a particular Fund to exceed such Fund's Expense Cap for
the most recent fiscal year period for which the Expense Cap was in place.
Nothwithstanding anything to the contrary herein, the obligations set forth in
this Section 3 shall survive any termination of this Agreement as contemplated
in Section 5.
Section 4. FTA's fund accounting department shall develop and
maintain appropriate internal accounting policies and procedures to monitor and
calculate the Reimbursed Amount and the Recovered Amount on a monthly basis for
each Fund.
Section 5. Term and Continuation. This Agreement shall be effective
on the date provided on Exhibit A (the "Effective Date") for each respective
Fund. This Agreement shall continue in effect for each respective Fund until the
end of such Fund's Recovery Period unless the Agreement is continued for
additional periods as agreed to by the parties. This Agreement may be terminated
by the Trust on behalf of a Fund at any time and by FTA after the expiration of
the Expense Cap Term of a particular Fund upon sixty (60) days' written notice
to the other party.
Section 6. Notices. Any notice shall be sufficient when sent by
registered or certified mail to the other party at the address of such party,
set forth below such party's signature on this Agreement.
Section 7. Entire Agreement; Amendments. This Agreement supersedes
and abrogates all prior understandings, communications and agreements (whether
written or oral) between the parties with respect to the subject matter hereof,
and this Agreement constitutes the entire agreement between the parties with
respect to such subject matter. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto. No assignment by
either party shall be of any force except with the prior written consent of the
other party.
-2-
Section 8. Governing Law; Miscellaneous. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of Illinois
(without regard to principles of law), including all matters of construction,
validity, and performance; provided that nothing herein shall be construed in a
manner inconsistent with the 1940 Act or any rule or regulation of the
Securities and Exchange Commission. If any provision of this Agreement shall be
held or made invalid by a court's decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby. The captions in this
Agreement are included for convenience only and in no way define any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
FIRST TRUST ADVISORS L.P. FIRST TRUST EXCHANGE-TRADED FUND II
By____________________________________ By__________________________________
Xxxxx X. Xxxxx, President Xxxxx X. Xxxxx, President
Address: First Trust Advisors L.P. Address: First Trust Advisors L.P.
0000 Xxxxxxxxxxx Xxxx 0000 Xxxxxxxxxxx Xxxx
Xxxxx 000 Xxxxx 000
Xxxxx, Xxxxxxxx 00000 Xxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000 Fax: (000) 000-0000
Attention: W. Xxxxx Xxxxxxx Attention: W. Xxxxx Xxxxxxx
-3-
EXHIBIT A
NAME OF FUND EXPENSE CAP EFFECTIVE EXPENSE CAP
(OF AVERAGE NET DATE TERM
ASSETS)
First Trust DJ STOXX(R) Select
Dividend 30 Index Fund
First Trust FTSE EPRA/NAREIT Global
Real Estate Index Fund
First Trust Dow Xxxxx Global Select
Dividend Index Fund
First Trust Europe Select AlphaDEX(TM)
Fund
First Trust Japan Select AlphaDEX(TM)
Fund
