EXPENSE REIMBURSEMENT, FEE WAIVER AND RECOVERY AGREEMENT
THIS EXPENSE REIMBURSEMENT, FEE WAIVER AND RECOVERY AGREEMENT (this
"Agreement") is entered into between First Trust Variable Insurance Trust, a
Massachusetts business trust (the "Trust"), and First Trust Advisors L.P., an
Illinois limited partnership ("FTA"), as of April 18, 2012.
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");
B. WHEREAS, the Trust is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets (each, a "Fund, and collectively, the "Funds");
C. 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 each Fund;
E. WHEREAS, the Trust intends to offer shares of the Funds as set forth on
Exhibit A, which may be amended from time to time (each such series being herein
referred to as a "Fund," and collectively as the "Funds"), to separate accounts
of both affiliated and unaffiliated insurance companies to serve as the
investment vehicle for variable annuity contracts and variable life insurance
contracts ("Variable Contracts"). The insurance companies that elect to purchase
shares of one or more portfolios are collectively referred to herein as
"Participating Insurance Companies." The Trust may also offer and sell shares
representing interests in the portfolios directly to qualified pension and
retirement plans ("Qualified Plans" or "Plans") outside the separate account
context;
F. WHEREAS, FTA has 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;
and
G. 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. Accordingly, if during the
Recovery Period the Expense Cap is no longer in place, FTA may not recover any
portion of the Reimbursed Amount if such recovery would cause the Fund's Expense
Ratio to exceed the Fund's Expense Cap that was most recently 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
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the other party. Notwithstanding the foregoing, this Agreement shall terminate
immediately with respect to a Fund in the event that the investment advisory
agreement between the Trust for such Fund and FTA is either (i) terminated for
any reason or (ii) not renewed by the Board of Trustees.
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 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.
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.
Section 9. Limitation of Liability; Miscellaneous. All parties hereto are
expressly put on notice of the Trust's Declaration of Trust and all amendments
thereto, a copy of which is on file with the Secretary of the Commonwealth of
Massachusetts and the limitation of shareholder and trustee liability contained
therein. This Agreement is executed on behalf of the Trust (and its Funds) by
the Trust's officers as officers and not individually and the obligations
imposed upon the Trust (and its Funds) by this Agreement are not binding upon
any of the Trust's Trustees, officers or shareholders individually but are
binding only upon the assets and property of the applicable Fund, and persons
dealing with the Trust or a Fund must look solely to the assets of the
applicable Fund for the enforcement of any claims.
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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 VARIABLE INSURANCE TRUST
By /s/ Xxxx X. Xxxxxxx By /s/ Xxxx X. Xxxxxxx
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Address: First Trust Advisors L.P. Address: 000 X. Xxxxxxx Xxxxx, #000
000 X. Xxxxxxx Xxxxx, #000 Xxxxxxx, Xxxxxxxx 00000
Xxxxxxx, Xxxxxxxx 00000 Fax: (000) 000-0000
Fax: (000) 000-0000 Attention: Xxxx X. Xxxxxxx,
Attention: Xxxx X. Xxxxxxx President
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EXHIBIT A
NAME OF FUND EXPENSE CAP EFFECTIVE DATE EXPENSE CAP TERM
(OF AVERAGE NET
ASSETS)
First Trust/Dow Xxxxx Dividend & [1.20%]
Income Allocation Portfolio
